Wall Street Unplugged
Episode: 829December 8, 2021

This 10x crypto winner is still a screaming buy

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We’ve been seeing some wild volatility in the markets over the last week… and the Fed’s change of tune on inflation is at least partially responsible. Daniel and I share why inflation is the worst enemy of the markets… why the Fed must raise rates to fight it… and whether we think they’ll actually do it. [0:30]

It’s not just stocks experiencing volatility—bitcoin and other cryptocurrencies also dropped a quick 20% in just a few days. I explain why you shouldn’t worry about what crypto critics have to say… why you need to look further down the road when it comes to digital assets… and why you should scale into crypto positions. [8:28]

Silvergate Capital (SI)—a bank focused on the crypto industry—raised additional capital this week. This stock is up over 1,200% for Crypto Intelligence members… but it’s still an incredible buy at current levels. [16:10]

Former President Trump’s new special purpose acquisition company (SPAC) is stirring the pot on social media. Daniel and I break down the drama… and whether there’s a legitimate investment thesis behind the headlines. [21:05]

Finally, the U.S. announced a diplomatic boycott of the Winter Olympics in China. We discuss why this isn’t as big of a deal as it’s being made out to be… and the best way to get exposure to China. [25:38]

Inside this episode:
  • Why inflation is the market’s worst enemy… and why the Fed must raise rates [0:30]
  • Ignore the crypto critics… And why you should scale into crypto positions [8:28]
  • Silvergate is up over 1,200% for Crypto Intelligence… but it’s still a great buy [16:10]
  • Former President Trump’s new SPAC [21:05]
  • The U.S. boycotts the Olympics… And the best way to get China exposure [25:38]
Transcript

Wall Street Unplugged | 829

This 10x crypto winner is still a screaming buy

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

Frank Curzio: How’s it going out there? It’s December 8th. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break the headlines and tell you what’s really moving these markets. I’m bringing in my buddy, Daniel. How’s it going?

Daniel Creech: Frank, it’s going good as always. It’s another good week on the island.

Frank Curzio: Yeah. It’s been pretty crazy. Crazy markets, right? The past few trading days, two to three percent moved. In NASDAQ, do you know how much the NASDAQ was down before this nice move up that we’ve seen and rebound? Well, Omicron is not that bad anymore, but it was close to seven percent. Can you believe that?

Daniel Creech: Only because I saw the DOW was down six from its all-time high. I figured the NASDAQ, a little bit more volatile, had to be. Yeah, but it was a quick… Is it glass half empty of me, Frank, to expect a future headline that, oh, maybe this variant is a little bit more deadly than we thought? Because inside of a week, we’ve gone from, oh my goodness. Let’s sell everything off to, hey, now everything seems to be pretty much better.

Frank Curzio: Yeah. We’ve gone from let’s declare state of emergency and force vaccines on young children in New York to, hey, you know what? It might not be too bad. I think the current vaccines work, and you’re going to be fine. Again, we’re in a world where overreaction is necessary in order for companies to generate profits. We should all know that by now, which we saw through the last election cycle. It’s pretty crazy and even before that.

Frank Curzio: But look, there’s a lot of companies that are doing well. Right? I saw Autozone report solid numbers. McDonald’s, a new high. Intel spinning off mobilize so it’s getting a bounce. In the meantime, we saw companies like DocuSign get destroyed. Some of the high growth names get destroyed where… Look the Fed’s raising rates next year, right? That’s a big change of pace where they’re like, no, no we’re going to do it earlier than expected. Tapering’s going to finish probably in March. What that means, you’re taking leverage out of the market. These companies that have 10 billion out on market caps, five billion out on market caps, and they’re generating a million sales or less than a million in sales, you’re going to see a lot of those names get hit. That’s really what you’re seeing right now. It’s pretty crazy out there.

Daniel Creech: Absolutely. Markets are forward looking as the old cliché goes, which they should be. You should try to get ahead of the game here. It’ll be interesting to see on rates because you got to be careful taking these people, politicians I mean, at face value. Even what they say because they lie a lot.

Frank Curzio: Mm-hmm.

Daniel Creech: You know that. They lie well.

Frank Curzio: Yeah. Transitory.

Daniel Creech: Exactly.

Frank Curzio: I love that.

Daniel Creech: See. You said that for how long? And bam.

Frank Curzio: I must have said that for nine months. I think that’s the number one word that I’ve said on podcast. It’s going to be transitory. You’re going to be fine.

Daniel Creech: Exactly. Yeah. Then now it’s not and that’s okay too. Because, well, that’s the world we live in. I don’t see how they’re going to raise rates. I think he’s hinted a lot more at raising rates more quickly than what they actually can or will, I guess. You remember the tantrum? I can’t even say it.

Frank Curzio: Yeah. Taper tantrum. Taper tantrum.

