Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - FED Rate Cut: THIS is Critical + Stock Market News 31 July 2024

Transcript

Felix Prehn - FED Rate Cut: THIS is Critical + Stock Market News 31 July 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Finally, live Fed interest rate decision today and, much more importantly, the Fed press conference today.
• 0:08
  Speaker 1: We've got tons happening overnight, from Microsoft to NVIDIA, absolutely exploding up 7% here pre-market, and our goal here today is to put all of that together into a logical, coherent structure so you can make money out of this.
• 0:26
  Speaker 1: That's really always our goal Make you the best informed investor out there, and I'll sort of share a little bit of my former investment banker wisdom to do something useful for you.
• 0:38
  Speaker 1: And as Lost and Bigger Case says, are you waiting for 100 likes before you start the video?
• 0:42
  Speaker 1: The YouTube connection is kind of laggy for some reason, but yes, the likes would be appreciated.
• 0:47
  Speaker 1: So smash that button and I'm going to share my screen with you straight away.
• 0:52
  Speaker 1: And let's get cracking.
• 0:53
  Speaker 1: This is from Bloomberg.
• 0:54
  Speaker 1: The Fed will probably move closer to lowering rates by signaling a potential cut in September at today's meeting.
• 1:04
  Speaker 1: But don't expect too many details and that's, I think, probably a fair assessment that he's not going to commit to it.
• 1:11
  Speaker 1: He's going to keep saying you know, every meeting is data-driven and that kind of thing.
• 1:16
  Speaker 1: We decide everything at the meeting.
• 1:17
  Speaker 1: But what he will say is that inflation has come down a lot, unemployment appears to be rising.
• 1:24
  Speaker 1: The labour market and vacancies are more in balance and therefore you know they're looking at that sort of thing.
• 1:32
  Speaker 1: That's kind of what we wanted to say.
• 1:33
  Speaker 1: If he doesn't say any of that bullish language, then they were screwed.
• 1:38
  Speaker 1: If he does say that bullish language, there could be some really interesting trade ideas from that, which I will gladly run you through in just a little bit.
• 1:45
  Speaker 1: If you want to understand how you make money in a day like today.
• 1:49
  Speaker 1: We're up $24,000 on our $30,000 teaching portfolio so far this year, which is an 80% gain.
• 1:58
  Speaker 1: And if you want to know how we do that, come and join our live trading session next week.
• 2:04
  Speaker 1: Felixfrancoorg slash webinar Link is down below.
• 2:06
  Speaker 1: We're up literally 10k this month Literally 10k and we did so little.
• 2:11
  Speaker 1: Look at the few trades we did.
• 2:13
  Speaker 1: We're so lazy and it's so profitable.
• 2:15
  Speaker 1: It's marvelous.
• 2:17
  Speaker 1: Now let's just assume the Fed cuts interest rates in September and, as my old boss used to say, assumptions are the mother of all F-ups.
• 2:30
  Speaker 1: That's always a good place to start, so I'll be assuming someone's gender in 2024.
• 2:42
  Speaker 1: I see a lot more women joining.
• 2:43
  Speaker 1: Yeah, there are a few more of you.
• 2:45
  Speaker 1: You sort of crept up from about 1% to about 8% of viewership.
• 2:48
  Speaker 1: So I've clearly done something to repel less women, although I'm still a very effective women repeller according to that statistic.
• 2:57
  Speaker 1: So what happens?
• 2:58
  Speaker 1: Well, when the Fed cuts rates, two things will happen.
• 3:02
  Speaker 1: This is the rate cut.
• 3:04
  Speaker 1: Rate cut happens there, the first one, and then the next 12 months.
• 3:09
  Speaker 1: If you don't have a recession, we go up 14%.
• 3:15
  Speaker 1: Now, if you do have a recession in the next 12 months, guess what?
• 3:20
  Speaker 1: We go down 14%.
• 3:23
  Speaker 1: Brilliant, isn't it?
• 3:23
  Speaker 1: That's a great forecast, isn't it?
• 3:25
  Speaker 1: It's going to go up, it's going to go down or somewhere in between.
• 3:28
  Speaker 1: This is generally what a financial advisor or an economist will tell you, but that's actually the statistics.
• 3:34
  Speaker 1: So it really all hinges on the recession.
• 3:36
  Speaker 1: Now, do I think we're going to get a recession?
• 3:39
  Speaker 1: I don't believe.
• 3:41
  Speaker 1: The US government, especially a new president and it'll be a new president we know that.
