Wall Street Unplugged
Episode: 1136May 1, 2024

What’s behind this disastrous earnings season?

Thank you to everyone who joined our live event last night—Crypto 2024: After the Halving—where I shared how to position yourself for outsized returns in crypto over the next 18 months. If you missed it, you can check out the replay here.

We’re about halfway through earnings season… and so far, the results have been disastrous. I highlight some dismal numbers and dreary guidance from several companies, including Starbucks (SBUX)… Paramount (PARA)… McDonald’s (MCD)… Comcast (CMCSA)… CVS (CVS)… and more. 

But it’s not all bad news… 

I go through some incredible results from Big Tech… and why Amazon’s (AMZN) pullback is the best sign investors could ask for.  

As a final note, don’t miss tomorrow’s episode of WSU Premium, where I interview Andrew Horowitz, host of The Disciplined Investor, about the Fed’s biggest mistake… where to invest right now… how AI will impact the markets… and more.

Inside this episode:
Frank Curzio
Frank Curzio, founder and CEO of Curzio Research, is one of America’s most respected stock experts. His research is regularly featured on media outlets like CNBC’s Kudlow Report, The Call, CNN Radio, ABC News, and Fox Business News. His Wall Street Unplugged podcast—ranked the No. 1 “most listened-to” financial podcast on iTunes—has been downloaded over 12 million times.

Wall Street Unplugged | 1136

What's behind this disastrous earnings season?

This transcript was automatically generated.

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?

I’m Frank Curzio. This is the Wall Street Unplugged podcast where I break down the headlines and tell you what’s really moving these markets.

It’s in today’s show, is our economy finally breaking down? Earnings season, the winners and the losers? And should we sell in May and go away? ’cause it feels like maybe we should have sold in April and went away.

So let’s today’s podcast with yesterday’s live crypto event.

So we record our third installment of our Crypto 2024 series, which was titled After the Halving.

The timing couldn’t be better as Bitcoin was coming down a ton, but, we had a, a, a great, great turnout.

Uh, also took a ton of questions, probably an hour and a half of a Q & A.

So I love having these things.

It’s 100% live.

You know, we have a new background.


I mean, everything could fall on us.

Everything’s like live.

You can see the timestamps.

Really cool.

Uh, but I gave my outlook for Bitcoin, which I showed that it’s almost, inevitable.

It’s gonna go a lot higher.

And people might say, be saying, well, Frank, it’s pulling back.

It’s at 57 now.

58 Holy cow is 73.

It was below 40 when I first told you to buy it.

When we first had our first installment, that was about six months ago, three months ago when we had our second installment.

I was like, buy these all coins.

Our five recommendations were up on averages, 70% each, a month later.

And I wanted to have this.

We only have these events when, when, you know, we really have something to tell.

And, and with the pullback, you’re seeing some great all coins, a lot of s**t coins out there, but you’re seeing a lot of of great names.

Even a top a hundred pullback, 20, 25%, right? In the past month or so.

Uh, providing a great opportunity.

But I put math behind it, simple math’s not gonna blow the crap outta you in this presentation of, of why it’s inevitable.

I mean, after the halving and then you have these ETFs coming online when you actually put the math behind it, which you don’t see a lot of people do, and it’s very simple math.

You’re showing how many Bitcoin and now you know, per day times that by year, how many gonna be minted Now it’s been cut in half after every four years, right? Which is the halving.

And you’re showing you the demand that’s gonna come and, and actually coming.

It shows you that Bitcoin’s gonna go a lot higher.

And you’re saying, well, it came down, it came down.

It’s still up 40% on the year.

And people will talk about gold, gold is great, it’s awesome.

That’s up 14%, 13% on the year.

You’re looking at, at technology up about 4% s and p 500 up 5%.

And this is by far the best performing asset class.

So if you’re like, well, inflation’s going higher and you know, there’s more uncertainty in the markets.

Deficits are going higher, how come Bitcoin’s going lower? Because it got really ahead of itself.

You’d have a greed fear index.

That was like at 90 something.

I mean, if it’s above 70, it’s high.

That’s a contrarian indicator showing that, you know, you do it for a pullback.

And we’re seeing that.

But it creates a great opportunity.

And that’s what you’re gonna see from us, where, you know, we’re gonna tell you to buy stuff when, when we see great opportunities.

We’re not gonna tell you to buy stuff when it’s at the absolute top, which is the easiest time to sell it.

But it’s the best way to f**k all your customers.

Uh, sometimes our competitors don’t care about that.

It’s all about sales.

We do.

And people getting in now and buying these, you know, specific names.

By the way, I shared a lot of cryptos, a lot of cryptos outside of Bitcoin.

They gave me my forecast, of what I think is going a hundred thousand.

Uh, and and we’re talking about course AI gaming defi, and, and cfi.

I remember saying CFI Defi is a centralized finance.

What think CFI is, CFI is centralized finance and there’s a massive amount of, of money going into centralized finance.

That was our last recommendation in Crypto Intelligence.

But central finance, think about it.

If you have FTX, you have Binance being forced to get outta here, right? They, they, they’re no longer in the us.

Uh, you look at Celsius, you look at block fire, you look at some of the banks, you know, there’s few players, there’s few players left and a few players left are gonna benefit tremendously.

