In today’s episode, Tyler examines the latest stock market dynamics and outlines critical factors to monitor in this week's market action. Despite early challenges, he highlights the robust U.S. economy and the innovation revolution as drivers of optimism. He also addresses current bearish market sentiment despite the market's proximity to all-time highs. Tune into today's episode to learn more.

Don’t look back because the market is closed. Good Monday afternoon, everyone. Tyler Herriage here with you for today’s VRA Investing Podcast. Hope you all had a great weekend out there. Hope that the start to your week this week was great here as well. Quick little note for the podcast here today. I am working with a new setup here in the office. So if you see me looking around, I’ve got a little bit more room here to work with, with a whole lot more data out there as well.

So I’ll be looking around a little bit as we’re working on bringing a few new features to the VRA Investing Podcast. Got some announcements coming up on that. Stay tuned. We’ll do it here on the podcast, but it should be some fun, too. I think a lot of stuff that our audience here you will will enjoy as well. We hope that you will. And as always, thank you for being here with us. You know, we’ve got a phenomenal audience here.

[00:01:12]:
We always appreciate your feedback as well. And any notes, we learned so much from you as well. You know, whether it’s the industry that you’re in or research that you’ve seen on your own as well. So keep it coming. Thank you for being here with us every day at the market close. We love being here with you as well. All right, so let’s kind of jump in here to what we saw to start off the week this week. We started off this morning looking like it was going to be a good start to the week.

Tyler Herriage [00:01:41]:
Earlier in the session, our major indexes were higher just about across the board and we ultimately did turn to finish at the lows of the day for a few of our major indexes today. So not what you want to see, but that’s not all for the week. Right. We could get a big turnaround Tuesday, tomorrow as well. Got a few things to look at on that regard as well that I’ll get to here in a minute. But first, let’s, let’s dive into what we’re going to see in this week’s market action. On the economic side of things, we’ve got a big release coming out on Friday, excuse me, the PCE price index, which is the personal consumptions expenditures that will be for January’s data. And remember, this is the Fed’s favorite gauge of inflation, so they say.

[00:02:33]:
Right. So this is an important one for the Fed. And so it’ll be interesting to see the market’s reaction to this, to see the reaction in the bond market from this. And as well, the CME’s fed watch tools probability because it’s been an interesting last few weeks here for yields. Absolutely. The 10 year today was down once again. It’s fallen over 8 1/2% from its peak in early January. The peak was just above a 4.8% today as I mentioned, again down 610 of 1% on yields today.

The 10 year yield now at a 4.39 below a 4.4. That is a new low. I know we’re only two months into the year but that is a new low on the 10 year yield from in 2025. So that will be interesting to watch there. On other economic news, we’ll get a second estimate for Q4 GDP that’s due out on Thursday. The first look at Q4 GDP was an increase of 2.3% which was slightly below the average of what we saw in 2024. I believe is 2.8% growth on the year for 2024. So we’ll see if we get any revisions higher for GDP on that.

[00:03:53]:
Again that’s Thursday morning. But overall, again it’s not the news that matters. It’s the market’s reaction to that news. And specifically for this data, investors will be watching yields on that and not only bonds, uh, but the CME’s fed watch tool as well which just one week ago was still showing the probabilities for rate cuts in 2025. The market expected just one rate cut in 2025. Now as, again as of a week ago that probability has been raised to two. So still, I mean we’re talking about 25 basis point cuts here. So you know, a half a percent in cuts that would take the Fed down from their current four and a quarter to 4.5 down to 3.75 to 4.

You know, we’ll see, we’ll see if this economic data impact, we’ll see which way this economic data impacts it. You know our long term view here remains unchanged. Yields will continue to move lower. Then other highlights from the week. This week we’ve got what has been the most company, the most important company’s earnings of every quarter for essentially the last two years now. And that is Nvidia. They’ll be reporting on here, reporting Wednesday. And you know, regardless of the outcome here, I mean we’ve seen some big beats from Nvidia and it would be another kind of thorn in the side of the bears.

[00:05:30]:
F Nvidia could beat here just over the weekend you might have seen the rumor out there that Microsoft was cutting its capex and also Canceling their leases for these data facilities that everyone’s talking so much about. We’ve seen so much fear from the market in, in regards to these data centers. Right. First it was the deep SEQ news in January where oh, they can do way more with the older model chips. We’re not going to need all these data centers. We don’t even need new chips. Right. That was the fear.

