Wall Street Unplugged
Episode: 874March 30, 2022

How to take advantage of the growth stock rally

The U.S. Treasury yield curve just inverted for the first time since 2019. On today’s show, I break down this warning sign from the bond market… 

Plus, Daniel and I share a few of our favorite sectors for a slowing economy… and a strategy to take advantage of market volatility and the rally in growth stocks.

Finally, we cover several headlines in the crypto space—from the huge hack of Axie Infinity… to coming regulations, which will be game-changing for the space.

Inside this episode:
  • Don’t fear an inverted yield curve [0:35]
  • Sectors for a slowing economy [12:20]
  • The game has changed for growth stocks [18:25]
  • What the crypto hack says about regulation [27:20]
  • Why you need exposure to digital assets [33:55]
  • Our special offer on Crypto Intelligence ends soon [35:11]

Wall Street Unplugged | 874

How to take advantage of the growth stock rally

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: What’s going on out there? It’s Wednesday, March 30th. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break the headlines and tell you what’s really moving these markets. It’s a fun day when I bring in the one and only Daniel Creech, senior research analyst at Curzio Research. Daniel, how’s it going, man?

Daniel Creech: Frank, good morning. Another wonderful Wednesday here in Florida. The countdown is on. Wait until we start seeing countdown clocks to recessions.

Frank Curzio: You know what’s funny, because everybody’s talking about recession, right? All of a sudden. We have the inverted yield curve, we’ll get to that in a second. But here, we are in a recession. Yet, we’re seeing the markets continue to move higher over the past few weeks, right? So everyone’s worried, worried, worried, and now, we have the inverted yield curve, which automatically means… And just to put this in perspective, guys, I know you’re hearing this a lot. We want to explain it, okay? So, the two year and the 10-year, right? So, it’s meaning that the yield on the two year treasuries is higher than 10-year. Whenever that happens, that’s an inversion, and that almost precedes every recession. That’s true. However, it’s happened a lot where we haven’t had a recession, right? So, how should we look at this?

Frank Curzio: If you look at it over the past 40 years or so, and how many recessions, I think it’s predicted six of the last seven. And for me, when you’re looking and you’re listening on TV, everyone’s talking about the two-year and a 10-year, I like to focus there between a five year and a 10 year. Dan, I don’t know about you, but that’s much bigger because it doesn’t have that inversion all the time, and that just inverted as well, and the last time that happened was 2006, I don’t have to tell you what happened 2007, right? It was the credit crisis, that’s when it began, 2008.

Frank Curzio: So, I could see the nervousness, but I want to get your thoughts on it. Because now it’s inverted, that’s a top story, recessions coming, and the media loves that word recession because it scares the shit out of everyone, right? It does. And a recession’s defined by two straight quarters of negative GDP growth. So, if you have negative 0.01% growth, which is not growth, and then you have 0% growth, it’s not a recession, but I assure, you the whole entire world is going to feel like they’re in a recession. So, what are your thoughts about the inverted yield curve, should people be able be paying attention, is in a lot of noise. I mean, what are your thoughts?

Daniel Creech: I definitely think people ought to pay attention to this just because it doesn’t necessarily mean we’re having fun with this countdown and things like that, that all the financial markets will run, but everybody should pay attention to it because it is important. When investors are thinking that interest rates are going to be lower in the future than they are right now, that’s because they see problems down the road, that’s a simple way to think about that. What caught my attention, Frank, is Mr. Market, you take all the analysis of everybody, they are now pricing in, according to Bloomberg and such, seven to nine interest rate hikes, depending on if it’s 0.25, 0.5, whatever.

Frank Curzio: I feel like we were just talking about it not long ago when we talk about three.

Daniel Creech: Right. Yeah, exactly. I mean, it seems like they’re going to be aggressive and all that, but forget that for a moment. More importantly, as this article points out through Reuters or zero… Reuters, I believe they are pricing in three rate cuts in 2023 and ’24. Take this with a grain of salt. I think this is an opportunity for individuals, for us little guys, because don’t fear a recession. Yeah, maybe prices pull back 10% and go sideways, this is the whole hard versus soft landing type idea. As interest rates rise, is demand in the economy going to come grinding to a halt and lead to a market crash to get inflation under control along with rising interest rates or can we just manage this? Hey, it feels really bad, but markets are only down a little bit and they’re bouncing around, that remains to be seen.

Daniel Creech: But pullbacks in certain areas that we’ve been talking about for a long time around this news of recession fears like energy and such should be used as buying opportunities, in my opinion, as far… And you want to get boring down the line. So you want to look at fuel, transportation, chemicals, and situations like that, in my opinion, for that slower… From high growth to more economically or well run businesses on the economy side.

Frank Curzio: No, I hear you. And we’ve talked about ways to play this, but the fact that inverted yield curve, and just to put in perspective, when you look at… And every company does this, but CNBC said they have the top 10 tickers, right? The search, so those tickers this way you know… You’re finding out what people want to know and everything. Of course, the meme stocks are in there, oil is in there, and you have Apple in there. What was in there for the first time, I think, ever was the ticket for the spread and it’s between the two-year and the 10-year. So, that tells you the average investor is really concerned about that, just something that’s weird.

