Wall Street Unplugged
Episode: 904June 8, 2022

The REAL reason for higher food and energy prices (Hint: it’s not Putin)

rising food prices

Daniel and I start today’s show by discussing the biggest risk to the market: inflation. While some data shows inflation is peaking, we break down why consumers will see elevated prices for a while.

Next, we highlight the government’s blame-shifting narrative around inflation and soaring costs… what’s really driving higher food and energy prices (and no, it’s not Putin)… and the best way to bring prices back down. And we explain why you don’t need to wait for a market bottom to start picking away at the best stocks.

We also discuss the Securities and Exchange Commission’s (SEC) proposed changes to “payment for order flow”… and whether this game-changing proposal is good or bad for individual investors.

Finally, I share why I believe Bitcoin will go over $100k.

Inside this episode:
  • It’s time to start picking away at great stocks [1:05]
  • Government leaders are shifting the blame for higher prices [4:59]
  • The real cause of—and solution for—soaring food and energy costs [11:56]
  • Big market changes could be coming from the SEC [17:05]
  • Why I’m bullish on Bitcoin [25:35]
Transcript

Wall Street Unplugged | 904

The REAL reason for higher food and energy prices (Hint: it's not Putin)

Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on main street.

Frank Curzio: What’s going on out there? It’s Wednesday, June 8th. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break down the headlines and tell you what’s really moving these markets. So, it’s Wednesday. Today is Daniel Creech day. That’s what Wednesday is, Daniel Creech. We bring him in every Wednesday to help answer some of your questions. Going back and forth discussing today’s topics. Daniel, how’s it going, man? How’s everything?

Daniel Creech: It’s going great, Frank. Thank you, sir. I like that. Daniel Creech day. That’s good. There’s no place I’d rather be than right here doing the podcast.

Frank Curzio: And what do you do here again? I forget. So, you took off like four weeks.

Daniel Creech: A little bit of everything. Let’s move past that. We got a busy schedule today.

Frank Curzio: All right. Look, the big concerns right now in the market, right? What I’m seeing, Daniel, is the past few trading sessions, the market wants to push lower, but then even with target warning, again, it just the market, you’re seeing buyers come in here. Doesn’t mean necessarily we’re at the bottom. And I don’t believe we’re truly at the bottom. I believe we’re close. We can go lower, but now’s definitely time start picking away. That’s what I’m doing for my own portfolio. That’s what I was saying in the past two weeks of podcast. We’ve been doing it with the portfolios in our newsletters.

Frank Curzio: And even today, the market started down now it’s making its way up a little bit, the NASDAQ’s up today as we’re taping this early on around 10 o’clock. But the biggest area is inflation. And we have the Fed meeting next week I believe, and they will discuss, not discuss, but they’re going to raise rates again, probably 50 basis points. And we need to see inflation moderating. And I’m not sure if we’re seeing that, but what I am seeing right now, with the Fed about to speak next week is the amount of articles coming out. And everyone deflecting inflation like its everyone else’s fault. It’s not the Fed’s fault. It’s not Biden’s fault. It’s Russia’s fault. It’s everybody else’s fault, which is funny.

Frank Curzio: And that’s all leading up to this because next week again, they’re preparing you, they’re conditioning you and all the newspapers, to show you that, “Hey, it’s not really our fault.” Again, there’s all politics and stuff like that. But the bottom line is inflation is here and is it’s definitely not transitory, which we know. You mentioned the Wall Street Journal, and you could read that in a minute, where they said we should use a better word than transitory, but we need inflation to moderate.

Frank Curzio: And that’s what we are now. So, what are your thoughts on it? Are we going to, from what I’m seeing with some of the data yes. Other data? No. When we look at housing, yes. We look at Target and Walmart, yes. Right? First affiliation, every trends we’ve seen, Daniel, but when I look at oil and food prices, they’re definitely going to go higher. So, which is it? I mean, for me, I think we’re almost there, but just because we’re going to top out on inflation doesn’t mean that’s such a great thing. We need to come down sharply don’t we?

Daniel Creech: Absolutely. And for consumer prices, and when you say inflation has peaked or is getting close, I don’t want to put words in your mouth. Are you referring to how the government measures inflation over time and things? You’re not saying that gas is going to go down and rent’s going to go down and stuff like that as far as inflation peaking, correct?

Frank Curzio: No. It’s more about peaking. And this is important to understand because you may say, “Well, it’s still expensive here.” But in terms of the markets, that’s what the markets want to see when the data’s released. They won’t don’t want to see eight and a half percent inflation. They want to see it come down. And as you’re seeing it moderating come down, even if we go down, what, 20, 25% here in prices, we’re still going to be paying what, $3 a gallon? Which is a lot more than we were paying a year ago, still.

