In today's episode, Tyler breaks down the day's stock market action where the Dow Jones hit a record high, despite some early trading hesitancy. He also previews the week's significant earnings reports and the latest look at inflation with the Fed's favored indicator, PCE inflation data out Friday. Tune into today's VRA Investing Podcast to learn more.

Dont look back because the market is closed. Good Monday afternoon, everyone. Tyler herriage here with you for todays VRA investing podcast. Hope you all had a great start to your week this week. Hope you had a great weekend as well. The market came out of the gate strong to start this week following Fridays big update after Jay Powell’s Jackson hole speech, the dovish speech that he gave on Friday and likely will set the tone for what the Federal Reserve has in store for the rest of the year. But the market got what it wanted from that speech and again came out of the gate this morning looking strong. But that also just a couple hours into trading marked the highs of the day to day, finishing with just one major index higher on the day.

It was the Dow Jones. And that didn’t stop the Dow from closing at a record high today. Good day for the Dow today. Maybe not up huge, but an all time high as we say here. Often new highs beget new highs. So very bullish action from our markets from that point of view. And then when we get to our sectors as well, we saw a lot of all time highs out there, especially earlier in the session today. So after that, buyers did seem a little hesitant after again, about the first couple hours of trading or so, as we do have a big week here coming up for our markets.

[00:01:41]:
We’ll cover a few of the items here quickly. Number one, the one we’ve been talking about a lot that all eyes have really been on for this earnings season and really for the last four or five earnings reports has been Nvidia. Remember, Nvidia may when they may of last year of 2023 when they released their Q one earnings report. That’s what really kicked off a lot of the AI innovation revolution themes. And Nvidia has been the leader for the semis for tech since that time. And so get another look here on Wednesday after the close. You know, that is certainly a market moving event, so stay tuned. We’ll be reporting on that here.

But it doesn’t end there. This is kind of one of the last hoorahs for Q two earnings here this week as we’ve got some other big tech names here as well. I’ll just cover a few of the highlights here. We’ve got salesforce also reporting after the close on Wednesday along with Crowdstrike. It’ll be interesting to see if crowdstrike addresses some of the security concerns after what happened with Delta just a little over a month ago. Now on Thursday, we’ll get a little more retail data with Best Buy. Also consumer staples with Campbell’s and then a couple more are really one more big tech name on Thursday with Dell and some more retail names, Lululemon and Ulta as well. So we don’t really touch on the retail consumer staple side of earnings all that much because tech is what drives the market.

But we do pay attention to those earnings reports, although we might not talk about them as much here on the podcast. But yeah, so some important earnings still to come here. So stay tuned. We’ll be reporting on those as well. But it doesn’t stop there as we’ll also have economic data coming out this week. We’ll get some jobless, we’ll get jobless claims on Thursday. But everyone will be watching for the latest in inflation data on Friday, where we’ll get the PCE data, which is the feds, so they say, favored gauge of inflation. We expect more disinflationary numbers coming in here.

[00:04:08]:
But one point that I think is interesting to me, at least, Kip and I were talking about it a little bit before this as well, and I would love your feedback on it, too, if you have some thoughts on this. So the Fed’s target on inflation is 2% right? Now. Does that seem like an arbitrary number to you? That’s likely because it is going back. If you look at some of the old fed minutes, I’m talking the seventies, right. The Fed minutes coming out. Then they made it very clear that the goal for inflation is 0%, which makes a lot of sense. You don’t want to inflate your currency into nothingness. Right? Again, if you think about it, a 2% inflation year over year, after 50 years, you, theoretically, your dollar is worth 100% less than it was, right after 50 years of 2% inflation.

Now what is concerning about that number now is that the Fed and economist, probably more surprising that any economist can go along with this, but they’ve been arguing that, well, maybe we should raise the target on inflation from 2% to 3%. That is an astounding error to even consider that. That is something that they can recommend as a policy change. But what I think will play out in reality here is that the Fed has now set not their target of inflation at 2%, but their floor for inflation at 2%. Notice we were at 3% right now on inflation, and the Fed has declared victory. Right. The mainstream media has done victory lapse for Jay Powell on this, yet we’re at 3%. Right? We’re not at 2%.

It’s not like inflation is coming in at 1.81.9 yes, we do agree that it is heading in the right direction. Inflation is a rear view mirror concern for this market now. But again, this is not 2% inflation yet. Now with the innovation revolution, we’ve talked about this a lot with the deflation we’ve seen out of China, we do expect them to export that here to the US. But already we’re talking about rate cuts, a move back to QE, when again, we’re not at a declared victory really on inflation yet. But I think, again, kind of going back to why they have declared this victory is I think that the new floor for them is 2% inflation. So they might not explicitly say it that their new goal for inflation is 3%, but I think they’re satisfied with it at that level. Now, there are some advantages to inflation.

[00:06:58]:
As long as you have wage growth above inflation numbers. Most people will not complain about inflation at that point because asset value prices are going to go up, your stocks are going to go up again. This is, is what we talk about a lot, that the first America doesn’t mind inflation, but it really affects the second America. And unfortunately, that is the reality that we live in right now. So I think it’s a huge mistake. I think that their new target is likely an unspoken 3% and that if we were to get down to like a 2.1, a 2%, even a 1.91.8, you’d see the money printer turn back on so quickly. Right. Which is absolutely astounding.

To think of where we were, that would have been economic heresy 20 years ago, but now it’s part of their policy. It is crazy. But point being, we’ll get PCE data back out on Friday. We do expect a good number there. We’ll get a second look at Q two GDP as well later this week. Not a whole lot of changes expected there. I think Ed Yardini made a good point about the jobs numbers and likely about GDP as well. But even with the downward revisions of jobs numbers, this manipulation of job statistics, we’ve talked so much about a point that needs to be made more for market watchers, and I think Ed Yardini made it well, that this is not, we’re not seeing a negative jobs number here.

