In today's episode, Kip discusses the day's market performance and directly addresses the role of the Federal Reserve and today's FOMC Minutes. He covers the technological innovation revolution, inflation forecasts, and the importance of staying focused on long-term trends. Tune in for an episode packed with critical financial insights and forecasts to guide your investing strategy.

Don’t look back because the market is closed. Good Wednesday afternoon, everyone. Kip Herriage here with the daily VRA Investing podcast. Hope you had a great day today. Markets had a good rally today. Intraday we’ll talk about that finishing higher at least for the Dow Jones today with only minor losses in Nasdaq and a couple of heads up. How about that? We’ll start here before we get to the markets. First of all, Tonight it’s at 10pm Eastern.

I’ll be on with our great friend Wayne Allen Root on his hit show the Root Reaction on Real America’s Voice. Again, that’s in the 10pm hour. I’m not sure exactly when in that time slot that I’ll be on, but if you can, love to have you join us. And also tomorrow the markets are closed in observance of Jimmy Carter’s funeral, President Carter’s funeral tomorrow. And the markets are closed all day. So we’ll see you back here Friday with our full VRA letter and with of course with our podcast after the close. Before I get to some things we want to talk to you about with the markets and the reason that we believe staying focused on the primary trend is key, not the counter trend moves, but the primary trend moves. Want to talk first about the Federal Reserve.

[00:01:12]:
It’s no secret, as I’ve been saying now for several years, that Jay Powell is the worst edge here of our times. I called for his resignation beginning a couple of years ago when he completely botched the inflation story. If you remember, the Fed went from saying we had no inflation to the next month saying, yeah, we do have some inflation too. Boom, 41 year highs in inflation. Again, it’s a clueless Fed. They’ve made five major policy errors since Jay Powell got the job in 2018 and now they’re making their sixth. Now, I don’t think this one’s going to be as bad. But the problem with Jay Powell is that he hates Trump.

As I wrote in our 2025 forecast, I think one of the biggest risks to this market is the Federal Reserve and Jay Powell battling with Trump. I think even though Powell’s term is set to expire next year, 2026, I think that it’s likely that Powell and Trump are going to get into it again. Remember, that’s what happened in 2018. The Fed raised rates eight straight times going into the December. Fed bank raised rates again. Caused the Christmas from hell. The Christmas Eve from hell. The worst fourth quarter ever.

Worse than the Great Depression. The worst December ever. The worst Christmas Ever, ever, ever, ever, when there is very little to no liquidity in the markets. The Federal Reserve was hiking rates and talking about beating at that time strong economic growth. Right. And their concerns of a runaway economy. So that’s. First of all, the Fed should never have a meeting in December.

[00:02:51]:
Jay Powell should not say a word in December. It should be a quiet period, blackout period, where they’re not saying anything because of the lack of liquidity in the month of December. We just went through a pretty brutal stretch in Christmas on to the end of the year because of that reason. And it just is no reason for it to even happen. Right. If you’ve got a policy change to make, make it in January. If you’re going to change economic policy, which they did at the December meeting, do it in January. Who’s going to be hurt? No one’s going to be hurt.

Who are you going to help? Everybody that wants to be able to take a couple weeks off and enjoy their family and try to have a good Christmas. So that’s. Jay Powell has done it. TW that’s not an accident. That’s someone that really probably doesn’t really care about how it affects people, because you wouldn’t, if you make that mistake once, you wouldn’t do it again. And he did. Okay, number one now today, we get the Fed minutes today from that December meeting. And if you remember in the presser, first of all, Jay Powell had just said a week before at a speech, we don’t guess.

We’re not in the business of guessing. We deal in data and facts. That’s what he said the week before the Fed presser. And then at the presser, all of a sudden they changed, Remember, they changed interest rate policy. They said they went from saying, oh, we’re going to have four rate cuts in 2025 to just two. And then the question started coming in, why are you making these changes? Does it have something to do with Trump? Really? Essentially, no comment. Would not talk about it. Now, today we get those minutes, we know exactly what was said.

[00:04:21]:
Even though Trump’s name wasn’t mentioned, by the way, there’s no way that not a single Fed member said Trump’s name. Absolutely. It said Trump’s name. They just didn’t put it in the minutes. I guess that’s a prerogative. Okay. But as it turns out, when he was denying that these rate, the change in rate cuts was done to per Trump, that’s exactly what happened. And we found that out today, multiple mentions about pending changes to do with, with Tariff policy, pending changes in the economy and inflation due to immigration policy.

