Frank Curzio 00:00

How’s it going out there— it’s Wednesday, September 9! This is the Wall Street Unplugged podcast where I break down the headlines and say what’s really moving these markets. Mr. Daniel Creech, how’s it going? How was the long weekend?

Daniel Creech 00:18

Good. Good long weekend. Another day in paradise.

Frank Curzio 00:21

Yeah, it was awesome. I had a good time too. It was fun, relaxing. Now it’s back to work, and September is usually the worst month for stocks, and everybody’s back, and it’s kind of a slow month, and no one’s really working. They’re kind of working. School everywhere is back, even though school in Florida— I think it starts like mid-August, which is kind of— I have no idea the reasoning. I have no idea. It’s so hot then too. There’s just no reason why they start that early. But anyway, Northeast is a lot later. All the kids back to school, so parents are happy. And now we go to the markets, which is kind of like this dead period, right? It seems like there’s nothing. I mean, earnings season just ended. Yes, we have a Fed meeting next week. We have the PPI, CPI, and stuff, which is normal, but not a lot of news on stocks. But a lot going on with the markets because they continue to push lower. But before we get to that, one of the things that’s pushed lower is the valuation of LIV. Big story.

Frank Curzio 01:10

We always go over one story that’s non-stock-related, right at the start of the show, and they filed for bankruptcy. And there’s a lot of guys they owe money to, in terms of ROM, Deschamps, millions and millions of dollars they owe money to. What’s your thoughts? LIV over PGA. Are we finally going to have a pretty cool tour where all these guys get back together, we see the best guys golfing again?

Daniel Creech 01:33

No. Well, you already see the best guys on the PGA, but no, I don’t think they’re going to be a welcome back. This is a bummer because there’s not a lot of details on there. I don’t— I don’t know how much of these huge paydays that these guys were promised are still owed. Maybe it’s out there. I just haven’t seen it. I don’t mean I— I’ve seen all the info. But there’s not a whole lot here other than the bankruptcy, which I don’t understand how it’s shocking that if your largest investor pulls out, you’re going to have financial trouble. I— yeah, it’s kind of a bummer that I don’t know— that we don’t have more info, or at least I haven’t seen the info on what players are owed and such. But no, I don’t— I don’t think the PGA asks or welcomes these guys back easily at all.

Frank Curzio 02:15

Yeah. I mean, bankruptcy laws are also always great. I’m not too sure if they’re filed in the U.S. here or wherever, but yeah, it’s kind of like, “Hey, we’re not going to pay anyone that we owe.” “We owe you $500 million? Okay, we’ll give you $50 million.” “No, okay, we won’t give you anything then.”

Daniel Creech 02:27

Is that what they’re offering, or are they just offering mobile?

Frank Curzio 02:29

No, they don’t ever— yeah, I mean, it’s—

Daniel Creech 02:30

I haven’t seen a whole lot of info.

Frank Curzio 02:31

You restructure bankruptcy— you restructure with everyone, right? I mean, equity gets nothing, which I’m sure these guys signed deals and they probably didn’t understand the— you know, maybe they have great lawyers. They should have great lawyers. But, you know, a lot of—

Daniel Creech 02:43

I bet they do.

Frank Curzio 02:44

Yeah, but just— it’s different because this is different deals, right? You’re not paying golfers $100 million. It’s different contracts. It’s— you’re not going to see Nike worry about filing for bankruptcy, right, in some of these big contracts. So, you know, I’m curious to see what was in those contracts. And yeah, a lot of these guys won’t get paid. But the LIV, I think, was a great thing to have at the PGA Tour because the PGA Tour is, you know, these guys that were running it were pieces of garbage, in my opinion. Not my opinion. I think it’s everyone’s opinion. Just, you know, Phil Mickelson was right. I mean, the payouts, the amount of money— they were paying out lower percentages compared to any other pro sports. In any other pro sports, you could never start a competing league. There’s no way you could start something to compete against the NFL, compete against NHL, compete against these guys. They’re just too big. They did it in golf because the payouts weren’t as great. And they raised the payouts. The payouts are much, much more. The players are making much, much more money.

Frank Curzio 03:30

So when I hear, like, you know, some of these players come out and say, “I don’t know if I want to forgive these guys.” You know what? F you. You know? You don’t want to forgive these guys. These guys took money. You guys are more concerned about— everybody, you know, money drives everything. But, you know, the LIV Tour created a better environment for all the players where they’re making much, much more money, more payouts than they’ve ever seen in their lives because of LIV. And now to get these players back and to say, “Oh, well, you know, you disrespected us, they disrespected us,” the PGA disrespected every single player on your tour, right? They should be taking these players back. Enough’s enough. But the PGA and the players and saying, “Oh, well, you know, you owe us this or you owe us that to come back,” to me, it’s— what a— what an effing joke. I mean, you know, if you did the right thing and paid your players the right amount of money— which you don’t see because the top 10 players all have endorsements everywhere and making, you know, tens of millions, if not hundreds of millions of dollars— but when you get down past the top 20 and you go down to 30, 40, 50, and these people, and, you know, now you really see how much, you know, some of these guys aren’t even in— can’t even make, you know, the professional tour or stay on the professional tour long term, right?

Frank Curzio 04:32

So, I don’t know. Not surprising they filed for bankruptcy. I think it changed the landscape at PGA. I think the tour is much, much better because of it. Everything’s better. They’re going to get better players there. But, you know, I just hate the fact that they’re going after some of these players and saying, “Oh, if you join LIV, you got to come back crawling on your knees and beg to be here.” Just shut up. Just take them back and shut up. You know, you caused this whole thing. And yeah, the PGA Tour, just got to hate those guys running that shit. I mean, a little bit better management now, but the other assholes I don’t like, so. It’s true. I don’t know. I just don’t like it. Anyway. So, I want to move on here because we do have a lot going on with the markets where we’re seeing them go down. It shouldn’t be a surprise to you. We said that, you know, I’m worried about the markets. We had a live event last week. I think we’re going to go a lot lower here. There’s nothing to stop the long, right, long-dated bonds going high, 10-years going higher.

Frank Curzio 05:18

That impacts everything when it comes to corporate lending, housing, all these markets, auto loans, student loans, and it’s going higher and higher. And we have a government that can’t control it, even though they’re trying to. We have the Fed that can’t control it, even though they’re trying to. And, you know, right now, what are we seeing? Well, the oil markets are up tremendously. WTI is— where is it now? $95, $96. You know, that’s up close to 25%. $96 in the past month. We’re not talking about a stock. We’re talking about the largest, most important commodity in the world that impacts every person, every company up 25% in a month on a war that we all know with Iran is not going away anytime soon. And we could see oil prices fluctuate based on news and go down to 80 and then below 70 and then go back. But we’re really at the high end here when nobody really had above 95 coming this quick or anytime soon. What does this mean to the markets? Because we’re seeing a lot of things tail off.

Frank Curzio 06:20

We’re seeing inflation look like it’s going to go higher across the board now. And they don’t have control of oil prices. It is interesting. It’s impacting the markets right now.

Daniel Creech 06:28

Yeah, absolutely. The— I’m actually surprised that the market isn’t selling off a lot harder given the escalation between the U.S. and Iran. You know, if you look at an oil chart here, we’re revisiting the big 100 mark. That’s obviously a psychological level. We’re still below the 105, 110-ish that we hit. So keep your eye on that. I wouldn’t be going out and getting crazy on oil prices here. Why? Because politics play. We’re getting towards the election. Today is a huge day for a number of events. One is the GOP is kicking off a midterm election rally event, whatever, in Dallas, I believe. We’re a headline away from pushing oil prices down 10% again or another silly truce or deal or whatever on that. So taking that hand in hand, I am impressed that the markets aren’t selling off a lot heavier. Obviously, the oil in, you know, price is going to impact everything, and we get inflation data later this week. But I’ll tell you, I— call me crazy, man. I’m surprised that markets are taking this as easy as they are.

Frank Curzio 07:28

Well, they’re taking it easy for right now. We’re doing this at 11:00 a.m. East Coast time. And the reason why the markets aren’t pulling back tremendously is we’re looking at— Treasury Secretary is going to come out, and they just announced it right now as we’re talking. How much was it supposed to be? $4 billion? They announced $6 billion, right? So they didn’t know because, you know, Treasury Secretary went a little nuts and said, “Hey, you know what? Don’t bet against me. Don’t fight against me. I’m the House,” right? That’s who he was saying in a meeting yesterday. So it’s $6 billion now that they just came out with. This is up from $2 billion that they originally proposed of buying the treasuries. And, you know, when you’re looking at having to buy the treasuries— and we’ll get to that in a minute because I want— that’s one thing. But I want to just talk about oil prices in general, right? As a retail investor, if you listen to this, you know, what does it mean? And how do you position against this? Have you noticed the market just turned around because it’s higher than expected, right? Joe, is the markets right now?

