Why the Stock Market Is Tanking

[00:02] you from well an airport in Amsterdam which you know what that means. The market's probably red and well it is. This is why we have a coupon code at mekevin.com called vacation red that's going to expire pretty soon. But but

[00:14] anyway, let's actually focus on what's really going on because I think I'm been studying a lot just sort of in travel what other hedges or suits or even nonsuits retail whatever are are thinking about the market. Uh, and I

[00:29] uh, in terms of what's happening is actually a lot simpler than, uh, what I'd like to discuss in this video, in addition to what JD Vance said on the gives us a little bit of color into what's going on in Iran, which also aids

[00:46] our commentary on oil and treasuries, which is equally important to, well, the broader market and capex funding because capex is being funded by debt. And as treasuries go up, the cost of debt goes up and therefore the cost of buying

[00:59] chips goes up and you kind of squeeze all that, right? Like the squeeze we saw at IBM that we talked about was really this prioritization of spending because yes there is limited access to capital or at least limited access to cheap

[01:14] capital. It is getting more expensive to raise money uh which which is fine. I mean treasury is hired is what it is. You know, for example, uh, House Hack, example. It's not a pitch. We're not fundraising or you House Hack's not

[01:28] trying to sell you anything right now. Uh, but I try to use it as as an example and go, "Okay, wow. Well, there's, you know, studying the market and then business?" And I remember last year, you know, wow, we're buying we're switching

[01:43] CPUs. We're and then we're telling Course members, we're like, hey, this could be really good for AMD. and AMD skyrockets from like the 170 range to you know the 500s now. And uh you know then we also realized just in the last

[01:58] GPUs has doubled. You know those are paper gains but whatever those were back earlier last year for our proprietary models. You know one of the things we're seeing now is that when it's time to raise money which we think you know

[02:12] and trust me this isn't all about a house hack. We're going to talk about happening in just a moment, but I think it relates and that's why I'm not trying to bore you. I'm trying to give you this insight from our point of view. In the

[02:24] buy in real estate. We usually go buy real estate. Let me clarify how I'm every single year since we started the company and first said, "We're going to go buy real estate Q3, Q4 of 23. We did it then, did it in 24, did it in 25,

[02:37] when we think we can find the best deals. And so we're thinking like, do we fund raise, you know, going into Q3, Q4? that latter back to school portion. Uh and if we do, we probably fund raise at a higher well not only valuation but but

[02:51] higher yield than what we did before just because the cost of capital has gone up. Now fortunately we can sustain that we can pay that right you know have before which is great partly because of the AI products that we do

[03:05] sell but the point is companies to some extent are having to make decisions money the money that we are raising is more expensive and uh you know let's make some more strategic choices and I think IBM is an example of that now what

[03:23] that highlights isn't well seen on its own. The IBM have to combine it with what Mark Zuckerberg said. And a lot of people, I Zuckerberg said because Mark Zuck, you know, in a private meeting talked about

[03:39] potentially selling this this extra capex or this this extra compute that we have. Uh, and then he later followed up and clarified that, hey, but the reason comput isn't necessarily because we overbuilt. It's actually because people

[03:54] are willing to throw so much money at our compute just to get access to our compute so that they can operate their proprietary AI models or whatever it is that they're doing. And so Mark is really trying to signal to markets,

[04:07] look, we're going to be a little bit more opportunistic in how we can make money. Now, there are two ways to read that. One way to read that is, okay, Meta is uh an AI play, it's an advertising play, and it's a comput. I

[04:22] point of view of how AI makes advertising better, which I think is massive, and I only like it from the advertising point of view, but whatever. "Oh, this this is so bullish. Great opportunity to monetize at high

[04:34] valuations, whatever, or or high prices for compute." Other people look and say, for compute." Other people look and say, "No, this is this is a sign that they're they've done." Of course, then a week later, they're like, "We're going to do

[04:46] another facility in Canada." So it, you know, you get a lot of narratives that play to both sides. What I think is uh probably true is that there's a mix of a Zuckerberg himself has argued that they've fallen behind sort of on the LLM

[05:02] addition to sort of falling behind on that LLM race, they realize that they need to be opportunistic about how they make money so that way they their stock doesn't keep tanking. Because if the stock keeps tanking and people keep

[05:17] bailing on the stock, then guess what happens? It becomes even harder to raise money for the initiatives that you do think are profitable. Now, I think Meta has been brilliant in how they've arranged their a lot of their leases. I

