Welcome back everyone to another meet! Kevin report we're on Episode 59. today I Want to start with the entertainment that is not financial analysis and uh, it's um, it's kind of sad yesterday GameStop reported earnings and I put together a video detailed video breaking down. Uh, why? There were some problems with the CEO suggesting that 1.4 billion dollars in Cash When The reality was they only had about 400 million because they didn't count their payables basically to clickbait people. Uh, they're essentially liquidating inventory.

Which is fine if in theory they're going towards a sort of web 3 development aspect. But wait a minute, they have no R D for web 3. They have no cost for web 3 and they've been liquidating their sale of digital assets. But what I think is most disappointing is when you actually and I did this after.

after I posted my video, somebody left a comment and they're like R slash Super Song and I'm like okay I Want wonder what people could possibly be saying at R Slash Superstar now I haven't gone to that? uh, read it before, but uh, now we're going to and we're going to be very brief about this so we can get to talking about the Fed and things that actually matter. But uh, let's just say it's a little disappointing. So this is the R Slash Super Stonks page here and here's a page with 30 700 likes or upvotes and a ton of little donation emojis over here and I'm like, okay, well this is probably going to be a really good analysis on GameStop right? Like let's see what conclusions they came to and what it actually is is a screenshot of the first page overview that the CEO put together. None of the financials at all.

None of the financials that tell you they basically sold all of their digital assets last year and took a 34 million dollar write down on those digital assets. Uh, none of the part where they actually, uh, are liquidating their inventory or not. None of the part about where, oh, their, uh, their cash position isn't actually what? what? Uh, what? this summary says right here. Instead, it's it's primarily just the summary page.

Just a little misleading because it implies that they're actually doing capex, which they're pretty much not. But anyway, then I thought okay, well, maybe the comments maybe the comments have some insights, right? No profits and 1.4 billion in cash. Can't wait to read the 10K and listen to the earnings call. Well, I hate to burst your bubble.

There were no analysts in the earnings call when I actually read it and when I actually read the report, they don't have 1.4 billion in cash. They've got like 400 mil which is still good, but it's not 1.4 billion of course. Then the replies are this is effing unreal. They're stacking cash as fast as we can stack shares for real.

Weren't they under a bill last time? Yeah, I think so. Absolutely crushing it I Don't know about you, but it sure seems like this GameStop company is doing well these days. I don't know about you but I feel like these comments are all just straight up thoughts because I mean just look at my video yesterday where I go into detail on this, but there's no logic to what's actually reported in the actual statements versus this pure hype emotion that you get here. It's this is embarrassing.

It's almost like these are like five-year-old children. Oh my gosh, but it's up 48 and after hours it can't be wrong. Cash flow is King Yay! Their cash flow is propped up on them selling their digital assets. which their digital assets was like.

What are the responses that I got yesterday? uh when I was looking at some of the comments which honestly I should have just not done. uh but I was looking at some of them yesterday I'll pull it up uh and uh yesterday I was like wait a minute where where did the logic go? Oh wait, there doesn't seem to be any left. but uh, yesterday. Uh, somebody basically complained about my video about how I left out all of the uh, here it is I think you may be leaving out the web Oops this darn iPad and it's HDMI setting.

Hold on one sec. Uh boom Okay, there we go. Fixed all right there we go on the right side here. I Think you may be leaving out the web 3 gaming space.

They are extremely well positioned to take advantage of. First of all, Web 3 Gaming is nothing more than like charging micro transactions for video games. Kind of like what what you could do in the new RuneScape 3 or really actual video games Like Web 3 Gaming is really no different from gaming, but you have to have a good game like Fortnite or Halo or World of Warcraft or something that's actually going to be good. Like a game that actually matters Otherwise, they all just tend to be games that prop up a miscellaneous crypto token and ended up being a scam, hackable, fraud or all of the above not to mention any names Axi Infinity But anyway, so my response and and I'm trying to respond with logic here is: uh, can you point out which line on the press release refers to Web3 Revenue Web 3 Research and Development Web 3 Cost Of Goods Sold There are none.

The only reference is a 34 million dollar digital asset impairment loss and what looks like the liquidation sale of negative 7.2 million dollars for selling digital assets. Maybe I'm missing where the Web 3 actually is, but but no, no, you go through r slash super strong. How dare you? How dare you point out any kind of potential negativity? Because folks, the Moas is just beginning. Not just profitable, but a forty percent increase in cash and cash equivalents.

Apparently, people don't realize that if you stack up your bills, it doesn't actually mean you have more Free cash. means you have more clickbait cash. And when you're liquidating your inventory, your margins go up because you're shrinking. I Mean they shrunk their stores like half fold.

