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VRA Investing Podcast: New Highs Beget New Highs, and Inflation In the Rearview – Tyler Herriage – May 15, 2024

In today's episode, Tyler breaks down the latest inflation reports, highlighting the market's positive reaction to this news as the Nasdaq, Dow, and S&P 500 hit all-time highs today. We also cover the new highs in our favorite sec ...

Posted On May 15, 2024Episode 1385
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About This Episode

In today's episode, Tyler breaks down the latest inflation reports, highlighting the market's positive reaction to this news as the Nasdaq, Dow, and S&P 500 hit all-time highs today. We also cover the new highs in our favorite sectors and the commodities markets. Tune into today's podcast to see what the market is telling us from today's action.

Transcript

Don’t look back because the market is closed. Good Wednesday afternoon, everyone. Tyler Herriage here with you for today’s VRA investing podcast. Hope you all had a great day out there today. If you’re invested in this market, you had at least a pretty good day today as the all time highs continued to roll on today. Yesterday we saw it first with the Nasdaq hitting an all time high, and then today following, we had the Dow hitting an all time high, the Nasdaq 100 hitting an all time high, and of course, the S & P 500 hitting an all time high here as well. And that doesn’t include our sectors. That doesn’t include global stocks.

We saw it in the euro stocks, 50 as well. And we got good rallies really across the board today. I’ll cover all of that here. We’ll cover the latest inflation data, Kip’s appearance, on making money with Charles Payne today, and a few things that I’ll elaborate on here that he pointed out as well. And of course, we’ll cover our internals and our commodity watch a lot of interesting action in the commodity market as well today. So let’s jump right in here, because on my Monday podcast, and I’ve said this on similar aspects on previous podcasts as well, I said on Monday that this would be a good week if after these inflation reports were announced, no one really talked about them, everyone would be talking about the market. I said this the last FOMC meeting. Yes, going into that week.

[00:01:49]:
I said it would be a good week if no one talked about the FOMC meeting after it was over and people focused on earnings. Yeah, we got some talk about FOMC, but those were, you know, rear view mirror type of comments, you know, oh, this happened. All right. Let’s move on, right. And look at earnings. We’re seeing the same thing right now in this inflation data. We got the release this morning, a few comments about it during the day, but then all the talk was all time highs. So it’s exactly what we want to see.

And as we say here, often new highs beget new highs. And so getting three out of our four major indexes hitting all time highs today, it’s exactly what you want to see. And as Kip said on his interview today, which is on our rumble channel, if you want to give it a look, it’ll also be up on our podcast channel at VRA letter.com if you want to give it a listen. Excuse me. Or give it a watch later today as well. But this is what Kip said he said inflation is now in the rearview mirror. We’ve been saying that for some time. This isn’t new.

If you’re a regular listener here, you know, the last three months of inflation data, yeah, picked up a little bit. But we’ve said from the very beginning it was never going to be a straight linear move, lower for inflation data. And now we think the worst of the little bounce that we saw is likely behind us going forward from here. And that’s what our market is telling us today. When we had, after the report for inflation, we had CPI this morning. And after the report, it’s what we saw in the bond market. It’s what we saw we’ve been talking a lot about in the utilities market. So after CPI bond market sold off, utilities hit another high.

[00:03:39]:
Remember, the market is a forward looking mechanism, so it’s not as much about the reaction to today’s numbers as to what the market now expects six to twelve months from now. And so if you understand that, then you understand what utilities are telling us here when they are hitting 52 week highs. It is telling us that this market and investors think that rates are heading lower, that rates have peaked, and it will continue to be lower highs and lower lows again, same thing with inflation, never going to be straight down, but exactly what we want to see is lower highs and lower lows from bonds and higher highs and higher lows from our major indexes. It’s exactly what we’ve gotten as of lately. And so again, bottom market telling us the same thing today. Ten year down 2%, hitting a 4.35. That is its lowest level here since the beginning of April as well. We think that this move continues to.