Now that you have laws that are passed that, you know, you have ETFs that allow, we still see the government trying to push back a lot, a ton when it comes to, to, to Bitcoin.

But I think going to election new administration is gonna be a lot different.

Uh, and you are gonna see, this is gonna be a great area for you to make a lot of money.

Might not seem like, like now you’ve seen the economy pull back a little bit.

It’s a little crazy.

But again, if you wanna watch that video and watch a replay of it, all you have to do is go to Curziocrypto.com.

You can see it.

Uh, and it’s absolutely for free.

I mean, it was live when we did it 100% live.

But, you can go and see it and it’s absolutely free to you guys.

So definitely if you own Bitcoin, if you own Ethereum, if you own any cryptos, they to own cryptos, definitely watch it.

And you can even go back and watch our other events as well.

We cover a lot.

The questions are great.

Sometimes they’re simple.

How do I put account? How do I do things to, to really advance in terms of airdrops and stuff? But we wanna educate you on this industry ’cause it’s a way to make a lot, lot of money.

Again, you’re looking right now, say, well, it’s down from 73,000 to 57,000.

Again, it was below 40,000.

We’re telling you to buy Bitcoin.

And, and we have it in our portfolio at 6,000.

We have a, in our portfolio at 180, the last time 18 month period after the haling, which we see Bitcoin go up an average of 600%.

We see all coins outperform Bitcoin by three to one.

They’re up almost 2000% over that timeframe.

Uh, and I actually brought up a picture of our portfolio from the last time at the Halving, 18 months after the May, may 20, I think it was May 11th, 2020 was the last haling date.

And if you look at 18 months and you looked at our portfolio, the average position in our portfolio, which I brought up, was up over 600% each position, which is insane.

Uh, so gains could be made there.

Definitely give a listen.

It’s for free.

If not, no worries.

But I’m sure a lot of you wanna learn more about it, especially what’s going on, because it’s definitely as a class that people are gonna pour into with all the s**t going on in the world today, especially Japan in the yen.

I dunno if you saw that.

Oh my God.

I mean, the last time we’ve saw anything like this with the end, this is the worst it’s been, of how it’s crashing.

But there’s like probably eight periods over the last 20 years.

And all eight of those periods were like, you know, the credit crisis and, and Asia financial crisis, you know, all these major, major events, COVID the 2022 crash when you get to these levels.

So, you know, they’re usually marked by by events that, that are pretty terrible events.

And 34 trillion, our deficits are rising a trillion dollars every four months.

We’re paying over a trillion dollar, 1.1 trillion interest.

Uh, you know, I get to that a little, little while.

Just, that’s an annual interest rate on our debt right now.

I mean, it’s really insane.

Anyway, if you wanna watch it, go to Curziocrypto.com and it’s pretty cool and it’s for free.

Now, let’s get into earnings season, which we’re in full swing.

My favorite part, I won’t say of the year of the quarter, ’cause every report, every quarter, but I love listening to that conference calls.

’cause you learn so much from the management teams and what they’re saying.

It’s not just about their company, what they’re saying about different, different areas, different demographics, geography, and, and allows someone like me that’s been covering the markets for 30 years and and knows thousands and thousands and thousands of stocks that, that, that I’ve researched, and that I know of, of who could be beneficiaries based on something that they’re saying.

And I have to tell you from listening to these conference calls, and some I listen to, I get transcripts.

You can get free transcripts of the conference call, which I advise.

If you have these companies in your portfolio, everyone should be looking at it.

It’ll take you 10 minutes to read ’em.

Uh, you can go to like seek an alpha.

A lot of this stuff’s for free.

And if you look 20, it was only analysts that were able to, to get on these calls, you didn’t even know what was going on.

And if you wanted to research, there was no computers.

You had to go to the library.

You had find stuff, encyclopedias and stuff.

You had to like make phone calls.

You had to go meet management teams.

Now you all have access to this.

Take advantage of it because it it, it’s, or service that, that actually will give you bullets, like a Briefing.com or whatever.

You don’t have a deal with Briefing.com.

But, I use that as a great site that just, you know, gives me bullets for conference calls.

And sometimes I’ll see something, I’ll say, wow, you know, I wanna read the whole transcript of that call.

But anyway, we’re about 50% into earnings, right? and holy s**t, the commentary coming from management, and this is from the conference calls, has not been this dreary and this scary since 2020 March, which was like a month or two before, you know, we decided to spend trillions and reopen the economy at the same time.

Uh, but the commentary’s horrible.

And it’s a lot different from what you hear out there.

Well, the economy’s good and job market’s good, man.

I, I mean, did you see Starbucks? Starbucks has a China focus for growth and almost every company that has that focus, young brands did okay with the quarter, but their estimates, you know, were okay, but they, they were lowered, right? Nike not too good.

You’ve seen just companies, it’s just an indication that a lot of people are jumping on China.

I’m gonna talk about this tomorrow.

I have a great interview with, with Andrew Horowitz.

He likes China right now.

I’m still skeptical.

Uh, but we have a good debate.

Uh, and that’s gonna be watch Wall Street Unplugged Premium tomorrow, which is awesome.

But if you listen to Starbucks, they lowered the bar tremendously.

Starbucks lowered the bar tremendously.

It was a number that that they couldn’t miss.

It was a number that they couldn’t miss.

I mean, it’s rare where you see the whole world piling on a company and it’s worse than what everybody believes.

