What a difference a few days makes. The mainstream media has turned from bearish to ultra-bullish—and stocks have surged—as the latest data shows inflation slowing.
And, as I explained in last week’s WSU Premium, several stocks could soar to new highs by year-end as money managers try to catch up to their benchmarks.
But while markets will likely continue to rise, don’t get too bullish yet… The economy is still facing major headwinds in 2024. I explain why this rally will be short-lived.
Target (TGT) is rallying after earnings came in better than expected. Even after the recent surge, the stock is still cheap at current levels. I break down the company’s latest results… and why we’ll never see its shares trade below $100 again.
Be on the lookout next week: I’ll be sending you a special interview with one of my favorite uranium industry insiders. You won’t want to miss our wide-ranging discussion on the new bull market in uranium… and why it’s likely to last for many years.
- The market’s sudden shift to ultra-bullish [3:28]
- Try WSU Premium for $1 [8:50]
- Don’t miss next week’s interview with one of our favorite uranium insiders [9:45]
- Enjoy the rally—it won’t last long [19:15]
- TGT just put in its “forever” low [35:55]
Wall Street Unplugged | 1091
Inflation is slowing… But don't get too bullish yet
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’s November 15th.
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.
So start this podcast.
Just have one important thing to say.
I love college basketball by far my favorite sport.
You guys know I played basketball for most of my life and I’m getting back to it after my hip replacement.
My second one, I’m actually going to start playing.
We’ll see how that goes.
Gonna keep living.
Don’t wanna be conservative in my life, man.
College basketball’s awesome.
Yeah, Kansas played Kentucky last night, started 9 45.
Nice night game.
They wound up winning the game probably ’cause Kentucky was missing three of their seven footers, which are all coming back in a few weeks.
But Kentucky looked really good.
Lots of freshmen as usual.
Calipari, great, great team.
Insane athletic as hell.
Made some mistakes at the end, but definitely a team to watch for the tournament.
Kansas ranked number one to start the year most ’cause Hunter Dickinson transferred from Michigan to KU.
And by the way, if you watch on our video on YouTube, here’s my nice national championship bottle for Kansas for KU.
I actually went to that game.
New Orleans, watched them win after being down by what, I think it was like 14, Yes, I was nervous, but they won.
They’re the best team in the country.
Again, Hunter Dickinson is amazing.
Left Michigan to go the final year to Kansas, which is kind of weird.
You really don’t like that.
You see that in baseball as well.
And you know, all the players, especially midway through the season, they all just join another team.
If, if you’re doing really bad in football, we saw it with Washington, you know, watching lost the game.
They get rid of everyone.
And then you have the, the Chiefs picking up, you know, chase Young and stuff like that.
It’s kind of, kind of crazy.
But he wants more exposure and, and he got it.
It’s got 27 points grow 21 rebounds.
First player in KU, which has a storied history in 25 years to do that.
But I just love college basketball simply because they have these great games at the beginning.
They have these tournaments like the Jimmy V Classic, the Maui Invitational Film, night Invitational Empire Classic.
And they pit up the best teams against each other right away.
And they wanna play these games because they wanna see where their team is at.
And you don’t see that in college football.
The first four or five weeks are usually horrible.
I mean, they’re getting a tiny bit better.
You saw Ohio State play Notre Dame, like third game you saw T play Alabama.
But if you lose one game in college football, you could be done for the year depending on what your schedule is.
Maybe, you know, you don’t play as many games where college, it’s all right off the bat.
Your place in Kentucky, you play Duke, Michigan State, you see all these great games.
Uh, and and you know, they just tr Tennessee’s great this year.
Yukon’s great again, have to win National Championship.
Michigan, Purdue, Arizona.
It’s just, it’s really great to see all these teams get together.
It’s like right outta the gate.
Awesome games, really cool, competitive, getting in your face.
It’s just awesome, awesome sport.
And looking forward to watching Kansas for the rest of the year, even though they should have lost that game last night outside Kentucky playing in bad the last three minutes.
They actually should have lost that game.
But they have a great bench, great team.
They look really good.
How to start the podcast off of Kansas.
Come on guys, you know.
Now let’s get to the bull markets since you really don’t need me in bull markets.
Just buy anything, you gotta be fine.
But not really anything.
I think the average stock price, even after the rally in the past two days is still down.
It was down 6% I think as of last week.
So you might think everything’s going up and everything’s going up right now, especially past two days.
But it’s still been a difficult year for a lot of investors unless you own the top five six stocks that continue to go higher and higher.
And those are the five largest technology stocks where Apple and Microsoft now account for 15, 16% of the entire S&P 500.
And we all hear about the 25 or 30% for the first top 10, I think is the, the top five or six of them, including Tesla account for Nvidia account for, what is it, 25% or 23% of the entire index.
So you know, it’s really heavily weighted, but right now it’s a bull market.
Again, buy everything.
We’re all okay.
Nothing to see here.
We had the CPI come out on Tuesday, showed inflation moderating better number than expected.
And we had a rip your face off rally.
I love when people say rip your face off, but that’s gonna be the word that actually, that’s gonna be the phrase of this podcast.
