Buy Now Pay Later is Feeding Financial Slavery (FULL SHOW)- Laks Ganapathi of Unicus Research

Added: 2026-05-22

[00:00:07]So, what I was saying to you and I'm like, "All right, Lux, let's gra let's grab some of this on recording." You know, in this world that we're in now, you know, I feel like, and I asked you this right before, you haven't seen this, but the beginning of Wolf of Wall Street, there's a scene where Matthew McConna and Leonardo DiCaprio are talking. You know, Matthew McConna is the mentor to Leonardo DiCaprio, and he's telling them how, you know, this machine never stops seven days a week.

[00:00:29]You know, it just always goes and always goes and always goes. And I think for people like yourself, myself, Melody, and others that are in this world, it's like it never stops. like this carousel never stops.

[00:00:41]>> It never stops. And you know, it's it's non-stop. I'm I'm trying hard not to get sucked in it. Um but my my family is uh not happy that I work uh 80 to 100 hours a week. But like you said, it it never stops and it's never going to the amount of information that's coming from uh multiple directions. So it's not just I'm a firm believer that if you're reading or if anybody of your audience are reading it in the news, if the mainstream media reports, it's already too late. But we are wired so much to listen to the mainstream media under the belief that whatever comes out is timely and it's unbiased reporting. Uh we take it with as facts and and I think that's the problem. uh and and we talk about this a lot in the sense that the data that we are seeing is not what the reality is and the gap between the data we are seeing and the reality is is widening on a on a every second of the day. So, but then also you go to YouTube and you know there are podcast with you. It's just I think people have gotten to a point whether it's retail investors or institution investors uh retail investors think institution investors are better and but clearly most of the time it's not the case. So the information overload and the investors ability to or inability to rely on which information is accurate. It is a dangerous path we are going in. So and that concerns me on a on a regular basis. Well, and and do you find it hard now, and I might even ask you this last time we spoke, to to step away because things are do do things appear to be moving as fast as they I think they are right now, the speed of things >> in the in terms of technology or in terms of what >> technology uh storylines like data centers and I mean just everything seems to be moving so quick right now.

[00:03:03]So one thing we have to understand what's happening right now is not an aggregate of the past 5 years. It's not even what's been happening past 10 years.

[00:03:17]It's been happening whatever is happening now the stage was from from our humble point of view the stage was set decades ago.

[00:03:28]So what I would constantly call it uh uh boiling for uh frog syndrome is that you know this the stage for whatever happening now was set like 20 years ago.

[00:03:43]Some people might call it crazy, but if you see all the patterns, it it fits.

[00:03:49]And people get surprised because when random events happen, when random chaos happens, not in the not only in the United States, across the world, there is a sense of apathy that hey, you know, this is one of, it's not a big deal, it's not systemic, it's not that. It's easy to just shrug off. But if that randomness, if that chaos consistently accelerates, you got immune to that to a point where you just don't care.

[00:04:25]And I think that's where we are right now. And one would think uh I have um an analyst in London and I have uh clients in Australia and and Europe and their question is like people are not pissed off in the United States. It's not about and it shocks people and we are in an information vacuum.

[00:04:52]information is there but it's not reaching the people that it's supposed to reach and I think it's by the design and also the data centers are coming up everywhere and you see you you have to view the market I think the investors are viewing the market retail or institutional in terms of binary it's not zeros and one and And we talk about this internally a lot. Everything connects Mike and and that's where people are missing uh data center center and we we talked about this in November or October 2025 in a new in our newsletter uh contrarian ununic.

[00:05:42]substract.com and when we talked about is like hey the data centers are coming everywhere and this is how it's going to cascade into affordability crisis for electricity water is going to be drained every single natural resources that are critical for human survival will be taken out right from underneath you right went on in deaf years.

[00:06:13]Now, fast forward a month ago, I think Fortune published an article saying that, oh, the data center is increasing the cost of electricity. It's uh, you know, taking the water from right underneath people.

[00:06:29]I'm like, it's in the mainstream media now, but it's already late.

[00:06:35]Virginia is uh Virginia DC area is the spot for data centers. There are some in Pennsylvania, there are some in California, some in Texas. There was I think there are at least eight data centers in Maine. So you see all of this happening in Nevada. All of this happening where there are >> Arizona blocks Arizona where I live, they're building them.

[00:07:02]>> Yeah. Yeah. So, so you would think how come people are okay with that and you go on Facebook and or or Twitter or whatever the platform and you get frustrated and angry and what does it do?

[00:07:18]It's it's it's not the economy that should concern anyone although it is. It's the mass apathy to what's happening is the dangerous tone to where we are going.

[00:07:36]>> Well, and and so I I was in Virginia, Restston, Virginia last summer and started talking to this guy. Maybe I I don't know if I told you the story, but started talking to this guy. Turns out he works for he worked for AWS, Amazon Web Services. And he was it was just the most random struck up a conversation and it turned into this half an hour like my mind was completely blown away because he was saying like these data centers that they were planning to build them and Restston was like ground zero for all these all these data centers because of the um the fi the fiber optic cables or something that was in the ground in Virginia.

