Latest / Felix Nikolas Prehn's Podcast / Warning: Inflation Data Just Out! 😰 + Stock Market News 13 February 2024

Transcript

Warning: Inflation Data Just Out! 😰 + Stock Market News 13 February 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Good morning, welcome to the end of the world.
• 0:04
  Speaker 1: No, I'm kidding.
• 0:04
  Speaker 1: Today is a day where we got inflation data out and it came in just a teeny, tiny little bit higher than expected.
• 0:13
  Speaker 1: And well, the market is thoroughly enjoying a freak out, as you would expect.
• 0:20
  Speaker 1: And what does that mean?
• 0:23
  Speaker 1: Well, if you want to see the pre-market, if you are of a sort of gentle disposition, avert your eyes right now.
• 0:30
  Speaker 1: There she is, it's all red, appreciate.
• 0:35
  Speaker 1: I'm blocking some of that, but that's the Microsoft and the Google bit, which you don't want to see under any circumstances.
• 0:40
  Speaker 1: That's where we are at.
• 0:42
  Speaker 1: And what does it all mean?
• 0:43
  Speaker 1: Let's dive into the numbers.
• 0:45
  Speaker 1: Let's look how we can make money out of it.
• 0:46
  Speaker 1: Let's look into the real story underlying the story.
• 0:49
  Speaker 1: There's always more to it than on the top of it, and if you are not smiling like me at this news, then you clearly are not part of my trading community.
• 0:59
  Speaker 1: Come and join me in exactly one hour life where we'll teach you easy trading, passive income, three, four hours a week, simple steps, fully automated.
• 1:13
  Speaker 1: And it puts a smile on your face whether the market goes up or the market goes down, because we don't particularly care either way.
• 1:18
  Speaker 1: So come and join me.
• 1:20
  Speaker 1: I'll take your questions as well.
• 1:23
  Speaker 1: Just pop them into the chat.
• 1:25
  Speaker 1: But let's get into the nasty news here first.
• 1:29
  Speaker 1: So who would have thought that the wise old economists of Wall Street would get a forecast wrong?
• 1:35
  Speaker 1: They never get them right.
• 1:39
  Speaker 1: I don't know why people are surprised by that.
• 1:41
  Speaker 1: So we were expecting core inflation to come in at 0.3% we got 0.4%.
• 1:48
  Speaker 1: We're expecting the month on month inflation rate to come in at 0.2% we got 0.3%.
• 1:56
  Speaker 1: No run for the hills and the market is doing what the market does best.
• 2:03
  Speaker 1: It's freaking out and it's down 1.7% on the Nasdaq.
• 2:08
  Speaker 1: The small caps are down 3.3%.
• 2:13
  Speaker 1: Talk of an overreaction and the S&P futures and I smile on that because that's actually making me money and the S&P is down 1.2% here this morning.
• 2:25
  Speaker 1: And we have laid to rest the hope of a March rate cut.
• 2:33
  Speaker 1: The March rate cut hope has died, so we should have a moment of silence for that.
• 2:39
  Speaker 1: It's not going to happen, in fact.
• 2:41
  Speaker 1: In fact, the market is now not even pricing in a June rate cut, but now a July rate cut.
• 2:48
  Speaker 1: That's how quickly tables turn and that's why you don't want to lean yourself out of the window too far, which is what I always say to you guys who are part of my trading community Seriously, come and join me, it'll be fun.
• 3:00
  Speaker 1: It'll be in 53 minutes.
• 3:02
  Speaker 1: Also, how I earn consistent income in four hours per week.
• 3:06
  Speaker 1: We trade literally one stock, three easy rules, and it's way, way, way simpler than you think For beginners.
• 3:12
  Speaker 1: Absolutely brilliant and perfect.
• 3:14
  Speaker 1: Come and join me at philipsfrensorg slash webinar, which takes you to a page that looks well.
• 3:19
  Speaker 1: It is this page that looks not just like it.
• 3:21
  Speaker 1: Pop your name in their email address and register.
• 3:23
  Speaker 1: Grab yourself one of the last spots we have available and let's look at a little bit more of where this is coming from.
• 3:32
  Speaker 1: I put out a tweet just if you follow me over there.
• 3:36
  Speaker 1: Housing, rent is app, grocery prices, food is app and car insurance is app.
