Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - Banks Just told Big Clients to SELL... + Stock Market News 17 September 2024

Transcript

Felix Prehn - Banks Just told Big Clients to SELL... + Stock Market News 17 September 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: I could live stream.
• 0:01
  Speaker 1: Not only do we have the last massive data point out just before the Fed decides tomorrow, we also have Wall Street's lowdown, lay down, lowdown.
• 0:11
  Speaker 1: What's the right words here Of why they're saying beware, be very, very beware.
• 0:17
  Speaker 1: And then I'm going to round you off with some silver lining, because there is some good news on the horizon as well, and I want you to understand the whole thing as a package so you can make better decisions in this September, october, november, december, till the end of the year, and be also thoroughly prepared to what Papa Powell is going to throw at us tomorrow.
• 0:38
  Speaker 1: So smash the you know what.
• 0:39
  Speaker 1: And let's get started here.
• 0:42
  Speaker 1: I'm a bit cut off today, aren't I?
• 0:43
  Speaker 1: It's like I grew overnight or something.
• 0:45
  Speaker 1: No, I moved my camera about a bit, which is obviously I didn't quite put it back into the original position.
• 0:51
  Speaker 1: So, good morning, all Is it live.
• 0:57
  Speaker 1: Yet I'm not hearing anything.
• 0:58
  Speaker 1: Yes, yes, if you can see me, and see me waving and that sort of thing, and that's typically a good sign.
• 1:05
  Speaker 1: So what have we just got out?
• 1:06
  Speaker 1: We've just got out retail sales data month on month, and as we're looking at that and digesting that, I need to digest some electrolytes.
• 1:14
  Speaker 1: That's usually my time of the day to get my fill of salt.
• 1:18
  Speaker 1: Basically, isn't that what it is Basically salt, isn't it?
• 1:21
  Speaker 1: Potassium, calcium, magnesium, zinc, trace minerals, no sugar, no stevia, nothing else.
• 1:33
  Speaker 1: There's some product placement there for you.
• 1:35
  Speaker 1: No, I don't sell salt.
• 1:35
  Speaker 1: But what were we expecting?
• 1:36
  Speaker 1: Can you see that we're expecting the number to be negative?
• 1:39
  Speaker 1: We thought not.
• 1:41
  Speaker 1: We, the economists, who are paid a fortune by Wall Street, thought in their infinite wisdom that we would have lower retail sales data, but we actually came out with higher sales data.
• 1:55
  Speaker 1: Now you could say that's good.
• 1:57
  Speaker 1: The US consumer is strong like an ox.
• 1:59
  Speaker 1: That's brilliant, right?
• 2:00
  Speaker 1: Yes and no, because if the US consumer is so strong, doesn't that mean we need less rate cuts because the consumer is so strong?
• 2:16
  Speaker 1: It's an argument, isn't it?
• 2:18
  Speaker 1: So it's not massively higher.
• 2:21
  Speaker 1: I mean 0.1% is significant, not massively higher.
• 2:27
  Speaker 1: I mean 0.1% is significant, but it's not like it came in at 1% or something like that, so I don't think it matters that much.
• 2:31
  Speaker 1: If I looked at the stock charts, which I just did, I don't think the market is freaking out over it.
• 2:36
  Speaker 1: Let me look on a minute chart again.
• 2:38
  Speaker 1: Give the bankers a few minutes to digest.
• 2:40
  Speaker 1: It Came out here at 8.30.
• 2:43
  Speaker 1: There, whoops, digest it.
• 2:44
  Speaker 1: Came out here at 8.30.
• 2:46
  Speaker 1: There, whoops what is the shortcut?
• 2:47
  Speaker 1: That's it, isn't it?
• 2:49
  Speaker 1: Yeah, there.
• 2:49
  Speaker 1: So we didn't really do much.
• 2:51
  Speaker 1: A lot of trading volume, but not a lot of action here.
• 2:54
  Speaker 1: So the market is okay with it and that's all right.
• 3:01
  Speaker 1: So we can move on to our doom and gloom story and then also to how we make money.
• 3:03
  Speaker 1: And, of course, if you want to learn how we make money and how we are literally up this here represents a 93 upside so far this year curious how we do that?
