Latest / Felix Nikolas Prehn's Podcast / A Once in a Lifetime Financial Event Is Here + Stock Market News 02 January, 2024

Transcript

A Once in a Lifetime Financial Event Is Here + Stock Market News 02 January, 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: We're live, winston and I, and we've got good news for you.
• 0:05
  Speaker 1: We've got all the data.
• 0:07
  Speaker 1: We've gone through all the predictions and analysts and macro events and they tell a story that is largely pretty.
• 0:15
  Speaker 1: There are one or two hiccups in there and I think it's important you understand them so that your golden retriever can look as happy as this one.
• 0:22
  Speaker 1: And if you are thinking he's here just for the financial news, you might be mistaken.
• 0:26
  Speaker 1: I do have a piece of celery on the desk which I think he deserves.
• 0:31
  Speaker 1: You think he deserves it.
• 0:32
  Speaker 1: Go on, winston, here we go Go.
• 0:35
  Speaker 1: Very polite, eh, very polite.
• 0:40
  Speaker 1: Now he's dropped it.
• 0:42
  Speaker 1: You're not a fan, all right, we'll see if he stays with us for a little while.
• 0:46
  Speaker 1: And what is it that I really, really, really want you to understand so you become a brilliant investor in 2024?
• 0:52
  Speaker 1: Well, first of all, come and join me tomorrow, live Me and Winston, and we will teach you how we make our money work for us.
• 1:01
  Speaker 1: So you have to work a lot less for your money.
• 1:04
  Speaker 1: That's the deal.
• 1:05
  Speaker 1: Learn our three step trading system.
• 1:08
  Speaker 1: It's right here on the screen Felix Franzlerorg slash webinar and make 2024 your best year yet, which is what I want for you, which is what you deserve.
• 1:18
  Speaker 1: All right, we do have a few charts, we do a few bits of fact and not fiction, and it's important.
• 1:24
  Speaker 1: And I'm covering up Winston here, which I feel really bad about.
• 1:27
  Speaker 1: What do you think?
• 1:28
  Speaker 1: He's still there, alrighty.
• 1:30
  Speaker 1: So what does this say to you?
• 1:31
  Speaker 1: This is the US 10 year yield, and yields, as you can see, have come down a great deal.
• 1:39
  Speaker 1: And because they have come down a great deal just make sure I see your comments at the same time because they have come down a great deal, the market has gone up.
• 1:49
  Speaker 1: So the way this works is that yields go sideways.
• 1:54
  Speaker 1: That's not what we want to do.
• 1:55
  Speaker 1: Let's get this pen here.
• 1:57
  Speaker 1: Yields go down and the market goes up, but what can you see?
• 2:01
  Speaker 1: When you zoom in a lot, we're going to zoom in a great deal here.
• 2:05
  Speaker 1: You see this little break out here.
• 2:09
  Speaker 1: If that continues, if that continues, it will break the trend.
• 2:15
  Speaker 1: You break the trend, you break the party.
• 2:18
  Speaker 1: We don't want to break the party.
• 2:20
  Speaker 1: So watch the US 10 year yield today.
• 2:22
  Speaker 1: We'll go have a look at it in life in a second as well.
• 2:26
  Speaker 1: The second thing that I always look at, and I know it's not the sexiest thing in the world, but it's really, really important because it drives like half the market.
• 2:36
  Speaker 1: Winston's left the building although I have vegetables, you'd think that would keep him here but not say this chart here and I'll make this full screen-ish.
• 2:49
  Speaker 1: Let me move this over a bit and then we can make this a little bit bigger.
• 2:54
  Speaker 1: Less me, more chart.
• 2:56
  Speaker 1: I think it's important in that order.
• 2:58
  Speaker 1: You have the SMP at the top here in purplish.
• 3:01
  Speaker 1: That's the SMP, then in yellow and I know I'm using yellow for both just to keep you on your toes you've got the VIX, the fear index, but we've turned it upside down, You're turning me inside out and everything else.
• 3:15
  Speaker 1: What can you see?
• 3:17
  Speaker 1: Well, they move together.
• 3:18
  Speaker 1: Now the trouble with this is that there is this green-circled gap up here, and that is not something we like to see, because if the VIX on this chart is lower, the SMP should follow it.
• 3:37
  Speaker 1: That's kind of the correlation logic here.
• 3:40
  Speaker 1: So watch a little out for that.
• 3:43
  Speaker 1: But I won't want you to worry today.
• 3:44
  Speaker 1: I don't really want you to worry very much today.
• 3:46
  Speaker 1: I think it's going to be a glorious day, and here are a couple of reasons.
• 3:51
  Speaker 1: Interest rates are well going back to normal and that means stock prices go up.
• 3:57
  Speaker 1: Stock prices go down, the rates are higher.
• 3:59
  Speaker 1: Stock prices go up when rates are lower Very, very simple.
• 4:03
  Speaker 1: And next, consumers have actually got money lots of this stuff, billions of dollars off the staff For a couple of reasons.
