Commodities are known for epic boom-and-bust cycles… like the one uranium experienced from 2005–2007.
But Amir Adnani, CEO of Uranium Energy Corp. and a long-time personal friend, believes we’re seeing something entirely different with the current uranium bull market.
For one thing, there’s been a huge shift in focus from fossil fuels to clean energy in recent years… For another, the government has completely changed its attitude—and approach—towards uranium. [44:53]
Then, Daniel and I discuss how continued lockdown measures across certain countries could impact the global economy… why Netflix is trading lower despite its solid earnings report… and the bidding war for Kansas City Southern. [01:27:18]
Today’s episode of Wall Street Unplugged is sponsored by Blockchain.com… one of the most trusted cryptocurrency platforms in the world. Not only can you trade your favorite cryptos on this platform… you can earn up to 13% interest annually on cryptos like bitcoin and ethereum, or on stablecoins like USD Tether.
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Wall Street Unplugged | 770
Why this uranium bull market is unlike any other
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 April 21st. 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.
Frank Curzio: In January 2020, the writing was on the wall. Just a matter of time before stocks crashed, just had to open your eyes a little bit. COVID was running rampant in China. Almost every American-based business that was in China was closing. They announced that they were closing. This is January, first week of February. The market crashed, what, the third week of February? And COVID was going crazy. And you had Nike, or was it Levi’s, Starbucks, Yum! Brands, all of them were locking down, we’re closing our stores.
Frank Curzio: When you look at statistics, China accounted for 40% of the world’s growth. That’s according to IMF, and it was completely shutting down in late January, early February. Our market here was that all-time highs. All-time high valuations as well. Things were pretty good, but you’re trading at a high growth valuation, but you’re removing the biggest component of growth. So what’s going to happen? The market’s going to come down.
Frank Curzio: And we played it great. We got out of the market, for the most part. If you follow my advice, follow our newsletters. In March, so the market crashed. Much, much worse than I thought it would be. And it came back a lot quicker than I thought. Again, I didn’t know they were going to throw the T-word out like crazy and spent trillions and trillions and trillions, because at the end of the day, you can’t fight the Fed. You can’t fight them. At least right now, you can’t. They always win. They got a printing press.
Frank Curzio: David Tepper from 2010 was saying the same thing. 2011, I think it was. Say, you know what’s going to go high? With interest rates low and with what the Fed’s doing, injecting money? Because everything’s going to go higher. And it made sense. You don’t want to put your personal feelings involved and say, “Oh, I hate the Fed and what they’re doing. And it’s terrible.” No, if you want to go hold up a sign, hold up a sign. Go protest, do whatever you want. Me, I’d rather make money. That’s my job. That’s why you listen to me, it’s to make you money.
Frank Curzio: So, we saw the market crash in March. Predicted that COVID’s going to spread like a wildfire through the US. I did some great interviews that I share with you from people locked down in Italy and China. But when you see these things happen, they’re signs. There’s almost always signs, it’s just, you have to be looking at them. And those signs, it’s a big signal telling you to get the F- out of the markets now.
Frank Curzio: Look at 2005. That’s what Michael Burry saw with housing. He said this subprime nonsense is a mess. What were they doing? They were giving teaser rates. That’s what his original thesis was. He thought that the housing market will collapse. It went up tremendously in ’06 and ’07 before finally mid ’07 started to collapse. But he was right and he predicted around 2007, it would collapse. It was, again, prices surge, and he had a terrible position at first before being completely right. Even though he almost lost his job and his customers. But he said, “Hey, these subprime loans, they’re at a teaser rate, they’re going to reset and nobody could afford them.” And you had a couple of others really start digging again and saying, “Wow, these homes are empty.” They’ve given five homes to exotic dancers who got the teaser rate and don’t care.
Frank Curzio: Again, everybody had five, six, seven houses, nothing down. And they started finding out things about synthetic loans and said, “Holy cow.” Synthetic of synthetic of synthetic loans. And everyone was on the take. Everybody. All the banks were on the take. All the rating agencies were on the take. They had to rate the stuff. “Hey, AAA, AAA, AAA, no, we’re not doing our research. Just AAA, pay us the fee, everybody’s happy.” Everybody’s happy until they’re not happy. Because then you saw the massive leverage. Banks leveraged 30 to one. Are you kidding me? The Fed’s sit down, not even knowing that, not knowing what’s going on under the hood? At all these financial institutions? But the writing was on the wall. So the system was corrupt.
Frank Curzio: A lot of people got that right. Not a lot of people, but a few of them got it right. They saw it coming. There was just signs that they saw. It wasn’t that difficult. It is, again, in hindsight, a lot of people… The difficult part is usually before markets crash, everything’s fantastic. So, it’s very hard to see. This massive optimism, stocks are going higher, you’d fear of missing out, I mean, that’s not a new term. It’s a new term for most people, because they’re young and FOMO. No, it’s been around. Fear of missing out is every bull market, every single one. Same thing, cab drivers, people don’t know anything about… Not that cab drivers don’t know anything about stocks, but just people who don’t were getting into stocks. It’s crazy. But you see it. It happens all the time, but it’s hard, because, again, you have to be a contrarian.
Frank Curzio: You look at the ’87 crash. It saw massive deficits, inflation out of control, super expensive stocks. We just had a bull market that ran from 1982 to ’87, straight up. But economic growth started to slow, yet stocks continue to go higher. It’s a little weird. It’s kind of what we saw in 2020 before the pandemic. Earnings started slow in 2017 and then we had the tax cuts, which inflated those earnings, which is great for companies. Before that, we were seeing earnings slow considerably, but yet stock prices continue to rise. That’s a recipe for a crash is coming.
Frank Curzio: Then we have the tax cuts, and then we went to 2020, and we kind of saw that. Well, that growth kind of slowing down a little bit. Economy’s pretty funny, chugging along. Max employment, everything’s cool. It’s fine. And again, that’s a recipe for disaster. When you’re seeing slower growth and extremely high prices. Of ’87, again, a lot of writing on the wall. When economic growth slowed, expensive stocks, we had a lot of shitty deals with G5 nations. It depreciated the dollar, international currency, to basically help control our out-of-control debt, which is insane. But think about that, because those conditions, does it sound familiar? It does. There’s going to be someone saying, “Listen, pedal to the metal, everything looks good,” but a lot has changed over the past week and a half. A lot. And I’ve been spending countless hours researching this for you.
Frank Curzio: And I wanted to open the podcast today because I’m worried. I’m really worried. You don’t hear that from me often. Not hedging my bets here and saying, “Oh, this could happen or that could happen.” The data I’m about to share with you is all fact. Someone who’s engulfed in this market knows all these companies across so many different industries, has great contacts. Thanks to you guys, listen to the podcast. We have an amazing guest. We have one coming up later.
Frank Curzio: But after I’m done telling you this, you’re going to see why I’m worried. And you know what? I want you to send me an email and get your thoughts on it. Tell me what you think, email@example.com. You can disagree and say that to everybody. If you can disagree, disagree. And you people are like “You’re an idiot, Frank. You don’t know what you’re talking about.” Tell me why. Maybe you have different thesis. Maybe you work in a particular industry. Maybe you know more. I’m not here saying I’m the end-all, I’m the smartest guy in the world, just listen to me and everybody’s shut up. No, people I interview are brilliant. You realize that you’re not really that smart when you start interviewing for 14 years of the smartest minds. You’re like, “Wow, these people are really smart across different industries.”
Frank Curzio: So here it is. I think we could see a market crash. Similar to what we saw in March, with S&P 500 could fall 30% by the end of this year. I know. Let that sink in for a second. That’s the bad news. The good news is it could be avoided. It could be avoided. This is not some crazy pandemic Black Swan event that’s going to cause it. Our economists, politicians, they have all the data in front of them, where they can take the measures to stop this right now. And by stop, I mean contain the damage to where we will see a pullback this year. Maybe 10%, 12%. You look at that, the Russell’s pulled off 6% now off its highs. Again, it went considerably higher. Amazing higher. But we can contain the damage, if we work now.
Frank Curzio: Which I know, you’re asking, “What’s the cause? Why’s this going to happen? When is it going to happen?” I think it could happen this year and the cause of it, it’s a word thrown around so much, so many times. Something you may laugh at because some permabears have been making this argument since the 70s on why the world is going to end. And it never ended. We’re okay. Market’s at all-time highs; we’ll do fine. That word is inflation. I know, inflation, I heard it before, everybody tries to scare me about inflation. No, I never ever, ever tried to scare you about inflation, ever in 14 years I’ve been doing this. I say, “Hey, we’re going to see inflation here or there.” But not like, “Oh, whoa, you’re in trouble, inflation.” No. Things are very, very serious right now. I don’t know if you’ve been paying attention to the data, I have. That’s my job. And I’m not sure if the Fed and politicians understand what’s really happening out there.
Frank Curzio: What do we see? Wall Street journal yesterday, “not enough home builders to build homes to meet demand”? Yeah, we saw that during the credit crisis, but that’s just one thing. And look what happened. Not enough chips being manufactured to meet demand to where plants are closing to save costs? When have you ever, ever… In the last 25 years, when have you ever seen plants close? You got Ford, GM, lots of plants closing, because demand was too great. When have you seen that? When I see things I’ve never seen before, you always want to compare it to… Look at the history of what happened during these times and inflationary times and I’ve done that. I’ve done a lot of homework on this, still have to do a lot more homework on it.
Frank Curzio: But when have you ever seen those conditions? And when have you seen… The PlayStation 5, have you tried to get one of those? It’s incredible, PlayStation 5. I went to Best Buy, by the way, the shelves were empty, There was no inventory. I sent pictures of that on my Twitter account @FrankCurzio. You go to Best Buy, but they don’t have any of the new items in. Everything’s on backlog. But the PlayStation 5, I asked, I said, “Have you ever got a PlayStation 5 available, like in this store?” He said, “No, not since black Friday.” They haven’t even had him in the stores. Targets, Walmarts, none of them. Why is that? Why don’t you produce 10 million by now? You see the demand. Why? I don’t know.
Frank Curzio: Try to get an Antminer from Bitmain. Good luck. The most powerful ones, that’s what they used for mining crypto and figuring out equations. This way they get Bitcoin or whatever the mining. Or even crypto mining equipment from Taiwan Semi. Good luck. Taiwan Semi was like, “Nah, you know what? We’re not going to go crazy this time, because we got burned already.” 2017, it was also balls to the wall. We generated $400 million just from a crypto perspective, which I think was about 10% of sales, which is amazing and a year. And then what happens is they build inventory tremendously and the market crashed in 2018. So now this time around, they’re like, “Nah, we’re not going to do that much.” And those companies in crypto mining, man, I hope that you bought your equipment already, because good luck. I mean, that’s how you generate profits in that industry: by mining. And the only way you could mine is by having cheap electricity and very, very state-of-the-art super-fast computer systems. But there’s none available.
Frank Curzio: Yeah, Biden saying that, “Hey, we want to get into the semiconductor industry. We want to solve the supply problem.” Really? You want to solve the supply problem? When has the government, any side, when have they ever done a good job running any business or any industry ever? Never. Their track record is zero. Zero. It’s never happened. And look at the post office. They lose $5 billion every year. Funny, because I don’t see the same losses at UPS and FedEx. They run it because they have a printing press, and it doesn’t matter if they lose money. You look at New York city, how is New York city in a deficit? I could see maybe now where people are living, and you destroy the whole city and everything, and then the politicians there. I get it. Are you looking at property taxes that are 15, 20 grand? You don’t get the Verizon toll was $19 to pass through?
Frank Curzio: I mean, you’re making… I looked this up, $4 million a day. Or used to be… You build tows to pay for the bridge. $4 billion a day. I think he paid for it already. Where’s all this money go to? The billions and tens of billions. And you notice how there’s never a surplus for any state. Why is that? The more money they make, the more they’re going to spend, spend like crazy. That’s their job. Always, always, always, always spend, spend more than you have. You know why? Because it makes sense from their point of view, right? They’re not going to have to pay for this. It’s not their money. They’re not going to suffer. They’re trying to increase growth and give money to everybody. So, they get votes. The taxpayers are going to pay for it, like they are now going. Because we’re going to pay it much, much higher taxes going forward.
Frank Curzio: I don’t care if you have middle class, lower class, whatever. I don’t care. What… How much income… Everyone’s taxes are getting raised. You’re an idiot, if you don’t think that. You’re an idiot if you’re listening to your local politician tell you differently. They have to.
Frank Curzio: Another thing that’s interesting: not enough people in the workforce? And we saw that restaurant owners are looking to hire. Restaurants here, where I live, are operating at 50%, 60% capacity. You know why? They’re allowed to operate on having full capacity, because they can’t get people to work. They actually cannot get people to work. They’re starting to raise wages, but it’s not working. They, the Fed, printing money recklessly, going nuts, absolutely insane. And I get it. Why? Because that’s the playbook since 2008. And the goal was, we need to inflate the markets. Backstop, the banks throw tons of money into this system. We need to inflate the market to bring interest rates to zero first time ever. We’re going to fight these markets. There’s not one person in the world that’s an economist or anybody that didn’t think we’d see inflation over the next two, three years.
