Illumination Light shines through constellations. pardon me Puzzle Peace I Tried to reach falling back I Cannot breathe spone I Wonder in the shadow of the spell. Wonder Calling your imaginary number here under tear drops of my brother awake at night, asleep at dawn. it's gone on for far too long.

Close my eyes start to SP open them and see again is gone Or so it seems. It's all right in of meone I in the shadow of the calling your imaginary number, you under te drops of my brother, brother, brother. Good morning, good morning, good morning. Welcome back to another episode of the Matt Co Show today is Wednesday August 30th and we're starting a little early today.

a little early, a little early. Hope you have your coffee with you. We are going to be listening to the GDP report coming out in a mere sixish minutes. a mere 6ish minutes.

so hopefully we have some nice volatility. Uh, you look a little under the weather. No. I sound like this because I'm allergic to cats so what you're seeing is allergies.

Uh, because I have the kitten and I don't know I guess some days I mtime my anti-histamine I don't know if you're is it better to take it in the morning or is it better to take it at night I don't know what it is but no my knows is stuffed up CU I have bad allergies dude. I'm allergic to cats and dogs and my biggest issue is that I Love cats and dogs I Love animals I Hang out with them all the time. Uh so I guess this morning or last night I didn't I guess I didn't take the Zerk or the Clarin or the zyol uh appropriately. why would you get a cat if you're allergic cuz I Love Cats I Love Kittens I Love Dogs I Love Dude I Just love Animals I Love Pets I pop three benad drills a day.

That's what I wanted to ask you guys about. So if you look at a bottle of Zerk or Zol or any of that, it tells you to only take one every 24 hours. Is that real? I Know maybe I shouldn't be coming to you guys from my medical advice. but I don't know.

You guys seem pretty smart. so before this GDP report comes out, are you allowed to take multiple? or are you going to like grow a third arm or something? Do Not take that crap daily. Well hang on eggs well. I Definitely take it daily cuz I Live with the cat.

Does the US have the fast acting B gel here in the UK We have a blue pack that you can take three a day uh I don't know I it's an endocrine system disruptor indr system I barely even know her I get 12-hour algr D and take it morning and night. If you could choose a financial book that you everyone you read, what would you do? Uh, would that be uh the long-term Secrets of short-term trading by Larry Williams well well well you know so am I allowed to take multiple of these if you 12h hour? I think I get the 24hour but maybe it doesn't release properly. Maybe I should be taking like a benad dril at night and then like a Zerch or something in the morning I don't know whoever's in here as a expert allergist let me know the best solution to this because cuz if I miss time it in the morning I S sound all nasly. but by the end of this stream today, I'm going to sound fine because the medicine's going to kick in and like my allergies will stop freaking out.

uh drink a ton of water. Does that somehow help? Oh is that for like to save my endocrine system Allegra Works Awesome! 60 milligrams and take two I think a lot of these like the Zerc, the Zizol, the Clarin are like 10 Mig dude are you, you're taking 120 Mig it works better if you snort it twice a day. I Appreciate that allergy shot twice a week for years D Only Solution So I get allergy shots I'm at the point where I like do a monthly shot now because I've been doing it for a couple years so like I only have to do a monthly maintenance thing, but apparently the potency isn't high enough when a little kitten can take me down. My issue is that even when I know I didn't take my medicine dude I see Piper and she's always hyper in the morning and she wants to play and I just like I'm like ah, screw it I guess I'll play with her so then I end up playing with her for like a half hour and then of course my allergies freak out.

Drink cat juice for natural defense Brandy that's that's the major thing I need to do is just rip some Brandy Uh, anyone else sees some videos of the hurricane I haven't but um, tag me on Twitter and we can watch them on stream today folks. if you're in. Florida This storm sounds like it's getting real nuts. So if you're in the th southeast of the US or anywhere that's potentially in the path of this hurricane, please be safe.

Don't take undo risk that's not necessary. That's what you do with your zero. DTE You don't need to do it in life. Wait dude, you got a cat and you're allergic I'm allergic I'm not like super allergic.

all I do is get a stuffy nose like so it's not like I break out and hives. it's not like I my throat closes up I don't have any of that stuff. it's just my nose gets stuffy. Sounds like this.

Basically, it's not like I'm losing my mind or anything and also even this goes away if I properly time the anti-histamine wear a gas mask. That's a possible solution. Very possible solution. Well, now that we're successfully off path here as we always start every show, uh yeah, if you're joining in right now.

normally we talk about finance and trading like, well, at least 10% of the time we talk about finance and trading. We're starting early today because there is a GDP report coming out at 8:30 a.m. ET So in literally 90 seconds. So we're going to be paying attention to that because most likely it's going to prompt some volatility in the market.

So yes, we're going to be going through all of that. Then from there I have some the normal breakdown of what's going on. in terms of macroeconomic announcements. we have some individual Equity updates.

We have a crypto update for you. We have some seasonality stuff. We have the five things you should know before the Bell opens. We're going to be doing all of that as as well and then I'll probably spend a decent amount of time trying to self therapize and understand why I feel the urge to play Ruinscape, a game that I played back in middle school.

but what's going on in the world right now that like I was talking to some other people and everyone was like yeah, dude, wait is like RuneScape coming back is ruinscape a thing again cuz if so, I think I might just become a really good fisherman at it I might just create my account and just fish away. Fish fish and fish and fish. So that'll probably be at least a couple hours of today's show not actually playing it, but just talking about how I want to play it. Um, but yeah, it's going to be a good one.

So on that note, let's switch it up just so you know the Spy currently trading at 44940. we're going to watch it on the Futures Market should be a little bit more active this morning. But here's the CNBC breakdown. Let me make sure I have all this exactly where it needs to be.

Note: uh, down a few ticks in yield at this point, you see that down about 413 414 or so to your note. Also did back off a little bit on the Uh ADP numbers as well. It's now at about 4.97 it got to 489 about 5. Let's get this rocking just a couple of days ago in day anyway.

Rick Santelli Standing by in Chicago hello Rick Give it to us Rick Good morning. Yes! Not only do we have GDP we have the trade balance which is a deficit of course. GDP It's our second time around the block. Uh, we're looking for 2.4 confirmation.

