Welcome back to another meet! Kevin Report we are on episode number 72 it is April 4th Finland might be joining NATO Today they would become the 31st member of NATO after uh holding a ceremony potentially today in Brussels Uh, this event will Mark the end of Finland's military non-alignment policy that began after the Soviet Union's Invasion attempt during World War II. It's kind of a big deal. There is also a train that connects Saint Petersburg and Finland when Russia first invaded Ukraine and vividly remember those Trains being packed as people were bailing out of Russia over to Finland. So it'll be kind of interesting to see the Finland joined and NATO and we'll certainly give Russia some more ammunition to say aha, See, they are advancing towards our borders.

although they really don't need many more. Arguments for that, Russia is already playing quite nasty. Consider the following: Apparently Russia's Security Services are now taking away people's passports who work for the government because they're paranoid that people within the government are going to flee Russia You just can't make this up. Hopefully these people got Life Insurance within as little as five minutes via link down below.

But in the meantime, uh, think about that for a moment. They're so worried that their senior officials and executives are going to leave, uh, the country Russia that they're now taking away their passports to prevent flight. So that way the country can continue to operate in their Invasion against Ukraine Security officers keep in mind to have a quote a tightened travel requirements already. Uh and uh.

Now these tightened travel requirements uh are being escalated to the next level which is requiring surrending surrendering any of your potential travel documents. Just think about that for a moment. Imagine being like a an army general or you know, a you know, a Navy official or someone of high command in the Air Force and then uh I don't know the FBI calling you up going. Hey, it's the FBI Yeah, we know you're a military general for us.

Uh, we're gonna have to confiscate your passport because we're worried about you fleeing the country. It's like you're general for the country. You'd think that wouldn't even be a remote consideration. but now Russia is so worried about sabotage from within that they now have to strip people of their passports.

Now the same is also potentially starting to happen to Elite uh. individuals who are not part of the political uh, or should I say a military complex in Russia The same is happening to them. Many of the civilian Elites supposedly oppose the war, but they quietly dissent from the war. and now instead of a solely trying to restrict people's travel, they're actually starting to lash out against a Russian children.

Yes, Russian Children are starting to receive backlash from: Russia Consider what the economists just covered The Economist Just sentenced a father to two years in a prison Colony for posting anti-war comments on social media. But it wasn't just that because a lot of people leave comments online. In fact, there would be a lot of people here in America who'd probably be in Russian prisoner Wars or Russian prison camps for the kind of nasty comments like left online here. But fortunately, we have the benefit of free speech.

Uh, Instead, listen to this. This individual who was sentenced to two years in a prison colony was sentenced because of something their daughter apparently did. Apparently their daughter was asked in school to actually draw Russians fighting in Ukraine and a lot of the Russian children Drew drawings of uh, glorified or Russian military service individuals fighting what they view as uh criminals in Ukraine or as the Russians like to say Nazis Well, apparently this one particular daughter wrote a a picture with a young family with Russia with missiles basically flying overhead and then captions no to war and glory to Ukraine Well, apparently that freaked out the teacher so much that the teacher gave it to the dean of the school, passed it on to the police, and a day later the daughter and the father were taken away by police in Russia which other students say made it look like they were terrorists and uh and and the father was sentenced to a two-year prison camp uh now uh The daughter writes the letters uh to her father, writing letters like I love you and uh, here it is Here's uh The Economist piece a letter written uh uh by Masha from the shelter later released by activists emphasized the close Bond hi Dad I love you a lot and want you to know that what you were doing is right. You are my hero.

It's pretty remarkable that this is the kind of stuff that's actually happening in Russia that now, uh, you have uh, individual children being separated from their parents because of their opinions about the war. There's also a belief that a lot of the uh, you know this is really the type of propaganda that's being used to minimize the sort of dissent that you would expect during a war within a country. and that kind of dissent is really, uh, being suppressed in Russia pretend actually leading a lot of people to just stay quiet and try to just live their normal lives Foreign Affairs had an entire base on how basically people are trying to be apathetic in Russia that is I'm just going to pretend there's no war going on. Let me put one foot in front of the other.

Let me try to live my life over here because if I say anything I could end up in prison like these other individuals. It's kind of sad and somewhat actually very sad. and uh, makes you appreciate some of the Uh freedoms that we have in the western world. According to a Human Rights Watchdog Over 500 miners children have been arrested and seven criminally prosecuted since the start of the war.

Authorities occurred with the Authorities encouraging localists or loyalists rather to snitch on their anti-war neighbors. Gosh, doesn't that remind you a lot of sort of the snitching that used to go on in World War II Era Germany with people ratting out uh, people who are Jewish For example, the practice of hitting dissenters where it hurts their families is set to continue. They will go after others, imprison more people and take more children away from their parents. Yikes, Children of Enemies of the State.

That's the example they are creating. For anyone who might think about opening their mouth. that's pretty crazy. Uh, and and also pretty scary.

It just shows you uh, uh, the the Era of War is one that you definitely don't want to be a part of. Listen to this one here here. A: Uh Serbian Authorities uh placed a 16 year old disabled boy in care after his foster mother an anti-war activist was arrested. The Foster father was hospitalized after a heart attack.

The boy was not allowed to attend his mother's court case. A leaked recording of a conversation with an orphanage worker suggested that uh, the individual should have quote known better than to piss Against The Wind In other words, why would you say anything? Anti-war You're just peeing against the wound. you're shooting yourself in the foot. It's kind of sad.

Well I keep saying kind of. it's terrible. Uh, it's very sad. So uh, apparently cases have been opened up against uh uh uh, the uh.

this father here. Uh, just to give you some details here, that father with uh, the daughter who made that drawing and his social media post. He was fined 415 dollars for expressing his anger over reports of Russian soldiers who had raped Ukrainian women. He tried to put a line under the incident by taking his daughter out of school and moving to another town.

but just before the New Year security service is again raided his home. The individual said They confiscated his family savings four thousand, seven hundred fifty dollars, beat him and smashed his head against the wall and played the Russian national anthem at high volume. Prosecutors opened against Uh, then opened a case against him for repeatedly discrediting the U.S army. Uh, and now there's a suggest that he was right.

the Russian Army. which could mean up to three years in jail and separation from his daughter. Uh, there was a later report that he had been sentenced to two years. uh, in uh, prison prison camp Crazy.

