In today's episode, Kip dives deep into a volatile day on Wall Street, breaking down what really happened during a dramatic market swing where the Dow plunged 700 points and the NASDAQ staged an impressive intraday rally before things took a sharp turn. He unpacks the impact of a weak 20 year U.S. government bond auction, explores the ripple effects of rising rates in Japan, and sheds light on how global debt dynamics could play into the markets.

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. Mark was actually doing pretty good today with Nasdaq after both The Dow and Nasdaq S & P 500 all opened lower this morning. Do we had this big rally intraday in Nasdaq. At one point we were up close to 100 points in NASDAQ. Even as the Dow Jones got down, I think I saw like a down 150, down 200.

It looked like just another day. Here comes the retail, Here comes, here comes the Mrs. Watanabes and we’re going to rally back to finish high on the day. And then I was actually out of the office and checked my phone and all of a sudden the Dow Jones is down 700 points. Like, okay, what’s going on here? And of course what happened was there was not a failure, but there was a poor 20 year US government bond auction. I don’t remember hearing Anyone talk about 20 year auctions in a very long time. So I don’t think that’s really what it was. I think that you’re getting concerned out of what’s happening in Japan with rising rates.

[00:01:04]:
But as Tyler reminded me in the podcast, in our meeting, we are talking about Japan’s 30 year debt being at a 3% yield when ours is better than a 5% yield. So you know, our 10 year again, it did rise today 10 basis points. We’re now at a 4.59% yield. That’s still not even at the 52 week high. It’s not even at the recent high which is just better than 5%. So I think keeping things in perspective is a good idea. But it’s coming at a time where Trump’s trying to get this budget passed and his big beautiful bill. And I think what we’ve learned, and again, if we’re just being honest realist here, what we’ve learned is that Trump used up a lot of his political capital.

He just did. Look, I’m a huge supporter of the guy. What he’s doing, what he did in the Oval Office today with the South African president. An hour of calling this guy on the carpet, right, for potential genocide taking place in the President’s own country in South Africa we’re talking about here. I mean, unbelievable. He just doesn’t care. He doesn’t gaf as they say, right? He’s going, he’s just, he’s going after whatever he wants to. He’s not going after everything.

The jabs are still on the market, but still, again, no one’s perfect. No one’s going to do exactly what you want to do all the time. But he really is going places where this is, this is the Trump that we all voted for in 2016, right? For those that voted for Trump in 2016, this is the Trump we thought we were getting. That’s the guy that’s in the office now. So, again, I’m a big fan, don’t get me wrong. But as I’ve said many times, it’s tough, honestly, because there are a certain number, a certain percentage of Trump supporters that just will not hear any criticism whatsoever. And I’m sorry, I’m not built like that. I’m a lifelong independent to begin with, and I’m always going to call it like I see it.

[00:02:54]:
I think that’s how you keep people honest. By the way, that’s why he did pivot on, on tariffs, because enough people that are supporters of his spoke up and said, no, this, this ain’t going to work, man. You know, the market is going to crash if you, we just had a, we’re in a bear market now and in no time at all, we are going to crash if you don’t change policy. And he did, right? He put the 90 day pause in. Since then, we’ve had nothing but progress. So that’s what I’ve always liked about Trump. He reads the room better than any politician I’ve ever seen. He pivots what he needs to because he doesn’t have false pride.

You know, he’s never going to admit to being wrong about something. And when that’s your, when that’s your mental makeup, you can just change your mind overnight and just move on. And that’s what he does. And again, that’s a strength from that point of view. So I think that when it comes to this, again with the tariff thing, that was reckless, there was no coordination and strategy there at all, and that used up his political capital. That’s just the reality of it. He started losing people. He lost people in Congress over this.

