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Felix Prehn - WARNING: Wall Street is Buying Stocks FAST + Stock Market News 07 August 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Lol.
• 0:00
  Speaker 1: I've been talking to myself for the last five minutes.
• 0:02
  Speaker 1: I didn't press the go live button.
• 0:03
  Speaker 1: There you are, old bankers.
• 0:07
  Speaker 1: I appreciate you hanging around.
• 0:09
  Speaker 1: Thank you very much.
• 0:12
  Speaker 1: I want to walk you through here today what's going on in Japan, which is kind of a little bit closer to where I'm right now in Hong Kong, and should we be buying?
• 0:19
  Speaker 1: Should we be selling?
• 0:21
  Speaker 1: Is this going to get worse?
• 0:22
  Speaker 1: Is this just sort of the you know dead cat bounce rather unfortunately termed, or is this actually over?
• 0:28
  Speaker 1: And how do we make money out of this?
• 0:30
  Speaker 1: And how do you make sure that you do better than the average trader investor out there?
• 0:34
  Speaker 1: That's really my goal here for you today, and so let's just jump straight into it, shall we?
• 0:39
  Speaker 1: There we go, yes, yes, yes, yes, we're finally live.
• 0:45
  Speaker 1: Appreciate that Bank of Japan sends dovish signals after rate hike spurred market meltdown, and Uchida-san, the Bank of Japan emperor, says it's important to keep policy easy for now.
• 1:00
  Speaker 1: Yeah, he maybe should have thought about that on Friday, but he says I believe that the bank needs to maintain a monetary easing with the current policy interest rate for the time being and because of developments in financial and capital markets at home and abroad being extremely volatile.
• 1:19
  Speaker 1: Whoops, yeah, because you, you know Nata set this off.
• 1:24
  Speaker 1: So Uchida said that in a speech on Wednesday and I'm sure everybody nodded very politely.
• 1:29
  Speaker 1: So that's good news.
• 1:32
  Speaker 1: That's kind of the central bank intervention in a way that we wanted, where they just go all right, all right, all right, we're going to calm down here, everyone relax, we're not going to do anything stupid, at least for another week or so, and therefore that's a good thing.
• 1:46
  Speaker 1: So the yen drops, the Japanese stock market goes up, the carry trade doesn't get unwound further and therefore we don't all have to jump out of windows, which is nice.
• 1:57
  Speaker 1: But there is a problem.
• 1:57
  Speaker 1: Most retail investors sold on Monday, and of course, at least the ones who could log into accounts.
• 2:04
  Speaker 1: Unlike most of us, most brokerages get locked out their retail customers on Monday.
• 2:10
  Speaker 1: Whether that is intentional or not is something I'm actually digging into.
• 2:21
  Speaker 1: I might do a video on that.
• 2:22
  Speaker 1: I don't know if you'd be interested in that.
• 2:23
  Speaker 1: A little bit conspiracy theories around that.
• 2:24
  Speaker 1: Why did we all get locked out on Monday?
• 2:27
  Speaker 1: Because while retail that's you and me sold, guess what institutions did?
• 2:33
  Speaker 1: Wall Street bought on Monday, and what does that mean?
• 2:40
  Speaker 1: So basically, again handing money over to the chaps on Wall Street.
• 2:44
  Speaker 1: The average retail investor is now down 4% on the year, which is just baffling, isn't it the way the market's gone up and people are down 4%.
• 2:54
  Speaker 1: But above all, it's sad and it pains me because I'm kind of hoping that we will improve, that, that we will actually make people smarter, make sure they don't panic on days like that and that they stop selling in the panic and stop buying on FOMO.
• 3:10
  Speaker 1: And that's why I love that you are here.
• 3:12
  Speaker 1: I love the 92 of you hit the like button.
• 3:15
  Speaker 1: The other 540 of you are probably too drunk or high to find it, so you got an excuse, but at least we've got 92 coherent people on the call here and you will hopefully learn how to actually make some money this week and next month and next year and so on.
• 3:31
  Speaker 1: And I keep showing you this, which is our trade teaching portfolio.
