I just finished watching the TV series Narcos. It’s actually a great story about entrepreneurship (although, of course, the business is illegal).
The stock rally is on. I highlight several names making explosive moves—including Tesla (TSLA), SoFi Technologies (SOFI), and one Curzio Venture Opportunities holding that’s up about 27% in less than a year.
But despite these impressive gains, investors shouldn’t expect a new bull market. I break down why this market is similar to the dot-com bubble… why I expect many big names to sell off soon… and why the Fed isn’t done with its rate hikes, even if it pauses this month (check out some must-see data about the Fed on my YouTube page).
That said, I expect one corner of the market to see a massive tailwind: small caps… I use a well-known stock as the perfect example of what to expect from small caps going forward. After selling off hard following its last earnings report, it’s up more than 15% since the start of the month.
In fact, I’m so excited about the opportunity in small caps, I’m creating a special deal for our small-cap newsletter, Curzio Venture Opportunities. Look for the details next week.
And on tomorrow’s WSU Premium, I’ll share one of my favorite small-cap ideas. Don’t miss it—sign up now.
- What Narcos can teach you about business [0:30]
- Why stocks are surging [3:00]
- This rally reminds me of the dot-com bubble [9:40]
- Be careful what you wish for from the Fed [12:40]
- Why small caps have a ton of upside [16:00]
- Look for a special offer next week [20:00]
- Don’t miss tomorrow’s WSU Premium [27:35]
Wall Street Unplugged | 1047
Get ready for a bull market in small caps
This transcript was automatically generated.
Announcer:Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on Main Street.
Frank Curzio: How’s it going out there? It’ss June 14th.
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.
We just finished watching Narcos, the series on Netflix.
It’s been out for a while.
It’s Pablo Escobar and the Cali Cartel taken over.
I never realized how much power these guys had.
I didn’t realize they were billionaires.
They were actually billionaires.
They were among the richest people in the world.
Tried to to get into the government.
He wanted to be president.
He was insane.
Some of this stuff, these guys are paying off entire governments, the entire police force, most of them utility companies.
This way they could tap anyone’s phone.
They knew when the DEA was listening, when they came in, they had people, you know, just watching the airports and stuff like that.
No matter how many guys you’ll arrest, you’ll never ever be able to stop the trend.
America’s love cocaine and they’re gonna continue to buy it no matter what and they’re gonna find ways to get it into the country.
So I was so surprised all the stories of fentanyl that got so out of control, right? So dangerous.
I heard you just open it and you could sniff it and you freaking you could die from it.
But if you’ve got fentanyl, that really hurts the cocaine industry.
It’s like tighter restrictions, cross borders.
You have politicians talking about it.
I’m crazy and Mexico border coming in and all this stuff.
You think the cocaine cartels would’ve killed a fentanyl cartel tribes and wanna wreck them.
Anyway, stuff is fascinating to me.
Learn about running a business by watching that show how organized they are, how they scale the business.
I dunno if you saw the movie Blow using Jail and said, oh you have the wrong dream selling marijuana and as planes.
He’s like, no, no, no.
You gotta get into cocaine.
Went from selling it in Columbia, south America, into Miami.
That was in Miami for a while before they were like, let’s try to get to New York and then all the way to LA You can teach you how to eliminate your competitors not in the right way.
Oh man, what an awesome show.
A really details government DEA going after people entertaining hails.
I saw the first season a while ago, Pablo Escobar.
It was season and a half.
Then with the Cali Cartel.
I just finished that one.
It was amazing, amazing, amazing stuff.
So definitely recommend if you got some time and if you’re an entrepreneur, definitely watch that.
You can have some listens from one of them.
Building a business from scratch, pretty crazy.
Anyway, let’s get to the markets.
I guess risk is back.
Tesla are up 13 straight days.
Tesla, aren’t they Cutting prices and margins getting crushed.
See SoFi, remember that bank searching 12% on Monday, carnival upgrade pops 12% low in Norwegian cruise lines that pops We now up over 40% on that name.
We’re Palantir and everybody hated that stock.
I mentioned it on Wall Street Unplugged Premium podcast host every Thursday it’s trading at $7 a month ago.
