Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - Wall Street Warns of Massive Rally + Stock Market News 08 July 2024

Transcript

Felix Prehn - Wall Street Warns of Massive Rally + Stock Market News 08 July 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Felix here and welcome to this slightly echoey.
• 0:03
  Speaker 1: Let's do something about that morning live stream.
• 0:05
  Speaker 1: I want to explain to you the massive shift we're seeing on Wall Street, on how they're looking at the market, where they think it's going to go for the year and what are some smart things to do right now, what are some dumb things to do right now.
• 0:18
  Speaker 1: So you come away from this as the smartest, best informed investor out there.
• 0:25
  Speaker 1: So good morning to everybody, welcome back and what Danny means there in Houston.
• 0:31
  Speaker 1: I hope you're not going to get blown away of a life and, seriously, I hope you're all right down there and Felix is hoping for boring week.
• 0:40
  Speaker 1: Well, I think it just got a little bit more exciting.
• 0:42
  Speaker 1: I think it just got a little bit more exciting, but let me share my screen with you and move myself around a little bit.
• 0:48
  Speaker 1: Okay, so I've got a couple of things prepared here for you that I think are very, very, very important points of information and data for you.
• 0:56
  Speaker 1: Before I tell you that, you might also know that we're up like 50% so far on our trading teaching portfolio this year.
• 1:03
  Speaker 1: You're going to learn how we do that Tomorrow, tuesday, 10am Eastern Time, 3pm London Time, we're running a live trading training.
• 1:13
  Speaker 1: I'll teach you what trades to open and when and how to automate profit taking and risk management so you can do it in two or three hours a week, like we do as well.
• 1:22
  Speaker 1: Not promising returns, but I promise to show you what I do and how I do it.
• 1:26
  Speaker 1: And there's an interesting quote from a highly respected analyst out there on Wall Street.
• 1:30
  Speaker 1: If that's such a thing, it's almost funny, isn't it?
• 1:32
  Speaker 1: Highly respected analyst?
• 1:33
  Speaker 1: Anyway, he's saying look, our S&P target for the end of the year is outpacing bullish projections.
• 1:41
  Speaker 1: So they're saying we're rethinking whether our current projection of 6,000 by the end of the year, 6,500 by 2026 and 8,000 by the end of the decade might be too conservative.
• 1:55
  Speaker 1: It might have been discounting our roaring 2020 scenario faster.
• 2:00
  Speaker 1: So they're basically just turning more bullish.
• 2:03
  Speaker 1: And let me show you why.
• 2:05
  Speaker 1: So everyone's complaining oh, it's only the top couple of stocks that are going up.
• 2:11
  Speaker 1: That's why you know my portfolio isn't doing so well.
• 2:14
  Speaker 1: But it's not true really, is it?
• 2:16
  Speaker 1: There is some truth in it that the may I have a pen that's a little bit thinner, please slightly thinner pen, perhaps in green.
• 2:26
  Speaker 1: Thank you very much.
• 2:26
  Speaker 1: That green line up here is the mag 7, the magnificent 7, and, yes, they have outperformed everything else.
• 2:34
  Speaker 1: But everything is up.
• 2:36
  Speaker 1: Everything is up.
• 2:37
  Speaker 1: The S&P is up something like 39% or something like that, from October 2022, which which is the sort of cycle period.
• 2:46
  Speaker 1: And what does that mean?
• 2:47
  Speaker 1: It means we are officially in a bull market.
• 2:51
  Speaker 1: The whole market, not just the top guys.
• 2:54
  Speaker 1: The whole market is in a bull market and that means, well, I kind of should be bullish, right, and there is a good reason for it.
• 3:02
  Speaker 1: If you look at this quarterly versus weekly forward operating earnings, it couldn't have made the chart any less clear, right, if you tried.
• 3:12
  Speaker 1: Don't know who the sad analyst is.
• 3:14
  Speaker 1: He made this better lives, a sad life in a cubicle somewhere.
• 3:18
  Speaker 1: But what's the point here?
• 3:19
  Speaker 1: That the in red in red, that is forward earnings per share, eps.
• 3:29
  Speaker 1: So how much profit I make per share, week by week, and you can see it's going up a lot.
• 3:36
  Speaker 1: And that's what the market's all about.
• 3:39
  Speaker 1: The market ultimately cares about profit growth in the future, not yesterday, not last week, not last month, not today, but in the future.
• 3:48
  Speaker 1: That's ultimately what it's all about right Now.
