Frank Curzio 00:00

How’s it going out there— it’s Thursday, October 15. I’m Frank Curzio. This is the Wall Street Unplugged podcast where I break down the headlines and tell you what’s really moving these markets. Daniel Creech, what’s going on? It’s Q&A day, where you get to ask anything of us. Just go to askkershow.com, got lots of great questions. Should be, because the market is coming down, AI is coming down, so much going down, everything’s a little nuts now. Uh, Daniel, how you doing, man?

Daniel Creech 00:30

Doing well. Another day in paradise.

Frank Curzio 00:32

Holding up in this market?

Daniel Creech 00:34

Huh? Red like everybody else.

Frank Curzio 00:35

I gotta tell you, I know. Now you’re seeing, you know, the stocks that held up the market are coming down, so now you’re really seeing it. But there’s rotations everywhere. Speaking of rotations, what’s going on with Dodgers? Holy cow. They have 6 or 7 players, I think, that have $100 million contracts. Their budget is bigger than the next three teams combined, and they’re down 0.3 to Milwaukee. Milwaukee is a really good team though. I mean, I don’t know, I mean, 0.3 is pretty crazy, but, uh, I don’t know. The Dodgers are basically toast. I don’t think they’re coming back from this. I think Boston’s the only team that came back from a 0.3, right? I don’t think there’s anybody else. Maybe. You can correct me on that. But, uh, yeah, that’s crazy. You know, and what’s even crazier is, if I look at it, if you see Milwaukee win and whatever team’s going to be on the other side, Tampa and Cleveland, is there anyone outside of people who live in those cities that’s going to watch that World Series?

Frank Curzio 01:27

I mean, I bet you can’t even name, like, like, you know, three players on each of those teams. Which is crazy.

Daniel Creech 01:33

Me? No, no, I can’t.

Frank Curzio 01:34

I don’t even— like, we talked—

Daniel Creech 01:36

I don’t even know who’s on the Dodgers.

Frank Curzio 01:37

Two teams. Two teams. And it’s just like, if that’s going to be the World Series, come on. That’s why you want the Dodgers, the Yankees, Boston, because people either love them or hate them, and you get big views. How is this going to be big for, you know, Milwaukee? Which would be nice if, you know, Milwaukee or Tampa or especially Cleveland, right? If it’s Cleveland and Milwaukee, I guess, you know.

Daniel Creech 01:57

As a non-fan though, I— that’s a good thing for the smaller markets being champions and stuff, isn’t it? I would think that’d be a good— I get your pointing on ratings and all that kind of stuff, but—

Frank Curzio 02:06

Yeah, the ratings, I don’t know.

Daniel Creech 02:08

I don’t know why they make such a big deal about the Dodgers spending all that money. Like, I get it, but hell, the Mets spend a ton of money, and they’re horrible, right?

Frank Curzio 02:15

And they suck. You know, I love the fans.

Daniel Creech 02:17

It’s not just about—

Frank Curzio 02:18

When you talk to fans and they’re like, “Oh, we spent too much money on that player.” You didn’t spend shit on the player. Like, I want my team to spend and go bankrupt buying players. I don’t care about the owner’s pockets. I care about having a great team and going there. I mean, the Giants and the Jets have been going to those games for how many years, paying some of the highest ticket prices to two teams that, in the biggest market in the world, that suck dog you know what. At least the Giants, ugh, I mean, unless they’re quarterback a little bit better, but last week was a disaster watching that freaking game.

Daniel Creech 02:43

Were the— were the Dodgers big favorites?

Frank Curzio 02:45

Yeah.

Daniel Creech 02:45

Like, is this a huge upset?

Frank Curzio 02:46

Yeah, they were big favorites. Two in a row they won, and now, um, in this series, I don’t know if they’re—

Daniel Creech 02:50

Oh, they’re going for a 3-peat?

Frank Curzio 02:51

I don’t know if they were big favorites because they, you know, uh, Milwaukee had a home field, but, you know, yeah, when you’re the champion and you got the best team and all these guys in a crazy lineup, good pitching, you know, they projected a win. But Milwaukee is a really, really good team. Over 100— what did they win, 103 games this year, which is— which is pretty cool. So I actually would watch Milwaukee and Cleveland if that was the case. Hopefully Tampa. You know, I wouldn’t watch Tampa. I don’t think. But, yeah, we’ll see. It’s baseball. I mean, you got to try to make it exciting as possible. I don’t think Milwaukee and Cleveland or Tampa is going to be that exciting. But we’ll see. So the Dodgers are basically out of it, 0.3. I hope I’m wrong and then they come back. This way it makes it exciting.

Daniel Creech 03:24

I wonder what the odds are for them to come back and win the series.

Frank Curzio 03:27

Yeah, I know. I know. Pull that up. Yeah, it’s going to be tough, man. It’s going to be really tough. So let’s get to some of these questions. The market has been coming down. We always like to start with something that’s fun, that’s trending. I just couldn’t believe I looked up and Dodge down 0.3. I didn’t see yesterday’s game, and I was surprised that they lost that game, really. At Dodge’s that game too, so. But, um, let’s start with some of the questions, Daniel, that we get a lot in, especially during AI and, you know, how to position yourself in this market. You know, why don’t you start?

Daniel Creech 03:52

All right. First one is from John. He says, “Hey Frank, with the current meltdown of AI stocks, as is typical in an October election year, how low could CoreWeave go before it is a good buy? Glad I bought Lilly since it a beast of Big Pharma.” And you know how I like the eagle— like the eagles used to be.

Frank Curzio 04:11

How they used to be, right, yeah.

Daniel Creech 04:12

All right, John, that’s a good little—

Frank Curzio 04:13

Yeah, nice take here. John, John’s a great guy. We talk sports a lot. He’s been an inscriber for a while. And, uh, you know, he always thanks me when the Eagles win or Kansas wins. But hey, you know, they deserve to eat some crow after that last game. And, uh, I do think the Eagles are going to finish pretty strong. I’m not being optimistic, but the last two teams that they played were Super Bowl contenders, and they should have won both of those games. Uh, but, uh, and I like the fact that Sarriana just went on there and said, “Look, I lost this game.” And that’s pretty cool. You don’t see that a lot. You didn’t see that with Washington. You saw the quarterback saying, “It’s the team.” And the coach is like, “Ah, it’s kind of my fault.” You know, it’s just— it’s nice where your team rallies around when your leader’s taking that and saying, “Hey, this is my fault. I got to be better.” And, uh, let’s see how the Eagles play going forward. They got a lot of injuries. They might have Barkley coming back. Going into CoreWeave, right? That’s the biggest story. It’s getting annihilated. It’s 60 bucks.

Frank Curzio 04:58

It was 150. Uh, I think if you look long-term, I think this is a good thing that’s happening because CoreWeave is the biggest, the best by far. You know, data centers, building data centers, cloud. Uh, that’s why they have big contracts. And, uh, you know, I think a lot of other competitors, I think they’re bigger than all the competitors combined in terms of revenue. And, you know, it could put a lot of these companies under where, you know, they don’t have, you know, the balance sheets or the big clients. But if we look at the numbers here, Daniel, we’re looking at— and John, let me ask the question for John, but even Daniel here, it’s, uh, they have 4.2 gigawatts contracted. That’s a lot. 4.2 gigawatts. And I’m going to go to 4.2 gigawatts for $120 billion. That’s their backlog to build data centers. Now, once the data centers are built, it’s kind of like hydropower. And I saw this with Ross Beatty when I saw his operations, uh, in Vancouver. We took a helicopter there over the mountains.

Frank Curzio 05:48

Unbelievable. I mean, if you can ever do that, I think it’s around this time where there’s lakes in between the mountains that you can’t even see. And we went in a helicopter, and they’re like turquoise. And he was telling me because of the minerals that come off of them, the rain, and it just turns— it’s unbelievable. It’s one of the beautiful things I’ve ever seen. But once this stuff is built, it’s, it’s, you know, I mean, you look at hydro, it’s forever, but this is like decades and decades of cash flow coming in, right? It’s like building an electricity plant, right? You’re going to need AI, you’re going to need the power. So the money’s going to constantly come in. Uh, but to get to that point, you need to build the infrastructure first. And since they have these massive orders, they need to take out loads of debt to build it. So when I look at CoreWeave, you want to look at the numbers, and it’s not necessarily— it’s a play on numbers, right? This is a play on sentiment right now. So, you know, when looking at the numbers though, you want to see if this company has a shot of going under.

