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You need exposure to this sector immediately

With the markets trading near all-time highs, should we be worried about continued action by the Federal Reserve?

That’s the question Rich Suttmeier, editor of 2-Second Trader, helps answer on today’s podcast. Rich also shares his proprietary Black Box trading strategy… and where he sees the most opportunity in the market, both on the short and long sides. [23:43]

Thanks to unprecedented action by central banks and governments across the globe, interest rates have fallen to historical lows… forcing investors into a massive hunt for yield. But one sector provides a great opportunity for investors right now. Here’s why trillions will flow into this space in the coming years. [44:41]

Inside this episode:
  • Guest: Rich Suttmeier, editor of 2-Second Trader [23:43]
  • Educational: You need exposure to this sector [44:41]
Transcript

Wall Street Unplugged | 729

You need exposure to this sector immediately

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 July 8th. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break down the headlines and tell you what’s really moving these markets. It’s pretty interesting out there when it comes to the state of our county. It ranges from being the richest most powerful country in the world, somewhere where you’re proud to live and raise your family, to America is a horrible place, we need change, and we need to remove anything that symbolizes our history of becoming a free nation. It seems like there’s no middle these days. If you’re looking at that, where America a terrible place, this includes knocking down statues, not just of slave owners, but of people that helped abolish slavery.

Frank Curzio: And what I found interesting in the past week, is seeing people calling for the destruction of Mount Rushmore. And to make matters worse, these calls were even louder on the 4th of July when the president gave his speech about the history and freedoms of our county. And some politicians were trashing the US, how bad we need change. Even our potential Vice President, Tammy Duckworth, believes that we should, “Have a conversation about removing statutes of George Washington.” And to be fair, she didn’t say, “Well, we actually need to remove these statues.” She didn’t actually say that. But she did not say that we shouldn’t remove statues of our first president. Which is better described as being a politician. Or bitching about everything while having zero solutions, or let me wait to see what the polls say before I express my opinion.

Frank Curzio: That’s how you become a good politician. Complain about everything, never solve anything, and that’s how you win elections. You touch into the emotions of people. But more to the point here, to suggest that we should have a conversation about this, and for people to be talking about this on the 4th of July, our county’s independence, what a bunch of spoiled, rotten, assholes. Sorry to use that term. I can’t think of a better one. Especially considering, you would not be where you are today, none of us would be, without George Washington. Someone who spent most of his life in the military, became commander-in-chief. Biggest goal was to be part of a self-governing nation. That’s what he was fighting for. Unity, togetherness.

Frank Curzio: We can have healthy debates among people to help achieve the best outcomes for America. That’s what he fought for. A guy that lost plenty of battles, but got up and kept fighting. Which is what America is all about, never giving up. Always fighting. Always going to make mistakes, always going to fall. Keep fighting and move forward. That’s the American dream. There’s a reason why there’s what is it, 10 Rocky movies? And it’s the reason why most people are going to watch it, including me, the next 20. Because you see you just keep fighting. You get up. That’s the American spirit. People love that. It sells in America, it’s great. It’s awesome. This country allows you to achieve things that you can’t achieve in other counties.

Frank Curzio: You’ve got Washington, someone who after his victory at Yorktown could establish monarchy, where he would become king. And it was up to him to become a king, which is normal. We’re talking about 18th century. Kings, right? There were tons of big name offices, big name people that wanted him to become king. Think about that for a minute, how much power comes with being a king. I mean, Roman Empire. I mean, you’d be the strongest individual in the world. What you just achieved, you are the king. How many people would say no to that? Washington said, “No. That’s not what I want.” He actually said the offer was not just inappropriate, but dishonorable. And made sure that a topic of speculation, anything, any talk of it was never to be brought up again.

Frank Curzio: Because that’s not what he wanted. And in his second term as president, which you can go basically anything you want, probably said, “I’ll be president until I die,” he could’ve said. But he said, “No. I’m stepping down.” He transferred his presidency to John Adams in 1797, which was hailed as one of America’s greatest democratic traditions. In fact, after refusing to be king and stepping down as president after his 2nd term, King George III said, “Washington is the greatest character of this age.” So think about that. Take that in. The opportunity to be king. King. Anything you want. Everybody kisses your ass for the rest of your life. You dictate everything. But he changed our entire history, freedoms, constitution, wouldn’t even have states right now. Senators to govern. Congress. Free speech.