Frank Curzio: But as we come down, it puts a floor into the market. And a lot of stocks are pricing this inflationary environment in down 25, 30, some down 50, 60%. And even Campbell came out today, good numbers stock went up and said, we’re expecting much more inflation going forward. That’s interesting because we were hoping a lot of companies reporting saying, “Hey, we’re seen that we get inflation on the control.” Because we heard these companies say that nine months ago and six months ago that, “Hey, inflation’s coming down, supply chain’s concern are easing.” Now the companies reporting are saying that we’re expecting a high inflationary environment still going forward over the next 12 months. And also, we’re still seeing supply chain concerns, which is a problem.

Daniel Creech: Yeah, absolutely. And to your point about, for our listeners, we try to have fun because in our business, and Frank and I talk about this a lot off camera and just when we’re kicking around ideas and things, we live in a world where you want instant results. And I’ll be the first to admit that’s why cryptos are so much fun because you can make life changing rewards in a year or less. Some of these tokens just do different, crazy things in cryptos.

Daniel Creech: Having said that, when we’re dealing with a huge macro topic like inflation, it’s going to take time to play out. And for us doing weekly podcasts and things like that, you doing every day, it’s much harder. But you have to continue to tell people what’s going on, but this is going to… It’s a bummer to keep pounding the table on inflation.

Daniel Creech: And we can only take some victory laps, but just today in the Wall Street Journal, Janet Yellen is doing her political kindness of throwing other people under the bus. So, what did she do before she was treasury secretary? She was the head of the Fed. Now, Jerome Powell’s there. And she says, quote, “Given the global nature of these markets” or excuse me, that’s the wrong quote. She says. “So, as chairman Powell indicated himself, both of us probably could have used a better term than transitory.” She’s referring to inflation. There’s no question that we will have huge inflationary pressures. She now expects this to continue for a prolonged period of time. And she says it’s unacceptable. And the last thing, here’s where good highlighters come into play, she hopes that inflation comes down, Frank.

Frank Curzio: Hopes. I love that. I love when the Fed uses that word, hope. It’s such a piece of shit word that pisses me off. Hope, hope like this is the Fed.

Daniel Creech: These are the smartest people In the room.

Frank Curzio: We hope, that is a terrible, terrible term. It’s almost like going at war, listening to a general saying, “Hey, you know what? I hope they don’t invade us.” It’s like really? You hope? I mean, hope is not a strategy. That’s not what we expect. That’s not why the Fed officials make the money they make, and then make millions of dollars speeches after they leave there and go to the Goldman Sachs of the world and every place else and make tens of millions of dollars and stuff like that.

Frank Curzio: But what frustrates me is, let’s deal with the problem and stop the bullshit. Okay. Biden ran and… Listen, Biden did his job. Biden did his job. He got elected based on the policies that he said, and those policies were: No more fossil fuels, we’re getting rid of the Keystone pipeline, we’re cutting back on oil companies and going to cut back tremendously. That’s what his constituents wants. And that’s what he did. And that’s fine. Right? That’s what they wanted.

Frank Curzio: Just like why I say DeSantis, the parents in Florida, live in Florida. We don’t want our kindergartens to learn about freaking sex and gender identification and kindergarten, first, second grade. And if they do, that’s our job to teach them, not the teachers. Right. That’s your job as a politician, right? You’re getting hired. Don’t us now. Right? Don’t bullshit us now, go on TV and say, “Well, it’s not our fault, it’s Russia’s fault.” And really expect the war on Russia and oil companies fault. They should be drilling and you know, we’re releasing and federal permits, it’s all bullshit. This is exactly what you wanted and deal with it because this is the inflation that comes with it.

Frank Curzio: This is what happens when you deal with these problems, but just the deflecting. And I don’t know why that’s the playbook. It used to be the playbook. And I get it. It used to be the playbook before social media, where you could see everything, everyone says their entire life and every single speech on YouTube or any other platform that you watch, Instagram, Facebook or whatever, right. Just go out there and say, “Hey, you know what? I messed up.” Don’t say we probably shouldn’t have used transitory or Biden and saying, “Hey, you know what? It’s not our fault. It’s not my fault.” There’s inflation. Just take blame. It’s okay. We make mistakes and learn from it. That’s what people love. When you say, “Hey, you know what? I fucked up, but whoop, this is what I’m going to do to fix it.” We love that.

