JP Morgan JUST Warned "This Time is Different"

yeah well look we're about to talk about

this time is different with JP Morgan

but I just have to say I was reading

about Morgan Stanley you all remember

the bear Mike Wilson he like pick good

growth stocks but not the Magnificent

Seven they're going to disappoint so

kind of an interesting twist and Jim

Kramer has the Jim Kramer six pack which

excludes Tesla which I have to say

probably one of the most bullish things

I've ever heard from Jim Kramer for

Tesla JP Morgan just warned that this

time is different but the way they said

it was is quite different yeah quite

literally yesterday I went to a JP

Morgan economics event we were invited

we're members of the private bank house

hack is a customer of JP Morgan uh it's

pretty cool it's the Year of the Dragon

so they hand out these little Year of

the Dragon uh uh envelopes with gold

coins in them they're chocolate

obviously but uh anyway kind of cool so

look they had an economic event we

talked to the person afterwards as well

that was presenting and I wanted to give

some of the ideas so first of all you

you have to understand also where their

bias is coming from their bias is coming

from selling you treasuries which is not

necessarily bad advice right now it's

probably a good idea to buy treasuries

not personalized Financial advice for

you because once we get into a rate cut

cycle yeah probably yields will fall

it's also known that usually after a Fed

meeting we see about a 60p point draw

down in treasuries and so far we today

have a 12.6 Point uh basis point draw

down following yesterday seven basis

point draw down so so that's already 20

of it so we're already seeing that 10e

sitting at 3.84 right now and the 2-year

down about 5.5 bips at 4.17 which

actually means the inverted yield curve

is getting worse but look from the point

of view of having a latter treasury

portfolio is it probably better than

money markets yeah because you might get

some capital appreciation and lock in

some of those higher yields it's not a

bad point of view but what did they warn

about the economy and this was the part

that was shocking to me because it is an

interesting point of view that we don't

hear that much right now we hear the

binary we're either in a recession or

were not I was highly worried about a

recession in January of 2022 which is

actually the last time I went to one of

these JP Morgan events and I'm the

person going we're about to be in a

recession little did I know we were

actually already in a technical

recession q1 Q2 2022 both quarters of

negative GDP boom technical recession

already happened so is it possible the

yield curve un inverting is a little

late is it possible the inverted yield

curve sets us up for the recession we

already had in 2022 I mean after all

look what the stock market did in 2022

compared to where it is today and we do

know historically stocks hit their

bottom around the time of a recession

but the interesting point of JP Morgan

was that we might be in this rolling

recession where at the end of 2022 two

you've got the technology and chips

recession remember when I launched my

ETF and everybody was making fun of me

for being chips heavy yeah oops chips

were great

play now you ended up in a freight

recession after that massive layoffs and

Freight you're still seeing it today

you've got UPS laying off 12,000 workers

but they're well out from uh their

bottom where Freight was in a pretty

deep dark recession there from um and

bankruptcies as well uh then you get

into this manufacturing recession where

we're in right now

and essentially you have these cycles of

everyone this is his argument you have

these cycles of everybody during Co

makes more money but then coming out of

covid everybody has their sort of

negative period where it's like we're

we're normalizing but everybody has

their own little recession and because

they're kind of all happening at at at

different times you don't have a

concentrated recession interesting point

because think about it in the do uh uh

era technology bubbled up did it really

affect real estate no not really what

about the Great Recession yeah real

estate got destroyed to the tune of 40

to 55% single family was somewhere

around 40% 45% certain markets multifam

saw about 48 to 54% uh and then condos

got smashed even harder not exactly sure

why but some probably because of defunct

HOAs and problems you get with HOAs

managing buildings and insurability and

also condo underwriting probably the

reason some condos got smashed like 60%

evaluations in ' 08 was crazy but point

being our real estate crash hasn't

arrived yet and even though we expect

that multifam is going to go through a

pretty big reer writing uh as a lot of

multif family apartment buildings are

starting to to basically hit their Lan

deadlines especially new construction

developments where now you've got this

