Latest / Felix Nikolas Prehn's Podcast / The -$217 Billion Sell Warning + Stock Market News 30 May 2024

Transcript

The -$217 Billion Sell Warning + Stock Market News 30 May 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: But what we've got in store today is quite a lot really.
• 0:04
  Speaker 1: We have the biggest CRM company in the world massively disappoint, which was not meant to happen.
• 0:10
  Speaker 1: You know the words A and I.
• 0:11
  Speaker 1: The letters A and I were meant to save us from that, but it's not a doom and gloom thing.
• 0:16
  Speaker 1: My intention is always to help you understand the market, help you find opportunities so that we can make money out of this.
• 0:24
  Speaker 1: And camera is a bit off center there, isn't it A bit off center?
• 0:28
  Speaker 1: There we go.
• 0:30
  Speaker 1: So let's get cracking.
• 0:31
  Speaker 1: I'll share my screen with you and walk you through what I think are the key things to understand today, and then we look at how we actually make money out of this, which is what this is all about.
• 0:40
  Speaker 1: And Richard, yes, you are quite right, I am three minutes late today about and Richard, yes, you are quite right, I am three minutes late today my microphone had run out of power, hence the cable, which wasn't long enough and makes me crawling under the desk, if you must know.
• 0:53
  Speaker 1: Thankfully, there is no footage of such incidents, so let's get cracking here.
• 1:01
  Speaker 1: So Salesforce drops on first ever single digit sales growth outlook and they basically missed earnings, they missed expectations and, at the same time, the CEO obviously jumping up and down, going AI, ai, ai.
• 1:18
  Speaker 1: This used to work.
• 1:19
  Speaker 1: Why isn't this working?
• 1:20
  Speaker 1: And you look at the stock.
• 1:22
  Speaker 1: Let me show it to you.
• 1:23
  Speaker 1: Stock's looking CRM minus 16%, ouch.
• 1:31
  Speaker 1: So it's trading right here at that orange line, which is pretty horrific.
• 1:35
  Speaker 1: It's where they were in November last.
• 1:39
  Speaker 1: So they've dropped massively a 16.5 percentage point.
• 1:43
  Speaker 1: They've dropped massively a 16.5 percentage point.
• 1:51
  Speaker 1: We've also got the Fed Bostik.
• 1:52
  Speaker 1: Someone should knock that man over the head Not literally, obviously.
• 1:54
  Speaker 1: Don't do a Nancy Pelosi husband thing.
• 1:56
  Speaker 1: I mean, they might be inside traders, but they don't deserve to get knocked over the head.
• 2:00
  Speaker 1: He says we still have ways to go to curb price inflation, which isn't really what the market wanted to hear, and he wants inflation across a bunch of sectors and measurements to go down before he has more confidence on cutting rates.
• 2:16
  Speaker 1: And the Fed boy band is on tour again today.
• 2:19
  Speaker 1: John Williams and Laurie Logan are performing today for you, probably saying something very similar.
• 2:25
  Speaker 1: We've also had yesterday a pretty, pretty bad day overall for markets.
• 2:30
  Speaker 1: Right, I was going to shield you from the heat map because I thought it was a little hideous, but I'll show it to you anyway.
• 2:42
  Speaker 1: This was yesterday.
• 2:43
  Speaker 1: So NVIDIA, as I explained yesterday, sucking up all the money but everything else going down as part of institutions, market makers selling off.
• 2:51
  Speaker 1: If you look at today free market, it looks a little bit better, but not a lot.
• 2:58
  Speaker 1: Tesla is up, nvidia is in the red.
• 3:00
  Speaker 1: We hope that that's going to turn around, because that's the one thing that we all cling on to Microsoft down a whole percentage point, which isn't particularly wonderful.
• 3:10
  Speaker 1: So what's it all about?
• 3:11
  Speaker 1: Well, how often do you think that all of the sectors of the market so banking and discretionaries and staples and energy and utilities and everything, every sector of the market declines in both the US and the EU?
• 3:29
  Speaker 1: Well, that happens 2.8% of the time.
• 3:35
  Speaker 1: So one in once a year.
• 3:40
  Speaker 1: Basically, is that about right?
• 3:41
  Speaker 1: 3%, am I getting that right?
• 3:44
  Speaker 1: See, bankers and numbers don't really go very well together.
