Fine art is delivering some incredible returns right now… and Masterworks opens up this elite asset class to Main Street investors.
Their art offerings sell out quickly… but as a Curzio reader, you can skip the waitlist.
We start today’s show with some breaking news from the sports world: Tom Brady has (once again) announced his retirement. I share some wild stats that show why Brady truly is the greatest of all time.
Later today, the Fed will announce its latest interest rate hike, followed by a press conference with Fed Chair Jerome Powell. Daniel and I break down how the market is ignoring the Fed’s words… why we expect Powell to take a hammer to the current rally… how high the Fed will push interest rates… and why this market makes me think of Batman vs. the Joker.
Cathie Wood went on CNBC this morning to explain why she thinks disruptive tech will become a $200 trillion market… and Bitcoin will eventually hit $500,000. I share why I have a ton of respect for Cathie… even though I have some issues with her forecasts.
- What makes Brady the GOAT [0:30]
- What to expect from today’s Fed meeting [4:15]
- Why this market reminds me of Batman vs. the Joker [9:10]
- How high will the Fed push interest rates? [16:50]
- How tokenization is changing the elite world of fine art [21:44]
- Why I have a ton of respect for Cathie Wood [22:40]
Wall Street Unplugged | 1001
Why Cathie Wood deserves your respect
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 February 1st. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break down the headlines and tell you what’s really moving these markets. It’s Wednesday, Daniel Creech Day. Daniel, how’s it going man? How you doing?
Daniel Creech: It’s going great, Frank, how are you? It’s another wonderful Wednesday on the island.
Frank Curzio: As we came on. Big news man, really big news. Tom Brady, retiring.
Daniel Creech: Again, geez.
Frank Curzio: Again. A little emotional this time. I believe him. I do believe him this time around. Just amazing when you look at it, right? I mean, seven Super Bowls. So, he played close to 20 Bowls and Super Bowls. That was 10 of them, right? And he won seven, and as long as he didn’t play the NFC East, he won the Super Bowl, right? He lost twice to the Giants, once to the Eagles, but he averaged it with 300 yards passing in those Super Bowls, right? So, no shitty games when it counted, which is important, right? That’s how you determine who the GOAT is. It’s in every sport. It’s how they perform on the biggest stage, and he’s done that time and again.
Daniel Creech: The GOAT. Greatest of all time, for those of you …
Frank Curzio: Yes.
Daniel Creech: You got to tell them what GOAT is, Frank.
Frank Curzio: I don’t know. I think people know, I’m not too sure. I don’t think that’s like a term that’s been thrown around a lot. I would say it’s less than five years, but now everybody says it. But even the Super Bowls that he lost, if you look at those. The two into the Giants where he actually scored the go-ahead TD and Giants, they came back to win games. In the Eagles loss, he threw for 505 yards and three TDs. I’m pretty sure that’s a record. But my favorite Brady stat is this. So in, sorry, Chicago Bear fans because you’re going to get pissed, but so the Bears all-time leading quarterback in yards and TDs is Jay Cutler, right? He owns the Bears’ records for passing yards at 23,400 and TDs at 154. Brady has more yards than that and more passing TDs, right? So, he has 23,000, almost 24,000 yards compared to 23. He has 174 TDs compared to 154. That’s his stats, since Brady turned 40.
Daniel Creech: And that’s better than, what was the dig of Chicago?
Frank Curzio: Better than the entire career of Jay Cutler, which is like, I think, it’s nine years.
Daniel Creech: Oh, the entire career.
Frank Curzio: And you’re talking about his span of five years. So Brady, when he was over 40, those, that’s how amazing it is. But like I said, when it comes to, the stats are unbelievable, but it comes to the greatest players of all time in any sport. It is the big stage, like Steph Curry, I’m a big basketball fan. Everyone was like, “He’s one of the top five, ever to play,” and I’m like, “You’re crazy.” I mean, outside of last year, he finally got-
Daniel Creech: Who says that?
Frank Curzio: A lot of people say that. A lot of people say that. And he’s an incredible player and I love him. He’s not a good defensive player. I’m not tearing him apart, because he is amazing, but he doesn’t play well on the big stage other than last year. Last year was the first year. So, when you look at MJ, six titles, six finals, MVPs. I see he has-
Daniel Creech: That is the goat.
Frank Curzio: Yes, when I see he has four rings and didn’t win an MVP until last year, finally, which was good because he didn’t win that finals MVP any other time. But just again, I put him up there with the MJs. I put him up there with Gretzky, Tiger and Phil Taylor. I don’t even tell you, you know who Phil Taylor is?
Daniel Creech: I have zero idea who Phil Taylor is.
Frank Curzio: If anyone tells me, first person, email@example.com, first email I get, who Phil Taylor is. He’s the GOAT in a certain sport and you’re going to know why. There’s no one even close to him. You’re going to get a free subscription to our newest product, which we’re coming out with very, very soon, called Wall Street UnpluggedPremium. I’ll give you all the details. It’s going to be fantastic. We’re working on this probably for the last two to three months to launch this thing. Some of our subscribers already know about it. We sent out some emails, but I’m going to give you all the details going forward, probably starting next week. It is a great, great, amazing service for our diehards. So, you’re going to get a free year to that, if you tell me who Phil Taylor is. Anyway, you don’t know who Phil Taylor is either, right?
