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Felix Prehn - Warning: Inflation Data Just Out! 🚀 + Stock Market News 26 July 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Felix here, Welcome to this.
• 0:01
  Speaker 1: Echoey just killed that live stream pre-market.
• 0:06
  Speaker 1: We have the most important set of inflation data out today, just before the Fed meeting in July deciding on they're going to raise rates, lower rates, this month, are they going to cut rates in September?
• 0:18
  Speaker 1: And the data didn't come in just quite the way we wanted to.
• 0:22
  Speaker 1: So let me walk you through that, but not just the headline figures, but actually what's happening underneath it.
• 0:27
  Speaker 1: So you are the best informed investor out there, and then we'll have a look at what should we do now.
• 0:31
  Speaker 1: Should we panic and sell and run like some, or is this actually the moment to get back in and buy the fricking dip?
• 0:39
  Speaker 1: So there we are.
• 0:41
  Speaker 1: Let me share my screen with you and as I'm glancing at the questions here, of course, feel free to ask me any questions and I'll do my utmost to answer them.
• 0:52
  Speaker 1: Okay, so core PCE price indexes.
• 0:55
  Speaker 1: This is the Fed's favorite.
• 0:57
  Speaker 1: This is the Fed's favorite inflation metric.
• 0:59
  Speaker 1: It came in at 0.2%.
• 1:02
  Speaker 1: We were hoping it would come in at 0.1.
• 1:04
  Speaker 1: Last month it was 0.1.
• 1:06
  Speaker 1: Is that terrible?
• 1:07
  Speaker 1: Well, bear with me for a moment.
• 1:09
  Speaker 1: Personal income grew less than expected at 0.2% about half the forecast.
• 1:16
  Speaker 1: So less money Spending is in line with what we expected and notice let me get a more neutral pen color here Notice that spending is larger than income.
• 1:29
  Speaker 1: So people are spending more than the income's going up by not generally a brilliant plan.
• 1:36
  Speaker 1: Month on month, PCE is at 0.1.
• 1:40
  Speaker 1: That's the headline figure, which is kind of in line-ish with what we're expecting.
• 1:45
  Speaker 1: It's a little bit higher than last month, but not like horrendously high.
• 1:49
  Speaker 1: It is basically the same level that we're at over the year that it was at.
• 1:53
  Speaker 1: But what about that slightly higher core inflation here?
• 1:58
  Speaker 1: Is that something we should worry about?
• 2:00
  Speaker 1: Well, I glanced at the first number and I went, oh, that's not good, is it?
• 2:03
  Speaker 1: And then I thought hang on, Income rising less than spending.
• 2:08
  Speaker 1: I think I know someone who likes that sort of thing, somebody who enjoys it when people fall into poverty and debt, and I think that could be the lot at Wall Street.
• 2:17
  Speaker 1: The lot on Wall Street might also like what we're doing.
• 2:20
  Speaker 1: We're up $24,623 so far this year on our 30K teaching portfolio.
• 2:27
  Speaker 1: If you want to learn how we do that the three-step system that we employ then click on the link down below felixfrensorg slash training or webinar.
• 2:35
  Speaker 1: Both takes you to the same place.
• 2:36
  Speaker 1: Yeah, not generally a brilliant plan exactly.
• 2:42
  Speaker 1: And margin of error.
• 2:42
  Speaker 1: Okay, statistics are always statistics and lies and all of that.
• 2:46
  Speaker 1: But let me show you this.
• 2:47
  Speaker 1: So, USPCE, core and year on year, if you just look at the trend here, the trend is very significantly down.
• 2:57
  Speaker 1: So whether we are 0.1% plus or minus kind of doesn't really matter.
• 3:04
  Speaker 1: The point is that the trend is largely intact.
• 3:08
  Speaker 1: So we're trending down.
• 3:09
  Speaker 1: We didn't see a massive negative surprise, so therefore I'm kind of like OK, I think the sherry whisking you know, swinging lot at the Fed are probably OK with this, and then I think they'll rejoice when they see this.
• 3:23
  Speaker 1: Rejoice, rejoice I should make you start singing.
• 3:28
  Speaker 1: And that is that, as I say, income is up 0.2%.
• 3:33
  Speaker 1: So this is income Income, Whereas spending is plus 0.3%, and last month income also was lower than spending.
• 3:51
  Speaker 1: What does that mean?
• 3:52
  Speaker 1: Well, it means and here is a slightly prettier chart for that it means that savings fall right, so we get less savings.
• 4:01
  Speaker 1: What happens if you have less savings?
• 4:03
  Speaker 1: Well, you eventually run into a recession.
• 4:07
  Speaker 1: Eventually, there's just no more money left right, and I've got a fireplace on which is maybe a little bit optimistic here.
• 4:15
  Speaker 1: I'm just going to turn that off One sec.
• 4:16
  Speaker 1: Okay, accept that, I can't.
• 4:41
  Speaker 1: I don't know how it's stuck, so it's still on.
