Welcome back to another meet! Kevin report episode number 87 Today We are going to be covering a few different things, but specifically I Want to start by uh, pointing out a little bit of confusion that's coming from some earnings reports. some of y'all who do fundamental analysis or like doing fundamental analysis uh, or those of you who just watched my fundamental analysis in the course member live streams. Some folks are wondering, why does it seem like companies are talking about how greatly they've been able to raise prices? And one of the problems where that's coming from is a lot of companies are reporting their fourth quarter their their calendar fourth quarter. Uh, or they're reporting their first quarter compared to the first quarter of 2022.

And so really, what they're doing is they're comparing this year-over-year picture and saying hey, look, this is the end of our year or this is the start of our new year And we're able to say, look, how much we've raised prices since then, But that's still understandable. It's still understandable that prices of course increase between January to really June July of 2022. So a lot of companies today and earnings calls are bragging about how year over year they've been able to raise prices, but they're not raising prices anymore going forward. and they haven't even raised prices quarter over quarter quarter of a quarter, which is known as sequentially.

They've actually either held prices flat or just been focusing on margin improvements now. I Find that really interesting because a lot some folks are seeing inflation expectations increase at the same time and that creates some problems because wait a minute if year over year companies are bragging about how they've raised prices. Is there a potential? At the same time as we're seeing inflation expectations at least in the one-year term based on the University of Michigan rise and we just had Bullard yesterday come out and suggest, hey, okay, we're gonna have to go higher for longer and I mean it. This time, the banking crisis was a whole lot of nothing, so you know what that means.

we're gonna raise rates again. Oh, and we're gonna raise them to five and a half to five and five eighths somewhere around there, because we gotta get inflation down. Now it's wild, because at the same time as you have this weird short-term de-anchoring of inflation expectations, long-term expectations for inflation are still stable. Not only are long-term expectations for inflation stable, but when you read any of the earnings calls, there's no indication that we're still seeing price increases.

Uh, at any kind of abnormal or concerning level. A price increase around one two percent that's normal, right? Even three percent to some extent brings inflation down. But this nonsense about some kind of runaway Paul Volcker style inflation is potentially giving the market some heart palpitations and there are a few things pointing to that reason. and I think that's why you're seeing some of the indices quite red at least as we go into market open today and we'll see how they evolve.

You know, Netflix of course is usually a little bit of a harbinger of uh, well, what's to come and Netflix uh you know they didn't know the customers we were expecting. We were looking at somewhere around 2.41 million ads of customers and Netflix is like yo yo yo, stop judging us based on our customers, judge us instead based on our free cash flows. You know it's kind of like the uh The Wolf of Wall Street line. You know I Ask my customers to judge me on my losers, not my winners because there are so few of them and almost kind of felt like that.

It's like kind of like I don't know Netflix You know, adding customers is a big deal and apparently y'all aren't able to actually add customers with your new advertising supported price structure because guess what, when people watch a show, people don't want to watch ads. It's simple. Uh, so anyway, of course yes, they had free cash flow. they had a nice net income boost, but you're seeing companies actually struggle to raise prices.

Look for example, at Tesla I mean Tesla's turning into the epitome of price Cuts Now that's on one hand, potentially bad for margin. Tesla Model Wise are now 29 cheaper than they were a year ago. Tesla Model 3s are 15 cheaper than they were a year ago. These price Cuts Come just a day after we hear that the Inflation Reduction Act has been extended for most models of Tesla us.

Except in addition to that extension, they're also dropping prices by as much as six percent. Take a look at this, the base Model 3, which actually only gets the 37 five tax credit basically immediately got dropped by two thousand dollars as it did lose the 37.50 credit, the Model Y long range performance, and standard. All three of these have the 30s or the full 7 500 tax credit that actually got extended. But on top of that extension, what happened? Tesla reduced prices anyway.

So I I'm like mind blown that there's this potential thesis that somehow inflation is still going to be resurgent. Not just because we're solely looking at a company like Tesla but it's because we're looking at the broader Market disinflation is here. Yes, year over year at many companies, prices may still be higher, but re really now. The competition is which company can actually cut prices to compete for fewer consumer dollars and maximize their profits.

And that's actually where pricing power comes from. In a recessionary environment, you have to ask yourself what product is still going to attract customers as prices come down and margins stay high. And that's going to be a big question for Tesla and their earnings today. have they maintained the pricing power that people believe that they have had? Remember, pricing power is not simply an explanation of oh, pricing Power means price goes up.

That's actually highly incorrect, because if you think about it that way, then what you're really saying is in a recessionary environment as demand Falls a company should still be raising their price. But that would be ludicrous because if a company, we're still raising prices in a recessionary environment, their demand would probably double or triple. To the downside, and what you would end up having is less operational leverage and you'd end up having lower earnings per share profits. which is terrible.

That's not where you want to be. You want to be in a situation where you're able to competitively maintain margins, grow earnings per share. Ultimately, that's the goal of a company, and that's what defines pricing. Powers The company's ability to grow earnings per share with positive leverage in their operating in Gross margins.

So we'll see what happens. But I'll tell you to me, there don't seem to be indicators of inflation, but the market is still concerned about those indicators of inflation right now. and that's exactly why we're seeing treasury yields rise and mortgage rates rise once again. Redfin Just reported for the first time year over year that home prices are down three percent.

I Thought by now they'd be down a little bit more on the year-over-year basis because Peak to trough real estate was down somewhere between 10 to 15 percent. but real estate has actually started to recover in January and February as rates started coming down a little bit and inventory still hasn't moved up at all. This is despite withdrawal requests from REITs uh, institutional investors suggesting they're going to sell defaults and Commercial we're not actually seeing any kind of inventory surge right now. And so even though here's the chart of mortgage rates, even though mortgage rates are high, they're certainly off their September October.

Even though those mortgage rates continue to take up there on the right, or just taked up a little bit on the right, bond yields are up. Uh, the 10-year treasury right now sitting at 3.63 it's up almost 30 basis points. Again, somehow the market is trying to say oh well, Now we're not worried about banking crisis anymore. Now we're back to being worried about inflation and I can't help but look around and see nothing other than deflation and disinflation.