Daniel Creech: Of 2018?

Frank Curzio: Yeah. Mm-hmm.

Daniel Creech: Right? It’s easy to look back and say this well, hey, the market’s bit the hand of the Fed and they gave in and, okay, well, we won’t do what we said we were going to do. We’re going to keep the easy money policies.

Daniel Creech: I don’t think it’s a big deal for valuations to come down. It sucks that it happens so quickly and it causes panic. A lot of that’s driven by headlines and other things. I know you don’t like to harp on the Fed, Frank. How do I say this nicely here? You like to point out how everybody uses the fed as a punching bag. But I would like to point out, it’s not that you don’t agree with them, it’s just that you got to live in the world we live in. Is that fair to say?

Frank Curzio: That’s fair to say. That’s the thing, people want to use them-

Daniel Creech: I don’t want people to think you’re giving them a pass, I guess, is my point. Because they are awful. They are responsible. They are terrible.

Frank Curzio: Yeah.

Daniel Creech: Okay.

Frank Curzio: No, that’s fine. No, that’s fair to say. But I think that’s the problem with people where… Yeah, I made that mistake in 2010, not getting into the market a little bit earlier until I heard David Tepper say, you know what’s going to go higher? Everything’s going to go higher. I was like, “Holy shit, this guy’s right.” Instead of saying, “Wow, you know what? Housing, how these people are going to get money?” Well, you have easy money, and then you start handing out money to people even directly after COVID and stuff.

Frank Curzio: We have inflation and inflation’s here. I think the Fed’s going to have to raise. They don’t have a choice. I think they threw in the towel now. We have crazy, crazy inflation. Crazy, crazy inflation where asset prices have been at record highs for three straight quarters now. Even going back to… Again, you had COVID. I get it, right? It’s an extreme Black Swan event. But when you’re seeing every single asset class at all-time highs, it’s time to start raising freaking rates, right? Come on. It’s common sense. Forget about it. I know the politics and shit like that. Now, look what you’re doing. Not only that, the policies in place to limit the amount of oil drilling is going to result in energy prices skyrocketing and continue to skyrocket. That has a bigger impact than anything, in terms of impacting all of us, all consumers. Well, we see that, whether it’s we’re heating their homes or cooling their homes. Even Florida still. It’s still pretty nice here in December. Or filling a car up with gas, which I’m seeing, which is crazy.

Frank Curzio: Then you throw in all the prices, man. You go to restaurants now, stuff that costed 25 dollars costs at least 40, 45 dollars. It’s not like six, seven percent inflation or it’s eight percent inflation. You’re seeing 20, 25 percent, 30 percent. It’s pretty crazy. It’s going to be strange in 2022 because you can get away with that when you have low interest rates, and you purchase some bonds, and it’s liquid, and you have a crazy, crazy market that’s just flooded with cash. But when you’re removing that and taking leverage out of the market, now you got to say, “Holy shit. This could be a really big deal.” It’s going to result in people closing their wallets, less profits, less borrowing. That’s going to hurt a lot of companies. It’s just doing as simple math. It’s going to hurt a lot, a lot of companies.

Frank Curzio: It’s going to be a lot of leverage coming out of this market. You’re going to see in 2022, it’s going to result a lot of volatility. But like you said, Daniel, the good news is ever since the credit crisis. What happens? Back in the day, when the market used a crash, it used to be two, three years with the tech bubble. 2000, 2001, two, three before the market came back. Now, it’s like the credit crisis. That was like 13 months, 12 months.

Frank Curzio: COVID was like three months, right? All these massive downturns. If you look over the past 10 years, these 20 percent declines happen in like weeks. Then, immediately, you see that snapback. The good news is, when this thing crash, it hurts. But it’s not like a constant crash. It’s not a long drawn out crash anymore that happens over three-, four-year period, even over a six-month period. It just happens and then it seems like people just go in and use that as a buying opportunity, which we’re kind of seeing again, which I don’t know. It’s different circumstances, Daniel, now that the Fed’s there to… That golden ops economy to be there to hold you if you fall. We’re always here. We’re always here. The Fed’s not there anymore. Right?

Daniel Creech: Well, they are. They’re saying they’re not going to be there. They’re still there.

Frank Curzio: Well, they’re still there, but they’re raising rates, right?

Daniel Creech: Yeah.

Frank Curzio: The only way the combat inflation is raise rates by taking money out of the system. It’s not like the Evergrande situation. It’s not the credit crisis where, hey, just whatever. What is it? What do you need? One trillion? One trillion or two trillion, did you say? Oh, two trillion. Okay. We’ll give you two trillion. All right. You’re good. You’re good. You’re fine, okay. No, it’s not one of those environments. It’s like, no, we got to take money out of the system or inflation is going to go through the roof. Because inflation, by far, is the biggest risk any market could have. If you look at Venezuela, you look at us in the ’70s and ’80s, it’s the biggest risk by far because the only way you can control it is by forcing a recession almost. That’s where we’re at, which is crazy. Then what happens? We see risk assets and even Bitcoin. Bitcoin sold off a lot too. Right?

