#977 - Is it Time to Hold Cash? with Tony Greer

0:00Hi, on the 5th and 6th of June 2024, I'll be speaking at the largest AI event in Asia, Super AI in Singapore at the iconic Marina Bay Sands. Alongside brilliant minds like Edward Snowden, Benedict Devin and Balaji Srinivasan, I'll be on a stage exploring the extraordinary potential of AI and the profound change it represents, not just for financial markets, but also for the world as we know it. With over 5 ,000 attendees and over 150 side events, Singapore will become a vibrant hub for a full week from the 3rd and 9th of June. Visit superai.com to register and join me with 20 % off tickets using the code Real Vision.

0:44Use the link in the description and I'll see you there. It's going to be incredible.

0:57Is it time to hold cash? Hi, everyone. Welcome to the Real Vision Daily Briefing. With me today is Tony Greer, editor of The Morning Navigator, newsletter and member of the RV Marketplace. Say there, Tony. Hello, Maggie. How are you today? I'm okay. I was just moaning a bit before he came on. I was telling Tony, it's Tuesday, Tony, but it's kind of a Monday for most of us. And these always feel hard these days, especially if we look at what's going on in the market, right? We're coming off a long weekend, an ugly start to the week. You have stocks down across the board. The drop in tech stocks, including NVIDIA, getting a lot of the headlines, but the Russell was actually the biggest decliner.

1:35But there was right across the board. As we're entering this, Tony, we've got some stuff on the radar this week, Fed Minutes as well. What's top of mind for you? Yeah, the timing of the short week, we're following through after CPI week last week, right? CPI, PPI both came in hot, right? Rates went up, essentially. Stock market still overbought, bullish, complacent. So we're due for waterfall kind of thing. And you look at the calendar, and we've got FOMC minutes tomorrow. Then we've got NVIDIA reporting after the close. Then we've got manufacturing PMI Thursday morning. I mean, it's about to heat up.

2:20It's about to heat up for sure. And now is when you want to kind of be dotting your I's and crossing your T's and making sure that nothing on your pad is going to get run over in that news flow that's about to come out. And I'm really ecstatic about how the market is trading and how the year is panning out and just how tradable the market is right now in this condition. It's hard to make money at the highs in the S &P, but it's still true that breakouts are breaking out, breakdowns are breaking down. We had that wild SMCI meme stock, DuJour, have a big, huge outside reversal day on Friday, follows through to the downside today, makes a new low.

3:03NVIDIA is off two sigma, 5 % sell-off ahead of earnings tomorrow.

3:11People are understanding that one-way traffic isn't always one-way traffic. Uranium is 15 % off the highs, which nobody thought was possible. So it's one of those things where market is proving to people that markets are going to be markets. And NVIDIA is not going to go up forever. And neither is SMCI. Neither is Bitcoin and all that stuff. And so you're going to be able to pick your trade, pick your breakout, pick your pullback, and be a trader, right? Put the risk management on the line and do what you got to do to make money. But we are no shortage of opportunities in that. So that's fun. I love that.

3:44That's a great way to think about it. And it's a great point, right? when it was all sort of, you know, it was very hard when everything's just a freight train and you're trying to hang on. If you've got things moving, there is opportunity in that. Hey, Bernard, nice to see you in the chat. I'm not used to seeing your name. I always like when we see people that we don't always weighing in. Welcome. And of course, to everyone who are the regulars in the chat too. So what do you think the market, so you're feeling ecstatic about the market, you see trading opportunities, of course, this leans into your expertise.

4:19What do you feel like the market sentiment is out there? I'm saying hi to everybody in the chat. I know you have a rock in Slack that your members are a part of, or some of them anyway. How do people feel going into this? Is there stress? I know there have been so many people who are really married to the tech narrative. I don't know. What's the vibe you're picking up in terms of market sentiment? Yeah, there's buzz. And what's fun about having a Slack channel, Maggie, is you notice that on days like today when we're ahead of those three big data points and it's a short week and there's money on the line, everybody's chirping up.