Daniel Creech: Negative.
Frank Curzio: Okay, cool. Wait, you’re not supposed to know. No one’s supposed to know this. You have to look it up, right? They’re going to look it up, but no one knows offhand who this guy is, but he’s definitely GOAT in a certain sport. and it’s not even close. Anyway, I want to get to the markets. Enough of Brady, going to hear that every place today. The Fed meeting’s today, so the Fed’s supposed to raise rates by 25 basis points, is a hundred percent chance of that happening. Market’s had a remarkable start to the year. NASDAQ’s up 10%, S&P is up 6% to end January. To put that in perspective, if you look since 1950, day on and on, I just saw the stat, which I thought was interesting. So, it’s up 6% this year, and that’s the S&P, but since 1950, January, the average gain is around 1%. So, we’re up 6%, and NASDAQ’s up 10% in one month.
Frank Curzio: The Goldman Sachs most shorted index is up about 22%. So, that’s the riskiest names. Usually the crappiest names are the ones that have very weak fundamentals. Smart money’s betting against companies that look like they were going bankrupt, seeing much slower growth. They’re up even more, right? So, the money that’s going into a lot of the garbage names is insane right now, into a market where the Fed’s going to come out and look. And I think the expectation’s out there, and I’m talking about a lot of smart economists, analysts, believe the Fed’s going to come out today and say, “Hey.” They’re doing the right thing, right? Their job on inflation is almost done. You’re seeing it moderate to where Powell, a lot of these people believe that Powell may come out and say, “Hey, we could cut rates by 2023.” There was an 82% chance that traders and derivatives traders, that’s what they believe. There’s 80% in the futures market, of the Fed actually cutting rates by the end of this year. Daniel, what’s your thoughts on that?
Daniel Creech: And just to get picky with you on that stat, that rate cut is before December, meaning not in the month of December, but before December. That is amazing. Frank, earlier this year, January 3rd, I came across this story about direction for markets and such. This is on the 3rd of January. The average Bloomberg projection for the S&P at the end of 2023 is 4,009. Where are we at right now? Do you have the S&P right now?
Frank Curzio: You know what’s so funny? I’ll bring it up. They don’t have the actual number. They just tell you how much it’s going.
Daniel Creech: Okay, so my point is that we’re already at the targets or very close to a lot of, or the average Bloomberg analyst-
Frank Curzio: What was it? What’s the target?
Daniel Creech: 4,009. 4,009 was the S&P target.
Frank Curzio: Okay, it’s 4,070.
Daniel Creech: Okay, so we’re above that right now. My point is that, we just started the second month of the year. I continue to be very surprised that the traders and such are banking on the Fed. Goldman Sachs came out with a good report. Frank, there’s actually some bond traders out there betting that the rate will not go, the Fed Funds rate will not go to quite 5%. You’ve got Jamie Dimon out there saying, hey, he thinks it’s going to six-ish. You have Home Bancorp’s CEO, who we’ve talked about several times, who thinks they’re going to have to keep the pedal to the metal. It’s a smaller bank out of Little Rock, Arkansas. What I’m going to be watching for today is the Fed Funds Rate in the projection, because they’ve had a habit and a pattern of continuing raising those, when they release their summary and things like that.
Daniel Creech: Going back to the December meeting, Frank, when you look at the central tendency, they give this graph here. And all that means, I’m going to read this. This doesn’t make any sense. I’ve read it a few times and it’s not going to make any sense to you either, but the central tendency excludes the three highest and three lowest projections for each variable in each year. Okay? That’s like the legal disclaimer. If you take this product, don’t worry about the side effects of dying. It’s good. We just do that quickly. In September, this is the Fed meeting in December, Frank. In September, they had a Fed Funds rate between 4.4 and 4.9. Okay? When they came out in December, they raised that to 5.1 to 5.4 for 2023. Even if you take a less version or a more moderate tone, they raised their December… The Fed is at 5% or higher on their Fed Funds Rate. Since inflation being transitory and the whole loss of credibility they had there, you got to give them credit. We’ve talked about this. They’ve stuck to their guns since inflation being transitory about-face.
Daniel Creech: I think you’re participating in this market with the rally longs. I don’t understand how Jerome Powell doesn’t come out today in a press conference, and just take the absolute hammer to this market. If I had a gun to my head and I would’ve lost my butt betting on Brady, I can’t believe he retired real quick. I just thought he would go somewhere else. I can’t believe he came back, went through all that for one more year, but good for him. My point to that is, is that if the Fed doesn’t knock the market down today, I would be very, very surprised. Doesn’t mean you got to go run, sell off, sell everything. I’m just thinking after a great run higher, there’s no better chance for the Fed to come out and be very hawkish. I don’t think the bond traders are going to believe him, but he’s got to stick to his guns in my opinion, because they are trying to protect their credibility, which I think is laughable. But we got to figure out, and we got to play the game the way they make the rules.
