To the co-founder of Home Depot slamming and calling out Joe Biden and the Federal Reserve Let's go ahead and play this because it's pretty in-depth before. I Do quick reminder that you can now use Buy Now Pay Later to check out on the programs of Building Your wealth. Link down below briefly extended that coupon so you could use Buy Now Pay Later Services to build your wealth. Check out especially that's the order Millionaire Real Estate Investing course and stocks and Psychology and Money.

All right. Let's now get into this piece. Here we go: Democrat Senator Elizabeth Warren Went at it yesterday clashing on Capitol Hill Warren is slamming the Fed's inflation strategy, claiming that it will get people fired. watch I Would explain to people more broadly that that inflation is extremely high and it's hurting the working people of this country badly and we are taking the only measures we have to bring inflation down and two million people out of work is just.

it's just part of the cost and working people be better off if if we just walk away from our jobs and and inflation remains. Do you want to be right? Yeah, it's worth noting before we get to the response of the Home Depot co-founder that that is actually exactly what Drum Powell's argument is that yes, there will be pain going through this tightening process and you should prepare for it, but some job loss is better than a lot of job loss. It's basically the argument Jerome Powell is making now Elizabeth Warren They didn't show it all here. She made a fantastic historical comparison, suggesting that when the unemployment rate Rises one percent It generally goes on to raise another one percent.

So in other words, we're at about 3.4 3.5 unemployment right now, the FED is projecting that's going to rise to 4.5 percent, which actually means they're telegraphing. It's probably going to go up two percent to five and a half percent. Which means potentially as many as 3 million job losses. Yikes.

Let's listen to the response though from the co-founder of Home Depot because he has some Choice things to say. Let's go now to look at the economy. The Macro story is the co-founder of Home Depot Ken Langone is here Ken It's great to see you welcome back to the show! Hi Maria How are you? Thanks for having me I'm doing well and I hope you are too. I Want to get your take on the current business environment under the Biden Administration Ken You've got investments in a whole host of Industries and have a great vantage point to tell us what you're seeing on the macro.

Story How do you assess well? First of all, Maria I would classify the FED as a gang that can't shoot straight. This goes back more than 18 months when they were saying that inflation was transitory and smarter people than them namely Stan Drucken Miller and people like Stan were all saying the exact opposites, so they got a lot. They got started late on the fight against inflation and now frankly, they act like the gang that can't shoot straight because we should keep raising rates until we break it. Now it's going to be some pain.

Senator Warren She talks out of both sides of her mouth. What she doesn't realize is the people who pay the most for inflation are the lower income people. Inflation is the most regressive of all taxes ever. We don't like paying higher prices, but we can afford to pay higher prices.

Nothing changes in our life, but a family of four living from paycheck to Paycheck has to start asking the questions: do I go with meat or do I go with a substitute and on and on and on. Because these people are really being impacted, there's no simple way to snap the back of inflation. The FED needs to be more aggressive and needs to be determined to make it happen. Wow, my problem with the FED Overall, there's too many academics in the mix.

I Think if you had more business people involved or people with business backgrounds, I think you might see a different dialogue and different decisions. Yeah, for sure. Yeah for sure. Maria Yeah, we will raise rates a lot sooner.

a lot higher. To get a control of inflation, it's not a lot of control. Yeah. and I think Frankly, I don't know how you avert a serious financial crisis where we are right now.

I Don't have any idea how you do it well. and now it's more a more distinct possibility. Well, there's also this issue around wages and this tight employment market, right? I Mean what are you seeing in terms of jobs? because Jay Powell Yesterday called the labor Market quote extremely tight. Can this morning we get news that President Biden is proposing a 5.2 percent raise for federal employees in his budget.

So the budget's going to be out tomorrow and you know going into it. they're linking this story that he's going to propose a raise for federal employees the largest salary boost can in 43 years. So if you're raising wages right now, what does that do for the tight Market that we're already suffering under? I Mean, don't get me wrong, it's good that employees have seen their rate their wages go up, but it's a problem for businesses. Look at Home Depot Just recently saying they have to spend a billion dollars because of this tight labor market.

Yeah, and keep in mind the people getting wage increases right now. Uh, and by the way, let me know if this audio is any better. Uh, or worse. The people getting wage increases right now are generally the people working under about twenty dollars an hour which actually lowers your average wage since the average wage in America is about 32 dollars.