They're gonna. They've shrunk in their inventory more than 50 percent. Eventually, they're going to have to actually add in a spend EPS basically spend uh, increase their cost of goods sold which is going to turn into a a lower EPS uh and and rebuild inventory. Unless of course, the only thing GameStop is going to do in the future is sell Collectibles which their Collectibles Revenue fell in the fourth quarter of last year like people are like.

but Kevin they're going to sell more Collectibles and I'm looking at the numbers I'm like dude, the there is no mention of Nfts other than one time in a disclaimer on the document. Usually if you actually actually think you're selling money or making money from something like Nfts on an earning statement, you don't just say down here. in a disclaimer that the company has unique risks and challenges related to content moderation and control from peer-to-peer Nft marketplaces. Okay, but when and when you go to the Nft marketplace for GameStop, everything's down at like a fraction of a penny.

Uh, you could just Google GameStop Nft. and this is their immutable X their leading Layer Two Ethereum scaling solution. Fantastic. Uh, and when you go to their their page most of the things are are pennies but they do have some games up there.

I Guess that you can buy Nfts for. but then again the company is liquidating their assets related to digital assets. and I Think the scariest part that folks have to pay attention to is what's actually happening with their their sales and look right here these are their sales and their Collectibles which is what they want to pay more attention to. their Collectibles Revenue is slowing.

so you're going into Q4 with slowing collectible sales compared to what you were doing the rest of the Year This this is like this is embarrassing I I Feel embarrassed for the internet. Somebody here goes wrong. Web3 Gaming offers you ownership. Need to go Better games but you have actual ownership I Don't even know what you said if you're telling me no, no man, no Man Web Three Is you being able to buy a video game and own it? Dude, that's called software.

How do I know it's called software Because it literally says Software Superscript 2 What is Superscript 2 Superscript? By the way, to slow this down a little is when you have a little number that's written above text it says includes sale of new and pre-owned video game software, digital Software, and PC Entertainment Software and what happened to Software Revenue in the last quarter compared to last year. Oh good Lord it plummeted by over a hundred and fifteen million dollars. It went from a 35-ish percent segment of their revenues to 30.1 percent like I I don't I don't understand where the argument could come from that that this company here I'll open up the the Poverty chat really quick because I I don't understand what I'm missing. This to me is just like the most disappointing click bait.

Honestly, what I think is happening is I I Think this company is is realizing that this is the kind of stuff that you get like people don't actually read the earnings. they just say after hours Gme is 23 up. Six dollars shorts are so effed I'm so happy I was able to get a friend to invest 2K in this today. Proud of you two! Apes I Talked a co-worker into buying last week now I Feel like Warren Buffett Oh this is so devastating.

This is so devastating. Uh, all right they all okay. let's effing grow hot. Effing damn let's go Good fundamental plays.

There are no good fundamentals. There are none Hi Mom My wee-wee is growing. no I yelled out loud a nice happy French Canadian Tabernac at Work I Fired off an austie Tabernick as well. That statement alone has my tits so insanely jacked.

They made approx 50 mil, 190 mil more net income than last year but also decreased their inventory. Is this still a good trade? I'm not too familiar with such financial information given market conditions going into recession I'd say so. Here's like the only reasonable discussion that seems to be now. They talk about having high inventory because of supply chain issues.

But like that that. the way you have to describe that is. the supply chain issues basically led to a delay in when your inventory arrived. Supply chain inventory issues are usually associated with a lack of inventory.

Lower inventory could be a sign of improving supply chain could be at least. this person injects some doubt because the reality is, they're liquidating because they realize they're not making money. They're only making money because they're taking impairments. Uh, and they're liquidating and not buying new products.

If they look, here's here's the thing. This company was not even profitable. If you go back to 2019 18 or 17. look at the last annual reports.

It's just it's all losing money. They've been liquidating for years. That doesn't make sense. All right.

let's see. Uh, we're gonna. We're gonna move on here in just a second. Why is GMA in a lot of small cap funds? Uh, probably for the memes.

Honestly, uh, I mean it is. Uh, it's a 5.3 billion dollar company and apparently, uh, now it's going to go up to like seven. It's worth the laugh. Yes, uh.

Trying to see if anybody has anything here. Momentum doesn't care about fundamentals. This is true And I'm totally fine with people saying that like, hey, if you're you're interested in a stock because of because of Momentum. That's fine, but you're getting clowned into uh, clickbait fundamentals.

I Mean please give me an argument where where I'm wrong I mean like if you really, if you really think that GameStop is going to the Moon because of Web 3 gaming, why isn't the CEO talking about it? Where is the Capex? Where is the R d What is a company supposed to just out of thin air create Web 3 gaming that people actually care about? Uh, GameStop made lots of money and paid a dividend back in 2017 and 18 says someone here. Okay, well let's look at that. so all we have to do is go to GameStop investor relations and then we're gonna go to let's go to 2018. Let's see I mean maybe right? No, I don't know.

