Latest / Felix Nikolas Prehn's Podcast / What the Fed Just Said will Flip Markets + Stock Market News 31 January 2024

Transcript

What the Fed Just Said will Flip Markets + Stock Market News 31 January 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: We, of course, have the Fed meeting today and deciding and telling us what they're going to do about interest rates today and in March.
• 0:08
  Speaker 1: We need to look at the data what's priced in, what isn't.
• 0:12
  Speaker 1: We also need to talk Google.
• 0:15
  Speaker 1: We need to talk Microsoft.
• 0:17
  Speaker 1: We need to talk fat drugs and every other major data point coming through.
• 0:22
  Speaker 1: I want to really lay out my strategy for what's going on right now, share that with you in complete transparency you are as well informed as this former investor and banker here and, of course, make your own decisions and financial advice.
• 0:37
  Speaker 1: Just what my cat whispered to me who's back there if you can see her Still stolen Winston's sofa?
• 0:43
  Speaker 1: He's actually afraid to go on the sofa now.
• 0:46
  Speaker 1: He's going to need some therapy.
• 0:49
  Speaker 1: Any dog therapists out there drop me a line.
• 0:52
  Speaker 1: One thing I'd like you to do for yourself is come and join me on Tuesday and learn how you can make your money work for you this year in three simple steps.
• 1:03
  Speaker 1: Super beginner, friendly.
• 1:04
  Speaker 1: You walk away without information.
• 1:06
  Speaker 1: It's completely free.
• 1:07
  Speaker 1: I run that session on this coming Tuesday.
• 1:10
  Speaker 1: Grab yourself a seat at 10 am Eastern time and shall we dive into it?
• 1:14
  Speaker 1: I think we should probably dive into it straight away, especially once you've destroyed the like button that we find my little screen share thingy here.
• 1:25
  Speaker 1: Here we go.
• 1:26
  Speaker 1: So what is actually priced in?
• 1:29
  Speaker 1: If you look at what we were at Christmas Santa Raleigh, the market priced in an entire 1% interest rate cut.
• 1:38
  Speaker 1: Right now the market is pricing in about 0.4% interest rate, or likelihood of interest rate cut, so 40.
• 1:48
  Speaker 1: What's the other one straight?
• 1:50
  Speaker 1: It was a 100% expectation, now it is 40% expectation.
• 1:55
  Speaker 1: You see, reading charts it's a challenge for bankers.
• 1:59
  Speaker 1: We're not that good with numbers really.
• 2:00
  Speaker 1: So now it is about a 40% likelihood of a March cut.
• 2:04
  Speaker 1: And you might be thinking, no, no, no, no, no March cut is coming.
• 2:07
  Speaker 1: Everyone's pricing it in.
• 2:08
  Speaker 1: They haven't, and that's kind of a good thing.
• 2:10
  Speaker 1: It's at the bar, a little lower right now.
• 2:12
  Speaker 1: So here it says 45% for March, and then in May we're definitely expecting a cut and so on.
• 2:22
  Speaker 1: And then we are expecting more and more cuts as we go through the year and you're going to get a statement out today by the Fed and it'll sound like something you've heard before.
• 2:34
  Speaker 1: If you listen to these sort of things, jerome Powell, the chairman he's just known as the chairman to his lovers is going to probably change about half a sentence in that entire statement.
• 2:47
  Speaker 1: And he does that because he's lazy and no, it's actually what he does.
• 2:51
  Speaker 1: So at the last meeting he used the language the extent of any additional policy firming, and the market went yes, because he said any additional, it might be like ah, it might be optional, there might not be any more rate increases.
• 3:08
  Speaker 1: So we were like they're done, they're going to cut.
• 3:10
  Speaker 1: That was the conclusion.
• 3:13
  Speaker 1: Paul Street is now expecting the following very, very exciting language Any future policy rate adjustments which leaves open to go up or nothing or down, but it's much more likely to go down than the previous language.
• 3:29
  Speaker 1: That's all that's going to change today.
