Fed's LIQUIDITY DISASTER & Banking Crisis

There's one hell of a tangled web going

on in the banking system. And while we

got taco from Trump this morning, which

is great, Donald Trump talked about how

Xiinping is a good man. And you know,

China only respects strength, so we have

to put up these unsustainable tariffs

and make it look like we're being

really, really aggressive. what actually

happened over the last 24 hours and what

we saw last night in the futures market

with the NASDAQ down 1.3%

multiple stocks selling off 4% I mean it

was a bloodbath in the futures market

last night

why it was all because of the tangled

web of the banking crisis and how far

this spreads is scary and this story

gets deep because what you're about to

see is how an auditor could potentially

fail at auditing companies, get fined

millions of dollars, still be in the

business of providing audits,

only to give their own lender, the

auditor's lender, only to give them

potentially first looks at risky

business that's going on. so that those

suits could then short first brands with

credit default swaps to make some big

dollars while they go bankrupt. It is a

disaster and it smells like fraud up and

down every way you slice it. And a lot

of the suits are going to be telling us

on CNBC or around the world that don't

worry, this is just idiosyncratic.

Which when you hear somebody say a

problem is idiosyncratic, immediately

say idiot. They're idiots. Because when

you have smoke in one place, there's

fire everywhere. This is the same kind

of fraud that was rampant in 2007. And

it's not isolated. It never is. It's

just a matter of how bad is it going to

get and how much is it going to smell

like 2007 and 8. Let me go show you a

quick example and then we'll get into

the disaster of the story because

history tends to maybe not repeat but it

certainly rhymes. Subprime mortgage

market wounds woes seem well contained.

Here's a Reuters article from August

2007.

And guess what this Reuters article

tells you? It tells you the following.

Watch this. The subprime mortgage market

is little more than an asterisk in the

overall economy, said a Roth Capital

Partners economist. The concern that

rising defaults among subprime borrowers

will spill over into lower consumer

spending is unwarranted, says a director

of the University of Central Florida.

It's the latest episode of hysteria.

It's just a small segment of the overall

market and its problems aren't akin to a

currency crisis or contagion. This is

just everything's fine. These are just

little idiosyncratic problems and

they'll burn out. We'll have some

bankruptcies and the economy will be

fine.

I hope so. And I so much want to believe

in that opium. But what we saw at First

Brand, it goes deep. And I'm going to

show you exactly how to watch for this

potential contagion spreading. So, first

you got to understand that First Brands

has apparently, we just saw this this

morning, their CEO has been down this

road before. Literally, that's how the

Financial Times article starts. You

can't make this stuff up. The First

Brand's chief, Patrick James, has been

here before, well over a decade before

this bankruptcy that he's now gone

through, showing over 11 billion in

liability uh in liabilities. The

Ohio-based businessman was battling

creditors in court over millions of

dollars in defaulting debts and fending

off allegations of fraud. So over a

decade ago, this guy's getting rich,

settling with people who were calling

him a fraud, buying massive mansions in

Ohio,

and maybe not paying his creditors. And

now all of a sudden, you're seeing the

same thing happen again. See what I

mean? With maybe it doesn't necessarily

repeat, but it certainly starts rhyming.

And this is where First Brands comes up.

See, first Brands, they're not that big

of a deal in the broad scheme of things.

It's not a really a First Brands issue.

It's an auditing and it's an

institutional money management issue.

That's the problem that's potentially

setting up for a real crisis here. So,

when we talk First Brands understands

it, it doesn't matter that this

windshield wiper maker is going bankrupt

and auto parts supplier. They started as

a windshield wiper maker. Who cares?

Nobody really cares about them. What we

care about is what does this mean for

the broader market? Why is it that all

of a sudden we see the Fed repo

facility, which fortunately today wasn't

used, but the Fed repo facility is

rocketing again.

