Welcome back to another meet! Kevin Report we're on episode 86, it is April 18th. Uh, we've got uh, some little things we're gonna start with here in the intro and then we'll jump on over into a couple segments. Uh oh. First, Lululemon is apparently selling off their mirror business.

They actually fully wrote that down in Q4 that should boost some profits going forward. The earnings per share might actually end up higher for Lulu if they end up selling the mirror business since they basically wrote it down to zero. Anything they sell it for would end up boosting EPS David's Bridal is going bankrupt for the second time now, but this time they actually hope to go bankrupt and close all 300 stores. Filing for chapter 11 a reorganization in New Jersey Although I wonder why they would be going chapter 11? If they're planning to close all their stores.

there's a potential they're trying to go online only. We'll see what happens there. Uh, Tesla according to Barons is deemed to have a ten thousand dollar for cost advantage compared to GM Toyota and Ford helping explain why Tesla can be aggressive with price Cuts while at the same time maintaining margins. Though margins are going to be exactly what we're looking at at Earnings Tomorrow for Tesla and we don't expect them to be as great as they used to be, at least for now, while we still have some lingering expensive supply chain costs.

Bloomberg Intelligence Surveyed a bunch of economists and believes that 96 of people surveyed or economists surveyed believe that if we end up defaulting on our debt, the stock market will crash anywhere between zero to ten percent. It'll definitely go down uh, and uh, many more think it'll crash substantially more than that. So fingers crossed and knock on wood that we end up passing the debt ceiling because it could be a nice Catalyst To the downside, which isn't great. Uh, then we've got uh, we've got to talk about winners and losers and this is sort of a piece that I've been building uh for a while here and so we'll start with some data and then we'll get into, uh, some of my thoughts on what this actually might mean for this craziness of, uh, the recession that we've been talking about.

So let's get oh dear Lord I'm gonna spill coffee everywhere. Let's get started with uh, the uh the first segment following the intro here. so intro and then we'll call that the winners and losers. All right, we'll go with 30 seconds after All right and bye.

Well, there's been a lot of talk about recession and yesterday my team and I had a big discussion putting together as much of the data we could and we had a really crazy thesis that we wanted to run by everyone. because you know I'm always trying to look ahead at what's going on. I was one of the first YouTubers to actually sell when it was time to sell at the beginning of 2022.. it's one of the first call for the Nike Swoosh recovery, which knock on wood so far is doing well.

but wait a minute. the yield curve is so inverted. you've got office real estate collapsing. Credit Karma says one in five people aged 59 and older say they didn't have a retirement account, and 27 say they have nothing at all set aside for their later years.

You've also seen baby boomers 17 of them decreasing their contributions to their retirement accounts due to inflation. You've got 41 percent of of Gen Z and 38 of Millennials saying their net worth is zero or negative. Yes, that's literally what's happening to people. You've when you've got four out of ten Gen Z your Millennials sitting with a zero or negative net worth.

People are robbing their retirements because of inflation, and we believe that a recession is afoot. In other words, recession should be here if it's not here already except what's actually happening. Well, what's actually happening is things are mostly still booming. In fact, we were supposed to have a bad earnings season, but according to Bank of America of the 30 S P companies that have already reported during this earnings season, 90 have beat on the bottom line, 73 have beat on sales, and despite the fact that banks are supposedly tightening, it seems like people continue to spend more money on their credit and debit cards.

And least when you look at Jpm's earnings, it's exactly what you see. people are spending more on discretionary Goods Despite the fact that we're supposed to be in a recession and this is something that even Wells Fargo echoed. The people are spending more despite the idea of this recession. Now, on one hand, we make the argument that okay, well, that'll be a limited candle.

In other words, we'll have this candle of excess savings that we saved up, and once we burn through that, then we'll really have this mind-blowing suffering. recession. Maybe not, though. And this was the thesis we talked about yesterday.

That is maybe not what if this recession is actually a recession of winners and losers. In other words, on one hand, you have wealthier individuals with exposure to stocks who are able to increase their allocation to some of their favorite stocks during the crisis. Maybe they were able to increase their exposure to certain businesses or opportunities that they were able to build during the crisis of the last year and a half. Maybe they were able to weed their businesses of talent that didn't end up being productive talent, and they were able to become leaner and actually boost up their margins and become a stronger company.

And so therefore, on one hand you have the winners, but then on the other hand, you have the losers, which might end up being office commercial real estate, which we think the time bomb of office real estate is going to destroy the entire real estate market. More on that in a moment because my, not exactly be what we think, although technically it should be, we'll talk about it. But in addition to Office, you might have people with lower incomes who, yeah, have seen their wages rise. But in real terms, which means inflation adjusted terms, we've actually seen their incomes go net negative.