We lose 3/10 Mike 2.1 That's a pretty decent revision, but then again, we all remember 2.4 was much greater than we expected the first time around. If you look at consumption 1.7 our last look was 1.6 so we lose a tenth there. we were expecting it to increase by a 10th. Now the pricing indexes maybe the most important aspect and if we look at just the Uh GDP Price Index headline 2% 2% The high water mark there was 9% Q2 of 22 that went back to 1981.

and what's interesting about 2% of course is is that we continue to move lower 2% actually is the lowest level since the second quarter. Now if we look at Core Price index and that is 10 less than our last look. And by the way, that price index 2.2 210. So 3.7 the high water mark there was 6% and Q2 of 21 that went back to 1983.

Let's take care of some other business here. As we monitor the effects in the market, we see that we moved from around a 414 to a 411 and we see that the pre-opening equity markets have definitely moved Tire almost doubled their pre-opening when we were up about 20 over 20 as Mike pointed out in Dow Futures. so we could see that the pricing index moving down really has an effect still market like this far. Congratulations If2 billion- 91.2 billion.

That's biggest stuff going of this year. Wholesale inventory is down 110th, that's a little less than expected. And finally, retail inventories that's a July number up 310, about half what we expected and about half in the rearview mirror which was up 7/10 We're going to continue to monitor of course post ADP jobs because we all know at the end of the week we have the Big Jobs report and maybe nothing more that very weak jolt yesterday. pricing keeps moving down and I guess the best way to summarize this is uh, the the the core.

uh, Pce quarter over quarter 3.7 is finally getting down into a territory uh, that is close to half of that high water mark and we see the degener General Price index at 2% is really Stellar considering it started out at 9% not that long ago Q2 of 22. So what a year ago? Yes, Finally, we want to monitor how all of this is going to figure into the growing Supply is interest rates continue to be firm, but we're about 12 basis points down from a very key technical level. In 10, pay very close attention to four and a quarter Mike Santoli it's all yours Yes sir, paying a lot of attention there Rick Thank thank you very much Steve Leasman back with us with more uh and Steve Pretty familiar theme as Rick laid it out there cooling but not cold. uh is is the tone of the data cooling I Can tell you that you know a lot of talk in Jackson Hole about where the right potential level is of GDP So how do you Benchmark this two this 2.1% number Some Mo Many people think you have the Uh GDP potential at 1.8 so still running a bit above potential.

And that's important because the FED has told us they believe a period of below potential growth is needed to bring down inflation. But hey what's not to like in this report A little bit you bullish or bearish. Because of this, some of the inflation came just a could affect those very robust GDP reports for for the third quarter which are running, you know depends on how you look at it between four and even 6% My guess is this comes down a little bit. It depends upon how the BLS apportions.

The weakness in other words was June a little bit slower and therefore the takeoff point for the third quarter was a little bit lower in that regard. Um, the Uh corporate profits were down, but down a lot less than they were in the prior prior quarter. They were down about $10 billion. They had been down.

what was the number there? $121 billion in the first quarter. It's our first look at overall corporate profits. It'll be um, uh uh, revised again. Uh.

and also we're looking at a gross Domestic Income which had been negative and now was positive 0.5 Some people like to look at a supplemental Uh number put out by the Bea which is an average between Uh gross Domestic product and gross Domestic income that's running at positive 1.3% Overall, a little bit cooler but still above potential and we'll see Mike This great question that stands in front of us now which is can the economy reduce inflation? Can inflation come down if we're still running above potential? Uh, you have the higher commodity prices uh in the month of August that are going to feed into at least the headline of the Uh inflation reports we get Uh, we'll see if it also uh uh feeds into the coure. Yeah, I mean that's really been the story of this year. Certainly in Market terms which is inflation coming down faster than growth has weakened? Uh, although I guess Steve You gave credit to Poell for saying look, we can have job openings come down, You could have a loosening of the labor market without a big Uh upturn in unemployment. That's been the case so far, but you still have those lag effects recession callers out there saying this is also not inconsistent with us going down toward a zero uh, job growth at some point at some month in the future and and this is going to be the process as we figure out exactly what the impact of the tightening campaign has been.

Yeah, and I think people need to realize and I think you're kind of hitting on it there Mike just because the my nose is already starting to open back up still still surve they went down % for the first time. but remember a running rate is around 25 or 30% and a BIG Story Here is those lags. the way that higher infl, higher interest rates are affecting things like Auto purchases and of course home purchases. With those Skyhigh mortgage rates out there and business, uh, expansion and borrowing? Uh, you're seeing uh, business expenses for for uh yields and interest rates also climbing up.

and of course some people are looking into that as a way to make some money. In terms of higher Gr bullish. that's been something that's out there as an investment opportunity in this world, the whole picture of things and there's still risk that the economy needs to digest these higher interest rates and it could be still some difficult times ahead. Absolutely looks good for now though.

Steve Thanks very much. All right Warner Brothers Discovery Making it official his name Mark Thompson the chairman and CEO of CNN worldwide. Well, Thompson is the former director. We could come back to that.

That seems pretty freaking boring. So as of right now Stock features Sloop After a third straight winning day, well they're not really slipping. Much Anymore Uh, rise slightly. they're I feel like they just have an inter.

They're like okay, we just the headline, just whatever happens, just make it kind of right at whatever moment in the time. Uh, so it it was going down, but now it's going up ever now. It even kind of gave back that gain from that initial pop. So at 8:30 we got the second read of the real GDP and it came in a little lighter than expected, which is saying okay.

economy cooling but not cold. That's what the FED wants to do. Thus, the initial reaction was positive. The selloff I'm finding to be a little bit surprising, but let's not freak out yet I Don't want you guys to lose your mind.

Let's just wait and see how things really go between now Market open and most importantly, between Market open and the first half hour of things playing out. That's the section I Really, really care about while we're just here I Do want to point out how in the overnight session, particularly the London session here between 2: in the morning and 5: in the morning, this is commonly considered the London session, the market did sell off. So in Europe people not feeling the most optimistic, we were in the realm of 4510 to basically 4,500 flat. So losing about a dollar in the Spy roughly give or take.

Now obviously since the year markets uh, their major session being done with well, we started to pop since then, but will it hold? Obviously this green line we are battling it out at the high from yesterday. If it can get above, hold above. To me, that'd be bullish. As of right now, there is a little baby.

