The Federal Reserve wraps up its March meeting today and Chair Jerome Powell is expected to announce the first interest rate hike since 2018. Daniel gives his take on how the Fed should move forward from here… and why the volatility in oil gives the Fed some wiggle room. [0:30]
The Fed is so far behind the curve on fighting inflation, it’s a joke at this point… And if it doesn’t take a certain set of actions, we’ll end up seeing 10% inflation this year—or higher. [4:00]
Next, we dive into an ethical question: Is it wrong to invest in Russia right now? [10:35]
Turning to cryptocurrencies… Daniel and I debate the usefulness of President Biden’s broad executive order calling for further analysis of the industry. (I believe it’s a game-changer…) [20:45]
Finally, movie theater company AMC recently made headlines by investing in a gold and silver mining company. As crazy as it might sound, I explain why this isn’t a bad move. [34:49]
- Why the volatility in oil gives the Fed some wiggle room [0:30]
- We’ll end up seeing 10% inflation this year unless the Fed does this [4:00]
- Is it wrong to invest in Russia right now? [10:35]
- Is Biden’s executive order a game-changer for crypto? [20:45]
- Why is AMC investing in gold and silver? [34:49]
Wall Street Unplugged | 868
We’ll see 10% inflation this year unless the Fed does this
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 March 16th. I’m Frank Curzio, host of the Wall Street Unplugged Podcast, where I break down the headlines, and you know the rest, tell you what’s really moving these markets. So, today’s the day I bring in my buddy, the awesomeness, the perfect person in the world… I always like building you up, Daniel Creech, senior researcher in the house, where we break down the markets. A lot, lot, lot going on. A lot going on today, especially, right? With not just the Fed, but China stocks are moving. You’re seeing Russia stocks move. What are we going to do here? Going to break down all the topics. A lot of great news. Daniel, what’s going on, man? How is everything?
Daniel Creech: Happy Wednesday. Hello, everybody. It’s another great day on Amelia Island, although it’s raining today, but-
Frank Curzio: Yeah, raining the past couple days. It just rains.
Daniel Creech: No, it’s good. Yeah. We have had a couple busy weeks. Yeah. We can start anywhere today. It’s a good one.
Frank Curzio: Yeah, I know. I know. Just remember, when you’re doing this and you have your own podcast, the person… I’m building you up, giving that confidence and stuff. Just remember that. You have got to pass that on. Got to pass that on. Whether you’re lying or not, you have got to pass that on, buddy.
Daniel Creech: Whether you’re lying or not. We go from foreshadowing to the reality of it, all right? Hence-
Frank Curzio: He is. Creech, he’s not that good of an analyst, but I have no one else to fill in today, and here he is. How you doing, buddy?
Daniel Creech: Wonderful. Wonderful.
Frank Curzio: But you know that’s not the case, and Dan is awesome. So, Dan, so let’s talk about… Yeah. The big news, which is the Fed, right? They’re expected to raise rates. They said they’re going to raise rates by 25 basis points when they testified in front Congress last week. But we kind of all know that. I don’t think that there is going to be change to that, even though I think they should be raising a lot, lot faster. But the question is, are they going to be dovish or hawkish? Which I think is funny. I’ll tell you why in a minute. And dovish, by the way, guys, is saying the Fed’s not going to aggressively raise rates, and there’s lots of concerns with Russia. We’re going to take our time, or tightening. He is like, “Hey, we’re going to aggressively raise rates,” which they said November. Holy shit, we’re behind the curve. It’s not transitory and all that.
Frank Curzio: So, that’s what we’re going to find out with the markets later today. So, when you listen to this, everything we say, we could look great or like idiots, but I like actually throwing it out there and telling you our opinions before stuff happens, right? This way we could talk tomorrow about it or whatever. And a lot of people to talk about it afterwards, “And I know the Fed was going to do this,” or whatever, but let’s see. Let’s try to predict what the Fed’s going to do, which you’re going to know when you’re listening to this, because we’re taping this in the afternoon. They’re going to come on probably in a couple hours or so and let you know. Daniel, what do you think here? What are you expecting from the Fed?
Daniel Creech: Yeah, 2:00 PM Eastern Time, and then 2:30 is Chairman Powell’s Q&A and, or update or whatever. I think I’m going to give you two answers. I think what they should do is, and we like to talk about these and throw stuff out, a couple weeks ago, we were thinking that it was leaning towards a 50 basis point, and then he comes out and basically says during testimony that they’re going to do 25 today, so anything outside of that would be a real shocker. I don’t think he is going to do that, so I think the 25 is in there.
Daniel Creech: I think they should announce that since he is trying to foreshadow and land this giant economy and a soft landing for their silliness, they should hint at a 50 basis points, a 0.50 rate hike, in the next meeting, which is… Is it April, Frank? I think it’s April and then June or July?
Frank Curzio: I think April and June. Yeah. Yep.
Daniel Creech: I think that that’s what they should do. I don’t think they’re going to do that. I think oil has… The price of oil skyrocketing and now coming down, I think has given them a lot of leeway. And just so everybody knows, we don’t need to get into this right now, but I come from a perspective of these people in the room, the smartest people in the room, I don’t think their intent is to fix it. I think their intent is to kick the can down the road.
Daniel Creech: So my point is, is that taming inflation is a lot better than curing inflation from a policy standpoint, in my humble opinion. So, I think they should signal a 50 basis point raise highs the next meeting. I don’t think that they’re going to do that because of the price of oil and the volatility there. It gives them some leeway to just kind of continue on down the road.
Frank Curzio: I think the Fed is a complete joke.
Daniel Creech: Well, I agree with that.
Frank Curzio: I really do.
Daniel Creech: Hell, that’s easy.
Frank Curzio: I think this is hilarious. I think that’s… This conversation that I’m seeing, even with the people on CNBC, and they have great analysts on there. A lot of people that have interviewed on this podcast and even through Fox business. I try to watch all of the media channels. I don’t care what political party you’re from or whatever because I want to see what the consensus is out there.
