The ongoing drama between Elon Musk and Twitter… Twitter’s threat to democracy… And whether Trump will be returning to the platform. Plus, who blew up the Nord Stream pipelines? Why oil prices will soar past $100 per barrel… And how to use politics to your advantage when it comes to investing.
- The Musk/Twitter saga continues [0:30]
- Tom Brady’s divorce… And the lucky fan who caught Aaron Judge’s home run ball [10:30]
- OPEC’s major production announcement [15:15]
- Who’s behind the pipeline explosion? [20:55]
- Saudi Arabia’s warning to the U.S. [27:15]
- How to use politics to your advantage when investing [32:50]
Wall Street Unplugged | 955
Why triple-digit oil prices are inevitable
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: What’s going on out there? It’s October 5th. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break the headlines and tell you what’s really moving these markets. It’s Creech Day Wednesday. And Creech has his Beetlejuice shirt on, which I love because it’s a little bit black and white checkered. If anyone is a Beetlejuice fan, which I am a huge Beetlejuice fan, and Michael Keaton fan, which we just named a bunch of movies by him.
Daniel Creech: Yeah, Michael Keaton.
Frank Curzio: What’s going on man? How’s everything?
Daniel Creech: Hey, happy Wednesday. Best day of the week. Happy fall day. It was cold this morning, which was just why I’m in long sleeve shirts. Arizona has ruined me. I don’t want any emails, email@example.com, about what a wimp I am. If you’re in real winter, good for you. However-
Frank Curzio: It’s like 65 out.
Daniel Creech: Yeah, but it was 50 when I came to work this morning.
Frank Curzio: Oh, my God. It’s like an hour.
Daniel Creech: Hey, Arizona, one of the best states in the country, ruined me. I’m a wimp when it comes to weather, I admit. Hey, I love this time of year. It’s fall. It’s beautiful. It’s amazing. Yeah, but it’s long sleeve weather, long pants, weather. Good golfing weather, Frank.
Frank Curzio: It is weird in Florida too, because in Florida like 60 degrees, that’s where you see the jackets, and they even wear ear muffs and stuff, and I’m wearing shorts and a t-shirt.
Daniel Creech: Well, hell yeah. You’ve got all this humidity down here. People think of humidity and the heat, which makes it tough and all that. They forget about it. It’s 24/7.
Frank Curzio: It’s weird.
Daniel Creech: It’s in the winter. That makes it more cold, bone chilling.
Frank Curzio: I’m wearing shorts unless it’s below 50 basically, 55 I’d say. All the time. Anyway, but okay, a lot going on today. We have the OPEC, which will get to in a minute and also news on your favorite person in the world.
Daniel Creech: Which one?
Frank Curzio: Elon Musk with Twitter.
Daniel Creech: Elon Musk. Hey, I’m starting to become a fan of his because he-
Frank Curzio: You are not a fan of his overall though. You’re not crazy about him?
Daniel Creech: I’m not overall, but I’m coming around on being a fan of Elon Musk only because he’s upsetting. Oh my goodness. I hate to even talk about CNBC sometimes because whoever they just had on there… Why is Elon Musk winning me over? He’s winning me over because people are now attacking him for buying Twitter. And they are saying that now Twitter is going to be compromised or corrupt or used to hurt democracy. When you literally have Twitter that kicked off a sitting President from a social media platform. But yet, Elon Musk is going to hurt democracy by this. The idea that they have to come up with arguments like this that are so ridiculous that if anybody even takes them remotely serious, just shows you how dumb the world is to lack of a better sense.
Frank Curzio: Politics right now and the next month’s going to get really crazy. I mean this, I saw the Italian lady and I didn’t know anything about her, who just won Prime Minister, whatever. And I saw her speech and she was just about family and she was conservative. She’s not like a diehard ultra conservative. She was just like, “Family. And we’re not just a number here, and we can’t let people take away our families,” and something.
Frank Curzio: And then, I saw CBS put on something that was comparing her to Mussolini. I was like, “What? Wait a minute. What did I miss here?” And you don’t know because people just, they believe what they watch and a lot of people don’t have time to do research sometimes on both sides. I mean, we see a lot of this on both sides which is crazy.
Frank Curzio: But the whole Elon Musk thing and is it going to be good or bad in terms of free speech and whatever? I think what we’re seeing is really from the left is, and this is why the metaverse is such a big deal, and I think so many people don’t understand it. Is it gives you right to your own digital property and people are sick and tired, especially the young generation who was all digital and grew up in this digital world. Even millennials who are 40 and under now. They hate the fact that Facebook, you’re on a platform, they’re stealing all of your data, everything you do and selling it to people that you really don’t even know and making a fortune off it. This is you. They’re make a fortune off you, off your data.
Frank Curzio: And this whole thing about disrupting that market. It’s the reason why the companies who basically own the data, all the big tech companies are the biggest investors in the metaverse. And we’re talking about not, “Hey we’re going to invest a $100 million here.” They’re investing tens of billions of dollars. It’s $170 billion that’s flowing into this.
Frank Curzio: But even with Musk taking over this platform from a political angle and saying, “Oh it’s going to be corrupt.” Free speech is free speech. I mean, you’re not going to go in there and say you want to kill children and stuff like that. But free speech is free speech. And that means whether you’re conservative or a Democrat or whatever. I mean, someone has a right to burn the American flag in front of you and say, “I hate the United States, and it’s the worst country in the world right in front of you.” That’s what free speech is it. And that’s what our country was founded on. That’s it. The fact that you’re afraid that it’s going to go more to a free speech platform is just really disturbing to me. I just don’t get that.
