In today's episode, Tyler breaks down a rollercoaster day on Wall Street that saw our markets open higher before finishing near their lows of the day. Amidst negative headlines it can be tough to find bright spots, but Tyler highlights the underlying strengths: double-digit earnings growth, new manufacturing booms in the U.S., and signs of a generational bull market in the making. Tune into today's podcast to learn more.

Don’t look back because the market is closed. Good Thursday afternoon, everyone. Tyler Herriage here with you for today’s VRA Investing Podcast. Hope you all had a great day out there today. If you’re a long-time listener here of of the, the podcast, you know that Kip and I have a long running joke that, uh, he gets the big up days and I always seem to get the big down days, the days when you’re in the middle of a pullback that end up marking the bottom, the worst of the worst. Uh, you know, this— so far this year I’ve already been lucky enough to get quite a few big up days as well, some days of all-time highs. So, you know, we’ll take it as it comes. Uh, overall still some very important high notes that I want to touch on, uh, today in this market.

Certainly some bright, bright spots even on a day like today where we did finish, you know, close to the lows of the day today, really almost across the board. We started out the day, uh, you know, looking pretty good. Um, and I’ll get into all the news that kind of shook the market up throughout the day today. Of course, you know, some AI news, more innovative disruption, which, uh, you know, as far as the innovation revolution goes, disruption is more of a feature than a bug in the long run and something that you don’t mind seeing. Uh, so if you can look beyond what we’ve been talking so much about lately, Kip as well, if you can look beyond the psyop of negativity that really pervades everything that you’re a part of, from really mostly the mainstream media, right? But you’ll see it all over the internet, uh, social media, uh, you know, talking with your friends and stuff too. The negativity is so easy to latch on to, right? There’s a reason why, uh, you know, the biggest email lists out there tend to be for permabears. We just call them list builders here because they sound so smart and there’s so many great reasons, you know, in research out there that you can cherry-pick data to make it look however you want, and they choose to interpret all of the bad stuff all at one time. So it does— it sounds so smart to be able to talk about all of these things, and here’s why it’s leading to a disaster.

[00:02:35]:
Uh, you see a lot of it out there, and like I said, these are very intelligent people and making great points. Unfortunately for them, the points to the upside that they’re leaving out really tell a much broader, a much bigger, a much more optimistic story. That’s our view here, at least. I’ll get through, uh, get into a lot of that here today on the podcast. So we’ll, uh, we’ll get to it here in just a second. But quickly, a little bit more about what we’ll cover on the podcast today. Uh, of course, we’ll cover our markets, the internals, and some interesting movements from our sectors on the day. I got an interesting chart to show for you there too.

And then what this latest pullback has done to sentiment. You know, it might— may not rock you, where, uh, these fair-weather bulls at the beginning of the year who, you know, were all looking for a big 2026— where have they gone now? Um, so we’ll get into that. And we’ve got some economic data coming back tomorrow as well. We’ll get inflation data, CPI data coming out, where we’re seeing, of course, once again here, a big difference in what we’re seeing from Truflation data. Uh, so we’ll get into all of that and more. Um, You know, on the economic data front, that is a good way to get started here, uh, because yesterday we got a jobs number back. Kip talked about this a lot. I won’t beat a dead horse here.

[00:04:02]:
It’s a great podcast if you haven’t heard it already. You see it also in our latest blog post. If you’re not already a VRA member, you know, obviously first and foremost, come and join us here at VRA Letter. We’d love to have you with us. But for the free side of things at kipharris.com. Uh, you know, great, great blog post out there today, uh, some fantastic writing from Kip as always, uh, where he talks a little bit more about this psyop of negativity, what we saw in the jobs data yesterday and how everywhere you looked, you know, it was a strong headline number, but the waters are muddy on what it means for this market right now. You know, you can’t just, uh, get any positivity, right? Especially when you’re seeing, uh, federal employment, federal jobs, you know, multi-decade lows. You know, for a lot of people, smaller government fans, that’s a big win right there.

