Welcome back to episode number 66 of the Me: Kevin Report: it is March 29th and there is a lot to cover. so let's get started with all the goodies that there are to cover today. Oh boy tell you you know, getting in the routine of waking up early got that down. But now I gotta get in the routine too of making sure all the beautiful, juicy research is perfect for you so we could keep them as efficiently as possible.

My goal, by the way is to start these at 4 20 a.m every day because why not? That's my goal. We'll see when we can get there. It'll take probably a couple weeks and then we'll be there anyway. Alibaba is splitting into six different units and Jack Ma is back a 220.

Billion Dollar Empire splitting into six different units. Pretty crazy Apple Buy Now Pay Later is finally starting to roll out randomly to users. iPhone wallets. Uh, you'll have to have an iPhone wallet to be eligible.

You'll be able to borrow between 50 to a thousand dollars via Apple Buy Now Pay Later. which is kind of cool because maybe that means at some point you'll be able to use Apple by now. Pay later for the courses on building your wealth though we did just partner with a firm and Colarna linked down below so you could use Buy Now. Pay later for the courses already.

Uh Apple Pay to come Uh Sam Bankman Freed is uh oh boy. He's got now a security guard babysitting him because he's being restricted to a custom configured laptop that only lets them go on things like Netflix zoom and the New York Times They didn't even give him access to the New York Times and Fox they only gave them New York Times and he'll have a security door guard at his door to make sure people get wanded down to make sure they're not bringing in. uh, special? Electronics Uh, that he might be able to look at different unapproved websites and he'll have access to his Gmail and Wikipedia as well. It's almost like he only has access to left-leaning things.

Gmail Wikipedia New York Times Netflix They are keeping him on one side of the spectrum anyway. Uh, Bloomberg Intelligence is suggesting that the 10-year yield is likely to stay above 3.3 percent. Uh, potentially for the rest of the year. So stay tuned.

Uh to that. That would certainly keep pressure on uh, real estate, but also funding markets. Uh, we've got. uh.

let's see here: Starbucks Global EPS Uh. forecasts maybe too aggressive say some analysts. Now what I thought it was interesting about this is the fact that Starbucks has doubled its amount of a Chinese stores. So I've actually been looking at Starbucks as one like hmm, what price would I want to enter on? Uh, but the valuation has always been too high for me to jump in on Starbucks for what it is.

Uh, and so this kind of reiterates an idea that maybe it's a little too early still to get excited about Starbucks Nike inventory up 40 percent. but that and they're discounting more. But that didn't hold a candle to that disbending that we just saw at Lulu People are clearly still able to spend through this recession. Lulu Absolutely exploded yesterday on a massive uh earnings beat.

We'll go through the actual earnings report and earnings call and our course member livestream today, but wow, that was absolutely unexpected apparently. Uh, you've got uh, Mr Jefferson the Federal Reserve Governor who told us that inflation has started to come down, but it's hot. It's unclear how much of the decline was due to higher rates because of the long variable and uncertain lags. you know.

I feel like when you get a job at the Fed and you become one of the FED Governors they kind of just like all right man. Look, you've never done this before. You know you got you got your degree or whatever. Here's how it's going to work.

Okay, you're gonna go up there. You're gonna pick some things that Jerome Powell has said that you like and then you're just gonna repeat those. It's that simple. Boom.

Is he able to play league? That's a really good question actually. Uh, you know, like so I've actually joked and actually I'm kind of half serious about it. Actually, I'm very serious about it. Uh, but I don't like thinking about this.

but I I think about it because I always think to myself like well what are like the worst case scenarios right? So first of all I think you all know I mean I I know there's some people who watch this this channel for perspective but they just want to punch me in the face and and I get that uh I think I am very punchable. Have you seen how I did my hair today? uh anyway um I always kind of think about this idea of like what if like nothing worked out like all of a sudden you just like uh you, you went bankrupt, you lost everything I really don't think that's that's in my future I think that's like uh you know is less than one percent chance because I'm really confident in everything that we're building. but uh but obviously you you know nobody knows right? Every single business owner has has that potential and so I think to myself well I guess I could just play Rust in world of Work craft all day long with my family or my kids or whatever and and like it actually wouldn't cost that much money I mean if you think about it, you could buy a like the the cost per hour that you spend playing a video game is nominal. First of all, you have a one-time basically fixed cost of a headset, keyboard, mouse and computer.

So what? 1500 bucks Amazon decent gaming computer. Now it's not gonna be the best, but be Decent Uh, and it's playable. Let's put it that way. And then you play pay what like 60 bucks a month for a game or something like that? your your cost of of gaming are actually really really low.

So let's say you wanted to game I don't know 60 hours a week because you really didn't want to do anything else. Although you could game 60 hours a week and still have a full-time job working 40 hours, right? Definitely possible. So let's say you spent 1500 bucks and uh, you did 60 hours a week. Uh, in one month that's 240 hours of gaming.

Which for your first month, that works out to say six dollars and 25 cents per hour of gaming if you played games 60 hours a week. Uh, for an entire year. that would work out to paying 52 cents per hour for a cost of gaming. Like it's actually really affordable to play video games all day long.

So uh yeah. uh. that's maybe that's why when I was in third grade and and we basically lost our home and Carr got repossessed, we had no money I just played video games all day long. It comes from experience.

Uh so uh. but I had nothing to do with that. That was uh, real estate crisis. All right.

Let's now talk about uh, some actual topics that we got to get covered. Uh, since? Uh, I'm starting a little bit behind I'm going to talk a little bit faster so we can make sure we could fit each of these segments in. Uh, together here. Bring back the house Hack Fast.

Yes, uh, we're actually we're actually working on those. Thank you for that. Uh, we, um, they they. The design of the vest is great, but unfortunately, the way they they cut the the vest is actually really bad.

Like they kind of. rather than tapering in like a normal vest does, these taper out and they look like a sleeping bag. So it's fine when you're sitting. But uh, if you actually go walk anywhere, it looks ridiculous.

So uh, we're actually, uh, returning these and then we're gonna get, uh, a different company to make them. Just kind of annoying. Uh. I A worst case scenario we've been saying thinking about maybe having somebody tailor them to taper them, but it's just it's ridiculous that that the company even sold them the way they are.

