Welcome back to another episode of the Meet Kevin Report we are on episode 54. That's 54 episodes in a row. Big thank you for being here! First, we gotta start with something that a lot of people have been asking me about and it's a topic. I Actually really enjoy talking talking about.

Obviously, if you could avoid having to deal with it, it's fantastic. But you know what the nature of business is such that generally at some point you're gonna have to deal with it. So I'm gonna start with that and then we'll get into economics. And Market First, how do businesses win lawsuits? And how can you learn from how businesses win lawsuits? Let's talk about that because I Think in this fear, the fear of lawsuits is one of the biggest things that actually stops people from progressing in business.

Rental property Investments Entrepreneurship. You name it, everybody's afraid of all our suits. the big old L word especially when you're in California And everybody sues everybody. But frankly, everybody sues everybody at the drop of a hat in America because it's a leverage tool and that's a very important thing to remember when it comes to lawsuits is 99 of lawsuits.

And yes, I totally just made that statistic up. Or it's a statistic. an attorney actually told me once, but there's a likelihood he just made it up. So I'm just going to say I just made it up.

99 of lawsuits end up settling before they ever end up Ever Getting to a judge or a jury trial or they get thrown out. So in other words, settle or thrown out. or uh, and they're done. Or they actually make it to to like a judge or jury.

uh trial? uh. I Would say only about one percent actually make it that far. There's a reason for that lawsuits are designed to be a pain in the ACT They take somewhere around two to three years for a good lawsuit to go through, and generally it's not the actual end result that's the killer. It's the process.

The process is the hell. And that is exactly what the purpose is. Because think about it. Attorneys like staff, attorneys.

People who whose full-time job is basically doing legal work. If their full-time job is doing legal work, there is zero additional effort in their lives required for a lawsuit. They're doing legal work anyway. However, somebody whose job is not being an attorney full-time does not want a lawsuit in their lives because they have their own businesses to work on.

So out of the gate, the legal system is designed to give an unfair advantage to guess whom Attorneys not to people right? that? Well, not that attorneys aren't people. I Mean some people might argue that. But anyway, you see. the point is that somebody who's in the legal industry generally always has an advantage.

So how do businesses win in the legal environment or minimize their potential risks? Uh, so that way they can focus on what matters most and that's providing value to their customers and providing quality goods and services. Well, here's exactly how Number One: Most businesses will religiously make sure that they are properly insured. Same thing goes for people on YouTube For example: YouTube is this type of media business so you can get something known as a media insurance policy to protect you against frivolous style lawsuits or quite frankly, any kind of lawsuit. So that way whether you make a mistake or you do your best, but you get sued anyway, you have media insurance policy subject to some form of a deductible and some limits or whatever that can protect you.

and you get an assigned a legal counsel that protects you and defends against, uh, you know, frivolous lawsuits or really any kind of lawsuit. And that is the number one way that most people I believe. And there's a second way as well. But that's the number one way that most people and uh, generally protect themselves from lawsuits is by being properly insured.

So for example, if you're a licensed contractor, you might have general liability insurance. Which means if you build a house and then it burns down and somebody gets injured, you have a general liability insurance policy to protect you. Now let's say you work for a flipper and you recommend the flipper install I Don't know, a beige colored kitchen and the flipper goes and sells the house and loses a bunch of money and then sues the contractor because the contractor told him to put in a beige kitchen and the flipper is convinced that Beige Kitchen just lost them 50 Grand on the Valley of the home and now he's upside down. Okay, well in such a scenario, that flipper who sues the contractor uh would be suing for a professional opinion or a failure of a professional opinion and therefore that contractor would hopefully carry an errors, an omissions policy.

Uh yeah, but that's not all you need because as an A contractor, you have employees and what if an employee slips and Falls because one of your other employees left the ladder out and employee one fell over the ladder that employee two left out and now they broke their back and they can't work for six months? Well, in such cases, you need to have a workers compensation insurance policy. See where I'm going with this? You kind of need insurance for everything. Then you end up firing employee number one because they don't follow your rules after employee number two blames you for not supervising employee number one. So you fly your employee number one for for being a knucklehead and leading the ladder.

and then the employee sues for wrongful termination. So then you need something known as Epil insurance or in Employers Practices Insurance and liability insurance. Whatever. The the amount of insurance that you need in business is is absolutely insane.

But the number one reason that you get insurance is not because you think you're a bad business person, it's because you the you know that the process is the punishment. and if you have insurance that can protect you from the headache of of a lot of the process, the uncertainty of Oh My Gosh, What if I have liability? The uncertainty of Oh My Gosh What if you lose the uncertainty of Oh My Gosh the employee the attorney costs are going to be so high Oh My Gosh who am I going to hire as an attorney? All of those things are the punishment in a lawsuit. So when you run a business, it's very important that you're very properly insured. Now there's a second thing that's very important as well that businesses use.

Although this this is a little bit more of an advanced one and no surprisingly, it's not what most people tell you on the internet. Now this is kind of of a a thing that I regularly talk about in actually all of the programs I have linked Down Below on building your wealth and I'm going to show I'm going to tell you this as an example as sort of a sample of the perspectives that you get from my programs. Whether it's the zero to millionaire real estate, investing, stocks, and Psych Uh, the Elite Hustlers which is basically for anybody who wants to make more money as an employee or an entrepreneur. right? That one make more money.

the others invest money. whether it's stock, real estate or whatever. Anyway, check out that coupon link down below. We've got a Saint Patty's expiring next week and then prices go up over time.

But anyway, one of the things that everyone in business seems to be under the impression of is that oh well. Kevin Who needs Insurance All you need is on the LLC clown. Like if I could put the cloud emoji on screen right now. That's exactly what I would do, because quite frankly it's it's ridiculous.

Most people, unfortunately, thanks to social media and YouTube are under the impression that in order to limit your liability and prevent some form of a lawsuit, all you need is a liability company or a limited liability company. And that could not be further from the truth. Now let's be clear. look: I'm not an attorney I can't give you personal legal advice obviously.

but let's be clear: entities are designed to attempt to limit your liability in the event of a bankruptcy or default. In other words, if you lose a lawsuit, the vision is that okay. take my company, take that property, take whatever's in that LLC leave my other llc's alone. But then that I mean that's part one.

