The Fed is Engineering a Major Crash.

We're seeing aggregate delinquency rates

elevated in Q3. Subprime auto loan

delinquencies skyrocketing. The Fed

doesn't want to cut. Foreclosures moving

up in new construction homes in

overbuild areas. We're seeing a

deceleration of spending power by

consumers. Bond market is cracking based

on what we're seeing at not just Oracle,

but also uh Applied Digital. That

terrible bond sales. All of these are a

red flag. It's official. The odds of a

Federal Reserve rate cut December 10th

are now less than a coin toss. [music]

At just 43.2%

a chance of a 25 basis point cut in

December. It looks like the Fed might

actually just cross its arms and do

absolutely nothing, which is really bad

given the cracks that we're seeing. This

is coming at a really inopportune time.

Consider, for example, what's happening

on the 30-year bonds for Oracle. Now,

shout out to Gordo. Not a lot of people

love this guy, but in fairness, he's

pointing out a chart that you can't

dispute. Look at these September 26

30-year bonds for Oracle. These 30-year

bonds for Oracle are now trading at an

8% discount, which is actually pretty

remarkable for a company that should be

such a major behemoth in the AI data

center place. And it's a sign that

basically investors are saying, "Hey, if

you want me to take out a 30-year

mortgage on your AI infrastructure,

you're going to have to pay me more, aka

give me a discount on the bonds." This

is coming at the same time as we're

seeing some creepy things happening not

just in the bond market. I mean, there

was more news on that, but also with

consumers and investors, like Robin Hood

data on investors. What's going on with

retirees that we talked about this

morning? We'll tie it all together in

just a moment, but look at this. This

morning, Applied Digital sold $2.3

billion dollar of quote junk bonds at

quote one of the steepest discounts of

the year as the deal struggled to

generate investor demand. Now, that's a

little nerve-wracking to me because it's

a sign that when you're already offering

junk debt at 10%. You know, if you're

having to offer a 10% yield, it's

probably junk. Don't even get me started

on STRC, okay? Leave a comment if I

should make a different video on that.

But if you've got to offer 10% to raise

money, it's a problem. And when you

offer a yield at 10% in the AI space and

then you're having to do so at a

discount, like you're not even selling

that 10% for a premium, you're selling

it for a discount. It means investors

are looking at the 10% going, "Yeah, no,

still not enough. I want more of a

discount. That's a sign. That's an early

warning sign. It's not good. Now,

Coreweave gave us disclosures on their

material services agreement. They

finally got posted, but they basically

gave us a blank material services or

master services agreement. And they gave

us absolutely no insights into the

arrangement that they made between them

and Nvidia when they can force Nvidia to

buy unused data center capacity which is

really interesting because Microsoft is

one of their top two customers. Out of

the top two customers, Coreeave has

Microsoft revenues at about 67%. Exact

which is a lot. And apparently there's

unused data center capacity when

Microsoft is one of your largest

customers and Nvidia is picking up this

capacity which you're buying chips from

Nvidia and now Nvidia is buying the

unused data center capacity and these

bonds are starting to sell off. It's

weird. It's the bond market saying we're

in a weird place. Oh, and you're going

to see a lot on this. Warren Buffett

just bought shares of Google while

trimming Apple. But I want you to think

about the ratio of this. Warren Buffett

sold about $2 for every dollar he

bought. So it kind of makes me feel like

while that is going to grab bullish

headlines, he's still a little hedged.

Remember, they've got over $300 billion

to go shopping. They bought 6.4 and they

sold 12.5. So they net raised cash where

not only is the Federal Reserve

potentially going to rugpull us, which

isn't great. In other words, not giving

us the rate cut we're looking for, but

you've got underlying parts of the

market that are keeping the economy

propped up, saying this isn't looking

good. Look at the 102 yield curve, for

example. The yield curve has started

spiking over 50 again, now at 54.

Anything above 50 is historically shock

territory. Now, in 1995, we hung out

around 50 to 60, kind of like we are

now, and we were still able to hold a

soft landing or pull off a soft landing.

