Latest / Felix Nikolas Prehn's Podcast / ⚠️FED Flips Market as Banking Crisis Hits Stocks + Stock Market News 11 March 2024

Transcript

⚠️FED Flips Market as Banking Crisis Hits Stocks + Stock Market News 11 March 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Felix here and welcome to this live stream.
• 0:02
  Speaker 1: If you showed up on time, goldstar, to you, you realized and figured out what time zone changes are, or what are the summer time, what are later nonsense, that is right.
• 0:12
  Speaker 1: So we used to do a petition to scrap winter time or whatever it is Actually.
• 0:16
  Speaker 1: Winter time is what I just like more.
• 0:18
  Speaker 1: Anyway, here we are.
• 0:19
  Speaker 1: We've got the Fed really laying an egg on Friday about the banking crisis.
• 0:27
  Speaker 1: I mean, as you get into that, we also need to talk about unemployment.
• 0:30
  Speaker 1: We need to talk about the Nvidia.
• 0:32
  Speaker 1: Is it the collapse of Nvidia or is it just a minor bump in the road?
• 0:38
  Speaker 1: We need to definitely look at that.
• 0:39
  Speaker 1: We're down another 1.1 percent pre-market and before we do, I want you to do just one thing, literally one very simple thing, and that is come and join me for a live trading session Tuesday evening evening, eastern time, new York time the current Eastern time, not the time we had on the weekend and I'll teach you how.
• 1:04
  Speaker 1: We made 126 percent in 2022, 105 percent last year return on capital employed and, so far this year, $4,000 on a $30,000 portfolio, approximately give or take, and it's completely free of charge, felix, once.
• 1:23
  Speaker 1: The large webinar is the link, which should be somewhere.
• 1:25
  Speaker 1: If I could find it, can I find it?
• 1:27
  Speaker 1: Probably not there.
• 1:29
  Speaker 1: It is Felix Rensseldorf's large webinar and it's going to be fun and we literally are completely over subscribed.
• 1:37
  Speaker 1: We had like 700 people sign up to it.
• 1:39
  Speaker 1: There were 500 people spaced in the live room.
• 1:42
  Speaker 1: So I've just upgraded our subscription with the service and we can now take a thousand of you, so take advantage of it.
• 1:48
  Speaker 1: The spaces will go.
• 1:50
  Speaker 1: So first thing I want to talk about, and then we'll talk about NVIDIA and everything else.
• 1:55
  Speaker 1: Papa Powell, jerome Powell, the chair, set the following.
• 2:00
  Speaker 1: He said there will be bank failures, and that's a pretty bizarre statement from someone tasked with essentially regulating that sector, and it's part of well.
• 2:22
  Speaker 1: The banking bailout is basically expired.
• 2:25
  Speaker 1: We are yet to see what its successor looks like, and the small and regional banks have the following problem One they bought US treasuries, so they bought government debt, and you might think that sounds like a responsible thing to do with my money, so you deposit money.
• 2:47
  Speaker 1: They bought government debt.
• 2:48
  Speaker 1: What's the problem with that?
• 2:49
  Speaker 1: The problem is very simple.
• 2:51
  Speaker 1: They bought the government debt when rates were zero.
• 3:01
  Speaker 1: Now rates have gone up from zero to about 5.25%.
• 3:07
  Speaker 1: What happens when that happens.
• 3:10
  Speaker 1: So you take a 10-year government bond and it was worth $100 here when they bought it.
• 3:20
  Speaker 1: Well, if interest rates got up 5%, that's now worth probably $55, something like that.
• 3:30
  Speaker 1: And that's just because interest rates have gone up and nobody wants the 0% interest rate bond anymore.
• 3:37
  Speaker 1: Why would you?
• 3:37
  Speaker 1: When you can go to the government, who will mint you a fresh you know Biden war bonds with 5.25% interest rate?
• 3:44
  Speaker 1: That's the problem.
• 3:46
  Speaker 1: So what's happened is that their balance sheet has gone from $100 to $55.
• 3:53
  Speaker 1: And they'd be like you go in and you say I'd like my money back, but I put in my bank account Actually it's my money, so please give it to me and they say sorry, sir, we lost $45 off that $100.
• 4:03
  Speaker 1: You gave us Right.
• 4:05
  Speaker 1: So that was the one problem.
• 4:07
  Speaker 1: The second problem that's the first one.
• 4:09
  Speaker 1: That's just idiocy, because actually they could have fixed that if they knew how to hedge, but that's just too complicated for small bank managers.
