Two SUBPRIME Hedge Funds Just Blew Up (What You Need To Know)
Summary
Market Parallels: The guest draws detailed parallels to 2007, emphasizing rising counterparty risk, stressed repo markets, and a potential doom loop as liquidity tightens.
UBS (UBS): Extensive discussion of UBS liquidating O'Connor funds, large redemptions, and the irony of 'high-grade' marketing echoing Bear Stearns, highlighting contagion risks in Financials.
CarMax (KMX): The guest outlines a short thesis on used-car retail, citing collapsing demand, CEO ouster, and a sharp stock drop as evidence of consumer stress.
Subprime Auto: Repeated references to blowups in subprime auto lending and rehypothecated collateral underscore mounting defaults and balance-sheet transmission risks.
Private Credit: Ongoing stress in private credit and shadow banking is flagged as a key source of tightening liquidity and redemptions, with broader spillover potential.
GICS Focus: Automotive Retail and Investment Banking & Brokerage are highlighted as pressure points within Consumer Discretionary and Financials respectively.
Contagion Risk: The networked nature of bank balance sheets is stressed as a catalyst for financial contagion, where isolated failures can propagate system-wide.
Policy Outlook: The guest expects aggressive policy responses (rate cuts, stimulus) that may avert a 2008-style crash but risk reinflating imbalances and future inflation.
Transcript
Hello fellow Rebel Capitals. Hope you are well. I didn't get to do a Halloween special, so today I've got my costume on. Who am I? Let me know in the chat. And if you guessed Josh Lassard, you are correct. Or I'll also take every single young person that works online. Either or. But getting into the topic of today's video, we've got big big news and that is two subprime hedge funds just blew up and it's getting eerily eerily similar to 2007. Now they say that history doesn't repeat but it rhymes. When you look at what happened with like Bear Sterns in 2007, it isn't really rhyming. It's like it's like literally repeating itself. That's for sure. Okay, so let's see how Josh Lassard does this video here. You guys ready to rock and roll? Okay, let's dive in. So, we have first and foremost. Oh, let's go over here. What's happening? UBS. Why is it always the Swiss banks? It's either Credit Swiss, UBS, and remember UBS basically absorbed Credit Swiss when they blew up in 2023. and they were always on the brink, you know, just a matter of time. But here's what happened. So they had two funds or they had a group of funds called the Okconor funds. And I think this was they're based out of Chicago or something like that. But the bottom line is that one of these funds that blew up had big big exposure to first brands. Now we got to give a hat tip to Jamie Diamond. That's for sure. Because man was he ever right on the money when he said that when you see one cockroach, usually there's a lot more [laughter] that are hiding and eventually they'll come out and you'll find them. And that's exactly what we're seeing. As the tide continues to go out, it reveals that more and more people are swimming naked, so to speak. So, and then why this matters is because it's never contained. It's never contained. Now, you might be able to kick the can down the road, but it's never contained. Why is that? Why is that? Because you guys know from watching my videos that the monetary system, the global monetary system, is simply a network of bank balance sheets. It's a network of bank balance sheets. So what happens is one bank's balance sheet is usually connected to in other words one bank's the asset side of one bank's balance sheet is usually connected to the liability side of another bank's balance sheet and that bank's balance sheet asset side is connected to the liabilities of this bank and that bank and that blah blah blah blah blah blah blah blah. So, what happens is it's a lot like old Christmas lights. For those of you who are old school, who those for those of you who don't dress like this, [laughter] you remember that back in the day Christmas lights when one bulb would go out, it's like the whole thing was shot. And now it's not that extreme with the modern-day banking system or the monetary system, but when one bulb is out, the amount of risk in the entire system goes up tremendously. And if the amount of counterparty risk goes up, then there's a lack of liquidity because the banks at the end of the day are the ones that provide liquidity. They're the ones that extend credit. And it doesn't matter what the Fed is doing. QE QT, this is this is all just it's a sideeshow really. What matters is the amount of counterparty risk. And so how can you argue that the amount of counterparty risk has not been going up? I mean it starts atricricolor and then it goes to first brands and then it goes to what was the one? Prima lend or something like that. And then Zion comes out says, "Ah, yeah, actually we a little fraud that uh you might want to know about because all these loans that we were doing, the collateral that was being pledged was all BS and it was rehypothecated about 45 times." [laughter] And so, uh, we're kind of last in line. And what that means is you really don't have any collateral there. And the same thing with Western Alliance, they came out and then we have talk about the auto business. We have CarMax just completely collapsing. And we'll get into that here in just a moment. But let's get back to these hedge funds because what's really important, I got to give another big hat tip to my good friend Jeff Snyder because he pointed this out on a recent video is it's not just the fact that these funds are blowing up, it's that they're starting to get big big big redemptions, which makes sense, right? So, as an example, this uh Connor or one of the Connor funds here that had massive exposure to First Brands, their sister fund, well, they're being shut down as well by UBS, but they had no exposure to First Brands. Why? Because they're just getting a flood of redemptions. Because you don't want to be the last guy that gets up and heads toward the exit in a movie theater if there's a fire. Like you want to redeem your money and then ask questions later, right? You want to shoot first, ask questions later. You don't want to sit there and be the bag holder. And so where there's smoke, there's fire. And these investors are acting in my view very intelligently where hey I've got my money in this fund that by the way by the way the these were subprime funds but the title the way these funds were marketed was absolutely I don't know if it's fabulous [laughter] but it's it's laughable. It's laughable. They were all marketed as ah no it's not there. Let's see if I've got it over here. That's Bear Sterns. We're going to get into that in a moment because this is almost uh identical. Oh, yeah. This might be it. Dozen key dates. No, that's not it. Uh that's a chart of what Bear Sterns did. And by the way, when the funds blew up, and we're going to get into a timeline there, it's right here. So, middle of 2007, 2007. So you had all this time where they're trading above a hundred bucks when these funds blow up that if you would have been paying attention then you would have seen this coming, right? Like pay attention. Like look at the yield curve as an example. But what do you think all the bulls were saying back then? Oh, you're just fear-mongering. Oh, this is just two funds that Bear Sterns is shutting down. Who who cares? This is just uh it this doesn't make a difference in the grand scheme of things. Sure, they might have had some sort of connection to mortgage back securities, but this is all contained. This is all contained. I'm sure it's the exact same argument that you hear today. So, let me go back. Josh, go ahead and hide my screen for a moment and because I want to How do I get back here? You guys are going to love this. It's absolutely just the the most ironic thing I've ever heard. And it's right. Oh, here it is. Okay. So, that's what it was. Okay. So, the way Bear Sterns marketed these funds. And again, this is why I say it's like history, not even repeat rhyming. It's actually repeating. It's repeating in the