debt-ceiling deal REACHED! Details & stock impact

hey everyone me Kevin here well we've

reached a deal on the debt ceiling and

now there are still some hurdles of

things that could go wrong but I wanted

to break down the details of the latest

things that are tentatively within this

a tonative deal and what it means for us

I first of all let's start with this a

course member asked me on Thursday if

they should be buying shorts on this

Market I said the big risk you're

running buying shorts going into this

three-day weekend is that you've got

three days with no ability to close out

your shorts

or a debt deal could get done and it

looks like that's what's happening now

no guarantees that the Market's going to

Skyrocket on this all it takes is j-pow

or you know someone from the FED coming

out saying you know what we are going to

raise rates again in June which so far

the market is actually pricing in that

we are going to get another rate hike

even though drone piles basically

committed to the idea of a pause

although then there's this idea of maybe

we pause in June and re-hike again in

July which is weird because that brings

us back to the mid 70s which led to the

Paul Volker era not what you want to

hear but forget the FED for a moment

let's think about the deals here or the

details of this deal so basically we had

a 90-minute phone call between Biden and

McCarthy the two teams uh to negotiate

the final details of the framework that

they had roughly agreed to earlier this

week now uh Janet Yellen this morning

came out and said and gave a revised X

date that's the date where the treasury

Department expects to run out of money

at first she gave a date of June 1st

however this led a lot of Republicans to

say nah that's a BS deadline most of the

Wall Street expectations are June 8th

through 9th which honestly I mean

there's probably some buffer room she's

giving because she you know if we hit

that date wants to be able to have a few

extra days just in case a deal is done

then you got to get the procedurals done

like the actual bill voted on which we

got to talk about that because there

could be some things that come up and

actually slow that process down too

the hardlining could still happen so

buckle up for that but Jenny Ellen this

morning came out and announced that June

5th would be the day that the treasury

Department has about 130 billion dollars

of payments that need to be made and

that's going to be pretty tight so maybe

June 5th is actually the X date uh

either way here's the framework of

roughly what was agreed to between

McCarthy and Joe Biden after Janet

Yellen came out with his date a lot of

folks say that was sort of the leftover

motivation Republicans needed to get

over the edge though realistically I'm

not sure how much of this date mattered

uh whether it was the first or the fifth

we just got to get it done so what are

the details roughly well we'll get the

full text of the bill supposedly

tomorrow though during the kova days we

all remember we would always hear oh

yeah the bill's coming out tomorrow and

then it would be like tomorrow tomorrow

tomorrow tomorrow it was always tomorrow

but anyway the rough framework is

agreeing to approximately a two-year

raise of fiscal spending at roughly the

same levels where they are now and

anything that's been agreed to in other

words any payments that have already

been agreed to Via bill will be approved

so we're good with that it's not like

we're renegotiating existing bills

however there is some sort of cap on how

much extra discretionary spending could

be authorized by the government we're

going to spend roughly about the same

amount in 2024 as we expect to spend in

2023 that's a win for Republicans with

about a one percent boost in spending

from 2024 to 2025. that does get us

through the presidential election cycle

which is exactly what Democrats and

Republicans want nobody wants this sort

of hard lining during a presidential

election that would be a disaster so uh

this this is a real seen as a win for

partially both sides Republicans will

probably be able to say hey look we're

reducing spending the New York Times

says this at least by about 650 billion

dollars over the next decade the Wall

Street Journal which leans a little

right well New York Times leans a little

left they say yeah it's unlikely to

change really anything and politico's

kind of like ah we're basically keeping

spending flattish so really it doesn't

seem like there's some huge major Cuts

here though Republicans are going to be

able to cheer the fact that they limited

that IRS spending from 80 billion

dollars down to 70 billion dollars uh

Republicans originally wanted 20 billion

off of IRS spending as opposed to new

work requirements for those receiving

some certain entitlement programs and

you know I know sometimes that's an

offensive phrase to say but you know

food stamp access uh and snap program

benefit access which is the official uh

name for the program anyway that's

probably the more appropriate way to

describe it you have to be so careful

with what you say these days everybody's

so sensitive but anyway uh you did get

slightly increased work requirements

here so what you got is basically

anybody currently under 49 who does not

have children has the requirement to

work basically what they did is they

