Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - FED just admitted the TRUTH about inflation + Stock Market News 10 July 2024

Transcript

Felix Prehn - FED just admitted the TRUTH about inflation + Stock Market News 10 July 2024 · Felix Nikolas Prehn's Podcast

• 0:01
  Speaker 1: Good morning to you on this momentous day when Jerome Powell, the chair, the president, the master of the universe, is to speak again, I think today in front of the Senate.
• 0:12
  Speaker 1: They called him yesterday in Congress and he said some things that I thought were quite predictable.
• 0:18
  Speaker 1: And that also continues the rally here today, and I want you to understand that, because he did actually change his tune very, very significantly, and I think the more people grasp that and the press hasn't really gone to town on it the more bullish things will actually look.
• 0:37
  Speaker 1: So the party shall continue, or will it?
• 0:41
  Speaker 1: Well, let's dive straight into that.
• 0:43
  Speaker 1: I'm going to share my screen with you here, fashionably late.
• 0:47
  Speaker 1: I think we were maybe a minute late.
• 0:49
  Speaker 1: Of course, grumble, grumble, grumble.
• 0:52
  Speaker 1: There must have been a good reason for it.
• 0:53
  Speaker 1: It probably wasn't.
• 0:54
  Speaker 1: Anyway, I appreciate you being here Before we get cracking and really understand what's going on here today.
• 1:02
  Speaker 1: If you want to learn how we do what we do, winston's up $16,000 on his $30,000 trading portfolio.
• 1:11
  Speaker 1: This is our teaching portfolio which is, you know, something like 50% plus so far this year.
• 1:17
  Speaker 1: We did similarly well the last two years over 100% return on capital employed.
• 1:21
  Speaker 1: I'm running, for the first time ever, a three-day masterclass.
• 1:26
  Speaker 1: I think the last time we did something like this was about two and a half years ago.
• 1:32
  Speaker 1: I think I did a two-day session once.
• 1:34
  Speaker 1: We've never actually done a three-day session.
• 1:36
  Speaker 1: Each day we'll do about an hour of real teaching, real insight, and it's completely free of charge.
• 1:42
  Speaker 1: All you got to do is head over to phoenixfrancenogcom slash masterclass and grab yourself a free seat.
• 1:47
  Speaker 1: I saw there were already 400 signups today, which is insane.
• 1:52
  Speaker 1: Even with our expanded subscription now I think we have a thousand people limit.
• 1:59
  Speaker 1: So go figure, right, we're going to run out of spots, so don't be late.
• 2:06
  Speaker 1: All right, let me walk you through, then, the two most important quotes from yesterday, and then how he got there, why it matters and how do we make money out of it.
• 2:16
  Speaker 1: He said he, jerome Lepowel, elevated inflation is not the only risk we face, not the only risk we face.
• 2:28
  Speaker 1: That is again new language from the top.
• 2:32
  Speaker 1: Because before it was all about we're worried about inflation.
• 2:34
  Speaker 1: Inflation is the thing we're worried about.
• 2:35
  Speaker 1: We're really worried about inflation.
• 2:36
  Speaker 1: Inflation is everything and the labor market's wonderful.
• 2:40
  Speaker 1: We're only worried about inflation.
• 2:41
  Speaker 1: He's now saying no, no, no, no, wait a minute, there are two things I'm worried about.
• 2:45
  Speaker 1: And then he says the latest data show that the labor market conditions have now cooled considerably.
• 2:51
  Speaker 1: I wouldn't have said that until the last couple of readings.
• 2:55
  Speaker 1: So what have we got now?
• 2:57
  Speaker 1: We now have a double threat.
• 2:59
  Speaker 1: So the Fed has a very simple job.
• 3:02
  Speaker 1: The Fed has a job of low inflation or rather stable inflation, they would like to call it and high employment.
• 3:14
  Speaker 1: Now it is definitely failed on the low inflation front.
• 3:21
  Speaker 1: So that was his main, that was the main concern.
• 3:23
  Speaker 1: All the attention was here.
• 3:25
  Speaker 1: They're saying hang on, it looks like the labor market's breaking.
• 3:29
  Speaker 1: So now we've got two things they're worried about.
• 3:32
  Speaker 1: But inflation is starting to look a little bit better.
• 3:35
  Speaker 1: So now we're really starting to get worried about high unemployment.
