Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - This is the LAST Investing Opportunity of Your Life + Stock Market News 27 June 2024

Transcript

Felix Prehn - This is the LAST Investing Opportunity of Your Life + Stock Market News 27 June 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Good morning to you on this ominous day.
• 0:04
  Speaker 1: It's not as bad as it sounds, but we've got some massive data out today, courtesy of the US government.
• 0:12
  Speaker 1: We've got some major earnings out today and I will tell you which way the market is heading, based on my crystal ball, no, based on actual market positioning, and this will hopefully make you into the smartest and best informed investor out there.
• 0:27
  Speaker 1: So you'll have a great end to this week.
• 0:30
  Speaker 1: Let's get cracking.
• 0:32
  Speaker 1: Make sure you smash the you know what and fondle the like button.
• 0:37
  Speaker 1: And here we are Prepare for a flat market.
• 0:41
  Speaker 1: But before we prepare for that, let me just show you a couple of things here this morning.
• 0:47
  Speaker 1: Levi, so Micron stock is trading at $136.
• 0:51
  Speaker 1: It was at $142 yesterday.
• 0:54
  Speaker 1: Pretty big drop.
• 0:57
  Speaker 1: Justified Probably not, I would say.
• 1:00
  Speaker 1: I think earnings were actually pretty good.
• 1:02
  Speaker 1: Margins were very good.
• 1:03
  Speaker 1: The whole supply chain to Micron is happy.
• 1:06
  Speaker 1: It's just people had higher expectations, I think, of guidance.
• 1:11
  Speaker 1: And it's a little bit this where we are in the AI world, that everybody is just hoping everything is always perfect.
• 1:16
  Speaker 1: It wasn't perfect, it was pretty good.
• 1:18
  Speaker 1: So it could be an opportunity for traders or long-term nibblers.
• 1:25
  Speaker 1: Secondly, levi Strauss and company.
• 1:29
  Speaker 1: You know the guys who make jeans.
• 1:30
  Speaker 1: I had their jeans in the 90s Trading down here at $19.
• 1:35
  Speaker 1: Yesterday it was up here at $23.
• 1:38
  Speaker 1: That's a 20% drop.
• 1:40
  Speaker 1: Why Softer outlook?
• 1:42
  Speaker 1: And it takes them literally back to March prices, which goes to show I think people are getting a little bit itchy about consumer stocks, which I've been saying for some time now.
• 1:57
  Speaker 1: We should be a little bit nervous about consumer stocks Pre-market this morning.
• 2:02
  Speaker 1: Not too shabby.
• 2:03
  Speaker 1: Nvidia's down a bit, visa Master down, tesla sort of flat.
• 2:07
  Speaker 1: But Amazon is continuing its rally.
• 2:09
  Speaker 1: A nice big technical buy signal there from Amazon this morning.
• 2:14
  Speaker 1: I'll also show you what other big, beautiful, shiny buy signals we have this morning.
• 2:20
  Speaker 1: If I can find some, let me just pull it up for you here inside Trade Vision.
• 2:25
  Speaker 1: Let's look at uptrends.
• 2:27
  Speaker 1: This is the change from yesterday.
• 2:28
  Speaker 1: So let's have a look on.
• 2:32
  Speaker 1: We limit it to S&P stocks, shall we?
• 2:35
  Speaker 1: Well, paul, jp Morgan, meta, verizon, coca-cola very much in uptrends.
• 2:40
  Speaker 1: And what's going down in the S&P Quite a lot more right, nike here leading the party, visas down from yesterday.
• 2:49
  Speaker 1: So again, it shows the separation of the big tech stocks leading the market.
• 2:55
  Speaker 1: And look at how much stuff's actually flashing sell signals here.
• 3:00
  Speaker 1: This is all inside Trade Vision, if you want to get yourself a three-month trial to that.
• 3:05
  Speaker 1: There's a link down below.
• 3:06
  Speaker 1: Go and check it out.
• 3:08
  Speaker 1: But let's look at this for the moment.
• 3:10
  Speaker 1: So I always give you these data points because I think this is super important.
• 3:15
  Speaker 1: It's at the beginning of the week.
• 3:17
  Speaker 1: I don't think the market was going to go anywhere this week and I'm also waiting out tomorrow's yes, pce inflation papa powell's favorite inflation metric sort of like a like a birthday for him tomorrow and that could really move the market.
• 3:34
  Speaker 1: So what are we looking at here?
• 3:36
  Speaker 1: We're looking at the s&p 500.
• 3:40
  Speaker 1: You know, essentially what happens is that at 5,500.
• 3:45
  Speaker 1: So at 5,500 you get more supply, as in people are selling, and then down here at 5 425, you get more demand, as in people are buying.
• 4:03
  Speaker 1: You might want to take a screenshot of this or write this down.
• 4:05
  Speaker 1: This is until the 28th of June, right?
• 4:09
  Speaker 1: You could, in theory, do a trade on that.
• 4:11
  Speaker 1: I've got one here on the screen on the right hand side.