Rip your face off, rip your face off rally.
And then what do we have today? The producer price index came out.
Estimates called for a gain of 0.1%.
I know it’s a producer price index.
Nobody really pays attention unless you know you’re really into the markets.
That’s a wholesale prices.
But it’s a big deal because it fell a half a percent when estimates call for a gain of 0.1%.
So it turns out that’s the biggest monthly drop in wholesale prices since early 2020.
So we have this push lower in rates, which is good, right? They fell sharply.
And that’s good for equities, which at least I think that’s good for stocks.
I’m not sure what’s good for equities and what’s bad for equities anymore, I should say.
I don’t know what’s bad for equities anymore.
We watch a 10 year go from 3.8% to start the year to 5% and stocks higher.
We look at all the data that comes out, whatever it is, it’s always gonna be good for equities.
You know, higher rates, low rates, markets go higher.
Earnings growth, no earnings growth.
Stocks go higher this year.
Slowest, CPI, slower, PPI, which indicates an economy that is slowing, that’s great for equities too.
Wars no wars, great for stocks.
And hell you have Biden meeting President Xi if he punched him in the face and said, Hey, we’re taking over Taiwan, that’s gonna be great for, for stocks.
Of course, if Biden did that, if he punched anything, it’ll probably be like watching a turtle move in slow motion.
It’ll probably take 20 seconds to get there.
I mean, it’s getting progressively worse, right? I mean, whenever I see it on camera, it’s sad to say, I mean this is the, the leader of our nation.
Uh, yeah, it’s just, it’s just painful.
It’s painful, but unfortunately it looks like we’re gonna be stuck with with Trump or Biden one or the other.
So good luck with that, especially if you’re watching anything in the media because you know, we’re all gonna hate each other forever.
Uh, can’t be friends at all.
So it should be interesting.
But all honesty, I’m looking at these markets, we’re coming off incredibly oversold conditions from about a month ago.
And we have seasonality in our favorites.
Seasonality is serious.
You can’t just look at different figures and say, okay, well interest rates are much higher this season or the it’s seasonality.
What that means.
And we talked about this last week, right? On why bearish on the overall markets? But we’re gonna see a, a strong rally into the end of the year.
And, and we, we’ve been saying that for the past couple weeks.
Uh, when you see this seasonality, and especially this year when so many money managers are underperforming, they’re underperforming.
Because if you didn’t have six or seven stocks, you, you’re significantly underperforming your benchmark.
And you wanna play catch up, which is called alpha.
You need to generate alpha.
And it’s all about your benchmark.
It doesn’t matter if you’re down 20%, the mark’s down 20% and you’re down 18%.
You beat your benchmark, especially if you’re up.
You’re gonna get bonuses, you’re gonna keep your job.
But if you go two years, three years and you don’t beat your benchmark, you better look out.
’cause there’s 20 people right behind.
You’re gonna take your job.
So you know, they’re fighting for this.
And also a seasonality.
You’re seeing tax loss selling gonna get to target later.
You wonder why Target went down to a hundred, 102.
I mean, even if you’re looking at funds that cover retailers, especially their competitors.
Look at where Walmart is.
Look at where Costco is and how great those stocks did where target’s down tremendously.
So what are you gonna do? Well, I’m gonna sell Target takes the tax losses and that’s why you see a lot of names that got punished go down even further towards the end of the year.
And a lot of the names that have been doing well go a lot higher.
And we took the time of Wall Street Unplugged Premium last week.
Uh, this is on on Thursday and daylight listed and went over 25 30 stocks to buy into year’s end.
And, and these are momentum names that we set are likely to surge over the next few weeks.
And this is because portfolio managers are shifting their allocations.
They need to generate that alpha.
And with that seasonality and still being a little oversold, at least before this week, it made sense to get into a lot of these names that are continuing to move higher and higher and higher.
And, and we really nailed that.
I mean, if you paid attention, you probably made enough money just to pass two trading days to pay the $10 a month for Wall Street Unplug premium for the next five years.
I mean, that’s the point of that product.
And look, if you’re new to Wall Street Unplugged, or listen to me the first time, you should be skeptical, okay? There’s a lot of clowns out there, is selling crazy trading services and all this garbage.
Been doing this for a long time.
It’s all you out there if you wanna try it, you go to wsu premium.com, have an offer on there where you could subscribe to Wall Street Club Premium for just $1.
You could test it out.
If you like it, cool.
It’s gonna be $10 a month going forward.
So you get the service amount to how much you pay to fill up your car in a week.
If you don’t like it, you can cancel that offer for just a dollar.
Wall Street plug Premium available at wsupremium.com.
And service also includes Dollar Stock Club.
That portfolio, we provide a trading idea per week detailed analysis on it.
But right now, Dollar Stock Club has 22 stocks in that portfolio, and that’s also included in that membership, right? So we have energy plays in there that are doing well.
Crypto, we’re really nailed as well.
Crypto is on fire sort of past couple days, but really, really strong, especially over the past, past two months really.
But we go anywhere with this newsletter, right? It’s just trading ideas every single week.
And it could be large caps, small caps, like I said, crypto who are really big on uranium, which has been on fire.
