**wtf is happening**

This video is going to cover a lot on

what's going on with credit default

swaps and what they're signaling in

private credit, especially artificial

intelligence, and Microsoft is in that

topic, which is scary. Then we're going

to be touching on employment and a

little bit of what consumer earnings

calls just told us because it's really

going to help us understand what the

heck is going on in this environment.

So, in my opinion, buckle up. Watch the

full video. It's going to be the only

video I post until I get back on Monday.

And folks, I think it's going to be

really valuable. It'll give you a lot of

color on what is actually going on in

the economy and maybe where to invest.

Holy smokes, folks. I really apologize.

It seems like every time I leave town

for a couple days, the oopsy dupsies

hits. But why today? Because there are

actually reasons as to why this market

is being so weird today. Liquidations,

margin calls. We had it all today. It's

crazy. Not me personally, but from what

we're hearing out there. Let's talk

about this because there are also some

underlying issues going on, not just

with what we're seeing in the consumer

plays. We're going to go through some

earnings calls, but also what's going

on. We're going to sit here. This is a

little comfortable spot I found. Uh it's

actually a giant bathtub. [laughter]

But anyway, uh we're going to break down

exactly what happened, especially the

spike that's going on in credit default

swaps. Uh and this is almost a little

bit concerning. So, I'm going to break

down exactly what's going on here. Uh,

so so you know, and you can keep track

of it. I think that's important as well.

Uh, I'm a big fan of teaching, uh,

people how to fish. And so, here's the

thing. You're going to see some of this

stuff circulating on social media. What

this is is somebody basically took

screenshots of the Bloomberg terminal

and they found a pricing for Oracle and

Microsoft credit default swaps. And

basically what you could see here is

that Microsoft credit default swaps,

this is AAA rated credit, this is really

really uh like the best kind of bond you

can buy. There's a reason the spreads or

premium that you pay for a corporate

bond at Microsoft is very very low

compared to US Treasury is because

they're basically both considered too

big to fail, right? Well, look at this

spike that you've seen here on Microsoft

just in November, which basically means

the last five trading days. Uh and if

you look at Oracle, you've seen this

repricing uh basically a doubling of the

risk profile over the last month and

it's really really remarkable because

it's like oh my gosh like what does this

mean? So we got to talk about that and

I'm going to break down why this is

happening especially the open AI drama

that's going on and then we'll get into

a little bit more on jobs in the

economy. I do want to mention that this

morning I I like I put I'm going to

start putting screenshots here because I

don't think people believe it but this

was literally from the alpha report

today. Say we bounce at 600. I'd like a

regain of 615 after the bounce. That was

towards our sort of bottom line. And I

also wrote, therefore, this was actually

earlier, so I reversed those, but

anyway, therefore, I'd be looking for

stability around either 605 or 600 for a

playable bounce, depending obviously on

how the first portion of the day goes.

Then there should be a playable bounce,

possibly even a long-term dip by

opportunity. And it's remarkable because

if we look at what happened with the

market today, and I'm going to tell you

why I think this happened, it I think a

lot of it frankly has to do with debt.

Like I think a lot of people are getting

margin called to the you know coonas.

It's it's not good. Uh but what's

happening is here let's go ahead and

share this. Look at the cues right here.

You can see the cues and what we got.

Look at this collapse at the beginning

of the day. We get the institutional

sell. Uh but look at that bounce within

a buck 43 of our foundation right here

which is a really solid reversal you get

off of roughly that 600 level. So,

pretty remarkable playable bounce,

playable as a long-term dip buy, but

it's only playable as a long-term dip by

if you actually think that this jobs

issue and this credit issue that's

brewing isn't going to last. Just a

quick reminder, I know you've heard the

pitch for the Meet Kevin program before.

I just want you to know my goal, like my

whole life, is just to make sure I

provide you as much value as possible.

