YIKES Fed! *This Time is NOT Different* & Trump SHOCKER! | Bottom Line Report [E.12]

oh smokes is it possible the Bond

vigilantes are back and what could that

mean for the real estate and stock

market this is a big deal we got to talk

about it in this video but also how much

was Donald Trump potentially going to

get paid not to run for president by Sam

bankman freed as some like to call him

Sam bankman fraudster well in this video

we're going to talk about exactly that

and more let's get into it first

yesterday we speculated that there was

wild and rampant Short Selling going on

in the treasury market and this has

happened historically as well and what

happens when you short the treasury

market is you drive yields up all you

have to know is when I say short

treasuries you think yields up we don't

have to get into the mechanics of that

but what does it mean when yields go up

it means interest rates for houses go up

and a lot of other things go up and

start to see some pain in the real

estate market and it's only been recent

I'll tell you some of the areas that

were hot in July are not now and some of

the areas that were Mega multiple offer

hot in August are less multiple offer

hot you're going from like 10 offers to

all of a sudden two we're seeing a

massive shift in the real estate market

and things are really finally reacting

to either a interest rates being higher

B the fact that the people who were

willing to buy with high interest rates

have potentially gone away and maybe

seasonality the fact that we're post uh

school starting all of those three

factors together mean that despite low

inventory you're starting to see some

pain in fact I don't know that in my

career I've been able to go to a home

seller and say hey we've been on the

market for 10 days and your $590,000

listing which should be worth based on

the comparable sales $590 to $600,000

that's what it should be worth and it's

listed at $590 and after 10 days it's

not selling I just saw a real estate

agent drop the price of this property by

$4,000 now who knows maybe they're

trying to go for multiples before winter

starts but this particular house is in

an area where you're expecting like a

big snowstorm to roll in or something

but it's a sign that people are a little

worried about what's to come this winter

and that's why we got to talk about

these Bond vigilantes now personally I

think that's an opportunity I think

eventually interest rates will go down

but but we'll have to look at this chart

to see is that definitely going to be

true we'll see what history says and is

that an opportunity maybe for my real

estate startup house hack maybe go learn

more about what I call the Vanguard of

real estate over at house hack.com and

read the offering circular for our

fundraise but look at this chart right

here this is mindblowing and then I got

to tell you about this Donald Trump

thing as well as some other things but

holy

smokes usually when the Federal Reserve

aggressively raises interest rates

that's the blue line right here right

the people with the money printer

usually when the FED aggressively raises

rates the Federal Reserve rate goes up

above the 10-year yield and then it

pushes inflation down or at least that's

the goal that was tried in the early

'70s it was tried in the mid '70s it was

tried in the early 80s but take a look

what happened after at the red lines

this is really interesting the B Bond

vigilantes came out at the Red Arrows I

apologize the Bond vigilantes came out

and you actually had spikes of the

10-year treasury well above the Federal

Reserve fed funds rate that happened

both in 84 and 94 and even though we did

slowly keep this trend of staying above

what the Fed rate is over here as you

can see the red lines just slowly been

kind of trending down and there are

other times it's been high as well like

over here it's worth noting these Spikes

have been associated with Bond

vigilantism bond vigilantism is when you

have investors institutions hedge fund

managers big dollar investors you know

the real Wall Street suits who got all

the dollar hollers say you know what we

are tired of a few things one Reckless

government spending number two the

potential for more inflation look at oil

prices I don't particular you think more

inflation is coming but this is just

some of the arguments that they're

making uh and quantitative tightening

which is basically the Federal Reserve

dumping treasuries on the market so if

they're dumping treasuries that lowers

the price why would you invest in bonds

and high alternative investment yields

like money market funds which yield a

lot of money so so why invest in

treasuries it doesn't make sense so then

you get what's called a bond vigilante

movement which is where institutions

come out and say you know what we're

going to short and dump all of our

treasuries maybe go short on them and

that ends up driving yields higher okay

why is that bad well it hurts everything

for longer it gives you potentially a

weaker economy going forward but wait or

does it while right now we have not

experienced that Bond vigilante ISM yet

on this chart the 10-year treasury is

still meaningfully below the FED funds

rate the FED funds rate is5 and a half%

10year treasuries are sitting at about

4.69% as of this morning clearly there's

still a gap here and maybe that Gap will

remain actually the 10-year treasury is

now at 4.71% it just keeps Rising every

time I refresh the page it just keeps

going up what's potentially happening is

a return to bond vigilantism again take

a shot every time I say this you'll

probably end up in the hospital so don't

end up doing that I'm going to stop

saying it now but anyway look at when

these instances occurred and there's

talk now that we could be back to seeing

this now why is it useful to identify

where it occurred and most importantly

where it didn't occur ready for this

look at where it didn't occur look at

the

2006 2007 recession era notice how we

did not have Bond well I'm not going to

say it again that activity right here

notice how you actually saw the 10year

never suddenly Peak substantially and

well above the federal funds rate and

then we slid into a dark and dirty

recession the Great Recession notice

what didn't happen after the last two

times we've seen this Spike

84 and 94 well it should be obvious

remember the gray bars symbolize a

recession what did did we not get during

those periods well we didn't get a

recession something else that's worth

