Wall Street Unplugged
Episode: 1018March 15, 2023

The banking crisis should scare the s*** out of you

The market is punishing the entire banking sector following the collapse of Silicon Valley Bank (SVB) and Signature Bank (SNBY). I start today’s show by explaining why SVB failed—and why the government bailed it out.

I also highlight how the situation has f***ed over the Federal Reserve… and whether a 50-basis-point rate hike is still on the table at next week’s Fed meeting. 

The bottom line: The market is in for a lot more pain. That’s why I keep pounding the table on why Moneyflow Trader is a “must-have” service to protect yourself in this market. I want everyone to have access to this incredible strategy—which is why I’ve discounted Moneyflow Trader by 90%.

And make sure to join us for tomorrow’s WSU Premium, where Daniel and I will break down the market chaos in more detail—and share one stock that’s being unfairly punished amid the banking crisis.

Inside this episode:
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.
Transcript

Wall Street Unplugged | 1018

The banking crisis should scare the s*** out of you

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 March 15th. I’m Frank Curzio, it’s the Wall Street Unplugged podcast where I break down the headlines and tell you what’s really moving these markets.

Just coming on to shoot the breeze with you. Nothing really going on this week. Holy cow. So having bank failures, people worried, Fed coming out with a special facility, supposed to short the markets, everything’s okay, yet you’re still seeing banks get crushed. Banks overseas. And what’s in the news right now? Silicon Valley Bank. It went under. I’m sure you’re familiar with it. Could watch it on every single channel. Not just the CNBC’s, Fox Business News, and things like that. Today Show, everybody talking about it because it impacting other banks. And Silicon Valley going under, they’re quick to point out, “This is the second-largest bank that ever went under.” It’s not a small bank.

It’s actually the 16th largest in the US, based on their assets and total deposits. So their assets before this happened is 200 billion in assets and 175 billion in total deposits. Now just to put this in perspective, this is the 16th largest. Think of it like it’s the 16th best player in the NBA. You’re amazing. You’re great. You could have games where it’s like you’re the best player. You get runs like Lillard had on Portland or some of the best players. They go on these runs. It’s not just LeBron. It’s just some of these NBA players, right? If you’re 16th best in almost anything, any sport, means that you have a shot to win. You’re capable of winning, whether it’s golf, whether it’s tennis, you’re that good.

When you have the 16th largest bank of the US and having 200 billion in assets. I want to put this in perspective for you, because JP Morgan has over three and a half trillion in assets. You’re looking at trillions and trillions and trillions in assets by the major banks. I mean, the difference between the four largest and everyone else is a joke. All created by the credit crisis, supposed to put in laws to ensure that these banks are no longer too big to fail, and they do the exact opposite, right? They’re much, much larger. We’re talking about JP Morgan, Citi, Wells, Bank of America. I mean compared to everyone else, that’s a difference. You say 16th largest, you think that’s big, and how many banks you’re seeing is hundreds and hundreds, if not over thousand banks. You look at community banks and stuff like that, but that’s the difference.

Still, 200 billion in assets, big deal. Then why did it fail? And maybe you know a little bit about this, but I want to bring everyone up to date, because you have customers that started withdrawing deposits and those deposits were beyond its cash reserves. So now it’s called a run on the bank. Look at Silicon Bank was forced to sell treasuries, which it’s supposed to be safe, but it’s supposed to sell them at billions in losses. So this safe asset, and I love how they put this, they’re forced to sell this safe asset for big losses. That’s what you’re hearing. I mean, I don’t think you ever see that in the same sentence, I tweeted about that. Massive losses on safe assets. You don’t really see that.

But the Fed raising rates by the fastest and largest pace in existence, the price of these bonds crashed. If you look at pricing yields, they move inversely. You’re familiar with yields. Look at the mortgage rate. Look where it is now compared to where it was. Look at the two year where it was a year ago, where it was 0.3 or 18 months ago, 0.3, 0.4, where it went as high as 5%. Again, now these rates are crashing, where everything going on in the market. But as you’re seeing this unprecedented rise in rates, you’re seeing an ultimate decline, massive decline in prices. The price of these bonds crashed. So that’s not really a big deal, if you hold to maturity. Whether it’s one year, two year bonds, it’s not a big deal. But when you’re forced to sell treasuries, like all the banks that failed, including Silvergate, Signature, and now Silicon Valley, maybe we should short all the banks that begin with the letter S, but that results in massive losses.

