I’m back in the office after attending a major industry conference for the financial newsletter business.
I start today’s show by recapping some of the biggest moments from the event—including my pitch about tokenization. I share why the buzz is building around this trend… why it’s a win-win for investors and businesses alike… and why it’s set to be the biggest trend of my lifetime. (And behemoth asset manager BlackRock agrees.)
Plus, I explain the advice I gave my colleagues about podcasting—and why they shouldn’t do it.
Next, I highlight several factors weighing on the market right now—including higher interest rates… some ugly data on housing starts… and investor sentiment turning bearish. But despite these risks, I share why we could see a pop in the market.
As Q3 earnings roll in, I break down what investors should be watching for… and how higher oil prices and interest rates could impact next quarter’s results.
Don’t miss tomorrow’s WSU Premium, where Daniel and I will discuss big banks… oil stocks… and a new Dollar Stock Club pick to play rising commodity prices.
- Tokenization is the biggest trend of my lifetime [2:30]
- Why podcasting isn’t for everyone [16:13]
- Why stocks could rally, despite the growing risks [28:20]
- The most important numbers this earnings season [31:20]
- Don’t miss tomorrow’s WSU Premium [36:20]
Wall Street Unplugged | 1083
The biggest trend of my lifetime
This transcript was automatically generated.
Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on Main Street.
Frank Curzio: How’s it going out there? It’s October 18th.
I’m Frank Curzio. This is the Wall Street Unplugged podcast where I break down the headlines and tell you what’s really moving these markets.
Glad to be back.
Busy week Back for a meeting in Cambridge, Maryland.
Had no idea there was a Cambridge, Maryland until last week.
What a beautiful place.
Right along the coastline.
Stayed a really nice Hyatt, which is Ride of the Water.
And that’s where Agora, who’s a big player in our industry, held its publishers’ round table.
This is basically a meeting among the top publishers at Agora, along with a few outside ones that they invite to discuss the state of the industry and new ideas.
And you compete against higher interest rates, right? And you get 5% for free.
Some people feel like they don’t want newsletters anymore, unless you’re really good at your job and you’re providing exceptional value.
And going to this meeting wa was real special for me.
I mean, I know a lot of these people, the other publishers, you know, it’s a tightly knit industry.
It’s was like four gm, Tesla, Rivian, you know, major auto manufacturers meeting in, in a closed door session.
I think it was about 35 people or so.
They put a lot of great relationships, learned a ton from those guys.
Just brilliant in terms of marketing.
And, and I mean, these are firms that are generating, you know, they’ve generated at the peak, well over a hundred million in sales, some over 200 million in sales.
So like a little dot right compared to them.
But to be invited to that meeting, meeting that closed door session, it, it was really cool.
It was really cool.
And they had a lot of respect for me, which, which, you know, I, I really appreciated.
I have a lot of respect for them.
But just learning from those guys and talking to them and future partnerships and, and, and things like that, it, it really creates value for all of us and, and especially the customers, right? Because that’s what you want.
You wanna put out good information in front of these people.
And I hope they learned a lot from me.
They’re looking for new ideas.
And I told ’em, Hey, you know, this idea is outside the box.
Every time I explain to the people, they’re like, I don’t know.
I don’t get it.
And I understand that maybe I have to do a better job of explaining it.
And I try, I try to break it down.
And you guys know, right? Educate ’em about tokenization.
What we did here, as many of their companies, divisions of Agora are much larger than ours.
And they could raise a lot of money by tokenizing their business.
And it makes sense.
And, and we’re huge in this industry where if other companies wanna grow, they have to raise money.
So our list is different.
Everybody has, you know, their own list.
You have, you know, Starbucks has their list, Walmart has their list, whatever company has their lists.
We have lists of investors that are looking to invest in really cool ideas.
That’s why we were able to raise money.
Plus I know the customers, their subscribers want an equity stake in their business.
Who doesn’t? You provide a perk with anyone that comes in and it’s a credit investors.
A year later you could trade on a tZERO or something like that.
And you’re seeing this build up tokenization really starting to take off.
Just guys do a Google search.
Just do a Google search, put tokenization and hit news in Google.
Just look at what’s come out in the past three months, four months.
I mean, you’d be blown away by the stories.
