Hey, everyone, welcome back to episode number 78 of the Meet Kevin report and today we have the Futures down about one-third to about uh, two-thirds of a percent. uh, or two-fourths of a percent. Actually, if we look at the NASDAQ s p down about half percent Dows down about a third just to start the day here. Treasury is sticking around that 3.36 level here.

oil kind of flat. Uh, you've even got gold down today. So a little bit of a bearish day. uh to start at least possibly because everybody is nervous for CPI on Wednesday which if you haven't yet watched my fed Catalyst watch before Wednesday video I encourage you to watch that so you can call it up with all the expectations this week for earnings and also very important uh reports.

so we'll go through um, so you'll be able to go through all of those very important uh. Now what we're going to start with is we're going to talk about this new EPA rule that's likely to be uh announced very soon. Uh, there's one person here saying no sound but I think the sound should be fine so they might be unmute. All right, Perfect.

So let's uh, let's jump right into the New York Times piece here on with Biden Administration might be up to and uh yeah, take it from there. So thank you so much as always for being here and let's get started. Sure and we will press this button very soon. There we go.

Okay here we go. Well, the Biden Administration is now proposing or about to propose some pretty large new electric vehicle rules. Easiest thing to do here is pop on over to the New York Times and see exactly what this sort of pre-leak is regarding electric vehicles. Take a look at just the headline here: EPA Set to propose rules meant to drive up electric vehicle sales tenfold in what would be the nation's most ambitious climate regulation.

The Proposal is designed to ensure that electric cars make up the majority of new auto sales by 2032. Right now, electric vehicle sales are closer to maybe five six percent of total sales. Now keep in mind this is really important to remember when we want to see if this is related to this, but the Inflation Reduction Act gave us somewhere around. Let's call it 389 billion dollars for energy related uh items.

However, Goldman Sachs believes that that number is actually going to be a lot closer or to about 1.2 trillion dollars via the treasury. Department Simply interpreting rules, uh, more. Loosely in favor of the democratic agenda. So let's see how much of uh, this, uh, this New York Times piece relates.

Let's see: Biden Administration is uh, planning some of the most stringent rules on auto pollution in the world to ensure that all electric cars note, not hybrids here make up as much as two-thirds of new passenger vehicles sold in 2032. A lot of companies, by the way, talking about banning electric vehicles or sorry Banning non-electric Vehicles by 2035. California is one of those New York I believe is another. Anyway, that would represent a Quantum Leap for the United States where just 5.8 percent of vehicles sold last year were all electric and would exceed Biden's earlier Ambitions to have all electric cars account for half of those Uh sold in the country by 2032.

That's because now he's trying to get up to two uh 67. So I'm curious to see how they're planning on setting this up. Take a look at this there. The administrator of the EPA is expected to announce the proposal limits on tailpipe Emissions on on Wednesday So in in other words, this would simply be some Uh administrative rule, not a rule that is passed by Congress but rather some form of administrative Rule and emissions and how green Vehicles need to be which essentially would drive people uh, solely into electric vehicles in order to make them compliant.

Uh, it was originally set for Detroit This meeting on Wednesday the requirements would ensure that electric vehicles represent between 54 and 60 percent of all new cars sold by 2030, rising to 64 to 67 by 32.. So, people familiar with the matter Rapidly speeding up the adoption of electric vehicles would require other significant Uh changes, including millions of new electric vehicle charging stations, an overhaul of electric grids uh and Uh, and the minerals and supplies for Batteries Now The neat thing is the Inflation Reduction Act does exactly this. These items that that are listed here are essentially enabled by the Inflation Reduction Act. And so to some degree, you have the political game that's being set up.

I Mean think about the political game. The political game is simple. Convince a bipartisan measure to pass on green energy. That's sort of step one.

We got that right. That's the Inflation Reduction act. Uh, then uh, it? Well, I should say ensure that act includes leeway for the current Administration which in this case obviously is the Biden Administration and Biden's EPA and then allow that leeway to stretch the existing budget via the IRA which is what Goldman says, which Goldman predicts will be a 3X And so in my opinion, uh, what's fascinating about these rules is what you really have is you have a game of almost what looks like 4D chess in preview, but in hindsight totally makes sense. So then step four: have your uh, democratically controlled or I should say democrat-controlled Democrat controlled uh departments uh uh, create strict rule sets that require more inflation reduction reduction act Leeway, right? Because basically, if the EPA comes out and says hey, hey, we we need, we need to get to 67 by 2032.

you know what that means. So the example right? Pass a small Bill a small bill with leeway, then uh, Implement Strict rules. Now Uh Treasury has to go super strong on leeway side to enable those strict rules. So in other words, the money's already there.

You don't even have to go to Congress to create more money for what they need here, which are again, significant changes to millions of new electric vehicle charging stations. Think about what the Biden Administration has already done. Hey, Elon Musk Can we partner with you and can you build us thousands of more electric vehicle charging stations and we'll pay you billions of dollars to do that? Of course the answer is going to be yes, an overhaul of lecture grids and that's fantastic. Potentially for Mega packs as well for Tesla right? Which we just heard about that New Shanghai expansion for Mega packs that could create as many as 10 000 megapacks and then of course, helping with battery materials.

The proposed regulation would go through public comment. it could be altered by the government before becoming final to make sure it meets legal challenges. It could become an issue in the 2024 campaign as a future Administration could undo or weaken it. Notice here: they don't talk about Congress because Congress has already been authorized or the purse strings have already been authorized via right here.

