In today's episode, Tyler recaps an eventful month of August for our markets, and what we can expect from the upcoming month of September. Tyler dives into the impressive rally to end the month from our major indexes and especially from the semiconductors. Plus, we'll analyze the upcoming jobs report and its potential impact on market sentiment and interest rates. Tune into today's podcast to learn more

Don’t look back because the market is closed. Good Friday afternoon, everyone. Tyler Herriage here with you for today’s VRA investing podcast. Hope you all had a great end to your week this week. Got a long weekend coming up here, so thought we’d do a little bit different of a podcast here for today’s close. Getting back into a little bit of video here again, as we have the long weekend coming up. Thought we’d have a little bit of fun with it. So let’s go ahead and jump right in here.

The market will be closed on Monday, so we’ll see you back here on Tuesday after the close. Hope you all have a great, relaxing, long weekend. Kind of one of the last long weekends until we get to the holiday season not too far away. This year has been absolutely flying by, and what a year it has been already, not only for our markets, but for our favorite sectors and indicators here as well that we’ll cover today. And now some more economic data here as well. But to wrap up the week, it was a strong week and a strong end to the month for our major indexes. Again, our favorite sectors finishing at least for the Dow, for the S & P, near their high for the Dow. Definitely the highs of the month here after what we saw, that brutal pullback in July and into early August, which really was a technical bear market for the semiconductors during that time.

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As you’ll hear on this podcast today, the rally back from those lows has been very, very impressive here. And again, a strong end to the week this week as well. And it kicked off this morning with the latest look at inflation as we got PCE data back coming in, up two tenths of 1% for the last month, two and a half percent year over year. So again, this is often looked at as the Fed’s favored gauge of inflation here, getting closer and closer to that 2% target. Now, if you tuned in, I was on Wayne Allen roots fantastic show last night, and we talked a little bit about this, and we talked about it here at length on the podcast as well, that inflation for years now, going back really over the last decade, has been vastly underreported. Even the 9% print that we saw from a couple of years ago, we saw it as likely closer, could have been 15% to 20% of what inflation really was. But they’ve got all these clever accounting ways, financial engineering, they leave out very important pieces in the inflation data, or they underweight them in the way that it’s calculated. So you never really get a true expression from these readings on what inflation is.

But some would argue that PCE is one of the most accurate representations. And so what we’re seeing here is disinflation continuing to head lower. We aren’t headed into, or we aren’t in yet, a deflationary environment. If you heard kip on making money today, you know, that is a view that we’ve had for some time, that because of the innovation revolution and what innovation can do to drive inflation, or, sorry, excuse me, deflation going forward from there. That’s something we continue to look for here. The biggest problem with that wouldn’t be that we can’t handle deflation, it would be the Fed. Right? Their goal for inflation is 2%, and they’re telling you that openly, that every year we want to devalue your currency by a minimum of 2%. And we’ve talked about this some on the podcast as well, that they’ve already floated the idea of raising the bar up to 3% as well.

Now the goal should be 0%. It was until just a couple of decades ago. If you go back and look at prior fed minutes from the seventies and eighties, you’ll see their goal for inflation was 0%, as it should be. But in the world of financial engineering, massive budget deficits and out of control government spending, this is when they know they cannot afford deflation. They need our assets, specifically the dollar, to be worth less in the future so that it’s easier to make those payments on the debts that we owe, essentially printing away the deficit that we have here now, going forward from here. The PCE data today ended up really being kind of a non event about what everybody expected. The market, the Fed especially, especially, has essentially declared victory on inflation now. So what everyone will be looking for is the jobs data, the other side of the Fed’s dual mandate.

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So we’ve seen the slowdown in the jobs reports and the massive revision lower from the BLS, roughly a million jobs less than what we had been shown to from all of the data they’ve been coming out with. And it’s funny that that happened, because we’ve been saying for some time that it was being over reported. And so likely the downward revision wasn’t big enough. Really. Now, if we take the downward revision at face value, we’re not in a contractual phase in this economy right now. We’re still creating between 161 hundred, 70,000 jobs per month. Now, you could also make the argument that most of those jobs are going to illegal immigrants. Yes, that likely is very true, but what does that mean for the economy, we still have job creation, and so for stocks, from the economic point of view, then all things are looking well.