• 3:48
  Speaker 1: We're not all that smart, after all.
• 3:51
  Speaker 1: 0.03 times 365.
• 3:53
  Speaker 1: Is that right?
• 3:56
  Speaker 1: 0.03 times 100.
• 3:59
  Speaker 1: That's what I was thinking.
• 3:59
  Speaker 1: So three times.
• 4:00
  Speaker 1: So it actually is not massively uncommon, is it?
• 4:03
  Speaker 1: It happens once a month actually.
• 4:05
  Speaker 1: So yesterday wasn't quite as bad as some of the headlines make it out to be.
• 4:10
  Speaker 1: Just sounds kind of crazy.
• 4:13
  Speaker 1: Actually, sorry, it's over the last 10 years.
• 4:19
  Speaker 1: Okay, so let's get that calculator back out again.
• 4:23
  Speaker 1: So it happens.
• 4:25
  Speaker 1: It's not the same thing 0.028 times 3,650.
• 4:30
  Speaker 1: Yeah, it still happens with some frequency, about once a month.
• 4:35
  Speaker 1: Now there is something that's been holding this rally up, which is rather nice to see, and, yeah, path also down 30%.
• 4:42
  Speaker 1: Absolutely, we'll touch upon that as well.
• 4:44
  Speaker 1: Very happy to look at McDonald's as well.
• 4:46
  Speaker 1: Anson and Roger, I wish I could use your language.
• 4:51
  Speaker 1: I think YouTube would not appreciate it, but I see where you are coming from.
• 4:55
  Speaker 1: So CTA positioning is what is CTAs?
• 4:59
  Speaker 1: It's algo funds, algo traders, dumb computers.
• 5:02
  Speaker 1: Maybe they're soo-bee smarter than us, who knows?
• 5:04
  Speaker 1: We're positioned there right here and, if you draw that across, we've been higher in 2019 and in 2008 in recent times.
• 5:18
  Speaker 1: But essentially algo funds have bought $173 billion with a B dollars worth of stock.
• 5:25
  Speaker 1: That's quite a lot.
• 5:26
  Speaker 1: Not all that long ago they had sold about 130 billion.
• 5:30
  Speaker 1: So they actually, from down here to up there, they bought about $300 billion worth of stock and that's been helping to support the Mr Market here right, and I love that you guys are shouting things out.
• 5:46
  Speaker 1: We will get through all the questions there and obviously feel free to repeat them when I get to questions, but there is what's called a market tape and it's a bit like that, except it isn't Okay.
• 5:59
  Speaker 1: On the good old days, trading floors had tickers and that was the tape and people would read it and see the trades on their life.
• 6:07
  Speaker 1: That's how people used to trade, you know, in the dinosaur ages.
• 6:10
  Speaker 1: But if the market tanks and so far we've been like it's not going to tank, nvidia is going to give up, go up, AI is going to help, joe Biden is going to go shopping, Nancy Pelosi is probably holding up the market.
• 6:23
  Speaker 1: But if we do go down this month there is $217 billion there of stocks to sell by algo funds, which is quite a lot.
• 6:36
  Speaker 1: So I'm just saying this is not doesn't have to happen.
• 6:38
  Speaker 1: I'm just saying that you know the market's flat, nothing happens, it's all good.
• 6:43
  Speaker 1: The market drops significantly because people like CRM fail, uipath, throw CEOs out of the window.
• 6:51
  Speaker 1: You could have a very, very significant, strong downside and people forget that there is downside risk when things have been going up forever after.
• 6:59
  Speaker 1: So here it is visualized, and this red line there is using a yellow pen, which is not super helpful.
• 7:09
  Speaker 1: We have red pens thanks to Microsoft Really big fat red pens, apparently.
• 7:14
  Speaker 1: What's going on there.
• 7:16
  Speaker 1: That is the downtrend, which would be very, very significant.
• 7:23
  Speaker 1: That's for the month.
• 7:24
  Speaker 1: So, just as a little bit of a warning and you might want to look at okay, what do we do about that?
• 7:29
  Speaker 1: Well, you can learn to hedge.
• 7:30
  Speaker 1: I mean, literally, if you type into YouTube, felix, and the words never lose.
• 7:36
  Speaker 1: I made an entire video with a handout document and everything else that teaches you how to hedge.
• 7:42
  Speaker 1: It's completely free and it's there to help protect your money, help protect your capital, which is what this is all about.