Daniel Creech: It did. One thing on the Fed. I don’t disagree with anything you said there. I just want to point that out because why do you have these massive pullbacks in a matter of days or weeks instead of months or years. Now, we’re not saying that it couldn’t be a choppy market for a couple years going forward. We’re not saying we know the future. We’re simply pointing out that you need to know what’s behind the atmosphere and the price action in today, in my opinion, because last week over Thanksgiving, when the market was really selling off hard, not that it’s easy to watch prices go down or your portfolio take a big hit or subscribers getting hurt. But when you know why you own something and what you own, that’s a big deal. I pound the table on this. Money is emotional. So, you want to know this. The reason you have more volatility in all this is because you have massive amounts of money sloshing around.

Daniel Creech: So, at least know what the Fed is doing and what they’re saying they’re going to go back on or change routes. We’ll see how and how often that plays out. The big pullback in crypto, to your point. Exactly right. I had a few friends ask me about this. Again, the fun thing about doing this every week, Frank, is you stay in touch with your subscribers and listeners. The bad thing about doing this every week is there’s not always something new to point to, in my opinion. There’s always news. There’s always headlines out there. There’s always something happening. Don’t misunderstand. But if you’re searching for, hey, why did this go from 62,000 to 42,000 in a matter of days? Take your pick, and you’re basically going to come down to a fundamental belief of where your core values are with Bitcoin. The way I look at that is, nothing has changed for why Bitcoin is rising like it is over the past several years.

Daniel Creech: Meaning it’s an inflation hedge. It’s sounder money. There’s a limited value and you have tons and tons of capital from all types of big and small investors moving in. If it helps you when you see Bitcoin going down, to your old point, you might have too much. If it’s really keeping you up at night, you might have too much exposure. So diversify, or kind of do some soul searching there, but just remind yourself, hey, is anything changing? If not, not that I’m a permeable, but it’s easy to be a permeable on this asset class when you look at why it’s going up because of everybody else’s actions, I.E., the Fed, risk on, risk off type mindset. Yeah. It’s got a great bounce back. It is crazy volatile, but is there anything has changed over the last two weeks in Crypto, other than the price rank?

Frank Curzio: No. Nothing really.

Daniel Creech: Is there anybody who-

Frank Curzio: China. China is going to announce they’re going to ban Crypto again. I think.

Daniel Creech: Oh, nice. Maybe we do have a crystal ball because I could say that’s probably going to happen.

Frank Curzio: Yeah. What’d they do? Six, seven times this year already. They say we’re really, really going to ban Evergrande. We don’t want any money come out. We’re really banning. Now, we’ll take away from banks. We’re banning it. But it seems like that same story keeps coming out. When I look at Bitcoin, I say the same thing. Look, in three years, I think it’s going to be a lot higher. It’s a massive market that institutions were late to get in. They have to get in because their clients want it and because it accounts for a two trillion plus market now. This is a major, major market, and you have the most innovation coming through there where the metaverse is going to run through Crypto. DeFi is disrupting Wall Street. It’s disrupting every security tokens. It’s disrupting our financial systems. This is here. This is now. This is where the innovation’s coming from.

Frank Curzio: There’s a lot of venture capitalists, the smartest in the world, Andreessen Horowitz. They’re investing like crazy. There’s probably about 70, 80 different deals that were invested in. You look at NFTs as well. Again, it’s not just like stupid art and stuff like that. It’s bigger than that. NFTs within the metaverse. Just properties being sold. Just lots and lots of stuff. Right?

Daniel Creech: Yeah.

Frank Curzio: You mentioned that and numbers and stuff. We’ll talk about that another time. But when I look at Bitcoin, I look at a three year time horizon and say, look, in three years, I think it’s going to be a lot higher. I don’t know what’s going to be next month or next year. I know it’s going to be volatile, but that’s why if you’re going in for the first time, buy a little bit. Okay, do it through a Coinbase or do whatever.

Frank Curzio: If you’re into Crypto, you can get a lot cheaper in different sites, but that’s one of the easiest and the safest when it comes to, to Coinbase. Buy a little bit and, this way, it’s not keep you up at night. When it comes down, you could buy more, an anti-position. Hold it because you want to be in this not just next three years, five years, 10 years. This is here. This is integrated in everything now. It’s not going anywhere. There’s a lot of shit coins that I think will get killed. But, look, what are some of the negatives on this? There’s really not any negatives now. It wasn’t volatile enough. The people don’t believe it in and now they’re looking at it. Hey, this is a store value.

