Hey, everyone, welcome back to another meet! Kevin Report: We are on episode number 32 today. We've got a lot to cover. We've got to recap what happened with those fed minutes. and what does it actually mean for us? Is it as bad as it seemed when some folks read that out loud yesterday? Then we may see some 50 Bpx we got to talk about that.

We're going to talk also a little bit about what's going on with that train derailment, some uh, specific cases regarding what's going on with uh, with the how are unions involved and what are Democrats versus Republicans saying really interesting Insight By the way, we'll talk a little bit about Tesla China and we'll see what else we can get to. But boy, we've got a lot to cover. So first a shout out to Nvidia 10 Movement to the upside: we're going to be going through Nvidia in much more detail in the course member live stream. By the way, thanks to the success of the last Uh flash sale, we are bringing back a Tesla uh Investor week.

Uh, because we've got investor day coming up. Uh, next week. So we're bringing back a week of a flash sale for the Tesla Investor day and that'll start now. So if you're interested in those programs on building your wealth, a link down below for our Tesla Investor Giga week.

But anyway, so uh yeah, Nvidia Absolutely killing it. Uh, we'll again. We'll go through this in detail in the course member live stream. But really, what's so phenomenal uh is that there is so much attention on AI and everyone in uh in the investing Community who's not an engineer seems to miss the idea that you can leverage Google in Nvidia's AI technology and then use that AI technology to build your own technology to teach your own algorithm.

It's really actually phenomenal. It's something that we do as well at House Hack and the opportunities in AI to to streamline labor-intensive tasks phenomenal. Whether it's a graphics generation, uh, analysis, uh, banking, Finance you name it, it's it's absolutely incredible what what AI is is working on and we're really excited about that. I Think something that's coming in the future as well will be sort of uh, a, uh, more of what we already have.

but uh, AI trading. You're going to start seeing a lot of that. It's pretty exciting. Uh, so uh, congratulations to folks over at Nvidia I Personally I think it's a big pricing power play, mostly because a lot of people have been trying to also escape this high margin.

really high free cash flow business for the fear of less PC demand. It's a complete nonsense. Uh, and of course PC demand has fallen. but uh, numbers for NVIDIA I Think this is their last quarter where they're actually comparing against some pretty tough comps.

Which means uh, q1 of next year could be pretty phenomenal or I'm sorry. Well yeah, q1 of this year 2023 we just reported Q4 but anyway, absolutely great matter report I Was really surprised by they're flat right now in pre-market but a lot better than I expected. Some of their margins though I was surprised on subscription options are compressing so we'll check that out as well in the course member live in some more detail, but uh, not as not as bad as I feared and we're finding that consistently a lot of companies beating in ways that we wouldn't have expected. Uh, which is great.

That's fantastic. That either means the true earnings recession is ahead of us. uh, or it's just not coming so, but we'll see that. of course all brings up uh, the idea of us having to catch up on the FED minutes.

So I know yesterday there were, uh, there was there was some fun with uh with uh, the choppiness in the video when I covered them live. Uh, but it sounded like the audio came through just fine and so many of you seem to appreciate that. But uh, we'll go through some of my thoughts on that a little bit more clearly right now. Okay, here we go.

What's Wall Street saying about the Federal Reserve minutes? And what says Kevin about the Federal Reserve minutes? Because in my opinion, there were two massive things that we had to pay attention to. Or one of which I'm actually going to play you something that Jerome Powell said in May of 2022 Nobody wanted to hear this in May of 22. nobody. But when Jerome Powell said it, it was so Salient to me that I've been pounding the table about this and it got reiterated in the minutes today.

This is absolutely remarkable so we'll have to touch on that. But first, why don't we just go ahead and hit what some of Wall Street is saying. First, we'll look at Nick T fed's mouthpiece and then of course we'll jump on over to a Morgan Stanley piece talking about the minutes and some of their thoughts on the minutes. So first, what does Nick T tell us? Well, one of the he of course hits on one of the two most Salient pieces, but he only hits on one of the two most Salient pieces.

So I'll give you part one now and part two standby. So so part one, he reiterates, much like what it was immediately picked up on this idea that a few members wanted to raise 50 BP Now I I Want to make this very, very clear: This has nothing has changed here. Bullard's been talking about front end loading hikes. Uh, rate hikes forever.

Like since this rate hiking cycle started at the beginning of 2022.. he's been talking about let's just go 100 basis points, 100 basis points. Let's get to four. Let's get to our terminal rate whatever that may be as soon as possible.

And there's this expectation now that, oh, somehow. because now all of a sudden the minutes are reflecting that Some members over at the Fat are like, let's go 50. there's this idea that oh, maybe markets are going to start pricing in 50. in my opinion, it's complete and onsets, It doesn't make sense.

Uh, to go 50 and I'll tell you exactly why. First of all, let's lay out the schedule here. Okay, the difference of going 50 here in March is really to speed things up by about five weeks. That's what you're trying to do.

You're trying to take the June 25 BP hike and basically move it up to March to speed it up before you get to your main meeting by about five weeks. The problem with that is by taking a five-week Advantage. So in other words, if like, you're gonna bet on March 22nd, March 22nd. Right that one down.

Okay, March 22nd is the next Fed meeting. If you're going to make a trade on the March 22nd meeting, my opinion is you're going to have a lot of fear going in of people going. That's it. They're going to rug pull us.

They're going to go with a 50. all that buys the FED is a five-week advantage. while at the same time they get that five-week Advantage they would turn around and you know what they would do. They would absolutely kill their credibility.

Whatever they have left right? Because now they much like me would become certified flip-floppers and it would show. Uh oh, We really are starting to sound like the 1970s. Think about that for a moment. All of this is about psychology at the Federal Reserve When bad data comes out, the Federal Reserve has already trained us to tighten Financial conditions when we got a tight jobs report inflation report PPI report and tomorrow we have the Pce report.

Guess what? Markets immediately did markets immediately tighten Financial Conditions In other words, Treasury yields Rose We're at the highest level on Treasury yields right now since November we're sitting at 3.94 yesterday I was uh, looking at some real estate actually down at Chula Vista and the Agents that were telling me a week or two ago. Oh, it feels like things are bottoming. Oh, things are turning around in real estate and I'm like no, I don't think so. you guys are getting head faked because interest rates just popped up again and it's just going to take another couple weeks before it shows up in the real estate market.

