Wall Street Unplugged
Episode: 872March 24, 2022

This is the “new growth sector” amid rising rates

The 30-year mortgage rate is up significantly in the last couple of weeks. On today’s show, I break down how rising mortgage payments impact not only housing but the overall economy… and the one group of stocks that will benefit. I’m calling this the “new growth sector.”

Just yesterday, Curzio Venture Opportunities members received one of my favorite plays on this massive opportunity. 

Daniel and l also cover oil prices… the clean energy market… what to watch for next earnings season… and Carl Icahn’s attempted shakeup at Southwest Gas. 

In this episode:
  • How rising mortgage rates impact the economy [0:40]
  • The “new growth sector” [5:50]
  • How higher rates will affect real estate [10:27]
  • What investors should watch next earnings season [13:45]
  • Why we’ll see higher oil prices [15:40]
  • An easy fix for higher oil prices and increasing clean energy [25:00]
  • Why Carl Icahn’s latest shakeup is good for the overall market [30:00]
Transcript

Wall Street Unplugged | 872

This is the “new growth sector” amid rising rates

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 Thursday, March 24th. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break down headlines and tell you what’s really moving these markets. It’s a special Thursday for you. I like to bring interviews every now and then. It’s when we do… We do them on Thursdays. But sometimes, we like interviews, and sometimes we just like to talk. So, I’m going to bring in Daniel Creech two days in a row, buddy. It must mean that I really like you to bring in two days in a row, huh?

Daniel Creech: Or, we couldn’t get a guest scheduled, but we’ll go with that one. No, it’s great to be here as always love these segments. A lot of fun here.

Frank Curzio: No, it is pretty cool. And I wanted to bring you on because we could have a lot of conversations in terms of what’s going on with the markets. And it just seems like something big happens every day during this volatile time, especially since November. And one of the things that’s huge, that’s really huge, is interest rates. So, we’re seeing the 10-year absolutely surge, right? 2.4%. When I say surge, 2.4% historically is not high, but it’s very high compared where it was just a few months ago, and that’s pushing interest rates up incredibly higher. And one of things that is up tremendously is the 30-year fixed for mortgages. And we’re looking at it now, closing it on 5%. Okay. It’s 4.9 something. When I’m looking right now, 4.9, closing it on 5% mortgage applications fell 8% last week. There’s going to impact that.

Frank Curzio: I mean, this was massive, a very quick, right? Very quick to 5%. And the reason why we seen a surge over the past couple days, and we really didn’t see it right after the Fed meeting last week with Powell. It’s on Monday, when he was speaking at whatever event. He was much more aggressive compared to what he was on Wednesday, when he was testifying for the Congress. And to the point where I think we all knew these rate hikes have to happen faster and they got to be greater, right? 25 basis point hikes not going to do anything. And we have massive runaway inflation, and we don’t see it slowing anytime soon, a lot of the governors came out and said, nope, we got to go faster right after that. So, he came out, and I think it was on Monday and said, we are going to go to faster pace. And it could be 50 basis point hikes going forward.

Frank Curzio: But people it’s funny how, when you look at their reaction where Goldman updated, they were surprised by this, right? They said, okay, now it’s going to be the next two meetings are definitely going to be 50 basis point hikes. Now that’s pricing in. But now, you’re seeing the rest of the market starting to price this in, and it’s pricing in that. We’re not just going to get a few of these 50 basis that they’re going to go sharply higher at 5% mortgage so crazy times, but it definitely impacts the markets.

Daniel Creech: It does. And it’ll be, you were running some calculations earlier, just locking in. If you did say at the end of the year, a few months ago, that payment per month is probably up at least a couple hundred bucks right now. Give or take. I mean, obviously that depends on what kind of loan you’re doing and all that. But generally speaking.

Frank Curzio: Here it is. Because I know you love numbers and I’m going to say, because this is what consumers understand, right? Because if you understand this, what if you’re looking for a home or if you bought a home, right? So, let’s go to the numbers, right? And say, if you’re buying a home of $500,000, okay, which is common these days with home prices through the roof, maybe you get a little bit lower in some other areas, but say $500,000, you put 20% down. So that’s a 400,000 loan, in November, few months ago, four months ago, rates with the 3%, four months ago, 3%. Right? And if you’re looking at 3%, your payment each month would be $1,650. Okay? That’s not including insurance or taxes. This is straight just for the loan, right? $1,650, four months later at 5%, nothing changed in your life.

