Wall Street Unplugged
Episode: 983December 14, 2022

Prepare for market chaos in 2023

VIEW ALL

I’ve been getting some incredible emails from happy subscribers who are making 200–300% gains in a matter of days…

And it’s all thanks to our best-performing product, Moneyflow Trader. While the market sank in 2022, editor Genia Turanova averaged a winning trade every 26 days

I want everyone to have the chance to benefit from Genia’s work… which is why, for a limited time, I’m offering this incredible product for 90% off the retail price. Here’s how to lock in your discount.

Turning to the markets… Daniel and I break down what to expect from today’s Fed meeting and Fed Chair Jerome Powell’s Q&A later this afternoon. 

Yesterday’s Consumer Price Index (CPI) data showed inflation is trending lower, fueling market bulls’ hopes for a quick end to the Fed’s interest rate hikes.

Daniel and I debate whether we’ve hit peak inflation. I explain why the bulls are crazy if they think the Fed will cut rates anytime soon… and why investors need to prepare for market chaos through 2023.

Finally, turning to crypto… The House Financial Services Committee convened yesterday following the arrest of former FTX CEO Sam Bankman-Fried. We discuss the smoking gun that could bury SBF… why the crypto industry will come out stronger following the FTX catastrophe… and why SBF should be on “Epstein watch.”

Inside this episode:
  • Lock in your Moneyflow Trader discount [0:30]
  • What to expect from the Fed today [5:15]
  • Have we hit peak inflation? [16:40]
  • Prepare for chaos in 2023 [24:10]
  • Crypto will survive (and thrive) following the FTX debacle [26:48]
Transcript

Wall Street Unplugged | 7

Title

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 December 14th. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where we break down headlines and tell you what’s really moving these markets. Guys, before I get started today, I have something important I need to share. As you may or may not know, members of our Moneyflow Trader service are crushing it right now. I have readers… I have never had this in my 30-year career, actually, send me screenshots of their brokerage accounts of 300, 400 making huge gains, sometimes in just a few days. To be fair, this is not me. This is Genia Turanova, who’s editor of this product, took over MFT three years ago, and since then, she’s closed out a winning trade every 26 days on average. That’s a winner every single month. And I want to give her attention, it’s well overdue. Moneyflow Trader is by far our best performing service right now. For one simple reason, it’s designed specifically to capitalize on markets like the one we’re in.

Frank Curzio: Crazy volatility, which is why I’ve been adamant pushing this thing and pushing puts, how to buy long data puts since last December, when the Fed did a 180 on inflation saying, “Wait a minute, we were wrong, it’s not transitory, and we’re going to be raising rates super, super aggressively, shrinking our balance sheet.”

Frank Curzio: That creates a much different market, a fundamental change. It’s the best part about MFT, Genia’s strategy is easy, it doesn’t require leverage and more importantly, it doesn’t require active trading to be generating similar returns that people see in those meme stocks or that you see in small cap stocks or cryptos without constantly worrying about your positions or being glued to a computer all day waiting for cell signals or trading. Everyone should be using this strategy. I sound like a broken record here, or investing at least a small portion of that capital. It’s exactly what I’m doing. Everyone says, “Frank, what are you doing with your money right now?” This is what I’m doing. This is what I’m doing with a big portion of my money. Today, right now, Moneyflow Trader, we had it at a very high price point, but now, it’s 90% off our regular price, because I want people in this, because you’re going to thank me throughout next year, which is going to be crazy.

Frank Curzio: 90% off, you’re going to have access to everything. Genia’s entire portfolio, easy to use guide on how to buy puts, is very simple. Her entire catalog of issues, every single trade she’s currently recommending, access to that immediately. We created a special webpage, mftoffer.com to get the full details on how Moneyflow Trader works, and how you can get started it today for 90% off. It’s the best I could do for you guys. Again this mftoffer.com. It’s M like Mike, F like Frank, T like Tom, offer.com. If you guys are interested, that’s where you can get the discount. Now it is Wednesday, Daniel Creech day. What’s going on man? I want to say thank you so much for yesterday, for taking over.

Daniel Creech: Oh absolutely. My pleasure. Always love hosting Wall Street Unplugged.

Frank Curzio: Yeah, my daughter was in a Christmas play yesterday, which was at 9:00 AM and it wasn’t like it was busy or anything. It wasn’t like the CPI was coming out. It’s not like the Dow surged 700 and gave up the game. It wasn’t like it was-

Daniel Creech: Nothing goes on during the week here.

Frank Curzio: No. When I look back, that never happened when I was in school though. My parents never went to see me do anything on a weekday during school hours. Yeah, I could have played Jesus Christ in the play, and they would’ve been like, “Sorry, when you get…”

Daniel Creech: That’s an important role. That’s a lead role.

Frank Curzio: They would’ve been like, “Good luck Frank, have fun with the play, and make sure you do your homework when you get home.” That’s it. That never happened when I was growing up ever. And now it’s like, “Oh yeah, well you got to be at school at 9.” I’m like, “What are you talking about?” But she had a pretty big part, so it was really cool, and she did awesome and killed it. It was a lot of fun. She’s doing it again tonight, but they wanted an exclusive, parents there and stuff like that, which is like, holy cow. But anyway, I’m here.

Daniel Creech: You have to go back tonight?

Frank Curzio: Yes.

Daniel Creech: Nice. All right. Well done, Frank.

