Folks, the entire banking system right now is getting punched in the throat yet Banks While they are absorbing billions upon billions of dollars worth of losses, while they are also not talking too much about it, acting like everything is just fine, don't you even think about asking any questions? We must just always believe whatever the banks are telling us and always believe that things are okay in today's video. I Want to show you the facts and the concrete numbers on how the banking system, regardless of what they're saying, is being completely obliterated right now. Once we've done that, I'm going to go ahead and cap off the video with an update on different trade ideas, including our Pali play, which more than doubled after our ZIP trade review briefing prize this morning. What should you be on the lookout for other potential trades moving forward? What are some criteria that you should be aware of? And of course we will put all the timestamps down below and get right into it.

After a word from today's sponsor, today's video is brought to you by our Black Friday sale on zip Trader You join the team today and get access to our step-by-step lessons, private chat, daily morning briefings, full price Target Realized that all other trading resources offered with the program coupon code block 60 will get you that 60 off for Black Friday Make sure to take advantage before the code expires, which will be shortly after. Friday Okay folks, so as you know when rates go up rapidly Banks earn higher interest rates on money they are lending and thus get more profitable. In that sense, at least per dollar lent, they are getting more of a return. However, oftentimes this also comes with reduced borrowing, as when the cost to borrow goes up, people borrow less supply and demand 101, right? But the bigger problem that a lot of people don't think about is that the lent out funds that the bank had previously went out that are on its balance sheet that have much, much lower rates.

Well, they start losing value rapidly. According to the Berg of Bloom Wells Fargo saw an additional 2.4 billion in unrealized losses on mortgage-backed Securities and other bonds that weighed on shareholder equity in the third quarter alone, and their three biggest Rivals took a similar hit on mortgage-backed Securities alone. The four Banks unrealized losses have climbed to 17 billion dollars based on company filings. Now, if you want to look at how these losses look chart wise, just look at the massive, massive trend of accelerating losses in Bank of America Citigroup JP Morgan and Wells Fargo.

Pretty damn aggressive and not getting much better. In fact, each is accelerating faster and faster as time goes by. To the upside, how does this work though? Charlie How do banks lose money on loans that they've already made? Well, The reason is because when Banks lend money that Odette has an inherent value on the secondary Market Most banks don't just hold their loans, they go and sell them to other Banks or investors. And who is going to buy a fixed three percent rate mortgage? in a high risk economy where housing is starting to drop and new mortgages are coming in at seven percent.

So those loans written at pre-high prices then have to get written down massively and it's causing billions and billions of dollars of losses. both unrealized but also realized. as banks are wanting to get out of certain mortgages ahead of the downturn, they are trying to get rid of toxic debt as fast as possible. But you see this is actually a farther reaching problem.

Banks not only resell their loans, but they also borrow against them. And if the value of loans that you're holding on your balance sheet and borrowing against dropped substantially, what happens? well, you may be due for a margin call. The CEO of Fundrise said on a recent podcast that he believes that lenders who borrow against their own loans won't be able to withstand the skyrocketing interest rates and will be especially susceptible to liquidity issues. He says that while loan standards are higher in borrowers are higher quality, the real problem isn't the customer taking out the loan, but it's the hidden borrower.

The biggest borrower of them all is the hidden borrower, which is actually the lender. Listen to that, he's saying, wait, Okay, the biggest threat right now isn't the direct customers who have borrowed money, but rather the lenders who themselves have borrowed money, to lend to customers. How can this be? Well, think about this for a second. If you are a financial firm who has built your business the last 10 years around lower and lower interest rates and your goal was to lend out as much money as possible.

Well, you used every single dollar that you had to sell loans. and you even borrowed money on debt that you've already lent out in order to what lend out even more money and make even more loans. But now as rates go up, you have to pay more and more to service those costs and so your liquidity dries up very, very fast. And if you want to prepare for this by going and selling loans as fast as you can, well guess what? You have to take a massive haircut because now nobody wants to buy those fixed rate loans that are at rates that are much lower than they are now.

