In today's episode, Kip breaks down a volatile Monday to kick off the week for our markets, unpacking how retail investors have stepped up to the plate to keep this market for heading lower as professional fund managers head for the exit. He also covers last week's Zweig Breadth Thrust, and looks ahead to a potentially pivotal week this week for our markets. Tune into today's podcast to learn more.

Don’t look back because the market is closed. Good Monday afternoon everyone. Kip Herriage here with the daily VRA investing podcast. Hope you had a good day. Hope your weekend’s great as well. We came back today, some volatility. We had a pretty decent open and a decent mid morning rally. And then midday, here came the sellers.

Looked a little scary for about an hour, hour and a half. NASDAQ was down a couple hundred points. Dow Jones also down more than 200 points. You’re thinking, okay, we come a long way in a short period of time. Here we go, here comes the profit taking. And it, it just didn’t happen. The rally kicked back in again. We think we know why, folks.

It’s retail investors. They I’ve got, I’ve got some more data on this. It looks better in chart format, so I’ll share it in tomorrow’s letter. But retail investors are stepping up to the plate in a way that I don’t think we’ve ever seen happen in this country, especially as professional investors, hedge funds, mutual fund managers, et cetera. They’ve been the sellers, Tom. They’ve been the sellers and retail is stepping up. And that’s even more the case in tech stocks. Millennials love tech stocks and they’re proven it with their pocketbook.

[00:01:06]:
Let’s see. Let’s go to the markets first. We’ll get into a pretty good internal state too, by the way. Dow Jones today up 114 points, up 3/10 of 1%. SBF 100 up 3 point just a fraction of a percent. Russ 2004/10 of 1%. The only loser of the day was NASDAQ. Just a late cell program took it in negative territory that is now 110 to 1%.

Not a big deal. Also, the semis today did lead lower, but again they were down just over 1%. But they have been, they have been a house on fire last week and they’re now leading the market higher. That’s it. The semis leave. You tell me which direction the semis are going to go in. That can tell you which direction the market’s going to go in. That’s been the case since the birth of quantitative easing in 2009.

And it’s continued to be the case here. Semi led lower in this bear market and it’s a bear market. All this, you know, debate over what, what 20% severe market, I’ve never, Tom, and I’ve never subscribed to that. When the average Stock is down 30 and 40%, that’s a bear Market, right, Because that’s, that’s what we own. We own this, we just own the, own the indexes, right? We, we own average stocks and they get hit far worse in these down cli and these, in these, in these big declines. By the way, this now makes four bear markets. Four bear markets since 2018. That’s unprecedented.

[00:02:31]:
Never happened before. I wish I could explain it to you. If I could, I would. I just think that it’s been, that it’s been two decades of hell and we’ve had a lot of bad things happen, you know, and we’ve lost trust in pretty much every institution that matters the most in this country. And I think that when you, when you lose that, when you lose trust in your, in your systems, you know, that creates a lot of, a lot of bad setups and that’s really what we have here. So. But it also creates opportunities. It’s a great trading environment.

It’s a fantastic stock pickers market. I think it’s a really good one right now. And I do think as we talked about on Friday, Thursday and Friday last week, you know, we have a wide breast thrust. And you know these are, these are pretty rare. They don’t happen a whole lot. I’ve only had now the 17th we had last Thursday, 17 of these now going back to 1950. And the results are pretty stunning. If you like high probability outcomes, high probability, repeating patterns, this is your kind of thing right here.

[00:03:35]:
We like it for sure. In the previous 60 times that we’ve had a Zweig breadth rust named after the legend Marty Zweig. Six months later, the mark SB 500 has been up 16.3%. One year later, market’s been been up 23.7%. I think as importantly, in every one of those cases over six and 12 months and in all 16 cases it’s happened, the market’s never been lower over six months or a year. That is, that’s stunning. That’s the kind of thing that you back up the truck for. And you know what, if it doesn’t work, you know what, hey, it had to happen at some point.

But this is, this is the horse that you ride to the finish line right here. And I think it’s a big reason to be more optimistic about the markets. There are, there are concerns here. By the way, it’s a huge week. Huge week. Tomorrow it starts economic data. The jolts report job openings tomorrow. Case Shiller home price indexes tomorrow.

[00:04:31]:
Wednesday’s a very big day. We get Q1 GDP. All right, gross domestic product and remember, if you get, you know, according to the official definition, back to back negative GDP quarters, then you’re in a recession. Well, if you listen to the Atlanta Fed and a lot of other Wall street chop shops, they’re going to tell you that this first quarter GDP is going to be negative. It probably is going to be negative. It depends on how they adjust it as well because, you know, whether or not gold’s in there. It’s strange that you think that, but that is the case as these gold purchases have actually decreased. I’m sure we helped to increase gdp, make that make sense.