The new regulations come on the heels of the 2022 Inflation Reduction Act which has helped Stoke demand for electric vehicles by providing the tax incentives we've seen as well as incentives for battery manufacturing and critical processing. And Mining And there's been nothing that's been made more of in America right now than factories. Uh, in 2022.? that's something that's pretty incredible to think about. Uh, we um, is reading a report on this yesterday and it's a worthwhile uh, argument or a point to mention that in Uh, in 2022, uh, we saw about a 120 billion dollars.

Actually, it was closer to 80 at 108. it was 108.. let me see if I can pull up my note: Uh, 108 million or colleague Kevin 108 billion dollars? Oh, I Got it here: 108 billion dollars of construction related spending in manufacturing. Uh, that contrasts to the next highest level compares to the next highest level in 2015, where we spent about 83 billion dollars.

Which means we spent somewhere around 25 billion dollars more on manufacturing. This was, according to the Wall Street Journal Uh, we spent more money on manufacturing than we did on on building schools Health Care Centers and Office Buildings Much of that growth was focused on EV Tac batteries, semiconductors. That's because that's where the stimulus checks are going. Only 10 percent of the private Workforce right now is actually in manufacturing.

Uh, However, Uh, the the sector still is behind in on a level of employment by about 800 000 jobs. So if you're looking for more growth, uh, the the growth is likely to be manufacturing. look. uh, particularly here at this chart on screen.

Now, construction spending related to manufacturing I mean we've blown out of the water the the previous Uh sectors here. Now, what's also pretty incredible though, is how much these factories are automating these new, modern Uh factories. Stanley Black and Decker gave us an example and they said that their automated lines used to have between 50 to 75 people per line to make Power Tools Today, the factories only require about 10 to 12 people, and in the future Stanley Black and Decker expects that only two to three people will be required per line on their manufacturing plan. I mean that that's a decline of 95 of the amount of Labor that's required in manufacturing, which is pretty remarkable to think about.

But what it really suggests is that you probably don't want to be investing in labor not that you directly would invest in labor anyway, but what you probably want to do with this expansion of factories oops, is do whatever you can to find out. How can we make sure that you are exposed to companies that are building these manufacturing plants and are getting these massive stimulus checks? Uh, and uh. let's see, we talked about this. Let's look at the rest of the Uh article here from: The New York Times Transportation is the largest source of greenhouse gases.

Uh, okay, why are we having some interesting my problems again here? Anyway, the proposed auto emissions rule is even more demanding than the target layout by Mr Biden in 2021. speaking on the south lawn that was back when he was talking up the Ford F-150 fine. Whatever, Climate change experts say that the transition to zero emission vehicles must move faster to avoid a planetary disaster, so they could just go into why. Basically proposed rule would not mandate electric vehicles make up a certain percentage of sales.

Instead, it would require automakers to make sure that a total number of vehicles that they sell each year did not exceed a certain total emission vehicle limit. That's interesting, that's a one way to do it. It basically puts the onus on the companies, not on the consumer, so it makes it a little easier for consumers. So in other words, consumers could still buy an Ice car.

But uh, there will start being some restrictions on I Would imagine a way a manufacturer could do that is they could just raise prices on the Ice cars to limit some of the Uh the number of sales there, while maximizing their profit and then lowering the costs on electric vehicles. Which that's basically what this bill does is it drives up the cost of Ice vehicles and down the cost of electric vehicles. Even manufacturers that chafe against the regulations would prefer to deal with one set of rules rather than meet specific rules from a bunch of different states like Cal. Here's that California line about banning in by 2035..

One of the biggest Uh items needed for electric vehicles is Charging Stations 2021. Infrastructure Law provided 7.5 billion dollars to build a new network of about 500 000 charging stations. Yeah, so uh, pretty pretty incredible. Uh, that, uh that basically these massive stimulus tracks are coming to the electric vehicle World Obviously I think that's a boon to a company like Tesla but it'll also be a boon to companies like GM GM has a fantastic uh ultium partnership with LG to make batteries.

They're building a pretty large Uh plants actually multiple sister plants in Ohio and Tennessee What's crazy is how much money? Just to give you an example of how much money is going into some of these plans. Uh, if we just Google just for Giggles Uh, the the cost to build a factory. Usually you look at a cost to build a factory of anywhere between five to Fifteen billion dollars. Let's just say for Giggles we'll take the average, we'll take the number of about 10 billion dollars.

Well, GM and the LG partnership just got a Federal Loan which is super super sweetheart deal of 2.5 billion dollars. so about 25 of it the rest they can get commercially and then they're getting about 666 million dollars in state grants and bargain electricity rates to actually operate those plans. Uh, and so what's remarkable is you're seeing governments at every level and the monopolies at every level. Whether it's the electrical departments, the cities, the counties, the states, the federal government, everybody's throwing money at these these factories.

And it's not just going to be a company like Tassel that succeeds. It's probably going to be the chips manufacturers. It's probably going to be uh, your your chip related companies. Uh, like the chip equipment manufacturers.

Uh, the the companies that actually take in those chips and use them like Apple for example, by taking the chips and turning them into a consumer product. Uh, But it shows you how much money is just flowing in. It is quite remarkable and and how they're pulling it off. Now, there has been some chips weakness over the last couple weeks in terms of a trade that's worth paying attention to.

