Wall Street Unplugged
Episode: 1063August 9, 2023

3 Big Tech leaders to buy… and 3 to avoid

By the time you listen to this, I’ll have had my second hip replacement surgery.

The first time, it cost me almost nothing out of pocket. But this time, I’ll be paying $8,000! Prepare for a rant about rising healthcare costs and the insurance racket.

Following Fitch’s downgrade of U.S. debt last week, Moody’s just downgraded its ratings on 10 U.S. banks. It’s another concerning sign of what’s happening beneath the surface of the market.

I highlight several reasons for investors to be cautious… including a classic signal that a recession is on the horizon.

The good news is that we’re heading into a stock picker’s market—where it’ll be easier to outperform the market if you select the right stocks. I share the qualities you should look for when picking stocks right now (today’s Curzio Research Advisory recommendation meets these criteria perfectly).

I also break down which Big Tech leaders are solid investments right now… and which ones can’t justify their premium valuations.

As we head into an election year, investors must be prepared for anything. Politicians will do whatever it takes to get votes… which could trigger more inflation and stock market volatility. That’s why it’s so important to protect your portfolio from the potential downside—and that’s exactly what Moneyflow Trader is designed to do.

Finally, I share one market-beating strategy investors should focus on… even more than dividends.

Inside this episode:
  • Health insurance is a racket [3:24]
  • What’s behind Moody’s bank downgrades? [6:30]
  • The biggest risks to the market right now [8:00]
  • How to identify the best stocks [14:42]
  • 3 Big Tech leaders to buy… and 3 to avoid [18:12]
  • What to watch out for this coming election year [22:45]
  • This strategy beats dividends [28:15]
Frank Curzio
Frank Curzio, founder and CEO of Curzio Research, is one of America’s most respected stock experts. His research is regularly featured on media outlets like CNBC’s Kudlow Report, The Call, CNN Radio, ABC News, and Fox Business News. His Wall Street Unplugged podcast—ranked the No. 1 “most listened-to” financial podcast on iTunes—has been downloaded over 12 million times.
Transcript

Wall Street Unplugged | 1063

3 Big Tech leaders to buy… and 3 to avoid

This transcript was automatically generated.

Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on Main Street.

Frank Curzio: How’s it going out there? It’s August 9th.

I’m Frank Curzio. This is the Wall Street Unplugged podcast where I break down the headlines and tell you what’s really moving these markets.  

You guys, this podcast may be worth a lot of money.

So be sure to save it, especially if I die,  which will know if that happens while you’re listening to this,  because I’m taping this late Tuesday and early Wednesday.

I’m going to get surgery, get my hip replaced,  get my right side, my right hip replaced already.

It was the greatest surgery ever, which means  the surgery’s gonna be the worst one ever.

I don’t know,  I’m not superstitious or, or anything like that.

But  it went so perfect the first time.

I felt like the bionic man.

I could just grab the rim now and then basketball,  which I never was able to do and rotate more and golf.

And now, you know,  they said five years from now the left side’s gonna mess up and you’re gonna  need that and stuff.

And you’re gonna get that hip replaced.

And that’s where we’re at.

So we’re getting that hip replaced.

I’ve been in a lot of pain for the past couple months and sleeping and stuff  like that.

But I’m getting that done.

And hopefully you’ll know if everything turned out okay.

But,  I’d say say your prayers, but you don’t need to.

’cause I’m already gonna be outta surgery.

Whether it’s good or what, it’s bad.

But if anything does happen, love you guys.

If you’re a lifetime member,  that sucks for you.

You could sue my doctor.

Ah,  that’s a great, that was great getting you guys on Lifetime, huh?  Hoping that I live forever.

Hoping I do.

Not forever, but a long time.

See my kids grow up.

So, yeah, interesting.

But I wanted to tape this and get this podcast out.

Daniel will be doing tomorrow’s Washington Pap premier by himself.

The recovery is usually pretty quick.

