Frank Curzio 00:00

Let’s go, right there. It’s Wednesday, November 4, post-election day. I’m Frank Curzio, this is the Wall Street Unplugged podcast where we break down headlines and— Tell you what’s really moving these markets. Mr. Daniel Creech, how’s it going, buddy?

Daniel Creech 00:17

Hello, Frank. Another beautiful Florida day.

Frank Curzio 00:19

I think we have to start off with that little story about politics. As Democrats annihilated the Republicans yesterday in the midterms, took all 7 swing states, and took governorships. They flipped Texas, winning the Senate and governor race. And I don’t know if you were watching the results last night; Florida was a lot, lot closer than most people thought. But we did win, thank God, which is a great thing. I love Florida, I love the laws here, I love that, you know, they’re really against transgenders beating the shit out of women. Or my daughters in sports, that the police and chiefs actually say if someone robs your house, you shoot them in the face. I love that. I love the fact that they say if you’re under threat from protesters and they’re in front of your car, you couldn’t run over them. Yes, I love that law. I love it. Not letting criminals out super early. Like, these are things like just safety and, you know, nice, good people. I mean, this is, you know, it’s Florida. But even with all of that, I can’t believe how close that governor race was.

Frank Curzio 01:21

I mean, that was insane, right? So, listen, the Democrats really kicked ass. And, you know, Daniel, what are your first opinions of what you saw?

Daniel Creech 01:29

Well, they definitely won in a popular fashion. The blue wave, that all came true. So that’s good for your betting markets. A lot of those things were really on point in the last presidential election. I think that that kind of helps those businesses. I think— I’m surprised, I’m happy. I think the market’s given you a chance to kind of unlighten some of your longs here, with the market being up. Very volatile. Futures were down 2, 2.5%, and then rallied all the way back. We’re actually up around 2%. So I think that that’s just kind of unwinding a lot of hedges. Some uncertainty is over now, which is good. The election’s behind us. However, now the market’s going to weigh this, hey, this executive order, basically presidency that Trump is going to have for the last 2 years, a lame duck. There’s going to be a lot of volatility. I think that’s only going to pick up. I do say, it’s clear on, in my opinion, the Iran war was a horrible misjudgment. Gas prices, you can’t go to the polls when the odds are already against you as the incumbent and the power, the party in power.

Daniel Creech 02:29

Midterms are typically and historically very bad for that. In addition to that, I want to keep pounding this drum because this is going to be with us for a long time, and that is inflation. And inflation is really hurting people. And the COVID money printing and experiment, for lack of a better word, is just now starting to really grip. And it’s not slowing down. And I think that that is going to kind of keep that pendulum swinging towards anti-capitalism, anti-wealth, anti-all that kind of thing. And I think markets are going to brace for that, and we’ll navigate that as it comes at us.

Frank Curzio 03:04

I mean, first off, it’s not a surprise. It shouldn’t surprise anyone. Because this happens in every single election. When one party wins a presidency, I think twice in the last 80 years, since 1940, when the president’s party gained House seats, you know, it’s only happened twice. And gained, you know, seats in both, you know, Senate and the House. And one of those was during the World Trade Center attack. The other one was like a long, long time ago. So it almost never happens, right? So they’re always voting opposite of what happened 2 years ago. And if you think about it, it kind of makes a lot of sense. Because I don’t know what the percentage is, Joe. You could look. I don’t know. I haven’t looked, you know, the acceptance rating or how Americans feel about, you know, our political— and politicians. Is that, you know, this all-time low? I think it was like 11, 12%. Everybody hates our politicians because, you know, they always make promises and very few deliver. And when you look at why this happens and why it switches all the time, it’s because, you know, you’re looking at these politicians and political parties, they can’t help themselves.

Frank Curzio 04:07

So the winner will immediately, like they did, even when you look at the channels. I looked at both channels. I looked at Fox and I looked at, you know, Trump’s interview real late at night at what happened. He said he’s going to work with Democrats or whatever, which, you know, I didn’t see him making too many excuses. But he said the turnouts were great. But, you know, he was surprised. And then I was looking at MSNBC, you know, because I wanted to see both sides. And, you know, I was looking at the other channels. And just like when I saw when, you know, Donald Trump won 2 years ago, you know, this whole like, you know, pounding your chest, the Democrats, thank God, the country. You know, so you’re trashing all those Democrats, which even some Democrats are going to vote Republican, some Republicans are going to vote Democrats, right? That’s that middle, you know, the middle that they try to capture. Because you’re never going to change the minds of, you know, die-hard Republicans or Democrats, like change their religion. But once the winner— they announced the winner— you have, you know, this trash talking.

Frank Curzio 04:57

And you even saw it where, you know, they’re, you know, just saying, oh, thank God Trump’s done, and, you know, now we don’t have to worry anymore and go crazy. And right away, you’re separating it. So, you know, then it leads to these ultimate extreme agendas, even though the majority of all Americans do not support those policies on both sides. And if you look at examples of this, Daniel, which I cited here, I mean, the majority of Americans, 77% support that U.S. citizens need to register to vote. So Republicans put the Save America Act to vote. It passed the House, but it needed a 60% majority in the Senate, which is not going to happen, right? Because it was voted down by every Democrat. That’s one thing. And if you’re looking at— and I’m going to go both sides here, so, you know, and why you see this. And I would say this, that my sister is— and she told me she actually went with my mom a day early to vote and voted early in one of the counties, right? Some of the villages. And she has a New York residence.

Frank Curzio 05:47

She just bought a Florida residence. So she hasn’t moved to Florida yet, but she has a house in both places. So, you know, she said, okay, I’m going to try to vote and see what happens. And she tried to vote and they said, okay, we have to check it out. Okay, your brother, your mom both live here. They made a couple of phone calls. They said, no, you can’t vote. You’re not registered, you can’t vote. And she was like, you know, it’s a good thing. Now, on the flip side of that, when you look at New York, and I’m sure California is like this, since they called the election 10 minutes before the polls opened. Did you see that? They called that for, what is it, the race between, you know, Hilton, right? And the guy that just disappeared and doesn’t do, you know, never actually wants to debate. So you’re seeing in New York where you could just go there and say, hey, you know, what’s your name? Okay, you could vote. Literally. I mean, there’s videos everywhere. They show people actually doing this, going up there and saying, hey, I know like 7 or 8 people.

Frank Curzio 06:35

They’re like, yeah, sure, if you know them, you could vouch for them. How do you vouch for them? Just say, I know them. And you could have— so, you know, the fact that that gets turned down when the majority of Americans want you to show an ID. And the reason why is because you’re saying, well, the minorities and the Blacks and, you know, Spanish people and all this, you know. They, you know, it’s racist. It’s kind of racist telling them that they’re complete idiots that they can’t fill out a form to get an ID, right? I think that’s more racist than anything. So, you know, they tried to pass the bill on Social Security that eliminates taxes and distributions, which every retiree in America should absolutely want, right? Pay less taxes on that distribution. That’s awesome. My mom’s collecting Social Security as well. And Congress passed a much more dialed-down version of it, even though massive retirees wanted it. Look at the Epstein files. Most Americans want those files to be released.

Frank Curzio 07:21

All of them. All the files to be released. And it’s still not released. Why is that? I mean, both Biden and Trump had access, saw everything, had the ability to release it, which, you know, most Americans want, but both chose not to. Why is that, right? So we have a political system that we choose these representatives and they’re supposed to represent their constituents and the people. And they’re not. And, you know, so after every 2 years, you’re seeing these promises, right? Ukraine, Russia, woah, woah, and on day one, Trump said, right, if he got elected, he declared that we won the war against Iran after 3 weeks and stated at least, I mean, you could say at least another 5 times. You might get up to 10 times that a deal was in place and the war is over and it’s now 8 months later. And we’re still at war. We have a country that nobody knows who the fuck is running, right? So you can’t do like a Cuban Missile Crisis thing where you call, you know, Russia and the presidents are talking or you’re talking to Xi or you’re talking, you know, Cuban Missile Crisis where, hey, we’re not going to tell everybody, we’re going to remove our missiles from Turkey, remove your missiles from Cuba.

