Latest / Felix Nikolas Prehn's Podcast / Kiss of Death Signal Just TRIGGERED for Markets... What Happens Now? + Stock Market News 06 March 2024

Transcript

Kiss of Death Signal Just TRIGGERED for Markets... What Happens Now? + Stock Market News 06 March 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Alexia and welcome to this pre-market live.
• 0:03
  Speaker 1: We've got the culprit for yesterday's crash.
• 0:06
  Speaker 1: Got the rebound this morning.
• 0:08
  Speaker 1: We've got Fed Chair Powell's statement from today.
• 0:11
  Speaker 1: We've got jobs data in.
• 0:13
  Speaker 1: We've got Apple massive charting problems which we must address.
• 0:19
  Speaker 1: We've got SoFi collapse and we're right, that's probably nonsense.
• 0:25
  Speaker 1: Got Palantir contract.
• 0:27
  Speaker 1: Is that enough to cover this morning?
• 0:29
  Speaker 1: I think it probably is.
• 0:31
  Speaker 1: Smash the you know what and put your comments in the chat and I will do my best to go through them in just a moment.
• 0:37
  Speaker 1: And let's get cracking, shall we?
• 0:40
  Speaker 1: Let's get cracking.
• 0:41
  Speaker 1: And what happened?
• 0:45
  Speaker 1: Here we are.
• 0:47
  Speaker 1: One thing, before we get going, that I want you to do for yourself is this I put out four times a year a full S&P 500 benchmark, all the key financials of every 500, all the 500 biggest stocks in the US, and you can download that for free at phelixfriendsorg slash SP 500.
• 1:09
  Speaker 1: And let me just show you how you actually use this.
• 1:11
  Speaker 1: This is the benchmark.
• 1:13
  Speaker 1: First of all, you click on file, make a copy.
• 1:15
  Speaker 1: Now you've got your own, you can mess with it, you can annotate it, you can write on it, you can do whatever you want with it.
• 1:20
  Speaker 1: I usually go and set filters these little filter tabs here at the top.
• 1:25
  Speaker 1: I click on those, filter by condition and I might want my gross margin to be greater than, say, 60%.
• 1:35
  Speaker 1: That would be a pretty good number to be above.
• 1:39
  Speaker 1: You hit a button, hit okay.
• 1:41
  Speaker 1: Now you've only got 110 companies left.
• 1:44
  Speaker 1: Okay.
• 1:45
  Speaker 1: The next thing I usually look at is return on invested capital.
• 1:49
  Speaker 1: And again I go and I can see you guys coming into the cheat which I love filter by condition and again go on greater than and that's not financial advice, but I'd say that has to be at least a double digit figure, preferably a bit more than that.
• 2:05
  Speaker 1: And now I forgot to put the percent.
• 2:09
  Speaker 1: You have to put percent afterwards, otherwise it doesn't work.
• 2:12
  Speaker 1: Now we've only got 51 companies left, so you've really limited 90% of the S&P just now just because they're not very good businesses.
• 2:19
  Speaker 1: Another thing you could look at is do something similar for long-term earnings growth.
• 2:22
  Speaker 1: Again, you want to look at double digit numbers, and then you'd be left with like a handful of companies.
• 2:27
  Speaker 1: I'm going to take my filters off here so that you get the full unfiltered sheet, and I love you guys hopping into this FelixRanzorg slash SP500.
• 2:37
  Speaker 1: It's completely free of charge.
• 2:38
  Speaker 1: Let's put that out there so you have access to the same data that everybody else has, everybody else Wall Street has.
• 2:45
  Speaker 1: So check it out.
• 2:46
  Speaker 1: Felixranzorg slash SP500.
• 2:48
  Speaker 1: Now let's jump all over the ADP data that's just come out and let's also pull that up Calendar, economic calendar.
• 3:00
  Speaker 1: Here it is, and it's coming higher than expected.
• 3:06
  Speaker 1: We were expecting about 90,000 or thereabouts.
• 3:08
  Speaker 1: We've got 140,000, it's higher than last month.
• 3:11
  Speaker 1: And what does that mean?
• 3:12
  Speaker 1: Well, it means the economy is still somewhat stronger than we expect and we also have pay, and while pay has declined significantly for job stares, so job changes.
• 3:31
  Speaker 1: So now, if you change the job, you're not getting that much more of a bonus.
• 3:35
  Speaker 1: You're getting about 7% more.
• 3:36
  Speaker 1: About a year ago you were getting 16% more, which kind of says there was a labor shortage that seems to have lessened and people who are staying in their job are now only getting a 5.1% pay rise a year, which is just less than inflation.
