Well welcome back to another episode of the Meet Kevin show. We actually got the headphones back! It's been years since we've had the headphones. Actually, course members helped contribute to this. Remember, we've got a expiration tonight for the awesome programs coming up on building your wealth, so check those out.

Linked it down below next to the information for our wonderful, most, uh, popular guest on the channel and I think Ross has been here the most out of any guess ever. Welcome Ross Gerber from a Gerber Kawasaki Super happy to have them ETF ticker symbol is GK Check him out at Gerberkawasaki.com or Gerber Kawasaki on Twitter Welcome aboard man, what's going on? Where's the catastrophe? Yeah, well, it's good to see you First of all, I mean you know last time was a wonderful moment. Uh, it's probably one of the best ski days ever, you know? I Don't know if your fans know this, but Kevin and I skied on the probably one of the best snow days I've ever had. I I Don't know if I've ever seen snow that good.

So that we we didn't we split on Trump on the Trump run or we decided not to go down the Trump run. this is at Deer Valley and uh, we went down the other one. Um, so good material. we took it to Ontario but but if your fans want to know, Kevin is a very good skier.

I was very impressed. Um, you know I didn't know um but he does have the German Roots but I Wasn't sure if you were actually a real skier, but you would certainly proved yourself to a very worthy skier. so that was that was a good talk. Thanks man! So uh, you know since then there's been a lot of fear.

Obviously you know this whole banking crisis going on. possession stagflation? Yeah, tell me about it, You know I don't think we've done a video since the banking crisis really. So what? What's going on at your firm? What are you guys hearing? You represent a lot of people or people fleeing their Banks what's going on? Yeah, yeah. I mean people fled First Republic And and they're they're not fleeing all their Banks You know it.

This was a really interesting thing because we know First Republic really well. Like probably half the employees at my company have a checking account at First Republic Not to mention tons of clients. and they're one of our in a way toughest competitors. Their wealth management division would use these mortgages and offer very very under Market interest rates to to get wealth management client assets.

And so they were a really tough competitor. And now it's the irony is those are the same loans that blew up the entire firm. but you know it was a very good bank. and and and they did a lot of lending in very specific parts of the market, especially high-end real estate here.

um, gray client base and and really well respected and a wonderful service and it's just like hard to believe and just like a weekend. It's just like the FDIC wipes them out and JPMorgan just sends you an email. It's like now you're JP Morgan You know we got another big Bank Uh, the FED has helped us engineer the Takeover of all time and then this First Citizens Bank reported like huge gains on their takeover Silicon Valley Bank already and the Stock's been soaring. So it looks like the the FED induced you know, upside down Bond banking crisis has created some you know, winners in the banking industry.

but I think in the end they're all going to end up being losers because the cost of insuring deposits is going to soar for all the banks, because essentially the government is kind of just backing all deposits whether they realize it or not. So it's an interesting time. You know, if you want to get into deep Financial like minutia, this is definitely a topic. Yeah, oops, sorry there was beat it there for a second.

Uh, it's interesting. You say that because really, what you're saying is the Fed drove this rapid rate increase and really, what was supposed to be the safe borrower that these Banks were going for? The ones with a lot of assets who wanted to essentially mortgages in the Hamptons or expensive real estate ended up leading these Banks to hold massive portfolio loans that, uh, it ended up losing substantial value because of the Fed's actions. Now couldn't these banks have hedged for that? I Mean it didn't They see? didn't everybody see this coming? or what do they miss? I mean boy. Remember on your show probably about a year ago when we were talking about interest rates and like after the FED raises three times, just Dock and hide And and boy I wish I could hide even more.

You know what I mean like I didn't duck and hide enough even close. Um, they really, really jacked up rates much further than anybody thought. I mean come on like nobody thought they'd go Five Points up from zero to five percent I I Actually at the time thought if they went to two and a half, we'd have some issues, you know? And then I Like the idea that they would go past three and a half seemed absurd to me. So now we're at five and the economy still hasn't rolled over and Banks starts just dropping like flies Because what we? what really what I'm talking about about.

What was unique about this situation was the ability for depositors to withdraw. Let's say you know, 200 billion dollars in a week or two. You know, finance and electronic money has allowed people to move money faster than ever before. And what it has done is it basically means that banks that hold assets to maturity in theory based off the concept that maybe they keep 30 percent, you know short-term money.

And then let's say you know 30 medium and 40 percent long. So the long money that's held to maturity, it's supposed to be safe and you don't have to mark to Market And what we've learned is that system doesn't work That basically all assets of banks should be marked to Market daily just like mutual funds. ETFs Um, you know my firms client accounts, you know. So we lost a lot of money in bonds last year like everybody else, but we had to Market to Market every day for my clients.

Even though my clients are holding it to maturity, we don't get this little special thing. So so I think if we said okay, all banks now have to mark everything to Market You would see a lot of banks have no equity and would that then just increase fear in Bank stocks leading them, maybe to sell off more or what would the benefit of that be just more transparency to the market could properly value them. There's transparency and then liquidity. They would be forced to have higher liquidity ratios because that then the concept would be that people could withdraw 100 of the assets at any time and the bank has to be prepared to to do that.

And if the bank can't, you know immediately sell their assets and withdraw. You know which is what Silicon Valley Bank was trying to do. Actually, you know it was like oh, we're going to sell 20 billion of our assets, take a two billion dollar loss, raise 2 billion from Goldman and we'd all be fine. But then the deal didn't work, you know, and so it just cascaded.

and so like once they knew that Moody's was going to downgrade them, the deal didn't work. You know it was just like in a lot of ways, these Banks were just set up to fail because they weren't per se. The you know, Bad actors per se. like there's no crying here.

They were just like caught with their shorts down, you know? and so like. So we have a banking system Now where money in Fury trillions of dollars like the the Securities industry already kind of works this way. It's just that banking doesn't work this way. You know, like when you trade bonds, it's completely different than trading stocks.

It's just like, not the same. It's a totally different system. one is completely electronic and the other is not okay. And so when you go to banking, it's even more archaic of the system.