Guess what Real estate agent starts telling me yesterday? Yeah, you know, a few weeks ago we were selling stuff again with multiple offers. but now I feel like we're right back in the doldrums. People aren't showing up again. It's like quiet again.

I'm like yeah, because rates just skyrocketed like it's not brain surgery. It's actually quite simple. But anyway, here's the problem in the 1970s. Uh, the the we we went into the 1970s with excessive price caps Ceilings on things like certain food items, gas, oil.

These things led to massive shortages for I mean gas. Everybody knows about the 1970s Dash shortages. It's crazy. A lot of these price or shortages of goods and services were created because of price Ceilings Caps: Anytime you put a price cap on something, you artificially keep the price low.

But what you do is you clear create deadweight losses. It's kind of like rent Control when you put a cap on rent. You temporarily make people feel better, but you actually substantially damage the future market and you make things more unaffordable. You actually create more housing inflation.

With Rent Control almost I mean 90 plus percent of economists agree with exactly what I just said. Now here's the problem and this is what happened in the 70s. We removed the price caps. So what happens when you remove the price caps? Prices? Freaking Skyrocket right? But guess what happened at the same time in this set in about 73 we left the Gold Standard.

So at the same time as we removed price caps, we left the Gold Standard. and all of a sudden, oh my gosh, Look at all this inflation. The inflation was being caused by having left, uh or removed the price caps. But it happened at the same time as oh no, we just left the Gold Standard.

So the psychological impression was oh no. This Fiat experiment is a disaster that we're going to have so much inflation. it broke inflation expectations. It killed the Psychology of markets.

This is why I have a course on the psychology of money and the zero to millionaire real estate investing course. When it talks about in negotiating with real estate agents or what we talk about in the stocks course A Lot of it is based on psychology. Human psychology. Markets are graphs essentially of human emotion after all.

Anyway, so so now all of a sudden you have this impression in the 1970s that oh my gosh, we left the Gold Standard. That's obviously why we have all this inflation. and what was the FED doing? The Fed was constantly flip-flopping. They're like, okay, you know we'll We'll raise rates a little.

Oh, looks like things are going getting better. Okay, we'll reduce rates a little. Oh no. okay, things are getting bad again.

Okay, we'll raise rates again. That like flip-floppiness led to a disaster. It led to Paul Volcker. That flip-floppiness no pants on no seriousness, no might led to Paul Volcker.

Now a lot of conditions created that leading up to it. obviously the uh, you know, Dash shortages, the removable price caps at the same time as the breaking of inflation Expectations by a post leaving. uh, the gold standards, right? All of that contributed to Paul Volcker. The problem is the Fed does not want to repeat the disaster of what came right before Paul Volcker, which is flip-flopping.

They do not want to appear to be flip-floppers I Think that in their Ideal World they still want to tell you inflation is transitory. So anyway, to get a five-week advantage to become certified flip-floppers is it makes zero sense at all. Like things that are not like. All of a sudden, that bad that the FED needs to like essentially try to rug pull markets.

It makes a zero logical sense at all. Uh so I do not see that happening at all and hey, maybe I'll be wrong. but I think the odds of me being wrong on this one are like one percent I think it's very, very low. Pretty confident in this.

Uh, so you know of course you've got Mr Bullard and master saying things like hey, I don't see much Merit and delaying our approach to that level Honestly, at this point I guarantee you the other members of the Federal Reserve board are like oh, Bullard say something else man, you've been saying that for 18 months I could see like Bullard at the meeting gosh when you jump around and Bloated and everybody else like all right, got anything else to contribute because that's the same thing you said every one of the last 14 meetings. whatever. Uh, anyway. s and then of course you have the counter argument which I think is a fair counter argument.

which is this one here Tom Barkin Saying something like this? that theory to me requires more confidence in understanding the effectiveness of a tighter rate policy than I currently have. Now that's actually really important because we do not. Okay two schools of thought and in in in the economies and we were talking about this actually with with the team Uh, right after we came back from uh from San Diego yesterday looking at real estate for uh for house hack uh we had a spa office meeting is great and uh, we were talking about the the two different trains of thoughts. uh Austrian School of Economics Keynesian Anyway, uh, one of the important Uh characteristics here is that maybe inflation is not solely dictated by rates.

After all, we had 40 Years of declining interest rates and no inflation. Maybe Instead, oh my gosh, imagine this inflation is caused by the Rapid or sudden acceleration in the expansion of of the money. Supply Now that's not to be confused with. okay, if you print money, you create inflation.

We've been printing money for 40 years, but we've never printed money at the scale. We did uh during the pandemic and and that is a is not a Keynesian belief right? that is. That is sort of just the belief of like usually you look at interest rates. Anyway, the point here is Tom Barkin is basically telling us look we we don't know of that front-ending rates is actually going to make a difference So we're going to stick with 25.

BP We also don't know what the lag is. Is the lag? Three months? Is it six months? Oh, the Fed's communication is better Or is it old school? Uh, you know. Uh, Milton Freeman 18 months before the Federal Reserve's rates are actually truly felt by everyone, right? So in other words, that's sort of my rant about about a part one of these minutes. And then of course they make arguments here.

like hiring. uh, yeah, you know, surged inflation surge. There's some bad numbers in January Okay, we get that some of that could be seasonal or it could be real. We just don't know the answer to that yet.

that's redundant at this point. Uh, we do know I wrote this here that the terminal rate as of just about 20 minutes ago when I wrote it down was about 5.37 That's obviously up from where we sat as a terminal rate projection from markets of about 4.9 Now, some say that this rate could end up going up to six percent. Uh, personally. I I Don't know that the Market's going to care that terribly.

I Think the market cares more, not so much about this terminal rate. I Think the market cares more about the potential of a Paul volcker having to come out because the FED doesn't know what the effort's doing. And so I think the last thing the FED wants to signal is they don't know what the hell they're doing. So that's why again.

I'm reiterating this: 25 BP here now. I I Want to get to the second part? That's really important. but first, before I do that. Let me just show you what Morgan Stanley said.

