Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - Time to Sell Everything? + Stock Market News 22 August 2024

Transcript

Felix Prehn - Time to Sell Everything? + Stock Market News 22 August 2024 · Felix Nikolas Prehn's Podcast

• 0:03
  Speaker 1: Good morning to you and welcome to this free market live stream.
• 0:07
  Speaker 1: I don't want to scare you with a headline.
• 0:09
  Speaker 1: Instead, I want to explain to you what everyone's going to be talking about in about a week's time and certainly going into September.
• 0:16
  Speaker 1: And if you understand the concept and you understand why yes, historically the market should crash, but why this time may or may not be different you'll be in a better position to make better decisions, which is really what this is all about.
• 0:28
  Speaker 1: I'm looking a little wet here today, banker hair.
• 0:31
  Speaker 1: No, I just came from the gym, so feeling nice and worked out and feeling absolutely wonderful, and, first of all, there's some good news.
• 0:40
  Speaker 1: Okay, let's get the good news out of the way and then we can go on to the doom and the gloom and the misery, and that's the way we like to roll.
• 0:48
  Speaker 1: So what's going on here?
• 0:50
  Speaker 1: Well, we just had job stater out Initial jobless claims we get that out every single Thursday and we were expecting 230,000 to 240,000 new, freshly minted unemployed people, and we got 232,000, which is exactly as we expected, and that is therefore good news.
• 1:09
  Speaker 1: Why is it good news?
• 1:10
  Speaker 1: Because, had it come in much higher, the recession fear mongerers would be out in full force and my title would probably be sell now, run and hide the children.
• 1:21
  Speaker 1: And that isn't the case.
• 1:24
  Speaker 1: So this is good news.
• 1:25
  Speaker 1: So the soft landing miracle is still alive.
• 1:29
  Speaker 1: Just follow the stars.
• 1:32
  Speaker 1: But let's talk a little bit about the FOMC minutes from yesterday and then I'll lead into what I actually want to talk about, which is why everybody on CNBC will be telling you in a few days that the end is near.
• 1:45
  Speaker 1: And what do they actually say?
• 1:48
  Speaker 1: Well, the vast majority of participants participants, by the way are Fed presidents, it's not just sort of random people who stroll through their building.
• 1:56
  Speaker 1: They said that the vast majority that it would likely be appropriate to ease policy at the next meeting if data continue to come in as expected.
• 2:08
  Speaker 1: So what does that mean?
• 2:09
  Speaker 1: That means we're getting a rate cut, not a cut, a cut, cape Cod cut.
• 2:15
  Speaker 1: And they also said that the risk to employment has increased and many noted risks to the inflation goal decreased.
• 2:23
  Speaker 1: So they're worried about unemployment and they're no longer worried about inflation.
• 2:29
  Speaker 1: Okay, so that's brilliant, it's exactly what we wanted.
• 2:33
  Speaker 1: Now unemployment goes up too high, then we get a problem, then we get a little thing called a recession, and we don't want that.
• 2:42
  Speaker 1: Right, there's a bit more data here from yesterday.
• 2:45
  Speaker 1: So so, yeah, almost all said they wanted more inflation data, almost all expect to continue it in falling inflation, and some noted there was a more serious deterioration in the labor market, which is, which is code for recession, and they've also cut the economic growth outlook for the second half of the year because of softer-than-expected labour market conditions, and that is again code for potential recession income.
• 3:20
  Speaker 1: Now, this is the chart that you will see in many different forms over the coming months, and I think once you understand it, you're better off.
• 3:30
  Speaker 1: Okay, so what have we got here?
• 3:32
  Speaker 1: We've got in green.
• 3:33
  Speaker 1: In the background, we've got recessions.
• 3:35
  Speaker 1: How do you spell recession?
• 3:37
  Speaker 1: Recession, okay, okay, and in that sort of purpley thing, this is what is it?
• 3:50
  Speaker 1: Anybody, anybody, anybody.
• 3:55
  Speaker 1: Interest rate, exactly Interest rate.
• 3:56
  Speaker 1: Well done.
• 3:57
  Speaker 1: And what is the squiggly sort of?
• 3:59
  Speaker 1: Let's get another color.
• 4:02
  Speaker 1: I will paint over.
• 4:10
  Speaker 1: I will paint over the s&p 500.
• 4:11
  Speaker 1: Okay, this is the s&p 500 here.
• 4:11
  Speaker 1: That blue line to make it a little bit clearer.
• 4:13
  Speaker 1: Uh, that was covid.
• 4:15
  Speaker 1: Was that covid?
• 4:16
  Speaker 1: No, this was covid.
• 4:18
  Speaker 1: Right, that was 2018, 18.
• 4:21
  Speaker 1: This is the S&P 500.
• 4:27
  Speaker 1: Beautifully drawn, wouldn't you say?
• 4:29
  Speaker 1: So?
• 4:30
  Speaker 1: What the heck happens when interest rates come down.
• 4:32
  Speaker 1: Well, in 1990, interest rates came down.
