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In this video, we will talk about the great crash that will begin from March 11th to March 15th. This is already the law. Yes, we will respond to a YouTube video where someone tells you for 13 minutes that since the bank's emergency financing program expires on March 11, we are all screwed. And that's why billionaires like Mark Zuckerberg, Jeff Bezos and others are selling, and people like Warren Buffett is hinting again this week that the opportunity to outperform the competition is very low right now, which is why he continues to have record high cash levels.
Is it possible that this is because billionaires know? Yes. Is it likely because of the bank's emergency financing program? No. In this video, we'll describe where the real problems with bubbles lie, and I'll show you some examples, some of which you can even make money on when the crash happens, which it eventually will.
Let's talk about it in this video. First, let's talk about the bank's term financing program. Yes, the bank financing program is a bank credit line that ends on March 11. Most people don't understand that when this program ends, it doesn't mean that all 164, yes , 164 billion dollars that were borrowed have to be repaid.
This is not true. Only about a third is due to be repaid within the first quarter after the bank financing program ends, and in reality it takes the banks a full year to receive the money under this bank financing program. One of the areas where I think you can really monitor that kind of regional stress, how much we think the completion of this program will impact the banks, is two- fold.
First, you should look at a bank like New York Community Bank, which has taken massive write-offs, a loan loss provision of almost half a billion dollars across two, just two buildings in real estate, office, commercial buildings. Just two properties had them written off by half a billion dollars, destroying their profits and cash flow potential so badly that the stock plummeted.
Now, a few weeks after that, the company has said: “ But don’t worry, we don’t have a panic from the banks, we don’t have an outflow of funds.” This is probably because, to be fair , the US government insured all deposits at Infinity. Of course, we must be insured for up to $250,000 for cash depositors in bank accounts .
But the reality is that the FDIC insurance limits after the Silicon Valley collapse and the required full bailout of the banking system are actually much higher. So you don't really see bank panics exacerbating these problems. As a result , I don't really think the next crash will be caused by a banking crisis.
This was last year's crash. So what is this crash? Well, I'll give you the next two crashes. And it is very important to pay attention to them. But I just want to finish. This is the Bank Urgent Financing Program. Note how the disbursements under the Banks' Emergency Financing Program have actually leveled off .
Yes, they grew up here. This is because there was a unique arbitrage opportunity. Forget about the science behind it . Essentially, you could borrow money from this program at a lower rate than you could borrow. That was strange. The Fed stopped it. Once the Fed stopped that, you got that last little push of borrowing, and then you had the crash.
Uh , and this or alignment, we should call it. I would n't call it that big of a drop. It's more of an alignment. This is a problem, but I don't think that this $164 billion here is that systemically problematic. Uh, if we don't see any signs of any hype by March 11th, you know, we're about 2 weeks away from March 11th.
Uh , there's no crazy rush of people flocking to this establishment, saying, " That's it. Last chance to get cheap money." There are other ways for banks to get funding, whether it's from the bond market, the stock market, or, frankly, the Fed's discount window. You don't need a bank term financing program for everything, okay?
So, let's put that aside for a moment. Let's talk about two other crashes instead, and they happen in two completely different markets. One, uh, is related to stocks and artificial intelligence, and the other, frankly, is related to real estate. Let's talk about both. So where do I see bubbles now? Well, one of the biggest bubbles I see right now is Arm.
Look, I understand that the company has phenomenal profitability selling its infrastructure codebases, you know, and I know I'm going to get a bunch of technical comments about describing what ARM is. It doesn't really matter what their risk architecture is. We don't need to go into that. What is important is that this is a company that is trading at a price of over four to five percent, with one person owning over 90% of the shares of this company, and the lock-up for this company is set for March 12, the lock-up expiration date.
This means that this is a company that has had an IPO. And after your IPO, companies say: " You know what, investors, internal investors, we promise not to sell shares until 180 days after a certain date." This date coincides with the IPO, which was in September. So, we are looking at March 12th. I think it is very likely that these stocks will fall very quickly, which could lead to them being blocked.
