Transcript of This is a HUGE SHIFT
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0:00The market obviously has started going0:02red today, giving back some of the0:04enthusiasm of yesterday. Should we care0:07and what does it mean?0:09>> [clears throat]0:09>> My opinion, the answer is0:11no. We really shouldn't care right now.0:13Why? Because a lot of this is driven by0:15the return of the suckening that we knew0:17was coming. The suckening strikes back.0:20The suckening returns. Elon Musk issuing0:23now the largest ever or seeking to issue0:26the largest ever debt financing for the0:29AI buildout. $40 billion0:31to buy Nvidia chips, $10 billion from0:34the banks, $30 billion from bond0:36investors. And frankly, the more0:38expensive we see or the higher yield we0:41see from bonds at corporations,0:44the more people are starting to scratch0:46their heads saying, "Hey, do I want to0:47invest in the S&P 500 and kind0:50[clears throat] of, you know, to take0:51the YOLO, so to speak, on the overall0:53market where it sits now, although its0:55valuation is relatively lower?0:57Or do I just want some kind of bond or1:00preferred bond with yields as high as1:02they are right now? Look, for example,1:03at the Google preferred that they did.1:06They did a mandatory convertible1:07preferred bond, which is a mouthful of1:10uh words. But, they were offering a1:14temporary 6.25%1:17yield that just cliffs in May of 2029.1:22And so, you get this preferred, this1:24tax-preferred dividend yield at 6.25%1:27from Google uh and and then it converts1:30into stock at a bit of a premium, which1:33I think it should have converted at1:34where the actual price is now. But, my1:36point is, like, equity investors are1:39starting to get so many more options to1:41invest in other things that actually1:44provide some yield while you wait. And1:46so, that's what Google pulled off this1:48summer is this get paid while you wait.1:51And so, the more of the suckening we1:52see, the less money, obviously, there's1:54available for the stock market in the1:56shorter term. So, it's not a surprise1:58that yesterday we get this news that2:01Elon's2:02looking to lead the largest debt round,2:05which is different from the big equity2:06round that they did where they raised2:0880 in equity plus the green shoe plus2:12the 25 billion dollars of debt for2:14refinancing some of the other debt that2:16they had. Put all this together though,2:18coming out now with 40 bill of debt, it2:20gives people other opportunities. And I2:22mean, I get it, especially if you can2:23come out with a preferred dude, a2:25preferred2:26>> [laughter]2:27>> you know, tax preferred this could2:28effectively be if I divide that by 60,2:32this could effectively be closer to an 82:34to 9% interest rate for some people2:38based on their tax structure where they2:40are. It's kind of crazy. So, like that2:42does kind of weigh on the stock market's2:45ability to just keep going up every2:46single day. The good news is2:49so far, things are relatively stable. We2:52actually didn't get anywhere close to2:54our line at 748 here on the queues.2:57We've held stable.3:00Now, part of that3:02is because in my opinion, we are3:03actually getting somewhat3:06closer again to a deal with Iran. I know3:08it might not sound like that, but I3:10think a lot of what's happening right3:11now is posturing and negotiating. Look3:14at this. Iranian media is reporting a3:1660% decrease in oil passing through the3:18Strait of Hormuz. We have full control3:21of the Strait of Hormuz. So, you got the3:23Iranians going Guys,3:26we got control. We're shutting this3:27down. And at the same exact time, you3:29have US Secretary State of State Marco3:32Rubio says Iran has lost complete3:34control.3:35>> [laughter]3:36>> All that stuff, just know3:38noise.3:39It's noise, noise, noise. What matters a3:42lot more3:43is that the Iranians3:45are getting really frustrated. And3:47Donald Trump knows this. Look at this.3:50Iran has already made more than enough3:53concessions in Washington. Every time we3:55negotiate with the Americans, the3:57negotiations end in war. Usually wars4:00begin and then you end with4:02negotiations, but what America does is4:05the opposite. A 12-day war somehow was4:09preceded with negotiations and then we4:11ended up in war. Then we had a 20-day4:12war that was also preceded by4:14negotiations and we ended up in war.4:15Then we had a 13-day war4:17after we signed a memorandum of4:19understanding.4:21So in other words, the Iranians are4:22like, "What's going on here?"4:23And this is frankly Donny T pulling his4:27Art of the Deal chaos theory strategy4:30for making deals and frankly he's got4:33the luxury of time right now. The4:35market's looking at the suckening right4:37now. I mean, you could see it's4:38literally on Bloomberg right now. SPACEX4:40TARGETS MASSIVE CHIP FIRE. I WAS LIKE,4:42"OH MY GOSH."4:43EVERYONE WHO'S BEEN PAYING ATTENTION TO4:45SpaceX knows that they need to raise4:48money. Okay, any4:50any what? Like financial statements 1014:53could look at