In today's episode, Kip dives into a tumultuous day in the world of the stock market and economics, where $11 trillion of wealth has been wiped out in just 45 days. He critiques the current administration's approach to economic policies, which he believes have been poorly executed, affecting serious investments. Join us as we explore these critical trends and what they mean for your investments.

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 today. Kind of a wild day today, was it not? Anybody else in shell shock besides me? Because that’s, that’s, that’s what I’m going through, if I’m being honest with you personally. We’ve lost $11 trillion in the, in the markets in 45, 46 days. Now sliding into, you know, bear markets, I think, for all but one of our indexes. But we’re, you know, obviously for when the average stock is down 30, 40, 50%, you know, we. It’s a bear market, right?

So, you know, the, these official gauges, you know, they’re just numbers don’t really matter, but we all feel it. It’s been brutal. And so let’s take a look under the hood today because there are a lot of things, a lot of things pointing to, at minimum, the, the, our expectation that capitulation here, at least again, for, for a counter trend move higher. Now, remember, the primary trend now is lower. Okay? We are now in a bear market. The moving averages are rolling over. So that’s the reality we have to deal with. Hey, doesn’t mean it can’t change real quick, but there’s got to be a reason for it, too.

[00:01:14]:
And for now, for the time being, the bears are in control. The wealth effect has reversed. Lower animal spirits are gone, and again, one person controls that. But right now, we see no indication that he’s going to cave on his approach. Right. I think most people that I speak with are in broad agreement there’s something needed to be done here. Again, our issue over the last month, month and a half has been the execution of this, which has resulted in these, and these losses that simply weren’t, weren’t necessary. Okay, that’s, that’s my view, but let’s take a look because things are getting ridiculously oversold here.

We’re getting a lot of indicators here that again, at minimum, we’re due for a big move higher. This morning’s open may be it. That may be the lows. You know, the futures were down at one point last night when I was up at about midnight, futures were down, what, 16, 1700 points? It looked like we were headed to a pretty rocky open. And then things began to get better. And today, again, today was wild because we had another rug pull today. As Kevin Hassett, I forget his exact title, but he’s an advisor to Trump and runs some economic counselor of some kind for President Trump. You know, he, he, he, he kind of implied in an interview that there may be a 90 day extension.

[00:02:46]:
And we had a 7% move higher in the S&P 500. It took place in minutes. And again, that’s a rug pull. It sucks. A lot of people in, good people that are just trying to buy cheap and then they get the rug pulled. Again. There’s, there’s been a pattern here with this administration of rug pulls. Again, I, as you know, if you know me and you’ve been listening, I have a lot of problems in this administration in the way this has been carried out, because you don’t mess around with people’s serious money, 401k money, retirement money.

That’s what you don’t mess with when you’re the president. That’s a big no, no, that can’t happen. Hasid should be fired. That’s a fireable fence for saying that there may be a 90 day extension only minutes later for the White House to come out and say, oh, no, no, that’s not correct. We’re not considering that. Okay, so the messaging again and the execution had been, what’s the best word? Pathetic. All right, how about that doesn’t mean, hey, doesn’t mean I don’t like Trump, doesn’t mean I don’t support Trump’s agenda. But on this, if you’re being honest, pathetic is the word to use here, all right? There’s never a good reason to crash the markets over an economic policy that is just very poorly thought out.

[00:04:01]:
And that’s what this has been. So, again, I think honesty, as always, is the best policy here, longer term. Hey, I think, again, I think there’s a lot of good to what Trump is doing here, but I just, I have a real problem. When I get your emails, I speak to you on the phone, get your direct messages, your text, you know, you can support the president but also be honest about the execution. That’s what we did during the pandemic. We didn’t support locking the country down. We didn’t support closing businesses, we didn’t support closing schools down, didn’t support Operation Warp Speed. Right.

We didn’t support the jab. If Trump hadn’t made the jab, they could have never been mandatory by Biden. They would not have existed for Biden to do that. So again, this is twice in five years that this has happened under Trump and we don’t, the problem is we don’t know how this is going to end. We don’t know that yet. But the bears are in control. That’s something we’ve not seen for some time. Moving averages are rolling over.

[00:05:06]:
Okay. But again, now let’s take a look at the short term because I think there are some really good trading opportunities coming up here. As you know, last week we sold a lot of positions and now we’ve identified something we want to buy for a trade and that’s what it would be. It would be a trade and then we would then initiate bearish ETF positions. So we have changed our game plan. We’re now trading a bear market. Understand this. It’s a different setup.

It doesn’t affect our 10 baggers, our growth stock holdings. It’s not impacted. If it’s like, Rona, if it’s like the pandemic, this may be a bear market the last five weeks, I think that’s what this is going to be. I don’t think this is going to be drawn out. That’s been my view for some time. But again, every day that goes on, more damage is done to the economy underneath the surface. When the wealth effect rolls over. We don’t have the government and I’m not saying they should, but what we don’t hear is we don’t have the Federal Reserve and the government coming to our aid as we did during the pandemic.