• 4:44
  Speaker 1: So there we are.
• 4:46
  Speaker 1: There is a little teeny flame there behind me.
• 4:49
  Speaker 1: It was sort of running out of fuel slowly and gradually.
• 4:52
  Speaker 1: So anyway, what does it mean?
• 4:54
  Speaker 1: It means it's probably actually quite good news and if you look at the pre-market, it's pretty good.
• 4:59
  Speaker 1: Nvidia is up 3%, Tesla is up 1.4%, Meta up 1.5%, Amazon's up a percentage point, Apple is up always a percentage point, and only Microsoft and Google are sort of trying to figure out what's going on there.
• 5:11
  Speaker 1: Well, Microsoft is about to report earnings.
• 5:13
  Speaker 1: That's probably why.
• 5:14
  Speaker 1: But overall we're seeing a nice little rebound here.
• 5:18
  Speaker 1: And if you look at QQQ, if we're allowed, left inside is QQQ, right inside is Nvidia, both pre-market and it's hang on.
• 5:32
  Speaker 1: Where was 8.30?
• 5:33
  Speaker 1: 8.30 was was here, and 830 was also.
• 5:42
  Speaker 1: Okay, let's do it on one shot, it's probably easier.
• 5:45
  Speaker 1: This was 830 on nvidia, so not exactly a terrible story, and then on qq.30 was here.
• 5:54
  Speaker 1: So we're sliding down a little.
• 5:55
  Speaker 1: We lost like a point or so, but nothing significant.
• 5:59
  Speaker 1: On SPY, we are losing a little bit, which sort of makes sense that you know the numbers aren't wonderful, but they're also not terrifying.
• 6:08
  Speaker 1: So we're losing about a point here.
• 6:12
  Speaker 1: So it's really not anything to feel particularly worried about.
• 6:21
  Speaker 1: My wife always spends more than my income, says Christian.
• 6:24
  Speaker 1: Well, that's a problem, my friend.
• 6:25
  Speaker 1: You better make financial planning a family thing, because it's your money together, isn't it?
• 6:31
  Speaker 1: So, yeah, you got to do something about that If you don't want to have that uncomfortable conversation.
• 6:35
  Speaker 1: You're going to really regret that in 20 or 30 years because it's going to really suck, not having money.
• 6:41
  Speaker 1: You got ads again for f-sake.
• 6:49
  Speaker 1: They are promising to work on it, but Google is not promising me a date.
• 6:53
  Speaker 1: So basically they're saying, yeah, we quite like taking the ad money that you don't want, so we're doing it anyway.
• 7:00
  Speaker 1: That seems to be the way they're doing that.
• 7:02
  Speaker 1: So IWM support was down here at sort of 210, resistance up here at 225.
• 7:10
  Speaker 1: This is a screenshot from TradingView, Not TradingView.
• 7:20
  Speaker 1: It's been a long day today.
• 7:21
  Speaker 1: For some reason it's from here, from tradevisionio.
• 7:23
  Speaker 1: That's where it comes from.
• 7:25
  Speaker 1: The support here at 225.
• 7:27
  Speaker 1: If you look at the live chart at IWM, party is still intact 1.5% up today.
• 7:33
  Speaker 1: So it looks very much like we're still going up.
• 7:38
  Speaker 1: Some resistance here at 223 on the chart, 225 for market positioning.
• 7:43
  Speaker 1: So that's what I'd be looking at Breakthrough 225, I think we have a pretty good chance to at least move up another 10 points or so or so.
• 8:00
  Speaker 1: And if you try and understand why the inflows into small caps are the biggest they have been since 2007.
• 8:03
  Speaker 1: Always a date to make us feel good, right, Nothing bad happened in 2008.
• 8:08
  Speaker 1: No, it was all good.
• 8:10
  Speaker 1: 2008 was fantastic, Brilliant year.
• 8:12
  Speaker 1: So just something to think about to cheer you up.
• 8:16
  Speaker 1: So, yeah, big move into small caps.
• 8:18
  Speaker 1: And now you might be thinking well, small caps are really cheap.
• 8:21
  Speaker 1: Well, are they?
• 8:22
  Speaker 1: The average PE of the small caps is that blue horizontal line there?
• 8:30
  Speaker 1: Where are we here?
• 8:32
  Speaker 1: So small caps are no longer cheap, trading at exactly the same historic valuations as they've done since 1985, on average.
• 8:41
  Speaker 1: So, you know, stream stop for you also.
• 8:46
  Speaker 1: Oh, that's just lovely, isn't it?
• 8:47
  Speaker 1: Um, maybe, yeah, I, obviously.
• 8:57
  Speaker 1: Obviously, our friends at YouTube can do whatever they like.
• 9:00
  Speaker 1: That is their prerogative, but they're not meant to.
• 9:04
  Speaker 1: They're particularly not meant to break the stream.
• 9:07
  Speaker 1: So I shall be emailing them every single day with screenshots and they do reply.
