Three items on today's agenda: Number one: Major banks are in trouble. We are hearing from them, and amidst profit drops, they are reporting that they expect billions upon billions of losses. Even the ones that are saying that it's going to be a shallow kiddie pool recession are behind the scenes preparing for a cyclone. Number two, the debt ceiling crisis and how it'll impact markets this week.

And lastly, number three: a few hot trade ideas heading into Open Tomorrow and today's video is brought to you by our ZIP Trader you program link down below, which includes our step-by-step lessons, private chat, and our very popular daily morning briefings. Some of the best briefing ideas we identified the last few weeks include: HKD which was a 309 run briefing price, the highs triple by another massive run party Jasper Antf, Blph, and of course the Lovely Cola Now these are some of the best plays we've had the last few weeks and certainly not all of our briefing ideas run. That's not the point of them. The goal is to make our members aware of catalysts and Trends before the rest of the market.

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Okay, plug aside, let's get right to work. So when it comes to Big Banks oftentimes you should ignore what they are saying and focus on what they are actually doing. If someone is saying, they don't expect a storm, but they are going and preparing for the biggest storm ever. That's pretty indicative that they believe a storm is coming right? Sure, it's helpful to prepare, even if you think it's a slim chance that a storm is coming, but the level at which someone prepares tells you all you need to know about how big they think the storm is going to be.

and How likely they think it is going to be to hit. And JP Morgan Wells Fargo Citigroup and Bank of America just reported quarterly results on Friday and they reported that they expect billions upon billions of dollars worth of losses and are preparing for it now. And one of the biggest ways that Banks prep is with loan loss. Provisions Loan loss Provisions were composed of money that Banks set aside that they don't expect will be paid back by borrowers.

They set it aside, preparing to lose it so that when it happens, it doesn't destabilize their bank right now. Banks Don't set aside this money unless they are very confident that it's going to be obliterated because the more they set aside, the less money they have to use for other things like actually growing their business in market share If they show up too much, they're at a huge competitive disadvantage. so you know they aren't going and putting this much capital on the sidelines unless they think they have no other choice. JPMorgan Just reported a loss provision for credit losses at 2.3 billion dollars, most of which was built in Q4 The net Reserve built in the fourth Quarter includes one billion in consumer and 343 million in wholesale, driven by what they say is a modest deterioration in the firm's macro Outlook in reflecting a mild recession in the central case.

So here they are building their reserves rapidly for this mild pansy recession that they're predicting. Yeah, I'm sure they would do that for just a little drizzle. for context on how much this is. About halfway through the 2017-2018 FED hiking cycle JP Morgan had just 1.2 billion in Provisions for credit losses.

In other words, in Q4 of 2022, they added more in supplementary Provisions for losses than they had in that entire category in 2018. Which means what it means: they are expecting a significantly significantly worse impact. Meanwhile, Yahoo Finance reported that the provision for credit loss is set aside in Q4 at the B of A was 1.1 billion Wells Fargo 936 million Citigroup 640 million all proportionally very large credit loss Provisions for these Banks Now again, you may say okay, whatever, no big deal, but if you go back to the fourth Quarter of 2021, all of these Banks were actually releasing. They were releasing reserves.

They went from releasing in 2021 to now 118 Very, very fast. a year later and rebuilding as fast as they can. That's a huge contrast year over year. For example, JP Morgan made a net Reserve release of 1.8 billion dollars Driven by what they said at the time was a more balanced Outlook Due to the continued resilience in the macroeconomic environment that was about a year ago, they thought the economy was far, far too healthy to need all these reserves.

But now we are seeing those reserves being shored up again rapidly because what? They realize things are getting real bad real fast and they have to account for all the losses they're going to have. Bank of America had a net Reserve release of 851 million at the end of 2021 for similar reasons and you had similar Trends in other Banks And guess what? they are all 118 right now. And if you're seeing this in the biggest banks, imagine all the smaller ones that are already starting to feel the heat, but don't have the ability to shore up this much cash for losses, they'll be the first to go under. You go over to the sacks of Goldman they've been trying to build out in the personal finance space with consumer and transactional Banking and they just keep getting destroyed.