Frank Curzio: And I can tell you, from that perspective, I wouldn’t be concerned. Like I said, it’s a different world, the Fed’s sitting on 5.8 trillion treasuries now, that it bought since COVID, that changes the thesis of this, when it comes to inverted yield curve and how it leads a recession. It does signal that something’s off, when treasury buyers are willing to go out long on their maturities without demanding more money, so I understand that point. But I want to say that the inverted yield curve, it’s just noise.

Frank Curzio: For you, the retail investor, which is what we care about, the podcast is about, and I think that’s why a lot of you listen to it, because you’re sick of hearing the bullshit every place else is use your common sense, just like you did when you saw inflation running wild because every bill that you paid was much, much higher, you sort running wild while the Fed, the so-called smartest people, supposed to be the smartest, that’s what we hired them for, the smartest people when it comes to the economy, had absolutely no clue this is happening, and still has no clue since they only raised rates by 25 basis points two weeks ago. That’s why we’re so out of whack, and we have inverted yield curves anyway, because we should be 2% to 3% on that Fed funds rate not… Okay, well, we’re going to slow down.

Frank Curzio: Everyone’s saying, “Well, you know the Fed’s not going to do… They’re not going to…” They don’t have a choice. They don’t have a choice. This is what’s going to happen if you slow it, you’re going to have inverted yield curves, you’re going to have things all over the place, shit going crazy, meme stocks going up 300% one week and down 75% the next week, this is what’s going to happen if you decide to do this, because there’s so much confusion, there’s so much money, there’s so much trading algorithms right now, and nobody knows what the Fed’s going do.

Frank Curzio: But the market is telling the Fed that the Fed’s funds rates be a two or three, that’s why you see mortgage rates through the roof. Now, for you, using your common sense, you’re seeing the cost of everything you pay up even further more dramatically than ever, it’s not slowing oil, gas, food, electricity, cars, homes, you name it, every single thing you buy is higher in price. Now, you try going to buy maybe a bed, golf clubs, a car, and you can’t get them since there’s supply chain disruptions, which means if you’re looking to buy any of those things and tons of things, it’s going to take more than six months. No one’s getting stuff delivered in less than six months.

Frank Curzio: In the meantime, prices continue to rise. Now you’re noticing that vacation, you were planning, oh, we complained like two, three months ago, cost 6,000, it’s 9,000 now, with hotel prices and fees, and everything else. Maybe you think about purchasing real estate as an investment, and you’re willing to pay $1,600 a month for a mortgage at 3% in October, mortgage rates are 5% now. It’s going to cost you for that same loan, which is up $400,000, which is the average loan in America for a mortgage, it’s going to cost you $500 more, $2,100. You just looked at your monthly statement, it’s down over 10% and much more if you own aggressive names in tech, biotech, meme stocks, on top of that, your accountant just told you how much you owe on taxes because you kicked ass last year in 2021 when the market was much better.

Frank Curzio: So now, you’re noticing a shift where you’re being forced to reign in you’re spending, everybody, across the board. I mean, who’s going wild and spending like crazy, they’re seeing the condition, everything’s higher. So, everything costs so much, gas price is over $4, these are a sign that we’re already in a recession. If you need to invert a yield curve to tell you that, or… We’re going to see that right now at this time we’re in a recession, okay? The Fed is removing the punch bowl, and I know earnings are good, and GDP growth is strong. However, you want to define as recession, we define a recession, but you are going to see companies, especially this earning season coming up, the guidance. That’s what earning season’s about, you can report shitty earnings and say our guidance just, you’re earning a dollar, you expect to earn a dollar for the rest of the year, and you say, we’re going to earn $3, your stock’s going to take off. They always worry about the future.

Frank Curzio: CEOs are crazy to guide aggressive right now, especially in the auto industry. If they are guiding and stocks are going to go up, it’s going to be used as a massive short opportunity, at least for the smart money. If you’re looking at growth, it is going to come down incredibly, and we’re seeing that. And you’re not seeing it at Apple, you’re not seeing in Google, you’re not really seeing it in Amazon, those are not growth stocks, they’re tech stocks, it’s a big difference between technology stocks and growth stocks, it’s two different things. These are companies that are generating tens, if not hundreds of billions of dollars in earnings, revenues, I mean, the cash flow is tens of billions. These are different companies than the snowflakes that aren’t generating that type of cash flow.

Frank Curzio: So, whether we are in a recession right now or are going to a recession, you need to prepare because stocks are going to come down tremendously before, usually when we find out there’s a recession, we find out two years later. “Oh yeah back to… We were in a recession then because GDP went negative two straight quarters.” It doesn’t matter. We didn’t know it was a recession until the end of 2008, that really 2007 the recession started. It doesn’t matter. What matters is you’re seeing people spend less, there’s less money going to the economy, the punch bowl is gone, and you have the Fed tightening, for the first time in history, they’re tightening while we have horrible, horrible market conditions. Usually, you’re tightening when things are much, much better, but again, they need to control inflation because they just went off the rails.