I mean maybe I'm losing it, but the one place I'm seeing prices go up is maybe gold and Bitcoin which obviously some people call digital gold. But even after the OPEC production cuts for oil, look at this. This is the chart of a Brent Crude. So we got oil production cuts that instantly skyrocketed oil somewhere around 10 percent.

And look, it's been bleeding out on the right side. Over here, we ran as high as 87.50 and we're already back to 83 16.. This idea that China is going to export a massive amount of inflation when they reopen. and and after all that inflation is exported, we're going to see a massive Resurgence of inflation in America is also.

dare I say ludicrous because as China is rebounding as you can see here, a piece from TS Lombard just yesterday, China's Mobility is rebounding, services are leading the recovery. What's happening in China China's Ppis, which is the producer price index Epic Lows: They're negative year over year on ppis, so are we like the leading indicators are negative. In fact, we did a course member analysis uh on PPI versus CPI and it was phenomenal because one of the things we were looking at uh in the chart over here was uh was you could see the Um ppi is the is the white line over here and then you've got this sort of blue line of inflation of CPI inflation where really housing is just propping up the blue line and so as soon as housing rolls over in terms of rents for a year over year, all we have to do is go flat or slightly down from the 7.2 percent rent increases that we're seeing annualized which is nutty. I mean even if you just go flat, this should roll over very soon in terms of CPI and actually follow PPI down.

Uh, anyway, this is something we were talking about more in the course member live stream, but let's go back to TS Lombard here. Oh, that does still remind me today. Uh, is the day before 4 20. Today and tomorrow we're doing a flash sale.

Uh, for the programs on building your wealth. We are getting rid of the single courses and potentially the lifetime access as well. We're going to be doing uh, something different in the future, so if you wanted to get in the most inexpensive way, now is going to be the time to do that because it's probably going to be a lot more expensive and a higher barrier to entry going forward. So good opportunity to check out those courses and that uh 420 flash sale link down below.

But anyway, let's keep going here on inflation. Look at this: TS Lombard A notable bear Folks, A notable bear. What are they talking about? Disinflationary drivers Prevail Inflation Outlook Improving in a growing number of emerging economies and fact expectations for emerging economy inflation is falling. You could see that right there.

This is the downtrend of higher expectation Inflation is being replaced by lower inflation expectations. This inflation prevails in Brazil India China We're expecting it to come in America but we just continue to overweight how much rent affects inflation in America China Services Lead recovery appears unlikely to boost in exports. What does that mean? No. Chinese exported inflation.

That's a big deal everybody's so worried about. Oh my Gosh. China's reopening is going to create this inflationary impulsive I Hate to say it, but I've been pounding the table for five to six months going. It ain't gonna happen.

And the reality is, it ain't happening. Like okay, the Chinese is going to spend more money on Starbucks and local traveling. but are they going to spend money and create inflation and more export? Uh, you know, Or or they get export inflation because no, it's just not happening. So now, investors are high.

Highly bearish right now. in fact, so bearish that it almost makes you wonder. like for example, looking at Tesla how much could Tesla really fall after earnings when people are already so bearish it seems on the market. Uh, in fact, take a look at this: Bank of America had a piece as reported by Bloomberg that investor allocation to equities relative to bonds has dropped to its lowest level Since the global financial crisis, investors indicated that fears of a credit crunch had driven up Bond allocations nearly 10 percent overweight.

In other words, you're You've got people that are still so fearful about are my auto credit garage banking crisis that they're flocking to Bonds. now. Those people are already starting to get hosed because bond yields are rising. Which means people who bought Bonds in the last well, three, four weeks are already taking an L on their bond positions and that 63 percent of participants now expect a weaker economy.

The most pessimistic reading since December of 2022. And uh yeah, here. look at this sentiment turns more bearish in April most pessimistic thus far in 2023. Yikes.

Look how bearish this is. Uh, these these little um lows here. I'll highlight these. These lows here show the last time we've had this sort of bearish positioning My goodness.

2011 and 2012, that was like the best time to buy right here. So was 2004. I mean you would have wanted to get out by about 2007, but 2004 was a great time to buy 2010. still had another low ahead of it, at least in housing, but for stocks, it was a great time to buy 11 and 12..

everybody's worried about the double dip recession which was total bull crap June of 2019. Things were still recovering the rest of the year after the 2018 disaster at the end of 2018. Uh, and then Kovid was a fantastic time to buy. personally.

I would say a lot of these times right? Here were great times to buy. Uh I mean I'd say May I mean 2016 was a phenomenal time to buy as well. Uh, October of 2022 we're off those bottoms and uh, the stock market technically bottomed in February of 2009, so you had a little bit more to go over here in 08 and August of 06 is questionable I think it's my iPad this is incredible. This little HDMI I think I I can look at this for a second.

Okay, the little tangent little tangent. look at this. look at this I Thought it was the dongles I thought it was the dongles So I'm like I'm just gonna keep trying dongles until it stops and this is insane I think it's the iPad that's wild. Uh, anyway, like doggle Man over here I think I've got like 10 of these stupid Apple dongles and it's insane.

This is driving me nuts Anyway, sorry tangent, but you know what? like I'm causing dongle inflation right now by buying so many of these dongles. I had a I had to return something. some of them are still closed I'm gonna return them. Uh, because I'm starting to think it's not.

it's not the dongles. Um, anyway, so so people are so worried about inflation coming back. but again, I I'm just not seeing it and we're trying to read Ernest calls on a daily basis to try to understand where is this inflation coming from and we really don't see it. Uh, I mean you again, look at.

look at the Tesla price Cuts but don't just look at uh, the Tesla price Cuts look at the prices. uh for for Lithium, look at the prices for some of the Commodities What we could even do is we could look at the Bcom index which is the Bloomberg commodities index. Uh, and we could get an idea for hey, how are we doing in terms of input prices? We already know when it comes to produce surprises. We've seen producer prices fall because obviously we've gotten PPI reports and and reports suggesting hey, things aren't actually that terrible.

But for some reason again, markets have this impression that right now it's time to be fearful again. I Think if I had to give an explanation to this and I don't know with certainty. but if I had to give an explanation to this I Think there's a possible fear that over the next two to four weeks people are going to be just solely worried about earnings. And if people are so worried about earnings, then maybe in the short term it'll feel like there's some fear around.

uh, inflation. but again, not when it comes to actual companies and seeing this inflation I I Don't see it I I don't see it I Don't know I don't see it at all. But again, let's let's jump on over to the B Com Index. Okay, so how's the Bloomberg Commodity index doing? Let's let's look at some things here.

