Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - FED Flips in 5 Hours 📈 + Stock Market News 03 July 2024

Transcript

Felix Prehn - FED Flips in 5 Hours 📈 + Stock Market News 03 July 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Good morning to this live stream the day before you all back off on holiday, and there are a couple of very important things that are happening today Fed-related things, what the Fed chair said yesterday, market positioning, and Toledo is joining me with some in-depth research here today, aren't you Toledo?
• 0:21
  Speaker 1: She's like I was not meant to be on this video.
• 0:23
  Speaker 1: I wasn't prepared, prepared, I hadn't done my hair, uh, so I'm going to walk you through that.
• 0:27
  Speaker 1: My goal, as always, is to make you into the best informed investor out there, while tell you there is tunneling into the curtains, which is where is a little bit warmer, and so let's um, let's um, jump into that.
• 0:40
  Speaker 1: And yeah, of course, talk about tesla.
• 0:42
  Speaker 1: We went well, properly bullish Tesla two months ago.
• 0:46
  Speaker 1: Right, I'd say we've done a pretty nice job on that one.
• 0:51
  Speaker 1: So let me share my screen with you here and hang on, I wanted to put this out as well.
• 0:56
  Speaker 1: What happened to this?
• 0:57
  Speaker 1: Yeah, here we go, there we go.
• 1:02
  Speaker 1: I've also made for you, out of my continued desire to make you better informed, a document that teaches you how to read financial statements, and I know most people are afraid of financial statements.
• 1:13
  Speaker 1: Don't be, it's going to be fun If you head over to phoenixfriendsorg slash 2024, I will walk you through how that works.
• 1:23
  Speaker 1: It's literally this document here.
• 1:24
  Speaker 1: It's only like five, six pages and it gives you some examples of what are good numbers, what are bad numbers.
• 1:31
  Speaker 1: So I really wanted to give you context rather than just like a basic explanation.
• 1:35
  Speaker 1: So stuff like you know, gross margins, like what's in a good example, what's a bad example, and then we also want to walk you through.
• 1:43
  Speaker 1: I attach here NVIDIA's financial statements and then an actual walkthrough of what they mean.
• 1:49
  Speaker 1: So I think if you digest this a little, don't eat the paper then again you will be smarter, and that's always my intention.
• 1:58
  Speaker 1: And I don't mean smarter, I mean better skilled.
• 2:01
  Speaker 1: I think that's probably the word I'm looking for.
• 2:03
  Speaker 1: But let's have a quick look at what Jerome Lepowel said yesterday when he was hobnobbing with Christine Lagarde in Europe, and he said some pretty powerful things that a lot of the market hasn't really picked up that much.
• 2:18
  Speaker 1: He said it's very much understood by us that we have two-sided risks and we have to manage them.
• 2:26
  Speaker 1: And what's he referring to?
• 2:27
  Speaker 1: He was referring to one, inflation being a risk and cutting too early.
• 2:37
  Speaker 1: Inflation comes back, and then also that if he cuts too late, he tanks the economy, and he's never actually really acknowledged that risk.
• 2:47
  Speaker 1: He was just always saying we don't want to do this too early, we don't want to do this too early.
• 2:50
  Speaker 1: Now he's saying we also don't want to do this too late.
• 2:52
  Speaker 1: To me, that's a real massive shift in Fed language that seems to have gone largely unacknowledged.
• 3:00
  Speaker 1: He also then says the last reading on inflation suggests we're getting back on a disinflationary path.
• 3:09
  Speaker 1: What we'd like to see is more data like what we've seen been seeing recently, which means he likes the data, he's happy.
• 3:19
  Speaker 1: More data like what we've been seeing recently.
• 3:22
  Speaker 1: He's not saying we need better data, he just says we need better data.
• 3:25
  Speaker 1: He just says we need more of the same, which is a pretty low yardstick, right.
• 3:28
  Speaker 1: So this is pretty bullish stuff.
• 3:30
  Speaker 1: I know it doesn't seem like it, but it definitely is.
• 3:32
  Speaker 1: And JP Morgan comes out and says he's telling us they're nervous, they've seen the slowing job numbers and they don't want it to accelerate.
• 3:42
  Speaker 1: They're getting vigilant on the jobs market, right On the labor market.