• 3:53
  Speaker 1: Let's be honest about it, right?
• 3:55
  Speaker 1: So that's actually quite positive, I would say, and I think that's why the market isn't freaking out about it, because the wages are coming down.
• 4:04
  Speaker 1: And here is pre-market.
• 4:05
  Speaker 1: Looks pretty beautiful in green.
• 4:07
  Speaker 1: Except for Tesla, everything is pretty much green and rebounding somewhat, which is nice Small caps and absolutely everything this morning.
• 4:13
  Speaker 1: And then you've got Papa Jerome Powell and he's speaking well, he's probably not speaking that much because the Muppets in Washington like to talk themselves and then occasionally you get a few words and he says the committee does not expect that will be appropriate to reduce the target range until it's gained greater confidence.
• 4:33
  Speaker 1: Inflation is moving sustainably towards 2%.
• 4:35
  Speaker 1: He's basically saying we're not cutting rates anytime soon.
• 4:39
  Speaker 1: And again, you might think the market doesn't like that, but the market is priced this in.
• 4:42
  Speaker 1: So we said goodbye to the March cut, we said goodbye to the May cut and in June the optimists are still hoping for it, but most people, I think, are now looking at a second half of the year rate cut.
• 4:56
  Speaker 1: So we lost about three rate cuts so far this year.
• 4:59
  Speaker 1: Now, what about the doom and gloom in the stock market?
• 5:02
  Speaker 1: Well, what have you got here?
• 5:03
  Speaker 1: You've got and this is not usually how this works, this is why I'm putting it out there You've got Apple down here and then at the top we've got the chart.
• 5:19
  Speaker 1: What are we doing?
• 5:20
  Speaker 1: What are we doing?
• 5:21
  Speaker 1: The wonders of technology.
• 5:24
  Speaker 1: At the top we've got the NASDAQ and you can see that Apple is massively underperforming the NASDAQ by about 6.5 percentage points and that's very unusual because the old mantra is where Apple goes, the market goes.
• 5:38
  Speaker 1: And that has me a little teeny, teeny bit worried about it.
• 5:42
  Speaker 1: And let me show it to you.
• 5:45
  Speaker 1: You look at Apple, you look at a four hour stock chart.
• 5:49
  Speaker 1: What are we seeing here?
• 5:51
  Speaker 1: Are we seeing the 50 day moving average line in my yellow crossing, the 200 day moving average line, and that's some people call it the death cross.
• 6:00
  Speaker 1: It's not a good thing.
• 6:01
  Speaker 1: Is that going to happen on a day chart?
• 6:03
  Speaker 1: Yeah, it's going to happen on the day chart, if not today, maybe tomorrow or the day after.
• 6:10
  Speaker 1: Just the way we're going.
• 6:12
  Speaker 1: So the yellow line here crossing through the longer term moving averages and that's a real bearish sign that a lot of people will sell on.
• 6:19
  Speaker 1: A lot of the Qantas, algo traders and so on will sell on and therefore Apple is a little bit in trouble, even though it's bouncing up this to touch here pre market, and it's important to look at these things.
• 6:32
  Speaker 1: A lot of people say, ah, stock charts are for whatever, but no, that's actually in the short term, it's all charts.
• 6:39
  Speaker 1: The long term, it's all fundamentals.
• 6:41
  Speaker 1: So in the long term, your 10-year, 15-year, 20-year horizon.
• 6:45
  Speaker 1: Go to my spreadsheet here philxfrenzorg slash sp500, and that'll decide.
• 6:51
  Speaker 1: But in the short term, it's understanding this right?
• 6:54
  Speaker 1: That's really what it's all about Now I want to walk you through here.
• 6:58
  Speaker 1: We put out a newsletter a couple of times a week.
• 7:00
  Speaker 1: We're just written by Elliot, who's one of our market makers that's not him, and he was an options trader for investment banks for 20 years hedge funds and so on and he was an actual market maker on the London Metal Exchange and has always been trading options.
• 7:17
  Speaker 1: So he knows a huge amount about the market more than probably 99.99999% of people out there.
• 7:24
  Speaker 1: Very, very smart guy.
• 7:25
  Speaker 1: And he writes this newsletter and I wanted to show this to you because there's some real insight in here and he's basically saying he's running through some of the things that have come down and he's saying that what actually matters here is volatility.
• 7:47
  Speaker 1: That's what's gonna flip the market If and when this goes back up.