Frank Curzio: And it’s only an hour drive away, there and back. And it’s funny because it’s at 6:30. My wife’s got to pick up the kids at 3:00. We got to kill three hours in Jacksonville. I’m going to go out there, but it’s just a nightmare. Plus, our house is closing pretty soon, but we’ll go into deals with that because they’re trying to close very, very quickly. Most people are trying to close everything at the end of the year, and they’re just rushing stuff and messing stuff up right now, so it’s a little disappointing. A little stressful here, which I hate being stressful going to the holidays, but I guess everyone’s kind of stressful in the holidays with plans and stuff like that. But the good news is, it’s not going to be too stressful today. What do we have today? Nothing really going on, right?

Daniel Creech: Nope. Nothing at all. We don’t have congressional hearings to talk about or inflation data and/or speeches by arguably the most powerful man in global finance. You’ll be able to make the play just on time. No big deal.

Frank Curzio: I like doing this. A lot of people might not do this, and they’ll wait until after. We tape this early on. We tape this around, it’s what, 10:15 right now, and the time this goes out will be a few hours from now. But it’s probably going to be after, because they usually meet 2:00, 2:30 or whatever, and they go over everything. The market’s going to be crazy. But I like trying to predict ahead of time. Where a lot of people say, “Oh, I told you so. I told you Disney was going to crash.” Really? There’s not one celebrating on Disney ever for the last year. Nobody said that. Now everybody said it. I like that, we’re holding your feet to the fire and saying this is what I thinks going to happen because Powell’s coming out later today.

Frank Curzio: Again, by the time you listen to this, it’s going to be out there, you’re going to know what’s going to happen. He’s likely going to raise rates by 50 basis points. I’m not sure if he’s going to say anything different than what he said two weeks ago when he spoke at the Brookings Institute, which I thought wasn’t even relative or news. He said he is going to slow the pace of rate hikes. No kidding, you’re not going to go 75 basis point forever, you can’t. This is the fastest we raised. I keep saying, the Fed era, we’ve never ever been in… This is uncharted waters for us. Two hikes is uncharted waters. Four 75 basis point hikes in a row, in what, four or five months of meetings? We’ve never seen that. What’s going to happen? Yes, you’re going to see inflation moderate. It better moderate.

Daniel Creech: Right.

Frank Curzio: Otherwise, you’re going to keep going and going and going. We’re going to see a 50 basis point hike, likely. He’s going to come out and probably say, “Hey, we’re seeing moderation.” That’s what he said at the Brookings Institute, and right away, the markets absolutely surged that day, if you remember, only for a week later, to give up all those gains. And I’m like, “The terminal rate didn’t change, nothing changed. We got a good CPI number now,” which was yesterday, but there was nothing in that CPI that tells me that they’re going to change course to the point where you could see them reducing rates and lowering rates by the end of this year. And that’s key. They could slow. I think they’re definitely going to see two 25 basis point hikes. But going into this meeting, again, it’s going to be market moving. This algorithm is going to be all over the fricking place.

Frank Curzio: I know, again, I think it’s split. Everyone says that most people are negative next year, even though earnings are supposed to rise 5% year-over-year. And you have every economist, when you look at the economist estimates, no one’s predicting a negative quarter of GDP next year. Very, very slow growth, so that means they’re not predicting recessions, but everyone’s saying, “Everyone’s pricing in the worst.” Well the economists aren’t, and earnings are going to go up 5% at record highs next year. That’s what we’re projecting. When rates are going to be more than double what they were at the peak 2019, when earnings were about 30% lower than they are now. What are your thoughts on this? You think he’s going to say anything? I’d like to say he’s not going to say anything about the market moving, but the guy just sneezes and the market goes in a direction these days, so it will be interesting.

Frank Curzio: It’s just like the after effect. Because I will say this one thing I’m noticing, and it was one of the things that I’ve been saying and when I’m wrong, I admit my wrong, you’re wrong, you admit you’re wrong. But one of the things I’ve been saying is, this is no longer a buy the debt market. It’s a sell the rent market and we had a good CPI number, we’ll break it down in a minute, a good CPI number, that was better than expected. Notice what happened to the markets, they went up a lot, and then really pulled back. They finished the day a little bit up, they came back a little bit, but… Which means that we’re starting to expect CPI to continue to moderate and that’s being factored in. If that’s being factored in, if we get a reversal of this, look out. But this is what we’re doing in the markets right now.

Frank Curzio: No matter what they’re saying or what they’re doing, it’s whenever you see the markets go up, even the NASDAQ went up 6% and boom one day, and that was a month ago, and what happened? You see the market pull back over the next few weeks. That’s the type of market we’re in. I’m saying if we’re going to see a really huge jump in the markets on this news today, again, I just mentioned Moneyflow Trader and buying puts, it’s just a perfect time because of the volatility we’re going to see over the next three to six months, at least, probably nine months and 12 months, is pretty crazy.

Daniel Creech: I think Powell has done a good enough job of being transparent or foreshadowing what he’s going to do too. Later today, he’s going to hike-

Frank Curzio: Did you say Powell did a good job? I’m going to mark that down.