Okay, that's that's like you basically admitting loss. It's like, okay, fine, just take that business or that property or whatever. Like you stop to defend the lawsuit right unless you want to just give those things away. which is stupid.

uh. And then the other thing is, you need a lot of legal power and and attorneys to actually help you segregate and prove uh, that that your limited liability company or Corporation or whatever is actually tangibly different from your other businesses. And so that's also very difficult and requires a lot of legal work to prove. And so generally I find that when people are looking at investing in real estate or they're creating their own businesses, they tend to be woefully underinsured.

Mostly because either they don't know, or they want to save insurance premiums or whatever. And then they think somehow a corporation or legal entity is going to protect them And it, it could not be further from the truth. It's it's ludicrous. So uh, so I think that's really the number one.

The most important thing to think about is Insurance Uh, not necessarily just entities. Now that's not saying don't have entities, right? it's just saying. that's not the priority and the second thing. And this is really the the magic of how businesses uh, prevent or or should I say deal with, uh, illegal liability in an insurance uh, and lawsuits and that.

And somebody here says insurance is required by law, it's a white collar Shakedown Yeah, no. I I Love to this commenter here, but you have no idea what you're talking about. Yes, technically workers comp is required but is uh Eno required many cases, not is Media Insurance required Not at all. Is it required to have an umbrella insurance for your policies? Not at all.

Is it required to update your limits? Not at all like you're talking like bare minimums here. Okay, and that you do not want to be flying with bare minimums to use sort of a flight analogy, you want to have buffers and safety anyway. So how do most businesses actually end up dealing with lawsuits? And this actually goes back to my introduction. So I want to give an example though before we get back to the introduction.

Elon Musk Just had a pretty large piece written about him in the financial Times and he basically, uh, you know there's basically the author claiming this idea that hey, Elon Musk ultimately just fires a bunch of people and and stops paying bills at Twitter Mostly because he's trying to cut costs and save money and he'll regularly be asked hey, well, you know we're going to get sued if we don't pay these bills or you know these employees are going to sue us or whatever. And Elon Musk's response to that is is actually very interesting. He says, let them Sue that is Elon Musk's response and see, now that's very interesting because the vast majority of people hear that and they tremble. They think, oh my God that's absolutely horrible.

Well yeah, because a you're probably willfully underinsured B What does Elon have that larger businesses tend to have that most businesses I think under emphasize I Actually think it's a really good idea for for businesses to hire this particular role before many other roles a staff attorney. Think about that. A staff attorney is beautiful. The reason a staff attorney is beautiful is because now let's say you pay that staff attorney a 250 000 salary including benefits, right? So maybe the salary is, you know, 175 I Don't know.

Maybe it's 250. Whatever, it doesn't matter. Uh, and and you pay them, say 200 250 000. That's obviously a lot of money if you're just a solopreneur or whatever.

but if you're a business, you look at that and go. One staff attorney, potentially obviously to the limit of them getting overworked, could probably deal with like three or four lawsuits. So all of a sudden you're getting one person who could really just handle it's. like, oh, really, another legal issue.

Oh, another legal complaint? Oh, another contractor review, right? You could actually have an attorney on staff handling all of that stuff for you. So what's the difference between three lawsuits or four lawsuits? Well, nothing, as long as that one person could handle that, right? So in an interesting way, that's actually how people like. Elon Musk Get jaded about lawsuits to the point where lawsuits don't even really matter anymore, because typically the incremental process of a lawsuit or sort of the marginal effort that each lawsuit requires is relatively low. especially since the vast majority of them disappear.

They fizzle out through, uh, negotiations for settlement or whatever. It's really just people throwing paper at each other is what it is most of the time. And the people who are most affected by lawsuits are either people who are uninsured or people who don't have staff attorneys. This is why in Corporate America larger companies tend to win because they can bully other people around because they have staff attorneys.

So now on the flip side, their marginal cost of suing people is actually very nominal because they have staff attorneys. Which kind of makes me wonder if somebody wants to be my staff attorney. Send me a DM Or you know what? Email me. Send me an email Kevin Me: Kevin.com Hey, I want to be a staff attorney? It's something to think about.

You know, no guarantees that we need one. Uh, but uh, it's interesting. If somebody out there is a regular Watcher and they're like I'd be down to be a staff attorney for for you know, meet Kevin or whatever and all the various different things we've got going on. we do need.

uh, you know we've got compliance stuff. so if you've got compliance experience and financial advising, uh, you know, uh, if you don't it's not necessarily necessary. but but whatever it I mean you. You guys know what babe Guys and gals know what I do.

So I don't think I need to go through a whole pitch, but anyway, send an email Kevin me Kevin.com I think it's interesting, much like if uh, you want to bundle a coupon code for the programs I'm building your wealth. Also, send an email to Kevin.com and yeah, you'd actually have to have some kind of legal experience. Uh, but anyway. I So I I Personally think this is really interesting because so many people are so fearful of lawsuits.

But remember the big takeaways here. Number one: Spend the time and effort to make sure you're properly insured and that you're not woefully underinsured. A Okay, Number two: once you grow in business, remember that in America a lawsuit is just basically like getting a letter in the mail like it's It's so so par for the course and you can't let it stand in the way of of you operating your business because there's always going to be nonsense of of uh, attorneys who are already working anyway who think, oh, here are people with money, let's go attack them that's just called America It's sad 99 of the time it's a waste of time and it's ludicrous. but hey, that's how attorneys make their living.

They got to have some work again. I'm not bagging on attorneys I Get it, You know I think If any of us went to to law school and we got our or you know we were, we got barred. uh, you know, like got your legal license. Uh, you know what, you'd be thinking the same thing.

So uh yeah I Always think it's useful to put your shoe yourself in somebody else's shoes. But anyway I Just thought: I'd introduce that I think that's actually very interesting Insight Uh, mostly because a lot of people ask about that I think that's very fascinating. Anyway, all right, let's move on to the next topic. Ooh, it's a banking crisis.

All right. All right. Are you all ready for this? All right? Hold on. let me get Oh my gosh.

I'm out of coffee. Dang it. Uh, that's a bummer. All right.