• 4:16
  Speaker 1: Apparently.
• 4:16
  Speaker 1: The second problem is called CRE, which is commercial real estate, and it's a similar thing.
• 4:22
  Speaker 1: So you have an office tower that was worth 50 million.
• 4:26
  Speaker 1: They gave him a mortgage on it for, say, 30 million.
• 4:33
  Speaker 1: Now that office tower collapses in value to 25 million.
• 4:39
  Speaker 1: The mortgage isn't covered, right.
• 4:43
  Speaker 1: So you sell that building.
• 4:45
  Speaker 1: There's no way in hell they're gonna pay back your mortgage.
• 4:47
  Speaker 1: So you've got two loopholes.
• 4:48
  Speaker 1: Basically, it's leaking out of both sides of small banks and we are gonna get another bailout on that.
• 4:55
  Speaker 1: It's coming, but they seem to be shaking us up a little bit, which is partially why, if you look at pre-market here, pretty much all the banks are down.
• 5:04
  Speaker 1: What's that one Progressive cooperation?
• 5:07
  Speaker 1: I don't know who they are, maybe they identify as a bank, but JP Morgan down, bayer ESVAC is down, morgan Stanley is down, citi down 0.7%.
• 5:16
  Speaker 1: So, yeah, banks are having a bit of a wobble this morning and that's not really what you want to wobble, if you do enjoy a wobble, and that's one thing to think of.
• 5:26
  Speaker 1: And video, of course, the other one down 1.1%.
• 5:32
  Speaker 1: And some of you are asking is this the new time?
• 5:34
  Speaker 1: You must be not in the United States.
• 5:36
  Speaker 1: Yes, us markets will open.
• 5:39
  Speaker 1: Let me show you Time.
• 5:42
  Speaker 1: Nyc 907.
• 5:44
  Speaker 1: Us markets open in 20 minutes.
• 5:46
  Speaker 1: So welcome to the confusing world of summertime.
• 5:50
  Speaker 1: I actually prefer it.
• 5:52
  Speaker 1: It means market opens an hour earlier for me, which is nice.
• 5:55
  Speaker 1: So smash the.
• 5:57
  Speaker 1: You know what If you found your way here.
• 5:59
  Speaker 1: Well, the Fed upgrade NIO.
• 6:02
  Speaker 1: That would be nice, wouldn't it?
• 6:04
  Speaker 1: And so that's the one story.
• 6:08
  Speaker 1: We look at Nvidia in a second.
• 6:09
  Speaker 1: Another thing I mentioned over the weekend if you watched my little ramble on Sunday is this the gap between so you have two measures of employment, you have, you have, you have in blue.
• 6:30
  Speaker 1: We're going to call this Biden's just to irritate the Democrats out there, and I don't care whether people are Democratic or Republican, honestly agnostic and they are all as rubbish as each other, but just to wind some people up.
• 6:44
  Speaker 1: And then the household thing.
• 6:46
  Speaker 1: This is basically employers, so the data comes from employers, and employers are creating very few jobs, whereas the government is creating a lot of jobs.
• 6:59
  Speaker 1: And this gap here is a little hard to explain, and over time this gap has accumulated, because there's always a gap, because governments lie through their teeth and everywhere there are nine million wait for it.
• 7:17
  Speaker 1: More jobs, more jobs, more jobs According to the government, then then according to companies.
• 7:40
  Speaker 1: So there are nine million phantom jobs out there.
• 7:45
  Speaker 1: And it's the fantasy of a 3.8 percent unemployment rate.
• 7:50
  Speaker 1: It's complete nonsense.
• 7:51
  Speaker 1: That's somewhere like 8 percent or something like that.
• 7:55
  Speaker 1: Nobody has 3 percent unemployment rate.
• 7:58
  Speaker 1: It doesn't freaking exist.
• 7:59
  Speaker 1: It's complete nonsense, but they're manipulating it so much that people are believing it, and you have part of the Fed perhaps believing it and making policy decisions on this, which makes no sense.
• 8:11
  Speaker 1: The Fed will cut interest rates too late and we will get a recession after the election.
• 8:20
  Speaker 1: Mark my words, tell me whether I'm wrong at the end of the year.
• 8:28
  Speaker 1: Yeah, should we look at NVIDIA before we go into some other deeper thoughts of the day?
• 8:33
  Speaker 1: So let's have a look at NVIDIA here.
• 8:34
  Speaker 1: How bad was it?
• 8:36
  Speaker 1: Well, it dropped like 10 percent.
