Latest / Felix Nikolas Prehn's Podcast / FED's Massive Trade... + Stock Market News 28 May 2024

Transcript

FED's Massive Trade... + Stock Market News 28 May 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: is expecting some data on this Friday.
• 0:03
  Speaker 1: That's having the market feeling rather well, rather chirpy, and out of that come two, if not three, trades that give us an opportunity to actually make money out of this.
• 0:14
  Speaker 1: As I'm pouring myself a little bit of electrolyte juice after a 12-hour flight, I must say I feel actually very buoyed and energized and for that reason I am doing two things After this.
• 0:27
  Speaker 1: For you guys inside the community, I'm doing a live trade.
• 0:30
  Speaker 1: You will have live trading We've probably already seen that pop up and for anybody who isn't part of the gang yet, learning to make your money work harder, come and join me in about 12 hours and I'll show you how we do what we do.
• 0:46
  Speaker 1: So in April I made these trades here, Not very many.
• 0:51
  Speaker 1: I was on holiday for quite a little over a month and we made $6,000.
• 0:56
  Speaker 1: You might think $6,000 is not a lot.
• 0:58
  Speaker 1: Maybe you think it's a lot, but anyway we're trading with about $30,000 here, so it's a fairly decent April.
• 1:04
  Speaker 1: I would say.
• 1:06
  Speaker 1: Could you do it with a larger amount of money?
• 1:07
  Speaker 1: Yes.
• 1:07
  Speaker 1: Could you do it less?
• 1:08
  Speaker 1: Yes.
• 1:08
  Speaker 1: If you want to see how we do that, the three rules that I apply that allow me to automate these trades once I set them up.
• 1:16
  Speaker 1: Come and join me.
• 1:18
  Speaker 1: Felixwensterlogscom Links down below.
• 1:19
  Speaker 1: It's completely free of charge.
• 1:22
  Speaker 1: Link is down below in the description as well.
• 1:24
  Speaker 1: Jonathan says this guy's all clickbait and that's why I clicked on it.
• 1:34
  Speaker 1: Love you, jonathan.
• 1:42
  Speaker 1: Thanks for tuning in.
• 1:43
  Speaker 1: So this is Friday's data about to come out and it's called PCE, which is the Fed's favorite inflation metric, and they're basically saying or the expectation is saying, we might come in a little bit lower than last month, or flat at worst, and we might start to see signs of inflation abating.
• 2:00
  Speaker 1: That's a big word, isn't it?
• 2:01
  Speaker 1: And that's, of course, what we want to see.
• 2:03
  Speaker 1: Now.
• 2:03
  Speaker 1: We'll look at the US consumer in a second as well, because that's important, so you can understand where this is coming from.
• 2:11
  Speaker 1: Where is the optimism coming from?
• 2:13
  Speaker 1: Okay, listen to what Target's got to say, and Target has got a pretty large number of just you know normal consumers and they're saying the elevated prices had a meaningful impact on budgeting and savings for many families.
• 2:29
  Speaker 1: One in three Americans has maxed out or is nearing the limit on at least one of their credit cards.
• 2:36
  Speaker 1: For these reasons, we remain cautious.
• 2:39
  Speaker 1: We expect discretionary spending.
• 2:42
  Speaker 1: That's the stuff you don't need, like a television or something like that, to remain pressured in the short term, but normalize.
• 2:49
  Speaker 1: That's the chief growth officer at Target.
• 2:53
  Speaker 1: Now, how about Etsy?
• 2:54
  Speaker 1: Online stuff?
• 2:55
  Speaker 1: Right?
• 2:56
  Speaker 1: Ceo says consumers are feeling a tremendous amount of pain right now.
• 3:02
  Speaker 1: They're spending more of their wallet on groceries than they have at any time since the mid 1970s.
• 3:08
  Speaker 1: Now you can't really cut down on groceries very much, otherwise you shrink literally.
• 3:12
  Speaker 1: And again, consumers are feeling a tremendous amount of pain.
• 3:17
  Speaker 1: They're spending.
• 3:18
  Speaker 1: Let's repeat it twice Okay, rent and mortgages are significantly higher.
• 3:22
  Speaker 1: Gas prices are higher.
• 3:24
  Speaker 1: There's little left over for discretionary goods, so they are very value, value focused.
• 3:30
  Speaker 1: They're one things 50, 60 percent off, says the ceo of etsy.
