Wall Street Unplugged
Episode: 1152June 26, 2024

The only EV maker that can compete with Tesla

Inside this episode:
  • Florida Panthers win their first Stanley Cup! [0:55]
  • What the TSA’s new record tells us about consumers [3:13]
  • How the presidential debate will impact the stock market [16:11]
  • These 3 sectors will spike this election season [26:11]
  • The summer is scorching—so why is POOL plunging? [27:04]
  • Be cautious on this hot sector [32:59]
  • What’s behind FedEx’s surge? It’s not strong earnings… [35:47]
  • Why you must own some large caps [40:02]
  • The only EV maker worth buying besides Tesla [50:41]
  • Don’t miss tomorrow’s new stock pick [1:01:14]
Transcript

Wall Street Unplugged | 1152

The only EV maker that can compete with Tesla

This transcript was automatically generated.

0:00:02 – 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.

0:00:16 – Frank

What’s going on there? It’s June 26th and I’m Frank Curzio. This is the Wall Street Unplugged podcast. We bring you the headlines and tell you what’s really moving these markets. So, on today’s show, Rivian gets a $5 billion lifeline, FedEx stock surges, despite core results not being all that great, and a list of stocks every single investor should have in their portfolio right now. But first let’s bring in Daniel Kreese, senior Research Advisor at Curzio Research. Daniel, what’s going on, man?

0:00:52 – Daniel

Hello Frank, Happy Wednesday. How are you? Everything is good.

0:00:54 – Frank

Everything is good. Florida won right, so Panthers big celebration in Florida.

0:01:00 – Daniel

First Stanley Cup ever. That’s exciting.

0:01:02 – Frank

You know, it was a great game. Holy cow, it was a great game. It was such a great game Compared to watching Saka Copa, and there was two games yesterday I watched. Imagine paying probably $1,000 to go. It was two different games yesterday and they both ended in a 0-0 tie.

0:01:17 – Daniel

What are you cheering at? And Saka, what are you cheering at?

0:01:20 – Frank

I mean, I know how big these tournaments are and you want to watch them. And US again, nice, early win, but you’re there an entire game without a team scoring. Right for the sport.

0:01:31 – Daniel

It’s just— that’s part of that sport though, right it? Is I mean I know zero about that sport, I don’t follow it, I’m not in—.

0:01:36 – Frank

It is.

0:01:39 – Daniel

I’m not the guy that says they’re the best but that’s part of it.

0:01:44 – Frank

It’s, it’s, you know, just watching it.

0:01:46 – Daniel

You have to go into that knowing you might not see a simple goal. That’s weird.

0:01:49 – Frank

Yeah, it is weird, I mean it’s hard.

0:01:51 – Daniel

The uh. The Stanley cup was awesome. I listened to it, man, those guys on the radio are hilarious. Um, I love that. And did you see? You know, what stuck out to me was the last seconds. There’s such a great commercial that the NHL was running and it’s a montage of the last seconds of people during the third period they showed Mark Messier and his famous jumping up and down.

0:02:16 – Frank

That was obviously afterwards About to win it, yep.

0:02:18 – Daniel

But they show a lot of people. And what was cool was that when Florida won it it was in their own zone, so the goalie had to be locked in. He was kind of knelt down against the left post, everybody was in the corner, but then you could just see everybody kind of start jumping. You know, once it got to two seconds it’s like man, this is going to happen. The interesting thing to me, what I really thought was classy, is that the Florida coach did you hear his comments about if he had one Stanley Cup? And he said man, you know, my only wish would be if Winnipeg could win it next year. Now I would love to have some hot mics on, because if I’m a Florida fan it’s like Larry Bird in the Boston Celtics saying the only place I’d rather be is French Lake, Indiana. They’re like get out of here.

0:02:57 – Frank

We want you to talk about us right now, you know.

0:02:59 – Daniel

I love that because he’s passionate. He was up there for so long but I could just imagine some Florida fans going Florida. Did he just say we’re not even done celebrating the champagne’s not even out of the bottle. But good stuff there, Good stuff there.

0:03:10 – Frank

Yeah, it was really good, Really good game. They did a great job.

0:03:12 – Daniel

I’ll tell you, frank, I was going to leave you high and dry here. I was going to take a spur-of-the-moment trip. But every want to ask you, frank, where in the hell, where in the Florida, are people going? Because did you see the record TSA screening passengers of 2.99 million, not 3 million. Don’t round up 2.99 million this past Sunday. I ask you again where in the Florida are people going, frank?

0:03:41 – Frank

That was a record and I got to tell you the airlines are not prepared for this at all, for you to have a record, and what is it? Isn’t it like the past, like three records, or within like the past month or something? Yeah, it’s ridiculous, it’s insane how many people travel.

0:03:55 – Daniel

I understand. Coming up to the 4th of July, I expect you know every holiday gets busy. But this last weekend and I just pulled this up from Yahoo Finance TSA predicts to scan 32 million people between June 27th and July 8th, an increase of 5.4% year over year. 32 million passengers. I like how this article says you know they tell how, hey, this is a healthy, strong economy. That’s the TSA administrator, David Okoski, says. I get that he’s plugging in for his administration. But then at the very end of this article, frank, they said hey, get there on time, be patient, blah, blah, blah, but don’t expect your flight to take off on time.

0:04:35 – Frank

No, and my wife could attest to this because she’s been flying back and forth to New York the past couple of weeks. She was at it the last 10 days. So I was, like you know, minding the fort with the kids and everything but by myself for 10 days and working and doing all the stuff which you know. You start realizing how important your wife is, but you don’t want to tell her that kind of you know, you don’t want to admit that at all.

0:04:52 – Daniel

You know it’s not a good thing you want to make it as easy as possible.

0:04:55 – Frank

Like when she calls, I’m always like things are great. Wow. She’s like are you sure? I’m like they’re great, the kids are fine, everything’s great, what’s the matter?

0:05:01 – Daniel

you just relax meanwhile, fire started in the backyard.

0:05:04 – Frank

I’m like holy shit, you know it’s monsters I live with, yeah my job is to make it seem like everything’s perfect here without you, right? But she traveled back to new york. Her flight got canceled on the way there and on the way back she had to leave. She had to leave instead of studying. So this was like, uh, two weeks ago she had to go back there again. My mom, mom isn’t doing too well and the flight on the way back, it was supposed to leave at six. Then they said 6.30, 7, 8. I mean, it was like and it just kept pushing along. Then it went to like nine and then, I know, it went okay, 8.20. And that was kind of like in this, right, I think this is whatever.

It was Saturday or Sunday, Saturday, but I don’t think the airlines are prepared for this. And you’re seeing delays across the board and you’re seeing, just on Twitter, people are traveling. You talk to people that travel. In the past couple of weeks it’s been a nightmare, right. So it’s going to be interesting to see how they ramp this up, because the experience hasn’t been that good.

But it really doesn’t matter, because you don’t say monopoly, because monopoly is one, but you can’t start an airline, right, it’s impossible to start a new airline. Hey, you, just you can’t. That it’s probably the highest barriers of industries to any industry in the world. Even one of evs or anything else it doesn’t. You can’t just to get the airports of space and stuff. It’s impossible. So you know you lock them in and plus you have a lot of places not doing that well, where southwest is a disaster right now in terms of you know, just even they they lowered their numbers. You have jet blue, which you know their planes are pretty much their original fleet from whenever the company came out, 30, 40 years ago still original fleet, I don’t even think they updated it. But then you have like Delta and Delta is doing good.

But more to the point here is, you’re seeing, not just through the airlines, you’re seeing all kinds of trips, travel, leisure, and that’s where the money is going, because did you see Carnival? I mean, carnival blew the numbers out as well and you know, same report here. This is TSA and also AAA. They’re saying that over 70 million people will travel 50 miles or more for the week of July 4th, right, so that includes the airlines and everything but 70 million people, you know. And then Carnival came out and blew out the numbers, which was no surprise, right Because we have one of these names in our portfolio that if you look at the cruise lines and even when you have the Expedias, when you have the Disneys, Disney does have a cruise line, but a lot of travel companies are citing that they’re losing business to the cruises because to go on a cruise with a family is so much cheaper than even going to Disney.