[05:29] arrange a lot of them off balance sheet, but the cancellation clauses that they they're going to leave a lot of bag holders in the companies who are providing these sort of least compute services. But if they can pick up

[05:44] dollars, great. But now you have to combine this uncertainty with what's combine this uncertainty with what's going on with Meta with the IBM news, which some are like, "Oh, that's bullish hardware." But then others are like,

[05:58] "But then look at the Meta news." Okay, combine both of those things with the suckening. Remember, we've talked about a suckening for four weeks. We have said on a consistent basis since before the SpaceX IPO, this sucker is going to meme

[06:12] and then it'll bleed. I called for a 30% rise and then a bleed. And I'd like to know, people Well, first of all, somebody did like an AI analysis of my alpha reports and and said, uh, Kevin Claude says you're actually underelling

[06:27] uh your your success ratios. I'm like, oh, that's really nice. I don't like to be like I'm perfect. I obviously make mistakes as well, but you know, somebody like, "But Kevin, you said sell Micron in the 600s." I said, "Sell Micron in

[06:41] the 600s while we were in the Iran war." And then it went well into the low 500s. still in the 500s, we said hardware is about to rally and it's going to boom.

[06:53] happening here?" Because hardware did get cheap and there were no capex wos yet. And that's what we're about to tie into. And then of course we got this massive rally. Now once again we think it's overblown. So things change and you

[07:07] know it's a little harder in the public videos. Uh and and that's why I report. That's not to be intentional. It's just that that's where we're black and white so you don't have to sort of listen and potentially miss

[07:20] transparent as possible about this. So that's why I tell you on sort of a daily basis, here's where my mindset is. So, I went very public about SpaceX and how it's going to be a liquidity suck. Problem is cash and money markets plus

[07:33] money and bank accounts is low. When you combine those two together, it is historically low. If you only look at money markets, it looks historically high. But you have to combine cash and savings account accounts because now

[07:47] people have moved their savings to money markets. So, it skews some of the money much cash available argument. There's not a lot of cash available. you had the great sucking. So, we called for the 30% up and then the bleed, which is exactly

[08:00] just looking at the past and saying go report, what does that mean going forward? Well, since the SpaceX IPO, we've talked about how money is going to be harder to access, especially on that

[08:15] lockups to get money to go invest in other opportunities. But now you have to add the IBM warning and the meta capex warning which is either opportunistic or it's a capex warning. It's kind of like when the boom is really taking off

[08:30] it's going to keep going. It's going to keep going and keep going. When you get to turning points in a cycle you could start reading things two ways and then obviously when we're on the downturn you can only read things one way. All capex

[08:44] is going negative. we're at this sort of like potential turning point or pause where people are like, "Oh, is this the beginning of a turning point or is this just a pause or are people misinterpreting Meta?" So, what is the

[08:58] answer? And this is the forward-looking part. This is what I'm telling folks in the alpha membership and I'm sharing this with you just to be fully transparent. I I would rather be transparent with you bluntly and be

[09:10] And then we're going to talk about what Joe Rogan just said on the uh and JD interesting and it also applies to what's going on in Iran. So what's next? Well, what's next is we've got to see what happens with mega cap earnings. Now

[09:27] this is going to be really interesting because between now and next week we are sitting around twiddling our thumbs waiting for a big boy. Google on the 22nd, Microsoft on the 29th, Meta probably also on the 29th, Amazon on the

[09:41] 30th, you've got Apple coming up, Nvidia's late in the cycle, but seeing Nvidia's late in the cycle, but seeing that, you know, TSMC beat and raised guidance. They raised their capex by 6.4%. Their revenue growth was expected

[09:54] to come in over 30%, it came in over 40%. They're expanding their capex. All that is great and all, but what does it take to actually get TSM to react leave me comments. They're like, "But Kevin, memory is sold out until 2027.