For example, if we look at Goldman Sachs on chips, this is a piece from Goldman Sachs on chips. Let's make sure we go ahead and have this screen up here that reminds you about the expiring coupon code in two days on CPI day. prices will be going up for those programs on building your wealth. Link down below.

you get lifetime access and you can now buy now, pay later to get access to them Lifetime access to them. You pay as little as 30 bucks a month which is pretty cool and you instantly get access to those course member live streams. So take a look at this hedge funds net sold tech stocks for the third consecutive week. And if you look at just semis specifically, this is a long uh, they call it an LS chart long short race ratio chart and basically the higher the level, the more short uh or sorry, rather, the more long.

In this example, the more long hedge funds are and the lower the level, the more short they are. And what you can see is hedge funds went into 2023 extremely bearish and uh, they. they came out a little bullish there around February but have already started selling off again. However, look at how uncrowded the semiconductor space is right now, which happens to be where the majority of the stimulus checks are rolling and look how uncrowded it is.

The long short ratio is basically even. we're basically at a one-to-one ratio here. there. In other words, for every dollar that somebody is long right now, somebody's sure on semiconductors now.

look I Understand, there's been some news that hasn't been the greatest uh regarding Uh semiconductors and and PC shipments and you know what's going on with Apple For example, Apple personal computer shipments declined by 40.5 percent in the first quarter. Uh, this is per Bloomberg quote marking a tough stock the start to the year for PC makers still grappling with a glut of unsold inventory. The Uh that compares to Dell which looks like it's down about 30 HP down about 28 Overall: Market down about 30 percent Aces down about 33 Lenovo down about 33 as well. You've got Uh, let's see here: Apple shares down about point eight percent and pre-market what this article was written.

Uh, even with heavy discounting channels and PC makers can expect elevated inventory to persist into the middle of the year and potentially into the third quarter. The Silver Lining is that cooling demand is giving manufacturers time to make changes as factories begin to explore production options outside of China That is true. You are starting to get uh, sort of this. What? I call re-globalization A lot of people during the uh, you know, post uh covet era were saying oh, here we go, we're going to get deglobalization and we're getting massive inflation because of that I don't think so I think we get re-globalization We actually get even more efficient Supply chains than we've ever had before.

Tsmc also this morning announced that they missed sales estimates for the second consecutive quarter and a sign of continued weakness and Global Electronics demand First quarter revenue for the world's biggest contract manufacturer of chips. with 16.7 billion, that's a sharp slowdown in March sales were down 15 last month relative to the prior year. Companies listed shares down about 1.1 percent in pre-market Global PC Shipments crashed 29 in the first quarter led by Apple's Mac lineup Apple's Mac lineup uh, the one that is actually leading the decline now Apple's uh, iPhone iPad and wearable segments have been doing better uh than the the Mac line, but something to pay attention to, especially if you're an Apple investor. Now what? I think uh about this and we could just sort of just quickly look at the market too.

Let's see how they've moved Tsmc pre-market right now down about 1.54 AAPL pre-market right now down about 1.3 So what I would do is I would pay attention to see how the stock these stocks move today on these basically pre-announced sales weaknesses because I think what these companies are doing is they're providing you the bad news now and then That way when earnings come around, the expectation is already set and it's actually a lot easier to beat on your earnings report by pre-releasing the bad news. and the pre-release bad news is only moving these stocks about one to one and a half percent. It's probably because so many people are already short these chip and tech companies and so, uh, I actually find that uh, a a big element of I I see a lot of optimism in that I Love that. Uh, there's there's so much of a short play in uh in the chip sector right now because when we combine that with what we're expecting to see with electric vehicles which require a lot of chips, uh, superchargers, chips, uh, pretty much anything Tech related.

Chips Chips Chips Chips chips uh. In and this is where the stimulus money is going not only via directly this chip sack, but also the inflation reduction act uh, and the manufacturing economies of scale that we're expecting to see here in America Yeah, I think in 10 years from now, we'll look back and go. How could we have not bought chips and electric vehicle stocks? It's going to be remarkable. So that's my take.

If you want more of my take, make sure you join those courses on building your wealth linked down below. All right. Next topic. Oh yes, this is a good one.

So the next thing that we are going to talk about is we're going to talk about the debt ceiling. Yes, All right. I've got shilling, All right. Max says Biden's running for for President again in 2024.

He is all right. So all right here we go. This is fascinating. Okay, now we've got to talk about the debt ceiling.

And boy, there is a lot of fear that the United States is going to default on its obligations. specifically treasuries. The way that works is when we stop paying our bills and we start defaulting on the debts that we owe because our debt ceiling has been broached and we can no longer play accounting tricks to extend how long we have until that debt ceiling expires. And then we say we start calling up people with treasury bonds and say, hey, sorry, you know we can't pay you even though that's not directly how treasury bonds work once.

Mostly because they're paid at, um, uh, you receive them at a discounted valuation. That's why treasuries work just to make a simple example, though, the argument is when the United States starts defaulting on its debt, the stock market could crash over 40 percent by some estimates, and the bond market could see a massive sell-off with a massive increase in interest rates. Massive increase in interest rates could drive our economy into a substantial deeper recession, if not even depression, because we could end up being in a situation where hey, by July or or September somewhere in that range when we hit the debt ceiling, maybe inflation will be conquered. But if we then refuse to pass the debt ceiling increase uh, and negotiate some kind of debt ceiling limit increase, then all of a sudden we default on our obligations.