Frank Curzio: A lot of companies are putting it on a balance sheet, but you also have the climate change maniacs, right? Who think the world’s going to end tomorrow again. I believe in climate change. We have different opinions on that, Daniel, but, for me, I get it. But not to the point where let’s not produce any freaking oil or stop producing oil when we don’t have alternative to replace it. Why? And prices are going to go through the roof, and you got to crush our economy, and what is China doing? Right at the Olympics, they’re building coal plants like crazy. They get cheap energy. It’s going to make them 10 times as strong, and nobody cares. We have a bunch of kids holding up signs. Now, the electricity use, I wanted to bring up a stat to you, which I think is amazing.

Daniel Creech: Okay.

Frank Curzio: Which is kind of funny. Right? So Bitcoin, right? They’re saying the amount of electricity consumes is killing our environment. We have to change. Elon Musk came out and said, “Okay. That’s true until Bitcoin… Use less electricity.” Right? We got all this stuff. Again, the climate change people went nuts on them. Right now, Bitcoin accounts for 0.5 percent of the world’s electricity.

Daniel Creech: 0.5 percent?

Frank Curzio: 0.5 percent of the world’s electricity. Right. Holy cow. We need to stop it right now or the world’s going to end. All the technology companies, how big they are on climate change, the amount of money that they’re putting in this. One of the biggest investments again. Right? To check off some boxes. It’s not like they care, right? Do you know how much data centers, and I’m talking about hyper scale data centers. These are the largest in the world, right? There’s about 200. They’re owned by who do you think? Google, Microsoft, Amazon. Do you know how much electricity things account for?

Daniel Creech: Probably more than Bitcoin, the way you’re setting this up. I like it.

Frank Curzio: Three percent of the world’s electric usage. Now the best thing, if you don’t know what a zettabyte is, look it up. Right? Because we’re about 40 zettabytes. We’re going to go to about 180 zettabyte in four years, right? With all the data that’s being consumed, all the amount of video. Everything’s video, right? People think the cloud is real. The cloud’s not the cloud. The cloud is servers, right, that are offsite that you’re storing all your data information in, right? This is going to increase by a factor of three or four or there’s got to be change to the technology, which there will be change in technology.

Frank Curzio: If you’re a CRA member, you know what technology I’m talking about, but they’re going to have to triple or quadruple the size of this to account for all the data storage, all the storage, all the service that needs store this. We’re going to look at close to 10 percent of the world’s electricity usage. I don’t know why nobody brings that up, but you want to talk about Bitcoin? You want to talk about politics? I just think that’s an amazing step. We have to store more data. We’re going to have to store it.

Frank Curzio: Data’s going crazy out of control. TikTok. Everything video now. What are you going to do? You’re going to need more of these hyper scale data centers are going to need to be built. I want to say something really quick because I have something here, which is from… This is from hyper scale. The website. I never realized this, but then I’m kind of nervous to start really going crazy with this thing. When you look at a power consumption, one of the world’s largest data centers, Microsoft, 700,000 square feet of data in Chicago, Illinois has a capacity to consume 200 megawatts of power. To put that in context, that’s enough to power 150,000 homes.

Daniel Creech: 150,000 homes.

Frank Curzio: Thousand homes.

Daniel Creech: Okay.

Frank Curzio: Bitcoin. We got to get rid of Bitcoin though right away. When we look at this, I just think there’s tons of opportunities. This is where I think the most innovation’s going to come from and there is. There’s lots of names we talk about Silvergate Capital all the time, right?

Daniel Creech: Hey. Real quick. Are you taking a shot at their data centers? Because AWS, Amazon Web Services, was reportedly down, causing a lot of havoc across a lot of different websites today. Little kick them while they’re down, Frank. I like that.

Frank Curzio: Kick them all, they’re down. Yes, but listen, if you look at cloud, who are the biggest companies in the world? Microsoft, Apple, Google, Amazon. You’re looking at Apple and Microsoft now, together, combined have a five trillion market cap. These guys are making a massive fortune, and you can look at revenue, but it’s not revenue. It’s the profits because the margins are explosive when it comes to their cloud operations. They’re going to protect this any way they possibly can. They need to, right? The more we store on cloud, the more servers that got to be created, but, again, they, they control the world, these companies. That’s not going away. There’s a reason why that was a safe haven when the market came down though. It was Apple, Microsoft hit new highs. Money was flowing into there where. You would’ve seen an even bigger dip, maybe a five percent pullback in some of these markets with the risks.