sense that UBS marketed these funds in the exact same way. In the exact same way. And how do you think they were marketed to the general public and to the supposedly sophisticated investors? They were marketed as highgrade. Oo, high-grade. Yes, they're they're high-grade all the way up until the point where they're not and they fail. [laughter] up until that point. Yes, they're very high grade, but it's isn't it just it's just it's almost like we're living in a simulation where you can't make this stuff up where not only did they did Bear Sterns have two funds that blew up and they had to shut down and they and one of the funds blew up as a result of redemptions, we see the exact same thing now play out with UBS. But all four of these funds just so happened to be marketed the exact same way. And that's with highgrade. Oh, it's a high-grade fund. And then of course they're blowing up because of not only redemptions but because they have exposure to subprime garbage. Subprime garbage. Whether it's subprime garbage in the housing market or in the auto market, it doesn't matter. you can still lose 50 cents on the dollar. In fact, in this case and in Bear Stern's case, you can go completely tits up, [laughter] right? So, and again, I'm not saying that there's a lot of systemic risk with these subprime auto cockroaches. I am saying that the risk or the systemic risk is in the fact of this freezes up the system. Right? Right. So, if we look at the repo market, you guys, I'm sure, have seen in the news that the repo rates are going up and the Fed's like, "Oh, well, I don't know. It is a little concerning. Maybe we should stop doing QT." It's not QT. It's It's counterparty risk because what happens is the lender I mean, wouldn't you do the exact same thing? I think we talked about this the other day. So, if you had $10 million to lend, it doesn't matter how much extra money you've got the money. You've got the money. But if you don't get any good deals, if the counterparty risk is too high, guess what you're going to do? You're not going to lend. And if you do lend, what are you going to do to your interest rate? You're going to increase it to compensate. Now, is it because you don't have enough money? You don't have enough liquidity? There's enough credit available? There's enough balance sheet capacity? No, you've got the money to lend out, but you're not going to do it. Why? Because the risk is too high. So again, the QEQT thing, I think it completely overlooks the elephant in the room and that's that all the cockroaches are showing up and that in and of itself is going to reduce the liquidity. But by the way, that creates a doom loop where the reduction in liquidity makes the tide go out even further which makes more cockroaches appear. So getting back to this uh UBS group liquidating two invoice finance funds with exposure to no no only one of the funds had exposure to first brands. The Swiss lender is closing the working capital. Look at how great this name is. the working capital finance opportunistic fund. Oh, which is highrade. I mean, you can see them pitching this like six months ago to an investor and and just some, you know, some guy that's got a lot of money but really doesn't watch my channel or is completely oblivious to the yield curve and what the yield curve is just and interest rates are just shouting at him right now or her. You can hear the pitch. Oh yeah. Wolf for you. Yes, you could get four or five% in treasuries right now, Steve. Or maybe Bob is a better We'll go with Bob, the smart guy, Steve. So Bob, yeah, you you could get the four or 5% in treasuries, but why would you want to do that when just taking a little teeny weeny weeny bit more risk? And it actually, you know, it's not that much risk. It's it's no more risk. It's no more risk because we just created this product that is basically risk-f free. The only difference is instead of getting 5% in a treasury, you get like seven or 8%. And the way we've structured it is so clever that you're really not risking losing any money because remember how these derivatives work that you're way up the capital stack. I mean, you're you're way up here, Bob. So all of these things would have to go bust before it even touches you. And that's true until it's not. And that's what we're seeing play out right now with UBS. So although this is, you know, and it's like when we first heard of it, it was like, yeah, okay, no big deal. It's small. It's not going to really impact that many balance sheets. And then the the week after or whatever it was. Oh, and then you get first brands and oh well, okay, there's a little bit bigger deal, but nothing to worry about. The sweeping under the rug. Oh, look, a squirrel. And then you keep going. And then it's Zion. And then it's Western Alliance. And now it's two more hedge funds with UBS. And it's like these these things keep piling up here to the point where even the bullish the most bullish person out there has to scratch their head and say, "Well, maybe actually this is something I should pay attention to." Just maybe, just maybe. Especially when you look at the parallels with 2007. So, let's um let's go over to that right now. Let's go over to this timeline. the dozen key dates in the demise of Bear Sterns. So December 14th, 2006, Bear Sterns post record earnings touting huge profits and gains from a booming business. This sound familiar? So the booming business in 2022, 2023 and toward the beginning of 2024 was everything everything was booming. Why? Because of the government distortions to the real economy due to their respon not due to the surveys sickness but due to the government's response to the surveys sickness. So everything is booming. You got all you don't have to pay your rent. You don't have to pay your mortgage. You get the the stming. You don't have to pay your student loan. You have to do any of this stuff. And then we're increasing wages because the price of stuff goes up because we have a supply shock again because of government distortions are locking you in a cage. Don't get to produce much stuff when people are locked in cages. And then we're like, this is just going to last forever. I mean, look at this aggregate demand. The government did such a fantastic job. And then you start getting into the middle of 2024 and you're like, "Yeah, I don't know." And then we get to the end of 2024 and then they're like, "Oh yeah, by the way, so the revisions to the non-farm payrolls, uh, that's going to come in at about 818,000. Sorry, my bad." [laughter] And then and then we roll into 2025 and you're like, "Yeah, more revisions." In fact, the next round of revisions we get, yeah, it's down by about a million. My bad. And then almost every single person that I talked to, just using the anecdotal evidence, they're saying how, you know, up until 2024 and even into it was like boom times. Whatever you were doing, it was just boom times. In fact, I just was at lunch and a guy I know just happened to be at the same restaurant come up said hi and he's a big influencer in the car space on uh Instagram and YouTube and he doesn't he knows that I create YouTube videos. He knows it's on economics and finance, but he I I doubt he's ever even watched a video. And so he doesn't know how in the weeds I am with this stuff. And so he comes up to me and I'm like, "Well, how, you know, how's Instagram?" "Oh, Instagram's great. It's this. It's this." But his Instagram channel now he's kind of pivoted into international real estate. And so he said, "Well, the YouTube channel is still all about cars." And I'm like, "Okay, well, what what's what's going on with the the car?" I mean, you had like 300,000 subscribers. He's like, "You know what? Nobody is buying cars anymore." Goes, nobody nobody's buying cars in the US and in Canada. Those are his two big markets. And he's like, you know, back in 2023 and in the beginning of 2024, he goes, "All these dealers were sending me cars for free and I was reviewing them and they're getting, you know, my videos are getting hundreds of thousands of views." He's like, "Now I try to get a car for a deal." They're like, "No way." Because the marketing just isn't working because the views