Why is the Stock Market Crashing | The Great Reset

US uh recession point. Um you're

concerned that perhaps uh we might be

headed in that direction.

>> My base case is that we will see a

modest recession in 2026. The headwinds

for the US economy are just so strong

and the vulnerabilities are that we've

only had really two drivers and they

could decelerate in the coming year. Uh

Jason Ferman, Harvard uh economics

professor, did a study on the first half

of 2025 GDP growth. Uh 92% of it he

found could be attributed to the AI

capex buildout.

>> Why the heck is the market tanking?

Bitcoin 98,000.

NASDAQ Technologies down over 2%

straight down. Tesla down 7 and 12%.

Disney earnings, nobody cares, down 7%.

Tech's falling, Bitcoin's falling, it's

all falling. What the hell is going on?

And how do we reconcile all of this? Is

this a viable dip? Well, to know if it's

viable or even viable to consider buying

in this market, you need to understand

this chart. It has everything to do with

liquidity. Now remember before we look

at that chart, understand that liquidity

is getting so damn bad right now or

available cash that you literally have

articles circulating that the Federal

Reserve is saying, quote, "The Fed may

soon need to expand its balance sheet

for liquidity needs." In other words,

folks, we are going back to the days of

the money printer.

Now look, some of what's happening

today, some of what's happening today is

super short- termism, but some of it is

long-term AI, data centers, energy,

what's going on with meta, debt. We're

going to talk about all of that. But

there's also short termism. And that

short- termism is worth talking about to

start with.

One of the reasons why in the Meet Kevin

alpha report and I want to teach you

this, okay? It's not supposed to be a

pitch on the Meet Kevin membership. I

want to teach you why we talked about

this in the Alpha Report. For weeks,

I've been saying that the most bearish

moment is going to be when the

government reopens. And people have

said, "Kevin, why would that be bearish?

The government reopening should be good.

Uncertainty goes away, right?" Wrong.

I'm going to explain exactly why. But

this is the kind of stuff you get in the

Me Kevin Alpha report. You pay once, you

get lifetime access. Check it out at

me.com. So, here's why it works.

The government stopped issuing jobs,

CPI, retail sales, GDP, import export

data. All of that was gone during the

shutdown. When we have no news on that

data, we can't say there are problems in

the economy. So, in other words, the

shutdown actually gave us the best trade

ever. No news is good news. The stock

market hit all-time highs, well, the

government was shut down. It seems

backwards, but anything that would have

been bad news, we didn't have to see.

Now, yesterday, I sold stocks and sent

out a trade alert because I said, "Hey,

I'm putting my money where my mouth is.

I think we go down when the government

reopens." Now, that aligned with Donald

Trump saying, "America's back, baby, and

futures were actually green when the

government reopened." But what actually

happened this morning? Well, we realized

that we're about to get a slew of data.

Kevin Hasset came out this morning and

told us that the September jobs report

has already been cooked. So, we already

know it's going to come out, aka it's

ready for release. It'll probably come

out next week. Great. So, now we have a

jobs catalyst for September next week.

Presumably, the October jobs report will

follow. The October jobs report is

already being asteris though it might be

so bad and this is the jaded outlook but

Kevin Hasset tells us that the October

jobs report is going to be released

without an unemployment rate attached to

it because the unemployment rate will

probably skyrocket. Now part of that

could be temporary in October. We were

expecting to see the Doge layoffs from

uh February that would show up in

September after their layoffs are over

and then they'd show up as unemployed in

October combined with all the furled

people. Like the numbers for October

could be really bad, but we're expecting

to add all that back in. Goldman Sachs

thinks we're going to have a negative

50,000 labor report for October, but a

lot of people are just going to adjust

that back in. So best case scenario, we

have a good September read, bad October,

and then a good November again, which

will come out in a couple weeks, right?

But markets are extremely leveraged. And

so now we're going to get a flood of

retail sales data, jobs data, inflation

data, construction data, import export

data, and it's all going to update this

Atlanta Fed real GDP forecast, which

says GDP is at 4% in the third quarter.

But that's based on a lack of data. So

what happens when we get the real data?

