In today’s episode, Kip breaks down the market’s surprising resilience after Moody’s downgraded U.S. debt, stripping it of its AAA credit rating. Despite the negative headline, the markets staged a notable comeback, demonstrating classic bull market behavior with investors focusing on the market’s reaction rather than the news itself. Kip also recaps highlights from Charles Payne’s show, where top technician Rich Ross set ambitious targets for the S&P 500, Tesla, and Nvidia companies that are already staples of the VRA portfolio. Tune into today's podcast to learn more. 

Don’t look back till the market is closed. Good Monday afternoon, everyone. Kip Herriage here with the daily VRA Investing podcast. Hope you had a good day today. Very interesting day today. You know, we had the news over the weekend about Moody’s. From Friday after the close, Moody’s downgraded US Debt, making the US Debt have now no AAA rated credit rating anymore. That’s now over with thanks to the Moody’s.

After the close on Friday. Futures were pretty sharply lower last night when Sunday morning trading opened or Sunday evening trading opened. But that didn’t last very long, did it? Good comeback today. We’ll talk about that. It’s the tell, you know, it’s always the tell. It’s not the news that matters. It’s the market’s reaction to that news. Again, more example of a textbook bull market action here.

[00:00:48]:
Also today on Charles Payne show, he had Rich Ross on who if you’re with us here at the vra, you know we talk about Rich Ross at least once a week in our VRA letter. He’s our favorite technician. And, and Charles gave us a shout out at the beginning of the show and said, hey, had Kip Herridge on last week and he talked about you being his favorite technician. And he is. Ross was great on Charles’s show today. Thanks again to Tyler. Give me the heads up on that. But Ross said his target for the year end is 7,000 on the S&P 500, folks.

That’s 17% higher from here. He also loves two stocks they talked about that we own here and that’s Tesla and Nvidia. They have a target of, he has a target of 160 on Nvidia as a, that’s just a short term technical target which is, what is that, about 30? What is that, 20? Yeah, 25 is here. Higher from here. That’s, that’s an initial technical target. I believe that’s what he was talking about because Nvidia, with things going a lot higher, but it was Tesla that stood out. Rich’s target for Tesla is, is $500, which just happens to match our target for the end of the year. Of course, Tesla right Now is at 342.

So some quick math here. That means Rich Ross is looking for a further move higher in Tesla from here, 46%. And of course it’s been, it’s been, it was down a bit today, but it’s been on a serious tear from the, from the lows of earlier this year. Actually, I think it’s up. We just ran These numbers up what, 90% in the last five, six weeks? I believe. That’s right. It’s really been on a roll here. We think that continues big happenings at Tesla, of course.

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The robo taxi rolls out next month early, not early necessarily, but in June next month in Austin. It’s going to be a, a slow rollout first. It’s going to be very controlled, just a certain number of cars. Everyone’s going to be kind of almost hand selected for, to ride to make sure that, you know, nothing goes wrong. The last thing you want is bad press coming out of the gate. But for people that think that the Tesla’s full self driving and autonomous driving is not going to work, number one, you probably don’t own a Tesla because if you own a Tesla, we just barely drive. First of all, I love driving the car because it just goes so incredibly fast and when it’s on autonomous driving, fsd, it doesn’t go as fast sometimes as I want to go. But yesterday we went to a friend of ours, graduation party for his daughter.

It was about an hour drive from our house and on the way back we used fsd. It made just every decision was essentially perfect. I thought at one point it changed lanes and traffic and I thought why is it doing this? Why is it changing lanes? We’re in the left lane, we’re going in pretty good clip. Yeah, things are slowing down. But why did it change? Cindy and I were talking about it. Next thing you know it changes lanes again and then exits and because it exited and we stayed on the feeder road for, for essentially a mile, mile and a half and, and bypassed all that traffic, I, I would have had no idea about that had I just been driving blind. And the car, you know, can see ahead. So it’s very intuitive and it makes very good decisions.

Not all perfect yet, but we’ve yet to even come close to having an accident. And it’s, you know, we’ve used it in some pretty high traffic situations too just to test it out, it is remarkable. So I think if that’s the first thing, if you don’t think it’s going to work, you don’t own a Tesla and haven’t tried it, number one. But number two is name something that, that Elon Musk has rolled out that doesn’t work. I mean this guy is landing spaceships on their own and you know, in backwards form. So everything the guy does when he, when he, when he finally rolls things out, very rarely do they fail. And so I, you know, I think that the smart money is on Elon Musk getting autonomous driving. Right.

