Latest / Felix Nikolas Prehn's Podcast / URGENT: US Jobs Data *Just* Out // Stock Rally at Risk + Stock Market News 07 June 2024

Transcript

URGENT: US Jobs Data *Just* Out // Stock Rally at Risk + Stock Market News 07 June 2024 · Felix Nikolas Prehn's Podcast

• 0:08
  Speaker 1: And I believe we're live.
• 0:09
  Speaker 1: We've got the weirdest set of jobs and employment data in that, and we know it's all the load of made up gobbledygook anyway, but today's data takes the biscuit.
• 0:22
  Speaker 1: So let me share that with you.
• 0:23
  Speaker 1: Let me walk you through it, and let's get rid of that too.
• 0:28
  Speaker 1: Pop that on instead.
• 0:31
  Speaker 1: Let me walk you through it.
• 0:33
  Speaker 1: Let me walk you through where we are.
• 0:34
  Speaker 1: Are we at the top of the market?
• 0:36
  Speaker 1: Is the bubble about to burst?
• 0:37
  Speaker 1: Is it a bubble?
• 0:39
  Speaker 1: And if you understand all of those data points, guess what.
• 0:42
  Speaker 1: You can make some money, which is what this is surely all about.
• 0:45
  Speaker 1: Right, do you want to see how much money we made this week?
• 0:47
  Speaker 1: Maybe you do, maybe you don't.
• 0:51
  Speaker 1: Here June, june, so far this week, I trade a 30K portfolio.
• 0:54
  Speaker 1: To show you, it can be done with a relatively small, modest size.
• 0:59
  Speaker 1: We made $5,400 so far this week, literally this week.
• 1:03
  Speaker 1: How many trades did we do?
• 1:04
  Speaker 1: Seven, six, eight, five so far.
• 1:07
  Speaker 1: And why is that?
• 1:10
  Speaker 1: Because I understand how the market works and I've got somewhat better information than most Not better than Wall Street, but better than most retail traders.
• 1:20
  Speaker 1: So let's have a look at the data here.
• 1:22
  Speaker 1: This is super important, the one thing the market cares about is non-farm payrolls.
• 1:27
  Speaker 1: This is the most important set of data.
• 1:29
  Speaker 1: The unemployment is for the tabloids.
• 1:32
  Speaker 1: Basically Nobody gives a hoot, but non-farm payrolls matters.
• 1:36
  Speaker 1: It was expected at 150 to 185 000.
• 1:46
  Speaker 1: It's coming at 270 000.
• 1:50
  Speaker 1: So very highly paid economists if you make the consensus forecast, you get paid hundreds of thousands of dollars a year.
• 1:58
  Speaker 1: If not, are off by 100,000 jobs.
• 2:03
  Speaker 1: So, according to El Presidente, joe Biden and his statisticians, 270,000 jobs were created in May.
• 2:15
  Speaker 1: Is that likely?
• 2:17
  Speaker 1: Well, seasonality plays a factor.
• 2:20
  Speaker 1: Right, it's got warm, so you know more stuff opens up, and so on, but it's a kick in the teeth of rate cut hopes.
• 2:24
  Speaker 1: Right, the Fed got warm, so more stuff opens up, and so on, but it's a kick in the teeth of rate cut hopes.
• 2:26
  Speaker 1: Right, the Fed can't go out and say we can cut rates because labor markets fallen apart, when this is what's happening At the same time, though.
• 2:37
  Speaker 1: So just to give this a score, this is a freaking disaster.
• 2:42
  Speaker 1: This is a disaster for the market.
• 2:46
  Speaker 1: The unemployment rate, however, is higher than expected.
• 2:50
  Speaker 1: Now the statisticians obviously bother to seasonally adjust non-farm payrolls, because they know the market pays attention.
• 3:02
  Speaker 1: But the unemployment rate, oh, they forgot that one.
• 3:05
  Speaker 1: So how do we have a higher unemployment and more jobs?
• 3:10
  Speaker 1: Yeah, because the data is a load of bollocks.
• 3:15
  Speaker 1: Average hourly earnings, which will tell you a lot about inflation, is also higher than expected, almost double what it was last year, last month, rather.
• 3:25
  Speaker 1: So that's also bloody horrible.
• 3:29
  Speaker 1: And the participation rate has dropped.
• 3:33
  Speaker 1: Less people are participating in the economy.
• 3:35
  Speaker 1: The Fed wants more people to participate in the economy.
• 3:39
  Speaker 1: You know, during COVID, 45 million Americans said that cubicle, I'm not going back to it.
• 3:46
  Speaker 1: That's what dropped the participation rate.
• 3:48
  Speaker 1: That's part of what caused inflation.
