In today's episode, Kip Herriage walks you through the SECs decision on the bitcoin spot ETFs, and what this means for your portfolio. We're also gearing up for the Consumer Price Index (CPI) report as we dissect the patterns of disinflation and where the Federal Reserve goes from here.Tune into today's podcast to see what the market is telling us from today's action.

Don’t look back because the market is closed. Good Wednesday afternoon, everyone. Kip Herriage here with the daily VRA investing podcast. Hope you had a good day today. After all the drama yesterday from the bitcoin muck up, which the SEC’s account, of course, got hacked. And the story is varied here and there, but it was a hack. Gary Gensler did not, of course, approve bitcoin yesterday, but it happened today. It happened mere moments ago.

It is now official. The SEC has given their blessing. After years and years of putting this off, they finally were forced to do it. And now there’s a whole slew of bitcoin spot etfs that will be trading. I believe that starts tomorrow. I think it was a foregone conclusion that this is going to happen. I think it’s a very good thing that it happened, and there are a lot of folks out there. And look, we’ve had this open conversation with you over the years about this.

[00:01:05]:
We were early believers in bitcoin, to a point obviously between, for me, so I can’t speak for Tyler, but for me, between my positions, gold and silver versus bitcoin, I was never, ever going to be okay. I’m going to put my life savings in bitcoin. I also don’t put my life savings in banks. Okay. I don’t believe in that. So I take a different approach here. I like to invest in assets, not liabilities and currency. Fiat currency is a liability, folks, if you’re keeping your money in a bank, although money market accounts paying 5% certainly helps for years, of course, that wasn’t the case, but otherwise, you’ve got, every year your money is being diluted, it’s being printed into oblivion.

Of course, the old fact that everyone knows now, since the Fed was created in 1913, the US dollars lost 97 98% of its value. That’s why you don’t put your money into the mattress. That’s why you don’t leave it in banks earning nothing. So of those options we have available for liquidity, gold has always made more sense to me, and it’s been one of the best investments in my career. And a lot of people say, well, gold hasn’t really done well. It hasn’t anything. Let’s see. I started buying it, $350 an ounce at an all time high, essentially today, just slightly below it, at just over $2,000 an ounce.

[00:02:28]:
And it’s fulfilled its role. It’s been a safe haven, a true safe haven, and it’s more than kept up with inflation. So that’s what gold’s role is supposed to be. But as far as bitcoin is concerned, we were early believers. We invested initially at 600, recommended at 2000 to our VRA subscribers and members, and then sold at 58,000. Now back in. Back in at 28,800. And last trade now is 45,677.

Is down on the news right now. Down $950 at 45,677. A little bit of buy the room or sell the news. This is completely expected. I have no idea what it’s going to do in the next one, two, three days. However, over the longer term, I think I have a pretty good idea what it’s going to do. As we’ve covered here ad nauseam. Bitcoin, there is no better, in my opinion, not that I’m aware of.

[00:03:26]:
There’s no better supply demand story for an investable asset than bitcoin. It simply doesn’t exist because the limited number of bitcoin is going to be in existence. 21 million. Because the next having takes place, I believe it’s 98, 99 days away. Late March, early mid April. Of course, it varies here and there as they mine new bitcoin. But what that’s going to do, simply put, is make it more difficult, more expensive, more costly, more timely to mine additional bitcoin. And so all of that adds to the, again, the supply demand story.

More difficult to mine it, and the fact that the supply is simply not there because people aren’t selling. Depending on who you listen to, between 70, 80%, maybe more than 80% of people that own bitcoin don’t trade it. They hold it pretty extraordinary, right? It’s almost like homeowners. How often do you sell a home? Not that often. How often do people sell bitcoin? Not that often. And I think that’s going to continue to be the case. That’s what makes it such an extraordinary supply demand story, because you can only make 21 million of them. And so that’s why, as we’ve always said, diversification is incredibly important.

[00:04:50]:
And that’s what you want to do. You want to be diversified, have a position in bitcoin. That percentage position is up to you, depending on your personal risk reward set up. But we absolutely believe it should be owned, should be part of every portfolio, at least to some degree. But again, gold to silver, larger, actually, probably silver, I would say, matches my personal bitcoin position. My exposure to silver is commensurate with bitcoin gold. Totally different story. That’s the way I personally approach it.