Frank Curzio: So, long-winded here, prepare for a recession. We’re basically in one right now for the majority of people. And you don’t need an inverted yield curve to tell you that because, yes, it has predicted recessions, but it also gave us false readings many, many, many times. So for me, I’m not looking at an inverted yield curve, I think it’s funny that we need that to tell us and everybody to worry about the word recession, you got to prepare for recession now, and that’s what we’ve been talking about, right, Daniel? I mean, different sectors and stocks that you should be buying to prepare, because a recession, not everything’s going to go down, there’s going to be things that are going to do great like banks, and crypto, and stuff.

Daniel Creech: Right. And I don’t want to make excuses right now for the future, but you want to… We talked about different reports and things like that about people talking about, “Hey, manage your expectations on future returns.” The last few years have just been absolutely gangbusters even above the 8% to 10%, whatever you want to pick on, historical averages, the idea of earning or losing less comes into play with that as you go and steer this economy. Two things to take in stride right there: Earning season is going to be really interesting coming up on guidance and things. But remember the Fed, and this will be an easy transition to Willy Wonka and the craziness of Wizard of Oz here on our markets, Frank, take everything in stride with the bond market because it’s so manipulated and ridiculous with the Fed printing and buying bonds and all that kind of stuff, so they’ve really ruined any actual tell that i.e. individual investors are trying to tell them, they’ve muted that out for the most point, because they control that, which is ridiculous.

Daniel Creech: And two, all their finagling and lever pulling, Frank, leads to crazy, crazy situations because so much moneys in the system sloshing around, like AMC buying into the gold mine that we already talked about. But another fun thing, because asset prices rise dramatically and then you have a great, wonderful game-playing CEO that gets stocks up. Now, a certain, somebody could even buy Twitter, Frank. This is the kind of fun stuff we can have, when you have goofy money policies and so much money around, everything is on the table. And that’s kind of exciting from an investor standpoint is you got to learn to laugh at stuff like this, otherwise you’ll pull your hair out, Frank.

Frank Curzio: Yeah. And just when you’re looking at different sectors that are going to benefit. For us, we do have exposure to agriculture, recommended Mosaic which is up a lot and has been doing well, Alcoa as well. We look at oil and energy when it comes to exports and Russia, And we’re putting all these sanctions on them, how could they hurt us. They’re not going to really stop the oil production or they’re going to get hurt themselves unless they find someone else to buy it like Turkey and China, which they’re kind of doing. But turning off Europe hurts them just as much as it hurts Europe. But they can turn off agriculture, which they’re big exporters of a lot of these agriculture, wheat you can go over just tons. And you’re seeing, you showed me, so Biden’s coming out and talking about the food crisis that we’re having, where prices are going to go to the roof. And Dan, I know you’ve been doing a ton of research on this.

Daniel Creech: I know people don’t like to talk about politics, but I want to start a little game here because this is my passion on explaining why people must listen to politics, and it literally affects everything in your life and your family’s lives, case and point, you give me an item, Frank, and I’ll tell you why policy controls it. The easiest one right now with all the autos and things, there’s cars. How does the government force you to buy certain cars? Well, look at the policies that drive gas prices up or down, look at the policies that drive manufacturers to manufacturers a certain percentage of cars that are either lightweight or heavyweight-

Frank Curzio: Taxes for EVs.

Daniel Creech: EVs, et cetera, et cetera. Everything affects us as individuals, which makes up the economy, that’s why you got to pay attention. And the easiest way to pay attention, Frank, is that old rule of listening. Our president literally came out and said, we are going to have food shortages soon because of the Russia Ukraine thing. Just like with the recession indicator on bonds, if there’s a major oil spill or whatever spill, it’s play into the greedy hands upriver. Yeah, that sucks if you hear news about it now, but it really sucks when it gets to your front door. That process of kind of shifting downriver and that pipeline to flow, that will show up in earning season, and if you think about it, we’ve already gotten White House officials out on the ag side saying, “Hey, you know what?” Farmers will take of advantage of higher prices, Frank, they’re just going to plant more.

Daniel Creech: Okay, that makes sense. And supply demand, you’re going to have less supply, demand’s going to stay the same, you got to increase supply. Okay, you’re planting more, Frank, what’s it take to plant, it takes fertilizer, is that up or down? It takes fuel, is that up or down? Is it a coincidence that John Deere, if it’s not at 52-week highs, it’s probably closer than the overall market is to its all-time highs, now I got to look at that. But my point is, is that if you see prices pull back… And John Deere’s at 4.20 a share, damn near a 52-week high, my point is if you see prices pull back in oil commodities like this, take those advantages as a buying opportunity because, yes, the market is forward looking, but these problems or these issues aren’t going to be resolved in a week worth of headlines.

