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VRA Investing Podcast: Dow Jones 40K, And This Bull Market Is Just Beginning – Kip Herriage – May 16, 2024

In today's episode, Kip dives into an action-packed Thursday in the stock market. Kip breaks down. Kip also breaks down the staggering volume on the Nasdaq, fueled by penny stocks and meme stocks, while also shedding light on the ...

Posted On May 16, 2024Episode 1386
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About This Episode

In today's episode, Kip dives into an action-packed Thursday in the stock market. Kip breaks down. Kip also breaks down the staggering volume on the Nasdaq, fueled by penny stocks and meme stocks, while also shedding light on the broader picture of the market. He also covers the latest in the cryptocurrency and technology markets. Tune into today's VRA Podcast to learn more!

Transcript

Don’t look back because the market is closed. Good Thursday afternoon, everyone. Kip Herriage here with the daily VRA investing podcast.

Hope you had a good day today. Interesting day in the markets today because it was a little kind of an inside action today, although we did have 12 billion shares traded on Nasdaq, which is the most active date is, I believed, out today on Twitter, most active days since February 2021. 2021 was a great year to be an investor, of course. And that’s when the stocks were all getting hot and a lot of liquidity. That’s where this volume came from.

Apparently four penny stocks each traded a billion shares plus, and that’s where the vast majority of the volume came from. But we are back on that market. Of course, meme stocks had been hot for a couple days and now they’re back, headed back lower again. But again, I think more than anything, as Tyler and I just talked about, it’s things like this that are indicative of the timeframe. We’re in the era that we’re in the roaring 2020s. Get ready for this, okay? Get ready for a lot more of this. As you know, if you’ve been listening to us, we’re going to get to a point, probably next year is when I think this really picks up speed. When the IPO market starts coming back and the merger and acquisition market starts coming back, you’re going to see a lot of strange things happen, like stocks that are going parabolic on a regular basis.

[00:01:27]:
Just as a reminder, because again, we’ve yet to see anything like this. So when people say, and this market sure is, we’ve had a heck of a run too far, too fast, is it time for this to end or is it time for a massive shakeout? We’ve yet to even get to that stage. There were back to back years when the.com melt up, back to back years where more than 100 companies went public each year that doubled on their first day of trading, and many, many of those went up three times on the first day of trading. Obviously, our IPO market is still pretty dead. So not only gotten back to hot IPO market, we haven’t gotten back to hot ipos happening at all. And the same thing, of course, is true for mergers and acquisitions. But I think we’re going to see a lot more of this against liquidity that’s out there is driving everything. And when I talk about this, the first thing really that comes to mind for me is what’s happening in the whole cryptocurrency space.

[00:02:30]:
Because when you add up not just the valuation of all the cryptos out there, which is, what is that now? Probably three $3 trillion plus bitcoin is what now, one and a half trillion by itself. But you’ve got to also add up all the other companies that work in this space, in the crypto space in support of the blockchain tokenization. All of these, all of this is under this one banner of cryptocurrency. Add all. That’s up. How much higher would stocks be today if the cryptocurrency space did not exist? So I think, again, it’s indicative of the global liquidity that’s out there, the strength of the global economy, things that just aren’t showing up in the official data, but we’re seeing elsewhere seeing signs of. So again, I think this is going to be an extraordinary run. We’ve just, we’re just beginning to scratch the surface of it.

[00:03:26]:
And by staying locked in, not only are we going to make a lot of money, it’s going to be a lot of fun. It is going to be a lot of fun. 95 to 2000 for me was a blur because when it started, we were like, what is this? What is.com dot? We just started using email, essentially, and now we have online shopping. They were like, oh, that sounds pretty cool. But of course, we had no idea what it was going to grow into. We didn’t know about Wi Fi, didn’t know about any of this. Sales and communication just starting, really. So it was all new to us, but it was a blur.

