My camera's higher than yours because one of us is calling the other one names out here.

They don't know that though.

They.

Well, I mean.

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

This is the higher standard.

Sitting in front of me with the gray hoodie higher standard merch that you can find@thspod.com is Christopher Nahibi.

Almost six years later, I figured out the actual algorithm to working with Sayed Omar.

He can't wear the V neck, the sweater vest can't.

Why you can't do it because your temperature has to be ice cold and mine has to be warm.

So now on a 90 degree day, I find myself.

See what you're doing in an air conditioned room with a hoodie on to make you feel at home.

Why is it so hot across from me?

Yeah, let's go.

All this equipment.

Speaking of which, the man across from me is the man, the myth, the legend, the quarter zip king, the one and only Syed Omar.

Thank you, my man.

And sit behind the desk in the production suite, if you will.

Slim the fighting Fijian, Rajille.

What's up, my guy?

Hello, everyone.

I've done good.

How are y' all doing?

Good.

And if y' all want to get slim like regil and look sexy, you can head over to join Fridays.com.

what can they find over there, Chris?

Well, all the stuffs.

Oh, well, I mean, really good stuff.

GLP1s, longevity medication, including things like NAD, plus Sarah Morland, Tessamorelin, all the fun peptides that are sexy and helpful.

Depends on what your goals are.

If you want to lose weight, they can do that.

If you want longevity, better health can do that too.

Go to join Fridays.com, use code HIRE, get $100 off your first order.

Helps us, helps you, helps everyone.

All right, man, we got a good episode for everybody today.

A lot to get into, a lot of data.

And we're going to title the show Everything is breaking at once.

Jobs, housing, private credit, and the Fed's dead end.

Are you potentially growing the beard out a little bit?

You saw that?

A little bit of.

Little bit of texture there, chief.

See that?

Oh, here though.

It's cleaned up on the sides.

Yeah.

Well, this show is being recorded on an Unorthodox Friday the 13th and.

Yeah, not normal for us.

I didn't even recognize it, you know, so.

But it wasn't bad luck for us, unfortunately.

It was bad luck for a guy in the White House.

Oh, only one?

Well, I guess technically the entire team there, but.

Well, there was a bit of a problem that.

That came down just before we got on the hot mics, before the Uchi.

Wally.

Wally.

And the Uchi Bang, bang.

Came down and started.

We had a bit of a telling story.

The Supreme Court rendered yet another compelling decision.

And according to the report from cnn, which I have here, Federal judge quashes Justice Department subpoenas of Fed Chair Jerome Powell.

Now, that in and of itself is not spectacular or surprising.

What is surprising is the way they did it.

They didn't just say, hey, I don't want to date you.

They said, I don't want to date you.

Andrew.

An ugly bastard.

Yeah, right.

This is.

There's a mountain of evidence.

Yeah.

That suggests Powell's investigation was to pressure him to lower interest rates.

Come on, man.

You also know it's not just on him.

Like there's a mountain of evidence.

Mountain.

Mountain of evidence that you were trying to get in my pants.

Just.

Wow.

Not good.

A federal judge has quashed subpoenas the Justice Department had issued against Federal Reserve Chair Jerome Powell, who came out defiant in statements that we played on the show, according to the court documents unsealed on Friday.

Today, the ruling is a major blow to President Donald Trump, who has repeatedly criticized Powell for not lowering interest rates.

And an embarrassing setback for the D.C. u.S. Attorney Jeanine Pirro, who launched the probe.

Pirro slammed the opinion in a hastily scheduled news conference Friday, saying she plans to appeal.

I bet you do, doll.

I bet you do.

You're not going to win that, though, of course, you asked District Judge James Jeb Basberg.

Jeb.

Jeb who?

The last time we heard of Jeb, you know, I challenge both of you.

Is that.

Is that neither one of you knows a Jeb.

Is that a.

Is that one of the Bush brothers?

Yes, Jeb Bush.

But you don't know.

I knew that.

Jeb.

You don't know him.

Oh, come on.

I get that name.

Another non Bush.

Jeb.

There's the finder.

Founder of Springfield from the Simpsons.

That's not a real person.

Hold on.

I feel like that's.

That's not.

Bro.

That's two.

That's right, Jeh.

Yeah.

The fact you know that.

Of course I know that.

If you don't know that, you know what?

You got a whole DC Universe, Marvel universe to get through.

I understand you got problems.

All right, so Jeb here wrote in the new opinion that a site quoted a mountain of evidence suggested that the government served these subpoenas on the board to pressure its chair into voting for Lower interest rates or resigning.

There's an interesting and compelling part of this, and there's two parts I want to get into, but before I do that, I want to finish a little bit more of the article, because this is.

This is some sensational stuff.

This is sexy.

On the other side of the scale, the government has produced essentially zero evidence.

Still quoting, by the way, zero evidence to suspect Chair.

Chair Powell of a crime.

Indeed, its justifications are so thin and unsubstantiated that the court can only conclude that they are pretextual.

Mm.

Jeb is.

Jeb came in hot.

Yeah.

Laying it down.

Yeah.

The federal probe underscores that Trump's administration's intense pressure campaign against Powell and the Fed in a bid to get the politically independent central bank to lower interest rates.

Trump continues to insult Powell on social media, and his administration is currently trying to push out Fed Governor Lisa Cook.

Therein lies problem number one.

Right.

If this is the pretextual defense to what should have been a prolongated fight, it sounds like it was summarily shut down.

And the same group of people are going to render an opinion on Lisa Cook.

Now, there might be some evidence to her mortgage fraud, but do you think it's going to get much farther along or more successful results than this?

I mean, given what she did, though, I mean, the umbrella of fraud, I mean.

Yeah, I guess, technically speaking.

Technically speaking.

Technically, mortgage fraud.

But here's the problem.

Speaking fraud does.

Fraud is an intent crime.

Okay.

Not that I'm an attorney or anything, but it's an intent crime.

You can't commit fraud if you didn't know.

What do you want to bet she wasn't the one who went to the mortgage applications?

Right?

Yeah.

Because that's not how these people handle it.

They're not applying for these loans themselves.

What do you mean by these people, Saeed?

The elite.

You people.

The elite.

The elite.

That's what I meant.

Very well played.

Yeah.

So problem number one right there, problem number two is if you're Jerome Powell and you came out and viscerally defended this opinion, you were like, I'm gonna hold a press conference.

I'm gonna do it in front of the podium.

I'm gonna wear my purple tie.

I'm gonna go out there and lace them up.

And he did.

Yeah.

Use their platform to say, no, no, no, no.

I will not be pressured.

I will stand on my business.

You know, be probably 10 toes down.

I mean, I don't want to say this, but he probably watched Training Day before he went Out.

Right.

Just to get himself robbed.

He did.

Yeah.

And he fought it.

And then he fought aggressively.

White House gone, back and forth, a little bickering, but then now you win this.

You know, your term is supposed to be up in May, so you think.

Does.

Would.

Would something like this make him feel better about maybe stepping away or now?

No.

Now I'm going to even dig my heels down even further and say, I will step down, but I'm still going to remain as a voting member on the board.

Well, now, because there's ongoing litigation and because this might be appealed, you might not get him to step down even when his term is up because it's the subject of ongoing litigation.

Oh, no.

This may have completely backfired on the White House, where if they keep this case up and she does appeal and that appeal is prolongated, this could carry into 2027 with Jerome Powell still in the seat.

Because you haven't decided.

Oh, no.

And you've got to have.

Because keep in mind, too, the political parties have said we're not gonna vote on.

We're not gonna confirm Warsh, the incumbent Fed chair, until such time as this whole situation is resolved.

Right.

Independence is important to them.

So now, if they're unwilling to do so, then, unlike him just being up with his term and leaving.

Right.

He could stay.

You could wind up backfiring, getting Uncle Jerome.

Yep.

For another year.

Can you imagine how pissed off the White House would be about that?

And.

And everything?

All the data points right now are all leaning heavy towards.

Doesn't matter if it's Jerome Powell.

Doesn't matter if it's Kevin Warsh.

There's no way in the world there's going to be a rate cut.

Right.

And you covered it recently on a live.

That we did as of right now on March 18, which is the next meeting which will have already passed by the time this episode drops.

Right.

Yeah.

Wednesday.

Oh, no, no, Wednesday.

Sorry.

It'll be.

It'll be later in the week.

I'm thinking that it's.

Yeah.

Wednesday night.

Yeah.

Yeah.

But 99.

Hold hands while we do this.

No.

99.4% chance at no rate cut.

Now, here's the thing.

The meeting after that, that's going to be April 29th.

Okay.

That'll be Uncle Jerome's last meeting.