Frank Curzio 06:33

It could go down to 30, it could go down to 20, it could go down a lot further, right? This is people selling. This is sentiment. When people have fear, they’re going to just sell and ask questions later. But CoreWeave’s backlog, $120 billion. It’s had a $33 billion market cap. It’s revenues $13 billion. So it’s trading less than 10 times sales, which is very cheap compared to its peers. Very, very cheap. Uh, it did trade at a higher premium, and it should have because it’s the biggest in the industry and they’re getting big orders. But the problem is, $13 billion, they’re supposed to generate revenue this year. Again, that’s expected, uh, which is close to 100% revenue growth. But their CapEx, they came out and said their CapEx, the money they’re going to spend to build these data centers, is $40 billion, which is a lot more than $13 billion revenue generating. So when I analyze companies like this, I want to dig into the contracts and see where they’re coming from. Are they bullshit contracts where they can get canceled?

Frank Curzio 07:19

Is it, you know, they do a deal with a smaller AI company that could go under and, you know, the backlog is at risk. Where when I looked at Boeing and analyzing that, the backlog’s not at risk because no one else does plane stuff for Airbus. It’s two companies, that’s it, right? And, you know, there’s 5, 10-year runway of, you know, if you order planes right now, if anyone orders planes off of Boeing, you’re not getting them for six, seven years, uh, because of that demand. However, when I look at this backlog, in my opinion, it’s more secure than the safety of our president when he’s sitting in the Oval Office in the White House. Because their top customers are Meta, Anthropic, which just came out and said they did $16 billion in revenue last quarter, and they’re going to have a run rate of $100 billion. When you look at next quarter, it’s probably going to be over $25 billion. Uh, so they have Meta, Anthropic, OpenAI, and Google as their customers. These are all companies who are flush with cash or have easy access to capital.

Frank Curzio 08:07

When we look at Anthropic, it’s going to go public, and that’s going to be monster. It’s going to be $2 trillion, probably going to go public next month. You have OpenAI that just raised $30 billion at a $1.4 trillion valuation, right? So Anthropic is going to come out $2 trillion valuation. Uh, and when I turn to the debt, this is important because— and I hope everyone’s listening to this because you need to understand— because debt, you have debt, it’s leverage. And when you take out a lot of debt, you’re always at risk of short sellers coming in. And when you have this debt and you’re forced to pay the debt, you could really crush the equity or crush the stock and really hurt that to the point where this fear is spreading right now where all these contracts are going to be for real. And you saw Larry Fink come out and say, “Absolutely.” You saw Taiwan Semicomponents saying, “Since there’s more demand than we’ve ever seen.” We saw Nvidia come out. The demand’s there, the money’s there, they’re spending.

Frank Curzio 08:56

However, there’s this fear saying, “Okay, you know, before you get these things up and running years from now and generate lots of cash flow, you have to build them first.” And it gives you a nice runway of these companies not reporting news so you can go after them. And, you know, you have this sentiment here. Now, when you’re looking at leverage, even banks, and a good example is Silicon Valley Bank. So, so when Silvergate went under, Silvergate was a crypto company, and it went under, they didn’t do anything wrong. So the Biden administration said, “If anyone puts any deposits to Silvergate,” and I forgot the other one, the other crypto one that went under, “uh, we are going to audit you and you’re done,” right? So all the banks said, “We can’t do business with them anymore. You’re not bringing in deposits.” So basically, they were forced, right, to shut down because of the government. Now, when that happened, it triggered this because people and hedge funds who are very, very smart, who again, it’s all cutthroat, they’ll destroy business, they’ll destroy families, whatever they can to make a fortune, they were looking and saying, “Wow, it’s pretty easy to make this run on the banks because a lot of them are holding bonds.” And anyone holding long-term bonds are, you know, in the red incredibly.

Frank Curzio 09:57

If you hold them at maturity, you’re fine. But they’re long-term bonds. So they looked at companies that had their cash instead of in short-term and long-term bonds. Because if you could force that company to sell those long-term bonds because they need the cash, they’re going to sell them at massive losses. So they picked out a bank, which is Silicon Valley, and said, “Wait a minute, let’s look at deposits,” which is an easy screen on a Bloomberg or a Capital IQ, and said, “Let’s look at deposits and see which ones are uninsured.” For example, I think it’s whatever it is, $200,000 FDIC insures your bank. If you have $300,000 and you get robbed, you’re on a hook for $100,000. So when they looked at Silicon Valley, 90% of their deposits were uninsured. 90%. So they saw a company that had most of its cash in long-term bonds, which were getting smoked because the Fed just raised rates back then. And again, you hold these long-term bonds at maturity, you’re fine, but when you’re forced to sell them, you have to take huge losses.

Frank Curzio 10:46

So hedge funds shorted the bank, spread rumors every place that they possibly can. That’s why it was all over the internet, everywhere. Like inside these, you know, in the right circles saying, “Hey, you know what? Uh, 90% of their deposits are not insured. So if you have money at that bank, Silicon Valley, which by the way is home to tons of huge tech companies at Silicon Valley, uh, you should take those assets out and put them someplace else and be safe.” So as they took out these assets and said, “Holy shit, now you’re taking out some assets,” and people like, “Why, all right, we got to take out more assets. Oh my God, this stock’s coming down. Something’s going on. We’re taking out more assets.” Now they’re taking out more assets. And for Silicon Valley to actually generate that revenue, they were forced, right, to cover these withdrawals. They’re forced because all the banks are putting this money into wherever. They were forced to cover these withdrawals and forced to sell a huge part of their long bond portfolio at massive losses.

Frank Curzio 11:36

And the rest is history. You destroyed a bank because of fear. All right, a lot of fear. And because of bad management, because 90% of the deposits were not insured. And right after that happened, everyone was like, “Holy shit, let’s lower it.” Even if it’s 20%, 30%, you know, this way that could never happen to us. My point is, if you create fear and keep pounding that theme, selling creates even more selling. And that’s what you’re seeing with CoreWeave, which I think is going to be one of the greatest buying opportunities in the world. I may buy the stock this week and take a little position because it is risky and it’s in free fall. I think it’s down 40% in the past couple of weeks. This company is critical for Meta, OpenAI, Anthropic, and Google to build out their AI presence because they are in dire need of data centers and power. And CoreWeave is the best at doing this. If I was CoreWeave, I would go to each of these companies and say, “Hey, make a direct investment in our company of $10, $20 billion,” which is nothing to these guys.

Frank Curzio 12:31

Uh, go directly into the stock and make it public. All four of you together collaborate into a deal and because they’re all customers. And we’ll also give you warrants and that exercise price will be at 150. It’s 60 right now. Nobody’s going to care about the dilution if it goes to 150 because everyone’s going to make a fucking fortune if it goes there before they get those warrants. And I’d also offer discounts once these data centers are up and running where they’re going to start a massive positive free cash flow probably 2030 and out and say, “Hey, you know what? We’ll also give you guys rights to unlock even more power 2030, 2035 when it comes available. You guys could get, you know, a 10% discount on each megawatt or whatever.” I mean, if that happens, it’s going to be the same as when Buffett invested in Goldman Sachs, which is going to put a floor in the stock and the stock, not only will the stock take off, you’ll probably see the whole industry bottom out here because this is the, I read a note, this is I think the ninth time since I think it’s June 2025 that we’ve saw a 9% retracement in AI names or maybe in 2024 because we go back to even DeepMind in China, remember that?

