worse than feared

there's fresh data out on the US economy

that might be even worse than what we

saw yesterday now in this video I want

to be realistic and straight up with you

I'm not trying to impute any bias or

emotion on this I just want to report

the data to you so you can make up your

own mind and at the end of the video

I'll even go through Warren Buffett's

letter which I thought was really cool

but honestly it doesn't make sense that

all of the headlines they see in the

mainstream Media or an X or whatever

have to do with people just

regurgitating pieces of Warren Buffett's

letter and complete ignorance for the

data that just came out that's actually

significantly more important now yeah

are there cool lessons in Buffett's

letter of course and we're going to

cover them but let's just get right into

this now this is a data set that uh was

released over the last uh 48 Hours uh it

was a data set that was an initial

release uh from the Bureau of Labor

Statistics on revisions uh quarterly

revisions uh the final revision won't be

out for another couple months but I want

you to see from Moody's uh in Standard

Charter what some of the takeaways are

are so far and uh I I just want to warn

you they're not good uh so look I I want

everybody to make money I want everybody

build wealth I want everybody to get

rich in the stock market I'm all for it

uh but we need to probably start paying

attention to this because it's getting

worse uh this comes after yesterday's

PMI data uh if you haven't seen that yet

just type into YouTube uh meet Kevin

this is very bad that was the the title

of yesterday's video we just go into

historical videos and see yesterday that

was that was already shock that was part

of the reason why the markets yesterday

sold down we a $2.7

trillion uh set of options expiring

yesterday the market lost $1

trillion in value yesterday poof gone

like that some people are blaming that

uh announcement about a potential

discovery of another covid virus in

China That's nonsense uh and the bit

hack I mean so far everything seems

pretty stable they're back to normal

operations so honestly their investors

help bail them out to cover what they

needed in terms of losses from that

ethereum hack but KnockOn would but

hopefully those two things are contained

you could also watch my video on that Co

virus this document is an Institutional

letter that I marked up discussing the

qcw changes now that does not sound

logical or anything understandable at

all in fact when you start reading it

sounds extremely complicated such as it

is a capital mistake to theorize before

one has the data the just relased Q3

2024 quarterly census of employment and

wages points to an increasing

overestimate of employment by non-farm

payrolls even after recent Benchmark

revisions okay none of this sounds like

English so let's just make this

extremely simple basically when the

Bureau of Labor Statistics or as some

like to say the U Bureau of uh

uh when uh they put together an

estimate on a monthly basis of

nonfarm payrolls what they're really

doing by the first Friday Friday of

every month is trying to make an

estimate for the entire 30 days before

that using a small sample of the United

States and what they do is they take

this little slice over here and they say

okay how many people over here got jobs

lost jobs how many businesses were

created how many businesses were

shuttered uh and this sample right here

they then extrapolate to the entire

month the problem is they try to do that

all with within the first you know s

days let's give them the benefit of the

doubt and say the Friday lands on the

seventh day of the month they tried to

do that all within the first seven days

best case scenario your first five

business days of the very next month

this leads to some really crazy over or

underestimating and this is why we come

back with these quarterly census

revisions and we make modifications and

we say you know what all right all right

let's just get rid of all of this right

here uh and it's instead of using any

kind of estimates of what's going on why

don't we just look at the data and see

hey U now that we have payroll data and

tax return data and stuff uh you know

payroll reports and that why don't we

fill in the actual data uh and how does

that actual data compare to what we

originally estimated well when times are

good this works totally fine because

things are much more predictable but

when there's uncertainty in markets and

when things are rapidly changing

then it's a lot harder to figure out

what's actually going on and how

representative a sample is of everything

that's going on in the United States so

let's try to explain this in English

right here uh in English when we look at

this actual document we'll see this

section right here we see that between

September 2023 and September

2024 non-farm payroll originally told us

we were generating 164,000 jobs per

month but the reality is we actually

only created 108,000 jobs so in other

words non-farm payroll is telling us

that everything is fine this is sort of

your usual average expansion level of

job gains somewhere between 160 to

180,000 per month the problem is once

you start knocking on the door of about

50 to 990,000 call it 50k in this case

this is your precursor to a recession

and what the qcw levels are telling us

is that we are only slightly closer to

fine than we are closer to recession

however we have a Federal Reserve that

is paying attention to this level now

jome Powell does pay attention to the

qcw numbers as well and this is why I

think Jerome Powell and the FED have

removed their forward guidance they

don't want to give us forward guidance

because they're actually starting to see

that things things are deteriorating on

the underlying but here's the problem

the FED runs into the FED does not want

a recession or a crash or some kind of

disaster so if the forward guidance is

going to be bad they'd rather just shut

up and tell you nothing and just say

that everything is fine right now

because I guarantee you the day Jerome

Powell comes out and says yeah things