• 8:37
  Speaker 1: Well, something like 10 percent right Including aftermarket.
• 8:42
  Speaker 1: Which was it?
• 8:43
  Speaker 1: Well, it was 5.5 percent during the day and that takes us back like three days.
• 8:47
  Speaker 1: So is it really something worth talking about?
• 8:50
  Speaker 1: Not massively.
• 8:51
  Speaker 1: Look at the red lines we drew in.
• 8:52
  Speaker 1: Where did we say the resistance was 9.50.
• 8:55
  Speaker 1: 9.50 was the resistance?
• 8:57
  Speaker 1: Indeed, it was, and now we are dropping 800.
• 9:01
  Speaker 1: Is support?
• 9:02
  Speaker 1: 8.75?
• 9:03
  Speaker 1: Not particularly so we're down another half a percentage point here.
• 9:07
  Speaker 1: Pre-market.
• 9:08
  Speaker 1: Is it the end of the world?
• 9:09
  Speaker 1: I don't think so, and I'll tell you why.
• 9:12
  Speaker 1: I think the NVIDIA and NATUS are related to the Bitcoin NATUS and I used the term in a loving sense and Bitcoin is at $71,800, in a few cents Dollars even, and I kind of think the party is going to keep going.
• 9:29
  Speaker 1: It's just a little bit of a mini wobble.
• 9:31
  Speaker 1: However, if we do drop, a lot more market makers will sell and you might be thinking who?
• 9:42
  Speaker 1: Go to our sub stack?
• 9:44
  Speaker 1: We have a newsletter Sub stack.
• 9:46
  Speaker 1: Go to academyorg slash sub stack.
• 9:49
  Speaker 1: I put it in the chat and read what our in-house market makers put out today.
• 9:56
  Speaker 1: This name is Elliot.
• 9:57
  Speaker 1: He's a wonderfully nice guy and it's not that one, it's this one.
• 10:01
  Speaker 1: And, um, he was a market maker for years and he actually understands how this works.
• 10:09
  Speaker 1: He actually wants you through it.
• 10:10
  Speaker 1: I'm not going to explain it to you in full detail, it's all there, so get to it, and he tells you also what to do, so check that out.
• 10:18
  Speaker 1: That's January.
• 10:19
  Speaker 1: Actually it's here.
• 10:20
  Speaker 1: It's this one One hour ago.
• 10:21
  Speaker 1: This is no here.
• 10:24
  Speaker 1: It is NVIDIA stock puked 10%.
• 10:26
  Speaker 1: That's the one.
• 10:26
  Speaker 1: We'll put on another one.
• 10:27
  Speaker 1: Put on the second one.
• 10:28
  Speaker 1: Wow, a trade idea on Boeing.
• 10:31
  Speaker 1: I'm going to get your hands on that as well.
• 10:33
  Speaker 1: 50 people injured on Boeing Okay, interesting.
• 10:39
  Speaker 1: And if you read this and you understand it, you will be a better investor and you will look like Zeus Same muscles Promise you hit the like button, you also get instantly that strong.
• 10:53
  Speaker 1: Think about the calories you burn, the muscles you build by building that like button.
• 10:57
  Speaker 1: Massive shoulders will evolve within seconds.
• 11:00
  Speaker 1: So check it out.
• 11:00
  Speaker 1: You can find it on the website.
• 11:03
  Speaker 1: It's go to academysubstackcom.
• 11:05
  Speaker 1: The link is in the life chat.
• 11:08
  Speaker 1: So that's one thing.
• 11:10
  Speaker 1: Feel free to, of course, also ask questions.
• 11:12
  Speaker 1: That's why we do this live.
• 11:13
  Speaker 1: I'm very, very open to that.
• 11:15
  Speaker 1: And let's just run through a couple of things here.
• 11:17
  Speaker 1: There are a few of the type who's worried about the impending doom and markets collapsing and all of that.
• 11:24
  Speaker 1: The M7, the Magnificent 7.
• 11:28
  Speaker 1: It's a different color, which is this line here.
• 11:33
  Speaker 1: Their earnings are so amazingly glorious that actually the evaluations are pretty justified, and I'll put some more videos this week looking at what AI stocks actually overpriced and which aren't and so on, and I'll give you some more data points on that as well.
• 11:52
  Speaker 1: But right now I'm not worried about the Magnificent 7, because the earnings are growing a lot.
• 11:58
  Speaker 1: What I am worried about is the rest, the junk, the S&P 493.
• 12:05
  Speaker 1: And if you ever heard me go on about why ETFs suck, this is why.