Frank Curzio 13:36

Oh my God, AI is dead with China. You know, China’s copying the exact model. China can’t get China can’t release its own model, right? They have to copy everyone’s model. But now this, you know, safeguards in place where they can’t do that. That’s why you’re not seeing China come out with models like crazy. They’re just copying everybody, which they did with all OpenAI and ChatGPT and Gemini and Anthropic. So, you know, you have these downfalls and the, you know, the spreading of the fear, but every single time it’s a result of where, hey, we’re going back to the demand. We’re going back to this. Do we have enough capital for this? That’s fine. But when I look at CoreWeave being the best in the industry, having the best clients in the world that have tons of free cash flow that need this power, they’re in a great position. And I think you’re going to see something like that with all four of these companies because it benefits everyone involved. It’s going to benefit them. They’ll get warrants on it. They’re going to, you know, they’ll invest in a stock here, which is at 60, which, you know, it was at 150 not long ago.

Frank Curzio 14:27

And you stop the bleeding. You know, these contracts are going to be secure. You got the biggest guys out there. They’re going to be paying for this because right now there’s a lot of fear. And yes, this could go down. This could go down more. But I want to put a little bit in there because something’s going to be done here. When you have the Nvidia’s and the biggest companies of the world all saying, “Listen, demand’s off the charts and they’re seeing what’s happening in this industry and their clients of all these people,” they’re going to probably step up and say, they’re probably meeting now and saying, “Okay, listen, this is what we have to do for these companies. We need the power. Let’s go out. Let’s make direct investments in a lot of these companies.” And they’ve been doing that a little bit, Daniel, on the side. You know, I don’t know if you saw that where, you know, bigger investments and they’re actually investing in some of these companies now in Broadcom and Anthropic and Broadcom is actually raising money for Anthropic. It’s a $60 billion offer. This comes in the back of, you know, what is it? $30 billion that SpaceX raised, right? So when I see this happening and then you’re looking at the debt because the debt now is topping 15% and again, that’s everywhere and that’s scary.

Frank Curzio 15:19

That’s a huge number because they need to take out more debt to fund their $120 billion backlog, right? They got debt to build data centers in the next, what, 6 to 18 months. But this run, it could continue because of fear. But for me, I really think there’s going to be these guys are going to come out and announce like a direct investment or some kind of direct, you know, investment or, you know, with warrants. I just think they’re going to come in and do something with CoreWeave because it makes sense for all the parties involved. And these guys need the power. They need this company. This company’s obviously going to survive, but it’s easy to make a run on this guy and these guys. And same with Oracle too. Oracle and CoreWeave building out these data centers. If those companies happen to go under, you’re going to see the hyperscalers lose trillions in market cap value. Trillions because that is their growth model. That’s the growth model of the whole world right now. If you look at infrastructure, that’s where everything, that’s where all the growth is coming because high interest rates, high energy prices, but we have, hey, AI is growing tremendously and all these companies are getting into it more and more.

Frank Curzio 16:14

They’re going to need more cloud. So you ask me how far it can go. It could go down further, but for me right here, I would probably put a little bit of money in it. Money that I could say, “Okay, I’m probably, I could lose 25% of it in a couple of weeks maybe.” But if I’m right, I think it’s 100% gain here. And I think that could happen in less than six months because I really think it’s in the best interest. I’ve seen things like this before. You’re going to see your biggest clients step up because they need CoreWeave. And I wouldn’t be surprised if you have an announcement like that over the next couple of weeks or so, especially if this continues. Because right now, wow, it’s down 6%. We got the chart up there. It was down 15% yesterday. And this thing has been in free fall. There’s going to be a bottom here. This is a great company with great technology, the leader in the space. You know, we understand and we see the risks in front of us. We see debt. They have a lot of debt. It’s not like, “Oh my God, look, look at what else they took out.” Or they have something hidden here like the credit crisis. You see the problem.

Frank Curzio 17:00

You could easily stop this problem by having these companies saying, “Hey, we’re doing a direct investment in CoreWeave because we believe in them.” The shorts would absolutely go crazy because this thing will probably shoot up to 85, 90 bucks in a minute as the whole entire world and all these algorithms rush to cover. That’s the play for CoreWeave. I’d be meeting with their biggest clients right now and say, “Hey, what could we do where we could provide a great investment where you’re going to get paid on the back end if the stock goes higher? You’re going to get these free warrants. It’s going to exercise at whatever, 150. So no one’s going to worry about the dilution on that because you’re going to be up well over 100% if it goes to 150. That’s a deal that I would sign. And that’s on the table. That’s an easy deal to sign for these guys. And I’m surprised they didn’t announce it. But with this run right now, that could lead to a bottom in this industry. And I do see that happening. I don’t think anybody’s talking about that, but let’s see if I’m right.

Daniel Creech 17:45

All right. Next question is from Marshall. He says, “Frank, how far do you see the market falling and what is the best way to position?”

Frank Curzio 17:54

You have your crystal ball there?

Daniel Creech 17:56

Yes. You want to use it?

Frank Curzio 17:58

How far do you see it? Look, we said that a lot of stocks are going to get hit 25, 30%. We said that over the past month. We had a special live broadcast, podcast that said the same thing. Be careful. It’s one of the most risky earnings seasons coming in. We just started. We saw some of the banks get hit, you know, good banks get hit 7, 10% yesterday. You know, overall the market’s holding up well with S&P and the Dow. But, you know, you’ve seen the NASDAQ really get crushed and that was the leader of the market. We covered this yesterday, Daniel. We said how money shifts. You know, they don’t take the money out of the market because otherwise these managers aren’t going to make fees on their money. So where is it going? You see it clearly going to healthcare. Walmart catching a bid today. Dollar stores, you know, biotech, energy, you’re seeing this rotation into these sectors very, very big where they’re making huge moves driven by, you know, really good results, really strong earnings.

Frank Curzio 18:46

These are, you know, sectors that lag a little bit. Walmart has come down tremendously. It was, where’s Walmart trading right now? Go down like it’s P? What does it say? It’s still, it’s still, Walmart’s still trading at a 40 times forward earnings. That’s insane to me. That’s insane. I mean, I like Target much better because it’s not just the value and it’s a lot cheaper, but Target is, you’ve seen it come out of its shell now, Target. And finally, after about four years figuring out that, hey, you know, we got to get rid of some of this inventory and change shit around. So, you know, I like Target. Yeah, Target’s just, you put your chart, Target’s been on fire. But, you know, it doesn’t matter trading 40 times forward earnings, Walmart, right? Which is a consumer staple company which should be trading at maybe, you know, a market multiple of 20 times forward earnings. But I don’t know if I would go into Walmart here, but you’re looking at Dollar Store’s healthcare. You know, UNH I like here.

Frank Curzio 19:37

You have Eli Lilly, it’s been on fire. Amgen, Regeneron just got an upgrade today. So you’ve seen a lot of the companies in these sectors doing very, very well where it’s not the whole market that’s getting killed. We don’t have this traditional, oh, bear market, everything’s getting annihilated. We had several companies holding up the market and now some of those companies are starting to fall and, you know, everything else is really benefiting because they’ve been down a lot more than some of these AI plays. So I don’t see tech falling. I mean, it’s going to fall a little bit further because if you’re looking at the hedge funds, institutional monies, I don’t know if you saw, Daniel, the money flows report, which is, you know, we get weekly from Bank of America. Hedge funds, institutional money has huge allocations into tech. And you can say, “Okay, Frank, that’s normal.” It’s not normal. It’s 37% and that’s the highest proportion since August 2020 and that was of last week. And now you’re seeing like the CoreWeaves and all these sell off and maybe they’re in like the bigger stocks where, you know, they’re not as worried, but, you know, outside of those, you’re seeing Cerebras is getting nailed.

Frank Curzio 20:33

You’re seeing, you know, Taiwan Semi. What’s Taiwan Semi doing today?