• 3:13
  Speaker 1: Come and join me literally today at 8 pm, new york time at felixfrancerock bootcamp.
• 3:19
  Speaker 1: It's completely free of charge.
• 3:20
  Speaker 1: I will, uh, talk at you for about an hour and a half and I will teach you our three-step system, including the rules, how we get into it, when we get out of it, how we automate pretty much the whole thing, and you walk away without knowledge, because my goal here is to make you actually financially free.
• 3:38
  Speaker 1: So I showed some of you this chart yesterday, some of you this chart yesterday.
• 3:49
  Speaker 1: Don't get us started on vegetables again.
• 3:50
  Speaker 1: Someone messaged me yesterday saying what's with all the vegetables, felix?
• 3:53
  Speaker 1: So September, the second half of September is typically terrible.
• 3:58
  Speaker 1: Right, and that's important to bear in mind.
• 4:01
  Speaker 1: But remember this chart.
• 4:02
  Speaker 1: We're going to come back to this in a moment.
• 4:04
  Speaker 1: There is a story to weave here that goes beyond that.
• 4:06
  Speaker 1: Now let me give you the doom and the gloom.
• 4:10
  Speaker 1: First, algo Funds, our lovely CTA computer friends.
• 4:14
  Speaker 1: In the future, all your friends will be computers.
• 4:16
  Speaker 1: They'll be the kind robot that you can buy and the not-so-kind robot, depending on how you feel.
• 4:22
  Speaker 1: And they're basically, if the market goes flat this week, they're going to sell.
• 4:27
  Speaker 1: If the market goes down this week, they're going to sell 30 billion.
• 4:30
  Speaker 1: Yeah, there is a little bit of.
• 4:32
  Speaker 1: If the market goes up, they're going to buy a little bit, but the downside risk is much greater.
• 4:36
  Speaker 1: And then over the next month, in a flat market, they buy.
• 4:39
  Speaker 1: Great, if we go up, they do buy, but the kicker, of course, is if we go up, they do buy, but the kicker, of course, is if we go down, they're going to sell 140 billion.
• 4:47
  Speaker 1: That's pretty horrific, isn't it?
• 4:48
  Speaker 1: So they're going to sell a heck of a lot more than, um, I know, the smp.
• 4:52
  Speaker 1: And then, up tape they buy only 5 billion.
• 4:55
  Speaker 1: And the down tape they buy, they sell 36 billion.
• 4:59
  Speaker 1: So the risk here seems to be skewed towards the downside, which is why wall street's saying what wall street's saying right, right, let's go carrots, don't get Winston.
• 5:07
  Speaker 1: I just went in the kitchen and there was Winston's head in the fridge with my lovely housekeeper and I was like why is Winston's head in the fridge?
• 5:16
  Speaker 1: And then I could hear him crunching on things, so I knew he gets lots of little snacks out of that vegetable drawer.
• 5:22
  Speaker 1: There we are back on the vegetables.
• 5:24
  Speaker 1: Okay, there is good news, though.
• 5:27
  Speaker 1: You know I was saying that they're going to sell like lots of money, just right.
• 5:31
  Speaker 1: Well, the pivot levels are pretty sweet.
• 5:33
  Speaker 1: So we're trading right now on the S&P at 5,633.
• 5:40
  Speaker 1: So in the short term so like this week we would need to drop below 5526, which is really really quite low down.
• 5:51
  Speaker 1: We go on a day chart here 5526.
• 5:56
  Speaker 1: Basically that that would be the this week line, and then for medium term sort of a month out 5358, 5358, somewhere there, and you can type them in.
• 6:13
  Speaker 1: So what does that mean?
• 6:14
  Speaker 1: It basically means we need to drop quite a bit by quite a bit.
• 6:19
  Speaker 1: I mean we need to drop about 2% or so till they start selling this week and they need to drop for the selling to continue.
• 6:26
  Speaker 1: The market would need to drop almost 5% over the month for the selling to continue.
• 6:31
  Speaker 1: So we have a bit of a sweet buffer zone here, which means it might not be as bad as we feared.