Uh, so that's uh, that's a little bit of an update on what's going on in Russia For you, it's just sad. Uh, pretty sad. So okay, that gives us a little bit on Russia. Let's now go ahead and jump into uh, well, a couple other updates here.

so there's a quick note on real estate. Let's do that so Blackstone's be read once again is Uh seeing massive withdrawals? Not a terrible surprise. this has happened before. It's actually been happening for months now.

The Uh Blackstone B read is facing withdrawal requests of, uh, another 4.5 billion dollars. Apparently, this is now the fifth straight month that the group has limited redemptions. The fund allows clients to withdraw about two percent of the fund's assets per month, with a maximum of five percent per quarter, which would be about uh, six percent total if you do two percent, two percent, two percent. Although that would compound, so it'd be a little bit more so.

Uh, realistically, it'd probably be closer to about one and a half percent as an effective cap per month. And uh, once again, the Blackstone is limiting the amount of actual withdrawals possible. Right now. At this moment, a Blackstone has paid out about 666 million dollars out of the four and a half billion dollars requested.

And that is because, uh, they have already exceeded their withdrawal cap for the quarter. So, uh, a sign that a lot of people are trying to get liquidity out of their real estate. That's probably one of the most frustrating things about real estate for most folks, is that when when times are good, everybody wants in, everybody floods in the top of the market, and then when times are bad, everybody at the same time wants their money out, but real estate tends to be relatively illiquid. There's also a node in The Economist that half of American counties are losing population specifically the rural Midwest losing a lot of population and that permanent population loss is expected to be a pretty large blow to smaller and local businesses.

All right, that is on real estate. Oh, the real estate front are still waiting in America for the surge potentially of inventory. Although as long as it doesn't come, uh, the the more time people have to just adjust to higher interest rates and uh, if people become comfortable with higher interest rates and inventory is still far and few between then, perhaps prices could actually start rebounding And in some cases they have done just that. Specifically, in Florida Florida's already seen its rebound whereas other areas have not yet, and it is still questionable as to whether or not will the rebound continue or will inventory Skyrocket at a time where there are fewer buyers leading to price declines.

Once again, we'll see some areas are like Phoenix and Boise Idaho down over 20 percent Peak to trough and some areas like Florida barely down at all. So big divergences in what's going on in the real estate market. Now we've got to talk a Bank of Australia. The first pause is in yes, yes, stand by for the first part.

There's some good notes in here. Let's take a look at the first pause of the banking crisis. So one of the first and major pauses of the banking crisis. is in the particular Uh institution.

that paused is actually one that led the United States on rate hikes. That's a sign that maybe the United States will soon follow this particular bank. So think about it. They hiked, then the U.S hiked.

Now they've paused And what could they possibly cite and how could their information be similar to what we're experiencing in the United States. Well, after you read this statement with me, you'll see Wow. it's surprisingly similar. Let's take a look at it right here.

This is the Bank of Australia The board decided to leave the cash rate target unchanged today at 3.6 percent. In other words, pause the big old pauses in at Australia and remember they they started hiking before us. That's important. Uh, all right.

the board took the decision to hold interest rates steady this month and provide additional time to assess the impact of the increase in interest rates to date and the economic Outlook Global inflation they say remains High Uh. And this is actually Something That We're wanting to pay attention to as well. In the United States is, wait a minute. If Uh inflation is high, why would you potentially pause? Well, they give us some reasons and in my opinion, it actually might give some indications to the United States.

Take a look at this: Global Inflation remains high. In headline terms, it is moderating. Although service price inflation remains high in many economies, service price inflation is of course, that third type of inflation that we're facing in the United States as well. phase one being goods and disinflation, phase two being Housing Services disinflation, and then phase three being all other services specifically Health Care retail, hospitality, and otherwise.

And this remains high in many economies. the outlook for the global economy remains subdued, with below average growth expected this year. And next, the recent banking system problems in the U.S and Switzerland have resulted in volatility in the financial market and a reassessment of outlooks for Global interest rates. These problems are expected to lead to tighter Financial conditions, which would be an additional headwind for the global economy.

So they, like us, are recognizing this potential for tighter Financial conditions, leading to basically the equivalent of more hikes. So that's potentially why they're taking a pause. Now, listen to this on CPI and inflation. Well, CPI being inflation.

A range of information, including monthly CPI indicators suggests that inflation has peaked in Australia. Now this is good because we would imagine that the Federal Reserve in Jerome Powell might say something convincingly like this at some point in the near future as well. Imagine if Jerome Powell came out in the next meeting in May and said inflation's peaked, we're confident of it. It would Really, if they didn't pause, then lead markets to start pricing in.

Oh, they're setting up for a pause and be quite bullish because remember, nobody really expects the FED in this cycle to actually cut rates until inflation is conquered. That's a big deal. And I think a lot of folks. Uh, forget that the FED isn't here to cut at the sign of potentially a recession.

If anything, they are engineering this recession in order to make sure inflation has been convincingly conquered. Uh, multiple different reports. Whether it's JP, Morgan Morgan Stanley Whether they're Bears or bulls suggest, it's clear the FED is not cutting anytime soon until inflation is conquered. but Australia actually gives us hope that wait a minute.

Maybe maybe that Peak is closer than we think or that Peak is already well behind us to the point where central banks can start reacting. And so that makes this such a unique occurrence. where the bank of Australia which again led the rate hike psych rate increase cycle is now pausing. Goods Price inflation is expected to moderate over the months ahead due to global developments and software demand in Australia.

Meanwhile, rents are increasing at a faster Pace in some years and vacancy rates are low, the price of utilities is rising, and the Central Bank forecasts for inflation is expect expected to decline this year and next to around three percent by mid 25 medium-term inflation expectations remain anchored and it's important this Remains the case. This is also quite interesting because what you have is essential Banks Basically saying in Australia hey look we want to get to about a three percent inflation Target and we're willing to wait until 2025 for that to happen. Now that's pretty incredible. It's almost as incredible as the paid promotion here to get 12 free Stocks by going to Metcaven.com a free link down below.