Frank Curzio: We love those stories. And Americans love those stories, but that’s what heard Trump too, saying, oh, “Well, he never did anything wrong. He never did anything wrong.” He did a ton of stuff, right. A ton of stuff, right for the economy. But he was like, “Everybody loves me. The black community. No, one’s done more for the black community. There’s done more for the Puerto Rican community.” It was this constant like, “Oh, I’m great. I’m great. I’m great. And nothing’s my fault.” And that’s really what offed America, is because we know you’re full of shit.

Frank Curzio: And now, we’re dealing with inflation across every level and you are even getting fired up and cursing, and I say, you should say that on a podcast, because it’s your true feelings. What? I mean, it’s true feelings. Like, come on, man. This is exactly the platform you ran on, and now you got what you wanted. Right? So, you’re seeing it, and well, okay, unfortunately, maybe you could say the war start or whatever, and who knows if it would’ve started with Trump or not. Whatever.

Frank Curzio: But you are at the helm and when you are at the helm, it’s your fault. I don’t care if you’re one year in, three years in, four years in whatever, seven years into your second term. Right? So, when you are the boss, it’s your fault, that’s it. You claim responsibility. It’s under your watch, right? When you have a baseball team and you get in new coach and you have two first years, you inherit a shitty team. You’re there for two years. That’s your fault. If they’re terrible, those two years, it’s your fault, right?

Frank Curzio: That’s the way it works. Don’t deflect blame. Because you’re a leader and that’s not what leaders do. Leaders don’t deflect. Okay. They take responsibility, and they fix problems, and you’re a leader. That’s why people follow you because they trust you. And there’s no trust in this system right now, which is pissing me off. And now, what are we looking at? Inflation running wild. Not to have a massive rant here, but listen, we have to deal with it. For me, I truly believe… And based on Target Walmart, you see home price, mortgage demands down its lowest level in 22 years, where interest rate’s going higher, the Fed’s going to continue to tighten.

Frank Curzio: You’re going to see it moderate. It doesn’t mean it’s going to come down tremendously. But when we see the data and you see moderation, that’s going to be a sign of a bottom where we can say, okay, it’s not going to go higher than this. So, it should only get better than this. And we’re not at that point yet. We need to see… We’re going to be there, I think, over the next month. And when the next round of data’s going to be reported, but let’s see. But from a stock standpoint or equity or your portfolios, that’s what we need to see. It’s not that oh, gas prices are going to go from $5 or $2, which is like now the average cost of $5.

Frank Curzio: But if you top out and say, “Hey, they’re not going to go higher than five.” Just an example, right? Oil prices are going to go higher the summer months. Right? More demand. Less supply as they come down, if we’re saying, “Well, five is the top.” And then, they go to $4.80, $4.50, that’s a good sign. That’s a great sign for inflation. That means inflation’s coming down. That’s not so good for the oil companies, probably great for everything else and all the businesses. And that’s what we need to look forward to, but we’re going to see it. We’re seeing it with Target. We’re seeing a lot of consumers pull back. And for the first time with, Target saying, we need to get rid of our inventory and sell it at much lower prices. Danny, that’s the first deflation area event that I’ve seen in at least last 24 months, probably longer, which is good news.

Daniel Creech: Yeah. And that is good news. And as we talk about what inflationary environments mean and things like that, you’re going to have to see that, and you will. And you’ll watch that unfold and play out. What’s very frustrating to me, and I was ranting to you off camera, is the narrative that is trying to surround people to be okay with misery. And what I mean by that is, you have two choices: You can accept what you’re just told and blindly agree or disagree with that, or you can do some data research and figure it out.

Daniel Creech: My big point is that, if you look at the narrative across the board, which I’ve talked about with Helen in the Wall Street Journal, just yesterday in CNN, commerce secretary says the brutal reality is there isn’t very much more to be done on gas prices. You have the leading superpower of the world government and the highest rankings from the president to everybody else telling you there is nothing that can be done to lower gas prices. And that is 100% untrue.

Daniel Creech: So as an investor, and as me and this podcast, helps the microphone helps. You’ve talked about this in the past, how it’s a good form of therapy. You can either be frustrated that the policies are choosing to inflict harm on everybody, or you can invest to try to make some of that back. How do you do that? Well, if you don’t believe me that we can drill for more oil in a safe manner, like we just did a few years ago and have prices much lower, that’s fine. If you want to participate, buy oil companies, that’s going to help offset. I just filled up a little bit over half a tank, and it was 70 Florida dollars, seven zero. Thanks Biden for half a tank. Yeah. That’s crazy. And so, you see these articles about.