Okay.

We also had a CPI report that came out earlier this week.

Oh, yeah.

Okay.

Which I have data points that we can quickly go over because it'll feed into a lot of what we want to talk about.

But before that, CPI report came out for the, that last meeting of JP on April 29, there was an 87% chance of no rate cut.

After the CPI report came out, remained the same 87 chance of no rate cut.

The next meeting as of right now, June after that, which would be Kevin Warsh's potential first meeting.

But we don't know given the whole Lisa cook situation.

Right.

CBI, before the CPI report, there was a 60 chance of no rate cut.

After that a 64 chance of no rate cut.

So things are not looking good.

Well, plus you got international geopolitical conflict

and that was it.

Right.

So all what you got out of the CPI report doesn't even take into consideration everything that's going on in, you know, the Middle east right now, which we know is going to be spiking energy prices.

Which part out loud, real quick, the quiet.

How much are the big elephant in the room?

God damn denial that people have.

That first Monday after, after the war kicked off over the weekend, the market was positive.

People like, oh, it's going to last a couple days.

Now they're like, oh, it's going to last a couple weeks.

Are we going to wind up being here a year from now going like, ah, it's going to last a couple years?

I mean, is that where we're going?

I mean, it's scary when you start to hear, you know, them floating around.

The possibility of like, all right, we need, we need what, you know, troops on the ground.

Right.

You've never liberated a country, Let me be explicit here.

You have never liberated a country in history with just air attacks.

Yeah.

And, and you posted this online, right.

You asked, you know, AI for their unbiased opinion.

Yeah.

Is it even possible?

Yeah.

No.

Yeah.

Absolutely not.

It's not.

Yeah.

And particularly a country that doesn't have weapons and munitions.

Well, Mace, which makes you think like, okay, I mean, there is the possibility that that was never part of the, you know, the agenda.

Right.

It's just what was fed to us

for who knows, whatever reason.

We can have this conversation.

Yeah.

If that is, if it wasn't a possibility, what was the agenda?

You took an 87 year old man.

I still don't know.

The dude was 80 something years old.

He was going to die.

You knew going into it that this particular son was a possible candidate of the four.

Now, I think the US may have said, okay, you know what, it's not a monarchy.

They're not going to name his sons.

And I don't think they probably wanted to, but they killed everybody else.

Right, so you knew it was a possibility, however remote.

This particular son is even more of a religious hardliner than his father was.

Number one, he's in his 50s.

Number two, he just killed his wife, his sister and his father.

What is that going to do?

What is that going to do to a.

Because look, at the end of the day, you know, the people out there right there, he had a huge support, too.

So did he.

I didn't know it.

Yeah, for sure he did.

And what is that going to do to everyone?

Everyone else that's still there that's just going to dig their, you know, heels into the ground even further, saying that we don't want.

We want continue with the regime.

Well, and don't get me wrong here, there's a lot of people in, in that country who didn't like the west and certainly don't like them more now.

Bombs are landing there, whether it's under the auspices of trying to free them or not.

There's a whole, a whole cohort of people who are like, I don't want to be under attack.

Yeah.

And we can, we'll get into later on in the show on, you know, how this all trickles down with, I mean, we've discussed on the show the straight of Hormuz, like being completely blocked and what that will do to oil.

But with the, with the geopolitical conflict that you and I had a conversation where we talked about, okay, helium, helium alone.

So apparently Qatar right now.

Right.

Produces a third of the world's helium.

And I, I didn't even know about this before this episode.

I didn't know.

Yeah, I had, I had to look this up.

And they produce a third of the world's helium, and there's no viable replacement for helium.

And helium is a big part of, you know, creating the semiconductors for these chips for AI.

Right.

And you're like, well, what are we going to do there?

What's that going to.

What could that in and of itself do to the stock market?

Just that.

Oh, yeah.

You know, and you're going to have prolonged.

So crude oil is just below 100 right now.

WTI crude, I've been, I've been tracking.

That's my litmus test for the oil industry.

You can look at other types of oil, but that's what I look at.

Right.

So if you get extended periods.

So you go, yeah, crude oil futures at 9720.

Good job, good pull.

Rejeel, what are you working a podcast or something?

No, I was just thinking like, oh, must be A great time to be a landman.

Yeah.

You know, I've never actually seen it.

Such a good show.

Is it really?

Yeah.

The problem for me is just going into it.

That looks like Billy Bob Thornton playing.

Billy Bob Thornton.

Yeah.

It definitely was made for him.

Yeah.

So good.

Yeah.

Nothing.

What.

What do you do all day?

Yeah, what do I do?

I don't know.

I got jobs.

I got.

I got families.

I feel like you're that guy listening, like, shot a.

Walking on the house.

Listen to shot day.

When the kids go to sleep, you pour some tea, you and your wife.

Yeah, yeah.

And you look cross.

You look deep into the orbits of her eye sockets, and you go, how was your day, baby?

Yeah.

That is me.

Play some Barry White.

You know that?

Go upstairs, you know, get a nice hot bath drawn for her.

Yeah, yeah.

Let her get out, wash her feet, massage her toes.

Listen to some Nick Hustles.

Yeah.

Then right before you go to bed, because you want to feel gangster.

Nipsey Hussle.

No, no, wait.

That was the guy's name, right?

Nick Hussles.

You see what I'm doing here, Regil?

There's only so much no you can work with.

You know what I'm talking.

You know what I'm talking about?

Nick Hustles.

Yeah, that was that R and B singer, that soul sitting here that you and I is the AI generated one that you and I were listening to.

Oh, yeah.

I have no idea what you're talking about.

Nick Hustles.

Yo.

Do yourself a favor.

Go listen to some Nick Hustles.

This is completely AI by the way, but it's probably some of the greatest songs that I've listened to in the last week.

Honestly, it's so good.

I was.

I'm not.

I'm not going to lie here.

I was legitimately enthusiastic when I heard there was actual playlist of him on Spotify.

I was like, yes.

Let's go, baby.

Yeah.

There's a AI for the culture.

Nick Hustles.

Let's give you some song titles.

You ready, Regiel?

I feel like slapping something I can't say on the show.

It's a good song, though.

It is a good.

It is a good show.

Yeah.

I'm letting go of the bullshit.

I love that.

My favorite.

One of my favorites.

I'm back on my bullshit.

Yeah.

Stay blessed with my friends Spelled a different way and God wants me to win.

It's great, honestly.

And I know it sounds like we're joking, but I'm telling you, the songs are amazing.

The.

The Only song I can actually say the full name of on the show.

I can't talk about his vacation.

A Dope Ass Day.

It's the only one.

Dope Ass Day.

So, yeah.

Anyway, I love the fact they actually created like an image.

An avatar.

Oh, yeah, yeah.

Because it threw me off at first because I saw the first image, right?

I was like, oh, man, this guy, man, this is.

He looks old, but this music, it's.

He's saying stuff that's, like, relatable today.

Like, this guy was like.

He was a.

He's a. I don't know, he could see into the future.

Then I. I pull up the next song, it's a different photo of.

I'm like, that's not the same guy.

By far and away my.

My guilty pleasure right now.

Okay.

And I. I'm ashamed to admit this is all like the modern songs that have been remade into old school art.

Especially the.

Especially the 50 cent ones.

Oh, my God, they're so good.

Oh, yeah.

They even have a DMX one too.

I was like, oh, this.

Oh, the DMX one was like a soul jazz one.

I haven't heard that.

Oh, my God.

It was good.

Give it to you.

So I be.

I'd be quoting DMX around the house.

I.

All the time.

Especially to my son all the time.

If he apologized, him.

Sorry, dad.

Won't happen again.

Talk is cheap, you know, Talking streak, son.

I went to.

I went to high school.

Aloe Black, right?

And Nathaniel Dawkins, his real name.

I went to high school with him and he was a rapper.

And then he got really popular for, like, that soul, like, rich, beautiful sound, which stunned me because I didn't.

I didn't know he had I Need a Dollar, Right.

That song.

Right.

And he did that song, the Vichy, which kind of really blew him up.

But it just a complete opposite from what I knew him as.

But he was always a creative, like, good for him.

Shout out to him.

I would be so pissed off if I were him.

Why?

Because those songs sound like him.

Oh, I know he could do that.

He can know he could do that right now.

Right now.

Yeah, but he's.

But you know, and he has like the hip hop background to do that.

But now you got AI doing it.

So if you're him, you're just like, man, yeah, that's it.

You just took out my whole market.

Yeah, that I need a dollar.

Yeah.

Dollar, like every day.

Yeah.

So just to quickly dive into some of those CPI figures that I talked about, CPI rose to 2.4%.