• 4:37
  Speaker 1: What happened?
• 4:39
  Speaker 1: We got a recession.
• 4:42
  Speaker 1: What happened in 2000?
• 4:45
  Speaker 1: That was Greenspan, wasn't it?
• 4:47
  Speaker 1: Cut interest rates, and what happened?
• 4:49
  Speaker 1: We got a recession.
• 4:50
  Speaker 1: What about 2008?
• 4:52
  Speaker 1: We cut interest rates and what did we get?
• 4:54
  Speaker 1: Exactly a recession.
• 4:56
  Speaker 1: So, historically, every single time we cut interest rates, we got a recession.
• 5:01
  Speaker 1: We also got a recession, by the way, here in 2020.
• 5:04
  Speaker 1: It's just that COVID happened and therefore the government spent us out of the recession.
• 5:09
  Speaker 1: That would have been a recession otherwise.
• 5:11
  Speaker 1: Anyway, so does that mean, as interest rates from here start to come down, we should be getting a recession?
• 5:21
  Speaker 1: That's the big mystery, really isn't it?
• 5:23
  Speaker 1: We should be getting a recession.
• 5:30
  Speaker 1: That's the big mystery, really isn't it?
• 5:31
  Speaker 1: Okay, let's do pros and cons.
• 5:31
  Speaker 1: Okay, what's causing a recession?
• 5:33
  Speaker 1: So higher unemployment, and we're starting to see that.
• 5:41
  Speaker 1: Okay, what?
• 5:43
  Speaker 1: Anything else that's bad?
• 5:45
  Speaker 1: Well, there's a strike in Canada and that kind of stuff?
• 5:48
  Speaker 1: Probably not, but there's very high debt levels.
• 5:50
  Speaker 1: There are people not paying their credit card debts off, and so on, and anything else.
• 5:58
  Speaker 1: Interest rates have been very high.
• 6:00
  Speaker 1: Maybe we've crushed manufacturing, right, so manufacturing is bad.
• 6:04
  Speaker 1: Manufacturing is definitely in a recession already.
• 6:08
  Speaker 1: I don't know why I chose a green pen for this.
• 6:10
  Speaker 1: This was meant to be the bad section, so this is the bad section.
• 6:15
  Speaker 1: So what about the good section, which we will have to do?
• 6:18
  Speaker 1: And what color should we pick for that?
• 6:21
  Speaker 1: Just to confuse you, a bit more yellow.
• 6:23
  Speaker 1: So the good stuff is government spending.
• 6:28
  Speaker 1: The rate that the government spends that is higher than in any war.
• 6:32
  Speaker 1: So as long as the government keeps spending, we're not going to get a recession you might get.
• 6:39
  Speaker 1: Well, rfk is about to endorse Trump tomorrow.
• 6:44
  Speaker 1: That boosts Trump chances and I know some of you Democrats out there are going to start running and go nuts.
• 6:50
  Speaker 1: I am neither a Republican nor a Democrat.
• 6:52
  Speaker 1: I just don't care.
• 6:53
  Speaker 1: I just care about my portfolio.
• 6:55
  Speaker 1: Trump cuts would be kind of the equivalent of government spending, right?
• 7:01
  Speaker 1: So rate cuts, so tax cuts, would be the same thing.
• 7:04
  Speaker 1: So that would prevent a recession, at least for the moment, and potentially ai could just lead to more productivity and therefore to more activity out there, and therefore we wouldn't get a recession.
• 7:20
  Speaker 1: Productivity.
• 7:21
  Speaker 1: We actually could spell that right.
• 7:22
  Speaker 1: So it really depends on, in my on, one thing and one thing only, and that one thing is how much money is the government going to spend If, for some weird reason, the government comes in and says we're just going to cut back on big government.
• 7:39
  Speaker 1: Then the US is in trouble, but it seems very unlikely, given that neither candidate is proposing that.
• 7:45
  Speaker 1: So what is going to get us through this without a recession at least without a historical recession is government spending.
• 7:54
  Speaker 1: As long as they keep spending, as long as they keep cutting interest tax rates and keep spending, we're all good, and we almost get a risk-free market rally.
• 8:03
  Speaker 1: It's a really weird world that we live in.
• 8:05
  Speaker 1: So this history I don't think applies, because we had tougher politicians in 2008.
• 8:13
  Speaker 1: We had tougher politicians in 2000 and tougher politicians in the 90s, and at the moment we just got a bunch of like total soft, fluffy windbags who just think if I spend more money, I'm popular, if I cut taxes, I'm popular.
• 8:37
  Speaker 1: He's talking about Portuguese egg tarts, are you?
• 8:40
  Speaker 1: They are very good.
• 8:41
  Speaker 1: We get them here too, in Hong Kong.
• 8:43
  Speaker 1: It's a Macau connection.
• 8:44
  Speaker 1: So can we make money in any scenario?
• 8:47
  Speaker 1: Yep, we can.
• 8:49
  Speaker 1: So this is our 30K portfolio, and we're up about $25,000 realized gains so far this year.