Daniel Creech: Yeah, well did you hear what I listed after that? I said being transparent, yes, on this one thing, you’re right, I have to give credit where credit is due. Oh, while I’m admitting that, I have to give Biden credit because I was very critical when they came out. Oil was trading much, much higher when they came out with the refilling of the strategic petroleum reserves between the high sixties and low seventies. And I thought, “Well hell, good luck getting there.” And we touched that briefly a little bit ago, so kudos to him on that. We’ll come back to that at a later time. As far as Powell does, I do think that he’ll raise it by 50 basis points, which is the market consensus. I don’t think that this is going to be the time that he picks to buck the trend on what he’s been foreshadowing.

Daniel Creech: I do however think it’ll be a fun trading opportunity. I think the market will sell off hard during his Q&A, because I think he’s going to reiterate to a strong point, that one positive, and I say positive consumer price index or any inflation data, trending lower is good, but one isn’t a streak. We don’t live in this country song, one in a row, Frank. He wants to see several readings over the next couple of months per what he said in the past, to make sure that inflation is, “under control” or trending down, because they don’t want to have to… The worst thing for the Fed would be to pause interest rates, let’s just say March or April of next year, hold them and then, instead of cutting next, have to raise them again. And he’s basically hinted that he’s going to err on the side of caution, raising too high too fast.

Daniel Creech: I think he’s to that. And I do think he’s going to reiterate though, “Hey, we need to see a lot more of this.” And I don’t think he’s going to take the 75 or another 50 basis points off the table. And I think that’ll be a wake-up. We’re in this trading rage anyway. I just expect a lot of volatility in the noise. This is just something we have to live in. But it doesn’t change anything, three and six months out. But it changes a whole heck of a lot right now as we deal with it.

Frank Curzio: When I look at the inflation picture, we’re still, right at 7.1%. Remember the PPI came in; it didn’t come in good. It’s not just, hey, one month or two months. We have to see this go on for a while because the last thing that they’ve been adamant about too is saying that, we don’t want to go back to the 80’s style where we raised, and then we control inflation, and then we just basically started lowering and inflation surged again. And it’s not a good thing, by the way, it’s not a good thing when the market surges every time we see a mild decline in the CPI, because what that’s telling you is that it’s giving the Fed more of a green light. What we want to see is we’re trying to destroy demand. If you’re seeing the markets take off and go to new highs, they’re going to continue to raise, even if they’re getting down to four and a half, 3%, they’re going to continue to raise if the market is surging, because they’re going to want to bring this down.

Frank Curzio: But let’s break this down. This was on CNBC, did a good job of this. I don’t know if it’s from Mark Zandi, who’s someone that who I respect as economist, because you are seeing a pullback of certain things and they list everything. They listed about 30 of these items and it’s great. Again, this is on CNBC, and I’ll show you the chart right here. And you’re looking at, if you go on our YouTube page, you could see this. Smartphones down 23% year-over-year, holy shit. I didn’t know that. Televisions, these are discretionary items though. Then you have computers here, which are down 4%. You have used cars and trucks down 3%, major appliances down 1%. Again, appliances tied to houses. You’re going to see that come down a lot more. Beef and veal came down 5%, which is good year-over-year. Now, here’s the deal. Let’s go over some of the stuff that’s up. Eggs not a big deal, 50% though eggs. Eggs are up 50% year-over-year-

Daniel Creech: Not a big deal, Frank. I love eggs.

Frank Curzio: I know-

Daniel Creech: They’re crazy.

Frank Curzio: Holy shit. Airfare is up 36%.

Daniel Creech: That’s why Delta raised the rates.

Frank Curzio: Butters up 34%. I know they significantly raised their estimates, and that’s one of our holdings in Curzio.

Daniel Creech: Do they not know our release schedule? They couldn’t have done that yesterday to make it, but anyway-

Frank Curzio: I know. It comes out today. But we were by-rating it. Public transportation’s up 23%, then you have lettuce, cereals, pet food, oil up 15 to 20%. Utilities are up tremendously, 15%. Milks up 14%, stationary supplies up 14%, electricity at 13%. You’re seeing all these things, this does not indicate the Fed is going to… Remember, pausing is a lot different than pivoting, and we’re looking for the pause and people are going to be happy with the pause, but we pause, we’re going to stay at that rate for a very long time through next year. So, that is around 4.8 to 5%, it’s probably going to be a little bit higher than 5% if I had to guess. Again, we have energy coming down, food at home, but overall, we’re still upset over 7% year-over-year. I saw Jeremy Siegel go on TV, and he’s been like, “If we use real-time data,” and he said something that was really, really wrong.

Frank Curzio: He’s an experienced economist, and he said something very wrong on CNBC. He’s like, “If you’re using real-time data, you’re going to see how much rentals are down year-over-year.” Rentals are not down year-over-year. They’re still up well over 4%, 4.4% and month-over-month. The last three months they’ve gone down 1%, one and a half, 1%. And they’re saying that’s a huge decline. But we were up tremendously, I think it’s 17 or 18% for the year before, but year-over-year, we’re not seeing rentals come down. And this is a massive part of the CPI, and that doesn’t fall fast. Now you look at energy, has come down, which is great. Food prices have not really come down other than beef and veal, but you’re looking at everything else, it’s milk, pet food, cereal, lettuce, butter, eggs, to travel.

Frank Curzio: You’re not seeing anything here that he was going to go come on later today. And again, I could be wrong about this, but he’s going to come on later today, and he’ll say, “Hey, you know what? We’re good, and we’re starting…” I could see him saying, “Listen, we’re starting to see, obviously, we’re seeing moderation, we’re seeing some deflation, every indicators here, but still, we’re not even close.” And that’s what I’m expecting him to say. We’re not even close to stopping. We’re going lower the pace.

