In today's episode, Kip breaks down an action-packed market performance week and discusses what we expect to see going forward. He also covers the chaos unleashed by Federal Reserve Chairman Jay Powell, who has once again unsettled the markets during the most illiquid time of the year. However, today brought some much-needed relief with significant market gains. Tune into today's podcast to learn more

Don’t look back to the market is closed. Good Friday afternoon, everyone. Kip Herriage here with the Daily VRA Investing podcast. Hope you had a good day today. Hope your week is fantastic as well. Let’s get right to it here because it’s really not a fantastic week at all, was it? And forgive the horse throat here. Kind of been suffering that all week, got to tell you the truth. If you heard Tyler’s podcast yesterday, number one, it saved me.

Was not feeling great yesterday and woke up this morning about 3am did not really want to go today, if I’m being honest. But the first thing I did was listen to Tyler’s podcast and it saved my bacon because he covered all the things that matter most and things frankly, I woke up and forgotten about. I was in a bad mood. I didn’t want to be long the market. I was still pissed off about Jay Powell ruining being another Grinch again, ruining another Christmas week for us again. What is up with this guy? He’s a clearly. He clearly likes to hurt people. Okay.

[00:00:59]:
Because this makes. It’s unforgivable and inexcusable and very irresponsible in my opinion, to do what this man has done In Steadshare in 2018, he crashed the markets in the fourth quarter and so bad on Christmas Eve, they had to halt trading. Markets were down so much on a half day of trading. By the way, the last thing a Federal Reserve chairman or Fed should do. They shouldn’t have meetings in, in December. They shouldn’t have a Fed meeting. And if they do, keep it quiet. We don’t need to hear from you.

Let Christmas be Christmas. It’s illiquid. It’s the most illiquid time of the year. There’s no time frame more illiquid than this time of year. And for the Fed to come out irresponsibly again, to come out and change their Fed, essentially their mandate for, for, for us, as far as we’re concerned, to change Fed policy is again, irresponsible is the word. I’ve said this now for several years. Jay Powell is the worst edge here of our times. There’s not a close second and he shouldn’t have the job.

I understand exactly why Trump wanted to get rid of him in his first term and why they had the battles they had. But again, to repeat it again this year and to have such a lousy presser on Wednesday, we where if you watch it like we did and you saw that the financial journalists in the room clearly were confused. They were asking Questions about the previous question, please. Can you clarify this? Can you clarify this? How is it that we can have. Now you’re, now you’re concerned about inflation. Last month you were, you were not. Now you’re concerned about rates rising and the number of rate cuts you might have next year. Last month you didn’t have.

[00:02:41]:
What’s changed when he wouldn’t admit was that it was changed is who won the election. That’s what Trump didn’t want to, that’s what Jay Powell did not want to admit. And I think that’s cowardly, you know, and the markets picked up on that. And again, when you had the most illiquid time of the year to come out as wishy washy as Powell was, it’s, I think it’s, it’s an unforgivable offense to do twice again, 2018 and now again here in 2024. He’s a sadist. I mean, I think that’s probably the kindest word I could call him. He is a complete sadist. And he’s also very insecure.

You can see this in his press conferences. You can see the way he replied in his last press conference when the journalists asked him, are you concerned about Trump firing you? His reply was very acidic, not applicable under the law. Oh, what was that? Not, not applicable under the law. He had to repeat it twice. So my biggest problem with the Federal Reserve today, frankly, besides the fact they’re a cabal of criminal bankers, us and globally, outside of that, my biggest concern is we have a Fed being run by a chair that should not have the job after what they did with inflation. Again, it’s a well known story, well repeated story. But to go from one month saying we don’t have inflation when everybody’s like, don’t trust your lying eyes, right? Look at, look at food prices soaring at grocery. Oh, we don’t have inflation the next month.

Oh, we do have some inflation the very next month. Runaway inflation, right. Ultimately to 41 year cycle highs. So that’s what happened Wednesday. I think it, it made my little head cold get even worse. And I’m also on a carnivore diet. And if you’ve been through a carnivore diet, you know, the first few weeks are a little rocky when you don’t have carbs. My system went through a little withdrawal.