But so next week we’ll get the August jobs report. That’s where all eyes will be next week because it will tell us whether or not the Fed is planning on cutting by 25 basis points or 50 basis points, usually when they start off a rate cutting cycle like this. It’s also not usually when we have the stock market hitting all time highs like we saw this week and again today, it’s usually something bad has already happened. So we could get a Fed here that cuts by 25 basis points. You know, we think it likely should be 50 because they are offsides here. But if we get a pretty good jobs number next week, then 25 will all but be locked in. And right now, according to the CME’s Fed watch tool, the probabilities are firmly in the favor of a 25 basis point cut. Now, it’s not a perfect indicator.

Again, it’s just a probability metric. So we’ll be paying attention to that here and be reporting on it here on the podcast as well. But what does this mean for the market here? Right? Of course, the market is firmly looking forward to a rate cutting cycle here, and we saw that in the action today as our major indexes managed to finish higher here across the board. We finished on the month. Right. Consider this, that at the beginning of this month, we had a big sell off. The semis lost 28%. Again, technically a bear market there, but we were able to get some nice rallies into the end of the month.

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The Dow finished higher on the month. The Nasdaq just managed to finish higher on the month. The S and P finished higher on the month as well. Only the small caps lagged there and weren’t able to get deposited on the month, but still finished strong here today. Now we are entering here what is seasonally the worst month of the year, going back to 1928. September on average has lost 1.1% for the S and P 500. But we’ve been talking about this here a lot as well. Everyone’s looking at this as far as traders go.

So this is a crowded trade here. And that’s when these kind of metrics don’t tend to hold up, is when it’s what everybody’s looking at. So we don’t see it as a reason to sell here. We’re not expecting to retest the lows of the beginning of this month. We’ve said that here for some time as well, especially on the semis. We think the lows are in likely for the rest of the year. This year, and as we talk about our position building, this is the time when we like to use discipline. We want to put some money to the side, keep some powder dry instead of monthly dollar cost averaging at these levels, with the hopes that if we did get a little bit of a pullback, it provide another opportunity to buy the dip.

That’s certainly how we’re looking at it here. We haven’t taken, we talked about it, but we haven’t taken profits here. We’re gonna hold through this time period. What also is interesting about this is that right as we head in to this seasonally weak period of the year, sentiment levels have started to get back into greed territory. So we’ve got the fear and greed index. Let’s see where it finished here today. Finishing at a 63 that is firmly in greed mode. Think about just a month ago.

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We were at extreme fear, so that came a long way in a short period of time. We also saw the AaiII sentiment survey. Really didn’t give up a whole lot of bulls in July during this pullback, and now we’re already back to over 50% bulls in the AAiII survey. So a little bit of a pullback, a shakeout, wouldn’t surprise us at these levels, get sentiment back down. But one other point here which people don’t usually talk about in terms of stock market sentiment, but is important for the overall economy, is consumer confidence right now, which has been at extremely low levels here. So people aren’t bought in to the strength of this economy. You hear it all over the place, right? That wages haven’t kept up with inflation, although data mostly shows that it has, or at least is catching up here and that businesses are struggling. Well, of course that is the case.

But in terms of a market top or economic top, or if we’re about to see a recession, just like with the stock market, bull markets don’t go out with a whimper, they go out with a bang. And the economy is in a very similar boat. When everyone thinks the economy sucks, it usually is not the sign of a long term top. It’s the sign of an economy that has a lot of room to grow from here, especially if we can get in November back to the Trump economic miracle. Not saying that it’ll take place right away, but in the stock market, you’ll likely see some front running after that, and on the hopes that the economy will continue to strengthen with those more free market style policies. So consumer confidence does is continuing to lag here, but it’s a reason for us to be bullish again, because when people are thinking the economy isn’t going to do well, it usually, again, is not the sign of a top. But as for our other sentiment indicators, Kip talked about this as well on Fox Business today with Ashley Weber. You know, it really isn’t a big concern for us here.

Again, we don’t see it as a reason to sell, especially when we’re hitting all time highs here after this big pullback for the semis. So let’s go ahead and jump right in to what we’re seeing in this market today. Again, really strong finish today. The last ten minutes or so of trading were some of the best. We finished at the highs of the day for the Dow, Nasdaq and the S and P 500. Only the small caps again finished lower on the month. So Nasdaq led the way up 1.13% to 17,713. Now, the semis, this is impressive.

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They did finish lower on the month here. They finished over 17% off of their lows for the month to only finish down about one and a half percent. Might be 1.7% for the month of August. Wow, that is a big rally. Back from the semis. Next up here, the S and P 500 up 1% to close out the week again, finishing at its highs of the day at 5648. So just 21 points away from an all time high. After that, the small caps were up 0.67% to 20, 217.

