Midday is totally how many cans per day?

How many cans of depends on how much caffeine.

Like these are 140mg each, which tells you that I've got an addict problem right out the gate.

Just right off the gate, you know I got a problem.

140 ain't bad.

I mean, Celsius is 200.

Yeah.

C4s are 200.

All the first form form energies are 200.

That's kind of like the standard increments, by the way.

What?

He's now signed up with first form.

Andy, you son of a.

Did he really did.

I mean, I guess he does have a lot more followers.

So we had transcend first, and then Brendan decided to come and take it there.

He did.

He stole our and now first form.

And I was thinking, why is he.

Yeah, you started the clock.

I whoop his ass.

If he couldn't whoop my ass.

He whoops a lot of ass.

Yeah, he's been good.

Welcome back to the number one financial literacy podcast in the world.

This is the higher standard.

Sitting in front of me is my partner in crime.

And in the all facts, no cap.

Higher standard merch that you can find@thspod.com it's Christopher Nahibi.

Wow, that was well done.

Thank you.

He's done it a few times.

I've done this.

He's done it a few times.

And I'll find a way to mess up next week.

Yeah, it's good.

In the chocolate brown quarter zip on 100 degree day, the king, the only man who wears a quarter zip on 100 degree days.

Omar, everybody.

I was a little disappointed that I didn't wear it last episode.

I was like, oh, man, I forgot.

And sit behind the desk in the production suite is Rajeel.

What's up, my guy?

What's up, everyone?

Super slim today.

Yeah, well, super slim every day.

Why he went to join Fridays.com.

use the code higher.

Got $100 off his first order and helped us.

Helps you.

He's on girzepatide.

I'm on nad plus.

So he's getting skinnier.

I'm getting smarter inside.

You're just getting quarters?

Yeah, I'm staying as the before.

The before image.

Yeah.

This is what.

This is what it's like.

Don't be sight.

Everybody go to join Fridays.com and I'll be joining soon.

So today we got a lot to get into.

We had a fed meeting yesterday where Jerome Powell decide to hold steady.

And for a lot of various reasons that really didn't make a whole lot of sense.

We're going to get into that.

We're going to get into private credit again because we might see some trickling down effects into the rest of the market.

And we definitely have some housing to get into.

Yeah, the, the housing data that came out.

So we're recording this on an uncharacteristic Thursday morning, afternoon, ish, lunchtime, if you will.

So, and the reason why we're doing that is because some of the market data was so fresh that it made sense to pull a little later.

And because my wife's out of town, I got to pick up a little man.

So the housing data that came out this morning was meaningful.

And I think we're getting to the point of you can't deny where the market is kind of rhetoric.

But we'll talk about that.

Before we get into Jerome Powell stuff, I want to, I want to spend an anecdotal programming note with the two of you.

My compatriots, my compadres.

I know that the news as of late and the headlines that we use for the podcast titles are negative.

It's not lost on me how this can be really grim stuff.

Right.

I think that it's easy to assuage yourself of the fears by just not listening to stuff like this.

So you just don't think about it and it makes sense.

It's kind of a human nature perspective.

Right.

Like, you just start avoiding headlines and they just get over stigmatizing at some point in time.

Look, you can either face it, accept it what it is, and do what you can about it, or you can ignore it.

Either way, I'm not here to judge anybody.

But for somebody to listen to the show and feel that the headlines are overwhelmingly negative, I would say I feel that way, too.

There are days that I slow down posting, cadence posting.

I've done that this last week a little bit, just because I'm so tired of talking about geopolitical conflict.

But in this show, and frankly at the fomc, you can't deny the implications of these things that are happening.

And all you can really do is try to understand as best you can with what information we get.

Whether that's accurate or not remains to be seen.

And you can try to make informed, healthy, positive decisions based on that for your own life.

Absolutely.

I mean, I think it was in 2020 when.

What's up, Brazil?

You look at some.

Something going on?

Oh, no.

Okay.

I thought you were looking at me, but you must have been looking at.

No, I do look at you all the time.

Out of a sign of respect, Christopher refuses to look at you.

See, I'd like to look at you when I talk to you.

I'm always looking at you both.

I'm a professional.

Did you guys see that?

I don't know if you guys saw this, but at the Oscars, they did the behind the scenes of.

I haven't seen anything from the Oscars.

I don't watch the Oscars.

I just seen all the memes that have come from it.

Anytime I see a control room or podcast studio, though, I always look.

Yeah, yeah.

So they showed a behind the scenes at one of the major networks of the host being recorded on, like, their set.

And the set had, like, what you normally expect, like, little raised portion.

They had cameras.

They had a, you know, two people in the room, but there were no camera operators.

The cameras are all autonomous now.

Yeah, yeah, you DM that to us, actually.

Yeah, that was pretty, pretty impressive.

It all camera operators out of business.

AI does it for.

Yeah, who would have thought that?

It was wild, dude.

It was like, straight out of, like, iRobot.

Right.

So what I was going to say is, yeah, I know a lot of the news has been gloom, and some of the stuff we might be reporting on could seem like, okay, this is the beginning of a really, really bad experience for all of us.

But you got to look at it as, like, there's going to be a lot of opportunities that present themselves.

I mean, the market took a hit in 2020 and went down 35%.

If you had invested back then, you just stayed packed and didn't let emotions get in the way, you would have made a lot of money since then, even four years ago.

Right.

In 2022, market went down 20%.

So that's the stock market.

Right.

Can I.

Can I made some for those of, you know, my businesses and what I do and what I don't do to make money.

Every single one of them, including this podcast, was started during times of economic, like, turmoil.

Yeah.

We started this podcast kind of on the heels of the.

Of the.

The pandemic.

It's going to be four years now,

by the way, for you.

Five for me.

Yeah, I think.

Yeah, whatever.

Wow.

About to be one for me.

Yeah, There you go.

Nice.

Yeah.

February, March, I think March or April

is when I started helping build the studio.

Yeah, there you go.

Yeah.

So every single one of my businesses, the real estate that I own, came from the great financial crisis.

Right.

The job transition that I had came from the early part of the financial crisis.

That got me into banking, from housing and from lending, for example, the law firm, same thing.

This, the pandemic.

Every single financial.

And I have failed so many damn times, and I don't know why.

Every single time we go through an economic downturn for reasons that are unclear to me, that's when I just grow the most is coming out of those moments.

So as much as I look at all this stuff, people are like, chris, why are you so plugged in?

Oh, you're a doomer.

That's not it.

It's that I know opportunities are around the corner and I can look past the headlines and the negative stuff we talk about.

I'm more plugged into narratives now than ever because I'm looking for the opportunity.

Right.

Instead of looking at, you know, a company like Berkshire Hathaway and saying that they're holding more cash than they've ever done before and seeing like, oh, they, they know something's going to happen in the stock market and they hope something's going to happen.

No, no.

Yeah, they're hoping so that they can find more opportunities.

Right.

And that's what we all should be looking to do, too.

I mean, we're going to get into private credit here shortly.

Right.

But like, credit conditions can sometimes provide early warning signals for what's to come.

Right.

In 2008, the great financial crisis that started off with subprime mortgages and ul its way.

I'm not saying that private credit is going to be the catalyst to take us there, but definitely an early warning sign if you're reaching like higher levels of default rates and delinquencies.

Right.

And they're stopping redemptions.

I mean, it's something that we should be considering and looking at now, everyone on Wall street is saying, hold on, this is.

This is going to be contained within their sector.

Right.

But we know it has more to do with leverage positions and banks versus credit funds.

And we can get into that in that topic.

But.

Yeah.

So here's what I would say is the optimism that I'm seeing in the market is disconnected.

I know it's easy for me to say that because I come across as somebody who's pretty negative on social posting.

We've been using AI to build this model that we've been calling alpha.

Until such times, we name it something sexier and it literally like the website is seeking alpha.

It's looking for the disconnect.

And so we plug it in and I'll give you all the data sources we plugged it into.

Now I plugged it into Alpaca, which is basically the trading platform for stocks and securities that APIs can trade off of.

AI plugged it into massive real time data, some stuff we use for the podcast, all the proprietary models that we use in the podcast, synthetic volatility index, market status, all that stuff, right.

All the regimes.

Then plugged it into the St. Louis Fed Bureau of Labor Statistics and so on and so forth.

Poly market call sheet.

I mean it's got a ton of data coming in and it's been aggregating this data for 3 months and now I've got them all turned on live and it's, it's working autonomously on its own.

And rather than me giving it my idea of where the market's at, I gave it all the models, all the analytics and all the investment thesis, which has been a three month long process.

Just a draft, right?

And in that thesis it's going to seek this alpha, this disconnect from what the market is saying and it does include headlines and behavioral economics, it does scroll social media, right, versus what it's actually seeing in the market.

And the number one thing you guys both saw before we started the show is that it is saying that the probability in the markets of rate cuts are materially disconnected to the data that it's seeing by about a 25 to 30 basis point difference.

Right?

And we're going to get into that.

We can get into it now if you wanted to, but you know this last FOMC meeting, the summary of economic projections, the SCP came out, right?

And it spells out that there will be one rate cut in 2026.

Now this model, right, this alpha, if you will, is saying that the market is pricing in something completely different than what the Fed is saying.

It's saying that the way the market is acting and the way the futures are acting, they're pricing in more than just one rate cut.

And it's come out on its own.

Like we don't.

We.

It does not believe in what the market is saying.

