Latest / Felix Nikolas Prehn's Podcast / The Great Turning Point for the U.S. Stock Market Has Arrived (Jensen Huang Explains) + Stock Market News 01 June 2024

Transcript

The Great Turning Point for the U.S. Stock Market Has Arrived (Jensen Huang Explains) + Stock Market News 01 June 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: forever Sounds a little dramatic, but that's pretty much exactly what just happened, and I think you should understand how this works, what it's all about, how to make money out of it and should we get cracking?
• 0:13
  Speaker 1: I think we probably should get cracking.
• 0:14
  Speaker 1: I'm supported today by my chief financial analyst Tallulah.
• 0:18
  Speaker 1: She's done all the research for today, haven't you, and we're going to get straight into it.
• 0:23
  Speaker 1: I appreciate you joining me.
• 0:26
  Speaker 1: Live especially, and in which case especially smash the you know what, and it'll help us.
• 0:32
  Speaker 1: And why am I showing you this?
• 0:33
  Speaker 1: To gloat, to show off, to generally be a pain in the neck?
• 0:36
  Speaker 1: No, hopefully to inspire.
• 0:39
  Speaker 1: So we did half an hour trading on Friday.
• 0:41
  Speaker 1: We made that Not too bad for half an hour on a Friday, right?
• 0:45
  Speaker 1: How much money were you using, felix?
• 0:47
  Speaker 1: I hear you in the back about $30,000.
• 0:51
  Speaker 1: Okay, that's about as much money as we're using on Friday, and some of those gains are not realized yet about $2,000 or so, something like that, $3,000 actually, and we will still take some profits there.
• 1:03
  Speaker 1: But if you want to learn how to make money, I think, yeah, buy and hold.
• 1:08
  Speaker 1: Brilliant, absolutely huge fan.
• 1:10
  Speaker 1: Buy your company's weight.
• 1:11
  Speaker 1: You'll be rich in 30 years.
• 1:12
  Speaker 1: But it's a little bit frustrating, isn't it?
• 1:15
  Speaker 1: So I prefer to also, in addition, trade what I think is a very conservative strategy.
• 1:21
  Speaker 1: Three rules, automated exit rules.
• 1:24
  Speaker 1: Everything is risk limited and I think beginners can crack it.
• 1:28
  Speaker 1: I think it's really not that complicated, and if you want to learn in about an hour or so how that works, completely for free, come and join me tomorrow evening felixfriendsorg slash webinar, and I'll teach you.
• 1:40
  Speaker 1: Is that a deal?
• 1:41
  Speaker 1: Tallulah will be there too, if that helps.
• 1:43
  Speaker 1: So get yourself one of the free seats there, alrighty.
• 1:47
  Speaker 1: So this is part of what we need to look at Now.
• 1:53
  Speaker 1: Is it that their computers again, or their GPUs or whatever you want to call them, are getting faster and faster, and you might've heard of Moore's law, which was the law that computing power got.
• 2:04
  Speaker 1: What was it?
• 2:05
  Speaker 1: It was doubling every other year, or something like that.
• 2:08
  Speaker 1: I'm sure some of you know, and this was basically it.
• 2:09
  Speaker 1: Nvidia broke the law, so they got arrested.
• 2:13
  Speaker 1: No, it's just rules and laws and limitations, a bit like the.
• 2:17
  Speaker 1: You know you can't run a mile in less than whatever it was.
• 2:20
  Speaker 1: Those things are all nonsense.
• 2:22
  Speaker 1: They're all in the mind.
• 2:23
  Speaker 1: So, okay, they're getting a lot faster, but does that really change very much?
• 2:27
  Speaker 1: That's not really what this is about, is it that it's making you money?
• 2:32
  Speaker 1: So if you spend a dollar on NVIDIA Compute Power, you can translate that into $5 in revenue over the next four years, into $5 in revenue over the next four years.
• 2:48
  Speaker 1: That's a pretty good business, right?
• 2:48
  Speaker 1: You turn a dollar into $5 in four years.
