Market Trends and Future Outlook

Speaker 1 0:01

Felix here and welcome to this pre-market live stream . I want to walk you through the two things that are scaring the market right now and why we might be seeing that beginning of the year dip . And then I want to walk you through the four reasons why , in my humble opinion , that dip won't last and things will be absolutely freaking amazing in 2025 for other investors and traders , but we need to be in the right stocks and in the right sectors . I don't want to walk you through that as well . Then , as a bonus , I'm going to give you some insight into whatever charts and stocks you ask me about here live in the chat . So please do Now . There are two new kittens in this very study , so I'm a little bit concerned that we might go offline at some point because these guys can't be trusted . I don't know if I can get any of them , but hang on , here is one . Here is one . This is the larger of the two . This is albert . You're training him up to be an options trader , aren't we albert ? Something like that ? So , yes , that's what's going on here .

Speaker 1 1:01

Good morning everybody . Let me share my screen with you and walk you through the key reason . People are feeling a little bit spooked after the holidays and I hope you had lovely Christmas holidays . It's a mad , mad house in here . I shouldn't have let them in and they're now crawling over every wire and absolutely everything . I don't know if you can hear them All right . So this is . This is what people are freaked out about .

Speaker 1 1:25

It's the US 10-year government bond yield , the . What you ask . Indeed , that would make you kind of a normal individual if you thought that that was the . Why do we care ? Well , think about it this way the yield is sort of like the interest rate that it pays . And there are two cats crawling on my desk and the easiest way to think about that is if interest on bonds is high , where do people want to put their money ? Think about it as like there are bonds over here and then there are stocks over here . Where do you put your money if interest rates of bonds are high ? Well , you're going to put more of your money into the bonds , right , and you're going to put a little bit less of your money into stocks , at least if you are . You know , a fund or something . I'm going to get onto funds in a moment here , I don't know , soon be used to the camera ? Well , there was . Literally . They were just crawling over the thing as well . So , madhouse , absolute madhouse in here . The easiest way I always like to think of it , it's just like if interest rates are high for bonds , then well , more money flows into bonds . There's a little bit more to that , but that's sort of the way I look at that .

Speaker 1 2:38

So why are they high ? Well , it's basically the market saying we don't think rates are going to come down and we think this new government , these Trumponians , are going to do something that's going to cause more inflation . This one's making a racket . Now why are you making such a racket ? Come on here , slightly distracted here this morning . So Is that likely ? Well , there is an argument that tariffs are inflationary . There is definitely something to that , at least in the short term . So if we get all those tariffs , we might see higher inflation and that might therefore lead to higher what ? Interest rates , right ? Hence the higher bond rates . Now , it doesn't take into account a bunch of other things , like they're also going to reduce the size of the government , although that might not happen as quickly , and thanks Fox Gaming for keeping things alive and that would , in theory , reduce inflation , because the most inflationary thing in the world is what the government right , the government spending money Slightly concerning that .

Speaker 1 3:50

There are cats crawling all over the router and everything else . So that's the first thing people are freaked out about . The second thing people are slightly freaked out about and there's maybe actually a third thing , but I'll get onto that in just a second the cats add to the life . Yeah , if we'll get on to that in just a second . The cats add to the life . Yeah , if we can get them more into the stream .

Speaker 1 4:08

Where are they ? Seriously , where are they ? I can only see one Worrying , but I can hear a second one , like she's trying to break out of something . I'm going to close that window at the top here . One second . These guys are unpredictable . So this is Bank of America . They've just come out , bank of America , you know , biggest bank out there , basically bank in the US and they've come out and they've said we expect 17 billion of US equities , as in stocks . I don't know why they can't just use the word stocks to sell into year end . They're saved on the D .

Speaker 1 4:54

Okay , let me show you the culprit number two here . This is culprit number two . We call this one Sabrina , who is very , very sweet and rather small and very , very , very naughty , aren't you Very naughty ? So , future chief research analyst material , of course , but at the moment very much in training and chewing everything . So , yeah , we're expecting , basically , a little bit of a sell-off .

Speaker 1 5:22

Why are they selling off it's pension funds ? Now , why , you wonder ? Are pension funds selling stocks in the most wonderful rally ever ? Right , because they want to miss out on the rally ? Maybe ? Maybe they just had too good of a year ? No , it's the quarterly rebalance . And why do they rebalance ? Well , they have a rule , say . Their rule might be this is their pie , and maybe they need to be 50% in stocks and they need to be 50% in bonds . That would be sort of a simplified pension fund setup . So what's happened ? Well , the stock markets rallied 30-something percent this year , so stocks now make up more than the 50% . So they're going to have to sell some stocks . It's a way you insure underperformance . That way , your pensioners stay poor , which is sort of the goal , it seems , of most pension funds . I'm being a bit cynical here , but that seems to be what most of them achieve .

