In today’s episode, Kip breaks down the latest market action following a relatively drama free Fed meeting and takes us inside the day’s key movers, including a rally led by semiconductors and tech stocks. Kip dives into why the chip sector’s performance and Tesla’s next moves could signal a big shift for the broader market and explains why all eyes should be on these market leaders reclaiming their 200 day moving averages.

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 good day today. We essentially got back the, the losses from yesterday today of course we had the Fed meeting today. Kind of a non event frankly. But pal did say a few interesting things, not much in the statement that we weren’t expecting.

We also saw some pretty, I think actually very good news today in the chip sector. The semis finished up now and after hours trading up 2% on the day. A good, always good to see the semis lead and apparently the administration is going to lessen some of the restrictions on international shipments of chips and I think that, that this industry needs a little bit of a shot in the arm. Look, the, the AI boom is just now getting started. But this group has been hammered. We wrote that up this morning, talked about some yesterday. We’ve talked about it a lot, haven’t we? We had two groups. We see.

[00:00:53]:
We had two groups, the Semis and Tesla, right? Two leading stocks, Mega Cap Mag. Seven names that led the way lower after the election. First they led the way up of course, really going parabolic after the election and then they started to peak and that was really our first sign that something was wrong in the market. When I’m talking about, now the Semis and Nvidia, which of course we’ve added to the VR portfolio and Tesla both started going down about the same time. And these are market leaders and they shouldn’t be going down because the semis lead in both directions. We’ve established that. Well, that’s absolutely 100% the case from the birth of quantitative easing in 2008. If you can just ascertain the direction of the semiconductors, you know which way the market’s gonna go at least over the, you know, may not be a day to day kind of a thing, but over the short, medium term you have a really good clue which way the market’s gonna go.

And then Tesla, just because this is a high profile name, obviously he’s got an exciting future ahead of it. But anyway, these are two high beta stocks that have led the market for a long time and they certainly did after the election they started going down. That was a problem. So what we need to see, as I wrote this morning, what Tyler, I want to see is we want to see the Nvidia SMH, a semi ETF. We want to see that get back above the 200 day moving average, right? We need that to happen. Now they’re both attempting to break out of a descending channel that’s been in place now for many months. Matter of fact they’ve broken out above that upper channel line if that breakout holds and they can get back above the 200 day moving average. Folks this is a, this is a whole new ballgame here.

So we want to see that happen. And we’re also king off Tesla. Tesla now is challenging the 200 day moving average. As a matter of fact, the first MAG7 name to do that is trying to lead again. If these two leading names, Nvidia or the semis and Tesla, if they get back to leading this market higher, I think we’re going to take on this market’s going to take on a whole new personality. So that’s one of the things we’re watching. But again good to see the semis lead the way higher today. We want to see a lot more of that.

[00:03:02]:
They have been leading but it’s been a little bit, a little sporadic. But if you look at the chart, relative strength chart, they have been leading and that’s bottom line, that’s what matters most. Market today again rallying strong. Good, smart money hour. Dow Jones finishing up seven tenths of 1%s 500 up 4 10. Russ 2000 up 310 and Nasdaq up 310 as well. But again a lot of these gains especially Nasdaq was down over 100 points with about 30 minutes to go and it got legs into the final hour or final 30 minutes. And the Dow Jones I think at one point it was up only about 60 points after the Fed meeting and J.

Powell presser and then it started getting legs as well. You know, some excitement about this weekend’s meeting between the US and China on tariff policy. I would say that I don’t think we’re holding our breath here but it’s good. Hey, at least they’re meeting right? That’s the main thing they’re talking. We also learned last night really more evidence that China is in trouble. Look, they’re already in trouble. I’ve got a lot of questions about China. I have a lot of questions China that I just don’t understand.

It makes zero sense. Maybe somebody out there can explain this to me. How is it possible, right that our 10 year yield is right now trading at close today at 4.27%. Pretty good action today in bonds. In other words, bond prices moving higher, yields moving lower. How is it that our 10 year yield is 4.27% when China’s 10 year yield is 1.64%. How our 10 year yields more than twice as high as they are in China. When China’s debt to GDP is at least 300%.

[00:04:40]:
Right. That’s just based off the public information. We don’t trust that anyway, it’s a communist country. Matter of fact, you may have seen this. China has pulled, just taking it off of their website, a myriad of economic statistics that they typically report on the Chinese economy. They just pulled that down within the last 24 hours. Now why would they want to do that? Because the country’s even in more trouble than they had been. But again, look, I know it’s a closed, it’s a closed society.

They’re able to control so much more than we are. Again, as, as an open, free trading, free trading system. So I get that, that, that is what explains the fact that their 10 year yield at their debt is yielding so much lower than ours is. But it still, it just highlights how what’s happening in China, number one, cannot be trusted. And number two, it’s a scam of a country. It, I mean, first of all, trust me, if you’ve been to China, I have, you know, a couple things. They work harder than you can believe anyone can work on a regular basis. Okay.