While seeing job growth on top of that, man, that’s a win-win really in most minds. But if you tune in to any financial mainstream media, you can’t go an hour without hearing about this low fire, low hire jobs report and, uh, the jobs market right now. Almost sound just diminished talking about it. It’s depressing to listen to sometimes. Um, you know, that’s their way of kind of tongue-in-cheek saying that this job market is stagnant. Uh, okay. I mean, but you’re finally seeing a jobs market here. This is what Kip and I were talking about, and he talked about a lot as well.

[00:05:37]:
You go back to the last administration and they want you to think that these, these job data that they were pulling out then were fantastic. Wayne talked about this, and Kip talked about it with Wayne in his segment this week, also another great watch if you haven’t seen it yet, that under the, the Biden administration, you know, you get terrible jobs data. Really, it might look all right on the, on the surface, but the only job gains were in the services sectors, were government jobs being created, no productivity, no additions to GDP out there other than tourism on the services sector. You know, of course, very necessary jobs there. But the other main driver of jobs growth was the government at the time. Now you’re seeing an increase in manufacturing jobs. You know, they want to talk about that like it’s some kind of bad thing. So really having to watch these mental gymnastics that they jump through on something like that time and time again, you know, once you start to see what they’re doing on the, on the psyop and negativity side, once you really see it for what it is, you know, it’s Tough not to see it everywhere.

And so kind of going into the inflation data, uh, one point we’ve talked about here, why might they want high inflation data? Well, government budgets are also linked to the government’s reporting on inflation. So the higher the inflation print, the bigger their budgets will be next year. That’s a very minor reason that doesn’t get talked about a whole lot. Definitely probably not one of the major ones, especially not right now. You know, they really just can’t give Trump any victories. Right? So, you know, make the data look and seem as bad as possible. But again, back to this point of so much negativity out there, and then the AI stories of the disruption from new AI plays— and I’ll get into some of those here in a second— you know, again, part of the innovation revolution. The disruption, again, is a feature, not a bug, and will bring forward some incredible things.

[00:07:38]:
You know, there’s going to be shakeups in the middle of it, and there’s, you know, it’s going to seemingly be like today, some chaos out there, right? But if you can, you know, keep your head about you, there’s going to be some fantastic opportunities, not only in this market but in your life in general. Uh, you know, we’re optimists here, uh, maybe to a fault sometimes, but really, you know, it all comes back to— I loved Elon’s quote at Davos. And how often do you say you’d love to quote from anybody speaking at Davos? Uh, but you know, I’d rather be an optimist wrong than a pessimist and right. Ultimately, here we think this is— you know, Kip and I have talked about it so much and what this is leading to, you know, generational bull market, you know, wealth creation cycle like we’ve never seen before. And then on the very far end of it, you know, you’ve got Elon and his team looking at a society where abundance, sustainable abundance for everyone, high income essentially for everyone, and You know, we’ll see what it takes to get between where we are today and then. But among all the negative stories out there, you would find it hard to see a whole lot of optimism if you’re just, you know, tuning into kind of the mainstream media, following on social media. But today during lunch, I got a little bit distracted actually, uh, even right before doing this podcast today, uh, by going back some clips of this. But during lunch, turned on for a second the, um, the xAI team all-hands video is like an hour-long, uh, uh, all-hands call for them where they’re going through all of the different areas where they’ve come from the beginning and where they want to go from here.

[00:09:15]:
And I mean, some of this is just so impressive of what they’re doing right now. But you go back again, I’ll get to it here in a second, but you go back to the, the headline stories, right? The transportation that they have, a new AI comes out and is going to reduce headcount by thousands for logistics companies, right? That’s it. Transports— Dow Transports were down as much as 5% or more earlier in the session today. I’ll touch on that with our markets, uh, but that was the latest, um, example of, uh, you know, uh, destruction from AI. Obviously it’s been the software stocks leading the way lower, um, and just being decimated, right? So you’re hearing, all right, the software stocks getting destroyed, now it’s logistics— logistics stocks are being destroyed. The next article was that white-collar jobs are being destroyed in finance, law, medical fields, all kinds of different things, right? All jobs will be gone in 12 to 14 months. Then a post about how AI scams will be so prevalent in 6 months that You won’t even be able to use your phone, right? Your phone number won’t work, your email won’t work. It’s all just going to be flooded with spam, will be unusable.

