Frank Curzio 00:00

How’s it going out there? It’s Wednesday, October 7! And this is the Wall Street Unplugged podcast where I break down the headlines and tell you what’s really moving these markets. Mr. Daniel Creech— hopefully you don’t own Weeble today, do you?— which is getting annihilated on China fears and— I don’t even know what it’s getting annihilated on. It’s basically— they have some ties to the congressional report. Didn’t you tell everyone to buy that a couple weeks ago or something?

Daniel Creech 00:28

I may have. I— I typically don’t go over to, uh, the Chinese though there very often.

Frank Curzio 00:33

I know, I know. It’s just craziness going on. And it’s, uh, been pretty cool, right? Along with the markets, where people are saying, “Oh my god, markets are coming to all-time highs, things are great.” Not so great when you look under the hood. We’re going to talk about that. Constellation Brands just reported. Pretty crazy. We’re going to get into that as well. But— but the big point here is: looking at interest rates, guys, this is very, very serious. Rates refuse to come down. And— and this was after a weak employment report, and then we saw the PCA indicator, right, come out and lower than expected. And those indicators are supposed to signal a moderation of inflation, which is supposed to push interest rates lower, and they continue to go higher. This is something that we talked about, Daniel, in the past 3 weeks. Highlighted 2 weeks ago in a live event, saying, “Listen, interest rates this high is very bad. I don’t know how companies are going to be able to report earnings and guidance going forward.” Which— earnings season is about to start, right?

Frank Curzio 01:24

We’re like a week away, and then the next 3, 4 weeks is going to be crazy with earnings. JP Morgan launches, I think, next week. And how are they going to issue positive guidance, which the whole world is expecting from last earnings, right? Everything was really great 3 months ago. Compared to much higher energy prices, interest rates going higher. But it’s— it’s dangerous territory, but yet we continue to see the Nasdaq hit all-time highs. What are your thoughts?

Daniel Creech 01:45

Yeah, it’s definitely a— I mean, both things can be true. You can have market at all-time highs and a lot of individual stocks doing bad. We’ve talked about the market weight and such. We’ll get into that with some earnings and things. But yeah, you got to be selective. I mean, we’ve kind of— we use this term “stock picker’s market” pretty often. It ebbs and flows. Sometimes the whole market rising tide lifts all boats type of deal. Other times, like now, you know, you got to be selective or you’re going to feel some pain. And there’s just not a whole lot of— there’s so much good news and so much in the rearview mirror, earnings growth and all that kind of stuff, that, you know, you are starting to get to, “Hey, what have you done for me lately?” and this bar is going to be so high. It’s going to be volatile, but listen, the sky isn’t falling, and corrections lead to opportunity. So take that stride and strider hand in hand.

Frank Curzio 02:28

Because we see the 10-year’s rising. Joe, you got a chart up there. It’s 5.3%. And if we look back just a couple months ago, we’re looking at 4.3%. And this is, what, in June? You go to August, it went a little bit higher, 4.6%. This is massive. This is like a stock almost doubling in price when you see rates this high. And I think people don’t understand the impact of higher rates. So I’m going to explain this to you. Because we’re sitting right now at a 24-year high when everyone’s thinking, “Oh, these rates got to come down.” Now we have our government that intervened, right? It’s got about to say, “We’re going to triple the amount of bond buying for long-dated bonds,” and that did nothing. We have the Fed kind of saying, “Hey—” not kind of saying, but, “We’re worried about inflation now, and we’re going to target inflation.” That’s a big— so you have the Fed, you have our government targeting, understanding this problem, and the 10-year is basically giving them the finger and saying, “It doesn’t matter what you say or what you do, we’re going higher.” Mortgage rates are now at 7.5%.

Frank Curzio 03:24

The mortgage market, the housing market, was frozen when it was at 6.5%. Now it’s at 7.5%. So mortgage applications have dropped to this lowest level. You want to guess, right? The lowest level since— not COVID, not since the credit crisis 2008. Since 1995. 1995! Where monthly payments are averaging $2,800, which is consuming close to 40% of pre-tax household income via mortgage. Now, that’s just a mortgage rate. We’re not talking about higher energy prices, surging food prices over the past 5 years, especially recently, higher tuition costs, and all the debt. I mean, we talk about auto loan debt. Did you know auto loan debt is 1.7 trillion? I mean, we know— we talk about student loan debt going from a trillion to 1.6 trillion just, you know, through COVID. Credit card debt is 1.3 trillion. So interest on these payments is going higher and higher, squeezing consumers, right? These are real numbers. Like, where are they going to get the money from?

Frank Curzio 04:24

“Well, we can refinance the house.” Sorry, you’re not going to refinance at much, much higher rates. That’s why if you look at refinancing, that’s down tremendously as well. Yet we’re seeing stocks at all-time highs now, pretty much led by what? A few names. AI names, hyperscalers, right? Look at Nvidia, AMD, Microsoft, Apple, Amazon, SpaceX, Meta, Broadcom, Google. To put this in perspective, the total market cap of the entire S&P 500, which also just hit an all-time high, is $69 trillion. If you take out the top 20 names in the S&P 500 index, the market cap, right? The market cap of the S&P 500 is cut in half. So you’re looking at 20 names, right, mostly responsible for all of this. And I’m just talking about the market cap. So if you’re looking at 480, 480 are like nonsense. Maybe you can go past like 50 of the companies. After that, they’re kind of meaningless. Like, those stocks could go down tremendously, and you’re not really going to see an impact on the S&P 500. So if you look at the 20 names, it’s really the top 10, which I named.

Frank Curzio 05:23

So this is AMD, Nvidia, Micron, Apple, Google, Microsoft, Amazon, SpaceX, Meta, Broadcom. So if you take those 10, or if you own those 10 right now, you’re pretty happy. You’re pretty happy as an investor. If not, there’s little that’s working in this market right now. You have some software names and cybersecurity that’s working well, some energy names as well. But these companies are not going to grow the rates they promised 1 to 2 quarters ago with energy prices surging. I mean, we have WTI, Joe, if you pull that up, still at $90. $90! You look at diesel prices, well over $6, up, what, 25% in the past 2 months. And now we have interest rates surging, 24-year highs, as these companies are seeing higher payments on existing debt and much higher expenses on the cost of capital to raise more money, which we’re going to get into a little while, how many companies are raising money right now, which is insane within the AI world, and they’re not just raising a little bit of money. We’re talking about tens of billions of dollars these companies are raising right now when the cost of debt is more expensive than it’s been in 24 years.

Frank Curzio 06:24

Now, Daniel and I talked about this. We’re going to earnings season. Look out, man. Look out. Because a lot of these companies are going to get smoked if they lower their guidance. And we’re looking at year-over-year growth as of last quarter, over 30%. Put that in perspective. Companies should grow 8.5%. We grew 30% as of last quarter. And a lot of companies reported great earnings and they raised guidance that said, “Pedal to the metal, everything’s great.” This is before energy prices surge. This is before we’re seeing the 10-year absolutely surge as well. So a good example of this, because we were saying, a lot of companies, how does these— how are these CEOs going to— going to report strong guidance with so much uncertainty? Because they’re reporting basically second quarter. So what are they going to report? Third quarter, fourth quarter, which is the next 6 months, right? So March really ends the year. You know, it’s not end of December. It’s March that we report fourth— fourth quarter.

Frank Curzio 07:15

How are they going to get aggressive and— and raise their guidance tremendously? And a good example of this, say, was— did you see Constellation Brands report? Daniel, I don’t know if you saw it.

Daniel Creech 07:24

Yeah. I mean, I just saw the numbers, yeah.

Frank Curzio 07:26

So this is a company that reported amazing earnings. They beat by 19 cents. Now, Daniel and I cover earnings all the time. Every— every— tons of companies all the time. We love coming on here. It’s what we do. We love to do it. Now, when you’re reporting Q2 earnings and you beat— they beat by 19 cents, right? They were expected to generate $3.55 and generate $3.74. And look at this company’s flat right now. Please, take an example of this, because this is what’s going to happen during earnings season. And I want you to be very, very careful, because not only are you going to save you a lot of money, it’s going to make you a lot of money, because you’re going to jump in this market probably in a couple months, couple weeks, with some of these companies being oversold. But Constellation beat by 19 cents, and it was a red flag, because if you beat second quarter by 19 cents, why wouldn’t you raise your full-year estimates? That’s a red flag. So they didn’t raise their full-year guidance. And in fact, issued full-year guidance between $11.20 and $11.90.

