Latest / Felix Nikolas Prehn's Podcast / Why Mass Layoffs Just Flipped the FED + Stock Market news 18 January 2024

Transcript

Why Mass Layoffs Just Flipped the FED + Stock Market news 18 January 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Felix here and good morning to you.
• 0:02
  Speaker 1: The market has once again flipped on Jobstater.
• 0:07
  Speaker 1: But to actually understand the Jobstater and put it into context and use it so you can make better decisions and make more money, you need to actually understand a whole trail of breadcrumbs that the market has left for us, and that's what we're gonna do here.
• 0:22
  Speaker 1: I'm gonna walk you through the breadcrumbs so you can eat them.
• 0:25
  Speaker 1: And shall we get cracking?
• 0:28
  Speaker 1: Ask your questions.
• 0:29
  Speaker 1: I will take them shortly, but let's get started.
• 0:33
  Speaker 1: Before we do, I'm gonna share my screen with you and you can see the tech layoff data, and you might be wondering why do I care?
• 0:42
  Speaker 1: Well, it's a pretty good leading indicator and in January, so far this year, about 18 and a half thousand techies got sacked, and that's only halfway through the month.
• 0:54
  Speaker 1: So that could come up to, say, 40,000 or so, which would be a pretty whoppingly large number of jobs lost, and I think there's a lot more coming.
• 1:06
  Speaker 1: Paypal, for example, hinting at major job losses, as are others, and the number of companies that are actually laying staff off is just massively exploding.
• 1:19
  Speaker 1: We've got 109 tech businesses so far announcing job cuts this month.
• 1:25
  Speaker 1: If you just say okay, it's gonna be 220, the end of the year, at the end of the month, that would be the biggest job layoff in a year.
• 1:35
  Speaker 1: So we're kind of back to the end of 2022, when everybody was saying we're going into a recession.
• 1:42
  Speaker 1: That's the kind of layoffs we're seeing after, apparently, 12 months of smooth sailing and Goldilocks and everything else.
• 1:50
  Speaker 1: Well, isn't anybody hiring?
• 1:51
  Speaker 1: Well, yes, they are hiring, but much, much, much, much less than you previously saw.
• 1:58
  Speaker 1: So Amazon is hiring 82% less job positions open than in 2022.
• 2:06
  Speaker 1: For Apple, it's almost 40% less.
• 2:08
  Speaker 1: For Google it's 50% less.
• 2:09
  Speaker 1: Meta 10% less.
• 2:11
  Speaker 1: Microsoft 30% less.
• 2:13
  Speaker 1: So they're not the jobs open there either, and this is live data.
• 2:17
  Speaker 1: This is actually, for once, not manipulated by the powers that be.
• 2:23
  Speaker 1: Now, the one thing you can actually do to protect yourself from that is just to have enough money and make your money work for you.
• 2:29
  Speaker 1: Then you don't really care about the job.
• 2:31
  Speaker 1: The job becomes an optional extra.
• 2:33
  Speaker 1: Wouldn't that be nice?
• 2:34
  Speaker 1: Well, guess what?
• 2:35
  Speaker 1: I'll teach you exactly how we do that, how we make your money work for you really nice and hard, without having you having to work really nice and hard, and we do that by automation, and it's a lovely thing.
• 2:48
  Speaker 1: Come and join me on Tuesday, it's completely free at Felix van Zadokslash webinar and I'll teach you what I learned as an investor banker the same rules I apply, the same rules our team applies of investor bankers and how we make money.
• 3:02
  Speaker 1: Felix van Zadokslash webinar.
• 3:06
  Speaker 1: Now how about the broader economy?
• 3:10
  Speaker 1: Here, you know this building, 1740 Broadway in New York.
• 3:14
  Speaker 1: It's being sold effectively for half what it was worth.
• 3:19
  Speaker 1: Blackstone defaulted on it and the mortgage they had on it.
• 3:23
  Speaker 1: It's being sold for half its value.
• 3:25
  Speaker 1: Is that a sign of a strong economy?
• 3:27
  Speaker 1: Is that a sign maybe there is something bigger happening here?
• 3:30
  Speaker 1: Then how can we make money out of it?
• 3:32
  Speaker 1: That's always the question how can we invest from this?
• 3:34
  Speaker 1: And we get to that in just a minute.
• 3:37
  Speaker 1: But let's just run through a couple of key data points here that are usually right.
• 3:43
  Speaker 1: This one has always been right Net savings.
• 3:47
  Speaker 1: So the real amount of money put aside is very, very, very, very, very rarely negative.