Frank Curzio: And what happened is we really didn’t see that much inflation, which is hard to explain. Some inflation in some things. But overall, we need to take the context of everything. We weren’t seeing massive inflation, so they kept low for like seven, eight years at historical lows. They started to raise them, but now with the pandemic, they started cutting again. But that’s a playbook and it was no risk. There was no risk. Not only that, we’re going to inject money, but… Let’s buy treasuries. It puts more money into the market. And again, print money, give checks directly to people, businesses, even banks, all of it’s been happened since 2008. That’s the playbook. And there has been no risk to that. Is it that easy? Because if it is, why don’t you just spend 20 trillion, 30 trillion, and 50 trillion. There’s consequences to everything we do. And it’s going to be a big consequence to this because now we’re seeing it in the numbers.
Frank Curzio: I don’t know why it didn’t lead to inflation early on, but the Fed, still pedal to the metal. Politicians, pedal to the metal. 10 and half trillion already objected to this market. 10 and a half trillion. 50% of GDP already injected into these markets. Stocks were at all-time highs, as the prices were at all-time highs. Economies started to open rapidly. More and more people are getting the vaccine. Yet, you want to inject another $2.3 trillion into the economy, saying it’s “infrastructure”? Give me a… What’s that, 11% is for infrastructure? Even though material companies are reporting insane profits right now that are greater today than they were pre-pandemic. Do we need the infrastructure bill? No, probably getting some votes.
Frank Curzio: And what do we see what’s going on today, few people in the workforce. Why work when I’m getting a free check? This is leading to a massive, massive, massive labor shortage. And you talk to any restaurant owner, CEO in any industry? I mean, it’s almost impossible to find good people these days, even in my industry. It’s hard. It’s not easy. I don’t know if you saw David Halpern’s at CNBC in that interview a couple of days ago. He’s a CEO of Jackmont Hospitality. That’s an Atlanta-based food service that had about 45 restaurants. He’s looking to hire 800 workers. He can’t find any. When have you seen that? He can’t find any. Isn’t that insane. Seriously, think back conditions when you’ve seen that, when demand is so great that supply can’t even come close to… Closing plants? You’re only operating at 50% capacity because… I mean, usually you want to open up 20 different places. You can’t find labor.
Frank Curzio: So what happens? How the companies make their ends meet? How did they get open up? How did they increased capacity? Only one way. Only one way. Raise prices considerably. Wages, make it up with food prices or whatever. But you have to raise prices. And you know what, it’s exactly what they’re doing. Listen to this earning season. Coca Cola, raising prices, first time since 2018. Netflix, numbers were great. They didn’t meet their expectations, right? How would they? I mean, 8 million subscribers during a pandemic, which is insane. They added 8 million and they were expecting, whatever, three and a half, four, and it came in at one, and a little bit more than 1 million. And people went crazy. But did you see the actual numbers? I mean, earnings blew it out of the water. Why? Because they’re raising prices. The average revenue per user went up. Disney announced they’re raising prices. They can afford to, since they’re paying $2 for every subscriber internationally. It’s $14 for Netflix. And Disney knows the playbook.
Frank Curzio: Nobody cares about numbers. Nobody cares about profits. They’re not going to get to the pre-pandemic levels, which almost all these companies are already for another two, three years. They sacrificed that. They just like, “Hey, people just want to see us get names on our list. Let’s give this thing away for free, whatever.” I got it for free. I’m a Verizon customer. I have it free for life. And then saying that I have a free for life. Why? Because they can’t show a decline in numbers because then they’re really dead. Because now you have no numbers. You’re not seeing a subscriber growth for Disney. And now you don’t have the revenues there. You don’t have the earnings. They’re still getting killed in most of your businesses. Proctor & Gamble on its call. 200 million in additional freight costs, $200 million. They raised their prices September, they said. Owens Corning, Hilton, almost every other hotel company. Genuine auto parts, almost every chip company, every drug companies raising prices on their products across the board. Every food company is raising prices.
Frank Curzio: A Dallas Fed, they have a manufacturing survey, and this is on Monday, showed almost 80% of factory respondents said supply chain disruptions have led to higher input costs. And okay, and we know that. But close to 50% said they’re raising selling prices as a result. That number is going to be more like 75$, 80%. You have to raise prices. And look at commodities. Are you paying attention? How much oil has gone up? We see massive demand. Oh, but oils has gone up considerably. Look at lumber. Look at copper. Look at corn. The food. Look at tuition, your electricity bill, your phone bill, water bill. I mean, it’s not just, “Hey, you’re used to that increase every year.” No, it’s a lot more than that now. Go to your favorite restaurant. Order something that you ordered a year ago. I can guarantee that same order was at least 15% less than a year ago. And it’s probably a much smaller portion. I can almost guarantee it.
Frank Curzio: They have to do that. What does that mean? Inflation is here guys. It’s here. It’s now. I don’t think the Fed sees it or knows it. I don’t think they have enough in clue. I mean, our politicians definitely don’t know it or even care, right? Again, their jobs just spend as much money and get votes and try and make as many people happy. They must have money. Their print goes directly to them or the groups they represent or it was lobbied for them. I mean that infrastructure bill again, was that 11% dedicated to infrastructure? Give me a break. Politicians? They have no freaking clue. They’ll call out their lawyers. They don’t know about the economy. They don’t know about stocks and… None of them do. I said earlier, the writing is on the wall. And why is nobody really seeing it? Because nobody knows what inflation actually is. When’s the last time we had it. People don’t realize that that is the biggest risk to the markets by far. We just never had it. Yes. The Fed’s goal has been to inflate the markets. Congratulations, it’s here.
Frank Curzio: But man, now it’s time. You got to take your foot off the pedal because it’s got to get insanely crazy. You’re looking at inflation, 70s, 80s. That’s when we really saw it. But right now people think inflation is great. Inflation’s… A little inflation’s good. High inflation is the biggest risk. It’s extremely, extremely, extremely dangerous. Again, conditions we haven’t seen. You never heard me talk about this before. I look at the data and translate the data and things that I’m seeing today, I’ve never seen before in my 25 years I’ve been doing this. I’ve never seen it before. But we’re told, “Hey, you want to fight the markets? Inflation’s good. It creates jobs, encourages more spending, more borrowing, more risk-taking. Look at SPACs, look at cryptos. More leverage we’re seeing across the board.” That’s fine. But runaway inflation? Man, the biggest risk in the world. Just ask Warren Buffett. And he wrote extensively on this in the 70s and 80s. And then in the 90s, he really feared inflation was coming back. It also had a lot to say about before the credit crisis.
Frank Curzio: In those years, leading up with that bubble… And he turned out to be wrong. Well, we didn’t really have to worry about… We didn’t see it. So, everybody dismissed it. But if you ask Warren buffet today, “What is the biggest risk to the market? What could that… What could crush it?” He would say runaway inflation, I guarantee it. But nobody cares because we haven’t seen that. We haven’t seen it in all investors in at least 15 years, 20 years? We saw a little inflation leading up in one market, in the housing market. That’s what caused the crash. But runaway inflation is a huge risk. And why is it such a huge risk? Because when it starts, it’s like a train going downhill. It’s impossible to stop.
Frank Curzio: You can’t just, “Hey, you know… During the credit crisis, all right, let’s inject the banks with, you know, hundreds of billions of dollars. You know, they’re probably not going to use it, but it’ll secure the banks. Put more confidence in the citizens.” No, you can’t do that with inflation. “Okay. Let’s just take inflation out of the market.” It doesn’t work like that. It’s always impossible. You want proof? Look at the 70s and 80s. I mean, inflation, just running wild. And we had terrible policies during that time. Terrible policies. And you’re looking into it to achieve sustainable employment, while achieving price stability. That’s impossible. That’s almost impossible to do. So, if you’re seeing prices gradually going up, what we’re fed today is like, “Okay, we’re okay.” Because prices are only going up a little bit, and we look at a gauge that’s basically structured, so it’s almost impossible to see inflation. But how we’re even seeing inflation in that index. That’s a CPI.
Frank Curzio: So, what happened 1979? Runaway inflation, 14% inflation? Nobody knew how to control it. And the policies in the 70s… Low unemployment, strong growth, high wages. In order to do that, you must have lower rates? They made all these terrible policies in place, when inflation started going higher, just like today. It’s like pouring gasoline on that fire. Make an inflation surge. Again, almost impossible to achieve that sustainable employment, while also achieving price stability. So VELCO said, “You know what? F it. This is what we’re going to do. I’m raising rates.” I was like, “Holy cow, you’re raising rates. That’s insane. It’s going to slow down the economy.” That’s what you have to do. That’s the only way to control inflation. Well, there’s several ways. I’ll cover them in a minute. Because if I said, “I’m also going to buy bonds.” It takes money out of the economy. And VELCO knew this is going to cause a recession. It actually caused two of them.
Frank Curzio: The prime rate was over 20%, which slowed down considerably. But this is how you control inflation. These are the measures you need to take. You have to take a big step back, which is very hard to do because everyone hated that guy for doing it because you’re forcing businesses to slow… Less lending, less leverage, you need wages to come down. That’s the way to do it. But VELCO knew that was good for long-term stability. Nobody thinks long-term today. No way. It’s tomorrow. “What’s going to happen tomorrow? By the way, we need to get into the chip industry and fix it.” Really? You’re going to fix the chip industry? Holy cow.
Frank Curzio: You should see the interview. Look up CNBC, and it is Rogers, who’s the former CEO of Cypress Semiconductor and listen to that interview recently. Unbelievable. Unbelievable. Fantastic. He’ll tell you why the government shouldn’t even go near the industry. And he is the guy that’s testified before is one of the smartest guys in industry. Incredible. But again, VELCO knew you have to take that big step back. Now, when we compare it to today, what do we have? We’re not allowed to have recession. We’re not allowed to have a… Well, not out loud. I mean, the pandemic forced that. But when we did have that recession, what happened? Coming in, it’s like, “Here’s trillions to everybody. You guys are fine.” He’s going to keep spending, spending, spending.
Frank Curzio: So now, we have inflation, and it’s insane. And our government, and the Fed, they don’t want to take a step back. And they’re throwing gasoline on this thing right now. And it’s not good. And that’s why I’m very nervous, because we’re seeing the writing on the wall. This happened in the past. We have a checklist of indicators that always warn us that inflation’s incoming could surge. What are they? Real estate prices soar every time. We’re seeing that. Yes, we started during a credit crisis, but not everything soared. It was isolated to one industry, which had to… We should just filter down. It was so leveraged. It almost blew up the whole entire financial system.
Frank Curzio: You just see stocks on fire, especially growth names. I mean, I don’t know how many trillion dollar companies… Do you ever think that we have trillion dollar companies five years ago. Trillion dollar companies. How many? That we have? These companies are enormous. It’s like the GDP of like 80% of the countries. These guys, that’s how big they are. And what do you see? S&P 500 at 22 times forward earnings. Very, very expensive valuations. Usually, we see commodity surge. We’ve seen that today more than we’ve ever seen it. I mean, we get oil prices… Have you seen lumber? It’s insane. Lumber is insane right now. I mean it. It’s really insane. I told you it was statistics. I think it’s like now… 10% of the increase in home prices is just due to lumber. I mean, the average home price usually increases by 2% average annually. With lumber, it’s 10%. Are you out of your mind?
Frank Curzio: You try to buy a house right now. I’m not talking about the major cities either because that’s got to be… Yeah, everybody’s moving out of there. But in Florida, you can’t buy a… If I move off the place I live, because it’s Amelia Island, I won’t be able to get back on. I’m not kidding you. I won’t be able get back on, unless I pay twice the price for a house. But it’s ours now that these things are flying off the shelves. But look at copper guys, look at corn, look at cotton, look at sugar. Most importantly, look at wages. That is the ultimate writing on the wall.
Frank Curzio: Now, in April 2020, which it did…. The Bureau of Labor Statistics. Again, I’m not trying to bore you here. I’m trying to support. And why I’m so nervous about this… But this is only like the past two weeks, a lot of this data, which is just mind blowing. Now, The Bureau of Labor Statistics… This is in April 2020, guys. So, they reported year over year growth in average earnings, they skyrocketed 8%. It was the highest. Since they’ve been observing this since 2006, the highest surge. This was right before the pandemic. So, we saw wages increasing. We also had the economy that was kind of slowing, not really growing that fast. And then we had the pandemic. Okay. Just everything forgotten, no worries. Market crashes.
Frank Curzio: Now, what does the Fed do? The Fed injects 10 and a half trillion dollars. I cannot believe that. I say that all the time. 10 and a half trillion dollars will be spent of GDP. Now, everybody’s saying on the calls, “Hey, we’re getting back to pre-pandemic levels,” which makes sense. We have most of the adult population, especially over 65… I mean, it’s almost… I haven’t looked at numbers. 60, 70% that they’ve been vaccinated. But you’ve seen people getting vaccinated like crazy now. Unbelievable stats. I’ll talk about that later with Daniel. So, we’re seeing the reopening trade again. It’s pulled back a little bit, because there’s been up so much. But you have everybody sitting on tons and tons of money. So, you inject a 10 and a half trillion. You’re keeping interest rates low. You still say you’re buying bonds. And you’re announcing another $2.3 billion infrastructure package, which again, has little due infrastructure. What do you think is going to happen? Wage growth is going to…
Frank Curzio: It’s surging right now. We see it. That’s why you can’t hire people. You have to raise those wages. I mean, it’s here. We’re getting an explosion in the housing market, not enough builders to build homes, supply of homes at an all-time low.
