 Hi, this is MXUX. I am doing this video on the Fed and a recent presentation by a Fed analyst that is extremely bullish on Lordstown Motors. I'm going to show how the present economic conditions don't really affect the market for the Lordstown endurance. I hope you like the video. Let's get started. Hi, this is MXUX after that. Introduction. I want to go through this presentation. I want to try to keep it short. This is all about what the Fed is doing and what a key Fed auto analyst has to say concerning Lordstown Motors, which is, in my opinion, very bullish for Lordstown Motors. So, let's get started. This is titled Macro and Money Environment and LEX, which is the new nomenclature for Lordstown Motors I've developed. That stands for Lordstown EV Corporation, which is how it is identified with the National Highway Traffic Safety Association, Lordstown EV Corporation, LEX stands for Corporation under teletype, I believe that's still in the stock market. So, that's what I have decided to call it, LEX. So, we have Fox and LEX. Fox, LEX. Anyway, let's move forward. Let's talk about the Federal Reserve. Okay. The Federal Reserve will likely hike in the coming meeting, despite Wall Street predictions, RCM and so forth. Jerome Powell met with the Republicans and he told the Republicans there will be one more hike. So, there will be one more hike. That would be probably 25 basis points and that'll take us over 5%, well over 5%. So, that is the latest information on that topic. Now, the banks, especially smaller regional banks, have unrealized losses under books as do commercial real estate interests as do insurance companies. The commercial real estate companies have loans written at 2%. They don't write long mortgages on those. Those are all going to be coming due next quarter. HedgeEye just did a report on this, billions of them. And those are going to renew from 1% to 2% and the new rate is going to be, you know, 5% to 6%, whatever. So, that is apocalyptic. As well, the banks that hold these loans have reserves, have their cash reserves in these low-interest bonds, which are unrealized losses as well. And the small regional banks, again, they take deposits. This is a fractional reserve system we have. They take deposits. They loan out a large percentage of them and they have a, you know, 10% of all the money on deposit is actually with the bank. What they do is they backstop this with, and I'm not an economist so bear with me on this, but in any case, they backstop this with bonds and these bonds are at 1% and 2% with the interest rate now at 5%. These bonds are underwater. If they get a run on the bank, they're going to have to cash these banks in. They are not going to get power value for these bonds. It's going to be below par because the interest rate is higher. It's going to be knocked back because the interest rate is higher. So, $100 bond is going to be bought back for $90. They're going to end up being short to cover their depositors. This is the whole bank problem we have. So, if there's a run on deposits, they need deposits. This is what's going to happen. You say, well, you know, it's only a 2% or 3% loss. Well, it's on trillions of dollars. That's the thing. And also not being mentioned here is insurance companies also have these, you know, I guess their liquidity accounts. In their case, it would be premiums, I imagine. But again, these are at 1% to 2% in government bonds and they are underwater. If there's a large natural disaster or some other demand on capital made to these insurance companies, they're also at risk of not being able to cover their obligations because they're underwater. Now, the Fed has put in an institution. I don't know if it covers commercial real estate and insurance companies where banks are allowed to borrow at par against these assets for one year without interest, but they got to pay it back. But there's still risk. The guy who predicted the black swan, Norabel, what's his name? I just did a piece that there's tremendous risk in the system. Now, here's the thing. These 1% to 2% bond, collateral bonds, to get returns on excess cash during the pandemic, everybody's saying, well, these banks didn't know what they were doing. They bought these 2% long bonds, 10-year bonds, whatever they are at 2%, never thinking interest rates are going on. You have to understand that Fed guidelines under the Dodd-Frank banking reform and other things encourages, because of taxation and other balance sheet conditions, encourages, the Fed encouraged through the regulations the purchase of these long bonds. And you could say that these banks were mismanaged by taking these long bonds on as collateral to their cash accounts and so forth. However, these were Fed guidelines. And now, since these are Fed guidelines, General Powell has got to know that these deposits were out there, or are we all, like I say, the victims of a monstrous hoax? Does nobody know what they're doing? Are all these Ivy League guys um, suiting