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Transcript

Felix Prehn - This Won’t End Well + Stock Market News 24 July 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: And welcome to a day where the markets are red, red, red and red, as both Tesla and Google and Visa card and other stocks disappointed the market's lofty expectations last night and most people are going to make the wrong decision today.
• 0:18
  Speaker 1: Most people are going to lose money today, and I want to make sure that you're not one of those, because that's really what it's all about.
• 0:25
  Speaker 1: Days like these are actually what really really make you a lot of money if you know what to do about it.
• 0:30
  Speaker 1: So let's jump straight into what we're doing here.
• 0:33
  Speaker 1: And well, there is the slightly depressing pre-market, but big moves, my friend, are an opportunity.
• 0:41
  Speaker 1: I like big moves in the market Tesla down eight percentage points here, google down 4%, meta down 2.8%, nvidia down 2.3%, microsoft down one percentage point, as is Amazon.
• 0:54
  Speaker 1: Visa is down almost 4%, dragging MasterCard with it, and the whole market looks like oh no, what the heck's going on here.
• 1:02
  Speaker 1: So let's have a.
• 1:03
  Speaker 1: Let's have a ferret through what actually happened here with with Tesla yesterday, because that's really, really important.
• 1:10
  Speaker 1: Now we'll put out a full Tesla review video on this, because we don't have like 20 minutes to go through Tesla here, but just so you can see what the problem is from a market perspective right now.
• 1:24
  Speaker 1: So car sales are down 9%, auto sales Regulatory credits up 216%.
• 1:32
  Speaker 1: So that's a huge boost which again the market sort of looks at and says it's not really your business.
• 1:38
  Speaker 1: You're just getting regulatory credits.
• 1:40
  Speaker 1: Leasing's down 19%.
• 1:42
  Speaker 1: Revenue is up two percentage points but that's mostly because of regulatory credits.
• 1:48
  Speaker 1: Take that out and it falls.
• 1:49
  Speaker 1: Then we have operating profit margins down 3% and net profit margins down 5%.
• 1:56
  Speaker 1: So not really any good news in here.
• 2:00
  Speaker 1: Two percent pitch points more restructuring costs than usual.
• 2:05
  Speaker 1: So that was kind of the layoffs and so on.
• 2:07
  Speaker 1: So you look at that and you go oh no, it's terrible, how awful.
• 2:11
  Speaker 1: Now the problem with that is is that you're taking a snapshot of a business as it is and you're saying it's a good old, boring business and they make I don't know mugs.
• 2:21
  Speaker 1: They've always done it and their margins have come down.
• 2:23
  Speaker 1: Their margins have come down significantly, almost halved in the last year or so.
• 2:26
  Speaker 1: But what you got to look at is that where is the cyclicality in the car industry right now?
• 2:32
  Speaker 1: There is an oversupply of used cars.
• 2:35
  Speaker 1: Interest rates are super high so no one's buying new cars because most people finance, get a lease right.
• 2:41
  Speaker 1: It's a leasing business and therefore the numbers don't look good.
• 2:45
  Speaker 1: But what the market isn't looking at is what's coming, and what's coming Well, optimus robots are going into small-scale production next year.
• 2:58
  Speaker 1: The Robotaxi event is on the 10th of October and the energy business has did a tremendous.
• 3:04
  Speaker 1: What was it?
• 3:05
  Speaker 1: 9.4, whatever gigawatt hours or whatever it was that they added to storage, and there is a lot of positive to come here.
• 3:13
  Speaker 1: So to me, it reminds me a little bit of the old Amazon earnings, which the market always hated because Amazon didn't cater to Wall Street.
• 3:22
  Speaker 1: Elon Musk and Tesla do not cater to Wall Street.
• 3:25
  Speaker 1: They do not bow and scrape and say we're going to squeeze the margins.
• 3:29
  Speaker 1: They don't care, they just look at building a better product.
• 3:32
  Speaker 1: Elon tweets today do you think we should invest $5 billion into XAI as Tesla, and there'll be a shareholder vote on that potentially?
• 3:40
  Speaker 1: That's kind of what I want to look at more with Tesla.
• 3:43
  Speaker 1: That's what I want to get excited about.
• 3:45
  Speaker 1: With Tesla, less than 10% of what it will be.
• 3:50
  Speaker 1: Right now, the car business is kind of like it's almost a sideshow.