We’re seeing a normalization of jobs. Right. You know, coming in, even with the revisions, we’re still seeing an average job growth month over month of roughly 170,000. Those aren’t terrible numbers. And nothing that the stock market will really be that concerned about if we can keep it up from here, would we like to see jobs numbers higher. Of course we would, because here at the VRA, we’re always rooting for the everyday us american citizen. Right. But point being, again, it’s not negative numbers.

[00:09:14]:
It is a normalization after what we’ve seen from COVID Right. So again, these aren’t negative things for the market. And we don’t think that we’ll get anything that surprises us this weekend. The data now, seasonality, next topic we have entered, or really, we’ve been in a troublesome time of the year for the markets this August to September timeframe. Then people talk about October is typically the bottom month for stocks, as in that’s where the lows are in. And we rally from there. We saw it most recently October of 2022 and even in 2023 that we marked the lows for the end of the year, at the end of October timeframe as well. So point being here, for our markets, in nine out of the last ten years, we’ve seen an approximately 5% correction from August to September.

Now, that wouldn’t be a concern for us here. As you know, we just had a larger correction in the July to August timeframe where we saw the semis fall 24%. We don’t think anything like that is on the horizon. We think the lows are in there. But if we were to get that additional 5%, call it a correction, we would use that as another buying opportunity here and a gift from this market as we head into year end. So yes, we are in a weak seasonally period now, but the Fed is about to be cutting rates. We know that they’re going to do everything they can to help their team, the Democrats, to get elected again in November. A correction before that timeframe does nothing to help them.

And we think the Fed really, with their plunge protection team, would step in long before anything major happened, especially before the election. All right, that being said, let’s take a look at our market action on the day today. We did finish with just one out of our four major indexes higher on the day today. It was the Dow Jones up 0.16%. It was up higher earlier in the session, but it was enough for an all time record close here at $41,240 for the Dow. Excuse me. After that, we had small caps, essentially flat on the day today at 20, 217. After that, the S and P 500 down three tenths of 1% to 5616.

[00:11:56]:
And lastly here, the Nasdaq. I was our biggest loser on the day, which is not what you want to see. Tech leading lower but again, no concerns, no major concerns for us here. Likely a little bit of hesitancy heading into Nvidia’s earnings. Chip names really got beat up today. The semis did lead lower down 2.34%. Again, not ideal, but we had hit extreme overbought levels on our short term vRA momentum oscillators. We still have a long way to go before even getting to overbought on our longer term oscillators.

But when you start to get overbought levels on our short term oscillators, that’s when you can get a little bit of a pullback there. Again, we don’t see it as anything major brewing here, but the Nasdaq again did finish down just over eight tenths of 1% to 17,725. Looking at our internals on the day today, this was our bright spot. It might surprise you here that we finished almost positive across the board. Only one negative reading here today. Not huge beats, but again, positive readings. So we did have advancing stocks beating out declining stocks on the NYSE. Just slightly negative, though, on the Nasdaq after that 52 week highs, lows solidly positive for both the NYSE and the Nasdaq.

Likely our bright spot on the day. That’s where the biggest beats were. And then volume coming in positive for both the NYSE and the Nasdaq as well. No big two to one beats, kind of light volume today, a little bit of end of summer trading kind of feel to it. But again, for the day that we had, we finished with three out of our four major indexes lower on the day, not down by a lot, but to get mostly positive internals, I’d say impressive session here. Now, I might have said a second ago that the internals were the most impressive part on the day. I take that back. The most impressive part of the day came from our sectors.

[00:14:03]:
Now, it might not necessarily been where they closed, but the intraday action today, we had seven out of our eleven sectors hitting either an all time high or a 52 week high today. That is an impressive session. Now, we finished with five out of our eleven sectors higher on the day. We were led by energy. Oil up big today. I’ll get to that here in a minute. Followed there by consumer staples, which hit an all time high, utilities, all time high. Materials all time high.

Financials all time high. Now for the ones that didn’t finish higher on the day, but did hit intraday all time highs, industrials, healthcare, and the real estate sector as well. Now, if you tune in with us here, for a while. You know, instead of the real, the s and p real estate sector, we like to look at the home builders which did finish lower on the day as well. But before that also hit at least from the home construction ETF. ITB hit an all time high before finishing lower as well as. Excuse me, I’m just a little off there. HGX though is just about right at its all time high as well, but did finish lower on the day to day.

Our lagging sectors tech did lead the way lower followed by consumer discretionary. Finally here for today, our VRA commodity watch. Lot of green on the screen here. Gold now up three tenths of 1%, just below its all time high. Its all time high being 25 70. Were at 25 53, so not far away at all. Silver also higher on the day. Just under four tenths of 1%, but back above, staying above $30 an ounce here at $30.37 an ounce.

[00:15:58]:
Copper up half a percent to $4.26 a pound. Oil now up over 3% on the day today. You know, I hesitate to say that it’s on more Middle east conflicts because we see this about once a month right now for the last year or so. You know, you hear about it just about every other weekend that some new attack is going to change the oil market that’s happening in the Middle east over and over again. So yeah, I’ll take that with a grain of salt there, but oil really has been range bound in this kind of 70 to 80, 85 range going back for the last four or five months. So yeah, we had a big move today. Oil still hanging around the lower, excuse me, now back to the upper seventies here. Up 3% on the day at $77.16 a barrel now.

And lastly here for day, bitcoin did rally over the weekend. It’s taking a little bit of a pause today, but firmly above 60,000. Down 1.2% now to 63,441 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 at vra letter.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, we’ll see you back here tomorrow for the close. Bye.