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Holy smokes. Nvidia stock just tanked from the top of the morning down to where it is today. Intraday 9% which is insane. Massive decline of worth probably half a trillion dollar that just evaporated. The NASDAQ 100 went from positive2% to -2.3%. which is a crash of over 4% in the day. AMD AMD couldn't get much over 237 in the pre-market, but look at this.
It's at 204 right now in the after hours. This is insane. So, what the hell happened? Was Michael Bur right? Well, let me make it very clear in this video. Michael Bur will be right in the future. But I don't think Michael Bur is why markets actually sold off today. I actually think it has a lot more to do with five different factors and we're going to talk about those factors and then we'll talk about the bur trade.
So one of those factors is the return or the fear of the Japanese carry trade. We need, we know, we need some like dramatic music to go over that. The Japanese carry trade and collapse in financial markets is back. Or at least the fear of it is back with people fearing margin calls in Japan leading to a crisis in US stocks as people rush to pay off their debt.
That was good. I like that. Okay, so now let's actually get into why the market sold off today. Uh, number one, I do think the reveal of what we talked about regarding Nvidia's documents had one contributor to this. Remember the video where we talked about the increase in finished goods at Nvidia, the uh accounts receivable at Nvidia, the coreweave guarantee, the 12% decline in prepaid capacity, all that stuff that they didn't tell us about in the press release or the earnings call that just came out later in the SEC disclosure.
I think that's just one leg of this problem and it's unrelated from the depreciation issue. We'll talk about that with Bur in a moment. That's just one part. I think it's also just one part that the same company that happens to be doing financial statements for OpenAI, you could see right here, Sam Alman, Fontello, Dofield, and Otake, also happens to have been the same exact company right here that did Cisco's 2004 financial statements, which then makes you wonder why is the same accountant doing open AAI as Cisco?
But but let's just call that like a coincidence. Okay. Then there's the possibility that we just have institutional seasonal weakness. We'll call that issue number two. So issue number one, Nvidia issue number two, institutional seasonalness. Uh so weak seasonality. Uh CTA selling, right? Institutions needing to sell to raise some cash.
You got a spike in the volatility index which generally triggers that very selling. You've got liquidity issues, right? These these are all real issues that could contribute to this. But what we really want to focus on is this potential Japanese carry trade issue because something weird is happening in Japan right now that could accelerate people getting nervous wanting to pay off their debt sooner rather than later.
And it's possible that Bitcoin could actually be tracking the very issue in Japan. Now, this is a weird one. Look at this chart right here. If you take Bitcoin and the performance of Bitcoin and you turn it upside down, then you get this orange line right here. Here's Bitcoin up, sorry, the blue line is Bitcoin.
The blue line is Bitcoin upside down. So, Bitcoin is tanking. Well, in a weird way, that is aligning perfectly with what's happening to the yield on the Japanese 30year bond. Okay. Well, what the hell does the Japanese 30-year bond, uh, which you could look up that yield, you know, we just type in Japanese 30-year Treasury, pull it up.
What is this skyrocketing yield have to do with the Japanese carry trade in US stocks? So to understand this, let's try to set up an example for you. Okay, let's say Donald Trump taco trade is all the rage and you're in Japan and you're like, you know what, I'm going to go borrow $100,000 USD denominated in yen, so I owe yen and I'm going to go buy US stocks.
Well, that trade does great obviously until US stocks start falling, right? which maybe US stocks start falling because of liquidity issues or weirdness in Nvidia's financial statements, right? Oh, we just evaporated half a trillion dollars in Nvidia. Hm, that's odd. And so now you're in margin in Japan and everything's good while the market's going up, right?
Now, technically, what happened in the last carry trade disaster in last August? What happened was we saw the yen surge in value by 10%. Because all of a sudden the Japanese central bank hiked rates suddenly. This meant that all of a sudden it became more expensive to pay back your original loan. Now this is where things get a little bit complicated.
Okay? So I'm going to try to simplify this. Everybody is shell shocked about what happened in Japan in last August. Okay, last August you borrow money. You borrowed that 100 grand. All of a sudden the yen surges and you're like, "Crap, it's going to cost me a lot of extra money to go back and pay off my debt." And if the market's selling off in the US and I want to get out and I get margin called, I got to sell even more.
It creates more Japanese selling pressure in America. But that's actually not what's happening right now because right now the yen is actually weakening. The yen is falling. The opposite is true. So why would we see, you know, a Japanese carry trade 2.0 fear? Well, because what generally happens is the yen is weakening for a reason.