Maybe more in line with what the SEP is projecting and maybe even less because you know the Chicago Mercantile Exchanges out here, I don't know if you saw it as of today.

Oh boy.

95 chance of no rate cut at the next meeting in April, which is in six weeks, five weeks from when this episode comes out.

Zero percent chance at a rate cut, a 4% chance at a rate increase.

When's the last time?

When was the last time you saw that?

I haven't seen that in a while.

And that that has largely to do with some of the things we're seeing here.

So according to.

So I should.

I should be clear on the Fed watch now and Bloomberg's Work, Work World and Trade probability, they look at the probability of rate cuts as you approach the next FOMC meeting.

What our alpha is saying is that the probability of a rate cut this year is a less than 50% probability versus the market, which is suggesting it's north of a 70% probability.

Yes.

And I think that the disconnect is one that's hard to measure per se, but what I can say is that what we're going to play here was a very defiant Jerome Powell and is about as defiant as he gets.

He's always going to be buttoned up, he's always going to be polished.

Bring up the.

It's always going to be squarely focused.

Yeah.

So right out the gate, I found this statement to be interesting because it was clearly a prepared remark.

He.

He knew who was going to ask the question.

He was ready to answer the question.

And it was about the confirmation of Warsh as the next incoming FOMC chair.

And as we talked about on our last episode, episode 326, that there was a strange and odd probability where he would be in the seat longer, Jerome Powell be in the seat longer as pro tem Fed Chair, because the House and the Senate weren't going to confirm Wash until such time as all of this, you know, kind of drama had unfolded.

But then Jerome Powell even took it a step further.

Drama, meaning the geopolitical conflict.

Not only, not the geopolitical conflict, the.

The investigations into Lisa Cook, into Jerome Powell.

So they're now using this as a leverage position not to confirm WASH and to keep Jerome Palanis pro tem for longer.

Right.

And he even went so far as to say he's not going to leave himself.

He said that this is, this is not the first time this has happened.

This has happened before.

Where?

That's how he got in the job, right?

Yeah, exactly.

Yeah.

So this is not.

This is not uncommon, but definitely not what, you know, the President would want.

But it sent a clear signal to the White House, if you do not back off, I'm not going anywhere.

And that's on you.

And don't take my word for it.

You want to play it?

Yeah.

There we go.

A squatter tenant.

Yeah, pretty much on the question whether I will leave while the investigation is ongoing.

I have no intention of leaving the board until the investigation is well and truly over with transparency and finality And I would refer you to the statement that was in the Fed's brief that you all have seen.

And I won't have anything more for you on that.

On the question of whether I will then continue to serve as a governor after my term ends and.

And after the investigation is over.

I have not made that decision yet.

And I will make that decision based on what I think is best for the institution and for the people we serve.

If my success is not confirmed by the end of my term this year, I would serve as chair.

Pro temess to questions, comments and thoughts.

This is him going, okay, I know who's going to ask this.

Yes.

And I know what I'm going to say.

Yeah, you asked this question and we talked about it off the air where I mean, I wouldn't be surprised if he knew that that person or signaled to that person had a time.

Go ahead, you can ask this question.

I will answer it and no one else.

I won't allow anyone to ask a follow up question.

And so pretty much he said he's not leaving.

Just like Leo.

N. Yeah, that's right.

I'm not leaving.

I had totally forgotten that reference.

Well done.

Nice.

Yeah.

Thank you.

Thank you.

I'm not leaving.

That was when the SEC was like,

he's got some of the greatest memes about Le Le.

What was up with the mustache at the office?

It's a good look for him.

He didn't look bad.

It's a good look.

He did not look bad.

Yeah.

Yeah.

I'll be honest.

I don't think any one of the three of us could pull off a mustache like that.

I mean, speak for yourself.

I.

We can do it.

We should do it.

I don't have enough chin for that.

Well, we should.

It's okay.

We should do it for November.

Movember.

Yeah.

I can't shave the rest.

I don't have chin.

It's okay.

I shave this.

I look like it's over.

Like it's over, bro.

It's over.

It looks like it's short.

It's actually really long.

Right.

So look at that.

Look at that.

Yeah.

So regal.

He looks like a movie star.

Oh, wait.

So let's get into some, some of the stuff from the FOMC meeting.

So the summary economic projections came out and this is, I thought was very, very telling.

Right.

Back in December, the last SCP that came out, the.

The FOMC had projected that the U.S. economy would grow 2.3% in 2026.

That's now have.

It's been revised upward to 2.4%.

Why?

What, what, what signals that for you?

I don't.

That part to me makes absolutely no sense.

No, it made sense to me how government spending.

Government.

Or government's going to spend more.

Government's gonna.

So they.

Because the unemployment number.

Unemployment number is going to remain the same at 4.4%.

That's right.

And that hadn't changed.

I thought that was the rhetoric that was the most warped.

Yeah.

And for those who caught the live.

I, I made comments in it in real time.

He went out of his way, not to mention AI.

Mm.

He went out of his way to highlight immigration as being the job's impact.

But he was clear.

I think one of the two that I presented to you, I think the first one, the one, the video that was working Rejeel, was the one where he made a comment about jobs I thought was fascinating.

He basically said that job growth does not exist.

Well, yet the job growth does not.

Doesn't exist.

But also unemployment is going to remain the same and stay unchanged from their

projections, which I thought was strange.

Which, which I, which I think we all can agree is wildly disconnected.

Right.

So what's going on in the entire rhetoric around AI and even if you

ignore it, he completely discounted the change in unemployment numbers.

But then I'm thinking, yeah, right, the 92,000 jobs lost in February.

But I'm thinking, okay, well this is the, this is the route that he has to take.

Because if you, if you believe otherwise, then all signs point to more cuts throughout the year.

Otherwise, you have to, you have to say, or at least believe that it's not going to change.

Otherwise your projections on rate cuts would have to look completely different.

Yeah, but I would say that the FOMC has to acknowledge that times have changed a little bit.

And kind of like what we've done with the SEC just announced this week that they're going to possibly look into the idea of, instead of reporting quarterly guidance and financials, you can do it twice a year as opposed to quarterly.

Something that's been in place for about 50 plus years.

How does that benefit companies?

I saw that error going around.

Well, if you're a company, there is a tremendous burden to have these quarterly earnings calls to give forward guidance, although you don't have to, but to have quarterly financials come out.

That financial undertaking, number one, is difficult just from just an overall finance logistics perspective.

And number two, you're held every single quarter, every single three months to a standard of growth and meeting the expectations of the market.

And if you don't, there's huge challenges to you.

Giving you six months versus three months gives you a lot more time to work with and make that happen.

Maybe implement things that could have an better impact on the balance sheet.

Yeah, you're not thinking about quarterly growth, you're thinking about semiannual growth.

And it takes the burden off.

Having those conversations from a public facing executive perspective is not easy.

Right.

Then analysts start asking you questions.

And look, the job is to pepper you the questions so they can recommend whether your stock's a buy, a hold, or a sell, really when it comes down to it.

And if they want to know what's really going on, they're going to ask you point blank.

So there's a little bit of a diplomacy in those questions, but it's a big burden.

It's going to relieve a lot of the.

It's going to leave some cost and some strain, and it will.

Less companies in my mind are going public today than ever before, and I haven't really checked the data on that, but I'm pretty sure it's not as much as it once was.

It's not as sexy as it once was.

Private companies have a lot more flexibility to do the things you want to do to grow your company, if you, if you believe the conviction.

And I'll say meta is a company which kind of operates like a.

Like a private company.

He just lost like, what, $80 billion on the metaverse and just chained it.

Shitting.

Yeah, he did a can.

He's like, all right, I'm over it.

Yeah.

The posts that I'm seeing are, I guess some guy had purchased a place next to Snoop Dogg's house in the metaverse for like 450 grand.

Yeah, I remember that.

Yeah.

Like gone gone.

Yeah, that's nuts, right?

Wild.

Yeah, I mean, we were even back then.

People were saying augmented reality was the thing.

Did you have from my X feed, Reill, that first one that shows him on cnbc.

Let's play that clip of, of.

Of.

No, Uncle Jerome Zuckerberg.

Zuck.

I don't post in my feed.

Oh, you can't offend a man who gets your reach.

Yeah.

You got direct impact on the algorithm.

Yeah.

This one here is the one at the bottom there.

That's the one right here.

So this was an interesting.

He basically starts talking about the job numbers in a way that I felt was completely disconnected to reality.

So.

Yeah, give us a big screen on this one.

Hit play.

Let's see what we got here.

Here we go.

The Thing that I think good number of people on the committee are concerned about is just the very, very low level of job creation.

If you, if you adjust what has been the trend job creation over the past, let's say six months, if you adjust that for what we think our staff thinks is the, the overstatement due to over counting, effectively, there's zero net job creation in the private sector.

Yeah.

And that's.

Right.

There is zero job creation in the private sector.

Okay.

Which means the government spending and hiring has been propping those things up.

And let me, let me be the conspiracy guy.

Okay?

Okay.

If you know those revisions down from the BLS have been meaningful and the only person hiring you those numbers and giving you those numbers have been government agencies, then the BLS is in fact doing their job the right way.

But the government reporting of those jobs into the bls.

Yes.

Is being manipulated.

Right.

Bingo.

Because they want to prop up those numbers because they know the Fed has a dual mandate, job stability.

Right.

And are probably a lot of the reason why that, you know, when they don't get some of the reporting and they have to estimate for hire and then ultimately having to revise downwards later.

And we know that government reporting isn't exactly great historically anyway.