• 3:53
  Speaker 1: I think that's the way I look at it, and I could be wrong on that.
• 3:57
  Speaker 1: I could be horribly wrong on that Entirely possible.
• 3:58
  Speaker 1: But the market is just looking up the here, the now.
• 4:02
  Speaker 1: The margins are bad and therefore the stock falls Like Tesla.
• 4:05
  Speaker 1: Well, it's just got 8% or 9% cheaper.
• 4:08
  Speaker 1: We have a look at where our support sits on Tesla.
• 4:11
  Speaker 1: So we're trading down here at 226.
• 4:16
  Speaker 1: The support for today is 220 and then bigger at 200.
• 4:22
  Speaker 1: So those are your kind of two.
• 4:24
  Speaker 1: I'll put that on the chart here for you.
• 4:26
  Speaker 1: So this is trade vision.
• 4:30
  Speaker 1: If you haven't got a subscription to that yet, first month is completely free of charge.
• 4:34
  Speaker 1: It's like 90 bucks after that or something.
• 4:36
  Speaker 1: It's very, very useful to have these support levels, for example, 220, 200.
• 4:41
  Speaker 1: This is our support, so I would expect us to stay above that.
• 4:45
  Speaker 1: Given where we are right now, 230 is also decent support.
• 4:48
  Speaker 1: So it could be that we bounce back above that.
• 4:50
  Speaker 1: That would be ideal, because that would also be pretty close to the recent lows.
• 4:55
  Speaker 1: That would kind of like buffer this out, but let's see when the market opens.
• 5:02
  Speaker 1: Stream crashed again for you guys.
• 5:03
  Speaker 1: It always happens at four minutes.
• 5:04
  Speaker 1: It's funky.
• 5:05
  Speaker 1: I had another chat with YouTube on that yesterday and they said it's all hunky-dory, but I will send them a screenshot of you just saying that.
• 5:14
  Speaker 1: So thank you very much for that.
• 5:16
  Speaker 1: And you just got your first ad as well.
• 5:18
  Speaker 1: That is so, so irritating, because there should be no ads on live streams.
• 5:23
  Speaker 1: So, again, I'm going to take a screenshot of that, thank you very much, and I will share that with YouTube.
• 5:28
  Speaker 1: Maybe they'll fix it or at least give us the ad revenue.
• 5:31
  Speaker 1: So that's where we are with that Now.
• 5:34
  Speaker 1: Second stock that's important is will be Google.
• 5:37
  Speaker 1: Maybe you also understand that, and maybe we talk about Visa for a moment as well.
• 5:40
  Speaker 1: Today I'm also in literally 52 minutes.
• 5:44
  Speaker 1: I'm teaching you how we did this little feat here.
• 5:45
  Speaker 1: We're up so far this year, $24,000 on a $30,000 teaching portfolio and that, my friend, is an 80% increase in portfolio size.
• 6:00
  Speaker 1: You'll learn how we do that.
• 6:01
  Speaker 1: Come and join our live training today.
• 6:05
  Speaker 1: We don't have a magnet out for that, Not a little image out for that.
• 6:10
  Speaker 1: Yeah, there we go, there we go.
• 6:11
  Speaker 1: Is it at 8 pm?
• 6:13
  Speaker 1: No, it's not.
• 6:14
  Speaker 1: No, it's not.
• 6:15
  Speaker 1: It's at 10 am Eastern time.
• 6:18
  Speaker 1: So sorry about that.
• 6:19
  Speaker 1: I don't know if you can do something about that.
• 6:21
  Speaker 1: Can we do something about that?
• 6:22
  Speaker 1: Have we got a relevant thing for this?
• 6:24
  Speaker 1: I guess that'll do.
• 6:26
  Speaker 1: Felixrentzorg, slash training.
• 6:28
  Speaker 1: We will take you there, sign up, grab yourself a free spot.
• 6:37
  Speaker 1: I see about 700 of you already have, which is brilliant.
• 6:39
  Speaker 1: So I look forward to seeing you guys live in about 50 minutes.
• 6:41
  Speaker 1: It's not on YouTube, it's down there at what happened.
• 6:42
  Speaker 1: Okay, felixfriendsorg slash training.
• 6:44
  Speaker 1: Now here is Google's statement, and have a look at this and tell me whether you think it's good or bad.
• 6:50
  Speaker 1: Have a look at this and tell me whether you think it's good or bad.