Frank Curzio: The pace of rate hikes and lower the amount from 75 to 50 or probably 25 going January, February, that’s what most people are predicting, probably around peaking a 5%. But guys, we’re going to be at that level for the entire year next year. We’re not lowering any time soon. And they’re not going to make the mistake that if we get two to three months at a pretty cool, that we go from 5% to 4%, to 3.5, that they’re going to be like, “Okay, now’s the time,” because 3.5 to 5% is major when it comes to inflation, and you can see 5% very easily, especially if you’re lowering.

Frank Curzio: But the way the market’s trying to jump ahead of this is just amazing to me, of how high we are and how overpriced and how expensive the markets are. Real quick, I did some research with Curzio Research Advisory members. It’s a great issue. You guys should be able to read it now if you listen to this, came out today for the December issue. When you’re looking at the QQQ, it’s trading at 23 times forward earnings. Now it was trading at 32 times forward earnings. If you take a three-year chart, that’s during COVID, eliminate COVID, and I pull up a chart 10 years prior to January 2020 to COVID, and we peaked on the QQQ at 23, 24 times earnings. It’s the highest level we’ve ever traded pre-COVID, and that’s what we’re trading at right now, and in 2020, we had rates below 2%.

Frank Curzio: It was a much easier environment. We had lots of better things going on. Now you have a Fed that’s removing all liquidity from COVID out of the market, which we’re not really talking about too much, which is QT, which is massive. It’s going to be close to a trillion dollars next year that they’re removing from the market. Not only that, but we’re talk about rates going much higher. You can’t sustain these valuations even though you’re seeing technology stocks have come down, you’re still seeing… I expect them to test the lows next year, which is about 70% downside. I think you can easy test the lows, but be careful buying growth stocks here. Anything that’s working, and they’re coming out with good earnings and saying, “Hey things are good,” it’s a great opportunity to buy puts on them because things are changing on a dime. That’s how fast these rate hikes.

Frank Curzio: The pace that they did. That’s how fast markets change. We’ve seen across the board and so many different things, are retails and just airlines and oil industry and stuff like that. And even at Walmart and Target earlier this year, of how quickly they saw demand fall off a cliff. It’s going to be an interesting year next year. But you got to protect yourself. You definitely have to protect yourself. I don’t see Powell coming on today saying anything different that he said from last week. But let’s see how the markets react because they’re going to react strong or weak, one way or the other. They just don’t do anything with these meetings anymore. It’s crazy volatile.

Daniel Creech: I think the market, to your point on pricing in this pause and pivot and this huge overlap of bullishness that people take away from that, is a big mistake. And I’m not ready and Frank, I don’t know where you stand on this, but I’m not ready to jump on the bandwagon of inflation has peaked. Of course, inflation has peaked from present yesterday’s data to the last couple of months. However, you just touched on it in a great point on the rental incomes. Over 50% of the consumer price index, the CPI, is rent, food and energy. Well energy has dropped, I think it was down 1.6 or 1.8%, which is fantastic. Gas pump gas prices are lower. Hey, I’m going to fill up later for around 3.09 here. I just saw it coming to work this morning earlier-

Frank Curzio: That’s Florida, yeah.

Daniel Creech: And you know how you get people feeling good about paying 3.09, you make them pay 4 to $5 for a while. That’s how you do it.

Frank Curzio: You don’t look at what they were paying-

Daniel Creech: Kudos to that.

Frank Curzio: What they were paying a couple months ago.

Daniel Creech: However, we’ve seen this drop in consumer price index, which is great, but what has oil done? You mentioned a little bit of food back and forth, that’s going to continue to fluctuate and at least remain high. Rentals, I just don’t understand how, unless you’re signing extremely short-term leases, I don’t know how that’s going to come down significantly anytime soon. Unless I guess people’s rents year-over-year starting in January are going to start coming in. I don’t know how those are going to be very down.

Frank Curzio: That’s when you say rentals are down. When Jeremy Siegel said it, he said, “Rentals are down.” I’m like, “Let me tell you something, anybody, you can go anywhere. You tell me that someone that’s paying less signing a rental today than they were a year ago, in any area. I’ll challenge you on that. You’re not going to see it.” You can’t tell me that, “Oh, rental prices are good now,” they’re not down year-over-year, they’re still up a ton.

Frank Curzio: Are they going to come down? Yeah, they’re going to come down. It’s going to take longer than expected. But the point is, are they going to come down in the next three months, because we’re only expected two more 25 basis point hikes, which is priced into the market, and then we finish at 4.7, 4.8, around there. But is that priced into the markets right now, more of a rate hike. But how do you stop after three months, especially when rental incomes are not… You’re not going to see it drop that much in three months. You’re going to see the housing market, it is starting to deteriorate, even in Florida, you’re seeing it, it’s starting to deteriorate, and it’s not seasonal right now either, so it’s going to make it more difficult to sell houses and stuff, even though mortgage rates have went from what, 7.2, 7.3? I think they’re 6.3 now, 6.4.

