Today's episode is packed with insights that will help you navigate the current investment landscape. We'll dive into the latest disinflationary data from the Producer Price Index, analyze the market's reaction, and discuss the implications of falling yields. We will also cover the intriguing possibility of GameStop adding Bitcoin to its balance sheet, PLUS, we'll touch on the latest developments from Tesla.

Dont look back because the market is closed. Good Thursday afternoon, everyone. Tyler Herriage here with you for todays VRA investing podcast. Hope you all had a great day out there today. It was a bit of a mixed day for our markets today, but we got more good economic news back this morning following yesterday’s better than expected CPI data. We got another good round of disinflationary data today, this time from the producers price index coming in. Different indexes, but better numbers here than what we saw are below where we see numbers of the CPI right now, actually in the 2% range here. But looking at just the headline numbers here, down unexpectedly down two tenths of 1% month over month.

The prior month was up two tenths of 1% and expectations were for one 10th of 1% increases. Their core CPI very similar. Coming in much better than the expectations were for coming in unchanged here on the month. Last month was a half a percent increase. So, you know, hard to imagine. Obviously, negatives across the board would be better here. But again last month it was half a percent and the expectation was for three tenths of 1%. So to come in flat on core PPI, again, much better than expected.

[00:01:41]:
And you got some of the reaction today that you might expect, namely in yields. And like we talk about here often, the market is a forward looking mechanism when you see yields falling. In reaction to news like this. And following yesterday, even with Jay Powell speaking during the day, we always looked to that as signaling that rates are going to continue heading lower. And today we hit another multi month low here. I believe this is the lowest level since the end of March. It’s not too long ago, but it’s gone down in a quick order here. Down again today.

Over 1.3% now at a 4.23. You know, we’ve talked about this for some time. Rates in this level are no concern for us here. As far as the market goes. Yes, we want to see rates coming down. You hear from a lot of people and a lot of clients as well. We’ve got some clients that work in the real estate space, and a lot of people right now are putting buying a home on pause because rates are so high. But one of the really interesting aspects of it is that home prices have started to come down with that.

So we’re almost in a sweet spot kind of environment. You’re not to give this isn’t, you know, go buy a home advice here, but we’re kind of in a sweet spot. Once rates do start heading lower, we would expect prices to rise because more people are going to go out and say they’ve been waiting for this. Right. I hear it from, again, a lot of clients, people in the city here, that I’m waiting for rates to go lower in order to purchase the house. But if they were to buy it at a lower price today and a 7% rate, if you waited a year and that price increases, and let’s say the rate falls from seven to six or even potentially a little bit below that, depending on the price increase, you’re kind of looking at a very similar mortgage payment there. So it’s an interesting time. You know, we love housing here at the VRA.

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We don’t have a position actually right now. We took profits in that earlier this year, but, you know, we’re looking for an opportunity there to get back in it. You love to see the home builders doing well again, part of a healthy economy here as well. You want to see the housing market doing well, which it’s held up, all things considered. Absolutely. All right. So after the news came out this morning for better than expected economic data, we’ll start with rate cuts here because the odds of a rate cut, we talked about this here on the podcast yesterday from the CME’s FedWatch tool. Right.

And this is just a tool. Don’t put too much weight into these predictions. But it is interesting to see it beginning to align with the views that we’ve been saying for months now that we still expect two to three rate cuts this year. Now the probability for the first rate cut is firmly in the camp of September. Not too long ago, September was pretty firmly for the Fed to stay put, but now we’ve got September potential rate cut November, and the final meeting of the year would be December. So still got time for those two to three rate cuts this year. And that’s continued to be what we’re looking for here. We’ve got more economic data coming back.

We don’t, thankfully, have another Fed meeting until the end of July. So that’s always nice. And then in August, very rarely will they cut rates or raise rates during that time. They got the Fed’s Jackson hole meeting, but it’s always a possibility. I doubt that that will happen, but always a possibility. That would kind of freak the market out. It would look like an emergency style of move from the Fed. And if anything, the market does not like surprises.