Also, more than 85% of Silicon Valley Banks’ deposits were not insured, and it doesn’t mean that this is a bank that was taking on excess risk. Yes, they were, but the reason why they weren’t insured, and remember the government, FDIC only ensures up to 250,000. Silicon Bank is the boys club, the Rich Men’s Bank of Silicon Valley. Hedge funds, startups that raised millions and millions and millions of dollars. This is the bank you have to use, right in the heart of tech country. So most customers had large balances at the bank that were well above the $250,000 threshold. So this is much different than say ’97. 96% of the rest of the people who bank in the US where their cash balances are below 250,000, and if they’re a little bit above, they might have different accounts at different banks. I think some banks allow you to spread it out, whatever, for different accounts, but not here. Raise $20 million, it’s at that bank.

Well, they’re going to insure a small part of it, which sucks for investors, especially now, who are getting destroyed, owning some of these banks. That’s the way the system works. So now this risk is spilled over to numerous mid-tier and smaller banks that don’t have that capital, forced to sell these so-called safe assets, right? Safe assets, treasuries are usually safe, but again, these are unprecedented times. I’m going to get to that in a second. You have to realize, unprecedented times, this is something we haven’t seen. This is something that hurts the market. This is like Black Swan, things that you cannot see, that you cannot anticipate. When you’re anticipating, “Oh, you know what? We might have a recession,” and you see Meta come out and lay off employees first round, then another round yesterday or whatever, another 10,000 employees. I mean you could see it coming, okay, we see a slowdown in spending for our customer. You see it coming, you could adapt, you could adjust.

The problems with 2008, 2009, you didn’t see it coming. Nobody knew the full extent. No one knows that everyone, all the banks just reversed their position, insured themselves to AIG, which took on all the risks. But once AIG failed, the whole banking system would collapse. Same with COVID. Nobody knew the extent of COVID, especially early on. I mean, people were dying like crazy, because especially in New York where you saw this thing spread, we started putting older people or people with COVID in nursing homes, not knowing that that’s the worst place you could actually put them. So the death rates were like, the infected were like 10%, which is crazy. So you had this chaos of people dying and holy shit, and lockdowns. I get it, right? Nobody knew the extent. That’s what causes these market crashes.

Now, nobody had this. Nobody saw this coming. Hey, these guys own treasuries. You could easily see it and the treasuries are safe, but not if you’re forced to sell them, if people suddenly removed their deposits. And in the world of social media, you could spread all kinds of news about fraud, about how you should get all your money out of this bank immediately, and once that spreads, it’s easy to make a run on the bank.

So they found out to do something about it, and this weekend they unveiled a new lending program called the Bank Term Funding Program. Pretty direct name. BTFP provides no risk funding for loans up to a year. That eliminates the risk of these banks being forced to sell their treasuries at huge losses. They announced this over the weekend. So everything’s cool, everything’s fun. This isn’t 2008, we’re okay. But the Fed had to do something here, because it still makes it easy to make these runs on banks and now you have everyone looking. These stats are readily available at the banks that had the least amount of deposits insured. And then you see First Republic, East West Bank, or First Hawaiian. Comerica, names that are getting smashed right now.

And you look at First Republic on Thursday. So Silicon Valley, shit hit the fan, right? Wind up going under out of nowhere, surprised everyone. And then First Republic, if you look at their trading, it crashed 65% last Thursday from $95 to 47. Rebounded on Friday back to 90 again, everything’s okay. On Monday, it crashed to low thirties. Then a Fed facility coming out. It was like, “Oh, we’re okay.” Tuesday, it rebounded to 50. This is First Republic. This is the last five trading days, and today it’s down another 15, 17%, in the low 34s. Again, trading near its lowest point. The back and forth. Again, you can watch CNBC, and Fox Business, even the Today show, learn what’s going on.

But here’s some of the things that you won’t hear. The Fed is, and I don’t want to say this word, but it begins with an F and it’s a curse word. And they are effed and nobody’s talking about this. Everyone’s like, “Oh, the lending facility, everything’s going to be flying with these banks.” No, if they were fine, you wouldn’t see what’s going on right now. Today, banks are getting crushed again.