We have the worst financial crisis that we've ever experienced in the history of America That is what some economists are calling for. Now, if we look at what the Federal Reserve tells us about the history of the debt ceiling, we can get a little bit more insight. And of course, we're going to throw up that Banner again to remind you that we're just two days away from the price going up for those programs on building your wealth. whether it's stocks and psychology of money zero to millionaire real estate investing, do-it-yourself Property Management Rental Renovations Becoming a real estate agent, building your wealth with real estate, selling real estate making YouTube videos and YouTube YouTube content the way I Do you learn all about that via the links down below for those programs that building a wealth coupon expiring in two days and price is guaranteed to go up.

So the United States has once again reached its debt ceiling in the first month of 2023, a limit that Congress set at 31.4 trillion in 2021. If no action is taken. Estimates are that the United States could face another debt sailing crisis between the X state, which is expected to be somewhere between July 1st and September 30th now since 1960, 1960. So think about that.

That is 73 years ago Congress has acted 78 times to deal with the debt ceiling. Not once has America defaulted at all, not once. However, people say this time is different and now with Kevin McCarthy in control of the Republican-led house, we could actually end up defaulting on our obligations. Measuring the debt burden.

arguably. Okay, Now this is where we get interesting about debt. This is where we start talking a little bit more granularly about debt, and then we'll talk about what we think is likely to happen. So first, Allah people will make what I think is Uh is is the very simplistic argument of simply saying oh my gosh, we have 31 trillion dollars of debt.

This is ridiculous. And don't get me wrong, the fiscal path that we're on right now is unsustainable. We need to fix Uh, the path that we're on. We're spending too much money for how relatively inefficient we are compared to how much money we're spending.

So I Want to be clear? we have to either become a lot more productive or we have to spend less money. It's very simple, but what I do think is very important is that when we talk about the national Debt, we talk about the national debt relative to how much our economy is growing. And that's actually what the St Louis Fed says here that look the national debt. The best way to measure it in their mind is to measure the national debt as a percentage of GDP Something that you can do is you can also measure uh, the national debt as a percentage of the interest payments on the national debt.

Uh, and the way the reason you might want to do that is because it could give you a little bit of look into even more recent history to show. okay, hey, uh, as a percentage of GDP Maybe maybe we're not actually spending that much money even as our debt is going up. So if you look at the St Louis uh, Federal Reserve and you look at the Federal outlays chart of Interest as a percentage of gross Domestic product, what you're going to find is, uh, the screen that we're going to pull up here. Let's go grab this window St Louis Fed.

There we go. Take a look at this particular chart here. This chart will show you that back in the 90s, we were spending somewhere between 2 to 3.1 2.8 to 3.1 percent of our GDP on the national debt. Right now, that number is going up, but we're spending around 1.86 so we could still roughly double and be roughly at where we were at spending levels in about 1991.

Now that's remarkable because it somewhat removes some of that pain that people have when it comes to looking at that nominal debt number. but there are other ways to look at the debt as well. So what I like to do is I wrote some notes Here I Go and I say that purely nominal figures don't actually mean anything and debt to GDP helps. But what I like is the interest payments as a percentage of GDP I call that our burden I Wrote this down right and that's what I just showed us now as our GDP grows, maybe through an AI boom, an artificial intelligence boom I write that that is optimistic.

today's debt could actually become irrelevant and so I make an example here. Imagine this: Imagine that our debt today is uh, 31 trillion dollars and our economy is 23 trillion dollars in size. In other words, it takes us about 1.48 years of productivity to pay off our debt if we were to throw everything at paying off our debt, right? So think about that very simply. for a moment.

Let's say you owe Thirty one thousand dollars and you make twenty Four thousand dollars. Let's assume you have no expenses and you just throw everything and paying off your debt including no taxes. It would take you about 1.48 years to pay that off Right now. what would happen if for example, these levels tripled uh so or one of the levels the triple and the other one doubled? So for example, let's say your productivity tripled and now all of a sudden you had income of instead of 23 000, you had income of sixty Nine thousand dollars and your debt doubled.

Well, now all of a sudden, you have reduced your debt to GDP by about 36.5 percent because you actually owe less than you're creating in that year. So there is a way of Escaping The Debt that we have today by becoming substantially more productive. Let's say, over the next 10 years, just to be extreme, we're able to 10x our economy and our economy goes from about 23 trillion dollars to 230 trillion dollars, and our debt four X's from 31 to 124.. Well, all of a sudden we'd look and we go.

Man, our debt is less than half our GDP. We're killing it. even though the debt foreign Next, it becomes substantially less relevant over time. So really, what you have to bet on to not be worried about the debt is in my opinion, substantial growth in the economy.

Now for the math whizzes who like math I Wrote a little chart over here to make that a little simple and break that down just so you could see how that might work your debt on a percentage basis. Grows by five percent. Uh, but your economy, or rather, yeah, your debt grows at five percent. which is kind of almost like what's happening now.

your debt grows at five percent, but your economy is growing at two and a half percent. You're growing your debt twice the speed of GDP. That's really bad, right? You don't want that. You want to be in a situation like this where your debt is growing at, let's say, two and a half percent.

So it's still growing. The number is still big, but oopsies, your GDP is growing maybe 10. In this case, your debt is growing at one-fourth the speed of GDP This is what you want. So I Wrote this note here when people say oh my God the debt is so high it's really a bad and unintellectual argument.