Frank Curzio 08:17

Okay, good. And you can’t talk directly to Putin. You can’t talk directly to Xi and do stuff under the table because you don’t know who’s running the show over there, right? So this is going to last longer and longer. So, you know, we always say the worst thing for a CEO is overpromise and underdeliver. And we saw that a lot with this administration. And I think people were really pissed off because we’re seeing energy prices a lot higher. You know, you have the Democrats right now who are, you know, who have won. They have the ability right now to say, hey, you know what? We’re going to work with the Republicans on most issues that the majority of Americans support, right? This will create this unity structure. Most Americans will be proud of their country and political systems. And the last time I saw that was when the World Trade Center bombing, right? And it didn’t matter anything. I was down there at ground zero a couple days later. It was every store was open, giving away everything for free.

Frank Curzio 09:05

People come from other states to help everybody. Everyone was proud to be Americans and help and stuff like that. You know, you have the ability, right, to do that. But it’s definitely not going to happen. We all know it. So if I’m looking at some of the Democratic channels with MSNBC saying, you know, we took the power away from Trump. He’s corrupt. He’s dangerous, right? Which, you know, you separate 50% of the country. So in 2 years from now, maybe the Democrats win the presidency, but it’s likely the House and the Senate, one of them are going to switch again because they’re going to look at all the bullshit promises that they’re making right now that, you know, these incumbents, you know, made now, which is going to be 2 years ago when they elect, 2 years from now. And they did nothing. And then the people are going to vote and say, hey, you promised this, this, and this, and you didn’t follow through. So, you know, when I see what happened, it was kind of, you know, par for the course, right? I think you had a lot of people on the Republican side saying, oh, this is going to go much better.

Frank Curzio 09:53

It’s going to go much better. It didn’t go much better. You got annihilated. I mean, it wasn’t going to go your way anyway, but you got annihilated. All 7 swing states. And maybe you won, you could have won one or two. But, you know, gas prices through the roof, the Iran war, I said, you know, that didn’t help. There’s a lot of Republicans that are pissed off at that, that they’re seeing prices, you know, go up for every single thing that they have. And affordability was a big issue. So, you know, now we look for the markets. And that’s what I want to ask you, Daniel. So what are you looking at here? Because we saw the markets fall after hours when these announcements are made, and now you’re seeing them rally. So what are your thoughts? Is there sectors of void, things that you’re looking at within things? And, you know, this is important to cover because, you know, we’re going to show some statistics that are going to make a lot of sense to you that this may be the start of a real bull market here over the next year.

Daniel Creech 10:34

Yeah, it could. Or it could be, like I said, I think today, you know, you’ve been kind of on this theme about we’re in earnings season and things are very good across the board with data centers that’s clearly been running the economy and got GDP growth there. But if that’s going to be hindered, so the Democrats ran on a lot of slowing down or moratoriums or kind of stopping that trend. And like Larry Fink of BlackRock says, listen, this is powering the economy. If you slow down this data center build-out and AI, you could go into a recession. Maybe he’s talking his own book because he’s an asset, you know, manager and such. But I do think that one day you’re not going to have all these answers. So to tell you the truth, I don’t know exactly the answers right now. What I would say is, as you’ve been saying, enlightening up your risk tolerance and portfolio because of the volatility, I think today is a great day. I’m surprised the markets are holding in there. Are they still? Are they still up, Joe?

Frank Curzio 11:25

Yeah.

Daniel Creech 11:25

Yeah, that’s good. But it definitely is going to hit certain sectors. So the AI sector is basically a coin flip spinning in the air right now because you have to really be cautious on, I mean, last I looked, energy, utilities, everybody was selling off a little bit because if they do what they ran on, then you’re going to have a slowdown in the economy and those stocks are going to get hit. And we’ll talk about it a little bit later. It doesn’t matter what you turn in in earnings or report. You could have fantastic earnings and your stock doesn’t have to go up. And that’s going to be a new normal. And so the AI center is really hit hard. And I think energy, man, if we can get a nice pullback in energy because oil prices, WTI has significantly come down. You’ve seen a little bit of relief at the pump. They’re still crazy high. I just think that energy is going to be, I think that’s a huge opportunity. And it’s hard to look at that and not feel like you missed it because of the Iran war and the volatility there.

Daniel Creech 12:24

But hopefully we’ll talk about it a little bit later. It’s just that’s going to continue to play out. And again, this all comes back to money and inflation. And it is just going to be, it’s going to get worse before it gets better. I’m not saying, you know, it’s over. I’m simply saying that it’s just the volatility is only going to pick up and the violence is only going to pick up in markets. I mean, just the volatility and such. And that’s what you got to be prepared for. And if you’re emotional right now, you probably have too much risk on the table.

Frank Curzio 12:53

Yeah, I mean, you should have took some off the table and we’ve been wrong with some of the companies in our portfolio as well. I didn’t think they’d get hit as hard as they did because they were down. So I structured portfolios saying, listen, this earnings season, you know, a couple months ago, saying it’s going to be one of the most dangerous. It’s one of the most dangerous markets. I had a post on X at Frank Curzio that got, you know, over 200,000 views and just saying it’s one of the most dangerous markets I’ve seen in 20 years because if you beat earnings, you get hit a little bit. And if you don’t, you get hit a lot. So what’s the risk reward compared to putting your money in a money market account and risk-free and earning 4%? And, you know, the political side of the day where it’s likely at the House and the Democrats and the Democrats, they’re going to announce an impeachment, which nobody wants. They don’t want to see a president’s house get raided without a smoking gun, right? So we don’t want to see that. It’s nonsense, right? And now the Senate, they control the Senate.

Frank Curzio 13:38

They can actually bring a trial against him, right? And what’s big about the Senate too is that if anything happens to a Supreme Court justice or they step down, they’re not going to allow Trump to pick that. They’re not going to vote for it, right? They’re going to vote against it. So, you know, it is a big deal. But if you forget about politics, which is very hard to do over the past month because you would think like, you know, we’re in the worst country in the world. Everyone hates each other because you’re a Democrat. You think Trump’s evil, corrupt, and he’s going to kill your family, you know? If you’re a Republican, you think that these socialist policies are going to spread, you know, throughout the federal level and criminals are going to take over. Everyone’s seeing massive tax increases and, you know, it’s the end of our constitution in America as you know it, right? That’s what they pitch if all this shit happens. We’ve been saying the same thing before every election for the last 30, 40 years. But if you shut off your favorite political channels and just, you know, tune out that noise and look at the markets, which, you know, this podcast is about, right?

Frank Curzio 14:27

We want to make money for you. When you look at why the market’s turning around and if you look and I’ve been very bearish and I’m very surprised at how much some of these stocks have come down during earnings season. Some of them got nailed, 30, 40% good companies reporting. We said that this was going to happen. But if you look at the return of the S&P and Joe, if you could put that chart up that I sent you, that the S&P over the next 8 months following the midterms, so it’s from November to June, and you date back to 1942, the S&P has been higher 21 out of 21 times in that 8-month period following midterms dating back to 1942. We’re talking 100% of the time over the next 8 months with an average gain of more than 16%. Now, why is this? Because a lot of uncertainty is removed. And, you know, during returns when we have a split government where across 10 midterms and five presidential elections that left no single party in charge, the S&P 500 rose an average of 15% after one year and one year returns were positive 14 out of 15 cases.

Frank Curzio 15:27

So, you know, even a better stat, so this is from Morgan Stanley, when there’s a split government where the president is actually a Republican and the Democrats control either the House or the Senate, the S&P 500 gains an average of 23%. All these, if you’re looking back, that’s why it should be no surprise what’s happening. Why did it reverse? It does it all the time. We saw that when Trump got elected, surprisingly, against Clinton, nobody predicted that. Very few people. And the markets really sold off and then we had one of the biggest bull markets in history to follow. So, you know, you’re looking at this and you remove the certainty, but split governments are good because you don’t have to worry. The less government is involved and the less to do and should, the better it is for businesses because, you know, when you look at these politicians, what happens? These politicians are getting paid by billionaires, right? And those billionaires want their agenda and, you know, they’re not going to do the agenda of the American people.