[00:04:41]:
I think I was detoxifying. And so again, I was completely out of it yesterday and the night before. I think I don’t listen to Tyler’s podcast early this morning because it set me straight because let’s see what the markets did first. A good much better day today all the way around. And then we’ll talk about the most important things we’re seeing in this market and why we, you know, we’re almost at the Santa Claus rally. We’re not there yet. Starts on Tuesday. Until then, we have to continue to worry, I guess about what Jay Powell may say or do.

But we did have a good day today. Dow Jones finishing up 500 points. Remember we were down over a thousand points on Wednesday, so it was an ugly week. But today the Dow Jones up 498points, up 1.1%. Also same with almost exactly the same with SB 500 up 1.1%. These are off the lows by the way. At one point the Dow is up close to 900 points. Rust 2000 today which has been destroyed this week on Wednesday again Chairman Powell day drench day on Wednesday Powell crashed the small caps the Russ 2000 by total of 6% in one day.

At one point this week the Russ 2000 was down over 10% on the week as were the trannies and the NASDAQ falling over 5%. This should not happen. It should not be allowed to happen on the most illiquid week of the year for the Federal Reserve to change policy. It is, it is outrageous. And again, I’m not the only person saying this. Now I may have been saying for the longest amount of time, but if you’ve been watching any financial TV at all, you know that people are calling him lost wrong man for the job, should resign. This is what other financial journalists now are saying about this guy and he gets you to everyone a favor. Just turn in his resignation before Trump gets the job.

[00:06:25]:
Trust me, I tell you things go much smoother because this may be Trump’s biggest battle. Trump’s biggest battle again at least one of may be dealing with the Federal Reserve and Jay Powell. But again back to the things that matter most now. But the VRA system again the eternals of the last two weeks have caused us to take the very system down to 10 to 12 screens bullish from 11 to 12 screens bullish. That’s just because the internals have been horrible. Of course on Wednesday there were crash like 13 to 1 advanced decline negative for NYSE on Wednesday these are crash like readings down volume 89.5% again very close to a crash like reading thanks to chair Powell. But 10 or 12 screens bullish in the very system is still back of the buy signal. That’s what Matters most.

This may be the most bullish reason of all folks. Fear has returned in, in, in glorious fashion. I say that because when, when you have the Fear greed index plummet from a reading of greed which where it was at on Monday morning all the way down to I think it hit below 20 today. It was 21 this morning as I wrote the letter. I think it did rally some throughout the day. But to, to, to collapse right from a reading of greed to extreme fear, which is what happened this morning and after Wednesday’s collapse that tells you something pretty important. Also the Vix, you know the Vix rose 74% on Wednesday. Again these are crash like readings for the markets to flip from bullish to extreme fear, from bullish to extreme bearish and to do it inside of two to three days.

You could not ask for any sign that’s more bullish than that. And I’ll tell you why that is. These kind of radical flips from extreme from greed to extreme fear tell us this bull market is very young. This is not the character, not the personality of a bull market that’s long in the tooth. And here’s what will happen then. Years from now when this bull market is truly getting long in the tooth. We’ll have these down days. You’ll barely see these sentiment indicators like fear and greed like VIX etc.

[00:08:34]:
You’ll barely see them react, they will barely move and that’s when we’re going to be start taking profits. However, this is the flip side of that. When you see fear come back in such a glorious fashion and it is glorious if you’re a bull because this is what you want to see. It’s just a sign that we are nowhere near any kind of a medium to long term market top. It is a sign that the lows are likely in place, which is what we think they are. Again, the Santa Claus rally doesn’t start technically until Tuesday is the last five days of this year and the first two days of the next year. So we start that on Tuesday. We may get a little more back and forth between now and then as people trying to figure out what the Jay Powell is going to do with the Fed’s going to do.

And again because there’s so much illiquidity here in this time of year. However, if we get another shakeout, we’re looking for a weak Monday. If we get a weak Monday. We did add two new positions this week, value stocks. We added positions in housing and we had a position in energy this week because value stocks have been Just destroyed. Again, the Dow Jones, home to many value stocks, has hit extreme oversold on steroids. Right. It’s our most oversold levels.