So here's the Bloomberg Commodity Index I Mean it it. I Think a seven year year olds could draw a trend line on exactly what's happening on the Bloomberg Commodity index. when you go year over year. On the Bcom index, you're at 107 right now compared to 131.

What do we got? 107 divided by 131? That's a decline of 19 18.4 Essentially, that's what you've got right now. Uh, you've got, uh, Lithium prices. Let's pull lithium prices as well. Let's get these over here so we can specifically look uh at uh at Lithium.

China is complaining about a glut of Lithium? Oh my. Lord Look at this. This is kooky dookie. Uh, this is the one year Lithium Price index.

Look at what's happening here. I mean you were at 46 4 per ton over here. Uh, and now you're sitting at 17 3, 17.3 divided by 40. What did I say? 44.1 Let me double check that.

Uh oh okay. 48.3 Well, let's do that correctly. then. 48.3 Yeah, Lithium.

Are you serious That I mean Lithium prices in that case are down somewhere around, um, 80. That can't be right? Hold on a sec. 18 2 is actually, uh, where are we right now? There we go. What is that? What is this level right here? 18 4.

Let's try that. Let's try 18 4 and 46 too. 18 4 divided by 46. 2..

yeah. I mean Lithium prices are down like 60. Uh, and that's not even off peak, that's just off. A year ago, off peak Lithium prices are down even more.

I Mean you're talking 18 2. Uh, from what is that 550? Let's go with 55. There we go. Yeah, you're down about 67.

It's remarkable. So everywhere I'm looking I'm seeing disinflation. Disinflation. disinflation.

Is it possible It's going to research? Absolutely. And I'll tell you if inflation resurges Kevin Your boy Kevin Screwed your boy Kevin's gonna lose lots of money. Uh, because so like, yeah, maybe I'm biased. but please show me where the inflation is now every time I Say that people write these comments and they're like, but when I go to the grocery store, prices are still high and it makes me want to pull my hair out because here we are trying to talk about more advanced economic data.

but we still have to step back and say, bro, it's the year over year change and the month over month change that matters. And if prices are still high but they're not Rising then inflation is zero You know I Think that's where people are like, oh, inflation is rigged fine. Maybe the CPI is rigged to some extent. But look at company data.

Please show me companies other than maybe pet stores and Aerospace that are still raising prices trying to find it and I can't see it. Everyone's reducing prices and so in a price cut environment, you have to ask what are the remaining companies that actually are going to be able to support the greatest margins in a price reduction environment? Here's an extreme example: Would you rather spend money investing in Rivian which just lost its EV tax credit of 7 500 And would you rather invest in Rivian where they have to spend 280 dollars to get a hundred dollars in Revenue Or would you rather invest in Tesla where when they spend a hundred dollar or when they receive a hundred dollars, they actually have 20 bucks left in gross margin somewhere around there, maybe 20 25. Uh, somewhere around there, right? So those that's an extreme example of which EV maker would have pricing power now then you have to ask yourself, well, who's going to have more pricing power Tesla Or a company like and base or Nvidia Maybe there's a flip-flop. Maybe those companies end up with more pricing power.

but now we're we're dictating between really the winners of their industry. So broad schema things here: Uh, I I Don't see it I've been looking at the comments here trying to find somebody who's talking about inflation. Somebody here says Job Market Opening up this summer which could create a second round of a wage price file. There never was a wage price spiral.

We were worried about a wage price spiral. It never happened. And what do you mean? Job openings Job Market Opening up this summer I I Like more more job like More companies wanting to hire this summer. It seems like companies right now we've got this sort of mixed signal in the job market which In Fairness I'll give some Credence to this idea that you know we're not clearly in just a layoff environment where you're still adding jobs every month, but you don't have to look far to see what's going on with the Bureau of Labor Statistics and wages.

and you don't even have to just trust them. Look at the ADP report. even the ADP reports for wage inflation are falling. Uh, any indicator that we're looking at whether it's in CPI it's in wages.

They're indicating a softening, Uh, in hourly earnings. Not any kind of, uh, insane wage price spiral. So, uh, we haven't seen it in the past year and a half. That was a concern, but we haven't seen it.

So uh, I I don't know about that. Uh, yeah. I Think it makes more sense to be worried about earnings. But then, if you're worried about earnings, how could you at the same time be worried about oil going ups? That doesn't make sense either, right? In order for oil to go up, there has to be more demand.

But if you're worried about earnings going down, why would oil go down, Or why would oil go up rather, right? Because if company earnings are going down, that means the economy is Contracting Which means oil should be coming down as well. Now I I Find it very difficult to make the argument that oh, oil is going to Skyrocket at the same time as earnings are going to go down. Why? The only way that would be true is if if somehow we had additional, uh, you know, massive cuts to production. But at some point, OPEC doesn't want to cut production either, because even at a lower price, they still want to be able to produce.

Because otherwise, they can't fill their coffers with cash, right? So there's a limit to how much they can. they can restrict uh um uh. production. So uh, it's it's gonna be really interesting.

Uh, climate change is inflationary? Yeah, that's a pretty Republican argument. Uh, we've already addressed the Chinese reopening, but you know nobody's forcing you to go green. Yeah, Is it expensive to put in solar panels and a batteries for your home? Of course. But guess who's doing that? Rich people or wealthy businesses are poor people doing that? No.

Or mid-income earners doing it? I Hope not. Hopefully they're not buying solar leases now. there's this argument that okay, but maybe forcing people to adopt uh, you know, or go to an EV strategy. But I mean we're worried about that for 2032 where we're worried about people having to maybe offer new cars by EVs and you know that's just going to get kicked down the road anyway when we even get close to that.

I mean that's like a nine year away concern. So yeah, of course, to some extent, new building isn't Uh is is going to be somewhat more expensive. uh, and therefore inflationary. But wait a minute, you have an existing housing stock that you could buy.