• 3:40
  Speaker 1: How about the, the posh lot?
• 3:43
  Speaker 1: How about the high end of income?
• 3:45
  Speaker 1: Says the Macy's CEO, the high end, the Bloomingdale consumer is interested in purchasing, but she, of course, she's a she, she's being very thoughtful in the category she's purchasing in.
• 4:01
  Speaker 1: So I think we said that luxury handbags in shoe business is much softer than it was still up strong to 2020 in Thailand.
• 4:07
  Speaker 1: But she's investing now in more advanced, contemporary Investing.
• 4:11
  Speaker 1: Investing, she's investing in advanced, contemporary handbags.
• 4:16
  Speaker 1: That's a phrase I'd never seen before.
• 4:17
  Speaker 1: So even at the higher level, people are feeling a little bit the pinch, not quite as much.
• 4:22
  Speaker 1: They're just thinking one MS bag, two MS backs maybe I'll just have the one that kind of level.
• 4:27
  Speaker 1: But what that means is well, if you understand what the Fed has actually done here the last few years, what's the Fed really done?
• 4:42
  Speaker 1: So this is the Fed.
• 4:42
  Speaker 1: They have increased the amount of money out there massively 40% or something like that.
• 4:52
  Speaker 1: What does that do?
• 4:54
  Speaker 1: Well, that money then goes into what?
• 4:58
  Speaker 1: It goes into assets, it seeks returns, it goes into real estate, it goes into stocks.
• 5:10
  Speaker 1: Now, after they've done that, they realized that all that money printing actually caused inflation, which is basically textbook 101 if you've ever been near an economics book.
• 5:23
  Speaker 1: So what did they then do?
• 5:25
  Speaker 1: The Fed?
• 5:26
  Speaker 1: Well, the Fed in stage two of their madness.
• 5:29
  Speaker 1: They then thought okay, because of the inflation, we now have to increase interest rates.
• 5:35
  Speaker 1: Okay, with me so far.
• 5:37
  Speaker 1: Now, what do interest rates do?
• 5:39
  Speaker 1: Interest rates make money expensive to borrow, which is kind of weird, given that they've just printed all that money.
• 5:55
  Speaker 1: And now they're saying, no, no, we're going to slow it down, we're going to take it back.
• 5:58
  Speaker 1: We didn't mean it.
• 5:58
  Speaker 1: So what was the impact of that?
• 6:01
  Speaker 1: Well, you've got two types of companies out there.
• 6:06
  Speaker 1: I mean looking here at the investment level, but at a company level.
• 6:08
  Speaker 1: So you've got the big co up here, you're Microsoft, you're Nvidia, you're Intel, you're a here your Microsoft, your Nvidia, your Intel, your large corporation.
• 6:24
  Speaker 1: They got the cheap money.
• 6:25
  Speaker 1: So they got lots of this stuff because consumers and investors were like, well, these are great companies, these are safe to invest in.
• 6:30
  Speaker 1: So these guys are sitting on lots and lots and lots and lots of cash.
• 6:35
  Speaker 1: So what do the higher rates do for them?
• 6:37
  Speaker 1: Well, they make more money for the big companies.
• 6:48
  Speaker 1: Big Co made more money when interest rates went up.
• 6:51
  Speaker 1: Apple made more money when interest rates went up.
• 6:53
  Speaker 1: Because they're sitting on all that cash.
• 6:55
  Speaker 1: It's good for them, so good so far as an investor, it's brilliant, isn't it?
• 7:00
  Speaker 1: Isn't it absolutely delightful?
• 7:02
  Speaker 1: Well, what about small companies?
• 7:05
  Speaker 1: Small co, your little Russell 2000 company?
• 7:11
  Speaker 1: What happened when the rates went up for them?
• 7:13
  Speaker 1: Well, they don't have much money because they're a little company.
• 7:19
  Speaker 1: They're not really benefiting from the higher interest rates, but they have to borrow money and therefore it got a lot more expensive for them.
• 7:27
  Speaker 1: So these guys down here got punched pretty hard.
• 7:31
  Speaker 1: And these guys up here, they are very happy and these guys are freaking, struggling, right, that's what's happened.
• 7:39
  Speaker 1: So it's just inequality within companies.
• 7:44
  Speaker 1: So what happened with all the money in the big companies?
• 7:47
  Speaker 1: Well, they invested it.