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And then of course, right behind that is Robo Taxi. They’re going to have thousands this year, thousands of Optimus robots, robots in factories, in their factories, working this year. Don’t know exactly what they’re going to do yet. They’re going to be walking around, probably interacting with people. Again, remember the brain, if you haven’t used Grok yet, Super Grok, the brain for Optimus is going to be Grok. We, we use Grok, I don’t know, 10 times a day here. It is extraordinary. You put it on voice mode and just have a running dialogue.

And I know that’s not all that unique. I know other AI does this, but we did test others out earlier this year and just didn’t find anything close to what Grok was. But having the running dialogue on is interesting, especially if you forget to turn it off, because then he was having a conversation. And Grok will pipe up and say something to help you in your conversation about a topic. Oh, I forgot that was on. A little dangerous there. But again, we’re big Musk fans here and certainly big fans of Tesla. And good to see Rich Ross out hawking the stock for us today.

Thank you. Rich Ross, really great technical, technical analyst and we love featuring his work. Again today we had the news. So again, other credit, credit downgrade. By now you’ve seen it. You know, as we, as we wrote this morning in our letter, this was much to do about nothing. Number one, this has been telegraphed. This was coming.

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We knew it was coming. We should know exactly when. And so in the short to medium term, it doesn’t matter. Longer term. Yeah, you know what, longer term, what does that mean, though? Are we talking about 10 years, 20 years, 30? I don’t think anyone has that answer, but I do think that the answer is long term. I think the people that are really up in arms right now about our, the amount of debt we have, look, the amount of our interest payments, there’s no doubt that that is. These are scary numbers. Okay? But I think that Trump and Scott Best and have this right, it’s the Reagan school of getting out of financial fiscal trouble.

You got to grow your way out of it. You can’t tax your way out of it. You can’t. Certainly can’t spend your way out of it. You have to grow your way out of it. You got to empower American businesses and individuals to do that. And that’s what we’re seeing from Trump. Not entirely, but that’s the first impulse we’re seeing for Trump, and it’s the right impulse, we believe.

And so look, as far as when is it going to be a problem, our concern is not the U.S. okay? And by the way, no longer. There are now 10 company countries on the, on the planet that still have a AAA rating. Among those is Canada, which if you understand the facts about Canada, number one, how small it is. We love our Canadian friends here, especially those in Alberta, and we’re, we’re rooting for them as they possibly, very, very possibly move towards secession from, from Canada. But there, there is no comparison. The fact that Moody’s rates than AAA but not the U.S. it’s pretty laughable.

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The, the one advantage that Canada has over us is that their debt to GDP is slightly better than average. They’re at 112%, we’re at 122%. But that’s where the advantages stop right there. The United States has $5 trillion in tax revenue from a private sector worth $200 trillion compared to Canada, that has just $380 billion in tax revenue, with the private sector only worth $19 trillion. So obviously the key issue is, do we have the money to pay our debt? Do we have the money to make our interest payments? And when you have the world’s reserve currency, and make no mistake about it, that’s the biggie. That’s why every president says, hey, we’re going to make sure we nothing to lose. The US Dollar’s role as a reserve currency on the planet, that’s the key. Because when you have the world’s reserve currency, you can’t go bankrupt.

You literally cannot go bankrupt. You can just print yourself out of a problem. And of course, we’ve seen what that does. That comes with inflation. But it is the ultimate problem solver. So our thinking here is that we’ve seen no administration that’s had the courage to tackle this, because if you tackle it, folks, you’re going to have a recession. You tackle this problem of government spending is such a big part of the economy. If you really tackle.

We saw what Musk tried to do with Doge. His cuts have not even codified into the law yet. Because I think every president, they run the numbers and they’re like, look, if you cut all this spending, we’re going to go into recession and it could be an ugly one. Not many presidents want to do that. Trump took some pretty bold steps on tariffs. Of course, he very quickly reversed his position on most of those because again, it’s very Hard to stomach when you’ve got a stock market going into a bear market in a period of two, three, four weeks and the pain that comes with that when you’ve got other things you want to accomplish. I just don’t think honestly that we’re going to have a president that’s got the courage to do it because it will be painful. There’ll be, as Trump said, a transition period, folks.

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I think it’ll be a very painful transition period. Now at some point, maybe a decade from now, that’s something that may be forced on us and on the planet. I think that there are other solutions for that will come to light as another Bretton woods, for example, a monetary solution. But I don’t think most people in the United States are ready for the pain that’s going to come with it. Especially when the United States and you do have other options such as growing yourself out of this mess. So that’s what I’m most excited about. That’s why the market’s rallying as well because the tariff issue is almost certainly, I would say the tariff issue now is 80% dealt with. We might get a, you know, a shock here or there but look, the markets couldn’t get hit today on this.