are bad he's going straight down this is

what we saw after January of

2022 when Jerome PA said yeah it's going

to be bad and the market sold off for

nine straight months towards the end of

2022 this is challenging so when the FED

has positive forward guidance to give

wow yeah inflation's going to be

transitory inflation's going down

housing inflation is going to contribute

to inflation going down everything's

going great according to plan positive

forward guidance they'll give it to you

all day long as soon as the forward

guidance turns negative guess what you

no longer get forward guid because it

would just self- fulfill the problem so

this data is better because it actually

says that we are creating substantially

fewer jobs take a look at this just

released qcw data show much slower job

creation than the non-farm payroll have

estimated over last year through

September this doesn't even account for

October November December where we had

probably some uh Trump enthusiasm

leading to some hiring but you know

what's that going to mean when we get

revisions for that period of time

especially through January February

March and April now non far payroll may

have overestimated average

month-over-month job creation by 50%

between October 23 and October

24 markets in the FED may have perceived

the labor market to be more robust than

it is in reality okay the qcw data point

to a far sharper deterioration in

employment growth then suggested by

non-farm payroll or the move in the

unemployment rate which is measured by

the household survey part of the

non-farm payroll as

well at least it suggests the FED

decisions and asset market pricing are

based on imperfect indicators this may

be because of the basically the sampling

the birth death ratio for you know how

jobs are counted into

samples that part is more simply

explained by the little drawing that I

made there otherwise it gets too

complicated so then I thought okay well

what are other institutions saying what

is uh let's say like a Bank of America

or Goldman Sachs saying about jobs and

then of course we'll get to the Bor and

Buffett portion uh well let's take a

look at this letter because this is a

letter here from aollo and then I want

to get into the B OFA one so apulo

letter is somewhat appalling take a look

at this the consensus expects that total

doze related job cuts to be around

300,000 jobs which given that 5 million

people change their jobs every single

month that might not be that big of a

deal but Studies have shown that for

every federal employee there are two

contractors as a result it's possible

that 300,000 federal job layoffs could

actually be closer to 1 million job

layoffs any increase in layoffs will

push jobless claims higher over the

coming weeks and such a rise in the

unemployment rate is likely to be a

consequence and would then lead to

movements potentially in rates equities

and credit spreads so if our credit

spreads haven't really seen any kind of

movements but usually when you see job

uncertainty you start seeing Capital

expenditures decline now why does that

matter well because a lot of our economy

right now seems to be based on this sort

of Boom in artificial intelligence

spending and artificial intelligence

enthusiasm and that's fantastic as long

as it continues but there are already

rumors circulating that following the

Deep seek sort of poison pill if you

will uh maybe and these are just rumors

right now maybe we could be getting to

the beginning of a Slowdown in some of

the r rid capex expenditures now I'm

going to show you this it's a rumor and

then I want to show you the Bank of

America piece but I think the rumor is

worth

explaining before I do though I want to

make sure that we know something very

very clear about sort of my thesis here

and I made this very very clear day

one on day one of the deep seek

announcement I said you're not going to

see short-term cuts to capex no company

wants to be the company that's implying

that they're panicking because of some

Chinese product so expect it to take 6

to 12 months to actually see Capital

expenditures either slow for servers or

chips or get repositioned to something

else and what have we noticed over the

past few weeks well we've noticed Satya

nadela from Microsoft start planting

some seeds that hey we don't want to

oversupply artificial intelligence huh

okay this is interesting why would he

say that uh and I'll show you that clip

and then we've also seen Mark Zuckerberg

all of a sudden get really excited about

humanoid robotics sure that could be a

way of catching up to Elon Musk but it

could also be a sign of yeah we're not

we're not uh stepping back on our

Capital expenditures we're we're just

we're just spending up something else of

course interesting listen to that's the

wrong button listen to SAA nadela

yourself and see what you think

ah well you know it would be useful

Kevin if you actually set the audio

output to something everyone can hear

aiming some AGI Milestone that's just

nonsensical Benchmark hacking to me the

real Benchmark is is the world growing

right at 10% the world economy is 100

trillion or something the world grew at

10% that's like extra 10 trillion uh in

value produced every single year if that

is the case it seems like 80 billion is

a lot of money um shouldn't you be doing

like 800 billion if you if you really

think in a couple of years we could be

really growing the world economy at this

rate and the key bottleneck would be do

you have the compute necessary to deploy

these AIS to do all this work the

classic supply side is oh let me build

it and they'll come I mean that's an

argument and you know after all we've

done that we've taken enough risk uh to

go do it but at some point the supply

and demand have to map you know you can

go off rails completely when you're like

all hyping yourself with all the supply

side versus really understanding how to

translate that into real value to

customers and you're not going to say oh

they have to symmetrically meet at any

given point in time but you need to have

existence proof that you are able to