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All right, next up here, though, or to kind of continuing on the economic front, the reaction to the data this morning was a little underwhelming for our major indexes. As we fell out of the gate this morning. Got a little bit of a rally into the close, though, to finish well off the lows of the day. And it did not stop the Nasdaq and the semis from continuing to hit all time highs here again today. I believe the S and P, that might be an all time closing high there. Yeah, it looks like it was. So, I mean, another all time high there. We don’t always focus on those, but as we say here, often new highs beget new highs.

So good to see. Absolutely there. And especially you want to see tech leading. Nasdaq did that today and the semis led tech. Still, though, despite the all time highs, continuing, getting better economic data back. Right. As far as inflation goes, jobs may be weakening a little bit. We’re slowing, but we’re not in contraction territory here.

We’re really not that close even to contraction territory. Of course, we always want to see stronger economic growth and employment growth and wage increases. That’s what we root for here. But what’s so interesting is with some positive news coming back here, the fear and greed index today, I talked about it a little bit yesterday, was in neutral territory, actually fell into fear territory today. Yeah, our markets were mixed, but we got all time highs from multiple names, the semis again and tech again here. It’s tough to be bearish when tech is leading. So that’s why it’s so interesting to see the fear and greed now at a 43, which is fear mode. Oh, wow.

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Despite the all time highs, just not enough for the fear and greed index, I guess. But we are seeing a little bit of separation in these sentiment readings because this week we got back, also overnight we got back the AAIII investors sentiment survey. We talked about this last week and noted that there was a big crease in bears last week and bulls remained the same week over week last week. This week, pretty much the opposite here. Neutral investors remaining about the same, roughly 29%, bulls jumping from 39% to 44%, and bears falling from 32% down to 25%. So as contrarians, we may not love to see the bullish lean here, but we’re nowhere near excessive bullishness here. Far, far from exuberant levels of bullishness until we’re getting into the 60, 65, 70% range of bulls for weeks, potentially even months on end. They always go a little bit longer than most people think.

Right? So again, that tells us we’re nowhere near the top for this young bull market. And again, I mean, we’re 20 going on 21 months into this bull market and bull markets on average run, I believe it’s 3.8 years. So we’re not even done with year two yet, folks. So buckle up. Be paying attention here, and I’ll get to some of our individual recommendations as far as the. Especially what we see in the short term here for our major indexes going forward, because we are beginning to hit some overbought levels here. But we’ll talk about that in a minute before we get to our market. I wasn’t really.

So I’ll jump around a little bit here. I wasn’t going to talk about this too much today, but Kip and I were just talking about it at our, you know, every day we have a call at the close to go over what we saw. And this GameStop move here is starting to really look like meme stock mania is back. And GameStop came prepared this time because recently, with some of these runs, their CEO, Ryan Cohen, has made some very interesting moves here as far as share issuance and other aspects that now Gamestock has like 35% of their market cap cash, roughly $4 billion in cash at their disposal. Now. I mean, that’s ammo to use against the short sellers here. And the rumor now that we’re, we’re talking about today, and again, this is a bit of the rumor mill, but if true or even partially true, this could become very fun and very bullish in a short period of time. The rumor is that Ryan Cohen wants to do something similar, similar to what Michael Saylor has done at Microstrategy.

Right. Microstrategy isn’t necessarily a bitcoin or crypto company, but they were the first company to add bitcoin to their balance sheet intentionally, and it’s done very well for them over that time. So now it’s being rumored that Ryan Cohen is going to announce that they’re going to also be putting bitcoin on their balance sheet. And now GameStop already has a cult like following their. Bitcoin obviously has a cult like following there. I mean, this is a match made in investing heaven here as far as especially a rally goes that is purely, you know, a technical look at it. There’s, I mean, obviously, $4 billion of cash on the balance sheet is a very fundamental reason to belong this company. But that story is a sexy story, and I think it could have a lot of potential here.