[00:08:15]But he was, you know, saying like all like Pennsylvania and they had just announced, Amazon had just announced like a big data center or multiple data centers in Pennsylvania right around that time. It was June of last year. And um and I asked him, I was kind of joking. I said, you know, I bet you these didn't put get put into plan, you know, start planning these out after Trump got re-elected. He goes, oh no, this has been in the works for a very, very long time. Which, you know, that's why I think it's funny how people like want to politically point fingers. It's like, no, if you start looking at this, these things have been in the works for years. But my question is, why do you think this information Well, two questions.

[00:08:56]Why do you think this information is getting out now? Why is it being released to the mainstream media?

[00:09:00]Because everything everything has an agenda behind it.

[00:09:04]Well, it's probably because this will create an illusion that hey things are happening, people are aware and then people start to fight. But if you say it gives a platform for people to fight and resist when in reality whatever they do there won't be impact but because it's already said and done.

[00:09:30]So, it's more like a heads up. You know, the water is going to go. There's going to be a We talked about the blackouts and uh brown outs in our article. We do not have the infrastructure, Mike. We do not have the infrastructure. I mean, we Okay, fine. I get it. It's like trillions of dollars in debt, but why can't we allocate some funds to stabilize the infrastructure? So we are overloading the infrastructure that we barely have and getting all the electricity for the data centers and people are saying in in the towns that they are building that they are absolutely helpless and on the other side if you see and these news are not I don't know I I don't watch TV news anymore because it's it saddens me but I don't think this is in any news outlets in the media because foreign bankruptcies are up 46%.

[00:10:39]>> Well, you said I said for you said foreign bankruptcies.

[00:10:43]>> No, farm agricultural farm.

[00:10:45]>> So, chapter 12 form bankruptcies at 315 in 2025, highest in since 2020, >> right? And this is not only that. Now you have to think about the Iran war. It has the impact in the fuel in the supply chain and you have problems with um I think ura and other uh fertilizers related to the farm. So none of these these are not separate events. The these are these are all interconnected and and they are not because US food US household food insecurity reached 13.7% or 18.3 million people. There are roughly 342 million Americans in the United States.

[00:11:43]342 give or take million people in the US. And out of that at least 25 to 50% of them already used buy now pay later for for critical or essential products and 15% of them are consistently using BNPL as a way to make their ends meet and of the of the people who are consistently using uh BNPL I I believe 14% of them used to use BNPL for groceries.

[00:12:20]Now in first quarter 2026, that number doubled to 29%.

[00:12:26]29% of the BNPL users are using it to pay for groceries. 13% are using it to pay for rent. So we are we are put put in a situation where you asked the question okay why this news is coming out now to people because it falls in deaf years. you know, if I had to be little little blunt about it, because you have a a lower tranch of households that are forced in a perpetual debt slavery.

[00:13:04]This is a modern financial slavery.

[00:13:06]There is no sugar coating it. So no matter how hard you try try you can't you are born you get a medical debt for like when you're pregnant so you start from right from the birth it's it's impossible to make a living and and that's what concerns me because it's it's not going to stop here. It's it's really not going to stop here.

[00:13:39]I had uh I had a gentleman on last week.

[00:13:41]Uh we were talking about the water situation in Arizona and he's um uh he lives in um Wyoming, but he went to school in ASU and his his thing is um you know, we climate change, but what he was saying though, what I thought was interesting, you know, being that I've lived in Phoenix now for almost 20 years, and I am gonna leave locks. I'm gonna admit this on recording with everybody because I've been saying this for three years and I'm still here. I mean, it's hard to leave, you know, it's hard to leave somewhere, you know, you've been for so long, but but anyway, >> um you know, they're doing so much construction in Phoenix and data centers and um you know, new I mean all these new projects. But what but anyway, what he was saying is that basically, you know, there's enough water in Phoenix for people, but it's going to come down to the agriculture versus the cities. So you're going to have so the development versus the agriculture and I said well if I if I'm going to guess here development's going to win because they have the they have more resources but this is a desert. I mean I can't even believe that this is a a topic that they're building data centers in Phoenix or in Las Vegas. There's no water.

[00:14:54]It's I I was having this call this morning and it's kind of I was I was dropping my kid off to school and then try to get some um uh exercise done and was walking around in this loop and you have the nature and then you see the cars going. So I live in uh Connecticut, right? So the car is going you see different varieties of car and I look at it as oh this is going to be a fantastic day because knowing what I know I was looking at the cars and say how many of these cars are bought in cash how many of them has negative equity how many of them will be repo how many of these people that I'm viewing right now by end of the year will not have jobs because if you see me if you see every single software company they are laying off people they're using the intellectuals to train the machines and they are kicking the people out.

[00:15:58]So now the one the one way to see it is uh this is um this is a matter of control fiscal control and the gap between halves and have nots have widened so much that there is no way you can bring it closer.

[00:16:21]There is I I think Jeff Bezos came in some CNBC or something said you know if you're going to don't quote me on this but it's something related to oh you know don't tax people below certain point like fine is is that supposed to be a a a chump change to to to let them go but then he also went up and said, "Oh, but you're not going to gain much from charging taxes, from levying taxes on the top 1%."