• 3:47
  Speaker 1: Now, right, one way or another will allow a recession.
• 3:51
  Speaker 1: They're just going to spend their way out of it like they have done in the last couple of decades.
• 3:56
  Speaker 1: Right?
• 3:56
  Speaker 1: Women number five there, lulu Lemon and I always know that you are from Vancouver, judging by that screen name.
• 4:04
  Speaker 1: That was quite funny.
• 4:05
  Speaker 1: That was right on that.
• 4:06
  Speaker 1: Five female bots confirmed out of 573.
• 4:10
  Speaker 1: So the 1% mark is yet to be reached.
• 4:13
  Speaker 1: So let's dive a little bit through this here.
• 4:17
  Speaker 1: Then A senior US equity strategist says this here.
• 4:21
  Speaker 1: He says it's hard to catch a falling knife, referring to the last few days.
• 4:26
  Speaker 1: Mega caps are by no means super compelling from a valuation perspective, lots of potential and so on.
• 4:35
  Speaker 1: My guess Powell on Wednesday has a hard time living up to dovish current rates pricing If he sounds a little hawkish.
• 4:42
  Speaker 1: That's not good for small caps.
• 4:43
  Speaker 1: Seems like a good time to cut leverage and go to the beach, and I think that's actually a very good idea.
• 4:49
  Speaker 1: In fact, I'm going to do that tomorrow.
• 4:52
  Speaker 1: I'm actually not going to the beach, I'm going somewhere a little bit more urban, but I doubt I'll trade this week.
• 4:58
  Speaker 1: Actually, that's not quite true.
• 4:59
  Speaker 1: Okay, I'm not trading this week.
• 5:01
  Speaker 1: I've bought some Tesla leaps and PayPal and so far leap options and things like that, I'm not really trading.
• 5:06
  Speaker 1: It's more like the sort of one year horizon kind of.
• 5:09
  Speaker 1: It's almost like investing, but not quite.
• 5:15
  Speaker 1: Ads again, bastards, bastards, because they're not on my end.
• 5:20
  Speaker 1: So YouTube is getting rich on the back of the little YouTube creator here in our little community.
• 5:28
  Speaker 1: Anyway, you know they're going to make some money somewhere, right?
• 5:32
  Speaker 1: Google earnings and all that.
• 5:34
  Speaker 1: Now there's some real positives here.
• 5:36
  Speaker 1: We walked through some actual trades.
• 5:38
  Speaker 1: I'll show you what the market looks like.
• 5:40
  Speaker 1: Actually, that's not the market.
• 5:41
  Speaker 1: That's just where I'm staying tomorrow.
• 5:44
  Speaker 1: Nvidia is up 7.2%, which is not bad, right?
• 5:47
  Speaker 1: Apple is green, google Meta are green, amazon's green, tesla is still green, so we're looking quite happy overall.
• 5:55
  Speaker 1: Now what's actually happening?
• 5:59
  Speaker 1: The Nvidia price and again, I love the guy with the blue and the blue.
• 6:03
  Speaker 1: Do you think he's colorblind?
• 6:05
  Speaker 1: The guy who makes these charts?
• 6:06
  Speaker 1: This is Goldman Sachs.
• 6:07
  Speaker 1: I think Is it Goldman Sachs or the Bank of America, I can't remember.
• 6:10
  Speaker 1: I think he's probably colorblind.
• 6:12
  Speaker 1: Like our chartist is colorblind.
• 6:14
  Speaker 1: He only sees blue and he thinks dark blue is green and light blue is purple or something In his mind.
• 6:20
  Speaker 1: It's probably got butterflies on it and all sorts of things.
• 6:22
  Speaker 1: Anyway, the dark blue chart is price.
• 6:26
  Speaker 1: The light blue chart is earnings per share for NVIDIA, the green giant, who I referred to as a Taiwanese company the other day and I was promptly put in my corner, which, of course, is correct.
• 6:38
  Speaker 1: It is, in fact, an American chip designer that just happens to outsource all its manufacturing to Taiwan.
• 6:44
  Speaker 1: Apparently, that makes them an American company.
• 6:46
  Speaker 1: It doesn't make them an American company technically.
• 6:48
  Speaker 1: Anyway, what are we seeing?
• 6:50
  Speaker 1: Well, they're moving together, aren't they?
• 6:52
  Speaker 1: Earnings per share and the price movement is moving together and this kind of wacky.
• 6:58
  Speaker 1: We went a little too high.