I mean, this thing years ago, early, I don’t think it would’ve been early if we didn’t have COVID and then we had SPACs and all this other stuff that competed.
Now we realize SPACs are s**t the garbage.
But this trend makes a lot of sense.
Again, you can provide perks of people that come in.
Those are credit investors where they get their top tier membership for three years.
But it’s a good way to really have your best customers participate.
And that’s what everybody wants.
Even at your job.
What do you want? How do you, how do you, how do you keep employees? How do you make them happy? You know what? They wanna participate in the growth of the business.
Make that possible.
Make that possible.
This is a way to do it.
Those are much better to have a tokenized structure, to be part of One of the biggest trends I believe that any of us are going to see in our lifetime.
You are like Frank, you’re talking your book.
I’m not talking my book.
Let’s go over the numbers.
And you look at, every bank is launching their own blockchain right now, tokenize most of their trillions in assets.
It makes sense from every point of view.
If you have an illiquid asset of commercial real estate, you sell off 20% of it.
Say it’s a hundred million dollars.
I give this example a lot.
You sell off 20 million, now you get a $20 million check.
You could invest in more commercial real estate, you could do anything you want with it.
But now it’s liquid.
You have investors who would own real estate, commercial real estate for the first time ever.
You could provide a nice yield on it because you’re probably generating nice income.
Seven 8%, which is pretty much, you know, you don’t wanna use the word guaranteed in my business.
You get the SEC knocking on the door.
But you know, in the right areas, assuming your commercial real estate isn’t, you know, filled with, you know, five horrible retailers or whatever it is.
And now a year later you could trade this and the person who owns the real estate at valued at a hundred million dollar, it’s gonna be valued more.
Because now it’s seen as a publicly traded security or private security that trades publicly to, to use the right term.
’cause the s c won’t get off his ass and just regulate this s**t already.
Now think about that.
The average business that you know trades at what? That’s why you go public, get that high valuation cash into the business, you grow faster.
If you look at private, they trade maybe three times earnings.
But if you’re tokenize, you’re gonna trade six, seven times earnings.
So even though you’re selling off some of the equity and you still control it, right? It’s not like you’re giving away more than 51%.
You’re getting a $20 million re check on a hundred million dollars business.
That a hundred million dollars business in that commercial real estate is now gonna be worth a lot more than that.
This is why it makes sense.
I’ve covered trends all my life, all my life.
And the ones that are successful and the ones that make sense are the ones that make it easy, much easier.
If it’s a technology for all consumers, something that’s costs less and something that benefits all parties.
I mean, you can think about it.
Why does Airbnb work? Why does Uber work? Why has the metaverse not taken off yet? Because you have to wear the big masks.
What it changing? Zuckerberg’s coming out with the glasses that I sampled for five years, like some electronic show, which never, ever work.
It’s just funny.
It’s like, oh, we don’t have this working right now.
Just they don’t.
If he gets this right, that’s it.
’cause people are gonna wear regular glasses.
It makes it a lot easier.
It’s why EVs, it’s not easy to charge a car.
There’s markets for both of those.
But we’re talking about things that make sense that are going to be disruptive.
If you’re looking at this trend, and I’m saying it’s gonna be the biggest trend in anyone’s lifetime, there’s over 16 trillion of liquid assets that can become tokenized.
That includes real estate, bonds, corporation.
Reason why New York Stock Exchange sees this as the future in trading on exchanges to Ry Fink at the dominant E T F industry.
BlackRock said this is the next biggest trend we will see.
Franklin Templeton, CEO, Genia Johnson, this is at CNBC’s delivering Alpha conference last month.
The tokenization is securitization on steroids.
They’re all in Franklin Templetont, 1.5 trillion in assets.
Put this in perspective, everyone believes AI’s, the trend you gotta get in AI is it’s $120 billion.
That’s what it’s, that’s the market size right now, while the market cap of tokenized assets is already close to 200 billion and you never even heard of it yet, most people don’t know this.
You have, because, you know, some of you participated.
I talk about tokenization.
That’s what we did for our business.
Again, we trade on tZERO and I think that volume’s gonna increase.
Liquidity’s gonna increase a lot more.
You can see a lot more issues.