So their Takeaway on the Fomc minutes was that they were relatively unfairly balanced. Uh, they mentioned over here that almost all participants supported the 25 BP right? They're picking up on part one as well. Uh, and now now this is where on the left side I was sort of as I was reading the notes I wrote look, saving one month of time basically is not worth the credibility hit that will happen basically what I just explained. but now this was really interesting because this is something that I've been talking about I picked up on immediately when Jerome Powell mentioned this I obviously I studied drum pal very well and when when uh, Jerome Powell responded to um Dave Rubin about hey, like this jobs report just came in hot like what say you Jerome Powell immediately quit back and basically said ah well Financial conditions have already tightened and you know one report doesn't make a trend and and like this is basically the FED saying look, let the market respond to the data.

We've been very clear that hot data means things have to get tighter. Good data means things can maybe get looser. So the more the fed's kind of like huh Market's doing its job already And that's fantastic because even though we've had a couple red days here, you know, maybe, uh, coming up on maybe about a week of of red, we're still obviously well off the lows where we've been. And I think now that this sort of catalyst of the FED minutes is behind us.

markets are kind of like, okay, like should we kind of start going back on that uptrend of the Fibonacci retracements, right? So, and that's because markets are looking going okay, well, maybe just not that bad. like. Okay, so slightly higher rates for slightly longer? Okay, great. The stock market doesn't care about that.

The stock market in my opinion cares about getting Paul Volckert. The stock market doesn't care about a slightly higher for longer terminal rate. But you know who does care about a slightly higher and for longer terminal rate real estate. And this is where everybody seems blind to what Jerome Powell is actually trying to do.

And I'm going to play you this for my tick tock because I played this like a long time ago. I Get so excited with the FED Uh, Anyway, uh, let's see here. Let me make sure we got the volume over here. Let's go ahead and pick this and I don't want to blow anyone's ears up here.

Um, just warned us that home prices might be coming down and even though he's not certain, he just gave the biggest warning. I've ever a young person looking to buy a home you need a bit of a reset? We need to get back to a place where supply and demand are back, uh, together and where inflation is down low again and mortgages or mortgage rates are low again. So this this will be a process whereby we ideally we we do our work in a way that where the housing market settles in a new place and housing availability and credit availability are at appropriate levels. Holy yeah.

so so I mean internalize that for a moment. Think about what you just heard. if you're a home buyer, wait for a reset. We need a housing market to settle in a new place.

Why would Jerome Powell say we need the housing market to settle in a new place? Uh, because have you heard of the Wealth Effect? The wealth Effect is when your wealth goes down, you spend less money, right? Not so fast. It's not actually your stock wealth that matters that makes you spend less money. Because maybe we've already adopted, uh, some of the psychology of money of of you know, Hey, you know what in the long term things tend to work out that's fantastic. But it's actually real estate that reduces the spending via the wealth effect.

Robert Schiller From Princeton Famous Economist came up with the case: Shiller Index for Real Estate Real estate is what kills spending when Real Estate goes down, people spend less money. Why do you think Home Depot's like oh yes, it appears people are going to start spending less money because real estate prices are going down. We've been talking about this on a channel for a year that real estate related company is just going to keep suffering and suffering and suffering. And your big barometer of this is the 10-year treasury yield.

What's the 10-year treasury yield? It ain't going down. In fact, it keeps going up. So in a weird way, look at this. The 10-year treasury hits a A You know, a high from November And what's the pre-market Oh, look, all the stocks are red.

Nasdaq's up one per sorry. All the stock indices are green. Uh, you've got the Dow up a third. you've got the S P 500 up half a percent.

Nasdaq's up one percent. Uh, you know. Oh, you got oil grain here. It doesn't matter so much.

in the sake of this, we're just gonna focus on bonds and stocks here. But point is, you can have a rising stock market and Rising yields. And then people like get this crazy thought in their head, but wait a minute. Kevin I Like I was told by the Basic Finance stuff that when yields rise, stocks become less desirable.

Now you go like congratulations, you've made it to Finance 101. now let's teach you the big boy stuff. And the big boy stuff says as long as we're not getting Paul volckerd your opportunity cost of not being in stocks is substantially higher than the stupid four or five percent you're getting on on the treasuries right now. That's why you could actually see yields rise and stocks rise.

Because the FED doesn't care so much about the stock market, the FED cares more about the real estate market. Now let me prove that to you by actually showing you what they said yesterday. And this is the big part too. Look at this box right here.

This is a phenomenal box. Just just listen to to this one. All right here we go. Oh God hold on my stupid iPad is uh uh, being stupid, so stand by.

let's refresh that really quick. and then I get this for you. Okay, yeah, there we go. Now you can see it better.

Oh gosh, I Just get so excited about this stuff. I'm sorry I apologize. Maybe it's the like five coffees I've already had. it's like 5 a.m The staff provided an update on its assessment of the stability of the financial system and on balance characterized Financial vulnerabilities of the U.S financial system as moderate good.

Okay, so we're not breaking yet. fantastic. The staff judged that asset valuations evaluation pressures remained notable. Okay, that's not great, right? Because if asset values are high, the wealth effect is in essentially a great place where people can feel like they're still spending lots of money because they haven't.

In particular, the staff noted that measures of valuations in both residential and commercial property remained high and that the potential for large declines in property prices remained greater than usual. Prices are already down 10 to 20 percent in various different Nationwide real estate prices already 10 off peak in certain markets you look at like Austin Texas Vegas Phoenix Boise you're down 20 already. In addition, the forward p E ratio for S P 500 firms remained above its median value despite the decline in equity prices over the past year above its median value. Okay, right.

The status asked that valuation pressure had ease for corporate bonds and leveraged loans as spreads and markets had increased from recent lows. Okay, fine, great, fantastic. So maybe maybe bonds are being priced appropriately, but I Want you to focus for a moment on what they said about stocks versus Real Estate for Real Estate They said large potential for large declines, right? I'm literally going to use their words here: potential for large declines? What else did they say They said valuations remained high, right? Valuations remained High Those are their words not mine. What did they say about stocks? Specifically the Spy the S P 500 which has a lot more Consumer Staples in it which haven't really had as much of the stock declines as like Tech or growth right? Like they didn't mention the NASDAQ they mentioned the S P 500.