It’s over 15.
You guys take a look at the VIX, the Fear Index under 15.
I mean level’s not seen since pre COVID.
Would you say that there’s less risk right now compared to any of the time the Russell 2000 was up seven sessions in a row down a little bit on the eight session, still up 7% in eight trading date seven per the rest of 2000 stuck the whole index.
And this is happening in the middle of interest rates.
What do you think they would be doing if fear index is damn right.
No, this surging absolutely surging 10 years had 3.
7% highest level since when we hit the banking crisis and then before that 2022 crash in October.
Not a good sign when that’s happening.
The two years, Remember when interest rates when they were going high, it was bad for tech stocks, bad for risk.
Remember that? Forget about that doesn’t exist anymore.
It doesn’t matter.
What about sell may and go away? Remember that? So in May the NASDAQ outperformed the Dow by 10%, by 10% in one month.
That only happened eight other months, eight on eight times in history of the NASDAQ since the 1970s, only eight other months.
So forget about that since sell may go away.
No, this is happening while tech earnings last quarter, believe it or not, some people don’t realize this, they’re down 5% year over year.
That’s except 25% yet they’re earnings.
And you wouldn’t think that from watching cause all you hear is they beat, they beat, they beat.
You didn’t know that they lowered considerably going into that corner, which is fine.
It’s my job to tell you that.
But it didn’t matter.
It doesn’t matter.
Peas don’t matter anymore.
And you look at tech stocks right now trading over 40 times earnings, So the two years where you know we’re shutting down 90%, a hundred percent of our revenue stream, which never happens cuz of lockdowns and then we’re injecting 11 and a half trillion into the market, which again, I always use this analogy, but to save the entire planet and a financial crisis costs 460 billion.
Seemed like a lot of money at the time.
Remember it was gonna, oh my God, trillion.
So if you take out that, you know, nonsense of 24 months, 40 times, right? Last time the nadaq traded at these levels was 2002, This is all happening while New York vacancies sit at a record.
Now experts predict that it won’t go lower than 19% before at least So vacancies for decades and decades and decades in New York City at its worst case and never average more than 11%, we’re at 22.
And again, the leading people in this industry who follow statistics for decades say it’s not gonna go lower than 19% for another four years.
Three and a half years we’re seeing this move in stocks and to risk with credit tightening to levels.
And you know what, I’m gonna pull this up for you guys cause I’m gonna make you watch my YouTube channel.
It’ll be worth it for these two charts.
Trust me, you should know these charts.
So there’s two lines here.
One is credit conditions by NFIB.
So this is you know, current and expected.
And then they have the F S L O credit conditions, which is a darker line.
So it’s a tightening standards for loans to small firms.
So if you look, it’s like a standard deviation chart.
So it’s like zero negative one, negative two, negative three and then 1, 2, 3, 4.
So zero is the line where that’s where it’s supposed to be traded.
Now there’s only three times in history that we’ve seen credit tighten to this extent.
And by the way, we’re probably in the third inning of credit tightening and the third inning we’re not even close Every month that goes by with interest rates high.
See, the Fed ‘s not gonna lower time soon, right? We know that they can’t lower anytime soon, not wear the cores.
Only three other times.
You want to guess those times that we were down to these levels with credit tightened this much.
Okay, this is on the negative three, okay? Which is bad.
That’s steep, okay? Meaning that conditions tight.
When did this happen? 2000.
What happened? Crash 2008, forget about the 2020 COVID ups and downs, right? And then right now currently we’re sitting at below levels pretty much, much in line with levels from the 2000 crisis.
And again, we’re in a third inning of this.
So tiny credit conditions where higher interest rates can constant drag home price values are gonna continue to come down little by little it’s like rental incomes are giving up a little bit and you’ve seen inflation numbers starting to come down a little bit with oil and things like that.
But if you’re looking at household wealth is gonna continue to go lower and lower and lower and lower at high interest rates.
That’s what it does.
It’s not a one time, it’s not a one-off, it’s not a write down a writeoff, it’s not a one-time thing.
As long as rates remain high, these conditions are gonna be tighter.