Well, we either confirm soft landing or

we fall into recession. That's where

people are today saying, "Okay, well,

how do we reconcile that risk, the

pendulum risk with this chart, friends?"

After a lot of work, we figured out how

to use a numbers Excel style spreadsheet

and we were able to plot the FINRA

margin data on this chart. So, yeah,

this is from my little spreadsheet. All

I did was download FINRA's margin data

and I put a bunch of arrows on it. So,

it looks really like fancy and like a

lot of work went into it. It was

probably about 8 minutes of figuring out

how the spreadsheet works and about 2

minutes of oh Anyway, here are the

takeaways from this. The blue line is

margin debt. The red line is available

cash in people's brokerage accounts.

Now, what you'll notice is today we have

26%

more debt than we had in the 2021 peak

over here, which means people are way

deeper in margin. And your boy Kevin has

been talking about paying off debt,

selling assets if you need to pay off

debt, getting out of margin, don't trust

the big banks. I've been a little bit of

a broken record about my fear of margin.

And part of it is because of this chart.

Since liberation day, debt has gone

[snorts] vertical. Now, yes, the chart

isn't inflation adjusted. So maybe this

is really just similar to this. But even

if it's similar, what came after the

2021 peak of margin debt? A nasty

year-long crash. Okay, this is where the

economist tells us we're actually facing

seven deadly sins. Now, I'm going to

talk about that and what's going on in

data centers and what's going on with AI

valuations. But understand this bottom

part of the chart, too. Usually, when

the market booms and margin goes up, the

blue line goes up, cash balances go up

as well. 2000.com bubble, margin up,

cash balances up. 2006 bubble, cash up,

margin up. What's happening now, folks?

Quote unquote, this time is different.

Uh-oh. margin up, cash down. We have 26%

more debt today on a nominal basis with

21% lower cash available than in 2021.

Part of this is because sentiment is

like

stocks only go up even though consumer

sentiment on consumer spending is crap.

Here it is. Consumer sentiment is

absolute trash and declining. But

household allocations to stocks are

skyrocketing.

And I think slowly you are getting

people that are saying, "Hey, wait a

second here.

Are we overvaluing the AI boom?" Well,

that is now becoming one of the big

questions and it's leading the economist

to talk about the seven deadly sins that

are present in the economy right now.

Take a look at the seven deadly sins

because these are wild and they

introduce us to the next parts of the

videos incl of the video including

phantom data centers. Take a look at

this seven deadly sins of corporate

exuberance. We'll keep it simple for us.

Number one, the lust for crypto. Crypto

we know doesn't produce underlying

earnings, but we love that on one hand

because when earnings go down, crypto

isn't necessarily associated with

earnings going down because there are no

earnings, which could be a good thing.

Some people see that as a feature. The

problem is crypto is also associated

with being a risk asset. And when margin

and debt are at all-time highs, not only

leveraged ETFs, feeder funds like STRC,

boy, I've got to make an expose video on

on that. Micro Strategy feeder funds, we

start seeing when leverage gets tight

for these funds, the ability to keep

pumping up the underlying asset becomes

limited. And so, while it's really

exciting that we've gotten this big

movement of corporations going into

treasury assets, there's a reason why in

my real estate startup, I have refused

to quote unquote treasury money into

Bitcoin. Not because I don't believe in

the innovation of stable coins or

cryptography, but rather because we are

a diversified play. People were emailing

us saying, "Hey, I want to diversify. I

want to take profits on crypto and

stocks. I want to diversify into real

estate." And this is like our operating

or our fundraising account where 90 plus

over 90% of this is our fundraising over

the last uh period of time here. But I

feel like there's an inverse correlation

with the more people want to take

profits on crypto and stocks the more

our inflows are exploding. Uh and so

it's kind of wild that you know we're

what 13 days even less. I think like

eight banking days into November and

we've raised $1.1 million for for a real

estate diversification play, you know,

with the flare of AI. Read more about

that in the offering circular and

disclosures at house hack.com or

reinvest.com. But it's interesting to me

because you are seeing that

diversification desire and some of that

comes from when we're maxed out on the

new total addressable market for crypto.