• 3:36
  Speaker 1: We're up about 24k probably about 25k by today, and that's on the $30,000 teaching portfolios who are up like 80%.
• 3:44
  Speaker 1: And that wasn't luck, that wasn't fluke, that was actually following rules.
• 3:48
  Speaker 1: And if you want to learn what they are, I'm running the first ever free two-day challenge.
• 3:54
  Speaker 1: I know it says masterclass, but it should say challenge.
• 3:56
  Speaker 1: Why?
• 3:56
  Speaker 1: Because I'll be challenging you.
• 3:58
  Speaker 1: I'll be setting you tasks, I'll be setting you some homework, even before the free two-day event next week.
• 4:03
  Speaker 1: Why?
• 4:04
  Speaker 1: Because I want to, come what may, improve your financial skills, because that's really all it is.
• 4:11
  Speaker 1: It's skills, it's confidence, it's knowing what to do when stuff breaks particularly.
• 4:17
  Speaker 1: So come and join me phoenixfriendsorg challenge.
• 4:20
  Speaker 1: It's Tuesday and Wednesday, 8 pm Eastern Time.
• 4:23
  Speaker 1: It's completely free of charge, and I'll be teaching you, probably for about 90 minutes each day, how we do, what we do and how you can make more money, and I'll be setting you some tasks and homeworks and sending you some extra resources to make sure you get the most out of that.
• 4:40
  Speaker 1: Ken is sobering up right now.
• 4:43
  Speaker 1: Okay, very glad to hear it.
• 4:45
  Speaker 1: You know, when I used to work on a trading floor of a bank that I shan't name right now, at least not in the sentence most people, or a lot of the people, certainly were not in a fit state at seven in the morning.
• 4:57
  Speaker 1: They were still on some sort of substance mostly, but anyway, the VIX, which is the fear index, is back here there at a sort of 23 level.
• 5:09
  Speaker 1: It was on monday at 68, which is higher than we were in 2018, when the world was on fire and it's almost as high as the covid panic, so it was pretty, pretty serious a way.
• 5:23
  Speaker 1: I'm surprised the market didn't drop more and we got into that in a moment.
• 5:27
  Speaker 1: Now is the VIX going to keep collapsing rapidly?
• 5:30
  Speaker 1: I think it'll come down some more, but I don't think it'll come down that quickly that much, and I'll explain to you why just in a moment.
• 5:38
  Speaker 1: Ads bastards.
• 5:47
  Speaker 1: Youtube keep putting ads into these live streams, even though I've turned them off.
• 5:50
  Speaker 1: I've told them off about a dozen times and they keep going.
• 5:53
  Speaker 1: We're looking into it, but we don't know how long it's going to take, probably until they made enough money from us.
• 5:58
  Speaker 1: Anyway, why is fear not going to drop that quickly?
• 6:04
  Speaker 1: This is a concept that hardly anybody understands.
• 6:07
  Speaker 1: If you don't understand this, it actually makes you normal, whereas I am abnormal and weird.
• 6:13
  Speaker 1: We're in a scenario called short gamma and we're down here.
• 6:19
  Speaker 1: This is the zero line, so it's fairly rare that we're there.
• 6:23
  Speaker 1: And what does that mean?
• 6:25
  Speaker 1: It means, okay, there are people out there who call themselves market makers.
• 6:30
  Speaker 1: If I could spell market makers, uh, maybe I'm on some sort of substance.
• 6:35
  Speaker 1: I'm on electrolytes which, um, have watermelon flavor today, which is new and kind of exciting and a bit weird.
• 6:45
  Speaker 1: There it is product placement.
• 6:47
  Speaker 1: No, it's actually I don't know, I'm not advertising it, but I do.
• 6:50
  Speaker 1: I'm a big proponent of electrolytes, watermelon and salt flavor, which is kind of funky but not sweet, which is good.
• 7:00
  Speaker 1: No sugar in this.
• 7:01
  Speaker 1: So we'll see how this pans out.
• 7:05
  Speaker 1: And anyway, go back to the gamma thing, whatever the heck that means.
• 7:09
  Speaker 1: So market makers are basically the people on the other side of most of your trades, so they basically provide liquidity to the market and they make money out of the bid-ask spread.