I should be outta the hospital the very next day.

I dunno if I really want that.

I’m thinking about it.

So I’m going in early,  but do I really want to come home the next day? I’m not sure  if you think about it, you’re laying in bed,  hanging out with some nurses watching tv, getting a great sleep,  or go home right away.

Listen to my wife yell at the kids.

Probably my daughter’s fight.

Gonna watch TV and put the TV on while I’m on the couch laying down,  can’t do anything.

And everyone’s saying, oh,  is this what you’re really watching Dad? You have to deal with any of that.

Maybe I’ll, maybe I’ll take a week, just check in and say, Hey,  you know what? It still hurts.

It still hurts.

And none of that,  you get free drugs and just hit that thing and go right to sleep.

That’s awesome.

I don’t know.

I’m debating whether I should come home right away or not,  but I should be home the same day and I’m just joking about my family.

Halfway joking, kids could be real pain in the ass.

Nobody tells you that,  right? Kids are the best thing ever, man.

It is.

It’s great.

But whoa,  I talk about going crazy.

You can go crazy.

Try having girls that are going through, you know, the teenage years.

That’s interesting.

Uh, but hopefully everything goes okay with the surgery.

I will tell you this, which is amazing.

So last time I got the surgery,  I don’t remember paying that much out of pocket this time.

I’m gonna be charged $8,000 out of pocket for $40,000  surgery.

And I was like, holy s**t.

Considering that I thought we had pretty good insurance on my corporation.

Not only that, but they raised the prices like 15% I think.

So, you know,  they’ve raised ’em every single year.

It’s a fortune.

The premiums are higher.

So I started doing a little research on it and it was saying the proportion of  premiums with increases in 2022 with 36% a higher rate than any other  year since 2005.

’cause among premiums that went up in 2022,  the average increase was 8% year over year.

Maybe the 15 states reported double digit percent increase in premiums in 2022  up from 12 and 2021.

So again,  this is happening while employer costs, at least mine are up tremendously.

If you look at inflation, they say, well healthcare costs are coming down.

Somebody please tell me if your healthcare costs are coming down.

’cause mine aren’t.

But now that my deductible is met,  I’m thinking of maybe getting a bunch of MRIs and every body part that bothered  me for the past 10 years, since I’m 50.

And it’s starting to hurt since I play sports all my life.

I just go to a doctor’s office and hang out every single day and ask him a  million questions.

I don’t know.

So deductible is now met, but $8,000.

I’m curious to hear what you guys, you know, surgeries and is it,  is it that crazy? I mean, holy s**t, right? That’s insane.

What a business,  healthcare, what a business, right? Taxpayer dollars, all government funded.

It’s, it’s awesome.

It’s such a great, great business.

Insurance is the greatest business,  especially when you make the government pay for it.

Like when you have to get insurance no matter what,  you don’t really need life insurance.

You could get it.

It might be good for you.

It depends.

Everyone says you need it, you need it.

Well you know,  if you live in for 30 years and after you first got it and you kind of  didn’t need it or maybe you didn’t need it, I don’t know.

Depends,  but it’s debatable.

But you look at,  at car insurance and necessity, you look at all this stuff that,  that that’s forced on you with insurance.

And you wonder why Warren Buffettt’s a billionaire because that’s how he made his  money, right?  Leveraging the insurance company and the pools of money that almost never get  paid out.

Sometimes they do, but most of the time they don’t.

And then the reinsurance companies, which is the biggest scam in the world,  right? It’s insurance for insurance companies,  which basically you’re seeing every hedge fund take over,  start their own reinsurance companies.

This,  you almost never have to pay out insurance.

But this is re this is insurance for the insurance companies.

Just just in case.

Just in case.

Case in case.

That’s what reinsurance is.

So they take those big pools of money,  all the hedge funds and then they invest it and make more on their return.

Again, it’s Warren Buffett did.