It’s very rare, right? We set up with Tesla, the whole world piling on them.

They report decent results and the stock surges.

And then of course the China news and the stock was up 35, 40% in a week because it was down 45% going into that call.

It was down tremendously.

So Starbucks was so bad, okay? It’s down 12%, 13% large decline in a decade.

The the numbers were significantly lowered, into the print.

And they didn’t beat them, but they missed by a mile also lower guidance from 15 to 20% growth this year.

Remember every one we’re supposed to see massive growth in the second half of this year because of lower interest rates.

And that’s off the table.

We’re supposed to be 20% earnings growth this year.

I have no idea how we’re gonna make it there unless the, the, the seven or eight large companies really take up like 60, But just to put in perspective, they lower their guidance from expecting 15 to 20% growth this year to no growth at all.

Not to single digits, mid, low, single digits to no growth.

The CEO, this is some of the commentary.

Uh, fiscal Q2 traffic was down 7%.

The weakest of 20 years outside of COVID China, still horrible.

Uh, April did not end well, which means the start of next quarter is already bad.

Why? A little guidance.

So, you know, it, it’s when they’re reporting, if you don’t know this, when they’re reporting numbers, now they closed the books over two weeks ago, three weeks ago.

So the first three weeks is going into the next quarter.

So they, they have an indication if those three weeks are good, it’s a good time period, right? Three weeks, you know, it’s big.

Probably what, 25% of the quarter that they’ll look at.

And, and they’ll say, well, you know, we’re seeing strong business and it might lead to them, you know, maintaining their estimates for next quarter, raising their estimates.

But they just said like, the quarter ended and, and it’s already off, the next quarter’s already off to a bad stock.

They said they’re occasional customer, they call ’em occasion a customer.

That that’s another way of saying your best paying customers are also cutting back on spending.

Uh, if you look at Starbucks as a stock, still trading 18, They’re reporting 20 24, 20 25 estimates is their forward earnings.

Uh, they’re expecting $4.

They’re not even close to that.

Even though they maintained it, they maintained $4.

I have, I have no idea how they’re gonna come close to that.

The stock was 1 0 5 in November, it’s now trading at 75.

But this is more like a $50 stock.

If you believe earnings for 2025 are gonna come down significantly more like 3, 3 25, which I think, now they, they see the risk ahead of ’em.

They saw the risk ahead of ’em for the last year and they haven’t adjusted.

So they’re gonna cut costs.

Kinda like Disney Disney’s, went up 12% and it’s not a growth story, right? They’re still losing money on streaming.

Uh, you know, they beat estimates that was significantly lowered.

It’s a cost cutting story for, for Disney, right? That’s why they reinstated a dividend, which I think is gonna be a big mistake.

Uh, but it, it’s not a growth story.

So let’s see if they can cut costs to the point where if they just maintain and see, you know, just growth not as bad.

You know, maybe we could be okay, but we talk about expensive stock and we talk about that across the board, right? There’s a lot of expensive stocks that have growth multiples that are not growing, that are not growing.

I mean, you wanna talk about risk, holy s**t.

I mean, look at Norwegian.

Norwegian reported earnings had their record backlog, record business going forward in, in, you know, just this forward business of people paying that they raised their guidance and the stock got hit.

It’s down 10%, 11% ’cause they thought it was supposed to go higher.

And that’s not really expensive stock.

I think it’s an incredible, incredible buying opportunity.

Norwegian, I think it’s a great company.

Plus what we hear from Comcast, Comcast was a disaster.

They, you know, just everything in involving in, in, in, in Comcast business.

So if it, if it’s streaming, if it’s, you know, just linear tv.

Uh, but more importantly they said they saw a significant pullback in park attendants when we heard that.

When did parks pull back? I mean, it’s always strong.

And they said, you know, lower traffic is due to increased competition from wa from cruises because it is cheaper to go on a cruise.

Much, much cheaper than going to Disney World or going to Universal Parks and gonna Disney, you’re going to Orlando or going to California to these parks.

And he said a lower traffic Comcast is due to increased competition again from cruises.

But it’s a problem I don’t see going away because you already raised prices significantly at the parks.

I’m throwing Disney there already, right? So, so where are you gonna get these returns and where are you going to see that? Is it more cus cutting maybe, but I’m interested to see what Disney reports, ’cause that’s been their bread and butter, their parks, I’ve been arguing they should just open up parks and get outta streaming streaming’s.

I mean, you see what’s happening to, to Paramount.

What a joke, what a joke Paramount is.

I mean, yeah, Redstone, she she controls the controlling shares.

They’re trying to f**k all the investors on it.

All the regular investors, class A, class B, she owns Class A.

She is like, ha has, you know, basically all the votes.

Apollo came out with an offer.

They should have ran, they should have took the offer and ran.

They wanna buy the whole company instead now they’re gonna sell certain pieces.

She’s gonna get a $2 billion paycheck.

That’s why she wants to go with Skydance.

Who’s, who’s, you know, was it David Ellison? Larry Ellison, Oracle’s son.

Uh, but they’re not allowing like votes.

And you’re seeing class B shareholders like Gamco G who’s, um, Mari Gelli and others saying this is the worst.

We don’t want this deal.

A it’s horrible.

They’re basically taking their streaming assets as s****y assets.

