In today's episode, Kip breaks down the remarkable market recovery today and dives into a new theme we’re experiencing, which he calls “the wild west of free market capitalism.” He shares his perspective on the current state of market patterns, insider maneuvers, and how savvy investors can spot the tells that institutions and administrations leave behind. Tune into today's podcast to learn more.

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. Got some interesting things to talk about today. We had a great comeback today. I’ll explain why this statement that we are in the wild west of free market capitalism, why that matters now more than at any point before. We’re seeing evidence of that.

We saw it today, by the way. You know, you’ve been around as long as I have, you start to notice patterns and you start to, you know, once you see a few of them take place, you’re like, okay, you don’t believe in coincidence anymore, right? We saw that again today. And I think this matters. I think if you’re, if you’re an entrepreneur, if you’re in business or you’ve got a side hustle, or you just, you just love the markets and want to take advantage as much as possible, if you know the signs to look for, then your job becomes just a little bit easier. And I’m going to walk you through what I think we’re seeing right now, because I think, I think it’s definitely in place. We saw it today when Meta announced earnings, Microsoft announced. These are tells. We told you that they’d be a tell this morning.

[00:00:59]:
And tomorrow we got Amazon and we get Apple. These are tells as well. It’s not the news that matters, it’s the market’s reaction to that news. Really. No different. We saw last week with Google and Tesla. Tesla just announced a horrible kitchen sink quarter. Put everything in there and the stock only went up, what, 9%, right? It’s up, it’s up 24% since the earnings of last week, which again were pretty bad.

Google, they beat slightly. And the stock, of course, is up like 13, 14% now. So again, it’s not the news that matters, it’s the market’s reaction. That news. And I think that really matters now because of where this market is. There’s still so many bears out there. And look, this market, we told you this market could go anyway. But you still got a lot of people, especially at the news today that first quarter contracted, GDP contracted.

You get a lot of people that believe, okay, that means we’re going into recession. That means the markets have to go down. That doesn’t mean that at all. It doesn’t mean that at all. The stock market and the economy are two very different things. Right. And I think we’re about to see evidence of that. I really do.

[00:02:00]:
Because I think, I think the worst, I feel like the worst of Trump’s terrible policy is over. I think he’s pushed it about as far as he knows that he can until he had to pivot. We’ve seen multiple, multiple cases of evidence of that. Okay. It’s not just Kip Harris making something up. And so the markets now know where those levers are. They know where those, those, those pressure points are for Trump and they’ve used that to their advantage. And this is why we’re seeing the market rally now.

But look at what happened today. Again, we got negative GDP data this morning. First time in, was it three years? So we’ve had negative GDP growth and it came in negative point exc. Negative 0.3%. Just a little bit worse than was what was expected. But remember the Atlanta Fed, the Atlanta Fed was saying that first quarter GDP would be minus 2.7%. Okay. So the Atlanta Fed just missed just by just a little bit outside Atlanta Fed from your Armageddon GDP estimate.

They tend to get things wrong a lot and that’s why they’re an outlier. No one really takes them all that seriously. But still, you know, when you see it one, any, any of the regional feds put out a forecast like that, it has to get your attention because what, what if they’re right? This, right. Well, they weren’t. And I also think that because we have so much again, GDP would have been far more positive had had if it not for these stupid rules that say, okay, for your, your, your imports, your. Excuse me. Yeah, yeah, your imports have to count against gdp. Right.

[00:03:25]:
And that’s the way this works. Otherwise our GDP would have been solidly positive. So, but it did count against this quarter. But guess what that means for next quarter. It’s not going to count against. It’s going to count to the positive. So number one, I will be very. If second quarter growth comes in negative, I do not think we’re going to have a recession.

I’d never thought the odds were more than at the worst. I think I was at 50. 50. Right. And I’d say right now I’m probably 15% that we’re going to have a recession. And the market’s reaction today again is a big part of it. We opened up sharply lower today. At one point, the Dow Jones was down over 600 points.

Nasdaq down over 400 points. Of course, that’s even a much larger percentage for nasdaq. And look at the rally that took place. But again, the rally took place not because of the GDP growth number. This rally I’M telling you straight up, this rally took place because these number, these earnings numbers on Microsoft and Meta, they absolutely leaked about 30 minutes before the close. We’re seeing this happen time and time again. Okay, look, this is not meant to be a knock against the Trump administration. Every administration does this.