Okay, well what they said for the S P 500 was above median. so valuations for the Spy are above median. Trend Okay, so which one seems more scary? Potential for a large decline? Valuations are made high or above median. The FED is sending a huge signal here that it's not stocks that are still like in a horrible Place Although there's a risk that those companies exposed to more of that Consumer Staples sort of safety idea.

Like your McDonald's are going to get asked because they're going to have higher and even like the companies like Walmart because you're going to have higher labor costs, higher food costs, but they're not going to have PP They're not going to have the pricing power to be able to pass on those extra costs. Read the Tyson Foods earnings call and you can see exactly that. read: Energizer Read read the earnings calls for these companies. You'll see that or I'll just give you the bottom line.

But anyway, those are companies are probably still going to get hit. So sure the Spy can still move towards median. although I think a rising tide lifts all ship. The big red flag here was for real estate.

So if you really want to know what was said in those minutes yesterday, let's make it super simple for you: check out the flash sale on the programs I'm building your wealth down below and researching stuff the way I do. But also join me in those course member live streams every day because it's included in any of the courses you buy and in the elite Hustler course you get an exclusive Saturday live stream. Uh, focused on business so when we do financial analysis uh, during the week on the weekend on Saturdays we do uh, business analysis and it's great. It's really fun, so check that out! I'm always adding to these programs as well.

So I I don't think they get dated at all and if there's ever anything that's missing, people, send me an email or let me know in the live streams and then I uh and then I add it. It's a beautiful thing is you get lifetime access. so check that out link down below. But that folks is my summary on the Fomc minutes and that is very, very important.

Now somebody here says Kevin way too bullish I'm sorry. Well look. I've talked about the bear case many times on the channel I Go through the bear case all the time and I don't actually think I'm bullish I'm actually providing you where I am bearish I'm being very, very crystal clear here: I'm highly bearish on real estate I'm highly bearish on the Spy I'm highly bearish on Staples I'm highly bearish on oil I Like people like Kevin you're just a bull I'm like, are you like like, hello, like are you missing something? like how many times have I been bagging on specific certain sectors that I think are going to perform poorly? Doesn't mean I'm going to be right, but I'm being very, very clear bearish on things I Just mentioned I Won't reiterate it, but I'm also very bullish on the things that have been sold off because I think they're freaking phenomenal value opportunities High Free cash flow decade-long pricing, Power plays, Chips energy EVS Autonomy Robotics But I don't want money losing companies because yeah, we might go through a recession. So I'm insulating myself with what High Free Cash flow I mean like uh, I think I'm pretty clear man I think I'm pretty damn clear.

Uh so anyway, I'll I'll leave it at that. but God I don't know, it's entertaining. Uh, okay. so oh goodness gracious, we gotta talk about the train derailment.

Now this? Okay, all right, this is gonna be data you probably haven't seen before. but I I find it so fascinating, so so fascinating. Let me get it all ready. It'll just take me a hot second here.

So oh, hold on, let me see this revision over here. Let's listen to this for a moment. Uh, right now and the tenure and the two-year pretty stable as well. going into the session.

Rick Santelli is standing by at the CME in Chicago Rick The numbers please. Yes, we are looking for our second time around the block on Fourth Quarter. GDP An initial Continuing claims. Let's start out with initial claims.

192 000. good news if you're looking for a better economy, Not so good news if you're looking for what the FED does to a better economy. Uh, on the continuing claims: One million, Six Hundred and Fifty Four thousand. Both these are less than expectations.

Both these are sequentially less than last week, at least until any revisions come forth. Our second look at Fourth Quarter GDP gets downgraded by two tenths of one percent from 2.9 to 2.7 percent. Consumption gets hit hard from 2.1 all the way down to 1.4 percent. Now the Money Ball numbers on the pricing index 3.9 This is hotter than our last look at 3.5 and I'm sure that that just popped interest rates and dropped stocks.

But do keep in mind this price and was created in 1947. It hit nine percent in Q2 of last year, Q2 of last year was nine percent. So now here we sit at 3.9 By my math, that's less than half. If we look at the personal consumption expenditure quarter over quarter on the core, it is 4.3 4.3 Also, just like the index, higher than expectations, higher than our last look, but well below the six.

All right, let me give you the numbers my way. I Appreciate his passion, but I'm going to give you the numbers my way. Okay, so the GDP Price Index is just another potential inflation gauge. The last reading was 3.5 Now it came in at with a survey of 3.5 we got 3.9 Okay, so slightly higher.

That also could be because of energy prices, right? But that's why we go to the Core, which removes food and energy core Pce. Now note: this is not a month over month gauge. This is a quarter over quarter gauge. Last quarter was three nine that has elevated to 4.3 Not fantastic.

We are still see some of that stickiness, even in the core prices, right? So so that is something to pay attention to. personal consumption also falling. Uh, last was 2.1 in the quarter three. Q4 the expectation was two.

We only got 1.4 So you're getting a lot of noisy and mixed data. I I Don't know that. Uh, this information uh, leading right. Uh, right ahead of the Pce numbers.

coming out tomorrow is is relatively uh as Salient or as important as the numbers we're going to see tomorrow. I Don't think this really changes anything. It's a noisy GDP figure. It's not even a January figure.

This is a a Q4 set of data on on GDP and an old measure. an old way to measure prices. I'm not terribly worried about it obviously. I Pay attention to it I Respect noisy signals.

but let's let's watch for a trend. And I personally am much more interested in seeing month over month information right now than quarter over quarter information. So tomorrow we will actually be getting the Pce, which we also do expect to potentially be hot thanks to the prior data. Note that the Pce deflator month over month.

That's just a fancy way of saying it. The CPI month every month? okay, uh, that is expected to be 0.5 on the survey and the year over year expected to be five percent. core month over month 0.4 Uh, core year-over-year 4.3 That's the expectation for tomorrow. So uh, again, this quarter over quarter nonsense.

If anybody gives you any kind of click bait on it today, it's it's like you're you're, you re. Do you really want to know about October November December right now? Or do you want to know about January and February? So let's move on. Okay, now we need to talk about, uh, the train thing. Okay, so I'm gonna keep this quick because I you know I I mean some people have really been asking me to cover this and I respect that.