the balance sheet and go4:55they don't have the 400 billion dollars4:57they need. They're going to have to4:59raise money. It's just a matter of when5:00they announce it and the stock just ran5:02from 145 to 176. Of course, they're5:06going to take the opportunity to raise5:08money. And so, you know, then it's like,5:11"Darn, the suckening is back." The fact5:14that the Qs are only down .6 off of this5:17is actually a good thing. And I think5:18there's a treasury reason why. I'm going5:21to pitch that treasury reason in just a5:22moment. I want you to see it on what's5:24happening on treasuries because it's5:25really important, but I also want to5:27explain Donald Trump's chaos theory in5:30terms of why he has the I hate to say5:34it, but the luxury of time right now. I5:36do also just want to mention that5:39thank you to all of those of you who are5:40believing in what we're doing at our5:42startup Reinvest and the products that5:44we're launching because yesterday we5:47actually had Stripe Startups. So,5:49Stripe, the company Stripe,5:51flagged our account5:53because we just moved to Stripe as our5:56payment processor. We were at a5:57different payment processor.5:59And so, when people check out, that it6:00it all goes through Stripe now. And6:02they're like, "Sorry, man.6:04We you know, we fixed it.6:06Uh but uh this was likely due to larger6:08than normal first translation size that6:11our6:12risk systems flagged." In other words,6:14like so many people were you were buying6:17the Reinvest 1 product. We kind of broke6:19Stripe for a moment. So, if if you want6:22to be one of those, then join us.6:24>> [laughter]6:24>> Come join us. Go to meetkevin.com. Join6:26us. Uh we do have a price increase on6:28Thursday. You've got the uh Alpha6:30membership, the trade alerts, the stock6:32terminal coming at the end of the year.6:34We've got a complete rebuild for6:36everything with our research terminal6:38that we're building coming between now6:39and the end of the year, which is really6:41really exciting. Uh the Homes product,6:44all nine courses, the course number6:45livestreams, uh Aagent AI for consumers6:47and Aagent AI for businesses coming at6:49the beginning of next year. We're really6:51excited. We've got a really sick product6:54coming for everybody. So, you want6:55lifetime access to that, go ahead and6:57lock that in there. But, let's talk6:58about Trump, and then let's talk about7:00the Treasuries. So, Trump's impression7:03is that right now time gets him a better7:05deal. As Iran is suffering and getting7:09frustrated,7:10Donald Trump gets the benefit of7:15them calling him going, "All right, you7:17know, what if we loosen What if we7:18loosen this a little bit? What if we ask7:20for a little bit less? What about this?7:21What about this? What about this?" And7:22you literally have the Iranians going,7:24"Hey guy Hey, peace is not out of7:26reach."7:28They're on a phone call with Vladimir7:29Putin going, "Hey, we're fully prepared7:32to reach a balanced and fair agreement.7:34Like, we're ready. Please sign our deal,7:36Donald Trump." Because right now the7:38Iranians are waiting for Donald Trump's7:40response. The Iranians are like, "Please7:42sign. We're We're ready. Please. Like,7:44stop the economic pressure, the naval7:46blockade, the flight blockade." Some of7:49those have already been loosened a7:50little bit as a sign of good faith, part7:52of the negotiation process, but they're7:53having trouble.7:55They are getting squeezed from all7:56sides, and Donald Trump realizes this,7:59and this is why Donald Trump recognizes8:00that time gets them a better deal. There8:02are 27 days left before the election,8:05but the market broadly is up, broadly,8:07okay? If you look at individual8:08companies, a lot of individual companies8:10are in fairness suffering. We're going8:12to talk about that in just a moment.8:14Actually, you can see it right8:16here.8:18This was more than 40% of the Russell8:203000 members have fallen more than 20%8:23since June, and just a week later, that8:26number was 51%8:29of Russell 3000 members are down more8:31than 20% since June. So, not every stock8:34is crushing it right now, but Donald8:37Trump's looking at the index level. The8:39market is up.8:41Oil is relatively stable around 100, and8:44the 10-year's rise is stabilizing. Now,8:47that's going to make me sound like I've8:48just lost the plot,8:51but let me explain that in just a8:55moment.8:56>> [laughter]8:56>> Okay? So, stay tuned for number four8:59right here. Well, the point is, if this9:01is Donald Trump's impression, then he9:04doesn't have to rush into a deal now. He9:06could rush into the deal between October9:0920th and Halloween. That would be my9:11guess. The final two weeks of the9:14election, that's Donald Trump wants the9:16biggest magnitude of gas prices coming9:20down. That's the target window for9:22striking a deal. It's after CPI comes9:25out on October 13th.9:28We'll have a Fed meeting9:29at the end of the month, so I wouldn't9:31be surprised if you actually get a deal9:33before