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VRA Investing Podcast: Economic Data And What Tomorrow’s Jobs Report Means For Our Markets – Tyler Herriage – June 06, 2024

In today's episode, Tyler dives deep into the latest economic data and how it impacts the stock market. In honor of D-Day, he also revisits a story that epitomizes US ingenuity and heroism. Tune in as we cover the latest in our to ...

Posted On June 06, 2024Episode 1399
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About This Episode

In today's episode, Tyler dives deep into the latest economic data and how it impacts the stock market. In honor of D-Day, he also revisits a story that epitomizes US ingenuity and heroism. Tune in as we cover the latest in our top VRA recommendations and tell you what the VRA Investing System is seeing going forward.

Transcript

Don’t look back because the market is closed. Good Thursday afternoon, everyone. Tyler Herriage here with you for today’s VRA investing podcast. Hope you all had a great day out there today. It was certainly another interesting day in our markets today. We finished mixed on the day today, and I’ll get to our market action here in a minute. But I wanted to start today’s podcast off a little bit differently than I normally do here. In honor of D Day today, I was reminded of, you know, incredible story from D Day earlier today.

I’m sure many of I know that many of you are history buffs, so you may already know this one. But now on the 80th year here of that fateful day in Normandy, June 6, 1944, again, wanted to bring this story up for today. I, growing up, heard this story a few times at least, mostly from family members, not as much in history classes, surprisingly, but I was reminded of it again last year at this time. And so, yeah, I’ll jump right into it here. But being from Texas, this story is really near and dear to my heart also, because it is about the USS Texas. And the ultimate point of it is that it does serve as another example here of us ingenuity in particular, especially in the face of conflict. So if you are familiar with the battleship the USS Texas, then you know where I’m going with this. By the way, the USS Texas is now currently being reconstructed or a renovation.

[00:01:57]:
What’s the word on the restoration? There we go. Is currently being done in Galveston. We can go to tours right now as well. Something I haven’t done yet, but I did see it last year just after Christmas around New year’s, drove by it, and it is impressive, that’s for sure. So this as going back to the story here. In 1944, D Day, the command of the USS Texas was given to Captain Charles Adams Baker from Virginia here. And keep in mind, this is no minor command of a battleship here. The USS Texas, created or built in 1910, has seen more combat action up to this point, before this, even than most us battleships.

And shortly after becoming the captain of the USS Texas, Captain Baker was sent to Omaha beach as part of a massive fleet of ships, joining the roughly 703 ships of the us british flotilla at the time. But the Texas was just one of seven battleships in this flotilla. So as the day goes on, the Allies advance inland and the USS Texas focus primarily by providing support from the ocean, bombarding german positions, taking out snipers, helping out the troops to advance further inland. Now, the USS Texas helped secure parts of the beach that day. But what takes place next is really what I wanted to dive into here today. I just think it’s so interesting. Nine days later, still at the beaches of Normandy, allied forces had advanced further inland, but by this point, they were too far inland for german positions to be just out of range of the USS Texas firing range. And what is just an absolutely genius and likely shocking move for most people, the crew of the USS Texas made the decision to flood their own ship.

They flooded the starboard side of the ship on this massive, massive vessel, and what this did was tilted the battleship two degrees right. Two degrees doesn’t sound like a whole lot, but it was just enough to make all the difference in the world, allowing their guns to fire accurately and contribute more to the operation’s success. Every time that I think about that and what that meant to the people on the ship and just what, especially in hindsight, what a genius move that was. I get chills every time that I hear that story. Just, you know, who would think, in the heat of battle, let’s intentionally sink part of our own ship, sacrificing maneuverability as well. Basically, they were sitting ducks out there to. To provide supporting cover for the men who were inland on the front lines, sacrificing their lives as well. That’s the kind of ingenuity and self sacrifice that our country was built upon.

[00:05:17]:
And so with that, want to say always thank you to our wonderful veterans. We just had Memorial Day weekend as well, and thank you to all of those who have served and made this great country the place that it is today by making the ultimate sacrifice. So for anyone who’s interested, again, the USS Texas, if you’re in the Texas area, it’s currently in Galveston, Texas. I mean, I’ve really, I’ve talked to a lot of people about it. I do think I went when I was younger, while I was under another restoration, where you actually able to go onto the ship. I know I have a family who’s done a lot of that. So I’ve heard this story a lot over the years and just thought it was pretty incredible and worth sharing today, revisiting that before we got to our market recap, because that’s why we are able to do the things that we are able to do today, the reason why we’re able to have the freedoms that we enjoy, even though they may be under attack. It’s the reason why we live in such a prosperous nation here today.