Frank Curzio: The Fed, what the Fed says and what they do are two different things. And over the past 10 years, they kept rates low forever, right? Forever, when they didn’t need to. Right now, you’re really seeing it… What’s happening when you keep rates low and you’re buying bonds and you’re injecting trillions into the market, what happens with massive inflation, supply chain concerns, all this crap, right? And you can throw COVID in there, that’s… Again, whatever it is.
Frank Curzio: But the Fed always had the ability to say, “Hey, this is what we’re going to do. Okay. We may tighten if we go above 2%.” Remember that story? “If we go above 2% of the CPI, that’s when we’ll look to tighten.” By the way, we’re 7%, right? 7% and rising. Rising. Continue the rising, right? So that whole transitory, and that transitory talk came out over a year ago. Go look at it. Over a year ago, okay? Yeah. We’re talking January, February of last year. Transitory, right? So and then, through the years, “This is what we’re going to do. We’re still going to buy bonds for now.” You use the term kick the can down the road, that… You can get away with that.
Frank Curzio: The Fed is in a corner right now. It doesn’t matter. It does matter what they say in terms of trading. So if he comes out and says, “Hey, we’re not going to really raise rates that aggressively,” inflation is going to 10%. Inflation is here. The only way you can control it, is by taking money out of the system, which you have to raise rates and you have to stop buying bonds. They said in November, they’re going to do this. As of right now, by the time you’re listening to this, it’s not going to be the case. As of right now, the Fed hasn’t done shit. They haven’t done nothing. They have done nothing. Nothing at all, right? So now, everyone is like, “Oh, well they’re only going to raise it by 25 basis points,” and the Fed’s going to be dovish and say, “We’re not going to.” They don’t have a choice. They should be raising by a half a point now, a half a point then, and a half a point again. That’s how far behind the curve they are.
Frank Curzio: They’re risking inflation being here for many, many years. And it might be a good reaction to the market because you have seen in the last two days we went up, and I don’t want to sound bearish. You have to take money out of the system, and hope is not a strategy. They were hoping that inflation came down. We’re not going to see inflation come down where we have supply chain concerns. We have them all across the board. We’re going to get to China in a minute who closed, locked down again, starting to reopen some of the plants a little bit due to COVID. That’s going to create even more supply chain concerns. The supply chain and the delays are going higher right now. It’s taking longer. You think it’s supposed to be getting better. It’s not. It’s taking longer still, and inflation is continuing. It’s trending upward. It’s not moderating. It’s trending upwards still.
Frank Curzio: And we don’t even have the latest energy prices priced in. So, the fact that when people go on TV and said, “Oh, the Fed doesn’t have to do this,” so they… They have to. They didn’t have to do a lot of for the last 10 years, Daniel. They didn’t have to do anything. You just keep rates low. Hey, everyone is happy. Money flooding into the market, stocks near all-time highs, hitting highs. Wealth is going higher. People are going to vote with their wallets and everybody is happy. Those days are freaking over. Now you have massive inflation. You don’t have a choice. The fact that they’re like, “Oh, they’re going to be dovish.” You could be as dovish as they want. They could say, “We’re not going to raise… We’re raising 25 basis points, and we’re not going to raise rates ever again.” You know what? Or for the next year.
Frank Curzio: The market is going to go up probably for the next couple weeks, and then when inflation goes to 10, 12%, you think things are bad now? Wait. You have to control inflation. It’s a train that as soon as it starts going down that hill, you can’t stop it. It’s so difficult to stop, and right now, they even haven’t attempted to stop it. And for you to come out and say 25 base… You’re at 0. 25 basis point hike, and people think they’re going to be dovish? Yes. They’re going to be dovish and it’s going to be good for the markets. You have to raise rates. Inflation’s not going away. Supply chain concerns, oil, Russia. We’re seeing it across the board. I just think it’s hilarious how people are saying it, and on TV, “Oh, the Fed, they don’t have to.” They have to raise. They have no choice. It’s not a question. It’s not like, “Hey, what do you think?” The Fed’s going to… They have to raise. They have to raise right away.
Frank Curzio: As we know, they tried to get away with this and not raise aggressively, thinking inflation was going to moderate and be transitory and they were dead wrong, that… I won’t curse. F them, and now you look at them in the back. I’m interested to see this meeting, because they’re going to be… He is going to be all over the place, and he can’t be all over the place. He’s got to say, “We’re going to be raising rates.” I mean, he could say whatever he wants to calm the markets. But the fact is, you’re going to have to raise rates to control inflation.
Frank Curzio: And I don’t know, saying things… Again, they got away with saying a lot of stuff. Now you have to do, and let’s see what they do. So, it’s 25 base points. They’re probably going to be dovish, it’s probably going to be good for the market. I think that’s very, very dangerous if you’re looking to hold stocks over the next six months, 12 months, long term, because you’re going to see incredible volatility and inflation continues to run out of control. That’s my two cents.
Daniel Creech: Yeah. They’re definitely in a tough situation. And again, I just think they should signal higher rates. They can always back off of that. It’s going to look even worse. And it’s even hilarious because they start throwing out words, and you get some non-voting members of the Fed that are interviewed on TV and things, and they talk about, “Well, we don’t want to lose our credibility.” I mean, how the hell can you say that with the straight face?
Daniel Creech: Anyway, that’s entertaining. Interesting times to be alive. There is going to be a lot of volatility, but yeah. That’s our take on the Fed, and hey, China or… Excuse me, Fed Chair Powell is probably taking a hint at how to talk to markets because China got a little boost from their government just saying that they’re going to support the listings overseas, like the over-the-counter stocks, the ADRs, et cetera, that you can buy. Because a lot of people don’t know this, Frank, but when you buy the Alibabas of the world or whatever over the counter and things, you don’t actually own anything. It’s just a claim to that.