People are worried that the new uh uh prime minister in Japan is running too much stimulus in Japan and she's going to be forced to raise rates and strengthen the yen. So people are actually trying to 4D chess this and sell ahead of the next carry trade. So the Japanese are like, well, may as well get out now at a discount than suffer the next carry trade.
This is my opinion, but let me show you some of the facts around this. In a Reuters article talking about the sale of Japanese treasuries, you have quote, "You just don't have many marginal buyers at the moment." Hm. Sounds a lot like the liquidity issues you have in America, too. Nobody has damn cash.
Everybody's too levered up. Too much debt. Okay, listen to this. We're calling this I'm calling this, by the way, the new prime minister in Japan. She's she's a woman. Uh not that that matters, but but people call it the Mrs. Teachi trade. I don't know if I'm saying her her name right, but that's what I'm going with.
So, the Mrs. Tekkai trade or Prime Minister Tekki trade. And the idea is that she wants to stimulate. Not only that, she literally just unleashed the largest stimulus package since COVID. Okay, so so try to follow this for a moment. Okay, you literally have Japan printing money. They're stimulating.
So Japan is stimulating biggest since CO. Okay, what does stimulus make you fearful of? Stimulus makes people fearful of inflation. So what happens? Yields go up. The market spikes rates for you. So all So where do we see that evidenced? That's evidenced in the Japanese 30-year bond, which is the yields are skyrocketing on this.
Now, the central bank in Japan isn't hiking, but the market is freaking out that the they're going to be forced to. So, there's fear. That's what this trade is. Okay? There's fear right now that the Japanese central bank will be forced to raise rates. If the Japanese central bank is forced to raise rates, then the yen will strengthen creating a potential uh creating the potential carry trade 2.0.
Now, that's not happening right now because you could actually get ahead of it right now. So, the market says, "I don't want that again. I'll pay off my JPY margin now. I'll pay off my margin now because the yen is weak. So I can, you know, get out while people are fearful about liquidity, seasonality, and Nvidia weird financials, right?
There's some weird financial stuff in there. I'm going to take all of that and a downtrend in in US markets uh since, you know, end of October. Really? You've had a downtrend in US markets since the end of October. So, why not use all of this as an excuse to get ahead of the Japanese carry trade? I'll go pay off my debt in Japan.
Now, how am I going to do that? I'm going to go sell more stocks in America right now. So, in other words, because the Japanese like if I put this simply, like bottom line, yo, Japanese yields up, people like, "Oh crap, shit's about to hit the fan. May as well sell before it does. I'm not gonna get caught with my pants down again like last year.
And so it's almost like people are FOMO. I don't know if that's the right word, but like pre-elling the carry trade, right? So now if the carry trade actually comes, then it's worse because then you end up with what I call a trifecta. So the trifecta for Japanese carry trade hell is yields up suddenly.
That's how the carry trade happened last time. Last time the central bank in Japan suddenly raised rates in like an emergency manner almost 25 bips. Nobody was expecting it. People were expecting they were going to hold rates at zero or negative. All of a sudden they're like JK rugpull 25 bip hike and people like oh crap margin calls.
Boom. You get three weeks of hell. all culminates after people are worried about a recession in the United States where the dollar you know now all of a sudden tanks because people think you know we're going to cut yields in the United States so dollar tanks makes the Japanese uh uh carry trade even worse that's a whole another aspect don't let the dollar falling confuse you with that right now okay this we could get so deep on this currency trade and I'm going to confuse myself if I keep going on this so the point is we don't have a carry trade implosion right now what I think we have is fear that the carry trade could happen again as the central bank in Japan realizes, oh crap, we need to raise rates because otherwise we're going to have an inflation problem.
That I think is what the markets are pricing in in Japan. On top of the fact that you just don't have liquidity. You don't have people sitting around with excess cash to go buy these Japanese bonds. But liquidity issues are the same issues that we have in the United States. We see the liquidity issues in private credit.
I mean, don't even get me started on on the private credit issues that we have. I'll give you a quick summary just so you can sort of remind yourself of some of these issues, but I think it's actually kind of wild. If I go to the Meet Kevin app and I search for Tricoler, I'll get this breakdown. Look at this.
Look at this crap show. So, what do I have right here on September 10th, which was also the day Charlie Kirk got shot, uh, we have gets rugpulled by JP Morgan. JP Morgan freezes an over $700 million warehouse line of credit and Triricolor goes bust. Now maybe they deserve to go bust, but they got rug pulled on a line of credit.
