Frank Curzio 00:01

How’s it going out there? It’s Wednesday, September 30. 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. So, quick note: tomorrow we’ll be holding our Thursday Wall Street Unplugged Podcast live on our X platform @FrankCurzio. To go and watch it, the title of this event is “How to Save You from Losing 30% of Your Money Over the Next 30 Days,” because the threat of this happening has increased substantially. For many reasons, not just one. The one you know of is the 10-year, which has surged well past 5%, which you want, everyone. It’s not 5%, it’s 5.25%, it looks like it’s going to 5.5%, which nobody had that on the table at all. Saying, “Eh, maybe it hits 5, we’ll see if it hits 5,” and we were saying it’s going to go well past 5, and we’re not pricing that in.

Frank Curzio 01:02

Higher rates means higher interest expenses, which we’re sitting on more debt than ever, global debt as well, in history of the world. It means higher cost to borrow for businesses and consumers, which drives our economy for infrastructure and things like that. Which means higher rates on your credit card for existing debt, higher rates on auto loans, mortgage rates absolutely surging. We’re now at 7.5%, which is insane, and I’ve got to break that down. Why that’s hugely significant and correlated to stocks. Throw in energy prices. Supposed to be temporary, supposed to be a month or two, now we’re going further and further and further, with diesel prices are averaging right now $6.38. It’s $8.40 in California, which is insane. That’s up 140% year over year, up 20% in the past 60 days. A cost that impacts almost every single business. From AI, infrastructure, clothing, restaurants, anything that you see in stores, this is impacting.

Frank Curzio 02:03

And what are they going to do? Are they going to incur these costs, which means they’re going to have to lower earnings, or are they going to pass it on to consumer and can consumer afford them? Because we’re seeing inflation continue to rise, continue to rise, no matter what that PCE inflator, which came out today, no matter what that says, and we’ll explain that in a minute. But you’re looking at costs rising across the board. And we’re being told that, “Hey, you know what, our economy is strong, GDP is strong, look at earnings as super strong.” Those are all lagging indicators. And we’re seeing the indices overall hold up pretty well, at least that’s what it looks like, right? When we’re looking at, you know, NASDAQ off its all-time highs. But that’s right now. In 30 days, you’re going to see something different. And why is that? It’s because in 30 days, and mostly in 2 weeks, but in 30 days we’ll be in the heart of it, is earnings season. It’s Q3 earnings season. I think JP Morgan starts off in about 2 weeks, and then after that we’re going to see many of the companies, the biggest companies in the world, report their earnings.

Frank Curzio 03:08

And the CEOs of those largest 1,500 publicly traded companies, they’re going to, like they always do every quarter, provide forecasts about when they see revenue and earnings, or where they see them going higher over the next few months, when they see these risks impacting their business. Almost all the majors, the big companies, the leaders in all these industries, always go over economic conditions they expect to see through year-end, and I cannot see many CEOs being optimistic given the surge in interest rates and record high diesel prices. And they need to be optimistic because we’re just coming off 30% earnings growth, which is being factored into the market. So if any of these companies happen to lower their growth estimates, we could see stocks go down 20, 30% in a day. We’ve seen it happen. We’re going to highlight examples because you never want to overpromise and underdeliver for a CEO. And that’s what’s going to happen going into this earnings season, with their costs rising substantially pretty much in the past 30 to 60 days, which weren’t factored in when they reported last quarter, which most of them were like, “Hey, earnings are great, the economy’s okay, we’re doing okay.” It’s a lot different.

Frank Curzio 04:17

And that’s what drives the markets. It’s not what happened in the past and, “Hey, our earnings are strong and over the past 3 months we beat estimates,” nobody cares. That doesn’t drive the stock going forward. What’s going to drive the stock is what these CEOs say, and you need to be careful. So when you look at everything in this event, and you guys who don’t know me, maybe listen to this podcast, I’m not a perma bearer of horrible, right? I analyze the market, the economic data all day, and that’s where I let— that dictates where I go with this market. So I don’t call like big crashes or anything like that, but I put my track record when it comes to big calls up against anyone. I include anyone that say, “I predicted the last three crashes in 2022, 2020, and then back to the credit crisis, 2008, 2009.” Those are the same guys I’ve been telling you to avoid the market for the past pretty much 17, 18 years, and we’ve been— probably we’ve seen the biggest increase in the S&P 500 in the generation over that time.

Frank Curzio 05:08

I mean, unbelievable of how far higher we went. And a lot of people say, “Hey, we call these crashes,” but they’ve been calling crashes and telling you to be out of this market forever. I’m not talking about those people. Also, you’re probably seeing your portfolio get hit here, even though we’re hearing that, “Hey, stocks are okay, the NASDAQ just off its highs.” However, if you’re looking at the market, 40% of stocks in the S&P are down 20% plus from their highs. And outside of the biggest companies in the world within AI, a lot of names are getting hit, and that includes a lot of big brand large caps. They’re getting the ass handed to them right now. That’s why you’re seeing, “Well, the market’s doing okay, my portfolio’s not doing great.” So tomorrow on X, at Frank Krizo at 11:00 AM, I’m going to break down exactly why higher rates and higher energy prices are going to crush your portfolio. I’m going to show you what specific stocks you should be worried about heading into earnings season.

Frank Curzio 05:53

Please pay attention to this. Like I said, if you want to see Dick’s Boarding Goods that a quarter ago, 3 months ago, said, “Everything’s great, we’re awesome,” and all the analysts raised their estimates, and then the other quarter said, “Holy shit, we’re going down.” That stock lost 30% of its value in a day. Be very, very careful. I’m going to show you how to avoid some of those pitfalls. Kind of like we saw also with the McDonald’s CEO, where he said before a shareholder meeting last week that things aren’t that good and we don’t know when they’re going to change. I mean, he’s not lying, and you’re probably going to hear those thoughts from other CEOs going forward, but we’re seeing that. We’re seeing that reflect in a lot of these companies. I’m also going to talk about and give you a few alternatives to park your money in to provide great, great returns right now. I’m going to explain in detail how to position yourself to make an absolute— and this is the most important point— what we see with every downturn is we see stocks bounce back tremendously.

Frank Curzio 06:41

And those downturns last in short time periods. Ever since dot-com. Dot-com was this 3-year, 2000, 2003 huge downturn and long recession where COVID was a month, right? A 30% decline in a month. Even the credit crisis was more like 9 months, right? So you see— I’m not saying it’s going to be 9 months, but the pullbacks we see are so drastic through the algorithms that you see these companies bounce back and things change very, very quickly, and the government getting involved or whatever. And you’re going to be prepared to buy a lot of your favorite names down 30, 40%. I’m going to tell you exactly how to position for this. And most importantly, after I go over all this data with you, it’s not going to be long, and tell you why you need to protect yourself, I’m going to take your questions. And probably do so for at least 30, 45 minutes, what we usually do. So you could ask questions by going to askkrizo.com, put your question in there, we’ll try to get as many questions as we can. Again, a good 35, 40-minute period.

Frank Curzio 07:33

I’m not going to spend a lot of time on every question, but it gives you the opportunity to talk to me personally. So we’re going tomorrow live, Wall Street Unplugged Podcast at 11:00 AM on the X platform. It’s titled “How to Save You from Losing 30% of Your Money Over the Next 30 Days.” We broadcast it again on X on my account @FrankKrizo. And if you have any questions, you go to askkrizo.com, which I will answer, again, as many as I possibly can during the broadcast. Be sure to tune in. It’s free, and I promise I’m not going to waste your time. I’m not this person who calls this stuff a lot and say, “Oh, the market’s going to crash,” and don’t worry about— I don’t say it often, but just the risk-reward is not favorable in the markets right now. It’s not going to be that way, at least for the next 3 to 6 months. It could result in huge, huge downturns, so be very, very careful. Okay. With that said, Daniel Kriesh, how’s it going, buddy? How’s everything? I know you enjoyed golf this weekend, that’s for sure.