But you look at AI in 2030, by most estimates supposed to be around 500, $600 billion business.
That’s by 2030.
So tokenization is 25 x AI of the size of AI.
Wait, me, I cover trends.
You guys know Consumer electronics show.
You guys watch the videos.
The videos do live stuff.
I mean, you get into trends well before anybody else, sometimes a lot sooner than everybody else.
This is the biggest thing anyone has ever saw.
And it’s coming and it’s here.
So get involved.
But anyway, as, as a financial publisher, I’d rather be in the middle of the token is AC Trend with that structure or labeled as a tokenized company, then be labeled as a financial publisher, which we’re viewed on the same scale.
I’m not kidding here as porno and marijuana companies when it comes to credit card processors, that’s a pretty big deal.
And we have low barriers of entry.
Anyone could start their own newsletter.
Wait till you have a promotion that really works and you get it out and you generate a few hundred thousand dollars in a couple of weeks for the first time.
Watch what happens.
They shut you off.
We were shut off for a year, a million dollars for a year.
They did not give us a million dollars for a year.
Our credit card processor, we had to go through that whole entire, you know, how difficult that is and how to manage a business.
’cause they’re like, wait, what is this business? What’s going on? Right? How could you generate so much money? You’re a startup or whatever.
And that’s what happened.
And then, you know, eventually it takes a while.
You build an established credibility.
So we don’t have that problem anymore.
Credit card processors.
So low barriers of entry.
But when you get bigger in this industry and by bigger just, you know, 500,000 million dollars in sales, man, it is a nightmare.
But it’s also an industry.
Many investors, including Wall Street hate, they hate subscription based businesses.
They’re lumpy, almost impossible to forecast.
I mean, gap earnings.
I mean, think about it.
So when we get a new subscriber, it’s a liability when they first come on your list, it’s a liability.
It’s not gonna turn into an asset until 12 months later.
’cause technically they can cancel.
That’s why when you, when you look at subscription based services, whenever they report, we don’t say, oh, we’re generating revenue.
But it’s a lumpy business where you could generate a lot of revenue and then a little bit of revenue.
And that’s why they’re always like, oh, you know, try to have an advertising model.
This is with the street.com.
They hated the subscription business.
Why? Wall Street didn’t cover it? The CEO.
Then Tom Clark was like, okay, they wanna see us get into advertising.
That’s why you go to street.com.
There’s 5,000 freaking advertisers all over the place.
They just pop up like crazy.
And you’re seeing it all over all these sites now.
Which I guess is all right.
They’re forcing you to pay $5 a month without the ads.
But you know, there’s just like a hundred ads you can’t even get, and you gotta click 10 times to get through a story.
I mean, it’s a joke.
But that’s the analyst want, because it’s recurring revenue.
It’s easy to forecast.
And Wall Street likes analyzing businesses that are easy to forecast.
’cause they keep their job longer, right? That’s what it’s all about.
So picture this idea in our industry and and you’re gonna see it in a lot of different industries.
You know, if you take the time to sit down and learn about it, learn about the costs, and you know, even with your businesses, if you guys are interested, let me know.
But I could tell you the big thing is when you do this, you’re gonna have hundreds, if not thousands of companies doing this over the next three years.
And you know who they’re gonna come to.
They’re gonna come to me.
And they are.
And you spoke to, to the founder of one of the largest athletic companies in the world.
One of the largest undeveloped lithium producers wanted to tokenize their business instead of going public.
They wanted to do it this way.
I mean, I can’t tell you how many people reached out and it was crazy pre COVID.
We first did this and now we’re starting to get lots of questions on it again, which means what? Which means these are the ideas that we are gonna be able to invest in early that my subscriber’s gonna be invested in early.
And that’s really freaking cool.
I think that’s why you guys listen to me.
That’s why you subscribe to our products.
You wanna have unique ideas, you wanna have a different take on the markets.
You wanna have someone you could trust.
’cause you see the agenda going on on you see it.
I mean, they’re gonna report what they wanna report.
I mean, the best thing is when a company, when you hear a government, and this is what we’re hearing, right? Ever since Israel and Palestine is, is unbelievable, right? That, that, that what’s going on.
I don’t want to get deep into it, but we have governments saying that they wanna shut down sites because of misinformation.
