Latest / Felix Nikolas Prehn's Podcast / Warning: Inflation Data Just Out! + Stock Market News 29 February 2024

Transcript

Warning: Inflation Data Just Out! + Stock Market News 29 February 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Felix here and welcome to Inflation Thursday.
• 0:04
  Speaker 1: Today isn't just any old inflation day.
• 0:07
  Speaker 1: This is the Fed's favorite inflation method that just came out.
• 0:12
  Speaker 1: I know it's a little sad to have a favorite inflation measure, but that's what their job is.
• 0:16
  Speaker 1: What were the numbers?
• 0:20
  Speaker 1: We need to look at that to be on the stand of the market steering.
• 0:23
  Speaker 1: We also need to talk about the scandal brewing at the BLS regarding inflation data GDP data out yesterday.
• 0:30
  Speaker 1: What does that really mean?
• 0:31
  Speaker 1: And, of course, I'll answer all your questions.
• 0:33
  Speaker 1: All you're going to do is pop them in the live chat after you've destroyed the like button, which will burn an entire calorie.
• 0:41
  Speaker 1: Some say you don't think of the money you save on Osempic.
• 0:44
  Speaker 1: Let's get cracking.
• 0:45
  Speaker 1: I'll share my screen with you and here is the data.
• 0:48
  Speaker 1: Before we get into that data point, do one thing for yourself Join the Clued Up.
• 0:55
  Speaker 1: Join those who know how to make more money from their money, which means we trade a couple of hours a week.
• 1:01
  Speaker 1: We don't stare at charts.
• 1:03
  Speaker 1: It's a simple three-step system that I use and have been using for years.
• 1:09
  Speaker 1: Super easy for beginners.
• 1:11
  Speaker 1: All you're going to do is sign up with a free life trading training on Tuesday, which seems like a long time away it's next week, but no, it's actually just a few short days away.
• 1:22
  Speaker 1: Go, grab yourself a seat and then you will see exactly how I'm up 126% in 2022, 105% in 2023, and, so far, 13% this year.
• 1:32
  Speaker 1: I will literally show you the exact system.
• 1:34
  Speaker 1: We'll do some live trading together and the link to that is phelixfriendsorg slash webinar.
• 1:39
  Speaker 1: The link is down below in the description phelixfriendsorg slash webinar.
• 1:43
  Speaker 1: So grab yourself a seat Now, hold on to your seat and let's dive through this.
• 1:51
  Speaker 1: We're going to color coordinate this color code this like we're five Green's good, red's bad.
• 1:58
  Speaker 1: Core PCE has come in month on month at 0.4%.
• 2:04
  Speaker 1: The expectation was 0.3 to 0.4.
• 2:06
  Speaker 1: So it's sort of in line, but it is whoppingly higher than the previous month.
• 2:14
  Speaker 1: Right, that's.
• 2:14
  Speaker 1: I think that's the highest number in a year.
• 2:16
  Speaker 1: Personal income was expected to be 0.3% increase.
• 2:22
  Speaker 1: We got 1%.
• 2:24
  Speaker 1: That's bad.
• 2:26
  Speaker 1: Now you might be thinking surely it's good if people's incomes go up?
• 2:29
  Speaker 1: No, that's inflationary.
• 2:30
  Speaker 1: It means they got a pay rise.
• 2:32
  Speaker 1: The government and the Fed don't want you to get a pay rise.
• 2:35
  Speaker 1: No, they want you to spend your excess savings.
• 2:38
  Speaker 1: So you're nice and poor and miserable.
• 2:40
  Speaker 1: That's the plan Personal spending coming exactly as expected.
• 2:45
  Speaker 1: So that's sort of a neither here nor there.
• 2:48
  Speaker 1: Jobless claims.
• 2:49
  Speaker 1: We were expecting those to be 210,000.
• 2:51
  Speaker 1: They came in pretty much on target, so that's sort of again neither here nor there.
• 2:56
  Speaker 1: The month on month PCE also as expected, but still it's a pretty high number.
• 3:04
  Speaker 1: It's three times higher than the previous month, he says, and continuing jobless claims actually ticked up somewhat.
• 3:13
  Speaker 1: And the market in its perversity is going to like that.