Frank Curzio: This reminds me of when the Joker told Batman, “This is what happens when an unstoppable force,” and the unstoppable force being the stock market, “meets an immovable object,” which is the Fed. Except the stock market isn’t this unstoppable force that people believe, right? It’s just money pouring into it, going higher and higher, and it is going to stop. And it’s not surprising to me, because we’ve seen, and I brought this up in one of our newsletters. And again, this is what Wall Street Premium is going to be about, because we’re going to provide lots of data, lots more picks in a paid version of Wall Street Unplugged for everyone, which is very affordable going forward, and just sharing a lot more data. But when I’m looking at the market in 2008, people forget even from October through March, which was 2008 in October into nine, 2009 in March where it hit the final lows. In between that period, we saw the market move up 10% in a couple weeks. We saw it move up over 20% in a couple weeks, in a month, and another 15% increase.
Frank Curzio: And this is in the process of the whole entire market crashing like 40% over that timeframe, which was from the highs in late 2007. I think for the year, it felt 33% or whatever. So, you see things like this and people are always surprised because the pendulum swings much, much further than it’s expected. And we could go up even higher from here. Let’s see. But fundamentals matter. Companies are warning, that they’re issuing weaker guidance. When I see what the Fed’s going to say today, and I think maybe this isn’t priced in, I think the Fed, I mean, let’s be clear here, right? There’s definitely indications that inflation’s moderating, no doubt. Wages falling a little, which is very, very good. CPI/PPI have moderated, home prices soft five straight months. So yes, we have data showing inflation’s moderating in some areas. We need to see it across the board.
Frank Curzio: And when I looked at home prices are down, and five straight months, Daniel. They’re down five straight months. They’re only down 3.6% from their peak. That’s it, right? They were up 7% year-over-year. December… Over December, 7% year-over-year. So, they’re only down 3.6%, which is not a lot, right? Because remember the Fed came out and said, Powell said, “I need to see mounting evidence that this trend of lower inflation is going to stay, and it’s not going to come back.” Because that was the biggest mistake they made in the eighties. He said that many, many, many times with the Fed. They just decided to raise rates and then went back on that, and it winded up killing them. They went to easy policy, and they had to go back to raising rates again. And they don’t want to go through that process, because it’s a major mistake.
Frank Curzio: When I’m looking at, copper prices are surging, gasoline prices are up 20% from its lows. Oil prices are up 8% year-to-date. Even though they retreated a little bit, they’re still up 8% year-to-date. That affects everybody. I don’t know if you heard, you and I listened to tons of earnings calls, we monitor it through all of our systems and everything. We see all the bullet points and everything. Much more than you’re just getting on CNBC. This is what we love to do, because you find lots of ideas, you and I. I couldn’t believe how many companies warned. Warned, right? And reported really good numbers. I mean, AT&T reported good numbers. There’s a lot of companies that beat their estimates. But then they came out and said, even Microsoft, you’re looking at McDonald’s, said the same thing. They said that they’re warning of higher commodity costs in 2023.
Frank Curzio: That’s what they’re saying. That’s what they believe. So, you can’t have higher commodity costs, and you’re not seeing decline of food price at supermarket level. It’s still up 10% year-over-year, right? Used car prices. Everyone’s, “Oh, my God, they collapsed.” They’re up the last two months. Rents, according to the Zillow Index, increased last month and maybe again, that’s an anomaly. It’s going to come back down, but it increased, right? So, the Fed needs to see this across the board, where we’re seeing home builders surge. They’re not expecting a major economic slowdown because we went from what, 7.2, whatever it was on the high of 30-year mortgage to wherever it is today. I think it’s five point, if I had to guess 5.5, 5.6. It’s still up significantly from 3%, from the start of last year, January.
Frank Curzio: You look at Spain, which I would never mention, but it’s important. This is important though, because again, it’s not a big deal normally and you never even mention it, but it’s the first developed country where they saw inflation moderate, and moderated from where it was up to 10% in July. It was growing 10%, year-over-year in July, then fell to 5% in December. And all of a sudden, last month, the expectations, this is that the recent reading, just came out, which is last month. They were expecting inflation to come down and just rise by 4.7%, and it came in at 5.8%, 5.8%. Again, another country, developed country, whatever. But it’s relevant here because the Fed, in order for them to come out and say, “We’re going to pivot,” not stop or slow down, but we’re going to pivot, meaning we’re going to go the opposite way. We’re going to go the opposite way. We’re going to start lowering rates.
Frank Curzio: I think it’s absolutely insane to think that the Fed’s going to do that this year. I mean, I give probably maybe a two, 3% chance that happens, and that’s going to be on the heels of a massive collapse in the economy. You see credit drying up, credit freezes, problems in the bond market and stuff like that. And it’s not happening. We’re seeing stocks be resilient here. We’re seeing, despite earnings coming down, which means that these names are trading at some of the most expensive levels they traded, in a very, very long time. I would say if you take out the COVID years of ’20, ’21, which again, 11 and a half trillion was injected and then came out of the market, you’re looking at the NASDAQ trading at its highest levels in 15 years. And we’re going to recession, the Fed’s raising rates.