All right. So here we go: Um, well folks, you can't make this stuff up. The Federal Reserve is literally back to printing money. That's right.

the days of quantitative tightening are over, the days of the Money printer being roaring it on again are back. and Bitcoin is a roaring on the news and sound that the Money printer is going burgam. You can't make this stuff up. but I'm about to tell you a lot of stuff that seems like it's made up.

It's totally true. Let's go ahead and start with this straight from the Federal Reserve This right here shows you on the left side: the increase. The rapid increase in the Federal Reserve's balance sheet, where we're moving up from a low of about four and a half trillion dollars all the way up to seven trillion dollars all the way up to nine trillion dollars of the Federal Reserves balance sheet. In other words, it doubled through the pandemic thanks to all the stimulus and money printing.

Remember the FED prints the money digitally and then the treasury Department physically prints it or sends it out via stimulus checks or whatever. Anyway, those parts aside, look at what's happened over the last year. Since about Uh April of 2022, we've started to see the Federal Reserve's balance sheet shrink and the Fed's been shrinking to the tune of about 90 billion dollars per month. They started at about 45, slowly worked their way up to 90.

So that's how you could see the slope of that curve actually getting steeper. To the downside, Right started a little gradually and then they accelerated. That is the quantitative tightening cycle where the FED is basically vacuuming money out of the economy. So think about it like Luigi and Luigi's Mansion sucking up coins out of various different vases or vases or couches and carpets or whatever, taking money out of the economy.

That's to be contrasted with money printing where you're basically you know, helicopter moneying or making it rain with money, right? Take a look on the right side. What just happened? We moved down to about 8.3 trillion dollars of the Federal Reserve balance sheet. What just happened? We saw it pop right back up too. 8.63 So about a 300 billion dollar injection of liquidity into the economy I Kid you not, but this is pretty remarkable.

What? I'm about to say: You literally have a bank run happening right now Where money is moving from companies like Charles Schwab who just lost 8.8 billion dollars in their money market accounts because people are fleeing uh Charles Schwab which was pretty surprising. Uh and uh, where did they run? Well, they ran over to the Big Banks the Bank of America Wells Fargo Citigroup JPMorgan Chase people are consolidating into the top four Banks and uh, people are also leaving Banks like First Republic a smaller Regional Bank And what are the Big Banks doing? In response to about uh, you know, 30 billion dollars having disappeared from First Republic or potentially more, the big banks have just turned around and taken about 30 billion dollars and injected it right back into First Republic You can't make this up Wells Fargo Citigroup JP Morgan Goldman Sachs Morgan Stanley and various others just got together and said together, we're going to deposit 30 billion dollars at First Republic Which means if you were literally running away from the small Banks and putting it into the big Banks the big banks are like, let's just put some of it back into small Banks Now that is not a typical capitalistic move in my opinion that is driven by politics and the treasury Department Probably on their knees begging the Big Banks to send some of the money back to the small Banks Now that's actually very interesting, but also concerning because after all, isn't that the job of the Federal Reserve The Federal Reserve was to open up their essentially uh by the FED pivot loan facility uh to allow Banks to go to essentially the discount window and that's not actually what the program is called, but it's the same acronym allow Banks to take their assets, their treasury bonds, mortgage-backed Securities, and whatever. And even though they've lost value, go to the Federal Reserve and say, hey, fed can I have money for this and they'll hand them basically something that's worth maybe sixty dollars. But the FED goes and says, well, eventually it'll be worth 100.

We'll give you a hundred bucks, right? So the Fed's supposed to provide liquidity to these Banks but apparently that's not enough. Apparently the Treasury Department now wants Big Banks to send a signal to markets that don't worry, we believe in the small Banks so much we're taking money from our own coffers and putting it into the small Banks Nobody believes that it's a big clown move. It's a sign that things are actually much worse than they initially appeared. But then again, that's no surprise when individuals, much like in 2008 March of 2008, told us, don't worry, these are just idiosyncratic risk.

Which you kind of can't say that without spelling the first like four letters of idiot. But anyway, idiosyncratic risks are a way of saying oh, this is that's just isolated to One Bank Yeah, this is the same thing they said in March of 2008. Uh, it's just it's just isolated to uh, bear Stearns And then what happens? AIG Lehman Brothers Complete disaster and cluster F Many banks going bankrupt. Now that's actually part of a normal economic cycle.

Banks are supposed to go bankrupt if they've had poor management practices. And the whole point of having an FDIC Insurance limit of 250k is to protect people who have less than that amount of money. But be a wake-up call to those who have more than that amount of money in deposits to actually scrutinize the banks that they're in they're depositing their money into as a tool for preventing Banks from being YOLO risky with people's money. The whole point of an FDIC Insurance limit is to send the signal to banks that your depositors will be evaluating you to see whether or not they trust you enough to breach that limit.

Of course, then people are like, oh, you can't require depositors to do that. They're too stupid to do that. That's the socialistic point of view. Bail everyone out, Spread the pain.

Oh, the banks are losing money or FDIC is losing money. Well, let's just raise the fees at all other. Banks When some of them lose money, let's raise the fees everywhere. It's corporate socialism.

It's corporate wealth. But what's actually happening right now? And uh, where are some of the numbers? So what's interesting here is: the Federal Reserve has just lent out about 300 billion dollars to cash strap banks. in just the last week the holding companies that they set up for failed. Banks.

The FDIC set up two holding companies uh, has received about 143 billion dollars to pay their uninsured depositors out. That's sort of the backstop of depositors, right? However, there were an additional 153 billion dollars borrowed from the Federal Reserve over this past week through the discount window. That's how you get that. QE Think about it.

it's literally Banks Well, maybe it's not literally, But imagine this. Okay, a banker walking up to a window at Federal Reserve going hey man. I Need cash And the facts like here's your money bag. Now the FED gets an IOU That IOU is an asset.

Assets go on a balance sheet. So the bankers walk away with cash. The FED gets an IOU That IOU shows up right here on the Federal Reserve's balance sheet. Now you might wonder, but wait a minute.

Kevin Why does it work like that? Because didn't they just give away a bunch of cash? Not really because they just created that cash out of thin air. That's why it's called a money printer. That's why the Fed's balance sheet increases. So even though they're receiving an asset quote unquote worth a hundred dollars for every 100 of cash they're giving out, they're actually receiving an asset for giving away nothing.