Frank Curzio 16:14

And that’s why at midterms you get that check and say, hey, you know what? You promised us this, this, and this, but now you’re doing this, this, and this. And that pisses off a lot of people. So, you know, what do you do? Do you buy the S&P 500? Yeah, it’s probably good now. I mean, I’ve been bearish for the last couple months. The S&P is down. The Nasdaq’s down. The 100 is down, I think, 10% from its highs. But a lot of individual names, especially in AI, have got annihilated. You know, I told you to use the higher rates to park some money into money market accounts earning over 4%. Now you’re going to get your chance. I mean, look at the hyperscalers coming in. Amazon was one of our recent selections in the newsletter. It’s up 6% today, right? So, you know, you’re going to see these hyperscalers, I think, absolutely go through the roof, which is kind of contrary to what a lot of people are saying on TV today because they’re like, oh, the Democrats are pushing back on, you know, all the states that they won. And one of the big issues was AI.

Frank Curzio 17:00

And I could see the young vote saying these things are going to take our jobs and we just paid a fortune, you know, because they don’t talk about the, you know, the schools raising tuition by massive amounts and making everyone broke, right? And the government, you know, funding that. They don’t talk about that. It’s everybody else’s, like the kids just blame everybody else. They don’t blame the actual fucking costs, which I’m going to be going through with my daughters, you know, going to college. You don’t talk about that, right? It’s never the schools’ fault for raising tuition like, you know, 8X more than inflation. But there’s a lot of states that are saying that we’re not going to build out these data centers. And that’s fine. But imagine if you’re a state that says, hey, AI companies, you know what? Come to my state. Every single one of you. It’s going to result in tens, even hundreds of billions coming into their state. The revenue for the state is going to soar over the next five years.

Frank Curzio 17:46

You’re going to see massive job creation, less taxes for everyone in that state because they’re going to want to balance in the budget. You know, they could say water is a concern. It’s not a concern. It’s a bullshit story, as Larry Fink said, and we knew this from companies that we cover. You know, golf courses use more water than data centers. Electricity prices are not concerns. States without data centers have seen their electricity prices rise more than with data centers. Nobody talks about that either. Plus, many states can require this build-out from hyperscalers that they pay whatever it is, concessions or the increase in electricity prices that are caused by AI. And they’re going to be fine doing that because they’re going to be making hundreds of billions of dollars over the next 5, 10, 15 years once these data centers are built. But imagine that it’s not a federal level where we’re saying, okay, no AI centers at all. It’s certain states saying, hey, you’re not going to build here. And what’s going to happen, right?

Frank Curzio 18:31

We saw a lot of people move from California to Texas. We see a lot of people move from New York to Florida because the laws are better and the taxes are better. They’re just going to happen in different states. Those states that open that up, that’s why I think this is just a lot of smoke and mirrors and a lot of bullshit because the Democrats are going to be crazy not to do this or not to reverse or push this off, right? They’ll basically lie and tell you what they’re going to do. But I bet you a lot of these data centers are going to be built, the ones that are currently being built are being built, but even ones that are going forward. I mean, look, they’re doing, they say, oh, we’re going to, you know, check out the water and see the electricity prices. And a lot of it’s all bullshit. But you say what you have to do to get elected. And that’s what they did. And that’s fine. But when you’re looking at this data center build-out, it’s going to happen. And Daniel, a couple of things here because I have strong thoughts on this. There’s a lot of companies that are going to go under in this industry. And they’re right with some of these neocloud companies who are basically third parties that don’t have the funding to build out these data centers that are under contract.

Frank Curzio 19:25

And you’re saying, why is all this happening? This is being led. And I think this is a story that should be told. This is being caused by the hyperscalers on purpose because they’re operating in a position of strength. Just like when there’s a massive recession, which I heard from numerous people, if we decide not to build out data centers or really hold this back, we could go into a five to seven-year recession. And it makes sense because we never had this kind of build-out where it counts so much of GDP and so much growth. And we always had, okay, well, we have a strong housing market. The housing market is dead. It’s dead at 6.5%. We’re over 7% mortgage rates. Maybe they come down a little bit. Ten years been easing. But still, do you know anyone that’s buying houses right now? Unless you’re paying cash. You’re paying cash. You’re a king. You go to 10 houses and off a 30% discount and you’re going to get probably two of them if you want them. But, you know, taking out a mortgage rate at 7% plus is absolutely insane, right?

Frank Curzio 20:11

Especially since, what is it? A massive amount of people have their mortgage rate below 3.5%. They’re either refinanced or they just, you know, they bought houses a couple of years ago in whatever it was, 2021, 2022. But when you look at the hyperscalers, it makes sense for them, right? Because what happens during recessions, the strongest companies pick up all the pieces. And that’s what’s happening right now. But if you look at the hyperscalers, they bought out, and this is what I’m hearing from key contacts in the industry, they bought out all the supplies to build data centers for two to three years. That leaves it impossible for neocloud companies to build out these data centers on time, which forces them to pay a ton more in financing. So what’s going to happen is a lot of these companies are getting hit and they can’t finance. And since they can’t get it done on time, it has a lot of these clauses in contracts say, hey, if you’re not going to get it done here, then, you know, the financing is going to be raised or we might go someplace else.

Frank Curzio 20:57

But, you know, the hyperscalers can pay. Think about when this happens and all these companies blow up, what’s going to happen? Hyperscalers, they need electricity. They need this built out. But now they’re going to be able to pay much less for long-term build-outs, forcing many of these companies to restructure their terms. I mean, it’s a brilliant strategy that nobody’s talking about. That’s why they’re saying, hey, let’s buy out everything. These companies are going to get hurt. And you look at a hyperscaler, some of them have deals with these companies, but still, it makes a lot of sense for the strongest to be like, hey, we’re paying a fortune for this to build out. The capex is so freaking high. How do we change that? Well, you know, if we force the terms of this and these guys really can’t afford and not going to build out on time, we can get much better terms to get this built. That makes a lot of sense. But the build-out in AI is going to happen because it has to. China is a socialist nation, right? You can say it a communist nation, whatever you want to call it.

Frank Curzio 21:44

The efficiency and quickness to build compute is a million times easier in China because you got one guy that says build it. They don’t go through this whole freaking process. And what state are you in? Oh, who wants to win the election? Okay. Well, we got to go through this whole shit. Oh, you know, let’s issue mandatoriums. Let’s, you know, delay this, delay that. All the bullshit bureaucracy and politicians pretend they give a shit when they don’t give a fuck about anyone, which we all know on both sides, right? They don’t give a shit. Shit, right? So we all know that. But when you look at China, it gets things done immediately. It gets things done right away. And, you know, their compute and to bring it to market is so much faster than us. So we know that. The biggest companies in the world know that. They’re going to go to the government, which they’ve gone even to Biden and they went through Trump. And, you know, they’re going to go to these politicians and say, look, you know, we’re going to be in a massive recession.

Frank Curzio 22:32

We’re in a recession. All you guys are going to get, you know, voted out immediately. So we need to be ahead. This is the future of our world when it comes to compute. That’s the future, right? We have to be first, which makes me think that the government has an opportunity to fund a lot of this stuff. And I expect them to take even more of a stake. Maybe it’s through the Fannies and the Freddies and helping build out data centers and making sure that this happens and maybe, you know, offering better financing terms. This has to happen. It’s not like an if. It has to happen. So, you know, they’re going to be, I believe they’re going to be very active funding, building out infrastructure, electricity companies, which, by the way, electricity companies are looking at these neocloud companies and other companies saying, you know what? You want us to build out electricity for three, four, five years of demand that you’re talking about, ten years. You know what? You have to put up two, 300, 400 million.

Frank Curzio 23:22

This is what they’re requesting right now before. And this way they’re covering their ass and covering their risk because who knows what’s going to happen in three years if we hit a recession? Who knows if it’s going to pull back? And we’ve seen that with every bubble that’s ever burst with spending. It’s just massive, massive, massive. And then, you know, you have this massive demand. All of a sudden, demand peaks and you have all the supply in the market and prices get crushed. Everything gets nailed. We saw it with the housing market. We’ve seen it so many markets over and over and over again. But, you know, you’re looking at the AI trade is very, very alive and well. And I’m not telling you to buy Cerebras, Anthropic, or OpenAI when they go public. But the chip names that are down. AMD just reported, we’ll cover that in a second, great, great numbers. And that’s down, what, 25% from its highs? And it’s not even, you know, it’s flat today. It was up a little bit more. You’re looking at memory stocks trading at single-digit PEs, right?