That actually was from, you know, the, the lead product guy at X, Nikita Beer. You know, maybe a little bit of a promotion there for X’s chat feature, which is encrypted. So totally different. Maybe they’re promoting, you know, hey, you want some backups on their, on our systems here. But I guess that’s kind of a good segue into the optimism story that really does begin with the— this XAI All Hands, because it’s so encouraging versus everything you hear all day about destruction, stock prices falling, you know, despite good earnings, right? We’ve got double-digit earnings growth from the fourth quarter, right? We can’t forget that. You’ve really got to remember your fundamentals at this point, which is we’ve got, you know, the one big beautiful bill really coming to effect this year, tax cuts coming into effect this year, deregulation hitting on a whole nother level. As well. So we’re really in the early innings of the Trump economic miracle 2.0.

[00:11:28]:
You can’t forget that right now. It’s really tough to have, you know, a brutal bear market when you have double-digit earnings growth. Um, so that’s why— another reason there why we look at sell-offs like today as opportunity. Um, so you can’t forget those fundamentals amidst the bearishness out there. And then you tune in to this X AI All Hands, and it’s just Wow, look at what we’ve been able to accomplish in the last 3 months, 6 months, a year, and look at where we’re going, going next from here. It’s the optimism of how we’re going to solve all the problems that I just listed above, right? What people will be doing solving real-world problems and how we’re going to increase productivity by 10x in the next year. And we’re not only going to have double-digit earnings growth, we’re going to have double-digit GDP growth. Because of this.

Okay, that’s the flip side of the coin that the pessimists don’t want you to think about. That they want to win in a world where they can— you know, I love this quote. I think Charles Payne might have been the first person I heard say it, is, you know, everything’s in a bubble is a, is a, like, a code sign for I’m not invested in stocks. Um, everything’s a bubble when you’re not riding it, right? Um, but again, the upside here the problems that we’re going to be solving from medical, um, you know, why not on the legal side to make things simpler? But of course, the very exciting ones, things like space exploration, um, one thing that they’re— the XAI team obviously has been talking a lot about, if you’ve been paying attention to it, is orbital data centers, things like this, things that have never been attempted before. These are incredibly exciting things They’re going to increase productivity around the US. You know, there’s going to be disruption and seemingly chaos amidst all of this. You know, just, it’s a, again, it’s a feature of innovation. But on the other end of this, I think somebody summed it up, and I probably, I’m blanking on who it was, but really On the other end of this, mean, I this is what, what Kip and I have been talking about a lot though.

[00:13:42]:
Um, you’re going to see dreams come true. Absolutely. Things that you never thought possible before that not only that you could do, but that we could do as a society as a whole for businesses, for individuals. Um, you know, be able to pursue the things that truly matter, uh, and not getting caught up in the minutia of it. The enhancements that we’re going to see in productivity coming in on the backside of this, again leading to more massive earnings growth. As Kip and I have talked about a lot, there’s really never been a point in history where innovation didn’t create more jobs than it destroyed. All right, you could go back to the, the origination of the car, uh, and headlines in the papers, you know, is going to destroy the horse and buggy industry. Um, I always like to share— there’s a— I should have saved the photo for today, but There’s one of somebody, or like 4 guys, you know, in the 1900s setting up bowling pins.

And the kind of the, the comment on it was like, who’s really missing this job today, right? All replaced by automation. Um, so again, long, long way around it. Uh, we think there’s so much good ahead of us here. And what we see for this market, let’s bring it back home now, has been the weak hands have been dropping off quickly coming into the year. You know, they’re saying like 95, 100% of analysts are bullish on this market. Well, where are they today? You see some bulls out there, the, the ones who are really good at what they do. And on the other side, so much negativity. Take a look here, uh, we’ll run through a few of the sentiment indicators.

[00:15:13]:
Okay, Fear and Greed Index, you know, again, I mean, just a month ago we were at greed, now all the way down to fear mode here. Um, if we were looking at a market top. As we’ve talked about often on pullbacks like this, you’re going to remain in greed mode. And now an interesting one here that just came back overnight as well, the AAII Investor Sentiment Survey. Bulls peaked a few weeks ago, you know, not a big drop in bulls here, very bifurcated in terms of sentiment here. But look at this increase in bears week over week. That is a big increase there, all coming from neutral. They’re mostly bulls, only falling, uh, 1% on the week.