They're giving up. Funny money, They're giving up magic. All the Federal Reserve does is change a number in a spreadsheet to digitally print money. Yes, that is legal.

That's how the system works. It's remarkable. But remarkable is that on a typical week, you tend to see four to five billion dollars of money borrowed through this discount window. Okay, well, that totals to four times five.

About 20 billion dollars a month being borrowed from the discount window, right? But wait a minute. The Federal Reserve is quantitatively tightening to the tune of 90 billion dollars a month. Well, that's four and a half times as much as actually being borrowed from the discount window. So what happens? Well, the balance sheet goes down.

Unless of course, you have a crazy week like you just had where people actually borrow 300 billion dollars. That's insane. Not only is that insane, but now JP Morgan is suggesting that the Federal Reserve may actually be injecting up to two trillion dollars through the bank term funding program. That's the buy the effing Fed pivot acronym Btfp Bank term Funding program that's the actual name.

and JP Morgan thinks that the Btfp is actually not likely to just be a 125 billion dollar facility like they said it was. JP Morgan thinks it could be as large as two trillion dollars. Now you might ask yourself, but wait a minute. Kevin if they said it's 125 billion dollars, why is JP Morgan saying it could be two trillion dollars? Are we being lied to? Yes and no.

So the reason you're not being lied to is because technically the facility is set up for 125 billion dollars. the way you're being lied to is via Omission Ordinarily when the Federal Reserve sets up a facility like this, they say, look, we have a facility that has an authorization of spending 125 billion dollars now because we're the Fed and we can give ourselves as much leverage as we want. Ordinarily, we'll leverage that facility 10x, which that's what they did during Covid, which means 125 billion dollars is really like 1.2 trillion dollars. But in their last letter, that is the letter of the Federal Reserve established the Btfp programming.

The Federal Reserve actually removed any mention of how much they would leverage the facility, which on one hand suggests oh, maybe they're not going to use any Leverage No, If they weren't going to use any leverage, they would have told you they weren't going to use any leverage. What they did is actually removed mention of Leverage on purpose to conceal the actual likelihood that the problem that's really happening is so great that not only do you need to get life insurance in as little as five minutes link down below. it's what Lauren and I use. It's actually really great.

It's easy to use. Just go to Met Kevin.com Life Met Kevin.com Really easy to use. Not not only is it so bad, but the Federal Reserve is basically hiding how much they're leveraging. Uh, this facility to where JP Morgan believes they're hiding of this facility implies they might be leveraging this to the tune of 18 to 20 x.

That is how JP Morgan and their analyst note believes the FED is actually willing to inject about two trillion dollars of liquidity into this disaster. Now, if you actually look at the chart, you can see if we're at 8.3 before the injection of liquidity and about 8.9 or you know, about a year ago. Well, then that means if we add 2 trillion to 8.3 we'd actually run up to about 10.3 trillion. Which means the balance sheet at the FED would actually expand by the tune of somewhere around 1.2 trillion dollars above all of the quantitative tightening.

So in other words, the money printers may be back on to a much larger degree than anybody actually realizes right now. That's what JP Morgan is saying. So when you're hearing about that two trillion dollars and you're like, wait, I thought it was 125 billion facility, This is how you're being misled. Now, it's unfortunate that the FED is not transparent about that, but then again, they probably have a reason for that.

And their reason in all likelihood is if people realized that the FED actually had to come out with two trillion dollars to save this banking crisis, people would lose their sh9t. People would freak out so damn badly that they would literally go to every single Regional Bank and say, why do I have my money here? Why don't I just consolidate my money at the big Banks which quite frankly, that is to some degree a form of capitalism. Why work with the small business when you could get a cheaper deal at Amazon Now that is terrible for small businesses and that leads to a lot of job loss and call a consolidation and ultimately leads to the Big D word. No, not yes.

There's a coupon code linked down below that expires next week and then the price goes up for the amazing programs in building your wealth. Now the d word is deflation. When you have consolidation amongst larger companies who could be much more efficient via economies of scale, you tend to have deflation now. Unfortunately, with that can come the loss of smaller business.

uh, flexibility. For example, in a New York Times article published yesterday, the collapse of Silicon Valley Bank has put a large strain on a lot of tech startups who are now facing significant increased scrutiny, not only from investors who are like, why the hell did you have so much money at risk with this smaller bank, but also lenders are like, yeah, you know, Silicon Valley Bank Collapsed. We don't know that we want to actually lend you because you're a risky startup and so now you have this potentially other disinflationary impetus of startups not having as much access to Capital anymore. It's not just that, Silicon Valley Bank collapsed.

But that means that all of the credit lines that they were giving willy-nilly to startups don't exist anymore. Now the debt is still owed by the people who borrowed. It's not like that disappears, but you can't borrow any more money. Now you got to go to a different bank and borrow money for your startup.

Well, where are you going to do that if you go walk into a Jpn or a Bank of America or whatever you're like, hey man, I'm a money losing startup. can I borrow 10 million dollars? They're going to laugh you out of the office because they actually have risk procedures that say we can't do this right now. Some people are like, what do you mean risk procedures? like don't the shareholders want risk procedures because you know they don't want to lose money and go bankrupt? No, Shareholders don't care. I Mean ultimately, shareholders care when things go bad, But generally shareholders in aggregate.

Okay, this is no offense to any individual shareholders. it's just an aggregate. The only thing shareholders want is stock go up. They don't care.

Uh, they will be completely blinded by risk mitigation. So so to suggest that oh well, shareholders will somehow self-regulate a company is like complete uh. But anyway, so the Federal Reserve on top of this, by the way, uh, is now paying out so much money, uh, in bonds, uh, that they are in repo facilities or whatever that they're holding. They're actually now losing more money than they're making.

Uh, this is called the remittances facility or or process Where generally, when the Federal Reserve has excess money, they will, uh, distribute that money back to the treasury. Department That's generally what happens. if that has more money, they distribute it to the treasury. Department Uh.

However, that does not happen when the Federal Reserve has more expenses. and you could see that via this chart right here. The Federal Reserve is actually substantially negative. Which means they're actually needing to borrow money or print it from the treasury.

