In today's episode, Kip discusses the impact of the Fed's statements and Powell's off-script comments on the market, highlighting the potential for upcoming rate cuts and their effect on various sectors. He also shares insights on tech stocks, the performance of gold and silver, and the implications for Bitcoin.

Don’t look back because the market is closed. Good. Wednesday afternoon, everyone. Kip Herriage here with the daily veering investing podcast. Hope you had a good day today. Gotta tell you, folks, this is why J POW sucks. All right. I don’t know how else to say it, so I’m gonna be just Texas blunt.

Jay Powell sucks. And I’m gonna explain why in a very brief fashion. Here is the worst fed chair of our time, certainly of my time. Okay. Jay Powell, from the time Trump gave him the job, is now making his 5th. 5th policy mistake. Now, whether or not they’re mistakes, are these all planned? I don’t have that answer.

But from the markets point of view, I’m telling you straight up, this is Jay Powell’s fifth policy mistake since he got the job. And this may wind up being his biggest one because it’s happening in an election year. Let’s start there today. Of course, we got the Fed statement at 02:00 p.m.. Eastern. You know what? It was exactly as we thought it’d be. Right? Data dependent. Data dependent.

Data dependent. And then they threw in something new about. We’ll have to wait and see what the evidence. I don’t remember exactly what it said. Okay. But the statement said, you know what, let me pull it up here. I do have it here because it’s pretty important. The committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.

[00:01:40]:
So that those two words, greater confidence, meaning that we don’t know yet. It’s gobbledygook. Okay? But that’s pretty much what we come to expect from the Federal Reserve, certainly from JPOW. Okay. But so that was fine. Market really didn’t do anything on that as expected. I expected today to either be a non event or to be dovish. And then his pressure started.

And this is where the fun always starts with this guy. This is where this clown always gets himself in trouble. He gets too cute. He gets too cute and he goes off script. J Pow should never take questions. Or if he does, he seems to get tired. He gets sloppy. Okay.

[00:02:24]:
It’s usually in the last remaining minutes, the last five minutes of his presser, where he starts tripping over himself and saying things that aren’t in his script. He did that again today, and he almost crashed the markets. Crashes, a strong word. He sent the markets tumbling lower as a result. When JPow said he doesn’t think it’s likely out of the blue, Jay Powell says this, I don’t think it’s likely we’re going to cut rates at the March meeting. Now, if you follow me at all, you know that I’ve been saying for some time that the March meeting would be our first rate cut. Even that is late. They should have cut rates today.

Over the last six months, inflation has been running below the Fed’s target of 2%. Core PCE is like 1.61.7%. Even CPI over six months is near the Fed’s target. Now it’s 2.9% over the last year. So we know we’re not there yet, but the risk is that we overdo it. Right? The risk is that this restrictive policy. And, folks, what do we mean by restrictive policy? I’m going to make it very simple because I’m a simple man from Texas. The Fed funds rate is five and a half percent.

The ten year yield, which is the yield that matters most today, is right now trading at. Let me get a current quote from you here. 3.51%. I knew that sounded wrong, 3.91%. So Fed funds rate 5.5% right now, 3.91% down. The yield on the tenure today is down 3.6% on a return basis. So bonds rallied big time today. Bond yields got smoked today.

[00:04:26]:
In other words, the market is not believing what JPOW is selling. Market’s not buying it. And even after he said the fact about, I don’t think we’ll hike at the March meeting, yields even drop further from there. They rally shortly and then they just drop further from there. So the market is telling JPAl and anybody that’ll listen that they don’t believe him. And the markets got smoked as a result. The equity markets got smoked as a result of Jay Powell once again going off script and saying something that none of his Fed governors agreed to. It’s nowhere in the Fed statement, their FOMC statement.

[00:05:11]:
Nowhere in that statement does it appear that we don’t think it’s likely we’re going to cut at the March meeting. JPOW just says this. And again, he has a habit of doing this. So, folks, just a real quick journey back through short history. We all remember transitory jpow, do we not? Less than two years ago, the feds, as inflation was getting ready to surge higher. Go parabolic. Right? First the Fed says, we don’t think we have inflation. They actually said this when inflation was really starting to percolate.

Then the next thing they said was, well, we have inflation, but we think it’s transitory. We all remember that? And they stuck with transitory for a couple of months as inflation was soaring. So everyone knew they were wrong. Everybody knew. What are you looking at? Because we can see by their CPI reports, PPI reports, the Corp, we see it in all the inflationary data. And your money printing is the biggest clue, right? Because that is the source of all inflation, currency inflation. The market saw it. And we wonder, what is JPAL smoking? What is he looking at? Folks, I have the same question now.

