Week on Wall Street: The Market Is Strong… But Changing

0:00Good Friday afternoon to you. Welcome to the John Sanchez show on new stock 780 KOH. It's a pleasure to be with you. I will just tell you this right out of the gate. It's a pleasure to say goodbye to the month of October. Yeah. My brain's fast ahead. Pleasure to say goodbye to the month of February from a trading perspective. That is boy folks. I'm so glad we're together this Friday afternoon because there are so many things to talk about that's influencing your portfolio. And I hope to enlighten you on all of the undercurrents that are there. You know, it's Friday. So we always do a recap, but it's also the end of the month. As I said, and we need to kind of look at some of these numbers and take a look and see what is going on. And I'm going to I'm going to theme today's show the following. The market is strong, but the market is changing. Now, if you look at and you'll hear here in a second how the market did today, you're going to say, wait a minute, what do you mean? The market's strong. It actually is. If you look at the underlying data, things are okay. They're not great, but they're definitely not bad. They're okay. But it's changing. And this is going to be one

1:05of the most important things that I share with you this afternoon is, are you changing? Are you sticking with the same names than the portfolio, the same allocation, the same sectors, so on, so forth? Or are you going to change with the times? I'm going to take you back a couple days. I'm going to take you back to Wednesday. Wednesday, after the close, about 130, we had the release of Navidia's earnings numbers. I think you would all agree with me that Navidia is probably the most highly anticipated earnings release of any company anymore because they are the central nucleus of AI of technology these days. Everybody wants to own Navidia. Probably everybody does own Navidia, it seems like. But more importantly, it's the deals that are being struck with Navidia. So Navidia releases those numbers on Wednesday. And this is when I started to see this tectonic shift as I'll call it. They release the numbers Wednesday at 130, three o'clock the show starts and I started the show off by saying, something's not right. Absolutely blow out

2:05earnings numbers for Navidia. Revenue growth, earnings per share, profitability, data center growth, you name it, they far exceeded Wall Street's expectation, far exceeded it. Then we get into the after-hour session, starts right around three o'clock, the future start trading. And the stock, after it was released, it starts edging up a little bit and it was just a little under a two dollar gain at the after-hour session. And I sat right here behind this microphone and I said to you, something is strange. I said, this thing should be moving a heck of a lot more than barely a two dollar gain. Something was strange going on. Now you can always say, well wait a minute here, John, everybody anticipated that Navidia was going to have great numbers. So therefore it's the old adage that I always say, which is, you buy the rumor, you sell the news, meaning you bought the stock leading up to the earnings released because you knew it was going to be good in your heart. But then the news comes out, it's like, okay, let me get out of this trade. That could be one of the possibilities. But I think it's deeper than that. And this is what I mean about the change

3:10that's going on. So I watched the stock, you know, until a little after five o'clock after our trading stops. Next morning, I crawl out a bit, excuse me, at four o'clock, first thing I do is check my phone, see what the futures are doing, check Navidia. And it was started to trade down a little bit. It's like, hmm, not even able to hang onto that roughly two dollar gain, opening bell rings at six thirty yesterday. And they start selling the heck out of the stock. And they sell it. And they sell it. And they sell it. And it ends up finishing the day down $10.74 5.49 percent loss yesterday on Navidia 84 89. Wait a minute here. Are they getting sucked into this whole concern about the software over evaluation and all the private equity money that people are concerned about that I'm going to get into going into the private or going into the software sector? What is it? What's the reason? Well, you'll never know what the reason is. All you can do is speculate and say, it could be this, it could be that. But when that stock finished down almost $11 yesterday, that to be signified, we are under a change. So we come into today. Well, you heard