Right.

And core CPI inflation, which removes food and energy up to 2 and a half percent, which I don't know that

we should be removing food and energy right now because I don't think that energy volatility right now for the purposes of inflation is transitory.

It's not coming and going.

It's not volatile up and down.

One day it's going up because we're doing something that is going to be inflationary 100%.

Right.

And you got to remember that if, if energy prices spike up, that trickles down.

I mean, we've, we've covered it on the show time and time again, how it trickles down into every other sector, right?

Like you need, you even need diesel to run machinery, large vehicles, agriculture to transportation for shipping.

The input price goes up.

The businesses will pass this rising cost onto the consumers, which, which we will ultimately pay.

The thing that we don't like about CPI is it's not, it's not measuring a certain product, you know, month over month over month.

What expects you to do if, if a certain product goes up?

You're going to alter your lifestyle and pick a cheaper product.

That's not really how this works.

Because listen to this.

Fruits and veggies are up 2.7%.

Non alcoholic beverages, Chris's favorite, up 5, 5.6%.

Hobby water.

Yeah, it's the best beef, up 14.4%.

Moo.

What are you going to substitute beef with?

You going to do Impossible Meat?

Hell, you ever seen Impossible Meat?

No.

Oh my God.

I can never see looking.

Yeah, it's gross.

Have you ever eaten impossible?

Are they still around?

He's for sure tried it.

Yeah.

Are they still around?

Yeah, yeah.

Trader Joe's has, has a, has a bunch of them.

See?

Totally.

I knew it.

He knows.

He, he's plugged in.

No, he.

See, unlike you, he's cultured and sophisticated.

Hey, hold on.

I'm, I'm all about Trader Joe's.

If it's shot playing the background.

Daycare up 3.7%.

Medical care cost 4.1%.

Movie tickets 5.5%.

Yo, I, so I gave a.

Before I came here today, I gave like a presentation in front of some kids.

It was about banking, but it was a lot about the podcast and show kids.

Or can you say kids as if it's elementary, bro.

You were at a community college.

All right, I'm gonna say something that it's gonna sound offensive at first, all

right, because this is the episode.

No, I know this is the episode,

the one that they're coming to.

Okay.

I didn't know.

Okay.

So I'm just in the classroom.

Like, I didn't get a lot of prep.

I was asked to do it set

to set the mood a little bit.

I mean, how big Classroom.

We talk.

I'll get there.

So I was asked to do it by a friend.

She's am.

I love her and her husband.

She's like, can you do this?

I was like, cool.

But I got busy, so I didn't have time to ask any questions.

I got like, a document saying, hey, prepare for the show with some material.

I'm like, I'm not going to go.

I'm going raw.

Right?

It's just, what am I.

What am I going to come in with?

Like, material for, like, banking?

Right.

Can't help himself, bro.

I can't help myself.

But no, I got busy and I was doing some AI stuff, and our AI, which I could talk about in the show later if you want to, is up and running.

It's pretty cool.

Although I screwed it up three times, and it basically gave me the middle finger every morning, which I can explain later on.

It actually called Rejuven before the show.

That's Raju before me.

You know, it called my phone and said hi to Regil, and Pretty cool.

Anyway, that being said.

What?

Yeah, it was weird, right?

The AI said, take it easy on me.

I was like, what am I doing with you?

Yeah, it knows, man.

The studio and the Mac Mini, they talk.

Right?

Right.

Yo, man, he's got some aggressive paws back there.

Anyway, so I get there and I show up and there's like a thousand kids in this thing.

I mean, it's a lot of people, and there's a lot of professional.

There's police officers there, people from Hollywood there.

And I don't know whether I'm gonna be like, is it a podcast that I'm here for?

Is it banking?

So I was banking.

Okay.

So I get in there and I'm looking around, all these kids in the first class.

I thought there was a teacher in the back because there's one woman watching me.

Then there's a woman that came in, clearly later on, who was a teacher.

Okay, Right.

And then she kept dipping in and out.

I knew she was a teacher, but I thought the woman in the back was a teacher.

Cause I'm new there.

You don't know me.

You don't know what I could say.

I could be out talking about dicks and balls and balls and dick.

And you were dressed like this.

Yeah, I was just gonna say what were you wearing?

Yeah.

No.

And next up to the stage is our banker.

You're like, I'm rich.

That's a thousand new subscribers.

Yeah, this is a banker I can get down with.

No, I literally said to them when I started the class, I said, number one, I'm gonna take my salary and my comp and all that stuff right now.

I'm gonna let you know how executive compensation works at large companies.

I'm gonna tell you straight up how much I earned and when I earned it.

I gave him a whole career history of earnings.

Right.

Not gonna lie.

That's pretty sick.

If I was in that class, like, dude, this guy's keeping it real.

Yeah.

There were some dudes who.

There were some guys who were clearly raw dogging in the class by trying not to blink and just staring at me like.

I was like, I know what you're doing, dog.

Like, I'm not like, these are they, like, squares out here?

Like, I know what's up.

Yeah, right?

There's people who are, like, deeply interested.

Good, bro.

Shout out to the.

The three kids in the front row who came up.

Suits, ties, the whole thing.

They sat down ready to go, asking questions, like, writing stuff down.

I'm like, bro, you ain't taking notes.

I think I'm saying, give me a question.

I'll know.

I'll know based on the question if they were plugged in.

What was one of the questions?

I talked a little bit about AI.

So I want to want to know about trading and algorithms.

I actually gave my email trading and algorithm.

Oh, yeah, dud.

There you go.

Okay.

There's one dude in the back was like, oh, can you talk about the algorithms?

I'm like, we just became best friends.

Yeah.

But anyways, we had this conversation, but nobody told me that there were also adults that were going to be there that were special needs.

And that person in the back wasn't an adult teacher.

It was one of the special needs kids who had decided to sit in the class.

But I didn't know that.

So I kept, like, calling and trying to engage, and I didn't know.

And I'm like, bro, that's something you want to tell somebody before I get there?

You know, I could have tailored the.

The lecture around, like, you know, some of those things.

And I probably would have been like, hey, what do you want to do when you grow up?

You know, I don't know.

And I skipped.

I skipped over one of them because I thought it was a teacher, so I didn't include them, which I Probably should have included them.

Like, I just feel bad, you know?

Yeah, you should feel bad.

But any event, it was really cool.

Like, I didn't have a day like that when I was a kid.

Did you?

Not that I can recall, no.

And if I.

If I did, then it wasn't good enough to stand out.

Yeah.

Oh, that was yo.

Sounds like even prep for litigation.

You hear that?

Not that I can recall.

I cannot recall.

Yeah, so I think Jay Z did it.

Can't recall.

All right, so let's get back into the show a little bit.

The unemployment numbers, well, they are completely.

Okay, I'm gonna call what it is.

US Job numbers according to the KOBEC letter, have now been revised down in each of the last 13 months.

And I would probably bet that almost every single person listening to the show has not actually seen a headline in mainstream media talking about the revisions down.

Every month the last 13 months, over a year, these numbers have been revised down.

Nobody talks about it.

And I can.

I bet you that.

No, none of our listeners.

And if you can please send it to me because I'd like to see it.

I want to.

I want to know the positive job number headlines that people have been seeing that make people feel warm and fuzzy about the jobs market.

Right, because we're claiming that unemployment is what, four and a half percent or.

Or just roundabout.

Right?

And that's according to historically historic numbers that should.

Everyone should be feeling really great about that.

But we're getting numbers like this.

And how come the Fed isn't worried about, you know, what.

What this could mean for the job market moving forward?

Because if right now what we're dealing with are these numbers, and by historic standards were low, which way are we going?

Yeah, so let's just.

Let's be very clear.

I don't want to leave anything to speculation.

If you adjusted the numbers where they should be, the actual unemployment rate is notably higher, number one.

Yeah, okay.

They also changed the way they calculate this about a year ago, which causes a whole different set of questions.

Right.

I think someone is, in fact playing hide the sausage with the numbers.

This is not something at this point in time that is accidental.

Okay?

The numbers are wrong.

One report revised.

Two reports revised.

Thirteen consecutive reports revised down.

Okay, I'm not an idiot.

Stop treating me like I'm an idiot.

Yeah, right.

So to make matters worse, US job numbers revised down by another 4,000 jobs in January.

And 65,000 jobs were down, revised down in December.

The number they gave you was 65,000 jobs, actually higher.

What the Fuck.

That's not good.

This brings the December reading down to 17,000 negative, marking the fifth contraction over the last nine months.

Over the last nine months, five out of those nine, more than 50% of them have been job contractions.

So let me get something, Let me get something right.