I have the exact same question now, because we’re already at 2% inflation, we’ve already met the Fed’s target. We’re starting to see now look what happened in tech stocks today. Right. This is, by the way, just to get back on the markets. I wrote this up this morning. The action that we’re seeing in tech stocks does not surprise me and should not surprise anyone. Yeah, Microsoft, Alphabet and AMD all got hit hard today. They all reported earnings after the close yesterday.

[00:06:54]:
AMD finishing down just 2.7%. Actually finished fairly strong today. Google or Alphabet down 7.3%. Now these had all rallied back quite a bit until Powell started saying things that weren’t in the script. And then finally, Microsoft, Mr. Softy today, of course, just an incredible earnings report yesterday, even Microsoft today started collapsing on it. Microsoft finished down almost 3%. Microsoft had been flat to higher on the day and now finishing down 3%.

As J Powell was speaking, saying what was in the script? The markets were rallying, the semiconductors went positive, right? They were down at one point today, well over two and a half, 3%. Semis went positive. Small caps turned positive by four tenths of 1%. They finished down, folks, 2.4%. So this was a brutal last hour and a half of trading that never had to take place, and it only happened because JPOW went off script. Now, I’m going to tell you straight up again, the Fed’s going to cut rates at the March meeting, right? As I told Tyler and Josh at our staff meeting a bit ago, I put it, 90% probability that the Fed is going to cut rates at March because things are starting to weaken underneath the surface. New York bank is concerned now about their financial balance sheet potentially, and there’s never just one. Right.

[00:08:28]:
This word started linking earlier today, which is when the ten year yield started collapsing. But again, the broader picture is that, no, I’m not concerned about these tech stocks at all, folks. Microsoft, the largest company on the planet, increased revenues by 18% and grew earnings by 26%. Alphabet, Google, grew revenues by 14% and grew earnings by 56%. These were stellar earnings reports. The stocks only went down initially, of course, because by the rumor sell of the news, these stocks, of course, have been on fire. And so this is what we expected on the VR investing system. As Tyler covered in detail with you yesterday, as we started reporting last week.

Look, we thought that we had probably some weakness coming in these mega cap tech stock names, because on the VR investing system, the entire group, essentially all of them that have been going parabolic, of course, all the big boys, well, they’ve all hit extreme overbought, on steroids on the rear investing system. This is when bad things happen. Right? The rubber bands stretch too far. If you followed us very long, you know that you’ve seen this happen time and again. It’s a repeating pattern. That’s why technical analysis really matters. And the reason is so many people follow it. If everybody’s following it and everybody’s seeing the same thing, they react the same way.

[00:09:49]:
That’s one of the biggest reasons in today’s world, especially the technical analysis works the way it does, because so many people follow the same stuff and trade off the same. Tomorrow, you know, we’re going to get three really important companies reporting, Apple, Amazon and Facebook report tomorrow. And so all after the close, I believe. Yes, all after the close. But again, this group is extremely robust. So look, our approach has been, because we’ve been aggressively along the semiconductors from the bear market lows of October 13, 2022, our Soxl was up over 500%. The three time leveraged semi ETF that we use, we had gains over 500% from the bear market lows in 2022. But our approach has been, okay, we don’t want to sell that.

Right. We don’t want to sell that. We pause our buying. And so that’s what we started doing last week, pause our buying now. We have a new game plan. Now we’re going to be looking to add a new position. So sometime beginning likely in the next week, we’ll once again start adding and buying Soxl again, buying the semis again. The pause will be over with at this rate.

[00:11:05]:
Again, Nasdaq that he finished down 2.2%, down a big 345 points. Right. And we’re also going to be looking to add new positions another three time leverage ETF in the tech space. I’m not going to give that out quite here. And we want to re add housing back to the VRA portfolio after booking profits last year of 201% in December. So we’re looking to go back into that group again and it’s these kind of sell offs, of course, that give us that opportunity. From that point of view, I’m thankful. But from the point of view that says the market should not work like this, I’m not happy at all.

I’m furious because I’ve seen this movie before with Jay Powell. He’s horrible. Look, none of these fed people have ever had real jobs. They’re economists. They’re traditionally trained economists that all learn from the same playbook. One of those books is Paul Krugman’s book, by the way, the Nobel Prize winning economist for the New York Times who said in 2003 that the fax machine will ultimately be as valuable as the Internet. Yes, Paul Krugman, that’s one of the books that these guys all study from. So they don’t have real world experience, which means they’re trading off of models and they’re reactionary.

