Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - Is this the DotCom Bubble All Over Again? + Stock Market News 26 June 2024

Transcript

Felix Prehn - Is this the DotCom Bubble All Over Again? + Stock Market News 26 June 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Felix, I think we're live.
• 0:01
  Speaker 1: Welcome to this pre-market live stream.
• 0:05
  Speaker 1: I want to walk you through, yes, other comparisons to dot-com bubble 2000.
• 0:10
  Speaker 1: Are they real and relevant?
• 0:13
  Speaker 1: And I'll give you the data so you can come to your own conclusion.
• 0:15
  Speaker 1: But I also want to show you and walk you through what the excitement is, what the opportunities are, the two things I am buying today as an ex-banker which doesn't mean that you should, although what you should probably do is take some electrolytes like me, without dog fur preferably.
• 0:31
  Speaker 1: It's just quite hard around here.
• 0:33
  Speaker 1: This is my new favorite brand, by the way Electrolyte hydration, absolutely zero sugar.
• 0:43
  Speaker 1: But you're not here to listen to me drivel on about electrolytes.
• 0:45
  Speaker 1: Are you here to make money?
• 0:47
  Speaker 1: So let's get into it.
• 0:49
  Speaker 1: And we have to take that little banner off it, don't we?
• 0:51
  Speaker 1: Well, actually, we don't necessarily, but there we are.
• 0:54
  Speaker 1: So what's the important thing?
• 0:57
  Speaker 1: There is a chap called Leopold Aschenbrenner and he was part of the OpenAI gang, ex-openai gang, and he's come out with an essay that is about as long as what a German could write.
• 1:12
  Speaker 1: It's really long.
• 1:13
  Speaker 1: I read some of it and then I asked ChatGPT to summarize it, which I thought was rather ironic.
• 1:18
  Speaker 1: But anyway, this is kind of one of the key things here.
• 1:22
  Speaker 1: He's basically saying no-transcript.
• 1:46
  Speaker 1: Who's particularly clever?
• 1:48
  Speaker 1: He thinks that by 2027, 2028, we're going to get to a level where AI is going to be as good as an AI engineer.
• 1:58
  Speaker 1: So AI will be able to write its own AI code Right, which is insane.
• 2:05
  Speaker 1: Stephanie, thanks for letting me know that the microphone is working today.
• 2:09
  Speaker 1: I appreciate that.
• 2:09
  Speaker 1: What's up with Winstonians?
• 2:12
  Speaker 1: That's a really good one.
• 2:13
  Speaker 1: We should do something with that, Logan, and you should take credit for that.
• 2:15
  Speaker 1: You'd have to sue me for the gazillion dollars of merch we will sell with Winstonians on it.
• 2:21
  Speaker 1: That's actually a really good idea.
• 2:24
  Speaker 1: So what does this mean?
• 2:25
  Speaker 1: This means that anyone who's any stock that's investing a truckload of money into AI right now is probably where you want to be, and it means that margins, particularly at software companies, are going to go through the freaking roof, Because do you know how many developers work at Meta?
• 2:43
  Speaker 1: They could get rid of like 80% of that lot if AI writes its own thing right.
• 2:48
  Speaker 1: So I'm very excited by this.
• 2:51
  Speaker 1: I will make some more videos on this in depth, but for today, this is the chart of the moment, right?
• 2:57
  Speaker 1: This is what everyone's banding about, except they're not.
• 2:59
  Speaker 1: They're showing you different charts.
• 3:01
  Speaker 1: They're throwing you a chart where we are at the same level we were at in 2000.
• 3:05
  Speaker 1: What is this?
• 3:06
  Speaker 1: This is the PE of, basically, world IT stocks Okay, msci and in 2000, we were trading at about a 57x PE.
• 3:23
  Speaker 1: Right now we're trading at about 30.
• 3:26
  Speaker 1: So we got a fairly long way to go.
• 3:32
  Speaker 1: Now, the problem in 2000 was that all these companies like Facebook, back then they weren't making any money.
• 3:37
  Speaker 1: They had no plans to make money.
• 3:38
  Speaker 1: They didn't have a sales team or didn't have it.
• 3:41
  Speaker 1: They were like, yeah, we'll figure it out later, don't worry about it.
