Wall Street Unplugged
Episode: 1061August 2, 2023

Why Fitch was right to downgrade the U.S.

Prepare yourself for several rants today…

I start the show with some comments about CNBC’s Squawk Box, which is usually a solid show—but not today. 

Next, I highlight the latest important earnings reports—including results from General Motors (GM) and Ford (F). I break down how GM’s CEO is lying through her teeth about electric vehicles (EVs)… why most automakers are afraid to face the truth about the EV trend… and how a little common sense could help their shareholders.

Don’t miss tomorrow’s WSU Premium, where Daniel and I will break down the winners and losers of this earning season.

Stocks are sinking today after Fitch Ratings downgraded the U.S.’ credit rating. I highlight some shocking numbers from the report… and explain why we’re in a much worse situation today vs. the last downgrade in 2011.

Of course, politicians and economists are pushing back against the downgrade. I rant about some of the most absurd arguments from the likes of Larry Summers and Janet Yellen… why I have to tip my hat to Fitch… and the silver lining in the downgrade.

Finally, I rant about how politicians need to be held accountable for their reckless spending… and how the problem spreads into issues like central bank digital currencies (CBDCs), climate change, and political corruption.

Inside this episode:
  • I have a bone to pick with Squawk Box [0:30]
  • GM’s CEO is lying through her teeth [6:25]
  • What’s behind Fitch’s debt downgrade? [10:00]
  • Larry Summers is a bum [19:30]
  • Why CBDCs don’t really benefit consumers [26:15]
  • How politicians use climate change to scam us all [28:35]
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.
Transcript

Wall Street Unplugged | 1061

Why Fitch was right to downgrade the U.S.

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? It’s August 2nd.

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.

In the mornings I like watching Squawk Box for a reason.

Usually on that show, they have analysts on there, hedge fund managers, very important people try.

They get the best guests a lot of the times, and they let them speak.

They’ll let them sit down on set and talk.

And maybe they go to a commercial and come back and, and you always like it.

’cause you wanna hear these guys, you wanna hear the biggest hedge fund managers, the billionaires.

You wanna hear their opinion on what’s going on.

There’s so much going on where they’re positioning themselves.

They usually like the show.

And today there’s freaking horrible.

They had some really, really good guests on Gary Gensler.

Had Jay Clayton, Mario Gabelli, he had Andrew Sorkin.

It’s not Andrew Sorkin’s fault, but he, you know, he’s interviewing Jay Clayton and pretty good.

But towards the end, finally with Jay Clayton, he starts talking about, he asked him one final question and he starts talking about crypto and says, what about the ripple decision? What does that mean for crypto? And more importantly, what does that mean for the state of what’s a security? What’s a utility? And trading? And before he even gets a chance to answer, Jay Clayton, they start playing the music.

And he’s like, well, you know, and he starts talking about how, you know, related to ticket sales and what’s the difference if it’s, and basically in, in 30 seconds, he’s like, oh, all right, well thanks a lot.

We gotta go bye, boom.

And, and they’re gone.

And I’m like, what the hell? Like, I, that’s a really good question you should ask before that would’ve been cool.

I understand.

You know, he went over that with Eric Git earlier, but then you had Mario Gabelli on.

I like Mario Gabelli, I like him lot.

He’s brilliant.

And he used to tour my dad back in the day and the money show and stuff like that.

And, and you know what, he did common.

His funds are amazing, but he always has great insight as entertaining guests.

He’s always been entertaining as speaker.

Great, great speaker.

And they finally, like, they tell him the whole freaking show Gabelli’s coming against.

So they put on the end of the show, right? So you have to watch this thing three freaking hours if you wanna watch him.

And they put him on with like a couple minutes left.

And he’s banging out ideas.

He’s talking about, you know, the used car market and, and during an auto parts is 238 million used cars in the market.

Why this is so great for them, that pricing power.

Uh, he talks about the, the airline industry.

And you know, what industries are, are, you know, going to perform regardless of the economies is 40,000 new planes the next 20 years.

Again, he’s spinning out all this stuff and he knows, he knows that he has to, you know, he’s got just a couple minutes.

Uh, so they’re asking about more ideas, talk about, you know, just trade, just tailwinds in the industry as well with crane and text runs.

But he, he’s just, then he is going over Golden entertainment.

That’s one of, one of our portfolio holdings in hotels.