• 7:53
  Speaker 1: Called VIX, we're just a volatility indicator and yesterday we shot up 7%.
• 7:58
  Speaker 1: Today we're down 3.5%.
• 8:00
  Speaker 1: So we're not there yet.
• 8:01
  Speaker 1: It hasn't exploded yet.
• 8:03
  Speaker 1: But when it does shoot up, then the market like what it did in October 2023, that's when the market pain comes in.
• 8:11
  Speaker 1: And will that happen?
• 8:13
  Speaker 1: Yes, at some point guaranteed.
• 8:16
  Speaker 1: And video will fall 20%.
• 8:18
  Speaker 1: It's gonna happen At some point.
• 8:20
  Speaker 1: It doesn't happen this month or a quarter, a next quarter, but at some point it'll happen.
• 8:24
  Speaker 1: And you need to understand that.
• 8:25
  Speaker 1: And he walks through this in real detail, which I'd encourage you to read, because I think it's a little in depth for beginners but it's kind of the knowledge level you wanna strive towards.
• 8:38
  Speaker 1: So I think it's a very, very good thing to read and really understand it.
• 8:41
  Speaker 1: But in a nutshell, and I like that he puts it in here.
• 8:44
  Speaker 1: So if you don't wanna read all the details, you just read the nutshell.
• 8:46
  Speaker 1: And he says look, it's easy to get nervous after a pretty decent down day, but as long as the SMP is above 4,040, the ball trend is intact.
• 8:57
  Speaker 1: So if we put SPX out here and zoom out a bit and then go to let me get a line, have a line please For some reason my browser doesn't allow me to use the shortcuts Anywhere above 4,040, we're still in the longer term ball trend Between 5,040 and 5,1.
• 9:24
  Speaker 1: Okay, let's go to bullish.
• 9:27
  Speaker 1: First 5,150.
• 9:31
  Speaker 1: Sorry, I put that too low.
• 9:34
  Speaker 1: It's 5040.
• 9:37
  Speaker 1: So below 5040 we're bearish, above 5150 we are bullish.
• 9:51
  Speaker 1: And he isn't just making these numbers up.
• 9:54
  Speaker 1: This is based entirely on market makers positioning and because he was one of those, he understands this pretty well.
• 10:02
  Speaker 1: So, essentially, up here everything is good and down there everything is bad.
• 10:16
  Speaker 1: Simple enough, and in between the 100 points in between where we are right now, we're in a neutral zone.
• 10:22
  Speaker 1: We don't really know which way it's going to go, and that's often the way the market works.
• 10:26
  Speaker 1: So how do you trade it today?
• 10:28
  Speaker 1: Either you pick a direction or you just wait, or you could trade it sideways.
• 10:33
  Speaker 1: That's also something to do, but waiting a little bit might not be such a terrible thing to do.
• 10:38
  Speaker 1: Pre-market, as I say, we are up somewhat.
• 10:42
  Speaker 1: We're going to have a look at the S&P futures, which are right now at 5114.
• 10:47
  Speaker 1: So we're getting close again to our bullish tag.
• 10:51
  Speaker 1: Does that make sense?
• 10:51
  Speaker 1: I hope that makes sense.
• 10:52
  Speaker 1: If it doesn't, please ask, and I hope to make it simpler for you.
• 11:00
  Speaker 1: That's always my intention.
• 11:02
  Speaker 1: So get your hands on that newsletter.
• 11:04
  Speaker 1: There's again.
• 11:04
  Speaker 1: There's a free trial to the newsletter.
• 11:06
  Speaker 1: There's also a free version of the newsletter If you go to philxfrensorg slash sub.
• 11:10
  Speaker 1: Philxfrensorg slash sub, like the sandwich which hopefully you're not eating because it's incredibly unhealthy.
• 11:15
  Speaker 1: Yes, I said it, it's true Total rubbish.
• 11:18
  Speaker 1: Then the price philxfrensorg slash sub.
• 11:24
  Speaker 1: So we have I look at some more exciting news.
• 11:27
  Speaker 1: Maybe excitement.
• 11:28
  Speaker 1: You want excitement.
• 11:28
  Speaker 1: And if you invest in Palantir and so far you're basically saying to the world I want excitement in my life.
• 11:34
  Speaker 1: I put this out on X and this is basically two announcements today, two press releases.
• 11:41
  Speaker 1: The army selected Palantir to deliver Titan's next generation deep sensing capability.
• 11:46
  Speaker 1: It can basically sense whether people identify as male, female or something in between.