4:55Everybody wants to know what you think about this. What do you think about this pullback? What do we do? And they're doing exactly, luckily, what I've been preaching in the Slack channel is kind of today is the day you make sure that you got nothing on your pad that's going to run you over in the next 48 hours. So there's been a lot of anxiety ahead of the NVIDIA earnings, right? Like this is the market disco ball that everybody, you know, this is like one of the bigger earnings releases. Like I'm waiting for my mother-in-law to call and ask me what my expectations for earnings are for NVIDIA tomorrow.

5:25They're so big. So it's like the market is focused on that. It really, really, really seems like the bar is really high for NVIDIA to be able to put up another beat, which they've been doing, that they've kind of got weaker beats as they've gone on. But I guess the point is the bar is high for them to do that again and to get the stock running again. Right. After a big pullback today, at least the charts finally got a kink in it somewhere where it shows like there's a little sign of weakness where maybe it goes down a few more percent. So it's going to be all about how the market grades those earnings tomorrow.

6:03I would imagine tomorrow we have an inside day in NVIDIA where the range stays between today's range until we get that earnings release. And then there'll be a breakout either way. And I have no idea what it's going to be because I don't know the earnings, but the market feels really ripe for a pullback. Like we've been saying, I'm trying to instruct people right now that it's OK to be bullish as hell, but less long at the highs. Right. That's a logical position for a trader to be. And yeah, I'm gung ho bullish, but I made a lot of sales because you got to make money before they go down. You know, so that's kind of the position that we're in right now.

6:36It feels like the pullback is about to happen. And who would be shocked if all of a sudden NVIDIA came out, beat earnings again, and the stock kept going down? That will be a really, really good tell. If something as simple as that happens, where earnings are better and the stock reacts negatively, that's a really good sign that the bull market is coming to an end. And so at least you can trade it that way for NVIDIA. You can start to sell rallies and sell rallies before you think of buying dips. So these are the things that we've been discussing in the Slack channel, Ad Infinitum, along with the cryptocurrency performance.

7:11We've been watching really closely the flows into the new ETFs and really happy that we picked the right one to get into on the Navigator. We picked the iShares ETF, IBIT, and they've just been buying Bitcoin hand over fist with the money flows that they've seen coming in. So those are what's on everybody's mind so far. Maggie, where do you want to start? Yeah, no, I think that's great stuff. So does it sound like, by the way, before we get to that, this is why I love the way you laid it out, because this is why we talk about having a framework, having a plan, why research is important. and you and I are going to catch up and have a further conversation about that next week.

7:54But this is why it's important to be prepared and not just shoot for the hip so that when these sort of potentially pivotal weeks are coming, you know, you make your money and you survive. So when you're talking about NVIDIA, do you feel like this is going to be more than just about NVIDIA now? It's going to be a sort of test and you got to watch out if you're in tech at all. Could it have that, you know, if that goes down, it brings that whole sector, or at least the MAG-7 with it? Does it feel like that kind of event? Yeah, it does only because it seems like, some of our indicators are so stretched, right?

8:28We've seen stochastics have been overbought since November. We've been running at extreme greed and sentiment for two months now, right? The AAII bulls index has been 40 bit of 50 for at least a month and a half, right? Just hovering along the highs. People are bullish, right? CTA risk, they're max loaded to the gills with S &P futures, right? So this is the scenario, right? This is when things happen. You just wait for what Mr. Market decides is going to be the catalyst. NVIDIA earnings may come and go tomorrow, and they may decide that ISM prices paid on Thursday was too hot, and that caused the real kerfuffle, right?

9:09It could be something like that. I don't know. But I would imagine that NVIDIA is going to break loose and have a massive range after earnings in the pre-market, et cetera, options this morning were pricing in like a 12 % move from last sale after earnings in NVIDIA. So they're expecting a shakeup no matter what. And it seems like the bar is just really high for either NVIDIA to beat and catch a new wave of AI-type buying or for them to miss the stock to come in lower and then climb its way back to the high. So for me, either way, after today's sell-off, the bar is kind of high for NVIDIA to do great things from here.