Right. But anyway, everyone’s going to be watching those two things on Wednesday, first quarter GDP and first quarter personal spending. Is the consumer continuing to spend even in light of the horrible soft data we’ve gotten all these consumer and investor surveys that we’re reading all about. So I’ll cover this more in just a moment. But these are, these are as bad as you’ve ever seen. We’ve never seen surveys that are as negative as they are now. So we’ll find out, you know, Wednesday when personal spending comes out and see how that looks. Wednesday again, that, that’s, that’s a big day.

[00:05:52]:
Again, GDP is the biggie. Okay. But if we have, you know, if it does come in the negative quarter, everyone’s going to be laser focused on the quarter in now on Q2 because if it’s negative 2, and again, if you’re seeing, if you’re reading what we’re seeing, all these tariff impacts really start hitting, starting in about two weeks and then get worse from there. So unless this, this is resolved, it’s probably likely, I would say it is likely that the second quarter is going to be pretty ugly. Although we’ve had a lot of demand pull, we’ve had a lot of front running of these tariffs. People are loading up on inventory so they don’t get caught short. They have products that aren’t more expensive. Right.

So that really, that could give us get off, get us off to a very good start in the, in the second quarter. So again, we just have to play by ear. But yeah, as I say, by the time, you know, you’re in a recession, you’re already out of it. So that’s, it’s not that this official data helps all that much, but at least it’ll give us an idea of where things stand and what real life impacts we’re seeing from Trump’s tariff approach. What else here? Oh, Thursday, I assume manufacturing data. Of course, that’s been that’s been in the toilet as well. All the manufacturing survey data we’ve seen has been really, really bad. And the estimate is that manufacturing will have contracted for the second straight month again, that’s on Thursday and the Friday, of course, you get the jobs report.

[00:07:23]:
So, yeah, it’s a big week. A lot coming out. The jobs. By the way, the estimate for the Friday jobs report is for 129,000 jobs have been created. I’ll tell you, if that number comes in below, let’s say, if it comes in at the 50 to 100,000 range, all of a sudden, the odds of a Fed rate cut at their, at their May 7th meeting, that’s coming up here pretty quick, will really start to jump. You know, our belief, if you listen to us at all, the Fed should already be cutting. They should never have paused the rate cuts. We know that if it had been Kamala Harris had won, they certainly wouldn’t have.

But it’s because Trump, it is a get Trump thing. Powell and Trump have this thing, and frankly, it’s not just Powell, it’s the Fed. You know, these guys are pretty vindictive. I think we figured that out, haven’t we? And, you know, when you’re always, when you’re, when you’re posting things on social media, being Trump, you know, saying, that guy’s pathetic and he should be terminated. You know, I mean, it’s not just the, the US Fed that you’re now targeting. It’s, it’s central banks globally, and they can do a lot of damage if they choose to. So Trump did take that back, said, no, I don’t want to fire him. Okay? He took that back on the same day he changed his mind on tariffs.

[00:08:36]:
So, you know, my guess is educated guess here, Scott Best, the Treasury Secretary, got to him and said, listen, I want to help you. I want to be your middleman with the Federal Reserve kind of important on your side here, but you got to let me do my job. You can’t be putting out these posts, you know, every day calling for this guy to be terminated. That’s not going to happen. You don’t have the power to fire him. And Trump can try, but he does not legally, as we understand it today, have the power to fire Jay Powell. And even if he did, can you imagine what the markets would do then? Now, if you’re short, all right, if you’re bearish or you’re short, you’re probably mad that he’s not firing him. But for all of us, the rest of us, that are still invested in this market and rooting for it to go higher.

That is the very last thing you want to see. So at least Trump has changed course there and now maybe the Fed will step up and do him a solid because they certainly should. Interest rates should be at one full percentage point below where they are now. The 10 year yield is 4.216. The average of fed funds rate is like 4.33%. We’re talking about the fed funds rate should be at 3.3%. Okay? Because there’s without question the economy is slowing. We’re going to learn that this week.

