Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - Warning: Inflation Data Just Out! 🚀 + Stock Market News 14 August 2024

Transcript

Felix Prehn - Warning: Inflation Data Just Out! 🚀 + Stock Market News 14 August 2024 · Felix Nikolas Prehn's Podcast

• 0:01
  Speaker 1: Felix, good morning to you with my first dose of electrolytes of the day and we just had inflation data and you could say it's a big old nothing burger, like somebody just wrote in the chat here.
• 0:12
  Speaker 1: Or you could say it's the most brilliant piece of data we've had in about three years, and I'll walk you through why.
• 0:19
  Speaker 1: I'll walk you through how we make money out of it, how we trade it.
• 0:23
  Speaker 1: I'll walk you through some of the other important data points here today, because bad news is about to become bad news again, so let's walk through that here and I'll share my screen with you.
• 0:39
  Speaker 1: There we go Back in my little circle.
• 0:43
  Speaker 1: You like the circle.
• 0:44
  Speaker 1: I thought the circle was quite snazzy, didn't you think?
• 0:46
  Speaker 1: A little bit better than the square for me.
• 0:48
  Speaker 1: Usually Small improvements day by day.
• 0:51
  Speaker 1: Okay, here's the core inflation data.
• 0:52
  Speaker 1: Let's color code this like we're three.
• 0:56
  Speaker 1: The actual core inflation came in at 0.2%, which is at the lower end of the expectations.
• 1:04
  Speaker 1: 0.2%, which is at the lower end of the expectations.
• 1:08
  Speaker 1: That gets a green tick.
• 1:09
  Speaker 1: Core inflation year on year is actually down from last month and again at the lower end of expectations brilliant Headline inflation.
• 1:15
  Speaker 1: So core inflation removes all the things you need Energy, food.
• 1:21
  Speaker 1: You know who needs energy and food, right?
• 1:23
  Speaker 1: According to the Fed, we don't.
• 1:25
  Speaker 1: The inflation rate, though, is now also only 0.2% for the month.
• 1:29
  Speaker 1: Now, that is again exactly as expected, slightly higher than last month, but that doesn't really matter, it's as expected.
• 1:35
  Speaker 1: So that's a green tick.
• 1:36
  Speaker 1: And then the headline year over year inflation rate the sort of thing you know newspapers pick up on mainstream media or a little bit illiterate it's 2.9%.
• 1:51
  Speaker 1: So cha-ching right, good stuff.
• 1:52
  Speaker 1: The market should love it.
• 1:53
  Speaker 1: Yes, the market should absolutely freaking celebrate it.
• 1:55
  Speaker 1: And pre-market, the market is celebrating it Nvidia up, apple up, amazon up, tesla up, fat drugs up.
• 2:01
  Speaker 1: Looks very, very, very sweet.
• 2:05
  Speaker 1: We'll talk a little bit about consumer non-durables in a second.
• 2:08
  Speaker 1: We'll also talk about Google, of course, some big stuff happening over there, but let's just dive a little deeper into this and see is this actually the end of inflation?
• 2:16
  Speaker 1: So what does this show you?
• 2:18
  Speaker 1: This shows you, in rather small font and colors, all the various segments of inflation.
• 2:24
  Speaker 1: But this bar there is right now.
• 2:29
  Speaker 1: So what can you make out?
• 2:30
  Speaker 1: That there is basically no inflation In goods inflation.
• 2:34
  Speaker 1: The green stuff here is particularly down, but nothing is really majorly up.
• 2:38
  Speaker 1: So this is very, very good news Inflation appears to be well nailed to the mast and beaten to death, and that's very, very good news.
• 2:48
  Speaker 1: Because, as Bloomberg just put out, what did they say?
• 2:52
  Speaker 1: They just said inflation.
• 2:54
  Speaker 1: Okay, they've changed the headline, obviously.
• 2:58
  Speaker 1: They just said that, yeah, sealing a Fed rate cut.
• 3:00
  Speaker 1: So we're getting that Fed rate cut.
• 3:02
  Speaker 1: I know it, you know it.
• 3:04
  Speaker 1: Winston knows it Well, he's known it for a long time, he's smarter than most of us.
• 3:08
  Speaker 1: But there isn't really any metric in the July numbers.