• 3:44
  Speaker 1: Of course, they were right on meta front, on Facebook's front, but on a lot of companies they weren't, whereas right now these companies are actually making look at that earnings per share for the magnificent seven, the shiny, beautiful tech stocks, and guess what?
• 4:01
  Speaker 1: They're going up right.
• 4:03
  Speaker 1: And what's the blue line?
• 4:04
  Speaker 1: Well, the blue line is our expectation for 2025, whereas the white line do we have a white pen Sort of that's 2024.
• 4:15
  Speaker 1: So, as long as the 2025 expectations on earnings are higher, in my humble opinion, the market will keep going up, with the occasional blip, which I'll see as a tremendous opportunity.
• 4:33
  Speaker 1: Logan, I appreciate that.
• 4:34
  Speaker 1: That means you've legally assigned the rights to that idea over to Winston.
• 4:38
  Speaker 1: Facebook didn't exist in 2000.
• 4:41
  Speaker 1: When did Facebook start?
• 4:42
  Speaker 1: Okay, when did they start?
• 4:45
  Speaker 1: So that's a bold claim there.
• 4:48
  Speaker 1: You might well be right.
• 4:49
  Speaker 1: When was Facebook founded?
• 4:53
  Speaker 1: Okay, 2004.
• 4:56
  Speaker 1: Okay, you're quite right.
• 4:57
  Speaker 1: Bad example, but you get the idea.
• 5:00
  Speaker 1: There were plenty of companies out there back then who weren't making any money.
• 5:04
  Speaker 1: But, thank you for you are my new fact checker, which I appraise Fonzle Fonzleberry, which is an amazing screen name.
• 5:13
  Speaker 1: Now Microsoft has made it impossible for me to move the chart.
• 5:16
  Speaker 1: No, they haven't.
• 5:17
  Speaker 1: Let's have a look at what stocks are moving, because that's always the opportunity, and I do that by looking in Trade Vision.
• 5:25
  Speaker 1: In our brand new screener, we have uptrend stocks.
• 5:29
  Speaker 1: These are the stocks that moved up the most yesterday and could therefore present a nice bullish trade opportunity or worth looking at if you wanted to go up.
• 5:40
  Speaker 1: The little number behind means by how much have they gone up by in terms of scale?
• 5:45
  Speaker 1: You know, sort of zero to five, and we're going to explain that a little bit better.
• 5:48
  Speaker 1: Now, what about the stocks that went down yesterday?
• 5:53
  Speaker 1: That list is a little bit longer, isn't it?
• 5:56
  Speaker 1: That's a little bit longer.
• 5:57
  Speaker 1: These are S&P stocks.
• 5:59
  Speaker 1: So a lot of S&P stocks went down yesterday, which should make us feel a little bit more cautious.
• 6:06
  Speaker 1: And what's the biggest S&P stock that's dropped significantly yesterday?
• 6:10
  Speaker 1: Walmart, home Depot, bank of America, lowe's, ups and so on.
• 6:15
  Speaker 1: So again, might be interesting.
• 6:17
  Speaker 1: Look at that downtrend minus seven.
• 6:19
  Speaker 1: Illinois tool works obviously dropping like a rock.
• 6:22
  Speaker 1: I didn't know.
• 6:23
  Speaker 1: This went to 10 actually.
• 6:24
  Speaker 1: So what I do is I look through this and I look for trade ideas of things that have really really significantly moved and then we hope to make some money out of it.
• 6:33
  Speaker 1: Secondly, I look at how is Wall Street trading, at how is Wall Street trading.
• 6:45
  Speaker 1: What have they done?
• 6:45
  Speaker 1: And well, somebody yesterday sold $1.2 billion worth of S&P 500 call options and another one sold 991 million five days ago, 894 million two days ago.
• 6:55
  Speaker 1: These are the big guys, the big guns.
• 6:59
  Speaker 1: And guess what?
• 7:01
  Speaker 1: Bearish, bearish, bearish.
• 7:04
  Speaker 1: It's the occasional bullish interloper, but look at the majority of this.
• 7:08
  Speaker 1: So the market is not by Wall Street.
• 7:12
  Speaker 1: I mean the big investment banks, the big hedge funds, are looking pretty cautious at the market overall.
• 7:19
  Speaker 1: You can also see individual stocks there.
• 7:21
  Speaker 1: You can filter by them as well.
• 7:22
  Speaker 1: This is, of course, all part of tradevisionio.