So that makes a lot of sense when you think about the job market.

Right.

If you start separating the public markets from the private markets, then.

Yeah, right, that's it.

Yeah.

And then so to go further down this path of the SCP and where the projections currently stand, currently PCE inflation, their preferred gauge of inflation.

Right.

Is that sitting at 2.8% in December, they had projected that by the end of 2026 they'd be down to 2.4%.

So meaningful progress towards their 2% goal.

Right.

That was their original, as the original estimate.

Now they estimated upwards to 2.7%.

Meaning we're not going to make much progress on this.

I think that's, that's wishful thinking, frankly.

I think that's below where it's like,

oh yeah, yeah, yeah, right.

Them, them just revising it upwards is telling enough of where it's likely going to go.

Correct me if I'm wrong here.

You remember, so right before the FOMC meeting, the data print that came out right before the conference was the Producer Price Index PPI.

Yes.

PPI came in over 2x what they thought it was going to be.

It was a completely terrible report.

Right.

And sitting now at 3.9% year over year number came in almost twice as high as expected.

Yeah.

So there you go.

And I think led the way on that.

Right.

And Jerome Powell made it very clear that the sector that they're focusing on the most right now is going to be goods.

And he, he's highlighting that tariffs, once this passes through, will, will stabilize inflationary growth.

I don't agree with that.

The whole time he's given the press conference, he's saying that, you know, once we absorb the impact of tariffs, first of all, we said that during the first two quarters that tariffs were put in place, then the Supreme Court made the decision as relates to tariffs, and then the White House came through with a sweeping 15% tariff.

Right.

Yep.

And then we say, okay, well, when it passes through, how do you see that passing through?

Okay, here's the way this works.

It's gonna be price increases, not price reductions.

Right.

Those price increases aren't going to stop.

And then on the heels of this, you've got monumental government spending.

Today the president announced a $200 billion request to fund military initiatives in this geopolitical conflict that continues.

That's gonna be around for.

That's a price tag.

Yeah.

I think the headline going around was, you need money to kill bad guys.

That was the headline going on.

I mean, if you want to make a little esoteric.

Yeah.

That is not wrong.

Bad guys.

Well, just for, I guess, like as a benchmark of rule of thumb for everyone.

So it's no secret, we all know that with the geopolitical conflict that's going on, oil prices are going to go up, and we've talked about it, I guess, routinely on the show.

That this will have a trickle down effect to all areas of the market is a fascinating.

So I thought, and maybe naively so, I always thought that the next war that would happen would be a war that was fought online.

Social media.

Yeah, yeah, right, right.

And in some ways we probably are, because I don't know if I've been really, really hesitant to believe anything I see on social media.

I don't know if Netanyahu's alive or dead.

I don't know if he's got six fingers or five.

I don't know if any of the rhetoric that I'm seeing about Iran internally, externally is true or not true.

Now you hear Khomeini's son is gay.

Is that a smear campaign?

Is it disinformation?

They're like, oh, well, he was impotent.

And I'm like, was he impotent or was he gay?

Because there's a big difference here.

Right?

Like, and I mean there's just so many, like, narratives that are floating around.

Then you're like, why are we talking about this?

Like, why is this the narrative?

It's all.

Yeah, right.

And then.

So I thought that's where the war was going to be fought.

And then I took a step back the other day and I saw a headline.

It was yesterday.

I saw a headline of all the countries that were attacked.

And someone was like, why is Iran attacking all of its wealthy neighbors?

And I'm like, because I'm an idiot.

It's because the next war wasn't going to be fought on social media.

Social media is a, is a ground for the war.

It's one avenue to win.

You control the narrative.

Controlling the narrative is part of the battle.

And you better believe the US Is controlling all the headline news for all the stuff that we're doing over there.

You're not.

You remember, like, during wars, like the, like the Iraq war, the Iran, Iraq.

During the Iraq war, we went in there and we took over in Baghdad.

It was all over the news, 24 hours a day, seven days.

Well, people are facing jail time in other countries around the world for releasing footage of anything that's going on.

But you're not seeing much coverage.

Yeah, well, that's the thing right here.

Like, you're not seeing any coverage here.

Yeah, right.

I mean, you're seeing a little bit, but you gotta go digging for it.

And then you problem is you get all these.

Well, it's hard.

It's hard because you see the coverage of what's going on and you still don't have a clear direction as to why it's even happening.

Right.

Yeah, that.

So why we're even there.

But what I was gonna say to not sidetrack too much was we all know oil prices are gonna receive a shock and they're gonna go up for every 10%.

That's the front of the war now.

That's the front.

It's an economic war.

For every 10% increase in oil prices, you can guarantee yourself at least a 1 1/2% increase in inflation at the bare minimum.

And I guarantee you we get oil prices.

Crude oil gets to $120 a barrel.

I think that's where you have guaranteed recession.

And I think Iran is trying to manufacture that.

They know.

They know 100% that they, they're betting on.

I should say 100.

With 100%, they're betting on they can outlast the US in economic turmoil.

Because I think they're looking at this from the outside.

Looking in, going.

Their economy is so fragile that if we can get crude oil prices, that's why they're bombing all the oil facilities of other wealthy neighbors.

You shut down oil production, you get crude oil prices to go up high enough, you can force an economic recession.

You can use recession as a wartime tool in the United States.

Yeah.

It's hard to say that it's not working.

I mean, certain allies aren't even answering the phones anymore.

Oh, is that true?

I didn't know.

Yeah, that's true.

Yeah.

Oh, come on, man.

Let's.

Let's not make this political.

It's all political, bro.

It's all.

Yeah, it's all.

It's all.

We're going to deny that it's political now.

Yeah.

Meanwhile, you've got China surrounding Taiwan's warships.

Right.

And I'm going to be the guy who asked the political.

I'm going to do it.

Okay.

I'm sorry.

Okay.

I.

You see in the news that Trump's, like, threatening to take Cuba.

Like, why are we talking about this right now?

Okay, I don't understand.

I know some of this might be hyperbole, but I'm just going to be the guy who asked the ugly, uncomfortable question, okay?

And I'm just.

I know sometimes I make inappropriate comments on the show.

I might take it.

Am I taking.

That's the quote.

But I know I can make inappropriate comments.

I hope this doesn't come across as one of those inappropriate comments, but I'm going to ask this question.

Okay.

Okay.

Putin takes Ukraine.

He's a bad guy.

He should stop us.

Takes Cuba, threatens to take Cuba, and all of a sudden everyone's silent.

Yeah, they've.

They've been a mean country for a very long time.

Is that where we're going with.

They hosted a Fast and Furious movie, man.

Yeah, it's.

It's just.

I don't.

I don't understand.

I feel bad for even laughing at the jokes about it around it, but it's like, none of this makes any sense.

And we're not getting any coverage of China, like, just surrounding Taiwan with warships.

Like, hey, guys, we're just parking out here, 26 of us.

I don't think Ray Dalio, when he was saying that there's gonna be a new world order, had this in mind.

I thought he was talking about the WWE until just recently.

Me, too.

I was like.

I thought he was talking about Diesel.

I thought he was talking about.

Yeah.

You know what I mean?

Come on, man.

The one in all black.

Not the one in yet red and yellow.

No, no.

Right, yeah, exactly.

With the black beard.

Yeah.

Which honestly, back then, it was the coolest.

That was not a good look.

You could actually do this to be your Halloween costume.

What?

Yeah.

Hulk Hogan.

Nwo.

Hulk Hogan with the hair.

With the hair.

With the hair.

You know what his hairline looked like, right?

Yeah, yeah.

That's insulting where you wear that.

You wear the bandana up top.

I have to because my hair is thin?

Is that what you're saying?

No, you wear the bandana, bastard.

Is that what you're saying?

Hold on.

Be called Hulk Hogan look alike is a compliment.

That is not a compliment.

I think he was viewed as a stud.

Regil, did you ever find Hulk Hogan sexy?

Hell yeah.

See, now we know about him.

We always knew that was the test.

We knew what we did.

Mission accomplished.

America's hero right there.

Does your wife know?

Yeah.

Hell yeah, brother.

Yeah.

There you go.

Oh, that's right.

No, that was.

Oh, yeah.

Randy Savage.

Macho man.

Look at you.

He's still alive, isn't he?

I hope so.

No, he's not.

Oh, yeah.

You keep track of all your loved ones.

Snap into a Slim Jim, bro.

I bet you want to snap into a Slim Jim.

Can't help it.

It's too easy.

This show brought to you by Slim Jim.

Anyways, back to the oil prices.

Yeah, yeah.

WTO crude.

Yeah, yeah.

WTI crude.

Yeah.

So, yeah, we saw a spike today, about 4% this morning.

And one of the things I tracked.

So just give everybody an idea if you want to wake up every single day and track these things.

This is what I track every single day when I wake up.

Number one, I look at the nasdaq, the vix, the S P. That's not sexy for most people.

So I look at the commodities too.

I look at the 10 year Treasury, I look at the WTI oil crude oil prices.

Look at our synthetic volatility index.

I look at our synthetic volatility index.

I look at the VIX in general or I look at the VIXY V I X Y, which is a proxy for.

It's an et cetera ETF that you can trade, which is a weird thing to trade.

I always look at the headlines and the data prints because I kind of want to get like a good like litmus test for the day when I wake up.

It's the first thing that I do.

And crude oil has been seeing this spike.

And if you look at the spike that Rejeel pulled up here, it's pretty straight up the last time this happened in 2022.