• 3:56
  Speaker 1: There is another good reason why the stock market's going up.
• 3:59
  Speaker 1: I know I said it was one, it's actually two, and this is the expected next 12-month earnings per share.
• 4:08
  Speaker 1: And look at that line, look at that's going up.
• 4:11
  Speaker 1: Isn't she a beauty, isn't she a beauty?
• 4:13
  Speaker 1: Since February 23, earnings per shares have been exploding and we expect it to get better and better and better.
• 4:22
  Speaker 1: So why would stocks fall?
• 4:25
  Speaker 1: Stocks will fall if this beautiful blue line up there starts doing that.
• 4:31
  Speaker 1: Right, that's the moment where you go ah, I need to switch strategy and direction.
• 4:36
  Speaker 1: And well, there may be two and a half good reasons, even, and that's this the price ratio of stocks how expensive are they?
• 4:46
  Speaker 1: And the earnings ratio.
• 4:48
  Speaker 1: So how expensive are they compared to earnings?
• 4:52
  Speaker 1: But again, they're moving together in harmony, holding hands, singing, dancing down the you know fields or something.
• 4:59
  Speaker 1: So, again, good reason why the market's going up.
• 5:02
  Speaker 1: It's not some weird disparity where you know, like in 2000, this was 2000, stocks got crazily expensive.
• 5:10
  Speaker 1: I started investing in 1999, which is pretty much that spike up there.
• 5:15
  Speaker 1: That was Felix's first invest, which was a lesson and a half, but we haven't got that.
• 5:27
  Speaker 1: There isn't a great big, monstrous gap between earnings and valuations.
• 5:32
  Speaker 1: That's good, good news.
• 5:34
  Speaker 1: Okay, there are three good reasons.
• 5:36
  Speaker 1: And that is how many?
• 5:39
  Speaker 1: Because everyone's saying, oh, it's only the top seven stocks that are going up.
• 5:42
  Speaker 1: Everything else is in the dustbin At the moment.
• 5:48
  Speaker 1: Sorry for all the data today.
• 5:49
  Speaker 1: Today is a bit of a data day.
• 5:50
  Speaker 1: It's important.
• 5:51
  Speaker 1: 85% of stocks have you see that have growing profits.
• 6:05
  Speaker 1: 85%, that's quite a lot.
• 6:09
  Speaker 1: That's quite a lot, right, we have 2,000 here.
• 6:12
  Speaker 1: We have the peak of 2,000, yeah, and then it was all downhill from here.
• 6:19
  Speaker 1: So the majority of companies are improving.
• 6:23
  Speaker 1: And okay, there was a fourth good reason.
• 6:27
  Speaker 1: Right, there's a lot of good reasons today, a lot of good reasons for why things are going up.
• 6:30
  Speaker 1: The forward PE, which is just how expensive are stocks?
• 6:32
  Speaker 1: Right, there's a lot of good reasons today, a lot of good reasons for why things are going up.
• 6:34
  Speaker 1: The forward PE, which is just how expensive are stocks?
• 6:35
  Speaker 1: Right, price divided by profits, they're not crazy.
• 6:39
  Speaker 1: I mean, this is the PE.
• 6:45
  Speaker 1: Okay, so you're thinking, all right, we're on like 2,000 territory.
• 6:48
  Speaker 1: But if you look at the median, so if you just don't look at only the top companies, which is what the blue line is, but if you look at the average, we're kind of pretty average.
• 6:59
  Speaker 1: We're not that high above the average, which is kind of what I'm looking at.
• 7:03
  Speaker 1: So, yes, the top stocks like Nvidia and so on.
• 7:06
  Speaker 1: You know PE ratios and Microsoft and so on.
• 7:08
  Speaker 1: You know PE ratios are relatively stretched, but got.
• 7:10
  Speaker 1: You know PE ratios and Microsoft and so on.
• 7:11
  Speaker 1: You know PE ratios are relatively stretched, but a lot of the rest of the stuff definitely isn't.
• 7:13
  Speaker 1: If the rest of the stuff catches up, there'll be a lot of money to be made with the rest of the stuff.
• 7:18
  Speaker 1: So for the shorts, if you're shorter the market out there, well, I'm afraid I've got some bad news for you.
• 7:26
  Speaker 1: We are there.
• 7:34
  Speaker 1: What is this?
• 7:35
  Speaker 1: This is the year.
• 7:35
  Speaker 1: This is January.
