WARNING: This Recession Will be WORSE than 2008.

A doomer who predicted the 2008 financial crisis thanks to the complex financial products over the housing market is now predicting that our next

financial crisis could be even worse and around the corner specifically because of the interplay of the four things that I wrote down on this whiteboard. We're

going to keep this straightforward and break this all down for you. Remember

meet kevvin.com coupon expires in 2 days. Okay, let's first jump in over

days. Okay, let's first jump in over here. Mark Sandy from Moody's. This is

here. Mark Sandy from Moody's. This is

not our bear porn guy today. This is

just something else related to the bear porn we're going to talk about. Mark

Sandy over at Moody's says that recession is once again a serious threat even before the disconcerting events in the Middle East. Our machine

learningbased LEI leading economic indicator model put the probability of recession starting in the next 12 months at an uncomfortable high of 49%. behind

the recent jump are primarily the weak labor market numbers. So in other words, when these bad labor market numbers came out, this uh algorithmic LEI device

spiked, which we hadn't seen seen since liberation day. So we're basically

liberation day. So we're basically according to this leading economic indicator model at the highs of liberation day for essentially the odds of a recession which we had not seen

since COVID when we had a recession 2008 when we had a recession the early 2000s when we had a recession here's 1995 where we had a soft landing never really spiked 90s when we had a recession

double recession over here and you can see its track record has been basically pretty damn good uh but you can see how long and frustrating the climb has been here like through 22 two, three, four,

liberation, all that, right? Uh, it's

not just that though that I want to point out. It's also Yardini. Ed Yardini

point out. It's also Yardini. Ed Yardini

says there's a chance it might not be the time to buy the dip. Take a look at this. Yardini warns contrarian buy

this. Yardini warns contrarian buy signal may fail. And that's because we have the largest skew and basically put options uh in the S&P 500 that we've

seen since 2021.

So the highest uh relative number of put options compared to call options in the last 5 years. Uh that's pretty wild. And

Yardini is arguing that the current war with Iran is potentially underpriced by markets in terms of how long it's going to last especially since Trump isn't getting a lot of help with the strain of

her moves from others which of course Trump is chiding others for. uh but

suggests that things might actually end up getting worse and these puts put purchasers might actually end up being correct. But anyway, for now, let's get

correct. But anyway, for now, let's get into this bear porn. The title is, and it's in our all our favorites, uh the New York Times here, but anyway, it doesn't really matter where it's published. It's that this Richard

published. It's that this Richard Bookstabber guy uh writes, "I predicted the 2008 financial crisis. What may be coming, what what is coming, what is

coming may be worse." This was published today. And basically, he combines these

today. And basically, he combines these four issues. I'm going to give you an

four issues. I'm going to give you an overview. Then we'll go back to the

overview. Then we'll go back to the article just to save you time. And

remember, if you like my uh time saving and distillation, make sure to subscribe to the channel. And then, of course, you want more fundamental analysis or daily technical analysis like our calls on oil this morning in terms of the direction and how that was going to move the

market, you join those over at me.com to get the alpha report. So, here are the four things. what what's really

four things. what what's really happening per this guy's article is all of these are ironically related. So

private credit he says is what's fueling artificial intelligence and he doesn't mention this but he's not wrong.

Remember, Blue Owl is the firm that put together Meta's original $28 billion financing deal to hold that private

credit deal off books. So, Meta can utilize that data center capacity without putting those longerterm leases on their balance sheet because they have

special cancellation rights. Some people

think maybe what's going on with NBIS sounds very similar where Meta is protecting themselves with cancellation rights and early termination options should uh the growth in artificial intelligence sort of peter out which to

some extent we you know heard this morning on our live stream we saw uh a clip where Sam Alman's talking about hey LLM aren't going to lead to AGI we need a new breakthrough to get to artificial

general intelligence what a surprise this is what we've been saying for years that we're not going to get to AGI this is going to be an S-curve And even at the top of the scurve, when we start petering out in terms of innovation,

there's still plenty of ways we can make money with artificial intelligence. I

mean, look at what we're doing with Houseack. Within the next 3 months, we

Houseack. Within the next 3 months, we expect to be able to and and we're already seeing this on the back end.

It's pretty remarkable. We just bought a deal we think we're going to be up $700,000 on using our software. Uh

that's over at houseack.com. But I mean, we're generating software that lets us determine not just the condition of properties throughout the entire country, but rank them based on how much

if we buy them, our net worth would go up with just AI looking at uh the data and the photos, the imagery and the context of the properties and the location and whether they're under a

highway, this that or whatever, any red flags, right? And now we can do that

flags, right? And now we can do that nationwide, which is just insane. And we

don't need newer AI for that. But AGI,

you know, Sam Holman is saying, "Hey, we need a new transformation to make this happen." So obviously, you know, there

happen." So obviously, you know, there are some slowdowns in artificial intelligence. At the same time, we're

intelligence. At the same time, we're getting layoffs like what we just heard, Meta potentially laying off up to 15,000 people. And the very company, uh,

people. And the very company, uh, Private Credit Blue Owl, who's funding Meta's data centers, is absolutely cratering, right? And we can see their

cratering, right? And we can see their stock has gone from $25 down to $8.73 which represents a decline of 65%.