4:15me actually, let's go back 24 hours ago. I told you on the show yesterday, I said, wait a minute here. I get an alert, futures are dropping. They were down over 200 points as I was sitting there doing the show. Yesterday was in a bad day. I mean, it was a little bit weak on the NASDAQ, but Dow finished at what 17. But Dow futures were selling off, like I said, well over 200 points yesterday about this time. So once again, something strange going on into the surface. Evening goes on. I'm checking the futures, checking the futures, go to bed at nine o'clock, check the futures. There's still down 210, 220, 230 right around there. Wake up at three o'clock this morning, check my phone. Yep, sure enough, they're still down. Sit down to do my first stock update with Ross Mitchell this morning at 5.30. And what is it? Dow features down over 400 points. A couple of reports later, we're down 500 points. Uh oh, things are starting to catch up. Things are changing. I counted two times, there may have been three, but I counted two times today that the Dow dropped over 800 points. That's significant. But more significant is the names

5:21that drove the Dow Jones industrial average lower, like one of my favorite Goldman Sachs, right? Stocks been on a tear. They pounded the heck out of the stock today. $68.78 lost down 7.4% to 860.22 financial sector itself down about 2% today. So why in the world would you give up the financial sector? Could it be declining interest rates potentially? So then we fast forward. NVIDIA, let me finish that story. So NVIDIA today on top of the almost $11 loss yesterday. NVIDIA today finishes down $7.79, 4.21% loss. So you're talking almost $18 loss just in the last two trading sessions on NVIDIA. The kingpin of AI, the kingpin of technology is going on with shifty yesterday. I told you on the show. And again, this is why it's so very important. If you miss a show, please, folks, watch it on YouTube. Listen to your favorite podcast because I'm telling you things going on in the after hours that set the table for what's going on the net or what's going to happen the next day. If you want to be prepared in your portfolio, you can't wait to the opening bill the following day. You have to understand what's

6:24going on in after hours in these themes. So I told you on the show yesterday, we got breaking news, that block. Now you may not recognize that name. It used to be square, which, you know, anybody in business has used square probably. They changed the name to block trades under the symbol XYZ. Block yesterday and the after-hour session said, hey, we're going to trim our work first by roughly 50% that numbers are somewhere between 40 to 50%. Over 4,000 people, 4,000 people are now going to be without a job. But I tell you one thing that impressed me about this announcement. Unfortunately, you don't want to see anybody lose their jobs. But one thing that impressed me about the company about Jack Dorsey, he is the CEO came blatantly out and said, yeah, we're getting rid of these 4,000 people because we're replacing them with automation, meaning AI. And he said specifically, the company is going to automate more work with AI. So as I was sitting there eating my dinner last night with my wife and we're kind of talking

7:27about the market and this announcement along the other things that I dealt with throughout the day. I say, you know, this is just one example. 4,000 people is a lot. But I need to do some research and see what the latest number is. But last time I looked, you know, especially last year, I mean, there were hundreds and hundreds of thousands of jobs that were lost last year in technology and other areas because of AI. And when I made my prediction on this show a couple months ago, I said, my prediction is before we know it within the next two years, you are going to see at least at least in the best optimistic case in my mind. At least a 10% unemployment rate that is going to hold. It's not going to be a one-month fluctuation like we've experienced like during COVID when we're at an 18% unemployment rate. It's going to be permanent. That's how many jobs are being displaced by AI. So back to block, kudos to them because

8:28they were honest. You get all these other companies that are getting rid of people because of AI, but they don't have the guts to come out and tell the public or their shareholders. Yes, we're eliminating jobs because of AI. They'll use all kinds of different excuses. But at least, like I said, Jack Dorsey had the guts to come out and say that. It hurts less for those 4,000 people that are going to be out of work. Yes, they're going to get severance packages. And if you're going to get laid off from any industry, tech's a great one to get laid off from because you usually get some pretty nice golden parachutes to get out the door. But the stock rocked on the news. 16.82% gain on block today. XYZ is a sample, by the way. $9.17 rise to $63.70. So why am I spending so much time talking about this? This is part of the change, this tectonic change that I'm seeing. Market is strong, but it is changing. Now, why did Wall Street and investors reward block today shooting the stock up like that? Here's the other side of the equation. It's pretty simple. What's the number one driving force behind a stock performance? If you can get rid of 4,000 people, whatever that expense was to