Daniel Creech 08:21

I did. It was amazing to watch that. I actually played golf for the first time in a year this weekend.

Frank Curzio 08:25

What did you shoot?

Daniel Creech 08:26

I broke 90.

Frank Curzio 08:27

I know you did. Yeah, everyone that doesn’t shoot in a long time.

Daniel Creech 08:29

On 18.

Frank Curzio 08:31

So funny. Whenever anyone says how great their score was and how good they shot, they always remember, like, how they could have shot better.

Daniel Creech 08:38

No, it was fun though. It was beautiful.

Frank Curzio 08:39

It’s in our system.

Daniel Creech 08:39

Finally had a taste of winter coming up here in Florida. North Florida.

Frank Curzio 08:43

And for those of you who don’t know, Daniel is a great golfer, but actually gave it up a little bit. But I don’t know why. Great swing. Hits the ball mile.

Daniel Creech 08:50

Moving on.

Frank Curzio 08:51

Seriously, hits the ball mile, great swing. You got to keep golfing, you got to keep going. I know it’s your back and stuff like that, but man, Daniel’s actually a very, very good golfer, and he knows how to shoot very, very well too. Those are two things I’ll give you that he does very, very well. With that said, let’s get to some of the news today, which is driving the markets. That’s why we’re going to start with the PCE index. This is the Personal Consumption Expenditures Price Index. Forget about that. You’re going to fall asleep if you repeat that. So remember PCE. Just know that this is the number one gauge the Fed looks at to determine inflation, to gauge inflation. More than the CPI and the PPI. And August’s report, which was released this morning, came in lower than forecast. So if you don’t think it’s a big deal, and okay, we’re starting out with this story, you should have saw the markets before this. It would have been the fifth day that they were down in a row. And they were down pretty good.

Frank Curzio 09:39

You know, it was ugly a little bit because rates were going higher, oil prices going a little bit higher here. And all of a sudden this number came out, and we saw a huge reversal where stocks are up across the board as we’re taping this at 11:30. Huge, huge reversal, right? So, and NASDAQ futures, you know, turned around right away. All the futures turned around right away. Now, a few things here. What we got to Daniel in my analysis here, the index was supposed to come in at 3.7%, and it came in at 3.4. So that’s year-over-year inflation. Daniel, should we be cheering an inflation number that is 70% higher than what the Fed wants to see it at, which is 2%?

Daniel Creech 10:18

Yes, we should be. The environment or the context there is, it is trending lower. If you look at short terms, that should be exciting. Rate odd hikes for October went down from roughly 70 to 80% to closer to 50. We’re not out of the woods yet. There’s a lot of things to discuss here, but as the market indicates, and we can talk about some configuration changes, but you listen, the elephant in the room here is oil. Outside of oil, some things are going in the right direction, and that’s a positive.

Frank Curzio 10:49

Eggs? You see Kalamayne? Kalamayne reported and said, “Interesting,” right? You’re thinking, “Oh, costs are going up.” Egg prices have collapsed, which hurt them tremendously, Kalamayne. We are seeing some things that are coming down. Also, you know, we’re looking at this inflation number, which I found interesting, is the forecast by economists was 0.3%. That was the increase in August. That’s the report, right? When they report, they report in September, and they study all the numbers for August. Which I found fascinating, which was a long time ago, 30 days ago. So we’re looking at this number, and they’re expecting a 0.3% increase for the month, which would increase the year-over-year 3.7%, and yet the year-over-year came in at 3.4%. Did you find it interesting that we got that exact increase, 0.3%, that analysts and economists expected, but instead of coming in 3.7% off of that, it came in at 3.4%? Now, why did that happen? Because they forecasted at 0.3% would mean that a yearly increase would be 3.7%.

Frank Curzio 11:54

However, a 0.3% increase for the month, and now they’re saying, “Okay, the yearly is at 3.4%,” and that’s what’s moving the markets right now. And you could say, “Okay, what the hell’s going on?” It’s almost like, you know, you’re forecasting earnings to go up 10%, they go up 10%, which means the yearly estimate should go up 10% too, right? That’s what happened. Well, picture this, and it shouldn’t be surprising because I covered this in the past with CPI. The Bureau of Economic Analysis, who does the analysis behind this, decided to adjust its methodology or the way it computes several components on this index. And it started with this report. So this includes only a few components: legal services, software, computer accessories, and portfolio management. Okay. Now, economists who covered this shit for 20 years have no clue exactly what the new methodology is. None of us do. They just are very vague about it. But they were told it’s likely going to put downward pressure on the inflation measure since they’re backdating this new methodology to 2021.

Frank Curzio 12:56

So everything that they calculate, obviously, it’s going to skew lower, and then they date it back to 2021, which means all this annual—everything that we relied on since 2021 when it comes to this indicator is actually going to be a little bit lower because how they’re calculating these fees, which they think they could do it a better way, which is fine. You want to make sure these indices are great. You want to always make sure you’re having the right information. You want to have access to that information quicker. I have no problem with that. The problem I have is most of this downturn, again, this number came in exactly as expected, and it’s being reported that, “Oh, the year-over-year is much lower,” with cheering 3.4 when it’s supposed to be 3.7 when nothing really changed other than the methodology of how you calculate it. So if the way we calculated this number in the past, let’s just revise it so it appears to everyone around the world that inflation is lower than it really is, which I find funny, and the markets are actually buying this right now.

Frank Curzio 13:47

Does that bother you at all? Do you think that—I mean, for me, when I see this, I told you the CPI, I did a lot of analysis on this. I barely—just nobody wants to do this kind of analysis. I just like doing it. But 30 different times in like 30, 35-year history, the CPI has been revised, revised, revised to the point where that’s why if you’re ever wondering today why does real estate calculate to be such a big part of it where it’s 30%, it’s because we rarely see real estate, especially rentals, move up year-over-year, even during a credit crisis. Before a credit crisis, when home prices spiked 3, 4 years before the credit crisis, we only saw rentals going up slightly, right? So they’re like, “Let’s put this more as a component.” This way, you know, we’re looking at a government reading, which helps anyone in office or any administration where we’re going to see lower inflation figures. And all of a sudden, what do we have during, you know, right after COVID is we saw rentals go up 7, 8% annually, which they usually go up 2%.

Frank Curzio 14:41

We heard the same thing with home prices before the credit crisis, before the credit crisis. So we revise these things to make it look like inflation is slow when it is, but apparently it’s not, and it’s just pretty much a gauge because it came in exactly how the monthly was forecast. And it’s just the yearly is down because of the new way that they calculate this measure, which I find pretty crazy. That’s just me though.

Daniel Creech 15:04

Let’s have a conversation quickly about this because if you ask your average Joe, and I’m an average Joe here, if you’re going to tinker with portfolio management, legal services, and computer software, 2 out of 3 are irrelevant. Portfolio management goes up when your indices go up and the costs go up. So I’m okay with number 1 and number 2, legal services, portfolio management. Computer software, I think that’s where everybody should kind of look because of the demand. And there is some inflation because of the productivity and the massive demand for all these—for everything related to AI, data centers, and all that kind of stuff. If you are upset with—and I’m not trying to take sides here—I think that, listen, I look at this from a macro view. These are all lies and BS, and they have been forever, and Frank’s spot on about CPI and its changes. If you’re upset about this, you need to take a chill pill and a bottle of your favorite adult beverage, Frank, because when the task force come back, you think these 3 are big changes in how they collect and analyze data.

Daniel Creech 16:05

Wait till Warsh’s task force comes back on collecting data. And I’ll leave you with this, Frank. We love to talk about Truflation here and the gap between what Truflation says in real time. And I’m not saying they’re the gospel, but I would take more real time and more data versus looking in the rearview mirror on surveys and estimating, which is a better word for guessing. If you wear a nice suit and tie and you have a horrible job in the government, guessing is called estimating, and economists think they’re brilliant for that. Frank, Truflation PCE 2.64%, which is right. Doesn’t matter. The gap between 2.64 and 3.4 is gigantic, and there’s a lot of room in the middle there. If you’re upset, I’m not trying to convince you on these. I just honestly don’t think legal services and portfolio management matter a flying Florida. I do like the computer software and things. Yes, it did tilt it towards the lower. And as Frank likes to joke about, but it is truth, it doesn’t matter what you think or feel.