Turned out to be bogus. Now we got Microsoft people saying they’re canceling their leases also apparently turned out to be bogus. You know, the other one from Microsoft is their quantum chip. I guess people are saying as well that that could disrupt some of the data centers. You know what, if that’s the case, that’s not a big deal because that’s an again, innovation revolution. Right. That’s disruption. Yes.

[00:06:29]:
So maybe not as much money will be spent on data centers, but the good news is it means not that much money has to be spent on data centers. That money is still likely going to be spent by these companies. As we are in an arms race right now. You might have heard a lot of people talk about this. It’s not necessarily an arms race from a weapons point of view, although AI could be used as a weapon. Right. But it is a digital arms race that we’re experiencing right now. There are going to be disruptions along the way.

But, but those are features of the innovation revolution. So if that’s the reason, that’s absolutely fine. Regardless here though, you know, we continue to like the setup of this market as a whole. I mean, we just hit an all time high last week in the S&P 500 and still the bears continue to get louder and louder. Sentiment indexes are getting weaker and weaker here. So let’s cover a couple of those here. But I mean just to point out, it wasn’t just the S and P hitting all time highs last week. We saw this.

[00:07:33]:
The tech sector, the S P tech sector also hit an all time high last week while we’ve got, I mean Meta just had that incredible 20 day run. Yeah, we pulled back from that, but still, what a run that was. And we got the mega cat names, you know, performing pretty well overall. You know, again we might see a little bit of that rotational aspect that we’ve talked so much about. But any dips that we see, any shakeouts that we see, we’ll continue to use as opportunities to buy the dip. If there’s one good thing that’s come from this little bit of a sell off here since Wednesday’s all time highs that we’re no longer in overbought territory there. So, you know, we’ll take that as a slight win going forward. Just tells us that the market has more room to run.

But sentiment here, again, when you’re hitting all time highs, it’s, it’s pretty rare that we’re hitting all time highs, excuse me, and seeing fear this pervasive in the market, you know, again, to us that is early stage bull market sentiment. You know, when it gets to the point where we see a 5 to 10% correction and everyone is buying the dip and the Fear and Greed index remains in greed, AII remains with, you know, 40, 50% bulls instead of bears where we’re at right now, then we’ll start to say, okay, that’s the sign that, that we’re hitting a top here again. When you see the, we haven’t even gotten to a 5 to 10% pullback and we are already this morning, we’re three points away from hitting extreme fear on the Fear and Greed index. We finished just four points away from it at a 29 today. Wow. I mean, again, four points away from extreme fear there, despite the fact we’re right in range of all time highs, right. For our major indexes that, that is. Now I get some of the fears here, some I might disagree with, but I, I can understand some of these, you know, people saying that rates are going to go higher.

[00:09:43]:
Remember it was just a couple of months ago that people were talking about rate hikes instead of rate cuts in 2025. We said that was irrational then. We think the same now. But the argument is from the bears that rates are going to head higher, causing a recession. And why would rates head higher? Because inflation’s also going to come back. Now, as you’ve heard Kim and I talk about a lot, we are believers that the innovation revolution leads to deflation. Right now, you know, coming off of the highs that we saw a couple years ago on inflation, we have seen disinflation. Right.

Tyler Herriage [00:10:17]:
We’re not to deflation. Right. We’re not even back to the Fed’s 2% target. In the short term, you know, we’ll get the PCE data this week. We don’t focus, you know, ever too much on just one report in particular because they can be misleading, they can be revised. Happens very often. Right. What we do look at are the trends.

And the long term trend to us looks like inflation’s going to head lower and continue heading lower. But that doesn’t mean there won’t be pops along the way. That doesn’t mean we’re getting back to 9%, but that it may take a little bit of time to get back down to the Fed’s 2% target. And any bounces in inflation in the meantime are just going to fuel the fire for these Bears. Although we don’t think it’s going to be significant enough to derail this market, that’s not what we see happening just yet. So, again, those are kind of the main arguments there from the bears out there, or, you know, some. You’ve probably heard some version of what I’m about to say almost every day in the financial mainstream media. You know, maybe not as much on Fox Business as on the other networks, but essentially what it boils down to, you know, go beyond rates, going beyond inflation, looking at the economy and saying that what Trump is doing with Doge and firing all these government employees, remember, the government is one of the, maybe the largest employer in the nation.

[00:11:44]:
So what Trump is doing with Doge combined with his dangerous tariff policies will result in a broad based economic slowdown. Right. It’s going to hit corporate earnings. It’s going to impact everything. You hear that story over and over again. We think of it more as a brick in the wall of worry. And the market loves to climb a wall of worry. So as we get more details on what’s happening with tariffs, the fear now is that the tariffs that were delayed in February are going to take place in March.