• 7:47
  Speaker 1: All right, so you might want to do that.
• 7:49
  Speaker 1: Maybe write that down and take a screenshot of it and, after this video, go and watch that, because people will find that really, really helpful.
• 7:55
  Speaker 1: Okay, so a bit more doom and gloom and then I promise you there'll be some good news.
• 8:00
  Speaker 1: Okay, just to kind of cheer us up, what's this?
• 8:04
  Speaker 1: Container rates?
• 8:05
  Speaker 1: Container rates from Asia to Europe and Asia to West Coast US have gone through the roof.
• 8:14
  Speaker 1: Behaving like a meme coin.
• 8:16
  Speaker 1: They've gone up about 3x.
• 8:18
  Speaker 1: Now, apparently, cma one of the big shippers, now quoting not $6,000 for the route to Europe, but are now quoting $10,000 for the route.
• 8:31
  Speaker 1: Why is that?
• 8:32
  Speaker 1: They're apparently hooties on camels shooting down US drones and ships in the Red Sea.
• 8:39
  Speaker 1: Another ship was hit today, apparently, which just goes to show all you need is a you know, an ebay drone and you're good to go, whereas the us government spends 50 million dollars on the same piece of equipment, essentially.
• 8:52
  Speaker 1: And so what?
• 8:53
  Speaker 1: What does that do?
• 8:54
  Speaker 1: Well, that is potentially inflationary, right, and we don't like that because that could cause a supply supply supply chain issue, right, costs going up, which is kind of what we had during COVID.
• 9:11
  Speaker 1: So something to watch.
• 9:13
  Speaker 1: Keep watching it.
• 9:15
  Speaker 1: I would say we don't want those rates to go particularly high.
• 9:19
  Speaker 1: Now.
• 9:19
  Speaker 1: Literally, just out, richard.
• 9:25
  Speaker 1: Thank you, beata.
• 9:25
  Speaker 1: Estee Lauder.
• 9:26
  Speaker 1: Okay, I'll make a note and we will.
• 9:28
  Speaker 1: Should we make a note?
• 9:30
  Speaker 1: A couple of things you guys have thrown out.
• 9:32
  Speaker 1: You've thrown out EL Starbucks Somebody wanted to look at Path because they were feeling depressed, or they wanted to feel depressed MACD, we had.
• 9:41
  Speaker 1: Keep throwing them out and we will keep looking at them.
• 9:44
  Speaker 1: And yes, palantir, new contract.
• 9:46
  Speaker 1: I just recorded the video on that and it's going to be glorious, because we look a little deeper than just the headline number, what it actually means and what it means to valuations and everything else.
• 9:54
  Speaker 1: So what have we just had.
• 9:55
  Speaker 1: We've had jobless claims tick up ever so slightly and that's the total jobless claims in red here.
• 10:04
  Speaker 1: So that's basically unemployment, right, unemployment.
• 10:08
  Speaker 1: And this green number down there green line is the initial.
• 10:23
  Speaker 1: So basically, first time virgin unemployed and you can see that's kind of trending up and you might think that's terrible.
• 10:26
  Speaker 1: The recession's coming Well, of trending up and you might think that's terrible.
• 10:29
  Speaker 1: The recession's coming Well.
• 10:30
  Speaker 1: The Fed has just done a little jiggy dance all around the table, had a double sherry and said finally, we made some people unemployed, we achieved something this year.
• 10:42
  Speaker 1: So the Fed will like this.
• 10:43
  Speaker 1: The Fed will like a weaker labor market, as they will call it, because they don't want to say making people unemployed and miserable.
• 10:48
  Speaker 1: But the data is, of course, complete gobbledygook and completely manipulated and utter nonsense generated to reelect the Supreme Leader of the United States, that's whoever happens to be in the White House.
• 11:06
  Speaker 1: By the way, they did the same thing for Obama and everybody else.
• 11:09
  Speaker 1: It's not a party political thing, it's just when you are in the White House, you control the data and therefore you put out data points that you like.
• 11:17
  Speaker 1: But there is something we can look at which gives us a little bit more of an indicator and that is called US Worker Adjustment and Retraining Notification Act notifications and this lovely thing.
• 11:32
  Speaker 1: They're called WARN notices, and let me see if I can find a suitable brownish color, this line here.