And so basically, if you can just withdraw 100 billion dollars out of First Republic and First Republic says these loans are going to hold for another 10 years, it's like, no, you don't get to hold them for another ticket so they go bankrupt sandbagged uh, the liquidity providing so they could, you know, maybe partake in getting a good deal so to speak. I mean I don't want to go into the mechanics of how Goldman Sachs always seems to be around these things, but they do, you know? Um, I Actually don't think that's what happened I I think I think that it reminds me of now this goes back a long time. Orange County In 1994 when they race rates got caught with interest rate Hedges and bankrupted the County of Orange County and that was what ended the interest rate hikes of 94 which led to the incredible markets of 95 to 2000. But it was until something has to blow up and you find out who's the weakest player.

You find the frauds like FTX. So when rates rise rapidly, that's when it really puts pressure on weaker systems. It put pressure on on every Financial firm including mine. You know where you know you have losses and you have you know to run your business right? Or you could go out of business and that's you know something my wife doesn't fully understand about the stress you deal with running a financial firm.

But but that's that's a huge risk. And when First Republic went out man, it was scary to me. it's really scary. I Mean people built this business for 50 years and they did.

You know everything conservatively and then they're blown up in like three weeks. you know. And like people lost 10 billions of dollars. Those are real people.

Those are employees. Those are low-level employees to high level employees. You know and not to mention clients and people in the stock market. And look at the Kre the index Regional Banks is just devastated.

So there's been some substantial losses taken because of the Fed and the economy is taking a hit to some degree and we just don't know how bad. And now we sort of have to look around and say you know, where do we go from here You know, do you think that a depositor should have lost any money? Do you think it was right for the FED to bail out the banks essentially the way they did? Well at first I thought they should. You know because I was like, you know, that's it's just not the way it is. it's business, you know, and there should be a risk reward relationship.

But then it sort of occurred to me because I also run a company and you know with our bank account we pay payroll and the way payroll works is we have to keep millions of dollars in the bank because our payrolls millions of dollars a pay cycle. So there's no way that we can not keep millions of dollars in the bank if we're going to pay our employees. So what I realized is that making business owners and especially small medium-sized business owners sort of just victims of for their payroll. For example, for tons of low-level employees, that should not be a risk that depositors bear in using a banking Institution for short-term banking functions because it's not like you were saying oh I'm putting this millions of dollars away in a CD where there's this risk reward relationship I'm getting paid interest and I know it's a liability of the bank.

This was just like we just do payroll and I don't want that money in the bank but I have to keep it or else paycheck you know, or or ADP or whatever needs to sweep it out every two weeks, you know and so like. So then I I said you know we really need to change FDIC And that's why I think these costs are going to soar for regional Banks and and that's why I don't think they're great Investments is because I don't think business accounts should have FDIC limits up to Millions You should be able to get as much as you want and just pay. You know the insurance cost you know, like I was like why can't a bank just offer you a million dollars and you just pay extra for it You know if you're a business but interesting. So I mean what what in theory you could do then is you could say hey, just keep your payroll at JP Morgan and get essentially the feds you know, bailout always because they're too big to fail and then if you want a bank with a Regional Bank where maybe you're getting some better interest rates or whatever, Maybe that Regional Bank pays higher fees but is able to offer you two million dollars of FDIC or whatever.

That's right. But we can't have a system where they just back every deposit for everybody that that creates moral hazard of enormous risk because then Bankers have no incentive to be conservative at all. and and since they get paid off short-term movements of their stock or metrics that they can manipulate that like when rates go down and they get tons of refi's and earnings go up, they're like look at what a good job I did and they're like no race just went down you know? And then it's like they pay themselves like 25 million dollars and then when rates go up they run the thing right into the ground like the Titanic times 10 and they're like oh sorry, goodbye And that was like Countrywide in the financial crisis with Mozilla who ran Country Ride like a monster during the growth phase. But when it ended it was, it was like a ramming ball down.

The financial systems grow with so many bad loans. it was just crazy. So the last thing we need is these bad loans in the system again because the one thing preventing a massive financial crisis right now it's simply that the loans are good. They're good lows.

There's nothing wrong with the lows, you know, so it's not like we're passing around a hot potato everybody will buy. First Republic You know I was like I'll buy First Republic I Just don't have you know, 15 billion to lose when they sell the portfolio. You know what I mean So you know like JP Morgan You know we'll lose 15 billion. but we've got the best Client List on the west coast that you could ever imagine.

That's a really good point. I mean yeah, think about it. Other than maybe the the smaller segment of offices, and Commercial Real Estate most real estate loans are great. Even if equities fall in in some cases 10 20 percent, the principal is probably well insured with extra Equity.

So the loans, you're right. and as soon as interest rates fall again, even the maybe lower rate interest rates they have, those bonds start turning positive again. Yeah, that's next year, huh? So Jamie Dimon. So why not these guys? This guy is like, you know, it's like you watch this genius.

You know, like JP Morgan himself. You know Jamie Diamond Rivals JP Morgan himself. You know, like I'm I I'm not a hater of JB JB Diamond Actually like, you know he's not like a bad guy. You know I I they're just really dominant.

He's just really good. You know, like Ken Griffin at Citadel like they work us. You know their work in the stock market. They're working everybody.

they're working Robin Hood You know I Don't like this guy. You know it's like he takes the plumbing of the system and he just takes a little bit from all of us all the time. that's Citadel. but Jamie Diamond's like I'm the banker of the world.

You know, how do you not like Jamie You know, like Powell's like Jamie Jamie what should I do and Jamie's like calm down Jerome You know, like I got this. I got this. You give me the bank. I'll call him everybody.

That's true. I mean it was. uh I think after they bought First Republic Jamie Diamond All right I think the worst is over and then Jerome Powell I think the worst is all over. Meanwhile Pac West ended up having a panic that later that day.

but but you're right I mean it was almost like coordinated. Yeah pack West is fine they wanted First Republic they took first Republic that was one of the greatest thefts in financial history. It was just I've I've just never seen anything like it. I I've been around a long time, you know I'm on 29 years I'm coming on the anniversary I've I've seen a lot of great moves in the stock market by some of the greatest like Buffett During the financial crisis made trades that were just epic trades like on Bank of America.