Frank Curzio: But getting back to that comment where I said an unstoppable force meets an immovable object. The stock market’s not this unstoppable force. The Fed is an immovable object, and you don’t want to fight the Fed. I mean, to fight the Fed, it’s kind of like Saudi Arabia launching a war against the US, China, and Europe at the same time and believing that it could win. That’s what you’re doing if you’re fully going in, all in on stocks here, because it’s a very dangerous market where you’re seeing a slowdown. Usually, earnings drive stocks. You’re seeing earnings come down a ton. These companies are actually lowering their estimates, even more than the 7% they’ve been revised lower from these analysts. So, when you see on TV that they’re being those estimates, they’re sharply lower. If you want to look, look year over comparisons, because I told you, even Microsoft has saw their earnings decline year over year, and revenues just grow 2%. That’s not a company that should be trading at 20 times or 22 times whatever, plus forward earnings.
Frank Curzio: Especially, when you’re looking at so many markets. A PC market, I mean, we’re going crazy over AMD and how great the quarter was, even though they should, was it great? They beat completely revised estimates tremendously. But it’s all about cost cutting now. It’s not like, “Hey, we’re seeing growth come back to the market, consumers coming back.” No, you’re not seeing any of that, and you’re not going to see it as long as the Fed continues to raise rates, and continues to have shrink its balance sheet, which you’re going to see from many, many quarters throughout 2023 and well into 2024. So, when I see this whole thing, I think the Fed’s going to come out and really be adamant and be super hawkish to explain to people that, “Hey, you know what? You better be careful here, because you don’t have the Fed anymore. Where if shit hits the fan, weaker, lower rates we could do.” You don’t have the Fed anymore. They’re clearly not going to do that.
Frank Curzio: So, this is a fundamental base rally, and there’s no fundamentals there. It’s mostly a technical base rally. So to me, you have to be very, very careful. I’m glad you’re protecting yourself. I’m also glad we have lots of longs in our portfolios, which are doing fantastic, and there’s lots of good ideas out there. But overall, you have to be very, very careful, especially buying these risky stocks. Do it as a trade. There’s bullish points both for the bulls and the bears when it comes to technicals and things like that, that would support your thesis. But just looking at the bigger picture where earnings are probably going to come down 20%, year-over-year at least, you’re seeing companies warn, you’re seeing the Fed going to continue to raise rates. I think they’re going to go to at least six, but this gives them the green light to go much, much higher. This way, they don’t… The biggest concern is that they’re going to stop too early or reverse too early.
Frank Curzio: If you go to six, 7%, you don’t have to worry about that. And I never thought I’d say 7%, but we’re definitely going to 6%, because they’re going to continue with these rate hikes. 25, 25, 25, 25. As long as we see the market conditions like this, because we’re not seeing really anything come down. And I don’t see the Fed reversing costs, because it is going to result in inflation coming back into the market, which maybe you see in Spain and you are seeing inflation come back, especially in commodities and certain things. I’m not cherry picking things. These are major costs, food prices, oil, energy. These are major costs that you’re looking at, that directly affect consumers, that have not really come down and are actually, reversing costs now and starting to go higher. I can’t see the Fed coming out and being dovish at all. And I don’t know if that’s priced in with the market rising, the most risky stocks on NASDAQ up 10%, heading into this meeting.
Daniel Creech: Absolutely. This is a perfect teed up opportunity for Fed chair Powell to remain hawkish. We’ll see how the market reacts. I don’t know if it’s rallying into the meeting, but I would look to trim that and fade that. Absolutely, I would be shocked, but hey, we’ll see how it plays out. But nothing is changing for the next few months and there’s just many headwinds. It’s impressive to watch the market rally like this. Sometimes everything, this just shows you that you can have huge disconnects at times and it’s okay. Doesn’t mean that you quit playing. You just keep managing your expectations and emotions.
Daniel Creech: The crazy thing here, Frank, you can’t go from zero to 5%, and in my opinion, have a stock market drop 25%, and then the pain’s over. That just doesn’t make sense. You don’t have a decade of manipulation and printing, and excess leverage and just silliness, and then have one down year and that’s it. Maybe you do, but that’s the idea of a soft landing. You don’t have to be an economist. Don’t be, it’s a waste of time. You don’t have to have a PhD in anything like that to understand that, that just doesn’t make sense. And investing is a lot of common sense.
Frank Curzio: It’s just, think about it Daniel, because that’s what we’ve been conditioned.
Daniel Creech: Yeah, absolutely.
Frank Curzio: In terms of downfalls, I mean, look at that COVID. Holy shit, lockdowns, the world’s ending. We saw among declines, the S&P 500 actually went up, I mean went up, well double digits, right? Double digits on 2020. And we had what? Probably a 40-day period, 45-day period, and the market crashed and came back right away.
Daniel Creech: Yep.
