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The Everything Bubble just POPPED!
14 years of cheap money has led to sky-high valuations in equities, real estate, and most asset classes overall.
The total assets of major central banks worldwide have increased by TRILLIONS of dollars since 2007.
We’ve essentially seen 14 years of quantitative easing and easy money, which has led to this mess.
We are now in a period where the fed and other central banks are starting quantitative tightening, which will exacerbate the situation even more in my opinion.
It took 215 years of the total U.S. debt to reach $7 trillion. The U.S. has added $7 trillion MORE since March of 2020.
You do the math.
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⏰ Timestamps ⏰:
0:00 – Intro
0:28 – 14 Years of Easy Money
2:33 – Total Assets of Major Central Banks
4:11 – The Staggering Pace of New Debt
4:40 – How The Bubble Grew
5:47 – When The Music Stops…
7:10 – $9.3 Trillion Vaporized
8:16 – Dash to Cash
9:22 – The Terminal Rate
10:56 – How To Protect Yourself
12:20 – FTX Spot
13:23 – My Thoughts.
16:11 – FUNNY HOW?! (GOODFELLAS)
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My mission is to provide my viewers with actionable content that enables them to create financial wealth. My videos reflect my real-world experience as a real estate investor, stock market investor, student of finance, and entrepreneur.
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Hey everybody welcome back to whiteboard Finance my name is marco and i’m here to Help you master your money and build Your wealth in today’s video we’re going To be talking about how the everything Bubble has just popped and how you can Protect yourself uh as always stay until The end of the video where i share my Candid thoughts on everything that’s Going on but before then let’s get into An excellent presentation put together By myself and also my research analyst Joe consorti if you don’t know joe go Follow him on twitter at joe consorti so How did this bubble grow Basically we’ve had 14 years of cheap Credit So the policy interest rate or the fed Funds rate has been locked in anywhere From zero percent to about two and a Half percent so if you look at this Orange line right here ever since the Great financial crisis uh the federal Reserve has adopted a policy of what we Call zurp zero interest rate policy so This is basically the rate at which they Lend out money to commercial banks in a Nutshell for the sake of this video so What what we did here was we plotted the Fed funds rate and a chart of the s p 500 and i have a video about this it’s Basically called how the fed is the Market and how it inflates and deflates These asset bubbles so basically if you
Look at the blue line this is the s p 500 index if you look at the orange line This is the fed funds rate whenever Interest rates are low which we can see Here this is the fed funds rate is Essentially zero asset prices tend to Rise once the fed starts raising rates And it gets to a point that the market No longer bears We have a crash which we had right here In december of 2018 january of 2019 and This is when they started lowering rates Again look at what the market does it Goes up we then had a flash crash Because of cerveza sickness in march of 2020 they had to go back down to zurp Which we see right here what happens When interest rates go down asset prices Because of money printing and low rates Skyrockets once we started hiking rates Again which the fed already did about Three times this year you can see what’s Happening to uh Asset prices i tweeted basically in January of 22 that said i don’t think The fed has enough ammunition to raise Rates this many times I think if they do they’re going to Crash the market and this is exactly What happened So company valuations skyrocket as they Binge on cheap debt over the past 14 Years this is why real estate is out of Control this is why tech companies have
Absolutely exploded it’s basically led To the gross misallocation of capital Since the profit incentive is removed so If we take a look at this chart this is The total assets of major central banks All around the world okay so if you see In the red here you can see that this is The fed this is the united states Federal reserve if you look at the blue This is the european central bank okay If you look at green this is the bank of Japan and if you look at uh orange this Is the people’s bank of china okay china China this is the orange line right here So what does this chart mean so since 2008 you can see uh in 0607.08 where uh The fed was the united states federal Reserve it was basically flat they had Less than one trillion dollars of assets On their books okay uh if you look at 2008 exploded to two and then we went up Up up and up stagnated we tried Deleveraging again back into uh 2018 And that’s when the market crashed and Then we had cerveza sickness and then Unprecedented money printing look at This this is literally like a hockey Stick right here you guys but the thing Is we are in an everything bubble right Now uh same thing with the ecb european Central bank is even worse than the fed They have more assets and trillions of Dollars on their books than the american Fed does look at united states look at