• 7:19
  Speaker 1: That's sort of what their job is and they make a lot of money out of that.
• 7:23
  Speaker 1: And how do we know that?
• 7:24
  Speaker 1: I've got three of them on my team, retired ones.
• 7:26
  Speaker 1: The oldest is close to 80 years old.
• 7:29
  Speaker 1: He's done that for 50 years of his life and insane experience and absolute marvel of wisdom and everything else.
• 7:37
  Speaker 1: So when you are short gamma, what happens if, okay, say, prices go up, so stock prices go up, what do they do?
• 7:44
  Speaker 1: The market makers buy.
• 7:47
  Speaker 1: But what happens if prices fall?
• 7:50
  Speaker 1: What do they do?
• 7:51
  Speaker 1: They sell.
• 7:53
  Speaker 1: So, whatever happens, they make it more extreme in this fairly rare scenario, and that's where we are right now.
• 8:00
  Speaker 1: So the market drops it's going to drop heavy.
• 8:02
  Speaker 1: The market goes up.
• 8:03
  Speaker 1: It's going to go up a lot.
• 8:04
  Speaker 1: So it's just going to be very volatile and that's what keeps the fear index, the VIX, up higher and it just makes life a little bit more exciting and interesting, although I don't particularly like excitement in my portfolio.
• 8:22
  Speaker 1: If he has ads turned off, does he get paid?
• 8:24
  Speaker 1: Lawson Baker, I very much doubt it.
• 8:26
  Speaker 1: I haven't checked, to be honest with you.
• 8:27
  Speaker 1: I mean, the ads revenue is not really why I do this, but it sort of pays for some of the editing and that kind of thing, but it's not really the motivation.
• 8:39
  Speaker 1: I think on a live stream it's incredibly irritating.
• 8:41
  Speaker 1: If you don't hear some of what I'm saying, at least, I would find it incredibly irritating, which is why I never turn them on.
• 8:49
  Speaker 1: Anyway, that's what it is.
• 8:50
  Speaker 1: So the market is going to be volatile right Now.
• 8:51
  Speaker 1: Some people are saying look, this is the beginning of the end and what you often get is you get a sort of wonderful rally up.
• 9:00
  Speaker 1: You then get a dip, you get another kind of okay, don't worry, it's all going to be fine, you don't make the same high again and then you really tank.
• 9:09
  Speaker 1: So a lot of people are saying we're right here.
• 9:12
  Speaker 1: Do they know?
• 9:14
  Speaker 1: No, they don't know.
• 9:15
  Speaker 1: Why not?
• 9:15
  Speaker 1: Nobody knows.
• 9:16
  Speaker 1: Nobody ever knows the future we have some idea on like immediate, you know, week or so out because of things like algo tradings and buybacks and volatility and stuff like that and behavioral patterns, which is how we make money momentum, essentially but nobody really has any idea.
• 9:33
  Speaker 1: But it's a possibility that I would keep in the back of your head that this might not be the end, but people also said it could be the end of the beginning of the year.
• 9:42
  Speaker 1: It would have been a ashamed to miss out on the whole rally just because you're worried about stuff.
• 9:47
  Speaker 1: So what I'm more watching is this chart here, and this shows margins of mega cap stocks and the blue one is without NVIDIA, the gray one is with NVIDIA and what are you seeing?
• 10:06
  Speaker 1: Well, they're sort of like slumping right.
• 10:09
  Speaker 1: So it doesn't mean they're peaking like we did here in 2021 or, you know, at many of the other times in history.
• 10:16
  Speaker 1: That's really the number one concern Our margins and therefore profitability and profit growth.
• 10:24
  Speaker 1: Are they slowing down?
• 10:25
  Speaker 1: If they do, that really gives us a top sometime, maybe in the next six or 12 months.
• 10:32
  Speaker 1: So watch that.
• 10:34
  Speaker 1: You really want to watch margins growth and if margins keep getting compressed, like we had today on the fat drugs from Wegovy's NVO maker, we'll get onto that in a second as well.
• 10:48
  Speaker 1: That's the concern there.
• 10:49
  Speaker 1: The market doesn't like it.