9:33block, they no longer have that expense. Now they should have more profit to the bottom line, higher earnings per share. And therefore, investors want to get in on it. So you see, we're costing ourselves jobs in our country due to this phenomenal new technology called AI. Corporations, in most cases, will become significantly more profitable. Their stock will go up. You as an investor will benefit, but what about all these people that don't have jobs? And I went down this path last night, explaining some of this to my wife. And again, we got into this real deep conversation. And I said, no, with someone, no one's talking about what's going to be the financial impact of all these job losses to the federal government, states, counties, and cities? Because you and I both know all of those dependent upon where you live, all of those entities, those government entities, they get a piece of your paycheck, whether it's the federal government, whether it's social security, federal government as far as

10:35taxes, social security. You work in a city like New York. That was my dream as a young broker. I wanted to work in New York, without was until I spent six weeks of their training. And like, get me the heck out of this city. But if you work in New York, guess what? You're paying federal income tax, you're paying city tax, you're paying state tax. And what happens a lot, people live in New Jersey and they commute into New York, then they're paying New Jersey taxes. And that's why you hear people complain about, you know, I lose 50 to 60% of my paycheck if I work in New York City. Well, again, people aren't working if they don't have their jobs, that's going to have a major impact on municipalities, state, federal, et cetera. So it's a big, convoluted issue. Now, when I come back, we're going to move into something else that happened as far as the changing this week. And I want to tell you about a big mess that's going on right now in the UK that potentially could find some problems here in the U.S. Let's turn over to Chris and Snow right now, traffic center. Hello, Chris. Mike, the John Sanchez show on Newstock 780K, which happy Friday to all of you. Not a happy day on the street, unfortunately. Let's get the bad news out of the way for you. Finish down 521 on the Dow 1.05% to 48,077.

11:41The NASDAQ gave up 210 points, 0.82%. Closing at 22,668, and the S&P lower by 30 points, 0.43%. At 6,078, 78. Those percentage losses, that was weren't the worst. The worst one was the Russell 2000, the small caps, the area of the market that's been leading, not today, worse performer percentage wise, down 1.68%, $44.92, sent lost. Missed at $2,632. Point, excuse me, looking at some dollars here, sorry. So we finished at 2632 again, down 40, 45 points, 1.68%. Let's go to the commodity side. I'm going to hit the economic, and then I'm going to tell you the other area that pressured this market. In this theme today, again, the market is strong, but it has changed you. Okay, so now let's go to the other factor that weighed us down this morning. So we talked about NVIDIA not performing, therefore so many other tech stocks didn't perform today. That drug things down, told you about Goldman Sachs, the most important stock from the valuation calculation standpoint inside the Dow Jones industrial average. That stock again, just getting hammered today.

12:45But here was the dagger in the heart as I said throughout my stock updates this morning. And it was the PPI report, the producers price index. Now remember, you get CPI, which is the retail side. PPI is the wholesale level of inflation. This number came at hot. It came at hot. PPI for the month of January. So from December to January, up one half of a percent, expectation was only a three tenths of a percent gain, core PPI. That's where you strip out food and energy, expectation up three tenths of a percent month over a month. Instead, it came up eight tenths of a percent. That was the gain eight tenths of a percent month over a month. So more than double expectation, you go to the year over year number, these are the nasty ones. Year over year headline PPI up 2.9%. Year over year PPI, core up 3.6%. So what does all this mean? This means that the wholesale cost to produce a good is going up. And it's going up far greater than what Wall Street had anticipated. And economists