9:48It won't shock me if they do, and I'm not saying, you know, I'm still bullish, but this stock, it seems like that, and the whole sector seems like there's room to pull back. We just got to see if we get a catalyst, Maggie. Hey, everyone. We're going to take a quick break right now to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing. Join over 5 ,000 attendees for the largest AI event in Asia at Super AI Singapore, June 5th and 6th, 2024. Raoul Pal, Benedict Evans, Balaji Srinivasan, Edward Snowden, and over 150 others will join the industry's most influential to explore and unveil the next wave of transformative AI technologies.

10:30Singapore will become a vibrant AI hub for a week from June 3rd through June 9th with over 150 side events that will make for unparalleled networking opportunities. Visit www.realvision.com forward slash super AI for 20 % off tickets with the code realvision or click below. Have you ever wanted to trade Bitcoin but haven't dared try? With Plus500 Futures, you can trade crypto without the hassle of opening a wallet. With just a few clicks, you can register and start practicing with their free and unlimited demo. See a trading opportunity? You'll be able to trade it in just two clicks. Feel ready?

11:12You can move to real money with as little as$100 once your account is approved. And the great thing is that in addition to crypto, Plus500 gives you access to a wide range of instruments. S &P 500, NASDAQ, gas, and much more. explore equity indices energy metals forex and beyond with a simple and intuitive platform you could trade anytime anywhere experience the fast accessible futures trading you've been waiting for with plus 500 with over 20 years of experience plus 500 is your gateway to the markets visit us.plus500.com to learn more trading and futures involves the risk of loss and is not suitable for everyone not all applicants will qualify plus 500 it's trading with a plus

11:56Yeah, there's that time frame element that's important, right? So there's a short-term trading outlook, and then there's a longer term how you feel about this stuff. It does seem like we've had a few people commenting. It seems like some of that AI momentum maybe is coming out of the market a little bit, or at least there'll be a different kind of litmus test as to whether anybody can rally on that. Does it feel that way to you, people getting a little more discerning about that? You know, yeah, right up until like today, people were slamming money into NVIDIA, no matter what, you know, like SMCI had its, you know, Icarus moment right in front of the whole tape on Friday afternoon.

12:36And they bought in, they bought NVIDIA up to the highs one more time for the hell of it. But, you know, after that happened and then it sold off and settled on the lows. So my, my, I guess the point I would make is that, you know, when it's money flow coming into a stock, it's impossible to say when that's going to end. And while it feels like the market is ready for that to end, we don't really know until the facts come out tomorrow, we see how the market reacts. But I would imagine that any kind of rally tomorrow after earnings that isn't making it towards the highs is going to get sold with the highs in the rear view mirror now.

13:14So that's just my feel. We'll see what happens. But I'm looking to buy the dip too. There's going to be plenty of volatility this year. I think the market's going to be extremely active with different sectors leading on different days and different kinds of breakouts. But it feels to me like we're going higher still. Yeah. It's amazing because we're trying to figure this part out on the equity side when there is a huge amount of uncertainty when it comes to the economic side and what that means for yield. So Samuel just sat down with the chief investment officer of TEMA that run a batch of ETFs.

13:48And he talked about trying to time the recession. Let's have a listen. So I think one of the things entering 24 is the setup is very, very different to 2023. You know, when we started 2023, the outlook was extremely negative. It was quite bearish. I think recession was pretty much forecast by most people in the second half of 23. And of course, the year that's just passed didn't materialize in that way. And I think as we sit here in 24, it's almost a diametrically opposed picture. As you can see in the first chart, you can see the mentions of soft landing in news articles is through the roof. And historically, that tends to precede an actual recession.

14:27So the market often gets these things wrong. If we look at the second half, we think, you know, the pressures of rising interest rates are yet to play out. And I think that's the second chart we've got here, which is the effect of tightening. So there's about a third of it left, according to the Chicago Fed. And I think that's interesting and tells you that there could be economic weakness in the second half of the year, which is a very out of consensus call right now. We don't think that weakness is going to be very sharp because there's not a lot of excesses around. We usually have very sharp recessions if you've had excessive housing market boom or whatever it might be previously we've seen in other recessions.

