In today's episode, Tyler discusses the bears' persistent pessimism despite the bullish trends underpinning the market, such as the impressive Q4 earnings beats, GDP growth, and animal spirits returning. While the market action was mixed today, Tyler points out that our major indexes remain within the range of all-time highs. Tune into today's podcast to learn more.

Folks don’t look back because the market is closed. Good Tuesday afternoon everyone. Tyler Herriage here with you for today’s VRA Investing podcast. Hope you all had a great day out there today. I’m glad to be here with you today. As always. I’m always glad to be here with you for our daily VRA podcast, but it is nice to get some positive action on the day as well. I know I make that joke here quite often that Kip gets the updates and I get the down days.

Well, we were a little mixed today, but certainly some bright spots out there. We’ll get into those here today. But first, we did finish again, slightly mixed here. Dow led the way, finishing up just under 3/10 of 1% on the day. The S & P also also managing to finish positive on the day today. Tech on the other hand, just a slight move lower on the day. But what we like to see is the semis leading the way. And while it wasn’t a huge gain on the day, we did see the semis finish positive.

[00:01:08]:
So hey, we’ll take it here. And the good news here really remains that outside of the semis, you’re looking at our major indexes now. Nasdaq S&P 500, Dow and then major names as well. You know, our mega cap names meta just wrapping up something like 18 positive sessions in a row. And the good news remains we are still not far away at all from all time highs. The S&P 500 just less than 1% away from an all time high. That’s a one day move right there. Dow, same thing.

Less than 1 or just about maybe a little bit over 1% away from an all time high. NASDAQ has a little bit more work to do, but still just under 3%, roughly 2.7% away from an all time high. And yet we continue to see the level of bearishness increasing in this market. Some of it doesn’t always show up in the sentiment indicators, but we’ve got, you know, Kip and I both kind of have our list of the perma bears out there and the people to watch for when they flip. Right. And we continue to see more and more people on the bearish side of things that are the typical people who are always calling for the market to crash. Right. Not the people out there who usually tend to get calls.

Right. These aren’t those people that I’m talking about here. So despite all of the bullish things we have out here going on right now. Right. So I’ll cover a few of them here. In just a second. But when you look at what we are seeing from not only our markets but from the economy as well, we’ve got, let’s go through a few earnings beating expectations. I’ll get to that here, more in a second.

[00:03:00]:
But we’re seeing massive beats so far on the expectations for Q4 earnings. We’re also seeing the Atlanta Fed continuing to raise their GDP estimates as well and their forward looking GDP estimates. So not just for Q1. We think that that’s exactly right and likely, I would say, I think Kip would probably agree with me here. One of the most important points has to be the return of animal spirits. Now these aren’t people always who are invested in the market, right. These are the people who are the backbone of our economy that are driving sales growth, that are driving innovation. You know, not just on the financial side of things, but in the economy as a whole, which ultimately is very bullish for the stock market.

Kip talked about this yesterday, but we were at NAPE last week, the energy conference here in Houston and what we saw was incredible. Certainly no lack of optimism from, from this group out there. And that makes sense, right? The energy sector gets vilified so much, especially by the Dems and by the left. So the last four years has really been hell for a lot of them. You know, got a lot being from Texas and in Texas still got a lot of friends in the oil and gas space and you know, before Trump got into office in 2016 and, and once again even during that time, and especially once again under Biden’s administration, it was funny to hear them talk about going to the more liberal cities, whether that’s Austin, Denver, anywhere in California and when you’re talking to somebody there, they what they started saying to people when they ask what they did, right? Instead of saying, you know, oh I work in oil and gas, I’m a petroleum engineer, what, what have you there. They would tell people well yeah, I work in energy. And they’ll be like oh that’s really cool. Do you, you know solar, like what is it? Nuclear, like you know, of course thinking that it’s going to be some green energy.

