In today's episode, Tyler breaks down today's All-time highs for both the Nasdaq and the S&P 500 after we received better-than-expected inflation data in the CPI print this morning. Tyler takes an in-depth look at the increasing market breadth, surprising levels of bearish sentiment, and shares why there is still plenty of room for growth. Tune into today's podcast to learn more.

Don’t look back because the market is closed. Good Tuesday afternoon, everyone. Tyler Herriage here with you for today’s VRA Investing podcast. Hope you all had a fantastic day out there today.

It’s great to be here with you for the VRA Investing podcast today as Kip and I have a long running joke here, really over the course of years of doing this podcast now that Kip always gets the all time highs and I of course, get the big down days, you know, especially really like bare market style big down days. It’s just happened time and time again, so you can’t do anything other than laugh about that. So it’s always great to be here with you for some all time highs. And it really does seem like the last few podcasts I’ve been on have been either at or near all time high.

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So always grateful for that one out there. We did finish higher across the board for our markets today. So, you know, first and foremost out there, before I dive into our market action, you know, we got some great feedback today from some clients here and actually a podcast listener as well. So always, you know, we want to thank you for being here with us every day at the market close being here with us VRA members or podcast listeners for all of it. Thank you again. Kip and I are so grateful for the opportunity to do what we do here. And really I’m grateful, so grateful for Kip, for the opportunity to be here as well. So, you know, we really do love what we do.

Diving into this here with you every day, day in and day out, and helping you crush Mr. Market. That’s always been our goal here, to help you have a fully funded retirement account. You know, we tell you exactly what we’re doing with our money here. And I won’t get too much into that today, but it is, it’s really nice to be able to do that, not have the conflicts of interest that some of these money managers do, brokers for, you know, and all kinds of examples of people in the financial industry. And there are some great companies out there too, don’t get me wrong. But a lot of the times, you know, these, the people who work for these companies are not incentivized by your portfolio performance. They’re incentivized by what they sell you at the end of the day.

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And again, we don’t have any of those conflicts of interest here. We just want to help you crush Mr. Market and we love doing that. So, as always, thank you for your feedback again and, you know, keep it coming if you got anything that you want to see here on the podcast, if you got something that you want me to do a screen share with here on the podcast, I’ve got a few exciting ones, some really good ones here for you today as well. So yeah, if you have any requests, as always, send those in as well. So no further ado. Without further ado. Let’s, let’s get in to today’s market action because it kicked off first thing this morning with the latest look at inflation data, with the CPI data out this morning.

And you know, really going into this report, Kip said it yesterday on his podcast, regardless of what the number was with the way that the BLS data system has worked and now that looks like we’ll be changing with the new head of the BLS that Trump just announced with this data. Previously though, you know, there’s so many aspects to it that are done in a black spot, black box environment, seasonality adjustments, you know, for CPI, Kip covered this yesterday. 35% of the number here is really an estimated number. So this isn’t real hard data at all. You know, don’t forget about there’s plenty of companies or states that don’t employ or that don’t report this data, you know, sometimes till weeks after. So you get the revised data. That’s a big reason why we’ve had such negative revisions to the jobs market as well, because they were making estimates there. So regardless of what the number was today, you know, we’re looking at the trend here of inflation and the trend, you know, from the peak to today.

[00:04:22]:
Of course, it hadn’t been a straight line down, but it’s been a series of lower lows and lower highs. And in our view, we’ve said it here for some time, inflation is in a lot of ways a rear view mirror issue here really. Now we’ve got to get the Fed out of our way and so better inflation data will help us there. So we did get better than expected data today. Of course, the Fed’s favorite gauge of inflation is PCE. Today we got CPI, but it did come in below consensus estimates for 2.8% year over year, coming in at 2.7%, core CPI rising slightly ahead of that there. But again, regardless of the numbers today, and I’ll show you, we talk a lot here about the truflation data, which gives a much better, much more accurate toll of this data. And a live look at it as well, you know, it’s entered the 21st century.