So see, real estate single family real estate isn't dictated by how much it costs to build a home. It's dictated by what the market will bear, which is comparative to what all the other hubs are selling for. So this idea that that uh uh you know climate change is is, uh and the inflation of climate change. Honestly at this point and this is this is I've been sitting here for 20 minutes asking people to give me where the inflation is and the only thing that I've heard is well the wage price spiral is going to come back or oil is going to go up.

Oil is not going up the wage price file. There's zero evidence that it's coming back or going up. Uh, we've talked about the China reopening not being an issue, we've talked about disinflation and now all of a sudden we're reaching 10 years into the future going, but in the future things are going to be more expensive. Jesus Christ There's no inflation.

Uh, so so I I don't know. not saying there definitely isn't any somewhere I'm sure there is. all you could look. If you want to say there's inflation, go look at Aerospace there's inflation in Aerospace Go look at pet stores.

they're still raising prices. uh and then of course you could look at the volatile Goods like uh, foods which which move on a month-to-month basis or oil should be a little bit more expensive going uh for for our Uh April reports because for most of this month it's been a little bit more expensive. and remember they take the months in thirds so two-thirds of the month is already over. and yeah, Energy prices have been a little higher, but uh, but I'm not seeing in it.

You know ESG is forcing to go green. Where where in your life are you spending more money on ESG this is this is a Fox News talking point. Look I'm not a lot of people who watch Fox watch me too. But I Really want you to ask yourself in your daily life, where is ESG making your life more expensive in a recessionary environment? It's not.

It's not, but it's that simple. So anyway, that does it for Kevin's rant on inflation because I don't see it and it's pissing me off because I really think the more the Federal Reserve is concerned about inflation or this Specter ghost of inflation, the more risk there is the Fed over Titans and actually causes a recession. Well, right now the odds of a recession aren't like it's not. It's not a foregone conclusion at this point, so we'll see foreign.

next up. Let's talk about uh, we gotta talk. Uh, the data. Uh, do we want to talk about the dollar? Yeah, we could do that.

All right. let's talk about the dollar. It's a good piece out by. Wells Fargo on the data, you know I Remember in uh well I'll talk about that when we hitting a sip of coffee over it.

All right, Foreign? All right. let's see here: dollar does not mean PPI inflation PPI inflation. It occurs when uh, producers and manufacturers can charge more money based potentially on Rising input costs because of a weaker dollar, making those input costs higher. But if the value of those input costs is plummeting faster than the value of the dollar is plummeting then then you're still net negative, right? So it's all relative.

Of course, we can make the argument that the following dollar should impute some kind of inflation, but not if those businesses have no pricing power, then the falling dollar would actually help us in the international. Uh, well, from International earnings than it actually is is a Tailwind to earnings. All right. Next up.

Uh, let's see here. Um, boy. there has been a lot of fear about the US dollar losing its Reserve currency status and there are many reasons for this. But today, we're gonna break down a Wells Fargo piece on exactly what's to come for the US dollar and what's left in terms of the strength of the US dollar.

After all, we're hearing rumors that Russia, at least at some point in the past, has been in talks with Brazil and India and China about creating a Brex currency although that was probably a revived rumor since before the Ukraine Invasion so it's probably meaningless. We've talked about China negotiating deals between Iran and Saudi Arabia once Arch enemies. We've talked about the US's botched withdrawal from Afghanistan leading to much fewer uh trusted Reliance in the American government. Given the power vacuum they've left in the Middle East and also potentially the United States is failure to actually approach appropriately appropriate Aid In the Middle East and Africa for example, why did Egypt just consider sending rockets and missiles made potentially with U.S dollars? Given that we've given them over two and a half billion dollars over the last four years to Russia, Why was that even a consideration? Now we've gone uh, a civil war essentially in the uh North uh, East country in Africa of Sudan Uh, the Darfur regions fighting again and once again, countries are calling the United States.

But what's the United States doing? Pretty much nothing. Now, this isn't to say that the United States should be the World police, but it is to say that the less countries can rely on the United States, the more they start doing things like trading natural gas in Chinese Yuan instead of dollars. And that's exactly what Saudi Arabia just did. They started settling some natural gas contracts in Huang in China instead of the US dollar and it's leading a lot of folks to wonder at the same time as the US dollar is falling.

Oh crap, What if the dollar loses its status as the world's Reserve currency? Well, what's first worth understanding is why the dollar is falling. The dollar. First of all, it has fallen when we look at a six-month chart. Pretty pretty nicely here.

Okay, we're down from about 112 on the Dixie down to about 101. go out about a year and uh, you could see this peak of the dollar somewhere around October where we were somewhere around 112 and so we've been on this disinflation path. If you will, uh, for the dollar. Now, why potentially is the dollar falling at the same time as all of these International concerns are propping up? well explain exactly why the dollar is falling.

But first I want to look at is the dollar going to go away as other countries start talking about getting rid of the dollar and the reality is well outlined by Wells Fargo And if we understand Wells Fargo And then we explain why the dollar is falling All of a sudden, there's a real chance your fears around the U.S dollar imploding and going away will also implode and go away. That is your fears will go away. So let's talk about what the Wells Fargo has to say about the US dollar status as its Reserve as a reserve currency of the world. I Do also have to mention that tomorrow is 4 20 and we are going to get rid of the lowest options to join the programs on building your wealth.

We're probably going to get rid of the lifetime access and the single courses after 420 so we've got a flash sale going on right now. If you like my perspectives, consider using that 420 coupon code link down below today. tomorrow, flash sale on that and then the net prices to get in will be going up. You get course member live streams on building your wealth and perspectives from going to zero to millionaire in real estate stocks or otherwise.

So what do we have over here? Wells Fargo In recent weeks, the US dollar status as the world's Global Reserve currency has come under intense scrutiny, with some analysts predicting the demise of the Greenback's Reign Such speculation has occurred in the context of China and Brazil announcing clearing Arrangements and other information that we've just ah, sorry, I almost had a sneeze there because all this fear is there we go. Okay, so how does Wells Fargo counter some of this? let's look at these charts. First of all, Wells Fargo suggests here's foreign Exchange turnover by currency and you could see that Us Uh dollars make up 88.4 of all of the US or all of the international turnovers that occurred. Now keep in mind this is out of 200 percent because there are two sides to each uh uh equation, right? So you have to think about it as uh, when you add all this up, you're gonna get 200 because you have two sides, but the point is, you've got almost 50 percent essentially when you look at it that way of All Foreign Exchange turnover conducted in US Dollars Part of the reason for that is US Dollars don't have convertibility issues.

