Credit Suisse JUST got *BAILED OUT*

hey everyone me Kevin here wow the Swiss

move really fast so remember quite a

Credit Suisse massive potential

bankruptcy risks and contagion risks uh

credit default swaps for pricing in

massive premiums this morning 1 000 bit

premiums I mean we had some insane

quotes this morning and you won't

believe what the uh Swiss uh basically

version of the Federal Reserve just did

but let me give you a first a little bit

of a breakdown so a lot of the crisis

today and credit suisse's stock was

caused by the Saudi National Bank the

largest shareholder of Credit Suisse

declining to increase their stake that

led to massive uh fear and pandemonium

they were blaming a regular regulation

saying oh well you know we don't want to

go above a 10 stake because then uh

we'll be subject to more regulation that

was sort of their excuse for not

investing more but everybody's like uh

no you don't want to throw any more good

money after bad especially during a

liquidity crunch that led to a lot of

freak out this morning I mean we had

quotes like the uh quote the collapse of

Silicon Valley Bank feels like a death

in the family for the tech community and

now we've got Credit Suisse that was

Sequoia Capital you've got quotes uh

like uh oh this is the uh the next shoe

to drop and this one is systemically

important and too big to fail this is

really bad uh however we did just get a

very very large update on Credit Suisse

which keep in mind the size of Credit

Suisse we're talking about 580 billion

dollars of assets under management that

is substantially different from uh from

from what you have with Silicon Valley

bang Silicon Valley Bank was technically

at about about 211 billion dollars of

assets under management under the 250 uh

statutory systemically important bank or

requirement of course they still ended

up getting the unlimited FDIC bailout

and we could talk about the moral hazard

of that in a different video but more

importantly here A Credit Suisse clearly

above 250 Bill however this is a Swiss

bank not an American Bank so what would

the European Union or potential

eventually Switzerland think about this

well their largest shareholder thinks

sorry guys not interested good news

though Switzerland's Central Bank has

swiftly entered the scene and

Switzerland's Central Bank is bailing

out Credit Suisse if necessary that's

right if you signed up for life

insurance it's probably still a good

thing to have met kevin.com life you

could do that within as little as five

minutes but listen to this Credit Suisse

group AG will receive a liquidity

backstop if needed this is according to

Bloomberg just minutes ago seeking to

restore confidence in the troubled

lender after a record slump in its

shares Credit Suisse after all was down

as much as a 30 over 30 percent in

pre-market uh percent today and Zurich

trading it was down as much as 31 31 end

of the day in New York down about 14

uh and so so clearly some of that uh

bailout helping uh of course this Bank a

lot of Bankers are saying this bank is

different this is not contagion you know

your credit Suite had poor management

after all they lent to arcados and they

were exposed to other potential uh you

know bad deals basically and bad risk

management and the blame is on them but

anyway the government Central Bank and

finma have been discussing ways to

stabilize the bank after a tumultuous

day sparked by the firm's largest

investor ruling out increasing its stake

the treasury Department in America

earlier mentioned that they were now

actively monitoring the situation uh

with Credit Suisse this is a big deal

obviously at this point now after this

bailout uh well it's a backstop there is

technically no bailout right now it's

just them saying look we'll provide

whatever liquidity Credit Suisse needs

which basically is a fancy way of saying

look if people want to withdraw their

money from Credit Suisse because they're

panicking and we end up having a bank

run or whatever fine we'll backstop them

so what do we have here uh let's see in

a recent interview the chairman of the

Saudi National Bank State he had no

intention of increasing its 9.9 stake

fine but that hey that 9 point nine

percent stake is probably lower now

given all the pain it's had in an

attempt to call markets and restore

confidence credit Suites as appeal to

the Swiss National Bank for a public

show of support which it has now

received the CEO of BlackRock Larry Fink

also warned this morning of more

seizures and shutdowns coming in the

financial sector but really this is just

the beginning of the crisis that we are

facing that's scary obviously because it

reminds us of the 2008 financial crisis

uh banking crisis very bad

uh we uh Larry Fink says we are going to

see a lot of idiosyncratic events taking

place that's a fancy way of saying we're

going to see a lot of individual Banks

get screwed whether it's because of

crypto or because of a lack of

Regulation or a lack of of uh you know

risk mitigation who knows uh the good

news is you can still get that same

Paddy's Day coupon code linked down

below look everything's green for Saint

Patty's Day today that was totally

planned uh anyway you get lifetime

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anyway as a result of the Credit Suisse