Uh, but that's okay. that's business, right? Two steps forward, One step back. That's just the normal kind of way of life right there. So uh, okay, all right, the first thing we're going to talk about.

Okay, yeah, quite a few things to talk about. Okay, stand by for Kevin to start talking. All right here we go. Well, AMC is potentially looking at an acquisition from Amazon now.

this was unexpected, but does it potentially make sense? Me thinks there could actually be a good argument here for Amazon Now I Want to be clear: I'm personally not the biggest fan of Amazon stock I Think it's selling for a nice discount right now, but there's a potential that there's a reason it's selling for this sort of discount. I'm not the biggest fan of its actual merchandise business I Think they lose money, hand over fist in merchandising I think basically Amazon and you can look at the earnings calls for this though, they purposefully lumped together some of their costs of goods sold to make it very difficult for you to know how terrible some of their margins actually are. But generally I think of anything they sell on Amazon and Amazon Prime as a loss leader, the place they make money is AWS Amazon web services. However, those margins have been compressing by about four, uh, 400 basis points.

about four percentage points. Uh, over the last quarter and we're starting to see a Slowdown in Revenue growth for Amazon AWS So AWS Well, it's a fantastic segment. It's the profitable one and it's really what you want to be paying for at Amazon Content creation is risky. Movie creation is a risky business.

Uh, and uh. the merchandise business is is not that, uh, particularly profitable. It's almost more of a lost leader. In fact, Amazon is turning so tight that they're considering getting rid of the entire Amazon Alexa program by just killing it off.

They don't find it to be profitable, they don't find it to actually be adding to sales. and quite frankly, while it was a novel to go yo Amazon order some new batteries I always end up going on my phone anyway to make sure it's actually doing it correctly. So the whole like order by voice thing never really went anywhere. but how could this relate to Amazon And what could Amazon potentially do with movie theaters? And why does Amazon even want these movie theaters? So I was doing some thinking about this and I want be clear Bloomberg intelligence and Bloomberg reported uh, this potential acquisition that led Amazon uh or actually let AMC stock to jump as much as 18 yesterday.

But I'm going to go into my opinion now and give you sort of my thought as to why. Maybe this could make sense? So first of all, there are 584 movie theaters that AMC has now the actual cost to build out a movie theater. Keep in mind, this does not build the actual building. it's build it out.

The reason I say that is because most of AMC theaters are actually leased. If you look at the asset statement for AMC you've got somewhere around a billion and a half for actual property and somewhere around five billion dollars in actual leases. Which means that five billion dollars in actual lease liabilities probably represents control of somewhere maybe around 10 to 20 billion dollars of actual buildings. So you could see as a percentage of property AMC has very, very little actual property.

Most of it is actually Lee space because you're leasing really the space within the walls. Uh, I mean kind of like a commercial condo so to speak, but somebody else owns the building, right? So most of Uh AMC's liabilities are lease obligations. in addition to about five billion dollars of actual debts that they have. They've got about 11 billion dollars of liabilities.

uh, and about nine of assets. So they're a little upside down. Right now, they've got negative shareholder Equity We know that uh, it's about negative shareholder Equity of around two billion dollars. So the point is, they have 584 theaters.

So 584 theaters. If you wanted to build a movie theater right now, what would it cost you? Well, according to RS means in 2019, the cost was about two million dollars to build out a theater. I Actually thought that sounded a little low. so let's call it three million dollars.

Let's add 50 to that cost. Uh, in my opinion, that also still seems a little bit low with AMC Though, if you paid three billion dollars for AMC which would be a premium of of what the stock is trading for right now, would be maybe about a 30 upside, you'd be paying about five million dollars per movie theater now. potentially. What's interesting here is Amazon's purposes for this because does it make sense for Amazon to potentially overpay for the movie theaters on these tenant? Improvement build outs and given the fact that right now, regardless of what the cost is to actually build out a movie theater, if Amazon was willing to build a new movie theater in vacant commercial space, the landlord probably build out the movie theater for you for free.

So the cost of the movie theater construction doesn't even matter because landlords will pretty much do anything right now to get new tenants. And if you sign a seven to ten year lease and it's Amazon a big anchor coming in to sign a big seven to ten year lease with you, they'll probably give you a free movie theater. so the cost to build the movie theaters doesn't actually really matter. So it doesn't necessarily make sense to buy uh AMC movie theaters for the actual theaters themselves because a you could probably get free movie theaters and and B these are old movie theaters, right? So they're actually a depreciated asset.

It's not like they're brand new theaters, but why would it potentially make sense? Well, in my opinion, the biggest spoon to Amazon would be the location. Think about it. 584 Commercial massive spaces between probably 10 to 24 Theater spaces that you wouldn't even need to use all of the theaters for actual theaters, you could use them for customer distribution centers. AWS Think about it, you take.

Let's say you have a a 10 unit movie theater in a mall, turn two of the theaters into distribution and so people can pick up their Amazon Prime orders with a bunch of lockers, turn three of them into an AWS Outpost Now you might think, well, wait a minute. like why? Like, you'd have much better scale doing that in the middle of Nevada potentially. but depending on how server infrastructure is designed, it might make sense to have your backup copies out in the middle of Nevada but your your needed copies for some of your customers of server data local to the customer and potentially you reduce latency and actually increase the effectiveness of your product. Now I'm not a server expert so I'll take Insight from other folks who know a lot more than I do I'm just thinking outside the box like how could this potentially make sense for Amazon But in addition to being a locker pickup for Amazon, a merchandise pickup for Amazon a customer Distribution Center uh and also maybe an AWS location.

What it also does is it puts Amazon right in malls and right restaurants where it's easy for people to want to order stuff on Prime have it delivered there very quickly and effectively and easily. But also I would guess that any Prime member might in the future be able to just walk in and have a whole host of the Amazon Library showing. Whatever it is they're showing, not just the top five to ten movies that Amazon might produce every single year, but everything. Think about it.

You could play. You could have screenings of movies that were popular last year, or you could have screenings of of, uh, seasons of shows. Think about that. We actually don't do that right now and now.