Parlay yesterday's let's call it capital

into today's uh demand so that in other

words can we actually prove a return on

our investments and maybe before we keep

blowing money we should make sure that

the money we've already spent is

actually making us money

this is weird and this interview comes

you know within four weeks of the deep

seek announcement and again I I

understand there are a lot of people who

say

but I just learned about javon's

principle or paradx and it says that

when something becomes more efficient

more people are going to use it yeah

listen I agree that more people are

going to use AI over time deep research

tools which are really just prompting

for you over and over and over again

they're great and they're going to lead

to more use that's fine I I believe that

I believe that AI agents will lead to

more usage the question is a will they

lead to more actual revenue for

companies or does this just become the

new commoditize standard uh and

B if the chips are 100x more efficient

but our output is going up by 2x then

yes we are 2 Xing how much artificial

intelligence we are using but the

infrastructure needs that we have are

actually 50 times smaller so in other

words there is a substantial risk of

oversupplying the infrastructure you

know that javon's Paradox comes from

this idea of uh uh you know oh my gosh

well if engines are more efficient then

we're going to need less coal okay well

if the people who are claiming that

javon's principle will lead to this

NeverEnding AI chip spending boom then

if you want to appli that to the the the

good old you know steam engine powered

by coal back in the day you could just

say all right we have 100,000 tons of

coal oh my gosh a more efficient steam

engine Chon's Paradox quick instead of

needing 100,000 lb of coal we need 1

billion PBS of

coal there's still a mismatch between

the supply and the demand and that's

exactly what Saadia is now planting the

seed with which is interesting because

it's coming just at the same time as

labor revisions are showing us things

that people who have been paying

attention very closely have already been

watching for many months many months now

certainly since last July uh these

problems have really started to become

more evident but also I want you to see

this you know yesterday uh Tom Lee was

on CNBC doing the usual oh people are

full of cash everybody's got all the

cash in the world oh all the dips are

going to get bought okay I mean I

haven't never heard anything else from

Tom Le but uh you know I'm still waiting

for um the all-time highs and small caps

but anyway what do we have here this is

Bank of America's flow show which

indicates that at Bank of America their

customers uh who manage their assets

with them only have about 10.9% of their

Assets in cash they're actually

63.5% exposed to stocks which is the

highest allocation since March of 2022

basically the peak following you know uh

December of 2021 but it took four months

for people to realize oh crap the

Market's actually going down

we have now seen the biggest inflow into

treasuries in 6 weeks we' have seen the

biggest outflow out of tech uh in in

what is this biggest 3-we outflow on

record ever uh

interesting we've also seen that uh

investors are still quite bullish but

there's a slump in cash as a percentage

of assets under management just 3.5% on

average this is different from the

investors over at uh Bank of America

apparently who are about 10% in cash uh

but but these numbers don't necessarily

agree with what we're seeing some other

folks say in fact something else to

consider here is what Bank of America

calls the bull disruption they think

that there is a potential risk of an

unanticipated slowdown in growth on

housing the Tailwinds of a wealth effect

job growth tailing off inflation nagging

consumer confidence US Government

heading into recession basically the DC

recession uh and and basically the

things that were supporting spending

such as a us uh the US government

exploding its discretionary spending by

65% over the last 5 years that going

away yes while it may go to less waste

also fuels less of the

economy so anyway a

Slowdown this slowdown is starting to be

flagged by outperformance of bond

sensitives and defensive stocks

interesting Now by itself government

spending only works out to somewhere

around 7% of GDP but when you consider

the multiplier effect of wasteful

government spending or just government

spending in general you tend to have

this large multiplier of like 5x and so

people regularly argue that government

spending is responsible for somewhere

around 35 to 48% of GDP because of the

downstream effects and so this is where

there's this question of if there's a

recession in Washington DC uh you know

assuming unchanged Trump taxation uh you

know of course Trump wants tax cuts then

we're probably going to be in a

situation of more uh uh government

deficit not less that's because at the

same time that yeah you're trying to cut

spending you're not going to be cutting

able to cut enough before you hit a

recessionary catalyst and then you'll be

right back to spending uh versus uh if

you're trying to cut taxes that's great

but how are you going to make that all

up in tariffs well you probably won't

and we already know that tariffs are

economically just not the best idea

they're tend to create too much dead

weight loss so this is where I actually

argue I think there's this potential

that Doge stimulus checks uh might

actually be closer than we think I know

it seems crazy right now when the

market's at all-time Highs but what it

ends up

happening is if you walk into a

recession because of some of the data

that we're starting to see I think uh

there will be uh quite a bit of

enthusiasm for government stimulus again

but that's my opinion we don't have to

focus on that so much right now uh

instead uh Bank of America is actually

recommending the 30-year Bond right now

I actually think that's very interesting

as they see a potential flatter yield

curve now in a shock we would probably

not just see a flatter yield curve we'