Frank Curzio: What about import prices? That’s a pretty big deal. The price of goods we pay from other countries, right? They bring their goods here, shipping it in. Last month, they grew 0.69%. You probably had no idea. Because whenever there’s a zero point whatever and its inflationary indicator, nobody cares. 0.69%, it’s not a big deal. It’s nothing. Nobody cares. You guys didn’t. I guarantee 99% of you listening to this have no idea that import prices rose 0.69%. So, you don’t need to pay attention to it. That’s the equivalent of 8.6% at a compound annual rate. 8.6%. You know how insane that number is?
Frank Curzio: The core CPI came out recently and showed just a 0.34% increase. Again, no big deal. Isn’t it like a 2% number we should be worried about with CPI? Right? That’s what they ingrained in our head. In the world 2%. As long as we’re under is 2%. We’re a little bit above 2%. But yeah, just, it showed a 0.34% increase. At a compound annual rate that’s 4.2% inflation. Inflation is here and nobody sees it. Nobody cares about it. The businesses are screaming as loud as they can. We can’t hire employees. Wages are starting to rise. They’re going to surge past those levels pre pandemic.
Frank Curzio: And what else do we need to see? Home prices. What else do we need to see? I mean, how can’t the feds see this? 4.2% inflation? This is the CPI. This is the gauge they look at. I mean, have you heard that number anywhere when they talk about CPI? Anywhere? No. You hear, “Well that’s got to be below 2%.” Nobody said it’s 4%. “Raise something? It’s probably a little over two. Were fine. They said it might go to three.” It’s 4.2% now. It’s going to be six, seven, 8% soon. We have no choice.
Frank Curzio: So, what do you need to do right now as of yesterday? Similar to what Vaka did, use wage and price controls, but that’s going to lead to a pullback and likely a recession and lots of job losses. So, our politicians are not even going to, no way. Absolutely no way. You guys can’t do this no matter what, no way. The politicians and Fed are in bed together, so no way. No way.
Frank Curzio: You have used the money supply by the Fed selling government bonds, just to take money out of the market, dollars out of the market. But the Fed said recently, “We’re still buying bonds.” They’re flooding the market with even more money at over 4% inflation. They’re flooding it, pedal to the metal.
Frank Curzio: Or, they could directly raise interest rates, which the feds can’t really do and said they’re not doing for several years. In the short-term, they can implement yield price control. I’m not sure what’s going to happen, if that happens, if we see long-term rates rise, which we saw a pull back last couple of weeks, but they rose tremendously and in such a short period.
Frank Curzio: But there’s no way the Fed’s going to say, “Hey, we’re raising interest rates or we’re going to implement wage price controls.” No. Because you know what that means? We’d have to take the punchbowl away, and we’re addicted to the punchbowl. We all want money. We all want it. We’re waiting for those checks. We’re staying home. They’re paying people for staying. Still, people don’t want to go back to work because they’re getting checks still.
Frank Curzio: And more’s coming because there’s been no risks to spending as much money as you can. Since 2008, since we injected with banks cap and no risk… Hey, you only learn from your mistakes when stuff happens and you go through that process and it really hurts you. It didn’t hurt us at all. It made the big banks even stronger. They didn’t learn a lesson there, but you have to do these things or we’re going to see runaway inflation.
Frank Curzio: And I can tell you very few people outside of permabulls who’ve predicting inflation since the 70s and 80s. And you know those names out there I’ve been predicting it, but I don’t think anybody sees this thing coming. CPI over 4% right now guys, over 4%, and a lot more money coming into the system. And this economy is about to boom. Everything is opening up. People are going to be buying everything. Hey, people are paying these high prices. That’s fine.
Frank Curzio: But I truly can’t remember another time in history were demand has been this great that supply’s not even close to keeping up where we’re closing plants. You close plants because there’s no demand to save costs. They’re closing plants because they don’t have chips. And they finally said, “Hey, we’re going to reopen them pretty soon.” But think about that for a minute. When has that happen?
Frank Curzio: When have restaurants said, “I want to expand and open 40 restaurants.” There’s enough capital out there. People give away hundreds of millions of dollars like nothing to companies these days. Look at SPACS and all that garbage. You’ve seen that blow up now, which I told you would happen.
Frank Curzio: But when have you seen these types of conditions from a business owner’s perspective, which is a lot of people out there that listen to this? From a business owner’s perspective, how do you manage inventory in a period that’s never happened before? And that’s happening in Taiwan Semi again. They’re not producing any more chips to crypto miners. They don’t want to have these massive inventory levels because they got caught holding the bag last time in 2017.
Frank Curzio: So, how do you manage inventory levels? Because if you can manage inventory levels, wouldn’t you think the Sony PlayStation 5 would be on the shelves? At least some people could buy it? You still can’t even come close to buying it. There’s still probably a five-month waiting list. It’s impossible unless you want to pay double on eBay and triple.
Frank Curzio: How do you manage your business during these times? Pretty hard. I mean, restaurants here, I said earlier, there’s several of them that we talked to operating at 60%. I’m like, “60%?” “No, we could operate at hundred percent. We’re open in Florida, but we just can’t find anybody. We can’t.”
Frank Curzio: What’s the solution to this? What is the solution for restaurant owners? What’s the solution for all of these people? What’s the solution for Proctor & Gamble? What’s the solution for Coca-Cola? There’s only one. You got to raise prices. You must raise prices across the board, but you must raise wages. You have to increase it. And that comes out to be a massive, massive expense. And that’s okay right now because everyone has a lot of money courtesy of the government, but it cannot last. There’s no way we could last on this trend.
Frank Curzio: The data that’s coming out, listen to some of these conference calls. Listen to these companies. It’s unbelievable of how much they’re raising prices and they need to raise prices. They’re going to have to just increase wages tremendously, to get more people to work for them. And it can have results in much, much more expenses, which is fine for now.
Frank Curzio: But what scares the hell out of me because what we’re also going to see, which all you know, is tax increases are on their way, right? We didn’t even talk it. That’s huge. You want to see how huge it is look what happened when we cut taxes for businesses. The market surged. Look at profits. They went from barely growing to double digit growth immediately in 2018-19. So big deal.
Frank Curzio: Now, you’re taking that away from companies. You’re raising taxes, even on individuals, but it’s not a pretty picture any way you look. Actually I’d say it’s as ugly as it gets. And again, it’s difficult to believe and it’s hard to see because everything’s at an all-time high. You could buy Dogecoin and be up 400% in a fricking week. Who cares about anything else? I mean, it’s awesome out there. Just by whatever and it’s got to go higher. Buy assets, NFTs.
Frank Curzio: Which again, Rob Gronkowski, without an NFL logo, spiking a football, I could see five billion places, but hey, people are going to pay 20 grand for it, 30 grand, 50 grand. I think he sold a lot of his NFTs for about 1.6 million. Amazing. Pretty cool. But this is the playbook. This happens before every single crash. Every single one. Everything is positive until it’s not.
Frank Curzio: You’re going to see strong growth year over year because it’s compared year over year to a period which was terrible in the pandemic. So, you’re going to see GDP numbers 5%, 6%. That’s fine. We’re not going to be like that next year, no way. Absolutely not. It’s going to slow considerably.
Frank Curzio: Earnings in sales, especially with double digits this year makes sense. Okay, year over year, it makes sense. They took a big step back. In 2022, that’s not going to continue. You know as well as I do, what is the market? The market is forward looking. So 2022 is here, according to the market. So, you guys got to be careful out there. It’s dangerous.
Frank Curzio: But the market, if you look at recent earnings, they may have already figured this out since companies are blowing away estimates. Some of the ones that are blowing away estimates, what are you seeing? You’re seeing their stocks actually pull back. J&J, Procter & Gamble, Lockheed Martin, all blew out their earnings. Their stocks pulled back. And then you have companies like Netflix who did not meet earnings and it got nailed.
Frank Curzio: So for me at this stage, I’m doing more research on it, looking at the best ways to play it, the best way to position yourself. Again, it’s something that could be corrected if our politicians, which is asking a lot and will probably never happen, but the Fed and even the Fed, government, they have to see this as… They have to get out there in the world. They got to stop closing themselves and locking themselves in rooms and just bell curves everywhere. You’ve got to talk to people. You got to see what’s going on.
Frank Curzio: That’s what’s great about this podcast. You guys email frank@curzioresearch all the time. You see what’s going on, you’re seeing prices being raised across the board, you’re seeing wages go up, all these. All these are signs of massive inflation is coming. We haven’t seen those trends. We haven’t seen those trends in a while.
Frank Curzio: We haven’t seen a real estate bubble in a while. Now, we have real estate bubble, which could get, it’s going to get, bigger and bigger and bigger. Look at collectibles. Look at everything. Look at the prices. Just look at the commodity prices. Again, these are all things. These are perfect signs. You could see the writing is on the wall. It can get really, really ugly because, if you go back and look, listen to Warren Buffett, listen to the times of high inflation, it takes five, seven, 10 years to stop it. It’s not something that you could stop immediately and it’s here. And nobody really sees it. The people in charge do not see it. And that’s what scares me.
Frank Curzio: Doesn’t mean you can’t make money in this market. I’m not telling you to sell everything. But for me, I’m digging even further. I want to listen to conference calls much more. About 20% of companies report. I want to see what the rest of the companies are reporting. Banks reported very, very good results. Trading activity and stuff like that that’s fine. But what’s going to happen as interest rates go higher? It’s going to be a disaster. And a lot of these companies paying these massive wage increases, their profits are going to go lower.
Frank Curzio: It’s going to be an ugly market. The only way to cure it is to take a step back. Nobody wants to take a step back. We don’t believe in that anymore. It’s pedal to the metal. Anything that happens, we fix right away. We throw money at it. Well, here comes the consequences. Here it comes. It’s here. It’s now, and it’s showing up on almost every single data point.
Frank Curzio: So the Fed, please, I’m hoping that you’re paying attention because if you’re not, the amount of money you’re injecting into this market, the amount of time you’re going to keep interest rates at zero, it’s going to get worse. You’re accelerating this thing. This terrible trend, you’re accelerating it right now. You need to take the punchbowl away. I don’t think they’re going to do it. That’s going to make me nervous. And if they don’t, you’re going to see me start selling a lot of stocks within our portfolios.
Frank Curzio: Okay guys, again, I want to do a lot of research on it. One thing I know for certain, you should be buying gold right now. Buy gold because I don’t think gold’s going lower, but I do think it’s going to go to $2,500. You say, “Well, Bitcoins.” But no, Bitcoin already made its move. It’s made its move. You can say maybe it was an inflation hedge or whatever. I don’t know, but made it’s made its move already. Maybe it goes higher. But gold right now where it’s sitting, you’re going to see more money flow into.
Frank Curzio: There’s no leveraging gold. There’s tons and tons and tons of leverage. And you own Bitcoin at any place and just look at the terms, you could leverage it. Holy cow, there’s a ton of leverage in that industry. That’s why if you see it come down, it’s really going to come down. I’m a big fan of crypto, as you know. I think it’s going higher. But right now with gold, I’d buy the major gold producers. Have a direct stake in gold with prices to protect yourself.
Frank Curzio: Because if these guys get this wrong, it’s going to be a disaster. And it’s going to be a disaster for a very long time. And they’re not going to be able to control it. There’s nothing you could do about inflation. It’s a super long-term problem and you can’t cure it by throwing money here and throwing money there. You actually have to do the exact opposite. And that’s when things would get really, really crazy.
Frank Curzio: Let’s get to my guest today, which by the way, this interview’s being sponsored by blockchain.com, the most trusted cryptocurrency platforms in the world with over 70 million wallets and over 800 billion in transactions since 2011. And I can show you if your cryptos on blockchain.com, but you can earn up to 13% interest annually on your crypto. That includes Bitcoin, Ethereum, or stable coins like USD tether. So, for more information, start your account, visit blockchain.com. That’s blockchain.com. Awesome company. And yes, I am a customer.
Frank Curzio: So, this is a guest that you’re going to be familiar with, but it’s been a long time since I had him on to talk about one of your favorite subjects. I can’t believe this is now in favor. It has been so out of favor for such a long time. That’s uranium. If I do a video on uranium, I get tons of hits all the time. Uranium, everybody likes uranium. And that’s Amir Adnani.
Frank Curzio: Amir’s a CEO, founder of UEC, one of the premier US uranium producers. He’s also chairman of Uranium Royalty, a new company that IPO’d in 2019. And if you own it, you’re up tremendously on it. So, it’s just the only uranium royalty company in the world. And the timing that he created this company is actually fantastic, which you’re going to hear about in this interview.
Frank Curzio: Amir has been all in in this industry for over a decade. He’s one of the smartest, truthful people you will find. Even though he’s a good friend though, this is not a lay-up interview. I know a lot of you are bullish on uranium. I have a big position in uranium personally, which I’ve been doing well on as well as you guys. But I put his feet to the fire because one thing that scares the hell out of me about uranium is, you’re not going to continue to see these stocks go up unless you see the underlying commodity go higher.
Frank Curzio: You don’t see oil companies surge, if oil is falling and going below $20 where it’s not economical. You need to see higher prices. When will we get them? Because if we don’t, we’re also seeing a small pullback in some of these names right now. But again, he’s a friend. He’s not on here because he’s my friend and because I know he can help you make money, and he has made you money in the companies that he’s been part of, but it’s a full breakdown of uranium. If you own any stake in any uranium company, this is a must listen to. It’s fantastic. Fantastic. You know what? Let’s get to that interview with Amir right now.
Frank Curzio: Amir Adnani, thanks so much for joining us on Wall Street Unplugged.
Amir Adnani: Hey Frank, nice to connect with you again. It’s been a while.