That usually means that they want you to follow an agenda and they don’t want you to know the full story.
’cause everybody should know the full story.
And we live in a world where learning the full story, where for me, I wanna know what could provoke somebody to do what they did.
I wanna know that, okay, this isn’t war And it’s all, I mean, this is personal.
Oh my God.
I mean, I called so many of my friends, but you know, for me to get on a podcast and talk about that, it’s like, oh my God, do you support Palestine? Do you support, I just wanna know the story because if we know the full story, maybe we could avoid something like this in the future.
And I know this dates back for hundreds of years and it’s not gonna change.
And there’s strong feelings on both sides.
But not being able to learn the history about it or know about it.
Because our government, who’s the king of spreading misinformation, which we learned about COVID tremendously, right? Oh my God.
And what an agenda.
Let us figure it out for ourselves.
We’re pretty smart people.
I think we can identify what’s b******t and what’s not.
You have communities now, someone posts something, they’re like, oh, this is b******t, this is wrong.
You know, even you go on Twitter and, and tag it and be like, okay, this isn’t proven or whatever.
But, but you know, whenever I see a government come out and say that and say, oh, you know, well we’re worried about TikTok or Twitter or these, you know, constantly going after the organizations that really allow the most free speech.
They say, oh, we’re worried about misinformation, really.
Because when they say, say that, that’s them saying, okay, we want you to follow an agenda.
And that’s why I love doing what I do.
’cause you know, you have to go there.
You have to go to these places.
You have to research stuff, you have to dig in.
You have to find other sources, different sources.
Find the real story.
’cause when you do find the real story, you can make a shitload of money.
And that’s what I’ve done throughout my career.
And that’s what I love.
I love thinking something.
And then all of a sudden it, it’s something totally different.
Because I’ve done the research, I’m like, wow, holy cow.
I had no idea.
I had no idea.
I had no idea.
The e p a was trying to shut down a company because they said there’s rivers that go through it.
That’s, you know, what is it? Non dynasty shutting down one of these large, the the largest bilt golden copper project because of environmental concerns where rivers run through the property and go 150 mile plus into Bristol Bay, they’re gonna kill sockeye salmon.
And when I go there and it’s in the middle of nowhere, you have to take a helicopter.
I have to two planes of helicopter.
There’s no rivers there.
There’s no river.
I said, are you kidding me? They’re like, Nope.
That’s the report.
That’s what everybody says.
You’d be amazed.
And that helped me generate a lot of money on that company.
And also a good time when to sell it.
’cause both parties don’t wanna see that project developed, even though both parties have never ever visited that site.
I mean that, you know, it, it wasn’t surprised when I went to this conference.
They were all interested in podcasting, building communities.
There’s very few in our industry in the financial newsletter industry.
And they wanna know how to become successful at doing it.
’cause they see our model and saying, wow, you know, this is really, you have amazing community, amazing people.
And I gave them the best advice.
And I was honest with them.
I said, don’t do it.
Don’t do podcasts.
Don’t have your editors do podcasts.
Because to have a really good one requires total passion.
You know, I’m all in.
I love this stuff.
That’s what people are drawn to.
I don’t care if you hate something, if you don’t like a certain type of music, even if it’s like heavy Metal.
If you go to a heavy Metal concert and you see those guys on stage, you’re like, oh my God, I mean this passion, they’re into it.
They get lost in it.
And people are attracted to passion.
They’re attracted to it.
No matter what it is.
You can look at things, wow.
I mean, when people, it’s the greatest thing ever to see someone.
How entertaining is it to see someone who’s the best at something that they do? Tiger Woods, Kobe Bryant, Michael Jordan, Tom Brady.
I mean, you hate ’em.
You hate some of these people if you don’t like the teams, but you watch them because it’s like perfection.
It’s like, oh my God.
Again, that’s what people are drawn to.
And to have an editor and just go and say, Hey, you know, why don’t you start a podcast? Which is basically, they’re writing probably a few newsletters.
They’re traveling, you know, they should be, you know, doing the job.
They’re being paid to, paid to do, but you’re putting more work on their plate and it’s something that you’re probably not gonna pay them for and they’re not gonna be able to monetize it because it takes yoUAWhile to build up an audience.