Frank Curzio: More importantly, I don’t understand why Elon Musk is actually purchasing Twitter here. And that’s a bigger story. And why purchase at $54? If you look at that price and you take where the first announcement was, and then he said he’s not going to buy it, and back and forth and all the bullshit. He’s buying it at an exceptional premium to where if he removed his bid, the stocks’ going $25 probably to $20-$25. Only if you take the comparables of all the social media companies and Facebook and stuff like that of how far these companies come down, the advertising platforms, do they have cloud and stuff like that, it should be down around 60%. And the level it’s trading at, that’s incredible. And he’s decided to do this deal at $54, which is surprising to me.
Frank Curzio: I don’t plan to get him. I love him because he’s so unpredictable, and I love that everybody hates that he’s so unpredictable. I mean, the fact that just SpaceX, affordable, just go to space. The fact that he was able to build Tesla with all the politics. You’re not allowed to open up any shops, any dealerships. And again, what he did to accomplish that and where it is right now, and again, evaluation’s crazy, but just how he was able to do that is incredible. It’s really incredible of what he built.
Frank Curzio: I think we’re going to see that in future generations, of they’re going to be talking about him in textbooks. But he is out there. And this, I don’t understand. Maybe you could explain it to me. Why buy it when you could actually pull your bid? They fine you. You pay the fine or whatever. He said, “I was going to buy it. I don’t believe the bots.” I don’t even know the bot story. I don’t know, the whistleblower story’s bullshit. But you basically say, okay, it’s a billion dollars if I come out of it. It’s a billion dollars.
Frank Curzio: And then, because right now, you’re overpaying for Twitter by about $10 billion. And you can come back next year and then purchase it. That would be perfectly fine. But I don’t understand why you would purchase at this price. But the fact he is, I guess it’s big news and they love him because he gets a lot of clicks, and he’s all over every station no matter what the market’s doing, which is giving back a lot of the gains today. But it’s just one of the top stories. My question is why purchase it at this price? I mean, you could purchase it, but you can get it for so much lower if you wanted to.
Daniel Creech: I don’t know what he’s thinking. Trying to get in that guy’s head is not something I’m interested in. He’s contract bind. I mean, that’s why he’s buying it here is because that’s what he said he was going to do. What value he sees there, what he plans are? The fun thing is, what we need here at Curzio Research, Frank, is a countdown clock. A countdown to when Trump gets back on Twitter. Man, I miss those days. I’m not even a big social media guy, but I used to love just reading.
Frank Curzio: Oh, on both sides. Everybody misses those days, especially the CNNs and MSNBCs.
Daniel Creech: I just loved-
Frank Curzio: I mean that was his biggest downfall was just stupid tweets. I mean-
Daniel Creech: No it wasn’t. Not at all. I loved seeing-
Frank Curzio: No, no, no. It is. It’s the credibility of this.
Daniel Creech: I would drink coffee in the morning and be like, “I wonder what this crazy guy tweeted at 4:00 AM this morning?” And I would just laugh and fantasize about it.
Frank Curzio: Entertainment is fun. Just saying.
Daniel Creech: Countdown clock, Curzio Research countdown clock when Trump gets back on Twitter.
Frank Curzio: I mean, he’s billing his new platform, and that platform still-
Daniel Creech: I saw they bought some time to make the deal. Who knows if that’s going to kick off.
Frank Curzio: It’s still a SPAC. They’re losing some of their buyers, which is not nothing to do with Trump, it has to do with the whole entire industry people coming out of SPACs right now, and the pipe deals aren’t closing. I think 30% of the pipes haven’t closed on the deal.
Frank Curzio: But now, the whole idea is to get him on a platform to speak. And now, he’s banned, an ex-President banned from speaking, which is crazy. I mean, you could say again, it’s a free. I don’t care how much you hate Donald Trump. How can he be banned, right? I mean, give me a break.
Frank Curzio: And you have Elon Musk saying that once we get Twitter up and running, Trump could come on. But Trump’s saying he’s not going to go back on Twitter no matter what because of this new platform that he’s creating. But I don’t even know if that’s going to get off the ground. But it will be interesting to see how this is.
Frank Curzio: But again, he committed to this. And then, he talked about the bots and everything, and I’m sure he can get out of it if you wanted to, and it’ll cost a pretty penny, but it’s going to cost a lot less than buying at $54, because it’s not worth $54, not in this market.
Frank Curzio: And no matter what you do with it, I mean, maybe years from now, it can. But right now, you could really pull that bid and save probably 80% of your wealth by doing this, and we’ll see what happens. I’m not worried about it being a free speech platform or it’s not a free. We’ve seen the suppression throughout the election. We’ve seen the suppression throughout COVID. People have an agenda when it comes to these social media companies, they don’t want you to post whatever you want.
Frank Curzio: You’re posting facts and getting thrown off if you didn’t support their agenda which is insane. I think everybody realizes that now, especially through COVID, where politics and money trumps the health of your children. We know that now. That’s how much these guys want power. It’s more than that. And again, it’s on both sides. It’s crazy.
Frank Curzio: But this whole story about Twitter and just the background is the back and forth. We’re talking about politics because of it, which brings up emotions, which brings up more clicks. Overall, it’s really not a big deal in terms of investing. I mean, for me, I would short the stock here because there’s a good shot he could pull out, and if you’re wrong, you lose a little bit of money. Because what’s your downside, a couple of dollars here? It’s at $51. The deal’s supposed to close at $54.
Frank Curzio: I think there’s probably a good 40% chance that this deal doesn’t go through. If it doesn’t, it’s going to $25. I don’t know. I mean, if you’re going to play Twitter that way, I wouldn’t be buying it at $52 to arbitrage to get $54. Especially when this guy just wakes up one day and says something, and who knows?