But he’s in the middle of going over these ideas and he always has them backed with great data and opinion and stuff like that.

You could disagree.

And as he’s shouting, he’s like, again, they give him like three minutes and as he’s good, they start playing the music and he’s gone.

They’re like, well, we gotta go now.

And now I’ve go to the next show.

And that’s why I love freaking podcasts.

I mean, I, I hate that s**t.

Hey, you know, think about what, why are you watching the show? Is it really about the users or is it about your advertising dollars? ’cause by doing that, it’s about your advertising dollars.

When you have a good guest on, you want ’em on for a long time.

You want ’em on where it benefits your guests, right? That’s the idea.

You’re giving your, your customers these clients, great information, great ideas, and you’re cutting them off saying, you know what f you, we have to get our commercials in no matter what.

And that’s the business and that’s how you make money.

But playing it a little bit, f*****g better.

Let Gabe Belly or someone else, and maybe you don’t like Gabelli, I happen to like him.

I wanna hear ’em a little bit more and what’s going on? Isn’t there too many shows? And you should be out there a lot more.

Everybody gets a little older as time goes on, but you know, you wanna hear these guys.

If it’s really about you and watching the show, that’s what it should be about.

Because I can tell you I listen to CNBC on the way in, you have no idea how many commercials, like the ticker on the bottom and all that stuff.

And that data is the greatest thing that ever happened.

Because the commercials that they have, if you, if I had to guess that commercials on a normal show is probably like maybe 20 minutes of the show, of an hour show.

And you’re looking at an hour show, it’s gotta be 35 minutes at least of commercials.

I mean, they come in and they, even without having a guest on, and you don’t really know, it’s ’cause you’re looking at the tickers and you’re going, oh, you know, it takes your attention away.

It’s like commercials all day on CNBC all day, all day.

When you are driving, you hear that ’cause you don’t have that ticket to read.

And it’s like, wow.

And then they’ll come back and then right after they come back from five minutes of commercial, they’re like, and, and you know, they’ll say, okay and looking forward to the next hour.

And by the way, and they’ll have ’em say, here’s who we’re gonna have for, for for 30 seconds.

They come on there, go to commercial again.

I get it.

The advertising knowledge, you gotta make money.

But when you have someone on there, we wanna listen to ’em, right? Isn’t about like companies or don’t you exist to benefit your customers, right? To provide them a great service.

You’re not providing a great service by having Gabelli on two minutes and cutting his ass off and doing the same.

We’re asking someone, right, who’s relevant in the industry? Jay Clayton.

And you’re looking at all the regulatory authorities just sleeping at the wheel.

All the b******t and the politics behind crypto when the regulation coming, how they lied to everybody.

You’re closing banks illegally that weren’t fraudulent.

I mean, all this stuff that, that’s a pretty cool topic.

And what you gave them like 30 seconds to answer that question.

I mean, come on.

You gotta do better than that.

You gotta do better than that.

That’s why I love podcasts.

’cause you interview people, you have ’em on the whole time, 20, 30 minutes.

You know, whether you agree or not agree, you get to talk to ’em about their opinions and, and you shut up and let them talk.

It’s pretty cool.

That’s why podcasts is just, are, are so great, you know, and I, I love this thing ’cause you know, you just get into more interviews going forward, but at least it gives you a chance to really pick the mind of these people and learn from them compared to just having a minute and a half, two minutes, which is just terrible.

Anyway, sorry about that.

Little ran a lot going on with the markets.

We’re in the middle of earning season and man earnings are coming out like crazy, like crazy past couple days.

What do we have? We have AMD, Norwegian, SolarEdge, Starbucks.

Not so good.

Norwegian was one that we made.

We did very, very well on.

We sold it.

It just felt like it, you know, after 40% gains of, you know, we sold it, which is good.

I just thought it, it got ahead of itself.

A lot of the cruise lines are getting ahead of themselves.

Match group, Humana CVS were positive from today.

GM decent numbers.

But CEO Barry Barnes, just, just like the Ford CEO did last year’s lying through her freaking teeth during the conference calls and the slow down EV sales was due to supply chain issues.

That’s 100% b******t.

That’s b******t.

very little supply chain concerns.

Again, someone has been tracking this data the whole entire time through COVID and the sources that have been track tracking this stuff for 20 years.

You’ve been Goldman Sachs tracks it, there’s others and you just shippers that track it.