aren't there because no one's watching videos on cars because no one can afford to buy one. So, I think it's just really interesting when you look at this at multiple levels. You look at the anecdotal evidence that I just went over. You look at what's happening macro with the overall labor market. You look at what's happening in the macro with interest rates, the yield curve, something we've been talking about on this channel extensively for the last three years, kind of warning people and giving them the heads up that when the curve uninverts, usually that's when the stuff starts to hit the fan, which is pretty much exactly what we're seeing. And then you see all this stuff in private credit. You see all this stuff in shadow banking starting to come to the surface. The tide is going out. And then you see the lack of liquidity in repo is a result of risk going up. And then that takes you right into the doom loop. So the question becomes how bad does the doom loop get? So on that note, let's get right back to Reuters and this timeline of Bear Sterns. And you tell me, you tell me if this sounds familiar. You tell me if this is like terrifyingly [laughter] consistent with what we've seen here in 2025. All right. So, going back to 2006, we got that they're just printing money. They're printing money just like every single business did between 2021 and 2024. But then you start seeing some cracks. January 12, 2007, they close at 171 Bear Stern's shares. I think that's an all-time high. Yes, a record. So, this is momentum from its strong earnings report. Okay. Then May 2024, excuse me, May 24, 2007, Bear Sterns, the shares closed at 147. This is 6 weeks low. Why? Goldman Sachs slashed its quarterly earnings target for the rival investment bank. All of a sudden, you're like, "Ah, okay. That's a little bit of a crack, but who cares? Just bye-bye. Let's buy the dip. Buy the dip. We know Bear Sterns isn't going out of business. So, this is just an opportunity to dollar cost average." I guarant. You know it. Of course they were saying that. of core. Then we get to June 14, 15, 16, 2007, 2008, 2007. On June 14th, Bear reports earnings, Bear Reports earnings declined for the first time. Yikes. [clears throat] In four quarters on weaker results from mortgage back securities or their mortgage securities business. June 15th, Wall Street Journal reports a hedge fund run by Beer Sterns has suffered big losses on soured subprime subprime mortgage investments. Now, if you weren't paying attention five minutes ago, this is exactly exactly what just happened with UBS. The only difference is this is subprime mortgages and the direct exposure UBS had through the one fund was subprime autos and and is the subprime mortgage market much bigger? Absolutely it is. Absolutely it is. But this isn't really about the size of the market. It's the fact that if the in if the risk increases, it's going to impact to a certain degree all of the balance sheets in the network that is the monetary system. It's just a matter of to what degree. All right, let's keep going. The next day, the 16th, the journal reports Meil Lynch, a credit creditor to the fund, seized some assets. The stock closes at 150. And another thing that I find fascinating as we go through this timeline, you'll notice that Reuters always puts the average target price from analysts at the time. They kind of time stamp it. So here the stock closes at 150, but the average target price from analysts is 181. And you'll notice every single time stamp the average target price is always way higher. [laughter] Ah, all right. July 17, as losses from subprime mortgages began to threaten credit markets around the world. And by the way, were they really threatening credit markets? This is this is not 2008. This is the middle of 2007. And remember, when did the S&P 500 hit its all-time high? Was it the beginning of 200? No. No. As we speak or as we go through this timeline, the S&P is going straight up. The S&P hit all-time highs in October of 2007. So, as this is happening to Bear Sterns, as they say that credit markets around the world are seizing up, they weren't. They weren't. Now, were they showing signs of stress? Yeah. But what was the market doing? Who cares? Who cares? Stocks always go up over time. We know that. That Bear Sterns, they're a a staple of the US economy. They're a staple of Wall Street. They're a foundational bank. I They're never going to go out of business. This is just a little speed bump on the way back up to all-time highs. Then we get to August 5th. And by the way, that's when the hedge funds, they had two struggling hedge funds and they said they have very little value remaining. [laughter] [snorts] Sorry guys, remember the the highgrade stuff? Yeah, it turned out to be lowgrade dog crap. But uh again, my bad. You know, it's it's not like they're taking the hit. All the investors just lost 70% of their money or 99% or whatever it is and they just get a thanks for coming. They get a participation trophy [snorts] or maybe a a free bottle of wine at Christmas from Bear Sterns for all their troubles. Then we get to August 5th. Warren Spectre resigns. Uh let's see. He is co-chief operating officer. And by the way, what just happened to CarMax? The CEO didn't resign, he got the axe. So then here we see stock closing at 113, but the target price is 164. And then October 5th, now prosecutors launch a criminal probe into the collapse of two Bear Sterns hedge fun. Now does this ring a bell? What just happened with Zion? What just happened with First Alliance? They I don't know if it was launching a criminal probe, but they sued or there's a criminal probe for the fraudulent activity around collateral with a lot of their loans. It's the same thing when you're in these manias. This hysteria, when you're in all these massive bubbles, it's the fraud goes up exponentially. Of course, there's fraud. It's exactly what you would expect. Bear Sterns reports first ever quarterly loss. Shares down to 91 bucks, but the target price is 121. [laughter] Oh, and then just more nonsense. They get rid of the CEO. They come in. Let's go down to uh let's see here. Oh, 11. This is fantastic. JP Morgan backed by the the Fed. And this is why I say that the Fed doesn't do anything, but the reason they're a huge, huge problem, well, there's a couple reasons, but the main reason is the bailouts. The bailouts because they prevent the free market from working. So, they provide undisclosed emergency financing. Okay, Bear Sterns, it's uh liquidity position has deteriorated dramatically. They don't say the stock plunges to 30 bucks. But look at what analysts are saying. But the average price target is 93. 93. $93. And what happens two days later? Two days later, it goes down to two bucks. Basically bankrupt. So, two days after the analysts on Wall Street had a price target at $93, it goes tits up and JP Morgan buys it for $2. A a 99% decrease in the firm's value from the for just 14 months earlier. That's how fast these things can happen. That's how fast you can go from rainbows and sunshine, nothing to see here by the dip to zero. You're bust. That's usually what uh catches people off guard so so quickly. So, is this 2008? It's definitely 2007. I mean, there's no way that you can argue that what we're seeing right now isn't exactly what happened in 2007. The question becomes, does it play out like 2008? That I don't know. I don't know. In fact, I did a whiteboard on this today. It'll come out tomorrow. And uh you'll have to see the conclusion there, but the conclusion may surprise you. It's probably not my base case. And why? It's because the government, it goes back to the video yesterday where the government is so integrated into the economy now. Now it's just the Republicans doing it. They have no shame. So, they're expanding government to the point where they're talking about STEMI checks and 50-year mortgages in a time when supposedly the economy is on fire, right? So, if that's what they're doing, if we've got UBI basically and 50-year mortgages when the economy is on fire, what happens if we go into a crisis of black swan or even just a mild recession for heaven's sakes? They're they're