Frank Curzio: It’s not his fault though.

Daniel Creech: I should say in the commerce secretary and everything is blame put. Exactly. And that’s what you know, in the takeaway there, if I can provide value or hope to provide value for listeners, other than just getting this off my chest is that until something fundamental changes, don’t expect a different result. My point is don’t expect prices to come down in the sense of the reality of inflation. When you still have the government blaming big oil for gas prices and Putin for gas prices, you have them blaming meat producers for high food prices. And when you have the government attacking and blaming everybody else, like Frank just said, that is just setting the table. You can ignore everything they say after that, all you need to know is, “Hey, they’re not going to do anything to fix the problem.” You can increase manufacturing here. You can incentivize businesses to open up here. You can incentivize all of that, and you’re choosing not to, that’s okay. It’s not okay in my opinion, but it’s okay to be done. And so, that’s what you have to think about.

Daniel Creech: So, when you see these stories about, “Hey, we hope inflation’s coming down,” they’re telling you, we’re not doing anything. It’s going to get worse before it gets better. You’re seeing that again, like I said, the commerce secretary saying the same thing, all that is a hundred percent false. So, nothing is changing in that sense. And with this recent rally, just to continue real quick here, and I know we’re segueing, but we’re obviously in a bear market. Market indices are getting hammered, and we’re trying to fight back. But I would argue until the fed changes its course on being hawkish, you have to use the rips to sell out of stocks that you want to unwind on and look for better opportunity. That’s the new nature of environment in a bear market. And the comfort there is that you’re going to get a lot of opportunity in bear markets. It’s just a disappointing thing, to buy and see things continue to go down. That’s just the way investing works though.

Frank Curzio: Yeah. And it’s just to deflect everything on Putin. I could tell you the difference between Putin and our officials here. Putin’s very predictable. He told Ukraine, don’t go near Crimea and don’t go to NATO. If you do, we’re going to invade you. And Ukraine did both and now they’re in a war, right? So, it was very predictable. Ukraine was like, “Hey, I think we got everyone in our pocket now,” which they do, even though they’re listed, not my opinion, that this is one of the most corrupt nations. Almost everyone of their elections were corrupt. If you go back and look we hated them, right? We hated Ukraine just until Russia invaded them. Now they’re, like, seen as the greatest place ever. And, and I’m not saying that in a bad way, there’s great people there. But you know, it’s a nation that when it comes to politics, same with China, that you cannot trust.

Frank Curzio: They’re going to say some one thing and do another, which I guess you could say that in politics in a lot of places, but at least that was predictable and to throw everything, oh, this is Putin’s fault. It a joke. All right, we have to take responsibility for it. We have the technology to drill more oil, to be the large producer in the world, which I think we’re second or third. Now, we were first for a little while, and we could take that money and take 15, 20% of those profits and thrown into alternative energy, green technology, whatever we want to do, but to see where prices are, this is not sustainable for the average American. It’s not. I mean, I’m changing. Like, we drove my daughter to Georgia really quick. We drive in Georgia through to Georgia, which is 35 minutes away. Right. So where’s north, you can go for Georgia border on the east coast, in Amelia island.

Frank Curzio: I fill up now, my wife and I, we make sure that we always fill up in Georgia because it’s 15% cheaper than it is here. In Georgia. Just even though, again, state tax, whatever, the reason why, but it’s, that’s a big difference, right? So, if it’s close to $5 here, it would be $4.30, $4.40 there? Which is a significant difference. Because we are there three times a week, four times a week, and that’s most of our drive, but people are changing their habits and they are, and that’s where sediment changes. And that’s why it happened so quick with Target, so quick with Walmart, they’re like, holy cow, I just can’t believe that people aren’t… In the last month of that quarter, that it was like a light switch that people just closed their wallets and not buying discretionary things anymore.

Frank Curzio: And they shifted their products and everything, but you’re seeing it now, you’re seeing prices continue to go up. But to the point where you can only have so much pricing power, right? The kill for inflation is going to be higher prices because eventually people are going to be like, okay, I’m not going to be paying these high prices. They got to come down. That’s what you’re seeing. You’re seeing the average retailer have 35% more inventory than they had last year. And they have to just get rid of it at fire sale prices. That’s what we need to see. Is it painful? Yes. The good news is target said that the stock went down 8% in pre-market because you have those high frequency trading firms that have access to that market, not you. And I think it finished the day down like 2% or whatever. Yeah. So, that’s because it went down so much when, when they missed the quarter, but it tells you that the bottom is pretty close here, but we need to see inflation moderate, and we need to take care of the oil problem. Hopefully, we do sooner rather than later. Now, I think we beat that to death and probably talked about that.