• 7:35
  Speaker 1: This is December.
• 7:36
  Speaker 1: This is the seasonality.
• 7:36
  Speaker 1: Now, of course, no year is the same as all the other years before, but typically after the summer we have a nice year-end rally.
• 7:43
  Speaker 1: That's typically the way it works, right.
• 7:44
  Speaker 1: So that's what we had.
• 7:50
  Speaker 1: So I wouldn't be shorting.
• 7:52
  Speaker 1: But guess what?
• 7:53
  Speaker 1: Hedge funds shorted Tesla majorly before the massive rally last week.
• 8:00
  Speaker 1: It's quite fun, isn't it?
• 8:01
  Speaker 1: Really, growing number of hedge funds is from Bloomberg Shorted Tesla throughout June because they were cautious around the EV market, not realizing that there was another business inside Tesla that was maybe not so related around the EV market.
• 8:11
  Speaker 1: Not realizing that there was another business inside Tesla that was maybe not so related to the EV market, and yeah, here it is.
• 8:17
  Speaker 1: I took a screenshot of it.
• 8:18
  Speaker 1: So the short volume on Tesla right now is 40%.
• 8:23
  Speaker 1: It's pretty staggeringly high, and it was 36% here.
• 8:26
  Speaker 1: So this is a squeeze.
• 8:28
  Speaker 1: This is a short squeeze.
• 8:30
  Speaker 1: So I know everybody loves Tesla, but they don't love it as much as the stocks down here.
• 8:31
  Speaker 1: So this is a squeeze.
• 8:31
  Speaker 1: This is a short squeeze.
• 8:31
  Speaker 1: So I know everybody loves Tesla, but they don't love it as much as the stocks down here.
• 8:34
  Speaker 1: This is a squeeze.
• 8:35
  Speaker 1: So, as we go higher and you get these beautiful gaps up here every day, traders wake up in cold sweat and they go.
• 8:42
  Speaker 1: We got to take this loss, don't we?
• 8:45
  Speaker 1: Yeah, what do you have to do?
• 8:46
  Speaker 1: We have to buy Tesla, the thing we thought was going to go down.
• 8:49
  Speaker 1: So that's what's actually driving the Tesla rally.
• 8:54
  Speaker 1: So, yeah, a little bit of momentum and robots and FSD and all that, but it's actually a lot about the short squeeze, short squeeze, which is good for us.
• 9:05
  Speaker 1: We made some nice money out of that last month.
• 9:07
  Speaker 1: Okay, let me go a little bit broader.
• 9:09
  Speaker 1: I'll also show you a stock pick and, of course, I'll take all of your questions, which is why we do this live.
• 9:16
  Speaker 1: So keep putting them in the chat, folks, and make sure you join us live tomorrow for a live trading session felixfenceorg slash webinar where I'll teach you all sorts of things that you must know.
• 9:30
  Speaker 1: So, bitcoin right now, as I took a screenshot, trading at 57,000.
• 9:33
  Speaker 1: So the big support for Bitcoin is 55455, which sounds a bit conspiratorial, doesn't it?
• 9:42
  Speaker 1: You're going to want to hold that, and where does that come from?
• 9:44
  Speaker 1: That comes from our Italian friend, fibo Fibonacci.
• 9:49
  Speaker 1: That's where the main Fibonacci line sits, sits the 0.618, and if you don't believe in fibonacci, if you ever seen anything beautiful in the world, it'll correspond to fibonacci formula everything beautiful in art, architecture, everything faces, seriously everything.
• 10:04
  Speaker 1: So it does.
• 10:08
  Speaker 1: However, this little Bitcoin and crypto catastrophe gives us a nice opportunity.
• 10:15
  Speaker 1: You know, ethereum ETFs are coming right.
• 10:18
  Speaker 1: Well, this is when people thought ETFs are definitely coming, etf, and then we rallied all the way up here.
• 10:27
  Speaker 1: Now we're going back down and we're sort of back down here now.
• 10:30
  Speaker 1: So we're halfway through the rally, maybe even a little bit lower.
• 10:35
  Speaker 1: So I think it could be a nice opportunity.
• 10:38
  Speaker 1: If you are late to the Ethereum party, I think it's quite a good one, of course not financial advice.
• 10:42
  Speaker 1: You know nothing to do with this chap here, but this chap is going to be tortured, tomorrow, I think, by Congress and the day after by Senate, and they get to insert things into.
• 10:56
  Speaker 1: No, they don't.