• 6:38
  Speaker 1: Right, vince is going to get a robot from Elon that can open the fridge.
• 6:44
  Speaker 1: Well, he's already got two lovely ladies who do exactly that for him, and it's hard to say no in those eyes.
• 6:50
  Speaker 1: Look at you.
• 6:50
  Speaker 1: Okay, this is, I'm going to say, from Goldman Sachs, and they're adding to this, and I think this is important to understand.
• 7:04
  Speaker 1: Remember we were saying about a month ago, like, why is September so bad?
• 7:07
  Speaker 1: Well, this actually answers the question because they break it down for us quite nicely.
• 7:14
  Speaker 1: The first is mutual funds do their tax loss harvesting around September and October.
• 7:19
  Speaker 1: Corporates pay taxes in mid-September, so that's bad.
• 7:26
  Speaker 1: I should probably make these crosses right More dramatic.
• 7:29
  Speaker 1: Bad.
• 7:29
  Speaker 1: The corporate buyback window goes into this blackout phase I'll show you a chart in another second.
• 7:35
  Speaker 1: And that happens in mid-September, where we are right now.
• 7:38
  Speaker 1: So that's bad.
• 7:39
  Speaker 1: And then the bank regulatory capital window dressing happens also in September.
• 7:47
  Speaker 1: So basically, in September, the banks know that they're going to have to dress up the balance sheet, so they do that and therefore make that, pull a little bit of capital out of the market.
• 7:58
  Speaker 1: So that's bad.
• 7:58
  Speaker 1: And then you lot out there, you Americans mid-October individual tax payments kick in.
• 8:04
  Speaker 1: That's also negative.
• 8:06
  Speaker 1: And then the Canadians the moose up north, are going through the same thing with their banks that the American banks are going through and they are, as Wall Street puts it politely, not an inconsequential player.
• 8:19
  Speaker 1: I don't want to give too much credit to the Canadians.
• 8:23
  Speaker 1: So that's it.
• 8:26
  Speaker 1: And there's a lot of data here today.
• 8:27
  Speaker 1: It's a lot of data.
• 8:28
  Speaker 1: It's one of these like data-laden mornings.
• 8:30
  Speaker 1: Yes, I know the camera is cutting me off.
• 8:36
  Speaker 1: It is, it's doing that and it's because I put the camera too low.
• 8:39
  Speaker 1: So if I do this, yes, so there is a head up there somewhere, but it's doing it even on this, you see.
• 8:44
  Speaker 1: So I haven't grown overnight, although it's possible.
• 8:48
  Speaker 1: What the heck does this mean?
• 8:50
  Speaker 1: We're dealer gamma out six months, what?
• 8:54
  Speaker 1: Well, okay, in a nutshell and I aim to always simplify Below 5,600, things go very, very bad.
• 9:07
  Speaker 1: And then you have this sort of zone here, and I don't know exactly where that sits, but I would say about 5,650 to 5,700.
• 9:20
  Speaker 1: It's hard to break out over that.
• 9:23
  Speaker 1: So that's also bad.
• 9:24
  Speaker 1: And then, above that, above 5,700, you get into this territory here, which is happy, okay.
• 9:37
  Speaker 1: So basically, we go down, there is more selling.
• 9:41
  Speaker 1: We go up a little bit, there is more selling.
• 9:43
  Speaker 1: But if the Fed delivers tomorrow you know everything fries and shakes and the whole lot and the market really goes roaring through the 5,700, then we're going to see a nice rally.
• 9:57
  Speaker 1: But anywhere in between we're kind of stuck.
• 10:01
  Speaker 1: Okay, or we go going down, and here is the lovely little chart for blackouts and essentially what that's saying that about 55% of the S&P is now not buying their own shares because earnings season's coming up, and by the end of September you know, I always struggle with whether the ninth month is September or October it says a lot, doesn't it?
• 10:26
  Speaker 1: By the end of September, there are basically no buybacks happening.
• 10:30
  Speaker 1: So therefore, october doesn't look that happy either.
• 10:34
  Speaker 1: All the supplements made me grow.
• 10:36
  Speaker 1: Indeed, that must be it.