Daniel Creech: Yeah, let’s get on bat. Let’s get on to bash and another government entity that might do something successful.

Frank Curzio: I mean, the Chairman of Commodity Futures Trading Commission CFTC that’s Gary Gensler, is speaking at a major conference, which is the Piper Sandler global exchange conference. It’s a major conference, did a big deal today because this is for the exchanges and Gary Gensler is suggesting changes in current system, the payment of order flows, which brokers send the orders to the market makers in exchange for payments. So, he says it may be a conflict of interest for the brokers and that too much power’s concentrated in a handful of market makers, and he’s likely to float proposals today that would diminish influence with wholesale market makers like Vertu. If you didn’t hear Vertu and Citadel Securities, Vertu is very, very huge. And we’ll get to that in a minute because they are starting a large crypto exchange with, with Citadel.

Frank Curzio: But what they’re doing is the zero commissions means that they’re making it up in pricing. With the market makers. I don’t know if Gary, and I’m going to call him Gary, if Gensler has a leg to stand on here because you’re about the consumer, right? You’re arguing the consumer. It’s better for the consumer. When they’re paying zero commissions, they don’t care about paying a couple cents or whatever, but dead zero commissions led to the biggest boom of volatility that we’ve ever seen, especially right after COVID it allowed tons of retail investors to start trading the Robinhoods, the Coinbases, and stuff like that, which increase volume incredibly. And now, we’re seeing that come down a little bit, but I don’t know if this is grandstanding or if anything’s really going to happen from this, but what are you going to do?

Frank Curzio: Because if you eliminate that spread of the money that these guys make, then you’re going to, what’s that’s saying for the brokerage rooms? Because you’re going to have to charge them. You’re going to have to go back to charging commissions. Which is going to result in less trading and less trading, less volatility is worse for the markets. I’m not too sure. I think they’re making a bigger deal about this than it is. I think it’s going to be a lot of talk, but if they do make a big deal about it, it’s important. But this is the big takeaway here, because at this conference, by the way, Robinhood CEO’s talking, Vertu’s CEO’s talking, Charles Schwab CEO, CME chair is going to be there. International Exchange Chair, Continental Exchange Chair, the NASDAQ, CEO of Galaxy Digital, Mike Novogratz’s going to be there. This is a very, very big conference, and people are concerned, right?

Frank Curzio: It’s very, very big. I will say that Citadel and Virtue though, which you know about. And we discussed off air that this led to Bitcoin going from about 29,000 to 31,000. And it’s around 30,600 right now, but a push over 30,000 again, because Citadel is partnering with Schwab fidelity. That’s going to build a high frequency crypto exchange and marketplace, yet Sequoia and paradigm, these are massive mass investors, guys. Going to be investors in this new platform. They invested over a billion dollars together. They also expected a consortium of wealth managers, market makers, and industry leaders, and joined the marketplace ahead of its launch. But I think these guys are taking it seriously, getting all in on crypto now and building this platform, they call it a marketplace, not necessarily exchange because Ken Griffin, as you know, wasn’t the biggest fan of crypto long ago. But it seems like now he is. I don’t know if it’s because he knows he could make money off it because it’s a $2 trillion market or if he truly believes in crypto, but he did a complete 180.

Daniel Creech: Yeah, I would think, I would think he, he sees it as an opportunity and I don’t, I don’t blame him for that. I think that’s good. Similar to the way the Jamie Diamond CEO, JP Morgan Chase has said, “Hey, I’m not a fan of Bitcoin. I couldn’t care less about it,” I’m paraphrasing, but clients want it. And I’m not going to tell clients want to do JP Morgan come out just last week when Bitcoin was around 30,000 said that, it had at least 30 or 35% upside from there. The great thing about Citadel and Virtue getting into the high traders and market makers, getting into crypto and doing this is it just shows you the theme that we’ve been reoccurring and trying to help people along the way. And we don’t want to come across as just cheerleaders and ignore bad news or negative news, bear markets suck.

Daniel Creech: They’re a reality. I’ve talked about being down on Galaxy Digital and personally as a position along with subscribers, the point to that is just to show the reoccurring, “Hey, if you have a bear market and prices go down, but the only thing that’s changed is the price, and the inner workings, and the money flow, and the development and the resources continue to come in. The odds are in your favor of it’s only a matter of time until prices catch up with all that behavior.” So, it’s good to see those big players get into crypto because demand an opportunity. That being said quickly back to the SEC potential rule changes. This is a huge deal in my opinion, because it’s going to help the individual investor I’m going to parlay or overlay a couple of stories. So, the SEC changes was in the Wall Street Journal this week and anytime.