This, by the way, just to give a simple

explanation of the repo facility, which

is not to be confused with the reverse

repo facility. I'll tell you that gets

really confusing. So, I'll give you the

bottom line here. Okay. the repo

facility. When this spikes up, which it

hasn't since co up until recently, it

means institutions need money. It means

banks, credit unions, globally

systemically important banks or gibs or

other asset managers, they have treasury

bonds. They can't liquidate them for

their cash needs at night or they don't

want to or whatever because they don't

want to recognize the losses on them. So

they go to the Federal Reserve and say,

"Yo, hey, can I deposit this with you

overnight and can you just give me a bag

of cash cuz I got some bills to pay.

I'll pay you back tomorrow." That's how

this works in banking. Even overnight

matters. Like for us as humans, this

doesn't make much sense because it's

like if you have a bill on your desk,

you're like, I'll just I'll just pay it

in two days. Like, who cares? It doesn't

work that way for the banks because they

continuously have to be in compliance.

Otherwise, they could lose their banking

charters or just get fined by

regulators, even for the non-banks,

right? So this repo spike, fortunately

it settled down today, but even Nick T

at the Wall Street Journal is looking at

it because he's like, "Whoa, this is a

sign of a liquidity crisis. This isn't

great." Now, are we seriously in major

stress right now because of this first

branch or banking issue? No, not really.

Right? This is where if you look at high

yield uh corporate bonds versus

short-term treasuries right now, if you

look at the ratio of this, usually you

see this line basically spike up when

there's big stress. Stress or you could

call it complacency. Stress is really

low right now where complacency is

really high right now. Liberation Day

had much higher credit spreads. The

Japanese carry trade, the bank crisis of

23, uh the rate hikes of 22, like these

were all moments of substantially higher

spreads. So, it really suggests, you

know, right now markets don't really

care that terribly much about what's

going on with this banking poopy duping.

It's one of the reasons why this

morning, uh, and, you know, this this is

a little nuanced, but it's one of the

reasons why this morning in the alpha

report, you know, the stocks the stock

market was down like 50 basis points on

the cues. And this morning I'm like,

look,

in the very short term, this is bullish

because Donald Trump is tacoing, which

suggests we're probably not going to get

bad news today. Donald Trump's tacoing

on China. Oh, it's unsustainable.

Whatever. Great. We're probably not

going to hear more bankruptcies today.

We might in the next few weeks or

months, but today we might end up

getting a rebound. And I'd be looking at

the cues and specifically Tesla. Now,

Tesla bounced on 414 this morning. And I

always like watching for the first five

minutes to see if we're going to revisit

otherwise bullish. Uh and so there were

a couple course members who were nice

this morning who who left comments on

this. Uh gold uh gold Josh says,

"Finally caved and joined the membership

in the alpha report. Already made my

money back on Q's calls from this

morning. Made about $1,500 on Tesla and

Q's calls from the alpha. Thank you." Uh

says uh Peele here. Peel. That's funny.

Uh but anyway, uh you know, these are

the things we'll do. Like even when the

market's red in the morning, we're like,

"Hey, strategically, we could get a

bounce in the morning. That's playable.

Just be careful. There's going to be

profit taking in this market." So, that

doesn't mean the market's going to be

green forever, but it creates an

opportunity to trade. And that's the

whole point. That's what we do every

morning in the Alpha Report. And if you

want to be part of it, not only get my

shortterm ideas, you get my medium-term

ideas, my long-term ideas, you also get

the top 10 stocks to buy, you see what

I'm selling, you see what I'm selling,

you see what I'm buying. Uh, and you

also get the courses. uh the all eight

courses when you join the Mecv

membership over at meet.com. Use that

coupon code schumer siesta. Now with all

of that said, let's understand what

actually happened at First Brands. And

again, this is a story that you really

want to understand. This is this is not

just First Brands. This has to do with

$2 million fines from the PCAOB against

the auditor for First Brands. And when

you understand that the PCAOB, which is

the public accounting public company

accounting oversight board, when the

oversight board, which is authorized by

Congress, finds the auditor $2 million

for similar issues to what happened with

First Brands. It says that the

underlying fundamentals of a a lot of

our financial markets could be either

fraudulent or rigged. And what we're

seeing now are just the the early dead

fish kind of percolating up to the

surface. And now the question is how

many more fish are dying below the

surface.