[00:17:00]Initially, it infuriated me when I heard that. But then I took a step back and thought the gap between halves and have nots have widened so big that there is no way that one could do something that would bring it closer.

[00:17:19]and and I was like this is not a way to live. People cannot sustain without water, without the basic needs that keeps them alive.

[00:17:35]We are getting into a scenario of social unrest. And I I listen I I didn't wake up one morning and say, "Oh, let me think everything that's wrong with this world." And I am really trying hard to find that things that could work. But it always brings me to people need to be aware what's going on.

[00:18:03]And I don't think not many have that luxury to be aware of what's going on because you suppress a segment of population to the point where they get angry because they are unable to feed themselves or their family and nothing else matters to them.

[00:18:27]And that's where we are.

[00:18:30]And let me let me date stamp this here really quick, too, because today is May uh today's May 20th and we're recording at 8 a.m. Pacific. And did they did they announce the Facebook layoffs today? I didn't even bother to look before we went on.

[00:18:43]>> I think two days ago.

[00:18:45]>> I thought it was supposed to be this morning. Wasn't it 8,000 or something?

[00:18:49]>> Yes. Yes.

[00:18:51]>> So, did that happen that Do you know?

[00:18:54]>> Uh I don't know. He said he's going to I think an email somebody else posted on Twitter that Meta asked a a good amount of employees to work from home this Friday.

[00:19:12]>> Oh, it's this Friday. Oh, I thought it was today.

[00:19:15]>> I I I have no idea. It's just the concept of time is completely >> right. It go Yeah. Uh do you do you think that like this for example and the other layoffs that have occurred and the more that we'll that will continue is it attributed to you know are they blaming it on AI because that's just an easier scapegoat for how lousy the economy really is? That's what Melanie and I talk about and it's just stuck in my head. What are your thoughts on on AI and is it a smoke screen?

[00:19:47]Um it's a yes and no because they they think and this again it's not when people are aware of AI they're already too late it's been planned uh this been laid out um and they don't need the resources that they need. It's think about uh my analyst Philip um who works from London. He he mentioned to me like think about industrial revolution before I think World War I and you know when you have the human capital and then you just didn't need it because you did automation. I think we he I think my analyst is right and I think we are at that uh phase in AI revolution where this is washing out um a lot of people out of the workforce cuz I feel like there's so many jobs out there that are just not needed like just in general like you could do away I mean there's so many departments and corporations that you could probably go in and be like I don't need this we don't need this. No, >> no, we we are um there are certain uh we hired an engineering team like a year ago. When I hired them, I thought okay fine. I I wanted to automate not not through AI but we we are building um a a product internally but the goal is to most of the process could be automated.

[00:21:28]We we we've run a very lean firm and for one it's a bootstrapping startup and I I have myself and other senior analyst I have one in London and couple of others and that's about it. You also have to think about the education system. the people who are graduating um they have not all of them but some of them has this people don't have the drive as much as they used to and I don't blame them for it it's just in front of their eyes the opportunities are completely going away and and that is the same thing that happened with uh Japan in 8788 and I was t I talked about this when I was in Steve's podcast is that if you see the banks if you see the data that's coming out of the banks there are they are benign right if you see the data there is nothing wrong with it and uh and that's where investors um are not seeing things from multiple angles they are seeing Wall trade and the finance is binary. It's more than that because you see the new earnings come out everything looks fine but then again you have private credit which is the funding mechanism and I get so much push back saying yeah but private credit is only 1 to 2% of the exposure compared to the banks I said yeah but that's true but also the one to 2% exposure the private credit do have. It's so intertwined with commercial real estate, buy now pay later with the banks and you have um synthetic risk transfer flying around to insurers.

[00:23:35]The risk is interconnected and that makes it a lot riskier than the banks themselves and people don't see that. I I did speak with um supposedly a a a smartest mind in in the industry and they are saying it binary and after the call myself and my analysts are like we need the rest of the day off because we need to process the person we spoke with said oh we don't see problem with the banks there is no connection between private credit and the banks That is an insane take.

[00:24:18]>> What was their justification for it, Lock? That they didn't see the connection.

[00:24:24]>> They are speaking up their books.

[00:24:28]They are long private credit and then we were asking certain questions and all of a sudden they they had to go for their lunch.

[00:24:42]So, so, so the I I think we hit a nerve in that um private credit is interconnected and one of our theory is that think of this Mike bank allocates money to private credit through NBFIs, non-banking financial institutions, not only to private credit but also to others.

[00:25:05]>> Is that like Blue Owl locks? Is that Blue Owl would be considered one of those entities?

[00:25:10]>> Yes.

[00:25:10]>> Yes. So when banks allocate money to private credit, they also allocate to others including insurers. So 23% of NBFI's allocation goes from banks goes to private credit. Private credit then takes that thing and then allocates to um business development corporations, small businesses and BNPL firms like a firm CLA and everybody. When it allocates to BNPL firms, they engage in what what one would call forward flow agreements. those agreements. Um, you can find them as press releases, but I haven't had a chance to read a forward flow agreement myself. And and that's the other point to digress a little bit.

