PRIVATE CREDIT COULD BECOME A NASTY PROBLEM

0:00This episode is brought to you by Indeed. Stop waiting around for the perfect candidate. Instead, use Indeed Sponsored Jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate seat. According to Indeed Data, sponsor jobs have four times more applicants than non-sponsored jobs. So go build your dream team today with Indeed. Get a $75 sponsor job credit at Indeed.com slash podcast, Terms and Conditions Apply. Not sure if you are paying attention to private credit but it is starting to get ugly. Earlier in the week, perhaps last week, we learned about the largest private equity fund capping withdraws. Then we heard about another and just this morning Morgan Stanley. And who is the other one? Morgan Stanley and Cliffwater. Cliffwater have both capped redemptions. What is going on? Well, a couple of things. The private credit arena has always been, let's call it murky.

1:06In addition to being murky, it is very illiquid. And it is not to market, it is marked to model. Are you starting to sense a problem? So as these private credits have been recognized for the crap that they are, they're being written down. It is causing investors to ask for their money back. We have seen repeated instances where investors ask for withdrawals of seven, of twelve, and even of 15% of a fund. The problem with that is these assets are not liquid. They are not easily tradable. And if you have to fire sell them, that just creates a cascading effect. So this private credit arena is a problem. It likely will not unravel smoothly. Credit events, and this is what this private credit is, this will be a credit event.

2:10Generally don't happen smoothly. They happen little by little and then all at once. There are going to be significant losses, significant pain. And likely, frankly, a drain on liquidity. A lot of this will likely unravel, I believe, in 2026. I don't know that it's immediate, I don't know that it's March or April. But what we are seeing now, again with, I think it was Black Rock and then Black Stone, now we've got Morgan Stanley and Cliffwater and there's likely been others. This sleeping giant is awake and he's grumpy and there's going to be a lot of pain. So we'll be paying attention to that. I know I will be searching for private credit issues as I read my articles each and every day. Shout out Gavin Newsom. Gavin Newsom is winning again.

3:12Yes, folks, it looks like Wells Fargo. Wealth Management has decided to relocate from San Francisco to West Palm Beach. Another set of employees leaving and leaving California and this time going to Florida. Don't know if you saw this, but Graham Stefan, Graham Stefan posted a, I guess it's called a story on Instagram where he was talking with some guy named Togey. I don't really know who Togey is, but apparently Togey gambles. During that story, Graham Stefan said the following, I live on, or I think he said, I spend, I spend 2% of my income. 2% can you imagine living on 2% of your income? I know lots of people who live on 30%.

4:12I know plenty of people and I personally have lived on 50% of my income. But can you imagine living on 2%, then that got me thinking, how much money does Graham Stefan make? I really have no idea. But if you think about it, if you know the spending pattern, 2%, and you know he lives in Vegas, and he's not a big spender by any means, but you got to be spending something, right? So I did some rough math just to figure out if I could guess, I'm just going to guess what Graham Stefan makes. So just for the math, if he makes 4 million and he spends 2%, that means he's spending 80 grand. I'm going to guess he spends more than that. I could be wrong. I might be wrong. Maybe he lives less than 80k. But I'm going to guess Graham Stefan lives on something between 150k and 200k.

5:21Now again, as I say that out loud, maybe that's just not right. Maybe I just don't understand how frugal Graham Stefan is. But if he did make 10 million and he lived on 2%, that means he can spend 200 grand. And that's a good living. That's a good living. So let me know in the comments below, how much do you think Graham Stefan makes? Again, we know because he said he lives on 2% of his income. So the question is, how much do you think he spends a year divided by 2% and then that will tell you how much he makes? Let me know in the comments below. I really want to know what you guys think Graham Stefan makes. I really have no idea. But let's see what the audience guesses. We already have some guesses, 5 million, 4 million. Yeah, that's pretty cool. All right, let's keep going. We did get some earnings today. Dick's Sporting Good Speed Top Line Bottom Line, but lower guidance.