But in 1995, we didn't have the kind of,

let's call them, risk moves that we're

seeing now. Remember yesterday that

FINRA margin data we were looking at and

we're like, man, how is it that all of a

sudden people are going vertical on

margin? People are literally leaving

comments going, "Oh my gosh, I'm getting

margin called." I'm like, "Dude, we're

4% off all-time highs and you're getting

margin called." Like, talk about not

being diversified in your portfolio and

being overleveraged in like momentum

names or something. It's crazy. I I

mean, I I'm seeing people are like, "I'm

all in on Beyond Meat. I'm all in on

Open Door. I'm all in on quantum, you

know, meme stocks that have no revenue."

you. And I'm like, dude, those are

supposed to be trades, you know, like

little edge trades that you play. Like

in our alpha report, we're like, look,

open door, this is cheap at 80 at five

bucks. I'm like, too much risk. Get out

of this. This is going to go down again.

You got to be careful. It's the same

thing with Quantum. I'm like, they've

run their course. You got to be careful.

But look at this Robin Hood data, folks.

This is something else. So yesterday the

FINRA data we saw was that cash was

declining at the same time as debt was

going up. So I got the Robin Hood

numbers and you could actually see a

decline in cash at Robin Hood which is

really interesting because look it's

been increasing. Cash has basically been

increasing every single month with the

exception right here of it looks like

November to December you had about a

point4 move down in cash. Well, you just

had a $1.2 billion move down in cash

over here in October, and it is the

first time we've seen this decline since

November of 2024, and it's three times

as large of a cash decline. At the same

time, not only does that align by, by

the way, with the FINRA data that we saw

yesterday, but at the same time, options

have just skyrocketed 22% in October. By

the way, this is probably big pee pee.

>> Big pee pee

>> for Robin Hood earnings. Like Robin Hood

makes a crapload of money off of crypto

and options. In fairness though, with

crypto going down, I don't know if it's

as clear of a bet because you're going

to have less trading in crypto and

crypto goes down. And crypto and options

are where Robin Hood makes the most

money. Equity trading barely makes Robin

Hood any money. That's to get you in the

door. Credit card money loser. That's to

get you in the door. They want you

taking in debt and then spending it on

margin or or spending it on options and

crypto. You'll notice that's why they

really promote that in the app or

margin. But anyway, look at their margin

book. Margin debt increased by 18.7%

in one month on Robin Hood. That is a

massive, massive increase. Now look,

we've been increasing since liberation,

okay? We've probably had, you know, a 5%

increase, maybe another 5% increase.

Roughly doing this mental math here with

you, right? This was maybe about a 14%

increase, maybe about another h this is

a little less than 10%, like 9.5% there.

Mental math there, right? Maybe another

10% right here. This is the largest

increase we have seen in this available

chart in margin which is kind of crazy

because at the same time as we're seeing

the largest move up in margin which is

the largest move matched with the

largest move up in speculation which is

matched what we saw at the FINRA charts.

What has the stock market done this

month? That's something to think about

or at least in October, right? So over

the last month what have we had since

October? a 1.8% move in the cues. I

mean, we know the six-month chart has

been fine, but let's look at all of

October. If you margined up October 1st

to now, sure, you're up 93% on the cues.

And we see these sorts of skyrockets in

margin, speculation, and debt, and

options,

and Bitcoin selling down. That's crazy.

That's this combined obviously with what

we're seeing with the bond market. I

these are little warning signs. Now,

also JP Morgan gave us a little bit of a

warning sign and this is all coming in

the face of the Fed basically wanting to

rugpool us. But JP Morgan gave us a

warning sign here that if you look at

forward price to earnings ratios

and you invest anytime the S&P 500 is

having a basically a forward multiple of

greater than about 22.5 which is on the

right side here where this red line is

this vertical line. Anytime you're to

the right of that line on price to

earnings ratios which again currently

sit at about 22.8 8. But anytime you're

above about 22.5, this red line right

here, your expected annual returns are

really, really low. They fall between

this little box right here, which is

probably like positive 1% because we're

a little further to the right over there

to -2%.

