How Bad will the Market Crash | Evergrande Disaster.

hey everyone kevin here in this video

we're going to talk about how bad ever

grants crisis will be we'll talk about

reactions in the market and in

cryptocurrency and cryptocurrency is

actually going to help us a lot here the

reason i say this is first i ran through

a thought experiment earlier in the

course member live stream we talked

about what could the potential worst

case scenario be in the evergrand crisis

and so in this video what i'm going to

do is i'm going to go through my

envisioning of what could potentially be

the worst case scenario for the

evergreen crisis then i'm going to talk

about some inflection points happening

in the market right now then we're going

to talk about what i actually think in

terms of how bad the ever grant crisis

will be now i could be wrong this is of

course just my opinion but let's get

right into it okay folks so the first

thing that we did in the thought

experiment is we came to the conclusion

that in an evergrand style collapse the

very first thing that's likely to happen

is that bond prices for evergrants

company would collapse and evergrants

stock price would collapse we'll take a

look at those in just a moment and we'll

look for inflection points then we would

expect real estate prices in china to

collapse and we would expect to see an

inflection point to the upside or

downside depending on how bad things

actually end up getting

then we would expect to see bond yields

go up not just in china because remember

when people sell bonds their price goes

down more sellers drive prices down

which pushes yields up we'd expect to

see see yields go up and i specifically

want to track the u.s market because

there are a lot of individuals in china

who invest in u.s dollar denominated

debt and so a sell-off in bonds will

lead to rates going up where yields

going up in the united states as well

that has the effect essentially of

increasing mortgage interest rates in

the united states and we know that real

estate is linked to mortgage interest

rates to the point where if interest

rates fall one percent or sorry go up

one percent home prices could fall about

10 percent you've got about that one to

10 connection there and this could

really affect u.s real estate prices and

when real estate prices in the united

states start coming down we often see

stock prices also start coming down and

lately we've seen stocks the company

like zillow open door and redfin start

coming down which some are speculating

is almost the stock market potentially

trying to predict

a fall in real estate prices but is that

related to the ever grant crisis well

let's take all of this apart because

we've heard a lot of things about the

ever evergreen crisis the best thing to

do is just get right into it and follow

the updates so first we know that

evergrand likely missed a 45.2 million

dollar interest payment just an interest

payment can you imagine that having a 45

million dollar payments like a 45

million dollar mortgage to make and you

missed the freaking payment your credit

score probably going down but don't

worry evergrant's credit score is

already junk this by the way comes after

the fact that evergrand missed a payment

actually missed two payments last monday

missed a payment last thursday or likely

missed a payment last thursday just like

this one

evergrand last thursday said they sent

the payment but we never got evidence

that it was actually sent and we never

got evidence that the money was actually

received so that's why we say it was

likely missed but what's interesting is

how certain things are reacting in the

market so remember how i said the first

thing we would expect to see is a

movement in the stock price

well take a look at this when we hop on

over to the stock price right here we go

to a year to date decline of about 79

percent

and while there are fluctuations on the

minute minute hour to hour take a look

at how evergrand stock has actually

essentially bottomed out around

september 21st which is where we had a

little bit more of peak fear in fact

let's go ahead and zoom into that a

little bit let's go into the one month

here and even though we have

fluctuations on the up and the downside

and we want to be careful for a

potential double dip usually the big

first inflection point is one we really

want to pay attention to it's kind of

like in the covid recession our markets

sort of hit bottom on march 23rd and

again on april 3rd but the april 3rd

bottom was a little more shallow than

the march 23rd bottom in 2022 and then

we took off from there and so this is

something in my opinion i'm going to be

paying attention to the fact that we

just got an inflection point in

3333.hk that's the stock ticker symbol

the easiest way to do is just type into

google

3333.hk or if you type it into the url

bar type the word google first because

otherwise it tries to take you to some

weird website

we could also do this with

6666 this is a china's china evergreens

ev group let's take a look at this one

so take a look at this one this is the

group here and if we go to

year to date to start with we're down

about 41 but take a look at that

similar inflection point where from the

bottom here we've actually seen about a

23 percent rise i suppose it's also

worth looking at that here let's go from

the bottom we've seen about a 28 rise so

we've started to actually see an

inflection point in the price of the

stock that's despite the fact that again

today we missed another

debt payment or in china's case that'd

be yesterday

then let's do this the next thing i

talked about was crypto we'll take a

look at coin market cap and i really

like using crypto as a catalyst tool for

understanding what's going on with uh

with with china because china while it's

always made headlines for crackdowns

china has some of and has historically

had some of the top 10 volumes for

crypto some citizens have in the past

moved closer to power plants to profit

from cheap electricity so they can mine

electricity you've got a lot of hodlers

in china china is one of the top 10

hodler countries in fact i think it's

almost top five

and even though you've got a lot of this

drama going on with again china banning

crypto transactions or financial

institutions from working with crypto

you've got a lot of crypto investors and