Gap F Uh, to the downside, at 4496, we're trading right above. Oh never mind. Scratch that. that's where we Clos uh the high from yesterday.

which is when you're looking at gaps, you're looking at the highs and the lows. Uh, we are actually just at the high from yesterday 44945 currently trading at 41. This is a very decisive bullish bar yesterday. A very decisive bullish bar.

We Not only was it a large range, we closed very close to the high of the day. We got a breakout from a key level from last week, which also happened to be last week's High We Also got a break above the next level of resistance at 448 and we closed above it. So from there, yep, I care about 4499. Uh, we'll just call it 450 technically right below it.

After that, though, there is an interesting upside Gap fill to 45549 so watching that. but we could cover that in a bit more detail when more people are in here and we're closer to the market open. let's get through some of this major news. So not only did we get the GDP reading at 8:30 15 minutes before that, we got an ADP Jobs report US job growth slowed sharply to 177,000 in August below expectations.

Once again, this is news that's not so good for the economy, but thus because of the weird monetary situation we're in. It's actually good for the stock market, because what the stock market participants are looking for is signs of what the Fed's doing actually working and what the Fed's attempting to do is push the breaks on the economy. So the Market's very positive and enthusiastic and bullish when they hear that the Econom is actually slowing down because everyone's kind of thinking wow, Okay, maybe the FED is closer to being done with what it's currently trying to do. Um, so we're very close right now.

The major argument seems to be are we going to get one more rate hike or are we done here so we're in the realm of one or done or what's going on there And obviously the next time we find out is in September But we are going to get more of an idea of if we are or aren't starting tomorrow because tomorrow. Uh, once again, an hour before the Market opens, we get the Pce report. The Personal Consumption Expenditure Report. This is another inflation report.

It's very similar to the CPI report. It's a little bit more timely. It's a little bit more Broad in terms of the basket it considers when it's attempting to compute uh inflation on this one. Just a side note, in case you haven't heard me say this before, but hey, you probably have at this point.

Uh, according to the Fed, I'm talking Jerome pal, and all these other voting members of the Fomc. According to them, they actually weigh the Pce report more. Uh, like they weigh it more than the CPI report. So it's definitely definitely important.

This is going down once again an hour before the Market opens tomorrow Thursday August 31st. But obviously today we got the ADP report. They were looking at 195,000 That was the forecast came in at 177. In terms of the GDP report, they were expecting the second read to be uh, 2.4% came in at 2.1 at 10:00 a.m.

Today we get petting Home sales and 11:00 a.m. Today we get crew oil inventories so that's the story for today. The story for tomorrow is majorly like going to be the PC report and then on Friday of this week. Uh, it's the first Friday of a new month if you believe in the Gregorian calendar and that means we're going to get a new unemployment rate.

So report. So check that out an hour before the Market opens. I Want you to know that? please don't forget. especially if you're playing with options that Monday of next week the Market's closed in observation of Labor Day.

So on Monday of next week, the equities Market is not open just so everyone knows. Um, all right before we get into things that are directly related to the market and maybe some good trades and bad trades for today. Uh, I Just want to keep you a priz to the situation of what's going down in the southeast of the US category 4 hurricane. Adelia Is that I Hope I'm saying it right.

Adelia Adelia ad Adia That sounds like it's a it's Adelia the I should be EAS Adelia Adilia projected to hit Florida with catastrophic storm surge. So what? Florida prepares for Hurricane Adilia Storm continues to strengthen I do have some videos. uh that? I guess people are finding. how do I open this up? uh open into a new page.

this is Florida dude that is crazy. look at that well is this Florida if it is, it looks like it's very Southern or maybe it's more like Cuba cuz just judging by when this had to be posted and whatnot I assume the storm had to be coming through whatever region this is a little bit earlier. Uh, hang on. there's a couple more here.

dude this is It's just so intense of hurricane. we have lots of lots of trees down the house behind us just lot roof power Lin are down tree debris flying around everywhere getting good pushes of wind just much to get into the eye. we're have a period a little bit of and we going to get through the second eyeball we just saw Qlc has2 just cross right in front of our truck. Are these like Storm Chasers or something? It's so wild to me.

ridiculous that was a good lost my fo what drives people to like want to do this like put themselves In Harm's Way and be like yo I'm going to take a good video of it. What else do we have in here? Uh, here this morning at about 7:00 sitting there, look at one of the Uh Marine markers coming through. That's a marine marker right there. so that's big water, big wave action.

It's approaching the houses here on First Street and then look at this. Doesn't this just ruin all the houses? Like there's no way the water isn't seeping into every house here. That's this. is just rid.

Are there any more? Yeah, a couple more. Dude, these are just so intense. He's like I need to get my bike in. He's like I'm training for a triathon I must bike this I must bike this today that that's grind set right there.

that is a grind set. he's I have to train. No excuses I Think that guy maybe a little bit too much into the world of d David Gogin All right. So this is in Florida 8:30 So this is this morning at 7:55 If this ever plays dude I need to reload this I don't think there's anything so Horseshoe Beach Florida 7:55 a.m.

So this is about an hour ago. A little less than an hour ago. Like today that is so wild. just random parts of buildings.

Well I think you guys understand the picture of it. Uh I Hope you are being safe. Uh Adelia Intensifies to Category 4 hurricane. How many different C How high does it? It Go Hurricane categories Let's see what this, um, the wind scale.

So it's all based on Wi. so five is the highest. Apparently, we don't exceed five. it has to be.

So to go up to four, it has to have winds of 130 to 156 milph. And then as soon as it's 157 or higher, it becomes a five. So as of now, apparently it's a four. So the winds are at minimum 130, but not above 156.

What's this? The Hurricane Intensity scale? Wind damage? All right? So that's a category one. Some trees are going to lose your leaves. Category two: You're going to start to lose the top of your house. Category three: Apparently you're really going to lose the top of your house.

And four. That's when things get nuts. And then what happens at five? Everything's gone already at 4. Apparently everything's already gone at 4.