13:47had anticipated. Could we say it's going up more than the Fed anticipated? Maybe they know something we don't know. Meaning, why didn't we get a rate cut in January? Because maybe they knew this data was coming our way. Here's why. The street got a very, very concerned today when this number, these two numbers came out. Now, why is that? Things have been very quiet at the Fed, right? We didn't get a January cut. No one was really anticipating that. But all eyes and guesswork is placed on June. June seems like a long ways away. It'll be here before we know it. But June being the first interest rate cut, again, quarter percent. So we come into 2026. Expectation is two to three cuts. That seems to be the norm, you know, guesstimate on Wall Street. But now you get this hot inflationary number. And now you say, is June even in the cards, right? The Fed is not going. If the Fed met tomorrow, they are not going to give us our interest rate cut based upon this PPI report, no way in heck, no way in heck.

14:49So it's going to be very, very important to see what happens to inflation between, you know, when we get February's numbers and Ford, the closer that we get to that June meeting. But traders looked at this number today and they went, well, scratch the Fed off the positive list, not with a PPI looking like this. No way. So that was the, that was the other thing that weighed on this market today. That would say the commodity side. Buck 85 gained on oil, $67.06 a barrel, strong day for gold, $54.10, $5,248.30 per ounce is where we closed. But here's the interesting thing. Back to my theme, market is strong, but it's changing. Tell me why the equity market wouldn't be soaring when interest rates are falling and falling like a rock. I compiled some data for you on the 10 year treasury. For the day, we were down six basis points, pretty good drop in one day, broke 4%, 3.96% is where the 10 year treasury finished. That is a significantly low number, right? That should be a positive. Lower bar and cost, lower credit card, auto loans,

15:53eventually mortgages, so on, so forth. I couldn't care about that. Let's go to the week. The 10 year treasury yield lost 13 basis points for the week. Remember, there's 100 basis points in 1%, 13 basis points that client in the yield for the week. If you think that number is strong, how about this? I tell you the numbers for the month of February, the 10 year treasury yield lost 28 basis points. Over a quarter percent, but we can't get this market movie. So now, what historically has been a positive catalyst for the market, although said investors don't care because the only thing that investors care about right now is AI and software. Everything else, the feds too far down the road, everything else doesn't mean anything. It's not at the top of the priority list. It's all eyes and ears focused on Navidia, Microsoft, Google, Metta, all the major tech names. So that's, again, a very interesting point to understand because normally you would see this type of action in the positive column.

16:56If you have treasuries dropping like these have, again, just over the week. Now, here's what we said on a year-to-date basis. I'm going to throw this stat in there before we go to break. So we're struggling out of the gate. Here we are two months into the year. Dows up only 1.9% year-to-date. S&P is up just a half for percent. NASDAQ is negative two and a half percent. And as I said earlier, the Russell 2000, which again gave up almost 2% today, is up now 6.1% year-to-date. Now, in an aggressive bullish market, you're always going to see the Russell 2000 lead, the small caps. You're always going to see them lead. And especially in a declining and interest rate environment, because small cap companies, small companies, they are the ones that are the biggest, have the biggest appetite for borrowing money. So in a low interest rate environment, that bodes well for them. They're out there borrowing. They don't have the big balance sheets like the Amazon's and the Google's and the stocks that make up the S&P 500 in the down. But again, today didn't help, but year-to-date, you can see that that is a strong area. Do you have small caps in your portfolio? Do you want to take a look at?

17:58All right. Now, when we come back, the other big thing that's changing big time. And that is the world of private equity and some of the major concerns that are going on. We saw KKR today, major private equity player go down. We saw Apollo global losing almost 9% today, down 8.58%. $9.82 sent lost to 104.58. They're right in the space that I'm going to talk about. So don't go anywhere. Let's turn it over to Jack Sabin. He's got news traffic with her. Hello, Jack. Mike, the John Sanchez show and his talk 780 KOH. Happy Friday to all of you. Oh, once again, we had a tough day today. We finished down 521 on the Dow, a 1.05% loss. And as I gave up, 210.92% S&P lower by 30 points, 0.43%. My theme this Friday with you is very simple. The markets are changing. Are you? All right. So we went through a number of reasons in the first half of the show why the market was weak today. Why February did not turn out to be the best month S&P for the month of February down 1% NASDAQ lost 3% and the Dow Jones industrial