And lastly, our all time high, the Dow Jones. This makes the fourth day out of five this week that the Dow Jones has hit an all time high, up just over half of 1% to 41,563. As we say here, often new highs beget new highs. So we do look for that to continue. And we saw in our sectors today as well. We’ll get to that here in just a second. But first, taking a look at our internals on the day to day, where we had very similar action, not great earlier in the session. We had a few negative readings here, but we finished at the highs of the day today to finish higher across the board here.

So we had advancing stocks, beating out declining stocks, just shy of two to one. Positive on the NYSE, a little bit lighter on Nasdaq, still firmly positive there. So good day from advance decline, 52 week highs and lows coming in positive here yet again. And I just saw this point, JC Peretz made this earlier today, and it’s something we talked about on the podcast, but it’s not something we’ve continued to talk about as much is that on the pullback, even with the semis down 28%, we didn’t see a pullback or like you would expect, a big dip or a big increase, I should say, in the number of stocks hitting 52 week lows. If we were starting to see the number of stocks hitting 52 week lows increasing. Right. Making higher highs and higher lows versus what we’ve seen, which is lower highs and lower lows from this group, that would be a warning sign to us here. A yellow flag, not a red flag, but we’re not even seeing that yet.

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Right. These numbers have continued to come in strong. Coming in eleven to one positive on the NYSE today. Over two to one positive on the Nasdaq as well. So continued good action from the internals here. And volume, similar story here. Coming in just about three to one positive on the NYSE. Just shy of, of two to one positive on the Nasdaq.

Now, what was likely one of our bright spots on the day comes from our sectors, where we had at least four sectors hitting all time highs today. Again, new highs beget new highs. So we were led by consumer discretionary, followed there by industrials, which I’ll run this chart really quickly because they are right at. Yep, that’s an all time high as well. So that makes five sectors today hitting all time highs. After that, we had tech materials, which hit an all time high. Let’s check real estate here as well, because we’re not too far away, just shy less than one point away from all time highs as well. After that, we had the financials all time high.

And then the final all time highs for the day were healthcare and the utility. So good day. All eleven sectors finishing positive here on the day today. Finally for today, we’ll wrap up the week with our VRA commodity watch here. A little bit of red on the screen for this one. Gold now down just under 1% at $2,535 an ounce. This is a group that we remain very bullish on, especially as we head into a seasonally bullish time of the year for commodities, as some of the largest gains of the year take place between August and February for gold. So we remain extremely bullish on gold.

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And the miners here, which one? Brummore chart. All right, so the miners did finish lower on the day today, though. Next up, silver down a little bigger, two and a half percent now to $29.24 an ounce. Copper essentially flat on the day today at $4.21 a pound oil also lower on the day, still kind of in no man’s land. Just a lot of sideways action that we’ve seen from oil from the $70 to $80 a barrel range today down 3% at $73.61 a barrel. And finally for today, another area with sideways action has been bitcoin. We’ve been kind of range bound here for the last few months in bitcoin, just really chop, you know. But we continue to look at any pullbacks in this group as buying opportunities as well.

Just saw a great chart before the podcast that bitcoin historically through the last two election cycles of 2016 and 2020, had sideways action, had choppy action leading into November. Then after November, it was off to the races. So, you know, we could see that very likely. Here again, this is a, this one does matter for the presidential election, as you have one side that is actively trying to reach out to the crypto community and to make partnerships. And that, of course, would be the Trump side of things, right? Trump spoke at that crypto conference. Kamala turned down speaking at that crypto conference. And anyone who’s really paying attention in the crypto space know that Trump is the only option if you are a believer in cryptocurrencies. Now, the crypto community has no love for SEC share Gary Gensler very few people do like this guy, as a matter of fact.

And what do they want to do with him potentially if Kamala were to be in office? They floated the idea of making him the treasury secretary. So no, they’re not going to get any votes on the crypto side of things. It’s absolutely astounding why they would even think that’s a good idea. But we do remain very bullish on this group, and pullbacks here need to be bought as well. And if that chart does hold true, it’s going to be a very exciting end of the year for bitcoin and crypto in general. Folks, that’s all that we have time for here today. Please be sure to subscribe to receive our VrA podcasts every day at the market close. You can sign up@vraletter.com dot click the podcast link at the top.

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