Daniel Creech: This agriculture or wheat prices, et cetera, are going to be a problem for the next year at least, through this planting season and next, because you have to factor in, what are farmers going to do depending on higher prices on diesel, fertilizer, et cetera. Do you have exposure to those? Huntsman, is it Huntsman, Frank, that just reported the chemical company?

Frank Curzio: Hunt, yes.

Daniel Creech: They’re projecting over double-digit earnings per share growth.

Frank Curzio: Big a buyback too, right? They just-

Daniel Creech: Yeah. And they announced a buyback because initially the stock pulled back, and then they announced a buyback and all that kind of stuff. Their free cash flow, I would guess is going to be very positive. I’m going to dig into more of that going forward. But my point is, I wanted to highlight that because they are in basically everything, you have… When you’re in the chemical business at that level, yeah, you have to deal with price increases in material costs as well, but your chemicals go into everything on the green side, on the ‘dirty side’, and that’s a sector that you need to be looking into and be boring.

Frank Curzio: A sector that has pricing power. They could pass up those higher cost. Where for example, streaming companies had pricing power. But when you’re looking streaming companies, to put in example, I love that you went there, but if you look at streaming companies, you’re looking at, it used to be $5, $7 a month. Okay, I’m going to get Netflix, Hulu before it was part of Disney, and whatever, HBO. And now, they’re raising prices where it’s $15, $16, $17 for these services. And you’re looking at it and saying, wow, this is always better off than buying cable, which I kind of have to pay for anyway if you want super high, fast internet right directly into your homes.

Frank Curzio: And now, when you’re seeing the service that these guys charge 15, 20, now it’s if you got to get Peacock, if you’re going to get Paramount. You’re getting all these services now, all of a sudden it’s costing more where there’s a level where you have pricing power to where it stops. And we’re at that level where it’s close to stopping at a lot of companies. And it might even be hotels as well, I told you I spent $1,200, Daniel, for hotels just going away two hours from my house, and I had a book of hotel because my daughter-

Daniel Creech: Hey, quit staying in the presidential suite, get a regular room.

Frank Curzio: We stayed in a small room which was two queen beds, very small where there was four of us, but we had my niece with us and they didn’t even… They didn’t provide a cot. They were like, “We don’t have cots.” So, it was like, great. But it’s getting to the point where, for us, well, I’m going to try to drive to a lot of these things and only spend money on one day for a hotel because I don’t feel like spending $320 on a freaking Comfort Inn, and that’s what’s available right now.

Frank Curzio: So companies have pricing power until they don’t, and we’re getting to that point where everything else is so expensive, you’re going to alter your spending. If you’re in the middle of buying a home, and you go try a loan process, it was 3% like I said earlier, now it’s 5%, that’s $500 extra. Okay, fine. You’re like, man, all right, $500 a month, I’ll suck it up, okay. And maybe, whatever, you want to pay it off early, whatever you’re going to do. However, that’s $500 that’s not going into other things into the economy, and that’s what you have to think about.

Daniel Creech: The opportunity cost.

Frank Curzio: It’s not going into anything, it’s not going into productivity. What is going into, is it’s going into banks, that extra money for free. That’s why banks are a great buy here, you’re looking at crypto, DeFi, which is so many innovative trends that you can get exposure to. Again, it is an up and down market, it’s pretty crazy, we’ll go a little bit more into it in a minute. But when you’re looking at different sector that are going to work it’s commodities, like you just said, Daniel, you’re going to see ups and downs.

Frank Curzio: We saw the food companies get nailed, I think yesterday, the day before, see uranium get you. The inventory levels are at 30-year lows, and we need commodities and we have a lot of disruption, we have a lot of… I shouldn’t use the word disruption, because that’s a negative way I’m using it now, but this supply chain disruptions, and that’s not going to come online anytime soon, so that’s something you should be buying on pullbacks, like ag, buying on pullbacks, anything banks buying on pullbacks. But I wouldn’t be buying the meme names on pullbacks, I’ll be selling as they go up and get… Long-term is very hard to say that AMC is going to go a lot higher from here even though who knows what they’re going to get into next, maybe they buy an agriculture company, I have no idea and not theaters.

Frank Curzio: But you get our point. So, we’re looking at the whole entire landscape of how we should position ourselves because that Fed punch bowl is gone and there’s lots of opportunities, however, there’s also lots of things, even like you just said, Daniel, that are going to get wrecked, including these super high growth stocks, because they may report strong earnings this quarter and raise guidance, if those stocks are going up, I would definitely take my profits in them or take some off the table because it’s going to be with the future’s so uncertain right now in terms of consumer spending, in terms of supply chain disruptions, how you’re going to get your apparel? How long is that wait, I mean, there’s just so many uncertainties now. You always had to Fed there, guys, you always had to Fed to back us up.

