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VRA Investing Podcast: Fed Day Analysis, Major Earnings, And The Markets Reaction – Tyler Herriage – January 29, 2025

In today's episode, Tyler provides in-depth coverage of the latest moves from J Powell and the Federal Reserve, including President Trump's reaction to the first FOMC of 2025. We will also cover the day's stock market action, incl ...

Posted On January 29, 20251542
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About This Episode

In today's episode, Tyler provides in-depth coverage of the latest moves from J Powell and the Federal Reserve, including President Trump's reaction to the first FOMC of 2025. We will also cover the day's stock market action, including a detailed analysis of key earnings reports that came in today after the market close. Tune in as Tyler breaks down another exciting day of Stock Market action

Transcript

Foreign don’t look back because the market is closed. Good Wednesday 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 Fed Day today, the first FOMC meeting of 2025. We also had a number of of big earnings reports after the close here today. So a lot to cover here today for our markets on the economy, of course, what the Fed had to say. And we’ll get to the earnings as well.

We’ll cover all of that here on today’s podcast. As for our markets on the day, we did finish slightly lower on the day, as most of you might have anticipated when you heard that I was doing the podcast here today. But the good news is we finished well off the lows of the day today and it certainly wasn’t bad. All out, all bad out there today. And we certainly got some positives after the close with these earnings reports. So stay tuned. I’ll get to that here in a minute. But first, as I mentioned, the first fed day of 2025, I’m sure that you were all excited for this year.

[00:01:22]:
You know, fortunately we had about six, six weeks or so since the last Fed meeting in December, which was absolutely brutal. If you remember, the s P was down 3%. The Q’s, NASDAQ 100 was down 3 and a half percent. It was the worst market performance on a fed day since 1994. So the bar was set pretty low for Jay Powell today as the expectations were as telegraph for them to pause. And that’s correct. No surprises from the minutes. But even going into the minutes and the meeting today, the usually Fed friendly Bloomberg had this to say, you know, that the Fed shouldn’t do much of anything.

But Jay Powell isn’t very good at that. They just kind of shrugged and said, well, it’s his to mess up today and you know, got to give credit where credit’s due. Again, the bar was low, but there were no surprises from the minutes, no surprises from J. Powell’s press conference here. So after cutting rates by a full 100 basis points in just the last three meetings, remember we had the 50 basis point cut in September followed by two 25 basis point cuts. There’s no Octo October meeting. Now I’m blanking on that. No, there, yes.

Okay, so that, yeah, no October meeting. Then we had the 25 basis point cut in November and another 25 basis points point in December. Now the Fed leaving rates unchanged. But we can’t forget that under the surface The Fed is still quantitative tightening here. They’ve rolled off their balance sheet by approximately $2.1 trillion in assets since they began this cycle in July 2022. So while they may have cut rates a few times, remember, they are still quantitative tightening. And there weren’t a whole lot of questions about this today. He just re and when he was asked the one question about qt, you know, he didn’t have anything new to say.

[00:03:27]:
They’re gonna remain data dependent re emphasize that banks have ample reserves and they feel like they’re getting to a point when they may be able to. But again, no curveballs there and no timeline of exactly when they’ll stop qt. But that’s kind of a tailwind going forward for this market. You know, if the Fed comes out in their next meeting or, you know, one of their first few meeting of 2025 and says they’re going to stop quantitative tightening, not to say they have to get back to quantitative easing, although we know they’re champing at the pit to turn that money printer back on. Right. They love easy money policies. But when. So when they do get to the point where they say, all right, we’re done rolling off the balance sheet, that will be another tailwind for our market here as well.

So then, quick analysis here of the press conference. You know, in a rare performance from Jay Powell, the market actually did move higher once he hit the stage. The market was at the lows of the day. So, you know, not much to say for that. And we, but we managed to finish off the lows from earlier in the session there. So it certainly wasn’t all bad out there. Again, compared to his December meeting, the bar was not very high. But he stuck to the script.

Tyler Herriage [00:04:42]:
And during the Q A, he, you know, he avoided the political questions, even though we know that he’s not a fan of Donald Trump, despite being put in his position by Donald Trump during his first term. But he just repeated the party line of remaining data dependent here. In reality, the Q and A portion of this could have lasted about five minutes, tops. It was the same same question asked a different way over and over again. They kept trying to get him to make a political comment, you know, and kudos to him. He stayed out of it there. Really, all Jay Powell has to do now, his job should be super easy, as Trump has said. All he has to do is get in line with Trump’s agenda.