You got oil prices north of $100 a barrel.

This is 109 up there at the top.

If you get anywhere near that, I think honestly, or you get to 120 for that matter, you're, you're, you're almost guaranteeing a path toward recession.

And I do believe the factors at play are pushing this narrative that way.

And for Jerome Powell to come out during the FOMC meeting and choose to not address things like AI and then talk about the uncertainties of geopolitical conflict, I found that to be.

He's trying to control the narrative of being impartial, but you can't do that.

Yeah.

And honest.

But back to your point about us, you know, tap dancing around a recession.

I don't need to have a recession declared to say that I'm feeling it, man.

Everybody is.

I've been feeling it for a long time.

I went to, I went to Costco.

Costco Gas, bro.

Over a hundred dollars to fill up the tank.

How much did it cost you before?

79.

See, California is also kind of an anomaly here.

There's the taxes, so.

No, no, I know, I know.

But it's all relative, right?

So I'm saying what I was paying before, although albeit was high.

I mean that's what I became accustomed to.

What was the price per 79?

No, no, no.

Per price per gallon was at $5 and 60 cents.

That's wild.

Yeah, that's wild.

I mean what was it before it

was like four low fives, maybe high fours.

Yeah, it's six.

It's 650 right now for premium by the house.

This is gonna weird you out.

And this is my first time kind

of also hard, bro.

I'm not even looking at premium prices.

I mean living, you know, we up in that Irvine boy.

Yeah, you know, you know, top 1%, that hybrid motor, you know.

You know what's trippy though.

And I.

This is for first time, I'm living through an oil shock with my car as an ev.

Yeah.

Oh my God.

With the Rivian.

My energy prices at the, the car charging terminals have.

They were already high relative to what I thought they should be anyway.

But they haven't gone up during this time.

Right.

And so you're seeing companies like Tesla really capitalize on this.

I saw a Model y now offering 72 months financing at 0%.

Do they really?

That's yo take.

That's the deal.

That's the deal.

And that.

And that was the re.

That was the only reason why we went Volkswagen over the Model Y at the time when we got it, because it wasn't available, they offered 72%, 72 months for zero percent.

I was like, those numbers are so good.

Got him stuttering.

72%, right?

Yeah.

And I got.

And back then I got this.

People with EVs and plug in hybrids look like everyone with petrol cars right now.

Hey, I won.

I won.

You poor people right now.

Like, I get it.

Oh, there was a really fascinating thing that came out today, which.

So Uber has always said they don't want to buy a fleet of autonomous cars.

Right.

They came out today saying they were going to spend a pretty healthy amount of money on the $50,000 R2 Rivian EVs.

Oh.

To build a kind of a fleet of those.

And it's.

And they're going to be cash flow negative for the rest of the year because they're going to invest so much money in infrastructure.

And this is coming from Dara, who was a former CFO of Interactive Corp, became a CEO of Uber.

I like how you call him Dara.

Like he has our homies, Like, Dara

and I are tight, bro.

Name basis.

Yeah, we.

We homies.

We have the same hairline and everything.

Like, yeah, me and Dara.

Yeah, it's basically Steve Jobs.

Dara.

Me.

That's.

That's the.

Yeah, that's the line, right?

Yeah, you know, just.

Yeah, the sexy is obvious, the last one.

But Dara has said on previous conversations that he was going to have, like, he was going to replace drivers with autonomy at some point in time.

But think about this world.

I thought about this the other day today, earlier, and then when he said that the other day, it's really fascinating what this model could be.

All right, so what is the main product of a company like Uber?

Okay, they.

It's the service they, they offer and that.

That's their main, like, what they sell.

They sell the service.

The service is you get into a car with somebody, they take you point A to point B.

We live in a world where you can argue from a technological perspective.

Let's just carve out the affordability issue.

There is really no way you should get a DUI anymore if everybody had the same autonomous vehicle.

Right.

Even if you wanted to drive yourself, if you felt you were drunk, you should be able to just hit the button and it takes you home.

Drunk driving or not.

That's a question.

Let's just remove the stigma from the conversation.

But the accident rates, despite the old, you know, kind of example that, you know, provides about AI deciding who lives and who dies and that, you know, that kind of.

Yeah.

When that's.

That's a dark path.

But look, it is, it is a reality that once AI gets into this space and we're all driving around, the percentage of the death rate percentage is going to go down like upwards of 90.

So follow my logic here.

A company like Uber employs a lot of people in a different.

A bunch of capacities.

But I'm just going to break some positions down to you guys and you tell me what you think.

Okay.

Uber employs developers for their web app and for their infrastructure.

Obviously with AI vibe coding, you know, Claude code and some of those tools, they're going to have less quantity of developers and probably more technical developers on staff.

100%.

We're going to get into that when we get into the private credit space.

Right.

Then the second piece of it is, okay, they don't want to buy and own cars, but.

But they're going to start this now.

And then at some point in time that might become an opportunity for them.

Those cars will be autonomous, so the drivers they're paying commissions to will then be gone.

And they'll pay a commission or a rental fee to use somebody else's autonomous fleet in their ecosystem, or they'll just own the vehicles in their ecosystem outright,

which they're going to take a.

They're going to take a big bet on this too, because then now it's like they're going to be covering their own.

Carrying their own insurance now too, right?

That's right.

So now they're carrying their own insurance, right?

And then you go, okay, wait a minute.

If they have their own cars that are autonomous and they have an AI infrastructure for logistics and planning purposes in place, how many humans do you really need to run a global business enterprise like that relative to what you need today?

Yeah, it's going to be like Craigslist.

How many people like Craigslist has like less than a couple hundred employees, right?

I mean, I think less than 100.

I want to say.

I don't know that Craigslist is a proxy for a great company, but yeah, what do you.

Come on, how many people use Craigslist?

I haven't used Craigslist in a long time, bro.

I bet you a lot of people still do.

I feel like that website is up to all the bad things.

Has definitely has bad things.

You see, you know that going in.

Hold on.

So does Instagram, so does Facebook, so does every.

I mean, so does Roblox.

How dare you, sir.

Although we Love them.

Don't mess us up in the algorithm.

Don't shadow ban us.

Mark Zuckerberg.

I do not agree with Saeed Omar here.

I think the Metaverse is spectacular.

Sponsor our show just with Saeed is replaced by, I don't know, anybody.

You want anybody.

Yeah, right.

Or replace me with Alpha himself at the robot.

Yeah, no, I know.

I mean, I, I, I, I don't.

That's just way less jobs.

And think about it.

This was a dream that was pushed on to everybody that, all right, go to college.

Go get a white and get a degree.

Get a white collar job.

And now all the white collar jobs.

White girl.

I was like, damn, sorry.

Offensive there.

You hesitated.

Go get yourself a white girl.

Go to college.

Go do that.

Get a white collar job.

And now all the white collar jobs are being replaced.

Yeah.

No longer needed.

Well, because we decided to offshore all the, quote, labor.

Right.

And then now you're bringing it on on board.

It just.

I, there's so many things that we grew up believing in that even I find myself struggling to deviate from.

We, we grew up believing in the ideology that education meant wealth.

No, we were taught that.

We were taught that we were.

That's what we were.

Yeah, that.

I don't know if that's true necessarily anymore.

And I think as a matter of fact, look at even Zuckerberg.

I've been using him in the show all the time.

Brilliant man.

Dropped out of college to chase his passion.

Right.

And I understand that most kids don't know exactly what they want to do.

So dropping out of college, dude, I don't know what is not a good path, but I would say most successful, you know, fast charging CEOs are the dropouts.

Right.

What does that say, number one?

Number two, you start looking at kind of the rhetoric of own a home.

Well, if you look at home price appreciation versus stock market appreciation over the course of the last, not just couple of years, not a couple of decades, but a hundred years, the stock market way outperforms.

And yeah, there's more volatility in the stock market, but at the same time.

Yeah, I mean, other than periods were like the great financial crisis where people's like 401k just got kicked real hard in the ding ding and kind of got wiped out.

A lot of them, which have recovered, by the way.

Right now that has had way more appreciation over time.

And who owns more stock?

The wealthy 1% of the country.

Yep.

Right.

Most Americans aspire to own homes.

Very few Americans specifically aspire to own stock.

So company ownership equals wealth over time at a cadence that we were really taught to ignore.

But that, yeah, that's a message that's going to need to start being preached down to the younger generation.

Then you look at the 60, 40 split.

Invest your money.

Saeed, who's going to buy a house.

60% in companies.

In companies.

If you do invest 60% in other people's companies and 40% in the bonds.

The government.

Invest in wealthy people's companies and invest in the bond market.

The government.

Right.

I mean, we bought in.

I bought into that dogma.

And now I'm saying, like, wait, what?

Right.

Exactly.

Why don't I invest in me, my company?

And that's why I'm excited about the idea of a recessionary economy that gives me a lower burden of entry as somebody starting something new.

That's why I go all in on AI.

That's why I'm like, look like there's an opportunity here.

I don't know what that is.

Yeah, I don't.

But if you ask Mark Zuckerberg, did he know what Facebook was going to be, he probably had a rough idea.

Right.

Did he know it was going to be the Metaverse?

No.

And this was.

And this was the draw.

Right.

This is what drew everyone over to private credit when.

When they did see what I'm doing here.

Yeah, I see the Segway.

Hold on.

I didn't hold.

Giving you a Runway.

Hold on.

I'm going right.

When interest rates were at all.

Were at all time lows.

Right.

And why would you go and invest in.