Frank Curzio: And just his Twitter feed is hilarious because he says things that nobody knows what they mean. Everybody tries to interpret them all. I think you’ll see the price fluctuate until this closes. It was just a surprise that he came out and said, I’m going to buy it at that price. Which is, again, he could do it for a lot lower if he wanted to.
Daniel Creech: Well, to go down the rabbit trail, I believe the hearing or the trial was to start the 16th or 17th of this month. And there must be something. I mean, this guy’s unpredictable, but he’s a great marketer. He obviously did an about change to buy this now before going through with lawyers and going to trial and all that. The low hanging fruit there is, well, he must not want something to come out or whatever. Why go through this deal? Anyway, this is good entertainment. This is our version of sports, Tom Brady getting divorced. This is just the market’s soap opera going back and forth.
Frank Curzio: Who’s better than Tom Brady? I think every man wants to be Tom Brady. I mean, not only do you have the hottest girl in the world that you’re with. And he’s the perfect person, right? I mean, it’s not even you see a lot of stuff come out bad about him or whatever. Now he’s doing all kinds of commercials. He’s to himself. But the media doesn’t press him or nothing. They don’t do what they do to other athletes in other sports, where they’re pressing them all the time. They’re very gentle with him. And then, now, he’s going to get divorced, and he is going to probably get paid a fortune, since his wife makes a lot more money than him. I mean, man, it doesn’t get better than being Tom Brady, I don’t think. I really don’t.
Daniel Creech: Well now, he is going through a divorce anyway.
Frank Curzio: But anyway, the guy is frustrated, he’s pissed, and you can see it in his game and all that stuff’s taken its toll, and we’ll see what happens. But obviously, I think what happened really, Daniel, is he got the chance to go home and knew that, “Okay, I got to spend the entire day now with everybody.” And he was probably like, “Holy shit, there’s no way that this is happening.” And said, “I don’t care. I’ll retire, and I don’t care if I get concussions or whatever. And I don’t care if we lose.” Because Tampa Bay’s not really that good of a team this year. They’re not going to win the Super Bowl.
Frank Curzio: But it is, it’s interesting. It’s interesting that he went back after saying that he was retiring. And I feel bad for the guy who bought his last football touchdown. Didn’t they pay like $700,000 for the last touchdown he threw right before we said he was going to retire, and then he came out of retirement.
Daniel Creech: Yeah. I don’t know.
Frank Curzio: Sucks for that guy, huh? It’s like Aaron Judge’s baseball. It was funny when he hit-
Daniel Creech: I heard about this. Yeah, there’s a record.
Frank Curzio: His 62nd home run and some guy caught it. But there was a guy about six seats over, and they’re like, “You fell.” He didn’t fall. The guy actually did something that was very smart. What he did, as soon as that ball was coming, he jumped down from the fence, which I don’t think is a far drop because he’s perfectly okay. If the ball came just like 10 feet, five feet lower, nobody would’ve been able to catch it and it would’ve hit that part of the stadium and fell right down. He would’ve had the ball. Big deal, you get kicked out. I got the ball. It’s worth millions of dollars in the future.
Frank Curzio: He actually as soon as that ball was hit, that was his plan. He’s like, if it’s coming and it looks like it’s going to hit the wall right below where I am, where they’re seating the wall right below them-
Daniel Creech: Nice.
Frank Curzio: It’s going to fall down. And he jumped down, he didn’t get hurt and the guy actually caught it. It was weird the guy that caught the ball, it was like no fight, nothing. I thought people would be punching each other for that ball and jumping all over. Nobody. It seemed like he was the only guy there and just caught it. He was like, “Yeah, I’m a millionaire.”
Frank Curzio: Hopefully, he doesn’t do something stupid like give it back to Aaron Judge, which is the stupidest thing you could do as individual. I’m sorry, but Aaron Judge does not care about you. He doesn’t give a crap about you. That’s your family. You get to put your kids through college. You don’t want a baseball bat and a couple tickets. Please, use it to your advantage. Support your family. Support maybe a future generation or whatever. I don’t know if $2 million will be enough to do that depending on your spending habits. But don’t just give the ball back to them. He’s worth like a hundred million dollars. Don’t just give the ball back. It makes no sense at all.
Frank Curzio: It makes no sense at all. People going to be like, “Wow, you’re such a nice guy.” And then, that’s it. You’re done. And seriously, you’re going to get a signed baseball bat or whatever and a couple games, front row seats. You’re going to be sitting a dugout one day. No. Take the money and support your family.
Daniel Creech: Take the money and run.
Frank Curzio: Jesus. Anyway.
Daniel Creech: I love it. He just set a record for-
Frank Curzio: He’s got the all-time home run record.
Daniel Creech: We’re getting a lot of great feedback, so thank you. Keep it coming, all the great subscribers and listeners. One guy made a note and said, “Hey, I know you’re not a big sports fan.” I’m a sports fan, I just don’t care about a lot of sports.
Daniel Creech: He set a record most home runs in the season?
Frank Curzio: American League record, all-time record for American League. He passed Babe Ruth and-
Daniel Creech: In a single season, because it was 62.
Frank Curzio: Yeah. It was 61. He hit 62. Babe Ruth hit 60. But everyone that’s above him took steroids. You had Mark McGuire that was above him, I think. Where was he at, 70 or something? And then you had Barry Bonds, I think he’s at 73 or whatever. But these guys, it was during the steroid era.
Daniel Creech: Okay.
Frank Curzio: I mean, you had second basemen, who was at Boone that I was playing second base that hit like four runs one year? And the year he took steroids to hit like 54.