[00:09:54]:
The only question is by how much and are we going to have an official recession? I will tell you that we did hear from. I included this in this morning’s letter. Apollo Global Management has some of the hedge fund, venture capital fund, et cetera. They have some of the brightest minds working there. All they do is print money, okay? And guess what? These guys know Scott Besant from the hedge fund world. They put out a piece over the weekend that everybody, pretty much everybody on Wall Street’s been talking about today and over the weekend. And I included some of the charts they included this weekend, but they’re calling, they predict a recession and stagflation to come into the to the US in two months by June. By June.

So what is that? Just over a month with large layoffs in trucking and retail. That’s their official forecast. And again, I think if they’re writing this, Scott Besson’s reading it and you have to imagine he’s passing this on to Trump. Okay? Because the one thing we know about the president, he loves the markets. He loves to be able to brag about the markets when he’s present. He hadn’t been able to do that. We also know that he wants to be known as the economic president. That’s why he’s doing all this tariff policy.

[00:11:05]:
The last thing he wants is either. I think he could stomach and I think he understands that a mild recession is possible. But folks, you start tinkering with these things and trying to play games with the economy like this, all of a sudden a mild recession turns into something really hardcore. Trump’s even uttered the D word, depression, twice in two separate conversations. So he’s aware of the risk here. Apollo went on to say to share some of the charts that I think just are eye opening. We have a record high percentage of consumers that believe business conditions are worse than you look at the chart. And there it goes back to 2000.

Excuse me, that Is, let me get, I’m curious now, 1980, this goes back to, and it’s never been this high. We’re at 65% now the previous hot of this was in 1990 at 47%. So we’re 60% higher than the highest level we’ve ever been before. Again, that’s a survey. Right. And these are tend to be left leaning. I get it. And it’s hard to take these things completely seriously.

[00:12:15]:
But we’re seeing this in survey after survey kind of across the spectrum. You know, Fox News is running this on Thursday about Trump’s approval rating being down to 33% on the economy. Trump watches Fox News. So again, you know these, these do matter because they get, they get to the top. And that’s of course that’s how the propaganda works. Right? That’s how the indoctrination works. But trust me, Trump is aware of it and ain’t no way he likes this. Okay.

Also, and this is hard data. Credit card payments that are 90 days or more past due just at the highest level since 2012. Right. So that’s hard data. Tom, consumer is hurting. Now the boost, the, the, the boost that I, we’ve talked about here with you that I think is going to happen in, in at least early on in the second quarter. Is this a demand pull, right front running of the terrorists. This is absolutely without question going to boost at least early second quarter GDP and the economy.

[00:13:15]:
So we may not really feel the impacts of this even as we know empty freighters are coming in from, from China and you know, imports have slowed to a crawl. We may not feel the real impacts of this economically until later in the year. You know, it may, it may be the end of the second quarter. So we may still have a couple months before this really starts to, to hit home. Okay. But again that’s inventories are skyrocketing so companies are trying to get in front of this and load up as much as they possibly can. What else here again, why breath thrust on Thursday? That was a biggie. The other biggie that we got, we found out on Thursday, just not Thursday but just last week.

And I think the markets have figured out where Trump blinks. I think they know exactly frankly and I think I know, I think we all do. We know the levels and the event levels if you will, that Trump will blink on tariffs because he’s already done it once. First, if we get a 10 year yield above 4.5% now, we backed off. Right? We were there. That’s when all the Turmoil happened. We were like, oh, here comes 5%. And by the way, you get 5%.

[00:14:26]:
That’s economic Armageddon. In this environment. In this environment, that’s Armageddon. Okay? These markets will be down sharply lower from here. Just, just take that to the bank. Right. But right now, they’ve fallen back to 4.21%. So 4.5%, really? That’s the level that I think gets Trump’s attention based on history.

Also, the S500, if we get back down to 4800, the lows for the S548,33, if we get back down below 4900, that’s another pressure point for the President because I think that he’s okay with a double bottom with a retest of the loads, which is still entirely possible. Okay. If the market’s going to start discounting a recession in the United States, you bet we’re going lower. There’s just no doubt about it, we’re going lower. That’s not. Regardless of what Apollo says and many others, that is not baked in the cake, by the way. Jamie Dimon, Jamie Dimon just said, I think it was over the weekend, said that our best case scenario is a recession. Okay.

[00:15:26]:
That’s the guy that runs the largest bank on the planet saying that our best case scenario is a recession. That got a lot of attention. That may be what drove the markets lower today when they hit the news. All right. But then we bounce right back, so it’s hard to make sense of that. Right. And what we also know is what got Trump’s attention was the meeting with CEOs when America’s leading retailers met with Trump last week. You know, we’re talking about Amazon, Walmart, I believe Home Depot and Target CEO were all there, maybe more, but we know for sure they were there.