Frank Curzio: Low interest rates here. You guys need money. We have a problem, we’re going to bail you out, anything else going to hand a free check… You had that. You had an unlimited printing press that cured every problem that is gone. That’s a fundamental change in the marketplace, it’s gone. So, you can’t compare anything that’s going on today to any time and say, well last 10 years ago when this happened, 20 years ago, five… It never happened before. These are new times. These are new times.

Frank Curzio: We haven’t hand out 10 and a half trillion dollars to everyone and expected that, “Hey, it’s probably not going to lead to inflation.” Which is idiotic. So, it’s different this time and you should prepare. I mean, you don’t see me this worried but it’s not worry where the whole market’s going to crash, but you have to position yourself accordingly, and there’s certain sectors are going to benefit tremendously, and they’re going to benefit over the long-term. Now that includes… Does that include Twitter or not? Depending if Elon Musk buys it.

Daniel Creech: I just thought that was interesting. I saw it proposed as a question because, and it made me think in terms of, “Hey, AMC can do anything.” AMC can transform into a holding company, movies could be just one avenue now that they got gold and silver mines, they still have a ton of cash left. To go back to the point on the craziness, Frank, what other environment other than easy money policies, to say it lightly, would you be able to run a business that is slowing in consumer demand and raise almost $2 billion in fresh equity to keep not only in business, but to try to thrive in order to punish others, not in your industry, but investors. That’s the kind of situation and crazy stuff that happens when you have crazy… You can’t throw crazy together and expect the product or the result to come out and be normal, I mean, hell.

Daniel Creech: So, it’s kind of fun to watch from that perspective. People are going to get hurt, but it’s going to be a great trading opportunity if you’re in AMC and you’re buying and selling it and trading around it. Great, I hope you make lots of money, but the odds are against you, but that doesn’t mean that you have to stay away. It’s just, to me, the takeaway is the bigger picture of why this has happened and just prepare for craziness. And don’t fear recessions, but just prepare for craziness.

Frank Curzio: Yeah, and just the meme stocks, and that’s why I was throwing Elon Musk and Twitter in there, where some people considered Tesla a meme stock, where it’s this religious cult following and it’s going up on something that… Of a stock split that’s going to happen… That may happen months later, it’s not going to happen right away. When you’re talking about that, you’re not talking about the lockdowns in China and production cuts and stuff.

Frank Curzio: I mean, these guys are light years ahead of everybody else, even in terms of production, where I think the traditional companies have not shown that they know how to produce EV vehicles at scale, it’s not the same thing. This is technology, there’s a lot more stuff in this, it’s a lot more different, Daniel. So for me, when I look at this, I’m like… With Elon Musk and the whole religious… I don’t know if it’s a meme stock, but I just thought it was funny that he’s in the news now because he took this poll and it sounded like, “Hey you know what? Are you sick of Twitter?” Basically it was like social media in general, not posting the stuff that you should be posting and limiting, censoring, whatever it got a massive following, which is expected because it’s Elon Musk, but it led speculation that he’s going to launch a competing service or he may buy Twitter, and change it, and whatever. But I just thought that was kind of funny and-

Daniel Creech: What do you think he should do? So, just off the cuff here, back of the napkin, market cap is around give or take 31 billion. And the stock’s down from call it bumping against 70, a few times during the last year down to around $40. So if you’re Elon Musk, you say, “Hey, I’ll put a premium, I’ll give you…” Well, he can do anything, he can buy it for. Let’s say he just says, “Hey, I’ll give you a 100% premium, I’ll buy it for $6 billion or $60 billion.” What’s he worth, 130, 200 give or take whatever. I mean, it was something ridiculous, right? So he could, and then he just changes the rules and says, “You can put whatever you want to, and we’re not going to police it.” That would be the ultimate Twitter stock, but he’s just so good at playing the game and getting attention that I think that’s what it’s about.

Frank Curzio: Game.

Daniel Creech: I was wrong on Twitter because I was actually looking into it because when they were doing the pay option, I thought that was smart on trying to differentiate themselves. They just have so many users, I don’t understand how they can’t turn on advertising more, I know that stuff under pressure. But yeah, Elon’s great at playing the game and getting attention and yeah, it’d be more entertaining than anything.

Frank Curzio: No, I agree. I just think it’s funny that’s the big talk right now. And for me, I just think a lot of these people thought on these platforms, and I’m not talking about like inciting violence and stuff like that but if you have a conservative view, extreme liberal view, whatever kind of view you have, you should be able to express on these platforms, even if you’re aggressive, as long as that not leading to… I mean, it might lead to hate and stuff, but not violence. And the fact that they pick and choose what’s allowed to be said, I think that definitely touched the nerve and people realize what… That’s why Web 3.0, Web3, whatever you want to call it. It’s such a big deal, where you control your content, you have ownership of your content, you don’t have a person telling you that, “Hey, you could use it. You could say whatever you want, but you got to… Not everything you want, you got to stay away from these subjects or that’s it.” And I see that and there is demand for that, massive demand for that, and I think people want it on both sides. Well, maybe not on one side, on one side, they’re happy that they control everything and the media and stuff. And you’re seeing that just that they… Anyway, I won’t get-

Daniel Creech: It is a great conversation starter on, “Hey, if you wanted a platform where you owned and, or could not be shut down as easily, what could you do?” You could start something else, there’s already competitors, or you could buy something and change it. So from that perspective, I do like the… It’s a fun rabbit hole to go down.