• 3:17
  Speaker 1: Wall Street wants you to be poor and unemployed and then spend all your money on buying junk.
• 3:25
  Speaker 1: That makes them more profitable.
• 3:26
  Speaker 1: So you'd be in really a lot of debt.
• 3:29
  Speaker 1: Then you just about service the debt.
• 3:31
  Speaker 1: That's where they want you.
• 3:32
  Speaker 1: Core PCE, which again is Jay Powell's favorite thing that's what he talks about over dinner 2.8%.
• 3:39
  Speaker 1: So this is not as bad as it seems, and let me show you how weird the world of journalism is.
• 3:45
  Speaker 1: Feds preferred inflation metric increases by most in a year.
• 3:49
  Speaker 1: From that headline you'd be thinking, oh my God, time to panic.
• 3:55
  Speaker 1: Sell, sell, right.
• 3:56
  Speaker 1: But no, it's about the real data versus expectations, and really the only thing in here that's actually bad is personal income going up a lot, which also, of course, has a plus side.
• 4:11
  Speaker 1: It means that the US consumer is strong and is going to keep spending, at least if you believe these data points, and so say we have higher unemployment, which is actually a good thing for once, although unemployment data is so fricking manipulated it's hard to know what it says really Total nonsense.
• 4:30
  Speaker 1: There are easily a couple of a million more people unemployed than that, but that's the whole side story.
• 4:34
  Speaker 1: So this data is not terrible and let me show you the pre-market.
• 4:39
  Speaker 1: There it is and you see it isn't terrible because pre-market pretty much everything is green Tesla up 1.2%, nvidia up 1.4%, google, meta, microsoft rebounding after yesterday's Slight misery.
• 4:54
  Speaker 1: Netflix up 1.4%.
• 4:56
  Speaker 1: That's the consumer CRM is up a percent.
• 4:59
  Speaker 1: So you know, domburg Strikes again now Biden's to old Trump is too dangerous.
• 5:07
  Speaker 1: What do you make of that?
• 5:09
  Speaker 1: Put that in the comment.
• 5:10
  Speaker 1: I know I talk politics.
• 5:12
  Speaker 1: People go, go really nuts.
• 5:13
  Speaker 1: There's some really nutty comments yesterday which I, which I enjoyed about dishwashers and thank you for all of you with a sense of humor, and when I mentioned, I think I expressed my opinion that the Biden New York, so the Trump New York lawsuit was a load of nonsense.
• 5:28
  Speaker 1: And of course, the Anti-Trump has come out and, you know, tried to hit me over the head with Baseball bat or something, but anyway, I don't have any strong political feelings on either of your Too fairly moronic candidates, quite frankly, but it is entertaining from an outsider's point of view.
• 5:46
  Speaker 1: Now let's go through this, because this is important, almost as important as smashing the like button.
• 5:51
  Speaker 1: This is from the BLS, the I mean you could think of a lot of acronyms, right, you know l lying.
• 6:03
  Speaker 1: Maybe statisticians, I don't know, be a, the labor department they sent this email less yesterday.
• 6:08
  Speaker 1: Seriously, super users, and nobody's quite sure what that means.
• 6:13
  Speaker 1: It might just sort of be, you know, the chosen ones in terms of statistics, or some sort of elite club of Old wise professors who knows?
• 6:21
  Speaker 1: They said the weights for single family detached homes increased materially From December to January.
• 6:28
  Speaker 1: All of you searching for the source of the divergence have found it.
• 6:32
  Speaker 1: What does that mean?
• 6:33
  Speaker 1: January inflation data was higher than expected and it's actually largely caused by this.
• 6:44
  Speaker 1: They are given have given a greater weight to property or rent, essentially, which is elevated inflation.
• 6:57
  Speaker 1: So what would be the sense on that say you had here December, january, february and let's just go forward into, say, november, for no particular reason, and December inflation was a little bit low.
• 7:16
  Speaker 1: January inflation was much, much higher than expected.
• 7:20
  Speaker 1: February is still going to be quite high.
• 7:23
  Speaker 1: It's going to apparently last a couple of months.
• 7:25
  Speaker 1: And then what could you do in November?
• 7:27
  Speaker 1: Well, you could make an adjustment, couldn't you?