hodlers in china and so when we see

sell-offs in crypto pricing sometimes in

my opinion that could be a sign of

stress related to china such as the

evergreen crisis that's why i said that

crypto could fall under the evergreen

crisis and that's why i've been saying

that for over a week and a half now to

two weeks as we've been covering the

evergreen crisis we're also seeing some

money flow into decentralized exchanges

which makes a lot of sense that we would

get away from centralized finance to

sort of still be able to invest in

cryptocurrencies

in china but what's more important is

the signal right now of cryptocurrencies

for this ever grant crisis so what we're

going to do here is we're going to go to

the trading view history here and we're

going to look at the day chart and uh

take a look at the day chart here for

bitcoin the evergrand crisis really came

to light closer to the the third and

fourth week of september where we are

now and we really had a pain day for

crypto here on the 20th where we really

sold down and we had another pain day on

the 24th and again here in the last

couple days or about three to four days

ago we also had pain days these were

these were larger sell-off days it's

easier to look at this on the one hour

candlestick so let's go ahead and do

that we're going to jump on over to the

one hour candlestick

and you can see here this is a september

7th sell-off we had a lot of crypto

liquidations over here and we started

getting the evergrand fear and this is

over here what i really call the ever

grand contagion for cryptocurrencies and

i believe that crypto is sort of a

barometer for the madness that's going

on in china although i don't want to say

that it's the only barometer or that

evergrand is somehow so powerful that it

can solely controls the pricing of

crypto that's not what i'm saying but i

do believe that crypto sells down on bad

news especially regarding the potential

of tether holding uh evergrand uh bonds

which we've heard that tether say they

don't uh so anyway so we've seen with

fear in the markets crypto sell down and

that similar fear that we get anytime

there's sort of fear uncertainty and

doubt or any kind of new negative

publication about evergreen is something

that we do see so on the 24th we saw

sell downs here and we've seen sell

downs here on monday and tuesday as well

in crypto today was when we had that

bond payment that was missed again or

likely missed and again we saw some of

the lows bitcoin around 41 200 but we're

starting to see this inflection point up

again at the same point as we're

starting to see this inflection point up

in the stock now no guarantees that this

little inflection point here is anything

special it's just worth noting that

we're starting to see crypto move up at

the same time as we're seeing the

inflection points in

three three three three and six six six

six again the stock is down five point

one percent today so some fluctuations

here are expected but again up twenty

eight percent from the dip here right uh

and up twenty 23 on the ev dip now for

evergrand but let's do another thing

because i mentioned

after the stock and crypto after that we

would talk about real estate in china a

little harder to measure real estate

prices in china so we're going to skip

that one and instead what we're going to

do is we're going to look at the 10-year

treasury trend let's take a look at the

10-year treasury the 10-year treasury we

want to get yields so 10-year treasury

yield not the actual bond pricing

let's go over here to the yield so take

a look at today which was supposed to be

a nervous day with that missed payment

we actually had treasuries trade flat so

even though we had this fear see right

around here when crypto declined and

right around the time we started seeing

some of those so those low super low

stock prices at evergreen we started

seeing treasury yields in the united

states skyrocket but they've stopped

they've stopped skyrocketing in fact

while we hit a high intraday of about

1.56 right now we sit around 1.51

remember that has implications for the

u.s real estate and mortgage market now

what about the fact that we are seeing

some funds circulate about the potential

for blackrock having of 20 or plus

percent or or you have a potentially 20

stake exposed to evergrand and that

really this contagion is just beginning

well this is where we actually have to

do a little bit of investigative work

and dismantle a little bit of fun that's

going around because what we're seeing

so far just sort of a signpost

checkpoint so far it looks like we're

starting to see some positive inflection

points that the market's going to have

enough cash repo markets have plenty of

money banks have plenty of liquidity

banks are stress tested hard enough and

it looks like so far we are inflecting

but markets are still going to trade on

fear now i've broken down how we're

starting to see some inflection points

and who knows could be the classic dead

cat bounce right where we get an

inflection point and really the real

peak fear is ahead of us but folks

whatever i've been saying even this

weekend i made a video and you can go

check this yourself fact check me please

i made a video that got 229 000 views

it's called the ever grant crisis stocks

and crypto sell off

that video

at about 12 minutes into the video i say

i do not see this being a systemic risk

i think this is going to create a dip

and that is a dip that we're going to

want to buy and i've been putting my

money where my mouth is i've been buying

that dip but wait a minute why is there

fud going around suggesting that maybe

blackrock has one-fifth of its assets

exposed to chinese real estate in fact

somebody sent me this and i was really

sussed out by this i thought there's no

way was my immediate reaction and i

found this particular article that they

referenced here it is it literally says

the blackrock fund has a fifth of its

assets exposed to china's real estate

sector and nearly a third of its

portfolio holds high yield debt also

known as junk bonds oh my gosh that

sounds really bad like if blackrock one

of the largest investment advisors in

the world has a fifth of its assets

exposed to chinese real estate well that

must be really really bad because that

could spell big trouble in the united

states right

too bad it's wrong it's blatant