Department. So they're either taking money from the treasury Department or they're just printing more. Uh, given that we're knocking on the door of the debt ceiling, they're probably just printing more. And that's why you see the quantitative tightening cycle essentially come to screen reaching hall.

Now many people say, hey, wait a minute. Isn't this consistent with a Fed u-turn And in many ways it is. Uh, it is. See, the Federal Reserve tends to panic once they break something and then they start injecting money and they turn the money printers on.

They did that in 1987 and marked the bottom of the market. They did that in March Of 2003. it marked the bottom of the market. They did that in February of 2009 and marked the bottom of the market.

They did that in December of 2018 and marked the bottom of the market. They did that in March of 2020 uh during Covid and that marked the bottom of the market. Now that is not to be confused with a rate Cut style pivot. Okay, rate cut pivot.

Very different. I've talked about that a million times before. Just type into YouTube meet Kevin pivot I Really don't want to go over that again. Uh, because that's that's different from from the FED turning all the money per draw on turning it on heavily again traditionally fed.

Turning the money printer on again and historically is a very good thing for the equities market. And I think that's why stocks are actually somewhat happy over the last few days here. Uh, However, there is always the risk and these words are obviously very dangerous. There's always the risk that this time is different.

We never know when what was historically true ends up no longer being true. We just don't know. Reality is every recession is different. They just tend to rhyme right.

And generally, when the money printer Turn on, there's a great sign to buy generally and historically again, not to be confused with a rate Cut or quote-unquote pivot. So what else do we know? Well, the other thing that we know is obviously the Federal Reserve now suggests they're going to provide a review of Silicon Valley Bank by May 1st Biden says he's going to call on Congress to pass more regulation. It's probably not going to happen. But more importantly, what are investors now saying about this? Panic Well, I think it's worth looking at what Bill Ackman has to say.

This is a an interesting thread and I think we can add some details to this. So let's go ahead and add some details. So Bill Ackman says secretary Yellen has apparently pushed the systemically important Banks to recycle some of the deposits they received from First Republic Bank back into First Republic Bank for 120 days. The result is that First Republic Bank default risk has now been spread to our largest banks now.

I actually disagree with that I Think the treasury Department and the FED realized that they will print as much money as absolutely necessary to make sure the systemically important Banks survive I I If if that does not happen and the one percent Edge case scenario that that the big Banks actually fail without a bailout, we have bigger problems. It probably means there's like nuclear war or something like that. Uh, and and don't get me wrong, I'm not saying I'm not advocating for this giant Ponzi of the American dollar that we have. The reality is at some point in the future the dollar will be absolutely worthless and all currency will collapse because that's also what history has told us.

No single currency has ever survived becoming worthless. Not a single one. So it will happen. I Don't think it's going to happen this cycle.

So I think we're going to be able to essentially still print our way out of this one. Uh, but anyway, this so so this idea of default risk being spread to the largest bank to some degree. He's he's right. It's just the backstop is so large that I don't think that's actually so terrible.

Uh, the point of this? These deposits going from the larger Banks to the smaller is just a tool to try to trick average Americans who are like so does this mean I shouldn't withdraw my money from from Uh First Republic Bank Let me be very clear: you should not be at a small Bank above and be on the FDIC Insurance limits And even if you're within those limits would be a headache potentially to access your Capital if you had to wait to go through the receivership processes. even though technically everybody was supposed to access their capital on Monday there are already reports and rumors on Twitter Uh, that a lot of people who have banks at Silicon Valley Bank cannot access their capital I Personally would not have a large portion of my money at a bank that is not too big to fail. Too big to fail. As a bank with over 250 billion dollars in assets under management, the top eight banks are the banks that go undergo the largest Fed stress tests and therefore basically get the Fed's blessing because the Fed's basically like, hey, follow our rules, we'll always bail you out.

wink wink. That's my take now. Some people are like oh, Kevin Are you advocating for a bank? Grant No Obviously. I don't want the financial system to collapse, but I am advocating for being smart with your money.

and if there's a non-zero chance that you lose some of your money at a smaller institution, why would you take the risk Anyway, Going back to: Bill Ackman Spreading the risk of financial contagion to achieve a false sense of confidence. He's right. this is trying to create a false sense of confidence. He's absolutely right about that.

It's trying to manipulate people into thinking, well, everything must be good then. Oh, the systemically important Banks Would have never made this low return investment in deposits unless they were pressured to do so. Yeah, I Agree with them. The market has responded to this fictional vote of confidence with a 35 aftermarket decline in First Republic Bank Stock First Republic Bank is no Silicon Valley Bank It's well managed, well capitalized, blah blah blah.

It's caught up in a bank run due to no fault of its own. It does not deserve to fail. Yeah. I Mean that might be true.

We need a temporary system-wide deposit guarantee immediately until expanded and modernized. FDIC Insurance Systems are made widely available, you know. Bill Ackerman has has a way of sort of pounding the table with things that we really need and and I think it could be argued that maybe some level of banking consolidation is actually normal and healthy. Now that's not to say we only want four Banks an oligopoly of banks, but it is to suggest that maybe we we don't need ten thousand Banks or five thousand banks in America Maybe we only need a hundred.

There's still plenty of competition that way. Maybe you only need 50. do you need five thousand? I Don't think so. But anyway, the press release announcing the 30 billion dollars of deposits raised more questions than it answers.

Lack of transparency caused Market participants to assume the worst. True I said before that hours matter, we have allowed days to go by. Half measures don't work when there is a crisis of confidence again. I Have no Investments long or short in the banking sector.

Dude, nobody believes this guy. Uh, that's mostly because people got very jaded during covet and hey, maybe he's he's right. I mean I don't think he's blatantly lying because I would just expose him to Too Much liability. Maybe he has no Investments long or short.

but maybe uh, maybe some of the companies is associated with do right I I Don't know. I'm not trying to be jaded to the point where I'm suggesting you know I don't trust everything Phil Akman says. But let me just be clear I don't trust anything anybody says. uh Anyway, so I'm simply extremely concerned about the contagion risk spiraling out of control and causing a severe and causing severe economic damage and hardship.

We need to stop this now. We are beyond the point where the banks can solve the problem and we are hand in the hands of the government. and Regulators Yikes. Well, that does not sound very exciting unfortunately.