flood of new Apartments Apartment rents

collaps great potential opportunity to

buy that's what we're doing with house

Haack we're right now we're in

negotiations on a deal with a massive

like uh over I mean how how should we

put it over eight fig uh defaulted loan

and it's like H this is very

interesting point is the idea of a

rolling

recession is potentially propped up by

fiscal spending and our debts going

ridiculous which means maybe we will be

considered to be in a wide recession

during all of this time 2022 to

2023 but it'll be this weird long

recession we're after the fact we're

like yeah we were in a recession all

along and it just sort of this petered

out ah every Market sort of went through

their own little disaster or just no

recession which is weird but the fact

that we can Define recession after the

fact is is the bizarre and scary part

now what else was very interesting is

comparing what happened in the Great

Recession to China this is something

else JP Morgan warned about they talked

about how our Great Recession in America

was based on a bubble in real estate and

then a banking crisis as a result of

credit derivatives

on home loans basically think about it

this way if you had a $100,000 home loan

you bundle them up with 10 different

Home Loans now you got a $1 million

portfolio of Home Loans but then people

take out credit default swaps and

derivatives basic basally on that $1

million home loan package that could be

sliced up to a bunch of different

investors and now you're actually

trading somewhere around uh 10x the

value of the underlying loan through a

derivatives Market which is just a fancy

way of saying the loans were a million

bucks now they're being traded on the

market at 10 mil so when 30% of these

loans defaulted and that you know

million dollar loan became 700k you

didn't lose 300K you actually lost 3

million and that Amplified or

potentially more because derivatives can

swing the opposite direction

substantially faster uh not necessarily

in the same proportion right you might

have seen that 10 mil go down to like

quite frankly an alignment 1 mil or 700k

in value massive losses where you're

seeing 90% losses on some of the

derivatives so what's interesting about

what they brought up with this is they

actually compared that to China today

and they said that China is way worse

that China it's not just housing it's

everything now contrarians look at that

and go perfect it's the time to buy the

dip on China but a lot of folks are like

dang that's an interesting comparison

that our Great Recession focused on

housing and banking is nothing compared

to the hell that China is going through

where basically every level of the

consumer is getting destroyed I mean

look at what we had on eack about uh

Starbucks so you look at Starbucks

they're adding stores like crazy and

Starbucks but uh especially in China uh

but what are you specifically seeing

with uh with comp sales well

specifically you're seeing negative comp

sales uh in China so the only reason

volumes are going up is because you're

opening more stores but people were

spending less per ticket in China very

interesting uh sort of a little measure

of what's going on with Starbucks in

China but uh more importantly this JP

Morgan uh analyst was essentially

arguing look every industry is going to

go through its recession and we've

already seen a lot of Industries bottom

out and come out of that recession that

explains why we've got the stock market

led by Tech at a multi-year high or

all-time high frankly because Tech's

already gone through its recession now

we'll see we got Apple earnings today

that'll be interesting Google earnings

came out the stock dropped 7% but they

actually weren't that bad it just wasn't

as optimistic maybe as speculators had

hoped you started having a little bit of

Miss on ad spend which is a big concern

because of AI robbing Google of AI spend

but I mean look at the freaking stock

who cares it's already green again 85

bips so the meeting all in all I think

was fascinating uh because you have this

POV of look rolling recession you have

China and the do drums and you have

really a Fed that in their mind is

steering the economy towards the soft

Landing now I had problems with hearing

you know when when we start comparing

ing to other decades hey well what about

1982 hey what about the 1920s and we're

comparing to other decades and one of

the responses we got was well

everything's an exception in this

environment you know this the fact that

we've got geopolitical issues war with

Russia Ukraine uh a pandemic followed by

the amount of fiscal stimulus that we've

gotten sure we can compare to different

periods We compare to post Spanish Flu

we can compare to postor War II

inflation Korean War uh frankly

disinflation there for a period of time

and you were below 2% inflation in the '