Frank Curzio 08:16

Guys, you could drive a truck through that, okay? That’s 6% range. That’s huge. For a company that’s basically— their beer division, their beer sales— and again, alcoholic beverages and stuff like that— main division— is growing 5% year over year. So you have a range of 6%. Meaning if you hit the low end of the range, it means that your earnings year over year are declining compared to growing 5%. It’s a big difference, right? So when they reported last night and they didn’t raise guidance, the stock got hit by 5, 6% last night. And the CEO, after seeing this, seeing his stock down and knowing the reason why— he knew why the stock was down— he then goes on the conference call, which they do after they report earnings, and he goes, “Whoa, whoa, whoa, whoa, whoa. Hold up a minute, guys. No, no, no, no. I know we have a wide guidance range, but September, last month of the quarter, we really kicked ass, and trends were great. And if that momentum continues into next quarter, it’s going to support—” and I’m quoting, he says, “it’s going to support the high end of our earnings range.” And the stock did a quick reversal, being down 6%.

Frank Curzio 09:17

Probably would have opened up down 10, 12, 13%. But now it’s up 1% because the CEO went on the conference call, said, “No, no, no, no, no. We know our range is big, but if we see the same trends as last month, we’re probably going to see hit our high end of the range, which is a big difference.” So the stock reversed. A couple of things here. I think the CEO is absolutely insane to say that. Because if Constellation doesn’t hit their number next quarter, since CEO overpromised in an environment that has much more uncertainty than probably any time he’s seen, at least through COVID, the stock’s going to fall 20% one day. I— I think this is a great short going into next quarter. I think this stock is easily going to be over $100— under $100 by the time they report earnings next quarter. And even going into earnings, I think this stock’s going to be below $100. Because people are going to— this is a consumer-based product. This is where— consumer-based company where in beer, which sells— again, they’re up now because they’ve declined for so many years, they’ve gotten annihilated.

Frank Curzio 10:10

Eventually, when you’re down 70%, 60% in sales— I’m not saying they’re down that— one of the next quarters you’re going to see, in the year following, you’re going to see growth, right, off a very low number. But not only are the shareholders going to be pissed selling the stock off because if they don’t meet those estimates, you’re going to lose the support of all the analysts who maintain their buy rating because the CEO just said, “Hey, if we maintain September—” and remember, last month, those numbers were really good. We didn’t really see the effects of high energy prices and surging, you know, debt and— and, you know, which is crushing consumers right now. We’re not talking about a mild increase in energy prices. We’re looking at diesel, WTI, these are up— you’re looking at 20, 25% month over month, direct cost to customers, and these guys have a massive fleet to— they have to deliver all this stuff, right? And pay all the suppliers. And that’s— the cost is up tremendously compared to last quarter.

Frank Curzio 10:59

So plus looking at the consumer is more squeezed today than any time in the past 20 years. I mean, you know, probably a credit crisis. I mean, you could say COVID, but COVID was a couple of months, and then the government’s like, “Hey, you know what? Let’s just hand out free checks to everybody. PPP loans, ah, you don’t have to pay that shit back. Here, you, $5,000 here. How many kids? Oh, you got a couple, three more kids here? It’s $15 grand, you’re fine. Throwing out all this money, then you reopen the economy and we see this massive boom that we’ve never seen before, because there’s more money in the system than ever in history, and then we get inflation and we have our freaking wonderful, you know, Powell saying, “Oh, it’s just transitory. It’s just transitory.” Even though we gave— they gave 4— what was it, Daniel? $4 trillion? I believe they gave $4 trillion to businesses and consumers, right? And this was at the end of 2020. Do you know at the end of 2020, that’s when we had the vaccines, markets at all-time highs, housing prices at all-time highs, everything at all-time highs.

Frank Curzio 11:49

And after 2020, the next year they spent another $6 trillion. Another $6 trillion. Another $6 trillion food in the economy, and we had, you know, our wonderful Fed chairman say, “Oh, it’s transitory. We’re not going to really see massive inflation.” But again, since— since COVID, and when you’re looking at— at a lot of these companies, we focus on AI all the time, Daniel, but there’s hundreds of companies in the consumer space where, unlike AI, which is being driven— we’re going to cover that in a minute— amazing AI news, right, over the past couple days, being by trillion-dollar companies, literally spending trillions in capex over the next few years. But when we look at consumer companies, they rely heavily on consumer spending. And you’re looking at clothing, food, beverages, autos, restaurants, furniture, appliances, you know, vacation, cruises, airlines. The consumer is more squeezed today than any time over the past 20 years. How are these companies, when they report— and they’re probably going to report decent earnings from the past 3 months— but how do they report strong guidance?

Frank Curzio 12:47

Or if you’re going to report strong earnings, how do you not raise your guidance? Because Constellation just provided a great example. Constellation Brands, Constellation Energy, we’re going to talk about in a little while, of the importance of making sure you’re going to hit the high end of the range compared to low end of the range. And this stock probably would have been down 10% today, and it’s flat. So going into this earnings season, this is what we’re talking about. Very dangerous, but Constellation Brands gives a nice blueprint of how important it is that if you report strong earnings, you better raise your guidance, or indicate on the conference call that things are going to be great. If you don’t, that’s what I’m talking about. These stocks are going to get hit 15, 20% in a day, and you’re going to see a lot of these names get hit. We’re starting to see it now. And just be very, very careful. AI is holding up the market, but the rest of the market, be very, very careful.

Daniel Creech 13:30

Yeah, AI is definitely holding up the market. And looking at earnings season, when the big banksters start reporting next Wednesday— or Tuesday, excuse me— in the morning is when a lot of banks start. But, Frank, basically, earnings per share growth is between 25 and 30% for Q3, depending on who you look at it, you know, all that kind of stuff. If you lose— if you use FactSep, you’re looking at 29.5%. Now, if earnings come in— now we have to look through this earnings season— if they come in around this level and earnings grow at 25% plus, that will be the 1, 2, 3— third quarter in a row that earnings have grown 25% plus.

Frank Curzio 14:10

That’s insane.

Daniel Creech 14:11

That not only is insane, that is impressive. And yes, it is skewed because it is driven by a handful of companies. But however, you still can’t just— don’t just gloss over that, because that is absolutely incredibly impressive. And what I think it will lead to, or it needs to lead to, for this broadening out, is you have to see some of the other companies kind of start to expand and do that. So a couple of fun stats here, Frank. Looking at earnings season, and if you take out— so let’s use this 25% earnings growth as a number. If you take out technology and energy, it drops to 7.5%.

Frank Curzio 14:49

Wow.

Daniel Creech 14:49

So that shows you how— now energy, as Frank just alluded to, is going to have sky-high earnings, because oil is up about— and I’m rounding here— oil is up about 30% year over year.

Frank Curzio 14:58

Which is been the drag on earnings for a long time.

Daniel Creech 14:59

Now, Frank is talking about diesel prices really surging in the last quarter. Oil prices year over year about 30%. Again, you’re taking Q3 to Q3, so, you know, there’s a lot of movement and momentum around all that. But you go from essentially 25% to 7.5% if you exclude tech and energy. On the tech side, tech is basically growing 42% by itself. Frank, you take out three stocks. You take out Nvidia, Micron, and Google, it drops to 20.5. From 42 to 20.5. Again, we’re not saying this is misleading, or we’re not saying this is wrong. We’re simply saying that— well, hell, Micron, Frank, you know they grew earnings like 1,000% year over year. So when you have somebody growing 1,000%, that’s going to skew the whole data plot. And that, you know, that’s easy to understand. One last final one here, Frank, this is fun. Top 10 companies in the S&P 500. 10 out of 500 is roughly 2%. Those 10 companies make up 64% of the earnings growth in Q3.

Frank Curzio 15:59

Incredible.