[00:04:30]:
You just have to know where they do it. A Biden administration did it over and over and over again with other economic releases. Right. Well, so far we’ve seen the Trump administration with first the tariff pause when Trump and his buddies got to front run the markets. Remember, we had the third best day we’ve had since World War II. Well, all the insiders knew about it. Then we saw Scott Bessant, Treasury Secretary, at his private JP Morgan event, tell all these rich Wall Streeters, really the richest of the rich, if they aren’t, then their clients are, told them that, you know what, this is not sustainable with China. In other words, this is not going to continue for much longer.

And that’s the market rallied huge for a couple days before that story leaked out. So look, all administrations do it. This is happening in this administration right now, and I believe it’s happening at the sec. Look, Team Trump has their guy in at the sec. He’s a huge bitcoin guy. Everything about this guy seems to be very market friendly, if you will. But I think what it really tells us more than anything is in a broader scope is that we are in the wild west of free market capitalism. And to some people that’s going to be a bad thing.

[00:05:41]:
But if you’re like kind of a, you have like a Gordon Gekko mindset where greed is good, then guess what, congratulations, because this is your era, your people are in charge. I mean, this is, you can fight it or you can say, okay, this is the way it is, you know, tilting and windmills. I’ve done a lot over my lifetime, hadn’t always worked out too well. It’s just a big waste of time in most cases. Right. But in this case, look, we’re in the market, we want to beat the market and we need to know the signs to look for this today. What happened today, the clearest sign in the world again with Bessens sign and what Trump and his buddies told each other privately about the tariffs being paused. This again happened today because these market, our markets are still down Sharply with about 30 minutes left, right? A couple hundred points of the Dow Jones.

Next thing I know, I looked up and we’d gone from negative 200 to plus. I looked away for a couple of Minutes. Okay, so the word without question in my mind unless we find out another reason why earnings results of Microsoft and Meta were leaked. And of course they were big beats Microsoft right now, which is of course the king of enterprise software. Microsoft now is up 6%, up 25 bucks a share on the day after hours. And Meta is up, it’s up even more than it was earlier now up four and a half percent, up 25 bucks a share. And going through the earnings report, I mean they both beat solidly beats on top and bottom line revenue and earnings and then capex, this is really what people have been looking for. We, we looked for it last week with Tesla and Google and there were no reductions in capital expenditures.

[00:07:18]:
Same thing here. Matter of fact, Meta is increasing their, their capex from $64 billion a year to $72 billion a year. That’s a solid increase. Microsoft is going to announce their, their guidance for CapEx in the earnings call which I think is starting here in about, about 30 minutes or so. So, but again, just based on when the stock is reacting, I can promise you there is no reduction in catbacks. This is really kind of the thing. This is what everybody’s looking for because if the AI story is in trouble, the first place you’re going to see it is going to be in CapEx. Well, the first place you’ll see is the share price.

And because these stocks have been hit so hard, that’s what everyone’s been concerned about. Right? But the next place you’ll see it will be in the, in the company releases talking about capital expenditures. They’ll start reversing or declining. You’ll see signs like that. Folks, we’re just not seeing that. That is not it doesn’t mean it can’t happen going forward. There’s still a lot of companies to report, but these are the, these are the max 7 names and it’s not happening here. These are the key players here.

[00:08:16]:
And of course we’ll find out a lot more Nvidia reports, but that’s not till late May so we got, we have some time to wait there. That stock also rallied sharply Yesterday, now up 3% after hours. We like that name here as well. But yeah, get used to this theme. It’s the wild west of free market capitalism. You don’t have to participate, but you should get accustomed to it. And for you creative and aggressive business people, I think you can get away with a lot. I really think you can get away with a lot.

A lot of things you couldn’t have in the past. I think that’s the world we live in now. I’m not encouraging to do anything that might be illegal by any stretch, but there’s a line and there’s a gray area. And I’m just telling you this is that market where you’re going to see a lot of you’re just not going to see regulation apply. Trump’s a big deregulation guy anyway, so we already kind of knew that was going to be the case. But as Todd and I were talking about for the podcast, if you really want to be able to push, you know, your, your luck as far as you can join this new club. What do they call this? Trump’s new $500,000 membership club. Join that club as you’ll get to get to go to D.C.