So yeah, you might work at Walmart instead of making 14. now make 18. but thanks to inflation, you're actually not any further ahead even though it feels like you're making more money. So the losers could really be those heavily affected by inflation, which are people who spend most of their money on expensive things like, well, I mean expensive Necessities food, gas, and rent.

All three of those absolutely destroying lower income individuals, whereas on the other hand, businesses are able to refine wealthier individuals are spending through the recession and if the stock market stages of recovery and most of real estate Dodges the bullet of an office disaster. Maybe this is not so much of a broad-based recession, but rather it's a recession for some and a Victory lap for others. Consider the following and this is something we yesterday we're really thinking hard about and this has to do with real estate because we continue to hear that hey, Office Real Estate is supposed to destroy the entire real estate market. and that's mostly because we continue to see defaults on office.

In fact, just yesterday we had more default announcements. Consider the following: Just yesterday, we ended up seeing a a A A Los Angeles-based Brookfield uh asset manager default on two more. Uh, well. sorry, they originally defaulted on two Office Buildings in Los Angeles Then they just defaulted on 12 offices that they hold in Washington D.C Just defaulted on 161 million dollars of mortgages.

Just we're gonna stop paying. We'll give the keys back to the bank. A lot of people scratch their heads here and say how how is this possible? How are some people losing so much money in real estate And how is this not going to affect the broader Market In fact, you're even seeing some of it extend over to multi-family Consider this: You've got a Houston apartment owner according to the Wall Street Journal who's now facing foreclosure after losing four complexes with over 3 200 units. It's the Apple's way.

Investment Group that borrowed 230 million dollars that just got hit with a refinance. can't refinance because rates are two to three times as high as they were. and what? Now they're going into foreclosure. And so the one.

The question here is, wait a minute. Isn't this a sign of what's to come if the real estate market collapses? Won't that pull everything else down? Well, let's think about that for a moment. So here's how this usually works. Ordinarily, what happens is, if you have a certain segment of the real estate market, Let's say you have office here and more multi-family We'll do these separately for a moment here.

and there goes the HDMI connection standby for Kevin to fix the HDMI connection. Okay, I think I Think Uh, the let's say you have office. and let's say office starts collapsing And office actually does collapse. Let's go with that.

Some office valuations are already down as much as 35. So what happens when office prices go down? Let's go extreme and let's say that prices go down 50. Well, what happens when prices go down is you generally see a cap rate which is basically your yield go up. So when that yield goes up, it should become more attractive compared to other deals.

usually because rents don't fall that fast. So in other words, you're in the situation where okay prices fell because that office space Maybe was originally less desirable. But once the price Falls to a certain point, the yield should go up. and even if rents have to be adjusted a bit, somebody else should be able to come in and buy them.

And those people who usually come in to buy that office space tend to be substituting the other real estate they're buying. Maybe they were originally buying multi-family or retail or industrial and they substitute those purchases for now heavily discounted office space because the yields are higher, right? Well, that's usually what happens, which usually drives the entire real estate market down because you've lost money at office and then you move money from other segments to office. But that's not actually necessarily what needs to happen. much like the broader economy you could actually have.

And look at this analogy here, you could actually have the winners and then you could have the losers just like you could have those who are highly affected by inflation on one side and those not affected by inflation on the other side. But wait a minute, How might that work? Well, the way this could actually work in real estate is you could potentially see office space be written down and become a lot less desirable because as those prices go down, maybe those rents are also equally driven down. Those cap rates don't actually become more desirable. and the best thing to do with a lot of 1960s 50s, 70s Office Buildings that aren't desirable for condo conversions or aren't functional For new office spaces, those office spaces just go away.

they get demolished, they get deleted. In other words, these become the losers. So people investing over here have invested in the losing side of this recession and this really just disappears, leaving the multi, my family, and the other sectors maybe even single family really unscathed because of the disaster of office. So in other words, you have this Tale of Two Cities of a recession.

Potentially where on one side you have office as a loser and you have people highly affected by inflation. Unfortunately, the losers in the economy, whereas the winners are people once again with assets uh, that uh in time, tend to appreciate in value, people with more cash, businesses that are able to shave off excess workers and refine and increase their margins. And what you end up potentially happening is you end up getting no real recession. In other words, if you get a recession, it's potentially so delayed that it doesn't matter.

Consider this estimates for a recession Were originally that we were supposed to go into recession in Q4 or Q3 Q4 of 2022.. those ended up getting pushed back to Q3 to Q4 of 2023. Now the market is saying oh, we might not actually be in a recession until Q1 of 2024.. Well what happens if the recession? this looming recession doesn't actually hit until Q4 2024.