• 10:56
  Speaker 1: They get to string him up and they also get to do that Spank him a little.
• 11:00
  Speaker 1: And they don't even get to do that.
• 11:01
  Speaker 1: They just get to ask him really irritating questions that he has to answer because they're kind of his boss, and I expect language from the Fed to tomorrow not to be particularly different.
• 11:18
  Speaker 1: Those will be data dependent and make a vote decision and so on.
• 11:21
  Speaker 1: But at the July Fed meeting which is coming up, I'd expect him to sort of a little bit lay the groundwork for rate cuts coming, which he has already done.
• 11:30
  Speaker 1: If you listen to him in, where was he?
• 11:32
  Speaker 1: In Europe?
• 11:32
  Speaker 1: He was somewhere in Europe vagabonding around on a taxpayer's expense, flirting with Lagarde lucky man and I would expect, at the current data, the September cut, and I'll tell you why.
• 11:47
  Speaker 1: Look at this.
• 11:47
  Speaker 1: This is from the US Federal Reserve Governor, lisa D Cook, and she says recent data household spending and retail sales for April suggest that growth is slowing.
• 12:01
  Speaker 1: Total amount of credit card balances declined for the first time since 2021.
• 12:05
  Speaker 1: That's not a good thing.
• 12:07
  Speaker 1: By the way, consumer debt declines when the consumer is worried.
• 12:10
  Speaker 1: I know it's a bit counterintuitive, but if you're worried, you start paying off your debt right and liquidity and savings access to credit have become exhausted.
• 12:19
  Speaker 1: Delinquency is an upward trend and car loan delinquencies at a 13 year high, so they're basically saying whoops, I think we might be breaking things.
• 12:32
  Speaker 1: Maybe we should stop.
• 12:33
  Speaker 1: And then we have also somebody from the real world, tim Tim Wentworth from Walgreens, saying we assumed in the second half the consumer would get somewhat stronger.
• 12:43
  Speaker 1: That is not the case.
• 12:46
  Speaker 1: Not the case.
• 12:47
  Speaker 1: The consumer is absolutely stunned by the absolute pricing of things.
• 12:52
  Speaker 1: So we've had to get really keen, particularly in discretionary things.
• 12:57
  Speaker 1: So the consumer is feeling not particularly happy right now, and that is, in a weird sense, a good thing for us, because it means we get our rate cuts sooner.
• 13:08
  Speaker 1: It means our stocks keep going up and the Wall Street party continues.
• 13:13
  Speaker 1: Wasn't Fibonacci a maths guy?
• 13:14
  Speaker 1: Yes, yes, yes he was.
• 13:16
  Speaker 1: He was a formula chap very, very, very, very long time ago.
• 13:20
  Speaker 1: So here's my stock pick of the day, and this is, of course, not financial advice.
• 13:24
  Speaker 1: Winston dug this up early on on the beach.
• 13:26
  Speaker 1: And who is this?
• 13:27
  Speaker 1: This is Amazon.
• 13:28
  Speaker 1: I thought this was a really nice way of illustrating the point.
• 13:31
  Speaker 1: So, amazon, you know a little book retailer out of somewhere that you've never heard of.
• 13:37
  Speaker 1: They're trading at the lowest PE ratio ever, ever, ever, ever, ever, ever, and I would actually expect that to continue to decline.
• 13:47
  Speaker 1: But I do think it makes for quite an interesting entry point.
• 13:51
  Speaker 1: I think they will have not just the cloud business, which has AI.
• 13:56
  Speaker 1: Have you tried, claude, their ChatGPT?
• 14:01
  Speaker 1: It's actually very good.
• 14:02
  Speaker 1: It does make stuff up, but it is pretty good.
• 14:04
  Speaker 1: It's certainly on the level of the ChatGPT.
• 14:06
  Speaker 1: And then we've got robotics, which I'm excited about.
• 14:10
  Speaker 1: Why?
• 14:10
  Speaker 1: Because Amazon has 750,000 robots working for it, and I mean robots it's a little sort of flat thingies with a conveyor belt on it.
• 14:20
  Speaker 1: It's not people walking around serving you coffee and giving you a wink and a smile, but these guys are going to use robots.
• 14:27
  Speaker 1: So for me, actually, amazon is one to watch on the robotic front, so I like it a lot.
• 14:32
  Speaker 1: And of course, there is the whole subscription business and everything else advertising and everything else.
• 14:37
  Speaker 1: So I'm a.