And by the way, real quick guys, I’m interviewing Amir Adani, right’s, CEO, founder of Uranium Energy, UEC, that’s sitting at a 52 week high.
I interviewed Amir’s, very close friend in January, and I say very close friend, I know him for longer than 10 years.
Back then he told us uranium prices were about to double.
He’s always been, of course, you know, very high in uranium prices and he should be because, you know, the industry was just ripe for prices to go higher.
Uh, but he said uranium prices were about to double.
And I don’t think he said, he says that often.
He says, well, prices are gonna go higher, but he said they’re gonna, they’re about to double.
They were trading at $31 a pound, then there’s $74 a pound today by his coal Amir’s.
One of the smartest mines in the world when it comes to this sector.
Uh, he founded UEC in 2005, travels across the world, relationships with presidents, prime ministers, and even heck, the, the, the former Secretary of Energy, right? Uh, Spencer Abraham, I is, is the chairman of UEC.
Uh, so the context that he has and just, you know, I talk to him when he is on the road and, and just seeing him work.
And, and it really goes to the credibility of a person like this who’s been in an industry that’s been s**t since Fukushima.
I mean, you’re talk about this drag and even though the last four or five years you’ve seen the fundamentals change where it makes sense, it’s just been this whole thing.
Well, clean energy and nobody likes uranium, right? No, nobody likes nuclear, right? Everyone’s like, it’s dangerous.
And now you’ve seeing that change a lot.
You’ve seen people saying, okay, this, you know, again, when it hits your pockets and even with corporations when they realize they can’t make money, you’re seeing, you know, clean energy stocks get annihilated now because they just can’t make money.
Now you’re seeing, well, what we’re sitting here with something that’s absolutely perfect.
We have an abundance supply, we have a massive amount of supply in the us Massive, massive amounts.
Guys, I dunno if you know this, but you know, oil companies in the seventies, they used to be the biggest producers of uranium before they basically outlawed it so they know what all the uranium is.
We could produce the hell out of it.
Uh, but we’ve always said, Hey, you know what, let’s just rely on Russia, Stan, let’s go, you know, import it.
And you’re seeing over the years where, you know, electricity for electricity generations, supply and demand imbalance was insane where they lock, they had to lock in these contracts.
And we were always wondering where prices were gonna go, right? How come they have a gun higher? So the interview’s gonna be great, covering the details of the supply demand, again, for uranium, which suggest prices are likely going much higher from here.
This isn’t just like, Hey, we’re gonna 75 in a, in a quick blip.
I mean, even at 75, they, they’re depressed.
I mean, I never thought we’d see But now it makes sense where you’re gonna see actually us companies and companies run out, start producing, actively producing.
’cause this is a, a product that probably costs 55 60 to produce a little bit lower in some areas, but on average now it makes sense, especially if you lock it in future contracts, higher evaluate where it makes sense that you could actually start producing this.
Not just sitting on the supply.
I mean, you wanna buy gold when no one’s really producing gold.
’cause you’re gonna get in the ground for like $7 an ounce.
It takes a, it’s a fortune to produce it.
Unlike uranium, it’s not as expensive.
But then once you do and prices go higher, now that’s worth 20, $30 in the ground.
Or you get some of the big guys that come over and produce it.
But you guys know what I mean.
So, so Amir, through this whole entire terrible bear market, has been just acquiring assets, acquiring assets for you to see, acquiring assets, getting bigger exposure.
Uh, and he just improving his relationships with industry leaders all over the world, getting involved in politics and just seeing someone work so hard in the industry.
It’s been so crappy.
It’s just a testament, to his dedication.
But he’s gonna talk about these trends including what countries are ramping up capacity.
And more importantly, I’m gonna ask him what specifically change about this market.
As I mentioned the past five years, that supply demand imbalance was pretty much the same as it is today.
And it’s, I hear Rick rule in my ears saying that the cure for higher prices is higher prices.
You know, so, and saying that, you know, uranium prices have no place else to go but up.
But what has changed specifically this year when now you’re seeing, I dunno if it’s political or whatever.
Again, I didn’t do the interview yet, I’m gonna do the interview.
Uh, but I’m curious to see what has changed this year to make this spike happen.
’cause I thought this spike and a lot of people thought this spike would happen a year ago, two years ago, three years ago, and it hasn’t.
So we’re gonna cover a lot.
It’s gonna be a nice interview.
Uh, and I’m gonna send this to you next week.
So I’m interviewing in a couple days, and next week we’re gonna be close for Thanksgiving.
Plus I’m taking a much needed vacation with my family.
I’m gonna go to Dominican Republic.
It’s been stressful with the house, as you guys know.
You guys know everything about my life.
It’s so weird when I talk to subscribers or Curzio one members who I talk to a lot, even shareholders and stuff of our token.
Uh, and the, and they, they’re just like, oh, you know, how’s your house doing? How’s your, and I’ve never talked to them before.
You kinda just, you know, I just say everything and everything just comes off the cuff here.
But you know, you guys know pretty much everything about my life.
I just leave everything out there, right? And very open.
So, yeah, stressful with the house.