Uh, obviously what's happened is a complete disaster and complete sh9t show and and it's just everything's just a disaster. Okay, so uh, let's talk about this. We need to talk about the train derailment because there's a fight going on Beyond between Marco Rubio and Pete Budajay. There's also a fight going on between Trump trumpice and and Obama is.

so there's a lot of this. Left Right fighting going on and y'all know me as a Mr in the middle I ran for governor as Mr in the middle I came in second place out of the candidates I won San Francisco That was really cool I I Gotta go visit San Francisco and pay my respects. But the point is I Want to go through some of the reality of what's actually happening. So we're going to look at some of the letters that are being talked about.

The letters Very very important. We're going to look at what is the Senate saying. We're going to look at what courts are saying. We're going to get a little bit of a different perspective on uh, what actually happens with the train derailment and potentially what caused it.

Now this is really important because obviously right now in East Palestine and Palestine thanks to the train derailment, a lot of people getting sick right now and it's kind of scary. We don't want to see that because well, after all, they're going to be massive lawsuits. People are doing their individual testing. Why? Because they don't trust the government to do the testing for them In part One of the reasons people don't trust and I'm going to get into some of the letters.

In part, some of the reasons people do not actually trust the government are because of the nonsenseical responses that we're even getting from the Governor of Ohio. So obviously, if you haven't heard, there was a trail derailment at the beginning of February. One of the issues was that one of the rail cars wheel bearings overheated. when it overheated it cost to it led to a fire.

50 train cars derailed and they spilled a bunch of toxic chemicals. Now, rather than than just leave the toxic chemicals or try to continue cleaning them up because of the hazards associated with cleaning them up, the Uh Rail agency or the the rail company decided to be a fantastic idea to just conduct a quote-unquote controlled burn and burn chemicals leading to a toxic plume of black smoke, and people complaining about dead chickens thanks to all the toxic air but dead frogs, dead fish, nasty chemical, uh, odors throughout the town, people complaining about rashes and coughing up blood, and issues that they haven't previously had. This is despite the fact that the government is trying to suggest oh, everything is okay. don't worry, our testing suggests everything is fine of course.

Now there are allegations that the testing that's being done was actually being done by the railway and their contractors. and so the EPA is kind of like okay, y'all need to go test and let us know what those tests say. Oh wow and lo and behold, if the company is involved in conducting these tests, Wow! Everything is safe. Don't worry, you could drink the water and the air is fine.

Look, listen, after Covid, nobody believes that. That's why people are doing their own testing right now. And people like I don't know how you're saying there's no contamination I smell it right I feel it. It'd probably be a good idea not to be in this area, but let's listen to the governor and I Hate to say it, but this is probably the most embarrassing clip for this.

Governor This is very, very bad. But listen to the governor of Ohio and then we'll get into some of that fighting that's happening between Marco Rubio and and the Senate and so on. So let's go ahead and listen to this clip right now. Please give in results to the water testing that are accurate.

I Mean a lot of these folks are rightfully untrustful of these tests. Uh, the initial tests that were done were being done by Norfolk Southern they were being hired by independent contractors from Norfolk Southern Correct. These are these are tests the tests that we are doing. Uh, we're doing double testing.

Uh, so you know notice he doesn't deny that the railway is actually conducting the test right. but it gets it gets worse. Testing is being done by the either Ohio EPA or the USC people. Okay, that was not the case to start though.

Uh, well let me just why why it is. we continue we continue to do to do that testing. Gotcha. One more question.

Uh, if that's okay. So the um, what took so long to get FEMA involved here? Um, go ahead. What's it So long to get FEMA involved? The most important thing is you're reaching up to the Federal government you would on an interview I watched you said straight up that uh, the President Biden said that you would provide Aid I don't think he's done nearly enough and I think a lot of residents here do but you said you didn't return the phone call. It seems like it's been thing after thing and look, the President called me and said anything you need.

uh I have not called him back uh after that. after that conversation we I will not hesitate to do that if we if we're seeing a problem or or anything. but I'm not saying it. why isn't there Federal money now for these people to move? Well, there should be.

But the Governor Dewine has to ask FEMA to come in and he hasn't done it yet. You didn't say that no no I did not say that. Come on man. what I said was the president of the United States called awkward or you had to call back sorry no, you're not letting you're not letting me finish.

Classics So look, the President of the United States called and asked if there's anything else we can do. I told the president that U.S EPA had been here from the beginning. Within hours they were here. They're working very very closely with our Ohio Eda so they're going to continue to continue to do that.

Gotcha! And that's that's what's going on. Okay uh, first of all, shout out to the person who says looks like Bill Gates's long-lost brother. That's hilarious. Anyway, that was terrible.

Okay, that's a terrible show of of. Basically, as soon as he got caught in a lie turning around and you know what, you're not letting me finish my sentence and walking away I'm sorry Mr Ojai Ohio Governor, You're probably not going to get reelected after this disaster. This is very very embarrassing. Now we've got to talk about these spots that are going on between the politicians.

and I want to give you some real insight into maybe what's actually going on here? Because listen, there's nothing I hate more than politicians cherry picking bullcrap about who's actually at fault of in in these issues I can't stand that kind of stuff. And so right now one of the things that you have going on is you have Marco Rubio Pete Budajet Batten on Twitter and I want to show you the reality first and this is this also leads into Trump versus Obama Okay and this is the whole idea here is to show you what's actually going on. Okay so first of all Marco Rubio says hey secretary Pete why were you M.I.A on the trail arraignment. uh the derailment and it is kind of strange.

but anyway. derailment? uh then uh Marco Rubio says Pete Budige lies to the media claiming my 2021 letter calling for more track inspections was a letter calling for deregulation. He is an incompetent who is focused solely on his fantasies about his political future needs to be fired. Okay, so Marco Rubio doesn't like Pete That's obvious Marco Rubio is a republican.

Uh, Pete is a Democrat It works with the Biden Administration as the the head of the Secretary of Transportation. So Pete Butterjet replies and says the facts. Don't Lie The 2021 letter you signed was obviously drafted by the railroad. Industries Lobbyists.