18:59leverage up just two tenths over percent for the month. Big sell off in the equity markets, big strength in the bond market. Once again, 10 year treasury today, following six basis points, breaking the 4% mark finished the day at 3.96%. Very significant from an investing standpoint. Now, I want to throw this one in there before I give you the the private equity mess that we're looking at at this point. And that is anthropic. Anthropic, not a publicly traded company, but again, they, you know, heavily backed by venture capital, private equity, so on and so forth. I'm sure they will plan on going public at some point. But I'm going to take you back not long to go. And anthropic, so there is secure AI security company for those who are not familiar with them. Last year, open AI signed its contract. Now, open AI is the parent, of course, of chat GPT. Open AI signed a 200 million contract with the Pentagon. Anthropic was included in that contract for classified work, AI classified work. Anthropic has probably some of the absolute best technology for

20:03all this use the term spying on us, right? The cameras that contract our license plates, the facial recognition and cameras throughout cities, so on, so forth. They do a lot of work under this $200 million contract with the government. Well, they got in a little bit of a, you know, what match with the president and our wonderful defense secretary. And they basically came down to today and said, anthropic, either you let us, the US government use your AI software for the uses that we feel we want to to protect our country. Or you're gone. Well, anthropic had today to make a decision. They said, we're gone. We are not going to be a part of this. We are not going to be part of the government spying on America. Just everything related to, I mean, let your imagination wonder. So the president, not long ago, a few hours ago, came out and said he was ordering every US government agency to quote immediately cease using technology

21:04from anthropic. In a truth, a social post, he said there would be a six month phase out for agencies such as the Department of Defense, which are using anthropics products at various levels. Pete Hegseth soon afterwards said he was ordering the Pentagon to quote designate anthropic a supply chain risk to national security after the startup refused to comply with demands about the use of his technology. So you go from you're in the deep dark bowels and secrets top secret activity for the US government. And now because you don't want the US government to use your technology for things that you don't feel are appropriate, you're now a supply chain risk to the national security. So there's $200 million contract again, signed back in July. Pentagon wanted assurances that it's AI model or excuse me, anthropic wanted assurances that it's AI models would not be used for autonomous weapons, weapons of mass destruction, surveillance of Americans, all kinds of things. Now you would, you would have thought when this

22:07contract was signed back in July, I mean, these aren't little simple contracts. These are very, very detailed contracts. You would have thought that management of anthropic and their attorneys. And the attorneys for the US government would have put all this on the table as to what are they paying anthropic for in exchange for this $200 million? What are they going to get for it? And more importantly, when you're talking to software company, how's their software their technology going to be used? So I've wondered again, this is this my own speculation, was it not clear in the beginning when the government signed this $200 million contract, or did the government say, hey, we're going to use it for this issue, we'll call it A, but once anthropic signs of contract, they go, no, we're going to use it for BC and D, like spying on people and so on and so forth. Who knows? But they had a 501 PM Easter Standard Time deadline today. And this news came out not long before the show opened. Deadline passed without any agreement. Anthropic stance is fundamentally incompatible with American principles,

23:09headsets set on a statement on X, their relationship with the United States Armed Forces and the federal government has therefore been permanently altered. Anthropic will continue to provide that a part of war, its services for a period of no more than six months to allow for a seamless transition to a better and more patriotic service, the defense secretary said. American war fighters will never be held hostage by the ideological whims of big tech. Trump then won two social started attacking the company. He said the left wing net jobs at Anthropic have made a disastrous mistake trying to strong arm the Department of War and force them to obey their terms of service instead of our constitution. Their selflessness is putting American lives at risk, our troops in danger and our national security in jeopardy. Therefore, I am directing every federal agency in the United States government to immediately cease all use of Anthropics technology. He says we don't need it, we don't want it, and we'll not do business with them again. Now what's Anthropic's side of this? Whether CEO Dario Amadi, you see him all over CNBC and