Now remember last month, what did the Fed say? Well, you can go back and look at the history over the past year, but especially the last month or two, about a month and a half ago, this is February, early February. The Fed was, “Hey, things are great. We’re seeing inflation come to disinflation. Disinflation, we’re great.” Then all of a sudden out of nowhere, a lot of the indicators show that inflation’s coming back into the market. So now, the Fed recently says this a couple weeks ago, about three weeks ago, their primary goal, no matter what, “No matter what, our primary goal is to get inflation under control. That’s our primary goal. Everybody should know, don’t even think about lowering rates this year. That’s not going to happen.” The terminal rate went higher.

Okay, this is based on the recent rise in so many indicators, showing inflation. Where used cars started to surge again, food, energy, prices. I don’t know if you’ve seen the rise at the pump. Yes, a lot of these stocks are getting crushed over the past few days. Gasoline prices started to go back up. Services, even rents. The Fed knows that, “Hey, you know what? We’re going to have to raise more aggressively.” Which kind of surprised the markets. Thought we’re done and everything’s fine. Maybe one more 25 basis point hike.

As you fast-forward to today, the Fed’s top concern, “Hey, it’s no longer inflation.” Amazing. Their top concern is shoring up the banks, provide liquidity for them, which is a bailout, no matter how our politicians want to spin it. I love if you Google this, I mean, the word got out to liberal media. New York Times, Forbes, Financial Times, quick to write stories yesterday and today. “This is not a bailout. It’s not a bailout. No way.” It’s even hard to find stories on it. It’s funny, but the Fed lending facility, when you go on Google, try to search. It’s just funny, right? All of them at the same time. You really know there’s an agenda when you see the same story out in the same media outlets, all at the same time.

But it is a bailout, because it provides liquidity or provides a special facility to banks, to acquire capital they couldn’t otherwise access under normal market conditions, while also making sure uninsured depositors get their money back. That sounds like a bailout to me. They say, “Well Frank, it’s not causing taxpayers any money.” Maybe not directly, but it is going to result in much higher inflation, which is essentially a tax on everyone. But we have higher inflation, higher costs for everyone is a tax on everyone and that’s what’s happening here. Because the Fed is saying, “Well, maybe we’re not going to raise rates this time around,” which is what? Next week. We’ll see.

I mean, the back and forth is incredible. I mean you’re looking at the two year, where’s the two year? The two year is, I mean you don’t see this during normal conditions. One, you don’t see go up to five in less than a year from almost nothing, and then go to four and then under 4% in a couple weeks. This isn’t normal, guys. You don’t see this on normal conditions. Okay, back to the bailout. It’s not a bailout. It is a bailout, guys. It’s a bailout. Man, how are you looking? It’s a bailout.

Now you look at Silicon Bank, by the way, who we’re bailing out. They paid bonuses to employees just hours before the bank collapsed. Also told their employees who agreed to stay on during this crazy time, that they’re going to pay them one and a half times their normal pay. Silicon Bank also gave over $73 million to the Black Lives Movement. Black Lives Matter movement. We’re bailing them out. This is the bank taxpayers are going to be bailing out. You may say, “Well, it’s not, directly.” It is, it is. Indirectly, whatever, it’s going to result in a higher tax and it is a bailout. Not a bailout for the shareholders. Okay, that’s fine. It’s like Fannie and Freddie, conservatorship still. Billions and billions of profits those guys make for the government. We took those over, but this is a bailout. This isn’t politics, this is a bailout.

The experts are out there, they’re quick to point out, “Hey, this is in 2008, 2009. It’s not that type of crisis. It’s limited to smaller banks, so don’t worry. We’re not in 2008, 2009, so you don’t have to worry.” Wrong. Very, very wrong. This is much worse, much worse, and not from the standpoint that the major banks need bailouts. The majors are fine. Instead of being three times larger than they were in 2008, after this, it’s going to be about five, six times larger. You look at Bank of America reported that it saw over 15 billion in deposits over the weekend. Everyone going to go to those big banks, make them bigger, bigger, bigger, right? It’s awesome. But if you look during the credit crisis, 2008, 2009, the Fed had the ability to go balls to the wall, spending unlimited amounts of money to backstop the system.