Frank Curzio: No, I definitely agree, I definitely agree. So, I want to move into crypto. So, crypto has been on fire, down a little bit today. We talked about crypto as one of the places where you’ll get access to innovation, you’re getting a lot of these things early, which is really fun, which is cool, because instead of buy SPACs at these crazy valuations on IPOs, crazy valuations where… And they just came out, it was a report on Bloomberg saying that they’re going to start, the SEC is going to start going after the high promotions and all these crazy growth forecasts, everyone’s going to go to space like with Chamath and everything. And they announce you SPACs and this… I provide the picture where they have the thumbs up, Daniel, across street from New York Stock Exchange where they overlook the New York Stock Exchange say, “Space,” whatever, “It’s your Virgin Galactic, it’s great, it’s awesome.” They’re out of the stock. They’re out of the stock.

Frank Curzio: I mean, Branson still owns, but he cashed in, I think both of those guys to the tune of more than 300 million and investors have gotten absolutely destroyed on it. Now it’s absolutely crashing, but you just told us not too old ago, two and a half years ago, that, “Space travel, it’s great.” Well, for Branson, he got to go, what about everybody else? I just think it’s hilarious. And you’re seeing this a lot, these valuations get inflated, and then these SPACs coming out. Again, if I was you guys, when it comes to SPACs, any SPAC that comes out right now, short the shit out of it, it’s an easy, easy winner. These guys have to buy something or they’re going to lose millions of dollars, people who start the SPACs.

Frank Curzio: When they say they’re giving investments back. If it’s a $100 million SPAC, I would say $90 million is going to be giving back to investors. But the people who start it lose that $10 million. And they don’t want to lose it, they have to find a company, so they’re going to buy even the shittiest of shittiest companies, because they’re going to get it for a dollar. Even if people don’t like it, 10 or 11, it stays there for a little while, goes to eight, seven, six, they still make an absolute fortune. So, they’re pushing through SPACs as much as they can before the regulation comes, and they’re inflating valuations, and most of the companies they’re buying are shitty companies that are not worth that.

Frank Curzio: This is for them. They’re going to be out of it. We saw the formula, you know the formula, I was explaining the formula for you for two years. Anyone that’s coming out with a SPAC from here on in, short it, you’ll make a lot of money. It’s going to be worth half its value probably in six months from now, it’s the easiest short ever.

Frank Curzio: Look, everyone, remember when that SPAC is launched, that’s the liquidity event for the people who bought it $1 or $2 to get the hell out of it, to sell it to a bunch of idiots who want to buy it at 10, 11, 12, 13 on all this hype and all this craziness that’s had nothing to do with earnings, that’s how this system works. You didn’t have to report warrants, you didn’t have to report anything, it was a system that hedge funds were like, “Are you kidding me? You’re going to hand me hundreds of millions of dollars from retail investors? Okay, we’ll take it.” That’s why SPACs got so popular again, they’re not going to be popular going forward, but that’s the easiest short.

Frank Curzio: Getting into crypto, again. Sorry, I got a little off track with SPACs, I get a little emotional about that. But we just saw what, hackers, hackers steal $600 million from a blockchain network that’s connected to Axie Infinity. That’s a very large crypto that’s play-for-earn, play-to-play, or earn-to-play whatever you do. So, you could play their video games and earn money doing it. So it’s a different model, also NFTs, Metaverse tied into lot of that. Very, very popular name, very volatile name, but $600 million from a blockchain network that’s connected to Axie Infinity got stolen. This is what’s scary, Daniel, it took place a week ago before being discovered.

Frank Curzio: And the blockchain was not hacked because people say, “Well, blockchain…” The blockchain wasn’t hacked. It’s the bridge, it’s this bridge, which is hooked up to Axie Infinity, it’s basically software that lets people convert tokens into ones that could be used on another network. And a lot of times, those are the things that aren’t monitored.

Frank Curzio: So if you want to put the 600 million hacking in perspective, Mt. Gox was the biggest ever everybody talks about it, they made movies about, that was 470 million, different market, it’s a $2 trillion market so you’re seen a lot of money, but now you’ve seen the risks of crypto. And we’ve seen hacks, and most of the time, the majority of the really good names are fine, but you’re always going to hear about the hacks, and this is a large hack, but this is why Biden’s executive order is massive.