But again, Where was everyone who was calling for a bull market in 2026? Where have they gone in, in 5, 6 weeks? It’s only— we’re not even halfway through February yet. Uh, and again, great earnings numbers, but you are seeing with the opposite what you want to see. It doesn’t feel good to get earnings beats and have stocks finish lower on the day. I’ll get to some of that here in a second, but one more point on sentiment. The put-call ratio today also now starting to see some real signs of elevation from this indicator as we opened above a 1 today, which marked the highs of the day. And then we remained basically above a 0.9 all day today, finishing at a 0.94. You know, not quite extreme levels of bearishness. That’s really reserved for anything above a 1.

[00:16:44]:
Sometimes you can get to a 1.1 or a 1.2 depending on which one of these indicators you’re looking at. That’s really extreme bearishness to a whole nother level. But that’s— I mean, this is a big increase here from what we’ve seen previous weeks. Um, let’s see here. thought I I had one more sentiment factor for you. Um, you know, if I think of it, I’ll come back to it. But again, the main point here being where, where are the bulls from earlier this year? You know, we love to see on Shakeouts like this Bears getting extremely pessimistic once again. Uh, we think those are telltale signs of a bottom forming in the market.

I said this last week, right? It hadn’t been that long, uh, since I said this. Bottoms are messy, uh, through the process. We’re getting back to those lows that we saw from last week, but good news on today, those lows held so far. I’ve got a few, uh, charts to go through with that. We’ll get to it with our major index indexes here in just a second. But again, there’s so much opportunity out there right now if you’re willing to be patient for it. All right, so let’s get to our major indexes here. Before I do that, we’ll touch on some quick earnings because we did get a few more back today.

[00:17:57]:
Uh, and like I talked about, we’ve seen some beats and big downside surprises in the reaction from stocks. So some good news on the day— we got Applied Materials, which is You know, part of the semiconductor area. Wow, I had to just pull this up real quick. You know, they beat on revenue and earnings per share, so great for the semis here, just what you want to see. But the big news really for them was that they reached a resolution on— with the State Department over having illegally exported semis, I believe, into China. So they paid a $250 million penalty. People like that they Investors like they got that behind them. The stock is now up 13% in after-hours trading.

I know that it’s just, um, one area of the semis, you know, still a, you know, $250 billion market cap plus company. Uh, so not nothing out there. Maybe not be the one you think about every day, but, uh, hey, good to see here. Another earnings after the close today, very different story. Uh, Coinbase, which was down big Uh, during the day today, 7.9% on the session. Of course, hasn’t been helped by the action in Bitcoin, which we’ll touch on later in the podcast. Um, it wasn’t helped by their own earnings either here, coming in with a surprise loss on earnings per share. Expectations were for, uh, uh, just below a dollar per share.

Earnings coming in at negative $2.49 per share. Uh, so revenue also slightly missed. But the stock was up in after-hours trading, now still up 1.8%, was up as much as 5% just after earnings came out. So again, uh, you know, some minor beats here, but we’ll take it, uh, on what has otherwise really been a very, very encouraging Q4 earnings. Uh, again, despite the reactions, double-digit earnings growth for revenue, uh, companies that are more international-based, seeing way outperformance of that number as well. Something like 17% revenue growth. This is where a weaker dollar comes into play in helping those multinationals. Um, again, good to see that big earnings growth.

[00:20:17]:
This might be a little bit of the reason in there we’ve seen, you know, some consumer staples like Walmart continuing to hit, you know, all-time high after all-time high, up another 3.7% today. I’ll get to the consumer staples after the markets here. But for our major indexes on the day, the Dow Jones led the way, if you want to call it that, up one or down 1.3% to 49,451. Again, the transports, the big loser on the day today, down 5.5% at midday, finishing down roughly 4% on the session today. Again, AI fears there, as I mentioned earlier, the logistics AI that is going to, you know, reduce headcounts by thousands. Next up, the S&P 500 down 1.5% on the day today. The equal weight has continued to, uh, power ahead in some ways. It did hit another all-time high today before finishing lower on the session, down a little bit less than the S&P.