And making money from it just seemed like, how do you do that? Then when these tech stocks started getting really hot, okay, so the play is tech and it’s new tech and it’s short term in nature, unless you find, get the big companies and they’re the ones that keep running. So some trends did develop, but it was so new to us again that it was just kind of a bizarre experience. Well, this is my second shot. A lot of us, this is our second shot@dot.com. Again. And if you followed us, you know that our view is it’s going to be much longer lasting, much, much deeper, broader, bigger in scale, because now we’re not dealing with startup companies and hot ipos that we’ve never heard of these companies before. And you’re really kind of just rolling the dice and trying to get lucky. These are companies now that are the real companies that are trading it with 1 trillion, $2 trillion market caps or minimum, you know, billion to 500 billion.

[00:04:58]:
This didn’t even exist in 95 to 2000. And now these legitimate companies, real revenue, real earnings, real staying power. So those companies from.com have grown up and the ones that didn’t even exist then have now gone public, turned into real companies. And so again, on the backdrop, with all the money that’s been put into the economy, look at the trillions, right, that the government threw in from the pandemic. Money supply grew by 40% in, what, a year and a half? Again, things that had never happened before. That money is also sloshing around. We still have a lot of stimulus money that’s not yet been approved but not yet inserted into the economy. So again, I think it’s a good reason why yesterday we saw all time highs across the board, Dow Jones S 500 and Nasdaq all time high across the board.

[00:05:53]:
Today for the first time. I’m sure you’ve seen this by now, Dow Jones hit 40,000 for the first time. That’s a big number, but it’s nothing like the numbers that are coming. We’re going to 100,000. The Dow, this is that bull market. We wrote about it. We relate how it’s going to happen through earnings growth, through revenue growth, through the growth of the economy. Again, this is the roaring 2020 where things you can’t, that you think couldn’t happen are going to happen.

And so, yeah, Dow Jones 100,000, Nasdaq 40,000. It’s not a new call from us. That’s been our call from the book in the third quarter of October of 2022 that this was going to happen, and I see no reason to change it. We’re probably going to want to be on the low side as far as exactly when that happens. Is it 20 302-031-2032 the timing, of course, is the hard thing to figure out. But I think the real key is this is probably going to go on much longer than this is going to be a long term economic expansion. We’re seeing the proof of that right now, all these hallmarks that show that we’re at the birth of an economic expansion, not the end. Consumers haven’t started leveraging up yet.

[00:07:04]:
Neither have corporations. Again, corporate debt to market caps trading at 50 year lows. Companies don’t need debt. They use it because it’s a part of the balance sheet. There’s a reason to have debt and you want to have your credit facilities there and available should you need them. But they’re just not being used because the economy and individual company and consumers, again, a third of Americans own their home outright 67% of Americans own at least one home. At least one home. Again, these are all, that’s not a record in of itself.

That rate has been higher, although it sounds high, doesn’t it? You think, you wouldn’t think 67% of adult Americans own a home, but that’s the reality. But then all the other things that point to the strength of the consumer credit scores, all time high. Consumer net worth, all time high. Net equity in homes, all time high. Of course, home prices, all time high. I can keep going. There’s a lot of proof to this, but, yeah, inflation certainly is taking a toll on people. So is wage growth, you know, better than 4%.

[00:08:07]:
So there’s never a perfect economy, never a perfect setup. But this is as booming, this is as boom time as you’re going to get. And again, I think it’s just starting. If rates are going to stay higher for longer, that’s the reason, because the economy is just that strong. A reminder, Kathie Wood’s team, you may not love her stock picking ability because it does leave something to be desired. I think they’d even admit that. But their macro research at ArK has really been very, very good. Again, they were early on Tesla.

We beat them on Tesla a little bit, but they’re early on Tesla, and they’ve had some amazing calls and sneakers, too. The macro part is what they’ve gotten right. And I think that’s what’s really going to sustain this economy. When you think what their research shows that we’re going through a period of 50 to 20, maybe 30 years of GDP growth, of six to 8%, they actually think it may be higher than that. So we’re at two and change right now. And again, the innovation revolution, the new industrial revolution, the fourth one, all of this and the fact that we’re probably going to be living through a bit of a science fiction movie in years coming because of so much technological change that’s taking place, we’re seeing some of it right now, but the things that I think are coming across so many different industries are really going to be so revolutionary that GDP growth is going to soar, and that’s going to be fantastic for disinflation because that’s the one thing that innovation does, is it brings down price, brings down our cost. And just the takeaway for me, and I guess it’s because I’ve always been a glasses half bull person. I am an optimist.