Frank Curzio: Do you know how long we’ve know each other for? I went back, and I don’t know why, just the other day so it’s a coincidence that we have you on and I saw the picture of Temer and when we were in New York city. That was, I think, like 10 years ago, right? When I met Mario Garnero and stuff like that. I mean, it was a long, long time ago. That was one of the first times I think we met in person.
Amir Adnani: That’s a good way of dating it because the Michel Temer was the president or vice president of Brazil at the time, I think. One or the other.
Frank Curzio: VP, he was, and he became president.
Amir Adnani: Yeah, he was. You’re right. That’s right. He was VP and then, he became president. And it’s sort of depressing in a way, isn’t it? Not that, that was a long time ago, to look back at what it was like to be in New York city at that time.
Frank Curzio: Oh, yeah.
Amir Adnani: Because I think about all the people, the bustling nature of coming and going and just… I talk to friends and I know you have friends and family in New York City as well, and what it is like now, right?
Frank Curzio: Yeah, it’s sad.
Amir Adnani: It is kind of this encounter.
Frank Curzio: And that was like in the middle of Manhattan in the heart of midtown, we were at the Plaza at a big event.
Amir Adnani: It was, yeah.
Frank Curzio: I mean, it was really, really cool. We had a good time. And we went to New York city a couple of times too. It was just… Yeah, it is sad. It really is sad what happened, but… Man, we can talk about that forever, but I want to get something that’s exciting.
Amir Adnani: Yeah, I know. I want to get started, yeah.
Frank Curzio: Because the last, how many years, right? Since Fukushima. And I don’t think people know how long you’ve been doing this and how long you’ve been involved in uranium, and it’s just a testament to you, man, because holy cow, I mean, being in uranium all that time… I’ve always said, “Man, I wish you just picked another sector, anything else, because it’s almost like being an executive of a coal company right now.” So, it’s unbelievable what you’ve done with UEC.
Frank Curzio: Let’s start there. So Uranium Energy, let’s bring everyone in. Tell us a little about Uranium Energy, maybe how it started, and we’ll bring up all the fundamentals. And everyone that knows about this, just bear with us because we want to bring everyone in together for the people who are listening to this for the first time.
Amir Adnani: Well, in 2005, as an entrepreneur, I became very interested in what was happening at the time with the nuclear renaissance, which was everywhere back then in terms of meeting the needs of carbon emission free electricity with nuclear power. And there was a real supply demand shortage from a standpoint of how much uranium was available to fuel these reactors. The industry had been out of favor for a long time.
Amir Adnani: And I know for those of you that know the uranium story today, this might sound very similar to what’s been going on in the last 10 years since Fukushima happened. But in 2005, I had a very similar setup and that really captured my attention. It captured my energy. It captured me as an entrepreneur to say, I need to be in the sector. And the sector at the time, I remember looking around attending uranium conferences, and there was a real age gap. There were guys who had been in the uranium mining business for decades, and the sector really hadn’t replenished this human capital.
Amir Adnani: I remember the former CEO, chief operating officer of my company, Harry Anthony, who gave a talk at a conference in 2005 in Casper, Wyoming. And he wasn’t our chief operating officer at the time. I just remember him getting up, looking around the room and saying, “20 years ago, I gave a talk at a similar conference of this. And 20 years ago, I remember looking around the room, and I was the youngest guy in the room. And now, looking around, I still feel, I’m the youngest guy in the room.”
Amir Adnani: I remember he said that and I looked around the room and I just saw a lot of white hair, right? And I remember thinking to myself, geez, like there really is a gap here. And then, I went and met Harry and we teamed up. And he was a key part of the UEC story and team as we built the company.
Amir Adnani: And our focus was very simple because the second thing that grabbed my attention was at the time in 2005 the United States was importing 90% of its uranium requirements. And everyone was rushing to Canada’s Athabasca Basin to look for uranium, which is where all the high grade deposits are.
Amir Adnani: I wanted it to be a contrarian and not only a contrarian in terms of getting into a commodity that was out of favor, but paying attention to areas that were not as heavily populated by other players and South Texas stood out. It had a long history of uranium exploration and mining, but you don’t normally go to south Texas for uranium. You go there for oil and gas.
Amir Adnani: I remember even in 2008, when I had a chance to meet George W. Bush, his last year in office, when I introduced myself to him I said, “Mr. President, my company is looking for uranium and developing a uranium mine in south Texas.” And he looked at me, and he says, “There’s uranium in Texas?” Now remember, he’s a former governor of the state of Texas, right? And so, it truly was not an area or a jurisdiction that people thought of when it came to uranium, and we made a business out of that.
Amir Adnani: And fast forward to today. What’s interesting, Frank, is… So, it’s not 16 years, right, since that beginning in ’05, and what has changed? We went through just a terrible episode with Fukushima 10 years ago that was a setback for the nuclear industry. But what is proven out of that a decade later is that nuclear power is truly safe and it has to play a role.
Amir Adnani: If we want to meet our climate needs, if we want to decarbonize, if we want to drive more electric vehicles, we need to have a clean ways of generating electricity. So, it’s been a journey over the past 16 years of just where nuclear power sits and how it’s embraced today. There’s been ups and downs. But what’s fascinating is on the uranium mining end of things. In the US, we’ve gone from importing 90% of our requirements to 100% of our requirements. So, that situation has only gotten worse.
Amir Adnani: And in case of you EUC, we’re still rocking and rolling in south Texas. We’re building a brand new project down there called Burke Hollow. We’re investing money down there. We’ve been a part of the community down there for since the beginning of our company in ’05. We’ve grown our business outside of south Texas. We’re in Wyoming. We’re in five other states. We have even a small footprint in South America and Paraguay.
Amir Adnani: But we’re very much… Today, I would say UEC is part of a narrative that has to do with, if you’re rooting for clean energy, if you’re rooting for finding a way to decarbonize, while at the same time, look for ways to create more electricity, right? This is a mega trend, right? And as part of this mega trend we need nuclear power because it is a large and base-load way of generating electricity around the clock.
Amir Adnani: Heck, you look at climate scientists, you look at even the latest, clean energy mandate that the white house put out, it includes nuclear power. And so the support is quite unprecedented. And this is where uranium comes in. We need uranium as the fuel to run nuclear power plants, whether it’s the large-scale plants or the small modular reactors that Bill Gates is putting a lot of his personal money into backing companies like TerraPower and NuScale, who are the developers of the small modular reactor technology, which is a very promising area as well.
Frank Curzio: Now, you know what? Now, let’s get into it, because you did a great job… Let’s compare the markets from today. What we’re seeing today, which I think anyone involved in uranium understands, right? It’s the under contracting by utilities, right?
Amir Adnani: Yeah.
Frank Curzio: You have the under investments, you have the low price uranium and compared to what’s going on, you did a little bit of that, but what stands out to you the most compared to now in 2005? And I think you have to Fukushima so many of us, I mean, everyone who knows about uranium thought prices would come back so much faster.
Frank Curzio: And now we’re seeing super low prices again, under contracting, it seems like the same exact environment setting up. Where could it take six months? I don’t know. Could it take another year, or two years? It is going to happen though, right? It seems like it.
Amir Adnani: Right.
Frank Curzio: Just under contracting is going to happen, right? It’s just, to me, it’s almost guaranteed. It’s just a matter of timing, right?
Amir Adnani: The parallels are quite interesting and they basically go like this, right? We had an epic bull market in 2006, 2007 in uranium market and uranium equities. And the market went from, there was 20 uranium companies in 2005 in the world. And by 2007, I think there were over 600 uranium companies in the world. But the combined market cap of all uranium companies went from $10 billion to over $150 billion in those two years, and the stock price went from $20 a pound to $140 a pound in two short years.
Amir Adnani: Leading up to those two years, we had a situation where for a long time there was a large amount of above ground inventory, secondary supplies that was basically being drawn down, and where it was coming from was basically a byproduct or side effect of the end of the Cold War.
Amir Adnani: When the cold war ended beginning in or around early 90s, the US signed a treaty with Russia called a highly enriched uranium treaty to dismantle Soviet era warheads and take highly enriched uranium, blend it down to low enriched, and sell that into the utility market in the US to generate electricity. So, the same warheads that were pointing at the US during the Cold War became basically the source of fuel to create 20% of US electricity, which is how much nuclear power supplies in the US.
Amir Adnani: That program, that basically was a secondary supply and it took a long time for that to be drawn down. As we came into 2006, we had this low uranium price environment for a long time because of large amount of secondary supplies, which meant there was a long period of underinvestment in exploration and development.
Amir Adnani: And then, all of a sudden, there was this positive attitude of embracing nuclear power, the nuclear renaissance of 2006. China, India, and all the emerging economies that really were transitioning hundreds of millions of people in their population into the middle-class. That need for energy, that needs for electricity, was driving the growth of nuclear energy in those emerging markets.
Amir Adnani: Bring it forward to today, right? You have some interesting similarities. The agreement between us and Russia, the HEU agreement, that ended in 2013. In the last decade, we had another type of secondary supplies, above ground inventories that basically were the inventories of Japanese utilities that shut down. And they didn’t need uranium anymore because of what happened in that country with Fukushima in 2011.
Amir Adnani: So, not only did we have above ground inventories, or basically uranium that the Japanese reactors didn’t need any more for the last decade, but we also had contracting that had happened in the previous bull market cycles that give bigger producers prices at higher levels than what the prevailing spot price was. So, they kept producing even though the market was over supplied.
Amir Adnani: Today, what we have is we have a situation where the above ground inventories have been drawn down, very similar to what was happening, leading into the ’06 bull market. The contracts that were in place for those producers, those hedges have basically rolled off and are coming off.
Amir Adnani: And so there’s a lot more of exposure to the spot price. That’s why we’ve seen some large successful mines, like the McArthur River mine in Canada, shut down as a result of a low uranium price environment. And all of a sudden we have this embrace for nuclear power, similar to the nuclear renaissance of ’06. We have climate scientists. We have the Biden administration. We have green organizations who are embracing nuclear power as part of the solution to decarbonize and meet the net zero neutrality goals that corporations and countries are set setting.
Amir Adnani: And so, some very compelling backgrounds and the comparison there is compelling also on the supply side. Because of low uranium prices there’s been an underinvestment on the supply side of uranium as well, over the last decade, as it was leading up to 2006.
Amir Adnani: Leading up to 2006, there was a major mine that was being developed called Cigar Lake. And when it flooded, it actually became a catalyst for the market to rally. Ironically, this time around there isn’t a Cigar Lake to flood to be a catalyst, but that’s actually the bullish point. There isn’t a Cigar Lake. What do I mean by that? There isn’t one very large mine that is under construction as we speak that can immediately come online as a response to higher uranium prices.
Amir Adnani: Most projects today that are at a development stage, unlike 2005, are not even fully permitted yet, yet alone under being under construction. And so I think the comparison between today and ’05 leading up to those bull markets of ’06. ’07 Is quite a compelling one. Obviously, as you said, we can’t perfectly get to the bottom of exactly when we’re going to have that inflection point where things take off, but there’s a very compelling scenario there.
Amir Adnani: And I think maybe the only difference, Frank, is that while there was Cigar Lake back in ‘O5, and there isn’t a Cigar Lake today under construction. I think above-ground inventories today are at a higher level than they were in ’05. But I think those two things basically offset each other.
Amir Adnani: And the situation in the US is quite compelling. In 2006, 2007 bull run the United States Department of Energy was a seller of uranium from government stockpiles. In fact, part of the rally in ’07 was capped when the Department of Energy announced they we’re going to be selling uranium from government stockpiles.
Amir Adnani: Fast forward, today another big difference in a positive way is the United States government has announced a plan to purchase physical uranium to basically create a new strategic stockpile, the US Uranium Reserve. Over the next decade, The Department of Energy is going to buy $1.5 billion worth of uranium. We didn’t have that in 2006, 2007. They were doing the opposite. They were selling uranium.
Frank Curzio: All right. So, before we go any further, do you remember this? So, you know I have a Curzio Research YouTube page. I have a picture there where I visited your house and plant, and I’m holding a little container of yellow cake.
Frank Curzio: I don’t know why I have a smile on my face holding this. I never realized it, but anyway…
Amir Adnani: I think you were smiling because usually… When you held that, I may have made a Texas proud comment by saying that the yellow cake from Texas is just a nicer shade of yellow than the yellow cake from elsewhere.
Frank Curzio: That was great. That’s great stuff. All right. I had to put that up.
Amir Adnani: Texas yellow cake. Texas yellow cake, baby.
Frank Curzio: That’s great. That’s great. You talked about a few things here and I can bring this… This is in your presentation whatever… This treated uranium reserve, 1.5 billion program over 10 years and 75 million in a probably fiscal 2021, where you guys are well-positioned for that. Are you worried at all? Because in the past Democrats didn’t support uranium as much. This isn’t political. This is fact. And they control everything in the US, all three branches of government. I haven’t seen them really come out against this. Is this good news for you? Is this something we have to worry about getting reversed? Because I just felt like a Republican presidency was much better for uranium. But it seems like, since this whole ESG push, that it feels like they’re throwing uranium in there as well.
Amir Adnani: To begin with, I hate having to think that politics can play a big role in your business or in any business or sector because it can be unpredictable. It can take a long time when you’re thinking about political catalyst or events or whatnot. But a fact of life in the nuclear power businesses is there’s a lot of state involvement when it comes to nuclear power. Not so much even in the US, but globally. Most nuclear power initiatives in the world led by China and Russia are all state-backed and stat- owned. So, politics and big picture issues globally do play a fact in our industry.