Kids just made their soccer basketball team.
So driving all over the planet and everything.
I explained that they made fun of it on last week’s podcast.
Uh, just work and everything, right? So we’re really looking forward to just hanging with my family, relaxing Thanksgiving.
but I’m gonna publish this interview on iTunes.
Also send direct link to, all the Curzio Research members and podcast listeners.
Definitely a must listen to.
We’ve been involved in uranium at Dollar Stock Club.
We have lots of good plays in there.
I told you one of my favorite plays, Encore Energy, which is been, which is also at a 52 week kites, surged, uranium is a place to be.
It’s not just like, Hey, you know, it’s cyclical, but oil’s good.
And then when other stocks are good, then oil’s not that good and back and forth.
I mean, this is something where you have the fundamentals behind it.
You have the momentum behind it.
And I’m not gonna say that the easy gains have not already been made, but I mean, we are probably in the second to third inning of this.
We have a long way to go before we see really this sector develop, and go forward.
So that interview is really, really cool.
Definitely must listen to, and you’re gonna see me do a lot more interviews.
We took a break from interviews just for a little while, you know, kept it simple.
But a lot of people I just wanna copy.
I’m going reach out to, um, just have a, a lot of CEOs reaching out.
A lot of industry specialists that I think are gonna help you tremendously.
I never have like, financial planners on this show, right? That doesn’t make sense.
I don’t have, you know, people that aren’t gonna help you, right? And I’m not being selfish here.
I think I know my audience, but my audience is, I think you guys are kinda like me.
Like I, I wanna be educated, I wanna hear a different opinion.
I wanna, I wanna have an open dialogue.
If I disagree with you, I’m not gonna be an a*****e to you, right? And, you know, seeing some of these people that wanna have interviews, I, I really think that, they’re gonna be really good.
It’s gonna benefit you.
It’s gonna educate us all.
Uh, I like having interviews where people have a different opinion than me.
Uh, I think that’s where you learn the most and be respectful about it.
But, real really cool interviews coming up and starting to book a lot of ’em.
So expect those, through December and into next year.
So very excited about those.
But I am taking off next week.
So guys, um, you know, for Thanksgiving and that Amir interview, I’m gonna publish, early next week.
So you guys will listen to it.
Definitely must listen to.
So let’s get back to the markets.
I will say, when I look at the markets here in the past four weeks, and I think you gotta get used to this.
I mean, we’ve seen a market go to incredibly oversold to now overbought.
And we highlighted like a lot of the sentiment indicators was contrarian indicators that, that were saying that the market, you know, should be coming down.
It should be coming down.
It came down and then, you know, we really sold off very quickly.
You gotta get used to these moves.
’cause right now, where, where overbought not at extreme super extreme levels, I think we still go higher into the end of the year.
But, we are getting to overbought conditions now because we’ve seen massive rallies.
I mean 5% rally in the Russell alone.
When have we seen the Russell outperform every other, like the, it’s outperforming the NASDAQ, right? Nothing outperforms NASDAQ, right? So it’s outperforming the NASDAQ’s outperform.
I mean, even today, when you look at, at stocks, right? We’re up whatever, half percent as I’m doing this in midday, it’s outperforming three to one the Russell, right? Small caps.
Why? Because they’ve been down significantly.
They’re still down right now 25% from their highs.
The SP five hundred’s down 5% from their all time highs.
I mean the a sector that’s been annihilated, but looking into 2024, I mean, guys, let me put it to you this way, okay? Okay.
So if you’re going into 2024 when you’re watching tv, I’ll go over that in a second.
Everyone’s like, just like, Hey, the market’s going higher.
It’s great, it’s great, it’s great, it’s going higher and higher and higher.
If we go back to March, 2022, this is right when the Fed started raising rates.
And I asked you, where do you think the markets will be today? And before you answer that, I said, but hold up.
Okay, I told you these are the conditions that are gonna happen.
The Fed is about to raise rates from 0.25% to 5.5% the highest rate in over two decades.
The fastest rate hiking cycle in the history of the Fed.
If I told you that mortgage rates are more than double from if I told you that inflation would surge to a new record and even now still, still be twice as high as our normal rate, looking at the cost of 4%, right? Double Fed’s target, and I told you over this time period that we’re gonna see relatively no growth in earnings or sales in the S&P 500 until today.
Would you say the S&P 500 will be higher or lower? Because based on those conditions of uxb, and I was really honest, I’d say the market has to come down at least 20% we’re up 5%.
The s and p 5% higher than in March, 2022 when the Fed started going crazy and raising rates.
So think about that.
What would happen if the Fed didn’t raise rates would be at 7,000 on the S&P 500.
I mean, where would inflation be? It’s crazy when you think about it.
What if we did nothing? Okay, inflation goes high.
Or think where would the markets be? Look at what we did.
I mean, this is significant.
These are significant moves.
I mean, when you see, you know, no interest rates you’re looking at, at, at, at credit tightening, you, you’re seeing the effective interest rates all around.
People can tell you the economy’s doing good.
Just listen to these calls.
A lot of these companies are beating, they’re not seeing earnings growth year over year a little bit for the first time this year.