When talking about those two businesses, they lost 1.2 billion dollars in the first nine months of 2022, including 612 million in the third quarter after a provision for loan losses of 942 million the bank said in a Securities filing. so they were seeing massive, massive losses. In a year where you're just starting to get the contraction, Imagine what's going to happen this year. And for Goldman Yes, they can take losses like this and survive.

But for many other banks in the Personal Finance space that came onto the scene within the last four or five years or even the last decade, well, maybe those aren't going to last. Maybe those are going to be the first to belly flop. We may be testing the limits of the FDIC real real soon. You look at how much money is in the FDIC fund, which is supposed to secure our deposits all the way up to 250k.

Well, the entire amount of money in the fund is at about 121 billion dollars. How much money is deposited in U.S Banks that this is insuring about 19 trillion. And folks, yes, I get it. an insurance fund isn't going to be one to one with the funds.

It is insuring fine. But it is disturbing to me to think that the fractional Reserve banking system is insured by an even crazier fractional Reserve Insurance system which is managed by politicians with fractional brain power. But I Guess the US government can always print and borrow more money, right? There's always that. That's how we've gotten out of previous crises.

Speaking of that though, Debt Debt Debt. So Yellen came out and said the U.S will hit the debt limit on this coming Thursday unless Congress acts to raise it. As you know, the U.S government likes to spend way way more than it takes in and so it has to borrow out the Wazoo And politicians like to play this game every year where they hold the debt ceiling aka the country's credit limit hostage. Imagine if you overspent for decades and put all of it on credit cards and then you called up Chase and said hey, I need you to raise the credit limit on my Visa card or I'm not going to pay the minimum payment on what I already owe you.

Well, that's kind of how it works with Congress and this debt ceiling. and over the last decade, this debt ceiling has been used as a political tactic to get concessions from the opposing party and the Republicans who assume control of the house last week have insisted that any increase to the debt limit be accomplished by significant spending curbs, which the Democrats are not too happy about. According to MarketWatch President Joe Biden's 2023 budget calls for a 1.2 trillion dollar deficit, a shortfall that is far far smaller than 2020's record covet induced 3.1 trillion, but still larger than 2019's 984 billion. The national debt is now 120 percent of gross domestic product, up from 106 percent in 2019, And a lot of people are very, very misinformed on this deficit issue.

A lot of people hear remarks from the White House same at the administration achieved historic deficit reduction and that is true, but you have to remember the context right. It's a historic deficit reduction as compared to what we were spending when we decided to lock down the entire economy and throw money down everyone's throats. But if you want to really grade Apples to Apples, you have to compare pre-pandemic to now. And if you compare 2023's budget to 2019, well, it's 1.2 trillion to 2019 984 billion and national debt is now 120 percent of GDP versus a hundred and six percent in 2019..

So again, we are borrowing more than we take in, and we are doing that more than we did in 2019. And you can blame whoever or whatever you want for this, but these are just the numbers. so this comes back full circle. Not only are we borrowing more than we did pre-pandemic but we are also experiencing a massive massive economic slowdown which means less tax, revenue and more coming expenditures in the future.

And the FED is at the same time raising the debt servicing costs, which has a lot of upward pressure on government expenditures specifically interest payments. And if this debt ceiling doesn't get raised, it could be the final straw that breaks the entire Financial systems back. But wait. Charlie this debt ceiling thing.

isn't that just something politicians do to get political concessions and something the media covers to scare us and get clicks? It's going to ultimately end up getting resolved anyway. So why should I care and I hear you? The debt ceiling articles are probably ones that you read the headlines of and you roll your eyes and say okay, well I'm just not motivated enough to read more into this. It's kind of like me with the Prince Harry and Meghan Markle articles I Could not care less about what budget sweatshirt and clothes Prince Harry is wearing and what that says about today's society or how Prince William feels about it I Could not care less about how Megan had her feelings hurt when she had a lukewarm Royal latte I don't wish badly on them and I'm not calling for another Revolutionary War or anything. I'm just saying.

it doesn't have an impact on my day today. It's not interesting and it's just noise. That's what the U.S debt ceiling is. For a lot of people, they think it's just noise.