Daniel Creech 17:00

It’s what the markets say. And right now, the market is buying it. And, you know, it may last a day, but then enjoy the day.

Frank Curzio 17:08

Yes. And look, with the markets, a lot of it’s sentiment-driven, and people believe, “Hey, inflation is coming down,” even though we’re seeing diesel prices. And again, you got to strip that out, food and energy, which is the core. And I understand because those are usually volatile, but we are in a war that was supposed to end in a month, and it’s not even close to ending. And it’s very difficult to bring oil prices down to the 70s again, diesel prices down tremendously. Again, stuff that’s not going to be fixed right away. You’re looking at different capacity for refining, right? We don’t have the capacity to refine, which is huge, and that’s why you’re seeing a lot of these prices go higher and higher and higher. So we’re realizing this isn’t a short-term problem, just like we realize that inflation isn’t transitory, right, because of certain factors that we looked at in the past. So you can’t tell me that, “Okay, inflation’s coming down for certain things.” That’s fine, but energy relates to everything across the board, and it’s a lot higher than what we thought.

Frank Curzio 18:01

And even if it goes down to 75, 80, we’re still seeing, you know, this number very, very, very high, right? Very, very high compared to not too long ago as we see with the chart up there. I will say this though, the numbers matter. It just doesn’t matter if you beat expectations. I’m going to go into a couple of companies later on that’s kind of funny when I look at the expectations because, you know, those expectations could be lower by 30, 40%. You beat expectations, everyone’s like, “Yay, that’s a great thing.” But the numbers actually matter, just like they matter with Nike. Why I hated Nike for such a long time? Because they legally manipulated their earnings. They would talk about, you know, different—they would use buybacks, you know, just, you know, highlight 3 or 4 different reasons how they were using just legal accounting measures to make sure their earning—and every earnings report early on, this is like 4, 5 years ago, when I said, you know, “Avoid Nike, avoid Nike, avoid Nike,” they would come in like 2, 3 cents above every single time.

Frank Curzio 18:50

I saw this with Salesforce as well. I saw this with Apple. Apple did a good job where their revenue did not grow. They weren’t a growing company. I think it was—don’t quote me—around 2017 to 2020, around there, where revenue wasn’t growing, and they were announcing these monstrous buybacks, which, again, bought them time to figure stuff out, to, you know, realize they have the services division where they have unlimited pricing power and, you know, create whatever technology everybody else creates before them, and then they tend to do it better, right? It’s not a lot of innovation at Apple. But there was a time when you look at these numbers and say, “Hey, they beat estimates.” They beat estimates because they’re buying back their stocks and their earnings. So, you know, after a while, Nike hasn’t innovated. China sales fall off a cliff. They don’t have the money to buy back their stocks, so they can’t really do much anymore. That’s why you’re seeing absolutely annihilated. And same thing with Disney, right? So, you know, yes, you’re going to beat estimates during earnings, but just be careful.

Frank Curzio 19:37

And same thing with economic data. Like, okay, now it appears that this is happening, but we’re still seeing inflation that hasn’t factored through the economy yet where we’re going to see companies either—and this is going to be tomorrow’s about—you got to see companies going into earning season. They either have to raise their prices or low earnings. That’s it. Raise their prices or low earnings. Those are their two choices. And if they raise prices, it’s not a guarantee they’re going to meet their estimates because consumers are really stretched thin where maybe they don’t want to pay $16 for a burrito at Chipotle anymore. And they said, “Hey, remember it was $9, it was $11, it was $12, $13. Enough’s enough. I can almost buy the ingredients myself and cook it at home for half the price.” So it’s getting crazy out there, and going in, there is a limit to how much cost could be raised. And if you would have told anyone, Daniel, anyone a couple of years ago that, oh, we would have, you know, the 10-year well above 5% oil, you know, against 90, whatever today, and it was $100, and we’re going to be near all-time highs a couple of years later, people would have said, “You’re smoking something.

Frank Curzio 20:32

You’re out of your mind. That can never happen,” right? So let’s see what the Fed’s going to do. If they’re going to raise rates, which is going to help lower long-term rates because we’re looking to slow down the economy. But we’re in a market, Daniel, where bad news is good news, and I never liked that. Bad news meaning we need to see, you know, numbers come down. We need to see inflation moderating, and we know, like, you know, good inflation is good for the economy. It’s good overall. Prices go higher. It’s good for asset prices. But we need to slow this down in order to tell the Fed and indicate to the Fed, “Hey, we don’t need to raise, you know, short-term rates incredibly, but we’re in a market where bad news is going to be good news, and good news, like a better unemployment rate, is going to be bad for the markets. We don’t want to see that. We want to see unemployment going higher. This way, you know, maybe less cuts. Maybe we’ll see inflation ease a little bit more on its own.” We’re just not seeing that when you’re looking around.

Frank Curzio 21:24

We’re really not seeing that. And this report has done nothing for me. It doesn’t mean inflation at 3% in August. It’s just, for me, when I’m looking at this number, especially with the new methodology, it doesn’t give me, you know, I’m not getting this feeling like, “Yes, all right, we topped out on inflation and we’re fine.” I just don’t see that. I don’t see the next 3 to 6 months, especially the next 3 to months being good. There’s nothing in this report that suggests it. Like, “Hey, we’re turning the corner right now.” I just don’t see it.

Daniel Creech 21:47

I like that. This is nothing to me. That’s good. Quickly for me, what I think, I liked your quick comments on the upcoming earnings season. You either raise prices or lower guidance. I think that’s very, that’s catchy. I like that. And from a bigger perspective, I’ll offer one here. You know, markets are either going to pull back until Bessent and Warsh and Trump kind of pull levers and push buttons and kind of kick this can down the road, or we’re going to have a significant pullback and it’s the start of a bear market. As Frank said, they’re going to fight the bear market from the Fed standpoint all they can. However, just quickly, that’s why you ought to be a little bit cautious and have some cash on the sidelines because it’s either, “Hey, this short-term pain until the government puts a Band-Aid over this and gets everybody in sentiment and back into bull market,” or it’s the start of a rough period. Recessions aren’t the end of the world, even though the media is going to tell you that constantly.

Daniel Creech 22:43

And the other thing is, expect a recession and get mentally prepared for it because it is a guarantee, people, after every single CapEx boom, going back to the railroads, pick your event, there is a big bear market to follow. That doesn’t mean the end of the world is here. That’s just how things work. And it works that way because we print off of a freaking computer and we have this Willy Wonka and Wizard of Oz situation. And just understand that. And Frank’s right. The pain and the timeline has gotten shorter. Maybe that continues. Odds are it will because people don’t give up power willingly. But just don’t think that this past decade is the new normal or by any ways ways against history when what you’re up against on the individual investor. So there’s a lot of times to be more cautious than others. There’s a lot of times to go to the beach and drink all day and day drinking, Frank, great thing. But now’s not that time. You got to pay attention. It’s not a big deal.

Frank Curzio 23:35

All right, let’s move on from that report and talk about AI, right? Dominating the news still with Trump meant the leaders of large AI companies at the White House to discuss safety. And I’m just so sick of hearing it. I think it’s like 3, 4 weeks in a row, every single story is how the world’s going to end, that everybody writing books about it and all this nonsense. I love the end of the world stuff because at the end of the day, you know, if the end of the world’s going to happen, then, you know, there’s so much like more important stuff you want to worry about. It’s just like, you know, you should get out of stocks if the end of the world is going to happen. You know, you shouldn’t just have stocks. Well, you’re going to, your life, the world ends, right? Nothing matters anymore. So, but it’s just funny when you hear some of this stuff. But they’re all at the White House today and they all wind up.

Daniel Creech 24:19

You have a seating chart, Frank. What do you think about that?

Frank Curzio 24:21

Seating chart.