They saw it.
Some companies, most companies aren’t.
They’re seeing sales decline year over year.
But why their earnings go bet? Well, cost cutting and finding ways to, you know, get rid of employees and things like that and, and tighten up where margins are a little bit higher.
But man, it it, it, it’s crazy out there.
’cause I know right now if you’re watching CNBC or Fox Business News or whatever you watch or Bloomberg, I’m not picking on these guys.
I watch all those shows and I’ve been on all these shows.
It’s like a circle jerk of analysts talking about how freaking bullish they are.
How the market’s back trillions are gonna start flowing back into equities from bonds.
You gotta get back in it.
I told you this is it.
This is the bull market.
We’re going higher and higher and higher if you’re watching tv.
That’s what they’re saying.
Believe me, I’m watching, it’s my job to watch this stuff.
That’s, that’s the status quo.
That’s, that’s what I’m looking to discredit.
’cause if I can on the positive or the negative, I’m gonna be able to make money on stocks and give you guys great ideas.
If the market’s price against something that I think they shouldn’t be pricing in the right way, I’m gonna say, Hey, this is what we should do.
And you do that by understanding that’s like the consensus estimates.
If you think they’re gonna come in light, you should be shorting a stock.
If you think, hey, these analysts, are conservative, you should be buying this stock.
Meaning earnings are gonna go a lot higher.
Look at Target.
Blew out the numbers.
Earnings were conservative.
If you think that was gonna happen, look at Target’s up 18% today.
We’ll cover that in a second.
So just remember the guys that you are watching on TV right now, don’t make fun of me.
The circle jerk, you guys know what I mean? The guys you’re watching on TV right now, just remember 30 days ago when stocks were getting crushed.
These are the same people telling you that you should buy bonds.
The market is dangerous, it’s head and lower.
The same people 30 days ago just switch from everything is perfectly fine to back then where it’s like, holy s**t, you gotta watch out in one month.
When really what has changed? It’s really just seasonality.
This is trading and we live in this reaction.
Every world everyone wants to play Monday morning quarterback.
I mean listen to, to Steve Leeson said, if I was the Fed, I would do this and just list to five or six different economists.
You know, the Fed, I don’t understand they should do it.
What don’t you understand? I mean, I’ve been critical of the Fed, they more than me.
But man, you gotta give the Fed its dues.
I mean, if you would’ve said that the Fed’s gonna raise rates incredibly the way they have and they’re gonna be at this level and you’re gonna tell me it doesn’t result in a market crash and we still have low unemployment.
I mean, what has the Fed done wrong? Don’t get me wrong.
You say, well the, the balances and you know, the debt levels and, and, and cra you know, a lot of these politicians and stuff like that.
And again, there’s millions of ways you, you criticize the Fed.
But when I see economists go on and say this is what I would do, not one of them would’ve raised rates to this level.
I mean, we were talking about even now they’re talking about, well there’s, there’s no way that they’re raising anymore.
No pricing and rate cuts for later on.
They’re not gonna be rate cuts guys this year.
Unless you see a market collapse, they’re not cutting rates.
What, what 2% said target.
I mean, they’re not gonna cut rates.
’cause the biggest mistake the Fed ever made in the history of, of, of that institution was in the eighties, we know that massive inflation they thought they had to contain and they were wrong.
They can’t make that mistake again.
It doesn’t make sense for them to lower rates if the economy’s doing the job by itself.
Just leave it until you don’t have to.
Why lower rates? Why take the chance when you’re getting the result you want? You could always lower rates whenever, but it just common sense makes sense.
And you’re gonna see Powell come out and talk hawkish.
That’s his job.
He’s gonna come out and talk hawkish because he doesn’t wanna say, Hey, you know, everything’s great and we get to rip your face off rally to go even further.
That’s not his job.
He is gonna say, look, we’re gonna data dependent and we’ll put the market’s doing your job.
You don’t have to do anything right now.
Why even push that issue? Why? Even there’s, you know, from a risk reward standpoint for the Fed one, it’s a credibility issue.
’cause you say you’re gonna wait till you get down to 2%.
We’re not even close, we’re not even close guys at 4%.
We’re still, you know, I explained this, that if you take out the last two years, 9% to 4% is great.
At 4% annual inflation, which we’re on the core CPI for inflation, by the way, we’re a lot freaking higher than that.
If you really look at the data and some of the, some of the s**t that was in the data and declines in in oil, heating oil and stuff.
It’s just, you know, it’s crazy.
We’re all paying higher prices, right? We’re all paying high prices.
I I didn’t see the price of anything get lowered, right? I’m not gonna Starbucks for the kids in the morning and seeing prices go lower.
Uh, I’m not shopping and seeing price and going, holy s**t man, this look how much look go in Chipotle.
And you’re like, wow, wow.
It’s so much cheaper.
Nobody in the world.
Nobody in the world is seeing that.
Nobody in the world maybe, maybe in Japan, that’s it, but gimme a break.
But at 4% guys, I mean it’s still the highest annual inflation that we’ve seen since 1991 if we take out the past two years.
So the thing that the Fed is actually going to, to start cutting is crazy.