• 7:49
  Speaker 1: They bought a bunch of other businesses, they bought smaller companies, but essentially they invested a huge amount of money into, well, things like AI, data centers, big data, and that's given us this economic boom in the whole AI land, whereas the small companies, well, they were just sad.
• 8:12
  Speaker 1: Basically, they're just really miserable.
• 8:15
  Speaker 1: So this whole boom that we're seeing in AI is actually caused by the Fed printing all that money.
• 8:23
  Speaker 1: Now, is that an accident?
• 8:25
  Speaker 1: We can speculate?
• 8:27
  Speaker 1: Keep a watch out for where Fed presidents end up in the next 10 years in advisory boards that's what I would say to that but it gives us an opportunity to make some real money, in my opinion.
• 8:39
  Speaker 1: Just an old banker here sharing his thoughts this is not financial advice, of course and so on.
• 8:45
  Speaker 1: So Elliot takes $2.5 billion stake in Texas Instruments we were just talking about that, weren't we?
• 8:52
  Speaker 1: Over the weekend, nice, to see what's the first trade.
• 8:58
  Speaker 1: So the original AI trade.
• 9:02
  Speaker 1: So the original AI trade is very, very simple.
• 9:09
  Speaker 1: It was called NVIDIA.
• 9:11
  Speaker 1: Still there, still alive.
• 9:13
  Speaker 1: Can I spell NVIDIA?
• 9:14
  Speaker 1: Apparently not.
• 9:15
  Speaker 1: I put one I in too many, but you get the idea.
• 9:17
  Speaker 1: It's got a lot of I's in it.
• 9:18
  Speaker 1: It's got a lot of AIs in it.
• 9:19
  Speaker 1: That was the original one.
• 9:21
  Speaker 1: It's still there.
• 9:23
  Speaker 1: I do think it's still going to do well.
• 9:25
  Speaker 1: But the question then is always what's next?
• 9:28
  Speaker 1: What's next here?
• 9:30
  Speaker 1: Trade one or trade two, if you want to call it that, two, if you want to call it that.
• 9:38
  Speaker 1: There are two things that we expect to increase here with the whole shift in AI.
• 9:45
  Speaker 1: One is the actual AI companies so your NVIDIA, your Microsoft, your Meta, your Google and so on, who are closely related to AI software.
• 9:55
  Speaker 1: Largely, I'm expecting them to do very, very well Now.
• 9:59
  Speaker 1: The second part and it's not quite as obvious is the kind of software offering and what's related to hardware.
• 10:09
  Speaker 1: So what has everybody just done?
• 10:13
  Speaker 1: Everybody's pretty much gone out and bought themselves a new laptop, a new computer or whatever three years ago and they needed a GPU.
• 10:22
  Speaker 1: Right, they needed an NVIDIA chip in it so they can do something.
• 10:25
  Speaker 1: For me to be able to stream.
• 10:27
  Speaker 1: Here, I'm using an NVIDIA GPU.
• 10:29
  Speaker 1: It makes it a lot more smooth.
• 10:32
  Speaker 1: Now, what happens to say phones when?
• 10:38
  Speaker 1: And the reason I have to use an NVIDIA GPU is because I use a software called NVIDIA Broadcast, which puts together the sound and the audio and makes my life a heck of a lot easier.
• 10:47
  Speaker 1: I don't need to edit Now when phones start to deploy these new apps.
• 10:52
  Speaker 1: So phones are going to get new AI apps that'll do cool stuff like what NVIDIA Broadcast is doing, and for that you're going to basically need some sort of GPU in your phone.
• 11:07
  Speaker 1: So what do you have to do?
• 11:09
  Speaker 1: You have to buy a phone, because your old phone will suck compared to your friend's phone.
• 11:15
  Speaker 1: You can do cool stuff that your phone can't do, and therefore you're going to buy a phone.
• 11:18
  Speaker 1: Now, the same also applies if you have a laptop that's more than a year or two old or pretty much everything else, and therefore we're expecting there to be a massive upgrade cycle in mobiles as well as in hardware and software.
• 11:37
  Speaker 1: But it's the software that's driving the hardware.
• 11:39
  Speaker 1: So there are definitely some ideas here, and if you look at the speed at which AI generative AI is being deployed, compare that to.
• 11:50
  Speaker 1: This was deployment of electricity Electricity, lots of people sitting in their homes going I'm not getting rid of those candles, are you mad?
• 12:01
  Speaker 1: And then eventually, 28 years later, they had electricity.