You looking at supply chain concerns where they hit all time highs about a year and a half ago, two years ago.

Now they’re lower than 2008 levels.

So she’s gonna go on there and she’s gonna say, remember we’re talking about Detroit.

These people hate climate change everything, but now you got them in EVs.

And EVs are great.

Why? ’cause the government’s gonna provide you money and hand you a check to build these things, but holy s**t, due to inflation, we’re gonna lose a shitload of money every single time we produce these cars.

So that’s why you’re seen GM and Ford produce less cars this quarter compared to less car EVs and produce more gas cars.

’cause that’s how they make their money.

And they realize it’s like, whoa.

Not only are we getting a ton of recalls, we’re not seeing demand.

That’s why Ford’s lowering prices.

They’re not lowering prices to compete.

You don’t lower prices unless you, you can’t sell your stuff.

They can’t sell ’em, they can’t sell it forward one 50.

It’s gotten bad reviews.

There’s selling the market.

You could buy them right now on the resell markets.

But don’t come on and say supply chain concerns.

That’s a check the box to hedge yourself.

Let me hedge, you know, we don’t wanna go out there and say anything bad because otherwise, you know, the climate change cra are gonna come after us and we wanna say, Hey, you know what? We’re reducing EV sales because we’re a corporation and our job is to make money for our shareholders.

So let’s produce more of these gas cars that are a massive demand right now.

Because people just don’t, you know, it’s not a ti EVs is a place in the market.

It’s cool, it makes sense.

Some people like them, but the numbers of scaling and I mean, come on man.

Holy cow, you’re dialing that back a ton.

Just can’t make money.

Let Tesla and Rivian those companies pure plays.

This is what they wake up and do.

EVs, gm, Ford, Toyota, all these guys.

Volkswagen, this isn’t their primary business.

They’re trying to get into something, but they’re trying to make money off and they’re realizing, wow, even after we produce these things and we don’t have the technology to to, to produce that many batteries right now, we don’t have it.

Pay the Tesla Rivian.

Even when you do, you get these things out.

They’re like first generation and you’re recalling ’em.

It just costs ’em a fortune and headaches.

You can’t even, how do you get these things repaired? Who knows how to repair these things? Tesla does.

They’ve been in this industry for a while, but it’s amazing.

And just look, if you’re gonna lie, lie whatever.

You say what you have to say and I get it.

I get why she’s lying.

Because you can’t say, Hey, you know what, EVs don’t make us money.

So you know what, we’re dialing down.

No way.

Ford would never say that.

GM we’re dialing it down ’cause we just can’t make money.

If Ford finally came out and said, Hey, you know what, these, yeah, these things are just too expensive right now, but you know, they’re still producing them.

But to say, Hey, you know what, we’re, we’re gonna produce less.

That would be pretty cool if they came out and said that that’d be great for the shareholders and the stock would surge.

’cause now they go back to making money and not losing a fortune like Ford and gm.

Ford’s gonna lose, what, three, $4 billion on EVs this year.

Crazy.

Dan and I are gonna break down the winners, losers companies report earnings this week, which is well over a hundred companies.

I mean this is like prime this week, next week.

Got some of the big companies, this week, I think it’s Microsoft and Amazon reporting as well.

So we’ll break that down and find out, give you a recommendation like we always do, and, break down the real winners and going into the numbers.

But the much bigger story today and the reason why the markets are down selling off and down pretty sharply.

When’s the last time you saw the Nasdaq down? Over 2%.

I can’t remember.

It feels like it’s up every single freaking day.

I don’t remember seriously when the NASDAQ was down.

More than 2% down.

More than 2% as I’m doing this in midday.

Why? Because Fitch credit agency downgraded us, right? US credit, which is resulting in not just a pullback here in US equities, but globally.

So they downgrade the US long-term debt rate from AAA to AA plus.

And the rating downgrade was based on three things.

Okay? It was expected.

This, this is the expected fiscal deterioration over the next three years.

That’s number one.

Number two, a high and growing general government debt burden makes sense.

And the third, and this is the most important part in, in, in their report, is the erosion of governance based on repeated debt limit standoffs and last minute resolutions, David Fitch says, okay, cool.

The government lacks a medium term fiscal framework unlike most peers and has a complex budgeting process.

And also says how our politicians have made only limited progress and tackling medium term challenges relating to right social security, Medicare costs due to an aging population.