And they’ve been talking about cutting, just to let you know, this was in October, 2022.
We were supposed to cut maybe first quarter in 2023 and second quarter back half.
We’re gonna cut pricing in 80% chance of cuts and 70% chance of cuts.
And, and we didn’t cut once in 2023.
And we’re not gonna cut in 2024 unless we have a meaningful, meaningful correction in the markets.
Unless we get inflation below 2% and we stay at 2% for maybe two, three months in a row, which I don’t see happening Happening.
So again, being reactionary and looking at seamless, everything’s great.
We gotta get back into the market.
We don’t need to be concerned.
It’s one month.
Nothing has really changed because I’m gonna leave you with this right now.
We’re currently cheering news that the economy is slowing.
Think about that for a minute.
A slowing economy is not good for equities.
We have interest rates are still exceptionally high.
Credit is tightening.
We’re seeing layoff announcements still city groups laying off their laying off employees every day.
We see laying off employees.
That’s not the sign of a strong economy.
People like the economy’s strong.
It’s resilient, it’s not strong.
We’re seeing earnings grow.
These companies are smart.
They have a lot of fat to trim.
They’ve done a great job of cutting costs.
It’s a reason why you’re not seeing sales grow year over year.
But yet, earnings are earnings haven’t grown year over year, but still they’ve been relatively solid.
They’re the same levels they wore 18 months ago.
Earnings and think about that.
No earnings growth in 18 months and yet markets are 5% higher when we’re used to them growing 12% over the past three, four years annually.
In fact, you know, you look at the PPI announcement today, great number, great by showing wholesale prices are slowing much more than expected.
So when you look at that, you may be thinking, well, wholesale prices, right? These are wholesale prices which results in, you know, that means that we kept prices the same.
We charged a little bit more.
It could mean increased margins for retailers.
That’s not the case.
That doesn’t happen.
Get drought history.
Drought history, lower wholesale prices.
And operating margins almost always move in tandem.
They go up the same, they go down the same.
But margins were a lot higher even during COVID.
But now you look, especially since 2020, it’s almost like identical.
You gotta have 2015, 2011, go back and see it.
Low wholesale prices is not a good thing.
It shows that the economy is so when it shows up, margins are gonna compress.
That’s what happens when just, that’s what happens.
So we’re cheering news that indicates growth is slowing.
What we saw surprising today from yesterday, ’cause we said, Hey, the rallies continue and it’s great.
Well, what happened yesterday, 10 year, But this is really surprising to me.
’cause today, despite that PPI, which is, which, really, really slow.
I mean that, that’s a big, big number.
Like minus 5% compared to you expecting 0.1% growth, you have a decline of 0.5.
That’s a big number.
But today, I’m talking not yesterday.
Today the big slowdown in PPI, it didn’t result in interest rates declining.
They’re actually going higher.
The opposite is happening.
Why is that? ’cause that’s not a good sign.
You would think, okay, now, now we got more confirmation, more confirmation of a slow economy.
So rates are gonna come down even further.
Why are they going higher? I would’ve like to see ’em go lower.
That that’s a sign.
Hey, this is gonna continue.
Maybe, maybe through December, I don’t know.
But now that they’re, they’re going higher on this number.
Also, as I just mentioned, inflation at 4%.
It’s nothing to cheer about.
It’s you could cheer because hey, with 9% we’re going lower.
Again, double the Fed’s target, Double the Fed’s target.
And people are calling for cuts.
We’re not gonna cut.
And believe it or not, it’s been July since we saw the last rate hike.
It seems like it was just recently rate hiked though since July.
We’ve had the Fed say, Hey, we’re not done, we’re not done.
They’re gonna continue to say that as long as the market’s doing, you know, chugging along, right? Seeing inflation come down, everyone’s like, maybe inflation is transitory.
I don’t, wouldn’t say inflation is transitory.
Meaning that it’s temporary.
’cause it hasn’t been.
If two years is, is your your new definition of temporary and transitory, then, then okay, fine, it’s transitory.
I thought transitory meant a couple months.
That’s what Powell thought before.
He raised race by the fastest, fastest pace in, in history of the Fed.
You can’t be more wrong than that.
So don’t think the Fed’s cutting anytime soon.
I mean it, it won’t, it has too much to risk in the credibility side.
Plus not just credibility.
What happens if inflation really starts surging after this? Just doesn’t make sense.
Especially again, when the market’s doing its job for the Fed.
So if you look at this, this translation of what I’m saying, and not to be told macro and bought the hell outta you here, the Fed is likely they stop hiking rates.
We said this a couple months ago.
All right, just leave them.
But Powell’s gonna continue to have the hawkish tone and we’re nowhere closer to fed lowering rates, which means they’re gonna stay higher for longer throughout 2024, which is this constant drag, this massive drag on the economy.
It’s going to continue.
The conditions still exist today as it did a month ago, but we are seeing inflation come down.
But interest rates are gonna be relatively high.
Should we be higher than we were in March, 2022 when we started this stuff? I don’t think so.
So for, you know, you to watch TV right now and they’re like, Hey, the bull market’s back.
You don’t need bonds.