the Fed meeting. I think the Fed9:36meeting is on the 28th9:39or the 29th. It's the 28th. The 28th is9:42at the presser. So, on the 20th. So,9:44that really means we're looking at a9:47deal time frame9:49deal announcement IMO will be somewhere9:54between Oct 20 to Oct9:58probably 27. Fed meeting on the 28th.10:03Ideal time frame for gas prices to fall10:07before the election and Fed to hold.10:10That would be my guess. Like that's when10:11Donald Trump's clock runs up. If he10:14doesn't do a deal here, I don't know.10:17There's another problem. But, I suspect10:19that's what's going on. Now, why do I10:21say this about Treasuries and what does10:24this mean for like the you know, breath10:26issue that we've been talking about?10:27Let's talk about that. But, first,10:29there's good news about bonds.10:32So, this is the 6-month chart right here10:35on 10-year Treasury yield.10:37It's10:38basically gone vertical on a on the10:40slope of the line, right? This is a very10:41big problem. The slope matters.10:45But, something has recently changed just10:47over the last few days. And I want you10:49to see it. But, first, I want you to be10:51able to compare the slope of the line10:54uh a little bit earlier. So, if I widen10:57this Dude, I hate being on preview in10:59full screen.11:00>> [laughter]11:00>> This is so dumb. There we go. Just like11:02fights me. You can see how the slope11:06if I kind of draw little slope lines11:08here, if I do a slope here, or if I even11:11go from here, you can see the slope was11:14relatively stable whether I measure here11:17or I measure here. This is the insane11:20part. The September to October period.11:22This is very, very bad. But, I want you11:24to see something good that started11:26happening. It's over the last week, the11:29slope has changed.11:31Look at what the slope has done since11:33about September 27th.11:37That green line is a pretty dang flat11:40slope.11:41And this morning in our course member11:43live streams, I mentioned, "Hey, today11:45the 10-year Treasury is opening up 7 and11:471/2 basis points."11:49This market stabilizes or recovers if11:54that 10-year Treasury comes down. 7 and11:561/2 bips is crazy for a market open.12:00And so, guess what happened?12:02The 10-year Treasury is only up four12:05bips right now. We recovered. It12:07stabilized again. That does two things.12:10One, it means we were right to point12:12that out that the market would12:14stabilize. That's exactly what happened12:16on the Qs.12:17But, that's just a you know, a shout-out12:19to what we do12:20in our Alpha reports in the course12:22member live streams.12:23But, what matters more and broadly is12:26this.12:27This is an inflection.12:29This is a change, folks. This is really12:32good. This means we have been going from12:35everybody freaking out about the 10-year12:37Treasury going parabolic to all of a12:39sudden it's flatlining.12:42That change in direction is huge.12:46Because think about this as like12:49a derivative. Uh the easiest way to12:51think about this is like let's say we're12:54driving a car, okay? You're driving a12:57car, you're going 30 mph.13:00All of a sudden somebody steps on the13:02gas pedal and you're going 70 mph. And13:05you're like, "Bro, this is13:06uncomfortable." Not that 70 is13:08necessarily uncomfortable, but, you13:10know, it's a small road, let's just say,13:12okay? So, it's uncomfortable. So, you're13:13like, "I don't know, man. This is a13:14little fast, man. This is This is not13:16good. I don't know. I don't like what's13:17going on with the 10-year here. This is13:19crazy."13:21Most people are still of this mindset13:23that, "Oh my gosh, the 10-year is so13:25high. It's skyrocketing."13:27But, if you actually pay close13:29attention,13:30these people have have stopped13:32accelerating. They've taken their foot13:34off the gas, and now all of a sudden13:36we're not getting thrown back into our13:38seat anymore going, "Whoa, this is going13:40fast."13:41It's almost like they've lifted their13:44foot off the gas just enough to go,13:46"Okay, we're no longer accelerating.13:48We're now just cruising." We're still13:51high, you know, but we're not going13:53through that wow, he just stepped on the13:54gas and we went from 30 mph to 70. That13:57acceleration that pushed us back going,13:58"Oh, this is not I don't feel good."14:00We're just cruising at roughly the same14:02speed right now.14:04I wrote here K peak just because in14:05transparency, I will gladly be wrong if14:08I'm wrong, but I still maintain that14:10around this level I I called 527 peak14:13Treasury yields.14:15Obviously, we're slightly above that14:16right now. But what you'll notice is, I14:19mean, I made that call what?14:21A week ago or something like that? At14:22the beginning of this?14:24What's happening is the the slope of the14:26line is actually flattening to that peak14:29call. That's crazy. Now, I'm not trying14:31to say, "Oh, well, you know, that makes14:33me right." I I don't really care about14:35being right. What I care about is how14:38can