• 3:56
  Speaker 1: It was negative in 2008, and it was very briefly negative during COVID, and then it's negative once again, and this chart that I've looking at here goes back to 1947.
• 4:10
  Speaker 1: There have only ever been three times when this number has been negative, and each time we were in a massive recession.
• 4:19
  Speaker 1: So what does that say to you?
• 4:20
  Speaker 1: Well, it says to me the recession seems pretty fricking likely, pretty fricking likely.
• 4:25
  Speaker 1: Well, what about the jobs data that's out live just now?
• 4:28
  Speaker 1: You ask well, we look at that in a second.
• 4:31
  Speaker 1: But what I would throw back at you is do you think you're going to get legitimate jobs data and then a election year?
• 4:38
  Speaker 1: But let's shift this back a little to the market before we look at some more data points.
• 4:44
  Speaker 1: So we really are insanely well informed.
• 4:48
  Speaker 1: The rate cut expectations have been going up since November, where we were expecting about three rate cuts this year and then they went up to about seven or eight rate cuts a couple of days back.
• 5:04
  Speaker 1: And now those expectations well, they're coming down again to still like five or six rate cuts this year, but we've lost about one or two in the expectations and the market should follow.
• 5:19
  Speaker 1: This morning we're seeing a nice little green rebound, which is lovely, but we do have a bit of a gap between the S&P and the expectations.
• 5:27
  Speaker 1: That ought to be filled and we'll have a look at which direction that's likely to be filled at.
• 5:32
  Speaker 1: And one of the key things I would watch this year.
• 5:35
  Speaker 1: Honestly, this is the funnest thing to watch this year and it shows, to show how interesting my life is, that I watched 20 year auction results because, well, somebody's got to write.
• 5:48
  Speaker 1: And what do we see?
• 5:49
  Speaker 1: Well, we see something that's a little troubling.
• 5:52
  Speaker 1: We see that the yields that the government is having to pay so essentially the interest they're having to pay yes, they've been coming down since August last year, quite a lot, and they've just rebounded.
• 6:07
  Speaker 1: And why does that happen?
• 6:09
  Speaker 1: Because there aren't enough buyers willing to buy the government debt at a lower price.
• 6:14
  Speaker 1: It's an auction, bearing in mind that this year, biden and Co are going to issue about double the debt they issued last year, which was a fairly insane amount, a trillion dollars.
• 6:26
  Speaker 1: You need a lot more buyers.
• 6:28
  Speaker 1: If you don't, because you've got so much supply, you've got to offer a higher and higher price that people take it off you.
• 6:34
  Speaker 1: That in itself should keep yields somewhat higher.
• 6:40
  Speaker 1: Yield somewhat higher means stock market somewhat lower.
• 6:45
  Speaker 1: But then hang on, felix, don't be a doom and gloomer.
• 6:48
  Speaker 1: No, I'm not.
• 6:49
  Speaker 1: I'm a permanent optimist.
• 6:51
  Speaker 1: I know we can always make money in all scenarios.
• 6:53
  Speaker 1: So what about sentiment?
• 6:55
  Speaker 1: Are we feeling bullish?
• 6:57
  Speaker 1: Are we feeling bearish?
• 6:58
  Speaker 1: Well, we're sort of medium bullish, not particularly bullish on the scale of zero to one, whereas zero point five.
• 7:08
  Speaker 1: Now, if it goes negative, we'd be bearish.
• 7:11
  Speaker 1: So we're kind of in no-man's land and that means, yep, we could go higher, but we could also go way, way, way lower.
• 7:20
  Speaker 1: So just from a risk-reward point of view, I think it's possible that rally is going to go a little higher here because we're going to get some good earnings in, I think, next week.
• 7:29
  Speaker 1: But it'll then top out again and it'll come back down.
• 7:32
  Speaker 1: And I think it's important to understand those zig-zags so you don't buy on the zig, but that you buy at the bottom of the zag or near the bottom of the zag, which is much more important.
• 7:43
  Speaker 1: Okay then, so let's just take one step back and go back into sort of orbit mode, where we actually see the bigger picture.
• 7:50
  Speaker 1: We've just been told by the jobstater that's out, which is fabricated sorry, seasonally adjusted so that's the word I was looking for by the government.
• 8:00
  Speaker 1: That jobstater is glorious and everyone's employed and it's absolutely wonderful.
• 8:06
  Speaker 1: But if you look at the number of states that actually have declining economic activity, it is 60% of all the states, 60% of all states, and every time that's happened, going back to 1979, for no particular reason.