Daniel Creech: So, the average individual investor, I take your point, Frank, a lot of people were drawn to that 0% commission or zero fees. And that’s great, but nothing is free. So when… If that influx of traders at zero commission only to go to these high frequency, hedge traders who are making tons of money off the backs of those it’s basically playing poker with seeing the other person’s cards. It’s a guaranteed win. If that leads to more volatility, I think that’s a bigger risk and offset versus the lower commissions because before this, and I’m going off memory here. So I… Full disclosure, I could be wrong, but TD Ameritrade swabs, different things. They were what, $5, $7 a trade before zero? And then, they lowered it to $2 or $3. So, let’s get rid of high frequency trading real quick and say the citadels and all those are not, you have to compete.

Daniel Creech: Because what the SEC potential changes are talking about is that market orders, which you just want to go buy it at whatever the market price is, a lot of those from individuals go to these market makers, Citadel, and Virtue, everything else goes to the NASDAQ and different exchanges, where they have to compete to fill those orders. That’s what you want in any business. You want competition because that’s going to overall lower prices. The point to that is that even if you have to go back to $2 to $3 per trade in commission, so you want to buy a thousand shares, it’s going to cost you $2. I don’t think that’s going to deter enough people. You don’t have to go back to $7, $8, $10 trades, like it used to be, or even before discounting trades, you had percentages of trades. When I first started in the brokerage business, hell if you wanted to buy X amount of stock, that basically looked at how much you were buying and charged you off that. Talk about a hack.

Daniel Creech: Yeah. So, I’m not saying nothing has been good as bringing the price down, but this isn’t the only way don’t fall for, “Well, this is the only way it can be done.” And of course, you’re going to get pushback because Frank, if you and I have a multi-billion dollar printing operation, and somebody else wants to change it, where do you think we’re going to stand on that? Well, hell no. You know what I mean, overall, I think it’s great. I don’t think the SEC is going to do it. I don’t think, I think they’re too big of a government entity to do anything right. I think they’re terrible, like every other huge government entity, but it’s good to see them dangle a carrot in front of your eyes every once in a while and act like they give a fly in Florida, Frank.

Frank Curzio: I know it’s true. I mean, the way the system is, E-Trade, place in a trade. You don’t know the relationship between E-Trade and Citadel, E-Trade and some of these other high frequency firms, you don’t know how much money they make. You don’t know. I think there just needs to be a little bit more disclosure that you’re not really screwing the customer. The customer’s not seeing it because they’re buying the stock, and maybe a few pennies here or… A 2%, 3% difference doesn’t really matter to you, or 2% difference in the price. And it’s probably less than that even 1%. But when you’re talking about hundreds of millions of shares trading on certain stocks, even a billion shares trading, it does add up. So, just maybe some more clarity on it because there’s no clarity in this whole business in high frequency trading.

Frank Curzio: It’s a bunch of front running, the high frequency trading, and you’re looking at some of these firms and the biggest, they’re not looking at fundamentals, they’re not looking, “Hey, this is a great management team. This is a good business.” Right? And you could say that the trading firms are fine if you’re trading firms, that’s okay, these guys are getting in and out of trades like in one second, based on the inaccuracies of the market, and they’re taking advantage of it. And that to me is front running. So when, when you’re looking at these firms… It is front running. You’ll see these guys get in and get out for everybody else. The reason why stock will open up and report bad earnings, look at Netflix reported bad earnings, it was down like 17, 18%, finished down like 38% that day, right?

Frank Curzio: Because these guys are able to get in out of these trades, even before the market opens, after it closes, you’re seeing these movements after markets and before markets, and you have to level the playing field. It should be a level playing field, but I don’t think anything is going to happen to this, but it is interesting to see the move, the move here from Citadels into crypto. And it’s important to understand that because people, when you look at Bitcoin, this is why I’m so bullish on Bitcoin. I don’t know where it’s going to be three months from now. It could be 20,000. I have no idea. I just know over time, this thing’s going to be well over a hundred thousand and over time it could be two years, four years, five years, six years. And I’m saying that because of the math and because of the data, if you’re looking at Citadel, I mean, I just announced that the companies, Schwab, Fidelity, Citadel, Sequoia, and Paradigm. Paradigm is very, very big in investing in tons of cryptos in the crypto space. They also expanding consortium wealth managers, market, major industry leaders. That’s what they’re saying, right? So, you are looking at… And then you come down to Fidelity. Fidelity is 4 trillion to the management. Maybe what? 25%, 1 trillion is in retirement funds, 401ks, you take 10% of that. That’s a hundred billion. They said, what was it? 20% Daniel? That they’re get allowed to, for people to use 20%.