going to come in with the CARES Act 2.0 and I can assure you it's not going to be five trillion. It's going to be like 50 trillion. I mean, whatever it is, right? Because every time they come out with one of these bailouts, it's just the the increase in what they do is always like 10x. It's like they call up Grant Cardone and they're like, "Hey, we've got this financial collapse, Grant. What should we do?" He just says, "10X, baby. 10x." So, QE 10x it. Fiscal spending 10x it. [laughter] Great, Grant. Thanks for your help. >> [laughter] >> I mean, I'm kind of joking, but I'm kind of not. [snorts] So, now let's to add fuel to the fire here. No, no uh pun intended. Let's go over to our favorite CarMax. We've been talking about that a lot on this channel lately, and we have been talking about it a lot a lot in Rebel Capitalist Pro. Now, for those of you who are Rebel Capitalist Pro members, you know that I do these trade alerts. So, we can go over there right now and Oh, I've got it up. Cool. I think I used it for the whiteboard video. That's why I've got it up. So, this was the trade alert that I did 20 days ago. And this was not my first position. My short position in in CarMax. Uh my first short position was I don't maybe 5 days earlier or something like that. And again, this is not investment advice. I'm just disclosing what I did and why I did it because it applies to what we're talking about in this video and it connects to all the things that we're seeing in subprime auto with the blowups with the private lending with the cockroaches with the tide going out with Bear Sterns 2007 etc. And you have to ask yourself if this is happening to CarMax like is there a better representation of the real economy than used cars maybe restaurants but those two things in my view uh other than the labor market you know those things I think represent what's happening with the average consumer better than anything else. So uh I added to the short position this was 20 days ago or so. Why? Because CarMax got a bump because GM reported good numbers. So I said I I want to fade that because the GM numbers were part in part due to frontr running tariffs and I said we just had another cockroach blow up in subprime auto primal lend and so Carmex went up because of GM's earnings but I think GM's earnings are fake news and I think that's looking in the rearview mirror instead of the windshield and I think we're the market's going to go right back to focusing on all of these cockroaches in the auto market or the subprime auto market business. And sure enough, let's go to a chart here. Uh, let me pull up a chart. It's actually really hot, Josh. I don't know how you I don't know how you wear this all the time. It like keeps all the heat from escaping your head. And I'm like sweating. [laughter] I'm going to lose like five pounds just doing this video. All right, so let's go to a a year-to-ate chart of uh CarMax. And this is right around when I first shorted it. And again, this is not investment advice. I I want to be clear. I'm just explaining what I'm doing here because it applies to this video. And then I when they got this bump right around here, I Let's kind of zoom in. I uh added to the position, added to the short position. And then they came out like what was it? November 5th or so. This is when I was at the New Orleans Investment Conference. and they announced they fired the CEO because things got so bad. And by the way, the CEO had been with him for like 30 years. So they come out and announce that they fire the CEO. What happens? The stock is down 24% in one day. One day. Now, I've made a lot of good trades this year. I made a lot of money, but um that was probably the best I've done. maybe some futures trading on interest rates, but this is right up there where I take a short position, five days later I add to the short position and then like two weeks later they fire the CEO and the stock is down 24% in one day. [laughter] But why did I do it? Why did I do it? I did it because everything that we talked about on this video that if you're actually paying attention to what happened in 2007 and if you're paying attention to what's actually happening now as opposed to just blindly investing like an ostrich with your head in the sand just in I always call it the ignorance is bliss investment strategy where you don't pay attention to any of this stuff. You just think it's fear-mongering and oh George you're always too bearish. Really? I wasn't too bearish on CarMax that's for sure. Oh, you're too bearish. I'm just going to do what all my friends are doing. I'm just going to do what Dave Ramsey tells me to do. I'm just going to do what the financial planners tell me to do. And I'm just going to buy the dip. I'm going to invest in a p passive S&P index fund. I'm just going to buy and hold. Buy and hold. I don't have to think about it. I don't have to use my brain. Oh, no. No. That's for suckers. Using your brain and critical thinking, that's for losers. It's the exact same thing they told us during the surveys sickness. But who ended up doing the best in the surveys? who ended up making all the right decisions during the surveys of sickness. It was the people that were actually doing the critical thinking and doing research themselves as opposed just following the herd. Right? So, going back to, you know, the main question here that I'm sure is on all of your mind is is is this 2007? There there is no disputing it. You can't even debate it. It's the exact same thing that we saw in 2007. But does it end? is the endgame 2008. And honestly, I don't think so. I don't think so. I think this is we're going to get there. We might have a black swan, but I think the government is just so hair trigger right now that um as soon as they get a whiff a whiff of a problem, the Fed is going to come in. They're going to drop rates down to zero or whatever it is. And then Trump is, you know, he's basically a big government socialist at the end of the day. and he's going to come out with UBI, he's going to come out with STEMIES, he's going to do all of these things and we're going to be right back where we were in 2021 where we have a dip down during 2020, you know, like a disinflationary almost deflationary thing and interest rates go down, but then as a result of the government's response, then you get the inflation rate going up and you get this. I've been doing this in all my videos because I think that's the best visual representation of what we had in 2020 or 2020 to call it 2023. And I think that's the best visual representation of what we're going to have in the future after we go through this cycle. And that's prices go up this much and wages and business revenue go up this much. You see the spread? That spread represents a loss of purchasing power. that spread represents a further deterioration in the economy um for those people who are on the bottom of that K-shape. And if this turns into a balance sheet recession, very similar to what we saw during the dotcom bust, then that K-shaped recovery can turn into a small Hshaped recovery where everybody is down. And that would probably be my base case until the government steps in with their stimulus that will distort the economy even further and over the long run make things worse. All right, guys. And if you want to find out more about Rebel Capitalist Pro, um like I said, I've had a very very good year in there. Um you guys can check it out. It's uh Josh, go ahead and put a link in the description or put a link in the the chat here. And it's basically the private investment community I have with my good friends Chris Macintosh, Brent Johnson, Patrick Sresna. It's all it's it's all about contrarian strategies that you're not going to hear on CNBC. And that uh although people may say I've been too bearish, I've done pretty well. And the CarMax trade is a great example of that. But you can find out more uh of those types of trades and what I'm doing with my portfolio uh by just clicking on that link. All right, guys. on that bombshell. Enjoy the rest of your afternoon. As always, make sure you are standing up for freedom, liberty, free market, capitalism, and I will see you in the next video.
