The Federal Reserve is driving me crazy…
A week after raising interest rates for the first time since 2018 (by a measly 0.25%), Fed Chair Jerome Powell is trying to sound tough on inflation. But Daniel offers a different perspective… [0:35]
The Fed needs to get its act together right away. I explain what it must do to keep inflation from getting completely out of hand. [7:40]
Large-cap China stocks have rallied hard off their lows over the last week. Daniel highlights what’s behind the move… and why it’s a great trading opportunity. [9:25]
Next, we review a Bloomberg article on how to deal with inflation—and poke fun at some of the truly ridiculous suggestions—like getting rid of your pets. [12:10]
Nike (NKE) reported solid earnings this week, displaying its pricing power amid rising costs. But I still wouldn’t buy this stock right now. I explain why the difference between growth stocks and tech stocks is key to making big gains in this market… tell you about a few tech stocks I’m watching right now… and one sector I’m particularly bullish on as rates rise. [21:07]
Big news in the world of crypto: Goldman Sachs (GS) recently made a first-of-its-kind Bitcoin trade with the help of Galaxy Digital (BRPHF) (one of our Crypto Intelligence holdings). Daniel shares why this is a major event… and why he’s bullish on all parties involved. [26:30]
- Jerome Powell’s “tough” stance on inflation [0:35]
- The Fed must do this to control inflation [7:40]
- Large-cap China stocks are a great trading opportunity [9:25]
- Ridiculous suggestions to deal with inflation [12:10]
- Tech stocks to watch and a sector Frank is bullish on [21:07]
- Goldman Sachs’ big crypto trade is great news for Crypto Intelligence members [26:30]
Wall Street Unplugged | 871
Understanding tech vs. growth could make you massive gains in this market
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 Wednesday, March 23rd. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break the headlines, and duh, you guys know the rest.
Frank Curzio: To tell you what’s really moving these markets, I bring in Daniel, not going to give you too many compliments this time. I did that enough on past weeks, but what’s going on buddy? How’s everything?
Daniel Creech: I’m well, Frank. How are you, sir?
Frank Curzio: Hanging in there, keeping busy. Markets all over the place at least looked positive past week or so.
Daniel Creech: Yep.
Frank Curzio: I want to start by going over Powell’s comments, which are interesting, which came out on Monday. By the way, he testified on Wednesday, right? He told us everything about markets, and the economy, and how he expects interest rates. And then it was cool, I guess we’ve seen it dovish, and only 25% rate higher than expected.
Frank Curzio: But now, he came out on Monday and said a 50 basis point cut is now expected in the next meeting, the meeting after, depending on what’s going on. But it was more of a tightening, or bearish tone.
Frank Curzio: And that wasn’t priced into the market there. Because Goldman came out immediately after and said, “Okay, we have to adjust our estimates. And now, we’re expecting a 50 basis point cut the next meeting, and a 50 basis…” Not a cut, “A 50 basis point hike next meeting, and another 50 basis point hike at the meeting after.” They weren’t expecting that.
Frank Curzio: Now, the interesting question is, why’d you have to come out on Monday? Because I know when he went on Wednesday, it was a 25 point hike. A lot of the Fed governors came out and said, “We need to be at 2%, 3%. Well, you need to go faster.”
Frank Curzio: I think they talked to him and said… I don’t even know what they said. I would’ve said, “Listen, you’re delusional. You’ve lost all credibility. You said this was going to transitory for 12 straight months. You said you were going to raise rates after the CPI went over 2%, it’s 7%. It’s going higher. It’s still bothering, that concerns.”
Frank Curzio: It’s just funny how he came out just a couple of days later just to show us, if you think that the Fed has their finger on the pulse here, it’s probably worse than it’s ever been right now, where they are so confused and have no idea.
Frank Curzio: When I think it’s just very simple, right in front of you. We have inflation. There’s no cure for it, unless you raise rates and take money out of the system. You could do that slowly, and this could be many years. Or you could do it really, really quickly, which you should be doing it fast. Because we could see 10, 12% inflation right away. What are your thoughts? I was just surprised, but how was market moving?
Daniel Creech: I can’t believe I’m going to do this. So I apologize up front, because I can’t say what I’m about to say without coming across as defending him.
Frank Curzio: Hmm.
Daniel Creech: I’ll tell you why I think he did this, and why I think it’s smart. Now, remember, I’m looking at the world through how I believe it is on their end. Not how I think it should be, or want it to be.
Daniel Creech: He is trying to… Let’s use that analogy of flying a plane. How many times do we see soft landing on the economy today, and yesterday on CNBC? We have TV on. I don’t have a TV in my office, yet. I’m working my way up to that, but Frank does.
Daniel Creech: Anyway, we saw a soft landing of the economy. So, you don’t want to raise rates too high because it could cause a recession. Nobody wants to cause recession, stock market prices lower, jobs and everything like that. What Powell is doing, and what he’s done since the grid 180, from inflation being transitory… Was that in November last year? It was November, right? Not December.
Frank Curzio: It was over a year ago, that they were saying it was transitory.
Daniel Creech: No, when he admitted it, that it wasn’t.
Frank Curzio: Oh, it was November.
Daniel Creech: It was November last year.
Frank Curzio: I remember when he said, “Okay, it’s not transitory.”
Daniel Creech: Yep. “Okay. It’s not transitory.” From that point on, he has been basically trying to say, what’s going to happen at the next meeting. And I think, don’t take me out of context here, but what I think was smart about this, is that you just raised rates for the first time since 2018. You do the 0.25, 25 basis points, because you can use the Russia invasion of Ukraine, and high oil prices and stuff as an excuse to not raise higher.
Daniel Creech: Now, you’re already out there a month ahead, Frank, and trying to say, “Listen, brace yourself. We’re willing to do more faster than what we’ve been doing in the past. We’re nimble.” He’s trying to say, “Hey, we have options. We can control this.” I don’t believe him, but I give him credit on trying to stick with a, “Listen, if you’re a carnival barker, go out there and bark.” You know what I’m saying?
