Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - What the FED Just Said + Stock Market News 16 July 2024

Transcript

Felix Prehn - What the FED Just Said + Stock Market News 16 July 2024 · Felix Nikolas Prehn's Podcast

• 0:03
  Speaker 1: Felix here and welcome to this pre-market live.
• 0:06
  Speaker 1: Lots happening today.
• 0:07
  Speaker 1: Lots happening From retail data to small cap rallies to, of course, what the Fed just said, Because Jerome Powell, the magnificent Fed chair, gave a very lengthy interview yesterday and it's very important you understand what that says and you understand what's happening with interest rates and how we then make money out of that, how we translate that into actionable things that can make us make money.
• 0:32
  Speaker 1: So, hello, Winstonians, I quite like that one.
• 0:36
  Speaker 1: Logan, Appreciate that Electrolyte scar kicking in, which is why we're live now.
• 0:42
  Speaker 1: All right, let me share my screen with you and we'll hop straight into it.
• 0:46
  Speaker 1: That's not it.
• 0:48
  Speaker 1: Let me move up a little bit here on our lovely little chart.
• 0:52
  Speaker 1: So headline from Bloomberg and also obviously super happy to talk about the new VP pick of Trump and so on.
• 1:01
  Speaker 1: Again, not as a political opinion, but just like.
• 1:03
  Speaker 1: What does that mean for stocks?
• 1:05
  Speaker 1: What stocks are going to benefit from this, and so on?
• 1:07
  Speaker 1: Powell says US data offers confidence, but inflation is on path to 2%.
• 1:14
  Speaker 1: He says risks to employment and inflation are now more balanced and he's moving to somewhat of a confidence level.
• 1:23
  Speaker 1: That's kind of bullish talk from a central banker.
• 1:26
  Speaker 1: It doesn't sound like it, but it definitely is.
• 1:28
  Speaker 1: So let's dive a little deeper into that.
• 1:30
  Speaker 1: Let's look at some of his key quotes.
• 1:31
  Speaker 1: Let's look at the market expectations on interest rates and how we make money out of that.
• 1:36
  Speaker 1: If you haven't already, join us and see how we're up $16,000.
• 1:41
  Speaker 1: Actually, we're up a lot more than that.
• 1:42
  Speaker 1: I'll show you in a second.
• 1:46
  Speaker 1: This is on a $30,000 teaching portfolio.
• 1:47
  Speaker 1: So we're up over 50% so far this year.
• 1:50
  Speaker 1: In fact, we're up actually probably another 20% on top of that Just this month alone.
• 1:56
  Speaker 1: I'll show you that in a second and you can grab yourself still a free seat to our three-day masterclass kicking off in 11 hours, and we're gonna have some fun.
• 2:07
  Speaker 1: I'll teach you exactly my strategy and everything else.
• 2:11
  Speaker 1: Not everything else, but how do we set up trades, why, what indicators do we use, how do we automate the exits and how?
• 2:18
  Speaker 1: We can therefore do this in like two to three hours a week, so it's as passive as possible.
• 2:23
  Speaker 1: Then you can do it while you're working or if you don't want to work, or whatever your situation might be.
• 2:27
  Speaker 1: So head over to phoenixfrontalrockcom slash masterclass and join over 2,000 people who have signed up for this masterclass, which I'm massively excited by, and I love you guys for that.
• 2:36
  Speaker 1: So we'll have some fun and you're going to feel really left out if you don't join, Getting some FOMO around that event.
• 2:43
  Speaker 1: Now this is here, Powell speaking to David Rubenstein or Steen at the Economic Club, and this is the important bit here the three readings in the second quarter, including the one from last week, add somewhat to confidence.
• 3:02
  Speaker 1: So he's saying he's feeling more confident in being able to cut rates.
• 3:06
  Speaker 1: And then he says, now that inflation has come down and the labor market has indeed cooled off, we're going to be looking at both mandates, so interest rates and jobs market.
• 3:20
  Speaker 1: And then he says the golden sentence they're in much better balance.
• 3:25
  Speaker 1: The whole thing around Jerome Powell's thing was that we had two vacancies in the jobs market for one job seeker and he was saying that's what caused the inflation and he probably believes that by now.