• 8:56
  Speaker 1: And there's our pre-market.
• 8:59
  Speaker 1: This is our teaching portfolio.
• 9:01
  Speaker 1: We're up another $7,000 on non-realized profits and I don't really want to realize them because it looks so good and you know, when you're up 43% on a trade, there is relatively little risk in that.
• 9:10
  Speaker 1: So we're hanging on in there for a little bit.
• 9:13
  Speaker 1: So we're making a lot of money and we're going to make a lot of money whether the market goes up or down.
• 9:17
  Speaker 1: That's really the intention here.
• 9:19
  Speaker 1: So if you want to learn how we are 25k so far this year, which is, as I say, 80% Then come and join our workshop next week FelixFrenzelorg slash workshop and if you have questions, let me know.
• 9:36
  Speaker 1: But this is an interesting one and there's a couple of interesting stock ideas as well I've got coming up.
• 9:41
  Speaker 1: So stick around.
• 9:47
  Speaker 1: It's an egg tart, like an egg custard in the UK.
• 9:49
  Speaker 1: Danza, that's the one.
• 9:50
  Speaker 1: Um, the portuguese ones are good, though you can get them in london.
• 9:51
  Speaker 1: I don't know, I don't know where you are, but you can get them in london.
• 9:53
  Speaker 1: Um, yes, an espresso and a portuguese tart is a good way to start a day.
• 10:05
  Speaker 1: Okay, what the heck does this?
• 10:06
  Speaker 1: What does this say here?
• 10:07
  Speaker 1: This is how long or short hedge funds are.
• 10:13
  Speaker 1: What happened to my pen?
• 10:13
  Speaker 1: There's my pen in infotech.
• 10:17
  Speaker 1: What's infotech?
• 10:17
  Speaker 1: Well, it's just Big tech, and they are at basically a five-year low in terms of positioning.
• 10:28
  Speaker 1: What does that mean?
• 10:30
  Speaker 1: Well, there is a little bit of a reason for why they're short.
• 10:35
  Speaker 1: One is that just the indices if you're in the index, you have a lot of tech and they say, therefore, try to own a little bit less tech.
• 10:43
  Speaker 1: But secondly, we've had an amazing run in tech and they're kind of like well, the Mark 7 run maybe it's a bit overdone and everybody got out of NVIDIA and so on.
• 10:50
  Speaker 1: A lot of the hedge funds have done.
• 10:52
  Speaker 1: So what does that mean?
• 10:54
  Speaker 1: All you need, when you know that the market is very short, something all you need is a catalyst.
• 10:58
  Speaker 1: Very short something.
• 10:59
  Speaker 1: All you need is a catalyst.
• 11:01
  Speaker 1: You need some sort of event that kicks it off, some good news, and then potentially, they'll be back in.
• 11:13
  Speaker 1: But what I'm actually waiting for is an event that is bad.
• 11:15
  Speaker 1: We can get some bad tech news in, like was it Microsoft's data guidance yesterday on cloud computing?
• 11:21
  Speaker 1: That wasn't great, and when that isn't great yet the market still goes, we don't really care.
• 11:28
  Speaker 1: Let me open it up here.
• 11:32
  Speaker 1: Then you know we've got some resilience and that might be the moment to go a little bit more aggressively long tech.
• 11:40
  Speaker 1: You see what I mean?
• 11:41
  Speaker 1: Sort of a contrarian thing.
• 11:42
  Speaker 1: Microsoft didn't do anything yesterday on some relatively bad news, so that's quite positive.
• 11:50
  Speaker 1: But of course, you could wait for what Powell's going to say tomorrow.
• 11:54
  Speaker 1: You could wait for what Nvidia is going to say next week.
• 11:57
  Speaker 1: But if those things are positive, wow, I think we could see some serious, serious rally here in big tech, because we're down about 30% from the peaks and this is the expected spending on cloud computing for all the major, the major players out there.
• 12:17
  Speaker 1: So we're expecting why does this matter?
• 12:20
  Speaker 1: Where does all this money go?
• 12:22
  Speaker 1: All of this money goes to NVIDIA, okay, all of it basically.
• 12:25
  Speaker 1: So in 2025, microsoft's going to spend 57 billion, google's going to spend 56 billion, aws 50 billion, meta 50 billion.
• 12:37
  Speaker 1: All of that together is 213 billion.
• 12:41
  Speaker 1: Together is 213 billion, which is about 34 billion more than this year.
• 12:52
  Speaker 1: And that means there is still growth, not just consistency, but there's still growth in it for NVIDIA and that's pretty impressive.
• 12:57
  Speaker 1: And even if you go into 26 numbers, the market's still expecting that to continue to grow.
• 13:02
  Speaker 1: As you can see here this is Goldman Sachs we model double digit year on year revenue growth in data centers into 2026.
• 13:11
  Speaker 1: So monstrous growth there, and that means this is Nvidia data center revenue outlook right, so Nvidia earnings should come in very sweet and they should give us some really glorious guidance here.
• 13:23
  Speaker 1: That's really all we need.