Daniel Creech: He’s like the people that go out there and get the crowd round up before rallies, where they call promoters, or… I don’t think that’s the right word. I think that’s what he is doing. And from that angle, I think it’s smart because the markets pulled back a little bit during his either questionnaire, or speech, or whatever it was. Goldman comes out with that but now, what do you think the market is doing right now?
Daniel Creech: In my opinion, it’s going to be pricing in 50 basis points for the next two. From that perspective, I think it’s smart, and I can’t believe I’m defending these people, Frank.
Frank Curzio: Well, I hear you. Except the only thing is when that guy barks at a carnival, we’re hoping that he tells the truth in his predictions, where… Not that he didn’t tell the truth, but so far looking back at when you’ve been barking, you’ve been so freaking wrong, that what’s different now? And why didn’t you say this a week ago? Why are you saying it four days later?
Frank Curzio: So what happened those four days to make you say this, that you couldn’t say it at that big meeting? Which, look, the markets were up ahead of that and maintained, you know that? And they went up just a couple of days before, but also into that day, into that meeting, they were up and they held those gains after he spoke.
Frank Curzio: I don’t know if they hold those gains if he makes these comments, but something happened. And whatever happened, I really don’t give a shit, to be honest with you. The truth is inflation, it’s not going to ease anytime soon dang it. We’re seeing it all over the place.
Frank Curzio: I talked about supply chain concerns and bottlenecks. You’re still seeing them. They’re terrible right now. It’s not an easy fix. Inventories are a 30-year laws for commodities. That’s not an easy fix. And those who think inflation is just going to go away by itself and ease, you’re crazy. It’s going to go higher from here. And we’re seeing that.
Frank Curzio: We’re seeing that even in the results that are being reported, when Nike just came out and reported great earnings, we’ll talk about that later. Their earnings were great because they said, “We’re still seeing major supply chain issues. And we would’ve done much better. We’re still seeing a strong demand. We can’t meet that demand.”
Frank Curzio: But Nike said that they’re selling products at full price right now, so they don’t have to discount them as much. Okay? A clear sign of inflation. If that’s not a sign of inflation… You want to bear with me, because I just got this email from a real buddy, Steve Amon.
Daniel Creech: Ooh, on the fly. This is breaking. I like this.
Frank Curzio: Yeah. So, this is breaking. This is actually funny, so I have to send this to you. Okay. So he goes, “Sign of the times.” And he has a book. It says, “Bentley, and buying a Bentley.” And it says that the Bentley is four… I don’t think it’s from him buying, or he might be buying it. I don’t know this very well, but it’s $404,000. Then it says, window tint is $400. And it says, “Ceramic coding is $10,000.” So, those are the add-ons.
Frank Curzio: Then it has something in there, I’m not kidding you, that says, “Market adjustment-“
Daniel Creech: A surcharge?
Frank Curzio: “Market adjustment of $75,000.” So, it originally was… I got to look at it. It was 404,000. Now, it’s 491,000. A market adjustment, no explanation of what that market adjustment is.
Frank Curzio: I explained this, where same with me, with the fees. When it came to fees, then I pay… I went to Miami, and I usually use Expedia. They tell you the full amount. If you go to Expedia, they tell you exactly what the full amount is. When I went there, they charged me an extra 50 bucks. They said, “You got to come down.” I said, “It’s not on Expedia we’re talking about?” They said, “No, you got to…”
Frank Curzio: Everything is like these surcharges and add-on fees. It can’t continue to the point where I’m changing my spending habits. I know a lot of people are going to be changing their spending habits. It’s getting insane right now. But also, I’m a data guy. I want to see it getting better. I don’t see it getting better.
Frank Curzio: I mean, I’m not even talking about Russia and China, because Russia and China is a temporary problem. It could be three months. It could be six months, nine months, whatever. But I think all prices will balance out at $75, $80. We still have massive inflation going into that, that just added to it. But if that comes down, that’ll be good news.
Frank Curzio: But now you have China, you know, coronavirus surging, and that’s going to create even more supply chain bottlenecks. I don’t see it, unless you’re taking money out of system, which the Fed refuses to do because they have this hope strategy, and that hope strategy has been around for 18 months now. You’ve been hoping that inflation’s not going to go higher for 18 fucking months.
Frank Curzio: It’s not going higher. It’s transitory. Now, you flip. And now you flip and say, “We’re going to have aggressive rates. We’re going to go out to aggressive rates, by-“
Daniel Creech: 25 basis points.
Frank Curzio: Come on. I mean, look, it’s going to be painful. It’s almost like… Man, I don’t even know what’s a good analogy. But if you are hurting, and you want to rip off the Band-Aid, it’s going to be much, much more painful the slower you go and the more you do this. Than just doing it right away.
Frank Curzio: And you’re looking instead of this being a six to 12-month problem, where we take our medicine and that’s it. Or, you’re looking at the dragging out for many, many, many years, which is going to really hurt. Companies are going to start cutting back in spending, they’ll see earnings get hit, they’re going to fire employees, lower expenses.
Frank Curzio: You’re going to see wage growth start easing and they’re going to say, “That’s a sign of inflation going down.” No, it’s a sign that they can’t pass on cost to consumers anymore. That’s a very bad sign. Wages going up means that’s more money for people to spend on things.
Daniel Creech: Right.
Frank Curzio: When you see that going down, don’t look at it as, “That’s a positive because inflation’s going down.” That’s a negative. That means earnings are going to get fricking destroyed pretty soon, because people have less money to spend on discretionary things. I don’t know.
Frank Curzio: What I do know is even with all these things with China, China is actually rebounding, right?
Daniel Creech: Yeah.