Frank Curzio: I mean, North Korea maybe looking at us right now saying, “Wow, those guys are crazy over there.” It’d be totally different. A person that built the foundation of the freedoms that you live today. So that people who are in congress right now even hinting at the thought of washing away Washington’s memory? You are a complete and utter asshole. I can’t say it better than that. And you really need to brush up on your history. Now, I’m not saying Washington did not make mistakes or have flaws. But our freedoms today exist because of him. And everybody has flaws. We all do. And Martin Luther King Jr., who outside of Washington, is the only American whose birthday is a national holiday. Little fact there. He plagiarized his doctoral dissertation. Fact.

Frank Curzio: He was banging dozens, if not hundreds, of women while being married. In fact, he had three women in his room the day he died. There was a woman right outside waiting for the other women to finish to go back in. That’s when he got shot. He called himself a democratic socialist. That’s what Martin Luther King called himself. Kind of? Not kind of. But you’ll get politicians, Democrats, Republicans, crucify Bernie Sanders for admitting to being the same thing, a democratic socialist. And they threw him right out of there, really quick. Democrats especially threw him right under the bus. Now they love him, they need his votes, they’re going to be nice to him. But man, when he was running, all of them destroyed him.

Frank Curzio: Did you see the debates? They destroyed him. They destroyed him. But do you take away all of Martin Luther King’s achievements? Do you erase his history because he wasn’t perfect? Should we knock down statues of him all over the county and change the name of what, hundreds of streets that bear his name? Even though his efforts for racial inequality, civil rights movement, changed the course of history for black people, helped end segregation. Unbelievable achievements. I mean, looking at Washington, there’s a reason why there’s no Hollywood movies made about the guy, right? Because he wasn’t exciting. He believed in unity, not power. Not division. He helped establish the Supreme Court, create the first US Census. Laid the cornerstone of the White House. Helped create our national government.

Frank Curzio: Made sure America stayed neutral when foreign nations went to war, which allowed us to become a powerhouse nation. I mean, when it comes to movies, people don’t want to hear about that. They want to watch movies about dictators, death, not people doing good shit. That’s not exciting. So, I’m going to look, mob movies, violent, serial killer movies, Troy, Caesar, death, chaos. That’s what sells. Politicians, and anyone for the matter, especially, especially politicians really shitting on Washington. It’s like AT&T knocking down statues and removing all the history associated with Alexander Graham Bell. I mean, are you kidding me? The reason why the company exists today. The reason why you have these freedoms is because of this guy and you want to knock down his statue because you don’t know your history?

Frank Curzio: I know many of you out there on this podcast, a pretty big audience, millennials, gen-xers that email me all the time, but millennials? And growing up, when I listen to them talk and yell, I mean, I just feel like you’re being taught to hate and focus on all the negatives. I mean, everybody has negatives. Everybody you know has negatives. But your best friends are the ones that know those negatives, and don’t judge you, and treat you the same, because they know you’re a great person. And those are your best friends. Not the ones that want to be with you when you’re successful or things are good. No. It’s the ones when you’re down and the calls that you get when you’re down, those are the good friends.

Frank Curzio: But the hate out there. I mean, I’m not sure how it happened… Where, and I’m not talking about the whole younger generation, but a lot of it and they talk about America as they hate it. And I’m struggling to find out why that is. And think about it. They’re telling everyone they hate it on their social media accounts, which they’re logging in through their $1,200 iPhone while they’re drinking Starbucks coffee, hanging out. I mean, it’s crazy. I mean, get out there. I traveled later on in probably my late 20s, and I traveled a ton, as you guys know for business. But really started in my late 20s and early 30s. Go to other countries.

Frank Curzio: When you go to other countries you realize how great you have it. When you’re bitching about traffic, you’re bitching about different things. When you go to China, they don’t have access to clean water in some places. You have to follow the government regime. You can’t speak out about anything. There’s no freedom of speeches in many countries. It’s not like it is here. And now you’re shitting on that and people are teaching you how bad things are? I mean, what is going on? Get out there. Millennials, getting tons of emails from you guys because like I said I’m going to start a clinic right after we launch our security token, which is going to go free trading in about six weeks, very excited. Going to have a big announcement for everyone. I mean, our offering was only available to accredited investors, and now it’s going to be trading on the global exchange where anyone can buy it.