That’s all Trump. So again, not only do they guess, not only do they speculate and not use data or facts, but it’s even worse than that because now they lie. We know that they don’t tell the truth. Well, is that a real surprise? I guess it’s not. Again, maybe I’m trying to be altruistic here and think about his better self, but I’m not sure there’s one there. This is, this is a bad Fed chair who should have resigned a long time ago. And I doubt that I’ll be this direct in my interview tonight with Wayne. And I’m going to be back on Fox Business next week.

I doubt that I’ll be this direct there either. But I have publicly called pal the worst Fed chair of our times. I’ve done it on Fox multiple times with Wayne as well. And I said that he should resign. I have said that. But look, I’m trying to, trying to be a nicer kip in 2025. So maybe on TV I won’t be quite as direct. But that’s exactly why they changed policy.

[00:05:59]:
And again, they are guessing, they’re doing exactly what Powell said they don’t do. They’re guessing, they’re speculating because they don’t know what Trump’s policy is because he hasn’t announced it. How could you know what his policy is going to be? Whether or not it’s going to be inflationary or not, which I don’t believe it will be. Neither is Tyler. Again, our view with respect to inflation. And folks, if you know us, you know, number one, we’re very direct. We tell you exactly what we think and we lay down, lay it out. Okay, if we’re wrong, we admit it.

But if you follow us, you know something else? We tend to get things right. We get things right because we’re not guilty of groupthink. It’s just me and Tyler comparing notes and then saying, you know what? This is what we believe. Right. I’ve done this longer, so yes, most of the time I’m gonna get my way in that debate. But I will tell you, as time goes, Tyler is getting more and more kind of a majority feel in this, in this partnership that we have, but we’re not in New York. We’re not guilty of the group think that these economists are, that these analysts are on Wall street because, you know, you get 30 people in a room, how do you come up with policy? You don’t. Even with Five or ten people.

Right. So that’s one of the reasons I think that we’ve done well. Number one, I’ve been in the business 39 years, learned a few things, had great mentors, et cetera. And now, you know, I think we can see the trees of the forest again because experience tends to give you that and the group think is the biggest thing. I think so anyway. So now the Fed’s changed policy over something they have no idea about. They don’t know Trump’s effect be on immigration or tariffs and what effect that’s going to have on inflation. If it’s the same thing has happened in his first term, there won’t be an impact and this time inflation will only fall further.

[00:07:47]:
That continues to be our belief. Our view is that inflation is going lower. Remember, okay, we have two things here that are really powerful. These are primary trends. Number one, we have an innovation revolution. This is going to be the most powerful era of technological change and innovation in any of our lifetimes. That’s number one. What is, what does innovation do? It drives down cost.

That’s the big, that’s one of the big wins. Besides creating massive success and wealth, it’s going to drive down a new industry, it’s going to drive down costs, it’s going to drive down inflation. Number one, what else do we know? We know that without two pieces of the CPI data, without shelter, housing and without insurance cost, we would have been below or at or below the fed’s target of 2% inflation for over six months. We’ve been talking about this a lot with you here. Okay. Those are lagging indicators. As Tyler reminded me in our pre podcast meeting, these are lagging indicators meaning that they’re going to continue to roll off. When someone signs a lease for an apartment or home or whatever, it’s one year lease, you get insurance.

It’s not day to day, month to month, it’s a multi month lease or policy. So as those policies and those leases, et cetera, renewal, the, the cost continue to fall because that is what’s happening, right? That is what’s happening both with shelter and housing and insurance. So what we know is that inflation is going to continue to fall for those reasons. And we have another biggie, don’t we? It’s called China. Tyler covered this yesterday as well. The, the interest rates in China are hitting new low, all time low after all time low. Why would that be happening? Because China’s growth is going in the wrong direction. Doesn’t mean they have negative growth.

[00:09:39]:
But it ain’t 5% like they claim. What is it? I don’t know, 2 and a half, 3. Can’t trust them. They’re Chinese communists. So they are driving rates lower. They’re, they’re printing money to try to stimulate the economy. They are now, in essence, and this has been confirmed, not, this is not just Kip and Tyler saying this. This is every Wall street economist that we know.