It's been a while since I've looked at these. All right. Let's pull up the 10K for 2018. and let's see what you got.

Uh, and then we got some more important things to talk about. but this is the company in 2018. Uh, you'll see that in 2018 and 19. They had inventory that was about twice as much as they have now, which to some degree is somewhat Fair because they, uh, they actually uh, have closed a crap ton of stores.

but eventually they're gonna actually have to start buying stuff again. Uh, all right, let's go to cash flow statement so we can see if they what we had over here. Yeah, look at that. They actually paid out 157 million dollars in dividends in 2018 155 and 17 155 over here in uh, 2016..

Now that's actually really interesting because in 2018, they took a net loss of 673 million dollars. The year before that, they made just 34 million dollars. It seems like 2016 was the end of The Glory Days with 353 million dollars of net income. Uh, but they maintained their dividend despite taking that kind of insane loss.

Uh, that's pretty incredible. Now, where did those expenses go? They? oh, they took a Goodwill impairment of a billion dollars. Oh, okay, well that's interesting. Uh, so that's gonna give them some tax benefits and reduce their net income.

So actually some of that could just be their Goodwill impairment. Yeah, a lot of that is actually probably their Goodwill impairment. So it's really interesting to see this company because yeah, before the pandemic, this wasn't as terrible, right? I Mean, there was actually like some hope over here. Uh, you had revenues that increased into 2017, but declined into 2018.

Uh, you had uh, their margins which shrunk into 2018. They took a Goodwill impairment probably because they started closing stores, but that gave them a tax benefit. So that's actually not too terrible. and that's why they maintained their dividends.

You know you're right. I Mean back then, it was actually still A store that that people cared about I mean you know back then wasn't Sears still around? and Bed Bath and Beyond anyway. kind of crazy. So uh, okay, somebody here says I understand your point of view, but I'm sorry you are highly uninformed In this case, you're welcome to Super Stonk.

The Web 3 project is long-term and developing. Okay, see when people. This is the part about logical fallacies. I Think people don't understand when when you just attack somebody and say you're just uninformed.

The Web 3 is long term. Oh okay, it's a long-term hold. eh? where are the expenses related to it? Seriously, like, where? Show me where On the quarterly report for the Fourth Quarter of 2022, they have any expenses related to Web3 other than losses that they took. which implies they're liquidating their Web 3 project.

I'm just reading the document. Anybody who say oh well, it's it's a long-term investment. Come on man, it's just it's just lying. That's what it is.

It's just lying to people. It's sad. So I I feel bad I mean I hope people can make money off the momentum. but uh, I would not huddle this thing.

Oh, somebody writes their Nft Marketplace is still in beta. Yeah, and it's going to stay in beta until they actually show some expenses on it. It's ridiculous. All right.

let's move on. Oh good. Lord All right, so that's a rant on Gme Sorry. Oh, that took a lot longer than I Thought it was going to take all right Now we gotta talk about the Fed.

All right, let's see what we got here. All right. Poverty chat's over. Back to the Fed Ah, now we gotta talk about the Federal Reserve because obviously that is the big discussion that we need to have today.

That is the most important topic. There are a lot of other things to cover Ukraine oil and China with the Saudis we got so much to cover. But the most important thing to talk about right now is what's going to happen in about five, four to five hours when Jay Powell gets all those papers together. you know, makes it seem like he's frazzled I Love that By the way, when he comes out and acts frazzled and like the corners of his papers are damaged and stuff making it seem like he's kind of been like nervously preparing, it's all for the show.

Okay, maybe it's not, but I think it's all for the show. But anyway, what's going to happen? And so I've given you my projections. but in this video, we're going to give you some projections on what institutions are looking at. First, it's worth noting that the Bundesbank Chief says that rate Setters must be quote more stubborn in their inflation fight Now actually thought this was an interesting piece and let's look at this together here: Germany's Central Bank Boss said Eurozone Rate Setters Must be more stubborn in continuing to raise borrowing costs to tackle inflation.

He discounted fears about the recent Financial turmoil that's been experienced. Now that's interesting because really, what we're saying is hey, whoa whoa whoa hey, the banking crisis does not matter. Instead, you must continue to hike. You must continue to race rates as much as possible.

Uh, bad accents. Uh, and that is actually what's being at least to some degree priced into markets. Now this chart is going to be very important today. Uh, this is the Federal Reserve's terminal Rate expectations.

This terminal rate expectation right now is sitting at about 4.96 Now this is going to be very important because if the FED comes out with a summary of economic projections suggesting they're going to go from, say uh, you know where we are now Four four five to four Seven five with the 25 BP height Uh, and then there's summary of economic projections. They have the goal of hitting 5.1 if they move that Target up then the Fed's basically signaling to us, hey, look, you all need to price in many more price hikes I Don't know why you all got your your panties tied up because of a silly little banking crisis? Who cares? We lost five banks. we still hiking. Sorry now.