You know like Buffett's trades and the financial crisis were efforts. You know people buff. It's old right now and you know they're trying to treat them like he's some young buck and he should be like killing it. but he's really like oh he's really old and monger's so old it's amazing.

He's alive, you know, like he's it's it's amazing and so like. You can't judge Buffett's track record by like the last 10 years. You know what I mean like 83 to 93. You know, like you got to look at Buffett's history like long term.

But when I was boy the financial crisis it was a disaster and Buffett was like like Jamie Diamond you know. and he just came in and got Goldman and he got Bank of America and the deal of a lifetime. a lifetime. What a trade! So if you have cash when everybody's panicking boy, you can make money and Jamie just did it again because he had the cash and liquidity to absorb the whole thing in one and the FDIC was like please take it.

You know, just please take it. Yeah, it seemed like there were rules against Banks as large as uh, you know JP Morgan the largest bank in the United States in the world and there were rules against them being able to acquire other Banks But because of these circumstances, those rules were waived and the door was wide open for JB Morgan to get even bigger. The rule was 10 and now it's 16. Like they did exactly what you're saying.

they were just like oh you know, like let's just change the financial crisis rule for Jamie because he'll save us. It's really it's it's absurd. You know, like once again if you're you know like a normal person and you live your life and have a regular job and you work and you bank and and you invest your money it's like just hard to imagine how these like it was like the Dianne Feinstein Revelation you know she's like 89 and she showed up at Congress and I think somebody just posted on Twitter a history of her trades. she's been in Congress forever and she's worth 200 million and they're like how how is this possible that you made 150 Grand a year for like 35 years and you're worth 200 million from Trading stocks during office you know and I'm like welcome to America America isn't fair you know I've been teaching my my kids this lesson you know like they go yeah, that's not fair and I go.

Let's get this straight in our family there is no fair, There's no fair. It's like the biggest lie in the world is pretending that life is fair God it's like you see this Jamie died so on that How fair is the Fed gonna keep being to us? Are they gonna actually pause here? Are we? Are we going to five? Five or six? So I have this new Theory It's starting to hit me that post-covet era is going to be a little bit different than the pre-covet era. and now that we've sort of gone back to normal, The New Normal is just different than the old normal. so we're seeing.

Let's say lots of layoffs at Google and Microsoft all the tech workers with high incomes and great benefits and and it was sort of like we can hire and we can hire We can hire. all those companies are now getting lean. So there's a lot of upside in the Microsoft's in the Google I mean the Google presentations today. Nothing better than open AI to scare Google into working hard again and all of a sudden Google's like we're doing this.

We're doing that. We're doing this and I was like this is the best thing that could happen at Google Like this is exactly what they needed somebody to kick them in the head and say you're you have all this stuff, you just are so complacent you haven't done anything with it, you know and Microsoft comes around and says oh, we're not complacent at all and now Google's like boom boom and I'm looking at Google going. Boy, this is a good company. You start cutting costs here.

How much? How much profit? because if you go to a Google office like only Kings and princes live better than Google employees. you know what I mean. So it's like the cost cutting potential at these companies is enormous like Microsoft was like today I Think they said nobody's getting a raise. You know, like that'll save them like billions and billions.

You know it's like oh, we don't get a raise from 940 000? Uh, a million, You know? And it's like nope. sorry You know our nine hundred thousand dollar assistant isn't getting a raise this year. Maybe he'll quit. You know it's like go get a better job so that so there's that.

and then the demand for labor for regular labor manufacturing? Hospitality Um for um, services like a health care? um the demand is still off the chart. Construction still very very strong you know? And and just like this house hack stuff, you're waiting for real estate prices to go down and we just had like a bunch of clients. Go on buy houses month and and it's like people have just come to terms like hey, rates are going to be five, five and a half, six percent. but we still need a house and we're gonna buy a house and prices have come down so people are negotiating and and you get a equilibrium but we're not seeing prices just like you know, like die Not at all.

In fact, it's It's almost like picking up. So from the the lower income and middle income jobs are robust with rage, increases in the middle and high income jobs are being lost in by the Thousand. You know like Walmart isn't firing warehouse workers Walmart is firing corporate employees. You know, so they're everybody's just getting lean.

and all the the the benefits and the the pay raises from 20 and 21 that everybody got because there was no labor, there was inflation in 21. now it's the opposite effect working. and so so you have this weird employment situation where we have record low unemployment. but yet people are getting laid off every day because for every Tech employee that's getting laid off they're still uh person who works in a hotel business getting hired you know and the hotels are still hiring and they're still busy.

In the entertainment industry, you're trying to find jobs you know, like people in Services it's it's really hard so goods are coming down and services are going up and that's what's happening. But the demand for entertainment, the demand for fun. the demand for going out restaurants is so high because people have jobs and they're over coveted. they're just like I'm going to Disneyland I'm going to Vegas and that's in our portfolio.

Very much been the the shift we've made from Goods to Services. You know because we're very very bullish on travel in other areas of the service industry, entertainment in the search. and and I think people, that's what people want to do. So are you suggesting maybe this is more of a white collar recession where maybe that more luxury buyers getting hit a little bit more than sort of your normal person who's like look I got a job Uh, whether I live paycheck to paycheck or not I'm just going to spend my money because you know I I Want to live my life? Well it's not the the ultra Rich the luxury people, the people that private jets and fly around all the time.

Not those people. those people are doing just fine. It's the people sort of in the middle. They're the mass affluent.

You know where they make a much higher income than the average American But they live in cities that are expensive and kids that go to private school and so if somebody loses a job it hurts. They kind of live. pay to paycheck to paycheck on 400 Grand or 300 Grand because they live in New York or LA or Chicago or Miami and it's expensive you know and so like these jobs are not being hired or people being laid off. but you know once again, those aren't Those aren't people that are going to go start working the hotel industry.

Number one and number two, they are finding other jobs, but maybe not as good, not as good a job or maybe not as ideal a benefit or situation. And guess what? they might actually have to go into the office. you know. So things are changing.