They’re losing buildings on and they’re gonna give it to their shareholders.

And, but they have amazing, amazing assets, right? It’s a good business, with their assets.

I mean, yeah, they have Tom Cruise Mission Impossible.

MTVI mean they got unbelievable assets in there, but streaming that’s destroying all these companies outside of Netflix and they don’t know what to do.

So now they’re construction deals, it’s so amazing.

But when I look at Comcast in there and, and whether it’s, you know, peacock, whether it’s, you know, HBOI think is good.

They’re doing a good job in terms of new content.

We talked about this, how streaming’s the worst business in the world.

I’ve been seen it for four or five years.

Netflix the only one that gets it, right? HBO’s, okay? And it Hulu’s been around the longest 15, 17 years.

They still haven’t made money.

They don’t report to financials anymore.

And, and now Disney was forced to buy that at, at a, at its sick premium.

Uh, and if you wanna know how sick it is and people are like, well, how do you know it’s a premium? Because no one else f*****g bid for those assets.

No one else bid.

They could have other bidder.

They didn’t.

They locked them in for a minimum bid price of whatever.

It’s 9 billion Comcast, which is great.

At least they saw that check.

But I’m interested to see what Disney, where streaming’s not working, how much more could you cut costs? ’cause you cut ’em tremendously before you see, you know, service deteriorate.

And now, you know, park’s not doing as well.

Let’s see if that filter’s over to Disney.

Maybe it didn’t, but Disney has, Disney went from a low expectation stock.

I told you they’re gonna beat the numbers.

Stocks are gonna go up last quarter to a very high expectation name, right? You got guys on a sideline that you rejected on the board and said, Hey, we don’t want pelts or anything.

It’s gonna be interesting to see what Disney reports going forward, because, you know, based on Comcast and the parks and the weakness of what they’re reporting, there’s not a lot more cost cutting you could do.

Uh, you know, it’s gonna be interesting.

And, and, and their streaming business is just horrible.

Like, you know, they don’t have any new content coming out.

It’s, it’s just a real waste.

I know they’re trying to do different things.

Even ESPN and declines and stuff like that.

It’s just, it, it’s so costly and so hard to maintain.

Just do what Sony did.

Sony signed a four year deal and making, you know, probably getting a billion dollars for six months after they released movies.

They go on Netflix platform and after that Disney sign a deal with them, I think 20, 28, 9.

Why wouldn’t Disney do that? Everywhere.

You have all these platforms looking for content.

Come on guys.

They’re all dying for content.

Why run your own platform? And not only does your platform suck outside of Netflix and your platform really sucks, what are you gonna do? What’s gonna be the user experience? We’re gonna throw ads all over this s**t and then we’re gonna raise the prices on you.

Really? You really think that’s gonna work? Good luck.

You could still cut it.

You still have great content for Disney.

Same, same with Comcast.

But you know, if you’re gonna have your own streaming site, man, you just can’t compete with Netflix.

It’s Netflix and everybody else.


I mean, same thing when it comes to commentary.

It was horrible said, traffic in us is declining.

Consumer are very conscious on how they’re spending now.

But one thing they said, and they said that past couple quarters, but they said the pullback in spending while more pronounced with low income consumers, they’re seeing the pullbacks in spending from all the demographics Now, from everybody that goes there, middle income higher, whoever likes McDonald’s, they’re seeing those price, you know that they’re seeing the pullback.

We’re not seeing the jobs, not seeing certain economic data.

But the companies are saying this, and there’s a reason why you’re seeing massive amount of layoffs.

You think the unemployment rate’s going high, but it’s not because you’re seeing a lot in services and you’re seeing people who have jobs get a second job.

But people with full-time jobs, if you’re looking year over year, that number’s down.

Employment, people don’t talk about that when you really break out the numbers.

I’m not cherry picking companies here.

I mean, trucking companies, JB Hunt, Swift Knight, I mean these are these, Knight-Swift, I mean, reported numbers that were absolutely horrible.

And this goes for, for the past two quarters.

I follow these companies and they said, business has been really bad, really terrible, but it’s gonna just like everyone else, it’s gonna get great the second half of the year.

Why? ’cause everybody thinks interest rates are gonna go lower.

Everybody thought that in October, January, February.

And now we’re realizing that they’re probably not gonna go lower.

We’re seeing inflation pick up.

So they reported a horrible numbers again.

And, and yeah, the commentary is important.

You could report horrible numbers and say, look, it was bad.

That’s the cord, it’s the kitchen sink.

Kind of like what Snap did.

And then report a, you know, blockbuster results across the board, which was also probably one of the best quarters was snap.

That, that, that so far that I’ve seen this earnings season.

Unbelievable, unbelievable quarter for Snap.

And I’m just surprised that it went down so much after the quarter before.

I didn’t think it was that bad.

But, um, man, AI products, selling AI products, you know, that enhance these pictures and, and, and charging whatever, three, $5 a month and people are paying for just starting just a whole new revenue stream business and advertisers on fire, they’re doing great.

But when it comes to these trucking companies and you’re listening to, to what’s going on under the hood, I mean, you determine that, but by listening to the commentary on the calls, they’re giving you a real perspective in real time.

And I gotta tell you, these guys, they said, not just slower traffic again, but shipping companies are raising prices.

So the shipping companies, right, they get all the goods from ships and now you have these trucking companies, you trucking companies bid.