Daniel Creech: Oh, to allocate in 401k.

Frank Curzio: Yeah. We’ll say if they use 10%, I think 20 percent’s a little bit crazy… As I said.

Daniel Creech: Well, that was the high watermark.

Frank Curzio: Yeah. That high watermark. Let’s say if it’s 10%, that’s a hundred billion dollars that’s 15 close to 15% of Bitcoin’s market cap. That’s just from Fidelity. BlackRock has 10 trillion. Vanguard has over eight trillion state street has, has close to 4 trillion. And when Fidelity opens up that door, it’s BlackRock, Vanguard, State Street, they all have to follow because if they don’t follow… And that’s what these companies are realizing, it’s what JP Morgan’s realizing, it’s what Citadel realizes. All these guys that hated cryptos, realizing that if we don’t open up this door, our customers are going to leave and go to places that offer this and they are going to leave. And you’re going to see outflows from these places into fidelity, because they’re going to want to invest in crypto because that’s very, very exciting. That’s why they want to speculate. And when you speculate in this money, the returns could be 30 X, 50 X, hundred X, which we’ve seen in almost all the top 100 cryptos at one time or another, which you cannot see those gains anymore.

Frank Curzio: People are wondering why the public markets are shrinking and not as many companies are going public. Why would all the regulation, all the bullshit, all the cells, all this specs, all this garbage, well, you don’t have to disclose stuff. Why don’t you stay private? And then you have security tokens, which opens the doors, where you can trade these private companies, like ours that are private companies that trade publicly where you could buy and sell our shares based on what we’re doing. Right? So, it’s less liquid, but you know, we haven’t gotten hit nearly as much as the rest of the market because you know, we’re not as liquid, but you know, we are going to have more liquidity. It’s got to be building up that market. It’s a lot to be said of this, but the takeaway is this, guys, Bitcoin is here.

Frank Curzio: It’s here to stay. It’s a massive market. And all the institutions have yet to come in. That’s why that Biden announcement executive order was such a big deal. At least he announced it, which now the framework is in place. You’re seeing more and more framework, more and more politicians come out and say, “Hey, we’re going to provide the framework behind this.” When they do, that’s what you’re going to see institutional money coming in. And the institutional money is in the trillions of dollars. So, if you’re a Bitcoin fan and say, “oh, this everything should be decentralized and off-platforms, no regulation or whatever,” if you want that, there’s no way you could think that Bitcoin’s going a hundred thousand. The way it goes a hundred thousand is by getting the big money in, which is all this retirements accounts talking trillions and trillions of dollars.

Frank Curzio: What does Bitcoin have a 600 billion market cap or something? So, this is where the money’s falling into. It’s coming in, Fidelity announced it, you got to see BlackRock, Vanguard, State Street. All these guys are going to announce it. They’re going to have crypto as an alternative investment for retirees that you could invest in. The funds are coming. That’s when you’re going to see this explode. I don’t know when it’s going to happen. We’re in a bear market, where risk off people are deleveraging right now, and I get it. But with Bitcoin down as much as it is 56% of its highs, now’s the time.

Frank Curzio: Put a little bit in, don’t go all in, start looking at some of these cryptos that are great innovations, great companies. That’s what we’re doing. That’s what we’re going to as well. That’s where the puck is going. And you see it with all these, the Jamie Diamonds, the Ken Griffins that hated this stuff are now saying, wait a minute. Okay. This stuff is for real. Whether they believe it’s real or not, they know that their clients want it, and they’re going to offer it, which means trillions and trillions are going to flow into this industry over the next few years. And where do you think crypto’s Bitcoin theory… Where do you think they’re going to go? They’re going to go a lot higher. That’s why you need to get into it.

Daniel Creech: Agreed. Yeah. Just scale into it. If you’re worried about the price volatility, just buy a little bit less. And like you said, in the past, if you have exposure now and it goes up, great, you get to participate. Yeah. You can kick yourself. You didn’t buy more. If it goes down, you can look to scale into it. As long as your thesis doesn’t change. That’s just the nature of environment. That’s the gray area. That’s the profession we’ve chosen. So, you got to get comfortable with that and you just got to do it. You learn by doing, yeah. You’ll see prices move against you. Seeing red sucks when you open your brokerage account, Frank, but as long as your thesis is intact, you can continue to manage and plug away because the inner working, the big tailwinds, the global tailwinds are working in your favor for higher prices. So, I think that’s great. It’s good to be bullish. And like I said, bear markets and stocks and commodities or Bitcoin or whatever is when you really make your money. So, build your positions. And then the next run, that’s cyclical, cash out some, and take them off the table, and then re-rinse and repeat.