I know a lot of people that have everything in bitcoin, and they’ve made a fortune doing it. So they’re smarter than me. What can I say? But again, longer term, we think it’s going much higher. $100,000 this year has been our target. 100,000 plus, actually. And I kind of think after this short term shakeout that we’re witnessing here, again, it hit before the SEC got hacked. And the fake announcement yesterday that was approved, bitcoin traded up to just under 48,000. And then it really did some damage to it, credibility wise.

[00:05:57]:
Of course, SEC doesn’t have a lot of credibility to begin with on this. I agree completely with Mark Cuban. And of course, Elon Musk don’t agree with Mark Cuban on a lot of things anymore. Used to. That’s changed. He’s changed. I haven’t. He’s changed.

But Elon Musk, of course, has had his own battles with the SEC, and it really is a clown show over there. And what happened yesterday, especially because it was just last October, and I shared this with our folks this morning, it was just last October that the preacher, Gary Gensler, the head of the SEC, in a very I’m better than you kind of a statement, started putting out these reminders of don’t be stupid, protect your personal identity. Right. Against cybersecurity fraud and constantly warning people about the dangers and fraud that exist in bitcoin and all cryptocurrencies. Right. And so maybe he should take a little bit of his own medicine here to see his account hacked. The way it was is really interesting. My favorite quote was from Cameron Weinklevoss, one of the weakelvals twins.

[00:07:07]:
Put out a tweet yesterday, said it would be great if the SEC would stop manipulating the bitcoin market because that’s exactly what took place yesterday. He did not use two factor, was it called multi factor authentication? Is what he didn’t use. Kind of amazing that the guy that runs the SEC doesn’t take every precaution possible for his Twitter or x account or social media accounts. Find that interesting? Maybe a bit of a snapshot into what this guy’s really all about and what he really takes seriously versus words versus actions. Right. Okay, let’s start with the market day. We got the big CPI report coming tomorrow. Going to cover that a bit with you here, because, look, Tyler covered this in detail yesterday.

We don’t get hung up on month to month reports, but it’s the trend and the pattern that’s important. And of course, we have a clear pattern of disinflation still a lot of people fighting us on that. I don’t really understand that, because disinflation is a fairly simple definition. Simply means that prices are declining versus where they were the previous month, previous year. And obviously that’s happening. It doesn’t mean we still don’t have inflation. We still have inflation. We just had less of it.

[00:08:23]:
But we now think, as we’ve been telling you here, we’re getting very near to the point we think it’ll be tomorrow, where we see deflation begin to kick in. We’ll see what the report reads. I’ll cover that more in just a moment, as well. And Tyler just told me this as well. The put call ratio today for the markets SB of hundred is very near all time closing high. Only 13 points away from an all time closing high in the SP 500. Up again, good gains today in the market. But Tyler just told me that the put call ratio today closed at a 1.28.

That is extremely elevated. You don’t see that often. The average, I believe, is right about a point 70. The market normally goes up, but for the put should to be this high on a day where the market’s up. That’s a buy signal, folks. You have too many people buying puts and the market’s good. That’s a buy signal. Normally you see just the opposite of days like this, and that’s usually reflected in the trend, the short term trading index.

[00:09:29]:
Yet here it is. The trend today hit a high of 1.69, closed it at 1.44. Again, anything above a one in the trend, the arms index, as they call it, another buy signal for equity. So interesting. Here we have a double top that’s in the SP 500. The high, the closing high was two years ago, pretty much to the day. I think you have technicians that are saying, some traders saying, okay, we’re going to prevent it, do our best to can trade off this, and let’s short the market. Let’s buy some puts, because maybe we’re going to have a triple top instead.

Maybe we’re going to have another sell off as it hits this next resistance level, which, of course, is what a double top is. So anyway, again, just had to point that out because it’s pretty uncommon to see a put call ratio of this high. And the market’s up big. Dow Jones today, we didn’t finish to the highs today. Very close to it, though. Dow Jones up 170 points. That’s four tenths of 1%. SB 500 up six tenths to 1%.