You could potentially in a recurring way, get people back to movie theaters because what you do is you say hey, uh, you know I can't even think of an Amazon show right now, but it may be Handmaid's Tale I don't know if that's on Amazon or something. maybe that's on Netflix whatever. Who cares? So let's say you want to watch Handmaid's Tales and you're like I Want to see that in the theory that in the theaters that'd be awesome? Well now now you're captive in the theater 10 times in a row and you may as well pick up your Amazon order while you're at it and you're bringing business to that local Plaza and potentially the restaurants and the malls that they're attached to. So really, what AMC has is the Prime real estate location.

Amazon Can build movie theaters wherever they want, but AMC has the locations and solely because they have the rights to those locations. I Actually think there could be value in a potential Amazon AMC play? Now you know I'm not the biggest fan of the AMC fundamentals, so generally I'm pretty bearish, but this actually could make some sense. Amazon's got like 70 billies sitting around 70 to 80 billion dollars of cash sitting around paying three or four bill for AMC which which could have an upside of somewhere between 30 to 50 percent. Uh, it's actually not that unreasonable, so we'll see.

it's an interesting idea. It's uh, there's some real potential ideas for how it could make, how it could really integrate Amazon into people's lives a little bit more and really think about it. If you have a Prime Membership you could come to the movie theater for free. Now it'll be interesting how they sort of pre-scheduled that because generally if you have it free, you might fill up the movie theaters.

But then again, if anybody's been to an AMC recently, you know most of the time the theaters are somewhere around 80 empty. Uh, unless there's like some hot hit new movie like Top Gun or whatever and then maybe it's like 60 full. But I would say the average occupancy of most of the theaters right now is probably somewhere around 20 to 30 percent. Amazon Giving away seats for free basically to their Prime subscribers can actually keep the theaters in business and then guess where theaters make? Oh I didn't even think about this.

Oh see, listen to this. Remember where movie theaters make money? You think it's at the ticket booth? Of course, not generally all of the ticket booth Revenue goes to the movie studios Anyway, Where do movie theaters make money folks? Concessions: that overpriced hot dog that you just gotta have that popcorn you just gotta have. Well, now, if you fill up the movie theaters for free basically people like yo, you just use your Prime Membership swipe your phone and and go into the movie theaters. It's actually a brilliant idea.

Now you could sell overpriced concessions to people and people can pick up their Amazon orders all in one. It's a good idea. Uh, but then again, you know, are people gonna care? Will people actually come? Because in theory it's not really a free show. You are paying for the Prime Membership right? You could watch it at home, So that's probably your risk factor here.

It's like, are you actually going to get people to watch you know shows and movies? Uh, for free at the movie theaters? That's probably the bigger stretch. now. they got the real estate, but that's all I could see because outside the real estate Amazon's probably better off just making their own movie theaters because the landlords will just build the damn theaters for them. But AFC might have the location.

That's it. Okay, so that's my take on AMC And if you're like spoiled bong water, who says is Kevin really talking about AMC The answer is yes. and if you don't like it, you can get life insurance in as little as five minutes. Look at this.

I now even have a paid promotion button. You see that? Look at that? I Press a button and it comes up just for you. So I can go Met Kevin.com free, get yourself 12 free stuff and check out the courses. I'm building your welcome down below and I can do that all with a little pushover button.

I can even put a little banner up if I wanted to. Oh can I do banner and paid? Oh yeah, all right now we gotta talk about the banking crisis. Well we gotta talk about the banking crisis again. The banking crisis is oh, it's a crisis.

Yesterday we had several Executives and Republicans and Democrats freaking out with all their ideas about how to solve the banking crisis. I'm going to give you a quick Lowdown on what happened in Congress yesterday. Spoiler alert Nothing but more Interestingly, we're gonna see Donald Trump lash out about the banking crisis. That's interesting and we're going to talk about how Deutsche Bank was potentially manipulated by the credit default swipe uh, credit default swap skyrocketing that we saw last week on Friday which led to a lot of Shivers in the stock market, especially in the banking sector.

Now be warned if if if if Donald Trump upsets you, see this little Banner right here that says paid promotion is because I'm about to tell you you can still get life insurance in as little as five minutes by going to Vetcoven.com life Apple Player Android Pay for all right? Banner Gone All right. Let's get started. So first yesterday, several Republicans A uh, freaked out over the Fdic's handling of Silicon Valley Bank In the crisis, Uh Chairman Uh Grundenberg asked why did the FDIC reject bidders that might have taken over the bank before Regulators were required to, you know, basically jump in and the FDIC is basically like, look, you know there was too little time for people to do due diligence and we have restrictions on how long it could take for people to go through this due diligence. So we basically rejected some of the initial bids.

Keep in mind how the Swiss National Bank ended up resolving the Takeover of Credit Suisse. They basically told UBS look, pay this amount, agree to take this much in losses. You're buying this Fixer-Upper We will guarantee the next 15 billion dollars of losses. Just don't look too closely.

We know it's a toxic Bank Just please say you'll take it over and we will just give you more and more money until you say yes, That's how the Swiss pulled it off. Uh, so. but anyway, so you're freaking out on both sides over here. Republicans Especially were freaking out in terms of why the FED didn't actually uh, regulate these Banks earlier.

Uh, even though a lot of problems have been identified at Silicon Valley Bank it's true. It's like, where was the supervising Yeah, there were inquiries and there were letters and there were complaints about Silicon Valley Bay in the past, but nobody actually dropped the hammer so they're kind of right about that. But uh, then of course you had, uh, both the sides split on whether or not we should have more regulation you had Elizabeth and I'm summarizing like a three or four hour event yesterday. Okay, and we're gonna do this fast.

Elizabeth Warren Yesterday's like, all right. Look, we need a whole lot more regulation and then Republicans were like, but is that fair to the banks that weren't Reckless And so that kind of gives you a little bit of an example of what you could expect to happen over the next two years in terms of new banking regulation? Absolutely nothing. Thank you. Congress Yes, of course, on one side more regulation and on the other side we're just not convinced.

Uh, Anyway, then of course there was talk about the FDIC having to take in billions of dollars in potential losses. Ultimately, the FDIC is going to likely pass that on to all the various different member banks of the FDIC which means your banking fees will probably go up. That is called corporate socialism, but it is what the FDIC is designed for after all. So uh, it's not a terrible surprise.

