In today's episode, Kip unpacks today's market sell-off following J Powell's controversial press conference at the final FOMC meeting of 2024. We'll break down Powell's perplexing commentary, discuss the severe market reactions, and explore the potential implications for the economy and your investments. Tune into today's podcast to learn more.

Don’t look back to the market is closed. Good Wednesday afternoon everyone. Kip Herriage here with the daily VRA Investing podcast. Hope you had a good day today. If you’re watching the markets today, you certainly did not have a good day. Another bloodbath brought to us by Jay Powell. The worst fetch here in history.

This has been my contention for some time, as you probably know, and actually went on TV a couple times and even said that maybe not the smartest move, but you know, I speak my mind and Jay Powell has proven that time and again that he is clueless. This is a clueless Federal Reserve Chairman. Remember three, four years ago when inflation was starting to really run. One month they went from saying there is no inflation the next month. They said, yes, there is some inflation the next very next month. It was runaway inflation. Ultimately 41 year highs of inflation. Again, this is a clueless Federal Reserve and very political now as well.

Look, today’s rate cut. They actually cut rates today and the market got destroyed. They cut rates today about a quarter of a point. That was expected. It was expected to be a hawkish rate cut that took place today. Right. It was hawkish. And then they started coloring outside the lines.

[00:01:16]:
The FOMC statement had no surprises whatsoever. It’s when Powell started talking and frankly, you could see the people questioning him were surprised by what he was saying. He looked very confused. He was saying one thing to one answer one question and a completely different thing to answer another person’s question. Again, he looked clueless. He looked confused today. Bloomberg. This is Bloomberg.

Okay. Said he looked lost today. The feedback, this is not just me saying. It’s not just Tyler saying it. This is coming from, from all ends of the financial spectrum talking about the disaster that J. PAL was today in this presser. Yeah, so they’re going to go from four cuts that was expected for next year down to two. I don’t, I put no credence in that whatsoever.

Because they just don’t know. Right? We, we’ve known this over time. They don’t know. Their forecasts are meaningless. Okay, that’s not what did it. It was Powell’s commentary where he admitted, yes, unemployment is rising, yes, the job market is not tight anymore. And then also at the same time said, but somehow we think inflation is going to go up. That’s our concern.

[00:02:26]:
Now, primary concern is inflation. Based on what evidence? Exactly. We’ve got inflation down to 2 1/2 percent. I mean the ultimate target is 2%. But what are they. It was about Trump now, when he was asked about that, how much of this is due to the incoming president, incoming administration, he waffled, you could sell, you could tell these. They did talk about this in the meetings. I can’t wait to see these minutes when they come out here in a couple, three weeks to find out what exactly was said in that room.

But this is embarrassment, though. That’s why the markets are down, folks. This is the most illiquid time of the year. As Tyler just reminded me, this is the most illiquid time of the year. Most people aren’t even still in the office anymore. People are out shopping, they’re out skiing, they’re on slopes. And the last thing they’re doing is focused on the markets. This is not.

When you surprise the markets with the gobbledygook that came out of J. Powell’s mouth today, I fully expect, I fully expect that this will be walked back. I expect as much as they want to get Trump and this may be Trump’s biggest battle. We talked about this. Trump’s biggest battle may be with the money people and it may be with the Federal Reserve. As Jay Powell reminded us, Trump can’t fire him. That was from the last press conference, right? Not permitted under the law. That was the quote.

[00:03:46]:
So this could be Trump’s biggest battle is going to be with the Fed. And if they decide next year to start hiking rates in an economy that’s slowing, folks, that’s called really, really bad decision. He actually took credit for saying. He took credit today for not having a recession. He said, well, we beat that. Famous last words. Reminds me of anything like mission accomplished from George W. Bush above the aircraft carrier.

Oh, my God. All right, so let’s talk about the markets first. This again, this is a bloodbath. Markets closing at the lows of the day. Dow Jones today down 2.5%, down 1100 points. SB 500, down more, down 2.95% today, down to being 178 points. This is the worst Russ 2000, which had been up almost a percent just before the Fed meeting started, finishing down 4.4%. It’s a 5.4% since swinging in the Russ 2000 that happened from the time Jay Powell opened his mouth again.

[00:04:48]:
The markets were barely lower. They barely were lower. After the minutes came out, the FOMC statement came out. It’s when Powell started talking and he started speaking out of both sides of his mouth. That very obviously, very political. Obviously, very, very political. That’s what this was today. Finally, Nasdaq today was down big 3.5%.

Nasdaq had been up 180 points this morning. Closed down 716 points. Semis smh. The semi ETF down 4.1% earlier in the day had been up as much as one and a half percent. God, I really. As I wrote this morning to our very letter subscribers, I did not think we had to even worry about another about revisiting the Christmas from hell of 2018 brought to us again by Jay Powell. The same exact setup. Illiquid markets.

[00:05:48]:
And Jay Powell comes in and starts hiking rates in the middle of December resulted in the worst fourth quarter we’d ever had in the markets. Even worse than the great Great Depression. And matter of fact, the market’s so bad on Christmas Eve they had to halt trading on Christmas Eve. That was the Christmas from hell again brought to you by another none other than Jay Powell. I do expect this is going to be walked back. I expect that they’re on the phone now with their media mouthpieces and I think that we’re going to find out overnight tomorrow morning. Now the. My prediction is it will be, it will be called.