I mean, it’s like a 30% difference and you could really have a nice room, nice vacation. It wouldn’t go as far as exclusive, but it’s a really, really like. You could upgrade your trip and it would be an awesome trip to a cruise. So Carnival came out and their numbers were amazing and you’re seeing this across the world with airlines. But I guess, is it a sign the economy is doing better? Is it just a sign people are really careful where they’re spending? And where they’re spending is definitely more on leisure, more on the travel part, more on experiences, and you’ve seen that across the board, almost every industry or every segment of this industry, I should say.

0:07:54 – Daniel

Yeah. What’s wild to me is that in Delta they’re obviously doing well. The management teams on the airlines, specifically Delta and Carnival Cruises I mean Carnival Cruises came out and upped earnings per share 20%. That’s crazy. Yeah, that’s a ton, that’s a great beat and raise 20% and they keep saying-.

0:08:12 – Frank

Sales rose by 17%, right, so sales rose by 17% and then they’re raising their earnings per share by 20%, two straight quarters where I think they were projected to report losses, probably about three, four months ago and they’re both strong quarters, very strong quarters. So it’s pretty amazing what they’re doing.

0:08:28 – Daniel

And what’s frustrating and, I’ll admit, kind of confusing. When you look at Delta, it’s the premium airline. No doubt their stock’s doing pretty well, close to a 52-week highs. You pull up a weekly or longer-term chart. It’s terrible. It’s still well below 2019 levels. I get it. They had to take on a lot of debt. Same with cruises, though. When are these? When is all the management upbeat and the results? Because now you can’t say Carnival’s a wait and see story. They’re putting up the numbers. The stock is still crushed from 2020 levels, 2019 levels.

0:09:00 – Frank

And they’re reporting the best results. American Airlines sucks. I mean, their stock is terrible. Yeah, I mean I’m not sure about American Airlines, delta, I mean-.

0:09:06 – Daniel

Well, I’m looking at the stock chart, I mean it’s terrible.

0:09:09 – Frank

Single-digit PE for Delta, seeing earnings growth, paying a huge dividend, right, and you’re looking at cruise lines, just probably I wouldn’t argue. I think it’s pretty much factual that the best shape that they’ve ever been in financially. I mean you’ve seen demand through the roof. They have pricing power right. They take this money, able to lower debt. You’re going to see it reflected in the stock price sooner or later. It hasn’t really been.

You know, I think you could buy any one of them, but the one in our portfolio we really, really like. I won’t give that away because people pay for it, but a great industry. But I would tell you Delta, delta is very expensive. Delta is very expensive, I mean, especially if you want to say, oh, I want to take a trip to first class. I mean you can look at first class compared to United, American, holy cow, it’s a big difference. I mean it’s a big difference. But Delta provides a good experience. So if you have a better experience and I don’t know if that experience is good for everyone it’s good for the planes are new, it’s beautiful Leg room. But sometimes when you’re flying Delta to other places again, you have the hubs different in Chicago and Dallas, united and American and stuff in New York.

My point is this brings me back to companies, where you look for companies that have pricing power, where Delta has it and they’re able to pass a higher cost off to the consumer. They have pricing power, raising prices. And then you look at a company a little bit outside this industry, like Starbucks, and people were like, well, their prices are insane because the stock has been crashing. There’s a big difference that you have to look at these companies. It’s not necessarily they don’t have pricing power. And again, I’m going to compare apples to apples, because it’s apples and oranges when I’m comparing industries.

The point is, when I looked at Starbucks, it’s not because of the high prices of coffee okay, everyone’s like, well, I’m not going to pay those high prices. It’s not that it’s because their service turned out to be terrible. Because when you have that app on Starbucks and you’re able to order and you’re in the morning, right, you’re rushing. And this is three different Starbucks that I go to for my daughters when I drop them off, or if we get something we, for if we get something, we used to go there a lot more. We don’t go there because when we ordered through the app, we used to go there, just run and pick it up and go right because we wanted to go. We used to go there and it was, like you know, we’d order like 15 minutes earlier and we had to wait another 10 minutes and it was long and there was like 20 people at the counter in almost every single place and, I guess, hiring new employees.

The thing is what I’m saying is is you’re not to get off topic, but but you’re looking at Delta. You’re going to have pricing power if you provide a good experience. Jetblue is not going to provide a good experience for you, southwest isn’t going to provide a good experience for you, and that’s an easy way to tell what stock’s going to benefit the most. Because if you’re having that good experience, people will pay extra for a better experience. They’ll pay extra for better food.

But now we’re in a market where people are trying to raise prices and the service is worse because you can’t get good employment. You can’t get again lack of employment in the services industry. You can see it across the board. The restaurants that you go to. The service is definitely not as good, but you know the prices are a lot higher. That’s going to be a story going forward in the inflation argument because people are definitely cutting back. They’re trying to see where they want to spend and you’re seeing it less in leisure, in things like Dave Buster’s right. Dave Buster’s stock has cratered. You’re looking at Five Below is another one and yet they’re like, okay, we’d rather go on these experience and go on Carnival and go on these things. You’re seeing that trend and, man, it’s continuing. So you could argue how the economy is doing, if you think it’s doing bad or good or whatever, but there’s definitely this underlying massive trend going to travel. People want that experience in traveling and you’re seeing it across the board.

0:12:33 – Daniel

I think the big takeaway here is how powerful human emotion is. And I think you’re right, you can’t have management. I mean you can for a long time and I don’t want to get caught up in this instant gratification. But I do think it’s important to point out, because even I fall victim to this how can you listen to cruise lines talk so upbeat and put up results and delta and raise their dividend and do all this and the stock basically do nothing? Well, it can happen for a long time and I fall into that too, where you think, man, if then happens, you know, type deal, Just because it hasn’t happened yet.

If you hold these stocks, mind your stops, look at your position sizing, but don’t give up on them Because, to your point, I think I don’t want to put words in your mouth, but you can’t continue to have these robust results and have a lackluster stock. You can have that discrepancy for some time, but don’t fall in that instant gratification or, if this doesn’t happen overnight, this doesn’t happen. That’s the good thing about stocks they don’t go away. It’s not an option. This doesn’t expire anytime.

0:13:27 – Frank

No, it’s about rotation, right? Because then Exactly what are you going to do is At some, point that has to come through.

0:13:32 – Daniel

It doesn’t have to, but you understand what I’m saying. If they keep putting these results up, it’s going to reward those shareholders. If I was going to play it, you’d stick to Delta, but I think the emotional side that I’m so interested in is we’re still getting back this revenge travel. You can look at credit cards and debts and all that crap and inflation and prices. People will spend money for experiences and do things. They were locked down and we are still seeing that kind of revenge travel and this just shows people want experiences, need experiences and will pay through the nose and stand in line with 3 million people. Frank.

0:14:07 – Frank

Yeah, no, it is crazy. It is crazy. And you’ve seen that kind of demand. So, no, it is pretty incredible. It’s pretty incredible. So, look, I don’t see that trend slowing anytime soon.

And you were saying, in regards to the stocks right, it eventually show up, listen, okay. So, from a Wall Street perspective, you have all these money managers it’s important, it’s relevant and say, if I’m managing money, I manage a billion dollars, right, I want all that capital invested, because if it’s not, I don’t get fees on it. If it’s in cash, I don’t get fees, right. So you want to and that’s something to look at private equity, because they have hundreds of billions of dollars literally in dry powder, right. So what am I going to do? Is, right now I might be in large cap tech, I might be in oil, but now, tech, you’re seeing a little bit of a crack there, right. Nvidia you would think it’s down 40. It’s down, like you know, seven percent from its highs, uh. And everybody’s like, oh, my god, it was 400 billion in value, yet you know, it’s up like two trillion valuation, like a year and a half.