That's the point. It's kind of like an HOA everybody pays in and then if something go falls apart or something gets screwed up, well, then what happens. Well then you end up uh, having HOA Dues potentially go up. Uh, because let's say the pool fell into a sinkhole and now your HOA dues have to go up because there's some kind of problem that happened anyway.

So that gives you really a summary of yesterday's banking crisis discussion. It really wasn't worth watching I hope you didn't watch the whole thing because what do you think Congress is going to do nothing. Instead, let's now listen to Donald Trump Though Honey Tea, let's see what he thinks, uh, should happen. So here's an interview with: Donnie T And uh, let's take a listen in over to this and play oh oh, we're getting the pinwheel.

We're getting the pinwheel hold on a second. There we go. Oh my God that was loud too. All right, Skip all right we are back with former president Donald Trump for the entire hour.

And here is more of my interview from Mar-A-Lago The Economy I Can't even say strongly enough is in complete channels. We have 60 percent of our country now living. Paycheck to paycheck CBS News Now says 25 of people in our great country are what they call Food insecure food. They can't get nothing Bare Necessities Recession Record Inflation Record our debt, our deficits.

You know Why is this happen? How would you fix it And would you have supported the bailout of Silicon Valley Bank Okay, ready? Yeah, a lot of questions you're asking me: I am I wouldn't have supported the bailout. The bank would have to get along by itself and maybe they could have. What happened with the bank's interest rates went too high and you know I had my own situation with Powell and I beat the hell out of him I was not a big fan of Pal I was he was recommended by some people I didn't like them. Uh, he's a two interest rate happy.

What you do is you get the oil prices down. That's bigger than that's. actually a really interesting argument though. The this idea that uh Donald Trump says no, don't bail out the bank right, don't bail out Silicon Valley Bank and let them fail is the argument that Donald Trump here is essentially making.

Now somebody in the comments here: why would I do that? Uh, somebody in the comments here is saying uh I don't think the issue is a lack of Regulation None of the banks can survive a bankrupt. That may be true that none of the banks can survive a bank. Rod What the hell? Hold on. Let me fix this until they got rid of my videos.

What a rip-off What a complete rip-off Uh I Want to answer that comment about none of the bank's concerned Now it's gonna make me watch the ad again I bet you FOX News you fart knockers. Uh uh. Anyway, we'll go right back to this. um, this idea that none of the banks can survive a bank run I think it's it's um, it's important to remember that uh, what you had with with Silicon Valley Bank Was a bank that purposefully didn't take an interest rate hedge right? They could have hedged and they used to hedge against interest rates so they knew that they should have.

They knew they should have. and they used to hedge against interest rates. but then they stopped because it wasn't profitable to do so. So they got rid of their own.

Hedge Let's keep going here. All right here we go. The Bailout of Silicon Valley Bank Okay, ready? yeah I had a lot of questions you're asking me. um I wouldn't have supported the bailout.

The bank would have to get along by itself and maybe they could have. What happened with the bank's interest rates went too high and you know I had my own situation with Powell and I beat the hell out of him I was not a big fan of Pal I was he was recommended by some people I didn't like him. uh he's uh, two interest rate happy. What you do is you get the oil prices down that's bigger than interest rates.

The only thing and what happened is we took an oil and now we take an interest rates. Those banks failed because the interest rates were too high. They stupidly bought long-term treasuries. 10-year treasuries.

Well, they bought long term, longer than that even. And they would long term. And those treasuries got crushed because Powell keeps raising interest rates. But that's up to Biden He's gonna have to worry about that himself.

You know, in theory, how would you fix it? Uh well. I would have done a big number on Pal like it did I did I did a very big number in fact. uh, he wasn't budget. he wouldn't have given it eventually.

He eventually cut him so much that it almost caused the problem. People said, how come he's cutting We helped cut him almost a point immediately because he thought I was going to fire him. Okay, which some people said I had the right to do. Other people said, you know, you know when you put them there rightfully they have to have some protection, etc etc.

from a president. But how much of this? but I thought he was hurting the economy You you left this country for the first time in 75 years. We were energy independent, right? and that exporter of energy? Okay, we're going to be dominant. Okay, okay and Europe right now could have used American Energy they could.

It was winner. They could have used it so. but now Joe has cut back dramatically on domestic production of energy. Now we're important believable we're importing from Venezuela Saudi Arabia Last year their their big oil company made the most money they've ever made in history over I think it was over 167 billion dollars.

How much of that because? doesn't energy impact? uh Trucking It impacts the price of goods in every store that we go to. So when Biden came in, the first thing he did was end the Keystone Pipeline that I got approved. Okay, it was all approved. I also gave Putin a waiver on the Nordstrom too.

Okay, so Putin said because everyone said oh I'm so nice to put Putin said of you my friend I'd hate to see you as an anime He told me that I get along very well with Putin by the way, I'd be able to work that out. It would have never happened in a million years and even the Democrats admit that. But if this thing isn't solved by the time we have the election which is possible it won't be. and there's also possible we'll be in World War III With these idiots that are doing what they're doing, you could end up in a nuclear World War which will make World War one and World War II look like Patty Cakes okay uh, this unbelievable because we have people that don't know what they're doing.

but if it's not solved, I will have it solved in 24 hours with Zielinski and with Putin and there's a very easy negotiation to take place. but I don't want to tell you what it is because then I can't use that negotiation. It'll never work. But there's a very easy negotiation to take place.

I will have it solved within one day. A peace between them. Now that's a year and a half, that's a long time. I Can't imagine something not happening.

The Chairman The key with that is the war has to stop Now because Ukraine is being obliterated. You know whether there'll be nothing else? Well I Looked at pictures of cities that are literally like it's like complete that demolition. I was in the construction business. You would demolish a building and you'd it looked like hundreds of these demolition sites.

The Bill: There wasn't a building standing and these are cities for Ukraine They were big cities, very big cities. Now he hasn't really in. Kiev He hasn't really set the missiles in, but at some point he'll do that one too. There's nothing standing.