So the initial numbers that they've been reporting on more times than not, have been better than what they actually were in the long run.

That's right.

So when a jobs report comes out and it says that jobs have fell by 92,000 this month, and that's the

initial number, it's significantly worse than that.

It's probably way worse than that.

Yeah.

Well, I'll put it this way, to your point, if they came out, and that's what they admitted to under this pre.

If you're using the same math that got you to 13 consecutive months of numbers revised down.

Yeah.

The overwhelming probability is that that number will also be revised down significantly.

Yeah, exactly.

Which then.

And that's my.

And that's what I'm most fearful of.

Right.

The only headlines we talk about as far as jobs goes are layoffs, layoffs, layoffs.

Interesting one.

Drive home the point.

I just feel like this is an extra data point that's valuable here.

Since January of 2024, there have been downward rev in 24 out of 25 months.

So in only one month was there a net revision up in the last year.

Yeah, in the last two years.

Really?

Yeah.

That's a problem.

Right.

So remember, keep this in mind.

In 2022, the rate of unemployment was three and a half percent.

Just to be clear here.

See this?

See this little spot right there?

That one?

Which one?

Oh, yeah, yeah.

A little, tiny little blip that looks like an accident.

Oh, yeah, yeah.

Oh, look at making the big pictures.

That is the revision up that little tiny one.

But don't worry, Chris.

But don't worry, because you know why?

On that last CPI report, it said that wages are growing at a rate of 3.8%, which is higher, which is higher than the rate of inflation of 2.4%.

So wages are now keeping up with inflation, apparently, and we shouldn't be worried.

No.

That's cute.

So here's the problem is if inflation was 9.1%.

Okay.

Yeah.

And the cost of living went up by 20%.

Yeah, yeah.

This is a compound interest problem.

What people don't understand is unless we get deflation, things go down in price.

Right.

It doesn't matter if we go up 1% this year and we're under the actual Inflation, the compounding interest will make the 9% we already gained on that one year, as one example, even bigger than our.

The percentage number has gone, is increasing at a slower cadence.

Right, but it's a bigger percentage of a bigger percentage.

Yes.

So therein lies the mathematical problem.

And it's all compounding.

Right?

Yeah.

So again, the data gets weaponized here to be.

And I do this all the time, like, and I will absolutely 100% admit that this is a problem.

Sometimes it's easy to look at data and go, oh my God, the numbers are positive.

Like this is great, like it's headed in the right direction.

And then you go, whoa, whoa, whoa, what am I talking about here?

Right?

So a great example of this is Rajeel, actually go to my X page and last night at like 2 o' clock in the morning, I was posting about private equity from Bloomberg terminals.

Because that's what I do at 2 o' clock in the morning.

Because I look at Bloomberg terminal printouts.

Go down, there's orange and black bars.

My page, go to profile.

Hit profile there on the left, far left.

There you go down says profile.

Little icon, there you go.

There you go.

Now scroll down, there'll be black bars and all that fun stuff there.

Right there.

There you go, that one.

Click on that one.

Okay, so this is an easy and great example of what I'm talking about here.

So you look at this and you go, okay, wait a minute.

This suggests that profits returned by PE investors are near a 16 year low.

But that isn't necessarily true.

That's a good headline.

It's eye catching.

But it's annual global buyout distributions as a share of net asset value.

So click.

If you close this for a second, go back to the actual text here.

Private equity investors aren't getting paid.

It's not that they're at a 16 year low.

It's cash distributions from buyout funds just hit a 16 year low as a percentage of net asset value.

So they're worth more, but less of that percentage is coming down those nuances, even though it's just a couple different like, you know, letters here and there and some clarity.

Those matter.

Right.

So it's easy to misinterpret the data.

You really kind of have to pay attention and.

Because people will take advantage of you for sensational headlines if you don't.

If you don't catch that.

Yeah.

And I'm the kind of person that would take advantage of you.

But I know this is about private equity, but I know with the Headlines in the market this past week, all the talk has been around private credits.

That's going to be the tail end of the show.

We're going to spend a lot of time there because there's.

There's a lot of parts of private credit where, you know, how the question is, is point to the spot on this doll where, where, you know, he touched you.

Well, unfortunately, this doll is the banking sector.

Come on, man.

What?

No, it's the banking sector, okay?

And I want to be honest with you, there's a lot of hands on this doll, okay?

And this doll, unfortunately.

I know it's tough.

Tough analogy, but it's.

It's.

Look, that's a tough one, bro.

Edit that out of the show, buddy.

Look, the private equity sector was supposed to be this clean break from the banks, Right?

But it's not.

No.

And as much as we like to say that, oh, banks.

Banks are the good guy now, and they've got rules and regulations and private equity is the bad guy.

Right.

And we'll explain when we get to that part of the show.

Chris means by that.

Yeah.

It's not the picture you're being told, and there are victims in this, unfortunately.

I think it's going to be us.

Yeah, yeah, yeah.

So let's go to the next one.

It is the real estate segment from.

I want to say it was Lance Lambert.

Was it?

I think it was.

Yes, it is.

Lenar Q1 2026 gross margins lowest since 2009.

There's gonna be a little bit of chart work here.

Amongst the.

The public home builders, Lennar has been the most aggressive in using affordability adjustments, I. E. Builder incentives to maintain volumes and take market share.

Right.

They're trying to sell more.

Click on that chart.

Make it real big.

Real nasty big.

There you go.

All right, so this is a good chart because it has the color coding here and the heat map really helps.

Right.

The top portion shows historically strong levels.

Right.

And the bottom portion shows historically weak levels as it relates to just overall sales and percentage.

Right.

So this is Lennar's gross margin.

Right.

If the gross margin drops below about 20%, that's generally weak levels.

Okay.

Right.

Their.

Their share profits, we're now at 15.2% only three times in history before all around the great financial crisis.

13.8%, 14.3 and 6.5%, which is the height of the great financial crisis.

Were they ever below that outside of the events leading up to 2007 to 2008, that.

That period of time, their profits have always been above this percentage.

Yet another in a litany of detailed information that suggest that we are seeing really, really, really high levels of stress in the market.

Think about it.

If you're them, how frustrated are you?

It's cheaper to buy a new home than an existing home.

Right.

That should never be the case.

Never be the case.

It makes no sense.

Right, but that's the market where it doesn't make any sense financially.

Yeah, I know you're still trying to go with the example, but.

Yeah, the example was rough.

Yeah, the example was rough.

But for.

For companies like Lennar and Dr. Horton.

Right.

They've been controlling.

What we've talked about on the show is they've been controlling how much they release out into the market.

And that's been kind of like their crutch to get through this process.

But now I think it's all getting exposed, and I really don't know what other lever they can pull from here.

Well, Rajeel, do me a favor.

And then over here on the right side, there's additional comment.

There you go.

Perfect.

This is from Lennar's CEO Stuart Miller.

Our strategy has been to actively design around the affordability challenge rather than wait it out.

Read between the lines.

And that one, that's kind of questionable.

Actively designed.

We have focused on prioritizing volume to create durable scale advantages that deliver volume at lower prices and ultimately improve margins.

Okay, but here's the problem.

You're doing the volume at lower prices, but you're disguising the price change in order to artificially keep the value up by giving incentives.

Why don't you just lower the price?

No.

Yeah, well, they can't do that.

Then it cuts into their profit margins.

Cuts in their profit margins out of the way.

Yeah.

What they want to do is they want to keep that value up as high as possible.

They're artificially manipulating the market.

Yeah, right.

That's what you're doing.

To me, that's not good.

And yeah, if some people are sophisticated, they look at this.

The problem is they know what people are going to see the headline.

The headline is going to say, this is the average home price sold in America.

That number is wrong.

Mm.

Bottom line.

Now, there's a lot more existing inventory than new inventory.

So it's not skewed by like, 50%, but it's skewed by maybe 5%.

Yeah.

Maybe 6%, but that number is going down meaningfully.

And a lot of these pundits that are housing punish, like, oh, well, the average home price in America is Not going down.

Okay, well, yeah, dude.

Home builders are taking advantage of that number.

They're manipulating the environment.

He literally just said what he's doing there.

While the broader markets remain challenged in the near term exacerbated by current events, we are continuing to operate with conviction and clarity.

Say what now?

These guys sound like politicians.

They are.

The fundamental shortage of housing in America has not been solved.

Demand is real deferred and building.

Okay, notice that he says he's going straight to supply is the issue.

Yeah.

Not.

Home prices are overvalued.

Something that you know.

Because you are artificially propping up the value.

Value.

Right.

Yeah.

It's a supply issue which anecdotally really benefits you.

Right.

Okay.

And again they.

And it's entire sector.

Right.