Two SUBPRIME Hedge Funds Just Blew Up (What You Need To Know)
Summary
Transcript
Hello fellow Rebel Capitals. Hope you are well. I didn't get to do a Halloween special, so today I've got my costume on. Who am I? Let me know in the chat. And if you guessed Josh Lassard, you are correct. Or I'll also take every single young person that works online. Either or. But getting into the topic of today's video, we've got big big news and that is two subprime hedge funds just blew up and it's getting eerily eerily similar to 2007. Now they say that history doesn't repeat but it rhymes. When you look at what happened with like Bear Sterns in 2007, it isn't really rhyming. It's like it's like literally repeating itself. That's for sure. Okay, so let's see how Josh Lassard does this video here. You guys ready to rock and roll? Okay, let's dive in. So, we have first and foremost. Oh, let's go over here. What's happening? UBS. Why is it always the Swiss banks? It's either Credit Swiss, UBS, and remember UBS basically absorbed Credit Swiss when they blew up in 2023. and they were always on the brink, you know, just a matter of time. But here's what happened. So they had two funds or they had a group of funds called the Okconor funds. And I think this was they're based out of Chicago or something like that. But the bottom line is that one of these funds that blew up had big big exposure to first brands. Now we got to give a hat tip to Jamie Diamond. That's for sure. Because man was he ever right on the money when he said that when you see one cockroach, usually there's a lot more [laughter] that are hiding and eventually they'll come out and you'll find them. And that's exactly what we're seeing. As the tide continues to go out, it reveals that more and more people are swimming naked, so to speak. So, and then why this matters is because it's never contained. It's never contained. Now, you might be able to kick the can down the road, but it's never contained. Why is that? Why is that? Because you guys know from watching my videos that the monetary system, the global monetary system, is simply a network of bank balance sheets. It's a network of bank balance sheets. So what happens is one bank's balance sheet is usually connected to in other words one bank's the asset side of one bank's balance sheet is usually connected to the liability side of another bank's balance sheet and that bank's balance sheet asset side is connected to the liabilities of this bank and that bank and that blah blah blah blah blah blah blah blah. So, what happens is it's a lot like old Christmas lights. For those of you who are old school, who those for those of you who don't dress like this, [laughter] you remember that back in the day Christmas lights when one bulb would go out, it's like the whole thing was shot. And now it's not that extreme with the modern-day banking system or the monetary system, but when one bulb is out, the amount of risk in the entire system goes up tremendously. And if the amount of counterparty risk goes up, then there's a lack of liquidity because the banks at the end of the day are the ones that provide liquidity. They're the ones that extend credit. And it doesn't matter what the Fed is doing. QE QT, this is this is all just it's a sideeshow really. What matters is the amount of counterparty risk. And so how can you argue that the amount of counterparty risk has not been going up? I mean it starts atricricolor and then it goes to first brands and then it goes to what was the one? Prima lend or something like that. And then Zion comes out says, "Ah, yeah, actually we a little fraud that uh you might want to know about because all these loans that we were doing, the collateral that was being pledged was all BS and it was rehypothecated about 45 times." [laughter] And so, uh, we're kind of last in line. And what that means is you really don't have any collateral there. And the same thing with Western Alliance, they came out and then we have talk about the auto business. We have CarMax just completely collapsing. And we'll get into that here in just a moment. But let's get back to these hedge funds because what's really important, I got to give another big hat tip to my good friend Jeff Snyder because he pointed this out on a recent video is it's not just the fact that these funds are blowing up, it's that they're starting to get big big big redemptions, which makes sense, right? So, as an example, this uh Connor or one of the Connor funds here that had massive exposure to First Brands, their sister fund, well, they're being shut down as well by UBS, but they had no exposure to First Brands. Why? Because they're just getting a flood of redemptions. Because you don't want to be the last guy that gets up and heads toward the exit in a movie theater if there's a fire. Like you want to redeem your money and then ask questions later, right? You want to shoot first, ask questions later. You don't want to sit there and be the bag holder. And so where there's smoke, there's fire. And these investors are acting in my view very intelligently where hey I've got my money in this fund that by the way by the way the these were subprime funds but the title the way these funds were marketed was absolutely I don't know if it's fabulous [laughter] but it's it's laughable. It's laughable. They were all marketed as ah no it's not there. Let's see if I've got it over here. That's Bear Sterns. We're going to get into that in a moment because this is almost uh identical. Oh, yeah. This might be it. Dozen key dates. No, that's not it. Uh that's a chart of what Bear Sterns did. And by the way, when the funds blew up, and we're going to get into a timeline there, it's right here. So, middle of 2007, 2007. So you had all this time where they're trading above a hundred bucks when these funds blow up that if you would have been paying attention then you would have seen this coming, right? Like pay attention. Like look at the yield curve as an example. But what do you think all the bulls were saying back then? Oh, you're just fear-mongering. Oh, this is just two funds that Bear Sterns is shutting down. Who who cares? This is just uh it this doesn't make a difference in the grand scheme of things. Sure, they might have had some sort of connection to mortgage back securities, but this is all contained. This is all contained. I'm sure it's the exact same argument that you hear today. So, let me go back. Josh, go ahead and hide my screen for a moment and because I want to How do I get back here? You guys are going to love this. It's absolutely just the the most ironic thing I've ever heard. And it's right. Oh, here it is. Okay. So, that's what it was. Okay. So, the way Bear Sterns marketed these funds. And again, this is why I say it's like history, not even repeat rhyming. It's actually repeating. It's repeating in the sense that UBS marketed these funds in the exact same way. In the exact same way. And how do you think they were marketed to the general public and to the supposedly sophisticated investors? They were marketed as highgrade. Oo, high-grade. Yes, they're they're high-grade all the way up until the point where they're not and they fail. [laughter] up until that point. Yes, they're very high grade, but it's isn't it just it's just it's almost like we're living in a simulation where you can't make this stuff up where not only did they did Bear Sterns have two funds that blew up and they had to shut down and they and one of the funds blew up as a result of redemptions, we see the exact same thing now play out with UBS. But all four of these funds just so happened to be marketed the exact same way. And that's with highgrade. Oh, it's a high-grade fund. And then of course they're blowing up because of not only redemptions but because they have exposure to subprime garbage. Subprime garbage. Whether it's subprime