looking at is that real GDP which is GDP

minus inflation that's the number you

should be looking at didn't meaningfully

shift during the time of BV or this sort

of bond market movement instead you had

relatively stable GDP here in 94 for

what you could say is stable you did

come off of some higher GDP in 83 but in

84 you really just went to this

normalization of GDP because you were

coming out of a hole from 82's recession

now look we haven't gone to massively

positive 10-year yields yet but my point

of this is arguing that it's possible

that higher for longer could also mean

the Federal Reserve might reduce their

federal funds rate from 5'5 to say 4.5 5

and the 10e could then be positive at

4.7 5% 5 and a qu% whatever and you go

back to that sort of vigilante ISM oh I

said it again but what happens you

actually are just like in 84 94 part of

a soft Landing recovery Market oh I said

it I said it see people always like

Kevin the most dangerous words in

investing or this time is different okay

but maybe this time actually isn't

different it's literally just like 84

and 94 which both of those years were

guess what coming out of recessions

coming out of the 82 inflation fight

coming out of the 91 crash both of them

were coming out of recessions how

interesting just like Donald Trump

potentially being offered billions of

dollars is interesting look at this oh

and then I got to tell you something

about Tesla boy I pissed some people off

with Tesla yesterday you know what hold

on a second let's wait on the uh Sam

bankman fraud and uh Donald T thing here

we got to look at Tesla for a moment

some people got massively pissed off at

me they're like Kevin how could you say

that Tesla stock has been flat for

basically 3

years okay first of all we're talking

about the stock market

nobody's here to tell you that the stock

is literally just doing this for 3 years

okay what I was at roughly 3 years ago

33 months ago to be precise which is

December to January 2020 to 2021 Tesla

was trading for about the same valuation

that it is now now notice I said

valuation that's because there are a lot

of people like but cabin there the worst

stock splits it's like okay sometimes I

really like people like Kevin you sell

courses on building your wealth how do

you know you're going to actually be

able to help people and I say just read

the

comments just read the comments people

need help okay the chart's inflation or

the chart is already split adjusted it's

not that hard it's already split

adjusted if we're trading for $250 now

and we move the mouse over to December

and January over here of 2020 and 2021

you're basically at the same level where

you are now go out to the day basis and

maybe it makes it a little bit more

clear again yes has there been

volatility in Tesla stock of course

nobody's saying there hasn't been but

look at this hump over here inflation or

split adjusted we're at

$300 in January January 6th 2021 j6

folks Tesla closes for

253 that's 33 months ago okay it's not

great and obviously the Cyber truck

still hasn't gotten delivered we've been

waiting for that supposed to happen in

Q3 nope not yet but hey you know what at

least we can read about s bankman freed

apparently wanted to pay Donald Trump $5

billion according to his biographer $5

billion

to get Donald Trump not to run s bank

mfried obviously a massive fraudster of

FTX apparently donated up to $40 million

to Democrats and says he secretly

donated to Republicans because the best

way to get advertising was donating

publicly to Democrats and privately to

Republicans now we got to talk about the

Federal Reserve lag but before we do

that remember the new bris Pro crash

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meetkevin.com Milton Friedman made the

term long invariable lags famous

everyone involved in the economy has

been struggling with the question of

what is the lag of Federal Reserve

policy and conventional wisdom says it's

3 to 6 months but what we have here is a

piece that talks about why is it taking

so long for the pain of high interest

rates from the FED to kick in and here's

what we've got the smartness of smart

money is actually potentially increasing

the lag time for monetary policy now why

is that well that's potentially because

corporate borrowers as we've talked

about previously are able to milk a ton

of money off of higher money market

rates compared to actually being

squeezed by higher interest rates

because they have so much cash but not

only do they have so much cash because

they financed a lot of debt at very low

interest rates the current average

coupon yield on bonds it's just

basically a way of saying how much are

these companies paying for Bond debt is

2.9% it's barely creeping up over 3%

this is while the FED is sitting at 5

and a/4 to 5 1/2% almost 60% of the time

before July 2020 so right after Co

almost 60% of the time before that the

the average rate that companies had paid

was above 4% that's the historical level

being above 4% and the reality is it's

not just corporations but it's also

homeowners locking in with 30-year fixed

rate mortgages those incredibly

inexpensive mortgage rate on top of that

when yields were low institutional

borrowers actually extended their terms

which meant not only did they lock in

lower rates but they did so for for even

longer therefore this author argues that

the Federal Reserve should be very

cautious about raising rates even

further because the impact has only

begun to be felt and I think that's

where we're starting to see some of the

break and pain in real estate that could

end up leading to a worse winter this

cycle than we had last winter we'll see

but we're lining up for patient and

great opportunities at my real estate

startup house act you know I've got

courses on building your wealth at

meetkevin.com you know I offer Financial

advice at stack.com get stacked with

stack Haack but my real estate startup

is position to take great advantage of

what we can do in the real estate market

we're going to be patient about it we're

studying every single Market

individually and we're watching the

changes like a hawk now startup

investing isn't without risks but if you

want to learn more go to house hack.com

thank you so much for watching hope you

found this helpful and we'll see you in

the next one goodbye why not advertise

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 PA there financial

analyst and YouTuber meet Kevin always

great to get your

take