• 2:51
  Speaker 1: I quite like the odds of that.
• 2:53
  Speaker 1: So that's one of the reasons they're doing well.
• 2:55
  Speaker 1: But again, that isn't really the story that I'm most excited about yet.
• 3:11
  Speaker 1: 9 am NC.
• 3:11
  Speaker 1: North Carolina, north Carolina, nc.
• 3:13
  Speaker 1: 8 pm Eastern time.
• 3:19
  Speaker 1: Mary, now is it this?
• 3:22
  Speaker 1: Is it that they're turning?
• 3:24
  Speaker 1: You know, one single NVIDIA DGX, now one of the A100 chips, one of the AI chips, is now the same as a thousand CPU servers.
• 3:36
  Speaker 1: No, no, that isn't any.
• 3:38
  Speaker 1: That I mean.
• 3:38
  Speaker 1: That's pretty freaking fantastic in terms of sort of innovation and the progress of humanity and all that kind of stuff and energy usage.
• 3:46
  Speaker 1: Woohoo, right, we'll get onto that in a moment.
• 3:48
  Speaker 1: No, it's not that.
• 3:50
  Speaker 1: This is it Now.
• 4:01
  Speaker 1: What the heck is this all about?
• 4:02
  Speaker 1: Okay, so at present they're selling a chip called the X800 and or computer, I don't know what you want to call that and that is built so that you can put tens of thousands of GPUs together, tens of thousands, which is quite a lot.
• 4:13
  Speaker 1: Now, next year, in 2025, this is 2025, this is 2024, they're releasing the Spectrum X800 Ultra, and it's not like an Apple phone or a Samsung phone, where the Ultra is just like a teeny, tiny bit wider and comes in a slightly different shade of silver.
• 4:34
  Speaker 1: No, it's a massively better, but it's also built so you can put hundreds of thousands of GPUs together.
• 4:50
  Speaker 1: So you can now build data centers that are 10 times larger than this year.
• 4:56
  Speaker 1: So what happens in 2026?
• 4:59
  Speaker 1: Nvidia takes the logic one step forward.
• 5:04
  Speaker 1: Add a zero if in doubt.
• 5:06
  Speaker 1: The Spectrum X16, which is the 2026 chip, allows you to put millions of GPUs together.
• 5:15
  Speaker 1: Just try and visualize that a data center with literally millions of GPUs.
• 5:21
  Speaker 1: So what does that do?
• 5:23
  Speaker 1: It completely changes what can be done with computing power.
• 5:29
  Speaker 1: So right now, we can process the whole internet, all the knowledge in the world, and we can get a language model to give bigger in terms of number of GPUs but at the same time, double on top of that.
• 5:56
  Speaker 1: So it's essentially 200 times bigger in terms of speed.
• 6:00
  Speaker 1: Imagine what you can power with computing power.
• 6:03
  Speaker 1: I think people don't really know it.
• 6:05
  Speaker 1: I think people can't really imagine it, but I would say it's kind of like when the internet came out and people were like what do you do with that right Fight porn?
• 6:13
  Speaker 1: Somebody said that was apparently very profitable and therefore I really genuinely think that the AI adoption will be very significant, leading into 27, 28, 29, and 2030.
• 6:29
  Speaker 1: So if you have a bit of a longer horizon, I think there are some pretty obvious plays.
• 6:33
  Speaker 1: I will make a video separately on that to go in a bit more depth here.
• 6:36
  Speaker 1: But this presentation yesterday it wasn't just like oh, look, we're making new chips every year.
• 6:41
  Speaker 1: No, it's really boggles the mind what they're doing.
• 6:44
  Speaker 1: Look, we're making new chips every year.
• 6:46
  Speaker 1: No, it really boggles the mind what they're doing.
• 6:47
  Speaker 1: And, of course, it affects NVIDIA stock, which, by the way, has a perfect Piotrowski score.
• 6:55
  Speaker 1: Now, piotrowski was not some Russian crazy computer scientist, which is what I thought it was.
• 7:01
  Speaker 1: Is that how Russians sound?