Well let me ask you, if the recession doesn't technically hit until Q4 of 2024 or high margin business is going to care or profitable real estate Investments going to care or a higher net worth individuals going to Care Unlikely, they likely won't care in LA In which in that case means there's a also the potential that you have A Tale of Two Cities in the stock market and the real estate market where potentially on one side. Let's say inflation is back at two percent when this, when this recession hits, right? Well, if inflation is back at two percent when this, delayed recession hits, Federal Reserve could turn on the money printer to try to help the poorer folks. Again, right? The FED tries to help basically the losers. But what then happens is when you turn on the money printer, we already know what happens.

It's actually not the poor people who win because we know trickle-down economics doesn't work that well. You get maybe a hundred dollars that gets showered down and ninety dollars goes over to the Winner's side and ten dollars goes over to the losing side. Why? Because again, when you turn the money printers on who wins. It's people with assets.

It's people who have stocks and real estate and businesses. Those are the people who regularly win. So the question that we discussed yesterday was, wait a minute. If this recession continues to get delayed, then what you actually have is the winners continuing to win.

In the meantime, as we ramp up for this recession, businesses have the luxury dare I say of cutting unproductive workers under the guise of a coming recession? Look at Ernst Young just fired five percent of their staff and they're in consulting, which makes you wonder, hey, wait a minute. These are a lot of layoffs and Tack is laying off to the tune of hundreds of thousands it seems for for the last uh, six to eight months. Yet when we actually look at employment reports, both ADP and the Bureau of Labor Statistics technically, we're actually gaining jobs on a monthly basis rather than losing jobs. So is it possible then that as the Velocity of Money starts actually and ironically and surprisingly, increasing rather than decreasing? Yeah, we might be seeing job loss, but is it possible that we're creating more productivity in this prep for recession so we could Barrel through the recession time? Look at the Velocity of Money right now.

if you go to St Louis Fred and you look at the velocity of Money. Usually what you would expect in a quantitative tightening cycle is that the velocity of money would be falling, and that's because people are tightening, people have less availability for Lending People are turning inward. They're spending less money. But if you actually look at the velocity money, what you see happening is the velocity of money has started increasing as of the fourth quarter.

Which makes you wonder. Did the velocity of money with all this money printing that was done really just fall substantially below this declining Trend to where we could actually see ourselves through a recession as the velocity of money picks up again, leading to Greater GDP especially amongst those winners? Yeah, it's possible now. look. the inverted yield curve technically hasn't been wrong in the past.

The inverted yield curve says a recession is definitely going to happen, but it doesn't tell us when a recession is going to happen. and it certainly doesn't tell us when the stock market is going to bottom. In fact, if we go into history, the stock market usually bottoms before the end of a recession, and if you have a short recession, you could end up having a stock market bottom quite substantially early. In fact, take a look at this chart here.

This shows that the S P 500 actually bottomed as far as nine months before the bottom of a recession in July to May of 1953 to 1954. And it shows you that yeah, the average might be somewhere around four to five months, but there's no real consistency to say that this couldn't be 18 months or two years. it wouldn't be the average, but there's no consistency to say that it couldn't happen if we've once had the stock market bottom 10 months after a recession ended back in in 01 when we had the early.com recession or uh, uh, or after uh, or way before rather like we had in 53 to 54. So the reality is sure might have a recession, but that does that necessarily mean stocks have to bottom around that time? No, in fact, in many cases, like when you look at a company like Nike, we've already seen their earnings recession and this is kind of weird to think about that the in many cases recession could have already been behind us.

look at Nike For example, Nike's earnings bottomed out with negative year-over-year net earnings for two quarters in a row. Which means they were in an earnings recession last year when we were in the technical recession remember Q1 and Q2 and we had negative. GDP Maybe the technical recession already happened, or maybe we'll have another minor recession ahead of us, but I'm convinced that we're living in a tale of two city-style reality. And so regardless of what ends up happening with recession, yes or recession, No.

I don't personally think that matters much. What I think that really matters is making sure as individuals, we can do everything that we can in our power to align with the side that's winning. And let's be really clear and provide that practical advice. The Practical Advice: Non-personalized advice.

Obviously, you know this: I'm a licensed financial advisor I Sell courses on building your wealth I've got uh, you know, affiliate links. You can learn all about those my ETF the courses, everything and meet Kevin.com You know that already. but this can't be personalized. Financial Advice because I don't know you.

Maybe we could sit down and do an interview one day and then we could do some personalized advice. But the point is, if you want to be a winner in this market, maybe worrying about the recession is actually the wrong strategy. Maybe the strategy needs to be. What can you do to figure out what the losers are and what the winners are? And the losers are? Very clear.

The losers are office real estate and unfortunately, if your wages are under about the national average, 33 bucks is the national average, and so I would take it maybe a little bit of a standard deviation further and say somewhere around 25 bucks, if your wages are under 25 bucks, you might have to think to yourself, okay, what can I do to get to a higher level? Maybe the company you're already in has you on a set path where you're going to be making a substantially higher salary in the future, but if you're at a potentially dead-end path, maybe the question is, what can you do to become a professional or create or increase rather, your exposure to assets. Remember the three assets that matter here: Bonds, Real estate. Uh, I'll say bonds and stocks. So Bonds and Stocks.