It’s less credit to the overall market profits and margins are gonna be shrinking.
That’s what you’re gonna see.
But when you look at this chart, it’s pretty scary.
Now I’ll have one more for you cuz now with the Fed they’re like, well they’re gonna pause and then they’re gonna lower.
They’re excited about, that’s a great thing, right? Please check out the YouTube channel, it’s for free.
I’m not pitching s**t to you.
Look at this chart that I have about Fed fund’s target.
If you look there’s three times since 1998 or even go back to 19.
Yeah, go to 1998 where when you look where the Fed stopped tightening, okay, what do you think those three levels are? 6, 28, 2000.
When did the market start to crash? Okay, so we have these rates, hikes, hikes, hikes, a pause for a little bit and then we see them to start lowering.
Now as they’re lowering, the market is crashing.
And why would you think that? Cause the only way you lower rates is if the economy is horrible.
Which right now it’s not really that horrible.
It’s supposed to be in a recession but it’s not.
It’s growing like 1% half percent now in the next quarter.
But it’s really weak.
So 6 28, 2000, right When the mark crash March for three years, Well if you look at 2006, August, 2006, right when the s**t started hitting the fan, that’s when they paused.
That’s when we saw what we saw.
Subprime names countrywide.
Early 2007 started to go on in 2007.
We saw the cracks.
And you can look at even 2008 where Bear Stearns went under or almost went bankrupt and they got bought for whatever it was, two bucks after that happened, the market went up considerably.
I think it went up over 20% over the next couple months.
And then what happened? Everyone’s, it’s done.
You have nothing to worry about anymore, we’re fine.
Just like we said with the recent banking crisis a couple months ago, we’re fine, we’re good, we’re past it.
You really think we’re past it.
Where interest rates are right now, you really think we’re past it.
Commercial real estate.
Who’s buying commercial real estate right now? You outta your mind.
Nobody see delinquencies.
So Capital One, I think some of these numbers out there, if you’re having trouble paying their bills, so the second time they still have this up Fed funds start when they paused before they started lowering, gonna add a little bit of a pause, it was in August, 2006.
What happened? They paused and then they started lowering I think starting either late 2007.
And what happened as they lowered the market absolutely got annihilated.
And then we have right now where rates have gone up more, right? If we look at the period in 2000 leading up to that rates were about four and a half and it went to six and a half.
If you look at the 2005, We went from basically 0.
25 to over much quicker than we did last time.
So for those of you thinking like, hey, a pause is great, it’s usually a sign that’s a top.
So in other words, maybe you should hope that the Fed doesn’t pause.
And if you’re a bull, maybe wish otherwise.
Cuz if they pause just before they start lowering rates, it’s a sign to get the hell out.
Run, run, run.
Clear chart again.
Check it out guys.
Fed fund’s target 19 94, 20 23 and this is when they left.
Rates unchanged after at least three straight meetings of rate hikes.
Those are the three periods.
It’s not like skewed where there’s a period here, no, if you look it’s clear as day, which is kinda crazy.
But unfortunately if you go to YouTube you gotta see my beautiful face with my two collared shirt that all my New York friends make fun of me when they see this.
So you’re looking at this and a lot of this stuff is happening in the middle of a lot of risk out there.
It was so consumed with bull market, bear market recession, no recession crash, melt up.
Yes, no black, white.
That’s the new world.
That’s the new world with like a minute interval before things change for bullish and bearish and bullish and bearish.
May I watch Cramer? I mean he seems like the biggest bear in the world and two days later he’s the biggest bull in the like it’s, it’s just back and forth, back and forth, back and forth, back and forth based on his crazy news flow.
But I think we have to start looking at the markets in a different way.
Clus, myself, if you look at the markets, and I’ll give you a good example.
If, if we pull back and we go into recession, usually risky stocks, small caps get crushed.
That’s normal risk off usually happens in a higher interest rate.
Credit tightening, right? Get the hell outta risky stuff, risky stuff’s doing well all of a sudden Tesla are up what? 12, 13.
lowering margins doesn’t matter.
And over that timeframe I think it’s up like 35% Crazy.