[10:12] Maybe even until 2030." I'm like, "Great, because you know about that. Every other butthole knows about it as well. And it's already priced into the stock market. That's why markets look for turning points so that hedge

[10:27] funds can be early on the turning points and try to beat retail to the turning and try to beat retail to the turning points. My goal and my alpha report is to basically try to provide what hedge funds are thinking with my take and

[10:39] provide it to you ideally even before they report on it. Right? I'm trying to they report on it. Right? I'm trying to be ahead of them to finally give us an some of the suits are watching and if you are all right fine but anyway we're

[10:53] you are all right fine but anyway we're all people after all. Okay. So what happens between now and then? Personally, I think especially uh in the midst of this Iran drama, a lot more uncertainty and potential movement to

[11:06] the downside, especially as the Iran war potentially escalates. potentially escalates. That means until we get a clear guide from Meta and Google and Microsoft that they're going to keep spending,

[11:20] including not just their capex guide that they write on paper, but what they say in their earnings call, the market is going to be skittish because SpaceX kind of burned them. And you know, I'm not I don't want to keep saying, hey,

[11:33] like I told you, so I'm invested in SpaceX in my venture capital fund and I don't want it to go down. And I said that since before its IPO, I'm like, I you know, we've been in it since whatever uh you know, $300 billion. And

[11:48] you know, I remember I'm like, this is now $2.2 trillion. This is great, but it ain't going to last. When can I get out? You know, it's like forecasting before I could even sell. Uh but that's okay. Uh so, so now we've got this catalyst

[12:04] calendar, which is basically mega cap earnings in whole. If this rally is going to keep going and hardware is going to keep going, we need the Zak, uh you know, the folks over at Google to be bullish on more spending. But not

[12:19] just more spending compared to last year. We already expect to go from about 450 billion in spent to over 7 and a quarter, so 725ish billion in spend. And maybe that'll break a trillion next year. That's already priced in. We need

[12:33] to beat those expectations and then the semi- rally can keep going. Unfortunately, until then, you can't just rely on cyber security to hold up the market. You can't just rely on software to hold up the market. We need

[12:47] hardware to stabilize and another sector to rally. And for 4 weeks now, we have not had that. For 4 weeks now, we have not had sustained support from hardware or another sector. And hence, we've been bleeding on the NASDAQ 100. Now, where

[13:02] can we potentially go? But unfortunately, if this Iran drama keeps going, my take is we could potentially head down to 675. I did put a time frame on that. Uh I'm not saying that's going to be, you know, today. Who knows? We

[13:15] could end up going green today, right? The argument is that between now and those earnings, the nervousness for cash, the dash for cash may be or even extreme that we could knock on the door

[13:28] of 675. We've talked about that time way time frame wise in the alpha report. and you're always here at there first. Make sure to join over at me.com. Now, what did JD Vance and Joe Rogan say? Well, this is also interesting. So, this has

[13:40] to do with Iran because the United States has been on and off bombarding coastal installations to basically try to get the hardliner Iranians back who are launching drones and causing disruptions in the straight of Hormuz.

[13:53] The great thing about that is hopefully we start diminishing some of their capacity. But JD Vance kind of gave us a big reveal. He said on the Joe Rogan in Iran. You've got the crazies and the pragmatists. And the crazies don't have

[14:07] to send a lot of money to some loonies with drones to cause a disruption in a straight of Hormuz. Because frankly, one ship catches fire and gets attacked. A and throwing up their hands and saying, "Our insurance isn't going to cover

[14:20] through it." And that's where we end up getting disruptions. And unfortunately, this is not from the podcast, but we know this. Donald Trump has shown his hand. He does not. Oh, yeah. Look, headline now. Iran warns US of Hormuz.

[14:37] Red line says it will retaliate to Trump's strikes, right? Because they want control of the straight of Hormuz. They know the leverage point of the United States. And JD Vance alluded to this. You know, they said the Hormuz is

[14:49] the leverage point. But let's be clear what the real leverage point is. The real leverage point is the S&P 500, which is only down 19 pips today. You pips as we're recording this. Dow Dow is slightly positive, but it's really the

[15:02] economy and with oil now Brent now back up over $85 where it was under 75. WTI was under 70 for a moment there when we thought the street was back open under theou. The economy is the only thing that

[15:16] papers over the sort of crazy experimentation that Donald Trump does I, you know, I'm not here to make a debate about whether you should like tariffs or not. Most of you already know I am anti-tariffs. I'm a free market,

[15:30] more libert economically libertarian, you know, actually pretty leaning, I'd when it comes to left or right, pretty much in the middle, I'd argue there. But anyway, the whole point of this is it doesn't

[15:42] Tariffs are an economic shock. Only about 50% have flown through the economy yet. The others are still flowing through the economy. It takes time to roll them through our CPI and PPI and PCE reports. And unfortunately, the only

[15:56] thing that's holding those up or holding the economy up is the stock market. The stock market tanks because oil goes to the moon and people are worried about now a new forever war where we start and stop strikes in Iran,

