"Kip's VRA financial newsletter is a MUST read for every saavy investor in this country. Disregard it at your own peril. His mantra is my mantra. Kip Herriage's newsletter is my financial Bible."

--Wayne Allyn Root
2008 Libertarian Vice Presidential candidate
Author, "The Conscience of a Libertarian"

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Journal Archive
Twitter: @kherriage

Thursday
Sep052019

VRA Weekly Blog Update: As Expected, September Fireworks. Key Housing Barometers at New Highs. Stunning Sentiment Readings Continue.

Good Thursday morning all. Overnight we learned that US-China trade talks are back on, with mid-level talks beginning this week and the big kahoonas confabbing next month. DJ +443 as I write.

Global markets are also in rally mode on the heels of Hong Kong withdrawing plans to enforce their extradition bill, in conjunction with Mainland China earlier this week.

We stand by our 8/29 VRA Blog Update. We even dance to it. The ramp higher is on. Fireworks to the upside.

One More time…September is Here. E,W & F style

https://www.youtube.com/watch?v=Gs069dndIYk

September, Hugely Important. I Expect Fireworks to the Upside

Here at the VRA we’re big believers in viewing the stock market as a “leading indicator” and as “the single best discounting mechanism on the planet”. This was the mindset and training of my mentors (RIP Ted Parsons and Michael Metz), who themselves learned this investing approach from their mentors, both of whom worked on Wall Street during the Great Depression. Quite the lineage, no? Not a day goes by that I don’t hear their voices and give thanks.

As a discounting mechanism, it’s my belief that the markets will (soon) begin to move sharply higher, giving us advance notice of the events that we can expect in September (do you hear the song in your head…cause I do). Here’s what September is about to deliver:

1) The ECB has already pre-announced their “Big Bazooka”, in what will be aggressive central bank policy of interest rate cuts AND the re-start of QE, or quantitative easing. The ECB meets on 9/10. Expect fireworks…with strong language from the ECB that more is to come

2) The following week (9/17) our Fed meets. While we won’t follow the ECB with a re-start of QE, we WILL have a rate cut of 1/4 to 1/2 percent, with almost certainly a change in the Fed’s language, strongly hinting that additional rate cuts are on the way.

3) and in what could truly be a jolt to the upside for markets, China is still on for a D.C meeting next month. There is little to no excitement today about a trade deal being reached (should they make the trip), which is music to my ears. Folks, we want the surprise out of nowhere….one that sends the DJ 3000 points higher over the next month. Again, the markets will almost certainly begin to discount the possibility of “some” forward movement in US-China trade.

All of the above takes place within the next 2–4 weeks. I fully expect a ramp higher in the markets in advance. It may already be underway.

Now is not the time to be bearish. Central banks are about to re-announce to the world “get your money out of banks and savings accounts. Put your money into stocks and real estate. Do it now, because if you don’t, we will keep cutting rates until you do. Do not fight us. We are the all knowing, all seeing, all powerful, masters of the universe.”

One day, central bank madness will become a massive liability. This is not that day.”

-------

The VRA Portfolio continues to outperform the markets in 2019(VRA +21.9% vs S&P 500 +17.33%). Investors remain overwhelmingly bearish, as we see each week in our investor sentiment surveys and continued outflows from equities.

Here’s the latest Fear and Greed Index Survey, updated last night.

A reading of 25…Extreme Fear…with US markets just 5% from all time highs. In my 34 years I have never seen anything like this. I’ve said it before, I’ll say it again, these ultra bearish surveys are stunning.

Know this; the investing public is rarely (if ever) right about the direction of the stock market. When investors are ultra bullish, we should be ultra cautious. When investors are ultra bearish, as today, we MUST be ultra bullish. This is how we are positioned…we remain in “back up the truck” territory.

The VRA Investing System remains at 10/12 Screens bullish. Comprised of fundamentals, technicals, internals and sentiment, the VRA System is designed to have us in the markets in advance of bull market, big moves higher and out of the markets, in advance of bear market, big moves lower.

It is important that the small caps and transports begin to act better, but with our Leading Economic Indicators flashing “economic expansion” and our housing indexes (ITB, XHB) near 52 week highs, all signs point to further economic growth.