took that age and they moved it up to

54. so 54 and under will now be subject

to work requirement rules uh and as a

give to Democrats no new work

requirements for Medicaid programs

remember Cade is for poor care is for

old okay great so uh so again uh

Democrats are going to be able to cheer

that they didn't get you know that they

were able to protect funding for the

snap food programs uh this includes the

temporary assistance for needy families

a program as well and Republicans are

going to cheer the fact that they did

get a club back from the IRS funding

they also got a little bit of clawback

of unspent coveted money and also got a

little bit of an increase in these work

requirements do keep in mind that the

program will also expand access to

Veterans and homeless

tentatively some of these things are

just being sort of leaked so different

agencies and different Publications are

reporting different things mostly

because the formal text of the bill and

framework of the bill isn't out yet but

we'll get more details over the weekend

over the Memorial Day uh weekend here so

uh Memorial Day Weekend wait a minute

uh yeah so the next thing that we need

to know well hold on what day is

Memorial Day Memorial Day 2023 why why

is this so oh it is the 29th yeah of

course that's the day off see all my

employees get their day off on on Monday

they know when these holidays are

because the pay day off that's okay I

think we've got too many paid days off

but we follow the uh I I do this on

purpose at our companies everyone that I

have we follow the uh office of

personnel management days off paid days

off and it's the government's date off

days off so in other words there are a

lot of them and it's a good thing you

know I'm a big fan of of that and people

getting some r r time you know work hard

play hard I'm a big fan of that uh we're

actually out here in NorCal oh boy I

might make a video on San Francisco but

Sanford Cisco is just a complete

disaster we had to leave San Francisco

because Lauren didn't feel safe it was

that crazy but we're looking at a little

bit real estate a little bit family uh

we're looking at real estate though I

really enjoy it so anyway oh and more

updates to come on on house hack that'll

be really fun but I want to talk about

some implications and what's next for

this debt ceiling deal uh do keep in

mind as well we're dropping the AI

lectures on June 1st and then pricing

will be going up for the all of the

courses across the board on building

your wealth and making more money check

those out linked down below so going

forward what's important to know is we

still have some potential hurdles from

hardliners coming so this is where you

could basically have some of the further

left progressives or those on the

further right basically come back and

say hey you know what we're going to try

to use some procedural tricks to

basically put leadership through some

hoops and hurdles to force a delay of a

vote on this bill I think that's

partially why more and more Republicans

wanted to hear hey what's the actual X

date so we could play some procedural

drama the reason for this is really so

those individuals can go back to their

districts and say hey I tried every

trick in the book and they still pass

this I didn't want them to authorize

even a penny more of spend so I tried to

delay it it didn't work well no doubt it

didn't work because once the moderate

votes are in and this deal is struck

it's it's done so so I I would say from

a practical point of view even though

the deal is not done and there's likely

to still be clickbait drama about how a

deal is not done yet and yes something

could go wrong I'd say you know 99 out

of 100 here this deal is done the debt

ceiling is going to get raised over the

next two weeks it's going to take a lot

of anxiety out of the market because

this anxiety is going to get taken out

of the market and because the market is

already pricing in a hike for June there

are not really that many negative

catalysts left now that's a problem for

some people because and I you know I get

it I know what it's like but there are

some companies out there that

fundamentally just are not good

companies and their stocks are

skyrocketing and that's leading a lot of

people to go what is this the bear

winning we should short these companies

I think this is a probably a very

dangerous time to short that's not to

say we're not going to have some kind of

short-term you know retracement on some

of the Fibonacci levels that we've been

hitting but I think shorting now would

be quite frankly dangerous and not a

wise thing just because there are not a

lot of new negative catalysts think

about the negative catalysts that we've

gone through in the last 18 months

really think about this for a moment the

covid reopening was supposed to be a big

second wave of inflation no it didn't

happen the invasion of Ukraine happened

within the last 18 months yeah that was

painful that led to another wave of

inflation but we're through it now uh

hitting Peak inflation in German while

in America but while I was reporting it

while I was in Germany uh with a family

last summer I remember doing that video

from the beach in Germany live for CPI

uh but anyway we're looking at this like

oh my gosh Peak inflation this is

terrible we're past that now yet now now