• 3:43
  Speaker 1: That's the particularly inflationary aspect that we've got here.
• 3:48
  Speaker 1: So the feds favorite manipulated made up measure of inflation, which is super core inflation, which is basically inflation Wait for it Without food, without energy and without housing.
• 4:11
  Speaker 1: So it's basically just you eating out.
• 4:14
  Speaker 1: I don't really know.
• 4:15
  Speaker 1: That's still app Pretty significantly, as you can see on the chart here, the Fed will feel vindicated in the language it's been using around rates cuts.
• 4:23
  Speaker 1: There can be little doubt that they're being pushed.
• 4:26
  Speaker 1: So delayed rate cuts are unjustified in the near term, says somebody.
• 4:32
  Speaker 1: We would expect treasuries government bonds to take up higher.
• 4:41
  Speaker 1: And somebody paid a lot of money for some mayonnaise, which is always important.
• 4:47
  Speaker 1: But yes, the March rate cut is basically not happening.
• 4:53
  Speaker 1: And now, of course, the story is going to be well.
• 4:55
  Speaker 1: Is it just one bit of reading?
• 4:57
  Speaker 1: Or is this an inflection point for inflation?
• 5:01
  Speaker 1: Is inflation going to re-accelerate on the back of higher oil prices from the Middle East and all the other things we can throw out?
• 5:08
  Speaker 1: This just generally panic.
• 5:09
  Speaker 1: That'll be the story today.
• 5:11
  Speaker 1: So if you turn on CNBC or Bloomberg, they're going to run you through that.
• 5:18
  Speaker 1: I would say we're probably overreacting a little bit here.
• 5:20
  Speaker 1: I think we're going a little bit too nuts here.
• 5:24
  Speaker 1: And how do we do this?
• 5:27
  Speaker 1: So you can still see this.
• 5:28
  Speaker 1: There we go Apple down a percentage point.
• 5:32
  Speaker 1: Nope, there's one, you didn't know it.
• 5:33
  Speaker 1: Microsoft down 2.2,.
• 5:34
  Speaker 1: Google down 2.3%, metal down 2%, amazon down 2.4%, jp Morgan down a percent, tesla down 3%, nvidia down 2.7%.
• 5:45
  Speaker 1: And this is all just pre-market.
• 5:47
  Speaker 1: This is all in the last five minutes or so.
• 5:49
  Speaker 1: Oh, the joy of being an investor, right?
• 5:52
  Speaker 1: But actually the beautiful thing is, if you grasp trading, you will have some sort of some bullish trades and you'll have some bearish trades all the time and people often ask you why does this make sense?
• 6:03
  Speaker 1: This is one of those days where my bearish trades will make money.
• 6:07
  Speaker 1: I'm going to take profits on those and then tomorrow we might go up again and the bullish trades might make us money.
• 6:13
  Speaker 1: So we are able to balance out by being what we call market neutral, the crazy ups and downs of the market here.
• 6:21
  Speaker 1: But what really takes the biscuit today is IWM down 3.5%.
• 6:27
  Speaker 1: Some of the smaller tech stocks also really getting hammered.
• 6:31
  Speaker 1: Palantir losing 6% today.
• 6:33
  Speaker 1: We did set up a bearish trade on that yesterday.
• 6:38
  Speaker 1: So sorry about that.
• 6:39
  Speaker 1: We don't move the market.
• 6:42
  Speaker 1: We use options.
• 6:42
  Speaker 1: We don't actually move the market with that, but yeah, that'll bring us in some dollars, for example.
• 6:48
  Speaker 1: And that doesn't mean I'm permanently bearish on it.
• 6:50
  Speaker 1: No, I just saw an opportunity and I take the opportunity and we aim to make money out of it.
• 6:57
  Speaker 1: Money, as they say.
• 6:59
  Speaker 1: Where do they say that?
• 6:59
  Speaker 1: If you're from the UK?
• 7:01
  Speaker 1: Where is that silly accent from?
• 7:02
  Speaker 1: Let me have a look.
• 7:03
  Speaker 1: Six of you are watching us live on Twitter.
• 7:08
  Speaker 1: That's very exciting.
• 7:09
  Speaker 1: That's very, very exciting.
• 7:11
  Speaker 1: I'm not sure I can see your comments, but do feel free to comment out there.