Now Fitch, I credit them for this call for several reasons, okay? One for telling the truth, which gets you in trouble, right? If you tell the truth about COVID or what’s going on, you got in trouble, right? You got censored.

Censored.

Just again, you tell the truth, that’s bad.

You can’t question anything.

But they’re telling the truth.

They’re right that are politicians being a******s when it comes to debt, ceiling debates back and forth.

I mean, they don’t really care.

They’re just getting what they want.

Little things right within the bill that they’re able to get another reason it’s calling out the us which needs accountability.

Our politicians have to be held accountable.

It’s no accountability.

So what’s then to stop spending since they’re, nothing happens to them.

They keep spending.

And I really, really, really, really credit them Fitch because the last time this happened, and this was s and p, right? The only time, this is the second time it’s happened in history.

Downgrade us credit in 2011.

That was the last time it happened when SS and p, the other credit rating agency, cut its rating for the us.

Same thing, AAA plus.

Uh, and after they did that, the CEO of the company got fired 12 days later.

And this is when every politician came out and said, these guys have no idea what they’re talking about.

And going, so, you know, Phish got some balls to make a call like this.

And good for them, good for them.

Now I have access to this report and it’s being talked about different opinions and stuff like that.

But I think it’s important we go over a little bit more of the data.

And I’m not gonna bore you, trust me, this is really cool stuff.

Uh, you know, I’m a research analyst and this is what I love to do.

I, I mean we all have opinions on something.

You can have opinion on anything you want these days, but opinions are made stronger through research, through data, which, you know, helps support your opinion.

So let’s dig into this report.

’cause when we look at the numbers, Phish forecast a widening of deficits in 2024 and 2025.

This say it’s gonna get worse.

Amazing.

Really? It’s gonna get worse.

Of course it’s gonna get worse.

No accountability.

So the larger deficits will be driven by weak 2024 GDP growth, a higher interest rate burden and wider state and local government deficits.

Now, when you look at the debt to GDP ratio for the US is at 114% this year.

Okay? That’s well above pre pandemic.

We’re 114%.

Why are we so high? Why are we higher now than we were pre pandemic? Okay? And before 2019, we never hit 100% that GDP ratio, that’s the highest it’s ever been.

Record as a hundred.

Now we’re at 114%.

Let’s put this in perspective, okay? Because it’s just a number, 114%, right? The US ranks ninth as a country in terms of debt to GDP.

That’s out of 195 countries.

And for those you be like, Frank, there’s more than 195 countries.

Well, there’s 195 recognized by the UN.

There’s another 50 something that just call themselves countries, right? So, so the 195 countries that are considered countries by the UN.

Now let’s take a look at the countries that are ranked worse than the US in terms of debt.

GDP, Italy, terrible, Mozambique, am I saying that right? Venezuela, Greece, Japan, Lebanon, that’s where we’re at.

He said, oh, we’re totally different.

We’re totally different side Apples, Apples comparison.

Absolutely not.

You’re right.

We have a stronger economy.

It’s much bigger, right? We have just terms of, of income levels are much, much higher and much stronger.

But you have to consider the class that we’re in because it continues to get worse and worse and worse with no solution in sight.

Similar to the Russia, Ukraine War.

Is there actually something on the table that, that could end this war? I mean, is there a plan to say, Hey, let’s see, let’s sit down.

There’s no plan to end it.

The US has no intentions of, of, you know, ending this or helping to end it.

Why is that? Don’t we wanna end war when we want to? Why is there no plan in place no matter what, no matter what Russia does and says, there’s no way.

We just don’t wanna, why don’t we un end it? It’s interesting.

I mean, deans keep getting worse and worse and worse.

But if you’re really looking at the 114%, maybe this could put it in, in, in, in more perspective for you.

Yeoman’s debt to GDP is 72% and goal is 61%.

El Salvador is 71%.

Mongolia is 51%.

We’re at 114%.

It’s insane.

It’s insane.

And we keep going higher and higher.

And again, you could say, well, it’s not Apples, Apples comparison.

No.

But it means much, much, much, much higher interest rate payments when you’re looking at 32 trillion over And our debt to GDP ratios projected to rise like Fitch said in 2024 and into And it’s not just Fitch because almost every economist that does research about this, it’s forecasting the same thing for it to rise 2024.

2020.

Now Fitch does a good job putting perspective saying that the median ratio for assets that have its coveted AAA rating is 39%.

