Kevin You Features and What to Know

Hey everyone, meet Kevin here. I just finished another cup of coffee and I could not be more excited to tell you about how we just removed more disclosure requirements for the AI build-out so we can truly get this bubble going to all-time new highs, baby. And a lot of folks have been wondering, Kevin, why are you bullish for the third and fourth quarter? You say you are more bullish for the rest of 2026 than you are for 2027. What would leave you so mad? In fact, we've got a price target on QQQ even for upcoming Tuesday here in addition to bullishness through the rest of the year. But looks like we're about to hit our price target for Tuesday early

again, which is all related to the bullishness that's happening in the economy. I'm going to break it down. There are a few different things that are going on and we're going to break them down one by one. We'll talk CPI, PPI. We'll talk about this disclosure rule and what's going on with artificial intelligence, Elon, all of it. So, let's get started. First things first, if you have not yet heard about it, you got to know about this. So, if you hop on over to the Meet Kevin app, you can use this for free. I'm not trying to sell you. I'm just providing more value, okay? You have either desktop version, Android or Apple, okay? You will find under the data tab, under the artificial intelligence section, a breakdown on the removal of this

disclosure requirement. Now, this disclosure requirement is a big deal. Back in the financial crisis, we decided that asset-backed securities, things like mortgages or car loans that are bundled together, should come with certain rules. So, let's explain some of those rules really quickly and use the best eraser ever for a dry erase board. You know what's great about it is it's always with me. Uh okay. So, into after the 2008 financial crisis, we passed these rules called the Dodd-Frank Protection Act and other rules. And what we decided in part was that asset-backed securities, again like pools of mortgages, should require the people who

actually make the pools to keep a 5% uh unhedged, okay? So, I'll put unhedged skin in the game. So, in other words, you can't create a product and then not own any exposure to it yourself because you might then not care about the quality of the product. Whereas, if you had skin in the game, maybe you'd care a little bit. Right? Uh and the second thing is that we would mandate disclosure rules uh for what is inside. So, for the makeup, what components are inside of these asset-backed securities? Well, uh we just uh did something in the last maybe 5 days here that basically said, "Hey, if you're going to do an asset-backed security on a data center, well, guess what? You don't need to do this and you don't need to do this.

We don't need that crap. Who needs disclosure or rules? And that's literally what happened here. See, a group of attorneys wrote this letter and said, "We respectfully request that staff concur with our view that fixed-income securities in data centers, described as DCS, data center securities uh or securitizations, uh do are not considered asset-backed securities per the exchange act definition, blah. This is just a fancy way of saying, "Please exempt us from the rules. The reason we think we're different." And this is kind of like the head-trippy math here that they try to play is they say, "Hey, when you hold a pool of houses or pool of car loans, that is different than holding a pool of GPUs.

You don't need to know what the utilization rates are for those GPUs or which GPUs are in the pool cuz it's it's different this time. Houses and cars, and this is their main argument, they can sell individually cuz a homeowner or car owner could decide to sell that, you know, home or vehicle or whatever. But GPUs don't sell themselves. And because GPUs don't self-liquidate, we're different and we shouldn't be restricted by those rules." Okay. And so, guess what happened? Literally, the day after they got rid of these requirements that underlying assets have to be disclosed, that ongoing reporting requirements are met, that repurchase obligations are disclosed, that GPU

rental rates, utilization rates, concentration, lease expirations, and all this crap is disclosed. What happened the day after we said or the SEC came out and said, "You know what? In fact, we got a screenshot of it here somewhere. I'll find it. You know what? We agree with you. Here it is. There's the letter. Based on the representations in your letter, we agree that fixed income or other securities issued in data center securitizations of the type described in your letter are not asset-backed securities. In other words, don't worry, the disclosure rules don't apply to you because you're right. You're different. Your pool is different from 2008. And guess what happened right after that?

Ta-da! August 10th, Nvidia partners with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR, basically everybody, to establish and mobilize $500 billion worth of other And they can hold the bag on GPUs because these companies don't want to hold the bag. All these companies right here, they benefit from something known as AUM, assets under management. They really don't care what the assets are. They just want their fee. And if that requires now less disclosure, hey, let's pop the let's let's blow the bubble up even more. Is it a shocker that Nvidia partnered? Of course not. They stand to benefit probably 40% of that $500

billion goes straight into Nvidia's coffers. So, reason to be bullish numero uno before the big bubble pops and everything comes crashing and burning down into the worst great recession 2.0 ever, worse probably going all the way back to the Great Depression. Hopefully that doesn't demotivate you. Between now and then, we've got ourselves one heck of a reason to be bullish cuz the spending is going to continue. Man, I need more coffee. Not only is the spending going to continue because of these disclosure rules and the Nvidia partnership and the financialization of data centers, one, but number two, we already know this, so I'm not going to beat it like a dead horse.