Daniel Creech 16:00

So top 10 represents 64% of all the earnings growth. And you can decipher this, and FactSep does a great job, and just use AI to do a great job and kind of pick this. But the takeaway here is, yes, this is going to be a stock picker’s market, because, as Frank has said, if your market is being held up by a handful of stocks, if those stocks hit any speed bumps at all, the market indices will come down, because the leaders are going to obviously take a hit. And the good thing about that is, you’re probably not going to have anything could happen, but you’re probably not going to have the leaders of the market tank and everybody else who’s already tanked start rising. They’re going to get hit even harder, which presents the opportunity. But there’s some general stats there. I can go on, Frank. I don’t know how much you want to get into the general earnings season. But that’s impressive to see how much a small amount of companies represent the earnings growth. And just remember that when you’re looking across the board.

Frank Curzio 16:49

Yeah, I mean, these numbers are unprecedented, right? We usually see it spread across. You said we have technology that’s been growing tremendously, and yes, AI has been growing tremendously. But right now, it’s supporting this whole entire market, and it looks like when you’re looking and saying, “Oh, wow, everything’s really great,” and it’s really not. I mean, if you see the hedge funds, they’re so out of position. Long-short funds are so out of position right now. They’re getting annihilated. Because, you know, they’re— whether it’s, you know, they’re short positions, or they’re not positioned right. But, you know, you have to be positioned in some of these bigger companies in order to be participating in these gains within your portfolio and this growth. And when you’re looking at that FactSep report, by the way, that’s absolutely for free. I don’t know why they do it. It’s great. But you can go on Google and just put “FactSep earnings.”

Daniel Creech 17:31

Insight. Earnings Insight.

Frank Curzio 17:32

Yeah, just put “FactSep earnings” at FactSep Insight, whatever. You know, and it’s going to come up, and they have the report. I think it’s like every 6 days. Sometimes in the middle of earnings season, it might be like a week or two. But, right, I think it’s every 4 days during earnings season. They update these earnings, and it’s a long report, whatever it is, 30 pages, and gives you a lot of great facts and details. And it’s important to know that, right? Because earnings growth drives market prices. And it’s been like that forever. So one thing I will add to this is, let’s talk about the rest of the market outside of those 10 names. And even the consumer-related stocks, they have high loads of debt. And not like software companies where margins are extremely, extremely high. They have, you know, pretty decent balance sheets, but lots of debt, which they’re going to be paying higher interest payments on. Even if they’re going to take out more debt, which a lot of these companies do, right, the cost of debt is rising tremendously.

Frank Curzio 18:21

So with all these companies looking to report Q2 starting next week, and then through the next 2 to 3 weeks going to be the core of it, we have companies with super high expectations after reporting very strong earnings last quarter. And, Daniel, I think you have a— I don’t know if you mentioned it— the report of consensus earnings heading into this quarter. I mean, there’s a big difference, right? The consensus earnings heading into this quarter, where when you see the analysts, what they mean consensus estimates, they’re looking at JP Morgan, Wells Fargo, Goldman Sachs, Morgan Stanley. So the consensus estimates coming into the quarter, they usually— most of the time you see them lower earnings, right? You don’t know about this. They don’t report that, right? You only see like on CNBC or Fox, they mention when there’s upgrades and downgrades. They don’t really— they don’t talk about when there’s cuts in earnings, especially when there’s not major cuts in earnings. Where, “Hey, we’re lowering earnings a little bit just because of this,” or “raising earnings just because of this.” You don’t know that.

Frank Curzio 19:12

But that number that you see on TV usually is higher heading into the report, and it’s— and going into the report, they lower it. They lower it by— what was the average? Would you say 1.5%, Daniel?

Daniel Creech 19:24

They usually lower it by 2%.

Frank Curzio 19:26

Okay, so they usually—

Daniel Creech 19:27

But they went higher by 1.5%.

Frank Curzio 19:28

So they lower it by 2% going into the quarter, but this quarter they raised that estimate 2%, which means expectations are even higher. So the overall numbers for the S&P 500 usually get lowered into every quarter, which is normal this way. They could beat the estimates. They beat the number on TV. The stock goes higher, and they cheer, “Yay, okay.” So they have these buy ratings, but they lower those earnings. This way, that number’s a lot easier to beat. And now that you have them raising these earnings estimates going in, where we saw Constellation Brands beat by 19 cents and said, “We’re not touching our full-year earnings,” and then provide, you know, a gap of guidance so you could drive a truck through, and the CEO has to go on TV and says, “Wait, wait, wait a minute, wait a minute, wait. We’re probably going to hit that higher end rather than lower end,” which is good for the stock today. That’s great. That’s good for traders. I’m just saying, I don’t think that— we’re talking about beer sales, been a nightmare for this industry for a long time— I don’t see them hitting their high end of the range.

Frank Curzio 20:18

And if they don’t, you’re going to see this stock come down tremendously, and I think you’re going to see it below $100. I really do. So I see this happening with a lot of stocks outside of AI. There’s no need to panic, right? You don’t have to worry about it if you’re prepared. And I’m telling you how to be prepared. So in our Alpha portfolio, we consolidated, you know, it’s Alpha— it’s called Alpha— because we consolidate all of our newsletters, which is crypto, large cap, small caps, AI, into one portfolio to make it better for all of our customers, right, and our subscribers. Where, you know, if you’re stuck in a crypto newsletter in the last 3 years outside of, you know, crypto really picking up in the last like 3, 4 months, you got annihilated. If you’re in, you know, Uranium newsletter, you got annihilated. If, you know, so if you’re in the wrong sector, if you’re in gold and mining, again, annihilated. And then, you know, last 2 years is good, now you get annihilated again, because gold is down tremendously off its highs.

Frank Curzio 21:06

Over 20, 25% off its highs makes sense, because gold doesn’t pay any interest, so you’re not going to hold onto gold when you get 4.5% in money market accounts right now. So we consolidated. This way, we can go where the market tells us to go. And in our Alpha portfolio, we sold a lot of stocks and said, “Okay, let’s be careful here going in,” right? We’re worried. And then I think we had, what, like maybe 2 stock recommendations in the past 3 months, which some of my subscribers were pissed at. “Oh, there’s a new portfolio. You should recommend more stocks. Relax. Our job is to make money for you, okay? I could recommend 50 stocks if you want for the month. If you want to be down on 50 stocks, that’s up to you,” right? We have credibility, and we care. But that’s going to change in the coming weeks. We’re going to be jumping on a lot of names. We’re probably going to see a lot of good names fall sharply, especially if they don’t raise their guidance, if they beat earnings. These pullbacks are going to be accelerated, which we saw at Constellation.

Frank Curzio 21:53

We see this all the time, right? When a stock’s down, or even if it’s up, if it’s down, go opening up like down 6, 7% on a weak quarter, it’s going to be down 20% by the end of the day, because these algorithms and these, you know, quick trading, you know, they get triggered. You see mass selling where they’re all getting triggered at the same time, and it’s just this massive run to the exits for a stock that should be down 6, 7%, and it’s going to go down 20% in a day, which is crazy. I think we— put up Weeble for a second. And pull up like a 5-day chart of that. Do it over here too. I just want to see this. This way you guys can see what I’m talking about. So Weeble’s down 20%. Let me pull up the 5-day chart here, as you can see up there. I mean, you’re looking at this stock. I mean, this stock is, what, 570? It was, you know, between 590, and this thing just dropped like a rock. But it was down even more, right? Wasn’t it down like 30% today, Joe? At one time? So you’re looking at a stock, like, right away you’re going to see people pounce and say, “Oh my God, we got to get out of this, we got to get out of this.” And then, you know, so you’re going to see rebalance.

Frank Curzio 22:55

Weeble’s a different story. It’s news-driven. It’s not driven on earnings. My point is, when you see these companies worn, and the report’s not that bad, they just didn’t raise guidance, right, which everyone’s expecting, you’re going to see these stocks get hit pretty hard. It’s going to be an opportunity to buy a lot of these names at cheap prices. Many of these names are already down significantly off their highs. I know you probably don’t believe that, unless you look under the hood like Daniel and I do all the time, because everyone’s telling you, “The S&P 500 just hit a new high.” “Oh my God, the Nasdaq just hit a new high.” But again, driven by really 10 stocks in the market, it’s a lot of stocks, consumer-related stocks down 20, 25% off their highs. A ton of these names. I think 40% of the S&P 500 is down more than 20% in bear market territory right now. Something you don’t see when you see the market’s at all-time highs. Usually, it’s not like that. It’s reversed. So that’s when we’re going to pounce, looking at names that really get oversold.