Uh, but think about that for a moment if the bank of Australia is saying look, we're going to pause. We realize inflation is still high, but we're at Peak. Let's now just let our rate hikes actually function and we're okay with not only a three percent inflation Target but we're willing to wait another two and a quarter years to get to three percent. They said it'll be three percent by mid 25 is two years, and a quarter is how long they're willing to wait to not get to two percent, but to get to three percent.

And this could be something that our Federal Reserve does as well. All they have to do is say yeah, we're okay with an average of two percent by mid 20 25. kind of interesting. Let's keep going with uh, the statement from the Royal Bank of Australia Oh, there we go.

Fix that, All right. So growth in the Australian economy has slowed with growth over the next couple of years expected to be below Trend. That's been Jerome Powell's goal as well to push us into an environment of below Trend growth. There is further evidence that the combination of higher interest rates, cost of living pressures, and the decline in housing prices is leading a substantial slowing in household spending.

While some households have substantial savings buffers, others are experiencing a painful squeeze in their finances. This is usually the difference between poor income households and wealthier households. The unemployment rate is near a 50-year low and unemployment is also low. Many firms continue to experience difficulty hiring workers, although some report an easing in labor shortages and the number of vacancies has declined.

So very similar again to the United States very low unemployment probably also our 50-year low in unemployment and a difficulty to hire new workers. But things are starting to loosen and those are the conditions that led Australia to pause starting to sound very similar to the United States Right now we're sitting at about a 50 50 chance of pausing I Do think there'll be a psychological benefit to the Federal Reserve to getting us to five percent. so I wouldn't be surprised if there's one more hike in the pipeline and then a pause. especially since right now at 4.75 and I think hearing okay Fed lower bound rate is five percent is a good psychological way to show the FED is really serious about inflation.

But uh, but beyond that I think further hikes are less certain, especially since now you've got the Bank of Australia saying wage growth, even though it's growing is actually consistent with their inflation Target and their goal is to return to a two to three percent inflation regime. The path to a soft Landing remains a narrow one, but they're taking the steps to get through a soft planning by pausing now. I Personally I Think that's that's uh, very fascinating I Want to look now in reaction to this at the Goldman Sachs Financial Conditions index and maybe what we can do as well is look at inflation break evens because generally what we want to see are that Financial conditions are at least somewhat elevated. They don't necessarily have to be as high as previously, and we want to see that the five-year Break Even Inflation rate is staying stable and not skyrocketing after those OPEC production Cuts Yesterday, we did see the five-year break even take up, so it'd be good to see how it's moving today.

I Have both of those charts, so let's pull those up and then evaluate those alongside what we just heard from the Bank of Australia. So the first chart is right here. Oops, Right here there we go. This is the first chart.

This is the five-year Break Even Inflation rate. You can see we had a nice little surge here after. uh, you know, an oil oil price cut. Uh, sorry, oil production cut, but it really shrunk yesterday.

this surge was actually a lot higher. I Would go as far as saying we were up to about 2.6 yesterday on the five year break. Even so, we've really dropped down some of the severity of those oil production Cuts here in terms of inflation expectation. So I would say that's actually very good news.

I Don't think it's so terrible that we remain potentially along this sort of average right here, which would be about the last nine month average. That's probably not horrible I Do think before we get any kind of cuts, we need to see this level down to about 1.6 so it's going to be a moment before we actually get that down. Uh, and then here we have the Goldman Sachs Financial conditions Index this Titan substantially during the Uh banking crisis as it was starting, but Financial conditions actually quickly loosened again. and so right now we're sitting at some of the lower levels that we've been in since December and about the end of January.

So Goldman Sachs Financial conditions lowering slightly. This, uh, this all comes at the same time as you've got the 10-year treasury yield right now, sitting at 3.46 percent. the two-year just for comparison. The two-year treasury yield right now is sitting at just about 4.01 so you've still got that inversion of about 55 basis points between the two and the 10-year at the moment.

The three month, which is another pretty common one, is sitting at 4.9 which is pretty widely inverted. 4.9 to 3.46 puts you at almost a 1.4 percentage Point inversion. Uh, pretty substantial between the two, and if we look at that historically, I Know we've had some recent re-steepening of the curves, and often people like to say that as the curve re-stepens that's when you know a recession is imminent. But so far it doesn't actually seem like that's happening to the three month ten year that did happen.

With the fives and the tens, you've got some rest deepening the twos and the tens. And for those two, but you're not seeing any of that at the Fed's preferred measure of recession, which is actually this one, right? Here, This is what your three month tenure looks like. That's the math that I just sort of mental math calculated. and look how steep this inversion has gotten here.

I'll hide myself for a second so you can see this a little bit more broadly. There you go. Look how steep that is. 144 basis points 1.44 Here of inversion, you've had some volatility.

But I Think the trend is exceptionally clear here when we draw a line, not a curved line. There we go. When we draw sort of the trend line, here, it suggests we're still substantially inverting relative to, uh, seeing any kind of, uh, steepening of that curve. Now again, usually the steepening is the painful part, unless of course, this is just a measure of hey, you know we still expect time And this is the only counter argument against the inversion of the yield curve.

Hey, well, the yield curve is as inverted as it is, because, well, obviously inflation is going to be high for the next few months. so we're going to demand a higher yield now than we will 10 years from now. You're really taking the polar extremes right: The near term and the long term. Basically purely liquid and almost purely eLiquid.

Although treasuries are relatively liquid it, from a Time perspective, it makes a lot of sense that you could just hold the three months to maturity. And it's basically like cash. We do a lot of that with House Hack a lot of rolling three months. So uh, that's pretty remarkable now.

Not only is that remarkable, but it's worth keeping an eye on. Uh, these, uh, these what the Bank of Australia is doing and other central banks are doing because it really potentially can give us a leading indicator. especially since the bank of Australia led the Fed. So with that said, remember Bank of Australia leading indicator and they just paused.