Frank Curzio: Just that rate is 2% higher. And it sounds like, well, it’s 2% high. It’s going to hurt at 5%. Under those same terms of that loan. 400,000 loan, we’re looking at payments of $500 more a month. So, $6,000 a year in extra payments. That is absolutely massive. I mean, you could do the calculation, it can go even further. You could see over the year, over the life alone, how much you’re going to pay over that life alone is almost double. Right? And just an interest we’re talking about. So, you’re looking at this from a consumer point of view going, holy shit, how could I purchase the house when I wish I did it four months ago? So now, you’re going to wait and you’re going to wait, thinking that rate’s going to come down, but they’re probably going to go higher. I mean, there’s nothing signaling that rate’s going to go lower.

Frank Curzio: We still have supply chain bottlenecks everywhere, oil prices just last week were felt below a hundred. Now they’re at $111, $112, $113 now. Right? So, we’ll talk about oil in a second, but you don’t see anything that’s going to happen. That’s going to ease inflation. We have the Fed. That’s just, again, I don’t like to talk terrible about the Fed. They try to do a good job. Powell’s trying to do a good job. I know it’s natural to talk negative about the Fed. You can’t say anything positive about, but they’ve been really, really, really wrong. And they’re trying to sugarcoat this. And I think people are starting to understand something that we’ve been saying for a while here is they don’t have a choice. And when I see people on TV talking about the Fed saying, oh, you know what, they’re not going to do that. They’re going to go a lot easy.

Frank Curzio: They don’t have a choice. Okay? This is inflation. This isn’t some bank that blew up that you could just take those assets and back stop them and throw them at JP Morgan like you did during a credit crisis and make those banks, all those rules in place. So, we don’t have banks too big to fail. They’re four or five X bigger than they were back then, right? It’s not that you can’t throw money at it. You got to take money out of the system. You don’t have a choice. You don’t have a choice. So, this is impacting consumers tremendously, at from an investment standpoint, Daniel, you have to ask yourself who is making the bulk of that money, who is making the bulk of that money’s interest rates go higher like that money that you’re paying out of your pocket, who is making that money? And it’s the banks.

Frank Curzio: The banks are still down 20% off their highs. It’s one of the greatest investments you can make. We just made our investment, our recommendation in Curzio Venture Opportunities, which is a bank. And people say, well, banks are boring. You get some, 2-3% yield, the small cap bank or whatever. This bank has a ton I won’t give you amount. Because I don’t want people to search and try to find out they have a ton of amount in deposits.

Daniel Creech: Don’t give it to them.

Frank Curzio: No. It deposits ton of deposits. It’s their main. And again, it’s the last thing I say about… But most exposures in Florida and Texas, right? And those are the two biggest growth areas, huge population growth. Everybody’s moving there. You’re saving money on taxes. So, even as that rate goes higher, if you’re moving from place in California, New York, where you pay massive taxes, that makes a lot of sense to go to these areas.

Frank Curzio: And these bank companies, these bank stocks are now the new growth stocks. These are the new growth stock. Now technology, the bank stocks are not these boring little things. You are going to see earnings absolutely surge in the years ahead as they continue to raise rates because they barely generated any net interest income and all it was from fees, and it’s the banking fees you pay, the higher wire fees you pay. It’s all fee. They fee them to death, banks fee, fee, fee, all fees. Now you’re talking about interest going up. They’re going to make the difference. And we’re talking about a massive difference. If you are a subscriber to Frankly Speaking, I’m going to break down some of the banks in what they’re saying, because they get quote to all these banks that were broken down by something that, again, we pay a lot of money for, for a firm that does this and you have to see what they’re saying about.

Frank Curzio: And they’re just pricing in three hikes. If it goes up three, we have three hikes, which is the 25 basis point hike. And then we got a 50 basis. Dell count is three, right? So, one hike is 25. That’s what they’re saying. So, if it goes up, the amount of money that they break it down, I’m going to talk about this. And Frankly Speaking, I’m getting a lot of questions on, I don’t want to give away too much stuff for free. We give away a lot of picks and a lot of stuff for free, but we do have services here that people pay for. So, I want to give a great stuff to them and the picks to them. Guys, put banks in your portfolio. You have to do it immediately. You’re the 20% discount. I don’t even know why they fell.

Frank Curzio: They fell Russia and they don’t really have that much exposure to Russia. But man, these guys are going to make an absolute fortune for doing nothing, right? The profits are going to explode for these names, right? Just simply put it they’re not looking to put money. They have to hire a bunch of people and to scale a business and you’ll put money in. And then once you scale, it keeps going and going and go. They’re sitting there and simply because a rate is going higher, a massive amount, we’re talking hundreds of millions of dollars and free money’s going to flow directly to their bottom lines over the next months. And probably, the next two to three years, as this cycle continues, as… And that’s something that I don’t hear too many people talking about what buy the bank say always have great play in hiring streets, but you not.