50s uh we can uh there are comparisons

to the 70s and there comparisons to the

80s but that left me a little concerned

because when I hear this time is

different and it's okay if you have a

long run Horizon to to buy stocks or

treasuries and stay away from the

foreign markets when things are at

all-time highs here I'm like I don't

know man I I know but it was an

interesting point of view and I wanted

to share it with everybody here I don't

disagree

with rolling recession so I'll give you

my opinion now okay that's their opinion

now I'm going to give you my opinion I

don't disagree with rolling recession I

think we're going to see substantially

more joblessness uh than than we've seen

so far more layoffs I mean even OCTA

just laid off more folks today but who

knows maybe that's isolated in TCH and

and is that really that big of a deal I

mean we go to ec.com and and don't get

me wrong we want to be sensitive to

people losing their jobs but look at at

ec.com we threw the uh layoffs chart and

we're really not at this highly abnormal

level if anything it's sort of like you

know oh I'm going to work out I'm going

to be healthier in January whatever

right it's kind of like you're going to

clean Shop clean the business a little

bit clean the pipes a bit it's not like

we saw in January of 2023 or or the end

of of 22 or the mid of of 22 not even

close so uh and that's in terms of

companies with layoffs is the blue line

and then of course you look at the

Orange Line for actual employees laid

off so rolling session totally agree

with I'm a more bearish that we're going

to get rapid layoffs and I'm also way

more bearish on the banks I'll have

another video coming out later on the

banks I don't want to go too long here

but I I think there are way more issues

in the banks that haven't really been

flushed out yet and this idea that oh

it's just individual banks that are

having problems I don't know I think the

end of the bank term funding program is

going to lead to a big oopsy doopsy

daisies when it comes to uh the FED

realizing oh crap we don't have the bail

out facility they're going to have to

open it again I really think they're

going to have to open it again or cut

rates because if you cut rates then

you'll essentially raise bond valuations

which should also raise mortgage back

security valuations which basically acts

as a

float uh for these sinking Banks right

it's like putting a buoy under the

sinking Banks Let's Pretend this cup is

a sinking Bank Okay and like default is

here like going bankrupt and these banks

are like oh my gosh okay underwrote the

multif family portfolio at a lower level

offices at a lower level okay but what

if our underwriting is wrong and it gets

worse oh no oh no uh oh no the bank term

funding program's gone right and we're

getting close to that default level and

then what happens fed Cuts rates 25

basis points oh all the bond valuations

just got written

up oh man that was a close one oh no

more defaults more defaults oh fat just

cut

again it's got to prop up the

Ponzi so I don't know it's going to be

really interesting but I have to say

fascinating meeting I like getting out

there physically uh in person with

people and hearing their opinions I also

uh I mean shout out to what we heard

about Jamie Diamond Jamie Jamie

Diamond's a big fan of getting out there

meeting his people meeting his analyst

uh love the meeting yesterday I it's

very insightful while I don't agree with

every perspective I don't think anybody

ever should it's interesting it's a

point of view and well- constructed

point of view interesting comparison to

China and 2008 in America uh and also uh

you know obviously motivating but is

there a potential buyers risk of course

there is uh is there uh you know a play

of of going long interest rate

sensitives of course but could there be

more pain in that my POV yeah

potentially and then uh big shout out to

the analyst team over there they've got

a great crew uh great group of people

kind of cool they really put their

analyst if you want an internship at JP

Morgan hard to get into hard to actually

uh stay at JP Morgan and get a lot of

work to do but boy it seems like once

you're in at JP Morgan you got a good

career ahead of you so kind of cool but

anyway uh that was uh that was my

takeaway and I wanted to share it here

let me know what your thoughts are I'm

curious and see you the next one bye why

not advertise these things that you told

us here I feel like nobody else knows

about this well we'll try a little

advertising and see how it Go

congratulations man you have done so

much people love you people look up to

you Kevin PA there financial analyst and

YouTuber meet Kevin always great to get

your

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