Latest / Felix Nikolas Prehn's Podcast / Fed Bombshell "Rate Cut CANCELLED" + Stock Market News 05 February 2024

Transcript

Fed Bombshell "Rate Cut CANCELLED" + Stock Market News 05 February 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Alex and good morning to you.
• 0:01
  Speaker 1: We've got the Jerome Powell bombshell interview.
• 0:04
  Speaker 1: I'm going to summarize it for you.
• 0:05
  Speaker 1: I'll also put out a full breakdown of it later on today and, of course, the market reaction to it.
• 0:11
  Speaker 1: We have the prospect of a Trump re-election, obliterating NIO, for example, and also a bunch of really important data sets that you need to understand so you can make better, smarter decisions.
• 0:25
  Speaker 1: Today, I'll be live trading for you guys on the coaching program in just under 30 minutes as well, so join me over there.
• 0:32
  Speaker 1: And if you aren't part of that community, and if you're thinking about, hey, how can I actually make money, no matter what happens in the world and that's always my thing Like if the market goes down, I'm actually happy.
• 0:42
  Speaker 1: We get more volatility, I make more money, I can buy stocks cheaper and ultimately, for that, you need to understand how the market really works, and I'll teach to you tomorrow for free.
• 0:51
  Speaker 1: Just come and join me at phoenixorg slash webinar at 10am Eastern time and I'll really teach you how we can trade for income in a really easy and simple way, completely ruled space.
• 1:04
  Speaker 1: I'll break it down for you.
• 1:05
  Speaker 1: You walk away without knowledge, so come join me.
• 1:07
  Speaker 1: It's completely free.
• 1:08
  Speaker 1: Phoenixorg slash webinar, part of our mission to make a million people financially free.
• 1:14
  Speaker 1: Now let me share with you a few data points.
• 1:16
  Speaker 1: This is the pre-market.
• 1:17
  Speaker 1: It's not too bad, it's.
• 1:20
  Speaker 1: I mean Apple and Nvidia.
• 1:21
  Speaker 1: Nvidia up massively 3%, apple up, google up, microsoft, flat meta done half a point.
• 1:26
  Speaker 1: Amazon on half a 0.7 point.
• 1:28
  Speaker 1: So it's not like, oh my God, everybody's freaking out.
• 1:32
  Speaker 1: Walmart's also green.
• 1:34
  Speaker 1: Fat drugs are green.
• 1:36
  Speaker 1: And to really understand this, let's dive a little bit deeper here in into data, because Papa Powell said no rate cut in March.
• 1:47
  Speaker 1: He basically said it's very unlikely.
• 1:49
  Speaker 1: The bond market is taking it one step further and said well, there's no rate cut in March, there won't be one in May either.
• 1:56
  Speaker 1: And that's taken the yields of bonds up.
• 2:01
  Speaker 1: What happens when they go up?
• 2:02
  Speaker 1: The dollar goes up, gold goes down and the stock market should go down.
• 2:07
  Speaker 1: Stocks should go down when yields go up.
• 2:09
  Speaker 1: That should be an inverse correlation.
• 2:11
  Speaker 1: It doesn't always work perfectly that way, but if you look at this kind of longer term trend we've been on, have we broken through it Meaningfully?
• 2:23
  Speaker 1: I mean, we've done it before, but this one is certainly one of the bigger breakouts.
• 2:27
  Speaker 1: So the market should be a little bit, a little bit concerned about it, just a teeny tiny bit.
• 2:32
  Speaker 1: We are going to get the rate cuts.
• 2:33
  Speaker 1: He basically said that.
• 2:34
  Speaker 1: He basically said, yeah, we're definitely getting rate cuts this year, but it might not come quite as early as you would like.
• 2:43
  Speaker 1: I look stressed, really.
• 2:45
  Speaker 1: I don't know about that.
• 2:47
  Speaker 1: I had a B12 shot today.
• 2:49
  Speaker 1: Apparently that makes you a little jumpy, but other than that, no, everything is really really good over here.
• 3:00
  Speaker 1: February, unfortunately, is not a great month typically for the market, but I don't pay that much attention to the seasonality, but I just thought you should know that typically these are all the February's of the last 30 years, so there have been some good ones, some bad ones.
• 3:16
  Speaker 1: On average they're not.
• 3:17
  Speaker 1: The greatest.
• 3:18
  Speaker 1: Part of that is because January is typically quite a nice one.
• 3:21
  Speaker 1: Most money flows into the market in January.