Their arguments for pausing is, let the lagging effects hit. We don't have a wage price spiral. Wages are growing as expected. we're slightly below Trend growth and maybe we can actually thread the needle of a soft Landing nobody.

Well, I should say very few people actually think that's possible. The stick is off Landing but there is a lot of Hope. But always remember hope is not an investing strategy. Instead, do your own fundamental analysis or join us in the fundamental live streams link below.

Thank you All Right now we got to talk about the Donald and then we're going to talk about uh, we're gonna look at some analyst reports. so I Want to give you a full breakdown on what we've got going on with Danity Oh, Donald 20 years bye. All right. So let's go ahead and give you a quick update on the Donald.

Then we've got an update on the Santas and then we've got multiple Uh Financial reports to go through. so let's knock both of those out. Oh yes, and then we want to talk about this as well. Let's listen in to Liz for just a moment though.

Um, if it if it probably a more a simpler fix than last time. Um, but you know the two Victor fail guys is pretty good here and I think they know it. Oh, the other question though, is about regulation. He makes the point you need to make sure that these banks are according to quote, investable.

Um, and I think he's 100 right about that. The question is once Janet Yellen made the decision that she did, which is to implicitly guarantee effectively all deposits you know, does that come with other forms of Regulation Is that something that the industry effectively needs to be worried about? Was it a mistake for Johnny Ellen to even back all of those deposits in the first place? I Mean the fight that we're clearly going to have now is whether it was largely a regulatory problem, whether the rules were too lacks, or whether it was a supervisory problem which is the cops enforcing them were asleep at the switch. Um, probably a little bit of both, but you have to remember that like the big: Banks Frankly, subsidize the small banks in terms of the FDIC Insurance um cap and it's not good for them if the cost of capital across the system goes way up. Um so I think they're You know they're a little bit of Schaumburg but I think really like the cost of capital across the spectrum is about to get more expensive and that doesn't help anyone I Want to Pivot The conversation to this because the other conversation of this morning for us has been this feud between Florida Governor uh Rhonda Sanchez You know in Disney which has been escalating, the Governor calling for an investigation into Disney's new development contract.

Well, Disney's Bob Iger uh called Florida's actions against his company anti-business and anti-florida surprised a lot of folks, in part because there was an expectation that he was going to shy away from taking on uh DeSantis uh personally and so directly. What do you make of it? Well, I think there's two things I think it is, uh, proof at least in Bob Iger's mind that that Bob Chapek's mistake wasn't so much doing something that was unpopular. it was waffling right that that it is okay for its CEO and Paul biker is is a unique CEO he's really a celebrity CEO and has a lot of years of credibility behind him, but that it's it's okay to pick a fight, you just have to do it with some conviction. The other thing that struck me about this entire fight is just to zoom out.

You have a republican Administration uh, being accused of being anti-business and you have one of the biggest companies in America accused of being too Progressive And just like in the historical lens that we've put on politics and business, that's a weird. That's weird. Usually when you know companies complain about governments being anti-business it's things like you know, uh, the pushback in New York City that kept Amazon from building its headquarters here I mean it's it's on the other side of the spectrum. So I think this show is just like how toxic this has become.

This is not about economic. uh Governor DeSantis is willing to force higher taxes onto his own constituents to prove a point and Disney is willing to pay higher taxes to keep control of its business and keep it out of the hands of the government. Yeah, but keep in mind Disney has just pulled a fast one on Ron DeSantis and the DeSantis camp that even though this is this fight between Ronnie D and Disney feels very politicized and political in nature. Ron DeSantis is now lashing out because he's calling for an investigation into quote last minute changes made by the outgoing Disney appointed board members.

Basically what happened is Ron DeSantis was busy being political with his administration, making the argument that we're gonna fight woke and we're gonna fight and punish Disney And then while he's making those public arguments Disney at a public board meeting, voted to extend many rights to Disney's ability to basically self-govern for the next 30 Years 30 more years Disney just gave itself in a public board meeting to protect itself from Ron DeSantis Now mainstream media Outlets like the Financial Times and New York Times are jumping on the bandwagon suggesting Rhonda Santos is humiliated. He is now on one hand trying to show how tough he is, but he's so tough that he got publicly juked and outplayed by Disney and now after Disney takes the last laugh of basically circumventing Ron Desantis's entire anti-woke law to punish Disney Disney is basically talking about how Florida's governor Ron Desantis's anti-business and now and this is at a board meeting. Uh, that uh uh Bob Iger was just speaking at a Disney board meeting. Uh, we'll play that actually in just a moment and uh in Disney Basically as it almost impunity from further action by Ron Desantis's Disney played by the rules.

They did so publicly but the DeSantis Administration missed it. Take a listen in here to what Bob Iger has to say back and Joints I can feel the tension. No wrong one. Let's thwartz those efforts simply to retaliate for a position.

The company took sounds not just anti-business but it sounds anti-florida and I'll I'll just leave it at that. There you go, calling it anti-florida Uh and uh I guess I pulled up the wrong video there on the audio there for a moment. but anyway Bob Iger you just heard I'm calling it anti-florida and anti-business to try to punish a Disney this New York Times columnist that actually it gives a little bit of extra Insight Over here, let's briefly listen to him uh and some reaction that would be right uh here. Times columnist and CNBC contributor Jim Stewart and Puck senior political correspondent Tara Palmeri great to have you both on and staying up late.

We appreciate it. Jim your take on this you literally wrote the book on Disney Where does this end? Well I'm not I'm not surprised this thing has flared up again, but it is at least so far. This is mostly a war of words and symbolism. Yeah, that's the scientists move to strip control of the local board.

but in the great scheme of things I think that could actually save Disney some money in in the long run, you know, much bigger. Stakes Here are the fact that Disney employs many, many thousands of people in the State of Florida and just In 2021 announced that it was moving another few thousand there, including the imagineers and Florida was giving them about 570 million in tax incentives. Now, the status has not yet done anything about that, nor has Disney said well, we're not going to do it. that would be I guess kind of like you know, Putin dropping a tactical nuclear bomb or something I Mean at that point it would become something with real economic repercussions.

you know Tara What this seems to be. Honestly, we're putting it as Disney versus DeSantis I Just have a feeling that Disney's lawyers appear to be a lot better than Florida's lawyers. So yeah, I'd agree. I mean to me: Rhonda Santa seems extremely flat-footed Um, this reminds me of the migrants that he shipped from Um Texas the border to Martha's Vineyard You know there was a headline grabbing stunt, a political stunt, but there was really no follow-through The fact that they didn't realize at the Reedy Creek board had even changed the rule back in February before he put his own board in, just showed that they weren't really doing their due diligence.