• 3:31
  Speaker 1: So if he doesn't use the language that I outlined, there, all hell breaks loose and the market flips and there'll be ragpolls and all sorts of things and my thumbnails will get even sillier.
• 3:42
  Speaker 1: That's a warning, isn't it?
• 3:44
  Speaker 1: So that's all we're looking at.
• 3:46
  Speaker 1: There is a little bit more.
• 3:51
  Speaker 1: This is what Wall Street says is going to happen.
• 3:54
  Speaker 1: It's like a bunch of chorus boys where they're all been lined up and say I will say pause.
• 3:59
  Speaker 1: Anybody say pause.
• 4:00
  Speaker 1: They all expect the January meeting to be a pause meeting like everybody else in the world.
• 4:05
  Speaker 1: I asked my cat.
• 4:06
  Speaker 1: I asked Winston.
• 4:07
  Speaker 1: They said the federal pause.
• 4:08
  Speaker 1: There will be no rate cut today or increase or anything, so it'll be definitely a pause.
• 4:14
  Speaker 1: That's sort of a non-event of the day, but it's going to get a little bit more interesting Because in 2024, the Fed is actually moving a little bit more hawkish because the people you get to vote are a little bit more hawkish.
• 4:29
  Speaker 1: As we go into the next year, 2025, we're becoming more dovish, dovish, dovish I always struggle with that word Weird, isn't it?
• 4:40
  Speaker 1: It's a dove, is it dovish?
• 4:41
  Speaker 1: I suppose the bird, but it's spelled like a dove.
• 4:45
  Speaker 1: All right, I don't know.
• 4:47
  Speaker 1: We should take a vote on that, maybe.
• 4:48
  Speaker 1: So next year we're going to get a bit more, you know, dovish or whatever that word is, so we might see the rate hikes coming, the cuts coming a little later this year and then coming in much, much harder and faster in 2025.
• 5:05
  Speaker 1: So that's something to bear in mind.
• 5:06
  Speaker 1: That could be a useful piece of information.
• 5:09
  Speaker 1: What about job state up?
• 5:10
  Speaker 1: Well, we got more job state around yesterday, which was glorious.
• 5:13
  Speaker 1: Adp data looks pretty strong.
• 5:15
  Speaker 1: Biden's gotten to them all and then on Friday we're going to get more jobs data out.
• 5:20
  Speaker 1: But if you look underneath the manipulated nonsense that the government puts out.
• 5:26
  Speaker 1: Look at the layoffs that we got here Twitch, hasbro, spotify, levi's, xerox, wave, duolingo, the Washington Post oh yeah, they're still around eBay, charles Schwab, blackrock, city Group, pixar.
• 5:42
  Speaker 1: Did you see PayPal?
• 5:43
  Speaker 1: Today, paypal is laying off 9% of its workforce.
• 5:48
  Speaker 1: I did a short on that.
• 5:49
  Speaker 1: You get the information in 30 seconds.
• 5:51
  Speaker 1: I thought maybe you'd enjoy that.
• 5:52
  Speaker 1: So there is a recession going on.
• 5:56
  Speaker 1: It's just we're being allied to that.
• 5:58
  Speaker 1: Certain people can get reelected, but the good news is that inflation is also back down to like reasonable levels.
• 6:04
  Speaker 1: This is a website called Trueflation.
• 6:06
  Speaker 1: I think they kind of got it going on.
• 6:08
  Speaker 1: Last year they had inflation at like 10, 11%, which I think was fair, and now they have it at 1.97%, which is kind of spot on.
• 6:17
  Speaker 1: So the Fed sees this great cuts are coming.
• 6:21
  Speaker 1: Great cuts are gonna come hard and fast when they start coming, especially if more of you hit the like button.
• 6:27
  Speaker 1: 95 likes 500 people.
• 6:29
  Speaker 1: It's a bit harsh, isn't it?
• 6:30
  Speaker 1: Is it that terrible?
• 6:31
  Speaker 1: So smash the you know what.