Frank Curzio 08:14

Is it higher or no? Did they turn around? No, they’re still down. Okay. So yeah, they’re starting to— they’re starting to pull back a little bit. They’re down about $3.50 now. So, when you’re looking at oil and you’re saying, “Okay, the obvious things, you know, okay, oil price is going to hurt retail investors,” not necessarily, right? We’ve seen oil prices go to these levels, and it doesn’t hurt stocks. But let’s talk about it from a political point of view. Republicans are toast for the midterms. Okay? They’re done. The chancellor’s straight opening up— the straight opener’s returning to normal before the election. His own polly market is 16%, right, before the election. It’s not going to happen, right? So Republican stats right now, the Senate, and these odds were much better. They have— what is it? Is it 53%, Joe, last I looked? So it’s 53— 53% chance that they hold onto the Senate and 16% chance now with the House. So the House is done. So we’re going to have a split government. But even the Senate, I think that they’re going to lose because— and that’s why they’re holding these rallies and stuff like that.

Frank Curzio 09:10

It’s just, you know, so when you’re looking at, you know, what’s going to happen in terms of polly, I think, you know, Republicans just shot themselves in the foot with this. So it’s not just going to Iran. I think every single, you know, administration said the same thing. “Iran’s the biggest threat. We’re going to go to war with them. We got to stop them.” You know, every— Republican and Democrats. It’s the way that I think this administration said, “This is going to be very quick.” They have no defense systems. They have no nothing. And this was supposed to end months ago. And now we see it with oil prices going higher. This is a long-term problem, right? So this is a bad look for Republicans, and that impacts stocks. And we’re going to talk about that. So, more importantly, when you look at the equity markets, the CPI, PPI, the last two months, they showed inflation was moderating. Now we just got a hot unemployment report. So what does that mean? We added much more jobs than expected. If we have a weak number, that’s good, apparently, for the markets.

Frank Curzio 09:57

That’s good for stocks because that means the Fed could hold off raising rates. And raising rates usually slows the economy. But a hot number like the one we got indicates the Fed pretty much has to raise rates. Now, when you look at the CPI, PPI— CPI comes out, I think, on Friday. And are they going to show that inflation is moderating? Absolutely not. So when the CPI— we’re expecting not 2.5%, not 2.7%. Remember, we’re looking at 2%, right? They want to get down to that 2%. Expectations are now up to a 3.4% increase year over year in the CPI. Okay? And they’re going to say, “Oh, they met those estimates.” Who cares if they met them or what? It’s 3.4%. It was supposed to be at 2. That is insane. Core, excluding food and energy, is expected to rise 2.5%. Now, excluding energy out of the core and food, but energy in particular, it always makes me laugh because you look at rising energy costs leads to everyone raising prices, especially with oil, WTI up 25% over the past month.

Frank Curzio 11:00

So we’re looking at airline prices. Airline prices are up 20 to 25% year over year. And for me, I feel like they’re even more, right? I mean, Joe, you and I, we fly back to New York or whatever. You know, it used to be like $2.50, $1.75, $2.50. It’s like $500 if you do it within like a month’s time. I mean, it’s insane. So they’re saying 20, 25%. What I see is much higher than that. Apple’s out right now revealing, you know, their new foldable iPhone. Again, Apple out again with zero innovation and copying its competitors and trying to make the, you know, let everybody else do the innovation and we try to create a better product. Same thing. Their base model for the foldable new phone is $2,000. And that’s for the model which is like buying a black-and-white TV. Okay? It has basically no storage. So the 512 gigabyte is $2,200. And the 1 terabyte, which everyone’s going to need going forward since they’re going to have— finally, hopefully they have AI intelligence to lie about it this time.

Frank Curzio 11:53

But they’re going to have AI intelligence, AI searches, AI agents, video creation, and it eats up massive amounts of storage. That’s going to be, for 1 terabyte, $2,800 for a phone. I remember winning about $1,000, right? And there it is right there. These foldable phones, which they were like, “This is dumb. We’re never going to do this.” And now they’re like, “Holy shit, we need to do something.” So, again, hopefully they can provide Apple intelligence on these. And if they do, you’re going to need a lot more storage. This phone’s going to cost an average of probably $2,200, $2,300. If you’re looking at memory prices, any technology device that requires memory, you know, this is iPads, laptops, PCs, gaming consoles, prices are going up at least 30% across the board in 2027, likely another 30% in 2028. That’s what’s being predicted. So it might be worth buying and hoarding PCs, laptops, gaming consoles, and then you’d probably be able to sell them at 50% premium six months from now. That sounds crazy, but during COVID, you could have bought a used car and even new cars.

Frank Curzio 12:47

I mean, but used cars especially, right? I mean, they went through the absolute roof, right? Because there was no supply. But I think the biggest story here, Dan, I think you touched up on it too when you talk about oil, is it’s diesel prices. So everyone focused on WTI and Brent, which are, in my opinion, not meaningless for customers, but not a big deal. I mean, you’re seeing prices go up, gasoline prices go up. Maybe it’s $50, $100 a month for gas. It’s not going to crush people. Diesel prices are closing in on $6 a gallon. A year ago, they were $3.75. That’s a 60% increase in fuel. Prices, diesel were $5.30 a month ago. So they’re up 15% in the past 30 days. If you’re not familiar with diesel, it’s used to power trucks, freight and delivery, used to power buses, boats and ships, tractors, bulldozers, construction, agriculture. So the price to transport almost every item you see at every store you go to— Walmart, Costco, Target, McDonald’s, Nike, supermarket, fruits and vegetables— any restaurant, retail outlet in the U.S.

Frank Curzio 13:49

is paying 60% more for their shipping costs than a year ago and paying 15% higher than they did just a month ago. What do you think they’re going to do for those prices? So have fun excluding energy and food from the core. Maybe that makes sense. Okay, fine. But when you bring all this together, we’re going to see higher prices across the board. And what we’re going to see is the Fed’s going to have a tough choice, not just to raise rates by 25 basis points. I think they’re going to need to raise them by 50 basis points now. Now that oil’s through the roof and we see this probably staying there long-term, we just saw Bessent come out and say, “Hey, we’re going to do $6 billion just now.” And what happened? The markets are like, “You’re full of shit,” just like he said it last week. Markets turned positive when they first announced that. And then they said, “Wait a minute. Why do we have the government getting involved in purchasing treasuries for? That doesn’t make sense. Why are they doing it in a market that you’re telling us the economy is great and the markets are near all-time highs?” And now they realize why, right?

Frank Curzio 14:43

Because we can’t have that 10-year continue to go higher. It’s going to impact everything from stocks. We have, you know, this underlying trend in oil going higher, and it just doesn’t look good for the markets right now. So I want to get your thoughts because I have a few more things I want to go into, Daniel, but, you know, what are your thoughts on stocks here? Because I don’t see the catalyst that pushes them higher right now, especially Bessent coming out and saying, “Hey, don’t bet against me,” and, you know, triple the amount of purchases in long-dated bonds, and the market just didn’t even blink.

Daniel Creech 15:10

Yeah. Well, I mean, this was already— a lot of this had to be priced in. I mean, Bessent, and I think the, “Hey, I am the market, I’m the House,” he said yesterday when he was speaking at SMU. I think that’s getting taken out of context a little bit. He was literally talking about the yen and the kind of big guys betting against the yen and a single currency. Granted, he said it, so I’m not defending that. But I don’t think— I think the way the media is portraying it is he is saying he’s the House. They’re taking it as every bond, every duration, all that kind of stuff. I think that’s silly. Number two is, again, they have to pull trinkets, levers, and all that kind of stuff. We’re not saying good or bad. We’re just saying every administration doing it. And the people that are out there reporting like this is something new are lazy on top of that. Bessent is not doing anything new. He just simply increased the silly tool that’s already there by the past administration. That’s number two.

Daniel Creech 16:02

Moving ahead, yeah, oil is going to be very difficult again because it just funnels through everything. We’ve been on this. But, man, the market is just— it’s odd how lazy the market is or, you know, with the escalation going up. And I think the hardest part to figure out what is truth here is everybody can basically agree, “Hey, there were 20 million-ish barrels of oil going through,” you know, equivalent, “going through the Strait of Hormuz pre-Iran war.” Now that number is up in the air. And some say, you know, it’s zero, and some, you know, the Trump administration’s saying it’s 10 to 12 to 15. And I honestly don’t know. It has to be somewhere in the middle, just like our inflation readings from the Fed and true inflation that we always talk about. I guess that’s going to be price discovery. So, yeah, there’s going to be a lot of choppiness. There’s just so many reasons why the market could sell off right now. Maybe it will, but the fact that it’s not doing so more violently kind of has my attention, to be honest with you.