They could do this. Why? Because inflation was super low and it stayed low, surprising the Fed for such a long time. They were expecting inflation, but when you look back, you gave the money to the banks and the banks just didn’t lend out that money like crazy. A lot of it, again, they couldn’t provide bonuses for a while, whatever, so they just bought back a shitload of stock and raised their dividend incredibly. The balance sheets are strong, absolutely, but that kind of controlled inflation, which surprised so many economists, and that’s why you saw rates stay low for such a long period of time. Wow, we still have inflation, keep them low. What’s the risk? Just keep them low. Today, different circumstances. Inflation is running wild. Running wild. People may say, “Well, Frank, it’s moderating. CPI shows it’s not that big.” It was 9%. Now it’s 6%. 6% inflation is massive, is massive, 6% inflation.

If we went up to 6% and we’re still at 6%, we’d be like, “Holy shit.” But the fact you went from nine to six, you don’t want to cheer that on. I mean, 6% is still the highest inflation rate we’ve seen since the eighties. It’s still much, much more, what is it? Three times the Fed’s target of 2%. It’s much, much higher than the unemployment rate. We just kind of have a gauge that some economists look at and say, “Hey, hopefully employee rate goes higher and inflation comes down.” Well, it’s not.

Clearly, the policy has to be more and more, and more tightening, because we’ve seen inflation crop back into the market. And you’re seeing it as well with the bills you pay. You’re not seeing, you’re not paying less for anything right now, compared to last month, compared to three months ago, no matter what they say. “Inflation’s coming down.” What, are you kidding me? Again, even gasoline prices. Just look at the pump. 3.50 again in Florida, down to just under two not long ago, or just under $3, in the high twos, not long ago. You’ve seen that creep back into the market.

When the Fed can print money and continue to print money, or what they’re doing with it with this new banking facility, providing this safeguards for these banks, it’s going to result in much higher inflation, which is going to crush the markets. It’s the biggest risk to the markets. Of course, you have to shore up to banks and make sure that people’s assets are safe, but it’s going to crush the markets. That’s why the Fed is effed. I’m not going to curse. And by the way, this is not just a US problem. Gold banks own over seven trillion in treasuries. Some may be forced to sell. Look at Credit Suisse right now, down another 15% today, down to $2 a share, all time low, you got crushed over the past few days.

Look at their bailing bonds, they’re called, which basically, get wiped out, the bank goes under, were trading at 72 cents on a dollar on Monday. They’re trading at 45 cents today, showing you that things are getting worse. So those of you believe that, “Hey, the Fed’s got our back and the banking system’s fine.” If it was fine, you wouldn’t see what’s going on right now, where a lot of the banks are getting annihilated again. If you’re looking at Credit Suisse and you’re looking at resulting in a lot of Euro based banks, seeing their stock prices fall. I’m not sure if you’ve been following what’s going on in China and their banking system, and the real estate crisis they’re going through that nobody wants to talk about. It’s much bigger than what we’re going through in 2008, 2009. Holy shit. Now these guys, even they said it’s a tsunami, once in a lifetime, and it’s a disaster there.

If you’re looking at all the statistics from China, it’s been terrible. In terms of opening up their market, their CPI/PPI, everything is coming in much lower than expected. But if you’re looking at, that’s why it’s much more dangerous compared to 2008, compared to the COVID crisis, because back then the Fed wasn’t limited. “Let’s backstop everything, do whatever we want.” Now they’re limited and yes, they could spend money. Yes, they could bailout. Yes, they could provide more facilities or whatever if things get worse, but it’s going to result in much higher inflation, and that’s leading to tons of uncertainty because who knows what they’re going to do at next week’s meeting? Remember, the Fed has been predicting what it’s going to do. The Fed Fund’s future has been right, with 75 basis point hikes, with 25 basis point hikes, they’ve been dead on, dead on, dead on.