And their quote to the President was. And this has made, you know, been now multiple interviews, has not been, has not been discounted by the President or anyone else administration. They have not said this isn’t true when they told the President to his face that if you move forward with your tariff policies as is, it will leave the shelves empty with prices soaring this summer. Okay. So, yeah, there’s a lot. I think those are the triggers. So I think those are the pressure points that we know the President responds to. And I think we know his personality well enough that I think that’s reliable.

[00:16:36]:
I think as long as we don’t hit those kind of levels. And this market, by the way, look how strong this thing has been right? And again, it’s just incredible the job that retail investors have done in supporting this market. The Mrs. Watanabes of our time, of our era, millennials primarily are leading the buying. We also learned from Vanguard, which is kind of the behemoth, that their investors, 401k, primarily retirement investors, barely avoided trading in early April. That means they weren’t selling at the same time. Professional portfolio managers and hedge funds sold a net $1 trillion of stock this year. So they’re getting out of the market.

They hate it, they’re scared to death. And retail investors are stepping up the plate and support this market. It is really incredible. Again, the chart that I’m looking at here shows retail investors now over the last month have made up 15% of the market. That’s in today’s world, just flat out retail buying, you know, through Robin Hoods of the world, E Trade, that’s, that’s never happened before. So this is something, something different’s going on here. And I think if you don’t pay attention to it or you poo poo it, I think you do it at your own peril. We’re paying attention to it.

[00:17:50]:
It matters. Right? So bottom line is, I wrote this morning, if we retest the lows and break those lows, Right. Okay. One or two things is going to happen. Either retail is going to capitulate this time. Do you see that happening? Because I don’t, I don’t see. They didn’t do it when it was really scary the first time. Why would they do it this time? Unless we get a really bad shakeout, I really don’t foresee that.

Okay. Because again, I think Trump knows, he knows the limits of what he can do now. He’s tested it, right? Not to say he won’t do it again and maybe put a 500% tariff on China. I just don’t see it happening. That makes no common sense. He’s called himself the common sense presidency. I think he’s not going to do that. And I feel pretty confident saying that.

Of course, anyone that tries to read the President’s mind probably should have their own head examined because it’s hard to figure out what the guy’s going to do. His unpredictability is what makes him such a powerful opponent. But I think if we break down any lows, and again, I don’t think we’re going to. I think either retail capitulates or we’re right back off the races going to all time highs. I think we’re going, I think, I think we’re going back to all time highs this year. I think this year is going to wind up being very similar to 2020 after the pandemic. Remember that brutal shakeout of four or five weeks, right? Just unbelievable. Nasdaq down 32%.

[00:19:16]:
Okay, this wasn’t quite that bad, although the semis got hit 39%. So it kind of is. Right. They lead everything. But, but if this is like the 2020 pandemic, I think that’s the scenario we have in front of us here. Then we’ll end the year at all time highs and it probably won’t, we won’t have to wait that long. Right. Okay, let’s take a look under the hood today again.

Busy, busy week here. Good internals today. Even with the big downdraft. We had intraday here again. We finished pretty solidly higher today. Advanced Decline NYSE 1.7 to 1 positive. NASDAQ 1 1/2 to 1 positive. Those are pretty good readings for what was essentially a flat to down market half the day.

Volume today, very solid. NYSE 71.4% up volume. NASDAQ 77% up volume with really strong volume. Again, that’s retail. This is, this is retail buying. Magnificent seven. That’s what’s happening here, folks. They believe they’re, they’re, they’re, they’re, they believe they’re buying the dip.

All right. And so far all you can say is ticket Pacific cap to them because so far they’ve been exactly right. Intersect watch today also pretty solid. We had eight sectors finished higher, three finished lower. Not a lot either way, frankly. We didn’t have a 1% gain or a loser either side. Utilities led the way. To give you an idea how boring it was.

[00:20:33]:
Utilities up 7, 10 of 1%. They were the leader on the downside. Technology down 310 of 1%. Again, no harm, no foul, any direction commodities. This is really what I think the most fascinating story. I, I, I happen to follow a few people that I kind of feel sorry for. They just keep calling a top in gold and I happen to know these people, so I’d never say, I’d never call them up by name. But you know, they, they, they’re fairly arrogant too, you know what I mean? So I kind of want to call them out, but they keep calling a top in gold and every time they do it, it bounces back even stronger.

We saw it again today. Gold opened down 30, 40 bucks an ounce. Finished up 56 bucks an ounce at 33, 54. That puts you what, 150 bucks below all time high of 30. Just over 3,500. Right again. Gold up today 1.7%. This is a freight train.