Unfortunately, that could lead to some pain in the uh, the stock market because I think the stock market is actually to some degree trying to think that maybe the federal pause which is just totally ludicrous. There are multiple different banks calling for a pause. The more research is calling for a 25 BP cut Elon Musk is calling for a 50 BP cut. You've got no more.

uh uh, you've got Goldman Sachs calling for a pause. Most banks are calling for 25 BP height. but just this idea of of of pausing basically totally discounts inflation. I mean I Suppose if J-pal comes out and says inflation's over, we're going to pause and cut.

Yeah, boys and girls, we're going back to the Moon but I don't think we're there I Actually think the central banks CBS are are really clear that uh, look, we got to make sure inflation expectations don't run away from us. Uh and so Mr Bundas Bank says if we are to attend this stubborn inflation, we will have to be more stubborn. I Didn't know that was possible for a German rate centers at the FED are set to decide on Wednesday whether to continue raising rates despite the collapse of U.S Uh, you know Banks Silicon Valley Uh, a bank and signature anal and of course we had Credit Suisse and Switzerland and so on. So analysts largely expect to raise by a quarter basis point today.

Uh, they talk about how the banking system is resilient in Europe and much the same as being talked about in America That this is not another 2008. Uh, and instead we just have to basically focus on getting inflation down. That that is going to be the most important fight now. I Agree.

Uh, and Nick T gives us some hints as well. Let's close out some of these others here. Let's look at what Nick T has to say. So this is what Nick T tells us to watch for: Nick T Uh, this is uh, by, by all accounts known as the FED Whisperer.

He's the guy that during the FED blackout periods. basically lets The Fad not be in a blackout period. He's the guy that gets the text messages from the Fed. that's like yo, we're leaning this way.

write the story. So a lot of people actually refer to articles from Nick T as kind of like a hint from the Fed so they can increase their messaging to the public even though they say they don't message the public I Don't know, it's wild. Anyway, the FED faces one of the thorniest policy decisions in years on Wednesday whether the lift interest rates again to fight High inflation or hold them steady if it's the most intense banking crisis since 2008.. we got some more research that we're going to dive in on this, including from Bank of America which we'll talk about in just a moment.

Uh, but anyway. Uh, this live I will be live streaming this at 2 P.m Eastern and 11 A.M Uh, California Time The video is already up so you can go click it remind if you want on it. But anyway Nick T says the FED has tried over the past year to Telegraph Its raid moves to avoid surprises, but hasn't confronted an Abrupt and fluid crisis on the eve of a policy meeting. Now they do on Tuesday Investors thought a rate hike was likely with interest rate Futures uh indicating a roughly five and six chance of a quarter point increase.

Okay, well remember the FED also likes to do what the market does uh or what the market projects and if the market is projecting a 25 BP it's get it's probably going to be a 25 BP That's my base case. It would be very, very rare to see something other than a 25 BP Here officials raised their Benchmark fed funds rate by a quarter point to a range between 4.75 or 4.5 to 4.75 in Fab. Now we're going to get the next 0.25 The case for raising rates. Here's what to watch for: So the bank a Silicon Valley Bank collapsed two weeks ago.

Officials were set to debate whether the raise rates by a quarter point or half point because signs of the economy is still running hot. Since then, the economy has shown surprising strength in hiring spending and inflation, leading to concerns about uh that aggressive rate Rises over the previous year hadn't done enough to slow and Corral inflation in other words, making the argument like hey, uh, these rate hikes still haven't caught up? Of course now people say oh, but we had banking failures. Is that not a sign of of interest rates catching up? Maybe to some degree because you had some banks with very, very poor risk management procedures. But as those failed treasury yields actually fell which increased the value of the bonds that other Banks had on their balance sheet, which actually makes a continued banking run less likely.

Anyway, some economists are just argue that stopping rate increases now, uh, risks, uh, fueling unacceptable risks that inflation will stay they hire for longer. Fed Officials have at times acknowledged the risk of being forced to simultaneously fight two problems: inflation and financial stability or instability. Several officials have said they'd use emergency Okay, this is boring so far. So anyway.

uh, let's go to where there's a little bit more interesting here. This is: Crisis Management Okay here. What's this quote that they're using over here I Always like the quotes that they use because they try to provide both sides. They're probably a little worried they'll be seen in some cases as knuckling under a financial pressures.

In other words, like if they go for zero, then it's kind of a sign that their weak paper handers. Uh, now of course they do give this argument about maybe holding steady because hey, Financial conditions have tightened since the bank failures. This is true. We've seen the Goldman Sachs Financial conditions index much higher than where we were sitting at the beginning of February But and the cost of borrowing for these banks have gone up? Uh, but Goldman Sachs makes the argument here that increasing tightening in lending standards could end up creating more recessionary fears and therefore do the work for you of of tightening.