That’s why he’s having trouble. One of the reasons he’s having trouble getting his big, beautiful bill through Congress, it still looks very much like that’s going to get through, but now people are talking about the flip side. So we’re not cutting debt. So, oh, this bill goes through, we’re going to add $5 trillion to our nation’s debt and 10 trillion over 10 years. Or maybe, I’m sorry, as close to 20 trillion over 10 years, folks. So it is starting to snowball. But that’s, that’s, that’s, that’s, he doesn’t have the capital to ramp through what he really wants to. That was used up because of the tariff issues.

It just was. And so, you know, now we’re kind of stuck here. And people are realizing that, okay, even, even Elon Musk dosh cuts, those have not been codified into law, which means all the things that he found and all the debt and ongoing spending that we canceled, those could be reversed. And so people are waking up to what we’re looking at is going to be much more debt, kicking the can down the road because it’s very hard to have the political will to make the changes needed to be made. Because that means that folks, it means a recession, government spending, if you cut it that severely. And that means finally going after Medicaid and all the fraud that’s taking place there, why they’re not doing that, I don’t really understand that. But I think, honestly, just being honest, I think it’s because when you, when you cut a government this bloated, you do enough damage to the economy that you really do risk a recession. I don’t think Trump, Trump really wants to go through that.

[00:05:35]:
And I’ll tell you something else. There’s no way the majority of Americans want to go through that. The majority of Americans say, you know what, just, I didn’t cause this, keep kicking the can down the road. I don’t want to, I don’t want to see my home price drop, you know, 20, 30%. What if a recession turns into a depression? What if this is how that starts? You know, what if the global bond market blows up? And again, the issues in Japan, which we’ve been talking right here with you out of, wrote up in this morning’s letter, this now brings all of that back to the surface. What could happen? What could go wrong, wrong? So again, we’re big believers in keeping things in perspective. But at the same time as we discussing here with you, you know, we do have a market that is extremely bought levels. It’s days like this that remove that pretty quickly.

And so that’s what we still see happening here. There’s a lot of money on the sidelines. It’s still got to get into the market. I don’t think a, a 20 year auction that was not successful is going to be the reason that this now, now new bull market is going to re. And no, I don’t think that Japan is going to turn into a Black Swan event. Tyler reminded me, a Black Swan event is something you don’t see coming. Well, everyone’s talking about Japan, so how can it be a Black Swan event? Here’s how we wake up and futures are limit down because something really bad happened overnight in Japan and that is the Black Swan we’ve talked about a lot with you here. My first two books, Crash Proof Prosperity, they were Crash Prosperity and then have different into the titles in both of those books.

That’s what I spelled out as being our biggest black long risk. It’s what’s happening in Japan. And I think most of us know that story now. But when you have the bank of Japan, which owns 50% of all the Japanese government bonds, okay, they are the buyer of first and last resort when they step away because they’re trying to disengage, they’re trying to get away from yield curve control in Japan. They want to try to stop the easy money policy that’s been in place there for forever. I mean, good luck with that. That’s just not going to happen. And they’re finding it out now.

[00:07:44]:
So I think they’re, they’re Japanese are comfortable with rates rising to a point. But if we start to see it snowball and again, I’m not predicting it, don’t believe it’s going to happen. I think we’ve got a, I think we’ve got a decade before at least five years get out of the 20, you know, roaring2020s. I think that we’ve got, I think we’ve got a decade, but at least into 2030ish before we have to worry about that. There’s just too many good things happening in this economy. And I just, I think that again, central banks still control this game. Again, we may not like it, our system may be completely manipulated. It is, but it’s our system.

And unless they’re intending to step away and let this happen, the bank of Japan at some point will say, okay, you know, we tried yield curve control, we tried stepping away from it. Guess what? Just can’t do it. We got to find a way to grow out, grow ourselves out of this. And that’s what I like about Trump’s approach now. And you can tell from listening to Trump and to Scott Bessant, they’re now using the Reagan methodology, we’re going to grow ourselves out of this problem. And that is the correct way to do it. And then they have a coordinate again, a really well thought out plan to reduce our debt but most of those talks can happen behind closed doors. These don’t have to be public battles.