• 4:13
  Speaker 1: I wouldn't recommend it.
• 4:14
  Speaker 1: It's far too short, it's far too risky.
• 4:16
  Speaker 1: But just to illustrate what that would look like, you would be making money Basically.
• 4:25
  Speaker 1: You'd be saying okay, we're trading here and here, as in, just slightly above and below the support and if we stay in that zone, we would make a 69% profit.
• 4:32
  Speaker 1: Seriously, 69%, which is not bad, the trade being $592 in size.
• 4:37
  Speaker 1: I wouldn't do it.
• 4:38
  Speaker 1: It's far too short in duration and far too risky.
• 4:42
  Speaker 1: But I just wanted to illustrate what is actually possible.
• 4:46
  Speaker 1: Now, what troubles me a little bit more than a flat market and a slight pause and breather and sort of the general AI rally, is that hedge funds, hedges you know the lovely people who make the world go round and are the most important people in the world.
• 5:05
  Speaker 1: That's what they think they are well selling.
• 5:09
  Speaker 1: What are they selling?
• 5:11
  Speaker 1: Tmt tech stocks, and they're selling tech stocks individual names of tech stocks at the highest rate since like forever.
• 5:24
  Speaker 1: I mean like forever, I mean more than 2018.
• 5:27
  Speaker 1: This was 2018.
• 5:29
  Speaker 1: And who's buying the tech stocks?
• 5:30
  Speaker 1: Because the tech stocks aren't going down?
• 5:32
  Speaker 1: Well, it's you.
• 5:33
  Speaker 1: Retail net purchases of stocks are at pretty high levels about a billion dollars a day.
• 5:45
  Speaker 1: Retail is buying, and consecutive days where the retail you and me are buying more stocks is super, super high.
• 6:02
  Speaker 1: So we've never really seen a period where, every single day, retail is buying.
• 6:07
  Speaker 1: So the FOMO buyers are buying tech like mad.
• 6:11
  Speaker 1: And that doesn't mean the market can't go up anymore.
• 6:14
  Speaker 1: It doesn't mean it's the end of the world.
• 6:16
  Speaker 1: It doesn't mean there isn't an opportunity, and I'll walk you through some opportunities in a moment.
• 6:20
  Speaker 1: But where's your blue blazer?
• 6:24
  Speaker 1: It's 100 degrees Fahrenheit today, something like that, 35 Celsius.
• 6:29
  Speaker 1: So blue blazer is hanging on a chair next to me and I know standards are slipping.
• 6:34
  Speaker 1: Right.
• 6:34
  Speaker 1: Wouldn't have been allowed that at school.
• 6:36
  Speaker 1: You would have gotten beaten to pulp.
• 6:38
  Speaker 1: Actually, you wouldn't have gotten beaten, but yeah, you would have been told off severely.
• 6:41
  Speaker 1: Wouldn't have dared.
• 6:42
  Speaker 1: Quite frankly, in 2000, the dot-com bubble tech stocks made up 35% of the S&P and right now we're just below that.
• 6:56
  Speaker 1: So you're going to see a lot more of these comparisons coming out.
• 6:59
  Speaker 1: Now I think there is a difference.
• 7:01
  Speaker 1: There's an interview with Bill Gates I saw yesterday.
• 7:03
  Speaker 1: Slightly odd man, isn't he?
• 7:06
  Speaker 1: He's a bit of an odd man.
• 7:07
  Speaker 1: Anyway, he was saying he thinks it's different because there are actually profits and the company's driving this.
• 7:14
  Speaker 1: The risk here is the following the whole AI rally is based on what it was basically NVIDIA and they are selling.
• 7:23
  Speaker 1: So this is NVIDIA and they are selling.
• 7:26
  Speaker 1: So this is NVIDIA and they are selling, so sells GPUs to Microsoft.
• 7:35
  Speaker 1: Apparently, microsoft is 22% of NVIDIA revenue Goes to show how much Microsoft's buying.
• 7:44
  Speaker 1: And then you've got Microsoft I made Microsoft into a Russian spy You've got, obviously, your Tesla and your Amazon and your Amazon and you know a bunch of others, and they are all betting on the fact that there will be demand for this insane cloud computing capability where we can compute stuff at a much, much, much, much higher rate.
• 8:15
  Speaker 1: That's the gamble, because there is, of course, a possibility that industry and software companies everyone just goes, customers just go, just don't need it, and people don't really think about that.
• 8:26
  Speaker 1: Right, that is a potential risk that we don't really want.
• 8:30
  Speaker 1: Chat GPT-8.
• 8:32
  Speaker 1: Maybe big industries like we got a lot of data, yeah, we computed like that we don't really care to.
• 8:40
  Speaker 1: It's a possibility.
• 8:42
  Speaker 1: Or maybe, rather than like we're not doing it this year, we might be looking at it.
• 8:45
  Speaker 1: It takes us another three years to look at it, in which case Microsoft and Tesla and Amazon and Facebook and everybody else has built all these things and will at some point slow their spending on NVIDIA.