They have a bid season.

And he said the prices have gone up tremendously.

So if they wanna have that business, they have to bid higher.

What does that mean? It means slower demand, which you’re talking about lower traffic coupled with higher prices, higher costs.

That means that your margins are gonna get annihilated, okay? It’s not just like, Hey, slower demand.

We may have a lower price.

They’re paying a higher cost at the same time when demand’s waning.

I mean, that’s why I say the reverse of that.

When companies cut costs, they’re like at Disney.

When Disney cuts costs and then you see business start turning around and you have, you know, much less costs, especially when you’re laying off employees, which is the worst thing for employees.

But when it comes to businesses, right? You’re cutting your expenses and then all of a sudden you’re seeing your business turn around and grow.

You get like this, you know, this big shot of steroids.

It’s not just a cutting cost where, okay, this is going directly to my bottom line and saving money.

But now your business starts turning up and you see earnings explode and you see that if you could determine to get ahead of that man, stocks sometimes double off their lows immediately, and then they’ll just start going higher and higher.

Especially small caps.

When you have the trucking company saying that it’s the opposite.

Slower demand coupled with higher costs, usually slower demand leads to lower costs, right? Because there’s little demand.

So we’re gonna lower costs, it’s higher costs, slower demand, which we’re seeing across the economy right now.

And that’s a double-edged sword.

Sysco, the Sysco that begins with a S not a C, the food distributor.

Lower traffic restaurants February and March improved a little, but traffic’s still down and keep going here.

Skyworks, you see that quarter, they’re down, they’re getting nailed today.

Uh, 66% of of Skyworks revenue comes from Apple.

And here’s what they said.

They significantly lower guidance earnings for shares were projected at a dollar 46.

They lower to a dollar 21.

That’s a big, big lower, expects, you know, they say further modest growth.

So, you know, basically to be continue weakness.

But stocks getting nailed today, despite, you know, trying to cover up, declaring a nice cash dividend.

It’s still getting hit, but 66% of their revenue comes from Apple.

So what is that gonna say? We know a lot of the risks that are in Apple.

We just recently recommended I think that June event for Apple is gonna mark a bottom in the stock when they really go with the AI strategy at, at the developer’s event.

I think it’s gonna be one of their biggest events since the launch of their first iPhone.

I think it’s a good time to buy.

You might wanna wait till after the quarter.

The numbers are bad.

Everyone’s expecting the numbers to be bad.

But let’s see what Apple reports.

Apple does have pricing power and Apple does have cloud.

What we saw, okay? ’cause not everything was bad.

What we saw a cloud, okay? And I’m gonna go back to to CVS in a minute, which is horrible.

Uh, but what we saw a cloud think about Amazon.

Amazon reported, I, the numbers fantastic and, and I love when people are worry about, you know, higher spending, especially when it comes to Meta and, and, and Amazon because one of the most certain trades in the world over the past When the declines, when you’re seen this stock decline because, they have higher CapEx concerns or that’s what investors are concerned with, but they’ll have higher CapEx and higher spending.

Amazon, I’ll throw a Meta in there too.

Amazon, time after time, after time after time is proven as the best return on investment capital ever.

Okay? You spend more money provide that cloud services check they did that, right? Spend more money to, to provide better logistics for one day.

Shipping check got hit because of spending more money one day shipping, no one else really has one day shipping, right? And, and they start, they got much better at the beginning.

It wasn’t really one day.

We all know that.

It’s one day, believe me, because I go to my house and there’s like six boxes on the freaking step for my wife all the time, which is cool.

She’s not just buying, you know, okay, it’s not materialistic at buying crap, but stuff for the house.

We just have it automated, whether it’s you know, if it, if it’s tissues, if it’s towels, if it’s dog food, cat food, right? Automated, it’s just, but constantly like the one day service, it, it, it kicks in, right? Uh, they plan on spending more, money on AI now.

And people are like, oh, well that’s gonna be a negative.

Really, really, it’s gonna be a negative because you are looking at the greatest retailer the world has ever seen that’s been tracking close to 230 million US customers, 310 global, Who receives close to 3 billion unique users on their every month.

And if you’re looking at cloud for Amazon, it’s absolutely surging.

This is supposed to be a mature business.

Why is cloud surging? Because a lot of people are arguing.

I argue this ’cause in tomorrow’s interview also, it’s gonna be cool with Andrew and we have a little back and forth about AI and he’s like, you know, even Zuckerberg said it’s gonna take a while.

He has to say that.

He has to say it’s gonna take a while to develop guys.

He has to say that because he can’t say, well, AI, we’re tracking everyone and we know exactly what you’re gonna do.

Now, 50%, 50% of the content on Instagram is AI generated, okay? When you’re looking at cloud, look at Amazon report cloud, you’re seeing the percentage, the percentage of growth, right? You’re still seeing growth.

It’s mostly cloud should be a mature business.

It’s been around forever, right? You have the industry leaders, right? If it’s Amazon, if it’s Microsoft Azure, you have, Google Cloud as well.

Oracle you could throw in there, right? And, and, and Apple, Amazon.

Look at the cloud growth that all these companies reported this quarter.

Microsoft blew out the numbers.

Amazon blew out the numbers.

Google, you wanna know why it went up.

It’s because they blew out the numbers in cloud.