The other thing is, many more people are dead and horribly injured. Then they're reporting. You know when you see missiles hitting 15 buildings at 15 buildings falling to the ground and they're big buildings? There are a lot of people in those buildings and then they say one person was injured? These are phony reports. many many people are being killed that you don't know, but you'll see that later on so you'd prefer.

If you were President you think you could, you would have a negotiated settlement and within 24 hours and we wouldn't no longer be ponying up all the money that by the way, western western Europe is not doing their fair share. What's unfair you and I have had this conversation is that we are spending. We're up to almost 150 billion dollars and Europe's a 24 billion dollars. Now it's the same thing with NATO Don't forget I got them to put up hundreds of billions of dollars.

My first meeting at NATO you know I was just there, never did this before I'm sitting with all these presidents and prime ministers, nice guys, 28 countries and I'm looking at the charts I say could I see who's delinquent because they're supposed to pay and they say what do you mean by delinquent They said that's a real estate term. When you don't pay your rent, you're delinquent. Could I please see uh, who has not paid and of the 28 countries, 20 were not paid, they weren't paying and I said you have to pay and if you don't pay I'm not going to protect you and ahead of a very important country stood up and said who is delinquent said could I ask you if we don't what you're saying if Russia attacks us and we aren't paid up, you're not going to protect us I said that's exactly what I mean. All right, So that gives you a little bit on Donnie T here now I Want to give you some reactions to this because first of all I have to say there's something that Donald Trump does whether you like him or not.

That as Ben Mulla said in my interview with him just a few weeks ago, Donald Trump has a way of inspiring hope in people that somebody like, Unfortunately, in the opinion of Ben Mala Ron DeSantis may not. Now here's the way you have to look at what just happened here: Is it realistic that Donald Trump could negotiate peace between Russia and Zielinski within 24 hours? Unlikely, but did it Inspire Hope Well, if you hate Donald Trump it probably inspired you vomiting, but that's okay. You could get life insurance in as little as five minutes and help solve that problem. But if, uh, if if you don't hate him and at least you're somewhat neutral relatively, maybe somewhat still.

a little. At least there's this like huh? It kind of makes you think like if would is it possible like if if Joe Biden well maybe not Joe Biden But let's put it this way, if if Obama okay if Obama right now had a corridor like a hundred percent safe Corridor where in one room there was Putin and in the other room there was Zelensky and Obama's like all right I'm just gonna keep going back and forth until I Got this? We're gonna solve this problem All right everyone. Thank you bro. All right this is bad.

but anyway, the point is, maybe it would get done and so what? Donald Trump does is he actually inspires that hope. He instills hope that well, maybe there there would be a way to save people's lives and the cities and the buildings that are destroyed. Maybe maybe there is a way to avoid World War Three because nobody wants that we don't want you know World War one and two to look like Patty Cakes that sounds terrible whereas you did have Ron DeSantis suggest this is just a territorial dispute. Now since then he's walked that comment back because he got a lot of backlash and now he's like I'm gonna refine my opinion and his refined opinion was really basically a U-turn So it's fascinating.

When you listen to Donald Trump talk, you could see exactly how you you get introduced to hope that you didn't even realize could exist and that motivates people to vote for Donald Trump Think about this. he says quote I would have done a big number on Powell I've done it before I had him under the threat of firing him. He was so scared he ended up cutting rates. Now what's interesting is we don't know if Powell ended up cutting rates in 2018 because the market and Bond market were freaking out or because of Donald Trump's threats.

but Donald Trump was threatening to fire him in the second half of 2018. I Remember covering it here on YouTube I Remember it very clearly and everybody's like you can't fire him He's like I'm a firearm. Uh, Technically, there's supposed to be a division between uh, the Federal Reserve and politics. Technically, the Federal Reserve is supposed to be apolitical.

It gets appointed and authorized to do its job by Congress, but it's technically not a part of the government. It's supposed to be independent. This is, despite the fact that The Financial Times just yesterday was reporting that Jerome Powell and Janet Yellen are basically trying to align their messaging on banks. which is a problem because Jaina Yellen is basically a puppet of the Biden Administration, which is a political office.

And if Jerome Powell is trying to align with Yellen, then you have political alignment. So it's It's a very, very blurry line. But the what else did Donald Trump say? Well, he said we shouldn't focus on rates. we should just focus on lowering the cost of oil.

How about we drill more? How about instead of banning the Keystone Pipeline we just have more energy Independence He's not wrong about that. More energy Independence leads to lower prices. Why? Well, obviously, because not only do you get headline numbers come down because you have a greater supply of natural gas and oil, but you also help core inflation come down because all of the service providers who were charging more to their clients because their gas costs more don't necessarily have to pass on higher costs. Now that actually doesn't even get measured Uh in in inflation as well Because generally when we look at core inflation, we think that's X Food and energy.

But energy is part of every single part of our economy. So we make some really good points and I Hate to say it. but if you took Donald Trump right here out of context and you ignored all of the past, all his faux pas Jan six all the investigations the stormy dance If you just ignored all of the past and you took that clip and put it next to a clip from Biden and a clip from DeSantis right now Donald Trump would win that it was very inspiring. So you know I'm not a Trump apologist.

Okay, by any means like I I do my best to be very in the middle, but I actually think the way he he he presents this information, he brings up ideas that really, we're not talking about uh, as much as we should. You know the idea of more energy Independence the idea of how maybe more energy Independence can help us reduce inflation. It's logical, but it's not one that gets talked about a lot. The idea of why don't we have a world leader actually trying to negotiate peace in the United States is in the best place to do it whereas we're not even remotely trying to negotiate with them, are we handcuffed to the Military Industrial complex which is telling us no, no, no, no, don't negotiate peace.

We like the orders I Don't know. It's very interesting. It's it's very, very interesting. So uh I think uh I Think that that's a good little analysis there on the Trump part now.

I Quickly want to talk about the what happened with those credit default swaps regarding uh, the banking crisis I Do think Trump by the way saying uh, that Silicon Valley Bank should just fail? Uh I Don't think it would have been as bad as people think because basically the bank would have gotten bought out at a discount, it would have gotten liquidated and then depositors would have taken like a 10 to 20 haircut. It might have created more fear and contagion and that's just the unknown. But it's like not like people over the FDIC limit would have lost all their money. It would have been a percentage, you know, 10, 20, maybe as much as 30, but not more.