Frank Curzio 24:10

With huge pricing power. And we saw it with Apple, right? They hurt their margins. We’ll cover that in a second. You know, and the hyperscalers themselves, they’re going to generate massive revenue over the next 10 years. And a lot of them have pulled back. These are great, great buys right now. I mean, I’m not telling you to buy SpaceX now and Tesla because Democrats stated publicly, you know, they’re coming after Elon Musk and who knows how that turns out. And Elon’s like, yeah, I have more money than all you put together. But who knows? It’s just going to create risk. But, you know, there’s other sectors I like here. But for the AI build-out, Daniel, I think that it’s alive and well. And that’s why you’ve seen a lot of the hyperscalers go higher because we’re not issuing, this isn’t a federal level saying, hey, we don’t want AI. This is certain states. And if they don’t have it in states, you’re going to have other states that say, hey, you know what? Come here. We want you to come here because it’s going to be a massive boom to their economies. It’s almost like an automatic reelection.

Frank Curzio 24:56

If you’re lowering taxes, you’re creating more jobs, right? That’s what people want. Safer environments. You know, they’re going to vote you in again, again, again. A lot of these states have opportunities to say, hey, you know what? Nobody wants these AI centers. Come to us. We’ll build them. You can build them in our state all you want. And that’s going to generate massive windfall profits for these states.

Daniel Creech 25:14

It definitely could. I do think the big question here is, if that happens, what’s the timeline there? So if this build-out is going to continue at pace, then that’s one thing. If the pace slows down and everything that you were hoping for or needed to return on investment in six to eight months is now pushed out to 24 months, that’s a big deal. And I think that there’s going to be a lot of volatility to fill that. I don’t think that it’s going to be built out as normal because I don’t think that the politicians who just took in power, they have to follow through a little bit, I would think, with what they ran on. And that running is clearly, hey, we’re going to slow this down and we’re going to kind of wait and see. And I think that that’s going to weigh on you and weigh on markets. So we’ll have to see about that. Yeah, I’ll be honest. I’m not sold on the fact that the U.S. and China are in this new Cold War race. I mean, I’m sold on the fact that that’s what we’re told and we have to be China and China this and China that.

Daniel Creech 26:13

I just, we have a huge disadvantage with them from the power structure you just mentioned. They can add much more power to the grid much more quickly because of the way that country is ran. And so we’re at a big disadvantage there. I just, let’s say we lose this AI race, whatever the heck that means. I don’t even know. I don’t know that that, I’m just not sold that this is important as what the media tells us. Let’s just leave it at that.

Frank Curzio 26:39

I mean, losing the AI race, what China means that.

Daniel Creech 26:41

What does that even mean? Yeah.

Frank Curzio 26:42

I mean, to me, it means that, you know, it hurts us through defense, creating weapons faster, quicker, better strategies around all this, which Palantir is getting hired like crazy, you know, into governments and stuff, you know, running these models incredibly fast. You know, the efficiencies of what we’re able to do now, I mean, it’s really incredible. A cloud could run your business for you if you just type in the right prompts. I mean, it’s unbelievable what it could do for you. It could create your whole entire marketing plan.

Daniel Creech 27:09

But that’s not changing. Like, that’s not going to change. If China has declared the winner, cloud can still do that.

Frank Curzio 27:14

Yeah, cloud can still do that. But now it could become a lot more expensive where they obviously copy all of our models, right? Because that’s why you see, like, you know, DeepSeek and everything and everything that comes out is after.

Daniel Creech 27:24

Yeah, the open source.

Frank Curzio 27:25

You see the news, you know, all the new releases and stuff. But being able to be quicker and faster and be ahead of our models is a very big deal when you’re looking at defense, you’re looking at war. Remember, we talked about communist nations that want to, you know, destroy us and take over the world, right? That’s what they want to do. So, you know, having those, they don’t have those capabilities right now. But if they had those capabilities and knowing how we’re going to attack and how we’re going to do things, I think that’s significant because, I mean, look, we just had a massive hack, you know, that, again, it’s over my head. I didn’t know. I know my guys were on it. Everybody I know was talking about it. And this was recently. And they said it was from, you know, South Korea or whatever it was from or North Korea, I mean. And, you know, and we had to, you know, put patches on our operations and stuff. We just saw a $6 billion hack of Binance, you know, which is $6 billion. Oh, $6 billion. $6 billion. You know how much money that is to lose in seconds?

Frank Curzio 28:13

Like, how don’t you have the safeguards in place to have this money be withdrawn from Binance in seconds, right? I mean, it’s got, I mean, I know it’s probably through hundreds of different accounts, but when you’re talking $6 billion, you’re looking at hundreds of thousands of dollars in different accounts. Like, how does that happen? And did they come out and say, hey, you know, this is what we did, we fixed it or whatever. But think about, like, all of our brokerage firms, think about all the banks if you’re capable of really breaking in. Think of our electricity, our grid and stuff like that if you’re able to do this, right? So to me, I think it is a significant risk when you’re looking at people who are looking to destroy America and hate America, right? So how could they do that? They don’t have the power to do it with our military, but yet cyber, yes, absolutely. You know, if they control that or they’re better at it than us. But, you know, getting back to, you know, sectors and stuff and after the election has this play out, I think healthcare remains strong.

Frank Curzio 29:00

Defense companies are good buys. Funding is not going to get cut. You know, it’s a split government. And, you know, the Iran war and restocking of weapons, drones, missiles, all that stuff is not slowing down anytime soon. I think you have to be selective in retail and energy, you know, consumer staples as well, which have made big runs. I think when you’re looking at those sectors, management teams are going to be huge, right? Where it’s not just all AI companies are going up, all healthcare companies are going up. I think it matters on how they’re going to operate going forward. I mean, the cost savings, how they’re using AI to, you know, increase margins, right, and increase productivity. It’s going to determine the winners from losers in this space. I don’t think those are sectors that are just going to go up and down. I think there’s going to be lots of winners, lots of losers. But overall, with this, you know, you got to be positive on the markets when you look into history and look at the stats. So I think we’re going to be much higher 9 to 12 months from now because we’ve sold off and you’re going to say, well, the S&P is only down a little bit.

Frank Curzio 29:50

Okay. Or the Equal Weight Index is only down a little bit. There’s names that are down tremendously, like 30, 35%. Some names that reported great earnings. Meaning these stocks are much, much cheaper since the E and the PE, which is, you know, earnings, is surging, right? You’re seeing earnings surge. A lot of these guys reporting record results. Well, the P, the P’s for price, has declined over the past few months. That’s making these stocks much, much cheaper than they were. So you can’t say, wow, this is expensive and it’s a rerating. We’re actually cheaper even before the sell-off than we were over the last three years on average. If you look at the PE ratio, maybe these companies rerate and we say, hey, you know, this company shouldn’t have a 25 multiple, it should have a 19 multiple. And who determines what the multiple should actually be? How many times sales like a company trade you do that through M&A. But maybe that’s rerating now. But if you’re looking at these companies, you’re looking to buy them, when you see in lots in AI space and the chip sector and memory that are up, their earnings have exploded higher and those prices have come down 20, 30, 40% from those highs.

Frank Curzio 30:51

You know, you’re looking at a market where demand is off the charts. We’re going to cover AMD in a second. But, you know, those are some of the winners here. But I see the market doing very well. You should have cash on the sidelines. And again, it’s not like our portfolio killed it. It didn’t. We had some small caps that got nailed as well. But I would say those are the winners. And the biggest winner by far, which we have to mention here, Daniel, is the prediction market platforms, who had this dead right again. So they had a dead right two years ago with Trump, one, and then Republicans. And we said, oh, these polls are full of shit. But now they kind of with the same polls that they have for the Democrats. And we want to see if this is going to work or not. But it makes sense that it works. I mean, this isn’t a poll where the person or organization is biased, getting paid by a certain party to post results that basically no one could audit and look at, you know, how did you get that, you know, whatever. This is real money on the line.