the argument is old but maybe there's

sticky inflation okay really that's

that's all you got the FED has played

the opportunistic disinflation game

before AI is going to lead to a big

boost in productivity spending from

businesses business fixed investment

will probably go up thanks to AI

consumer spending is still Rising people

are still spending like crazy uh we're

still expecting record travel spend uh

this summer uh all of that yes is

inflationary will it lead to another oil

price surge

unlikely because the Chinese spending

boom just hasn't been fantastic if

anything China's been a little bit of an

anchor to not only Commodities actually

staying low look at iron and copper

charts sorry commodity Steve uh and and

also uh quite frankly oil uh so even

though you can see more spend in America

and in Europe seeing Less in in China uh

is is anchoring especially industrial

spending in um China is anchoring some

of your inflationary expectations for

oil so really this is a dangerous Market

to Short

I think it's a dangerous Market to uh be

under allocated on because this Market

you know as much as people will look at

this market and go oh it's just a bubble

you could be at any one of an AI bubble

and you could say it's a bubble for the

next eight Innings and yeah maybe

eventually it's going to burst and you

know what I'll tell you today mark this

somebody marked this on the calendar and

remind me in eight years or whatever but

I believe there will be an AI Bubble

Burst at some point the companies that

will burst in it though will be the

software companies that got disrupted by

this AI technology I think there are a

lot of software companies you have to be

very very careful of how they're

actually going to adapt to this now

broad-based availability of AI in other

words these software companies that used

to have emote potentially just had their

moat robbed from them thanks to Bard and

chat GPT and these plugins that for very

cheaply for basically the cost of the

server access which you're spending

money on anyway you could be caught up

on on AI levels so uh not for all

purposes obviously like for example you

you know are at house hack for example

we have our wedge finder uh this is an

AI that we trained on top of Google's

database and it's and it's our own

personal training that training is not

available on something like a Bard or or

a trash EPT uh but if it were which I

know you could do like a plug-in Zillow

look for Fixer-Upper but that's just any

listing that's listific sir that's

that's different uh but if all of a

sudden like all of our training data

were suddenly available and something

else whether the money we spent on that

wouldn't be worth that anymore right now

we still think it's an incredible

proprietary advantage that we have

specifically because it's trained

the way I operate right but the

long-term argument of this is to say

that a lot of companies who spent money

developing and training AI potentially

have just lost their investment because

of the bards and chat CPT plugins and it

makes it so much easier for other

companies to compete and that

competitiveness is something we're going

to have to watch for so point of this is

I don't know that now that you've got

this debt ceiling default drama out of

the way that you're really going to

expect to see a sudden drop in markets

again you could see a tactical

retracement I believe that is possible

but I don't think you have real Catalyst

left for negativity and I know that

sounds crazy like what do you mean like

there has to be some kind of negativity

left and I'm like

not necessarily again I'm not here to

say the market won't go down in the

short term but I think this is uh this

is a moment where we have to look and go

well if inflation is gone the major

catalysts of of oh my gosh War Chinese

second wave Commodities 200 oil barrels

uh a debt ceiling default all this crap

gone I mean the next thing people are

going to talk about is like okay well

you know maybe they'll hike one more

time or they won't cut that soon

so the market doesn't care look at how

quickly the market reacted or how much I

should say the market reacted to oh my

gosh maybe we actually are going to have

another 25 BP in June what did the

market do it just kept going up

doesn't care uh which is pretty

remarkable and I think that's because

the economy is starting to or the

markets rather are starting to recognize

we might actually avoid a recession here

and the recession if there ever was one

was probably in 2022.

oopsies anyway those are my thoughts if

you want to see my fundamental analysis

on whether it's real estate your job

income uh you know you want all my

perspectives make sure to join those

programs on building your wealth uh

you're going to get non-stop updates to

those programs especially with the AI

course uh and the productivity course

the entrepreneurship course or the

employee that's all one right any kind

of in making more money course we're

constantly going to be adding more

lectures to that mostly because AI is

also constantly going to be evolving uh

so we're very very excited to share all

our insights with you so stay tuned join

that before June 1st which is coming up

so click that link down below to learn

more thank you so much for watching and

folks we'll see in the next one but this

is great news thanks bye