JP Mirricolor collapses on September 10th. First Brand collapses on September 28th and there are some really sus things going on with the auditors there and financing regarding the auditors. Maybe it's a canary in the coal mine. That's what the Bank of England says. The Bank of England is laughing at us going, "H, should have kept paying your stamp taxes." Uh, I Anyway, uh, October 10th, you have the crypto liquidation event, which is also a liquidity event.
On November 1st, UBS's two private credit funds with exposure to First Brands Shudder. On November 3rd, you have Black Rockck's Renovo Homes going from November 2nd, everything's fine. All our assets were worth 100 cents on the dollar to November 3rd. Actually, that 100 cents on the dollar is actually worth 0 cents on the dollar.
Okay, that happened on November 3rd. That's Black Rockck as Renovo Home shuttered. Then you had on November 4th the FiveStar Development Bankruptcy, which was the Ritz Carlton developer that went bankrupt after their construction lender rugpulled them on a $30 million loan in Arizona. And then they went bankrupt.
And then on November 10th, you had Sonder Holmes go bankrupt, blaming Marriott, but they were out of cash, bro. I mean, don't even get me started on companies that are out of cash. Like, if you want to know a company that is out of cash and you just want to look at something that looks terrible, like if you want to make yourself feel better with debt, just look at fat brands.
If you want like to study a financial statement that is the worst financial statement I think I've ever seen in my life, go look at Fat Brands. And maybe I'm missing something here, but Fat Brands franchises a bunch of restaurants like Twin Peaks and Hot Dog on a Stick and stuff. We recognize a lot of the brands that they finance, but Fat Brands literally has $2 million of cash.
You can see it right here. See? 2 million. September 28th, Fat Brands, Inc. in thousands, which makes that $2 million of cash. How much debt do they have due right here? Long-term debt, current portion, $1.2 2 billion, folks. I don't think I have ever seen a company with $1.2 billion of debt and $2 million of cash.
What the hell? But the point of this is if you put all of this together, what you're starting to see is this is a liquidity crash. Okay? Japan is bricks because nobody's buying their bonds. So yields are skyrocketing. Bitcoin's selling off because Bitcoin's done nothing for us in the last year. Okay?
I mean, think about that for a moment. I I'm not trying to dump on Bitcoin. I won't buy I don't own Bitcoin. And I I have told everyone in my courses, I will not buy Bitcoin until Michael Bur goes bankrupt. I think the guy's a Ponzi scam. That's it. I think he's a Ponzi. Okay, that's my opinion. I'm not on Bitcoin here.
I'm saying I think Michael Sailor needs to go bankrupt and then I'll buy Bitcoin. That's the day I'll buy Bitcoin is after Michael Sailor goes bankrupt. But the problem is you look at the one-year return on Bitcoin right now, you're negative 5.8%. You could have you could have bought house hack bonds, earned 5% yield, positive yield, and all the upside in the stock and the AI and the stuff we're doing in that same time frame.
So like the the return profile on Bitcoin has sucked over the last year, but so is Ethereum. I mean, look at Ethereum. Tom Lee is down three. People gave Tom Lee like $10 billion or $13 billion to go buy Ethereum and he's burned 30% of their money roughly. Ethereum's down 7% here today. Tom Lee was shopping at the top.
Tom Lee was the TOP. HE WAS THE EXIT LIQUIDITY. Tom Lee was the exit liquidity. Wow. You take a perma bull, give them a fund, promise them some stock comp, and you turn their face into exit liquidity for the institutions who are dumping on you. It's effed up. But now add all of this crap together. Okay, people are like and and I'm not like I want to be very clear here.
People are looking at today's sell off. They're like, "Oh my gosh, Michael Bur was right. Michael Bur is making a very long-term argument." I call it the BDT. It's the Bur depreciation trade. We have talked about this Bur depreciation trade for 2 years and I have always said it's not an issue now. it will be an issue in the future.
It doesn't make sense that chips that are 6 to 8 years old are still running at 100% utilization. The only reason it makes sense is because we have a supply shortage. It's just like why the hell does it make sense that Kevin got to fly around in a $13 million jet for three years and then sold the plane for a profit?
Why does that make any sense? The only reason it makes sense is obviously because I'm a genius investor. No, it has to do with the fact that there's a supply shortage of those aircraft. It's the same with the chips. There's a supply shortage. So, the value stays artificially high or even in a weird way case goes up like the plane.