• 8:55
  Speaker 1: You'll find out in two or three years, but for now, they're buying.
• 9:04
  Speaker 1: They've got money.
• 9:04
  Speaker 1: Microsoft's got money, amazon's got money.
• 9:06
  Speaker 1: Microsoft's got money, amazon's got money, facebook's got money, they all got money.
• 9:08
  Speaker 1: So they're sending that money to NVIDIA.
• 9:10
  Speaker 1: Nvidia is sending some of that money to, you know, smci and the whole kind of supply chain.
• 9:14
  Speaker 1: So for the moment everyone's kind of happy and therefore we are sort of the beneficiary of the high profit margins at these big tech stocks.
• 9:23
  Speaker 1: So I actually think the party's going to keep going for a little while.
• 9:26
  Speaker 1: But today's data this is a screenshot of literally today's macro data just out here.
• 9:31
  Speaker 1: It says watch out.
• 9:34
  Speaker 1: And what does it say you should watch out for?
• 9:36
  Speaker 1: Okay, let's just color code this like we're three.
• 9:40
  Speaker 1: So durable goods orders came in at 0.1%, as expected.
• 9:46
  Speaker 1: Basically it's kind of like neither here nor there.
• 9:48
  Speaker 1: It's sort of like okay, gdp growth rate was pretty much as expected, doesn't really matter.
• 9:53
  Speaker 1: Ex-transport is a little bit lower.
• 9:56
  Speaker 1: Okay, could be screaming a little bit the big R recession maybe.
• 10:02
  Speaker 1: Then initial jobless claims are basically flattish, doesn't really make any difference.
• 10:08
  Speaker 1: Retail inventory is a little lower.
• 10:10
  Speaker 1: Don't think it makes a huge difference.
• 10:12
  Speaker 1: Continuing jobless claims pretty much flattish, doesn't really make any difference.
• 10:16
  Speaker 1: You've got corporate profits minus 2.7%.
• 10:26
  Speaker 1: We were expecting it to be minus 1.7%.
• 10:28
  Speaker 1: That's actually a problem Because the whole party, the whole stock market rally works on the basis that stock market profits continue to accelerate.
• 10:39
  Speaker 1: Growth gets better, not worse.
• 10:41
  Speaker 1: So that number is a little bit worrying Now, honestly, we only care about the corporate profits at the big boys and not all the little companies.
• 10:51
  Speaker 1: But there is obviously, as I said, the downtrend from yesterday is pretty significant and then the uptrend is pretty limited.
• 11:01
  Speaker 1: Jp Morgan, meta, verizon, google there's only like five companies here, right, so a lot less up than down, and at some point that will cause a problem.
• 11:11
  Speaker 1: But for the moment, as long as the big tech stocks and AI companies and so on do well and hopefully Micron will recover a little bit here from being down very significantly, the party will keep going.
• 11:25
  Speaker 1: But watch out for that.
• 11:26
  Speaker 1: Watch out for the corporate profit numbers.
• 11:27
  Speaker 1: That's ultimately what matters.
• 11:29
  Speaker 1: And if that scares you sufficiently to become a contrarian, then here is a contrarian trade for you.
• 11:36
  Speaker 1: Utilities are trading at super, super low multiples.
• 11:42
  Speaker 1: We're trading at what was that?
• 11:44
  Speaker 1: 2018?
• 11:45
  Speaker 1: That was 2018 multiples.
• 11:46
  Speaker 1: We're trading at what was that?
• 11:46
  Speaker 1: 2018?
• 11:46
  Speaker 1: That was 2018 multiples.
• 11:48
  Speaker 1: Kind of that sort of early 2000 zone.
• 11:52
  Speaker 1: Nobody wants the stuff, nobody wants utilities.
• 11:55
  Speaker 1: So it could be time to maybe go bullish utilities, the other thing I think might be worth looking at for people who have a little bit of a longer term horizon is growth small caps, and there is an ETF on that, isn't it?
• 12:14
  Speaker 1: What is it?
• 12:16
  Speaker 1: I?
• 12:17
  Speaker 1: What is it?
• 12:17
  Speaker 1: Growth small there's an ETF on that.
• 12:28
  Speaker 1: Yes, ijt, that's not the one I had in mind.
• 12:33
  Speaker 1: Iwo, that's the one I had in mind.
• 12:36
  Speaker 1: That's the one I had in mind.
• 12:37
  Speaker 1: I think that could be, again for people who have a bit of a longer-term horizon, kind of interesting, because it's very significantly below its 2021 highs.
• 12:49
  Speaker 1: And if you compare this to JQQQ, see how the orange is QQQ, see how that's outperformed the small caps.
• 13:00
  Speaker 1: So the large guy is massively outperforming here.
• 13:02
  Speaker 1: Since 2022, large caps basically up 163%.
• 13:07
  Speaker 1: Small growth companies are only up 71%.
• 13:11
  Speaker 1: So rate cuts should help fill that gap, which I think might be might be an idea.