You Don't have government risk, and even though it's Fiat it's the most trusted Fiat that exists. I Know a lot of people, especially those in the crypto Community Don't like the Up and they'd love to see the doll or die and a lot of people are suggesting well Bitcoins going up because of the weakness of the US dollar for the weakness of the US dollar we could have seen coming from a mile away. There's a reason I had started to short the dollar and again, I'll explain that reason in just a moment. But what do we see when we look at these charts: FX Turnover by currency The US dollar Reigns substantially Supreme The second closest currency by for Global Payments is the Euro not the Uh British pound, the Japanese Yen the Chinese Yuan These don't even hold a candle to foreign transactions.

That's just one of the facts. Beyond that. what do we have here? Reserve Managers continue to choose the dollar. The U.S dollar still represents the majority of global Reserve assets.

That is, when people or countries want to maintain a currency or bonds, they prefer the dollar. Now, why would they prefer the dollar? Well, one of the reasons they prefer the dollar. In fact, we've got a breakdown right here. One of the reasons they prefer the dollar over the Japanese yen is because Japan is distorting their bond market thanks to yield curve controls and they're freaking out markets so that's an unstable Bond Europe is concerned about fragmentation between the value of bonds between basically France Germany Italy Spain which is basically saying you've got the really strong economies in Europe potentially fragmenting the yields on their bonds versus the poor countries in Europe like Italy and Spain versus France and Germany.

Then in China, you've got too many capital controls, creating disincentives for Reserve managers to actually allocate to Chinese bonds. Now, even though the Chinese Yuan is paid to the US dollar, it's still not desirable Because now if you use the Chinese Yuan, you're having to deal with the Chinese government instead of the US government. And look, I'm not here to show the US government just saying it's the least bad out of all of the other options. Uh, and so there's no surprise when we look at the US dollar.

It is super supreme in the International Community. But beyond that, you have to understand people keep talking about the Petro dollar going away. The Petro dollar is basically oil traded in uh, in dollars. The Petro dollar market sits at around four trillion dollars.

That's pretty big, right? but there's some. The The foreign use of American dollars sits closer to 12 trillion dollars in total. So outside, just oil dollars. So really, you even just the Petro dollar alone.

If a hundred percent of it went away, it just represents a third of international use of dollars or or Holdings of US dollars. And what's wild about this though, is it's probably in my opinion going to take 30 years for the US dollar to no longer be used in oil settlements. And guess what? we probably won't be trading in 30 years. Oil, or at least not as much as as we do today is hopefully our world wakes up to the beauty of nuclear clean energy.

Uh, over you know, some of the solar and wind. Although solar and wind is probably strong enough to help I'd much prefer it heavily relies on Battery Technology I'd Heavily prefer investing more in nuclear power, but that's going to take a while. It's been a little unpopular thanks to Fukushima but that's really a topic for a different video. So if the dollar is so strong, then why is the dollar falling Kevin I Mean we just explained why the dollar is so fantastic and so wonderful.

Then why is the dollar falling in value? It's very simple. There's one very simple explanation for why the dollar is falling. It's super easy and it all has to do with inflation expectations. As inflation expectations go down and the United States doesn't suffer from Runaway inflation.

What ends up happening? Well, you end up seeing yields on treasuries fall when you see yields on treasuries full as they have been over the last uh, six months. What you end up getting is less demand for U.S dollars. Because think about it, the 10-year treasury in October November was trading for somewhere as high as 4.25 percent. Look at this six month chart right here on CNBC.

This is a six-month chart of 10-year treasuries. The downtrend is super clear, and the downtrend actually corresponds directly to the downtrend in the US dollar. So you look at the peak of the US dollar right there in October right over here, right peak of the US Dollar. Holy moly, you got a peek over here.

Let's just go to year one year on both of them. Go to one year on both of them. And what do you see? Pink Treasury yields right here, basically aligning with Peak Dala. Everybody wants the dollar when the 10-year treasury is offering you 4.2 percent.

But as inflation concerns have started to become transitory, transitory is obviously a very offensive word. Uh, you know, the Federal Reserve made plenty of mistakes still printing money while inflation was too high. There's no defending the Federal Reserve on that. but inflation will very likely end up proving to be transitory over a span of two three years, which is a lot longer than the Federal Reserve expected.

But the point is, as inflation continues to prove that we're actually trending towards disinflation, maybe even deflation. Well, then, treasure yields fall. Now, treasury yields did go into a little bit more of a hole here because of the banking crisis, but the trend is clearly down from 4.2 to 4.6 percent. Uh, just like the trend is down on the U.S dollar.

So now what's really easy to do though? and this is where you have to understand politics? Ready for this? This is? This is my favorite thing to mention. Let's get serious about this one. My favorite thing to mention is that you have a democratically controlled White House And what do Republicans hate? A democratically controlled White House Republicans Also dislike the United States's performance in many different regards to the presidency, specifically in regards to the Middle East. And so what is a beautiful thing that you can do if you're a Republican or your Fox News You could basically say oh my.

God The dollar is plummeting. The dollars lost 15 percent of its value from Peak. At the same time, China's starting to negotiate natural gas currency transactions or natural gas transactions in Renminbi instead of US Dollars. That's it.

We're losing our clout. It's all because of Joe Biden's withdrawal from Afghanistan and our weakness in the Middle East. And yeah, don't get me wrong, I Personally think the Middle East is a show, and we've made some really big mistakes in the Middle East and some big mistakes with our foreign policy. I'm not arguing that at all.

I'm simply saying it's awfully convenient. Does it that as inflation is going down, the dollar is falling and it's easy to ignore the inflation side of the equation and just say dollar falling Biden Sucks. Hell yeah, let's pop a beer, but not a Bud Light So anyway, look this whole dollar D dollarization stuff is a bunch of hogwash. If I could short the idea that the dollar is going to lose its Global Reserve currency I'd probably put a million bucks on it because it's complete nonsense.