It's not great. You get green days like today. I mean circles taking off. But

today. I mean circles taking off. But

then again, this is not an AI play. This

is an undervalued play that we did a fundamental analysis on multiple times over here at the bottom orange line in the alpha report. And we actually initiated a position on it because we thought it was so cheap. And you know,

it's it's basically doubled from that bottom, which is pretty impressive. But

anyway, uh remember you can get that at me.com. Now, now he mentions that

me.com. Now, now he mentions that private credit fuels AI, but the Iran issues actually increase interest rates

for private credit. We know what's happening in private credit. So, you

increase stress over here. If China

invades Taiwan, which is just more of a footnote in this article, I think we've heard this so many times before.

Obviously, this is related to artificial intelligence because it would essentially limit uh the iPhone production that we get at TSMC as well

as uh Nvidia chip production, Blackwell, Vera, Reubins and everything that we get from TSMC that would just get gated. And

part of that could be because of Iran where Donald Trump is now delaying the meeting with Xiinping and potentially a suggestion that Donald

Trump might be going a little too far in terms of reaching across uh you know geopolitical lines if you will to the point where China says all right you guys are distracted over there here's

our opportunity. Now who knows it's a

our opportunity. Now who knows it's a crazy idea to say that all of these are related but you could kind of see it a little bit. In fact, uh I mean, we were

little bit. In fact, uh I mean, we were reading this morning in the Wall Street Journal that helium, it may have been Bloomberg, but anyway, helium is produced from oil and natural gas

refining, which is being disrupted by Iran, which limits production or potentially increases the cost of production of Tai of, you know, chips in Taiwan because helium's used in chip

manufacturing, which of course makes artificial intelligence more expensive.

At the same time that we have these private credit redemptions and withdrawals, a lot of people now uh talking about obviously these private credit exoduses and it's not so much the

worry that these rich people are going to lose money from private credit. The

worry is that banks lent to them uh and banks lent to companies like Jeff and Blue Owl who are lending to all these knucklehead firms who basically, you know, don't have a valuation or haven't

had a valuation in years. You know, I wrote this morning on our um uh Meet Kevin app. You can see these data points

Kevin app. You can see these data points in the Meet Kevin app. I wrote this morning on it that the Apollo co-president warns of arrogance of private markets and suggests small to medium businesses may may return only 20

to 40 cents on the dollar. And I was trying to think a little bit like scenario-wise, how could that actually be true? And I thought it was actually

be true? And I thought it was actually pretty simple. If a private credit

pretty simple. If a private credit company uh or you know an asset manager invests into private credit and they invest into let's say a hund00 million

into a $1 billion company, the asset manager has no incentive to actually go look under the hood to see what's that company worth because if there's even a slight hunch that the company has gone

down in value, their fees are going to drop. So, of course, it makes sense for

drop. So, of course, it makes sense for them to just leave everything marked to market or not marked to market, marked to, you know, original purchase price because it means they don't have to realize that the value has come down,

which would then lower their fees. See,

an asset manager taking a 2% fee on $100 million earns $2 million in fees. If the

value of these companies goes down 70%, they only earn $600,000. So, literally

$1.4 million leaves their pockets. So of

course there's no desire to actually value these companies. Now that's all in addition to what's mentioned over here.

So he talks about how what's coming right now might actually be worth worse than the 2008 financial crisis. And it's

not because of one thing AI or private credit or Ron or Taiwan. It's actually

all of them together. See he says it's not the first time we've built a system that's basically this broken. The crisis

of 2008 is remembered as a story of homeowners gorging on excessive debt and a housing bubble fueled by speculation.

But the housing bubble itself was not the reason the crunch became so destructive. The accelerant was pushed

destructive. The accelerant was pushed by that pushed the crisis to the depths was the financial system that had been constructed around the housing market.

He's basically saying remove the word housing where you had CLLOs's, you know, collateralized loan obligations or CDOS's collateralized debt obligations

and uh or credit default swaps, right?

CDS's where basically every trillion dollars in the housing market was engineered to really represent about $10 trillion of capital value created out of

thin air. And everybody thought they had

thin air. And everybody thought they had all this money, but when the original one trail went, you saw these 99% losses at a lot of these underlying instruments, which might be why so many people were rushing for the exits at

private credit because they think they might just be in some form of complex crazy product and people don't even know the extent as to how bad it could actually be. It's part of potentially

actually be. It's part of potentially the reason why I think Elon Musk is trying to rapidly IPO SpaceX, you know, before the poopy dupy hits the fan.