• 3:50
  Speaker 1: So that dropping is also a freaking disaster.
• 3:53
  Speaker 1: Average hours worked as flat.
• 3:55
  Speaker 1: The government the government employed 43,000 people extra.
• 4:01
  Speaker 1: How do we get elected?
• 4:02
  Speaker 1: Let's lower unemployment.
• 4:03
  Speaker 1: Let's just employ them all.
• 4:05
  Speaker 1: Buy the votes, buy the votes, buy the votes.
• 4:07
  Speaker 1: It's not something Biden came up with.
• 4:08
  Speaker 1: They all are as bad as each other, but still private, non-farm payrolls.
• 4:15
  Speaker 1: So private payrolls, excluding agriculture, is massively higher than we're expecting.
• 4:21
  Speaker 1: About 100,000 more jobs created, and that is terrible, as they say in some countries.
• 4:30
  Speaker 1: So what's the market made of this?
• 4:31
  Speaker 1: The market isn't exactly in love with it.
• 4:33
  Speaker 1: Spy dropped here two points.
• 4:36
  Speaker 1: We're now down 0.26%.
• 4:38
  Speaker 1: It doesn't seem so bad, does it?
• 4:40
  Speaker 1: Because the market doesn't believe the data.
• 4:41
  Speaker 1: At least the smart money doesn't.
• 4:43
  Speaker 1: Qqq is also down 0.2%, so it's not horrible.
• 4:47
  Speaker 1: And why is that?
• 4:49
  Speaker 1: Because people have caught on to the fact that this data is a load of gobbledygook and it's only intended for you, the American voter, to say, mr President, thank you for generating all those jobs, bringing all the jobs home, unshoring them Absolutely.
• 5:05
  Speaker 1: Mr President, thank you for generating all those jobs, bringing all the jobs home, unshoring them Absolutely.
• 5:07
  Speaker 1: Now the free market doesn't want to load.
• 5:08
  Speaker 1: But yeah, nvidia is down, amazon's down, the rest of the market not terrible.
• 5:12
  Speaker 1: Tesla's down a percentage point.
• 5:13
  Speaker 1: There's a fair bit of red, but it's not horrifically red.
• 5:17
  Speaker 1: Bank of America is down a percentage point, but it isn't quite the news we're hoping for we were hoping for.
• 5:27
  Speaker 1: Some of the banks out there were saying we should get 100,000 new jobs created, not 270,000.
• 5:33
  Speaker 1: So this is what Goldman Sachs came out with this morning, actually last night.
• 5:39
  Speaker 1: Goldman Sachs, the bankers who care.
• 5:44
  Speaker 1: They said if we create 250,000 plus jobs, the S&P will drop by 0.75 percentage points.
• 5:55
  Speaker 1: Today, and how many did we create?
• 5:57
  Speaker 1: 270,000.
• 5:58
  Speaker 1: So the mid range of that.
• 6:00
  Speaker 1: So the market should drop 0.75% today, according to the smart money, and you know it could get a little worse when the market opens.
• 6:09
  Speaker 1: It's just, I don't believe the data.
• 6:12
  Speaker 1: I really, really don't.
• 6:14
  Speaker 1: So I might be a contrarian here today.
• 6:16
  Speaker 1: And higher unemployment, more jobs created.
• 6:19
  Speaker 1: It's a bit of a contrast, right?
• 6:21
  Speaker 1: Doesn't really make much sense, does it?
• 6:25
  Speaker 1: How's PayPal doing?
• 6:25
  Speaker 1: Oh, paypal's doing very nicely.
• 6:27
  Speaker 1: Well, overall it's down half a percentage point this morning, but we're making some money on that.
• 6:32
  Speaker 1: We're up $4,000 so far on that trade.
• 6:35
  Speaker 1: You see that here, paypal plus $4,000.
• 6:37
  Speaker 1: That's a $12,000 cash trade $4,000 up 33% or so.
• 6:43
  Speaker 1: Not too bad, right?
• 6:44
  Speaker 1: So let's let that settle in and let's digest that for a moment.
• 6:49
  Speaker 1: And and we, we want to move on a little bit.
• 6:51
  Speaker 1: Oh yeah, and if you, if you want to know how we make money like this, like that here, right, yeah, we've got four thousand dollars profits here uncollected on 24k um and overall the portfolio is up, I think, fourteen thousand dollars, excluding that four thousand dollars.
• 7:08
  Speaker 1: And I keep showing you those trades, right, all of those trades, every trade that we do.
• 7:14
  Speaker 1: I am super happy to show you what did we do yesterday.