Frank Curzio 31:37

Like people in the know are wagering big money on these results, right? So it’s less bias, right? Because we want to make money. It’s almost like betting against Vegas. But they were right on this showing. I looked at, I mean, they had races at 90% across the board in a lot of these swing states, a little bit closer to maybe one or two. But man, they had this dead right. Like if you looked at the poly markets or the call streets, they basically said that this was going to be a blue wave and a sweep. And it was a little bit stronger than they predicted, but they had this right. So they’re big winners because those platforms, you know, I’m going to be listening to them rather than the polls all the time. And I did that last year as well when I was looking as the election was taking place and those guys were dead on, right? So, you know, we’ll see what happens there. But those are definitely big winners because if that didn’t happen or if the Republicans won, people would have been like, oh, you can’t listen to these sites either.

Frank Curzio 32:23

They’re full of shit or whatever. But they clearly weren’t. They were right this election. They were right last election. That’s how long they’ve been in existence for. But those are very, very big winners here from these election results.

Daniel Creech 32:33

Yeah, definitely prediction markets get a nod there. Definitely.

Frank Curzio 32:37

Well, let’s get to some stocks because we saw Apple report this week. So is Palantir and both sold off. We got a lot of questions, you know, why they sell off for? Because they both reported strong numbers, you know, record results. And you’re looking at why? And I can tell you there’s a fear now. We’ve been in a growth market for such a long time. That growth is going to slow with higher interest rates, higher energy prices that are probably going to stay here longer than anyone anticipated. I mean, people thought this was going to be over five months ago, right? It started eight months ago and it’s still not over. And we’re seeing energy prices. Well, energy prices are coming down now. But what happens with the next bombing or Iran goes after whoever in the Middle East and attacks, you know, a pipeline or whatever, who knows? But you’re looking at a market where they believe growth is going to slow. And that’s another thing what I want to talk about the Republicans for because the Republicans, I felt like they were even last year, you know, two years ago when Trump won, you know, there was this humble among the Democratic Party and saying, you know, we thought this, this, this, and this.

Frank Curzio 33:32

And clearly you were wrong. When I’m looking at the Republican Party and they’re looking and saying the economy is doing great, the economy is not fucking great for most people. Most people are seeing their costs, even the people who are doing good and they’re citing these spending statistics. You know, I get it, but you can’t go on TV, even election night when you got your ass kicked and say, wow, the economy is doing great. I can’t believe that’s what Trump was saying. I’m like, dude, you got to put yourself like a little empathy, right? Put yourself in their shoes and say, okay, what really happened and why did we lose? People are not doing as good as you say. Yes, they’ll spend a little bit more, whatever. But, you know, they’re looking at their bills going higher across the board, right? And they were supposed to come down. We’re supposed to see inflation come down in this administration. So, you know, get a reality check there. There’s got to be someone saying, hey, you know what? Take a step back and be like, these are the mistakes I made. And that’s what the Democrats did afterwards. They didn’t understand why. And then, you know, they ate humble pie and now look, now they won.

Frank Curzio 34:19

They said, okay, affordability, let’s focus on some of these issues. Stop focusing on these, you know.

Daniel Creech 34:24

Frank.

Frank Curzio 34:24

DEI garbage.

Daniel Creech 34:25

You’re going off the rails here. You’re actually, quit it. You’re.

Frank Curzio 34:29

But seriously.

Daniel Creech 34:29

You’re thinking that either party is going to get humility and stuff that doesn’t happen.

Frank Curzio 34:33

No, no. It would be nice.

Daniel Creech 34:34

Egomaniacs.

Frank Curzio 34:35

It’s amazing how you, I think they would have lost anyway, but just to go on TV after you lose and say, well, you know, I don’t know what to talk about. The economy is great. It’s never been strong. Come on.

Daniel Creech 34:43

Hey, all they look at is GDP. It’s not a good measure of individuals. That’s what they look at.

Frank Curzio 34:48

Be smart. So bringing that GDP’s relation to this because they were talking about how great the economy is doing, but people believe that the economy is going to slow. And that’s why you’re seeing a lot of these growth stocks get hit. And a clear example of this, that fear that growth is going to slow. When growth slows, both companies, when I dig through those results, I mean, you’re looking at China sales clearly slowed for Apple, came much worse than estimates. New contracts with Palantir grew just 6%. That was 49% growth the quarter before, not the year before, the quarter before, right? So when you have that, you have less pricing power. And, you know, when you’re seeing that slow growth and costs are going higher and margins get hit and bolted to margins were kind of like a little bit less than expected. Apple went up immediately when they saw the results and beat. And then when they talked about, hey, margins are going to get hit, meaning that we don’t know if we’re going to be able to raise prices enough to cover the memory costs for all of our devices.

Frank Curzio 35:35

So that’s why they sold off, you know? So I don’t know if you like, you know, any of those on a sell-off. I wanted to cover AMD as well that reported, but, you know, just a lot going on with earnings, a lot going on with the markets where, you know, people are surprised at the turnaround and stuff, but there are earnings coming out. And, you know, I’m getting to the point where I say, hey, you know what? Avoid a lot of this stuff because it’s crazy. If you’re right, you’re going to get hit a little bit. And if you’re wrong, you’re going to get annihilated. And a lot of stocks are going to come down 20, 30% in a day. We’re seeing that like crazy. What do you think, Daniel? What do we like? Two-thirds into earnings season or?

Daniel Creech 36:04

Yeah, I mean, it’s definitely in the heart, but I would just say on Palantir and Apple, your timeline, in my opinion, if you want to buy these today, I don’t see any upside to buying today. I don’t know why anybody would go in there and buy today, but that’s just me. I don’t think we’ve kind of felt enough pain for what potential changes are taking place. And we’ll see how that plays out. But yeah, clearly the numbers are great. The growth is still there from a year-over-year standpoint with Palantir especially. And the big thing there is commercial outpast or surpass, excuse me, government contracts and revenues. That’s a huge ordeal. But margins did take a hit going forward. And in this environment, you know, if your margins are going to go down a little bit, people are going to get a little shaky. So I think if you’re going to buy either one of those two companies, which I think, yes, over the long term, whatever that is, that’s kind of a lazy answer. I apologize. But I don’t think if you’re buying either one of these on the quick pullback or after earnings, I think your timeline has to be, you know, at least a year or two out, as Frank was just saying, to put the odds after the midterm back on your side.

Daniel Creech 37:06

But go ahead on AMD. I got a few comments on yours.

Frank Curzio 37:09

No, just before we even go there, just to show you guys a little bit of how I think of this. So you have Palantir up there, right? So look at, go down to the PE for Palantir. Of course, it’s skyrocketed. It’s really high. They were growing.

Daniel Creech 37:19

And it always has been.

Frank Curzio 37:20

So you look at the trailing 12 months, it’s like 120 and now it’s 96. So that means, you know, that fold PE is lower, meaning that they’re growing earnings a lot faster than the price is going up. And those numbers were much better because you’re looking at Palantir has gone up tremendously, right? I mean, look at the chart of the past few months for Palantir. It’s gone up, you know, put a three-month chart on there.

Daniel Creech 37:40

Yeah, it fell to 100 and then rallied to.

Frank Curzio 37:41

I mean, look at that. I mean, you’re looking at, yeah, so 150 to over 200 again. And now, you know, you’ve seen a little bit of sell-off in the past week or so, but, you know, that’s different if you look at most companies with an AI. I mean, you know, and this company got nailed with the software where a lot of software companies get, but it came all the way back. So it’s really strong going in. But now look at Apple’s numbers. This was scared the shit out of me because Apple’s up 5%, right, with the whole hyperscalers and everything, even though they’re not part of the really AI trade. But now it’s back almost to its all-time high. But when you scroll down, scroll down, Joe, and look at the PE. This is a company that’s trading near 40 times forward earnings that’s seeing slower growth, that the margins have gotten hit. They already reported record numbers. So how much better could those numbers get? If you look at the PE, see how close they’re together year over year, then not growing their earnings as fast as the stock price is going up.

