*MAJOR* CORRECTION Coming

And you're not worried about a recession

in 2026 for the US? You made that clear.

>> I think it could happen in 2026.

>> The Bank of England said share price

valuations on US stock markets were

similar to those seen near the peak of

the dot bubble and the risk of a sharp

market correction has increased. 12

different CLOs or collateralized loan

obligations. Well, the Bank of England

just issued a massive warning on the

United States's equity markets because

they think what's brewing is so bad that

they think if poop hits the fan in the

United States that the United Kingdom is

going to have major issues. We're going

to talk about that. Keep in mind that

people are also now drawing lines on the

S&P 500, comparing it back to the Great

Depression days, the eras of the early

1930s,

suggesting that if the United States

were to undergo a Great Depression style

shock, it would just take the S&P 500

down, well, at least on the spy, down to

about uh 140 or 100, you know, high

130s. which would be about an 80%

decline. Now, why are people saying

that? Because obviously so much money is

circulating around artificial

intelligence. And it seems like the

tangled web of artificial intelligence

spending has no shortage of ending. I

mean, look at this chart here from the

doomers. It is so uh confusing. You can

see Nvidia really at the core of

everything here. But you see money going

to Nvidia, going from Nvidia, going to

Intel, going to Corewave, going from

Coreeave to it. It's all this

interconnected tangled web of

investment. This comes on top of Musk uh

now raising $20 billion, $7.5 billion in

equity, two of that from Nvidia, and

$12.5 billion in debt to go buy a lot

more chips for Colossus 3. So, at the

moment, it's like, man, all this capback

spend, how could there be anything

possibly bad in the underlying data?

We're going to look at some of these

things and how some of this could start

breaking down, but understand the money

that's being spent right now. First of

all, Colossus one from Elon Musk and

Bluff City XAI data center, 200,000

Nvidia chips, mostly H100s. Colossus 2,

even bigger now in construction. Memphis

City,

tens of billions of dollars in costs,

$300,000 Nvidia chips. So, it's no

surprise that you've got Jensen Hong

going, "Oh, Elon, I want everything to

do with you, Elon. I love you, Elon.

Elon was the smartest in the world." Of

course, Jensson's going to do that

because Elon's about to buy 300,000

chips from him. It makes sense. And at

the same time, last week, we literally

hit the highest inflows to Bitcoin ever.

Just a few days ago, we went through the

Bank of America flow show where they

indicated that we hit the the second

highest stock market inflow in a week

ever. And Bank of America clients have

the highest allocation to stocks ever.

At the same time as that, we also have a

report now that retail in the last

month, take a look at this, have bought

over $100 billion of US equities, the

largest one month buy on record ever.

And so Morgan Stanley is like, look, the

reason for this is retail keeps making

money. You're working your job, you get

income. What do you do with that income?

Especially as you're trying to grow your

portfolio, you go throw it into stocks.

And so until there's a jobs recession,

there's something like we're basically

not likely to see a slowdown in equity

purchases. See, Morgan Stanley says when

income slows, that's when we see a

slowdown in equity purchases. But

otherwise, we're potentially seeing this

massive boom right now because the Fed

is telegraphing cuts now obviously

because of a very weak labor market and

an explosion of AI deals and news flow.

Question is, are those AI deals actually

going to turn into any kind of money?

And will that all happen before we end

up getting real job numbers? Because if

we look at private surveys of job

numbers, the Wall Street Journal has a

great piece where they talk about the

unofficial job numbers are in and it's

rough out there. Basically, they refer

to analysis by Bank of America, Goldman

Sachs, and Carile that suggests we're

probably at no employment right now. We

might be close to very, very close to

zero or maybe even negative employment.

Now, of course, that would be bad

because, hey, if we're not growing our

labor force, that would suggest fewer

inflows into stocks because, you know,

potentially there are fewer buyers here.