And I’ll tell you something else. When I was there, I’d spent, just before I got there, I spent 10 days in the Philippines. Just the warmest, nicest people, love Americans. And then I went directly from there to China. I don’t remember a single Chinese person making eye contact with me. They don’t like Americans. They want to beat Americans. They work towards it.

[00:06:13]:
That’s their goal. So they’ll take a lot of pain. That’s why I think if Trump or anyone in the US Administration believes that we can melt down their system by putting tariffs on, that’s just not the way they work. They’re built to withstand all of that. But the point being, they’ll do whatever it takes to beat America. They’re working as, as a finely tuned machine. And they are, they are a machine together working to beat us. That is what their goal is.

So this is not going to be easy to do, but at the same time, it’s a communist country that is a paper tiger because their debt is, they have so much debt, their system is held together with, you know, with almost like a chicken wire. Okay. And so it wouldn’t be hard if we wanted to. And I don’t think this is what Trump wants to do. It really wouldn’t be hard to crash our system with a little creative financial engineering to be deployed in that country. But again, that’s not what we want. Second largest economy in the world. We want them to be a participant.

We want them to be an honest participant in the global economy. Of course, that is not what they are, which is why we back what Trump is doing with his tariff policy. Again, the rollout was reckless damage done to the US Economy. That really wasn’t necessary, frankly, because the way he rolled out, poorly thought out. There’s no coordination with other US Entities to help Americans deal with this. That’s still not the case, by the way. So there are questions about this. Of course, we’re about to see the end result of these empty ships that have been coming into the US now are half empty.

[00:07:57]:
We’ll see what kind of an impact that has on our shelves. Remember, it was Walmart, Amazon CEO, Home Depot CEO and others. They met with the president shortly after he announced his tariff policy. That told him privately, you launch your tariffs as is and we’ll have empty shelves this summer with much higher prices. And that’s when Trump announced a pause on his 90 day pause on his tariff policy because he listened to them and he does what he does, he pivots when he believes it’s necessary. So I think most of us believe that Trump is going to come to some kind of a grand deal on tariffs. The market’s certainly trading that way at this point. If he doesn’t, then we’re going a lot lower.

But again, I think most people understand that. They know where Trump’s pressure points are. They know that he pivoted when he needed to and that he’d do it again if he has. That’s at least what the markets believe now. And I think that probably is right. We believe the lows are in. It’s still assigned a 25% chance that we could have a retest of the lows. Again, very 25%.

Tyler reminded me it’s not a small percentage, but that’s because a lot of damage was done. And we can still see if Trump goes back to 145% tariffs on China and remember other countries as well, then we’re going lower. And the question is, do we have a double bottom or do we at least retest those lows that we had just about a month ago now? So just as a reminder, though, as I wrote this morning, now we have some experience with this, don’t we? We had a four to five week bear market in 2020 during the pandemic only five years ago. To me, it Seemed like it was longer, but it was five years ago. And when that got resolved, we were back to all time highs again in August of that year. So you know, that was essentially a V shaped recovery. And of course that was also helped by a lot of stimulus. We had $5 trillion in stimulus, we had $4 trillion in quantitative easing, $9 trillion forced into the US economy.

[00:10:11]:
It’s no wonder that the markets skyrocketed. Also no wonder that we had inflation at 41 year highs as we did. Remember, a lot of that was Trump’s doing as well. You just can’t blame Biden followed that. But of course he gets most of the blame. But it mostly was Biden’s. But Trump played a role in that as well. But again, the key point being if we get the leading groups going that we want to see get go, want to see going, and that’s the semis and leading stocks like Tesla, if they start leading and we start getting back the 200 day now, we, and we need to see the 200 day because right now these 200 day moving averages have all rolled over.

That’s another technical negative. If we get these things to start flatlining and moving back higher again, again, there’s no reason why we can’t also be back at all time highs later this year. And our view really is that as we wrote this morning, this is not the time to be myopic. You know, we’re focused now on looking past the short term and focusing on where we’re going instead of where we’ve been. Because without question, everything we wrote in the big bribe, the innovation revolution, our five big bribe megatrends, and yes, the roaring 2020s is still in place. And we think that when we look back on this, it’ll be the millennial retail investors, the Mrs. Watanabes that have had this right all along and buying the dip. We just got to get through this period of uncertainty.

I think in a worst case scenario, we’re looking at that happening in late Q3, early Q4, because if you know Trump at all, you know this is his legacy term. This, this is it. He ain’t running again. Everyone can speculate about that. That’s not going to happen. So this is it for him. And if you know Trump at all, you know that, yeah, he loves to be president when the stock market’s soaring. It’s all he talks about when he’s president in his last term when the market was going higher.