Rust 2000 up one 10th. To 1%, was down all day, finished higher on the day, low small caps here. Nasdaq was our leader on the day, up seven tenths to 1%. And semis did finish up one 10th to 1%. But it’s this pattern we’re seeing a repeating pattern once again, lower opens, strong closes. Remember, opens are for amateurs. This is just a generalized statement, but opens are for amateurs. The closes are for professionals.

Smart money hour was strong again today. Again, we’re seeing this. This is what you want to see. Pretty much textbook bull market action. Remember, at the end of the year, we’re at extreme overbought on steroids, and the Bureau of Investing system was our most overbought designation. Of course, the market went parabolic, stayed that way for a while. Markets that hit overbought levels like that and stay overbought, it’s hard to find anything more bullish than that. But finally, we did have that shakeout.

[00:11:25]:
And again, we’ve now had a couple of negatives from a analytic point of view. We had the Santa Claus rally that failed. We had the first five trading days that failed. Again, they both came in negative. If you’re bullish, that’s not what you want to see. So the only thing I would say that bothers me about that, and it’s something you have to acknowledge, because we talked about it for the entirety of the last year, really? From the bear market lows of October 13, 2022. Last year was the single best year of my career for the analytics. Right.

Seasonality held up better than any point when the market was supposed to do something based on history. It did it. And so, yeah, maybe it will matter. We’ll see. But that’s why we’ll continue to follow the things that we follow, not just seasonality, but price action. Of course, what’s happening under the hood, the things we talk about here with you, the eternals, all of the, of course, the semis. Right, leading. That’s our biggie.

[00:12:26]:
There is nothing bigger than the semis leading, because they do that in both directions. It’s just coming across the wire. Now, the SEC, yes, they approved. We knew that. But tomorrow, trading begins for spot bitcoin etfs, and you will see. So, again, we are buying the pullback. That’s the key point in bitcoin. So, again, we are very bullish, as you know.

And we’re going to remain that way throughout this year, even with seasonality pointing to some potential issues for the year. But until the other things change that we’re looking at, it’s not a concern of ours. I also tweeted this out today. So I may sound like a conspiracy theorist when I say this, but again, I’ve also covered, often for a long time, I like being a conspiracy theorist. You know why? I like being right. I like being right. Hey, look, if you’re like me, we’re really not conspiracy theorists. We’re fact theorists, and they just happen to be.

The CIA labeled this conspiracy theorist. That’s their label. The CIA came up with many, many years ago. Decades ago with the tinfoil. It’s the tinfoil hat. People don’t believe them. That’s what the media is globbed onto. Right.

[00:13:42]:
But we actually do our research. We do our due diligence. We know fact versus fiction. We’re pretty good at that, aren’t we? As human beings, if you got a bit of common sense, and maybe if you’re a little bit older, like me, you start to realize, okay, yeah, when all these guys agree on something, meaning the media and the government, when they’re all spouting the same line, you don’t even have to hesitate. That is a lie. Right? That’s the lie. That’s the conspiracy theory, and it’s helped us get things right. And that’s why being a contrarian and a conspiracy theorist, as I’ve somewhat joked about, I believe that if you are an informed conspiracy theorist and a smart money contrarian, you have a superpower.

And if you don’t use that superpower, shame on you. This is how we beat the market 17 out of 20 years and started the VRA. I was taught by some really smart mentors. This was the way they looked at it. Ted Parsons at Underwood New house, Michael Metz at Oppenheimer. This is the way I was taught to look at these things. They would read the Wall Street. Ted would read the Wall Street Journal, and I hear him laughing in his office, and he goes, they expect us to believe this nonsense, right? He’d actually say bullshit, and then he’d walk around the office all day pointing out all the lies we’re being told.

So, yeah, I was indoctrinated at a young age in the business. I became a broker at 23, but I was indoctrinated the right way, not with the stuff that they try to teach us in school. And certainly the government in mainstream media tries to shove down our throats. Look, good day. Today we see everything happening we want to see happening again with semis, leading tech, leading. Tyler also just told me a number of the magnificent seven, the big mega cap, tech stocks hit a new 52 week high today again, SPF hundred, just mere points away from a closing all time high, which will mean it’s going to join the Dow Jones. Dow Jones is the only major index that’s hit it so far. Nasdaq hasn’t done it.