Amir Adnani: Now, you said it really well. If you said to me, “What does a Biden presidency mean for uranium mining and nuclear power?” before the election, I would have probably said not as certain as what I thought at Trump reelection and Trump presidency meant. Which was a more clear stated position of support for nuclear power and uranium mining under Trump and not so certain with Biden. And to everyone’s positive surprise, right after the election and as the Biden people and administration came in, we saw the theme around why they were embracing nuclear power switch from national security, which was a big concern of president Trump, to meeting the clean energy mandate of the Biden administration.
Amir Adnani: We saw, the first time ever in the history of the Democratic Party, support for nuclear power as a policy. We saw a bipartisan support for the approval of the budgeting, the appropriations for this US uranium reserve, pass very swiftly through the house and the Senate. I was a bit surprised at how fast and smooth it actually went. And this continued positive posture towards recognizing that look, you can’t go after all sources of energy. And as you know, the Biden administration is not exactly a friend of the coal industry or the oil and gas industry or carbon industries. You can’t go after all those major sources of power generation and then also decide to cut nuclear as well.
Amir Adnani: I mean, renewables on their own don’t cut it. You got to pick and choose what lineup you’re going to have out there when it comes to the energy matrix and nuclear power is in there. It’s in a big way. And the reality is, it’s the first time also in history, that nuclear power is the second largest source of electricity generation in the US and the largest source of emission free electricity generation in the country. So these are… I don’t want to say too big to fail… But these are important weightings that nuclear power is playing towards meeting our energy needs, meeting all our electricity needs.
Frank Curzio: Amir, when I look at this too… Because not only that, and that’s great for you because I would have been a little bit worried about that… But it just seems like it’s more favorable, you’re right. They just can’t take everything offline. But this lead to the $64,000 question, which everybody knows. And I know you’ve been asked this a million times, but you don’t normally see oil stocks go higher without the price going higher, especially if it’s under a price that’s economical to produce, which say is… Some will say $30 for oil, but basically it’s like 1% of their wells. It’s more like 40, 45. I’ve been to every major shareholder and visit them personally. I hear it’s around 50, $55 for uranium. We are at 29, $30 and everything is there.
Frank Curzio: You see limited supply. You know that these electricity companies are going to have to lock in contracts. So there’s the demand. There’s the demand picture. You’ve seen a lot of bigger mines come offline. It’s just, everything is positioned perfectly. China, more plants coming online. Japan reopening, more plants coming online. Why are we not seeing prices go higher?
Amir Adnani: We have to I think remember that with all the issues that happened around COVID, nuclear power plant owner-operators, the utility companies, had to really first and foremost think about how they’re going to continue operating in a COVID world. That came number one, preoccupation and priority. Prior to that, prior to COVID, we had a whole bunch of political matters that had to resolve. The Russian Suspension Agreement, the trade remedies that were being introduced about possible sanctions or quotas for uranium coming into the US. So we’ve had, in my opinion, both political distractions and COVID related preoccupations the last few years that is kept the utilities back from entering into the next contracting cycle.
Amir Adnani: The uranium market functions this way, 85% of all volume is by way of long-term contracts. The spot market only makes up 15% of transactions. So for you and I to look at, let’s say $29 per pound spot market, it’s really just… I don’t want to say it’s just a number… But it’s not where the volume is transacting at. The average uranium price that a US utility paid under contract last year was $40. The average uranium price that was contracted in 2010’s run pre-Fukushima was $70 per pound. Utilities will lock in pricing under long-term contracts. That’s 85% of the market on a volume basis. And remember, uranium pricing makes up less than 5% of the overall cost to operate a nuclear power plant. Unlike, let’s say, natural gas pricing, which makes up over 70% of the operating costs for a gas-fired power plant.
Amir Adnani: So, the nuclear utilities have traditionally entered into these contracting cycles. That has then been the driver of the spot market. 2010, when we went from $40 a pound to $70 a pound in a matter of six months. 2006, when we went from $25 all the way up to $140 a pound by 2007, in a matter of two years. It’s the utility contracting cycle that drives that. So, while there is a spot price right now at $29 per pound, that you know and I know uranium miners can’t make money at, it also isn’t a price where there’s available abundance supplies that utilities can buy and contract for a 29. For that to happen, there has to be a bit of price discovery. And I think that price discovery will lead us to 50 to 55, as you point out.
Amir Adnani: Why? That’s the incentive price based on most available economic studies. That’s the price where the bigger companies like Cameco and Kazatomprom had hinted would be the level where they might restart some of their operations. And frankly, if we look at this, there’s also been a lot of inflation out there. There’s a lot of inflationary pressures that the uranium mining industry won’t necessarily be shielded from. Everything costs more right now, especially in a post-COVID world, from labor to equipment to supplies. So for the bigger, larger scale mines, not the in-situ recovery operations that we’re tackling, which as you’ve visited and know really isn’t mining. We’re moving water around and it’s not an earth-moving exercise. But when it comes to conventional mining, where it’s an earth-moving exercise, you factor in all the inflationary pressures that are out there when it comes to mining in general. And I think we’re going to have to see a higher uranium price than maybe even 50, 55 before you see project development to then satisfy the needs of upcoming contracting cycles that the utilities are going to need to have bigger volumes of uranium.
Amir Adnani: So Frank, to give you a perspective, the total cumulative deficit for uranium in the next four years is about 200 million pounds. By the end of the decade, it’s well over 330 million pounds, is this supply demand deficit. Some of the biggest mines coming online might… Or the biggest mine, let’s say, coming back online, like in McArthur River. McArthur River might produce, let’s say, 20 million pounds. That’s an exceptionally large mine. That’s not going to necessarily add up to be, entirely on its own, satisfy what the supply demand deficit looks like out over the next four years or to the end of the decade. I think uranium mining we all got to remember, it takes a long time to permit these uranium mines. Longer than a copper or a gold mine, because of all the extra layers of licensing that uranium mining has associated with it.
Frank Curzio: Yeah, it definitely makes sense. Definitely makes sense. I think we are eventually going to see… I didn’t know the spot market…. I mean, the spot market obviously was lower, but I didn’t know they’re locking in at 40. I thought it was even below that price, which is a pretty good sign.
Amir Adnani: Sorry, not locking in at 40. That they were still paying 40 based on contracts that entered into previously.
Frank Curzio: Previously.
Amir Adnani: So, what I’m saying is that, when you look at what the contract, the deliveries that they’re receiving larger amounts of supply on there, what that implied price is, it’s at least 20, 30% in some cases, 50% higher than what today spot market is. And spot market simply doesn’t have enough available liquidity or supply in it where a utility that needs to buy 5, 10 million pounds can go and secure that. Look, case in point, our company, Uranium Energy Corp, recently we announced the initiative to purchase physical uranium. We did this because we see spot price at $29 that we just talked about being well below most industry mining costs globally to mine uranium. Even our own all-in cost could be just around 28, $29 per pound to mine uranium.
Amir Adnani: So, we recognized that this was a strategic time to take advantage to strengthen or equity valuation to buy physical uranium and build a physical inventory program. Well, when we entered the market looking for just a million pounds of uranium… That’s basically enough uranium to run two reactors for one year, and there’s close to 94 reactors in the US. Just enough uranium for two reactors, a million pounds we went to buy and that moved the market 10%. So, the spot market is tight. When you have a market where the future supplier, a company like ours, is actually on the bid looking to buy uranium and other developers or producers are doing the same thing now, it’s a messed up picture. How many other industries do you know, Frank, where the suppliers are on the bid, buying the widget or the commodity that they’re supposed to be producing?
Frank Curzio: Mm-hmm. Yeah, that’s a great point. It’s a great point. We talked earlier when we started this off of how long you’ve been at UEC and well positioned right now, as you just explained. Fantastic. But also it led to you starting another company, Uranium Royalty, which I think at the beginning of this a few years ago, people probably look and going, “Uranium Royalty?” I mean, you see royalties all over. You even see in the healthcare industry. We know gold, silver even copper and whatever, but now we’re seeing it in different industries because it’s an amazing business model. But you’d said, “Uranium Royalty, now’s the time to do it.”
Frank Curzio: And right out of the gate, this company is…. I’ll bring up the chart here, this is a five-year chart only because it will go out to exactly where were you guys came out and went public in 2019. And look at the price. But you guys came right out of the gate with some really cool announcements. I guess, give everyone a quick elevator pitch on Uranium Royalty. What made you start it? And man, I think people were surprised right out of the gate with those major announcements.
Amir Adnani: The royalty business model, especially in the gold sector, has proven to be an effective way to build companies that end up with exposure to not only the underlying commodity, but also they end up with that embedded optionality that we look for when it comes to exploration. Embedded optionality, when it comes to expanding profit margins or just operating margins when a commodity price goes up and you’re operating a mine. Why is that? When you own royalty… A royalty is basically a contract. And when you own a basket of these contracts or royalties between the royalty company and various miners and producers and operators, you’re getting a percentage, a fixed percentage, of the revenue for the life of the mine including exploration upside or success that that operator may have.
Amir Adnani: Except with the caveat being, we’re not on the hook as a royalty owner for any, and I mean any, of the capital investment and the ongoing costs associated with mining. All the time, energy, and effort that goes into doing that. So that’s why you look at companies like Franco Nevada, Wheaton Precious, Royal Gold and the gold sector, these companies trade at three times NAV where the producers trade at one and a half times NAV. They portray that better cash flow multiples, partially because they don’t have the big CapEx lift the miners typically do and they can operate with such small G&A. I think Wheaton Precious Metal, with a 30 or 25 market cap, has a total of 30 employees. It takes 30 employees to run an exploration camp, let alone a mine.
Amir Adnani: So, we looked at this model and just felt like, with the bear market we’ve been in in uranium, there hasn’t been active interest in the uranium sector to build a dedicated royalty company. But that the next 10 to 20 years there is going to be the need to build and operate and finance many new mines to meet this growing demand for uranium and the deficit that we talked about. It really felt like the right point in the cycle to come and launch a pure play royalty company focused on uranium only. There wasn’t anything else like it out there. And we felt that this could only be done by uranium people. People that are in the uranium business, with knowledge of the industry, that understand where the opportunities lie, understand the nuances, the difficulties, the technical issues around uranium mining.
Amir Adnani: This was all the genesis and the reasons behind forming Uranium Royalty Corp, taking it public. There was also a key benefit in this to Uranium Energy. Uranium Energy, along with other companies like Altius, which is a big diversified royalty company, and Mega Uranium. A number of corporate backers got involved early on with Uranium Royalty. It’s been a huge benefit for us at Uranium Energy. We now have an equity position in URC. We own 19% of the company that is now worth close to $40 million. We basically took a stock in exchange for a few non-core royalties to establish that position. So, we’ve done very well with that at UEC.
Amir Adnani: But at Uranium Royalty, being the first and only publicly listed uranium royalty company has meant we have a first mover advantage and we’ve capitalized on it. We’ve gone out there and recently acquired royalties on the best uranium mines in the world, Cigar Lake and McArthur River. In Canada, your counter-party is Cameco and Orano, two of the biggest uranium miners in the world. These deposits have produced… Or collectively when they go back into production, Frank, will be 20% of global production. And we have royalty exposure on these types of world-class assets. It would be impossible today and the gold sector or the copper sector for a new company to go out there and get a royalty exposure on the best assets, the Tier 1 assets of gold and copper. So, the fact that we’ve done this in uranium speaks to that first mover advantage.
Amir Adnani: We’ve acquired physical uranium. We’ve acquired an equity stake in a London stock exchange listed company, Yellow Cake, that has a 10-year, billion dollar physical supply agreement with Kazatomprom. That’s the world’s biggest uranium miner. We, in fact, can purchase physical uranium under that supply agreement, ended up doing that recently, and we ended up realizing a 7% discount to market by having this strategic supply agreement.
Amir Adnani: So, it’s a very interesting way of playing the uranium sector. When you think about uranium, you can look at a company like Uranium Energy that’s focused on the US production business. You’ve got ETFs that just buy a basket of equities. But the royalty business goes a bit further. It sits in between all of that because by having that direct exposure to the top line, you’re getting direct exposure to each deposit’s operating success, exploration upside success. And the fact that, again, you’re not paying for any of it. Other than the first purchase price to acquire the royalty, any of the ongoing costs associated with mine development, a royalty company is not responsible for.
Amir Adnani: It’s a very cool elegant business model. And the team that we’ve brought on board are individuals who’ve spent their entire careers building uranium mines, exploring for uranium deposits. So you’ve got also a very uranium specific team, coupled with financial expertise and experience, who’s now out there building Uranium Royalty further. I think it’s a very interesting way to play uranium. And it’s the only royalty company out there in the world.
Frank Curzio: I commend you too, because you brought up gold royalty companies, the Franco Nevadas, Sandstorms, you could go on and on, name 10 of them. But the way that they make their money is during bear markets. Because they’re able to get a piece of amazing, amazing projects. And when you look at gold and some of these companies that were close to going under they were so leveraged… I mean, the majors were in big trouble, 13, 14… that they were looking to finance and this was a way to give… Now today, they’re the strongest companies a world. They’re amazing, producing at $900 and they don’t need to give away anything. But it’s hard to find projects. Same with uranium. When you came out with this, it’s getting stakes in Cameco… At this, if you’re going to see the price go to $70, 75, you’re not going to be able to get… It’s going to be much more difficult.