And they would just say, you know, try something clever in there. I work in non renewables and most of the time the people wouldn’t catch on to what they were saying. But we’re no longer in that environment where you have to, you know, censor yourself for what you do for a living. When you provide these people with energy on a day to day basis. Most crucial portion of Our economy without oil and gas, most of our infrastructure comes grinding to a halt and quickly. Right? So again, after being villainized for the last four years, certainly no lack of optimism from the energy crowd here. But that didn’t just apply, you know, to the big wigs or, you know, high up executives in this industry. It’s across the board.

[00:05:51]:
It’s the startups, right? It’s the small oil and gas companies out there that are, you know, trying to do something new and innovative. Or whether we’re talking to our clients here at the VRA or business owners, one theme continues to stand out here, and that is the overwhelming desire to build, to go after the projects they’ve talked about doing for some time. Whether you’re entrepreneurial or it’s a project within your own business, these are the animal spirits we’re talking about here, which do trickle up into stock market effectiveness or stock market increases as well. So the bullishness of this trend cannot be understated right here in our view. And yet, at the same time, while we have all of this bullish undertone, you’re hearing all of the perma bears getting all worked up, whether it’s about the Doge team and what they’re doing. Elon was just in speaking from the Oval Office with Trump saying, you know, great point here, that maybe they’ll start looking into people who work in the government who have a salary of a couple hundred thousand dollars a year, a big salary, $200,000 a year plus, but are worth tens of millions of dollars. And he, he didn’t, he didn’t name any names. He didn’t say that they were, you know, out there grifting off of, you know, the USAID type of stuff.

But what he said was, I think it just deserves an investigation and if nothing else, maybe we can follow their trading advice, as so many people have done. Now that that has been more public, the congressional trading info. But again, I kind of lost my train of thought there. Again, okay, so whether it’s the tariffs, whether it’s deep seek, whether it’s Doge going in and disrupting the government, there are so many smart reasons that these bears can latch onto and talk about the market should head lower for this reason or that reason. You know, under the surface here, we know the economic strength, we’ve seen the earnings side continue to increase. All of the right reasons are lining up here. We’ve got 10 out of 12 VRA investing screens bullish right now. That takes a lot of the noise of what we’re hearing out there and really puts it in perspective for us here at the vra.

That’s why we have the VRA investing system to remove emotion from our investing and not get caught up in these perma bears. Again, they have some really smart sounding arguments but time and time again they are wrong. And so on that note, seen it especially in the AAII Investor Sentiment Survey where we’ve seen the most bearish investors since November of 2022. It was a huge swing last week. It’ll be interesting to see what it updates for th this week. But remember again we are right in the range of all time highs and yet the Fear and Greed index also just one point away from being in fear mode. This is just nowhere near the optimism and bullishness that you would expect to see anywhere near a market top. We’re just nowhere near those levels right now.

[00:09:04]:
We’ve still got record levels of cash that’s just now starting to come off of the sidelines from money market funds. You’re seeing big inflows and inflows starting to pick up here from the retail side of things and it’s only a matter of time until the big guys catch up on that one as well and continue to pour more money into into this market. And again, I get it. There have been some wild swings over the last few weeks. Most of those we’ve recovered the gains on already here just a couple weeks later. Again, whether it was the deep seat news or the tariff news, bottom line here again 10 out of 12 VRA screens remain bullish here and in our view by the dip remains the smart money move. So ignore the perma bears out there and we’ll move on to another topic. Now a little bit of news out of the today is Jay Powell began his two day testimony to Congress began today with the Senate goes into the House tomorrow morning as well.

And no real meaningful change here from J. Pal. No surprises for the market here as he has been prone to do, but just continuing to say inflation has eased significantly, remains somewhat elevated. The labor market appears to have stabilized and now the Fed is on hold. You know, essentially he didn’t say those words exactly, but he said it will stay there until inflation improves or the labor market weakens unexpectedly. So no big surprises. We knew the Fed had paused after what was it? Let’s see here. Well, I mean the big news coming up is we’ve got inflation data coming out tomorrow.