Those sound like Tesla buyers. So so the fed the FED is done I'm I'm on your show to announce that the FED is done. This is great news that the only place the FED can go now is down. Okay, the ultimate path down ends at maybe three and a half percent when that pathway starts.

We don't know, but we know that the path up is over there. If they raise rates again, that people will shoot Powell, they'll hang them. They'll be like Occupy Wall Street You know what I mean there. There is absolutely no reason.

So you brought it up. I Think in your video today about the shelter index. We all know the shelter costs are down. We all know.

Okay, we all know Auto prices are down. But yet you're looking at lagging data saying inflation's 4.9 over the last 12 months. But if you take out the three months of the nine, you just take the last nine months since when inflate rates went up and then you extrapolate forward and then you adjust for the bogus shelter number. You did this, that you did this on your show.

You're doing good stuff and and and you're right. You're 100 right with those numbers. We're at two percent. We're at between two and three percent now.

Okay, so now it's like I see actually an acceleration so the FED can hold higher for a little bit longer and see what happens and whether we get a continued acceleration which then the FED doesn't have to lower rates. But maybe or we don't get a recession so that's not so bad. And then if the economy weakens then the FED can start the money spigot by lowering rates and the Market's already at four percent on the two-year so the fed's got a a long Runway that they can lower rates either like 25, 25 and just see how it goes. Um, and and that presents a really good five-year potential return for the stock market.

From here, it it really does it. It really sets us up for a great new bull market and I'm just hoping we can get the rest of the things in line. Yeah, I mean that sounds really exciting and there I Was reading through some comments this morning and it seems like there's this consensus where a lot of people believe because we've been trained this for the last 18 months. that good news is bad news is what people have been almost trained now, right? Oh well, if we have strong jobs data or strong spending data, that means inflation is going to reanimate when there's probably a balance where maybe it just means we're not going into a recession.

Maybe we already had the recessionary period in the middle of last year? Who knows. Whatever that is I Want to ask you your thought on that A but also B I it sounds very similar to what happened with China Everybody was saying at the end of last year that China was going to explode and have this explosion of inflation after they reopen their economy. And then what happened? They reopened at the end of December. Uh, and through the first five months of the year.

Yeah, people went back out. But what happened? No inflation. The government's stimulating, no inflation. The spending wasn't as high as stop, but they're not in recession so it just feels a lot like a back to normal.

Dare I say you know the difference was the ridiculous government stimulus in 21 that the U.S did and holding rates down for longer versus China didn't do that. So the whole Act of 21 where they like gave everybody money even though the pandemic was functionally over. and and then it like created that whole stock market rally and sort of crypto frenzy and all the people who didn't want to work anymore and you know it was like that was so unnecessary and it created a lot of pain for this country, you know. And so we really have nobody to blame but our government and the FED for the inflation.

and then the reaction to the inflation which has caused a lot of pain. So that said, China didn't do that. It's a centralized the economy. They don't have politics.

there's only one party there, you know. So they do what they're going to do. They don't have to fight, so if you fight with she he puts you in jail. So you know they guided their way out of there and now oh they're looking at it like well we have to stimulate like China needs to stimulate their economy versus we over stimulated ours and slammed it on the brakes and now we hope that we gave it just enough amount breaks to get it not to crash, but keep going and it's just a big experiment and that's why I'm saying we don't know where we're going to go from here, but a recession being a four going on.

Conclusion: I think is maybe premature and I think we could Escape it because I think there's more animal spirits and people spending than what the FED understands because they've never gone out and had a good time in their entire lives. so you know, like how fun is Jerome Powell he doesn't go out and see what's going on in restaurants and clubs and parties and and concerts. and Disneyland and in Vegas and and people out traveling, you know it's really encouraging. I think um, the consumer is is back and with inflation down they have more money to spend on Nikes and on, you know, lightsabers.

So so this is really good. higher wages, lower inflation and then good news becomes good news again. And that's when you get the bull market because the the fear is recession. So good news becomes good news again versus the fear is inflation.

Where good news is bad bad news because we don't want it to be too good? You know, So is there a danger that inflation reanimates like we had in the 70s like three waves of reanimated inflation? No no. in the 70s we didn't have technology, we didn't have computer chips we didn't have. uh Teslas Okay so today in La I was driving around and not only do you see Teslas like everywhere I mean it's insane. From the days where I would drive around looking for a Tesla you know it's it's just really awesome to now I see Ross I think I lost you for a sec.

Do you got me I touched my my headphones. Does it work? You hear me? no yes there we go. it just caught up. Okay, you cut out right after you were saying in the 70s we didn't have technology and then the technology is just like nope.

Yeah, well it's I Was just about to say something good about Tesla I said you see Tesla's everywhere and you see Ev adoption across LA and across California in mass. Now with all these other EVS Rivians now Loose as I even see Id4s, Ionics everywhere um every type of a BMWs you know I'm seeing all these EVS now and it makes me so happy. And so you think about how technology Cuts inflation and it cuts our Demand on oil and oil is one of the biggest drivers of inflation last year and so now we're still looking at 72 dollars a barrel of oil and that's because of Tesla and the EV Revolution I don't care what people say and also what's happening in China With Byd and and League Auto and all, what's happening in China United States is anti-inflationaries technology kills inflation. Okay, and so since the 70s, well, that's when they invented the computer chip.

we've had a disinflationary cycle. and once we disempower oil as a mechanism of blackmail, and which is exactly what the EV sector is doing. Um, inflation will never really be an issue again because we have demographic challenges as a society. So the demographic challenges of the United States, China, Japan and Europe are quite enormous.

which is incredibly disinflationary because our society is so old. Look at our politicians. Okay, so so if any issue we don't really need to worry about is inflation. And the only reason we got inflation was bad government policy.