[00:25:59]Private credit is so opaque, nobody knows what's going on.

[00:26:04]And so private credit allocates to buy now pay later firms and they originate to everybody.

[00:26:15]They originate to every single consumers that are struggling to make make their ends meet. So once the affirm or clar whatever bum pay later takes that originations sells it immediately to private credit or any other lend uh any other buyers and they get the money right away right for the loans and then a firm and cla use that money to originate loans again.

[00:26:46]So if you see buy enough pay later funds is a originating machine right all they do is origination that will happen as long as there is a private credit fund or other funds willing to bear the risks of the originations of the subprime.

[00:27:04]So a while ago, Stone Ridge Lendex um private credit fund I don't know if they went bust or the redemption started. One of the mess. So I asked my engineers, okay fine, there is thousands and thousands of loans.

[00:27:24]Take it and give me an analysis.

[00:27:29]when they parse the loan, it starts anywhere from $2 to an unsecured personal loan um for 200,000.

[00:27:42]So people are taking a lot of unsecured personal loans and lendex that bought these loans from multiple companies including a firm if you see their cost nearly most of the loans that they bought directly or underwater.

[00:27:59]They're now performing.

[00:28:02]So my our thesis here is that the banks if you see MUFG a Japanese bank uh last month or so um no last week or so was looking for an insurer to buy $2 billion of SRT. So they are looking to transfer $2 billion of loans that from private credit that they have on their books to transfer it to insurance companies. So SRT is synthetic um risk transfer. So the loan remains in the books of MUFJ but the risk moves to an insurer. So they pay the insurer some fee and if there were to be any loss in the books then uh the insurance will cover MUFG up to an x amount of amount of the loss that they took and then Morgan Stanley is looking for it. So these are all we take these as signals. So you're saying private credit fund and the banks it's all interlink banks originations moves uh to private credit fund private credit fund also will have an insurance branch so the prior credit fund itself has an SRT this is a mess and nobody can track where it's going and that's the the the reason I'm sharing this here is because when the private credit fund were to say to BNPL firms that hey you know what I'm not buying this risky loans anymore it's not making sense to me so either tighten your originations or you know what I'm not taking it so all the risk loans will end up in a firm PayPal um or CLA on their books so when that happens when the funding chokes the BNPL you will not you will have a credit issue to people who are using BNPL.

[00:30:23]I know it's a long-winded exp uh explanation.

[00:30:28]Um I will leave you uh with this though and then let me know if you have questions is that the reason I was comparing this with Japan in 8788 is a lot of things happened in u in Japan and one of the things that stood out is that they did not um they were extending and pretending for a long time they did not write off anything. It's not because they were not acknowledging the losses. They didn't pretend there were no losses. They pretended the losses were smaller than they were.

[00:31:08]They were under the assumption in Japan in 8788 corporations, banks and everyone that the risk that they have is manageable.

[00:31:21]That is the exact position in our point of view that Wall Street is currently in. Wall Street does not know how much risk they have. They were under the false belief that the risk were manageable. What deeply concerns me is if you go up and read on Japan in during that time period when all these things said and done, Japanese banks survived. The taxpayers bailed them out. However, the entire population of Japan, the wages were stunted.

[00:32:00]The younger generations weren't able to find jobs for a very long time. And that's what's concerning me and keeping me up at night.

[00:32:09]>> Well, just like 2008, right? I mean, who who who ultimately paid for for all these, you know, all these mistakes? Regular I mean, who always pays for all this?

[00:32:21]Regular people, right? I mean, 2020, who paid for that? I mean, it just it goes on and on and on. Now, the the question I have in regards to private credit, was it a good idea at the time when they started it? And if it was, when did it start to go south?

[00:32:41]>> The private credit?

[00:32:42]>> Yes.

[00:32:43]So the the I didn't call it by the fancy name back then but after 2008 shadow banks um where the shadow banks started to come and um I will I will >> what do you mean by shadow banks? What do you mean by shadow banks?

[00:33:01]>> Shadow banks are like banks that are not in the limelight. The banks that are not the regular banks. Uh shadow banks is by definition they are in shadows. you they are very opaque they have uh they don't want anybody to know what they're doing um they mark their own books as in well I lanopathy say this is right oo it's right so they mark their own books right um that's why if you see private credit none of them mark to market because they are not traded in the market so they mark their own books right um And they were shadow banks were private credit that is anybody who are not banks that are lending money. Uh they are also private equity.

[00:33:53]They are also like um oh my god what is that terminology I keep forgetting. Um I will share that write up that I did. I'm I'm trying to find it. Um pawn pawn stores right? They they come under shadow banks as well. Um I'm trying to find it but yeah they started in 2008 and one of the reasons they started is in 2008 if you see you have a lot of regulation going on with banks and they weren't able to lend money to people who needed the most aka the lower tranch of the K. So when that happened, these guys, the shadow bankers started to come out and say, "Hey, I can give you the money. I don't care about your credit score. I don't care if you have uh were bankrupted 20 times in the last decade, but I'll tell you what, the interest is going to be higher because I'm taking on the more risk by lending you money."

