Latest / Felix Nikolas Prehn's Podcast / The Great Turning Point for US Stocks Has Arrived + Stock Market News 24 April 2024

Transcript

The Great Turning Point for US Stocks Has Arrived + Stock Market News 24 April 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Yes, we're going to talk Tesla.
• 0:01
  Speaker 1: Yes, we're going to talk earnings.
• 0:03
  Speaker 1: Yes, we're going to talk manufacturing data and about your favorite stocks.
• 0:08
  Speaker 1: But really, there is one thing that I think you need to know.
• 0:12
  Speaker 1: As I'm popping some electrolytes into a mug here so that I stay somewhat awake, because I need to do a spot of trading when the market opens as well, that's the one thing that wakes me up.
• 0:25
  Speaker 1: There is something here that you need to understand, and I want to walk you through it, and I'm going to share my screen with you so you can see it.
• 0:33
  Speaker 1: What is this great, big, beautiful bouncy opportunity that we got ahead of ourselves here?
• 0:42
  Speaker 1: Well, you want to know.
• 0:45
  Speaker 1: Smash the like button.
• 0:47
  Speaker 1: That might help you get there.
• 0:48
  Speaker 1: Let me share my screen with you here.
• 0:50
  Speaker 1: I've also got something for you, which is massive research of where did it go An 89-page document of all the greatest moats in the world, and in moments like these, where you have opportunities to buy great stocks in slightly adverse conditions, you want to buy the greatest companies with the greatest moats.
• 1:15
  Speaker 1: If you want to understand the different type of moats that are there they're basically eight, in a sense and you then want to understand what the companies are, so you can spot these moats both in established business but also in startups.
• 1:32
  Speaker 1: Then get your hands on this document for free at felixfrenzorg.
• 1:36
  Speaker 1: Slash moat 88 pages of research.
• 1:38
  Speaker 1: It'll also solve insomnia, apparently.
• 1:41
  Speaker 1: No, it's actually really quite interesting.
• 1:42
  Speaker 1: I think it's generally quite interesting.
• 1:44
  Speaker 1: Pre-market we're looking pretty good.
• 1:45
  Speaker 1: We're looking pretty good.
• 1:46
  Speaker 1: Tesla up almost 11% pre market.
• 1:48
  Speaker 1: But let's just look at the broader picture here.
• 1:51
  Speaker 1: This is the earnings growth, so the profit growth of tech earnings growth, and we're expecting that the big six tech stocks will have their growth slow down.
• 2:09
  Speaker 1: Well, everybody else's growth will grow up.
• 2:11
  Speaker 1: Is that the opportunity of a lifetime?
• 2:13
  Speaker 1: Possibly, but it's not what I want to talk about.
• 2:15
  Speaker 1: How about PCE inflation coming in tomorrow Down here, which the more it goes down, the more the market goes up?
• 2:28
  Speaker 1: Important, but again, not the story I want to talk about.
• 2:31
  Speaker 1: How about the doom and gloomers who are saying that inflation is going to come back up and, you know, going to hit another 14% or something like it did in the 70s?
• 2:44
  Speaker 1: I think it's unlikely.
• 2:47
  Speaker 1: I don't think it's the story you want to talk about.
• 2:48
  Speaker 1: Is it Tesla's pretty horrific numbers Vehicle deliveries collapsing, free cash flow minus 2 billion versus usually very, very strong free cash flow and net income collapsing, adjusted income coming down significantly.
• 3:10
  Speaker 1: No, it's not even that, although I do want to talk about Tesla.
• 3:13
  Speaker 1: Super happy to take your views on that as well.
• 3:16
  Speaker 1: I'll put out a video I'm about to, which will also walk you through the full Tesla details there.
• 3:22
  Speaker 1: This is it.
• 3:22
  Speaker 1: This is it.
• 3:24
  Speaker 1: What is this all about?
• 3:26
  Speaker 1: This is buybacks.
• 3:28
  Speaker 1: This is going to be the favorite theme of 2024.