You will keep an eye on that one there for you. After that, small caps down 2% on the day today, and the NASDAQ also down 2% on the session today. Semis right in the same boat there. I mean, but started off the session right in range of all-time highs, you know. Again, kind of by— back to this selloff of negativity, not to beat a dead horse, but one other area we’ve seen that in a lot with the US pulling back here has been this, uh, you know, American unexceptionalism theme. Where have we seen that before? Well, we saw it last year just before tariff mania took place, where world indexes, specifically European indexes, were outperforming the US early in the year last year. After tariff mania was behind us, the US resumed control from that point of view. You know, I think it’s another sign really to money not leaving this market but rotating.

Again, a broadening action here, uh, not only for stocks, not only for our sectors, but international markets as well. Um, which we don’t look at as a bad sign. We think this is going to be a rising tide lifts all boats. We think at the end of the day, they’re really on the global stage. There’s unfortunately in many ways, and specifically in the AI race, there’s really only two countries playing here, and that’s the US and it’s China. Um, as much as you would love to have other competitors in there, that’s really the race at this point. And Alex Karp put it this way, that if AI is essentially, at the end of the day, can be a weapon, right? Like nuclear and uranium, uh, that has been highly refined could be used as an energy source or it could be used as a bomb. If you’re looking at AI in a similar sense, then who do you want to win at the end of the day? Is it American values, the Constitution, what we stand for, what we believe in, the— our amendment rights Or is it totalitarian government, a surveillance state like China is, centrally governed, top-down, authoritarian in essentially every way? Those are the two competing systems.

[00:23:31]:
You know, who do you want to be rooting for here? Again, would love to see Europe playing a part of it, but they’ve regulated themselves out of this competition. Not to say there won’t be winners there, um, but saying that the, the race at the end of the day is between two global powers at this point. And we think that the U.S. is in a prime position here, letting free market capitalism as best as possible take its place. Uh, we think that we’ll see some incredible innovations mostly taking place here in the U.S., and it’s great to see us building back in that way. A lot of people didn’t think it was possible to get manufacturing done back here in the US. It’s happening, happening quickly. Just another semiconductor plant was announced just north of me here in Austin, uh, Texas.

Uh, so great to see it happening fast enough. Let’s keep our pedal— the pedal to the metal here. All right, next up we’ll take a quick look at our internals on the day. Uh, not what you want to see, as you might expect on a day where we finished near the lows of the day, coming in 2 to 1 negative advance decline on the NYSE, slightly worse on the NASDAQ today 52-week highs to lows are one bright spot here for the NYSE, still coming in positive. Again, this is a lagging indicator. You know, if you’re new to the podcast, we do talk about this one pretty, pretty often here. But when you’re in the middle of hitting all-time high after all-time high, it makes sense you’re gonna have stocks hovering closer to that all-time high level on pullbacks like this. Just like at bottoms, you’re gonna see more lows still, even despite on up days.

[00:25:05]:
But we mean, we just saw all-time high for all-time high in this indicator as well, right above for the advanced decline line on the NYSE. Again, not a bearish occurrence. That is broadening action in this market, very bullish long term. Finally, volume here, not what you want to see. 70% plus downside volume for both the NYSE and the NASDAQ, unless there were some late-day revisions that, uh, may have come in here after the close. That looks to be about the case here. Again, not what you want to see, um, but again, bottoms are messy. And what we’ll see here in just a second, we’ll start to cover in our sectors, are some moves taking place where the lows have hold— have held.

And you know, for— from a chart point of view, you want to see higher highs and higher lows on things that you’re invested in. And so far, that’s what we’ve seen. All right, for our sectors on the day, we finished with just 3 out of our 11 S&P 500 sectors higher on the day. Uh, all defensive really here. Utilities actually led the way. You know, a lot of talk in utilities, you know, big benefit here of deregulation though as well. Um, whether that be from a nuclear point of view or, you know, these facilities that take years to get permitted out in order to build That’s, you know, was usually a pretty slow mover and defensive name, could have some exciting moves to play. Um, after that, consumer staples, which did hit an all-time high here today.