[00:35:01]That's how it started. And it's also the BDC's or companies that are, you know, highly levered. Um, regular banks won't take the risk, but private credit or private equity, you know, feed the habit hoping something terms turns out. And you know, all these companies that should not have gotten money, they have the money and they still go bust. They are the zombie companies. After everything is said and done in Japan in that time period, you had a lot of zombie corporations. And I do believe that once everything said and done in this time frame that we are in, we will have a lot of the companies that you're seeing today won't be there like 5 10 years later. So you can akin this to the dot growth as it to I was sure there were like a lot of Amazons back then uh when WW came out now everyone died except Amazon. So that's the same theory.

[00:36:10]>> Uh so so I mean in your view then okay so let me shift over to private equity. Was private equity a good idea at the time when that started?

[00:36:23]>> It's the question is good idea for whom?

[00:36:27]The people who started the private credit of course it's a good idea. It's a lot of money to be made. But when you are starting something it's always has to it's important for me to ask the question good idea from whose point of view right consumers are vulnerable to be blunt. You have a family you are born in this land you you expect to be fed. you had no problem working hard but still no matter what you do you're always playing catchup. So they are in a vulnerable position and for them if somebody is offering um a credit line and it's two or three percentage points more than the banks but the banks are not giving any money but these guys are. you trust them because that's the only source of leverage you have to invest in your farmland or invest in something else to make your ends meet. So, was it a good idea to exploit vulnerable people knowing that you shouldn't enable them or knowing that they're going to fail? I don't know.

[00:37:49]>> No, and I didn't mean it like that. I meant from a private equity standpoint.

[00:37:52]when private equity don't don't mistake that question for for yeah I don't the way you just described it no was not a good idea but in terms of private equity when you started now you see them their hands are in everything right hospitals dental practices >> I mean I think they're in like plumbing and bakeries and I don't think there's any limit to any industry that they won't touch >> um and in my view and you you tell me if I'm wrong by saying this I think they destroy everything they get their hands on now Yeah, private equity where business is close to die.

[00:38:26]>> Why? Why is that? What is their goal?

[00:38:28]When private equity when private equity gets their tentacles on a business, what what is their goal?

[00:38:33]>> They want more margin and they are going to squeeze the um output. Uh for instance, um Oh god, there is a Subway sun, not the Subway, but a sandwich place. Uh I forgot the name.

[00:38:48]>> Jersey Mike's.

[00:38:49]>> Yes, thank you. uh jersey mics and ev ever ever since the private equity came in the portions have gotten smaller.

[00:39:02]So what they do is they look for quick bucks to make but in that process they destroy the business because you are reducing the size reducing the quality reducing the output that you give for the and you increase the price all at the same time. You will have a good margin for a while and then the consumers are going to be like I'm not going to that store. That's what I mean.

[00:39:29]Uh, private equity is where the con business goes to die. There was a store um in Richville where I live. It says um it's it's a Mexican food store, right?

[00:39:41]And I was talking to the owner and myself and my husband goes go used to go there every morning get a small burrito or herbal. The food was fantastic and the portion was good and they come in the morning, they work very hard and all the workers in the nearby, the construction workers, everyone, they come over there to eat it. We paid $20, we got a dollar or something back.

[00:40:12]Fast forward two years after CO, we went there and it was $50 for the same bowl. The quality got reduced. It was $50. I'm like, I am not breakfast for me outside is a nogo because $50 for two burrito bowls. And I was like, dude, you you raised prices across the board.

[00:40:40]What's going on? It's like, oh no, my business was struggling. There were like five private equity guys. They came in and you know, we make good food, but like they suggested we have to increase the price across the board because the tariffs on tariffs of circus was last year and the input cost started to go up and then they have to pass it along. So, no one is going there. The construction workers are no longer going there.

[00:41:10]It's it's it's interesting you bring up Jersey Mike's because they have those all over the place here in Phoenix and uh and I had read that private equity got their you know got their hands in it. Uh are they not doing well now? Do you know?

[00:41:23]>> I don't know. I I haven't I I don't I don't go to to Jersey Mike's um often, but I don't know if they are doing well, but I do question how these guys are like keeping the lights on because think about the demographics that go there. I I I don't like to go to fancy restaurants because a I have to sit proper and do like eat proper. I don't wanted to do that after a long day. I just wanted to relax, eat something.

[00:41:55]And if you look for all those restaurants, they are struggling.

[00:42:02]And they're getting bar licenses because they think that's the perfect way to jack up the prices because they have to keep the food prices lower, otherwise they're losing the business.

[00:42:15]I I've said so many times, you know, driving by shopping centers and looking, I'm like, I don't know how these places how half these places are are staying afloat. And and and maybe, you know, the high-end restaurants, the fancy steakous, they might be doing fine or okay.

[00:42:32]>> It's it's funny that you say that. Uh we are recommending I I don't talk about the companies we recommend as a short, but I'm going to make a small exceptions to make a point. So we've been recommending Texas road houses a short u you know and we were doing the channel checks the beef prices are through the roof right they are we have no idea how they are surviving and the other one is ringtop wingtop is not surviving at all uh we recommended that as a short when the stock was around 380 um we were doing channel checks and realized that 40% of the consumer base is on the borders. So when the immigration started to take off, their business is dead in California, Texas, Florida and also we learned that their input cost higher. Same with Texas Roadhouse. Um and what's interesting for me is that Door Dash is still alive.