• 3:33
  Speaker 1: Buybacks it sounds like a slightly homosexual soft porn, doesn't it?
• 3:39
  Speaker 1: Not that I'm an expert in that, but it does a bit.
• 3:43
  Speaker 1: So that's the most appropriate thing we've said for the day.
• 3:46
  Speaker 1: Are we going to get cancelled?
• 3:47
  Speaker 1: Probably someone will complain and say we're offensive.
• 3:50
  Speaker 1: Of course I'm offensive.
• 3:52
  Speaker 1: That's the whole point, isn't it?
• 3:53
  Speaker 1: Life's very boring if you're not offensive.
• 3:55
  Speaker 1: We've already bought back.
• 3:57
  Speaker 1: I mean by we, I mean the largest companies in the US and the S&P 317 billion of buybacks this year.
• 4:04
  Speaker 1: Last year was 377 and it's only April, so it's going to be a monster buyback year.
• 4:10
  Speaker 1: Let me just illustrate this for you.
• 4:12
  Speaker 1: Earnings and buybacks go hand in hand, and right now, the purple line here is earnings and it's expected that profits will go up a lot why?
• 4:25
  Speaker 1: Well, papa Biden is spending.
• 4:27
  Speaker 1: Like you know, he's forgotten about what he spent money on yesterday.
• 4:30
  Speaker 1: Us government is issuing, I think, 70 billion in debt today.
• 4:34
  Speaker 1: In one day, it's quite something and AI will reduce just the cost of running businesses, so businesses will get more profitable.
• 4:40
  Speaker 1: Now, what happens when businesses get more profitable?
• 4:43
  Speaker 1: They've got more money slashing about.
• 4:46
  Speaker 1: They don't know what to do with, and they will therefore spend that money on buybacks, and the green buyback line is expected to go up even more.
• 4:54
  Speaker 1: So there are reasons to be bullish on this, and if you look at where we are right now in terms of range of buybacks, we're at the lower end of the last sort of 15 years trend as a percentage of profits, so there is a huge room for buybacks to go up.
• 5:16
  Speaker 1: So this year will be the biggest buyback year ever in history although apparently not the biggest like year and that means that means all you got to look for is the end of the blackout period for buybacks, and we're not going to make inappropriate jokes on the blackout period.
• 5:38
  Speaker 1: That's probably pushing it one too far, isn't it?
• 5:40
  Speaker 1: And although don't tempt me, don't tempt me, my humor is an odd one.
• 5:44
  Speaker 1: A German with a sense of humor who would have thought.
• 5:46
  Speaker 1: So the market is just going well.
• 5:49
  Speaker 1: The blackout period is going to end basically next week.
• 5:53
  Speaker 1: Why don't we just wait and load up the boat before, and then companies will buy these shares of us essentially, so that's a good thing.
• 6:00
  Speaker 1: We're also seeing less economic surprises.
• 6:03
  Speaker 1: Why is that a good thing?
• 6:04
  Speaker 1: Because generally economic surprises are bad, so if we don't see them, it's boring.
• 6:08
  Speaker 1: The market likes boring.
• 6:09
  Speaker 1: The market doesn't want to be surprised, and yesterday the hope, the wishful thinking around rate cuts popped up a little bit again.
• 6:21
  Speaker 1: So we're now expecting basically two cuts for the year I still think it'll be more than that, but that's what the market's expecting right now and another two and a half or thereabouts for 2025.
• 6:34
  Speaker 1: So that's a positive right, because rate cuts will drive stock prices up and the most shorted stocks have exploded short squeeze.
• 6:45
  Speaker 1: We have the same thing happening in March here, and that is kind of a good thing.
• 6:51
  Speaker 1: I think it's a good thing.
• 6:52
  Speaker 1: It just means people are getting a little bit more cautious on their positioning and the Magnificent Seven overall have had a pretty decent three, four days here, recovering back to sort of its averageness of the middle of April.
• 7:05
  Speaker 1: Could they go much higher If Meta and Microsoft come in and deliver the goods on Thursday, then absolutely freaking, yes, and even the panic is coming down.