Frank Curzio: When you see rates go high like this right away, this fast that’s unprecedented. It doesn’t. You could say, well, we had a 5% mortgage rate a couple years ago. It doesn’t go from three to five in four months. I mean, it’s a massive difference where these banks are going to blow out earnings and they’re not these boring little things and fees. And you buy them for dividends and stuff. No, these are going to see their growth stocks. Now you’re going to see earnings explode, especially in the quarters ahead, starting right now. And I would be buying. I’m going to say, you could buy almost any bank. I’m not talking about one that’s, a garbage bank that’s trading over the counter and it’s probably going to do very wealthy over the next 12 months.

Daniel Creech: Well said, I like that sector. Couple of things to unpack there real quick. And it’d be great to get some feedback on this because $6,000 per year increased cost on a mortgage is a lot working a little bit backwards here. The only negative thing about the banks that I can tell and maybe why they got sold off along with the overall market. If you’re worried about rising interest rates, you’re worried about this hard landing versus soft landing, meaning they can guide the economy, the Fed to raise interest rates, fight inflation all without causing a recession or a big stock market crash. That’s going to be very difficult. So, the only negative point or the only counter argument to your thesis is, hey, recession comes, bank lending, dries up. It’s going to hurt the banks.

Daniel Creech: However, When that is a risk, that’s always a risk, but that’s not enough to keep you from digging into this sector. Like you talked about on what they don’t. They don’t have to do a whole lot. It’s like a scale. They don’t have to do a whole lot to get a lot of increased profits because interest rates are moving without them. That’s a big thing. And I like that, frank@curzioresearch.com, daniel@curzioresearch.com, is $6,000 a year going to change your mind about an asset, a house? Historically, they’re still dirt cheap. There’s no way I would still be buying mortgages. Now, if you can afford it on the cash flow point, the takeaway here is the balance. This is what is so great about markets, the balance here. So, $6,000 a year or more in extra cost is a lot.

Daniel Creech: That’s going to make you make some changes and or figure that out, get you and your partner to talk. However, the same conditions that are driving those costs up Frank higher inflation are going to actually be a tailwind for the actual asset we’re talking about in housing. So, as an investor, if you’re buying a house because it’s your forever house and you want to have a family and you want to be there until you die. So to speak, that’s one thing. If you’re buying it for a livable situation, an asset plus an investment, or just purely an investment, that’s another take. And I just think that the inflationary aspect, if you’re in housing or looking at housing, the odds are still in your favor, in my opinion, to buy that and pay the higher costs now because of the same tailwinds that are causing rising interest rates are going to be boom for the price and that overall asset and loans give you, debt gives you a ton of optionality with refinancing, borrowing against all that kind of stuff. And that’s why I’m still bullish on this. So yeah. Real estate and banks. Absolutely.

Frank Curzio: Yeah. And to your point too, there’s two things people might say, well, during a recession, people are not going to bars with balance sheets are more stronger than they’ve ever been. Okay. It’s getting to the point where companies don’t borrow, they need to borrow money. They’re going to be borrowing at higher rates. We’re not looking at 7-8% mortgages. We’re not looking at less demand. There’s still not enough supply in the market. I don’t know. So, I just talked to a real estate agent, a good friend of mine. He told me the supply on the market here. And because he said, whenever you want to go golfing with Frank, let me know. And I said, I’m too busy. It’s crazy. Driving the kids, everyone working. He goes, I said, why? What’s going on? Busy? He says, slow.

Frank Curzio: I said, nobody’s buying houses anymore? What’s going on? He goes, no, no. He’s like, there’s zero inventory. He’s like, it’s a 0.8 month supply. He goes, it’s usually on average six month supply. He said on our whole entire island, there’s 40 properties available. And more than half of those are lots, that’s all this. He’s like, there’s no inventory. And you’re still seeing that. So, which means you’re going to see more builds, more taking out loans, even business loans and stuff like that. That’s one thing, another thing you asked a question about $6,000. So, I think the bigger point is it’s not if $6,000 is a lot of money to you, which should be a lot of money to most people out there.

Daniel Creech: But it is the majority buyer.

Frank Curzio: It is, right? So the majority buyer, but it’s more to the point where that’s $6,000 a year. That’s out of your pocket that you’re not going to spend on something else and it’s not going to filter into the economy. Right? So that’s a vacation with your family right there where you can see airlines, lose money, Expedia lose money, hotels lose money. And that’s a big deal because you’re taking money out of the economy and that’s going simply to a loan, and it’s not like, you’re getting any productivity out of that. It’s not like you’re spending on an investment. It’s a fee. It’s a tax. That’s what it is. It’s an extra tax. Right? So, and that’s with mortgages at 6%. What happens if they go higher? So, that’s why it’s a little scary. And I don’t know if that’s factored in. I figured we go to 5%. I didn’t think we go to 5% in a couple of days, four months from 3 to 5% is insane.