It's not happening anytime soon, Even if the petrol dollar went away, it doesn't matter. The rest of it is just politics. That's what it is, and that's what you should be considering it as so when it comes to dollar dollarization, don't worry about it. check out the courses instead.

All right, we have a few more things to cover. So Today we're going to do the course member live a little bit later. it's gonna be at 7am, so let's get ready for the Bell Oh man. Sneezy Today my gut is whether it's a modest recession or we Dodge that bullet sort of doesn't matter that much.

What really would matter is if inflation's not tamed, it has to go much higher than people are expecting. You go into a much deeper recession. That's certainly not the likely outcome at this point. Yes, that's right.

Senator Morgan Stanley On the call. talking about the trajectory from here of the raid hikes. I Guess no surprise. two years almost back to 4-3 Yeah, okay, everybody's pretty convinced there's going to be.

It's just a question of whether it's gonna be. one or two. Uh, I Do point out that the Bank of America people question why there need to be any, given the fact that there might have been some weakness in April I'm not hearing anybody saying that so far. April Strong.

Uh I Just feel like a lot of people are saying let's see what the big say. Like the big Consulting companies are saying uh, let's see what the big tech companies are saying in terms of layoffs I Don't hear and they you can contradict me I Don't hear a lot of tech companies doing a lot of hiring if you want that, a nutrient dense snack and beverage company Jim Um, speaking of sort of uh, macro conditions, these reports of uh, playoffs at Disney next week? Yes, a boxing. maybe Meta's got a new round coming in the days to come. Open door cutting another 22 after cutting 18.

Open Door is trash I'm still surprised Open Door is not bankrupt. It's complete trash. Uh, see. Oh Buck Six Wow.

Anyway, Uh, all right. so some things to talk about. let's see here quickly. Uh, let me get NASDAQ Oh down 0.69 Yeah, that reminds me of the 69 off you can get at the current price before the price changes.

Entry price will be substantially higher for the programs of building your wealth. We'll be changing things up a little bit, actually quite a lot uh, over the next couple days. So uh, buckle up for some huge changes coming. Uh, but you'll uh, you'll You'll be happy you got in before.

uh, the changes. So uh, consider joining before the changes. Let's now go ahead and, uh, jump into um, the next topic of the evening address. All right.

So we did that. We did that. We did that. Okay, yeah, next next topic.

so I I Want to take, uh, a moment to talk about, uh, the Elon Musk Ai And then we got to talk about Gary Gensler And then we got to get to the course mobilizer. All right. So yes, let's pull this up really quickly. Uh, and then we'll also see what happens with the market in the morning Here and here we go.

Okay, uh, let's you know what. We're gonna start with Gary Gansar because a lot of people have been asking me to comment on what's going on here and I think I have some insights that'll be somewhat useful on the Gary Gensler issue. Uh, okay, so we'll start with this and uh, then we will explain. All right.

Here we go well. Gary Gensler The chairperson of the SEC actually showed up in person to something and testified before Congress about, well, whether or not Bitcoin or Ethereum is a security or a commodity. and let's just say his answers were quite dodging. In fact, that's pretty much all he did.

He basically refused to address whether or not Bitcoin or Ethereum was a commodity or security now I have an explanation for exactly why Gary Gensler is doing this and this is by no means going to be a shill on what's going on at the SEC or Commodities future trading commission. It's actually what I think something somewhat Sinister that's going on and I'm going to give you an explanation. But first, it's worth noting what the interaction was like. Here's just a short clip, but this went on substantially further.

There was even one individual in Congress who went as far as asking if Gary Gensler when he was the chief Financial Officer for Hillary Clinton's campaign if he authorized the payment for the Steele dossier that really took Gary Gensler off guard and he's like, well, I saw what I'm here to talk about and he's freaking out it was. it was musty TV But we've got to actually address why we think Gary Gensler did not answer the following question. so let's watch this for a moment here. It gets a little redundant or repetitive so I'll stop it when it does, and then we'll get into uh, why uh, this could be happening.

Ready for this Here we go or security and again, it depends on the facts and the law and if there's a group of I'm asking about the facts and the law sitting in your seat and the Judgment you are making and so uh, Mr chair I think you you would not want me to prejudge because you have prejudged on this. You've taken, you've taken 50 enforcement actions we're finding out as we go as you file suit as people get Wells notices on what is a security in your view and your agency's view. I'm asking you a very simple question about the second largest digital asset what is your view and my view is is if there's a group of individuals in the middle middle that the public isn't all right. So let me just ask a second question.

Do you think it serves the market for an object to be to be viewed by the Commodities Regulator is a commodity and the security is regulator to be viewed as a security. Do you think that provides uh safety and soundness for for for the products? Do you think it provides consumer protection? Do you see? do you think it serves the value of innovation? I Think no should be a very simple answer for you here. I Think that uncertainty is bad is it not and I think that Congress has said that there's one agency that's secured as an Exchange Commission under this committee, you won't answer my question and you're the head of that agency. So give me a break.

Come on. I'm answering it in the generic because you would not want me to speak about any one set of facts and Circumstance Okay So but you've already spoken. Have you said anything about Bitcoin Uh, my predecessors and the agency itself is spoken to them. Okay, but you're not willing to do the same about Ether.

Okay, so let me just step back. There's a lack of clarity here in the marketplace. Can you at least agree to that I Think that the clarity is there. The law is clear, right? Let me.

let me. Okay, let's stop right there, because there's absolutely no freaking Clarity at all on whether or not BTC or Ethereum should be considered security and commodity or what. But let me give you my explanation for why I think Gary Gensler is being so dodgy. So first of all, whether or not a uh an asset is considered a security or a commodity all has to do with the definition of a security.

And this is what. basically Gary Gensler keeps trying to talk about this expectation from the public. Ready for that. Here is the definition of a security.

This is the legal framework by which Gary Gensler is bound because of Congress. All right, the term security means no. Note: Stock, Treasury Stock Security feature Security Based blah blah blah Security Interest and Participation of Profit Sharing Agreement blah blah blah Okay, so it goes on to all this crap right here. The specific part that it seems that Gary Gensler is referring to here is the following: certificate of Interest or participation in any profit sharing agreement.

