Latest / Felix Nikolas Prehn's Podcast / ⚠️Wall Street Just Warned: Biggest Risk is THIS... + Stock Market News 04 January 2024

Transcript

⚠️Wall Street Just Warned: Biggest Risk is THIS... + Stock Market News 04 January 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Welcome you to this live stream pre-market.
• 0:02
  Speaker 1: I hope you're not too freaked out about what's going on in the market.
• 0:04
  Speaker 1: I wanna walk you through what big world street banks have just put out in terms of the big items to watch out for in the coming days, weeks and months.
• 0:14
  Speaker 1: And Winston said you better explain this to people so that people can be calm and happy and relaxed, as this lovely little hound here behind me, before we get cracking.
• 0:24
  Speaker 1: Our mission here is a simple one.
• 0:26
  Speaker 1: It's to make a million people financially free, and to me that means being able to live of your investments and your trading income.
• 0:33
  Speaker 1: Don't have to, but you have the option to live of that, and as part of that mission, I'm running a there it is live webinar on Tuesday, the ninth, 10 am Eastern time.
• 0:45
  Speaker 1: Come and join me, grab yourself a spot and you'll learn how we trade exactly how we trade one stock with three rules, how it all works and how simple it truly is.
• 0:55
  Speaker 1: And Winston might just put an appearance as well as snoozing on the sofa behind me.
• 1:00
  Speaker 1: So grab yourself a seat and sign up for it.
• 1:05
  Speaker 1: Now let me just rejick one or two things here so I can see your comments a little bit better.
• 1:11
  Speaker 1: Feel free to obviously ask questions and I will get to those once.
• 1:15
  Speaker 1: I run you through a little bit.
• 1:16
  Speaker 1: What's going on here Today.
• 1:17
  Speaker 1: We're gonna go to the pre-market and everything as well.
• 1:19
  Speaker 1: The first thing is, well, the NASDAQ is down as I've got here on the screen, so I remember it about 3% in the last five days.
• 1:28
  Speaker 1: That's the worst since October.
• 1:31
  Speaker 1: It's also the third time in entire history of the NASDAQ that we started the year with such a unpleasant decline.
• 1:41
  Speaker 1: The last time was in 1980 and 2005, according to the friendly chaps at the Goldman Sachs sales desk.
• 1:48
  Speaker 1: I suspect they're right.
• 1:50
  Speaker 1: And why is that happening?
• 1:52
  Speaker 1: Well, one thing is, if you look at the stock chart here and I'll make it as big as it possibly can if you're watching this On the bottom here I've got RSI, and when RSI breaks out above this 70 point line, then it's considered overbought.
• 2:12
  Speaker 1: And we had that.
• 2:13
  Speaker 1: Just, we had that in July, we had it in June, we had it at the end of May and we had it in about February this year.
• 2:24
  Speaker 1: And each one of those correlates with a peak and then a ZAK back down business, the NASDAQ.
• 2:35
  Speaker 1: So it's not exactly a massive surprise, and a glance at the S&P shows you very much the same thing.
• 2:43
  Speaker 1: We were just very overboard, like we were last time in, say, in June and also in July and each of those where once again peaks in the market.
• 2:56
  Speaker 1: That doesn't mean it's an all-time high and you can never go beyond it.
• 3:00
  Speaker 1: It just means temporarily it tends to be a resistant point and therefore the market tends to take a bit of a breather when you get to those levels.
• 3:12
  Speaker 1: Now what's the positioning set up right now?
• 3:15
  Speaker 1: According to the lovely folks at Goldman Sachs, the bankers with a heart, the ones who care, and all that kind of thing they are saying, at the end of October, before the year-end rally, positioning was about minus eight, and right now, or rather two days ago, positioning was plus eight.
• 3:37
  Speaker 1: So now we've corrected a little bit.
• 3:39
  Speaker 1: We're probably plus six, which therefore logically says we could probably go a little bit higher again.