Daniel Creech: Anyway, China came out with positive statements. This shows you the power of policy and the… And why you should pay attention to this, Frank. Because Alibaba, I don’t know if you have anything on your screen, but jd.com, Alibaba, DD-
Frank Curzio: They went up 20%.
Daniel Creech: 20% in a day. Now granted, they have gotten absolutely smacked-
Frank Curzio: They have done 90%. Yeah.
Daniel Creech: Yeah. But anyway, that just shows you what policy does, what policy forward-looking or hints at can drive markets. And that’s what we want to try to participate in.
Frank Curzio: No, absolutely. Absolutely. And it’s just like you said, the policy, and I want you to remember, we’re going to come back to that later, but you’re seeing a market right now where, what? Oil is pushing down… Now I feel a little smart, because I said you should short oil. I think not short oil, but I think oil was a good short at 100 and went to 130 immediately. And slap me in the face. I didn’t short it. I just said, “I think it’s overdone.” It went to 130. Now it’s below 100 and trending lower. Commodities are pulling back. Again, good thing and… Okay.
Frank Curzio: The talks in Russia I think are kind of hilarious. I mean, use your common sense, right? I mean, Putin’s not going to surround the capital and not take it over. They’re not going to surround the capital and be like, “Oh, okay. All right, peace. Let’s get out of there.” No. So, they’re going to say that all this peace and ceasefire, whatever, it looks like these tensions are easing. They’re going to take over Ukraine. It’s just a matter of what’s the uncertainty after that? How far is he going to go? I mean, is that going to lead to China, Taiwan? Is that going to lead to him going further and trying to partner with China and create massive… That’s the concerns going forward, but you… The Ukraine thing and the back and forth where the ease of tensions… Look, they’re going to take them over, it’s… There is nothing you can do about it, right? I mean, all the countries are saying it, talking a big game. They’ll provide weapons, they’ll do whatever they want, and say… And advise them, but they won’t fight for them, right?
Frank Curzio: Right. So, and Russia knows that. Russia has the playbook. And those people who are saying Russia is crazy… Putin is crazy, I think it’s absolutely a joke. I mean, the fact that he is able to take them over and he knows it, no one can do anything about it. Believe me, the guy is sane. He’s crazy, but he’s sane. He knows what he is doing. He’s very, very smart. I’m not saying it where I’m like, “Wow.” But I’m not like being a fan of Putin. But for people to go on and say, “Oh, there is something wrong. He’s crazy.” Or, “He has lost his mind.”
Frank Curzio: No, he didn’t lose his mind. He’s doing exactly what he wants to. He wants to take over the Ukraine. He is doing it. He knows no one could do anything. He knew the sanctions were coming because that’s what we do every single time that this guy gets aggressive. He knew that his currency was going to fall by 30, 50%. He knew there was going to be defaults on the table, which brings the question, is Russia investable? Because a lot of people were saying China wasn’t investable, and now you’re seeing a lot of these stocks roar back. Is it a trading opportunity? And obviously, when you see stocks moving 20% immediately, it’s a lot of short covering, and those volume spikes.
Frank Curzio: But what about China, Russia? I mean, you got some questions when Russia is not investable or it is investible. I mean, talk about that because it could be opportunities. People told me to buy Russia five years… 10 years ago, five years ago, three years ago. Thank God I didn’t listen to them. Very, very smart people. Again, they’ll say, “PE ratio is low,” which is the biggest negative ever if you’re buying a stock. Don’t buy a stock because the PE is low. There has to be a growth factor. The only reason why I’m telling you this is because I got my ass kicked so many times doing that. So telling me Russia is cheap, but no growth or catalyst, never made sense for me, and now… But is now the time? I don’t know. I mean, probably now. I want to look now, to be honest with you. What do you think?
Daniel Creech: Things can be true and remain true for a long time. You can have a low PE and that’s a good point, but it can have a low PE for a decade and not go anywhere, so yeah. That’s a good investing lesson. I think China is tradable on this. I’m hesitant because one comment or one day doesn’t make a trend in a sense, yet Xi is going up… President Xi over there in China is… Soon or relatively soon is doing something with their branches and government to basically reign or regain… Continue to be in power for another five years, I read. Again, I take all that with a lot of salt. It’s just like our midterms. You don’t do silly things when you’re looking to gain public attraction and, or support.
Daniel Creech: The comments coming out of China and the massive… There has got to be some short squeezes. There’s a lot of volatility there, but I do think that’s a tradable environment. I would do that. On the Russia thing, last Wednesday, Frank, when I filled in for you, because you were down in Miami hanging out and having fun in the sun while we were freezing up here, I posed some open-ended questions and I got some good feedback, and capitalism was winning through. And a couple of the feedback, Frank, they gave, because I just asked, “Hey, should you be allowed?” Because we talked about, or I mentioned some ETFs, the ERUS and the RSX, just quick trading. So if you add money in that, it’s just kind of locked up. Who knows what’s going to happen with that when markets are going to reopen? Things like that.
Daniel Creech: And from the capitalist standpoint, yes, because those value… We’re in such a weird gray area because those assets, we have so many back and forth or things that don’t make sense, Frank. Real quick, COVID, you have got 30 to 50-some million people in China under lockdown. You had Foxconn quit some manufacturing. Now that’s back on already. That took about a day. Oil is dry… Dropping because you got demand in China, people worried about lockdowns. You have also got the positive comments out of the Russia-Ukraine peace talks and things. Yet you can’t even… You still can’t even buy Russia, but none of that is disrupted. Those gas companies, Gazprom is still running gas. As of last week, through the Wall Street Journal, it was still running gas through Ukraine like normal. Europe isn’t cut off yet. Yeah. Prices are higher, but nothing has changed there. So on paper, you have these assets that are worthless, and yet, outsiders or anybody else can’t.