Elon Musk is going to spend like a freaking drunk sailor. Elon Musk helped SpaceX rally 9% yesterday because of the day before that an interview was released where Elon's like, "Yeah, I just said our compute is going to be like 99% of our company. Yeah, we're we're going to spend 30 to 50 billion dollars per gigawatt building these facilities and we're going to make so much money. We're going to make 300 to 500 billion dollars a year in the future." That's great. Didn't mention the bottom line or GPU rental rates or the sustainability of those or how much debt SpaceX is going to take on, but I'm not here to be bearish on SpaceX. I'm telling you that is actually Reason number two to be

bullish is all the freaking spending that is now basically 2018 all over again on the disclosure rule side. Elon's spending like crazy is all beneficial to the entire market. In fact, I call it rising tide lifts all ships, baby. Some of the favorites that I have, uh favorite number one in terms of index level, RSP, daily new highs over and over again. This is the S&P 500 equal weight. This is the third reason to be bullish. As the equal weight rises, it means we are rising beyond just what technology stocks are doing. And what happens when we see stocks go up beyond technology stocks? We have a rising tide of people

getting richer, the wealth effect expanding, and people will just continue to spend every last freaking dollar they have. Broad green market today, very impressive, but it's been a trend. Look at that equal weight. It has been up and away for frankly the last 6 years. I mean, these dips are very short-lived. And look how clean that 200-day moving average is. Now, obviously, that's probably a you know, symptom of being a moving average, but boy oh boy, it makes you want to buy on those 200-day moving average bounces or buy at 200-day moving average bounces. Now, the second portion that I'm also very bullish on is IGV, the software ETF. That's because of my Q3 Q4 software bottoming thesis, which has really

started to play out with companies like Microsoft and Palantir, and even Axon. These are all great stocks that we've sent buy sell alerts on. And I'm not saying every single stock that I invest in go straight up. In fact, I've been in a place very recently where I buy a stock and the next day it has mornings and then it goes down and then I'm like, it happens. You can't always win. Uh but if you want the fundamental analysis, you always know you can join over at meetkevin.com. But let's focus. Let's focus on the data. The next thing to make us bullish. So number one, Nvidia disclosure rule.

Number two, Elon spending like crazy. Numero three, broadening the wealth effect. Numero four, inflation. So this is an interesting one. Uh inflation, which we're going to see right here, you can see core goods had a real tariff effect right here in a balance and we've started to decay over here on year-over-year core goods. Core CPI is trending down. Core services ex housing mostly flat over here and housing has also been on a downtrend. This has been the significant lagged housing delay. This is actually what Jerome Powell talked a lot about in 2021 and two that they thought housing disinflation would come because of but because of the way owner's equivalent

rent is calculated it would come with a lag. That is actually exactly what happened. You could see that lag very clearly here how services reacted much faster than housing. Uh and now you are seeing some flattening in that housing disinflation. You're not getting as much anymore. Now, who could have predicted this? Oh, wait, we did. We literally made a prediction that if Mondani wins, rents in Manhattan will go to all-time new highs. And of course, they have because anytime a government tells you they are going to make something more affordable, you can put dollars and donuts on the fact that they are going to make it more unaffordable.

Government sucks. Now, I'm not an anarchist, okay? Let's be clear. There is some responsibility that government has. There is a balance. There's nuance to everything. Unfettered capitalism just leads to pure socialism and eventually communism. So, you need some limits. I don't actually think it's healthy what's going on with these SEC disclosure rules. It is going to just accelerate the bubble even more. And this is why in the short term, bullish. Longer term, cautious. Because it's a good way to put it, right? But let's understand. So, CPI came in a little lower than expected yesterday. PPI was mostly flat this

morning. You can see the journal says here, "Wholesale prices unchanged last month as energy prices edged down." Although that's not really true right now with Brent at like $87. Uh but uh so some of this is a little bit lagging. But uh overall CPI and PPI pictures were less bad than feared. Uh the labor report softer. I will say though, TS Lombard, who's basically been chomping at the bit for a rate hike, uh you know, even they are like, "Oh, uh I guess this does uh lower the odds of a rate hike in September. So, we're not prepared to die on the hill of a rate hike over here."

They've been begging for a rate hike. And they that's sort of their base case scenario at TS Lombard that this is it. This you know, this is going to be a really big uh a big one. Um but now the disinflationary numbers that we're getting and the labor numbers that we're getting or that are deteriorating or actually indicating there's probably no reason for the Fed to hike. Instead, you can get Kevin Warsh's anchoring bias to hold likely to prevail. Now, what's interesting is the only people still calling for a rate hike like TS Lombard are people who are literally saying the following. We are more overtly concerned about the labor market

rapidly tightening from close employ uh to full employment. So, in other words, these folks literally think the labor market is improving and that's going to drive them to more rate hikes. I find this to be ludicrous. That's my opinion. I think they're only looking at the unemployment rate, which is going down. But if you look at 27 weeks unemployed, if you look at labor force participation, if you look at the weekly ADP trend, all of this data is bad. It's a very muddy foundation, I call it. It's not the straw that's going to break the camel's back and push us into a recession tomorrow, but it is a muddy foundation. We are not on good foundations with the labor market.

