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The Great Leveling: Navigating the SecondPhase AI Economy · The SPY Trader

• 0:00
  Hello and welcome back to the Spy Trader podcast , your goto source for making sense of the markets without losing your mind .
• 0:07
  I am your host , Penny Profitt , and I am so glad you could join me for our midafternoon update .
• 0:14
  It is currently 2:30 pm on Thursday , July 30th , 2026 , here in the Pacific time zone .
• 0:22
  We have a lot to cover today as we navigate what we are calling the SecondPhase AI Economy .
• 0:28
  The initial hype has cooled , and we are now seeing who can actually turn all those expensive chips into real profits .
• 0:35
  Let's dive right into the key news items shaping your portfolio today .
• 0:40
  The big story is the U.S.
• 0:42
  stock market's resilience despite a bit of a bumpy ride following the Federal Reserve’s recent Neutral Pivot announcement .
• 0:50
  We are seeing a real split in the market .
• 0:53
  While the techheavy Invesco QQQ Trust has felt some pressure from stretched valuations in the softwareasaservice space , the Healthcare sector , tracked by the XLV ETF , is absolutely shining .
• 1:06
  This is largely thanks to the expansion of those GLP1 metabolic drugs into new treatments for heart and kidney disease .
• 1:16
  Eli Lilly , or LLY , has hit new record highs because of this , and diversified giants like Johnson and Johnson , JNJ , are benefiting from AI shortening their drug discovery timelines .
• 1:28
  We are also seeing a great comeback for banks .
• 1:31
  With the yield curve finally uninverting earlier this year , JPMorgan Chase and the Financial Select Sector SPDR Fund , XLF , are becoming favorites for those looking for defensive growth .
• 1:44
  Now , for some deeper analysis and insights .
• 1:47
  We are currently living through what economists are calling The Great Leveling .
• 1:51
  After years of the Fed hiking rates , they have finally settled the Fed Funds Rate at a neutral 3.25 percent .
• 1:59
  This has brought a sense of calm to the bond market , making the iShares Core U.S.
• 2:04
  Aggregate Bond ETF , ticker AGG , a great incomefirst alternative to stocks again .
• 2:11
  Inflation has also settled at 2.4 percent .
• 2:15
  While that is higher than what we saw before the pandemic , it is predictable , and the market loves predictability .
• 2:22
  This has allowed the S&P 500 , which you can track through VOO , to maintain higher pricetoearnings ratios than we usually see .
• 2:31
  One of the most fascinating shifts we are watching today is the energy transition .
• 2:37
  All these AI data centers need an incredible amount of power , and that is causing a massive rotation into nuclear and grid infrastructure stocks .
• 2:47
  Looking at specific companies , NVIDIA is in the news today as their Rubin architecture enters fullscale production .
• 2:54
  While NVIDIA remains a core holding for many , everyone is watching to see if their big customers are going to take a break from spending quite so much on hardware .
• 3:03
  Meanwhile , Tesla is making waves after demoing its Optimus Gen3 robot in Texas .
• 3:10
  It is really shifting from a car company to a robotics powerhouse right before our eyes .
• 3:16
  And over at Apple , rumors about an iPhone 18 Ultra with a neurallink interface are keeping the stock near alltime highs , which is providing great support for the Vanguard Total Stock Market ETF , or VTI .
• 3:31
  So , what should you do with your money ?
• 3:33
  Let’s get into the recommendations .
• 3:35
  First , stay grounded with a Pragmatic Growth Core .
• 3:40
  I recommend keeping about 50 percent of your equity exposure in broad funds like the Vanguard S&P 500 ETF , VOO , or the Total Stock Market ETF , VTI .
• 3:53
  Largecap companies have the cash to buy up the best AI startups , so these funds let you own the winners without the stress of picking just one .
• 4:02
  Second , consider the Power and Infrastructure Play .
• 4:06
  Since AI needs physical space and electricity , I suggest overweighting the Vanguard Real Estate ETF , VNQ , or the Utilities Select Sector SPDR , XLU .
• 4:18
  Specifically , look at NextEra Energy , NEE , or REITs like Equinix and Digital Realty .
• 4:24
  They own the land where the AI actually lives .
• 4:27
  Third , don't forget geographic diversification .
• 4:30
  I recommend a 15 percent allocation to the Vanguard FTSE Developed Markets ETF , VEA .
• 4:38
  With the U.S.
• 4:38
  dollar weakening slightly as the Fed stays neutral , European and Japanese stocks are looking like a bargain compared to the S&P 500 .
• 4:47
  Finally , for defensive stability , use the iShares 20 plus Year Treasury Bond ETF , TLT , as a hedge .
• 4:56
  If the economy cools too much later this year , these longterm treasuries will be your safety net .
• 5:02
  To wrap things up , we are currently in a barbell strategy market .
• 5:07
  On one side , hold your highconviction tech through XLK , and on the other , balance it out with highquality healthcare and financials like XLV and XLF .
• 5:17
  Use the BND fund for your fixedincome floor to capture those 3.5 to 4 percent yields that are now the standard .
• 5:24
  Stay cautious but stay bullish , friends .
• 5:27
  That's all for this update of Spy Trader .
• 5:30
  I'm Penny Profitt , and I'll see you in a few hours !