Uh, But yeah, wages have gone across up across the board. I Mean just yesterday? Uh, the Wall Street Journal was reporting on how much wages have gone up at Uh at construction jobs. Uh wages Rising substantially at construction jobs across the industry. massive demand for for construction.

Uh, Specifically, you're seeing uh, uh, the the individuals, uh, individual workers seeing massive wage increases from in some cases, specialized contractors seeing their wages go from 35 an hour to potentially as high as as a 45 or 50 an hour. So massive wage increases? Uh, now. Fortunately, there's been a massive increase in available labor Supply That's helped. That's been evidenced by what we've seen at companies like Uber Lyft McDonald's Chipotle.

But the construction industry, for example, is looking to hire an additional half million workers just to get back to normal Pace in 2023. So there's still massive demand for workers and so you are still seeing some inflationary pressures and that is going to keep some of these Services inflation somewhat sticky. Now the Home Depot co-founder here is suggesting, hey, we need to increase uh, how much we we tighten the news basically on the market to contain this inflation because average working people can't afford this stuff anymore. Hourly wages for General construction workers are up 42 from 2019 to today.

That's incredible. Absolutely incredible. All right. let's keep going here.

Well, we want to make sure our people are taking care of Maria To me, the first obligation you have in business is taking care of your people and make sure they're treated fairly and make sure they're living in a way that they're comfortable. We made that decision I wish I was there to be part of it. but I'm retired. but thank God the company under under Ted Decker's leadership made the decision.

We have to do something for all people. so we've we. By the way, we did it all at once. Yeah, we did it at the end of January it's one billion dollars.

It's a lot of money but all people need it and with with Biden let me say this to you about Joe Biden in my opinion and I'm going to be very very direct. He thinks he's the smartest guy in the room. If that's the case, we're really in trouble because the American people are a lot smarter than that and they see it. Yeah and I'm afraid Maria The American people need to understand there's no pain, no gain.

Maybe we're going to put two million people out of work. but I don't know any way around dealing with a problem of inflation and the and the tragedy of what comes with inflation as they say. The poor people, the little people, the people living for paycheck to paycheck, they're the ones that get hurt the most. Yeah, which you want to think about them which is like umpteen times you've said in the past: I don't need Social Security I Need these checks? Do something about it.

Try to make sure Social Security Is solvent. It's about to go insolvent in 10 years and yet there's no plan to fix it. We're waiting on the President's budget tomorrow and we're also waiting for this debt Showdown to take place right? The debt ceiling has to go up. At this point.

we have to pay our bills. But will they come up with any boundaries to spending? Ken No. What they'll do is they're already talking about raising rates. Look Maria I've said since the day I got a social security check.

This is outrageous I did so well in this system I did so well Under capitalism, it would be a travesty for Elaine and me to take any money from the government any at all. And very frankly, what we do is we give those checks to charity every month. Nice. Why? Because if you're trying to give it back to the government, forget it and if you gave it back to them, they'd only burn it more.

But I Think politicians. This is why we need term limits. Maria Because until we have term limits and people understand their goals, people are not going to touch the so-called third rail of politics which are like entitlements. My my social security check last month mine alone not a Lanes was 3 500.

This is crazy. Yeah, that was three quarters of what my starting pay was when I went to work. uh, 65 years ago. But look what you and Elena are doing giving it all away, you're giving it to NYU Langone Medical Center You're giving it to the Arts You're giving it to cancer research.

you're giving it to to to you know animal hospitals. You're giving your money away. You don't see that all the time, but you're doing it and I'm glad you brought up term limits. Ken We've spoken about this in the past.

How is it possible that a politician goes into washing Goes to Washington and ends up spending 40 50 years? They forget who they're working for and I want you to know that I Spoke with West Virginia Senator Joe Manchin on the phone the other day. He came on the shower before he came on I talked to him on the phone and he said to me a very good friend of mine Maria and he said to me people are not going to like what I'm going to say but you know what I'm for term limits and I said wow Ken Langone told me the same thing he wants term limits. you even have a sitting Senator Joe Manchin calling for term limits but the people who are going to do decide this are the very people who are going to get impacted. So I don't see it happening Ken What about you? Well I don't see it happening Maria unless the American people get so fed up I mean we need turn by the way.