You can’t do that overnight.
So I was honest, told ’em, listen, most of your editors, you know, they may give it a go and some of them have, but they wind up giving up probably a few weeks later.
A few months later.
I see it all the time.
And I’ll help them.
I mean, another podcast coming to the industry is not competition.
It’s not like we’re all on it.
The 5:00 PM time slot and you can’t tape it.
And you know, I love it.
I’ll help you.
Come on my podcast, I’ll promote you, I’ll help you out.
And I’ve done that for several people in the industry and they do it.
But it’s a commitment.
And for me, I love doing this.
I love telling the stories of me going out in the field and going everywhere and going on trips.
I love educating investors and I love the feedback the emails are coming from around the world.
I mean, this goes out to a hundred countries now.
It’s helped me generate numerous ideas and staying ahead of the market because a lot of data that’s reported is lagging.
A lot of the data’s lagging earnings are lagging for what happened last three months.
Right? You’re looking at, at economic data.
I mean there’s a reason why they revise it three times every month after they report the quarterly data and look at the jobs number, they revise it, they revise it, they revise it, they revise it lower, they revise, what is it? Seven, eight straight months significantly revisions lower.
Look at G D P, how many revisions you have there.
But seeing what’s going on exactly when it’s happening, like the reporting of COVID that we were able to do.
I mean, it’s fascinating and just to see how doctors are calling in.
And then doctors telling me, Hey, don’t mention my name.
I’m like, what are you talking about? I wanna mention your name.
I wanna give you a, nope, I’ll get fired.
What do you mean you’ll get fired? You’re saving lives.
What the hell’s going on? That’s pretty cool.
But I love the interviews and debating my guests on current topics I’d ever do layup interviews like Jimmy Fallon.
Oh, that movie’s so great.
That was so awesome.
Oh, you were so funny in this.
Why Howard would Stern’s great interviewing’s.
Why Joe Rogan’s great at interviewing? And listen to your guests and talk to him.
Don’t give ’em layups and don’t conflict with them.
They’re coming on your show.
You don’t have to be an a*****e to them.
Even if you disagree.
If you disagree.
I had Peter Schiff on the podcast.
I disagree with a lot of stuff, Peter Schiff.
But I wouldn’t be like, well you are, you know, I wouldn’t really destroy him.
I mean, maybe with facts and things like that.
But you know, I I I wouldn’t make it that this is big argument because it doesn’t benefit.
I don’t think the audience, you know, it might be cool for a couple of sound bites, but you know, why does someone think so different from me? Let’s educate ourselves and figure it out.
In fact, even when I debate, I, I, I love losing debates more than winning.
You know why? Because when I interview a a guest, I’m prepared.
I’m gonna know everything about you.
Your methodology for picking stocks, I’m gonna your track record.
Everything you wrote over the past three months are gonna look at even videos that you did when I interviewed Jim Rogers.
It’s the same thing.
What you think about commodities? What do you think about this? I didn’t wanna do that.
When I interviewed Jim Rogers, I asked him questions outside the ba What country are you gonna invest in? I think he was like North Korea.
This was like four years ago.
Where do you see him saying that? I don’t wanna ask him the same exact questions everyone else is asking him.
’cause the interview is meaningless.
Although when I did interview him, which is great, he was walking outta treadmill.
He was doing a lot of exercise at time, getting in shape, and he started coughing and, and you know, he couldn’t catch his breath.
I’m like, you’re okay.
So we had, I almost never edit podcasts.
I don’t add anything.
We just go and I give it to the guy and they put up there, you know, even if there’s a mistake here or there, I let you know, I’ll get emailed about it.
If, you know, a stat’s wrong or, or you know, for me, I’ll joke around if there’s a mistake.
Like I don’t care.
Like I just had, you know, one of my speakers on it went off and I’ll shut it off right here.
You know, you can see on video.
I’m like, I’m not gonna take that out.
It’s, it’s real.
But Jim Rogers was on the treadmill.
He started coughing and you know, he started like choking.
And then, you know, we stopped for like three, four minutes.
I said, you all right? He’s like, yeah, I’m better.
And then he, as much as it would be really cool for my career if you died on this podcast, ’cause it’ll go everywhere, I really don’t want you to die.