Frank Curzio: At 4 to 5%, we went really like a week, a little over a week. I think people are starting to realize, and the markets now are finally pricing in that, hey, you know what? Rates are going a lot higher. And like we said, Daniel, we said, it’s not that everything’s going to sell off. It’s going to impact a lot of companies guys, profits are way too high. If you look at their earnings, they’re way too high. They got to come down tremendously. You’re going to see some of the bigger names incorporate profits, but you’re going to see this quarter. I’m pretty sure you’re going to see them beat and usually see the beat and the raise. You’re going to see the beat. Just like we saw at Nike, a beat and reiterated their guidance. They didn’t raise their guidance, which is interesting saying, well, just too many unknowns, not just higher rates, what the consumer’s going to do on those higher rates. Are they going to cut back? Which you may see which rates are going much higher. We’ll see how that turns out.

Frank Curzio: But the next quarter’s earnings are going to come out even the next couple weeks or whatever. When you’re looking at earnings come out and what they say, there’s no way that you’re going to see very few companies really raising. If they’re raising and their stock goes higher. I’d probably use that as a short opportunity because it’s impossible to predict what people are going to do. I think you’re crazy if you’re a CEO, that really is conservative, which you have to be when it comes to estimates. You don’t want to get too crazy because your stock to full 30%, if you miss by a mile and you have super high estimates and even the analyst can be blamed for that as well. But I just don’t see it.

Frank Curzio: They’re going to have to either lower their estimates or maintain their estimates. And some of these things are facilitating a high multiples. That’s something I would worry about. I mean, going into earning seasons again, not everything’s going to get hurt. We talk about commodities. We talk about Bitcoin. We talk about gold, looks good. A lot of these things look good, and oil and Dan, you’ve been doing a lot of research on oil. We’re always doing research on oil, but a couple of articles that you brought up were interesting and listen, oil’s all over the place, right? It just fell below a hundred. It went to 130, fell below a hundred. Now you’re at 114 out of nowhere. Again, pushing up inflation, pushing up rates. Oil, we have solutions, right? And we just won’t act on them.

Daniel Creech: Absolutely. We have a crazy situation with oil because just like the banking sector and lending, your biggest fear is, hey, if there’s a recession, demand’s going to go down. You don’t need all the oil. So, the price is going to fall out of bed. The two macro tailwinds right now, obviously the Russian invasion of Ukraine, the war going on there, the sanctions that followed from governments all over the world and continue. I know they’ve announced more sanctions earlier this week. They’ve announced them over the last weeks, The simple thing is you don’t have the technology or the resources to just replace oil, gas, coal, and switch to green energy, like so many of the world leaders would like and are forcing companies too.

Daniel Creech: Even without the Russia thing, oil prices are going to, we’re moving higher and sustainably higher because of ESG, Environmental Social Governance, more politics and more pushing from BlackRock that we’ve talked about in corporate America and the boards’ kind of taking over and influencing and pushing management away from fossil fuels. All of those were the thesis behind higher oil prices and the new normal, the war from Russia invading Ukraine have just pulled a little bit of that forward. However, what we don’t know Frank is bearing a crazy recession where demand just falls through the floor, who knows what’s going to happen as this war plays out, because if you damage and as of now, I’m not trying to be a fear monger because as of, I think even earlier this week, gas was still flowing through Ukraine from Russia. So, there hasn’t any been disruptions on the energy flow yet, other than sanctions. Okay.

Daniel Creech: Yet, they’re really in between a rock and a hard place. So, we were talking about how oil prices are going to be sustained higher for longer. And that’s why you have to get exposure. Now, I don’t know if you want to talk about the article from… Do you want to talk about the Wall Street Journal article first, or you want to talk about the capacity? Because there’s rumors going around Oilprice.com, it’s a great website we’ve quoted before, and all around different messages boards that, hey, OPEC is an increasing production like world leaders, us, UK, Boris Johnson are asking because maybe they don’t have a lot of spare capacity or a lot of ability to increase that production as easily as what the market thinks. Bottom line is all this unknown, just paves away for much higher oil prices. And you can continue to gain exposure through Devon, Continental Resources, ExxonMobil, Viper Energy is a fun name that we used to kick around. Any pullbacks there. Frank talk me out of being so bullish.