Frank Curzio: And, and just for the record, guys, we’re seeing a massive bear market, right? A lot of capital getting wiped out. And yet you’re seeing a ton of money. Billions going to metaverse, Ethereum just announced Ethereum NFT game alluvium sells over 72 million digital land plots. This is from like a day or two ago where the land plot’s going to provide various benefits and upcoming PC and Mac game due out later this year. I mean, we’re in TCG world. You know, our deal there. You’re seeing tons of buddy phones, NFTs, Metaverse, even Apple talking about FinTech and where they’re going. You know, this is where the innovation’s taking place. And if this was a strong market right now, you’d see just so many of these industries within crypto exploding right now. But the fact there’s a big deleveraging event taking place. The Fed’s tightening. Once that ends, which I think is going to be at the end of this year, the Fed’s going to say, okay, well, we’re seeing inflation moderate.

Frank Curzio: That’s why it’s important. Because if it moderates and starts coming down, the Fed could say, you know what? We’re not going to tighten as aggressive. We’re going to be easy. And that’s when you’re going to see the markets really, really take off really, really take off from here. And that’s what we need to see. And that’s going to be some time probably next year, if I had a guess, early next year. And then when it comes to crypto and the amount of money that is going to flow in, you think it’s billions and billions now, and it’s terrible market. Think about if it’s a good market, that’s when you’re going to see investments come into all these new innovations. But the fact that you still see this money coming in this marketing, it was absolutely impressive. It’s amazing.

Frank Curzio: We were able to raise money for our real estate purchase in TCG world. If you think it’s going to be the greatest open metaverse 4k round, which is open to September, we’re very, very excited about that deal, and more and more people keep signing onto that platform. But this is where I say it a lot where the puck is going, this is where the money’s going right now. The big institutional money is going and you should be investing in it. Because a lot of these things are down significantly. And it’s given you a great opportunity to invest in this thing over the long term. So, what, I position accordingly.

Daniel Creech: Absolutely. And like you just said, we’re not going to get out of these bear market rallies or bear market or major headwinds for lower indexing prices across the board until the fed changes their tune on rates. So until then, just keep in mind that we’re in a different environment than what we’ve been in. So, that’s fine. It doesn’t mean it’s bad. It doesn’t mean you can’t play or make money. It just means that’s the most important macro point you can think of, and just continue listening to us for six months, and we’ll navigate you through there until they finally do something.

Frank Curzio: Hopefully, we’ll be able to make you guys money, if you listen to us.

Daniel Creech: Oh no, we can’t oh, well, hey, we got some losers, but we’re… Oil and commodities is fine and those are going to continue to do well. And we’ll take advantage of it.

Frank Curzio: Our portfolio’s holding up much, much better in the markets. You know, we did stop out like everybody else. But yeah, that’s what we here for. Help you guys out. Questions, comments, email frank@curzioresearch.com. Or daniel@curzioresearch.com.

Daniel Creech: Curzioresearch.com

Frank Curzio: I love when he says it instead of me, but Daniel, thanks so much for coming on. I really appreciate it.

Daniel Creech: All right. Cheers everybody.

Frank Curzio: All right guys, that’s it for us. And we’ll see you tomorrow. Take care.

Announcer: Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its host and guests. You should not base your investment decision solely on this broadcast. Remember, it’s your money, and your responsibility.

Frank Curzio
Frank Curzio, founder and CEO of Curzio Research, is one of America’s most respected stock experts. His research is regularly featured on media outlets like CNBC’s Kudlow Report, The Call, CNN Radio, ABC News, and Fox Business News. His Wall Street Unplugged podcast—ranked the No. 1 “most listened-to” financial podcast on iTunes—has been downloaded over 11 million times.

Editor’s note:

As Frank mentions on today’s show, it’s time to start bargain-hunting for the best stocks…

That’s why, later today in Curzio Research Advisory, he’ll reveal two new recommendations to profit from the “side effects” of inflation…

And add to two other positions with a ton of upside potential ahead…

All of which are trading at discounts too good to pass up.

Frank’s advice is the best way to combat inflation… as well as another hidden economic force eating away at your wealth.

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