In today's episode, Kip dives into a jam-packed start to the week including, major indexes at all-time highs, the market's reaction to China's "liquidity bazooka," and the parabolic rise in gold and silver. We'll also discuss the broadening action in this bull market and the impressive performances of tech stocks and semiconductors. Tune into today's podcast to learn more

Don’t look back. The market is closed. Good Tuesday afternoon, everyone. Kip Herriage here with your daily VRA investing podcast. Hope you had a good day today. There’s a lot happening in this market, is there not? The news out of China overnight. Liquidity bazooka. We’ll talk about that.

We talk about this big move higher. Well, gold is going parabolic. Silver starting to join the party. Gold up $35 an ounce today. Another all time high. Silver up 4.6% today. The miners up as much as 3% today to a 29 month high. This group is going parabolic.

[00:00:34]:
It’s about time. Look, gold has been hitting all time. After all time high, silver’s been all over the map getting some steam. Now, of course, silver really starts to catch fire when gold starts to make these kind of parabolic moves. Silver likes to play catch up, and then it does that in a hurry. And then the miners. There is no group. How many times, if you’ve been joining us here for very long, how many times have you heard me say this? There is no group more undervalued than the gold miners.

Well, now they’re starting to hit 29 month highs again. A big, big rally happening here. And the China bazooka certainly helps, by the way. And the semis led Nasdaq today. This was a textbook move. Higher on the surface. You look at this and go, well, it was kind of an average day. Nasdaq up 100.

Dow Jones up 83. Okay, just another day at the office. No, this is not, this is an important day. We’re starting to see broadening action like this bull market has not seen. Again, we’re not even two years into this bull market yet, but now this is, again, this is textbook bull market action. Now, the broadening is tech. Remember all the perma bears, how long? How many, how many months? It was probably a year and a half. We had to listen to perma Bears say, this is a bull market of seven stocks, and that’s it.

[00:01:54]:
It can’t continue. When it crashes, it’s going to be another 2008. And we kept telling you, no, this is not 2008. Matter of fact, if you find someone saying it’s another 2008, you realize you’re speaking to someone who doesn’t know what they’re talking about. Because of the structure of the economy being so incredibly strong, the structural market being remarkably strong, corporate America has never been, ever been in this good financial shape. So, look, all of the, all of the ingredients have been here for some time. We had three bear markets in five years, folks, starting in 2018, three bear markets in five years. It was brutal.

The average stock lost 40, 50, 60% of its value in each of those bear markets. And so again, you can’t fault anybody for not wanting anything to do with this market for a long time because it’s just been too painful too soon, you know? And again, there are so many people that still have yet to recover from the financial crisis. They just want nothing to do with financial assets whatsoever. Maybe a home, maybe some conservative investments, but getting aggressively long the market, no way. I know this to be true because we’ve talked to so many people over the last two years and say, I just can’t do it. Look, he’s president. Look what just happened. Another 2000 days coming.

I can’t do it. Cannot do it. I can’t go through it again. And as we said so many times, that is the exact blueprint for a melt up. Move higher. And it continues. And it continues because so many people are not buying what’s happening in the market, folks. This is going to be a runaway bull market at some point.

[00:03:29]:
Melt up. This could be, we’ve written this for the last couple of days. This may be the beginning of a melt it move higher. I’m going to talk more about that in a moment because of what China just did, because of the election coming up. And again, I’m going to give you, I’m going to give you a viewpoint that probably nobody else is telling you, and I think it’s probably the one Tyler and I both agree on this. That is the most likely explanation. Right. So I’ll walk you through all that.

First of all, the market, Dow Jones today again, up 83 points. Not, not a huge move on the surface, but it’s what happened under the surface. It was so big. Dow Jones up two tenths 1% S 500, but also just better than two tenths of 1%. Wells 2000 up two tenths of 1%. Nasdaq now we’re starting to get a little better here. Up a half percent of 100 points. And again, the semis up 1.9%.

Again, if you’re with us, you know, we’ve been, we’ve been hammering, we’ve been pounding the table on a few groups, pounding the table for the last, what, since the August 5 lows, right. Going back a little ways now. Pounding the table on the semis, pounding the table on tech, pounding the table on precious metals and miners. Tesla, Tesla’s the single stock that we pounded the table on. And again, Tesla now up 86% from the second quarter lows where we started pounding the table on Tesla. Another day for Tesla today. I’ll talk about that a little bit as well. Let’s get right into the, again, textbook semi is up 1.9%, Nasdaq up a half percent.