So thank you again to all those out there who have served this great country. All right, that said, we’ll turn the dial here a little bit, but we’ll keep it on Texas for a second longer, as we did find out yesterday, two evenings ago. Now. Well, either way, we’re getting more information here about the newest us stock exchange, which is planning to be launched in Dallas, Texas. We’re excited about this one. Yeah, we’d rather be in Houston or Austin, but Dallas, still a great city. And what’s most interesting here, what I think maybe most of us are so excited about, not the Blackrock and Citadel part of this, right. That we could do without.

But, you know, the mission, the goal, the agenda behind this new exchange, and Greg Abbott confirmed this this morning as well, is that companies are tired, they’re exhausted of having to fight this bureaucratic red tape, especially in New York. You know, they have all these, the diversity, equity and inclusion requirements there, ESG requirements there of these New York stock exchanges, of the Nasdaq. And this new exchange will focus. Their number one agenda is to support a capitalist based exchange here. It’s meant to support capitalism. Already we’ve seen companies all over the US flocking to red states, right? It’s not just Texas, it’s also Florida and other red states as well. Most recently it was Tesla. Right? They’re in the process right now of moving to Texas as well.

[00:07:59]:
But it’s far, far more than Tesla. And not only that, it’s some of the largest companies in the United States right now. The most valuable companies in the United States, if I’m not mistaken here. I think last year Texas had, number wise, the most US 500 companies. It’s either. Texas and California are usually neck and neck in that regard, but Texas is now home to all of the most valuable. So by market cap, Texas has the most Fortune 500 companies in our state. That’s pretty incredible considering how many of these companies began in states like California began, or at least incorporated in states like Delaware or New York or listed on those exchanges.

Right. So it’s too soon to tell here exactly what this exchange will look like, but we are excited about it here and really hope they stay true to that promised first agenda of capitalism. And Greg Abbott, while we’re at it, let’s work on it. In the state of Texas. How do we still have property taxes in the state of Texas, right. This our state, which loves freedom so much to allow property taxes, I might say, is the most criminal of all of the taxes that they could apply. And I’ll tell you why. When you pay property taxes, what you’re saying is that you are okay with renting that land from the state in perpetuity, right? These taxes don’t go away.

If you retire at 65 and your land value appreciates massively by the age of 80, are you going to be able to pay those property taxes? What if you can’t? What if something comes up? Right. People who own this land or you see it in the inner cities here in Texas a lot where a family bought a house in the sixties, seventies, even prior to that, fully paid off home. Their kids live in it now, maybe their grandkids live in it now and, or a business that maybe their grandparents started and now they can’t afford the property tax on how much these assets, the real estate assets have appreciated in such a short period of time and they can’t keep up with their property tax. It’s absolutely criminal what they’ve done to these people who have been evicted because they couldn’t pay properly. Property tax criminal. I could not be more emphatic about that there. I think, I know we’ve got a smart money audience here. I know a lot of you feel the same way.

[00:10:41]:
I just can’t believe that we can stand for this. It’s absolutely, it’s mind boggling. But we’ll see. You know, let’s go back to the exchange here. We are looking forward to that very much here. Be great to get some direct listings from Texas to a Texas exchange. Pretty awesome. All right, turning to our market action on the day to day, we’ll start on the economic side of things today.

Earlier today, we got initial jobless claims adding to the jobs data we’ve already seen this week coming in weaker than expected, or in this case, higher than expected. We had more initial jobless claims than expected here with 229,000 claims, about 9000 over expectations. Continuing claims edging up here as well to 1.79 million. To piggyback off of what Kip and I have talked about on our podcast this week. The economic data that we’ve gotten has not been ideal, but there’s a huge but to this. These aren’t red flag kind of numbers, at least not yet. Not to say that they won’t ever go that way. Eventually they will, but we don’t have a crystal ball here to tell you exactly when that will be, although we see it not for some time.