It goes up. What? This is crazy. It's a depreciating asset. It should be going down. No. In the future, the value of those planes will tank when supply catches up. In the future, the value of the chips will tank when supply catches up. Has anything changed with depreciation curves today? No, no, no, no.
This has nothing to do with the bur depreciation trade. The bur depreciation trade has everything to do with an issue that comes after the bubble bursts. It has to do with after growth tops off. That's when the bur depreciation trade is a problem. Now, that's actually scary. I wrote that here. That's actually scary because it means the bur depreciation trade is still ahead of us.
He's too early right now, but it means it's still coming. So if the stock market falls off a cliff now, you still get to look forward to the bur depreciation trade, which is all of a sudden where the, you know, the mag sevens go, "Oh crap, we actually got to say uh that our um depreciation schedule is 2 years or 3 years instead of the six or eight years we chose.
Now, we're going to have to write off more expenses and all of a sudden EPS tanks at these companies and then the stocks sell off." That is still to come. That is actually scary if you think about it. It's totally scary. So, so now let's try to put it all together because like this is crazy. Hopefully, this is not the case.
But let's try to put this all together. Take a deep breath. We'll put it all together cuz it's crazy. Okay. Put it all together. Okay. Liquidity and private credit hell. Okay. That's where we stand right now. Then you have uh institutions selling on VIX. You know this is CTA selling. Okay. Then you have fear of Japanese carry trade coming.
Getting ahead of it by selling. And then uh you have Nvidia weird financials. Okay. Then in the future the bur depreciation trade. Okay, we still get to look forward to that, right? So that comes later. That's the BDT, not to be confused with buy the dip BTD, right? But that is actually over here. So what you also have right here, think about this.
You have the Fed uh rugpulling on December rate cut. Probably a big mistake, right? You have this artificial pump in September jobs while we hide October jobs data. This is crazy. So, let's try to let's try to put it all together cuz I could get excited about this, but how do I consolidate all of this?
I put it all together by saying this is at first and foremost a liquidity issue. Liquidity issues are driving all of this. Liquidity issues are causing the private like people don't have cash. They're levered to the tits. Okay, so giant bottom line, giant bottom line, too much damn debt. Margin all-time high.
Uh leveraged ETFs all-time high. SPVS, special purpose vehicles or acquisition whatever all-time highs, you know, debt way too high. That leads to a lack of debt that you can now get like new debt. So you get liquidity issues which cause it p causes private credit hell which leads to institutional selling which causes the stock market to sell start trickling over which leads to fear of the Japanese trade coming again the carry trade coming again.
So you're trying to get ahead of it. Then you get weird Nvidia financials, which I'm like, "Oh my gosh, this is terrible. This is some weird stuff." Marco Morales just donated $10 to say made $15,000 worth your calls this week. I would donate more, but I have a credit card to pay. Pay off your credit card, man.
I appreciate the 10 bucks. I appreciate you saying that. Thank you so much. Really appreciate that. Uh why don't we go ahead and pin your message? Oh, I can't I can't pin donation. Oh, because they're autopinned when you donate. They're autopinned. Oh, that's why. Anyway, uh then you have this Fed rug pull.
You know what? What are the odds of a rate cut right now? I'll pull it up. Uh and then of course you got this this data issue of us not getting I mean, you know what Kevin Hasset was just saying? Kevin Hasset, he was just saying this on Reuters. Kevin Hasset. Dude, my blood pressure is too high right now.
Uh Kevin Hasset, I get so excited about this stuff. I don't know. My fault. I apologize. It says Kevin Hasset says, "Oh, the the the shutdown uh had a much bigger negative effect than anyone expected." Oh, uh growth growth is going to fall because of the shutdown. Uh the September jobs data though was a hit out of the park.
This is funny. So now you actually have politicians going Everything was fine until the Democrat shutdown. That's the cover. Damn, man. Damn. I had I don't know. I mean, I I could be wrong about some of this stuff, but when I put all of this together, yeah, we have a 34.9% chance of a cut. When I put all of this together, it kind of makes sense.
It kind of makes sense. You know, why is this happening? It's because that's why. So, you know, I don't know. I mean, I guess if I had to say anything, &; The balance sheet's screwed. And if this balance sheet correction continues, then the unfortunate reality is there might not be a lot of places to hide for a while.
And this is why I've been such an advocate for raising cash, you know, like I say it all the time, not because I'm trying to shill House hack, although I will say I'm going through our AI app this morning on House Hack and I'm like, "Oh my god, this is actually really good." Uh, like I'm looking here and I could sort by uh most likely to be a wedge deal.