• 3:45
  Speaker 1: Also, we're right now in the worst period of the buyback blackout window.
• 3:52
  Speaker 1: So the way this works is that large companies a lot of them buy back their own shares the Microsofts and all that kind of stuff and a lot of companies do.
• 4:00
  Speaker 1: They don't know what else to do with all the profits they generate.
• 4:02
  Speaker 1: They just buy back their own shares and therefore the shares get destroyed and therefore each individual share left is worth more.
• 4:08
  Speaker 1: But they're not permitted to buy back their own shares just before their report earnings.
• 4:14
  Speaker 1: And we're about to head back into earnings season and therefore we're in this blackout period and we're in the worst of it.
• 4:21
  Speaker 1: We're in the thick of it.
• 4:22
  Speaker 1: We're in the thickest sort of fog that you can possibly imagine.
• 4:26
  Speaker 1: But there is some silver lining.
• 4:29
  Speaker 1: There are sleeping golden retrievers on surface and, in addition, january is typically the month when retail that's you and me put the most amount of money into the stock market compared to the entire rest of the year.
• 4:44
  Speaker 1: So we should get some serious retail inflows as people get over this morning hiccup.
• 4:53
  Speaker 1: Now Goldman Sachs are also saying expected average year.
• 5:00
  Speaker 1: They're saying we should expect about an 8 percent increase.
• 5:04
  Speaker 1: That's a rather precise number, but that's roughly what we've been getting historically, so they're not really sticking their neck out.
• 5:14
  Speaker 1: They're also saying during presidential election years, we normally get an 11 percent rally.
• 5:21
  Speaker 1: I'm not sure whether that's because the presidents try to outspend or something.
• 5:26
  Speaker 1: If that's really what it is, it might just be a fluke, I'm not really sure.
• 5:29
  Speaker 1: But they're basically saying expect 8 percent.
• 5:33
  Speaker 1: I can live with 8 percent.
• 5:35
  Speaker 1: If I get 8 percent and trade we get to 12 percent, 15 percent or something in total, then life's pretty good.
• 5:48
  Speaker 1: The other thing they're saying is that the meme stock excuse my French, the crap.
• 5:54
  Speaker 1: There's an ETF called Meme.
• 5:57
  Speaker 1: You can look up and I've got it on the chart here.
• 5:59
  Speaker 1: They're saying this rally won't last.
• 6:02
  Speaker 1: They're saying it might last a quarter or two and it will then come back down.
• 6:06
  Speaker 1: We've had this massive, massive shoot up here.
• 6:09
  Speaker 1: Right now we're pretty much still at almost peak levels, come down a little, but still, and that should come back down to more moderate levels.
• 6:18
  Speaker 1: I wouldn't be surprised by that.
• 6:21
  Speaker 1: If your meme portfolio, if you hold one of those, is doing tremendously well, I would consider it's not financial advice.
• 6:28
  Speaker 1: I'd consider taking profits when it looks really, really shiny.
• 6:32
  Speaker 1: It's just one of those things.
• 6:33
  Speaker 1: It's there.
• 6:34
  Speaker 1: If they're crap stocks, they're not actually going to stay up there, right, and Gopens are also saying that the AI rally is probably going to take a little bit of a breather and then it'll be back with a vengeance towards the end of the year.
• 6:48
  Speaker 1: And they're saying non-AI stocks are going to start a benefit as well.
• 6:52
  Speaker 1: Why?
• 6:53
  Speaker 1: Because their CEOs will have learned that mentioning the two letters A and I on the earnings report will do something.
• 6:59
  Speaker 1: No, because industry outside of the core tech space will have started to integrate AI into their businesses and they'll start to see the cost saving, the efficiency improvements.
• 7:12
  Speaker 1: Maybe they'd be able to file some people sorry, but it's the reality of AI and that will therefore be supportive for earnings.
• 7:20
  Speaker 1: That's kind of what they're sort of hinting at here.
• 7:22
  Speaker 1: I wanted to take those all day.