We'll never know. Uh, anyway. uh, on Friday we did see credit default swaps for Charles Schwab Skyrocket. However, it's uh, worth noting that fewer than 20 of Charles Schwab's depositors actually exceed the 250k FDIC limit.

Ninety percent of depositors at Silicon Valley Bank exceeded the 250k limit. That's why there was so much like political drama about protecting depositors here. Uh, Charles Schwab has 34 million accounts, 7 trillion assets. It's literally huge.

Yeah, they've got 29 billion dollars in unrealized losses, but with bonds rallying that actually has been falling. Uh, they suggest they have enough liquidity to cover deposits right now. Of course, they're considering also other assets that they would have to liquidate. You don't have enough cash to cover deposits ever at a bank.

Uh, but uh, Schwab seems pretty strong. Uh, that's Charles Schwab Uh, we were supposed to talk about Deutsche Bank but let me get this out of the way. Some people have been asking me about it. Uh, 51 of their income comes from net interest Revenue their sweep account and pays just 0.45 percent.

Uh, but uh, the bank seems pretty strong right now, so people bringing up questions about Schwab probably, uh, unnecessary to worry about Schwab at this point. TBD though we can keep an eye on it regarding Deutsche Bank Same story: their revenue is increasing, their profits are increasing. so Schwab is actually doing fantastic. uh, or sorry.

Deutsche Bank's actually doing pretty dang well over the last few years if you look at their financials. a Deutsche Bank had credit default swaps Skyrocket on Friday Apparently the reason for that was a single trade one. Trader We don't know who it is, but one person put on a five million dollar bet and because these are so illiquid, they LED credit default swaps to Skyrocket on Friday sending a signal to markets that was actually inappropriate one Trader made a bet freaked out the market that Deutsche Bank Credit default swaps were skyrocketing which is an insurance against failure and all of a sudden the entire Market gets. you know it's panties in a knot thinking oh my.

God the banking crisis is worsening. It was one freaking Trader So it's kind of interesting to look at that so long and short of all of this. Trump Uh, we talked about long and short of the banking crisis so far. Does it really seem to be widespread systemic risk outside of the risky banks? No.

Uh. Is this issue potentially going to fade away? Yes. Could there be other issues? Yes. Do we see those red flags now? No.

So when it comes to the banking, Crisis get life insurance and keep putting one foot in front of the other in as little as five minutes. Uh, you could go to Metcaven.com Life and get yourself paid promotion. Uh, a life insurance paid promo Motion Life Insurance here. littlest five minutes Apple or Android pay for it.

Get free Stocks by going to Kevin.com Weeble 12 free stocks and use buy now, pay later on the programs and building your wealth linked down below. That concludes the banking crisis and Donald Trump lash out section. Now we gotta cover what the Bears are saying and boy ah bloody Morgan Stanley is back with another one or a buddy from Morgan Stanley's back with another bear piece and I love reading what the Bears have to say because even though I am a bull at heart and I think the Nike Swoosh recovery is real I Want to pay attention to what the Bears are up to because you always got to know what your enemies are doing. It'd be silly to be blind to what your competition is doing.

So what are we gonna do? We're gonna look at this piece right here: Morgan Shenley The bond market is questioning the Fed's Dot Plot Basically I'm gonna keep this one simple for you. So the bond market is pricing in Cuts Jerome Powell per Mike Wilson Morgan Stanley's analyst who's the big bear in the office. He probably doesn't have many friends in the office. Uh, but who knows.

Anyway, he says, look, the fat is really explicit that we're not going to cut rates this year. Why is the market cutting in these rates? Well, it's probably because the bond market is saying the U.S economy is either going going to fall into recession or banking stresses are far from resolved. He actually missed an argument here and I'd like to point out where the Bulls could be wrong and where the Bears could be wrong, but he missed an argument here. It is entirely possible that the market is pricing in a massive set of rate cuts by the end of this year because a they're doing what the FED refuses to do, say that inflation is going to plummet and rates are going to come down.

As a result, the FED can't say that because if they say that inflation won't plummet, so they're in a game. They're in a psychological game. whereas the Bond market is not subject to that psychological game. They're actually putting their money where their mouth is.

They're not using their mouth as a psychological tool to get people to stop spending money to affect demanded markets, right? The Bond Market is not only saying either we're going to fall into recession or banking stresses are over. It's actually three-fold Either we go into recession or banking stresses or inflation is about to plummet or a combination of all three of these. But the third one is actually very encouraging because if inflation goes away and we could cut back to, you know, a low interest rate regime, the recession's over. People got enough money to keep spending.

Look at what happened with Lulu yesterday. people were spending money like they're drunk. People are still spending money like crazy. It's absolutely insane now.

Morgan Stanley suggests that you should cut from Exxon uh and Simon Property Group and instead on their Best Buy list or fresh Money Buy list. What is this? a grocery shopping list? That sounds lame. They should think of a better list than that. They suggest you add Colgate I Had to look up what CL was because I'm like who buys Colgate Uh.

But anyway, Colgate and Walmart I actually think these and and that's because they're positioning defensively I Bluntly wrote next to that wrong. The reason I think that's wrong is because these are exactly the kind of companies that are going to lose pricing power in the environment that we're in right now. Employee costs go up. These companies disproportionately have a high employee costs for the amount of Revenue they have compared to uh, you know some of the high free cash flowing pricing power stocks that I like again, whether it's in busy if I just combined end phase in Nvidia and phase Nvidia Taiwan Semiconductors Tesla Apple those companies pricing power Walmart Come on, that stock has done phenomenally over the last year because it's a defensive play.

but that's a trade and when the fundamentals come through, that trade will fade away. My opinion: Okay, but you already know that. Uh, so they of course suggest that earnings are going to fall going into the recession. But listen to this he actually says.

We focused. We had a macro discussion and we focused the session on credit availability. which credit availability is actually still remaining strong. Uh, which is shocking in the short term labor market dynamics.

a lot more labor. Supply We know that earnings guidance slowly going down. We'll look at the chart in a moment and Pricing Power I Love that they talked about pricing power. Uh, and we'll look at some of his conclusions on this.