For most people, that's going to be stocks, real estate, and then actually owning businesses. So it will simplify that. Stocks Real Estate businesses. Most people, especially when you're younger, under 40 years old, have the capability of generating some kind of professional license whether that's the CPA lender, a realtor or whatever has some form of professional designation, substantially increase your income by creating either your own business or working for somebody by making an above average wage which would be above 33 bucks an hour.

Then use that to buy stocks and real estate. And maybe the Nike Swoosh holds The losers continued to be low earners who have negative real wage growth and office space. And maybe we end up with this Tale of Two Cities of winners and Losers style recession. Or yeah, office is going to look like it's in a recession.

Poor folks are going to be like damn that time sucked and wealthier people or people with the assets, the stocks, the businesses and real estate are going to go. Damn that was a in buying opportunity. And what a great opportunity to increase margins at our business by laying off the unproductive Workforce It's the harsh reality. Nothing in this video is designed to be politically correct.

You know, calling suggesting that people who are more affected by inflation are in the losing Camp is a financial reality. It's certainly not the politically correct thing to say, but when we start considering that maybe we have this two-city style recession. uh oh, maybe it means we've got to realign our expectations for this Mega crash that's supposed to take down the whole world Again, everybody's got fears about everything. Their fears about China invading Taiwan Their fears about dollar the dollarization Rabobank Just had a massive piece about uh, the Brics currency and the potential D dollarization and this is something that we've been talking about on the channel as well.

This this d-dollarization uh, under, uh, potentially uh, Joe Biden and potentially some of our weaknesses in the Middle East Africa and South America leading to other countries wanting to flee the United States We've talked about this many times before and the reality is a lot of these fears could end up blowing into real problems, right? It is a problem if the dollar loses its Reserve Status problem of China invades Taiwan But I think a lot of these are much more Edge Case scenarios like the chance of us defaulting on our national debt which would probably lead to a substantial decline in the stock market, but we've got to ask ourselves or do we want to be in a situation where we're constantly hedging for this impending recession or all of these potential Edge case scenarios or do we want to do what we know is tried and true which is exposing ourselves to stocks, businesses and real estate assets so we could be part of The Winning Side Now of course, the biggest thing that destroys all of this and ends up destroying both sides. And this is the one red flag to both sides. There's one thing that can absolutely destroy both the losing side now and the way training side. There's one thing that destroys both of these sides and folks that is resurgent inflation.

If for some reason, the velocity of money increase that we're seeing ends up not just offsetting the quantitative tightening that we're seeing, or the tightening blending conditions that we're seeing, or the subprime Autos Market collapsing like we're seeing. If the velocity of Money increase here does more than just offset those things and it actually creates resurgent inflation, then we're screwed. Then the fact is, both sides get hammered. Both sides end up getting Paul Volcker.

You get people like Mr Bullard who end up being right Mr Bullard Actually just provided some commentary. Let's see what he says: Bullard Still sees adequately restrictive policy rate at 5.5 to 5.75 percent with a bias to hold longer until inflation goes away. Not much. Clear Progress on inflation means interest rates need to continue to rise.

He's referring to core inflation, unfortunately still remaining somewhat sticky. At 5.6 percent, it's way too high. We need patience to get to two percent and hopefully we can get inflation down. And if we get inflation down, which is my base case that by the end of 2024, we end up getting inflation down, which requires patience, the asset side will prove to be a winner again, as it historically always has, and the losing side will always always be the side that ends up going bankrupt because of a regime change or people who have low wages Now, regime change in this case, probably just going to be the changing coveted post covet Dynamic where people don't want to work out of 1960s, 70s, 80s, 50s offices anymore.

Well, a lot of those buildings are just going to have to get demolished. Which sounds crazy because you might think it'd be realistic to turn them into condos. The reality is it's not. so that gives you my opinion on the two-sided recession that we might be facing and how to potentially protect yourself.

Obviously, if you want to learn exactly how to go from zero to millionaire with real estate, check out the programs link down below. We've got a course on stocks and psychology and money as well the Elite Hustlers group for building your income. whether you're employed or self-employed starting a business or otherwise. check out those programs linked down below.

But when it comes to recession, really not terribly worried unless we see the ghost of inflation come back foreign. Next up. Vietnam Now going to talk about something else. we are going to look at the video and do reaction to video.

All right, let's see what we have here. This is an interesting one, so that's my more positive winners and losers piece which I align with. But now we gotta talk about what's this dude talking about over at: Home Depot former Home Depot CEOs Losing it again. Well again, this is the first time we played him on here, but let's take a look at what he has to say.

bye. All right, let's see here we go. All right, let's do this button. Now we gotta talk about I screwed it up.