[00:09:51]:
And I think betting on America has always been a really good bet. And I think, I do think our best days are still ahead of us. I think that’s always been the case. There’s just so much negativity. We call this a silent negativity is out there. People think that things are so horrible. Like, what are you talking about? Stop. Turn off your tv and stop listening to the people you’re listening to because, yeah, we’ve got problems.

I’m not saying things are perfect. They’re not. Look who’s present. Look at open borders. Look, we can make the case that there are parts of what’s happening now that are horrible, but, you know, there’s never been a better time to be alive. From a prosperity point of view, the wealth creation is taking place. All you have to have is a work ethic and a bit of a brain, and if you’re willing to put the work in, you’re going to become wealthy. And that’s never really been the case before.

The number of options that are available to us to build wealth and prosperity, it is a great time to be alive. I think the future does look great. Get this jackass out of office here next, later this year. You believe that? What is it, six months away? Now get this guy to office and just let’s get back to having a normal setup in this country. A true America first policy. Of course, for that, we are very much in Donald Trump’s corner. All right, folks, talk at the markets here. Dow Jones today again hit 40,000 this morning.

[00:11:11]:
And then it was like, okay, we touched it. Now let’s take a little breather again. Look at our, if you look at Stochastics, one of our, it is our favorite short term momentum oscillator. I mean, we’re an extremely robot on stochastics on every index. So, you know, it’s not at all surprising. We get a little bit of breather. But Tyler and I just talked about this, especially in bull markets like this, it doesn’t take more than about a day or two of some sideways action, which is really what we got today for all of a sudden, stochastics, because it moves so fast, you can go from 96, 98% over bottom stochastics back to 80% in a couple, three days. And yet, and the great thing about this market is that we’re so far away from being extremely robot on the other oscillators that we follow MACD RSI and money flow, they are ramping up a bit.

But again, they have not hit extreme overbought. So we’re not really. It’s days like this that actually are a bull’s best friend. Little sideways action. A little, little. Some inside, inside action here is actually very, very healthy for the market. I think that’s what was happening here. Now Jones.

[00:12:21]:
They did 38 points. That’s 10th, 1%. SVf 100 down two tenths, 1%. Nasdaq. That just almost two tenths. And small caps did give up seven tenths, 1%. Today. They have been pretty hot.

The VIX today back down to 12.4. People have forgotten this, but I remember we had years where the Vix was below ten and a half, actually spend a lot of time below ten. Again, I think that’s a feature we could probably get used to. The ten year yield did tick up a little bit today, 4.37. But as we covered this morning last October, we had an outside day in the ten year at 5%, and that marked the peak since then. And Tyler, Tyler covered this. Tyler covers this often his podcast. It’s such an important point because of the succession with rates, we’ve had nothing but lower highs.

[00:13:12]:
We had lower, high 4.7%. Now we’re ticking lower again on the ten year down to a 4.37%. And we’ve broken down through a channel that’s been in place really since the beginning of the year. That’s been a great trading range channel for bond, for the ten year and other bond maturities. And we’ve broken down from that now, which should signal the next sharp move. Lower in rates, we think back below, probably back below 4% into the election. And I know that seemed like maybe an aggressive call. We were just there.

We were just there at the end of the year and it really into February, 10 year yields were below 4% until we got this latest inflation scare. So, no, I don’t think it’d be a big deal to get back below 4%. It’s rocket fuel for the markets. It’s rocket fuel for precious metals and miners. And not that they need it because there’s so much liquidity there anyway, but we think it is likely. And the other thing I think that we’re going to see is that, again, it really is our base case, that the innovation revolution is going to bring inflation down, continue to, that’ll bring race down with it as well. And the wild card, a very friendly fed, into the November elections, would that surprise anybody? They know their guy, team biden, is struggling, and so if they have to goose the markets, they darn, he rigged an election. Who’s to say? The feds above goosing the markets and the economy into November.