The.

And I mean even.

Even was Donald Trump came out and was talking about how do I do not want home prices to come down.

That's right.

Right.

She was very clear.

He's very clear.

Like we're going to do whatever we can to keep these home prices right where they are.

We just need to find a way to make them more affordable.

How?

You're going to force the corporations to pay higher wages.

They're not going to do that.

No.

And then to your point.

So he's already, you know, kind of sidestepped affordability, supply issues driven.

But then he goes on to do the classic real estate professional thing here, which again, shout out to my real estate professionals.

Listen to the show.

That's not a knock on you.

There's just people who like to manipulate that kind of stuff.

Right.

As affordability gradually improves, as rates find a more stable footing.

Bruh.

Okay.

And as the nation begins in earnest to address the regulatory and entitlement barriers that constrain supply.

Again, it's supply's fault.

Lennar is extremely well positioned for long term growth.

But until then, we are building the hopes the homes American needs at the prices the market can absorb.

Are you with an operating platform that is continuously improving?

Okay, that sounds more like political fodder and spin.

Yeah.

Than it does you own.

How about saying Americans aren't paid enough?

Okay.

Wages have not kept up with inflation.

Interest rates are artificially low for a prolonged period of time.

We need to adjust to an environment where rates are higher and home prices are in fact coming down.

Yeah.

And they're not.

You're right.

He's also not getting any help from the 10 year right now.

Oh no.

10 years getting as they say in the business, shaboing, boing, boing.

That's Sad.

It's sad.

Hopefully you, hopefully people locked in at 599 when they could.

Well there's some morning.

What is that original?

Can you google what the average 30 year fixed rate mortgages?

Yeah, or you can, or you can go to CNBC too.

Yeah but so I, I have been programming some automation into the agentic AI that we built.

I call them Atlas for the show because the big dude, a statue holding the world.

I would love to find a way to make Mr. Atlas a third co

host actually for the live show.

That's, that's already, that's already mapped out.

Yeah.

So the server that we built for the live show will be put onto Atlas's Mac Mini and then he has, he's going to run the server 24 7.

So I've been only running it during the show.

He's going to run it 247 and then he can change and engage in the show.

So on, on one side of the show I'm going to, I'm going to pull him up.

So this is the 30 year mortgage rate is 6.0, 6.11% from St. Louis Fed.

Yeah, St. Louis Fed.

Yeah.

So six point.

And that's right where it should be.

I mean frankly given where the Treasuries moved, it's actually a little lower than where it could be.

But you saw it go down super, super low in 20 showing the end of the artificial intra deflation period and how it's come back up.

But again you're not talking 1980s, 17%.

You know, you're talking a pretty healthy increase the average historical.

Yeah, but when everyone cites the 80s man, it's like that's.

Yeah, but that's like.

I don't know, you're pointing, you're pointing to a time that we are never going to get back to.

Right.

Because the, the income to home price ratio was significantly different than what it is now.

Sugar plum.

So when I've been programming this agent, agent a guy and I've been trying to get some automation built in, one of the things I get is in the morning I get like a market snapshot of the things that I track.

WTI crude oil, 10 year, 30 year mortgage, all the major indices, the VIX and some of the stuff that we normally would track outside of our own show metrics and then it gives you the top headlines, any data prints that come out for the day versus the forecasted versus actual.

Got it.

But it hard coded inadvertently the 10 year number from the previous day as like 10 basis points higher So I woke up this morning, think the tenure had lost its mind.

Yeah.

Yeah.

And I'm going like, oh my God, what's going on?

It did that on its own.

Did it on its own.

Because hardcore.

I fixed it today.

Yeah.

But yeah, building an AI agent is.

Everybody makes it sound so simple on social media and they're like, oh, look at it running in the background.

It's made me all millions of dollars.

It.

Dude.

There's so much coding that goes into it and like work and like labor.

Yeah.

That it's, it's, it's wildly misunderstood.

Yeah.

Yeah.

So.

But we're getting.

Today was a huge leap forward.

Yeah.

Huge leap forward.

Which I'm very proud of.

I don't know.

You're not as excited.

I'm extremely excited.

I wanted to come in early to see it, but unfortunately my boy got sick.

Yeah.

How's he doing, by the way?

He's all right.

Yeah.

Dehydration.

I think it was dehydration.

Yeah.

This.

Cause he's playing basketball in the sun.

Hot heat.

They had a brutal workout yesterday, man.

And he did not drink enough water afterwards.

Yeah, yeah, yeah, yeah, yeah.

I don't like how hard we push kids, but that's different.

Yeah.

Next post.

Nick early via X Housing affordability collapse.

February home sales hit a 17 year low.

The chart here make it big and sexy with Jill.

Just like, just like you used to be.

Now you're just skinny and sexy.

Home sales just dropped to the lowest level since 2000.

2009.

Yeah, this is.

This is home sales for existing home sales.

By the way, this is not new home sales.

This is existing home sales.

So now new home sales selling for less than existing homes.

Now existing home sales are selling way less volume.

Lowest level since 2009.

4.09 million.

2009 was 3 million 9, 970,000.

Do you feel like they can rest on seasonality at all right now?

No.

No.

Why is that?

Well, I mean, you could try, but unfortunately, if you look at the chart here, there were many, many, many years historically where that went up.

As a matter of fact, the normal cadence of volume in my mind is pretty indicative of cycles.

From 1998 all the way to 2004, you saw a pretty active increase.

Then from 2004, you saw the great financial crisis hit.

And it went almost straight down until you hit about 2010 where it started to spike back up again.

You got a little bit of momentum in 2011 that was.

Seemed a little bit down, but incrementally so.

And then it effectively went back up from 2010 all the way to the pandemic.

And then you've seen it drop down to effectively a straight down number.

You're talking pandemic, 6.13 million in home sales.

Then in 2022, 5,890,000.

Then shortly after that, 4,460,000.

4,310,000.

Now 4,090,000.

Right.

And to take this a step further, it's not, this isn't just can people afford, you know, these homes that are listed for sale, people that are even living in the homes are having a difficult time keeping up.

So did a little bit of research for the show.

What is it, what is the financial, what is financial health of the US consumer right now?

Did you know, Christopher, a record share of Americans are taking emergency withdrawals from their 401 case?

I did.

Although the number wasn't as big as I thought it was going to be.

But according to Vanguard, 6% of people enrolled in 401ks plan made a hardship withdrawal.

That's 6%.

That's its record record high last year.

Last year was 5%.

So it's only going up in that direction.

But this is the part that was alarming to me.

Top reasons for the hardship withdrawals, avoiding foreclosure and eviction.

36%.

Damn.

Yeah.

You know, if it was something like medical expenses, tuition, something like that.

Okay, makes sense.

And those are, those are categories.

But buying a home, home repairs.

But number one on the list, avoiding foreclosure and eviction.

Damn, that's, that's, you know, so that's, that's not painting a good picture.

Right.

And on top of that, according, this is from, you know, my favorite AARP.

Right now, 7% of retirees are returning to the workplace due to financial needs.

That's a record high too.

All of them wear quarter zips and

boat shoes as they should.

Yeah, hold on.

Right.

48 of returning retirees say they are unretiring because they need the money.

Yeah, I know, I know a number of people like that right now.

It's crazy.

So, yeah, this is not, this is not just people that can't afford like that have been waiting on the sidelines, you know, they've been saving their money.

Like ah, you know, we really can't make sense of this.

No, this is people that are actually in the home.

So I don't know one, all it's going to take is for something to crack and break.

And I do, I do see a correction.

But when or what that, what that's going to be.

I don't know, you're already seeing it.

I mean this article from Nick Gurley said that home sales has dropped to the lowest level since 2009, down 35% from pandemic peak and by 20.

By 25% from pre pandemic norms.

This was the second worst February reading the last 30 years.

Traditional news outlets tried to claim there was a quote, recovery, end quote in demand in February of 2026, but that's obviously false.

So again, this is an interesting thing where if you go back to 2000, 2007, 2008, the great financial crisis in around that time we had social media, but it was still social media.

Now we have attention media.

Yeah, it's different.

We've got a lot more population control via headlines.

A great example of this.

Look no further than the war that's going on right now.

This in my mind is the first war where economics are the biggest weapon being utilized.

They are trying to cause a recession in this country and they are trying to cause an economic slowdown worldwide to put pressure on everybody to play the game.

And I'm sure there are other wars where the similar types of levers are pulled.

But then you also get the element of the news reporting.

And I can legitimately tell you guys that I don't know what's real anymore.

How many times have I seen a video of somebody from Iran or like an action in Iran or I've seen Netanyahu or somebody from Israel or somebody from all but.