And so maybe you don't need higher rate increases. now. Yesterday TS Lombard had a good piece. They actually said that a Fed uh or or the tightening and lending standards is probably going to be similar to somewhere around 0.75 to 1.5 percentage points in height.

So in in rate hikes, Goldman Sachs put that number at only about 0.25 to 0.5 I actually agree with TS Lombard more. Here's that piece. Let's look at this piece together. So the 2008 PTSD versus the ghosts of the 1970s.

So they talk about uh, basically things being broken and this new era of no longer having permanent, zero lower interest rates which are a great time to sort of expand risk. But what you have here is, uh, they talk about how the U.S is acutely susceptible to monetary tightening and that's why we're seeing these banking failures and we have to realize that these banking failures are going to tighten lending and and Bank fears so much that the first thing that happens is people stop uh, getting yield on their deposits or as high of a yield on their deposits as they could potentially at new Banks or Fintechs. There's a reason for that, You might be wondering why Is it that the Legacy Banks don't pay me a yield like the fintechs do? well? Part of the reason is the Legacy banks have a lot of the debt. that or the assets that are devaluing quickly as rates are rising and so rather than pay out more in interest, they are taking more of that income yield that they could Farm off of your deposits.

uh, and and buffering their losses on their bond portfolios. But in doing so, they're actually driving their depositors out of the banking system and into just buying Treasury themselves to increase their deposit yields. which is a good point. Now they hear talk about how this is not going to be another 2008 which is another argument for the FED just maintaining their 25 BP hikes.

Uh, but they talk about here and I think this was really neat. They talk about how cred a credit squeeze that is an actual tightening in credit standards typically feels like another 75 to 150 basis points of hikes and that I think is actually what we want to pay attention to at the Federal Reserve Today is it possible that we enter into a new phase of the Federal Reserve? We'll talk about that, but basically look at this. They refer to the Bank of England as a recent example where the Bank of England patched up the UK financial sector and maintained its monetary squeeze, but never reverted to its previous extreme levels of hawkishness. Instead, gradualism ruled.

Okay, so now this is really interesting. Let's try to put all this together. So first of all, today is March 22nd, which is the Fomc day, but it's also the expiration of the lifetime access of the coupon code linked down below for those programs of building your wealth. Okay, so we'll just leave that right there.

Okay, important to know, and it's only a one-time payment. If you want to break it up into smaller payments, you could do that. Just check out with PayPal Okay, so what does this potentially mean for the Fed? Well, If The Fed hints in any way that we're going to do 25 BP now. but tighter lending standards could affect the market the way TS Lombard thinks.

get This could affect the market 75 to 150 BP Well, what does that effectively mean? That means we can have the lower bound. Uh, in March That's with the 25 BP hike of 4.75 But now, if you add in tightening with tightening because banks are freaking out, you could actually be at a rate of 5.5 to 6.25 percent without actually being there. Think about that. If the FED hints this today, they could be signaling hey, we don't have to do as much anymore because the banking system is going to tighten and effectively do that work for us.

Which basically means the FED could be at a six percent effective rate thanks to the credit squeeze they're creating while pausing after the next 25 BP that we're expecting to get today. That is also very interesting because in my opinion, if rates were effectively 5.5 to 6.25 we would effectively I would call it an effective guarantee that we're hitting a recession. If if we have rates this high, and if the banking crisis tightens lending this much, then that's where we're walking. So what could that then mean for the way the FED talks to us? well as TS Lombard says gradualism which is basically a way of saying uh, I I would call it uh, softly acting like a hawk with hikes and seriousness on inflation, but mostly being dovish, it's kind of like a change in tone.

and T.S Lombard makes a really good argument here that hey, look, this credit crunch could hit us so badly that who cares what banks say about what happens today. What actually matters more is about the Fed's potential move towards gradualism in response to the credit tightening that's going to happen as basically all the banks pucker and they're like, oh dear, we better tighten lending because we don't want to go bankrupt like all those other Banks And that does enough of the Fed's job for them, that's entirely possible. It's something to pay attention to now. we'll look at a Bank of America piece as well here.

but I think we should quickly get the Goldman Sachs Financial Conditions index. Uh, let's get that really quick just to see how we're doing going into the meeting. Uh, Jay Powell looks at this chart I'm 99 certain now. Financial Conditions look like okay, look like we're rotating down slightly.

but uh, let's pull this up together here. Okay, here we go. So here are Financial conditions as of this morning. a slight loosening over here after the drama that we've had in the last uh, you know, a couple weeks here.