• 8:28
  Speaker 1: We got a recession.
• 8:30
  Speaker 1: We got a recession in the 80s, we got one in the 90s, we got one in the 90s, we got one in 2008, and we had the COVID recession.
• 8:38
  Speaker 1: So so far, that indicator has always worked and then we can look at all right, how about job rates?
• 8:46
  Speaker 1: Employment You're telling us, dear government, our overlord, who cares and who have our best interests at heart and know better than we do what we should be thinking about that when unemployment rates go up, not just in one area but across the country, then you tend to get a recession.
• 9:09
  Speaker 1: And if we look at 2008, the number of percentage of states where the employment rate was going higher when we went into the recession was about 60% of all states.
• 9:24
  Speaker 1: The 60% of states had rising unemployment In 2020, covid that's the same number In right here, right now, and basically 2022 also.
• 9:36
  Speaker 1: I think we had a recession in 2022.
• 9:39
  Speaker 1: It was forbidden.
• 9:41
  Speaker 1: It was the forbidden fruit.
• 9:42
  Speaker 1: You weren't allowed to talk about it.
• 9:43
  Speaker 1: Well, right now, about 88% of all US states have rising unemployment Quite a lot.
• 9:53
  Speaker 1: Every single time we've been at that number, we were in a recession.
• 9:58
  Speaker 1: So, as much as the Washington Muppet crowd wants to tell you?
• 10:03
  Speaker 1: There isn't one, there is a recession.
• 10:06
  Speaker 1: Here's another one GDI gross domestic income.
• 10:10
  Speaker 1: The Fed have admitted that this is a better indicator and a better predictor of what the economy is doing than GDP.
• 10:18
  Speaker 1: So why do we look at GDP?
• 10:20
  Speaker 1: Well, gdi is basically income.
• 10:23
  Speaker 1: It's all salaries, it's all dividend incomes, it's rental income.
• 10:26
  Speaker 1: It's all income.
• 10:27
  Speaker 1: And it's a much, much harder thing to manipulate, whereas GDP is exports, imports, prices, currency conversions, adjusted this, adjusted that who the heck knows what it actually means?
• 10:38
  Speaker 1: And real GDPI is negative, and every time it's negative, you get exactly let's say it all together you get a recession, and that's been the case since 1950, when the data started.
• 10:58
  Speaker 1: Every time it was negative, you got yourself a recession, and that sounds like a song, doesn't it?
• 11:06
  Speaker 1: And usually, when it's negative, you actually already in a recession, which is what makes me think that we are already in a recession.
• 11:13
  Speaker 1: It's just that nobody wants to say it because it's not good for electioneering, is it All right?
• 11:20
  Speaker 1: Then let's take a step back.
• 11:21
  Speaker 1: Pakistan recalls the ambassador from Iran?
• 11:25
  Speaker 1: Who the heck cares?
• 11:26
  Speaker 1: Well, pakistan is also just bombed Iran After Iran bombed Pakistan.
• 11:32
  Speaker 1: Some tit for tat about something or other?
• 11:35
  Speaker 1: That whole area of the world is just a powder kek, isn't it really?
• 11:40
  Speaker 1: And the World Container Index, which basically tells you how much does it cost to move stuff from A to B, has gone up 23%, not last year, not last month, but last week, actually this week, this week.
• 11:57
  Speaker 1: So that's quite a lot and it's going straight up.
• 12:01
  Speaker 1: And that, my dear friends, is inflationary and it takes a little bit of time to feed its way through into our data points, but it is very much inflationary.
• 12:14
  Speaker 1: And if you look at the routes that are going through the Red Sea, then Shanghai to Genoa, for example, to do that for the container was about $1,500 at the end of last year.
• 12:30
  Speaker 1: Right now it's about $6,200.
• 12:34
  Speaker 1: That is 4X freight cost.
• 12:37
  Speaker 1: Frickin heck, yeah.
• 12:40
  Speaker 1: So container shipping has just become really really fricking profitable.
• 12:46
  Speaker 1: The consumer ship is going.
• 12:47
  Speaker 1: Let's keep this coming.
• 12:50
  Speaker 1: Now you have some weird data points that there is some conflicting stuff in here.
• 12:55
  Speaker 1: And that is yesterday.
• 12:57
  Speaker 1: The retail sales data came in twice as strong as expected.
• 13:02
  Speaker 1: And you might be thinking so, felix, you're wrong.
• 13:04
  Speaker 1: There's no recession.