Daniel Creech: Nice.
Frank Curzio: I mean, listen, it made the game more fun. People were watching. People were writing. I remember Sammy Sosa and all that stuff. I mean, Sammy Sosa hit a lot of home runs as well. But all of that is of tainted. This isn’t a tainted record. This to me is the record. And that record for home runs may be one of the greatest records in sports.
Daniel Creech: Nice. Right.
Frank Curzio: I mean, arguably, you could say that… You guys know I’m a big sports fan.
Daniel Creech: Hey, just because I’m not interested doesn’t mean I don’t appreciate it. I just don’t follow it.
Frank Curzio: Yeah, you could say Joe DiMaggio’s streak, was it 56 games in hit streak? I mean, but there’s some streaks. Like, Tiger Wood’s streak is amazing too. How many cuts did he make? You probably know that.
Daniel Creech: No, I don’t know about that.
Frank Curzio: It was insane. He made so many cuts.
Daniel Creech: He basically won for a decade.
Frank Curzio: You know how hard that is? No, no cuts. He made the cut.
Daniel Creech: Okay.
Frank Curzio: Was 90 to a hundred? I mean, you know how hard that? That’s like not having a bad round in-
Daniel Creech: But Frank, when you’re in first every time, it’s easy to make cuts.
Frank Curzio: Man, that’s hard. You don’t play golf. I mean every guy, Spieth, Mickelson, you all have a bad round. I mean, to be that consistent.
Frank Curzio: Anyway, I want to get to some really big news, which you, big follower of oil. I’m a big follower of oil. I visited almost every major shale area with my buddy Cactus and hopped on rigs and had so much fun. And I really learned about the shale industry.
Frank Curzio: That’s when I started learning, Daniel about political agendas and the bullshit behind everything and you got to be careful what you read. Is 2010, 2011 when I started going to these shale areas. And that movie came out on HBO that showed, you lit the faucet it on fire or whatever and how it’s killing. I really thought I was going to go there saw animals dying and I’m just going to be in earthquakes and shit because that’s what you read. Which is all a 100% bullshit.
Frank Curzio: You can’t drill thousands of feet into the ground and the chemicals are better now much, much better, which is good. They cleaned that up. In order for it to impact water, fresh water, I mean, you have to have these chemicals magically travel upward through rock and go all the way to fresh water, which is about a few hundred feet deep. It’s impossible.
Frank Curzio: And then, they have these tails ends and these ponds and everything. And again you could throw all this stuff in a truck and dump it in water. That’s different. But fracking doesn’t cause it. That’s a person that causes it. And realized this technology and how amazing it was and did well with our subscribers.
Frank Curzio: But now, we’re seeing a different oil, where OPEC is deciding to just announce they’re going to increase by two million barrels. And this is at a time where we have, our current administration just depleting the Strategic Petroleum Reserve, the SPR.
Frank Curzio: Just to put it in perspective guys, and I’ll let you go here, just want to bring everyone here. The SPR, if you’re not familiar was set up 1975. We had a massive short of gasoline where there’s lines everywhere and we were really reliant on OPEC back then because we didn’t have shale technology where we’re importing more than 50% of our oil. Now we import around 6% and the only reason why we import that it’s 800,000 barrels. I mean turns out to be like even if you go to the net, is because it’s very refined and that’s like the best oil through OPEC.
Frank Curzio: We no longer need OPEC through shale technology. But since oil prices in Russia and the whole war started and we saw stupid ridiculous ESG policies which forced drillers to cut back tremendously, now we have this whole entire market where oil prices surged to $130 and went crazy. And to lower gasoline prices, which were averaging $5. They’re about $3.25, $3.50 now. We have the Biden administration who’s releasing, just taking out of the strategic oil reserves a million barrels a day. That’s where we are right now. They’re taking a million out.
Frank Curzio: Now OPEC said no way, F that. Oil price are coming down because of that. And it’s a big deal Daniel, because if you’re looking at the math behind it, I mean that million amounts to about eight and a half percent of our total production in the US, a million barrels. We produce what, around 12 million barrels per day. That’s a million. That’s a very big increase.
Frank Curzio: I mean if you want to put it in perspective, if you’re looking at companies where net margins for consumer staple companies are like 6%. The use for energy companies over the past five years pre-COVID are 4%. I mean that’s how much. I mean 8% is a really big deal. And you saw it like it’s impacting gasoline prices.
Frank Curzio: Now we’re at this market where holy cow, OPEC’s deciding to cut. And what does that mean? I mean what does that mean? What are your thoughts on it? And a lot of people have different opinions. It could affect oil prices. Oil prices going to surge from here. What do you think?
Daniel Creech: There’s so much going on around and within the energy spectrum that it’s just fascinating to me. And the takeaway here is that I believe investors should prepare for higher prices or sustained higher prices than the previous years as the new normal. And maybe that’s a period of a few years or longer.
Daniel Creech: But if you look at a long-term chart, not a super long-term chart, but just go back to when different administrations, since the T word is a swear would, now we won’t say that. We’ll just say that oil prices were substantially below $70, $80 a barrel for a few years. Now they’re basically going to remain around that. The takeaway here is that they’re going to be higher. Please have exposure to this industry. I understand. Listen, the big nervousness I have is, I’m very bullish on a sector that we’re already in a recession, if we go into global real depression or recession, then we have to worry about oil.
Daniel Creech: However, the politics behind it are what you really need to pay attention here. I believe OPEC is doing a conference, a Q&A right now as we’re recording Frank. We don’t know the exact numbers. The two million cut was a big headline. Goldman is already out saying that it’s probably going to be around a 600,000 when you actually net, net because you may have to exempt Russia from it, et cetera, et cetera. They’re already under their quotas.