• 4:12
  Speaker 1: One is that wages have actually gone up a little and secondly, they've been handed out helicopter money by governments and the wealth you just got a lot wealthier in the post COVID rally and that's a lot of people.
• 4:27
  Speaker 1: And if you are wondering just how much here it is, here is a bit of data for you 5.9 trillion dollars sits in money market funds, and I've told you before I think that's a trillion more than the year before, and 2.3 trillion of that is retail.
• 4:47
  Speaker 1: So 2.3 trillion dollars of you and me money like retail people, money is sitting in money market funds.
• 4:54
  Speaker 1: Now what's a money market fund?
• 4:56
  Speaker 1: Bonds, right.
• 4:57
  Speaker 1: So the people bought bonds because interest rates were going up and they wanted to make the money, and they wanted to make the money as the rates come down, and I've been talking about this trade for a year, so that's pretty good.
• 5:08
  Speaker 1: Commercial bank deposits in cash are 17.3 trillion, which is insane, and there are 86 million households in the US who own their homes.
• 5:19
  Speaker 1: 40% of them have no mortgages.
• 5:21
  Speaker 1: I love those 40%.
• 5:23
  Speaker 1: That's who you should aspire to be.
• 5:25
  Speaker 1: Have no mortgage.
• 5:26
  Speaker 1: You think you can get Winston back.
• 5:29
  Speaker 1: Winston, do you wanna come back?
• 5:30
  Speaker 1: Come on, let's see if you'll give us another Over here, over here.
• 5:38
  Speaker 1: Over here, come on, all right.
• 5:39
  Speaker 1: Come on, good boy, all right.
• 5:41
  Speaker 1: What do we think?
• 5:41
  Speaker 1: Can you just about?
• 5:45
  Speaker 1: We're blocking him slightly.
• 5:46
  Speaker 1: There we go.
• 5:47
  Speaker 1: That's a crime, isn't it?
• 5:47
  Speaker 1: What about baby buck pok choy?
• 5:48
  Speaker 1: Any more interest in that?
• 5:53
  Speaker 1: I don't know.
• 5:54
  Speaker 1: I don't know.
• 5:54
  Speaker 1: I don't know.
• 5:55
  Speaker 1: I don't know.
• 5:55
  Speaker 1: I don't know what I think.
• 6:00
  Speaker 1: What he's really saying to me is do you have any idea how many snacks I guess in your kitchen during the day?
• 6:04
  Speaker 1: Clearly you do not.
• 6:06
  Speaker 1: I've eaten bucket loads of the stuff.
• 6:08
  Speaker 1: I'd like something more tasty.
• 6:09
  Speaker 1: But let's get back to households and how you're gonna make money this year.
• 6:14
  Speaker 1: Labor markets are still pretty strong.
• 6:17
  Speaker 1: There are literally almost nine million jobs openings out there.
• 6:22
  Speaker 1: But I think for anybody to take that role still feel bad that we're blocking Winston's little face here with something as pointless as what we're looking at here.
• 6:34
  Speaker 1: So that'll do right.
• 6:37
  Speaker 1: And Winston, and we've got?
• 6:40
  Speaker 1: You're a lovely creature.
• 6:42
  Speaker 1: We went for a swim this afternoon with me.
• 6:44
  Speaker 1: No-transcript.
• 6:46
  Speaker 1: We've also got manufacturing to some extent returning to the shores of the United States, particularly in chip manufacturing.
• 6:55
  Speaker 1: We expect a lot of AI, chip-related manufacturing to come back to the US, and that's boosting capital spending.
• 7:01
  Speaker 1: When you boost capital to spending, you might actually drag the miserable manufacturing sector out of the recession that it's clearly in, and that would be good for stocks.
• 7:12
  Speaker 1: Housing is going to have a party and a backflip.
• 7:15
  Speaker 1: Why?
• 7:16
  Speaker 1: Because even though the market hasn't tanked because of higher rates because all you lot were very, very smart to lock in 20-30 year rates, mortgages at very, very low rates people didn't really build that many houses and developers certainly aren't, because they do actually need to go out and finance the developments.
• 7:36
  Speaker 1: So as rates come down, that becomes more and more attractive and the housing market is likely to become more liquid again.
• 7:43
  Speaker 1: And pick up steam.
• 7:45
  Speaker 1: Winston looks ever so serious, doesn't he?
• 7:47
  Speaker 1: He's like very serious stuff.
• 7:49
  Speaker 1: You're talking about that, felix.
• 7:50
  Speaker 1: Have you got any more of those vegetables?
• 7:53
  Speaker 1: Corporates and their cash flow the Apples and the Microsoft are sitting on so much cash.
• 7:59
  Speaker 1: It's actually hard to believe about 3.4 trillion.
• 8:03
  Speaker 1: What does that mean?
• 8:05
  Speaker 1: It means one thing, and one thing only Buybacks are going to be back with a vengeance this year, which means they buy their own shares.
• 8:14
  Speaker 1: This means they're less shares available.
• 8:16
  Speaker 1: He's had enough now.
• 8:17
  Speaker 1: He's like enough.
• 8:17
  Speaker 1: You're going back Buybacks.