It’s not ’cause he bought Coke and everything.

He leveraged the s**t out of his company and and did very,  very well ’cause he’s a great investor.

But the reason why it got so big is the leverage part,  which people don’t talk about.

They’re like, oh, you buy Coca-Cola,  you hold it every single year.

No,  it’s good to leverage the s**t outta that and and good for him, right?  So insurance is the greatest thing on earth for, for these companies.

It’s why those companies make money hand over fists constantly.

And again,  great business to be in.

But I’d like to hear from you guys frank@curzioresearch.com about insurance.

Unless I die.

You don’t have to email me ’cause I’m not gonna get it.

But we’ll see.

Anyway, let’s talk about some of the things that are happening,  right? We saw more debt downgrades,  which is very serious.

And this is from individual banks and saying a lot of bigger banks got put on  notice.

So  when I see that followed by the Fitch downgrade, you know,  that’s what pushed the markets down on Tuesday.

And  I’m starting to not find any reasons to  see why, why stocks are gonna go much higher.

And I’m not calling for a market crash,  but there’s a big difference in some companies when I’m seeing a company like  Apple that’s gone up almost parabolic, right?  Over the past nine months,  the exception of the past couple weeks that they reported earnings.

And this is a company whose stock went up considerably.

And when I say considerably, you may be like, well it’s up 60%.

This is a company that added like a trillion plus in market cap for a company  that saw sales decline three quarters in a row year over year, right?  Compared to the year before.

When I look at,  at a M d being under the umbrella of a company that  beat earnings estimates,  part of the 80% of the companies that beat earnings estimates,  they’re under that umbrella yet, earnings decline, what?   And valuations on some of these names are insane.

Should they deserve these high premiums? I don’t think so.

But you may say,  well okay, well the economy’s getting to, is it getting better?  Because we just saw credit card debt and average leased on Tuesday hit   delinquencies all rising.

So look at credit card debt,  which is 30 days or later.

Rose 7.2% in Q two.

That’s the highest since the first quarter in 2012 I was watching as  those results were released.

And, and so Steve Leeman and CNBC oh you know,  quick to point out again, no worries,  still better than 2008 levels and it’s so, I mean,  and then what happens when we pass 2008 levels?  You’re gonna say don’t worry that they’re higher than, you know,  great depression levels.

I mean is that really what we’re comparing it to?  Because it’s very misleading because this data is gonna continue to get  worse and worse and worse.

That’s what the Fed is trying to achieve by higher interest rates.

It’s not this, oh one time event And the banks, you know,  we had the banking crisis, the recent banking crisis, right?  Selling treasuries and couldn’t wait for them to mature and then, you know,  forced SilIcahn Valley who was over-leverage, okay?  The Fed just writes a check and everything’s fine.

This isn’t like someone writes a check and everything’s fine.

This is a different market.

This interest rate’s going higher and that’s okay for the first six months  because the government decided to put the pedal to the Metal and continue to  push out more and more money into this market, which is unexpected, right?  What happened to quantitative ting? Well, let’s just hold up a little bit.

Now we’re go into election year.

What do you think is gonna happen?  You think they’re gonna,  they’re gonna raise rates Now they’re probably gonna try to start lowering ’em  if they can, but they might stop.

We’re, we’re near a top here.

Maybe one more rate hike.

But make no mistake guys, that that’s not a good sign.

We’re gonna be staying at these levels for a long time.

But even when we start lowering,  if you look at the past hiking cycles every time,  that’s not the pause when we started lowering is when the markets really crashed  and they came down.

’cause it’s a signal that you’re lowing him ’cause the economy is not doing  good.

And you’re gonna see that eventually.

That’s what these rates are doing.

You’re gonna see that in housing.

You’re gonna see that across the board.

You’re starting to see those cracks and bull bears back to his cycle high.

You’ll get Berkshire reported operating profit,  which was at a record in the stocking all time high.