So I will say that we remain very bullish, not only on the stock market but on the economy as well. But again, these aren’t red flag kind of numbers. These aren’t contractionary numbers. We’re still adding jobs, we’re still adding to GDP. Earnings are still beating and the employment level remains very low. So again, these aren’t red flag kinds of numbers, but it does put more emphasis on tomorrow’s jobs data that’ll come out ahead of the open tomorrow. And again, based off what we’ve seen so far this week, we continue to look and well, not only the action in the economic data, but also the action in yields this week. The ten year continued lower today as well, hitting another new low, finishing down.

[00:12:51]:
It was higher earlier in the session, but finished down just under two tenths of 1% now at a 4.28. And while we don’t like to throw numbers out there and predict any month over month report, after all, we are trend followers here. And you’ve got to think about how much this data has been manipulated. Remember, for like the last twelve reports, a month later, every jobs number has been revised lower. So we’ll be watching for the revisions as well. But we said it all week that this jobs number will likely miss on expectation. We don’t like to see that. It’s not what we want to see.

But that also doesn’t mean it’s going to be a terrible number again. It’s not going to be a negative number tomorrow. That would really be a shock. And if that happened, you’d likely see the market lower. We’re looking for more of a Goldilocks number here for the Fed. You know that not too hot that it brings back rate hike fears. Right. A red hot jobs market.

They’re going to keep cutting rates, but not so cold that there needs to be an emergency rate cut. They don’t need to go cut next week at their meeting. Right. That’s also, again, not what you want to see. It’s usually when rate cuts happen very quickly that they are bad for the market. A controlled rate cutting cycle that has been telegraphed by the Fed. That doesn’t hurt the market like a shock to the system that emergency rate cuts would do. So we don’t expect that to be the case.

[00:14:24]:
Again, you’re looking for a number that gives the Fed more clearance than they already have, especially now that the bank of Canada and the ECB have cut rates. We know they work in coordination. It’s only a matter of time before the Federal Reserve follows in their footsteps. So get ready, folks. We are headed back to another era of quantitative easing based off of government spending. We never really left, but the Fed wasn’t involved in that. So we know that the Fed is champing at the bit to get back to easy money policies. One more factor here, sentiment on the day.

We got the AAIII investors sentiment survey back this morning as well. So I’ll touch on sentiment here. Remaining at 39%. Bulls week over week here. But what was interesting is that this is becoming a much more bifurcated market. Investors shifted the biggest shift this week. Again, bulls stayed in line. The biggest shift was from neutral to bearish and switched in a big way.

Bears adding nearly 6% over the week, this week neutral, all coming from the neutral side of things. So, you know, it’s really interesting to see a bull market that is kind of loved and mostly hated here. But as contrarians, we really love to see that this bull market has been so unloved going all the way back to the October of 2022 lows, which we called to the day. We actually put that out in our blog post on the day today. So go check it out@kipperidge.com. you see exactly what we wrote to our members on those October 14, 2022 capitulation lows where we marked the beginning of this bull market. And folks, remember, we’re not even 24 months into this thing yet, not even two years. And most bull markets have an average lifespan of four years.

[00:16:24]:
So we think we have a whole lot, we think this bull market is going to go much longer than that also. So we’ve got a whole lot of exciting action ahead of us. And again, back to sentiment. It makes us even more bullish that we’re seeing the level of bearishness increase here. And another example of that today, the put call ratio. Wow. Opened up this morning at a 2.2.24. Remember, anything above a .7 is seen as leaning bearish.

When you get above a one, it’s excessive bearish territory. We didn’t get below one until the afternoon trading and just barely. We finished the day at a 0.98, really averaging the day at about a 1.5. That, folks, is excessive put buying. So again, what we want to see as contrarians. All right, turning to our major indexes on the day today, not exactly the day that you want to see, we hit all time highs right out of the gate in the Nasdaq today, in the S and P 500 today, and in the semis today. All three of those pulled back into the close. No big losses on the day, though.

Really pretty much unchanged. And the good news here is that we did have another pretty decent smart money hour. It didn’t get us back to the highs of the day, didn’t get us back to positive, but we finished well off the lows of the day today. So in some sense, you call that another good smart money hour. Close. We just wrapped up four days in a row of that. It’d be a little bit of a stretch to call this five, but, you know, definitely a decent smart money hour, which is still what you want to see. So leading the way today, the Dow Jones up, just point, sorry, two tenths of 1%.