[00:09:26]:
$500,000. You get to go to D.C. a couple times a year, hobnob with Trump and his and we’ve talked about it. I doubt we’re gonna do it. It would probably be hugely beneficial if you would. I’m gonna have to talk to Wayne about this if he gets a bit of a discount on the membership fee. But again, this is the world we live in now and I think that’s just something we should get used to and to find a way maybe to take advantage of it in a way that doesn’t get us in trouble. Right.

But again, good rally today from the again sharply lower open this morning. Dow Jones finishing up 3/10 of a percent, up 141s P500, up 1/10 of 1% and did finish down 6/10 of 1%. Nasdaq had flipped to positive and just went slightly negative in the after hours. Of course, tomorrow it won’t be tomorrow. You’re going to see big gains in tech stocks tomorrow morning. Nasdaq finished down 14 points of the day. Vix is somehow up 2% right now at 2470. That won’t last.

And the 10 year yield again, after hitting 4.51% couple weeks ago, now back down to a 4.17%. What the markets have realized is what we’ve been talking about here, the markets are recognizing the bond market certainly is, that the economy is slowing because there’s no quite we see it in all the data. There’s almost no data that we don’t see that in. So that’s just a fact. That’s just the fact of fact of the matter. But 10 year yields should be nowhere close to where they are now. 10 year yield 4.17 right now, the 10 year yield should be mid three and a half. The fed funds rate should be 3.33%, not 4.33%.

[00:11:00]:
That’s the effective Fed funds rate. And so look, we get the employment data on Friday. Everything we’ve gotten so far this week is pointing to an economy slowing. If we get a weak employment report on Friday, a week by the way would be, I’d say something less than 50,000 jobs created. And I have no idea because these monthly reports are just in many cases essentially made up. Okay, I would be surprised if it’s really weak. But if we do get a really weak number on Friday, then it’s going to make next week’s Fed meeting very interesting because they meet no next Tuesday and Wednesday. They on the betting markets, futures markets have them not cutting rates.

Next week they should be, but if not then it’ll be at the June meeting. Right, but rate cuts are coming and again that’s a market positive as well. As I’ve said many times, had Kamala Harris won in November, that would have never paused the rate cut schedule. We’d already had an additional, by this point, three or four additional rate cuts. You know, but it’s get Trump and that is what’s going on. When the Fed says they’re not political, it is just, I don’t know how they say it with a straight face. I do not know because we know from every Fed chair in history, you know, the private memoirs we’ve learned in, you know, books written about situations. Lyndon Johnson famously just about beat the shit out of his Fed chair who wanted rates coming down, took him into in a room and put them up against the wall and said, boy, you can do what I’m telling you to do.

[00:12:26]:
So these are very political. I’ve got a lot more stories like that we’ll find out about Jay Powell’s here probably in the decade or so to come. But it’s very political. They don’t like Trump. We know this, we know that Jay Powell doesn’t like Trump. We certainly know that Trump doesn’t like Jay Powell or at least the job. You know, Trump really, I don’t think doesn’t. It’s not that he doesn’t like people, Trump just doesn’t like what people do.

I Trump seems to be a very kind of loving, seems to take everybody. He doesn’t seem to hold a grudge based on what I can tell, which is kind of hard to imagine. But he seems to be pretty forgiving guy, pretty positive guy. So I’m sure he doesn’t hate Jay Powell, but you know, we’ve seen from the public he said it again today or last night as rally in Michigan that he is basically smarter than J Pal and he knows more about inflation than Jay Powell does. And I’m sure he’s right about that. What else today? But again it’s the, what we’re looking for now is the tell. So if we get good earnings tomorrow, right, from Amazon and Apple and we get the reaction to the earnings like we’ve had today with Meta and Microsoft, I think that, I think the coast is clear. I really do.

[00:13:35]:
I think the coast is clear. I think we’re going to be back at all time highs in the third quarter or fourth quarter of this year. And I think that’s now becoming, I think a pretty safe forecast for us. I think this was pushed about as close to the breaking point as it could get. We almost had a market crash. We came very close to the market crashing and then again some very well placed leaks prevented that from happening. One more thing before I get to the rest of the internals. Remember we have a wide breadth thrust in place as well as we’ve been covering since last Thursday.