Frank Curzio: It’s hard. It’s hard talk you out of being bullish. I mean, let’s go over some numbers here, right? So, just simple math. And again, I don’t like there too many numbers with people like, oh, fricking data. Just tell me what to buy and I get it, right? That’s why people subscribe the newsletters. But we as a world, right? There’s a hundred million barrels, right? That we consume a day, around a hundred million barrels, which is funny, because I think there’s only 600 million in our strategic reserve. So, that’s for the US, right? I mean, so it’s just six days, right? Not… For the world. So, if you’re looking in 2021, US produced 12 million, Russia produced 11 million and Saudis produced 10 million. You have Iraq, Canada, China, 4 million each out of that. And this is per day, and a bunch of others, right? So now, you have the US, they consume a lot of this, right?

Frank Curzio: 20 million barrels a day, right? So we produce 12, consume 20. Now Russia is a wild card, and it’s 11 million barrels and say half of that comes offline. And that’s why it’s pushing all prices sharply high. Talking about the second, yeah. Out of the top three producers in the world. That second one is really at war holding back and we’re putting sanctions on them and we want Europe to put sanctions on them this way. Nobody has electricity and they freeze death in Europe. Right. So, this is what we’re telling Europe to do, which is funny. They just can’t do that. Right. They can’t, they wish they could. They just can’t, they’re too relying on Russia for energy. So, what do we do about this problem? Say if it’s 4, 5, 6 million barrels of oil a day, well, it’s very simple.

Frank Curzio: We have that here in the US. We could drill right here in the US. Right? And become the most powerful freaking nation by far just blowing. We already are, but much, much more. Right. And you’re looking at who consumes the most it’s you know? Yes. The US on it, but China, India, Europe, these are places that don’t produce that much oil produce zero oil. Right? So, that’s why India has to buy oil. And they’re like, hey, if Russia is selling it for cheap, we’re going to buy, they don’t have a choice. I mean, we could shut off whatever we want. We’re a rich nation, right? A lot of places can’t shut off oil. You can’t shut off oil. You’d need it, it’s a necessity. Right. As much as you think, alternative energy, no, you need it. So, for Russia to be sitting on this oil, they’re going to be able to sell it to anybody who wants to buy it.

Frank Curzio: And everybody wants to buy it outside of the US, because they’re going to be getting it for cheap unless they want to destroy their entire economies, which we know every political system is based on how the economy’s doing. If your economy’s doing great, you’re going to get voted in. So, these people do they want to say, oh, you know what? We’re not going to buy oil from Russia anymore and destroy our economy. And then we’re not going to have a job and go, we’re not going to be in office anymore. No. So, even the politics that evolved crazy, but you brought up something with Harold Hamm, which I think is incredible where he has. I think it says, op-ed, it’s it in the Wall Street Journal, talking about the Federal permits.

Daniel Creech: Yeah. I believe it was last week in the opinion section of the journal, and he highlighted, and Howard Hamm is… I’m second guessing myself. It’s Continental Resources, right?

Frank Curzio: Yep, Continental Resources.

Daniel Creech: He founded in. And I think he still-

Frank Curzio: But one of the biggest checks ever when he got divorced.

Daniel Creech: Yeah. Google that image. That is awesome. Because that is hilarious. How you got to write all over the face of the-

Frank Curzio: Hilarious for everyone except for him.

Daniel Creech: Yeah. Well, hey, when you got that kind of money, you can still laugh at it.

Frank Curzio: Yeah.

Daniel Creech: He has a great point. I encourage anybody to listen to it. The one thing that stood out to me was of course, you’re going to have the politics involved in everything. That’s why you ought to pay attention to politics because it literally affects everything that you do and spend money on in your lives. He pointed out because the press secretary was talking about and I always butcher her name, but she was talking about, hey, the Biden Administration has highlighted several times that there’s a like 9,000 permits already available for oil companies to begin or start or continue drilling here in the US. So, you have this tug of war where the oil companies are saying, hey, take the chains off of us. Quit holding this back, quit making our lives harder. We’ll produce more oil.

Daniel Creech: Instead, you’re calling on middle east and other venues to… They’re trying to do an Iran deal to get oil on supply, etc. When we have it right here at home, the white house is countering that with, you guys are just gouging prices. You’re taking advantage of higher prices and just profiting and hurting consumers on it. So this 9,000, the white house has said, hey, there’s 9,000 permits out there. And the Wall Street Journal, Mr. Hand points out that the 9,000 they like to tell is really tied down with a lot of litigation. That’s not just like saying, hey, there’s literally 9,000 that can be used or start drilling right now. He says, according to their calculations, there’s only about 1500 permits leases, etc., that are available. And a lot of those, he doesn’t give more detail, but a lot of those are already producing.