The reason why cloud’s going up on a percentage basis, I mean, it’s going up on an actual number, right? But the percentage you’re supposed to, you’re gonna supposed to see slower growth.

And the growth’s starting to accelerate again because of AI.

Everybody’s paying for AI.

If you want proof, look at Nvidia’s numbers.

I mean, this is a company’s generating $5 a share.

They generating 20, 23, 20 $4 a share now in earnings, massive growth, massive revenue generation.

So you’re seeing all these companies and everyone going into AI and they’re seeing the benefits tremendously through cloud, which is why I like AI so much because these companies don’t have an AI division.

People looking at Microsoft co-pilots, not the co-pilot that’s gonna do great for them.

And, and you know, again, that’s just let me be able to charge you a little bit more for Microsoft Office products.

This is about cloud, this is about inference.

This is about, you know, throwing this into your CRM services.

All of this goes through the cloud.

And when you have the cloud, it’s a massive high margin business.

There’s a reason why the biggest companies in the world, the reason why those went so much higher after earnings and did very, very well, is because of their cloud.

And again, this is their high margin business.

This isn’t like a, a retail business where you gotta buy a product for $30 and, and sell it for $35.

This is like pure margins.

I mean, the scalability of cloud, it’s unbelievable.

And now you’re throwing AI into it and these features are working and obviously they’re building it, they’re building these systems and continue.

You can see from Nvidia sales and you’re seeing enough from AMD sales.

I think, listen, when I had our live events for AI, when we just lost our cardio AI newsletter, I told you names to avoid, and AMD was one of them.

It, it’s not an AI play, okay? They have a certain section of AI, they’re not Nvidia, they’re not even close to Nvidia video’s.

Been building this for 15 years.

They have other s****y divisions that are horrible and, and AMD should never, ever, ever be trading at right now.

Still, it’s down today.

It’s getting wrecked on earnings.

It’s still, right now trading at a 25% premium.

If you’re looking at forward earnings to, to Nvidia, which is a joke, okay? We, we’ve been saying there’s a stock to avoid at at One forties, I think it briefly went over 200 people keep pitching AMD like an AI play.

It’s not an AI play, it’s not an AI play.

They’re not even close.

They’re not even close.

They might make a chip or two, whatever.

But still it’s the whole ecosystem.

Nvidia’s not even like a hardware company.

It’s more like a software company.

Uh, and you’re seeing that get nailed.

So, so the point of this is when I’m looking at, at, you know, is AI doing good? You’re looking at Apple, Apple’s cloud division, they haven’t even begun to use AI and now they have, they’re releasing that technology stuff that I, that I follow.

It’s amazing what they are doing in AI right now.

They’re going all in AI, by the way.

What is it? A hundred billion dollars on the balance sheet.

They could buy almost anything they want other than the big technology companies.

But you probably see Apple decline.

That’s the last major company that’s yet to report for the quarter.

Uh, maybe, I mean, everyone’s expecting horrible results.

We saw what happened with Tesla when that, when, when you’re expecting, when all expectations are really bad and everyone lowered their numbers into the quarter, Skyworks is kind of, you know, with most of their business in Apple and those guys warning, it tells you that the Apple core is probably gonna be a little bit weaker than expected.

Uh, I think it’s a great, great, great great buying opportunity because the AI component and the cloud component, which once you’re on a cloud service, you, it’s almost impossible to switch unless you wanna stop and rebuild everything from scratch.

If you don’t think so, try going from a Samsung phone to an Apple phone and try transferring all your data over.

Good luck, good luck, not easy or vice versa, right? So once you’re on it, it has all your pictures, it has everything in the cloud.

Now you’re gonna throw AI on it.

Not to mention, we all talk about pictures and videos.

I mean, you’re looking at the iPhone is a professional camera.

I mean, it takes better pictures than $500, $708,000 cameras right now.

And especially the two latest versions.

I mean all this and putting AI into it and what you’re capable of doing, Apple’s gonna be one of the best players, one of the, the biggest beneficiaries that would relate to the party.

They know it, they’re spending a lot of money.

But I think in June you’re gonna see, you know, one of the most important developer conferences when Apple’s really gonna surge.

But you might have to be a little worried into the core, but not everything was bad, right? So Microsoft, good Google, most of ’em that have cloud services were good.

Uh, and I just wanna cover CVS for I go here, horrible numbers slash guidance.

They blamed on higher medical costs, for their insurance business.

But guidance for 2024 was cut from $8 and 30 cents to $7.

I remember when Walgreens and CVS Walgreens, horrible, you saw that stock, you know, crashing as well.

You dominated the pharmacy industry.

Rite Aid.

Remember, if you’re looking at what they actually do, these companies, every supermarket offers these services to pharmacy, Walmart, target, even Amazon, right? They all, you could get your prescriptions through these companies.

Now, you could even go directly to the companies for weight loss.

You can go directly to Eli Lilly to get your weight loss drug now and, and, and save instead of doing all this, you know, whatever, going to Walgreens, CVSs.

So that leaves their retail business and they can’t charge two to three times more for every single item in their store.

And they, they’ll never ever do price matching ever.

But you go in that store and everything is just like a fricking fortune.

It’s a fortune.

It’s marked up tremendously.

Especially when there’s what, where you see where these things are built.

There’s probably a Walmart or Target within a half a mile from where it is.