Understand this. The PCAOB sanctioned

BDO. BDO was the auditor for first

brands. The PCAOB sanctioned BDO $2

million. This is a massive fine. Okay.

Like that's huge. This isn't like, oh,

you guys made a little oopsy dupsies

here. Like, this is you guys were

criminal is almost what the level of

this what this rises to. In fact, they

went as far as not just sanctioning the

company. They went as far as saying the

actual individual auditors are also

going to get fined. Look at this. Civil

penalties for the company of $2 million,

$35,000, and $25,000 for the actual

individual auditors.

That's crazy. So what happened? Well,

what happened was this PCA uh this nonPC

the BDO is not a PC. They are overseen

by PCAOB, but they were not doing PCAOB

audits for uh this company that they got

sanctioned for or first brands. PCAOB

level audits are the most rigid

standards for auditing. They're deemed

to be the best audits you could get in

America. typically reserved for broker

dealers or public institutions. I pay

tens of thousands of dollars extra at

house hack every year now including the

last year uh actually I think in the

last two years now to have PCAOB level

audits because we want the highest

standard of audits and BDO didn't have

that for first brands or this company

and look at what happened when they got

fined here for AAC holdings this had to

do with short pays for uh insurance

claims like claims by ACA AAC that they

could make a lot of money in revenue

from picking up short pays from

insurance companies, but there was no

proof that they actually had any

historical evidence they could actually

make that money. And so the PCAOB is

like, we're finding you guys because you

guys failed to properly evaluate this

company that ended up going bankrupt and

you therefore failed to protect

investors. And it all had to do with

accounts receivable, which is really

interesting because accounts receivable

are exactly what the problem was with

first brands. So the first brand

situation, how does this work? So the

first brand situation is unique because

you go from a windshield maker, you

know, windshield making company to

basically a company that became a

financing company for taking on debt

based IUs. So really what it is is quick

example. Let's say you make these mugs,

okay? You're going to sell me this mug

for $10. Okay? So uh you give me this

mug for $10 and I'm like, "Yeah, I'll

pay you in 90 days." Cool. Well, what

happens if I don't pay you? Well, you

get burned and that sucks. There's risk

there, right? I'm giving you a note that

I'm promising to repay you. Well, First

Brands does this with a lot of different

people and now they're sitting around

going, "Man, we can't really manufacture

more of those coffee mugs because uh,

you know, we don't have any money. We're

waiting for all these bills to come in.

So, why don't we just call someone up?

Hey, yo, bankers. Yo, can we finance and

get some debt on these IUs that we have,

these accounts receivable?" So,

basically on their balance sheet, the

bankers come in and they go, "Oh, well,

uh, it says here your accounts

receivable have a lot of money coming

in. This looks this looks pretty good.

You guys got a lot of cash flow coming

in. That's good. That's good. And did

you guys get audits on these?" And

they're like, "Hell yeah, we got an

audit by BDO. Yo, and the bankers are

like, "Oh, okay. You're audited. Oh,

that sounds good." They're not paying

attention to the fact that it's not a

PCAOV audit. They're not paying

attention to the fact that BDO got

slammed for accounts receivable failures

and find $2 million for basically the

same damn crap that happened at first.

They're not paying attention to that at

all. Why? Because the bankers don't give

a flying f. The bankers aren't looking

at actually underwriting this product. I

hate to say it. They're looking at how

to make money. That's all. How am I

going to make fees? I hate to say it,

but that's how the soup business works.

Okay? That's why people don't like the

suit very much. So here's how the soup

business works. Oh, accounts receivables

look good. Okay. Yeah, we got an audit.

Oh, okay. You know, we could package

this. We could take this product and we

could put, you know, this is a high

yielding product. We could put all of

this into this this giant bucket. Uh,

and then we could sell this to a bunch

of little companies.