Um bank of japan look at china so why Did i draw these two arrows here well We’ve had quantitative easing Essentially for 14 years now we’re Getting back into quantitative Tightening okay this is when we start uh Becoming more tight with our monetary Policy and you can see they’re trying to Get rid of stuff on their books as most Other central banks are makes sense So the next slide is just showing you The staggering pace of new debt that We’ve had to prop up the market since 2020 after cerveza sickness so you can See here that it took 215 years For total u.s debt to reach 7 trillion That’s basically from the start of this Chart to about uh right here and then uh The u.s has added another 7 trillion Since march of 2020 okay so what took 215 years to get to uh it took about two Years uh since march okay So uh this is the chart of the 100 year Historic uh p e ratio this is the price To earnings ratio so if you don’t know What a price to earnings ratio is it Basically tells investors how much a Company is worth in the traditional Sense okay this is if you have a Traditional financial background A lot of this stuff doesn’t apply since 2008 Because of quantitative easing and all The easy money that’s been in the system
So the p e ratio is simply the stock Price divided by the company’s earnings Per share uh so you can see here that The asset bubble is growing because of a Boon in speculation from retail so right Now we are living in the third highest Average pe ever after the dot-com bubble And the great financial crisis so two uh The early 2000s late 90s was the dot-com Bubble great financial crisis 0.708 and Then now we’re over here um back in 2022 okay the reason for this is because Of euphoria and fomo fomo is simply fear Of missing out this is leading people to Pour money into the market and inflate The equity bubble these are the people Getting their stemi checks and using Apps like robinhood for example so this Is where the meat of the presentation Where the rubber meets the road Essentially so what is going on well we Talked about it it’s easy monetary and Fiscal policy easy money quantitative Easing Companies are binging on cheap debt and Individuals are speculatively investing At levels never before seen this is Retail these are your retail investors So when i talk about retail i’m talking About me and you we’re not institutional Investors we’re not working on behalf of A hedge fund we’re not working on behalf Of a life insurance company So on and so forth so a fun fact the s p
500 hit an all-time high 68 times in 2021 that’s essentially 30 percent or One-third of all trading days so now What now this is the whole point of the Video so in order to fight inflation the Fed is targeting a two percent cpi uh or Inflation rate or consumer price index Rate if you will And the fed is hiking its policy rate Its fed funds rate to a 3.5 percent Target So they’re raising market-wide interest Rates causing a system-wide deleveraging Of bad debt so a de-risking is underway As inflationary recession looms and cash Which is typically trash or at least Losing money to losing purchasing power To inflation Is now outperforming your traditional 60 40 portfolio 60 bonds 60 stocks 40 bonds So the bubble is bursting so just Recently we’ve had about 9.3 trillion Dollars vaporized this is the largest Ever wealth destruction in history you Can see in this chart right here This is the drawdown from previous peak Percentages of u.s gdp um we’ve had Something in 1990 had something in the Mid 2000s uh great financial crisis Cerveza sickness and now we’re right Here so company valuations tank as their Debt servicing becomes too expensive and They default so i’ve talked about this a Million times on twitter and also my
Past channels we are essentially seeing A record high of zombie companies these Are companies that just exist enough to Service their debt okay debt service is Just like you and i paying off um debt Or servicing our debt making the minimum Payments okay So bonds with negative real yields have Sold off fast i’ve been talking about Bonds and them not being great Investment for years now on this channel This is causing their yields to Skyrocket further And then also this de-risking is Creating a dash to cash so what we’re Seeing here is um the dash to cash okay So what this chart is showing you is the Dollar strength Index we’re seeing a rising dollar Moving into the last three recessions so These gray bars here are when a Recession happened uh you can see here Dot com bubble great financial crisis Cerveza sickness and then you’re Starting to see the dollar reaching its Peak into all these recessions and then Kind of going down if you will we are Seeing an uptick back up where the Dollar is right now but you’re seeing uh People shifting into cash as kind of Like a safe haven asset even though uh Going back to what i’ve been saying for Years on this channel savers are losers What do i mean by that i don’t mean
Savers are literally losers as people Like loser i’m talking about you are Losing purchasing power to inflation so If you put a thousand dollars under your Mattress And you wake up a hundred years later i Promise you that thousand dollars will Not be able to buy what it can today a Thousand years from now okay So the dollar strengthens as liquidity Is vaporized from the economy and then Deflation implies a stronger dollar so This slide is talking about the terminal Rate if you’re not familiar with this Let me explain this very quickly so the This is actually a screenshot from joe My research analyst bloomberg terminal So the green line is basically the Expectations for the fed funds rate one Year from now okay so they’re seeing uh 3.5 percent by next june as joe Highlighted here the yellow line is Actually the market’s expectation for The fed funds rate as of march so uh you Can see right here historical date is March 2022 they were The point of the slide is showing that The fed is hiking a lot higher than what The market’s expectations were in yellow So in yellow you can see that they are At 0.5 percent going up up up and up to About almost three right here however What’s happening in reality is that the Fed is actually hiking a lot more than