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Stay tuned. We’re going to keep talking about it. Absolutely. It’s fun to talk about. Right. And at the end of the day, if you can have some fun while making money. Why not? It’s the best of both worlds and other kind of fun news as well. We love talking about Tesla.

That is an exciting story, right? Who can’t get excited about innovation, about fun things that they’re working on that really could make a difference, not just an incremental change in daily life, a big difference in daily life. And Tesla, we believe, has that capability. It’s a vra ten bagger here. And today we learned that Tesla won the shareholder vote in favor of Elon Musk and this massive compensation package, which was already agreed to and approved in 2018, it was denied by the state of Delaware. So props to Elon for standing up for himself there and really a double win today. Not only is he getting the compensation package, Tesla is now going to be incorporated in the great state of Texas. I’m a little biased here. I’m Texas boy, but we love it here.

It’s exciting. I live here in Austin, and they built their gigafactory here quickly, and it is a massive, massive building over there. I’m excited to see what they can come up with in the coming years. And, I mean, Elon’s moving a lot of his projects to Austin as well. I believe they have a SpaceX office here now. And just outside of the city, there’s also a boring company facility there. The rumor is that there’s going to be a connection potentially one day from San Antonio to austin with one of his boring tunnels. That would be pretty cool to see and really unheard of here in Texas.

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So, again, exciting stuff, though. Those are fun projects. These are the movers and shakers of the world that we’re watching here. Right? Especially someone like Elon Musk. Look what he’s done to the space industry and how exciting that is. And, you know, a little inside baseball here into the way that I like to think about investment ideas is, I don’t think I got this from Elon, but I’ve always been fascinated by space, just from growing up and watching, you know, the space shuttles and growing up in Houston. Right. We have the Houston Space center here, Johnson Space center, just outside of Houston.

So I gravitated towards that as a kid. And you start to learn about all of the innovation that took place to specifically work in space. A great example here that I think about all the time that, you know, you talk to some old school, you know, guys who are really good at word working, really good with construction, and everyone used to love the plugged in version of a drill, you know, could get more power to it. You know, the battery is not going to die on. You may not be as mobile, you know, if you need, if you’re in the middle of the woods, it’s not going to help you out there. But, you know, for that project, if you’re working on a house and you have electricity, it’s a great tool. The reason why we have battery powered drills today is because in space, they couldn’t leave a socket exposed on the outside of a space station or space shuttle. Right.

They couldn’t bring accorded pieces of equipment with them. There’s nowhere to plug it in outside of that. So they had to design battery powered tools for all of these things to use on spacewalks and things like that. So I love thinking about investment ideas from that point of view. I’m a big fan of nuclear as well. You know, we’re going to. Solar power isn’t going to work in a long term space use. Yeah, you can get it here closer to the earth, but what happens when you go further away from the sun? Right.

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We’re going to need alternate sources of power, and at the same time, we can use it to provide renewable energy here on earth. It’s a win win, right? Doing the research on it is a win win. Anyway. Little sidetracked there, but I think it’s fascinating to think about investing in that way. Sometimes you get some big ideas out there. They’re a little bit up in the clouds, maybe not feasible, and you got to bring them back down to earth. But it’s just an interesting way to approach it that I like to do for certain stories. Tesla on the news today, though, was up 2.9%, and we do believe we’re still in the early innings of the Tesla story.

And it’s already very exciting. Right? I mean, it’s a half a trillion dollar company. Well over that still. So it’s not a startup or anything, but we still think this is the early innings here and just so many exciting things happening overall. You know, we’ve got the robo taxi rollout later this year, some more information on full self driving the robots OPTiMus that he’s BEeN WORking on as well. So we’ll see here. You know, it was really pretty shocking how many people in TaLKinG heads were either against this vote. YoU KNow, big institutions as well that were against this vote.