But the good news is you can still get 12 free Stocks by going to Metcaven.com free and signing up for Weeble or life insurance in as little as five minutes by Kevin.com life or the programs on Building Wealth link down below or Metcaven.com So let's stop. Uh, I guess I Guess we should probably have some kind of like outro on that, eh, like like conclusion. Okay, let's let's do like a conclusion on that. Um, okay.

now my opinion on some form of a conclusion to all of this is, well, a minimize your risk at small Banks Be make as much money as you can by making it. You know, realizing that in a recession it's time to double or triple down, work as hard as possible and make as much extra money as possible because you just can't guarantee that the revenue sources you previously have had will be there for you going forward much longer. So you have to be very, very careful and astute in making as much money as you possibly can right now. In addition to that, I Think it's a great time to start considering uh, looking at the stock market as a potential opportunity in the event this is a Fed U-turn uh C I think it's a I don't know what letter I'm on anymore anyway I think there's a good opportunity to look into real estate Investments soon? Uh, probably within the next one to two quarters here.

And uh, ultimately do I think that we're facing a larger economic contagion of bank failure for smaller Banks Yes, I do for larger Banks Top probably 50 unlikely Top Eight? Absolutely not. I Realize Silicon Valley Bank was a top 16 bank, so don't get me wrong, there could be more collapses in the top 50. but uh, that's why I like the shelter. So to speak of the top eight, it's like if if a nuclear bomb was flying our way.

whose bomb shelter would you rather go in? You know, think about it like uh, uh, what's the the girl with the Uh with the wolf? do you want to go in The Twig House Woodhouse or the brick house right? which one's gonna blow over? uh, or which one's gonna have the most damage in in the case of economic Fallout To stick with that example, well, I would venture to say the ones that are going to be most insulated are the big ones. You got the thickest walls. Uh, so I I Don't think this disaster is as terrible as it seems. Uh I Do not think this is the time the dollar collapses I Do think all of this is incredibly disinflationary, potentially even deflationary.

Uh I I Think the artificial intelligence Revolution that we see over the next we're expect to see over the next 10 years here will be absolutely remarkable. Uh, now, Uh, I You know Kathy Wood has sort of chimed in on this as well. Uh, she argues that hey, well, if we had transparent cryptography, you know, basically cryptocurrency. Uh, that, uh, you know, was essentially not founded with uh, we could potentially avoid this kind of craziness.

That would probably be quite disinflationary since you wouldn't have the inflationary money printer. But uh, you know she makes a good point. The debacle would not have been possible in a decentralized, transparent Audible and over collateralized crypto asset ecosystem. now.

I Personally take issue with this word right here. While in spirit, she is correct. It's important to remember that many brokerages dare I say like binance, say they're over collateralized, say they might have a billion dollars to back. Uh, the busd.

Let's just say as a quick example, you know, let's say Busd has 900 million dollars in demands. but they have a billion dollars in cash that solely is over collateralized. But then if they use that same billion dollars to say 10 other coins with 900 million dollars or over collateralized then that means in aggregate they're actually 10x under collateralized. They just sort of misled you into thinking they individually were overclocked so that when you hear over collateralized red flag should go up.

But but in the true Spirit of the phrase over collateralized, she is right that to some degree a crypto is a solution to Central points of failure and the opacity of of uh markets that we see today. She's not wrong about that. Uh, so I think that's actually a a well put point. but again, I don't think this cycle is the cycle where we have a severe contagion risks though.

I do think a lot of banks are at risk now. It is interesting to see Bitcoin up about 6.7 in my opinion. Bitcoin is responding directly to the money printer being on again. This is what happened during Covet Money Printer Gober guess what goes up stocks and Bitcoin So those are my thoughts and my conclusions on the banking crisis though.

apparently now Elizabeth Warren has asked if the Silicon Valley Bank and Signature Bank Executives would return the bonuses and salaries they earned in the last five years before their Banks collapsed. You know, Elizabeth Warren says stuff to you know essentially create a very populist uproar. Uh, and and she's not wrong about asking the question. but I always think it's interesting like I wonder what it must be like to sit there and think what could I say that 99 of people are gonna laugh and then that's all you do is you sit there all day long thinking up ideas of what 99 to be.

A lot of salaries and bonuses were paid right before banking collapses. Stocks were sold right before the banking collapses. Does that mean it should go all the way back to employees five years ago? Probably not. But the extremeness is always something that uh, it gets attention and I think that's what politicians like because it keeps them in office.

So in other words, the nature of politics encourages extremeness. But that's not necessarily actually good for our our economy. Somebody here in the comments writes: woke a hauntus Steve writes do you think with these small bank failures, there will be more or less investment to expand productivity and increase goods and services Slash new technology. If less, it means lower economic growth.

Yeah, so it actually does mean less. Unfortunately, when smaller Banks fail, it means looser lending goes away and you end up with net net tighter lending. So yes, it does mean a slower economic growth and a greater likelihood of recession. And as if On Cue Steve replies and says I like lithium Uh, but but yes, yes, Uh so this this is very, very clearly.

uh. A result is that yes, economic output will slow with less lending. and I think this is why it's so important to focus on PP Pricing power style of stocks that uh that are likely to receive investment uh and and purchases at cash flow regardless of a marginally weaker economy. And when I say marginally, it's not to minimize.

It's to say on the margins, right? Marginal analysis is looking at the margins if the economy slows for the bottom 50 percent. Yes, that in aggregate lowers GDP but it affects the bottom 50 more than it does the pricing power stocks that sell stuff goods and services to the top 50 right now. Obviously none of this is exact and designed to be a science, but that is a thesis that I have and we shall see how it evolves. All right.

Let's take a listen here for a moment to what CNBC has to say because Committee: Congressman It's good to see you of course in studio and I was looking at some of your comments. you think it was absolutely all right, the right thing to do and like everything in in today's uh, sort of partisan atmosphere. There are those that say why do these guys Then gals deserve a bailout when so many other people don't get a bailout. And it's basically you know, socializing capitalism when.

