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VRA Investing Podcast: Big Week; Global Central Bank Meetings, Nvidia’s AI Conference, and Bitcoin Update

Check out today's episode as Tyler kicks off the week with a recap of the markets' performance and a preview of the significant events to watch out for. From the upcoming Federal Reserve's FOMC presser to the latest on the Nvidia ...

Posted On March 18, 2024Episode 1345
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About This Episode

Check out today's episode as Tyler kicks off the week with a recap of the markets' performance and a preview of the significant events to watch out for. From the upcoming Federal Reserve's FOMC presser to the latest on the Nvidia annual conference, we cover the potential market impacts and discuss the broadening trends in the market.

Transcript

Don’t look back because the market is closed. Good Monday afternoon, everyone. Tyler Herriage here with you for today’s VRA investing podcast. Hope you all had a great start to your week this week. It was a pretty good start to the week for our markets in what will certainly be a very eventful week this week. We kicked it off a little bit today with the Nvidia annual conference taking place that will take place for a few more days this week. We’ve got a couple updates there. Then, of course, what most eyes are on right now is not only the Federal Reserve’s FOMC presser Wednesday, but global central bank meetings taking place this week.

We kick it off tomorrow with the bank of Japan, which should be an interesting one here, as speculation now is that the bank of Japan may be ready to end eight years now of negative interest rates. That’s a big shift from where the quantitative easing kicked off there and really transitioned into never ending QE programs. So this is a big transition for Japan, which a lot of the time has a weird correlation to the rest of the were the rest of the world economy was hiking rates before, now Japan’s looking to do it. Interesting timing here. So certainly will be a very watched event tomorrow. We’ll be reporting on that here as well. And then we’ve got the ECBs Christine Lagarde speaking on Wednesday. Expect a lot of Fed speak there.

[00:01:42]:
And then of course the US Fed meeting on Wednesday afternoon as well. Then it’ll all wrap up with Thursday with the bank of England. No big expectations there. They’re expected to stand pat on interest rates, much like the Fed here in the US. The ods are nearly a certainty that the Fed will stand pat here on Wednesday at their meeting, although expectations for the June meeting do still remain. From the CME group’s Fed watch tool, the odds of a first rate cut continue to look like June. That’s in the majority there, over 55% of chance there of the first rate cut being here in June. So yes, a whole lot of Fed speak this week, and this is an important time for our market right now, because when the Federal Reserve comes out and they’re making policy decisions, this is when the perma bears love to come out and play.

They talk only of the worst possible outcome from the Federal Reserve. They know that people are anxiously awaiting these events. So we might have seen some of that this morning as futures were higher. Then shortly after the open, our major indexes peaked for the day. That certainly could be a little bit of profit taking ahead of the uncertainty of the Fed speaking a whole lot this week. So key point here being continue to ignore the perma bears any type of sell off that we got, especially in news related to the Federal Reserve. We’re going to continue to use as a buying opportunity here. So regardless, we remain long and strong.

Now, at some point this year, the Fed will be cutting rates. Of course, like I just talked about, June is the expected timeframe right now, but we’re fine with waiting on them to do so here. We just don’t want any unexpected moves from the Fed. Nothing that isn’t telegraphed, which Jay Powell has really been a fairly unpredictable Fed chairman. Not exactly the quality you want in your Fed chairman, but as long as they continue to telegraph what they’re doing, we see no real big concerns. Everybody knows the Fed’s next move is to cut rates at some point. Now, if they threw a curveball and said they were going to continue raising rates, we’ll reassess from there, but we don’t think that that will be the case. And again, any pullback that we got on Fed fears, we will continue to use as buying opportunities here.

[00:04:16]:
As we’ve talked about a lot here on this podcast, something that we continue to see more of and Kip talked about on Friday, that there’s just so much liquidity in this market and yet that is yet to come into this market. We still have record levels of cash on the sidelines. Yes, money markets are earning a high amount, but eventually this money will look over and see, hey, man, I could have done how much in the s and P. I could have done how much in the Nasdaq versus my 5% money market account. That’s a game changer. Of course I’m going to move some money over there and they will be forced to buy at higher prices, only adding more fuel to the fire for us here, which is why we do want to be positioned now. But as we see it, we are still in the early innings of this new bull market. Remember, this is just year two of our bull market that began in October 2022.

Every bull market going back to 1950. I wish I had the stat right in front of me right now, but every bull market going back to 19, 5100 percent of the time, I believe it’s 14 instances of new bull markets. Every single one that lasted at least a year went on for gains in the second year as well, 100% of the time. So that’s where we are right now. And again, if we don’t see it as halfway through this bull market. This is still the early innings. Bull markets run on average for roughly four years. We think that and beyond is what kind of bull market we could be looking at here.