[00:06:09]:
Right. Again, I’m not saying that we should do that. We shouldn’t, we should never have done that. Okay? But that’s the cycle we got into. And so we’re on our own. We’re in this on our own. And I think that’s why we’ll get ultimately probably a very good flush. Flushes can be painful.

Right? So we’re in this together. I don’t have all the answers. I clearly don’t have a lot of them right now. But let’s talk about what we do know. How about that right now here’s what we know. The Fear greed index is at 4. Now. It was there on Friday as well.

The all time low is at 2. So we’re, we’re, we’re, we’re right at capitulation lows now in the fear and greed index again the markets lost $11 trillion in 45 days. It doesn’t, doesn’t sound like a flush and a near term capitulation. I don’t know what does. The book call ratio today was elevated. Again, not as much as it was on Friday, which kind of surprising I actually thought this morning when the markets cracked at the open. I thought the first put call ratio would be like a 13:14. It was a 1.16, but it was above 1 all day.

[00:07:18]:
And we closed at the high of the day, 1.23. As Tyler talks about often, anything above a 0.7 or so is elevated. So we’re over one all day. Again, these are readings that indicate at least at minimum a near term low is approaching also. And I don’t hear many people talking about this, but again, I don’t watch a lot of, a lot of tv, but I haven’t seen it in the print media either. The percent of SPF 100 above the 50 day moving average now is 7. That’s the third lowest reading in five years. Let me check that.

I want to check that time frame. Yeah, that’s right. And the percent above the 200 day moving average is down to a 20.2. That takes a little while to come down. But still, even at 20.2, that puts it in the top six or seven of the lowest readings over the last five days, five years. So again we’re getting to that point. A Vix. Okay, this is important.

[00:08:16]:
All right. There’s, there’s a couple of different ways to look at the volatility index. We wrote this up on over the weekend and then again this morning. So let me just talk about this very quickly. Okay. Okay. Going back to 1990. Right? I think that’s when the Vix.

I think that’s when they first. No, that’s not right. Yeah, look, not 1990 to April 2025. That’s the time frame we’re looking at here. Of all the, the times that the VIX had had the highest weekly closes. Right. Which was, which is a 45 or higher. Right.

We’ve, we’ve had 45 is what our, our, the Friday close for The Vix was 45.3. Believe it or not. That’s not even the top. That’s not in the top 20. Right, the top, the number one is 79.1. And that’s of course from the financial crisis. But the Fridays did make the top, you know, 20ish. Right.

[00:09:18]:
And so we were able to calculate what the forward returns were every time the Vix was above a 45 on a weekly close. So check this out. Over the next year, the market was higher 39%. Okay. That’s the average. And by the way, these are 100%. The market’s higher on a 1, 2, 3, 4, 5, all five. So what we get the VIX reading on Friday, if you’re a longer term Investor, then you must, you must own this market, which is why we didn’t sell our positions.

Okay. But now we’re looking for kind of a perfect spot to get back in. But again, here are the averages. The average one year return from these worst of the worst VIX readings which Friday qualified is 39%. The average two year return is 60%. The average three year return 63. Again, the average five year, 139%. So this is flashing big time buy signals.

[00:10:21]:
If you’re a, we’ll just call it a, a medium to long term investor. Right. Number one, in the shorter term, we also have great data that shows us what the VIX does over the next one, two, three, four, five days, two weeks. Okay. And again, it’s not a, it’s not a perfect track record, but it is very nearly that when you get to this level of a vix, it is, it is a buying opportunity. And so we will probably look back at this open this morning. Okay. We’ll probably look back at this and realize that that was the low.

It’s, you know, we, we don’t, we don’t like throwing darts so we’re looking for a little more backup. But I’m telling you we’re, we’re getting there for again at minimum of trade. And if this gets resolved and if what Trump is doing is just a one big negotiation, very possible right then, then this could all be behind us in short order. But in the short term we’re getting all the signs that a near term move higher is coming. Okay, what else today? Just looking over my notes here. All right, let’s take a look under the hood today. Oh, of interest, the 10 year, 10 year yields today, you know, again, when the futures have dropped lower this morning, you know, yields were down. That’s what we kind of become accustomed to.

[00:11:52]:
And then all of a sudden, within an hour of the market open, the 10 year, 10 year yields turned positive and on the day ended up 17 basis points to a 10 year yield of 4.15%. That’s interesting. We know that Trump wants the Federal Reserve to cut rates. This is indicating that rates are going higher, so bonds are being sold. I think you probably understand the risk from this. Should yields continue to go higher with an economy that’s weakening, possibly going into recession, that would be the definition of stagflation. That would be part of that definition. And again, that’s not an economic or not a market positive.

Keep a close eye on what’s happening with interest rates because right now with the Destruction we’ve had in the stock market in the last 45 days, 10 year yield should be firmly below 4%. I would, I would have thought in the 3.7% range, not 4.15. There’s something we’re keeping a close eye on because again that’s a, that’s a pattern change, right? That’s a pattern change. All right, let’s take a look on the hood today. The internals were not good. All right, just of Note, the new 52 week highest of lows. Are you sitting down? We had 3,188 stocks hit a new 52 week low. That’s NYC and NASDAQ combined told me 35 hitting a new 52 week high.