Frank Curzio: China’s like trading opportunities and stuff like that, which is pretty cool.
Daniel Creech: What a difference, a week makes! I don’t know if you have any charts of Alibaba, or Tencent, or some of the other big ones over there in China. But it is not a coincidence that they basically came out, that the government… I don’t want to say President Xi, because I don’t want to misspeak.
Daniel Creech: But the government basically came out and said that they were going to support, i.e. the stock market, the economy, and foreign listings. Which over-the-counter trades, we have Alibaba and different things. And I know they rallied what, 10 or 20%, the day they made that announcement. Then they pulled back, and now-
Daniel Creech: A week ago?
Frank Curzio: Two weeks ago in March 14.
Daniel Creech: Two weeks ago?
Frank Curzio: Yeah. A little bit over a week ago, yeah.
Daniel Creech: And I think we both agreed on this. I mean, these are tradable. The hard thing for me in my perspective from this is, I understand the thesis behind buy and hold China, because their massive population, a huge growth engine. I get all that. I’m just so worried about the overreach of the government, and the way they can change the rules when they wish, as quickly as they wish.
Daniel Creech: However, I do think they’re… Like we said last week, these are tradable events. It’s just tough because Frank, you know better than me with your experience and stuff. Investing is one thing, it’s hard enough. Trading is very difficult, emotionally unmanageable. Not a lot of people have the majority of the time that’s needed to be a trader and all that, me included.
I’m simply saying, that makes me worry for the average person like myself, to have to put on that trading cap or mindset, versus a longer term. But I still think that, hey, if you go into it with that mindset, use positioning and sizing correctly. Instead of BF… What is it? BFTD, Buy effing the dip.
Daniel Creech: Now, it’s sell the rip. You know what I mean?
Frank Curzio: Yeah.
Daniel Creech: But, hey, that’s why you pay attention to policies and governments, because they will give you the roadmap on how to make a lot money. And as individuals, nobody’s looking out for you except you, Frank and I included. We don’t care near as much about your money, as you do. And you don’t care about our money, as we do. That’s just the way the world works. That’s okay.
Daniel Creech: So, pay attention and invest accordingly. But hey, if you followed it, if you took Frank and Daniel seriously and said, “Oh, these guys are great. I’m going to buy some China.” You’re welcome. Now, sell some of it, and take some profit.
Frank Curzio: I know long-term, it’s hard to invest long-term right now. We’re probably seeing the short covering coming in. The short covering is obviously coming in, you can see that in these rallies, but how could this be sustained? What’s the catalyst here? I don’t see it. I don’t see the data showing that this could be sustained.
Frank Curzio: Eventually, we’ll get into some stocks in a little bit, which are, there’s a big difference between growth stocks and technology stocks. Some technology stocks are just really good quality names that were put in that growth section, but some others are getting absolutely destroyed.
Frank Curzio: Staying out of deflation really quick, I think that nobody really has anything to worry about. “Because inflation stings mostly if you earn less than $300,000. Here’s how to deal with it,” which is an interesting article by Teresa Ghilarducci, which I just found interesting.
Frank Curzio: But yeah, you’re laughing at a part of this article when she says, “It’s funny how it’s going to be translated into whoever you listen to, or whatever… Are you a Democrat, a Republican, liberal, whatever, woke?”
Frank Curzio: Yeah. The articles that are out there or whatever, just how it explains inflation, I thought it was funny. You brought it up, but I’ll let you go from there. Because this is a funny article that’s on… It’s actually on Bloomberg. It’s on Bloomberg.
Daniel Creech: Bloomberg opinion, yeah. I thought this was a joke when I first read it. So, I saved the link and I wanted to show it to you. You already read the title, and this… Okay. It’s a little unfair to talk about somebody that’s not here to defend themselves. But this Teresa is the Schwartz professor of economics at The New School for Social Research. It’s amazing how titles, the longer they are I think, they sound better.
Daniel Creech: Anyway, she points out that, hey, inflation is here. She has some good stats, and she does have two solid points, I will give her that and I’ll highlight this in a minute. But the majority of it is just hog wash, it’s ridiculous. It’s almost laughable. If you’re an average Joe reading this, I don’t know how you’re not insulted. But again, that’s my opinion, not everybody’s.
Daniel Creech: You pointed out, she starts it off with, if your income is more than 289,000 a year, the run up on gas prices maybe alarming, but it’s unlikely to hammer your overall finances. The higher one percenters or wealthy people pay only about 1% on gas and oil of their take-home pay. Obviously, that’s a lot higher percentage for us, lower income earners.
Daniel Creech: She points out about food prices, energy prices, and such like that. But then she gets to, how do you deal with it? And some changes to be made. And she says, “I expect the most affected will adjust to inflation in a classic way, by shifting away from relatively expensive items, towards close substitutes. Here are some ideas to do that. First…” This is a good point. I mentioned she had two. This is solid for everybody to pay attention to.
Daniel Creech: “First, you have to know your budget, to control your budget. Budget takes effort, but it gives you power, and the power is even more important in inflationary times.” That is great. She should have stopped there, good investing, and signed her name. That’s smart. Everybody’s on a budget, Frank. We’re just on different-sized budgets.
Daniel Creech: Her idea to deal with gas prices is to consider public transportation, if it’s an option for you. She points out that fares are only up about 8%, compared with gasoline prices, thank you Joe, are up 38%. How about that? And she says, “Now may even be the time to sell your car. It certainly isn’t time to buy a new or used one.”
Daniel Creech: Prices have stabilized a bit, but Frank, used car prices are still up more than 40% from a year ago, and new car prices are up 12%. So, what’s the takeaway? Ride the bus and sell your car, to deal with higher gas prices.
Daniel Creech: When it comes to food, animal-based products. Who likes real meat, Frank? It’s skyrocketing as well, we can live off plants and vegetables. And if you’re a pet owner, now this, Frank’s going to be upset with me because Frank… Out of the two of us, Frank is the animal guy, not Daniel. I don’t dislike animals, I’m just not an animal person.