Frank Curzio: Just coming in when you came in, and this is… I don’t want to say 2018, you’re probably talking about a little bit before that… it’s really incredible. I mean, it’s got to feel a lot better with this company compared to UEC or gold where those trends just lasted…. There was such a bearish trend for such a long time that it was crazy. Look, we wanted to keep this at 30 minutes, we’re going a little late.
Frank Curzio: I’m going to ask you one last question, because we really covered uranium to death. If you had to do it all over again… One of our closest friends and one of the people that we follow for all of our lives was Rick Rule, I think he was the one that said, “Either be a contrarian or die.” Would you choose to be a contrarian since you’re contrarian? But yet, it took a long time for uranium to come back. It took a long time for gold to come back. Or would you do it differently and be like Disney? Again, just streaming late and watch your stock price triple in a year, which they might get hurt later on. But to do it all over again what would you do? What would you choose? Would you choose to be contrarian all day?
Amir Adnani: I think to be a contrarian you have to be comfortable in your own skin. You have to really have, I think, the passion for being a contrarian. Because otherwise it’s very difficult. I mean, Frank, it has been a lonely, lonely place the last decade being in the uranium business. It’s not interesting for people. It has been out of favor. It’s tough, man. You’re not coming to work every day high-fiving and rolling in and getting lots of media coverage, analyst coverage. There’s hardly any uranium analysts left, for example. So it’s not easy. And so I think the only way to truly persevere as a contrarian is to be so passionate and committed to the cause and to the concept of being a contrarian to really last. I think it’s so much easier said than done. Yeah, of course it makes sense to me because everyone wants to be a contrarian, go after something that’s out of favor or a sector that’s out of favor. But when those sectors or themes test you, and you’ve got to just stay with it for way longer, that’s when it comes out.
Amir Adnani: So, to answer your question, I absolutely relish the sectors I’m in. The potential I see in them are enormous. Never doubted it. Would never do it any other way. I hate the idea of ever looking back in my life and having regrets. And I don’t have any regrets about any of it. Has it been challenging? Yes. But has it allowed me to build a place and grab market share for my companies? Be it Uranium Energy or Uranium Royalty. Or as you say, get my hands on royalty, for example, royalties on blue-chip assets, or be able to pick up and team up with the best people at Uranium Energy. For me to get a chance to partner up with a former United States energy secretary, Spencer Abraham, who was the chairman of our company, who you’ve interviewed.
Amir Adnani: If I was, let’s say, one of a hundred oil and gas companies, I wouldn’t have been able to attract the unique people that we have. Because we’re one of five or six companies in the world that can mine uranium. This scarcity factor with being in the uranium business, with having production capabilities in the uranium business, with being able to get projects and assets at discounted valuations. I relish that. I love that. I do it all day long. And sometimes I get worried. I’m like, “Jesus, if that bull market comes tomorrow. Do our companies have enough assets? Shit, we better hurry up and do more before this thing becomes mainstream popular.” So anyways, I’ll stop there.
Frank Curzio: You know what, and I’ll end with this here, I always define of how people act when things aren’t going good. Because everybody wants to be your friend when things are going good and example of that is I was invested… I’ve done well in private places, I invested in. One was a cryptocurrency company, it was a crypto mining company. And in 2018, the market went to crap and my investment went to crap. And instead of really getting into the market and trying to build those assets and doing everything you can, they really sat on their hands. And now when the market turned around, they didn’t benefit as much as everybody else.
Frank Curzio: To see what you did during those times, being with you, traveling, going to Washington, it’s a testament to your character. I think words I would describe is resilient, courage, persistence, everything that becomes a winner. I’m just proud to really know you and see you through this and just see the success now. It’s really, really cool. You’re probably one of our longest guests on Wall Street Unplugged, and I just want to thank you for coming on, man. It means a lot.
Amir Adnani: Thank you. I really appreciate that, Frank. That was an awesome interview, and I look forward to coming back and doing it again soon. I just can’t wait to the day we’re going to interview each other and you’re going to say, “Holy crap, it’s a hundred dollars a pound uranium.” One of these days that’s got to be the interview. How many times have we interviewed and we’re talking about the $20 uranium, $25 uranium, $30 uranium. That day.
Frank Curzio: No, absolutely. I would think we’d be so excited breaking 30. We break 30, we’re like “We broke 30!” It’s just the expectations are so low right now. Absolutely, man. So, thanks so much for coming on. And as always, we’ll talk again soon, buddy. Thanks, man.
Amir Adnani: All right. Thank you. Bye.
Frank Curzio: Hey guys. Great stuff from Amir. And I meant every single word I said. Character to me is defined on how you perform and how you treat people when things are not so good. Because everybody wants to be your friend all the time. When things are good, they want to be a friend. They love you. It’s the people that reach out to you when things aren’t that good. That’s how you know who your true friends are. I’m always a big guy in character. But to see how hard this guy works… I traveled with him personally numerous times, and just seeing him work a room, talk to shareholders. He’s one of the few CEOs you always see at his booth, unless he’s speaking at these conferences. His influence in Washington is incredible. He just has a way with really big institutions and investors. He met presidents, former Secretaries of Energy. Spencer Abraham is a former Secretary of Energy, which you talked about, who’s the chairman of UEC.
Frank Curzio: To work that hard as he did during those times, when things are horrible… I’ve seen it. A lot of people just crumble up and they don’t care and whatever. He was just pedal to the metal, building his company, knowing that this is going to turn around. It might take longer than expected. And so many downs, much more than ups. It’s not easy being a manager of a company and always worried about costs and always worry about… I mean, you should always worry about cost as business owner, but to the point where we got to make sure that we’re going to survive during a period that nobody really wants our product right now. But we know someone’s going to want it later on and no one’s in this industry at all. But if we keep doing what we’re doing, we’re going to be positioned as one of the best in the industry. And that’s where UEC is right now.
Frank Curzio: It’s just a testament to his character. Personally, I learned a lot from Amir. He’s a great friend. That’s not why I put him in front of you. I put in front of you because he will make you money. He’s one of the smartest people I know within this industry. One of the hardest workers I know. And he always, always, always treats his customers first and his investors first. So for me, that’s just classic great, great character and just a really, really, really good person. But this podcast’s about you not about me. Let me know what you thought at firstname.lastname@example.org. That’s email@example.com.
Frank Curzio: Now, I’m bringing in the ultimate favorite, actually best-looking guy. I’m going to keep going. I’m going to give you so many compliments, Daniel.
Daniel Creech: We’ve got plenty of time.
Frank Curzio: Plenty of time. Daniel Creech, welcome back to the podcast. Parents are in town, right? Which is pretty cool.
Daniel Creech: Yeah. Happy Wednesday, everybody. Yeah. Parents are in town visiting here on Amelia Island, the first time. It’s been entertaining because I’m the worst host. I’m the guy that’s lived here a few years, but they’re like, “Hey, what about such and such?” You know there’s a fort right up on the north side of the island, Fort Clinch?
Frank Curzio: Yes.
Daniel Creech: Yeah. Never been there. And they were asking me, “Hey, is that pretty nice?” “Meh, I don’t know.”
Frank Curzio: Yeah, but you do know every restaurant, every bar, everything of that. Much more than I know.
Daniel Creech: Oh, I do, yeah. Yeah. We’ve hit some bars up. Got to watch the timing of all that. You got to go during the daytime and get your island hops in. It’s a great time. The weather has been beautiful, and it’s fun to play host.
Frank Curzio: Yeah. I made the mistake of going golfing with you and your dad. But your dad, he kicked our asses.
Daniel Creech: Yeah, he showed off a little bit. Made some puts.
Frank Curzio: Like, “Man, look at that guy.”
Daniel Creech: Putting is the biggest Band-Aid in golf. You roll in some 20, 30 footers and life is good.
Frank Curzio: I know. I hated him.
Daniel Creech: That was a lot of fun.
Frank Curzio: I was happy for him. It looked like I was happy for him, but I really wasn’t.
Daniel Creech: Notice we’re not going anymore.
Frank Curzio: Let’s get to what’s going on today. George Floyd’s such a big topic here. To me, when I look at this thing, Daniel, again, it’s a tough story every place. And people are like, “Hey…” I don’t know why we have to comment about it because everybody I think was on the same side here. They act like something terrible was going to happen where he wasn’t going to get convicted on everything. But there’s not a person that saw that video… I mean, the guys in handcuffs and you have him stable. You have your knee on his neck it. Everybody saw that. And for me, the result was expected. But I was just surprised how so many people believe that, that wasn’t going to be the result. And for me, look, I’m glad it’s over with, I don’t know what CNN is going to talk about now. Those guys are broadcasting every single minute of that trial. But for me, I guess I don’t have much comments on it, but it is one of the biggest topics out there so I want to get your thoughts on it as well.
Daniel Creech: Yeah. It’s unfortunately politicized like everything else in today’s world, but it is what it is. I don’t think anybody was defending that guy. If they were… I’ve never heard anybody defending other than his lawyers and the right to defend yourself and all that kind of stuff. Everybody trying to do live shots and just the media gets as much headlines as they can. And hey, we’re guilty of that too. We want to get headlines. We want to get people to click on our stuff and all that. But when you take a situation like this and just blow it out of proportion… From the anticipation of what will happen, there was very few riots, if any.
Daniel Creech: I know you’re Gotham City, New York City there, Frank. Had some rioters I’m sure, which makes total sense because everything happened in Minneapolis, so why wouldn’t you do something in New York or California or whatever? Yeah. They’re not going to simmer down, they’ll do something else. We’ll probably get back onto the coronavirus, and then for the next two and a half years, we’re going to listen to the climate change fanatics again. We’re going to have to listen to how the islands are going to go under water and everything else. Yeah. I’m actually looking forward to that. We’ll make money off the Greenies. That’ll be a lot more fun.
Frank Curzio: It’s funny, because making money off of them was very easy about a couple of months ago, but I don’t know if you’ve seen the prices in some of these things.
Daniel Creech: I know. It’s going to get difficult.
Frank Curzio: They’re down 40, 50, 60% some of these names. I mean, they’ve gotten crushed. And you see the market’s at highs and it’s very heavily weighted towards the biggest companies in the world, and especially FAANG companies with S&P. And you look at the Dow price-weighted index, whatever. But when you look down the line at trends and you see where these companies have gone, some of these things… You have Virgin Galactic down, what? 65% now. You got to love Chamath too. I mean, he got out of that so fricking fast for a nice $250 million pop. And then what is it? I think it’s 500 million for Brandstone. He still own shares, and he’s got 500 million. I mean, in this case, SPACs are great. He’s awesome. These guys are like, hey, if you’re going to give us something on the… If it’s going to be a lamp, we’re going to take it from you.
Daniel Creech: Absolutely.
Frank Curzio: They’ve done it. So yeah, I don’t know if you’d get pissed off at them, but you’re seeing that market really… It’s a lot different now. And they’re not going to find as many ideas and you’re not seeing the money come in, those pipe deals after, because you’ve played the valuations. A lot of stuff is slowing down, definitely. But yeah, just pretty crazy times.
Daniel Creech: Yeah. I mean, like you said, with so much money sloshing around, you’re going to have to get into bidding wars for the same assets. And they’re nothing new, they’ve been around. I know you’ve talked about this in the past. But yeah, if you get in, it’s great. I’m not saying it’s a Ponzi scheme, but you definitely want to get in before the other investors and all that. And you want to pay attention to lockup periods in any kinds of deals that they have with insider shares, because it is just low-hanging fruit and you cannot blame… You go to a zoo and you get in the cage and you get bit and you’re shocked, you’re an idiot. I’m sorry. But that’s the way it is. You don’t go to one of those places and look at these wild creatures… And wall street is a cut-throat business, so you can’t get mad. I mean, you could and you can, but it does no good.
Frank Curzio: Yeah.
Daniel Creech: Eat some popcorn, watch it on the side. Play with very little money if you just watch the markets all the time and you can’t not do something, I get it. There’s action there. It’s fun. But yeah.
Frank Curzio: Yeah. For me, I just think it’s funny the way these things are structured, the way that… It’s just that, I love when they’re launching these things and they merge and you see how excited they are. This is the greatest thing ever, we’re going to change the world. And just four months later, they’re out. Again, if you’re going to give this to them on a silver platter, they’re going to take it and they’re going to take it all day. That’s what they do. And not only that, when you have less regulation, holy cow, is that dangerous when it comes the wealthiest, because they want less regulation because they have the best lawyers. They know what to do. And there’s not a lot of regulation around SPACs, and to the point where you don’t know what those pipe deals are. You don’t know where everyone’s getting their stock. You don’t know.
Frank Curzio: It’s hard to find the lockup periods. It’s not like your typical S1 that you get an IPO with. Things are much different. They’re able to hide a lot more stuff and that’s very, very dangerous when it comes to Wall Street. And I’m not saying it needs more regulation, but I’m just saying it should be the same as other companies. When you could really look through things and say, okay, here’s the company or what is company’s IPO. You could see it. You don’t know really what’s going on with these names. You don’t, you don’t. And Sorkin on CNBC was actually…. And I’m not the biggest fan of his, but he actually did a good job questioning Chamath on some of these investments early on and saying, “Okay, where are you in? Are you fully committed to here?” And he just dodged the questions.
Daniel Creech: Yeah.
Frank Curzio: He’s smart and he’s filthy rich, so.