• 7:02
  Speaker 1: No, I'm kidding, he's actually a Stanford professor, I think.
• 7:07
  Speaker 1: And it basically tells you kind of, how good is the balance sheet of a company, how good is it?
• 7:12
  Speaker 1: And nine, for some reason, was the highest number Nine.
• 7:16
  Speaker 1: Maybe it's a Russian thing, I don't know.
• 7:18
  Speaker 1: I don't think he was Russian.
• 7:19
  Speaker 1: I think he was just perfectly American.
• 7:21
  Speaker 1: I don't know why he assumed he was Russian just because he's called Piotrowski.
• 7:23
  Speaker 1: Anyway, presently NVIDIA has a perfect Piotrowski score and the last time they were there was in 2017.
• 7:30
  Speaker 1: This stock isn't expensive.
• 7:33
  Speaker 1: That's the really really weird thing.
• 7:35
  Speaker 1: And look at other companies.
• 7:36
  Speaker 1: Maybe you think, oh, all chip companies have perfect Piotrowski scores.
• 7:39
  Speaker 1: Amd is a five.
• 7:41
  Speaker 1: Nine is the best, right.
• 7:43
  Speaker 1: Intel is a five.
• 7:44
  Speaker 1: Microsoft, which I love, is a four.
• 7:46
  Speaker 1: It generally is a four.
• 7:48
  Speaker 1: Broadcom is a four.
• 7:50
  Speaker 1: Texas Instrument, which I like a lot, it's got a two.
• 7:52
  Speaker 1: So it is just an extraordinary business.
• 7:56
  Speaker 1: And unless the whole thing is just an Enron, then it really is just something that's just out of this world.
• 8:04
  Speaker 1: So we like it, we like it a lot and we like it so much that GameStop doubled overnight as well.
• 8:09
  Speaker 1: That's something we should look at, right, should we have a quick glance at pre-market?
• 8:12
  Speaker 1: I think let's.
• 8:14
  Speaker 1: Here's NVIDIA.
• 8:15
  Speaker 1: Actually, let's have a look at the NVIDIA stock.
• 8:17
  Speaker 1: So right now we're trading at 131, which is well above Friday's.
• 8:24
  Speaker 1: We closed Friday at 1097.
• 8:27
  Speaker 1: So we're up 40 points here.
• 8:29
  Speaker 1: Now, is that good, is that bad?
• 8:31
  Speaker 1: Let me just refresh my little chart here.
• 8:34
  Speaker 1: What happened?
• 8:35
  Speaker 1: Somebody stole my subscription or something.
• 8:40
  Speaker 1: They were back.
• 8:44
  Speaker 1: Okay.
• 8:45
  Speaker 1: No, I got a notification saying that I should upgrade and I'm like developing team.
• 8:52
  Speaker 1: You're trying to invoice me, so it's just kind of funny.
• 8:56
  Speaker 1: If you don't realize, we built this app.
• 8:58
  Speaker 1: Me and a friend of mine are building this.
• 9:01
  Speaker 1: So we've got resistance here at Let me get a line At 1100 and at 1150.
• 9:13
  Speaker 1: That's the resistance.
• 9:15
  Speaker 1: My lines are not very straight.
• 9:16
  Speaker 1: I'll put it on the chat for you.
• 9:19
  Speaker 1: Resistance at 11.00, which was broken through this morning, and at 11.50.
• 9:27
  Speaker 1: How do I know that?
• 9:28
  Speaker 1: I simply go into Options Watch.
• 9:31
  Speaker 1: I click on the third Friday of the month that's where the options volume always sits third Friday of the month and then I look at these bars here.
• 9:38
  Speaker 1: These green bars are call options.
• 9:39
  Speaker 1: They act as resistance and there are a lot of them there.
• 9:50
  Speaker 1: I'll show you.
• 9:51
  Speaker 1: So at 1100, there are 22,000 call options, and at 1150, there'll be 10,000 and so on.
• 9:56
  Speaker 1: So there's pretty strong resistance there.