So if you’re looking at US debt being at times higher than the assets that Fitches, right? That they place on AA, that they place AAA rating on.

That’s how much higher it is.

And that’s why they’re coming down in their rating, right? So if you’re looking at, at the debt and, and the median ratio, the median ratio for the AAA rating of those companies that have their best rating is 39%.

Were at 114%.

In fact, even if you look at aa, these companies have a debt ratio 44%, right? So obviously hires a little bit of a lower rating, but even at aa, the US debt ratio is two x higher than the median asset they place the delay rating on.

Seems like they’re doing the US a favor again.

Now, could you compare it to a corporation? Maybe not.

I mean the US again with you look at the US and you’re thinking this is the United States, Frank, we’re the greatest country on earth.

We always pay our debts.

This downgrade is absolutely insane.

Uh, you know, at least that’s what most economists are saying about it right now, including Lawrence Summers who said, and I’m quoting the US faces serious long run fiscal challenges.

But decision of a credit ratings agency today is economy looks stronger than expected to downgrade the US is bizarre.

And inept, that’s what he said.

This comes from the guy who deregulated, right, the derivatives market supporting and pushing the Commodity Futures Modernization Act of 2000, which led to the financial crisis.

I’m sure he didn’t have have those intentions when they passed it, but he said it’s too much regulation and derivatives and whatever.

And you didn’t know what the hell these guys were doing.

Nobody knew.

Nobody knew, to the extent I, they had no clue.

Even if even in mid 2008 you look at a guy, Paulson had no idea what was going on.

They had no idea it extended to GE to AIG.

They had no idea.

This is mid 2008.

They had no idea.

And when I asked them about that, which is a time where you could say just like, you know, Barney Frank and lowering the standards for homes where, you know, you could buy a home and, and have adjustable rate mortgages, fine.

I’m sure maybe your attentions were like, Hey, we wanna put people who can’t really afford a house in a house.

And I get it, but at least years later, admit that you were wrong.

He did.

He’s like, no way.

I was wrong.

No fricking way.

Of course.

Right? No way.

Just like our politicians, one of ’em will ever admit that they were wrong.

I mean, Cuomo won’t admit that he was wrong and sending people, again, we didn’t know anything the full extent of COVID.

And what happened, I mean, it was 10% of the people got COVID were dying in New York.

You know why? Because everyone who had COVID and spread in New York first and quickly, they put in nursing homes and retirement homes and that’s the worst place you could put them.

So a lot of people started dying, but even now he’s like, no, no, no.

We did it.

Right? Just admit, say, Hey, you know what, that was on us.

We didn’t know.

We just, that’s fine.

No, you’re not allowed that.

And politicians and economists, no, no, never ever admit that you’re wrong.

Absolutely not.

No way.

Right? If you also look at Lawrence Sums, who made a huge mistake during the Asian crisis in the 1990s, underestimating how high interest rates would cripple so many Asian countries.

It’d be fair, Lawrence sums in mid 2022 when a lot of people didn’t support much, much higher rates.

He said that they got to go high, much, much higher to cool inflation.

At least he was on, on board there.

But you know, you look at Lawrence Summers must probably one of the best economists in history on paper.

So his accolades and awards and stuff like that in real life, I personally think he’s a bum.

That’s my opinion.

I don’t like him.

He’s very arrogant and kid thinks he knows a lot more and talks down.

And again, there’s lots of stories and s**t like that through it.

But it wasn’t just Lawrence summons a ton of people.

Janet Yellen came out also disagreed immediately.

Like her statement, obviously Fitch said they were gonna publish his report and at the same time they hit enter to publish it, yell came out with a statement.

It was un it was unbelievable.

It, it’s kinda like when you’re short selling something and you come out with your report and the same time you hit enter, there’s like 14 lawsuits on the company.

You know, ’cause it’s so coordinated through whatever the site’s like Seeking Alpha and everybody else and, and c b s market watch and, and all this stuff, right? You, you just coordinate it where everyone, again, you give ’em a piece of everything, you give ’em a heads up on the short.

Again, it’s perfectly legal.

It’s perfectly fine.

Take this position.

Doesn’t matter if you’re gonna only have that position for a little while.

But again, it just coordinate.

So I know Fitch probably said, Hey, you know, this is what we’re gonna do.