[00:43:37]We we were recom we've been recommending Door Dash as a start and we are talking to the drivers and you should hear their frustration. I didn't know there is something called Door Dash addiction.

[00:43:48]People go on debt to do takeout which I don't understand. Um second they should never have provided buy now pay later for Doash. Forgive my language but you eat something you defecate and you're still paying the bills. It does not make logical sense. I didn't even know that was possible until you told me that a year ago that you could actually do buy now pay later for Door Dash. And and I put a tweet out I put a post on X a couple days ago. You probably didn't see it because I'm just amazed. And of course I got some hate for it, but I said I cannot believe people actually use Door Dash for anything. Maybe I said Uber Eats, but whatever. One of those food delivery. And I have people that are like, well, there's handicap people.

[00:44:31]I'm like, okay, well, what do they do before Door Dash? Like I I just can't believe people are that lazy.

[00:44:40]They they they get Door Dash McDonald's or I mean just look where look you want to know why our society is screwed.

[00:44:48]>> Walmart came out yesterday and said oh we are entering the delivery business because we are going to deliver along with the food. Um we are going to engage in partnership with delivery uh with restaurants around our uh building and we are going to enter the delivery business.

[00:45:10]Well, see that kind of makes sense because if you're ordering from Walmart, you know, at McDonald's, but >> at the end of the day, >> makes no sense to me. Locks, why would you have McDonald's delivered to you?

[00:45:27]Like, why would you like I don't >> you pay $20 for an already shrinkflated McDonald's burger with fees added on. I don't understand. And and I got some um Amazon delivered to our home and my husband is like, you know, I don't understand why can't we just go and buy something and you have to order everything.

[00:45:52]But I think convenience factor is the case. But then again, I don't know.

[00:46:03]>> Well, >> it's just >> Here's the other thing, too. What's the condition of that McD I mean, I don't eat McDonald's, but what's the condition of that McDonald's sandwich by the time it gets from the restaurant to your to your house? I I just I >> that's that's the other thing. So, there was a huge amount of Door Dash uh population uh drivers that we spoke with. They said, "Oh yeah, we are not touching we are not touching the delivery for Do Dash." So if you order Door Dash and you are not tipping them, well, they're not going to come and pick your Door Dash. And we saw that in a Wing Stop. So we went to a nearby Wing Stop on the way to somewhere driving. There were during the football season, Super Bowl or something, somebody took a picture and sent it to us. There's tons of Wingstop orders sitting right there and nobody is picking it up. Imagine ordering wings for Super Bowl and no one is picking it up. I'm not a mediator, but like won't that get soggy?

[00:47:11]Let's I want to I want to talk about um I want to talk about subprime uh auto loans because that's something that you know that was a that was I was hearing about it and I don't and I don't I haven't heard much of anything lately.

[00:47:25]>> Well, that's that's because there's a reason for it. Um I don't I don't have the let me see if I have the statistics on my hand. Um but what's what's interesting with the subprime auto loan is that we are hearing from our sources who are who engage actively with auction houses and buying cars. Things are quiet there. They were like oh we are not seeing more repos coming in. That is because we've been extending and pretending uh for a long time for auto loans. So the banks are rather keep the borrowers in the car by extending them 100 month plus auto loans. Yes, those are real. and instead of repoing. And there was an other source that said, "Oh, banks repo the car, but you don't hear anything about it in terms of delinquencies or write offs." That's because bank reposs the car and keeps the car somewhere.

[00:48:40]They don't take them to the auction houses because the car is so beat up, so underwater in terms of negative equity.

[00:48:48]The banks choose not to throw good money after the bad by taking it to the auction houses.

[00:48:56]So it's sitting there somewhere and you're not hearing anything about it.

[00:49:01]The the cost h for the used cars have gone up. eBay has entered the used car business.

[00:49:09]There was another bunch of sourc said there is a used car um supply crunch for lack of better words because Carvana is coming to the auction houses and taking buying up all the cars. So there are so many things going on in terms of used car business and used cars in general. Consumers can't afford it. You have negative equity. you have to roll on the negative equity. So, and now the gas prices are going up. I I think we'll be we will be forced to be in a position of you know what, I don't want the cars anymore.

[00:49:55]I mean, it's the cost of fixing a car has gone up 50% give or take since co Mike I have a window in my beat up VW Jetta that I bought it pre-owned six years eight years ago. the right window motor has gone bad. So I took it to to the dealership and I got yelled at by my husband rightfully so.

[00:50:34]Took it to the dealership. They said, "Oh, $800 to fix it." This was like four years ago.

[00:50:40]Since then, I decided fine. I I don't open the right car window. I don't need it.

[00:50:49]And even if I open it, sometimes I have to be patient and try it like 20 times to close it. I would rather do that than pay close to $1,000 without with the with um the charge the the fee for the mechanics have gone up because of the demand for them. So this is like maintaining a car is is very very intense and also the health insurance have gone up.