Daniel Creech: So I get that. You still can’t really buy Russia. I think that’s a… Where money goes to die right now. I just think that there, A, you’re going to get labeled as a terrorist probably if you try to, and I’m not joking about that. And B, you really can’t, and there’s so much unknowns there. That’s when political risk is just out of hand. So China, yes. Russia, no, only because it’s not an option.
Frank Curzio: I mean, and with Russia, yeah.
Daniel Creech: What about you? Sorry. Should you be able to at least try? One of the best feedbacks I got was, “Hey, I didn’t start this war. These corrupt politicians did. I’m looking out for myself. I should be able to do whatever is best.” I understand that argument. I’m not saying that’s all there is to it, but I understand that perspective.
Frank Curzio: Yeah. I mean, are you saying from the point of view that you should feel… Ethically?
Daniel Creech: Yeah. Should you have the option to buy the RSX or the ERUS? Even if it goes from 50 to five, should you be able to buy it if you wanted to right now? Well, as of a couple days ago, you couldn’t because of the trades.
Frank Curzio: Here is a quick story, okay? When it comes to ethics. I get the point, okay? And you want to be ethical. At the end of the day, I think people listen to this podcast to make money. If we’re going to be ethical, there’s a lot of… Then you shouldn’t be invested in Coca-Cola, you shouldn’t be invested in Amazon, you should never be invested in Nike, if you really want to be ethical. If you really want to be freaking ethical, right? I mean, come on. Let be honest. I mean, the shit that those companies do. I mean, Coca-Cola with China, the NBA supporting China. I mean, we know what’s going on in China, right? I mean, if you’re really, really, really ethical.
Frank Curzio: So, I want to put this in perspective because my dad died of cancer, and he was a smoker. Smoker, couldn’t quit, and died of lung cancer. That should never, ever prevent me from recommending Philip Morris or a tobacco company based on ethics if I think my subscribers can make money off it. Is it personal? Yes. Ethical? Yes. I get it. It’s like not investing… You shouldn’t be invested in any of the vice stocks, which is any of the gambling stocks, the marijuana stocks.
Frank Curzio: But you’re in this to make money. I’m not saying make money by screwing some guy that’s going to be completely broken and can’t afford to feed his family or anything. I’m not talking about that. But in terms of ethics, if Russia is a good opportunity and you know that institutions are going to run in once this war is over, which is going to push this market considerably, considerably higher, then you should be buying. I mean, it shouldn’t be ethical. It should be based on fundamentals. It’s very dangerous right now. They’re about to default, which isn’t a big deal. I mean, it’s a great headline. We know that they’re at that point, but it’s being pushed like crazy that headline to show that, “Hey, look at the sanctions. They’re working. Look what we’re doing to Russia.”
Frank Curzio: So, yeah. That’s why we’re like, “Holy shit. They’re going to default.” Again, when you control energy, you control the world. And they are the largest exporter of energy in the world. The largest exporter, our largest producer. They’re the largest producer, largest exporter, and they have a lot of people that would love to buy their oil. And they have really great oil, refined oil, right? It’s not like the shit in the tar sands in Canada. They have great oil there, right? So, you have a lot of people that will buy it. So, it is economy that, if you want to buy it, buy it. I don’t see the catalyst other than they’re cheap right now.
Frank Curzio: I would be very, very careful as an individual investor. I see institutions talking about it, but they’re going to get in bonds. They’re going to get in early. They’re going to get in these things where they’re going to get warrants. They’re going to lower their cost considerably, where all you need is a bounce and they can execute those warrants, and then they… Basically, once they get warrants, they’re probably going to short the stock and make the money off the warrants of the difference. There is a million things they could do and talk their book.
Frank Curzio: As an individual investor, hey, there is a lot of risk there. And if you try to do it any time up to this point, you got your ass kicked really, really, really bad. Really bad. And I know great investors who did this. And Kuppy, I know, is in Russia. He has been in oil, he has got amazing trades, and he even mentioned it on the podcast. I’m not throwing him under the bus, because he’s a great investor, but he’s when… He has been in Russia, and it’s been going lower and lower and getting crushed. But again, he’s been… Calls on $100 oil when it was 40, 50 and amazing calls there.
Frank Curzio: But as an individual investor, I would just be careful with Russia. There is just so many different ideas right now that are trading at significant discounts, good PEs with growth profiles, that… Yeah. Just stupid valuations here. And I know it’s a bear market and everything goes down no matter what, but there’s a lot of great names here, that I thought they were great 10, 15% ago, and they’re down even further, so yeah. I would stay here, if you really want to buy cheap stocks with high growth with less risk, I think you have that opportunity here to make great gains than go into Russia. That’s just my two cents. Anyway.
Daniel Creech: There is always risk and rewards everywhere, so yeah. Not playing is always an option. That’s what’s good about Wall Street versus a casino. You don’t ever have to play.
Frank Curzio: Absolutely.
Daniel Creech: You can sit here and wait, so-
Frank Curzio: Absolutely. So, I want to move on.
Daniel Creech: Sit on your ass and think, as Charlie Munger said of Warren Buffet, or sit on his ass and reads a lot or whatever.
Frank Curzio: Sometimes doing nothing is the greatest strategy in the world.
Daniel Creech: That’s right.
Frank Curzio: And I have learned that many times. Instead of being in it or not being in it, or being in late or trying to buy early in the crash, and so just… The more you know about something and the more patient you are, so what? You miss a 10% move. It’s better to have all the information there. It’s better to invest maybe after quarter than trying to predict, which is a coin flip after… Again, it’s a three-month period. Who knows? Maybe there’s accounting practices where… That are illegal, that all these kind obvious can manipulate earnings and get massive contracts in one quarter and spread it out through a year and whatever to make the quarters, and just make these quarters time and time again. But you never know what happens within a quarter. It could be horrible and delayed orders, which is going to crush the stock and you could keep your guidance for the year because those orders are coming in and people don’t care.