But then on the flip side, we've got $35

trillion of US equities owned by foreign

investors. So, does it really matter? I

mean, the economist thinks so. The

economist argues that for every one

percentage point rise in the share of

migrants working in our population, our

GDP per person rises 2% in rich

countries. So in other words, the more

migrants, especially highly skilled

migrants you have working in a country,

the more your productivity and the more

your economic output goes up, which

reduces that burden of the n national

debt. You know, Ken Griffin was on

Bloomberg freaking out about how bad the

national debt is. Ray Dallio tells us

every day how we're going into, you

know, the the ninth inning of the debt

cycle and this is so unsustainable.

Yeah. But so far so good because

everybody keeps throwing money into the

stock market because so far jobs are

holding up. Even Jamie Diamond says

things so far so good. And so this is

where we start wondering are there any

potential risk factors that are starting

to brew under the curtain so to speak or

under the cover so to speak under the

the hood of the engine. And to some

extent the answer to that is yeah. Take

a look at what Jeffrey said and or what

what they just revealed about a massive

loss. Billions of dollars of loss

specifically 715 for them but billions

once you incorporate all of the other

investors and how this loss might

actually be ubiquitous of some of the

underlying risk in our economy. Consider

margin debt levels right now are at the

highest levels we have ever seen. That's

not even counting the advent of

leveraged ETFs. Leveraged ETFs use

option contracts and so they don't show

up in margin statistics and therefore

all the money that's in leveraged ETFs

isn't actually accounted for in margin

debts at all-time highs, which is

somewhat scary. Now, does that mean it's

time to bail and time to sell Nvidia

stock? Uh, probably not yet. But the

early chapters of this bubble popping

and the book that's going to be written

on this

are being written right now. We're going

to talk about some of those red flags,

especially with this Jeffre deal and

what we're seeing with the artificial

intelligence space. I want to quickly

mention though, take a look at this on

screen here. These were the calls of the

last two days. So, you know, yesterday

uh and today, these were the calls we

made in the alpha report. People love

these calls so much they started sending

donations in the chat this morning in

the live stream going thank you for this

call and you know other people saying

this but look at this yesterday I made a

call that we would have a down day on

Tesla buy the rumor sell the news Tesla

was down 4 and a.5% yesterday straight

down from the open I also made a call

super micro Symbotic and Figure would go

up yesterday and all of them rallied

figure at one point up 10% and then of

course we got our oracle news which did

slow down that trade a bit but was Great

call nonetheless for traders who got in.

And of course, we always ad advocate

trailing stops today when the market was

at in the high 604s. I said, "Hey, I

think the Q's are going to 607 to 609

today." And what and that figure would

go up. Take a look at this. The Q's this

morning all day long straight up to 609.

Uh and figure right now is up 9%. Also

straight up. So where is this coming

from? Well, it's the me Kevin Alpha

Report. So, if you're not part of it

yet, use the coupon code Schumer Siesta.

I don't have my Where's my Siesta hat

at? Use the coupon code Schumer Siesta.

We got to work to get some music in

here. Uh, and join us in the Meet Kevin

alpha report every single day. Uh, where

I set up trades for the day. Can't

guarantee that they're always right.

They're definitely not always right, but

we do, I think, a really great job and

people are really satisfied with the

product and the service, so we keep

adding more value to it. You did our

fundamental analysis, all eight courses.

Could be a tax writeoff for you. Uh, and

uh, we've got more lectures coming out.

I'm hoping to post them this weekend,

which I'm really excited about. So, join

us over there. You'll also unlock our

stock tab in the Me Kevin app, which is

really cool for course members. So,

anyway, uh, let's understand what's

going on with this Jeffre deal. So, when

you read this Jeffre article, it's a

little complicated to understand what's

going on, but it tells you some of the

insane risk that's going on in markets

today. And it makes you wonder how much

of that risk is actually showing up in

these AI deals as well. Now, this is

considered the largest

what is this? US Banks Credit Union is

one of the largest known creditors to

bankrupt auto uh parts company. Fine.