What we really have to do is say, how is our debt relative to the interest payments we're making, how is our debt relative to GDP and how is our debt growth relative to our economic growth? I Think it's our schools that have failed to teach that obviously I mean I Ran for Governor on the idea of of suggesting we need financial education in schools. It seems like it'd be very simple to do, but nobody wants to do, it. But anyway, anyone mentioning trillions of debt, right? You hear this all the time. You see this on Twitter all the time headlines.

She actually wrote I deleted, Twitter and Tick Tock off most of my devices because I found that 99 of the algorithm is emotion based and you know you kind of get that on like YouTube titles as well. but I think logic is within the actual videos. Hopefully the ones that you're watching have logic within. So I make this argument that and we're gonna go back to what the St Louis Fred says over here.

Uh, I Make this argument that really, when people argue. oh my gosh, the debt is so high, we have 31 trillions of dollars. 31 trillion in debt. Our country is going to collapse.

It's a ridiculous argument because as long as our economy keeps growing, we'll be totally fine. especially if we can grow at a faster rate than we're growing our debt. and we think about that for a moment it. What I'm really saying is if America stops innovating America dies I Don't believe that America was going to stop innovating I think America is the one place in the world that will continue to be the greatest innovator in the world.

I Think it's more likely that China turns into a Japan than the United States turns into a Japan and Japan I mean there are plenty of reports out now showing that Chinese women are less interested in having children. After the one child policy was removed, China's population is shrinking, it's declining, their growth is faltering, China might not be in the same boat uh, where where people hope that they will be uh in the future. and I think that's why China is now freaking out about oh, we need to be a little bit more friendly to the capitalists because they realize if they don't innovate, they're going to die and I believe that's true of America as well. except for America's purposes, I have a lot of enthusiasm for what artificial intelligence and productive productivity increases in manufacturing are going to do.

Remember the Wall Street Journal article we've talked about previously where the Wall Street Journal tells us that Stanley Black and Decker went from having 50 to 75 people on a manufacturing line in China to an in a new modern facility 10 to 12 people which is somewhere around one-fifth to even less of the amount of people on the factory line. And now you're looking at potentially the next phase of factories having only two to three people per line. Those people are then freed up to go make money somewhere else. So think about it, that actually doesn't hurt GDP because you're still producing the same amount of power tools.

except you've now freed up 70 people to go do other jobs and now you've actually doubled your potential output. So GDP growth is a phenomenal way of minimizing the burdens of our debt. We just have to make sure we continue to invest in in growing this economy. Uh, rather than shrinking it.

So that's that's very, very important. So let's keep going with this this Fed piece here and we'll keep that banner up on uh, the course member coupon code. All right. right before the grade recession U.S debt to GDP was hovering around 60 following the recession, that ratio Rose to around 100 percent.

Then, in response to the Covid-19 pandemic, that debt to GDP ratio Rose to 120 percent and the St Louis Fed talks about a few ways we can reduce that. But first, what I want to talk about is at the bottom. Here, the U.S has experienced this before. In fact, they we hit 100 debt to GDP after World War II.

This means our debt was basically the same size as the amount uh, or as the the size of our economy following World War II The ratio reached 97.2 percent in 1945 as a result of War financing. Moreover, in the three decades that followed, U.S debt to GDP ratio fell significantly and by 1974, it went from 97.2 percent to 16.9 percent. Now they break down why that occurred and I translated it over here To save you the time, the drop from nearly 100 GDP to 16 GDP was fueled by a good budget that is actually having a competent government that's spent less than it made. 34.7 percent of that of of of that decline was because of our budget surplus.

I Do not see that happening I Just don't see us going into a budget surplus, but it could happen and I'll show you how it could happen. GDP Growth represented about 31.8 percent, which that's great. And then of course you can inflate away debt as well by making it less valuable because as inflation happens, your debt becomes less meaningful over time. To make that very simple I Want you to think about this: if you have a home loan for a hundred thousand dollars on a home and in 30 years and and today you're making let's say fifty thousand dollars a year.

So you're making fifty thousand dollars a year and you have a home loan of a hundred thousand dollars. It would take you about two years of income assuming you had no expenses to pay that home loan off, right? Well let's say now in 20 years you haven't paid a dime off on that one hundred thousand dollar home loan because maybe you didn't interest only home loan. But instead of making fifty thousand dollars, you're making five hundred thousand dollars. Well, now, with just one fifth of your annual income, you could pay that debt away.

That would be an example of inflating away your debt assuming that inflation led to those wage increases. Of course, you could also increase your wages by being more productive member of society and providing more value which you could have. You can also have both, and that's exactly what it decreased our Uh, our relative debt from the post-war era to Uh to the 70s. So again, 34 Surplus 31.8 GDP growth and the fifteen point eight percent inflation now.

I Wrote that if I I really think we're going to have a GDP boom once we get through this recessionary environment specifically driven by advances in manufacturing chips electric vehicles. I Sound like a broken record by saying that, but basically my pricing power stocks. If you want to know what those stocks are that I Really like? just go to Meet Kevin.com You'll see my courses, my affiliate links, and you also see my ETF I am a financial advisor. This video isn't personalized Financial advice, but check that all out at Meet Kevin.com But anyway, I Think it's entirely possible and I do want to talk about this a little bit as well over here: reducing the net I Think it's entirely possible that we could have a massive increase in GDP and a massive increase in GDP will also massively increase revenues for the government.