probably see a substantial drop in the

2-year treasury uh which would also pull

down uh the longer term end so you know

TLT becomes interesting in the event of

a shock we don't know with certainty

that we're going to have a shock uh so

put putting all these pieces of the

puzzle together things are looking a

little okay at the very least we should

pay attention to these things right uh I

mean consider this for a moment

job data likely weaker than expected

terrible pmis yesterday consumer

confidence is starting to slip optimism

that we had after uh immediately after

and immediately before actually the

Trump election has started to wne

because we've started to go all right

what is all of this actually going to

mean what kind of tariffs are we going

to get what you know the pull forward

that we had for tariff spending has sort

of already been been had so now it's

like all right where's the new demand hm

you know growth forecast slower than

expected at companies including Walmart

well the Walmart wasn't really that bad

and Walmart tried to blame it on their

TV manufacturing business that they

bought well technically it's a designing

business since they themselves Outsource

but anyway you you put all that together

does create some uncertainty now

sometimes uncertainty is a great

opportunity to buy the dip in stocks

personally I think that if the only

uncertainty we face is this uh H5 U I

don't know what no it was Hong Kong u5

the

hku5 kv2 variant of uh of of this sort

of bat if that's the uncertainty leading

markets to sell off right now I mean

that's probably a nothing Burger I would

argue with a 97% certainty it's a

nothing burger and you can watch my

video on it if you know markets are

selling off because of drama over the

bybit hack then that that that is also a

buy the dip opportunity uh markets have

become sophisticated enough to realize

that if they don't step in to bail out

uh a potential bank run then they end up

collapsing like FTX and it leads to

substantially larger

problems and more more losses now when

it comes to uh this employment data well

that's what makes me concerned because

most people seem convinced that oh well

everything's fine the labor market is

fine look jobs are still fine but I

think people forget that recessions

usually are defined in the past in the

rear view mirror and this is actually

really problematic because it it takes

away your predictive power and it means

you have the highest likelihood of being

in a shock now this is the kind of stuff

we talk about in our course member live

streams regularly this morning we were

doing a hymns analysis uh and their

exposure to glps do you know how many of

their customers are subscribers because

of glps do you know how many of their

customers are senior citizens the these

are important things that we dive into

to evaluate okay what's what what could

a potential Revenue impact be at hims if

they lose their ability to utilize a

compounding exemption if you don't know

these things I really encourage you join

the course member live streams on a

daily basis you could two watch them

back and I'll even post summary notes on

these fundamentals just go to me

kevin.com you get trade alerts you get

lifetime access uh you get long-term

investing Theses Tax Strategies I mean

these are really Advanced you know from

basic level Finance to advanced level

Finance topics that that are really

designed to help you get to the next

level so check those out out me

kevin.com but if you go to the St level

St level St Louis fed and go to um

unemployment

rate it's worth noting how much of a lag

there is in in when you actually end up

seeing the unemployment rate Spike

relative to uh recession uh and so as an

example if I pull into the uh uht bubble

recession or the uh you know 2008

recession you don't actually hit Peak

unemployment until the recession is

essentially over now this is quite

shocking but if you look the stock

market bottomed somewhere around March

of 2009 the stock market started tanking

around March of 2008 so notice how the

stock market actually tanked before the

unemployment rise came and the stock

market bottomed before the peak of

unemployment now the same thing was true

over here this stock market uh started

falling uh you know in 2001 late 2000

and you didn't actually really see the

peak of your unemployment until

basically the turn of 2001 to

2002 now that's really interesting it's

worth paying attention to as well and

you ended up getting your bottom in the

stock market in March of 2003 but you

didn't hit Peak unemployment until you

had this other surge over here in June

of 2003 so in other words the market

seems to bottom about 3 to 6 months

before you hit Peak unemployment but

we're at the top right now in the stock

market so you you haven't gone through a

bottoming process yet if this is a

potential future now again is this an

argument that says and then we're going