Frank Curzio: But yeah, it’s pretty incredible. But really, really quick came back to Bitcoin. Because one of the companies you talk about is Silvergate Capital. We recommended this at, I want to say, around 13 dollars a share. It’s our cost base a couple years ago, a few years ago. This is one that we saw in our Crypto Intelligence, news that had tremendous upside, and they just did a financing, right? For close to 500 million dollars and saw the stock come down. But, again, we recommend this thing at 13. I don’t know where it is today, but I know you’re a fan of that company as well, Daniel.

Daniel Creech: Yeah. It’s a great story. I came across that, like you said, we came across that a couple years ago listening to an interview of the CEO. They’re a profitable, just old school bank for the most part, but just had one eye open and the leader was always looking for innovation and new things to bring to the bank. They got into crypto. They have this Silvergate Exchange Network, S-E-N, which basically handles back and forth, allows institutions and different clients to 24/7 fund accounts, transfer money. Just that borderless disruptionness of payments. There’s no nine to five to where you have to wait on somebody else. Just to give you an example, I was looking… This is back from July, Frank. This is the second quarter. We’ll get to the capital race here. I’m sorry. I’m taking this on a rabbit trail.

Frank Curzio: No, no. It’s cool.

Daniel Creech: But the second quarter, just to give you an idea of the growth. They reported in July, the second quarter of revenues, and I know they’ve reported since, but this one just had a good stat. Their Silvergate Exchange Network handled 240 billion dollars, US dollars, in transfers for the second quarter during 2021. That’s 44 percent higher than the first quarter, the previous three months, okay. That was over 968 percent higher than that quarter in a year ago in 2020. My point is you went from basically 22 billion to 240 billion in a year or a little over year. That is amazing growth. What does that mean? You’ve been on this good, not… Tangents not the right word. But being good vocally about, hey, there’s a lot of stuff out there that got rewarded for just growth.

Daniel Creech: Now it’s getting hammered because there’s no profits. Your Pelotons. Things like that. Well, this is a situation where this is the perfect storm because you have a company that’s growing like crazy, this exchange network, but they’re profitable. Their profits are increasing, and this gives them a lot of optionality to offer different products. But once you get people just like Facebook, once you get people on your platform, you can figure out how to monetize that over time. Getting them there, you could argue, is the hardest part.

Daniel Creech: Now you’ve got a billion something people… This Silvergate Exchange Network is incredible, and it’s only going to continue to grow. Even if it stabilizes a little bit, then you can look at monetizing, but that’s a great thing. The stock was… Whatever it was-

Frank Curzio: The stock-

Daniel Creech: 12 percent lower is where they… Because you got to incentivize people to come in. They said, “Hey, we’re going to do an offering.” I think it was around 160 in share. They did this in 145.

Frank Curzio: Yeah.

Daniel Creech: Yesterday, it gained all that back. It opens at 145, pops right away because people want to get into this name.

Frank Curzio: It’s even up today too. You’re looking at the stock and pulling up a chart at 170. What I’m going to say at 13 dollars compared to 170, you think you missed it? I think it’s a better buy today based on the numbers that you said. But one of the things that I like about this company is when they did this capital raise and, again, they had offered discount because the market cap is about four and a half billion, and they were raising close to 500 million dollars.

Frank Curzio: That’s a big capital raise for a company. 25 percent of the market cap. A little bit less than that. What I like about it is a lot of companies that we see, especially in these markets, especially a company like this, that saw its share price go up so much over the past couple of years, what you normally see, Daniel, is on these offerings is you’re seeing these selling shareholders.

Frank Curzio: The shareholders are selling. The shareholders are selling. These guys raise this money, and these guys are not selling. They’re not selling. What are they using the money for? To further supplement the regulatory capital levels of the company, totally owned subsidiary, which is Silvergate Banks. It’s an actual bank and for other general corporate purposes, which includes acquisitions and things like that. But, for me, when I look at this name acquisitions and also leverage, right? Leverage is very, very good when you’re in the banking industry. To increase their leverage, which they’re probably going to offer like yield farming and things like that, and clearing services. These guys are like the one stop pure play in this industry. There’s other names in the area that you mentioned another one, which you can give. I forgot the name. What was the other one you mentioned when talking?

Daniel Creech: Oh, I don’t have it. It’s SBNY is the-

Frank Curzio: Yeah. Another one that got into crypto, but as a pure play crypto company, that’s going to see tremendous growth in only four and a half billion valuation. This company, based on the fundamentals, is more of a buy now. When we bought it, it was taking a chance seeing where crypto was going to be over next three years, and this thing took off. But these guys are clearly becoming the biggest player, the best player in the industry. I like them a lot. I still think it goes higher. Other than that? Other news, Daniel, I don’t know. What about SPACs? Trump? Trump’s SPAC. SPACs. Trump. Trump. SPACs. You know what? I reversed that before. I don’t know if it’s because I’m dyslexic, but the Trump SPAC and the reason why it’s funny because I thought at December 6th, okay, you have these guys announced that they have one billion dollars committed, right?