And people are like, I’m not gonna CVS no more.

I mean, same thing with Dollar Stores.

It’s a dollar store, but you know, when you’re raising prices well over a dollar, well, you know, now you’re competing with Walmart where I could buy 80 things if I want instead of the two things I’m looking to save money on that you have at a dollar stores reason why dollar stores are doing s****y.

Uh, but what’s the necessity for the Walgreens and CVSs anymore? Used to be huge necessities.

Now what’s the necessity? What’s the, what’s their purpose? I don’t see it.

I really don’t see it.

You know, so, so just that, that whole industry in terms of not the industry, but you know, those two companies particularly, I just can’t see it getting any better.

Maybe I’m wrong on that.

We’ll see.

overall earnings have met estimates.

The guidance has been okay, but the commentary and, and for these companies for the massive growth we’re expected to see in overall earnings in 2024 in the back half of this year on lower interest rates, we know rates gonna stay higher for longer.

The caution and what I’m seeing, the commentary from these calls have never been this negative before.

They’re seeing it firsthand with consumers.

You might not be seeing it.

You you’re feeling it.

A lot of you’re feeling it.

But if you’re listening and you’re hearing things on tv, the economy’s great.

Unemployment’s awesome.

I mean, look, you know, So we still about midway through and we got thousand over a thousand small mid-cap companies are gonna report.

It’s gonna be interesting what we hear there.

Uh, but it’s not just the earnings that are making headlines, guys.

I mean, economic data has been pretty bad for a Fed that’s expected inflation to come down.

I mean, forget CPI, PPI, the PCE later, all that stuff, which is high than expected.

And this is the past couple days.

The Q1 employment cost index.

Much, much, much hotter than expected.

That’s a big miss.

Year over year was at 4.2%.

What happened at 2%, 4.2%.

Again, employment cost index, Chicago, April, Chicago, PMI came in at 37.9.

They were expecting 45 worst readings since November, 2022.

Case shield, house price index stronger than forecast.

Prices are remaining high, while ADP jobs data also strong.

So, you know, you wanna see weakness across the board ’cause that makes sense for the Fed to cut.

But when you see unemployment strong, we had, you know, ADP data was good.

We’ll see what, what, you know, Friday brings with unemployment report.

Uh, housing is staying up there, even though it’s kind of like a frozen market.

It’s very difficult with rates this high.

And people don’t wanna sell their mortgage or sell, you know, they have a mortgage at, at, you know, under 4%, probably under three point half percent.

Uh, they’re gonna buy another house.


It’s gonna be much, much more expensive.

Uh, or maybe, you know, it’s in line be with the price that you’re selling, but you’re gonna be paying a s**t more because it’s what are mortgage rates over 7% for the 30 year, mortgage rate.

But what’s the Fed going to do? I mean, they can’t cut.

I mean, inflation’s way higher than it was in December and January.

You didn’t cut when you decided to pivot a little bit and then take it back.

You can’t raise, I don’t see raising ’cause it would crush consumers, especially low income consumers gonna crush ’em even more.

Uh, you know, we saw Visa say that, that, that, you know, business is okay, and we saw mascot come out today, which went up, and now it’s coming down.

But they said, oh, the, the, the economy’s fine.

I I don’t want MasterCard’s numbers to go higher.

It’s not an indication that the economy’s fine.

It indicates that people can’t tap money outta the house.

They, they, they’re not making as much money.

Bills are so high that they’re turning the credit cards to 27% interest rate.

That’s not an indication of more people spending on credit cards.

It’s not an indication that the economy is strong.

Now we have 27% that you gotta pay that annual interest.

Are you crazy? So it’s just funny when I hear those reports, but, you know, we’re at a market where the Fed can’t really cut.

They can’t raise.

Politicians won’t stop spending even though we’re at full employment.

And what does that mean? What does that mean when I say that? Because when you are looking at, at the amount of spending that’s taking place from our government, that usually takes place to stimulate the economy.

That happens when we have an unemployment at seven, 8%, you know, maybe we’re going into a recession and you wanna stimulate the economy, and then when you stimulate the economy, you throw all this money into it from the government and then they make it up on the back end.

More people get jobs, the economy starts picking up.

You have lower rates.

And, and, and now you have more tax receipts from these people that have jobs.

We have full employment, we have full employment, and they can’t make ends meet.

They can’t make up the difference in spending, right? Because most of the people have jobs already.

But when you’re seeing the spending that’s taking place at this level, when we’re at full employment, what happens when growth slows, which we’re finally starting to see what happens when this growth slows, but prices remain elevated, which we’re actually seeing.

So it’s gonna lead to higher rates for longer higher payments by a government to fund this debt, which is at 1.1 trillion in interest payments, annual interest payments.

So if the debt stays the same, 1.1 trillion, how could that be sustained? Our debt is surging, decreased by a trillion dollars every four months right now.

And it’s leading to the treasury having to borrow more money to pay the bills, which we just saw two days ago, right? That it was like 200 billion.

They had to go to 243 billion, they had to borrow even more.

And they said it was due to weaker cash receipts, which is taxes from consumers.

So if that’s weak, now as the economy gets slower, more people, they companies are gonna start laying off even more.

Where are you gonna get the taxes from? Where are you gonna get the receipts from? This is where we are.

I mean, means the Fed loses the power to help the economy, which they always had this power and they have unlimited sources.