to get into the Burk share letter here

is this an argument that says oh my gosh

sell everything no I mean of course not

I'm not your personal financial

adviser but I do think it's an argument

for being cautious uh how can you be

cautious well one of the ways you could

be cautious is diversifying your

Investments uh private Market

opportunities are interesting because

they're less exposed to the volatility

of the public markets so for example at

the moment for accredited and hopefully

soon for non- accredited uh our um our

investors into house hack receive 5%

yield on their investment in addition to

5% which just 5% alone that's not a big

deal but in addition to the 5% you get

100% of The Upside in the stock so you

know you know if we end up over you know

you know the next six seven years or

whenever between now and IPO time if

we're able to 10x 20x 50x the company I

have no idea what it would be hopefully

it'd be something great like this you

you capture all of that upside uh in

between now and conversion you earn 5%

that's just an example it's you don't

have to invest in my real estate company

it's real estate you know it's not for

everyone uh but

diversifying is one option another

option is looking into uh treasury bonds

you know those those are another option

you capture some yield uh and you could

do what Warren Buffett does well Warren

Buffett just goes for you know up to one

year treasuries six to six to one year I

think six months is is his favorite uh

another option is pay down debt there

are a lot of people with outstanding

margin uh in fact we could look finra

finra margin outstanding and I would be

really nervous about uh some of these

levels because we're at all time highs

on margin outstanding right now standby

let's see here there it is all right

here you go margin statistics look at

that

937 billion doll of margin outstanding

it's the highest at least in the chart

that we could see here we can get some

historical data too by going through the

download of the data but this is

substantial so uh this is going to be

something to pay attention to I think we

may have been beaten by this once at the

end of 2021 or so and then margin just

absolutely collapsed because so many

people got burned you know margin's

great when markets are going up but

there's a sudden shock oh man you're

borrowing money to lose it oh it's it's

bad then you have the Panic of the

potential for a margin call and it just

leads to poor decision- making so

reducing Deb is is usually a

psychologically smart thing to do uh I

know how how burdensome it could be to

not want to pay off debt because it's

like oh but you know if the stock just

bounces back a little bit all right well

I I just want to make sure we we talk

about this at the top of the market okay

anyway so the burshire letter was

interesting I'm just going to point out

some of the highlights that I found

interesting I'm not going to read

everything here but I love the argument

about Praise by name criticize by

category so don't speak poorly about an

individual instead criticize the

category when you're talking about let's

say reviewing a business or whatever uh

and then praise people by name I find

that very interesting uh then uh he

talks about how important it is to

realize that managers aren't perfect and

more managers should admit that they're

wrong and they've made a mistake because

then you can actually start solving the

problem right what do they always say

the first step of solving a problem is

is identifying or admitting it uh anyway

uh he talk talks about you know don't

fool yourself uh into not acknowledging

and solving mistakes he goes through

some stories that are quite interesting

how he talks about how he never looks at

where somebody's school is that they

went to talks about how 53% of their 189

reporting businesses uh or or businesses

that they own or have ownership in

reporting a decline in earnings now

Burkshire did better in part because of

the treasury income they had and then

also the insurance business they talked

about how there really weren't Mega

major storms that of course their claims

that they still pay out on asbest which

have been going on for 30 years there

are short-term claims that they'll have

to pay out for storms or fires but some

years you'll get multiple Mega storms in

a row and he talks about them not having

been exposed to these in uh 2024 and

helping increase their income in the

shortterm but be careful because you

know you could have a really good year

and then you can have a really bad year

with insurance uh he he also says that

sometimes businesses will blink yellow

and give you a warning sign and you

should pay attention to those warning

signs so he says that the treasury

Department knew that Berkshire Hathaway

was going bankrupt the furniture

business was going bankrupt because they

kept the shell right and used it as the

company has now the shell was going