Frank Curzio 38:28

So if you’re looking at that, you’re seeing a company where you’d love to see the trailing PE a lot lower and say, oh, wow, this company’s growing so a lot. So it deserves that 40 PE, like 38, whatever it is, 38.6 or 39. Does Apple deserve it? I mean, how much better could Apple’s results get when their costs are rising tremendously? You saw that China sales down, you know, worse than estimates. They just came out again that iPhone, I mean, you know, sales are a little bit better, but the prices have increased tremendously. Are they still going to have pricing power? I think Apple’s a very dangerous stock here. I mean, it could go high and go to 400, 500, who knows? But, you know, for me, I’m looking at other stocks like Amazon, I think, is an absolute steal here at that price compared to Apple, which, what’s the market cap on Apple before you go to Amazon? It’s got to be 5 trillion, right? 5.1 trillion. 5.1 trillion dollars, that stock is worth. Completely dropping the ball on AI, which turned out to be an advantage because they’re not worried about the capex numbers.

Frank Curzio 39:20

And that’s what people want to see, a little bit more safety on that end. But still, at the end of the day, you have to innovate. And let’s see. I mean, they have the money to spend to try to get into trends, which they’ve done their whole entire, you know, existence, right? They never like innovate. They kind of just take someone else’s idea and put it on steroids and make it a hundred times better than a company who invented it. That’s okay. But I mean, Amazon here, I think, you know, again, that’s closing on its high. I think Amazon, what’s the market cap of Amazon? Isn’t it like half the market cap of Apple? Basically half the market cap of Apple. And, you know, you see these results and people aren’t even reflected in, everyone’s talking about Starlink, this massive division, billions. And it’s the reason why SpaceX is going through the roof. Amazon’s going to be competing, right? They have their own Leo satellites that are going to go up. And, you know, again, that’s threatening an entire industry where you have, you know, companies that own Spectrum like the Verizons and AT&T. And I think there’s, what is it?

Frank Curzio 40:06

Aren’t they, SpaceX is looking to acquire a mobile company, I think.

Daniel Creech 40:12

Boost.

Frank Curzio 40:12

Boost Mobile, you know, which if I’m AT&T, I’m like, holy shit, right? So, you know, Amazon has that division. They’re the only ones, right? So they’re going to be competing with them. They’ll launch tons of satellites that are coming out like now. Retail divisions on fire. Everything’s just, the AI division, they have more compute than I think any single hyperscaler. They have more power than any other hyperscaler. But again, you know, 200 billion they’re spending. And people get a little nervous on that. But I think Amazon is a $4 trillion market cap easily 12 months from now. That’s why we have it in our portfolio. Sometimes you just got to take the win where and take what’s given to you. You know, people want small caps trading at 30 cents that are going to go to $25, of course. And that happens tomorrow. Some people want, it doesn’t happen. But we did this with Google a couple of years ago and generate over 100%. We did it with Dell. It’s well up over 100%. Sometimes these large caps just sit at levels like you’re seeing.

Frank Curzio 40:58

I think AMD is going to be a screaming buy. I mean, just, you know, down tremendously off its highs. They crushed the numbers, drove AMD down, Joe. I mean, look what that stock has pulled up from 650 to 486, under 500 now. Server revenue doubled. They’re expecting it to double in 2027. You have AI demand much stronger than it was three months ago when they issued forecasts, right? So, but yet the stock is down 25% over the past month. And you could say some of this might have been related to Intel, which is a totally different company because Intel really shit the bed and fell 30% one day. You know, massive growth, they said. I had CEO on it and orders from key clients like OpenAI, Microsoft, Meta. And I think that’s, isn’t that Jensen Huang’s cousin, I think, that runs AMD?

Daniel Creech 41:44

I do think they’re related, yes.

Frank Curzio 41:45

They’re related. They look a lot. It might be the same person that dresses, I don’t know. I won’t go there. It kind of looks the same. They look exactly like they do. So one’s a woman’s man, but, you know, it’s, it’s both of them are on fire and both of them are great when it comes to like when they’re on TV and, you know, promoting their companies and just showing growth. It’s not just promotion. They’re putting up the numbers. I mean, Advance Micro is growing tremendously right now. And this is a company that has been held back by PCs and, you know, just other divisions. And now they’re becoming more of a pure play with AI, which is why I liked them a while back. I think we sold it at like 550, you know, for my own portfolio. And it went to 650. I’m like, oh shit. But, you know, for this right here, 480, this could be a screaming buy here for AMD, right? Because you’re seeing that that massive demand from these hyperscalers is going to go through AMD. It’s going to go through Nvidia. So most analysts, believe it or not, when I look today at the analyst calls, they have targets above 650 for this stock.

Frank Curzio 42:36

Several at 700, Citigroup has an $800 target on this stock. I mean, very rare to see target prices that much higher on one of the largest companies and industry leaders in this space. Usually it’s 25% higher, 30% higher. These are 12-month target prices. Citi at 800. It doesn’t mean it’s going to go to 800. It doesn’t mean it’s going to go to 700 or 600. I’m just saying that you’re looking at the numbers of where AMD usually trades and they’ve done everything they possibly could to grow this company faster than they ever thought imagined, even raising their estimates from three months ago. And it’s still getting hit hard because, you know, it’s part of that AI trade, which I think people are going to get really wrong on this. I think you’re going to see acceleration here with AI because it’s not a federal law that’s passed. It’s states and other states are going to say, hey, come here. You guys can open up all the data centers in the next five years. And those states will be very, very smart. And those guys are going to do it. Republican and Democrat are going to get elected again, again, and again.

Frank Curzio 43:22

Because when you lower taxes, you provide more jobs for your economy and have a safe environment. That’s what people care about the most. And that’s why, you know, Florida actually, you know, did it right in this election, which was pretty cool. But Bailey did okay. Still almost reversed, which was crazy. But AMD, really good numbers.

Daniel Creech 43:37

Yeah, and it just goes back to investor sentiment. I mean, they have great numbers. The stock’s not doing anything. The stock’s off its high, as you said. They, I believe they guided for a growth of 50% quarter to quarter on the data center business. It is still booming. But again, none of that matters unless momentum comes back into this. And I’ll be honest, I don’t know what triggers that, but it doesn’t get triggered today. I mean, the blue wave is going to take a victory lap and that’s fine. But, you know, if you’re out there cherry picking today, I would just caution against that. But hey, my crystal ball is broken as well. Sticking with the data center play very quickly, an old friend of ours, Eaton Corp, ETN, Joe, if you want to throw the chart up, that stock’s gotten beat up as well. When I say beat up, I just mean it’s off its previous highs. Going through their Q3 earnings that was on the 3rd of November yesterday was absolutely incredible. Record this, record that growth. And the reason I’m pointing this out is because the CEO made this comment and he was talking a little bit about the data center and the momentum either stopping or picking up post-election.

Daniel Creech 44:32

And he was very confident in saying, listen, this is going to take multiple years to build out. Again, the timeline is multiple years, but that doesn’t mean it’s going to start and go smoothly. And that’s what I think is up in the air, like the spinning coin with the election there.

Frank Curzio 44:46

Keep that chart up. This is why it’s so difficult. And I think, I don’t know if I covered it with you yesterday or maybe Joe was talking, you know, offline. And when you look at Eaton, then you’re an investor. And this is where the algorithms play such a big deal because they’re faster than ever with AI where if you see a company up and reporting good numbers, you know, they go up tremendously for the rest of just that day. And if they report bad numbers and the stock’s down like, you know, pre-market of 7%, it’s going to be down 17, 20% or whatever. They just pile on. But if you look at Eaton and we’re programmed now that to say, holy shit, like 10%, it’s down 10%. Look at that chart. I mean, there is, you usually see a chart that goes up and then a bad quarter will come down a little bit and then maybe you resume that trade going higher or maybe just everything’s bad. Like Nike, see a chart that’s just going lower and lower. Like if you’re an investor, how do you look? And I don’t care who you are, if you’re a retiree or whatever, people look at their stocks.