Daniel Creech: Who’s telling the complete truth, who knows the point and takeaway here is you’re always going to have these policies back and forth. Politics play an integral role. The outcome of this situation is higher prices. As an individual, you need to understand, look at it like a game it’s March madness. We’re competing against one another. The policies that they’re inflicting and forcing are going to make energy prices higher as an individual and investor. I look at the world as one of the only ways to fight back is to increase your net worth, to try to be able to sustain a standard of living or increase it. So invest, listen to what they’re telling you and make money off of it. Gain exposure to oil and commodities and keep the wolf away from the door a little bit longer.

Daniel Creech: I don’t want to sound so doom and gloom, but the odds are stacked against us individual investors. So pay attention. Hell, you know, it’s bad. Even Axios, Frank, is reporting that Jamie Dimon from JPMorgan Chase, Jamie Dimon is encouraging Biden to increase domestic oil and gas and wants to come up with a plan. Now, take this with a grain of salt because it was closed door meeting it wasn’t on Biden’s schedule. Anyway, shit’s about to hit the fan with oil. If Jamie Dimon is actually increasing or calling on that, if that’s true.

Frank Curzio: All right. So, lot of things here, right? So one, it’s important to realize that we’re going into an election year, which is insane when you think about our national security, but that’s the most important thing for our politicians is getting reelected. You’re looking at the Biden camp, was promised less fossil fuels for a massive amount of votes and got a lot of money for it, right? Just like anyone would get money, any president will get money for what they promised where you got to follow through. So, by him coming out and saying that there’s 9,000 permits available, it sounds great for conservatives, pro-oil crowd, right? So, you please them, this way you’re like, well, I care about national security, but when you look at the underlying thing, and this is fact, what Harold Hamm is saying here, right?

Frank Curzio: This is a person that’s in the industry, right? He’s running an op-ed, where you just have stands close to the 1500 that are ready for production. And many of these are already drilling and he says, no lease that have been issued for Federal land since 2020. Okay. That’s very easy to find, right? So, that’s very easy to find. So, the fact that we are not opening this up is crazy. And you could say, well Harold Hamm is talking his book, right? And you are right. And the guy is an oil guy, he’s probably going to make more money on this. And that’s fine. However, how about we open it up and we take a large amount of those profits generate specifically on those leases and start funneling them to alternative energy things like solar, like wind, whatever electricity, right? Open up more plants for EV vehicles, have all companies invest directly in this or use this as their carbon offsets to lower their carbon emissions.

Frank Curzio: Doesn’t that make sense that pleases everybody right? That pleases everybody. But we have the ability to become extremely powerful sitting on massive oil reserves, oil prices are through the roof. They’re killing the consumer right now. I would think Biden has no choice to do this and make sense and why you’re not doing this and asking other nations that hate us, Iraq, whether it’s Venezuela, can you guys produce a little more oil while all this, are you crazy? I mean, you’re going to strengthen their economies where we’re sitting on this right here, where we could drill it. And we have the best technology in the world that apparently a lot of people just can’t mimic or use when it comes to fracking, hydraulic, this is the time this is national security. This isn’t about whatever. But Harold Hamm, even if he’s talking his book, that’s fine.

Frank Curzio: Because even if you’re an environmentalist left or whatever, I mean, someone who actually looks at numbers, which is probably like 2% of people, right? Doesn’t matter the numbers or anything, right? They’re always going to ask for more. This is a great solution for you. Solar, electric, wind, alternative energy. This is going to get developed much, much faster since you’re going to have a ton of this money floating into this. It makes sense on every single level, except on a political level. Because if you do this, you’re going to get attacked by the left. You’re going to lose lots of votes going into here. And right now, it looks like they’re going to get buried. The Democrats in the midterms. And they’re just pushing this off, pushing this off, watch what you see, no matter what happens, no one can predict what’s going to happen in November. And particularly today will be a blowout, but who knows what’s going to happen by November? Who knows? Right?

Frank Curzio: No matter who’s in office, you’re going to see this open up. They’re going to open up because now they don’t have to worry for another couple years. So, they’re going to be like, okay, if you’re seeing this war, hopefully it’s not as bad as it is now. And it’s doesn’t exist and whatever they cease fire or some kind of peace agreement, everything’s better. I’m hoping that happens tomorrow. But if it doesn’t heading into that, you’re going to see once the election is done. Now you’re going to see this, which is insane to me, which is fucking insane. Why wouldn’t we be doing this now? Why? This is natural security. This isn’t about politics. We have oil. We could produce it. It’s going to make us incredibly powerful. Everybody’s in dire need of it.