Just, oh we don’t, just in all that, when I say bonds, I’m saying that, you know, again, bond prices and, and, and rates move inversely, but people like getting those rates and, and higher.
So, you know, instead of being conservative and and putting it and parking that money, it might come out and go into equities again.
I think that’s crazy at this level.
Even Goldman Sachs came out with their forecast today for 2024.
I dunno if you saw it.
We have access to this.
So I’d like to share this stuff.
They’re expecting just 5% returns over the, that 12 month period in 2024.
So I want you to think about that.
And not only can you see similar gains just parking your money in in one month Treasuries, right? Which or an Apple savings account risk free.
I mean it’s over 4%.
But Goldman’s expecting these poultry returns despite, despite it being an election year.
And we look at past election years, we see stocks, equities, eight, 9% gains.
They’re saying no, hold on.
It’s a lot different from what I’m hearing on tv.
Well gotta go all in.
You’re only expecting That’s it.
You mean to tell me instead of going the ups and downs and waking up at night and seeing everything go crazy and rates and certain things could break and you know, maybe we see a, you know, a global meltdown and and ’cause higher rates are crushing a lot of countries.
Maybe we see more wars, right? Who knows what’s going on.
I could just, instead of dealing with all that b******t, I could just take my portfolio and throw it in something that’s gonna generate four to 5% right now risk free.
And I don’t have to worry about it.
This is what Goldman Sachs is saying right now.
So short term, stay the course, but longer term be careful what you wish for.
And slower growth, again, while helping to lower inflation is also gonna result in weaker profits for companies.
At a time when analysts are projecting the consensus estimate for next year’s earnings, they’re projecting to surge by 12%.
Good luck with that, especially since you’ve done the majority of your cost cutting.
I don’t know where they’re gonna see this demand come from.
Maybe a certain pockets.
It’s not all companies.
I’m not telling you to sell the markets.
I’m not telling you to leave the markets.
I’m telling you, you better be selective with what stocks you pick.
So tomorrow’s world show club, premium con podcast, Daniel and I are gonna break down 13Fs, which just came out, come out every quarter.
That’s the report.
Money managers, you know, and hedge funds they follow every quarter show which stocks they own and are adding to and have sold.
Again, it’s a little, it’s data that’s, you know, happened three months ago.
Some of these things they might not be in, but there’s investors like Warren Buffett, lots of value investors, investors that have you know, that are not these high frequency funds going in and outta stocks that they all accumulate positions and continue to accumulate.
But you get lots of ideas and Dan and I cover this every single quarter.
We get great ideas, not telling you to buy what these guys own, but they may decide to buy something that could fall 20% over the next month or 15%.
You know, these guys are gonna come in and buy more.
So it gives you an opportunity to just, you know, put some of these stocks on your watch list and keep an eye on them.
But a lot of names, a lot of stuff to go over.
Some things I’m not used to seeing.
Some things that are pretty obvious but we’re gonna break ’em down.
All the hedge funds are biggest names.
All the guys you could think of.
It’s not just Buffett, what you know about an Ackman.
There’s a lot of big, big huge funds out there that that report.
File posts, value act, you know, multi-billion dollar funds are under management and it’s significant, really moves the needle.
So we’re gonna cover that tomorrow.
Also, we’re gonna break down target more detail, which which just blew out the numbers.
It’s trading 17% higher today.
Reported earnings of $2 and 10 cents.
Expectations were for a dollar 47.
That’s a 42% increase or better than what the analysts were expecting.
I mean it’s an insane beat.
So much so that with the stock up 18% today, it’s cheaper today than it was yesterday before it reported even though it’s up.
Even’s how crazy that beat was and Target killed it.
I mean naysayers are gonna claim sales fell year over year though sales have fallen for the entire s and p 500 year over year and the S&P 500 is up 17% year to date, while Target was down 25% heading into the quarter as of yesterday.
I mean hell the past 12 months guys, listen to this.
The past 12 months, Apple sorts sales and earnings decline.
Actually I’m lying.
Earnings went up one penny over the past 12 months.
I think it went from 6013 cents.
So basically no growth in earnings and a decline in sales.
Yet the company increased its market cap this year by nearly $1 trillion.
The 50% premium to the market when you’re not growing sales and earnings.
Tesla, you own Tesla margins falling like a rock.
They’re lowering prices like crazy.
Earnings are protected decline 25% year over year.
That number was $6 a share.
It’s now down to three 20.
I mean it came down to $4 and now a little bit over $4 now it’s like 3 25.
So you now they’re projecting earnings to decline year over year by 25% and that stock is up 90% this year.
So please and people giving target s**t about hey this sales are down a little bit, which by the way, beat analyst estimates, but they’re down to low single digits year over year.
Where most companies the same except most companies went up in value.
But Target was a clean beat.
Earnings margins, inventory levels down.
Guidance was solid.
I mean Target has put in its bottom, you’re not gonna see that stock ever hit the low one hundreds again ever.
And even now when you look at Target where it is, the stock is trading at 15 times right now after this move, 15 times forward earnings, it’s a 50% discount to Walmart and Costco who are on deck to report earnings.