Maybe it's time for a little bit of a

breather. uh then hey maybe that creates

a buy the dip opportunity right number

two the economist says the second deadly

sin for the economy right now is that

retail momentum and this sort of

disconnect between fundamentals and

realities is a risk factor and they're

not wrong Elon Musk getting a trillion

dollar pay package when the stock is

trading for like a six peg Palunteer

with a seven or eight peg price to

earnings growth ratio these are very

high valuations as well as then of

course stocks that are actually kind of

like companies that are losing revenue

momentum like American Eagle pumping on

you know Sydney Sweeney but then again

that's not the only thing that pumps

when Sydney Sweeney comes on screen.

So this is what they call the second

deadly sin. Retail momentum circularity.

This I mean we've heard this before. The

Bloomberg uh you know circular financing

argument for Nvidia and AI has been

something we've been kind of complaining

about for the last few months here. And

it's this idea that hey uh you know is

this circular financing or is this

really just like no different from GM

saying hey if you go finance a car with

us you know we'll uh we'll give you a

discounted rate or whatever on your car

right those are the arguments that you

have right now is people say hey when

Nvidia backs stops Coreweave who's going

to end up buying more Nvidia chips it's

really just like financing their ability

to buy more chips. But then you kind of

run into these problems because I'm

looking at Cororeweave's latest sales

because I keep looking for their MSA,

which is going to come out soon. I'll

talk about that in a moment. And what

you find is you've got an insider over

here dumping $1.4 million worth of

shares. This is one of their directors.

But then today we had yet another filing

and West Clay Capital dumped $25 million

worth of Core shares. And apparently

these are founders shares. And so it's

very interesting because insiders are

dumping shares while at the same time

everybody's being told that while debt

is at an all-time high, it's okay

because don't worry uh this cycle of

financing will go on forever. But I

think this is where companies are

getting frustrated. This is kind of like

what we talked about yesterday.

Yesterday we talked about how Meta is

actually falling off a cliff over here

in part because people are getting

frustrated that Mark Zuckerberg might be

back to his old ways of drunken sailor

spending like what you saw during the

days of the metaverse. I hate to say it,

but when you zoom out, when Mark Zuck

went metaverse crazy, the stock went on

this like nearly one and a halfyear

selloff and the stock plunged from

almost $400

about 75% to about $87.

And so people are worried again that

maybe we're in this same environment of

overspending

on artificial intelligence. And you'll

notice that the stock that's not getting

hammered is the company that's spending

the least money on artificial

intelligence. All you have to do is try

testing Siri and you'll know that Apple

spends basically zero money on

artificial intelligence because there is

no intelligence.

But look at Apple. Apple at all-time

highs. Microsoft or Meta is down like

25%.

Microsoft is down 10 to 12% off all-time

highs. Even Amazon uh is coming off. You

can't see it on the week chart yet, but

it's slowly coming down here on the day

chart is people are concerned about the

lack of cash flow at these companies and

the amount of debt they're taking on.

Amazon just had a quarter that is

essentially indistinguishable from no

free cash flow. Last year, $2.5 billion

of free cash flow in a quarter. This

year, 400 mil. They're basically next to

no free cash flow because they're

blowing their money on artificial

intelligence buildouts. And people are

worried that these companies are going

to be bag holders. I mean the fact that

Meta I mean here's Oracle just a great

example. They are way heavily indebted

massive amounts of debt at Oracle.

People ask me in the Alpha report

they're like Kevin should we buy Oracle

on this earnings boom and I'm like bro

have you seen their balance sheet? Have

you seen how much debt they have?

>> Kevin is much more interested than most

people by the way in the balance sheet.

>> It's bad. And eventually the bill comes

due. Now, the issue with Meta is that

you actually have a stock that is able

to finance uh the $30 billion buildout

of a data center by selling the debt to

specialurpose vehicle investors. And

then they don't even have to recognize

the lease payments as expenses on their

balance sheet as a current or long-term

liability for the leases that they're

committing to. Why? Oh, because rating

firms say you don't have to anymore.

That's insane.