• 6:34
  Speaker 1: Now let's look at Microsoft, google, and then I wanna look at a little bit more strategy.
• 6:38
  Speaker 1: What do we do now?
• 6:39
  Speaker 1: How do we actually make money in this environment.
• 6:41
  Speaker 1: And then I wanna take your questions, kestionis.
• 6:44
  Speaker 1: Now Microsoft's earnings.
• 6:47
  Speaker 1: I thought they were pretty insane.
• 6:49
  Speaker 1: I thought they were pretty amazing, but the market's going.
• 6:51
  Speaker 1: We wanted more and that's a little bit of happens when everyone's very exuberant and we get to that in a moment.
• 6:58
  Speaker 1: But Microsoft 365 and LinkedIn is up 13% on the year, cloud is up 20% and Xbox is up 19%.
• 7:10
  Speaker 1: That's pretty staggering stuff.
• 7:12
  Speaker 1: 18% revenue growth for a business this old.
• 7:15
  Speaker 1: It's pretty hard to pull off.
• 7:17
  Speaker 1: I mean sort of like Palantir growth.
• 7:19
  Speaker 1: Right, but the business is a little bigger 62 billion revenue in a quarter and 22 billion of that is actually profit after tax.
• 7:29
  Speaker 1: I mean, even Bill is going like what islands can I buy with pretty little girls on it?
• 7:36
  Speaker 1: What do you do with all that money?
• 7:42
  Speaker 1: Google did a good thing their Cloud business up 26 percent, actually taking Microsoft market share, taking Azure market share.
• 7:51
  Speaker 1: Youtube, thanks to you, 16 percent up on the year.
• 7:55
  Speaker 1: But search advertising is the sad part of the business, going only 13 percent.
• 8:01
  Speaker 1: You know why there is a recession going on.
• 8:05
  Speaker 1: It's just we're told that there isn't.
• 8:07
  Speaker 1: People advertisers spend less money on recessions.
• 8:10
  Speaker 1: Google is an advertising business.
• 8:11
  Speaker 1: That's what it's all about.
• 8:12
  Speaker 1: But 24 percent profit margin, an improvement of six percentage points over the year.
• 8:19
  Speaker 1: They've done a good job and, yeah, they're lagging a little bit behind on the whole AI front.
• 8:23
  Speaker 1: But it's not the end of the world.
• 8:25
  Speaker 1: They've got 20 billion a quarter.
• 8:27
  Speaker 1: They can check out that problem to fix it.
• 8:30
  Speaker 1: So I don't think everyone's going to go.
• 8:32
  Speaker 1: Did you bring it next week?
• 8:34
  Speaker 1: No, google will stick around and I think it's very hard to take the market share away from them there.
• 8:39
  Speaker 1: The fact that their Cloud is sped up, I actually like it.
• 8:42
  Speaker 1: I think Google is the underappreciated tech mega cap at the moment.
• 8:46
  Speaker 1: I'll put out a video on that a little bit later as well, where I walk you through the real breakdown of that.
• 8:51
  Speaker 1: But I like it.
• 8:53
  Speaker 1: If the market doesn't like it, I like it even more.
• 8:55
  Speaker 1: Be a contrarian, my friends.
• 8:57
  Speaker 1: And then, of course, we've got obesity pays just luckily, isn't it?
• 9:02
  Speaker 1: So I now make money out of addiction, tobacco and fat people, no bono disc and yeah.
• 9:15
  Speaker 1: So 500 billion market cap, the second Euro company ever to break that, lvmh being the other one.
• 9:22
  Speaker 1: So operating profits here are rising 29% this year and they're saying, yeah, there is some more margin pressure coming in, price competition pressure coming in from LLY, but we think there are enough faties out there who want our drug.
• 9:38
  Speaker 1: Now, I know people get very offended when I use it, but it's just true, right?
• 9:42
  Speaker 1: I mean, I'm thin, I might be skinny, that's fine, and some people are fat.