• 7:27
  Speaker 1: I forgot.
• 7:27
  Speaker 1: What supplements do you guys take?
• 7:29
  Speaker 1: Put it in the comments.
• 7:30
  Speaker 1: I'll tell you what I take.
• 7:32
  Speaker 1: But let's run through some financial information here.
• 7:35
  Speaker 1: Don't fight the Fed is always the lesson that I have learned and whenever I track off it, one of our head coaches, elliot, says to me I remember when we went against the Fed.
• 7:46
  Speaker 1: I said I'm going to take the Fed Coaches.
• 7:49
  Speaker 1: Elliot says to me I remember when we went against the Fed and we were down I don't know $25 million as a bank or something.
• 7:57
  Speaker 1: It's a bad idea.
• 7:58
  Speaker 1: Now the FOMC minutes came out yesterday and they basically said the following they said rates are at or near its peak, which is basically they're at the peak, and they said we might keep them at current levels longer than people currently think.
• 8:17
  Speaker 1: They didn't say it's going to happen.
• 8:19
  Speaker 1: In March, the first rate cut, but inflation is clearly moving down sustainably, which is they're safely saying, yeah, we won the inflation fight.
• 8:30
  Speaker 1: And they're also saying that they might slow down the balance sheet shredding, which means decline, which means they stop shredding money, and that, of course, is very supported for the market.
• 8:47
  Speaker 1: It's probably also required to avert the big risk here that we're going to get to in just a second.
• 8:53
  Speaker 1: So stick around and smash the you know what if you haven't already.
• 8:57
  Speaker 1: If there's a like button near you, abuse it as much as well.
• 9:01
  Speaker 1: I was going to make a very inappropriate remark there.
• 9:04
  Speaker 1: I shall take that back.
• 9:05
  Speaker 1: Do you read about the Epstein papers today?
• 9:08
  Speaker 1: That's probably not a quote we need out there.
• 9:12
  Speaker 1: Someone's going to make a short out of it.
• 9:14
  Speaker 1: Now, typically, going back to the Fed here, once the Fed starts cutting rates which is well, I can't draw a straight line today there if you can see my screen, and we usually get in the next 12 months about a plus 10% market rally if, and only if, there is no recession.
• 9:41
  Speaker 1: I'll tell you in a second why I don't think there'll be a full blown recession for various reasons, but that's kind of the plan.
• 9:51
  Speaker 1: So that's kind of what we're aiming for here.
• 9:53
  Speaker 1: It's just average 8%, 10%.
• 9:55
  Speaker 1: To get a proper recession you would need the consumer to capitulate and snooze like Winston does here on the sofa behind me, but unlikely to happen.
• 10:09
  Speaker 1: Why?
• 10:10
  Speaker 1: Because wage inflation, which means salaries are now actually going up more than inflation for the first time in three years.
• 10:18
  Speaker 1: So the US consumer is actually becoming a little bit better off, or it's just trying to make up for three years of lost, three lost years.
• 10:28
  Speaker 1: So that's supported for the consumer.
• 10:31
  Speaker 1: Further, we just got in, literally a couple of minutes ago, the ADP jobs data, which is jobs data that's usually slightly less manipulated than the stuff that the president puts out and it, surprisingly, is higher than expected.
• 10:52
  Speaker 1: It came in at 160,000 jobs created 160,000.
• 10:56
  Speaker 1: We're expecting about 120,000.
• 10:59
  Speaker 1: So that's the perfect soft landing miracle, isn't it?
• 11:05
  Speaker 1: It's the pre-Russian Christmas miracle.
• 11:08
  Speaker 1: Russian Christmas, I think, is on the sixth, isn't it?
• 11:10
  Speaker 1: Orthodox Christmas, I think it is.
• 11:12
  Speaker 1: And it's the largest monthly job gain since August, mostly service jobs and 9,000 goods producing jobs, and that was mostly leisure, hospitality, education, health, while manufacturing is still plummeting.
