Latest / Felix Nikolas Prehn's Podcast / Why Everybody is WRONG about the MARKETS and the RECESSION + Stock Market News 26 March 2024

Transcript

Why Everybody is WRONG about the MARKETS and the RECESSION + Stock Market News 26 March 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Felix, ian, good morning to you.
• 0:01
  Speaker 1: I want you to understand what's actually driving this rally, because it's not what you think, and I also want you to understand the most important things supporting this rally and what the risks are, what might be the better investments right now.
• 0:15
  Speaker 1: Of course, I'll also answer all your questions.
• 0:17
  Speaker 1: All you're going to do is pop them into the live chat after you've fiddled with the like button.
• 0:23
  Speaker 1: You know the one, right, so let's get cracking.
• 0:26
  Speaker 1: Exciting news I'll be running a live trading training in literally 12 hours actually 11 hours and that will be 8 pm Eastern time.
• 0:38
  Speaker 1: So for all of you lot with a job, we want to do a little bit to get you out of wage slavery, and that doesn't mean you have to quit your jobs because you start trading.
• 0:46
  Speaker 1: But I think building up an extra income stream potentially is a brilliant thing to do.
• 0:49
  Speaker 1: We did 126% in 2022.
• 0:53
  Speaker 1: We did 105% last year returning capital employed, and this year so far we're up something like 16, 17%.
• 1:00
  Speaker 1: We're earning about 74% of our trades so far this year and we are trading with a really small 30k portfolio.
• 1:08
  Speaker 1: I know it's not for you, obviously it's relative for everybody, but the way reason I do that small, because I want to encourage small people to start small, because it's the responsible thing to do.
• 1:16
  Speaker 1: And you know we're doing pretty well.
• 1:18
  Speaker 1: We're doing uh, you know we're looking like an nvidia chart, aren't we?
• 1:21
  Speaker 1: And we're not trading nvidia.
• 1:22
  Speaker 1: We do one thing and we do it really well, and we follow three rules.
• 1:26
  Speaker 1: I give you my entire playbook, the entire system.
• 1:30
  Speaker 1: It's completely free of charge.
• 1:31
  Speaker 1: Grab yourself a seat I know many of you already have and join me in 11 hours.
• 1:36
  Speaker 1: It's going to be a blast.
• 1:38
  Speaker 1: But let's look at a couple of things first here.
• 1:40
  Speaker 1: Recession fears, stagflation, fed what's actually driving the market?
• 1:45
  Speaker 1: Bridges collapsing.
• 1:47
  Speaker 1: You know loads of stuff happening today that we're not really foreseeable.
• 1:53
  Speaker 1: What we've seen is that the Dallas Fed, all the Feds, put out data on economic activity in their zone and Texas particularly hit with really big red flashing recession in manufacturing indicators.
• 2:09
  Speaker 1: Here We've now been.
• 2:10
  Speaker 1: This is the zero line.
• 2:13
  Speaker 1: That's zero.
• 2:14
  Speaker 1: So we're now at minus 11.
• 2:17
  Speaker 1: Basically, anything negative flashes recession signs and we've been here now for about a year, which is what I keep saying is that there is a private sector recession, but the government's bailing it out.
• 2:28
  Speaker 1: But that isn't actually the full story and I want you to get the full story.
• 2:33
  Speaker 1: But yeah, some really like new orders collapsing 17 points, growth rate of orders minus 14 points, shipments down 15 points and at the same time, prices for raw materials and finished goods pretty high.
• 2:48
  Speaker 1: So this kind of streams screams stagflation, and if you want to understand that better, obviously ask.
• 2:54
  Speaker 1: I'd be super happy to explain it.
• 2:56
  Speaker 1: But yeah, company outlook minus seven.
• 2:59
  Speaker 1: This is not good, right?
• 3:01
  Speaker 1: So there is a real world out there that isn't feeling particularly brilliant.
• 3:06
  Speaker 1: Brett says government employees aren't in a recession.
• 3:08
  Speaker 1: No, because the government's employing a lot more people.
• 3:11
  Speaker 1: They account for about 25% of all the jobs created in the last year.
• 3:16
  Speaker 1: That's a lot, it's really a lot, and I don't know if you've seen an uptick in government services, but yeah, that's the way the government's doing that.
• 3:23
  Speaker 1: So we've got inflation because prices are accelerating again in manufacturing and we've got falling order books.
• 3:31
  Speaker 1: That isn't really brilliant.
• 3:33
  Speaker 1: Now, does that mean it's the end of the world?
• 3:34
  Speaker 1: Well, I had to throw this in, didn't I?