Frank Curzio 23:41

We want to see what they report. Companies that do have pricing power. This is going to be a key earnings season for us. We’re going to see a lot of new names make their way into our Alpha portfolio. But this is how you prepare. If you have cash on the sideline, you’re going to get an opportunity to buy a lot of great names. Goldman Sachs is down for the year now. Goldman Sachs was up tremendously. Goldman Sachs is getting nailed, right? Why are financials getting nailed where interest rates are going higher? And yes, it’s related to, you know, Goldman Sachs is a little different from, you know, a traditional bank who also has investment fees tied to them, like, you know, JP Morgan. But you’re still seeing deal—massive deal flow. And even without the massive deal flow, we’re going to talk about OpenAI. You’re seeing these deals come out. Trillion-dollar deals are being launched, and Goldman, Morgan Stanley, are all over these things. So there’s going to be opportunities there. Just being a little patient. But just be careful going into this earnings season. You might want to lighten up a little bit, because if you’re a company that’s not raised guidance right now, especially companies that are up going into the quarter, if they’re down 20%, and you’re looking at it going, “The report wasn’t that freaking bad, man.” Well, your stock was up like 40% heading into the freaking quarter, and now they didn’t raise guidance, even though, you know, because they can’t raise guidance, because there’s too much uncertainty.

Frank Curzio 24:42

How do they go out and say, “Oh, you know, things are going to be great the next 6 months. We’re going to raise guidance”? It’s tough when your costs have gone up tremendously over that time period. It’s going to be an analyst market. You have to look at debt. You have to look at what companies are hedged when it comes to oil. That’s going to be very, very important. A lot of these companies with large fleets sometimes hedge. If they are, they’re going to see their profits surge compared to companies that aren’t. But that’s where you have to look under the hood, and you’re going to find lots of ideas and get into a lot of great names in the S&P 500 that are going to be down 20, 30% from their highs. And look, you don’t get this opportunity often, right? Usually, we have these bull markets. They go higher and higher. Now you’re going to get the opportunity to buy some of these names. That’s why, if you’re prepared, bear markets are really good, or when stocks come down, it’s really good if you’re prepared, because that’s when you buy really great assets for dirt-cheap prices.

Frank Curzio 25:29

I don’t know if you wanted to tie in anything else to that, but, you know, Constellation Brands was a good blueprint, you know?

Daniel Creech 25:34

Yeah, no, well said.

Frank Curzio 25:35

Now let’s turn the corner to AI. I think everything is absolutely positive within AI. So, I mean, we could start here. SpaceX in talks to raise 40 billion to buy Nvidia chips, Daniel. I mean, what are your thoughts on that? 40 billion is a lot of money. I mean, this is one of the biggest debt financing we’ve seen in AI. I know we see 20, you know, trillion-dollar valuations coming out. 40 billion just to buy Nvidia chips. I mean, pretty crazy. I think SpaceX has about 30 billion in debt. They just raised a shitload of cash because they just IPO’d. But you’re looking at, you know, big capital raise in debt markets when it’s more expensive than ever, but you’re still seeing demand for this debt, right?

Daniel Creech 26:13

Oh, yeah. There’s—listen, I mean, you can have a tale of two economies, and right now, as crazy as the numbers and the future spending and CapEx is, there’s still demand for both the appetite to spend money and then to receive it. We’ll see how. Now, there’s a lot of appetite, and don’t mix it up. We’re talking AI demand is one thing. You know, the bond sale for Paramount and Warner Brothers and stuff is totally different. So don’t cross over the investor appetite there. But looking at AI, I mean, they’re not slowing down on trying to contract power. They’re going global. You don’t have to look very hard to not only look at headlines, and Frank’s talked about this, in other parts of the country, data centers, even American companies investing billions of dollars overseas in different data centers and power plays like that. That’s just wild. And then, so this whole supply chain from chips to power continues to be in strong demand. Yes, everybody wants to call the top. Everybody wants to be right and all that.

Daniel Creech 27:09

I just—there’s way too many people calling the top in AI for it to bust right now, in my opinion. I could be wrong. But clearly, the market is telling you there is a massive appetite to continue building this out. And again, I’ve continued to kind of beat a dead horse here, and I’m sorry. However, I think it does provide a point. You cannot have it both ways in the sense of, you can’t say, “We’re spending too much on AI, and this is never going to come to fruition, and the CapEx and the return on investment is not going to be there,” when it takes 3 flirty years to build a plant, and 6 months in, everybody’s complaining and whining like a newborn, Frank. That drives me insane. You know, waiting is the hardest part. But if you think this is all a flop before everything is built, I agree to disagree, and I just think that you’re getting caught up in the noise. And that’s okay. You can enjoy the noise. Frank likes concerts too. He loves loud noise. He goes to rock concerts all the time.

Frank Curzio 27:54

I mean, speaking of noise, I mean, so Broadcom is also being talked to raise 60 billion to—so Broadcom, what does Broadcom do, right? Okay, he’s a chip supplier, right? TPUs mostly, and he’s really kicking ass, right? Stocks up nicely. Put a, yeah, chart up there, 1-year chart of that. You know, just Broadcom, even like a 3 to 5-year chart, this company’s really been killing it. But I don’t think people understand that they also lease equipment, and they’re also a lender. And this is where the financing takes place, which worries me, because when you see higher interest rates, they’re going, you know, Wall Street’s great at creating new financing vehicles. Things that you never heard of, like which crust us during the housing market, right? Nobody knows what a CLO is until it was too late, and G’s like, “Yo, we’re caught in this too, man.” We’re like, “What are you talking about? This is G. Why is it? What’s going on? AIG financed all of that. What’s going on with AIG, where everybody passed off, you know, their risk to AIG?

Frank Curzio 28:51

It’s great. Hey, this is great. This is awesome,” right? They didn’t realize AIG would go under, and it’s kind of like an insurance company. Everybody has insurance, but when an insurance company goes bankrupt, nobody gets paid, and everybody goes bankrupt. And then you have, you know, the whole world and the whole financial system collapsing, right? That’s why the government had to bail out a lot of the banks and the whole system back during the credit crisis. But when I see what Broadcom is doing right now, Daniel, they’re raising 60 billion to loan money to Anthropic. And Anthropic is said to become Broadcom’s largest custom chip design customer by 2027. And so now Broadcom and a lot of these other companies can use investment grade rating and raise money and then lend it out at higher rates, and then Anthropic is going to say, “Okay, hey, we’ll do that. We’ll get the debt. We’ll get the money from you. You’re our lender. We’ll pay you for that.” And also, on the backside of that is, “We’re going to do business with you and be one of your biggest clients.” So you have this whole financing circle that’s really crazy, and it all works just like, you know, you look at Michael Saylor and Bitcoin and all these, you know, Bitcoin treasury firms and Ethereum treasury firms.

Frank Curzio 29:56

They all work as long as the underlying commodity or whatever they’re related to continues to go high. When it goes lower, then you get fucked. I mean, look what happened to, you know, to Strategy, right? A lot of these companies. What was it? Bitmine, which is Tom Lee’s company. So, you know, there’s a lot of moving parts within this, and there’s a lot of creative financing that’s going to go on. But, you know, when you need 40 billion, it’s just a matter of time. I think you’re going to start seeing it in the next 3 months where these guys—you saw it with Google. They’re issuing equity. A lot of these companies, where the stock prices are, it’s cheaper for them to just dilute and issue tons of equity and raise $100 billion for a lot of this stuff. But it’s just, you know, we’re talking trillions in financing that has to take place. And SpaceX, hey, raising 40 billion to buy Nvidia chips to takeaway? It’s not SpaceX here. The takeaway is great news for Nvidia. Great news for AMD, because AMD is going to see this as well, right? And AMD also has ties to MUSE, which is massive.