Daniel Creech 24:22

Can you read some of that?

Frank Curzio 24:24

Some of it. So who’s to the right and to the left? Nvidia and who? Who’s to the right? Elon Musk. That makes sense.

Daniel Creech 24:29

Are to the right and left of.

Frank Curzio 24:30

Who’s the furthest away on the right and the left?

Daniel Creech 24:33

One of the Anthropic, Dario is third. If you’re looking at this chart and you’re going top right, go down three. That’s Dario. He’s sitting in the corner, Frank, because he’s a big crybaby. Trump doesn’t like crybabies about the end of the world.

Frank Curzio 24:44

Anthropic and.

Daniel Creech 24:46

He wants dominating the end of the world, not ending the world. That’s a Trump task.

Frank Curzio 24:49

Yeah.

Daniel Creech 24:49

Look at the coolest CEO down here. Three up from the bottom right. Bill McDermott, blue glasses and all. ServiceNow. Got to get back into that company. Makeups for the losses. But I love the fact that he was there. Then on the other side, you got VP. He’s Catty Corner from POTUS there. He’s sitting next to Speaker Johnson, which is kind of odd. They ought to put somebody next to him too. And Jeff Bezos. What do you think about that? What do you think about Bezos still attending all the.

Frank Curzio 25:13

I mean, he’s friends now, right? I mean, you have to buy New York Times on this other stuff, but he’s kind of moved more to the right, like most of these guys have done because you need to do that for the current administration. They’re doing what’s in the best interest of their company. And, you know, BlackRock as well, we talked about it, and that’s fine. I have no problem about that. I mean, all these guys are going to tell you that DEI is the greatest thing in the world if Newsom gets in next term, and we all go to go back to DEI and stuff and then pay people for not working and capitalism sucks and all that stuff. Hopefully, we don’t go to that because all the companies are going to follow, right? So right now, I get it that he’s there, but listen, it’s Google, Meta, Microsoft, SpaceX, Nvidia, Palantir, Anthropic, OpenAI, AMD, Broadcom, and like you see here, you know, Zucks there, Jensen Huang, Elon Musk, and Della, Bill McDermott, Lisa Su from AMD, Hock Tan from Broadcom. I mean, you know, trillion-dollar companies.

Daniel Creech 25:58

Two things I like here, Frank. If you look just three down from President is that Brad Gerstner, the Altimeter.

Frank Curzio 26:05

Altimeter, yeah.

Daniel Creech 26:06

Hedge fund. And then across the table from POTUS, where is David Sacks? One off, so not directly across. He’s a hedge fund. Obviously, he was part of the Trump administration for a short period of time. But that Brad, how do you say his last name? Gerstner? Whatever. Check his 13Fs. He’s a big tech investor. He’s big into Anthropic and stuff, but he’s worth a follow. And he’s not bad on podcasts. I’ve listened to him a few times. But yeah, you got to love this. You know, it’s a photo op. He did get him to sign the big heads of guys. Did you see any of the Q&A afterward, Frank?

Frank Curzio 26:43

No, I didn’t. I didn’t get a chance to see.

Daniel Creech 26:44

When Google’s guy, Trump asked, “Hey, you want to say something?” And he said, “Oh, well, thanks.” First of all, Trump interrupts him. “Wow, this guy’s a monster. He’s great. Nobody knows about him, but he’s a monster.” And all the other guys are laughing. And tell you what, this is the best gathering of nerds anybody’s seen since Revenge of the Nerds, Frank. I know you like one of those movies.

Frank Curzio 27:00

That’s one of my favorite movies, yeah. Revenge of the Nerds.

Daniel Creech 27:02

Very good.

Frank Curzio 27:02

That was great. That was fantastic. But I mean, what are you representing? I’m guessing here 20 trillion plus in this room of companies and everything.

Daniel Creech 27:09

Yeah, I’m not sure.

Frank Curzio 27:10

And a bunch of leaders. Holy cow. China wants to take the lead here. There it is. I won’t say anything more than that. But anyway, so you know who’s not there though? Sam Altman. Sam Altman.

Daniel Creech 27:20

But he had representatives.

Frank Curzio 27:22

He did. He has a, yep, he has, he said the president’s said. He’s at a San Francisco conference, OpenAI, I think it’s DevDay. And he had the, you know, obviously opening keynote there. But I think his president could have handled that. I’m surprised he’s not here. I think this would be, this Trump’s everything. But there’s a lot of people in this room that really don’t like him either publicly. So maybe that’s it as well. But, you know, all these guys in that room together is pretty impressive. But also, you know, this comes on the heels of Anthropic releasing its S1, which is basically prospectus, which, you know, all companies must publish this before they go public. So once you see the S1, you know, hey, it’s official. Companies go on public. You know, a lot of companies say they go on public when they go on public, like OpenAI. No. Until the S1 gets filed, then you know. And, you know, in the S1, the prospectus, the company outlines its business model, audit financial statements, risk factors, you know, everything you need to know, expenses, how they plan to use the money raised, you know, again, all this stuff.

Frank Curzio 28:17

Daniel, I know you saw some interesting things from the S1. I did as well. I don’t know if you want to cover some of the things you saw first or you want me to go first. You know.

Daniel Creech 28:23

I’ll get my rant out of the way.

Frank Curzio 28:25

Go ahead.

Daniel Creech 28:25

Please. Okay. Number one, I think it’s amazing that everybody got in the room and can talk and disagree because David Sacks and Dario of Anthropic have been, you know, basically polar opposites. Hopefully, they got a chance to act adults. You can be, you can agree to disagree and be disagreeable. You can be kind and all that kind of stuff. I’m not saying to be rude to anybody. And I hope that they had some real frank conversations in that room and just said, “Hey, I disagree about this,” and they had an open topic because that’s the best thing. Now, moving on to this Anthropic, I hope this topic came up as well because, Frank, this drives me absolutely bonkers. And there is no way, I don’t know whether to be extremely disappointed or just try to make everybody laugh this off. There is no greater example of us as a society being at a horrible point in history, in my opinion, where the almighty dollar is damn near the only thing that matters. And I don’t think they take this seriously. And I think this is them shoving it in our face.

Daniel Creech 29:24

I understand the idea of disclosing everything, CYA, cover your, I get all that. And you can put anything in there and there’s, and you just had a great interview with a lawyer and talked about all this. When you put into the S1 filing, and this is a leak, supposedly Reuters is putting this out, maybe they can change this. But when you put in, quote, “a catastrophic or existential risk to humanity,” to go raise billions of dollars at a multi-trillion dollar valuation, this is beyond Florida pathetic. This shows you they do not take anything seriously. And if you think these weasels, and I’m going to be rude here because they are absolute weasels, if you think these weasels absolutely believe this, I agree to disagree and we can have a beer and enjoy that. There is no way they take this seriously and you shouldn’t either. If this is at all true, then the idea that we can just act like this is new technology, which it’s not, and act like we are not liable or responsible for actions of tools that we build, I’m telling you, there is no greater con man or spineless individual than somebody that hides behind all this.

Daniel Creech 30:30

There you go, Frank.

Frank Curzio 30:32

You done?

Daniel Creech 30:34

And oh, by the way, it’s all BS and the world’s not going to end anyway. They just want to get out of liability.

Frank Curzio 30:37

Yeah. And when it comes to risk and stuff, as someone’s been in this industry for a long time, their job is to put, and we’ve done that too, even when we’ve raised money for our company where you.

Daniel Creech 30:46

Is Curzio at risk of existential risk to humanity?

Frank Curzio 30:50

We should have put it in there because according to the lawyers, you put in any possible risk because basically no one’s really going to care. Every single risk, but it covers your ass, right? That’s what they do with these lawyers and that’s fine. And you see that with every healthcare commercial on every product where I think we’re one of two countries in the world that are allowed, that healthcare companies are allowed to promote their products on TV. I think you could look up that stat. And, you know, it’s a minute commercial. The first 15 seconds is, “Hey, you know, Skyrizi is great for this and this.” But, you know, and then, you know, you go into the risk factors and notice, just listen to that or pause it and read the bottom of it is the funniest thing in the world with some of those risk factors. I mean, it’s not funny in terms of what they say, but what, like you could have, you could become addicted to gambling and lose everything you own if you take this pill, which I’m like, “Holy shit, man.