Sorry Now we gotta talk about what the former CEO of not just Home Depot had to say, but the former CEO of Chrysler and GE Power Yeah! three-time CEO all the same person. And what did he just have to say about what might be coming to the U.S markets and U.S companies? Well take a listen over here because uh, it's something to pay attention to and buckle up for. Listen in to this interview. Here we go from Paris right? these protests still waiting to hear from a high court standby we had.

Yet there's the interview Emmanuel Macron went to What the heck They clickbaited me with something else. This is Not the right video. Yeah, no, this is. This is where he ends up coming into an interview.

It's just. oh there it is. Okay, here we go. They're gonna make me wait a minute and a half before getting to the actual interview.

you jerks stand by. All right here it is. It's a very generous benefits uh, but it's still going to be pretty low as far as Western power standards are concerned. Um, what do you think of what this could mean for us when when politicians eventually get around to addressing, you know, strengthening funding for social security and Medicare here? Yeah, well, good to be with you.

Neil this afternoon. Uh, I think you and I have both seen uh, that number rise over our lifetime here, right? So I'm okay at 63 64.65 but I do think it will have some backlash here in the United States Should that, uh, should that move forward here Now to be a much different number? But uh, I think there'll be some some negative reaction to it. also. Neil I Really? Do you know obviously entitlements have to be addressed? We know, uh, that Kevin McCarthy is going to address this whole debt limit issue next week, but he and the President don't seem to be even talking right now about that.

Uh, you know the clock is ticking. Are you worried about all that? Yeah, I'm definitely worried about that. And I Thought a lot of the comments from Mark were spot on and I would just reinforce a lot of the points he made. You know I'm seeing inventory bills.

uh, in a lot of the businesses both public and private. You know you remember when we spoke in 0789, there was singular focus on the banks, right? Their meltdown took everything down today. The banks are doing great, but now we have this mixed messaging. retail's not doing so well.

Banks are doing well. Transportation uh is up 13.9 percent over the last 12 months. Um, I I Think we're We're in a very complex environment. and of course, this debt issue only adds to that.

It adds to the certainty of uncertainty what what's going to happen. And again, Mark's point about a lot of the small Middle Market companies that are under tremendous pressure with debt. I Think we're going to see a lot of bankruptcies like Bed Bath and Beyond we got Walmart not only laying people off the closing stores, we got a lot of Accenture laying people off, we got Amazon closing distribution centers. So I think there's a tremendous mixed message and and the complexity with which we have to deal with this one is different than any I I have seen in my 52 years.

Neil All right on on that. I Hope you're wrong. You can look at that same Trend and it's one of the reasons why you have a majority of investors still very leery about the market. That could also be an opportunity.

Um, that this is as low as we go and things will turn around because so few are optimistic. Having said that, retail sales did fall more than expected. down one percent X Autos Down eight tenths of a percent. Slowest growth we've seen since uh June of 2020.

I I'm wondering what you make of all of this because on the one hand, uh, you could talk about that. You know, giving consumers second thoughts about spending, we don't see much evidence of that because their flights are booked. That airlines are saying they very optimistic. for a busy summer travel season, restaurants are packed.

Uh Walt Disney World Their site went down as people were booking Walt Disney World Vacations So that doesn't seem to be a worry, so there does seem to be a disconnect here. What do you make of that? Yeah, No. I I Think you're spot on. Neil I mean if you think about transportation again, uh, it's up about 13.9 percent year over year.

If you look at bookings, it's up tremendously. If you look at our hometown, uh, you know company here Delta is having you know tremendous bookings. Uh Ed came on and talked about the future. Hospitality has been one of the biggest job creators uh over the last couple of months that you and I have talked about that.

but then again, you look at retail and I can just assure you that we're starting to see more cancellations and leaving us with bigger inventories that we're going to have to try to burn off or we're going to have to Discount to try to get those moved. So again, it's it's very mixed messages here. and and you talk about Auto being up and again Now we have this: Administration trying to tell the pause for a second. oh we got like 20 seconds left.

but I want to talk about this? Mixed messaging is exactly what we're seeing in this sort of Tale of Two Cities style recession where yeah some people are getting screwed. subprime Auto is getting screwed, people are getting their cars repossessed. Guess what happens then they can't go to work. can't go to work.

What happens? They got to cancel their their Magic Kingdom visit. so some of that is happening. Yeah Amazon distribution centers and Walmart they're conducting layoffs. A lot of these companies way over hired.

Way over hired because it was so hard to hire people so it was easier to hire a bunch of people and then fire. Now those people have to go find new jobs. Now what's actually really interesting about firing people is you might initially think oh my, God that's horrible. But the reality is, if somebody is not productive at a job, the best thing the company could do is fire them.