Daniel Creech: But that’ll be bullish as well. Non-seasonal, if they go down a little bit more because you have lower volume than normal over unseasonable times, that’s all going to be bullish for that. But I think the mistake people are making and of course everybody knows that listens to this, that I’m bullish on energy and energy prices, energy has pulled back significantly. In my opinion, in order to have this camp or this mindset of inflation is going in the right direction, we peaked now, it’s just a matter of how fast does it drops, and then when does it steady out. I think you’re relying on the fact that energy is going to remain low, and I just don’t see how that’s happening when you throw in all the crazy variables, and let me point out-

Frank Curzio: The variables, but even the strategic oil reserve. Biden actually said, we’re going to wait for it to come down this price to just buy it and fill it back up again, which is down significantly. They’re an active buy in the market, so it’ll be interesting.

Daniel Creech: And to couple with that, you can’t release forever. You can do it for a long time. You can draw down reserves to very low levels. People like to site say things like, “Oh, it’s the lowest since 1984.” Okay, that’s fine. I’m not agreeing or disagreeing. I’m simply saying it can’t go on forever. China can’t stay locked down forever. They can stay locked down longer than people believe, but they can’t stay locked down forever. And my point to this, the cliff note version of this is, who drives the price of oil and oil supply? It’s the same entity. And the answer is OPEC. We have given up because of policies, the right or the front runner in global energy for right now. We could get it back, but until we make changes at the policy level, we’re not going to.

Daniel Creech: We have given over that power to OPEC, who if you don’t think is going to just wait and see, take the longer approach on the Russian sanctions that previously went into effect. What we do with the strategic petroleum reserve over here in the US, they’re going to be able to hold monthly meetings and/or emergency meetings anywhere, anytime. And all they have to do is hint at cutting production and pulling those strings to keep Brent, world oil closer to $100 a barrel. They’ve failed at that, which is why they’ve made big announcements and reversals over the last couple months, and they’re not doing anything in the near term as we unfold through this recent.

Daniel Creech: The Russian sanctions have only been in effect a little over a week. I’m talking about the latest ones on the price cap of Russian oil. Going into next February, we’ve talked about more sanctions. I just think the short cliff here, the short story here is, you have to be at the mercy of lower oil prices in order for these CPI and inflation data in the future to remain positive, and I’m happy to bet against that.

Frank Curzio: And it was interesting in OPEC, just a little background here. It’s funny because what they did in 2013-’14 is they started releasing a ton of oil, because they knew that we becoming dominant, and we had the technology. We also couldn’t produce it. Because again, this is 2009-’10, when even shinier energy, that was supposed to be an import facility of LNG. And then they were like, “Wait a minute, holy shit, we got to turn this around really quick.” And it took years to change it with all the trains and stuff like that, it’s an amazing story that I followed for a long time. But OPEC was just releasing so much oil because they said, “Listen, we have to get this thing below 70, 60,” that’s how much you use the cost. And in reality, it made us improve our technology even more and lower our costs even more.

Frank Curzio: Because they did, we were able to push it down significantly. I think it’s 2015, ’16, went below $4 a barrel, even in the thirties, where a lot of these guys couldn’t do it for 45, 50. Again, I was covering the industry, 55. Someone would say, “Well, we have a well, we could do it $25 but it’s one well in one area in specific county within the Permian,” maybe in Glasscock or something like that. And then you just couldn’t keep them down that long. Now as they went higher or above 60, not only that, we lower our costs significantly. We found out how to do this at a much cheaper cost and improve our technology. It’s just a matter of saying, “Hey, okay, you guys could drill, and we have an unlimited supply.” People say, “That’s crazy, unlimited, you don’t have unlimited supply, unlimited.”

Frank Curzio: Let me tell you something, it’s unlimited because as prices go higher, learn about the Permian basin, learn about the Sprayberry, learn about things like that because these are massive deposits that you drill deeper and deeper and it costs more. But if you’re at 100, 120, you drill deeper and deeper, you’re going to be drilling in the ocean as well. But now, you’re bringing in so many more share plays into play, when the price is much higher because now you can afford to drill 15,000 feet, 20,000 feet. It’s not just 7,000 or 5,000 or whatever. The Eagle Ford has a pay dirt of 300 feet. That’s where it is. You drill down and then horizontally in there and then, boom, you’re fracking. That’s where the oil is. But there’s seven of those in the Permian that go deeper and deeper and deeper. Just go to Google and take a look at it and you’ll see it, they do a great job in pictures, but it’s just interesting to see-

Daniel Creech: It’s amazing the things we do in reality that seem like movies. What are we going to do? Well, we’re going to drill down a mile here, and then hang a left and drill a little bit longer and grab it. Oh, no big deal, all right. The technology is amazing. To nerd out on you, that’s just a great story of capitalism and innovation.

Frank Curzio: And then, you had the complaints that they were using different chemicals, which they were, and now they clean that up as well. No, no, but they cleaned that up as well and stuff. And again, it’s amazing that we have this kind of technology, and why are we not using a lot?

Daniel Creech: Am I crazy to think that we haven’t seen the peak in inflation? Do you think oil will remain low enough with global demand and such, that we have peaked or am I crazy to think it’s going to go back up?

Frank Curzio: I think we’ve seen a peak in inflation. Because these rate cuts, and I don’t need to say it, the last two rate cuts of several hikes, have not even been factored in. They’re not valid points in the markets right now. You think they are, but they’re not. And I try to explain this to people where say, after COVID, you have this big pool of money of 20, 30,000 or whatever it is, this big pool of money that you built up because you’re getting checks, business is good, they push forward demand and everything. And now, you’re raising rates, and your bills are getting much higher. That 30,000 goes to 25, it goes to 20, it goes to 15, then you’re like, “Holy shit.” And this happens over three to six months, and then you’re like, “Wait, I really have to cut back. Where else am I going to get money from? Let me see if I can get out of my house, my credit card payment’s 19%. Let me take out HELOCs,” which all the banks are sending out to all the customers right now.