And then they have six fingers or they.

There's like glitches in the background.

You're like, wait, what, what's going on?

You don't.

Yeah.

You don't even know what to trust anymore.

I have no idea.

No idea.

Something else that gets affected by the straight of horror movies being blocked down.

I did not know this actually was.

A lot of fertilizer gets shipped.

Yeah.

Through there.

Yeah.

Right.

30 of the US's fertilizer comes through there.

There's a lot of coming down that pipe.

There's a lot of.

Yeah, that was a.

That's a joke.

That was a joke.

That was a shitty joke.

Hold on, wait.

What?

You made it.

You made it.

You made it.

I took a personal man joke.

You can't just leave it where it's at.

Right.

So you know, unfortunately fertilizer is not something that can be stored either.

And right now is planting.

Oh, come on.

I'm trying to do a show here.

You can't store your people can't Store the fertilizer.

It creates toxic fumes, right?

So as of right now, the current price of fertilizer for farmers has gone up 77%.

That's some expensive.

The maturity level.

77.

What is that good?

What is that doing?

What is that going to do to food prices?

You tell me.

I don't know.

But I can tell you it's going to bring down the maturity of the show by 50%, easy.

Got to keep it light.

It's not so light.

It's not light.

Shit.

50% of the time works.

I know, but we're joking about it.

But okay, for us, joking.

Well, for us, okay, there's.

There's alternatives, but there's other countries around the world that they do not have an alternative.

That means.

That means famine.

You understand me?

Like, it's currently planting season where they're at now.

What.

What are they going to do,

man?

No solution, bro.

That's the answer.

I don't even know what kind of world we live in anymore.

I don't.

The world a better place.

What are you.

Yeah, what are you doing to make this world a better place?

That's my question.

Where's Michael?

I need.

I need some kind of, like, charity gala or something where everybody's together, sing Bring Prince back.

I brought up Michael one time.

You said, I can't bring that up.

No, you can't.

I can't.

Oh, I've already crossed the line.

A way worse joke.

Everything I do from that point to now is a recovery.

I'm a terrible human being.

Oh, he made the he sound.

All right, let's go to the Khabisi letter.

US Oil reserves.

I want to tap on oil for a little bit, and then I'm going to get right into private credit.

We've heard a lot about it.

I've got a whole breakdown here.

I actually didn't put some in the show notes because I want to break that down to you guys live in the show and get some more honest feedback.

US oil reserves are set to climb by about 41% to the lowest level since the 1980s after the US abandoned a 172 million barrel release.

It's not a good situation.

This will drop US oil reserves to about 243.4 million barrels, or just about 34% of total capacity.

On top of this, the Strategic Petroleum Reserve must keep about 150 million barrels in place to maintain operational flexibility, which really only leaves about 90 million barrels there.

This leaves just about 93 million barrels available to draw or less than five days worth of the oil supply that nat naturally passes through the Strait of Hermuz.

After the upcoming release, the US oil reserves will be down over 400 million barrels since the Russian Ukraine war.

The US strategic oil buffer is rapidly disappearing.

Rajeel's got a chart for that.

You want to click that, make it real nice and big.

Yeah, that's the lowest level since the 1980s, kid.

And it's only going to go one direction.

You got oil facilities in the Middle east that are down.

You got a straighter Hermosa, which we cannot traverse at least.

Right.

Not right now even.

Insurance companies are like, yeah, I don't think we're gonna get an escort through that anytime soon.

Yeah.

And that's really what.

What it boils down to.

Forget the.

The minds that are being placed out there.

It's.

You're not.

No.

Insurance companies coming close to that.

No.

Why would you want to?

And here's the problem with insurance.

And most people are in kind of denial about this, but let's be clear.

Everybody likes the idea of insurance.

You know, no matter.

No matter what happens, I'm gonna be insured.

Except here's the practical problem, right?

You ever dealt with an insurance company?

Yeah, they suck.

It's really difficult.

It's difficult.

Can you imagine?

Your ship gets bombed and you gotta wait six months to a year before you get paid out.

And even then, what's this new government backed insurance?

How am I getting paid off?

That we don't know.

We'll figure it out.

Yeah, yeah.

Not a lot of confidence here, chief.

Yeah, I need it now.

No, no, no.

I want some guarantees.

Yeah, put it in writing.

All the US government's backing it.

I feel really comfortable that guarantee right now.

Right?

Yeah.

You got a little thing called a national debt problem.

That's a big problem.

We're all gonna sidestep, then go, you know what?

Hey, guys.

The U.S. is gonna guarantee me payment.

Matter of fact, their navy's gonna.

Gonna escort our ships through.

I'm sorry, against the underwater mines.

Yeah, not happening.

Yeah.

How you plan on doing that?

Matter of fact, your navy just said we're not ready to do it yet.

You want to know why?

Because there's underwater mines.

Who's.

Who's.

Have you seen what these mines look like?

They're not like the big balls like in the Hunt for the Red October.

No, no, they're like missiles.

A little propeller in the back that they can control with AI and remotes.

They're like.

Think about them as like underwater shark mines.

Yeah.

Like they shot the mind of a shark and then taught it to attack boats.

Like that's what we're dealing with.

A red.

A red shell from Mario Kart.

Yeah, it's coming.

Such a PG example.

Why can't you go back to the doll example?

We got away from the doll.

I know.

Yeah.

That's not what the minds look like.

That.

That's your old school minds.

They chant into the bottom.

They got little like probes on the top.

And you ramp something into the probe and there you go.

National average for a gallon of gas right now in the U.S. $3.58.

That's cute.

What is it?

Up 30, 30 cents, 35 cents.

Up 16% year over year.

That's what, 30, 35, 35 cents?

Yeah, yeah.

A week ago it was $3.20.

A month ago, $2.94.

Yeah, okay.

That's right.

Yeah.

Yeah, I can do math every once in a while.

All right, well, that's a problem.

And not a problem's going away anytime soon.

Of course, this all puts pressure on the bond market.

Long term duration.

The bonds market market has pushed up.

You got 10 year, which creeping up to a pretty crazy amount.

Go to cnbc, go to the bonds portion of the tab.

See what tenure is at today.

I haven't had the time to check because I've been in school with kids all day.

Oh, look at you.

Yeah, I'm learning stuff, giving back to the community.

There are bonds at the top left there.

There you go.

Oh, clicking.

Oh, so good.

Oh, the top left one.

Yep.

The green box.

4.283.

Click on that.

4.283.

That's a positive day, kids.

That is.

That is a big bump.

And if you go on the chart here and click the one day in the top on the left of the chart there.

There you go.

Now click this arrow right there.

Expanding it.

The big one.

No, no, no, no.

There you go.

That one.

Perfect.

That's a one day chart.

That went up.

Wow, that went up a lot.

And you can check out the chart like this.

I don't have to know.

Right there where Jill's at.

Where the bottom where bottomed out.

Something happened at around that time today which caused concerns, and that's how rapid stuff responds.

Yeah, of course.

There's an interesting play here.

If you ever want to like, you know, get into like algorithmic trading and you want to nerd out on this stuff, you get access to data faster than most people as a feedback loop.

The way this works is data comes out headlines get the head.

Get the data.

The headlines report the data.

Those headlines get to social media.

Social media takes that, spins it around.

You see it on social media.

Hysteria or behavioral economics play out.

But if you have access to the data direct and you cut all the middlemen out.

Right.

You have at least 30 seconds to a minute with which to trade on data that nobody else has.

Yeah.

And that's the power of data and agentic AI in this world.

Everybody can have access to a hedge fund.

Man, I'm hard selling over here.

You want to buy in?

Yeah, I'm in.

I'm going to put my money where my mouth is.

I'm going to invest in this thing.

Like bitcoin.

Like bitcoin.

20%.

20%.

But most of it's going to the QQQ.

The qua.

The qua.

Shout out to my.

All right.

Yeah.

So subprime private credit is a big problem.

Past the post 2008 hunt for Y fueled by zero rates QE and suppressed volatility created a multi trillion dollar private credit market.

The credit that banks could not or would not do, considered to be too risky.

They often got paid higher interest rates because they were willing to make a roan that you could a loan you couldn't get somewhere else.

Right.

Different structure, same dependency.

Unfortunately, like the subprime 20072008 the model assumes stable cash flows and perpetual refinancing.

But in this particular market, perpetual refinancing doesn't seem likely and will.

Cash flows have been impacted a lot in some businesses.

Right.

So the spoiler here, the consumer is already cracking.

And if the consumer cracks, refinancing stops.

And when refinancing stops, leverage turns to fragility, which is why you're seeing all the headline risks.

But I made this chart, it's a sexy chart.