[00:05:06]:
They both let every other index. These are, again, do I need to keep saying it? No, I don’t. This is what you look for in a bull market. And again, shared this this morning with our folks bury letter. This is, we are beginning to reach overbought levels. But I have to stress this, we only advise you of that so that you know what the VRA system saying, because after we have, after our shortest term indicator, stochastics, after it gets overbought, and we’re hitting that now on the Dow Jones SBF hundred and Nasdaq semis, no small caps, no miners, no. But on the big three, we are getting overbought. That’s only on a shortage term momentum oscillator against stochastics.

The others have a ways to go. Now, we are tackler today and yesterday’s move, RSI is starting to get to that. But the point being we’re not what we would even call heavily overbought yet. We’re just reaching overbought levels. And then after that from heavily overbought, we go to extreme overbought on steroids. Okay? And that’s when all of our oscillators are hitting extreme overbought levels at the same time. And we’re not, we’re not, we’re not there. Look, that doesn’t mean the market can’t have a slip up.

Now, again, we’ve had a very good move. We are in the, we’re still in the worst nine days of the year. How many people have you heard say this right? September is a horrible, is a typically a bad month for the year. This particular nine days we’re right in the middle of are typically the worst nine days of the year. And what’s the market doing? It’s given the seasonality, the big middle finger, it’s like it does not matter. We’re going to keep doing what we want to do, which is go higher. And we actually said this. Beginning with the Fed’s rate hike, we predicted that the Fed would cut by 50 basis points.

[00:07:03]:
As you may remember, 92% of economists said that it would be a quarter point. But we, as is usual whenever we can find 80 90% plus of economists saying one thing, we’re almost always going to take the flip side. Matter of fact, I don’t know that we never haven’t. But specifically with this, we believe that a 50 basis point rate cut, that’s what made sense. That’s what the markets called for, based on where inflation is, based on where the ten year is, and of course, where the Fed funds rate was, which is at 5.33%, announced at four and four and three quarters to five. That’s what is that effective, 4.83%. So even there, we’re still at least 100 basis points over the ten year. So again, the Fed, frankly, the Fed could have cut by 100 basis points.

Now, they wouldn’t have done that because that sends a signal of, we’re really worried about the economy. It’s melted, the economy must be melting down and they wouldn’t have cut that big. But the point being, we said that there are multiple reasons why they cut by 50 basis points. And we said one of those reasons, and the conspiracy reason would be that Kamala Harris is in trouble and the state protects and backs their own. They want her to be elected. No surprise. Is this a surprise? Is it a surprise that the Fed’s political? No. How many times have you heard this on the Fed is not political.

That is not political. And, you know, I, frankly, when they say that, it’s a laugh out loud moment for me. Maybe it’s because I’ve done this so long, but the Fed is most certainly not political. We saw this with Jay Powell. Remember, there was a leak from a journalist that got someone caught on camera, undercover video. And the guy says, yeah, Jay Powell hates Trump. And then, of course, we know the evidence of it. What Powell did as Trump’s fetch chairman when Trump is president.

[00:09:04]:
So that was no surprise that Powell, 90, over 90% of all the Fed governors, Fed presidents, 90%, over 90% of them are Democrats. They vote Democrat again, this is the state we’re talking about, right? You can call it the deep state if you want to, the shadow government, the uniparty, it’s really all the same. And they want Harris to win. No surprise there. Well, that’s one of the reasons that we said that the Fed would cut by 50 basis points to really get this market juiced and get the stock market going. Because I’m telling you straight up, if the market melts up into the election, that’s a big win for Kamala Harris. That’s a big win because people vote with their pocketbooks. And stock market investments are something like 20% of consumer net worth.

Housing is over 40%. Bank accounts, of course, are a big percentage, but stocks are 2020, 5% of consumer net worth. So if you’re making, if your portfolio is growing by now, 5% a month or something, and the election is coming, why would you want to change that? Not saying that, but it may change just enough votes right, in these slim margins for the election to help get her in. So imagine our surprise when China announced their bazooka overnight. Right? I’ll cover that in just a moment. But imagine, I’m surprised when that happened because how does this not, look at, look how, and by the way, I’m going to be on Charles. I was supposed to be on Charles Payne’s show today on Fox Business today. I’m scheduled to be on tomorrow.

Instead, I got bumped. I’m not sure by who, but I got bumped. And I’m going to hopefully get a chance to talk to Charles about this. This is right up his alley. I think you’ll enjoy this. And you, look, it was in addition to the Fed’s rate cut, big outsized rate cut. What do we have? Putin. Who did he endorse? Kamala Harris.