• 11:53
  Speaker 1: No kidding, but it's part of the Titan huge effort of the US military to become somewhat of a modern force.
• 12:02
  Speaker 1: And they are handing these out in teeny, tiny slices.
• 12:07
  Speaker 1: Imagine one of those slicing machines slices salami or something.
• 12:11
  Speaker 1: They're doing that one slice at a time.
• 12:13
  Speaker 1: So it's a hundred seventy eight million, which isn't really all that much.
• 12:15
  Speaker 1: But Palantir keeps getting these and I think they're going to keep getting these and I think they're going to hold onto these and I think they're going to get billions of dollars from the army every year In addition.
• 12:25
  Speaker 1: That's my view.
• 12:26
  Speaker 1: And the second thing is that they're announcing another AI P con, which is sort of a comic book convention for tech nuts, and they're going to unveil 20 plus new customers in partners, which is pretty good, and 60 customers will showcase what they're doing.
• 12:47
  Speaker 1: 20 of them are new, 20 plus of them are new.
• 12:49
  Speaker 1: That's pretty impressive.
• 12:51
  Speaker 1: So the run rate at which they are signing up trials and apparently now converting them seems to be speeding up significantly, which is, of course, something that we like so much.
• 13:04
  Speaker 1: We can't help ourselves but smash the like button.
• 13:09
  Speaker 1: Now let's see what some of your questions are.
• 13:15
  Speaker 1: Did I miss something else?
• 13:16
  Speaker 1: Oh, so far.
• 13:17
  Speaker 1: Oh, yes, so far.
• 13:19
  Speaker 1: I'm going to put it down in a nutshell.
• 13:20
  Speaker 1: I wanted to put out a video on this.
• 13:21
  Speaker 1: I just didn't get around.
• 13:22
  Speaker 1: I don't have time for it today.
• 13:25
  Speaker 1: What have they done?
• 13:26
  Speaker 1: They've issued Bonds.
• 13:32
  Speaker 1: The bonds are convertible.
• 13:34
  Speaker 1: You read that Two stocks that could cause dilution of about 7% or maybe a little bit less.
• 13:53
  Speaker 1: They're doing something fairly complicated with call options and so on.
• 13:56
  Speaker 1: That makes it a little bit hard to read, but the exact number is what are they doing with the money, you might wonder.
• 14:02
  Speaker 1: Do they need money?
• 14:03
  Speaker 1: Well, it's not a desperate move.
• 14:06
  Speaker 1: They are buying back old bonds with a 12% interest rate.
• 14:23
  Speaker 1: Seriously, that's where they came from.
• 14:24
  Speaker 1: People didn't trust so far, and the rate for the new bond is about 1%.
• 14:38
  Speaker 1: Is that a smart move?
• 14:40
  Speaker 1: Yeah, and the second thing that they're going to do with this money is the increasing capital, which means they can issue more loans, which means they're going to make more money.
• 15:03
  Speaker 1: So it's not quite what people thought it was.
• 15:08
  Speaker 1: I think the way they announced it was particularly moronic because I read it and I was like my head hurts.
• 15:14
  Speaker 1: So I would expect most people wouldn't have a freaking clue what it says.
• 15:17
  Speaker 1: Not that I'm saying particularly smart, but I used to read these documents and it wasn't very well done and I think that's hopefully something that SoFi will learn from.
• 15:27
  Speaker 1: But that's not a way to announce something.
• 15:29
  Speaker 1: So stock dropped 15% yesterday at 1.78% pre-market.
• 15:34
  Speaker 1: Is it an opportunity?
• 15:36
  Speaker 1: I'm not telling you what to do, but I quite like it as an opportunity.
• 15:41
  Speaker 1: I might do something with that today because I think it was a massive reaction I didn't really see coming at $7.40.
• 15:50
  Speaker 1: People do strange things when there's uncertainty and that's really what management should understand.
• 15:55
  Speaker 1: Uncertainty is your enemy and that's why you want to understand the certainty.
• 16:00
  Speaker 1: What are the margins of the stocks you own?
• 16:02
  Speaker 1: What are the return and invested capital numbers of the stocks you own?
• 16:06
  Speaker 1: And if you know that and you understand how much debt they have and how their PE ratio is going to move in the next two years, or how it's expected to move.
• 16:15
  Speaker 1: You are no much, much better like what your portfolio is really about and what you may or may not want to invest in.
• 16:21
  Speaker 1: So get yourself a copy of this free benchmark.
• 16:24
  Speaker 1: We put this out four times a year, felix Frenslerorg.