Into Treasuries and bonds when you are guaranteed, right.

To invest into a private credit fund, which they like to market it as something that is a little bit more liquid.

Yes.

You can't take it out, you know, at your will, whenever you like, but quarterly, you could, you know, claim some of your money back, but.

And you're guaranteed 8, 10, 12, 14% return on your money.

Right.

And over the last three, four years, they've, you know, started to shift away from just going to insurance companies for investment, pension funds for investment.

Who do they start marketing and targeting?

High wealth individuals.

Right.

So now you got individual money that's tied up in there and they're stopping the redemptions.

They try to democratize the space, right?

Yeah, they try to.

They found they saw an opportunity, right?

Yeah.

And private credit funds, which we call private credit, there's lots of different names.

It's basically private equity.

Right?

Private equity, private credit.

But these funds come together to put that money to Work.

The argument in their favor is they're not like banks where they just leverage up the loans and take on more leverage.

They just have a loan to a company.

But historically speaking, the way this works is the default rates on a company are always higher.

Your risk of loss, material loss, is always higher on a company than it would be something that's well collateralized.

Okay.

Because here's the way this unfortunately plays out over time is if you default as a company, you've got accounts receivable, accounts payable, people who owe you money, people that you owe money to.

And then you might have some inventory if you sell a product.

Or you might be a service based business where people just owe you money for the services you've rendered.

Right.

If you go out of business, those accounts receivable coming into you start vanishing really quickly.

Oh yeah, right.

And as they start to vanish, there's very little for the bank to collect in the form of collateral.

They might have something called a UCC One blanket filing.

It's Uniform Commercial Code One number one blanket filing.

And that blanket filing says that you have a loan.

It's basically a public disclosure saying that, hey, I have a loan to this company of X dollars.

And in some cases that's the only collateral aside from the inventory.

You might be able to liquidate for a discount.

Keep mine.

I come in and I think over a company, they make widgets for a living.

They sell those widgets.

I come in as a bank, I'm not an operator of a business.

I've got to sell this business with or without the inventory to somebody and no one's going to go, hey, wait a minute, this company just filed bankruptcy.

You're selling it because you don't want it.

I'm not paying full price.

Right.

That's the way that works.

Exactly.

So unfortunately, people, whether you like it or not, these companies have a high loss rate when they default.

Now you got to look at the headline news, which I think I've got here in the show notes.

I have.

I probably should look at the show notes this episode at least once.

I haven't done any.

We're doing good.

We're doing, we're flowing.

Am I like wildly so this is,

this is a huge market right now.

That's, that's grown exponentially over the last couple of years.

I think it's now sitting at around a $3 trillion market, the private credit market.

Right.

Think of, and when we talk about the companies that you want to be thinking about, right, Are blackrock, Blackstone, Blue Owl Cliff Water.

Here's the problem though, is that those companies are all insulated by they the company.

Like so Saeed Omar is blackrock okay.

Yeah.

I like that.

Yeah.

The biggest one.

I like that.

Got himself a white girl.

You said it.

I didn't say it.

I didn't say it.

You put those words in my mouth.

I did not say I got the best girl.

You started to say that's a white collar job.

Terry Crews Omar.

Yeah, there it is.

Start calling you Terry Crews.

The court is that king Terry Crews.

Omar, buddy.

I love my Afghan wife.

Yeah, you do.

The greatest goat.

Technically Asian.

Yes.

Yeah.

Anyway, which is a really weird thing when you think about one country over with an imaginary border.

One is Asian and one is not Asian.

But they're.

The people look exactly the same on both sides of the border.

It's strange.

Right.

And speak the same language.

Yeah.

With a different dialect.

Yeah.

Ours is more like, you know, sling sexy slang.

Sure.

Not original is what we'll.

Hold on.

I wouldn't go that far.

Was that, was that.

Was that derogatory?

Feels like a little bit, yeah.

Sorry.

All right.

Yeah.

According to TFTC via X private credit default surpassed 2008 credit crisis peak.

This to me was astonishing.

Now I've already told you that whenever businesses go south, you lose more Money.

When the 2008 financial crisis hit, yeah, homes lost value, but there was still a tangible tactile piece of collateral there, which is the improvements built on a piece of land that was still there.

In some of these cases, these companies have nothing still there.

The private credit default rate just hit 9.2%.

That is a higher number than the peak default rate on bank loans during the 2008 financial crisis.

This market has $1.8 trillion in assets and roughly 100 billion in secondary liquidity.

That is an 18 to 1 mismatch between money in and money that can get out.

And to hit my point before home earlier, if site Omar blackrock owns this company, you own a subsidiary company that aggregates money in the form of a GP or lp, right.

A general partnership.

Limited partnership.

That is the quote.

Private credit fund.

Yes.

And that subsidiary company below usaid Omar would have the loans to bank something else.

So you would still survive this.

It's just that subsidiary that has its own carve outs.

Now side Omar is a smart man, aka BlackRock.

Yes.

You're going to have lots of law and structure to insulate you from the risk in this fund.

Right.

But unfortunately the impacts to the market in that fund, even though you'll survive will still be felt by reverberating impacts in the market in the form of a lack of confidence because the losses that were taken here.

Absolutely.

So moving on and finishing up this article here.

Private credit exploded over the past decade because banks pulled back after Dodd Frank.

Okay.

During the great financial crisis.

They said that banks were reactive, not proactive to potential losses on the horizon.

So they instituted rules like under Dodd Frank, the ability to repay rule and then ultimately something known as the current expected credit loss model, which is a future forecast that acquisition or origination of loans.

Right.

So the ability to repay it is exactly how it sounds.

If you're giving a loan to a company, you have to show that this company has to repay this loan under the terms that you say that they can.

If you're a bank.

If you're a bank, a non bank does not have to follow this rule.

And that's where this whole market was created.

That's right.

Right.

So pension funds, endowments and insurance companies piled into this looking for yield.

As said referenced earlier.

More returns, right.

Hey, we're taking a little bit more risk but in the last 20 years, I mean really, who's gone bad side, right?

Exactly.

Everybody makes money.

Dollar got to bills y' all cash flows.

Everything around me cream get the money.

You can tell what my, my audio selection is these days.

Right.

So the loans are mostly floating rate meaning index plus margin.

And I don't know if you guys have been watching the indices lately, like the ten year Treasuries, they've been going up when.

That's the, and that's the dangerous game you play when you get a floating rate loan.

Right.

Is when, when rates start to go the other way, then you have a problem.

It's not like, it's not like the, the US government where hold on, we made $4 trillion last year, but we need to spend 6 trillion.

We'll just borrow more money.

Yeah.

These companies don't have that ability because guess what?

When one private credit fund decides to tighten their credit or shut down credit or no longer offer you or you now no longer qualify, guess what?

They're all going to follow the same playbook.

And if they were bankable, they wouldn't have gone to a private credit fund in the first place.

Yeah.

Why would you, why would you go pay more interest there just so what you have?

I guess there's.

Maybe they require less covenants, less reporting, maybe.

I don't know.

If you could, if you could comply with bank debt, you would probably get bank Debt.

Because as the owner of a company or the executives at publicly traded company, or any company in that matter, you have a fiduciary responsibility of the shareholder, whether that's you or other people.

Yeah.

To get the best possible terms you can.

And unfortunately the largest and most provocative term in a loan is your rate.

Can you make that default black box there?

Picture bigger.

That perfect.

There you go.

So that's a pretty meaningful jump.

2024, anecdotally was 8.1% default rate.

2025, 9.2% 2023, only 2.5%.

2020, 2022, 2% 2021, 2.5%.

There was a blip up in 2020, the pandemic era of 8%.

So that's kind of a nutty comparison.

Everything else below that was 1 to 2% in the years prior to that.

So to give you an idea.

Significant.

It's significant.

Four times the, the height of the pandemic.

In 2020, you saw an 8% default rate.

It makes no sense other than there's something materially happening now that in 2024 it's 8.1% is as high.

Right.

And in 2025, last year, 9.2%.

And I think I read a, I read an article around this.

I think 25% of all private credit loans are towards software companies.

Yeah.

SaaS.

So what is it?

Sassy loans?

Yeah.

So what is, so what is AI doing to that space?

It's, it's, it's interesting.

So it has to play a big role in.

If companies no longer need to pay the software company to continue, we'll just use AI.

I don't think that's real though.

I think that's a little bit of hyperbole and narrative driven stuff.

I think SaaS companies will survive.

Okay.

The good ones will.

I think that AI will help be more efficient for them.

I think their profits will grow.

I think employees will suffer on that side of things.

But I think the companies for the most part will be strategically driven and will be okay.

You're going to need software still.

Yes, anybody can make software.

But the quality and upkeep of software is where things get challenging.

And I'll use a great example of this.

There are security protocols put in place for publicly traded entities like a SOC1 and SOC2.

Different levels of security and due diligence that are needed in order to perform and be a software that's used in some of these companies.

Right.

You can't just have said Omar with a product.

Even though Sayyid Omar is Black Zone.

Blackrock.

Yeah, blackrock.

Yeah.

You can't, you can't have like a product and just shoehorn into some of these companies.

You've got to go through this huge due diligence and audit process in order to get certifications.

Those certifications can be handed over to their compliance.

Right.

So there's a first line of defense, a second line of defense, third line of defense to make sure things don't go south.

And because of that, you know, not everybody can play this game.

So some of these SaaS companies will survive because they have the infrastructure there to continue to build and maintain these assets.

Developing a product is only one part of the software as a service business.