• 13:05
  Speaker 1: The consumer is strong, strong, I say.
• 13:08
  Speaker 1: The consumer is like a drunk sailor in a it's probably too rude to say there are basically out and about with their credit cards and then they buy and I'll pay later kind of thing.
• 13:20
  Speaker 1: So no, the consumer is actually out of money, out of savings.
• 13:23
  Speaker 1: So we looked at above but still shopping, why?
• 13:27
  Speaker 1: It's just, it makes them feel better about stuff.
• 13:31
  Speaker 1: That's what people do.
• 13:32
  Speaker 1: People don't feel well happy, they go in and buy stuff they don't need.
• 13:36
  Speaker 1: But there is something positive here.
• 13:38
  Speaker 1: I always like to end on something positive and we'll have a few more things to look at TSMC you make chips Taiwan Semiconductor Manufacturing Company.
• 13:48
  Speaker 1: They said that they're going to raise capital spending as an investment this year because there's going to be smartphone and computing demand pickup and they are going to well, they're supplied to Apple and Nvidia and they're going to increase their expenditure by about two billion or thereabouts.
• 14:12
  Speaker 1: That's positive, so there might be some rebound there in that sector.
• 14:17
  Speaker 1: They're also going to build their plants in Japan, arizona yes, arizona and Germany.
• 14:23
  Speaker 1: So that's positive.
• 14:26
  Speaker 1: Surely and honestly, that's one of the reasons the market is up this morning, because the chip guys are up.
• 14:31
  Speaker 1: And then we've got out some real data here, just which is a loaded data We've got let's color coordinate this so we've got jobless claims data out.
• 14:43
  Speaker 1: Is that good or bad?
• 14:44
  Speaker 1: Well, it's lower.
• 14:45
  Speaker 1: You might think that's a good thing.
• 14:47
  Speaker 1: It's about 10% lower than expected.
• 14:51
  Speaker 1: That's actually a bad thing because it means the labor market is tighter.
• 14:55
  Speaker 1: It means it's harder for the Fed to justify rate cuts.
• 14:58
  Speaker 1: I know the data is a load of made up nonsense, but well, the Fed doesn't know that what they do, but they're in on it.
• 15:03
  Speaker 1: Housing starts that's actually good, you could argue.
• 15:09
  Speaker 1: The number is higher.
• 15:10
  Speaker 1: Well, it's less, less, it's slowing down less than expected.
• 15:14
  Speaker 1: Is that good?
• 15:15
  Speaker 1: Well, yeah, it's kind of saying soft landing, so that's actually quite a good thing.
• 15:18
  Speaker 1: Business conditions Well, they are pretty bad, but they're not as bad as expected.
• 15:27
  Speaker 1: Fed prices paid are rising more slowly than expected, so that's kind of good news.
• 15:34
  Speaker 1: So it's sort of like it's almost as if somebody sat down and said what would it look like if we made up soft landing data?
• 15:46
  Speaker 1: Maybe I'm a cynic.
• 15:47
  Speaker 1: Maybe I'm a cynic.
• 15:48
  Speaker 1: Am I a cynic?
• 15:49
  Speaker 1: Possibly.
• 15:49
  Speaker 1: I just don't believe the jobs data.
• 15:51
  Speaker 1: I don't believe it's a tool.
• 15:52
  Speaker 1: I think it's a load of nonsense.
• 15:54
  Speaker 1: I think it's going to be adjusted next month.
• 15:57
  Speaker 1: I think it'll be a load of part-time jobs, mcdonald's jobs and I think, a load of real jobs lost.
• 16:03
  Speaker 1: That's as typically what they're trying to hide in those data points.
• 16:06
  Speaker 1: So the only thing you can really do is well, either you can jump up and down in frustration and go they're all crocs yeah, I think they are or you can just focus on yourself, make money from your money.
• 16:16
  Speaker 1: That's what I do.
• 16:17
  Speaker 1: Come and join me If you want to learn how to do that.
• 16:19
  Speaker 1: I'll teach it to you for free.
• 16:20
  Speaker 1: Three steps.
• 16:21
  Speaker 1: It's really very, very simple.
• 16:23
  Speaker 1: It's great for beginners.
• 16:24
  Speaker 1: You don't need to know a thing about anything.
• 16:26
  Speaker 1: Join me on Tuesday live phedex-friendsorg slash webinar, and I'll be traveling, actually next week, but we'll still do it.
• 16:34
  Speaker 1: We'll find some Wi-Fi.
• 16:35
  Speaker 1: That's quick enough.