• 7:16
  Speaker 1: So this is called a panic index, vol panic index.
• 7:20
  Speaker 1: You can also just look at VIX.
• 7:21
  Speaker 1: It'll show you the same thing.
• 7:22
  Speaker 1: It's coming down a lot and if you read our newsletter and you follow some of the trades in that obviously you have to come to your own decision on that you would have made a boatload on the vol trade we put out on Monday.
• 7:33
  Speaker 1: Right, us government yields coming down very nicely, never, ever, ever breaking through the 5% line, which is very, very good and very important sort of psychologically, and the dollar coming down yesterday.
• 7:51
  Speaker 1: Why is that a good thing?
• 7:51
  Speaker 1: It makes companies like Microsoft and Netflix and so on more profitable.
• 7:54
  Speaker 1: Companies who have a lot of their earnings in non-dollars make them more profitable.
• 7:58
  Speaker 1: Bitcoin is doing pretty well, hovering around the sort of $66,000, $67,000 line, and things are looking pretty good.
• 8:11
  Speaker 1: Look at Tesla pre-market Still up 11%.
• 8:15
  Speaker 1: Pre-market Volume very, very low though pre-market.
• 8:18
  Speaker 1: You're not seeing any big takers there.
• 8:20
  Speaker 1: Yesterday's post-market had pretty strong market volume.
• 8:24
  Speaker 1: So wait for the market to open before you make a decision on this, because the data was bad, the only thing that we really like from it, as the short-sighted, insane Wall Street bank analyst sort of person, is that they are pushing the Model 2.
• 8:44
  Speaker 1: So the low-cost Tesla is coming, it's going to get accelerated and the market does love that.
• 8:49
  Speaker 1: Banami.
• 9:01
  Speaker 1: I appreciate the request for a European live trading training.
• 9:04
  Speaker 1: I don't think realistically.
• 9:06
  Speaker 1: If we push it earlier, americans won't be able to join.
• 9:10
  Speaker 1: But I'm looking at and I put a poll out on that when it would work, I might do an extra one for Europeans only.
• 9:16
  Speaker 1: So it'll be a Europeans only.
• 9:19
  Speaker 1: Well, and Brits, honorary Europeans, brits and continentals will be allowed to join.
• 9:25
  Speaker 1: Strictly, no Yanks.
• 9:26
  Speaker 1: So there we are.
• 9:29
  Speaker 1: Economic data wise, do you look good to all of us today?
• 9:33
  Speaker 1: Yeah, kind of like, not super exciting, really not super interesting.
• 9:38
  Speaker 1: Mortgage rates are fairly high, but I don't think it really matters at this point.
• 9:44
  Speaker 1: Gdp data tomorrow, pce data tomorrow, jobless data tomorrow Tomorrow morning is a whopper of a day, so make sure you are subscribed and you've made sweet love into the like button.
• 10:11
  Speaker 1: Let's talk about a buyback.
• 10:12
  Speaker 1: I didn't see that bit.
• 10:14
  Speaker 1: Honestly, I didn't see the buyback bit.
• 10:16
  Speaker 1: I think, given that their free cash flow was sharply negative last quarter, I don't think buybacks is really where they should be going.
• 10:23
  Speaker 1: This is a startup.
• 10:25
  Speaker 1: Again, startups don't do buybacks, so I'd be very surprised if they did.
• 10:29
  Speaker 1: I don't think there'd be much sense in that.
• 10:32
  Speaker 1: What do you think of MSCI stock?
• 10:34
  Speaker 1: I quite like it.
• 10:36
  Speaker 1: Is that an answer enough?
• 10:37
  Speaker 1: Of course, that doesn't mean you should buy it because I quite like it.
• 10:39
  Speaker 1: But me, zoom in a little bit on this.
• 10:41
  Speaker 1: If you look, zoom out it's obviously had a pretty miserable run.
• 10:58
  Speaker 1: Earnings are what today, yesterday so I would definitely listen or read earnings yesterday.
• 11:07
  Speaker 1: It went up to an half percentage points yesterday, so that must have been somewhat positive.