Frank Curzio: So, you don’t know what’s going to happen to them up here. I would rather know after they report earnings, giving me that guidance and getting in, and I don’t… So what if I miss 5, 7%, and I move higher, or the stock could go lower and they may say something that you might be like, “Holy shit. I don’t want to buy this.” It’s my thesis, just from what they said in the… On the conference call is not intact now.
Frank Curzio: So anyway, I want to get over to crypto. Crypto is pushing 40,000 again, and it’s amazing because everything that… You’re seeing a lot of the things that went high. I thought Bitcoin held its own, and it did go lower, but then it held its own. A lot of had to do with a Biden executive order where after Biden came out and said basically, he’s going to regulate cryptos. It pushed crypto up 8% that day. The next day, it fell sharply. So I’m going to ask you this: Biden’s executive order, is it a game changer or not?
Daniel Creech: No.
Frank Curzio: Okay.
Daniel Creech: It is a necessity. I get it. And we were having fun with this. I don’t want to put words in your mouth. I think it’s a good… You referenced the check box, and I’ll let you explain to make sure I’m not taking that out of context. I understand the whole, hey, big money needs certain things in line to be able to play and or expand. Therefore, this is just kind of one of those on the, hey, we’re doing this the right way. We’re in line with all regulations and such. So now, basically, we have got to get through this gateway, and now we can get into this park and go play and run and make money. I totally agree with you there. The frustration I have and the reason I don’t think it’s a big deal, is because this is just typical government BS of a lot of words and next to nothing.
Daniel Creech: So for instance, I have the fact sheet from the White House, and a couple of the last points are support technological advances and ensure responsible development and use of digital assets. Now, Frank, this is done by directing the US government to take concrete steps to study and support technological advances and the responsible development, design, and implementation of digital asset systems while prioritizing privacy, security, combating illicit exploitation, and reducing negative climate impacts.
Daniel Creech: I just said a whole lot of nothing, Frank. I didn’t make any sense. You need to stop me when I’m doing this. That’s word for word. That’s nothing. What the hell does that say? Zero. That’s my problem. This is just part of the plan where governments get in the way and hey, we’re looking out for you. We’re looking out for the little guy, because you’re too damn dumb. Bitcoin has gone from zero to 40,000. All luck. You guys don’t know what you’re doing. Innovation can’t continue. We have to take… Step in. And then, they’re exploring this Central Bank digital currency, which I don’t even want to rant about that right now. That’s the worst idea of crypto ever. It’s not crypto at all. It’s just using technology behind it, but yeah. It’s a good step from the checkbox. I’ll let you elaborate on that. But outside of any meat in it, no. It’s just window dressing right now, in my opinion. In my opinion.
Frank Curzio: So, the reason why the government is coming in now is because all the institutions are going to the government and saying, what’s the deal? If they didn’t care, the government would be like, “Whatever.” Because that’s where the big money is, that’s where the donations are, that’s where the lobbying dollars are, right? So, the fact that they want to come into this market is big.
Frank Curzio: So, well Biden announces is that, just a set of orders, instruction agencies, all the agencies, the regulation agencies, to develop policies that will protect consumers, investors, and businesses, right? So, the guard gets systemic risk, also to root out illegal activity and create US competitiveness on a global stage, giving America a competitive edge over other countries when it comes to crypto development, because they realize that all the innovation is coming out.
Frank Curzio: So here is my thinking on this. Okay? We talked about with the Fed, what they say and what they do is two different things. Okay? And we know that the government talks a lot of trash, but there’s… There was nothing on the table, Daniel. There was nothing on the table. And knowing people in this industry and a lot of big players in this industry, I know that we’re trying to work with the SEC. They’re doing the right thing in crypto, because there’s a lot of shit going on that’s not the right thing in crypto, that you want to get out of. If we’re going to really go all-in in this industry, you have to get out of that crap.
Frank Curzio: Now as an individual, if you lose your money, it’s not a big deal. If you’re an institution managing money, and I want to explain how much money we’re talking about. So, when we look at the amount of institutional money, assets managed globally, including real estate, it’s $250 trillion. Okay? That’s the amount of money. These guys have a fiduciary responsibility to not is something because if something goes bankrupt, all will lose their job. They can get sued, they can get crushed. They need some kind of framework.
Frank Curzio: They need the government to come out and say this, just like the Fed came out and said four months ago that we are going to tighten and we are going to taper, stop buying bonds, four months ago. What happened to them? Did they do that yet? No, they’re going to do it today when you listen to this again. They didn’t do anything. But what happened to the market? The market crashed just from what they said. So, what you say and what you do, again, are two different things.
Frank Curzio: And I’m with you with the government when you don’t… You want them as far away as a business as possible. We could see it in almost anything that they do. I bring up the post office example all the time. I could bring up Axon, which is Taser, which is a great example. The reason why that stock is so high is because they… Is because of their cloud capabilities, because they have the cameras. It’s not the Taser, it’s the cameras, so they charge… They own 92% of all the police stations, right? That’s their penetration, 92%. And they charge them on cloud services, which is a massive business. So, they’re a software company, really. But they’re charging the government 14X higher than the average cloud person. Think about that. Why are they able to? Because the government doesn’t give a shit because it’s not their… It’s taxpayers’ money. They’re not like, “Why the hell are you charging me 14X? You should be charging me 2X, maybe. This is a government. You should be doing everything you can.”
Frank Curzio: No, I’m going to charge you whatever the hell I want to because they’re not going to say anything, right? Just like the post office. How is the post office losing money with so many people having so much money? I mean, look at Amazon, especially during COVID. Holy cow. I have 20 boxes at my door every time I freaking get home. How is the post office not generating tens of billions of dollars a year? It’s because they’re going to just pay whoever, they’re going to just run. They don’t care. There’s no checks and balances, so I get it.