Unbelievable how you could be a shareholder of Tesla and vote against the CEO, Elon Musk, whose name, whatever you want to say about him. Tesla and Elon Musk are synonymous with one another. He is the reason why they are where they are todaY. And there’s. I don’t think you can deny that, of course, he’s got incredible engineering teams, but, you know, he’s the one who puts ThEM together. At the end of the day, he’s made a lot of these executive decisions there that have done so many incredible things for Tesla. And what a lot of people pointed out, Kip talked about this as well, is that a lot of people who are pro EloN in this were scared that he would just take his toys ANd go home if he didn’t get his way here. Right.

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I wouldn’t compare it to a pouting child, because this is a big deal, and he’s obviously in the right. This was approved by shareholders already. It’s not up to the state of Delaware to decide that the shareholders didn’t know what was in their best interest. I personally don’t think that that’s how markets should operate. Right. We made agreements. We stick to agreements. Again, from Texas, handshake agreements are very important to us here.

So again, you say whatever you want about him, but the fear was that he would take the projects he’s working on and go take them to his private companies. Right? Take it over and start working on it at SpaceX, his AI program at SpaceX or at Twitter instead of working on it at Tesla, which is the public company. Right. Taking. You know, he probably still let the companies work on it because he couldn’t just take it and go, I’m sure there’s some laws against that, even if you do own both companies. But. So, again, it’s good to see, though, he’s built a great foundation here. It’s just amazing people would want to root against that.

And good to see they’re going to be staying at Tesla. These are great ideas. They integrate well with the platforms that he’s been there. And as you may have seen now, Cathie Woods Arc, again, just up the valuation for Tesla in a big way here. And I get it. ARc portfolios have not performed very well. Big miss on Nvidia, but they do good research there. And we’re fans of Optimus here.

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At the end of the day, Ark’s base case right now for Tesla is a share price of $2,600 a share by 2029. That right now, for today’s example, we closed at $182. Think about how massive of a move that is. And that would give Tesla a valuation of an $8.3 trillion market cap, more than double the largest companies in the world right now. Their bullish case. That’s not even their bullish case. Their bullish cases. $3,100 a share with a $9.9 trillion market cap.

Now, I know that might sound crazy, but five years ago, pre Covid, maybe a little bit further back than that because we started to get the talk of it, Apple was, was getting close to the trillion dollar mark, right? But people thought it was insane then that we were going to have a trillion dollar company. And that must have marked the market, the market top there, right? Well, not quite. Five years later, we’ve got three companies now in the $3 trillion range here. So yes, we do think in another five years, it’s realistic to think we could see companies with a close to $10 trillion market cap. Absolutely. And not only that, not only will we have, it’s not just going to be three companies, is my point here. It will likely have 20, at least $1 trillion companies in market cap by that time as well. By the end of the 2020s.

We are in the roaring two thousand twenty s. And that’s a pretty big call there, but we think that that’s going to be the case. This, this train is going one direction. It’s forward, not backwards. All right, so now let’s take a turn here and actually dive into our market action on the day to day. We’ll cover it pretty quickly. Covered a lot of it here already, as I mentioned earlier. Exactly what you want to see.

[00:20:25]:
Tech leading the way, Nasdaq leading the way today up, not a huge day, but up over three tenths of 1% to 17,667, an all time high and the semis low. Lead tech semis, SMH was up over 1.5%. Also hitting an all time high today. And Nvidia has just been unstoppable here, continuing to lead the semis up 3.5% today, hitting another all time high as well. Before I go on to our other major indexes, I will point out here, we wrote this up to our members this morning if you want to see it, we’ve got a 14 day free trial going on right now@vraletter.com. dot but we wrote about it to our members this morning. We’ll talk about it here for a second, is that we are approaching extreme overbought levels here on both the Nasdaq and the semis. Now, we aren’t at quite the highest distinction of extreme overbought, but this is the time where we would pause buying in this group.