[00:21:35]:
It’s a freight train. This is that bull market. We’ve been telling you this folks. If you follow us. You know, we’ve been telling you this. This is that bull market. And it’s really going to be that bull market for the miners who haven’t even barely gotten going yet. This is going to be insane when you start to go because it’s just the market caps are so small.

They’ve been hated and under owned for so long that when investors get serious about this group and finally realize, okay, gold is going to stop. Gold. Gold’s going to 4,000 now where’s going to 5,000? Where’s it going when. When the. When the juices really start flowing. And I happen to know this space pretty well. I happen to know what I think about. My dad was a gold bug.

Been involved in a lot of these dinner table conversations. Okay. When I was on Wall street, the first off Wall street investment conference I went to was a gold conference in New Orleans. Talent. And I’ve gone to this time to go again, frankly. But you know, when you, when you, when you like the markets as much as we do, it’s hard to go easier. They always have these during the middle of the week. That just doesn’t work for me.

[00:22:33]:
I need to go on the weekends, you know. But when this group gets going and it’s going to get going, watch what these miners. We’re going to make fortunes in these miners, especially the ones that we own. I happen to know these companies pretty well and they are. One is. One of them is just perfectly set up for buyout. It’s the best frankly. We should raise some money ourselves.

We should raise this, this company. It’s Vista Gold. Okay. Everybody here VR remember knows what I’m talking about. This company has a market cap of about $117 million. That’s it. Sitting on 7 million ounces of gold in the Northern Territory in Australia. And the project has been around for so long and they’ve reinvented the company a few times.

But the Mount Todd, which is their primary, you know, it’s. It’s their only asset now. They’ve sold everything else off. We traded. We’ve been out of this name two or three times now. It’s the third time we’ve been back in it. Done incredibly well in the stock. But this is, this is the one.

This is now they’ve got this one asset, 7 million ounces of gold, they think more than they’re still doing testing on some new unexplored areas. They got a pretty big a concession there in northern territory of Australia and great, great, a great management team. You know, all gray haired guys been around the block. I just think this name has been around so long that people kind of forgot about it. And it’s 7 million ounces is good, it’s tier one but it’s, you know, it’s not gangbusters. It’s not going to be 14 million or it’s not going to expand by much. Maybe it expands to 10 million ounces. Okay.

[00:24:02]:
So it’s going to have a limited, a limited life but you can make $10 billion from this thing. Right. And especially with gold where it is now, it’s probably 13 or $14 billion for his worth. And so the company is just not brought in a partner. They are waiting for their deal. This is their thing. This is they. Most of these guys are going to retire if these deals done right.

That’s they, they’ve been in business a long time and I again I, I know the CEO Fred Ernst real well and I just think they’re going to keep holding out till they get the deal that they want. And at this point, absolutely right. Kudos. If they take a cheap deal now, you know, I certainly wouldn’t be happy. I don’t think you would be either. So I wouldn’t. If they, if they get stock’s a buck, if they get two or three dollars a share offered, Adam, there’s no way I say yes to that. I say let’s raise some money and take this company over ourselves, take it private and then open the mind and then resell this thing for you know, instead of 100 million market caps, let’s resell it at a billion.

[00:25:01]:
You can make literally make 10 for one. I believe at this price. For gold where it is, the Profitable gold is $740 an ounce. Gold is $3,350 an ounce. Right. So again rooting for them. I think we’re going to do very well in this name. Silver today up 2, 10 of 1%.3308 an ounce.

Copper today been very quiet but still inching back up now back to 490A pound. It’s up just fractionally on the day. Crude oil today back down, you know, getting back towards 60. We really don’t want to see that 6190 right now, down 2% of the day. And finally the day Bitcoin, one of the quietest days it’s had in a while. Unchanged for the day. 94,473.

 

[00:25:49]:

The only thing I’ll tell you about this, it’s Extreme overbought all right? It’s Extreme overbought. Not on steroids because money flow is not yet reached extreme overbought levels in the VRA investing system. Everything else is there. And so for those wondering why have, why we haven’t added back to portfolio now, you know, and we also own GameStop which I think is a fantastic stock to own as a, as a bitcoin stock, you know, because they’re, they’re, they’re, they’re trying to duplicate at least to some degree what Michael Saylor has done with strategy. What used to be called microstrategy, now just strategy.

All right, folks, that’s it for the day.  Hey, I hope you had a great day and even better night. We’ll see you back here again tomorrow after the close.