So in other words, what he keeps trying to say before he gets cut off is that: look the law right now says if there is a group effort and therefore then an expectation of profit out of that group effort, then it's a security. Which is complicated because then you wonder, okay, well, is collectively mining to create a yield a participation in a group project and therefore making Ethereum a security? So and since Bitcoin doesn't potentially have that pooling of of stakers, then maybe Bitcoin isn't a security. Maybe Bitcoin's a commodity, and Ethereum is a security. That's what he's trying to say, but he's completely failing because he doesn't want.

and this is where the Sinister part comes in. He doesn't actually want to say it's a security, or it's a commodity. Why? Because both the commodity Futures Trading commission and the Security and Exchange Commission have dual enforcement actions going against dozens of different organizations, and if one of them says something to contradict the other one's case, Well, now you have. The agencies are going to be pissed at each other because for example, if the Cftc guy over at the Commodities place is like yo, come on Gary you can't call that a security.

It's a commodity. It kills their jurisdiction. If the Commodities guy goes, these are all Commodities then Gary's gonna be like dude man now. I don't have a lawsuit and so what's actually happening here is backwards regulation and this is where I'll show you where the buck actually stops and where the true failure lies.

Okay, ready for this. So this is what's happening. So what you have is you have uncertainty in the marketplace, Right Is BTC or Ethereum a commodity or a security? What is it? There's uncertainty. I'll tell you why.

there's that uncertainty in just a moment. although it should be clear, but I will explain that more clearly in just a moment. So the question there is uncertainty. Is it a commodity or is it a security? So what do you get the SEC and the Cftc doing? Well, You have these organizations saying Okay, well we don't know exactly.

So what we're going to do is we're going to sue Sue and Sue And over here we're going to sue Sue and Sue And eventually what will happen is these lawsuits will probably end up getting multiple different decisions. So you'll probably have something like this happening. You'll have decision decision. You know, Maybe this will settle and then you'll have a decision and then you'll have a decision.

And then maybe that'll settle, right? But these four decisions if they're not conducted by the same judge which it's unlikely that they're going to be conducted by the same judge or going to have different decisions. And so what will end up happening is these decisions will have to go in front of likely the Supreme Court so they could make an ultimate ruling and then the answer as to whether or not BTC or Ethereum is a commodity or a security will be answered by the courts. That is what they are trying to do. So Gary Gensler is sitting here.

He's not looking very good, but he's sitting over here going. Um, we really need the courts to decide this and I don't want to bury our potential cases by getting cornered into saying something in Congress that's going to ruin the case because if he said it's a commodity, guess what? He kills all of his cases. If he said it's a security, he kills the Cftc's cases potentially right, so he can't do that. So he Dodges Now that makes him look scummy, but is that fair? Who is ultimately to blame? Because this is the interesting thing about media.

You ready for this? Here's the really interesting thing about media in this exchange: Chairman: McHenry seems like Jesus and the Congress people seem like Jesus coming in going, why the hell can't you answer the question and Gary Gensler is looking at this going I can't answer the question because guess what? Guess what and he ain't gonna say it because it's offensive. But the reality is Congress hasn't told us what it is. It's actually up to Congress which is dictated by the people to decide what the law is. Because here's how United States Government regulation works.

You have a law, then you have an enforcer, and then you have an arbiter. But because you do not have law, that is clear right now, you actually have the enforcer trying to force the Arbiter to make something known as case law. So that way you could do Congress's job for it and make the damn law. So the real issue here, ironically is that that guy is part to blame right here.

Chairman: McHenry and all of the people in Congress are part to blame for the reason why this guy. Gary Gensler Which I Get it everybody hates Gary Gensler Where is he? Where is he trying to find an interview? It doesn't really matter I'm just trying to put up a picture of him. Everybody hates this guy and maybe he's not the best. SEC Chairperson: There are plenty of reasons to hate Jerry against or whatever.

Okay, I don't That doesn't matter why people hate or like this guy, it doesn't matter what matters. Is this that Gary Dancer can't do Jack Sh9t right now because of this on screen right here. This is, by the way, the kind of perspective that you want to learn on your way to. Building Wealth Which is why you want to take advantage of the flash sale before price is massively change.

We're getting rid of the lowest price options. The prices will probably be at least a thousand bucks bare minimum to get in for the programs. Uh, so if you want to get in substantially lower right now, as little as 39 bucks a month, or you want to get in, uh, for for somewhere around 400 bucks, check out those programs. Link down below.

Substantially more inexpensive than it will be after the next couple days. So check out those programs here to millionaire Investing It lead Hustlers for building your wealth as an entrepreneur and employee. Uh, stocks and Psychology of money, you name it. Check them out.

link down below. But anyway, everybody's hating on Gary against and again. I Get it? I'm not here to defend Gary Gensler Trust me. I'm not defending Gary Gantzler I'm also not defending Congress because the reality here is Congress is to blame.

The reason all of these enforcement actions are occurring is because people want a judge. likely the Supreme Court to answer this question. Now, guess how you could solve all of this? Okay, you're ready for how you could solve all of this. I'll show you how you can solve literally all of this.

You ready for this. Here's how you could solve it right here: Congress decides and they say something like Bitcoin equals calm, right? Ethereum equals I Don't know Commodity: Some people are like, oh, just call it a digital asset that doesn't work. People say that on the Internet they're like, oh, just call it a digital asset. An asset is something.

An asset is either a commodity, it's a security. It's a real estate. Real estate is separate. Maybe you create a new class.

but then guess what? Real estate is regulated by the Department of Housing. So what you do. What you have to realize is, no matter what you call it, it needs a regulator. Securities Get regulated by the SEC Commodities Get regulated by the Cftc.

Real estate gets regulated by the Department of Housing and Urban Development. So no matter what you call it, you could call it. uh, you know, call it defy. World Okay, then guess what you're gonna get.

You're gonna get the defy. Exchange Commission That's going to come in and regulate it. They will make a regulator for it. But the point is, you have to start with a law because until then The Regulators can't do Jack sh19.

So number one, you start with a law, then you create an enforcer. Number two: This is how law should be made. You create an enforcer and then when there are disputes, you could go in front of an Arbiter which is a judge, a court. It's very simple, but guess who is too stupid? Congress But then you can't really blame Congress because Congress can't get anything done.