• 9:57
  Speaker 1: And then, of course, at 11.50,.
• 9:58
  Speaker 1: We've also got the recent high up here from last week.
• 9:59
  Speaker 1: So can we take out the 11.50?
• 10:02
  Speaker 1: Well, I think what they just presented yesterday was pretty staggeringly extraordinary.
• 10:06
  Speaker 1: So I think there's a possibility of that happening, christian?
• 10:13
  Speaker 1: It's coming up.
• 10:14
  Speaker 1: It's coming up.
• 10:15
  Speaker 1: I've seen the drawings already.
• 10:18
  Speaker 1: I've seen the draft of it.
• 10:19
  Speaker 1: What you're asking for is coming up.
• 10:21
  Speaker 1: There will also be a beautiful table with all the P&Ls, all the different dates and the volatility slider, time slider, all that stuff.
• 10:29
  Speaker 1: It's all coming.
• 10:29
  Speaker 1: It's all coming.
• 10:29
  Speaker 1: Just, you know, we need a little bit of patience.
• 10:31
  Speaker 1: Sometimes Things need to get developed.
• 10:33
  Speaker 1: So that's Nvidia.
• 10:41
  Speaker 1: Let's have a look at free market.
• 10:43
  Speaker 1: This was Friday Remarket Nvidia up, 3%, tech up.
• 10:49
  Speaker 1: Why is tech up?
• 10:49
  Speaker 1: So over the weekend the bankers sat down and their wives explained to them the economic news from the last week and they basically said to them dum-dum.
• 10:56
  Speaker 1: Inflation came in a little bit softer, consumer spending came in a little bit softer and that means that the Fed is likely to cut rates and that likely means that rates are going to cut a little earlier and that should be good for tech stocks generally, for the market generally, but particularly for tech stocks.
• 11:13
  Speaker 1: And the bankers wrote that down on their hand and then went to work this morning and bought some futures.
• 11:18
  Speaker 1: So generally, the market is bouncing here.
• 11:21
  Speaker 1: Particularly chip stocks AMD, qualcomm and so on are up quite nicely and I kind of think we're just at the beginning of this chip rally at this point, like watching NVIDIA really kind of blows your socks off.
• 11:36
  Speaker 1: So there we are.
• 11:38
  Speaker 1: But there is more to this.
• 11:39
  Speaker 1: Gamestop is through the fricking roof.
• 11:41
  Speaker 1: So what did he do?
• 11:43
  Speaker 1: The Keith Jill.
• 11:46
  Speaker 1: He has a Reddit account, from which, where the screenshot originates, reddit, by the way, is a cesspit.
• 11:53
  Speaker 1: I'm not a fan particularly.
• 11:54
  Speaker 1: It seems to attract a particular, the unhappy individual, I think.
• 11:58
  Speaker 1: But it has this very active trading community, obviously on GME, and he posted this yesterday, on a Sunday, just for maximum impact, and he has about $180 million, $180 million in call options.
• 12:16
  Speaker 1: Call options mean you think the stock's going to go up and quite short call options at least this one is a June call option and then you also have some shares I think $20 or $30 million in there.
• 12:29
  Speaker 1: So you know that's done quite nicely out of this.
• 12:31
  Speaker 1: What has that done to GME?
• 12:34
  Speaker 1: Let me open it up for you.
• 12:35
  Speaker 1: This is what happened.
• 12:48
  Speaker 1: Can you see where we closed on Friday Down here At a very respectable $23.
• 12:55
  Speaker 1: We seem to be opening at $39.50.
• 12:59
  Speaker 1: That's not normal.
• 13:00
  Speaker 1: You don't normally double over the weekend, but they have Now.
• 13:05
  Speaker 1: Could you trade this?
• 13:06
  Speaker 1: I have actually looked around at this, but we could trade this.
• 13:10
  Speaker 1: I'm running a live trading session, by the way, for you guys in the community.
• 13:13
  Speaker 1: In a moment I'm blocking the sound.
• 13:17
  Speaker 1: What do I do?
• 13:19
  Speaker 1: What is the no?