China is exporting deflation to try to sell their cheap stuff, right, because they could do it, because they pay their people nothing. And this is one of the reasons Trump wants to have these tariffs, to cut that nonsense out. Europe is doing the same thing. Their growth rate going the wrong direction. Why is that? Because they’re socialist and they can’t compete with free market capitalism. Guess what? We’re about to have even more of that true laissez faire free market capitalism with the strongest pro business administration in the history of, of the United States. Look at this cabinet Trump’s put together, right? So it’s all very exciting stuff for the United States. It’s all really bad stuff for most of the rest of the world.

But that again, means cost will go down and inflation will continue to go down. We think, I think in three years we’re going to have pure deflation from accommodation of these things. But the one thing we’re not going to have is rising inflation, which is what Powell and his team of money printers is again. Remember, these people really do believe that they are the, the, the smartest people in the room. They do believe that the, they’re, they’re the financial masters of the universe. And they love the notoriety, they love the fame they’re getting. That’s why they meet every month, it’s why they have these pressers. I mean, it’s, again, it’s all about, all about the Fed, all about this cabal of bankers.

[00:11:18]:
Right? I just, every time I say that, I think about Ron Paul in the Fed. Ron Paul in the Fed. Ron Paul in the Fed. Please, please, please. It’s in the Fed. Maybe when Divac and Musk gets some headway going with Doge, the Department of Government Efficiency, maybe they’ll come get an opportunity to look under the hood with the Fed. Doubt it, but they should. So all of this is the Fed guessing and speculating again, which is what they say they do not do.

They’re not data dependent, they’re guest dependent. That’s infuriating for me because they’re not being candid. There’s no transparency here. There’s no honest Very little honesty here with this Federal Reserve and that’s what’s caused this hiccup in the market, this volatility. We’ve seen this move higher in rates in the U.S. remember again we’ve covered this ad nauseum. The 10 year yield is just below 4.7%. In Germany it’s 3.4, excuse me, 2.4.

In China it’s all time low of 1.5. In Japan it’s 1.1. For the same caliber, same debt instrument, 10 year debt. So why in God’s name should our debt. We have the safety and security of the leading country on the planet. Safety and security. And we also have the world’s reserve currency. Why is our debt so much higher? You could say, well because of economic growth.

[00:12:40]:
Yeah, I’ll grant you that we are having better economic growth. It’s only going to get better under Trump 2.0. But without the inflation factor, that’s what doesn’t exist here. Without that factor there is no reason that’s why the 10 year today should be 3.6, not 4.6. And that’s why we believe by the end of the year the 10 year will be below 10.4percent and likely in the 3 1/2% range because the Fed again, the Fed has this wrong. The Fed has this wrong. That’s our call and that’s, that’s been our call. And I think we got more evidence today with these FOMC minutes that that’s exactly what’s going on.

When, when they Powell denied that these changes were happening because of Trump and we find out today that they’re exactly because of Trump. Okay, clueless. That is this Federal Reserve clueless. Okay, markets today again we had a pretty good recovery here today. At one point the Dow was down over a couple hundred points. Nasdaq down about 130. Good rally today. Dow Jones finished up 106 points up a quarter of a percent.

Again we get the employment data on Friday. Pretty important report in the short term. But in the long term it doesn’t matter quite so much. I’ll tell you why it really doesn’t matter at all in just a moment. Again good rally. NASDAQ did finish down 10 points. That’s not even 1/10 of 1% s. And P500 was higher on the day as well.

[00:14:02]:
Nine points. Russ 2000 was our original in the day down 4/10 of 1%. And the semis did finish lower as well. Again there’s been following Nvidia’s Jensen Huang’s presentation at CES in Las Vegas. Consumer electronics show finish down today 6, 10, 1%. We got to remember they’ve been on a pretty good roll here. And we like the setup here. We like the chart, we like the macro setup of the semis very much.

We’re aggressive along this group and continue to recommend it aggressively. We think it’s going to lead going forward. But if it weren’t for the Fed and this ridiculous rate policy they have, tech stocks would be leaning much higher now and semis would be charging higher. And they’ve been trying to do that. But we had a little bit of a buy the rumor sell the news eventually with Jensen Wong’s presentation. But how extraordinary was his presentation? We focused on that this morning in our very letter and talked about Brian Rich, who’s a market strategist that we’ve gotten to know pretty well, just does exceptional work specifically on the innovation revolution in this again era of technological process and progress and change that’s never been seen before. And he, you know, he makes the point that like Elon Musk says with the introduction of humanoid robots, Optimus right into the world, there will be, this is Musk, quote, there will be no meaningful limit to the size of the economy. It’s a combination of AI, autonomous cars, humanoid robots that will produce the largest technology industry the world has ever seen.