I became a broker in 1985. Reagans tax reforms and deregulation were just beginning to fully kick in. US markets would double over the next 2.5 years, taking the global economy higher with it. Reagan went on to help create more than 20 million new jobs. The Trump Economic Miracle will be more impactful. Yes, taking down China and elitist globalists is a major battle….scars will be left…but folks, the end result will be an economic boom the likes that we haven’t seen in a generation. The Trump Economic Miracle will not only take us back to 4–5% GDP but it will power the worlds economic engines along with it.

Each point made above has been my view since Trump was elected. I may be wrong…but I tend to get the big calls right.

— — — -

Of course, after the “Russia Russia Russia” hoax and “Impeach Impeach Impeach” fraud both fell by the wayside, TDS infected never-Trumpers had to find something else to fear monger Americans about. What did they choose? “We’re going into a recession! Run…run away from the US economy as fast as you can!”

But once again, lies based in fiction rarely hold up. Folks, as we cover daily, the US economy is on FIRE! Plain and simple, we are in rock and roll territory. We saw evidence of this again yesterday, as 3 key housing sector barometers either hit new all-time highs or are now within 1% of ATH. We know what a slowdown in housing looks like…we warned and alerted extensively about exactly this in 2006–2007, as housing charts/barometers broke down just prior to the GFC. What we’re seeing today is a healthy and improving housing market. The recession hoaxers are going to have to take their crazy elsewhere.

Until next time, thanks again for reading…

Kip

Since 2014 the VRA Portfolio has net profits of more than 2300% and we have beaten the S&P 500 in 15/16 years.

Join us for two free weeks at VRAInsider.com

Sign up to join us for our daily VRA Investing System podcast

Also, Find us on Twitter and Facebook

Thursday
Aug292019

Get Ready for a September Melt Up. Thank You, Mr. Treasury Secretary. Stunning Sentiment Readings.

Roughly 3 hours after yesterdays (second) VRA Update, where we applied Occam’s razor and made our case that global bond markets are screaming at us “there’s not enough debt in the world…interest rates will keep plummeting until you issue more debt”, Treasury Secretary Steve Mnuchin announced this:

We rarely use our clout to phone the White House. Tyler and I don’t like to abuse the privilege. We were a bit surprised they acted on our advice that quickly :) (Don Jr. does follows me on twitter)

Folks, investments are driven purely by one economic law; supply and demand. When a stock goes parabolic, the ONLY reason that it does so is that there is more demand than supply. There are more buyers than sellers, meaning that there are not enough available shares and those shares must then rise in price. It is that simple.

With this economic law in mind, let's apply Occam’s razor to this crazy move lower in bond yields, in the US and globally. Aren’t the bond markets SCREAMING “there is not enough supply…we need MORE debt?”

It sounds insane…I’ll likely be laughed out of rooms for making this argument…but it doesn’t mean that I’m wrong.

When this mountain of global demand for debt starts making its way into equities, wonder what might take place in our stock markets??

VRA System Update

Each week we welcome new members to the VRA…great having you with us! The following is an excerpt from Tuesdays VRA Update. This is how we’re positioned…we believe you should be aggressively long. The best discounting mechanism on the planet is kicking in. DJ +327 as of writing this.

“September, Hugely Important. I Expect Fireworks to the Upside

Here at the VRA we’re big believers in viewing the stock market as a “leading indicator” and as “the single best discounting mechanism on the planet”. This was the mindset and training of my mentors (RIP Ted Parsons and Michael Metz), who themselves learned this investing approach from their mentors, both of whom worked on Wall Street during the Great Depression. Quite the lineage, no? Not a day goes by that I don’t hear their voices and give thanks.

As a discounting mechanism, it’s my belief that the markets will (soon) begin to move sharply higher, giving us advance notice of the events that we can expect in September (do you hear the song in your head…cause I do). Here’s what September is about to deliver:

1) The ECB has already pre-announced their “Big Bazooka”, in what will be aggressive central bank policy of interest rate cuts AND the re-start of QE, or quantitative easing. The ECB meets on 9/10. Expect fireworks…with strong language from the ECB that more is to come

2) The following week (9/17) our Fed meets. While we won’t follow the ECB with a re-start of QE, we WILL have a rate cut of 1/4 to 1/2 percent, with almost certainly a change in the Fed’s language, strongly hinting that additional rate cuts are on the way.