Daniel Creech: Well, there’s a lot of gray area there. You can’t be specific because you don’t want to be wrong about making 300 million when you’re going to make 800 million. That looks kind of bad.
Frank Curzio: Yeah. I know. I think Virgin Galactic is supposed to be profitable right now, yet they have, what is it? I think $200,000 in revenue. $200,000 of revenue. They’re supposed to be profitable right now. It’s incredible when I think about it. So, let’s move on here, and talk about COVID. I mean, the stats coming out are absolutely amazing. Yes, we’re seeing it spread. And I don’t know what’s going on in Europe, but I don’t know if the vaccine is getting… I don’t know if they’re getting it as quick as us. We’re getting it tremendously. But globally, we’re closing in on a billion people. Did you know that? A billion people.
Daniel Creech: I did see that headline. Yeah. That’s a whole bunch.
Frank Curzio: I mean, that’s incredible. And I know, whatever, you take it, you don’t take it. I don’t know. But I do know there’s a lot of garbage going on. And even when I look at the CDC and you know what, Dan? I want to say this, because a lot of times when I talk about COVID, people get pissed off for some reason, like I have an agenda. I don’t care about politics. I care about safety. I care about you, the customers, subscribers. Now, where do I get this information from? Is from leading doctors all over the place. This podcast has been downloaded in over 100 countries. And I can’t tell you the amount of doctors that have emailed me and people, influential people have emailed me about stats. And they all say the same thing, “Don’t mention my name.” Or whatever. But I have emails here and one of them emailed me and I actually tweeted about this the other day, when he says COVID cases of the USA, are 32 million from 2021.
Frank Curzio: So, if you go over the flu cases in the US from 2016 to 17, kind of similar, 29 million. 17 to 18, 45 million. 18 to 19, 36 million. 19 to 20, 38 million. Again, we have 32 million cases this year for COVID, but what about the flu this year? There’s 0.0015 million cases. Nobody had the flu and they’re like, well, it’s because we were wearing masks. No, it’s because this is a version of the flu. They can’t tell you that though. It’s a worst version of the flu. We know the statistics. You’re not saying that it’s… If you’re over 65, be very, very careful. My daughters were in school. We had it already, but we’ve seen other people have it in school, kids, and it hasn’t spread, which is exactly what the statistics show. So, you can open up schools. For some reason, we don’t know why, which is a great thing, it doesn’t really impact kids.
Frank Curzio: I think there’s 12 kids, which is way too many, but 12 out of the million plus in California who died from COVID, which makes the flu more dangerous. And you’re still seeing schools close, again, for political reasons. But the politics behind this Daniel, I mean, it really me pisses off, but I never under estimate the power of brainwashing people and people getting completely brainwashed. And I have relatives of mine who live in New York and they have no clue. I mean, they got vaccinated. And we had it already, my wife and my family, we didn’t get vaccinated. And I’m thinking about it, I’m not too sure. I’d like to see more studies come out. I wasn’t afraid at all of getting COVID, I’m a little worried about injecting 10X antibodies when I already have antibodies to fight this thing. I’d like to see some certain studies, that’s it, which is fine. I think that, that’s normal before I do this.
Frank Curzio: But we’re supposed to go away with them and they’re like, “Oh, well you need to get the vaccine.” I’m like, “Well, you got the vaccine.” And they’re just conditioned, like, if they disagree, we can never hang out with them, we can’t do anything. But it’s just, who are they listening to? They’re listening to people on television that are just scaring you and not looking at statistics. But the emails that I get here, and even another one from Canada and this one was great, just statistics and everything. It’s not all like, we’re pro open up everything. I mean, for me, I thought everything should be closed in the beginning. But once the stats came in, Daniel, you’re seeing this. And again, from the numerous doctors saying, “Please don’t mention my name, we’re not allowed to say this publicly.” That’s really insane. Isn’t it your job to say? And I know why they’re not, but people are losing their jobs if they say, “Hey, I think this works and we’ve seen progress.” No, no, no. That’s not part of your agenda. No way.
Frank Curzio: But I think people on both sides of the aisle are starting to see this, because we’re seeing states open like Florida, Texas. And yes, cases are rising a little bit, but still, we’re open, things are good. We’re still practicing mask use in different stores. The Walmarts and supermarkets, everyone wears masks in there when they go in. But just to see things locked up completely still, and just the politics behind it, it’s sad because you’re fucking with people’s lives, right? I mean-
Daniel Creech: Yeah. I mean, absolutely. You’re causing unknown and basically incalculable terribleness going forward. The crazy thing here is, just to your point you were talking about with Sorkin and Chamath a while ago, when he wouldn’t get specific. And granted, there is a gray area, because well, we’re in at this amount and this amount and we put so much money in up front. So, I get that. But when people won’t be specific, you just want to ask why. And Dr. Fauci is the same situation there. Jim Jordan, everybody was playing political chess and going back and forth. And he was asking him specifically, “Hey, if everything goes as planned, give us a date. When are we allowed to take masks off? When is life going to get back to normal?” And they wouldn’t even give you a date.
Daniel Creech: So remember, it went from 30 days to slow the spread. 15 days to slow the spread. We’re going to lock down for two weeks. That was over 365 days ago. So, I get you don’t want to be wrong. It’s nervous. It sucks. You have to admit it. But everybody gets it wrong. So, when you have the quote-unquote leading doctor, and I’ll tell you the quote-unquote leading doctor, because I’ve always been a lot more skeptical than your average bear on this whole thing, because you look at data and you look at the policies and politics around it. Dr. Fauci won’t answer a question. He was on CNN the other night. Won’t answer a question about when you can get back to life as normal, even if you’re vaccinated and all this kind of stuff. The President of United States said, you can’t even have a freaking barbecue to celebrate the independence day-
Frank Curzio: Outdoors.
Daniel Creech: Outdoors with a bunch of people. Maybe, as long as everything… The irony is beyond hilariousness. But Dr. Fauci now, is a gun control advocate because he was saying that gun control is a public health deal, and we have to deal with it. So, that just shows you, if you were skeptical at all, and Fauci won’t answer what he’s supposed to be an expert on, and now he weighs in on the public health crisis and gun control, you know it’s just complete BS. The guy just needs to get back in front of a camera, and I get it. I mean, I like being on the podcast. Maybe I’ll change and be a babbling fool like everybody else is on some of those channels, but that remains to be seen. But yeah, it’s all politicized. People need to get over this. The best revolution we can see, is everybody tells the wannabes and do-gooders to go to hell and open everything back up. Take off your mask, open up everything and just ignore everybody. Wave and smile. Kill them with kindness.
Frank Curzio: And I say this a lot, and I really mean it, because you listen to this podcast to make money on stocks. So politics aside, do your own homework on this. I mean, to just listen to somebody blindly, even myself. Do the research on it. I mean, the reason why I’m coming out with statistics, I’m not making this shit up. I mean, I would say, when it came to COVID, I mean, thank God I had the sources I had. I mean, it helped us out tremendously. But it’s amazing how many people just believe a news anchor on any channel, without doing any of their homework themselves. And now, unfortunately, if you try to look… Because I looked at what Fauci said at the beginning, and I wanted to see what he said compared to what he didn’t say. And when I looked at that in May, again, he was like, “No, we’re not going to close anything down.” And again, I’m not just criticizing him because nobody knew what this actually was yet.
Frank Curzio: So, I found all the dates of everything and all the things that he changed, along with Trump and everything, where I was just comparing to what everybody said. Because you want to be accountable compared to what they’re doing now, after learning about the data and all that stuff. If you try to look at that now, Dr. Fauci and the things he said wrong, Google suppressed it. You can’t find it. If you want to look at Fauci saying, we don’t need masks. If you try to Google that, you’re not going to get anything. And he said that, right? I mean, a lot of people said that at the beginning, which is fine, but they’re suppressing it to the point where you can’t even do research on it on, and that’s what’s pretty scary. That’s what’s really scared, because now we’re finding out how much these guys bullshitted us. And that’s fact, right?
Frank Curzio: It’s not six feet, there was never a science behind it at all. Again, unless spit comes out of my mouth into your mouth, that’s the only way you can get it. What do you have to cover your nose for? Am I going to blow mucous out of my nose, into your mouth? Why do I have to have my nose closed? No. Are you going to be… Is it three feet? Yeah. But most of the time, when you’re within three feet of someone, it’s somebody that you know, right? And it’s not strangers and stuff like that. Very, very rare you’re inside three feet, unless you’re at a concert or something like that. But now it’s three feet.
Frank Curzio: Now, surprisingly, it doesn’t live on surfaces. Holy… Think about that for a minute, of everything. I don’t know if you’ve gone to Disney in the last six months since they’ve been open, every other… People go on the rollercoaster and then when it comes back, there’s another one behind it. But that one that’s there, they spray the whole thing down. They spray everything. Everything, everywhere. But it doesn’t live on surfaces. We just found that out. How don’t we know this shit? I mean, the lies that we’ve been told, and just during a season where you’re supposed to vote and everything and you can’t go… There’s no way, don’t even think about going to the polls. Don’t even think about it. You can go get whatever you want at Walmart, you’re going to be perfectly fine. Don’t go to the polls though. Don’t. Don’t. Just mail in your vote, you’re going to be fine. I’m like, come on. Really? Are you kidding me?
Frank Curzio: So I get it, I understand it, the strategy behind it. But we’re talking about lives here. We’re talking about kids. I mean, my daughters were significantly behind and they were in school. Kids that aren’t in school, they lost a ton. A ton. I mean, you’re just seeing the statistics start to come out now with suicide rates and depression, anxiety. And really, Biden? You can’t go to a barbecue outside with your family? Maybe you can in two months from now. Are you out of your mind? Really? Come on. You can’t be that stupid. And he’s not that stupid. Again, the more you can control, the better it is. But yeah, now we’re finding out that, hey, you know what? This is a bad version of the flu.
Frank Curzio: It sucks. I got it. Wasn’t the worst I was ever sick, just like 99% of people that got it. It is dangerous, but we know who it impacts. I mean, this is a serious disease for certain people. Those are the people we need to protect. You didn’t need to keep everyone in the world at home this long, and the fact that they’re still doing this. And Dan, I’m going on and on here, but look at Europe. Look what Europe did. Look at everybody in Europe. Look at them now. Who’s the example now? I think we are the good example of how it was supposed to be done, because you look at all these other places and they’re still on lockdown. I don’t know what they’re doing over there. I have no idea.
Daniel Creech: Yeah, it’s ridiculous. We’ve beaten this horse. What else? Yeah, yeah. I’m with you. Germany’s still locked down. It’s crazy. It’s sad, but hey-
Frank Curzio: It is. But you know what? Now that it’s affecting…
Daniel Creech: We can’t control that. We can only complain about these cats.
Frank Curzio: So, why bring it up? Because it’s affecting the reopen trade. Because now you’re seeing airlines down 10, 12% off their highs, after running considerably higher, because they’re dependent on that international travel. And now, they’re saying it’s not going to return back to normal a lot longer than expected, when you’re looking internationally. So remember, a lot of all profits come from the S&P 500, I think it’s 35% of those profits come from overseas, where you still have things closed. That’s a big problem.
Daniel Creech: Yeah. Yeah, it definitely affects the reopen trade. And you have to kind of balance that. But so much of that, I feel is baked in to a lot of prices here. I mean, they’re obviously looking at with a glass half full. Market’s knocking on all-time highs, et cetera, et cetera. But yeah, it’s aggravating that you’re going to have to deal with headlines like this and kind of take that in consideration. But certain sectors are going to get whacked or just slow recovery, so we’ll continue to follow those. But at some point, massive shifts will occur, and hopefully, we can get ahead of that and make some subscribers some money.
Frank Curzio: The last thing I want to talk about is earnings. It is earning season. We saw banks blow it out of the park. We’re seeing a lot of companies blow it out of the park, as expected. The average gain in these stocks, at the earnings beat, is 30%. If that holds, it’s going to be the largest increase or the largest beat ever, since they’ve been keeping track of this thing. And again, I think it dates back to the fact, to 2006 or 2008 or something like that, which is insane. But again, the banks reported those are the biggest profits. But also, oil companies are reporting massive profits there now, due to just such big losses. But you look at a company like Netflix that just came out, and everyone’s like, “These numbers are horrible.”
Frank Curzio: I mean, to me, I don’t know how they were going to add a ton of people. And yes, that number is lower than I thought it would be. But just to see this come down the way it is, where we’re looking at companies that are beating. Lockheed Martin beat by a lot. We saw Procter & Gamble beat by a lot. All of them said, high cost and they’re raising prices and whatever. And outside of IBM, which was a super depressed name that beat and the stock went higher. But these other names that have ran considerably higher, that reported and beat earnings by a mile, have come down. And then you had the Netflix’s that came out with earnings that didn’t meet expectations. And numbers subscribing to those, didn’t meet expectations. And that thing got hit pretty hard.
Daniel Creech: Yeah. I saw those numbers come across briefing yesterday, and if I had to guess, I would have thought the stock was going to be down a little bit just because they missed on the added subscribers. So, I know that, that’s the big headline there. But if you look through a couple of talking points, margins are going higher. They’re talking about buying back shares to reward shareholders. They’re going to manage between 10 and $15 billion in debt. They already announced that a quarter or maybe two quarters ago that, that was going to be their plan going forward. They’re amazing though. They’re getting a ton of… They’re about to release a lot more seasons of different popular episodes or shows. I’m not a huge Netflix fan myself. I don’t even own a TV, but a lot of my friends love Netflix. And you can have more than one thing.