• 3:47
  Speaker 1: That's a first.
• 3:49
  Speaker 1: They've been vigilant on inflation but not on labor.
• 3:52
  Speaker 1: So this is definitely a positive thing.
• 3:58
  Speaker 1: Derek says do you need a brilliant React developer?
• 4:01
  Speaker 1: Always possible.
• 4:03
  Speaker 1: My friend Derek, brilliant React developer, always possible.
• 4:06
  Speaker 1: My friend Derek, send me an email.
• 4:08
  Speaker 1: Would you to Actually send an email to Jeff?
• 4:10
  Speaker 1: That would be the smartest thing to do.
• 4:12
  Speaker 1: I'll put an email on the screen here for you.
• 4:14
  Speaker 1: We're also always hiring on the site.
• 4:16
  Speaker 1: Email jeff at tradevisionio and tell him that you found him via me.
• 4:25
  Speaker 1: Jeff is my partner in Trade Vision.
• 4:27
  Speaker 1: He's a developer, so he's an ex-Twitter guy, so he understands more about what you just said.
• 4:34
  Speaker 1: So send him a message.
• 4:36
  Speaker 1: Seriously, we are always looking for good people.
• 4:39
  Speaker 1: I can't promise you anything, but do send him a message.
• 4:43
  Speaker 1: Also, he says the chair fed pal.
• 4:47
  Speaker 1: We're getting a gradual cooling of the economy, a gradually cooling labor market, progress on inflation, four percent unemployment, two percent growth and look at that statement we're getting kind of what we want to have.
• 5:01
  Speaker 1: It's like.
• 5:03
  Speaker 1: It's like like Christmas at the Fed.
• 5:05
  Speaker 1: Imagine the parties.
• 5:07
  Speaker 1: They're having Christmas in July.
• 5:09
  Speaker 1: So I don't know why the market isn't absorbing this and going this is freaking brilliant.
• 5:16
  Speaker 1: So when we then today where did the calendar go?
• 5:20
  Speaker 1: At 2 pm, we get the FOMC minutes out, I think it puts this stuff we're going to get at 2pm in a very, very different light, whatever they're going to say, because he has turned positively optimistic, this chap Right, yeah, so smash the like button and the market will continue to go up.
• 5:51
  Speaker 1: But let's look at some of the data that he's actually seeing, jerome Powell, and it's the increase in unemployment we're starting to see, right, and it's starting to get a little bit more significant here.
• 6:05
  Speaker 1: You know, we saw similar stuff in 2008, 2009,.
• 6:11
  Speaker 1: Similar increase In the late 80s.
• 6:14
  Speaker 1: We saw a similar increase In the late 70s.
• 6:17
  Speaker 1: We saw a similar increase, and you see what the heck happened after that, right, you've got these massive, massive increases in unemployment.
• 6:24
  Speaker 1: Now, given that the labor data is more manipulated than ever, it probably is a lot worse than it looks.
• 6:29
  Speaker 1: So what about hires?
• 6:30
  Speaker 1: This is non-farm hires, so non-agricultural job hires, and the trend is very much declining, right?
• 6:38
  Speaker 1: So the last time we saw that, that kind of decline, what was that?
• 6:43
  Speaker 1: That was 2008.
• 6:45
  Speaker 1: So I can see why they're getting a little anxious and I can say they have, they have interest rates too high, they're just too high.
• 6:53
  Speaker 1: They need to do something about that.
• 6:55
  Speaker 1: Now I want to walk you through a few points here on.
• 6:58
  Speaker 1: Are we in a bubble?
• 6:59
  Speaker 1: Should we still be buying, and what should we be buying and so on.
• 7:01
  Speaker 1: But before we do that, I need you to understand one thing that almost nobody understands.
• 7:07
  Speaker 1: This is pre-market.
• 7:08
  Speaker 1: By the way, big tech's down a little, nothing too significant.
• 7:12
  Speaker 1: Tesla up another one and a half percentage points Pretty good.
• 7:15
  Speaker 1: Considering where we were yesterday, it makes complete sense, and it'll make sense to you in a minute as well.
• 7:20
  Speaker 1: This is the S&P 500 stock chart here on the left right.