So uh, I Guess we don't even know what happens at 5 Because it was. It was already gone in the fours. So holy crap. Holy crap, that's that's actually ridiculous Right now.

we understand here. At least in Tampa, the winds are starting to pick up at about 50 mph. Overnight, there was heavy rain in the area. the hurricane of this has never made landfall in thewestern part of Florida, and there's even a tornado watch in effect for theate until this, of course, as Hurricane Andalia barrels towards.

Florida Gulf Coast Expected to make landfall just north of Cedar Key That's just south of Tallahassee and the hurricane strengthened over the Gulf of Mexico threatening to unleash catastrophic Storm surges and rainfall now Fort Meers Beach Just south of here is already flooded. It's the same Community devastated by Hurricane Ian Last September and Governor Ronda Sanchez has warned people in these areas, announcing that more than 20 shelters are open and more than 1 million gallons of gas are available if needed. Overnight people in at least 30 Florida counties were placed under evacuation orders. Residents actually chose some of them to Honker down.

They boarded up their windows and filled those sandbags. They got water at the grocery stores now. Tampa Electric actually secured tens of thousands of workers from more than 20. States As far as Maine to help restore power.

After The Storm 5,500 National Guardsmen are also on high alert and as President Biden will be receiving a briefing on Adalia today, FMA is already calling on Congress to approve more funding for Disaster Response Of course we're also looking very closely at those Storm surges which could be life-threatening They could go up to 16 ft in some areas and it adds to the increasing flood threat here and along the coastline. Well, I guess that's a clear downfall living in Florida Beautiful. A lot of the Year great taxes but man when the storm come they come. That is ridiculous.

Oh wow, well hope everyone's good there for sure. Uh, little bit of international news and the global economic situation. The Bank of England is facing major losses on its Bond purchases. Kind of sounds like our banks here and it's set to get much worse.

The Bank of England's losses on bonds bought to show up the UK economy will be materially higher than projected in Late July The Bank of England The Boe estimated that it would require the UK treasury to back stop $189 billion worth of losses on its accet purchase facility also known as an AFP Deutsche Bank Senior, Uh, Economist Sanj Raja said the cost of the treasury of indemnifying the AFP losses over the next two fiscal years will be around 23 billion higher than the OB forecast in March. Not a good situation. It seems like between the banks, the small and the medium, the regional banks in the US that kind of got blown out of their position because of what's going on with bonds. Well, it looks like the Central Bank in England potentially under the same pressure.

What's interesting there is they are the central bank and in the US it was like private and publicly traded Banks It wasn't our Central Bank. It wasn't like it was like what Jerome Pal's running. so this it it could be a bit more intense. Uh, a bit more intense for sure.

UK Home sales set to hit their lowest since 2012 as mortgage sales plet. So the phenomena that we're seeing in the US with obviously interest rate skyrocketing just less people are interested in buying a home right now because you're buying a lot less home for the same amount of money. and we're seeing that right now in Europe as well. Specifically, uh, some of these records that are being broken in the UK not the records that you want to be breaking.

The number of houses sold in the UK this year is set to reach the lowest annual figure since 2012. Demand for homes is down by 34% compared to the average of the last 5 years. As higher mortgage rates and cost of living pressures weigh on the market, the Bank of England hiked interest rates for 14 consecutive times on August 3rd. Once again, this is also pretty much being mirrored in the US bringing that figure that underpins most mortgage lending rates to a 15-year high of 5.25% So that's what's going down on Europe I Have another update for you of what's going on in China China moves to stabilize finances of troubled Shadow bank.

So like I said, the issues that are currently in China's economy the country. Yes, on one side, you have real estate that's on tilt. You have a populace that is not happy with the banking system and the shadow banking system. The finances of the Shadow banking system.

it's making some people rightfully mad. default and Trust sector raised Financial Stability concerns China's economy struggling to revive as confidence. We also got some pretty big headlines: uh Sophia on of course the China asking the biggest Financial firms to look at Shadow Banking is this alarm Bell Should we be concerned about this? Uh, this is an important step. It it does seem like uh Beijing is looking to perhaps lead a state back Rescue of this Shadow Bank Uh, so what essentially happen is Shadow Banks they're they're the alternative funding source for um, not just developers, but for companies that can't get loans uh via Banks because the lending conditions are so strict in China So the the concern is that there could be a Cascade of Financial Risk if we do get um, this company collapsing in a disorderly fashion.

So the fact that Citic and CCB trust two Uh companies that are linked to uh State back lenders are looking at the finances uh of this Shadow Bank suggests that the same that happens to China hang the bad debt manager in 2021 um could also happen to this Shadow banking. So what this tells me Fran is that authorities are kind of tightening their grip and also increasingly concerned that this could spill over to the rest of the financial system. But is it something that they can manage or could we see a significant financial event again? Shadow Banking is one of the trickiest things to get a handle on. probably one of the most dangerous if it unravels.

Yes, exactly. And the problem is that, uh, it's not, uh, entirely clear how big it is. There are estimates um, over the size of the Shadow banking sector and China has cracked down on it in recent years and made it smaller because of the spill of risks to the financial system. Um, China did handle the Huon crisis quite well and there wasn't a spill over back then.

actually. Um, it was almost a post child of how how to do a state backed restructuring and bailout. It was a big one back then. So if they follow the same Playbook and the restructuring uh follows through in in the same way that it did, then it could be positive.

I mean you do want the state you do want Beijing to kind of Take Charge here because of the risks that it poses to to the economy in general. So on that with Shadow banking I see some comments here of like okay, like what exactly is Shadow banking? Uh, actually where I got most of my knowledge from him is from a personal friend of mine. Andre J Uh, he's a fellow YouTube Creator he's a lot bigger than I am. He's a lot more successful than I am.

and he's just probably better human than I am. Uh, so I figure instead of me fumbling my way to try to perfectly explain this Shadow Bacon crisis. let's turn to a dude who put in a lot of effort. This is a great video.

Show him a bit of love. uh, make sure you're subscribed to his channel, but this is a good explanation. Uh, it's a little bit longer, so if it's cool with you, we're going to watch on 1.5x speed because it is 12 minutes. But it's a great explanation All right.

So there's even more bad news because China's economy just exposed a deeper problem in something called Shadow banking. This Shadow Banking Sector Shadow Banking Shadow Banking The shadow banking sector is estimated to be worth at least $3 trillion and that's in China alone. And it all started with: Real Estate Country is facing a financial meltdown every week. There is a new headline about its impediments.