Frank Curzio: And after that, I’m going to start this clinic, it’s going to be filled with millennials to help you guys become better investors. It’s going to be tough. It’s not going to be easy. I’m going to get on you. But I just feel like it’s a group, or your group that people really don’t care about. They’re just trying to steer you into the direction they want. They want you to support their agenda, when you should be free thinkers. Do your own research. I mean, it’s the best advice I can give you. This is the best advice I can give you as a young investor. And it’s based on the mistakes I made when I was your age, okay? I’m not a genius or anything. I made mistakes. I’m trying to help you out because I want you to avoid the mistakes I made, and hopefully you’ll be able to pass that down to the younger generation when you’re my age, which is 35. Actually, I’m pushing 50, so a little bit older. Anyway.

Frank Curzio: But the best advice I can give is forget about all the political bullshit. Forget about protesting, holding up signs, forget about hating Trump or hating Biden. Stop hating the Fed. Stop hating bankers. Stop hating Wall Street. Because that’s for losers. That’s what losers do. I’m not saying you don’t have to be passionate about it, but if you want to be a winner, if you want to be successful, if you want to start building generation wealth, starting a family, making sure they’re taken care of, starting early, instead of focusing on all the BS, all you need to do is ask yourself one question. How do I make money off it? No matter what the situation is, that’s the question you should ask.

Frank Curzio: How do you make money from the Fed spending an unlimited amount of money? How do you make money if Trump loses the election? How do you make money from interest rates being super low for a very long time. And every time you go out, every time you do travel, ask people questions. Cab drivers. “How’s business?” They know more than anyone out there. They know how busy Vegas is at certain times, and the building going on. They know everything that’s happening in that town. They drive every single day. Every single day some of them for 10, 20, 30 years. I mean, you’re going to barbecues, ask your friends, your neighbors, “How’s business doing?” In their industry. Educate yourself. Talk to people who have a different opinion than you, but be respectful.

Frank Curzio: I mean, hell, I don’t agree with everyone I interview on this podcast, but I respect them and I respect their opinion, and I’ll challenge it, but I’m not calling them curse words or saying, “You’re crazy. You have no idea what you’re talking about.” Because in the end, when we look a year later, they may be right. They’re not going to be right all the time. But talk to everyone, because every person, every person out there, I’m a true believer of this, is good at something. They are. Like my wife, she’s the best at busting my balls. There’s nobody better in the world, there’s nobody better. I’m just kidding. I’m making a point here. And believe me, I bust her chops much, much more. She’s doing a great job. She’s being at home with the kids, which has not been easy during this whole entire time.

Frank Curzio: But more to the point here, people are just good at different things that you don’t cover. I mean, you guys listen to this podcast for investment advice, but I mean, a lot of this investment advice comes from so many emails. frank@curzioresearch.com, that I get from all over the world. And it’s not just CEOs. Thing about it from a millennial point of view, with Facebook. I mean, Facebook bought Instagram. And you go back and watch TV, and you look at every 45 year old plus analyst on CNBC, Fox Business, wherever, Bloomberg, destroying Zuckerberg for buying that company. What was it? Two, two-and-a-half billion dollars? “He doesn’t have revenue. He’s too young. He doesn’t know anything. He should be fired. He should get out. He’s got to get out of that company. He can’t run Facebook.”

Frank Curzio: What’s the valuation in Instagram? I don’t know. I haven’t checked. $25, $30 billion dollars? Some genius, some person who follows finance all their lives could figure that out. He knew social media. He knew what people want. This is what he does, whether you like the guy or not. And it’s amazing, right? This is the millennial crowd of a company. If you’re looking at our biggest companies in technology are created by millennials. And people are shitting on you right now, which I think is a joke. Not giving you a chance and complaining that you guys don’t work too hard. You guys have more access and are 10 times smarter than we were. We didn’t have access to what you have access now to, in terms of getting real-time information in a second.