• 12:05
  Speaker 1: Well, actually, about 20% of people 20 years later had electricity.
• 12:09
  Speaker 1: So it took them 28 years to get to 20%.
• 12:11
  Speaker 1: With the internet, to get to sort of 25% took about 15 years and with AI we're already at 10% in two years.
• 12:26
  Speaker 1: And the thought is that the speed of that is going to continue and that we will be next year basically at the level that took us 28 years for electricity.
• 12:36
  Speaker 1: So the adoption is much, much faster because it's not just cool but it's actually useful.
• 12:41
  Speaker 1: It actually saves you money, especially for businesses.
• 12:45
  Speaker 1: And then look at I was talking about that last week Apple.
• 12:48
  Speaker 1: I'm saying Apple is back from the dead.
• 12:50
  Speaker 1: And one of the reasons we hate Apple or have been hating Apple is that China sales for the iPhone were declining Big decline in January, february, march was sort of flattish, and then now April data just out looking very, very nice.
• 13:10
  Speaker 1: And have a look at how Apple is doing pre market.
• 13:12
  Speaker 1: There she is 1.5% up pre market.
• 13:16
  Speaker 1: So that's a potential trade in itself because Apple is an ecosystem.
• 13:21
  Speaker 1: It's software, it's hardware, it's everything.
• 13:29
  Speaker 1: I see your questions, I will answer them, provided you smash that like button.
• 13:33
  Speaker 1: We've got 570 people watching, 83 likes.
• 13:36
  Speaker 1: It must be pretty horrible what we're talking about here.
• 13:38
  Speaker 1: This is Goldman Sachs' AI basket and someone said to me yesterday, or put it in the comments oh, don't listen to Goldman Sachs, they're the worst people.
• 13:48
  Speaker 1: They're not doing this.
• 13:48
  Speaker 1: They don't care about the consumer.
• 13:50
  Speaker 1: Of course they don't care about you, but they don't put this basket together for you.
• 13:54
  Speaker 1: They put this together for their clients.
• 13:55
  Speaker 1: That's why I'm sharing it with you.
• 13:57
  Speaker 1: If this was a consumer product, goldman Sachs, I wouldn't share it with you.
• 14:01
  Speaker 1: But they don't do that.
• 14:02
  Speaker 1: They don't care about you at all and they're saying the PC upgrade basket is basically for them.
• 14:10
  Speaker 1: Dell, apple, hp, hpe there are two Apples, two HPs.
• 14:14
  Speaker 1: There is the consumer and there's the corporate HP, western Digital, qualcomm, tsmc, intel, micron, broadcom, amd, skyworks and they're all about 5% of their basket.
• 14:27
  Speaker 1: So they're just buying the lot, they're just going.
• 14:30
  Speaker 1: Overall, we think the general kind of chip hardware sector will sell more.
• 14:35
  Speaker 1: Note NVIDIA isn't in the list because they feel like the party there is maybe riskier, because we've had a lot of party.
• 14:44
  Speaker 1: And then for the AI software and hardware there we have NVIDIA.
• 14:49
  Speaker 1: Maybe this makes sense.
• 14:52
  Speaker 1: That might make sense.
• 14:53
  Speaker 1: So you've got Microsoft.
• 14:54
  Speaker 1: Microsoft builds laptops and stuff like that.
• 14:58
  Speaker 1: Obviously it makes software.
• 14:59
  Speaker 1: And then you have a bunch of other ones components companies, supermicrocomputer, google, micron, dell.
• 15:06
  Speaker 1: There's a bit of an overlap here.
• 15:07
  Speaker 1: There's Apple down there, oracle down there, but their two big plays are very much Microsoft and NVIDIA, because Microsoft owns ChatGPT effectively and NVIDIA powers the whole thing.
• 15:20
  Speaker 1: So maybe take a screenshot if you want to save that.
• 15:35
  Speaker 1: Alberto CCS covered calls.
• 15:37
  Speaker 1: You need too much capital to do covered calls.
• 15:41
  Speaker 1: It's not really a very effective strategy.
• 15:44
  Speaker 1: I think it's decent, but it takes up a heck of a lot of capital.
• 15:49
  Speaker 1: So if you want to learn, by the way, come and learn my strategy.
• 15:51
  Speaker 1: Links down below felixfriendsorg slash webinar in literally like 11 hours or something like that, and we're going to have a blast and we'll do some live trading together.