So let’s take a look at this inflation data as KIPP covered yesterday. We got a tame PPI number yesterday morning. And what was most important about that number was the sharp downward revision in March’s PPI. You know, as Gibbs talks about this often, we can’t really read too much into one report because you get these revisions afterwards. Same thing with jobs data that every jobs report last year was revised lower afterwards. Now who would that help? A hot jobs number. You’ve got hot inflation, you know, possibly a manipulated higher jobs number. It gave the Fed coverage to continue to hike rates.

Now, if we do get more revisions to the downside and inflation, and we continue to see inflation go lower again, provides the Fed cover to cut rates. So that’s the game they’re playing with this data. You know, honestly, we talk about here often as well. PPI, CPI whatever government numbers are coming out, they’re always manipulated to fit a narrative. So that’s why it’s, you know, again, so important not to keep too much off of one of these reports. But today we did get the CPI data coming in at the lowest level in more than three years. And now I won’t disagree that it’s clearly still too hot, still affecting Americans. A lot of people hear us say that inflation is heading lower, and we think, and they think that we’re telling them that they’re not paying so much at the grocery store, they’re not paying so much at the gas station.

[00:06:29]:
That’s not what we’re trying to say, because again, it likely is being under reported here. But what matters is the stock market reaction. That’s our job here, is to help you make money right at the end of the day and to help fight and protect your assets against inflation. And the number one way to do that is by owning hard assets, not holding on to dollars. Right now, as of today’s numbers are essentially depreciating at 3.4% year over year. So you’ve got to get at least 3.4% returns just to break even on the year if you’re holding cash, which you could do in a money market account right now. So it’s not, you know, the worst environment ever, right? There are solutions here, and if you want to find out more of them, come and join us. You can sign up for two free weeks@vrainsider.com.

Dot we’ve been crushing this market since the October 2022 lows, almost two years ago now. And we are nowhere near done with crushing this market. Remember that every bull market that’s lasted one year since World War Two has gone on to rally again for the second year. And the average lifespan of a bull market is four to five years. So, yes, we still see big move, highers, higher coming. And I know it can be a little bit demoralizing if you’re not fully positioned when you see major indexes hitting all time highs. But all time highs, if you look back historically when they’re breaking out, are actually good times to be buying the market still. So you haven’t missed yet.

Come and join us. We’ll show you how to get positioned here. All right, so CPI, I’ve kind of jumped around a little bit here, so let’s just dive into the numbers. CPI for April coming in up three tenths of 1% month over month, better than the four 10th of 1% estimates. Again, that’s too hot. Inflation should be 0%. I don’t care about the Fed’s 2% target. Right, it should be zero.

[00:08:36]:
But 2% is what they’re going for. So that’s what the market will react to, which we have to know that as well. But this number pushed the year over year inflation numbers down to 3.4% year over year, which was in line with expectations. And what matters most is not the news. It’s the markets reaction to that news. And immediately, the market liked the news. The Dow Jones futures were up, big gold was up, yield was down, and the Nasdaq made another all time high as the day went on. It only got better from there as we finished at or near the highs of the day today as well.

So good day all around here. But before I get to our market action, I do want to point out here, interestingly, the CME’s Fedwatch tool probability for the first rate cut is now firmly for September, over a 50% probability for September now, which you may notice is just before the November election. Despite everyone saying, oh, the Fed won’t cut rates too close to an election. Why wouldn’t they? We would call that wishful thinking. Right? We know this Fed is so far from independent, you know, you might as well call them another branch of the government now, despite the fact they’re supposed to be independent from the government. And there’s also nothing federal about the Federal Reserve. And those reserves are also in question as well. So we’ve said this for some time, that if you think the Fed is above goosing the market leading into November, then you’re either, no offense, you’re either naive, or you’re just ignoring the facts.

If you look up the makeup of Fed chairman, you know, of all the Fed banks, it’s like 75% are openly Democrats from a allegedly independent institution. How does that happen? Right? The Fed is really just another arm of the vampire squid that has become the Democratic Party. The vampire squid, that term made famous by Matt Taibbi about Goldman Sachs during the 2008 financial crisis. Right. They just have their tentacles in every aspect of the financial market. Well, in this case, the Democratic Party is the vampire squid, and the Federal Reserve is just another tentacle of that party. So we’ll see. You know, it’s gonna be very interesting to see what we get.