[00:10:58]:
What did China just do overnight? This massive liquidity bazooka that they launched, it caught the markets completely by surprise. Chinese tech stocks are just soaring overnight. And today in US trading, well, who would China, who would Russia rather have, Ukraine, who would they rather have as president? Would it be Trump or Harris? I think we know the answer to that question. So again, these dominoes really do fit very well together and they’ve started tumbling together. So it’s just something to be aware of. And I think the more people that talk about it, the better, because at least it puts some perspective into why this is happening. You know, but again, let’s list, that’s a good segue into China because last night, this is around eight or nine our time that China made this announcement. PM last night that they’re beginning, this is the beginning of fresh monetary and fiscal stimulus.

It’s going to be a cycle of dramatic chinese fiscal stimulus policy, fiscal and fiscal and monetary stimulus policy. And it’s just the beginning of, because the first phase lowered interest rates. They also signaled, here we go, more cuts are coming. Sounds like the Fed does it not? The cut rates on over $5 trillion in us money, over $5 trillion in China. And chinese housing and mortgages were cut. That’s a big cut for China. They made second home purchases much easier to remember. They had restricted that.

Now, now they’re going back to, you can buy a second home, third home, fourth home, whatever you want to buy. And family stands. You can put 30 people in. I mean this is the way that they’ve supported the housing market in China forever because this is how communist countries have to operate, right? They don’t have a true capitalist system. They have to have these gimmicky things to give people an opportunity to make money because again, in their jobs they ain’t making money. Right? That communist is, that’s the big drawback. So they have to do these kind of things. And by the way, that’s why China’s debt to GDP is over 300%.

Officially they’ll say Japan is 270% debt to GDP. Officially China’s 289% debt to GDP. They’re both over 300%. Okay. And China, who knows? You can’t trust their accounting system. Who knows what this really is? But that’s what they have to do, these gimmicky economic policy to help the consumer. And they also lowered the reserve ratio for banks which freed up a lot of bank liquidity.

[00:13:38]:
That was a big move as well. But finally, here we go with the chinese plunge protection team. We know we have one in the US, right? That’s the other thing. If you meet someone that says there is no plunge protection team in the US, once again you’re hearing from someone that doesn’t know what they speak of. And if it happens, if it exists in the US, you know for certain that it exists in Europe and exists in Asia. It certainly does in China. So last night they pledged over $100 billion, this is us money, over $100 billion in equity market support and quote unquote, announced the creation of a stock market stabilization fund. That’s their plunge protection team.

So chinese stocks are going to keep going up, folks. This is great news, by the way, for the global economy, not that we needed it. We already in the roaring two thousand and twenty s, the world’s awash in fiat money and easy money policies. Now again, thanks to the Fed, it’s not that we needed this, but the PBS, the people’s bank of China signaling what they did last night is a very, very bullish sign for global financial assets. Take that one to the bank, folks. Take that to the bank. I’m going to repeat this again. If you are not long this market, you are making a massive mistake.

Not only do we have all this fresh liquidity that are reserved ECB now the People’s bank of China, all this fresh liquidity. But what do we already have? We already had all time highs in the stock market. We already had all time highs in consumer net worth, home prices. I could keep going. You’ve heard me run the list so many times, this is a complete recipe for a market melt up. And again, how interesting that the election is. What is it now? What are we seven weeks away from the election? Something like that. So look, as an investor, how can you say you don’t love this, right? How can we already in the innovation revolution, we’re already in the roaring 2020s, we already have a melt up economic environment, and we do.

[00:15:45]:
But now we have all this extra money coming into the markets, folks, this is, this is the time to be long and strong. The chinese news confirms that. And as we also said again, we’re not yet at overbought levels that concern us. We are still in buy mode right now. And I think that it really applies to tech stocks. We own chinese tech stocks through KWeb, the China ETF, and that was up 10% today, of course, we own Soxel, the three time semi ETF, and we own the three time Nasdaq 100 ETF. And again, these have been on very, very good tears of late, again from the August 5 lows. And now it’s time, by the way, I’ll just, final note, the semis, check the charts.

The semis are still, what? What are they, 14, 15% below all time highs. Remember, the semis got hit 28%, three week bear market at 28%. Talked about at the time, couldn’t believe we were witnessing, say, back up the truck, buy the semis, buy tech, because they’re going to come roaring back. And they have. But what’s also happened is the markets broadened at the same time. The SB 500 is now trading at the highest levels since 2002. When it comes to broad market participation, in other words, the average stock is participating more, is growing more than the index itself is. And so again, that hasn’t happened at this level since 2002.