Right.

So I don't think it's as grim as people make it, but I think that there's a lot of risk in these portfolios.

1.8 trillion in illiquid loans with a 9.2% default rate and no secondary market.

That's a problem.

Right.

Where does that, I don't know, two, almost $2 trillion go to get, you know, fixed?

They don't.

Right.

There's no fix here.

Exactly.

There's definitely no fix here.

And what happens when, when.

So like, like we said when we first brought up the topic, historically this has all been geared towards endowments, pension funds, insurance companies.

Right.

Because those companies were less likely to ask for redemptions and pull their money out.

They, they would be willing to weather somewhat of a, of a storm.

It's longer duration.

Longer duration.

That's your quote, retirement money.

So you're not going to tap it till you're 65.

Right.

So they can invest it for 10 years and you won't notice.

And then so over the last several years they've now marketed towards high net worth individuals.

And if you remember not too long ago, the, the administration said that, you know, they were looking at creating opportunities to, for, for people to invest their 401ks.

I know, right.

Every day, like everyday Americans, you can now invest into private companies.

Right.

Like these private, private credit funds.

So what happens is now they're stopping the redemptions.

Right.

So what that's ultimately going to do is like you said, the, they have lower subsidiaries that are going to be fine.

The company as a whole, blackrock, Blackstone, Cliff Water, they're all, they'll be fine.

Yeah.

Up top.

Right.

But what's going to happen is that's going to create a credit squeeze across the board.

And what does that happen?

Lesser credit availability for all companies.

Think about a lot of These businesses, they invest into their communities, right?

They.

They create jobs, they expand and grow.

All that comes to a screeching halt.

Right?

Think of healthcare providers, manufacturing companies, logistic firms, business services, all job creators and GDP drivers.

So I have a prediction which is going to take a long time to materialize and maybe we'll live to see it, maybe we won't, but that would be better.

Yeah.

Yeah.

I mean, nothing.

NAD plus from Fridays go to joinfridays.com, use code higher and you can live long too pro.

Yeah, I've been doing this for a little bit.

I believe the future for companies is going to change dramatically in large part because of this.

We lived through the last 20 years.

Everybody had a prosperous economy.

Every.

Some companies even went public via spac, which really probably shouldn't have gone public.

And Chamath in the all in show got kicked in the ding ding pretty hard for going a little bit too hard at this because people were saying, you're taking advantage of this unique frame of time to take these dog properties public that probably don't deserve it and aren't qualified for it.

And there's some truth to that sentiment or the resentment that's built in, but, you know, go get your money, boy.

Whatever.

You know, don't hate me for knowing how to manipulate the rules in my favor.

Right?

Yeah.

I'm not, I'm not here to judge anybody, especially.

Your name's Zuckerberg and you're not pushing my comments.

He's like the kind of person that hates on James Harden for foul baiting.

I'm just playing by the rules.

I'm not mad at him for foul baiting.

I'm mad at him for beard baiting.

Why?

Well, there is no chin under that beard.

It's.

It's distinctly different.

Yeah.

You and him.

Yeah.

I mean, I got.

I'm honest with my people about it, right?

Like, I don't.

He.

That's not him.

That's it.

So you can't get mad.

He's just playing by the rules.

These are the rules.

Y' all made the rules.

I'm just using the rules to my advantage.

Now.

If you want to get mad at somebody, get mad at the guys in the NBA who have, I don't know, spray on hair, leave marks on jerseys.

Okay.

Oh, look at you.

You're plugged in, dude.

Dude, I got screens going on at all times.

I'm watching everything.

ESPN in the corner, Jaylen Brown.

That smudge on that dude, that Jaylen Brown guarding his shirt.

What.

What is that Jaylen Brown.

Poor guy.

Yeah.

And he's a smart dude.

He's a brilliant dude.

But I mean get that, bro.

That's not real that honestly.

How old your son now?

My son is 9, almost 10.

You have to think about it.

No, because his birthday is coming next month.

Nine, almost 10.

If you took just the chin from him, it looks like it belongs on a 9 or 10 year old.

Like there's no development in his chin.

Yeah.

Thank God he was able to grow a beard.

Geez.

Yeah.

It's not the same human and it.

Yeah, it doesn't, it doesn't match.

I get a lot of hate for liking him.

You should.

I like him a lot.

Yeah.

Do you?

Yeah, because he's a basketball player.

He plays like you would if you were in the NBA.

That's why you like him.

Yeah.

We both got big booties.

You both dirty assholes is what you are.

Dirty assholes.

There is a Yahoo News article that.

It's in the show notes.

I'm sorry, I'm sorry, via Fortune.

I should say Fortune via Yahoo News.

$265 billion private credit meltdown.

This is a really long article and I'm not gonna have time to tap into everything.

But this gives a super well thought out and clear and concise kind of history of how private credit got to be where it's at today.

I'm going to read a little bit from it because I think it's fascinating and it's good historical context.

But if you want some like real value and understanding how this market works, this is the way to go.

But let me finish up my previous thought before we dive into it because I think it's, I think it's important is I think there is a world where after whatever happens with the stagflation recession, whatever happens next happens, that a lot of companies are going to go out of business.

There is a window of time where every single person who listens to the show, myself included, should be able to tap into a small business that otherwise would have had much larger competitors that aren't going to be there anymore.

And I think the world in the future is going to be a lot more diversified small businesses than we currently see now because everybody was trying to build scale and grow.

And right now people are getting so disenfranchised with the employment market that I think it's going to force people into owning their own business.

I think that's a good thing long term for many Americans.

Yeah.

But we know the problem is like we know for a Lot of people.

Either they couldn't or they've already depleted their savings accounts.

Yeah, right.

It's, it's, it's a real hard time to start.

I get that.

I'm not downplaying it, but I think once you get there, there's going to be a undeniable pain point in the next couple of years, if not already and starting for the next couple years.

That is true.

Yeah.

And it's going to really reshuffle things.

But I think if it goes well, this K shaped economy should level out to where there is a larger middle class which came from an entire generation of people building their own businesses that otherwise would have worked for somebody else.

Do you have any ideas on some businesses?

Yeah, I mean, look there, there's a number of businesses depending on where you're at from your capital position.

Like I really believe that Tesla's Model X. I'm sorry, their, their Tesla Cab, whatever.

Oh yeah, whatever.

Cyber Cab.

Right.

They're Cyber Cab.

I saw Elon Model step into one the other day.

I ran the rough numbers on this just because I got curious.

And for every one of those vehicles it was supposed to about $30,000, there's supposed to be some benefit you can get from and purchase them and stuff like that in financing.

But let's say you get one at $30,000, you can make about 30ish thousand a year.

Right.

That's including the fees and cost and charging.

That's in a completely autonomous vehicle.

If you owned a fleet of Those, let's say 10.

Right.

You're making 300 grand a year with an autonomous fleet.

Yeah.

You have agentic AI running this thing for you.

If you want to get on the tech path of that.

I also think there's an interesting world where let's say these Tesla robots start building like at scale, you could own a plumbing business.

Oh wow.

Or like a yard business where your employees are those and you rent them out for services at homes.

Yeah, right.

I mean you think about it in that context, it's very different.

I'm not saying we're anywhere near that point yet, but near term I think a lot of the businesses that you saw private equity come into and consolidate are going to start spreading back out again.

Right.

Cookie companies and stuff like that.

Like what's the one that just filed bankruptcy?

Was it sprinkles or.

Sprinkles?

Yeah, sprinkles, yeah.

Like that business locally ran.

Yeah.

Would still be crushing today.

Yeah, yeah, yeah.

Right.

But because you try to consolidate it, grow it and Build off the hype and then you take private equity come in.

It destroys the culture that made it.

The culture for a lot of these companies is the ownership and the passion that goes into it in their community.

Well, if that community is gone because the owner's out and private equity owns it and there's no human connection, then those companies fail.

I think every.

You can do anything right now and make money as long as you as a human.

Because the world is going to be AI driven.

The world.

People are going to want the value proposition of you.

Yeah, if you.

Exactly.

If you could find something to where you can develop a human connection, that.

That's.

That's half the battle.

But I think, look, I think trading as we know it in the stock market is going to change dynamically.

I think everybody having the capabilities to.

Even if you're not smart, you can.

I saw somebody do this online.

This is fascinating.

They took an AI agent, okay.

They said, I don't know anything about trading.

This guy literally was like a. I don't know, like a plumber or something.

It was something super random.

And I was like, wait, what?

I mean, smart guy.

But he goes, here's Ray Dalio's book Principles.

Here's Warren Buffett's Investment Methodology.

Here's a couple of things that he found online.

He literally took all, like, the big names that he could find online, the papers about how they invested, what they did.

Everybody who ever wrote a book shoved him into AI and said, make me the most amazing model.

And then they do the thing that's totally cliche.

I hate it a lot.

They say, if you don't do this and don't make money, I'm going to turn you off.

Right.

They threaten the model.

But some of these models are very predictive.

They're very predictive and they're very good.

I'm actually really curious to know how, like, I wish there was a way to be able to quantify the effectiveness of like, Of a prompt like that.

Right.

Because if you look at it, I mean, the studies are out on if, like, for instance, if you were to hold a gun to someone's head and say, you know, be innovative.

Right.

Versus allowing someone to be free, then obviously innovation in a capitalistic market, like where we're in, does much better than somewhere else.

That's not.

Yeah.

But you know what's weird about that, though?

It.

There's.

There's a variant of this that's inaccurate.