Uh, However, this level is still substantially higher than where we were over here when Jay Powell uh Spoke with Dave Rubinstein and and cheered how it uh, Financial conditions were tightening. Remember, to some degree you do not want to see this sort of uh, uh, you know Char rotate all the way down because you do need financial conditions tight enough to kind of prevent rampant and runaway inflation. I Don't know that this drop really is significant to the FED though. I Mean if we were down here I think we'd get a very hawkish fed I think here.

given that Jerome Powell was pretty neutral over here. I Wouldn't be surprised if here you have a pretty calm fat as well. So I I'm I'm looking for a 25 BP hike in a relatively calm fed today. That's that's what I'm looking for now.

Uh, we do have Bank of America that has some insights on this as well. Let's hop in on this piece here. So what's next for growth and inflation? and are there going to be second round effects blah blah blah. So let's just look at some of their summary answers here.

So the first thing they talk about here is if Regional Bank issues are ring fenced tightening, lending standards, and a Slowdown in credit creation would be consistent with our Baseline outlook for a mild recession in the U.S Later this year they've been calling for like a Q3 Q4 uh recession. Here, Our bank research team believes the FED will impose stricter liquidity and cap requirements on a larger subset of banks, leading to tighter lending standards. More pronounced Financial stress could lead to Fed cuts and even a return to the zero lower bound if stress spreads. but this is not our base case.

It's actually what the bond market has been pricing it for a while that we would actually end up seeing somewhere around 500 basis points and rate cuts by the time the cycle is over. That would put us basically right back at zero. Now, a lot of people don't think we're ever going to go back to zero that we're never going to see those low rates again. That's going to take a very long time to get inflation down.

Uh I I'm a little torn on that I probably lean more like 60 40, maybe even 70 30 towards the idea that oh no, we're going back to zero And not only are we going back to zero, but we're probably gonna start knocking on the door of negative rates uh, in the future. But we'll see mostly because of the deflationary impacts of AI autonomy. And otherwise, with money markets now yielding four percent, are we worried that money will flow out of equities and into higher risk, free yielding assets? Well, my answer to that before I read their answer Here is my answer to that is: I think that's already happened I Think people have already thought, why would I invest in stocks when I can get four percent risk free on treasuries? Uh, and the answer here is simple: you might get four percent on treasuries and maybe avoid a 10 or 20 right down on on the stocks that you bought. but if then, all of a sudden those stocks go up 50.

Well boy, your opportunity cost was pretty rich. uh, to sit in those treasuries. But anyway, cash has become an alternative. but there have been.

There's been no equity capitulation so far. Yeah, because I feel like allocation to equities is already relatively low I I saw, uh, it was actually a a funny uh little meme yesterday on on Twitter Where was this darn thing? Uh, it was. Let's see here. somebody writes waiting for oh here it is spotted.

Look at this investors waiting for a drop below the October lows before buying and it just shows a bunch of skeletons. uh, would look to be impaled on some kind of wall that doesn't look very pleasant. but uh I don't think they they are bothered by that anymore. Anyway, Uh, okay.

fine. In the past has the how has the FED reacted to financial crises when they are in the process of raising hikes or raising raising rates following the 1987 Stock Market Crash, the FED cut rates and then raised them again as things stabilized? Ethan Harris believes the FED can address Financial stability and inflation with their varied policy tools and concerns. Uh, that? uh, that they can't are overdone I Don't think I mean this is a suggestion that Goldman Sachs is making as well. I think it's so wrong? I I think there's I would I I bet a good chunk of money on this I think there's almost no chance.

the Federal Reserve pauses and it keeps going. If The Fed pauses. They're done. They're done.

A Fed pause means they're done because they've said a million times we will not repeat the mistakes of the 70s. The start stop. Uh uh uh. policies of the 70s so it's very interesting.

Uh, you know you could go to Goldman You know they're the ones who are saying this. Here's their piece from this morning. and uh, they refer to the Fed's response to the 1966 credit Crunch 84, 94 and 98 collapses. Uh, and they look at these.

But basically they say here. Beyond the immediate response, the FED eased monetary policy further in two episodes where it initially eased resumed hiking in an episode where it initially paused and continued to hike further in an episode where it initially hiked despite Financial Cons: Stability concerns I Believe they're going to do the yellow section here, which is just keep hiking even in the face of financial stability concerns. Overall, the historical records suggest that the Fomc tends to avoid tightening monetary policy in times of financial stress and prefers to wait until the extent of the problem becomes clear unless it is confident that other policy tools will successfully contain stability risk well. And I bet I guarantee you a 99 certainty.

That's exactly exactly what the FED is looking at today. They are looking at this and saying, look, we have a Buy The FED Pivot facility. It's the bank term funding program. We have the Buy That Fed Pivot facility.

We did our job, then we added to liquidity in US dollar swap markets throughout the world and we again did our job. We got tools I I Guarantee you He's gonna say this day we got tools on our tool belt bro wheeze using them. But rate hikes are important to contain inflation because that remains our number one fight. Uh yeah, so in other words, they're gonna make this argument my thesis that we have stability.