So, still send the alpha report when I'm

on vacation. and we're going to be back

with really great content over the next

few weeks before even Black Friday

because we're releasing these amazing

new lectures on tax strategies and much

else. You get all this for free as a

course member. So, uh if you're a course

member, mark your calendar technically

for Nvidia Day. That's we're going to be

when we're going to be actually

releasing these lectures. So, mark your

calendar for Nvidia Day. All those

lectures will come out then. You'll get

those totally for free. And if you're

not a member yet, I just want you to

know you will get the best price by

joining now. and we'll guarantee that

for this meet Kevin Alpha Report

membership. So join that and you get

everything. We'll see you there. So what

do I mean with that? Well, this is where

you have to understand the underlying

problems. There are two underlying

problems. Number one, let's talk about

this open AI risk factor and then we'll

hit jobs. Jobs, we know about this. So

we've talked about this before, but

anyway, the underlying issue that you

have with OpenAI is the following.

Remember when we had uh Sarah, the CFO

of OpenAI, who used to work at Next

Door, which tanked, who used to work at

Square, which tanked? Like these have

been massive underperformers. So like

her reputation for working at companies

that can actually grow over the long

term, maybe not the best. Uh but that

said, Sarah basically said, not Sarah

Eisen, uh said, "We're looking for loan

guarantees or back stops." She

essentially put this little balloon up

in the sky like, "Hey, uh like if you

offer it, we'll take it." to this. Sam

Oldman freaked out on X and he's like,

"Bro, no. We we are not doing that."

Like, "What are you talking about,

Sarah?" Uh, and it was actually funny

because I took his giant wall of text

yesterday. You can follow me at Realme

Kevin and see me post these things, but

I took his giant wall of text uh and I I

put it into his own software using GP

GPT5. I took this giant wall of text and

I'm like, "Hey, basically, is is Sam

Alman just coping?" is what I asked it.

Uh, and the response was this

screenshot. Yes, this reads as damage

control. Alman is walking back the

optics of seeking government guarantees

by reframing it as a support for public

infrastructure or chip independence,

not a corporate subsidy. It's a careful

clarification to preserve the pro market

narrative while calming bailout

criticism. Okay. So, basically in

English, Sam Alman's like, "Look, if we

want to keep growing AI and spend a

trillion dollars, you know, it would

actually make our lives a lot easier if

the government's like, we'll guarantee

all these loans for these data centers

because then the uh we can borrow more

money, blow up the bubble even faster,

and the taxpayer can pay for it where

when it fails." The issue with that is

you're basically asking the taxpayer to

guarantee the most expensive part of AI

and the riskiest part, the data center

buildouts. That's going to be where the

real big BA bag holding is, which is why

you're seeing those Oracle spreads widen

so much because they take on massive

debt and have massive infrastructure

investments and they've crushed their

cash flow to do that. That's basically

where Sam Alman's like, see, look,

credit default swaps going up over here.

We need the government to preemptively

bail that out so we don't have spreads

go up and we can keep the AI party

going. In the meantime, we'll take the

really high margin uh software business.

Uh and then of course uh you know this

was him saying like we're see we're not

asking for bailout everything's fine but

then of course if you actually look at

the letter they sent the white house

which this started circulating in a

letter they sent to the white house so

keep in mind the order here right Sarah

asked for government back stops Sam then

denies it and then openai you know the

letter that the openai sent to the white

house comes out uh and it says

broadening coverage of the advanced

manufacturing investment credit would

reduce the effect of capital and

actually derisk early investment

In other words, it'll take care of the

rich people throwing money into backing

open AI. And it'll unlock more private

capital to alleviate bottlenecks and

accelerate AI build in the US. They're

trying to bend the knees to Trump going,

"Look, man, like if you just if you just

juice us with with, you know, a bailout,

a pre-bailout, a guarantee, right? It's

essentially a pre-bailout. Then then

we'll be able to give the manufacturers

the certainty they need. Just give us

loaning guarantees, bro. Come on.

That'll really help us." This is leading

to the stress where markets are now

saying, "Wait a minute." So Sam Alman is

asking for loan guarantees and then he's

saying he's not, but then basically he

is. This is probably a sign that other

lenders are starting to get nervous

about lending to AI to OpenAI or any

really underlying AI business, which if

other lenders are getting business or

are getting nervous, maybe we should be

getting nervous as well. I hate to say

it. People think like the suits and the

people on Wall Street are brilliant.