• 7:16
  Speaker 1: And shall we run through a little bit of the other things that are going on today?
• 7:19
  Speaker 1: This is the allocation to tech, and basically we are at fairly elevated levels in terms of tech allocation.
• 7:29
  Speaker 1: A little bit less so this morning, as a lot of people are just freaking the heck out.
• 7:32
  Speaker 1: I mean, who sells on one data point?
• 7:34
  Speaker 1: Somebody's got to, I suppose, and the algorithms will kick in and start selling and so on.
• 7:41
  Speaker 1: But we are at fairly elevated levels in terms of how much money is in tech.
• 7:45
  Speaker 1: And we've had these massive, whopper, wonderful, big juicy days, like meta gaining, on the 2nd of February, $170 billion in one day.
• 7:57
  Speaker 1: And you might be thinking, oh my God, it's a bubble, it's all over, right under the chairs.
• 8:02
  Speaker 1: You know, seriously, when I was in primary school, you know what they taught us.
• 8:05
  Speaker 1: They said if the Russians drop a nuclear bomb on Germany, where I grew up, hide under your wooden desk.
• 8:14
  Speaker 1: That was the advice.
• 8:16
  Speaker 1: What was that?
• 8:20
  Speaker 1: Was that going to help?
• 8:21
  Speaker 1: Was that really going to help?
• 8:22
  Speaker 1: We've got wooden desks.
• 8:24
  Speaker 1: Anyway, the, anyway, the Earnings, the earnings, meetings of companies.
• 8:30
  Speaker 1: How often have they used the word operational efficiency, which is code for fire workers.
• 8:38
  Speaker 1: It's the highest it's ever been, and that's also got something to do with the whole AI binge that we're on and is one of the reasons I think this rally is going to go a bit higher.
• 8:54
  Speaker 1: I know today feels like oh my God, it's all over.
• 8:56
  Speaker 1: You know, hide under the wooden desks and particularly if you've smashed the like button, you will appreciate that the fundamentals of large companies are improving a lot because they can do more with less people, and people are expensive.
• 9:14
  Speaker 1: You got to house them, feed them, water them I mean not literally, but you know, give them a desk, buy them a computer, all that kind of stuff.
• 9:21
  Speaker 1: You can get off, days off and holidays and parental leave and you know all sorts of things.
• 9:26
  Speaker 1: I mean that costs money.
• 9:28
  Speaker 1: So if you can replace them, you can cut jobs and we're seeing a lot of job cuts and that could actually be quite good.
• 9:34
  Speaker 1: Now, one of the reasons I think today and this is I appreciate I put out stuff sometimes that is above the average pay grade of the average investor.
• 9:44
  Speaker 1: The reason I put that out there is because I want you to be extraordinary, and I know you can be, because it isn't actually rocket science.
• 9:50
  Speaker 1: Somebody explains it to you.
• 9:51
  Speaker 1: There's something called gamma exposure and basically, when it's positive, it means there are people called market makers.
• 9:59
  Speaker 1: I've got three of them on my team.
• 10:00
  Speaker 1: They are forced to buy stocks, no matter what happens.
• 10:05
  Speaker 1: They have to buy stocks and we are at a pretty elevated level of that one of the highest we've seen in in last three years and they are buying, and they're buying hand over fist the SMP until this Friday.
• 10:20
  Speaker 1: After Friday, or bets are off We'll talk about that at the end of the week but they will support the market somewhat today, which is why I think that we will end the day somewhat better than what we're seeing right now 1.4% down on the SMP, the QQQ, the NASDAQ is down 1.8% and the small caps and the Russell are down 3.5%.
• 10:49
  Speaker 1: They're just a committing hierarchy as we speak.
• 10:52
  Speaker 1: Why?
• 10:52
  Speaker 1: Why do the small caps fall more than the big caps?
• 10:56
  Speaker 1: Because the small caps are more responsive to interest rates, because they actually have to go to the bank and borrow money at kind of market rates, whereas if you are meta, you're just like money who needs money?
• 11:08
  Speaker 1: Do you know how much money I've got in the desk drawer $120 billion or something lying around.
• 11:12
  Speaker 1: They don't really care about interest rates.
• 11:14
  Speaker 1: In fact, they actually make a lot of money out of the cash they got lying around, so higher rates are actually quite good for them.