Frank Curzio 30:44

So, you know, you’re seeing, you know, Target raises AMD. AMD is a company I liked for a while. I had that in my personal portfolio, and I sold it probably $100 ago, but I did very, very well with it. But, you know, now you have to look at AMD again. Now you have to look at Nvidia, which we rode up to, right, for really good gains. I think we sold a couple weeks ago. But, you know, just all this factors into Nvidia. Nvidia is the biggest winner. So don’t look, “Oh, SpaceX raising money.” Yes, they’re going to more than double their debt, and yes, they have a lot of cash on the balance sheet from the IPO. You know, SpaceX, yes, we liked it pretty much 30, 40 points ago when this thing came close to the lows, because I said all the risks that are priced in are priced in with all the lockups and stuff like that, and you should be doing really well with that. We call that in this podcast. But, you know, great news for Nvidia. And then when we turn, we turn to Alphabet signing a 20-year nuclear power agreement with Constellation Energy, right?

Frank Curzio 31:33

I mean, I don’t know if you saw that news as well, Daniel.

Daniel Creech 31:36

Yeah, oh, yeah. Absolutely.

Frank Curzio 31:37

I mean, so we have Alphabet in an agreement with Constellation, and Constellation is to bring 890 megawatts. Okay? I have two companies that are signing 40 megawatt deals for a billion dollars, right, in power. And, you know, on average, you’re looking at 890 megawatts of new nuclear capacity online, and to contract another 2.7 gigawatts of existing capacity in PJM. And PJM operates the grid for, I think it’s 13 mid to northeastern states. So this capacity is supported by a 20-year contract with expected investments of more than $4 billion. And Constellation Energy, and, you know, look at—pull up like maybe a 3-month chart, Joe.

Frank Curzio 32:25

I mean, you see that. Look at that. I mean, now you see this thing really, you know, taking off here. This is a great deal. And when I look at this, you can say, “Oh, Constellation, that’s great. You know, more money coming in, guaranteed money. That’s fine. That’s great. That’s awesome.” I think when we look at a deal like this, you have to realize the importance. I mean, the translation here is the desperate need for power. We need more power, right? We say it all the time. We need more power, right? It’s, you know, a 20-year contract. 20 years. You know how long that is? I mean, 20 years. We’re talking about—it’s a long time. I mean, 20 years ago, we had the credit crisis. So the takeaway from this is not necessarily for Constellation Energy, but this could signal a bottom for nuclear stocks, which have been annihilated, because if you look at a hyperscale who’s willing to say, “Hey, you know what? We’re going to sign 20-year deals,” and I think Microsoft did the same thing with Three Mile Island, you know, a 20-year deal there.

Frank Curzio 33:20

If hyperscales are willing to sign 20-year deals into the future, it basically puts every uranium project on the radar, saying, “Hey, once you develop, we’re in.” And yes, in the U.S., we need refining, right? Otherwise, none of this stuff works, and we need that capacity. And hopefully, that comes online. That’s going to take many years. But you have to look at nuclear, which nuclear stocks have been decimated. They’ve been annihilated, where they’re one way, or they’re 24/7 baseload power of every cheap, one of the cleanest fuels ever. And when I look at uranium, I say, “These are stocks that you borrow, not buy long-term and hold long-term, and you borrow them when they’re really down, getting annihilated, and when they go up tremendously, it’s always a good time to sell.” It’s just this huge curve, up, down, up, down, up, down. Right now, it’s really, really down. This might light a spark under the rags of nuclear companies, because I know I have a lot of people out there that love nuclear, that love uranium companies.

Frank Curzio 34:10

But if you’re looking at uranium companies, you know, this is a very, very good catalyst, because they’re not looking, “Oh, 1 to 2 years, and Constellation is a very big company and established.” But if you’re looking 20 years out, and that’s how the dire need of them to need power, you know, it might be time to jump into some of these nuclear companies that are down tremendously. And we did that with one that’s down. It’s down a little bit more. It’s down 50% off its highs. That’s tied to nuclear and new ways of bringing power to the market. But I will look at some of these other stocks. I mean, uranium energy, I mean, it was $20 under 10, and nothing has really happened. There’s nothing there that you could say, “Oh, well, you know, the company did major, major financings,” or anything. This stock is just down. But, you know, you go years and years. There’s just these up-and-down cycles, up-and-down cycles. We know that the hyperscalers have the most money on the planet. They’re spending trillions of dollars year after year all the way through 2030, probably a lot longer than that, over $7 trillion until then, until 2030, 2031.

Frank Curzio 35:03

I just think it’s a good time to really pick away at some of these uranium companies where you might see 3, 6 months where it’s kind of going to be crappy. You’re never going to pick the ultimate low and sell at the ultimate top. But right now, if you’re willing to say, “Hey, you know what? Let me put a 15, 20%, 25% stop loss on this,” because this could easily double from here. And this should be good news for the whole uranium sector. And it’s not even—look at, I mean, you’re looking at uranium energy down 6% today. Why? There’s no deals with these companies. Again, we’re looking at utility companies compared to just uranium producers, but uranium, it has to come from these companies. I just think at these levels that they’re going to become buyers. That’s my takeaway from that news. I don’t know if that’s the same takeaway that you got.

Daniel Creech 35:39

I agree. I mean, I definitely think that uranium in the sector is due for a bounce. Prices have been moving higher. If you look at Cameco, it does a good job of just putting the long-term and spot price of uranium. Those prices have rebounded, and the stocks are lagging there. So I do think there’s an opportunity there. Biggest takeaway here, though, for me, is the utilities and power generators. We’ve talked about Southern Company and Duke Energy. Those guys have gotten beat up. You can look at the independent power players or producers. But I just, you know, it’s tough when markets and stocks go against you. But again, you can’t have this bullish argument about AI and power, and we need all this, and then get upset before that situation or project is even done. Yes, stocks can go against you, and that can be aggravating. As Frank said, you know, you can pull up several stocks and say, “Well, you could argue they’re in better financial shape,” or you can argue there’s better news or momentum behind the stock, and yet the stock could be significantly lower than where it was.

Daniel Creech 36:35

That’s just part of the game. But I really like utilities here. I’ve talked about Southern Companies in the past. I just, I think the selloff is way overdone. Yes, they have high interest rates, and that is something you have to take into consideration, because the good thing about utilities is, keep it simple. Utilities only make money when they invest, because they’re contracted to have certain fixed returns on equity and investment from different rules and regulations. Well, when they’re investing, like they are now, that means future profits are coming at a guaranteed rate. However, they have to do just like everybody else. They have to go to the markets, and they have to negotiate and figure out how they can make that work, because, you know, their same 6, 8, 9% return on equity doesn’t stack up that well if you’re going to borrow at 8.5% or 9% or whatever. So, yes, there’s going to be some headwinds, but the demand for utilities and the demand for power, as Frank has said, is absolutely there.

Daniel Creech 37:24

And just, like I said, if I can encourage you one thing, is to try to block out the noise on, “Oh, this isn’t working. This isn’t going to happen. We’re having delays.” You can’t throw in, you just can’t throw in the towel a year, year and a half in on a 3-year project. And the people telling you to do that are just dumber than doorpost.

Frank Curzio 37:42

Yeah. And a lot of these utility companies have gotten out. It’s one of the worst-performing sectors. And there are notes out there, even today, if you look on CNBC, I forgot who it is, one of the news stories saying, “Hey, this sector is poised to bottom here,” which is interesting, right? It’s another sector to look at. More AI news. OpenAI raising $30 billion in another private funding round at a $1.4 trillion valuation. Remember when OpenAI said that they were going to go public this summer? But now, Altman says he’s putting it off because of, Daniel, your favorite thing, safety concerns.

Daniel Creech 38:12

He’s a liar.

Frank Curzio 38:13

What do you think? What do you think?

Daniel Creech 38:14

I think he’s full of it. You know what I think is better is that, evidently, I think I still, this still might be fake. I might be pulling a blunder here on Wall Street Unplugged, Frank. Did you see the New York Times article about Anthropic and the AI people meeting with the Pope, evidently?

Frank Curzio 38:31

No.

Daniel Creech 38:31

Trying to talk about consciousness?

Frank Curzio 38:32

No. Really?