But Berkshire and Q two sold 8 billion more stocks than they bought.

This is buffet, right?  Also big champion of buybacks bought back less,  much less of their stock than usual.

Meaning that maybe they think it’s a little, it’s relatively high.

But if you look at their cash,  their cash balance went much higher than expected.

Okay? They sold more than bought.

So not, you know,  if you’re a follower buffet and believer in buffet,  which he should be with his track record,  seems like he’s stockpiling a lot of cash waiting for the right opportunity for  stocks to come down to purchase them.

But he’s not really being aggressive Now.

I don’t blame him.

What valuations are,  look at the yield curve, the two to 10 year yield curve.

Just watch CNBC that mentioned like every five minutes.

Now it’s steepening not good.

When we see it rise to these events and this is,  you know, a rose to these levels, what do we see at the, the banking crisis?  Usually things crack when we start seeing these levels go higher or steepening  loan and credit tightening absolutely surging  you at the S P R for crude lowest level since 1985.

Good for oil stocks, which we have a lot in our portfolio now.

Supposed to start replacing that, remember that.

But are they’re gonna do that at $80 a barrel going into an election year,  right? We have to factor in the election year.

We have to,  ’cause things are gonna be different.

They’re really gonna have the Fed  tightening and raising rates.

So  gonna have to have the economy look better than what it really is doing outside  of jobs.

Outside of wages.

I mean you could point to numerous indicators that show that things are  weakening.

Again, we’re all over the place.

I can give you 10 indicators that show weakening and recession and 10 that show  that you know, we should be raising rates ’cause inflation’s going higher.

But that’s what happens.

We inject trillions and trillions into the market ’cause no one knows what the  hell’s going on.

They pretend we’re 10, we’re going,  the Polish thesis is that the Fed ‘s gonna stop raising rates and stocks are  gonna go higher.

Well they haven’t stopped raising rates and stocks are higher.

But pat yourself on the back if you said that.

’cause you’re right in terms of where stocks are going, your thesis was wrong.

What does that say going forward? I think the mark’s gonna go even higher.

If you really wanna see how dangerous this market is,  look at the equity risk premium which compares a risk-free rate and a potential  return on the S&P 500.

So in short,  this shows how expensive stocks are.

And when you look at this thing,  I mean it’s down to like Z, it’s down to levels showing that the valuations,  that the market is more expensive at any other time than over the past 20 years.

Even more expensive than 2007, 2008 when the credit crisis hit.

So since then,  COVID.

So it’s taking like the risk-free rate of WeQ to earn without even buying stocks  compared to what the s and p value is expected to generate over the next 12  months.

Again, that ES equity risk.

Premium is a big deal.

That’s why I say this is one of the most dangerous markets I’ve ever seen.

Much more dangerous than other times.

’cause other times you just pulled your money out.

Okay COVID,  I’m pulling it out.

No way.

Holy s**t, I’m scared.

Credit crisis.

What the hell’s going on? AIG is involved GE r I’m pulling my money out,  I’m outta here.

Now you get punished for pulling your money out ’cause stocks going higher and  higher and higher.

That’s why it’s dangerous.

And you have to be careful.

It’s not necessarily that the whole market’s gonna come down,  it’s just we are very expensive levels and I’m, I’m struggling internationally.

China data, you see the import export data.

Horrible.

I’m struggling to find catalyst to justify where so many of these stocks are  trading.

On the flip side of that,  I’m also finding lots of ideas that people just hate and they hate it for a long  time.

One of those names are in Curzio Research Advisory we just recommended.

But guys,  stock picking and getting into the right names is essential.

I can’t tell you how many names over the past couple days of reported earnings  that you see down 15, 20% and they’re still expensive.

You look at a market being like, wow,  your portfolio and it looks like it should be doing better with the NASDAQ up so  much.

Are you? You have access to Disney, you have exposure to Disney,  you have exposure to a lot of these names that aren’t doing that well.