And he was like hysterical laughing.
It was cool.
But when I come to these interviews, I mean, I’m gonna know everything about you.
Even, you know, your favorite hobbies, which, you know, most people are gonna list on their LinkedIn or Facebook accounts, which is easy to to, to, you know, show these are real people Just about all markets and everything.
But that’s an interesting conversation.
You interviewing 25 minutes and and most of these guys say the same thing after I interviewed.
They’re like, this is like one of the greatest interviews.
I know because I did homework.
’cause I gave a s**t.
I mean, I hate when people come to my company and they want a meeting and they say, oh Frank, you know, I think I can market.
I think I could do this.
I think I could do that.
I’m like, okay.
And you know, I’m busy.
I’ve gone away the past few weeks.
I’m business going, you know, family and all this stuff.
And they come, they’re like, well, how many products do you have? How many products do I have? You can’t look on my f*****g website and see how many products I have.
I mean, you can’t take the time to look on my free site.
You have a meeting with me.
I just talked to people from Japan.
We’re gonna be marketing on newsletter in that market and they love us.
It was great.
And this is Drew Agora.
And he said, well, it would be a great fit.
We love your material.
And man, it it, it, it was incredible because they were like, oh, you like the Japan market now? And I just mentioned that on a podcast like a week ago, two weeks ago.
And I’m like, wow.
They did their homework on and I actually thanked them.
I said, you know what? Thank you for really spending the time to do the research on me.
I mean, you know how a guest feels when you do that.
So when I come prepared and someone thinks differently than me and I have all these statistics and everything, you know, and they’re able to change my mind, which some have done.
I mean, Porter wa was, you know, bullish for the first half of the year.
I thought he was, I interviewed him in February, I think, cup was super bullish on oil in in early 2021.
I I thought he was crazy.
I’m like, no, you know, great job.
And now look how many oil stocks, look how much we benefit in our portfolios from oil.
But if you’re able to do that and you’re able to change my mind, I tip my hat to you.
That means you did a lot of homework in order to do that.
That’s why I love this freaking podcast.
It’s educational idea generating machine or something new every single day, which I hope all of you’re lucky to do in your line of work.
Don’t be stuck at a job where it’s just constant.
You get a paycheck, learn, learn.
There’s a billion things to learn.
There’s so much out there.
As you get older you realize, wow, I’m not smart at all.
’cause there’s so many brilliant people out there across so many different industries.
It’s fascinating to learn, ask a lot of questions.
People, people who are great at things, love to get questions.
They love it.
I know I talk to everybody.
They love it.
Talk to ’em about their industry.
People love talking about themselves or what they do.
Have that conversation with them.
Oh really? Well what about this? Just talk to someone in Citibank.
We’re getting more assets than we ever generated.
Oh my God, they’re all coming in from these mid-tier banks.
Great information two weeks ago.
They’re right from mid-tier banks who are struggling right now because having money in a mid-tier bank, you’re taking on a hundred percent risk and no upside.
Chances are you’re going to be okay.
But why take the risk.
Throw it in JPMorgan, throw it in Wells Fargo.
Why these companies, you know, provide benefits where, you know, there’s great local housing industry and things like that.
But that’s not doing that well.
Now, now you’re looking at it with interest rates really actually hurting them.
But money and capital’s being removed.
They’re in short-term treasuries.
They’re worried about the capital ratios they’re supposed to keep.
I think that’s what happened in SilIcahn Valley.
They’re not allowed to merge with other mid-tier banks because our F T C and the Justice Department doesn’t allow mergers anymore.
Bailey, you gotta go draw a massive process no matter what.
It’s, hey, Microsoft could buy, offer to buy.
I’m trying to think is the most competitive industry in the world? Hey, which is gaming basically.
And look how long that took for Activision Blizzard.
But you know, they could offer to buy an AI company with a million in sales and they’ll find a way to block it and, and go through in concessions and all this stuff where it’s, you know, sim a simple process sometimes.
This is the information I get and, and it works best when you have a great network of listeners that email you all the time with great information.
Crush your industries.
This include college kids to, to, you know, hedge fund managers, CEOs, all across the spectrum.
This is where you get the ideas from.
So I wanna thank you for that.
And I love doing this podcast.