3) and in what could truly be a jolt to the upside for markets, China is still on for a D.C meeting next month. There is little to no excitement today about a trade deal being reached (should they make the trip), which is music to my ears. Folks, we want the surprise out of nowhere….one that sends the DJ 3000 points higher over the next month. Again, the markets will almost certainly begin to discount the possibility of “some” forward movement in US-China trade.

All of the above takes place within the next 2–4 weeks. I fully expect a ramp higher in the markets in advance. It may already be underway.

Now is not the time to be bearish. Central banks are about to re-announce to the world “get your money out of banks and savings accounts. Put your money into stocks and real estate. Do it now, because if you don’t, we will keep cutting rates until you do. Do not fight us. We are the all knowing, all seeing, all powerful, masters of the universe.”

One day, central bank madness will become a massive liability. This is not that day.”

— —

AAII Sentiment Survey

26% bulls, with the markets just 4% from ATH. Not even sure stunning is a strong enough word.

 

10/12 VRA Investing System Screens Bullish…back up the truck.

And how about this; as of yesterday, the yield on the S&P 500 is now greater than the yield on 30 year treasury bonds. The last time this occurred? March, 2009. The bear market lows, following the GFC (which we nailed within minutes).

— —

So you are ready for the good times to come…”September” by EW & F

https://twitter.com/KHerriage/status/1167026299455660032

Until next time, thanks again for reading….

Kip

Since 2014 the VRA Portfolio has net profits of more than 2300% and we have beaten the S&P 500 in 15/16 years.

Join us for two free weeks at VRAInsider.com

Sign up to join us for our daily VRA Investing System podcast

Also, Find us on Twitter and Facebook

Thursday
Aug222019

RECESSION FEARS? Uh….NO. Housing About to Get Hot. Miners, Major Buy Signal.

Over the last few days Tyler and I have fielded a ton of questions, from VRA Members, friends and family, about the 24/7 news coverage about “the coming recession” in the US. How could anyone miss it…the media would love nothing better than to topple Trump, even if it means enduring a painful recession that could cost millions of Americans their jobs. Personally, I find the medias behavior disgusting. It’s exactly this type of fake news reporting that keeps investors bearish and out of stocks. It explains why the latest AAII Sentiment Survey (updated last night) shows just 26% of investors bullish with a huge 39% of investors bearish. As contrarians, we know exactly what this means; back up the truck and buy, buy, buy.

The VRA Investing System was built to spot economic booms and busts, and spot them early. Just yesterday, both ITB (Housing Construction ETF) and HGX (Housing Index) hit new 52 week highs. The media seems clueless to this fact, so we’ll report it for them; there has never been a recession in the US when the housing market is solid. Housing is THE leading economic indicator. Today, with two leading housing indicators flashing “strong buy”, the market is doing its job as a discounting mechanism….it’s telegraphing what’s about to take place; the US housing market is about to get hot.

Because housing leads (everything) economically, we see the possibility of a recession as “very slim”. The VRA Investing System remains at 10/12 screens bullish. We continue to see a major move higher into year end. Our DJ 30,000 target is unchanged.

And more evidence that the US economy is rocking and rolling. Trucking tonnage is +7%, year over year, in July. Folks, that’s another new all time high. #NotRecessionary

Now, we look for the transportation index and small caps to regain their 200 dma.

NEXT UP: Mega Global Stock Market Rally

Again, the all clear was given on US-China trade war last week. Recession, in the near term, is a laughable prospect. As the single best discounting mechanism on the planet, markets are about to roar higher. It started this weekend with China announcing a massive easing program and continues this week with Fed Chair J Powell speaking at the annual Jackson Hole meetings this week. Rate cuts are coming…we’re talking coordinated cuts on a scale the world has rarely seen.

The ECB meets on 9/12. Late last week they tipped their hand (aggressively), with the statement that they’re about to launch the “Big Bazooka”, meaning significant rate cuts and the re-launch of QE. Germany, the largest country in Europe, has historically stuck by their commitment to keeping debt/GDP at no more than 35%. Beginning next month, fiscal conservatism begins to go out the window.