This is important. If you’re new here, jot this down because when we had this in the past it only happened 16 times going back to 1950. Zweig breadth thrust, named after the great late, great Marty Zweig. It’s basically a moving average, a 10 day moving average of, of advanced decline. Okay. And when it goes from one extreme to another over a 10 day period, which it just did, then the market’s higher. Six months later better than 13%. 12 months later better than 24.

[00:14:39]:
I think that’s, that’s close anyway, working from memory here and the market’s never been lower, not once over six months or 12 months going forward. 16 out of 16 times the market’s been higher and a lot. So I think that’s again, that’s a repeating pattern that we can put money on. Okay. And that’s really the, all these, all these things are starting to add up as you can hear what I’m saying here. Combined with the fact we got the free market, the wild west, free market capitalism, I think that all systems are go again and we might have some more hiccups. We might have a shakeout we had this morning and shake out this morning, a little scary. It won’t be straight up, but I think the dips are going to be buying opportunities again.

And I think we’re seeing more and more evidence Think about this. The smart money hours over the last two weeks have been nothing but good. Okay? Internals, they weren’t good today, by the way. But you know, again, it’s why breadth, thrust is based on good internals. We’ve had solid, solid internals essentially every day. And so these are all the signs we look for a smart money hour. Good internals, semis leading. And semis led aggressively last week.

[00:15:41]:
Today they were lower. Let me see where they semi right now. Up 1.4% on the day. I think that’s the after hours report. You’re seeing that from Meta, Microsoft. Okay, all tech is reacted. Tomorrow’s open, should be very good unless something surprising happens overnight. One more thing that I think is of interest.

You know these two companies, right, that I have no sympathy and I would never buy either one of these stocks. I don’t, I don’t, I don’t frequent them. I don’t buy stuff from them. And my guess is most of you don’t either. I used to love Starbucks, right? I used to, I used to love Starbucks. I don’t go there anymore because they, they, they, it’s, it’s go get woke, go broke. You know, Starbucks all of a sudden hate or hating on cops. If you voted for Trump, they spit your coffee.

You know, I mean this was, they, they, they, they, they were proudly hiring people that were far left. And you know, it’s just. Why, why, why would you do that? Why do you want to break your business model? And that’s what they’ve done. Nike is now, excuse me, Starbucks now is down 35% from its recent highs. Nike is down 68% from its highs again. Nike, same thing. Get woke, go broke. What did they do? Well, they embraced football players taking a knee for the national anthem.

[00:16:56]:
Nike’s one of the big reasons. They stopped playing the national anthem at football games because they have so much power. Nike essentially ran the league for a while. That’s not happening anymore. Colin Kaepernick gave him a huge contract because of racism. He’d be starting if he was white anywhere else. How funny is that? They’re calling racism now versus Sanders not getting drafted to the fifth round of the draft when it has absolutely nothing to do with race. 60% of the NFL is black.

The first person taken in the draft was a black quarterback. So again, it’s such a stupid argument, racism. You know what, it’s been used so, so, so much that the word no longer has a meaning. But again, to be able to watch and see what the end Result, this should be taught in business school all over the country that if you, if you get woke and go broke, and it works both ways, by the way, you can be extreme on either side. But if you do that, show this share, show the charts of Nike and show the chart of Starbucks and what the end result is. And I wish both of these companies nothing but the worst until you apologize publicly for being idiots. Your public companies, you answer only to your shareholders. You answer to nobody else, just your shareholders.

[00:18:09]:
Your job as management of these companies is to make as much money as possible, right? That’s your only job. Not to send social, social messaging, you know, cultural awareness programs. I know that’s not your job at all. So again, very good to see. I threw all my Nike stuff away a long time ago. Again, Starbucks. If I’m at an airport, yeah, you know what? I do like the coffee, okay, If I’m at airport, I’ll get a Starbucks. But otherwise I was a loyal customer.

My guess is so were many of you and they just basically gave us the middle finger. So good to see their stock prices reward them for their stupid behavior, right? All right, let’s take a look under the hood today. Again, the internals were not great today, but they have been so solid. I don’t think it’s that big of a deal today again, we got such a bad open this morning. Today we finished though, NASDAQ advanced decline just barely. Negative by 400 issues. No big deal. NYC negative by 300 issues.