24:14all the news channels. Yesterday, he said his company, quote, cannot in good conscious allow the Pentagon to use its models without limitations. On statement that he issued yesterday, he said, quote, it is the defense department's prerogative to select contractors most aligned with their vision. But given the substantial value of Anthropics technology provides to our armed forces, we hope they reconsider. Our strong preference is to continue to serve the Department and our war fighters with our two requested safeguards in place. Should the Department choose to offboard Anthropic, we will work to enable a smooth transition to another provider avoiding any disruption to our ongoing military planning operations or other critical missions. Our models will be available on the expansive terms we have proposed for as long as required. Now today, another major player, OpenAI, said it has the same, quote, red lines as Anthropic regarding the use of technology by the Pentagon and other customers. Quote, we have long believed that AI should not be used for mass surveillance or autonomous lethal weapons and that humans should remain in the loop for

25:16high stakes automated decisions. That's according to OpenAI CEO Sam Altman, he wrote on a memo. Again, OpenAI last year signed that $200 million contract. OpenAI's contract is for AI models in non-classified use cases, which include everyday office tasks. But Anthropic, their contract, as I said earlier, was for classified work. The Department of Defense had no comment today on Trump's announcement. So now this brings into a whole different light, right? If you are a tech company, AI focused. You got a contract with a federal government. You see where this is going now, this next area. Now you're getting into very scary areas, surveillance, weapons of mass destruction that are using AI on and on and on. So when I saw this comment in regards to Sam Altman, the CEO of OpenAI, and I didn't know they had a $200 million contract to our researches, now you're wondering, is the government going to use this as a threat? Now again, OpenAI is government using OpenAI for office tasks. So definitely different than Anthropic, so it's more

26:16on the classified side of things. But is this the way it's going to go, right? Is the government going to push the envelope with AI technology and these competitors are going to go, sorry, we all know what happens to companies that disagree with the president. Things don't end well for those companies. So we got to watch that very closely. But that was just another issue that we had to deal with today. All right. Now I debated whether to make this next topic, as we talk about shifts in the market, the entire show because I could probably do two or three hours on this topic, but I'm going to hit the high points. You've heard me say many times, there's a saying on Wall Street called the cockroach theory. And what that means is it comes from you walk into a room, it's a dark room, you turn on the light, you see one cockroach. You walk out of the room, turn off the light, and if you compare through a window, here comes hundreds or thousands of more cockroaches. But you only saw one. Well, we use that theory a lot on Wall Street. That when there's one company in trouble, i.e. one cockroach, there's hundreds of others potentially in trouble. It's as we can't see them yet. So when I come back from this

27:20break, I'm going to tell you about this cockroach theory that's unfolding in the UK that potentially potentially could start to upset our markets a bit. Let's wrap it up a Chris and snow right now, traffic center. Hello, Kristen. Welcome back to the John Sanchez show on News Talk 780 KOH. All right, we're talking about the tectonic shift going on in the market markets. You know, we're not really not all that far off of the highs of the year. But things are changing and that's been my theme for the entire show. Once again, as a reminder, if you missed any of the shows, please pick us up on YouTube, or of course, any of your favorite podcasts site, kkoh.com, Sanchez.com, everywhere. Just don't miss anything. There's so much going on these days. All right, like I said, I could do a probably a two hour show to three hours show on this issue. So it's going to be a challenge to kind of condense it down over the next six minutes. But listen closely. Okay, I gave you my cockroach theory before we went to break. And here's why I'm referring to this. You see, folks, there's a company called market financial solutions limited. I'm going to refer to them as MFS. It's nothing related to the MFS mutual fund company. They are a UK mortgage firm that is backed by Wall Street lenders. Yesterday, some of these lenders