And for the first time Walmart reports tomorrow, Costco a couple weeks.
But what have we seen in the last three quarters? We’ve seen target earnings with s**t and then all of a sudden you had Walmart, Costco beat ’em like wow, they’re killing it now.
Walmart, you better produce great results.
You’re trading at 30 times forward earnings.
Costco’s trading like at 37, 40 times forward earnings.
Those guys better report good numbers ’cause that’s an indication that not only is Target back, they’re starting to take market share.
That market share that they lost, especially during COVID.
But really happy to see this move, especially with Curzio Research Advisory members.
Targets one of our positions in that portfolio.
Really great quarter.
We’re gonna break it down a lot further than that.
And finally Dan, I also gonna talk about how targets rip your face off Rally.
I love that term.
Rip your face off.
Rally relates to small caps.
’cause the Russell 2000 surge 5% on Tuesday 5% and today it’s significantly outperformed the SP Nasdaq I mentioned earlier, right? Three to one margin.
I think it’s up like 1.3% as I’m doing this where everything else is around half percent 0.4%.
You know, I’ve been pounding the table on small caps over the past few months and why in a market that I’m like, why? You have to be careful how interest rates the con economy could slow, which usually results in bad news for small caps.
The reason why I’ve been pounding table, not the whole Russell of 2000 is this sector.
I’ve never seen a better opportunity by some of these names where they’ve gotten annihilated, especially into this month because of the tax loss selling.
So you’re looking at a 5% and then a one say one point a half percent rally and the Russell is still down 25% from its highs.
That’s how bad it’s been.
Why? ’cause everyone and all the money managers are just have rushed into the biggest names.
Well now if you’re trying to catch up, what are you doing right now at the end of the year? You wanna play catch up, buy some of those small caps that are down tremendously.
We’re seeing small caps names that are 60, 70, Insiders are buying, they’re announced buybacks, they’re growing earnings.
I’ve been doing this for 30 years and that’s the part of the market that I love.
’cause you really have to dig deep.
I mean, everybody covers these large caps, you know so much about them.
But the small caps, that’s where you see the biggest disconnects.
I haven’t seen disconnects like this in decades.
So much so, as you guys know, I put over $200,000 into one stock, another $50,000 into an, I mean I’m, I’m going very heavily into some of these names that I really, really like.
And those who are members to certain services know what stocks they are.
I’m not gonna give those away for free, but those are very big positions for me.
Those are positions that I, I normally don’t do because this is an opportunity not to generate one x or two x returns.
These d things, some of these names are down so much.
I mean five x returns are possible.
Three x returns are possible.
Some of these names could triple and still be 20, 30% below there.
What is it? 2021 highs.
It’s just a sector that’s been forgotten, annihilated.
It is trading at a discount.
We haven’t seen a discount like this to large caps in 20 to 25 years.
That’s gonna change in 2024.
There’s a lot of these names that are gonna do very, very well.
’cause they priced in recession, they’re down tremendously.
And these names, you’re not gonna see those gains where, oh, I can hold ’em long term.
You’ve seen a lot of these names.
I mean the name I put in $200,000 is already up a hundred percent.
I’ve seen a lot of names up 30, 40%.
These things are going to pop like target up 18, 20%.
That’s why we’re gonna talk about more how target relates to these small caps.
Because when everyone hates you and they’re so under owned, once that shifts and that sediment shifts, that’s where you’re gonna see.
You don’t need these things to report great numbers.
You need them to go from terrible to less than terrible.
And you’re gonna see 30, 40, 50% games from these levels.
We’re gonna break down some of those stocks, give you some names, some plays like we did last week.
Get all Wall Street Unplugged Premium and go over all of that.
So look forward to that podcast tomorrow.
And that’s it for me.
The great stuff on deck.
Can’t we do Wall Street Unplugged Premium? If you’re not a premium member, then I will see you again in two weeks and going on vacation with Thanksgiving with my family, giving my staff the week off to do the same.
And by the way, I say the same thing every single year at this time.
Eat lots of Turkey stuffing.
If you’re a vegetarian, eat freaking salad or whatever you eat.
Have some alcohol, watch football, laugh a lot, enjoy the family.
Be thankful for everything you have.
We live in a world where I feel like the younger generation, I feel like we’re the only country that our schools teach our younger generation to not like our country sometimes, you know? And, and that’s really sad ’cause that’s not taught any place or any country, right? And you have to be thankful and you’re thankful just when you look what’s going on around the world.
You have, you have someone in Ukraine that you haven’t spoken to because of the war.
I mean, you’re looking at the conflict between Palestinian and, and you know, Israel.
It’s just, it’s, you know, when you’re looking around what’s going on and the things that you have and to hang out with your family and stuff like that and be able to watch football and laugh and stuff like that.
Guys don’t ever, ever, ever, ever take that for granted.
Don’t, I’m not bullshiting, don’t take that for granted.
Okay? It’s really, really important and have fun for Thanksgiving.
So have a Thanksgiving to everyone.
Love you guys.
Thanks so much for listening.
And go Eagles, 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 decisions solely on this broadcast. Remember, it’s your money, and your responsibility.