And then we'll have fees for each one of

these little tickets. We'll have a fee

for every one we process and you know

our investors will be left holding the

bag but but we'll make a fee and we

could disclose to them that these are

audited and we don't really need need to

look too hard cuz the auditors already

did it. So you know what do we care and

we're going to sell this product and

make money. That's kind of how the

financial system works. And you bundle

this crap up as you know whether you

want to call them CDOS's collateralized

debt obligations which are somewhat

similar to CLLO's a little different

collateralized loan obligations you see

with commercial mortgage back securities

which that's a whole another bubble you

end up finding that institutions can

make a lot of money selling and

packaging this crap

Jeff people look at Jeffre and they're

like oh it's an investment bank it must

be regulated like the government should

be looking at Jeff

wrong. Nowhere near as much as a bank

because Jeff is called a nondepository

institution. They're basically an

investment bank is a company that helps

companies IPO or invest into certain

packages of dudu to get a yield for

their assets, right? So Jeff doesn't

have the level of regulation that banks

do and so they can much more easily just

sort of rely on like a BDO audit or

something miscellaneous for their

investment products and the banks they

don't really know because they're

relying on Jeff. So you remove a whole

regulatory element here. And so Jeff can

get loans and Jeff can go create

products that are full of crap and they

can bundle it together into something

like Point Bonita, which is what they

did. They bundled all these First Brands

debts into a company called Point Bonita

because they didn't even want their name

on it. It's not like Jeff Fund 17. It's

Point Bonita. Oh, Point Bonita had the

losing money. Hm. Interesting. So, when

all of a sudden

the first brands company starts

not being able to pay their bills

because they're not actually getting

money coming in or worse, they're total

frauds and they're double and triple

dipping on those accounts receivable.

So, in other words, you know, I you sell

me this mug and then you have that

accounts receivable and you're like, hm,

I could go to Bank of America and get a

loan. I could go to Jeffrey's and get a

loan. I could go get a loan from three

different banks. Now, you're double

triple dipping on the same accounts

receivable. you're really just creating

this tangled web of fraud. Now, who was

able to profit from the tangled web of

fraud? Ah, enter Apollo. And this is

where things get really interesting. Uh,

and the really way the way to see this

is you kind of have to draw this out

because it's just it's sad. This is why

the suits always win and retail usually

always gets screwed. It's so sad. But

watch this.

So, First Brands goes bankrupt. Okay, so

we'll write First Brands right here.

They go bankrupt. Now, who loses money?

Well, who loses money is all of the

people who invested in the slices of

crap over here. All these people are now

sad. They lost a lot of money. But guess

who made a lot of money? Well, remember

how First Brands was audited by BDO that

got fined $2 million for sucking at

accounts receivable auditing and here

they are auditing First Brands for

accounts receivable. Well, their lender

is a company called Apollo. Apollo Asset

Management has lent BDO $1.3 billion.

So Apollo has a loan to BDO the auditor

for $1.3 billion and First Brand is

experiencing financial difficulties. And

so what does First Brands do? First

Brand says, "Hey, we need to raise some

money." Guess who gets a first look?

Apollo. Apollo comes in and says, "Hey,

so you guys need some money? Show us the

stuff." Apollo in 2024

gets a first look to provide credit.

Uh so basically to provide a loan to

provide a bailout and they don't instead

they short it. They short first brands

uh with a collater uh credit default

swap is what they used here which is the

same crap that we saw in 2007 and 2008.

Apollo goes in buys credit default swaps

on first brands because they're like

that is a flaming pile of poop.

And so they set up their short position

because they got the first look because

they happened to lend a lot of money to

the very auditor who got fined for

failing on the same stuff that they

should have been watching first brands

on. Apollo didn't rely on BDO because

they I feel like realized that was just

a layer of Apollo actually

looked at the stuff and they're like,

"This is bad. This is a flaming pile of

dudu. Let's short it." And that got no

attention for, you know, the last year.