That is that you couldn’t get more along with the euro stock exchange breadth, hitting an all time high after all time high. Again, these are just more signs that broadening is really kicking in here. And as investor, this is just one of the times that you just got it. You have to own stocks. You have to own stocks aggressively here. But again, we’ve been saying this now for a couple of years. Why would we change our tune now? Investors are on the wrong side of this. They’re on the wrong side.

[00:17:38]:
You have a lot seasonality. It’s held up very well for the last two years. It’s held up incredibly well. We paid attention to it for that reason we started pointing out to you at the beginning of September how bad the month was. We got to the worst nine days, decades. We started really pointing out how bad this is. We also said, our theme has been that a generational bull market, which this is a generational bull market, will supersede bearish seasonals, bearish analytics. And so that’s been our view.

It continues to be our view. But there’s so many people that have paid attention and traded aggressively based on seasonality that they are on the wrong side of this market, either either short or they’re broadly underinvested. And that’s more fuel for the fire. Along with that, of course, you’ve still got $6 trillion sitting in money market funds. That money’s not now starting to come out of money markets into equities. And, folks, today’s the 24th, where we got five trading days left until fourth quarters here. Fourth quarter is the beginning of not just its fund flows. Right? New month, new quarter fund flows that people front run that already.

And now we’re front running. What is the best quarter of the year? The fourth quarter. I mean, that’s when we say this is a, this is a, it’s a recipe for a melt up. Move higher right here, which would catch traders. Exactly offsides. That’s when the biggest moves happen. Okay, see, what are those I have here today? You know, again, I’ll cover the miners. And in our commodity section here, let me just talk for a second, because we have been pounding the table on TESLA.

[00:19:22]:
TesLa from the second quarter lows, which were the quarterly earnings for q one stock got pounded. We began pounding the table on Tesla. It’s now up 83% from those second quarter lows. That was in April 22. It’s when TESLA bottomed at 139, folks. It’s right now trading at 254. All right, so it’s had a, it’s had a, again, 82, 80 troops that move higher. And I’ve got to tell you, again, front running has become Such a thing.

If you can find the, the circumstances that are being front run, if you can identify what’s the next thing, that’s a smart money. Of course, that’s what we are here. Right? That’s why you’re on this podcast. You are the smart moneY. If you can identify what the next big investing trend is or the next big cycle is, and you can do it in advance. And now you should be able to do that, like maybe a few days to a week out. Not anymore. If YoU CaN identify something to front run, that’s significant, right? About three to four weeks in advance, then you’re getting in at a great time.

And that’s what we’ve done with Tesla because these are the things that are coming up, and these are happening fast. Now, these are all in early to mid October, is right around the corner. First thing is happening is q three delivery numbers on OcTober 2. Their delivery figures have been poor for a couple of years. The stock price has shown it well. Analysts now are starting to come out going, wait a minute, I think we’re on the low side because China has been on fire for Tesla. Right. The rest of the world.

[00:20:59]:
Again, it’s going to be a third year in a row that Tesla’s got the number one selling car in the world. You tell people that, they don’t believe you. What do you MEAN? Ev? An electric vehicle is the number one selling car. Are you telling me that for three years? Yep, that’s what I’m telling you. Because electric, electrical cars, of course, are the future. There is just no doubt about that. With BATTERY. Again, battery life has really been the key, plus cost.

But that’s the other thing. Tesla’s about to introduce their $25,000 electric car. That’s also probably going to happen at the unveiling on October 10. But anyway, I don’t want to get too far ahead, but these delivery numbers on October 2 should be excellent. The next thing that’s going to happen is on October 10. This is probably the big one. Besides earnings, the robo taxi unveiling on October 10, they’ll unveil what it looks like, details of it. Musk has been really pumping this up, and he’s actually said this is the most significant moment for Tesla since the model three unveiling, which was, of course, what drove the stock up, you know, 800% or something.

Right. And, yeah, also on RoboTaxi, day one of the big thing there is going to be autonomous driving. Really more details will be shared there. This is what’s so important. Not just robo taxi, but FSD. Both full self driving. It’s growing by leaps and bounds. They’re AI, there are thousands of Nvidia chips all plugged in together.