Frank Curzio: Which drew pipe investments, which is normal, right? This is normal. This is what you do. When you announce a merger or you’re billing a company, once you do this with one of these SPACs, you got these pipe investments and that’s where it gets really fishy. It gets really fishy. This is why these things were almost outlawed a while ago. Now, they came back because, again, everyone thinks it’s good and the retail investor was making money on the backside of this. So, it’s okay when the retail money. They didn’t know that they’re buying this for 10, they’re selling for 13, 14. Everyone else in for a dollar and selling it for like eight, nine, 10, 11. These pipe deals, they’ve given away warrants. They don’t have to disclose the warrants. They don’t have to disclose this stuff.

Frank Curzio: This is great for chametz and all these investors and stuff. Thy made an absolute fortune just feeding the stuff to retail investors. But here you go, you got the billion dollar pipe on the same exact day, the same day that they announced that. The FCC and whoever else are launching investigations on the company. Just-

Daniel Creech: Yeah.

Frank Curzio: Yeah. I love the politics behind it. I know you don’t want him to start his own media company. You want to keep him off the media and suppress him, which, again, this is the constitutional right where your freedom of speech. I think that’s amazing. But I think there’s more to this story because, Daniel, if they really decide to do this and they have anything wrong with pipe investments, you’re going to have to apply that law to every single SPAC that was launched.

Frank Curzio: If you do that, holy cow, because the shit that’s under the hood on these SPACs that they didn’t have to disclose. That’s why you’re not seeing SPACs come out that much because a lot of this has to be disclosed as he said, okay, you know why? Because now the retail investors getting its ass kicked on these things. I think it’s like 65 percent of them are down from their original price of 10 dollars. You always have to wait until the retail investor to get wrecked, right? They got wrecked and now they’re like, “Whoa. We’re looking into this and you got to disclose a lot of more information.” The more you have to disclose, the more that these things aren’t being launched. You’re not seeing them being launched anymore.

Frank Curzio: But it’s just funny, because whatever they do to this, remember, this is an industry. You’re going to have to do it. Every single pipe going all the way back, which I know a lot of these politicians were invested in early on. A lot of these guys have money, which certain firms are invested in. That’s going to open up a massive can of worms. I just thought that news was kind of funny. The same day they announced that the investigation as, “Hey, we raised one billion dollars in pipe investments.”

Daniel Creech: We’ve joked in the past about this fits into how there’s nothing new under the sun. In our world, financial news junkies, financial market guys, researchers, et cetera, et cetera. This is basically our grocery store checkout item. This is where we get to catch up on the People magazines and the headlines and all the drama and what you left out there is hell, they got a congressman. What? Devin Nunes is taking over as CEO next year. I guess you resign from your post?

Frank Curzio: I don’t even know. I saw the news. Yeah. I think-

Daniel Creech: Yeah. The stock, remember, this stock comes out. It skyrockets to over 70 dollars a share as basically getting on the meme trading wagon. It’s pulled back significantly to under 50. It’s now, basically, like you said, under investigation. Got an ex-congressman, who they’re politically tight as can be. This is just one of those things where this is the perfect world. As I’ve said in the past, for Willy Wonka and the Wizard of Oz combination. If you buy this stock, you’re basically buying it on the thesis that talk about pricing in success before it. They don’t even have anything launched yet. You just know it’s going to be media-related. Whatever that means.

Frank Curzio: Yeah.

Daniel Creech: But your thesis is here is, hell, this is just a connected crazy. Your biggest potential here is you could be a meme stock and, hell, this thing could go to 150.

Frank Curzio: No. I know.

Daniel Creech: But it is entertaining. Like I said, this is our gossip side. You got to laugh at this. If you want to play in that game, treat it as a lottery ticket that doesn’t expire as quickly as paper tickets.

Frank Curzio: Yeah. You could put results on this. You could analyze this because if you look at social media platforms and how many people are on them, you can go and look at how many Twitter followers that Trump had-

Daniel Creech: Yeah.

Frank Curzio: That are going to be tuning in this media platform. Because you look at media platforms, it’s all based on daily active users, how many people you have on the site. We’re talking about tens of millions of people. If not hundreds of millions throughout the world because the people that hate them want to listen to them even more. It’s like the Howard Stern effect. Right? It is crazy when you look at it that way. I just thought the last part, the last thing I want to talk about, which I thought was funny is how the Biden Administration came out and said that we’re going to boycott the Olympics.

Frank Curzio: There’s going to be like no politicians there and stuff like that. I just thought that was kind of funny. I thought that they’re not going to send any government representatives to the games. I’m thinking here’s the place that we know for a fact started COVID, that killed millions of people around the world. They lied about. They didn’t let anyone in the country. The WHO. We saw how corrupt the WHO was. Right? They said, “China is great.” They allowed WHO in there and WHO still got their back. We know where it started. We know where it’s originated. We know it. A lot of whistleblowers have come out. Just what these guys have been doing is unbelievable. Just to have the Olympics there, but our response, our big response from the Biden Administration is we’re not going to send any representatives to Beijing.