Frank Curzio 16:59

Yeah. It’s— when I bring this all together, the Iran war is not going to end anytime soon, right? I mean, we have Iran attacking U.S. ships right now while the U.S. is bombing oil tankers in Iran, right? So you have oil prices.

Daniel Creech 17:10

Just like that. That can’t go on forever. They don’t have an unlimited supply of tankers. So the question is, well, what happens after— let’s say you tank out all the tankers. Maybe there’s 100 just to pull a number out of thin air. Then what? That’s— I mean, you got escalation. That’s the crazy thing. But that ain’t going to last for long because you don’t have that many ships. That’s what’s crazy, man.

Frank Curzio 17:27

I think what’s crazy is the fact that they could have one drone get through and just crash into a ship, and that’s a headline. Or, you know, like I brought up how, you know, with Tesla’s self-driving cars, you have one of them crash, it means that they all suck. The technology’s terrible. It’s a headline, right? It’s tough, right? It’s just autonomous driving. Imagine if, you know, they crash into a kid. That’s it. You need one negative— and it’s not that hard to throw a mine in the water where insurance costs go through the roof. You see the headlines, and the headlines are what drives oil prices, right? And I don’t see that changing anytime soon unless there’s an agreement on the table. So that’s going to lead to what? Higher oil prices. Higher oil prices are going to lead to massive inflation almost across every sector, which we’re seeing with diesel prices and oil prices. Meaning the Fed, when they meet next week, I think that they’re definitely going to raise 25%, 25 basis points.

Frank Curzio 18:19

But, you know, they could and they should be raising by 50 basis points because they should have raised 25 a while ago. But they’re like, “Oh, okay. Let’s just wait. Let’s just wait. Let’s just wait. Let’s just wait.” I mean, there’s a big difference from the Fed meeting last time at the Jackson Hole, which is, what, a month in between each other where, you know, we saw a Fed that was kind of dovish and now hawkish in a month’s time, which you don’t see with the Fed. They’re usually more transparent than that. So, you know, if they don’t raise by 50 basis points, they’re going to risk pushing the 10-year not to 5%, which I said would result in a 10, 20% pullback in equities if you listened to our live event last Thursday. The 10-year can go past 5.25, 5.5 if they don’t take action, any action at all. And if that happens, look out. I mean, that is not even close to the scenario that is being priced into the markets where 5%, I said, is going to be a big deal. As we’re pushing higher, that’s what’s driving stocks, right?

Frank Curzio 19:10

As we see it go higher at the highest level, 5. What is it? 4.83, right? Or 8.5, I mean. 4.85. That’s the highest level that we’ve been over three years. So, and even over the past couple of weeks. So as we’re pushing five, it becomes more of a big headline. As that goes up, we’re seeing the market sell off. What’s going to stop that from going up? Nothing right now. I don’t know. Let me know. Frank@CurzioResearch.com. I have no idea what stops that going up other than we see the Fed actually take strong action and say, “We need to slow this down because inflation’s out of control.” Because inflation’s now going back up. It is going back up. I just took pictures of sneaker prices, regular sneakers, $220. I mean, you’re looking at prices that are absolutely through the roof. It’s insane right now. It’s insane. So now what’s going to make the 10-year go, you know, that yield go lower? You need buying. Well, we’re not getting buying. Well, the government said, “Oh, we’re going to buy even more.” That didn’t work just now, right?

Frank Curzio 20:01

We’re seeing the market kind of like sell off a little bit more. We’re down $3.50 now. We’re down $4.25 on the Dow after this announcement just came out as we’re on the air about 10 minutes ago. We have hedge funds. Are they going to buy treasuries? No. They hold a record $6 trillion in treasuries. They’re maxed out. They can’t buy anymore. Private equity. They usually make a phone call private equity. They can’t buy treasuries right now because they’re fucked, right? They’re all trying to sell trillions in dog shit assets to investors. You know, more on that in a minute, right? That’s why they halted redemptions. You have China, one of the biggest holders of treasuries selling treasuries. Japan, one of the biggest holders selling U.S. treasuries. India, Saudis, Taiwan trimming treasuries. Norway, the biggest sovereign wealth fund in the world is selling treasuries. So what’s going to happen here, right? What stops this from that yield from going higher? The only thing is, is the slowdown in the economy, the Fed really coming out aggressively and saying, “Okay, enough’s enough.” And that’s going to cause the markets to pull back.

Frank Curzio 20:51

And this is our thesis. Now the positives, right? Because it’s not all negative. The positives, usually we see big and huge pullbacks right away, especially since the credit crisis, right? We don’t see these long drawn out like we saw at dot-com, three years of recession, Nasdaq goes down 75%. We usually see these big pullbacks. Even COVID was like a month, right? A 33, 35% pullback in the S&P in a month, and boom, we shot back up. So, you know, maybe we see a 15, 20% correction this time, and they owe 100% of the time when we see these corrections, they turn out to be a buying opportunity 100% of the time. That’s why stocks are near all-time highs, right? So on the way down, equities tied to debt markets are going to get hit hard as rates go higher. You know, housing stocks are going to get hit hard pretty much as well. But I expect Bitcoin. Bitcoin’s up. You know, gold to outperform as well. Copper’s at all-time highs. You know, we have exposure to Copernico, a company that we’re working with.

Frank Curzio 21:43

Ivan Bivic’s company just received his permit on a signature Sombrero project, one of the largest undeveloped copper and gold projects in Peru. Healthcare, I expect to do well into the JP Morgan Healthcare conference in January. This sector has been out of favor for such a long time. This year, doing very, very well. A lot of good news along with negative news. I forgot, what was it? Novartis is down. What are their drugs? I mean, when you go to phase three and your drug fails, the amount of money that goes in there is well over a billion dollars, and that failure is just a nightmare. Your stock’s going to get nailed even for a big company. I think they had three drugs that didn’t pass. But you’re seeing a lot of drugs come in over the last few weeks, month. That’s because leading up to the JP Morgan Healthcare conference, one of the biggest health conferences in the world in January. I think healthcare does very well even though the markets pull back. I still think there’s, you know, you’re going to see money rotate. It has to rotate someplace. But let’s talk about after we do correct, and if I happen to be right on this, if we see rates pull back, inflation moderate, it’s going to be a huge buying opportunity because I see earnings.

Frank Curzio 22:37

That’s one of the big drivers of stocks and keeping them higher where we have—how many people in the standards? 31% year-over-year earnings growth. We’re used to 8 to 10% earnings growth annually historically. So I still think we can get to 15, 20%, which is double the historic average. But those earnings and that growth, and Daniel and I follow this, was probably at 18%, 20%, 22%. This was in the last three months leading up to the 31% increase that’s official now because earnings season’s over. I mean, so it wasn’t that, “Oh, my God, we got a,” you know, this huge—it finished strong. Like it’s like a horse, like beating everybody and keep running it. If the race was longer, it would have won even by more. You saw this acceleration of earnings growth, and a lot of this is AI. So I think that continues, which is good. A government, you have a split government is really good for stocks because nothing can get done on a political spectrum. And we look historically, usually our best markets are when we have a split government because there’s a little interference in the capital markets when politicians who have no clue how to run a business.

Frank Curzio 23:39

That’s a good thing, right? So no bullshit going on. It’s just like business as usual. Usually, the markets do well. Just position accordingly because we are going to get this pullback, I believe. We’re positioned accordingly. We have good stocks in our portfolio that should benefit on the way down. And then we’re probably going to get very, very aggressive depending on timing because I think we’re at the high end of oil here. I don’t know if we can get any worse when we go to 105, 107. But if we do hear another agreement, we’ll probably see them push down to 80, 85. But we need the Fed to take action here. If the Fed does nothing during this meeting, I mean, there’s a good chance that I may come on here and be like, “Listen, you just really need to sell almost everything and go into cash.” Because if they’re not going to do anything, you’re just going to see the 10-year move higher and higher. There’s nothing to stop it. Everyone’s selling treasuries right now. There’s nobody to buy them other than the government. And they just said they’re buying $6 billion down from $2 billion, which was only supposed to be $2 billion.