[00:18:15]:
Now at 38,886. After that, the S and P 500 pretty much unchanged on the day, down one point to 5352. After that, the Nasdaq down. .09% so again, not very much. Did 17,173. And lastly here, the small caps. We’re our biggest loser on the day, down seven tenths of 1% to 2049. Again, yields were lower today.

The dollar was lower today. A kind of day where you might expect a good action from our market, but again, ahead of tomorrow’s jobs number. I think a lot of people are in a bit of a wait and see approach here. 1 second. Let me get drawn. Drink water. All right. Next up, looking at our internals on the day to day.

You know, an interesting session here for the internals. Earlier in the session, we were negative and finished negative on advance decline, but we were positive for both 52 week highs, lows and volume. You don’t see that every day, which is why we can’t found it kind of interesting. I’m not really sure exactly what it tells you from today’s action, other than it’s good to see bulls continuing to step in when buying pressure is needed here. The bears really haven’t gotten control of this market despite some weakness where you would expect them to. They really haven’t been able to take this thing down. So that is, that was probably the takeaway there, especially, especially on the volume side of things. So let’s cover it here.

[00:19:56]:
We did have more declining stocks than advancing stocks. No two to one beats or anything, really pretty close to even on the NYSE, just a little bit worse on the Nasdaq. Again, not a big beat, though. 52 week highs. Lows did come in over three to one. Positive on the NYSE and still positive on the Nasdaq as well. Lastly here, volume, again, likely the bright spot on the day. Again, not big beats, but coming in positive for both the NYSE and the Nasdaq.

Today. Definitely had the kind of feel of the calm before the storm with the jobs report coming out tomorrow. This is the kind of storm, though, that, again, really tough to predict in the short term how a market’s going to react. The reaction will tell us everything we need to know. But this is the kind of storm that ultimately sends our market much, much higher and why we believe that buying the dip remains the smart money move here, as we’ve said since the October 2022 lows. Next up, looking at our sectors on the day to day, if you just saw this, you probably thought it was a pretty good day as we finished with seven out of our eleven s and p 500 sectors higher and one unchanged as well. So just three lower on the day we were led by consumer discretionary, followed there by energy and consumer staples. I will point out we got another all time high today from communication services, which now makes four days in a row of all time highs from that sector.

Then our laggards on the day, utilities and industrials. Which utilities has been interesting given the move lower that we’ve seen in rates, but they’ve come a long way, especially for what we’re talking about here. Utilities. Then after that, industrials. And then tech did finish lower on the day today. Also though, in all time high news, Nvidia hit another all time high today. Then the CEO Jason Wang announced a roughly $750 million sell of his stock. I mean a $3 trillion valuation.

[00:22:06]:
It’s tough to say that matters a whole lot, but, you know, we’ll continue to see how that action plays out. We do remain extremely bullish on the semis as a whole, as a sector. Finally here for today, our vra commodity. Watch some green on the screen here today. Gold trying to get back to its all time high levels now. Just about $70 away. Up eight tenths of 1% to 23 95. The all time high is 2400.

Excuse me, 24 64. And I’ll also point out today, gold miners having a good day today after hitting overbought levels and peaking at their 52 week high in mid May. Big rally back today, up 3.46%. Just what you want to see on a good day for gold. The miners outperform in three to one, outperformance at that. Three to one plus outperformance at that. Next up here, silver up bigger on the day, up 4.6% to $31.45 an ounce. Copper also higher on the day, up 1.4% to $4.67 a pound.

And oil getting back above $75 a barrel here. Up 2.1% on the day to $75.65 a barrel. And finally here for today, bitcoin taking a little pause down half a percent still above $70,000 of bitcoin at 70,755. Folks, that is all 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@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, we’ll see you back here tomorrow for the close.

Podcast Newsletter

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Time Stamps

00:00 USS Texas: Supporting Allies, self-flooding for safety.
05:17 Always thank you to our wonderful veterans.
09:35 Property tax burden on elderly and families.
11:08 Initial jobless claims higher than expected, but manageable.
15:30 Bears up 6% in a neutral market.
20:27 Market calm before storm, unpredictable reaction ahead.
23:22 Oil above $75, Bitcoin over $70,000.

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