Frank Curzio: HELOC loans. We knew what happened in 2008, when that happened. These variable rate loans taken out, home equity line of credit, and you’re doing it for whatever, 8%, 9%, but you could pay off your credit card for 19%, but at the end of the day, you’re still paying 8% on equity in your home and you’re taking that equity out of your house. It’s just for me, when I see where rates are and that we’re going higher, I think we peak. I’m hoping that we peaked. I really do hope that we peak, and we need to come down here. But in order to come down, you have to destroy demand, and you have to significantly have the unemployment rate go much higher from here.

Frank Curzio: And that’s not a good scenario, but that’s the bullish case that everyone’s looking at. That’s the bullish case, we have to see CPI come down, we have to see demand fall off a cliff. They think there’s going to be this mild slowdown and just unemployment go up a little bit. We’re in unchartered territories. Don’t throw out all your books on investing. We’ve never seen this shit in our lives, what’s going on right now. It’s crazy. And to say that, “Oh, it’s going to be a perfect scenario.” You’re out of your mind. You’re out of your mind if you think next year, that they are going to be like, “Okay, inflation came down, the market stays steady, and now, we’re going to lower rates maybe in Q3 next year and everything’s going to be fine. And get back to…”

Frank Curzio: You’re out of your mind if you think that’s going to happen. You’re out of your mind because there’s a million factors involved. Even with housing, you’re seeing the cracks in housing. You’re seeing the cracks in all the real estate that these private equity firms raised. All these private REITs that said that they want 9%, while the publicly traded ones are down with the same areas and properties and stuff like that, we covered this, are down 30% this year. You’re getting redemptions from family offices like crazy across the board, they have 1100 REITs, is 800 private REITs, and you have to think the two largest single redemptions-

Daniel Creech: Well, think of the headaches going on in that world-

Frank Curzio: They limit their redemptions, but still, it’s going to mean that you’re going to have to sell these properties and sell them at lower prices. There’s a lot of things going on underneath the hood that are really scary right now, and I think they’re all going to come to fruition into next year because of these high rates. Well, we’ll see what happens. Now really quick, I wanted to get into the big news, which is Sam Bankman-Fried, and now he’s officially under arrest. And I know that you’ve been following this a ton, Daniel, but everyone was saying, “Why isn’t this guy arrested?” Well, based on what I’m reading now, I understand why it took a little longer. I know there’s theories out there of the timing of this. He was going to get investigated by the-

Daniel Creech: Well, he was going to testify.

Frank Curzio: He was going to testify. He was going to testify in front of the Republican committee, not the Financial Services Committee, which is run by the House Democrats. And they’re pushing this agenda like, “Oh, he donated money to both. He donated money to parties.” 92% of his money personally went to Democrats. And then, they’re bringing up the other guy who founded the company who’s not really in trouble a while ago and say, “Well, he was more…” Again, they’re trying to split it out, but it’s just amazing how they were really going to put his feet to the fire, and before he was able to do that, in one day, they arrest the guy. Again, you could think about what it is or what it isn’t, but the bottom line is they found a lot now, now they found the smoking gun.

Daniel Creech: Do you think there’s any coincidences in Washington DC, Frank?

Frank Curzio: No, there’s no coincidences.

Daniel Creech: I don’t think so either.

Frank Curzio: There’s no coincidence, absolutely.

Daniel Creech: I was one of the guys that was very upset and wondering why he hadn’t been arrested. And I don’t want to break the rule of law here, just because it favors me in this one argument. However, I could say John, John Jay Ray III, man, it’s tough. I think I messed that up yesterday a few times. Anyway, the current FTX CEO, the former, not former, he’s still an expert in bankruptcy and all that kind of stuff, but he made a huge splash in his name walking through the Enron bankruptcy.

Daniel Creech: There’s nothing new about the commingling of funds here. My selfishness, Frank, is it took over a month to get this guy arrested. It could’ve taken 12 hours, and he could’ve been sitting there for longer. But let’s just enjoy the small victory as we have it. Frank, a couple of quotes that caught my eye yesterday as I, for everybody else’s painstaking, instead of putting everyone else through a painstaking endeavor, I was listening to some of this and it was entertaining as can be. You have both sides of the aisle touting themselves in their… They all get five minutes in these hearings, they’re recognized for five minutes. They use the first minute-ish to talk about how right they’ve been in the past or how they’re fighting for the common people. And then, they get into some back and forth with the people across the aisle.

Daniel Creech: Because at this time, Frank, you can’t talk, it’s like you’re muted. I can say, “Ah, Frank, I don’t hear you whooping and hollering today as we’re having this congressional hearing like you have in the past.” That’s always kind of funny. Half the congressional hearing was trying to paint crypto as, “Hey, this is a fraud in total and if we just regulated, this wouldn’t happen.” And I thought John Ray did an excellent job walking the line and simply saying, “Listen, this is just fraud. Forget-“

Frank Curzio: The guy’s now taken over.