[00:13:23]:
3,188 new 52 week lows. That’s getting there again. You don’t, you don’t see that very often. Okay. The rest of the internals weren’t nearly as bad. Matter of fact, the NYSE down volume was 65.3%. Nasdaq was 49.8%. We had 4 to 1 advanced decline, a negative advanced decline for NYC and 2 to 1 negative for Nasdaq.

Those one horrible. But the new 52 week lows, that is a, that, that gets your attention right there. Kind of almost takes your breath away. Again looking for signs of capitulation that certainly would qualify as another that says, you know what, how much worse can it get? Okay, how much worse can it get? Because that’s bad today in our sector watch. Nine of 11 sectors finished lower on the day. Led the downside by real estate down 2.4% again, rates up, economy weakening, not a good sign. Remember folks, again we started, we started pointing this out to you. I don’t know.

[00:14:25]:
Two months ago the semis and housing stocks were underperforming the market. They were leading lower. If we bend smarter, we had to use that signal to get out of all of those positions we sold last week. We’ve done a lot sooner because housing and the semis have been lean lower for some time now. Today this is interesting, the semis led higher. So again we’re looking for first in, first out. We’re looking for the semis now to start leading higher. That will be one of the classic telltale signs that again a turn higher is coming.

Semi said a SMH up 3.1% after the close today Broadcom announced a share buyback of $10 billion. So again, a lot of cash. The corporate world has hardly ever, I don’t think it ever has been Stronger. Their balance sheets are incredibly strong. That, that, that again, is very supportive, making sure that if we have a recession, it’s going to be very shallow and you’ll see a lot more of these buybacks. Okay. Because again, they, their stock’s cheaper now. Let’s put it to work.

[00:15:31]:
You know, that’s what they love to do. So again, Broadcom did it today. Great to see the semis lead higher. It’s not, we’ve not been able to say that for much very, for, you know, very often in the last, honestly, you know, a couple of months plus. All right, it’s been a tough sled, both the semis and housing. So again, we had, you know, five sectors finished 1% lower to the upside. Communications, really. Tech, okay.

Technology and communication services both. Communication services up 1%. Technology up 3/10 of 1%. Again, the market did bounce back today. The Dow Jones still finished down nine tenths of 1%. I mean, by the, I’m sure you’ve seen this, so I don’t need to repeat it all, but NASDAQ did finish high on the day, just 1/10 of 1%. But it did finish higher with again, manageable losses, if you will, in The Dow Jones Russ 2000s P500. Right.

[00:16:29]:
Less than 1% in our commodity watch today. First of all, let me tell you, gold has pretty much done what we told you it was going to do. Gold, it doesn’t matter. You know, when you have a liquidity event, liquidity events, in other words, you have something that says, okay, we’re going to shake people out. They’ve got losses, they’re looking to sell whatever they can that they have gains in. That’s what I refer to as liquidity event. Just get me out. What can I sell that I got, I got gold.

Gains in gold. Let me sell. Okay. Because again, there’s been so much, the public has been very, very interested in buying gold. So they have profits. They’ve been selling. Goal today back below $3,000 an ounce, down $36 an ounce today. I wouldn’t read anything into that.

[00:17:17]:
Again, we told you a couple weeks ago this group hit extreme overbought. We were expecting the group to, to, to, to move lower or at least to plateau. Right. But we did not take profits. Do not recommend that. It won’t be long. We will cover this for you this week from the VRA system. It won’t be long till we’re back to flashing strong buy signals for this group.

Silver today actually finished higher up today, 2.9% on the day, $30.08 an ounce. That’s a very good sign as an industrial metal. Copper with the other way down 2% today at $4.30 a pound. Crude oil flirting again with that $60 a barrel. Just been, you know, energy again. It’s flashing recession. That, that’s lack of demand. That’s what we’re seeing here.

But it also helps to accomplish one of Trump’s goals. He wanted energy prices down. He’s getting his wish, also getting, well, he was getting lower y and he’s getting a lower dollar. So he’s getting two out of three in what he wants to see to drive the economy, to drive our global trade strategy and to bring down the ability to really stop the ability for these non tariff trade barriers for our global trading partners to be able to take advantage of this with. And so these things are moving in Trump’s favor. That is very good from his point of view. Again, crude oil down to now $60.96 a barrel, down 1.6% of the day. And finally the day again, I got to be tell you, I’m impressed.

[00:18:43]:
You know, again, we, we sold bitcoin. It was not an easy decision, but bitcoin’s been very, very good to us in the last, since 2017, you know, we’ve made in two trades, we’ve made over 2,200% in net gains. Two trades, that’s it. And so we went ahead and sold again because if this is a liquidity event, people need money like gold. Then we thought bitcoin would move lower. We sold it just over 82,000. Hit a low today of 76,000. But it’s bounced back.

Last trade now 78,800 again, that is a very good sign of bitcoin acting like a store of value, like in a flight to safety trade. That bitcoin has held up incredibly well. That’s, that’s, that’s what we want to see. We look forward to buying that back in the not too distant future.

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