• 11:42
  Speaker 1: This is WARN notices and they're not made up by the government.
• 11:46
  Speaker 1: They can't because employers have to issue them by law.
• 11:50
  Speaker 1: And if you look at where we started at the end of 2021 and where we are right now, and throughout the entire period, there were lots and lots of war notices, which basically means we're going to fire you, we're going to fire people, lots of people.
• 12:04
  Speaker 1: And then, at the same time, you look at the rather amusing jobless claims down here.
• 12:13
  Speaker 1: So unemployment, jobless claims which is fabricated by the Ministry of Misinformation.
• 12:22
  Speaker 1: From the Supreme Leader, you can see that there is a little bit of a gap.
• 12:27
  Speaker 1: From the Supreme Leader, you can see that there is a little bit of a gap and really they've just they've kind of pushed it out so far that people laugh at jobs data now.
• 12:38
  Speaker 1: But that's the gap.
• 12:39
  Speaker 1: So tell me how that makes sense.
• 12:39
  Speaker 1: All these people were told they were going to get fired, but the government was like no, no, no, no, we've seasonally adjusted the heck out of this to make us look good.
• 12:45
  Speaker 1: So jobs data is basically an irrelevance.
• 12:48
  Speaker 1: That's what I'm saying.
• 12:49
  Speaker 1: Okay, until somebody comes in and says let's do something about that.
• 12:52
  Speaker 1: But there is good news and we will get there.
• 12:54
  Speaker 1: Before we talk about path Sorry about the path thing HP Hewlett Packard reports sales are top estimates on first PC boost since 2022.
• 13:05
  Speaker 1: Did I tell you about that?
• 13:07
  Speaker 1: Or did I tell you about that, like what, three days ago?
• 13:16
  Speaker 1: I think I did, didn't I?
• 13:18
  Speaker 1: So anybody who joined the AI PC trade?
• 13:24
  Speaker 1: You're making some money because HP is up 5% point today.
• 13:32
  Speaker 1: The rally, the party keeps going there.
• 13:34
  Speaker 1: They're trading right here up there.
• 13:36
  Speaker 1: Is that an all-time high?
• 13:37
  Speaker 1: No, no, no, not quite.
• 13:39
  Speaker 1: We were a little bit higher in May 2022.
• 13:42
  Speaker 1: So we've got a bit of room to go.
• 13:44
  Speaker 1: I would say.
• 13:44
  Speaker 1: I'd say we have got to take out the 35 and then head for the 40.
• 13:48
  Speaker 1: Okay, you guys throwing out.
• 13:58
  Speaker 1: I saw the VXX there.
• 14:00
  Speaker 1: We will get to that.
• 14:01
  Speaker 1: No need for tears on such a beautiful day.
• 14:03
  Speaker 1: So that's one thing.
• 14:05
  Speaker 1: Now, another thing I always look at is market momentum.
• 14:11
  Speaker 1: Right, and we got a pretty good insight into that by looking at Dagpool trades.
• 14:15
  Speaker 1: We call them smart money trades, but essentially they are Dagpool trades and we can see the trades that were made yesterday in options by institutions that are trying to hide from you.
• 14:29
  Speaker 1: And look at the S&P trades and get a feel for sentiment.
• 14:34
  Speaker 1: They're all bearish.
• 14:35
  Speaker 1: Okay, there is one bull in there.
• 14:37
  Speaker 1: Maybe he took some profits, but everybody else look at the bearishness there.
• 14:43
  Speaker 1: We haven't seen that in a while.
• 14:44
  Speaker 1: Also, nvidia, tesla, nvidia, nvidia it's all bearish.
• 14:48
  Speaker 1: I mean, I have not seen that much bearishness in a row in quite some time and it makes me feel a little bit more glum.
• 14:56
  Speaker 1: Actually it doesn't, because I just think I'm going to set up some more bearish trades and make some money out of this.
• 15:01
  Speaker 1: But if you want to look at this data live as it comes out every day, go where Exactly, optionswatchio down below.
• 15:09
  Speaker 1: You get access for 30 days completely for free.
• 15:11
  Speaker 1: You also get support and resistance lines and much, much more and some our indicator.
• 15:17
  Speaker 1: You get our alerts, you get our trend alerts.
• 15:19
  Speaker 1: So you get this.
• 15:20
  Speaker 1: We're just going to.