We equated it often to the 1995 to 2000 dot melt up, where the Nasdaq rallied 575%. Even within that time period, there are multiple corrections of 10% or more, including one bear market of 20%. Right. All of those that we see in this stage of the bull market, we’re going to continue to use for buying opportunities, especially now when you see this much money on the sidelines that’s yet to be put to work. All right, so exiting the central bank conversation now and on to some of the other events for this week, namely, again, the Nvidia annual developer conference began today, runs for the next three days, and they were expected in advance to unveil their new flagship chips designed specifically for AI. And we got an update here on it just after the close that the big one here for today in Nvidia’s announcements was that their Blackwell platform has arrived. And just reading some of the big headlines here, this chip platform is built to run enabling organizations everywhere to run real time, generative AI on large language models at up to 25 times less cost and energy consumption than the previous model. That’s a big difference.

[00:07:13]:
Big upgrade there. And just seeing some of the comments on the initial headlines of what this might do to companies that were using those old chips that might now be obsolete, almost like a planned obsolescence on a large scale here. If Nvidia is coming out with new chips that are the must haves, these companies are going to have to replace their previous models. So really it’s going to be interesting to see what happens from here and what that means for Nvidia’s bottom line, as well as the downstream effects of companies that built models on their previous platforms. If it’ll be an easy transition, we’ll wait and see. But a lot of people will be continuing to watch this this week. We will hear as well, because remember, Navidea kicked off the AI craze in their Q one 2023 earnings report, and their CEO Jensen Wang has some people call him a hype artist like they do to most people, but gosh, has this guy hit and exceeded expectations? The last earnings report from Q four of last year, a lot of people said that their claims of what they could do, the expectations, were way too high and he exceeded those right again this year, looking for some phenomenal expectations. We’ll see if he can continue to live up to that so far, that’s been nothing but true from Jason Wang so far.

So we’ll stay tuned. We’ll continue to report on that here. Certainly a lot of interesting developments here. All right. So next up, let’s take a look at our market action on the day today. Again, we finished with three out of our four major indexes higher on the day today. And what we like to see this morning, futures, Nasdaq leading the way. You want to see tech leading the way.

Tech and semis, semis did not perform quite as well as tech today, but still finished positive. And what we really like to see here has kind of been a theme for us for some time. Gib and I both touched this on this last week that in this most recent move higher, not all of the magnificent seven or eight have been participating in this rally. Apple below its 200 day moving average. Tesla has been crushed well below its 200 day moving average as well. Google briefly dipped below its 200 day moving average all while the market continued to head higher. That is a very bullish trend there for anybody out there who hasn’t believed all the hype, where everybody’s saying, oh, it’s only seven stocks taking this market higher. This is a market that is broadening here as we see it.

[00:10:00]:
As far as the SP goes, like I said, everybody’s saying it’s only seven of the 500 stocks moving higher. Only what are the other 493 stocks doing? Well, I was running some charts today, and a lot of the largest stocks of those 493 have very similar trends up and to the right. They’re making new highs. Maybe they pulled back a little bit from those highs, but far from their 52 week lows. That’s important right now because it’s not just the seven or eight magnificent seven stocks, not the names that you might expect. And so this rotational aspect is that these companies are now getting to overbought levels while the magnificent seven or eight are not at overbought levels. It allows for a rotation back into those names in this market that keeps our major indexes at or near all time highs. While a lot of action is taking place under the surface.

We’ve certainly seen it in the internals, which I’ll cover here in a little bit. But like we saw last week, where we had two big down days that actually had positive internals, that’s a pattern change that we haven’t seen yet in this bull market. Again, a factor that we look at here, that this market is broadening our structural bull market and generational bull market themes here completely remain in place. So the timing of these moves lower and the magnificent seven or eight names could not be better. And now that the other parts of the market are reaching overbought levels, now is a perfect time for them to come in and start earning their stripes as the generals. Right? So really good to see this rotational aspect taking place. Again. When you start to see headlines like we saw last week, I saw a few of them that were the not so magnificent seven.

Or is this the end of fang stocks? When you start to see headlines of that, you know that that’s not a top, just like you look for headlines, which we are starting to see a few of. How far can this bull run type of headlines from the Economist? Usually when they put out a big bullish piece on a topic that usually marks the top. So the inverse of that is also true, that when you’re calling for the best stocks in the world to bottom, that’s typically not. Or to start moving lower, that’s typically not when that move begins. All right, so I still haven’t covered our major indexes here. Again, three out of our four major indexes higher on the day. We did peak shortly after the open this morning. Again, likely some nervousness and anticipation of a lot of central bank meetings this week, but let’s jump into these here.