And Yellen had a prepared statement saying that this call is arbitrary and based on outdated data, outdated data really coming from a person who said just three months ago that the US could run out of money for politicians don’t agree to raise a debt ceiling.

That’s what she said.

I can’t make this s**t up.

She said that the US is going to run out of money three months ago unless we raise a debt ceiling.

But Fitch outdated data, was it three months outdated? I mean, think about what Janet Yellen said.

If a company said it will run out of money, unless it could raise a significant amount of cash, it would not have AAA rating on it.

In fact, it would’ve carry probably a double C rating from Fitch, which they define as a high probability of an issuer about to default.

That’s what she said three months ago.

Now she outdated data arbitrary, don’t agree with it.

Yeah, Democrats, Republicans, other members of the US Treasury also came out disagreeing with Fitch’s downgrade.

And they should, you know why? Because these are the a******s that are responsible for building our deficit, the 33 trillion.

Of course, they’re gonna come out and say, what are you doing? Are you crazy? What are you doing? And of course, where there’s no plan in sight for how we’re gonna pay for social security, which is gonna be depleted by 2033, how are we gonna pay for that? How are the us? I mean, think about the US now paying $1 trillion just in interest on its debt due these higher rates that’s right now.

And the Fed, they said, Hey, we’re not done raising and they can’t be done.

And did you see the job numbers housing past couple weeks starting to tail off? Did you see what energy prices are? You know, what you’re paying for gas now 360.

It was, it was $3 on average.

About $3 and maybe 10 cents was was the average.

Nationally it’s it’s 360, 3 70.

This is in the past.

What month are you crazy? They’re gonna continue to raise, which means it’s probably gonna be even more in terms of just the interest on the payments.

So I’m a research analyst.

I started looking back a little bit.

I said, you know, how is a country different now than, than when s and p downgraded, which was in August, 2011.

I think it was August, 2011, maybe like a month before that.

So they also downgraded US debt, right credit to to to a plus, which occurred four days after the Congress voted to raise the debt ceiling.

And I mentioned earlier, you know, what happened then 18 days later, sba x’s, CEO to step down, pretty much under pressure by the government because you had Democrats, republicans, US Treasury criticizing the move and they found like a mistake in it of a $2 trillion or whatever.

And they said, listen, this in the scheme of things that didn’t really impact their research or whatever, you know, again, they, they try to tear it apart as much as they can.

What a surprise.

I mean, they’re p****d off from the move they should be ’cause they created it.

We don’t wanna get this information out.

People really don’t understand what’s going on.

And people been talking about this for such a long time.

So that’s not gonna happen.

Look at debt ceiling debt ceiling was raised and, and I think it was in, in, I think it was early August, again a couple days later, then we had the debt downgrade and, and when they raised it, they raised it to 16.

7 trillion.

Again, that was 2011, Makes you wonder why we have something called the debt ceiling.

Ceiling means top.

I mean, why I won’t curse.

I won’t curse anymore.

Why call it a ceiling when you’re gonna raise it every couple of years? I mean this is the ultimate guarantee.

If you’re gonna guarantee and bet something that’s definitely going to happen, it’s going to be that the government’s gonna raise a debt ceiling every couple of years.

It’s guaranteed they have to, or like Yellen said, the US is gonna run outta money, but Fitch is wrong on their call.

Arbitrary based on outdated data.

Okay, good job ya.

But it’s the ultimate guarantee, right? Our debts are gonna continue to surge because there’s no accountability.

Nothing happens to politicians if they spend more money and lose it.

I’ll break that down more in a second.

But back in 2011, so S&P downgraded their rating because they said elected officials remained wary of tackling the structural issues, causing debt levels to rise significantly.

So they blamed the politicians back then saying these idiots cannot come together.

It’s such a pain in the ass and it’s gonna continue.

Back then debt to GDP was at 89%.

Again, where are we at? at least over the next couple of years.

Back in 2011 though, when s and p made this call, what was different interest rates was zero, well, not zero, This is a totally different animal.

This is a different environment.

Again, I used to make fun of people that said, Hey, you know, the dollar will lose its reserve currency status or you have nothing to worry about.

You’re seeing it and maybe we won’t use it for 10, but it doesn’t mean that other things aren’t going to happen.

Why do you think they’re pushing central bank digital currencies? Why do you think they’re pushing that? I’ve covered trends all my life and trends.

And if you wanna be disrupted, they work when it benefits all parties.