So what did we have over here? We're seeing another quarter where estimates are being lowered. That's fine. So earnings are decelerating now Morgan Stanley's Mike Wilson Believes that earnings markdowns have a lot more to go. He believes the consensus is that earnings are going to basically do this at the S P 500 or that this is what the consensus estimates are, but he actually believes we're going to be on much more of this downslope.

So he really thinks earnings for S P 500 companies are going to fall a lot more than expected or is priced in I Agree with him just not on all stocks pricing power stocks. I think Will Survive Now uh, Morgan Stanley's Mike Wilson suggests that look, when inflation happens, you can. Everybody can raise pricing. You have a lot more operating leverage, but the problem is when inflation goes down, you're operating leverage.

In other words, how much you're able to increase sales above your operating expenses? Opex Like sales and Gen goes up maybe five percent, but Revenue goes up 15. Positive operating leverage. But what happens in a disinflationary environment? Well, you might see revenues decline five percent, but your operating expenses go up 15 exactly I Actually think that's exactly what's going to happen to Staples not pricing power stocks. Now we could actually be aligned and that he might be thinking, look, maybe it's the S P 500 that gets burned I agree with that because there are a lot of Staples in the S P 500.

now Uh, something that I thought was very interesting is I Purposefully wanted to see what chat GPT would say about this so we ran chat. GPT What does inflation do to operating leverage And they talk about exactly this about how inflation can increase operating leverage. However, it's worth noting uh, that inflation can also infect a company's pricing power, which could affect operating leverage. For example, if a company has strong pricing power and can pass on inflationary effects to customers, it may be able to maintain profit margins.

The question though, is do you get pricing power solely because of inflation I Believe the answer is, every company gets pricing power because of inflation. The real challenge is which companies maintain pricing power when that inflation goes away and that's what Mike Wilson is warning of. So he thinks when that inflation goes away, the easy pricing power all the easy PP goes away. Way now you enter the bear Market where only the companies with true pricing power survive the recession.

Mike Wilson suggests that Equity risk premiums right now are way too low to justify being in stocks now. I Wrote on this that yields potentially manipulate this and that's because right now the risk-free rate is so high because of the inflation we're fighting and Mike Wilson did only go back to about 2008 here. So I have a little bit of an asterisk on on his bare thesis here and uh, I Do also think that he has a point though. he has this point that says it's possible Equity investors are simply looking ahead towards the next bailout and the next stimulus regime.

He might be right about that. He might be right that Equity markets are looking towards basically the FED just to cut to zero and maybe we start getting stimulus checks again, not just for the chips act, not just for EVS and energy, but also potentially expanded on employment or otherwise. maybe now Baron Mind that breadth has been exceptionally weak as large cap stocks are holding up the averages right now. Basically thinks look, if large caps start falling, it's over because those are the only things holding up the S P 500 right now now.

He also makes an argument here about real estate briefly that we do not think that real estate is going to suffer the pain that we saw in the global financial crisis or the Savings and Loan crisis. And specifically, while they'll be, they'll still be weakness in lending and mortgages. Ultimately, we believe that a real estate won't suffer with the exception of retail as much as it previously had in the past. however, credit cards still running hot and in my opinion, that reiterates that people are on it in terms of well spending through this recession.

Now my goal was to end this, but I Want to add some more commentary before the Bell So we're going to listen to the bell and then I want to add some more commentary in my thesis on this. I'm not going to ever go against Nike because it's a great manufacturer. These guys are. well.

let's get the opening belt here. CNBC Real-time exchange at the big board Hannah Graham Structured Asset Management Celebrating the recent listing of its first ETF Nice, Really cool thing. Welcome Welcome to a green open everyone! Okay, so I got to get to the course member live stream. But what are my opinions on what Morgan Stanley is saying here or or specifically Mike Wilson He has a point that yes, in a traditional recession, wouldn't it make sense to go to Staples especially Walmart Yes.

And that's why people have gone to Walmart over the last year because the idea is that poor people stop shopping at Target and fancy places they go to Walmart richer people stop spending at Target and Whole Foods they go to Walmart and that actually has been happening. He is correct about that, but in my opinion, being correct about that is actually looking into hindsight. When we look at Walmart stock over the last year, they've done very well. They're only down 1.73 Over the last year, they've done extremely well in terms of holding up shareholder value.

The problem is in my opinion, this is a company that is actually looking at pain ahead. Take a look at the following: We're going to look at their fundies really quick. So this is the last time I looked at the fundamentals on Walmart Uh, which actually this was not the last time this is an old one this is from July I Want to go ahead and pull up a more recent uh Fundy on Walmart but we could look at this really quickly so we looked at gross margin actually still being very incredible for Walmart sitting around 23 percent, gross net margins sitting around four percent which was fantastic. We'll get a recent report over here.

They have lots of uh, let's see what do we wrote over here. Lots of cost and little cash is what I wrote. They have a lot of payables now that can tend to be very normal for a merchandiser. And when we look at their net cash provided by operating activities though, they're still pumping out somewhere around 9.2 billion dollars in operating cash at the last six months of 2020 or the first six months of 2022..

when you take out or look at just free cash flow, they were sitting at about 1.5 billion dollars of free cash flow. so they got free cash flow. They've been holding up very good defensive stock, but we want to look at some of their revenues. so let's go ahead and get their last quarterly report and look at that and we'll jump on over to the course member live stream.

So if we go on over to their last press release, we'll get a little bit more of a look into Walmart because obviously he's moving into Colgate and Walmart for a reason. a defensive play. The idea is that eventually if people get rid of all of their discretionary spending, the one place they'll still go is Walmart. It's not a terrible argument, it's a very traditional recessionary mindset argument.

The question really becomes: how deep is the recession going to go? Are we going to be in a situation where we keep this recession going so long that you do end up killing people buying new iPhones or new cars or whatever? Maybe. So Sales at Walmart year over year up 7.4 percent. Membership down three percent, but you're still up 7.4 in sales, which is great. but keep in mind inflation roughly matches that.