• 3:39
  Speaker 1: What does that mean?
• 3:39
  Speaker 1: How do you increase employment?
• 3:42
  Speaker 1: You cut interest rates.
• 3:46
  Speaker 1: So this is what's coming.
• 3:49
  Speaker 1: And by him saying that, by him acknowledging this is now a two-issue thing, he's being the most market-friendly, rally-friendly.
• 3:58
  Speaker 1: We've seen him since COVID.
• 4:03
  Speaker 1: And here is why there is data.
• 4:05
  Speaker 1: There is data.
• 4:05
  Speaker 1: There is always a chart, isn't there?
• 4:07
  Speaker 1: Yes, there is always a chart.
• 4:08
  Speaker 1: This is the number of unemployed workers divided by job openings.
• 4:18
  Speaker 1: Essentially, how many workers are there per job opening?
• 4:22
  Speaker 1: Workers are there per job opening and it's come back into balance essentially.
• 4:31
  Speaker 1: So we now have we're now no longer worried about there being this super tight labor market that down here, that was the tight labor market where there weren't any people who could do the jobs.
• 4:45
  Speaker 1: We don't really have that concern anymore and that's very, very positive.
• 4:50
  Speaker 1: But if you dig a little bit deeper, beyond the sort of Biden officials numbers, what do you think is going to happen there?
• 4:56
  Speaker 1: Do you think it's going to step down Any Americans there?
• 4:59
  Speaker 1: Let me know what's the German spewing now?
• 5:02
  Speaker 1: I know, I know it shouldn't be allowed, right, but then you're called the bio lizard.
• 5:07
  Speaker 1: So what do you think is going to happen with Biden?
• 5:10
  Speaker 1: You think he's going to run, you think he's going to get stepped down?
• 5:13
  Speaker 1: But yeah, look at this, this black line there which is now here at the highest level since 2008.
• 5:23
  Speaker 1: Remember global financial crisis?
• 5:26
  Speaker 1: That's the number of US job cut announcements in construction, and it tells you something about the housing market for sure, and kind of a pretty good indicator that a recession is very, very much on the way.
• 5:43
  Speaker 1: And they receive this data too.
• 5:45
  Speaker 1: They don't even want to talk about it because they don't want to spook anything, but yeah, it looks kind of frightening, right, derek doesn't think Biden's going to step down.
• 5:55
  Speaker 1: I mean, there is statistically a real advantage of being the commander-in-chief and all of that right, when you're running for president, because you get all that beautiful backdrop and the helicopters and the planes and you look kind of powerful in that backdrop.
• 6:09
  Speaker 1: So it's generally an advantage for the incumbent.
• 6:11
  Speaker 1: So I can see why Dems want him to run.
• 6:14
  Speaker 1: But is it the best for the country?
• 6:17
  Speaker 1: I don't know.
• 6:18
  Speaker 1: I guess it's not my business really.
• 6:19
  Speaker 1: Is it Now?
• 6:20
  Speaker 1: Tomorrow matters?
• 6:21
  Speaker 1: Now tomorrow matters.
• 6:21
  Speaker 1: Yes, tomorrow matters.
• 6:23
  Speaker 1: Tomorrow we get inflation data and we want that to be broadly in line or slightly lower than expected.
• 6:29
  Speaker 1: So we want the inflation rate to be somewhere between 0% to 0.1% on the month.
• 6:35
  Speaker 1: It comes in like that party on.
• 6:38
  Speaker 1: It comes in higher than that.
• 6:40
  Speaker 1: We're going to get a bit spooked.
• 6:42
  Speaker 1: So be wary of that.
• 6:44
  Speaker 1: But out of the last six inflation ratings, I think we've rallied, or the last eight, I think we've rallied six times, even when it wasn't particularly wonderful.
• 6:53
  Speaker 1: So I think the market's pretty resilient right now.
• 7:01
  Speaker 1: Ty's saying we should replace Biden with a rock.
• 7:03
  Speaker 1: You know what I actually thought about two years ago?
• 7:06
  Speaker 1: That I think the rock wants to run for president.
• 7:08
  Speaker 1: I don't know why.
• 7:09
  Speaker 1: I thought that.
• 7:10
  Speaker 1: I watched like a little 15 second clip with him and I thought that guy wants to run for president.
• 7:14
  Speaker 1: He looks quite powerful, doesn't he?