Daniel Creech: And she says, “If you are one of the many Americans who became a new pet owner during the pandemic, you might want to rethink those costly pet medical needs. It may sound harsh…” Frank, you got to let me know if you’ve ever even heard of this. “It may sound harsh, but researchers actually don’t recommend pet chemotherapy, which can cost up to $10,000 for ethical reasons.”
Daniel Creech: One quick side note here, Frank, and I’ll give you back the floor. I have a good buddy of mine, great friend of mine out in Arizona. They have a dog. They have pet insurance, now. Now, I think the dog has had not one, but two ACL surgeries. ACL surgeries, thousands of dollars. He made a comment to me, and I can genuinely say, I love this guy.
Daniel Creech: He made a comment with to me, with a straight face about how… “Man, I’m glad we have pet insurance, because it would’ve cost an arm and a leg.”
Frank Curzio: Yep.
Daniel Creech: I’m just telling you people, when it comes down to pets, is if my pet needed not one, but two ACLs, I wouldn’t have a pet anymore. The pet would be in heaven, it would be comfortable, it’d be-
Frank Curzio: I’m telling you, PETA is going to close us down. But they’re actually-
Daniel Creech: I know, firstname.lastname@example.org.
Frank Curzio: Yeah.
Daniel Creech: I grew up with a dog, loved the dog. It was just wonderful.
Frank Curzio: So, PETA is more powerful than the EPA. I mean, two places you don’t want to mess with because, it has nothing really to do with anything that they support. They just love the power. I’m saying that because I’m an animal lover, but it’s just funny.
Daniel Creech: Oh, man.
Frank Curzio: It’s the truth, but yeah, I just think it’s funny. Just playing, but yeah, pet insurance. Yeah. All right. Just let them die. Let them die and whatever.
Frank Curzio: Again, they’re like family. And people who have dogs and that’s all they have, and maybe they lost family members and stuff like that, whatever, and I get it. We just have like a million animals that are all-
Daniel Creech: Frank, can I ask you a personal question?
Frank Curzio: Sure.
Daniel Creech: Would you spend $10,000 to keep a pet alive?
Frank Curzio: It depends how old it was.
Daniel Creech: All right. I respect that. I sat next to a guy, a gentleman on an airplane, who said that they spent $10,000 on a cat, him and his wife.
Daniel Creech: Listen, I’m not the guy that says, “Oh, I think you’re stupid because of doing that.” I’m just simply saying, I’m not that guy to do it. To each, their own. You love a cat? You’re right, they’re like family. I’m not that guy. I’m just saying, “Hey, that ain’t me.” That’s all.
Frank Curzio: Yeah. Some things mean more, like people will spend $2 million on a car, or like we just met with the Bentley, $500,000. It’s just that people could spend what they want to spend on, on what they believe in. It’s not even that, what…
Frank Curzio: I do want to go back there, is the, article because when you’re looking at Teresa Ghilarducci, which she’s… Again, she’s a professor of economics at The New School for Social Research. So, The New School for Social Research is a graduate place that is…
Frank Curzio: And I give you some statistics here, 800 graduate students in New York City, 75-plus full-time faculty members. Then you look at the academics. It’s liberal studies, politics, sociology, economics, gender, and sexuality studies, creative publishing, and critical journalism.
Frank Curzio: What’s critical journalism? What is critical journalism? I don’t know what critical journalism is, do you?
Daniel Creech: I don’t know what half the stuff is.
Frank Curzio: Yeah. I think, journalism, journalism. Critical journalism, that means you’re going to disagree with everyone? I mean, what is-
Daniel Creech: Serious.
Frank Curzio: I want to look it up, what is critical journalism? It’s almost like, “Hey, if you want to be controversial and throw yourself out there, and support…” What’s the girl that’s actually swimming as… I don’t even know if I’m going to say this right, because they might throw me off the network, because I don’t know what month it is. Because it changes if it’s-
Daniel Creech: Oh, the Lia.
Frank Curzio: Yeah, if it’s transgender. I think that’s the proper way to say it. It changes all the time, I think so, but you’re talking…
Frank Curzio: I mean, if I knew this, seriously… I kind of wish I had boys. I’d say, “Hey, you know what? You can get scholarships, and set world records, and make a fortune.” Right? I mean, if I was LeBron James, man, imagine him playing against everybody and just…
Frank Curzio: I mean, what’s so funny is how this, this… Remember the women’s movement, the #MeToo movement? This totally trumps them. Like, if you’re a woman, you are a piece of garbage because we’re like… That was like the #MeToo movement. Women fought how hard to get equal rights? And now, this is like, it doesn’t even matter. Like, “I don’t care. There’re certain records, yeah. We don’t care.”
Frank Curzio: To me, this is laughable, but it’s one of those issues that they want you to talk about. They want to be controversial. They want to yell at the top of their voices. This way people argue and debate, and this is what they want. And in politics, it gets more pages.
Frank Curzio: But it’s just funny how this is actually an agenda, right? I mean, does it help anybody? I don’t know. Does it really? The bottom line is when you’re looking at stuff like this, you have to be careful what you’re reading, like inflation or whatever, it hurts everybody.
Frank Curzio: It hurts everybody. I don’t care who you are. I don’t care how much money you make, and you can say, “Well, it’s going to hurt me less if I make more money.” If you make more money, it’s probably like dollar-wise. It’s going to crush you even more because some of these people, if you’re making millions of dollars…
Frank Curzio: I mean, I’ve been in this for 30 years. I’ve interviewed a lot of people. I know a lot of wealthy people. Usually, people who make a lot of money live well, well beyond their means, live well beyond their means.