It's coven, so no bad policy should be no inflation. even even green inflation because other people argue that the inflation reduction act which is throwing you know, maybe somewhere around 380 billion dollars at Green incentives for cars or solar panels or wind farms? Whatever, you know. Goldman Sachs thinks that's actually more like 1.2 trillion dollars of spending because of the loose interpretation of the rules. Isn't that potentially then inflationary green inflation? Or are you suggesting that? Hey, with artificial intelligence and Technology, you don't even have to worry about that ending anymore.

Well, no, the onshoring of supply chain is inflationary. So the moving battery factories from China to the United States is inflationary. It costs more money. so the government incentivizing businesses to do that gives higher wages to U.S workers and lower business activity to China.

Now that is inflationary. Now you get an opposite benefit. Which is higher wages in the United States and better standards of living. A better National Security Better control of our supply chains and a lot more power actually.

so you have to weigh. You know this two percent number. Forget about it. That's a bad economy.

In a good economy. Inflation should be three percent now. I've been doing Finance since I was a kid and since I was a kid when we started running models of you know, inflation in the future. It started at five percent and that was in the early 90s when I started in the industry and then as time went on WE lowered it to four percent and then we lowered it to three percent.

But when it got to the time we thought about lowering into two percent, we nixed it because we said there's no way we'll never gonna have inflation again. We'll have inflate. So we run: the long-term average rate of inflation should be three percent, The long-term interest rate of bond should yield should be three percent. You see what I'm saying.

So like the Fed's two percent mandate is a post-financial crisis Viewpoint of the economy that doesn't include it's focused around Globalization as a main theme, not on Shoring which is the main theme now. And I Think that it's an unrealistic goal. if we're going to have a growing economy and that's going to be something the Fed's going to have to change quietly over the next year, is they'll have to be more accepting of this closer to three percent range or a little above three percent. But stable And a growing economy with growing wages and growing earnings and a ripping stock market and wealth creation in this country? see? The problem is, we got too many people who forgot what the purpose of capitalism is is for wealth creation for this country.

And that's what your viewers are here for. Your viewers are here to learn how to build their wealth by investing in this stock market. Investing in real estate. That's wealth creation.

Simple as that. I'm I'm 52 I Can tell you flat out that you are 100 on the right track with your viewers. 100 if there's anything you do. you go to work every day, you make your money and you invest it.

You invest in real estate. You invest in the stock market. It's simple as that. It's simple as that, and there's going to be a great period of wealth creation in front of us if the people, the politicians in our country focus on that instead of wealth destruction.

And unfortunately, as much as I like Biden in certain ways, the policies they've employed have been very destruct destructive and as much as I don't like the Republicans in a lot of ways, a lot of their policies make a lot more sense for business and God forbid somebody comes in the middle somewhere we would have a real winner of a country so we just need some working together. you know and there's a lot of upside in this country. so like uh Ron DeSantis or an RFK no right now I don't see any candidate that fits this bill you know of of really being a a Centrist uniter who can really get the extremes less extreme and the moderates really excited in each party where where they both both feel that they have the trust that they'll be equally respected and that person could lean Republican or lean Democrat but be able to play Both Sides you know and that takes a pretty Deft politician and we don't have many and part of the problem is they're all so old so you know I always try to encourage young people to run for office I I Was just at a city council thing last night for my district and I helped this wonderful woman Tracy Park win as City Council of uh in our district from this horrible guy Mike Bonin and she has done such a good job in 145 days that she's been in office I am so proud of her I was standing there so happy I got involved with the process I donated my money I supported her I tweeted I went to events and she won. but now there's a real impact on my neighborhood and on our city and she is working her you know what often doing a great job.

The competency level was like. went from here to here so don't tell me that we can't make a difference because we can. But we have to say enough is enough. Of the Diane Feinsteins and the Mitch McConnells and the Schumers and the Bidens and the Trumps and the DeSantis we need people that want to unite our country.

You know we shouldn't have to have like a 911 or something to unite our country, you know and and I think we would all benefit from that. I mean that's a really good point is you're just thinking about it. You really don't see the older guard Reaching Across the aisle like when do you see like a Mitch McConnell going look hey AOC and the squad We know you've got to. Just how can we bring you all in right? right? You would never see that you'd never see Mitch McConnell at a dinner or whatever because that would have been how dare, right? Listen to the other side, right? But that would be amazing wouldn't it like? And and I give Pecano credit today.

he came out today and he said, listen, we're not going to default All this media talk and hype. we're not that dumb, you know, like and the market immediately kind of turned around because it was like we don't have faith that the people in charge are responsible so McConnell has to come out and literally be like, trust me, we get it like we get the repercussions of the default. We're just playing the game to try to get something done, you know And and the market was happy with that today. and and I felt more confident that the idiots aren't going to default too.

But you start to feel like our country's being run off a cliff, you know? And and that's when I get stressed. You know because I'm like dude, we can't control this I'm just a business person I Got 44 employees and the last thing I need is a disaster economy, you know? I I Like you know, got 44 people to pay, you know I I saw you tweeted about it as well today George Santos Pled not guilty. Got a whole list of indictment on wire fraud charges. What's hap, what's gonna happen to him? Apparently he could stay in office while he's got all these charges.

Well it turns out in our government you can be a criminal and actually be in. If you get elected, you get elected. You know that's our democracy. so if people knowingly elect criminal, they can't.

Um I think the Santos thing is really embarrassing for our democracy. not I'm not going to just blame the Republicans because he's a Republican and how he somehow got through this whole system somehow. but I think they'll make a great comedy movie about him one day and it will be hysterical. It's amazing He fooled an entire District that he was like some Jewish guy I mean the whole the whole thing is so absurd I I am embarrassed as an American So I'm glad he got indicted.

but even just as controversial did you fly to Gordon's house? were you at Gordon Johnson's house? But my take was that if Gordon Johnson is the biggest Tesla bear that exists then I need to literally go to his house and find out if my financial portfolio was at risk. Let me just say, when I left, I felt very confident in my Tesla stock. Well, I've argued with him a lot of times and I can tell you his basic premises are so off. There's nothing more comforting about your Tesla thesis than coming from an argument with with Gordon because his premises are so off just to begin with.