And so it there is this possibility that you could go back to a surplus now. I Think our government will end up just spending that money via you know, stimulus checks for businesses that they're trying to prop up like the energy space. but I Do think that explosive GDP growth could be a it once we get through this recession. So I'm really not personally terribly worried about the level of our debt.

and I'll give you what I think is going to happen with this debt ceiling crisis in a moment. But the St Louis Fed makes it very clear here in terms of three things that could actually help us essentially eliminate the debt. One is fiscal austerity. This is very unpopular.

Think about like the lack of trash collection in Greece during the 2010's Euro crisis. So fiscal austerity, cutting on spending schools, Whatever. terrible people hate that people get voted out of office for cutting spending. Then you have inflation.

and then of course you have economic growth, which hopefully via the AI uh, Revolution and this Tech Revolution we're going through that. I Think we're going to see substantially compound. over the next 10 years, we're going to see GDP growth just absolutely explode and our debt today will be relatively Irrelevant in the future. So where does this leave us for the debt ceiling crisis this year? Well, obviously if we default in our debt, it would be devastating.

I Personally believe that it's 99 likely and I could be very wrong about it. but I think it's nearly certain Congress will pass a debt ceiling limit increase. Even after they do, they're going to be people pounding the fists, punching the air, and writing and angry tweets about how much dead America has. But anybody who's making the argument that America has too much debt and therefore it's some massive problem is really arguing that America will not innovate in the more in the future.

That is the argument. Now it's very important to also consider that America is very different from a direct household. For example, somebody here is making a reference Jim Here is making a reference to a margin loan. This is not a margin loan.

This is fixed debt. It's not like somebody calls up America and says all of your debt is due immediately. That's not how it works. The debt America holds is a a a massive collection of of three-month six-month one year, two year, three year, five year, ten year, 20 year, 30 year, and more different various forms of Treasury bonds and different forms of other debts and obligate Asians the Social Security debts or otherwise.

all of these debts aren't coming due at any point. There is no Margin Call There's no movement in the marketplace that all of a sudden makes all of this debt come due. It doesn't matter, what matters is, can we afford the interest rate payment and in the 90s, we afforded twice the interest rate payment we could afford. Even more than that.

Now again, I'm not saying that's going to be good for the US dollar. I Think in time as we continue to inflate away our currency which we will do remember, every currency that has ever existed has disappeared. Every currency has failed, and the likelihood is that every currency will fail in the future. But personally, the victim of our currency failing is the US dollar, not our assets.

Our stocks and dollars, or our stocks and real estate are insulated from that. Instead, it's it's anything where you're holding actual dollars that is potentially at risk. So I'm not that big of a of a bear when it comes to simply looking at the debt we have. because I think again, the United States has plenty of capacity to make its debt payments, even if we needed to turn the money printer on which we likely will.

And uh, even if we do turn the money printer wrong again and people argue, well, this can't last forever. I Agree with that. I Don't think it can last forever and it won't last forever. But I Don't think this is a problem in this cycle.

It probably won't be a cycle in 20 years or probably won't be a problem in 20 years. It'll probably be more of a problem in 50 to 100 or 200 years. We don't know when, maybe we never have to worry about it's not saying we shouldn't worry about it, but I think what we should focus on now is being as productive as possible not only as a country, but also as individuals. And that's why I have all those beautiful programs I'm building your wealth being the most productive member of society.

You can link down below: whether it's that's zero to million, a real estate group, these stocks and site group, or the Elite Hustlers group Really popular right now A Lot of people are bundling those three together. They learn all my perspectives on Insurance Liability Llc's building a business Uh, gaining income, building your wealth High margin businesses. Low margin businesses. Where to invest your time and your money.

Uh, where to build your wealth. So take a look at all of those linked down below. Okay, so that is the dead ceiling. Now we must talk about what else must we talk about? Let's see here.

Oh yes. Oh, the M2 piece would be really interesting. We can talk about that. we talked ships.

Let's take a very quick look at the Futures markets. Still pretty Red Barn's pretty flat oiled down one percent now. natural gas has been so volatile. Okay, next up, let's take a look at the M2 money supply.

All right, standby for this really incredible chart. Okay, there's a thesis by the Austrian School of economists that suggests inflation is directly related to the money supply. That is how much is the money supply going up or down and that will be your best predictor for determining how much inflation we'll be facing. Now What I think is remarkable about that is so far they've probably been right in fact, and well, it's worth also mentioning.

the Federal Reserve seems to have been relatively blind to this, which is remarkable. but uh, the Federal Reserve follows more of a Keynesian School of Economics which suggests that hey, in bad times, we should generally stimulate and in good times, we should generally Implement some more cost cutting, right? But also the Keynesian theory is that, uh, the formulas regarding inflation are more focused on actual data we receive rather than on solely the money supply. And this is why some folks say the Federal Reserve was caught flat-footed when they were still printing money in March of 2022 and we had six percent inflation, which led to the rapid inflation we saw for the rest of the year. But take a look at this particular chart on screen now right next to that coupon code expiring in two days and then price is going up for those programs on building your wealth where you get that lifetime price guarantee.

So take a look at those LinkedIn below. But what do we have over here? Look at this as uh, the Academy Securities says is an almost embarrassing chart. Embarrassingly bad chart. They actually say so This chart shows you Bitcoin in Black it shows you the tech in this index, the NASDAQ 100 Qqqm ticker symbol uh, and it shows you the Federal Reserve's balance sheet and what it beautifully shows you here is in times of the expanding Federal Reserve balance sheet, you tend to see ignore Bitcoin's volatility over here.