• 3:36
  Speaker 1: We're going to have fun until November, right?
• 3:38
  Speaker 1: Donald Trump versus Joe the Biden, and who's leading at the moment?
• 3:43
  Speaker 1: Versus Joe the Biden and who's leading at the moment?
• 3:47
  Speaker 1: Now, these polls are obviously kind of bollocks because the way you guys vote.
• 3:50
  Speaker 1: It's a state-by-state thing, so the national thing doesn't really matter, but it looks at the moment, at least from this poll here, and I think this is an average of polls, so it's the poll of polls, if you will.
• 4:01
  Speaker 1: Presently, the orange one is slightly leading the geriatric one and that's, I think, kind of how I'd sum them both up.
• 4:08
  Speaker 1: I honestly couldn't care less who wins.
• 4:10
  Speaker 1: Really we can get into criticizing both sides and everybody's going to get mad.
• 4:18
  Speaker 1: But this is important and it's a lot of words, but it's a horribly complex, endogenous money creation.
• 4:27
  Speaker 1: What the heck does that mean Basically, even with high interest rates?
• 4:33
  Speaker 1: Well, you would explain this in a moment.
• 4:35
  Speaker 1: You would expect that high rates would lead to less spending because consumers get hit with higher mortgages.
• 4:44
  Speaker 1: You think it would lead to less investments because it's more expensive to fund investments.
• 4:48
  Speaker 1: Right, and therefore you'd think the economy would falter.
• 4:50
  Speaker 1: It's not really happening, except in manufacturing.
• 4:53
  Speaker 1: Why isn't that happening?
• 4:55
  Speaker 1: Because actually it's not the central bank, it's not really the Fed that controls the economy.
• 5:01
  Speaker 1: It's largely the banks, the big banks, the JP Morgans.
• 5:07
  Speaker 1: What do the banks do?
• 5:08
  Speaker 1: The banks decide how much money there is.
• 5:11
  Speaker 1: They lend, right.
• 5:14
  Speaker 1: So what does the company.
• 5:17
  Speaker 1: Say, a company now gets some money.
• 5:19
  Speaker 1: What do they do with that money?
• 5:20
  Speaker 1: Well, they put that money in into a bank account.
• 5:27
  Speaker 1: Right?
• 5:28
  Speaker 1: What is money in a bank account?
• 5:32
  Speaker 1: Money in a bank account are deposits.
• 5:34
  Speaker 1: It's fresh money for the bank.
• 5:36
  Speaker 1: What does the bank do with the deposits?
• 5:38
  Speaker 1: Well, they can lend it out, and then the person they lend it to gets money.
• 5:46
  Speaker 1: They put it into a bank account and then the bank has more deposits so they can lend it out.
• 5:51
  Speaker 1: You get the idea it's banks that create money, and I did a Instagram sort of story thingy on this a little while back and people went really mad and they're like you don't understand, that's not how it works.
• 6:03
  Speaker 1: Like that's exactly how it works.
• 6:04
  Speaker 1: Banks create money from your deposits and then they lend it out.
• 6:09
  Speaker 1: That creates more deposits and so on.
• 6:10
  Speaker 1: So it's really up to banks' appetite to lend.
• 6:14
  Speaker 1: As long as banks are lending, the economy expands.
• 6:17
  Speaker 1: It's as simple as that.
• 6:18
  Speaker 1: So the Fed doesn't matter anywhere near as much as you think.
• 6:22
  Speaker 1: And we had these massive spirals going on just before 2000, 2008.
• 6:30
  Speaker 1: And those were all moments when interest rates were like 5%.
• 6:33
  Speaker 1: So interest rates were high, but the economy was on full steam ahead because banks were like we're lending, we lend, our business grows.
• 6:43
  Speaker 1: So, danzo says.
• 6:43
  Speaker 1: Someone told me God created everything.
• 6:44
  Speaker 1: Yeah, you think you've been lied to.
• 6:45
  Speaker 1: It's bankers.
• 6:46
  Speaker 1: Bankers created everything.
• 6:47
  Speaker 1: Wall Street creates pretty much everything there is out there Indogenous indeed.
• 6:57
  Speaker 1: So there we are.
• 6:59
  Speaker 1: That's basically the way it works and that explains to a large extent why the S&P is flying up the way it is in this lovely, basically straight line.
• 7:08
  Speaker 1: We're bouncing off a little bit of the upper trend here.
• 7:11
  Speaker 1: You'd expect that, and then you'd maybe bounce off the lower end and you keep going up until something really terrible happens, but at the moment, nothing terrible has happened.