And don't forget, a lot of banks go and they sell fixed rate loans, but they're borrowing money at adjustable rates. So when all of a sudden the rates go up, get to see how they can get themselves into trouble very very quickly. And on top of that, you also have non-bake lenders who basically have no regulatory standards who are getting loans from so-called regulated banks that they themselves can't cover. Quote: Many unregulated non-bank lenders Mortgage real estate, investment Trusts Private Equity Funds Commercial mortgage-backed securities, residential mortgage-backed Securities and collateralized Loan obligations are involved in making loans that Banks can't cover.

And what is the tune of this well quote: five trillion dollars of asset-backed lending now exists outside of banks with a lot more debt and a lot less liquidity than there used to be. Corporate borrowers have 300 percent more debt than before the 2008 Financial Crisis, so think about this: Lending standards for direct to Consumer loans are substantially higher today than they were during the Great Financial Crisis. However, at the same time, there is now this massive New Market of unregulated or at least less regulated borrowers who essentially act as the Wild West. And meanwhile, they owe tons of money to these same big banks that are supposedly very, very much regulated.

I Feel like I'm losing you. So here's an analogy. Say I Go and I lend money to a hypothetical man named Bernie and Bernie defaults because he overspends and doesn't know how to manage his money. The question is, is that such a better system that it's much better than if I go and I lend my money to another lender and that lender lends money to Bernie who then defaults again.

Both situations Bernie is defaulting, but in one situation you have created a smoke screen between who is lending the money. You have created another lender who has less regulatory standards that you're lending to at the end of the day, if customers in Mass start defaulting, well, the lender that borrowed money from us is also going to have a hard time paying and eventually will probably default as well. And if you have a bunch of lenders who lent money to lend out to sketchy clients going and not paying their bills, well, eventually that goes all the way up to the top. or you have the biggest banks going and not being able to make good on their debt.

Here's the other threat of having an extra lender. You see if the middle lender needs to keep borrowing money at variable rates while issuing loans at fixed rates. Well, that's a whole other issue. Even if Bernie consistently Pays His payments.

Well, guess what if the lender can't pay the higher rates and the FED just keeps going up, then all of a sudden Boom the default is from the middle lender and this is the situation that we're in right now. A lot of the biggest banks are pretty strong right now. They have a lot of reserves, so on and so forth. but they've lent a lot of money to a lot of these mid-grade lenders who quite frankly are now getting crunched.

And then you have that other thing that downgrades the value of loans and increases the risk. The actual value of what is securing them will focus on home mortgages in a stable Financial environment. Banks Loan out money and if you default, they can foreclose on you and sell the house and get their money anyways. But in an environment where the housing market is falling off a cliff, that becomes a massive massive risk factor.

According to Corelogic's November 2022 analysis on the odds of regional home prices dropping over the coming year in most major areas, the odds are, as they say, very high and this has shifted rapidly. They did a survey back in May 2022 and at the time they felt the odds of regional home prices dropping over the coming year were very, very low. pretty much across the entire country. And this is what happens when the FED keeps upping the ante on fighting inflation and analysts have this moon boy mentality of Oh Housing demand is unlimited regardless of the rates.

It's like, know, when you raise rates, you're going to destroy large segments of demand. and this is what is happening across most lending segments. home mortgages just being one example. secured loans are becoming less and less secured as the underlying assets drop in value.

But what's fascinating and freakish about the mortgage segment is that the assets are becoming toxic so fast and at the current Pace they are soon going to be impossible to get rid of. I Hear people saying oh no Charlie There is no threat in the mortgage segment. Everything is just fine and dandy. Again, it's not going to look like a threat until everything is already collapsing.

You see, from October 2021 to the week ending November 9th, 2022 which was just like a week ago, the overall trend has been consistently down of banks selling their mortgage-backed Securities If banks were so solid before this crisis and Banks were so confident that they're going to get their money out of these mortgage-backed Securities Why are they going and taking the haircut on these assets by dumping them on the secondary markets now? Okay, now let's go over to trade ideas. So obviously in any Market condition, the goals that to find Opportunities to trade and the one I want to start with today is Madame Pally Now if you didn't catch this one this morning on your own or you aren't in our ZIP trade or you daily morning briefings, make sure to pay attention because the characteristics that made this one run are likely to come up in other stocks in the coming weeks. So very, very important. Now We briefed on Pally 30 minutes prior to Market open at about 309-ish and it sold off into open and then popped up and more than doubled to 639 for a total run of about 107 percent.