All stocks underperform now they’re starting to come back and look great ’cause  oil prices are probably going much, much higher from here.

Most likely.

There’s different areas of the market.

There’s different stocks you need to be in.

Stocks that are growing earnings much faster than the overall market.

Stocks that are growing sales much faster than the overall market.

You’ll find lots of those names you have to dig, but you’ll find them.

Companies have seen that generate tons of free cash flow.

Don’t worry about dividends ’cause you’re seeing this big shift to paying  dividends into buying back stock.

And that’s what you wanna see.

’cause that’s the floor that you’re gonna see that you need to buy these stocks  where if the overall market comes down,  that’s when they’re gonna be buying back their stock.

These management teams.

So if you could find companies, which there’s list of companies,  you’ll see it in cursor Research advisor.

Again, last recommendation,  last few recommendations.

Companies buying back more than five,   Used to have that floor when interest rates was zero for 10 straight years.

Just buy the dip.

Money’s free.

You don’t have that anymore.

So what’s the floor? What’s to stop this? Stop?  What’s to stop Apple from going down 30%, which is insane.

Apple going down 30% is insane,  but yet it’s gonna be trading outta market multiple.

If it does that,  it’s gonna be trading at 20 times earnings.

And you know what?  At 20 times earnings,  it’s still gonna be growing earnings and sales slower than the overall market.

So if you see something like that with Apple where they’re tied to headsets,  and I don’t know if you’ve been listening to calls about headsets, holy s**t.

Micron.

You listen to Skyworks, you’re listen to,  I mean all companies across the board, I mean Apple’s kind of like, you know,  oh this is great and we have, you know, more headsets that,  that are active because you’re giving ’em away for free.

Of course  buy one and we’ll give another one to a family member, right?  This way you could get the services and the cloud and all that stuff on it.

But yeah, you more active phones.

But you know, this is an iPhone company still.

They have lots of services.

It’s not iPads, not anything else.

It’s not AI.

And Microsoft came out in their quarter a couple weeks ago and just said, look,  we’re not gonna see anything really, not the bottom line,  but the top line from AI meaningful for another year plus.

And this is a company that’s spending what tens of billions of dollars of AI,  which is say it to every other software company that’s up 300% based on just  putting AI in your name or mention it on every single call over the past six,   How are they gonna generate that kind of revenue? Those expectations.

The valuations need to be fulfilled.

When you have expensive stock,  it needs to be fulfilled.

You need to see earnings growth,  you need to see sales growth.

You need to see that.

Or eventually your Disney,  eventually your Ford.

You gotta put up the numbers.

You can’t just say what you’re gonna do.

You get away with that,  especially in a bull market in this market.

You don’t,  you gotta put up the numbers eventually.

And a lot of these companies are having difficulty putting up the numbers.

You’ll see earnings go a lot higher because they’re cutting costs,  but sales are not really going higher.

They’re actually declining year over year for S&P 500 companies on average  sales.

Yeah, the Walmart’s doing great.

That makes sense.

And McDonald’s doing great, right? Both of those companies.

Lower price goods,  huge pricing, power, ability to raise prices.

Not all companies can do that anymore,  but stock picking is going to be extremely, extremely important.

Focus on stocks that are cheap relative to the market that are growing faster.

You’ll find a few, especially in small cap land,  but other names,  especially names that have been driving this market higher and Meta and Google  and even Amazon.

I mean, those three companies are much different  in terms of buying them or selling ’em right now.

But if you’re looking at,  at all those companies that want high, they’re, they’re,  they’re different from Tesla where margins are getting crushed.

Microsoft driven on AI saying, hey, it’s not gonna be that big of a benefit.

And also how cloud growth on a percentage is slowing,  which is their core business.

Just amazing to have like six different divisions and every division beat by  just a hair perfectly for Microsoft.

Amazing.

No manipulation of earnings there.

Don’t worry about it.

