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Transcript

Felix Prehn - THIS is The Best Investing Opportunity This Year + Stock Market News 29 July 2024 · Felix Nikolas Prehn's Podcast

• 0:02
  Speaker 1: Felix here and welcome to this pre-market live stream, the most important week of the year, arguably.
• 0:08
  Speaker 1: And imagine if you knew the insight from probably the number one trader in the world working at Goldman Sachs and you had his memo to his top clients and his co-workers.
• 0:20
  Speaker 1: You want to know what it says.
• 0:24
  Speaker 1: I think we probably do.
• 0:25
  Speaker 1: Five points, essentially, that basically define the week, why it matters, how it ties in, how we make money out of it, how we make trades out of it and everything else.
• 0:34
  Speaker 1: That's what I'm going to share with you here today.
• 0:36
  Speaker 1: I'll explain it, I'll break it down, I'll explain the language and so on, and I hope you're going to get max value out of that, because it's kind of a scandal that all the knowledge sits on trading floors and in hedge funds and that the rest of us are completely in the dark usually.
• 0:52
  Speaker 1: So that's really the whole point here of our little community and channel that we lift the veil on what those bastards are trying to keep from us.
• 1:00
  Speaker 1: So if you want to learn that well, you're going to mix panoramic information possibly, but really what you need you need a strategy.
• 1:07
  Speaker 1: If you want to learn the strategy that's made us so far $24,000 on a $30,000 teaching portfolio.
• 1:15
  Speaker 1: Yep, that's 80% up.
• 1:17
  Speaker 1: Then come and learn with us tomorrow evening felixfrensorg slash webinar links down below, tomorrow evening, felixfrancidogscom links down below, and you'll see exactly how we did these July trades.
• 1:28
  Speaker 1: Look how few trades I make.
• 1:30
  Speaker 1: Look how lazy I am.
• 1:31
  Speaker 1: We made like 30% just this month, which is pretty good, right, nice and lazy.
• 1:37
  Speaker 1: There we go, so you'll learn astrology completely for free.
• 1:40
  Speaker 1: Come and join us, felixfrancidogscom, but let me walk you through what Goldman's is saying here.
• 1:47
  Speaker 1: We'll draw some pictures, because I think that'll help.
• 1:51
  Speaker 1: Pre-market looking flattish, moderate, upside on the tech stocks, which is a lot of what we're going to focus on here today Big earnings, of course, coming up this week.
• 2:00
  Speaker 1: Okay, here it is Goldman Sachs TMT, which is, of course, telecoms and media and tech, and he sort of rambled on a little bit about.
• 2:13
  Speaker 1: You know, we have the biggest drawdowns we've seen in a while.
• 2:15
  Speaker 1: Big tech went down almost 15%, and it's hard to argue that positioning isn't cleaner now, which is kind of a positive.
• 2:23
  Speaker 1: He's saying that really.
• 2:26
  Speaker 1: What moved the whole thing, though, is more sober conversations around tech and acknowledgements around the more complex market that we've got here, and I'll explain that in a moment in a little bit more detail, but what really happened is we didn't get massive investment increases from Google and Tesla.
• 2:49
  Speaker 1: That's actually what tanked the market last week.
• 2:53
  Speaker 1: If you think that through, it makes a lot of sense, although maybe not at first sight.
• 2:57
  Speaker 1: Let me explain it.
• 2:59
  Speaker 1: So, if you've got, what are we doing?
• 3:04
  Speaker 1: Tech stocks this will be a little bit of data and whiteboard today.
• 3:09
  Speaker 1: I hope you don't mind Tech stocks.
• 3:11
  Speaker 1: So you know, like last week we had Google reporting Google and we had Tesla reporting and they spend billions on GPUs right, which come from NVIDIA.
• 3:28
  Speaker 1: So they're basically sending billions of dollars to NVIDIA, but they did not N-V-I-D-I-A.
• 3:36
  Speaker 1: If I could spell that, I'd be a better man.
• 3:39
  Speaker 1: They didn't announce massive increases.
• 3:42
  Speaker 1: Yeah, they're saying we're investing a lot, but they didn't sort of say you know what?
• 3:46
  Speaker 1: We're going to do 50% more and that therefore, potentially is bad news for Nvidia, even though the market might like the fact that they're spending less money.
• 3:59
  Speaker 1: And what does it all come down to?
• 4:00
  Speaker 1: Well, the question is starting to be all these billions spent, what's the return on that spent?
• 4:08
  Speaker 1: Return on investment?
• 4:12
  Speaker 1: Google said we don't really care.
• 4:16
  Speaker 1: They said we are worried that if we don't spend it, we get left behind.
• 4:23
  Speaker 1: So that's kind of the other risk.
• 4:25
  Speaker 1: So say, you spend less, you get left behind, which means your business fails because Microsoft or OpenAI steal your lunch if you're Google.