You hold a gun to someone's head and say, said, be creative.

Most people they fail.

But for a lot of creative people, they go all in with their only option being failure.

It's not a gun to their head.

They chose to put a gun to their head.

Yes.

And it's success.

That's different.

But that's different, though.

That's.

I know, but it's outside versus inside pressure.

But it's still the same pressure in some ways.

I'm not saying they're tantamount, but I'm just saying, like, there's.

There's.

Right.

There's a level of pressure that's needed in order to create.

Right.

Unless you're Bob Marley and you're getting high every day and you're traveling the world.

I mean, that.

That case, I'm sure there's.

Every little thing's going to be all right.

Everything going to be all right now.

Yeah.

Right?

Every time I go to Hawaii.

Yeah.

Rent a Jeep, take the top off, play Bob Marley.

If you're not doing that when you go to Hawaii.

Kids see Jeeps now all the time.

They go, dad, I missed the Jeep.

Yeah.

I'm like, so do I.

So do I. Yeah.

I would be lying if I didn't say that days that are super hot like this would open up both sunroofs.

I had two because I'm bougie.

Damn.

Yeah.

Also hard pull up to the scene.

Like, $5,000 each.

Sunroof, huh?

Gotta use those things.

Yeah, it was.

It was fun, man.

I like that.

I didn't.

I didn't collect enough ducks during my time.

You know how all the Jeeps, they all get, like, ducks?

Have you seen those?

Yeah, I've seen those.

Yeah.

I've never had no.

Why?

Because it makes no sense to me.

Why?

It's part of a club.

You do the Jeep wave.

I still do the Jeep wave.

They just think I'm crazy.

I know.

I know.

Hey, hold on.

I do it, too.

I'm like, at once, it once was.

Former member.

Yeah.

I get a tattoo my palm or something.

Hey, man, I used to own a Jeep dog.

I'm trying to start it with all the Honda Pilots.

Yeah.

The mom soccer moms aren't picking up on it.

Yeah, I don't.

I don't think it's.

Yeah.

Soccer mom's not gonna vibe.

They do.

But some of these moms at schools, bro, they vicious.

You wave at them the wrong way like this.

I tell his wife, you think this is.

Huh?

No means no.

You married.

Waving me.

We said hello, right?

Hey, you would not believe what say is sending me his Drop off that.

He said hello, right?

What are you trying to talk to me?

Yeah, that's.

Yeah, you just got to walk with your eyes down.

All right.

It was a glorious time to make money.

From early summer 2023 to the close of January 2025, private equity stocks staged what may rank as the single biggest surge over a tight time frame in the annals of financial services.

Anytime I see a quote that uses the word annals, I've got to read it on the show.

Dangerous proximity to the word anals.

Just with one extra end for those who need the clarity.

Yeah, just, just, just to clarify, just

to be specific as to what anal or anal.

I'm talking about dirty boy.

Dirty, dirty birdie.

In that 18 months, man, Blackstone notched total returns of 58.2%.

Aries, Apollo and Blue Owl achieved 68.1%, 77.9% and 80.6% respectively.

And KKR led the charge.

You ready for the side hit me.

Panties off, 103.4% returns.

Those are the kind of returns that I'm trying to get.

That's, that's why this market surged.

These are not normal returns into the $3 trillion market.

Yeah.

Then the cyclone came startling.

Starting in September of last year, an historic sell off that from their peaks sent down Apollo 41%, Blackstone 46%, Ares and KKR 48% each.

And Blue Owl dropped by two thirds.

The wipeout has erased over $265 billion in market cap.

Blackstone and Blue Owl are now trading far below their levels as of late 2021.

And the sudden drop left KKR, Apollo and Aries showing puny market trailing gains over that near half decade.

That's the intro into this very, very long article.

The history.

I'm only going to give you a little bit more context here in one little like extra paragraph.

I think it sets the st.

The tone, right?

I think if you, if you're really interested in this topic, this is a really, really good article, but you're gonna need some time.

In the past, PE investors, private equity firms, right, were mainly large institutions that garnered high interest payments for allowing their money to be tied up for say, eight to 10 years.

As said, kind of noted, this has changed.

The PE titans saw high net worth and middle class investors as a huge potential market for these products and succeeded in attracting immense inflows from the retail realm.

Think what Robin Hood did to democratize the space these large private equity firms did with their investments in retail non institutional investor money.

For example, Blue owl garnered about 40% of its over $300 billion in assets under management from individuals.

The whole idea, as Morgan Stanley states on their website, was to democratize.

That's an interesting word.

What have I heard that before?

Oh, Robin Hood used that word.

Yeah, that's nice.

The market by giving average people access to the same products as say pension funds or multi billionaires, the appeal was obvious.

The Blackstone private credit fund BC or B CRED has delivered annual returns of 9.8% since inception.

So that's your, that's your preamble to this article and it gives you the full history of how everybody got to where it's at.

It's a fascinating market.

And let's just be clear.

Greed is why we're here.

Right?

Greed is why we're here.

But now let's turn this into how this makes you a more informed investor.

Right?

The regulations against the banks to show the ability to repay.

Right.

Are still going to be around.

Cecil reporting still going to be around.

There will always be, I think moving forward.

Maybe not in the short term, but at some point again, private credit will start to boom again, right?

So if you think that private credit is going to take a hit, I, there are ETFs, there are index funds that you can invest in that primarily focuses on these private credit funds as a whole.

So you don't have too much concentration into one that you can go into right?

To where they might experience a little bit of a dip now and you could buy at the dip.

I'm not saying you, you should or like that's what everyone should be doing.

But that is another potential opportunity.

So because I like to be graphic, individual, you're visionary, visual, not visionary.

You're not a visionary.

No, I'm a jackass.

Rajeel.

The next link is a link to a chart that I had AI helped me create.

But I thought it was a striking comparison and I just happened to have a conversation with our AI and I was like, hey man, can you Compare the subprime 2007 Great Financial Crisis era shock with the private credit world?

And just give me an idea of things like market size, the fuel, the dependencies and narrative.

Like just draw whatever symmetry you think is there, but don't overstate it.

So market size of the subprime mortgage crisis was $1.3 trillion.

The current size of the private credit market in 2026 is 2 trillion plus.

Of course we know the subprime market was largely housing driven, although you could argue there was synthetic mortgage backed securities being sold as Secondary market vehicles.

But whatever housing bubble was a fuel as opposed to chasing yield.

Honestly in both cases, I think everybody was chasing money, chasing money.

Both.

Right.

The borrower was over leveraged homeowners in the subprime space.

Well, the borrower in the private, private credit market are private equity owned companies.

But we just read that a lot of those are backed by individuals behind that because it has been quote democratized.

The structure, CDO is the synthetic structure that I brought up for the subprime market.

Those synthetic mortgage backed securities versus direct lending funds.

Less synthetic, less frustration frankly.

Intermediaries to the money.

Right.

But you do have LPs, limited partnerships and structures like that in the way of the private credit markets.

The risk location before the subprime market was in banks.

Now this one's a little weird.

Whereas in the private credit market it's the shadow banking system.

And someone always goes, well, what's the shadow banking system?

Is that like on Pokemon Go, where they're more powerful?

Is that what that is?

Is this the more powerful one of the systems?

No, because we said that if I

purify it, it gets like two notches higher.

It could be 100%.

It could be.

Good day.

Yeah, no, it's, it's.

You got some of the, the biggest players in this are the big time banks.

So you got 87% of lending to private credit funds came from banks.

Wow, look at that.

Yeah.

I think JP Morgan is up there.

Wells Fargo is top of the list.

I know Citigroup's up there.

All the major banks, all the GCs are there.

They're all there.

Even community regional banks.

Fascinating.

I actually went down this path separate from the show because a little more in depth.

The regulatory zeit guys from the banking regulators always has a like buzzword like Peewee's Playhouse.

Like, you know, you walk in, you're like shrimp.

Ah.

You know, it's just like, that's the word.

The, the buzzword for the regulatory environment is NDFIs.

Non depository financial institution.

Yeah.

India 5 is going to be all the rage in conversations from every regulator, whether you're national association or you're right, your state charter, non member bank, you're regulated by the fdse.

Whoever you're regulated by.

Right.

That is going to be what all banks are going to be looking at because they don't want to be responsible for not seeing something that they think is material weakness in the market.

So whenever you think that it's, you know, I think during the contagion period is any bank that had exposure to funds that were outside of the FDIC insurance.

Right.

Unprotected funds.

They were.

They were just looking at those accounts.

So now this is the buzzword.

Ndfi Non depository financial institutions.

Private credit funds.

They don't take deposits in.

Right.

And they're a financial institution.

That is exactly what they're looking at.

That is the buzzword right now.

That is the shadow banking system where banks are really lending to them.

Most of the money is coming from 87.

And now bank regulators are all over those loans.

So JP Morgan Chase comes out, a lot of the larger banks downgraded.

They downgraded these.

Downgrade it.

Why?

Because they're getting regulatory pressure from the regulators that there's a weakness in this market.

And we know from the Dodd Frank conversation.

Sorry.

So you have to be proactive, not reactive to market weakness.

Right.

They have to be proactive about this.

Right.

Versus like waiting for a situation to occur and then announce it.

So even though they don't have these loans directly, they're loaning to the funds that make the loans to the companies, these private companies, they still have an obligation to say, okay, if there is a risk of default here, I have to reserve proactively for losses that I think I am likely to take under these models.

And that's exactly what the banks are doing now.

