Latest / Felix Nikolas Prehn's Podcast / Banks Just told Big Clients to SHORT… + Stock Market News 19 June 2024

Transcript

Banks Just told Big Clients to SHORT… + Stock Market News 19 June 2024 · Felix Nikolas Prehn's Podcast

• 0:05
  Speaker 1: Thanks, ant.
• 0:06
  Speaker 1: Good morning to you on June 19th day, or whatever it's called.
• 0:11
  Speaker 1: No offense intended, just didn't know this was a holiday.
• 0:14
  Speaker 1: Apparently, papa Biden came up with a holiday to commemorate the end of slavery in Texas at some point in the past, which I guess it's a fair thing to commemorate.
• 0:23
  Speaker 1: But it doesn't stop the financial world from turning around and it actually gives us a tremendous opportunity to understand the market, to bust some myths that mainstream media is telling you and to go through some real trading ideas and some real investment opportunities here today.
• 0:41
  Speaker 1: So I appreciate you tuning in on your day off.
• 0:44
  Speaker 1: Clearly you've got nothing better to do and let me get cracking and share my screen with you before I offend anybody anymore.
• 0:53
  Speaker 1: If you want to learn how we make money and you are based in Europe or the UK I've heard your whimpers that you don't want to be awake at four in the morning, which seems perfectly reasonable to me.
• 1:06
  Speaker 1: And if you want to learn how we make these returns the last couple of years 2022, 126%, 2023, 105% and this year so far up on our you know teaching portfolio.
• 1:17
  Speaker 1: I call it we're up $14,000.
• 1:20
  Speaker 1: We're allowed to write that out.
• 1:23
  Speaker 1: Microsoft says no On a 30K portfolio so far this year and I will walk you through it.
• 1:31
  Speaker 1: I'll teach it to you, I'll give you the whole setup, the whole system, the whole structure.
• 1:34
  Speaker 1: Beginners are able to do this not promising the returns, but you're able to follow my system, my structure.
• 1:41
  Speaker 1: So we are running one on Saturday for you lot in Europe and the UK and for you Americans you're going to have to wait till next week, but the links are down below in the description.
• 1:52
  Speaker 1: So grab yourself a free seat while they're still there.
• 1:54
  Speaker 1: What's Juneteenth?
• 1:55
  Speaker 1: It's what I just said.
• 1:56
  Speaker 1: It's apparently the last 250,000 slaves in Texas were sort of liberated that day.
• 2:03
  Speaker 1: I think the army showed up.
• 2:05
  Speaker 1: That's what I read First time I heard of this.
• 2:06
  Speaker 1: Actually, not true.
• 2:07
  Speaker 1: I heard about this last year.
• 2:08
  Speaker 1: I just didn't Google what it was.
• 2:10
  Speaker 1: This year I Googled what it was.
• 2:11
  Speaker 1: Now there is something out from Goldman Sachs today which is what I want to run through, which is a warning but also a really nice trading opportunity, and then there are a few other pieces that sort of fall into place that I think will give us a pretty sweet setup here.
• 2:29
  Speaker 1: If you understand it and if you understand that you're probably ahead of 99% of people out there.
• 2:34
  Speaker 1: We haven't got faintest idea what day of the week it is.
• 2:36
  Speaker 1: Actually, I often don't know what day of the week it is One of the problems of not having a job.
• 2:40
  Speaker 1: You're like what day is it?
• 2:41
  Speaker 1: I don't know.
• 2:45
  Speaker 1: I thought you knew.
• 2:46
  Speaker 1: Okay, so what are we looking at here?
• 2:48
  Speaker 1: We're looking at US retail sales.
• 2:48
  Speaker 1: Right Yesterday, what was going on there?
• 2:52
  Speaker 1: Well, they're growing at 2% annualized, which is less than average, but it's not terrible.
• 2:58
  Speaker 1: But if you account for inflation, they're actually negative.
• 3:04
  Speaker 1: They've been negative for some time.
• 3:06
  Speaker 1: So the US consumer is actually spending less inflation adjusted.