Frank Curzio: So, if institutions which are managing other people’s money, Daniel, like State Street, Fidelity, BlackRock, if they decided to say, “Hey, you know what? We’re going to get into whatever crypto name.” And that money gets stolen, they would be required to pay out that entire claim. I’m not even talking about getting sued or anything, since they got into crypto or that, which is a security basically, or being deemed of security, without having the proper due diligence, due diligence that’s usually done by the SEC, FTC, whoever to make sure investors’ rights are protected, that’s why they need the box checked off. That’s why they need the box checked off. That’s why when Biden says, “Okay, we are going to reg it.” That gives them the okay to invest in certain things right now, even in the early stages, where if you don’t hear that, they’re like, we don’t know if they’re going to deem everything a security right away, or if the US is just going to say, “We don’t want cryptos.” Whether it’s Russia, or China, or whatever. This is why you need a little bit of framework in place, this needs to be prevented. If not, you can’t lose your money and you can’t find it. Those guys lost… Where is it? Who knows? How do you steal $600 million and not find that? Where’s that guy who’s going to put $600 million, I don’t get it. It’s black market and stuff but-

Daniel Creech: Well, the last I read, the guy shared a screenshot on the wallet he was holding. Now, I don’t know if they knew, obviously they don’t know, in my opinion, who’s behind it or where it’s going. Can they get it back? They were working with some other on chain or security type firms that help track that and things. Yeah, that’s a crazy risk. I don’t know how the executive order’s going to help that. I mean, they’re trying to be safer and things like that, but-

Frank Curzio: No, these are software tied in, right? Which you say, “Okay, the blockchain, fine, you have records of everything.” But this is like a software attached to Axie Infinity that makes it easier for people to basically use their token, and transfer the token, to have their tokens, and that’s what needs to be monitored, stuff like that needs to be monitored. You need that. And remember, this is a very popular name, Axie Infinity, this is a name that’s in our portfolio and it fell 6%, it’s still up 15% for the week, so it didn’t get hit too hard, it’s a software thing on site that’s working with their network.

Frank Curzio: But seeing this money get hacked and get stolen, it’s a concern. If you really want the masses to come in, which, again, all the innovations taking place here, whether it’s DeFis, security, tokens, NFTs, metaverse, this is where it’s taking place, you need some kind of regulatory structure, which I know of the crypto diehards hate, I get it, and I understand why you hate it. But if you really want Bitcoin to go to 100,000, 250,000, I said this in past podcast, you need trillions of dollars to come into this industry from institutions. And it’s trillions, they have 250 trillion assets in the management, we’re looking at just 1%. There’s trillions of dollars coming into this industry, which is just a $2 trillion industry.

Frank Curzio: So, if you really want this thing to explode, and all people getting in, and scale it, you need this, you need the framework. That’s why it’s a big deal. Hopefully, we can avoid things like this because most cryptos are safe. And maybe I shouldn’t say most cryptos, but the top 100 or 200, I mean, these are great places for the biggest innovative trends, but you need that framework in place. It’s important to prevent a lot of this crap. It’s almost like a Tesla, Daniel, where cars crash all the time, but Tesla crash, you hear every place, you hear it everywhere, it crashed it’s on fire, they can’t put out the fire. You just hear these one and done… But that’s what you’re going to hear just like you’re going to hear if it’s autonomous driving, maybe somebody runs into that car-

Daniel Creech: Bad idea.

Frank Curzio: They’re got to go crazy. And they’re going to say, “You got to that accident.” One accident. That’s how these things work. So, you need some kind of framework in place, you need to know that these things are safe, you need safety checks. Because the way the media runs right now, runs with some of these stories is absolutely crazy and you want to make sure all the facts before you invest in the industry, a stock, a sector like crypto. Most cryptos that I’m invested in are safe, they are in the blockchain obviously, and big investors backing them, and we’ve seen incredible gains on these things. These aren’t like garbage, crappy tokens, but you do have to be careful, it needs to be a framework in place. But again, I know you’re not really sold on the Biden executive order bringing in more money and stuff but what do you think about the hack? And I mean, does this discourage you from investing in cryptos?

Daniel Creech: No, it doesn’t discourage me on that. It is a worrisome. It’s interesting to me on the prices really haven’t moved. Axie Infinity, I mean, pulled back, but nothing where I would point to the chart and say, “Oh, something big must have happened there.” Bitcoin and Ethereum were fine. It’s a wait and see at this moment, I don’t know how they’re going to track it. I’ll have to kind of read up further on it as this unfolds to see is the company going to kind of pay all the losses? I doubt that they have $500, $600 million in reserves sitting around. Are people we’re just going to eat that? There’s too much to unfold. I mean, it does make you worry, but no, it’s not enough to… You have fraud and stuff everywhere. So, I’m not worried about… I’m not worried about this space in general because there’s fraud everywhere. It is a bummer on how sophisticated… The amount is just crazy. I mean, that’s a… 500, 600, whatever it was.

Frank Curzio: And a week to find out.

Daniel Creech: In a week, yeah. I mean, that’s not good. So, I don’t want to sugarcoat that, but obviously, you’re going to have other players, competitors in the space, hopefully take that, run with it, beef up security, be looking at that. Yeah. I mean, there’s risk to everything, but no, it wouldn’t… In short, it wouldn’t keep me from the entire space, no.