• 7:30
  Speaker 1: And then in November you'd show inflation was beaten.
• 7:35
  Speaker 1: Elect the chosen one, elect the super user.
• 7:38
  Speaker 1: That would be a conspiratorial idea here.
• 7:41
  Speaker 1: Essentially saying the BLS labor department manipulates data to get Biden reelected.
• 7:46
  Speaker 1: And you might be thinking you can't be saying that they don't just do that for the current El Presidente, but they've done it for all the previous ones too.
• 7:55
  Speaker 1: This is not not something that's just a Biden thing.
• 7:59
  Speaker 1: They've always done this.
• 8:00
  Speaker 1: Look at Labor market data is always a little nonsense Later nonsense.
• 8:04
  Speaker 1: But yeah, that's one interpretation here.
• 8:07
  Speaker 1: Now, today's inflation data was important because Fed president Susan Collins and John Williams said the Fed's first rate cut will be appropriate later this year.
• 8:20
  Speaker 1: Bostick said he's penciling a cut for sometime this summer and they're basically saying the pace of interest rate cuts will depend on incoming economic data.
• 8:30
  Speaker 1: So we got to keep watching the economic data, just like behave, to keep watching the like button.
• 8:34
  Speaker 1: You know.
• 8:35
  Speaker 1: You got to keep looking at these things again and again and again and consider whether you want to smash it or not.
• 8:39
  Speaker 1: So Today's data Not a surprise and therefore the market isn't shocked, so don't get waylaid by the crazy news out there now.
• 8:48
  Speaker 1: This is this would be really funny if it wasn't true.
• 8:56
  Speaker 1: America, land of the free greatest economy in the world, the home of Homer Simpson.
• 9:03
  Speaker 1: Their GDP grew 334 billion last quarter.
• 9:10
  Speaker 1: That's a lot.
• 9:11
  Speaker 1: However, government debt grew 834 billion the same quarter.
• 9:18
  Speaker 1: So what does that mean?
• 9:20
  Speaker 1: You've squandered $500 billion.
• 9:23
  Speaker 1: That's what that means.
• 9:25
  Speaker 1: It costs $2.50 in debt to grow GDP by $1.
• 9:31
  Speaker 1: That's the power of government spending.
• 9:35
  Speaker 1: Governments are the least effective when it comes to spending.
• 9:39
  Speaker 1: They waste most of the money, which is why I'm not a big fan of governments.
• 9:43
  Speaker 1: That's what's going on.
• 9:44
  Speaker 1: The whole US economic growth story is complete bollocks and it's made up and it's based on exceptionally inefficient government spending.
• 9:58
  Speaker 1: What do they do with the $500 billion?
• 10:06
  Speaker 1: Nancy Pelosi?
• 10:07
  Speaker 1: Ate it, send it to the Ukraine or somewhere.
• 10:09
  Speaker 1: I don't know what they did with it, but obviously they're not spending it very wisely.
• 10:13
  Speaker 1: It's a bit of a sobering piece of data, isn't it?
• 10:15
  Speaker 1: The next time you want the government to spend money, well, think about it again.
• 10:19
  Speaker 1: Now here's something else about sobering.
• 10:21
  Speaker 1: We will get to some positive news.
• 10:23
  Speaker 1: I want to leave you on a cheerful note and talk about money, what you understand.
• 10:29
  Speaker 1: Be quiet about US politics, christian Gerhard Wolf.
• 10:32
  Speaker 1: Brilliant, go on, let's get angry there.
• 10:35
  Speaker 1: Go on, express your opinions.
• 10:37
  Speaker 1: That's what it's all about, isn't it?
• 10:38
  Speaker 1: I like that.
• 10:39
  Speaker 1: I like somebody who descents violently.
• 10:42
  Speaker 1: Go on, christian.
• 10:49
  Speaker 1: The big crisis out there that everyone's trying to not talk about is commercial real estate.
• 10:57
  Speaker 1: The problem with commercial real estate is that they have a double whammy.
• 11:03
  Speaker 1: One is that all of you people want to work from home slackers and say aye, without a job.
• 11:16
  Speaker 1: That's one thing.
• 11:17
  Speaker 1: There's less demand for office space.