• 7:24
  Speaker 1: Link is down below in the description, you get to sell a free 30-day trial to get access to this.
• 7:29
  Speaker 1: But if you look through this once a day, you suddenly are way more informed than anybody else out there, right?
• 7:34
  Speaker 1: And then we look at Nvidia, which right now is down a little bit, if I'm not mistaken.
• 7:41
  Speaker 1: Yeah, down about percentage point.
• 7:44
  Speaker 1: It's trading here at this dotted blue line.
• 7:47
  Speaker 1: And then you look at that and you go well, okay, where is the support?
• 7:50
  Speaker 1: Where are things going to get better here?
• 7:55
  Speaker 1: At 120.
• 7:56
  Speaker 1: So 120 is our support.
• 7:59
  Speaker 1: How do I know that?
• 8:00
  Speaker 1: Because that little red bar there is the biggest red bar we've got and that means support.
• 8:09
  Speaker 1: Now, what about resistance?
• 8:10
  Speaker 1: What did I just do?
• 8:12
  Speaker 1: I took a screenshot.
• 8:13
  Speaker 1: I didn't know you could do that.
• 8:14
  Speaker 1: Huh, interesting.
• 8:16
  Speaker 1: The resistance sits here at 130 130.
• 8:23
  Speaker 1: So that's resistance, on the way up, resist.
• 8:27
  Speaker 1: And 120 is support.
• 8:30
  Speaker 1: Again, how do I know that?
• 8:32
  Speaker 1: Because it's the biggest bar in green here, which is maybe counterintuitive, but on the way up that's what matters.
• 8:39
  Speaker 1: And then 135, 140 will be your next resistance line.
• 8:43
  Speaker 1: So it would kind of imply we might be sitting in this 120 to 130 zone for the week.
• 8:50
  Speaker 1: You can also go forward and say well, what about next month?
• 8:53
  Speaker 1: Where are we going to go then?
• 8:54
  Speaker 1: Is it still 120 to 130?
• 8:57
  Speaker 1: And the answer is basically yes.
• 8:59
  Speaker 1: 120 to 130?
• 9:05
  Speaker 1: And the answer is basically yes, because still biggest little red knob there at 120.
• 9:07
  Speaker 1: And at 130, there is still that resistance there.
• 9:09
  Speaker 1: So the market right now not really pricing in massive moves up.
• 9:12
  Speaker 1: Right, we're seeing a bit here at 160 150.
• 9:15
  Speaker 1: But the market is definitely looking rather cautious on NVIDIA right now.
• 9:22
  Speaker 1: So that's important.
• 9:23
  Speaker 1: 110 says 110 is bigger.
• 9:27
  Speaker 1: Yes, okay, true, but you have to go through 120 before you get to 110.
• 9:34
  Speaker 1: Yeah, you're quite right on that.
• 9:35
  Speaker 1: It's a good observation that there is more support down here at 110.
• 9:39
  Speaker 1: And what you want to watch for is how do they move every day?
• 9:42
  Speaker 1: Are they moving up?
• 9:43
  Speaker 1: Are they moving down?
• 9:44
  Speaker 1: That tells you quite a lot about the market.
• 9:45
  Speaker 1: Right now, I'm not seeing a lot of movement, so I'm kind of thinking market's feeling a little bit like rallied out until we get some good news Once again.
• 9:55
  Speaker 1: What red knob.
• 9:57
  Speaker 1: I was waiting for someone to say that it wasn't me who sold 1.2 billion worth of S&P call options.
• 10:07
  Speaker 1: I'm relieved.
• 10:08
  Speaker 1: I'm relieved it wasn't you who fat fingered that one.
• 10:11
  Speaker 1: It was good seeing you on the webinar yesterday as well.
• 10:17
  Speaker 1: So let's go back a little bit more, zoom out macro, because we need to decide what's happening today.
• 10:23
  Speaker 1: And then I'll tell you two things.
• 10:25
  Speaker 1: I'm actually going to buy today.
• 10:27
  Speaker 1: This is showing macro right Economy, the economy, it's the economy, stupid.
• 10:35
  Speaker 1: The unemployment rate in white is going up.
• 10:38
  Speaker 1: In blue, we've got the conference board fewer jobs than six months, three months ago, average sort of thing, so that's also going up.
• 10:48
  Speaker 1: So that basically means we've got higher unemployment.