They're just like you and me. Like they

just have more capital. And so when some

of them get scared, they all get scared.

Uh and so it's not also a surprise that

you're seeing a liquidation of funds in

private credit

after the first brand's collapse. So,

this is how it all starts shaking and

getting really, really nervous for

people. And I kid you not, I'm going to

put this up on screen because I think

it's remarkable. Uh, look at this here.

Let's pop this up on screen. Uh, okay.

Well, this is the downside of not being

in my studio, but that's okay. You know

what? While I pull this screen up,

remember, uh, don't forget you can go to

mekevin.com and get that alpha report

every single morning. I still send it

even when I'm on vacation, boys and

girls. But anyway, look at this. So UBS

liquidates funds affected by first

brand's collapse. So now I really want

you to think about what this means. UBS

basically has funds. Think of them like

ETFs. They're not ETFs. They're private,

but but think of them like an ETF, which

an ETF is just a fund, right? Hey, we

have this idea. We're going to invest in

private credit, and you're going to get

all these great yields. Well, all of a

sudden, clients are like, "Yo, bro, um,

we want our money out of these funds."

And so First Brands is like, "Oh my

gosh, everybody's trying to take their

money out. They're basically liquidating

the funds. Let's just go ahead and close

the fund because everybody's selling and

uh everybody wants their money back out

of the fund. So, we're just going to go

ahead and liquidate funds and and we'll

we'll shut this whole side of the

business down. So then investors get

their money back, you know, what's left

of it." Uh because remember, there are a

few reasons you can like close a fund.

You could close a fund because

everybody's bailing and nobody wants,

you know, wants to be part of it anymore

because there's an underlying stress. Or

you could close a fund because you're

doing other projects and you don't want

to manage the fund, right? This is not

the latter. This is not UBS saying,

"Yeah, we just don't want to do this

anymore." You know, it's like we we're

going to focus on a different part of

our business that's booming. That's for

example me and Hellsac. Like I'm

focusing on a business that's booming.

It's crazy. We're we're about to cross a

million dollars of inflows just in

November, which is really awesome. This

is UBS going, "No, it is so bad if

people panicking, not wanting to put new

money in, which if people don't put new

money in, then what happens? UBS ain't

going anywhere with these funds. So,

they're not making money anymore on

these funds. You may as well just

liquidate and close down." Okay. Well,

what happens then? Other funds start

getting stressed because they don't get

the inflows or new funding. And then

what happens? Well, credit starts

freezing up. when credit starts freezing

up because there's a a form of a

liquidity crisis going on. Well, then

what happens? All of a sudden, you see

credit default swap insurance rates go

way up because people start taking out

insurance against a default. Remember,

insurance right now on $10 million of

Oracle cost you about $84,000 a year.

And that's double what it cost like two

months ago, which is crazy. Anyway, uh

so

this ripple effect of triricolor and

first brands which a lot of people first

said they're like oh it's idiosyncratic

it's idiosyncratic it's just those

companies it's just there aren't any

other cockroaches now all of a sudden

you're seeing oh no there are problems

in a lot of different places lenders

people who buy bonds are getting

stressed they're not as interested in

buying debt in these you know uh AI

infrastructure plays or certainly

private credit plays And so they're

taking their money out and they're

moving to less risky assets, especially

when the stock market is at all-time

highs. Unfortunately, when the stock

market is at all-time highs, what ends

up happening? Well, you tend to get the

stock market as soon as it wobbles and

starts coming down triggering margin

calls. And that's literally what we're

seeing today. I mean, I know of people

who are getting like six figure margin

calls. I'm apparently they don't listen

when me Kevin's like, "Don't have debt

in this freaking environment. That's why

we don't have debt." You know, me

personally, zero debt, no margin debt,

no credit lines, no helocks, nothing.