Frank Curzio: Go back to before that was 2018 with tariffs and stuff like that. We had 20% decline quickly. That was like three months. Boom, it popped again. I mean, even when we look back at 2000, but the Fed has always been there to say, “Hey, we got your back. We’re going to bail you out. We’re going to lower rates. We’re going to continue to keep buying bonds, right? Flood the market with money. QE, we’re going to be there for you.” I mean, even in 2008, right? In 2009, it was a year and then that was close to the world freaking ending, credit, banks shutting down, and they did what they had to do, and made the banks four times stronger in terms of their market caps, when the goal was to have these biggest banks, not be too big to fail.
Daniel Creech: Too big to fail, and now you make them bigger.
Frank Curzio: Much, much, more bigger. Which by the way, which is the problem with this market here. Because usually when we see recessions, we see the credit dry up, we see there’s a lot of cracks in the foundation, but the banks are so fully capitalized because of the tough, stringent laws they had 2008, 2009, and Dodd-Frank, where they have massive capital on the balance sheets. Yes, they’re seeing losses. Yes, they’re raising their loan loss provisions. Yes, they’re seeing earnings decline, but they’re fine. It’s not like you’re worrying about a big bank going out of business like 2008 or even 2000, which was a little crazy in the market and stuff like that. So, the fact that banks are okay also adds to it, where you’re not seeing that major pullback or decline, where people are confident enough to be like, “Okay, I need to really worry about how much I’m spending now.”
Frank Curzio: And savings are clearly dwindling and they’re going to continue to dwindle, but it’s just a crazy market. It’s really crazy. It’s hard to predict right now and just to see where stocks are going. Yes, they can go up even further, but just be careful. Because the Fed, I think the Fed’s going to come out. I think the Fed’s going to come out with a pissed off attitude at 2:30. Okay, you’re going to listen to this afterwards and he’s going to be like, “What the F? You want to mess with me? This is what happens.” I think that’s what, that’s the attitude’s he’s going to have and say, “Don’t even think we’re close.”
Daniel Creech: Man. Now that we’re agreeing, we ought to buy calls. That means the exact opposite’s going to happen.
Frank Curzio: 17 out of the 19 members believe it’s going to be well above 5%. There’s only two members that thought it’s going to be less than 5%, right? The terminal rate, that the peak of it obviously, is going to be much higher than that. But no clear evidence that they should stop. And forget about pivot, but no clear evidence is stopping. I mean, I think they’re going to keep going well into the summer months, especially if the market continues to hold up like this. But we need to see something break, prices come down, and we’re not seeing that in a lot of commodities, which is pretty scary right now that they’re going back up. So, let’s see what happens.
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Frank Curzio: Now, I wanted to turn to the CNBC interview today of Cathie Wood. I thought that was pretty cool. So, this is after our ARK Innovation Fund closes out its best month in its nine-year history. It’s up 28%, thanks to amazing moves in Tesla, Spotify, and Roku. To be fair, this fund lost 69% in 2022. Lost 21% in 2021, okay? But she’s been on TV every month. She’s on… She’s been on this whole entire time. People have been questioning her, ripping her apart and stuff like that. But today, she’s on CNBC to talk about the future of technology, AI, Bitcoin, robotics. You could see a little pep in her step, which she should have because she got a beating and she received a lot of criticism. But her fund is doing much, much better.
Frank Curzio: But she started throwing out some crazy forecasts, Daniel. I don’t know if you got a chance to see the interview, but one of them was disruptive innovation, she calls it, right? So the sector, and this is a sector where I think she’s basing it on the NASDAQ 100, which is at 13, because she said 13 trillion valuation, large tech companies. She expects it to hit a 200 trillion valuation by 2030, in eight years. What are your thoughts?
Daniel Creech: I think that’s a made up number. I feel like we’re in Austin Powers movie and we should put our pinkies to our faces. Yeah, I have no idea. So say that again, because you mentioned the 200 number before we went on, and I looked exactly like I look now. I look like a bobblehead.
Frank Curzio: We need sound clips, when he goes $1 billion, and then they make one or two extra. It was like, what was it? It was a long time ago.
Daniel Creech: So, she’s saying the 13 trillion right now is the total?
Frank Curzio: 13 trillion is the market cap. 13 trillion is the market cap of the NASDAQ 100.
Daniel Creech: But what’s the 200? How does robotics-
Frank Curzio: She thinks it’s going to go into 200 trillion. Disruptive innovation, which is basically a NASDAQ 100, she thinks is going to hit a 200 trillion evaluation. So, it’s going to grow 4% annually through 2030 over the next eight years. We’re looking at robo taxis, autonomous vehicles, EV, AI, robotics, all that stuff.
Daniel Creech: Yeah, that’s wild.
Frank Curzio: Space.
Daniel Creech: Listen, she’s very smart. Yeah, I would take the under or gently bet against that. That’s just astronomical and don’t, this auto taxi BS, I am so sick of hearing this. How long have we been hearing that Elon Musk himself has been saying, what? You’re going to be able to call your car from New York to California and come pick you up, and all that kind of stuff. He was promising that crap years ago. I can’t take that stuff seriously. I’m sorry. I just can’t. There is no way we are anywhere close to that, in my opinion.
Frank Curzio: Or, within eight years.