[00:12:29]:
That’s the big point here, folks. They’re reactionary. And I’m telling you again, if I’m wrong, I will gladly admit it, but I’m not backing away from my forecast that the Fed’s going to cut rates in March. And because of what Powell did today, March could be a really aggressive rate cut. March may not just be a quarter or a half a point. March may be three quarters of a point. And let me explain to you why that is. Because for Powell not to realize this, this is again showing there’s something not quite right with the guy.

And I like him. He seems like a likable guy, okay? But he doesn’t think before he speaks clearly. Because guess what else is happening this year? We have an election this year. And the Federal Reserve does not like to be seen as influencing elections. Of course they do that. And of course 80% are all liberal, so they really want their guy to win. The state sponsored guy, whoever that is, in the election cycle, I think we’re all pretty clear in this election cycle is going to be Biden. But they don’t want to be seen as influencing elections.

Right? So if they don’t cut in March because they don’t meet every month and they don’t want to cut past September, October, really August, September, the Fed does not want to be cutting rates within two to three months of an election. That’s just right or wrong. That’s historically the way they’ve done it. That’s tradition. That’s policy. That’s unwritten Fed policy right there, folks. That means the Fed’s going to have to somehow get in two to three rate cuts. And they don’t like to do it at successive meetings.

[00:14:08]:
They like to be able to skip a meeting and then cut rates again. Otherwise they’re telling the world we screwed up. Well, folks, they screwed up. They screwed up because I’m telling you also that the inflation data, and again, we’ve got a lot of evidence to back this up. The inflation data that’s coming for the month of January and February, the Fed’s going to have both of these before their Fed meeting in March. They’re going to have all this inflation data, two more rounds, right? CPI and PPI, they’re going to have this, plus a lot of other stuff coming out that is going to show that we have clear disinflation, if not deflation. Powell even said today, consumer goods, we have deflation. Prices are falling.

So the concern, and the biggest concern for the Fed and for bankers is that it’s one word and it’s deflation. It’s the word that scares the hell out of them more than anything else, because then you get into a deflationary spiral and now you’re talking about, okay, it’s time to cut rates 2%. Yeah, we’re going to go from five and a half percent to three and a half percent like that because the bankers fear that word and they know what that means. It means debt has no home. That’s what deflation means. Debt has no home. And our entire monetary system is debt based. So this is what the big concern is.

[00:15:31]:
And also, again, with the election coming November, they’re going to have to get at least two, if not three rate cuts done before then. So now they’re bunching it all up in a way they don’t want to do it. I’m telling you, Powell made a big mistake today. I believe he made another mistake today, I should say. And I think that when the Fed speakers start coming out next week, you’re going to see people covering for him. You’re going to see people covering. I really, frankly, from my point of view, from our point of view, from the VRA investing system point of view, and from the VRA portfolio point of view and on behalf of our subscribers, you listening here? I hope the market continues to pound lower because we’ve got some positions we want to add and some we want to add to in advance of what’s going to be, again, another major move higher this year in our equity markets, because today should not have happened. What happened today should not have happened.

[00:16:27]:
Powell screwed up again. The ten year being at 3.91%, folks that’s all the evidence you need. Again, Fed funds rate five and a half percent. Ten year, 3.91%. No, that’s way too restrictive, especially in this kind of a fluid economy. There are layoffs taking place. We are starting to see now some negative events taking place in the credit card space. Right.

People are running their balances up more. They’re making minimum payments more. This is starting to happen. A slowing economy is starting to happen. And that’s the kind of thing that can pick up speed quickly. And trust me when I tell you, Joe Biden and his team, it’s the last thing they want to see in an election year. So I’ll leave it at that. I think I made myself pretty clear there.

JPOW is the worst dead chair of my time. Certainly Dow Jones today, finishing down. I believe this is right at the lows of that. We were on a conference call. I believe this is right at the lows of today. Dow Jones finishing down 317 points. That’s down eight tenths of 1%. SBf 100 down.

[00:17:31]:
.6%. 1.6%. And it was down maybe three tenths of 1% as the market was starting to rally. And as tech went, as semis went positive, and as small cats went positive. Small cats went positive, but then finished down. Rusty thousand down 2.4%. All right. Ridiculous.

It also shows you the lack of liquidity in these markets. The fact they can turn them down like this, that’s not a good sign. Again, the Fed should know all of this. Why don’t they know this? Nasdaq down 2.2%. Down a big 345 points. And again, semis today, we’re only down 1.4%. Again, there’s your strength. That’s what the market really wants to do, is go up.

Okay, the semis, again, are the tell, right? Again, that tells you really the strength of this market. But the Fed, they can screw up a wet dream. And who knows, man? Maybe they’re going to try to do it one more time here. I just don’t know. Very frustrated with what I saw today because it just was not necessary. Today should have been a non event. Shouldn’t have had a pressure today. Anyway, the statement should have come out and says, that’s it, we don’t need to have it.