Daniel Creech: The big takeaway here are, another big takeaway is that read between the lines. Biden flew over there asking them to cut it. The strategic release of petroleum, like you said is down to I think 1984 levels. That’s a fun headline to talk about. We’re not increasing production here. You don’t have to be a doctor or have any fun letters in front of or behind your name. You can be as simple Daniel Creech in the world and be smart enough to understand supply and demand.
Daniel Creech: And when you have governments attacking an industry through pressure on drilling less, being “more green.” And then the final thing that you can do is threaten for excessive tax or windfall tax profits that they’re already doing overseas. The Shell CEO was dragged in front of somebody over the pond in a committee hearing just like they do here. And he was telling the industry to brace for higher taxes because that’s what governments do. And this is just simply, there is no easier lay up to tell investors to buy into a sector when you have politicians going at each other and attacking the industry. It’s wild.
Daniel Creech: And then, we haven’t even talked about the pipelines blowing up. And I want to talk about that because who did it? Who benefits from it? Well if the US didn’t do it, somebody who did it had to have great technology. Do you know this pipeline was around 200 feet and I’m talking about the Nord Stream 1 and 2 pipelines from Russia to Germany. Or not Russia, but Russia supplied gas to Germany. 200 feet down. I watched the interesting interview. Do you know the economic professor at Columbia University? You ever heard the name saw him, Jeffrey Sachs?
Frank Curzio: I saw him mention that on an interview and they started attacking him like crazy.
Daniel Creech: It was on Bloomberg, it was a couple days ago.
Frank Curzio: Oh, it was Bloomberg. That’s right. I did see that interview actually. I did see it, and he was just like… Go ahead. Tell the story again.
Daniel Creech: Well, it was just interesting. He come out and said he thinks that the US is behind the blow up. The Bloomberg commentators said, “Hey,” and it’s right for them to push back. You make an accusation or a big statement, it’s okay to say “Hey, back that up.” And then he pointed to either radar or some detection that we were in the area, which hell, everybody’s in almost every area. But when you break down, okay, who’s going to do this without asking permission from the world super powers I guess is an easy question. I’m not saying I have all the answers. The answer to this is just energy prices are going to remain elevated for some time and have exposure to it. But it’s fun to talk about who did it.
Daniel Creech: Do you think Russia did it? That’s out there. Why would Russia do it? Maybe to provoke and just have an excuse to escalate the war in Ukraine? I’m not saying that can’t happen. I don’t think the percentages are there, but that’s an option.
Frank Curzio: I don’t know. I don’t know what happened. I mean I could try to speculate a little bit and use a little common sense. I would think Russia blowing up its biggest advantage over everyone. And the reason why that they haven’t gotten hurt as much as everybody thought they would when you took them off the Swift system and all these sanctions and everything is because they’re one of the largest energy producers in the world.
Frank Curzio: And if you’re looking at that pipeline that you talked about, Nord Stream 1, Nord Stream 2, they’re both offline. I don’t know. And leaks were happening or whatever. It’s just a little weird. But that’s the main conduit for bringing gas in Germany. It supplies more than half of Germany’s consumption. Why would you blow that up if you’re Russia? I mean if you’re saying they would blow that up, that’s like China coming out and saying that they’re going to blow up every one of its rare earth mines to spite everyone since they control 95% or 90% of the high strength rare earth metals, the ones that go into everything basically, all technologies, cars and stuff like that.
Frank Curzio: I mean, that’s like China doing that and saying, “We’re going to blow up all of our rare earth mines.” And you screw the world but you screw yourself a billion times more because that is a significant advantage. That’s a massive advantage that you have that we need China for. We need China. I mean we can get anyone to buy our stuff or anyone make our stuff rather. It’ll cost a little bit more in other countries. But we need countries for certain things, the rare earth metals, we need China. They have the monopoly on it.
Frank Curzio: Would they blow up all their mines? Would Russia do this? To me common sense says absolutely not. It doesn’t make sense. I mean they’re showing clips of administration saying that, “No, we’re going to take care of this.” It’s weird that it happened. I think it’s very dangerous that it happened.
Frank Curzio: But the bottom line is now, you are really removing it. It’s not like, okay, if what happens with Russia and Ukraine? One day they will say, “Okay, it’s over.” Hopefully short term, a lot of people dying. But when they do, now what? I mean you’re looking at these pipelines, I don’t think people real-, like you said, I mean how many feet was it? 200?
Daniel Creech: It was close to 200 feet.
Frank Curzio: 200 feet.
Daniel Creech: Depending on … Yeah because they give-
Frank Curzio: They’re coated in concrete. Weighs 24 tons. I mean this thing stretches out for 760 miles long. This doesn’t happen by accident. This happened on purpose. And who benefits the most from this? I think the US benefits tremendously since we’re one of the largest oil producers. I think OPEC benefits tremendously. For Russia to do this, I just don’t think it makes sense. And since that’s one of their biggest advantages, but I don’t know. But I know it escalates it. And when you’re looking from a stock perspective, investment perspective, which is what this podcast is about, oil has no place else to go but higher from here.
Frank Curzio: I mean, you’re looking at the strategic oil reserve where you’re releasing. I mean we’re down in 1984 lows. And just to be fair, every single presidency before the election releases oil reserves to bring prices. You can go back. Even with Trump. Yes, he increased it, but right before you saw a little bit come out. You look at Obama, you look at Clinton, you go all the way back, but not like this. Not this much before the election.