Daniel Creech: Exactly. Yeah. I mean, hell, there’s still investigate, there’s investigations going on right now with Tesla about how they’re quote, unquote, “Lying about their self-driving programs, technology, and all that, and their proof.” Just as a public warning, anybody out there that just fully trusts any brand of car to drive, you guys are, you men, anybody that that is totally being very risky, and that’s just dumber than hell. That’s like hitting the lottery and taking up rock climbing without a rope. It’s just dumb as can be. Why would you do something like that? But hey, to each their own, I am not throwing stones. Just pointing it out that I would more than, I would bet the under on that.
Frank Curzio: Yeah, I mean, our generation is different. And I’ll clue you in there too, even though you’re in the millennial generation. But seriously it’s, when you look at the millennium generation, which is the Ubers, and I don’t know how they think the Ubers and Lyfts are going to go autonomous. I get it, going to autonomous. I could see that even with public transportation and buses and stuff like that, and even airplanes. There’s just a big order for autonomous airplanes in the future. And whatever the Delta ordered along with, I think it was, I don’t know if it was Delta, but I think it was UPS and FedEx, both joined forces to get an order. Anyway.
Frank Curzio: But when you’re looking at EVs, I mean these guys drive all the time. They’re not going to spend 40, 45 minutes is money to them. They could just fill up their car with gas very, very quickly in three minutes, four minutes, whatever it takes. Or you have to charge it someplace else, outside of your home, which where are those chargers? They’re probably going to have hubs that you could charge them. Maybe they’re a little quick, but it just doesn’t make sense for EVs. Autonomous, I don’t know. I like driving. I don’t want to sit in the back seat just to go to a store to get a snack, or something or go to a supermarket. I just don’t see that.
Frank Curzio: But let’s get back to our forecast because when you put numbers behind, by the way, I’m a big Kathy Wood fan. I’m a big fan of anyone who really believes in what they’re saying. I am a sweat, even if I’m totally in disagreement. I love hearing people that really believe in something. It’s refreshing, when you’re not looking at polls and you’re not bullshitting people. This is what you believe in. That’s fine. And this has been her message the whole time. She’s gotten annihilated and the way she was beaten, Warren Buffet, and then all of a sudden the performance came down tremendously with the market, last two years. Yeah, I get it. She took a beating, but she kept adding to her situations, adding to her situations, adding to her situations, and now you see what she’s doing. But she’s stuck to this narrative. And that’s what you need to do as a fund manager who people are betting on you, and giving you their money.
Frank Curzio: And that’s why I always had a problem with BlackRock, where your job is to provide, you have all these funds in 401ks where your job, I’m investing in you, so I can have great returns on my investments, that I can retire and live a happy life, improve my family and everything. And you’re investing, you’re forcing these companies to invest in ESG, which is a political agenda, not because it’s good for your profits or dividends. It’s because you’re just pushing a political agenda. And a lot of these companies are not making money.
Frank Curzio: We saw BP come out and say, “Listen, we’re going to reduce our investments. They can’t make money on it.” I’m not saying they shouldn’t be money going to ESG, but you shouldn’t be forced. That’s not your job as a portfolio manager, as someone who runs the biggest funds of the world, 13 trillion in assets. Her job is to invest in disruptive innovation, and she has not blinked or whatever. And I respect that a lot. But with that said, you’re talking about from 13 trillion to 200 trillion is 1400% returns in eight years. Okay? 1400% returns in a market where the next year, two years are going to be really, really, really, really tough conditions, okay? Because we are going to go into a recession, we’re going to see much more slow growth as we go forward. You need lower interest rates. You need a great market like you had for 12 straight years from 2009 o to basically 2000, right? And even you got two extra years on to that, thanks to COVID and the amount of money that flooded in.
Frank Curzio: But you need this low interest rate environment. You need money flooding in, you need good economic conditions in order for this to work. And you’re not going to have those over the next 18 months, 24 months. So, that’s where those valuations are coming from. That’s where you see the growth. How do you grow when you’re seeing consumers close their wallets? You’re seeing PC sales down tremendously. You’re seeing technology stock, I mean, chips are down tremendously. So, people and companies are cutting their budgets, their advertising budgets.
Frank Curzio: Look at Snap, that just reported. You’re going to see the same. Meta’s reporting after the bell. Let’s see, their expectations are low, the stock has run up. They’re probably report pretty decent numbers if I had to guess, but still it’s not going to show this massive growth in huge jump in advertising. People are closing, shutting their budgets, they’re reducing their R&D. And how do you see that when you’re reducing that? How do you see that kind of growth? I mean, I would make that forecast maybe when the Fed starts lowering, which would be 2024 maybe, and wait like three, six months because you use the market collapses once they reverse that strategy, believe it or not. Once they start lowering, if you look at history in the last 40 years, that once they begin to ease and lower rates, the market tends to have the worst performance immediately, right off the bat in that year.