All this black, you tend to see what. Well, the NASDAQ goes straight up with the expanding balance sheet as soon as we hit an inflection point in the Federal Reserve's balance sheet. What happens to now Bitcoin a little bit more correlated to the NASDAQ in the NASDAQ. Oh, look, it goes down.

And oh, look, the Federal Reserve's balance sheet picked up a little bit over here at the beginning of the year. Oh, look what happened over here to stocks and Bitcoin at the beginning of the year? Oh look, they picked up a little bit so the money supply could be a very, very good tell for what's to happen with assets, what's to happen with inflation? And a lot of folks say that as the Federal Reserve continues to push us into a quantity tightening cycle, they will actually end up breaking the economy, leading to an earnings recession, forcing them to essentially cut rates. uh, the two to the tune of about five percent. The Bond market is pricing in about a five percent rate cut right now.

Uh, in fact, there's a piece here by Morgan Stanley Talking about, uh, the Bond market specifically. And they actually show us here the prior recessions. Look at that. 90 to 91, 2001 and 2007 to 2009.

What did we get? Cumulative easing during the prior three recessions? Oh, look at that. five percent Five and a quarter, and five point five percent which is basically the same thing that you're seeing being priced in today. The yield curve is so inverted today that the yield curve is predicting. We are expecting 500 basis points of cuts from the Federal Reserve soon and probably turn the money printer on again, which would be fantastic for risk assets like the tech indices and Bitcoin.

But what's interesting here from academies as they say the following: I'm not sure if we're witnessing a Pavlonian response here. basically algorithms responding to a trend or the policy that is in place. uh is helping risky assets. Like is there a correlation here or not? and uh, the chart certainly suggests there is, and in their piece, they.

They go on to talk about the banking crisis and they talk a little bit about oil economic data and the recession. Well, I don't so specifically want to go deep into that because it's not so terribly detailed. but it said I'd like to talk about this. Uh, just from the perspective of of us as individual investors.

What does this mean for us? Well, what this means is if the bond market is starting to project the substantial rate Cuts Is it possible that the Federal Reserve will turn the money printer on again and stocks and Bitcoin will potentially start predicting the Federal Reserves a U-turn and therefore start pricing it in. Some folks think that's exactly what's happening. For example, Bloomberg ran a piece on the front page yesterday that talked about the bond market overplaying the severity of the recession. They suggest that, uh, really, credit which is a measure of Blue Chip spreads at high yields in English.

If you can get four and a half percent on an Apple Bond and four percent on a treasury bond that spread as 50 basis points in a risky environment, you might see that yield for a apple Bond go to five percent and the treasury say a four percent. Now the spread has gone up to one percent. That's a sign of risk of concern, but you haven't seen spreads move much at all. You haven't seen the stock market so much signs of concern.

Maybe the banking crisis is overplayed, Maybe the recession that's supposed to be coming isn't actually that terrible. And once the FED realizes it's conquered inflation, the FED starts cutting. That's the thesis right now. Uh, that that people are arguing on one side.

That's the bullish side. The bearish side is saying the FED doesn't even realize how much they've already over tightened, how much damage they're causing. And when they continue on this path of quantitative tightening, you're going to be in a world of hurt. And this I actually agree with to some extent this idea that if we continue this quantitative tightening pass up here, we continue.

and let's draw a little larger. There we go. If we continue where that orange line is and we continue this Fed balance sheet runoff, well, the chart would suggest that NASDAQ and Bitcoin should continue down. But given that our total debt as we've talked about on the channel is is a fraction of what it was in terms of interest payments compared to the 90s, it makes sense that we could actually potentially stand to continue paying the debt that we have.

And really, if we could just grow our economy, maybe this debt isn't necessarily a terrible thing. Maybe the Federal Reserve doesn't need to run off its balance sheet. Maybe you could stay elevated. That's an argument that some of the Bulls are making the Bears say hell no.

We've got to get back to where we were before the pandemic. but before the pandemic would be a little bit of a tough pill to swallow. We were sitting around the time of the pandemic at a Fed balance sheet just above four trillion dollars. that lower green line and that four trillion dollars has now turned into 8.63 to, uh, trillion dollars.

So you can see this massive increase here from the green line to the red line, that is your expansion of the Federal Reserve's balance sheet and and similarly, the United States total debt. So if you are a bull, let's try to simplify this. If you are a bull, you are making the argument that the Federal Reserve does not need to lower their balance sheet and that what the stock and crypto markets are pricing in right now is the response to basically a a pause in tightening and the Fat is likely to cut rates and pause their tightening leading to rallies and risk assets as the FED tries to prevent a recession or limit the blow over recession and inflation is conquered. If you're a bear, you look at this and say inflation is not conquered.

The only way inflation goes down is if we continue to contract the money supply. That's again, the Austrian thesis. We continue to uh to restrict or or contract the science of the money supply that continues to crimp the economy as we vacuum money out of the economy. people spend less money, the earnings recession is worse than expected, and you end up in a pretty dark recession until the FED decides to U-turn of course.

then you have people like Peter Schiff who say the FED shouldn't U-turn The FED should let the bankruptcies occur, let the failures occur, and let the cards fall where they may, let that great reset so to speak occur. and let's get through the pain we need to get through and start over. That is the to get back to sort of sound currency. The odds of that happening I think are relatively low.