• 6:53
  Speaker 1: So we've got search advertising up 14% ad revenue, up 11% revenue overall, up 14%.
• 7:01
  Speaker 1: Youtube revenues up 13% year over year.
• 7:04
  Speaker 1: Google Play up 14%.
• 7:05
  Speaker 1: Google Cloud up 29% year over year.
• 7:08
  Speaker 1: Gross profit margins are improved.
• 7:15
  Speaker 1: Operating margins are improved.
• 7:16
  Speaker 1: Profit margins are improved.
• 7:17
  Speaker 1: Operating margins are improved.
• 7:18
  Speaker 1: Net margins are improved.
• 7:18
  Speaker 1: They're spending less on S&M.
• 7:19
  Speaker 1: They're spending less on G&A just overheads, basically.
• 7:21
  Speaker 1: So shouldn't the market be doing a little merry dance and going?
• 7:25
  Speaker 1: Oh my God, that's amazing.
• 7:27
  Speaker 1: I love these guys.
• 7:28
  Speaker 1: I love these Google guys.
• 7:29
  Speaker 1: The market goes here it is.
• 7:33
  Speaker 1: We're down what 4% or something, trading here at 175.
• 7:36
  Speaker 1: We're trading at early June levels here right now and that's slightly above the support line here at 175.
• 7:45
  Speaker 1: So I see support at 175.
• 7:49
  Speaker 1: There we go, 175.
• 7:52
  Speaker 1: So why the heck are we down?
• 7:54
  Speaker 1: There was a slight miss on the YouTube earnings expectations.
• 7:59
  Speaker 1: You obviously haven't clicked the like button enough or watched enough YouTube of late.
• 8:05
  Speaker 1: Basically, here is what it comes down to.
• 8:07
  Speaker 1: Wall Street has single-mindedly narrowed in on this, which is we want to see a return on investment on all that AI spend.
• 8:17
  Speaker 1: You're buying all these NVIDIA chips.
• 8:20
  Speaker 1: How much money are you making out of it?
• 8:22
  Speaker 1: And all these companies are mostly saying none.
• 8:27
  Speaker 1: Yet we're just figuring it out.
• 8:29
  Speaker 1: And so the analysts.
• 8:31
  Speaker 1: They ask you know what's your return on investment?
• 8:35
  Speaker 1: Are you spending your money wisely?
• 8:38
  Speaker 1: And Sundar, the CBO of Google, says I think one way to think about this is when you go through a curve like this, so like a technology curve, the risk of under-investing is dramatically greater than the risk of over-investing.
• 8:53
  Speaker 1: Even in scenarios where it turns out that we are over-investing, these infrastructures are widely useful for us Because, worst case scenario they just use it for the cloud business or to power something else.
• 9:05
  Speaker 1: So the tech companies are basically saying we're spending a lot, we intend to continue, because if we don't and we're wrong, we got a business.
• 9:16
  Speaker 1: If we're right, we make a lot of money.
• 9:18
  Speaker 1: If we spend a little bit, it doesn't really matter.
• 9:20
  Speaker 1: We have lots of money, but the market doesn't really like that right now.
• 9:24
  Speaker 1: The market wants to see AI returns, which is too soon because it takes time.
• 9:27
  Speaker 1: Okay, I appreciate all your feedback on our live stream hiccups and I shall forward them all to my lovely friend at YouTube after this.
• 9:48
  Speaker 1: So, and then Amy is asking so then, why is NVIDIA down?
• 9:52
  Speaker 1: Because here is NVIDIA, and you're quite right, it's trading at 119 here, which is ever so slightly below the 120 support which might act as a little bit of a magnet here today, 120.
• 10:03
  Speaker 1: Why?
• 10:06
  Speaker 1: It's just sentiment.
• 10:07
  Speaker 1: Because if you think that Google is spending too much money, who are they sending the money?
• 10:14
  Speaker 1: To NVIDIA exactly.
• 10:17
  Speaker 1: So it's not good if Wall Street goes bearish on the big tech companies, because those companies are the customers of NVIDIA.
• 10:25
  Speaker 1: So we want to keep everybody sweet and happy here.
• 10:29
  Speaker 1: So NVIDIA's down a little bit.
• 10:30
  Speaker 1: I don't think this is a dramatic drop because we're basically where we were two days ago, so it's not really a big deal.