15:06So recession call, we think it's going to happen in the second half of the year, And that's something that we're incorporating in our equity stock picking right now. That full interview, including three of their top trade ideas, dropped on the website today. If you are watching on YouTube or listening on a podcast, head over to our website at realvision.com and join. You're going to need that RV login to be able to participate in a bunch of really cool things that we have coming up in the next few weeks. We'll tell you more about that toward the end of the show. So interesting comment from Michael, Tony, in the chat.

15:40He's saying until the 10-year yield drops 100 basis points, nothing looks safe. And it's true that the yield volatility we saw last year really was problematic. And again, we went into the year on such a different posture. And now, as you mentioned, all that hot data coming in, we've seen upward pressure on yields again. Is that still really key? Is the direction of the 10-year really going to dictate a lot of what happens with the rest of the markets? At some level, of course, there will be that effect. I think I'm most concerned about, I'm trying to have a bigger, wider lens this year a little bit.

16:19So last year, to unwrap that, last year, the market was very sort of anxious about inflation and the bond market's reaction to that. and a lot of micro minutiae and things about where rates were going. And rates weren't really trending. They were backed off the highs a little bit. But my idea is that this year, we're going to get sideways. And so I'm kind of zooming the lens out. And my idea is not to get as caught up where the 10-year is trading. I think it's going to be within the recent high, certainly, and say, I don't know, 3%, 3.5 % on the downside. but just the way you know if fed funds just stay in the sort of steady range and not make a new high above five and a half and bounce off of three that kind of thing or even a tighter range than that that is going to be bullish the stock market and so i i just think that over the long run you just have to keep in mind yeah higher rates may not be great for the market but we just had rates go up for the first two weeks of the year, and we're talking about the S &P holding dips to 49.70 and 49.80, right?

17:28It's a 5K item. Even with everything that's come out, the hot CPI, hot PPI, higher rates, the dollar was bid only for a month and a half. All these things that are generally negative the S &P have had no effect on the S &P whatsoever. And the S &P is up on the year and trading 5K and pushing an all-time high and breaking out technically. And all of that is still going on. So I'm just trying to stay at if Fed funds don't make a new high, if tens don't make a new high and rates are range trade, and we don't know whether we're going into a recession or a more inflationary situation, bullish for stocks.

18:03I think that I just want everyone to pause and for that to sink in because you're exactly right, Tony. And when you're doing it day by day, you kind of can lose sight of that, that everything's been thrown at the stock market. And it may not feel good, but here we are at a new high. It's absolutely true. That's what I mean. It's more resilient than you think, right? It feels like, oh my God, this thing's about to curl over. Uranium is 15 % off the highs. NVIDIA just curled over today. It's like, everybody relax. The S &P is doing great. It's doing great, right? In fact, it's doing its job. If you're invested in it, it's sorting out winners and losers, right?

18:43You can't ask for an index to do a better job than at the end of the year, it sorted out the regional bank blowups, the pullbacks in AI, the this, the that, and it was up 25 % on your money. That's an index I can get behind. And it's giving that whole personality so far this year. I mean, there's blowups all over the tape. I mean, downside blowups, earnings blowups. The story is all over the tape today. So it's like you can't tell me that it's just a five-stock market, et cetera, et cetera. The S &P is doing a great job sorting out winners and losers and coming out a winner on top of it, like it's designed to do.

19:17So when it's having a good year, I think you want to be in it and not overcomplicate it. Yeah, great, great, great insight. So on that point, the macro butler is asking, Tony, do you think we could see a rotation from tech into energies and cyclicals from here? We had some conversations about that last week. It's kind of what everybody's been looking for, though, right? Last week, last year, five years ago. It's like one of those things, and I'm not trying to cut on the question. It's a great question because what's just come up is you can't miss the market cap porn where they just said NVIDIA's market cap is now bigger than the S &P 500 energy sector.