Frank Curzio: You’re hurting us. Right? You’re killing your consumers. You’re killing people who pay their bills, where the energy prices are through of the roof. You’re looking at, it’s just now you’re seeing interest rates go up tremendously because this is causing even more inflation. Are you just going to sit back and do nothing because we have a solution. This isn’t something we don’t have a solution to. This is a viable solution that you could check the box for everybody. And everybody should be on board with something like this. If your environmentalists take that money, take some of that and throw it into again, offset, carbon credits, whatever oil companies have to do this anyway, it makes no sense why we are not doing this other than the fact that our politicians are going to go back on their word. When they promise less fossil fuels, but times are different.

Frank Curzio: This is national security now, this is a very, very big deal. India is in dire need of oil, Europe’s in dire need of oil. They’re in dire need of this stuff. And Russia is cutting back. And now, we’re seeing how powerful they are. They really are that powerful. So, it’s sad about the situation. I don’t know if anything’s going to be done by it, but it’s probably going to lead to even higher oil prices. Like you said.

Daniel Creech: Of course.

Frank Curzio: You want to look at politics and this is the investment pockets. How do you make money off it? You could scream from the top of mountain, hold up signs. Let’s fossil fuels or open up the drill, whatever bottom line. We’re not going to see this happen right away. We’re not, they’re not going to open up more Federal lands so we could drill and with permits and stuff like that. You’re not going to see that. And it’s going to result in the higher oil price as long as this war is taking place. So, you’re going to see, there’s still an opportunity to really invest in oil all and make some money here.

Daniel Creech: Absolutely. Two quick things to wrap this up, you had me, Frank. I was excited. I thought you were taking me down. You kept saying, take the money. I thought you were going Steve Miller band on me, take the money and run. I thought you were going to work that in there somewhere. I like the idea though, to try to please everybody as investors, all you need to look for. Here’s the easiest thing to know. The higher prices are going to continue in oil and commodities. We don’t have to get into it now, Frank, but over that next couple weeks, we will, because these guys are going to come up with it because they don’t know what they’re doing. The powers will be keep looking for headlines about stimulus checks. We’ve already seen rumors about the gas tax being cut over in the Europe and UK. They’re doing some things about that. As long as these politician and the powers that be are going to fix the problem by giving you a break here or there, or trying to give you stimulus checks that proves that they’re not going to focus on the core and you just need to ignore that brace for higher prices and invest accordingly.

Frank Curzio: Yeah, so we’re at the 30 minute mark, I want it to get into one more topic. Maybe we got a minute or two, even though it’s probably a five minute topic, but you’re the icon and raises off for Southwest gas and being an activist investor. You’ve been up on that. You wanted to talk a lot about that. So yeah. I don’t know if you want to just really dig in, since we’re running a little bit over 30 minute mark here.

Daniel Creech: No, I’ll keep it.

Frank Curzio: We want to talk about.

Daniel Creech: I appreciate that. I’ll keep this real short because, and we can talk about out it in the future. Icahn’s not going anywhere with Southwest Gas. That’s a utility. The big takeaway here is I’m a huge fan of Icahn. He’s had a great career, a very long career. He’s had huge successes. He’s had some failures like everybody, but what I really back him for and enjoy and want to listen to him all the time is because, Frank, we live in a world where everybody’s woke and cancel culture and all this, you want to clean up everything. That’s what he is doing. And I know people are going to take easy shots at me, daniel@curzioresearch.com because I’m defending a billionaire hedge fund Titan, but he genuinely cares about board and results. So if you read, and it’s free Google or Duck Duck Go, Carl Icahn increases.

Daniel Creech: So, he’s trying to battle the board, get some board seats shape this company in particular Southwest Gas. The big takeaway here is he wants accountability on board members. He’s not anti-making money. Of course. And Frank, I think you would agree. It doesn’t matter if Tim cook is making a billion dollars a year. If you’re an apple shareholder, as long as apple is performing and the stock is performing and everybody makes money. That’s what capitalism is. That’s great. What he’s calling out and he lists, and you can look at his increased offer for Southwest, but he list a ton of data points and says, hey, here’s why I don’t like this management team. They’re not keeping their key. They don’t earn their key. You ought to get rid of them and he’s taking it right to the shareholders I like that, from a bigger picture to wrap up as an individual investor, pay attention to presentations, pay attention to conference call transcripts, and look at your management team and figure out, hey, do I like what they’re saying? Do I think they’re a carnival Barker? Like we joked yesterday, do I think that they are passionate? Do they have skin in the game? Focus on management because there’s no better time to focus on management when you have a high inflationary environment. And it’s not just as easy to make money as it’s been over the last 10 years.