Would you make it big?

Boom.

Oh, so big.

Yeah.

Subprime versus the private credit markets.

And I went down a little trip down memory lane.

This is very cathartic for me.

Okay.

Very enriching to my soul.

I did this one at 1:00 clock in the morning.

SAT vocabulary.

Yeah.

Market size of the subprime credit crisis, $1.3 trillion.

Market size of the private credit market, over $2 trillion.

I think that's more.

Yeah.

Your math skills are good here.

Sharp.

I like that.

The fuel for the subprime crisis was the housing bubble.

Synthetic mortgage backed securities.

Okay.

Yeah.

Well unfortunately that was an interesting set of circumstances.

And this one, it's chasing yield.

Yeah, chasing money.

The dollar dollar bills.

Y' all borrower over leveraged homeowners in the subprime crisis.

Well, the borrower private equity owned companies in the.

More greed.

Yeah.

Private credit markets.

Oh, I feel so bad for them.

You can imagine.

How badly.

How bad do you feel for them?

You know, I feel a deep swell of a fortress of solitude for them.

You see what I did there?

I didn't.

Yeah.

Okay.

All Right.

The structure.

CDOs.

Right.

The subprime crisis dorm.

They are direct lending funds.

Is a structure in the private credit world.

Risk location back then was banks.

Risk location is the shadow banking system.

You're going to hear that a lot in the news as this private credit market continues to deteriorate.

Why do they call it shadow.

Shadow banking practices.

Why is that?

Because there's a problem here.

This is the doll joke that I was making that they did not hit me.

I apologize for it.

In retrospect.

Yeah.

Probably could have done better.

Yeah.

But I didn't have a good example for someone being taken.

This is a very.

It's a very dark and gloomy show.

It's a dark show.

It's grim.

Yeah, yeah.

Doesn't make it better.

No, no.

All right.

Anyway, so public pricing versus opaque nav marks, which meant the subprime credit was more visible because everybody could see the numbers.

Whereas in this one, the opaque net asset value marks in the private credit marks mean that there could be a whole lot of hiding numbers.

Okay.

Right.

It can be manipulated.

The loss recognition was immediate in the subprime crisis.

Whereas in the private credit markets, because you had that manipulation of the nav figures and the values of these private credit vehicles, that recognition has clearly been delayed.

Right.

Mortgage defaults are the warning sign.

Well, non accruals, people who not paying their debt obligations are behind on it.

Payment defaults, those are the warning signs that we're already seeing.

The private credit market.

Rising home prices were the part of the problem in the subprime market.

Whereas now it's perpetual refinancing.

Except just like the rising home prices where they go up and they go down, perpetual refinancing stops.

Yeah.

And we're already seeing that.

So to under.

To understand the private credit market a little bit, we'll break it down just as simple as we can.

Right.

You got to think of it as if you as a person wanted to get a loan from a bank, you would go to the bank, they get your credit score, they look at your history, how much, how much cash you have and you know, how much income do you make and Then.

And then they give you a loan.

Okay, Boom.

Now you gotta.

Now let's take it a step further.

You got a company that makes a couple hundred million dollars, right.

And they can't go to the bank to get the loan because they're regulated.

And based on, you know, the cash flow that you currently make, right now you're probably operating at a cash flow negative.

But you have all these plans for the future.

And unfortunately, the regulators would not allow the bank to make such loan.

Right.

Because of everything that happened in 08.

Okay, that's right.

So.

And they can't go out to, you know, the stock market and raise money that way because no, no one's going to invest their money and they can't grow it that way.

So what do they do?

They got to go to these private credits.

Right.

There's a lot of companies out there.

Do yourself a favor and knock yourself out and Google them.

Right.

They're going to give you the loan.

But there's a problem with that though.

Why is it, why is there a problem?

So it's like, okay, now why is it a problem for private credits?

Because you know who's in bed with private credits?

Big banks.

Yeah, as a matter of fact, 87% of the debt in the private credit market.

Right.

Top five biggest ones too, I think.

Let me guess.

Wells.

Wells is number one.

B of A.

B of A is number two.

Let me go.

Citigroup, pnc, actually PNC is number three,

then Citigroup, then number five will round out JP Morgan Chase.

That's right.

Yeah.

Too big to fail, as I would like to say.

Yeah, too big to fail.

So what do they do?

They took that failure and offloaded that risk to the private credit funds.

So they, they have a percentage of debt here.

But big banks are rushing to downgrade the private credit risk.

Why?

Because big banks hold about 87% of the loans to the private credit funds themselves.

So the structure looks like this.

Banks, private credit funds, then the companies.

Right.

Which is why it's really shadow banking

and why this is so bad for everybody else.

You literally have 401ks pension funds that are invested into these private credit companies.

Right.

And guess what they're doing now?

Just like, what was it, Bear stearns back in 08.

They're stopping.

They're not letting you take out your money.

Yeah, they're stopping the, quote, redemptions from happening.

Redemption, right.

Because they usually cap redemptions at about 5%, some are 8%, but they're seeing redemptions of 14 even higher in Some cases, people saying, I want my money back.

This is a tantamount to a run on deposits of a bank, for example.

Example.

Right.

These will cause these funds to effectively shut down at some point in time.

And the banks have to figure out their leverage positions in all of this.

So that's why you're seeing some things happen.

So I'm going to lay out to.

To end the show here, at least on this part of the information here.

I'm going to lay out a series of events, which I don't.

It wasn't the show notes on purpose because I want to lay it out for you guys.

Okay?

This is what.

This is the.

The series of events that has now unfolded.

We've heard about private credit and the stress in these markets for a prolonged period of time, but this in the last two weeks.

Here you go.

Ready?

JPMorgan Chase just marked down its private credit loans and restricted lending to private credit funds.

They are one of the top five lenders in this space.

And they've marked some of those assets down, saying that we know we're going to take an economic loss on these, so we're going to take that economic loss now, put it in a reserve for potential losses against the fund.

Okay.

And that gets reported in their earnings.

Right?

It's just reporting the earnings.

They put out a statement to that effect.

It's very visible.

Okay.

Number two, Morgan Stanley says it's now blocking redemptions of its own private credit fund after withdrawals surged.

So now Morgan Stanley has said, hey, no more redemptions and we're not giving you any more.

Can you imagine going to a bank saying, hey, I want to withdraw my money because you have me running deposits?

And they go, you know what?

We're not giving it to you.

Nope, nope.

Yeah.

You'll never get this.

La la la la la la.

Right.

Yeah.

I think I read another stat on this, too.

On the article that I was reading was like 40% of the loans in this private credit space were made to companies that were.

At the time the loan was made, they were operating at a cash flow negative.

I heard something similar, but I haven't verified it.

So grain of salt there.

That's a lot.

Yeah.

Well, I mean, upside potential, baby.

Yeah, upside, upside.

Number three, Cliff Waters Private Credit Fund redemptions just hit 14%.

Partners Group says defaults could double from here.

Right.

Fitch Moody's a Fitch, the rating agency says that US private credit defaults hit 9.2%, the highest ever recorded.

That's three of the biggest banks in the same in the world pulling back from the same market in the same week.

Okay, now should we put it all together?

Yeah.

All right.

Number six, private credit funds borrowed from banks to lend to companies.

Banks are now cutting them off.

That's a problem.

Because what they had to come up for renewal?

Well, banks have to rate their debt.

Right.

And if there's additional risk in your debt, then guess what they have to do?

They have to.

And again, so some of these banks have blocked making for the loans and then they have taken the assets they have in the books.

Let's say I have you loaned to you for 5 million.

They're saying that loan is now worth 4 million.

Yeah.

So that 1 million goes to my additional loss reserve from accounting perspective because I'm expecting to take a logical loss there.

And this is not just my opinion going 1 million, you actually, do you do an analysis to see what your potential loss is.

There's a full breakdown model.

If banks are doing this, it's not because they want to recognize losses, because they feel there are real mathematically calculated losses on the horizon.

Yeah.

And you have to show that you were ahead of the game on this.

That's right.

Because if you're reactive versus proactive, it's a problem.

That's going to be a much bigger problem.

Yeah.

They're going to say you weren't actively monitoring your portfolio.

And a lot of these launch should be monitored quarterly.

Right.

So then the next step in the process, those funds can't, can't refinance, redemptions accelerate.

You can't refinance the debt with another lender.

You've been cut off.

Right.

Now you want to go somewhere else and refinance with another lender.

But a lot of lenders are blocking this and stopping this.

These are not attractive loans anymore.

This is the highest risk category in the market right now.

Why would I want to do this?

Right, so now you're going, okay, what do I do?

Well, you're now forced to sell assets in your portfolio to pay back the redemptions.