Yeah, they're always disparaging socialism, but you think that it was necessary because it just needed to be done, or the single greatest priority of the Federal government should be to protect the safety and soundness of the banking system? Was that really what it was doing in this case, which was the Beating Heart of our economy. It's the Beating Heart of every house and not every business. Uh, there was a real concern about a contagion spreading to the broader banking system. and I thought the administration did act correctly and act aggressively to prevent the contagious whose deposits are getting guaranteed here.

They're they're people that let's say they can afford to lose it. And we talked about pay people not getting payroll. but in general these are you know, startups and I mean you can even tie it back to the investment. Banks Venture Capitalists These are people that are doing pretty well in society and they're taking risks.

They're going to benefit if they hit it big, shouldn't they? You know, shouldn't they suffer the consequences when they? If the damage had been contained to Silicon Valley Bank then there would have been an argument against intervention. But once it became evident that the risk was spreading to the broader banking system, we have an obligation to intervene. And that's the regulatory framework that we crafted in 2008. What do you think of this? Look at this screen for a second.

First Republic Bank Down 20 This morning, you can actually just see the nerves. Uh, pack West down 10 Western Alliance 10 8 The question is, actually did it work? Talk about contagion? Yeah, Meaning you know? Are we going to see shotgun weddings this weekend and other kind of capital? Uh, you know, Investments Made because people are worried about this very thing who convinced that they would have been cascading bank failures and the options of intervention? Uh, from the government. But do you think there's going to be more I Mean are we talking about now? more intervention? Meaning that was the first step in a long sort of probably a number of steps of intervention. Yes, look, it might take time for the banking system to stabilize, but that's an argument for the Federal Reserve for example, to proceed with caution.

Um, you know, as you know, the Federal Reserve has a dual Mandate of price stability and maximum employment. Or in case could be made that we should expand the Mandate of the Federal Reserve to include Financial stability. Oh good lord, when it comes to raising higher interest rates, I Think the Federal Reserve has done too much too fast and it's destabilized the banking system and there's an argument for slowing down. So we did Dodd-Frank We maybe diluted it to some extent Senator Warren has been making that case.

Do you think they're could have been regulations that would have prevented what happened at Svb? Duh? Marginal for sure. but if Svb had been subject to enhanced Prudential standards and stress testing then they would have been a greater likelihood of flagging the concerns about the failure of of interest rate risk management. So I would argue yes. And if look, if we're going to provide broader Deposit Insurance to Regional Banks then it's only fair to subject those Banks to a higher standard of Regulation Yeah, he's right about that.

Okay, so let's uh, let's keep going. We've got other things to talk about and we'll Circle back to some of this. Oh, the next thing we are going to cover now Uh is uh oh wow. we got a lot to cover.

Okay, let's let's get some through some of this as quickly as we can for out of respect for you and efficiency. Uh, join the course member livestream and I know I spent 20 bucks man I appreciate the donation, but I I I I I can't stop my production to to answer: go and go deep into a stock I know nothing about I'd have to have to do an analysis. That's the kind of stuff we do in the course member live streams do that every day. People suggest the topic.

uh and then we go through it and we do an analysis. All right. So oh, let's talk and we got Tesla Russia and then we'll Circle back to uh. banking.

All right, let's knock this out ready. Here we go. We got some updates regarding Tesla and it's worth talking about because even in the face of the banking crisis said yes, Tesla stock has fallen under 200 per share. It bounced off about that 175 level intraday.

We briefly went under 175 just a few days ago and kind of been staying above it, which is really good because that's an important retracement level. And what is some of the news regarding the latest at Tesla Well of course a first big Financial Times article this morning talking about Elon Musk's costs cutting measures and how in the long term these uh, while in the short term are are creating a lot of drama and fear in the long term will help get Twitter the profitability hopefully as soon as Q2 or Q3 of this year which is fantastic. Well that's exactly what Tesla Shareholders want to hear because we know that Tesla stock is Elon Musk's piggy Bank. In other news, Tesla applied to expand the gigafactory.

Berlin They're now claiming that they can do so without actually increa increasing the necessary water usage. That's actually a big deal. They're trying to get to a million vehicles per year at this facility, but they've been running into a lot of application delays due to essentially individuals in the neighborhood and and politicians restricting uh permitting due to concerns over water consumption specifically environmental groups. A Tesla Berlin has goal of 5K cars per week of production uh started late 2021 company manufactures the Yn3 there and good news the model Y just actually became the best-selling vehicle in Europe outpacing other vehicles by the tune of somewhere around 40 percent which was pretty incredible.

Model Y in my opinion, is actually probably the most desirable out of the Tesla vehicles. I do think you a little bit overpay for the Snx, which I own both the Snx so I'm kind of shooting myself on the foot by saying that. and I think the Model 3 is so close in price to the Model Y that uh, unless there's a specific reason to get the three, I think the Y is a great deal uh, a Volkswagen did just announce an Id2 a 25 000 Mass market car uh and a smaller battery two-door sedan I'll actually show you uh, some pictures of it Elon Musk replied in a tweet and wrote uh, pretty good uh in response to Volkswagen announcing this vehicle now, uh, the joke about that is the vehicle won't actually be available until 2025. it claims the front wheel drive 25 000 price to go on sale in 2025..

the vehicle looks like this. You can see this on screen here to see what the vehicle looks like. This is the Id2. Four pictures here shows uh, very very Tesla-esque interior with that center console forward console.

uh again, this is the Volkswagen Wagon's newly announced Id2 is not actually expected to go on sale until 2025, which again, that makes you wonder like, really, that's uh, it's gonna be well if it starts. if it starts going on sale at 2025, that means probably not actually producing until 2026. And the reality is a lot of the Legacy Autos uh have have really cool Visions for concept cars but it takes them absolutely forever to actually deliver I doubt Volkswagen is actually going to uh, you know I Here's here's how about this: Let's Make A Deal Somebody will have to remind me remind me in 2025 if Volkswagen actually delivers this vehicle for under 25 000 dollars MSRP We'll say not going to include taxes in 2025 I will buy 100 of Volkswagen stock, that that would be impressive I Just don't believe it. uh Elon Musk has also along with oh, there we go.

If you thought the previous V3 superchargers were fast, these V4 superchargers are about 40 faster, 350 kilowatts of power versus 250. Absolutely incredible. They're also now rumors. so well potentially not rumors.