• 11:21
  Speaker 1: And then this is the second piece of information that isn't exactly appropriate for children, and that's CTAs.
• 11:29
  Speaker 1: Ctas are algo-traded funds and there's lots of them around.
• 11:35
  Speaker 1: It's basically a dumbass computer that's been given a program by when you hear this word, or sell when you get to that price point.
• 11:42
  Speaker 1: And if we are down a little bit on the market, they are expected to sell about $60 billion worth of stock globally.
• 11:57
  Speaker 1: It's not that much.
• 11:59
  Speaker 1: It's something, but it's not that much.
• 12:02
  Speaker 1: And on the S&P, we would expect them to sell.
• 12:05
  Speaker 1: On a moderate decline in the stock prices, we'd expect them to sell about $35 billion.
• 12:13
  Speaker 1: So if that kicks in, yeah, that'll be a little bit bearish.
• 12:18
  Speaker 1: So we have to see if we can offset that with buybacks and so on and just give the market a break for a second.
• 12:26
  Speaker 1: We'll come back to the life market.
• 12:27
  Speaker 1: And just a second.
• 12:28
  Speaker 1: Understand the inflation data a bit better and ping your questions in there.
• 12:37
  Speaker 1: Commercial Reader State.
• 12:38
  Speaker 1: We're crashing US Commercial Reader State for the best part of a year and a half, I would say, and 20% of all the mortgages on essentially offices are up this year.
• 12:51
  Speaker 1: They will mature this year, which means they need to be refinanced or they need to sell the properties.
• 12:56
  Speaker 1: Now the properties are worth maybe 30 to 50% less than when they took the original loan out, so a lot of them can't necessarily sell it or refinance it and that's gonna be a problem and you're gonna see a lot of defaults coming out in commercial real estate.
• 13:14
  Speaker 1: If interest rates fall quickly, these guys will be saved.
• 13:19
  Speaker 1: If interest rates do not fall quickly, these guys are screwed.
• 13:23
  Speaker 1: And that's another reason why the Fed and the Fed knows this and they're aware of this they will have to cut pretty harshly once they start cutting.
• 13:32
  Speaker 1: Otherwise, they know they're killing off the US commercial real estate space, which cop forces a financial crisis, and nobody really wants that, because think about it, this is 929 billion.
• 13:43
  Speaker 1: Even if you just think 30% of that is a right off, well, that's still $300 billion lost.
• 13:50
  Speaker 1: That's some serious bankruptcies out there, right?
• 13:54
  Speaker 1: Who's gonna bail that out?
• 13:55
  Speaker 1: Who's gonna bail out the banks for having that hole in their portfolio?
• 14:00
  Speaker 1: And then, if you read our newsletter this morning, almost as if we can predict the future.
• 14:05
  Speaker 1: And, by the way, you can get your hands on that.
• 14:07
  Speaker 1: Where can you get your hands on that?
• 14:09
  Speaker 1: Do we have a little thing set up for that?
• 14:10
  Speaker 1: Here we go.
• 14:13
  Speaker 1: Phedex-friendsorg slash sub very large right.
• 14:17
  Speaker 1: Phedex-friendsorg slash sub.
• 14:18
  Speaker 1: If you go over there, you get your pause on our newsletter, written by a former market maker, one of our team, and he was basically saying look at the drawbacks, you get the drawdowns, you get, you get rallies, and then you get 26% drawdowns, 43% drawdowns, 38%, 20%, 77% drawdowns.
• 14:40
  Speaker 1: And this isn't some crazy crypto stock, this is actually meta Facebook and you would therefore expect at some point to get a drawdown.
• 14:50
  Speaker 1: Doesn't have to be this week or next week or next month, but if you've written up this rally and you made all that money, it might just be prudent to take some profits.
• 14:59
  Speaker 1: That's basically what we were saying this morning, and today might be one of those reminder days where that could be something, because you have to ask yourself why do you invest?
• 15:08
  Speaker 1: Is it because you wanna fill some sort of spiritual, religious bond with a stock?
• 15:16
  Speaker 1: Or is it because you wanna make money, look after yourself and your family and be financially free and secure and live more free for a while after.
• 15:23
  Speaker 1: It's probably the second thing, right?
• 15:25
  Speaker 1: I mean, okay, if you wanna join a cult on a certain stock, go nuts.