[00:11:09]:
But we keep getting Goldilocks numbers like this, we keep seeing lower highs and lower lows in inflation data, and yields continue lower as well. The Fed could definitely cut once, maybe even twice, before the presidential election. Not saying that’s a guarantee or anything, and not saying either that the market won’t head higher. If they don’t do that, the market will still head higher. That is our view here. And the smart money move continues to be to buy the dip. So again, come and join us here. We want to make sure you’re positioned correctly to make as much money as possible off of this.

And again, protect yourself against inflation. That is likely much hotter than what these reports are showing. All right, so let’s switch gears here and talk a little bit about our market action on the day to day. As I mentioned earlier, the all time highs continue today. Nasdaq now back to back days of all time highs. And it did so on big volume, especially yesterday, 83% upside volume. We got big volume again on the Nasdaq today. And good to see the S and P and Dow Jones following here hitting an all time high.

But again, what you want to see and what we got today was tech leading the way and semis leading tech. Nasdaq up 1.4% on the day to 16,742. The semis were up 3%, just shy of an all time high there as well. Next up, the S and P 500 up 1.17% to 5308. After that, small caps up 1.14% to 2109. For the Russell 2000. I will point out the Russell 3000 also hit a 52 week high today as well. I’d have to look into the holdings again on that one, but there are a few larger companies.

[00:13:08]:
It’s not like the Russell 2000, all made up of small caps, but still another index hitting all time highs. Lastly here, the Dow up 0.88% to 39,908, an all time high there as well. Now, one last point of what KIPp talked about on Charles show today is that we are now hitting overbought levels on our short term VRA momentum oscillators. If you’re a trader, this is kind of the time where you look to take some profits. We’ll be continue to updating our members here about it and what we’re thinking. We got a little bit more room to run, really kind of looking at a big move here, possibly leading up to Nvidia’s earnings on Wednesday. If that’s what we get, we might take a little bit off the table ahead of those numbers. Nvidia really kicked off this rally with Q one earnings of last year.

So we’ll see if they can do it again or if the second time around, maybe the market is a little bit of a buy. The rumor sell the news kind of event. So stay tuned on that here because at the same time that our major indexes are hitting overbought levels again on our short term momentum oscillators, yields, specifically the ten year is hitting oversold levels. So we would not be surprised to get, you know, a little bit of a pullback. I say a little bit, and a little bit of a bounce in yields here. You know, it would if that was the case in the near future here, we’ve seen sentiment start to rally back a little bit. Although the put call ratio this morning was above, well above a one, hit a 1.23 earlier in the day, still finish at a 0.87, which is a little bit on the bearish leaning side of sentiment. But if we could get just a little bit of a shakeout, that would really scare off some of the weak handed bulls here, and we would be the ones on the other side of that looking to buy at that time.

Because over the medium to long term, our view remains unchanged, that dips need to continue to be bought here. All right, next up, looking at our internals on the day today, we didn’t get quite as strong of a reading as yesterday, but still positive across the board here, which we’ll take as a win. Advancing stocks, beating out declining stocks on both the NYSE, excuse me, and the Nasdaq today coming in over two to one positive on the NYSE, just slightly below that level on the Nasdaq. 52 week highs to lows today were impressive, with roughly 553 stocks hitting 52 week highs to just 88 stocks hitting 52 week lows. Good to see there. Lastly here, volume. A little interesting on the NYSE, just slightly positive. That got our attention.

[00:16:09]:
Nothing too big in one day’s move, but something that we’re now watching closely. Nasdaq, on the other hand, continued on a volume tear, not the 83% upside. Volume day still 6.33 billion to in buying volume there, to 2.4 billion in declining volume there. So over two and a half to one positive. Call it on the day today. Next up, looking at our sectors on the day to day, we finished with ten out of our eleven sectors higher on the day to day, with three of our sectors hitting either above or right at all time highs today. And again led by tech, all time high, followed there by real estate, which we don’t track or we don’t trade. The real estate sector of the S and P, we prefer home builders, which had a big day today, also nearing a 52 week high as well.