• 3:13
  Speaker 1: That's worrying.
• 3:14
  Speaker 1: There isn't really anything that's massively shot up.
• 3:17
  Speaker 1: The biggest inflation number we have is like housing, up 0.4%.
• 3:22
  Speaker 1: One thing I do note is used cars are down 10% on the year 11% almost which indicates a softening consumer.
• 3:35
  Speaker 1: And by softening I don't mean getting more chubby on the edges, no, no, no, lly is making sure that doesn't happen anymore.
• 3:42
  Speaker 1: It just means the economy is slowing down.
• 3:45
  Speaker 1: Right.
• 3:45
  Speaker 1: So again, good news if you're hoping for rate cuts.
• 3:48
  Speaker 1: But then what I actually thought?
• 3:52
  Speaker 1: The inflation reading today would be a bit of a nothing burger, and I thought that yesterday's inflation expectations were actually the thing we should be looking at.
• 4:00
  Speaker 1: And if you look at the three-year data of inflation expectations, and if you look at the three-year data of inflation expectations.
• 4:06
  Speaker 1: They are the lowest they have been in three years and that's actually what matters.
• 4:12
  Speaker 1: The Fed tries to look forward in the infinite idiocy.
• 4:17
  Speaker 1: They really care about whether you expect more or less inflation.
• 4:21
  Speaker 1: If you expect less inflation, you're not going to ask for higher wages and so on, and that's kind of the thing that saves everything.
• 4:28
  Speaker 1: At the end of the day it's like you're going okay, it should be all right.
• 4:32
  Speaker 1: 50 basis points.
• 4:34
  Speaker 1: I expect a quarter point.
• 4:37
  Speaker 1: I must say I think the Fed is going to be as nutty as they were with the money printing.
• 4:42
  Speaker 1: I think they're going to be cautious going into the cutting.
• 4:45
  Speaker 1: So I would expect a quarter cut here, unless something really bad happens.
• 4:49
  Speaker 1: And I'll show you a little bit more about how we continue to make money out of this whole situation.
• 4:53
  Speaker 1: This year so far we're up 80% on our portfolio $24,000 gains.
• 4:58
  Speaker 1: Actually it's, I think, slightly above that now.
• 5:00
  Speaker 1: I think we should be about 25,000 by now.
• 5:02
  Speaker 1: I need to update the chart.
• 5:03
  Speaker 1: That's a $30,000 portfolio.
• 5:05
  Speaker 1: We trade and if you want to join me for day two of our beginner trading challenge, join me for the juicy bit.
• 5:16
  Speaker 1: We'll be doing some actual trading together.
• 5:18
  Speaker 1: We'll go into the real rules and everything else.
• 5:19
  Speaker 1: Today was a little bit more bigger picture, setting goals and motivation and stuff like that, which is actually probably more important than the skill set itself, because without that you never bother to go through it with the skill set.
• 5:29
  Speaker 1: But come and join me for that today, in 11 hours.
• 5:32
  Speaker 1: It'll be fun, it'll be a blast and here's what matters.
• 5:41
  Speaker 1: I am right now bullish on the market and if you watched me yesterday, I'm bullish until this is a little specific until 6th of September.
• 5:53
  Speaker 1: What the heck happens on the 6th of September?
• 5:55
  Speaker 1: The world's going to end.
• 5:56
  Speaker 1: Yes, the end is nigh.
• 5:58
  Speaker 1: We should all jump off a cliff together, sing Kumbaya and you know, no, let's not do that.
• 6:04
  Speaker 1: Anyway, there is the retail by the dip.
• 6:07
  Speaker 1: I managed to not put an F in it.
• 6:10
  Speaker 1: We've got corporate buybacks about $20 to $45 billion per week.
• 6:15
  Speaker 1: That's monstrous, the biggest buyback season we've ever had, and they're just buying stocks and this is the most illiquid market we've had for absolute ages.
• 6:29
  Speaker 1: Everyone's on freaking holiday, so there are no sellers out there on large, so the buyback should have a bigger impact.
• 6:35
  Speaker 1: Pensions should be buying about $40 billion on the end of quarter adjustment of their fund allocation.
• 6:45
  Speaker 1: So that should be good.
• 6:48
  Speaker 1: That should happen towards the end of August.