And that’s again, that’s the mistake that Trump made when with his tariff policy, just sprung it on people and everybody’s like, what, what, what, what are you doing? You know, you remember that day, God, we were sitting, Tyler sitting there watching this, and he’s in the, out in the Rose Garden and he announces, okay, there’s going to be a 10%, 10% baseline tariff and the markets explode higher. And I kind of stopped watching to pay the truth, to tell you the truth. Next thing I looked up and all the gains were gone and we were down, you know, 3%. Like, okay, what just happened here? Then I look back at the TV and he’s got his whiteboards, right, where he’s listing all the additional tariffs that are going to be placed on countries like Vietnam and of course China, the big one. And you’re like, okay, what, what, what, what is going on here? Right? And then, you know, disaster then set in after that. But that’s not the approach that typically works. Even though Trump does like to, to try things like that. His chaos strategy he uses usually with a high degree of success, this just wasn’t one of them.

[00:10:06]:
But I think that again, the bank of Japan and other central banks will step in when they need to yield curve control is not going to work in Japan. Their birth rate is at all time lows. I started saying that 20 years ago and every year it gets lower. But again, most of the debt outside of the bank of Japan for Japan is owned domestically and they can always buy more of it. And so we’re not there yet. We’re just not there yet. And we’re certainly not there in the US because as I said yesterday, I believe every time a television, a talking head says we have a death to GDP of 122% in this country. Can you believe how bad that’s world.

It hasn’t been that bad since World War II. Every time they say that, they should then go. However, viewer, did you know that Japan’s debt to GDP is better than 250%, right. Versus our 122. Then did you know that Japan, I mean China is over, is in an honest system, who knows what they really are, but they’re at least 280 to 300% debt to GDP. So again, there is no comparison there. We’re still the most powerful country on the block. And by the way, isn’t it about time that Germany stepped up? Germany’s debt to GDP is below 60%.

I bet most people don’t know this. It’s time that Germany starts joining the rest of the world in modern portfolio, modern monetary theory or something and starts supporting the rest of the world in helping to get rid of fiscal stimulus. As tongue in cheek here. Germany, of course after the Weimar Republic episode, they now have very strong constitutional controls where they cannot, they cannot add new debt or at least a very limited amount of new debt on a yearly basis. Which of course is now why they’re the most powerful country in Europe and one of the most powerful in the world with a fantastic fiscal house in order. But again, we don’t think we’re there yet. But these are the risk. This is what people are talking about.

[00:12:16]:
And I’ll tell you what we’re going to do here. I wrote this up this morning. Tyler and I have a game plan for this. If we start to see things unraveling in Japan and that is where it start, I believe that’s where to start. If rates really begin to spike in Japan, we’ll first notice that in their stock market because the market leads. So we see it first in the stock market because somebody always knows. And you start to see big downswings in Japanese equity. So again, we’re not there yet.

Really. That hasn’t happened at all here. The bond market’s leading and that’s typically not really what happens here. Especially if something really big is going to happen. In other words, wrong and bad for the world. But if that were to happen, you know, we’ve already got a game plan. First of all, we own what we want. We feel really good about the portfolio that we have here.

We’ve got great exposure to inflation related assets. You know, when you own gold, silver, bitcoin and our, what do we have three other, we have three other investments in the portfolio that are tied to bitcoin. That’s probably too much to tell you the truth. And then we’ve got also several tied to gold and the miners right between those two that makes up 65% of our portfolio. So that was done by design. But then we have great exposure to growth, growth stocks. Right. And so it’s a, it’s a great mix.