And people are like, "All right,

whatever. you took out those credit

default swaps. Big deal. That's okay. It

was just a matter of time. And sure

enough, now Apollo, they look like

geniuses or they had insider

information. This is how the suits

always win. And so what happened over

the last 24 hours wasn't really about

this company with 11.6 billion of

liabilities. Who cares? Like in the

grand scheme of things, is an amount of

11.6 billion really that big of a deal?

No. You know, you've got these emails

circulating on on Twitter where people

are like, you know, you've got this

email going in, hey, you know, can you

guys tell us did First Brands actually

get $1.9 billion? What happened to it?

How much money do you guys have in the

segregated account for those

receivables? Uh, we don't know. And

zero, in other words, like over $2

billion of money vanished at First

Brands. People don't know what the hell

happened. Like, it's just gone. What

they were doing is they were double

triple dipping and then they were

blowing the money to finance probably I

mean we don't know for sure but it'll

all come out over time but to finance

you know the CEO's lifestyle or whatever

with his Ohio mansion or some car. I

hate this stuff. And then they got

crappy audits to boot. So what ends up

happening is

first branch goes under and you get

losses that circulate. You get JP Morgan

down $170 million. You've got Raystone

down uh $2.3 billion. You've got Jeff

down up to $715 million. You've got UBS

with a $500 million exposure. You've got

uh Katsumi Global. Uh this is a Japanese

company that's wholly owned by Nu and

Mitsu. Probably screwing up those names.

They extended $1.75 billion to First

Brands. And you might wonder like why

are these companies extending debt to

First Brands? It's because the yields

were good, man. The yields were good.

The product paid a good commission

probably. You know, we're assuming that

because that's what the bankers do. This

is one of the reasons why I've gotten

such a hate on for JP Morgan because

like at like when I was starting my

career, I'm like, "Oh my gosh, JP

Morgan, the biggest bank in the world.

This is great. They're going to give you

all these great products or whatever."

But you know what it turned into? It

literally turned into the schmucks at JP

Morgan going, "Hey, Kevin, you you

should sell your Tesla stock and invest

in our JP Morgan product." And I'm like,

you schmucks. You call me all the damn

time to try to pressure me to sell Tesla

stock to invest in your JP Morgan

products so you guys can make your damn

fees. That's all it is. That's all

banking is. It's so annoying. And you

know, now I look at like, sorry, little

tangential here, but I look at like

Mercury Bank. I'm sorry. Like I don't

even have like an official referral

relationship with them, but I I did take

the affiliate link that they give

Banking Done right. But it's only

because it's it's it's not that I want

to pitch that. I really don't care. It's

that I use like Mercury now and I'm

like, "Wow, the technology they have is

so much better than the crap at JP

Morgan. I say so excited about it." And

I combined that with like the

productized business that is banking and

I hate it. I hate banks. You You don't

hate the big banks enough. But

understand so much of this is just

layered upon layered fugazi.

And that's the scary part is the layered

onlayered fugazi is that the bankers are

like, "Hey, this is good. Why is it

good?" Well, because Jeff says it's

good. Okay. Well, why does Jeff think

it's good? Well, Jeff thinks it's good

because, you know, they're audited by

BDO. Do we believe BDO? Well, it's an

auditor. Why wouldn't you? Maybe because

they got sanctioned for accounts

receivable nonsense uh on a company that

went bankrupt. And now here's another

one that we're supposed to believe them

on.

and Apollo's shorting them because they

happen to have the insider info. It

don't sound too good. But anyway, so

what you end up with is just first

brands going under. Now, how does this

apply to the rest of the economy? Well,

it tells you that now it's not a first

brand's issue. What it tells you is you

are in a shockprone environment. And

what do you think bankers and lenders do

now?