• 7:17
  Speaker 1: Masterclass, not accepting your info.
• 7:22
  Speaker 1: Really, john, what are you typing in there?
• 7:25
  Speaker 1: About 450 people have already managed to sign up.
• 7:28
  Speaker 1: Try a different browser, john, maybe.
• 7:30
  Speaker 1: Maybe try a different browser.
• 7:31
  Speaker 1: That might be the solution.
• 7:36
  Speaker 1: Now, why am I feeling so chirpy and happy and wonderful?
• 7:41
  Speaker 1: Because every day is amazing.
• 7:43
  Speaker 1: If you saw that post that I did today, I was sitting today, this little members club in the center of Hong Kong.
• 7:49
  Speaker 1: It's beautiful, and I walked.
• 7:51
  Speaker 1: I sat by the window.
• 7:52
  Speaker 1: It wasn't the same spot.
• 7:53
  Speaker 1: They know me and I watch where I used to work, the National Finance Center, and I sit there and I eat my breakfast and I think how good is life.
• 8:03
  Speaker 1: The sky is blue, I'm being served breakfast and I never have to go to an office again.
• 8:08
  Speaker 1: But that's not the only reason why I'm excited.
• 8:10
  Speaker 1: The other reason I'm excited is that the buyback blackout is in full swing.
• 8:14
  Speaker 1: So normally the large companies buy a lot of their own shares.
• 8:17
  Speaker 1: You know, think Apple and so on.
• 8:19
  Speaker 1: They do buybacks right and they are the largest buyer of shares out there and they don't do that just before earnings and earnings season is about to kick off properly.
• 8:28
  Speaker 1: The big investment banks report on Friday and then next week, I think.
• 8:31
  Speaker 1: We get Netflix next week and you know, the big tech guys come the week.
• 8:35
  Speaker 1: Right now we are here, as they say, in France, so 95% of companies are not buying stocks their own stocks and that, of course, removes a lot of demand.
• 8:52
  Speaker 1: So imagine when they come back.
• 8:54
  Speaker 1: Imagine how good things will be when they come back and they start buying again.
• 8:57
  Speaker 1: Crazy, hey, crazy, to think.
• 9:02
  Speaker 1: 6,000?
• 9:02
  Speaker 1: , 6,500?
• 9:03
  Speaker 1: Where do you think we're going to get to on the S&P MVP?
• 9:10
  Speaker 1: On the app, I haven't got a date for you on that, my friend.
• 9:12
  Speaker 1: We have started to work on it, but we haven't got a date on it yet.
• 9:16
  Speaker 1: I would at this point recommend a slightly bigger screen to trade on.
• 9:21
  Speaker 1: It's a little challenging to get all the data on a small screen.
• 9:24
  Speaker 1: I never set up trades on a phone, never have.
• 9:28
  Speaker 1: I don't think I ever will.
• 9:29
  Speaker 1: You just can't really get all the insight.
• 9:31
  Speaker 1: So I do that on a laptop or on a desktop A tablet probably works too and then you can close trades on the phone, but I wouldn't really set them up.
• 9:47
  Speaker 1: Mcflash says the profits are low on bulls put spreads.
• 9:52
  Speaker 1: Are they low?
• 9:53
  Speaker 1: Have you seen what we've done so far this year?
• 9:56
  Speaker 1: This is a teaching portfolio.
• 9:57
  Speaker 1: We are up over 50%, my friend, $16,000 over $30,000.
• 10:03
  Speaker 1: The problem is, if you're buying call options is that they lose value every day.
• 10:08
  Speaker 1: Right Can occasionally be a good idea, but most of the time, well, you're overpaying, you have a negative edge, you're overpaying 4% and IV often moves against you and you lose money every single day just by holding it right, unless the stock really moves in your direction.
• 10:24
  Speaker 1: We don't need the stock to really move in our direction and that's a huge advantage.
• 10:28
  Speaker 1: That's a huge advantage.
• 10:29
  Speaker 1: You have to select all day, it's not click each individual one.
• 10:36
  Speaker 1: Yes, that's true.
• 10:37
  Speaker 1: Yeah, you just have to register for it.
• 10:39
  Speaker 1: It's one registration for all of them.
• 10:51
  Speaker 1: Who's going to ban ban who lost in bkk?
• 10:53
  Speaker 1: Your trade vision is going to appreciate that.
• 10:56
  Speaker 1: Um, ban canadians.