crisis projections for the monetary

tightening have now shifted for the

first time today uh well actually for

the first time in this cycle we are now

seeing pricing for the Federal Reserve

at a greater likelihood of a zero

percent hike

compared to a 25 basis point hike now

this could have shifted just since we do

have this breaking news here it takes a

little bit for the markets to react so

this could shift a little bit I would

say we're probably at a coin toss of 25

BP a lot of people asking what my

opinion is I know it was 52 for 0 and 48

for 25 earlier uh personally I think

let's let's just be clear let's rule out

a uh a 50 BP let's rule out zero uh I

don't uh sorry let's rule out negative a

cut so let's rule out the high side of

50. let's rule out a cut uh we could

rule both of those things out now

markets are pricing at 100 basis points

of cuts by the end of the year but not

yet we're really debating is the Federal

Reserve concerned enough about this

financial crisis uh this banking crisis

this liquidity crisis that they end up

pausing that could actually end up being

bad for markets ironically that could be

a sign that things are so bad that they

need to u-turn

that means they've broken too much if we

get 25 BP in my opinion it's actually

bullish to get 25 here because it means

your contagion risks per the Federal

Reserve which remember they have access

to all this Bank data way more than we

do I mean they have 2 000 economists

that work at the Federal Reserve uh not

saying they're always right at what they

do I mean they still manage to get

things wrong like they're still printing

money when inflation is over six percent

in March of 2022 but but then again you

know maybe that's just j-powell's fault

no I like j-pal I don't want to say that

uh but anyway we did see a lot of fears

of contagion spread throughout the

market today we did have First Republic

stock in a lot of the smaller Banks

trade down uh throughout the day of

course this bailout definitely helped

buoy some of the losses a little bit but

you were getting a lot of fear that uh

oh even though we've got that FDIC

bailout of 125 bill with the FED is that

going to be enough now the FED didn't

tell us usually the FED will tell us hey

we're going to leverage this or not uh

that's actually something they usually

do look out the window by the way

doesn't that look cool anyway usually

they say we're going to leverage that oh

that's a dam usually they said damn

usually the Federal Reserve will tell us

oh we'll leverage this uh 125 billion

dollar bailout facility ten to one or

whatever that's what they did during

covid they didn't tell us whether or not

they were going to this time according

to JP Morgan that's actually a way of

them going hint hint we can do whatever

we need to do without being blunt about

it this looks beautiful man okay uh and

then the economist by the way stating

now that uh regardless of of what

happens with Credit Suisse The Economist

says we are entering a new phase here in

which the fed's tightening cycle starts

to bite the phase is characterized by

markets working with the FED instead of

against it silicon Valley's Bank

collapse has shock markets into doing

the fed's job of tightening Financial

conditions such as lending standards

tightening lending standards we're

seeing that especially in auto

you're going to see that as well in home

mortgages as well even as rates come

down lending standards might actually

tighten substantially uh interest costs

money market liquidity reduced aggregate

demand cooling prices you create fear

right when you create fear people stop

spending money The Economist also noted

tension between the fed's inflation

Target and its duty to protect Financial

stability exactly that's what we're sort

of evaluating now is what's next what's

going to happen are we going to get zero

or 25 is Credit Suisse too big to fail

well according to the uh Bank of

Switzerland the answer to that is yes it

is it is considered a systemically

important bank and it is getting a

liquidity Bank from the uh uh basically

the Federal Reserve of Switzerland the

ECB may even adopt a more cautious

stance going forward towards hiking they

were expected widely expected to hike

about 50 basis points and now we're

looking at probably a 25 BP hike uh for

uh or from the ECB instead of 50. we

also have let's see a little bit more

information here uh this is all CEO's

efforts to reassure investors that's

boring First Republic Bank was

downgraded to a junk rating by s p and

Fitch well duh I wouldn't touch these

things with a 10-foot pole the only way

I would play these right now like the

little Banks is I would trade them oh

dear uh I would trade them that's that's

the only thing I would do uh I I there's

no way I would buy and hold these

smaller ones I wouldn't be surprised if

we end up getting honestly hundreds of

small Bank bankruptcies uh I think

there's going to be so much

consolidation to the big ones because

nobody's going to want to take that risk

anymore yes we technically have the

unlimited FDIC bailout now but you know

what happens if that unlimited FDIC

bailout goes away anyway now I'm

checking out Austin uh quite literally

right now checking out Austin we're

basically looking at the floor over here

oh yeah turn it a little more yeah look

at that this is how we look at real

estate uh anyway I want to be very clear

that uh I pay for this not househack or

the house hack investors and that is a

guarantee I give you as well as subject

to our audits the house hack has paid

zero dollars for this plane that's

because I pay for it but anyway uh

that's that's my way of doing my best to

make sure I'm the best CEO for this

company that looks beautiful out there

but anyway so

wow I'm really surprised Credit Suisse

is officially bailed out uh well I think

we should wrap up on saying we've got

probably okay let me put it this way

regarding the Fed

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insurance.com life and make sure you get