That's crazy. And it is scary. And it is

a red flag that all of a sudden these

circular investments are now starting to

show up as offbalance sheet debts even

though you're technically having to make

the payments for it. It's wild. So you

have a liability, but you don't have to

disclose it. It's kind of weird. Now,

don't get me wrong. I think Meta is one

of the cheapest out of the mag seven

plays, but in a time where the

underlying economy is starting to shake

with Verizon eyeing up to 15,000

layoffs, which by the way led the stock

to actually green candle up, which is

another red flag, mind you. Like you got

to think about that when a stock pops on

a day like today when the NASDAQ's down

2% 2.2% right now on the NASDAQ, but the

NASDAQ's down. It's just like keeps

bleeding today. We were bearish in the

alpha report this morning. That's why I

sold stock yesterday because of the

government reopening. But anyway, the

stock actually popped right here on news

of 15,000 layoffs. You should see that

as a warning sign. I want you to think

about that for a moment. Think about the

cycle that happens with layoffs and

recessions. This is the scary cycle of

layoffs. The way it works is simple.

Earnings and revenue go down. So, people

at companies fire people to increase

earnings per share. Revenues flatline.

They can't raise prices anymore cuz

people are pissed about inflation. So

you're not getting earnings growth. So

what do you do? You cut in the middle.

You fire people so you could get

earnings per share up. Then the stock

goes up. People are happy. But the

problem is that then motivates other

companies to fire workers. And then all

of a sudden eventually you fired so many

people that revenues go down and then

you're in a recession.

The economist actually thinks a

recession could be really bad for the

global economy. They actually say

markets could topple the global economy.

And what they talk about is not just the

Buffett indicator being at all-time

highs, but what they also talk about is

the fact that so much of the world has

exposure to American equities. They say

that we're at an all-time high of

American household net worth being

exposed to the stock market.

and international exposure to the

American stock market is so high that we

could literally create a mini wealth

growth of growth effect globally just by

having a stock market sell off in the

United States. They say that a stock

market selloff in the United States

could cause such a big retrenchment in

consumer spending that you could see a

1.6% decline in GDP, enough to push

America, where the labor market is

already suffering, into recession. Now,

everybody's been talking about the

potential for a recession, and so far

it's been staved off by AI, but that's

actually the very problem. Remember that

the one thing that's holding up our

labor report right now has been, in my

opinion, artificial intelligence. I

mean, look at the last ADP report, okay?

The last ADP report, which has come

basically down to zero in part because

of immigration. The last ADP report

showed that really the only hiring was

in the West Coast. 37,000

jobs in my opinion likely just AI hires.

So what happens when that peg leg of the

economy goes away, right? And in fact

that mostly in large employers over

here, right? So kind of creepy. So it

makes sense what the economy is saying

or or or what the economist is saying

rather. But the circularity is an issue.

These you know offbalance sheet

financing issues are an issue. It

doesn't help that now there's talk that

open AI is peeking out on growth. It

doesn't help that Elon Musk didn't get

his Tesla investment into XAI, which I

was not an advocate for that anyway. I

don't think Tesla should be taking a

profitable business and investing into a

money losing business. Elon Musk is

rumored to be raising 15 more billion

dollars for XAI, which he denies, of

course, but whatever. This doesn't help

either for the AI place. Look at this.

Phantom data centers muddy forecast for

US power needs. They're basically saying

that AI companies have these insane

views of how much power that we're going

to need in the world by the end of the

uh decade that what happens if we don't

actually need that much data or or that

much power. Well, now all of a sudden

you'll have built data centers or or

you'll have built power grids that need

to be repaid for, but you don't actually

have use. And if you don't have that

use, then you can actually increase

utility rates, making existing AI even

more expensive to operate, even more

money losing because now you're paying

for an overbuilt ecosystem of uh power

thanks to phantom data centers. You

know, they make this quote here, nobody

builds a 100 story tower in Manhattan

without some anchor tenants. It's kind

of crazy. It's kind of crazy to think

about just how much is propped up on

hope around data centers. Now hopefully

it's fine, right? I'm not here saying

we're definitely going to go into

recession. I just think we're at a

turning point and when you are at a high

leverage point in the economy, you're at

high debt. You know, this is why we have

zero bank debt at house hack. This is

why Kevin has zero personal debt is

because I I'm not here saying I have a

crystal ball. I'm going to tell you

which way it's going to break. I'm just

saying we're going to break in one way.