We’re big believers in monthly dollar cost averaging so again, not a sell signal, but we’re gonna put a pause on our regular monthly dollar cost averaging until we work off those overbought levels. Make no mistake, though, any dip that we get post this, and I’m not saying it’s gonna happen like tomorrow, sometimes a market that gets overbought and stays overbought kit is very bullish as well. So too soon to tell if that’s the environment that we’re in. That’s why we’re staying positioned here. But stay tuned. We’ll be talking about it more here and advising when we are going to start putting our money back to work in the tech sector as well. Next up. Oh, sorry, our mother.

Major indexes. Next up was the S and P 500, again, all time, closing high at 5433. After that, the Dow Jones was down 0.17% to 38,647. Lastly here, the Russell Studio 2000, down eight tenths, just over eight tenths of 1% to 2038 there. Next up, looking at our internals on the day here, we would have liked to have seen better numbers here. We got great numbers from the internals and yesterday’s market action. If you heard the podcast yesterday, I talked about it there, but not great readings today here. Not terrible though, either.

[00:22:51]:
No major concerns for us here. Again, we’re at overbought levels, and we’ve seen this rotational theme take place in our markets a lot. The generals have started acting better. Little mixed action from the generals on the day today, but so it could be another little rotational aspect that we’ve been talking about a lot here on the podcast. We think that’s probably likely what this is. And so, again, no real red flags here, but we did have more declining stocks than advancing stocks. Managing to come in, though, below two to one negative on the day. Much like our major indexes, these readings finished off the lows of the day.

So, you know, not bad considering where we were earlier in the session. 52 week highs to lows did manage to come in barely positive here on the NYSE, but was negative today for the Nasdaq. Lastly here, volume did come in two to one negative for the NYSE. Battled back here to come in just shy of even so, still negative, but just shy of even for the Nasdaq. So, again, you know, not great readings, not what we want to see, but not. Yeah, it could have been a lot worse. Absolutely. All right, next up here, taking a look at our sectors on the day to day.

We finished with just four out of our eleven s and p 500 sectors higher on the day to day. We were led, as you might expect, by the tech sector, which also hit an all time high today. After that we had real estate and then utilities, which I pointed out yesterday was interesting to see yields hitting new lows in utilities. Not reacting to the upside. As the biggest borrowers in the nation, they usually react well to lower yields. And that’s what we’ve been saying here for months as well. While utilities have really been under the surface here, well, not under the surface, but kind of under the radar. I mean, just hit an all time high in the month of May.

[00:24:45]:
As a forward looking mechanism, we think utilities are continuing to tell us that yields are going to head lower from here and then to our laggards on the day to day. Communication services did lead the way lower. If I’m not mistaken, meta and Google were both down on the day. So two of our mega caps there were down on the day. Not nothing massive or anything. Again, nothing concerning. But meta and Google make up like 40% of the communication services sector. It’s absolutely crazy.

So we call that a proxy for tech, but that likely had a lot to do with it today. Our other lagging sectors were energy, industrials and consumer discretionary. Finally here for today, our VRA commodity watch where we are seeing some red on the screen today. Yesterday was really pretty flat. Flat for commodities today though, heading lower. Gold now down one and a half percent to $2,319 an ounce. Silver down bigger, down 4% to $29.03 an ounce. Copper, same story down as well, 1.8% to $4.48 a pound.

And then oil down seven tenths of 1% on the day to $77.93 a barrel. And finally here, crypto, you know, continuing this pause, I talked about this yesterday as well, with kind of the 65 to 70,000 range right now, kind of waiting for a catalyst. We know all the good catalysts here. We’re going to continue to add to our positions in bitcoin. You know, keep buying the dips here as well, much like our major indexes and favorite sectors and our VRA ten baggers. And if we do get that GameStop news, I think that would be very exciting for both, not only GameStop, but also for bitcoin as well. And I think more companies will follow suit after that. It kind of started an avalanche of companies who want to put bitcoin on their balance sheet as well.

[00:26:55]:
We think that would be amazing. We love it. Alright 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@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.