So, it has to do with auto parts. And we

think, well, what does this have to do

with AI? What this has to do with AI is

banks willingness to do stupid funding

in this economy. This really doesn't

have anything to do with auto parts. In

my opinion, this is a symptom of the

stupid things these companies were

willing to do. Look at this. The fund

that Jeff put together carried a

leverage ratio of more than 160%

having borrowed against assets to boost

returns for investors. And then they

told investors that 20% of the portfolio

was in hedges such as credit insurance.

In this case, 12 different CLOs or

collateralized loan obligations.

I feel like we're literally just playing

the 2007 financial crisis on repeat with

stupid bank financing, except instead of

it showing up in the housing market,

it's showing up in private credit. and

possibly, we don't know, but I wouldn't

be surprised if some of these similar

credit deals are showing up in this AI

tangled web. Now, let me explain how

this insanity works because it's scary.

Take a look at this. So, we're going to

look at First Brands. So, let's say

Spurs Brands has a pile of stuff,

mufflers, $100 worth of mufflers. So,

they ship that right away to Walmart. In

this case, Walmart only has about 9%

exposure to firstband products. So even

though Walmart seems good for it, over

80% of their products aren't going to

big name brands. And when they stop

paying, it's a problem. Anyway, let me

explain this. First Brand ships $100

worth of mufflers to, let's say,

Walmart. Walmart doesn't pay right away.

Walmart instead records a $100 account

payable. Hey, we'll get back to you in

like 90 days or whatever. So they issue

an IOU. Then first brands get what's

called an account receivable on their

balance sheet. Well, an account

receivable is considered an asset.

And with this asset, First Brand now

goes to a bank and says, "Hey, can we

borrow money using

this bill, this invoice that eventually

we hope to get paid on? Can we use this

asset over here, this account receivable

as collateral? and can we borrow against

it? The banks being bankers who, you

know, want to make loans say, "Sure,

yeah, we don't care if you want leverage

on your flaming pile of crap and trash

auto parts. No problem. We'll lend you

uh $160

versus, you know, on on maybe your $100

of debt or however they end up doing the

leverage, right? We saw the $1.60 versus

of debt for every dollar of of actual

assets. So, we're way overleveraged

here, right? But whatever. So, the bank

ends up having a loan. The bank gets a

promise from First Brands that First

Brands is going to repay. The bank is

like, "Cool. We now have a flaming pile

of doodoo. What are we going to do with

this giant flaming pile of dudu? Well,

we have an asset and First Brand pays us

a yield and because we added leverage to

it, the yield's going to look even

higher. So why don't we put it into some

kind of box and when we put it into a

box we'll call it you know Kenota

Capital Fund or whatever some kind of

like it ba basically I feel like if

capital is in the name it almost may as

well just say scam at this point it was

point Bonita Capital was the name of it

so Point Bonita Capital is a fund that's

going to give you access to this flaming

pile of crap and so they're going to

sell slices of this flaming pile of crap

to individual investors and the banks

are going to hold some of it, blah blah

blah blah blah. And then they're going

to hedge 20% of it, which doesn't really

matter because the vast majority of it

is unhedged, with collateralized loan

obligations, which they're going to sell

and take fees on from even more

unsuspecting investors because they all

hear, "Oh, but you know, Walmart is the

IOU and they're going to be fine,

right?" Nah, bro. Walmart was only

representative of 9.5%

of the actual products. O'Reilly,

another 8.6%. We don't know what the

other 20% was. Could all be junky little

companies that just can't pay. And so

when people stop paying the receivables

to first brands because you have like

thericolor bankruptcy and the auto

market goes a little, you know, suffers

a little bit of a shock. All of a

sudden, what happens? How does one

bankruptcy like this reverberate?