I Also think it's really interesting to see that um. Iger's language is much stronger than Bob Chaffix and you know he's calling the Santa's anti-florida He's really, you know, getting in it with him that's good I mean Tara that's a good I mean whatever you think that's a good line I mean whoever side you're on, that's a good line. Yeah, but I Also wonder if it reflects the fact that DeSantis is becoming weaker politically, the fact that he would become so aggressive, or if this is just Igor's Style versus Japix. But it just seems to me like he's ready to take the scientist on head on.

and the tone has changed. And it also just happens to coincide with the fact that the Santa's poll numbers are slipping right now. the fact that he's had a lot of stumbles on the national stage. You know the fact that he's wobbling on Trump's indictment politically, he's suffering, and it's interesting to see him being attacked.

Um, not just politically, but also by you know, corporate Disney so we're gonna stop that one there. Worth thinking about that though for a moment. Really, There's this setup that potentially Ron DeSantis is weakening in the at the same time as Donald Trump is potentially strengthening. Here's that New York Times piece.

Just so you can see it where a Disney basically responded to losing control of its board by the month before losing control, basically voting with the now lame duck board to restrict the power of the new board and give Disney several exclusive rights that could last as long as 30 or even more years in certain circumstances. So Disney really outplaying Ron DeSantis here and this now leading to a lot of folks wondering: did Ron DeSantis just get embarrassed on a national stage it is Ron DeSantis Somebody who was considered a potential front-runner as Donald Trump was kind of screaming in a corner in this 2024 a political election cycle did Rob condescence has now become the kids screaming in a quarter and banging his head against the wall as Donald Trump's uh, you know, indictment has made him potentially 10 times more of a news subject than he was beforehand. and now the only remaining sort of legacy of DeSantis is this mistake of of trying to appear tough against Disney yet actually getting outplayed by Disney I kind of think I think about it like the the person who, uh, who's winning the uh, I'm sure you've seen these before. You know those marathon races where you get like the uh, the runner who's running and they're getting right to the end and they're like yeah, I won and then they.

They're so focused on how they're winning that they don't even realize their Challenger is running up right behind them ends up passing them right at the last second, at which point it's too late for that person to respond anymore. That's kind of how I view this this DeSantis Disney dispute Although he's been getting hit pretty hard in various different areas, not only the it is the issue he got hit for at first, kind of nearly kicking Trump while he was down by making fun of the hush money potentially to uh Stormy Daniels argument that he was making on top of that and this was when he was at a press conference and Ron DeSantis basically uh said ah, you know I wouldn't know anything about paying hush money to a porn star and uh, that was seen as a low blow uh by many as well as his response to Ukraine calling it a territorial dispute. All these things really. painting Trump is very different from DeSantis Right on one hand, you're painting Trump as not able to be beaten down by Uh by the system whereas DeSantis just got beat by Disney Essentially, you have Trump who's taking this very tough on Ukraine and Russia approach saying it's so important that we need to prevent World War Three, he'll do whatever he needs to do to get a negotiated settlement as soon as possible.

whereas DeSantis initially called the territorial dispute before walking that back. so you're seeing some very clear differences between the two candidates. uh, you're also I mean even Ben Mala whom I've interviewed on the channel the Real Estate Guy. He's A.

he's a big fan of believing that one of the big differences between Trump and DeSantis is that Trump inspires hope and really motivates people to vote whereas maybe DeSantis less so. uh, White House uh, obviously always criticizes the Republicans at the moment. the White House apparently has now condemned DeSantis for signing into a law that would allow residents to carry concealed carry guns without a permit. It's kind of like what California is trying to do.

except in California anybody can get a concealed carry license is the way that they're labeling it. You just basically can't carry it anywhere. Yeah, I think the only like you can't carry it at parks, public events, schools, libraries, retail establishments that don't explicitly have a sign saying you're allowed to carry in their store. So yeah, okay, good job.

California Uh Anyway, DeSantis Signing a uh right to Carry law basically and uh, the White House calling that shameful and the opposite of Common Sense Gun safety? Uh, In under the new law, anyone who legally owns a gun in Florida can carry it without a permit and training and a background check are not required to carry a gun in public in Florida anymore. Fascinating. Big differences there in Florida from certainly States like New York or California. So this gives you an update on DeSantis I'd have to say in summary here, things probably aren't going fantastically well for DeSantis now, but I think it's way too soon to count anybody out in this election cycle.

especially since you still got to get to actual debates. You got to get to election year, Which election year is still a year away. A lot could change by then. Donald Trump could be totally free or he could be in jail.

Or what's more likely is we'll just still be twiddling our thumbs watching court cases and we'll see how DeSantis handles next year. we'll see. Thank you! Alrighty then now we are going to talk about this soft: Landing Oh yes, there's some law in Florida that if you use a lawyer, that same lawyer can't be used against you. Yeah, so that's not just a law in Florida that's a conflicts check.

That's pretty much something you would get in any state. And you're saying Disney has hired basically every lawyer in the state. Pretty brilliant. Yeah, Commercial Real Estate.

We've definitely been talking about commercial real estate. and uh, 200? you know, a lot of loans coming due, you know? JB Morgan Did an analysis on that that we've talked about on the channel where uh, basically they assume hey, if 20 of commercial properties default, there might be losses, uh, of somewhere around eight to ten percent in actual uh, assets for a lot of the banks who are holding these commercial mortgage-backed Securities it's actually a piece going on right now here on CNBC on it. let's listen in. He said we'll keep rates low because there's no inflation.