Frank Curzio 24:27

And again, we’re not seeing a good reaction. We’re not seeing a pullback in the 10-year at all, which is what it’s designed for. I just don’t see rates coming down and rates drive the entire market. That’s what’s driving the market right now. We need rates to come down. The only way we see them is if the Fed takes affirmative action. If they take no action, I think we see at least a 25 basis point hike. If not, be very, very careful because I don’t know the catalyst that could push stocks up right now because everything, earnings growth, you know, decent economy, good jobs number, all that stuff is factored in. I think we can get really hit hard if that 10-year continues to go higher.

Daniel Creech 24:59

So consensus is we get one to two rate hikes this year, 60% chance of a 25 basis point. So you just think they should go 50 basis points right away.

Frank Curzio 25:08

You need a statement here. You got to stop 10-year from going up. You got to stop it. It drives the whole world. It drives the market. It drives everything.

Daniel Creech 25:14

Now let me play devil’s advocate. Why would a 25 or 50 basis point increase stop the 10-year from going up?

Frank Curzio 25:19

Because it signals to the world that the Fed wants to slow down the economy and wants to slow inflation. They need to slow down the economy, right? That’s what it shows. It shows, okay, it’s going to be harder to take out debt, higher interest rate. Again, it takes a while for these things. Usually, like 12 months to filter through. It’s not about that. It’s not about that, though. It’s not about when it happens.

Daniel Creech 25:39

That’s the point.

Frank Curzio 25:40

It’s a statement. It’s a signal to the market saying, “Okay, we’re worried about rates, and we’re going to do everything we can.” Just like Walsh has been saying, our number one goal is to fight inflation. We’re going to fight inflation. This is how you tell the world, “I’m not messing around. I’m not full of shit. I’m not just telling you anything.” Because if they do 25 basis point, it’s projected. It’s 60%. It’s going to be probably 75% by next week when we get the PPI and CPI, maybe 80% because they’re going to show inflation taking higher. You need a statement to show, “Hey, we see this, and we’re concerned about it, and we’re going to do everything we can to bring that down.” Because right, the housing market’s like dead. The housing market was dead six months ago with rates at, what, 6.3, 6.4. And what are they pushing? 6.6, 6.7 mortgage rates. And they’re going higher. Nobody could—there’s just the housing market, from what I hear, real estate agents all over the world, a lot of people emailing.

Frank Curzio 26:28

It’s a tough market. It’s a really, really tough market, right? So you really need that 10-year to come down. And I don’t know how it’s going to come down unless the Fed makes a bold statement because, you know, you’re sending to the market that, you know, nobody wants those treasuries right now other than the government. And that’s not going to be enough right now to push a 10-year lower, so.

Daniel Creech 26:47

Yeah. And that’s the ultimate question. I’m not sure what will push the 10-year lower because, again, I don’t see—even if you hike 50 basis points, that’s not going to destroy demand, in my opinion. It is a signal. I agree. But the whole point is we’re having fun with this is that these are all signals because we live in a Willy Wonka, Wizard of Oz economic deal where we think the current administration, just like the last administration, just like the previous administration, thinks that they can control this Florida thing. And that’s just asinine. That is just absolutely ridiculous to think about. But we have to be whipsawed around on this and act accordingly. And the only reason I don’t think that’s going to do anything is because the ultimate signal would be, in my opinion, that, “Hey, we’re going to hike rates here to show you we’re serious, and then we’re going to continue hiking.” And I don’t see how that’s possible because that is the most politically uphill war, and nobody is going to fall on the knife because nobody cares that much about the overall economy or the average investor or the average guy in the economy, in my opinion.

Daniel Creech 27:44

That’s what I’m trying to contemplate here because I think that that, again, I understand it’s just a signal, but.

Frank Curzio 27:51

You’re saying because of politics, they’re not going to raise rates.

Daniel Creech 27:53

Smoke signals. Oh, I think, well, if I need to see the inflation tomorrow.

Frank Curzio 27:59

They say it comes out even at 3.5.

Daniel Creech 28:01

Then I think they hold. I don’t know how, and listen, this is Walsh’s own problem. I don’t know how you can come out there and pound the table about these task force and these important task force and then make a decision before your task force come in. I think that’s a misplay on him if he does it. If he hikes 25 basis points, then he must put some stock in the fact that that signal is going to be powerful. I could be wrong. I just don’t think that that’s that strong of a signal. And then again, if you don’t follow that up with more rate hikes, I don’t understand how they’re going to take you seriously. And what everybody, and I say everybody with consensus looking at, if you look at Bloomberg or you look at other people, they all have, for whatever reason, inflation falling off a cliff next year. It’s going to trend down. And so now you have this AI productivity kicking in, supposedly, which it’s there in pockets. Don’t get me wrong. I’m not knocking that. But you need that more than ever.

Daniel Creech 28:52

You need this productivity boom to happen. And you also need inflation to go down. Maybe they’re thinking there is some resolve to the Iran war. And as Bessent says, “Hey, we’ll get through this over time.” But again, anytime you can take a bet and not have a deadline, you definitely want to say, “I’m right, Frank. Just wait a little bit longer. We’ll win. Just longer.”

Frank Curzio 29:10

There’s going to be a lot of credibility here because what he said, word for word, I’m quoting, “We must be confident that underlying inflation is moving to our objective. Otherwise, the Fed has more work to do as part of its job mandate and charge.” Because that was the case when we were at 4.5. We’re at 4.8, going to 5. I mean, it’s not like, “Oh, okay, we’re staying at the same level,” and you could bullshit and be like, “Okay, we might do it.” You know, it’s, I don’t know. I mean, you’re right. Maybe it’s more politically charged, you know, and that’s fine.

Daniel Creech 29:36

Oh, I definitely think it is. Yeah.

Frank Curzio 29:38

But I don’t know. So basically, because of politics, they’re not going to raise rates then because politics, they won’t raise rates no matter where the 10-year goes.

Daniel Creech 29:46

No, I didn’t say that. I said I want to see the inflation data this week. If the odds stay above 60%, I think they have to go 25 basis points. Absolutely. I don’t think they necessarily should because, again, we don’t have good information. And I constantly point this out. You know what CPI is right now on true inflation? 2.29. 2.29. Now, that’s still higher than 2, but it’s nowhere near 3.5. And again, I’m not saying that this is right. I’m willing to say that our data that we’re making decisions on is not correct. I don’t know if this is correct.

Frank Curzio 30:17

I don’t think it matters. I just think what they’re looking at.

Daniel Creech 30:19

Well, it does matter because we ought to have price discovery. And what I want to ask you is, when the task force comes back with all their notes and suggestions and all this kind of stuff, how in the world are they not going to be dovish and better for markets versus a hammer to this?

Frank Curzio 30:34

Maybe. Maybe. But I’m just saying, what I say doesn’t matter because it’s like the Fed is not looking at the true inflation number. They don’t care about that. They don’t even know it exists. What they’re looking at is the numbers of the CPI and PPI. Maybe they get that better. But again, as an investor, you know, maybe we see that. As someone who buys goods and has houses and pays bills, there’s no effing way inflation’s 2.2% right now because the last month, the last two months have been insane. Everything I’m paying for is much, much, much more higher. If you get anything, if it’s food, if it’s sneakers, if it’s, you know, booking flights and stuff like that, everything is just like insane right now. It just keeps going higher and higher. And, you know, again, if that 10-year goes higher, that’s what they’re telling the market. You can’t have that 10-year go higher. It’s going to crush the economy. It’s going to crush the markets. So how do you stop the 10-year? Now you finally have that position, which I’ve always said, “Okay, you don’t have to worry about this or that until we see this or that.” You have a position where the Fed’s stuck and the government’s stuck.

Frank Curzio 31:23

They can’t do anything to get the 10-year down, right? You have the government going in there, saying, “I’m going to buy bonds.” You got the Fed going in there going, “Okay, we’re going to raise. We’re going to raise rates.” Well, nothing’s happening, but we’re seeing, you know, look, 4.84 now, right? So we’re seeing it go higher and higher where, okay, now the government’s stuck, okay? Because if you see the 10-year go higher, the market’s going to come down. What are you going to do? If you just sit there, you’re going to see the market crash. It’s going to be even a long crash. But how do you get the 10-year down? 10-year down by having a slower economy, by raising rates, it’s the only way. We see every other country. I mean, they’re starting to raise rates. We’re not. It’s just going to be surprising. I don’t know if there’s any excuse, if it’s politics or whatever. I know the midterm election, all the shit factors in. It’s a lot of fun and craziness. But I don’t know how they don’t raise by definitely by 25 basis points. But I mean, how do you keep it the same at, you know, 4.5, 10-year, and you’re like, “Okay, let’s see what’s happening.” Well, you know, the PPI, CPI are much higher, right?