Frank Curzio 31:35

That’s got to be a really freaking powerful pill.”

Daniel Creech 31:37

What if you take two?

Frank Curzio 31:38

Yeah.

Daniel Creech 31:38

You’re going to be a good gambler?

Frank Curzio 31:39

Yeah. Don’t drink, which, you know, every pill is probably amplified when you drink. So yeah, it’s just, but literally, so all these things of you could do this, you could do that, you could do this, you could do that. And as long as it’s written there, and same thing with financial disclosures. I mean, we have financial disclosures in our industry that basically say companies are going to pump and dump stock. And I mean, they say that. They say that if you interpret it. It’s, it’s, “Hey, this is, you know, from competitors and stuff like that in marketing saying we’re getting shares of this stock. We could buy and sell it whenever we want. We don’t deem anything that we’re saying reliable. So make sure you do your own research.” So they’re basically saying everything in this may not be a fact. We’re getting shares. While we got our shares and we’re promoting this, we’re going to sell it into your buying as we’re promoting. Like they actually say this. And you know what? With our wonderful regulation system in our industry is like, “Hey, as long as you disclose it, you’re fine.

Frank Curzio 32:33

As long as you say you’re robbing people fucking blind, it’s perfectly fine. You can do it. It’s not a problem at all. It’s amazing.” It really isn’t. Like disclosure and disclaimers and how you have to say everything. And then they speed it up on like 3X to make sure. And this risk, hey, we did say it. I know nobody heard it because it’s on 3X speed. It doesn’t matter. It’s just a, you say it. That’s all it matters. Just say it. Say every single risk. And that’s what happens in S1. So I agree with you in all that, which is ridiculous, but not surprised of me.

Daniel Creech 33:02

You are SEC Chair Paul Atkins. Okay. Your staff goes through this. I’m assuming this chain of command, you know, they go through this and I don’t know what they do, mark it up or write or have questions and all this kind of stuff. How can you, as the SEC Chair, take this serious and say, “Hey, you know, we understand the disclosures and all this kind of stuff and we’re lazy and we really don’t work that hard and, you know, blah, blah, blah, blah, blah.” However, this whole existential threat to humanity kind of deal, how do you, am I the only one that just saying this out loud makes you seem like the only crazy person? I mean, how in the world can you put that in there and everybody just gloss over it like what you just said and great point on, you know, there’s a lot of silliness that goes on. But, oh, okay. Well, this is such a big threat, but that’s okay because it’s $2 trillion valuation-ish and we want to give it to the bag holder retailers. This is, again, this is shows you what a joke was.

Frank Curzio 33:53

You know what? We’re playing reverse role here because usually I’m the one that’s being, you believe this and you’re like, “Hey, what do you expect?” And I’m like, “What do you expect?” I mean, we basically have, you know.

Daniel Creech 34:02

This is a one-off.

Frank Curzio 34:02

Highlighting how, you know, “Hey, these college students should spend 250 grand on their college.” And, hey, what are you going to college for to become a fifth-grade teacher where you’re going to have to work that off for 27 years and you’re going to be in debt for the rest of your life. You’re never going to buy a house. You’re going to be at risk. I mean, you know, again, it’s all set up. Like for me, I feel like we’re reversed because I’m the one who’s complaining. You’re like, and you’re always like, “What else do you expect?”

Daniel Creech 34:24

We are reversed a little bit. I’m saying this is, to my knowledge, they’re the only guys that disclose this. I mean, this is a one-off.

Frank Curzio 34:30

Every AI company. Every AI company that goes forward is going to disclose this, guaranteed for a fact, 100%. And I’ll tell you something. You know how long this prospectus is? It’s 260 pages. You know how many pages were risk factors?

Daniel Creech 34:43

I heard 80.

Frank Curzio 34:44

80 pages of risk factors. 80 pages of risk factors, which means nobody’s going to read them. Nobody cares. They just got to go through and go over what’s going on. Some of the things you should care about, 2025 revenue was 4.6 billion, which is amazing for a company that’s not that old, a couple years old. But that came with a $42 billion loss. Someone who looks at this, don’t go crazy because it looks like, “Why do you spend 40 billion to generate 4.6 billion in 2025?” But 34 billion of that is mostly, you know, accounting charges due to convertible financing instruments, which is important. So it’s not cash outflows. It means that money’s not going to come out going forward. You know, interest payment, whatever it is. But, you know, that’s mostly tied to that. Last quarter revenue, however, this is 2025. We’re past 2025. Last quarter revenue is 12 billion. So that means they’re generating 4 billion in sales, which is, you know, what they’re generating monthly over the last quarter is what they generate the whole year 2025.

Frank Curzio 35:37

That’s how fast this company’s growing. So that places their run rate at, say, 50 billion. And we’re looking at revenue, which I’m hearing it’s going to go up to 8 billion a month. And the people who cover this company and look at it again, who are close to it, say that the revenue is expected to be over $100 billion over the next 12 months. Think about that from a company of 4.46 billion. Maybe that revenue is whatever, 2026. But if you’re looking for 12 months from today going forward, they have it pegged at up to 120 billion, 100 to 120 billion dollars in revenue from a company that’s 4.6 billion in 2025. It has over 500 billion in infrastructure, compute, cloud obligations. And you can guess every list, you know, look at that map that we pulled up, the top six companies, infrastructure, hyperscalers. So, you know, 500 billion is committed to help, to building a lot of this stuff. It aims to go public, forget 1 trillion, just blew past that, right? They raised, it was May’s valuation came in at pretty close to a trillion.

Frank Curzio 36:41

This could come out as a $2 trillion company, a $2 trillion company. And 100 billion in revenue, which is crazy. Risk disclosures you talked about where AI models could resist, shut down, conceal, or manipulate information, exhibit behavior resembling blackmail. Again, this is some of the risks outside of your world and the whole, you know, everything’s going to end. One thing I did note, the founder, and I always look at this, which is expected, but the founders, I think there’s three of them, have a 50.1% voting power. So if you become a shareholder of this company and get anything in the mail to vote, throw in the garbage, it’s meaningless. It means nothing. You don’t have any voting power at all. If they’re building something, and again, there’s no checks, all these companies left the White House saying, “Okay, we’re going to self-police. We’re going to self-police.” What could happen? What could happen? If you self-police your own company.

Daniel Creech 37:32

I’m with you on that.

Frank Curzio 37:33

There’s no laws. Just make sure you’re doing the right thing. Okay. Okay. That’s going to happen with these guys, the amount of money they’re spending. But if it so happens that the end of the world is upon us and it’s all based on Anthropic and everything’s horrible and we’re like saying, “You have to stop,” but we can’t vote them to stop unless, you know, I guess the government could probably shut them down if they wanted to, but then they might control all the government entities and tell them not to shut it down. Who knows with an AI.

Daniel Creech 37:57

Doing Dario, put the end of the world up to a board vote. You vote against it? I don’t vote against it in the world. Overruled, I own 51%.

Frank Curzio 38:04

Oh, 51%. We’re going to keep going. We’re going to keep going. Yep. It’s only a couple areas of the world that are not going to exist. We’re going to be fine. So we’re going to keep going. But I will say this, which I thought was pretty cool, is the co-founders, they pledged 80%, 80% of the equity in this company is going to be pledged to charity.

Daniel Creech 38:20

Oh gosh.

Frank Curzio 38:21

Which I don’t know.

Daniel Creech 38:22

Give me a break.

Frank Curzio 38:23

What that means or when that happens or if, when they die or whatever, I have no idea what that means because maybe, you know, if the company gets, I have no idea what that means.

Daniel Creech 38:33

It doesn’t mean anything.