[00:14:48]:
So I think it’s just another, it’s just another feather in our bull market cap, frankly, and another reason to think that you just got to get buying dips. And I just think from this point forward, we’ve already had our big shakeout. Now what? Nasdaq fell 10%, SF 100 fell 7%. That’s probably going to be it until the, at least through August. This is a very, the timeframe we’re in now through the end of August, seasonality wise in a presidential election year, is extraordinarily bullish. And then we make a little bit of anxiety from August through November. But this time frame now, it is a time to be long and strong. The market again, specifically being led by semis, intact commodities, coppers, who are tapping their precious metals, miners, of course, small caps in bitcoin.

[00:15:40]:
Those are the areas that were focused in here. And now we have the benefit of front running is taking place. Front running of don’t fight the tape, don’t fight the Fed. The tape has been fantastic for a long time, of course, for the October 2022 lows. But now it’s the Fed that’s about to be our friend with rate cuts. And so we think that’s coming just after the bank of England and the ECB cut rates likely going to start next month. And the Fed’s going to follow not far after because they’ve had coordinated interest rate policy in central banks from the birth of QE. It’s been very tight.

One has followed the other. And so we don’t, I’ll be shocked if anything different happens here. So again, don’t fight the Fed. Don’t fight the tape. Front running of that old adage is taking place right now. We think it’s going to continue to happen. Let’s take a look under the hood today. Internals were not good today.

Not bad either. You know, it’s actually kind of a mixed bag. But, you know, again, you hate to see, after the big day yesterday, you hate to see a negative day today. And so I’ll just tell you, it was straight up, barely negative, really. But we did have that big volume day on Nasdaq, 84% upside volume, by the way. So that’s certainly not negative. But Penny stocks get the most of the most of the biggest reasons that happen. We also have, by the way, new 50 highs.

[00:16:56]:
Lows came in very good, 387 stocks new, just 75 low. We want to start seeing that to 600, 700, 800 stocks. Then we’ll get to over 1000 stocks today. That’s when we know this market’s really cooking with gas. Advanced decline. I’ll save some trouble here. This decline really only slightly negative. Both NYC and Nasdaq, same thing in volume.

Again, nasty volume, 84%, 85% up volume today and today was just slightly negative NYC. So certainly nothing really disappointing here. The disappointment today was really from the sector watch. We had ten of eleven sectors finished lower on the day, but no damage was done. Again, the biggest loser today, consumer discretionary down three quarters, 1% due to the upside. Consumer staples up 1.4%. I think Tyler said that just hit a new 52 week high today, maybe all time high as well. And our commodity watch today, we had a surge coming out of the CPI data.

A little bit of softness today, but nothing. Gold down half percent, down $14 an ounce at 23.90. Silver up $0.08 an ounce at 29.81. Getting close to $30 an ounce on silver actually ticked over today. Intraday high of 30.09 an ounce. Copper up, down today, actually down to four pennies a pound at 488 a pound. A copper hitting an all time high yesterday. Doctor, copper doing a great job of forecasting a strong and vibrant global economy actually is discounting what’s about to happen.

[00:18:34]:
So if the economy doesn’t seem strong now, copper is telling you it’s about to be. Part of this of course is electrification of the US and the planet, which of course is happening for the future of EV’s and other electrified power. And that is just the reality that is taking place. Need a lot before that, crude oil today was down, excuse me, up three quarters of a buck of barrel at 79.35. Love energy stocks here. And finally of the day, bitcoin. Bitcoin, after surging on the CPI data, up huge yesterday, given a little bit back today, not much though, 65,324 depending on how you calculate this. It’s down from its 24 hours high of 4.7%, down 1% from its high of the day before that.

So, excuse me, from the CPI data high, so we had 66,400. Now again, 65,325. I made this point this morning and I think it’s, I think, you know, you’re betting on the. Come here. You don’t know exactly when this is going to happen, but if you’re following the goings on it at Vanguard, neck and neck with Blackrock for the largest investment firm on the planet, Vanguard, of course, their CEO just up and quit last, I think it was last month or maybe the month before, but I think it was in the month of April. And after being there 33 years, the guy just quit. And you had to look at what Vanguard decided not to do. And with the CEO, all this map, he talked about cryptocurrencies and about bitcoin, and just never gave it any credence as a valid store of value.