bankers and lenders now go, "Oh man, the

cat's out of the bag. There are some

crappy audits going on and there are

some crappy balance sheets." So, what

are we going to do? We're going to go

grab the sheets and we're going to go,

"You look into the balance sheet for

this company we're lending to. You look

at the balance sheet for this company

we're looking to. You look into the

balance sheet." And so all of a sudden

you get executives like, "You think JP

Morgan wants to be on TV talking about

how they lost money lending to a

cockroach? That's embarrassing for these

people." So now all of the suits are

going to go, "Bro,

check this cuz this is bad." And

when that happens across the board,

lending starts tightening. And that's

what you have to be careful of. It's not

First Brands, nobody cares. It's not

Zion's Bank and these, you know, this

these two guys that are supposedly

frauds. It's not Western Alliance with

the same two guys that are supposedly

frauds. It's the same crap that happened

in 2008. That's what the problem here is

in a low liquidity environment where all

of a sudden the repo facility is

starting to pop off. Hopefully it

doesn't keep popping off. But I mean,

look, Reuters is is is reporting on

this. US banks borrowed 6.5 billion from

the Federal Reserve Sanding Repo

facility on Wednesday. Central bank data

showed the repurchase rates suggest

tightness in meeting funding obligations

with large net treasury settlement due

this week. The rise in the repo was

unusual. This is more of a sign that

liquidity is slowly but surely

decreasing. It's not alarming yet, but

it's a trap, you know, and and mind you,

this is why Powell is turning dovish on

the vacuum cleaner. You know, Powell,

just last week, he told us that some

signs have begun to emerge that

liquidity conditions are gradually

tightening. That's bad. When people

start running out of money at the same

time as they start doubting the

financials and they start thinking

everything's a fraud, then they get

fearful. They run into gold and they get

out of any kind of complicated financial

instrument. This is one of the reasons

why I believe Bitcoin is having a little

bit of a struggle here recently. Now,

it's not that Bitcoin is inherently

complicated. Bitcoin is having, in my

opinion, just basic technicals here, the

worst sell-off that we've seen since the

liberation, like the more most rapid

selloff that we've seen since liberation

and the Japanese carry trade, uh, you

know, days of last August. Okay, we're

having the worst selloff since then.

Now, does that mean it's going to

sustain TBD? We'll talk about that. But

what it is is less money is flowing into

the strategies of people like Michael

Sailor with all these leveraged ETFs and

monetize the stock to try to buy more

Bitcoin. And people are looking for a

bailout from Michael Sailor and it'll

work until it doesn't. See, that's the

thing. Yesterday, Bitcoin went down to

106,000 and people on social media were

losing their SH9T going, "Holy crap,

Michael Sailor, please buy." because

they realize daddy

is the only thing propping up the

Bitcoin valuation right now.

Institutions have come in, retail's come

in. We need more leverage buying from

Michael Sailor in this environment.

That's very bad short-term because Micro

Strategy is on an ugly downtrend. Look

at this. Since July, you are down from

$456

down to $284.

That is a decline of 38% on Micro

Strategy stock. Now Micro Strategy stock

you have to think of it like a ballast.

Okay. So it's sort of like it's a

buffer. When Micro Strategy goes to

zero, which eventually they will have

printed so many shares they will have

diluted their shareholders to zero. When

Micro Strategy's premium goes away and

they keep diluting their shareholders,

that buying support for Bitcoin gets

rugged. That's your biggest risk for

Bitcoin. But it's also the most bullish

thing for Bitcoin. I tell people I want

to load up on Bitcoin when Michael

Sailor goes bankrupt because it means

daddy got flushed out. And when leverage

daddy gets flushed out, that's the best

time to buy. When the leveraged people,

when the emperor wears no clothes and

all of a sudden you're like, "Wow, look

at all the debt get flushed out." That's

the time to buy. Anyway, it's a little

rant on Bitcoin, but the point is it's

related because this whole financial

system right now is built up on a pile

of debt. And if people start doubting

debt and credit spread starts

skyrocketing and credit l and lending

standards collapse or like tightness

increases, right, the availability of

credit collapses, you have no more legs

to stand on. Realize first Brands was

paying like 9%. Actually, no, I'm sorry.