• 3:11
  Speaker 1: And that's, I think, the beginning of the Goldman's thesis here.
• 3:15
  Speaker 1: And they put out something on this in April.
• 3:19
  Speaker 1: And then there's a pretty other piece yesterday or today, and this is Goldman Sachs consumers.
• 3:23
  Speaker 1: And then there's putting out a piece yesterday or today, and this is Goldman Sachs consumers, and they put out these notes and they're saying that the consumer was the most sold sector in the market all of last week by a good amount.
• 3:38
  Speaker 1: The retail group underperformed all five days of the week.
• 3:42
  Speaker 1: This really stood out to me, says this trader, and the group should have, in theory, done decently.
• 3:46
  Speaker 1: And why is that?
• 3:48
  Speaker 1: They're saying look more cautious, just stock performance.
• 3:53
  Speaker 1: You know Nike, lululemon and so on Maybe you have the pen back Nike, lululemon and you know Ulta and all those restaurants.
• 4:01
  Speaker 1: Mcd Price Pushback that's being taken more seriously, they said in April and also gas prices that just make the consumer feel kind of more cautious and poorer.
• 4:13
  Speaker 1: And then you fast forward here to the latest note, which is literally short.
• 4:22
  Speaker 1: The middle income consumer.
• 4:24
  Speaker 1: I mean, if you thought that bankers at the heart were lovely, warm and fuzzy people who cared about you, I think that headline sort of sums it up right.
• 4:33
  Speaker 1: And that isn't just an idea, there is actually a ticker for it.
• 4:37
  Speaker 1: They've created a tradable basket of stocks so it's short the middle income consumer.
• 4:44
  Speaker 1: So basically, if you're sort of middle class, you're making that sort of 50 to 100k, they're shorting you.
• 4:51
  Speaker 1: They're saying sell the heck out of that basket because we think those people are going to really, really struggle.
• 4:58
  Speaker 1: They're going to trade down the low end consumer, as you are known, down.
• 5:03
  Speaker 1: The low-end consumer, as you are known, is just in trouble Retail sales reports, slowing labor market and earnings calls, perspective on the consumer.
• 5:12
  Speaker 1: And I've been telling you some of those things like what Walmart's been saying, essentially warning of that, and they're saying our favorite trade in consumer is going short our middle-income.
• 5:29
  Speaker 1: There are three factors here.
• 5:30
  Speaker 1: One is higher taxes, higher capital gains payments.
• 5:35
  Speaker 1: Tax refunds are lower than in previous years, inflation is a little higher than expected.
• 5:42
  Speaker 1: And then saying that you know people like McDonald's missed earnings estimates.
• 5:48
  Speaker 1: Consumer became more discriminating.
• 5:50
  Speaker 1: Coca-cola saying lower income consumers are shifting towards value options and so on and they have more debt.
• 6:00
  Speaker 1: They have more debt.
• 6:02
  Speaker 1: So basically they're saying we like the middle consumer, the lower income consumer, because we think we can make money out of it.
• 6:12
  Speaker 1: So I wanted to walk you through that.
• 6:13
  Speaker 1: What would be the easiest way to do that for a normal investor like you and me?
• 6:19
  Speaker 1: There is an ETF called XLY, which is the S&P 500 consumer discretionary thing.
• 6:27
  Speaker 1: And then we have a little bit more ability to go a little deeper today, because it is a holiday after all.
• 6:32
  Speaker 1: So feel free to ask questions and, amy, I like your question.
• 6:36
  Speaker 1: So discretionary spending is stuff like what you don't need.
• 6:44
  Speaker 1: You don't need to buy a new phone, you don't need a new fridge, you don't need a new car, you don't need a new belt or bag or some sort of mid-range luxury product because you could probably wait a year and get it later.
• 6:57
  Speaker 1: So that's kind of what discretionary stocks are, and I would therefore think there is an argument to be made that these might come down significantly and that's what Goldman Sachs is saying and they haven't really gone anywhere over the last year or so.
• 7:14
  Speaker 1: If I zoomed out a little bit on that stock.