• 9:46
  Speaker 1: I think it's just a fair observation.
• 9:47
  Speaker 1: You can do something about it if you want to.
• 9:50
  Speaker 1: I could go to the gym more.
• 9:51
  Speaker 1: You could eat less cake.
• 9:52
  Speaker 1: You know we both have our challenges.
• 9:55
  Speaker 1: Now come and join me before we dive more deeper into strategy on the coming Tuesday and I'll break down for you my trading strategy.
• 10:02
  Speaker 1: Like, we made 126% in 2022, return on capital employed 105% last year and we're up 12% on January 4th.
• 10:10
  Speaker 1: I think we might be doing something right.
• 10:13
  Speaker 1: You want to learn what that is For free?
• 10:15
  Speaker 1: I'll teach it to you.
• 10:16
  Speaker 1: Come on Tuesday, felix Frensler, doc slash webinar.
• 10:19
  Speaker 1: Grab yourself a seat.
• 10:20
  Speaker 1: It's way simpler than you think.
• 10:21
  Speaker 1: We make this for beginners, people who've never had a brokerage account in their life.
• 10:25
  Speaker 1: The fact that you're watching this means you're probably going to be all right, and thank you very much for the extra 100.
• 10:31
  Speaker 1: Who's found the like button?
• 10:32
  Speaker 1: Well done, so let's jump ship.
• 10:39
  Speaker 1: No, not jump ship.
• 10:41
  Speaker 1: I wanted to show you something.
• 10:42
  Speaker 1: Where did I put it?
• 10:44
  Speaker 1: Where did I put it?
• 10:45
  Speaker 1: It wasn't that, it wasn't this.
• 10:47
  Speaker 1: No, it was economic calendar, and there wasn't even that.
• 10:51
  Speaker 1: Was it this?
• 10:52
  Speaker 1: It was not either.
• 10:53
  Speaker 1: Crikey, I'm losing my marbles, aren't I?
• 10:57
  Speaker 1: Yeah, yeah, anything.
• 11:02
  Speaker 1: Well, here's okay, let me show you the pre market of a informational service provider.
• 11:09
  Speaker 1: Google is down almost 6 percent, meta is down, nvidia is down 2 percent, microsoft is basically flat, amazon are 1.3 percent, tesla is down 2.5 percent.
• 11:18
  Speaker 1: The market is going no Then.
• 11:21
  Speaker 1: Well, the fat drugs are doing well and Johnson and Johnson.
• 11:25
  Speaker 1: I'm not going to go down that rabbit hole.
• 11:30
  Speaker 1: I was going to say something even more offensive.
• 11:31
  Speaker 1: So let's not go down that hole.
• 11:34
  Speaker 1: Walmart's up and so on.
• 11:35
  Speaker 1: So it's a little bit of a tech thingy pushing down.
• 11:39
  Speaker 1: I like it, I like the opportunity.
• 11:40
  Speaker 1: I'm probably going to do some trades a little later today on that news, but what I actually wanted to show you was something rather insightful.
• 11:50
  Speaker 1: I thought we put out a newsletter which is largely free of charge, and Elliot, who's a 20-year market maker, worked in major investment banks and so on.
• 12:02
  Speaker 1: He actually writes this and speaks a lot of sense and picks great memes.
• 12:06
  Speaker 1: You've all got more anymore of those tech stocks.
• 12:08
  Speaker 1: The strategy, I think, is really good.
• 12:10
  Speaker 1: So let me run you through some of the key stuff here.
• 12:14
  Speaker 1: Basically, we're saying we are bullish, the market is insanely exuberant, but we are bullish, and, yes, we're very bullish, because we're actually Only 1 percent of the time are we as high in the stock market as we are right now.
• 12:32
  Speaker 1: We are at the 99 percentile.
• 12:35
  Speaker 1: Nvidia has added $600 billion to its market cap in the last three months, which is a Tesla.
• 12:43
  Speaker 1: It's gone up a trillion in the last year, which is a meta.