• 11:19
  Speaker 1: The other is that you all have an Amazon Prime subscription and you order everything online, which means there's less need for shops and shopping malls and all that kind of stuff, because that's the point in driving somewhere where Amazon's going to drop it through your chimney with a drone in 25 minutes, right, and then you've got a well-trained laboratory picks it up and brings it to you a perfect delivery system.
• 11:40
  Speaker 1: That's basically the double whammy on that front.
• 11:44
  Speaker 1: And then the triple whammy is higher interest rates, because these guys finance the buildings and they use bank loans for that.
• 11:55
  Speaker 1: Now, bank loans were like 0% two years ago.
• 11:59
  Speaker 1: Yeah, weird, world Interest rates will stay zero forever.
• 12:02
  Speaker 1: That's what people said two years ago.
• 12:05
  Speaker 1: And last year, in 2023, very, very few of those mortgages matured.
• 12:12
  Speaker 1: Why?
• 12:12
  Speaker 1: Because they rolled them over.
• 12:14
  Speaker 1: They have a clause in them off which allows them to extend it and roll it over, and it kind of got them out of a tight spot.
• 12:21
  Speaker 1: But what it means is that in 2024, we're gonna get some insane number of mortgages having to be refinanced something like a trillion dollars and that's gonna have to get refinanced at the current interest rates.
• 12:39
  Speaker 1: Which is what are they gonna have to pay?
• 12:41
  Speaker 1: Six, seven, eight, nine, 10% and that means that those projects, those buildings, are now loss making.
• 12:48
  Speaker 1: There's literally a building in Manhattan today I can't remember what the address was Proper nice office building that the Canadian part owner sold for $1.
• 12:59
  Speaker 1: $1,.
• 13:01
  Speaker 1: They just wanna get rid of it.
• 13:02
  Speaker 1: And this is the problem for banks, because you take all of this on board, who holds all the mortgages?
• 13:09
  Speaker 1: Well, it's small banks, because they're run by a bunch of ninkin poops who'd be well qualified to run for federal office and they have a hole in their balance sheet.
• 13:23
  Speaker 1: This is a problem and it is something to keep an eye on.
• 13:27
  Speaker 1: And if you're thinking that, well, we can just turn all of these office buildings into apartments because, say, new York could do with more apartments, more condos, but less office space, well, according to JP Morgan, they have to half in value because commercial real estate is higher priced.
• 13:43
  Speaker 1: So that's not really gonna happen without a massive haircut for banks.
• 13:47
  Speaker 1: So that's definitely something to keep an eye on.
• 13:51
  Speaker 1: The end zone is here for the political views.
• 13:53
  Speaker 1: Brilliant, love that.
• 13:55
  Speaker 1: Let's aim and offend some more people.
• 13:58
  Speaker 1: Julia, I'm not ignoring you, but I just wanna run you through a little bit of data points here before we get properly stuck in in the.
• 14:10
  Speaker 1: You know, offending more people, which is obviously what I aim to do.
• 14:14
  Speaker 1: Give out free tissues with your next promotion.
• 14:17
  Speaker 1: Absolutely, three people offended.
• 14:19
  Speaker 1: That means you achieved something.
• 14:21
  Speaker 1: I always think if you don't offend anybody in life like you haven't really done anything right.
• 14:26
  Speaker 1: So I aim to offend a few people.
• 14:27
  Speaker 1: Yes, there, we offended dishwashers and husbands of housewives, apparently.
• 14:34
  Speaker 1: So Bitcoin is going through the fricking roof.
• 14:39
  Speaker 1: Even Dogecoin is up.
• 14:41
  Speaker 1: The Dogecoin millionaire is a billionaire again.
• 14:44
  Speaker 1: And let's have a look at where BTC USD sits Right now, at $63,000.
• 14:56
  Speaker 1: How wonderful.
• 14:58
  Speaker 1: And that's driven literally by ETFs.
• 15:04
  Speaker 1: How do we know that?
• 15:06
  Speaker 1: Well, we can see the trading volume in Bitcoin ETFs and we can also see, at the end of the day you can see, the buying in Bitcoin.
• 15:15
  Speaker 1: So let's have a look at a 30 minute chart and hang on.