Frank Curzio: Now, it’s a million barrels a day. Said in March, it’s going to be for six months, and it’s at its lowest level since 1984. What’s going to happen when you reverse that?
Frank Curzio: You’re taking a major producer offline, that’s what you’re doing. You’re taking a major producer offline. That million barrels is going away. Now you throw in OPEC with two million or whatever it’s going to be. Outside the Russian news it’s one million but they’re predicting one million. It could be two million. They said two million, but like you said, outside of the Russians saying stuff like that, might be a million. That’s significant. I mean that’s a significant amount that you’re taking off the market now.
Frank Curzio: And now, what are you going to do? Because you still have crazy ESG policies. I love the fact that our current administration is going to OPEC and going to Saudi Arabia and trying to convince them that, “Hey, don’t do this right now, especially during election. We’ll give you whatever you fricking want under the table.” You know they’re saying that. And you know why Saudi gave him the finger? Because I mean look at something as simple as the LIV tour.
Frank Curzio: The LIV tour, are the Saudis are the biggest funders. And this is a big part of it. I think it’s a big part of it. It would be a big part for me if I was president of a country. They’re like the biggest funding operation, Saudi Arabia, of the women’s tour. But nobody says anything about that.
Frank Curzio: But now, all of a sudden, you had this political agenda and all this lobbying by the PGA. And this whole agenda and all you see in the media is these guys, the human rights and they’re killing their own people. How the hell could you do that? All these golfers. And we have this narrative that we’re shitting on them. We’re shitting on their whole country saying that this is. And now you want to go there and pretend you’re friends with them? I mean I know politics is politics, but come on man. I mean now you need us? Because the Saudis don’t need us, they don’t need us. They’re the major producer just like Russia doesn’t need us.
Daniel Creech: Do you think the message is they control the oil markets? What do you think the message is they’re sending?
Frank Curzio: They don’t need us. I mean they’re sending the message that, “Hey, I don’t care what you do in the strategic oil reserve, but right now we want prices higher and we could make prices go higher.” And they’re going to make prices go higher. If you think gasoline prices are cool now and everything’s great. And going to the election you’re going to feel a little bit better and hopefully they’ll get a couple more votes that way. Again, every president has done this go going into an election year. Not to this extent. But now to really go to the Saudis and ask them for a favor is crazy. But look after the election of what’s going to happen.
Frank Curzio: I mean, if you’re looking at a million barrels per day, that’s like removing the Bakken. I visited the Bakken. It’s a massive oil producer. I think it’s the third largest behind Permian and Eagle Ford. It’s Permian and then Eagle Ford, and then you have the Bakken, which is now producing a little over a million barrels per day. It’s removing the entire Bakken. That’s how much is going to just from the US when you remove that, when you stop adding that million to the market.
Frank Curzio: And now, you’re looking at the production cuts from OPEC. I mean it’s significant. It is. It’s significant. If you don’t think it’s significant, this is why gasoline prices went from $5 to $3.50. It’s significant. Where do you think they’re going to go after this? If you’re looking at oil companies right now, man again, Exxon produces 3% of the world’s production. I mean, you’re looking at US production a cut of 8%, 8.5% right now. That’s what a billion barrels a day does with 12 million of production a day that we have in the US. It’s significant. These are big numbers guys. I mean, 8% might not sound like it. It’s a big deal.
Frank Curzio: I put it in terms of margins where consumer staples, their net margin is like 6% pre-COVID. Energy margins were 4%. They’re higher now because oil prices are higher. I’m talking about the last five years, not just during COVID when the shit hit the fan. That’s a market like previous five years is where oil should be. That’s how big and significant this is. And some of the smartest people around, Kuppy’s one of them that we have on. He’s been a big bull on oil for a very, very long time.
Daniel Creech: Yeah, I need to get him back.
Frank Curzio: I need to get him back in here.
Daniel Creech: Chris Macintosh too, he’s big on oil.
Frank Curzio: And Chris Macintosh. And those guys again, I wasn’t crazy about the oil trade back then. Those guys were very early buying $100 calls on oil when oil was like at $15, $20 and going crazy during COVID. But it looks like oil prices have no place else to go but high. And those margins are going to get better and better for oil companies. We’re going to have to produce more.
Frank Curzio: You’re seeing ESG regulations. People know they’re full of shit now. We don’t need a full 100. It can’t be black or white. I mean seriously. It can’t be black or whiteness industry. And that’s what it is right now. It’s black and white when it comes to ESG. “You’ve got to go totally off fossil fuels or that’s it. Everyone’s going to die.” And yet we’re promoting other places to produce more oil. If you really care about the environment, let’s produce it here.
Daniel Creech: Nah, nobody cares about the environment.
Frank Curzio: I mean everyone-
Daniel Creech: Here’s what gets me.
Frank Curzio: This is crazy.
Daniel Creech: Here’s what I’m trying to work backwards on. And you’ve talked about this in the past like, “Hey, when you’re bullish on something, try to read the other side.” And so send your thoughts, firstname.lastname@example.org.
Daniel Creech: Outside of a global depression, because you have a lot of things going. You have the strategic reserve release. You have “our administrative” saying how many releases and we should drill more when it benefits them. However, you don’t even have the full sanctions taking place yet. Forget the best line that’s quoted all the time from, what is it? Not Lord of the Rings, but Game of Thrones. Winter is coming. Winter is coming, which is going to put Europe in a terrible situation. They’re already talking about next winter being a problem. Frank, we’re not even in this winter yet. They’re talking about next winter.
