Latest / Felix Nikolas Prehn's Podcast / Inflation Data Out *Now* 😰 Markets Flip! + Stock Market News 11 January 2024

Transcript

Inflation Data Out *Now* 😰 Markets Flip! + Stock Market News 11 January 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Felix here and good morning to you.
• 0:01
  Speaker 1: We've got inflation data in and guess what?
• 0:05
  Speaker 1: It's higher than expected and the market's not loving it.
• 0:09
  Speaker 1: It's not the end of the world, but it definitely puts a bit of a well.
• 0:16
  Speaker 1: It's a bit of a kick to the whole rate cut scenario thing, isn't it really?
• 0:21
  Speaker 1: Now the other, much, much more serious thing is that Winston has been banished from my studio by these two rotos down there, number one and number two.
• 0:31
  Speaker 1: Over there, the two cats have taken over the sofa that was placed there for Winston's comfort.
• 0:37
  Speaker 1: If you were want to, you know, do something about that injustice, donate generously, kidding.
• 0:45
  Speaker 1: So no, winston, I'm afraid I don't know.
• 0:48
  Speaker 1: He can't go anywhere.
• 0:49
  Speaker 1: Where's he gonna sit exactly?
• 0:51
  Speaker 1: So let's jump straight into the core data here.
• 0:53
  Speaker 1: I'll run you through the market reaction, which so far is definitely red, and what it means, so you can understand that you can place some good trades on it.
• 1:02
  Speaker 1: Our trades made some money yesterday, which is great.
• 1:04
  Speaker 1: The last one I've got open as well might put on some more today.
• 1:07
  Speaker 1: And come and join me If you want to make your money work for you in the simplest way possible, in a couple of hours a week, and if you're a non trader, if you've never thought about trading, if you think that's complicated or risky or any of that, come and join me for a live trading training on Tuesday and I'll break it down for you.
• 1:26
  Speaker 1: You walk away with all that key inside all that information so that you at least you understand it and you are able to make good decisions on information rather than on like, ooh, I'm a little, I don't know, I'm afraid by it, but you know that kind of thing, which is where most of us come from, which is completely natural.
• 1:44
  Speaker 1: So let's look at the headline numbers then.
• 1:47
  Speaker 1: Here and here they are, and what have we got?
• 1:50
  Speaker 1: Well, I'm gonna color code this as sort of good and bad.
• 1:54
  Speaker 1: Where's my pen?
• 1:54
  Speaker 1: Pen, pen.
• 1:57
  Speaker 1: Seriously, what is going on here today?
• 1:59
  Speaker 1: Ah, all right, is there anything good news in here?
• 2:05
  Speaker 1: Well, well, jobless claims are a little bit lower than expected.
• 2:12
  Speaker 1: That's not really good news.
• 2:13
  Speaker 1: So it's like the labor market's tighter, continuing jobless.
• 2:16
  Speaker 1: No, I don't think I can use a green pen, I'm afraid.
• 2:19
  Speaker 1: But the really bad news is that the month on month headline inflation rate is at 0.3.
• 2:25
  Speaker 1: We're expecting 0.1 to 0.2.
• 2:28
  Speaker 1: So that's a big, and core inflation is at 3.9% of the high end of estimates, as is core inflation month on month.
• 2:39
  Speaker 1: And yeah, the inflation rate year on year is accelerated from 3.1 to 3.4%.
• 2:47
  Speaker 1: So it's not exactly the story that we wanna hear.
• 2:50
  Speaker 1: I'm sorry to be the bearer of such news, but let's look a little deeper here.
• 2:57
  Speaker 1: So this is from the folks who put the CPI together the US government.
• 3:02
  Speaker 1: You know the statisticians we trust.
• 3:04
  Speaker 1: Can you see that yawn back there, small cat yawning wrapped in a jumper?
• 3:09
  Speaker 1: A very unfair, isn't it?
• 3:11
  Speaker 1: Poor little Winston has been evicted.
• 3:12
  Speaker 1: And the all items inflation, well, it's re-accelerating.
• 3:18
  Speaker 1: We don't really like that.
• 3:20
  Speaker 1: It did that at the beginning of the summer as well.
• 3:23
  Speaker 1: So it's not like it can never happen, but we just wanna make sure that in January we're gonna get some lower data, and in February, otherwise the March rate cut is a thing of hallucinations.