Anticipated so the fed has a stated goal Of hiking until three and a half percent Uh terminal rate this means uh more Expensive debt for corporations who must Borrow at a premium to the fed banks so They’re gonna have to borrow at a higher Rate um even though a lot of them are Zombie companies just barely able to Service their debt they’re literally in Existence to service their debt so the s P 500 could see levels below 2 000 The fed doesn’t care their mandate is to Normalize inflation at 2 percent at the End of the day politicians want to get Reelected they want to quell inflation They want to say hey i did that i’m the One that stopped inflation while Everything else around you is uh pretty Much burning to the ground if you will I’m being a little bit sensationalist But you see what i’m trying to say so How can you protect yourself the whole Point of this video let’s get into Number one holding cash i’m seeing more Uh hedge funds holding cash right now And also in a de-leveraging event cash Is your friend cash is king market-wide Risk tolerance has declined steeply People hold cash in times like this Savers are still losers because of Inflation however so again if you’re if You’re getting point five percent in Your bank or zero percent under your Mattress and the cost of everything else
Is going up 8.6 year-over-year which is What the cpi actually is your purchasing Power just got eroded by 91.4 How do you like that quick math we’re Going live baby we’re doing it live Uh Number two avoid bonds for now so while Bonds usually outperform during equity Market drawdowns the nature of most real Yields being negative due to high Inflation means that bonds sovereign and Corporate uh so This could be corporate this could be Municipal uh cities companies will Continue selling off until their yields Are above inflation and sovereign is Typically nations if you will number Three is don’t be a hero we likely Haven’t seen the worst of this Contraction and is best to remain market Neutral instead of trying to trade Directionally especially with leverage So i’m going to get into my thoughts Right now but Before we do that here’s a word from Today’s sponsor Ftx today’s sponsor is ftx check them Out in the link below ftx is one of the Largest cryptocurrency exchanges in the Entire world and you can trade crypto And ftx with up to 85 percent lower fees Than their top competitors you also get No fixed minimum fees no ach transaction Fees and you can also set up recurring
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That’s just the truth right However i always advocate on this Channel an emergency fund of three to Six months 12 if you’re an entrepreneur Or a straight commissioned salesperson Number two Actually let me finish my thought on That that’s defensive so when you guys Think of cash you’re thinking defense Right it’s good to have cash good to Have liquidity After you establish your emergency fund You should have a little bit of cash Also as a war chest so you’re playing Defense and offense your emergency fund Is your defense your war chest is your Offense number two is reduced high Interest rate consumer debt so 30-year Fixed rate is good macy’s credit card Bad okay so essentially anything that’s Under like i’d say four and a half five Percent don’t be in a rush to pay it Down um A 30-year fixed rate mortgage with low Interest rate now is your best friend You’re hedging against the united states Dollar by doing that you’re literally Betting against the dollar by having a 30-year fixed rate mortgage number three Is build a war chest which we just Talked about i’m going to skip over this One sorry i’m just reading off my notes And the number four uh employment is the Joker card here you guys employment is
Everything when people start to lose Their jobs that’s when they can’t Service their debt that’s when stuff Starts to hit the fan so as long as Unemployment is at almost historic All-time lows which we’re seeing right Now at like 3.6 percent people don’t Have anything to worry about what we’re Gonna see is if the market keeps Crashing and the cost of capital or the Cost of debt increases we’re going to Start to see mass layoffs in tech which We’re already seeing there’s a huge Amount of layoffs going right now in the Tech sector Thankfully tech you know employs a Certain amount of the population doesn’t Employ everybody so if we’re seeing Systemic wide unemployment or layoffs That’s we’re going to see things hit the Fan so i hope this video was helpful to You i may start making these slide decks Available for download i don’t know if You want them for download please let me Know in the comments below thanks to ftx The sponsor of this video thanks to joe My research analyst for putting together This presentation I put together the better slides just so You know joe i’m just kidding You always do a great job thank you so Much for watching uh if you guys have Any questions or comments leave them Down below uh please hit the like button
Please subscribe and please share the Video um i don’t post enough for the Algorithm to love me and to spread my Videos to everybody but you guys know That you’re watching one of the realest Finance channels out there thank you so Much have a prosperous day You guys think i’m gonna do something Funny huh That’s why you’re here huh What am i a clown do i amuse you Funny how Funny how What no no he’s a big boy he said it Funny how Do i look funny do i amuse you funny how I don’t know you tell me you’re the one That said i’m funny That’s a terrible good fellow’s Impression so here’s a picture of lei Ryoda with laser eyes peace