Frank Curzio 45:32

They look at their portfolio often to see where it’s at. When you’re looking at this stock, I mean, look at between, you know, three, what is that? 330, whatever it is, and, you know, $400, you know, especially towards the last like seven or eight months, but it’s like up, down, up, down, up, down, up, month and month. You’re looking at this massive like 10, 15%. It looks like, you know, just this range month by month, right? When you usually used to seeing maybe quarter by quarter, but, you know, maybe, you know, every six months or so or a year. I mean, the volatility you’re seeing in these stocks and how much they go up and how much they go down, how much they go up or how much they go down is getting very harder for people to say, hey, I’m going to buy it and just forget about it. And that’s why it might be better to buy S&P 500. It’s outperformed a lot of hedge fund managers. It’s doing great. It gives you exposure to all the stocks, not just certain, this is one or two sectors. But my point is, if you could look at Eaton, you could look at AMD.

Frank Curzio 46:24

And what’s Eaton trading for? Could you go down and see what it’s trading for? Okay. I mean, look at that. Look at the PE was 35. It’s now 23. They’re still growing like a weed. Reported good numbers, but look at the discount that you’re getting. And you’re getting such a tremendous discount, 30% discount where the numbers have met expectations, right? So, you know, the fact that the data center bill out’s going to happen and it’s going to happen in years, people looking at Eaton going, I don’t know if I want to wait. I want to make more money. I want to trade. I want to make more. But buying these stocks like this and AMD and just closing your eyes and forgetting at these prices, I mean, holy cow, just open your eyes and wake up and not look at the markets. Telling you, you’re going to be like, holy shit, I can’t believe how much these stocks went up. But if you’re looking at day to day and week to week with that chart again, throw up that chart of Eaton, which is, you know, a good company, good earnings, you know, throw up a year chart of that.

Frank Curzio 47:10

You know, holy cow, it’s just, you know, the ups and downs. If you look for a year, look at the year chart, look at a year. I mean, look at that volatility. That’s insane. That’s insane, that kind of volatility. It’s all over the freaking place, right? So, you know, if you’re able to buy these things and you can keep your emotions out, you’re going to do very, very well buying Eaton here on this 9%, 10% pullback, buying AMD, which should be up easily. It’s down 25% going into the quarter, blew out the numbers, great forecast. And you’re telling me it’s flat today? You know, it should gain back some of that. There should be someone saying, hey, you know what? This isn’t Intel now. This is much better. So, you know, I’m looking at some of these stocks and the way they trade, this is why we said, you know, move to cash. You know, try to move to cash because when this happens, you’re going to get the chance, the opportunity to buy a lot of these stocks 20, 30% lower. And you’re not buying them because they’re seeing slow growth in earnings, some of these names. You’re just buying them because it’s a shitty market and people are like, you know, I just, I want to sell.

Frank Curzio 47:58

I want to get out of it and I don’t want to deal with the volatility. I’m nervous, but a lot of that stuff’s going to be leave with split government, I believe. And I think it’s a really good time to start picking away at stocks. You’re going to see a lot of new names make their way into our portfolio soon. A couple more names I just wanted to say, like put up McDonald’s, MCD. It’s having a pretty good day. Report earnings. What do we have there? You know, 5% on earnings. Put up a year chart. Still well, well, well off the high 340, right? But it has, you know, look at that, look at the end of that chart coming back, right? So, you know, McDonald’s, I don’t know if they’re there yet. They seem slow with traffic, but they seem bigger orders. I don’t know what that means. It means more heavy people are buying more French fries. I don’t know. They seem, you know.

Daniel Creech 48:40

No, I mean, they raised their prices.

Frank Curzio 48:41

I mean, listen, if you go to McDonald’s and you buy like, you know, you could literally, for what you pay for Chipotle, you could buy, you know, four Big Macs and three fries and two sodas and for yourself. And it’s going to be cheaper than what you’re buying in a lot of these crazy places right now where, you know, it costs you $17 to $20 to get lunch now for some of these places where it’s a lot cheaper. But again, GLP-1s, but a name that’s been down significantly that maybe turned the corner here. Look at CVS. CVS was a little different, not too good. Shares down 17% from the July high and now, you know, people don’t like the numbers. That one’s getting nailed. You know, I want to look at this. Again, this is what happens. This was a name that was down. Could you put a day chart on this really quick? CVS?

Daniel Creech 49:21

Aren’t they spinning something out?

Frank Curzio 49:22

I didn’t look at the news, but I was just, I mean, I saw the stock. Look, look where it is. Like look at like the downturn, like just during the day, right? It’s like, hey, this comes out and all of a sudden, boom, you know, it just gets nailed. I saw this down like 7 or 8%. Then I was like, oh, wow, it’s down 10%. Now it’s down 12%, right? So these algoes kick in and you get annihilated where if you’re owning that stock and yes, put up a three-month, put up a year chart, you know, and you’ve been doing pretty well. It has sold off, but you know, again, still up over the past six months, up significantly over the past six months. You know, you’re looking at this, what is it? So it was close to 100 and its high was 110 and now it’s pulled back, right? So, you know, you’re looking at this name going, how do I own it? It’s still selling off 12%, 13%, 14%. And what happens is people don’t go, maybe there’s something more going on to sell it even more, right? It’s just, it’s amazing what these algoes are doing where, holy shit, the sell-off.

Frank Curzio 50:10

I’ve never seen this. I’ve never seen companies like, you know, fall like 5, 6% on earnings. They open up and then down 7%, 8%. But by the time you look at it again, you’re like, yo, that stock’s down like 20%, you know, which has happened. You know, you put it on Uber. Uber is down what, 33% from its highs from a year ago. And this day came out with numbers and they’re up 7%. This is a chart that’s really, really ugly. There’s a lot of people that have been bullish on the stock for a very, very long time where, you know, even if you’re looking at early, earlier in the year when the market was doing good, this stock was not. It’s come off a lot. You know, and look, Uber used to be the greatest technology. This is what happens in all sectors, right? It’s the greatest thing. And then you have this massive growth trend and what happens? You saturate these markets. It’s harder to grow. You’re trying to extend country to country. And then what do you do? You’re left to do one thing, raise prices.

Frank Curzio 50:59

Now you raise prices, you bring taxes back into it. I talked to Eric Goldwater on stage who created Savvy, who had two sales in the hospitality industry, bedandbreakfast.com and another one for, you know, an eight-figure win and a nine-figure win. And now he’s, you know, started a no-fee platform for rental homes, right? So, you know, going against Airbnb and Vrbo, because I noticed too, like I use that every time I go to Saratoga, prices are up, prices are up 25% year over year. For the same house that we got, 25%. A lot of those are the fees because you’re like, okay, Wall Street needs to see profit growth every single quarter. And then you run out and say, okay, where are our growth markets? And they become saturated and you’re like, wow, okay, we have to raise prices. And then you raise prices to the point where consumers are going to give you the finger and say, okay, we’re going to go elsewhere. And that opens up the door to new technologies, right? So that’s Uber as well, you know?

Frank Curzio 51:46

So, you know, nice day for Uber, but still well, well, well off its highs from 95. It’s 70, just off its lows. But, you know, is that more of a trend that I have to look at the quarter? But, you know, these are the companies where, you know, people loved Uber at 85, 90. It’s 70. You know, people loved McDonald’s a long time ago. People loved, you know, Kraft Heinz, which is down 7% in three months. And I think that’s up today. But, you know, CVS Health is down. You know, so you’re looking at this, a lot of opportunities are opening up for us. And, you know, that’s what you want. I mean, bear markets are good if you’re prepared. And you can look at the S&P 500 again and say, well, Frank, it’s not really a bear market. It is a bear market, believe me. There’s everyone that has portfolios because if you didn’t own AI companies, you didn’t outperform the market for the last three years. And now all of a sudden, did you decide to sell them on a dime? Because now you still have them because they did so well and you were kicking ass.