After that, we had healthcare and then utilities making another 52 week high today. And the financials hit exactly their all time high today, but did finish higher than before. So that is a fresh all time closing high as well. Within our one laggard on the day, consumer discretionary. Finally here for today, our VRA commodity watch. Get a little refresh of my screens here. Lot of green on the screen. Gold now up 1.35% to 23, $91 an ounce.

I’ll also point out that gold miners here love to see this hitting a 52 week high today as well. New highs beget new highs. And I’ll point out the GDX kip talked about this on Charles show as well. Still roughly 20% away from its all time high. We look at that as extremely bullish for this group. The same thing with our major indexes, that until we get to all time highs, the party hasn’t even started. So this is another group we remain long and strong in right now. Next up here, silver.

[00:18:18]:
Wow. Up four, four and a quarter on the day today at $29.92 ounce. I want to get a refresh of that screen. It’s a 52 week high there and a multi year high that is the highest level since February of 2021 for silver as well. Copper also having a great day today. Now up 0.59% to $4.92 a pound. Got as high as $5.12 a pound on the day, which is a 52 week high as well. Knocking on the door of all time highs there.

Oil up slightly, well up over 1%, but still below $80 a barrel at $78.87 a barrel. And finally here for today, bitcoin, which I wanted to single out here today, the move higher in bitcoin just continues. I started this podcast, Bitcoin was up 5%. Now it’s up 7% at 65,904. And, you know, it’s been a little while, so if you’re new listening to us here, I’ll give you a little background. Kit really dove in to this story when the Vanguard CEO, one of the largest, you know, financial firms in the world, Vanguard, got rid of their CEO a few months ago. The CEO had been there for over 30 years, and people were wondering, you know, is he just stepping down? Has he been fired? You know, it’s. They said he resigned, I guess, but we said that it was because the Vanguard CEO said they would not offer their clients bitcoin products, their clients would not have access to bitcoin ETF’s.

And a lot of people said we were just speculating there, but what a big miss that is that none of their clients have been able to capitalize on this massive move we’ve seen in cryptocurrencies. Well, the new guy who they just announced is coming in as the Vanguard CEO just so happened to be the mind behind the ibit bitcoin asset. This is the guy who oversaw the filing and logistics of ibit, and now he’s the new CEO of Vanguard. So you think he just forgot about bitcoin? You just forgot about crypto currencies. You think Vanguard might now be looking into allowing their clients to buy these? We think so. You know, there’s a statement from, from him saying, you know, they weren’t really thinking about it. You know, they may try to deny it, but they are absolutely looking into this and they absolutely have a number of clients who are saying, give us access or we’re going to take at least some of our money elsewhere. So when they announce that, look out above for bitcoin, that’s going to be a big announcement.

[00:21:17]:
And one has to wonder how much of this move today is in regard to speculation that they’re going to be opening that up. I mean, we’re talking massive amounts of money that will be poured into bitcoin when this news becomes a reality. Alright, folks, that is all that we have time for here today. Please be sure to subscribe to receive our VRA podcast every day at the market close. You can sign up@vraletter.com click the podcast link at the top. You’ll find the sign up form on any of our podcast pages there. So thanks again for tuning in. Until next time, we’ll see you back here tomorrow for the close.

Podcast Newsletter

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Time Stamps

00:00 Euro stocks rallied, covering inflation, market action.
05:06 Market indicates lower rates, higher major indexes.
08:34 CME's Fedwatch tool predicts September rate cut.
12:12 Stock indices hit all-time highs, consider profit-taking.
13:44 Market may see slight pullback, then bounce.
18:56 Vanguard CEO with ties to cryptocurrencies speculated.
20:14 Bitcoin speculation driving massive money influx. Subscribe to VRA podcast for more.

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