• 7:23
  Speaker 1: You've seen a stock chart before, and then this is in tradevisionio.
• 7:28
  Speaker 1: And if you haven't got a free account, or rather a trial account, over there yet, for the love of God, get yourself one, because you finally have some decent data to make decisions on.
• 7:39
  Speaker 1: And what is that saying to you?
• 7:41
  Speaker 1: Well, can you see we're trading at 5,500 and you see the green bar at 5,500.
• 7:50
  Speaker 1: That's resistance.
• 7:53
  Speaker 1: It's a lot of call options.
• 7:54
  Speaker 1: There'll be resistance.
• 7:56
  Speaker 1: They force market makers to sell and we get some more up here at 5,525.
• 8:03
  Speaker 1: A lot, actually.
• 8:04
  Speaker 1: So it's going to be very hard for us to break through this 5,500.
• 8:08
  Speaker 1: It's very likely we'll go up below it.
• 8:10
  Speaker 1: But if we don't, then 5525 will be where we bump our head.
• 8:14
  Speaker 1: So very, very helpful to know that there is massive selling that happens in these zones.
• 8:21
  Speaker 1: So that's the one thing I ask you to look up and if you know that, you know that you're better informed than everybody else out there.
• 8:30
  Speaker 1: Now support kicks in sort of 5,475, 5,425, and 5,400.
• 8:39
  Speaker 1: So we're not going to drop that low because, again, the market has to buy it's market makers who have to buy.
• 8:47
  Speaker 1: Dell is up 2%.
• 8:51
  Speaker 1: Yeah, that's actually on my list this morning.
• 8:53
  Speaker 1: I was going to look at that.
• 8:54
  Speaker 1: So, if you understand this, you are optimistic on the market, but you're not expecting a monster rally and therefore you're expecting some pullback.
• 9:04
  Speaker 1: So I would expect us to have some pullback.
• 9:06
  Speaker 1: I know we're up slightly on pre-market.
• 9:09
  Speaker 1: I think we are at least 5,509.
• 9:11
  Speaker 1: But I would be surprised if we close above 5,500 personally.
• 9:17
  Speaker 1: But if we do as I say, we head towards 5,525.
• 9:21
  Speaker 1: And these positioning points are insanely important and I hope that helps to understand them a little bit.
• 9:26
  Speaker 1: You can look them up every single day in trade vision free for a whole month.
• 9:30
  Speaker 1: Now is the market in some sort of crazy bubble?
• 9:40
  Speaker 1: Well, actually, overall the market is underweight.
• 9:45
  Speaker 1: Semiconductors there are some it's longer, nvidia is a little bit more exposed to, but there's also a lot that it's actually really short on.
• 9:53
  Speaker 1: So overall, we are not crazily positioned into semiconductors.
• 9:59
  Speaker 1: And there is Tallulah.
• 10:01
  Speaker 1: Is back Tallulah?
• 10:02
  Speaker 1: Any thoughts on money market funds?
• 10:04
  Speaker 1: Any thoughts on that?
• 10:05
  Speaker 1: No, any thoughts.
• 10:06
  Speaker 1: She's very smart, very wise, aren't you, okay?
• 10:11
  Speaker 1: So the orange line here money markets.
• 10:15
  Speaker 1: It's basically cash right All intents and purposes.
• 10:19
  Speaker 1: There is more of it than ever.
• 10:20
  Speaker 1: And the little blue line, the light blue line, is whoops.
• 10:25
  Speaker 1: We all did a blue line here.
• 10:27
  Speaker 1: The light blue line is stocks and at some point the money market money is going to start flowing back into stocks, because it's not normal to have that much money in money markets.
• 10:48
  Speaker 1: I'll run through your questions in just a second here.
• 10:50
  Speaker 1: And then we've got it's a sentiment indicator.
• 10:54
  Speaker 1: This one, I think, is from Bank of America.
• 10:55
  Speaker 1: And are we at crazy levels?
• 10:58
  Speaker 1: Is this crazy?
• 10:59
  Speaker 1: Is this like insane?
• 11:00
  Speaker 1: It's high-ish, but we've been, you know, 20% higher at the top of 2013 and 2018.
• 11:10
  Speaker 1: We were higher in 2021.