• 7:17
  Speaker 1: Most of the money comes from s&p trading it always does, but yesterday I made a little money on nvidia, made little bit of money on Nvidia, made a bit of money on IGV, which is software, uh, and $500 on GME.
• 7:29
  Speaker 1: Just couldn't help myself sometimes.
• 7:31
  Speaker 1: Uh, you are gonna have a bit of fun as well.
• 7:33
  Speaker 1: So that was, that was yesterday.
• 7:34
  Speaker 1: And uh, we're probably gonna make some more money today, because it's fun, isn't it?
• 7:39
  Speaker 1: It's good fun.
• 7:40
  Speaker 1: So there we are.
• 7:42
  Speaker 1: Let me walk you through.
• 7:43
  Speaker 1: Is this now the bubble?
• 7:46
  Speaker 1: Is the bubble bursting, bursting?
• 7:47
  Speaker 1: Is it all over?
• 7:48
  Speaker 1: It should be selling.
• 7:49
  Speaker 1: You know, dig a trench in the backyard and bury the children and the sardines and the cats and everything else and the gold and make your own decision.
• 7:58
  Speaker 1: What do you think about GME?
• 8:00
  Speaker 1: Well, it's a casino and if you've got enough money and your position sizing is right, I think you can make some nice money with it.
• 8:13
  Speaker 1: But for most people, I'd tell them to stay the heck away.
• 8:15
  Speaker 1: Nice little return, yeah.
• 8:17
  Speaker 1: Full-time employment fell 625 000 muhammad.
• 8:25
  Speaker 1: Yeah, exactly the.
• 8:26
  Speaker 1: The underlying data is is always a very different story.
• 8:29
  Speaker 1: Like the government puts out a load of gobbledygook.
• 8:31
  Speaker 1: Let's see if bloomberg's smart enough to to tell that apart.
• 8:34
  Speaker 1: Check out the us edition.
• 8:36
  Speaker 1: Big us job gains is out of sync with recent weaker economic data.
• 8:39
  Speaker 1: Okay, at least they realize something.
• 8:41
  Speaker 1: Or maybe they ask chat gpt.
• 8:42
  Speaker 1: Maybe they asked ChatGPT.
• 8:44
  Speaker 1: Treasure yields are up, us payrolls and wages pick up, pushing back bets for Fed cuts.
• 8:52
  Speaker 1: The market's pretty stupid, isn't it?
• 8:53
  Speaker 1: And if you understand a little bit more than your average Bloomberg journalist, making money is a lot easier than you think.
• 9:00
  Speaker 1: If you want to come and learn that, how we make those returns, then come and join me on Tuesday for a live training FelixRentsorg slash training.
• 9:08
  Speaker 1: It'll be fun.
• 9:08
  Speaker 1: I'll teach you exactly what I do and how I do it.
• 9:10
  Speaker 1: It's free.
• 9:11
  Speaker 1: So this is the bubble talk.
• 9:14
  Speaker 1: This is the chart that everybody shows you.
• 9:15
  Speaker 1: So what do you got here?
• 9:16
  Speaker 1: You've got in blue Cisco, right, not the dancing thong song man, but rather the IT company.
• 9:25
  Speaker 1: And then, in sort of greenish, you've got the Taiwanese big giant.
• 9:30
  Speaker 1: He should have Sweetcorn as a logo.
• 9:34
  Speaker 1: Really, that'd be funny.
• 9:34
  Speaker 1: So the charts match.
• 9:37
  Speaker 1: But OK, first of all, this is chart crime and should be imprisonable offense, or at least should be allowed to flog the person who made it publicly, because that would be the right thing to do, because you can make two charts fit pretty much anything if you play around with the axis and everything.
• 9:53
  Speaker 1: I used to do that for a living.
• 9:55
  Speaker 1: Can you make that chart look a bit more bullish and like all right, I'll just stretch it a bit, squash it a bit, cut out the bit.
• 10:02
  Speaker 1: We didn't want you to see.
• 10:03
  Speaker 1: That's what charts do.
• 10:04
  Speaker 1: But there is a big difference here, because I'm going to show you a few data points.
• 10:09
  Speaker 1: If you're allergic to data, this is probably not the channel for you, because data makes you money, and if you don't want to make money, then go somewhere else.
• 10:18
  Speaker 1: This here is what this is realized.
• 10:23
  Speaker 1: Vol what the heck is realized.
• 10:25
  Speaker 1: Vol.
• 10:25
  Speaker 1: This is realized.
• 10:26
  Speaker 1: Vol, what the heck is realized.
• 10:27
  Speaker 1: Vol.
• 10:27
  Speaker 1: Vol stands for, yeah, attility, attility, Volatility.