We are very indebted. And the issue is

if we get good jobs data, good. We could

soft land. It was a buy the dip

opportunity. But if this is a liquidity

crush and the Federal Reserve is going

to have to go back into money printing

mode because we're about to have a

liquidity crisis, then you're going to

see rates go to zero. The Fed run the

money printer and the economy and stocks

could still go down even in the face of

money printing. Kind of creepy. I mean,

you literally have people worried about

the Fed cutting 25 basis points. Oh, is

it going to happen in December or not?

Who freaking cares? Who cares? Is is the

real question. But anyway, look at these

other deadly sins. We're not even at

them yet. Dealm number four is what they

say is the seventh deadly sin. Big boom

in deal making, whatever. The debt

gluttony they say is another big danger

uh for the economy. I mean, that's what

we've already been talking about with

margin, but it's not just that. It's

these offbalance sheet debt plays. Mind

you, also what's happening with banks

like they make this argument that here

there's patriotic pride by JP Morgan

saying they will bankroll companies with

a $1.5 trillion investment. People

misread that headline so badly. And I

talked about it when that headline came

out last month. I'm like JP Morgan I

even tweeted it. I'm like, JP Morgan is

not going to give you $1.5 trillion of

money because it's equity. They're going

to lend you money is what they're

saying. Oh, we'll lend because they said

they'd invest like a couple billion

dollars or whatever, like 1/100th of

what they're saying. But everybody's

like, "Oh my gosh, JP Morgan's so

bullish on America. They're going to

invest $1.5 trillion in America." No,

they're going to lend cuz they're a

bank. That's what they do. And then

guess what happens when banks lend money

and then hits the fan? They take

the money back. They pull credit lines

and that's when things go dirty. Like we

have not even most people who are in

margin right now have not experienced a

bank calling you up and saying, "Hey,

uh, guess what? We used to lend you $4

on every $1 of Tesla shares you own. Uh

JK, now we're only going to lend you $2

on every $1 of Tesla share you own

because oh, volatility has changed. Oh,

great. Well, you know how many mar

people get margin called instantaneously

then when you start changing the other?

We're not even there yet. We're not even

there at the broker dealers freaking out

yet. Broker dealers are still trying to

call up investors on a daily basis

going, "Please take on more debt. Like,

please borrow more money so we can pump

the fintech space even more." That's

what broker dealers are doing right now.

And it's so dangerous for investors

because people don't read the terms of

services that say these people can rug

pull you on margin lines. It's the most

scary thing about margin is that they

could change the underlying

requirements. Economist goes on to say

that the United States is now taking

stakes like basically they're arguing

that the United States is misallocating

capital by investing in companies like

Intel or MP Material uh or you know US

Steel or whatever. Open AAI is now

begging for a government backs stop.

Yeah, that's a red flag. You know,

yesterday there was talk that the CFO of

OpenAI was talking about um uh basically

user growth falling in October and

turning negative because of changes to

you know their policies. But what if

that doesn't change? You know, what if

that growth does stall and there's a cap

to how many people want to use a

commoditized service like LLMs and the

whole, you know, peg leg that supports

the economy rolls over. This is why

you've got, you know, there's somebody

at Goldman Sachs that's arguing 93% I

think it was 93% 93% of earnings that

we've seen and earnings growth we've

seen is because of AI. Well, what

happens when that peg leg goes away? And

then of course they just talk about

greed and fraud which is exactly what

you see atricolor

first brands. They're all pointing the

finger at each other going it's fraud

that's why we're going bankrupt. Not

great. And so this is where they say

look at this. Robin Hood they point out

that Robin Hood has announced that

client borrowing has risen by 153% this

year.

That's insane.