• 6:52
  Speaker 1: And then, in addition to that I think this is from Goldman's they're saying you should consider that stabilizing markets could trigger volatility falling further, which is the VIX, the sort of fear index that will eventually lead to systematic buying of stocks.
• 7:09
  Speaker 1: So it's the algo funds that will come back as volatility falls.
• 7:14
  Speaker 1: So if we move up 50 basis points, I mean, why don't they just say 0.5%, bloody idiots.
• 7:20
  Speaker 1: We go up, is that right?
• 7:23
  Speaker 1: No, it's what's a basis point?
• 7:25
  Speaker 1: It's 0.05, isn't it?
• 7:27
  Speaker 1: Is that right?
• 7:28
  Speaker 1: Maybe that's why they say it.
• 7:29
  Speaker 1: It kind of confuses us.
• 7:30
  Speaker 1: I'm going to have to look that up.
• 7:31
  Speaker 1: What is BPS basis?
• 7:36
  Speaker 1: Yeah, 0.01.
• 7:40
  Speaker 1: Okay, okay, okay.
• 7:41
  Speaker 1: I still remember one or two things.
• 7:43
  Speaker 1: So 0.75% per day for a month, then the algo funds will buy an additional 170 billion.
• 7:52
  Speaker 1: So you know that Well, kind of helps setting up trades, doesn't it?
• 7:56
  Speaker 1: We have a fair idea of where the winds are heading.
• 7:58
  Speaker 1: It's funny.
• 8:05
  Speaker 1: You're still getting ads.
• 8:06
  Speaker 1: I'm literally getting.
• 8:06
  Speaker 1: Look at this says here now would be a good time to insert ads.
• 8:11
  Speaker 1: The more viewers are watching, the more money creators get, and I never do it.
• 8:14
  Speaker 1: I never do it because I think it's a really, really bad idea to put put ads inside a live stream.
• 8:19
  Speaker 1: I think it's just a really, really daft idea and I keep telling them don't do it let.
• 8:23
  Speaker 1: Let me show you this Monetization Choose how you admit roles appear, insert them manually, which I don't right, because otherwise they do it for you.
• 8:32
  Speaker 1: There should be zero ads on these live streams, bastards.
• 8:35
  Speaker 1: Anyway, youtube is pretending that they don't know what to do about it.
• 8:39
  Speaker 1: It's obviously too boldster.
• 8:41
  Speaker 1: Google earnings, Let.
• 8:43
  Speaker 1: So there we go.
• 8:52
  Speaker 1: We've got retail buying, the dip, we've got corporate buybacks in the liquid market, pensions buys and, as long as we go up, we've got massive algo buys.
• 9:04
  Speaker 1: Now, why do I still say so?
• 9:06
  Speaker 1: The 6th of september, that's when the corporate buybacks stop.
• 9:10
  Speaker 1: So so, these guys here, the corporate buybacks, which is quite significant amount of money, that stops on September 6th approximately.
• 9:19
  Speaker 1: So therefore, the second half of September could get a little choppy.
• 9:23
  Speaker 1: Watch out for that.
• 9:24
  Speaker 1: Also a lot more electioneering and so on.
• 9:27
  Speaker 1: So, talking about Google, bastards, we do love Google, don't we?
• 9:34
  Speaker 1: I mean, youtube is pretty amazing for most of the time, it's just.
• 9:38
  Speaker 1: You know, it allows us to have like a thousand people on here, which 150 hit the like button.
• 9:43
  Speaker 1: The rest of you think this is a load of nonsense.
• 9:45
  Speaker 1: Or you're throwing things at the TV, which is also okay.
• 9:47
  Speaker 1: Thumbs down is also good.
• 9:50
  Speaker 1: You know, it's also an expression of opinion, practice it.
• 9:53
  Speaker 1: Anyway, us considers a rare antitrust move breaking up Google because that worked out so well with Microsoft, didn't it?
• 9:59
  Speaker 1: They tried to break up Microsoft.
• 10:01
  Speaker 1: Of course, they bloody failed.
• 10:02
  Speaker 1: Microsoft's got them all in their little pocket, right, and Google will do exactly the same thing, but at the moment they are talking about spinning off forcefully, possibly Android, because what's this actually all about?