Frank Curzio: Because it gets to the point where I need to show you, and I need to show my neighbors. And it gets to the point where now, you have these massive expenses that are going to only increase dramatically. Right?
Daniel Creech: Right.
Frank Curzio: So, not that I’m putting anything on them, it’s their own fault. But even, let’s say the people who don’t own the assets, they didn’t participate in that move that we’ve seen in inflation over the past three, four years. It’s been rising.
Frank Curzio: And if you own assets, that’s great. Your home price, everything, your cars are much, much higher collectibles, whatever. But if you don’t have that, now look at the bills that you’re paying in food and stuff like that. It’s incredible. It’s incredible.
Frank Curzio: I mean, going out, I paid… I went to Jersey Mike’s. I went to Jersey Mike’s, and I got a foot long sandwich that I split with my wife. And it was $21 or the meal, which is a soda and a bag of chips.
Daniel Creech: You got two sodas, obviously.
Frank Curzio: One soda.
Daniel Creech: One soda, two straws?
Frank Curzio: One soda, and I had to get another, so it was $21.
Daniel Creech: Whew.
Frank Curzio: I mean, why don’t you charge 30? What’s the difference? It’s getting to that point, which is great, anyway. But you have to account for this, when you’re investing.
Frank Curzio: I mean, you’re seeing it across the board where we saw Nike come out and report great numbers. And they said it was led by pricing power, reduced promotions, able to sell products at full price. And then they said that it would’ve been much, much better if those inventory issues weren’t around that. But they said it’s creating, and I’m using their words, “Major obstacles.”
Frank Curzio: They cut ties with DSW, and also lowered their exposure to Foot Locker. You saw those names get… I’m not too sure where DSW is. I’m sure it got nailed, but Foot Locker got annihilated.
Frank Curzio: And when I’m looking at Nike, it did go up on the news, exposure to China, which is going through lockdowns again for COVID spreading. And they only reaffirmed their 2022 guidance, only reaffirmed it, which calls a mid-single digit revenue growth and an improving supply chain situation.
Frank Curzio: So, you didn’t raise estimates to go crazy. So, as good as those numbers were, can people continue to pay full price for a lot of these things? I’d worry. I’d worry about… Nike’s one of the greatest companies around. They do a great job of how to manipulate earnings.
Frank Curzio: A lot of their growth is tied to China, so let’s see how this plays out. I don’t know if I’d be buying Nike right now on this, but what I would be buying is the Google’s, Apples, and Amazons. Amazon especially, I mean, we made well over 100% on it, and you know the numbers more than me. Then we actually said, “This is stellar buy here.”
Frank Curzio: It’s like an 18-month period where the stock did nothing, while everything else moved higher, because it moved higher so fast. And then when everything got hit recently, it got hit along with everything, went down to what? 2,700, you said? 2600, two different times?
Daniel Creech: Yeah, I believe so.
Frank Curzio: Now, we’re back up to 3,300. I think Amazon’s just screaming by here. I mean, just blowing out the earnings, doing everything right. Paid employees more money, they’re going to stick around. Right? They did the right thing. That’s what hurt them two quarters ago.
Frank Curzio: Last quarter, they absolutely annihilated numbers, and it still fell along with everything else. But when you look at growth names, you have to avoid growth in this type of market where the fed is reducing its balance sheet, rates are going to rise. So, you don’t carry those huge multiples above market, when you’re going to see that growth slow. And you’re going to see the growth slow.
Frank Curzio: But Google, Apple, and Amazon, these guys are seeing that growth. They have the numbers, they have massive balance sheets. Markets like this make these guys even bigger because now, they’re flush with cash and can really buy any asset they want right now at 30% discounts. It’s probably going to be at a 50% discount, 60% discount for some of these names, but those are some of the names that I like here that have been doing pretty well.
Daniel Creech: Those are the low hanging fruit. And I don’t want to put words in your mouth, but I know you’re talking about a longer term perspective with these. Because these are amazing businesses, and that’s the mindset that I definitely want to get across to a lot of listeners. I know you do the same with that.
Daniel Creech: There is a huge difference between growth that actually is profitable, and growth at all cost. And the stocks that are really getting hammered are Amazon, Google, and all that got thrown into that, Facebook or Meta now. That even popped a little bit, coming back.
Daniel Creech: Those are in their own league because like you said, they are successful businesses. If you took off the names of those companies like Facebook or Meta, excuse me, Amazon. And you looked at the return on assets, the optionality, the pricing power they have, and forgot about what the name was, you would…
Daniel Creech: If you just looked at it as a box that generated returns, that you could just put money into, it’s amazing, and you would want to put as much money into those boxes, as you could. That’s the big difference. So yeah, be selective when you’re buying growth like that. I think all those are great. Like I said, as long as you have a longer term timeframe and can handle some of that volatility.
Daniel Creech: Turning to assets, to buyer stocks, insider buying, we’ve talked about this, Frank. You always want to look, to see who’s buying shares, depending on who it is in the company. But AutoZone, I believe it was the CIO, recently bought about a half a million dollars’ worth of shares. That was, I think a week ago.
Daniel Creech: The fun thing about AutoZone is, they’re one of the best businesses run because they are focusing on commercial and retail, the do-it-yourself, do-it-for-you. And Frank, everybody should put AutoZone on their list, and Auto Parts, and the other ones. Because if you’re that worried about, that’s a good pulse on where the car market is and where autonomous driving is.
Daniel Creech: How in the world would you continue to see these guys buy back their shares, these… And AutoZone reported amazing earnings last quarter. They wouldn’t continue doing that if they were about to be replaced by driverless cars and all that kind of stuff.
Daniel Creech: So, look at those kind of companies that have great operating profits, as well as hard assets. I was blue in the face about Berkshire Hathaway. That’s still an easy buy and hold, but nobody’s going to listen to that. So let’s move on, Frank.