And Apple, who’s seen a slowdown in  mobile phones and that’s been echoed throughout everywhere.

Look at the exports coming out from, from Taiwan down tremendously.

Is that not the ultimate sign, right? Taiwan SemIcahnductor,  the biggest maker of chips in the,  in all industries and showing you that, hey,  we’re not seeing the growth that everyone’s expected or the economy not doing  that good.

Again, I’m not saying that everything’s full, but I’m,  I’m struggling to find reasons of, hey,  you know what, the market’s going higher and things are great.

That’s what we heard last week, right? We heard that last,  last week and the three weeks before the economy’s turning, we’re great.

We’re fine.

It’s so amazing.

It, it,  it how sentiment changes when stocks go higher and everyone’s happy.

Now you listen.

Everyone’s like, whoa, two,  three straight days of of markets coming down.

Now you’ve seen downgrades from the credit agencies, which, which again,  I agree with Fitch, how don’t you downgrade?  How could you say the US is is still in AAA standing today compared  to where it was two years ago, five years ago, pre COVID whatever.

I mean, you, you can’t say that they’re much worse situation than they are.

Get double A plus is a great rating,  but to be p****d about that or you really think things haven’t changed.

   Gimme a f*****g break  and it busted Fitch’s balls on this, on that call.

You’re kidding me.

Then Moody’s comes out again.

Put a lot of big banks  on watch for credit.

Downgrades a lot of big names there.

It’s Truist Northern Trust.

I think it was.

It was us, ban Corp,  state Street.

A lot of big names.

I mean if you’re putting them on credit watch,  what’s to say for the 4,000 community banks?  How could it be 4,000 community banks? It’s impossible.

That’s like,  that’s like having like 7,000 candy bars to choose from.

I mean eventually it’s chocolate and whatever you throw in there.

One will have peanuts, one will have car.

Eventually you’re just gonna duplicate the s**t, right? I mean,  how could there be that many And with higher interest rates, gimme a break.

You’re gonna see a lot of those names get crushed.

I wanna send on a bear of bad news.

But you,  you have to buckle down and be careful.

Be careful here.

It’s a dangerous market.

You looking at oil looks, looks good.

There’s pockets,  within software that look good.

You,  but not that every market is is, you know, again,  when you look at specific sectors within technology,  is AI the the big growth engine? Yes.

See how Nvidia does,  but you know when with earnings, but  it’s tough to find these massive growth markets within what’s going on because  they’re seeing so many declines across the board now.

Like things are just pulling back.

Even restaurant sector outside of travel and leisure is still very, very strong.

’cause people instead of spending on discretionary items,  they’re going out even more.

Remember we’re still coming off COVID only a couple years people have taken  maybe one, two vacations.

They wanna get out there with their family.

Two years of lockdown.

We realize how important it’s to get out there and talk to people and how much  we’ll lie to about all this b******t.

You need to stay in.

We’re gonna kill somebody.

If you don’t get the vaccine, you are the devil.

You’re killing people.

You are the one that’s killing people and transmitting.

Oh yeah,  you get the vaccine and and you can still transmit COVID.

Oh wait, wait man,  it’s so funny.

The data coming out on COVID.

Holy s**t.

Doesn’t matter though.

Guess nobody caress.

Nobody’s ever gonna get fired in the government, right?  For lying.

Doesn’t happen.

But I think the whole wild card in in this is the election coming up and what’s  the government gonna do?  ’cause if they continue to flood the market with cash one,  we’re gonna see the negative effects of that.

Where inflation’s gonna go higher and continue to go higher.

That means they’re gonna have to continue to raise rates.

Or do they continue?  You know, I don’t know.

I really don’t know.

I I mean what if I’m looking at the election year, what they could possibly do?  They wanna try to keep oil down so they’re not gonna replace the, the,  the S p R.

So oil prices, yeah, they’re gonna try to get lower.

I dunno if they can.

Gasoline prices, by the way are at 10 year highs.