[00:13:46]:
But should we need to do something, you know, we only have to sell three positions. We sell we, because we want to sell our three, our 10 baggers. So that leads about three positions that we’d have to sell and that would take us about five minutes to do that. And then we’re, we’re, we’ve got exactly the setup we need in kind of a worst case scenario. And so, yeah, we have a game plan in case it goes wrong. I don’t think that’s going to happen, but I, I told Todd I was going to bring this up. I have to, I have to talk about it now. Why is it that really bad things happen during Republican presidencies? George Bush financial crisis, Trump pandemic.

If it were to happen again, Trump and the bond market vigilantes, you know, attacking right and blowing up the bond market, it would be, it would be on par with what we, we’ve learned to expect during Republican presidencies, would it not? And now that I’m talking about it, let’s go conspiracy theory. Kip here. What if Cash Patel and Dan Bongino and Pam Bondi and Trump and the entire Justice Department, FBI, not CIA, et cetera. Of course they’re deep state, but what if they’re really getting close to something breaking something big? What if that’s happening? Well, as Tyler reminded me, that’s, that’s when we have a false flag. That’s when something happens to distract them and get them off and to send them a message. Don’t go there. Right. So again, I think by talking about these things and having a game plan and having an active playbook that’s this way, you’re not surprised and you’re ready.

You know, should something happen, you got to be ready for both sides. You just do. This is what we live in today. Information travels at lightning speed now. And if you don’t have a game plan in advance, something bad happens, you’re like, oh, I haven’t thought about this. What am I going to do? So that’s how we think here. Because as I’ve said many, many times, I haven’t said it in a while, though. I’m a proud conspiracy theorist, because since 9 11, they’re the only group that has been consistently right.

[00:15:55]:
So I’m a proud member of that club and I know this audience here. I know our listeners and our VRA members here. I know that you think exactly the same way. But this is the, these are the conversations we need to have. This is what we got to be ready for. And if we have to take action, we’ll take action. But otherwise we are see again, what would happen if the bond market blows up? Well, look at what’s happening with physical gold delivery. I mean, the gold market altogether record year after record year after record year of the smartest smart money in the world buying gold at Record levels.

And that’s of course, central banks and global governments. Look at these physical deliveries taking place at Comex. Nobody wants to, nobody’s letting people hold their gold anymore. No, they’re like, you know what? I’m going to take it out of your hands. I’m going to put it into a centralized location that I know I can get to my gold if I need to or just send it to, we’ll keep in our country’s vault, you know, wherever, wherever they’re shipping it to. Physical deliveries are taking place at a, at a pace we’ve not seen ever. So the sides are there that I think a lot of this also is. De.

Dollarization is happening again. Remember, the US seized a lot of Russian assets. There are a lot of countries that like, you know what? I don’t want to be in a position where if you don’t like what I do, you can just take my shit. And so there are a lot of reasons for why gold is going higher. Of course, the primary reason is that it’s money printing again. With Trump’s big, beautiful bill spending and, and, and, and, and fiat currency printing. It’s only going in one direction. That’s not, no one has the will for this until it’s required.

[00:17:35]:
And as I’ve also said many times, you know, when I became a broker in 1985, all of these, these guys that were the seasoned veterans, I mean, these are the guys I wanted to hang around. My, my, my, my mentor was part of this group, but he, he understood that, you know what, worst case scenarios really don’t happen very often. And he was unlike the other guys. He was more of a realist. He was an optimist. Ted Parsons, I’m talking about. But these other guys, they were certain then, this is 1985, that our debt levels were going to crash the entire system in 1985. And it just didn’t make sense to me.

Again, I’m an optimist anyway. But that same story has been building since then. I think it’s never going to go away. It’s not that it’s wrong. Right. You just, it’s, it’s hard to make money if you’re perma anything, you know, and that’s why we’re not, you know, if we need to change direction here, we have no problem doing that. We’d rather not have to, but we have no problem doing that. We’re not, we don’t, we don’t have a centralized thought process.