[00:15:41]:
Of course, Russ 2000 hasn’t done it. Still, what, 15, 16% away from an all time high? And it’s one more time. To my mentor, Ted Parsons. Bull markets don’t start until you hit all time highs. That’s the way he looked at it. And I think it makes a pretty good point, does it not? All right. If you’re only going to rally back to the old highs and then go back into another bear market, I don’t think that’s much of a bull market. While I’m on the topic, again, for our newer listeners here, I think this is a very important point we had beginning in 2018 when the Federal Reserve hiked rates eight straight times.

Of course, Trump was president and it was get Trump is what it was. They did not like Trump at the SEC, nor did, of course, the Federal Reserve. I’m sorry, the Federal Reserve, or really the rest of the government, the deep state. And so they targeted Trump and they hiked rates when they shouldn’t have. They crashed the market, literally crashed the market in the fourth quarter. It was our worst fourth quarter in Christmas since the Great Depression. From that point forward, we had three bear markets in five years, absolutely brutal bear markets, where the average stock lost between 40% to 60% of its value in each of the bear markets in a compressed time, three and five years, unprecedented. Never happened.

[00:17:01]:
I’m not sure it ever will again. It was that unbelievable. But that’s what we’ve lived through. That’s why when you talk to people and they go, no, man, what do you mean? Am I heavy in the markets? Are you crazy? Did you not live through what I’ve just lived through? We’re all damaged. Good. To a certain degree, we’ve been bitten by the same snake three times in five years. Why would we go back in that area of that cave? I fault no one, and I’ve written this in every book. I think the same quote, I would fault no one for wanting nothing to do with the stock market.

I don’t fault you. I understand that. That’s not my view. But this is what I do for a living. But for the average person to have to, and again, what happens again, the average person, because the average person doesn’t buy low and sell high. That’s not human nature. The average person, human nature wise, is to buy at the top because everybody else is buying and it feels great. That’s when everybody wants to buy.

[00:18:00]:
That’s not a smart money play. I think this is a smart money group I’m speaking with here. I know you guys and girls all get it. So that’s not the approach we want to use. Which, by the way, if you notice, we just hit extreme greed on several of our investor sentiment surveys. So again, it wasn’t a surprise we had a shakeout. Those are now reads are now starting to come off. But it’s this combination of this fear and this anxiety about the markets and about who’s president and the media with this psyop of negativity.

I, again, fault no one for not being in the markets, but for contrarians, for those of us that are bullish and we are hyper bullish, as you know, this is a phenomenal setup. It could hardly be better. You want everybody out of the market. I think that’s the design. I think that’s the design. You want people out of the market. You want people scared to death about the economy, about who’s president, about your investments, your price. That’s how, as a smart money investor, that’s how you make money, especially if you have the power to do it, which, of course, the media does.

[00:19:11]:
I got off on a tangent there. I’m not sure we were talking about before, but let’s get to, I want to cover again the CPI data tomorrow, just briefly, because we rarely, matter of fact, I don’t know that we probably once a year we’ll say, yeah, we’ll make a prediction about any month to month figure. And we’ve done that here. Tyler covered it yesterday. I’ll just kind of reiterate, because I wrote it up this morning, I think tomorrow’s CPI is going to be, I think, you know, we’ve had, again, a trend of disinflation, but something’s about to happen here. Another shift is going to happen. Finally, mainstream economists have come around and they’re talking about disinflation. But I think the shift that’s about to happen here is that deflation is going to become one of the new buzzwords.

Now, deflation can be dangerous. We rarely have it. You have it during depressions. We don’t want deflation. That’s not a good sign for an economy. But with what we’ve just come out of, with the Rona and the pandemic and the $8 trillion in money printing from Trump alone, and that’s of course, all that money printing. That is what caused inflation. Nothing else caused it.