If you take out COVID, just take out COVID ’cause you got this big up and down.

Some companies benefited tremendously and some haven’t and then they came back.

But if you take out that two crazy year period,  two and a half year crazy period of, of, you know,   And even when you’re comparing stocks compare now until like the end of 2019  before COVID.

Those are good comparisons.

But if you look at gasoline prices and you take out just that part with COVID  that, you know, spikes and, and first it went down that it spiked,  but we’re at 10 year highs,  it’s gonna hurt people gonna hurt consumers like they could afford that along  with student loan debt that they’re gonna have to start paying again.

Is it 43 million Americans? 400,000 a month on average.

They took surveys of these people and what they’re cutting back on and,  and how many say they can’t pay that right now based on that demographic  of the age.

There’s a lot of risk out there guys for a market where some of these stocks are  trading at all time highs.

But Berkshire deserves it.

Walmart deserves it.

Does Apple deserve it? Really? Does Microsoft deserve it here?  ’cause they’re saying AI, AI, AI.

Tesla deserve it.

The crazy multiple.

Again,  you have to eventually put up the numbers and when you’re not and now you’re  having this cycle change, we’re gonna see slower economic growth,  which the Fed is intent on doing.

But again, the wild card is,  is how much which the government controls the Fed,  the president controls the Fed and they hire the Fed.

So, you know, again,  direct link and it’s always been a direct link,  but much more over the past couple presidencies.

How’s the Fed  gonna react going into an election year?  And you see what they’re doing right now, right in,  in terms of doing everything.

They can’t know why they don’t want Donald Trump to run.

I mean their numbers are great in terms of head to head with Biden,  but yet head to head with Biden with any other candidate they lose,  you’d think they’d want Trump to run instead of  just going after him on so many b******t charges.

More and more and more and more of this, right?  That’s what we’re seeing politics in Washington.

So it is a wild card going into next year,  but just know it’s a very dangerous market.

You need protection.

You can buy long dated puts.

We’ve done it through a Moneyflow Trader .

I’ve pushed the crap outta that because of moments like this.

Just be careful when you saw this earning season, especially past couple days,  a lot of these names on average the first time what we’ve seen this earning  season, right, with the b******t number of how many,  the percentage of companies that beat earnings estimates, right?  It’s a b******t number ’cause they revised significantly lower and it’s easy to  beat.

But this is the first quarter we’ve seen probably in about six,  seven quarters where the average,  usually where they beat expectations is around 70, 73%, right?  For the S&P 500 companies, 73% of ’em usually beat analyst estimates.

Now we’re 80%, but this is the first time we’ve been over 73%.

Where even though that many companies are beating the earnings and sales  estimates,  the average company is going lower after they report,  which is saying that a lot of this is factored in and the gig is up.

We know that earnings year over year down sales are down year over year.

Again,  company like AMD, Hey, we beat earnings in sales estimates,  but yet should your stock be trading that much higher considering earnings?  I mean, lemme take a look at this.

Curious to see AMD right now.

Gimme a second here guys.

So look at AMD I wanna see where it’s trading because  usually it should be a function of sales growth and earnings growth.

Usually it’s a function of that.

So let’s see,  this is a stock that’s trading at one 13.

It was 54.

It’s low.

So it’s trading,  you know, against trading off it’s highs.

A little bit of one 30.

I wanna see where it’s traded.

So it’s trading at 38 PE.

So based on the 38 PE for a company that is part of that 80 cents.

  They beat the analyst estimates this company should be growing sales  by at least 10% and earnings by at least 15% annually.

And earnings declined almost 50% year over year.

Sales declined more than 20% year over year.

That’s how crazy this market is right now.

So be very, very,  very careful.

Especially companies that are heavily debted.

They better be growing.

Rivian has a lot of debt, but they’re growing like weed.

That’s fine.