And there are several catalysts here . I think a negative catalyst on the eve of the lockdown, i.e. before March 12, could lead to a decline. So, I think you may see a decline until March 12th when traders start to take price action. I think you could see further declines during the post- lockdown period if SoftBank actually starts selling, which I expect, especially if these valuations hold.
Or there is another negative catalyst on March 20 – the publication of the Fed's consolidated economic forecasts. I think that all three factors: A– will restrain this growth, and B– will lead to a significant decrease. I'll say it, but to be completely honest, I'm not in a good place with this [ __ ], okay?
So I'm betting on this one to some extent that it will fall. However, there are other companies in which I am not in a satisfactory position, and which, in my opinion, are also currently valued absurdly. Look at Wingstop. Wingstop is growing rapidly. It trades at a price-to-earnings multiple of over four, which is an absolutely insane valuation metric.
The same goes for Costco . The problem is that the market can remain irrational longer than you can remain solvent. And just like I think Arm will collapse, I think Wingstop will collapse. And my real question is, which companies will go down with these companies when they actually start to go down?
Will we see a distribution and this could be a copycat hopi idea. Some people are very hopeful that when these stocks start to fall, people will allocate them to other stocks that have performed poorly , like Tesla. You know, today they grew by almost 4%. This is great. But, you know, it's just a fluctuation around the 200s.
Who cares? Perhaps it is even more foolish to think that there will be a collapse in some sectors, but here there is movement. Some people also think that the Magnificent Six, you know , everything except Tesla, um, will take a little break and pause, and there won't be a real downward correction. We'll see.
But this is just one of the places where I see real risk. So I'm not going to chat with you for 14 minutes about, "Oh my God, March 11th, mark your calendar for March 11th." Or, you know, and suddenly urgent financing from banks. In my opinion, it will probably end, nothing will happen. If something happens, just accept that the Fed will reopen the facility.
They never said they couldn't reopen the facility . The Fed is just going to bail him out again. And don't get me wrong, it's all set up. Yes, I think there are problems. Consider an inverted yield curve. It is now inverted at -44 basis points. The situation is getting worse. We talked about this this morning on e-hac.com.
We're talking about the inverted yield curve being worse than it was for most of the beginning of the year. We were inverted by 20-30 basis points. But the problem is that there is no recession yet. You can look at the Bank of America fund manager survey. 41% of fund managers believe there will be no recession in the next 12 months.
21% of those who believe it will happen in the next quarter. And another 20% think it will happen in the next quarter. In other words, in the next 7 months, about 40% of fund managers believe that we will be in a recession. The problem is that we have essentially climbed out of the recession in printed letters.
We probably just put the issue aside. That's probably why we have an inverted yield curve. We could be in a recession in '25, '26. Think about it. The growth of the artificial intelligence bubble is slowing. You no longer receive this contribution to growth. Fiscal spending is disappearing because the Biden administration is throwing money at the Chip Act and the Inflation Reduction Act, potentially, you know, over $1.3 trillion according to Goldman Sachs estimates due to the Treasury Department's unclear interpretation of the rules .
Essentially, huge corporate welfare and incentives go to the richest, right? This is faked. I don't want me to make this video saying, "No, this person is wrong. "Not everything is rigged." No, no, no. I agree. This is rigged. I just do n't think the bank's emergency financing program is worth paying attention to.
These assessments need to be paid attention to. You draw attention to the fact that the two-year Treasury bond is 4.7 and the ten-year is 4.6. Er, or sorry, 4.26. So, you know, it's an inverted yield curve that's getting worse. You point to the spike in inflation that we had in January, and even if that spike is temporary, that's a nasty word, but I think January was heavily influenced by seasonal, uh, inflation.
I'm not really worried about it as a catalyst. I'm really worried about the next bubble. And this is an apartment building. Now you need to be very careful about this, okay? So just type it into Google. Do it with me. Um, overdue mortgages on apartment buildings. So, the mortgages of apartment buildings are overdue, according to the Wall Street Journal.