So the inevitable happened last week and Evergrand collapsed. Now this is huge and if you haven't been following this story, Evergrand was one of China's biggest real estate developers with more than 1300 projects across 200 80 cities, but in 2021 they fell behind on their bond payments to their investors. 2021 was when we saw the company default on its debts, sending shock waves across the Global Financial system and in fact, triggering a string of defaults across other builders who were either owed money from ever Grand or expecting ever Grand to complete some contracts with them. Since 2021, we've seen about 40% or the companies that make up about 40% of CH China's housing sector defaults.

ever. Grant's debt got so out of control that they owed more money than any other developer in the world. $300 billion because the company got so big and it was so connected and other developers relied on them for resources and for loans. After Everr defaulted, it was a domino effect and 40% of China's private real estate developers started to fail as well.

Currently, as we understand it, ever Grand has about $300 billion in debt. It's lost about $80 billion in the last 2 years, and in fact, has even been in a trading H at shares since last year. $300 billion is a lot of money. To put that in perspective, that represents 2% of China's GDP In other words, 2% of all the yearly income that China makes.

So it's been a long time coming and now ever. Grand Filed for chapter 15 bankruptcy. It's property. Giants so-called property Giants are now filing for bankruptcy protection.

Chapter 15 Bankruptcy is a way to protect non- Us companies and their assets from their creditors. And because Evergrand is an international company that owes money all over the world, they want to make sure they don't get sued all over the world, especially in the US which is extremely litigious. But why all of this is important is because the world has a 105 trillion doll economy Of that. China is the second biggest at almost $2 trillion right behind the US and its downfall is having an impact not only on the Chinese economy but the US economy as well.

And this includes the recent dip in stock prices as well as Bitcoin. And this has led to something even worse because there's another developer in China that everyone is looking at right now called Country Garden which is even bigger than Everr. But all of this is leading to a potentially much much bigger problem. But now we also know that a leading trust from Jong wrong International has missed several payments in the shadow banking sector which is estimated to be about $3 trillion.

So let me explain exactly what's going on in China with this Shadow banking crisis as well as interest rates here in the US which could be going higher and I want to talk about a potential downgrade to US Banks including JP Morgan and what could happen next. So let's get into it. Hi, my name is Andre J Hope you're doing well. Come for the finance and stay for China again.

I Did not think I'd be making another video about China so soon, but this is big and as they say, if China's economy gets a cold, the US will get a cold as well. and China's economy is not doing good right now. China's GDP has significantly slowed down and unemployment is so high that China is trying to hide and stop publishing their data. Beijing will stop publishing figures for youth unemployment just weeks after it hit a record high in June Increasingly possible the world's second largest economy is going to miss it.

5% growth Target that comes after the Chinese Central Bank A little a surprise interest rate cut earlier this week. and to make things worse, housing is going down as well, which is bad for a country that relies so heavily on the real estate economy. Uh, how in scale and importance regarding Country Garden compare with that one bigger, worse, more worrisome, less what is four times as large as ever? Grant As a matter of fact, Country Garden until I think probably the last week was the number one largest private real estate developer in China. Now it's number five and China's now experiencing deflation, which is when prices are going down, but not in a good kind of way.

because consumers have stopped spending money consumers aren't really spending Cons: aren't spending in China And uh, they're not spending abroad either. And now Everr is in bankruptcy protection and they're trying to restructure their debt via something called chapter 15 bankruptcy which is pretty complicated, but here's exactly what it means: This is something we're going to hear about a lot. So imagine I was ever Grant an irresponsible child who owned a lot of these M toys which represents all the people that I owe money to. Now imagine that I had so many of these toys laying around the house that I eventually asked my friends to hold on to these toys for me.

and then one day my parents which represent the courts get mad at me and they decide that I've been neglecting my toys too long. so they're going to give them all away. So to decide who's owed a Mughal AKA who's owed the money, they're put in charge. Which is pretty important because when you're giving toys away, you're going to have a lot of kids from different neighborhoods who are going to want a piece of them.

That's essentially what's going on with Evergrand except substitute kids with shareholders Bond holders employees and property owners and substitute the different neighborhoods with the chapter 15 part that was the Mle Again, explain it like I'm five Edition Now the next stage of China's bad news is an even bigger property developer, the owner of which became the richest woman in China. She was once A's richest woman, but Yuen has since lost more wealth than any other billionaire in the world in just over two years. some 28.6 billion to be exact, all lost as her company. the Chinese property.

Country Garden Falls Deeper into a debt crisis once China's largest, Builder by sales, the firm is now at risk of defaulting. So unlike Evergrand, which people knew about since 2021, Country Garden Took people by complete surprise because this was supposed to be China's strongest real estate developer with a ton of cash on their balance sheet. In fact, they promised to deliver 700,000 properties, but so far they've delivered roughly half of that and they're having trouble. And they've also missed two Bond payments to their shareholders.

which is also why in the last 30 days, the stock has lost almost 40% in value, and since the beginning of this year, it's down over 72% The stock is now only worth 10 cents. And because Country Garden has roughly four times the amount of projects in development than ever GR If they collapse, The question is kind of selfish, but it's something everyone is wondering: how will the US be affected by this? Presumably it's going to be the US companies that bought into Country Gardens bonds to get those interest payments, but there are a couple companies here in the US that actually did that, Companies like Black Rock Fidelity International UBS JP Morgan and a couple others, which is scary because these are all companies we know and probably use. Now the good news is this: those numbers are in a couple hundred million doar worth, which sounds like a lot, but relative to those companies balance sheets, and assets under management which are in the trillions, this is relatively a small amount. So if the worst was to happen and Country Gardens bonds go to zero, then they should have zero impact on all those companies.

theoretically. but as I've said before, whatever happens in China doesn't stay in China so anything could happen. And unfortunately, the Chinese middle class is already to be affected. and it's also starting to impact the shadow banking sector.

Do we have a handle I Mean if we extend China's problems Beyond property and we start thinking about the shadow banking system there, you know how? how does that impact the economy Overall, So here's what shadow banking is because it sounds Cloak and Dagger and kind of evil. but that's only because it kind of is. So here's the unofficial explanation of how Shadow banking works. If you send me two, Bitcoin I'll send you one back Right now, here's what the official definition of what shadow Bank is: Shadow Banking describes Financial intermediaries that participate in creating credit but are not subject to regulatory oversight.