Frank Curzio: And when I first started in this business, there was no emails or anything. You had to wait for the 10k. You couldn’t even get on a conference call. Now anyone can go on a conference call, or a quarterly conference call for these companies. And listen just same time analysts are listening to. You didn’t have that advantage back then. You had to get your 10k. You found information weeks, sometimes months later. There’s no access. The stuff you have access to, the productivity is incredible. You guys have. And when you’re out there, talk to everyone. There’s experts in real estate, manufacturing, people who own their own businesses. You see sports agents, restaurant owners, software developers. Talk to people who live in California, what’s really going on there since it’s a hate Trump crowd, but if Biden gets elected and raises taxes, it’s probably going to result in a lot fewer jobs in technology.

Frank Curzio: And this is Biden, what he said he was going to do. He wants to take more money out of corporations, and if he does that, they’re not going to hire as much. I’m not saying that’s a reason to vote for Trump or not. I’m just telling you, that’s what you have to look at. There might be other things that are more important to you. Immigration or whatever. Whatever you want, that’s your choice. That’s your choice. But is interesting to see how this is going to play out. But talk to everyone. Make it a state of mind. Just start conversations with everyone you meet. Because there’s one thing that’s a certainty. People love talking about themselves. And I’m not saying that’s a bad thing, but it’s the reason why social media exists. It’s, “Hey, look what I’m doing here.” Everyone needs to post everything they do in every second of the day. “Watch me. I’m here on vacation. Look how much fun I’m having. Oh I love my husband, I love my wife.” It’s all about you, you, you.

Frank Curzio: People love that. Just shut up and listen. Because these people have access to stuff that you don’t have access to in real-time. In small business, when I put it all together with the network we have this podcast talking about well over 100,000 downloads every month, the emails that come in are incredible. The information you get before it’s reported because a lot of this stuff is lagging, like economic data, same store sales on a company like Chipotle when Ebola kicked in. I mean, how many emails did I get where it was like 400 or 500 stores, I must have got 100 emails from people in different states saying, “Everything is empty. We’re expecting same store sales to go up 30% plus.” And I’m like, “There’s no way it’s going to happen.” And the stock winded up crashing. Yes, it’s at an all-time high now, but getting ahead of that news before a company reports is real-time information.

Frank Curzio: So what you need to do is change your mindset. Always ask that question, “How do I make money?” Because it’s easy to follow the crowd, it’s easy to hate Trump, it’s easy to hate Pelosi. That’s the easy thing to do. But the rich, successful people, that’s how they think. They figure out how these policies can make them money. Don’t worry about the outcome. If it happens, how are you going to make money? Because at the end of the day, you’re fighting for someone, political agendas for people who don’t give a shit about you. They only care about power. And to get that, they need your vote. There’s a reason why no one’s talking about racial inequality. It’s a big thing now. It’s huge. Because they want votes, they want power. And they’re going to use whoever they can to get in there.

Frank Curzio: They don’t actually care about you. They didn’t care about the subject you’re talking about before this, did they? No. Has Biden talked about racial inequality? Has Trump talked about racial… No. Everybody wants to talk about it now because it’s a hot topic, and they need your vote, and it’s an election year. But be different. Don’t be the same as everyone else. It’s easy to hold up a sign and yell at people, and bark on social media. That’s the easy thing to do. They want you to do that. You must be different. Let’s look at how is it going to benefit you, your family. Because in the end, that’s the thing that matters most. It’s your family. It’s your reputation. It’s how your kids are going to look at you. That’s what matters the most.

Frank Curzio: And I can tell you, most millennials even the ones I talk to, they don’t think that way. And I didn’t think that way when I was young. So hopefully, you learn from my mistakes, hopefully you’ll be able to retire in your 50s instead of your 70s, but again, look at different policies. What you need to do to create generational wealth. Low interest rates. Stop buying assets. Straight to low across the board. I’m going to go over that with my educational segment. It’s crazy. But there’s so many things going on right now that it is different this time. It is different. The Fed this spending as much money, never happened before. 10 year, 0.6% never happened before, mortgage rates, record lows. Stuff going on right now, where profits really don’t matter.