Frank Curzio: Oh, man. Did you just make a bold, bold statement? Don’t increase tariffs. We have the power to make China a living hell, right? They depend on us. Right? We’re the largest consumer of things, which means we have the money, right? They produce a lot of stuff. We could buy it anywhere. Okay. It’s going to be more expensive if we buy it anywhere. But we have the ability to crush China. They’re not going to sell our bonds anytime sooner. That’ll crush their economy. Right? We own them completely. It’s changing. It’s changing now, right? We’re not energy efficient and stuff like that. But it’s just funny that that’s the statement we choose to make. It’s a big deal because China accounts for 40 percent of the world’s growth and this is an economy where you’re seeing, right? The supply chain disruptions, you’re seeing a pullback, you’re seeing the Evergrande situation.

Frank Curzio: I’ve seen the stats. You’re looking at construction is down 36 percent. A lot of these debt-laden companies having trouble. They’re trying to encourage them to borrow more. It’s a lot of things under China that aren’t going right. This is what we want to do. We have them in a perfect position, but this is the bold statement that we make. Oh, we’re not going to have any representative. You know what? President Chief, we’re not going to have anybody, any of all representatives from the US, attend your Olympics, like that is the slap in the face to them. I don’t know, maybe it’s me.

Daniel Creech: Well.

Frank Curzio: We could have done a little bit more than that.

Daniel Creech: It does seem odd to us common folk, us peons, Frank. But you got to remember, we’re not part, well, you’re more the elite than I am, but you got to-

Frank Curzio: Tax man.

Daniel Creech: Remember. This isn’t to us.

Frank Curzio: Yeah. Don’t tell my wife and kids that. To them, I’m just like a pain in the ass.

Daniel Creech: But your fundraisers you go to and all that excitement now. How did you get back to Florida this last trip? Just coach? Anyway.

Frank Curzio: Yeah. That was pretty cool though.

Daniel Creech: It’s like the Seinfeld episode when they’re talking about Elaine and Jerry, who gets the first class, and he says, “Well, you’ve never gotten a first class before.” She’s like, “I know.” He says, “Well, you don’t know what you’re missing. You need to go back there. I’ve been there. I can’t go back to coach.”

Frank Curzio: Yeah.

Daniel Creech: It’s funny because from a political standpoint, I agree with you in the sense that it’s kind of funny. But in their world, this is a quote, unquote, bold move or a serious move not to have officials there and all that. I’ve read headlines, as I’m sure you have, they’re going to retaliate in some way. That all doesn’t matter. The big takeaway here for me is just as a fan of the best of the best in the athletes is that you always have something hanging over… The situation is always going to have something hanging over in China.

Frank Curzio: Yes.

Daniel Creech: You can point to any number of things, and I’m not saying we’re perfect. Hold your hate mail on that silly stuff.

Frank Curzio: Yeah.

Daniel Creech: I’m not going Ray Dalio here.

Frank Curzio: No. We involve ourselves in too many situations.

Daniel Creech: But my point is that it sucks for the athletes on there’s always going to be this over there. It’s just crazy. You don’t get to pick when you’re born, when you’re going to be great at what you do, all that kind of stuff. That, to me, it just shows you how politics gets its hands in everything. Typically, makes everything worse. Real quick, as an investment standpoint, if you want to play China, I think their markets still down about 20 percent this year.

Frank Curzio: That’s a lot.

Daniel Creech: You’re right. They got a lot of problems. My only advice there is don’t believe anything you read. Just imagine it’s much, much worse than whatever they try to admit, but I still think you should avoid it easily. I think there’s plenty of ways to make money for investors that you don’t have to. That’s the great thing about investing. You don’t have to participate in everything, but if you really want to play China, if you buy into this growth model, you need China to keep this world economy and world growth going. Buy ones that bend the knee. Buy Nike. Frank is Nike’s stock near 52 week. I would bet it is.

Frank Curzio: I think it’s pretty close but-

Daniel Creech: Tesla pulled back their big China bulls.

Frank Curzio: Yeah.

Daniel Creech: Starbucks is over there. McDonald’s has exposure there.

Frank Curzio: Levi’s has exposure there.

Daniel Creech: If you really want to play China, play it that way, in my opinion.