• 3:24
  Speaker 1: Typically that's got a lot to do with 401Ks and stuff like that.
• 3:28
  Speaker 1: And then we have some good news.
• 3:31
  Speaker 1: There is good news.
• 3:32
  Speaker 1: Yes, we're optimists.
• 3:33
  Speaker 1: The US economy is expected to grow 2.5% this year to give Papa Biden the chance to win, and then next year at 2.1%.
• 3:43
  Speaker 1: Then look at Japan and Canada and the French and Italy and the UK and the Germans who are saying fast.
• 3:50
  Speaker 1: You can't believe it.
• 3:51
  Speaker 1: Germany in a recession last year, this year coming out not a lot of growth.
• 3:59
  Speaker 1: But the US is the place where it's at and therefore, investing in the US it's probably the smart place, so that's a good right.
• 4:07
  Speaker 1: Strong economic growth forecast.
• 4:10
  Speaker 1: Here is the Fed cut probability.
• 4:13
  Speaker 1: This, the lower line, is the March likelihood of a rate cut, which is now at a fairly pessimistic 20%.
• 4:25
  Speaker 1: So there is only a 20% chance we're going to get that rate cut that we all wanted for Christmas.
• 4:31
  Speaker 1: Not going to happen, whereas the May rate cut is still an optimist at about 65% probability.
• 4:39
  Speaker 1: And these are actually traded probabilities, so they are fairly accurate.
• 4:43
  Speaker 1: And the lower these go the bit of more of a dampener.
• 4:47
  Speaker 1: It is on the party, but then you know, we do have Nvidia, who knows they might bail us all out.
• 4:54
  Speaker 1: And Actually, if you look at where we are in terms of earnings per share growth, which is what I really care about in the long run, there's a long-term investor.
• 5:05
  Speaker 1: I'm not talking about trading as a long-term investor.
• 5:07
  Speaker 1: There's only one thing that really matters how much profit per share do companies make?
• 5:12
  Speaker 1: How fast is that growing?
• 5:14
  Speaker 1: And in 2022, first half of 2023, they were negative numbers, and that really was the recession that we were denied by.
• 5:27
  Speaker 1: The recession deniers those six wise old men in Washington who apparently run the world and never see daylight, something like that.
• 5:35
  Speaker 1: And ever since it's getting better, and the forecast is that in the fourth quarter of 2024, we're going to get a 16% increase in profits.
• 5:50
  Speaker 1: So what do you think the stock market's going to do with that?
• 5:54
  Speaker 1: Exactly, to the moon.
• 5:56
  Speaker 1: We'll be back.
• 5:57
  Speaker 1: The diamond handers will be back.
• 5:59
  Speaker 1: All those natus all across YouTube it's going to come back.
• 6:04
  Speaker 1: I'm telling you it's going to come back.
• 6:05
  Speaker 1: So another reason you should never throw away your clothes, because they will always come back into fashion.
• 6:09
  Speaker 1: Just in the stock market, that happens a little earlier.
• 6:13
  Speaker 1: What about the wage inflation spiral we were so worried about last year?
• 6:19
  Speaker 1: Yeah, not happening.
• 6:20
  Speaker 1: Wage inflation hourly earnings are about 4% or something like that, but coming down.
• 6:31
  Speaker 1: If you look at job openings, they're coming down pretty significantly and therefore, yeah, you're not getting it.
• 6:39
  Speaker 1: I don't think we're going to get domestic inflation.
• 6:42
  Speaker 1: We might get a little bit imported from the Middle East through oil and that kind of thing, but at the moment it doesn't look like there is a domestic inflation problem, which, of course Jerome Powell should be very, very happy about.
• 6:56
  Speaker 1: And yet you can always pull up this doom and gloom chart which is government debt.
• 7:00
  Speaker 1: Right, yeah, government debt is going through the fucking moon and excuse my French, as they would say in French and yeah, it's insane.
• 7:11
  Speaker 1: Unless somebody stops this, it's going to be a real problem for the US and it's going to hamper your ability to invest in infrastructure and become a better country, because you're just paying off debt.
• 7:25
  Speaker 1: You're paying to pay more on debt than on defense and social security and any other thing that you might care about.
• 7:30
  Speaker 1: And that's a real thing and that's happening.
• 7:33
  Speaker 1: And how can you change it?
• 7:34
  Speaker 1: You got to elect someone who tells you I will give you less, yes, I will give you less.