Following the ECB, our Fed meets on 9/17 with a rate cut of .25-.50 a certainty. More importantly, we look for the Fed to change their language from the last Fed meeting when they state that we are now in a cycle of rate cuts (not merely just a mid-cycle adjustment).

Don’t fight the tape. Don’t fight the Fed.

Know this; all of the fears out there serve as a BIG “wall of worry”. Markets love to climb them. There will come a time…likely with the DJ at 40,000 to 50,000…that the public starts to forget some of these indelible marks. The fact that we have a fake news media that only stokes fear and divisiveness elongates our mental recovery process.

PRECIOUS METALS/MINERS STILL ON MAJOR BUY SIGNAL

Our most important technical buy signal in PM’s/miners continues to flash “strong buy”. The 13 year downtrend line has been broken (miners to gold)..this is when this group gets red hot. While not a ST timing signal, a better than 2:1 ratio tells us that smart money is aggressively buying the miners. This only happens when gold/silver are in full-on buy signals.

In my career, this level of outperformance by the miners is the biggest buy signal of all. Keep buying PM’s and VRA Buy Rec miners. Multi year massive move higher is in process.

 

Until next time, thanks again for reading….

Kip

Since 2014 the VRA Portfolio has net profits of more than 2300% and we have beaten the S&P 500 in 15/16 years.

Join us for two free weeks at VRAInsider.com

Sign up to join us for our daily VRA Investing System podcast

Also, Find us on Twitter and Facebook

Thursday
Aug152019

Economic Data Points to Acceleration of Growth. We Repeat, No Recession. Capitulation Signals. Interview with WAR.

Good Thursday morning all. We’re in the dog days of summer. Low volume sell-offs, like yesterday, during one of the worst months of the year (August). Not even close to a big enough reason to sell. We’re also seeing classic signs of a reversal higher as the TRIN (short term trading index) closed at 3.65. Anything above 1.5 is excessive bearishness. We saw excessive bearishness in the put/call ratio as well, meaning that more investors were buying puts than calls. Both are used as contrarian indicators. We’ll repeat, based on our work, it’s likely that the lows for the year are in place.

Thanks again to our great friend Wayne Allyn Root (WAR!) for having me on his TV/radio show again last night. While sheeple are losing their heads over an 800 point down day and amid (propaganda) calls for “recession, recession recession”, WAR’s instincts are spot on as always. We’re in complete agreement; events in China have pretty much no chance of causing a recession here in the US. Here’s the link for those that weren’t able to join us; https://soundcloud.com/user-640389393/kip-herriage-live-on-the-wayne-allyn-root-show-raw-and-unfiltered

The prior guest last night was Fox news legend Bill O’Reilly. If I listened to his economic reporting on the economy and housing, I would probably be bearish as well. O’Reilly stated that “the housing industry is in a serious slide, with mortgage delinquencies on the rise, a big warning sign to the US economy….”

There’s just one problem…O’Reilly got his facts 100% backwards. Mortgage delinquencies are at 16 year lows. The US housing market is rock solid and getting stronger (as we’ve covered here often and why we now NAIL, 3 x Housing ETF):

Busy start to the day. Economic data just coming in (retail sales and Philly, empire Fed), all with “solid” beats to expectations. I’ll repeat…there is no recession on the horizon. Not even close. In the interest of time, allow me to paint a picture for you via my Twitter account:

 

If I am wrong…if an inverted yield curve is going to push the US into recession…remember these analytics;

Should a recession occur, based on inverted yield curves from 1950, a recession would not take place for 19 months and a stock market top would not occur for 12 months. In addition, the average gain for the S&P 500 (over the next 12 months) is 15%. In other words, an inverted yield curve is BULLISH..for at least the next 12 months.

Yesterdays trading also gave us a number of capitulation signals. Again, the TRIN closed at 3.65…the highest reading in 4 years. And 94% of volume was selling..another classic sign of selling pressure exhaustion. It’s mid-August folks…vacation time…light volumes, with few around to buy. We’re in bull market confirmed status. Don’t fight the tape, don’t fight the Fed.