You know, I think the uncertainty is really the biggest fear right now, more so than even the tariffs themselves. You know, these could be a lot better than people expect, as Trump has said time and time again. Now he wants reciprocal tariffs. Right. And so that’s part of the reason why they’ve been delayed. They’re negotiating. Right? The other, other countries are coming at the table and saying, whoa, hold on, don’t tariff us yet. Let’s figure something else out first.

And whether they’re just trying to delay it, as bureaucrats are great at doing, or they’re actually willing to negotiate, we’ll have to wait and see. That March 1 deadline is quickly approaching here. So, again, once some of the uncertainty is removed, we don’t think that that’s going to be as big of a deal as the perma bears out there are making of it right now. Right. So I get, you know, these concerns. Again, we think our bottom line remains that we are still in the early innings of a bull market, early innings of an innovation revolution that will lead to a golden age that Trump has talked so much about. But the one fear we have, you know, and, and I love your feedback on this as well, because if this is something you want us to talk more about, we can. But keep in mind I, this is a very low probability that I see for what I’m about to talk about.

[00:13:34]:
So don’t get that confused with how bullish we remain right now. Remember, 10 out of 12 V investing system screens are bullish right now. This is not the environment to be bearish at. And just to quickly recap on sentiment, you know, we can’t forget too that the a fear and greed index is it almost extreme fear? AII has 70% of investors are either bearish or neutral right now. Again, that’s not the kind of sentiment action you see at market tops. That’s the kind of action you see near the lows before the next rally. That’s our view. But again, so I would love your feedback on this.

The main concern that, that Kip and I keep coming back to here as we talk every day and every day, especially after the of these podcasts and that is the risk of a black swan event. Now, the nature of a black swan event is that the probabilities are very, very low. But it also would be something unexpected that won’t, doesn’t mean there won’t be riding on the walls. But usually, broadly speaking, very unaccept unexpected. So I still think the odds of this are incredibly low, but maybe right now they’re a little bit higher than usual. Okay, again, very, very low. So I a lot of you have been wondering this. We certainly heard it in feedback as well, is that, you know, we’ve got Trump and Doge moving at a million miles an hour.

[00:15:07]:
You know, cutting the government, enacting new executive orders, the immigration policies, talking about eliminating taxes in favor of tariffs. Right. All of these things going through dismantling the deep state, dismantling, you know, our surveillance state apparatus. Right. Reducing the headcount in government employees. And what has been so interesting is, yeah, we’ve seen some slight pushback from the left dims. You know, not really anything that is congruent. Right.

It’s kind of scattershot all over the place. Doesn’t make a whole lot of sense. They’re having trouble latching on to something. Right. Which is partially because of the speed of information that we’ve seen. We talked about this as well. It was Steve Bannon’s idea to for Trump to just come in an information overload. That’s how you beat the narrative machine, right? Just information overload for them where they can’t latch on to any one story.

[00:16:09]:
And they haven’t been able to do that so far. But the concern is what does the deep state have planned here? Right? They seem pretty, from the surface level, outside looking in, they seem pretty backed into a corner here. So do they just go into hibernation? You know, it’s tough to say with a system like this that has probably always existed in some form or another in every government around the world. So do they kind of hibernate and come back more organized or the scarier event of that is, you know, what does a communist do when they’re backed into a corner? Right. What does an animal do when they’re backed into a corner? Whatever they need to do to get out of it. Right. And so that is kind of the black swan event, Potential black swan event. You know, we know that Covid came from a lab.

Whether it was leaked or accidental, it came from a lab, right. So I’m not saying that something like that is going to happen, but really covet is kind of the tip of the iceberg. It woke a lot of people in my generation up, you know, much like 911 did for Kip, right into what is our government doing? It is amazing when you look back on history and all the atrocities our own U. S. Government has committed that we didn’t find out about for 20, 30, 40 years. You think they just stopped doing all that, right, in the last decade? No. So I’m just saying we wouldn’t put it past them. Now is the time to, you know, keep your ear to the ground, stay vigilant about that.

[00:17:42]:
We see it again though, as this probability is very low. But I had to acknowledge it here in the podcast as well. Bottom line though, again our view remains unchanged. Buying the dip remains the smart money move here. Our opinion with against the V Investing system at 10 out of 12 screens. Bullish and sentiment at these levels, you know, when bears are the loudest, it helps to remember the fundamental outlook, right? Because these people, again we refer to them as perma bears most of the time. Most of these people build and have made their money off of building fear. That’s not who we are here.