• 10:59
  Speaker 1: Who are we banning calls too dangerous?
• 11:04
  Speaker 1: I mean dangerous is the wrong word.
• 11:05
  Speaker 1: I mean I, I buy calls sometimes, but it's not my go-to strategy, because the go-to strategy for most people.
• 11:13
  Speaker 1: So let me give you an example.
• 11:14
  Speaker 1: So say you're bullish on.
• 11:25
  Speaker 1: Let's look at something here on our watch list.
• 11:27
  Speaker 1: Say you're bullish on the S&P financial sector right, which I actually am and chat will load when the chat will load.
• 11:39
  Speaker 1: So what happens if you buy a call option?
• 11:41
  Speaker 1: Let me show you.
• 11:42
  Speaker 1: So say you buy a call option, I don't know, a month out or whatever, however long you want your probability of making money is 27%.
• 11:53
  Speaker 1: You have a 27% chance of making money, right, is that good?
• 11:55
  Speaker 1: So with a call, you have a 27% probability, right, prop, and you lose money every single day.
• 12:08
  Speaker 1: You're in that trend.
• 12:09
  Speaker 1: It just gets worse and worse and worse every single day.
• 12:11
  Speaker 1: Now, if I do a bull put spread and I position that somewhere below the market, I'll say that, okay, I now have a 70% chance of making money.
• 12:30
  Speaker 1: Can you see that Blocking it with my head, aren't I?
• 12:41
  Speaker 1: No, no, microsoft ruins it for us all.
• 12:44
  Speaker 1: 70% chance of making money, why?
• 12:47
  Speaker 1: And yeah, it's a smaller profit.
• 12:48
  Speaker 1: It's a smaller profit, but I have a 70% chance of making it.
• 12:52
  Speaker 1: And I'm not saying this is a great trade, by the way.
• 12:53
  Speaker 1: I don't think it is.
• 12:54
  Speaker 1: I don't think it's profitable enough.
• 12:55
  Speaker 1: But the beauty is that I'm positioned below the market.
• 12:59
  Speaker 1: So I'm positioned at 43.4% below the market, Whereas you, with your call, are positioned above the market.
• 13:07
  Speaker 1: So the stock has to move up.
• 13:08
  Speaker 1: For me, the stock doesn't have to do anything.
• 13:19
  Speaker 1: It could even drop a little bit and I'm still making money.
• 13:20
  Speaker 1: So for most people, it's very, very hard to lose, as in this example.
• 13:22
  Speaker 1: If you're only winning 27% of trades, it means you're losing 73% of the time.
• 13:26
  Speaker 1: It's pretty hard for most people's psyche.
• 13:27
  Speaker 1: So I think the much, much better thing to do for 99% of people is to win, say, 75% of the time, which is what I do, and manage the losers with automations.
• 13:35
  Speaker 1: So I think it's just much, much more suited to the human psychology.
• 13:45
  Speaker 1: Good morning.
• 13:46
  Speaker 1: What about other money leaps?
• 13:48
  Speaker 1: I think we all ask this because a lot of us don't have level three.
• 13:50
  Speaker 1: First of all, you can get it.
• 13:53
  Speaker 1: Everybody I've ever taught thousands of people got approval for options.
• 13:57
  Speaker 1: You can buy leap options, but you have to ask yourself is it a good moment?
• 14:02
  Speaker 1: So you really need the stock to move like a lot, right.
• 14:05
  Speaker 1: So you can do it on things that you think are vastly undervalued, but I wouldn't do it for the average trade, and the duration is quite long right.
• 14:12
  Speaker 1: So, yes, I do use loops occasionally, but it's like less than a percent of my trades.
• 14:20
  Speaker 1: My bread and butter is just high probability trades, again and again, and again.
• 14:22
  Speaker 1: And if you want to learn more about that, come and join us next week.
• 14:24
  Speaker 1: Three-day live training, felixfrenzorg slash masterclass.
• 14:28
  Speaker 1: Does a bull put require you to purchase 100 shares, derek?
• 14:32
  Speaker 1: No, no, we don't own the shares.
• 14:34
  Speaker 1: Never, do, never want to, because if you did, it'd be incredibly unprofitable.
• 14:38
  Speaker 1: I mean, you'd tie up so much capital.
• 14:40
  Speaker 1: So, no, we don't need to own the shares.