Daniel Creech 38:33

Oh, talk about why people have a bad taste in their mouth about religion. If these weasels are going over to get a blessing of the Pope, that shows you how pathetic they are. I don’t buy—listen, I’m not going to beat this horse again. I don’t buy into this whole safety fear BS. I buy into the idea that their fundamentals behind their business are deteriorating, and they have to sell the stock as quickly as they can to people like me that want to get rich. I just, I think it’s horrible. I think they’re beyond laughable, to be honest with you.

Frank Curzio 39:00

We say it’s laughable because, for me, growing up on Wall Street, 30 years, and working on Wall Street, right, when I was at street.com, it’s money. Money trumps their families. It trumps their kids. It trumps everything, right? Money, when it comes to Wall Street, right? I always use the example that, you know, they’ll take everything from you and leave you naked in the street with one sock, and then, you know, they’ll take that sock and shove it down your throat, right? That’s Wall Street. That’s what SPACs they annihilate, you know, retail investors and stuff. So when you say, “Oh, safety concerns,” like they care, it’s kind of, it’s like a politician telling you they care about you. You know, it’s hilarious. You know, they care about themselves. But I’m going to say a few things here, okay? The last raise for OpenAI was in March. That’s 7 months ago at an $850 billion valuation. This valuation they’re raising money is at $1.4 trillion. So that’s a $550 billion increase in their market cap in 7 months, which there’s only 19 companies in the S&P 500 with a valuation higher than $550 billion.

Frank Curzio 39:54

So just the amount this increase is bigger than the market caps of Mastercard, Chevron, Costco, Coke, Oracle. And this is 7 months, right? It’s like you just create another Oracle, another Costco, Coke, Chevron, right? That’s how much at this valuation for a company whose growth is clearly slowing. And Anthropic is eating your lunch. And slowing, I mean, I’m talking about revenue growing. Yes, it’s high, 18% quarter over quarter. Well, Anthropic is growing its revenue by more than 100% if you look at the comparison. If you are investing in OpenAI at this valuation, you are insane. You’re an idiot. You’re an idiot. I mean, you might see BlackRock come in, Asher and Horowitz come in. When these rounds go, Series A, B, C, D, E, F, whether they’re up to, you know, the 10th, 12th round, whatever, in funding, they’re giving special discounts to the investors that came in previous rounds where you could buy the next round at a substantial discount. Sometimes it could be 10%, 50%, 20%. So when they say, “Oh, you know what?

Frank Curzio 40:50

BlackRock’s coming in, Asher and Horowitz coming in,” they’re coming in at a significant discount to everyone else because they were previous investors in private rounds. But now, what are they doing? They’re targeting the Middle East for capital, which is kind of like the last person to know. They’re almost like the retail investor of private equity. “Oh, okay, let’s go to the Middle East. They have so much money. Yeah, we got okay.” And they just like, “All right, let’s just come in.” They usually last, and, you know, they get hurt a lot of times being the last one coming in. But you’re raising at the $1.4 billion valuation. My takeaway on this news is that if they’re able to raise that money, I think it’s what, is it $30 billion they’re raising? They might raise even more. I have no idea. With a $1.4 billion valuation, a company that’s slowing growth where their top competitor is eating their lunch right now, it tells you Anthropic, that IPO is going to come out at $1 trillion. And Anthropic’s coming out, I think, in next month, right?

Frank Curzio 41:41

Still on schedule for next month. If they raise this money at $1.4 billion at that valuation, Anthropic’s going to be a $2.5 trillion. That’s going to be the largest we’ve probably ever seen in the history of the markets, Anthropic’s IPO, when it comes to market cap. It’s going to be $2.5 trillion. It’s going to dwarf SpaceX, which, whatever that was, $1.5, I don’t know if it came out close. This, I mean, I’m just saying, if OpenAI is an inferior company, which we all know Anthropic is killing them, if they come out with a $1.4 billion, they’re able to raise at a $1.4 billion valuation in the private markets, when Anthropic goes public, that thing’s going to go public at a $2.5 trillion valuation. It’s going to be insane, because that growth is not slowing. It’s getting faster and faster and faster. That’s my biggest takeaway there. Again, all this news within AI, clearly positive, right? A lot of other stuff, not positive. But then we have Marvell Technologies. CEO came on CNBC today, and I don’t know.

Frank Curzio 42:34

Maybe I want to look this up, because maybe I don’t believe it, but I saw this in two different areas. I’m going to look it up one more time. Did you see that interview with the CEO? Did you see what’s going on with Marvell and, you know, what they said about the future of AI?

Daniel Creech 42:44

I saw their, I saw, I didn’t see the interview, no. I saw some of the comments that he made about the total addressable market, which is significantly growing. So again, AI is working, and these guys are clearly benefiting.

Frank Curzio 42:57

Matt Murphy went on TV and said that fiscal year 2031 revenue target is going to be $80 billion. That’s the midpoint. They think it could be as high as $90 billion. $80 billion.

Daniel Creech 43:15

What’d you say? I thought it was 2028. It’s 2031?

Frank Curzio 43:17

Fiscal year 2031 revenue target of $80 billion. Why is that a big deal? Well, you have Marvell up there now, if you see. Joe, scroll down to the revenue for Marvell. What they generated the past 12 months. What does that say?

Daniel Creech 43:35

9.5.

Frank Curzio 43:37

9. They’re generating $9.5 billion in revenue over the past 12 months. They’re saying by 2031, it’s not this crazy forecast, right? Five years out. They’re going to 10X their revenue. 10X their revenue. And this is based on custom chip demand, which they’re seeing right now. But we’re looking at a company, $9.5 billion, and the stock is freaking down. And I know this has a tremendous run when you look at the year chart here, but had a tremendous run since March. It was $80, and it went up tremendously, right, to $2.80. It’s been like, you know, since, I would say, June, it’s been up and down, up and down, kind of, you know, a little bit lower than that, but just this tremendous move higher. I don’t know if they were anticipating $80 billion. I didn’t see that number any place, anywhere at all for this company. And the fact that they came out with that number, and that’s what he’s throwing out there for 2031, telling the whole world, “This is where we’re going. We’re going to 10X our revenue from here.” And that stock hasn’t even moved on this.

Frank Curzio 44:32

I mean, $2.80, you can’t tell me, even the $2.80, again, you saw tremendous growth in this company over the past year, especially in revenues and earnings, but we’re not talking about next five years where we’re looking at this massive, massive growth in sales. You know, to me, that’s incredible. I mean, you’re seeing really incredible gains of $80 billion at least from a $9 billion company. Holy cow. I mean, that’s massive revenue going forward. Let’s see if they meet it. But if they do meet it, I can’t see Marvell. And what’s it trading at, Joe, in terms of, this is an expensive stock, I don’t think. It never was, but maybe now it is. Oh, it is expensive now. So, you know, maybe they’re just pricing in that growth of, you know, that huge growth going forward. But this was always one of the cheap, like, you know, non-darlings or just like the redhead stepchild of the chip industry. And now, all of a sudden, you see companies like this, even AMD, you know, doing tremendous. But big takeaway for chip companies, because that growth, what we’re looking at is an industry that’s usually cyclical.

Frank Curzio 45:27

It does very well with the economy, and more chips are sold. This industry is no longer cyclical. This is a secular growing industry. We’re not looking at one or two years of growth. They talk about growth three years, four years, five years, seven years out. That’s never happened if you look at a chip market going back for 20, 30 years. This is always a cyclical market, and everybody copies, you know, the technology in some way where they’re not infringing on patents, and they become commoditized, right? It was always like this commoditized industry. Now, you have these specialties where, man, these companies are just rocking and rolling. If you see that strong growth, how aren’t you in these companies? Because I don’t know any company outside of AI that could actually say that they’re going to 10X their revenue over the next four, five years. And that’s why you’re seeing these companies do very, very well in holding up the market. Marvell, you could throw in there as well. Look at that trend in the last couple of months, just going higher and higher. But, man, holy cow. I mean, just positive news all around for AI.