The reason for that is twofolded. First, let me say the impression. The impression is oh no, evil company fired somebody. Oh no.

That means GDP is going to go down because that person has less money to spend, right? Well, that's the impression, but that's generally not the reality because what actually happens. Let's say that person works and produces a hundred dollars of productivity a day and gets fired because they're paid 300 a day and they only produce a hundred dollars of productivity a day. Well then they get fired. Now they go.

They don't create a hundred dollars of productivity a day. So it's like, oh my gosh, the economy lost 100 of productivity a day, right? And the company's saving 300 a day, right? No, the company now has three hundred dollars to spend on something else that might create 300 of productivity. and that person probably doesn't stay unemployed. They go find another job.

Maybe they're not getting paid 300 anymore. Maybe they're getting paid 200. But they're actually providing 200 of value. Now you actually have a net.

GDP Boon I Mean think about it. Firing sounds so bad. but when you have firing and still have employment growth, it's actually freaking awesome because now the company that fired has more money to spend. Some other company picks the person up and properly values them hopefully.

And if they're not, then they get fired again in the future. and they're just a revolving door that maybe the you know the finger points at the individual and out of the companies. So so now all of a sudden that person gets another job and what happens GDP actually goes positive because both the company that fired and the individual now introduced more productivity into the world. Now the question is, well, what happens if there are no more jobs to get? But that's not actually what's happening in this economy.

Yes, that could happen in some economies, but it's not what's happening in this economy. What's happening in this economy is yes, you are seeing people get laid off of Consulting People get laid off of tech and guess what they're having to do they're having again Lower wage Tech or consulting jobs or go into a different industry. Yeah, that might seem like it's a terrible thing, but again, if you're paying a software engineer two hundred thousand dollars for fifty thousand dollars of productivity, they are Net. They are creating a deadweight loss of a hundred fifty thousand dollars of potential economic power.

The company saves the two hundred thousand dollars. Person gets fired, person goes and works a hundred thousand dollar job which is a 50 pay cut, but actually creates a hundred thousand dollars of value. Now you have a hundred thousand dollars of value here. 200 000 of value.

Here you actually have more GDP output. So layoffs are not actually a horrible thing. As long as the con the the economy is still functioning. which right now it appears that it is really.

layoffs are just a sign of what I like to call a re-jiggering right? It's kind of like companies did a bunch of this and then they're like, all right, we got too much. Let's do a little bit of that. all right Now we're good. We're good over here, right? Or you bring on people who actually help create productive, uh, productive margin.

You should always as an individual. Whether you're an employee or you're a self-employed or whatever, you should every single day be asking yourself how much value did I generate today and then compare that to what you're being paid. And if you got paid, let's say you're you're working at Walmart Okay And and your job is to do inventory. And you took 17 bathroom breaks and yeah, sent 200 messages or whatever on your phone and you did maybe an hour worth of inventory work.

And maybe you're really good in that hour. Maybe you get paid 20 bucks an hour, but you did 30 worth of work, but the company paid you 200. Well, the company didn't actually pay I Mean they may have paid you 200, but it cost the company probably 30 percent more. So it probably cost the company 260 dollars that day for you to basically do thirty dollars worth of work.

Well, in such a case, it is in the best interest of the company to do the hard thing and fire that person who's not being productive. No, there's always the question of like, well, was the person not trained or are they just a misfit, right? Like maybe that's not what they should be doing, Maybe they're not motivated for whatever reason. So this idea of layoffs always being bad is very flawed. It's actually very healthy for businesses to go bankrupt and people to get laid off because it's a wake-up call that you can't keep doing the same thing expecting different results.

What is it? A Bed Bath and Beyond never adapted to really getting into e-commerce Best Buy Did Best Buy and and Bed Bath and Beyond were both on the same path. They were both trending towards bankruptcy Best Buys Like we need same-day pickup. We need to have the best customer service possible. We need to have a better return policy.

We need to have better CX We need to have better availability of Supply Our inventory management system has to match. That is what's in the store has to actually be reflected online. And what's reflected online has to actually be on the store. We got to get our ship together and they did.

and now Best Buy is killing it. whereas Bed Bath and Beyond's not. They deserve to go bankrupt. Some businesses don't adapt and they die.

Adapt or die. That's Evolution This is a very normal part of the business cycle. so when I hear about like oh my Gosh, Bed Bath and Beyond they're going to be more bankruptcies good I want more consumer what they're going to be able to buy going forward, right? You know with the electric vehicles? Yeah, they got more and more of those in, but they went. What? six out of ten sales to be that? uh, just another few years? I don't know if we're ready for that because they're just about one out of 20 sales right now.

Uh, all right. Bob Thank you very much. hope you have a safe weekend my friend. Very good seeing you again Thank you Neil very much you too.