Remember that Xandy quote or chart is recession probability over the next 12 months for the beginning of a recession.

So in other words, the beginning of a recession could still be, you know, March of 2027. We we don't know. It's

very hard to time. So far, the bond market is not pricing in recession. If

the bond market were pricing in a recession, we would see a plummeting on the short end of the curve. The two

two-year uh Treasury yield would plummet, which right now the 10-year is actually dropping more, leading those spreads to tighten a little bit. In

other words, the bond market's not freaking out right now about a recession risk. It's more worried about inflation.

risk. It's more worried about inflation.

But anyway, going on to this, he says, "Novel and complex financial instruments obscured the risk, intertwined balance sheets across the financial system, and eliminated the buffers that once

absorbed shocks. When the housing market

absorbed shocks. When the housing market tanked, the instruments nearly took down our financial system with it. So, the d this time, the danger isn't just financial engineering. It's that the

financial engineering. It's that the financial system has attached itself to the vulnerabilities of our physical world, power grids, water, land, supply chains, and hazards that the market has

no framework to analyze. In other words, the capex boom, all of the AI uh infrastructure spending combined with the risks of Iran and Taiwan and private

credit. All of those together are what

credit. All of those together are what make this a scary situation. Now, that's

his doomerism. Uh, you know, I personally, and this is my opinion on this, I know this is sort of like a sexy topic for, you know, the bears to talk about, but I really think the Taiwan

thing is a little overblown. You know, I think China really wants money and economic growth and they realize that would crush both of those. Uh, I I do

hope I hope I hope I hope that Iran is a short-term issue. If Iran lasts more

short-term issue. If Iran lasts more than 6 months, we're probably going into a recession. But I wouldn't be surprised

a recession. But I wouldn't be surprised that this ends, you know, within the next 30 days. So, I'm going to be 6040 on that. I'll say 60% chance this ends

on that. I'll say 60% chance this ends quickly. Uh, and then we're really just

quickly. Uh, and then we're really just left with artificial intelligence and private credit and what that could do to the banking sector. And then, of course, layoffs, which he doesn't talk about.

But as long as we get rid of the Iran issue, hopefully people just continue to spend as they have been and we continue to see growth in the economy. Uh I do think, you know, somebody asked me this

morning, they're like, "Hey Kevin," this was in our course member live stream.

People ask me questions and of course I interact with y'all all the time. So

they said, "Hey Kevin, you know, with like people at the mall are still spending like crazy, you know, how could there be a recession?" And it's important to remember that is the a unfortunately it's a backwards way to

look at it. People stop going to the mall when they lose their job and they don't have any money left in the bank.

That happens in and in the latter half of a recession. So, for example, if let's say a recession is going to be, you know, this Christmas, okay, of 2026, you're not going to see the mall empty

until probably March of next year when people actually have lost their jobs and spending has plummeted and everybody's scared, right? Because they're like, "Oh

scared, right? Because they're like, "Oh my gosh, we're in a recession." People

typically spend right up to the moment of recession. And that's why for so many

of recession. And that's why for so many times, even including in our daily wealth, which is a free thing you could get in the Meet Kevin app if you want.

Just download it in the app store, Apple, Android. Uh I wrote this

Apple, Android. Uh I wrote this yesterday. I thought it was very useful.

yesterday. I thought it was very useful.

Anxiety is temporary. Market anxiety is almost always temporary. Just stay out of bad risky moves. Too much debt, too many options, too much risk, too little income. If you find yourself anxious,

income. If you find yourself anxious, you have too much of one of the above.

Income has changed with new skills, providing more value, learning a trade on top of being a realtor, being a lender and an accountant, being a lawyer and a real estate agent, being a software engineer and an agent, etc. Uh

the others are also choices, right? You

have the choice of debt or margin or options or risk, right? What kind of investments you're making, those are your choices. So, if you find yourself

your choices. So, if you find yourself worried or anxious, ask yourself, can you find a way to fix one of these? That

was the daily wealth yesterday. You can

get the daily wealth uh every day basically in the meet Kevin app totally free. There's no pay wall for that. Uh

free. There's no pay wall for that. Uh

so you can enjoy that along with the news notes. Uh so anyway, a little bit

news notes. Uh so anyway, a little bit of a doomer update for you. Uh and sort of my opinion around this. I think some of this is overblown. Uh but uh if you find yourself anxious, limit your risk.

Thanks so much for watching. We'll see

you in the next one and go to mekevin.com before that coupon expires Monday. Wednesday evening, 2 days.

Monday. Wednesday evening, 2 days.

Today's Monday.

>> Why not advertise these things that you told us here? I feel like nobody else knows about this.

>> We'll we'll try a little advertising and see how it goes.

>> Congratulations, man. You have done so much. People love you. People look up to

much. People love you. People look up to you.

>> Kevin Praath there, financial analyst and YouTuber Meet Kevin. Always great to get your take.