Frank Curzio: No, no, that’s… As bearish we are on this, and just saying that you have to be worried, you have to adjust your portfolio. Not everything’s going to get nailed. I mean, commodities are great. Gold is great. Uranium has been great. Real estate has been great.
Frank Curzio: You look at banks, guys, banks. I can’t tell you that… And I covered this in our Curzio Venture Opportunities issue, which you’re going to get in a little while, if you’re listening to this right now, if you’re subscribers to that newsletter.
Frank Curzio: But I have research where these guys took all the quotes from last quarter, from the bank showing how high interest rates. I mean, these guys have not made money, right? They’ve made money on fees, right? So, non-interest securities or areas.
Frank Curzio: They’re talking about 200 million to 300 million massive, massive increases stifle just so many of them, just all the banks across the board. But just seeing what high interest rates can do for the industry, and getting them at discounts is incredible.
Frank Curzio: But I know you wanted to talk about Goldman, and that deal with Bitcoin. I mean, Bitcoin’s really starting to surge again. Right? So, let’s see if it passes that 44,000 level, but yeah, I’ll leave that to you. Because Bitcoin, I tell you, I think we’re going to see this thing really break through 44,000. That is if it doesn’t go even higher.
Daniel Creech: Yeah. I’m not sure where it is. It bounced around the 40 mark, which is good to see as an investor in bullishness. But the big news was recently with Goldman Sachs. So, Goldman Sachs and Galaxy Digital just completed the first transaction of a Bitcoin option. It’s actually an NDO, Frank. And let me pull this up here.
Daniel Creech: I wasn’t even really familiar with… I know that banks trade over-the-counter and such, but the big takeaway here is Bitcoin… Oh, excuse me. Goldman is the first major Wall Street bank to do this. Galaxy Digital, who we’ve talked about a lot, run by Mike Novogratz, ex-Goldman partner. They facilitated an option trade in Bitcoin, that was settled in cash. So, it wasn’t settled in the underlying asset.
Daniel Creech: Details were light, they didn’t talk about… I’m not sure if it was a Goldman trade for Goldman, or if it was a Goldman trade for Goldman clients, but Galaxy Digital put the press release out, Goldman didn’t. They’re going to hide out like they do and just try to maintain no exposure, which I appreciate the attention.
Daniel Creech: But this is huge because what I think about this is, in the quote from the Galaxy Digital people were saying, “Hey, this is a great. It solidifies, it increases our partnership with Goldman.” But they hinted that, “Hey, other banks are going to do this.” What’s the greatest form of flattery? Plagiarism.
Daniel Creech: Do you think JP Morgan and all the other big banks are going to sit by and let Goldman do over-the-counter trades if it’s all productive or profitable? Absolutely not. Everybody will pile into this. And Galaxy Digital is not the only player in the game, but I think they’re going to be one of the major players in the game. I think this is the easiest option to look…
Daniel Creech: We could timestamp this as a fun time and say, “Hey, if you bought Goldman Sachs, Galaxy Digital and Bitcoin right here, we could kind of timestamp those over the next six months, in a few years. I think that’s huge because I think it opens up the floodgates. A, it shows you the desire for Wall Street to get more involved in crypto trading or derivatives. And it also shows that if Goldman’s going to do it, everybody else on Wall Street will, in my opinion.
Frank Curzio: This comes back to… And I know we had a back and forth in this with Biden’s executive order, but Biden could have come out and said, “We’re not doing anything,” and just made it cloudy.
Frank Curzio: He didn’t make it cloudy. He made it clear that he wants to encourage investment in cryptos. And that’s what the big guys needed to hear, because there’s 250 trillion assets under management, and these clients… You could read stories, just Google it.
Frank Curzio: In Financial Times, I mean, Wall Street journal, these clients are demanding. They want to be in crypto. From a risk-reward standpoint, it makes a lot of sense, is where all the innovation is coming from right now, like pure innovation. And to see that, and now right away with…
Frank Curzio: You’re saying, Goldman didn’t announce this and put in a press release, because it’s a small-
Daniel Creech: Not yet anyway, yes.
Frank Curzio: I mean, that’s a small thing for them, but don’t get me wrong. Because with us, now we have press releases, again, for our Curzio equity owners token. And say with tZERO, you always have to go to tZERO. If tZERO is making an announcement, they’ll come to us for a response, or they’ll say, “Is this okay?”
Frank Curzio: Right. So, that’s usually normal when you have something going out that involves two companies, right? And the press release, so you go back. So, Goldman knew that this was coming out. I wasn’t like, “They’re trying to hide it,” or anything.
Frank Curzio: But yeah, it represents the first step really, that banks have taken where they’re offering that customizable exposure. Right? That’s what they’re saying to the crypto market, on behalf of their client. So, taking that off of what they’re saying in that press release, it’s a big deal.
Frank Curzio: Galaxy Digital is over-the-counter, but they want to be on NASDAQ. It’s very tough. I mean, if you’re looking at SPECS with crypto, they don’t really want to touch crypto because the SCC keeps coming back and saying, “There’re no rules on it.” They come back with tons of questions.
Frank Curzio: And again with us, we have our security token traded. I mean, the goal is always to be in New York Stock Exchange or real publicly traded liquidity, once we get that. Otherwise, the token makes a ton of sense, right? But just to get to that and knowing how SPACs are looking for deals, which by the way, I’m going to tell you something about SPACs.
Frank Curzio: The SPACs, what they do is they pool money together, and they raise money… And not to get off the topic here, but they raise money. Then they have usually 12 months, sometimes it might be extended, dependent if they want to pay more money as a holding company to find a company to buy, a private company to buy.
Frank Curzio: That’s been really hard in this environment, right? A lot of companies have been bought, but that’s what they’re looking to do. So, what happens is if they don’t, they have to return the money back, but they don’t return all them money back. The early investors in this SPEC, who put it together, will invest anywhere from like, I would say five to $7 million in total of say, a $50 million SPEC.