But if you’re looking at small caps, these risky stocks, they significantly underperform the NASDAQ year to date.
And what does that mean? It means that a lot of the risk is priced into these names.
So even if you’re anticipating a market pullback doesn’t mean small caps are automatically gonna get nailed.
In fact the reason why they’re starting to surge or up 7%, but Russell mentioned earlier in the past week or so.
So another good example is is Macy’s.
Macy’s came out June 1st and this was from the January period.
So in March they said look the consumer’s really cutting back, it’s cutting back, it’s cutting back, they’re cutting back, all we got are cutting back.
And they said that you know, we’re adjusting our earnings a little bit lower for the end of the year.
Okay, this is in March, June 1st they report, they’re like we were wrong.
The consumers coming back much, much more.
They missed earnings and lowered guidance significantly.
So in June 1st the stock was like a 14 50, 14 75 and it fell to 13 and changed hours, it finished the day down 2%.
You know what Macy’s is now this is June 1st, we’re talking about 12 days, Macy’s is trading at $16.
Why is that? Because Macy’s was down heading into that quarter from $25 a share.
It was down 50% dramatized before reporting wasn’t like up consistently into the quarter and then reported these numbers.
That’s what you see at a Dollar General.
That’s what you see at some of these stocks.
These retailers that got smoked like a 10 day span where you saw stocks full on Macy’s gotten crushed.
Does that from 25 to 1450 then it goes to 13, it’s training at six times forward earnings even though they lower those numbers considerably.
A lot of downsides priced in.
And Macy’s is not a one-off.
I cover small caps on my life.
It’s what I’ve done my entire career from the start.
Small caps, stocks under 10, Jim Cramer, single digit stocks, Stansberry started a newsletter.
Now Curzio Venture Opportunities.
I read, this is what I love to do cuz your cover companies from the very early stage, sometimes it’s my models, right? I’m the only person covering some of these names.
I love this area of the market.
Some of ’em, some of the rest 2000 stocks have 15 analysts covering.
Sometimes they’re bigger.
But I’m seeing the same case for a lot of small caps where these companies have gotten annihilated biotech names trading their net cash about a month ago.
I mean they’ve been surging.
Why? Because they already got annihilated.
And when you see one sector of their market surging, especially getting super expensive, I told you the 13Fs recently came out.
Those are all the biggest firms I have to report their whole, I’ve never seen, I never, I can’t remember.
So we’re talking about 10, or seven of ’em almost every single fund.
Usually some of ’em have like 10 different holdings, maybe three holdings, maybe three new holdings.
I mean every one of ’em, Nvidia, Google, Microsoft, apple, pouring into those names, pouring into those names, which means what they’re over owned and what are they gonna do as they get a little bit more expensive? Well they’re gonna diversify.
Were they gonna diversify into some of the names that haven’t really performed? And that’s the pool of money going around.
In order for the market to actually crash, you’re gonna have to see the companies with the highest market caps.
Those 10 that account for 30% of the S&P 500 .
Now 31% to be exact, the 10 largest companies.
We haven’t seen that high of a concentration in in market waiting since 2000.
It’s 2000 and now we know what happened last time.
But again, for those companies who come down, their balance sheets are very, very strong.
Maybe they don’t fall that much.
If they don’t, you’re not gonna see the overall market crash.
So you don’t have this crash call or recession call and you know when they announce a recession, it’s usually happens six months before they make the announcement and stocks usually fall before that.
And stocks never bought ’em before A recession.
And we’re heading for a recession.
I think most people believe that.
I mean based on G D P, maybe it might take an extra quarter.
It’s saying something since we’re about 22, 20 3% off our highs now.
But you had this sector that’s so over owned that now you see money pour into other areas.
Maybe that’s why the, the small caps rust thousands up tremendously when you look at it as a whole.
Curzio Venture Opportunities and I mentioned this earlier, if you ever thinking of subscribing to that flag, that’s our flagship product, again, that’s what I’ve been doing my whole entire career with small caps.
This newsletter also offers private placement opportunities.
But if you’re thinking about it now is the time, the ideas that I’m seeing in this space are incredible.