garbage in the housing market or in the auto market, it doesn't matter. you can still lose 50 cents on the dollar. In fact, in this case and in Bear Stern's case, you can go completely tits up, [laughter] right? So, and again, I'm not saying that there's a lot of systemic risk with these subprime auto cockroaches. I am saying that the risk or the systemic risk is in the fact of this freezes up the system. Right? Right. So, if we look at the repo market, you guys, I'm sure, have seen in the news that the repo rates are going up and the Fed's like, "Oh, well, I don't know. It is a little concerning. Maybe we should stop doing QT." It's not QT. It's It's counterparty risk because what happens is the lender I mean, wouldn't you do the exact same thing? I think we talked about this the other day. So, if you had $10 million to lend, it doesn't matter how much extra money you've got the money. You've got the money. But if you don't get any good deals, if the counterparty risk is too high, guess what you're going to do? You're not going to lend. And if you do lend, what are you going to do to your interest rate? You're going to increase it to compensate. Now, is it because you don't have enough money? You don't have enough liquidity? There's enough credit available? There's enough balance sheet capacity? No, you've got the money to lend out, but you're not going to do it. Why? Because the risk is too high. So again, the QEQT thing, I think it completely overlooks the elephant in the room and that's that all the cockroaches are showing up and that in and of itself is going to reduce the liquidity. But by the way, that creates a doom loop where the reduction in liquidity makes the tide go out even further which makes more cockroaches appear. So getting back to this uh UBS group liquidating two invoice finance funds with exposure to no no only one of the funds had exposure to first brands. The Swiss lender is closing the working capital. Look at how great this name is. the working capital finance opportunistic fund. Oh, which is highrade. I mean, you can see them pitching this like six months ago to an investor and and just some, you know, some guy that's got a lot of money but really doesn't watch my channel or is completely oblivious to the yield curve and what the yield curve is just and interest rates are just shouting at him right now or her. You can hear the pitch. Oh yeah. Wolf for you. Yes, you could get four or five% in treasuries right now, Steve. Or maybe Bob is a better We'll go with Bob, the smart guy, Steve. So Bob, yeah, you you could get the four or 5% in treasuries, but why would you want to do that when just taking a little teeny weeny weeny bit more risk? And it actually, you know, it's not that much risk. It's it's no more risk. It's no more risk because we just created this product that is basically risk-f free. The only difference is instead of getting 5% in a treasury, you get like seven or 8%. And the way we've structured it is so clever that you're really not risking losing any money because remember how these derivatives work that you're way up the capital stack. I mean, you're you're way up here, Bob. So all of these things would have to go bust before it even touches you. And that's true until it's not. And that's what we're seeing play out right now with UBS. So although this is, you know, and it's like when we first heard of it, it was like, yeah, okay, no big deal. It's small. It's not going to really impact that many balance sheets. And then the the week after or whatever it was. Oh, and then you get first brands and oh well, okay, there's a little bit bigger deal, but nothing to worry about. The sweeping under the rug. Oh, look, a squirrel. And then you keep going. And then it's Zion. And then it's Western Alliance. And now it's two more hedge funds with UBS. And it's like these these things keep piling up here to the point where even the bullish the most bullish person out there has to scratch their head and say, "Well, maybe actually this is something I should pay attention to." Just maybe, just maybe. Especially when you look at the parallels with 2007. So, let's um let's go over to that right now. Let's go over to this timeline. the dozen key dates in the demise of Bear Sterns. So December 14th, 2006, Bear Sterns post record earnings touting huge profits and gains from a booming business. This sound familiar? So the booming business in 2022, 2023 and toward the beginning of 2024 was everything everything was booming. Why? Because of the government distortions to the real economy due to their respon not due to the surveys sickness but due to the government's response to the surveys sickness. So everything is booming. You got all you don't have to pay your rent. You don't have to pay your mortgage. You get the the stming. You don't have to pay your student loan. You have to do any of this stuff. And then we're increasing wages because the price of stuff goes up because we have a supply shock again because of government distortions are locking you in a cage. Don't get to produce much stuff when people are locked in cages. And then we're like, this is just going to last forever. I mean, look at this aggregate demand. The government did such a fantastic job. And then you start getting into the middle of 2024 and you're like, "Yeah, I don't know." And then we get to the end of 2024 and then they're like, "Oh yeah, by the way, so the revisions to the non-farm payrolls, uh, that's going to come in at about 818,000. Sorry, my bad." [laughter] And then and then we roll into 2025 and you're like, "Yeah, more revisions." In fact, the next round of revisions we get, yeah, it's down by about a million. My bad. And then almost every single person that I talked to, just using the anecdotal evidence, they're saying how, you know, up until 2024 and even into it was like boom times. Whatever you were doing, it was just boom times. In fact, I just was at lunch and a guy I know just happened to be at the same restaurant come up said hi and he's a big influencer in the car space on uh Instagram and YouTube and he doesn't he knows that I create YouTube videos. He knows it's on economics and finance, but he I I doubt he's ever even watched a video. And so he doesn't know how in the weeds I am with this stuff. And so he comes up to me and I'm like, "Well, how, you know, how's Instagram?" "Oh, Instagram's great. It's this. It's this." But his Instagram channel now he's kind of pivoted into international real estate. And so he said, "Well, the YouTube channel is still all about cars." And I'm like, "Okay, well, what what's what's going on with the the car?" I mean, you had like 300,000 subscribers. He's like, "You know what? Nobody is buying cars anymore." Goes, nobody nobody's buying cars in the US and in Canada. Those are his two big markets. And he's like, you know, back in 2023 and in the beginning of 2024, he goes, "All these dealers were sending me cars for free and I was reviewing them and they're getting, you know, my videos are getting hundreds of thousands of views." He's like, "Now I try to get a car for a deal." They're like, "No way." Because the marketing just isn't working because the views aren't there because no one's watching videos on cars because no one can afford to buy one. So, I think it's just really interesting when you look at this at multiple levels. You look at the anecdotal evidence that I just went over. You look at what's happening macro with the overall labor market. You look at what's happening in the macro with interest rates, the yield curve, something we've been talking about on this channel extensively for the last three years, kind of warning people and giving them the heads up that when the curve uninverts, usually that's when the stuff starts to hit the fan, which is pretty much exactly what we're seeing. And then you see all