All right so that, uh, that addresses that. a little bit more layoffs here, you know. Mr Ops are uh says here Kevin doesn't take into account the period of time the replacement worker is unproductive. Who cares, That's called business.

You have to wake up and realize that if you run a business and there are unproductive people, well, hopefully you could train them better. And you could try to train them better. Anytime you train people, there's going to be A A A A phase where they are less productive, right? So you have to think about the life cycle of of basically, uh, somebody at a job you started a job. They're extremely unproductive when they start, but they have very high potential.

So let's say you pay somebody a hundred thousand dollar salary. The first six months where it's their first time doing stuff, they're extremely unproductive and they generate twenty five thousand dollars of value. But then in the future after six months, they generate 200 000 of value. Well, first of all, that it would be incumbent upon the company to eventually give the person a raise.

right? 125, 150 000. And now all of a sudden the company is starting to get paid back for the training period period, right? But now it's net net for both sides. The employee gets paid more and the company makes more money. But this idea that oh, well, you know we keep giving second chance.

Look, I'm all for two chances, three chances. But at some point people are not a fit for a company and they gotta go. So you know I'm a big fan of hey, you know, six months, You know, within six months you you know and then it's time to trade them in. So I mean you know it.

Sometimes people are like, oh, that sounds so insensive. It's like that's hello. That's good for both sides. If a person's working for a company and they're not productive for whatever reason, training, culture fit.

Uh, the type of work, Who cares? They are affecting the US economy, They're They're sandbagging the US economy because money is being wasted. We don't want waste in the economy. America is so great because we are so operationally efficient. Because you can get fired, you are motivated to work harder, Everybody's not protected by a union, and it's not impossible to fire people.

And we have a lot of right to work states. like even California is one. Imagine this: What the like. Literally I would say the most liberal state in the country is a right to work state.

Which means Yugi have fired it any moment for any reason. Well, maybe not any reason. But uh yeah, that's uh uh. you know that's uh.

that's that's in my opinion. How many people have 200 000 salaries and a lifestyle set on a 200 000 job and they're laid off and can only get a hundred thousand dollar, A job will not lead to higher GDP Well, it's a fair question. so let's analyze this. First of all, if you have a 200 000 salary and you're living a 200 000 life and you're at risk of potentially getting laid off because you're not actually providing more value than you're getting paid or you can't get A replacement job at that sort of salary? That's your own fault.

Sorry, that's a harsh reality. That's your fault. That's not the economy's fault. That's your fault.

That's why I Mean it seems like you still have what forty percent of people living paycheck to paycheck making six figure salaries. It doesn't make sense that that's not sustainable. So the reality is: people making two hundred thousand dollars should be aware that. Okay, well, what are my other options if I didn't have a job here and and my lifestyle should be conducive to to that level of value.

So that's always a risk, so that individual should always be prepared for that. I mean that's just the nature of of the world now. Uh, if the company that was employing them at two hundred thousand dollars now potentially has to lay them off and uh, and then doesn't hire a replacement worker and their earnings go down because that person has their lifestyle cut in half our earnings going to go down Absolutely. Could that lead to a recession? Absolutely.

That's what recessions are. So I'm not saying GDP is not going to go negative. Don't get me wrong, I'm not saying it's not I'm just saying in the long term, it's healthier. In the short term.

Absolutely, it could be recessionary. In the long term, it's a benefit to both the employee and the company. All right. So that's my take.

All right. Okay, so uh, what else let's listen to Jimbo over here for a sec. let's see what he has to say. You're not going to get much about 2022 in there.

No, because 2021 is sort of where that data set the world Stood Still after that I Mean of course not, but it can still be very helpful with a lot of different things. So it is. I I am I'm getting pushed back from people saying Jim You think that this is just going to be slotted in. it's just not going to happen as fast.

So maybe that gives the must of the world a chance to catch their breath. This thing is not just electromate. He's got a different approach as he says in front of the truth and he believes what is he worried about that that what it will have a it's someone taken over. he's worried about the big.

the big. The big thing that the human species will be eradicated by an AI that gains Consciousness and is right. You can't shut it off and Tucker actually says I mean you won't be able to shut it off I Mean it is. it is.

and we spent a lot of time in it. We've had plenty of guests to say we're way too focused on that. That's nowhere near where we are right now. Now that may very well be the case.

Okay, we'll have a question. Husk is not bad. It's sort of thinking about things terrific. I go back and forth.

yes I disagree with them. Occasionally they're arbitrary material. No. I'm not.

I tend to just listen to him and I've always respected him from the point of view of a businessman. Mr Davis from uh Merck last night welcome Mitch McConnell Talking about optimizes that this could be the way we we might. We're going to cure a lot of cancers. Meanwhile, you didn't take it here.