• 10:36
  Speaker 1: It must be the electrolytes.
• 10:38
  Speaker 1: Lawrence, thanks very much for the like.
• 10:43
  Speaker 1: Okay, so there we are, right.
• 10:50
  Speaker 1: So now we know some of the bad news.
• 10:52
  Speaker 1: So if the Fed decides to disappoint us tomorrow, then things are looking fairly bad.
• 10:59
  Speaker 1: Right, we've got the algo funds selling, we've got the market makers selling, we've got liquidity being tight for the various reasons we illustrated.
• 11:07
  Speaker 1: So none of that looks particularly happy.
• 11:09
  Speaker 1: So what am I doing?
• 11:10
  Speaker 1: I'm doing absolutely bugger all.
• 11:12
  Speaker 1: I'm doing nothing at all.
• 11:13
  Speaker 1: I'm gonna wait, sit on my hands, like a good trader should in scenarios like this, and then you're gonna have asked me but felix, what happens after that?
• 11:21
  Speaker 1: What about next?
• 11:22
  Speaker 1: What happens next?
• 11:23
  Speaker 1: What happens next?
• 11:23
  Speaker 1: So what happens when the fed starts cutting rates?
• 11:28
  Speaker 1: So here is the beautiful chart that we've got and this is the rate cut number one.
• 11:41
  Speaker 1: Okay, it happens here.
• 11:42
  Speaker 1: That's the first rate cut, and this is historic data going out, I don't know how many years.
• 11:47
  Speaker 1: And what happens?
• 11:48
  Speaker 1: Well, if we don't get a recession, so no recession.
• 11:52
  Speaker 1: Then 12 months later, so 12 months later, 12 months later, we are up about 15% on the S&P, historically.
• 12:03
  Speaker 1: Now, if we do get a recession, guess what?
• 12:07
  Speaker 1: 12 months later, you get the idea we go down 15%.
• 12:13
  Speaker 1: So it's kind of a bit of a coin toss thing, isn't it?
• 12:16
  Speaker 1: Now, wall Street doesn't think we're going to get a recession, and I'm with them on that.
• 12:20
  Speaker 1: Not because we don't deserve a recession.
• 12:22
  Speaker 1: I think we do.
• 12:23
  Speaker 1: I think there's plenty of rubbish out there that deserves to go bankrupt, but in terms of companies, not individuals, obviously.
• 12:29
  Speaker 1: But the US government is spending so much money it's almost impossible to get it.
• 12:36
  Speaker 1: There's so much money gushing about and the whole world is cutting rates, which is going to create some sort of stimulus everywhere.
• 12:44
  Speaker 1: So therefore it's fairly unlikely.
• 12:48
  Speaker 1: How tall am I?
• 12:48
  Speaker 1: I think I'm about six foot one, I think.
• 12:51
  Speaker 1: That's about which is, I don't know, 185 or six or something like that.
• 12:55
  Speaker 1: For you, you know metric people out there, but apparently I've grown out of the screen today.
• 13:02
  Speaker 1: We will try to address that by hammering myself with a large hammer overnight and see if that has an impact.
• 13:09
  Speaker 1: The alternative would be to change the camera position.
• 13:11
  Speaker 1: That seems a little mad, doesn't it?
• 13:13
  Speaker 1: So what comes after September?
• 13:15
  Speaker 1: Well, let me show you what comes after September, because there is October, first half of October.
• 13:23
  Speaker 1: That's a glorious.
• 13:25
  Speaker 1: It's not much of an arrow, it's a bit of a big pen.
• 13:27
  Speaker 1: This here is the first half of October.
• 13:32
  Speaker 1: This next one is second half of December, and these two represent November.
• 13:46
  Speaker 1: Do you get the picture?
• 13:47
  Speaker 1: November and December some might argue October are brilliant.
• 13:52
  Speaker 1: Why do I put the October thing in square brackets, as I'm about to, because it doesn't turn out very positively if there is an election.
• 14:03
  Speaker 1: So if you lot keep on insisting on elections, your Octobers typically don't look very good every four years.
• 14:09
  Speaker 1: So I'd be less excited about October, but I'd be very excited about November and December.