• 10:33
  Speaker 1: Can I spell that Apparently?
• 10:34
  Speaker 1: So volatility is what Simplistic word would be fear In 2000, towards 2000,.
• 10:43
  Speaker 1: That's 2000,.
• 10:45
  Speaker 1: Fear shot up very significantly.
• 10:47
  Speaker 1: Right, the market kind of got a little bit more freaked out from 1995 when the good times started to happen all the way up to 2000.
• 10:53
  Speaker 1: And what have you got right now?
• 10:56
  Speaker 1: No fear, none whatsoever.
• 10:59
  Speaker 1: So the parallel that this is good data.
• 11:03
  Speaker 1: From Bank of America, by the way, who have a pretty good options trading team, I'm told.
• 11:09
  Speaker 1: I don't know them personally, but I read some of their stuff.
• 11:12
  Speaker 1: This is B of A Bank of America.
• 11:16
  Speaker 1: They said the bubble took five years to unfold, survived a 100% Fed hike, the Asian crisis, a bear market driven by LTCM's failure, so on, and still made 80% in each of his last final two years.
• 11:30
  Speaker 1: And what are they talking about?
• 11:31
  Speaker 1: They're talking about 1995 to 1999.
• 11:34
  Speaker 1: So they're saying today we're closer to 1995, rather than to 1999.
• 11:40
  Speaker 1: So if we go back to our little lovely chart up here with the Cisco chart, that would imply we are here.
• 11:50
  Speaker 1: This would make a good thumbnail, wouldn't it?
• 11:52
  Speaker 1: I should take a screenshot of that Thumbnail editor.
• 11:54
  Speaker 1: If you're paying attention.
• 11:55
  Speaker 1: This is a good one and therefore there's still a lot of fun to be had.
• 12:01
  Speaker 1: So let's have the fun Now.
• 12:04
  Speaker 1: In the 2000s, cisco their PE was 400.
• 12:09
  Speaker 1: 400.
• 12:11
  Speaker 1: What's the PE today of NVIDIA, nvidia stock PE?
• 12:16
  Speaker 1: People should know the answer.
• 12:19
  Speaker 1: Is it 70?
• 12:21
  Speaker 1: I thought it was 38 or something.
• 12:25
  Speaker 1: What is it right now?
• 12:34
  Speaker 1: Is it really 70?
• 12:35
  Speaker 1: Do we have price earnings in here?
• 12:40
  Speaker 1: Price and earnings See if that guy got it right.
• 12:46
  Speaker 1: Nope, not loading Data is sometimes a bit dodgy.
• 12:49
  Speaker 1: What's going on here?
• 12:50
  Speaker 1: Nvidia PE, guru focus They've got pretty good data over there.
• 12:56
  Speaker 1: They also say it's 70.
• 12:58
  Speaker 1: Forward PE is 46,.
• 12:59
  Speaker 1: That's what I was thinking of Okay, so it's 70.
• 13:01
  Speaker 1: So it's NVIDIA.
• 13:03
  Speaker 1: The red pen is a bit menacing, isn't it?
• 13:08
  Speaker 1: It's changed to blue as new, as they say.
• 13:11
  Speaker 1: Hey, blue is 70.
• 13:13
  Speaker 1: So what's 400 divided by 70?
• 13:15
  Speaker 1: Anybody can do maths here.
• 13:17
  Speaker 1: I can't, obviously, I'm a banker.
• 13:19
  Speaker 1: 400 divided by 70 is 5.7.
• 13:24
  Speaker 1: So we could go according to this, 5.7 times higher until we hit a real bubble.
• 13:29
  Speaker 1: So this ain't a bubble yet what about this one here?
• 13:33
  Speaker 1: This is fun, because what are US money market fund assets?
• 13:37
  Speaker 1: Bonds, right.
• 13:40
  Speaker 1: And what are bonds?
• 13:41
  Speaker 1: What are they?
• 13:43
  Speaker 1: They are not stocks.
• 13:47
  Speaker 1: What does that mean?
• 13:49
  Speaker 1: See that little dip there?
• 13:51
  Speaker 1: There's a little dip there 7.3 trillion.
• 13:53
  Speaker 1: A little bit of that is getting greedy and going.
• 13:55
  Speaker 1: Mr Bond manager, I think we should be putting some of this on Nvidia.
• 14:00
  Speaker 1: I hear it's the latest thing.
• 14:02
  Speaker 1: I hear it's from Taiwan and they do something that's kind of funky and they sign women's chests, and if some of that money flows to the stock market, we could go five times higher.
• 14:14
  Speaker 1: Yeah, seriously, seriously, there's a lot of money on the cycle.
• 14:17
  Speaker 1: No-transcript.