[00:12:00]:
Who wouldn’t love to see that, right? Any warm blooded human Being that’s president, they’re all megalomaniacs, by the way. They would all want to see it and Trump especially. So our bet, and it’s a strong wager we’re making here, is that we get past this year. And again, I doubt that it’s going to take the full year to deal with this. But just think about the remaining three years, okay? There are many three years of Trump’s administration we think will resemble a full on stock market melt up. And so that’s what we’re focused on, getting past the next couple of quarters, making sure our positions are in place, adding where we need to, taking profits where we need to make sure we’re heavily invested in sectors that we think are going to really benefit, like precious metals and miners. Okay. Which have been on a real tear.

We think that’s going to continue as well. So that’s what our focus is. That’s our approach here. And again, the Fed today, I’ll just tell you a couple points. Powell said there was no change, as I’m sure you heard by now. So we have an effective funds rate of 4.33%. Pal said on more than 30 occasions that we’re in no hurry. We’re in no hurry.

The risk are definitely rising and rising on both of the Fed’s mandates, which is prices and employment. So they’re rising on both sides, which means they think the economy’s in solid footing and that the economy is not. We don’t need to worry about it. So this is the third straight meeting they’ve let the Fed funds rate unchanged again, effective rate 4.33%. As Powell reminded us, they have cut rates by a hundred basis points of 1.4percent prior to this pause in the rate cut policy. But with China cutting, with Europe cutting, we believe that US will have a rate cut next month. Now, that doesn’t give the Fed a lot of time to message that and they really like to message the rate cuts. But it won’t be at the June meeting, it’ll be at the July meeting.

[00:14:03]:
Okay, but, but it is coming. And that means we have a, a, a global rate cutting environment. And if you know anything about stock market, you know the stocks love that kind of environment, especially when the economies are in good shape. So we’re setting up for a very good second half of the year as long as we don’t get any unpleasant surprises. All right, let’s take a look on the hood today. Pretty good day for the internals, actually, which stayed positive throughout most of the day. Today and finished that way as well. Quick refresh here, quickly here.

One and a half to one positive for advanced decline. Both NYSE and Nasdaq volume today positive. Not by a lot on NYSE, 54% positive. Nasdaq was, what is this? 64% positive for Nasdaq. And we had about 50 more. Stocks hit a 50 week low. That hit 50 week high, but again, not a bad day today. We were lower of course this morning in Nasdaq and our sector watch today.

Uh, what is this? Yeah, good day here as well. Eight sectors finished higher, three finished lower. Not much on any communication services was down 1.8% because Google was down. Last I saw was, let’s see, Google was down 7% today. I guess the word is that so many people are using AI like our favorite Grok, that Google, that searches on Google have declined for the first time, if I got that story right. And of course that’s a huge part of their business. Google last trade now down right at 7% on the day. That would be a shock to the system for Google.

[00:15:39]:
So we’ll have to see how that plays out. Of course, advertising is the, is the, the, the key, the key word there. But that’s why communication services down today. Otherwise not a lot happening. Consumer discretionary up 1%. Technology also up 9, 10, 1% again eight sectors higher. Three finish lower on the day. In our commodity watch today, gold giving back some of its gains from yesterday down right now 50 bucks an ounce.

It was up with 100. And if the close up to 120 yesterday at 3372. Love the chart of gold, love the chart of the miners here. Silver today down a little bigger, 2.3% at 3261. Copper also down today. Copper down 3.3% today at 461 a ton. Excuse me, a pound. I did say silver and ounces, not pounds.

Right. I’m remembering saying it differently. Gold and silver both stated announces. In case I need to repeat that, copper in pounds, crude oil today again lower again down a buck. Just over a buck a barrel. 1.9% at 57.97. The fact that Jay Powell is not talking about the decline in oil prices tells you to a large degree what a fraud he is. We’re not going to have a sharp rise in inflation.

[00:16:52]:
We are not going to have it. Prices are coming down. He’s doing this because it’s get Trump, you know, again, this is 2018 again and it’s, you know, his term cannot end soon enough. Trump of course, has backed away from saying he’s going to try to fire him. But we got another year to put up with this guy and I guess. I guess we’re just going to have to get through it. At the end of the day, it really shouldn’t matter that much. But, yeah, interest rates should be one full percent lower than they are right now.

This is another. This makes five policy errors that Powell has made since he got the job from Trump in 2018. So again, crude oil down 5797 last trade. And Bitcoin today. Bitcoin up on the day last 24 hours up 2.5% to 97,000. Even you just can’t keep it down. Remember, you look at the chart, you’ll see what I see. Bitcoin on last Thursday hit extreme overbought on steroids.

Our most overbought designation. Well, it’s also right into an area of very heavy resistance. Now, the way bitcoin trades, it could just blast through this overnight for all I know. But still, technically speaking, it is. It is trading into heavy resistance and it is extreme overbought levels. So we’re just being patient here. We’ll keep you, of course, in the loop. As things change, we do have some other changes we wanna make.

[00:18:12]:
The portfolio as well when we re add bitcoin to the portfolio. All right, folks, that’s it for the day. Hope you had a great day and even better night. We’ll see back here again tomorrow after the close.