Well, I mean look at the last few days. Few days, leading up to this meeting. Or even if you look back, say four weeks ago, it’s, “We might not even raise this meeting,” and then all of a sudden we’re like, “Okay, 25 basis point hike.” And then we saw all the data come out in the past couple of weeks, where the Fed futures were pricing as 60% chance of a 50 basis point hike. And today if you look at those futures they’re pricing in, a high probability that the Fed will not raise rates at all. This is just in weeks’ time. It doesn’t get more uncertain than that. And people going, “Oh, they have to raise by 25 basis points, otherwise they lose credibility. It’s not going to be 50, but maybe they shouldn’t do anything, because look at the banking system, what’s going on.” But now you have the Fed backed in the corner, which you normally don’t see.

So in 2008, 2009, they said, “Okay, that’s it. Get all the banks in here providing trillions in capital in the system.” Well, it was hundreds of billions back then. Now it’s trillions today. But it’s crazy. People tell you, “Well, comparing this market and saying it’s not 2008, 2009 type credit crisis, you’re right. When it turns to the banks, the large banks especially, are much more funded.” However, the consequences are going to be much more severe as an investor because you do not have the Fed there anymore. Something we’ve been saying for over a year. You’re used to the Fed being there. I mean, Silicon Valley Bank, it’s a sign of the times.

Are you looking at, these people believing in technology? “Tech’s going to grow forever. There’s very little risk. Might see a minor slowdown but not a big deal.” Remember hearing that? Remember hearing that about the housing market in 2006, 2007? “Housing will never go down. It never goes down. We’re fine. We’re fine.” Even though it’s up 25%, housing annually for four straight years, we’re fine. We’re fine. Even though over the past 10 years we’ve seen market caps go up for the large technology companies by seven to 10X, a trillion dollar valuations, but we’re fine. It’s okay, but if you’ll get Silicon Valley and those guys, most of those companies have only operated in a zero rate environment. When money was super easy and projects on cocktail napkins received 20, “Yeah, that’s a good idea. Here’s 20 million in funding. Okay, everything cool? All right, you’re funded, you’re good. Let’s see where this goes.”

And these conditions existed for over a decade. That’s what you’re used to. If you have 10, 12 years of experience in this market as a tech executive, you’ve never lived through times in a high interest rate environment. You have no idea. Kind of like the dot com companies when they got wrecked. You have five straight years leading up to what? March 2000 when, “Hey, this is the future, these guys, nothing will ever happen. Doesn’t matter if they don’t make money, who cares?” And they got wrecked.

But from a common sense point, which that’s what you have to put yourself in, that’s what makes you smarter than most economists who look at charts, who look at figures. Makes you smarter than AI, makes you smarter than anything, from a common sense point. You really believe that a government can print 11 trillion in 18 months? Our Fed can raise rates by the fastest pace in the Fed era, while also shrinking its balance sheet by trillions of dollars, while also trying to control the highest inflation we’ve seen in 40 years, and that there will be no consequences? Do we really believe that? Soft landing. Really?

I mean, I point out charts all the time through this podcast, now Wall Street Unplugged Premium, we highlight all our data, all our charts and everything. There’s things that are happening that never happened in the history of the market, and we’re in extremely dangerous times. Stocks are more expensive than at any other time since the dot com bubble, when you include where interest rates are. The equity risk premium, which is a risk reward, is terrible right now. Horrible. It’s basically how much money could I make for free, based on how much money am I’m going to make on stocks.

And if you’re looking at equity risk premium it’s at its lowest levels, talking about today where rates are really coming down, but you can earn 5% for free and maybe six and a half percent on stocks. Why even take that risk? It used to be four and a half percent, 5% on average, that equity risk premium. It’s like one and a half percent. Again, before today where rates are get getting crushed. So risk reward is terrible. We’re seeing an inverted yield curve which proceeds every single recession. Not only that, we’ve seen it at the largest amount since the eighties. It’s not just, “Oh wow, we dipped here,” and even when it dips, that’s when we saw the last two recessions, COVID and 2008. That inverted yield curve wasn’t that wide. That’s now, holy cow. I mean again, before this week, we’ve seen at levels we haven’t seen since the eighties.

Seen tons of liquidity come out of this market due to Fed tightening. Mortgage rates are more than double they were a year ago. It was over 7%. I think they’re at 6.4, 6.5-ish. Where home buying is unaffordable for most Americans right now. We all know housing is a major driver of economic growth. Just look around your house at every single item, every single thing that you purchase. Buy a new home or you are moving or whatever. It’s you’re taking that out of the economy and we’re trading at the valuation as everything’s okay.