[00:20:19]:
Supply chain issues had very little to do with it. It was all money printing because of course, that is what fiat currency is. Money printing is inflation. There is no other definition for it, period. However, this deflation that we’re talking about here, and again, I think we’re going to see it tomorrow. We have a lot of evidence already building, as we’ve talked with you about here for some time. Thanks again to the great work from our favorite economist, Ed Hyman at Evercore. Ed Hyman has been doing this over 50 years, been doing longer than I have, and he’s a phenomenal economist, although he has been somewhat bearish, which again, he doesn’t make market predictions.

He just tells us what the economy is doing. But months ago, I think it was mid year. Last year, Hyman started talking about China, the fact that they’re exporting their deflation. And that’s a very powerful statement to make because when China’s booming, there’s something called the China impulse, not talked about much anymore, but the China impulse, when China’s economy is doing well, it’s not doing well right now, but when it’s doing well, they export that growth and that inflation to the world to a certain degree. But now they’re exporting deflation because their economy is weak and they’re doing it broadly. So we’ve already seen that shown up in Nike’s earnings report from last week. Costco just commented on this and said that they’re seeing deflation and many goods prices are falling by 20% to 30%. Costco, I’ve not seen anything similar from the other big retailers, Walmart targets, Amazon, et cetera.

[00:22:04]:
But again, it was interesting to see Costco make that statement. But if you’ve been shopping, you know prices are starting to fall on some items. But look at what’s happening again from a broader point of view. Energy prices definitely right, definitely not rising. They’re falling. Oil prices are falling, gas prices falling. Look what’s happening. If you’re following what’s happening with rent and shelter costs, those are declining, we think declining sharply and will continue to a lot of multifamily housing, home construction, apartments and the like being built all over the country.

Matter of fact, they hit an all time record about six months ago, hit an all time high for multifamily construction. And that, of course, bringing down costs and used car prices for some reason also make a big part of it. I really didn’t even know that until a couple of years ago. But core CPI used car prices actually play a fairly major role. Used car prices are plummeting. So when the China impulse is weak, as it is now, and we have clear deflation, disinflation happening now turning into deflation, it’s also shown up, by the way, in the ISM PMI surveys, the purchasing manager index surveys. Manufacturing has been in contraction. Services have been in contraction for months.

Again, this makes sense of what we’re seeing elsewhere. So the China impulse has stalled out, and our call is that tomorrow’s CPI is going to reflect that and it will be a long running issue that clearly shows deflation has arrived. While it sounds negative, I do not believe it’s going to have any negative consequences of any size or scope globally or in the US. However, it will be very bullish for bonds. Yields will continue to fall. Plummet is probably the better word that they have been doing from the 5% highs of late last year, and that the single group that’s going to benefit most from this will continue to be the groups that have been winning that semis intact. So that’s the playbook we’re using. We’ve been using it from the October 13 lows of 2022.

[00:24:16]:
It’s worked. We believe in not fixing something if it ain’t broken. And we keep using something as long as it works, that is working, we will keep using it. But the final point on China, China has yet to really turn on their money printing spigot. They have so many tools at their disposal they have not used yet. So I really do doubt that this deflation is going to turn into something serious. But it does mean that gravity has absolutely returned for interest rates. Rates will continue to fall.

We’ve covered this ad nauseam here, and we think much, much lower. Two and a half percent is my target on the ten year. With two years from now, it’s just over 4% now. So I think we’re going to see a steady diet of lower rates, and that is very bullish for the markets. But again, if you think that the markets aren’t going to rally into the election, if I sound like a conspiracy theorist with this state controlling everything, remember, the federal government is not real big on republicans. They love the uniparty. But if you’re a Republican that believes in smaller government and less money printing and you believe in your constitutional rights, you’re not really going to be friend of the state. The uni party, of course, they’re part of the state.

[00:25:44]:
So how do you get this walking tombstone reelected as president. How about rocketing the markets higher? Rocketing the economy higher? So I think, again, I don’t think I’m wearing a tinfoil hat and being a conspiracy theorist when I tell you that I expect the markets to have a very good year this year to help get Joe Biden reelected. That’s been our position for some time. As far as rate cuts, yeah, they’re coming. I don’t think we’re going to have, what is the Fed futures. I saw six rate cuts expected this year. I don’t believe that’s going to happen. I think two to four, because again, the economy is stronger, still stronger than people believe it is.