[00:18:38]:
But here goes. J. Powell got to open his big mouth and once again put his foot in it, right? Maybe he’s just dying to turn his money printing press back on. There may be more truth to that than anybody has any idea in our internals. Today. Again, internals today. And I put out a midday update to our parabolic options program members. Internals.

They were mixed to positive even when the market was at its lows. And then again, JPAL, open mouth and cert foot. Here goes the internals. We had three to one negative for advanced decline. On advanced decline for Nasdaq, three to one negative. NYSE, almost three to one negative 79.6%. Down volume day for NYSE. NYSE volume was positive.

[00:19:23]:
All right. It was positive. And then we almost collapsed on volume. Nasdaq volume down better, but still down 62% on the day. Again, Nasdaq volume was positive midday before JPOW decides to go and ruin the fund. Finally, on the day, new 52 kai to lows positive. 311 stocks in new 52 week high to just 156, hitting a new 52 week low. We’re going to see that trend continue.

Sector watch brutal. All eleven s and P 500 sectors finished negative on the day. Communication services down almost 4%. Technology down 2.1%. Energy down 1.9%. A lot of stuff down one and a half percent. Plus, again, communication services down 4%. That’s a big move.

[00:20:09]:
Lower healthcare was our winner of the day, down just one 10th of 1% in our commodity watch today. And again, we saw it here. Gold had it right. Gold still finished higher on the day. Okay, but gold was up at one point, close to. Well, the high was 2074, and it finished at 2057, still up $7 a day. But it had been up as much as 23, $24 an ounce Today, again, only finishing up $7 an ounce. Because gold and the miners know what’s coming.

Rate cuts are coming. As a reminder, even GDX, the minor ETF, finished down today because, after all, it is an equity, right? It’s still a stock. GDX finished down half percent. It had been up as much as 1% plus in the day. Because, as I shared with folks this morning, as we talk about here often, by the way, boy, if you go back through history, we don’t have a lot of rate cutting cycles, but in the last three rate cutting cycles, the average move higher. In GDX, the gold miner ETF is 180%. So gold is already sniffing out what’s coming. The miners have yet to really do that.

[00:21:17]:
They’ve not been trading great. They are putting a series of higher lows. That’s really all about all you can say about them. They’re still trading below the 200 day moving average. Gold, of course, is trading much better. Silver also has been pretty beaten up, but I believe gold and the miners are about to start telegraphing this mistake that the Fed’s making here again, because again, I repeat, the Fed’s going to cut rates in March and they’re going to be embarrassed. JPAL is going to be embarrassed for saying it again, thinking, God just made this. Some mistakes would have some self awareness to not go off script.

Unplug this guy’s microphone. How many times have Tyler and I said this over the years? He’s the worst fetch here. Certainly with these big mistakes he’s made. And just in front of a microphone, I don’t know, it’s like he gets starstruck or something and he loses his train of thought and just says diarrhea of the mouth, which is probably what I had today on this podcast, by the way. Sorry for that. But again, today shouldn’t have happened. This affects people, man. This affects people’s money, right? Their planning their retirement, planning their goals.

[00:22:26]:
This kind of stuff matters. And you cannot have an irresponsible fed chair that’s out here just saying whatever he wants to. That Fed governors haven’t even talked about. It’s not in the FOMC statement. Why are you saying things that aren’t there? Because the Fed is going to cut in March. I’m telling you, the Fed’s going to cut in March. All right, I won’t say it again. Fed’s going to cut in March.

Fed’s going to cut in March. Jpow, Jesus, man, give me a heart attack. All right. Okay. Gold, silver today was down also. It was also sharply higher, finishing down seventeen cents an ounce at twenty three dollars and five cents an ounce. Copper also finishing lower just slightly at three eightyn. Love the copper story here.

[00:23:12]:
Crude oil down $2 a barrel. It had been much higher as well. And then JPAL strikes, trading as high as 78. Ten finishes at 75 84 again down $2 a barrel. And finally today, bitcoin also getting caught up in the liquidity sell off. That’s what this is, folks, liquidity sell off. Okay. You just got people coming back into the market.

Yes, I understand. Again, a lot of stuff is stretched. The rubber band stretched too far. But again, this is our market. One thing sells off, they all sell off. Powell should be aware of that as well. A bitcoin today, finishing down just over $1,000. Bitcoin at 42,445.

All right, folks, that’s it for the day. Always appreciate you listening. Hope you had a good day and even better night. We’ll see you back here again tomorrow after the close.