And when you you see the rotation, what are they going to look for? They’re going to look for these sectors that have seen strong earnings, growth, strong demand. The numbers are good and stocks that are not really pricing this in, that are cheaper, and that’s one of the sectors you’re going to see. You’re going to say you know what? I’m going to rotate into cruises and that’s what you’re going to see. It’s two weeks ago, it’s 350 now, but yeah, that’s how I would play it. The rotation, like you said just to add to your point, daniel is eventually it’s going to be reflected in these stocks because these guys are putting up great numbers. They’re raising guidance significantly. We’ll talk about another stock in a minute, which is FedEx, which didn’t raise guidance and the quarter was okay and that’s up a lot, but-.

0:15:45 – Daniel

Yeah, the lesson here is if you’re not holding on and justifying, if you’re not down a ton, then nothing new here is and just keep until your thesis enacts and, like I said, you have the news on your side. It will eventually, or it should. The odds are in your favor on that. If you’re down 40%, you just keep saying, ah, I’m not wrong. That’s a totally different story.

0:16:02 – Frank

And it’s different because this isn’t a cost-cutting story, which is big.

0:16:06 – Daniel

This isn’t a cost-cutting story.

0:16:07 – Frank

This is a massive demand that they’re seeing and that trend just doesn’t reverse, especially in that industry. But I want to move on to the debate which we have to talk about. Right, and people cringe because they’re like oh, my God.

Kurt’s going to talk politics. You separate the audience right away. Right, debate coming in hot, so Debate coming in hot, so debate’s coming up. It’s coming in Thursday and they’re going to be talking about a lot of hot topics. I want to get your thoughts on it because I think there’s going to be a lot of things being said. That’s going to be. They’re going to move portfolios and people say, well, there’s not too much of a difference in terms of your allocation in some of these areas, but it’s definitely sectors you could highlight. In terms of solar, in terms of if Trump, I would see less investments to alternative energy, more investments towards drilling and oil. Obviously, I mean, he’s really going all in on crypto now, right, and he’s believable because he’s getting massive donations, massive donations, and that’s the crowd you don’t want to fuck with, because if you say you’re going to do something, don’t do it.

Those guys will post 50 billion posts on social media and destroy your ass, right? I? I mean, these are passionate people and he’s all in. He’s beating with all the crypto crowd to the point where diehard democrats are now saying who own crypto companies, like the Novigrads and stuff, are saying, like you know, what do I want? Do I want to just destroy my company?

Because right now, we see Biden clearly going after crypto companies and has you know, just no, you’re not gonna see any regulation from him. Right, we didn’t see that for four years. Right, we haven’t seen any regulation, nothing. And not only did you not see regulation, you saw him start going after these companies and suing them, right, and that’s where you had that major turn, where it’s not like hey, you know, we’re waiting for you. It’s now you’re coming after us. You’re closing banks that are doing business with crypto and forcing this. So, in a wink of all signs I actually said that in their post on Twitter, if you follow them of the reason why they voted for Donald Trump. So a lot of issues at stake.

0:17:55 – Daniel

What are you expecting?

I think Biden is going to do very well. I think that he is going to prepare for it. He has he’s cleared his schedule. I think that Biden is definitely slowing down. You can’t look at the guy and not have some serious concerns, just as a human. Now I don’t give him much credit because that’s a terrible environment.

I’m a big guy on hate. Context matters, the environment matters. When you’re talking about politicians, they don’t deserve the benefit of the doubt. They don’t deserve your grace. That’s why I respect you, frank, one reason I do because you are a much nicer person than I am. In that front, you believe in people a lot more than I do. That’s fine. My point is is that you can’t deny this gentleman is slowing down. Everybody around as you get older does. I also think that he is an excellent politician. He’s a career politician and I think that he plays up the old Uncle Joe or the crazy guy a little bit, and we’ve already seen this replay or this act play out During the last presidential race, the first debate.

I thought this. I think it’s going to go the same way. I think Trump’s going to be so angry and fired up he’s not going to be able to control himself. He’s got a few list of insults. He wants to get out. I would love to see both guys come out and really be a much more tame, relaxed guy, but that’s not the game they play. I don’t think Biden is going to look gone, watch him have a freeze or do a Mitch McConnell and just freak out on stage and make me look bad. I think he’s going to do really well. I think he will. He’s going to have all of his ducks in a row and they can hit the economy very hard.

And I’m what I also want to talk about is I think you’re right on the crypto aspect. I think crypto will move more than anything other space One, because it’s volatile by nature. I understand that, but really when you look at Trump and Biden, there’s not a whole lot of differences on the economy, and you know where I’m coming from. On the deficit side, if you’re spending $1.5 to $2 trillion a year in deficits, that’s not going to change depending on if Trump’s in office or Biden’s in office, and I personally think that that’s terrible. But it doesn’t matter what Daniel Creech thinks. I think that that’s going to be a goose to stocks. The real big differences they have are on social issues, and I’m not saying that those aren’t important. You guys should all think for yourselves. I’m not telling you how to think. My point is is that social issues are not economic issues, and we’re talking about stocks here and equities and different cryptos and things like that.

I think that Biden will hit him hard on debt. You’re already I don’t know, frank, people call me a conspiracy theory. I just put things and pay attention. There’s no coincidences in politics. If you’ve already seen, if you’ve noticed, just this week, you’re seeing a lot of this narrative building around Trump added twice the amount of debt than Biden did during his tenure. Okay, that’s going to be a talking point, guaranteed.

That comes up in the debate. You’re going to see the economy and strong jobs numbers. Of course you’re going to do it Now. Forget the fact that you laid them off and just got them back from COVID the authoritarian, terrible decision to lock down, and that was under Trump. You know what really shocks me about the vaccine, though, frank, with all the negativity coming around the vaccine now why is Trump not getting blamed for it? He was bragging about warp speed and all this kind of stuff, and now you have a lot of data coming out there that was shunned and shoved under the rug and you were fired from your job if you decided not to take it, and that my body, my choice bull crap went out the window when it came to the shot. But yet I expect Biden to kind of point the finger at Trump and say that, hey, if you’re upset with the vaccine or any illnesses or whatever, why not point the blame on Trump? And so I think that that’s going to be a couple of big highlights.

There. I do think Biden will do better than people, because what I think is people are already saying, oh, he’s going to act like a robot and they’re going to get him off the ticket. That might happen, anything could happen. I just don’t think the percentages are there for that. I think this first debate will be kind of a lackluster thing. It’ll be fun for guys like us to give our opinion and point out how ridiculous they are, but the no audience thing just should piss everybody off. The fact that you have two people that are going to lead the free world that can’t argue and debate in front of a live crowd is beyond pathetic, and everybody ought to think about that real hard about what that means for the greater US of A Frank.

0:21:59 – Frank

Yeah. So I mean I’ll say this this is what this debate’s all about. It’s about how bad Joe Biden is right now in terms of his health Any guess anything that you’ve seen there he’s going to get pulled.

0:22:12 – Daniel

Do you think he’s going to struggle or do you think he’s going to do well? I think he’ll. I think he’s going to do well.

0:22:17 – Frank

I think he’s going to do well because he’s going to get the questions right. I mean the question I had. I had questions before. It’s like I never did an interview like that in my life, when I interviewed the president, oh right yeah uh, it was all scripted and then she could.

she was restricted from asking any further questions, right you? You can’t ask any questions. She was like okay, so basically it’s like a bullshit interview, but you know you’re going to know the topics going in to talk about and you don’t have to worry about oh well, what about this or that? I do kind of like the mute because I mean if you look at the latest debates, Trump doesn’t shut up sometimes.

I mean just shut up. You know, like interrupting a guy when he says four words, let them talk and then you talk and back and forth. But this you’re going to see the topics and everything. That’s fine. This is about Biden, because we’ve never had a presidential debate this early in the season before I don’t think ever. And there’s a reason why Usually all this stuff starts after Labor Day. And the reason why is this is the opportunity where if he just stutters, if he makes a couple mistakes, and he’s just out there and stutters if he makes a couple of mistakes and he’s, you know, he’s just out there. And you know it’s so funny how they report like this is fake news. There’s hundreds over the past. You know nine months of him just not even know where he is. Not just you know, you know four or five. You’d say, okay, maybe they’re cutting. You know you’re watching these things and you’re seeing.

