In this episode, Kip Herriage provides a quick recap of the market's performance and the underlying factors at play. He shares insights on the recent market trends, investor sentiment, and the health of the bull market. Kip also delves into the latest data on labor force productivity and its impact on the economy, offering his unique perspective on market dynamics and potential opportunities for investors. Additionally, he discusses the performance of various sectors, commodities, and cryptocurrency, debunking misconceptions and providing valuable analysis. Join us for a concise yet informative episode with Kip Herriage as we unpack the day's market highlights and gain valuable insights for our investment endeavors.

Don’t look back because the market is closed. Good Wednesday. Afternoon, everyone. Kip Herridge here with the daily VR investing podcast. Hope you had a good day today. Going to make this a fairly quick podcast today. I know mine tend to be a little long winded. We’ve been working on that just a little bit, but there’s been lots to talk about.

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We like to communicate what’s happening in the market. So, folks, because I’ll be honest with you, listen to what other people are saying, I just disagree with it so often. Again, way too many. Not recently. Now that a lot of bears have capitulated, so we’ve communicated that to you. But typically from the October 13 lows, the bears have been omnipresent. They are everywhere. Pervasive, perma bears everywhere.

And we got a little frothy here, didn’t we? We had this amazing November 1 of the best in history. And here came everybody again, capitulating. The Fear and Greed Index went from extreme fear to greed. It did it in three weeks. AAI Investor Sentiment Survey had the lowest percentage of bears, one of the lowest percentage of bears that you’re going to find in the last decade. So there’s been a lot of capitulation as we’ve covered here on our very momentum Oscillators VRA Investing system. Every index except for small caps, every major index, hit extreme overbought on steroids. That’s our most overbought designation.

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And you have the third thing, okay, is seasonality. Yeah, seasonality for December is good, but guess what? Not all that good for the first week to ten days to two weeks. We might have another week of some back and forth pause action before we start heading higher again, but that is exactly what we’re calling it here. We think this is healthy. This is the way healthy bull markets operate. It is now broadening out as the tech sector has gotten weaker. Saw that again today. Again, you’re seeing small caps.

Even though they were down today, they led and they were up most of the day, better than 1%. That’s been a recurring theme of late. And a lot of value stocks. Banks have been better. Obviously, the miners have been doing a lot better. So you’re starting to see the market broaden again, rising tide, lifting off boats. This is all very healthy, normal action in a market. But our approach, as we talk about here often, is when we get to extreme rebuttal steroids.

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There’s one thing we don’t do. We don’t chase. We stay away from positions that have a lot of exposure. In other words, a high beta, ones that move with the markets, or that lead lower, in this case, tech semis. But that gives us an opportunity to sit back, take a breath, right, pull some cash together, and get ready to average into positions we really like. And even today, by the way, housing, Tyler just talking about this. Housing stocks continue to be house on fire. Hit another all time high today.

Housing all time high. This has all happened in the last week to eight, nine days. Housing all time highs. The tech sector XLK, the tech sector ETF, all time high. Semis obviously all time high. Those are our three biggies folks and the Transport synagogue is a lot better. But our three biggies with really the most effect on the economy and the market. Those are the areas we look at and very good to see them hitting all time highs, they’re leading and that means the rest of the market is going to follow and also hit all time highs.

Kip Herriage [00:03:30]:

That’s been our call for some time. That remains our call. But yeah, we’re not going to let these shakeouts bother us. We will use these as a buying opportunity and keep buying our VRA ten baggers, keep buying the stocks that we like, the ETFs that we like that aren’t overbought. Otherwise we don’t participate at extreme overbought on steroids and that’s really what we’ve seen here. So it’s a healthy pause to start the markets here. Dow Jones down 70 points today down two tenths 1%. SVO 100, down four tenths 1% again Rose 2000 down two tenths 1%.