• 13:26
  Speaker 1: No, that doesn't work either.
• 13:28
  Speaker 1: Okay, we should.
• 13:31
  Speaker 1: We should do uh, I want to go to myself.
• 13:33
  Speaker 1: There we go.
• 13:35
  Speaker 1: That's a bit better, isn't it?
• 13:35
  Speaker 1: Uh, so I mean, something's gone up that much.
• 13:39
  Speaker 1: My first thought would be well, why don't we buy a put option?
• 13:43
  Speaker 1: Go the opposite direction?
• 13:44
  Speaker 1: Right, because at some point it's going to come down, no-transcript.
• 13:47
  Speaker 1: But why don't we go out till, I don't know, june 2025?
• 13:52
  Speaker 1: Surely at some point it'll drop now you could do that, but you're paying quite a lot for the call option.
• 13:59
  Speaker 1: Why?
• 13:59
  Speaker 1: Because volatility is at 94%, so the call option is quite expensive two and a half thousand dollars.
• 14:04
  Speaker 1: So there isn't really a perfect setup for this.
• 14:07
  Speaker 1: I would say Shorter call, but that has unlimited risk to the upside, so that is probably not ideal for most people.
• 14:20
  Speaker 1: This could, in theory, get very, very expensive if it does go really parabolically nuts, although, again, with a long enough time frame, it's probably a fairly safe bet.
• 14:29
  Speaker 1: But you need a bit of capital to do that.
• 14:31
  Speaker 1: So that's why hedge funds like it.
• 14:34
  Speaker 1: They're probably just shorting quotes, I would imagine, just waiting for it to inevitably come back down at some point, which it always has right?
• 14:40
  Speaker 1: Look at the chart here.
• 14:42
  Speaker 1: In the longer term it does sort of come down every once in a while.
• 14:46
  Speaker 1: But yeah, it's a tough thing, I think, to trade for most people.
• 14:49
  Speaker 1: So I wouldn't necessarily I actually definitely wouldn't advise it.
• 14:53
  Speaker 1: We've also got a bunch of important data points coming up.
• 14:55
  Speaker 1: Today.
• 14:56
  Speaker 1: We are getting manufacturing data.
• 14:58
  Speaker 1: Tuesday, job openings.
• 15:00
  Speaker 1: Wednesday, service data.
• 15:02
  Speaker 1: Friday, non-farm payroll unemployment.
• 15:04
  Speaker 1: There's also, I think, on Thursday, adp jobs data coming out as well.
• 15:08
  Speaker 1: So, a lot of jobs data this week.
• 15:11
  Speaker 1: What do we want?
• 15:11
  Speaker 1: What do we want?
• 15:12
  Speaker 1: Say it in unison, go on, go on.
• 15:14
  Speaker 1: Can you say it?
• 15:15
  Speaker 1: You want more unemployment, don't you?
• 15:17
  Speaker 1: I know I know Now, where did I go?
• 15:20
  Speaker 1: It's a good question, isn't it?
• 15:23
  Speaker 1: Yeah, here I am, here I am.
• 15:27
  Speaker 1: We're going to start breaking out into song here in a moment.
• 15:29
  Speaker 1: So, yeah, a lot of jobs data and the Fed basically wants higher unemployment and a slightly softening job economy Slightly softening, not a lot, slightly softening.
• 15:40
  Speaker 1: So we basically want these numbers to come in at the bottom end of consensus generally, and we would be.
• 15:47
  Speaker 1: We'd live very, very happy.
• 15:48
  Speaker 1: Unemployment rate could even tick up a little bit, 4%.
• 15:52
  Speaker 1: We'd be perfectly happy with that, very, very happy with that.
• 15:55
  Speaker 1: Could short a $110 call?
• 15:58
  Speaker 1: Yeah, you could.
• 16:00
  Speaker 1: Probably don't know what that would cost.
• 16:02
  Speaker 1: What about trading 212 in the UK?
• 16:06
  Speaker 1: Never used it, can't really comment on it, but generally brokers all pretty much do the same thing.