You see within the portfolio A lot of these guys have good management teams have been pricing at a recession, lower cost significantly, yet their stocks still got annihilated.
Not like many of the large caps.
If you listen to this podcast for first time, you haven’t heard me pitch that newsletter outside for last week or two for a year.
Cause I like to talk about products when it’s a good time to come in because if you come in at at the wrong time and you get wrecked, what are you gonna do? We don’t get paid by any company to recommend them.
People that pay us the subscribers and we have to show you performance, we don’t show you performance, you cancel and you leave us and I can’t feed my family.
It’s that simple.
And that’s the way it should be, right? Sucks.
It’s not like that in sports.
Guys sign 300 million contracts like Man, Scherzer and the whole Mets Squad, right? Geez Verlander.
Oh man it’s terrible.
Then what happens? You get hurt.
They got insurance on it but still love baseball.
Man, I wish I was a left-hand pitcher.
I mean just get me.
I could walk a guy and get paid a million.
You don’t have to pay those guys like 10 million to walk batters.
They come in for like one or two batters, I’ll walk a guy and give up a hit and they sit down 7 million a year cuz they’re lefties.
I need to be a lefty anyway when it comes to small caps, usually charge anywhere from 3000 to 5,000 for an annual subscription to this product and maybe biased here, but it really is worth every penny because of the research that you have to do.
And when you’re analyzing small cap socks, large caps are easy.
You get research every place you can pull up Google know the numbers everywhere.
Again, when I’m doing the model, a lot of people look at my model so I gotta, you know, make sure it’s accurate as possible.
So that means visiting management teams and traveling, going through the numbers, going through the story.
I mean it’s a lot, a lot of work for that product and I love it.
I love that part of the business.
Very wealthy focusing on this area of the market.
But starting next week I’m gonna cut the price of this newsletter by 75% one time only for Curzio listeners.
That price is probably gonna be around a thousand dollars for the entire year.
That will never happen again.
It’s not gonna happen next year.
If your subscribed already, you could add this on the reason why, cause I know if you subscribe to this product, you’re gonna be a client for mine for at least a decade.
That’s how positive I am.
And if not after year and doesn’t do well then okay, you don’t empty up, that’s fine.
Well I haven’t had many private placements in this newsletter probably for the past 18 months.
I travel, I speak at mining conferences in Vancouver and you know, really tied into that industry.
But the last three years I haven’t really gotten into.
yeah I avoided a lot of these stocks and private places for at least in the past 18 months.
Cause we would’ve got killed on a lot of mining stocks.
I mean SPAC deals, it was SPAC deals that came my way and I hated SPAC deals because of the the amount that was coming out at under a dollar, under $2.
And sometimes you really had to ask questions cuz they didn’t have to report like their warrants and the structure.
What, what is structure SPACs? What is structure to completely f**k the regular investor? Oh my God.
And they let you do it too.
The regulators, S E Cs, a bunch of a******s going after crypto.
I mean they didn’t even care.
You don’t even know the pipe deals that happen behind the scenes.
They don’t list anything.
I mean they just created so the insiders can get out much, much quicker than having to wait seven to 10 years for liquidity period of investing in private company.
Now you got all these pipe deals, these guys are getting free stock.
They don’t care if it goes from 10 to six, they’re still make it a fortune cuz they own it.
A dollar they’re blowing out of it killing you and you’re like, what’s going on? How come this company’s down so much? How come they got crushed? Cuz it came out 3 billion valuation and it’s trading it 900 times sales.
That’s why it’s not even that it’s a bad company.
It’s like you’re paying $25 for a Snickers bar, it’s a good candy bar.
You’re not gonna pay $25 for it.
And you’re like, I’ll wait, I’ll wait till it comes down.
It goes at 20 and you’re like, all right, I’ll buy it.
Then it goes to fifteen ten five.
How’s it still going down? Who’s selling all the people that got into that deal four months ago? Those do it.
That’s who’s selling.
And much less disclosure.
You didn’t have to disclose warrants or anything.
It’s so funny how the biggest guys like the Ackmans and all these other freaking rich idiots all got in late, right? They, they were like, oh, now we’re gonna launch our special fund.