BDO the auditor who is auditing first

brands you know how much money they pay

in interest

9% BDO Apollo loan cut staff they're

cutting stuff the very auditor look at

this you can't make this stuff up this

is this shows you how bad debt is okay

BDO US lays off employees amid Apollo's

debt repayment Apollo is the principal

financeier to BDO providing a loan

facility worth $1.3 billion to fund

their employee stock ownership plan. And

as a result, now BDO has laid off

employees to reduce expenses and is

considering new debt arrangements. So in

other words, they're laying off staff

because they're so out of money. They

can't pay for this. They're paying 9%

interest on these loans, which is

insane. Mind you, um Elon Musk via uh

XAI is paying 12.5%

interest for his Nvidia lease credit

line. He's he can't even buy the Nvidia

chips because he's out of money. So,

he's having to lease the Nvidia chips

via lease option with 12.5% interest

rates at 40% down. He's putting 40% down

while Meta's putting 10% down because

lenders are starting to get smarter.

They're starting to go, "Ah, we got to

be a little bit more careful here."

There it is. BDO debt is currently

paying interest of 9%. These are insane

interest rates. These are very, very

high. And that's an auditor. An auditor

is paying 9%. And this comes at the same

time as options activity has never been

higher. One week ago, Friday, we had the

highest level of options activities

traded ever in the history of options.

October 17th. that follows Liberation

Day, which was also a pretty remarkable

day for um uh options trading. But look

at this. Options are a form of leverage.

Absolutely skyrocketing. Uh margin debt

is a form of leverage. All-time highs on

margin debt. Leveraged ETFs aren't even

considered in all of this. This entire

economy is propped up on debt. Now, is

it going to collapse? Well, not

necessarily. There are things that could

happen. And the economist actually had a

great piece on, you know, what we could

do to sort of avoid this. And so here is

the recipe to avoid profit taking.

Number one, the private credit disaster

blows over with no more large

bankruptcies or very limited uh

bankruptcies and people end up saying,

"Ah, see, it was idiosyncratic after

all. There's no problem here. No new

banking crisis. Everything's fine." Best

case scenario number one. Condition

number one, there are three conditions.

Okay, three conditions for the boom to

keep going. Number one, private credit

blows over. Number two, tariffs don't

actually end up hurting the economy, not

in the last 6 months, but the next 6

months. That's where it matters more

because, you know, people pulled forward

inventory and built up inventory to

insulate from tariffs. That insulation

wears thin. When the insulation wears

thin, that's when we're going to

actually see the real pain of tariffs.

And then then you will know if the

economy actually receives any kind of

damage. Okay. Number three, the AI

bubble doesn't pop.

As long as we don't have a private

credit disaster, tariffs that hurt, or

an AI bubble that pops, as long as we

don't get any of those three, we could

keep going. Okay, we're going to soft,

we go back to alltime highs, calls on

the Q700, baby, we going to the moon.

If any of those go poopy dupy, we're

screwed cuz we're sitting on a mountain

of toxic debt. We can't even trust the

damn auditors anymore.

That's scary. So, what's my point of

view on this? Like, what am I doing?

Well, I mean, you already know this to

some extent if you've been paying

attention very clear on this. There are

short-term trades that you can make. We

talk about those in our alpha report

every morning. You know, people made

great money this morning on on uh the

plays that we talked about this morning.

Mind you, I was also bearish on

Coreweave and MP Materials. MP material

is now down over 20% since my call of a

top when it was like in the 80s. I'm

like this is going to go to 100 and it's

going down. It literally went to 100 in

pre-market technically went to 104 and

it's been down 20% since then. Down like

25% if you consider the 104 or 24%. But

anyway, so join the alpha report. But

beyond that, the other thing that you

want to watch credit spreads. We are at

complacency levels of credit spreads.

This is insane.

Credit spreads are so low right now.

There's only really one way credit

spreads are going to go and it's up.