• 3:48
  Speaker 1: Nothing to do with printing $4 trillion of extra US dollars.
• 3:52
  Speaker 1: No, no, no, no.
• 3:53
  Speaker 1: That was just a bit of a bender.
• 3:56
  Speaker 1: But where are we now?
• 3:58
  Speaker 1: We're at, basically, one vacancy for one job seeker, so we are in balance.
• 4:02
  Speaker 1: And what does that therefore mean?
• 4:03
  Speaker 1: It means next we're at, basically, one vacancy for one job seeker, so we are in balance, and what does that therefore mean?
• 4:05
  Speaker 1: It means, next, we're going to go into less vacancies than we need and therefore we head into a recession, unless the magnificent Jerome Powell starts cutting rates pretty soon.
• 4:13
  Speaker 1: And here's a bit more.
• 4:17
  Speaker 1: Last week he said that the balance between inflation and the balance between inflation coming down and the market's cooling is the thing keeping him awake at night.
• 4:31
  Speaker 1: So he's worried that he's missing the boat.
• 4:34
  Speaker 1: He's worried that he's missing the moment and, as such, rate cuts.
• 4:37
  Speaker 1: Expectations are rising and many are hoping the Fed will start to communicate a change in policy in August, where they meet in Jackson Hole and they dig a very, very large hole.
• 4:48
  Speaker 1: I've not been to Jackson Hole Apparently good skiing around there.
• 4:52
  Speaker 1: I wouldn't mind checking that out.
• 4:53
  Speaker 1: Now we've got a bit more for you, because I think it's always good to listen to management of the large companies that actually matter, Because if you understand that, you can see the insights and the trends before everybody else and therefore you can make more money out of this, which is really what it's all about.
• 5:10
  Speaker 1: Right?
• 5:10
  Speaker 1: We're not seeing the same growth in consumer spending that we had in prior quarters.
• 5:19
  Speaker 1: There's less traffic in retail venues that we work with, and there are clear signs of a softening labor market and a tightening of the consumer budget, says Citigroup.
• 5:28
  Speaker 1: Now Citigroup has a heck of a lot of consumer data because they have a heck of a lot of credit cards out there and accounts and so on.
• 5:34
  Speaker 1: And what does that say to you?
• 5:36
  Speaker 1: That reconfirms what Jerome Powell is saying, because Powell is reading this too right.
• 5:42
  Speaker 1: The man might occasionally act like an idiot, but he actually isn't.
• 5:44
  Speaker 1: He's a former Wall Street chap.
• 5:45
  Speaker 1: The man might occasionally act like an idiot, but he actually isn't.
• 5:46
  Speaker 1: He's a former Wall Street chap.
• 5:50
  Speaker 1: Rate cuts and we'll get to in a second how we benefit from that more.
• 5:55
  Speaker 1: Here are some of the and I always like to be transparent on good days and bad the trades we were talking about also on Friday can't remember last week like bullish Coinbase up $1,700, bullish Maura, which essentially is a Bitcoin play, up $4,000.
• 6:14
  Speaker 1: Our small cap trade, IWM because interest rates are coming down, is up $755, which is 85% of the profit it can make.
• 6:24
  Speaker 1: Paypal, which was down a couple of thousand dollars, is recovering very, very nicely.
• 6:30
  Speaker 1: Energy trade even is starting to make some money.
• 6:33
  Speaker 1: So a lot of the things that we look at because they're based on data.
• 6:38
  Speaker 1: They're based on facts pay off quite sweetly.
• 6:41
  Speaker 1: So it makes sense to understand the market a bit more Now.
• 6:44
  Speaker 1: What we'll go through tomorrow will actually be a lot less complicated than this, because, to start with, you want to keep it really simple, because most people just want passive income right, they don't really want one complicated.
• 6:56
  Speaker 1: But I just wanted to show you this, so this is not included in my 50% up so far this year on our portfolio.
• 7:00
  Speaker 1: So we're probably up 60, 70% or something like that.
• 7:04
  Speaker 1: Now we also have out, so maybe you want to come and join our masterclass Today.
• 7:10
  Speaker 1: Today, isn't it?
• 7:11
  Speaker 1: Yes, it's in 11 hours.
• 7:12
  Speaker 1: Felixrentzorg slash masterclass.