Marie With all due respect, thank you for your kind words about what Elaine and I are doing with our Good Fortune But I'd be less than honest though I didn't say we're also keeping enough to live well. Thank God But but uh, really, we need term limits I Had an argument pushed at me last week. Two people, two elected officials in Washington together said well, you know if if you go to term limits, the staffs are going to run the government I said what the hell are you guys talking about The staffs are on the government now, right? These guys haven't got the slightest idea what the hell they're doing. Yeah and Maria I'm serious.

If and when the big crash comes, it is not going to be pretty. it's not going to be pretty. And if we worry about China we have to worry about China vis-a-vis a weakened American Economy A very weakened American economy. That's right.

that's where you really run the risk. So Ken Real quick. we just talked to Larry McDonald He said there's going to be a stock market crash within 60 days. He's talked to his institutional contacts to come up with that.

but I Want to get your take on market performance and what's priced in here. You're a big investor if you expect we're going to see a recession. If you expect, things are going to slow down quite a bit this year. Does the stock market fall off? or is it priced it? Maria Let me say this: I'm impervious to that argument for one reason: I'm a very long-term investor.

My average holding that's a weighted average of all my positions is 41 years. Wow. I've owned my Lily now it'll be 45 years this. November Home Depot Of course we founded it in 79.

Yum Brands 25 years Uh, Parker Hannaford One of the new editions 13 14 years Okay, bad times come and bad times go. My advice to people is: own great companies Great Managements strong balance sheets, a history of periodically raising dividends and go fishing. Yeah I like to go fishing I Put money with Strand Ruckus By the way, put money with Stan Brockenmiller if you can. You've never had a losing a year.

Wow. and uh, about the Good Fortune To be an investor is since he had less than a million dollars in assets. That's pretty impressive. but but Maria I'm not smart enough.

These pundits are the same. We're going to have a creation 60 or not. They may be right, but they also may be wrong. All right, not that against.

America Yeah, bet on America We're the greatest country on. Earth We always will be. We're going through a rough patch. We will get it right.

not without a lot of pain, but we'll get it right. It's great to see you. Thanks so much God Bless you Thank you Jono Please and have a great day! I Will thank you. All right so let's add some commentary on that.

Wow. Well, first of all, super admirable. Uh, the guy's donating his social Security check. Uh, that's awesome.

It's also really cool. I mean I'm sure he donates more than that. He's got plenty of wealth. You know there's really no no need not to donate more than that at that point.

Uh, so so. But good for him. That's not to try to minimize what he's doing, but he makes two really good arguments. Uh, that number one, he he amplifies amplifies how important it is to handle inflation.

Because if we don't handle inflation, then as he said, the little person gets screwed. especially the people who work at Living Paycheck to paycheck. And that's why as an investor I Hate to say it. but I'm purposefully trying to avoid investing where regular people are buying things right now.

the the Nike the McDonald's the Costco the Staples the target, the Walmart the the restaurants. I'm trying to stay away from all of that. Let me put it this way, when you go to Cheesecake Factory or Red Robin gourmet burgers right now you're eating at a charity because they lose money. They lose money.

You sit down and eat. You make them lose more money. That's how bad costs have gotten at restaurants I Really want to be exposed to Staples even like Home Depot or Lowe's that that are that? Are you know raising uh, all of their their employee wages which is fantastic for them. but their costs have exploded so much I Don't think they can make any money here in the in the near term now? I Love his argument about investor the long term investing companies with great balance sheets.

but my answer to that right now is pricing Power stocks that appeal to the higher income business or consumer. Think about business. Businesses need servers, They need data centers. They need artificial intelligence.

Invest in my opinion in those sorts of options. Look my license Financial Advisor I can't give you personalized Financial advice or run an active ETF You can learn more about it at Meet Kevin.com I've got courses on building your wealth. You can now use buy Now Later platforms to pay for it I Don't recommend you do, but if you want to, you can. People have been asking for it.

uh you know and yeah we extended the coupon code to today because you can. You can check out using that by now later platform if you want. But the point is I think you want pricing power stocks and the way what you want to look for in the balance sheet is you want to look for companies with massive free cash flow that is the opposite of what you're seeing at companies like a coinbase right now or a Roku these are cash burning businesses. Let me give you an example just by showing you Roku And we do stuff like this in the course member live streams on almost a daily basis where we go through cash flow statements.

uh, balance sheets, you name it. let me show you Roku Okay, so here's Roku This is the balance sheet for Roku What do we see on the balance sheet for Roku Well, right now we see that they have negative free cash flow of 172 actually I Did that math slightly wrong? Uh, it was actually 11. If they have a negative cash flow about 150 million dollars, that's because they have a slight positive on operating activities, but they're only able to get this slight positive of almost 12 million dollars here thanks to their purchases of plant property and equipment. So you've got a negative cash flowing business over here.