That means credit is going to get harder

and less available. Now, we've had other

cases where credit has become less

available, but you have to think about

what's added onto the crap here.

stocks at all-time highs,

the actual effects of tariffs,

and jobs. Those are three things that

make this potential credit event even

worse. Like, we didn't have stocks at

all-time highs in 23 during the banking

crisis. We already had a stock selloff

over here during this credit event. We

didn't have high debt during these

scenarios. We weren't at the highest

levels of margin or options trading ever

in any of these other scenarios. That's

all unique to now. And we didn't have a

jobs issue. You know, here we started

having a jobs issue here around the

Japanese carry trade. Started to. Those

were the early warning signs. I think

the enthusiasm of Trump winning really

put pause on this for a while, which was

great.

But the bills got to get paid. So, there

are definitely like people ask me,

they're like, "All right, Kevin, I go

to, you know, meet Kevin.comdata

to see your barebull scale. I should

really update it because I feel a little

more bearish today. But, you know,

whatever. I think it's at 42. You know,

maybe it's like what? It's 43. Whatever.

You know, maybe I update it to like 39

or 40, right? I'll I'll do that after

this. Uh, you know, big deal. The point

is, there's a reason why I haven't been

over a five. There's a reason why I

don't want debt. Like I said, you know

what I'm doing? I just When does Kevin

pay off debt? I just paid off my house

and the house I bought for my dad. paid

off. Okay,

I have no car debt, you know. I'm also

looking at like there's no there's no

debt in my stock portfolio, right? So, I

look at this and I go I am not playing

the debt game in this environment

because I am nervous about where the

economy sits. And so, I think of that as

just sort of like hopefully a warning

for everybody because I think in in the

near term there's going to be a lot of

profit taking in this market. Now, it

could just be seasonal October and like

I said, maybe the credit stress will go

away and we won't see credit yields

widen. We won't see bad jobs numbers and

we won't see an AI issue. But there's so

much fugazi that making like wild bets

on margin right now or leverage that

everything is going to be fine. I don't

think it's worth going to zero. You know

what I mean? Like take some money off

the Vegas table, be safe, and if

somebody else makes a little bit more

money, who cares? Stay away from that

toxicity of relativity. Right. Somebody

says Dave Ramsey would be proud of you.

Yeah. Somebody else says buy gold. Gold

has been gold is actually your warning

sign, right? I I mean I'm not going to

buy gold right now because you know

usually what happens is you get these

crazy runups of gold and we've talked

about this before and then obviously

when poop actually hits the fan, gold

also comes down. Uh so but gold is to me

more of a warning sign than than an

investment vehicle. It's it's a tool

that tells you, hey,

people are concerned. Where do people go

when they take profits on stocks? Think

about this for a moment. When people

take profits on stocks, usually they're

looking for the next trend. They're not

trying to sit in a money market. That's

boring. So, what's the next trend? Gold

or bonds? Bonds actually have a good

shot. A little bit of a give back today,

but bonds are like the stepchild of gold

right now. Look at the slow uptrend

you're getting on the 25-year average

maturity bond right here. Uh this is

TLT. It actually says 20-year Treasury

bond, but it actually says 20 plus year

because the average maturity is like 25

years. But you've had an uptrend on TLT,

for example, since May. And you're

potentially breaking out of the 90 level

over here. It's down 20 pips today. But

if we actually get to the next gulf over

here, I don't know when it'll happen,

but as these shocks become more

pronounced, there's a good shot of TLT

rapidly going over 100 because it'll be

a bond play. You know, people will flee

to the bond play. It's funny. This

morning in the alpha report, I said,

"Hey, we're, you know, 137. This isn't

looking good." Like, we're back at 137

again. It just cannot stay above 137.

That's so I was bearish on Core this

morning. But anyway, those are my

thoughts on what the hell just happened

over the last 24 hours. It's a pretty

big deal.

>> 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 Praath there, financial analyst

and YouTuber. Meet Kevin. Always great

to get your take.