It's transitory. It was in transitory. that was 100 the result of all the stimulus packages you know that was flush consumers coming back to the cities and rents Rose everywhere New York Peoria You know Dallas it was Albany we were I was in shock and they went up 20 and so that is what really drove CPI for five months. I Will give you credit for saying at the time you thought they needed to raise rates sooner.

Yes yes and you know they they did. I don't know why that has his credibility today. when they they they really are. the markets give them any credibility right? So I think Jamie's wrong I think we're going into a serious recession and the government has an interesting problem but not for the reasons he stated.

they have a massive deficit and they keep feeding the deficit. that forces rates higher because too much Supply paper to pay for the deficit. receipts are going down because capital gains are going away. Real estate will talk as a complex values are down.

so with interest rates up values are down Well that's the one thing I would say. So receipts are going down and interest expense is going up. he's gonna have to the deficit will grow. He'll have to print more paper that should force rates up which would make the economy weaken further.

So he's going to have the opposite problem. He's going to have rates going up and the economy weakening and he's going to have to lower. Why aren't they going up now? Well I think it's a it's A I think I think the markets I agree with first of all I agree with you. the credit markets are smart.

You know they, they know that this cannot last and you know you: have very low consumer copies, very low savings rates very low CEO Confidence recessions to Serious layoffs coming covering through the service Industries I Heard earlier education and Healthcare are not interest rate sensitive and the one thing that we missed and Jamie talked about was the regional banking crisis. You know we just we just missed it. But when you look at what it actually looks like, the only thing Powell is affected with his last quarter point increase in rates was knocking another 50 billion out of the bank of the regional. Banks Balance sheets.

For every point he raises or lowers interest rates, he's adding or taking away 200 billion dollars of losses or adding Capital to the banks. All right. So if he goes down two points, he has 400 billion dollars of capital to the regional stuff. Yeah, that's duration.

Risk is because they didn't have to mark the market as a significant portion of their book. So Superman Was here yesterday. He said that the next place he thinks this hits obviously is commercial real estate. Yes, a business you know.

well where do things stand? Well, so you've seen in the Regional Bank crisis you saw is the Svb sale of of a small portion of their health and Maturity book which popped that 1.8 billion dollar loss and people went whoa and everyone started looking around like we better look at these balance sheets in every Bank As you know that we looked at was insolvent. They haven't touched the Cre book and the Cre book. The commercial real estate book for regional Banks is almost 2 billion trillion dollars. The big banks are 800 900 billion right? It's 28 of loans versus six percent of loans for the big Banks they are long CRA and we know that rates are up, real estate dies are down, and there's no markdowns yet of scale.

So that's why this Regional banking crisis I Totally agree with Jamie is far from over and you know Signature Bank which failed here in New York is about to auction 30 billion dollars of their loans. Uh, the whole loan book the government took back. It's going right and we'll we'll be bidding I'm sure most of my peers will be organizing to bid, but it'll be. It'll be the first of the RTC like FDIC Like the government doing this.

Will they make money? No the loose. Well actually it's up to Powell if he lowers rates the one that the government will make money. So why it keeps rates high, you're going to get prices that are bargain prices. Yeah and they'll have to finance the deal.

the government which is what they did. uh back in Afg in 2008 that we bought a bank called Chorus bank and it failed a nine billion dollar loan book original cost six billion dollar book and we paid 3.7 billion for it and we borrowed two point something billion from the government for 10 years. The government partnered with us. Unlike the RTC days in 2008 we went 60 40 with the government.

What would you the bank Would you do the bank long term? Well actually there were 11 branches so they shut them and they just sold the loans which is basically what's happening with Signature Bank They're just going to sell the 30 billion dollars 19 billion of which is multi-family in the tri-state area. It'll be fascinating to see what happens because yeah it'll be a first test of where do you think? What's the clearing price Like what's the price and when you get to the department this is pure Mark to Market They they took these loans out of the banks, sold the remnants of the operating Bank Was that the deal that you got just hammered for it as being Yeah, we made almost 25 percent of our money. That's one that said there's just no way this works. That's right, there's a front page of the Wall Street Journal They were paid by 500 million dollars.

Sorry though, when you think about the regional Banks yeah that are going to this is going to play out signatures this This: if this happens, this will play out across the country. This is reflected morning. Stanley Production Report: I Think just yesterday or two days ago about commercial real estate I mean yeah it just I mean suggested this bloodbath Is coming. Um, what which bank would you own a regional bank right now at all? No.

I mean Chairman Powell said the banks are solid. They're selling because the government's standing behind their balance sheets. They borrowed 300 billion from them. No.

I probably wouldn't own a Regional Bank They won't all fail. Um, and but I think they want all fast. So what happens? but no I mean what happens is a prolonged credit crisis. These banks are making you Jan and yelling for the day or J-pal for the day or whomever who can whisper it's all in Powell's hands.

So what we the Beyond Lowering rates you have to do. You have to back up. There is actually other than the office. asset class real estate is actually performing really well.

like apartments are full houses, single family for rent, houses are full, Hotels are really chocolate is going down. Yeah well. rents are going down in some cities that have you know, situations like like Austin where they have mass layoffs. but in general rents.

there's no overbuilding. There's almost the real estate does not support Jay Powell saying well. you know, maybe we got to keep you know. So you have, you have rents that are full in income streams from these real estate assets.

but he he crushed them by raising rates so far. so fast. So the cap rate of the yield you're willing to pay for the property reflects interest rates and also the availability of credit. So in the multi-market you have Fannie and Freddie willing to lend to you.

So those markets are very healthy. We just put an asset for sale in Virginia We had 33 bids for a multi and they're trading around four and a half four and three quarter percent which is actually in line with Fed funds and below the total cost of the borrowing, right? We're going to take a break. Okay, there's too much information then I'm thinking it's great. So really interesting conversation there so far.

let's let's try to break some of that down because there was a lot of information there. So let's catch up and break this down. Yeah, so really, what you have is an individual here. Uh, who is, uh, one of the executives over at Stern Light Capital He's making this argument that the banking crisis is going to continue for a year and a half and the reason they believe it's basically going to continue through about the end of 2024 which would be until after about the election cycle is basically As One Bank Defaults as we've just had happen their book of business.