And unfortunately, you've got a business that does have a net run of about. Uh, you know they've got about 1.1 billion dollars in free cash available after their current liabilities. But when you consider that they're burning about 150 mil here, or you know, per quarter and they're barely making money on the business, you go. Okay, Well, at some point they might have to raise money now.

Roku A little bit more insulated than other businesses. For example, if we divide that, they've got about a six year run rate that's not bad. Maybe Roku could end up going profitable. But then you have to ask yourself, do they actually have pricing power on uh, on their business? Well, they have a business that went from profitable in 2021 to income losing in 2022.

They went from making 21 million dollars to losing 250 million dollars. That's because they're SG A they're sales General and administrative expenses basically doubled. Their R D nearly doubled. At the same time, their revenue barely went up.

You went from about 700 million dollars in 2021 up about four percent to 731 million dollars. Their devices revenue is barely. uh, their devices Revenue actually shrunk. Now their devices are lost leaders anyway because they want more subscription Revenue But the point is, on top of that, they're also seeing their costs explode.

their costs exploded 500 basis points. so their their revenue is growing four percent, their operating costs are doubling, their margins are shrinking. and yeah, they've got a six-year run rate because they made a lot of money during the boom Market selling their stock and that's fantastic. But is it actually a profitable business? Well, I don't know.

It's not something I Want to be exposed to Now look, when the Fed's money printers turned back on everything's gonna go back to the moon so maybe it doesn't matter. You know, maybe it's unfair to bag on one company. But personally I want to be looking at companies that have massive free cash flow. Very, very very massive amount of free cash flow.

That's what I care about Big free cash flow. Big PP is what I call it pricing power stocks. So uh, look, that's just my opinion right now again. I Want to be very clear if you think that big recession is coming like we just heard uh, Akan, the co-founder of Home Depot Talk about then you just don't want to be in stocks.

But if you want to invest like can, then you look for high quality companies that you think could be here. uh, for 40 years. Like he mentioned, his average hold is 40 years. That's that's admirable.

Now there are possibilities. You could walk into value traps. For example: I Think one that potentially is is a value play right now is Intel But Intel could be bankrupt in five years if they're their investment into new Fabs fails. you know they're They're exposing themselves to both.

uh, the risk architecture arm and X86, which is fantastic. They're being very smart. They're basically becoming chip agnostic. We don't care what chip you want, we'll just make it for you.

which is fantastic. Very, very smart. Uh, and with all the subsidies from the government for the chip sacks I I can't see that going wrong. Uh, but that might be more risky than potentially investing and well, I should say just like uh, Taiwan semiconductors could be risky in the event there is some drama between China and Taiwan that that extends I think that's highly unlikely I think it's very unlikely that China ends up invading Iran I think that's Taiwan I Think that's their last case scenario.

Worst case scenario. but uh, what? American companies are probably here to stay, at least for now for the long term. Probably your Teslas your Apple your end phase, your your Nvidia your AMD These are fantastic American companies that appeal to a higher net worth business or individual and that I think is where you want to be positioned. That's just my take.

Uh, and so I'm a big fan of pricing power style stocks like that. Uh, learn more about uh, you know my courses and and uh, some of the other services that we do like even the ETF by going to meet Kevin.com Okay, well, something. Anyway, basically here's a Wall Street Journal article. I'll give you this sort of as a little bonus here.

So I went through this: Wall Street Journal article I It wasn't as great as I thought, but there were some fantastic arguments within it. Renovations now take 79 days on average, longer than they did in 2019. uh or sorry, they take an average of 79 days up 259 from 2019. uh, a lot of people are frustrated about how things were going over budget, how hard it is to find workers.

People are becoming a do-it-yourselfers out of necessity. Yeah, it was interesting. I mean I Like reading a lot. So I sometimes I read stuff that isn't great.

it's not worth you know its own little video. but I thought I'd make a mention on it. So anyway um yeah, some thoughts here. I Gotta go now I gotta go to the course member live stream and get another cup of coffee from right behind me and then I'll go to the course member live stream so I'll see in the next one.

Thank you all so much for being here. It was a blast! A little tougher with the mobile Studio but uh I think we still did our best. Appreciate you all for being here. We'll see you soon! Bye.