[00:51:18]It's just you can't make a subprime consumers.

[00:51:23]There is no middle class and and I get really a push back from it. If somebody makes the $200,000 depends on where you live and if you have like one kid or like two kids, you can't you can't have an emergency fund more than $1,000 to make the ends meet.

[00:51:46]That's where we are at. So $200,000 a year doesn't get you anything these days. And that is a very very dis depressing fact. Well, and and and and you know, in relation to the car market, I I I was talking to a friend of mine on the phone and talking about new cars, and it's like you go around to these, you know, dealerships and the prices are just it's just so uninspiring or unmotivating to want to pull the trigger on something. And >> I like I'm just, you know, I like those Rav 4s are not I drove one last summer on my road trip and they're nice cars.

[00:52:23]I'm not going to pay 40 grand for a RAV 4. I out of principle, I'm just not going to do it. So So now So now you go into and I I just I I get really weird about financing. I don't want to finance things.

[00:52:35]>> Oh, yes. Oh, I I'm with you on that.

[00:52:38]>> I did when I was younger. And here and and the thing is like when I was younger, I was in college and I wanted, you know, I had a I had a decent job and I I did a five-year note, but you know, my job didn't things went south on that and things changed and and I didn't like being tied to tied to a payment. But the other thing Oh, go ahead.

[00:52:56]>> That's that's one that's one thing. And it's just um it's the maintenance part that gets me.

[00:53:07]And I think that's where that's where uh people are getting frustrated. You have to put gas. You have to maintain for it.

[00:53:16]And every time um and and um my husband goes, "All right, let's you know, why don't we get a get a car?" I'm like, "We don't need a car. We have like two well functioning cars. We don't need a car." And and I think that is that's where we're going. It's just affordability is people are trying to at least we are trying to uh pinch where we allocate the resources and we are at a we are at a place where we have wellwater and we we put on some vegetables and garden this year. Mike, I'm I'm There was a mother's mother's day recently and my husband said, "Uh, what do you want for Mother's Day?" I said, "Whatever you do, don't take me to a restaurant.

[00:54:13]Don't get me flowers. I I I am on principle. Do not buy flowers during Valentine's Day or Mother's Day because it's it's double the price for something that's going to die." And I think most people have to view things from that point of view. Um and and and and we need to have a mass shift in how we think or how we approach luxury, how we approach affordability.

[00:54:52]Um wherever you see there is going to be marketing you know somebody is giving like you know go to sales buy now pay later get a ring for the somebody you love. I'm like I'm happy if somebody I loves cook me food. So that kind of shift uh we need to redefine how we um see um gifts, how we give gifts and all those things because this is this is going on an inc increased crazy town where you have to do certain things to be part of a certain society is just for me it's stupid. Do you see where do you see the used car market going then? Will that I mean because those prices are out of control too?

[00:55:44]>> Those prices are out of control because they know that people can't buy new cars, they have to go buy used cars and then the used car prices are higher and because of the demand and there are certain set of um companies going and hogging all the stocks it's going to be high. I mean the private credit will come to save the day by giving loans and the banks will extend the loan to 100 plus months.

[00:56:15]There is a buy here pay here loan strategy. So maybe that will go along.

[00:56:20]So I think all of this is to constantly keep consumers in a perpetual debt trap.

[00:56:32]And that is not okay.

[00:56:35]and and that's not fair for people who are in that vulnerable segment of demographic. It is really not fair.

[00:56:44]>> Do you think it's going to continue though the used car market? You don't see it coming back to earth or prices stabilizing or >> the one thing that everything will go back a deflate is for this to collapse.

[00:57:03]you you you need to have um a market collapse. There is too much money um too much risk transfers going around. There needs to be a collapse for regular people to start affording um anything.

[00:57:20]And and I also don't think Iran war is going to end anytime this soon this year. Again, I might be wrong, but I see it continue to 2027. Um there is going to be a resurgence of inflation. The inflation in the food and the CPI numbers you do see right now. I believe those are the those are the lag catching up from the tariffs coming back up where the manufacturers are buying uh at earlier and that's getting passed through to the consumers. the impact based on the straight of hormones and this entire hoopla that hasn't pa pass through to the consumers yet. So the second wave of inflation is like I expect to hit the uh economy in the second half of this year and well into the 2027 and we also expect a huge amount of redemptions redemption wave happening for private credit and uh you know the the retail investors need to stay away from or or if you're a retail investor you're try not to trust Trust your financial advisors 100%. Instead, ask them where they are investing your money, where they are guiding you. Because I was shocked to learn that financial advisors are getting kickbacks from private credit funds to push them in, push the retail investors in that direction. So uh shocked to know that I was under naive assumption financial advisors are acting on their fiduciary responsibilities and I was proved wrong. So uh the kickbacks are going to financial advisors. So please know where your money is going and getting invested.