Let me ask you a question right now.

How does Central Bank digital currencies benefit us? Benefit you.

How does it benefit you? It doesn’t.

You don’t worry about your money being stolen from a bank.

It’s insured.

You don’t worry about the transfer of payments.

Yeah, you might have to pay 25, $30 a wire transfer.

Okay, fine.

Maybe we can lower that somehow, whatever.

But you’re not, it doesn’t benefit.

It’s not benefiting you.

What this is, is they want full 100% control.

That’s what they want.

That’s what central Bank digital currencies are about.

That’s what, why would the, why would our Fed launch something like this like this? Why would they even entertain this idea? It doesn’t benefit us.

They can’t say, well, it’s better for the transfer of payments.

No, it doesn’t benefit us at all.

It gives them a way to track and to control our spending.

And that’s what this is about.

Full control with no accountability.

But what happened back in 2011 right after S&P 500 , right? S sp five s and p credit agents downgraded the US debt over the next two months.

The markets tanked 18%.

It’s even worse for the global markets.

So something to think about given that back then though the current state of economy was getting better, coming off of 2008, 2009 zero interest rates, pedal to the metal, QE all in, we don’t have that now.

I mean, our current state of the economy, which Lawrence Summer is saying, is stronger than expected.

Right? Being titled super strong look at manufacturing numbers starting to break down.

Loan loss is surging interest rates at the highest level in over 20 years, over 6% of the families in America living paycheck to paycheck.

Really? You have the balls to go out there and say, Hey, we have a stronger economy.

And Fitch is crazy for saying this.

Me, I applaud them.

They have balls.

They told the truth.

And hopefully this puts our politicians on notice, which it won’t.

I mean, it’s good to hope for that ’cause they don’t care because we’ve got a bunch of a******s and, sorry, I do have to curse that are, they’re destroying America right now.

And these guys are very, very smart.

You could say, oh these guys, they’re not idiots.

They’re, they’re brilliant.

I mean, they understand what their job is is to get taxpayers dollars.

How do we get those taxpayer dollars everybody pays and get them into our own pocket? How do we do it? That’s a politician’s job.

That’s what they do.

And one of the biggest scams that they do it with is climate change.

And I know I could see all of you who listen to this who are Democrats or liberals or whatever going, Frank, you’re an a*****e.

How could you say that? Here me out.

’cause most people believe in this, right? They, they, they wanna make the world a better place for our children.

Okay? Find ways to, to, to lower our uses of fossil fuels.

That’s fine.

I think a lot of people, most people are in that camp.

I’m not in a camp that’s spending 5 trillion on renewables and lowering fossil fuel usage by 2%.

From 82% to 80%.

5 trillion.

Why is it a scam? Because nobody’s allowed to question how this money’s being spent, no accountability.

If we do, what’s gonna happen? The woke mob’s gonna crush you, hate the world.

They’ll come after your business.

Say you hate the world, you hate climate change.

You don’t wanna provide a better future for your children.

Next generation.

You are anti environment.

They go after you.

Just if you question it like there’s not a better way.

Like we couldn’t spend $4 trillion.

How did you lose $5 trillion? How did that happen? It’s amazing that you can’t ask that question.

You’re not allowed to, that you get attacked.

Just finding better ways to spend some of this money because our deficits are outta control.

I mean, you can’t even offer nuclear a as a solution, which it is a solution.

And your rain is a devil, right? You goes statistically the safest, cleanest energy in the world.

24 hour, 24 hour base load power, meaning that you don’t need to wind to blow or, or the sun to be out to provide energy.

And I forgot who it was, who just did an amazing documentary and it could barely get it shown at some of these private events.

And this person, it was a liberal, I forgot who it was.

I mean, George Lucas, I think maybe just saying, why are we not using this? Like, and he went over everything and talked to people, interviewed people, and said, holy s**t.

Like the narrative out there is 100% lying.

It’s false.

Why not? That’s a clean, clean energy that we have access to.

You have no idea how much uranium we have in the us.

You know, the Exxon, all of the old school companies from the seventies and eighties, I mean, this is a big deal.

It’s almost a byproduct of what they’re doing when it comes to oil and, and natural gas or whatever.

But due to regulations, they were like, okay, we’re not, we’re not producing this stuff anymore.

No way.

But we know exactly where it is.

Here’s a ton here, but yet we’ll import the s**t out of it.

