Money Rehab with Nicole Lapin - Market Craziness Explained with Peter Tuchman, the "Einstein of Wall Street"

Episode Date: August 6, 2024

So... what the heck happened yesterday? Today, Nicole is joined by stockbroker and podcast host Peter Tuchman to decode yesterday's market dip. To subscribe to Peter's podcast, click here: https://link.chtbl.com/63Zpqkvs All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Public Investing offers a High-Yield Cash Account where funds from this account are automatically deposited into partner banks where they earn interest and are eligible for FDIC insurance; Public Investing is not a bank. Brokerage services for alternative assets are offered by Dalmore Group, LLC, member FINRA & SIPC. Brokerage services for treasury accounts offering 6-month T-Bills are offered by Jiko Securities, Inc., member FINRA & SIPC. Banking services are offered by Jiko Bank, a division of Mid-Central National Bank. Securities investments: Not FDIC Insured; No Bank Guarantee; May Lose Value.  Brokerage services for Regulation A securities are offered through Dalmore Group, LLC, member FINRA & SIPC. Risks at public.com/disclosures/alts-risk-and-conflict-of-interest-disclosure See public.com/#disclosures-main for more information.

Money rehabbers, you get it. When you're trying to have it all, you end up doing a lot of juggling. You have to balance your work, your friends, and everything in between. So when it comes to your finances, the last thing you need is more juggling. That's where Bank of America steps in. With Bank of America, you can manage your banking, borrowing, and even investing all in one place. Their digital tools bring everything together under one roof, giving you a clear view of your finances whenever you need it. Plus, with Bank of America's wealth of expert guidance available at any time, you can feel confident that your

money is working as hard as you do. So why overcomplicate your money? Keep it simple with Bank of America, your one-stop shop for everything you need today and the goals you're working toward tomorrow. To get started, visit bofa.com slash newprosmedia. That's b-o-f-a dot com slash n-e-w pros p-r-o-s media. bfa.com slash newprosmedia. I'm Nicole Lappin, the only financial expert you don't need a it's time for some money rehab. Oof, how are we doing, money rehabbers? Better than the S&P, I hope. I mean, if you missed it, yesterday was the worst day for the market in two years. Two key indexes that represent the market as a whole, the Dow and the S&P 500 fell 2.6% and 3% respectively. This week, we're going to focus on what this slide means for the economy, for interest rates, and of course, for you. And to start today, you're going to hear from someone inside the Money News Network fam,

Peter Tuchman, who is a trader on the floor of the New York Stock Exchange and hosts the MNN podcast, Trade Like Einstein. Peter is going to tell you what the heck happened yesterday and why. And if you love Peter like we do, subscribe to his podcast, Trade Like Einstein. It's linked in the show notes. Hey, everybody, it's me, The Einstein of Wall Street. We came in this morning after some bad economic data came in on Friday, which capped off about a three or four day sell off in the tech sector and the overall markets. High boosts in unemployment and labor markets are under a lot of pressure, and that sort of rounded out the week with a three- to four-day significant sell-off, double digits in a lot of the higher tech names.

This also involved somewhat of a rotational period where we had some selling in tech and some movement and rotation into the Russell and into flight to safeties like precious metals. Over the weekend, It is a summer weekend and markets have been trading at record highs day after day, week after week, month after month. So the valuation of this market is frothy, frothy at best. So on top of that, the market was ripe for a little bit of a sell-off. So you've got economic data. You have a Federal Reserve meeting last week which capped off a lot of anticipation and

excitement about potentially an interest rate cut which the market has been patiently waiting for. Jay Powell's news conference did not give us clarity. First of all, we didn't get the cut we were hoping for. We didn't get much clarity about the cut that was supposed to come in September. And so the market was starting to be a little bit resentful and a little bit anxious about what was going on on top of being fueled by some poor, at best, economic data. at best, economic data. So we come into this summer weekend with a market that's a little bit fractured and you've got the news media just catastrophizing the markets and the geopolitical, geo-global situation in a huge way. If you weren't

watching the Olympics, you were thinking about the possible recession and thinking about World War III with Iran and Israel and thinking about Federal Reserve and bad economic data that was coming out. fear index spiking up above 60, which is unheard of, which we haven't seen since COVID. You saw basically everything being sold from crypto to precious metals to the whole S&P, the NASDAQ, tech, everything came in. There was $2 billion for sale on the opening bell. And the market opened on the lowest print of the day right fear fear blood in the streets could this have been avoided if the fed cut rates on wednesday it's possible are we in as bad shape as it seemed like this morning well if you look at the market the market has rebounded at least half of what we lost this morning. So it feels more than just a dead cat bounce.