Tricolor goes under, then First Brands

goes under, then Jeff is like, "Ah,

crap." Okay, well, we're taking a

massive loss, $715 million. Our

investors are taking billions of dollars

in loss. And on top of that, if we

actually go look at now the stock market

impact, Jeff is down 16% in the last,

you know what, 30 days, probably even

more over here. And a lot of this

because of the pain of this recent

revelation. And you can see a lot of the

banks have actually been recovering

nicely since liberation day. But all of

a sudden people are waking up going, "Oh

crap, dude. The banks are right back

into their stupid uh, you know,

financing strategies from 2008." This is

exactly what blew up the bubble uh of of

2008 was bad bank financing that's on

rocky foundations, bad fundamentals, and

it's fueled by greed. Well, I hate to

say it, but I think there's a very real

risk that the same greed that we're

seeing at companies like Jeff is in

here. We just don't see it yet.

Remember, we're not getting the material

services agreement yet until November

where Nvidia who's an investor in

Coreweee and Coree buys Nvidia chips.

Nvidia is promising to lease back $6.3

billion or $6.7 billion of Coree data

center assets, but only if Coree can't

sell it to anyone else. And Core is

like, "Yeah, we can't sell it to anyone

else. Nvidia, you're going to have to

step in and lease this stuff." Nvidia is

branding it as, "Ah, it's okay. We'll

put it to use. we don't mind leasing it.

So, you know, the Nvidia shells are

like, "Nah, Nvidia is going to put it to

use. Who cares?" But, but people who

actually look at this with logic are

like, "Wait, Poor Reef can't lease out

all their data centers. Wait, Oracle

can't make money on leasing out their

data centers. This is bad. These are

early warning signs. These two things

right here, huge early warning signs in

this AI bubble popping. This is why I

say I have a hair trigger on my Nvidia

stock. Like again today, I'm up a lot of

money on my Nvidia stock. I love it. I I

every day this is green. I get happy. I

love it. It's just free money. I feel

like I'm sitting

money in my face. It's great. But I'm

hair trigger ready to sell this sucker

because of the warning signs that aren't

just showing up in AI.

But they're showing up at banks who are

financing these deals. This is where we

have to be careful because really what's

happening is you've got what I call two

bubble boys who are blowing money like

drunk sailors. Bubble boy number one uh

is um Sam Murderer, I mean Sam Olman. Uh

and bubble boy number two is Elon Musk.

and they're in like a, you know, a

boyfriend tiff competition with each

other to see who could spend more on

this stuff. Well, at the same time,

inflows into markets are at all-time

highs. And when Jaime Diamond gets asked

about a recession in 2026, in a weird

way, this was kind of a weird little

portion of his interview. Honestly, I

should find the clip because I thought

it was a little awkward. Jaime Diamond

gets asked, "Hey, like, you know, could

we have a recession in 2026?" And he's

like nodding his head. Yeah. Yeah, we

could have a recession in 26. It almost

feels like does he know something or

does he always say that uh take a look

at the clip. I maybe maybe I'm

overreading into I probably am but I

just thought it was a little eerie

>> way and and so I I look I don't know. I

hope for the best plan for the worst and

you're not worried about a recession in

2026 for the US. You made that clear?

>> I think it could happen in 2026. I just

I'm not worried about it is a different

statement. We'll deal with it. We'll

serve our clients. will navigate through

it. A lot of us have been through them

before. You don't wish it because you

know certain people get hurt, but uh but

it could happen in 202.

>> We're still of course in the US

government shutdown. But

it's like the most the most like

positive I've seen in my like

have a recession. Yeah.

Weird. You know what what is the largest

big too big to fail bank see?

I mean maybe they're getting a little

nervous about what's going on in private

credit anyway. So So how does this all

go? Because the Bank of England, they're

warning us that markets face a sharp

contraction if mood sour on AI or Fed

freedom, Bank of England says. Okay.

Well, global financial markets could

tumble if investors mood sour on the

prospects for artificial intelligence or

the independence of the Federal Reserve.

The Bank of England warned on Wednesday.