Frank Curzio 38:34

No, but that’s what I said. 80% of the equity to charity. I don’t know what that means.

Daniel Creech 38:37

Here’s what it means. They’re going to start a charity that’s going to fund and be very tax beneficial to them and their families. And it’s going to fund all their vacations and BS. Everybody does this. It’s absolutely, this, that pisses me off.

Frank Curzio 38:47

I think their podcast is just an AI. That’s what you just go, “That’s awesome.” No, it’s true. It’s frustrating. I get it.

Daniel Creech 38:52

I do want to actually try to provide value.

Frank Curzio 38:54

80% of their equity.

Daniel Creech 38:55

On the 500 billion thing. The reason I think that there’s such a race to AIGO public and raise as much money as possible, I can’t blame them for that. Like Frank said, yes, the revenue is growing like crazy. Yes, they have big losses. That’s fine by itself. Growth stocks, whatever. 500 billion, excuse me, around that, 500 billion in obligations going forward, when the product that you sell cost is plummeting. Token costs are plummeting. User cost is going to get, well, it’s going to increase, but the margins is what’s going to be the untold story here. And I just, good for these guys. But that charity thing, that is complete and utter BS. Just take that to the bank. That is absolutely BS.

Frank Curzio 39:36

Yeah. And the token economics, I’m not worried about. I mean, as token prices come down, you’re going to see much, much more people use. You’re going to see it increase exponentially, right? In terms of demand. So that’s something to monitor going forward to see it. I think that may have happened to OpenAI because OpenAI, I guess, you know, they’re not using, they got to find other ways to use OpenAI, just like, you know, Meta found ways to, you know, with their AI and use and change the landscape of the company, right? And I said that too, is that we didn’t like Meta. I thought that their core business was going to see, not a threat, but there’s other ways to generate traffic now. You don’t have to pay an absolute fortune, you know, in the digital traffic, the same with Google, but, you know, they’re finding ways and use a great way. OpenAI has to find other ways and come, and they just announced it, I think, as a competing product. They’re coming out with a competing product to Meta, Facebook.

Frank Curzio 40:23

So we’ll see. But yeah, it will be interesting. But lots of AI news and all these guys meeting together and this whole end of the world stuff and everything. I mean, look, it’s a big story that everyone wants to talk about. I just think it’s all smoke and mirrors, but yeah, what is not smoke and mirrors is the amount of money that these companies plan on spending going forward, which is helping the market. It’s absolutely helping the market tremendously. I think I read a stat that it’s like the 45, 50% of the profits are coming through AI right now at the whole S&P 500. Yet we’re seeing 40, over 40% of the stocks are in bear market territory, down more than 20% from their highs. And again, we’ll cover that tomorrow during the event. I wanted to go over a couple of companies that are reporting because I mentioned some things I teased a little bit. You know, we’re seeing lots of upgrades and downgrades of stocks. And this is the time for upgrades and downgrades. It’s normal. It’s like two, three weeks, four weeks away from earnings season where companies are providing updates and meetings and stuff like that.

Frank Curzio 41:21

But also, it’s when, remember, as an analyst, and this is what a sell-side analyst, when you go on TV and you see, okay, this company beat by 10 cents, it’s taking the consensus estimate of all the sell-side analysts, right? What we do is buy-side analysts. Sell-side analysts are the institutions, right? So they have all these discounted cash flow models and they put target prices and stuff like that. And some of this research is very, very good. A lot of it, like the target price is ridiculous. You know, a lot of it’s biased as well because they receive fees. If they don’t receive those fees, they’re going to be like, “F you, we’re not going to cover you,” right? That’s just the industry. But right now is a key time because you’re seeing lots of upgrades and downgrades because a lot of the investors or a lot of the analysts that cover at these firms are talking to CFOs now because they’re closing their books. And, you know, again, they get a little bit of indication this way, they’re not surprised and it’s not like this inside information or whatever, but they’re like, “Wow, things are good.

Frank Curzio 42:10

Okay, we’re going to upgrade.” Oh, okay. Maybe things aren’t as good or we see something that’s different. So anyway, I wanted to tell you because some of these upgrades are really good and some of them are really bad. You would think like every upgrade is great for the stock, every downgrade is bad for the stock. It’s not true. You really have to look at who’s making the upgrade and downgrade and who talked about, what they said before this. It matters. I mean, if you’re short on Tesla from $30 and it went to 300, and then when it’s at 300, you’re like, “Okay, we’re raising our target to 280 now from 30 and we have a neutral rating or whatever.” I look at a report like that as meaningless. So a couple of reports that I saw, Dean, I don’t know if you saw some, because, you know, we try to analyze as much as we can, is, you know, first, Val Resorts, ski, right? Ski company. Report earnings last night, headline said it beat on revenue. And yet, if you put it up there, Val is VA, MTN is a symbol.

Daniel Creech 43:00

A mountain.

Frank Curzio 43:00

MTN. So what is, how much is it down? So the market’s up and it’s down. And it’s down. You say, “Why is it down?” Well, it beat, you know, on revenue. And it looked like a decent report. Well, these earnings, when you strip out certain items, since, you know, the company reported loss, you want an apples-to-apples comparison, you strip out like the nonsense. But last year, heading into earnings season, again, we’re heading into ski season, I mean, they generated over $7 in earnings. This quarter, the consensus was $4.43. So, you know, you beat, and that’s the bottom line, but on the top line, you beat, but those estimates will cut dramatically. And the company said North America ski season was horrible, down 12%, which, you know, this is the quarter. This is like, you know, the pre-holiday season, you know, for most retailers and, “Hey, you know, we’re going to Black Friday and things should be pretty good or whatever.” For you to come into this part of it and not really report those numbers and look at that stock and look at that chart, that’s not like, “Hey, this thing got nailed once.” It’s just a steady Nike-Disney type, “Holy shit, when am I going to have anything good on this stock in my life?” And the thing just keeps going lower and lower.

Frank Curzio 44:04

But, you know, going to Citi, Citi downgraded Moderna. So put up Moderna to sell. So they downgraded. And they said this implies sales assumptions, which are unrealistic and valuation is unjustified. And if you look at this stock and you look to that point right there on the right side of the chart, and what was it? That was about two weeks ago when the stock went from 60 to, what did it go to, Jay? Like 170 in a day, right? And getting positive results on one of its key vaccines. Well, here’s a guy that had a hold rating and a $60 target on the company heading into that before it went to 170. So now what does he do? He raises his target from 60 to 80 only. Again, this stock’s 188 right now. So he raises it from 60 to 80 and downgrades it to sell. But why would you want to listen to this guy or anything he says? Not saying he may be right in this or not. I have no idea what the future’s going to hold. And it did drive the stock lower today. But why would you want to listen to this guy who’s been so wrong on this stock for such a long time where obviously you didn’t get it right?

Frank Curzio 45:09

I could see if you had a buy rating into it and then this thing went to 180 and said, “Look, it’s a little over, you know, unrealistic expectations. You know, it’s great. Maybe we think it’s 140, 150.” This guy’s a 60, like, you know, you thought it was worth 60, it’s 190, right? Why am I listening to you for? And that’s why you got to look at some of these things and the notes and the analysts, which we do, right? Because all you’re seeing is, “Wow, this downgrade to sell.” They said that there’s no way they’re going to meet their estimates or do anything. It’s coming from a guy who basically does not like the stock and has been dead wrong on this thing right now, especially for the past, you know, few months. Go up to Core Weave really quick. And this is kind of like education, guys. I’m just trying to teach you because this is some of the things that I look at. I actually, this is a report I like with Core Weave. So they initiated, what we call initiates Core Weave’s outperform. Now, why would they initiate it now?