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that so my thoughts on the FED I I

really do lean towards the idea that the

FED will go 25. I do not I actually

agree with blackrock's CEO Larry think

that these are going to be idiosyncratic

risks fancy way of saying

individualistic right individual

companies are going to fall off the

shelf uh they're like gonna be they're

little like let's say you got a bunch of

flies floating around in your house uh

and uh and and they're all banks they're

all little Voltron all little vampires

trying to suck your blood little

mosquitoes and uh the the weakest of

them are just gonna go bankrupt but

they're not gonna kill you you're still

going to be there for the other Banks to

suck on and I think the other strong

mosquitoes Will Survive and I think the

FED realizes that so not only does the

FED realize that but um I I highly

expect a 25 BP hike let's let's get to

where we were thinking four point 0.75

maybe even five maybe another 0.25 I

don't think they want to send the signal

of panic but I think the pause is

imminent I don't think we're going as

high anymore as previously thought I I

think six is out of the question uh this

year uh this cycle I don't think we're

getting to six anymore after now we're

starting to break things but can we

knock on the door of five yeah yeah

absolutely uh again they do not want to

send a signal of panic uh unless they do

you know I mean if they do it's a sign

that they actually do have some concerns

uh about the banking stability and

that's a sign that the bank runs could

be continuing even with the unlimited

FDIC bailouts so personally I think

that's uh that zero would be more scary

to me ironically I mean I think

everybody generally cheers for like less

now I think quite frankly we kind of

want to be cheering for 25 and right now

the way Market's pricing it is a coin

toss I will say though what we got from

PPI this morning what we got from retail

sales was very good uh retail sales uh

we barely got adjustments from January

there were some course members this

morning asking me about hey you know

what what's your take on the adjustments

for January the adjustments for January

were nominal and I think a lot of us

were thinking that oh you know the

numbers are all cooked and rigged we're

going to get massive adjustments we

barely got gosh Austin's beautiful by

the way look at this we barely got

adjustments uh for January barely I mean

I think retail sales for example went

from three percent to 3.2 super nominal

adjustments less than uh you know eight

eight to ten percent in terms of

adjustments not actual percentage points

super nominal adjustments super nominal

adjustments actually uh a baguette

accuracy in the January numbers and they

reiterate what I've been saying that

this is not trying to Pat myself on the

back it's just to be consistent here and

I'm not going to be consistent for the

sake of being consistent it just is what

it is anyway uh this reiterates that

January was an outlier that the retail

sales for January were due to a warm uh

January this is not some kind of

re-explosion of people going nuts

spending money uh yes people are still

spending through this recession but to

some degree we want retail sales to be

relatively stable so we can avoid a

recession remember the consumer drives

about 72 percent of our economy it's the

opposite in China consumer only drives

about 30 percent of the economy although

they hope that this year maybe the

consumer will drive a little bit more

but uh

ah well we'll see China's a whole nother

story I think the Chinese consumers are

a lot more skeptical than American

consumers are as they should be I mean

what they went through here with three

years of law three years of lockdowns

folks absolutely insane but uh anyway

say hello to uh Austin Texas uh we got

the gigafactory somewhere out here but

right now it looks like I just got

elonville uh not really but this is us

coming for landing we get to enjoy it

together how about that so kind of cool

you can actually see the cockpit up here

it's also kind of cool but uh yeah this

is breaking news it's actually broke I

was downloading news stories and this

broke as we uh as we were taking off and

I'm like oh all right now we're Landing

so there you have it uh hopefully that

was insightful I think this is very good

news and uh bottom line uh bailout not a

surprise from the Swiss bank uh you know

some of these guys are gonna go bankrupt

and I think they need to according to

capitalism I don't think it's best that

uh we always have unlimited bailouts at

some point it has to stop but at least

we have relief on the inflation front so

the volatile Nike Swoosh continues and

I'm still bullish if you want to ask me

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I'm in Austin now thanks so much for

watching and we'll see in the next one

bye