Frank Curzio: But I don’t see that, I just don’t see how that could happen. I think there’s great companies, there’s AI companies, there’s so many names that should be involved in, but 1400%, the whole, you don’t have to make a call like that for 200 trillion. You could invest in the next company that’s 300 million mark cap. That’s a private valuation, that goes to seven, eight, nine, 10 trillion. That’s where you get your massive gains from. But to say the whole entire market, because as you know, Daniel, a lot of these companies, you have the major technology companies, but as you come out with new innovations, it impacts other companies.
Frank Curzio: AOLs disappear, the Blackberries disappear, the industry leaders disappear. You see other companies start catching up to the major ones. So, you almost see the replacements in some of these market caps. It’s not like all these little ones are going to, “They’re going to take market share, a total addressable market, a total addressable market.” That total addressable market’s not getting bigger. It’s actually shrinking. So, I don’t see how you even come close to that. And that was just one of her forecasts. Another forecast is Bitcoin, is going to go much, much higher than 500,000.
Daniel Creech: That was also by 2030, correct?
Frank Curzio: I don’t know if it was. I tried to look at the timeframe. I didn’t see the timeframe, but regardless-
Daniel Creech: I believe the CNBC headline had 2030.
Frank Curzio: If it’s 20 years from now. Regardless. If you’re looking at the returns, I mean you could say a hundred thousand, and get your point across. 500,000 Bitcoin. I mean, if she really believes that Bitcoin’s going to go to 500,000, I would probably take everything that she has in these funds and just put it in Bitcoin, if she really thinks it’s going to go that high.
Daniel Creech: Well, hell no, Frank. 200 gazillion, billion, trillion’s a lot bigger than 500,000.
Frank Curzio: I mean, you’re looking at these gains, where’s Bitcoin today? Say it’s 23,000 and go to, and I’m putting this because I can’t figure it out directly in my head. But if you look at the 500,000 predictions, say it’s 2030, I try to look for a timeframe. It was probably around 2030, I don’t know if she went out further than that. But you’re looking at 2100% gains, compared to 1400% gains. I think Bitcoin has a much better shot of going to 500,000 then, because you’re not really going to need the economic help, I think. I think it could do well without the economy doing well. I just think it’s getting adopted in so many countries. It’s alternative to Fiat and stuff like that. But I don’t see how you get that high or those 1400% returns, the 200 trillion valuation without the economy being in your favor and lower rates, and more spending from companies, more innovation that spurs more innovation. I just don’t see it. But, 500,000, which is interesting.
Daniel Creech: I liked what you said and I think you’re making the point. Bitcoin doesn’t need the environment of easy money policies and low interest rates to get to its target, like the valuation she’s talking about. I agree with you, it doesn’t need it, but it will get help from governments, because governments will not change course. They will continue to print money and spend recklessly, hurt individuals, the lowest on the economic ladder unfortunately, with their inflation policies. They will continue to do the same old, same old. And that is positive for Bitcoin. Whether or not you think, if you think it’s a fraud, and I know a lot of smart people that still think it’s a fraud. If you think it’s a fraud, try to prove why and just tell me, “Hey, this is why. Because I bought Bitcoin and it didn’t get sent to me.” Or, “I sent Bitcoin here and it didn’t go there.” Or, give me a specific reason. Not a, “Hey, this wallet got hacked or this company stole my money.”
Frank Curzio: Or, I sent Bitcoin to a fake address.
Daniel Creech: That’s not Bitcoin. Or, I accidentally sent it to Frank instead of Melissa, or whoever the hell.
Frank Curzio: And she brought up that point. She brought up how resilient Bitcoin and Ethereum have been through probably the worst period that could, this is a 2008, 2009 crisis that basically happened within crypto. And you had people cheating, lying, you had, let’s start with Three Arrows, then Alameda and FTX, and you can go down the line at Celsius or whatever. All these companies. So, you see what happened when liquidity completely left this market. And she highlighted how even though these worst conditions, Bitcoin’s still working, Ethereum smart contracts went off without a hitch. They did perfectly fine, which is very good, because I don’t think you’re going to see worse conditions than what we saw last year with all these companies. Now there’s going to be more regulation. Hopefully, the SEC gets off their ass and starts regulating this industry because this, there’s a lot of innovation coming here.
Frank Curzio: It’s amazing. But the 500,000, I think you could have easily said, “A hundred thousand,” but 500,000 Bitcoin, you are seeing more money coming to Bitcoin. There’s, on a technical level, it hits every single checkbox. If there was 20, than it’s over. So, overboard here. And it’s probably going to come down. And you could also argue what I said before, Daniel, where you don’t need those market conditions. But so far, you’re looking at Bitcoin following the markets, right? Risky assets is doing good, they’re doing good. But let’s see if that decouples, it has the decoupled a few times.
Daniel Creech: And at some point it will. Yes.
Frank Curzio: And I think it will too. And the last thing she says, “Amazon is going to have more robots than employees by 2030.” I think they have one third of the robots, of the employees. And there’s something to be said about that. I mean, Amazon is one of the most incredible innovative companies. Apple’s not an innovative company. They always make devices. They look at everybody else and what they make and then they say, “You know what? We could do better and we’ll do this.” They don’t innovate and create something, right? That’s why they’re going to come out with their VR system, follow Meta, AR/VR system. Even the phone, they came out after Blackberry. Just every single thing that they do. Right now, they’re going to have the folding iPad, folding phones like Samsung going forward.