Frank Curzio 32:14

Those numbers went much higher. They’re going to say they’re in line, but they just moved up incredibly higher over the past couple of weeks because of oil. So, you know, let’s see what happens. But.

Daniel Creech 32:23

One last thing I want to ask you about this because in past speeches, Walsh said something that, and I don’t have the exact one, so I’m paraphrasing, but he essentially said the bond market is doing a little bit of the Fed’s job. And again, I don’t know what’s going on, but this is interesting to me, and I’m thinking about this. If the Fed doesn’t do anything and the bond market keeps going higher, let’s say the 10-year.

Frank Curzio 32:47

The 10-year yield goes higher. Yeah.

Daniel Creech 32:49

That is going to create a slowdown. It’s going to get people to change behaviors. Let’s just say that causes, at some price, market discovery. If markets actually were allowed to work, you would have price discovery that we could argue is higher. And what that exact number is, we don’t know. What’s wild is that Walsh has made comments about the bond market doing the Fed’s job. And if he does stay this more, “Hey, I’m not going to communicate as much, and I’m not going to talk as much,” by definition, those higher yields on the 10-year and government bonds are slowing the economy. They are going to make people make different financial decisions. And I’m a little, I don’t know if worried is the right word, Frank, but I’m curious if Walsh looks at that thinking, “Hey, they’re kind of, the market is kind of doing our job. We don’t really have to play with the Fed funds rate as much because that’s going to,” again, I would like your opinion on this because he said a few things that make me think.

Frank Curzio 33:43

And I agree with that, but he said it when oil prices went 80 and they’re 96.

Daniel Creech 33:47

That’s a good point.

Frank Curzio 33:47

Okay. So it’s not doing its job because oil prices are going higher, which is creating more inflation. However, without oil prices.

Daniel Creech 33:52

You can’t just point to oil without Iran. That is a one-off. It is a reality. But.

Frank Curzio 33:57

I think it was a reality that was going to be a couple of months, though. I don’t think people factored in being a couple of years. I mean, according to Trump, it was weeks. It was supposed to be weeks. We were not supposed to be 96 right now. We’re supposed to be at 65, 70 right now after this timeframe. And we’re talking about, you know, we’re well into this now. And it’s not showing signs of slowing down. It’s actually getting worse, right? So that’s the thing where, yes, higher interest rates will do the job because it’s going to slow down the economy. It’s going to slow down the housing market. But when you see inflation keep going higher because of this, and again, how long it’s kind of, now you’re getting caught in what we saw with Powell. Oh, rates, right? It’s transitory. Why? Because everything we look back historically says it’s transitory because it’s transitory. It’s going to be quick. It’s going to be quick. It’s going to be quick. And he looked like an asshole, and that’s a big stain on his record for the rest of the life, which is one of the worst calls in the history of the markets where we’re like 3%, 4% with 10% inflation, right?

Frank Curzio 34:46

Total about face, right? So now we’re in the same thing. Oh, the bond market is doing its job for them, but we still have inflation going higher. We still have companies raising rates, raising prices. And now, again, with diesel prices, everything else, you think Apple’s going to come out and say, “Oh, memory prices have calmed down. So, you know, our foldable phone’s going to be $1,500 now.” No, they’re going to keep it at 2,000 forever now. That’s the base model. So it is, there’s a lot of things that work here. One thing that I do know is what we see, and which is most important for you to listen to because we’re getting deep in the woods now, is as that 10-year goes higher, it’s still going higher. There’s nothing stopping it from going higher. That 10-year yield, stocks are getting hit. That’s going to continue to happen going forward. You’re going to see companies lower their expectations going in because it’s going to be hard to predict what’s going to happen next quarter and the quarter after when you have interest rates rising and then you have consumers that start pulling back. That’s the big thing.

Frank Curzio 35:32

Once you see 5%, it’s going to be headlined everywhere in the world. You’re going to go to like a comic store and see 5%. You’re going to see it every single place you go to. That’s what it’s going to say. It’s going to say, “5% 10-year, horrible for markets.” And it’s going to create this whole, and that’s what drives the economy. It’s sentiment. You’re going to have this negative sentiment. People are like, “Holy shit. Okay, enough’s enough. I can’t really afford a lot of this stuff. I’m going to stop pulling back.” And that’s what we have to worry about where this could get a lot worse. And that’s where we are right now because I just, I don’t know how to get 10-year lower when the government and the Fed can’t do it and you have nobody out there that’s buying bonds. I have no idea how you do it. That’s what scares me right now. So I just think the risks really, really, really outweigh just all the positives right now. And that’s why you have to be very careful. And that’s what our event was about last week. So let’s move on.

Frank Curzio 36:18

There’s a couple more stories I want to get to. One is, which has only 80 million views on X right now. And this is Jacob Coxen, researcher at Anthropic, said on Tuesday, “He resigned from the company. It’s saying neither Anthropic nor OpenAI is acting responsibly and that people building AI earnestly believe that it could kill us all by the end of the decade.” He also said they’re racing to, or they are racing straight to self-improvement, superintelligence, and gambling with our lives. Do not underestimate the power of this technology. These will soon be superhuman systems that can hack anything, revolutionize any field overnight, and acquire real power and resources. We’ve all witnessed the progress in each of these domains and progress is not slowing. I’m laughing because you have this guy, Evan Hübinger, right? And he’s an alignment science lead at Anthropic. I don’t know what that means, but I think they got him and said, “Hey, you know what, Evan? Could you do me a favor? You’re a big shot at Anthropic.

Frank Curzio 37:15

Could you post something?” And you know what this guy posts? This is his rebuttal. He goes, “Jacob’s right here. We really do earnestly believe AI could kill all humans. I personally think it is 10% within the next decade.” And then he comes on with another post after that, this guy who just goes, and he goes, “You know, the risk from current AI models is low, though.” I’m like, is that the guy Anthropic wants to put out after that statement? But you have a bunch of guys who really believe this. Look, I’m going to be talking about this at my conference in October, our Kersey One conference. If you’re a One member, you haven’t registered, please register. We still have, I think we have two more weeks to offer specials on the rooms and stuff. That’s for credit investors. We have 13 CEOs coming. We’re going to announce the full lineup. Unbelievable. All the companies that we’re investing in the private markets and stuff. I’m really going to do a segment at the opening on AI because, you know, where I see the world in 10 years from now.

Frank Curzio 38:04

And I love that because, you know, two years, three years, I mean, look how much has changed in two, three years. It’s unbelievable. When you look at 10 years and you look at where AI is going and, you know, just, it’s, they could automate almost any single thing that almost any employee does that most of these people do. I mean, think about what AI does to a person like Elon Musk, Jamie Dimon, some of those brilliant people in the world. Now it’s taking their ideas and, you know, putting on steroids at 100X times that they used to produce them, right? And now they just let them go wild. And now you have AI learning off of AI, right? Which is just insane. And the model’s learning off each other. We’re seeing them break into markets right now. When did this start, Dan? Like really AI? It’s when Nvidia reported that quarter one, 2022, 2021, we’re like, “Holy shit.” You know, AI, wow, a lot of people buying, all these companies are buying AI chips and stuff like that. It’s not even that old.

Frank Curzio 38:57

Yes, AI existed before that. I’m talking about mainstream when people are like, “Holy shit, this is real.” Now we’re just scratching the surface where companies are using this, people are using this for different things. You know, schools aren’t ready. Nobody’s really ready for this. And look where we are now. It’s going to get faster and faster and better and better and more agentic AI and robotics and stuff. We’re going to have robots every place. It is pretty scary. I mean, some people have these crazy views. I don’t think they’re as far-fetched as what people say. I don’t know. What do you think?

Daniel Creech 39:21

I think that if the Terminator gets people scared enough to find Jesus, Frank, which we all desperately need, I think that’s a good thing. I think that’s a good idea. And I am the leader in needing that category. Outside of that, I think that this is completely BS and laughable. I can’t believe people take this stuff serious. So I’m probably not the guy to listen to. Frank, let me ask you something here. Are we now, is AI the new technology that we could send off nuclear warheads and destroy the world 10 times over by a press of a button or a computer program? Or has that already been in existence for a long time? That’s already been in existence, correct. Okay. So now we’re worried about bots jumping from my computer to your computer to the Pentagon and hacking everybody and taking over. I think that Anthropic will put out a statement that we have conquered AI. The end of the world is not coming after they partner with Bernie Sanders and they set up a public fund and all this automation and all this, what’s the income phrase I’m looking for when you pay people not to do anything?

Daniel Creech 40:25

Universal basic income. Thank you, Frank. Yeah, I just think, give me a break here. I mean, if you, listen, is AI going to be amazing and all that? Absolutely it is. But I just, hey, color me a dumb redneck. I can’t get on this board, Frank.