28:28forced this company into our equivalent of bankruptcy. These Wall Street lenders warn there may be $1.3 billion shortfall and collateral backing their loans. Zircon bridging and Amber bridging the companies that forced MFS into the UK form of insolvency yesterday accused the London based firm MFS of using the same assets as collateral for multiple loans. Of course, we know this is called double pledging. And that may have led to an unaccounted for deficiency of more than 1.2 billion euros of debt, according to documents obtained by Bloomberg. Now, the collapse of MFS, which attracted backings from firms like Barclays, Apollo management group, which again got hammered today as I said at the beginning of the show, Atlas partners, unit of Jeffries financial, and TPG is the latest crisis to hit both banks and

29:30direct lenders, puts a spotlight on asset based lending. If this movie sounds familiar to you, you're like, I've heard about this double pledging. I've heard of this. Where was this coming from? Let's go back to last year. Last year, we had two auto parts suppliers, first brand group, and then excuse me, two in the auto sector. First brand group, which is a major auto supplier, they make things like fram auto filters. And a lot of names you probably use and know. And the subprime auto lender tricore holdings, both of those companies were doing exactly what MFS is accused of doing double pledging. Now, let me stop there real quick and just explains if you never heard this term. So let's use the auto since I spent many years at GMAC. So when a bank lends on an auto loan, right, that car plus your down payment is their collateral. Well, if I'm a middleman and I'm arranging loans and I go to bank A and I say, hey,

30:33my customer needs a loan for $1 for this car. You know, I put 10% down, but he needs a loan for $50,000. Bank goes, cool, it's got good credit. Great. Give me the title and that'll be my collateral is the lender. But somehow, some way that I can't figure out this middleman then goes to bank B and says the exact same story. Now, why would bank B lend on the same collateral if bank A has the title to the property or title to the car? So I don't know how they're getting around this. But that's the gist of what I'm about to quickly explain. Then I'll tell you why this is so very important to us and that's something we need to watch. So first of all, you got some big names. I mean, Paul's massive, right? You got a lot of big names in the private equity space that is involved in this real estate deal. Now, this fellow named Parrish Raja. He's the owner and chief executive of MSF MFS and he's kind of the brains behind this whole, well, I'm going to call it a scam at this point. So again, lenders typically, of course, provide mortgages for less than the value

31:34of the assets that are backing them back to my auto example. Well, according to many on the street, MFS is basically borrowing more money than with the properties worth. In other words, they're getting loans for 120 or they were getting loans for anywhere between 105 and 120 percent of the value of the property. Is that sound familiar back to our 0809 housing crisis? Yep. So essentially, you've got about 230 million euro value of property and 1.2 billion euro in debt. Folks, that is a mismatch. That means there's no collateral. That means once again, this company was double pledging. So they're saying it's too early to tell what the eventual losses if any will be for creditors of MSF. Alexis Partners was appointed to oversee the insolvency this week. Now, again, I'm at a time you hear my music playing. So I got to get going. But the bottom line, the reason I'm

32:36bringing this up in my 30 years, 36 years experience doing this. If there's ever an example of a cockroach theory, this is one that we have to be very careful about when you start getting into lending and companies, especially in the mortgage space, collapsing in companies of a billion dollars or so. That's pretty good size. It's not massive, but pretty good size. We've got to be careful. What can happen? Because if that thing accelerates, it gets bigger or to the cockroach theory. If there's other mortgage companies that have done the same thing and subjecting these private equity firms to the same risk, now what you start to see happen is the private equity firms go, we can't pay any money. And we already had some news of that out of out of Apollo. They stop paying dividends on one of their funds. So nothing at this point, we need to be significantly concerned about again, just something as part of this market and this whole economy changing that we've got to be aware of. Stay tuned. I'll try to keep you up to date. God bless, have a great weekend. We'll see on Monday on the John Sanchez show. John Sanchez is a registered investment advisor and the opinions

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