Daniel Creech: Yeah, the FTX CEO, the bankruptcy guy, he said, “It’s just old-fashioned embezzlement.” And what he did was he said, “Listen, this isn’t crypto’s fault.” And my point is, while everybody’s grandstanding and talking about regulations and things, I know there have been changes to regulatory filings and regulations since Bernie Madoff. But how do you not have one of the biggest financial frauds on Wall Street and Bernie Madoff right under the noses of everybody in the SEC, and then, yet, you grandstand up there and talk about how regulation could have solved this one. There’s just so much hypocrisy up there, it’s not even funny. But when you look at what he said, it’s just old-fashioned stealing. And I thought this was just a boom for crypto and I think A, Sam Bankman-Fried getting arrested; and B, some of that testimony is why Bitcoin remains between 17 and 18,000-

Frank Curzio: Yeah, I don’t know what the monthly high is, or 18,000.

Daniel Creech: I’m scratching my head because it makes sense, and then we don’t need to get into the allegations against Binance, not that I’m trying to back them, I’m just saying there’s still the ripple effects of the FTX fallout. However, it’s getting more clear I think to everybody that’s going, “Oh, wait a minute, this guy was just lying and cheating and stealing.” Well, that’s exactly what you could do under, no regulatory environment is going to make that. Frank, if you make me give you a piece of paper that says, this, this, and this, if I’m an outright fraud, what’s keeping me from giving you that same piece of paper? It’s great to see, now he’s still allegedly a fraudster, so we’ll see if he’s convicted or anything. However, my point is, is that, once word gets out that there’s actually repercussions for bad behavior, that is only a positive for the space and the price of crypto, i.e., Bitcoin going forward.

Frank Curzio: No, absolutely. And I think the big deal here is with the SEC, and they’re always slow to move their feet, but they wanted the smoking gun and they got it. They basically got it. If you’re looking for the report of what they read, and I went through this and I have good people who are very smart with this industry and said, “Hey, did you see this part, and this part, and this part?” But there’s certain things here, they used the customer funds to make undisclosed venture investments, lavish real estate purchases and large political donations. There’s no meaningful distinction between FTX customer funds and Alameda’s own funds, meaning that the people who were putting money into FTX had no idea that their funds being used. That’s illegal, right?

Daniel Creech: That’s outright fraud, yeah. Theft.

Frank Curzio: That’s right. Now they have more than 8 billion FTX customers assets and FTX deposit these into Alameda controlled bank accounts. They were initially move to a different account. Now you have Sam Bankman-Fried actually knowing about this and trying to hide it. How? Because FTX, they were trying to separate Alameda’s portion of liability, and they create a new account in the account called fiat@ftx.com. But what happens is this account, when you put money, it generates automatic interest. It generates that interest automatically, and again, we’re talking about $8 billion. Sam Bankman-Fried’s like, “No, no, no, no, no, no, we can’t bring attention to this. We don’t want to have them generating interest.” They actually moved that account to someplace else. Now, you have a guy that’s trying to conceal the losses in Alameda. That’s where, he didn’t say anything about that in the interview.

Frank Curzio: He was like, “I don’t know what happened.” Now there’s a smoking gun, he’s dead, he’s done. But this is old fashioned fraud. Yeah, you could say it’s not just about crypto, but it makes it a little bit easier to do in crypto because the SEC has been dragging its feet. And to be fair, it didn’t matter with this. This is an international company, they have a US division, but this is an international company, that you really don’t know what the hell was going on. You really need to see those numbers as international crypto companies that show their numbers that are fine. Now don’t talk about those. And it makes sense from tax purposes, especially if you’re doing a lot of business overseas. That’s why all of our shippers we talk about, there’s no major shippers that have businesses in the US, because they deal in so many other countries in shipping around the world, they’re going to go in the best jurisdiction for tax purposes, it makes sense.

Frank Curzio: But regulation needs to come down in this industry. And I think people are seeing that because I’ve said it a million times, this is where the innovation’s coming from. Blockchain is for real. Yeah, the metaverse is unbelievable. Where you’re going to see proof of your ownership that’s on the blockchain through NFTs. You get to create, you get to own your own content. The internet’s no longer owned by four or five different companies. They’re not going to be collecting their data anymore. But it allows you to build whatever you want, be whatever you want, do whatever you want. And that’s really, really appealing. It might not be appealing to people listening to this if you’re 55, 60, but when you are 40 years old, a millennial and you grew up 100% in the digital age, everybody below 40 is 100% grown up in the digital age. They grew up with social media, going all over these accounts.

Frank Curzio: They’re trying to ban TikTok now, whatever. But it’s just amazing to see that this is going to provide a much better experience on your mobile phone and you’re going to have the chance to own all of your content. All of anything. If you get kicked off social media, you don’t own anything. If you happen to pass away, you can’t buy a car, they erase everything. All your tweets you ever sent, everything, gone. They own everything that you put on their platforms. And I still think today people don’t understand that. You’re running your whole business and you say like, “Hey, I think Donald Trump was right on this.” And boom, you get suppressed and nobody ever hears from you again and you’re like, “Holy shit, I just had 300,000 subscribers I used to talk to on YouTube, and now I got banned.”