• 7:19
  Speaker 1: We have a pretty thick skin when it comes to bank failures, which will definitely happen, and the other thing to watch out for is always like how much money is flowing into the market, and typically in March so seasonally, january, february, march a lot of money flows.
• 7:40
  Speaker 1: In April a little less.
• 7:43
  Speaker 1: May, june, typically money outflows.
• 7:46
  Speaker 1: Is that tax deadlines?
• 7:48
  Speaker 1: Maybe that defines that?
• 7:50
  Speaker 1: Or, I don't know, expensive holidays, or, you know, an extra jet for P Diddy or something.
• 7:55
  Speaker 1: What's going on with Diddy?
• 7:56
  Speaker 1: Did you read that he had his mansions raided and he was almost on a plane, but then he wasn't.
• 8:05
  Speaker 1: And apparently you know it's all about sex, drugs and guns.
• 8:07
  Speaker 1: Shocking, isn't it?
• 8:09
  Speaker 1: Sex, drugs and guns Shocking, isn't it?
• 8:11
  Speaker 1: The man is a rapper.
• 8:11
  Speaker 1: Be terrible.
• 8:12
  Speaker 1: If you didn't have lots of sex, drugs and guns, I mean, he'd be out of business.
• 8:17
  Speaker 1: So I'm not quite sure what the excitement's about, but there we are.
• 8:20
  Speaker 1: So CTAs, we're going all in today on all the data.
• 8:28
  Speaker 1: We're going fully nuts, although you don't seem to appreciate it, because four of you haven't hit the like button yet, but anyway, I shall persevere.
• 8:36
  Speaker 1: The amount of money that CTAs have in stocks, equities fancy word for stocks is pretty high.
• 8:47
  Speaker 1: I mean, we've been higher 2019, 2018, and so on, but essentially it means the algo funds, the dumbass algorithms who just blindly follow the market and try to somehow magically beat it.
• 9:03
  Speaker 1: They very rarely do.
• 9:04
  Speaker 1: They are going, market's going up.
• 9:08
  Speaker 1: We're all in.
• 9:08
  Speaker 1: That's where we are right now.
• 9:11
  Speaker 1: Of course, the risk is, if something happens that flags some sort of risk factor for the algos, the algos will sell.
• 9:17
  Speaker 1: So it's a risk factor.
• 9:18
  Speaker 1: When you are extended and we are extended Currently, we are higher than 91% of the time.
• 9:26
  Speaker 1: It's kind of high.
• 9:27
  Speaker 1: It's kind of high right.
• 9:29
  Speaker 1: It's kind of high.
• 9:31
  Speaker 1: It's kind of high, right.
• 9:32
  Speaker 1: It's sort of like the margin by which Putin won the fair and democratic election that just took place in Russia.
• 9:35
  Speaker 1: And are they going to sell?
• 9:39
  Speaker 1: I mean, are they going to like, really really sell?
• 9:42
  Speaker 1: Probably not.
• 9:43
  Speaker 1: If we're down a lot, I mean really, if something terrible happens, then yeah, they'll sell a bit, but it doesn't really look like it At the moment.
• 9:53
  Speaker 1: The downside risk is fairly limited unless something really dreadful happens.
• 9:58
  Speaker 1: This is also something I like to watch.
• 9:59
  Speaker 1: What are CEOs doing?
• 10:01
  Speaker 1: What are the board members doing?
• 10:03
  Speaker 1: Are they buying or selling their stock?
• 10:06
  Speaker 1: And this lovely little indicator here is sellers to buyers.
• 10:10
  Speaker 1: So when it's high, it's bad, bad, low is good and well, you know you get the idea they're kind of selling.
• 10:21
  Speaker 1: Now there is typically a little bit more selling at the beginning of the year, justifiably, because you know people got to pay for the deposits on their yachts.
• 10:31
  Speaker 1: No, I think taxation is allegedly the excuse used.
• 10:34
  Speaker 1: But if you look at the NASDAQ chart here, typically when people feel like we're kind of peaking, they sell right here they were selling.
• 10:46
  Speaker 1: They're kind of thinking this has been such a great run, we're going to sell Right now.
• 10:49
  Speaker 1: I think this is a really good run.
• 10:51
  Speaker 1: Let's sell some.
• 10:52
  Speaker 1: So the Bezos the Island Build.
• 10:56
  Speaker 1: Sorry, bill Gates, you know all those guys have sold a very significant amount of stock in their own company and others.
• 11:02
  Speaker 1: So again, just like are you chasing this thing too late?
• 11:05
  Speaker 1: Why have we got the energy chart on here?
• 11:08
  Speaker 1: I'm not entirely sure, but if you are into energy, we're hitting the same top four times in a row, four times, makes a party, so we would expect that to keep coming down once again.