• 3:35
  Speaker 1: Now JP Morgan said to us, if the headline data prints 0.3 to 0.4%, we should be getting a 0.75 to 1.25% rate cut.
• 3:49
  Speaker 1: They thought, how the 25% probability?
• 3:54
  Speaker 1: Well, it doesn't look quite as stark as that.
• 3:58
  Speaker 1: By the way, at the moment we are down.
• 4:00
  Speaker 1: Where is it?
• 4:03
  Speaker 1: No, there it is.
• 4:07
  Speaker 1: The S&P futures are down 0.2 percentage points right now, and this is where the rate data kicked in and we had a proper kick in the teeth.
• 4:18
  Speaker 1: We're about 0.4 percent down since the market, since the inflation data, has come out.
• 4:26
  Speaker 1: Basically.
• 4:27
  Speaker 1: So you know, not brilliant, not terrifying.
• 4:30
  Speaker 1: What do you think, tallulah?
• 4:31
  Speaker 1: Was it terrifying?
• 4:32
  Speaker 1: Do you think Winston's going to get a sofa back ever?
• 4:35
  Speaker 1: Apparently not.
• 4:37
  Speaker 1: That seems to be the consensus around here.
• 4:40
  Speaker 1: So what would accelerate inflation?
• 4:44
  Speaker 1: Some sort of crazy geopolitical event that would drive energy prices back up, because that's really what's come down.
• 4:54
  Speaker 1: Iran has seized an oil tanker about two hours ago in the Gulf of Amman, which is just sort of around the corner from Dubai.
• 5:05
  Speaker 1: This was done by Iranian military.
• 5:13
  Speaker 1: Now there's a bit more to that story which makes me think it isn't quite the scary story people are going to make it out to be, because this tanker called the Sant Nicolas, appropriately named for a Santa rally used to be called something else I've forgotten the name, but it was previously seized by the US about in 2022.
• 5:39
  Speaker 1: And that's because they were selling Iranian sanctioned oil and there's a court case on it.
• 5:48
  Speaker 1: And then this vessel was renamed to Sant Nicolas from something else, and now Iran has seized it back and has seized back the oil that it lost from the vessel that was seized by the Americans same vessel.
• 6:02
  Speaker 1: So it's a bit of a tit for tat.
• 6:04
  Speaker 1: So it's not quite the whitewashed scenario that we're being presented by US media.
• 6:08
  Speaker 1: So I don't think this is quite the oh my God.
• 6:12
  Speaker 1: Inflation will therefore end the world today.
• 6:15
  Speaker 1: But if you look at US oil, it has, At least in the UK, it was up about 2 percentage points.
• 6:26
  Speaker 1: When I looked In the US today, I also have 2 percentage points.
• 6:30
  Speaker 1: So oil is up definitely, and this is definitely that.
• 6:33
  Speaker 1: But if people look at dig a little deeper, this doesn't seem quite the unreasonable act by the Iranians.
• 6:39
  Speaker 1: They just disagree with sanctions.
• 6:41
  Speaker 1: I mean, you know your view and my view, whatever.
• 6:44
  Speaker 1: But yeah, bear that in mind when you hear about that.
• 6:48
  Speaker 1: Now a little bit more depth onto the CPI data here.
• 6:52
  Speaker 1: Really, the one thing that's gone up is this blue bar here, and that blue bar is core services.
• 7:04
  Speaker 1: So that's services and that's also housing, and that's the one thing that we actually want to come down.
• 7:12
  Speaker 1: Everything else seems to be all right.
• 7:14
  Speaker 1: I mean, foods are yeah, eggs got more expensive, that sort of thing.
• 7:18
  Speaker 1: Energy prices have come down, but it's really services that are the thing that is hard to squash.
• 7:26
  Speaker 1: And then if you look at the super core or this is core less shelter which is the feds super core, which is sort of the Ibitda of inflation data, which basically strips out everything Food, energy, shelter what exactly does this think measure?
• 7:51
  Speaker 1: Certainly nothing that you and I need, but that's, you know what the Fed looks at.
• 7:54
  Speaker 1: And even that's up, it's re-accelerating.
• 7:59
  Speaker 1: So it's not quite the story we wanted to hear this morning.
• 8:04
  Speaker 1: And if you think inflation has come down broadly, well, there's only one thing that's come down and that's energy.
• 8:11
  Speaker 1: Energy costs have come down, food prices have just gone up and everything less food and energy has also gone up.