• 8:19
  Speaker 1: Seriously, no vegetables on site.
• 8:21
  Speaker 1: I'm leaving and go and go.
• 8:26
  Speaker 1: Now.
• 8:26
  Speaker 1: Just sit down, just relax, relax.
• 8:28
  Speaker 1: That's a good thing.
• 8:30
  Speaker 1: It's essentially reverse inflation, so it means that you own a stock and its stock becomes rarer and rarer.
• 8:39
  Speaker 1: It's sort of a little bit like the crypto myth and therefore it becomes more valuable.
• 8:44
  Speaker 1: It's brilliant.
• 8:44
  Speaker 1: It's like if you bought a masterpiece from the artist.
• 8:48
  Speaker 1: You only made five of the same thing and then, one by one, the other ones got burned.
• 8:54
  Speaker 1: Yours would be a lot more valuable.
• 8:56
  Speaker 1: That's a sort of analogy for you.
• 9:00
  Speaker 1: Now, inflation apparently and I can't I don't think I can bring myself to say it, but it's a bit of a trans trick.
• 9:11
  Speaker 1: It's Jerome Powell, right?
• 9:13
  Speaker 1: Well, it gets.
• 9:14
  Speaker 1: Inflation is looking like it's a done deal.
• 9:17
  Speaker 1: You see, it makes me ill to say that the Fed president is actually right.
• 9:23
  Speaker 1: I have to have some water on that shock here.
• 9:27
  Speaker 1: Today, service inflation is still pretty elevated and provided that comes down to partially, because the labor market might tank, a little inflation might be actually well and truly behind us.
• 9:43
  Speaker 1: And then we've got lower interest rates.
• 9:46
  Speaker 1: I can hear chomping.
• 9:48
  Speaker 1: Someone's discovered the celery on the floor.
• 9:50
  Speaker 1: And what does the lower rates mean?
• 9:53
  Speaker 1: Well, yes, it reduces the burden of interest on the US government, and you might therefore think that's brilliant, but the way I read the Muppets in Washington, they're just going to go and pile up more debt because they can sort of afford to.
• 10:11
  Speaker 1: So that's a little bit of a downside, but in the short term it keeps the party going.
• 10:16
  Speaker 1: I mean, it's like it's four in the morning and someone's just discovered another crate of whatever it is you like to drink Champagne, whiskey, whatever and you probably shouldn't be having another drink at 4 am, but in the moment it feels like the right decision.
• 10:32
  Speaker 1: So you have another couple and you probably have a worse hangover for it, but for the moment, 2024 isn't the hangover yet.
• 10:40
  Speaker 1: No, it'll be sometime down the road when Biden and Co have all gone to greener pastures Well, browner pastures if they don't get cremated.
• 10:55
  Speaker 1: Well, there is also and there hasn't really been any money shredding, and we were worried about money shredding and what I've got on here in blue, no, in white.
• 11:07
  Speaker 1: In white, can we get a white pen.
• 11:10
  Speaker 1: White pen would be helpful In white here.
• 11:15
  Speaker 1: That is money or liquidity, and it hasn't really gone down right.
• 11:23
  Speaker 1: This was sort of the peak and we're back there.
• 11:26
  Speaker 1: How's that possible, I thought?
• 11:27
  Speaker 1: I thought the Fed is shredding money.
• 11:30
  Speaker 1: Well, have a look at this.
• 11:31
  Speaker 1: If you look at bank reserves and the Fed liquidity okay, it's come down a little bit from the levels up here, but it's actually picked up again.
• 11:45
  Speaker 1: So, thanks to the banking crisis, thank you all you incompetent managers of small and regional banks.
• 11:54
  Speaker 1: We salute you for the rally that you've given us in our stock portfolios.
• 11:58
  Speaker 1: The Fed has basically undone.
• 12:02
  Speaker 1: It's a lot of its good work and it started to essentially effectively print money again.
• 12:08
  Speaker 1: And this will continue, because the banking crisis would otherwise kick off again in March, because that's when the temporary bailout stuff disappears.
• 12:19
  Speaker 1: It's not going to be temporary, it'll be permanent.
• 12:21
  Speaker 1: One thing I've learned bailouts are permanent and they continue forever.
• 12:26
  Speaker 1: After Once you've given, you can no longer take it away.
• 12:29
  Speaker 1: It's some sort of you know, 12th, or whatever you call it, religious thingy.
• 12:36
  Speaker 1: Now I'd also encourage you to make this the best year for yourself ever and come and join us.
• 12:42
  Speaker 1: Come and join us tomorrow.
• 12:44
  Speaker 1: Live.
• 12:45
  Speaker 1: It'll be fun, it'll be glorious.
• 12:46
  Speaker 1: I will teach you our three step simple and I really do mean simple system which allows us to make very, very nice returns, allows us to make our money work for us in a smart way, without being right.
• 13:00
  Speaker 1: We don't have to be right on whether the market's going to go up or down, and that's one of the real beautiful things with options is I make half my money when I'm wrong.
• 13:09
  Speaker 1: So come and sign up at Felix Friends at all.