The Bank of England said share price

valuations on US stock markets were

similar to those seen near the peak of

the dot bubble and the risk of a sharp

market correction has increased

and they are now issuing their sharpest

warning to date about the dangers of an

AI triggered market slump. Now when it

comes to Morgan Stanley and their take

on the valuations, they actually say

that you know so far US4 firms are

absorbing tariffs. So unless they

exercise greater cost control, weakening

the labor market, everything is fine.

Notice how everything is fine as long as

there's no jobs recession, right? That

will be continue to be a theme here. And

then are valuations justified? where

well if we compare back to 1999 and we

factor in EPS growth yeah we're actually

trading at a discount to the late 1990s

levels says Morgan Stanley now Morgan

Stanley it's like your resident bull in

the market right now but they rely on

EPS growth which makes sense what could

make EPS growth falter well more news

like what we're seeing out of Coree and

Oracle if those actually lead earnings

to compress, then that's when we don't

get EPS growth. That's when we get an

EPS collapse. That's when all of a

sudden it becomes harder for Nvidia to

keep selling their chips. Now, we still

I think we still have Ring. Elon's still

got to buy 300,000

Nvidia chips. Like, I want to see that

money show up. But there's a reason when

you look at the Oracle earnings numbers.

You can actually see their margins are

collapsing 240 basis points. You know,

companies like IBM, we did a great

fundamental analysis on them this

morning. They're actually playing this

AI boom really smart. You could see that

analysis in our course member live

stream this morning. Uh which remember

you get all the course member live

streams when you're an alpha report

member. But they're I think ABM's

playing this smart. Oracle, they're

eating this whole line of sinker. They

are very exposed to a collapse of EPS,

you know, if some of these circular

deals stop coming through. And it's

really fascinating because you might

wonder like, well Kevin, how does like

this like fear reconcile with the market

still going up and you even saying oh

you know the cues are on a trend to 615

and we're going to go to 607 and 609

today and then we do. How do we

reconcile this? Well, because of this

look what I wrote here right here two

days ago AMD massive deal with OpenAI

mark it up. yesterday information bad

news on Oracle margins mark it down

today Nvidia XAI deal mark it up like

that's that's how it works you know oh

good news yay bad news oh good news yay

and it's just like net up and this

continues as long as credit remains

available and we don't start seeing the

tangled web of shady banking practices

unweave themselves.

That is the biggest risk and it's the

one we have the least visibility into

because see the XI deal is mostly debt.

12.5 of the 20 billion that XAI is

raising 62.5%

debt. So what are the terms of that

debt? What happens if XAI continues to

lose money? Much like and there's no pro

profitability much like OpenAI does. At

some point the spend has to stop. I

mean, you could even look at the balance

sheets of companies like Meta and

they've spent their available cash now.

They're almost they almost need to

borrow more to keep the boom going. I

mean, actually, I think they had a good

piece on Meta in here. Was it in this

piece? I can't remember exactly where it

was, but there was a a an argument

somewhere that Mark Zuckerberg argues,

I'd rather spend hundreds of billions of

dollars on uh artificial intelligence

and waste it than risk being late to the

AI move. Uh yikes. Talk about

malinvestment. But anyway, what do you

have right here? If we get to a point a

year from now where we had an AI bubble

and it popped, this deal might be one of

the early breadcrumbs talking about, you

know, these circular arrangements over

here with open uh AI. So, kind of crazy,

especially when you have Barclay saying

FOMO is in full swing and uh we're

lacking a lot of real near-term

profitability on AI. Again, for now,

hey, keep cranking. Great. We can make

money in the markets. We can listen to

mariachi bands. But long term, there are

definitely some seeds of concern being

planted. So, that's where I'm going to

leave it for today with the mariachi

band because remember,

you can now get lifetime access,

potentially tax deductible as well,

right off for you. So, that's like

another coupon on a coupon uh using

coupon code Schumer Siesta.

[Music]

>> 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 Papra there, financial analyst and

YouTuber. Meet Kevin. Always great to

get your take.