19:59So when you start to see mathematical anomalies like that, it's usually when you can look at the valuable sector. right you've got the idea that cuppy's bullish oil field services and a couple of particular names in your pocket right like the big one of the most renowned cheapest value investors on the street my friend cuppy is looking in that space so yeah i think that's a smart space to be looking in if you look at xle um through the recent oil episode and meaning the sell-off to 70 the rally back up to 80 energy stocks never shook you out right there's never been a scary sell-off there. And right up until today, where the refiners are getting hit today, the refiners have been in the lead once again and putting up, Marathon Petroleum traded a new all-time high last week or two weeks ago, whichever it was.

20:47But it's sailing along, and the energy sector looks okay to me. So yes, I don't think there's anything wrong with picking away at that, especially when oil trades at the bottom of the range now. When it bounces off the bottom of the range like it just did, there's much less fear that it's going to fall into the 60s. I had that idea a couple of weeks ago down at 72. It was like, man, the bottom of the range looks vulnerable now. Sure enough, nothing doing. $80 again, and nobody's got to be scared of it. But to me, there's still not a great trade there in energy. So that's why I'm not really all gung-ho, let's buy energy and energy stocks.

21:21That's all. Yeah. John asking, do you think crypto would be immune from a wider sell-off, or is the new demand from the ETFs going to overwhelm any broader sell-off? Yeah, that's the question right now, isn't it? The ETF inflows are massive. What's great about Bitcoin, I think, right now is that it is following the script, right, to a T to me. It's rallying with all kinds of central bank and politician irresponsibility and gaming and things like that. it reached a peak for the ETF launch, had a pullback, held a great technical level. We start seeing the wall of institutional money flying into the thing.

22:08And there's now, next thing you know, we're at Bitcoin 50K again. So it looks great. It's trading great. And I have to think that there's going to be some sort of regularity to the institutional flow. And that meaning whether at different times, different institutions decide to get involved or at different prices, different institutions decide to get involved. But I think that over time that it's going to be around and the flow is going to be somewhat steady. But my bigger point being, I don't think it's just going to be a trade where you can fade the initial ETF inflow and then Bitcoin falls apart again.

22:49It just doesn't seem like that. It seems like it's had more upside stimulus this year and less downside. So Bitcoin seems like a good place to be, and I'm on it for the Navigator. I got into it for my clients a couple of months ago, and we've had a couple of good trade in that one too, knock wood. So that's why I'm staying in Bitcoin. When it's behaving the way I think it's going to behave, I'm definitely going to have risk on in that security. We're going to take another quick break to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

23:21So, Madhashia, I think that answers your question. He was also asking early in the comments, is it the right time to take a position in Bitcoin? Like, we can never answer that directly, because, of course, Tony doesn't know your risk profile and all the things he would know if he was doing a one-on-one with you. So hard to say that. But generally, I think we can take your answer, Tony, as a this is behaving type that you're now on it. I like the security, Maggie. And just to offer some advice, it's the number one question that I get as a professional, literally, is do I put money into this now or do I wait?

24:00I've got guys in my Slack channel that I'm having one-on-one calls with to give them some coaching on how to enter trades like this in bull markets. I've got institutions that are asking me how to plot getting into stocks and securities and how I would handle it. So everybody wants to know, how do I put this money to work? My general idea is, you know, if this is a sort of not a day trade, right, it's not it's not an immediate thing. It's for a view that you have. Watch it for a little while. It's not going to go anywhere. If you're fortunate enough to see two or three red days in a row and you're an interested buyer, then buy some.

24:38Right. If you've got cash on the sidelines and that cash is earmarked cash, then put it in the bond market and frigging leave it there. And don't look at it again. And I don't want to hear it. You generating a four point something percent return and you allocated it to the bond market. If it's money that you have that you want to put into a security, then put it in. Right. If it goes down, you have to manage that risk just like everything else. But you've got to handle that ticket like a buy order. Right. If you've got the view, you see the price action, it's going up. You think it's going up.