Greed to Fear: Jay Hatfield on Post-Earnings Volatility, Tech Rotation, and the Case for Income

In this episode of Lead-Lag Live, I sit down with Jay Hatfield, CEO of Infrastructure Capital Advisors, to break down what Nvidia’s blockbuster quarter means for mega-cap tech, why markets fade after earnings season, and the implications for dividend stocks, preferreds, and small caps as rate expectations shift.

From valuation pressure in momentum names to tightening money supply and the path of Fed policy, Hatfield explains where he sees opportunity as volatility resets — and why income strategies may be entering their strongest stretch of the cycle.

In this episode:
– Why strong tech earnings often lead to short-term market weakness
– How Bitcoin and leveraged crypto products spill over into tech volatility
– Why dividend-heavy large caps offer resilience in rotation periods
– How preferreds and corporate bonds can outperform into 2026
– The setup for small-cap value once Fed cuts begin

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Episode Transcript

SPEAKER_00 (01:12):
You buy tech stocks when you know Fed's tightening
or there's concerns about growthbecause there's secular growth.
And then of course you buyincome stocks when Fed funds is
being cut, uh removed from CDAsusually into preferred and
bonds.
So we do think that'll continue,particularly as it just
volatility drops.
Even if the stock market doesn'trip back to 7,000, if we just

(01:33):
stabilize somewhere around6,500, then all the fixed income
and probably small caps willstart rallying it's a$10,000.

SPEAKER_01 (02:04):
The company says it's in a virtuous cycle of AI,
yet at the same time, we'reseeing mounting questions around
cap saturation, earningssustainability, and whether mega
cap tech remains the only gamein town.
That makes this a key moment torethink what happens if capital
begins rotating.
My guest today is Jay Hatfield,CEO of Infrastructure Capital

(02:26):
Advisors, a specialist in incomevalue and active small cap
strategies in an environmentwhere yield matters as much as
growth.
Thanks so much for being heretoday, Jay.

SPEAKER_00 (02:36):
Thanks, Melanie.
Great to be on.

SPEAKER_01 (02:38):
So first off, given the strong NVIDIA print, what do
you see as the broaderimplications for the megacap
tech complex and the the rest ofthe market?

SPEAKER_00 (02:48):
Well, the most important thing to keep in mind,
and this works four times ayear, is that greed occurs
during earning season and fearafter.
So we're after the big techearnings.
And now you might say, well, whydid we fade?
Well, now we're over all the bigtech earnings, not just a five

(03:11):
that reported, or I guess sixthat reported uh two weeks ago.
You have Broadcom coming up.
But um, so all the cat positivecatalysts are behind us.
And you know, we have a 7,000target on the SP, but targets
are not just for buying, butalso selling.
So other people had similartargets.

(03:33):
They faded the market at 6,940.
And then the all the shortsellers come out with their
theses about why the world'scoming to an end.
There's not gonna be any returnon ANI investment.
OpenAI is gonna go bankrupt,cockroaches and credit.
Uh, we don't believe any ofthat.

(03:54):
In fact, the NVIDIA print wassuper strong.
We raised our target on thecompany to 260, it raised our
earnings estimates.
So no zero evidence of acollapse there.
But here's the big proviso, andit's important to get all this
information out, it's a littlebit long, but there are so the

(04:14):
Mag 8 are roughly fairly valuedin our models, which is
consistent with that 7,000target.
But and Tesla, by the way, hastremendous downside, but we
won't get into that.
But um, but there's areas of themarket, particularly Bitcoin.
We hate uh securities that don'thave cash flow, earnings and

(04:36):
cash flow, they have neither.
And we hate even more leveredbets on that, like Treasury, um,
crypto treasury companies.
So, you know, Bitcoin is kind ofcrashing on a levered basis, and
that's taking some air out ofthe speculation in the tech
market.

(04:57):
And given that we're pastearnings, you know, we're into
this technical market, andappropriately the market
rallied, but then we faded atthe 50 days, so now we're
crashed below that.
We think the hundred dayssupport, which is roughly 6,500.
So we think we're fine, butthere's gonna be volatility.

(05:19):
Um, I would watch Bitcoin, notbecause I like it, but it
definitely having a crash everyday and having microstrategy, I
think, is down uh maybe beyond10%.
Let's just I'll look that up aswe're talking.
But uh until that stopscrashing, you're probably gonna
still see at least a lot ofnervousness, if not downside, in

(05:40):
the overall tech market, becauseit does kind of suck capital out
of uh tech investors.
So micro strategy is down 10bucks and six percent, kind of
in line with Bitcoin, they'relevered Bitcoin.
So that just gonna put a littlebit of uh risk into the
marketplace.

(06:01):
So um, you know, we're gonnahave to just bang around these
moving averages and settle downa little bit.

SPEAKER_01 (06:07):
Yeah, what about the large cap dividend stocks if
rotation begins away from themomentum names?
Why might dividend-rich uh largecaps offer a sweet spot?
And how are you positioning forthat uh scenario?

SPEAKER_00 (06:20):
So we have a big, big focus.
Well, obviously, preferreds arereally that's all they are.
Um, so they're acting the waythey should, which is defensive.
We have a more defensiveportfolio than the index.
So we've been significantlyoutperformed as uh, for
instance, the index has a ton ofmicrostrategy preferreds.
We have zero.