Other companies and other company almost recommended,  just has massive debt where their payments have gone up like $10 million simply  because interest rates have gone higher.

You have to be careful.

They have a lot of debt.

Companies are sitting on a lot of debt.

It’s gonna be tough for them.

It’s gonna be tough for the restructure at restructure that debt.

They’ll be able to restructure it, but not at great, great rates.

We’ll see.

It’s not as easy to raise money in this market.

Can you turn that faucet off? It’s a different market,  so be careful out there.

It is a very, very dangerous, dangerous market.

But it’s also a market.

If you’re smart, you can make a lot of money in.

You just have to know what companies invest in.

The key,  which has not been the key for a while and is boring as s**t,  is having good balance sheets where companies hopefully in not increasing their  dividend because dividends are used to entice investors to come in.

You don’t need to do that when you get a 5% risk-free.

In other words, Verizon,  whatever yield it is, five, 6%.

I mean, you used to buy it and say,  okay, at least I’m getting five, 6%.

Hopefully the stock could, could do.

Okay,  I don’t need that five, 6%.

I can get that risk free.

So I’m buying Verizon based on Verizon and what they’re doing in the future.

You’re buying the stock now.

So instead of using that money to increase your dividend,  which you’re competing against something that is risk free,  which is a higher rate,  start buying back your stock and you’re seeing that trend,  SB 500 companies for the first time you’re seeing it’s called the the,  you know that dividend yield or buyback yield.

The buyback yield is much higher now.

Companies are using that money as a portion,  more than 50% to buyback their stock  and spending less on increasing their dividends, which is a good thing.

Focus on that.

’cause good balance sheets thrive in these types of markets.

’cause when the s**t hits the fan, all average companies go down.

Even ’em have good businesses.

You have the companies that are gonna pick up the pieces and those become the  industry leaders.

We’ve seen it dating back a hundred years,  but more recently, look at 2000.

Look at the credit crisis, the survivors drew that.

And a credit crisis might be a bad,  bad example ’cause every bank should have went outta business outside,  maybe JPMorgan.

But the government bailed them out and said, okay,  everyone’s cool.

GM’s okay, AIG’s fine.

But the tech bubble,  you didn’t really have the government injecting trillions of dollars.

So you saw a lot of really good companies just leveraged themselves.

And when the s**t hit the fan and NASDAQ declined tremendously over a three  year period in 2000, 2003, a lot of companies went outta business.

And who were the survivors? Amazon, Microsoft, holy cow.

Look at ’em today getting a bunch of those.

I see.

And you know, good 15,   And that’s where you wanna be in this market going forward.

The company’s with the best balance sheets and also make sure that they’re  growing sales and earnings.

You have to, especially these valuations.

So be very, very, very careful in this market.

It’s crazy times.

And again,  if I’m wrong, it might not matter,  especially if I don’t make it through my surgery.

But I’m not nervous at all.

I’m happy with my doctor’s different doctor in performed it last time.

Uh,  but you know, all should be okay.

And hopefully I’ll be back on my feet pretty soon, pretty shortly,  a couple days.

I’ll let you guys know.

Let let you know everything’s okay and send out a couple emails.

If you wanna send me personal checks.

You could wire money directly right To me.

You know, I’m always accepting gifts.

I’m kidding.

Don’t send me a dime.

Joking.

I’m joking.

Okay.

In case the SEC’s listening.

The wonderful SEC that that, yeah,  that doesn’t do anything anymore, right? Especially within crypto.

We’ll see about that.

But questions, comments, sure.

Send ’em to me and to daniel@curzioresearch.com.

Daniel@curzioresearch.com.

Daniel will be taking over Wall Street Unplugged Premium and also, Frankly Speaking, so you have a lot of fun with that,  which should be pretty cool.

But again, questions, comments,  feel free to email me.

Thanks so much.

Have a wonderful few days and I’ll put back to you guys soon.

Okay, take care.

Announcer: Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its host and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money, and your responsibility.

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