You know it's like if you're driving to like you know, let's say the mall and you know that you have to go down the Main Street to get to the mall and your first turn is just completely in the wrong direction and you just have to just accept that you have to turn the car around but then the person doesn't want to turn the car around and now they're so far off from going to the mall that it's like hysterical because they just won't accept it and then you're like you know you just need to turn around. You ever you ever have that happen like you just go the wrong way and the person's so stubborn that they just keep going and you're like there's no other path but turning around. but they won't do it because it's like I have to. Absolutely, you know yeah, don't be that husband.

You know I was like your wife's like that's the wrong way every time my wife says it's the wrong way I turn around because it's lose-lose if I don't you know, let's lose those Oh that's the same idea. So you went to Gordon's house, you went to Gordon's house. where does he live? Yep yep North Carolina I mean he is actually really nice look I Have to say it's nice talking to him or during after. Nice guy, great you know, like wait wait I gotta stop you for a second everything I Gotta stop you for a second here.

So so you knock on Gordon's door like on his house. that's like where his office is and all that he's got Nerf Guns Man I Love him. but yes, but he's creating from his house. he's got a home.

uh home studio I I mean I don't I don't I don't know if he shoots all of his content from there. but but it was nice. You know I think everything about it was great you know I think the one did you look around for like GM hats and stuff like that like did you did you kind of like peer in the corners kind of looking for like hints of he only had Citadel cups for real okay no no no. so did you bring all the duties I like Gordon I'll tell you again I like Gordon so did you bring all your equipment in and you shot that interview with him? Is that what you did and then yeah.

so he's married, he has kids and stuff. uh no I mean you, you gotta ask Gordon all those details but like like on the on the Gordon Tesla thesis I think and I want your opinion on it I think it's really hard to evaluate FSD if you've never used it, what's your take because that's what he mentioned you won't try FSD right? Well that's what I caught him on on that interview a few months back when I was like have you ever been in it and he was like No And and then I asked the same thing to Chenos. actually it was I caught channels first I had I had the debate with Chanos and then the next day I had a debate with Gordon and I caught both of them and I was like so you, you've never tried it and Chainus was like I'm not risking my life I go I literally go with my children and Put on Full self-driving You think I would risk my children if I if I didn't think it was safe you know and it was like um oh you know you know like I I don't know I just don't want to try it and I was just like but your whole thing is that the software sucks, it'll never work and whatever and like you could go to a field, you know, like somewhere and like put on a helmet. you know, like you could wear like a whole bubble suit if you're that worried and just push the button and see if it would take you down the road.

you know and you're like no, I can't do it, it's too risky and I go have you people parachute people parachute. They'll pay like 500, they'll go out, they don't know anybody, they strap onto some random Stone guys back, they fly up or they jump out and they do this every day safely somehow every day. And you know people do this right. But Gordon and Chenos Will Go On TV every day bashing software but won't even try it, won't even try it.

it's insane. That's a really good point. I Mean you could go to any test track that's plenty safe and and try it, out. You know for a day.

So I'm gonna disclose this information now exclusively on your show because I Love you so much So I've been negotiating with Dan O'dowd to do this test with him. you know and so we've got a date and you've got to come. You got to come. So it's in the end of June and you know it's been a tough negotiation because there's certain things I won't do.

You know? obviously he has an agenda I have an agenda and I'm not going to let him take advantage of us in Tesla and make us look bad. You know, like there's no way I'm giving an upper hand. So they want to do all these like tests that are like the tests that they do at the Nthsb or whatever you know with the fake you know robots that go in front of the car and this and that I Go No, no, that's not what we're doing. What we're doing is Dad's getting in the car.

it be him and me and we're gonna take full self-driving through. Santa Barbara like I Do this all the time I Do it every day like I'm perfectly confident that if we have to disengage, we'll disengage. but you'll see that the software's safe. The way it's programmed is safe.

So then they're like, okay, that's fine. So then they're like, well we have these tests with like children and strollers and like this and we want to do those and I said something like well, how about this we'll go to a kindergarten and I'll drive around the kindergarten on full self-driving you know I'm like and like I I have every confidence so they didn't know what to say they're like I guess that's fine and I was like listen, people are using this thing every day. They're not running people over, it's real safe I'm not that concerned about it. Let's let's just film it.

You know I'm sure I'll have to disengage. That's fine, but you'll see how safe this is, you know? So I think it's gonna happen I think it's gonna happen. Me and Deanna in a test I'm driving driving around in the gardens. Yeah, I mean that's that's the title right there is Ross Gerber suggests test FSD around real kindergarten children.

Oh, everyone's gonna have heart attack. We gotta get Alexandra Mertz on this deal too. She's going to be our controller. She's gonna make sure nothing goes wrong.

So Alexandra if you're watching this I will be calling soon we meet Kevin It's going to be one of the funniest things that's ever happened in Tesla history. If if this goes down, I mean I don't know Dan's got this whole team though. You know, like he's a serious guy. Yeah, he's really serious and I'm like dude, why is this your mission You know, like Tesla's really trying to make it safer like they really are I like you can I I cannot like a lot of things Elon says and the politics bullcrap.

but Tesla's mission is to make it safer on the roads and I absolutely believe in this. Mission and I use the software every day and I hope it gets better I work on it the software I send messages every day to the team. you know you know this turn La is super hard, super hard and it gets better and better and better. and I have every faith that at some point this will work I don't know when it will be, but I know that it gets better and better and better and it drives pretty good now in LA and when I got it, it didn't it drove okay and now it's pretty good.

So I think full self-driving can take most basic cities. Now what? What do you think about the pricing? You know you've got this whole concern that uh, you know if maybe that, uh, median buyer, the 140k kind of uh, income buyer? Maybe they don't want to buy a car right now and maybe that's affecting some of the price elasticity of Tesla you know that's something Gary Black and both Gordon Johnson agreed on. In fact Gary Black reduced some of his Tesla exposure. A Worried that you know, why are we reducing prices and not uh, upping volumes potentially as in an equivalent manner.

What's your take on that Well I had to reduce my position a little bit too, you know. I I Don't believe in Tesla's current sales strategy. This is my basic disconnect. You know people in the Twitter Community think that there's some like oh I hate Tesla now or this or that.