Frank Curzio: You’re seeing momentum names that were expensive. Man, they were expensive months ago, have tripled. And understand the conditions that are going on and what’s going to happen. Instead of looking like, “Oh, I hope this person loses the election,” what’s going to happen? What’s your play if Biden wins, what’s your play if Trump wins? What’s your play if Goldman gave out a good report on this? If you see that the election is very close, which is a huge possibility, and extends where they’re recounting votes? Man, forget it. I think that’s going to crush the markets, if that lasts a month or two months, like we saw with Gore, right? A good possibility that could happen. A lot of states a very, very close. The last election was a blowout, you didn’t have to worry about it.

Frank Curzio: How do you make money off that? That’s how you need to look. That’s how you need to think. And most important here, man, learn your history. Talk about a guy where all of our freedoms exist because of this person. Yes you could pick and choose little things that are bad about anybody, anyone. But man, you got to take the whole package, and when you look at the whole package, George Washington, unselfish with what he did for this country, and you want to destroy his monument because you don’t know the history behind it? Because you had the right to that freedom of speech because of him? Come on. Holy cow, man. Do you know how bad that is? It’s terrible. It’s terrible that people are being conditioned this way. Stop being conditioned. Do your own homework. Do your own research, and start caring about yourself. Because that’s what matters most.

Frank Curzio: Now, speaking of respectfully disagreeing with my guests sometimes, I have a great interview set up for you today with Rich Suttmeier. He was a long time bear. I was a long time bull. But I always respected his opinion, and yes, he’s a very smart analyst which you’re about to see in a minute. He’s an expert when it comes to analyzing the Fed’s balance sheet, which is out of control. Something he’s been doing for over three decades. Rich, as you know, also runs our 2-Second Trader newsletter which he uses Black Boxes to find the best trade for our subscribers. Again, I don’t have to tell you how the balance sheet has exploded higher, spending trillions to inflate our economy, and it’s going to continue. So, what does that mean for you? How do you make money off of it?

Frank Curzio: What’s going to happen? What’s going to happen in the short-term? What’s going to happen in the long-term? It’s a great conversation we’re going to have, so definitely listen up. And my educational segment, I’m going to break down a sector, what every single investor needs to be invested in right now. I’m not talking about tech, I’m not talking banking, healthcare, small caps, infrastructure, it’s something else. And this sector’s about to see trillions in inflows over the next couple years. It’s going to push many names significantly higher starting now. And trust me, this educational segment, it’s a must listen to for everyone who owns stocks in this market. I promise this segment will not disappoint. But first, let’s get to my interview with the one and only Rich Suttmeier. Rich Suttmeier, thank you so much for joining us on Wall Street Unplugged.

Rich Suttmeier: Hey. How you doing, Frank?

Frank Curzio: Really, really good. So, I was looking forward to this conversation because, and we’ll get to your 2-Second Trader newsletter in a minute, because I know we have a lot of subscribers to that. But I wanted to bring you on because you’re one of the smartest people I know when it comes to analyzing the Fed’s balance sheet, and what’s going on today is absolutely insane. Even after the money is spent, which is 30% of GDP, we’re looking at a Fed that said, “We’re not even concerned about a balance sheet.” Which you’re going to see more stimulus come out. The market issues are favorable, where Main Street’s going to struggle, how Wall Street’s going to be doing… people won’t ask if it’s going to be doing good.

Frank Curzio: We’re just going to continue, right? We’re going to maintain that we need to continue to hand out checks to people and provide stimulus. So, this isn’t a short-term thing. It’s not even a US thing, it’s a world thing. But let’s talk about the Fed balance sheet and the consequences with someone that studies this, because it seems like short term, nobody cares. But for someone that’s being doing this for a long time, what are some of the things that worry you of what the Fed’s doing right now?

Rich Suttmeier: Well the Fed balance sheet, it’s been in around the $4.5 trillion area for a long time. Pardon me. And then, just before the market low of March 23, they started to spike the balance sheet significantly. And it rose to $7.16 trillion on June 8th, which was the day of the market top. So, clearly this rally since the March 23 lows is purely based upon the spike in the Fed balance sheet. Now if that starts to taper off, then you’re going to see the stock market decline, because the Fed stopped increasing its balance sheet. And so, that’s the critical thing to look at, is to keep an eye on this balance sheet to make sure it’s not peaking. If it peaks, then we have a correction in the stock market.