So if you look at a real adjustment of revenues, we're probably actually about flat for Walmart in terms of growth. But in addition to that, you're actually negative on operating income. Look at that 5.5 Which means if you inflation adjusts their operating income, they're probably negative 13 in operating income year over year. I Personally believe that is going to worsen.

that is going to get even more difficult. That's my thesis. Again, it's very different from Morgan Stanley But I believe the following: I Believe that companies that do not have pricing power are going to be companies like Walmart Where basically you're keeping up with inflation here, but your cost of sales are exploding at a higher rate and so is your Opex at a higher rate, Then you're able to raise revenues Because you don't have pricing power, you're dealing with extremely price sensitive customers, you're not dealing with price sensitive customers or as price sensitive customers. and Apple for example or end phase uh.

and therefore I think their operating leverage will go substantially negative. This is actually exactly what we saw with Chachi PT Look at this revenues. What do we have? We have revenues up 7.4 but their operating income is actually down 5.5 It's a little bit of an oopsy-doopsies and it suggests they have negative operating leverage, which makes sense in a disinflationary time. This is why I think uh Mike Wilson is actually wrong to go into Staples At this point, going into Staples would have been a great thing January of 2022 In a Nike Swoosh style recovery, it's a terrible thing to go into my opinion.

Now if we look at their actual bottom line: uh, let's go to net Income per comment Share: uh, net income Very nice percentage-wise increase from last year. That's because of some of the write Downs they took last year and some lawsuit losses regarding uh Pharmaceuticals that they had to uh, take some losses on some some lawsuits and settlements. Uh, but anyway, ignoring that, let's I really I Think it's easier just to compare operating income over here because this is a little complicated because of the comparisons of the different quarters. Uh, but in my opinion, this is not necessarily something that's super exciting.

Let me look at their cash flow quickly and then let's look at Colgate briefly and then we'll jump over a course member life. So they actually had a nice free cash flow though I will give them that look at that Very nice free cash flow you had if we subtract these two numbers here, you've got about a 12 billion dollar set of free cash flow, so plenty of cash, but declining operating leverage. Again, you would expect that though. So if we go to Colgate investor relations, let's just see if they have positive Opera trading leverage or not because that's what our bear here is suggesting is that earnings are going to plummet.

all the growth companies haven't properly priced in yet. All of the pain that's to come. And basically the S P 500 is being propped up by companies like Microsoft or Apple or otherwise and the real pain is coming. Okay, so let's look at where he's moving money too.

Colgate and Walmart we just looked at Walmart Let's quickly look at uh Colgate and we have their annual report right here. so this annual report is just out from them. What we're going to do is we're going to jump over to there's income statements. Let's see if we can find them here Income statements while I look for their income statements.

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link down below. Oh, what do we have here? Colgate All right, so Colgate's revenues. Let's do this briefly and then jump over to course. remember live stream.

So Colgate has net sales here that have grown 17967 year over year, divided by 17421. Wow, Only 3.1 growth. How do you argue? You have pricing power with 3.1 percent growth? You don't Holy Smokes And their costs went up by about 10. 9.5 percent increase in cost of goods sold.

So you are absolutely experiencing inflation on Colgate Your cost of goods sold are skyrocketing. Uh, and your sales are barely growing on a real basis, an inflation-adjusted basis. You're massively negative on sales. If we look at operating profit.

Oh, it's negative. Why would you buy this garbage? Uh, your your uh uh. Let's see 28.93 divided by 3332 your negative. Uh, let's write this here: Negative: 13.1 on operating profit year over year.

Why would you do this? There's no PP this. There's literally zero PP Like it's not even micro. PP It's like it's like negative PP it's it's an inverted PP it's inside out. This is problematic.

Uh, now the crazy thing again, is these staples have actually held up CL let's see how it is. CL Stock I don't know I haven't looked. uh, but I'll look. uh, let's just do year over year.

Yeah, that's what I'm saying. This is stupid. Look at that. Colgate negative Operating income negative Operating Leverage trash.

The stock is down 1.8 year over year just like Walmart Why? Because the Bears The weenie baby bears are like a recession. Okay, we must move money to defensives. That's because what happens? Well, because you have money managers who pick up their phone and their clients are like I'm worried about a recession and then the money managers are like it's okay. You're paying me to reallocate to defensives We have done.

so. Are people really going to stop buying toothpaste because of a recession? Are people going to stop buying Walmart Uh, Chocolate bars because of a recession? No, of course not. Don't worry, we have you defensively positioned. But in the long term, what's going to happen? The fundamentals are going to Shone through and these people are going to get wrecked.

It doesn't make sense, it doesn't make sense. So what do we have over here? Uh, let's just look at cash flows really quick. Uh, cash provided by operations? That's decent. actually.

2.5 bill Capex Over here. you're at 1.9 bill in free cash flow. It's very good. It's a free cash flowing business, but it's because they're milking an existing business.

Their actual operating leverage in their PP is negative. I wouldn't want to go near it like what would you rather have. Okay, this is this is your choice right now. This: I I Really want you to think about this.

Keep in mind this is the same stuff that I do with course members in our live streams daily which I got to get to uh and so if you're not a course member, you're missing out on this kind of perspective. All right, you pay once you get lifetime access. All right. Here's the thing.

Would you rather defensives which are down one percent year over year? You know what? I'll be generous and so I'll say you're You're at a two percent discount. year over year. you have negative real revenues. You have negative operating leverage.

basically. Uh, you have, uh, negative PP. But you do have free cash flow. A free cash flow is positive.

That's true. Okay, would you rather that or do you go over here and you look at uh, pricing power growth stocks where you have a negative twenty percent year-over-year discount? You have positive real Revenue You have positive operating uh, leverage in a dis inflationary time as well. Which basically means you have positive PP Uh, and your free cash flow? positive. So what would you rather? No discount and negative real revenues or discount and positive real revenues with operating leverage.

and PP The only reason those stocks are doing well right now is because it's a trade. It's a trade. If you want to trade it, that's fine. You can play the cyclical trades, but if you're looking for a long-term portfolio building hashtag not personalized Financial Advice: Some people get mad.

they're like, why do Finance channels save this not Financial Advice: They're obviously talking about financial advice. This could be Financial advice, but it's not personal financial advice. There's a big difference I don't know what your situation is if you have a hundred dollars to your name. should you go YOLO at all into Tesla That's different from somebody who's got 10 million dollars.