misinformation because the person who or

at least the people who are circulating

this have misread unfortunately the

article that they are reading and so

let's break down how there's

misinformation circulating about black

rocks holdings uh in evergrand and

blackrock's holdings that are exposed to

chinese real estate so let's go into

that detail it's worth knowing this kind

of detail because fud spreads so much

faster than fact and it takes me so much

longer to dismantle the madness and

insanity that sometimes circulates like

wildfire but that's why you subscribe to

this channel so the screenshot and

misinformation actually comes from this

article in this particular website here

it's financial review afr.com blackrock

fidelity funds suffer exodus on

evergrand fears and what this article

refers to where it says that blackrock

the black literally says the blackrock

fund uh there it is the blackrock fund

has one-fifth of its assets exposed to

chinese real estate oh my gosh but it's

the biggest investment advisor in in the

united states it's got 9.5 trillion

dollars under assets that's so big and

fidelity is the other big one which they

also talk the fidelity fund oh my gosh

includes uh some of its largest holdings

in china's real estate companies oh my

gosh fidelity's got 4.2 trillion under

management these are huge funds and if

they're exposed to chinese real estate

then then america's institutions and

their investments are going to plummet

everything's going to crash that's kind

of when when you misread articles like

the walk away impression and i think

that's why those videos get shared but

it's wrong because this article doesn't

talk about blackrock in total it doesn't

talk about

fidelity in total it talks about these

specific funds like the fidelity china

high-yield

fund or in the case of blackrock it

talks specifically about the blackrock

gold global funds china bond uh fund

so in other words

this article saying that a fifth of

black rock assets are exposed to china's

real estate sector is not blackrock in

total it's just this fund this

particular fund has uh 9.2 billion

dollars under management that's all

that's a good amount it's 9.2 billion

dollars but it's a far cry from 9.5

trillion dollars that blackrock has

under management which if i multiply

this by 100 to get a percentage we are

talking about 0.09

of blackrock's assets under management

are in this chinese fund that block rock

has this chinese high-yield fund and of

that 25

is exposed to china's real estate like

is a drop in the bucket

and if you zoom out even more and you're

like okay well how much does blackrock

have invested into evergren like one

percent of their assets it's a drop in

the bucket

the same thing is true of fidelity

fidelity has 4.2 trillion dollars in

assets under management

but uh in their fund uh hold on 4.2

trillion there we go in their fund they

only have 2.4 billion which means 0.057

of fidelity's money is actually in the

fund

in this junk bond fund that this article

is talking about so somebody basically

took an article

about a fraction of one percent of

blackrock and fidelity's holdings and

turned it into a misinformation video to

spread fear uncertainty and doubt in the

united states about the united states

market and it was really a

misunderstanding of the article itself

just to show you an example here's one

of the marketing brochures on this high

yield fund and uh it's got a 1.2

management fee you can see here the fund

size 2.4 billion dollars you've got here

it's fidelity funds china's high yield

fund yay and if you scroll over here you

can actually see what the top 10

holdings are and that yeah look it's a

china fund it makes sense it's got 61

exposed to china i'm surprised it's not

all like it's not 100 china and you

might ask well why do people invest in

this kind of stuff it's because the

yield is 6.9 so people are like yay i

get a lot of dividends but i'm investing

in garbage in fact you can like the

disclosure literally tells you you're

investing in garbage look credit rating

exposure triple a bonds nah we don't

want any of those how about double a

bonds nah how about a bonds okay two

percent how about bbb bonds triple b

rated bonds sure two percent how about

bb bonds yeah now we're in junk bonds

sure 34 exposure to those b bonds yeah

we'll take 37 of those too you're

literally investing in junk bonds like

just for giggles here's what junk bond

means anything under triple b rated is

considered

junk so if it's less than a capital b b

b

or a capital b a a then it's junk and

what you'll notice here is if you go to

the pamphlet bbb or baa

2

everything below that is junk

and that's where most of the money is

invested is in junk that's the risk you

take when you invest in junk

this is not somehow suggesting that

bankrupt is about or a blackrock is

about to go bankrupt

that's a total misunderstanding and a

misread of a silly article that really

nobody should be talking about

so anyway you have to be careful with

some of the fud that spreads but my

bottom line stays consistent i believe

the evergrant crisis overall is

overblown in terms of its global

contagion implications uh and and this

is really just based on me looking for

inflection points i'm not trying to

trust jerome powell or

christine lagod over at the ecb

but i will say

these inflection points could could

shift they could shift back to the

downside in the meantime i'm going to

keep doing research i'll keep sharing

and breaking apart fud if i see it i'll

also correct misinformation if i see it

and in the meantime

i hope you buy the dip on on things that

are not ever grand

uh although hey maybe uh maybe it's uh

by the dip opportunity if you had like

an insanely high risk tolerance just for

giggles also

know that you could look up what

blackrock is exposed to you can look up

their 13f filing and you could literally

see about but i think we want to say

about 3.7 trillion dollars of their

investment assets are over here in

stocks and you can google this stuff so

just google uh 13f blackrock filing if

you want to go through here and see how

much apple or microsoft or amazon or

tesla or whatever they own you could do

that all right folks thanks so much for

watching this video if you liked it make

sure to subscribe and we'll see in the

next one goodbye

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