Codie Sanchez warns a market crash is coming, driven by commercial real estate collapse and shadow banking stress. Commercial property values have fallen up to 40%, with $2.9 trillion in loans maturing by 2025. Small banks and shadow-bank funds like BlackRock are exposed, and ordinary investors holding mutual funds and pensions could take the hit.
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The collapse of Silicon Valley bank, the second biggest bank collapse in U.S. history. Okay, so we've all heard about the big bank crash that happened a few weeks ago. A rough week for the banking industry. As a storm of events came together. All of us kind of freaked out and we ran to the banks to take our money out. That was scary. But the scariest part is that that may be just the beginning. You think the Silicon Valley bank was something? Nothing compared to what's going to happen. It's going to be at least as bad as 0809. And the reason for what's coming that no one is talking about is commercial real est. In this video, we're going to explain what may cause the next crash and what it means for me and you and who will sadly be taking massive losses. The people who earn too much money should take losses. Commercial real estate, what is it? Basically, property used for business purposes rather than living. Think offices, industrial units, rentals, not your apartment. And something dangerous lies in wait there. Why? Well, it all started with this guy. Meet Jerome Powell, leader of the Fed. The Fed basically controls the cost of money, AKA how much inflation or prices go up each year and how much interest rates or the cost for borrowing money also goes up each year. The Fed started raising interest rates aggressively because inflation, it's almost at all time highs and high inflation is bad. I mean really bad. So when rates go up, the idea is it tamps down on spending and because people spend less. Thus theoretically inflation comes down. But there are side effects. Bad ones like asset prices, AKA the cost of hard things like real estate fall faster than a girl at Coachella when she sees a VIP badge. Vip? A bunch of smart minds in Wall street think commercial real estate could fall that fast, as much as 40%. That means that if you had a dollar invested, you now only have 60 cents overnight. And that might be why small and medium banks are are essentially running out of money. Hundreds of banks are failing their deposit minimums for the 19th straight week in a row. So obviously people like me and you think let's go to the big banks because the government might actually make them safe. So while Jerome Powell of the Fed says this, the winner is actually this guy. I won. While we're so worried about the markets that we literally only want to put in banks that the government could bail out, the market actually gets more risky because now fewer banks hold all the cash and JP Morgan is one of the winners. Do the words too big to fail ring a bell? I'm too big to fail. Spence what's happened? The money spigot has shut off money, then floods to safety and more interest rate loan extensions from big banks are mandated. You might say that's not that big of a deal. We still have 60%. In 2008, the housing market fell 20%. So 2023 to 2025 could be two times as bad as 2008. But why is this important? And how big is this? Commercial real estate makes startup bank loans, AKA SVB look like a gnat biting at a giant. Commercial real estate is a $20 trillion sector globally with more than a trillion dollar market in the us. We're talking about giant size losses. But what's that mean for us, the normal people? Well, right before our eyes, the perfect storm is playing out again. God damn it. Huge market. 70 to 80% of commercial real estate loans come from small and medium banks. The same ones experiencing those runs. The extra hard problem with that is commercial real estate loans, not liquid, AKA easy to sell. If these loans start getting marked down to 40%, you have a mass liquidation event or a bunch of people going bankrupt. And a bunch of the smart guys all over the world think that's going to happen sooner than we're ready for it. So what happens when that fall begins? There's always somebody holding the bag. Let's call them the bag man. So who owns all these loans in commercial real estate? Two words. Shadow banks. Shadow banks are basically entities that do bank like activities, AKA lending, but they take place outside of the traditional banking sector. Shadow banks, many say are what caused the 2008 crisis. And the biggest one in the world, BlackRock is holding most of the commercial debt. The cracks are beginning to show. BlackRock and Blackstone just stopped people from taking money out of their commercial loan funds. No soup for you. No more soup for you. But maybe we don't care about blackrock or Blackstone going broke. People gotta have losses if they take risk, right? Well what if I told you they don't own the bag, you do. You see, we did a bunch of research and it turns out that we all invest in commercial real estate even though we don't realize it. Where? Stocks, bonds, mutual funds, pension funds. And who owns the pension funds and mutual funds? America. Look at the top 10 holders of BlackRock funds. Vanguard. I actually used to work there. SSGA used to work there too. Could be like Taylor Swift. Am I the problem now? But who else? Charles Schwab, Morgan Stanley. Those are all you and me. So if there is a crisis in the shadow banking system due to Commercial real estate loans. You could be the one left holding the bag. And this is the house of cards no one tells us about. There is a thing in finance called systemic risk. A fancy word meaning a risk so big it could take down the whole system. Think of it like cancer. Cancer in your system can kill you. So you read all the labels to make sure you know what goes into your body. But in this case, the banks didn't give us a warning label. So why does this all happen so quickly? It all started from one thing. The pandemic. Basically, the pandemic accelerated work from home. In 2018, less than 6% of people worked remote. Now 26% do. And guess what? 66% of people now work at least some time. Remote. What does that mean? It means vacancy. No tenants. Empty properties all around. Walk through any retail store, go to a shopping mall. Horrifying. Walk across a warehouse district. All across the country, you see vacancy sign after vacancy sign after vacancy sign. Silently, these assets are that canary in the coal mine with every single for rent or sales sign sounding the alarm. But why don't we just turn all of these into condos and Amazon warehouses? Because it's expensive as shit. You've never been inside an office tower and thought, man, it's so cozy. I wish I could live here. So real estate has nowhere to go but vacant. It's happening fast. September 15th of 2008, the day Lehman Brothers fell and the full recession began. Let's talk about the speed with which we are watching this market deteriorate because we're now down 43%. What in the world is happening on Wall Street? I remember at Goldman Sachs, watching the TV screen fill with stunned employees carrying cardboard boxes amidst a backdrop of huge towers. What will be the date of this crisis? Well, since the Feds hiked interest rates, thus hiking mortgage rates and putting a freeze on the market, that same thing is happening to commercial real estate. The entire sector is facing a refinancing wall where there are loans of 2.9 trillion. Trillion are set to come due by 2024-2025. They're not going to be able to pay up. They only have 60 cents on every dollar. And so we don't have long. The time is ticking. Borrowers are going to go under. It's just a question of who is the next Lehman Brothers to fall. What does that mean for me? And you, watch for the signs. More failures in shadow banks. More lockups where people can't get their money out. More sales of big office buildings for 40% discounts. We better buckle up, because this market is going to make an episode of Succession look boring.