Kip Herriage [00:04:05]:

Nasdaq was our leader to the downside today down six tenths 1% and Semis led Nasdaq lower semis down eight tenths to 1%. That’s a textbook, that’s a textbook day. Semis lead tech, tech leads to draw, market happens on the upside and the downside. I always enjoy seeing that play out because that’s exactly what the playbook has been from the birth of quantitative easing in 2008 2009. This is the way it works. Is there’s no better tell or market timing mechanism than semis leading tech, tech leading the broad market. And again it happens in both directions. So that held up again today.

I wrote a couple of things that I’m going to cover very quickly. I think it’s important Tyler sent. First of all, we had data this morning, ADP jobs report came out. This is where some of the weakness is coming from fears of economic slowdown. Okay, are we going to have a hard landing? Okay, we’re not. I don’t believe we are. Okay. And I’ll explain it why briefly in a second.

But we had the ADP jobs data this morning came in with 103,000 jobs created in November, private payroll jobs versus estimates of 128,000. So it was a fairly big miss ADP. No one really cares about it to be honest with you. The big numbers on Friday, of course the non farm payroll report is really the juggernaut and yeah, guess what? The economy is slowing. Yeah, guess what that means the Fed’s job is done. Isn’t this what they wanted to see? Of course it is. But again when you get an overbought market, people got to have a reason. The media’s got to have a reason.

The market went down. It can’t just be that the market’s tired, it’s just run out of steam and that’s what we think is happening here. What was more important, I believe today was the data that came out on labor force productivity, worker productivity. It rose in the month of November 5.2%, folks. That’s a huge month. Estimates were 4.7%, which is fantastic, even beat those. So workers are more productive, right? That means with all of the construction, but you’ve probably seen this if you haven’t, the amount of construction happening in this country is at all time highs. Talking about commercial construction for multifamily housing, for just construction projects around the country hitting all time, really going parabolic.

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Look at the charts. This is all Fred data, right? All from the Federal Reserve. And then when you add high levels of productivity to that, what it tells you is a couple things. Number one, the economy is humming. Number two, that companies are making bank. That means corporate earnings will continue to grow above trend. And third, it tells me that workers are still going to have the ability to get nice pay increases. Isn’t that what we know? When I hear the federal reserve talk about, well, wages are growing too fast, I want to punch these assholes in the face.

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Because how could you dare say that you’re in your ivory tower making multiple six or seven figures, and you’re going to say that wages are growing too fast for somebody making 50 or 60 or 100,000 or even 200,000 or whatever? Are you kidding me? Wages should grow at the level that they should grow naturally. You should never try to stifle the amount of money that somebody is making in a capitalist system. I reject that whole cloth. People that say it are absolute idiots. And so that’s essentially everyone at the Federal Reserve. But we already knew that, didn’t we? But anyway, it was very good news. And it also is a reminder. Yeah, we are in the roaring 2020s.

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We’ve said this for a year now. Why would we back away now? All the data is backing it up. We cover it here often. I’m not going to go through it today if you’re new. Well, I’m sure another day I’ll cover it all. But again, a couple of things. Consumer net worth, all time high. Housing prices, all time high.

Net equity in homes, all time high. One third of Americans own their home outright. So all of these stacking keep going. Credit scores all time high. Consumers have reduced their debt by 25% to disposable income in 15 years. Corporations debt to market caps trading at 50 year lows. Folks, these are all time first. This is a roaring 2020 economy.

Happened right for eyes. And the fact that almost nobody else is saying it just makes me that much more confident as a lifelong contrarian. So ignore the perma bears, ignore the naysayers. This is one of the best times in history for the US economy, but especially for the US consumer. And that is all fantastic. Don’t care who President is, does not matter. Markets don’t care. Markets care about supply and demand, liquidity, what drives corporate earnings and what drives economic growth.

And our engine is sound. It is very sound. And that’s a long term thing. And by the way, for those that are worried about us having a hard landing, we’re not going to. Here’s why. I just covered the reasons. Consumer and companies are in great shape. We’re going to have a slowdown yes, because we wanted to deal with inflation.