Daniel Creech: I like how they talk about competition. I mean, if you’re an analyst, you got to ask, “Hey, what’s Disney doing? What are you seeing on Hulu or YouTube and all that.” But one of the talking points they said on their conference call was, “Yeah, these guys have been around.” I mean, Disney is newer on the streaming side, but they’ve been competing with these people for years and years and years. They have excellent shows. They increased their margins, they increased their prices. And I know you had a big, good rant on inflation at the beginning, so you want to look at companies like this.
Daniel Creech: How often do you see a stock drop 10% and the following morning, you have analysts coming out and upgrading the stock? Screw the net ads number. Who cares? I mean, to a certain point, I get it. You got to pay attention. But they’re raising prices. They’re increasing earnings. They’re going to manage their debt and cashflow going forward. And now they’re talking about rewarding shareholders. That’s great. It’ll be interesting to see if that theme sticks. If you only want to see growth and you don’t reward companies going higher because of something like this, but this was a great play. I thought this was a solid earnings. And I think management’s doing a real good job there, so…
Frank Curzio: They guided earnings higher, right?
Daniel Creech: Yeah.
Frank Curzio: So, they guided earnings higher. That operating margin, 27.4%. Much higher than expectations. But just, if you look a year ago, operating margin, 16.6%. Guys, that’s insane. That’s a really massive, massive increase. I mean, you would see year over year, 16.6 to 17.68, will be a huge… I mean to go that high, is showing that they have people who love that platform, that they could easily raise prices. They successfully have done that, but we have to see if the model changes, because… It’s the same with Twitter. And it was the same with IBM. I mean, IBM, it was revenue and revenues declined tremendously over a period. I mean the earnings growth was enormous, because yeah, their revenues declined because they got out of these fricking shitty businesses that cost a fortune. Where yes, it would generate a lot of revenue, but the cost to manufacture that was even higher.
Frank Curzio: So, they got out of that business, got into cloud. Higher margins in the earning surge. But now revenues back into play and revenue is going to increase, and maybe that’s why IBM went higher. So, there’s always different a metric, and here, it is subscribers. So, I’m interested to see what Disney is going to report. They’re going to report a big increase in subscriptions because they’re giving this shit away for free, so I get it. But at the end of the day, in this type of market… Twitter too. Twitter got hammered because they weren’t adding… And they got to, what was it? 300 billion, I think, people on Twitter. And it was just a number that you really couldn’t get over, whatever it was. But if you look their earnings, they skyrocketed. They found out how to monetize the list, and earnings just took off. And it took a while for people to understand that.
Frank Curzio: Those numbers really matter. Yes, you want to see growth in subscribers. And again, it’s going to be more future money down the line. But I would tell you this about Netflix. I think it’s a screaming buy here because there’s one thing that I know for a fact, as someone who has been covering this stock for a while and have missed it, and that’s Reed Hastings. Reed Hastings is the Michael Jordan of Wall Street.
Daniel Creech: Oh, dropping the MJ.
Frank Curzio: He never loses. He never loses. He never ever loses. Everybody that doubted this guy from the day… And we interviewed guys. Listen to that interview of Mark Randolph, who’s the co-founder of Netflix. He still own shares, he said. But that meeting, and you can look up this online, it’s a great story with Blockbuster. And Blockbuster’s laughing at them because they had high costs. And this was right after the bubble crash. And they went in there and said, “Company’s worth a lot more than it is.” Then Blockbuster laughed him out of there. And he said, “Okay.” And he went back and said, “Now, we’re going to have to destroy Blockbuster.” And he destroyed Blockbuster.
Frank Curzio: And someone who’s listened to those conference calls, think about this when you listen to conference calls. You get a CEO on and they’re talking about what they did, here’s what I’m doing. All this guy talked about, is Blockbuster. That’s all he talked about, how Blockbuster’s terrible, how we’re beating them, how we’re doing this, this and this. And it was just, the whole thing was dedicated to Blockbuster. And then whenever someone enters this industry, which we’ve seen for the past six, seven, eight years, these guys are always like, “Yeah, competition. That’s good.” It’s building streaming or whatever. But the people that doubted this guy and thought that the cable companies would crush them. And now, look at everybody getting into streaming.
Frank Curzio: Right now is a competitive… Right now, I think this is the best thing to happen because the competitive spirit is back. And he’s going to show everyone in the world, why this is the greatest streaming platform, why nobody’s even close, not even Disney. I think it’s a great buying opportunity for Netflix here. I mean, yes, those users are coming down. They’re going to be buying stock, which is going to support downfall a little bit here, if it pulls back even further, below 500 or whatever it is today. But these guys have the best content. Everybody wants to work with them. Every actor, which is the key to all this stuff. The greatest actors, all love working with Netflix. They all love… Again, these guys do the right thing to everybody and everybody loves them in terms of the people that they need on that platform.
Frank Curzio: And man, I just think it’s going to be an incredible buying opportunity, just because of Reed Hastings. I think he’s that competitive. I think he’s going to go nuts. I think he’s going to really accelerate and distance himself from Disney going forward, even though Disney’s adding a lot of subscribers. But they’re going to be taking massive, massive losses in doing so. But anyway, pretty good earning season thus far. And real quick, which was interesting, man. I thought it was really cool is, did you see the Canadian National Railway and Kansas City Southern and Canadian Pacific, and that whole thing go down? Holy cow.
Frank Curzio: I mean, that was… I mean, so basically you had Canadian Pacific bid for Kansas City Southern, and it was kind of a done deal. It was a done deal. It was like, ah, okay. I think it was 275 or something like that. And out of nowhere, Canadian national railway came in and said, “We’ll give you 325 a share.” And just looking at what’s going on in this business, it’s so amazing, right? You’re not going to see more railroads built or anything. These guys constantly just do transportation, making a fortune. But just to be a company that you’re all psyched up about, and then you’re like, “Wow, this is going to be great for us.” And then someone to come over the top, it’s going to be interesting to see where this bid is. And again, just signs of a bull market here, in a top almost. When you’re seeing that much of an outbid, I was just surprised.
Daniel Creech: Yeah, it was a 21% increase from the previous bid. So, they bumped it up, I think five… I think it jumped from basically 25 to 30 billion. What better timing for you in the inflation, because you want to own real assets during periods of inflation. Inflation is here in a lot of different aspects. It will get a lot worse. I mean, not because we have a crystal ball, just because of the policies that we’re creating and implementing world governments all over. So, you want to own these assets before all that really kicks into place. Nothing more hard assets than railways. You have to ship everything. No matter whether you have high demand or low demand, they got to move. So Buffett, again, looks brilliant. I know it’s a huge capital intensive business meeting. No matter how much revenue you’re making, you are pouring billions of dollars back into this company to maintain rails, cars, all that kind of stuff.
Daniel Creech: But Buffett looks good again, because basically, he bought, was it Acacia SF years ago? A lot of people made the same argument about getting ready for inflation. And they’re going to have pricing power, so I don’t think it’s a coincidence that you have this bidder. Either one of these, Frank. Did you see the headline or the stat that, if either one of the mergers work, it’ll be the first Canadian, New Mexico connected railway, I guess, or company. So, that’s kind of wild.
Frank Curzio: That is wild. No, that’s good stuff. And I mean, I know when they sign deals like this, that there’s always a termination clause. Or if somebody comes in, it’s a hundred million dollars or whatever, 50 million. I don’t know what it is. I got to see what that termination fee…
Daniel Creech: Take a guess. Take a guess.
Frank Curzio: Do you know it?
Daniel Creech: Yeah. It’s in the Wall Street Journal here.
Frank Curzio: How much are they bidding for it?
Daniel Creech: Well, I’m talking about the first.
Frank Curzio: Yeah. The first bid was for what? Because that’s the way-
Daniel Creech: 25-ish. 25 Billion.
Frank Curzio: So, 25 billion Canadian Pacific. I would say 200 million.
Daniel Creech: I saw seven.
Frank Curzio: Are you kidding me?
Daniel Creech: Yeah. I don’t have the Wall Street Journal right in front of me.
Frank Curzio: It’s only 7 million? What’s 7 million to this company?
Daniel Creech: Let’s timestamp. No, 700.
Frank Curzio: Oh 700? Oh, I thought you said 7 million. I was like, are you crazy?
Daniel Creech: No, seven. I meant seven. You were like, 100 and I was like, no, seven. 700.
Frank Curzio: 700. Oh, that’s better. Because I was like, 7 million?
Daniel Creech: Now, we need to timestamp this, because…
Frank Curzio: 700…
Daniel Creech: To show you how unprepared I am. I had that with me and I must’ve not grabbed it. So, if that’s completely wrong, I’ll come back and admit it and everybody can poke fun of me. But yeah, it was huge.
Frank Curzio: Canadian Pacific, I mean, you’d think they weren’t in the driver’s seat. But 700 million is a lot of money for doing nothing. Basically, you just spent whatever, $5 million on hiring Goldman Sachs or whoever to put this whole entire thing together and structure it, or Morgan Stanley. But at the end of the day, that money is for free. You just got that. It’s like a settlement, right?
Daniel Creech: Look at this breaking news, Frank. We’re on the money here. Canadian Pacific would have a chance to match it or walk away with a $700 million breakup fee.
Frank Curzio: Breakup fee. That’s incredible. That is a nice number. And that’s what you do. If you are a business and you’re buying, you don’t want competition to come into the market. There it is. But Kansas City Southern is in a great position. And Canadian National Railway, if they’re going to purchase that, they have to include that 700 million in that price tag, right? So yeah, that is interesting. And it’s just funny how it was that much. I thought it was going to be very, very high. It was funny. All right, Dan. Thanks for stopping by, buddy. Love talking about just relevant, everything that’s going on right now and getting positive… What’s your email again? This way-
Daniel Creech: Daniel@curzioresearch.com
Frank Curzio: I love it. I love it.
Daniel Creech: D-A-N-I-E-L.
Frank Curzio: Especially when you talk about politics, all those things coming in. I’m sick of getting them, so I don’t have to forward them to you anymore. Daniel with a D.
Daniel Creech: Daniel with a D. Like doctor.
Frank Curzio: Get those emails over. Ah, that’s so great. Well, thanks so much, man. Thanks for stopping by brother.
Daniel Creech: All right. See you all next week. Cheers.
Frank Curzio: All right. Guys, last thing here. We’re taking Crypto Intelligence offline soon, so we did cut that price by 50%. Great, great stocks in that portfolio. We’ve done tremendously, as I told you. I think we’re going to see so many disruptions in that industry. Things that we’re seeing, even security tokens and some of the stuff that’s going on, we just have the biggest capital raise from a security token company ever, which is awesome. So, we’re seeing that industry develop. And having access to so many of these things is really, really cool. And you can see by the interviews we have too, with BlockFi and major company… $3 billion company. Blockchain.com is advertising with us. It’s a $5 billion company, so that’s really cool.
Frank Curzio: So, just the context of that industry is helping us find new ideas like crazy, and it’s working and it’s awesome. And we’re very, very careful too. So, you’re not going to see us… If we’re buying something that’s up a little bit. And yes, a lot of this stuff has gone higher. We’re taking small positions, adding over time, and we’re very careful of our due diligence of all these tokens, because there’s so much bullshit out there. You really need someone that knows what they’re doing. And it’s sad, because I know some people that write these and they’re like, do not understand what’s going on. In a bull market, it’s fine. But in a bear market, a lot of these things are going to get destroyed. Instead of getting destroyed, it’d be nice, hey, let’s add to some of these good things. And we teach exactly how to invest everything, right from scratch.
Frank Curzio: So, it’s really cool. We have so many new subscribers that came in, I want to say thank you. I think you’re going to be very, very happy over the years because the dedication, the research. I do 40 minute videos, just teaching you everything. Just start learning about it, even if you don’t subscribe to a newsletter. Take advantage of it. Start learning about cryptos. I don’t know if Bitcoin’s going to be the winner or not. Maybe it is, maybe it’s not. Right now, of course it’s the winner. But there’s just going to be so many developments within Blockchain, within crypto. You saw the DeFi movement, you saw NFTs, everything’s going to digital. You’ve seen all the biggest banks in the world now start partnering with a lot of these specialized companies, which we benefited tremendously from, who are in this market and full crypto service companies.
Frank Curzio: But this thing is here, it’s now. Probably see a little pull back, that’s absolutely awesome. It’s going to give us a chance to find lots of more ideas. But really exciting times in that. And thank you so much for so many people subscribing. Again, that’s a 50% discount at curzioresearch.com. It’s a banner on our site, if you want to subscribe. If not, this week, it is going to end. So, I just wanted to bring that up as our last thing here.
Frank Curzio: So, guys, that’s it for me. Thanks so much for listening. Thanks so much for all the support. I mean, just the amount of people downloading this podcast, it really just allows us to get almost anybody we want on this. So if you have any ideas of who do you want on this podcast, email us at firstname.lastname@example.org. We’ve got amazing guests coming up. Really, really cool, so really exciting times. And again, I just want to say thank you. I’ll see you guys in seven days. 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 hosts and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility.
- Guest: Amir Adnani, CEO of Uranium Energy Corp [44:53]
- Educational: Lockdown measures… Netflix’s earnings… and Kansas City Southern [01:27:18]
On today’s show, Frank shares details about the special 50% OFF deal he’s currently offering on his advisory, Crypto Intelligence.
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Act now to claim your 50% discount to Crypto Intelligence—this deal won’t last much longer.