The BLS, the Bureau of Labor Statistics has to enter the 21st century as well. You know, we can do just about everything on the Internet at the speed of light now. And yet, you know, we get this data back. You know, it’s so, it’s really, it’s a non event most of the time. By the time it comes out, because it’s backward looking data, we should be able to update that to real time data. All right, so I have one other point that I wanted to make there before I got to this trueflation data. Well, again back to the point of getting the Fed out of the way and how important it is to get an accurate look of data. Right, we’ll go ahead and show it.

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If true fascination is correct, which we we fully believe here is a much more accurate look at inflation. You know, BLS reported 2.7, but True Inflation’s figures are now 1.83 and they’ve been lower.

So the Fed had accurate data. Again, this is going back to March. Now if the Fed had that data, we would have cut rates a long time ago to the same effect with the jobs data. If the Fed had had that data and seen the weakness that Kip and I did talk about here. We’re talking about, oh, these are government jobs, these are leisure and hospitality jobs. These aren’t the jobs people want. This is people working two and three, you know, part time jobs and it being counted as multiple individual jobs along the way, inflated by so many metrics. Again, if the Fed had access to that data, which they likely do.

Right, but they can claim they don’t, then they would have cut rates a long time ago. And now that we’ve gotten this data out. One other factor before I get to the Fed though on this number, again it’s looking like Trump will be proven right again because where is the inflation even at coming in at 2.7%. I mean this is where we were when the Fed was cutting rates last time as well. But the most interesting when you dive into this data, where is this inflation coming from?

[00:07:23]:
It’s actually not from any tariff impacted sectors. The biggest culprits behind a 2.7% increase in CPI. By the way, the BLS does it shelter food away from home? Food at home has also gone up. We do see that that’s going to be able to fix itself. We’ve got to empower American farmers once again. You know, we think that this will continue to happen. We’ve already been able to bring down egg prices once under Trump. Right, let’s get that with Beef prices as well.

Then the last one though, medical care. Again, none of these impacted by tariffs. So again, it’s looking like Trump was right all along here to point out that no tariffs will not have an impact on inflation. And if they do, they’ll be there might be spots of it here and there, but it’s not going to be a shock to the system like we’ve seen or like we saw post. Covid and really Kip covered this a lot as well. One of Trump’s advisors was on Bloomberg, I believe it was, last week, talking about this as well. Economic growth is not what causes inflation. It’s a monetary issue.

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So, you know, I think he summed that up really well. I won’t dive into all of that here today, but he’s exactly right to make that point. And so now fast forward to today. Wow, What a difference two weeks makes for the CME’s Fed watch tool. You I’ve referenced this one here a lot on the podcast, so I’ll move this a little bit more out of your way here. I’ll go to the top. How about that? All right, so now almost a complete certainty that the Fed will cut rates in their September meeting. We’ve still got a ways to go that’s over a month away from here.

We’ve got Jay Powell speaking at Jackson Hole though, that’s the end of next week, so stay tuned. We’ll be reporting on that here. Powell will likely, you know, it’ll be, I would guess, a dovish Jay Powell that we, that we see at Jackson Hole. You know, he’s got a, there’s too much data in front of him now and too much push back even within the own, his own Federal Reserve Board on him. So we went from, you know, really getting to the point where we’re almost at just one rate cut priced in for 2025.

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Just a month ago it was, well, where were we here? These, this data has gone back and forth, but it was really less than a month ago at one point. So maybe if you could do like three weeks ago instead of the one week probabilities here before that, jobs data, the Fed was looking to stay put again in September and then it switched, I mean overnight and went up to 80. Now again we’re at 94 today. But it doesn’t stop there. This is now pricing in three rate cuts a quarter each time. You know, a lot of speculation now. We might even get 50 basis points in September. We’ll have to wait and see what we get from Jay Powell we’re not seeing yet in the Fed watch tool here.