• 12:47
  Speaker 1: So insane, right, how that's gone up.
• 12:50
  Speaker 1: This is my favorite chart.
• 12:52
  Speaker 1: I put this on Twitter as well.
• 12:53
  Speaker 1: Did you ever guys?
• 12:54
  Speaker 1: Did you watch this Zoolander?
• 12:56
  Speaker 1: It's a great move.
• 12:57
  Speaker 1: If you know any models, particularly, it's a great move.
• 13:00
  Speaker 1: You say, what is this?
• 13:01
  Speaker 1: There's a bubble for ants.
• 13:02
  Speaker 1: So this was NVIDIA in 2000.
• 13:04
  Speaker 1: It was worth nothing, and right now it's worth $624 a share.
• 13:08
  Speaker 1: This is the real kicker.
• 13:10
  Speaker 1: Though we're going to go up, I think nothing is going to stop it, unless that chair Powell has lost his marbles today and is going to do a rate hike.
• 13:21
  Speaker 1: I don't think he will.
• 13:23
  Speaker 1: And when you get to insanity territory, I remember very distinctly in 1999, I was working at dot-com company and our valuation and I kid you not was a cash burn multiple.
• 13:37
  Speaker 1: The more money we spent, the more the business was worth, and that didn't make any sense.
• 13:46
  Speaker 1: We've got the 2024 cash burn multiple and it is called whoops, price to innovation multiple.
• 13:57
  Speaker 1: There is also price to AI multiple.
• 14:00
  Speaker 1: How often does your CEO mention the word AI and earnings called multiple?
• 14:06
  Speaker 1: Something like that?
• 14:06
  Speaker 1: Price to innovation is something that you make up because you can't justify the price earnings multiples and therefore you just go well, let's just make something up.
• 14:15
  Speaker 1: It's new, no comparison point and we're saying that this company is very innovative and therefore it's worth more.
• 14:23
  Speaker 1: It's jibber, it's nonsense.
• 14:25
  Speaker 1: People come up with this stuff and actually go on to CNBC with it because we're near the top of a market.
• 14:30
  Speaker 1: But we're going to keep going up for a while.
• 14:32
  Speaker 1: We might as well enjoy the ride.
• 14:34
  Speaker 1: That's what I'm going to do.
• 14:35
  Speaker 1: So we're in extreme greed, so I'm going to keep trading, keep making money out of it, and bear in mind that I mentioned this yesterday.
• 14:46
  Speaker 1: It is cheaper than it has ever been pretty much in the history of Muppets to hedge your portfolio and protect it.
• 14:55
  Speaker 1: You want to learn how to do that.
• 14:56
  Speaker 1: I've got a video out on that.
• 14:57
  Speaker 1: It's free, type in Felixneverlose and you'll find it on YouTube and you'll learn how to hedge your portfolio.
• 15:03
  Speaker 1: It's insanely cheap, so please do do that.
• 15:07
  Speaker 1: Now we are getting today Boeing data out.
• 15:09
  Speaker 1: They pulled back all guidance stocks up.
• 15:11
  Speaker 1: Weird Amazon and Meta on Thursday those are kind of the big boys we want to watch out for and, of course, the Treasury quarterly refunding announcement on Wednesday.
• 15:27
  Speaker 1: What the heck does that mean?
• 15:28
  Speaker 1: It's just how much are they actually going to put out in terms of debt?
• 15:31
  Speaker 1: Now, yellen said it would be less.
• 15:32
  Speaker 1: That's why the market was up yesterday.
• 15:34
  Speaker 1: If it comes in a little bit more, we're expecting a little bit less.
• 15:39
  Speaker 1: Then, you know, let's see what's going on here.
• 15:42
  Speaker 1: So I'd encourage you to read this.
• 15:44
  Speaker 1: Honestly, it's a great read and it comes out in a very, very, very, very bright way.
• 15:48
  Speaker 1: Lots of interesting data coming up.
• 15:52
  Speaker 1: So that's kind of what I wanted you through.