So remember the fundamentals here. And these are themes that we’ve talked about on the podcast and in our updates at at length here. And that is that we have to still remember the strength of the US economy that barely gets talked about, right? Nationwide we’ve got home prices near or at all time highs, net equity in homes at all time highs. And 68% of Americans own at least one home right now, with one third of Americans owning their home outright. That’s also a record there. Consumer net worth all time high. Credit scores all time high. You know, we’ve seen the increase in credit card debt, sure.

[00:18:59]:
But debt to available capital, debt to cash in the bank is actually at historically very low levels. Mortgage defaults are at lows as well. And really since the 2008 financial crisis, this is another theme we’ve talked about. Both consumers and corporations have cut their debt to disposable income or debt to market value. In the terms of companies, you know, they were well prepared in that regard. And again, we’ve got credit scores at all time highs. It also means the ability to lever up is high, which you know, can help at least fend off the worst effects of any economic slowdown. We don’t see a whole lot of that though, in our personal view.

But again, those are some astounding fundamentals as a backdrop to this economy right now. So we think now is an important time to remember th, those, those fundamental facts right there. All right, that being said, let’s take a look here today at our market action. Just the Dow, at least we got one finishing up on the day, Dow up just under 1/10 of 1% at 43,461. After that we had the S&P 500 down half of 1% to 5,983. So we did get back below 6,000 there. So not what you want to see, but we’ll see how quickly we can get it back after that. The Russell 2000 down just over 3/4 of 1% at 2,178.

[00:20:31]:
And lastly the Nasdaq not what you want to see leading lower was down 1.2% on the day to 19,286. I will point out that the semis, excuse me, the semis did lead lower from here, down over two and a half percent on the day. You know, we’ve seen we got a brief dip below the 200 day moving average here today. What’s most important is how long it takes to reclaim the 200 day moving average from here. One thing I did find surprising from today’s action, and maybe I should have talked about this a minute ago, but Trump was giving a press conference earlier Today with Emmanuel McCrone, the President of France, you know, talking about trade deals, talking about specifically the war in Ukraine. Right. And what he talked about about the Russia Ukraine war. And what I was Surprised the market might not have really reacted to the way I thought was that Trump said Zelensky was going to come to the US to sign an agreement next week.

[00:21:36]:
Next week. I mean, I hadn’t heard that until that interview earlier today. And I was kind of surprised it didn’t get more traction you saw in a few places. But again, I’m surprised they didn’t get a little bit more traction there. I thought that might have been a market moving news to the upside there. Again, it’s not the, the, the news that matters, the market’s reaction. So if we get more details out about that this week or even as the market and investors start to actually see that news and digest it tonight, again, that might be a major reason there for a turnaround Tuesday, tomorrow. I mentioned at the beginning of the podcast the potential for that.

You know, there’s one reason for it there. Next up, looking at our internals on the day today, you know, just a couple hours before the close, we actually still had some positives here. We did ultimately finish negative across the board, you know, but really not terrible readings here. We had, you know, pretty flat, more declining than advancing stocks on the NYC, but pretty flat, just under, under 2 to 1 negative on the NASDAQ. 52 week highs and lows as you might expect, was negative but then volume again just barely negative on the NYSE. It was just over 2 to 1 negative on the Nasdaq but still well below the warning sign levels of like 70, 80% plus downside volume there. I think it was about 67% downside volume. So not ideal obviously, but you know, not nothing too crazy there.

[00:23:11]:
Looking at our sectors on the day, we did finish with 5 out of our 11 sectors higher on the day. We were led by healthcare, financials, real estate and energy. So more fundamental value names there. Makes sense as the Dow led today. And maybe we’re getting one of those rotations a little bit into a little more value. You know, financials have held up really well to the downside. We had tech, consumer discretionary and consumer communication services. Excuse me there.

Finally here, one last one for today. Let me get a quick refresh of my screens for the VRA Commodity watch. But I will say gold hit an all time high today at $2,973 an ounce. Just barely below those levels right now at $2969 an ounce. And GDX having a good day today as well, still below its recent highs, but was up 4/10 of 1% on the day to day as well. Silver up on the day to 32.73 an ounce. Copper higher as well at $4.56 a pound. And finally here, crude essentially flat on the day now at $70.93 a barrel.

[00:24:28]:
Finally, here for today, Bitcoin was up from where it was earlier in the session, now close to its lows of the day today, down nearly 4%. 9246 of Bitcoin. 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@vra letter.com click the podcast link at the top, and we’d love to have you with us. Thanks again for tuning in. Until next time. We’ll see you back here tomorrow for the close.