this stuff in private credit. You see all this stuff in shadow banking starting to come to the surface. The tide is going out. And then you see the lack of liquidity in repo is a result of risk going up. And then that takes you right into the doom loop. So the question becomes how bad does the doom loop get? So on that note, let's get right back to Reuters and this timeline of Bear Sterns. And you tell me, you tell me if this sounds familiar. You tell me if this is like terrifyingly [laughter] consistent with what we've seen here in 2025. All right. So, going back to 2006, we got that they're just printing money. They're printing money just like every single business did between 2021 and 2024. But then you start seeing some cracks. January 12, 2007, they close at 171 Bear Stern's shares. I think that's an all-time high. Yes, a record. So, this is momentum from its strong earnings report. Okay. Then May 2024, excuse me, May 24, 2007, Bear Sterns, the shares closed at 147. This is 6 weeks low. Why? Goldman Sachs slashed its quarterly earnings target for the rival investment bank. All of a sudden, you're like, "Ah, okay. That's a little bit of a crack, but who cares? Just bye-bye. Let's buy the dip. Buy the dip. We know Bear Sterns isn't going out of business. So, this is just an opportunity to dollar cost average." I guarant. You know it. Of course they were saying that. of core. Then we get to June 14, 15, 16, 2007, 2008, 2007. On June 14th, Bear reports earnings, Bear Reports earnings declined for the first time. Yikes. [clears throat] In four quarters on weaker results from mortgage back securities or their mortgage securities business. June 15th, Wall Street Journal reports a hedge fund run by Beer Sterns has suffered big losses on soured subprime subprime mortgage investments. Now, if you weren't paying attention five minutes ago, this is exactly exactly what just happened with UBS. The only difference is this is subprime mortgages and the direct exposure UBS had through the one fund was subprime autos and and is the subprime mortgage market much bigger? Absolutely it is. Absolutely it is. But this isn't really about the size of the market. It's the fact that if the in if the risk increases, it's going to impact to a certain degree all of the balance sheets in the network that is the monetary system. It's just a matter of to what degree. All right, let's keep going. The next day, the 16th, the journal reports Meil Lynch, a credit creditor to the fund, seized some assets. The stock closes at 150. And another thing that I find fascinating as we go through this timeline, you'll notice that Reuters always puts the average target price from analysts at the time. They kind of time stamp it. So here the stock closes at 150, but the average target price from analysts is 181. And you'll notice every single time stamp the average target price is always way higher. [laughter] Ah, all right. July 17, as losses from subprime mortgages began to threaten credit markets around the world. And by the way, were they really threatening credit markets? This is this is not 2008. This is the middle of 2007. And remember, when did the S&P 500 hit its all-time high? Was it the beginning of 200? No. No. As we speak or as we go through this timeline, the S&P is going straight up. The S&P hit all-time highs in October of 2007. So, as this is happening to Bear Sterns, as they say that credit markets around the world are seizing up, they weren't. They weren't. Now, were they showing signs of stress? Yeah. But what was the market doing? Who cares? Who cares? Stocks always go up over time. We know that. That Bear Sterns, they're a a staple of the US economy. They're a staple of Wall Street. They're a foundational bank. I They're never going to go out of business. This is just a little speed bump on the way back up to all-time highs. Then we get to August 5th. And by the way, that's when the hedge funds, they had two struggling hedge funds and they said they have very little value remaining. [laughter] [snorts] Sorry guys, remember the the highgrade stuff? Yeah, it turned out to be lowgrade dog crap. But uh again, my bad. You know, it's it's not like they're taking the hit. All the investors just lost 70% of their money or 99% or whatever it is and they just get a thanks for coming. They get a participation trophy [snorts] or maybe a a free bottle of wine at Christmas from Bear Sterns for all their troubles. Then we get to August 5th. Warren Spectre resigns. Uh let's see. He is co-chief operating officer. And by the way, what just happened to CarMax? The CEO didn't resign, he got the axe. So then here we see stock closing at 113, but the target price is 164. And then October 5th, now prosecutors launch a criminal probe into the collapse of two Bear Sterns hedge fun. Now does this ring a bell? What just happened with Zion? What just happened with First Alliance? They I don't know if it was launching a criminal probe, but they sued or there's a criminal probe for the fraudulent activity around collateral with a lot of their loans. It's the same thing when you're in these manias. This hysteria, when you're in all these massive bubbles, it's the fraud goes up exponentially. Of course, there's fraud. It's exactly what you would expect. Bear Sterns reports first ever quarterly loss. Shares down to 91 bucks, but the target price is 121. [laughter] Oh, and then just more nonsense. They get rid of the CEO. They come in. Let's go down to uh let's see here. Oh, 11. This is fantastic. JP Morgan backed by the the Fed. And this is why I say that the Fed doesn't do anything, but the reason they're a huge, huge problem, well, there's a couple reasons, but the main reason is the bailouts. The bailouts because they prevent the free market from working. So, they provide undisclosed emergency financing. Okay, Bear Sterns, it's uh liquidity position has deteriorated dramatically. They don't say the stock plunges to 30 bucks. But look at what analysts are saying. But the average price target is 93. 93. $93. And what happens two days later? Two days later, it goes down to two bucks. Basically bankrupt. So, two days after the analysts on Wall Street had a price target at $93, it goes tits up and JP Morgan buys it for $2. A a 99% decrease in the firm's value from the for just 14 months earlier. That's how fast these things can happen. That's how fast you can go from rainbows and sunshine, nothing to see here by the dip to zero. You're bust. That's usually what uh catches people off guard so so quickly. So, is this 2008? It's definitely 2007. I mean, there's no way that you can argue that what we're seeing right now isn't exactly what happened in 2007. The question becomes, does it play out like 2008? That I don't know. I don't know. In fact, I did a whiteboard on this today. It'll come out tomorrow. And uh you'll have to see the conclusion there, but the conclusion may surprise you. It's probably not my base case. And why? It's because the government, it goes back to the video yesterday where the government is so integrated into the economy now. Now it's just the Republicans doing it. They have no shame. So, they're expanding government to the point where they're talking about STEMI checks and 50-year mortgages in a time when supposedly the economy is on fire, right? So, if that's what they're doing, if we've got UBI basically and 50-year mortgages when the economy is on fire, what happens if we go into a crisis of black swan or even just a mild recession for heaven's sakes? They're they're going to come in with the CARES Act 2.0 and I can assure you it's not going to be five trillion. It's going to be like 50 trillion. I mean, whatever it is, right? Because every time they come out with one of these bailouts, it's just the the increase in what they do is always like 10x. It's like they call up Grant Cardone and they're