You can't call me in margin calling

because there's no debt. Now, House hack

is a little bit of convertible bond

debt, but that's because we're

diversifying away from the insanity of

the euphoria and we're diversifying into

American real estate. I should show you

this foreclosure that we just got our

hands on. Uh, this is really cool. This

this is like totally raw, non-edited

footage. I should probably shouldn't do

this, but I'm gonna do it anyway. Um, so

this is a a foreclosure I took Jack to

and uh poor little guy. I mean, look at

this. It is like a full hoarder disaster

where they've got the little hallways

over here just to get through and

survive. Jack's never seen something

like this before in his life, which is

great for him to see because it's like,

"Son, if you ever get mad at mommy and

daddy for a day, we'll go move you into

the hoarder house." [laughter]

So, we now have a little bit of uh maybe

leverage, but look at his face over

here. just like stunned. Uh I mean I'll

amplify the audio later, but he's

basically like, "Man, you need to like

tear this place down and and start

over." I mean, look at when you go

upstairs. Oh, yeah. We got mold in the

bathroom over here, too. It's

disgusting. But anyway, look at you go

upstairs cuz this person actually is

still alive. You go over here into the

master. You actually find the TVs on

here and and this is how the folks watch

TV. Oh, this is Jack holding the camera.

So, I think I'm going to take it here.

Yeah, there we go. So, I'm going to take

it in. Watch how these people watch TV.

That's the bed that's buried by

everything. And look at this. You have

like the whole shrine set up for the TV.

And there's where you could sit and

watch it. Holy smokes. Anyway,

Houseack's going to make a lot of money

on this. But then I always think it's so

funny because then people are like, "Oh,

but Kevin, you know, a home buyer could

have bought that place." Dude, no home

buyer is buying some of the stuff we're

buying. [laughter]

Nobody's touching this. But like that's

what we're putting our money into,

right? It's not like we're putting our

money into Bitcoin or or whatever.

People are able to diversify to real

estate with House Hack. This is not a

solicitation. Go read the documents at

househack.com or reinvest.co. Uh yeah,

whatever. Okay. You know about that,

right?

>> Seriously going to fix us up this place?

>> I mean, don't you think it needs it? Or

should we just rent it out the way it

is?

>> Probably needs a little love, huh?

>> I would just destroy the entire thing

and make a new one. Oh, just start over,

huh? I mean, it's got a good water

heater that, you know, looks good. Get

the laundry in here. I mean, I think a

little bit of paint would be fine.

>> No, but you have to remove everything.

Like, what is all this?

>> Uh, well, Amazon purchases.

>> I just swallowed a spiderweb.

>> So, well, now we got mold. Well,

>> yeah, sure. Here you go.

Oh,

>> it's all right. Powder room. Please

don't close door. You will get locked

inside. Sorry for the inconvenience.

Call locksmith ASAP. Let me go.

>> Why do you want to go?

>> It's scary.

>> You're not having fun?

>> No.

>> Now we know about this private credit

crisis that's going on. Not just the

overflow from First Brands and

Triricolor, which is leading to ripples

in the private credit. You're seeing

insurance premiums skyrocket for taking

out insurance against these bond

operations that the big infrastructure

plays are doing because they're burning

all their capital without this clear

path to profitability. Uh the open AI

sort of pre-bailout request creates even

more nervousness. And all of this is

happening when fund manager cash is at

extremely low levels and

there's not much else you can borrow.

Like people are already maxed out.

People are suffering. People are maxed

out on buy now pay later. People are

maxed out on credit cards. All these are

at all-time highs. BNPL all-time high.

Leveraged ETF funds all-time high.

Credit cards all-time high. Margin debt

all-time high. Like we are a a an entire

economic ecosystem of earnings per

share, like S&P 500 earnings per share,

all fueled by debt, baby. And that's

scary. Now, obviously this I mean this

is one of the reasons I'm mid, you know,

mid-range on the bare bull scale because

it's like there's a path to getting out

of this, but you can't be blindly

bullish on everything. You have to be

aware of the risk. And that gets to the

other side of the equation, which is the

data that we got this morning on jobs.

It's not great. Now, you can get this

data, remember, in the Meet Kevin app

totally for free. Uh if you're a course

member, you get extra insight obviously

through the app. Uh so download that in

the app store. Uh but um but I I think

it's valuable for you to have the extra

explanation with us on video here. But I

do also want to just shout out if you

haven't used it yet, use that extra 15%

off coupon on the uh investing.com

special they've got going on. If you use

coupon code meet Kevin, you get an extra

15% on their discount there. Then you

can really do some good analysis. But

look at what's going on on uh jobs here.