If you remember in 2011, the last, the last time we lost a triple A rating, the markets went into a serious tailspin. There were a lot of perma bears last night saying okay, here we go again, here we go. The beginning of a 10, 20% drop in the market. And we were like no, that’s just not going to happen. It’s just not. We are in a, we’re essentially in a melt up time frame. Now as we’ve been telling you here, this is a, this is a market that is, got a magnet to it, right? This is a textbook bull market that is a magnet attached to it to all time highs. And what makes that interesting is that this happened in 2020.

And we’ve been saying this is the best analogy toward going through now is the plandemic. Again, look at it. Very, very similar four to five week bear markets. This one wasn’t as bad of course as that one was but both had V shaped bottoms. This is another thing that Rich Ross talked about today on Charles Payne show which he, Rich Ross believes this is a V shaped bottom. Again we’re going right back to all time highs. When that happened in 2020, I think people, I’d forgotten this, to tell you the truth, it was only five years ago but I’d forgotten this once that happened once the lows were in place in March of 2020. Nasdaq then rallied 79% into November of that year.

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And so that’s what’s happening here. The market knows it’s going to keep going higher. We’ve got a lot of people that are still on the wrong side of the market. Remember, the retail investor, the Mrs. Watanabes of our era, backed this market up all the way. They just bought every dip while institutional investors sold and went aggressively short. And now they’re still having to cover and come in. It’s double buying a lot of fuel for the fire.

They’re having to come in and now re establish their position. So that’s why these dips keep being bought even on what looked to be on the surface, very bad news. One last point I want to make on the downgrade. This is something that you just rarely hear talked about in the media. And I don’t really understand that everyone’s so worried about the U.S. and our debt to GDP at 122%. Really. It kind of seems to me the parallel to me is with climate change, because the climate change, the hoaxers, the real hoaxers, right, the big life for the climate change is that they never talked about China’s role in cleaning up the economy, excuse me, cleaning up the environment.

They just never brought it up because every year they’re opening, what, 100, 150 new coal mines every year clearly weren’t playing along with the other parts of the world that were buying into climate change. And that’s the same thing that’s happening with debt. Because if you think that the US being at 122% debt to GDP is serious, then how is it, how are you not in the very next Senate saying, oh, but by the way, Japan is at 250% debt to GDP and China, if you can even believe their numbers, is at 280% to 300%. That’s GDP. So those are the second and third largest economies on the planet. If you’re going to talk and, you know, talk shit about the US debt situation in the very same sentence, you have to be going. However, the real problems lie in China and Japan. In my first two books, Crash Free Prosperity books, this was the black swan that I thought that I wrote about.

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And it’s still the number one in my opinion, the number one black swan that exists today, it is Japan. It’s not China, it’s Japan. Because they, they are the only buyer for their, for their currency and for their markets. There’s really Almost nobody else. Everyone’s locked out of their markets and Japan is, you know, the depopulent population is going the wrong way. Now China is certainly another one to be worried about. But I think that wouldn’t surprise people, the communist country. I think most people expect that China is going to fail economically at some point.

So that wouldn’t be a surprise. However, if you look at Japan’s interest rates, they are really starting to creep up now. There is some concern there, but again even there, because the Japanese people own so much of their own country’s debt and equity that I think that they have the power to do what it takes as a democracy. They still have the power to do what it takes to at least reverse their situation. But keep an eye on that. I think again, that is the ultimate black swan is Japan. If we, I’ll tell you right now, if we start to see things start to unravel in Japan, we will be out of the market very quickly. We will, we will be out of the.

Because that the next step, you would not want to have a lot of exposure to equities if Japan starts to follow. But trust me on this, that’s the ultimate black swan right now is Japan. So much is levered and tied to what’s happening in Japan. Again, don’t see that happening. But as a black swan, you know, that’s why they call it that. You typically don’t see it until it’s too late. But that is, that’s our biggest concern. It has been for a number of years and it remains our biggest concern.

[00:15:49]:
But again the US compared to China and Japan, it’s laughable to think that we’re anywhere close to the financial difficulties that they’re in, the debt difficulties that they’re in. But also to do interesting, you know, overnight when futures opened, the 10 year yield spiked up to a 4.55%. I think that was a high for the day. Let me just get a. Okay, the high today on the 10 year was 4.56%. That opening trade this morning when the markets opened officially was the high tech. From there we only went lower. The 10 year today closed at a yield of 4.47%.

