Rotation Trade Begins: Earnings Will Spark It

watch with Sylvia Jablonski, Chief Investment Officer of Defiance ETFs. She's been pretty uh positive about things when when you've been on recently. Uh Sylvia, the AI trade continues, although there's little pockets of rotation or weakness in in some of the leaders, but it's so it it encompasses so many different areas. You you can find a winner every time you see uh one of the uh you know, one of the parts of the AI trade a little bit weak, you see you see it someone else take up the slack. >> Yeah, absolutely. And I I think it's I think it's poised to continue. You know, we're talking about $1.3 trillion that's estimated to go into the AI power and infrastructure trade. So, you know, first we just had an Nvidia and everybody was pretty much buying either SMH or Nvidia stock and then AI started to broaden out. That for me is the broadening out trade. It's the different pillars of AI. It's photonics, it's lasers energy electricity infrastructure. And you know, you just see this continued AI spending by the hyper scalers, 600 to 700 billion. The projected growth and need in energy of 125% or so is the last statistic that I saw by 2030. These bottlenecks that are forming and so investors that didn't get into the, you know, mainstream chip trade have a lot of places to go in the last couple of days on these pullbacks have given them a time to buy it. >> And what kind of data points are are we are we waiting for? We'll see. But we got Alphabet this week. >> Yes. Yes. Well, I think that, you know, we have to see if the continued spending is there, which the market, you know, sometimes likes it, sometimes doesn't like it. And we'll have to we we'll have to hear about future guidance about um continued spending, continued demand. But more importantly, monetization. You know, how is this starting to convert and how is this starting to benefit these companies in terms of their their revenues and things like this. So, I think that'll be an important message. I I actually think, you know, earnings we're expecting 20% or more overall. It'll be the second 20% or higher quarter. It'll be the seventh quarter in a row of double-digit growth. And but I think it matters now with the geopolitical backdrop, the new Fed, the hawkish tone, all of these things. I think if if earnings comes out of the gates, you know, hot, it'll it'll propel the market in the short term and we'll see some positive momentum. >> You have a the 400 S&P number. You think that's doable? Will will Could we beat it? Could we could be disappointing? If you put 20 on that, it's 8,000 on the S&P that up that all sounds reasonable to you? >> I think it sounds reasonable. I think if if earnings keep up, which we intend for them to, balance sheets remain strong, consumer spending is strong, business spending is strong, the economy, you know, we're in the soft landing that we've been talking about forever. So, you know, barring nothing coming out of left field or just an ongoing geopolitical, you know, issue here that can go on for years and and and not months, I think the market's on pretty good footing. >> Hm. What about um something other than AI? What would What would you What would be most attractive to you? How How do you like the banks? >> Yeah, I mean, so the the banks just were another vote of confidence that we have a pretty strong market. You know, you saw the M&A activity there coming in strong and and that felt like there was a little bit of a broadening trade. So, actually, interestingly, consumers or clients of ours that that aren't in AI have been picking up AI. The ones that in are in AI have been doing two things. They've been either going, you know, XMAG cuz they already have those allocations and they're trying to broaden out or they're going XIGV, which is basically Nasdaq minus software. So, with IBM coming out, they had their biggest, I think it was 24% in a day worst drop in a day since 1987. Just tells you that the software story is on tricky footing and and investors are kind of broadening out on the tech trade. Um and also the hyperscalers, you know, the performance hasn't really been there as compared to some of these AI stocks and maybe it's a time to kind of flip back into some of those names. >> Would you think it's it's a time to to buy energy or or or not. How do you How do you play I mean these they're going to be the beneficiaries, the majors. >> Yes. >> pricing, no? >> Yes, I mean, we are very much focused on energy, electricity, lasers and photonics, and we look at the whole AI infrastructure infrastructure trade as, you know, a a great potential catalyst for the market and a great opportunity for investors. Partic- Again, particularly on pullback. >> Well, is it an opportunity or or is it a possible pitfall if the if the the power's not there? The >> I think I I think it's an opportunity. I think it's a I think it's a long-term hold as infrastructure gets built out over the next 5 to 10 years. This is something that investors can put into their portfolios and hang on to it. I think it's hard to just time these trades because, you know, AI is hot right now. There's a bubble, these stocks rise and then they crash, and, you know, long-term buy and hold, dollar cost averaging. This is This is the fourth industrial revolution. >> Yeah. I wonder if any of the of the political backdrop comes home to roost. The the the pushback on AI a lot of people and data centers, things like that. The energy just success in general uh from from the socialism viewpoint. I'm wondering if >> somewhere to put them. >> Uh I don't know if it's