• 7:00
  Speaker 1: We've corrected that, so you can see why people are starting to buy the freaking dip.
• 7:04
  Speaker 1: And there's some more reasons for that.
• 7:05
  Speaker 1: I'll show you in a second.
• 7:06
  Speaker 1: This is one of them NVIDIA's forward PE ratio.
• 7:11
  Speaker 1: Why forward?
• 7:12
  Speaker 1: We kind of expect their profits next year to be massively higher than in the last year.
• 7:18
  Speaker 1: Therefore, it makes sense for fast-growing stocks to look at forward PE rather than present PE.
• 7:35
  Speaker 1: Okay, and reading some of your strange comments there, we're down here in terms of valuations.
• 7:42
  Speaker 1: So we're basically back to the misery of late 2023, when the world was going to end, if you remember that, or 2022, or even to 2018 valuations.
• 7:53
  Speaker 1: Seriously, we're back to 2018 valuations on NVIDIA.
• 7:56
  Speaker 1: So it kind of looks cheap on some metrics, which is perhaps what's inspired the 7.5% rally this morning.
• 8:03
  Speaker 1: Actually, that was a little bit more inspired, I think, by AMD's good numbers and also by Microsoft, and I'll go into that a little bit more in just a moment.
• 8:13
  Speaker 1: And staying with semiconductors.
• 8:16
  Speaker 1: And staying with semiconductors.
• 8:19
  Speaker 1: They rallied after Reuters reported that the US plans to exempt chip equipment makers in Japan and the Netherlands and South Korea from the upcoming export restrictions.
• 8:28
  Speaker 1: So they're exempting everybody who matters and the Biden administration is still putting some pressure and blah, blah, blah.
• 8:34
  Speaker 1: Now the Netherlands is where all the equipment comes from, and this is implying that they're not going to be that tough on NVIDIA either, at least if the present apparatchiks stay in power, which is possible with an increasing probability, apparently.
• 8:56
  Speaker 1: Now, if you want to look for some ideas in terms of trading, I get this email every day from tradevisionio, which I'm not entirely surprised by, because I set up tradevisionio with a partner, with a friend, with a student who's brilliant, and it gives us some interesting ideas of what we can make money on, and it calls every day this is AI uptrends and it calls downtrends, and Microsoft was down here yesterday, for example, and NVIDIA was down here.
• 9:25
  Speaker 1: Okay, nvidia, big reversal, because we can't predict news.
• 9:30
  Speaker 1: We can predict stock price movements, but not massive news events, and that's obviously always one thing to bear in mind.
• 9:37
  Speaker 1: But risks are risks are going down here and quite a bit like Merck and so on.
• 9:40
  Speaker 1: So very useful If you want to play around with that, then get yourself a here we go tradevisionio.
• 9:49
  Speaker 1: Get yourself a one month trial.
• 9:51
  Speaker 1: You can use the whole premium features for a month and we're not going to charge you.
• 9:54
  Speaker 1: And if you like it, brilliant.
• 9:56
  Speaker 1: If you don't, you just cancel it, no questions asked.
• 9:59
  Speaker 1: Okay, let's stray away a little bit from semiconductors and Microsoft and everything else, and then we'll get back to that in a moment.
• 10:06
  Speaker 1: Aruna I also only got one alert the last two days.
• 10:08
  Speaker 1: I know the guys are tinkering with something there.
• 10:11
  Speaker 1: I quite agree with you.
• 10:13
  Speaker 1: What cooking channel?
• 10:17
  Speaker 1: What are you talking about?
• 10:20
  Speaker 1: Oh, it's an advert for a cooking channel coming up.
• 10:23
  Speaker 1: It must be incredibly relevant.
• 10:24
  Speaker 1: Maybe you watch a lot of cooking channels, right?
• 10:26
  Speaker 1: So this chap here I think this one is smiling no longer.
• 10:32
  Speaker 1: He was killed just, apparently, by an Israeli airstrike, and he was in Iran, which makes the matter a little bit more complicated right?
• 10:43
  Speaker 1: Israel striking Iran, a residential building, killing this chap who happens to be the political leader of Hamas, which is why he was killed.
• 10:52
  Speaker 1: And what does that do for the market?
• 10:57
  Speaker 1: Well, oil going up pretty significantly.
• 10:57
  Speaker 1: Killed, um, and what does that done?
• 10:58
  Speaker 1: What does that do for the market?
• 10:58
  Speaker 1: Well, oil going up pretty significantly.