Briefing Price to highs Now, why did we brief on it though? Well, it had an FDA Catalyst and it showed proof of concepto by reacting to it in the pre-market quote Palisade Bio was granted Fast Track designation from the U.S Food and Drug Administration for lb1148 for Accelerated Return of Bowel Function following GI Surgery Bowel Function is very, very important folks. You do not want to be financially constipated nor actually constipated. Their CEO said quote receiving Fast Track designation represents an important regulatory milestone for the company. Although Our current focus is on our adhesion study.

This designation provides what we believe is a key component to our future clinical and Regulatory strategies as we continue to formulate next steps for studying the Return of Bowel Function. Now, obviously the FDA process is very, very long and very very growing. but it is very rewarding if you get through it. not many do, but if you do all of a sudden you get a big windfall and this news helps expedite the process to get through to that final approval.

and so that set us up for a nice run. Once markets had opened and more people became aware of the news and that's why we briefed on the stock. Now of course, not every Catalyst like this one runs like this one did, but the key is number one, making sure the market shows some signs of being able to react to the news like we saw here this morning, and then number two, making sure the market actually shows some new strength and confirmation of rebounding and building a new wave of momentum like we saw here shortly after. Open right! If you need help finding stocks like this, we do offer our daily morning briefings as part of our ZIP Trader you program.

I'll put the link to that down below and as you know for Black Friday we are discounting at 60 off if you use coupon code block 60. But if you don't want to join us, at least take some time each morning to scan for stocks. Make a spreadsheet of the characteristics of the ones that run and keep track of them day after day and you'll start noticing Trends Now in the super Small Cap world we have Cosm. We briefed on Cosm at about 20 cents this morning and it ran to 33 cents and then in the after hours we concluded a more than double on the day from briefing price to highs.

Why do I like small caps? Well, because they run, they run quite a lot. It's a lot easier for a small cap like Mr Cosm to run 50 than it is for an Apple to run fifty percent. A 50 run and cause them is like a 10 million dollar market cap increase. A 50 run in apples like a trillion dollar market cap increase.

So the pro of the small cap world is yes, they can run pretty damn fast. but remember they can also dump just as fast. And the other thing is that when you see a setup that you like, make a plan to trade it and then trade your plan. a lot of people they do make plans and then they just don't look at it when they're in the position.

They follow their emotions. Oh, does it feel like the time to buy? Ooh, does it feel like the time to sell? And folks, if I've learned nothing else in this world, it's that you can't follow your emotions in Life or you're going to get punched in the face. But a plan also starts with having some clear standards for what the trade needs to do in order to qualify as a proper trade. Every morning, when we brief on the five or six Catalyst plays that we see, we don't just assume they're going to run because Market weather or whether or not the catalyst is strong enough is what is going to dictate whether your Catalyst gets rewarded and it's pretty impossible to know that for sure beforehand.

So we have clear minimum standards for what a Bull and Bear setup looked like. For Pally that was at, it needs to hold 270 for cosm that was added, needs to hold 17 and cause them fit that bull criteria by holding support and built on top of that and ran to 33 cents. Now moving into the end of the week which really just encompasses tomorrow and then a shortened trading period on Friday Thursday being closed for Thanksgiving I'm paying very close attention to Tblt and Matt and to some extent Dwac. Tblt had a hero's run from 184 to 4 and then a massive dumpy Mcdumpy is now attempting to build a new wave of momentum.

If it continues holding upward Direction over our red Direction SMA that will be sufficient for this to be a top the list of trade ideas and susceptible very susceptible to new upticks. And then we have talked about Mmat extensively and we did get the start of the expected cooldown period today. Let's see where this cools down to, and if it can hold some real support somewhere at 180 or even a bit lower if you get that, then you've got the criteria met for another hype rally past the previous Peak at 2 30.. Anyways, folks that caps off today's video, make sure to hit that ravishing like button and subscribe if you want to get up to 15 free stocks with Moomo.

I'll put a link to them down below and if you want to take advantage of our black 60 60 off coupon code, we will also put a link to that below as well. Have a great rest of your day and we will see you in the next video.