All right. So imagine you're back at Toys R R Us Again, when you go in there, you know that there are certain rules and expectations. like when you buy a toy, you're probably going to get a receipt and there's a return policy most likely and what you see is what you get. So if you see $495 you're not going to be like I'll give you 350 for it.

There is no haggling and the owner of Toys R R Us will uphold these rules. Those are the basics and that is the regulated banking industry. But now the shadow banking industry. Imagine a playground full of kids.

Let call it play. Club They could in theory just trade the toys with each other because there are no prices, only the prices that they set for themselves. And they could even let each other borrow their toys in exchange for something else because there are no receipts and there are no rules. The Only Rule is don't talk about play Club That's the shadow banking industry.

There's not a lot of official data out there, as you would imagine, but it exists sort of like dark matter in outer space. We can't see it, but we know it's there. It exists in the shadows outside of regulatory purview. And here's what's crazy.

Remember how I said the world's economy was estimated to be worth roughly $100 trillion? Well, it's also estimated that shadow banking is easily worth over $50 trillion and that was a report from 2019 way before all the inflation and crazy money printing. So at least half of the world's economy participates in Shadow Banking And it's probably safe to assume that all banks around world, including in the high St Market which is a whole different story, but also part of Shadow banking. But the point is that China Shadow banking industry is easily worth over trillion. Some estimates put it much higher and that industry is heavily dependent on real estate and those loans are coming due, but no one's paying them because those developers are in default.

Now, all this news has led to a couple interesting developments here in the US. First, it's partially why the stock market lost 2% last week and why Bitcoin went down to roughly $26,000 Investors are just becoming fearful over China's struggling economy and how that could affect us, but there's also another reason why everything's going down. And that's because the Illuminati aka the Federal Reserve The minutes from the Uh Fed's most recent meeting show that the Uh, most of the participants in the meeting still saw significant upside risk to inflation that could require further tightening and all tightening means is just potentially higher interest rates in September. But so far the market aka the CME Fed watch tool predicts there's almost a 90% chance that rates will stay the same.

But also remember Fitch not abber Comian Fitch but the Credit Ratings agency which downgraded the US economy. They're back with more bad news. There may be another downgrade coming for the banking industry Fitch is warning it may be forced to cut the credit rating of dozens of banks, including big ones like JP Morgan Now so far, thankfully, there hasn't been a downgrade, but there is a possibility. Here's what the ratings look like as of August 223.

And remember, these ratings just represent how safe A Bank might be. Bank of America Bank of New York Melon, JP Morgan Chase and State Street are the highest rated, with Morgan Stanley and Wells Fargo right below them. All these banks that are highlighted in bold means they're systematically important AKA Too big to fail Again, none of this is a reason to be concerned yet, but it is important to pay attention to personally. what I'm doing to protect my money is I am going to the bank as soon as I can and separating my accounts so that none of them hold more than $250,000 so I'm within the insurance limit just in case if we find out that this Shadow banking sector has a huge contagion and it's worse than we originally thought.

As for investing, I'm still dollar cost averaging into the market because I'm investing for the long term and my prediction even though I think it's completely worthless, is that when the Federal Reserve starts to lower interest rates which theoretically should happen sometime next year, that's when the market should go up. Unless of course, China takes everyone down with it, which shouldn't happen. but you know famous last words. but I that last part I don't agree with I agree with 99% of this video except for this last part.

as for investing, I'm still dollar cost averaging into the market I'm investing for the long term and my prediction even though I think it's completely worthless is that when the Federal Reserve starts to lower interest rates which theoretically should happen sometime next year, that's when the market should go up. So historically the market does eventually come up, but on the moment that they start cutting rates, there's actually a considerable double digigit downfall from there. So if you look at the whatever from the 1960s until recently, when you look at the monetary cycle, the monetary policy cycle, there is this just clear pattern that when they start to cut, the market is still going down. So from the announcement of the first cut, there's still double digit draw down.

So after that, eventually the market does Shake itself off and go from there. But I Don't want anyone to think that it's based on history and no one knows whatever is coming in the future. But if you're hearing like oh, the Fed's finally cutting like I should be buying Now now now now now. now.

in reality, you actually have some time. you actually do have some time. Uh, I do have the numbers somewhere around me actually right here. Is it right here? Yeah, So uh, I I have them right here in my super secret handy dandy notebook.

So if you look at the last Fed rate hike Cycles From the moment that they said they're actually going to cut rates in that happened in 1969, the market from that point to the actual Valley where we bounced off of it, hit the ground and started to run, the market came down 36% In 73, it came down 48% in 1, it came down 27% In 2000, it came down 51% In ' 07, it came down 58% and in 2019 it came 30 down 35% So my point in this is when they announce a rate cut, there is typically a little bit more blood, a little bit more pain to be like had, but from there you're good to go so it's more of I Don't want people to think that like right away, you're like I Got to buy I Got to buy. Just the history doesn't suggest it. This time around, in 2024, it could be different. It totally could be.

But I just want you guys to know how it's played out historically. But overall, and that's like the one little sentence that I would add my own little critique onto this video. Andre is a personal friend of mine like subscribe. He is one of the best storytellers in the world of financial content creation and his editing is superb.

I'm a I'm a huge huge fan of what he does. Uh, so this one. this particular video is China Shadow Banking Crisis just started. Overall his channel name is Andre J He's a great guy.

uh, as as much as he comes across as like a humble awesome human being in his videos, he's even more humble and down to Earth In real life he's a great great dude so show him a bit of love speaking about. Bitcoin Um, it had a great day yesterday. An absolutely phenomenal day yesterday. if we bring up Bitcoin Uh, still holding above 27,000 so as you can see around 10: a.m.

it just started to rip a spot. Bitcoin ETF is much closer to reality, but investors aren't quite there yet. So yesterday, Grayscale, which had a Bitcoin trust, finally got the court to admit that the reason the Sa was saying no and kept denying their spot Bitcoin ETF was basically unjust because we already have Bitcoin Futures and the reasoning for accepting that should have been applied to the trust, but they didn't so we don't officially. As of right now, as of August 30th, 20, 23, we do not have an approved spot Bitcoin ETF but we are getting absurdly close to it.