This is what you should have taken it. I'm saving that for myself like what's wrong with you All it is you went off I was trying to channel it and just we're gonna get uh Kramer's Mad Dash in a minute and we'll talk about this double upgrade for NVIDIA over at HSBC Some pretty astounding Revenue projections Take a look at Futures as uh, we kick off the second trading day of the week. Don't go away Nice. All right we.

um, there's a segment that I want to cover from the Elon uh, um Tucker interview. So uh, let's uh, let's hit that segment and then we're gonna. um, we'll go to the course member live stream I mean I have some more segment reactions coming later today. I'm not going to be able to get all of the segment reactions to the Tucker interview.

Uh, but um, uh yep. Got my second cup of coffee ready 310. All right, so let's do this one. uh and then we'll do the other segments we'll post later today, so stay tuned for those, but they'll be trickling out throughout the day.

Oh wait, let me make sure I have it. Uh, where's it? Where's it? Where's it? Where's it? Oh yeah, okay, yeah, here we go. Oh yeah, that's a good one. Wow.

Elon Musk I Just threw a Mark Zuckerberg under the bus and it was a harsh throw too. This was not a soft throw, this was a there's the bus I am grabbing you making sure you are placed right under the wheel and oh this was one of the most direct slams that I've seen by. Elon Musk on another billionaire and this one. Let's just say Elon did not hold back an ounce.

Take a listen to this clip and then what we're going to do is fact. check some of it. Let's listen in right here. Book Do this.

I know that Zuckerberg has said and I take him at face value that he that he is a kind of old-fashioned liberal who doesn't like to censor he has but he you know like why wouldn't a company like that take the stand that you have taken? It was pretty rooted in American traditional political custom, you know, for free speech. My understanding is that um Zuckerberg spent uh, 400 million dollars in the last election normally in a get off the boat campaign, but really fundamentally in support of Democrats Is that accurate or not accurate? that is accurate. Does that sound unbiased to you? No, it doesn't. Yes.

So you don't see hope that Facebook will approach this as a a non-aligned Orbiter Yeah, Oops, Oh man, that was a pretty big slam. and what I wanted to do was actually break this down. So the Associated Press did a fact check on this that ended up being totally biased. The Associated Press was like no, no, no, that information isn't true Mark didn't donate to Democrats He donated to two non-partisan organizations the Center for Tech and Civic Life and the Center for Election Innovation and Research.

And boy you get a lot of some of the details on those companies. But let's just start with this. First of all, when I ran for Governor in California one of the things we quickly realized is the reason you have these organizations that exist is the way politics works is you cannot get an individual donation from somebody from more than a contribution. Limit that limit I think is somewhere around 3 500 bucks.

That means anything more than that needs to be funneled through some kind of political action committee or some kind of non-profit So the two non-profits that Mark Zuckerberg donated nearly 400 million dollars for them are one the Center for Tech and Civic Life and the second I already mentioned. but I'll go through them individually now. So the Center for Tech and Civic Life is actually described as non-partisan and now. in order to understand the background of the individuals who founded this company, you have to look at this one segment from a Washington Post piece.

Eight years ago. Eight years ago, the Washington Post tells you there's this company called the New Organizing Institute or Noi. It's a basic Democratic Indoctrination Boot Camp. They say it's a basic.

They say it's an annual boot camp that gives rookies a basic set of skills, a crash course that helps them develop wider talent and knowledge infrastructure that many Democrats credit when discussing their technological gains in the last few election. Cycles blah blah blah. Basically, it's like a Mormon Indoctrination Camp instead of one of those you go to to learn about how to be a Mormon and serve your mission. It's how to serve your mission as a Democrat Okay, and the three founders of this company this this alleged non-profit organization pretty much all worked for Noi.

In fact, here's one of the three founders: Whitney Mae worked for the New Organizing Institute to work on voting information projects. But it's not just her, it's also the other co-founder Tiana Epps Johnson She ended up working for Guess What? Not only Noi, but also look at this folks an Obama fellow in 2008. For two years, she was one of 20 out of 20 000 applicants to be an Obama Fellow. And then you've got this other person named Donnie Bridges Donnie Bridges Guess what? Where did Donnie Bridges happen to work? Oh there it is.

New Organizing Institute So in other words, the three founders of one of the foundations that collected probably somewhere around half of that 400 million dollars is run by three hardcore Democrats The second, the Center for Election Innovation and Research is founded by David Becker. You only have to go to his Twitter or Google his name and you find that he's described as a hardcore leftist who hates conservatives. All of these four folks that I've just described either graduated Stanford or Berkeley all leftist institutions, so it kind of makes you scratch your head. Is that fair that Mark Zuckerberg donates 400 million dollars to democratic organizations? What say you now? I Gotta go to the course member live stream.

See you all in the next one. Goodbye and thanks so much for watching.