It is a flat out buy recommendation for these Dow Jones value related stocks. And that’s why based on the very system we added these positions through leveraged ETFs in the VRE portfolio. But again, that’s, that’s. It just fell off. It fell off the table. Right. It’s just a complete waterfall collapse for so many value names. But if you’re a buyer, that’s the sign you look for as long as everything else holds up.

[00:10:08]:
And yes, everything else has held up. So what else is causing this move lower? It’s the weekends, folks. You know, we got into a little bit of an extreme overbought readings at the end of November. Since then we’ve been working those off as the internals have been again, fairly horrible. But that process has caused the weekends to sell. That’s what happened on Wednesday. The weekends began to capitulate, margin calls came in. Selling reached a capitulation frenzied level on Wednesday with these readings that we saw in vix, et cetera.

And again, as a buyer, you sit back and you’re like, okay, now it’s time to act. And that’s what we’ve been doing here. We started doing that yesterday and again, excuse me, Wednesday afternoon and again this morning, excuse me, yesterday morning, adding to our value positions in the VRA portfolio. I think these stocks are going to do very, very well into the end of the year. Also, we also follow Rich Ross very closely, as if our VRA members know this here. Rich Ross is the technician, if you will, the quant at Evercore. And he put out his update yesterday. He’s still saying back up the truck buy.

He loves value names here as well, recognizing however sold they are recognizing the 74 spike in the Vix. That’s consistent with panic lows. That’s what we saw, panic lows on Wednesday. Also, key stocks like Nvidia have had major reversals, the semis, major reversals yesterday and today. We believe that continues into year end and to what first quarter, 20, 25. And very soon we’ll be talking about not only the Santa Claus rally, but the beginning of a new month, a new quarter and a new year, along with all the flow, flow funds. They’re going to be coming into equities as we start the new year, new quarter, new month. And so the markets are should start discounting that I think they really did today as we open Lower futures were sharply lower than we reversed.

[00:12:00]:
That looked like another short term bottom. And so we think that we’re going to get off to a very good start as we get into January. And of course, we get closer to Trump taking office. Now, as I said earlier, if I had to pick a top for short term, my guess would have been, I said this last week, my guess would have been that it would have happened going into the inauguration. Now we still have time for that to happen. We can get all bowled up again. We can go all the way back to extreme green readings. The markets can melt up again between now and then.

But frankly, I kind of think Wednesday’s lows, you’re going to mark the lows and then the lower open this morning, the futures markets and sharp reversal higher. I kind of think based on the setup here, that we’re already there, at least for value stocks, at least for semiconductors. I think Tesla’s lows of this morning yesterday, I think those will probably be the lows, maybe for Bitcoin as well. But I do expect that once we get through the inauguration, we’ll cover that when we get to it. But I think from then on, we’re going to have a pretty glorious run higher. With Trump being president again, his biggest enemy again, maybe the Federal Reserve, Trump may be forced to take action against the Fed, at least the Fed chair. Let’s get that battle over with sooner than later. I’ve also got to say I admire Trump.

He hasn’t reacted to Jay Powell taunting him. That’s a sign of growth and I like that. I like sign. I like the fact that Trump is working through his advocates. He’s working through people like Elon Musk. Let’s see him continue to do that. Right? Elon Musk turned around this stupid spending bill, did he not cancel that with Speaker Mike Johnson? Wow. Who is this guy, right? One day he’s one guy, one guy, the next day he’s another guy.

[00:13:44]:
But I feel very confident with Elon Musk and Vivic being in charge of Doge, that along with Trump, we’re going to get a whole lot accomplished. This is sanity, folks. Sanity is returning to the good old US Of A. And I know we’re all looking very forward to that happening next year once Trump isn’t fully inaugurated in office. That can’t come soon enough, right? I think we all agree to that. That cannot, January 20th cannot come soon enough. Also, another point again, the Fed is clueless. This is a clueless Federal Reserve.