They're the loans that they hold the notes that they hold which have value right? Like they have little pieces of paper all over the place and they have on them all. right? This person owes me one million dollars. This person owes me 10 million dollars and together it's their book of business. Right now, somebody has to go an auction block and go.

All right. What do I want to pay for that? that bundle of of all those loans? What? Am I willing to pay for all these and you kind of take a quick look and you go. Yeah, I don't know. Man, that's uh.

there's a lot of crappy loans, Man, those haven't been marked down yet. Who's going to underwrite those? Well, You could sit there and go through every single one and try to figure out what the loans are for and what the value is of the collateral, but that's very tedious. Takes a very long period of time so instead usually what happens at these auctions is the government who leads the auctions will just say look, this is probably worth 10 bill. Let's just start the bidding at one bill.

It's kind of like listing something on eBay. It's like look, the value is probably somewhere between 1 and 10. you all have at it. You got 24 hours to figure out what you're willing to pay for and what risk you're willing to take.

Uh, and then the idea is and he gave this example of how uh, they previously in the last recession, bought a bank. Uh well, basically the bank's loan portfolio. And basically what they do is they then dump on the market those loans. and when you dump those loans onto the market, what you're doing is you're lowering the prices of those related bonds, You're increasing yields, and when you're driving up yields, you're making the cost of debt more expensive, especially for the Federal government, which his argument is will then lead Jerome Powell to have to run the money printer more.

But that's exactly the opposite of what we want to hear. If the government needs more cash printed in order to pay for their debts, then the government is going to have to print via the Federal Reserve. But if they expand the money supply, then they're creating inflation much like what we saw during Well Covet where the Money Printers ran. So much so that we induced a lot of inflation.

This kind of catches you up a little bit to what what his idea is now broader his uh I think bigger fear is first that he would stay away from any small or Regional Bank because He suggests the small Banks This is something that Kathy Wood reiterates as well: small Banks hold about a 28 book exposure to commercial real estate. So of what small banks have 28, it's commercial real, estate, whereas at the Big Banks, it's only about six percent. Part of that is because the big banks have such stringent regulatory requirements. It's actually hard to get a good deal at a big Bank when you could just go to a smaller bank and get a substantially better deal.

Now, unfortunately, when you start liquidating assets like that, you can also potentially start putting pressure on real estate prices and that you are increasing available image story. Now that's not to say there aren't a ton of available buyers right now, and that might be why you're seeing multiple offers again, which you typically do see in a spring. Market But what will be really fascinating is if an increase of inventory will happen after some of those spring buyers have faded. So we'll have to pay attention to the real estate market because as we've seen here, this Berry guy thinks it's probably going to be about two up to two years, one and a half to two years before they actually end up getting uh to the bottom of the banking crisis.

Now interestingly so, apparently he was giving us so much information that even though the break is now over on that CNBC coverage they didn't actually go back to them. It looks like they kind of cut their interview with it, which I thought was actually a really good interview. So something he said there must have upset the apple cart because all of a sudden they've ended uh, that individual's uh interview I'm kind of surprised by that. sometimes I mean I put on sort of the uh, jaded tin foil hat.

It makes you kind of Wonder wait a sec. Was he onto something the mainstream media doesn't want us to know about? After all, this person Was named the Commercial Property Executive of the Year in 2010. this person identifies as a Republican, though he's more recently been characterized as an independent. He's a self-described friend and golf partner of Donald Trump but was disappointed that Trump did not move to the political.

Uh, did not move, uh, to the political Center uh, that is. he stayed. Uh, he stayed a little bit more. uh, divisive.

Uh, okay. interesting. So uh, anyway, uh, this is a Barry Sterling some of his uh, worries and fears and as you heard him start with, he actually thinks there's a real potential you could. uh, you could see a larger crash ahead thanks to to specifically what's happening in the banking sector commercial real estate.

and he's essentially warning the banking crisis is nowhere close to over. so something worth paying attention to. All right, somebody says, look up Sorkin Oh no, uh, uh. Steve why are we looking up Sorkin Let's look up the differences.

So I don't know what you want me to look at. You said your dinner anyway. uh oh oh, you wrote lock. Oh, got it all right.

So um, very well. That gives us a little bit of an update layer. Okay, now, uh, okay, uh now. Steve Also asked, how does Australia's housing market play into the decision to pause rates? uh, in rate hikes in Australia So what's fascinating is Australia has lost home values or seen home value declines for about 10 of the last 11 months.

Just last month, we've actually seen home values actually finally take up a little bit. Again, we're not sure if that's just like in the U.S Sort of a spring impetus of a little bit of a spring boost where you combine basically next to no inventory coming out of December With at least some people who are willing to pay these rates until they can refinance in the future, we're not sure if that's the same thing that's happening in Australia as the United States, but we do know is that Australia peaked a trough Across The Nation was down about eight and a half percent peaked trough in the United States We're down about 10, so you're roughly equivalent to the bank of Australia in in their situation. Now not to say I'm not trying to say we're exactly the same, but uh, we, we are. We're pretty dang, uh, aligned with Australia.

So I think that's Australian pause is uh, is pretty, uh, pretty incredible. Hey, Barry's back. Let's listen in. but if you're wealthy and you have gains in your tech stocks or your founder, you leave.

That's a lot of money to say. 10 just on just on taxes. Done a very good job of chasing out the rich people they're they're working on it. So I mean you got to change that narrative.

So the California It's not a sales tax. It's not an income tax. It's a resort fee. It's the nicest place to live in the country for sure.

so you just change the the marketing. but but it's really the between safety and the attitude. Those are the two things. I Think that drive people out I mean New York's a fabulous place and it's wonderful to be back here.

but you know it's it's getting crushed under its Social Services We need to put people in productive work in. Hawaii I Understand the tax rate and why. It's okay. Well, they're an island nation they are.

but you know I'll pay a few more. We just opened a hotel there if anyone needs a job we could use some house. uh some. Are you still seeing a lot of big on where on? Kauai The One Hanalei Bay Former Saint Regis We gutted it and brought it back and find it.