• 10:50
  Speaker 1: Remember, paypal Margins fell.
• 10:53
  Speaker 1: See what happened to PayPal.
• 10:54
  Speaker 1: It lost like 70% of its value.
• 10:57
  Speaker 1: So that's an important thing to keep an eye on, if you're only going to keep an eye on one thing.
• 11:01
  Speaker 1: But there is something positive, and that is buybacks are back, backstreet's back, and what does that mean?
• 11:09
  Speaker 1: Well, we're kind of out of that main earnings window where they're not allowed to buy their own stocks.
• 11:14
  Speaker 1: They're not allowed to do it in those weeks and we expect 2024 to be the best and biggest buyback year in history and therefore, especially the large companies who do all those buybacks should do relatively well, because it's like deflation basically for large stocks.
• 11:33
  Speaker 1: Right, and we'll get onto your questions in a moment, guys, so keep asking them, but you have to smash the like button before.
• 11:41
  Speaker 1: 700 of you haven't smashed the like button yet.
• 11:44
  Speaker 1: So I said too drunk to find the bloody button, so let's.
• 11:46
  Speaker 1: Haven't smashed the like button yet, so set to drunk to find the bloody button.
• 11:48
  Speaker 1: So let's have a quick look at pre market.
• 11:50
  Speaker 1: Looks pretty decent, right?
• 11:52
  Speaker 1: Okay, disney, you know, put out earnings that they said were good, but in reality they identified as being fairly awful.
• 12:00
  Speaker 1: So they're minus 3% down, although they claim that they really should be good, because that's how they call themselves and it's their right to identify as a company with brilliant earnings, even though they didn't get them Enough.
• 12:15
  Speaker 1: Digging at Mini or Mickey or whatever.
• 12:20
  Speaker 1: Lly is down.
• 12:21
  Speaker 1: Why?
• 12:21
  Speaker 1: Because Novo Nordisk, the company with a larger capital market cap, I think, than Denmark and the entire country, and why Margins are down a little bit.
• 12:34
  Speaker 1: But basically what they're doing is they're scaling, and when you scale pharmaceutical distribution, you've got to give a little bit more money to your sales guys, your farmer pushers, to the bloke at the street corner with the white lips, that kind of person.
• 12:53
  Speaker 1: You've got to give them a little bit more of an incentive to push the good stuff a little harder, and that typically depresses margins.
• 12:59
  Speaker 1: Is it a big deal?
• 13:01
  Speaker 1: No, I think the addressable market for obesity is huge I mean really ginormous and they'll make a heck of a lot of money out of it.
• 13:10
  Speaker 1: But they'll do it on slightly decreasing margins, so they'll sell more, but on each unit they'll make a little bit less.
• 13:17
  Speaker 1: If you think that through, is that a bad thing?
• 13:19
  Speaker 1: Okay, say you could sell you know this electrolyte sachet, for you know a dollar profit and you could sell 100 of them.
• 13:30
  Speaker 1: Right, you make $100.
• 13:31
  Speaker 1: But what if I said to you okay, but I'll take 1000 of them off you, but you'll only make 50 cents a sachet.
• 13:39
  Speaker 1: Would you take my order?
• 13:40
  Speaker 1: Well, you'd make an extra $500.
• 13:43
  Speaker 1: Why the heck wouldn't?
• 13:44
  Speaker 1: Right, you're making money.
• 13:45
  Speaker 1: So, yes, you're making less of a margin, but overall you're making more money, so you're going to make more money per share for your shareholders.
• 13:51
  Speaker 1: So the whole margin obsession is a little bit dumb and it's just a natural thing.
• 13:56
  Speaker 1: That's going to happen to companies like LLY and Norma and Adisk.
• 13:59
  Speaker 1: It's going to happen to NVIDIA too and the market's going to freak out when it happens.
• 14:03
  Speaker 1: But overall, gentle recovery here, not a massive boost and boom, but things are up sort of 1% to 2% across the board and Google also recovering from that horrendous lawsuit judgment from the US government, which is good to see.
• 14:21
  Speaker 1: So maybe there is some appeal in there somewhere.