• 10:19
  Speaker 1: So Google has been paying, so they pay good money to companies like Apple 20 billion a year actually put a number on that 20 billion to be the search engine on iPhones.
• 10:44
  Speaker 1: Now, the other thing is, if you want to use Google features as a manufacturer, with that comes the Chrome browser, which is hard installed and you can't uninstall it, and that, of course, is a stupid.
• 10:53
  Speaker 1: I mean, that's obviously an antitrust issue.
• 10:55
  Speaker 1: And where did they learn that?
• 10:56
  Speaker 1: From Microsoft?
• 10:57
  Speaker 1: Right, it was not possible to uninstall Internet Explorer from Windows previously.
• 11:03
  Speaker 1: Now it actually is, but still nobody does it.
• 11:05
  Speaker 1: Nobody bothers.
• 11:06
  Speaker 1: So that's a little bit the problem.
• 11:09
  Speaker 1: So they also might want to split out Chrome, but given that they didn't win against Microsoft, I kind of can't see how they would win against Google, because it's exactly the same thing.
• 11:22
  Speaker 1: But is Google going to get fined for this?
• 11:23
  Speaker 1: Yeah, of course.
• 11:25
  Speaker 1: Can they afford to pay the fine?
• 11:26
  Speaker 1: Yeah, is it going to take years and years and years of litigation and all sorts of courts around the world?
• 11:31
  Speaker 1: Yeah, a bit of a distraction.
• 11:33
  Speaker 1: Yeah, is it going to stop them?
• 11:35
  Speaker 1: Well, let me show you a little chart that might illustrate what's likely to happen here.
• 11:40
  Speaker 1: Look at Microsoft.
• 11:42
  Speaker 1: Zoom out.
• 11:45
  Speaker 1: Is antitrust issues a problem?
• 11:52
  Speaker 1: No, no, they're not.
• 11:54
  Speaker 1: If you're going to have a good business, it really, really, really doesn't bloody matter.
• 11:58
  Speaker 1: So, no, I don't think this really matters.
• 11:59
  Speaker 1: Could be a really nice buy the dip opportunity at some point.
• 12:05
  Speaker 1: Hang on, goog, let's have a look here.
• 12:08
  Speaker 1: It's falling, falling, falling, falling, falling.
• 12:11
  Speaker 1: Oh, what was that shortcut?
• 12:13
  Speaker 1: With this space, I can go through my watch list.
• 12:16
  Speaker 1: Did anybody know that before I learned something today?
• 12:18
  Speaker 1: Look at that, look, look, look.
• 12:20
  Speaker 1: I can switch.
• 12:20
  Speaker 1: Brilliant, all right, learned something today, very excited.
• 12:24
  Speaker 1: So we're still above the 50-day moving average line.
• 12:28
  Speaker 1: It sits at 152 here.
• 12:29
  Speaker 1: That's the pain point.
• 12:31
  Speaker 1: Let me also look at where the market's positioned here in trade vision, which, if you want to play with that and get yourself a one month free trial to it, here's the link to the chart I'm looking at, for example.
• 12:44
  Speaker 1: But you do need to be signed up to the trial first.
• 12:48
  Speaker 1: So our little indicator told you to get the heck out here.
• 12:52
  Speaker 1: And then again here it turned from green to red.
• 12:56
  Speaker 1: Right.
• 12:56
  Speaker 1: It told you to sell, which was a good move.
• 12:58
  Speaker 1: And okay, I was in a week's chart.
• 13:01
  Speaker 1: Okay, on a day chart it looks far worse, far worse.
• 13:04
  Speaker 1: So where is our 200-day moving average line Down here?
• 13:08
  Speaker 1: That's our support.
• 13:09
  Speaker 1: Right now we're at 153.
• 13:13
  Speaker 1: It's our support.
• 13:14
  Speaker 1: And for the month oh, look at where people are starting to hedge down here at 140.
• 13:21
  Speaker 1: Oh, that's pretty ugly, isn't it Pretty ugly?
• 13:26
  Speaker 1: So people are expecting some pain here.
• 13:30
  Speaker 1: I would argue it's a bit of support at 160 as well, but that 140 is a bit worrying.
• 13:36
  Speaker 1: So either way, at this point it's still a falling knife.
• 13:41
  Speaker 1: We seem to be undoing the good work of the last week today here by starting a little lower than the pre-market.