Frank Curzio 20:42

So and down 3%. And again, it’s a stock that’s almost, what, close to 20% off its highs too. And massive demand. But look at that chart. Like put up a month chart, Joe. Just all these companies selling off this massive, you know, just deleveraging, right? Getting out of this industry and this rotation going into other places until these companies hit a bottom. Now, what’s going to make them hit a bottom? Like I said, if CoreWeave comes out with an announcement like that, now you see the biggest guys saying, “Hey, we need these companies. Otherwise, we can’t have, we’re not going to be able to secure our trillion dollar valuations because we need these data centers. We know that every dollar that we spend, I’ve done the research on it, they generate $3.5. They see the runway. They understand it. It’s the money’s there, but it’s, you know, I understand when it comes to debt and you’re seeing, you know, interest rates higher. However, we could see interest rates go lower, which, you know, we’ll talk about in the next question.

Frank Curzio 21:32

Someone’s asking about the interest rates, but, you know, when I’m looking at these companies and I’m looking at, you know, how best to position, I think you can start picking away at tech a little bit here. Some of these AI names, maybe some of the ones that we sold in the past, because I think you’re going to see a bottom to this. We’ve seen this happen several times, these retracements over the past year, year and a half. And every time it’s met with, “Hey, okay, the demand is there, more buying’s coming in, these stocks are cheaper than ever.” And they’re all, it’s not one or two companies saying demand’s strong across the board. Micron, you’re looking at Amazon, you’re looking at Meta, you’re looking at Taiwan Semi, right? All these companies, CoreWeave, you said Larry Fink who’s involved in financing so many of these companies, 15 trillion assets. Like we don’t have that problem where demand is off the charts. I think you’re going to see this industry bottom. It’s going to be a gift for a lot of people, but, you know, you might have to experience a little more pain before that happens.

Frank Curzio 22:18

With that said, you should also, if you listen to us, you should have money in money market funds earning 4%, which is, you know, you’re sitting there earning 4%, watching people scramble going, “Holy shit, what’s going on?” And, you know, we have exposure and a couple of our stocks are down, yes, but we did sell a lot of stocks into this because, you know, high interest rates, high energy prices are no joke and both are going to stay at elevated levels for a pretty long time, not short term. That’s going to hurt earnings. It’s going to hurt because these companies that are reporting are going to have to issue guidance. I don’t see how you issue super positive guidance when you have these massive risks in front of you. And if they lower those guidance, they’re trading on 30% earnings growth year over year. Everything’s optimistic. So just be careful through this earnings season, but it’s going to open up a lot of opportunity, which you’re seeing with CoreWeave. CoreWeave’s down tremendously. This is a very, very good company. Very well-run company. Just down a lot of fear. It’s going to come down to, you know, some announcement to say, “Hey, this company’s okay.

Frank Curzio 23:07

A big investor coming in. One of the hyperscalers and CoreWeave should bottom here.” But overall, you should be spread out. Biotech, energy, you know, healthcare, again, these are sectors that are doing good and definitely you should have money in money market funds waiting this out, generating a nice return, which was not available for a very long time. Returns like that just, you know, just in money markets or bonds or short-term treasuries. And, you know, I think you wait this out a little bit and you’re going to have great opportunities over the next couple of months as the whole entire S&P is going to report in the next pretty much couple of weeks.

Daniel Creech 23:37

Yeah, busy couple of weeks coming up.

Frank Curzio 23:39

Yeah.

Daniel Creech 23:40

All right, Frank. This one’s from Frank. Frank’s a regular. He’s a great guy. Frank says, “I find this Ask Herzio helpful and enlightening. Thank you for continuing innovation.” He says, “For years, I’ve held Verizon and T-Mobile and have automatically reinvested dividends. I’ve done reasonably well with this plan. Now that SpaceX is entering the field and their dramatic drop, Verizon and T-Mobile, when the announcement was made, is it time to sell Verizon and T-Mobile or should they be continued to or should I continue to hold? Look forward to your thoughts.”

Frank Curzio 24:12

Here’s my thoughts. It’s not just SpaceX entering this field. It’s also Amazon entering. They’re about to launch 3000. I think they have like 300. And now they found a way to make these satellites in weeks when it used to be six months. And I did a lot of analysis on this because, you know, I love Amazon here and just a great company. But when I look and you can say, “Okay, AT&T has been down, been here since whatever, the 1800s, Verizon, T-Mobile,” you know, I get it, right? These companies generate massive free cash flow because everybody has to pay their bills and constantly it’s monthly free cash flow. And I remember I was talking to Porter Stansbury. He’s like, “AT&T is going to go out of business and they have $120 billion in debt.” I’m like, you know, you got to look at both sides because of that balance sheet because they’re generating $30 billion in cash flow, free cash flow, right? And the debt was like investment grade. So, you know, that was like 12 years ago and of course it didn’t go out of business.

Frank Curzio 25:04

With that said, you always have to reevaluate if your thesis changes. And their thesis is, “Hey, you know, we have monopolies.” And you say, “Okay, there’s three companies, monopolies.” But they do. They have monopolies around the areas that they work in where you can only get, you know, I mean, even Comcast with Xfinity or, you know, if you, you know, same with, you know, wireless, but now you have so many wireless companies out there and you have these wireless companies that are able to tap the spectrum. And I know that, you know, you look at Cricket’s owned by AT&T and they started buying these little players and stuff that are more cheaper this way to have them under their umbrella and maybe don’t get the full spectrum, the full, you know, 5G services and stuff. But you see in wireless how, you know, I mean, T-Mobile was, I remember this. So T-Mobile wanted to merge with Sprint, I think it was, or it was AT&T. I think AT&T tried to buy T-Mobile, I think. And the CEO of T-Mobile came on and remember they had to go through the whole thing on the hill and stuff like that in politics.

Frank Curzio 26:02

And they said, “We’re not going to survive. We’re going to die. We’re going to be done if we don’t do this deal.” And I was just, so that’s what you say when you want to get the deal done. Everyone’s going to save money once we do this deal and, you know, we’re not going to exist if this doesn’t happen, whatever it was. So, yeah, and I don’t quote, I used to research Sinsurie a ton and then I think, you know, we merged with Sprint or whatever, but I remember those days and now you’re looking at T-Mobile, which is, you know, basically bigger than these companies, but you have a significant threat to their business model right now. Their business model is, “Hey, we have the spectrum and we’re able to provide, you know, they have pricing power too, right? They can raise their rates for internet.” You know, internet here is funny because at a house you could pay 80 bucks and get pretty good internet service, maybe a little bit more if you have a bigger house. I have internet service in my office from the same company I’m using and they charge you four times as much only because we’re a business.

Frank Curzio 26:51

Same service, just, you know, business, a little bit faster. Internet service, they should be charging like 125, 150, they charge us like 350, which is insane. So a lot of this is being threatened now. And when you see that, I don’t know if I like that, you know, I’m reinvesting the dividends. I’m reinvesting the dividends because if you’re earning 4%, you can reinvest that 4% or in whatever you want. If you have money market funds, I know you don’t have the automatic reinvestment and, you know, you want to put that in stocks and stuff, but that made sense and the dividends, like dividends to me, I think the S&P dividend yield is the lowest that’s ever been, I’m pretty sure right now. It used to be well over 2%. I think it hit 3%, well below 2% now. So if you’re looking for stocks to reinvest the dividends, you want to have good stocks, right? You want to own good companies that just generate lots of cash flow. And this significantly damaged that thesis. And when you do that, I would reevaluate this.

Frank Curzio 27:40

If that’s your plan to just hold these forever and reinvest the dividends because the dividends are going to be meaningless if these stocks continue to come down. And now you have a real threat of people saying, “Hey, you know what?” DirecTV tried to do this with satellite and it was horrible and it didn’t even work. You have like real companies with fast speed internet that you could use anywhere that are going to undercut their prices and, you know, you built all this competition in there. There’s going to be so many choices for people because I use AT&T for my phone and I’m pissed because, you know, the rates are very, very high and I see everyone else, “Hey, it’s like 50 bucks, 40 bucks, you know, unlimited service.” And I’m paying like 65. And I’m like, “Okay, eventually I’m going to switch and I’m probably going to switch.” Even though where I am, AT&T is the best service provider and it depends what area it could be Verizon or T-Mobile. But to get to your question, Frank, I don’t think this is a good strategy because you’re looking at that core business is threatened.