• 7:15
  Speaker 1: You know, let me do that for you X, l, y I'm using options watch here, by the way, and we are launching, I think as soon as Monday, the daily alerts, the daily trade alerts, not just one time per day, but two times per day, and that will be a premium feature which people will have to pay for.
• 7:37
  Speaker 1: But if you join now and all you got to do is join the free trial, right, so you join the free trial, you get a whole month to play around with it If you like it.
• 7:48
  Speaker 1: You won't get an extra charge for this.
• 7:50
  Speaker 1: If you sign up next week, you'll have to pay extra for it.
• 7:56
  Speaker 1: So it's a zero risk opportunity to lock in something for naught.
• 8:01
  Speaker 1: So I would highly suggest you do that.
• 8:03
  Speaker 1: If you head over to tradevisionio links also down below in the description and then you'll get this daily, twice daily, from the next Monday, trade alerts on, like when there's a big, big shift in what's been going on here.
• 8:17
  Speaker 1: And if you look at the consumer, well, it hasn't really done very much, has it?
• 8:23
  Speaker 1: If you were to draw a sort of straight line where we're trading here we're up a little bit, but compared to the S&P we've done basically nothing at all.
• 8:32
  Speaker 1: The consumer stocks, discretionary stocks, just haven't really gone anywhere.
• 8:35
  Speaker 1: Four, the reasons I just outlined that we're worried about the consumer.
• 8:40
  Speaker 1: We're worried that credit card debt is too high.
• 8:42
  Speaker 1: We're worried that their real income hasn't gone up.
• 8:45
  Speaker 1: We're worried that they are feeling more cautious about the economy and interest rates kind of finally got to them and they've spent all the money the US government gave them over time.
• 8:54
  Speaker 1: So I think possibly buying a put option could be an idea.
• 8:59
  Speaker 1: This is not financial advice.
• 9:01
  Speaker 1: Why do I say that?
• 9:02
  Speaker 1: Because if you understand a little bit about options, iv percent tells you how expensive options are.
• 9:07
  Speaker 1: So that goes from zero to 100.
• 9:09
  Speaker 1: Goes from zero to 100 and zero is cheap.
• 9:20
  Speaker 1: What's going on with the pen today?
• 9:22
  Speaker 1: Cheap and 100 is basically expensive pens a bit laggy, microsoft saving on ink again.
• 9:25
  Speaker 1: So it could be an idea to go out quite far, like maybe into like june that's what I've got here June 2025 or something like that.
• 9:34
  Speaker 1: And again, I'm not recommending this trade, I'm just walking you through how I sort of think about these things.
• 9:40
  Speaker 1: And that would cost $565 to set up.
• 9:43
  Speaker 1: That would be the entire risk of this trade.
• 9:46
  Speaker 1: You could never lose more than $565.
• 9:48
  Speaker 1: You don't need to own the shares Now.
• 9:50
  Speaker 1: If it went to zero, you'd make $16,000.
• 9:53
  Speaker 1: That's a little unlikely.
• 9:54
  Speaker 1: But if it dropped, you know, significantly to sort of 130, 140 or something, you'd probably make 500% or thereabouts.
• 10:03
  Speaker 1: So you'd make a couple of hundred percent return on that if we dropped back to sort of 2023 or even late 2022 levels.
• 10:12
  Speaker 1: So I think it's an idea.
• 10:15
  Speaker 1: I will watch this a little bit.
• 10:17
  Speaker 1: And how will I watch this?
• 10:18
  Speaker 1: I always look for a good entry point and one way to look at that would be let's break through one of the support lines, say the moving average here the 50-day.
• 10:29
  Speaker 1: Let's break below that, because right now we're still on this kind of slight uptrend.
• 10:33
  Speaker 1: We break below that here at 176.
• 10:35
  Speaker 1: That might be the point where I go short, essentially via some sort of trade.
• 10:42
  Speaker 1: So I think there is an opportunity in that.
• 10:45
  Speaker 1: I don't think the moment's quite there yet, but it could be a day or two away and then I'm going to probably jump on that.