Well, first of all, that's an that's an opinion the second part. So we're already conflating opinions and facts. but let's see what the facts are right? So Pete Budajega goes on and says it. The letter supports waivers that would reduce visual track inspections.

Oh, that doesn't sound good. Wait a minute. Marco Rubio Did you sign a letter that would reduce visual track inspections right before a derailment thanks to a wheel bearing failure? and now Pete Budajek continues and says now will you vote to help us toughen rail safety accountability and fines or not. In other words, Pete is taking this idea that the railroads are at fault and you contribute to it because you called for Less visual inspections.

But you want to know what the fact is and this is why in my opinion you come to the channel here. This is is why you come here. The fact of the matter is that letter is right here and does the letter actually call for Less Visual Track Inspections. Listen, what I'm saying visual Track Inspections and the answer is yes, that is true.

Pete is correct. It supports reduced visual track inspections, but guess what it also does is it replaces visual track inspections with better, more efficient automated track inspections using technology. So see how like you get, uh, politicians who try to screw with you. Let me read you some of this.

A critical step in the utilization of new technologies is the Federal Railroad Administration waivers and testing programs that provide the freight industry the opportunity to achieve the next level of track equipment and employee safety improvements. Basically, and I'm going to fast forward a little bit here. Rather, what they basically do is rather than solely rely on into individual people conducting visual inspections, they instead rely on data monitoring and technology that measures how are our Wheels doing. Are things more shaky? What are the algorithms saying? And now you could take that labor and allow that labor to go to where the abnormalities are to find where defects are.

Now, this piece here alleges that these ATI these automatic track inspection programs have proven safety benefits of this concept. These tests have resulted in an over 90 percent reduction in unprotected main track defects per 100 miles tested. Now, hey, maybe this letter was written by some lobbyists, right? That's possible. that is possible.

And so we're going to do some more research here in just a moment. And I'm going to show you how this politician stuff just grinds my gears. But I Want to be very clear: Yes Marco Rubio Signed a letter right there as a signature Yes. Marco Rubio You have signed a letter that calls for Less Visual Inspections Fact: However, false that the letter actually was calling for less safety.

It was actually calling for more safety and better inspections. Now how do we know that the automatic technology is actually better? Well, this is where you could look at a case that was, uh, basically litigated by the United States Court of Appeals between the Federal Railroad, Administration uh, the Uh, and then the uh. basically the Unions of the Railroads. Okay, so you could look at this case.

It's a case that was decided on July 15, 2022 case number 21 1049 And short of going through every bit of this case, let's look at some of the Salient items for them. First of all, they talk about these waivers and they actually uphold visual waivers in favor of automated technology because the studies provided directly by the unions show that are safer to use automatic Technologies Whether it's for braking, brake inspections, or just track inspections. This court case upholds that. The studies do show an increase in safety from automatic inspections and waivers.

When we hear uh, certain waivers, Right when we hear waivers, we automatically think, oh my gosh, waivers and less inspections. That means less safety. Not necessarily, not necessarily. In fact, the industry is working to get better and I'll show you what's potentially actually standing in this because I'm not like I'm not a Shale for the railroads? Okay, like let me be like, crystal clear about that.

really quick. Like the railroad F'd up here. Okay, they highly screwed up over here. Massively screwed up.

It's obviously a for-profit institution. I Get it, They screwed up. They got a lot of work to do and I would not trust the tests at all. So I'll be very clear about that, right? So I'm not here to like show the railroads.

I'm here to show you how politicians manipulate what's actually happening. What's actually happening is you have both sides that want more automated inspections. But now they're pointing fingers at each other for complete nonsense because they're kind of both trying to get things to be safe for both the Republicans nems. But they're pointing the finger at each other going no, no, you want less safety and you want less safety which is not actually true.

And so the next thing that comes up is people start talking about breaks. Okay, well, why did we go from automated braking under the Obama Administration and calling for more automated braking under the Obama Administration to less automated braking via the Trump Administration Okay, so immediately that's an argument that's circulating on Twitter that says oh, all the trumpists are for deregulation. They cause this accident. You know we should have stuck with the Obama era stuff.

Okay, well this is where it gets really nasty. Okay, and I'm gonna keep this simple, but watch this. Here's a document and I'll tell you. I've been up like all night researching this stuff.

Here's the department Department of Transportation letter talking about electronically controlled pneumatic brake devices. Basically automatic braking systems and the biggest like these are great. These automatic braking systems work. They're They're fantastic.

They're great. Like they improve rail safety right, but they have some problems with them and now you're gonna that It's not this part but the problem that comes after this. You're gonna see where the real problem in my opinion is potentially and then this is going to be like the Aha moment where it's like oh, anyway, watch this. Okay, ready for this.

So in the conclusion, they talk about how great these braking systems are the automatic braking systems. but they talk about how there are actually some issues they have not actually found solutions for yet. They say, look, there's some software issues. Even after we're fixing the software issues, some of our tests are failing.

There are backward compatibility issues. We basically need new train cars. We need newer systems. We have issues.

Look at this. They literally say here there are issues presented during testing for which a solution cannot be identified. So there are still problems with some of this new technology, right? And so then you might be thinking to yourself, Okay, so there's new technology that would make Railway safer, right? Like, why don't we use that new technology that would make Railways safer? Okay, I'll tell you this is this is the Big Like: What The F? What The F? You want to see Why we're not investing more and trying to get this technology, The automated braking systems, the automated inspection systems, and making them function better. Here it is.

Here's just an example for you Rail Labor Files: joint Comments on the railway agencies. you know standards and take a look at this one right here. The brotherwood Brotherhood Railway Carmen This is this is a union, right? BRC Joined with four other rail unions to oppose new regulations from the railway. Authority And here it is, among other things.

The unions argued against proposed changes Innovative changes, Mind you, for the following reason: Number One: the regulatory framework right now is already good enough. Fine. whatever. I'm paraphrasing that I'm going to read you this one word for word.

Reason: Number two: The railway. Uh, unions do not want more of the Innovation Here you go, the changes would lead to decreased safety by having fewer break inspections, fewer timely discoveries of defects and other problems, and by allowing risks associated with brake system degradation to actually increase across the rail network. That doesn't sound good, right? Translate that for a moment less labor. It's a union.