Frank Curzio 28:32

And when you have that core business threatened, that spells trouble. And it’s being threatened by two companies that have massive resources and capital. And that’s one of the reasons I, you know, I use Disney a lot, not to beat the shit out of Disney here, but, you know, everyone’s like, “Oh, they’re streaming, they’re streaming.” They’re competing against the biggest companies in the world that could pay shitload for more content. They’re actually getting all the sports rights. I mean, that’s the industry that Disney’s in and that’s their growth model is streaming, which, you know, their best content comes out in the movies first. So they can’t compete in streaming. And you see what happened at Disney, right? This could happen to these stocks because they’re not going to be able to compete, especially with the pricing that’s going to be offered for these services from SpaceX and Amazon. And that trend is just beginning. And that’s a significant threat. If you want to reinvest dividends, you can go to, you know, make sure you have companies that are growing their sales, growing their earnings.

Frank Curzio 29:22

J&J might provide a good one right now. You’ve seen that company, you know, maybe a couple of healthcare companies in there, maybe ExxonMobil where you know stocks that you can look at 15 years from now that are going to go higher along with the market, but also give you that dividends when you can reinvest. But when you see the underlying thesis or, you know, the reason why you would own these stocks when that’s threatened and that’s what technology and AI does now, it’s crazy. I mean, it could change your industry dramatically where you can go out of business. So, you know, it’s BlackBerry. You invented the smartphone, but, you know, you didn’t keep up with technology. And Apple said, “Hey, we can do it a million times better.” And BlackBerry doesn’t even sell those phones anymore. It’s selling whatever, technology for cars and stuff. So, you know, that happens, Steve, if you don’t adapt and these companies, that is their asset, that spectrum, the fact that you can go other places and it’s going to be cheaper.

Frank Curzio 30:08

You could see these things fall. Those moves lower were serious. These are still decent companies, but, you know, if I’m looking 10 years from now, I don’t know like what’s their growth model, how do they generate, where do you see the growth coming from? You know, where do you see the growth coming? Are they in advertising? Are they in AI? No, you know, they have this monopoly they constantly make money off of. And now that’s being threatened. And I say monopoly because in certain areas, but I would go somewhere else with that kind of, with that strategy and I’d be a little bit worried here for those companies only because they’re sourced. The reason why you would invest in these companies and, you know, that asset is being threatened and significantly threatened by companies that have access to tons and tons of capital that are going to keep pushing this. And you’re going to see a lot of people switch to, you know, to that technology.

Daniel Creech 30:52

When is SpaceX and Amazon, are they, I haven’t really looked into it. When are they going to offer a service?

Frank Curzio 30:59

Amazon’s supposed to offer at the end of this year.

Daniel Creech 31:01

End of this year?

Frank Curzio 31:01

That’s what they said. At the end of this year. They already have satellites up there and they’re going to launch, I think, over 3,000. I’m not too sure where, you know, with SpaceX, but, you know, they have the satellites. You’re just looking at the sky. Just seriously, if you’re looking at the sky, you’re going to, it’s going to look like you’re shooting a star. We did that. We did it when we were upstate. I’m not even kidding you. We did it when we were upstate. We saw shooting stars. It was great. It was nice. It was like cool up there. It was like a month ago. And we’re just looking up. I’m like, “Wow, look at that. That’s another satellite.” You can see the satellites rotating. It’s like, “Get out of here.” That’s how low they are. Right? I mean, it’s crazy. I never even knew you could see them. You could actually see them. So believe me, they’re there. This isn’t like, “Oh, this is what we’re going to do.” And, you know, no, this is here. This technology is here right now. And you’re going to see this rolled out. And that’s, you know, that’s the reason why you saw those stocks get hit. They didn’t get hit, you know, on bullshit news. I mean, these are big industry-leading companies that are at significant threat.

Frank Curzio 31:49

And, you know, I think that you’re going to see those revenues and sales come down. And you don’t want to own dividend stocks that are not growing because that 5% dividend is meaningless if your stock is down 15, 20%. And you want to have that good underlying stock that’s growing that also pays a dividend. And these guys don’t have the underlying stock that looks really good and really healthy right now based on the news coming out from SpaceX. And also, again, you got to throw in Amazon as well.

Daniel Creech 32:14

That’s a good one. That’s going to be memed and repeated. “Hey, just look up. They’re right there. Just look up.”

Frank Curzio 32:19

That’s because I didn’t know you could see them. Because, you know, when you live in, yeah, there’s a lot of like Jacksonville, whatever. Upstate, there’s nothing.

Daniel Creech 32:25

Yeah, we live in a freaking city. We don’t get to see the beautiful sky.

Frank Curzio 32:28

Amazing. So somebody’s shooting stars and then we’re like, “Oh, shoot.” I was like, “That’s not a satellite.” I’m like, “That’s it.” I’m like, “Get out of here.” And you just see them. Yeah, it’s pretty cool.

Daniel Creech 32:34

Yeah, look up.

Frank Curzio 32:35

Just look up.

Daniel Creech 32:35

All right, next question.

Frank Curzio 32:36

They’re there.

Daniel Creech 32:36

Armando, hello, Daniel and Frank. He says two questions. I work heavily with annuities in the field and I have been in general finance services for 12 years. Annuity companies are really good at estimating rates and hedging their risk. I’ve been seeing caps and fixed guarantee rates increasing quickly overall in the marketplace.

Frank Curzio 32:55

Good to know.

Daniel Creech 32:55

Do you guys think that the 10-year rate will increase more than 6%? A couple of our friends have been thinking that the Fed should increase rates more aggressively, like in the Paul Volcker times. Do you still think the Fed needs to increase aggressively to help us from the assets that have overappreciated rapidly?

Frank Curzio 33:12

Yeah. Well, he had two questions, but taken one of them because the other one was also long. I don’t want the whole podcast to be about Armando. But I appreciate the questions. Thank you very much. Again, you can go to askkurzie.com and that’s where your questions and we email you and let you know we’re answering those questions as well. This way you can listen and tell all your friends about us. But Dan, do you want to take that with interest rates? You know, he’s asking both of us.

Daniel Creech 33:31

Yeah, sure. I’ll start with that one. Yes, I think the 10-year will go to 6%. The timing is always difficult. And honestly, I wouldn’t buy it without a six in front of it. I think, again, as I mentioned yesterday, quickly here and not to beat a dead horse, I think the market’s going to kind of sell off or be extremely violent and choppy until as Frank has mentioned, sentiment changes. How does sentiment change? We have to get the Willy Wonka and Wizard of Oz people back in, pushing buttons, pulling levers, and making you feel like everything is okay. We’ll see how long that takes. Probably at least through the midterms and into next year. But yeah, I wouldn’t, I would use the money market rates, as Frank has said, to use cash on sidelines, but I wouldn’t lock in money to a horrible government for 10 years unless there’s a six in front of it.

Frank Curzio 34:13

I don’t think there’s going to be a six in front of it. I’ll take the other side of that and I’ll tell you why. Because look at the action today when you’re pulling up the 10-year. Joe, pull up a month chart. Okay, if you look at this downfall over the past day and we’re looking at 5.2 to 5.08. It was at 5.3. And we’re like, “Oh, it goes back.” This is, it’s coming down. Now, why is it coming down? Because we just saw a CPI number that was hot, but the PPI number came out today. It was really hot. So what that indicates is the Fed is definitely and has to, has to raise rates. And they’re going to raise rates more. We said like four or five times. And you say, “Okay, they’re going to raise rates. How come the long-term rate’s not going to go up?” Because when you, and it’s different because when you’re seeing the PPI, the reason why it’s coming down is because now the Fed’s going to raise rates. When the Fed’s going to raise the short-term rates, now there’s this indication, “Okay, now we’re going to see a slowdown in the economy.” And when we see a slowdown in the economy, inflation’s going to start falling, right?