It seems like this morning was a bit of a capitulation. It was a bit of a overreaction, not a reaction, but an overreaction to a lot of this fear. And so is the pain and the fear over? I don't necessarily think so. We don't have clarity about the Federal Reserve yet, but the market usually tells us what it thinks of the information.

Today, right now, as we look at it, midday on a Monday was nothing more than a really amazing buying opportunity. Historically, large sell-offs, right? Crises, crashes, and all that stuff, which today was not by any means any of those things, nothing more than consolidation and an aggressive sell-off are nothing more than great buying opportunities, right?

People should not be running from the movie theater screaming fire, fire. When markets sell off like this after month after month, trading at record highs, it's nothing more than a buying opportunity, right? That's what today it turns out was. Now, look, are we out of the woods yet? Probably not. What could dislocate this market even further? God forbid Iran attacks Israel, this market goes down again. God forbid we don't get a cut in interest rates in September and more of a positioning, a tightening posture by the Federal Reserve for September.

That could affect the market on a negative basis. So right now as we stand, this morning was a major sell-off. Midday we are back to only about half the losses we had. So that is a really good response. That means that there was a bid in the market. People found the opportunity to scoop up some stocks that were on sale. If your favorite leather jacket goes on sale at Macy's,

you don't go running for the hills. You go into the store and buy it. This morning was an opportunity to buy stocks that you like, the people, the process, the product, the profitability on sale. Okay, now the scenario could have gone the other way. We could have opened down 230 on the S&P, down 1,000 on the Dow and continued to go lower.

And we could have had a major capitulation. That did not happen. Is it possible that that will happen in the coming days? It is possible. These are the scenarios. These are the wild days of the stock market. It is a summer day. We've got a lot of moving parts. This is a thousand piece puzzle. There are so many things going on with interest rates, with inflation. Now, this morning, when all of this was happening, we did notice that they started to bring up some of the really bad economic news that could be percolating, right? About foreclosures and about late billing situations by the consumer. When the consumer surfaces as being in bad economic shape,

that points to problems that could be bigger than we thought, right? We didn't hear about this last week. We didn't hear about this when the market was trading at record highs. Suddenly today, when they were throwing the baby out with the bathwater and the market was down 240 handles and 1,200 points on the Dow, we started to hear that there is some economic data that is of concern right but you know it's very funny how these things are you know going phases the media loves to catastrophize markets this was a monday oversold crazy fear fear index is reba is come back down we were down we were up up at 65 We're now only up about 30 or 40 handles. That

means that people's fear has been pacified to a certain extent. And as I said, are we out of the woods yet? I don't think so. There's still a lot of moving parts to this situation. So stay tuned is the best I can say, you know, and look, you know, historically when everyone else is selling, it's more of a buying opportunity. When everyone else is buying, it's a selling opportunity. You know, this is a wild summer day. It is a wild market. We do have, you know, a political landscape going on.

I don't think that has too much to do with the market per se, but it is something that is overshadowing everything. So you've got interest rates, you've got inflation, you've got the state of the consumer, you've got the state of the banks. You've got interest rates and the Federal Reserve. You've got a couple of wars going on, which we don't even think about. And we've got some fear going on in the marketplace. So these are all the things that contributed to this morning's sell-off.

Now look, it's 1 o'clock in the afternoon. Could we end the market in a positive territory? Yes. Could we retest the lows that we saw this morning? Yes. So if you were to ask me, is the market gonna go up or down? The answer is yes.

And that's where we stand, midday on a Monday in the middle of the summer here at the New York Stock Exchange. It is a wild and crazy ride. I wish you all the best. Happy trading. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin.

Money Rehab's executive producer is Morgan Levoy. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehabatmoneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening

and for investing in yourself, which is the most important investment you can make.