in Bhutan and they're nutting in the suit? I don't know, but again, the reason we're in this condition is because the Fed encouraged the purchase of these long bonds at 1 to 2%. Okay? And now they're underwater and there's a lack of liquidity in this system. And here we have the Fed tax structure implored these entities to do this via the existing rule legal structure. It's important to note again, everybody says, well, why did they buy these long bonds at these low rates? It's because that was the deregur under the regulations. Now, the Fed raising rates 20x in less than a year has put all these bonds underwater. Okay? So this is what I've been talking about. These are unrealized losses. These are losses that are on the book that they haven't realized yet. That's like when your stock portfolio goes down, you know, cash it out. It's unrealized loss. Same thing. And again, some banks is barring Fed cash at par value of these bonds for one year. This has to be paid back and it is a, it is a, I have a bank stop. It's a backstop against bank runs to provide liquidity. A lot of people think this is going to be enough. There are trillions of these bonds out. And the result of these banks taking advantage of this par borrowing is it is going to inject cash into the system. And again, they're going to be looking returns on this cash. But in any case, all this cash being injected into the system is why chicken genius has recommended buying. Okay. This is a Cavaco capital. This is a charting channel I follow. I think these guys are pretty fantastic. And this is their take on the economy. This is just late breaking. I wanted to add it to this video. Let me see if I can play a short segment. Link in the video. Link in the description. Here, started to develop a similar look last year. The cloud is turning green here. This is October. The ratio was above the cloud. And again, you really don't see that a lot. What's noteworthy is when the ratio started to fall and more importantly made it back below the cloud here. The major low on the S and P 500 was in the rear view mirror. Something similar just happened this week for the first time we have a similar look. BIL divided by XLK is below the cloud, the weekly cloud for the first time. You can make an argument this point here. Similar to this point in here, which again is after the major low in the S and P 500. Similar story. This looks different than anything we had in the rear view mirror here during the bear market. And it also looks similar to this point here after the major low was in place. We zoom in on this portion. All of this just this week below the cloud. Also getting the cloud turning from green in favor of cash over tech to red. Brand new signal March 31st telling us from a probability perspective, the odds have shifted back in favor of XLK. Convincingly, not yet. We really like to move away from the cloud a little bit, but it's a good start. Others have not. I just watched Hedgeye Hedgeye presentation. They said the second quarter of this year is when all these real estate commercial real estate loans are going to be financed and it's going to be bad. They see it as the Titanic, their strong gold, Cathie Wood, as I said in here somewhere, I believe is into crypto. But chicken Jean just says because of this, at least interim, there's going to be money going into the market and then the market is up. I'm not sure that this borrowing for these bonds, these par, you know, they're able to borrow at par, which is the full value of face value of the bond for one year. I don't think insurance companies and real estate firms have access to this. Someone can correct me if I'm wrong on that. So we just, we, this is endemic throughout the world and throughout many, many different companies and many different market segments. And again, I say here cash in will feed stocks. Chicken Genius says by now, again, Noriel Robini says extreme potential risk. Hedgeye says the quarter of doom with commercial real estate coming up. Cathie Wood appears to me to be hedging with Bitcoin as much as possible buying Coinbase and cash block. It is blocked now. Anyway, this is kind of where we are at. So we have trillions of dollars of bonds throughout the world economy that are pledged as collateral, two cash deposits and other assets. Again, not a financial guy here, but I'm just saying the point is these are all underwater. So none of this, none of these deposits that they're covering are covered by these assets. This is what we're looking at. And bank runs are the problem, but I think there are other complications. These commercial real estate mortgages, what's going to happen is when they do these commercial real estate projects, as I understand, they establish a corporation for each building or each project. And if they have worked out the financing of this project, you know, they go 20 years, you know, buy versus lease or whatever the analysis is at a certain current, at a certain interest rate for