Frank Curzio 35:02

And that’s why you’re seeing the 10-year really come down today. I mean, it’s a pretty big move. It’s coming down a lot today. That’s a big move. You know, I know it’s a 10-year and you don’t think it’s a big move, but it is a big move. Especially from 5.3, now we’re at 5.08. And I mean, if we break below five, you’re going to see it every place. Hey, it’s coming down, but it’s coming down as NASDAQ is getting hit, right? So I know it sounds kind of like, you know, counteraccount or two to whatever word you want to use, but when we got this PPI and it’s the hottest reading since 2022, the Fed has to raise rates. They need to slow this down because inflation’s getting out of control. Okay? We’re looking at, it’s not just reversed. I mean, it’s significantly reversed. It came down last month from the month, from the quarter prior. And now you’re seeing it go back up, right? And it’s not, and it’s not, we’re looking at the core rates. The core rates are going high. So that’s excluding food and energy because people are like, “Oh, you’re throwing energy in there.

Frank Curzio 35:49

Frank and energy, you know, we’re going to get rid of this. It’s going to end pretty soon.” Well, I don’t know. It doesn’t look like it. I don’t know if you just saw the news from the last couple of days, even yesterday, like the bomb. We’re going to see higher oil prices for a lot longer than what people believe. By a lot longer, not higher. I’m saying above 75, 80 for a very long time. At least for another, I would say, six months minimum. And this is supposed to be two months and we’re already six months in, over six months in since I ran started. So when I’m looking at rates, yes, they are going to raise rates significantly, I think, at least four or five times. We’re going to get another one. I don’t think we’ll get one before the election, which is rare, even though we should, but we’ll definitely get one in December. I said yesterday, I think that could be a half a point rate hike. And, but we need to raise rates to slow this economy down because we cannot service this debt. We’re seeing it even in the AI. Like it’s, you know, having the access to capital, but at 15% rates, right?

Frank Curzio 36:39

We’re looking at an interest 15% rate. So if we’re looking at our debt, which when rates were at 4%, look at a 10-year at 4%, just for comparison, we were looking at what, a trillion dollars in interest expense for the 40 trillion in US debt. Are you fucking kidding me? Right? That was, that was before we blew through five. So, you know, it’s the interest on this debt and most people are debt. It’s going, it’s starting to hit. You’ve seen the housing market absolutely frozen. It was frozen at 6.5% mortgage. Now it’s 7.5%. Fannie and Fred, whoever one of them just came out and said, if you believe them or not, and I don’t know how good their forecasts are, but they said next year we’re raising the forecast for mortgage rates from like, I think it’s 6.7% to 7.5% all of next year, which means that market’s going to be, it’s going to be horrible, the housing market, right? And that leads to economic growth. And now you’ve seen data center growth slowing because of, you know, new laws being put in place and, you know, now you’re seeing funding issues where, you know, it’s not as easy to get the debt to build these data centers.

Frank Curzio 37:37

So, you know, we need inflation to come down. We really do. So I see the Fed raising rates. I don’t see it because right now is an indication of if you see the Fed or is there an inclination the Fed’s going to raise more than one more time overall, even into next year, you’re going to see the 10-year come down. And that’s why you’re like, well, you know, just so producer prices and CPI, highest producer prices through the roof, high since 2022, indicating that the Fed’s definitely going to raise rates. So why is this rate going lower? Because higher rates on that short-term is the Fed saying, “Hey, we need to really focus on a mandate because 2% is an absolute fucking joke.” And we’re, you know, whatever, of course, 2.7, but we’re at 3.7, I think, without the core for the CPI, where we need this rate, we need this to slow because, you know, people just can’t afford it. Inflation’s out of control right now. And it is. And we need to slow this down. So, you know, the 10-year coming down is an indication that the Fed’s going to raise.

Frank Curzio 38:25

If the Fed goes back and says, “Hey, you know what? We’re not going to raise. If they don’t raise in October and December, the five-year will go to 6%.” But there’s no way you’re going to see that. So I think the 10-year is going to continue to fall. Hopefully, we need it, but don’t get happy. It’s just an indication that we need to slow down the freaking economy. You can’t win both ways. It’s like gold, gold bugs, right? They’re like, “Oh, you got to own gold during recession. You got to own gold during inflation every time.” No, you don’t want to own gold or inflation every time. Rates are, even inflation every time is when rates are zero. That’s the best time to own hard assets outside of gold. Everything. Your car even went up in value. Jeez, every house price, stock market, you know, collectibles, Pokémon cards are through the roof right now. Probably the best thing you can own right now, which my daughter’s sitting next to me owns a shitload of Pokémon cards. So maybe working for her one day. But when I’m looking at Paul Volcker, I don’t think we see rates skyrocketing like back then, but we need this.

Frank Curzio 39:15

We really need to slow down, you know, this inflation rate because we have more leverage than we’ve ever had in the history of our nation. And those interests, that interest on that debt, even for consumers, for businesses, and our government, it’s unsustainable. It’s unsustainable if we go a lot higher from here. So they can do everything they can to slow this economy. That means higher rates. And I think it’s going to be good because you’re seeing some stocks get hit on that. And that’s why I think this earnings season is going to be difficult. Because how do you, how do you go in for the next quarter, which is through December, right? The next quarter through December, when you’re not even too sure what the Fed’s going to do when it comes to rates, you’re not even sure if oil prices and your input costs are going to be high and stay at this level. But if you’re a CEO and you’re going on and you’re issuing a forecast, which all these CEOs that are going to report over the next couple of weeks are going to do, how do you, how do you raise guidance?

Frank Curzio 40:03

How do you say, “We’re going to do even better with these uncertainties?” Because that’s a massive risk. If you overpromise and under-deliver, you’re done. Okay, your stock’s going to get annihilated. We saw that with exporting goods. You’re going to see that with a lot of companies. So, you know, and if they don’t raise their guidance, you’re going to see these names come down. And that’s, even if they beat, they’re not even going up that much. So just the risk reward in this earnings season is very dangerous. But I do see that rates, they’re going to raise rates, but the long-term is probably going to come down. If I explain that right, that makes sense. Hopefully, I did. I know it’s a little confusing, but it does make sense when you see how the market reaction is with the PPI number that basically is telling the Fed you need to raise rates and why is the 10-year going down? That’s why, just like we explained. Man, look at that exporting goods truck. Bang! The quarter before, they were high-fiving each other. The analysts were like, “Yeah, you guys are awesome. You’re great.” Like, “Yeah, we’re going to have a great quarter.

Frank Curzio 40:49

It’s awesome.” Then they come out and freaking just bomb the quarter and all the analysts. I did this, I saw at least five downgrades. When analysts downgrade or when you have five downgrades of a stock, that means your CEO did a shitty job explaining the conditions of your company. And stuff like that should not turn within like a two to three-month period where everything is great. We’re raising estimates and now we’re significantly lower. That’s not good management from the management team into exporting goods.

Daniel Creech 41:14

Well said. Wouldn’t be a Q&A. You got a lot of questions on Vivo and DigiPower X or DigiPower if you want to talk about it. We got a good home builder question. If you want to save that one. What’s your comments there? What do you want to build?

Frank Curzio 41:26

Yeah, so with DigiPower and Vivo, these are names that we had and obviously we liked them at much higher prices and they’re coming down along with the rest of the market. And me, when I look at the thesis, I’m going to have both of these companies speaking in my conference next week. I talked to Kevin Chin, CEO of Vivo, because the company has been coming down along with the whole entire industry. The outlook has never been brighter for this company. And when you look at Vivo, they have that power available, 40 megawatts and probably another 40 megawatts going to be available. And you have literally people lined up, right? If you have 40 megawatts of power available, you’re going to have three, four, five different, you know, people pitching ideas, pitch going in. So, you know, they’re supposed to announce the terms of the deal. They didn’t announce the terms of the deal yet. And I could see why that’s happening. I mean, there’s companies that, I mean, if you look at, if it was with Cerebras maybe that they’d announce it.