You’re like, damn, it’s like you know this guy’s really the president of the United States, right? I mean, how does he talk to other presidents? Especially when you saw Putin during that Tucker interview. You could think he’s crazy. You could hate him. Man, that guy’s sharp, holy shit, was he sharp? I mean scary sharp, where you’re looking at a dictator. That’s very sharp. You look at President Xi to be.

You know what their topics are going to be. You know what they’re going to talk about. You know I just hate the fact that when you’re wrong on something, no one ever misses a politician. I just watched, you know, senator Warren, Elizabeth Warren, come out and talk about how the immigration is Trump’s fault. Come on, I mean, you know. You know why the legals are into the country. We know why he did. It’s just you know, own it right, don’t blame, like it’s not Trump. He reversed all of his strategies and you know there’s other things that can be attacked on Trump and back and forth.

And I just think you’re going to see the normal topics. He’s going to talk about crypto, which I think would be a really, really big deal, and this is more about hey, could Joe get through this? Yeah, could President Biden get through this and President Biden get through this. And if he does, and people feel confident like he did, he was very angry during the what is it? The State of the Union? I mean, holy shit. I mean he was so angry that it was like I felt like he hated my guts as a Republican Like this guy, really freaking hates my guts.

0:24:57 – Daniel

Well he does. If you’re a Republican and I’m like I just have different opinion.

0:24:59 – Frank

But you are a few major issues here. It’s not like I don’t hate you, you know, but it’s like. It’s like I’m an enemy of the state Right.

0:25:06 – Daniel

So so you think there’s a replacement factor? If he has a, oh, it is definitely a big yeah, Because right now this is more because I don’t think anyone’s going to learn anything different from Trump.

0:25:16 – Frank

He’s on the campaign trail. Everyone sees him. There’s a lot of people seeing him. You’re not going to learn anything different. You know the ones that are kind of thinking because they’re seeing this. You know they’re seeing his health deteriorate. You know, which is sad because he’s older, but this is, can he get through this? And if he doesn’t, I think they’re going to be like, ok, we got to pull a plug on him, let’s throw out another candidate and probably Newsom. So we’ll see. That’s what this is really about. But pay attention to the crypto aspect. There should be questions on crypto.

0:25:54 – Daniel

I think crypto and the economy. There should be some. You know there’s definitely going to be some oil and gas and some clean energy talk, and those sectors will no doubt move a little bit. You already have the Inflation Reduction Act and any further promises there. But I do think you’re right. I think crypto will move the most and that’s great for crypto in general and for everybody that has exposure to that.

0:26:09 – Frank

Yeah, absolutely, absolutely. So definitely pay attention. It’s going to be. Yeah, you’re going to see a lot of ideas in your portfolio, especially as they get closer to the election. Marijuana, gambling, crypto, three industries I mean you see marijuana really do. Well, it’s on the Florida ballot now. I mean you know more states are approving it and saying which makes sense, right? I mean, if anybody wants marijuana, they can get it within 10 minutes anyway, whether it’s legal or legal.

Your state just, you know everyone has 20 people to call right so you can get it like immediately or a lot of medicinal. Again, you could say, well, I don’t, and before you even say anything, they write in a prescription make it legal. This way you’re making money off of it. But those are really hot topics going in and the obvious ones would be like drilling and alternative energy and money funding to this stuff.

0:26:56 – Daniel

But Stay tuned. Over the coming weeks Trump may actually make me sell and get less bullish on the energy patch. If some of that happens, maybe, maybe.

0:27:01 – Frank

So let’s go to some earnings here, which were pretty crazy, right. I mean you saw a pool right Lower earnings. So mentioned in late April that interest rates have weighed heavily on their new pools that they’re building and this is the world’s largest wholesale distributed swimming pools related backyard products, and they said it’s reflected by a 15, 20% drop in permits year over year in Q1. But I mean, this was a lot, lot worse than they expected. They were expecting the report and saying, hey, we’re going to see cutbacks. Now they’re expecting their full year guidance, fiscal year 2024. They were projected their original estimates and this is from February, right, not long ago $13, $14. Now it’s looking like $11, $11.25 around there and that’s a massive, massive reduction, right. So you’ve seen the stock pull back. It was down a lot and then I think it went down like 8%. It’s been down in general, but I think this tells a really big story about housing here, right?

0:28:02 – Daniel

Yeah, I agree. I mean the thing with pool is it’s not just a US story, they’re an international company. They do a lot of business globally, so take that with some salt. The thing that shocked me the most is to your point, you come out in February, you give guidance. I understand you got to change when data changes. What really the takeaway? One of the big takeaways here is how fast the consumers can change. I mean you’ve seen that with COVID, with inventory, with home furnishings to now travel and all that kind of thing. But man, consumers can change like fashion trends.

0:28:32 – Frank

Think about that we just said great point. This isn’t people buying sneakers. This isn’t people buying a certain product and saying oh shit, I can’t afford. These are people they were basing their guidance on people locking in like saying, hey, we’re building a pool, and now people, instead of doing that, they’re pulling back and saying maybe not or maybe not going to buy this house, right. And you’re seeing that actually, in reports that were reported today too, New home sales were slow and unexpected.

They said 9.3 months supply. It was 9.1 a month ago, right. So the supply is building and they’re building the supply because more people are saying lots of people are looking, but fewer people are actually building. And they’re building the supply because more people are saying lots of people are looking but fewer people are actually buying. And so when you’re building these houses and you have these projections and stuff like that, you might see the home builders. I think the home builders might get caught off sides here too, because they’re raising their estimates, they’re building a lot more, they’re able to restructure and provide incentives with a low interest rate for buyers and stuff compared to traditional mortgage 30-year, which is 7%. But it is interesting that you said that because it does have implications for the entire housing industry. It really does, but these are contracts that got canceled, Daniel. It seemed like this business was booked and now they’re pulling back on it, which is a big difference from just a consumer pulling back and saying, yeah, I’m not going to spend that much next month.

0:29:44 – Daniel

And you’re going to see a lot more of that because we’ve joked around about this, not ha ha, just something to pay attention to off air. When you see the amount of conference calls during the last quarter, talk about efficiency operations and such like that, that’s a hint at future layoffs. If you have more layoffs on the management side or managerial positions, higher white collar stuff, that’s where a lot of your communities and such are going. So what I want to dig into a little bit more on the homebuyers because there’s a few that I really like on this pullback is your resale value are basically all cash, especially around here. Now we’re in a little bit of a pocket bubble, as you could say, on Amelia Island and some in Jacksonville. Essentially, your new home builds are for starter families and things like that. Maybe you have younger people because the developer, the builders can work with them, you can buy rates down, you build smaller houses, et cetera, but all the resale value around, frank, is basically cash buyers, you know, people my age aren aren’t taking out 30-year 7% mortgages to go buy a house, unless it’s a starter home and you’re getting some help there. That’ll be interesting.

But with the pool side, the change there is hey, from February you drop 20% on your earnings per share. Guidance from February to now that’s significant. That’s going to drag on and everybody ought to be paying attention to the Home Depot and the Lowe’s and the DIY do it yourself all that kind of stuff DYI trends. I’m not saying the sky is falling, but this is just a process and you know we talk about this. This spill going into a river and it’s flowing through the economy. Well, now you have elevated prices. Yes, some costs have come down, but people are living with this new elevated prices at the grocery, to the gas pump, to building materials, to labor and all that kind of stuff. And you know what, when you hit your wall, you’re going to pull it Frank real quick.