Frank Curzio: Yeah. And this is activist investing, which is good for all the shareholders, right? Because you’re going in. You want to have that management team accountable. You’re saying, listen, you’re not doing this stuff. And a lot of times when you have activists come in, the management team will meet with that activist. And then they’ll go over some of those initiatives and say, okay, we get it. We’ll meet you here. And that works because usually with activists in order to be an activist, you have to be big shareholders. So, they’re taking a big stake and that’s when they come out with these letters and say, hey, we got a big stake and they try to convince the vote. A lot of times you’re not going to get the votes because they’ll put in poison pills or the restructure like they did with Under Armour.

Frank Curzio: So, you’re getting most of the votes, right? So, it’s very hard unless you’re ExxonMobil, where there’s really little insight on ownership. And that’s why, it was engine-whatever company has a tiny itsy bitsy position. And it was able to convince the Fidelity’s of the world, and the black rocks that these guys need to be more environmental friendly. And they all voted to have people on that board. A lot of times it doesn’t happen, and the board controls it, and they do whatever it is in their best interest. And they make a fortune while shareholders don’t, they could dilute the stock incredibly just to raise more money, to put into other initiatives, which is going to grow revenue. And then they can pay themselves more. But you know, when you’re diluting shareholders, your stocks may be not going to go up that high. Right? There’s just more shares outstanding.

Frank Curzio: So, holding them accountable is always a great thing, especially if you’re a shareholder. There’s no downside. Right? Because usually all right, we want to buy this thing because you guys suck and there’s a big fight going on. Both of them are fighting because they believe the stock price should go higher and usually it goes higher. So, it’s usually good. It’s a positive for shareholders most of the time, but the outcome is going to determine, where we’re going to go if Icahn is able to take this company over, they’re able to make some board seats and changes and stuff and really focus on those growth initiatives. But it’s usually a good sign. And yeah, it’s a good thing, you could argue, and bust balls, and say, well, there’s a billionaire. Just talking, look, it’s a billion.

Frank Curzio: But he usually… When they’re activist investors, they’re taking 3-4% stake in the company. The rest is owned by whoever it’s going to benefit all those people by them, shouting at the rooftops and yelling everybody telling how bad management is. And then when they highlight how bad management is and hold them accountable, those guys need to change. So, they’re going to get better even if it doesn’t result in those changes because Icahn calling them out, but it’s usually a positive all around. I don’t see too much of a negative, but it’s usually good for shareholder. So yeah.

Daniel Creech: Yeah. There’s I mean you got to have somebody that’s willing to point out bad results, accountability. There’s not to say anything personally bad about them, but if they’re not doing their job, it’s just good. We ought to have accountability in politics, term limits, different things. Corporate America is no different. We’re not biased against that just because we’re stock guys. That’s great.

Frank Curzio: No, that’s cool. All right guys. So, thanks so much joining us today. That’s it for us questions, comments, Dan gives email address out. Give me a shout at frank@curzioresearch.com. So any questions, comments, we want to hear from you, especially from the $6,000 thing I’m interested to see, people come in and say, how much money is that to you? Is that a big deal? Is it resulting in you cutting back spending? I’d love to hear things like that. I mean, would data driven? So if the story changes, something changes, you’re able to flip, it’s not like, you just pound the table and you’re stubborn because I’ve been stubborn on things before and I’ve gotten wrecked. So, feel free to email us, right? That’s what this is. It’s a massive network of people I’ve noticed for 14 years.

Frank Curzio: And because of you, it gives us an amazing pulse on what is going on out there in terms of interest rates, in terms of COVID. It’s not like we’re reading certain websites, we… You’re getting real time data from you. That’s how big the network is. And I don’t care if you’re a college student or you’re a doctor. I don’t care what it is. The information that you provide is real time. And when you combine that times, hundreds of thousands of people and over a hundred countries that this goes to, it gives us a huge advantage to be able to predict things, to have to see things and actually recommend stocks based on the things that we’re seeing out there from so many of you. So please, we encourage you to email in. That’s why this podcast is so powerful for me. It’s people say you’re doing a free podcast.

Frank Curzio: This is why. I mean, it gives you incredible leverage to really what’s going on in real-time. Because so much of this data is reported three months later, six months later, knowing what’s going on out there is from you guys. And I appreciate… I just want to say thank you for the emails once again. Thank you to Daniel. And, if you’re subscribed to any of our products at all, no matter what the price is, even if it’s the very, very low priced Dollar Stock Club at $4 a month, you’ll be hear me tomorrow. I’m on Frankly Speaking. I’ll see you then. 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 hosts and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility.

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 weekly Wall Street Unplugged podcast—ranked the No. 1 “most listened-to” financial podcast on iTunes—has been downloaded over 9 million times.

P.S. My latest Curzio Venture Opportunities pick may sound like a “boring” dividend play. But most investors don’t realize its enormous growth potential… 

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