(06:40):
And so our funds, uh when bigsell-offs like today, they're
gonna go down a little.
You still get your 9% yield.
ICAP, we have a lot of defensivedividend stocks there.
We write covered calls thatworks well when a market's
volatile and down.
So um do you think it's betterto be in dividends?

(07:01):
It's good to be diversified.
And then you have some techstocks, some large cap dividend
funds like ICAP or small caplike SCAP, have some preferred,
have some bonds.
And then you get less worked upabout, you know, uh the NASDAQ
moving like 4% of a day like itdid today.

SPEAKER_01 (07:20):
Yeah, and I I want to talk, take a minute now and
talk about rate, something wetalk about uh every time uh that
we do these podcasts.
Uh let's dig into that a littlebit.
And I mean, with the marketlooking toward a possible cut in
December, something, and andmore in 2026, you've made a case
for small cap uh value as wellvia SCAP and income via
preferreds, as you as you justsaid, and corporate bond funds,

(07:42):
uh, the ETF B N DS.
Can you walk us through why youfavor those plays heading into
2026?

SPEAKER_00 (07:49):
So that's a history that you sell small caps during
a Fed tightening cycle and youbuy them during a loosening
cycle.
The um only issue is, of course,we have an incompetent Fed
following a flawed frame policyframework.
So we're relatively certain,unless there's another

(08:10):
employment report that's supernegative, today's was sort of
positive, mixed, but positive,then they're definitely not
gonna cut because they have alot of Keynesians whose models
are broken, but they haven'tfixed them yet, or they haven't
changed them yet.
So almost certainly if youlisten to them, like the Kansas
City or Cleveland Fed presidentseems to be totally out the

(08:34):
lunch.
So they're not gonna cut.
But the good news is the new Fedchair is definitely gonna cut.
So probably small caps are alittle bit more of a 20 uh 26
asset class.
I mean, they're getting theirbounces, they're bouncing
earlier today.
But as long as the cuts areexpected, we think they will

(08:56):
outperform.
And not just the norm.
You buy tech stocks when youknow Fed's tightening or there's
concerns about growth becausethere's secular growth.
And then, of course, you buyincome stocks when Fed funds is
being cut, uh removed from CDsusually into preferreds and
bonds.
So we do think that'll continue.

(09:18):
Um particularly as it justvolatility drops, even if the
stock market doesn't rip back to7,000, if we just stabilize
somewhere around 6,500, then allthe fixed income and probably
small caps will start rallyingin.

SPEAKER_01 (09:34):
What are you projecting uh for next year in
terms of inflation and moneysupply growth and even tariffs?
And how are you incorporatingthose inputs into your portfolio
out?

SPEAKER_00 (09:42):
So we have a non-consensus call on that um
you know, budget deficit's gonnaget way better next year.
But we don't just like make itup.
We have a uh model and forecast.
And uh it's important to knowCBO doesn't include tariffs, or
at least hasn't so far.

(10:02):
Because they just do the changein the law, not and the only
tariffs aren't in the law.
So budget depth's gonna declineto 4.5 percent.
That'll be a tailwind for bonds,not critical, but a tailwind.
Um and um we do need Fed cutsdown to 275 to get to 375.

(10:23):
That's our target on the tenure.
We do think we'll get there witha new Fed share.
So um no real change, eventhough in our forecast, even
though this month is or isreally December next month, uh
very low probability of a cut.

SPEAKER_01 (10:40):
And I just uh lastly, I I want to pivot a
little bit.
Uh energy demand is changingreally fast with AI and data
centers, uh, electrificationinfrastructure build out, all
pointing to higher natural gasand mid-stream demand.
Why do you believe MLPs such asAMZA are positioned uh to
benefit from this shift?

SPEAKER_00 (10:58):
So pipelines are um, even if they nobody really gets
too excited about them, it'sgreat because they have
tailwinds.
Uh, not the natural gas pricesare gonna skyrocket, but the
throughput is at the margin, youhave to use natural gas to
produce electricity.
Um, so all these data centersare gonna require more natural

(11:19):
gas.
That's more throughput.
Price will probably remaincontained because it's a waste
product to join for oil.
So we're bullish on that.
We're tilted in AMCA towardsnatural gas companies.
It's been working well.
Um, hasn't become overvaluedlike a lot of AI plays, so
there's that upside.
But even if that doesn't happen,you get solid dividend growth of

(11:42):
about uh 5% a year, uh 7% yield.
So you get low single-digitreturns, tax deferred.
In the case of AMZA, you'd get a1099 versus a K1.
So um we'd like to sector, it'smore defensive, it's acting more
like fixed income.
So I wouldn't do it to play theAI boom, but just be aware

(12:05):
there's a tailwind.
Great way to get tax-deferredincome.

SPEAKER_01 (12:08):
And uh Jay, uh just lastly, for investors, uh
advisors, et cetera, who want tofind more about your research,
delve into uh uh what you'rethinking and what you're
following.
Where's the best place for themto go?

SPEAKER_00 (12:20):
They can go to infracapfunds.com.
And there you can email us oreven call us or text us.
Love talking to our clients,100% available to anybody
interested.
So definitely recommend that.
Great proprietary economicresearch there too.

SPEAKER_01 (12:36):
Fantastic.
Well, Jay, it's always uh sogreat having you on, and I
always appreciate your insightinto the markets.
Uh also thanks to everyone forwatching.
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