And that's every single year. So, your

expectation of a profit investing in

stocks at these valuations per JP

Morgan, who knows, maybe this time will

be different, is bad. And you could see

it through their little fancy category

scatter chart thingy here. Basically,

the more to the right you go, the lower

you're expecting to make when you

invest. The more to the left you are, in

other words, the cheaper the stock

market is, the more you could actually

expect to make on an annual basis. Okay,

great. So, we've got JP Morgan telling

us valuations are high. FINRA debt with

what we saw on the chart yesterday. If

you didn't see the chart yesterday, I

guess let me just show it to you really

quickly. This was the FINRA chart

yesterday, right? This is where we're

seeing 26% more debt than the 2021 peak

yet lower cash. 21% lower cash today.

That aligns with the Robin Hood chart.

So, that's just more supplemental data

that's reiterating this. So, think about

what we have so far. the Fed going,

"Yeah, nah, we don't really see the need

to cut." At the same time as you've got

AI that's holding up the economy

starting to wobble because we're seeing

bonds wobble. That's weird. You got JP

Morgan saying investing in the S&P 500

at these valuations is not associated

with good positive returns over the next

5 years, which makes sense if we're slow

bleeding out, right? And then dead in

speculation is skyrocketing at the same

time as we're seeing the second largest

and and the year is not even over yet.

So it could end up being the largest,

but 2024 and 2025 are some of the

largest inflows that we have seen from

international investors making our US

stocks more expensive. Now I'm not

trying to bag on international saying,

"Oh, you're not allowed to buy our

stocks." No, please. Like you please

support our companies. I think it's

great. Like we've got a bunch of

investors in house hack. We just crossed

1.2 2 million uh in inflows in November

here for House Hack. So, we're really

grateful. We've got a bunch of

international investors. And we got

people in Canada. They're like, "Please,

Kevin, open like a Canada only version

where you invest in Canada." We're like,

"Oh, wow. Leave me a comment if you're

even interested in something like that."

But anyway, um we we have Canadian

family. So, so you know, we we would

work with our Canadian family. My

father-in-law, my wife is, you know,

half Canadian. But anyway, uh this is

really interesting because it it means a

lot of money has flown into our markets

making it expensive and part of it is

because of the money that's flowing in

from international investors and the

other part is just debt and speculation.

Then of course you have Bank of

America's cash indicator which suggests

that currently the fund manager survey

says fund managers only have about 3.8%

8% of cash in their portfolio, which is

wild because yesterday people are

leaving comments going, "Oh my gosh, how

come stocks are red? Like, I thought

there were $7 trillion in money markets

outstanding." You have to be careful.

There are knuckleheads, and I see this.

There are knuckleheads on Twitter that

are like, "Oh, well guys, this is

bullish. Rate cuts are coming." Uh, no,

that just got basically rugpulled. Then

on top of that, you have uh this idea

that, oh, well, there's all this money

outstanding in money markets. That's not

people. Mostly that is not people.

Mostly what that is is large

institutions that park their money in

between doing stock buybacks like Nvidia

or Apple just basically hoarding cash.

So in other words, yes, that money is

there, but it's not money that's readily

available for the stock market. The

stock market to go up, we got to see

some more pumping of I hate to say it,

but debt. And that's not great. Okay.

So, what did we see this morning? Well,

this morning on the cues, we're right

here and in our alpha report, I said,

"Look, the goal is first 15 minutes,

watch for a bounce." I thought we would

bounce at 595. We bounced $2 above that.

So, I wasn't good with this 595 line,

but if you notice, the first 15 minutes

would have brought us to about uh right

about here, about 602. And the goal was

if we beat or bounced within the first

16, my goal is we would end up going to

606. We ended up getting 606 with a

triple reject over here. We got a

breakout of 606, which was phenomenal.

Ended the day at 608 to 609, which is

great. So, the day didn't continue its

bearish trend, but we also didn't have a

lot of news today. There wasn't a lot of

bad news outside of Schmid being a

little bit of a schmeistery bear. Schmid

says inflation should be might end up

being much broader than just tariffs.