Frank Curzio 42:12

If it’s a company like NScale that pushed its IPO back, people aren’t talking about that. So if they have a contract with that, they might be in the quiet period now. But, you know, the fact that you have a massive amount of power that’s going to come online and they have a rental model. So it’s not like they have to build the whole thing and take out massive capex. They could choose to do that if they want, but they could choose to just rent the facility because it’s a different market condition. Remember three months ago, when you look at these companies, all these companies in this industry for three to six months ago, when they announced big contracts, their stocks surged. DigiPower surged, Vivo surged, Iron surged, you know, all these names within it, Core Scientific surged, Riot surged, right? All these companies within that are transitioning from, you know, tier three to tier one or whatever, tier one, tier three from, you know, crypto mining to, you know, AI, these stocks just ramped higher.

Frank Curzio 43:01

But now when these companies, if you notice, Iron just announced a big contract, right? And I think it’s somebody else, I forgot who it was, Core Scientific. And the stock sold off because in those big contracts, people are worried about the capex. Now you have to raise money. Now you got to build these things before you generate cash flow. So we come from a market where if you’re announcing a big deal and you have to fund some of it, you’re getting your ass handed to you, even though it’s a billion-dollar contract for a $200 million, $300 million company. So, you know, Vivo is different from DGXX. DGXX is building this. It’s amazing. I was going to go to the Alabama plant, but I just couldn’t. They invited me. Michelle’s going to be speaking at my conference, CEO. But I just couldn’t because of, you know, just so much going on. I had meetings and plus I have the conference and a lot going on. So I couldn’t go. You know, they wanted me to go last week. Maybe I’ll go in November, December.

Frank Curzio 43:47

I don’t know. But they’re getting everything done. But Vivo is different. It’s like a rental model. And if they come out and say, “Hey, our client is renting,” or they look and or announce like, you know, several of them that they’re not going to have to build the capex, this thing could just really, really take off because, you know, they don’t, the fact they don’t have to build it, they’re going to be generating that free cash flow like right away, which is awesome. So when I’m looking at Vivo and DigiPower, I looked at thesis, the thesis still intact. They’re in the industry where it doesn’t matter if Jesus Christ was the CEO. Again, I’m Catholic. I can say that because it doesn’t matter. It doesn’t matter who the CEO is. Everyone says, “Oh, the biggest thing about companies is a CEO.” No, it’s the market conditions. When the market conditions are getting annihilated, you’re seeing these things sell off. But I added to Vivo, I’m going to add to DigiPower. I’m going to have these interviews, probably send them out to everyone for free, maybe a week after the conference. And, you know, and I’m going to dig into them.

Frank Curzio 44:32

Like what’s going on? What’s the debt? You guys, you know, what position are you in? But when you look at Vivo, where they are in Finland, where I don’t want to say unlimited power, but they have cheap power in the middle of nowhere that they could tap, that they’re doing this where, you know, you look at over two gigawatts of full potential power over the next five, seven years that this company is going to have in a market where, you know, you see Microsoft and Google go to and these areas, we don’t have to worry about political risk or any shit like that. They’re just in a prime market that then these companies are getting hammered in the middle of these markets. But, you know, Vivo right here, I bought at 3:30 and the stock just, you know, collapsed and it’s 2:25 right now. I mean, how could this company and you’re looking at DigiPower trading at levels below the levels when they announced billion-dollar contracts? So it’s getting to the point where, okay, enough fear’s enough. I bought it.

Frank Curzio 45:20

Am I worried at 3:30? No, I’m not worried at all. I’m not worried about, you know, DigiPower X either. You know, to show you, I came into a finance of DGXX and I think I have warrants that I could get, I think the exercise price is 325. And I didn’t even exercise them yet. And I could have sold them higher, but I was just like, I think this thing’s going higher. That’s how I feel. Could I be wrong? Yes. Do I think they fall at these levels? Absolutely not. I hate it. I own them. I’m in the same boat as you. I get it. You can ask me questions. You can rip me apart. I’m the one that told you to buy these things. And, you know, they’re down if you bought them a lot higher. If you’re a subscriber, you bought them lower, you’re still up, which isn’t a big deal because they were, you know, sure they don’t care because these things were a lot higher. But these are two names where the thesis is intact. There’s no bullshit involved. These are good companies run by good CEOs that have been very, you know, just open and transparent with me about what’s going on.

Frank Curzio 46:07

And I understand, you know, the concerns about Vivo, the concerns about DGXX and the industry, but these guys have been doing this for a while now compared to a lot of others just starting to get into it. But I’m going to ask them all the tough questions, you know, access to capital, how you’re building out these facilities, what’s going on in Finland, what’s going on in Norway with DigiPower, how the Alabama plant’s coming online, which is exciting. They’re already generating money from AI, DigiPower. I mean, you know, these companies are doing very, very well, well positioned. They’re just in a shitty market right now. I’m holding on with two hands, but I’m still holding on because the thesis is still intact, unlike the question that, you know, I forgot it was Armando asked about Verizon and T-Mobile, which, you know, if you look at their core businesses being threatened right now, you have to watch out. These guys have the power. They own the power. The biggest companies in the world are in dire need of it. They’re in good position.

Frank Curzio 46:52

I think this is going to be pretty much a layup buying these things down at these levels, and you’re going to be very happy a year from now.

Daniel Creech 46:59

Well said.

Frank Curzio 47:00

And with that said, I did not think they would fall at these levels. I didn’t think Core Weave will fall at 60 either, but, you know, you have this whole fear trade, but I think I really believe that. I don’t think anyone said, I think Core Weave is going to have like a Warren Buffett, Goldman Sachs type moment where you’re going to have those four guys or two of them come in and say, “Okay, look, we’re going to backstop this thing because this is a great company. We all have big contracts with them. They’re doing the right thing. And they’re going to be fine because the amount of money that that company is going to generate once these data centers go up, it’s going to be freaking huge. Huge, huge. So.

Daniel Creech 47:29

Well said.

Frank Curzio 47:30

And you said we had another one, right? Home Builder or something?

Daniel Creech 47:32

Yeah. You want to take one on them?

Frank Curzio 47:34

Yeah.

Daniel Creech 47:35

This is from Beaver Banker. This is his handle on X. This guy’s hilarious. I go back and forth.

Frank Curzio 47:39

Beaver Banker.

Daniel Creech 47:40

Beaver Banker.

Frank Curzio 47:40

That’s awesome.

Daniel Creech 47:41

He’s hiding from Daddy Diamond out in Oregon.

Frank Curzio 47:44

Oh, we have father.

Daniel Creech 47:44

It’s fantastic.

Frank Curzio 47:45

Awesome.

Daniel Creech 47:45

Anyway, he says, “Hey guys, saw Berkshire increase their position in Lennar. Obviously, looks like home builders are dead due to rates. As we all know, they will be resurrected when rates start to go back down. I’m 34 and I have a lot of peers with growing families who are stuck in their low-rate first homes. I see this as pent-up demand. Do you guys think it is a good time to look at home builders, or is it still a falling knife? My thoughts are the same with Warehouse and timber prices.”

Frank Curzio 48:11

Look, we’re seeing rates at 7.5% and Fannie Mae is expecting that to stay that way or Freddie Macleod made the forecast through next year. So you see the risk ahead of you. You see the housing market doing good? No, but what Lennar and a lot of these companies do when they build in neighborhoods is they give you special rates. They give you special incentives. They give you special add-ons, right? That’s what they’re able to do, which is what crushed a lot of a lot of the existing home market, which hasn’t really been doing good for many years because if you’re looking, I think it was the first time ever where you saw the price of a new home, and I believe it was comparable square footage. I’m not too sure, but the price of a new home was cheaper than what people were selling their existing home for. So why would you buy an existing home when you could buy a brand new one for a lower price? And now if you look at Lennar, if they could find a way to help these people, and you’re right, there’s massive demand there, but they can’t afford 7.5% rates.