Frank Curzio: Here is the big deal on why this is a massive, massive game changer, and I understand why Bitcoin was created. I understand no government, decentralization. I get it, but you need rules in place. And from the people out here in this industry, Daniel, that have went to the SEC, the SEC didn’t want to talk to them. And they’re talking to them and saying, “Hey, is it okay if we…” Because the SEC didn’t know.
Frank Curzio: Now that you have this on paper, yes. Nothing has happened yet, but it does check the box off, which we were talking about, where now you have this money. Now this money, a lot of this money, could flow in because now we’re… If they’re like, “Well you lost…” Well, hey. The government said that they’re going to come in with regulation. They’re going to regulate this industry. Now, they can build the infrastructure in order to support custody and to support this. Now, why is that a big deal? Because I had… I’m split on both sides when I hear the diehards in crypto saying, “How could you think this is good news? This is bad news.” And these are people who all own Bitcoin who want to hold it forever, because I’m going to be honest with you. And these are people that educated me tremendously, so I’m going to try to educate you on this, and I’m not being arrogant when I say this.
Frank Curzio: If you’re looking at 250 trillion in global assets and to manage it, right? So, if you’re looking at Bitcoin and you own it right now at 40,000, and you’re holding forever, it’s going to go higher forever, it’s a $700 billion market cap. It will never, ever, ever get to a $10 trillion market cap unless you have institutional money coming in, which is Bitcoin going to of 500,000, which is a forecast a lot of these people believe in and why they’re holding it forever. If you’re holding Bitcoin to go to 500,000, you should love what happened. Not love it because we know the government has… Likes to fuck things up, excuse my… When they get involved in business, but there has to be a framework where people feel their money is safe, just like it is at a brokerage firm.
Frank Curzio: Just like you if you’re at E-trading, you’re buying all kinds of stocks, you feel fine. You’re okay with that. It’s not like, “Oh my God. The government’s regulating or they’re sending me taxes and capital gains on what I made.” That’s what you need in this industry across the board because it’s going to weed out all the bullshit. So, if you’re looking to hold an asset forever and Bitcoin forever, and you don’t want any government… Or if you really don’t believe in that, right? If you’re like, “Well I think this is bad news with the government,” you should be selling some of your Bitcoin. You really should. Because holding an asset forever that has a ceiling is absolutely foolish, and it has a ceiling.
Frank Curzio: It won’t go any higher unless you have money coming in and we’re not talking about it because you need an asset that’s 100% scalable, has unlimited potential to grow. This doesn’t have a limited potential to grow. Okay? It’s not unlimited potential if it’s limited mostly to retail investors and what? El Salvador and a couple governments? Really? That’s going to push it to 500,000? There’s 250 trillion in global assets under management.
Frank Curzio: Every one of those banks that are managing at investment firms, all of them across the board, I’m talking close to a 100%, their clients want to get into alternative assets and Bitcoin. They’re asking to get in. They want to get in. And when it comes to Wall Street, they’re going to give what the people want, whether they get killed or not. And that’s even Jamie Dimon. He doesn’t believe in all this and all… Whatever. And then, all of a sudden, you saw them him, “Well, now that they have their own…” Get into blockchain and digital currency, they have to get in it because their clients want it. If not, they’re going to leave that bank and go someplace else.
Frank Curzio: So in order for them get in, they need a framework. They needed the President to come out and say something like this. I know they didn’t really announce anything, but the fact that they came out and acknowledged it is huge because now the institutions have a framework. We could start building this as we see the SEC get involved or whatever. Again, am I nervous about them getting involved? Of course. But I also know that in order for every investor to get in here, especially institutions at $250 trillion, you need framework here. And it’s just to check the box, Daniel. It’s just to check the box. Because I can tell you, you want another check the box opportunity? Disclaimers on commercials or on anything. I mean, they have them up there for a second and its lowest… You can’t even freaking see them, right? You can’t see. They’re useless, but you have to have it on there for healthcare.
Frank Curzio: And I’m not talking about it because it causes diarrhea. If you read that stuff, it causes depression, makes you have suicidal thoughts, causes gambling addiction. Have you seen that? That’s on there. That’s on these lists and you know what? They check every box. This way, no matter what… Anything happens to everybody, they’re fine. And again, is it useless? Yeah. Is it going to result in people not taking something? Probably not. And it’s in a disclaimer that has print that, again, I just started wearing glasses. Even if I wore the greatest glasses in the world and binoculars, I wouldn’t be able to freaking read that, and it’s up literally for five seconds, and it’s 300 words. And not even five seconds. Three seconds at the end of a commercial.
Frank Curzio: So, it’s important that they came out with this because now it’s going to open the door for institutions to come in. I hear the argument that, okay, it’s a government and they’re just announcing shit or whatever, but the fact that they announced it allows these institutions to go forward with their plans. And when you’re looking at 250 trillion, if you are a Bitcoin bull and a lot of those people want to hold it forever. I understand decentralization. If you want it to go to 500,000, it’s not going to go to 500,000. I know there’s a limited supply. You still need people to buy it. 40,000, 50,000, 80,000, 100,000. To go to 500,000 or higher, you need trillions to come into this market. That’s institutions, and that’s how you’re going to do it. That’s why this is a game changer.
Frank Curzio: And now, you have a market where a lot of these things have gotten nailed. It’s providing great opportunities. I have said this before in this market, Daniel, and you’ll probably agree with this. I have never seen a market where you could generate more returns. Is it risky? Yes, but I’m talking about a 100… 1,000% gains, 50,000% gains, and I’m not cherry picking a Netflix if you bought it a long time ago or Microsoft, Apple, 15, 20 years ago.
Frank Curzio: This happened in the last three years. You could pick hundreds, hundreds, hundreds of tokens. Now, you have the new generation of innovation, which is what? Which is decentralized finance. Again, that’s a trend that’s probably old to most people in crypto, but still massive, massive, scalable opportunities impacting all businesses. You have security tokens, which we’re in with our security token. You have NFTs, which is huge, massive NFTs, and it’s not just kids selling bananas and monkeys. Forget it. It’s ownership of your assets, where you can get royalties, where you don’t have to worry about sitting at… All of our content being on all these platforms, where they could pull it whenever they want, right? Whether it’s Google, Apple, iTunes or whatever, right?