So on the legal victory for Grayscale, which was obviously a big win for them. Bitcoin in general and crypto as a whole, we saw a huge pop. but I just want you to know it. in the legal sense, we're not exactly there.

and when we do get there, obviously Grayscale it seems is going to be number one. Then you have Black Rock, you have Vanguard You have Fidelity You have a lot of Heavy Hitters who are trying to get a spot Bitcoin ETF And the reason it so important the reason at least in my estimation, that the market ran off of this news is because it creates more highway on ramps and Regulatory Clarity for Big Wall Street institutions to actually get in the world of crypto. and it also allows a lot of retirement accounts direct access to the world of crypto. I Mean in the US loan, it's over10 trillion in retirement accounts, even if a small small percentage decides to put some of their Savings in crypto.

Obviously, that just represents a lot more Demand with Supply staying the same. obviously. price goes to the upside. the world's biggest Bitcoin fund post best day in 2 years on Court Ruling great scale Bitcoin Trust rose 177% on bets it will become an ETF US Court overturned an SEC decision to block the conversion.

This is a thing that to my understanding and I'm not a lawyer I don't speak legali a lot of people were kind of saying how is this even possible It seems like the SEC the Security and Exchange Commission was clearly overstepping, not really doing anything that made any legal sense and now obviously a judge is finally agreeing. So big win for Grayscale. Big Win For Bitcoin Big win for the crypto Community Goldman Sachs to pay a 5.5 million fine over audio recording failures during The Rona period. The Civil fine in civil fine imposed by the Cftc the commodity Futures Trading commission is the latest settlement against Goldman related to to recordkeeping failures.

We don't need to dive into it. I'm basically just using the time and the platform to point out how time over time these big institutions Wall Street like Goldman is a symbol of it time and time again. they're just doing things that hey, you're doing things that you shouldn't, You get caught and then they just pay a little speeding ticket and they get away with it. Now the audio recordings that should be there that aren't there did it make them more than 5.5 million? It's hard to say I wouldn't be surprised if it did.

but I don't have the definitive evidence to argue one way or another. But for them, if they're doing something that makes you more than what you're being fined, why wouldn't you just keep doing that thing? That's one aspect of our regulatory system that I just don't really get on a relative basis of what people are making from some of this illegal imoral actions. When you're find less what is ever going to stop you from just like, why wouldn't you just keep doing it because you're net ahead. Uh, so just wanted to bring that up very quickly.

Now with respect to today: Wednesday August 30th I Do want you to know from a seasonal perspective: today does favor the Bears Now does that mean that today's going to be bearish? I Don't know I mean I Would argue that there's roughly a 68% chance that today's going to be bearish, but on the flip side, there's a 32% chance that's going to be bullish. So nothing ever, ever, ever is guaranteed or defended in the world of the markets. We're always in this gray area between 1 and 99% and it's all statistical probabilities. it's all likelihood.

So even though today's bias is bearish, I I Think we're going to have an anti- like I Think we're going against the gra grain today because yesterday was so strong, we have a little bit of a gap up. So for those of you who are scalp Traders you at Market open you if it still exists, you could play quick. downside Gap Fi to 44945 if that's something that you're interested in. But overall, if you look at the past two, two and a half decades, yes, there's a clear downtrend, but once again, it's not a guarantee.

So even though I know today's seasonally bearish, I'm looking at the current situation and it it's making me feel a bit more bullish. So I guess on that question I did put it in the poll at least on YouTube It looks like 2third of you are bullish going into today, so we'll see if most of you are right or if most of you are wrong. Five things to know before that: Bell goes dingy ding ding ding today Wednesday August 30th Tech Stocks rebound I Mean dude if you look at Tesla Nvidia Some of these major tech stocks from yesterday Tesla Had a phenomenal day, gained 7.7% It's losing a little bit in pre-market right now, but I mean dude, this thing opened up at 238 and pushed as far as 257. Beautiful, beautiful, beautiful, beautiful.

If you look at Nvidia opening up at 467, going as high as 490, gain 4% I mean those were the two very exciting ones but even Apple had a nice 2% Gain Netflix almost a 3% gain, you have meta up 2.67% rum. Not a major Tech stock, but hopefully one of these days. Uh, recapturing the $8 Mark there There was a lot of bullishness and excitement in the markets Medicare negotiations. So I believe the Biden Administration Just released the first 10 drugs that will be subject to this type of negotiation.

I'm not the biggest pharmaceutical Trader out there and I try to not do it at all. Biotech. This is just not my domain I Just don't have knowledge in it. So if you're out there and you love trading biotech stocks, hey have at it.

If you like medical supplies Pharmaceuticals that whole world, that medical insurance related world I simply just don't know about it. You can make a lot of money if you know what you're doing. It is just not my skill set. Regional Banks Us Regulators are responding to Regional banking crisis that flared up this spring.

So basically they're saying hey, we need a better cushion. It's a safety n that they're trying to get through Bitcoin ETF We talked about that Hurricane Idalia Idalia Idalia Idalia Idalia Idalia Um making landfall in Florida I Believe majorly hitting the West Coast uh this morning. if you're there, if you know someone there, my thoughts and prayers are with you. Be safe.

Dude it the the videos are absolutely crazy are truly truly crazy. Uh, a little bit later we could talk about this: AMC Short Sellers net: 522 million in August as meme stock tumbles. Uh, do you want to go over this now or do you want to do this after market opens? Uh I'll I'll leave it up to you. uh I don't know who we have in the audience right now I Think there's some people who you're like, yeah, know this makes sense.

and then there's other people that this particular story is going to. um, make really angry Elix is saying now and he's the first one to respond. So let's do it. if you've been paying attention to AMC Adam Aon and just really, what is going on in this particular insane situation.

It's no surprise that AMC and the artist formerly known as Ape which is no longer merged back into AMC at the time that I'm recording this over the past year. Really, ever since that rip higher all the way up to 72 in June of 2021 has done nothing but go down and down and down, there have been brief moments of bullish optimism, but unfortunately they are shortlived and a lot of the time there was in between there where things were a bit boring and I didn't really cover it. But now that we have this merge event of Ape going back into AMC obviously it makes sense that maybe we should be talking a little bit about it and it's been a bloody nightmare. It's been horrible.