• 11:35
  Speaker 1: So that's kind of where the real recession is the manufacturing recession and it gets better, and this is terribly exciting.
• 11:43
  Speaker 1: You probably barely stand the real excitement of all this data Job changes who, by the way, are very smart Statistically.
• 11:52
  Speaker 1: If you change your job every two years not more often, but every two years you will get much, much higher wages than if you stay on the same job.
• 12:00
  Speaker 1: Why?
• 12:01
  Speaker 1: Because change your job, you might get a 20% pay rise.
• 12:05
  Speaker 1: You stay in the same job, you probably get 5%.
• 12:07
  Speaker 1: So job changes at the moment are getting an 8% pay rise, whereas job stayers are getting a 5.4% pay rise.
• 12:16
  Speaker 1: Still pays to switch jobs, but that's down from 8.3 and 5.6.
• 12:21
  Speaker 1: So the labor market is calming down a little bit and the Fed is going to be looking up this and inviting people out for a sharey party maybe not Bill Clinton after today's news, but everybody else who wasn't.
• 12:34
  Speaker 1: On Piedophile Island.
• 12:35
  Speaker 1: What's the big risk in 2024?
• 12:39
  Speaker 1: Isn't that what you came for?
• 12:41
  Speaker 1: I think it probably is.
• 12:42
  Speaker 1: What is it?
• 12:44
  Speaker 1: The chart says monthly net supply very cryptically it's government debt issuance.
• 12:54
  Speaker 1: Wow, that's exciting, isn't it Darling?
• 12:57
  Speaker 1: Do you know the big risk for 2024?
• 12:59
  Speaker 1: It's government debt issuance.
• 13:01
  Speaker 1: Can you believe it?
• 13:02
  Speaker 1: Yes, what does it really mean?
• 13:05
  Speaker 1: Well, the nutters in Washington and I don't care what political affiliation you are, they are all stark, raving mad.
• 13:14
  Speaker 1: They are going to have to issue $2.4 trillion net of US Treasuries.
• 13:24
  Speaker 1: So that's new US Treasuries.
• 13:28
  Speaker 1: And the question therefore is who's going to buy all that stuff?
• 13:33
  Speaker 1: Who's going to buy $2.4 trillion of new US Treasuries?
• 13:38
  Speaker 1: Now retail?
• 13:40
  Speaker 1: You and me bought about a trillion last year, but $2.4 trillion it's a lot more, and last year the only reason we bought is because rates were really high and we thought they're going to come down.
• 13:51
  Speaker 1: It's kind of an easy trade and the closer we get to kind of year end and the more people realize how much money this is really sucking up, people might start to think again about well, the polite phrase is debt sustainability.
• 14:10
  Speaker 1: The less polite phrase would be is the US going to go bankrupt?
• 14:15
  Speaker 1: This is also why the Fed is floating in its minutes.
• 14:21
  Speaker 1: We don't have to shred money.
• 14:25
  Speaker 1: We could just slow it down a little bit and just support the government a little bit.
• 14:31
  Speaker 1: And all the debt students, which is what they've been doing the last six months Secretly.
• 14:35
  Speaker 1: They've been essentially buying hundreds of billions of government debt through T-Builds, through the reverse repo thing, which is terribly complicated and terribly dull, but that's what they've been doing.
• 14:46
  Speaker 1: That facility is almost exhausted, so they're going to have to come up with another conjuring trick to bail us all out, and I'm sure they will, because if they don't, then well, I'll freeze a save.
• 14:59
  Speaker 1: I think you'd want that now.
• 15:00
  Speaker 1: Come and join me on Tuesday at 10 AM Eastern time.
• 15:05
  Speaker 1: Live and I'll explain to you and I'll teach you the three steps that we use to make our money work for us harder.
• 15:12
  Speaker 1: It takes maybe four hours a week to implement and it's automated.
• 15:18
  Speaker 1: You don't need to look at screens or charts and you can live your life the way you want to live it.