On Disney, there was an article a couple of weeks ago where the average family was okay with taking out and I’m rounding, let’s just say $1,000 in credit card debt to take a family on vacation. Now there’s obviously two easy perspectives here. You can say one well, you’re an idiot, you shouldn’t go in debt for a stupid vacation like that. Two is hey, if you value an experience with your family and justify that by that, that’s fine. I’m not telling you whether that’s right or wrong. The point is is that at some point you hit that wall and you change like that and you say, hey, I’m canceling this big purchase, we are really cutting back, and then companies have to come out. So just be cautious with that. There’s a lot of juggling going on and it’s all held up by just silliness and deficit and goosing the gander here. So just be cautious on that, because the consumer is going to and has proven they change really, really quickly. Frank.

0:32:26 – Frank

Yeah, and has proven they change really, really quickly. Frank, yeah, no, they definitely do. And when I look at the results of this, and I know an insider in this industry I mean not really an insider, but he sells high-end furniture for pools, like in the pools, and stuff like that, and he sells them like crazy. And he said I told him I was watching the game with him, the hockey game at his house. And he said he’s, you know, I told him about Pool Corp. You know we just talk about, you know, pools and stuff. And he’s like, yeah, I deal with a lot of those companies. He’s like, yeah, and demand’s falling off a cliff. He’s like, and I said, yeah, they just reported because he doesn’t really know stocks. He’s like, wow, I think it’s being masked here. There’s this industry that’s really strong. That’s not. I think you have to be very, very careful.

Pool’s not the only indication, but it’s regardless what the stats say. For example, if you’re looking at some of these stats which is a joke they reported new home sales in April. New home sales they just reported in May. But April new home sales were revised from 690, what was it? From 634,000 to 698,000. That was a revision. That’s a 9% close to a 10% revision. Okay, stronger than expected. How the hell do you look at these numbers? Because now what happens? Now they reported for May and what do you think happened in May? Now you see no home sales, much lower. They were expecting a 2% gain and it came at an 11% decline.

What the hell is going on with these numbers? I mean you can’t be reporting like because, right now, what does this mean? You’re looking at, oh, these numbers are down 11%, but they’re really not down 11% because look at the massive revisions you had in April. But if you look at Northeast alone, when you look at new home sales, they’re down 43%. Northeast alone Demand for second home mortgages, which is a very, very big market right, which drives home prices.

It’s at a six-year low. Vacation home mortgage originations dropped 65% from 2021, right and down over 40% year over year. I mean people, the affordability index look, you’re going to have people with cash always buying houses, no matter what. They’re going to have people with cash always buying houses, no matter what they’re going to buy houses. What makes this market is, and increases the total addressable market, is having low interest rates, because now almost everyone can buy houses. Right, it doesn’t even matter. Oh wait, you have a positive balance in your bank account, fine, okay, you’re good. Right, first time home buyer Okay, fine, we’ll lower the mortgage rate even more for you, right, doesn’t matter when you’re removing that portion of the market which is this massive growth component.

I can’t see so many companies here If you look at the Home Depots, the Lowe’s, the appliance makers I mean, look at throughout your house you can name. Just sit in your kitchen, open up a few cabinets, look at everything being made and you could probably have like 30, 40, 50 companies that you can name. All those companies are going to see slowdowns, Okay. So even no matter what the stats and some of these stats will come in better than expected and you see the home builders doing better than expected in terms of their stock prices yes, they’ve recently pulled back, but still doing well, considering interest rates have gone up so much. You have to be careful here. I mean, it’s like this foundation is cracking and it’s cracking, it’s cracking, it’s cracking and it’s going to continue until it breaks. And no one’s really paying attention to it right now.

0:35:26 – Daniel

And I feel like you really need to, and then all of a sudden, yeah, because everyone’s like it should be like this.

0:35:29 – Frank

Well, it is like that. But again there’s certain components that are doing well and keeping it higher and again, lower supply. You need more supplies for homes and stuff like that, but now you’re seeing that supply go up because people aren’t buying, because they just the affordability index. It’s more unaffordable than it’s ever been, than it’s ever been in history of housing. I want to talk about and get into another company I reported, which is FedEx.

Fedex reported numbers and its stocks up 15%. Now if you just look at that, you’re like holy shit, they just reported earnings. This is great. They did great. They didn’t do great. If you look under the hood, earnings were up I believe 1% year over year. Earnings were. Look under the hood, earnings were up I believe one percent year over year, one percent one. But earnings were up. They beat estimates by one percent. And their guidance they kept their guidance in line. They didn’t raise their guidance and it stocks up 15.

You may be saying why, and I’m gonna bring up a chart here FedEx, see, see how much it’s still up here. Um, yeah, so I look at FedEx it’s still up by 14% here and near it’s at its 52-week high. Right now Looking at looks like an all-time high, almost an all-time high. The all-time high was like 312, 314, and that was in 2021, I believe. All right, so you’re looking at FedEx almost at its all-time high right now. Okay, you would think like, holy cow, this stock’s doing great. And if you look year over year, forget about the estimates, forget about the estimates. Year over year.

Their earnings for this quarter, compared to last year’s comparable quarter, are down 2% and this is a stock that moved 15%. Why did that happen? Because of cost cutting. Why is this important? Because when I’m looking at stocks and I analyze stocks, a lot of people do this. They look at FedEx. Holy shit, this is great. Should I buy it? Or maybe it’s getting overvalued? Maybe I should buy? Puts on it. I don’t really believe in the quarter, whatever.

Stop looking at FedEx, because the implications of this quarter within FedEx the implications are massive for hundreds of companies, of how this company reported. It’s going to influence so many companies because of the massive gain that they had. It’s kind of like when you in crypto, when you say like, hey, I’m buying crypto with my cash balance, what happens is, you know, look, MicroStrategy did it, but a lot of other companies do it and you see this pop right. And now that you’ve seen this pop, other companies are looking at it and saying, wow, I can get 15, 20% by doing this. What FedEx did here is they cut costs dramatically. 16% decline in CapEx Plans to cut another 4 billion expenses by next year. It’s a massive amount. It’s going to use this cash. What do you think they’re going to do? They’re going to buy back their stock $2.5 billion in stock, including 1 billion in the current quarter. Everyone loved this news. Dan, are you buying FedEx here?

0:38:08 – Daniel

No, I will give them credit. I think this is hilarious because I was working from home and I saw these numbers and I thought, nah, we’re probably not even going to talk about this, there’s nothing here. Then I saw it was up 14%. I was like, well, obviously I’m going to let me go back and look and see what they did. The only thing that I feel like this proves and I think that there’s a little bit of value here to take away is that A, the market’s fixed and all that. I’m tongue in cheek, I’m having fun there with algorithms, but there’s no doubt the market is forward looking and I think we do a good job of trying to highlight that, not to say it’s a la la land, but hey, the market’s forward-looking.

The one thing that I think the market and algorithms are taking and running is saying, hey, after six consecutive quarters of no revenue growth, they’re actually going to get back to some revenue growth. Granted, it’s not much, but to me I’m looking through that and, to your point, it’s a cost-cutting story. We’re huge components of buying back shares. I get all that. However, if it’s not just because they’re returning to a little bit of revenue growth, I have no idea what’s going on here, and I’m fine admitting that. No, I’m not buying it here because I don’t really like this business in general, because for a couple reasons, but I wish I would have had it two days ago. So we got on this pop, but no, I, I outside of. Hey, we’re going to return to revenue growth at dismal percentage-wise. But hey, give them credit After six quarters-.

0:39:28 – Frank

They’ve filled your guidance. They didn’t change it. They’ve filled your guidance. They didn’t even change it. Right?

0:39:32 – Daniel

but they’ve bumped a little bit on the next quarter right? Did I read that wrong? After six consecutive declines.

0:39:38 – Frank

I’m not sure if they report next quarter guidance. They usually report next year guidance but even like the and the full year, they didn’t change the guidance right.

0:39:45 – Daniel

Like I said, I was surprised that this thing. When I saw it up 14% in the after hours I went back and I read them thinking I still don’t get it. I don’t know what these guys are so excited about.