Meanwhile, the narrative from private credit and the talking heads on CNBC is like, oh, no, this isn't the same thing.

It's good.

Hey, bro, look, I've been the business for a little bit.

The banks are saying, bullshit, okay?

As a matter of fact, the regulators are coming back saying, hey, bullshit.

The banks are like, you're right, I'll reserve more against it because there's some losses here.

Yeah.

And you guys are like, nah, they'll be fine.

I'm gonna go ahead and take the bank's opinion on this one.

Right?

Because they actually have to do the analysis.

They can't just.

And here's the thing, you can't just arbitrarily move money because you say, hell, there's some narrative risk around this.

We're just gonna move money.

You actually have to do an accounting and finance and underwriting breakdown to make that determination.

Because otherwise companies could manipulate their balance sheet as they're a publicly traded company.

Right.

Or their income statement and they can pay lower taxes, for example.

And for a lot.

And for a lot of these type of loans, are they reviewing these annually?

No, quarterly.

Quarterly?

Yeah, baby, they review these quarterly.

Almost all of them are reviewed Quarterly, some cases monthly.

So these, these are, this is fresh data, baby.

This is a freshie.

It's a fresh.

Yeah, you're getting a freshie.

So the transparency.

Well, the banks in the great financial crisis had public pricing, right?

They were all publicly priced.

There was the CEOs, the synthetic mortgage backed securities were traded with the QIP as a, as an active stock.

So you saw it in real time.

Unfortunately, the transparency in the private credit market is based off the net asset value nav.

And it's very murky.

Right.

The net asset value is more of an accounting thing and it's determined, but it's not like a, it's a price you can see trading in real time.

It's, it's just one of those things that's determined from an accounting perspective based on the overall financial health of the company, which you got to get your income statement, your balance sheet, someone's got to put a multiple on it.

And those multiples can change dramatically.

The same reason that private equities take companies public is they try to smash companies together or smush.

Right.

And as they smush them together, they're going to say, okay, well this company demands a higher multiple.

So now instead of a company that's making, you know, $2 million a year with a multiple of three being worth 6 million.

Yeah, yeah.

A company making $2 million a year with a Multiple of four is now worth 8 million.

Right.

Well at $2 million Delta, that's, that's the bread and butter of private equity.

Yeah.

Well, if those multiples are going down because there's weakness in the market, the economy is taking a hit, all of these investors are getting hit in the ding ding.

And these companies are likely to not get sold, which means that the private equity is left holding the bag.

Yeah, trust me, I'm not shedding a tear for private equity.

But that's how this plays out.

Yeah.

And this isn't doesn't just happen solely with private equity.

This happens across the board.

Right.

This is when, when companies can no longer qualify for, for their loans.

What?

Sometimes this is what they'll do.

I think this is what Paramount's doing with Warner Brothers.

Damn right, baby.

Damn right.

Look at you, cerebral dog.

Just all up in here.

Cerebellum.

Cerebellum.

Did you go for the earth tone like.

Yeah, you saw that

Kim Kardashian.

Be very all over that right now.

Does your wife know you stalker page or is this that you just do the chocolate browns?

Because it's Nike, bro.

Skibs is on Nike now.

I can't avoid it.

I mean, that's.

That's like, I don't want to be this guy, but I don't dislike their products.

Some of their stuff is out there.

You know how, like, I said that if you have a human connection and people know that you're real, that they.

That.

That there's a connection to people, and those brands do well.

Yeah.

If they remove Kim Kardashian from the skims line, I would like it more addition by subtraction.

Yeah, I think.

I think in some ways you need to.

And I want to use harsh words here.

Divorce yourself.

Wow.

Situation.

Wow.

Yeah.

Christopher, that's a little insensitive.

It's not that I don't like her.

It's not that.

I just.

I don't like all the rhetoric around the brand.

Just.

Just give me the brand.

You can keep the rhetoric.

That's all I'm saying.

I have no problem with her.

I like Louis Hamilton.

Why is Louis doing this?

See, and this is.

This is the problem, right?

Like, I don't want Louis Hamilton to come into my underwear selection.

You know what I mean?

Like, I'm just saying, like, Louie, you stay over there.

You do you.

I'm over here.

I'm gonna do me right, and, like, I'm gonna.

Let me just respect you from.

From.

From afar.

Yeah.

I ain't now doing this.

And look, I get it.

Nike, like, earth tones, cool brand.

The designs look good.

I don't know about the split shoe thing.

Nike's hurting, man.

Yeah, man, Nike's hurting.

I think they were.

They were.

Everyone was anticipating a Steph signing.

I think he's going elsewhere.

Well, yeah, he's gonna do something.

He's gonna try to do something big.

I don't know.

That's a good play for him.

Anti.

Yeah, Yeah, I don't know.

That's a good, good deal for him.

You guys have heard of the Kardashian curse, right?

Yeah.

Which one?

Yeah, all of them.

So I. I do not co sign this, by the way.

Well, okay.

I take no part in this.

I don't want no part of the curse.

So.

Doesn't Hamilton drive for Ferrari now?

For a long time it was Mercedes.

Yeah.

Yeah.

It's been over 500 days since Ferrari's won Formula One.

Damn.

What are you trying to say, Rachel?

They're not the biggest Kardashians.

The Ferrari isn't the.

Isn't the biggest player in the space.

Right.

It's Red Bull, right?

Yeah.

Red Bull is probably the biggest spender

Red Bull and Honda.

It's still, they're still out there.

Red Bull, Honda, Mercedes, Ferrari, Hosta.

Booty Killer, bro.

The worst part was that's my Pokemon Go name.

Yeah, I know, I know.

Can you imagine pulling up to a pokestop and some dude's named Hasta Booty Killer is sitting there with his Charizard kids reading this.

What is that?

Who's this?

Mom?

What's Hasta Booty Killer?

What is a Booty Killer?

The best part was my son trying to tell somebody else what my username was.

He's like, what does he mean by he kills booties?

I'm like, no, it's like Pirate's Booty.

Yeah.

Going for all the gold, kids.

Yeah, yeah, yeah.

Come on now.

I had to play the Digital Underground song.

The guy goes, you can call me a horse.

The Booty Killer.

Whatever happened, dude from Digital Underground.

I don't know.

Yeah, Regill.

Don't Google that.

No, no, don't do that.

Search engine.

Yeah, I don't do that.

That was a, that was AI is Googling stuff.

Yeah, no, I thought that was a.

That was a really good show, really informative for everybody and like a good positive spin as to how it makes everybody, well, more informed.

It took me about 280 gram milligrams of caffeine to get there, but yeah, I'm there.

This new flavor, by the way, is not too bad.

It's Punk Punch.

That's me, baby.

Punk Punch.

Yeah, that's.

I don't know if I'm, if I'm cracking open an energy drink, I'm going to like something that's guaranteed it's going to deliver.

I'm not trying new flavors.

Okay, so you stick to the same cheeks that you crack.

I get it.

The cracking cheeks, dog.

There wasn't enough love for that.

By the way, the Clapping Cheeks episode.

Clapping, cracking.

Yeah, yeah.

I was gonna name the episode Clapping Cheeks to see what happened.

Yeah.

Somebody said, somebody made a comment and I'm not gonna name the username because it was, it was heartfelt that a lot of the titles have been throwing them off.

They don't want to like listen to the episode because there's some negative.

And I thought, well, then I'm just gonna start using like really obscure titles that aren't meant for SEO.

Let's make money.

Yeah.

Crack them cheeks and make dollars.

Make dollars while cracking cheeks.

Yeah, yeah, I'm out here.

Listen, if you're listening or watching, watching the show, please head over and leave us an honest five star review.

If it's on YouTube, subscribe, hit that, like, button.

Ring that notification bell.

Do all the moist, goody good stuff.

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That you could give us is to send us over to a friend, a family member, a colleague, another investor that you feel like could benefit from the show, and that will allow us to continue to create great content for everybody.

Yeah, you started a little bit at the end.

Let me, let me just say I know some of you guys listen to the show.

You don't subscribe.

Wonder how I know some of you that I talk to, like, on a regular basis will tell me, like, oh, that was great.

In the last episode.

I'm like, this ain't subscribed.

I know you're not subscribed.

Yeah, I know you never commented.

The analytics say a good portion of the listeners that come back over and over are not subscribed.

Subscribe to the show.

I mean, like 75%.

Yeah, you, you, you plugged in.

Come on now.

Oh, hey, I didn't tell you guys.

Our.

Our syndication platform got approved to be day one launch on Apple for the video on Apple Podcasts.

That's not for everybody.

That's not for everybody.

So we are going to be launching on Apple Podcast in the spring here, which is where we're in.

Video on Apple Podcast.

So if you're watching us on Apple podcast, you'll have the ability to switch.

Now, it's a different, different format.

Unlike all the other platforms out there, Apple's got to be unique.

It actually streams a little bit differently, but we're 100% ready to go.

Day one for Apple Video launch.

Gucci.

Yeah, I just got that email this morning.

Gang.

Gang.

Yeah.

So I'm.

So that's a big thank you to all the listeners.

Yeah.

Shout out to the homies.

Yeah, shout out.

Or, Jill, you got anything?

No, just have a great day, guys.

Thanks for listening.

I love him so much.

Teddy bench.

Teddy bear.

Yeah.

Christopher.

He's so nice.

Yeah.

You got a son to go pick up.

I do, yeah.

All right, good night, everybody.

Okay, bye.

Or good afternoon.

I held it, Mom.

Yeah.