So you know, down. What is that? Is that 7 bips today from his high? So again, it’s not the news that matters, it’s the market’s reaction to that news. I, I, we think, we think rates are going to keep going lower. Every country on the planet is cutting essentially except the United States. Jay Powell is behind the eight ball here again. He’s late again. Trump’s exactly right on this. And we think rates are going lower.

I wouldn’t be surprised folks if today, it’s today’s yield high of in the 10 year of 4.556%. I would not be surprised and frankly kind of expect that may be the cycle high for the 10 year. Because if you look at, if you’re on social media or if you’re watching tv, everybody is talking about rates going higher. Right? This is one of those things where the majority are focused on it, that means it’s not going to happen. And so as contrarians and because we see that we had disinflation rather than inflation and that the majority of and the mainstream media really had the tariff inflation story exactly wrong. So we think that again, look at oil prices down to 62 bucks a barrel. We have the last PPI was negative 5/10 of 1%. And again that is another sign of clear disinflation.

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CPI came in better as well. So we think that rates are going to peak here. That’s going to be extremely good for housing. We’re looking for an opportunity to reenter housing stocks and that probably will be one of our next buys in the VRA portfolio. Stay with us here, we’ll give you a heads up when that happens. Let’s see here. It’s how to point it out in our pre podcast meeting Industrials today sector hit an all time high today. That, that kind of snuck up there.

Value stocks have been doing very well and now of course, now we see that tech growth is really making a comeback too. So I think that the recession risk is off the table. I think that’s what we’re seeing here. And because we’re not going to have, we’re not going to go back to tariff mania. I think that that experiment again, I give Trump credit for trying around the, around the margins. There’s work that can be done there, but we’re just not going to have a major, a major breakup with China on trade. It’s just, it’s just not going to happen. That would have to be more of a planned event.

And those steps weren’t those steps, those measures weren’t in place. There was just not enough coordination in what Trump tried to do in our opinion. Who are we to judge Trump? I know the guy gets a lot of calls, right? But that has been our view from the beginning that the coordination was there. It was a reckless rollout. Hey, but you know what? He pivoted. He saw what needed to happen. And he made the pivot and now we’re back on the right track and that ultimately is what matters to the most here. All right, let’s take a look at the hood today.

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Kind of a quiet here again. We opened lower so you wouldn’t expect much from the eternals and that’s what we got. Not very much. Advanced decline was essentially flat on the day for, for NASDAQ and NYSE volume today also we’re just going to round up, we’ll call it flat again. I mean that’s the kind of day it was. We did have about 100 more stocks hit 50 week high, the 52 week low. Other than that, very not much happening there. But again good come back in the markets today.

Dow Jones did finish up 137 points. It was down over 300 points this morning. Okay, everything but the Russ 2000 finished higher on the day. So again it’s not the news that matters. Markets reaction news. That’s, that’s why we paid more attention to what the market’s doing instead of what the news looks like to watch today. We had six extras finished higher, four finish lower. Again not much of the way here.

Energy stocks were down 1 1/2 percent. That was our only loser really. Healthcare was up 1/10 one, excuse me, up 1% to the upside. And our commodity watch today again with the. Not, not really honestly with the, down, with the, with the downgrade. That’s not really what gold was up today frankly. Look, gold got extended on this last move higher. It was, it was above the 200 day moving average by the highest percentage that had been in many years.

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Right. And so it was extreme overbought. It was just time for gold to take a breather which is what it did. Both gold and the miners talking about GDX the gold miner ETF both pulled back pretty much exactly to the 50 day moving average work completely worked off the robo bot readings. Now back to heavily oversold talking again. Both gold and GDX trading in unison here. Now to heavily oversold technically and again Back to the 50 day. This is, this is what you need.

There’s so many people out there saying that’s it. Top calling in gold. How’s that worked out for people over the last several years? The last many years again since 2003 at $375 an ounce we’ve been buyers of gold. $5 now for silver. And look there were stretches where gold did not do much. It was flat or underperformed. But folks that has not been the case since 22. Since 2000.

Since 2000, gold has outperformed the S&P 500. And top callers have done pretty poorly, I would have to say. And again, we use gold for different reasons. It’s not just a place to put 5 to 10% of your assets as a hedge, you know. No, we use it for savings and it’s proven it’s taken really good care of us over the years. I’ve shared this data a lot of times for our newer listeners here, you know, since 2003 when we first recommended gold, if you put $100,000 in gold that. A hundred thousand from 2003 to now, call it what, 22 years would be worth more than $700,000. All right, that’s what we’re talking about as an inflation hedge.