the project to make sense. If it renews from 2% to 6%, they will just hand the keys into the bank and the banks are going to end up owning all these buildings that nobody wants. And this is another shoe that may drop. So Chicken Genius says buy now. And that may be the intermediate term. I don't know. You have to make your own decision. The world is fraught with risk result. Every firm that owns these bonds is underwater and has unrealized loss on the books unless the Fed cuts rates to make them whole. The Fed has said they are going to make one day, Jerome Powell told the Republican caucus that they are going to make one more rate hike. So they are not going to start cutting rates, although they said extraordinary circumstances would cause them to do that. Will they pause after this? Probably? Maybe? We don't know. But we got one more rate hike for sure. There's no way around that. I mean, it looks to be a certainty. I don't know what Wall Street is. Is it CMI index? Perhaps I'll try to find a clip of the CMI index that does. Okay, this is MXUX. This is a CME group FedWatch. This is a tool. They use this. They base this on futures contracts on the Fed rate. And what they have here, as my understanding how to read this, this is from the May 3rd meeting. If you come over here, no change is 52% in change. A raise is 47.7. Very close, but the futures contracts are saying no hike. And I think these guys are wrong. According to the presentation, Powell gave to the caucus of Republicans. So this is no hike. This is hike. They're looking at no change. And Powell clearly stated that he is going to hike. So this you can take into your evaluation of the market. Oh, also, three weeks ago, Tom Lee said, we're heading into a bull rally in April. And this may be April to May. So had mentioned we didn't hear from, we haven't really heard from Tom Lee in a month. So that was his last word. Anyway, that's it. Let's get back to the video of Wall Street sentiment on rate hike possibilities on here. The point is the Fed is not going to cut rates, not in the next quarter or two. Again, Hedge Eye, which called the last 2008 catastrophe says it is the Titanic going down the stock market, especially they mentioned today anybody with calls on Tesla is in for a surprise. I don't know. You have to evaluate that yourself. Hedge Eye is bullish on gold. Kathy Wood bullish on Bitcoin. Tom Lee, who I think is one of the most astute economic analysts says the Fed actions have either broken something or something in the economy has changed. That's very nebulous. I cannot find any definitive word from Tom Lee lately. So I think the top guy. Well, I mean, all these people are top people that I follow. But you have a range of different opinions there from Chicken Genius to Tom Lee to Kathy Wood to Hedge Eye. It's all over the place. But according to my rating, 51% chance of downturn of some type. And there could be a positive black swan or a white swan, a pink swan that could turn everything around. Now, I have down here. Now, Trump has been in the news. This is not a political channel. I don't support or not support Trump. I just want to say, I watched an interview with Trump, he proposed increasing the oil supply. And this is actually a pretty genius comment in my opinion. I am not a big fan of Laffer curve and Laffer was the author of Reaganomics. But Laffer does have a point in, you know, you can quash demand or increase supply to lower inflation. And in this case, increasing oil supply would have an effect to lower inflation. Energy is a component of all consumption. Everything you buy has an energy component, whether that's transporting the raw materials, delivering it to your house, so on and so forth. Right now we have a oil based energy system, hydrocarbon energy system. And oil prices are going up. You see Buffett is buying oxy. This is why he's buying oxy. And by the way, we need oil. According to my estimations, we're at a very near peak oil, which means all the cheap oil has been gotten. So it's just going to get more expensive from here. And I think this is why Buffett also is buying oxy. And we do need oil, even if we go to all electric cars, because we need plastics and other things that are made from hydrocarb. So there's just no way around it. But I think a major move and I think the president administration is moving backwards on this. Although they are looking at opening a reserve up in Alaska or the Arctic area, the thing is, one thing that could change the inflation picture is increasing oil supply. Whether you like that or not, that would have the effect of, that is a denominator of everything we buy. So anyway, interestingly, Trump is right on that. And I think that's an interesting proposition. Now, just getting down to the nitty gritty here, the ultimate solutions include the Fed buying all of these underwater bonds back from the holders at par. So retiring all these bonds and giving the holders cash for them, so that whatever the par would