Even though one of the largest users of uranium for electricity and nuclear, we’ll import.

I keep importing it right from everybody else.

I stand wherever.

But no, don’t produce it here.

We’re not allowed to.

Right? Climate change crazies.

I mean, what do you want? Do you really want to lower the uses of fossil fuel fuel? Do you really want to help? That’s the solution that makes sense.

So if you, if you want us to believe you, why not push that agenda and why not question some of the money trillions being spent taxpayer dollars.

You can’t question it to try to save money.

No accountability.

That’s why Warren Buffett, I love him.

He had it right? I mean, they asked him about solving our debt crisis and he said I could do it in five minutes.

I thought that was funny.

And then when I heard the answer, he is right.

He goes, you just pass a law that says anytime there’s a deficit of more than 3%, GDP, all sitting members of Congress are ineligible for reelection.

He’s like, and you’ll solve it in two seconds.

Accountability.

These guys have to be held accountable.

Whether it’s Donald Trump, whether it is the president of the United States, right? Biden doesn’t matter.

You have to be held accountable.

And these guys right now are just running wild, doing whatever they want, spending whatever they want.

And these are our taxpayer dollars.

And the system is, hey, we hire the best person that’s gonna represent.

All right.

Are they really on both sides here, Democrat, Republican, are they really representing your ideas? Are they? But I love that statement from Buffett and, and, and the Fitch down.

Great, good for them.

And look, look, I think it’s a big deal because it shows the world.

I’m not sure if it’s reminding them, but it’s showing them how our debt levels are the biggest country are, are unsustainable.

And it’s gonna get a lot worse.

And I can’t even say before it gets better.

’cause there’s no sun that’s gonna get better.

I truly believe most people here in the US and abroad, they, they don’t have an idea of what’s coming.

They don’t think they understand what, you know, $1 trillion in interest rate payments, no plan in place to solve the crisis.

Constant raising at the debt ceiling.

You can’t do this constantly.

Not at this level.

And to, to go about it like it’s no big deal as you’re raising rates by the fastest pace in the Fed era.

I mean, something’s gonna break.

We’ve never been worse as a nation in terms of debt than where we are right this second.

Something to think about.

Man, that’s a bad note to end on.

All right, this’s, even worse.

I know a worst note, and this is Steve Cohen.

Okay, this is worse this way.

That’s not the worst thing that you hear.

I hate ending the podcast where it’s so bad, but that’s bad just to end it there.

But Steve Cohen, owner of the Mets just basically fired sail.

The whole team said, okay, we spent a shitload of money, number one, spending and, and, and now we’re getting rid of everyone.

But they got two great pictures, which is Max Scherzer and Justin Verlander, both of ’em under form and they got rid of ’em.

So we say what’s worse than the country right now, it’s probably Steve Cohen’s pockets because he’s paying over $80 million for these guys now to play on other teams this year.

There you go.

It should make you feel better about everything I said.

But this Fitch thing’s a big deal.

Let’s see, it’s hurting the markets.

It’s just a reminder, it’s a tap on a shoulder to say, Hey, you know what, this shit’s getting real right now and you need to do something about it.

I’m glad they highlighted it.

They told the truth.

The numbers make sense, but come on, if everyone is say no, no, you’re crazy.

Do we really deserve AAA rating? Do we? Are you crazy? So it’s interesting.

Let’s see what happens with the markets.

Again, we’re waiting for something to just tilt it with a put call ratio is at the lowest levels.

Uh, you’re looking at, at you.

Basically the bears ran and hid.

I told you about this couple weeks ago when you had Mike Wilson, who’s the biggest bear in the market, apologizing mia culpa.

You have Tom Lee, biggest bull on the market.

That’s just like, you know, high, high Five-ing everyone.

Squawk box.

Yeah, this is Greg.

I mean, you know, these are signs, these are signs that, hey, we’re close.

When everyone’s leaning to one side.

Everyone was extremely, extremely bearish.

November, December, January, right now everyone was extremely, extremely bullish leaning to one side.

This is just tap on a shoulder in their mind and say, Hey, you know what? Things aren’t that great.

So be careful and you need to be careful in this market.

Guys, questions, comments here for you free to email me at frank@curzioresearch.com.

It’s frank@curzioresearch.com and I’ll see you guys tomorrow on Wall Street Unplugged Premium podcast. 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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