Frank Curzio: Yeah. I’m curious to see what Nike is because that actually it might be near its high, but it hasn’t really been doing too much if that makes sense. It is near it’s high. I just want to see like the last six months. Even the last six months, I would say the last five months, it’s really been flat. It’s come down a lot, and then we have to miss earnings, and they came back a little bit, but it’s kind of been flat where a lot of these other players in that space have really been doing very, very well reporting great. Hibbett just reported great numbers. You’re looking at… Dick’s Sporting Goods sells it. Yeah. Athletic apparel and things like that. Also Under Armour shared their portfolio, which was good timing on that one.

Frank Curzio: A lot of names are really… Again, it is Nike. They’re the biggest in the world. They’re the greatest in the world. But yeah, right now it could be a goodbye. It’s near for two-week high. It’s not too far… 10 percent off about. But 8 percent off. But we’ll see. We’ll see there. Guys, just with China in general, if you have exposure, some stocks have exposure to China. You’re right, Dan, but you have to look at G. Yeah. I read a lot of these reports and I don’t want to bore you with them in terms of all those reports. In terms of the macro environment. If you’re looking at Omicron and even Delta, Delta is really hurting China right now and it’s hurting Europe. Europe has a lot of tougher policies in place. You’re not seeing that growth come out of there.

Frank Curzio: You’re not probably going to see a little bit longer. The US, I think we’re fine. We’re through this. We’re like, okay, we’re here. We’re going out no matter what. We feel comfortable now. Vaccinated. But if you look at those two areas, to develop major growth markets, right? You could say Europe’s kind of a growth market, but to those markets, those major developed nations, they’re struggling right now and you’re seeing it. Is it a buying opportunity? I don’t know. I know that GDP estimates have been lowered across the board in Europe and China again, and that’s from Goldman Sachs and you’ve seen a lot of other firms and those are reports I was talking about that I read that are kind of boring, but that could provide a good buying opportunity. Right now, it’s not. But I just think the buying opportunity day will be in some of the airlines.

Frank Curzio: I think that once international travel comes back, these guys are probably going to report similar revenue that they reported in 2019 pretty soon, pre-COVID, without international travel, which is insane. That’s how much pricing power they have. These things are still trading. These airlines are still trading at the same levels of a year ago when a lot of these things were all grounded and the vaccine was just now being distributed. Just now starting to be distributed. To me, that’s insane where they were and where they are right now. I think that’s a great opportunity, but like you said, find ways to play it even here because playing these directly, you can really get nailed because, especially in China, because, a lot of times, you really don’t know what the hell is going on with some of these companies and stuff.

Daniel Creech: Yeah, absolutely. We’ve seen DD. Basically, the Uber over there. They were asked to get de-listed. I mean that stock’s gotten crushed since it went public.

Frank Curzio: Destroyed. Yeah.

Daniel Creech: Alibaba is well off its highs, even though you got Charlie Munger, Buffett’s right-hand man, and business partner buying that hand over fist or at least he was a couple months ago as it dipped down. Yeah. I’m not saying it’s going away. I don’t think there’s any rush to gain exposure there personally. But the great thing about investing as things go down in price, it gets cheaper because, hell, it can only go to zero.

Frank Curzio: Sometimes it get cheaper. Sometimes it go down in price, and they’re more or depending what they’re earning.

Daniel Creech: Well, that’s true. I guess risk goes down with price. I should say. Good point. Good point.

Frank Curzio: Yeah. You could, depending on it, but yeah. We’ll be into the market guys heading into next year. Again, a lot of risks on the table and you throw them the Fed and raising rates again. A lot of these things we could see right now. What we can’t see is those other versions or variants that are going to happen over reactions and stuff like that. It is going to be interesting, 2022, I think we’re going to see volatile market like we’re seeing right now going into, at least, first quarter, second quarter, but it should be interesting. Daniel, we talked about a lot of new ideas today. I appreciate you coming on and you’re going to come on. We’re going to do another one tomorrow. Right?

Daniel Creech: Are we? Yes. Oh. We fly by the seat of our pants.

Frank Curzio: Yeah. We did have an interview, but I did have a late cancellation on apology. That was from the Mooch, Scaramucci, who I had on before. But he is taking a trip to Middle East, which he actually even said when he was on a CNBC interview. They apologized, and that was a late cancellation. Just right now, at holiday times and stuff like that, look, we’re going to have an interview for next week and that might be all the interviews for the year. We still going to have some picks in Dollar Stock Club, which would be pretty cool. But yeah, Dan, I’m going to see you tomorrow and break down the markets again, which should be a lot of fun, and I’ll see you then.

Daniel Creech: All right. Sounds good. See everybody tomorrow.

Frank Curzio: All right, buddy. Take care. All right, guys. This is it for me. Really appreciate all the support. I will see you tomorrow with Daniel. Questions, comments, feel free to email frank@curzioresearch.com. That’s frank@curzioresearch.com. I’ll see you guys tomorrow. Take care.

Announcer: Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its host and guests. You should not base your investment 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 12 million times.

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