So again now probabilities for the second rate cut in October and finishing the year with three rate cuts. Pretty incredible how quickly this shifted here after the jobs data. And speaking of sentiment, though the let’s keep going on to this, you know, to kind of wrap there. Andre Powell, we’ll hear from him next week. You know, too late. Powell absolutely in effect here. He’s gotta, gotta get out of the way. But speaking of sentiment, again, after the jobs data we’ve seen, let’s dive into our markets here because we did get all time highs today in sentiment.

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Wow. We’ve had roughly a, you know, between a 2 and 4% pullback depending on where you’re looking from the all time highs. And sentiment looks like, you know, we’re still in recovery mode. We haven’t just hit all time highs. People are still worried about tariffs and you know, we’ve just had a 10 pullback. That’s what sentiment looks like. Here, take a look at this. This is the aii.

So we’ll get this updated one here in two days. But look at this swing last week. Again, it’ll probably be higher because we did just hit all time highs. Today we look at the 10% upswing in bears last week. Again, a 2 to 4% pullback. And that’s the kind of shakeout we get. Those are weak hands being shaken out. We’ll take that.

Again, we’ve said buy the dip from the very beginning here of this bull market. Nothing has changed. So we’ll say, hey, thank you very much. We’ll, we’ll take that off your hands. Sure. In the fear and greed index. Wow, what a difference just one month makes, right? A month ago we had hit in extreme greed, right. It says 75.

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Maybe that’s to the day. But we had gotten all the way up, you know, into the 80s there. And just last week we got into neutral.

Again, week hands being shaken out of this market. And believe me, you know, to any newbie investors out there, I don’t call you weak hands as an insult by any means. We’ve all been there in our investment journey. That’s exactly again, to the point I made earlier in this podcast. That’s why we’re here at the vra. It’s why Kip created with his mentors the VRA investing system, which helps us remove the emotion from our investing. Our 12 screen system, 70% fundamental, 30% technical. Again, come and join us here at the VRA.

We’d love to walk you through it and how we use it. And again to remove that, invest that emotion from our investing so that we can make good decisions when they’re presented in front of us

We want to be the go back to the old kind of Warren Buffett ad adage of being greedy when others are fearful and being fearful when others are greedy. So yes, we’re getting into back into greed mode here. What would you expect? Right? All time highs. This should be an extreme greed really. Until we get to extreme greed for weeks and months on end. And same with AI until we’re in really 50, 60, 70% bulls for weeks on end, we won’t be looking for a top in this market just yet. That said, let’s go ahead. We’ll just pull up the chart here.

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Why not? We’ll start with our leadership on the day. But it wasn’t the Nasdaq. Even though we hit an all time high, the Russell 2000 is what led the way. And you know, really good to see. Those are the companies that will benefit the most from falling interest rates while the ten year was up. Today you the market is a forward looking mechanism. We think that’s what we’re seeing. You know, we’ll go ahead and just the ETF here for the Russell 2000 IWM, you know, not at 52E highs but again, good move today, up 3% there.

All right. So for our leaders for the big three today, Nasdaq did lead the way all time high. Getting close to another golden cross here. The big one is always the 50 through the 200 day. But hey, that’s nice to see as well. And we aren’t at, you know, extreme overbought on steroids just yet. We’re getting there, but we just hit all time highs. Always great to see.

Kip talked about this yesterday. I won’t dive too deep into it today because we talk about it a lot. I know it’s scary to get into the market when you’ve just hit all time highs. But from our most recent example of a V shaped recovery, you know, yes, we’ll wait for pullbacks and use them as buying opportunities if you’re not in this market yet. But from over the next, I believe it was 18 months in the Nasdaq in the S and P from the all time highs from the previous V shaped recovery during COVID I mean we’re looking at from all time highs until the ultimate peak rallies of 40 to 70%.