• 8:23
  Speaker 1: So the only thing that's actually moderated is energy here.
• 8:27
  Speaker 1: So it's not really the enormous deflationary scenario that we were sold.
• 8:32
  Speaker 1: It's just that prices are rising more slowly.
• 8:35
  Speaker 1: There isn't really disinflation, there isn't deflation.
• 8:38
  Speaker 1: So it's a bit of a whitewash by the government.
• 8:41
  Speaker 1: As usual, when they say inflation is low, they find us Well, no, not really not really right.
• 8:46
  Speaker 1: There is some good news, however Move, which is, of course, the favorite thing you look at every day when you wake up, which is the bond market volatility.
• 8:58
  Speaker 1: The bond market's fear has come down and it's inverted on my chart here and that supports the S&P rally very, very much, so that's actually quite good news.
• 9:08
  Speaker 1: So people are not really afraid of anything.
• 9:10
  Speaker 1: Now there's a bit of media reaction here.
• 9:12
  Speaker 1: We're going to have a look at Bloomberg in a second as well.
• 9:14
  Speaker 1: This is a senior editor from Bloomberg saying this doesn't really argue in favor of teeing up to large rate cuts as of now.
• 9:25
  Speaker 1: The still too high inflation readings would argue against signaling that March is in play.
• 9:31
  Speaker 1: Here is an asset reporter saying that the Fed will probably start cutting the rates around June.
• 9:39
  Speaker 1: However, the good news is that wage inflation is cooling Good for the Fed, less good for employees.
• 9:45
  Speaker 1: And slightly off subject, let me go back to inflation in a second here.
• 9:51
  Speaker 1: But the Bitcoin ETF is approved, it's trading and Coinbase should be pleased.
• 10:01
  Speaker 1: The stock is down.
• 10:02
  Speaker 1: Sell the rumor by the news.
• 10:04
  Speaker 1: No, it's the other way around, isn't it?
• 10:05
  Speaker 1: By the rumor?
• 10:06
  Speaker 1: Sell the news.
• 10:07
  Speaker 1: That seems to be what's happening to Coinbase.
• 10:08
  Speaker 1: Bitcoin, on the other hand, is off to a flying start, once again trading at $47,000.
• 10:15
  Speaker 1: So just when you thought crypto was all over?
• 10:18
  Speaker 1: Definitely isn't, and trading volumes apparently exploding.
• 10:22
  Speaker 1: And there are about another dozen such Bitcoin ETFs in the offerings who have applied and they should also all get approved, because to approve one you got to approve them all.
• 10:34
  Speaker 1: Now this is from our newsletter today Trading Floor Whispers.
• 10:38
  Speaker 1: I just thought this data point is really important.
• 10:41
  Speaker 1: I'd make a note of it.
• 10:42
  Speaker 1: The number to make a note of is 4644.
• 10:47
  Speaker 1: If this is from Bank of America, if the S&P drops below 4644 or 16215 on the NASDAQ 16215.
• 10:58
  Speaker 1: It's about a 1.0% something percent low on the S&P that would kick off some massive sell-off by the Algos, the CTAs, so the robots will be selling at that point.
• 11:12
  Speaker 1: So maybe put it in your alert or on your chart or something.
• 11:16
  Speaker 1: I think that's a good thing to do.
• 11:17
  Speaker 1: But other than that, the setup actually looks pretty good.
• 11:19
  Speaker 1: There is no fear.
• 11:20
  Speaker 1: There shall be no fear.
• 11:21
  Speaker 1: So we're going to keep making money.
• 11:22
  Speaker 1: Actually, we make money if the market goes up or down.
• 11:24
  Speaker 1: Come and learn exactly how we do that.
• 11:26
  Speaker 1: It is far, far, far more simple than you think.
• 11:29
  Speaker 1: It's just Wall Street's been telling everybody that they're incredibly clever and it's really not all that clever.
• 11:36
  Speaker 1: Well, it's sort of clever, but it isn't that complex.
• 11:39
  Speaker 1: Meet explaining.
• 11:42
  Speaker 1: For sure it's not intuitive, but I'll explain it to you completely for free.
• 11:47
  Speaker 1: Come and join me.
• 11:48
  Speaker 1: Philxfriendsorg slash webinar.
• 11:49
  Speaker 1: Grab yourself a seat on Tuesday.