Frank Curzio: Now, they’re going to lose that money unless they find an idea. So, they’re trying to find ideas, which is… And I can’t disclose anything, but just… And I know this, but they’re trying to find any idea because it doesn’t even matter. They’re at a dollar or $2, right?
Frank Curzio: So, this is going to come out to 10, even goes to five, they’re out there making a fortune. That’s what SPACs are about. That’s why Chamath is bailing the SPACs that he’s come out with, and he’s bailing any of them. He made an absolute fortune, promoted them. They come out absolute top. He looked, those SPACs are all down 80%. He’s gone, he’s out.
Frank Curzio: That’s what he does, and good for him because he can get away with it. Because there’s a lot of stupid people out there that believe him and believe that he provides value to these things and they’re going to go higher, and he talks about all this.
Frank Curzio: My point is, Bitcoin, they’re coming at Bitcoin related companies and security token related companies. And you know, when they went through the due diligence process, the SCC has come back with tons of questions. I mean, it wouldn’t be questions with our security token structure because it’s very pure.
Frank Curzio: It’s a good structure and it’s a security token, right? So, it’s the cap table, everything’s set. But some of these other ones are going from utility tokens to security tokens, to try to get that money in the SPEC and get that 50 million. Right? And the guys are happy with that because now, they’re not going to lose three, four, $5 million. They’re going to set a dollar or $2, and they could sell it.
Frank Curzio: But my point is, there’s a lot of SPACs out there. A ton of SPACs out there that are dying, that are about to like expire, basically. And they’re dying to do deals, which means anytime you see a deal come up, a SPAC deal from here on in, do everything you can to short it. Just do everything you can to short it.
Frank Curzio: I mean, they’re buying a company out because they think it’s great and all. They’re going to have this whole road show, where they’re going to try to get as many people in there. They’re doing it because they have to. They don’t want to lose the money because they’re going to a dollar or $2.
Frank Curzio: You’re going to see that thing go from whoever comes at 10, 11. It may hold in, but it’s going to absolutely crash. But be careful, the SPACs deals are coming out. Not everyone they might find a really good company out there, but there’s a lot of SPACs looking because that clock is ticking right now. But that’s what’s going on, you see it within…
Frank Curzio: Again, I’m trying to go after crypto companies and stuff. I didn’t want to go too much off topic there. But when you’re looking at what’s happening with Bitcoin, what’s happening with crypto, the gains that we’ve seen in the past are nothing compared to the gains we’re going to see in the future.
Frank Curzio: Is there a lot of shit out there? Absolutely. Absolutely. But crypto is here, the institutions are late to the party. They have trillions, if any one of you out there… I know some people, we want centralized government, we want nothing involved, we want zero laws to…
Frank Curzio: Those are the same people that own Bitcoin and are holding onto it forever because they think it’s going to go to 100,000, 500,000, a million. It’s not going to get there without trillions of money coming into it. It can’t. The math doesn’t work.
Frank Curzio: Only way to happen is for institutions to be able to come into this market, which is now. The US is pro-crypto, now we know they’re pro-crypto. Yes, there’s going to be regulation, know your money is safe and rally legal activity and stuff like that. That is a really big deal in this industry.
Frank Curzio: You’re going to see a lot of the best play. Even outside the US, come into the US, this is where the money is. They’re going to have projects here. It’s really exciting times for crypto. It is here. Institutions want it and all the innovation, like I said.
Frank Curzio: I mean, Facebook changes name to Meta, right? For the metaverse. Metaverse is supposed to be crypto, okay? That’s where it’s going to flow. Decentraland, Sandbox, there’re others coming out with much, much better technology, amazing technology than even those two that you’ll see in our Crypto Intelligence newsletter.
Frank Curzio: Looking at the security tokens, you got FTS. I mean, these are innovations, right? Defi, this is changing industries. And just to see Goldman getting in now… And you’re going to see this, you’re going to see announcements like this Daniel, over and over and over again. It’s really exciting times.
Frank Curzio: I’m not saying Bitcoin can’t go to 30,000, or 25,000. I know in five, 10 years, it’s going to be incredibly, incredibly higher. And it’s going to be spill over into so many great cryptos, and the ones that are focusing on those trends are going to be absolutely enormous.
Frank Curzio: Venture funds are piling into this thing. You see more and more money going into this. This is a sector that’s here. It’s for real. And you should have exposure to it. You need exposure to this. Even if you risk a small part of your money, because the gains could be 10X, or 100X. That’s what we’re seeing in this industry, if you get it right.
Frank Curzio: And the fact that you can get in something at cheap levels is really, really exciting. Just to see this announcement and see how far we’ve come, and now Goldman’s getting… To me, it’s awesome, and you’re just going to see it. I think the floodgates are open right now and you’re going to see a lot more money come in. So, not to rant and go on and on and on, but it’s something I’m really excited about, that being in this industry.
Daniel Creech: Yeah. That’s a great point. I mean, this was the first on the trade. So, this is the first major bank to make a trade in this type of non-deliverable option. Like I said, it’s settled in cash instead of the underlying asset over-the-counter, that’s a big deal.
Daniel Creech: The press release from Galaxy talks about how Goldman wants to continue. They did option trades last year. So yeah, I mean, you’re right. Institutions want to get in, there’re massive amounts of money to be made-
Frank Curzio: Not the institutions.
Daniel Creech: Oh.
Frank Curzio: It’s the clients of the institutions. That’s a big deal, because those clients will go outside.
Daniel Creech: To disagree a little bit-
Frank Curzio: Sure.
Daniel Creech: You know, not JP Morgan, but you know Goldman wants in. You know Goldman wants to make a lot, or at least-
Frank Curzio: Oh. They all want to make money.
Daniel Creech: Yeah, exactly.