10/12 VRA Investing System screens remain bullish. We’re still in “back up the truck and buy” territory. Make sure and login to your VRA Members Site to ensure you are positioned correctly. We are big believers in monthly dollar cost averaging. By year end, we believe you’ll be glad you did.

Until next time, thanks again for reading…

Kip

Since 2014 the VRA Portfolio has net profits of more than 2300% and we have beaten the S&P 500 in 15/16 years.

Join us for two free weeks at VRAInsider.com

Sign up to join us for our daily VRA Investing System podcast

Also, Find us on Twitter and Facebook

Thursday
Aug082019

The Most Hated Bull Market of My Career. Stunning Investor Sentiment Readings. VRA Investing System Nearing 11 of 12 Screens Bullish.

Good Thursday morning all. To give you an idea of just how out of whack investor sentiment is, with US markets just 5% or so away from all time highs, check out last nights AAII Sentiment Survey reading.

21.7% bulls (down 16.8% on the week) with 48.2% bears (up 48.2% on the week). Over my 34 years of doing this…and I’ve voted in this survey for 30 years…these readings are more evidence of our long stated belief that this is the most hated bull market of my career. Folks, this is not the sign of a market top. This is the sign of a market that wants to roar higher. Investor sentiment is that powerful of a force. 21.7% bulls are just (barely) off the low readings from the week of the 12/24/18 capitulation.

We see similar readings in the Fear and Greed Index, with a reading of 25 (extreme fear). While not near its all time low readings of 1 (yes ONE!), from 12/24/18 (the single biggest buy signal of my career), a reading of 25 confirms AAII readings just fine for us.

The VRA Investing System sits at 10/12 screens bullish…we are very close to moving to 11/12 screens bullish. If the Russell 2000 and transports were above their 200 dma, we would be 11/12 today. The VRA System has only hit 11/12 screens bullish twice in its history. In Parabolic options we added two call positions over the last two days. SMH and QQQ. It’s likely that the lows for the year are in place.

What’s the one goal of central bank rate cuts? To stimulate economic growth. Exactly how do rate cuts begin the process of stimulating growth? They force money out of bonds, into equities. With central banks cutting rates all over the world, all we have to do is follow their lead. It’s TINA time folks. There Is No Alternative to stocks.

Of course, these global and coordinated rate cuts are extraordinarily bullish for precious metal’s and miners as well. Remember this from our recent updates; the best bull markets for Pm’s and miners occur at the same time that stock markets are soaring. That’s exactly where we are today.

Note: as we return to “risk on” mode, don’t be surprised to see precious metal’s and miners take a breather. Trees don’t grow to the skies. I expect any pause will be just that. Take a few minutes to watch this video from Bill Murphy, head of GATA. Bill thinks a sizable default on delivery could be underway right now. Know this; Bill is the man. No one knows the criminality and fraud of the manipulation of the PM market better than Bill. After you watch this you will know more about the PM market than 99.9% of Wall street gurus or CNBC talking heads.

https://www.youtube.com/watch?v=BfTvQb2PZ-Y&feature=youtu.be

U.S.- China Trade

If China is the biggest risk to US markets, we have almost no downside risk. Not really….not beyond a ST (early August) selloff.

I’ve made it a point to understand Trump. Here’s what I believe is happening. Trump is ramping pressure…putting the fear of God into China. Communists back down to one thing and one thing only…power.

China has no real power. Again, not really. I’ve written about this often over the years…the only power China enjoys came from 2 decades of weak US/global leadership that enabled China’s theft of other counties GDP.

Look at whats happening in Hong Kong. Mainland Chinese leadership….Xi and team…believes that Hong Kong protests are taking place due to US interference.

They’re almost certainly right. If China takes the bait…as in another Tiananmen square from 1989…China will lose control. Protests will spread to mainland. This is a communist countries biggest fear.

Look, all of this is potentially risk off news. I’m not blind to that. But this is also when trend followers get paid. Buy the fear.

Until next time, thanks again for reading…

Kip

Since 2014 the VRA Portfolio has net profits of more than 2300% and we have beaten the S&P 500 in 15/16 years.

Join us for two free weeks at VRAInsider.com

Sign up to join us for our daily VRA Investing System podcast

Also, Find us on Twitter and Facebook