China, the growth driver of the world is terrible. Again, all that data surprising to the downside. “Oh, we’re reopened. Everything’s fine.” Are you kidding me? Guys, check your sauces. Go deeper. There’s people really covering this stuff. Things are not good in China. They’re not good in China. You may see stocks rise and people say, “Oh, well this is going, China’s reopened, so this is going to get better.” I don’t know. Let’s see. Let’s see what we hear from Nike. Let’s see what we hear from Las Vegas Sands. See what we hear from Wynn. See what we hear from, I mean most companies, lots of companies, Levi’s, tons of companies with exposure to China, that real estate crisis, it’s again, it’s bigger than ours was in 2008?

That’s China. What about Europe? Still seeing massive inflation. Europe growth is nothing there. How could we be trading 18 times forward earnings on the S&P 500 and over 23 times forward earnings on the NASDAQ? And these are huge premiums to historic valuations, especially when you account for interest rates, when there is almost no growth in the marketplace, other than if companies could raise prices, which is inflation. So I’m not sitting here telling you to sell everything. You see lots of stocks, they’re getting fairly punished, especially during this crazy volatility, including some banks. But what I am saying is, you need to have insurance on your portfolio.

We push Moneyflow Trader, a product that we have. Genia Turanova buys long-dated puts that absolutely surges in times like this, or times that we’re going to see for at least the next 12 to 18 months. And we’re not going to see lower rates or the Fed lowering rates. They can’t do that where inflation is, where inflation’s going. They can’t. And Genia’s an expert at this. I always say, “Well, try to learn by yourself.” It’s difficult.

I mean, I turned around last week where we bought a put in Dollar Stock Club, which is part of Wall Street Unplugged Premium now. We just launched it. Daniel and I do podcasts. It’s part of Dollar Stock Club. Again, newsletter. We have trades every week, lots of great services in there. People love it. And it’s on a super expensive tech name. Timing is pretty good on this and I spoke to her, because she goes much more deeper into the analysis of implied volatility, what the expected return is, which allows basically, chooses the perfect put. And it wasn’t the one I was going to choose.

And it was funny where she’s an expert at this and she’s like, “Well, what kind of returns are you looking for? Okay, then we’ll go for this one. Okay, this is better. Don’t go too far out of the money.” So having that person there, you don’t have to know what implied volatility is, whatever. She tells you exactly what the trade is. But for MFT Trader, Moneyflow Trader, we lowered the price by 90% for a three-month trial, which is only $500. It’s not for everyone, but if you have over $75,000 in your portfolio, which includes 401ks, this is a must. Not just for us and selling a product or whatever, but understanding how to protect yourself.

And you might say, “Well Frank, 75,000, a hundred thousand is a lot.” If you are in your mid-forties, you probably have over a hundred K in your 401k, and just by constantly putting money in there. You have to learn to protect yourself. You may say, “Frank, well what about the banks?” It didn’t matter. We could have still held on to some of those banks. Listen, this bailout guys, they’re not bailing out the stockholders, they’re bailing out the pot. They’re bailing out the customers at the banks. See, that’s why you’re seeing the stock prices for these banks get annihilated. So you have to protect yourself because there’s things, there’s consequences that we don’t know, especially this, treasury’s supposed to be safe now. Well, now we have to sell them to cover your losses. You have to sell them at steep, steep losses to cover those deposits.

We’re going to see more of this. We’ve seen the foundations crack. The charts I provide you. Some of the things that I see. Great research out there, this is what I do for a living, again, for 30 years. When I see things that I’ve never seen before and people highlight this, it’s time to worry. You can say, “Well, stocks are doing okay.” They’re not cheap. Where’s the growth coming from? “Oh, inflation’s going to come down. We’re going to start lowering.” Inflation’s not coming down anymore. It’s going back up in so many areas. The Fed was going to raise by 50 basis point before all the bank failures.

I don’t know what they’re going to do this next session, to ease the markets, but now we have the debt ceiling coming, which is going to be a nightmare, which could be a great play to short the dollar, especially if these guys go back and forth and might result in a downgrade of credit. Remember, the dollar goes down. A lot of things do well when the dollar goes down. Let’s see. But by providing even bigger discount, then we have the Fed. Nobody knows what they’re going to do next week. They’re all over the place. Usually, we know exactly what they’re going to do, a week before or two weeks before. We don’t know of how much they’re going to raise, but if you’re looking at times where, these crazy times, there was some positions in Moneyflow Trader that turned 6X, 4X, 3X.