Enough of the BS, let’s get to the markets real quick.
Interest rates, high credit card debt surging, bank credit tightening.
I actually have a chart of this broadcast on YouTube.
This is pretty credit contractions.
It’s credit contractions here.
I mean, look at this bank.
Credit contracting tremendously.
I mean, we haven’t only saw this during the financial crisis for a little while.
That’s the level we’re at since 1974.
And people are like, stocks are going higher.
That’s what happens when you have non-stop government spending.
But now you don’t have that, especially what’s going on in the house mean man, Republicans are a bunch of freaking idiots.
Just get together.
I mean basically it’s nine people that are dying to get special, special treatment.
That’s what they want.
Let me hold out.
You need my vote.
That’s all it is are politicians, right? Forget about providing aid to, to Israel, whatever, they don’t care.
You know, I just want what I want.
You really can’t come together.
Just shows you how, how terrible, how broken our political system is.
It just horrible.
But now that results in a lot, a lot of things not getting approved or funding, not getting approved funding.
The Ukraine not getting approved, which whether you think it should get approved or not, it could mean that less money going to some of the defense companies.
And then you had Israel.
So maybe that offset that and saying, okay, now we’re gonna provide weapons and you know, but just different things that, that you have to see what’s going on in the political landscape.
But credit contraction is here.
I mean, guys, look at the chart.
Seriously, go to a YouTube page.
You post all this stuff.
I mean it’s insane.
I mean, you have a lot of stuff.
I mean, you’re looking at, at housing market rolling over 8% mortgage rates, you know, so, so you look at all this tightening, higher interest rates, housing market, big, huge, huge driver of G D P, the economy.
You just saying, well, you know, supply that, that’s holding up prices.
It doesn’t mean there’s demand where people buying new homes and getting new furniture and getting new supplies and everything.
So you look at that at, you know, a market that’s expensive here, consider where interest rates are.
However, everyone’s extremely bearish right now.
And so much so that if you look at the bull bear reading, and this is the B of A, I mean, it’s now agreed levels, meaning more people are bearish.
And when they’re really overly bearish, it’s a contrarian indicator.
It’s a time to buy.
But it hasn’t been at these levels since November, 2022, October, 2022.
And the market’s bounced.
A lot of people predicting, you know, a potential bounce.
And here’s another chart.
Look at money market funds surging.
I mean look at these levels.
This goes back to 2007, this chart, it’s at 5.
7 trillion, right? And that’s about as this month, October, in May, 2020.
It hit this level in January oh nine, right? I mean, it didn’t hit this level, but that’s when it peaked before it came down.
So you’re looking at, you know, we’re at 5.
7 trillion trillion.
It peaked at around 4.
7 trillion during COVID and that’s May, but if you’re looking at 1918, we’re at two and a half trillion.
Now it’s 5.7 trillion.
But if you notice this chart, every time it spiked to these levels, I mean you’re looking at massive spike.
When was it? January oh nine.
When was January 9th? Pretty close to the bottom.
May 20, close to the bottom.
Now October, are we close to a bottom where stock’s gonna run higher? Listen, it’s a different environment.
We didn’t have super high interest rates, which is why, you know, it provides a better alternative.
It’s not Apples to Apples comparison, but people look at the money market fund assetS & People going more into safety.
And again, January oh nine, they went to safety.
They weren’t generating anything.
May 20, they weren’t generating anything.
Now you go to safety.
I don’t know if you, you say, well I’m gonna go, I’m gonna go treasuries, you know, money market funds to be safe.
It’s not being safe, it’s being smart.
You’re generating 5% plus.
But still, some people look at this and say, well that’s a contrarian indicator.
We could see a pop in the markets coming.
I don’t know, maybe they’re right, maybe they’re wrong long term.
You know, just in the 2024 credit contracting interest rates relatively high.
The Fed doesn’t seem like they’re pausing yet, but we could see a pop.
Which ironically, I think every analyst on now predicting, oh, we’re gonna see a run into, you know, some believe we can hit a new high this year.
Which you know, I think is insane if we would do that.
I mean we’d be incredibly overvalued.
But you know, we could see short-term pop because when the, that pendulum swings and everything’s really bearish, it’s been, you know, really bad past few weeks you might see that.