Frank Curzio 40:41

You know what scares me? Do you know what cold storage is? So cold storage in a wallet, right? It gives you, if you do that in crypto, you have cold storage and you hold it on this little thing, you know, little device, hardware device, and you take it offline. And in order to break into that, it’s very dangerous to do because they give you like a 20-word password, 20 different words, you know, all these kinds of security. It’s impossible, impossible, impossible to hack. And it’s so impossible and so crazy that a lot of people forget the passwords and they can’t get into it, right? And they lose their Bitcoin, they lose anything. AI is basically, it’s breaking into cold storage and stealing all the money, like instantly, right? So you’re looking, there’s a reason why, you know, you look at CrowdStrike and these cybersecurity companies are going through the roof because this is their biggest fear. When you have an AI system that it could easily break into anything it wants to right now through computers, remember, it’s not a person doing this, which is hard enough.

Frank Curzio 41:37

And you have a bunch of people in India, South Korea, whatever, in China, and, you know, Ukraine, and, you know, a hundred of these kids working on, you know, breaking into whatever and starting stuff. These are computers working a thousand times faster than them per second that are able to break into this stuff. So when I see cold storage and some of these crazy things that are unhackable being hacked right now, there’s a little percent of me that’s worried. Just that’s me. There’s a little percent of me that’s worried. And just with the AI and what’s capable of doing and how far people want to take this, because the further you take it, the more money you’re going to make. And they don’t, you know, you don’t look at the consequences. Nobody does it during bull markets. You don’t look at the consequences. You just like build, build, build, build, build, right? And that’s where we are with AI. And now, you know, you don’t look at, okay, what happens if, you know, AI is learning from AI, which is learning from AI, which is learning from AI systems, and, you know, it’s, and you can’t control it.

Frank Curzio 42:25

It’s, you know, it’s different from back in the day saying all these missiles could be launched and this and that. It’s for me, when I see stuff like this getting broken into pretty easily, and if you want proof, I say this all the time, Daniel, how many of you are getting calls right now? Five a day minimum, I get, of lending source. That’s all AI. They’re taking millions of numbers. This is them hacking every single system. Remember when companies used to get hacked and you’d just be like, “Oh, I’m so sorry. We got hacked.” And, you know, and come out with big statements. No one comes out with statements anymore. All the data that you have online at every single one of these companies is now in the black market. Everybody knows everything that you’ve done, everything you bought from Walmart to JP Morgan to your banking to all kinds of, even Google, if you know it’s cool. It’s like, “You got to switch all your passwords. Google, Google, you got to switch all your passwords,” right? I mean, it should be one of the most secure companies in the world, right? You got to switch your passwords. We’re getting more, even Interactive Brokers sending more updates if you change your password.

Frank Curzio 43:13

You really have to make sure, you know, a lot of phishing and all this stuff. We’ve never seen it on this level where everything that you have on the internet is now breakable and anyone could find it through these AI systems. And that’s pretty freaking crazy right now. So I believe this is this much because of that’s something that we’ve never seen before.

Daniel Creech 43:30

Let me ask another dumb question. Why can this amazing Terminator technology not be used for good?

Frank Curzio 43:37

I think an intention. I think right now, once a business.

Daniel Creech 43:39

If you can build AI to AI to AI to AI to hack, why can’t you build AI to AI and have like a group of 300 and defend your property? What about AI 300, Joe? How about that?

Frank Curzio 43:48

Maybe.

Daniel Creech 43:49

What’s that guy doing?

Frank Curzio 43:49

Terminator, I think it was supposed to be for good, right? Before they took it over.

Daniel Creech 43:53

Bearded guy, Frank. What’s the main guy’s name in 300?

Frank Curzio 43:59

Linus. What is that? Leonidas?

Daniel Creech 44:01

Leonidas, yeah. Joe, smart guy.

Frank Curzio 44:04

Joe, you can’t choose your name.

Daniel Creech 44:05

He chose his real name out there. Like I’m going to know the real name. I mean, Joe, gosh, that’s brilliant. Oh, I’d be like, “Oh yeah, Daniel Krieg.” Who the hell was that? Who cares? Leonidas, thank you. That’s funny. Anyway, but in a serious question, it’s just like antivirus. Oh man, these antiviruses, they can hack anything. Well, why don’t you use this technology to build an antivirus that protects it? And again, I’m, you can email me, daniel@curzioresearch.com. I’m dumbing this way down. But Frank, I love your argument about when everybody talks about consumer debt or tuition debt or whatever, you can also look at the other side of the balance sheet. And with AI, I get it, it’s easy. And we live in a, you know, clickbait whore world where we got to get attention. We’re in the same business. It’s just, “Oh, this is going to hack everything.” Okay, well, why not use it to build a protector about it? Like, is that that crazy of a question?

Frank Curzio 44:53

No, but I love the, that’s why you’re seeing cybersecurity companies go through the roof right now, those stocks. But I like the fact that we talk about it this way. It’s not like, “Oh, this is 0% chance of this happening.” You know, when you talk about things, then they’re on the table, right? And people could see the risk coming. But, you know, again, I don’t know how much you believe this, but, you know, these are guys deep within AI that know more shit than any one of us in the world. I mean, these are guys within these programs. I mean, the guys at Anthropic, the guys at OpenAI, the guys at Amazon right now, they’re working on AI systems. I mean, they know shit that nobody knows, right? Which is pretty crazy. And this technology is moving.

Daniel Creech 45:24

They are the house.

Frank Curzio 45:25

Not only is technology moving as fast as it is, right? It’s moving as fast as it is, but it’s getting funded by hundreds of billions of dollars and now trillions of dollars every freaking year, right? So, you know, it’s being forced to get better and better. So it’ll be interesting to see how this plays out, but it’s not all positive. I can’t see it all being positive. So.

Daniel Creech 45:44

Just remember, people, if the world ends, it doesn’t matter anyway. There are some safeguards.

Frank Curzio 45:47

It doesn’t matter. Yeah. If the world ends, it ends.

Daniel Creech 45:49

But it’s not going to.

Frank Curzio 45:50

You have nothing else to worry about.

Daniel Creech 45:51

We’re not that lucky, Frank.

Frank Curzio 45:53

There’s nothing. I think so many people would be upset because there’d be nothing to worry about then. No more anxiety. The world ended. There you go.

Daniel Creech 45:59

We would find something else.

Frank Curzio 46:00

Let’s get to the last story here. This is Rob Hood, CEO on CNBC, talking about tokenization. You guys know I’m very big into tokenization. You know, I’ve been involved in tokenization for like six, seven years. People had no idea in the first three years I was doing this. I believe in this so much. I tokenized my own company, Curzio Research. So I put my money where my mouth is. And, you know, I’m a believer in this. But right now, this technology is taking a turn which I don’t agree with. And these large companies are taking it to where, okay, how do we generate the most profits? And for me, it wasn’t generate the most profits. How do we provide something that’s really good for our company? We can raise money from our customers where they get an equity stake in the company and they get to trade this on an alternative platform just like a stock with less regulation where I don’t have to pay $4 million a year to be on the NASDAQ. I thought this was a great idea. I said, “Wow, this is amazing.” However, it’s not a great idea for the alternative trading platforms because they don’t make any money because we’re talking about smaller companies.

Frank Curzio 46:50

So they’re like, “How do we make the most money possible?” And money drives this shit. Now, you know, when I look at tokenization and talk about tokenizing stocks, and to me, whether something becomes a trend or a fad, a trend solves three things. It makes something easier, faster. I put that in the same category for the consumer. It makes it cheaper. And it’s best for both parties. It’s a company and a customer, right? So like Uber, like Airbnb, like AI, like cloud, right? It makes sense to everyone. It’s good services for everyone. It provides cheaper services. And now Airbnb and Uber are going more expensive. And that’s where they’re getting disrupted. But that’s how come they became these monster names and these monster technologies. You know, tokenization, when it comes to tokenizing stocks, I just don’t see the huge benefit here. You know, people say, “Okay, settlement, yes.” But 99% of retail investors have no idea what settlement is. So why would they care? It doesn’t make it easier.