We learned this morning the core PCE is at 2.4%, 2.4%. The Fed’s target is 2%. But folks, if you remove, over the last six months, you remove two, two, two pieces of data from the inflationary reports. If you remove shelter, housing cost and if you remove insurance, these are both lagging indicators. If you remove those. We’ve had deflation, not disinflation. We’ve had deflation going over six months. Think about this.

The Fed’s supposed to know this. So why are they focused on things that are, that are lagging indicators which are only going to continue to fall off the table, especially as Trump comes into office. Inflation will, disinflation will continue to fall. Inflation is not our concern. Rising rates should not be our concern. But again, in the very short term, we’ve said we understand higher rates because look who’s coming in office. We’re going to have hyper economic growth with Trump in office, especially with the innovation revolution taking place. That’s also going to have a dramatic impact on levels of inflation.

[00:15:19]:
As we said, we expect to see pure deflation within about three years. Again, without shelter and without insurance costs. We’re already there. Now. This is a Fed that is lost. That’s what Bloomberg said. It’s about Jay Powell. This is a Fed that’s clueless.

That’s what I’ve said about this Fed and this Jay Powell. And I think very soon the markets are, I think the markets have already figured that out. Again, it’s illiquidity of December. I think it’s a criminal act to do what they’ve done. Look, how many people sold out their portfolio? How many people had margin calls and have been forced to sell because they can’t meet the margin call. These folks won’t have their portfolios made. Right. Look, we’ve all been damaged from this.

Some of us have the ability to just put more cash in your account to buy more or if you get a margin call, find out more cash. Most investors don’t have that ability. So they get washed out of their positions. And I think to do that twice for one Fred Chair to do it twice in the month of December, one week before Christmas is unconscionable. It’s unconscionable. If he had any, if he had any self respect and he doesn’t. If he had any self respect, the guy would resign. He won’t.

[00:16:29]:
Right. But that’s my call and it has been for some time and of course I’m sticking to it. All right, let’s take a look under the hood today again the eternals have been so bad. But they were much better today. First of all, advanced decline was on NASDAQ very close to very close. Better than, excuse me, 2 to 1 positive. NYSE almost 3 to 1 positive. Much better readings.

Again these are crash like on Wednesday volume now this is much better. Nasdaq up volume 78.6% for NYC. Nasdaq up volume was 81.5%. These are very good readings. We did have about 150 more. Stocks hit a 52 week low, 50 week high, but that’s not a real concern. Again a lot of that’s lagging as well. Excuse me.

Our sector watch again much better today. All 11s 500 sectors finished high on the day. Led the upside by real estate of 1.8%. Utilities up 1.5%. Also technology leading the way up 1.5%. And again the semis rallied today doing what they’re supposed to do, leading higher up 1.6% on the day in our commodity watching. And gold got destroyed by a feckless Jay Powell made up for that today. At least a good comeback start in the right direction today.

[00:17:41]:
Gold today up a big $31 an ounce at 122 an ounce actually was higher than that by about $14 now. It’s at one point right now trading at 26.39 an ounce really like this set up here. And precious metals and miners been tough to own this group. But we really like the miners here to year end. This is a very bullish period for them. You would know it from the reaction of the last couple of weeks. This is a very bullish time for the miners again. Once Trump gets all sorted out, the dollar will not continue to spike higher.

Rates will not continue to spike higher. That will get resolved as it did from 2016 to 2017 once Trump took office. The gold miners rallied 35% after Trump was inaugurated. We’re buyers of this group. Silver today also up nicely 2.3% at $30.08 an ounce. Copper today up two pennies a pound at $4.09 a pound. Crude oil down a dollar a barrel at 69.56. Again we like energy stocks here.

They often trade different than you will from the commodity itself. And finally on the day, bitcoin, bitcoin had a good rally, gave that away today. Now back down to 96,600. That’s down about 1% over the last 24 hours. Again we hit a high of 107 to change here just this week. And then a low about 92 I believe I saw, and now 96,600 again. This basing period around the hundred thousand level is bullish. It’s required and it gives us a new base to rally from.

[00:19:10]:
That’s what we think is going to happen in the year end and to first quarter of 2025. All right, folks, that’s it for today. Hope you had a great day and I hope you have an even better weekend. We’ll see you back here again Monday after the close.