Our view again remains unchanged here. Inflation is on the decline. Doesn’t mean it’s going to be a straight down line, much like jobs numbers, we, you know, it’s tough to glean a lot of insight from the individual reports themselves as much as it is from following the trends. But after the jobs number last week, the odds of a rate cut in March dropped from, you know, just these are expectations odds, you know, a month ago was at a roughly 23% chance probability that the Fed would cut rates by another 25 basis points in March. Now those odds have dropped to just four and a half percent there. So we’ll see what we get in the inflation data. We don’t expect any surprises even if we did get a move to the upside. Again, you’re, it’s just never going to be a straight down line back to, you know, the Fed’s 2% target or back to kind of a neutral rate, which we would be more supportive of.

[00:11:43]:
It’s incredible. You go back and look at some of the Federal Reserve notes, just not from not that long ago, you know, 80s, 90s. And the Fed’s goal was 0% inflation at the time. So that, you know, that is a more modern thing. Looking for the 2% target. Let’s see if maybe we can get Ron Paul as they floated out there. Kip talked about this yesterday as well as they floated out getting Ron Paul and Doge into the Federal Reserve. Let’s see if we can get some changes there as well and get back to a 0% inflation target.

Possibly. That would be. That would be something. We’ll see. Stay tuned. One good development out of today. Jay Powell was asked that as long as he is Fed chairman, will he commit to not having a central bank digital currency? And he replied, yes. So very good.

Always good to see if you’re a regular listener. You know, I’ve been an outspoken anti CBDC central bank digital currencies for multiple reasons, namely some of the reasons that those at the World Economic Forum have talked about. Augustine Severin, I always mess his name up, but he was the former Treasury Secretary for or head of the central bank in Mexico, now works for the World Economic Forum where he outlined, you know, a CBDC is great because it removes the gray market. You know, now we’ll know where every single dollar is spent. We don’t want the government tracking every single one of our transactions. Look at what’s happening in Europe. You know, JD Vance just gave a phenomenal speech earlier today in front of the EU in France where he was meeting. There’s a summit there.

[00:13:28]:
I’m blanking on the name of it right now, but it was a phenomenal speech. You know, he, he kind of brought up there as well, what we’ve seen from countries in Europe where they’re arresting people over social media, post what. So what do you think they would do if they have access to your bank accounts, Right. Much like we saw during the truckers convoy in Canada, they’ll just shut you down. They’ll shut down your bank accounts. And now what are you going to do? Right? Tough to, tough to protest the government when you can’t put food on the table because your money is locked away by the same government. Right. So, been a strong advocate against CBDCs, but you never know, they might change the name, call it something else.

Could come from the Treasury. You know, I see that as unlikely under Trump being, you know, wanting to be the pro crypto president, you know, kind of implying the anonymity behind it or at least the fact that it won’t be traced and tracked by government officials. But regardless of what they might call it or try to do, whether that’s a Treasury digital currency or a digital US Dollar, this is something that we do not want. And as much as we love Trump’s actions so far in his second term, this is not the time to let your guard down either. You know, I, I don’t necessarily think, for example here, that Trump was in on the plandemic, the COVID pandemic. I think it was used against him. Right. But it still happened on his watch.

Operation Warp Speed still happened on his watch. So, point being, now’s not the time to get relaxed about it, you know, but to be paying attention, celebrating the victories where we can and. But stay vigilant, I guess, is the point that I’m trying to make here. I know that. I’ll continue to report on it here as well. All right, again here upcoming this week, inflation data CPI tomorrow, PPI on Thursday morning. We’ll be reporting here every day on the podcast after the close. Still got some earnings to go this week as well.

[00:15:36]:
Had a couple of beats after the close today. You know, none, none of the Mag 7 names, none of the massive players out there really reporting this week. You got Reddit, Robin Hood, John Deere. That’ll be an interesting one. Coinbase after the close on Thursday, Airbnb Palo Alto. So certainly still some big names to go out here, so stay tuned. But so far, as Ed Yardeni pointed out earlier, analysts started the year expecting S P 500 earnings per share growth to be 8.2% year over year for Q4. Turns out they shot Way to the way under where we’re at so far Q4 earnings have reported an increase of 13.3% year over year.