Frank Curzio: Yeah, and crypto is on fire right now. You’re seeing a lot of Bitcoin being bought to back the stable coins. Again, I think a lot has to do with that Biden executive order, with that money coming in, because it could have come in whenever and it’s not a coincidence that all these things with Goldman Sachs and these announcements are coming in the past couple weeks after that.

Frank Curzio: But when it comes to crypto, more bullish ever, and this is why it’s important to really make sure those regulations are in place, and I’m hoping and praying that it’s not overregulated. And to go over everything, guys, I want you to listen tomorrows interview. It’s with the lawyer in the crypto industry that I really respect. This is a very large firm that’s getting to crypto. This is a guy who is a partner at the firm, and he’s been in crypto since 2014. He’s going to share everything with you in terms of the regulatory framework.

Frank Curzio: And I promise you, it’s not going to be boring, it’s going to be interesting. And his views are not even the same as my views, but it’s a really good back and forth discussion that you must listen to. I promise when you hear a lawyer, you’re probably like, “Oh, I don’t want to hear this shit. And don’t like…” It’s not one of those interviews. It’s going to show you why you need a regulatory framework, why it could lead to trillions coming into this industry. And this is a person that’s very dialed into the industry that I respect, and that interview is going to be tomorrow be sure to listen.

Frank Curzio: Also, and for our crypto portfolio, we do have people coming in and they’ve done fantastic, especially if you came in the past couple days or so, I mean crypto’s really risen over the past week. We did open up Crypto Intelligence, I told you yesterday, new subscribers, special offers, so I cut the price in half the annual subscription, which again, make that offer are fantastic by itself. But also I’m giving away a free year, we almost never do that. So, this is one of the best offers you see in this product. There’s 10, 12 positions that you could buy right now that are very, very exciting, that we love. It’s a great time, and we’re keeping that offer open for a week.

Frank Curzio: So if you’re interested, again, I’m getting a lot of emails. So for me, I want to provide something that’s in terms of the perfect time to buy something like that within the industry and provide the right price that you can get in because getting in now and getting in crypto, it’s still very, very early in so many of these names and innovations, but doing the right thing makes you become an investor in Curzio Research, and following us for decades, and that’s why we’ve been doing this for over 30 years. It’s not because I’m getting people in at the very, very top of every single trend when things are most exciting.

Frank Curzio: This is a time where crypto, a lot of money’s pouring into the industry. It’s definitely game-changing. With Biden’s executive order you’ve seen tons of money flow in immediately after you announced that, and you’re going to see those regulations in place, which is going to allow more institutional money to come in, so this is a great time. So if you’re interested, for those people, do it now. You go to website curzioresearch.com to find that. If not, no worries, maybe crypto’s not your thing.

Frank Curzio: I think everybody should be invested in crypto immediately, at least with a small portion of your speculative money because that small portion could be worth more than your entire portfolio. Those are the gains that we’ve seen, you see those portfolio gains in our portfolio right now. This way, you know I’m not BS’ing of some of the things that we bought early on getting into early trends, even Decentraland very early, there’s other metaverse plays that are coming out one, that’s very, very exciting that we’re going to be recommending, I’m talking to that company right now.

Frank Curzio: So, really exciting things coming in crypto, including security tokens, more and more getting launched, and we’re covering those as well, which is a lot of fun because we got a good in there, a little bit of a good in, right Daniel? With being one of the first to launch security token and trade tZERO, which is cool. But Dan, I want to say thank you so much for coming on. We talked a lot, this is a little bit over the 30-minute mark, which is okay. We like to discuss all the topics that are going on. But Dan, thanks so much for coming on. I really appreciate it, bud.

Daniel Creech: Yes, great as always. Cheers.

Frank Curzio: All right guys. It’s for us questions, comments, frank@curzioresearch.com. Daniel, what’s your email?

Daniel Creech: Daniel@curzioresearch.com.

Frank Curzio: All right guys, be sure to listen tomorrow because there’s a great, great interview, it’s not that long, it’s awesome, and it’s covering crypto and the legal aspects of it. Again, don’t think of it as a lawyer and I got to listen to this crap. I know how to do interviews and I wouldn’t put you through that, there’s a lot of interesting things. And that’s going to come out tomorrow so be sure to give a listen and I’ll see you guys then. Take care.

Announcer: 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 decision solely on this broadcast. Remember, it’s your money and your responsibility.

Frank Curzio
Frank Curzio, founder and CEO of Curzio Research, is one of America’s most respected stock experts. His research is regularly featured on media outlets like CNBC’s Kudlow Report, The Call, CNN Radio, ABC News, and Fox Business News. His Wall Street Unplugged podcast—ranked the No. 1 “most listened-to” financial podcast on iTunes—has been downloaded over 12 million times.

Editor’s note:

Biden’s new executive order will open the floodgates for hundreds of billions of dollars to flow into crypto…

In the meantime, early investors in this trend stand to make HUGE money. 

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