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Kip Herriage Live On Making Money with Charles Payne – May 15, 2024

Check out Kips latest interview on Making Money with Charles Paynes. Kip dives into why it's crucial not to fight the tape or the Fed in the current financial climate. Kip shares his expert insights, suggesting ample upside potent ...

Posted On May 15, 2024Making Money with Charles Payne
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About This Episode

Check out Kips latest interview on Making Money with Charles Paynes. Kip dives into why it's crucial not to fight the tape or the Fed in the current financial climate. Kip shares his expert insights, suggesting ample upside potential as the market starts discounting the inflation story, and forecasts rate cuts from key central banks. They also discuss the parabolic rise of utility stocks and the intriguing opportunities in small caps and miners.

Transcript

Charles Payne [00:00:01]:
All right, so my next guest continues to say, don’t fight the tape and don’t fight the Fed. Joining me now, vertical research advisory management partner, Kip Heritage. And, Kip, you know, you say that there’s direct evidence that the market discounting is discounting the inflation story. So what does that mean? More upside from here?

Kip Herriage [00:00:20]:
Yeah, we think a lot more upside. Charles, again, thanks for having me back on today. You know, since the birth of QE, some very interesting things have happened as it pertains to central banks. The Fed and the bank of England and the ECB have acted in coordination, complete coordination. Together they act together. We got telegraphing this week from the BoE and ECB that they’re going to be cutting rates likely in June. That means the Fed’s going to follow shortly thereafter. So we think we’re seeing now utility stocks going, utility stocks going parabolic.

Kip Herriage [00:00:51]:
What? They’re the largest borrowers of money in the country, so they’re very interest rate sensitive. You won’t find a group more so than you. Utility stocks going parabolic. All these signals, tenure yield collapsing, all these signals are telling us what the Fed is going to do, that inflation is now in our rearview mirror. It just is. And that’s our, that’s our view. The market, we believe, is telling us that we think we’ve got a big move higher ahead of us. The best time to be long stocks in a presidential election year is where we are right now through the month of August.

Kip Herriage [00:01:21]:
This is time to be long and strong.

Charles Payne [00:01:22]:
Right. And I saw a tweet from you that you talked about copper and, of course, the implications for the strong global economy. But what bothers me is that we have, the global economy is strong. Why would these central banks be cutting, you know, we look at China, we still can’t get its act together, you know, so I feel like maybe the utility play, the copper play, maybe those are more electricity demand centric than a traditional proxy for economies.

Kip Herriage [00:01:51]:
No question is part of that as well. It’s a combination. But as the largest borrowers of money, that’s our view. But I think these Fed, these central bank rates have been restrictive for far too long. The Federal Reserve shouldn’t have been at five and a quarter to five and a half percent where they are now. They shouldn’t have been here for a long time. Rates are probably 1% higher on the Fed funds rate than they should be right now. So the Fed’s got, we think, at least two to three rate cuts this year.

Kip Herriage [00:02:15]:
That’s been our view from the beginning of the year. We think the markets are discounting that now. We think that’s going to continue. But I will say in a very short term basis, we are hitting extreme overbought levels on some of our most closely watched momentum oscillators. Nvidia reports next Wednesday for our trading accounts, for option accounts. We will be looking to take some profits into that report.

Charles Payne [00:02:36]:
So let me get this straight. Take some semiconductor tech profits off the table before Nvidia reports into that report.

Kip Herriage [00:02:45]:
For trading accounts only.

Charles Payne [00:02:47]:
All right. And let me real quick ask you about small caps because they’re looking better. You know, they’ve been a lot of fits and false starts with small caps, but they are looking a little bit better here. Time to get more aggressive.

Kip Herriage [00:02:57]:
Yeah, I think so. As last time is on your show, that was at one of our favorite positions. We’re in the three time leveraged ETF, small caps, assembles, TNA there. We think you continue to buy that. It’s up like 40% in the last, was it three, four months? We think that moves going to continue, Charles, there, what, 20% plus or 15% plus below their all time high. And we really like the miners here. Gold, of course, is very near an all time high. Just hit that last month.

Kip Herriage [00:03:25]:
The GDX, the minor ETF, is still 22% below its all time high, but it’s up 40% in the last two months. So we like the miners here a lot. Of course, a lot of those are in small caps.

Charles Payne [00:03:36]:
Yeah, absolutely. Hey, kev, great stuff, my friend. Thank you very much.

Kip Herriage [00:03:41]:
Thank you, Charles. Good to be back.

Charles Payne [00:03:42]:
Hey, folks, I want to talk.

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Time Stamps

00:00 Borrowers, interest rates, market signals, presidential year.
03:25 GDX ETF showing strong growth despite dip.

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