• 7:14
  Speaker 1: Retail sales are up.
• 7:17
  Speaker 1: Well, they're not up, they're flat 0%, 0% retail sales.
• 7:23
  Speaker 1: So Citigroup probably has some good data there.
• 7:25
  Speaker 1: If you exclude autos, they did go up a bit.
• 7:29
  Speaker 1: If you exclude gas and autos, they actually went up a fair bit.
• 7:34
  Speaker 1: So the consumer is spending less money on big purchases like cars.
• 7:40
  Speaker 1: And why would they do that?
• 7:41
  Speaker 1: Because they're worried about the future.
• 7:55
  Speaker 1: Screen dropped, Did it?
• 7:59
  Speaker 1: Seriously, you guys can't see me.
• 8:00
  Speaker 1: You can't hear me.
• 8:00
  Speaker 1: I can see it.
• 8:02
  Speaker 1: No, Just reopen it.
• 8:05
  Speaker 1: Okay, that's weird.
• 8:07
  Speaker 1: That's a first from YouTube.
• 8:11
  Speaker 1: Did the stream crash?
• 8:12
  Speaker 1: Oh, very, very odd.
• 8:13
  Speaker 1: Looks good on my end Stream health.
• 8:17
  Speaker 1: It says, Okay, I'm streaming at too high a rate.
• 8:24
  Speaker 1: That's what it's saying.
• 8:25
  Speaker 1: I'm not sure we can do anything about that.
• 8:27
  Speaker 1: It's fine for you.
• 8:29
  Speaker 1: Fine for you.
• 8:29
  Speaker 1: Reload, All good.
• 8:30
  Speaker 1: Okay, Don't think we can change stream settings midstream, can we?
• 8:35
  Speaker 1: No, I don't think so.
• 8:41
  Speaker 1: No, Okay, All right, I'll play with settings a bit for tomorrow.
• 8:45
  Speaker 1: Good sound, good picture.
• 8:48
  Speaker 1: Can't see anything.
• 8:49
  Speaker 1: You're good, Elephant Brazil.
• 8:50
  Speaker 1: You're back, Okay, all good.
• 8:51
  Speaker 1: Okay, okay, I appreciate you guys letting me know that.
• 8:53
  Speaker 1: Thank you.
• 8:54
  Speaker 1: So yeah, essentially, the consumer is spending money, but not spending money on big ticket items, right?
• 9:00
  Speaker 1: So retail sales are plummeting, which is, you know, at the moment, a good thing for us.
• 9:10
  Speaker 1: Now, if you look at the real retail data, you know they told us it was 0%.
• 9:15
  Speaker 1: Right, this is, of course, the government, the government, the government.
• 9:20
  Speaker 1: So the government.
• 9:20
  Speaker 1: The official number is 0% If you take out the adjustments, the manipulation, the corruption, the massaging of figures.
• 9:32
  Speaker 1: Right, making stuff up.
• 9:34
  Speaker 1: Well, retail sales actually fell minus 2.8%.
• 9:40
  Speaker 1: I know, but it's hard to get reelected when you put that kind of data out.
• 9:46
  Speaker 1: So therefore, they massage the numbers to zero.
• 9:49
  Speaker 1: So zero in reality means it's pretty bad.
• 9:52
  Speaker 1: Right, that's what happens when you live in a banana republic.
• 9:54
  Speaker 1: You have to look underneath the hood of every piece of data that the government puts out.
• 9:58
  Speaker 1: So actually, retail sales data is pretty horrific.
• 10:01
  Speaker 1: It goes and matches exactly what Citigroup says, which is people are not buying stuff, and that's important.
• 10:10
  Speaker 1: Now there are a couple of things I wanted to highlight that I sort of try to do every day, things that I'm looking at that I like LLY, fat drugs, right, Drugs for the horizontally enlarged.
• 10:25
  Speaker 1: You can't be bothered to exercise or cut back on pie.
• 10:27
  Speaker 1: They love LLY and NVO.
• 10:31
  Speaker 1: But the yeah price has gone up a fair bit, but earnings per share has actually gone up quite a lot.
• 10:42
  Speaker 1: So the price earnings ratio, which is that sort of weird little gray line down here can we get a grayish pen?
• 10:49
  Speaker 1: I think we can.