The same way banks during the great financial crisis and other crises, you got to run a deposits.

They can't give you any more deposits because they don't have any more.

They have to sell off loans, in some cases loans at an economic loss.

And that economic loss they have to take in order to give you your cash back.

Right.

No different.

Right.

All right, number eight, the companies that borrowed from private credit, tech startups, software firms, mid market companies, they can't refinance either.

Right.

Where are they going to go, who's

going to give it to them?

To your point, now, this whole sector of people who were willing to make loans to companies that were riskier are no longer willing to make loans to companies that are riskier.

The same way during the great financial crisis, they were willing to make riskier single family residence loans because home values only went up.

Right.

You've had 15 ish plus years of artificial intra deflation and because of that everybody thought they were an entrepreneur.

Everybody thought they were going to make a ton of money and there was no disruption to that process.

If you were good and you were there and you were alive and breathing, you had a good shot at making more money.

Right.

And guess what?

That persisted for a prolonged period of time because the cost of borrowing was almost nothing.

So as long as you made enough money to pay back your almost nothing interest, you were good.

Yeah, well that's gone now.

And these companies can't refinance and their cost, which is usually index plus margin base of their loans, even if their balance was the same on their debt positions, is going up to pay.

Yeah.

So there's a problem right there.

Okay.

Number nine, defaults cascade.

Not just 9.2%, we're talking about 15 to 20% likely by Q3 or Q4 this year, maybe even sooner.

And that's a huge problem that no one's talking about.

Right.

And back to the point that I, I made earlier, the reason why you need to care about this is because it will impact everyday people because their 401ks and their pension funds and so much money is invested in, into these companies, into these private credit companies.

So to make a grim show even more grim.

You're welcome.

Yeah.

Listen, at the end of the day, I know we joke about maybe in a grim show, gloomy show, I had a darker ending.

It's, it's, it's the truth.

And people deserve to know the truth.

At the end of the day.

Yeah, no, it's true.

This is real.

This is happening.

It's not, it's not opinion.

We had one problem, CDOs in the mortgage backed security market, which is really derivatively one problem.

We.

Yeah, we, we.

You had one problem.

You.

Yeah.

In 2008.

Right.

The great financial crisis.

This one has a private credit implosion clearly happening, a war shutting down the global economy.

You're talking like 20% of the world's oil supply now in jeopardy.

Crude oil spiking, 10 year spiking, lots of volatility all over the place.

And now you got A bond market because of that volatility, which can absorb this shock.

Right.

Working against unemployment numbers which are clearly artificially inflated.

They're wrong cooked, bro.

Yeah, not good.

And then you got other problems.

Okay.

Housing affordability crisis, this whole situation at the fomc.

And you've got an active war going on where in part they are trying to wage economic war with the United

States, which we still don't understand why we're even there.

There's a lot of problems here and hopefully that overshadows my inappropriate comments from earlier.

Gloss over.

I'm sorry I had more dark and

gloomy statistics, but I feel like that's enough.

You don't want to hit him with some negative.

No.

Delinquencies are up, bro.

Yeah, Across.

Across all loan types.

Across all loan types.

Not just 30 days.

Serious delinquency, 90 day plus.

I don't want to see it anymore.

I. I go out of my way not to even read a report on those headlines anymore because it's just like this nasty cycle.

It's not getting any better, is bad.

It's been like a full year of like progressively worse defaults.

And everyone's like, we're fine.

The market is good.

We're so amazing out here.

Yeah, yeah.

Unemployment is.

I'm like, what's wrong with you people?

Wages are outpacing inflation.

Yeah, we got inflation under control, 2.4%.

We're good.

I'm at the point now where this is the true story from this morning.

I went to Starbucks and I'm sitting down and I'm waiting for my order, and I'm watching this dude in a brand new Ferrari roll by and I'm snickering like, damn, fuck that guy.

Right?

And then I'm like, oh, don't get mad, Chris.

He probably gonna be broken a month.

It's so bad.

And I know there's probably a 50 chance of that.

And it's.

What's crazy is there's some people that are really this, like, they're so out of touch because maybe, maybe it will impact them, maybe it won't impact them.

Maybe they, they do well elsewhere.

I had a guy approach me recently and was like, hey, man, I've been trying to get my son on a couple club teams and, like, unfortunately all the spots are full.

I was thinking about financing one.

Will you coach it?

I'll pay you.

Wait, what?

Yeah, he's.

He wants, he wants to pay me and finance the whole team so no one has to pay anything.

He's like, I'll Pay.

And I'm.

Look, what the hell?

Like, why?

It's a lot of money, bro.

Like you.

I mean, we can have the conversation if you want, and go outside.

And he's just Daily Driver McLaren.

We're not.

We can't even have the.

I can't.

What are we doing?

I'm gonna be a snobby guy.

I don't like McLarens.

Okay.

I don't think he does either.

I'm not impressed.

Okay, Bro, you driving Toyota.

I said it.

No, it's a Toyota.

No, it's not.

That's what it is to me.

It's Toyota.

I'm not impressed.

Really?

Yeah.

I don't McLaren's.

And I got a lot of friends who have them, and I guess they're cool.

I'm just.

I'm angry.

I can't fit in them.

Oh, that's what it is.

I can't fit it.

I can fit in some Ferraris.

I. I can barely get into, like, a Lamborghini.

I cannot fit in McLaren.

Yeah, yeah, yeah.

They are highest bastards.

Yeah.

It's not appropriate.

He was like, bro, you want to sit inside of it?

I'm like, bro, don't treat me like a kid.

Like, come on.

You want to take a picture inside of it?

Yeah.

He said to me, honestly, he's like, you want to sit inside?

You want to take it?

I was like, bro, come on, relax.

That's the biggest head pat.

Can you chill?

I got pride, bro.

I can't wait.

Somebody's like, hey, Chris, you like your ribbon?

Yeah.

You want to take a photo inside of it?

I'll take a photo of you.

It's cute.

You look cute.

Come on, sit down.

Meanwhile, we're dealing out here.

Like, yo, you catch me, too, this week.

Yeah, me too.

Adam is sitting.

Adam is standing next to me.

Yeah, dad.

On, dad.

I'm like, adam, no, stop, Relax.

You can go.

Yeah, scratch it, son.

Yeah, right.

No, they were.

They were trying to, like.

They were like, like, peeling at, like, some of, like, the.

The stickers or whatever around the car, and you're like, stop, man.

Like, he's like, no, it's okay.

This is my daily driver.

Damn.

Damn, damn.

One of the.

One of the articles I was reading last night because, again, I don't sleep much, was about all the custom Ferraris they've made over the years.

Yeah, They've made, like, one off, like, hyper custom cars for, like, avid collectors.

And I'm like, how much money do you have to have?

We're like, it's a Different market.

You're like, hey, babe.

Yeah.

I'm gonna buy a Ferrari that nobody else in the world has.

We're gonna design on ourselves.

How much do you think that's gonna cost?

I don't know, like, five, six million dollars?

Yeah.

Okay, cool.

Let me know when it gets here.

Yeah, that's what it's like.

Is that where we're at now?

That's what it's like.

Some people are just out of touch, man.

Out of touch.

You got anything positive to say, anybody?

I got nothing positive today, man.

Ramadan's gonna be over in a week.

That's positive.

Oh, yeah, we celebrate.

Eat.

That's all I got for you.

Yeah, well, it's a beautiful weather outside.

We're all here.

Beautiful dog.

Yeah, it's hot.

It's 90 degrees, bro.

What you talking about?

He lost all his weight.

Everything feels.

Everything feels cool.

Yeah.

You don't mind.

You don't mind being hot now?

Like the insulation gone.

Polar bears free.

Yeah.

This guy.

Those are subtle flexes.

Yeah.

What do you got?

You got anything?

So you remember I used to wear sweaters?

Yeah.

No, I'm pretty much useless today.

I wouldn't trust me making free comments at this point in time.

No.

Regio.

You got anything?

Yeah, dude, the sun's out.

What are you gonna.

What do you got planned after this?

Oh, I.

Let's see.

I did my nine to five.

We did this.

Oh, you gotta leave, dude.

You gotta go to work.

I got my five to nine.

Oh, he's got his five, nine.

Let's wrap it up right now.

Take us out.

Let's go, let's go, let's go, let's go.

Let's.

Hold on.

If you're still.

If you're still listening to the show, do us a favor.

Go ahead and leave us an honest five star review.

Best thing you do for the show is refer this out to a family or friend.

A family?

Yeah, a family member or a friend.

And we really appreciate all of you guys.

Thank you so much.

All right, good night, everybody.

Okay, goodbye.