• 12:10
  Speaker 1: Because what are you buying?
• 12:12
  Speaker 1: You have an opportunity to make a choice.
• 12:14
  Speaker 1: So would you like to only have the seven great products we have, or would you like me to throw in the 493 rubbish products that we have and you go?
• 12:26
  Speaker 1: Oh, I take them all.
• 12:27
  Speaker 1: I think who does that?
• 12:29
  Speaker 1: That's ETF investors down here.
• 12:32
  Speaker 1: And of course, it's better to be an ETF investor than to not be an investor.
• 12:37
  Speaker 1: But that's not really what this is about.
• 12:38
  Speaker 1: I think life should be about being better than average rather than just average.
• 12:44
  Speaker 1: And ETF is average.
• 12:45
  Speaker 1: But if you're starting out there, that's a good place to be.
• 12:48
  Speaker 1: It's a good place to be.
• 12:49
  Speaker 1: It's better than not doing it, way better than not doing anything at all.
• 12:52
  Speaker 1: But I think you probably want to be in the top a couple of percent.
• 12:59
  Speaker 1: Now let's look at sentiment here.
• 13:00
  Speaker 1: This is from Goldman Sachs and sentiment right now is a little stretched, but we've been more stretched.
• 13:08
  Speaker 1: I mean, last summer we were Eventually there, excuse me, eventually sentiment does come down.
• 13:19
  Speaker 1: So these kind of periods don't last forever, unless you get amazing news, and let's skip past that one the concentration of the top stocks 33%, so you're max seven.
• 13:35
  Speaker 1: And so on other top stocks Does that make sense?
• 13:37
  Speaker 1: Yes, why?
• 13:38
  Speaker 1: Because their earnings are better.
• 13:39
  Speaker 1: They're better businesses than everything else out there, so nothing wrong with that whatsoever.
• 13:44
  Speaker 1: Now, the 10 largest stocks have also given us the vast majority of returns this year, about half of all returns.
• 13:58
  Speaker 1: So again, you might want to ask yourself why do I own the fifth 500th stock and the S&P 500?
• 14:04
  Speaker 1: I don't really know the answer to that.
• 14:06
  Speaker 1: I don't think it makes a great deal of sense.
• 14:08
  Speaker 1: Is it super expensive?
• 14:11
  Speaker 1: Is the bubble about to pop?
• 14:13
  Speaker 1: Well, look at where we are.
• 14:14
  Speaker 1: We've got a multiple of about 25 times profits.
• 14:18
  Speaker 1: That means 25 years of company profits is what we're pricing it.
• 14:28
  Speaker 1: So, in a sense, what that means is you're getting a 4% yield on that investment, and that will be terrible if it stayed like that.
• 14:39
  Speaker 1: But we know that those companies are going to get more and more and more profitable, partly because AI will make it.
• 14:47
  Speaker 1: So.
• 14:47
  Speaker 1: Ai can fire tens of thousands of people and Zuckerberg stands on a balcony and shoots them and nobody really minds that.
• 14:54
  Speaker 1: They're less developers and less bean counters and less people now at Facebook.
• 14:57
  Speaker 1: Facebook became a lot more profitable.
• 14:59
  Speaker 1: He didn't actually shoot anybody.
• 15:01
  Speaker 1: No, he wouldn't do that.
• 15:02
  Speaker 1: He's a very nice man.
• 15:04
  Speaker 1: I'm told Now by some, probably by a Facebook ad where do bubbles pop COVID bubble 2020.
• 15:15
  Speaker 1: Popped at 36 PEcom bubble popped at 43 times PE.
• 15:25
  Speaker 1: So we probably have.
• 15:26
  Speaker 1: It's probably fairly safe to say we can go up another 20%.
• 15:31
  Speaker 1: Right, that would take us to 30X.
• 15:34
  Speaker 1: That's where bubbles, bubbles, bubbles, bubbles sometimes start to wiggle and then therefore enjoy the 20% up and then be ready for the 20, 30% down, and do that with a smile and know how to hedge, know how to protect your portfolio, know how to make money out of it and not panic and freak out and sell everything, right.
• 15:55
  Speaker 1: But that's the moment when you want to be buying us, the moment when you want to.
• 15:58
  Speaker 1: Well, it's too late to hedge at that point.
• 16:01
  Speaker 1: You want to do that right now.
• 16:02
  Speaker 1: But if you want to learn that, come and join me live tomorrow, 8 PM Eastern time for a live trading trading.
• 16:09
  Speaker 1: Links down below philxfriendsorg slash webinar.