[00:19:02]:
Again, these are, these are not big losses at all. Big comeback, by the way. I’m glad I hit refresh here. NASDAQ declining volume beat advancing, but just by $400 million worth of trading. Again, not a big deal. Now, Nyse volume was 1.7 to 1, negative. That’s a little worse, but still not a huge problem. 52 guys lows essentially came in flat today.

And our sector watch today, what is this? Seven sectors finished higher, four finished lower. The only one that saw any real action today. Again, tomorrow, technology will be up quite a bit. But today energy stocks down another 2.6% today. Really? Oils, oil’s falling out of bed. We’ll cover that just more in a moment. Oils get into the danger zone. I actually think there’s a really good opportunity coming in.

Oil just, just, just to hear me on this, because if the global economy is okay and it is right, if the tariff thing is going to get resolved and it is right, we know that the global economy is good because look at what other markets have been doing not just during this tariff tantrum we had but look before it was a global bull market with markets hitting all time highs in Europe and not Asia but of course widely throughout Europe. Well that means their economy is okay. Right? And if the US economy is not going to go into recession, even if it does, it’d be so incredibly mild. Not a problem. That means demand is going to be really strong. We know the demand will be strong. How else? Because of the need for AI. What these data centers just soak it up.

[00:20:30]:
So you’re going to see again a lot of that now is going to come increasingly of course from natural gas. Nuclear is going to play a big part of it but essentially it’s all going to drain a lot of energy. You can eat a lot of oil for that too. And so I think oil prices down here are recommended are giving us pretty good value. But more importantly than that it’s going to be energy stocks. But I’m just working that up now. The chart right now does not say buy it but I think we’ve got a really good opportunity to buy this group cheap in the not too distant future. We’ll let, we’ll keep you on the loop on that.

A lot of good opportunities there. Gold today finishing down 34 now it’s at 32.29 to me. 32.99 just under 3300 now it’s down 1%. Silver they down a little bit bigger today. 2.3%. 3251 copper today. Copper today down 5%. No clue why that is.

[00:21:21]:
I just now noticed that, tell you the truth, down 5%. Down 26 cents a pound at 460 a pound. Oil down too. That’s interesting. Right? There may be a connection there. We’ll, we’ll get the answer to that before tomorrow morning. Sorry, I don’t have that now again crude oil today was the big loser. Down 3.6%.

That’s down $2.19 a barrel. Back down to 58.23 a barrel. 55 is danger. Zone 50 is where companies stop producing. So not all companies but a lot of them. So sometimes it self corrects. Right. A company cut back on production.

[00:21:53]:
There you go. Demand may be lighter now but going forward I highly doubt that that’s going to be the case. So I think again I think we’re coming up on a very good, I’ll say buy the dip opportunity instead of catching a falling knife opportunity which is not what we want to do at all. That’s dangerous. Right. Bottom of the day. Bitcoin bouncing back after hours with the, with tech stocks. Of course, bitcoin has, you know, it really has, hasn’t it? It’s broken its trading pattern with, with tech stock, you could lay, you could lay one stock, one chart pattern over the next between tech stocks and, and bitcoin.

And it looked like the same chart. That didn’t happen this time. Tech stocks got smoked. And bitcoin, it did get hit at first, but it bounced back so quickly. This decoupling really does look to be true here. I’ll. Just as I said yesterday, this is the final point I’ll make here. I, I can’t find anyone that doesn’t like bitcoin. And that worries me. Well, I, I ask a lot of people. Every single person I asked says, oh, yeah, I love bitcoin. Here. I, I don’t. That’s different. That’s different, right? There used to be so many haters. People didn’t believe in it.

[00:23:04]:
It was a scam, all this kind of stuff, right? It was, it was the next to tulip, right? And I don’t hear that anymore. I get nervous when everybody’s on one side of it. And right now everyone appears to be on the side of being long bitcoin. Other than that, I love everything else about Bitcoin. Last trade. 94. 613. All right, folks, that’s it for the day.

Hope you had a good day and even better night. We’ll see you back here again tomorrow after the close.