That’s Jensen Wong saying it and it’s Elon Musk saying it as well. Two pretty bright guys that understand technology far better than the Federal Reserve or anybody in this government. So again, that technological change is going to bring the innovation, to bring costs down and benefit mankind. This is the power of innovation. But I love what Brian said today in his final sentence of this write up. He’s talking about technological change and what’s happening with race, etc. He says this all makes incremental surprises in daily economic data. The uptick in global bond yields and parsing of Fed communications on the next quarter point rate cut seem relatively unimportant.

[00:16:26]:
Now that’s a subtle, that’s a subtle swipe. It’s not relatively unimportant, it’s unbelievably unimportant because again, if we’re anywhere close to being right and our forecast says we’re going to have 5% plus GDP growth within 18 months, I think it even could happen this year. The combination of Trump 2.0 and the innovation revolution. Okay, just dramatic. Again, animal spirits coming back again. Laissez faire business guy. Look at the, again, look at the cabinet, look at the cabinet that Trump is putting together here, these are all many of the billionaires, they got rich off the free market capitalism and this is what we want more of. Right? And so it’s that combination that’s going to mean it doesn’t matter if the 10 year is 4.7 or even 5.1 or whatever it is.

It didn’t matter in the dot com melt up 95 to 2000 where the average 10 year yield was 6.1%. Remember we’re telling 4.7 1995 to 2000 the average 10 year yield was 4 semi 6.1% with spikes over 7%. So the market didn’t just couldn’t have cared less about where the 10 year was in 95 to 2000. Okay. And so we’ll have these short term blips. That was at the beginning of this podcast. I’ve talked about the short term counter trends versus the medium to long term primary trends and that’s where we want to stay focused on. This is where I believe that the wealth is going to be built, not the day traders.

And I’m not, I’m not, I’m not, I’m not lame basting day traders. However you want to make your money, I’m good with that. What I’m saying is most day traders don’t make money, okay? Frankly a very low percentage do because they don’t know how to do it. I don’t either by the way. But we don’t try to do that. We focus on what we know, what we’re good at. Our strength is on the medium to long term with a focus on the short term for trading purposes. That’s why we had the VR investing system.

[00:18:23]:
But other than that, we want to be stake picture. We want our interest and our attention focused on the big picture. The medium to long term trends that play out over time versus counter trend moves that can disappear in a week or two. Right? And these primary trends that we’re focused on, medium to long term primary trends are extraordinarily bullish and we believe it’s going to create never before seen levels of economic growth and wealth creation. As I wrote this morning, the recipe for success, it’s really the same as it was during 1995-2000. Buy your winners, hold your winners. That’s what we’re focused on here, getting the primary trend right and then trying this as much as possible to ignore these short term counter trend moves. But with the Federal Reserve like this, it doesn’t make it easy.

One more point now on rates and I’ll wrap with this and get into the internals and, and, and things like that. Oh by the way, I tell you the, the trannies, the transport’s up four days in a row. That’s a very good sign for the economy. Put call ratios toddlers told me very elevated. Now that’s typically a reverse indicator. And again the Friday jobs report is going to be important to some degree. We also have the fear and greed index at 32. 32.

That’s in solid fear territory. Closer to extreme fear than it is to neutral and in a bull market that’s 3% from all time highs. It’s one of the damnedest things I’ve ever seen. It just tells you the amount of fear that still exists out there, how powerful this psyop and activity has been. People have it better than they’ve ever had it and they think their lives are horrible. I’ve never seen anything like this. But it just shows you propaganda works. Man, does it ever right.

[00:20:05]:
While 40% of Americans own their home without a mortgage, net equity in homes at an all time high, consumer net worth, all time high. Yeah, I know we’re not happy with the President that’s on the way out. But the facts are still the fact and the propaganda is just in your face 247 and across all media mechanisms they have. And there’s one goal in my opinion, to keep people negative and worried. Because fear, false evidence appearing real allows our controllers to control us. That’s what this is about folks. Never forget. So last point on the, on yields, the 10 year we shared this chart this morning.