But now you throw an earnings season, which is upon us, it’s a big deal.
And not really Q three, right? So this is Q three, which we’re reporting and earnings are relatively flat around there.
But, but next quarter you guys should know this, earnings are expected to rise 8% in Q four, 8%.
Remember we declined year over year, three straight quarters.
Now we’re into this quarter, could be four straight quarters while the market has been surging up to the past month, which is remarkable.
Usually earnings drive stock prices.
Now it’s government spending drive stock prices.
’cause it’s not earnings, but it’s key because these companies better be raising estimates and you’re not really seeing that.
Most of the reporting are saying, hey, you know, the consumer’s getting weaker.
United just lowered estimates.
But said the c e O actually implied this, that the low cost airlines are dead higher oil labor costs are crushing them.
So they’re gonna have to raise prices and they’re gonna have to raise prices to what? To the levels that you’ve seen at at, at American Delta, United.
And you know what the experience on those are.
Much, much better than experience on you get what you pay for with discount airlines.
I know I go to Dominican usually once a year with my family and you know, you take discount airlines from where we are, we have to go to Miami.
And then it’s usually a discount airline or you know, it, it that that flight directly sometimes really flights directly to Jacksonville these days, especially on the west coast after anything like, you know, west of Texas is two flights.
But you see, you see the drop off and they charge you all these fees anyway, all these fees, I mean you shake the hand, you go to the bathroom, it’s fee and take a fee for everything.
And now they have to raise prices.
So I was joking when people say they’re gonna start this can airline, but look at JetBlue spirit just warned.
I mean they’re saying it’s gonna impact them significantly to say that they’re dead.
This isn’t a trend to say they’re in a lot of trouble yet.
PG report good numbers.
CEOs on there, you know, patting themself on the back and this is what we did with it.
Yeah, it’s good.
And, and the numbers were good because they raised prices.
They’re a company that was able to raise prices.
Is that really, really good? Or they seemed more demand or seen volume growth? No, that seemed volume growth.
Retail sales, you’re not seeing volume growth, you’re seeing sales explode because things are higher.
So we’re still seeing inflation in the market, which is at 4% guys, We’ve never seen inflation this high since 1991.
If you take out last year, that’s how high, we’re still on inflation.
We’re a lot lower and it feels better.
We’re still way, way, way above 2%.
So these earnings actually good? Are they quality? I don’t know.
I’m not sure we’ll see 8% growth.
But if we do, and this is really ironic, if we see 8% growth, it’s not gonna come from the growth sectors like tech information services and semis.
You know, it’s gonna come from, it’s gonna come from the banks and it’s gonna come from oil.
Large cap banks, their earnings are surging, oil surging.
And that’s not good.
You look at bank earnings for the large guys, the guys that make a fortune, I the mid-tier are struggling.
Even some of the other large ones are struggling, but the top four dominate the industry are getting bigger and bigger and bigger, but they generate high earnings.
Why? Because interest rates have surged, which is horrible for the consumer.
Look at oil companies, their earnings are urging because energy prices are going through the roof.
Again, something that’s not good for the consumer.
So be careful what you wish for.
Oh, we’re gonna see 9% growth in earnings.
It’s gonna come from the two worst industries in terms of consumer and how they spend.
So we see that massive earnings growth.
It’s not gonna be such a good thing.
We’ll say SS and P earnings grew 8%.
Yeah, mostly from the banks, mostly from oil.
And that’s horrible for consumers today.
I’m gonna break this down further in tomorrow’s Wall Street Unplugged Premium podcast.
Include what banks you should be investing in, what oil companies we like.
We’re also gonna share new, new pick, which is not so new.
We actually close out for a very, very nice game, short-term game on this.
But it’s come down to levelS&Pulled back to where I think it’s just screaming by again.
This is an industry that everyone suddenly loves.
Everyone hated this industry forever.
If I tried to promote this industry, I’d get maybe one person to subscribe.
Nobody let everybody loves it now and they’re gonna love it for a while.
’cause the fundamentals of this industry have never been stronger.
It’s one of the areas that they’re gonna see incredible growth in a market where most companies s S&P 500 has not seen growth in three straight quarters.
And likely not to see growth this quarter, which will make it four straight quarters.
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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.