Frank Curzio 52:34

And now that they sold off, a lot of people, so either you don’t have the AI trading, you’re doing okay now, but you missed all those gains for the last three years. So, you know, when you’re looking at the markets as a whole, if you had growth in your portfolio and small caps in your portfolio, they really got nailed the past two months, but it’s opening the door up to lots and lots of opportunities. If you’re capable of putting your feelings aside and say, hey, I’m going to hold this for a year, next 12 months, there’s a lot of names I’m looking at right now that look very, very, very, very positive. And you have these election trends with split governments and after midterm elections where 100 out of 100% of the time, the next eight months after midterms, the market goes up an average of 16%. We’re going in where a lot of stocks down tremendously, split government, this way nothing really gets done, which is great for stocks, right? Less government, much, much better where these guys aren’t fighting back and forth and going crazy and picking which industries or whatever billionaire pays the most to, you know, make something go higher.

Frank Curzio 53:23

I just, I like the favorable trends right now. You haven’t heard me bullish for about three months, but now I’m getting bullish and you’re going to see a lot of names make their way into our alpha portfolio.

Daniel Creech 53:30

There you go. Quickly for me, like a two-minute drill or less on energy. I went through ExxonMobil’s numbers and of course the energy sector is doing fantastic because they elevated prices with Ukraine, Russia, and also the US and Iran. Pick your energy company. They probably reported incredible earnings. ExxonMobil said something very interesting to me about the refining business. And that is that we are still under the refining capacity we had before the Ukraine-Russia war started. So forget US and Iran for a moment. That’s causing at least a third of the shortages and disruptions through different oil and gas products because of the Strait of Hormuz. What Darren Woods, I got to tip my hat to him, Frank. He sounded like an excellent politician to start the conference call. And he also sounded like he was testifying to keep himself out of jail. And both those things can be true because he has to defend himself. If you’re one of the biggest oil companies, you have to go on there and talk about all the good that you do for the common people.

Daniel Creech 54:24

And they were talking about investing in communities and this and that and trying to ramp up production. They’re running the refineries at all-time records. They’re trying to get as much product out to consumers to help lower prices and help consumers when they need it most. That’s all well and good. And he’s saying that partially. I’m not going to call the gentleman a liar. I think he’s got good intentions. He’s also saying that because he is going to get dragged in front of Congress and they’re going to get drilled and blamed for everything. That’s the way the game goes. So understand that. On the refining business, he was talking about how two things have to happen. And this is common sense, but he just explained it very well. You have to stop the conflicts, number one. No one inside on either one, Russia, Ukraine, US, and Iran. And then number two, you have to build the infrastructure back. So you have Ukraine attacking Russia, you have Iran attacking different partners in the Gulf or not allies, excuse me, neighbors and all that kind of stuff.

Daniel Creech 55:12

So even if everything was declared peace today in both wars, the refining business is going to continue to be struggling. And that is going to lead to inflation that’s going to force the Fed’s hand. And what’s going to happen, I don’t know if it’s going to happen before Christmas or if it’ll be a New Year’s deal. The Fed and the Treasury have to make an announcement to put nervousness and investor sentiment back on the back into the bullish camp. And they can do that by using their balance sheet. They can use that by printing more money. But this is going to cause inflation to remain higher for longer, no matter who’s in office. Trump really hurt himself by causing energy prices to skyrocket with the war in Iran, but it does not matter what they do or what they announce. Darren Woods is telling you this is not going away anytime soon. And last year, CVR Energy, and I’m not messing with you, Joe, the ticker is CVI, CVR Energy, CVI, I have no idea why. Carl Icahn owns the majority of this.

Daniel Creech 56:05

It’s like 70%. I point this out because they just did an offering of over 10 million shares. They’re buying two refineries from Marathon Petroleum, MPC, something we’ve been pounding the table on for quite some time at different times here. Great well-run company. They’re buying it for over $4 billion, these two refineries. They’re getting an injection of $800 million from another partner, but they did this offering. This space, energy still makes up less than 4% of the market. You got tech at over 30, energy’s under 4%, the most important Florida commodity there is, Frank. Have some exposure. You don’t have to go out and get it today, but you didn’t miss it just because of the wars.

Frank Curzio 56:38

CVR, down a lot of the offer. What’s the market cap of CVR? Where did it go down, Joe?

Daniel Creech 56:42

That’s what’s exciting. It’s under $5 billion, even if you include enterprise value.

Frank Curzio 56:46

And they’re buying $4 billion. Wow, that’s a big transaction. You can see why it’s down, but still.

Daniel Creech 56:50

Well, and they did the offering, so.

Frank Curzio 56:52

Yeah, yeah. That makes a lot of sense. All right, guys. So listen, today we covered a lot. Today after the close, I think we got Qualcomm coming out. Stocks down like close to 40% from its mayhighs. Arm Holdings as well is a name a lot of people have stocks down almost 60% since hitting its highs in June, which is crazy. So they’re coming out after close. Let’s see what they report. Probably that’s the thing. You own these names right now. You can report good numbers like AMD. You’re going to get hit a little bit if they’re really good. And if they’re not good, then you get nailed, right? And you’re Intel. So, yeah, I still see this with some of the AI companies. I wouldn’t buy these ahead of the quarter. Wait. If they’re really good and come down, it’s going to give you an opportunity to buy these companies a lot cheaper. So let’s see. I mean, look at Qualcomm. Qualcomm was 260 basically. It’s 166. I mean, holy cow. You know, so let’s see how they report. Same with Arm Holdings. A lot of these names have been hit tremendously. And, you know, some of you have some of these names in your portfolio still, but if not, this is a good time to really look.

Frank Curzio 57:42

Look at the quarter. They may report great results and the stock comes down 5, 7%. It’s going to give you a good opportunity if you have a 12-month timeframe because the AI trade is alive and well. A lot of winners are going to be losers as well. But that’s going to build out tremendously and, you know, nothing’s going to stop that over the next few years. It’s the biggest growth trend around. And I think you’re going to see a lot of these bigger names, the chip companies, the memory companies, I think they do a lot better going forward. And you’re seeing that with the hyperscalers really, really be bit up today, which, you know, get 5, 6% moves. Those hundreds and billions of value being created. Just to put that in perspective, Daniel, $200, $300 billion these stocks are moving in a day is probably a higher market cap than what, 100, 200, 250 companies in the S&P 500?

Daniel Creech 58:22

Yeah, but they’re huge. It’s all relative.

Frank Curzio 58:23

That’s how big they are. So we’ll put back to you tomorrow, guys, you know, on podcast. Be sure to send in your questions. Askkersio.com. I’m sure you’re going to have a lot of them. We also have a special interview coming out with Vivo tomorrow. Vivo is for a press release and the press release looked really, really shitty and a lot of people sold off and they are coming on to explain a lot of the stuff because I said even when I looked at that, I’m like, what’s going on? So I called them up and said, listen, we have this in your portfolio. These guys also talked at our conference and it was very positive. I’m going to do a special interview exclusive with Alice Cuppage, who is the chief investment officer. And that’s going to come out a little bit later today. So be sure to watch it if you’re a shareholder. So, you know, it is down. I own a lot of it. So I’m getting hurt as well. But for me, I want to find out what’s going on with the company, what’s the truth, what’s happening. And we’re going to find out a lot of that story because if it turns out to be positive and a lot of this stuff’s still intact, it’s going to create, you know, one of the biggest buying opportunities that we see with this stock selling off a lot.

Frank Curzio 59:16

And let’s see what’s going on. And I think they’re going to have a lot to say about the industry itself, which they’re in the middle of, which is, you know, pretty crazy when, you know, you listen to what’s really going on from the people who are in this space and what they’re seeing and how they’re avoiding a lot of the pitfalls and the downfalls and, you know, being able to really participate in the next few years of this massive growth trend. So it’s a great interview. It’s coming out a little later and I’ll be sure to send that out to you as soon as it publishes. Probably, I don’t know, a little bit later in the afternoon. So, yeah, I’m going to take that in a little while. So, and again, I don’t know what they’re going to say or anything. It’s going to be really cool. So that’s special. It’s exclusive. And again, tomorrow we’ll talk about that as well. And askkersio.com if you have any questions. And thanks so much for tuning in. We’ll see you tomorrow. Take care.

Announcer 59:59

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.