• 9:12
  Speaker 1: They're very polite, but obviously they're not just out of the powers of the mighty.
• 9:16
  Speaker 1: Maybe they need to bring in a bit more money before the next earning stage or something.
• 9:21
  Speaker 1: And then, if you look at the S&P here we have some support at 5,400 SPX, but we've lost the last two support lines here, which is not good.
• 9:34
  Speaker 1: Which means what it means?
• 9:35
  Speaker 1: The market makers are still selling.
• 9:37
  Speaker 1: It means there is actively sell pressure.
• 9:40
  Speaker 1: We've got no buybacks this week and we've got algo funds also selling.
• 9:45
  Speaker 1: So who's selling?
• 9:46
  Speaker 1: We've got market makers selling and I know market makers is an odd term, but we've got three of them on our coaching staff.
• 9:54
  Speaker 1: They basically are the ones on the other side of your trades.
• 9:57
  Speaker 1: It's typically a market maker.
• 9:59
  Speaker 1: We've got no buybacks this week and we have what was the third thing?
• 10:05
  Speaker 1: Oh yeah, CTAs, algo funds are selling.
• 10:08
  Speaker 1: So I would still be a little bit conservative today.
• 10:11
  Speaker 1: To be honest with you, I think it is probably the point to turn bullish again after this little rout, particularly as the inflation data came in.
• 10:20
  Speaker 1: Okay, but there's still a little bit of sales pressure there.
• 10:23
  Speaker 1: So just, if you set up positions today, just don't be super surprised if they dip a little bit.
• 10:27
  Speaker 1: But hopefully come next week things will look a lot better here.
• 10:30
  Speaker 1: And I gave you this yesterday the CTAs sell below 5,472.
• 10:38
  Speaker 1: They just sell, Can't really help themselves.
• 10:50
  Speaker 1: How long do these corrections typically last?
• 10:52
  Speaker 1: Well, these 8% corrections are pretty normal.
• 10:54
  Speaker 1: Whatever, it depends on the time frame you look at.
• 10:59
  Speaker 1: I mean, just look at the chart right, Just look at QQQ not a minute chart, but a day chart and just zoom out and have a look at the measuring tool here.
• 11:14
  Speaker 1: So say, in October, we fell 7% right Then in the next big one was in April we dropped 6%.
• 11:26
  Speaker 1: Right now we've dropped and rebounded somewhat, or we're down about 4% now, or something like that, Because we're up 1% here this morning, but we did go down 5% or something like that.
• 11:38
  Speaker 1: So it's a normal move.
• 11:40
  Speaker 1: There's nothing unusual about it.
• 11:43
  Speaker 1: It doesn't really change anything.
• 11:45
  Speaker 1: It's just a little bit of money shifting from A to B, in this case from big tech stocks to small tech stocks, because a lot of people on Wall Street are thinking stocks to small tech stocks, because a lot of people on Wall Street are thinking I think all this spending on AI isn't really getting us any returns.
• 12:01
  Speaker 1: It's just more money in NVIDIA's pockets.
• 12:03
  Speaker 1: That's kind of the way that's going.
• 12:05
  Speaker 1: So be a little bit cautious with that.
• 12:06
  Speaker 1: I think I'm shorting Google.
• 12:16
  Speaker 1: I never really short anything, actually.
• 12:17
  Speaker 1: Palantir had a pretty good day yesterday, right Up another 1.5% here today, which is pre-market that is.
• 12:25
  Speaker 1: So that looks pretty decent.
• 12:26
  Speaker 1: Some of our other favorite tech stocks, like SoFi, is at 2.3% 744, which is pretty good, I think.
• 12:36
  Speaker 1: Yesterday we said it was going to stick around the $7 mark.
• 12:39
  Speaker 1: We're not too far off on that front, so there is some logic in that.
• 12:44
  Speaker 1: And then you might be thinking but it's all a bubble.
• 12:47
  Speaker 1: It's all a bubble.
• 12:48
  Speaker 1: Here we go Sorry, chart being shared again.
• 12:51
  Speaker 1: And what do we see?
• 12:54
  Speaker 1: Well, these are the FAANG stocks, that faint line there, and this is the NASDAQ and this is the present bubble.
• 13:02
  Speaker 1: So it's in similar line.
• 13:06
  Speaker 1: You could arguably say we are near a market high.
• 13:09
  Speaker 1: But it really just depends.
• 13:12
  Speaker 1: It really depends on whether companies are able to make money out of AI.
• 13:18
  Speaker 1: Is Microsoft able to charge us for Microsoft Copilot and are sufficient numbers of people paying for that?
• 13:26
  Speaker 1: If the answer is yes, then spending billions on data sensors and so on is a great investment.
• 13:31
  Speaker 1: If the answer is no, and there is no product at the end of this and there's no productivity gain at the end of this, then the thing will come crashing down.
• 13:39
  Speaker 1: So you really want to look at like what's the quality of products and are people buying and people are using them.