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Fine, that’s been handled. Now have clear disinflation in place. But yeah, what it is is the speed of the move lower in the ten year. All right, the ten year was just 5% last month. Now it’s down to 4.12%. For those that have been long term listeners here, maybe you remember me back in late spring saying that we’d end the year below 4% of the ten year. Well, we’re just almost there. We’re almost there.

I think we do crash through 4%. That should be a level of support on the ten year yield. I don’t think it’s going to hold for long. Just 1 second. I do not think it’s going to hold for long because what’s happening now, again, we’ve been preaching this. This has been to our choir here. Fed front running is happening. The smart money, the big money is anticipating what the Fed is going to do, which is cut rates next year, we think four times.

Ed Hyman at Evercore, best in the business, 50 years. Economist still says six great cuts next year. A lot of people are thinking it’s going to happen sooner than later. We tried to tell the Fed, okay, I said it on Fox Business. Tyler and I’ve said it time after time after time in a podcast throughout the year that they hiked rates too far and that they paid the price for it with an economy that slowed down and kind of put the fear of God into them, meaning they had to cut rates sooner than they wanted to. Well, you’re there, you made the mistake, now you got to live with it. So, yeah, I think that’s got the market a little freaked out, but just a little bit. Again, not a big deal.

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And that’s why we’re not going to have a hard landing. Consumer’s too strong. US. Companies too strong. A little weakness won’t hurt anybody. In the meantime, again, housing, all time highs today, right? So you have this dichotomy happening here that somebody that’s a perma bear are really negative. They cannot explain what’s happening because you can’t make this a negative story because it doesn’t exist. It just doesn’t exist.

One of the things Tyler sent this to me yesterday, we covered this morning with our VRA subscribers. The person that wrote this article clearly was trying to be negative, like saying, oh, look how bad things are. They were like, we’ve only had 148 companies go public in the United States this year. That’s the lowest level in six years. Isn’t that horrible? It shows you just how bad things are. And I’m like, no, you don’t understand. As a contrarian, that is wildly bullish. Wildly bullish.

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Because this is that bull market, right? This is not something new we’re saying. We’ve been saying this for a year. This is that bull market most reminiscent of the 1995 to 2000 melt up. We wrote this in the big bribe. We’ve been preaching this over and over again. This is our book we’re talking here. And if this is anything close to 95 to 2000, guess what? The IPO market is going to come roaring back. Okay? Roaring back.

So the fact that it’s not there now just tells us how far we’re light years away from this market getting overbought from there being some kind of mania or bubbles. We don’t see any of those signs, folks. People still haven’t leveraged up again. Debt america has deleveraged. These are not the things you see happen at a market top. These are the things you see happen at a market bottom. I can’t stress that enough just to put a point to it. You want to talk about a market that’s in fear of overheating.

We had multiple years during the.com melt up, where more than 100 companies that year on the first day of trading went up more than 100%. We had scores of companies each year that jumped 200% to 500% on day one of trading IPO. And they were happening everywhere. You couldn’t keep track of so many IPOs. Of course, that was another sign that we were about to have a dot bomb. And one of the reasons I left Wall Street, I was told by my mentor to read Giova Griffin’s phenomenal book. I always forget the name of extraordinary popular delusions and the madness of crowds. Gio Griffin.

He’s a creature from Jekyll Island. I’m a little rushed today. Extraordinary Popular Delusions madison Crowds, written by Charles McKay in the 17 hundreds, talked about all the bubbles that had happened all over the world. And my mentor at Oppenheimer, Michael Metz, said, kip, you should probably read this book. This is about a year before I retired. And he said, Read this book.

I read it like, are you trying to tell me something bad is going to happen? Look around. What do you think? Look at the IPOs. Look at the froth. Look at the people quitting their jobs to day trade. Get into a taxi, the taxi drivers telling you their stock tips. Kip, these are all the classic signs of a market top. And that was enough for me, right? Time to head back to Houston and do my thing as a parent and a spouse. And so, anyway, that was my story back then in 99 when I left Wall Street.