• 7:39
  Speaker 1: I will give you higher taxes and less services.
• 7:43
  Speaker 1: Please vote for me.
• 7:44
  Speaker 1: Like any politician is going to say that right, never going to happen.
• 7:50
  Speaker 1: So, yeah, welcome to Japan everybody.
• 7:52
  Speaker 1: That's where everyone's going to end up.
• 7:55
  Speaker 1: Now, what about the AI bubble?
• 7:57
  Speaker 1: Is the AI bubble something to worry about?
• 7:59
  Speaker 1: I don't know.
• 8:01
  Speaker 1: Well, you can see that, but it's really small on the chart here.
• 8:04
  Speaker 1: That's the AI bubble, that little thing down there.
• 8:07
  Speaker 1: It's nothing compared to the Bitcoin bubble or the ARC bubble, or the China bubble or the gold bubble of the 70s.
• 8:14
  Speaker 1: So write the bubble.
• 8:17
  Speaker 1: My friends, that's what I'm saying.
• 8:18
  Speaker 1: That's not a financial advice.
• 8:20
  Speaker 1: Usually the word bubble isn't included in financial advice.
• 8:24
  Speaker 1: But yeah, let's enjoy it.
• 8:25
  Speaker 1: Let's enjoy it while it lasts, and it's going to last for a while and at some point it's going to go overboard and it's going to pop and it's going to come down and I'm going to enjoy the up with the stocks and I'm going to enjoy the down trading.
• 8:35
  Speaker 1: So come and learn with me how we do that.
• 8:39
  Speaker 1: Felixfrensorg slash webinar.
• 8:40
  Speaker 1: It's important to be prepared for when stuff hits the fan.
• 8:45
  Speaker 1: We can skip that one, I think.
• 8:48
  Speaker 1: Okay, there's a little bit of an uptick in hourly earnings, it's true in the day in the latest data.
• 8:58
  Speaker 1: Should we be too concerned about that?
• 9:00
  Speaker 1: I think it's a little bit the same thing we saw last year and pretty much every year.
• 9:05
  Speaker 1: It's a seasonal thing.
• 9:07
  Speaker 1: So when people show you these things, always go back a few years and see hey, is there something that we should be worried about?
• 9:12
  Speaker 1: I don't think so.
• 9:13
  Speaker 1: I think there's just a seasonal Christmas pay and bonuses and all that kind of stuff.
• 9:19
  Speaker 1: Employees are working less hours.
• 9:23
  Speaker 1: Interesting Tends to happen as we head into a recession.
• 9:29
  Speaker 1: Maybe we've already been in it, maybe we're coming out of it, who knows for this jobs data, but yeah, if you look at like 2008, jobs hours work collapse.
• 9:38
  Speaker 1: Same thing happened in 2020.
• 9:40
  Speaker 1: So that number coming down is kind of an indication that there is something slowing down which we should mean.
• 9:46
  Speaker 1: The Fed should cut interest rates and therefore we should get the golden bonanza which we would also have.
• 9:53
  Speaker 1: If you just found the like button and smashed it.
• 9:55
  Speaker 1: Apparently, 400 of you haven't found it yet or maybe thought that this wasn't worth smashing the like button for, but it is an option.
• 10:02
  Speaker 1: I'm just putting it out there.
• 10:04
  Speaker 1: What about labor market data?
• 10:07
  Speaker 1: I talked a little bit about this on Sunday and well, payroll data is a basket case, basically.
• 10:24
  Speaker 1: So is this the right way around.
• 10:33
  Speaker 1: I'm not really sure what this chart tells us, to honest with you.
• 10:35
  Speaker 1: Just tells us that revisions are sizable.
• 10:37
  Speaker 1: Most revisions in the last year have been negative.
• 10:41
  Speaker 1: It would be interesting to see what happens.
• 10:42
  Speaker 1: So, yeah, basically in December I think the label is wrong on this, to be honest.
• 10:48
  Speaker 1: Yeah, I think so.
• 10:48
  Speaker 1: Essentially, they put out a high number for payrolls and then a month later they sort of adjusted downwards and nobody really matters, but I think that chart is labeled the wrong way around.
• 10:58
  Speaker 1: And then, yeah, I've got just more payroll charts here.
• 11:01
  Speaker 1: Let me find the one that's actually the most useful one here.
• 11:05
  Speaker 1: I've got a ton of data on this, but yeah, no again, that's not really what I want.
• 11:09
  Speaker 1: I want one, that one either, I want this one.