0:39:54 – Frank

Well, the exciting part is this, and I’m going to tell you, okay and I’m going to get a little geeky here, but pay attention, because this is going to make you a lot of money. Okay, what? By hundreds of large cap companies. Okay, and these companies I’m talking about have strong balance sheets and generate lots of free cash flow. Now you have to have these names in your portfolio because a lot of these names are going to be able to do this and cut CapEx. For example, if you look at the first quarter of 2024, you look at Amazon, alphabet, Microsoft, meta four large companies spent $44 billion on CapEx for the quarter a record. They’re expecting to spend more than $200 billion for the full year. These are costs that can be cut by a billion here, a billion there, and it makes a significant difference for their bottom line. And you could say well, I mean, are they really going to cut? Well, this is what really sparked meta when it was down 60%. People want to see cost cutting. Now you’re seeing the record amount of spending in some areas, but those areas are really in the growth areas. They’re cutting costs dramatically. How they’re cutting costs is they’re cutting costs through letting employees go. That’s why you’re seeing a market that’s at all-time highs for the first time I’ve ever seen in my 30-year career, where you’re seeing all the major companies laying off employees. Here I think a lot of it has to do with AI, but you’re seeing the efficiencies. Now you could easily cut these costs for these companies and say, if you don’t have a lot of demand for a certain quarter, so if you don’t have demand, say you go into second quarter, third quarter, whatever, you don’t have a lot of demand, you could again.

Earnings are easy to manipulate Legally and they all do. All these companies. Nike’s been doing it for so many years. I finally caught up to them. I was telling everyone about that. All these buybacks and everything. You can increase earnings so many different ways. You push these contracts, long-term contracts, into further out different quarters when you recognize a revenue, whatever it is. But you can cut CapEx and say, hey, we’re not doing so good this quarter Now. These are ways that they could prop up earnings.

But if you’re looking at the companies with the highest CapEx that have a lot of free cash flow the AT&Ts, Verizons, the FedEx, Exxon, chevron 25 major energy companies expect to spend less on CapEx in 2024 compared to last year. Many of the chip companies a ton on CapEx also generate tons of free cashflow. We just saw several of them. We saw Micron blow out the numbers, we saw Avago blow out the numbers, and now that they’re cutting that CapEx and they’re cutting costs, what are they doing with that money? What did FedEx say they’re going to do? They’re going to buy back a shitload of stock.

Now, buying back stock right now, companies are buying back at a record pace. It’s a significant advantage. So if you’re looking at Marathon Petroleum, general Motors, state Street, Valero just a couple of them they’re all buying back more than 10% of their float, which is significant. Now buybacks are set for this year, for the first time ever, to surpass $1 trillion. Goldman Sachs predicts that another $1 trillion is going to be bought next year. So let’s put that in perspective.

Okay, just a little numbers here to show you why this is so important. The total market cap for S&P 500 is $45 trillion. So if you’re looking at $2 trillion in buybacks, it amounts to about 2.5% earnings per share growth annually just from buybacks. Now, let’s put that in perspective. Well, 2.5% earnings per share growth annually just from buybacks Now let’s put that in perspective. Well, 2.5% growth. Is that that much I’m getting? Average, average company.

I was at numbers going to be a little bit more for technology companies that are buying back more of their stock. But to put in perspective, you saw 15% increase, right, you’re seeing this surge in FedEx’s price 15%. Its earnings are down 2% year to year. Yet by buying back the stock, the average S&P 500 company is going to grow their earnings by 2.5% year over year. So that’s why FedEx is buying back stock. That’s why a lot of these companies are buying back stock, because it’s the best use of their capital, since, if you look at FedEx, they can’t grow earnings through the traditional business model right now.

So how do you grow earnings? One, let me throw some of this cash and earn 4%. Let me take some of this cash and buy back our stock. And now you’re looking at the formula here, which there’s literally 100 large caps. Easily that could do the same exact thing. Well, they’re not really so concerned about this huge earnings growth. They want to see this cost cutting, and it’s not that difficult for these companies to cut costs because they have so much overhead expenses.

I just think this is going to lead into a really crazy market where we could have an economy almost fall into a recession next year, where we’re going to see this massive, massive earnings growth. Earnings growth to the likes that we’ve never seen, that are so underestimated because of these. Companies are able to increase their earnings, so so much right and increase their productivity as well, and AI has a lot to do with that. We’re in a market that’s very strange. Usually, you see, you know again, when you’re cutting CapEx, what does that mean? That means you’re not spending money on certain things and a lot of companies are going to get hurt because of that. You know that CapEx is going.

A lot of companies, but the companies with the best balance sheets. It’s fundamentals. Now, it’s not growth. It’s fundamentals that are going to drive the market over the next 12 to 24 months, where you want to see the growth component there as well. But it was pure growth. I don’t give a shit about earnings. I don’t give a shit about your balance sheet. That worked for Rivian until just now. Rivian just got a $5 billion investment, but it crushed them, even though they did a great job one of the only companies that could scale EVs outside of Tesla and it did fantastic. They got to Tesla’s position three years earlier than when Tesla got there, but higher interest rates. It takes tens of billions of dollars to have an EV strategy and it got nailed. But now it’s no longer hey, just growth. We just want to see growth. It’s the fundamentals.

It’s looking at the cash on the balance sheets and what these guys could do and buy back stock and increase their dividend. I mean, if FedEx could go 15%, showing year over year negative growth in earnings, what do you think these companies are going to do when we report next quarter and give their guidance for the full year? They’re all going to announce buybacks. They’re all going to announce stock splits, especially if there’s a stock over $1,000. That’s the playbook All right, split, buyback, stock dividend and that’s okay. With earnings, we’ll be okay if earnings aren’t that great. Right, you just have to have flat earnings right now. But that’s a formula where your stock’s at an all-time high, just to put this in perspective.

One last thing, Daniel, sorry to go on a tangent here, okay, so when you look at FedEx I just want to explain something it’s at its all-time high pretty much, and if you look, it’s all all time high at 21, 22. And I have these numbers up if you’re watching a video. And in 2022, they generated $20.61 in earnings when their stock was at their all-time high. Okay, you know what they’re generating now? Less than $18 in earnings, which is telling you that they’re paying a premium.

It’s trading at an expensive valuation right now. They’re paying a premium for companies that are buying back their stock with good balance sheets, that are going to raise their dividend. They’re going to cut costs Because right now, if you’re looking at this market, you look at the economic outlook, it’s a lot slower than it was in 2021, 2021 heading there, right, so coming out of COVID. So it’s just interesting that the company was in much better shape fundamentally than 93 billion in in revenue compared to $87 billion in revenue right now. So it’s trading at a high premium, but that’s what Wall Street wants to see, and if you can get your stock price up, that’s all anyone cares about. Everyone keeps their job. Everybody does well. Stock price is doing well. Everyone cares about right. That’s everything. Your bonuses, everything right. So that’s the formula. Let’s see if it happens going forward. I just thought that was interesting. That’s a 15% when earnings numbers weren’t that good, but strictly because of the cost cutting.

0:47:16 – Daniel

Yeah, absolutely. It’s like the old sports saying winning cures everything.

0:47:21 – Frank

Absolutely, absolutely, and it does, it really does. I mean you know what a good example of that. So yesterday I had a fantastic day like yesterday, worked my ass off. We have an investor update out there, guys, for anyone that owns a token. So we update our Q1 financials, which are very good. Year over year we’re up 26%, billings are up 26%, while our costs are down I think 35, 36%. So, you know, really good start to the year, first four months compared to the last four months last year, but I have an investor update Just really busy. So yesterday I last four months last year but I’ve been invested update just really busy.

So yesterday I went home and um, hung out with my oldest daughter for a little while. Then I went to play basketball for about an hour and throw football around with my uh, youngest daughter, who’s like a sports geek, and then my wife and I. It was the Yankee bet game. She’s a Yankee fan, I’m a fan, and you know. And and just watching that game in new York man, I was so happy. The Mets really lookets really looked good, but um, it looked fantastic there. But um, you know, for me having that day was really, really cool. It was such a good day. I forgot the point I was going to make because I’m like wow it was really cool.