Daniel Creech: Because Europe is still buying a lot of Russian oil to get all their gas and tanks ready for the winter and then hope that winter’s not that bad and they can levy it all. It’s just absolutely terrible. You also have sanctions in December. We still have the G7, Europe and the United States pushing for capping Russian oil. To say, “Well, we’re going to cap Russian oil at a certain price so that people can still buy oil. It doesn’t disrupt global oil markets, but it doesn’t give Russia the coffers to keep fighting the war in Ukraine.”
Daniel Creech: Again, you don’t need to be a doctor or a CPA or any anybody intelligent to understand that’s a stupid idea. Any Joe Schmo can put that together. And the only reason they tell you you’re not smart enough to understand it is because they don’t want to actually explain the reality of the situation, how simple it is. Then they’re going to try to take away, I say them, the United States and European Union is going to try to take away the ability to ensure the cargo and shipping of oil and commodities. Well that doesn’t mean it’s going to stop it. You have ways around that. They’re already doing it. You can transfer oil out at sea, refine it or do something to it. Slap a new label.
Daniel Creech: It’s like Tommy Boy. Hey, if you want me to take a dump in a box and mark it, guaranteed I will. I got spare time, Frank. Okay, guaranteed. “Because all they know they sold you a guaranteed piece of …” That’s the best movie. Anyway, there’s just so much going and that makes me nervous because you have so much bullish signs.
Daniel Creech: What am I missing? And I don’t think I’m missing anything. I’m not saying go all in. I’m saying have exposure to it. If you listen to these rants by me and you get tired of them, email me and tell me you have exposure to this sector and then you can fast forward or ignore me. But until you do, I don’t want to hear this, “Oh, get off oil stuff.” All right, let’s go, Frank.
Frank Curzio: There you go. But I mean oil-
Daniel Creech: Not used to my rants are you? See?
Frank Curzio: I like the rant. I do like the rants. Listen, play politics in your favor no matter what side you’re on. And everyone’s going to have their bias of what they believe in and stuff like that. And the media’s going to force you to hate the other side like they always do no matter what. That’s why they push boy’s a girl, girl’s a boy right now. It’s got to be so extreme that it’s crazy where you separate people. That’s what they want.
Frank Curzio: But use it to your advantage as an investor. I mean are you that they’re depleting the strategic oil reserve right now? I don’t know. I mean it’s at its lowest level since 1984. Again that was created a long time ago. I don’t know how much oil we need in that, but it is being used for purpose to lower prices, but not because they care about consumers. It’s because they want to get elected. They want more power.
Frank Curzio: In the meantime, while they’re doing that, and you’re seeing oil stocks did pull back a little bit. It’s still up for the year. They will up a lot more. They pulled back. But oil prices are probably going to go a lot higher from here if you have a 12 month outlook. I don’t know where they’re going to go immediately, but you have OPEC is supporting cuts. We’re going to be cutting production here because we’re not going to take any more oil from the strategic reserves. That’s going to stop right after November. We all know that. It’s going to force oil prices to go higher, gasoline prices to go higher.
Frank Curzio: And take a look at that because it was something interesting that I saw today, Daniel, which from Exxon. And I’m probably going to mess this up, but I saw the first line. I was surprised about a charge that they were taking. And I wanted to bring this up and let me see if I can. It’s probably going to take a minute or two, but I want to go to the briefing.
Daniel Creech: Yeah, they announced the charge. Probably, well I’ll take a guess. It’s around derivatives and different liquids and things, but they also are going to get a bump somewhere else. I think it was a net positive if I recall.
Frank Curzio: Okay here. I saw that the first part of this, and this is earlier today. Says, “Exxon discloses a $1.4 to $1.8 billion negative Q3 impact from change in liquid prices.” So liquids, just natural gas liquids, that could be whatever, from kerosene, from just refined products. It’s not necessarily natural gas, which natural gas prices are higher. They did pull back a little bit. But they did say, “But they disclosed a $1.8 billion to $2.2 billion positive Q3 impact from a change in gas prices.” Gas prices, what were a big deal? The natural gas prices.
Frank Curzio: What’s the point of this? Exxon is a full service upstream, downstream, they do everything. You could get companies that are leveraged more than natural gas right now and natural gas prices, I mean, they’re projecting natural gas prices to fall. The futures like 50% from here over next year and the year after.
Frank Curzio: I mean, I don’t see that happening at all. I can’t see that happening, especially with Europe and everything going on there. And where prices are in Europe is incredible to the point where now we have all these LNG facilities that we could export. And just for the record guys, when I was researching LNG companies and energy, these were supposed to be import companies, not export companies. They were supposed to be made to import natural gas. And then once we found shale technology and how much natural gas we had, which I remember Apache CEO, and this is about 2011, 2012. I went to a conference and he goes, “We have more natural gas than we know what to do with.” And it’s true because that’s why they were burning it for free because it’s a byproduct of oil. They were burning it for free. We have tons of natural gas here and the whole entire world needs it. And man, prices are skyrocketing.
Frank Curzio: Instead of just saying, “Oh I want an oil company,” well oil prices hold up. But there’s also companies that really specialize in natural gas liquids that go into just so many other products and chemical products and things. But if you can get a pure play on natural gas and that’s the Apache’s, the Chesapeake. I mean that’s where you could really see prices skyrocket, especially as gasoline prices are going to go a lot higher. But it’s not only oil companies. And yes, again, all these byproducts and they could break it down and they actually create a system where they’ll take the liquids, natural gas liquids. Hope I’m not getting complicated here. And they’ll take the oil price and natural gas prices and combine it and say this is how many barrels of oil is the equivalent. However oil’s equivalent.