be, they were sold at a discount of 2%. So they would pay them the full amount. So in other words, a $10 bond was sold for $8 at maturity would pay 10. They would buy them back at 10. So that would involve the Fed retiring all of these bonds from all these parties all over the world. Trillions, trillions of dollars that would infuse cash into the money slide could be worldwide inflation. The second solution is the Fed ensures deposits at all levels to stop bank runs. And there's political opposition to this from the Republican Party. You know, in the SVB, they guarantee any amount of deposit over and above the $250K Federal Reserve guarantee. A third option here, and I believe this is being discussed regarding money market accounts, you have to do your own research on this. But in general, there is a rumble that they want to impose rules that limit your access to your money to stop bank runs. I don't know what form this would take, but there's a couple of different proposals out there. There's some considerations out there. You know, under certain conditions, you would not be allowed to withdraw money, things of this nature. This is actually being talked about. You have to research it yourself. There's nothing formal yet. I do believe there was just a rule regarding money market fund withdrawals that a law that was passed that went into effect, you have to research that yourself. That's another, of course, this would be the Cathie Wood argument for Bitcoin because, of course, they are trying to control Bitcoin, but Bitcoin would not fall under these rules presently. And then I have here the tinfoil hat. I have a video out about Powell raising rates. I had in that video have Jerome Powell raised rates to bring credit card and other debt based on the Fred rate to current dollars for big banks. I think big banks had about, I don't know, $12 trillion is the number of, for example, credit card debt. And this was all debt that was undertaken at 2% interest rates. And now that the interest rates are 5%, they want this debt paid back in current dollars. In other words, they don't want the same loss that the bond holders are looking at by having stuff on the books that's under par. And my thesis was that this was the main reason. You know, the Fed is composed of bankers, they work for bankers. So that was my thing so that the big banks didn't theoretically, in any case, recognize unrecognized losses on these, on this $12 trillion of credit card debt. So the Fed raised rates. That was initially my first take on this race. And these rate hikes have also caused and will cause consolidation in banking, making the biggest banks bigger. And also the biggest banks are in the best position to weather, to deal with this underwater bond issue. And they have more liquidity. So again, are we all the victims of a monstrous hoax? I think we have to question what Jerome Powell's rationale is. Now, some people have said that it has to do with the value, international value of the dollar and keeping the dollar of the world currency. But of course, this is my tinfoil hat argument. Anyway, that could at least be part of it, summary. So what we're going to have, and this is coming, if not here, it's going to take time according to the expert, credit's going to tighten up. You know, they're going to make it harder to borrow, you're going to have to jump through more hoax, have higher credit ratings. Banks will hike, hike liquid collateral levels. So they are going to try to backstop their balance sheets. The T bill rates will drop to zero. And there's, this is already happening. There, there are, you know, they're buying short term T bills with zero return, just to have liquidity, secure liquidity to back these collateral levels. And I have down here, maybe limits on deposits with thralls. Okay, this is I mentioned earlier. And large unrecognized losses exist throughout the world economy, throughout the world economy. So stocks may benefit from increased cash in the system, you know, from these Fed injections. And that's the chicken genius thesis. And chicken genius says buy a chicken genius is pretty smart guy. Anyway, now, here's the thing. What does this Fed activity have to do with Lordstown Motors Corporation or LMX as I call it? Auto Line Daily After Hours had a panel discussion. They had a auto analyst from the Chicago Federal Reserve on this call. And it was incredibly bullish for Lordstown Motors. And I'm going to play a clip of this. And I'm going to put the links in the description. I have two links under here that you can look at on the screen and copy if you like. This Fed analyst says municipalities and governments, including the federal government, at all levels want to replace fleets. Okay, as I said, there's unrequited demand for fleet vehicles. They haven't had any for two, three years. They're at the end of life. They especially want to replace these things with battery electric vehicles by law in a lot of places. These municipalities