This is, we’re locked into perma. Something and so you got to be realist and be able to recognize trends. You know, we’re trend followers here. That makes our job actually pretty easy. But you know, again, was this going to happen? It’s going to blow up? No, I don’t think it is. But you got to be ready for it just in case. And again, the way we’re, our portfolio is structured now, you know, we’re, we’re just a few moves away from being in great shape regardless of what we have to do. And the question everybody always ask is, okay, let’s assume a worst case scenario takes place.

What, what does happen to gold? Well, folks are looking at $10,000 an ounce plus. And that’s on the low side because what’s, what’s also changed now is that the manipulators, the manipulators that have, that kept gold low for so long seem to have gotten out of the way at least to some degree. They’re allowing gold to rise. This short selling of gold, naked short selling, using these paper, you know, gld to, to, to short gold. That’s not happening or it doesn’t seem to be. They’re allowing gold to rise because you know, I was talking to a guy many years ago that one of the smartest financial guys I’ve ever met and he said, what do you think the signal would be to the global markets if they allowed gold to go to $5,000? Now this was 20 years ago. He told me this at least. What do you think would happen? I go, every woman, no, we’re in trouble.

[00:20:09]:
And he goes, exactly. That’s why they can’t let it happen. Because the gold is the signal. Well, it’s signaling something right now, right at 3200 bucks an ounce plus. But yeah, in a, in a, in a semi, in a, in a bond market vigilante activated environment, when they really go after yields and you’ll start to spike, gold would be over $5,000 an ounce, probably within two weeks on its way to much higher prices. So again we, you got to be careful owning the miners then because they are stocks. And that’s the problem. We learned that the hard way in the financial crisis.

If you remember, if you own the miners and you think gold skyrocketing, right, because of concerns about these banks imploding and the bailing out of the country, etc. That is the environment you want in gold in. And it soared. But the miners got crushed. And that was a tough lesson to learn for a lot of us. I learned that lesson then too. Because after all they’re equities and at the end of the day they move with the market. So we’d be great with our gold, we’d be great with our bitcoin, but we’d have to probably put some stops in just in case the miners got hit in a worst case scenario.

Right. And our other bitcoin tied investment. So. But again we’ve got that playbook. We don’t think we have to use it, don’t want to use it. But we are prepared to should we need to. I think this is probably going to be much ado about nothing but again, you know, you got to be prepared just in case. What else today? See here.

[00:21:54]:
All right, that’s that, that’s it. That’s most of it. Again the book call ratio did jump today and that’s again that, that we got. The book call ratio is just too low. Yesterday that’s almost always a sign that the market’s due for a pause. But today we saw that change pretty quickly and we had really bad internals today. I’ll cover that more in a moment. But the foot call ratio today was, was high 80s to low 90s.

Quite a bit of the day today. And again yesterday we were in the 60s. Okay. So that’s almost always a sign that the market’s due for a breather. And then we needed to shake out. We need it anyway. Mark was overbought. I think the market was looking for a reason to, to, to, to, to move a bit lower.

But again we continue to believe that any of any, any pause is going to be short lived. But again the wild card is interest rates. That’s the only thing that could really derail us right now as far as the major event that we could see. All right, let’s take a look at the hood today. Again the internals were not good for the. Not at all. By the way, NYSE 87% down volume day. That kind of came out of nowhere, didn’t IT? Also almost 9 to 1 advanced decline.

[00:22:59]:
Negative almost 9 to 1 for NYSE. Nasdaq was better. 60% down volume day and 4.4 to 1 advanced decline. New 52 guys lows came in just almost exactly even so no kind of a signal there. Sector watch. It’s about what you would think in a day like this. Again Dow finished down 1800 18. Excuse me, eight 800 points.

1900. 800 points. That’s 1.9%. Same as S500. Nasdaq today was down 1.4%. Russ 2000 small caps just, they just can’t get going, can they? Down 2.8% today. Just been a brutal environment for small caps. But you know we are starting to see some small caps really start to move.