Frank Curzio: But there’s a big difference between those three markets as you could see. I mean you don’t see it often when Exxon Mobil, it’s a $1.5 billion negative from the change in liquid prices. That’s natural gas liquids. But yet you’re looking at one at a $2 billion positive. And this is just one quarter, Q3. This is just one quarter. Those are big numbers.
Frank Curzio: But you could really dig down and this is what we do. It’s not just, “Hey, buy Exxon by Chevron.” But you know what? There’s companies inside this industry that are going to specialize, whatever. If they’re more of a natural gas play or more growth into one particular industry inside of oil. Instead of getting a 30% pop, you’re going to get a 200% pop. And that’s why it’s important to really do the research behind this. It’s not just, “Oh, oil’s going higher.” Well natural gas price is probably going to go a lot higher than that.
Frank Curzio: It is interesting. I know there’s a trend that you’ve been on a long time. You’ve actually had recommendations for us, Daniel, in the oil sector that have done very, very well. And I know you’re still bullish on this sector. Where do you think oil’s going though?
Daniel Creech: Yeah, Exxon’s doing good in dollar stock club. I did stop out of Vietnam, the timing couldn’t have been worse on that, so I’m sorry about that. That sucks.
Frank Curzio: It’s a lot higher now, right? Yeah, it went up.
Daniel Creech: My final thought. I’m terrible at price targets. I just think oil is going to be above $80 a barrel for a long time and I think it’s going to be in the hundreds triple digits. I want to say one final thought. Imagine being ExxonMobil and everybody in oil or energy. And you’re going to have amazing results again. Your previous quarter was awesome. Yes, oil prices are down 30 some percent from their peak. You’re not ExxonMobil, you don’t put out releases like this and start warning of another positive corner without being nervous. And you only do that because of politics.
Daniel Creech: Expect them to be brought in front of a committee again soon, railed against. This is just front running the show to, “Hey, when we announ-” and you have briefing up. I don’t know when Exxon reports their next earnings, but they’re probably going to be really, really damn good. And that’s why you get out in front of it.
Daniel Creech: Imagine being so good at something and creating so much money for you and your shareholders that you have to be nervous about the government entity over you. That’s where we are in the energy sector.
Frank Curzio: Yeah. It’s about three weeks from now, October 28th earnings. This earning season’s going to be crazy, but I could picture the oil company. The oil companies are actually-
Daniel Creech: Yeah, and oil’s down, but they’re still going to be doing great.
Frank Curzio: Yeah, oil companies-
Daniel Creech: And maybe I’m wrong. We’ll see this.
Frank Curzio: All this shit.
Daniel Creech: But you don’t get out in front of this unless you know you’re going to have good results.
Frank Curzio: Yeah, I mean, all this shit with the Fed too. I know you’re seeing depression era conditions everywhere and usually oil prices go down. But you are going to see China come out pretty much in a week or two right before the election and say we’re no longer going to have a zero COVID policy, and that’s going to be good for oil and demand. You’re seeing India on fire right now doing very, very well. The major countries are doing well, they need oil.
Frank Curzio: This is one sector that’s actually going to come out with earnings and maybe raise their earnings or the expectations or be able to provide guidance compared to every other company, which it is just a coin flip right now. I don’t know what they’re going to say for guidance. It’s going to be funny.
Frank Curzio: You’re going to see if companies are going to be aggressive on the earnings call. If they are, you’re better off shorting those companies because this is not a time to be aggressive because the Fed continues to raise rates like they’re promising to do. We’re going to get a high CPI number. We just got a terrible jobs number in terms of showing that inflation’s not really slowing down and the gauges that they look at, look out. Look out. It will be interesting. And as always we’ll pull back to you guys soon. But yeah, thanks for coming on. I really appreciate it.
Daniel Creech: Another great Wednesday. Cheers.
Frank Curzio: All right. If someone wants to email you about all your stuff about hating Elon Musk and political stuff and everything-
Daniel Creech: I don’t hate anybody. Don’t have hate in your heart, email@example.com. Telling you, he’s winning me over. Got to give it to him.
Frank Curzio: Hey, You have to hate me sometimes, but-
Daniel Creech: Well that’s different. We work together.
Frank Curzio: I’m going to make say Beetlejuice three times. You got to go. You got to go say Beetlejuice, Beetlejuice, Beetlejuice, right? I’m telling you. You’ll laugh. You go to YouTube page, and that’s not a plug to go to YouTube page. If you do, you’ll laugh at that. I actually like-
Daniel Creech: You colorblind?
Frank Curzio: Oh yes.
Daniel Creech: Okay. Because I don’t have a black and white checkered shirt.
Frank Curzio: What color is it?
Daniel Creech: Green. I was color-
Frank Curzio: That does not look green.
Daniel Creech: I wasn’t going to call you out all that, but yeah.
Frank Curzio: That does not look green. But I am a little colorblind.
Daniel Creech: Yeah, it is.
Frank Curzio: Well, you know what’s good? It looks really black and white on our thing right here, which is cool. So, we’ll see. So, you can make fun of me-
Daniel Creech: Happy early Halloween, everybody.
Frank Curzio: Yeah. Happy Halloween. Anyway. All right Dan, thanks for coming on. I really appreciate it. Guys, questions, comments, you can email Daniel, or email me at firstname.lastname@example.org.
Frank Curzio: Really appreciate all your support. I’d love to hear from you. And if you’re part of Frankly Speaking, you’re a subscriber to any of our products, I will see you in a couple days. Thanks. Bye.
Announcer: Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its host and guests. You should not base your investment decision solely on this broadcast. Remember, it’s your money and your responsibility.
Editor’s note: The global energy crisis has set the stage for a uranium bull market… and Frank just recommended a simple way to get exposure to this explosive sector.