Frank Curzio: Now you understand. They own it and they control it, and they can have any agenda they want. They could do whatever they want. They could say whatever they want. These are private companies and public companies, whatever, but they’re companies. It has nothing to do with free speech. You don’t have free speech on these platforms. I know what Elon Musk is trying to do with Twitter, but if you think you have free speech all the time, go up and say, “I hate women, they should get paid less than anything at your job.” See how fast you get fired. You don’t have free speech at your job and when you’re going on these platforms, they can do whatever they want. And again, but for them to suppress and have agenda and stuff like that, and that’s a big media outlet, it’s different. But when I see the metaverse, when I see Dow, which is not just your board of directors, it’s a whole community that has say in it and voting rights and stuff like that.

Frank Curzio: Not the voting rights that you think you have because you really don’t have them. The way they set up CEOs, CEOs’ pretty much and the insiders have the most rights and stuff, your vote really doesn’t matter to be honest with you when it comes to public traded companies. Anyway, most of them. But my point is, this is where the innovation’s coming from, and now, this is force and regulation and you’re seeing a bid in the market. Because really quick here, if you looking Binance, what happens is, people are worried that Binance is going to be next and even though they’re in good shape, what do you do? You’re allowed to take all your assets off and you put them in cold storage. It’s a little thing that you have. You put in 16 codes or something, words or whatever, I have one here.

Frank Curzio: You put all your assets offline. That’s the way no one can ever touch them, you own them. They’re like, “I’m not going to leave my assets here.” They were moving billions of assets off the platform, and now they kind of stem that, it looks like most of that was done. It doesn’t mean people are selling Bitcoin. If you’re removing those assets and putting them on cold storage, it probably means you’re going to hold Bitcoin for a very, very long time. Because you have to take it and put it into another account and then you could trade and sell. Those people are doing it, they’re long-term holders, they’re not selling Bitcoin anytime soon, not selling Ethereum, they’re with NFTs and smart contracts, and Ethereum’s definitely the leader and will continue to be the leader forever in that industry. This is where the innovation’s coming from.

Frank Curzio: And you’re seeing a bit in crypto, which could be surprising to a lot, but it is interesting. I think long-term, this is very, very good news, but they got the smoking gun and this guy’s dead. They’re going to make a big example out of him. They don’t even need to make an example out of him, but he’s done. With some of this stuff showing that he transferred assets, that he was trying to hide this and conceal it. If this turns out to be true, then you’re done, and it looks like it is. Because they’ve done a lot of work on this to go over every single email, everything, tweet, everything that he’s doing, and they got them. They definitely got them.

Daniel Creech: Yeah. I read 115 years he’s facing, that seems like a good idea.

Frank Curzio: Yeah, which means in today’s society, he’ll be out in five years.

Daniel Creech: That or the death penalty. You got to put him on Epstein watch.

Frank Curzio: Oh yeah. The stuff that guy knows.

Daniel Creech: Or allegedly knows. Who knows?

Frank Curzio: What is Epstein? No one even knows what happened, he just died.

Daniel Creech: Nah, cameras don’t work, Frank. It’s not a big deal.

Frank Curzio: Cameras don’t work, yeah.

Daniel Creech: Not a big deal.

Frank Curzio: It’s so insane. It’s so insane that we never figured that out. We don’t want to figure it out, it’s okay, don’t worry about it. The dirt that guy has on all these major politicians, princes, holy cow, man. It’s unbelievable. And then he just disappears, nobody asks questions anymore and everything’s fine. It’s cool the way the world works.

Daniel Creech: Frank, we don’t even know how the Nord Stream pipeline blew up and the recent war we’re talking about.

Frank Curzio: Yeah, that went away really quick. Oh, it was Russia. Russia blew up their only leverage they have, in the war, it was Russia, Russia.

Daniel Creech: Look at the time. Holy cow.

Frank Curzio: We better get going. All right guys. Dan, thank you so much. I really appreciate you coming on. Email, if someone wants to get in touch with you?

Daniel Creech: daniel@curzioresearch.com.

Frank Curzio: Awesome stuff, and my email is frank@curzioresearch.com. Thank you guys for all the support, and I’ll see you tomorrow. 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.

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.
What’s really moving these markets?
Get free daily updates
Episodes about Digital Assets

How to give Wall Street the middle finger

The two most important trends at CES 2023... There's more pain ahead in crypto—here's why... And how to take advantage of the market rally (while giving Wall Street the finger). Plus, stocks that will soar as inflation falls.

More Wall Street Unplugged
Amir Adnani

The uranium bull market is just getting started

Amir Adnani, CEO of Uranium Energy Corp., breaks down how Japan is causing a paradigm shift in the uranium market... Why the Russia-Ukraine war will impact the market for years... And why uranium prices will likely double from current levels.

Inflation is surging again

Why some of the biggest stocks dropped double digits this morning... The Fed, China, and more reasons this is a treacherous market... Proof inflation is surging again... And a warning from one of the most accurate analysts on Wall Street.

Porter Stansberry, Porter & Co.

Prepare for global chaos

Porter Stansberry explains why the global financial system is nearing a tipping point... The coming debt crisis... And why he's cautious about China. Plus, the sector Porter and Buffett love... And the Wall Street icon who's about to outperform everyone.

How sex workers are benefiting from inflation

Why the World Economic Forum is great for high-end escorts... This little-known indicator shows a pullback is coming... And the one sector to buy when interest rates are high. Plus, why stocks will fall when the Fed starts cutting rates.

Disney

Nelson Peltz won’t save Disney

Why the Fed hasn't won the fight vs. inflation yet... How investors can protect themselves from what’s ahead... And Nelson Peltz's uphill battle at Disney (and what it would take for Frank to recommend the stock).