• 11:19
  Speaker 1: If not, you kick off a real party and if energy goes up, maybe get a little bit worried.
• 11:26
  Speaker 1: It's a little bit defensive play, but really the investment that you've missed out on.
• 11:31
  Speaker 1: If you have FOMO because you are not an NVIDIA enough, or you missed the Bitcoin rally because you don't know what a cold storage wallet is and you're looking for it in the supermarket, then don't worry, you've missed a much bigger rally, much, much bigger.
• 11:47
  Speaker 1: There's only one thing that's up 283% this year, in the last year, and what is it?
• 11:53
  Speaker 1: Cocoa, cocoa, cocoa is up like mad.
• 11:59
  Speaker 1: In fact, it's Bloomberg's leading headline today, believe it or not.
• 12:02
  Speaker 1: Where is it?
• 12:04
  Speaker 1: It's?
• 12:04
  Speaker 1: Uh, well, there's a bridge that collapsed and if you, you know, but cocoa breaks through ten thousand dollar record with pricier chocolate to follow, the world goes disaster.
• 12:14
  Speaker 1: I think I think we need a.
• 12:15
  Speaker 1: I think we need a chocolate bailout fund.
• 12:18
  Speaker 1: Don't you think a couple of trillion dollars should do it?
• 12:20
  Speaker 1: That's kind of an interesting one if you're in commodities and what else we got?
• 12:26
  Speaker 1: We look at the market, we look at your favorite stocks.
• 12:29
  Speaker 1: Make sure you join me in about 11 hours for a live trading training where I'll teach you how we make money in like a couple of hours a week.
• 12:37
  Speaker 1: Three rules, fully automated, and this one is for beginners.
• 12:41
  Speaker 1: You don't need to know anything at all.
• 12:43
  Speaker 1: If you don't know what a brokerage is, you're still in the right place, so come and join me.
• 12:46
  Speaker 1: Felixfrenzelogswebinar Link is down below Pre-market looks pretty good, doesn't it why?
• 12:53
  Speaker 1: Banks are lending, tesla is up 3%, amd is green, nvidia is green, microsoft, google, meta, amazon are up.
• 13:01
  Speaker 1: Everything is up, basically, except for bridges.
• 13:05
  Speaker 1: Apple is down.
• 13:07
  Speaker 1: Did you see that Bizarre?
• 13:09
  Speaker 1: I saw this on Twitter this morning.
• 13:11
  Speaker 1: I kind of couldn't believe it.
• 13:12
  Speaker 1: The whole Baltimore, what is it called?
• 13:15
  Speaker 1: Francis Scott Key Bridge, massive bridge, I mean, it looks like it was a little old, but this little vessel, about half the size of Bezos' yacht hit it.
• 13:28
  Speaker 1: I'm not quite sure how it missed a bridge, but if you've ever taken lessons on how to drive boats or yachts, you have to deal with captains who teach you, and I had a captain who taught me that a boat like that, it takes about 10 miles to stop, so you might see the thing you're about to hit, but there's very little you can do about it.
• 13:50
  Speaker 1: So this looks like one of those cases and I don't know, did people die in that?
• 13:55
  Speaker 1: Um, apparently it was going to get replaced.
• 13:59
  Speaker 1: Is that the Trump Make America Paved Again program or something?
• 14:04
  Speaker 1: It wasn't intentional, it wasn't terrorism, but the ever forward, very aptly named vessel ran aground in 2022, took a month, and so on.
• 14:19
  Speaker 1: Anyway, this one here.
• 14:20
  Speaker 1: Yeah, I hope nobody died in this.
• 14:24
  Speaker 1: It doesn't say it.
• 14:25
  Speaker 1: I mean, bloomberg cares more about financial losses than about people.
• 14:29
  Speaker 1: Clearly, you know they're the people who care.
• 14:32
  Speaker 1: Trump's farm saws ahead of the SPAC deal.
• 14:35
  Speaker 1: That's a crazy story, isn't it?
• 14:37
  Speaker 1: If you want to get around campaign financing, apparently SPACs are the way to do that, because you can receive unlimited money through a SPAC, can't you?
• 14:45
  Speaker 1: It's trading at $50.
• 14:47
  Speaker 1: It does, which is a valuation of what.
• 14:50
  Speaker 1: What's the market cap on this thing.
• 14:51
  Speaker 1: Anybody know how many shares are out there.
• 14:53
  Speaker 1: A couple of billion at least, four or five billion, I think, and it's got three million in revenue.
• 14:58
  Speaker 1: So you know reasonable multiplier, surely?