This is kind of crazy. So first, this is

from the University of Michigan

sentiment survey. The survey itself is

extremely volatile. Oh, I should

actually edit that part. It's extremely

volatile. Uh but uh the less volatile

portion is the blue line shown below.

There we go. I should clarify that. This

is why I think it's important we go

through this stuff with video. But

anyway, it's a nice reference for you to

look at in the future if you want to

look it up. So look at this. This blue

line is the consumer expectation on the

labor market. Now, even though this

one's volatile, it's nowhere near, I'll

say that, nowhere near as volatile as

sentiment, right? This is different than

sentiment. We already know sentiment

came in trash, but this is nowhere near

as volatile as sentiment. And it usually

leads GDP by 6 months. Frankly, the

reason it probably leads by that much is

because GDP is just like such a lagging

indicator. And it's usually wrong. Like,

usually really high GDP estimates end up

just getting revised rapidly down. It's

not great. But anyway, so we're nowhere

near as volatile on sentiment uh uh for

for consumer expectations on the labor

market, and it's absolutely falling off

a cliff, which isn't great. We're at

like 2008 lows on expectations for

labor. And I'm seeing this. I mean, I'm

talking even here at where where I am,

which is a wedding. I'm talking to

people who work from for like, you know,

Microsoft divisions. No names to be

named here other than Microsoft, but

people are like, "Dude, you know, we've

been working here 10, 11, 12 years, and

we're nervous that we're suddenly going

to get laid off." There is true fear in

the office that today may be our last

day where we open up our laptop, it just

doesn't work anymore. Like there is real

layoff here. So some of that fear could

be coming through here. But it's not

just that. And I don't even have this

listed right here on on today's page,

but it's also that ADP report. Yeah,

look, we cheered that we went on a

three-month moving average. We moved up

to 43,000. That's great, you know, uh uh

or sorry, on on the one month we're at

42,000. And the three-month moving

average is positive. Fine. It's still

indistinguishable from zero. We think

the break even rate somewhere between

zero and 20. So 40 is above the break

even rate which is great. Uh you know

because immigration has come down so

much. That's what the break even rate

adjusts for which is probably somewhere

between zero as Powell sees it or as

other people at the Fed like Lorie Logan

think it's like 20K somewhere in there

is probably right. I think they're

probably right about. Now, something

else that really nobody is talking about

on social media either that I want to

amplify, which we've talked about on the

channel before, but you may have already

forgotten, is that even the ADP report,

which was really the only bullish

catalyst we had for jobs, told us, hey,

forward warnings for layoffs or at the

highest level that we have seen since

2008.

We are not on a good trend for layoffs

coming, which is bad because remember

the one thing preventing the

normalization of the beaverage curve,

big red flag if that normalizes because

it basically means unemployment is going

to skyrocket is layoffs. And if plans

are now accelerating,

it's a problem. Shout out, by the way,

to Cancun,

not for turning my internet off, which

really, well, I'm a stoic. I don't get

upset. Well, I had to move because

apparently the internet went out. That's

one of the downsides of travel. But then

again, we'll get the video up

eventually. Uh, so here's the thing. The

ADP warning that we last got was that in

California, Oregon, and Washington were

basically the only states we got jobs.

that west coast. That's probably why

because of AI tech hiring. So if you

remove that one toothpick that's holding

up that AI tech hiring cuz you're still

hiring AI developers, right? You

probably have no jobs on the ADP report,

which was an issue I flagged in the ADP

report a few days ago when we covered

it. I'm like, man, you had I remember

saying it wasn't to be offensive. It's

just like, you know me, I'm in the

middle, so I kind of make fun of

everything. I'm like, the MAGAS better

be thankful for the libtards for the

leftover hiring cuz it's the only

toothpick holding up the economy right

now. So then you get the Revolio Labs

jobs report yesterday which revises down

jobs from 60K to 33K and it shows that

October is actually at 9,000.