The whole point here is, you have a union. and what does a union want? A union exists. It literally exists to increase union membership and to protect employment for employees. Which means more employees.

What did The Regulators want? both Republicans and Democrats What do they want? More automation, Better inspections? so in other words, physical waivers and automated inspections that do a better job as well as automatic automated breaks. But somebody is standing in the way going. We don't want automated breaks. We don't want inspections and I Hate to say it, but the Smoking Gun appears to be the unions.

It's not Pete bootage. It's not a A A A Marco Rubio I Don't think it's Dems or Republicans I Think they all want more real safety I Think it's unions who are protecting the reason they exist. more labor. Now look.

I'm not saying unions are bad. Okay, I'm just saying from the research that I've done, it appears to be that there are ways to make trains safer. but unions do not want labor to be replaced. Duh.

That's why they exist. So what's an easy way to do that? You stand in the way of innovation, which could actually be better than human labor now. I Want you to think about this logically for a moment. What do you think is better at determining whether a break should stop or like a train should stop, Or if there's a track defect? An algorithm that's measuring vibrations and is you know, thousands of times per second measuring how a train is moving through a trained system, railroads or a dude walking by with a clipboard going that looks good and keep going.

Come on, it's obvious it's so obvious now again. Maybe I'm Wrong Maybe the unions want to have their jobs replaced by algorithms that do the job better. Maybe I'm wrong I just don't think I am and I hate to say it, but it's this kind of on Twitter that's so wrong Marco Rubio didn't sign something saying we want less regulation and Pete Butterjudge is not talking about the real problem because guess whom the unions often vote for. But then what happens is after Pete Bootage tries to call basically call Marco a liar.

You get all of these these comments from people that are like how does self-professed and a proud Christian like you square with the fact that you regularly break the eighth command with which is like doubt, shall not lie, thou shall not lie or deceive people, right? It's like he didn't like ah, it's not that. ah I'm sorry, it's it's so freaking frustrating. And and look this. this is what I try to do on the channel I I Try to look at like from a first principles approach here.

what's standing in the way? What's actually causing the problem I Guarantee you it ain't the tweets going back and forth that are gonna solve everything. Anything, they're not going to solve anything. All they're going to do is piss Americans off more. But I I don't give a crap whether you're a Democrat or Republican I think if you just watch this whole segment on the Ohio train derailment disaster, you're looking going.

the come on man, that's ridiculous. Like this is not a Republican or Democrat issue. it's a union issue. just saying just saying okay like I I ah and then and then of course you get all like I feel bad because like I you know I get hate on the internet too I try not to pay attention to it.

but like I feel bad because it's like you know people are calling uh, each other Liars here and it's like there's there's so much more than you can explain via a tweet. But but you know I guess people's attentions fans are too short to actually like learn. This is why I have courses on building your wealth through the psychology of money uh, through a real estate investing zero to million because people honestly don't understand the things. they don't even understand.

it's it's in unconscious incompetence, right? They don't even know that they don't know I know I don't know everything regarding this, but I've already gone through that phase of at least trying to crack what's actually happening right? I know I'm not a trained expert I I Don't know anything really about trades, right? But but at least I know enough to realize I don't know and I want to learn more. This is like when people like oh Kevin you should just you should just hire somebody in different areas to go look at real estate for you. They don't understand why I am physically going to the places I want to buy real estate because they don't even know that they don't know. they don't realize they are such at such a low level of confidence competence that they are just completely incompetent And and they will never wake up to that because they don't allow themselves to wake up to their incompetence because it's so much easier to remain incompetent because that's popular if you're an incompetent idiot spouting on Twitter you happen to get a lot of likes from other incompetent people and that's popular, so it actually encourages you to be incompetent.

How the hell am I supposed to explain what I just explained in the last 10 15 minutes here in 140 characters on Twitter it ain't gonna work and even if I managed to do it, it's not going to get a lot of likes because what gets likes on Twitter is the incompetent I'm sorry I I am so sorry I get so heated about this stuff because I like I feel like the people who watch my channel and and I feel like most people are good people. everybody's trying to do the best they can with the information they have. but people get basically just getting lied to because it benefits uh the the Liars basically because they get more more you know, like like likes and and hits and stuff and it's just like ah, this is why the mainstream media is broken. It's like why is the mainstream media so divisive? because well, it gets way more hits and clicks.

being neutral. very hard. Very very very very very hard. And anyway, okay I'm sorry I'm sorry I had to go through that.

that was. that was a disaster. Um oh good lord. Okay, let's move on to a different topic.

Good, it's gracious. let's talk about something nice like: Gavin Newsom God Damn it. sorry I Ran against the guy for governor. It's not much nice to say.

Oh, we gotta do it. Okay, all right, all right, we've got an update on Tesla in California And boy this is a little bit mind-blowing. But folks Tesla is now announcing that their Global head of Engineering is actually getting placed in California in Palo Alto A place where you can't buy a home. A good home for less than three million dollars.

My son happens to like Palo Alto because I took him there once and their playgrounds are amazing because they got a lot of money over there. and so why the hell would Tesla build a menu or build basically an engineering Workshop Workshop more like an engineering headquarters. Why would they put an engineering headquarters in Palo Alto California Well, Elon Musk Explained this directly and essentially. The idea is that there is a lot of engineering talent in San Francisco and this makes a lot of sense.

In fact, I'm going to grab something from JP Morgan asset management and some research that they put together in just the last couple days and this is the kind of stuff I do. Okay I sit here and I read research. This is an 81-page report and on page 64 of that 81-page report, take a look at this number of unicorns. in other words, smaller companies that that are very Innovative and get a lot of private Equity money a lot of Investments A lot of dollars have a lot of skilled employees.

Look at the number of unicorns by City From the point of view of private Equity markets and what do you have? Ah, most of them are in San Francisco about 50 percent more than the next highest city in New York Now this is a piece on China and this particular piece talks about how like Shanghai and Beijing are catching up and they are. That's really a topic for a different video though, but it's very interesting because as much as people bag on California if you want AI investment, Venture Capital Money San Francisco is the best place for that. At this point you know other areas are coming up. You got the Silicon slopes in Uh, in in Utah Uh, you've got uh New York You've got Miami Uh, you've got Austin which is trying to become uh, you know an area I think Miami they call it silicon Beach Silicon Slopes Utah Right Silicon Valley Obviously, uh, uh, San Francisco and such.