It’s not just like, “Hey, we’re hedging on portfolio.” No, you can make an absolute fortune. That’s what we did during COVID, even during times in 2022 where the market really sank. Again, this is a compliment to your portfolio. We even have a put in our portfolio that we have for Curzio Research Advisory, and it was down 80% and 6%, it’s down less than that. Now it’s nine months out. I’m not worried about it. It’s so put 5% of your portfolio in here. Why? Because if that’s down, the rest of our portfolio holdings are doing better, they’re doing great.

But you want to have that because that put can generate, could be worth 25, 50% of your portfolio, especially if the market really collapses. And this is what you want to do. You want to have money at the bottom of this market when the Fed comes out one day, which is a while from now and well into next year, “All right, we’re going to lower rates. Stocks are cheap.” That’s where you want to have money to invest. Unfortunately, our minds are programmed to invest at the highs when things are most exciting, sell to lows when you’re most nervous, but stocks are still very, very, very expensive. And by the way, those earnings declines, what was keeping them up is earnings from oil companies, and oil prices have been steadily, again starting to rebound a little bit, but are down.

Okay, S&P 500 earnings are going to be negative. There were negative last quarter. There’s going to be negative this current quarter and negative a quarter after. Again, very little growth in this marketplace. Yet stocks are trading at these levels, that assuming everything is going to be okay, and as we could see here, even as the Fed comes out and provides a lending facility, and a backstop and a bailout, you’re still seeing a lot of banks get nailed. There’s a lot of problems under the surface that are going to, just those cracks in the foundation. Again, there’re going to be consequences for what the Fed’s doing. The difference now between 2008 is the Fed can’t go balls to the wall. Sorry, using that expression in terms of lowering rates, providing lots of liquidity. It can’t, not where inflation is. It’s a different market. It’s a market we haven’t seen in 40 years, that most people on TV and analysts and some of them have studied a little bit.

Most just believe, “Hey, it was a buy the dip market for 12 years. Just buy. It goes lower, buy. Buy technology, just buy. Bad quarter, buy, buy, buy, buy. No matter what, it’s going to come back and you were right.” You were right because there was that Fed put, that bid underneath the market, zero interest rate. It’s not there anymore and that’s got to scare the shit out of you. And it should, but you need to learn how to protect your portfolio and even make a killing if the market crashes, which those odds have increased dramatically over the past few days, as confidence is waning and that’s what causes crashes. It’s uncertainty. It’s not like, “Oh, we’re expecting recession.” Everybody ain’t saying that. “We’re expect a recession. It might not happen this quarter, it might happen next quarter. It might happen early next year, but everyone’s kind of expecting that.” That’s on the table if we’re talking about it.

Two weeks ago, we weren’t talking about bank failures. We weren’t talking about treasuries not as safe as you think, because banks are forced to sell them. Weren’t talking about run on banks. This is sentiment. This causes fear. People close their wallets. You’re seeing massive layoffs, especially across the tech sector. People worried about not having access to money at their bank. That’s what they’re worried about. Even though they don’t have to worry about that. That’s what causes crashes. When you see that sentiment like, “Oh my God, holy cow, we got to get out of this market.” And right now we’re at that tipping point. It’s not like stocks are pricing this in, trading at 18 times forward earnings. That’s the high valuation, at the high end of the past 10 years. Except over the past 10 years, what did we have? Zero interest rates. We don’t have that anymore. We should be trading at 15 times. It’s a big difference from 18, 18 and a half times.

Because of Moneyflow Trader, I didn’t realize this. We took that offer offline, and the reason why I realized this is because several listeners emailed me in the past few days to say, “Frank, Moneyflow Trader, is it available? Is it available for a special price?” Because this is a $5,000 product. We lowered it to $500 for three months. So if you’re interested in it, interested in trying it out, email me frank@curzioresource.com. You won’t be disappointed, okay? When you have market positions where from December through early February, the first week in February, you’re not going to see these positions do well because the market was in bull mode and rebounding.