bankrupt uh and the treasury Department

knew that before anybody else did

because he stopped paying taxes to them

for at Berkshire haway because they

weren't making money anymore he was

basically always say saying hey like

sometimes a business can look cheap

because its income is going down and you

have to be careful because that could be

for a reason maybe that company is

bleeding

out then uh it talks up America How

Great America is how much money they've

paid in taxes takes a slam at other

companies that aren't paying a lot of

money in taxes because of tech Loop or

whatever talks about uh how they don't

have a lot of flexibility in the markets

mostly because when they make a move

it's so large it takes them while to get

in and

out uh then he talks about foregoing on

dividends to reinvest at the company

we've heard some of these things before

talks about investing the float uh he

this was fascinating too he talks about

uh that uh when when when CEOs are paid

on a level of performance or stock

exposure rather than option exposure uh

it it's an approach that encourages

caution but does not Ensure

foresight I don't know if um you know

how much of that is true his idea is

basically if the stock goes down the

owner loses money as well like the the

CEO uh I get that uh but what I really

liked was the line that you could do

something that encourages caution but

does not ensure foresight you can't

guarantee that you'll see everything

that's happening or going to happen in

the future thought that was fascinating

uh it talks about how they're not going

to lower their underwriting qualities

talks about his investments in Japan and

how great Japan is because Japan's

gotten so cheap blah blah blah blah then

they actually just kind of go through

the investor day of what they're going

to do how they're going to talk to Becky

quick and and some scheduling stuff so

that's really it for the birkshire

letter I really think uh some of the

other things that we talked about though

are much more important and we know that

Warren Buffett's cash pile is at alltime

record highs we also know that he

doesn't try to time the market uh his

take is uh just look for good

opportunities and he sees a substantial

lack of good opportunities right now in

markets which is fascinating uh I still

see opportunities you know we talk him

with talk about him with course members

uh but I could see for his scale they're

they're going to be fewer because

they've got just way too much money to

deploy for it to make a difference you

know they could only put so much money

into a small company before they move

the stock themselves right uh anyway

with all that I think it's worth uh

listening to the rest of what Satya

Adella here said and we'll just sort of

a little summary here it's a lot of

information then you can again can

invest maybe exponentially even knowing

that you're not going to be completely

rate mismatched I wonder if there's a

contradiction in these two different

viewpoints because look I mean one of

the things you've done wonderfully is

you make these early bets when there's

you you invested in open AI in 2019 even

before there was co-pilot and any

applications if you look at the

Industrial Revolution these um you know

6 10% uh build outs of Railways and

whatever things many of those were not

like we've got revenue from the tickets

and now we're going to a lot of money

lost that's true the uh so if you if you

really think like there's some potential

here to 10x the or 5x the growth rate of

the world shouldn't you just like let's

go crazy let's do the hundreds of

billions of dollars of compute it's not

about building compute it's about

building compute that can actually help

me not only train the next big model but

also serve the next big model uh and you

understand until you do those two things

you're not going to be able to really be

in a position to take advantage of even

your investment so you have to have a

complete thought not just one thing that

thinking

about all right so that was really the

the rest of that just to cover that as

well I mean again this idea is very

simple it's like let's prove that we can

make money first then we can keep

spending as long as we can exponentially

make money we can exponentially keep

spending so put all of these things

together and I think when you put them

together on a list it it becomes

something that you know at least merits

some caution uh cash Levels by uh at

least institutional surveys are quite

low right so let's write these down low

cash levels something to pay attention

to what's another thing that we want to

pay attention to well the lagged deep Fe

seep effect right so lagged uh deep seek

effect this this mainstream media

argument that I think is so interesting

is you've had a lot of people say oh

well you know the Deep seek effect

didn't do anything because capex

spending didn't go down look at you know

Microsoft Amazon meta whatever okay but