• 10:50
  Speaker 1: This one here is actually not that expensive If you look at it.
• 10:56
  Speaker 1: It hasn't gone up that much.
• 10:57
  Speaker 1: Why not?
• 10:58
  Speaker 1: Because profits have gone up so much.
• 11:01
  Speaker 1: It's a little bit like the NVIDIA story.
• 11:02
  Speaker 1: So, yes, the price looks crazy, but actually the forward PE is kind of exactly where we were in the beginning of the year.
• 11:10
  Speaker 1: So I'm still very much liking fat drugs all over and, yeah, Novot is doing pretty nice.
• 11:19
  Speaker 1: Pi is nice.
• 11:20
  Speaker 1: I love good Pi.
• 11:21
  Speaker 1: I can understand it.
• 11:22
  Speaker 1: I'm not saying anybody should cut down on Pi.
• 11:25
  Speaker 1: In fact, you should all eat more pie.
• 11:27
  Speaker 1: Therefore, my NVO holdings make more money.
• 11:31
  Speaker 1: Now the market is now pricing in a rate cut with a whopping basically 100% likelihood pretty much.
• 11:41
  Speaker 1: So we're going to get a rate cut in September.
• 11:44
  Speaker 1: That's what the market's saying.
• 11:45
  Speaker 1: So 87% says one cut.
• 11:47
  Speaker 1: So 87% says one cut, 12% says two cuts.
• 11:53
  Speaker 1: So you can add those together and you're pretty much at 100%.
• 11:57
  Speaker 1: So everybody thinks we're going to get rate cuts.
• 11:59
  Speaker 1: So how do you make money out of that?
• 12:00
  Speaker 1: Well, you have to first of all understand what benefits from lower rates Small caps, for example, do, and I've made a couple of videos in the last week that explain that.
• 12:09
  Speaker 1: Maybe you want to go and watch one of those afterwards.
• 12:11
  Speaker 1: Now I like one particularly, and I highlighted this also last week IWO, IWO.
• 12:20
  Speaker 1: So there's IWM, which is just plain old vanilla small caps, small stocks, all 2,000 of them.
• 12:28
  Speaker 1: Iwo are the growth small caps and they are particularly allergic to high interest rates and because rates are expected to come down, here is IWO.
• 12:44
  Speaker 1: It is exploding up.
• 12:47
  Speaker 1: It was trading four days ago at 263.
• 12:49
  Speaker 1: Now it's at 283.
• 12:50
  Speaker 1: It's $20 up.
• 12:51
  Speaker 1: That's quite a lot for an index like that, right, or an ETF like that.
• 12:56
  Speaker 1: So I like that very much.
• 12:57
  Speaker 1: If you look at our little indicator there in the background, when it goes green, green, green like a Christmas tree it's generally a bicycle.
• 13:04
  Speaker 1: It doesn't mean, of course, you still need a strategy.
• 13:11
  Speaker 1: You can't just sort of go, oh, let me just follow the indicator blindly.
• 13:12
  Speaker 1: But it's something that makes me feel very bullish.
• 13:14
  Speaker 1: So if I had to put money on something, I would put it on that.
• 13:16
  Speaker 1: Now why did I put money instead on?
• 13:19
  Speaker 1: Let me show you here why did I put money instead on IWM?
• 13:25
  Speaker 1: So we did here.
• 13:27
  Speaker 1: Because there are no options on IWO and I like my options.
• 13:31
  Speaker 1: So we've done very nicely with IWM and we're going to have to do something else because this one's hitting its profit ceiling here.
• 13:37
  Speaker 1: Basically already it can only go up so much and we have a trading stop loss on this.
• 13:43
  Speaker 1: So therefore I'm letting it run so much and we have a trading stop loss on this.
• 13:47
  Speaker 1: So therefore I'm letting it run.
• 13:48
  Speaker 1: But we are right now at $755 profit.
• 13:50
  Speaker 1: We can only make an extra 130 and then we're topped out on the particular trade.
• 13:53
  Speaker 1: It's now a risk-free trade because if it does drop what is it 10 cents or something, 10% approximately then we close out the trade automatically.
• 14:06
  Speaker 1: I'll teach you again all that stuff over the coming days.
• 14:09
  Speaker 1: No-transcript.