Why can't Congress get anything done? Will Congress get this? Okay, this seriously goes back to 1776. This goes back to like the founding of the country. Okay, why can't Congress get anything done? Because our two-party system in America rewards. Guess what? Gridlock.

The two-party system in America basically forces gridlock. That's America for you gridlock. So it's very difficult for Congress to do anything. which that was actually the point.

The founding fathers did not want the government to be able to have too much overreach by constantly doing whatever the hell they want because if you had no two-party system and instead you had a plurality system, a multi-party system like you end up having in Germany What ends up having what ends up happening is you end up getting Coalition governments. So you end up getting Coalition governments between let's say, the Liberals and the green party, and they stomp out conservatives. Uh, and then all of a sudden you get countries that are much more heavily uh uh, leaning towards the left than people would potentially like. right? You have a lot less freedoms in Germany than you do in America.

It's just the way it is. So what's the solution here? Well, the real solution is either Congress passes a law or a judge decides right and that has to probably be the Supreme Court. The Supreme Court's got a lot of crap to deal with though. and I'm not making excuses for the Supreme Court.

Okay, they got their own problems. Let's just look at, you know. Clarence Thomas You know you got some real disasters going over there. the huge PR nightmare for the Supreme Court.

Right now and now, they got to worry about abortion pills getting banned and and challenges to courts all over the country about. Uh Roe V Wade it's there's a lot. I'm not saying they can't rule on this, but they probably don't know either. So the reality is, nobody wants to rule on this because really, nobody knows.

Nobody knows. Hey, by the way, Um, Jack has a question for you. What do you call someone without a nose and without a body? And the answer is, nobody knows. So in case you're wondering, who's to blame is Congress Is it the SEC Is it the system? It's the system.

The founding fathers designed our system to make it really difficult to adopt new laws. Therefore, Congress ain't doing jack crap. The courts aren't doing anything, and The Regulators aren't doing anything because nobody knows what the hell to do with commodities. And you know what? they don't really care to learn because they don't really care about crypto.

And so that's the Sinister Bottom line: Security Commodity. They don't just don't like crypto. so it didn't happen. Wow.

All right, that was a lot of insight on commodities. All right. Last thing we've got to talk about: Uh, uh. third negative day in four days.

Wow. Really? We still negative? Yeah, Nasdaq's down about half percent. SMP Falls Man, that's boring. Everybody's nervous about inflation and earnings fine.

All right. Yeah. Oh wow. Everything's red right now.

We'll see if we get a recovery. I'm surprised. So red. Okay, so next stop, let's talk.

Uh, let's see here. Um, here we go. I'm gonna jump into this Okay, and it's gonna take me in one second. Okay, where is Earth starting by we gotta find it.

Oh, that's inconvenient. All right. We'll get to the bottom of it. Hmm, dang it, that is so weird.

I had a I replied to something that Community notes posted and it was part of what I wanted to talk about. but it's not actually showing up in my replies on Twitter which is quite odd. Usually it does. that's a little bit problematic.

Okay, well I might have to catch up on that then. Uh, we can answer some questions. Oh maybe that's it. Oh yeah, here we go.

I think I found it. Yeah, yeah, here we go. Okay, good, uh okay. found it.

Yay! so we can chat about that. Hello do you keep your AC in the office? It's usually 65. just because it gets so hot in here. Um, it's uh, it's really difficult to uh, have all the lights on and film without sweating I used to not have AC in here I have like three air conditioners are in here and a lot of that is due to how hot it is when, uh, when you're filming Elon deleted it No, no no I got it all right.

Here we go. All right now. we got a touch on Elon Musk's desire to Star a truth a GPT Now Elon just launched a LLC or a company and is potentially looking to raise money from shareholders called X Dot A I and shareholders would probably be private venture-backed shareholders who are already shareholders of companies like Tesla and Twitter so not something we'd publicly be able to invest in. But a lot of this is inspired by Elon Musk's frustration with Open AI turning into really a for-profit rather than being a non-profit especially since he helped start Open Ai And there's a lot of drama around.

Hey, wait a minute. What is a truthful Ai And why does it matter? Well, we'll listen to a clip here from Elon Musk in just a moment. But I Want to start by pointing out this: uh, this Community notes response that Elon Musk had following one of his tweets and so Elon Musk tweeted the following. He said: NPR literally said Federal funding is essential to Public Radio on their own website.

Now taking down what Hypocrites now I believe you could actually still find this NPR Federal funding item on their website. They're pretty transparent about their funding sources, but it is a little confusing to break apart because some parts they like to say oh well, in some years we average one percent from federal organizations and then the reality is they're kind of like misdefining exactly where some of the money comes from. And really a lot of this is blowing up right now because companies like NPR are basically getting notes put under uh of their uh, their actual Twitter tags showing that uh, hey, they are backed by the government. For example, here you have NPR has a tag government funded Media or another one that's pretty funny.

that came up yesterday was the Canadian Broadcasting Corporation if you go to just at CBC they uh, they argue they were less than 70 funded by the government. so Elon Musk helped label them as 69 government-funded media which on one hand is pretty dang funny. on the other hand, makes you wonder, wait a second whose truth really goes into this information. And that does create some potential problems.

Because for example, here is a community notes response to this that says at the time of this tweet, there we go At the time of this tweet, NPR's website dedicated to their finances still claim that Federal funding is essential So Elon Musk actually got community noted on this so it's not taken down. NPR is still claiming that Federal funding is essential to the public radio service to the American public. Now what I reply to with this because it's been such a big deal is I replied uh, when I can find my reply I think I have to press back twice him I replied it said unbelievable that Community Notes left out the percent of funding and I said I lost some respect for Community notes. Now if you weren't part of the big debate around this, that might seem extreme, hey, Community Notes is just comparing or just suggesting that Hey Look, it's still essential, right? We're just fixing that item from Elon Musk's tweet and that's fair.

But all of this is based on a massive debate on Twitter about what percentage of NPR's funding is from the government. Is it one percent? Is it Ten percent? Is it 15? And in my opinion, if Community Notes is going to come in and talk about this Federal Funding you have to also talk about the percentage because even though NPR suggests that they're funding, their government funding is essential. You have to remember what the word essential means and it's something that nobody on Twitter is talking about. and the reason this is important is because of congressional.

Appropriations See that is the most important thing that is on Twitter and that's pretty common b