• 10:52
  Speaker 1: But it could be a day or two away and then I'm going to probably jump on that.
• 10:56
  Speaker 1: So there we go.
• 10:57
  Speaker 1: That's idea number one.
• 10:59
  Speaker 1: And you might be thinking, ok, all right, fine, let's walk through a couple more things here then.
• 11:03
  Speaker 1: So is the market at a peak?
• 11:06
  Speaker 1: Is it so far up that it couldn't go any higher?
• 11:16
  Speaker 1: Well, by historic comparisons, the 10 largest stocks in 2000 were trading at 47x their PE ratio right, so their price over earnings.
• 11:26
  Speaker 1: If I write a little bit slower, it seems to work.
• 11:28
  Speaker 1: Right now we're at 30x, so arguably we could go 50% higher.
• 11:34
  Speaker 1: If you wanted to go back to a dot-com bubble kind of thing Probably won't quite do that, but there is room to go a little higher.
• 11:41
  Speaker 1: I think that's reasonable.
• 11:43
  Speaker 1: And look at that, the market isn't really crazily like mad.
• 11:47
  Speaker 1: I mean it isn't.
• 11:48
  Speaker 1: We're in fear stage.
• 11:49
  Speaker 1: We're not actually greedy or extremely greedy, we're in fear stage.
• 11:54
  Speaker 1: So it kind of again indicates that there's probably a little bit further to go.
• 11:59
  Speaker 1: Right, would a bear put spread be safer, says Stevie.
• 12:04
  Speaker 1: Yes, but I doubt you'd be able to find any volume, stevie.
• 12:09
  Speaker 1: Not necessarily safe.
• 12:10
  Speaker 1: Actually it's not safer.
• 12:11
  Speaker 1: Probably be smaller trade, but it would give you the same outcome but you'd have some assignment risk as well.
• 12:20
  Speaker 1: So actually probably not safer.
• 12:21
  Speaker 1: The put is probably the safest thing you could possibly do and Amazon is 23% of XRY.
• 12:31
  Speaker 1: Amazon is going way up from here.
• 12:35
  Speaker 1: Yes, I'm long-term bullish Amazon.
• 12:38
  Speaker 1: So the question is what's the other stuff right?
• 12:39
  Speaker 1: What's the other consumer discretionary?
• 12:43
  Speaker 1: What about this?
• 12:48
  Speaker 1: When is the Fed cutting?
• 12:49
  Speaker 1: When is the Fed cutting?
• 12:50
  Speaker 1: Fed cuts this is from Bank of America data and 39% of the market is expecting a September 18th cut and I'm kind of with them on that and I think it's quite likely Pre-election, which will be controversial, but it kind of makes sense as long as inflation comes in the way it does and we're seeing the real slowdown in the job state market and so on.
• 13:17
  Speaker 1: And here is something to cheer you up as well when we have a 20% yearly gain, you basically get a green year the following year, 80% of the time.
• 13:32
  Speaker 1: But you don't usually get a huge rally the year after a rally very, very rare.
• 13:41
  Speaker 1: The only times we did that was 1995, 1996, and 1997.
• 13:45
  Speaker 1: Those were the only years in recent history where we had 20% plus years.
• 13:54
  Speaker 1: Is it possible?
• 13:55
  Speaker 1: Well, you could argue that the kind of invention and commercialization of the internet which is what the 90s were all about.
• 14:02
  Speaker 1: It's very similar to AI and therefore I think we probably could.
• 14:07
  Speaker 1: I think we probably could have another 20% plus year this year.
• 14:12
  Speaker 1: So I would just say stay invested.
• 14:14
  Speaker 1: If money is tight, wouldn't McDonald's do better?
• 14:18
  Speaker 1: No, because people downgrade.
• 14:20
  Speaker 1: They buy the cheaper things, they buy less extras and that's where they make their money.
• 14:24
  Speaker 1: Right, they make their money on the additional things, on the upgrades.
• 14:27
  Speaker 1: They don't really make that much money on the core product.
• 14:30
  Speaker 1: If you're not upgrading your meals, then it's tough for them.