Frank Curzio 46:15

And, you know, do you see it continuing, Daniel? Is this the sector that you have to be in going through the rest of the year? Is it priced in because these things are doing very, very well? You know, what are some of the areas? I mean, are you looking at, you know, individual hyperscalers that haven’t performed as well as some of the other ones where we’ve seen, I mean, what are you looking at, Daniel? You saw Meta come back tremendously from use. You saw Microsoft come back tremendously, right? So is there, we really nailed Google when we recommend that and so forth with 100% gains. I still think there’s areas in here. I don’t know if there’s any names that you like here within the hyperscalers.

Daniel Creech 46:44

Yeah, I missed it on the pullback with, or not hyperscalers, excuse me. But to your comment about cyclical and then secular growth industries and such, you know, it’s not a huge risk, in my opinion, to think that AI can lengthen or change or even disrupt past cycles and business cycles. And while GPUs are getting a lot of the attention right now, and they should be with NVIDIA, you know, Intel is a Trump circle play. Intel is getting a lot of help with government funding and government deals and such. But also, the CPU cyclical nature of things, you know, one to two to maybe three years refreshments and all that kind of stuff, you’re seeing demand not only on the GPU side, but CPUs because of inference and training and all this kind of stuff. So look at Intel’s and AMD’s. Just, I just continue to think that the supply chain and the value chain across everything from chips to power remains to be bought on pullbacks. Now, you can get as picky as you’d like or as detailed as you’d like over certain sectors, but I just think that you can paint with a pretty wide brush right now, because the reason that some stocks are underperforming is basically just either geopolitics or political headwinds going into the midterms right now.

Daniel Creech 48:00

I don’t think that, you know, let’s just take the crazies on the political side. You know, are we going to go from build it, own it, and earn a generating return on equity? Or are we going to go to, hey, we’re stopping all data center buildouts. We’re going to take over AI. I just think there’s a lot of noise right now. I don’t think it’s going to leave us. So I would be, you know, I’m comfortable just to kind of sit there and be patient. But I do think that everything from chips to power, and for your point on hyperscalers, you know, Meta has really come back very nicely. Amazon Prime, doesn’t Prime start soon?

Frank Curzio 48:36

Yeah, Prime just started. Yeah, yeah, Prime just started. Yep. Good deal. See how that goes. Yep.

Daniel Creech 48:41

I’m not trying to bury this because it is important, but as Frank says, when everybody’s talking about this, it’s not as important as what it may seem. And I love the details and some of the research I’ve seen about, you know, there’s over a trillion dollars in off-balance sheet items and debt that Amazon and Meta’s and all these guys have. But that’s not the credit cycle yet. These guys are gushing cash. I just think there’s a lot of fear right now into the midterms. And listen, I think you need to let the market tell you where they see midterms going in. And last thing for me, cow sheep, polymarket, all those are great and fun to look at. Do not bet the farm on those things. Those guys, that’s just crypto of the early days. That’s the Wild West of just transferring and basically insider trading. And oh, by the way, you got to be careful on who they’re polling and all that kind of stuff. So still an eternity before the midterms, but markets will tell us what’s going on. Here’s an easy one.

Daniel Creech 49:33

If interest rates spike to 10%, Frank, you know, Democrats are winning hands down.

Frank Curzio 49:37

Yeah, there’s going to be a lot of change coming.

Daniel Creech 49:38

Keep that on your big O chart.

Frank Curzio 49:40

Yeah, a lot of change is coming, but, you know, Trump wants that 10-year much, much lower, energy prices much, much lower, and he’s not going to get it in, you know, what are we, three weeks away? Four weeks away from the election? He’s not going to get it. So there’s going to be a lot of change over there, and we’ll see how that plays out with a lot of negative news. But just a couple of things too I wanted to mention is, you know, Michael Burry’s getting beat up a little bit, you know, continues to call for the AI crash, where just, you know, he took losses on Lululemon, which has been a disaster and stuff. So, you know, people are just, you know, talking a lot about that.

Daniel Creech 50:07

Did he sell?

Frank Curzio 50:08

He sold basically for the tax losses, yeah. So I don’t know if he bought Deckers Outdoor or something instead for now, and maybe he’ll get back into Lululemon, which he likes. But, yeah, he’s been calling for the AI crash for a while. I just, you know, if I had to guess, I really believe we’re in the second inning of this. You know, and when you’re seeing much, much more demand, everyone’s come out and said it. It’s not just coming from a few companies. It’s the whole industry. They just, they can’t keep up with demand right now, right? And you’re seeing the earnings, you’re seeing the profits, you’re seeing this massive growth. This is unlike anything we’ve ever seen. It’s not like the dot-com era. You can’t compare it there, because, you know, earnings, they weren’t seeing earnings. They weren’t even seeing revenue. It was just an idea. And they had like, you know, you know, 12 pages on their website that they just built that then trading at multi-billion dollar valuations back then. It was crazy, right? It was just crazy, some of these valuations. But, yeah, I thought that’s interesting.

Frank Curzio 50:54

And, you know, I don’t like to beat up anyone when they’re down, but usually when you see these great, great guys, I’m not saying AI is going to crash here, but usually when you see this with David Einhorn, I said the same thing. He had like four, five years, and I was just like, you know, guys like that, whatever it is for that downturn, but, you know, inside of them, that competitive drive and that just, I mean, you saw billions, right? It just, you know, you want to buy these guys when they’re down, right? You want to buy these guys when they’re down. I’m not saying buy Lululemon here. I’m not saying AI is crash, but, you know.

Daniel Creech 51:22

I was going to say Burry’s a, he’s a sky is falling guy.

Frank Curzio 51:25

He’s, yeah, and he was right once and really, you know, got a lot of credit for that, which, you know, is well-deserved. He was one of the first in the credit crisis, but, you know, again, he’s been calling for lots of crashes for a very long time, but he’s been very. This from, you don’t see what happens. Another news story that just hit this week is Disney announced that a streaming Disney Plus is going to air the upcoming Super Bowl in February. I said why I don’t like Disney for four years, and the stock has absolutely collapsed. It’s been annihilated. If you, Joe, put it like a 10-year chart if you can. If you got a five-year there going into 10 years, go a little bit further and just pull that out. I mean, you’re going to see a stock that has just, well, you got all, not all. You got to go five years and then bring it out a little bit. Go five years. I mean, look where that was five years ago. Look where we are now. You keep going. Look at the levels that we’re at. I mean, we’re at levels in 2016, right?

Frank Curzio 52:13

You know, that this stock, I mean, yes, it had a big bump when it said, “Hey, we’re going to stream you for COVID.” That’s what we called bullshit, because they were just adding all these free subscribers and people loved it and, you know, trying to compare themselves to Netflix, but the average RP user was like, you know, 70% lower than everyone because they were just getting these free people internationally to their star program. But Disney, I think last week announced that finally what we said that they’re going to license their content in a licensing deal with Netflix. Wow, that’s great. I mean, why don’t you just cancel your streaming service, get rid of all your employees within it. Now all your great content comes out in the movies, which it does everywhere. That’s why, you know, no one really wants to get Disney Plus, because your new content doesn’t really come out on that platform. Hulu has been a disaster forever. There’s so much competition now. You continue to raise prices tremendously on this and provide a much worse service with commercials everywhere. But now, but you do have a great library and these streaming companies are dying here where they need, they need content, right?

Frank Curzio 53:02

And now you have the Super Bowl, then they’re going to broadcast it on ABC, but imagine if Disney said, “We’re only going to do it on Disney Plus,” so you have to pay for that and you have to pay $50 for it. I mean, you know how much money they would generate off of it? I mean, everybody would be pissed. It’s like when people are pissed, they’re still going to pay for it.

Daniel Creech 53:20

Yeah, that would.

Frank Curzio 53:21

Imagine it. The whole world wants to see the Super Bowl. The world, not just the US, the world. The greatest event in the world, arguably, right? It’s amazing. But the fact that you could say that that’s on streaming, that you won’t be giving it out of way to any, I mean, holy cow. I mean, if you just broadcast it and don’t worry about the advertising revenue, which you’re bringing in, you know, whatever, $15, $20 million, $30 million, however it is for the commercials. But you could do all that, you’re still going to bring in the money. But imagine if they just broadcast it like what Amazon does on their streaming. What is it, Joe? Is that Thursday Night Football they have? Thursday Night Football where you need Prime in order to, so that’s, and now you’re getting Prime and they’re like, “Oh, also with Prime, you get these 10 things,” right? I mean, maybe you get discounts. Oh, Disney Plus, but you get 20% off of a park. So if you sign up for cruises, if you pay for this event, I mean, that’s what would, if you’re looking at Prime was a great example of that.