Frank Curzio 45:55

Core Weave’s been, you know, in the AI trend for many years. Maybe they’re doing investment when you’re really tight into investment strategies or maybe Core Weave’s buying a company or doing a different deal. If that brokerage firm’s on that deal, they remove themselves, right, from any rating and then they’ll come out and initiate again, right? So they initiated and Core Weave has outperformed $176 target. The stock’s at 87. That’s huge. I mean, you can get the same result going to 130, right? But 176. So they highlight how to strategic infrastructure provider to many of the world’s largest hyperscales and AI labs. Every single big company works with them. They have a $130 billion backlog that I think is pretty secure because these guys are not showing any signs of slowing down anytime soon. Maybe a couple of delays, maybe the Blackhawk due to, you know, political uncertainty right now, which is going to change, especially on the Republican side, once November elections, midterms take place.

Frank Curzio 46:46

Second quarter revenue, they say, is 2.6 billion. It’s more than all the other NeoCloud providers combined. And NeoCloud, if you think of NeoCloud, it just provides GPUs as a service. They leverage their data centers, heavy machine learning capabilities. So it’s different than just the hyperscalers where this is GPUs as a service, almost like a rental. And these guys, you hear NeoCloud a lot. 2.6 billion in revenue is more than all the other NeoCloud providers combined. That’s how big Core Weave is. So I like his initiation because the stock is down 40% from its highs, right? It’s 153. So I kind of like it here. He’s highlighting like, “Hey, the backlog’s still in place.” These guys are the leader in this industry. Spending’s not slowing, right? There’s no signs of AI CapEx spending slowing down the next two years, which I would look forward because these, when a company has a target price, it’s a 12-month target price. It’s not longer than that. It’s 12 months. But you’re looking like two years down the line.

Frank Curzio 47:40

You could say, “Well, five years, it’s going from, you know, it’s supposed to be 7 trillion. Who knows what happens in three years, four years.” Again, we’re being told that the world could end because of AI. So I wouldn’t look past four years right now, but looking past a year or two is, you know, you’re going to see massive AI spend continue and these companies raise that. So you’re looking at Core Weave on this pullback. I like this, right? So you see how we’re analyzing these things differently. And the last one here that I have is, Dan, I want to talk about in this educational segment is HSBC upgrades target to buy from hold. They increased their target to 190. This is a stock that I know Daniel loves.

Daniel Creech 48:13

Oh, yeah.

Frank Curzio 48:14

And we’ve been on this for a while, man. I mean, just look at that. You don’t see too many better charts than that. Go to a five-year chart, just to be fair. It was horrible before, you know, that part in, and when did it start really going up, Joe? When is that? We’re looking at what? Like in pretty much past 12 months, right? It’s 83 was the low, right? So 83 was the low, 52-week low. Now it’s 156. So he’s raising his target from 125 to 190. So he’s been wrong on this as it’s been going up. So, you know, that’s fine. I thought the note was kind of weak because the analyst just says, “Hey, target’s cheap and earnings are likely to beat next quarter.” And scroll down to target where it’s trading at right now, Joe? The PE. So it’s the next 12 months. It’s trading at 16, 17 times. Walmart’s probably trading over 30. Costco’s trading over 30. But yet, you know, it doesn’t necessarily mean, you know, the company’s cheap unless they’re growing, but you’re seeing them get things done. That’s why they’re beating estimates and you’re seeing the revenue go higher.

Frank Curzio 49:11

So you’re seeing a company go from less bad to bad and look at that move and now it’s getting better and better and now you have an analyst saying, “Hey, you know what? I think it’s going to be better from here. So we’re going to increase it.” That’s not what this is about. What this is about, and I’m bringing up this note really quick, and I like to have these educational segments sometimes, Daniel, is there’s 40 analysts covering the stock. 25% of them still hate, they have hold ratings. I won’t say they hate them, but they have hold ratings with targets lower than where the stock is trading. And what does that mean? If target comes out and reports another strong quarter and expectations are low, 25 of these 40 analysts have hold ratings. Put in perspective, it’s usually 80%, 70 to 80% have buy ratings on the stocks, right? It’s in their favor because they can charge investment fees. It’s better for them. You’re going to choose the guy who has a buy rating on your stock if you’re raising money through the debt equity markets, whatever it is, compared to a guy that has a sell rating, right?

Frank Curzio 49:58

So it’s in their favor. That’s why you see a lot of these stocks have 80% of them have buy ratings. This company, 25 of them have hold ratings out of the 40. So if target reports a strong quarter, what do you think is going to happen? Expectations are low, right? Again, not a lot of buy ratings, but a lot of these guys are going to have to upgrade the stock, which is going to result in stock moving higher and higher and higher. Now, they’re not really focusing too much on this note. It was up like 2% a little bit, but that’s usually what you see when you see upgrades. You have 25 of them to have target prices that are lower. Yes, they could raise a target and say, “Okay, we’re going to keep our neutral rating.” But if they come out with a blockbuster quarter, not only are you going to see this company go up tremendously and maybe shorts cover and algos and stuff like that where you see a 10, 15% move higher, you might see that sustained because all these analysts have to re-rate. And when they re-rate is when you make the most money because they’re all on the opposite side.

Frank Curzio 50:46

Just like the reverse with Dick’s Sporting Goods. They were all positive going in. And when they said, “Holy shit, our quarter sucks,” they had four or five downgrades at once and the stock absolutely crashed 30%. Instead of crashing 10, 15%, it crashed even more because all the analysts told all the clients, “You know what? We’re getting out of this. It’s not a buy. It’s a neutral. Go buy something else, another competitor.” Just know that going in when you see that many hold ratings of a stock that’s doing this well, that’s trending high, that seems to be getting it done. If they report one more quarter, you’re probably going to see three, four, five upgrades of this company, which could push it up even higher after the quarter. These are the things that we look at. It’s not just looking at a buy rating or sell rating. It’s looking at the quality of it, reading the report, seeing what the analysts like, because not every buyer’s sell rating are the same. It all depends on the credibility of the analyst and what they believe. Is there something original that they’re seeing?

Frank Curzio 51:33

I mean, you telling me that you want to buy target because it’s good valuation and, you know, it’s cheap and earnings are likely to beat the quarter, that’s not really, you know, it’s not persuading me to go buy target. However, you know, you did increase that target from 190 to 125. And that’s why you’re probably not seeing, even though you have this upgrade, you’re not seeing a lot of movement here because it’s not really based on something that we don’t already know. So just, again, educational segment. Let me know if you like that. Send from frank@curzioresearch.com. This is what Daniel and I do. It’s not just looking at, you know, what you see in the headlines on CNBC or Fox or whatever business, whatever you watch, but it really goes into looking at the details of this because that can make you a lot of money. I mean, I knew the estimates are very, very low for target. I liked target for a while now. And this thing has been doing very, very well, but there’s a lot of stocks like this that we’re looking at now that make their way into our alpha portfolio.

Frank Curzio 52:26

So, Daniel.

Daniel Creech 52:29

Joe’s going all in on Nike calls tomorrow.

Frank Curzio 52:31

Is Nike report tomorrow?

Daniel Creech 52:33

Tomorrow after close.

Frank Curzio 52:34

Do they report after they close tomorrow? Jeez, I don’t even know what those estimates are. Hang on. I’m going to check for you really quick. I’m curious how much, you know, just to see how much earnings are declining. Just like I bought.

Daniel Creech 52:46

We were deciding last week. We were looking at option change. We were trying to decide where to put our tire paychecks.

Frank Curzio 52:50

What do you think it’s going, Joe? High or lower? What do you got?

Daniel Creech 52:52

We were flipping coins.

Frank Curzio 52:53

I’m curious. I mean, you know, I’ve said this a lot and been wrong a couple of times. I can’t believe like every single negative is not priced into Nike right now. And I forgot what stock I said then. It still went down like 10, 12%. I think it was, I think it was Netflix after the quarter. So what are you looking at? Earnings? Let’s see. I want to see this before we go. Hold on. So if you look at the calendars, when do they report tomorrow?

Daniel Creech 53:21

Yes.

Frank Curzio 53:22

Okay. So earnings. We’ll open. Micron’s reporting too. Micron.

Daniel Creech 53:28

Yesterday.