like, "Hey, we've got this financial collapse, Grant. What should we do?" He just says, "10X, baby. 10x." So, QE 10x it. Fiscal spending 10x it. [laughter] Great, Grant. Thanks for your help. >> [laughter] >> I mean, I'm kind of joking, but I'm kind of not. [snorts] So, now let's to add fuel to the fire here. No, no uh pun intended. Let's go over to our favorite CarMax. We've been talking about that a lot on this channel lately, and we have been talking about it a lot a lot in Rebel Capitalist Pro. Now, for those of you who are Rebel Capitalist Pro members, you know that I do these trade alerts. So, we can go over there right now and Oh, I've got it up. Cool. I think I used it for the whiteboard video. That's why I've got it up. So, this was the trade alert that I did 20 days ago. And this was not my first position. My short position in in CarMax. Uh my first short position was I don't maybe 5 days earlier or something like that. And again, this is not investment advice. I'm just disclosing what I did and why I did it because it applies to what we're talking about in this video and it connects to all the things that we're seeing in subprime auto with the blowups with the private lending with the cockroaches with the tide going out with Bear Sterns 2007 etc. And you have to ask yourself if this is happening to CarMax like is there a better representation of the real economy than used cars maybe restaurants but those two things in my view uh other than the labor market you know those things I think represent what's happening with the average consumer better than anything else. So uh I added to the short position this was 20 days ago or so. Why? Because CarMax got a bump because GM reported good numbers. So I said I I want to fade that because the GM numbers were part in part due to frontr running tariffs and I said we just had another cockroach blow up in subprime auto primal lend and so Carmex went up because of GM's earnings but I think GM's earnings are fake news and I think that's looking in the rearview mirror instead of the windshield and I think we're the market's going to go right back to focusing on all of these cockroaches in the auto market or the subprime auto market business. And sure enough, let's go to a chart here. Uh, let me pull up a chart. It's actually really hot, Josh. I don't know how you I don't know how you wear this all the time. It like keeps all the heat from escaping your head. And I'm like sweating. [laughter] I'm going to lose like five pounds just doing this video. All right, so let's go to a a year-to-ate chart of uh CarMax. And this is right around when I first shorted it. And again, this is not investment advice. I I want to be clear. I'm just explaining what I'm doing here because it applies to this video. And then I when they got this bump right around here, I Let's kind of zoom in. I uh added to the position, added to the short position. And then they came out like what was it? November 5th or so. This is when I was at the New Orleans Investment Conference. and they announced they fired the CEO because things got so bad. And by the way, the CEO had been with him for like 30 years. So they come out and announce that they fire the CEO. What happens? The stock is down 24% in one day. One day. Now, I've made a lot of good trades this year. I made a lot of money, but um that was probably the best I've done. maybe some futures trading on interest rates, but this is right up there where I take a short position, five days later I add to the short position and then like two weeks later they fire the CEO and the stock is down 24% in one day. [laughter] But why did I do it? Why did I do it? I did it because everything that we talked about on this video that if you're actually paying attention to what happened in 2007 and if you're paying attention to what's actually happening now as opposed to just blindly investing like an ostrich with your head in the sand just in I always call it the ignorance is bliss investment strategy where you don't pay attention to any of this stuff. You just think it's fear-mongering and oh George you're always too bearish. Really? I wasn't too bearish on CarMax that's for sure. Oh, you're too bearish. I'm just going to do what all my friends are doing. I'm just going to do what Dave Ramsey tells me to do. I'm just going to do what the financial planners tell me to do. And I'm just going to buy the dip. I'm going to invest in a p passive S&P index fund. I'm just going to buy and hold. Buy and hold. I don't have to think about it. I don't have to use my brain. Oh, no. No. That's for suckers. Using your brain and critical thinking, that's for losers. It's the exact same thing they told us during the surveys sickness. But who ended up doing the best in the surveys? who ended up making all the right decisions during the surveys of sickness. It was the people that were actually doing the critical thinking and doing research themselves as opposed just following the herd. Right? So, going back to, you know, the main question here that I'm sure is on all of your mind is is is this 2007? There there is no disputing it. You can't even debate it. It's the exact same thing that we saw in 2007. But does it end? is the endgame 2008. And honestly, I don't think so. I don't think so. I think this is we're going to get there. We might have a black swan, but I think the government is just so hair trigger right now that um as soon as they get a whiff a whiff of a problem, the Fed is going to come in. They're going to drop rates down to zero or whatever it is. And then Trump is, you know, he's basically a big government socialist at the end of the day. and he's going to come out with UBI, he's going to come out with STEMIES, he's going to do all of these things and we're going to be right back where we were in 2021 where we have a dip down during 2020, you know, like a disinflationary almost deflationary thing and interest rates go down, but then as a result of the government's response, then you get the inflation rate going up and you get this. I've been doing this in all my videos because I think that's the best visual representation of what we had in 2020 or 2020 to call it 2023. And I think that's the best visual representation of what we're going to have in the future after we go through this cycle. And that's prices go up this much and wages and business revenue go up this much. You see the spread? That spread represents a loss of purchasing power. that spread represents a further deterioration in the economy um for those people who are on the bottom of that K-shape. And if this turns into a balance sheet recession, very similar to what we saw during the dotcom bust, then that K-shaped recovery can turn into a small Hshaped recovery where everybody is down. And that would probably be my base case until the government steps in with their stimulus that will distort the economy even further and over the long run make things worse. All right, guys. And if you want to find out more about Rebel Capitalist Pro, um like I said, I've had a very very good year in there. Um you guys can check it out. It's uh Josh, go ahead and put a link in the description or put a link in the the chat here. And it's basically the private investment community I have with my good friends Chris Macintosh, Brent Johnson, Patrick Sresna. It's all it's it's all about contrarian strategies that you're not going to hear on CNBC. And that uh although people may say I've been too bearish, I've done pretty well. And the CarMax trade is a great example of that. But you can find out more uh of those types of trades and what I'm doing with my portfolio uh by just clicking on that link. All right, guys. on that bombshell. Enjoy the rest of your afternoon. As always, make sure you are standing up for freedom, liberty, free market, capitalism, and I will see you in the next video.