• 16:00
  Speaker 1: I'll give you my whole system, the whole structure of how we trade.
• 16:03
  Speaker 1: We're going to have a blast and we'll do some live trading together.
• 16:04
  Speaker 1: I'll give you my whole system, the whole structure of how we trade.
• 16:06
  Speaker 1: We have three rules.
• 16:06
  Speaker 1: We automate them, so we don't have to stare at charts.
• 16:08
  Speaker 1: We can actually enjoy our life and travel around the world.
• 16:11
  Speaker 1: This is trade number two.
• 16:13
  Speaker 1: And again, I've been talking about this for a couple of weeks now but I know not everybody necessarily pays attention and this is essentially energy.
• 16:20
  Speaker 1: Now, the energy ETF is XLE, that's the ETF for energy, and if you look at the ratio of XLE over the QQQ so how is energy performed compared to tech?
• 16:34
  Speaker 1: Well, it's pretty horrible, isn't it?
• 16:35
  Speaker 1: It's like, oh my God, freaking disaster.
• 16:38
  Speaker 1: Nobody ever touched this, so it seems it looks pretty cheap on the face of it, given that a okay if a Google search.
• 16:49
  Speaker 1: So if you're searching for, you know whatever you're searching for today, a Google search if it uses one unit of power, then a chat GPT search chat GPT search uses 10 units of power.
• 17:10
  Speaker 1: So what do you need?
• 17:11
  Speaker 1: You need more power, you need more electricity, you need more the whole grid, you need more of it.
• 17:18
  Speaker 1: You need more power.
• 17:19
  Speaker 1: You need a lot more power.
• 17:20
  Speaker 1: So, therefore, power, I think, is a pretty good place to be.
• 17:23
  Speaker 1: And energy.
• 17:24
  Speaker 1: And also, I'm looking here at OptionsWatch and I look at on the left side.
• 17:28
  Speaker 1: Here I've got the RSI.
• 17:30
  Speaker 1: That's like a is it oversold?
• 17:32
  Speaker 1: Is it overboard?
• 17:33
  Speaker 1: Generally, this is where we are right now.
• 17:37
  Speaker 1: It's the whitish line there in the background.
• 17:39
  Speaker 1: You can see we're at a pretty low level here, right, and typically when you are at those levels, you get a little bit of a bounce up in the stock chart, which I've put there in colors in the background.
• 17:49
  Speaker 1: Maybe that's a little confusing for some people.
• 17:52
  Speaker 1: But yeah, again, xle, I think, is something that's worth looking at.
• 17:55
  Speaker 1: Again, not financial advice, obviously, do your own DD and so on.
• 17:58
  Speaker 1: But energy is also lagging commodities.
• 18:07
  Speaker 1: So if you look at BCOM, which is the commodities ETF, then you've got a monster gap here between, again, xle, energy and commodities.
• 18:18
  Speaker 1: So again, I think that typically they move quite closely together.
• 18:22
  Speaker 1: So I think energy, even though the trade's been around for a little while, is still a decent opportunity.
• 18:27
  Speaker 1: So something might be worth looking at.
• 18:32
  Speaker 1: How about the ones appreciated?
• 18:33
  Speaker 1: Why is the sound so low?
• 18:37
  Speaker 1: It looks pretty good on my end.
• 18:39
  Speaker 1: I can move the mic a little closer, but we're at the top end of the green segment, which is where my sound chap tells me we should be, and not too far up.
• 18:47
  Speaker 1: So crank up the audio, honeybadger.
• 18:58
  Speaker 1: Is there an ETF?
• 18:59
  Speaker 1: I haven't researched, honestly, whether that basket has a.
• 19:02
  Speaker 1: There might be some sort of AI ETF by now, if possible, so you could find that.
• 19:08
  Speaker 1: Otherwise, you know, see how you do it.
• 19:12
  Speaker 1: New batteries in the mic.
• 19:14
  Speaker 1: No, no, no, the batteries will not impact the volume level.
• 19:18
  Speaker 1: That would be really silly.
• 19:19
  Speaker 1: But yeah, let me know, guys, if it's too quiet for you, I will crank it up.
• 19:26
  Speaker 1: Turn your hearing aid up.
• 19:27
  Speaker 1: Swing trade tips also a little bit lower.
• 19:31
  Speaker 1: Okay, I'll move it a little closer, a little closer.
• 19:33
  Speaker 1: Don't want to blow your ears off either.