[16:09] Donald Trump's ability to paper over his experiments fails. And unfortunately, if his ability to paper over, his experiments fail and the economy tanks into recession, then Donald Trump will unfortunately go down as a failure

[16:24] solely because of the stock market tanking. And of course, people will then this is why the stock market ended up tanking. But the point is the reason performance so much is because if he knows if we go into a recession the

[16:39] stock market corrects 30% on the index levels, 90% on stock levels, so many people are going to lose their jobs and everybody's going to blame Donald Trump. economy and Iran knows it. They know they have a leverage point and Jance

[16:53] fully acknowledges that in the um Joe Rogan podcast. Now he also says we're not going to send in troops. We've destroyed their nuclear program, which send in troops is basically the opposite of what Donald Trump said about yeah, we

[17:06] might have to raid Pyramid Mountain soon, which can't be struck from the ground and you're telling me the nuclear program isn't over. So like the left the right hand isn't talking to the right hand here, whatever. Uh JD Vance

[17:21] if you have these forever wars go on, you can end up causing a failed state which then causes a migrant crisis in Europe. Totally agree with that. By the way, I actually have to say I think JD Vance is relatively

[17:35] rational in the way he presents himself. Uh he tries to be reasoned. Obviously, we could pick apart some of the things that he says. Uh, for example, you know, but when it comes to the Epstein files, he really punts on that and says, "Well,

[17:49] job communicating, but it's not our fault. Uh, it has everything to do with Epstein, and they dropped the ball and they didn't give us the material that we needed to really fully reveal what kind of scumbag this guy truly was." One

[18:04] interesting though was that JD Vance points out a Time magazine piece where former campaign manager is running a campaign for Israel. Uh, and this uh

[18:17] Brad Parcale guy who runs a firm called Clock Tower X apparently targets Gen Z Clock Tower X apparently targets Gen Z on social media and uh wants to basically uh let the entire generation and even

[18:32] artificial intelligence chat bots be influenced in a pro-Israel way by trying to spread pro-Israeli call it disinformation or misinformation, whatever you want. Apparently, Israel is paying $1.5 million a month to Clock

[18:46] Tower X to do this, paying influencers as much as 4250, so $4,250 per post on X to to essentially try to uh manipulate Americans to continue to be pro-Israel.

[18:59] of losing some of the communication battle uh and that every country does saying, well, you know, everybody tries to manipulate public discourse, which is probably true. I mean, Iran puts together Lego AI to try to manipulate

[19:12] that they're the underdog, right? So, it's an interesting interview. There interesting, but it doesn't surprise me and I don't put it doesn't I don't put spend money for their purposes. They're a country of 9 million people of of

[19:26] fact check that population, but of course they're going to try to do everything in their power uh to keep funding going for their Iron Dome, whatever else uh uh priorities they have. Uh, and I truly believe, this is

[19:39] by anyone. The only sponsor I have is House Hack. You know, we don't even take sponsors on his channel. We're not taking sponsors on the channel. Uh, but the point is, uh, yeah, 9.38 million. But the point is, you know, Israel

[19:53] probably has a point to some extent because I personally think Iran is Mountain. Donald Trump is aware of it. They're not telling us the truth about own read. It's not something somebody else is feeding me. And you know, if I

[20:06] because I think the day will come where Israel holds up the bomb and goes, "We Iran holds up the bomb and goes, "We got it." Straight's ours now, boys. What are you going to do about it? Just saying. Uh and I don't think they'll put the

[20:19] safeguards on that sort of bomb like uh the safeguards that we have on nuclear a nuclear bomb right now it doesn't detonate but that's because they have intentionally designed not to blow up

[20:32] when they get shot down potentially in inadvertent areas. I don't know that Iran would do that and include those sort of fail safes because I do think and I agree with JD Vance that there are hardliners uh that uh that will keep

[20:44] and that's obviously where I circle back to saying this is uh this is um you know bearish uh this uh I've actually reduced my level on the bull bear scale because of the Pickax Mountain comments because I've been worried about Pickax Mountain

[20:59] as a next two or threeear issue. Donald Trump mentioning it moves up my concern. You can see what we're buying by joining over at mekevin.com. And frankly, I expect to buy stocks and buy the dip on stocks between now and next week uh when

[21:14] paying very close attention to everything that's being said in these earnings calls because that's the key. As soon as we see capex roll over, I As soon as we see capex roll over, I agree that it is game over.