[00:22:38]:
So they’re making remarkable progress here and that this is a big event to front run. This is really, I think that’s going to pick up speed again. I would not be surprised to see the stock hit 300, maybe 350. So I would not be surprised to see the stock jump dollar 100 a share between now and the middle of October. Not a prediction, but it wouldn’t surprise me. 300. I’ll be disappointed if the stock doesn’t, doesn’t jump another 50 points between now and the robotaxi unveiling. Then we’ll have to see, is it a buy the rumor sell the news event? And of course, that’ll be answered by timing.

When are these robotaxis going to be on the road? When is full FSD going to be available all over the country? It’s expected, by the way, that it will first take place. FSD approvals first take place in China and Europe in January of next year. That is not long far away, folks, not even having to drive your car anymore. It’ll pick you up, it’ll drop you off, it’ll take you home. It’ll act as a taxi service for you. You can make money while you’re sleeping, as your car drives strangers around. This is all happening. This is an incredibly exciting time to be alive.

And this is just one snippet of the technological innovation that’s taking place. Right. And then the big one, of course, then after that, after the robotaxi and building on the 10th will be corporate earnings for Tesla. Excuse me, that will be third quarter. Yeah, second quarter. Tesla’s a little off, and I believe that’s right. But this would be Q three. This should be Q three, if I believe October 16, earnings reported for Q three, which should be outstanding.

[00:24:18]:
Yeah, that is Q three. Right. So in addition to that, there’s so much else to talk about. Tesla. There is. Tesla is the single stock to own for the innovation revolution that’s underway now. There is no other company that represents everything they do. Again, in addition to EV’s and full self driving and robo taxis.

How about robotics? How about energy storage? That’s been a really hot area, robotics and Optimus. I mean, they’re going to be millions of these robots all over the planet inside of five years again. And the stock really has not reflected that valuation whatsoever. And, of course, artificial intelligence, what they’re doing in AI, they’re also a leader there. So again, been pounding the table on it, and we talk about it here on this podcast fairly often, so we thought we’d leave you with that. Okay, let’s take a look on the hood today. Let’s take a look at the internals. Internals were good today.

Just doing a quick refresh. 1.7 to one. NYSE advanced decline, Nasdaq. Is that also about 1.7 to one? These are on a day that was a little topsy turvy. It was just kind of quiet kind of inside day. These are good internals we had. Volume was two to one positive. NYSE volume was almost three to one positive for Nasdaq.

[00:25:37]:
And we also had, what is this? 552 stocks hitting a new 52 week high to just 121 hitting a new 52 week low. Very, very good internals. Sector watch not quite as impressive we had, but again, kind of a quiet day. We had five sectors finish higher, six finish lower. Upside, materials and technology led downside, financials and utilities. But again, not big moves either way, this is a good day regardless of how you look at it was a good day. And our commodity watch today. There we go.

Quick refresh. Yeah. Gold up $32 at 26.84. Right now. A big, again, $32 move higher, just about $4 off the, it’s an all time high, of course, and trading near the highest of the day right now is up 1.2%. Silver up 4.5% to 32.49. Copper up 4% as well. Big moving copper in the China news is big, folks.

Copper, 452 a pound. Crude oil today. Also replying this China news was great for commodities, period. Right? If China’s economy comes back, look out, by the way, that also will result in a little bit more inflation. But the markets just won’t care. One more time, if you find someone telling you that inflation is going to come roaring back because of China, you’ll realize you just, you’re speaking with the person that doesn’t know what they’re talking about. The inflation story is over. And I’m not saying it won’t bump up a little bit here, there.

[00:27:08]:
But the Fed’s made it clear, if not in word, that indeed that they’re happy with 3% inflation. Of course, 2% or cover story. It is a bogus cover story. The markets have figured it out. And with the innovation revolution and continued disinflation, slash deflation, a lot of that coming from China and Europe. Look, inflation is only going to fall in the long term. The markets are figured this out. Inflation is dead.

Still, the market could not care less about the inflation story. Just know that to be true. Again. Crude oil today 1.6% to 7152. And finally, the day bitcoin. So much happening with bitcoin again, options now being approved by the SEC for the first one from Fidelity’s Blackrock’s bitcoin ETF. It’ll happen for all of them at the same time, I imagine, or within days of each other. That’s extraordinarily bullish for bitcoin.

Extraordinarily bullish right now. We’re about $10,000 a bitcoin away from all time highs right now. Trading at 64,207. That is up at 1.4% on the day. All right, folks, that’s it for the day. Hey, stay locked in. This is that bull market. Have a great night.

[00:28:18]:
Always appreciate you. Listen, we’ll see you back here again tomorrow after the close.