Is it A? It's called the One Honolulation. It's the one. What do you have to pay? What do you offering average room rates right now? No. What are you offering for housekeepers that you can't find people? I Think we might be like 30 an hour? We can't find out.

Bring your own bed, your sheets. Sorry. not bad. We'll give you discount if you make your own bed.

There's no and there's no housing. There's no. there's no worker housing and you can't get people there. There's some I mean we do some crazy things in this country.

You know if you ship goods from Asia to Hawaii they have to go to La first and then go back. That's it because that's some old law we've been in the 1800s or something like why do we do stupid things like this? The government can spend a lot of time cleaning itself up and making things a lot more streamlined than that. Anyway, go see the hotel. It's really lovely from a real estate perspective.

Are you seeing that continued shift from the Northeast to Florida? And are you still taking advantage of that from Real Estate perspective in Florida Are you building? Are you buying in? South? Florida in Florida And and the market? It actually slowed down and it's picking up again. Home every all my friends from the Northeast and there are a lot of them that have moved down. whether it's anywhere Naples Palm Beach Jupiter Miami They're asking me when the housing market is going to slow down and there's such incredible demand in such a small supply of Waterfront or close to water homes. It doesn't look like it's slowing down and in fact, it'll slow down up here.

Makes people even want to get out of here more because they're worried about. You know, their incomes are stagnating and they're looking at their tax bill and say I don't need to pay this anymore So um, in Florida's uh Achilles heels at school system you need private schools Executives Or you need better public schools because you can't move to Miami without getting your kids in school. And the same thing with Palm Beach people have started their own schools Should he take that Surplus they have now in Florida and put it toward education 100. He is doing that.

The census bill is uh, his spending of the 22 billion dollar Surplus is actually pretty good. I mean he's investing in teachers and education that's really smart and that that that becomes a positive positive Rolling Stone As opposed to the negative going on in some of the blue States it's like New York is going to be a great City forever. But it has some serious issues including its office stock which is, um, emptying so it's very difficult up here right now for offices. All right and Robert is depressing news.

Yeah, thank you. It's a great city. Thank you Young people will never leave New York What happened to your Lamborghini story? We're not doing it on this show. You'll see it later.

Okay, all right when we come back. Barry is going to stay with us as we get into this year's bank failures. Lessons Learned The potential long-term impact on the economy and much more. And a reminder for you there is.

This guy is Awesome by the way, he's really, really insightful. Really like this. Uh, this. Uh, just keep in mind this guy.

uh, they they founded uh the Starboard Starwood Capital group and uh, he launched a firm back when he was 30. Oh wow, that's weird. Think about this. in 1991 at age 31, he launched a firm to buy apartment buildings I'm 31 and I'm launching a real estate company.

That's kind of cool. Uh, anyway, um so uh, they now have 120 billion dollars under management. That's how when he could say oh yeah, we just bought basically an Old Saint Regis in Hawaii uh which uh this by the way is uh, what their Saint Regis website looks like uh, which is uh, now the uh I believe that's this this one hotel I believe this is the right one I'm not sure but uh anyway. um yeah, uh, it seems pretty.

uh, pretty incredible. so uh, inspiring. Either way, you look at it. but anyway, uh, what's fascinating here? Is this this idea that uh, California's income tax is almost like a resort fee and this this argument that if you buy near coastal areas, uh, people are willing to pay the price because they basically as we used to say as when I was selling real estate in SoCal they ain't making any more waterfront real estate.

It's kind of a good point and it actually reiterates something that uh was uh reported in The Economist this morning The Economist This morning reported that uh, we have a record decline of counties, nearly half of American counties losing population in America. The rural Midwest is the one losing The most of its population. uh, permanent. uh.

population loss is obviously expected to be a big blow to businesses out there, but it's remarkable because you are seeing this massive shift where people are saying no look I'm I am willing to live by the beach whether that's in California we're paying some more of the taxes or I am willing to live in Florida where maybe you have to send your kids to private school which is an interesting argument he uh Barry here makes uh yeah I I grew up in South Florida Uh initially I went to private school, but then after my parents divorced and they had no money left I did not go to private school anymore. uh and to spend most of my uh School career going to like five or six different Public Schools it was pretty annoying and we had no many. but uh, But anyway, interesting to see he actually provides some optimism on Desantis's sort of reinvestment of surplus money back into schools, which is good to see. Keep in mind Disney employs like 75 000 employees in Florida so you've got some tensions with Disney obviously.

but Barry makes very, uh, very neutral and I think solid points uh and uh and gives a very fair Outlook so I think it's worth heating his warning Let's uh, keep listening in here to what else uh they have to say Banks both large and small as we head to a break, take a look at Future They're going to double break us here. How rude, Double break. It's just absolutely rude. Uh, so anyway, the um, uh yeah.

So continuing with with just the the thought on Barry here. Uh, why? you know it's it's going to be incredible. And I think the the real bottom line about real estate. Uh, in America Is we just we just don't know.

We don't know if we're going to get that inventory surge. Uh, how are demographics going to change? I think what's most important if you're looking to buy real estate is that you have confidence that you're not catching as we like to say, the falling knife. Uh, that's uh, that's something I definitely don't want to do for example, with uh, good old House Hack So we are very cognizant of uh uh. we would rather if if the real estate cycle is is a nice little circle and you kind of fall down, we'd rather be a little past the bottom than a little ahead of the bottom.

Uh, so we'll see what happens obviously. I My expectation is we'll know more clearly where the market ends up settling once we get past Peak inventory era. Uh, and the reason I say that regarding Peak inventory era is because think about, uh, sort of how the the buyer mentality might work. So if we go to, uh, just throw up a little notepad here and let's go with oh I don't know Uh, let's do uh.

let's say there are 100 buyers. it's December it's December 2022 and you've got yourself a hundred buyers for real estate and there are I don't know 100 listings right now. You've got a balanced Market but it's December 31st and all the overpriced stuff expires and I'm just gonna on purpose here be extreme. And so now all of a sudden you're at January of 2023 and interest rates are maybe down a tiny little bit a smidgen.