Atlanta Fed estimate now for a fourth quarter GDP is 2.2%. I don’t know where that number is going to come in, but I do believe the economy will remain strong. So much of this economy is simply not trackable. The gig economy, so many people have found a way to make money, and the government has not found a way to track that yet. And so when people follow the official government data and say, wait, but how are we doing all this? Aren’t you seeing the releases that come out about the government? Even though we had 5% GDP growth in the third quarter, it’s just not showing up. They haven’t found a way to track it yet. But I’m telling you, folks, people have money. People are making money.

[00:27:17]:
We’ve covered this ad nauseam with you. The US consumer is in the only word for it is extraordinary shape. And I know that’s going to sound like heresy to some people because you’re not hearing it in many other places. But again, we don’t need to go through the list again, do we? The economy is rock solid and we think it will continue to be, which is why I only think we’re going to have two to three rate cuts next year, certainly before the election, but even that will be a positive. I think the surprise is going to be quantitative tightening is coming to an end. That’s something very not many people are talking about right now. Remember, they’ve been doing quantitative tightening now for some time. I think the Fed has sold roughly 1.8, I want to say one point five to one point eight trillion dollars of the bonds that they had purchased through quantitative easing programs over the years.

But now they’re selling those bonds are called quantitative tightening. I think that’s going to be one of the first things that comes to an end. I would expect that to happen as soon as March. That will be hugely bullish. Hugely bullish for both stocks and bonds. A lot of reasons to be bullish here, folks. A lot of reasons to be bullish. All right, what else today? Let’s go ahead and take a look under the hood today.

[00:28:38]:
Close that out. Let’s take a look first at the internals. Quick refresh. Pretty flat day today. With the market being up as nicely as it was. Internals were fairly flat today. NYSE and Nasdaq as far as advanced, decline slightly. They cross each other out.

NYSE, slightly positive. Nasdaq, slightly negative. Volume essentially flat, slightly negative only. Again, not a lot happening. Everybody’s watching the CPI tomorrow. We did have, what is this? Roughly 100 more new 52 week highs and 52 week lows. But on the day, we have to say this was just a mixed report under the hood. Looking at the internals intersector watch today, we had quick refresh.

[00:29:37]:
Seven sectors finished higher, four finished lower, led by to the upside, communication services and technology both up just better than 1% to the downside. Energy down 1%. Not much happening elsewhere. And our commodity watch was also, again, commodities very quiet today. Gold right now down $3 an ounce at 2029, holding above $2,000 an ounce. That’s important. That’s a new support level. As gold, of course, hit an all time high about a month and a half ago, gold is ready to have a phenomenal year.

Our target, 2400 minimum up to more than $3,000 an ounce this year for gold. Love the miners, which have not been doing anything of late. For those that follow our work here, both for the VRA and for parabolic, we’ve been focused on this new ascending channel in GDX, the miner ETF, which has been in place now since late October, I believe it is. And it’s a well defined ascending channel. These are highly tradable. There are a lot of people I know that just trade these channels because that’s how high probability they are. And right now, GDX is at the lower end of that rising and ascending bullish channel, which should mean it’s a buy here again, central banks all over the world are buying record amounts of gold. That was the case last year.

[00:31:01]:
I think it’ll be even more the case this year. And so it’s a great setup. It’s a great macro setup for precious metals and miners. We just need the miners to get going. They are not doing that. Volume remains remarkably low. The market cap of this for all the miners is so unbelievably small and tiny. When this group gets going.

It should be a house of fire. And we are along this group. Silver down one penny, announced today at 23. Seven copper was up two cent a pound at 378 a pound. Crude oil down ninety two cents a barrel. Again, disinflation, deflation happening there, and energy prices, net gases. Twelve crude oil today, West Texas Intermediate, 71 32 a barrel. And finally, of the day, as we covered earlier, bitcoin, 45,677.

All right, folks, that’s down 950. All right, folks, hope you had a great day and even better night. And we’ll see you back here again tomorrow after the close.