Frank Curzio: But Amazon’s an innovative company with smart homes, with its voice technology, pretty much reinventing the entire supply chain of how they do business. It’s interesting to see how robots are going to play more of a role. And you could see, even with the robotics and AI. So, AI is artificial intelligence. AI only works if you have a massive amount of data that it learns from. So right now, when you look at the ChatGPT, which is unbelievable, you can’t even get on. If you try to get on, it’s very hard to get on the site. But I mean, it’s incredible technology, taking everything that’s ever been on the internet and predicting the future, and writing for you. So, think about what does the world revolve around? The world revolves around content. People want to be entertained, even with their money. I always thought that was crazy. But you come up with a great new story. We’ve seen in my industry especially, they come up with a great fricking story. People want that story, know about the story, compared to them.
Frank Curzio: If I say, “Hey, you know what? If I told them 10, 15 years ago to buy Microsoft,” they’re like, “Oh, I don’t want to buy Microsoft. It’s not going to make me a billionaire.” They want to buy the craziest thing. So, they want to be entertained. This is a way to have amazing content all the time, where you don’t have to hire more people. And it is incredible technology. And now, you’re seeing something that threatens Google. You’re looking at Google trying to invest on other platforms, but just this goes to AI and robotics and the constant learning, which is a scary future, but it’s here. It’s freaking here.
Frank Curzio: And it’s scary when now AI, just like cloud, nobody really knew what cloud was, until on a consumer level. Now you know what cloud is, right? When you have your Apple phone, you want more storage and stuff, and you don’t have to worry about storing on a hard drive on your phone, or anything like that. You store it in the cloud, that’s how AI is becoming. It’s becoming like something every day that people are going to use, especially through that service. That’s going to be interesting going forward.
Frank Curzio: But that forecast, I agree with. Bitcoin going much higher to 500,000, I think it’s going to a hundred thousand in the future. 500,000, a little crazy. And man, that other, 40% annually to 2030, disrupted innovation sector, take 200 trillion from 13 trillion. I mean, I don’t know. I think it’s a little out there, even though I’m a big fan of Kathy Woods. Or, Kathy Wood.
Daniel Creech: It’s a lot out there. We’ll see. We’ll continue to watch that with our popcorn, especially with the Fed meeting later this afternoon.
Frank Curzio: She brings it and you could hate her, but I could tell you there’s so many other people that are such full of shit that I watch. That is such full of shit, Daniel. They just will go on there, and anything.
Daniel Creech: I don’t hate her. I think she, I don’t have hate in my heart.
Frank Curzio: People who are, “Bearish, bearing, bearish.” The market goes up, and that, “Bullish, bullish, bullish.” She comes on all the time, same message. She came on, which I love, when her fund was getting its ass kicked. I love that. I love the fact that she went on TV for that. And a lot of people, even CEOs don’t do that. I always respect that, because you’re going to have good times and bad times. And how you see the best leaders is when the shit hits the fan, how their team reacts, how they react, and how they get back on top. And you go through that, and it makes your team even stronger. So, when I see people avoid that, when things are bad, it’s a big red flag. She’s never done that. She’s been on TV and people criticize her, whatever. She’s been buying more, buying more, buying more. Glad it worked out for her. Let’s see how it works out in the future.
Frank Curzio: Again, we’ll see. But I know even if it doesn’t, she’s constantly going to come on. And if you believe in her forecast, disruptive technology, she’s not going to waver from that. So, invest with her. If you think it’s not going to happen, don’t invest with her. But she’s not going to go back and forth and have this massive forecast over the next eight, 10 years and say, “Oh, I changed my mind.” And that’s what her investors love about her, and that’s what you should love about her, because that’s what, again, just like politicians. I don’t want to get into politics, but you’re supposed to vote for the politician who supports your views. And our politicians, even though we vote for them, do not support the constituent’s views. It’s their own views, which we’ve seen. She supports her own views and yeah, I admire her for that. I definitely admire it for, even though those forecasts are a little crazy. Anyway, man, we’ve covered a lot again, haven’t we?
Daniel Creech: Yeah.
Frank Curzio: A lot of stuff.
Daniel Creech: Big Fed meeting. Get our popcorn ready.
Frank Curzio: Let’s see what’s going to happen.
Daniel Creech: Watch the markets. Watch the markets from 2:30 to 4:00.
Frank Curzio: Yeah, it should be interesting what the Fed says. And again, we are talking about this, before you’re going to no. So, feel free to make fun of us whenever you want. Daniel.
Daniel Creech: As the market rallies 3%.
Frank Curzio: It’s going to rally 10%. Feel free to throw it in our face, and you can throw it in Daniel’s face first. Daniel, what’s your email?
Daniel Creech: firstname.lastname@example.org.
Frank Curzio: My email’s email@example.com. Definitely want to hear from you. Questions, comments for any of us, and I’ll see you guys tomorrow. Take care.
Announcer: Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its host and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility.
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