I Think We're going to keep playing the Funny Money game for quite a while longer so we'll see. Uh, all right? So uh, that's that. Let's uh, let's see here what else we have I think that about covers what we've got today I Want Let's take a quick listening over on CNBC and just see if they have anything fun. Hold on a sec, we'll We'll listen together here for a few minutes and see what we got.

Mm-hmm Oh look what they're talking about. This is what we already talked about. How interesting. Okay, let's see here.

share is your union jobs. It's very hard to switch. It's very easy to make. There are very few parts in an EV versus the ice.

uh I this was very bad for Ford and I I Like Ford very much I Think this is my child trust but you don't want Port squeeze on both screen squeezed on ice and squeeze on EVS This is the whole Jonas Playbook right here. the the pain involved in in navigating away from that business candidly at times I've made a little support of Jonas but he's the one who's most friend I think he's the one most right and it's worrisome because I want Ford just to succeed. but you've got this. You'll have to cut for Monkey Hey, unless they say listener demand is extraordinary, but Wow I mean they have to.

They need prices higher in order to make the transition and they're not lower now last time, by the way, Tesla lowered and then the buyers came back Yes and then they raised them again. It's certainly not a I mean he's got the ability. Because of his unique uh system we have, he can rise. You know it's very hard for for dealership Network to do it.

Uh, he's a very smart guy and he may just be saying I don't like the drum beat of 600 000 Ford cars going out at the end that I don't like that progression and that's smart. It's not going to admit it. you won't even acknowledge before it has a car. That's right, he's busy on with the Twitter headquarters play.

Twitter is going to be immensely profitable and like you know, when it's a private company. Yes, when we come back, Wow, Yeah, sure we'll get Kramer's Mad Dash Count down to the opening bell a lot to get to. Still this morning as a busy week is on tap. Don't go anywhere.

Thank you 92. What's interesting is I just pulled up the trends for Tesla and I want you to see the trends for Tesla So let me share the screen here. Keep in mind I do this live stream with all these banners and everything that I can throw up using a stream yard. so uh, that's paid promo.

but if you wanted to learn more about stream yard you can go to Metcaven.com stream yard or jump on over to stream yard. uh through my website at Meet Kevin.com supports the Channel All right, take a look at this If I Present this particular screen here. let's do. These are search trends for the Model 3 over the last five years.

and what's remarkable about this is: you actually see a an increase. A substantial increase in Model 3 search: Trends relative to the end of last year. It seems like in the six months the second half of 2022, there's a lot of pain for model threes here. Let's try comparing that little Y search trends.

Let's actually just remove Model Three. Okay, here's Model Y. We had a big surge there in January on the model Y. You have a relative strength of about 25 today, but look at that in that second half of 2022, your search Trends were actually lower than they are today.

Search trends for Tesla A Tesla cars or higher now. Uh, then then they were in the last six months of 2022. I Find that very interesting. What about Tesla Solar? Ah, Tesla Solar.

You had to drop off here towards the end of the year. That's surprising. that's usually around tax credit time. A nice surgery at the beginning of the year, but definitely lower on Tesla Solar.

So Tesla car is up. What about full self-driving That's the FSD This is just been a slow Trend up. This makes sense and what if we do Tesla For somebody who isn't so familiar with Tesla full self driving even though that's what FSD stands for Yeah, similar kind of trend over here. That's interesting.

Um Okay So what about Ford Ford Mock? Is there an E in it? Yeah Ford Mustang Marquee Let's see, let's go to the past year since we've got a weird Spike at the announcement there. So over the last year you've actually been declining on search trends for the Ford Marquee What if I just type Maki like this same thing. Okay, what if I go last two years? Yeah, it's it's straight down for for the Maki Wait Did I do two years? No. I still did One year.

Hold on. there we go. Okay, Interesting. So yeah, we're lower than levels where we were in 21 uh, and certainly lower than where we were in 2022.

We're kind of at the pit of 2022 for the Maki so that's not that great. What's another popular electric vehicle? Uh, let's see here. let's see. Yeah, uh.

Joel We could talk about that in the course member live. but yes, they normally do. Ford Maki How about what's uh, let's see top EVS United States And let's just look at the search trends: Caribbean Rivian. Yeah, okay, let's go last year 12 months.

Yeah, Rivian trending down Nissan Leaf trending down lucid. pretty stable here on loose. So let's go to five years. Yeah, someone trending down to the Peloton.

That would be interesting just for Giggles even though that doesn't have to do with cars. Oh gosh, a BMW IX Well, that's pretty decent. that's IX. What about just I 3 I3 Kind of trending down slightly there? All right, let's try Ford Bronco for the last year.

Pretty stable. So again, this compares to the Teslas which are at a higher level than what they were in the last six months. and it looks like a similar level a little lower than the beginning of 2022.. Fascinating.

Let's go model Y on the one year chart. model Y and the one year chart Still higher than where we were with a nice surge there at the beginning of the year. I Ionic, Ionic, Ionic declining Trends in the last 12. if we go to five year, it looks like it had some virality over here.

someone been declining ID3 Go past here. Um, that's that's. at least got some kind of an uptrend over here. It's pretty good anyway.

So um, yeah, gives us a little bit of extra Insight I'm gonna head on over to the course member live stream now. let's do some analysis together so we'll see you there. Thanks so much Bye.