[00:12:47]:
The Nasdaq up zero point 82% on the day today, was up as much as one and a half percent or more earlier in the session. Now it’s 16,103. After that, we had the S and P 500 up six tenths of 1% to 5149, and the Dow Jones up two tenths of 1% to 38,790. And finally here, small caps were our laggard on the day today down seven tenths of 1% to 2024. Next up here, taking a look at our internals on the day. You would have liked to have seen better readings on a day like today, but not a bad day at all. We still had advancing sucks, beating out declining sucks, just slightly, but positive on the NYSE and just slightly negative on the Nasdaq. 52 week highs to lows still coming a positive NYSE over three and a half to one positive but negative on the Nasdaq, which no big red flags there just yet from the Nasdaq.

There’s a whole lot of names on there that probably aren’t really primetime players. Before, people talked a lot about the SPAC names that were in there and other types of issues as well with the Nasdaq internals. So no real big flags there from a negative day for the Nasdaq. But volume on the other hand will call our bright spot on the day today which did come in positive for both the NYSE and the Nasdaq. So again, not spectacular internals but going back to what I was saying earlier, twice last week we had days with big market down days and we had mixed deposit internals. Again, that’s a pattern change that we haven’t seen lately in this new bull market. So we really like to see that here again, another sign that this is a market that is broadening and wants to move a whole lot higher. Next up here, taking a look at our sectors on the day we finished with nine out of our eleven s and P 500 sectors higher on the day.

Earlier in the session, all eleven were higher. Fell a little bit into the close here as well. But communication services leading the way. Makes sense here as meta had a really good day today. Google had a really good day today as well. But 4.6% on Google today. Sorry, I lost my train of thought there. The communication services sector though, like 40% of the waiting is in those two stocks alone.

[00:15:22]:
So it makes sense that they had such a strong day today. And just before the close, Kit told me about this news that was previously unaware of here, that Apple is in talks with Google to let Google’s AI system, Gemini power not. I didn’t believe it when I heard it at first. Right. Google used to make phones Google and Apple’s competitiveness goes back a long way. And so now we’ve seen Google release in what all reviews have said, a very subpar AI engine and that’s what Apple’s going with. I thought Apple was working on their own AI division. Now they’re looking at using Google’s.

That is just a bizarre one. I certainly did not expect here from Apple, especially all the work they’ve done in manufacturing their own new chips as well, which I have been a fan of so far. I have both products with an m one and an m two chip. I thought they’ve functioned phenomenally. I would love to see them come out with their own AI product. Not this. Not this. This is not what you want to see from Apple in my opinion.

We’ll see how it just again, they’re in talks with Google to do this. So who knows if that will actually come to fruition or not. All right, back to our sectors here though. After communication services we had consumer staples, consumer discretionary, the tech sector, and one other sector I wanted to highlight here has been the energy sector, which has just been on a tear recently. Oil has been higher as well, but the energy sector just shy of an all time high here. Or just shy of a 52 week high. But that is a 52 week closing high that we did see from the energy sector today. So hey, not the favorite kind of new high, but we’ll take it.

[00:17:18]:
On the day our two laggards were healthcare and real estate. Finally here for today, our VRA commodity watch. Gold now pretty much flat on the day, up one 10th of 1% to 2163. After that, silver now lower on the day by half a percent to $25.24 an ounce. Copper nearly hitting a 52 week high here. Very close. That’s its highest level since April of last year. Was up a little bit more earlier in the session, now up zero point 16% to $4.13 a pound.

And oil, as I mentioned earlier, has been higher as well, making some moves above $80 a barrel. The energy sector as a whole, I’m not going to quote the price of oil right now, but we do remain bullish on the energy sector as a whole. Oil again, highest level since the beginning of November last year, now at $82.20 a barrel, up over 2% on the day to day right now. Finally for today, bitcoin was a little higher earlier in the session, down now on the day 1.1% to $67,542. A bitcoin taking a bit of a pause here again. We’re now roughly 30 days away from the having event that’s taking place in bitcoin, after which each time has headed significantly higher from there. If you haven’t heard our full story about the bitcoin, our full reports about the bitcoin story, take a look at some of Kip’s previous podcasts from last week. We’ve been covering it here in depth, and we do remain very bullish on bitcoin as well.

Folks, that is all that we have time for here today. Please be sure to subscribe to receive our VRA podcast every day at the market close. You can sign up at click the podcast link at the top. You can find our full transcripts and other items there as well. So thanks again for tuning in. Until next time, we’ll see you back here tomorrow for the close.

Podcast Newsletter

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Time Stamps

00:00 US Fed and Bank of England meetings outlook
05:48 Bull market compared to 1995-2000 dot-com boom.
07:13 Nvidia's new chips causing industry shake-up.
13:49 Internal market indicators show positive trend.
17:54 Oil reaches $82.20, bitcoin down 1.1%. Bullish.
19:00 Subscribe to VRA podcast for daily market updates.

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