But if you're a stock market participant or really anybody who transacts in this economy, well, this debt ceiling actually matters quite a lot because it has a Huge a huge impact. Even if it passes, it has a huge impact on risk. In this economy. It actually tends to increase borrowing rates because of said risk.

You go back to 2011 one with a similar standoff that we may have again. where Congressional Republicans engaged with a Democratic president. This is what happened according to the New York Times Stock prices plunged and volatility in the market spiked as lawmakers approached a debt limit breach. they did not recover for half a year.

The cost of borrowing for corporations, which fluctuates with the level of risk that investors perceive in the economy jumped substantially. That made it more expensive for companies to borrow to make new Investments mortgage rates Spike Similarly hampering prospective home buyers, the credit agency S. P. downgraded America's credit rating for the first time.

So in addition to the rate hikes from the FED a defaulting on debt or any sort of drama around the defaulting on debt could make the cost of borrowing even more expensive and make the risk in the economy even higher even higher than it is now. And Goldman's Chief Economist said if the government defaults, it's kind of like taking 10 percent of the economy out of play until you resolve the issue. So you certainly got to care about this because it's going to cause a lot of volatility and pressure in the market this coming week and need I Remind you that other countries have had their own debt crises as a result of sloppy political problems. Now finally, trade ideas.

So you better have watched yesterday's video because I went really into depth into why you're seeing a massive squeeze season and why I think that's going to continue and some of the major squeeze stocks heading into this week like your triple by your apron and your Mara lovely Mara If you are someone looking for an in-depth trading breakdown before Market open tomorrow, that is the video to watch. Make sure to check that out. It's the video right before this one. But anyways I want to give you three more potential squeeze trades to know? number one.

Beyond So I personally hate fake meat I Don't believe processed fake food is good for you I'd rather starve, but the company's valuation has been destroyed in this current crisis short interest is so high and momentum has been so consistently picking up and it's looking ripe to break above resistance levels that it's failed to break or at least hold above like five times previously. If you get that higher high and a breakout that holds well, that could really put a lot of pressure on Shorts and you get some more squeezy mix squeezy and probably a bigger rally than we've seen I Love the slow and steady momentum rallies because that puts a lot a lot of pressure on shorts. Number two: Upstart. So I Like upstart as a company and their value add in, their segment is great in my view at least.

However, it's a bad environment for attack and Upstart has been hit massively and shorted to the ground fair enough, but we are starting to see the pressure escalate and I expect more squeezy MC squeezy Cycles in the coming weeks. Number three: Carvana bad company to own right now. Terrible, terrible business model. Inventory is losing tons and tons of money as used cars go down in value.

We did a fundamental breakdown on this: I Think like three or four months ago and pretty much everything we said was going to happen with the stock pretty much happened. But for those of you who are looking for a spec contrarian, Squeeze Play This One is heavily shorted a lot and ripe for short squeezes if you get enough attention on the stock. and it has shown a little bit of proof of concept in this previous week. So in this current Take Profit cycle, watch for it to stop falling and then show signs of bouncing and that's when you're going to start seeing some more breakouts in my opinion, against small caps right now.

I Think the biggest argument is for the short-term trade and the spec opportunity. I Don't think it's for the Buy and Hold right now. I Think that in the future you're going to see some Buy and Hold opportunities, but right now I would focus on the squeezy mixed weasel setups. Anyways, that capped off today's video: make sure to hit that ravishing like button And subscribe.

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