and governments, including the federal government, can't find vehicles to buy. They have had orders in for a year. And they are not getting their vehicles. You know, the Ford Pro is, you know, it's like we're all the victims of a monstrous hoax on that too, because I mean, they're just not making them. Why would they? They're going to make the higher value-added vehicles. They're not going to dedicate battery units and so forth to the $40,000, which has now had the price just raised again. I do believe the price of the base Ford Pro is now at $54,000. Don't quote me on that. So we have the endurance base price at $56,000. I'm sure that it will match the endurance base price. But they cannot buy these vehicles. I want you to listen to this clip. I'm going to play it right now. Hi, this is MXUX. I just want to play this. This is a Federal Reserve Bank of Chicago auto analyst on Auto Line after hours. And she is going to make a comment here pointing out in the presentation that is very bullish for Lordstown Motors. And let me just see if I can get that to play for us. Okay. So, Kristen, Jeff, I mean, let's start by each of you talking about how you characterize the period we're in right now in the auto industry. I mean, what are the things that people really need to be paying attention to? Well, I'll say nothing is normal, still. It's getting back to normal, but nothing is normal. And we started the year with, I think, Jeff might agree, cautious optimism that this year some things would start to work out and get a little better. Production recovery is underway. There's companies that are managing their inventory a little bit more closely. Prices are starting to mediate and level out to address some of the affordability. And there's still a whole lot of pent up demand out in the retail customer as well as fleet. One of the fleets that we don't think about too much is government fleets. And many states and the federal government in particular are looking to buy EVs or plug-in hybrids, and they haven't been able to get them, and they haven't been able to get them at the prices that governments usually pay. So, I talked to a state that was getting ready, the legislature was going to pull their budget because they put in their orders in October when their fiscal year started and getting around to the end of the year, they still didn't have the vehicles. So, there's a lot of demand out there. We just have to see how strong it holds up this year. Okay. Okay, now I'm back. This is crazy. A lease under this market qualifies for all available tax credits under the IRA at full levels. So, in other words, this is a perfect market for the Lordstown Endurance. And under a lease, a lease is the same as an individual buyer. So, there's going to be a massive tax incentive to lease these BEV vehicles. And again, we're looking at the Laffer curve. We're looking at supply and demand. Increasing supply in this market is also going to lower the price. It's actually just, I don't know what the government is doing because we need these vehicles. Why are they allowing these new companies to be, you know, why are they not supporting these new companies? Why hasn't Lordstown Motors gotten the government innovation grant that other companies have got? You know, Abterra just got a $21 million grant from California. Why hasn't Lordstown Motors? Why hasn't Lordstown received the federal grant that Tesla received back when it was at the same stage of development? The government is just not supporting Lordstown Motors. And I just want to make that point. But the other point is this is a market that is waiting to be tapped. This is the potential here for a fleet. And by the way, pickup trucks are in the top 10 vehicles of every consumer segment for automobiles. There's a pickup truck in it. The endurance is one of three pickup trucks right now. And that would be the Ford Lightning, which is having battery recall problems and production and they're having trouble meeting production and they're talking about two years. You know, Ford is milking this for all it's worth, in my opinion. You have Rivian, which really does not operate at this cost basis or in a fleet mode. They do not have a fleet model. So I think this is a really perfect setup for Lordstown Motors. And anyway, I have down here this is a crazy bullish for Lordstown Motors. And I think the key is this demand basically bypasses all these banking issues, especially when you're focused on the fleet market. Because these municipalities and federal government, they have budgets in place to buy these vehicles. They cannot get these vehicles. So that's all I have to say on this. Good luck in the market. I hope you liked the video. And again, there is the auto line link right there for the full video on this. I'll put it in the description as well. Again, this comes straight from the Fed and this is very bullish for Lordstown Motors. This is MXUX. Good luck in the market. Thanks for checking out the presentation.