That is a phenomenal beat so far from this market here and we do expect that this is going to continue to accelerate. Earnings growth will continue to accelerate here. So looking at our markets here, I’ve covered most of this already. I’ll do it quickly here. Dow Jones led the way up 310 or just under 3/10 of 1% on the day to day but just what you want to see. The transports once again leading the Dow 39% on the day. Next up the S&P 500 essentially flat but did finish positive on the day. Nasdaq tried to go positive earlier in the session finished down just over 310 of 1% but again good to see semis leading the way finishing positive on the day.

Small caps were our laggard down half a percent. Of course it didn’t help that the 10 year has bounced a little bit here. As we you know started reporting you last week we were approaching and had hit on some metrics heavily oversold levels. You know about the point where you expect to see see a bit of a bounce. Again we’ve talked about this here at length. The 10 year below 5% and even above that level still isn’t a concern for us here. We know that the Trump administration wants to bring down the 10 year yield. His Treasury Secretary Scott Bessant has said that repeatedly.

[00:17:37]:
They want to work on the 10 year yield. So we’ll see what they can accomplish in that regard. Read a 4.53 as of today up just under 1% on the day for the 10 year yield. Next up looking at our internals on the day, really not a lot of action here today. Pretty flat. We did manage to come in positive on the nyse. More advancing stocks than declining slightly negative on the NASDAQ 52 week highs lows also managed to come in positive on the NYSE 2 to 1 negative on the NASDAQ. But as we talk about here often as well, you know some of the Nasdaq components are just not prime time players.

So not a huge shock there. And then for volume finishing just below even slightly, just barely slightly negative for both the NYSE and the nasdaq. No massive moves there on the day though. Looking at our sectors on the day you would have thought we finished positive across the board. We had eight out of our 11s and P500 sectors finishing higher on the daytoday. We were led by consumer Staples Followed by energy, which just had a nice little back to back moves here. After that, real estate, which we like to track. The home builders, we talk about that here often as well versus the S and P real estate sector as it’s mostly made up of REITs.

But we’re continuing to see constructive action here in the home builders. We do remain bullish on housing as well. Then for our laggards here today, consumer discretionary healthcare and communication services. Finally here for today, our VRA commodity watch. Let me get a quick refresh of my screens here. We did have gold hitting another all time high here today, which I believe that makes eight out of the last nine trading days that gold has hit an all time high. Been a phenomenal move. Now trading at 2926.

[00:19:29]:
The all time high was 2,968. Also continuing to see good action in the miners. They were positive earlier in the session. Sorry, take it back. Miners did finish down one and a quarter good action yesterday though, hitting their highest level since October of last year. And while we do continue to love gold and the miners here, we think that, you know, both of these are due for some long term moves higher in the short term here we are hitting extreme overbought levels on the VRA investing system. This is about when we expect to pause. You know, we’ll continue to report on this here as Kib and I both talked about taking a more active role for trading positions in 2025 with kind of market action that we’ve seen so far.

But even though we are heavily overbought, that’s about when we would pause our buys. We’ll alert you if we do anything other than that here again over the medium to long term. Gold and the miners, we remain extremely bullish on just in the short term, hitting overbought levels. Silver on the day now down three quarters of 1% to $3 $32.25 an ounce. Copper down more 2.3% to $4.59 a pound. Oil now up 1.2% on the day today. Let’s see here, to 73.19 a barrel. Still seeing, you know, even after a big move higher like that Today, you know, 1.2%, not a small move for oil, still well below the highs just before Trump was inaugurated.

Then finally here for today, bitcoin really has been stuck in this trading range here, down 1.2% today was up at 98,000 earlier. Now back down to $96,170. A Bitcoin folks. That is all that we have time for here today. Please be sure to subscribe to receive our VRA podcasts every day at the market close. You can sign up@vraletter.com, click the podcast link at the top and we’d love to have you with us. Thanks again for tuning in. Until next time.

[00:21:37]:
We’ll see you back here tomorrow for the close.