I’m so. I’m so busy I forgot what I was going to make with it. But uh, you know, for me, you know, spending time with the family is always really important because I’ve been so busy with work and everything. But anyway, I was talking about Rivian earnings and stuff like that and buybacks and cash being king and stuff like that. But really, looking at the numbers and getting back to the point that we just got to, it’s important that you look at FedEx as much bigger than just FedEx guys. It’s going to influence the way companies are going to report going into next quarter, and these are names that you need in your portfolio. They’re going to do great over the next six to 12 months. Make sure you have one or two large cap technology stocks in there, two of the largest. It doesn’t have to be NVIDIA. Nvidia is running tremendously, but Amazon looks great here. I think they’re going to just blow out earnings. You can throw Netflix in there. You can throw again Microsoft I would go with the Amazons right now and the Metas.

0:49:09 – Daniel

That’s why we have a couple in our dollar stock club portfolio.

0:49:12 – Frank

Yeah, Exxon or Chevron. I mean, you might see these boring companies. Berkshire is buying back a lot of their stock as well. These are the companies with the good balance sheets that you should have in your portfolio, along with risk. Yeah, you want a little bit of risk, but these are names that are not just safe. They’re going to significantly outperform the market over the next six or 12 months, and I think FedEx has shown the way here and you’re going to see it coming in this earnings season, which starts in about a couple of weeks from now.

0:49:38 – Daniel

Yep, you want to talk Rivian the big news there.

0:49:47 – Frank

Yeah, Rivian, listen, $5 billion investment from Volkswagen and I think it’s going to be the greatest investment in the history of Volkswagen. Oh, look at that, there’s a headline. We talk back and forth and people think I hate EVs. I don’t hate EVs, I hated the forecast because they forecasted, and California’s got a mandate, that you have to use electric vehicles. And I’m like when you disrupt markets, Daniel, it has to be easier for the consumer. It has to be easier, it has to be cheaper. It’s not cheaper. We’ve seen that it’s not cheaper with the cost for this. When they first came out with EVs especially Ford and GM the prices were through the roof. It’s not easier, but there is a market for it. There’s a good market for it. Maybe it’s 15%, 20% of total consumers that drive cars and trucks might have an EV. That’s fine, but and trucks might have an EV. That’s fine, but I could tell you 80%. This doesn’t make sense for them. And with the forecast saying that this is going to turn into a whole EV market, I’m like there’s no way, man. There’s a guy like me that I can never charge my car. I just drive too much. I don’t want to charge it. It makes it so easy to go to a gas station. But for other people it’s great. And when I look OEMs, which are original equipment manufacturers, the Fords GMs they did what none of them could do. They built a company that could scale EVs. And not only that if you look at their trucks, they got fantastic ratings and performance. The trucks had the highest rating as a pickup truck, like the highest safety rating you can get the only pickup truck that has it. Their products are great.

When I did research on this company and we stopped out. When I did research on a company I got on their list. They were sending me free tickets to car shows and different things. I mean, they’re always in touch with you. It’s just a really good company with good products. The thing is it costs tens of billions of dollars to launch a company like this. They did it. They did it within three years, quicker than what Tesla did. It did it and Tesla’s the only company outside that could really scale these EVs.

And what happened? They’re sitting on this massive amount of debt, burning through a billion and a half in cash. A quarter. They had probably like 70 billion in cash flow. Everyone’s looking at that burn rate and then interest rates go up tremendously and then you saw demand for EVs pull back right and it wasn’t really so much Rivian, because you need to spend that much money and they had a lot of cash on the balance sheet. But you know, they kind of got fucked and now you see this cash injection of a company. I feel like that was left for dead.

This is a company that I could see some. I could. You know Ford, ford should have. You know, ford had a huge investment at such a cheap price and could have sold such a high price. They’re out of it now, but you could see GM making a deal with it, like they could be. You know, instead of GM getting into into all this now, all this, now your partner. I think they’re going to see more partnerships with Rivian because, like Tesla, these guys could really scale and they have good products. Now they have great technology as well. They did a lot of homework on this company. It’s just the market shifted. When the market shifted on them, they got hurt.

I really think that Volkswagen again, they’re coming from behind. They fell behind in terms of EV development, but this is a fantastic deal for them. It’s great for Rivian. It gives them that cash infusion and this company is like right at rock and roll. You’re gonna see the man. I’m seeing Rivian everywhere in new York. It’s, you know, as well as tesla’s. It’s the only evs I really see. I saw that the cyber truck again. It’s like this gigantic, like you know I did see what well.

0:52:44 – Daniel

I didn’t get a good glimpse of it, but I saw one drive by.

0:52:46 – Frank

I don’t I mean maybe inside is cool and it’s awesome. I saw a black one for the first time. Most of the silver, uh, but I, I just you know, and I see some of them and I look at them and my daughters.

It’s like, oh my god, they’re just in love with it, like kids are in love with this stuff good marketing but for me when I, when I look at it, just looks like this giant, you know, big, I don’t even know. Uh, it looks like that, that tank that fought kit in night rider from 25 years ago. It’s just this big tank without the top on it. It just does. I don’t know, I don’t get it. But you know, hey, you see, in some of them I don’t see any real, any other EVs. If you live in California you see lots of EVs. I’m sure In West Coast you see lots more. You know where I am in Florida. I would see a lot other than Teslas and Rivians to be a really, really good deal for them. What are your thoughts? I know you’re not crazy about the EV market as well and stuff. It’s just-.

0:53:31 – Daniel

I’m not crazy about the EV market because it doesn’t make any sense and you have to start with the time you get in your car and start it with its battery to act like you’re doing a damn thing for the environment or anybody else. It’s a feel good story, it’s a hashtag look at me, I’m a good person and it’s all BS. In my opinion, exclude facts and the reality of things. Having said that, if you want to go buy an EV, have at it. My big point is, I think obviously Tesla is a leader. I think the market is big enough for a couple because you have enough wealthy people that like to have these other cars. The handful of people that I know with EV cars all have gas powered cars on the end. What I don’t understand and the reason it’s not taking off, is because it’s too much common sense, like many things in our world. I know a handful of people. Lately they got hybrids. You don’t plug them in, use gas. They use gas and battery. The gas as you’re driving powers the battery. Again, you never plug it in. They absolutely love them, love, love, love them to the point where I would actually look at it for commuting and things like that with a truck. A mutual friend of ours that you know, frank, got a new truck and he loves the hybrid. I know a couple of people with hybrid SUVs. They look great.

My big takeaway here is if you’re counting on this, but see, rivian is an upscale, it’s a nice trinket to have. Your average Joe can’t afford a Rivian. Your average Joe can’t afford a nice Tesla. These are six-figure cars. That is not a mass market car and that’s fine. You can be a premium. You know what? Rolex has stayed in business for a long time. Frank and a lot of people can’t afford Rolexes, so you don’t have to be a mass market product.

0:55:02 – Frank

And they’re producing a cheaper truck now.

0:55:04 – Daniel

Well, they’re going to try. They haven’t done a damn thing and they haven’t sold any of them yet, and that’s fine. Then you look at a huge consulting company, McKinsey Company. They put out a consumer report, frank, 46% of EV buyers are thinking about going back to gas-powered engines on their next purchase. Now, these sound like most people with not a whole lot of excess cash and things like that. But I’m not saying it’s the end of the world for EVs Again. The world is plenty big enough for Tesla and Rivian.

I do think those premium brands have a lot better chance than GM and Ford. They’ve already pissed through and blown up so many billions of dollars. If they don’t do some kind of a deal or cut back like they have, then they’re just crazy and they deserve what they’re going to get. But when you have 46% of the people thinking about that, now, let’s say that’s overstated by half. Okay, maybe only 25% of the people or 20% of the people are going to change, but if that happens, that is significantly a blow to all the projections that these guys are putting, these sky high valuations or these sky high projections about there, about how, by 2030, you’re going to have to have all these electrical chargers because the demand is so good. Don’t fall for that narrative. Do not ignore the data. You don’t have 46% of the people buying these things thinking about going back as a coincidence.