we all make money?14:39And my takeaway from this14:42is if most people aren't realizing that14:44the foot's now off the accelerator pedal14:46on the 10-year, and we're setting up14:49from a for an Iran deal within the next14:5120 days,14:52this little suckening bull crap from14:55SpaceX, who gives a flying poopy doopy,14:59man? This is a nothingburger. And this15:02is a really bullish setup, especially if15:06that 10 comes down. And guess what?15:09That's exactly what they talk about in15:10the Zero Hedge piece.15:12In the Zero Hedge piece, what they do is15:13they analyze uh Mike Wilson argument15:16from uh I don't know, where is he now?15:19Yeah, but he's still at Morgan Stanley.15:20Okay. So, uh Morgan Stanley's Mike15:22Wilson15:24they make this analysis on how many15:26stocks are down about the rotation,15:29blah blah blah blah blah.15:31This is not an oil shock. What this bad15:33breadth is is Jackson Hole, the15:36hawkishness coming from the Fed. But,15:38hawkishness coming from the Fed fades15:41when you get pressure off from the Iran15:44Treasury yield side of this market. And15:47that's what we're starting to see happen15:48now.15:50Yesterday, I was talking to somebody who15:52deals with companies that list on15:53Nasdaq, and they were talking about how15:55challenging it is right now for15:57companies who rely on, you know, going16:01public and getting liquidity on public16:03markets to actually list right now16:05because a lot of the exchanges are more16:07interested in doing bigger fund raise16:10deals, bigger deals like SpaceX size16:12deals, which makes sense. If you could16:14do an $80 billion IPO with SpaceX,16:17uh and somebody else wants to do an16:20$8 million IPO, like a super tiny IPO. I16:25mean, you'd have to if my math is right,16:26you'd have to do a thousand of those16:28little deals to just equal one SpaceX16:30deal, right? So, the big financing deals16:33we're getting with either big mega IPOs16:36or big financing deals are giving a lot16:40of the suckening to the big companies,16:42but they're hurting a lot of the smaller16:43companies who need that financing. It's16:45been harder for smaller companies.16:48That is an extreme way of saying as16:52smaller companies get hurt, so do those16:54little and mid-size companies, and that16:55could be one of the reasons why we see16:57market breadth at the lowest level since17:00the dot-com bubble. But, I suspect17:02that'll will reverse, and Mike Wilson17:06argues that as well. Wilson thinks the17:08bond market may be getting ahead of17:09itself. August CPI was firm, but the17:12upside was concentrated in a handful of17:14categories.17:15And they're probably talking about like17:16the cell phone numbers we saw. Uh but17:18anyway, in our view, the bond market has17:20potentially moved to an overly hawkish17:22posture in the near term.17:25They also, in another part of the17:27article, suggest there could be a move17:29where both yields come down and the17:32stock market moves up together and17:35simultaneously. I still think, even17:38where we sit now, a lot of that is ahead17:41of us, not behind us. So, maybe I'm17:45delusional or too excited about it, but17:48I think that's what's happening here.17:50And I think that a lot of the noise that17:53we're hearing out of Iran, about Iran,17:55"Oh, we're going to We're going to shut17:56down Hormuz again. We fully control it."17:59You know, that's literally what you have18:01right here. Look, advisor to IRGC,18:02"Illegal routes for moves are going to18:04be blocked soon."18:06These things come out on purpose, as18:09Donald Trump has the Iranian counter18:11response on his desk. So, it's sort of18:13like18:15"Did you fax the offer to the18:17Americans?"18:19"Yes, sir, we did."18:21"Good.18:22Now tweet that we're going to close18:24Hormuz."18:26And then Pete,18:28"Donald!18:29They're They're threatening to close18:30Hormuz."18:33What's the stock market doing? I I need18:35I need more of a Trump Trump impression18:37here. Uh18:40"Little Pete, the stock market is doing18:43just fine.18:44I don't care what the IRGC says.18:47>> [laughter]18:50>> I'll sign it in 20 days.18:52>> [laughter]18:54>> It's honestly just a clown show. It's18:56all a clown show. Uh but I The bottom18:59line of all of this clown show is the19:02market going to go up.19:03>> [laughter]19:04>> That's my take. That's my take. And I'm19:06sticking to it. And in the meantime,19:08>> Oh, man, your boy Kevin just lost lots19:11of money. Oh, but that's okay. I am with19:14you with you.19:15>> You like that video? Check this one out.19:17I think you're going to love it.19:18>> Why not advertise these things that you19:20told us here? I feel like nobody else19:22knows about this.19:22>> We'll we'll try a little advertising and19:24see how it goes.19:24>> Congratulations, man. You have done so19:26much. People love you. People look up to19:28you.19:28>> Kevin Paffrath there, financial analyst19:30and YouTuber Meet Kevin. Always great to19:32get your take.
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