AMC Short sellers net 522 million in August As meme stock tumbles, shares of AMC Entertainment are down by more than 75% in August AMC Short sellers have made more than half a billion dollars betting against the mem stock. in August alone. Short sellers have booked 522 million in profits so far this month on the back of a 75% stock decline according to the financial analytics provider Ortex. Shout out to Ortex I Like them: I Like their software I Like the data they provide and right now you, we can roughly judge the size of shorts and that's how they come up with these numbers.

The shares of AMC have pledged. Since the firm got approval for its revised stockholder sell settlement, the ruling on August 11th by Delaware judge has allowed AMC to convert preferred share units into common stock. Why are things going down on this conversion? Well associated with the conversion is the fact that basically the Adam Aaron the CEO of AMC and the board now have unlimited power to delute. Obviously, with more Supply as in dilution with the same amount of demand, price goes down.

Now the question is, well, how do we know they're going to dilute? Well, it's pretty evident. Just listen Adam Aaron himself or just understanding their financial situation. they're $5 billion in debt and right now that debt burden's not looking so pretty. especially because there's a writing and acting strike.

So that's going to create some form of a lag of new blockbuster movies being made if they're not being made, or if there's a major lag to it. That means we could go more financial quarters with the box office not performing at the level we would all want it to. And if it's not performing at that level inherently just means that the revenue for AMC will be going lower on August 14th AMC Stock tanked 35% on fears that the approval would allow the firm to issue more shares to raise. Capital It's not just a fear that's going to be reality.

AMC Shares dropped uh further on August 24th after the company completed a reverse one for 10 stock split another 11% drop on August 28th has erased all the gains from 2021 meme stock mania. This is a good reason of for everyone to understand there's a difference between an active trade and an investment at this. Point AMC is not proven itself to be a quality investment. It's proven itself to be a quality active trade arguably both to the upside and to the downside because there's been massive volatility in both directions.

On August 28th AMC short sellers made over 25 million within 24 hours Short Interest in the firm's free float share stands around 12.5% This recently took a big tumble because of the nature of the merge of ape going back into AMC People were playing the Arbitrage they were short AMC They were long Ape and the reason they were doing that is because both AMC and Ape had the same legal and financial claim to the company, so it wasn't really logical that they were trading at a different price. The fact that they were trading at a different price creates what's referred to as a Delta and people were taking advantage of that Delta the Arbitrage Opportunity by being long Ape and short AMC until the merge, and obviously people who chose to engage in that particular trade actually ended up fairing pretty nicely AMC reported its Financial results for the second quarter on August 8 The company's 15.6% Revenue growth and net income of 8.6 million compared with a net loss of 122 million in Q2 of 2022 failed to lift investor confidence on that note. In terms of fundamentals, that was actually a big win for AMC The fact that they had a positive net income that's good. That means they were trending in the right direction.

Now it's nothing to blow your skirt up over, but it was a positive sign. I'd rather them be the positive than the negative as I alluded to before though, the fact that there is the strike, the dual strike going on, the writing, and the acting strike I Don't think it's the most insane call out to be like whoa, the longer that goes. That means there's going to be less movies. And if there's less movies.

And this is something completely outside of AMC's control, there's just going to be less. Revenue So my fear is that their net income goes back into the net loss territory the longer that this strike continues. well. AMC Proved to be a successful bet for short sellers.

in August they have lost roughly 24 million by betting against Mem sock. GameStop over the same period Overall, in 2023, AMC short sellers made a profit of 407 million while GameStop short sellers ticker symbol Gme have lost a little over 80 million. So the short on AMC this year has been successful. The short on Gme this year has not been successful.

I Know this is a very a high emotion trade. a high emotion situation. In my opinion, it's as simple as this: I no longer trust Adam Aaron I I Don't see what he's done That should make me trust him. If anything, whenever things seems a little bit good, he's tweeting over the weekend and drives things back down.

I Just I Cannot name a thing that shows he supports retail traders. That shows he supports Apes You might be of a different opinion I'm just sharing my own and covering just factual information of how things have been going. But once again, obviously when it comes to your own money, your own Investments you have to take a bit of responsibility and do your own due diligence. I'm a fan of taking in as much information from as many sources as you possibly can, but if you find yourself just hoping you're like only looking for things that support your bias, the market is probably going to eat you alive obviously.

I Hope that this all very much turns around, but the fact that there's been such a horrible plummet capitulation in AMC's stock price and the CEO Adam Aaron himself is nowhere to be found. This guy thinks the best thing he could do right now is be completely silent. That's insane to me. That's absolutely insane to me.

Uh, it's a bold, bold strategy cotton. We'll have to see if it pays off. but the fact that this guy is Radio silent when the stock is getting absolutely merked. I Mean it tells you exactly what you need to know about that guy's leadership or what I should say is lack of now.

Obviously we covered a lot there, so let me know your thoughts in a comment, but this is. it's a sad situation. If we're going to sum it all up, things have gone very, very bad and poorly for the supporters of AMC. So I hope things turn around, but I'm not particularly going to be holding my breath on it.

All right. Let me bring back to the spot. we have seven minutes. so little bit of chart review So Yesterday Beautiful breakout.

We broke above the high of last week. Also, just a key level around 448 got above it, closed above it I'm talking about the Spy tracking the S&P 500 right now in pre-market trading, we are literally just right at the high from yesterday, so it'll be interesting to see how bullish or bearish things are right at open right now. I Know the seasonality of the day does favor the bears, but I'm feeling bullish based on current price action, current technicals. uh, just really current momentum and excitement.

So if this can push and hold, obviously 450 is a clear level key psychological level, key technical level if it keeps going past that. Yep, 452 followed by this upside: Gap Fi to 45550 If you're looking at the NASDAQ similar situation A breakout a hold now at additional resistance I Want to see what happens around? We'll just call it 378. But past that, there is an upside Gap Fi to 3870 in terms of Apple Cup handle higher highs, higher lows upside Gapi to 190 Microsoft not actually doing too too much Tesla Great day yesterday coming down a little bit in pre-market trading right now.