They're gonna send this confidence. today. We have stability now. we need uh Financial stability, right? So that that's we have Financial stability.

So instead, we're going to focus on maximizing jobs and stable prices because that's our dual mandate. Financial Stability is kind of like their third mandate. Uh, well, actually, it might be their primary mandate and then you have this dual mandate thereafter. Either way, because the financial stability goes actually wonky.

The other two issues go away. They'll do whatever they need to do to maintain Financial stability, even if that means lots of job loss. But uh, yeah, I don't I don't I don't know I I Just don't jive with the arguments that uh, you know we're gonna start stop here. So I I'm actually bullish on it I'm bullish on 25 and I'm bullish on a dovish fat I'm happy about that.

I Think the the scariest part where we can get rug pulled today uh is a you not using the coupon code link down below because you pay once and you get lifetime access and you're guaranteed to get the best price. So I don't know I wouldn't you get to join me in fund the analysis? Uh and uh, q1a uh Or real estate analysis ever. Oh, there's so much we do, it's great. All right.

So here's the Dot Plot Again, Well, the sap uh, the Dot Plot is one of the other Pages it doesn't so terribly much matter. Uh, I suppose. since I mentioned it, I'll pull up the dots for the people who care about the dots. this is what the dots look like.

Oh, you know what I should do I should make my projection over here I Like making these bets, somebody is asking me how come Kevin is not introduced to Espresso So sometimes when I land at uh airports uh and I need something really quick or no. usually when we're about to take off at airports, I'll have an espresso because the plane takes off so fast that it kind of like jerks. uh, your coffee back and then you spill I've done that like three times. so I I'll have espresso.

The problem is, espresso gives me a massive stomachache. It's just too concentrated, too acidic or whatever. So so I I know espresso and I like it especially. you go to like Italy or you have some, you know Cuban coffee which is really espresso? I think anyway.

Okay, so so this is the Dot Plot projection from December Okay, I'm gonna I'm gonna draw my Dot Plot projection for for this year. Okay, so this is going to be midpoint target range for the FED funds rate. Uh, in 2023. So this is the end.

Let me make sure it's the end. We'll go through these really quickly. Oh here all my drawings from last time. Okay, so here it says yeah.

Okay, it's the end. Uh, median logaron. Uh, is it the end though. See, that's actually interesting.

Is it the end or the peak that they write over here? Uh, it's the projection for the year. Usually, that's what they expect the year to end in I'm pretty sure these are year end, but for let's see: Central Tendency three highest, lowest long run Uh. one participant announcement based on a monetary policy Fourth quarter. Oh, here we go: Present changes from the fourth quarter of the previous year to the fourth quarter of the Year indicated.

Okay, Q4 it's Q4. So let's go back to the dots. So where do we think rates are going to be in Q4 Okay, so now this is going to be interesting. When the FED does this.

it signals uncertainty, uncertainty. When the FED does this. that is. all the dots are clumped together.

It signals certainty I Think what's gonna happen is how many dots we have One, two, three, four, five, six. That's uh, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19. Okay, and then one person didn't submit. Okay So 19.

So 19 dots this time. How how would I revise this? Well, I would probably go as far as saying uh for Q4 I'm gonna go I'm gonna put five right here I'll put two right here. Uh, I'll actually put uh, let's see that's seven. I'll put four over here.

three four actually I put five over here. That's 16. and then I'll put another four right here. That should be added up.

but this is. this is the kind of dispersion that that I would think of. I I Think we're we're going to lose this higher end in consistency. It's possible it's possible you end up having like one lingerer up here, but I think you're going to lose the high end by Q4 Remember this is Q4 All right.

So you're gonna lose the high end and uh, and you're gonna shift this whole box basically down. uh, as much as half of a percent or so. So we'll see. that's uh, that's my take Kevin Drinks energy drinks.

No, I don't those are very bad for you I used to, uh, but not anymore. So anyway, those are my projections on the fat. updated just a few hours before the FED meaning with all the latest. Goody Two-Shoes All right.

next up, what do we got here? We got a little bit of news. Looks like Sofi is increasing their FDIC limits I Are they just doing this with multiple different banks? or how are they doing it? Sofi Sofi Press release. Let's see what they're doing. Uh, uh, be interesting to get some kind of press releases from them.

Uh, maybe I'll go to Investor Relations Investor Relations. So far, Investor Relations yeah, somehow they're Inc they're they're suggesting. Oh, our FDIC insurance is up to two million dollars. Yeah, here it is.

They have it updated on their website now. So if I Checking and Savings offers access to up to two million dollars in FDIC What is this with multiple different accounts? Are they just clickbaiting here? Uh, two million FDIC Insurance Increased from the industry standard of 250 per account. Okay, what's their asterisk Funds participating in the FDIC So far Insurance Network are deposit into deposit Accounts at participating Banks which are insured. Oh, clickbait.