That's probably because more people are going to lose jobs from AI before people uh before we get more job growth from AI. So, I want to be clear about that. Long term, yeah, AI will create more jobs just like any technology has ever had before that. But there's usually a delay, right? You lose more jobs first and then you get more growth in the future. Hopefully, that timing doesn't align, it probably will, with the popping of a bubble. But right now, we're still just pumping air into this tire, okay? This tire is rated for 70 PSI and we are just at 50 or maybe we're at 69, I don't

know. But this puppy can stretch. We can probably pump it up to 100, 120 before it blows. Maybe I'm too bullish here. But I'm very optimistic and that's one of the reasons why I'm buying and you know, why we're expanding our exposure in a conservative way. If you want to see exactly what we're buying and more importantly why we're buying it, why we're building the thesis that we are, which is an enterprise inference compute thesis, which has exposure to hardware and software. If you want to see exactly why and the fundamental analysis behind all of this, always remember to join me over at mekevin.com. Right now because Elon is helping us pump it up, the coupon code is called oh Elon, pump it.

God, Kevin, could you be a little less caffeinated and more mature? Oh. Man, this is embarrassing. Whatever. So, anyway, um when we put all of this together, we can actually see there are a lot of reasons to say, "Man, we're not going anywhere anytime soon in terms of a rolling over of CapEx." In fact, this uh new $500 billion fund from Nvidia, I think is completely underrated in the market. Uh I don't think we've actually seen the real hardware push yet. We did see some of the push from Coreweave, which then obviously led NVIS to move up. NVIS Nebius. NVIS is the ticker, right? Nebius is the company. Coreweave, which was really interesting, had you know, a fantastic earnings release, but it was really based on their backlog, not based on their

balance sheet. If you look at Coreweave's balance sheet, I'll pull it up, it makes me want to vomit. It is so bad. And this is what I don't want to happen to SpaceX is for them to get a crap balance sheet. I want you to look at this just so you can see it briefly here. They have $6 billion at Coreweave. And if you look at their current debt that's due within the next 12 months, and you add it together everything in red here not including the deferrals right here, you have an $18 billion of bills due within the next 12 months. And to pay that $18 billion, they have $6 billion. There's no surprise here as to why they're paying 10% or more in interest on their debt. Now, what's actually

remarkable here on Coreweave is they argue in their statement. Let me pull this up because this is in the We have this in our alpha membership as well. It's under our stock tab. If I go to Coreweave, I want you to see their interest right now expenses because they're kind of misleading folks in my opinion. This is their debt breakdown. And at the bottom, you can see that as of June 30th, the company has a weighted average cost of capital. So, um you know, um a WACC, a WACC, a WACC of 9%. Well, that's great. They have a WACC of 9%. But what's actually happening

is per the Wall Street Journal, they are having to raise uh the effective yield that they're paying on this debt by discounting their notes. So, they're kind of lying to people. They're able to tell you, "Yeah, our WACC is just 9%." Okay, but wait a second. Here's the Wall Street Journal piece that says the following. Coreweave is the latest company having to pay up a to attract investors in a data center related debt sale. The AI computing company just revised the terms of its $2.6 billion leverage loan sale.

Mind you, a drop in the bucket compared to the $18 billion they need to pay their bills. Offering yields of around 5.5 percentage points above SOFR rates, that debt would yield more than 10% at current terms, which include offering the loans at steeper than normal discount values to par. In English, here's just ANOTHER WACC LIE. THIS IS HOW YOU blow up a bubble. Uh like I say, I'm not here saying that, you know, the bubble's going to pop anytime soon. It will pop. Uh I don't know when, but it will pop. But between now and then, kind of bullish in the short term.

All right, ready for this? Let's say you have a $100 worth of debt, and you're going to tell everybody, "Hey, my WACC is 9%." It's less than 10%. What are you talking about, Willis? But what happens when you have to sell this at a discount? They say, "Hey, um uh these are $100 bonds. We'll pay you $100 at some point in the future, right? All a bond is an IOU. So, we'll pay you $100 back at some point in the future. We'll also pay you a 9% yield, so we'll pay you $9 for every $100 you invest. But um we'll actually sell you this bond for $85. So, you're now getting a discount of 15%,

which if you're getting a discount of 15%, you're yielding nine dollars on 85. You are yielding 10.59%. Oops. Now you can still disclose to everybody that your walk hawk is 9% effectively paying 10.6% So like this is the kind of stuff I know this is nuanced you know and if you like it can I just want a summary so I say well then you miss all the nuance and then you don't understand and then so the people who actually watch the videos which I think you do obviously you're here you know your folks are like damn I never thought about it that way I didn't know about that disclosure rule damn I didn't know about Corey's debt damn I didn't know about how they can totally manipulate the debt numbers like that is how we can all be more shady

together Cuz they're all trying to screw us from all different angles and so if you want more of Kevin tearing apart a-holes like an a-hole join us at meetkevin.com bam it's time for more coffee Why not advertise these things that you told us here I feel like nobody else knows about this Well we'll try a little advertising and see how it goes Congratulations man you have done so much people love you people look up to Kevin Paffrath financial analyst and YouTuber meet Kevin always great to get your take