All of those not great signals for the

labor market. But on top of that, we

also know that the layoff level today

matches the layoff level on challenger

job cuts reports that we lost saw in

2009.

The problem with that chart or the

problem with that understanding is in

2009 when we saw those massive layoffs,

we already had our shock event. We

already had our Lehman Brothers

collapse. We already had all the poopy

dupy in front of us or or behind us. And

then it was just about recovery. So then

if you look at like Indeed job postings

which today are declining to levels that

we haven't seen uh since uh 2021.

You could see this right here going

back. The difference is job postings

were on this massive uptrend here. Now

we're on this slow bleed trajectory.

Right? That's really what this is is a

slow bleed. The economy is basically

being sliced down to hell slowly. So now

let's understand what restaurant

earnings tell us just briefly. Okay,

Cabava which was this big meme stock.

People are like Kevin should I buy this?

I'm like I don't know man. The reason

people are so excited is because they

keep adding stores. Comp sales growth is

you know 20%. But that's because it's a

2011 business. It's a newer business

relative to to you know restaurants. And

so what do we have now? Complete

reversal. 24 stocks closed 18 opened

which means you net lost six stores.

transactions were growing in the mid20s.

Now they're growing at like 2%. The

entire restaurant industry has lost 7%

of transaction volume since 2019. That's

directly from the Cava earnings call.

The macro environment is what they're

blaming and they're like, you know,

we're in a heavy discounting

environment, but we're not going to uh

get into the heavy discounting to combat

any cyclical headwinds because, you

know, we don't do that. That's just high

ego. That's just a matter of time before

they have to cut prices. It's not in our

value proposition. You know, we're not

like McDonald's is basically what

they're saying. They're trying to slam

these other companies when the reality

is that's a big mistake. You should be

adjusting and taking care of your

consumer. On fairness, they're talking

about unlike Chipotle, actually having

your bowl of food full. I thought that

was an indirect slam at Chipotle. That

was actually kind of entertaining to see

in an earnings call. But anyway, at

Sweet Green, they're like, "Yeah, dude.

You know, we saw a slight pickup in July

after Liberation. However, in August, we

saw 200 basis points of declines.

another 200 basis points of declines in

September and now we're holding flat

compared to September, but on an annual

basis we're running in the low negative

doubledigit territory right now. Dinner

is mostly slowing down and the younger

consumer specifically in LA, the 25 to

35year-old consumer, oopsy dupsies. Now,

Dash is falling, not necessarily because

of the restaurant issue because Dash

numbers are up, but Dash is falling

because they're like, "Yeah, we're going

to go invest a bunch of money so we can

keep the growth going." And people today

are punishing that. They're like, "Oh,

you guys are going to invest. So,

earnings per share are going to be down.

Okay, sell." I mean, they got a two peg,

so I think, you know, they're probably

relatively where they should be as long

as we don't go into a recession. But

anyway, this gives you a breakdown of

everything that's going on. Liquidity

stress, people are maxed out on money.

It's hard to keep going up when you're

out of money. Okay, people are fully

leveraged. You're seeing the margin

calls. You're seeing the credit stress.

You're seeing the underlying consumer

stress. And unless we get a turnaround

in jobs here, which could happen, that's

kind of why I say we're on this

pendulum. You know, it's teeter totter.

Are we going to soft land? To soft land,

we need jobs up. If we don't get jobs

up, we're done. Now, mind you, this is

exactly why we have zero debt with House

Hack. We are, we think, diversifying

into a portion of the economy that has

actually been kind of battered up since

2022. Like we think real estate has

massive opportunities because as the

economy falters, rates come down, the

ability to leverage up the portfolio

skyrockets.

And I mean, let's say rates drop to

zero. Holy smokes, we can explode this

to like a half a billion dollar

portfolio. We're jumping up and down at

House AG. Uh but we also on the flip

side we're like but a recession would

also be bad because it would limit the

potential that we could sell our SAS biz

right because obviously if we're in the

biggest bull market ever and it keeps

going driven by AI we could sell our AI

product which we're just now getting

ready to launch. So like we're okay

either way. We have benefits and wins

either way, but there are reasons to

also cheer just people not going through

the suffering of a crash.