This is what it looks like. You just go to the first click right here. Um, and this article is what should be bothering you. Um, the bottom line is that you had 0.9% of apartment buildings that were delinquent, uh, sorry, 0.4%. Let me make sure I understand correctly. 0.4%. Yes, there it is. As of January 2023, 0.4% of some of these secured credit obligations were 30 days or more past due.
This is 20 times more than in January of this year. And you see it not just in Arbor, but all over the country. You see delinquencies across the country in multifamily properties, particularly in the Sunbelt area, skyrocketing. There are, uh, apartment companies that only deal in apartment buildings and the Sunbelt, and they sell for a fraction of their potential value .
Why? Due to excess supply. new construction, lower rents, and approaching loan repayment dates. There are many apartment building developers, including developers and owners, who are approaching loan repayment deadlines. They don't have the benefits of a 30-year fixed-rate mortgage. Does this mean that housing prices, single-family homes and condominiums, will decrease?
Maybe not, because of the advantage of a 30-year mortgage fix. But apartment buildings see huge opportunities . Mismanaged buildings and approaching loan maturities create opportunities for companies to buy. That's exactly what we do with House Hack. Well, maybe we got lucky with timing, because we started buying back in the third quarter of last year.
And we see the problems getting worse. Even though single-family home valuations were stable or rising, which is what we started buying, now in the spring we're thinking, "Okay, the single-family home shortage has gotten worse. Most single-family homes are in April-May, so let's wait until April-May to buy single-family homes again ." Where is the greatest pain now?
Apartment buildings. So, where will the real bubbles appear in March? This is not a bank financing program. This is nonsense. This is nonsense. At this point, it's probably not yet an unemployment recession. I think, you know, when we look at layoffs in terms of the number of layoffs that we had...Yes, there were a lot of layoffs in January, but honestly, that's just a fraction of what we saw in late 2022 and early 2023.
It's probably not an unemployment recession. JP Morgan says the biggest concerns we need to have going forward are negative employment reports. We don't see this now. Negative retail spending is possible, but thanks to the "buy now, pay later" principle, we don't see that right now. And a spike in inflation after January now seems unlikely.
In my opinion, the bubble is much more clearly evident in particularly overvalued stocks. Costco, Wingstop, ARM. I think ARM has the highest chance of breaking out in March. Uh, it's followed by apartment buildings. And I think it's not that devastating a 2008-style crash. It's more of an opportunity.
The reason for this is the stability that separate housing gives you. The money that would have gone to investing in individual housing is starting to be invested in multi-apartment housing, they are balancing out. And so when you take advantage of the higher capitalization rates that you get in an apartment building, you start to get a kind of balancing effect.
This is our opinion. This is our point of view. But no, is this a bank term financing program? Look, this is a great clickbait video that says: yes, everything will collapse on March 11th. Well, I don't think so. Well, this is for a bank term financing program. Well, I think it's worth paying attention to this diagram, which is why I drew it.
Who is paying most of the interest today? Remember , most people think that high interest rates will slow down the economy. Let's be realistic, high interest rates benefit the richest companies in existence. Every quarter since we started seeing interest rates rise here in the second quarter of 2022, the interest that companies had to pay has been falling every quarter from here on out.
That's because companies are cash-rich, they're the ones buying AI chips or something. They charge high interest rates, they make money on high interest rates. On the other hand, it is smaller businesses and people like you and me who pay higher interest rates, and we suffer from these higher interest rates.
So the Fed does a great job of putting pressure on people, not on big rich corporations. So, I think that's where you should look for all sorts of fools. Anyway, if you like the perspective I share in my buy and sell alerts, check out my courses at meetkevin.com. as an accredited investor, please visit househack.com/2024 to learn more about our fundraising.
This may be the last event we do. Our plans will work this year. We may never have to raise funds again. So that's going to be pretty cool. So check this out. househack.com/2024 and thank you very much. I will post more updates on ehack.com. Thank you for watching. Goodbye. how it goe O'Leary of Money Matters and YouTube meets a partner own and actively manage ETFs, and I also s other than those who are members of the House of Representatives, and I do not currently act as a market maker.
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