Frank Curzio 54:06

Apple Plus, you know, Apple also a great example of that. Now, plus just, you know, Apple and online, and it’s amazing. So for me, I see Disney finally realizing a lot of things. I know they’re laying off more employees. I’m not there yet to recommend it, but, you know, positive news all around, sports broadcasting. I don’t know if they have enough money to broadcast, to buy these broadcasting rights. They’ve been canceling a lot of them because, you know, you’re dealing with the biggest players. But just interesting news around the industry, a lot of stuff going on, but Disney not yet at that point where I like it, but at least they’re finally doing things I said they should have done four years ago. And I know they’re not listening to this podcast. If they did, that stock would probably be 150 instead of 100, but let’s see. Because they keep pushing this Disney Plus and they cannot compete. They can’t compete with the bigger players. They don’t have the money for new content. All their best content comes out in the movies first. So people aren’t going to pay a fortune for Disney Plus to watch a movie that they already saw in the movies to watch on your platform.

Frank Curzio 54:56

It just, it doesn’t work, right? And that’s their growth. There’s no growth around anything else that they’re doing other than raising prices for their parks and cruises and events and stuff like that. So, you know, for me, just drop the Disney Plus, license your content out. That whole division, yes, you’re making money on it now because, you know, you basically, it’s almost impossible to cancel the service. People have trouble. It’s seriously. You basically break it to foot and knock. So you got a better shot than canceling your Disney Plus account. But there’s things that they could do to make this right and especially get out of the woke and we saw that with Nike and stuff like that. But just, yeah, interesting to see Disney, they’re going to be broadcasting it, but also on ABC, which I don’t know why that’s a big deal. ABC and you’re going to stream it on Disney Plus. I don’t know why.

Daniel Creech 55:35

I don’t know why it’s a big deal here. Disney had a good run. They ought to have folded up, Frank.

Frank Curzio 55:38

If you say Disney, if you say, “Hey, you know what? We’re just broadcasting Disney Plus and not ABC.” Holy shit. The whole world.

Daniel Creech 55:43

Nobody would watch the Super Bowl.

Frank Curzio 55:44

Everybody in the world would sign up to that. Anyone who loves football is going to sign up to that no matter what. It’s like signing up to a big fight. I mean, I even bought freaking the fight with Tyson and who’s that influencer? Yeah. Yeah, Logan Paul. I mean, I even signed up for that because it’s entertainment. You want to see it. You’re going to, okay, big deal. It’s 30, 40 bucks. You go to a bar to watch it. You go to a party, whatever. You’re going to spend money. Why not spend 50 bucks or whatever it is? But just the amount of money they would generate for that, it would piss off a lot of people, but they would still absolutely subscribe to it. And, you know, I don’t know. Disney is there. They have a lot of service. They have a lot of things they could turn the company around. It’s just a matter of pulling the trigger. They haven’t really pulled the trigger on a lot of it. So let’s see what happens. With that said, hopefully you’re enjoying the baseball playoffs with Joe. What happened to the Yankees, man? What happened there, buddy? I mean, Yankees were hitting, doing well.

Frank Curzio 56:31

And you know what? You were one of 20 people that said to me, I’m not even kidding, Yankee fans. I was saying, you know, judge, better off. And I get it because judge never hits in the playoffs, but the whole team really never hits in the playoffs, right? So I still think they have a shot. I mean, they have the best rotation in baseball. Yes, they’re down two-all, which is very hard. The odds are against them. If they win this game, things could change, but let’s see if they win this game tonight. Milwaukee looks great so far. So do the White Sox, so do the Rays. But I can’t, I mean, how are you going to beat the Dodgers? They have eight players. Eight players on the team making more than $100 million while Tampa has zero players making a $100 million contract. I mean, eventually, yes, you’re a good team, but you’re playing against superstars where the guy who did, who’s the guy, I don’t even know the guy’s name with a two-run homer, who’s probably the worst guy on their team, who’s probably would be the best guy on other teams, but a two-run homer for them.

Frank Curzio 57:21

Ohtani’s like in the slump, but I don’t know. The Dodgers aren’t even playing good and they’re winning. So let’s see. They still have to get past Atlanta. I think they’re up 2-1 and it’s one more game they got to win a three or five series, but not the biggest baseball fan. I like when the Yankees are there, but hopefully it turns around. I was hoping they win one game at the Rays, but yeah, the last two games and they didn’t look good the last game either, whatever it is. Hopefully they turn around. One game. One game changes that momentum. They still have a shot. We’ll see what happens. Other than that.

Daniel Creech 57:43

How much longer is baseball on? When’s this whole, when’s the World Series?

Frank Curzio 57:46

Weeks.

Daniel Creech 57:46

Weeks.

Frank Curzio 57:47

Weeks. Yeah. So we got after this, two more rounds of playoffs and then we’re good. And then we’re going to worry about baseball, but hockey. Hockey’s here. Hockey’s here. We got football, which is awesome. Great time of year. So even though my Eagles, are they going to be the worst team in the whole NFL, which is crazy. The last two games that they lost and now they lost Lane Johnson, but man, what a disaster for them. What a disaster for my other team, which is Penn State. Two that are pretty crazy. Although I do like Penn State, the wideout game against USC, I think they should be on the duck by 10. They’re favored by one and a half. I told you about Missouri. I said, putting my house, right? I was telling Joe as well, putting my house on Missouri against Florida. And I think Florida is favored by five and a half and lost by like 35. I really like Penn State to this game, even though they looked horrible, because they should be on the duck by 10 and they’re favored by one and a half. And you always have Vegas that’s right.

Frank Curzio 58:32

They’re dying for you to take USC for some reason. So let’s see how that game turns out, which is their wideout game, which is always very exciting. Let’s see what happens.

Daniel Creech 58:38

As exciting as it used to be since they got their cocaine problems.

Frank Curzio 58:42

That’s why the wideout game. It’s even better. More meaningful now.

Daniel Creech 58:48

Also, the big 10 is a bunch of morons because the big 10 is not 10 anymore and they’re nowhere near close to one another because you have Washington, USC, and all those guys in there. That’s a tough travel from USC all the way to.

Frank Curzio 59:01

It is Oregon, Washington.

Daniel Creech 59:03

Not Penn College, State College.

Frank Curzio 59:05

Yeah. All the way across the country back and forth. But yeah, speaking from the guy who has the best team in the world every single year and complains more than anybody.

Daniel Creech 59:12

Hey, we already got a loss.

Frank Curzio 59:14

See what I mean? One loss and they want to get rid of Ryan immediately, right? That guy’s great.

Daniel Creech 59:18

No, I don’t care about who he, that’s because of the one team he loses to. That’s why he should get fired.

Frank Curzio 59:23

Well, Michigan.

Daniel Creech 59:23

Everybody else he wins.

Frank Curzio 59:24

He’s going to be, they’re going to be Michigan this year. I mean, Michigan’s horrible. He just lost the last two games to Michigan. So Michigan.

Daniel Creech 59:30

Right at the last second too at home. That was great.

Frank Curzio 59:32

That was, that was insane. That was two, that was two weeks ago and then he just lost to Minnesota, right? So.

Daniel Creech 59:36

Oh, yeah, that right. Yeah.

Frank Curzio 59:37

Yeah, which is crazy. But anyway, guys, talking about our sports and stocks, be very, very careful going into earnings season. Be sure to listen to our podcast tomorrow. Q and A, go to askcurzio.com to ask questions. We’re getting tons of great questions in about all this stuff, about different stocks, economy, anything, personal stuff. But the Q and A does very, very well. A lot of people asking questions. Go to askcurzio.com to ask us a question. Daniel and I will try to answer as many as we can. And that’s the Thursday podcast tomorrow. So that’s it for us. Questions or comments, feel free to email me at frank@curzioresearch.com. Daniel?

Daniel Creech 01:00:05

Daniel@curzioresearch.com.

Frank Curzio 01:00:07

All right, guys. We’ll see you tomorrow. Take care.

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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.