• 11:11
  Speaker 1: But I like these data businesses and it's quite a volatile one.
• 11:14
  Speaker 1: So it might be something worth trading into, but right now it's obviously below all moving averages.
• 11:21
  Speaker 1: I can't even find them on the chart.
• 11:22
  Speaker 1: That's how low we are.
• 11:24
  Speaker 1: So it's not looking particularly glorious right now.
• 11:28
  Speaker 1: Particularly glorious right now.
• 11:29
  Speaker 1: So you have to really come to a fairly strong fundamental analysis decision there on whether that's something you want to get into.
• 11:37
  Speaker 1: It is a falling knife right now, and always be wary of falling knives, right?
• 11:41
  Speaker 1: I don't even need, I don't think I need to draw a line here to illustrate that trend is trend, is abysmal.
• 11:50
  Speaker 1: Right, that's trend, and you can go back even further and it's just terrible and you could draw another one up here.
• 11:56
  Speaker 1: So you're kind of coming into this sort of wedge here.
• 12:01
  Speaker 1: So, yeah, it doesn't look good right now, but listen to the earnings call and you might be able to make a smarter decision here.
• 12:17
  Speaker 1: Sam Apple yeah, apple is an interesting one I was actually just looking at.
• 12:20
  Speaker 1: We're building out a trading indicator which is actually working incredibly well on Apple, like insanely well on Apple.
• 12:27
  Speaker 1: I was just looking at it.
• 12:31
  Speaker 1: The problem with Apple is what is going on here.
• 12:34
  Speaker 1: I'm going to take a screenshot of that and send it to somebody who cares, which is our development team, because that's kind of interesting.
• 12:42
  Speaker 1: Let me hit the refresh button on that.
• 12:45
  Speaker 1: They are upgrading the charts.
• 12:48
  Speaker 1: I think that's why some funky stuff's happening.
• 12:50
  Speaker 1: Here we go.
• 12:50
  Speaker 1: China phone sales are declining significantly and I think they will continue to.
• 12:57
  Speaker 1: I think Apple will lose most of their market share in mainland China and that is going to hit them where it hurts.
• 13:04
  Speaker 1: So they really, really need to come up with something new.
• 13:08
  Speaker 1: Elon's very good at that, right, he says, okay, the market wants a cheap car.
• 13:12
  Speaker 1: Let's tell them that we're going to do it.
• 13:14
  Speaker 1: The market wants a story beyond that.
• 13:16
  Speaker 1: Let's tell them we're going to do robo taxis.
• 13:18
  Speaker 1: Let's knock up a little preview, a notion in an hour and show them that we're building an app.
• 13:24
  Speaker 1: Right, that's all he did and the market goes love it.
• 13:27
  Speaker 1: There is a vision, there's a story.
• 13:29
  Speaker 1: Stocks you got to sell them like anything else.
• 13:32
  Speaker 1: You got to tell a story.
• 13:34
  Speaker 1: So Apple at the moment I don't know what the story is and where we're trading right now is at these lows here, october lows.
• 13:41
  Speaker 1: And if we fall below that, I mean you literally go back to where is your support?
• 13:48
  Speaker 1: 150, 145, go out into the end of May.
• 13:53
  Speaker 1: 150 is where your support sits right now.
• 13:58
  Speaker 1: So can you see that red bar there?
• 14:01
  Speaker 1: That's where people are hedging at 150.
• 14:04
  Speaker 1: So that'll be support, but that's a lot lower than where we are right now.
• 14:07
  Speaker 1: So I would be cautious with Apple right now, unless you believe they're going to knock out something out of the park.
• 14:18
  Speaker 1: I would rather see some improvements, see some data points that make me bullish on this.
• 14:23
  Speaker 1: And also, you see that cross here.
• 14:25
  Speaker 1: That's a death cross right Crossing the long-term moving averages here.
• 14:32
  Speaker 1: So it is just very, very bearish as a stock.
• 14:35
  Speaker 1: So I'd be highly cautious.