• 4:40
  Speaker 1: But at the same time, the market's starting to think about, well, how much money are they going to make with this stuff?
• 4:47
  Speaker 1: Because they're spending.
• 4:48
  Speaker 1: You know you spend 50 billion on this.
• 4:50
  Speaker 1: How much do you have to bring in incrementally over the years to actually make that a good return on money?
• 4:55
  Speaker 1: Right, most still ads.
• 4:58
  Speaker 1: I'm sorry guys, I keep bugging YouTube with it every day.
• 5:01
  Speaker 1: The buggers seem unwilling to fix the problem.
• 5:05
  Speaker 1: My ads are literally off, which is weird.
• 5:07
  Speaker 1: So, yeah, there we are.
• 5:09
  Speaker 1: So this is kind of the conundrum we entered in last week and the market was going okay, we're a little bit confused about this.
• 5:15
  Speaker 1: Where are we going with this?
• 5:16
  Speaker 1: And then, because, really, the Google earnings and the Tesla earnings they were good on many fronts.
• 5:27
  Speaker 1: Google's advertising revenue was good, cloud business was good, but the market was more worried about this spend Is it good, is it bad, is it enough?
• 5:39
  Speaker 1: That's kind of the conundrum we're in right now.
• 5:42
  Speaker 1: So let me show you his little note here and they're always a little bit wordy these things.
• 5:50
  Speaker 1: He says generative AI return on invested capital.
• 5:53
  Speaker 1: The market's been largely the more capital expenditure, the better mindset.
• 5:58
  Speaker 1: As in, more capital expenditure is good for semiconductors.
• 6:01
  Speaker 1: So Nvidia more capital expenditure is the leading indicator for generative AI demand trends.
• 6:08
  Speaker 1: And in the last few weeks it's felt like investors have started to debate this a bit, thinking, well, how does this work?
• 6:21
  Speaker 1: You spend the money, you get depreciation on those GPUs, so you get a tax write-off, all right.
• 6:28
  Speaker 1: And then the question is how do you monetize it?
• 6:30
  Speaker 1: And he says we're clearly still in the early build phase, but investors are now measuring more like are we actually going to make money out of it?
• 6:42
  Speaker 1: What is the path to monetization here?
• 6:44
  Speaker 1: And that's always the hard thing, right?
• 6:47
  Speaker 1: So we need to see this week Apple earnings, microsoft earnings, meta earnings.
• 6:54
  Speaker 1: We need to see iPhone sales pick up because of AI.
• 6:59
  Speaker 1: We need Apple to come out and say we're going to I don't know 20% more iPhones going to be sold in the second half of the year because of AI.
• 7:07
  Speaker 1: They want the AI applications that only will work on the new phone.
• 7:12
  Speaker 1: Or you know, the meta AI agent.
• 7:14
  Speaker 1: How many people are using that?
• 7:15
  Speaker 1: How many people have paid for Microsoft Copilot?
• 7:19
  Speaker 1: That's what the whole thing is now circling around because before we were just excited.
• 7:25
  Speaker 1: Ai it's exciting, it's brilliant, amazing.
• 7:27
  Speaker 1: Spend some money and build stuff.
• 7:29
  Speaker 1: And the memory comes back in 2000,.
• 7:33
  Speaker 1: People were building the internet.
• 7:35
  Speaker 1: It was exciting, it was amazing, but nobody really had a plan to make money out of it and I don't think we're quite in that space.
• 7:41
  Speaker 1: But Meta right, they've released some sort of open source LLM chat GPT competitor.
• 7:47
  Speaker 1: It's open source, it's free, anybody can use it.
• 7:50
  Speaker 1: So does that therefore reduce all the spend from Google and Microsoft and Amazon on LLMs to like zero, because now you can get it for free, like?
• 8:01
  Speaker 1: Those are the things the market is a little bit worried about right now, which is why we're seeing that.
• 8:05
  Speaker 1: You know a little bit up and down right Over the last week.
• 8:09
  Speaker 1: Now, themes, okay, software, generally software earnings have been pretty good.
• 8:19
  Speaker 1: And if you think through this little strategy here, who's actually who's benefiting from AI right now?
• 8:29
  Speaker 1: There's only one company.
• 8:30
  Speaker 1: The only company benefiting right now is NVIDIA.
• 8:33
  Speaker 1: Nvidia makes all the money right now, but down the road, all the software companies who are actually building apps on the back end of AI, they should be the ones that make even more money because they don't have to build like hardware, it's just the software as a service.
• 8:52
  Speaker 1: Margins tend to be pretty high, right, 80, 90%.
• 8:54
  Speaker 1: So really, and I've been saying this for what?
• 8:58
  Speaker 1: Two months now maybe?