It was misinterpreted, was communicated poorly. I think that’s what we’re going to see because the fact is we do have a strong economy. Animal spirits were trying to return before today. Jay Powell put it into that real quick but I think they’ll walk it back. I think today was overdone again. Illiquid markets when you had this kind of a shit show brought to us by the Federal Reserve. When no one’s around to buy it means any selling there. There’s no buyers so the bids just simply disappear.

[00:07:02]:
And that is what happened today. Concern also the dollar skyrocketing. This what happens now. Emerging markets could be in real trouble. We could see a really ugly period overnight trading this, this should be a concern to the Fed, which is why you never say what you say what he said today with these kind of illiquid markets one week before Christmas, for example. The, the. Yeah, I think emerging markets, especially with the surging dollar, emerging markets could get hit hard overnight. The Fed should be walking this back as I speak.

They should be on the phone now walking this back so the word gets out. Tyler just also told me the fear Green index now is 37. Right. We were just in green territory now 37. So that is the flip side to this is now a lot of these leading indicators that were already basing off the 200 day like the semis like housing stocks. It just Got hammered in the last hour and a half of trading now, now we look, now we look at the technicals and now this should present some great buying opportunities. Another example today, one of our favorite darlings here, Tesla. Tesla hit a high today of 488.

[00:08:16]:
It’s 429 now and yeah, sorry, down 50 a share. And the reason for that is again, liquidity and the hot money is the first to go. That’s what we’re seeing now. And again, I’ll just say one more time, I will be, I will be very surprised if this is if Jay Powell’s disaster of a performance is not walked back overnight with something very aggressive in the morning. We’ll see. Well, you know, get inside the side of the head of Jay Powell. Good luck with that. This was, this is a shock.

Did not see this coming. Maybe the week internals of the last week someone did, but I did not see this coming. I think, again, I think this will be walked back internals were horrible as well. First of all, we had all 11 sectors finished lower today. Consumer discretionary had been our Leader closing down 4.7%. Real estate down 4%. Rates spiking higher. The 10 year spiked up now to a 4.49%.

[00:09:14]:
Call it 4.5% if you will, into a slowing economy. Again, this is about Trump. It’s about Trump coming in. Animal spirits get the economy really rocking and rolling. Jay Powell says, no, no, no, we can’t have that. I’m the big man here. This is what I’m going to do. Just, just a disaster and embarrassment.

Worst fair share in history. There is no question about that whatsoever. I’ll debate that with anybody. He looked very confused today. Again, he looked lost. That’s according to Bloomberg. This was a disastrous performance at the worst time of the year. You never, you never do this one week before Christmas.

What is wrong with this person? He’s lost. Bloomberg was right. He’s a lost man. Credibility completely shot. Now. Jay Powell, his credibility is gone after this performance today. Absolutely gone. Especially when he’s forced to walk it back and everybody realizes that this market rallies big time tomorrow.

[00:10:14]:
Assuming that he does that and the people that sold today got wiped out because they panicked into this. They should be the most angry at him. Jay Powell should resign based on this performance. Jay Powell should resign. He won’t. He won’t. But he should. The internals.

Let’s take a look here. Excuse me. Okay, quick refresh. Yeah, this is pretty bad. So we had 13 to 1 negative advance decline. 13 to 1, declining stocks beat advances 13 to 1 on NYSE. But a lot of times we’ve seen that NASDAQ was better, but still 6 to 1 negative. Again, these are, these are not good numbers.

Volume NYSE 89.52% down volume. The only reason it wasn’t past that important. 90 figures. Of course, the sell off only started when Jay Powell started talking, which was at. At 2:30 Eastern Standard Time. Nasdaq 6. Excuse me. Nasdaq was 61% down volume.

[00:11:26]:
Much better. Much better in Nasdaq in a commodity watch. Again, devastation here as well. Gold down $60 an ounce. That’s down 2.2%. We’ve seen worse, but this shouldn’t be the case. This is a. Yeah, bitcoin has been.

Been pretty, pretty stiff competition for gold. A lot of people are selling gold to buy bitcoin. Hard to fight that logic. But. But now again, liquidity there, there is no liquidity at this time of year, which is why you never do anything like this at this point in the year. Again, Jay Powell should resign. Down 60 at 2601 an ounce. Silver down even more, down 3.7%. $1.11 an ounce at 29.77. Copper today down 6 cents a pound at 408. Crude oil down 56 cents a barrel at 69.52. And finally, where is my. Here we go. Bitcoin down now, down 5.3% at just over 100,000. 100,000. 7:49.

Had been as high as 106,000 throughout the day. Again, illiquidity everywhere. Let’s hope that fat pal walks us back overnight. If not, there’s nothing to say. We might want to have a repeat of 2018. Do not expect that. But it, it does ring a bell, does it not, Jay? Foul should make this right overnight. Well, let’s hope that that happens because this should not have happened today.

Completely uncalled for and ridiculous from the worst fetch here in history. All right, folks. Hey, appreciate you listening. Hope you had a good day and even better night. We’ll see you back here again tomorrow after the close.