[00:59:22]um and try not to follow um the propaganda in terms of invest in this because I am telling you this is a right thing to do always question the motive because we don't come out and advertise hey we are recommending X Y and Z the only reason I mention the restaurants because restaurants input costs have gone so up their margins by definition by business model it's very small and they are trying to maximize it but um retail investors need to uh protect the capital that they have and invest only in things that they understand if you can't invest uh if you can't if you can't explain something to your 8-year-old I have an 8-year-old if if I can't invest something um explain something to my 8-year-old year-old and answer their questions when they have any, which means that's very complicated, which means there are risks and derivatives involved that you have no idea.

[01:00:33]And most importantly, the people who are investing your money um are constant need to be constantly learning. And always remember that the past performance of XYZ um investors does not directly equate to the current and the future performance.

[01:00:53]Um th this is very critical because there is a huge amount of money chasing the retail community.

[01:01:03]And it is not fair that the taxpayers are bailing everybody out. The taxpayers are robbed blind of their fresh water and the electricity prices are going up and nobody cares. Think about it. Real think about the taxpayers bailing out everyone every single time. And no one is bailing out the taxpayers.

[01:01:33]and and it's it's disturbing. It's um I hope your audience benefited from from this conversation because uh they need to focus on preserving their resources uh rather than splurging. or uh if you are investing with somebody else, the more questions you ask the better it is for you and they should ask more question to you as an investor instead of just saying hey your yield is going to be 10% and you're going to consistently make money. Nobody consistently makes money. That's the first red flag. So, I will leave you with that.

[01:02:28]>> The uh You got time for one more question?

[01:02:31]>> Sure.

[01:02:32]>> Uh I thought you were like trying to exit the door. I'm like, Locks, we're done. We're done. I thought I said I thought you were trying to exit the door. I'm like, Locks, we're done. I got another question for you.

[01:02:40]>> No, no, no, no. I have time for one more question and then I have to jump on the call. I'm sorry.

[01:02:45]>> No, it's okay. It's it's all the more reason for you to come back. But, uh you know, you you mentioned that you know, infl you think inflation is going to go back up. And coming back to the car question for a second because you know with inflation going up if if you know higher gas prices if this conflict does not get resolved soon which I agree with you as every day goes by even if it were to end today I mean what do they say every day it adds a week of when things would resume normal. I read that the other day.

[01:03:11]>> Yeah. Yeah.

[01:03:12]>> So so with that uh you know I could see car prices because people just aren't going to be going anywhere. They might be giving cars away at that point. Maybe I'm wrong, but >> yeah, because if it's like too much to maintain the car, too much to drive the car, why would I even need the car, right?

[01:03:33]So, the airline industry is imploding.

[01:03:37]Um jet fu jet fuel is really a concern in Europe and we are hearing that um in India um they were asking the people the public to take the public transportation not travel if you don't have to. It's the same uh tone we are hearing in across the Europe, right? It's the same tone we are hearing in Australia, across across the continent. And um we haven't heard anything in here.

[01:04:18]Is that because it's not happening or is that because we are in the information vacuum? I think it's a bit of both. And when it starts to come, when you when you start to see the price go up to $6 and $7 and all of a sudden you see the notice that says no more gasoline, then what?

[01:04:44]So then you would rather stay home and and I think that's where in a weird twisted way it's going.

[01:04:54]What do you think? What do you think things things are going to be like by the end of the year?

[01:05:02]>> The narratives, the headlines will continue to boost the market will create volatility.

[01:05:11]The data will be massaged. But the people who are enduring spike in electricity prices in and near the data centers, the people who are enduring going to um Stop and Shop or Shopright or any other grocery stores, they are they will continue to feel the pain. And I stand by the statement that we continue to make. it is that we are not going to see if you are waiting one morning to wake up and see oh the market collapsed oh everything deflated we're not going to see that we're not going to see a clean problem we are the problem is so intertwined not many are even aware that there is a problem so whatever is coming the persistent inflation will be felt by the lower paid demographics by the p by the people who are uh making six figure the unemployment I am saying we are seeing that it will go up whether you will see it in the numbers or not that's a different story we don't see U3 unemployment numbers we see U6 and even U6 you have to add like a truckload of salt to trust that number so unemployments are blue collar white collar All the jobs are going to uh or people are going to get laid off most of them and whoever is there are going to be in a position of either owning their own business or freelancing or things like that. So the narrative will change into a positive manner.

[01:07:04]That does not mean the reality is in the positive sense getting better. So look beyond the narrative, look beyond the headlines because headlines are meant to boost the market. headlines are meant to give you an a reality that many are not living. Um, and I hope that helps.

[01:07:30]>> Where can people find your locks?

[01:07:33]>> Um, please put that in in in the video if you can, my newsletter, because my accent sometimes can confuse people. But people can find me in Substack.

[01:07:45]It's contrarian.substack.com.

[01:07:49]And uh uh happy to and and we post everything in confidential insights um which was uh which is a little pricey to be completely transparent. So I can provide uh half off to your audience if they uh let just let me know when you um put the video on so I can make that half off. uh and your ex handle >> uh at Unicus Research >> and I'll have all this uh all these links in the show notes when I publish this as well. So, Lockx, I always enjoy our conversations and I look forward to continuing to follow your work and uh more conversations ahead.

[01:08:29]>> Likewise. Thank you so much for having me, Mike.

[01:08:31]>> Mic drop.