Speaker 1 6:27

Now , I did tell you there were four pieces of good news here , though , which is which is really . These guys are just climbing over everything , which is good news , and I think I think we have to always separate the media and the news headline and the story . So I'm trying to focus here into short-term FUD , and then medium-term and then longer-term . And as an investor you kind of want to think in those timeframes . So short-term is like a week or two , medium-term is like a month or two or three maybe , and then longer-term is five years , five years , 10 years , 20 years , 30 years , that sort of type of thing . And then there's the very long term and then you're dead . So game's over .

Speaker 1 7:12

They're now chasing each other through this little study . So in the short term , retail that's you and me we're selling less than expected . So typically in December there is a thing called tax loss harvesting , which basically means you close your losing positions , you realize those losses and then you close some winners and then you offset the losses against the winners and that way you pay less capital gains tax . That's a big thing in the US , and so typically in December you see a little bit of that . The kiddies , mind you electrolytes . I fear they've already had some of those , otherwise they wouldn't be bouncing off the oh , they've got one of those cable ties off and are now kicking that around on the floor . Well , I'm glad they're having some fun they should . They are naughty kittens , so this is kind of offsetting , in my view , a little bit here what the pension funds are doing .

Speaker 1 8:06

Now let me show you briefly what's live pre-market . There's a little bit of that headline news here flowing into the market , right , which is all the red . It's all moderate red , but it's all red now nevertheless . So let's understand a bit more what's happening in the medium term , right ? So we had data out just before Christmas . What if we trade in a Roth IRA ? That makes you a very smart man , paul , and keep doing that , because that's the best place to do it . If you're American and you're not using your Roth IRA to trade , I would argue you're missing the biggest tax gift that government will ever give you . They're going to chew the wires and get shocked like christmas vacation . Well , let's hope they don't do that . So far they seem to be um happy with the clippy things , so two of them running around the floor here can't get to the buggers .

Speaker 1 9:04

What's the good news ? There are more people unemployed . Yes , and as a former banker , it's the sort of thing you'd expect me to say right , let's celebrate guys , let's open the shampoos . There are more people unemployed . I didn't mean it in that way , but it might come across like it that way . So , yes , we have more unemployed people now than we've had at any point in the last , in more than three years , which is a sign that it takes longer for out-of-work people to find a job , and it's also a sign that the Biden number crunches are retiring , because they were really , really , really good at manipulating numbers , so we started to see the reality here . Why is that important ? Well , the Fed basically said that the jobs market is thriving . Now the data now begs to differ , and that is good news .

Speaker 1 9:53

So if you're unemployed , you're doing a service to the impoverished stock investors . You get the idea right . More unemployed people means lower interest rates , so lower rates mean what ? Lower rates mean ? Higher stock prices . Very , very simple would be an overstatement , but you get the idea , raj , I love being unemployed .

Speaker 1 10:21

So do I , but these guys are claiming unemployment benefit , which is not something I've ever done . That's a weird thing , actually . I finished law school . There were literally people at law school who said to me oh brilliant , I'm taking the summer off and we're going to Italy or something . I said , okay , nice , and they said yeah , yeah , yeah , I've just got my unemployment check in this morning . I'm like you what ? And they're like , yeah , yeah , yeah , getting whatever much . And I thought that was so sad and immoral that somebody who didn't need the money was claiming it Because , yes , technically they were unemployed but they actually had a job lined up like six months down the road with a major corporate law firm , so they weren't exactly unemployed in the classical sense of the word . But that's kind of . People just think that they're entitled to stuff , right , they don't really realize that someone's going to pay for that

Market Growth and Job Market Trends

Speaker 1 11:12

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Speaker 1 11:12

But anyway , going back to the third reason here where I think the market is actually going to do much , much better in January than we think and Fox is reminding us here of something as well today which I appreciate you for , fox , and I'll share my screen which is we're running a masterclass today in I don't know how many hours nine hours and about 4,000 of you have signed up so far . Now we had a room limit of 2,000 . So I've messaged with a webinar hosting software company and we now have a room limit of 3,000 , which seems to be the limit . So I assume maybe another 1,000 of you will sign up today and I encourage you to . I just want to encourage you to show up early , because we might literally be full and there's nothing I can do about it . 3,000 people is the maximum we can fit into that digital room . For future events , we'll fix that and we'll make sure we have sort of unlimited capacity , but for this one here , I'm thrilled that you guys want to learn , very , very excited by that . So really looking forward to that in just a couple of hours , 6 pm , new York time today .

Speaker 1 12:26

But here is another piece of data . This is from GS , which stands for Goldman and Sachs Goldman Sachs , one of the biggest , most important investment banks out there , and they're basically saying that wages are growing at a much , much slower rate than they have been at any time since 2021 . What does that say to you ? The job market is slowing . What does a slowing job market say ? Well , wages are not growing as quickly . What does that mean ? That means lower inflation and less economic activity and all of that . And what does that mean ? That means , essentially , lower interest rates . Which means what ? Yes , indeed , higher stock prices .