• 8:59
  Speaker 1: I've been keeping saying, like guys start rotating from the chip trade into the software trade, because I think that's where the money is going to be made, and we made some trades like that in the last month and we made some money on that.
• 9:10
  Speaker 1: So therefore, software earnings this week, like Microsoft, is really what matters.
• 9:17
  Speaker 1: That's the proof that we need that.
• 9:19
  Speaker 1: The pudding is a good one, right?
• 9:24
  Speaker 1: He talks a little bit about luxury here.
• 9:27
  Speaker 1: I think luxury is a little bit in trouble.
• 9:29
  Speaker 1: I think the China growth story is not really happening.
• 9:31
  Speaker 1: And then he talks about FOMC Fed meeting Tuesday it's tomorrow.
• 9:38
  Speaker 1: Now we've got two price cuts priced in.
• 9:42
  Speaker 1: So what is the Fed going to do?
• 9:55
  Speaker 1: So where are we right now?
• 9:56
  Speaker 1: Okay, if you remember January 2024, we were expecting like seven cuts this year.
• 10:01
  Speaker 1: We were on something, we were smoking something.
• 10:04
  Speaker 1: Now we're expecting.
• 10:05
  Speaker 1: Now we're expecting two cuts, some people maybe two and a half, maybe three.
• 10:11
  Speaker 1: So the Something's beeping.
• 10:17
  Speaker 1: The Fed's press conference tomorrow.
• 10:21
  Speaker 1: We need him to say two things.
• 10:22
  Speaker 1: We need him to say unemployment is higher and we need him to say something like we are more confident, inflation is beaten to a pulp, something like that.
• 10:43
  Speaker 1: If he says those two things, then we are going to get our September rate cut.
• 10:48
  Speaker 1: If he doesn't say those things, if he doesn't say those things, it's a really, really, really, really bad thing, because the September rate cut has a 99% probability attached to it by the market.
• 11:02
  Speaker 1: Probability, which means everybody is trading as if it's already happened.
• 11:09
  Speaker 1: So if it doesn't happen, it's like a cold dead fish in your face kind of a thing.
• 11:15
  Speaker 1: A big fish.
• 11:21
  Speaker 1: Winston likes big fish.
• 11:21
  Speaker 1: So that's the important thing on the Fed side of things.
• 11:23
  Speaker 1: So that's actually in many ways that's item number one.
• 11:25
  Speaker 1: Now let's look at item number two and he gives us some interesting insight here into what institutional traders love.
• 11:35
  Speaker 1: So stocks that they love for this week, that is ANET, one of Tom's favorites, it's Microsoft.
• 11:49
  Speaker 1: They love Meta, they love Amazon all reporting this week and they love Apple, and I'm pretty positive on all of them.
• 12:02
  Speaker 1: Apple I'm a little bit worried about.
• 12:03
  Speaker 1: They just have to tell us a good story, because that's really what it's all about.
• 12:09
  Speaker 1: They're going to have to come out and say, in the second half of this year, we expect X percent more iPhone sales.
• 12:14
  Speaker 1: Everybody wants them.
• 12:15
  Speaker 1: We can't make enough of this stuff.
• 12:16
  Speaker 1: That's really what we need to hear there.
• 12:18
  Speaker 1: And what does everybody hate?
• 12:20
  Speaker 1: Let's make a hate list too.
• 12:22
  Speaker 1: It's always easier to make a hate list.
• 12:24
  Speaker 1: By the way, if you ever want to try and figure out what you want to do with your life, don't make a list of what you want to do with your life.
• 12:29
  Speaker 1: Make a list of what you hate in your life.
• 12:30
  Speaker 1: So easy isn't it?
• 12:32
  Speaker 1: Just go.
• 12:32
  Speaker 1: I hate this.
• 12:32
  Speaker 1: I hate that.
• 12:33
  Speaker 1: I hate this.
• 12:33
  Speaker 1: I hate my boss.
• 12:34
  Speaker 1: I hate driving there.
• 12:35
  Speaker 1: I hate the cubicle.
• 12:35
  Speaker 1: I hate the hours I work.
• 12:36
  Speaker 1: You know, now you've got the list right next to the opposite.
• 12:40
  Speaker 1: Now you know what you want to do with your life.
• 12:42
  Speaker 1: So what are they hating?
• 12:43
  Speaker 1: They are hating PayPal.
• 12:45
  Speaker 1: Yeah, sorry about that.
• 12:46
  Speaker 1: They are hating Paycom.
• 12:48
  Speaker 1: They are hating Intel and MCHP.
• 12:51
  Speaker 1: So that's kind of what they hate.
• 13:02
  Speaker 1: It gives you some idea of market positioning, okay, of where they expect earnings to come in positive and where they expect earnings to come in.
• 13:07
  Speaker 1: Yeah, this isn't going to be great.