Frank Curzio 47:42

It could make it easier for someone, you know, again, tokens back one to one against a stock. Does it make it easier for anyone in the US? Absolutely not. And that’s much easier to go to your brokerage firm and just buy it, right? What’s the benefit? But it doesn’t make it easier for someone overseas and you don’t have access, right? So you get more access. But I could see that in the case for a small cap or maybe a mid-cap stock that doesn’t trade a lot. But, you know, when you’re looking at the volatility and the liquidity these big companies provide, what benefit is them to them? And what they’re doing here is you’re having a third party. And why do you have a third party? Third party means higher costs, more margins. That’s all a third party. If you go direct-direct, it’s best. But that’s the internet created. Allowed you to go direct-direct to a lot of companies where you had to go to third parties and buy all this stuff at supermarkets. Now, sometimes you go direct and sometimes it’s cheaper. But, you know, for me, when I look at this and I see, you know, is this a benefit?

Frank Curzio 48:31

And, you know, the CEO of Rahman, who was on, you know, talking about, you know, tokenization of individual stocks, it’s hard for me to see the benefit where a lot of these companies aren’t in favor of it, right? Like the Microsoft, meaning if they’re not in favor of it, they can’t do anything about it. But they’re not in favor of it, meaning that they don’t have to give you voting rights as a token holder compared to owning Microsoft directly. And when you’re looking to get paid cash dividends, you’re not going to get paid directly as a holder in your account, but it’s only going to be able to reinvest those dividends into the underlying stock, right? Will they have SIPC, federal insurance protection that brokers have? If you tokenize Microsoft shares, if they’re stolen out of a wallet or account, are you going to have the same protections? Maybe if you’re at Robinhood, maybe, maybe you will. But that has to do with the Clarity Act, which a lot of this is based on a Clarity Act because you’re going to have to have, you know, the right rules and right regulations around it.

Frank Curzio 49:22

I don’t know if this is a necessity or not. I feel like it’s 3D TVs. I mean, remember that trend? Oh my God, 3D TV. I was just like, you’re going to force your friends to come over and wear these glasses and watch an hour, you know, two, three hours moving your house. It just didn’t make sense to me. It makes sense, okay, I’m X3D. Maybe you go to a movie that’s different, but just to do it in your house. Remember, we had all these people making 3D TVs like crazy. I just didn’t get that trend. I don’t know if I get this, this part of tokenization where I get it where it’s the easiest part to break through. It’s going to be great for Robinhood because they make more fees. They’re a third party. I get it. I just don’t know what the benefit is other than you saying, “Hey, someone overseas who, and these guys don’t have access to stocks in the market, to US securities, most liquid market in the world, they could buy it.” But is that enough? Because otherwise, I’m not too sure, like what’s the huge benefit?

Frank Curzio 50:07

What’s the necessity that we need this today? That’s what I’m trying to figure out.

Daniel Creech 50:12

You’re asking me?

Frank Curzio 50:13

Yeah, I’m asking you. Like just, I don’t.

Daniel Creech 50:15

Well, I didn’t know if you were done. I didn’t mean, I didn’t know.

Frank Curzio 50:17

Yeah, no, I’m asking, I’m just saying it, you know, and he was arguing why this, you know, this is important. I just, you know, had trouble figuring that part out. And then I have another part of this too, which I’m going to, you know, skate a shit out.

Daniel Creech 50:27

No, I think you’re right. I mean, I think this comes down to branding. I think you’re correct. And, you know, when most people that have gone down this rabbit hole a little bit, if you think of tokenization, you think of essentially just a fractional ownership. And your example about real estate is very good. Okay. You know, real estate is illiquid, meaning it’s difficult to sell versus a stock that trades from 9:30 to 4:00 on Eastern time zone. So if you could sell off a portion of that, all that, but that is assuming, and I know what happens when you assume, but the general understanding, at least what I think got you excited, Frank, and what got me excited about this is that all the benefits and everything were the same. It was just easier to go to the individual because of this fractional ownership, because of technology and all that kind of stuff. That is totally separate from what they were talking about, Vlad and CNBC on tokenization today, because they’re using the same terminology and you’re not getting any of the benefits.

Daniel Creech 51:20

And so it’s irrelevant. I think this is horrible, but, you know, it is what it is. I mean, I couldn’t agree more. Listen, I don’t know how big of the percentage of people or population is that doesn’t have access to US markets that want to invest in AMC, which is a horrible stock anyway. So, you know, why you’re picking on that one and that CEO is, you know, doing anything to get his stock up so he can probably sell more into the people. You talk about a weasel. He’s near the top, Frank. Adam something is his name. But whatever that percentage is of, you know, what I think they’re doing is trying to take that argument like to Bitcoin. Frank, I think it’s genius to say, “Hey, anybody that has a cell phone can have Bitcoin.” Okay. Well, that’s cool. That’s a huge market. But do those same people want AMC stock? I’m not in that camp. So I think he’s just using a terminology that is exciting and getting people’s attention to expand his business. I don’t blame him for that, but I don’t think this is anywhere near what real tokenization or the idea was when you were thinking about it.

Frank Curzio 52:23

No, no. And, you know, look, I get it. If you want to have small mid-caps, the biggest thing for us, we had no liquidity. And when we were on T0, which were coming off that exchange, we had no liquidity. They weren’t marketing us. They weren’t allowed to market us. And that’s an alternative trading platform, right? I mean, the CEO of Robinhood, one big fan of one of the most innovative companies in finance. I mean, they changed the landscape of brokerage fees, being one of the first exchanges to offer crypto exchanges, right? So there’s alternative trading platforms. They’re an exchange, right? That’s different. It’s two totally different things. Like T0 can never call themselves an exchange. Neither could Securitas do alternative trading platforms. They don’t have the exchange designations. And they provide high money market rates, money market accounts, right? Much higher than banks. I think it’s 3.5 is the average percentage yield for them. And, you know, they want first to do it and interactive brokers does it now because banks and large banks have trillions that they charge, you know, they give you zero, right?

Frank Curzio 53:10

0.1%, you know, and make a fortune off of net interest income. But his big thing that he said was, “Hey, you know, these publicly traded stocks is going to give the world access to it.” And, you know, I get it if it’s for smaller names and even us, that was what was missing. We’re like, “When’s the liquidity going to come? When are more people going to be able to buy this?” And it never really happened because, you know, you need liquidity. I mean, you create more liquidity. It’s the holy grail for any stock, right? You need liquidity to get institutions to buy. Big brokers cover the stock, which leads to massive capital raises, which is why a company goes public in the first place. But I don’t know if that holds water with the large, you know, top thousand companies. They don’t really need the liquidity. They have it already. But another thing I’m going to tell you about, and which I don’t like with this interesting thing it’s going into, is, and you heard it first here, is as a retail investor, if anyone is trying to convince you to buy a private company through tokenization, run as fast as you possibly can in the other direction.

Frank Curzio 54:05

If you can’t short the shit out of the idea, you make a fortune. There’s close to 4 trillion in unsold assets sitting on the balance sheets of private equity companies. And they’re fucked. It’s bad. It’s been going on. I’ve been telling you this story for three years. Thanks to having great people in the industry. One of those guys is going to be speaking at my conference who, you know, who created a company because of this and is buying assets 10 cents on the dollar in Shikafina. And now that company is going to go public next year that my investors are in because he understood that, wow, we’re going to be able to buy a lot of assets that are on the private equity balance sheets because this is the industry that we’re in. And they’re going to basically give them to us because they need dry powder and we’re going to be able to buy 10 cents on a dollar. And now they bought and created this whole structure where they bought a whole bunch of companies. And now, you know, they’re doing very, very well. Their valuation is a lot higher than we first recommended it. So, you know, but there’s 4 trillion unsold assets sitting on their balance sheets.

Frank Curzio 54:52

That amounts to 33,575 aging companies, right? That’s from the New York Times, being marked at much higher valuations that private equity can’t sell right now. And since they can’t put more money into these companies to help them grow, their valuations get lower every passing week. Now, private equity, they’re like, “How do we figure this situation out? We got to figure it out. We’re trying to do everything we can to figure out. We can’t figure out.” So now they’re turning to tokenization. So this opens up a huge runway for alternative trading platforms like Securitas and T0, which is where they’re going, not where we want it to go, where they’re going to start making money selling this garbage. And it’s great for private equity companies, right? Because private equity companies are going to get a lot of this dog shit. Any liquidity, these dead companies help, you know, again, once they get rid of these companies, they have dry powder. They can invest in other companies. Right now, you have this, you know, this bottleneck.

Frank Curzio 55:42

It’s not a bottleneck anymore. So it’s great for the private equity companies. It’s going to be great for alternative trading platforms, but they’re basically like they did with SPACs. They’re going to sell this dog shit to retail investors that you’re going to get annihilated on and that no one’s going to be there. There’s no regulation. No one’s going to come to you and say, “Oh, I’m so sorry.” No, they’re going to annihilate you. I’m trying to prepare you because I tried to prepare you with SPACs and a lot of people didn’t listen. They got fucking annihilated, right? When it comes to tokenization, if someone’s been in this market for six, seven years, be very, very careful. As a retail investor, it’s Wall Street selling you not just dog shit, but the dog shit that stains your carpet and you can’t clean up where you have to throw it out. Like if you have a nice rug, that’s what this is. That’s what this is. That’s what they’re going to sell this to you. So even when I say a company like Securitas, which we originated on that platform, it’s why Morgan Stanley, BlackRock, ARK invested a lot of money.