[00:22:13]:
This great place to put your money as opposed to fiat currency. If you put that same hundred thousand dollars into a money market account earning 3%, that $100,000 from 2003 would only be worth $67,000 and losing money every day. Again, inflation is the destroyer of savings accounts. And not enough people understand this really. But again, we’ve been aggressively telling people to use gold as savings and now people are doing the same with bitcoin. Got no problem with that. We own both, but for very different reasons. Right, we own both, but for very, very different reasons.

We think they’re completely different asset classes. One is you can call gold if you want to. I think there’s only one gold and that is gold. Bitcoin is a, is a brand new invention. And this, it’s just, it’s just the best supply demand story. It’s the best financial engineering story of all time. It’s the best supply demand story of all time. And it’s like real estate.

They’re just not making more of it. That’s the thing. Once we get to 21 million bitcoin mined, it’s over, folks. And so that’s why bitcoin is going to a million dollars and we’ll stop. Probably, and not probably, we will be still recommending it there. Is it a slam dunk? No, and it’s not a slam dunk. And this is why we don’t have everything in bitcoin. Because yes, bitcoin on surface does have more upside potential, but that’s because it comes with a higher degree of risk.

[00:23:39]:
It just does. Bitcoin can be hacked. Now if you say kip, there’s just no evidence of that, you know, that’s. I will tell you, look at Every smart money poll that’s been taken of bitcoin, the biggest risk is exactly that, that it can be hacked. Maybe not today, but maybe in 10 years with quantum computing. Right? I think you’re naive to think that’s not a risk. The other risk, if you don’t have power, if you lose power, we have an electromagnetic magnetic pulse, EMP or something like that take place, or, you know, you just. You’re Spain and your, you know, your entire system goes down.

That is a risk. But the number one risk is the risk of hacking. Either you could be hacked, right? You can lose your code, your login information, or the entire blockchain could be hacked. That is a risk. So we’re more aggressive in gold than we are in bitcoin. But I will tell you, we are adding to bitcoin at a higher rate than we’re adding to gold today. But that’s why we own both for very different reasons. They’re phenomenal asset classes done for very different reasons.

So there’s no reason to hate gold. That’s the thing that probably bothers me the most about the bitcoin community is they just love to talk crap about gold. Why? What does that gain you? All it does is upset people like me that are serious gold bugs. Maybe that’s what their goal is, is to shake us out of our slumber, right? But look, I can tell you this. Gold has been great for the vra. It’s been fantastic for the Heritage family, and it’s been fantastic for everyone that’s listened to us since 2003. And I just think we’ve got a good thing going here, both with gold and bitcoin. If it’s not broke, why fix it, right? That’s how we’re positioned.

[00:25:28]:
It’s how we’ll continue to be positioned. All of our savings are in gold, right? As much as possible. We gotta have some liquidity you keep there. But very little, frankly, okay? Very little do we keep. Otherwise, we’re saving in gold. And then bitcoin, we look at it as. Again, as the. The best supplied inventory of all time.

We look at it as a risk on asset. And by the way, bitcoin has clearly separated itself from past action. This is another reason we’re so bullish on bitcoin. Now, bitcoin has decoupled not. Not just from, you know, apparently from the stock market, but more importantly, I think from tech stocks. Because you. You. If you overlay the chart of bitcoin and say, for example, NASDAQ 100 for a decade.

You, you, you would lay one over the other and not be able to tell which one is which. They traded together, which meant that bitcoin was a risk on asset. Well, that didn’t happen this past, on this, this tariff shakeout. The four or five week terrific bear market did not happen. Bitcoin did get shaken out, down to a low about 72,000. But it, it, but, but it bounced back quickly and it wasn’t hit as bad as the stock market was and it bounced back so fast again today. Bitcoin’s back over 105,000 on the downgrade last night. Excuse me, Sunday morning, I believe it was.

[00:26:44]:
Bitcoin hit a hit, a high of 107,000, folks. That’s just 2,000 away from an all time high for bitcoin. So we’re clearly going there. We believe this is the next big move. Our urine target remains 200,000 on Bitcoin. Our urine target for gold is 4,000. For those that are wondering, okay, what else today? Commodities. Silver today was up a half percent.

Getting gold up 1.4%. Silver a half percent today at 3,250 an ounce. Copper today up 1.5% to 463 a pound. Crude oil today up 20 cents a barrel. 6,217 again following the day. Bitcoin. Trading it right now. Trading it because it trades 24 7.

That’s one of the great things about it on blockchain. Trading at 105, 105,000, 169. All right, folks, that’s it for the day. Hey, hope you had a great day, an even better night. We’ll see you back here again tomorrow after the close.