It's important that we lean against

growth, which is basically saying be

more restrictive.

And he's in the same place as he was in

in October, which means voting for no

cut. And it seems like more and more

people at the Fed are coming out going,

"Yeah, I don't see a need to cut unless

all of a sudden jobs fall off a cliff."

Yet, it seems like they're blatantly

blind to the fact that as soon as jobs

fall off a cliff, we're cooked because

that ends up leading the stock market

off a cliff, as we saw this morning,

that ends up leading to more

unemployment via potentially labor force

participation increasing because seniors

have to go back to work as their

portfolios get reamed or other people

have to take on multiple jobs just to

get ahead because they can't rely on the

stock market's wealth anymore. Affects

the international community as well. In

the meantime, Fed's like, "Ne,

everything's fine." Now, maybe, and this

is that teeter totter environment we're

in, look at City. City tells us that

right now we are actually seeing further

incremental signs of a weakening

consumer. We're seeing aggregate

delinquency rates elevated in Q3.

Subprime autoloan delinquencies

skyrocketing. The Fed doesn't want to

cut. Foreclosures moving up in new

construction homes in overbuild areas.

We're seeing a deceleration of spending

power by consumers. Bond market is

cracking based on what we're seeing at

not just Oracle, but also uh Applied

Digital. That terrible bond sales, all

of these are a red flag, right? So, when

you put all of this together, it's like,

man, sure, I guess we could hope for a

pickup in 2026. That's literally what

they say. The expectation is to

decelerate in Q4, but pick up in 2026.

the expectation here that you have a

weak consumer in 2 in Q4 and then you

rebound in January. Good luck rebounding

after the holidays. I mean, I'm hopeful.

I mean, like, here are some things you

could target. Literally, Target, Target,

Lowe's, TJ Maxx, Walmart, Ra, Ross, Fun,

Dave Busters almost back at 2020 levels.

Home Depot, uh, Six Flags. Like, a lot

of these have tanked. Restaurants,

hotels, airlines, entertainment. We are

in like a consumer discretionary

recession right now. If you're looking

for dips, man, and and you think we're

going to soft land, the consumer stocks

are great freaking play right now

because they're dirt cheap. Obviously,

unless we go into a recession, then

you're screwed. And if we go into a

recession, it wouldn't surprise me that

we end up having, and I hate to say it,

but in our stock market with how insane

it's gotten, we could see a hopefully

not this bad, but this sort of Japanese

style.

Have you seen this? For the first time

in 36

years have investors who invested in

December of 1989 in Japan actually made

money again. How insane is that? 36

years of basically losses,

you know, hoping to get back to gains.

And you know, here we are now with 60%

of Americans over 55 years old not

working. 20% of those never worked.

Uh, and so now 25% of Americans over 55

never worked. Clarify that number. So

we're in a really bizarro place. Now

hopefully the job numbers that we get,

mark your calendar for it, okay? We're

going to get those BLS job numbers now

on the 20th. That's going to come out at

5:30 in the morning. So obviously I'll

be covering it with a live stream. Make

sure you're part of the alpha membership

and meet Kevin.com. But digesting and

having a plan for that is going to be

critical for short-term trades. Now, for

longer term trades, I'm still of a

strong or I still have a strong mindset

that there is an opportunity to

potentially trim at certain plays that

have done really really well. Like I

just trimmed uh a couple days ago a

stock that I was up like what 1600% on

or something. And I'm going into a stock

I'm building a position out on. Now, the

danger right now with buying obviously

any stock is that you you're just

catching a falling knife. So, somebody

asked me, they're like, "Hey, Kevin, how

come it seems like your buys are so much

smaller than your sales right now?"

Well, it's because of where my opinion

is about how important this data is that

we're about to get. And so, while I'm

taking big profits on stocks that have

done really well, I'm only trickling

maybe a buck out of every $10 back in

right now. So, I want to keep that other

$9 as ammunition for, you know, when and

if we hit the fan. Now, with House Hack,

it's worth noting as well, we just

bought 11 properties, maybe to be 12.