• 15:29
  Speaker 1: But most of us actually just wanna make money, which is again why I trade, because I can make money on stocks falling.
• 15:36
  Speaker 1: Some of my trades will make money.
• 15:37
  Speaker 1: Today we're bearish on what?
• 15:39
  Speaker 1: Do we bearish on Palantir.
• 15:41
  Speaker 1: We're bearish on Oracle.
• 15:43
  Speaker 1: We've got what else have we got Bearish trades on Netflix.
• 15:48
  Speaker 1: We've got a bunch of bearish trades on and they will print money.
• 15:52
  Speaker 1: Today we will take that money and then we will reassess and see what happens with our bullish trades.
• 15:58
  Speaker 1: Right, very, very simple.
• 15:59
  Speaker 1: So you wanna understand that.
• 16:03
  Speaker 1: You wanna learn that.
• 16:04
  Speaker 1: If you wanna learn that, then you wanna learn that for free.
• 16:06
  Speaker 1: For me, my system, my structure, how I weigh up $3,000 or something so far this year, go to FelixFrenzelorg slash webinar.
• 16:14
  Speaker 1: That's on a really small portfolio I run.
• 16:16
  Speaker 1: It's about it'll be out 12% in January, february.
• 16:20
  Speaker 1: Obviously, the jury is still out.
• 16:21
  Speaker 1: Check it out down below FelixFrenzelorg slash webinar.
• 16:25
  Speaker 1: Grab yourself a seat.
• 16:26
  Speaker 1: You can.
• 16:27
  Speaker 1: That takes you to the scary IWM chart, to this page here.
• 16:32
  Speaker 1: Pop your name in the email address and then register and you will get to join me live in just 45 minutes.
• 16:41
  Speaker 1: There it is Okay.
• 16:44
  Speaker 1: Felixfrenzelorg slash webinar.
• 16:47
  Speaker 1: Now let's have a quick look at Bloomberg's panic commentary of inflation data and comments.
• 17:00
  Speaker 1: Comments, comments, comments.
• 17:01
  Speaker 1: Let's see some data here.
• 17:02
  Speaker 1: Great cuts expected around the mid-year.
• 17:08
  Speaker 1: Gas prices are coming down.
• 17:15
  Speaker 1: Electricity prices are up again.
• 17:16
  Speaker 1: That was likely weather related and someone asking here quite smartly.
• 17:24
  Speaker 1: What we're trying to identify is a place where we're really confident about inflation getting back down to 2%, so we can then begin the process of dialing back at the restrictive level.
• 17:34
  Speaker 1: That was Chair Powell on the 31st of January press conference.
• 17:38
  Speaker 1: So is this giving him confidence?
• 17:40
  Speaker 1: Putting a little bit of doubt in there?
• 17:43
  Speaker 1: Right, hospital fees are up the largest monthly fee increase since 2015.
• 17:50
  Speaker 1: No idea why.
• 17:52
  Speaker 1: Food prices are up Ham particularly Good job.
• 17:56
  Speaker 1: I am a vegan and other protein is actually flat.
• 18:02
  Speaker 1: Fat prices are cheap apparently Too many pigs about and core inflation is still just below 4% 3.9%.
• 18:16
  Speaker 1: So the question is is this enough to let the Fed cut rates later on in the year?
• 18:28
  Speaker 1: At the moment, it's putting some doubt into people's minds and therefore we're seeing the market taking a kick in, which is exactly what you'd expect.
• 18:42
  Speaker 1: So pre-market looks as gray-red as a I don't know what.
• 18:46
  Speaker 1: Coca-cola is up, I think.
• 18:49
  Speaker 1: Good earnings over there.
• 18:50
  Speaker 1: Anything else up?
• 18:51
  Speaker 1: Cdx is up, that's pretty much it.
• 18:54
  Speaker 1: Who's the worst offender of all?
• 18:57
  Speaker 1: The big caps are basically down 2.5 percentage point.
• 19:00
  Speaker 1: Actually, the magnificent seven.
• 19:02
  Speaker 1: Have we got that magnificent seven in here?
• 19:11
  Speaker 1: No, no, okay, they've taken the ticker off where you could do it manually.
• 19:14
  Speaker 1: But yeah, you get the idea.
• 19:15
  Speaker 1: Qqq is down 1.7%, so that's a good one, okay.