Frank Curzio: So now you have control. Then, yeah. You have the metaverse, which is incredible. And the amount of money… All the major technology companies, every single one of them, all the FAANG names are all building out their platforms in the metaverse. So, all this can take place and build in this innovation. This is innovation. EV’s not innovation with… That was developed a long time ago, so was AI, so was virtual reality. These are all extensions, right? With crypto, this is innovation. This is new shit taking place on the blockchain. Now you need to let this loose.
Frank Curzio: And the fact that you say you want to make the US competitive and you have Russia not in crypto, you have China announcing, hey, what? No crypto, what… It’s going to create a breeding ground for the smartest people in the world to come here because that’s how you’re going to disrupt the whole entire world in every single industry. This opens a door. Am I looking at this as…. No. Could there be risks to this? Yes. We know it’s the government. They may overstep, but you do need that in place in order for the institutional money to come in, and that’s a big deal if you are long on crypto. That was a long explanation, wasn’t it? It was a little bit too long.
Daniel Creech: No. It was good.
Frank Curzio: That was a little too long.
Daniel Creech: I knew you were fired up about that. I enjoyed that. We had a good conversation to start. Yeah.
Frank Curzio: The people in crypto, they educated me tremendously, and I understand this is why it was created, Bitcoin. It was… No government… This is the reason why it was created right in 2008, right? With the credit crisis. And I understand, but if you’re holding it and saying, “I’m holding it forever,” you need institutional money to come into this thing in order to push it to a $10 trillion valuation from a $700 billion valuation.
Frank Curzio: That’s not going to happen without institutional money. It’s not going to happen from El Salvador, it’s not going to happen from retail investors. That’s what you need, and now it’s opening up the door for that. That’s what we want, but there’s lots of risk, and I get it. The government usually messes everything up that they get involved in, but it will be nice to have a framework and weed out all the garbage because we have a real project, great cap table, doing the right thing, related to our business, direct equity stake with our token, and you could buy that on tZERO. Could we fail? Yes. It’s a company. We could fail. Nobody buys newsletters anymore. But there’s people out there that are collecting money with these projects and just spending it on new cars, not using it to build the projects. There is a lot of garbage out there still that you have to weed out, and that’s going to create even more innovation and really push this industry to the next level.
Frank Curzio: That’s what you need. Just like we needed with the internet and regulation and different things. It’s happened during all these massive, massive transformational technologies, and you can look at it down the board. For me, I think this is a great deal. Now, we are running a little bit late. I know you’re interested in one… One more topic, really quick guys, is AMC. Starting to get fired up with that, but I’ll leave with AMC, because AMC had some news out there and it was very interesting. We’re getting a lot of emails. We wanted to get to it really quick.
Daniel Creech: We can talk about this more. I just want to pose the question. So AMC, the theater, bought a 22% stake in Hycroft, which is a mining company in Northern Nevada, gold and silver, and it’s… They got 20-some million dollars. They did a big investment, millions of warrants and things like that. Obviously, the low-hanging fruit is, hey AMC Theaters, movies investing in a mining company… Eric Sprott, from Sprott Management, or I don’t know if that’s the actual name, but Eric Sprott, the very successful-
Frank Curzio: Great guy.
Daniel Creech: Very well-respected resource investor. And CNBC leads it off with, “Movie theater chain AMC just bought a stake in a tiny gold miner with a shaky financial history.”
Frank Curzio: What’s is that? So, if you’re not familiar with the junior mining market, shaky financial history. I mean, they don’t generate revenue, right? They put a stake in the ground, they start drilling, and hopefully, they find a nice project that they could sell to somebody else, right? That’s what a junior minor does.
Frank Curzio: And they don’t develop the project. That takes 10, 12 years. It takes hundreds of millions of dollars on the low end to build the infrastructure, the lighting, the water, the facilities. Forget it. So, in terms of financials, it’s usually, they have a cash balance and they’re just using it to drill and pay a few employees. I don’t know what the financial thing is, but I think it was Hycroft Mining that they took over, right?
Daniel Creech: Yup. Well, a 20-some percent take.
Frank Curzio: That took up 22%. I’m sorry. And they got warrants and stuff like that. And then, the same number of shares and warrants in Hycroft is being purchased by, like you said, Eric Sprott, who has… I know he has been on this podcast. I have hung out with him, and his office with Rick Rule who reached out, and I got to reach out because I would love to get Rick on the podcast again, who is really getting bullish on uranium now, extremely bullish. So… And he has been bullish for a while, but yeah. Anyway, I want to get him on and get his thoughts. He’s doing a lot of stuff within the uranium market, but they’re basically investing in something totally outside their business.
Frank Curzio: Now, if you’re looking at AMC, I want to throw some numbers at you. I’m going to try to be as quick as possible. The valuation last year surged to $23 billion, even though they posted a $1.2 billion loss. They’re not expected to generate positive earnings, pick the year, probably after 2027 at least. So in 2019, and this is pre-COVID, pre-craziness, pre-Wall Street bets, it generated 5.4 billion in sales, right? That was their peak.
Frank Curzio: Global box office sales, total global, was 11.3 billion. Those are the numbers. That’s 2019. The best you got was 5.4 billion in sales, your market cap went to six and a half billion, right? That’s the perfect conditions. That’s at max. I think global sales were probably a little bit more than that the year before, but that’s almost peak, right? Today, the company is doing less than half in those sales, two and a half billion. Their market cap is 9 billion today. Today, after the stock is down 80% from its high, it’s still $9 billion, and they’re doing two and a half billion in sales. And you’re looking at global box office receipts are down considerably, and they’re going to go higher. I think it’s four billion, and maybe they get to 11 billion in two years, three years, four years.