We’re just not seeing any of those signs here. And so we look forward to the hot IPOs coming back because, folks, guess what? They are coming back. All right, let’s take a quick look under the hood today on the internals. Pretty ugly. Yesterday. They were positive all day today until the last 30 minutes of trading, really. And we just had slight negatives, slight negative advanced decline for both NYSE and Nasdaq. Really.

Nothing there. Volume, slightly negative NYC, but volume for Nasdaq was positive by more than $700 million worth of trading. So it’s not two to one or anything, but solidly positive. And new 52 highs and lows came in positive both NYSE and Nasdaq. And by a considerable margin, we had 270. Stocks hit a new 52 week high to just about 135, hitting a 52 week low. So again, on a down day, we’re seeing better internals. That is what you want to see in our sector.

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Watch today. We had, again, quiet day here, really. Eight sectors finished lower five, three higher. Downside, energy down 1.7%. Oil is down big today. Concerns about OPEC cuts are they really going to hold to them again, fears of a weak economy. And now oil is back to the $70 level. Anyway, energy stocks today down 1.7%.

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Tech down nine cents one percent. Financials down half percent to the upside. Utilities with rates plummeting, it makes you sense. The largest borrows of capital in the country for utilities to rise, they did today up 1.4%. Industrial is up a half percent in our commodity watch today. Gold kind of quiet day, except for oil. Gold today was up $7 an ounce, 2043 an ounce against Central Bank. Story here is so incredibly bullish, central banks buying it.

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Last year was a record for Central Bank purchases of gold. This year we’ll break that record. Governments are doing the same thing. That’s the real smart money folks. What do they know? They know that all time highs we saw Sunday night are just getting started. Gold is a buy on this pullback again, just like the markets got extreme overbought. And now we’re getting a little bit of pullback, shake out the weekends and then, boom, here we go again. Golden cross happening in gold as well.

Great looking charts, both for gold and the miners. Love this story. Silver got smoked pretty good on Monday, down like three and a half. 4%, down another one and a quarter percent today. But again, silver is up 40% from the beer market lows of last October. So it’s had a really good move, higher, as have the miners, also up 40% from last October’s lows. But today, silver closed at 24 23. Announced copper today was down 1% at 373 a pound.

Crude oil again down $3 a barrel at 69 20. And finally of the day, bitcoin down 164 at 43 8112. Just got to say what a breakout this has been. It took a little bit of breather today. Again, it’s been nothing but updates here. And I just got a note. I just happened to catch a snippet of Jamie dimon, okay, of Morgan chase fame coming out and saying that if he had his way that they would just shut bitcoin down. Just shut it down, just shut the whole thing down.

He’s talking about the criminality involved in it. Yeah, from his point of view, because banks are losing control. Of course he hates it, but remember what a fraud this guy is. Number one, JP. Morgan chase has been served, has been found guilty in criminal trial after criminal trial, and no one has paid the appropriate price for that, just civil penalties. He personally has been found guilty I got all my JPMorgan Chase accounts shut down many years ago for talking about exactly this kind of stuff about the criminality of Morgan chase. I’m glad they closed my accounts with no reason. I was ghosted long ago, before it was cool to do it, which I guess is the case now, but we’ve been there for 15 years, had like twelve accounts closed, them all personal, and corporate would not tell us why.

I know why, but again, I don’t self censor, so there you go. But yeah, look, remember, this is the same Jamie Diamond who just a few years ago when bitcoin was like a couple thousand dollars, okay, that’s when Jamie Diamond was saying, it’s a scam, it’s not going to last. And then we find out that at the same time he’s saying this, JP. Morgan is working in the background building all kind of crypto based products, including ETFs trading vehicles, all of these, you know, he’s like Jim Kramer. Frankly, if Jamie Dimon says something boldly like this about bitcoin, he’s just not to be believed because he has a history of being exactly wrong on these issues. And with that, folks, I’ll wrap the call today. 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.