That's crazy. So that means if you had,

you know, $100 of debt, now you're at

like 240 or whatever something dollars

of debt. It's insane the amount of money

that uh that you're that people are

borrowing right now. Uh so debt big

issue. We already know that. That's why

economists are talking about seven

deadly sins. They also have a whole

piece here where they talk about again

the US economy being so vital to the

rest of the world that we will probably

push low growth Europe into a recession

and China into a big recession. Now

maybe they're just being uber bearish

here, right? Uh usually they say America

would be a safe haven and people would

invest in the dollar, but you've got

problems because

are people going to invest in the dollar

this time because of tariffs? the

protectionist policies that we've had

now might not be good. You know, they

say, "Hey, if we do hit a recession, we

could not be prepared for these

consequences, that they'll not only be

even more of a glut of Chinese goods, so

more deflation, which is good, but that

means even lower earnings for US

companies." So, something to, you know,

I I guess start paying attention to

maybe a little bit as well as this Fed

liquidity thing. I mean, so far we've

seen a relaxation in the repo market,

but you get these little fits and starts

over here on the repo market, but you

know, even today, Hammock was talking

about, uh-oh, we're going to have to

inject liquidity again soon into

markets. Makes you wonder why, like,

what are they seeing in the background?

Who's leaking stuff or data in the

background that is making everything

turn so freaking red? I personally think

it's because people don't have money, so

they got to sell to raise capital so

they can go buy the dip or whatever, but

they got to pay off debt first. And it

makes sense. The question then is, you

know, where like which part of this

cycle are we on? And again, I realize

this is probably not inflation adjusted,

right? Like I'm not trying to be dead

bearish here, but uh I'm certainly not

dead bullish either. Again, I'm very

like teeter tottery, but it makes you

wonder what happens like when does this

margin debt like when do people wake up

that debt is is very bad at this phase

of the cycle? I don't know. I don't

know. You know, somebody donated last

week and it almost makes me wonder if

they're like a um you know, a stock

broker and not to be jaded here, but I'm

going to be a little jaded. They donated

$500 on my live stream and they're like

something to the effect of like, yeah,

margin, baby. And and I'm like,

bro, the guy just donated $500 on my

live stream to promote margin. And I'm

like, man, like what phase of the cycle

is this when brokers or, you know,

people are begging you to go deeper into

margin? Like, it's really hard. But you

know the the the challenge right now is

being disciplined

when when everything is kind of mooning

you know uh now obviously today things

aren't but for me give me the data man

and then let's see what the data says.

Now I'm obviously going to take the data

with a grain of salt. I mean you know me

I'm not going to believe all the crap

the government is just throwing at our

faces but at least it gives me the

opportunity to be prepared. That's why I

sent out an alert yesterday to my Alpha

Report members and said, "I'm selling

some. You I sold over a4 million or

roughly a quarter million dollars of

stock. Uh and and I've been trimming uh

some positions uh I've been I've

probably sold what, like $15 for every

dollar I've bought uh in in just the

last like two weeks or so. Uh and so you

get all those alerts over in the Meet

Kevin membership. If you're not part of

it yet, I I highly encourage checking it

out. You get lifetime access, best price

guaranteed on the ME Kevin membership.

So like you won't see the ME Kevin

membership at a lower price guaranteed.

Uh you get every private live stream,

every alpha report, all of the courses

in one. It's probably a tax write off as

well. And you get the technical analysis

every morning in the alpha report like

you know for the last two weeks my

warning that Tesla's going to go you

know back down to 414 and you know sure

enough it dumps. But I mean that was I

think a pretty easy technical call. I'm

not trying to minimize the call there.

It was a pretty good call nonetheless.

But anyway, check that out over at

mekevin.com. And then of course if you

want to check out house hack and

diversify from the madness, go check out

househack.com at uh well house hack.com

and then uh reinvest.co is what it

redirects to. Just to be clear to

people, it's the same company. It's just

a DBA and you can learn a little bit

about what we're doing, the AI we're

building. uh big announcements coming

for the AI product uh before Black

Friday. So, we're really excited about

this, but it's it's pretty cool. Uh but

it's all backed by real estate, which uh

which I love. And we just bought bought

11 properties

uh in just this quarter.

And what do we have? Got a couple offers

out there. I'll see if those go through.

So, we might be up to lucky 13 for the

quarter, but uh we'll see. Anyway, yeah.

>> Why not advertise [music] these things

that you told us here? I feel like

nobody else knows about this.

>> We'll we'll try a little advertising and

see how it goes.

>> Congratulations, man. You have done so

much. People love you. People look up to

you.

>> Kevin Pra there, financial analyst and

YouTuber. Meet Kevin. Always great to

get your take.