Frank Curzio: They all want to make money, but their clients are going to go to… If they’re not getting that exposure, they’re going to go someplace else.
Daniel Creech: Absolutely. I agree with that.
Frank Curzio: And that’s the thing. They don’t want to lose those assets in the management, and that’s why you saw huge lobbying dollars going behind… I mean, out of nowhere. Did you see the daylight saving time thing? Did you see that? Did they even do the daylight savings?
Daniel Creech: About the passage of trying to get rid of it?
Frank Curzio: Yeah. The Senate passed, and now they asked Biden in it. And this goes to what I’m saying here in terms of lobbying and stuff like that, and which sucks is, it makes sense on every freaking level. Right? Everybody wants it. Everybody wants it. Right? “Just get rid of it. It’s useless. It was for World War II, save money on electricity. It’s stupid.” Right?
Frank Curzio: So, now it came out, the Senate voted yes. And now it goes to the house, but they asked Biden and he didn’t comment on it. So, Biden didn’t comment on it because he has to see the polls of what people want, and what the people who voted for him… Which sucks, right?
Frank Curzio: I can’t stress that point enough, like he can’t come out on a fly and say, “This is bullshit. We got to change this thing.” I mean, that’s something that Trump would do to get himself in trouble with his party. He would never, ever do that. No, he can’t say anything. He’ll say it after he talks to everybody and having everyone say, “Okay, yes or no.”
Frank Curzio: But the lobbying dollars that have gone into making sure that this announcement was made, we have to go pro-crypto, we need to do it or you’re going to lose this. Other countries are going to be happy to get these trillions of dollars, so let’s set up a framework that works for everybody, and I’m glad that’s happening. That’s really going to open up the flood gates because you’re going to see tons of money coming into a lot of great situations. Yeah. And I think, it’s really good times.
Daniel Creech: Yep. Our job here is to say the similar thing or the same thing, different ways, especially on great topics like this. But as an individual investor, I mean, just keep scaling in or start and gain exposure right away. Don’t take all your assets in.
Daniel Creech: But I’ve talked about, been buying different stocks over time, especially Galaxy Digital. And it’s frustrating when things are going down. But if your thesis doesn’t change, keep scaling in to your position size, and you just definitely want to have exposure to this.
Daniel Creech: Don’t continue to watch all these developments and say, “Oh, I should have put money into this,” without putting a little bit in. Get some skin in the game. And if you’re tired of hearing that, then email me and tell me, you finally have skin in the game, email@example.com.
Frank Curzio: Yeah. And guys, look-
Daniel Creech: Beat you to it Frank, you don’t even have to ask.
Frank Curzio: Yeah, what’s your email again? And last note here is, we have Crypto Intelligence, which is a high-end product and it’s a little expensive, but put like $100 dollars into Bitcoin, learn how to… Get a wallet, go on Coinbase. Again, the crypto people wouldn’t really recommend it. They have a lot of cryptos in other places. And that could be in a little bit expensive platform, but just learn this stuff.
Frank Curzio: And for me, what I’m realizing is, our newsletter is more on the expensive end. We need to come out with a newsletter, which is a very low price that educates people. That shows you how to buy some of these cryptos and you know, it’ll be risky in this way.
Frank Curzio: Educate yourself. You don’t just go in and say, “Oh.” For me, I’m still educating myself every single day in this industry. That’s what I love about it. So, it’s not like you got to come in and this guy knows so much more than you know. They know the basics, but man, the new list of cryptos and the innovation that’s taking place, you’re still extremely early to the party.
Frank Curzio: It’s like saying, “I don’t want to learn about the internet.” We saw that. We saw it with so many older people and emails, “I don’t want to get on emails. I don’t want to do this credit way.” It forces you. It’s going to force you to do it, it’s going to force you to learn about it. So it’s here, it’s early. It’s like the internet.
Frank Curzio: There’s just so many different other uses it could go, which you can’t even think about where it’s going to go right now. Just like you couldn’t even think about where the internet’s going to go in 2004, five, or six, where it is right now. With 5G, data analytics, AI. I mean, it’s incredible. Social media didn’t exist what, 12 years ago, 10 years ago? I mean, in certain parts, but not the way it exists now.
Frank Curzio: But what’s the next phase? It’s still innovative in a certain way of how you’re using the internet, with streaming, right? So with crypto, just a little bit of money in it. You can find a lot of that, just easy to read stuff on our website, something you don’t have to pay for. We write about it. Daniel, you write about crypto all the time. If you want, at curzioresearch.com, but that’s what I’m thinking we need to do.
Frank Curzio: We need to get a newsletter out that we charge less than $100 for that, that the masses could really follow and take a look at this and learn, and educate them and teach them. Because you need to get into this industry. I still get tons of questions, “I don’t know too much about it.” This is your chance to learn a lot about it and I promise I’ll get that done for you guys. But, huh, I think we’ll leave it at that, Daniel.
Daniel Creech: Yeah. Right. Covered a lot. Good stuff.
Frank Curzio: All right.
Daniel Creech: Breaking news. Yeah. Keep Frank and I accountable. That’s fine, we got to… Hell, I didn’t even know we were thinking about new newsletter. That’s news to me as well. Great.
Frank Curzio: Yeah. No, no, just… I think it makes a lot of sense. It really does. So, Dan, thanks for coming on. Guys, thank you. Questions, comments, again, you got Daniel’s email address. Mine’s firstname.lastname@example.org. We’re here for you.
Frank Curzio: And I will see you actually in about, not even 24 hours, in less than that. So, podcast’s coming out, and really good stuff. Surprise, because I’m going to have a great guest tomorrow. An awesome, awesome guest. I promise. He’s good looking. He’s nice. Looks a little bit like Daniel, but tomorrow’s podcast is going to be really, really cool. 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 host and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money, and your responsibility.
On today’s show, Frank highlights the sector set to benefit the most as rates continue to climb…
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