I see I could pick the zip code. I could pick whatever city I want. Uh, I type a city in, uh, like here, Davy, Florida. Uh, 19 19 options. I click update and then I get wedge deals in the areas I want. Dave, Florida, wedge score A. Oh, damn, that's good. So, like instantaneously, uh, picks up a deal that I'm looking at here that's got trash carpet.
Looks nasty. Some of the bedrooms don't even have flooring. That's great. Cooper City, Florida, blue carpet deal. Oh, that's hot. It's kind of interesting. So, pretty impressive. The app. This is getting pretty good. I just put a random zip code in there. Uh, that's awesome. So, like I'm really excited about this, but I don't know.
Where was I going with this? Uh, the reason I brought this up is because like we're just like stay out of debt, no margin. Uh, you could buy the dip. Like, don't get me wrong, I bought some of the dip today, too. But I also sold over $2 million. I actually probably sold like $2.7 million of stock in the last 6 weeks because I put my money where my mouth is.
And uh, and then I maybe I've bought like 200 grand back. And so I'm reallocating to different positions. But as you can see, I've raised cash. So it's like me personally raising cash. No personal debt raising cash. House hack has cash. focusing on our AI product, focusing on where we can make money.
Yeah, we just opened escrow on a 12th deal, but we're we're not going to go crazy on speculation here because liquidity is a premium right now. If you have cash, you're golden. So, makes sense why people are raising cash. You know, now I should say it just so I don't get in trouble. If if you're interested in investing in Houseack, just go to house hack.com.
It's . That's the only way the stock converts is if you're up on the stock. You can read about it at houseack.com. You get 5%. It's paid on a monthly basis. It's open to nonacredit investors. Read the offering circular. And uh yeah, we're pretty we're pretty excited about what we're doing. But as far as this liquidity hell, do I think it's fair to say that Bur was right today?
No. I actually think that Bur is early on the depreciation trade. all of these other things to a very basic kind of like Twitter surface title reader user. The title readers drive me nuts. But I think that's why people come to my channel because we go deep into nuance. I don't think I get as many views because like I I I don't do surface level stuff.
I try to go as deep as possible on things. I love going deep. Okay. I got seven kids. Okay. Anyway, I got to go. Okay. Bur will be right in the long term. I don't think he's right right now. We've got liquidity issues that are causing hell, not just in Japan or in private credit, but here at home. And Nvidia's funky disclosures were really sus.
Uh, somebody here donated $50 to say check Nvidia. Are you going to Is this a reference to Peter The selling? I think it might be, but uh somebody donated $50 to say go to Nvidia, check the sale of securities on October 29th, the SEC filing. Scroll down to the last three months of sales to see who's selling.
Okay. Oh, yeah. It's Jensen. I mean, it's true. I mean, but this is also in fairness. He gave his 10B5 or 51. I don't know what the hell it's called. Yeah, 10B51 plan. He did issue that in March. So, he has been transparent about that. And in fairness, that sale just ended. Now, maybe it happened to conveniently time the top.
Honestly, maybe he did. But yeah, Jensen's been dumping shares and but he's been jump dumping shares basically since you know what? Yeah, July. Now, let's see here. Uh wouldn't that be interesting if that aligned with the top? Because I think the top was like 10 days ago. 210, right? 212. Oh my gosh, look at that.
October 29th was was the top, dude. October 29th was the top. And when was his last sale? Oh my god. October 28th. Dude, the guy the leather jacket is going to go down in infamy. I'm from Europe. Somebody says, "I'm from Europe. Can I invest in house?" Like, yes, you you could be anywhere except Bulgaria or Iran or North Korea.
I don't know why Bulgaria is on that list, but you just have to not get caught up by the what is it called? The OFAC terrorism checks. And I do not know why Bulgaria is part of that. Don't ask me. Ask the SEC. But anyway, that's crazy, dude. Jensen finished selling his stock the day before the freaking top.
Max just picked up 10 house hack convertible bonds. Excited for that. LET'S GO, MAX. WOO. What up, Mo? That's awesome, dude. Thank you so much. And donating here to say that. I love you guys. I And I'm sorry I get like heated sometimes with this stuff. It's It's really because I love this stuff. Like I have a headache right now from screaming and I uh like I need to look at my aura thing.
It's probably off the charts. I'm burning. This is how I burn calories. So I apologize. Daytime stress stressed. Yeah. Yeah. That that's appropriate. Um it says I'm max stressed. I'd love to show it here. my max my stress peaked around market close. That's when we started filming this. I think there's only one thing left to say. &.
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