And I mean, he wouldn’t even have to give these press conferences, really. And we don’t think they should be giving this many press conferences. There’s no need for a Federal Reserve chairman to also be a celebrity. There’s just no need for that, you know. So again, even if he weren’t to get directly in line with Trump’s policies, you know, if they wanted to claim their unbiased place, really all he has to do, though, is get out of the way. And after the close today, Trump let that be known as well, letting the world know how he feels about Jay Powell. I’ll kind of paraphrase this true social post from Jay Powell, but I think he sums up our views pretty well here. So here it is.

[00:06:09]:
He said, Trump said because Jay Powell and the Fed failed to stop the problem that they created. So he’s acknowledging that this is a Fed induced problem. So because Jay Powell and the Fed failed to stop the problem they created with inflation, I will do it by unleashing American energy production, slashing regulation, rebalancing international trade and reigniting manufacturer American manufacturing. But I will do much more than stopping inflation. Also pointing out that he’ll make our country financially and otherwise powerful again, making America great again. Right. He goes on to say this about the Fed though, that they have done a terrible job on bank regulation and that the treasury is going to lead the effort to cut unnecessary regulation and unleash lending for all American people and businesses. Exactly what we want to see from our commander in Chief.

In closing here, he says that the Fed has spent, if they had spent less time on DEI gender ideology and you know, the fake climate change scam, inflation would have never been a problem. We couldn’t agree more. You know, and the Fed loves to take credit for solving problems that they created. Let’s get the Federal Reserve out of the way. We’re very much in the Ron Paul school of thought here of end the Fed. We’ll see if we can get all that done during Trump’s term. That would be a wild term to see something like that now. But at the very least, we can limit their powers until a day comes that we can get rid of the Federal Reserve.

So the battle between Trump and Jay Powell rolls on, as we know from the O’Keefe Media Group, James O’Keefe, who does some great undercover reporting work, he got a staffer from the Fed on camera admitting that Jay Powell does not like Trump. So we don’t like to fight the Fed, but here when we have President Trump also fighting the Fed in some ways, we wouldn’t bet against our president, that’s for sure. And the overall Point is that yields at this level, as we’ve said many times we see yields coming down and likely have peaked for the year at that 4.8 they hit today was up fractionally. Finished well off the highs of the day though at just a 4, 5, 5. Yes, they’re a little restrictive here, but certainly not prohibitive. And if we can do some things to work around the Fed, we could be absolutely fine here. You know, we talk about it a lot that from the 1995 to 2000.com melt up, when the NASDAQ rallied 575%, yields averaged much higher than they are right now. So no, Yields at a 4 1/2% don’t concern us here.

And the Fed can kind of just stay quiet in the background. We think we’ll be fine. Economic strength is going to make up for their mistakes. And that continues to be our view for the Trump Economic Miracle 2.0. And I’ll get to a little bit here about the innovation revolution and some more comments about what we’ve seen from Deep Seek here in a second as well. But first, it was a big day of tech earnings today. As we Talked about here, 41% of the market cap of the S&P 500 is reporting this week, a big portion of it today. So we had Microsoft after the close beating on earnings per share, beating on revenue as well.

[00:09:35]:
The stock did trade down slightly in after hours since well off the lows, still down 1.9%, but good numbers there. IBM, you know, not one that you think about as much anymore from the technology side of things just because they’ve been, you know, I guess the right term would be blue chip. You know, not a big innovator with the outsized returns that we’ve seen from smaller tech firms that are now giant. But IBM back on the map here today, crushing earnings per share and revenue as well. But it was the forward guidance that sent the stock higher. The company saw double digit revenue growth in their software for the quarter and projecting continued big future growth. That’s what investors liked. The stock is now up 9.8% in after hours trading alone, on top of the 1.3% it was up in the session today as well.