But again, what we’re going to see constantly, the volatility where it’s going to work in this market, it worked pre-December, it’s going to work numerous times going forward, the next 18 months where you’re going to see more and more cracks where massive declines in certain stocks, massive declines in certain industries. Industries becoming totally out of favor. That’s where you want to be. You want to be buying puts on this market. Again, if you’re interested in that, email me, frank@curzioresearch.com, I’ll provide that offer. It’s not online right now. For you, if you’re interested. If not, no worries.

Also, tomorrow’s Wall Street Unplugged Premium. It’s going to be our third episode and lots of positive feedback on it. Dale and I are going to share ways to protect yourself by getting exposure to two sectors on the long side. He should have exposure to these if not immediately, and both are in an upturn right now. Also going to provide a list of banks that the least amount of deposits, insured names that are not being mentioned in the media that much, you’ve seen a few of them being mentioned, who can see their stocks get nailed. Remember, the government is providing liquidity to these banks through the new facility.

It doesn’t mean stockholders are protected. It’s a big difference. Doesn’t mean the stocks can’t crash. It just means those customers with deposits, even if they’re over $250,000 are going to be protected. But they’re not protecting the shareholders or the stocks. And you want to see proof, is just look at the market today. I don’t know where it’s going to be. I’m doing this about noon Eastern and we’re down a lot in the markets. We’re seeing banks getting crushed again. A lot of those risky banks that got crushed, that came back, that got crushed. That came back. They’re getting crushed again. Credit Suisse is getting annihilated again, despite the Fed’s new lending facility. And finally, Daniel and I going to come up with company trade to play with this volatility in the financial sector. We like one name that’s been unfairly punished and you’re going to see a lot of that, because there’s winners and losers in this throughout all these sectors.

I mean, you’re not going to see the total addressable market. You see, total addressable market is how big the market opportunity is and you want to get a bigger percentage of that. Well, the total addressable market in technology and other things where you have free money. It gets bigger and bigger and bigger, the total addressable market. Now they’re starting to shrink, but the larger players and the ones with great management teams are going to take market share away from the ones that are going under. And you’re seeing a lot of bankruptcies. The bankruptcies in, there’s a sports platform I believe, I just saw, I mean, just like three or four of them I read about in the past five days. Just bankruptcies out of nowhere. You’re going to see that, more and more and more. There’s a lot of companies that are struggling. Others are going to do great.

I mean, look what Meta’s doing. Cutting costs, focusing just again, not a time to be aggressive. Now, everyone’s following suit and what do you think is going to happen? That’s where it starts to get rewarded by cutting more. When they cut more, they’re spending less. If you’re spending less, that’s less economic growth. Yeah, we’re trading again at a multiple of the stock market that’s through the roof, assuming that we’re going to see this massive growth over the next 18 months. I don’t see it. I don’t know. If you see it, email me. I don’t know. Maybe I could be wrong. Let me know. I’m trying to find them. I’m trying to find bullish catalysts. Very difficult. The only bullish catalyst is, a lot of good names get hit when you see things like this happen, even in the banking sector.

Daniel and I are going to take advantage of it. This is a great, great name that’s gotten unfairly punished, and you’re going to be able get it at a nice discount to where it was trading. It’s a really good name. It’s trading, going to be published in Dallas Stock Club, again, which is part of Wall Street Unplugged Premium. That’s our new service, which is just $10 a month. That’s it. You can subscribe by going to wsuoffer.com. That’s wsuoffer.com and thank you, for all of you who have subscribed. You can definitely see the difference in podcasts, you see the difference in the analysis, the ideas that we’re generating.

Also, we are going to have an awesome interview for you, and this is going to be an exclusive. That’s going to be behind Wall Street Unplugged Premium. I’ll let you guys know a little bit more about it. If you’re interested in listening too, we’ll have little snippets and stuff like that. But I’m actually doing this interview tomorrow. I’m going to release it on Monday, and it’s someone that I think everyone would be interested in hearing from. Very popular name, very controversial name, and Wall Street Unplugged Premium, you’re going to get to listen to that probably early next week.

So guys, that’s it for me. Questions, comments, I’m here for you. Frank@curzioresearch.com. I’ll see you guys 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.

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