And it’s, I mean, man money.
I mean it’s the death of everything.
It really is.
And that’s coming from someone who’s Wall Street background.
It’s just the The greed, right? The billionaires and the greed that comes from it and it’s like, oh my God.
And it all comes at your expense.
It only works if the retail investor buys in.
It’s like, who’s the suckers that we could sell all this s**t to? Who do we have to lie to? Who could we lie and tell everyone there’s a grace, they’re all going to space like Chait did.
We’re all go to space, we’re all gonna hang out.
Yes, he thumbs up across from the New York Stock Exchange with a big thing plaster there.
We’ll go to space.
That company’s done.
They cashed out for 150 million.
It’s a cout sold it’s totally outta position.
Probably sold that thing at like 20 something.
Man, I had a guess probably $3 now it’s gonna be zero.
We’ll go into space.
Everybody’s gonna space everybody.
It’s so great.
You can’t make this s**t up.
But it’s insane.
Hey, that’s why I love covering small caps to tell you who’s b******t and who’s not.
What structures are good inside ownership? What’s management seems growth, what’s their goals? Why is the stock down? Are they addressing? Which is fine? Small caps have ups and downs, ups and downs.
Ups and downs.
It’s okay to have the downs if you learn from ’em.
Have they learned everything? Do those problems still exist? Have they taken care of it Cuz the stock went from 20 to 10 or to eight based on these three risks And those risks no longer exist anymore.
Meaning this thing, they know what they need to do to get back up to 20 a share.
There’s funds coming into this thing.
Funds that are have great performance track records.
A lot of guys, you’ve never even heard of getting hundred million dollars.
If you imagine 100 million, you gotta report this stuff.
They become a significant owner.
It’s a new positions.
That’s what I love about this area of the market.
And again, private placements, which you will see over the next six months.
Several go in there.
If you’re a credit investor, you don’t need to buy this newsletter if you’re not.
But a product that we sold for three to five x more, that’s one of the products that we’re gonna discount just for you, which you should say you should never discount a product.
There’s times that you do times like this that are crazy where I see opportunities, where I know that we’ll be able to charge full price for this newsletter.
Everybody pay for it a year from now.
That’s an opportunity for you.
Again, there’s a newsletter I don’t pitch often outside last couple weeks that often is gonna be available to Curzio listeners only next week if you’re interested, we’ll send you an email.
You guys, mostly you are on our email list.
It’s pretty cool, but a lot of stuff.
I’m gonna break down more small caps, why I liked them.
And also share my favorite small cap idea with you in tomorrow’s Wall Street Unplugged Premium podcast.
That’s our premium podcast.
Just $10 a month for that includes free subscription to our Dollar Stock Club newsletter where we recommend a trading idea every single week based on the current news, what we’re seeing, earnings and stuff like that.
So it’s a lot of fun, interested, wanna learn more? Just go to wsu offer.com and that subscription, a free report every I told you, include 20 stocks that are much better buy than Home Depot or growing their earnings and sales much faster than Home Depot.
These large cap stocks while trading a cheap evaluation, 20 names, get that for free, which is pretty cool.
This guy’s gonna be focusing on small caps a lot over the next couple weeks.
Lots of new ideas are gonna be coming out.
Portfolios start on a ramp higher.
We’re seeing a bid and these stocks, and even when the market pulls back and it will a lot is priced in, just like we saw with Macy’s, you can’t get a worse report than Macy’s missing earnings.
Lowering those estimates considerably saying that less traffic, which is the death to death freeze for retailers.
Consumers closing their wallets.
Okay, that stock was 13 when they said that 12, 13 days ago, and it’s 16 today.
That’s what happens when your stock is now 50% and you’re trading just six times fold earnings compared to a market that’s trading 18, 19 times fold earnings.
There’s a big difference with those markets.
I’ll separate the good from the s**t from you and you’re gonna see a lot of that, a lot of new recommendations over the next couple weeks.
So questions come.
So I’m here for you, frank kza research.com.
It’s it for me.
I’ll see you guys tomorrow.
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