Then we had actually. Well, I’ll skip around here because Meta was one of the last ones to report coming in just before I got on this podcast. Crushing earnings per share, coming in at $8.02 a share versus estimates for $6.77 a share. That’s a big beat there. Revenue also beating by over $1 billion from expectations. The stock now up over four and a half percent in after hours. Then we had Tesla as well as you know, we’re big fans of Tesla here and I’ll get into this a little bit here, but we think Tesla, you know, the story here is so misunderstood by analysts. Most of these analysts don’t even include their other parts of their business.

Like we talk about here, whether it’s Optimus or even full self driving or the Cyber Cab, you know, they still think Tesla is a car company. It’s not. It’s a tech company. The stock though, after coming in just shy on both earnings per share and revenue, the stock was initially down, getting down as low as 365 a share there but have since reversed higher up over 2% now just shy of $400 a share there. Did briefly get back above 400 though in this after hours trading. So you know, again we’ve heard a lot of misleading reports about Tesla. You think back to what just happened a month ago when Tesla reported Q4 deliveries of nearly half a million deliveries. 4, 500 vehicles shy of half a million deliveries.

But the headlines ran, sorry, before I even get to that, that is a record high delivery for Tesla. So the headlines could have run Tesla record high deliveries. Instead they had missed estimates. Keep in mind these aren’t the company estimates, these are analyst estimates. Right. So the headlines were Tesla misses estimates for production in Q4 when you know, again it’s not a lie, certainly not a lie, but it kind of is by omission because you’re not telling everybody. Yeah, sure they missed on estimates, but this is a record breaking quarter for the company. So again it’s not just a car company though, that’s just the headlines.

[00:12:50]:
Right? And we think the valuations here are really undervalued when you consider things like their full self driving like Optimus, like the Cyber Cab which is now expected to be in production in 2026. I’m sure they’ll talk about that on the earnings call. Going to try and get to that after this podcast. Excuse me, should be airing. Excuse me, just about any minute as of reporting this here. But again, you know, yes, missed slightly here for Tesla. Not a big miss. And it is higher in after hours now it’s looking like it’s going to be a good day tomorrow, at least so far in after hours.

The semis are also up in after hours trading. I’ll get to that here, more in a minute. But the semis up one and a half percent in after hours. Tradings, which is good news. We got some big earnings tomorrow with Apple and Intel, so stay tuned. We’ll be covering those here. But good to see the semis starting to bounce back from the Deep Seek selloff that we saw on Monday. As more and more news comes out about Deep Seek and how, you know, the headlines we saw over the weekend might have been misleading as well, you know.

So we think that the lows are here for the semis. We remain aggressively bullish on the semis. I’ll get to a few more points here in a second. But first on Deep Seek, you know, the big headline was that they supposedly built this breakthrough AI on just $7 million. Of course, if you read deeper into the headlines at all, you know that it’s built on the Chat GBT platform, so they didn’t have to build all that out. Right? So where did the $7 million really go? But now you’ve got analysts saying and doing research that say they might have spent as much as $500 million on this. Right. And as Kip covered on Wayne Root show last night as well.

When did we start trusting data out of China? Right? Who knows how much they spent on this? You don’t even get me started on where your data is going. Just know that if you download it to test it out, you’ll have no privacy. They’ll not only have access to all of your searches and, and use cases on their AI platform that might be a little bit understandable in order to, you know, enhance the product in the future, but they’re also able to access, if you saw, if you download it on Google Chrome and they have a Google Chrome extension, they get access to essentially everything that’s in your browser. So if you open up your email, you have got access to your email now and that AI is going through it. Right? You don’t want that. Certainly don’t want that. Then lastly, there’s this as well, that the Deep Seek chatbot was just tested on delivering news and information. This was a News Guard audience, which, you know, I’m not familiar with News Guard.

[00:15:41]:
Maybe they’re just as much propaganda as the fact checkers that Facebook just fired, you know, but still, and I’m skeptical about news reports any anyway from the beginning. But still, when it came to news and information, it ranked 10th out of the 11 AIs that they tested. So, you know, not a great metric there. And we’ll continue to get more store more about this story out. But as we see it, the lows should be in for the semis held above those Monday lows even though finishing lower on the day. Just fractionally lower though and again as I mentioned, higher and after hours now. So this morning for our market was a bit mixed there and we did ultimately finish lower across the board but also well off the lows of the day. So let’s cover that here quickly.