No, no. I'm a Tesla shareholder for the long term I'm you know I I can't have some crazy overweight position in a stock where the CEO isn't really running strategy the way I think they should. Now it's not that I'm selling on my Tesla I love Tesla Okay, but I see Tesla as a premium brand and I can tell you many data points to prove this, including we can sell tequila from 250 dollars to surfboards to whatever. So you put Tesla on anything that's premium.

the premium beer it's it sells. So Tesla wants to be a premium brand that sells to the masses. That's a great business. Okay, but you have to have a margin that you're willing to defend in the vehicle.

And that margin, let's say should be 20 percent. So when Apple builds a phone or L'Oreal builds a beauty product, there's a margin. In this case that's 40. Okay, no product is priced unless there's a 40 margin at Apple okay or L'Oreal or a lot of luxury bands or Louis Vuitton one of my newest stocks I've been buying luxury Brands because I got so excited about luxury Brands after being so frustrated with Tesla not valuing the Goodwill luxury value that I think Tesla has in the marketplace buy, cutting prices so dramatically and by cutting prices so dramatically it it changes the perception of the brand subtly.

not massively but subtly. and selling more volume. Also, in some ways doesn't help you if everybody now has a Tesla and you sold them for Less Price You know you're kind of pulling forward demand at a lower margin. okay and saying that we're going to get all the services Revenue in the future like Apple You know that may or may not be true, you know? So I think for Tesla they should say 20 is our margin.

This is the lowest priced a world sell a car and if we can't sell a car for this price, we should look at other things we can do to create demand referral program. Easy. They used to do that all the time. free self-driving tests I think Elon even tweeted something like he might do that.

You know, let everybody try it. You know, self-driving is fifteen thousand dollars. People aren't going to pay fifteen thousand dollars for full self-driving on top of a forty five thousand dollar car. It just doesn't make sense.

He's not thinking like the consumer. Okay, a consumer goes to buy 45 or 50 000 car, doesn't want to pay fifteen thousand dollars more for software. Okay, it's better just to roll it into the price of the car then. But to two hundred dollars a month 200 a month is a different cell.

So you sell them the car and then you say Hey. Try this out and if you like it, we'll give it to you for a hundred dollars a month for the first six months and then 200 a month from there for. But the software doesn't cost them any more. Whether it's on 400 000 cars or a million cars, it's the same cost.

because they're developing the same software, it's already on the car. Okay, so for for Tesla they have to start thinking like we have to sell cars instead of we have so much demand that we don't need to worry about selling cars. We need to worry about making cars. Now it's the opposite.

We can make lots of cars and we're good at it, but we need to create some demand. And when we know that ninety percent of the market doesn't own an EV and knows very little about the EV I think the fundamental idea that on Twitter is the best advertising and that people get EVS is a is a mistake. I Don't think people get EVs and I don't think Twitter is the only place that they should be advertising. and so if Tesla tries these demand levers they will have tremendous success and that's where my frustration lies.

I Think they'll have tremendous success trying some of these demand leaders and people have this like ego where they're like oh, if Tesla advertises, it's like they're lowering themselves to being GM and I'm like no. Tesla's a 600 billion dollar success story that needs to get to a trillion plus. And to do that and to sell millions of cars worldwide, you have to educate the greater public. You've sold it to all the early adopters.

So Tesla has tremendous upside. If in my mind, if they adjust their strategy, Elon needs to stop being so hard-headed about this idea except that they've grown up and try a few things and now he's starting to and this is one of the things I've been pushing him to do and so he mentioned the other day. oh, when full self driving is a little better, maybe I'll give a free trial to everybody I was like yes and God forbid you run a few of these videos in places other than Twitter you know, boy, they're great videos, you know, like just just let people know you know. My wife and I were talking about going to gas stations and how I could never drive a gas car again.

Not because of the environment, not because it's an EV and it's a better car, but just simply not to ever have to go to a gas station again. It's such a pleasure to avoid gas stations for the rest of your life. That alone is something they could sell to. Consumers They could do a whole commercial and just all the times you're like oh my God I gotta stop for gas.

Okay, you charge at home, you never need to stop for gas and then it's just like boom and people would be like I want one and then you just click on your phone and you buy a Tesla it's it's it's. the perfect product to sell online. I Don't know I could sell Teslas all day I I Believe it I You know I Love this idea. even of a trial or even the first month.

The first 30 days or 60 days that you have the car, they should just have everybody on. FSD Yeah the first 30 60 days, try FST for 36. see what it's like? you know and then when it goes away, then they're gonna be like damn I Want that? Yeah, you know it's the easiest upsell. Get them hooked onto the damn service.

Krispy Kreme You know Krispy Kreme how they got big they give away Donuts that's how See's Candy got big. You go into a See's candy right? What do they do? They go. You want a sample? you go sure and the lady gives you. Like all these samples, you're not gonna not buy something.

It's sugar. You know what I mean Like every good business gives something away. you know what I mean we all give something away free to get people in, right? That's why I do Twitter I'm giving away free information and people want Financial advice they can call me. You know what I mean it's like, that's how you do it.

it's it's just good business And so if Tesla did that once again I think they'd be wildly successful and that's where my frustration lies. It's like you're lowering the price. you're lowering the price, you're lowering the price. and I'm like you're killing everybody who bought a Tesla two months ago.

you know, and three months ago who are like, oh, I paid 62 000. now it's 52 and I feel like an idiot. You know and it's like yeah, Elon just wiped out ten thousand dollars of yours because you bought his product like that. Sucks for those customers.

Give them self-driving for a year. You know, like you wiped out people's Equity Who bought a car six months ago. It's really sucks. It sucks I Talk to these people I Have to talk To these people oh I Bought a Tesla six months ago for 65k.

kind of sucks and I go Yeah, it's great car though, right? And she's like, yeah, it's not the car. it just I feel like an idiot I spend ten thousand dollars more for a car that I didn't need to spend and that's a lot of money for people. Give them self-driving they say oh, that's so bad I Got self-driving for a year and you hook you, hook them all. You hook them all, in and then they'll pay the 200 bucks a month.