• 11:02
  Speaker 1: So we've got a got a lower high here now.
• 11:04
  Speaker 1: So we kind of, you know, moving up in the world in terms of oil prices as tensions escalate.
• 11:10
  Speaker 1: Um, oil, sorry.
• 11:13
  Speaker 1: Gold also shot up overnight here.
• 11:15
  Speaker 1: Um, it could be an interesting trade we're starting to like we're going to take out here.
• 11:18
  Speaker 1: Sorry, gold also shot up overnight.
• 11:19
  Speaker 1: Here it could be an interesting trade we're starting to like.
• 11:21
  Speaker 1: If we're going to take out here these highs, we might make our way back up to sort of the 229s and thereabouts and that could be an interesting trade.
• 11:28
  Speaker 1: Something like this Again, I'm not suggesting it, but a bull put spread into the end of August, 73% chance of making money, 22% max return, could be an idea.
• 11:37
  Speaker 1: Again, not suggesting it, but just floating ideas.
• 11:41
  Speaker 1: But let's move back from killing Hamas to semiconductors, and this is SOX, s-o-x, which is the semiconductor index, the ETF for that is S-O-X-X, same sort of thing.
• 11:59
  Speaker 1: And what do we see?
• 12:05
  Speaker 1: The sell-off that we've just seen is pretty extreme, sort of like the April sell-off, like the October sell-off, very, very extreme.
• 12:12
  Speaker 1: So the reversal this morning might make a lot of sense.
• 12:16
  Speaker 1: Now I always say don't buy a freaking falling knife.
• 12:19
  Speaker 1: But given 7.6% up this morning.
• 12:24
  Speaker 1: This is a falling knife, no ball, and the semiconductor rally might well be back.
• 12:29
  Speaker 1: And this is another indicator that I watch.
• 12:31
  Speaker 1: It is called RSI, which is a momentum indicator, and we were down here for SOX semiconductors and for QQQ, the NASDAQ, we were down here which again kind of says we're sort of heading towards oversold.
• 12:46
  Speaker 1: We've kind of overdone the whole sell-off party.
• 12:48
  Speaker 1: Emila is happy there, israeli, you know, everybody can celebrate death of buggers.
• 12:56
  Speaker 1: It's a free world and I doubt it'll change anything, unfortunately.
• 13:03
  Speaker 1: I'm a bit of a skeptic on that sort of thing.
• 13:07
  Speaker 1: But I can see why Israel obviously targeted them.
• 13:10
  Speaker 1: Now can we make money out of that?
• 13:14
  Speaker 1: Well, look at this setup here.
• 13:16
  Speaker 1: So again, it's a screenshot from Trade Vision.
• 13:17
  Speaker 1: Look at our blue trend line.
• 13:20
  Speaker 1: Right, we started here.
• 13:21
  Speaker 1: We have that low.
• 13:22
  Speaker 1: We have this low which just now looks like we're rallying back up.
• 13:25
  Speaker 1: If we take out the 50-day moving average line, which looks to sit at about 245, then we're free once again to find some new highs.
• 13:36
  Speaker 1: So I think it's a good chance now that AMD's earnings numbers came in and that Microsoft seemed quite bullish and I'll explain the misunderstanding on Microsoft there in a moment as well.
• 13:52
  Speaker 1: Marcus, customer service doesn't answer your emails.
• 13:54
  Speaker 1: Really, I see them every day.
• 13:55
  Speaker 1: I see all the emails that get answered, but I will take a screenshot, marcus and I will make sure we send you a bunch of roses and a big fat kiss.
• 14:08
  Speaker 1: No seriousness, of course, I'll make sure we get back to you, which is really what's important here.
• 14:11
  Speaker 1: Do we need customer service people?
• 14:14
  Speaker 1: Yes, actually we do.
• 14:15
  Speaker 1: We do.
• 14:16
  Speaker 1: We have someone lovely on it, but it's not really her full-time role and she's rather busy.
• 14:20
  Speaker 1: So if you have somebody amazing, yes, please, but it needs to be somebody who can think.
• 14:27
  Speaker 1: That's really the requirement.
• 14:29
  Speaker 1: We've tried a few who couldn't think.
• 14:30
  Speaker 1: So AI will be better if you can't think, but I'd much rather have a person, because a person can give you a much better customer service experience, which is really really, really important that people have a good experience, and that's a given.
• 14:42
  Speaker 1: So we're looking pretty good this morning, aren't we?
• 14:45
  Speaker 1: We're looking absolutely freaking lovely.