• 11:11
  Speaker 1: So we actually have come down a little bit.
• 11:13
  Speaker 1: So, again, I'm not seeing anything here that I'm particularly worried about.
• 11:19
  Speaker 1: And then look at this rally, or this thing that we call a rally.
• 11:22
  Speaker 1: So this is the year over year change in the NASDAQ QQQ for all intents and purposes.
• 11:30
  Speaker 1: In 2000,.
• 11:34
  Speaker 1: It went up 100%.
• 11:36
  Speaker 1: 100% In 83, 87% Toulouse back In 2021,.
• 11:45
  Speaker 1: We went up 80%.
• 11:47
  Speaker 1: Right now we're only up 29%.
• 11:49
  Speaker 1: It's barely a rally.
• 11:50
  Speaker 1: Right now we're only up 29%.
• 11:51
  Speaker 1: It's barely a rally, barely got started.
• 11:53
  Speaker 1: So I think we've got a way to go here.
• 11:58
  Speaker 1: Just this week it's going to be a little bit tougher.
• 12:01
  Speaker 1: This is CNN's fear and greed index and we are neutral.
• 12:05
  Speaker 1: So we're not in greed, we're not in extreme greed, we're right bang in the middle.
• 12:09
  Speaker 1: And if you look at seasonally what the Nasdaq does seasonally, we're right here.
• 12:17
  Speaker 1: So seasonally we should go up like another 12 percentage point.
• 12:21
  Speaker 1: Now, of course, not every year works out exactly like every average year the year before, but it gives you some idea that we would expect things to turn around in our favor.
• 12:33
  Speaker 1: The second thing and some of you who watch me regularly you know we've got a VIX trade open.
• 12:37
  Speaker 1: I like trading VIX, the fear index, and we are down here right now and again, seasonally, we'd expect that to accelerate significantly, especially with an election in November.
• 12:50
  Speaker 1: Do you still think Biden's going to run?
• 12:54
  Speaker 1: Do you think he's going to run?
• 12:54
  Speaker 1: Have you seen his numbers?
• 12:56
  Speaker 1: Pretty shocking, right?
• 12:57
  Speaker 1: So yeah, that's the VIX trade and this I would actually take a screenshot of.
• 13:06
  Speaker 1: I'll take it as big as possible for you.
• 13:09
  Speaker 1: What have you got?
• 13:10
  Speaker 1: You've got on the left-hand side here.
• 13:12
  Speaker 1: You've got on the left hand side here.
• 13:14
  Speaker 1: You've got forward pe, so expected pe for the next year.
• 13:17
  Speaker 1: And then down here you've got forward return on equity employed.
• 13:23
  Speaker 1: So it's kind of like, how efficient are they at making money?
• 13:26
  Speaker 1: And then you've got all the sectors on there and then it is obviously the one thing that's most expensive, and what's particularly cheap are things like financials, energy, utilities, real estate materials, consumer discretionary, industrials and so on.
• 13:42
  Speaker 1: So you get an idea of like, if I want to go against the trend and maybe have a bit of a longer time horizon, perhaps looking at this end down here might not be such a terrible idea.
• 13:52
  Speaker 1: Looking at this end down here might not be such a terrible idea Because they're pretty, pretty low valuations.
• 14:04
  Speaker 1: Now, it will always have higher valuations, but yeah, so have a look at that, maybe take a screenshot.
• 14:07
  Speaker 1: That's a set.
• 14:08
  Speaker 1: Now, if you haven't already, download our beginner's guide to reading balance sheets and income statements is also brilliant for insomnia.
• 14:14
  Speaker 1: I see a lot of you in there already, which is fantastic, and it's a couple-page statement which basically walks you through what everything is, how it works, and then, to make it a little bit more useful, actually gives you like what is a good number, what's a bad number for each of these, and I think that's quite useful.
• 14:32
  Speaker 1: I can also give you some examples of some real world stocks out there.
• 14:35
  Speaker 1: And then, for the real keen beans out there, we have an NVIDIA financial statement you can play with and a review of that.
• 14:45
  Speaker 1: So maybe have a look at the statement first and see what you think and then have a look at what it says here and see if you agree or disagree.
• 14:53
  Speaker 1: I think that'd be quite a good thing to