Frank Curzio: My point is, if we get back to record box office receipts, again, just say the $11 billion, AMC stock is still significantly down, significantly overvalued. So, in order for them to keep this market cap long-term, what they need to do, they need to do other things. So, is it gold? I don’t know. I mean is it NFTs? I don’t know. I mean, you saw Microsoft, Google, Amazon go into cloud, but cloud fit into their ecosystems, which is fine. And I get it. But AMC is sitting there with a whole massive group of investors. They’re sitting there with a lot of cash, and now they’re looking to invest in different things.
Frank Curzio: Investing in gold, it’s kind of weird, but I applaud them because they need to do something. They can’t go all-in on theaters, because even at that max… The greatest times ever in history, in 2019, which we’re not even close to being there again yet in a couple years, their market cap peaked at six and a half billion. They’re nine billion right now. And that’s with the stock down so much. Now you can manipulate this, and WallStreetBets could come out and push this wherever it is. I’m just saying, if you’re looking at those numbers, the CEO knows we need to do something else. We need to find other forms of revenue. It’s just like what we do with our business. What’s the next step? Yes, we’re publishers, but how… And now, we’re becoming a crypto company. And now, we’re seeing huge demand for our crypto newsletters.
Frank Curzio: And so, how are we building that out? How are we going to partner? Or, do we want to do something with the metaverse? We’re always looking for different areas of how we could branch out and grow our company. I applaud them for doing this, as crazy as it is in gold, but if you’re going to do it, do it with the best guy and the smartest man, probably in the whole entire a world when it comes to resources, which is Eric Sprott. I mean, that puts a lot of credibility to it, it pushed the stock up already. I’m sure the warrants are already in the money with these guys, but let’s see.
Frank Curzio: Because I’m sure Eric said, “This is one of the main projects we love the most.” They’re invested across the board so many different things, but just be careful buying AMC or buying that stock because when they give away that many warrants, usually they’re going to short the stock right away, capture that balance, and it’s more like an arbitrage opportunity. This way, there is no risk for them. So, you may see that mining company go higher initially, but you’re going to see the short interests go up tremendously from a lot of those big names that are in there. Something that you’re not going to read in textbooks and things like that, but things that I know from experience in the industry, so I would be careful. But I applaud them, Daniel. I really do. I think it’s pretty cool.
Daniel Creech: I don’t mind the move. It does make you scratch your head, but listen, the whole… If you’re surprised about anything with the AMC and the meme stocks in general, I just don’t think you’re paying attention. I think this is entertaining as hell. The CEO points out in a press release that says, “Hey, we’re not just going back to the old AMC. In 2021, our retail shareholders armed us with a $1.8 billion war chest to play on offense and grow our company.”
Frank Curzio: Amazing.
Daniel Creech: That’s a better way of saying we diluted the hell out of everything, raised a ton of money just to survive, but hey. That’s what they did. This is what’s great. One of your biggest roles, as Warren Buffet always talks about as a CEO and a manager, is asset allocation, money allocation. I have egg on my face. I have been bullish on gold and silver for several years. It’s not gone near as high or anything as I thought, but yeah.
Daniel Creech: This shouldn’t surprise anybody that AMC is doing this in my opinion, and I just think it’s entertaining as hell. I would like to hear though, if you own AMC, email us, email@example.com, frank@curzioresearch… I would like to know. Do you like this? Does it make you want to buy more, sell more, or sell some? Anyway, just give us some feedback. I would be interested to hear on the average shareholder out there in the movie theater.
Frank Curzio: Yeah. And 1.2 billion in cash is a great thing if you’re a company, because now you got… They could build few more theaters and stuff like that, maybe 100 theaters, whatever they build. But again, they’re not going to get to that level. They need to do something else. And at least there is a lot of companies out there that don’t have that cash on a balance sheet. They do, so at least they’re thinking outside the box. Again, I don’t know if it’s positive, negative. I’m not a shareholder, but they need to do something, and maybe this is it because gold is super depressed, and I don’t know why it’s not at 3,000 or $4,000 right now. I have a lot of gold investments, and investing alongside Eric Sprott is never really a bad idea, so yeah. Maybe this works out for them and we’ll see.
Frank Curzio: Kind of like how Mike Novogratz, MicroStrategy invested in Bitcoin. Same thing. I mean, we’ll see the value of that assets and see what else they’re going to do. But Daniel, okay. We always keep this to 30 minutes. It went to 40 minutes because it really is that the Fed… I mean, you’re seeing China stocks go through the roof. We wanted to talk about Biden’s new executive order and stuff. A lot of stuff going around, so we want to be here for you and break down and always provide you ideas. So Dan, thanks so much for coming in, buddy. Yeah. Love having you on the podcast, and always getting that feedback has been fantastic, so.
Daniel Creech: Always enjoy it. Cheers.
Frank Curzio: All right, guys. So that’s it for me. Questions, comments for me, email me at firstname.lastname@example.org. We are going to open up our membership to Crypto Intelligence again with a very, very, very special deal, the best deal that we have offered since we have launched this product, I think, four years ago. So if you got it in November, it’s pretty much the same offer.
Frank Curzio: But right now, what I’m seeing in this market and some of these opportunities where we’re able to buy them, it’s pretty incredible. And we are getting some questions about it, so yeah. We are going to open that up probably in the next few days. I’ll let you guys know, but we’re really excited about crypto right now. I do think that this is a game changer, and the opportunities in that space and where you can get in compared to buying a freaking SPAC or an IPO at 100 times sales is insane.
Frank Curzio: This is the chance to get in the ground floor of a lot of good technologies. We have great contacts within this business, and one of those guys you’re going to hear from tomorrow who has a million followers, just about a million followers on Twitter, one of the most listened-to guys on when it comes to crypto. Brilliant, and that’s going to be a great interview. So definitely give it a listen tomorrow, and I’ll see you guys 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 guest. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility.
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