they reported earnings 5 days after the

Deep seek fact you know 5 days isn't

enough to adjust 6 to 12 months and this

is what I've said since day one this

just be careful it is it is a it's like

a cancer that has been

planted uh then so watch the capex

redirection or slowdown low levels of

cash watch these job revisions also a

lot of talk right now about growth or

lack thereof and remember what happens

when growth slows down

when growth slows down companies

lose their PP nobody likes losing their

PP when their pricing power goes down

they end up taking it in the margin Okay

small PP taking it in the margin are

problems and they all lead to

eventual uh but not immediate job loss

uh Jess job losses there we go whatever

so uh just watch all of these things in

your investing career be careful I

personally think uh there's still

opportunities in high quality real

estate specifically single family mostly

because I have this

Vision so we're going to call this

section Kevin's

Vision uh and and it's it's I'll call it

my my bare Vision bare Vision uh my bare

thesis is that uh we end up in a uh

deflationary

uh

recession and this is going to be marked

by uh marked by 10 to 14%

Unemployment uh the problem is this uh

will be quite sticky and the reason I

say it'll be quite sticky uh is because

I actually think the beauty of ai ai

will make it harder to rehire

uh this will actually make it make it

harder

to um come out of the recession to

escape the recession uh it will take

much longer to get out uh you could see

flat

returns uh in markets for years you many

years because you need people to go back

to work to get the consumption going

again right this is where I think

there's the potential you start seeing

some more clamoring for Doge stimulus

but but I don't think it's going to do

much to actually create jobs it might

create temporary little boosts in

spending like what you saw in China but

doesn't sustainably change anything you

know in our Co recession when we

stimulated we were

stimulating what was actually a

relatively strong economy uh but Kevin's

bear Vision here is a deflationary

recession that's really you know it

usually how it

starts so uh it starts with a market

slowdown uh some early indicators of

Labor Market

stress uh

then after that the compounding effects

take hold compounding hits uh weaker

growth more layoffs this is a cycle

right we end up in a deflationary

recession so this means prices go

down but people have less Capital you

know risk assets go down in this risk

assets uh down so this usually means

that things like gold bonds usually do

well in a recession but a deflationary

recession

um you know may not do as well for gold

I I don't know you know because gold has

already been propped up on this idea of

tariffs and inflation so how much of

that gets replaced with um deflationary

I don't know but usually golden bonds do

well I would guess that if we hit a 10

to 14% unemployment rate we're probably

back to 0% interest rates and QE uh AI

will make it again harder to rehire

which which just leads to more QE right

uh more QE it'll make it harder to

escape recession and and

really probably asset owners will end up

doing the best uh like you know people

who can leverage their assets for debt

uh for cheap debt and so I think uh

leverageable assets will become very

very valuable uh to me the easiest one

is just real estate but then again

that's you know that's my world of

expertise apparently I can't even spell

leverageable maybe because it's not a

word put the e in there anyway so

whatever uh I I don't want that to

happen I mean sure it'd be cool for

rates to be back to 0% again but this

would be terrible you know the economy

will be in a poopy duper for a while so

I don't love this be Vision uh but uh

just the data that we've gotten over the

last two days has has increased the

likelihood of this to me so you

know 3 days ago call you know put me at

4.8 on the bare bull scale you know 100%

so like a score of one would be sell

everything uh scale of 10 is margin

everything all in baby I was probably

about a 4.8 3 days

ago I've been kind of more in the middle

the last couple months just sort of like

wait to see the data we got all the last

two days the last two days of data

probably put me closer to like a

2.4 so I don't know make uh make with

that what You' like uh but you know I

don't have any options on the market uh

uh in terms of like uh shorts on the

market or whatever right now I've got

exposure to bonds uh just to be

transparent uh via options and and

actual Holdings but that's mostly

because I think bonds are are great I

think they are probably going to be one

of the best performing Assets in 25 but

we'll see so I know bonds are kind of

boring though they're they're not fun so

that's my take thanks for watching

goodbye good luck 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 always great

to get your take