6:23We are starting to see lots of retailers lower guidance. Dick's Sporting Good actually blames a merger. I don't know if you remember this, but in Q4, Dick's Sporting Good closed the deal with footlocker. So they are going through that assimilation right now. The three amigos, Dion, Matt and I posted a video yesterday that under 24 hours got 5,000 views, which for my channel is a lot. And it is about why Matt, Dion and I are selling our properties. Yes, the three amigos. Yes, one rental at a time are selling properties. So if you want to know why we are selling and there are actually three different reasons, tune into that video. Let us know what you think. Again, we are selling and each of us are selling for different reasons. That video got a lot of traction, so let us know what you think. At Lassian is a slashing headcount. They are slashing 10% of the workforce because they look to

7:28self-fund investments in AI and enterprise sales, interestingly enough, in an area that I know very, very well. They are going to be making self-funding investments in AI and enterprise sales. Looks like 42.5% of recent college graduates are under employed. Every time I see a stat like that, I always ask compared to what? I am going to guess any decade. Frankly, any year, at least most years, recent, again, stressing the word recent, recent college grads are under employed. So again, when they throw out scary numbers like 42.5% always ask yourself, what was it five years ago? What was it 10 years ago? Because if 10 years ago, it was 39%, then this is nothing to look at. But if 10 years ago, it was 19% then we have a problem. It is Thursday, so we did get our weekly unemployment. And again,

8:34it came in benign weekly unemployment at 213K, a little less than expected at 214, less than last week at 215. Again, we are bouncing around the 200s. Nothing to see here so far. Let's talk about some good stuff. We got Jason. Congratulations for getting your next deal. Your card will be in the mail. And then Danny, Danny, this is supposed to be a golden ticket, but I've given away so many at this house that I have to go to my other house and get some. So Danny, I'm going to hold on to this and mail you a golden card when I'm back at when I get more golden tickets. So I didn't want you to think I forgot about you. This will become a golden ticket. But again, Danny, congratulations for getting your first deal. I will hold on to this and make sure you get a golden ticket. And Jason, congratulations to you. Estimates for the first week of the war with Iran are in and it's estimated cost 11 billion

9:42dollars. We've spent 11 billion dollars already. Again, I always ask myself compared to what? I have no idea what the first week of war cost with Iraq, for example. But 11 billion certainly seems like a lot. It looks like the EU is already remodeling GDP. They are estimating that this conflict will go on for a while, which will keep oil prices high. And they are saying their GDP growth will fall from 1.4 to 4.4%. So a significant drop. Looks like the conflict in Iran is not getting any better. It looks like Iran is continually going after ships. Three more ships attacked after three yesterday. This is going to really raise the cost of oil. And don't forget that oil is in everything. It's going to eventually affect food because oil is a contributor to fertilizer. So this is going to start to ripple through the worldwide economy. This is not a local issue. This is a worldwide issue.

10:46And then I heard this morning that the U.S. is not quite ready to escort ships through the straight sounds like something might be coming there. I do want to let you know about all the great school activities coming up. Today at 9 o'clock, we have wealth beyond real estate. From 12 to 1, we have the Western Pennsylvania meetup. 5 to 6, we have breakthrough Thursday, another great weekly accountability call. And then at 6, 30 to 7, 30, we have a one-off solar power plant discussion. Again, folks, we will take any topic in the community and share it and see what the audience thinks. On Friday, we got out of state investors, a great call every Friday 8 to 9, again out of state investing. 12 to 1, we got a special recording with Mark the financial firefighter and Dana, the CEO of Himlane. They're going to talk about how Himlane helps Mark manages rentals all the way in Pennsylvania. Again, Himlane helping out of state investors.

11:50And then Saturday, we've got the Gen Z plus led by Cody Davis in the morning. And then we have the art of short-term rentals. Yes, folks, we've got short-term midterm rental experts in the community. Always looking to help and give. I will see you inside there. And we did have one person join yesterday, shout out Delory. Make sure to introduce yourself, get a part of the accountability groups, get around other wealth builders and have some fun. Last talk is inflation. Kind of the numbers behind the numbers. Again, yesterday, the number was mute, 2.4, headline, 2.5 core. Wait for next month. Next month's going to be ugly. We have a small base effect and a huge run in oil. Next, we could go from, we could go from 2.4 to 2.9. It is going to be that ugly next month. So buckle up for that. But this month, food at home, 2.4% electricity, 4.8 rent, 2.7. That is a completely bogus number. I rancid about that yesterday. Airlines, 7.1 and going

12:54higher. We're already hearing from United and others that they will be raising prices because of oil. I'm guessing they are not hedged like they used to be. Medical services 4.1. And if you're looking for deflation, you've got to turn your eyes to used cars. Yes, used cars are deflating at 3.2%. All right, folks, that is the daily financial news. Never forget. You need. You must be around other people doing what you want to do. I am giving you that platform with school. Join school. 67 pennies a day to be around nearly 700 wealth builders all going the same direction. Ask your questions. Get in the groups. Take the free education. Thousands of dollars in education. And I hope to see you there. Lucidia, warm welcome. And of course, don't forget to check steadily. They helped Olivia and I saved 20 grand over 20 grand last year in insurance. So folks, take care. Have a great day. Later.