We'll see. We got uh, you know, another

project here in mind. But my goal is to

get all of these rented out, you know,

within the next few weeks. And then

we're just going to chill for Q1 and Q2

probably with House Hack. I don't like

buying in the first half of the year

anyway. I like buying at the end of the

year. Uh, but it's great because we've

just deployed quite a good amount of

capital, but we still have over $10

million in cash just sitting around. So,

we've got optionality should something

weird happen. And that makes us really

satisfied. Not in a way of like, oh,

look, 10 million just that's for the

sake of transparency. You know, if you

want to invest in Houseack, you can

learn more about that over at house

hack.com and read the offering circular.

This video is not a solicitation. And

there's risk with every investment. The

reason I bring that up is because I I I

just want you to think I'm not saying

like don't buy. I'm just saying with

some of what we're seeing, be a little

cautious. There's no reason you should

even be remotely concerned about getting

margin called. And if you are, maybe

it's time to set some trailing stops.

But anyway, try to put this together as

well. In 1999, the NASDAQ Technology

Index, which was a lot more sensitive

back then, saw four 10% declines and

then three more in just the first

quarter in 2000. And then the market

finally peaked and crashed.

So far, in the last 6 months, we've only

seen NASDAQ losses of 2% or more three

times. That's tiny. Like, we're not

seeing any real downside volatility. And

the fact that people are like losing

their SH9T with how little prices have

come down makes me really nervous that

people are massively more indebted than

we think. Now, I was talking about uh

SoFi this morning. I was doing an

analysis with uh course members on SoFi

this morning. Do I have it in here? I

think I do. Uh so I was doing an

analysis on SoFi. Yeah, here it is. And

uh we were going through uh their their

balance sheet because I got this SoFi

offer right here because I I uh opened

like a I had a little SoFi just side

account for a while. But anyway, um so

they have my data basically. But they

sent me this and they're like, "Here's

your offer. Request any amount for a

personal loan of $5 to $100,000

fixed rate 8.74%."

Which is obviously much cheaper for, you

know, than paying a credit card rate.

But I'll tell you the problem with

these. And this is a noob versus pro for

you. Okay, so the noobs get an offer in

the mail that says, "Hey, here's a SoFi

personal loan. You'll have a lower

interest rate. Just pay off your credit

card by using a personal loan of $50 to

$100,000 and just pay off your credit

card and have it all in a nice fixed

rate lower interest rate loan. It sounds

like a good financial decision. is

actually a terrible financial decision

because when you have a lower rate on

one of these personal loans, your

motivation to actually ever pay that

debt off plummets and your motivation

now to take a credit card that literally

has zero balance and go out there and

spend skyrockets. So, I would argue that

the vast majority of people that take

these credit card consolidation loans

end up paying off their credit card and

then immediately going back into credit

card debt. And now you have the worst

case scenario. you've increased your

personal loan exposure and your credit

cards are filled right back up. That's

always how it works in America and it's

so dangerous to get into this kind of

stuff. Now, for SoFi, it's absolutely

brilliant. Good on them. Now, obviously,

we're not in a recessionary environment

right now, and SoFi's got a really

interesting funding method. We talked

about this in the alpha report, so make

sure you go check it out. It's also

under the stock tab, but the way SoFi is

raising money to facilitate their growth

could run into some headwinds. Let's

just leave it there. And if you don't

know, I'll give you a hint as to where

you could find it. Study the cash flow

statement of SoFi and then ask yourself

how that's likely to evolve over the

next 6 to 24 months. Almost did a 67

there. Anyway, so all right. So, if we

think about this and emotions, I don't

know if it's just like X, like people on

Twitter, you know, X or just emotional

because it's like they get engagement or

what, but the fact that people seem like

they're literally losing their SH9T,

legit losing it, and stocks are down so

nominally makes me again nervous that

they're either not diversified at all uh

or they're heavy heavy heavy in debt.

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 Praat there, financial analyst and

YouTuber. Meet Kevin. Always great to

get your take.