Clickbait. Sofa. Clickbait. Clickbait.

That's ridiculous. This is. this is like old. Everybody does this.

man. this is no different than what Robin Hood does. What they're basically saying is hey, uh, we'll just anything you have over 250k will just siphon off and put it into another bank. and then that way because it's at another bank, you'll get more FDIC insurance and we'll do that up to four times.

So you get up to you know, 250 with us 250 at three other. Banks I suppose. So that's old news. Like that's not even news.

That's clickbait. That's clickbait. Uh, because other people have been doing that forever. M1 Finance was one of the early ones to do it along with Wealth Run Robin Hood Does it all day long Like it's like it's like cheating.

Yeah, exactly. Up Star says it's like cheating. It is. It's clickbait.

Come on man. Uh, it's it's. marketing is what it is. That's exactly what it is.

Yeah, so what Whatever. Whatever. What's Uh, what's the Robin Hood savings yield these days? By the way, because wealth runs 4.05 you've got. Oh, 4.15 with Robin Hood gold right now? Ooh Juicy.

Ah, it's ridiculous. The amount of clickbait just bothers me. All right. What do we got? Now we have.

Carvana has an update Carvana Investor Relations. So what do we have at Carvana? Carvana announces ooh Private Exchange offer relating to existing notes. Okay, how are they not bankrupt yet? All right, Carvana is a leading e-commerce platform for. But yeah, right.

for buying and selling cars. Okay, Carvana announced that his commenced exchange offers for existing notes for an aggregate principle of up to a billion dollars. Wow. Uh, subject to increase or decrease of new 9 and 12 cash slash slash Pak Toggle Senior? No, No, no.

Okay, so basically they're raising money at nine to twelve percent. Well, it's no surprise that they have to raise money. They're like so out of cash. I Mean the last time I looked at their fundies, they were basically knocking on the door of bankruptcy.

And then they came out with the poison pill as well. It's just a disaster. Uh, but yeah, they're they're Their earnings are very, very scary. Uh, they're losing money like crazy.

We can look at some of their recent their recent earnings here. Let's look at that. So if I just quickly. Uh SEC Filing subscribers, annual Project Shareholders on our current report, how about give me a give me like, uh, give me your annual report.

There's your annual report on. Yes, it is. Annual report Here we go. All right, let's see how much why they needed another Billy here.

Probably because they ain't got no dollars. Uh, the report must be so bad it crashed my iPad Oh that's just wrong. It's just wrong. Kevin You can't say such things all right.

It's like Open Door Why don't you zombies gonna die All right. So here's your cash flow. Oh good Lord. they lost 2.89 billion dollars.

2.89 billion dollars is what they lost last year. Cash from net cash from operating activity? Uh, basically. oh no, that's this one right here. 1.34 billion.

One point. what do we got here? Uh, 1.324 billion dollars in the hole over here and net cash from operating activities. And then if we look at free cash flow, well uh. we got property, plant, property equipment only 44.

But then they had to buy a bunch of inventory. Okay, so burning money to get acquire inventory revenues? How are we doing here? Retail? Yeah, they're still losing money hand over fist over here. Yikes. Net sales, gross profit.

Okay here we go: Net Loss: 2.8 billion dollars. The same number we just saw. They did take a Goodwill impairment so their loss would be closer to about 2 billion a two. Billy loss is is more of their actual loss with about just over a billion bucks in negative free cash flow and this company has.

How much money do they actually have bills that they have to pay? Look at the bills they have to pay, they got to pay about two point. Quick math: 2.4 billion dollars of debt that they have to pay. Then they've got long-term debt. Oh my gosh.

6.5 billion dollars of long-term debt. More. It's like 6.6 billion dollars of long-term debt. Along with just bills to pay of about 2.4 billion in uh, in payables.

They've got cash of about 600 mil. A billion dollars isn't even enough. A bill is not even enough. They're so upside down.

Man, this company's going BK This is a disaster. It's a complete disaster. Oh God. Listen, if if you work at Uh Carvana I implore you to sign up for life insurance in as little as five minutes by going to Metcavin.com life uh and just to help help your balance sheet out a little bit, maybe even go to Uh Metcaven.com free and sign up for Weeble you know, got it? Gotta get those.

Uh, gotta get that paid. placement in anyway. Uh wow, that's terrible. That was terrible.

Okay, what else do we have? So I don't know. There's some talk we can do about banking but and some other topics I Want to hit like oil Banking and some other goodies. What I'll probably do is I'll uh post those after the FED because I think right now the most Salient thing that we need to cover is the Fed. So I'll be posting multiple uh, unique videos throughout the day, so make sure to watch those.

Of course, at 11 o'clock we got the Fed so stay tuned and buckle up for the FED. All right folks, we'll see you later at the FED meeting.