• 15:25
  Speaker 1: Maybe a 15 minute chart you should see at the end of the trading day, when this is probably the ETF volume 2 PM to 3 PM.
• 15:44
  Speaker 1: So ETFs function on something called net asset value, so they have to basically buy this there If they get inflows in cash.
• 15:54
  Speaker 1: They don't just go run out and buy it right there and then they wait till the end of the day.
• 15:58
  Speaker 1: Essentially, well, they sort of at 2pm they place their orders into the market makers and then those guys will set a price and then those orders will get filled.
• 16:07
  Speaker 1: So you get these spikes.
• 16:10
  Speaker 1: Well, it's a bit random, isn't it?
• 16:12
  Speaker 1: In theory, let's have another look at here.
• 16:16
  Speaker 1: Btc USD.
• 16:17
  Speaker 1: Let's have a look at the coin based one.
• 16:19
  Speaker 1: Maybe that gives us a bit better data.
• 16:20
  Speaker 1: Yeah, in theory, these end of day purchases here should be ETF money and if you see big spikes towards the end of the typical trading day, then that would be ETF money.
• 16:36
  Speaker 1: So that's one way to keep track of it.
• 16:41
  Speaker 1: What else we got?
• 16:41
  Speaker 1: Oh yes, good news.
• 16:43
  Speaker 1: I thought I'd known good news buybacks Buybacks are back like the back street boys.
• 16:48
  Speaker 1: Are they back?
• 16:49
  Speaker 1: And what does it mean?
• 16:51
  Speaker 1: Well, when we are in earnings, when companies report their numbers, they're not allowed to buy their own stocks just before, and therefore we haven't had a lot of buybacks in the last two or three weeks because a lot of companies have bought their earnings, but that's now back, so we're having, essentially, 91% of companies are now able to buy back their own shares, which will be supportive for this benanza that we are in.
• 17:20
  Speaker 1: And the second piece of potentially glorious, wonderful news is this the amount of money that has flown into funds since 2020.
• 17:34
  Speaker 1: In billion dollars, we've got $2400 billion that's gone into money market funds, which is basically it's sort of basically bonds, but through funds.
• 17:49
  Speaker 1: Money market market spell funds.
• 17:55
  Speaker 1: And then we have another $800 billion which went straight into bonds.
• 18:04
  Speaker 1: Most people can't figure out how to buy a bond, so they buy something like TLT or something, and then you have down at the bottom stocks with a miserable $690 billion.
• 18:16
  Speaker 1: Still a lot of money.
• 18:18
  Speaker 1: And what does that mean?
• 18:20
  Speaker 1: Well, the possibility is when interest rates come down this year, which the Fed basically confirmed.
• 18:25
  Speaker 1: This $2400 billion plus this $800 billion, which is $3.2 trillion that's almost as much as Biden spends over lunch.
• 18:35
  Speaker 1: That money, some of that, will start to flow back into the stock market, because the stock market will ultimately give you higher returns when interest rates come back down and anybody offended by that?
• 18:46
  Speaker 1: I hope so.
• 18:48
  Speaker 1: So that's a positive thing to look at.
• 18:51
  Speaker 1: So, as a recap, come and join the life trading training on Tuesday and you can abuse me on the training where I will teach you my three step trading protocol, and that system is really very simple.
• 19:06
  Speaker 1: It takes a couple of hours a week tops, and it's what allows us to make these returns year after year.
• 19:13
  Speaker 1: So come and join me phoenixrendsorg slash webinars where you get your pause on.
• 19:18
  Speaker 1: That takes you to a page that looks just like this and you can see here.
• 19:21
  Speaker 1: March 5th, at 10am Eastern time.
• 19:24
  Speaker 1: If you reside somewhere else, select your time zone and it'll show you what it's like in your time zone.
• 19:30
  Speaker 1: Free market we're looking pretty good, aren't we?
• 19:33
  Speaker 1: We're looking pretty good, and it's a combination of stronger consumer, slightly higher unemployment and, yes, inflation data looks a little higher, but we already expected that.
• 19:44
  Speaker 1: So they came in as expected, not higher than expected.
• 19:47
  Speaker 1: There really isn't all that much to worry about.