[00:20:22]:
I guess a guy can’t read a chart. And with the returns, of course, it has been a great store of value. People have made fortunes in it, and it’s recognized as a commodity by the SEC. So I really don’t know what the guy was ever talking about. We know most people just didn’t believe him. We all believe that Vanguard was developing this in the background, just like Jamie Dimon was always taught talking smack about bitcoin, while at the same time his own firm, JP Morgan, was developing their own cryptocurrency products. We thought that was happening in Vanguard. Turns out, no, the guy really just hated it.

And I guess he ruled with an iron fist. And so they didn’t develop, they didn’t launch one of these spot ETF’s for bitcoin. Of course, Blackrock did. Well, Vanguard’s guy, he was forced out. We know this, right? The guy was clearly forced out of his job. And the new guy that just got the job actually was one of the key players at Blackrock and launching Blackrock ETF. So he’s now the CEO of vanguard. So you know what’s about to happen here, right? Vanguard is about to jump into the cryptocurrency, the bitcoin ETF craze.

[00:21:30]:
Really soon, I believe. I think word is going to start leaking very soon. And when that’s finally announced, I think. I think it’s good for $10,000 in bitcoin. Just minimum by itself. Vanguard is a market mover. Their buying pressure across, probably many of their funds will have that effect. And again, you’re seeing it day after day, hedge funds loading up on bitcoin.

State governments, Wisconsin, I believe, announced yesterday they’re buying bitcoin. This is happening globally, but we still have something like 70, 80% of all investors, firms in the US, financial advisors and otherwise, money managers can’t by bitcoin. It’s not yet been approved by their internal compliance departments. Of course, that’s in process. And just wait till sovereign wealth funds, I think that’s, for me, that’s the biggie. When the first sovereign wealth fund, Norway, I believe, is still the largest with a couple trillion dollars. Saudi Arabia, I think, is behind that. I need to refresh my knowledge on that.

[00:22:27]:
It’s been a while since I’ve looked at it. I know Norway’s number one. You wouldn’t think that, but of course, all the oil, North Sea, they’re flying back, and sovereign wealth fund actually paid it out to the people. They guaranteed a certain income at their retirement. And it’s very, very generous, very healthy. It’s pretty nice for norwegian, even a socialist country, by the way, been there a couple times, and these are, these are interesting people to deal with. I would tell you they deal with an iron fist. However, what I know about these sovereign wealth funds is when one acts, they’re going to, it’ll be domino.

And I think when the first sovereign wealth fund announces that they’re buying bitcoin again, you’re looking at a move that’s going to take place very quickly to 100,000 right now. We’re just, just over 65,000 right now. This is a great buy the dip opportunity. Frankly, every day. Every day is a good day to buy bitcoin. It just is because of what’s happening. The best supply demand story on the planet. You don’t have to love it, don’t have to use it.

Just understand, from investment point of view, bitcoin should be a part of every serious investors investment portfolio. Just like gold and silver should. Just like equity should. Yeah, just like, you know, cash and other very safe and conservative instruments should be part of your diversification. Bitcoin, I believe, should be. And I know Speaker Tyler as well, should be there as well. All right, folks, that’s it for today. Hey, always appreciate you listening.

Hope you had a great day. And you betternight. We’ll see you back here again tomorrow after the close.

Podcast Newsletter

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Time Stamps

00:00 Market experiencing unprecedented growth, driven by liquidity.
03:58 New tech stocks and long-term strategies.
08:37 Positive outlook on future economic growth and innovation.
11:11 Breather after touching overbought on stochastics in market analysis.
13:51 Inflation scare, potential market boost, friendly Fed.
19:28 Vanguard CEO quits, disbelieves in bitcoin.
22:27 Norway's oil wealth and generous social programs.
23:46 Have a great night, see you tomorrow.

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