But it's very interesting to me because Tesla made it clear they've got 47 000 direct employees in California and uh, Elon Musk made it very clear that Tesla Fremont is the most productive Automotive Factory in North America Now that will change. Elon Musk here is trying to be complementary to Tesla or to California and I'm going to give you my thesis on exactly why that's happening, but that's that's true. for now, it won't be much longer because the most productive Factory in North America will probably be in Northeast Mexico or the Giga Texas right? Uh, and that's also where the Tesla headquarters are. but the headquarters of Just Engineering are going to be in California and this facility will employ about 1400 engineers.

And what I thought was really interesting about this is oh well. Also, it's worth noting that Nvidia which just smashed earnings. Phenomenal earnings. Huge player in not only autonomy, but also in AI Artificial Intelligence Data centers.

Uh, cloud-based artificial intelligence, but also uh, it just smashed earnings I mean absolutely incredible. They they're talking about an inflection point in AI but they also are a massive Automotive player. Nvidia is right in that they're trying to sell basically systems on chips to companies like Mercedes so they can actually more effectively conduct software updates. Right now, only about 31 of Mercedes recalls according to Forbes are done over the air, whereas 99 of Tesla's recalls are solved by an over-the-air update.

An Nvidia actually provides a lot of the backbone for a lot of other Automotive companies. Whether it's Nvidia I'm sorry, whether it's Neo Mercedes Volkswagen they provide the backbone for a lot of of the chip technology and guess where Nvidia is located? Ah, Santa Clara the valley right up by San Jose San Francisco Like this, this is the AI Hub Like, say what you want about California that's the AI Hub I Just flew from San Diego to to Uh Ventura California Yesterday we got to fly along the coastline and then we crossed above Malibu and saw all the crazy homes and everything from from a pretty relatively low altitude. Gorgeous. Like California is freaking beautiful.

Uh, but but the point is NorCal is fantastic for the AI autonomy and Engineering world. Now maybe that'll change. A lot of work from home is changing that and messing things up, but there's nothing like the in-person startup culture. That's why with my startup we require anyone who's being hired new hire.

They've got to work with us in person. Come travel with us. Work with us. Be with us is a massive difference from in a startup culture.

So I think really? what Elon here is doing is twofolded. Number one: it's trying to Foster the startup culture to always be at the front of innovation. There's no better place for AI innovation in my opinion. And clearly, uh, Elon Musk at least someone agrees with this.

NorCal Now the second thing that's very interesting because you know Gavin Newsom tried to turn this into like a politics thing and he's like, you know, we've got more jobs in California We've got more hunting jobs, more fishing jobs. We've got more Manufacturing in California than any other state. Elon's response to that line was fantastic. Elon's like, well, it is a big state and he's basically kind of saying like dude, Gavin Newsom like stop stroking yourself Okay, that has nothing to do with you.

You have the highest population out here. Of course, you have the highest amount of jobs in all these various different sectors. Fantastic. Quit back from Elon Musk But here's the 4D chess move.

in my opinion: Elon Musk has also very clearly aligned himself with Uh Texas and Republicans from manufacturing and Manufacturing freedoms, right? That's obviously very in and sort of Freedom of Information via Twitter big fan of aligning himself with Republicans right? That's been, whether that was intentional or not. He's done a phenomenal job over the last year of basically being the greatest Republican Advocate ever. Okay, obviously from a political point of view, people on the left do not really like Elon Musk Right now, look at what Elon Musk just did by employing about 1.4 percent of Tesla folks, engineers and new headquarters in California creating potentially new jobs. Although we don't even know those are going to be new jobs, people could just be moving from their current old headquarters into that headquarters right? so they might not even be new jobs.

It could have literally been as simple as Elon Musk like signing a lease and then moving 1400 people to a new engineering headquarters which is like kind of a line. Anyway, it's like, okay, like you had an engineering department there. Anyway, now you're just signing a new lease and calling it the engineering headquarters right? Like like come on, this is a 4D chess move. You know what the 4D chess move is to make Democrats like him Again, it's freaking brilliant.

Elon Musk was just at the White House shaking hands with Biden Folks at the uh, Transportation Department. Why? It's so they can get billions of dollars of tax credits to expand the Tesla supercharging Network in exchange for slowly in a way that doesn't affect congestion. although I think it will affect congestion. Really, that's just sort of me.

kind of being a little skeptical and jaded. But anyway, that's because I'm a Tesla owner right? So obviously like I don't want other people at the touching stations because I don't want to wait. That's me being selfish. Okay, but anyway.

Elon Musk Working with the White House to build billions of dollars more of charging infrastructure is great. Why? Because it gives Tesla billions of dollars to make the greatest charging Network even greater and even better and even more Innovative But that also makes but the body Administration Shout out Elon Musk and Tesla about how great their being for sustainability and climate change. something Democrats like So Republicans we already got we got enough Republican Elon Musk right? We had enough of that in 2022. now he's playing the other side.

Hey, uh yeah yeah. Give us billions of dollars in tax credits and we'll expand our charging Network and we'll let you all plug in. And don't worry, we'll charge you Democrats Who don't drive Teslas More money to charge at our stations. but oh well, we'll take the billions of dollars of tax credit.

Freaking brilliant. This guy's a genius. He's playing both sides. Elon Musk is brilliant.

Now he goes to Gavin Newsom The epitome of the left, the poster boy of failed schools, failed homelessness, failed mental health education, a failure of a state. They will send stimulus checks to people making 500 000. No joke. look it up.

500 000 people A households making up to 500 000 in October of 2022 got stimulus checks rather than actually making the appropriate investments into the state that needs it most. actually trying to make California more competitive again. Jeez. Lord That guy.

Why would Elon Musk go talk to that guy and quip back at how great California actually is by actually kind of trying to undercut Gavin Newsom in like I thought like the perfect moments. why is he announcing this? Because again, Gavin Newsom's the poster boy of the left and even though Elon Musk might not actually be doing anything special or unique, it makes it feel that way. Hey, let's have an event. Let's celebrate the signing of this new lease hold interest th