This is actually something circulating on Twitter Apparently Cadillac has reportedly been trying to poach Tesla owners in China offering them substantial discounts on the Cadillac lyric and they're doing this by Tesla Chargers They're also sending text messages uh to Tesla owners from Cadillac Here for example are some photos. Uh, this is a Tesla supercharging station. You see the caddy on the left side there, uh branded Cadillac There it is the Cadillac lyric. Here's video.

Let's see here. somebody driving by. Yeah, test drive caddy by the Tesla Superchargers. Uh, shout out to this person.

By the way Jay in Shanghai who posted this content uh, he calls this Shameless cold calling by Cadillac I mean honestly? I can't I can't really blame them I think it's kind of funny. Actually, it it just like the Pr of Cadillac trying to convince Tesla owners at the Tesla superchargers in my opinion, is priceless like it's it's hilarious. Tesla VR It's actually fantastic. It's like if somebody really wants to leave Tesla and go buy another car, go for it.

but they'll be back anyway. uh Elon Musk Also said uh uh at uh. an investor conference hosted by Morgan Stanley uh again. and this is sort of reiterating.

we covered this last week as well, but again on Twitter They're planning on cutting their non-dead expenditures down to 1.5 billion and hoping they could be cash flow positive by the second or third quarter. Talked about that already. Sorry for repeating that. uh the uh.

Let's see here. the Elon Musk Also, Uh has just predicted that uh, there will be a Tesla Monopoly in the electric vehicle Market But that's actually not his hope because the reason he likes to open up his IP like patents to other and Technology to other automakers is to actually help promote the push towards sustainable energy now. I I Can't I struggle to determine whether or not that's Noble for like you know the cause for green energy or if that's anti-competitiveness and anti-capitalism and maybe it's the perfect blend of both. It's like hey, we're kicking everybody's butt so much here as Charity How about we just give you our IP But the reality too, is the more people transition to EV, the larger the pie the EV Market goes.

And so maybe that ends up circling back and being beneficial to Tesla Anyway, whether that's in selling Tesla solar panels selling batteries, maybe to other car manufacturers selling Drive trains seller car manufacturers. Heck, maybe it's licensing the FSD to other car manufacturers, right? So maybe that's the end game. Maybe that's the jaded capitalistic point of view is that? Sure, we'll give you our IP. By the way, when you can't figure it out, we'll sell you our drivetrains, We'll license you our FSD and we'll make lots of money off of you.

Sure, people can drive their Volkswagen built by Tesla Interesting idea. A lot of reports circulating on how great the Mexico gigafactory will be for Tesla. It's now being called a genius move by a Bloomberg uh, a journalist and uh, a combined Business Insider report thanks to Mexico's not only lower labor costs, but also its proximity to the United States. Remember, your average hourly wage in Mexico is about 3.50 That's led to a lot of criticism that Elon Musk is basically using slave labor, because when you compare to minimum wages in California or Texas, you're closer to 15 to 20 dollars.

Uh, and uh, in such comparisons you might think oh dear, that does seem very, very, cheap. Is that fair to those folks? And the reality is, it actually puts upward price pressure on those wages it gives Mexican workers in that Northeastern region of Mexico pricing power for their wages potentially enables them to actually make more money and raise their standards of living. that is, after all the nature of capitalism. The capital saves money, but everybody else also wins, so it's It's a win-win situation that's at least there.

Uh, Yougov also now conducted a survey about the impact of tests of of Elon Musk's Twitter activity on Tesla's reputation. Now originally we have always been thinking that the more Elon tweets the more he pisses off uh, like either woke people or not. not. Necessarily a bad thing.

it's not meant to be a slam, uh, or or liberals or whatever people, whatever right That has regularly been an argument. Well, for what it's worth, Ugov put together a survey and they say that while Musk's tweets can generate attention and controversy, they do not seem to have an overall negative impact on Tesla's overall image. The automaker remains popular amongst consumers, and Musk's social media presence continues to be a major driver of publicity for the company. Well, there's your PR department that's kind of interesting.

I Mean it's a good idea, You know I mean we've always made this this argument that yes, it pisses people off, but are they eventually really not going to come by a Tesla Well, probably not Eventually, they'll probably still buy a Tesla But then again, I think Also, the people who are the loudest screaming well, I refuse to buy a Tesla Uh, because you know Elon is too aggressive or you know I didn't like he said, promote fauci or uh, prosecute fouchy or whatever I Think that those folks would have never bought a Tesla in the first place. which I think is quite interesting because there are a lot of people who will never buy a Tesla and they just continue to seek more excuses as to why they won't buy a Tesla And this just happens to be another one on the list. So maybe that Yougov survey is actually right I Think that's actually quite interesting. Tesla has also now introduced new features called charge on for power wall owners allowing them to make better use of the excess energy from their solar panels.

So basically here's the Scoop Okay, let me give you the bottom line on how this works. So if you have oh dear, if you have solar panels on your house and you're burning I don't know, five kilowatts an hour at your house, Maybe that's a little low. Yeah, that's probably. Let's say you're burning 20 kilowatts an hour and your solar panels are generating 30 kilowatts an hour.

Well, now you're using 20 from your solar panels, but you have an Xs10 and so what you do is you roll the meter back backwards. The problem is, even though you might be saving energy at a cost of 30 cents a kilowatt hour. Uh, especially during the middle of the day when air conditioning is expensive and the time of use rates are up, When you roll it back, you're usually only getting like one cent. Like the the utility companies do not want to give people large rebates anymore for having these solar panels not like they used to.

Don't get me wrong, they still do. You get clean energy credits. You get these uh State mandated credits and stuff, but the utility companies don't want to pay you that much for Rolling the meter back. So this charge on for power wall owners is actually very interesting because what it does is it's a feature that gives power wall owners which remember you can now buy a power wall itself without the solar panel system from Tesla The power offer gives owners the option to charge their electric vehicles when their home battery reaches full capacity and solar energy production is still ongoing.

This solution not only maximizes energy usage usage, but potentially lowers electrical electricity costs by reducing the need for the grid to power your car during Peak or Peak periods. It's actually brilliant. I Think that's a it sounds like a small feature, but it's actually very, very smart. It's like hey, charge my car.

What? otherwise I would be rolling the meter back like top my car. off when otherwise I'd be rolling the