Frank Curzio 56:29

I think it was Series B, $45 million. Big for the company. BlackRock invested because they were able to launch their tokenized treasury fund on their platform, BUIDL. But with these big investors, even with the big investors, Securitas had to go the SPAC route to go public. Why is that? It’s almost like Coinbase. We believe, we believe in crypto. It’s the greatest thing in the world. And what did you do? You went to the capital markets and did an IPO, right? You didn’t do it on Coinbase. So when I’m looking at that SPAC route and their investors, and I’m talking about their investors in Securitas, the ones who didn’t get shares under a dollar, which was a lot of people that they don’t know about in their pipe investments and stuff like that, or their best long-term clients, they got annihilated. It opened at 12.75 in July. One month later, it fell to under 6. It got a little momentum. It’s now trading at 8 on positive news with the Clarity Act. But you’re looking at maybe they do well because they’re going to have, you know, all these private equity firms try to launch these private companies on their platform and sell them and say, “You can get into private companies now.” These private companies are dog shit.

Frank Curzio 57:32

If they weren’t dog shit, they’d be coming IPO, right? They’d be doing more capital raises at high valuations. This is dog shit they need to unload and they have to unload it because they don’t have a choice because they’re stuck. And they’ve been stuck and it’s getting worse. It’s getting worse because rates are going higher. Okay. A lot of these guys take out massive amounts of leverage to restructure these companies and then grow them and then sell them and, you know, do another IPO on them, right? Take them off the public markets, go private. That’s why they like asset high companies where, you know, their assets, they can leverage as much as they can against, you know, their assets. And now that they’re stuck and they’re looking to get rid of, they’re turning to tokenization. It might be good for Securitas in the short term or T0 because this is what they’re doing and they, you know, they’re going to get fees. They’re going to finally generate money because they haven’t generated money. They’re not going to generate money by having courtesy research trading on their platform with no volume, right?

Frank Curzio 58:21

So this is how they kind of generate money. However, it all is dependent on the retail investor and fooling you and making you look like an asshole to lose all of your freaking money. And they’re not going to care because now they got it off the balance sheet, just like we did the SPACs. We’re in at a dollar, $2. Who cares if it comes out at 10? We could sell the shit at 4 and wreck everyone that bought at 10, 15, $20 when they hyped this shit up. This is what’s going on with tokenization right now, which is a disappointment. And just if anyone, anybody tells you to buy tokenization based on a private company and it’s going to be tokenized, run as fast as you can. You’re automatically, I give you a 99.9% chance you’re going to lose your money. Please prove me wrong on that. You won’t be able to prove me wrong. It’s like going to a Reg C offering. How many Reg C, right? Oh, Reg A offerings we’re talking about. How many Reg A offerings where they raise money without going to institutions and they go through little investors and stuff like that?

Frank Curzio 59:08

How many of those companies have actually made money for you? I bet you you can name one out of every 300, right? There’s certain things that are allowed that the government’s not going to come after them before. This is one of them. So you might see these platforms do well. However, if you’re a real-time investor, man, watch out because you’re going to get annihilated because these companies are stuck. And now you’re looking, that’s why BlackRock, Morgan Stanley invested in Securitas. They’re going to take a lot of the private garbage that they have that they can’t sell as dog shit. They’re going to tokenize it and then create this great story for you. Say, “Oh my God, now you can invest in private companies and this is how we do it.” And you’re going to get annihilated because if they’re really good, they would be IPOing right now and they’re not IPOing because they’re dead companies. They’re valued much higher than they are. They have mark-to-market. They’re not doing that. Just be very, very careful with that part. And it’s disappointing from someone who really believes in tokenization, who thinks it’s a great trend for little investors.

Frank Curzio 59:56

But if you can’t make money off of it, and that’s what happened to a lot of these platforms, they can’t make money off of it, then they’re going to shift to other ways to make money off of it. And that’s where the big institutions get in. And that’s how you’re really destroying an industry. And that’s what you’re going to see here. It’s very sad. Just be very, very careful. I hate the route that all these companies are going with tokenization because that’s not the route that I saw this or I believe in. I think a lot of people are going to get hurt and you’re not going to get your money back. The government’s not going to be there for you because these are the guys that donate the most money to the governments. So politicians. So just be very, very careful when it comes to tokenization and private companies. Tokenizing private companies, be very, very careful. These companies that are on their balance sheets because they’re going to be worth a lot, lot less a couple of years from now. Anyway, I don’t know if you want to follow up on that, but.

Daniel Creech 01:00:40

Nope.

Frank Curzio 01:00:41

So again, you’re looking at private. There’s a reason why they halt the redemptions, guys, right? And they’re worse shaped now than they were over the past three years because the 10-year is going higher and higher, right? It’s at three-year high. So any way that they can get out of this situation, they’ve been trying to look at it for years and years and years is selling off stuff at 10, 20% on the dollar. They don’t want to sell off everything. How do they get the highest valuation? Just like you, if you have a company and you want to sell it, how are you going to get the highest valuation? They look at every single option. Right now, that option that just came on their table is, “Hey, tokenization. We can go through some of these companies and then offer this to retail investors that never had the chance to buy this stuff.” And now it’s almost like semi-public and they’re going to be able to buy it, but they’re doing it where they’re buying dog shit and just be very, very careful. That’s what I’m saying. Anyway, interesting podcast today.

Frank Curzio 01:01:26

Lots of like really good topics, right? Just deep topics that we went into. I’m probably getting lots of questions. Frank@CurzioResearch.com. Daniel, what’s your email again?

Daniel Creech 01:01:35

Daniel@CurzioResearch.com.

Frank Curzio 01:01:36

Also, NFL season starts today. The Seattle Seahawks and the New England Patriots. What do you got today, Daniel?

Daniel Creech 01:01:45

Oh, hell. I don’t care about this game. I don’t know. I don’t even know the line.

Frank Curzio 01:01:48

I don’t care about opening day of NFL football. It’s the biggest day in the world. That’s all anybody cares about.

Daniel Creech 01:01:52

Frank, Frank.

Frank Curzio 01:01:52

So you don’t care about football and you don’t care if the world ends.

Daniel Creech 01:01:54

I didn’t say I didn’t. Well, I’m happy the football season is here. I don’t know anything about it. I don’t even know the line. What is it? Three? Patriots? Patriots to 3.00?

Frank Curzio 01:02:04

I think it’s 3.00 something, right, Joe? But I’m surprised. I think Seattle’s going to murder them, but that’s just me. They do have a couple of.

Daniel Creech 01:02:10

Didn’t they say replay of the Super Bowl?

Frank Curzio 01:02:12

Yeah.

Daniel Creech 01:02:12

Yeah. And that wasn’t close. I don’t know if they.

Frank Curzio 01:02:14

They got AJ Brown.

Daniel Creech 01:02:15

I don’t know if they made any big sales.

Frank Curzio 01:02:16

I’m not their audience. This isn’t my. Listen, they got male cheerleaders on the Patriots, don’t they? That tells you how much I give a flying floor. I think it’s the Patriots. It might be the Eagles, actually.

Daniel Creech 01:02:26

Listen, male cheerleaders are fine if you’re the guy who’s throwing up the petite girls doing flips and that’s cool stuff. Other than that, horrible.

Frank Curzio 01:02:32

We better end before we get into trouble here. Joe, where’s this guy?

Daniel Creech 01:02:36

3.00.

Frank Curzio 01:02:37

Where’s the broadcast on? Is this Prime? Do you watch it on regular TV or no? I think it might be on one of the streaming platforms now. And then they’re going to have Tuesday football. It’s crazy. They try to do it every single day, which is crazy. Anyway, NFL season’s here. Fantasy football, fun. I’m into fantasy football leagues. A lot of fun. So we’re going to be talking about football a lot too, but enjoy the game. Enjoy everything. And we will definitely see you tomorrow. Sending you Q&As, guys. That’s what Thursday’s podcast is about. Sending you Q&As. Go to askcurzioresearch.com and we’ll answer a lot of your questions on stocks, the economy, the markets. Getting lots of questions these days, especially the market coming down. So yeah, that’s on Thursday and we’ll see you tomorrow. Take care.

Announcer 1:03:16

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.