Now, Rivian, if I had a gun to my head, what would I do with the stock? Well, I would trade it and I would look to buy it. But if you buy this thing, you better have a long-term horizon, because I don’t know the exact details on the deal, but that $5 billion is a billion up front and it’s throughout what? 2026 or 2028 or whatever. So, yeah, but they do have a lifeline this tank’s bankruptcy and all that kind of stuff. So trade around it, but don’t fall for this mass market major disruptor in EVs, because it’s simply not there. And here’s proof. Yeah, there, now everybody can send me the hate mail on EVs.

0:56:57 – Frank

No, it’s not hate. Look, listen, I was looking at some more stats and just saying okay, it doesn’t make sense. The biggest thing, I think in your stat where it was 40-something percent, I think Daniel is 46. Yeah, so the 46% is when you’re trading that car in. Holy shit, I mean you want to talk about the value going down tremendously. I mean that that the trading values are down. You know that’s where they’re getting crushed.

It’s a big deal, right, because that’s what you use usually to get to your next car, right, unless you you know your lease is done or whatever. But you know, if you own it, that’s, that’s what happens. That thing’s not worth a lot. You’re not gonna be able to sell it and buy a new car. So which people like to buy new cars? Probably every two, three years.

Now, you know, when I look at this market to me, I just thought Rivian was a competitive Tesla. I think, you know, in 10 years I said they have a shot because you know to get to the point of scaling EVs. And that’s the thing you know. Everyone says they’re going to do this Now. They have the capital, they have everything set up, they have the facility set up. Now they could scale. They could just make these as soon as they’re ordering, they’re going to be making them. You’re going to be able to get them a lot quicker. That’s a really big deal in this market. Let’s see. They capture just some of the demand.

I know everyone that drives a Vervion truck that I heard of. You see the reviews on it from everywhere, everybody. It’s a good product. They like it’s high-end, but they are coming out with a low-priced truck and everybody says they’re coming out with a low-priced car. We’ll see how that works out. But you’re right, it’s just an industry where I think there are winners. I just didn’t think every single company was going to be a winner and we were dead on in that. That’s why I think Ford stocks are probably buying out for the first time.

You nothing about that. You can’t execute it all. You bring in a new employees. It’s all the connections I mean the former CEO of Forbes was talking about and saying you have no freaking idea how many things there’s like 80 things that have to work together, right. So that’s why you see recalls on these things. Like you know, every day is another recall and they just couldn’t figure it out.

But you know, unlike baggage, and you’re seeing, look what’s happened to Paramount. The deal went off the table. I mean, Goldman Sachs just downgraded, told you to avoid that stock when it was a lot higher. These guys are struggling. I mean, isn’t Paramount? The Paramount just announced they’re raising prices. If you’re raising prices and you lose your key franchise again, worse service, higher prices, does not translate into a good stock. It’s just not going to work.

But yeah, so good stuff there on Rivian and I like it here. That’s a good cash infusion. And again they just got caught off sides. And again they just got caught off sides, had a lot of debt. It wasn’t like they were stupid with their debt. You need a lot of debt to build this. But now they’re selling cars, now they’re selling trucks, right. So let’s see how that works out for them and I’m happy for them because it’s a good company. I like the CEO, I like how they met a lot of their estimates it. Let’s see if I’m going to be right. Last thing here the Mets thing, expectation. I remember when I was saying earnings are super conservative here with Mets. My wife’s a Yankee fan, I’m a Met fan.

1:00:00 – Daniel

I’m glad I lost my train of thought, because I was I was going to remind you winning cures, everything. See if that triggered-.

1:00:05 – Frank

Yeah it’s Anyway, Mets are on fire. I think they have one game out of the wild card. If they’re starting, they look like holy cow. They look horrible and they look great they’re hitting. They’re fans. It was electric last night and again me and my wife are going back and forth because she’s a Yankee fan, I’m a Mets fan, but it’s the first time I actually watched a baseball game in a while, because watching the Mets is always really tough.

But yeah, expectations and stuff. So it’s really nice to see them exceed it now and yeah, they’re doing very well. Same with stocks, same with earnings, stuff like that. But even the earnings expectation, the earnings picture is, I think earnings are super conservative. That’s something I haven’t said in five years. I think they have to be revised significantly because these companies have a way they have so many ways now, with the cash on their balance sheets, to increase their earnings and cut capex. I mean I think earnings are going to absolutely surge and it’s going to happen at a time when the economy is slowing. So it’s going to be a crazy market. Definitely, listen to the podcast, get more ideas and stuff, but really good stuff on that front. And again, I had a great day with my family yesterday, which I needed because I’ve been working my ass off, so it was really cool, really cool. Any final words?

1:01:08 – Daniel

No, we’re over an hour.

1:01:10 – Frank

Yeah, I did, went over an hour Covered a lot of stuff. Okay so, guys, that’s it for me and Daniel We’ll see you tomorrow, folks.

Hosting. We’ll show Unplugged Premium tomorrow both of us and the big topic is going to be inflation. Right, it sounds boring, but it’s not, because everyone is expecting inflation to come down over the next three months. The market’s pricing this thing tremendously. We’re pricing it hey. Eventually we’re going to cut rates. If it’s not going to be September, it’s not going to be just before the election, it’s going to be December, it’s going to be early 2025.

I think you’re going to be in for a rude awakening with some of the stats that we’re pulling up, and we’ll tell you exactly how to play it. Have a new recommendation for our Dollar Stock Club portfolio so you can become a subscriber for literally $1. $1. Okay, it’s not a joke, it’s not a gimmick, it’s just most people who subscribe for a dollar. It’s $10 a month after that and we keep almost every subscriber because of details, recommendations, a portfolio, the performance in Dollar Stock Club. It’s really a trading portfolio that all competitors charge thousands of dollars for that you can get for $10 a month. So we want to get more people exposed to that. It’s more education, more stock picking and a performance and a track record and stuff like that, which is really cool for Wall Street Unplugged Premium. But we’ll see then. Daniel, if anyone has questions, comments heck of a question.

Daniel, daniel@CurzioResearchcom and for me it’s Frank@ CurzioResearchcom. Guys again. Last thing, that Curzio Investor Update for our token is CurzioEquityOwners.com website. Definitely take a look at it. Lots of good things coming up. We explain our growth plans and everything. I do a nice video on it. It’s really cool just to see the health of our company. How you put an equity subscriber. The token is representative of equity. It’s not a utility token, it’s an equity token to trade T0. A lot of positive developments with what we’re doing right now, including some of our investments that we made. So really cool stuff. So talk about that a little bit more tomorrow and we’ll see you. Take care.

Love this episode of Wall Street Unplugged. I think you’ll really love Wall Street Unplugged Premium. The Wall Street Unplugged Premium is my members-only podcast where I dive even deeper into this week’s events. Well, I’ll do even more than tell you what’s moving these markets. I’ll tell you specifically what moves you can make today. So this is going to be about trading. Put big money in your pocket right away.

Due to the inconsistencies I see daily in the market. I’m talking about specific investment ideas. I’m recommending and tracking each week that I believe will be impacted directly by everything I just talked about today. Plus, you’re going to get the chance to go even further down the rabbit hole with me and my co-host, Daniel Creech, as we discuss which of these week’s trends could turn into massive windfalls. Massive windfalls, the big trends that we see lurking on the horizon. Also, the news we’re picking up from our network of insiders, which has gotten bigger and bigger thanks to you and so many people listening to this podcast in over 100 countries. And you’ll get a chance to talk to me directly in my special Ask Me Anything Q&A session. All that and a lot more like premium interviews with world leaders in finance, technology, industry and politics. This is all part of Wall Street Unplugged Premium and becoming a member is super simple and super cheap, so head on over to WSUoffer.com to check it all out. Sign up today and you won’t miss a thing. That’s WSUoffer.com.

1:04:28 – 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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