I highly recommend you look at it. 10 year yield is now again back up but bouncing against the 4.7%. That’s right, bouncing up against the one year high and yield. So we have resistance there. But when you, when you, when you drill down a little further and you take a look at the investing system, at our, at our momentum oscillators, you find that rsi, MACD moving average convergence, divergence and stochastics are each hitting extreme overbought levels. We call that when that happens. That combination extreme overbought on steroids combined with the fact that we’re hitting the high yield for the year, that resistance line, this market, this bond market is set up for a sharp reversal. We think that’s what we’re going to get.

Again this is when bad things happen. When you get to extreme overbought on steroids, some bad things happen to a chart and again they can get more extended. I’M not calling a top necessarily. And we don’t really invest or trade on bonds or 10 year debt. If we did though, we would be betting on rates headed lower. What does that mean? Why is that important? Because tech stocks are extremely sensitive to interest rate movements in the short term. That’s why we’ve had this shakeout in tech since the Fed meeting and now I’ve come all the way back full circle talking about this insanely ridiculous Federal Reserve. We have making all of our lives more complicated and more anxiety fueled than it has to be.

[00:22:06]:
Right. But if, if we’re reading these charts right, our charts are really good with this. Our variant system is very good at picking this up. Yeah, rates are in the process of topping and that’s going to be extraordinarily bullish for tech stocks. Tech stocks elite everything semi is lead tech. Tech leads the broad market. I think you see where I’m going with this. We are very bullish for all the reasons I’ve just laid out.

All right, let’s take a look under the hood today. The internals were not good today but we’ve seen worse but not good. Again we’ve had a stretch here because of Federal Reserve and Jay Powell where the markets now are going through some volatility. Today we had 2 to 1 negative. Advanced decline for NASDAQ NYC was only negative by a couple hundred issues. Much better there. Volume today was three to one negative. Excuse me, two to one negative for Nasdaq yesterday it was like two and a half to one positive.

A weird day. And NYSE volume was also negative by we’ll call it two to one. Wasn’t quite that. We also had negative reads Today for new 50 week highs and lows we had about another about 130 stocks more hitting a 53 week low, 50 week high. This was negative across the board for our internals. I don’t like seeing that but reality is what it is now. Sector watch was much better. In our sector watch today I just had this up.

[00:23:29]:
Let me pull it up again. There we go. Now our sector watch today, this is much better. We had eight of 11s and P500 sectors finished higher on the day. Led to the upside. Not a lot either way frankly. Again holiday tomorrow. Everybody’s looking for the jobs number on Friday but we had healthcare up half percent, materials of half percent, consumer staples of half percent, real estate up half percent.

To the downside, not much there either. Communication services essentially tech down 7.1percent and that was it. To the downside in our commodity Watch today. And again, another benefactor. If rates are going lower, guess what’s going to be benefited from it? You got it. Precious metals and miners. I think we have a little bit of a tell here. Gold has been looking better.

The miners short term have late have also been rallying. We think that continues. Our target for 2025 for gold is $3200 an ounce. That’s another 20% move higher on top of last year’s 26% move higher. We like this group. It’s the miners that we really like. It’s time for them to get going. It’s past time for them to get going.

We’re looking for 50% gains in the miners this year and I would not be surprised. It was 150% gold today, up a half percent, up 50 bucks an ounce at 2679. Silver of a quarter of a percent. That’s 8 cents announced at 3077. Copper today also up 1.7%. Copper’s been a little bit of a roll here now. 427 a pound. Crude oil giving back some of its gains again today, down 94 cents a barrel at what is this? 73.31 a barrel.

[00:25:05]:
And finally the day bitcoin cryptos have been weak. I think it really is. It’s liquidity. You know, anytime you have volatility and concerns about the markets, you have this drawdown and something that’s got a very high beta and that is bitcoin. Right. And cryptocurrencies. But still obviously we love this in the pullback Last trade now 40 94. Not 44,94,460.

That’s down 2.1% in the last 24 hours. All right folks, that’s it for today again. I’ll be on Wayne Root show tonight at 10pm Eastern. Hope you can join us. Have a enjoy your day off tomorrow in observance event in honor of President Jimmy Carter and we’ll see you back here again Monday, Friday after the close.