• 11:11
  Speaker 1: I'm going to zoom in a little bit on this.
• 11:15
  Speaker 1: The payroll data shows how many jobs are created and the employment data shows how many people are in jobs.
• 11:24
  Speaker 1: Now you would expect the two to be roughly the same, right, give or take 100,000 or something.
• 11:29
  Speaker 1: No, it's give or take 9 million, I know.
• 11:33
  Speaker 1: So should we still be paying attention?
• 11:35
  Speaker 1: Do jobs data?
• 11:37
  Speaker 1: Probably not.
• 11:38
  Speaker 1: And this really, this shenanigan really started sort of around COVID time and it's just the government lying to you.
• 11:48
  Speaker 1: It's very simple to make the jobs market look better.
• 11:53
  Speaker 1: So the payroll data counts part-time jobs.
• 11:56
  Speaker 1: It counts you as multiple jobs if you work two or three jobs.
• 12:01
  Speaker 1: So if you work at McDonald's and some other part-time job and do something menial at night, then you have two or three jobs and you are private jobs created, whereas the employment figure is a little bit more realistic.
• 12:16
  Speaker 1: So in reality, there are probably 9 million jobs less than the US and people actually think.
• 12:22
  Speaker 1: And you can think about manipulation or that, but it also means the Fed knows this.
• 12:27
  Speaker 1: They're not completely stupid, one would hope, and therefore, again, it would give them an excuse at some point to cut rates.
• 12:39
  Speaker 1: And look at the last two months here in terms of jobs created In blue I've got part-time jobs created and in orange I've got full-time jobs created.
• 12:51
  Speaker 1: So they've lost full-time jobs and they've created part-time jobs each month.
• 12:56
  Speaker 1: And the same story is pretty much true for the entire year.
• 12:59
  Speaker 1: So the jobs miracle is a bit of a myth, to kind of get reelected.
• 13:04
  Speaker 1: Here we go.
• 13:04
  Speaker 1: Since February 2023, 97,000 full-time jobs were lost and 870,000 part-time jobs were created.
• 13:13
  Speaker 1: Yay, mcdonald's.
• 13:15
  Speaker 1: So it kind of insane, right?
• 13:18
  Speaker 1: Yeah, but do you think about the native born workers thing?
• 13:26
  Speaker 1: All jobs in the last 18 months created have gone to immigrants.
• 13:31
  Speaker 1: Is that a problem for you?
• 13:33
  Speaker 1: How do you feel about that?
• 13:34
  Speaker 1: So the good things are a bad thing.
• 13:36
  Speaker 1: I'll put out a video on that later on.
• 13:38
  Speaker 1: I'll give you my opinion.
• 13:39
  Speaker 1: It might not be the most popular thing out there, but we'll see what happens here.
• 13:42
  Speaker 1: But fundamentally, the yields are going up and the NASDAQ is still up.
• 13:48
  Speaker 1: That doesn't make a lot of sense.
• 13:50
  Speaker 1: At some point that gap is going to have to fill, either because by the NASDAQ going up or by yields coming down again at the moment.
• 13:59
  Speaker 1: That's a good question.
• 14:00
  Speaker 1: Which way are we going to go?
• 14:01
  Speaker 1: Either way, we're going to make money.
• 14:04
  Speaker 1: Come and join me.
• 14:04
  Speaker 1: Learn how we do it.
• 14:06
  Speaker 1: Really easy, simple trading rules for income.
• 14:11
  Speaker 1: That's basically what we do.
• 14:12
  Speaker 1: So go to Feed your Trends and Locks at Web and I grab yourself a seat for tomorrow's live.
• 14:18
  Speaker 1: Let's have a little bit of a look at the life market here.
• 14:21
  Speaker 1: Apple, nvidia, google looking good, fat Drugs looking good, walmart looking good everything else.
• 14:28
  Speaker 1: A little bit on the edge, but nothing like too serious, and this, of course, is the reason Papa Powell threw a minor hand grenade in there over the weekend, and two year bond yields are up 1.4% today.
• 14:46
  Speaker 1: That should, in theory, lower the stock market by a similar amount.
• 14:51
  Speaker 1: It's not really doing that yet and the market's been very resilient and earnings coming good enough.
• 14:58
  Speaker 1: You could just go well, it's all going to be great.
• 15:00
  Speaker 1: Palantir reporting after earnings today, after hours today.
• 15:03
  Speaker 1: Of course I'll cover that tomorrow.