A lot of the miners of course starting to get good legs here. A very interesting chart pattern taking place. I’ll write this up in the morning very soon. Chart breakout taking place in the junior miners. In the junior miners GDXJ and this looks like it’s, it reminds me of the same bottom and reversal higher than we had in gold when gold broke out of its 1012 year rounded bottom. I’ll share that in the morning with you. But that’s breaking out now. So these junior miners again, I repeat it one more time.

[00:24:12]:
This bull market in precious metals hasn’t even started until the junior miners get going in miners period, but especially junior miners. And it’s going to happen. Gold is simply priced at too high a level for these junior miners to be trading at the current prices they are. And there’ll be rotation and because these companies are so small, the entire valuation of the mining sector is so tiny. It’s never been this small. There’s just no money there. People don’t own it, don’t want to own it, they hate it. That will change and that’s what’s going to cause an explosive move higher because again there’s not sellers here.

People that own these stocks ain’t selling. And that means there’ll be very little selling on the way up. The new money coming in, we’ll have to, we’ll have to chase the miners higher. And that’s coming, right? That is coming. We’re going to make so much money in this group. All right. The second watch though today was 10 of 11 sectors finished lower. Real estate down 2.6%.

Health care down 2.4%. Again nothing. The only higher on the communication services up 610 of 1%. In our commodity watch, gold did about what you think it would do. It’s had a good recovery after you know again last week it was extreme or bought 10 days ago extreme robot. Now it’s had a shakeout. Hit the 50 day moving average. Now it’s, it’s heavily oversold.

[00:25:36]:
I mean the, the chart, it’s got a megaphone pattern, you know, kind of dueling trend lines that are, that are spreading out as, as, as, as gold. And GDX goes higher, especially gdx and just pull back exactly to that trend line for GDX again with both pulling Back to the 50 day a great looking setup. Gold today finishing up 32 bucks an ounce at 33.16 an ounce. That’s up 1%. Silver today also up better than 1.1%. Down up 1.2% at 33.57. At some point silver will get legs but again we’re 80, 20 gold to silver here. We do own silver but we’re primarily gold bugs here.

Copper today flat on the day at 465 a pound. Crude oil today, good looking setup by the way in, in, in, in. In oil. Good looking technical setup in oil. And I think that, I think we’ve got a good trade coming up. We’re looking at a couple things for the very portfolio that we use as, as, as leveraged ETFs for this. We’ll probably, it’s a little premature but we may share that with you in the morning as well. We’re, we’re getting close to taking action again.

We wanted to use this shakeout that we kind of thought would happen this week to add a couple of positions here and the energy stocks might be one of those. We’ll share that with you probably tomorrow, if not then early next week. But again oil today down 1%, down 68 cents a barrel at 61 35. And finally Bitcoin hit an all time high today very quietly. Right. What was high day 11094 I think I saw. Is that right? Ah, no, it’s higher.101. You know, for some reason system not updating here.

[00:27:21]:
I want to give you the high because I’m curious now. Yeah, 109, almost 198 today. The old previous high was like 1093. So clear breakout again. It fought through all the congestion and then broke out over 100,000. That told us that the next move was going to be higher. I think that we’re going to see a move I think pretty quickly to 150. I think this is going to be explosive move second half of the year both for the market and for bitcoin.

Inflation related assets are going to do very well in the second half of the year. We’re going to get back to the innovation revolution theme. We’re getting back to an environment of people thinking about growth now in a high growth environment. People just won’t care about the 10 year being, you know, in the 5% area. That’s just not, that’s just not going to be a thing. This is, this is about growth and that’s what we’re about to see a lot of it. Okay. Anyway, last trade.

Now bitcoin has pulled back from that all time high of 108,107. All right, folks, that’s it for the day. Hope you had a great day and you’ve been tonight. We’ll see you back here again tomorrow after the close.