Russell 2000 was our leader, if you want to call it that, down a quarter of 1%. After that we had the Dow down just over 3/10 of 1%. The S P 500 down slightly less than half a percent on the day and the NASDAQ down half a percent on the day today. You know, it’s important to remember here that we are still higher on the month for the Nasdaq here even though we’ve seen this sell off. So we’ve got two trading sessions left in the month of January. We want to finish the month strong here and now that the semis led lower to the downside. Last point here on the semis we saw them lead lower to the to the downside here on this most recent move. We think this is going to be a first in, first out kind of scenario where now the semis should lead to the upside as more and more people realize that this deep SE is likely pretty overblown.

So we do remain aggressively bullish on them here. Next up, looking at our internals on the day today. Earlier in the session we had good internals. Even with the our major index is lower, we still had just about positive internals across the board. Ultimately we did finish lower. But the good news here remains these negative days in the internals have been very manageable. You know, no big two to one beats like we’ve seen in the past. As I talked about on Monday’s podcast, we had actually seen days in the last couple of years where the market was higher and the internals were worse than they were on Monday’s sell off.

Right. So similar story here. Yes they’re negative but no big two to one beats or anything. So hey, we’ll take it. We did have more declining stocks than advancing stocks on both the NYSE and the NASDAQ. 52 week highs lows did manage to come in positive on the nyse. Slightly negative on the NASDAQ though and then volume really pretty even on the nyse. Slightly more negative though on the nasdaq.

[00:18:33]:
Again no terrible numbers out there though. Next up here, looking at our sectors on the day, we finished with four out of our 11 sectors higher on the day led by communication services which is right in the range of an all time high after Meta’s big move here in after hours. Met is one of the largest holdings for the communication services sector along with Google. But Meta being up over 4% in after hours certainly doesn’t hurt here. Likely to get another all time high for Meta tomorrow and communication services if these gains hold, which we think they will after that. Consumer staples, utilities and energy. Our laggards on the day were real estate, tech and healthcare. Also point out financials really were flat on the day, but hit an all time high during the session today.

You know, just fractionally lower again, I’ll call that flat. But point being new highs beget new highs. So certainly could have been a worse day out there today. Then let’s wrap it up here with our VRA Commodity Watch where we’re seeing some good numbers here. Gold, you know, as Kip talked about on his show last night as well, just just over $20 away from its all time high. $26 away at $2796 an ounce. We do remain bullish on gold as well. Silver up bigger two and a quarter percent to $31.57 an ounce.

Copper now up just about 1% here to $4.28 a pound. Oil now lower on the day, down 1% to $73 a barrel. And the last big news of the day today, bitcoin. If you didn’t hear it, this hasn’t been talked about a whole lot here, but there’s a story in the Financial Times this morning. The head of the Czech central bank wants to buy billions of euros in bitcoin. The first estimates were for as much as 7 billion euros worth of bitcoin. This still has to be approved by their government. It goes to a vote tomorrow.

But the proposal is for a 5% target of the Feds, their central banks. Excuse me, not the Fed, the head of or, sorry, the Czech central bank targeting 5% of their balance sheet to be in bitcoin. You know, that’s well above a lot of other countries estimates of talking about just doing 1 to 2%, which not a whole lot of countries have really started to talk about yet. But if this becomes a trend, as we’re already seeing, you talked of a bitcoin strategic reserve here in the US if other countries start jumping on board with this and just 1 to 2% of their balance sheet is put into crypto or bitcoin, that would absolutely send this price of bitcoin soaring from there. You might have seen some estimates about this out there if if the central banks across the world did start doing this, the price on bitcoin in these estimates is astronomical. We do remain extremely bullish on Bitcoin here as well. So stay tuned. We’ll let you know how that vote goes tomorrow as well.

[00:21:48]:
But 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@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.

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Time Stamps

00:00 Fed Holds Rates; Continues Tightening
03:27 Fed Strategy: Data Dependent, QT Uncertain
07:46 Trump vs. Fed: Powell Tensions
11:16 Tesla: Beyond Cars, Stock Surges
14:45 Concerns Over Chinese Data Privacy
18:33 Communication Services Near All-Time High
20:42 Czech Central Bank Eyes Bitcoin

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