You know, it, it, it, they, they, they just painted themselves into a corner here.

But it’s gonna be an interesting year, especially because people are quick to say, well, Frank, it’s an election year.

So no matter what, no matter, and I get it right, it, it’s the current administration, any administration that’s in office during election year is gonna spend like crazy, right? Because they wanna win in, in their best interest, right? It’s gonna lead to a lot more spending, just send more money to Ukraine.

Okay? We just did.

And not because they care about Ukraine, it’s just, okay, we know based on a poll that we’re gonna get a certain amount of votes if we do this.

They just forgave more student loan debt for like art students and stuff.

My daughter’s probably gonna go away for art.

I know the numbers in art, but she did win.

You know, she’s up for, for a, a massive award, which is gonna be good in terms of getting a scholarship.

And I want her to follow her dreams.

People were like, oh, well, don’t tell ’em to follow your dreams.

They’re not gonna make, she’s gonna be fine.

She’s smart.

She can get into my business.

She can do anything she wants, but I do.

She, she’s very, very talented.

It’s not like, oh, I’ve painted to pictures pretty, I mean, you know, she, she’s basically in a running, I think five people in the state of Florida for a art piece.

And hers is the only one that was a sculpture.

Everything else was a picture.

And I saw the other ones and I thought, you know, and I’m 100% biased here, but I, that was the best thing I’ve ever seen in my life.

It was really nice.

It was really nice compared to the pictures.

And then it goes national event.

And, and that’s the process now.

And it’s just done another great piece.

But, um, you know, I, I wish, I wish she was in school.

Obviously she was in college right now.

’cause all the debt got for forgiven.

And this isn’t about helping students, it’s about getting votes, right? That’s just about keeping energy prices low by not replacing the SPR like you promised for the last 18 months.

Oh, we’re not gonna do it now.

Prices are higher.

Well, prices are now below 80.

Are you gonna buy? No, they’re not.

Of course they’re not.

Absolutely not.

They wanna keep prices low as possible.

They don’t wanna buy oil here.

Even know what, it’s 60, when Biden took office.

And it’s not, you know, this isn’t Biden, this is any single president.

I mean, you look at, at, at at Trump as well, 2018.

He’s like, tell him the Fed.

You’re lowering rates.

You’re lowering rates, right? It’s 2017 going to 2018.

The path that we’re on is unsustainable, guys.

It’s unsustainable.

And tomorrow on Wall Street Unplugged Premium gonna gonna break down these trends in detail.

Andrew Horowitz, I’m gonna be interviewing and interview him a lot.

I love him.

Uh, great guys pulling investor podcasts and stuff.

Uh, we’re also gonna share lots of actionable ideas with you, including how to hedge yourself.

Uh, Andrew is short, 15% of his growth portfolio hedging himself.

So, which is, I think he says his highest amount, a very long time, but he’ll break down, you know, how he’s doing this.

Okay? Sometimes what we say, well, buying puts is a strategy.

Buying puts is very, very difficult.

It depends on the pricing.

And sometimes you could be right and, and still, you know, not make money.

It’s not the best strategy.

We used to have a newsletter run on that, and we realized that we had lots of losses other than short time periods when the market really comes down.

And in this market, it usually comes down in two to three months, and you can make a lot.

And then it goes up tremendously, right? The market and, and you see a lot of losses.

You only lose the money you get into.

But there’s also inverse ETFs.

I don’t think he’s gonna talk about actually shorting the markets, which I think is absolutely crazy because that could just whip so against you immediately, especially with, with machine trading.

And, and you know, how quick and you could see the shorts, you know, the short positions in the market and how to blow out of ’em, which we saw at Tesla, right? And we went, earnings, earnings are not good.

But Elon Musk knew exactly what to say and, and, and that surge.

And then people piled on the shorts again.

And what happened to the China news? And then you look at the stock like popping tremendously, it must went to 200, it was one 40 a week ago and it, I think it touched 200 and now it’s pulled back to like, you know, 180 5 or whatever with, with the market pulling back.

But, yeah, we’re gonna go over all that stuff.

It’s gonna be a great, great interview.

Uh, definitely give the listen and if you wanna learn more about Wall Street Unplugged Premium, including how to try it for just $1, $1 for the first month.

If you hate it, you can get rid of it.

If not, it’s $10 a month after almost everyone that subscribes it, it maintains a subscription because the value that you’re getting also with the Dollar Stock Club portfolio, which is where recommendation almost every, every week, has been on fire and, and trading products, again, that’s included.

The $10 a month trading products go for a hundred dollars a month in our business.

Uh, I, I could tell you this performance is much better probably than you’ll see on any trading product.

Uh, ’cause Dan and I cover the market so much and we really break it down.

You get all that stuff.

But it’s a good service.

We provide a lot more details, a lot more analysis, and we’re gonna provide a lot more interviews and some of them might be here on Wall Street Unplugged Premium, Wall Street Unplugged.

But that one’s gonna be on Wall Street Unplugged Premium.

And we’re gonna be sharing lots and lots of, of, of actionable ideas with you.

So, questions, comments, I’m here for you, frank@curzioresearch.com.

Thanks so much for listening.

I appreciate all your support as always, and I’ll see you guys tomorrow on Wall Street Unplugged Premium.

Take care.

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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.

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