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And our major indexes even bigger in some of the sectors as well. Speaking of one of those sectors, just what we want to see today, the semis leading the way and another all time high here as well. You know, really that’s even better to see than tech hitting an all time high and again leading the way, R2000 above that. But for the big ones semis, great to see and one more all time high here today after this. The S P500 hitting an all time high here as well. Again, great to see and great to be here with you for a day of all time highs. Now the Dow on the other hand, not quite back to all time high territory, but working on it. We want to see it get there. You know, those are some of the bigger multinational corporations.

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So at least from that point of view, you could see maybe not the direct impact of tariffs is what’s affecting these stocks, but the sentiment around them certainly can be. So the Dow still up a nice 1.1% today at 44,458. Next up here, taking a look at our internals. You know, Kip and I talk every day at the market close ahead of these podcasts in one, you know, factor we’ve been noticing over the last couple of weeks. Again, we did have the, the, the slight shakeout here. Really nothing. When we get about a year out from this, it won’t even look, you won’t be able to tell on a chart hardly of what this shakeout was. But the internals, you know, yeah, we got some days where they’re mixed to positive but just not as strong as you would like to see at the beginning of a bull market.

You know, it’s not uncommon though at the beginning of a bull market for the leadership, you know, driving the move higher to be very concentrated and then it expands. A rising tide lifts all boats. We think we’re seeing something very similar here. So much of this growth so far has been led by the Mag 7, but that is broadening. And the proof today from the internals, much better numbers than what we’ve seen lately coming in positive across the board here. NYSE over 4 to 1 positive advanced decline, you know, just under 3 to 1 positive advanced decline for the NASDAQ. Next up, 52 week highs lows which can lag a little bit, especially after a slight pullback like this. But still great numbers here.

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Let’s see. I mean massively positive if you want to call it, you know, over five to one on the nyse, just about three to one on the nasdaq. But volume here. Wow. And you Know, might have even been more impressive with some refreshes here. But just shy of, you know, bullish thrust territory, you either want to see a 90% update as a bullish thrust or back to back 80% upside volume days. And I believe, you know, for the real technicians out there, the hardcore old school technicians, I believe it’s got to be followed by something else. You know, they’ve got very specific ways of looking at it.

But we had one earlier this year, you know like a Whaley breath thrust and a Zweig breath rust and the results from those over the next year. So we’re still, you know, what four, four months or so, you know, from the April lows. I mean. Yeah, four months from the April lows. And so about that. Maybe even a little less than four months from those breath thrusts. I’m talking about in the, the, the analytics looking a year out. I’ll have to go back and find those for you because it really is impressive and we’ve seen it play out already.

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Right. Or we were 3, 4% off the lows, 5% off the lows of the year and we got this breadth rust. Now we’re back to all time highs but the returns will continue from here and especially Kip covered this yesterday as well. It is a stock pickers market. You know, you can have a great day while the rest of the market is not participating as well. That’s why we do what we do here at the vra. Owning the major indexes is great in a bull market but you want the those outside returned returns from some unloved sectors, from some high beta names and the divers diversification of these sectors as well. Because it’s going to be a rolling bull market.

We’ll see that and elaborate it here, elaborate on that more here on the podcast because yes, you know it’s tech in the Mag 7 leading now, you know, next year. Who knows, tech in the mag 7 might be fantastic as well. But energy stocks may lead the way.

Maybe it’s nuclear. Other ones we’ve seen in the past as well. Gold on the year has outperformed the major indexes has outperformed the even though the SB is at all time highs. If you take gold I believe you know, from where we just were at all time highs. I’d have to run them again today but gold has outperformed the S&P 500 since 2000 last I checked. So there’s always great opportunities out there. Even moret overbought levels like we’re seeing like we’re getting back to here for our major indexes. All right, we’ll wrap up the rest of the day quickly here.

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Our sectors, all 11 sectors positive on the day to day led by, let me get a refresh there. Communication services proxy for tech essentially which that was an all time high though from that sector. As we say, you’re often new highs beget new highs and we’ve got a lot of these sectors that have really yet to get to those all time highs and beyond. So again, more room to run in the broadening aspect of this market for our laggards on the day if you even want. I guess I’ll say the tech sector. Tech and communication services again, all time highs today. Our laggards if you want to call them that, consumer staples.