Frank Curzio 53:29

Oh, they reported at the close today. So they reported at the close today. Watch out. Look out. Holy cow. Yeah. So we’re looking at, so it’s tomorrow. If I could find this. So this is Nike. So Nike last year was 49 cents this comparable quarter and this quarter expecting 44 cents. So that’s a slowdown in growth. Go down to Nike and see where it’s trading at. It’s still trading expensive multiple, isn’t it? Because earnings have been coming down. It’s trading at, you know, 22 times earnings, which is an above market multiple for a company that’s seeing earnings decline year over year. Okay, you could be trading at 40 times earnings. If your earnings are just, you know, rocking and rolling, that’s fine. That could be considered cheap if you’re going earnings 25%, 30% year over year. This company seemed declining earnings and trading still at a higher multiple than the market. So I know you look at the stock and say, “Holy shit, this stock’s down from 76 to 35.” It’s still expensive at 22 times earnings for a company that’s not growing year over year with their earnings.

Frank Curzio 54:22

So that’s what I have to look at it. When I look at this, I have no idea. I just, if they say anything positive, they’re trying to compete on TikTok with Noble now and just I’m looking at their sneakers and they’re not even pretty. And when you’re selling online, it doesn’t even matter if they’re comfortable. People are going to buy them if they’re pretty. But they’re not even, like there’s nothing that I saw at Nike that I’m like, “Holy cow, those things look awesome.” And I just don’t know how that is with this company being, you know, the biggest in the world. It’s just so much competition here. But that will be interesting to see what the quarter is. And I don’t know how long that CEO’s been there for, but man, just look at that. Just terrible, terrible, terrible.

Daniel Creech 54:57

That’s only a year. Hit the five-year.

Frank Curzio 54:59

Holy cow. This is, I mean, you know, just with Disney too, this slow, long, holy cow, what am I doing?

Daniel Creech 55:06

You know what scares me about Nike is looking at this. There’s really no, I mean, you could look in July of ’22, I guess, there was a significant drop there. That’s probably an earnings release and then it went back up. However, there’s no horrible gap puke point though in the sink down there. That is just a death by a thousand cut. That’s like a sliding down a mile razor blade right there, Frank.

Frank Curzio 55:28

Yeah.

Daniel Creech 55:28

It’s getting chopped.

Frank Curzio 55:29

You think it is, right? It was a downturn right there like after July. I can’t really see that chart.

Daniel Creech 55:33

Yeah, but that’s 2022.

Frank Curzio 55:35

2022. And you say, “Okay, well, look at that big downturn. Okay, that’s it. That’s the bottom. It’s a kitchen sink.” And then it came back and it’s just going down like, yeah, it’s just hard to keep investors when it’s just, you see this low. And that’s the thing too. Everyone who sold the stock, I feel like has sold the stock. So any positive news comes out of this. I mean.

Daniel Creech 55:51

But a bad message, ugly shoes, no big losing all your big athletes in soccer to somebody else. Boy, what could possibly go wrong?

Frank Curzio 55:57

But you have to look at fundamentals. I don’t know what the cash position is. I don’t know if they’re able to announce a buyback. I don’t know what’s going on with the company. I mean, they are generating money, right? They’re making money. So I can see the cash position, you know, announcing a huge buyback at this level. And this is a company that’s been buying back their stock like freaking crazy during this downturn. So I don’t know if even that will give it credibility.

Daniel Creech 56:15

Anyway, we’re just having fun, but good luck, Joe.

Frank Curzio 56:18

Joe, you think it’s going higher?

Daniel Creech 56:20

He’s undecided. We’re just looking at it.

Frank Curzio 56:21

You’re undecided. You’re going to play, but you don’t know which way you’re going to go. You’re supposed to have a play on it and be like, “Okay.”

Daniel Creech 56:27

Yeah, they’d say down.

Frank Curzio 56:28

I think that’s say down. I know this is like a coin flip. I have no idea. It’d be interesting to see. Micron too. Look at Micron really quick before we go. This is cool, guys. You want to take a look? MU. You know, we brought this up if you didn’t listen to that podcast, but where would you think Micron is trading? It’s 1,000. It’s up 10X, I think, over the past whatever. It was 160 and the high is 1,000, you know, 1,250, right? So you’re looking at, yeah, you didn’t go back 18 months to 10X on this company. And you would say, “Holy cow, with that stock price, this thing must be expensive.” Go down and see what this is trading, which I find hilarious. It’s trading at seven times forward earnings. So what they’re saying at seven times forward earnings is this is 100% cyclical and is going to change. And that’s why you saw all of the chip manufacturers re-rate because for the first time, they’re not operating, first time in history, they’re not cyclical names anymore. These are secular names.

Frank Curzio 57:19

Why are they secular? Because you’re seeing the amount of spending by the hyperscalers, meaning that this isn’t, hey, a two-year cycle, a three-year cycle, and then the economy comes down and all these names come down. That was always a cyclical sector. Same with Micron, trading at seven times forward earnings. Holy cow. I mean, they might report numbers. I hope they report numbers and this stock falls like 10, 12%. It’ll crush the whole market tomorrow. But if it does, I may recommend this thing in our newsletter because, you know, there’s a clear three to five-year runway with this stock, memory that everyone’s in dire need. They’re locking it up now because they’re so afraid what price is going to be even after that. But this isn’t like a cyclical name. At least maybe it is, but not for the next four years is not. Next four years, they have a clear runway of what they’re doing. And man, this thing is dirt cheap. They’re operating, they’re filling capacity, they’re doing everything they have to do.

Frank Curzio 58:06

But that’s going to be a very interesting quarter for the whole AI trend. I think it’s going to be very positive. Let’s see. Hopefully.

Daniel Creech 58:11

And we don’t even have to wait long.

Frank Curzio 58:13

Yeah. Hopefully it’s not. It comes down. If it does, I would probably look to buy it because I don’t see anything really changing in this company’s landscape. It’s a cheap stock. It’s growing faster than almost any company on the market right now at below 10 PE. Again, a lot of people believe that growth is factored in. They’re looking at the price, but it all comes down to earnings. We just showed Nike got crushed and it’s still expensive. This is a company that’s went up 10X and it’s actually, it’s probably cheaper today than it was when the stock was half the price. So, you know, again, just because you’re looking at a price saying, “Holy shit, I missed this.” This is a 10X, there’s still opportunity for you to make money in it because it’s cheap and it’s growing and it’s part of this bigger AI pretty much, you know, becoming a leader, right? A necessity within the AI trade and cloud and just everything grows faster. You need more and more memory. These guys are right in the middle of it.

Frank Curzio 58:58

So with that said, tomorrow, tune in. Not going to waste your time. Please, very, very important. It’s for free. I earn nothing. It’s Wall Street Unplugged podcast. It’s going to be 11 a.m. It’s going to be live on the X platform at Frank Curzio. Title: How to Save You from Losing 30% of Your Money over the Next 30 Days. If you have any questions, go to askkersio.com, which I’ll answer as many as I can. Daniel will ask too during the broadcast. But be sure to tune in. Yeah, it’s free. It’s going to be worth it. And, you know, I want to protect yourselves because I know doing the right thing and you can say, “Well, you know, this is kind of contrary to our publishing division, right?” By telling you, “Hey, guys, you got to prepare and be careful.” We make money by recommending stocks or people buying on news or talking about stocks. But at the end of the day, when you do the right thing by people, they know you’re a credible brand. We’ve been around forever and that’s why we have lots and lots of long-term subscribers who have been following me for longer than 20 years, 25 years, is because there’s times to buy and there’s times to say, “Hey, you know, let me sit on my hands, see what happens and be careful.” I could be wrong, but I mean, if you’re looking at the math and you’re looking at what’s going on right now, I’m going to provide stats and figures for you that are going to blow your mind that people aren’t talking about.

Frank Curzio 01:00:06

And that stuff really scares the shit out of me. And I don’t get scared often when it comes to the markets. So you’ll see all that. It’ll be highlighted tomorrow, Wall Street Unplugged Live, X platform, 11 a.m. at Frank Curzio. And we’ll see you there. Take care.

Announcer 01:00:17

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.