So what's your take on where the stock is heading? I Mean you know it's obviously down what 50 from where it used to hang out in that 320-ish range? Uh, you know what? Where's it going? Is it? Is it going to go back to 100 or Gordon Johnson's Target of 24. Well one of the things I do to avoid emotional you know sort of attachment to companies is I just pretend it's just ABC company. Okay, so ABC companies supposed to earn now less than four dollars in earnings this year, but when it started the year I assumed ABC company was going to do more like six dollars. Okay, now okay, we went from 50 earnings growth to six dollars a share to negative earnings growth to somewhere below four dollars a share.

Ooh, not good for P E ratios. Okay, now we look out to 24 and they've got them doing maybe five dollars a share you know and I'm like, okay, you know, not the six dollars I was hoping for for this year and now that's next year. You see what I'm saying and and let's say that's 25 growth instead of 50 growth. And so Tesla's got a PE problem because it's starting to look like a mature company that can't grow oh, earnings very easily and I was given it a 50pe now I've loaded it to a 40pe This ABC company and a 40p on a generous multiple of at four dollars is 160 dollars.

Okay, if they do five dollars, you know, obviously at 40p, they go to 200. But the only way that Tesla hits new all-time highs is if earnings go back to eight dollars. Okay, so if Tesla's earnings double, the stock will be back to those levels. So it doesn't really matter how much you like Elon or Tesla or whatever.

That's My point is, stocks move based off the perception of its future earnings growth. Okay, and what those earnings are actually going to be and because earnings perception went from six dollars to four dollars. That is. Put the stock down 50 percent, right? Not an arbitrary number over the last year and it's really, you know it's hurt, It hurts.

Okay, so if I buy Tesla today, let's say I think it's at 170 or whatever. Okay, it's it's it's priced correctly. You know, like it's a fair multiple 40 plus times earnings of this year's earnings. So for Tesla stock to go higher, earnings must go up.

I Don't care what you say I don't care how many times you tweet that I'm an idiot or this or that or how could he sell some stock or this or that For Tesla stock to go up, earnings must go up. Okay, because the multiple is not going to go up. Okay, and so that's not up to me. So if you lower the price every time you lower the price, the stock goes down.

So if I lower the price of the car stock goes down If they raise the price of the car. Stock goes up Very makes a lot of sense. Yeah and I guess if you look out to right now I was just looking. It probably takes until about at least according to what Wall Street thinks right now.

Uh, probably first quarter of 2027. Maybe second quarter to get to eight bucks which is four years from now to get to that. eight bucks is is at least what Wall Street is projecting right now. You know they could be long, right? But that's the Hope factor out.

Yeah, you know we we don't have any idea. like mega Pack energy storage. You know, Like how do these businesses look over the next two to three years? Uh, increase production and model y? Um, cyber truck semi truck? You know if they get their margins back, if they sell full self-driving they certainly could be an earnings. Juggernaut Like Apple.

if they want to be Apple, they could be Apple. You fix the 20 margin in on the car. That's that. You come out with a new model every year.

He's got to come out with a new model every year. You know? iPhone hasn't changed that much, but it's the perception. You know. you change the headlights a little.

You add a little flare here, or you just you got to do stuff to excite consumers about your product. You know they've got this hubris that Tesla's just so great. They don't have to do anything and that worked for a long time, but it's just we've got to start thinking like, hey, and they go. Oh well.

Now you're thinking like other car companies, they go well. there's a reason why other car companies do it. and okay, it's not random. Other companies don't advertise just because they want to spend money.

It's like nobody's gonna buy these cars if they don't advertise. They've been around for a long time. the 150. you know how many Ford F-150s can you buy? Okay, but next year will be a new one.

Oh, it's got a special step. Oh you know new horses running around in the ad? I Don't know, you know. But I think Tesla has the earnings potential to be a huge winner. It's what still a major holding it in personally for my firm and whatever.

I have no less love for the product, the technology, the potential uh, moat that they have that's enormous in many Industries including battery production and technology and charging. Um, but I Also think that they aren't going to have it easy anymore. like they have real competition they have to try. They have to pretend that you know we gotta win the game now Again, kind of like what I was saying about Google like something woke up Google like with open Ai and they were like dude we could get wiped out if we don't get moving and they just got moving.

so I got bullish on Google today I was like listen to what they were saying and and I don't think people give up Google for big as much as I'm a Microsoft shareholder I'm a Google shareholder too and I don't think I'm giving up Google for Bing I just don't and I don't think chat chat is so much better than Bard So I think the AI races have just begun. but when you start putting AI in maps like what they were talking about today, all of a sudden Maps gets way better because it doesn't have ai and I'm like dude, this is what it needs Maps goes next level actually really knows something, learns how you drive, actually packs that you can actually take instead of taking down past you you know you can't take you know and so what? What about this competition for Tesla and I Want to talk more about Google but you said more competition, What competition and then let's let's talk more about Google after that. So so Tesla's become a little bit of the red hat here in California So you know when you talk to people what kind of car you want, they want rivian. You know my wife wants Arabian The neighbor got a rivian, the next neighbor got a rivian, They're all driving around.

It's like the new Range Rover because they're not driving the trucks anymore. they're driving that that SUV and the SUV looks like a Range Rover and the new Range Rover I don't like. So the new Range Rover doesn't look that great and the new rivian looks really great. and it's green and every you know everybody wants one because there's Teslas everywhere and there's only a few rivians.

People go. Oh, look at the Rivian and it's like what they used to say about Tesla And so the new car in town is Rivian. That's what people want, you know and that's what my wife wants right now. Yeah, and she wants me to trade to model Y for the Rivian as long as it has the maps.

She's happy. Convince her. Well, no, we have a fight. This is when we fight because she'll Drive She doesn't like me driving because I drive too fast and she drives.

and then she uses zero of the technology. She doesn't use the even the the screen to back up like she turns her head and I'm like Jill stop. You know turning your head just look at the screen. it's it's live.

You know it's like a camera and she won't do i