• 10:35
  Speaker 1: The S&P overall as well, is trading at the low of three days ago.
• 10:40
  Speaker 1: I remember we had that.
• 10:42
  Speaker 1: What was it Thursday hiccup?
• 10:44
  Speaker 1: It was Thursday, it was a Friday, it was one of those random ones.
• 10:51
  Speaker 1: And let me have a look where the support sits.
• 10:52
  Speaker 1: Here Support sits very clearly at 545, which is well, well, well below where we are trading right now.
• 10:59
  Speaker 1: So down there, that's our horizontal blue line.
• 11:05
  Speaker 1: There is our support line right now 545.
• 11:08
  Speaker 1: So let's see when the market opens.
• 11:12
  Speaker 1: Let's see when the market opens, but right now, obviously everything looks pretty red and bleak.
• 11:17
  Speaker 1: Okay, week, okay.
• 11:29
  Speaker 1: So let's move on and have a look at this.
• 11:32
  Speaker 1: This is another reason I'm bullish, because most people don't realize this.
• 11:35
  Speaker 1: I'd say 99% of investors out there, retail investors don't know.
• 11:39
  Speaker 1: This Blackout window is still where we are Buybacks.
• 11:43
  Speaker 1: The largest and I did a video on this on Sunday the largest buyer of US shares are not funds, not pension funds, not you, not me, not Winston, it's companies themselves.
• 11:58
  Speaker 1: The largest buyers of shares are companies buying back their own shares, and in an earnings season they're not allowed to buy back their own shares.
• 12:07
  Speaker 1: Now, the blackout period where there are no buybacks that we're in right now will basically end at the end of July.
• 12:18
  Speaker 1: So in about a week's time, about 50% of the S&P 500 will be out of the blackout, which means we're going to get money flowing into the market again, which should be very, very supportive, and the amount of buybacks that we're seeing is pretty extraordinary.
• 12:35
  Speaker 1: We are right now almost near the 2019 highs.
• 12:39
  Speaker 1: We're going to exceed it.
• 12:40
  Speaker 1: This will be the biggest year ever for share buybacks, so it's really important to be in the blackout out of the blackout period where they actually buy outbacks happening if you want the market to be supported.
• 12:51
  Speaker 1: So watch out for that.
• 12:52
  Speaker 1: So you might have a little bit of a wobble for a couple of days, but next week money keeps flowing back in.
• 12:56
  Speaker 1: So overall, I'm still pretty bullish on this.
• 13:11
  Speaker 1: Isn't Google Cloud revenue up?
• 13:12
  Speaker 1: Yeah, it's up like a whopping 20-odd percent.
• 13:14
  Speaker 1: That's pretty good.
• 13:16
  Speaker 1: Can you make money investing just a thousand pounds, says george, yeah, but you, you're going to want to focus on earning and saving some more.
• 13:28
  Speaker 1: My friend um, the first 50k, the first 100k are the hardest and, as um charlie munger says, the first 100k are a bitch uh, and it's true.
• 13:38
  Speaker 1: You just gotta like save and earn and then it becomes a heck of a lot easier, because then investments will take over Right here.
• 13:50
  Speaker 1: So this is where we are right now.
• 13:53
  Speaker 1: If you look at Tesla, we're down here at 226, slightly above the 220 support.
• 13:59
  Speaker 1: Google, we're above the 175 support just about.
• 14:03
  Speaker 1: Nvidia is down, not super significantly, but still below 120.
• 14:07
  Speaker 1: The S&P, right now trading at 548.
• 14:10
  Speaker 1: 545 is our support and we can have a look at some of our favorite tech stocks at the same time.
• 14:15
  Speaker 1: We just looked at Tesla, didn't we?
• 14:18
  Speaker 1: Palantir, for example, is down 1.3%.
• 14:21
  Speaker 1: That's just market sentiment.
• 14:23
  Speaker 1: I don't think that really means very much.
• 14:24
  Speaker 1: Sofi is also down 1.7% for no real reason whatsoever, and I think more and more people are coming out of the woodworks and are worrying now about are we going to get a recession?
• 14:35
  Speaker 1: Maybe we should get Fed cuts in July rather than September, all that kind of stuff.
• 14:39
  Speaker 1: So you get into this like uncertainty mood in the market and that's all you need.
• 14:44
  Speaker 1: It's like an infectious disease and that's why days like today are important.