So that’s all right. And then after that real estate. But I want to point out as we do here often, the S and P real estate sector is primarily made up of REITs. We like the home builders. If you saw Kip on Charles Payne today, it’s exactly what we talk what he talked about as well. So we’ll take a quick look at one more chart here for the day of the home builders. Look at that. Yes, you know, well off the all time highs from late in the year last year.

[00:21:17]:
But wow, I mean it’s been a great room, a great move from the lows. Great series of higher highs and higher lows. Exactly what you want to see. Yeah, you know we’re at overbought levels. We got a nice little pullback from that here. But back above the 200 day moving average and again this is the housing index. What we really like to look at is the home builders. They shared this chart for Kip on Charles Payne today.

I’ll get a little more out of your way there. But again, same story here. Big Update today. Even led small caps up 3.6% percent. We think that this continues. We think we’re early on this move here because so many people have been so bearish on housing, you know, for the obvious reasons of, you know, young homeowners can’t afford a home right now. That’s a big I totally get it there but you can’t. It’s tough to have a 2008 recession type of environment when as Kid pointed out, 40% of their of homeowners own their home outright here.

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You know, you got credit scores at all time highs. You know, might need to do a latest check with some of new data that’s come out. But consumers have done really well in in preparing for a move like this, I think a big part of that is so many people didn’t want to get caught in a 2008 kind of scenario again. So instead of taking out huge loans on their house, like if you look at the home equity loan line of credit helocs, we’re nowhere near even the beginning of 2008 level. Yeah, it’s picked up a little bit, but I believe we’re still below a lot of the averages we’ve seen over the last two decades. Nowhere near, you know, big concerning levels. So not only do 40% of homeowners own their home outright, but homeowners and consumers have the ability to lever up here and take on more debt.

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And if we can have lower interest rates to accompany that. Again, economic growth is not inflationary. It’s nothing we should worry about here. For some reason, economists got people scared of too much growth. Seriously, you hear it from the Fed. It’s unbelievable to listen to Jay Powell and think in for, you know, Fed directors and imagine these, them taking themselves seriously at all when they’re saying, oh, we’re concerned about the economy overheating and the employment market is just too tight. You know, wage, wage inflation. Wages are rising too quickly.

What? How can wages rise too fast? How can prosperity happen too quickly?

They’re literally hamstringing us. And we hear them say it and people, oh yeah, okay. You know, we don’t want to have a blow off top. Yeah, yeah, yep. It’s this scared restrictive mindset and we’re not doing that anymore here in America. It’s the golden age of America. It’s Good Morning America. Now, as Kip talked about today on Charles Payne’s show as well, I’m making money.

[00:24:10]:
This is the Trump economic miracle. 2.0 meets the roaring 2020s meets the innovation revolution. There are are not any bigger bulls on Wall street out there than we are than the vra. I would be surprised to see if any people have predictions for this market higher than we do. And day by day, Kip and I ask have to ask ourselves, are we bullish enough? Seriously, that’s what. Those are the conversations that we have often, of course, they’re short term moves in the market. But as he said today as well, and we wrote in the Big Bribe, we see this move running at least to 20, 30 and beyond. There will be plenty of great buying opportunities along the way.

So no need for FOMO here yet. Come and join us. We’ll help get you in the right positions. Let’s have a great time in this bull market together. So thank you for being here with us today. That’s all I’ve got time for here today. Probably went a little longer than I planned to for you, but again, thanks for being here with me. As always, you can sign up to receive our VRA podcast every day at the Market close at vraletter.com Click the podcast link at the top.

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You’ll find our transcripts notes for the podcast, and you can watch the video there as well and sign up to receive them again every day at the Market close in your inbox. So thanks again for being here with us. Until next time, we’ll see you back here tomorrow for the close.