[00:26:38]:
Um, again, Walmart up big on the session here. And finally, the other sector higher on the day was real estate, XLRE, which actually hit a 52-week high today. Uh, the housing market as a whole ended up finishing higher on the day as well, although homebuilders slightly lower. Um, for our laggards on the day today, as you might expect, tech led the way lower. After that, we did have energy as well. Financials getting hit here again, another AI disruption story for the financial space, of course, which makes sense. But you know, Skip and I have talked about here a lot, you know, you want to see the financials participating in a bull market, but no love lost here for, for those, uh, in the sector for the most part. Uh, so no problems for us here.

Um, all right, so one chart that I did want to share here in the short term, okay, um, you would expect and probably want— I would say you want to see consumer discretionary stocks performing well. It means people are spending money, means they have spent money to spend, it means jobs are good, it means wages are increasing. Um, And on the flip side, consumer staples, as I was just explaining, is a defensive sector. So if you look at the short-term 1-year chart here, okay, here is consumer staples to consumer discretionary. Again, on the 1-year chart, big outperformance here for 2026 from consumer staples. You know, in some ways might look a little scary. You know, you got a, uh, bottom here and a higher low and now higher highs. Again, just what I was saying, you don’t want to see Now let’s zoom out a little bit here though, right? Let’s get a little perspective on this.

When you zoom out, that’s a drop in the bucket. Here’s what we’re seeing on a series of lower highs and lower lows. We think we’re getting right back to the top end of this channel here. It’s getting stretched. You’re seeing the same in relative strength, you know, at— you’re seeing similar levels of relative strength outperformance that you did at major market bottoms. Okay, there’s where this bull market began. Okay, the October 2022 lows, that’s where the peak was there. Uh, you’re going back to 2020, the COVID lows, that’s where we were there.

[00:28:56]:
Even tariff mania lows, again, similar levels of relative strength from the staples. We think that is again another sign here of bottoming action. In this market. Um, and we’ll see a reversal of this essentially is what we’re looking for here. Again, if you look at the major indexes, uh, you take— I mean, the semis are still right in their range of an all-time high. But let’s just— I’ll do it quickly here for you. I wasn’t planning on doing this, but we’ll go through it. I want to show you what I’m talking about.

All right, back to a 1-year chart here, and we’ve got some labels and our moving averages still above major moving averages here. On a short-term basis, you can see we held the previous lows, exactly what we want to see. You know, if the short term— if we do head below that in, in the short term here, we’ll deal with it as it comes. Again, bottoms can be messy, it’s not always perfect, but that’s the kind of higher low that you want to see in this situation. And the biggest hit here, of course, has been software names. You can go back a year here, again, back to tariff mania. And you’re looking at finding a low here. Again, another higher low there.

[00:30:06]:
The lows have held so far. Um, so we do think that this has come a long way. You’re also— if you zoom out on this chart a little bit, you’ll see some record-level, um, relative strength weakness here, about the levels you see bottoming action at as well. So for so many reasons, we believe that we’re early in this bull market. You know, the pullbacks never feel good in the short term. But again, if you can stay patient, you get some fantastic buying opportunities along the way. All right, let’s wrap it up here for the day. Our VRA commodity watch, where again, you know, from the opens today we saw some red on the screen.

Gold now down below $5,000 an ounce at $4,941 an ounce, and the gold miners did get hit hard today as well. Silver now at $75 an ounce. Copper $5.77 a pound, and oil down on the day as well at $62.84 a barrel. Finally here, Bitcoin. Again, hey, Coinbase up big in after hours earlier today. Uh, we’ll see if that’s the sign of things to come for this space, which has been hit along with software names really some of the hardest out there. Um, but as far as Bitcoin goes, we still remain bullish on Bitcoin. In the group, crypto really as a whole.

Um, specifically, we’ve got an AI crypto play here that we really like, uh, in this world of transformational technology. So if you, if you aren’t with us already, again, come and join us for 14 days free at vraletter.com. Bitcoin though, down 1.8% on the day at $66,186 a Bitcoin. Folks, that’s all that we have time for here today. Please be sure to subscribe to receive our podcast every day at the market close.. You can sign up at vraletter.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.