• 10:56
  Speaker 1: I'm probably writing under my face there aren't I?
• 10:58
  Speaker 1: Yeah, so you don't need to see it.
• 10:59
  Speaker 1: You get the idea.
• 11:01
  Speaker 1: And then you look at the next bigger bit of data, which is okay.
• 11:05
  Speaker 1: I thought the labor market was strong.
• 11:07
  Speaker 1: What about wage growth?
• 11:08
  Speaker 1: Well, guess what?
• 11:09
  Speaker 1: Private wages and salaries are still growing, but they're growing less than post-COVID.
• 11:18
  Speaker 1: So we're kind of going back here to below long-term average.
• 11:24
  Speaker 1: We're going into 2016, 2017 territory in terms of growth, and 2% wage growth is pretty freaking miserable considering the inflation you've had to endure in the US.
• 11:34
  Speaker 1: So you are actually worse off than before.
• 11:38
  Speaker 1: And then this is Bloomberg's US economic growth surprises, which is fun, isn't it?
• 11:45
  Speaker 1: What does it mean?
• 11:46
  Speaker 1: High surprises are good news, low surprises are bad news, and right now we are looking at being down here, which is definitely below trend and would imply a recession.
• 12:06
  Speaker 1: Why?
• 12:07
  Speaker 1: Because let me extend the line just a little bit more.
• 12:15
  Speaker 1: You get the idea.
• 12:16
  Speaker 1: This was 2008, which wasn't exactly glorious.
• 12:21
  Speaker 1: 2014-15 was also not a great time in the market here, 2015.
• 12:26
  Speaker 1: And then this was COVID, the big ugly C.
• 12:30
  Speaker 1: So right now we're at the same kind of levels.
• 12:33
  Speaker 1: So you would think that you would think what it's bad news?
• 12:38
  Speaker 1: Yeah, it's bad news for, like retailers and stuff, most of us don't care that much about retailers.
• 12:44
  Speaker 1: Well, what does it mean?
• 12:44
  Speaker 1: It means one thing and one thing only Rate cuts, rate cuts, they're coming.
• 12:50
  Speaker 1: That looks a bit rude, doesn't it?
• 12:52
  Speaker 1: I must put an N in that word.
• 12:54
  Speaker 1: The rate cuts are coming.
• 12:56
  Speaker 1: That was not intentional and that should be a good thing.
• 13:00
  Speaker 1: That should be a good thing for big tech Not for everybody, but for big tech.
• 13:05
  Speaker 1: Crafty, you want a UK-friendly time for webinar instead of 1am.
• 13:08
  Speaker 1: You don't think 1am is friendly for learning?
• 13:10
  Speaker 1: No, I appreciate that, crafty.
• 13:12
  Speaker 1: We'll see if we can squeeze in another session in a little bit.
• 13:16
  Speaker 1: We did a UK session probably a week or two ago, but if there's plenty of demand for it.
• 13:24
  Speaker 1: I'm always glad to run one.
• 13:26
  Speaker 1: Mark has just figured out that on his keyboard he can write the word test, which is always fun.
• 13:33
  Speaker 1: So let me tell you what I am buying today, today.
• 13:37
  Speaker 1: Well, the first thing I'm buying today is this it's a little car startup.
• 13:48
  Speaker 1: It's called Tesla.
• 13:51
  Speaker 1: Why am I looking at Tesla?
• 13:53
  Speaker 1: Because I believe and I will put out a video on that later today as well If you care to watch it, make sure you are subscribed.
• 14:03
  Speaker 1: And this again, this platform here is Trade Vision, right.
• 14:07
  Speaker 1: So green and red in the background is our indicator that tells you whether things are going up or down.
• 14:12
  Speaker 1: We had.
• 14:14
  Speaker 1: Well, how do stocks move?
• 14:15
  Speaker 1: Anybody know what are the four phases?
• 14:18
  Speaker 1: Stocks move in, have a stage one, a stage two, a stage three and a stage four, and then they go back to stage one.
• 14:33
  Speaker 1: So one, two, three, four, one, I think we're in one, which is basically flat.
• 14:45
  Speaker 1: One tends to lead into two, which is yay, rally, rally, rally, right.
• 14:47
  Speaker 1: So sort of sideways action here.
• 14:49
  Speaker 1: And then you go.