Frank Curzio 49:03

They can’t. Most people can’t. It’s insane. I wouldn’t be able to afford my freaking house. I mean, you’re talking about double mortgage on a million-dollar house. It’s insane. I have a 3.2% rate on that. If I have to go 7.5 on that, I would have passed. I would have been like, “I’m not buying it. It’s freaking, it’s crazy.” So when I’m looking at these home builders, if they could find a way to offer, you know, rates at lower prices, which, you know, having finance divisions and being able to lower that rate and people buy points down and stuff like that, I’m not even talking about that. Because if you look, look at this world, I just don’t get it. And this might be too simplistic and I have people who are bond experts and you could destroy me on this. But I’m looking at my credit, which is much better than it was three years ago or four years ago when I bought my house. Okay, so my credit’s better. I have assets that can cover my loan very easily for my mortgage. Yet, if I decided to do this loan today, simply because a rate went higher, my loan is going to be double.

Frank Curzio 50:00

So say if I’m paying a million-dollar house and it’s $8,000, I would be like $15,000, $16,000 a month in a mortgage payment. You know, so if I could find a way to lower that somehow, if I could find a way, because is my, do I have good credit? I have great credit. My credit rating’s better now than it was back then. Do I have assets to cover it? Yes, I have collateral to cover it. So why are the banks, you know, the banks I get it 7.5%, but, you know, if you have great, great credit and you have, you know, just you see the cash in their account or you see the collateral and whatever it is, you know, you have assets and stuff, you know, there’s got to be someone out there that would say, “Hey, you know what? Let’s offer 5% loans.” Plus people with super high, great credit. And yeah, I mean, it sounds crazy because the rates are higher and yes, you’re taking on more risk, but, you know, when you’re looking at some people, a lot of people are better off today than they were three, four years ago.

Frank Curzio 50:48

And yes, costs have increased, but your home value is up tremendously. I mean, almost everyone has equity in their homes, right? If you bought more than three years ago, but think about people who bought four years ago, seven years ago, ten years ago, I mean, the equity in your house has gone up tremendously, tremendously. And some people are tapping it through refinancing, but they’re not anymore because rates have gone higher. It’s for, you know, whatever, for remodeling or, you know, whatever, maybe you’re paying college tuition for the kids or something like that. But with these home builders, you know, they’re able to provide incentives. Their prices are going lower. It wasn’t Lennar, I think it was KB Home, right, Daniel? I think it was KB Home that said their average home price went down 20,000 from 500 to 480.

Daniel Creech 51:27

I forget the numbers, but it dropped a little bit, yeah.

Frank Curzio 51:28

To 480. And I looked, I said, “When’s the last time that happened?” And basically, it’s at the same price level it was five years ago or four years ago. 480, the average home price. So you’re looking at these prices where they’re not going up anymore for these new homes. Yes, the rate’s gone up, but if they could offer the right incentives and it makes sense and they’re really digging into their credit and the collateral and stuff like that, there’s a lot of people out there that say, “Hey, you know what? You know, maybe they could try to give them better rates. I don’t know, but at 7.5%, it’s really tough to see this market doing any better. But, you know, you want to buy when there’s blood in the streets. And I can tell you, I don’t know if it’s blood in the streets, but you’re close there in the housing industry. And you’re seeing Fannie and Freddie. I mean, look at those stock prices. They’re laying off a ton of people that I hear, even in Florida too, that just real estate agents and people who do mortgage applications and stuff.

Frank Curzio 52:15

And it’s just dropping like a rock. I feel like not too many people are talking about it, but 7.5% is just insane. But, you know, again, that’s when you want to buy these home builders when they’re down tremendously and Lennar is down tremendously, along with a lot of home builders. And, you know, it’s probably a good buy because you’re looking at, you know, what do they do? If you’re looking at Berkshire, what do they do? Well, they buy these things and they hold. They’re looking at a five-year minimum outlook. Five years from now. And if you’re looking five years from now, I could see Lennar at a much, much higher price five years from now, but one year from now is going to be incredible certainty. But, you know, maybe it goes down a little bit, but that’s why you have Buffett and they usually add to their positions over time and build up a nice position and, you know, might be a good investment. But today, nobody has longer than a 12-month outlook. Everyone wants to be a billionaire in a day, right? And algorithms. Your stock goes down 10%, you’re screaming. My mom, I went to my mom’s house, she’s like, “Oh my God.” You know, she’s looking at her stock.

Frank Curzio 53:03

She only owns three stocks, right? And, you know, one of them’s not doing too good, the other two are doing great. And she has the rest in S&P 500, which has been doing very, very well overall, you know, the overall index and in the money market, which, you know, is earning 4% plus. And she tells me, she’s like, “What about this? What about that?” I said, “How often do you look at this?” She’s like, “Pretty much every day.” I’m like, “Mom, don’t look at this every day. Just don’t worry about it. You’re fine. You’re fine. Most of your money is secure. You’re good. But if you’re looking at your money every single day and you own Core Weave, you’re like, ‘Holy shit.’ If you see some of these names, you’re like, ‘Holy shit.’ But people don’t hold stocks for years. People rent stocks. It’s a rental market with algorithms, with trading that throws these things around. One bad quarter, it gets amplified times a million on TV, on social media. This company’s done. The CEO, they got to fire the CEO. That’s the market that we’re in. And it’s hard to ignore all that noise when it’s in your face every single second.

Frank Curzio 53:53

And yeah, it’s just pretty crazy. Do you have that screen up right there? Joe, are you showing that? That’s CNBC? Yeah, show that CNBC screen because you just put up on a TV. So this used car stock is likely to cruise higher. I will say, I think I saw that for Bank of America. I just looked at the headline. She put it up there. I’m pretty sure that’s Carmax. And why is that so big and why did I see that? And I’ll give you guys a, you know, again, pivoting a little bit here because I just saw this headline, but that’s Carmax, I believe, right? Yeah, Carmax. And why is this relevant here for Bank of America is because they went from a sell to a buy. So that’s a double rating. And when you do that, that’s usually really exciting for a company. You see hold to, you know, neutral to buy or neutral to sell. You rarely see a sell to a buy or a buy all the way to a sell without going to that neutral first. So that was interesting that we saw that. But, you know, sorry I got diverted a little bit there with Carmax, but I figured you guys have good information on a stock that I just saw.

Frank Curzio 54:46

I’m going to be looking at Carmax and see why they double upgraded that. But, you know, get back to home builders, probably worth the buy to put money in, but, you know, you got a year or two, you need to have at least a year or two time horizon to see that work out because it’s going to be very choppy, at least over the next six months.

Daniel Creech 55:03

Well said.

Frank Curzio 55:04

Are we done? Done all the questions?

Daniel Creech 55:06

We’re done.

Frank Curzio 55:06

Good questions, guys. Keep them coming. Even about the stocks. Listen, if I’m recommending stocks to you guys and they’re down, that’s my responsibility to get on here, talk to you about them. You know, I’m not backing away. I own a lot of these companies personally. You know, so I feel the pain as well. Some of these things are going down. I also feel it when, you know, it’s great when we had Bloom Energy, which I made a ton of money on. You know, Celestica as well, you know, massive gains. You know, Dell’s doing pretty well for us now, even though it fell yesterday off a downgrade, but, you know, reevaluate that company as well for our portfolio. But, you know, a lot of names do well, but I know people and subscribers, they want to hear from you when things aren’t doing well. And I understand that 100%. Things are doing great. Hey, don’t worry about it. Everything’s fine. But when things aren’t, that’s when you got to be there for your subscribers and we’re going to be there for them. And, you know, any questions you guys have about any stocks that we’re talking about on X, please follow us at Frank Curzio. You know, continue to grow our presence on that platform.

Frank Curzio 55:54

And I’m just so happy so many people are on that and 15 million traffic. That’s, you know, views that we had in September. And we’re going to start kicking ass again in October, which is great. And we’ll have some really good footage from our conference as well, which is next Sunday and Monday. It’s going to be really, really exciting, really, really exciting stuff. And questions and comments, feel free to email me at frank@curzioresearch.com. Daniel?

Daniel Creech 56:17

Daniel@curzioresearch.com.

Frank Curzio 56:18

All right, guys. Enjoy the weekend and we’ll see you on the other side. Take care.

Announcer 56:23

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.