Frank Curzio: So I think we’re all on the assumption here, at least from what the Fed’s telling us, that this isn’t going to stop anytime soon, so they’re going to continue to spend money, spend trillions. They’re calling it phase four which is going to come out, more checks to people. We’re not even talking about a trillion dollar infrastructure plan that’s in the works that both sides agree with, but who knows if we’ll get it. Considering that’s going to happen, almost, I don’t want to say guarantee which is a bad word in finance to use, but should we assume that stocks are going to continue to have the bid under them because even when things go bad, it seems like the Fed’s going to be there to back everything up and just to continue spending money.

Rich Suttmeier: Yeah. But I see some problems on the negative divergences on the various indices. Like an island reversal for the DOW, and an island reversal for the S&P. What happens with an island reversal, they gap higher, and they did on June 5th, gap higher. And then they gapped lower on June 11th, and that created what’s called an island reversal. In other words, you can circle those daily bar charts on the charts, and now the DOW is below its 200 day simple moving average, which is also a warning since it can’t get back to that island that it created at the June high. June 8th was the high for this particular move.

Rich Suttmeier: And now we’re a month away from that June high, so it’s starting to show negative divergences in some of the charts, like a declining weekly stochastic reading for the DOW, the island reversal for the S&P. The only thing that’s doing the bidding for the market right now is the NASDAQ. Now, I have a semi-annual risky level at 10,639 for the NASDAQ, and it’s now in an inflating, parabolic bubble formation. Meaning, that its stochastic reading is above 90 on a scale of zero to 100. And that I call an inflating parabolic bubble. So, I have a feeling that we’re going to have a surprise quick downturn if you don’t see the balance sheet for the Federal Reserve spiked a little bit higher from its $7.17 trillion dollars.

Frank Curzio: That’s interesting, too. Because a lot of people out there even listen to this podcast. If we cover this stuff every single day of our lives, every minute of our lives, but people who have jobs, they come to us to see what’s going on, and they’re just reading papers. When you read the papers, the markets are at all-time highs. Everything is great. Not that everything is great, but they see stocks roaring higher. But yet, like you said, it’s being driven by mostly technology stocks. Yes, you have biotech in there, which sometimes they lump in with technology, communication services.

Frank Curzio: But when you look at energy, financials, travel-related companies. I mean, these are some well, well, well off their highs. From someone that analyzes every sector using your Black Box system, are you seeing ideas out there? Even though stocks are at an all-time high, there’s a lot of names that are still well, well, well off their 52 week highs.

Rich Suttmeier: Yeah. And well, when you screen with the Black Box tool, the Black Box tool provides you levels to buy on weakness and to sell on strength, but when you look at the weekly charts for a lot of these stocks, they’re negative. Because you’ve got that DOW transport under its 200 day simple moving average. The Russell is underneath it’s 200 day simple moving average. And like I said before, the DOW is under its 200 day simple moving average. The S&P is hovering above and below its 200 days. So, it’s only really the NASDAQ that’s stretching this thing to new highs.

Rich Suttmeier: And I think that’s limited to 10,639 as I said earlier, because it’s in a parabolic bubble of its own. So, I have a feeling the upside is limited on the NASDAQ, and it’s up to the Fed to expand that balance sheet every further. And if it starts to look like it’s peaking, the market’s got a problem. Because it definitely tracked the balance sheet higher since the March 23 lows. And that was a great observation that you seemed to imply to me when we chatted the other day.

Frank Curzio: Yeah. I mean, it is amazing. And even when you look at your system, your Black Box system, and I going to say that for a lot of systems out there, I’m not talking about the algorithm systems where these guys are front running the market. I’m not talking about those which they get away with. I’m talking about systems, like yours, and so many out there, and I love yours, that that had been built over decades to focus tons of variables. But almost all of that, everyone that has these systems, even with tentacles, you’re looking at earnings growth/sales growth, right?

Frank Curzio: I mean, those are two factors. Even if they’re little factors or they don’t carry as much weight as the rest of the variables within the system, they have to be in there because that’s what drove stocks since we’ve been doing this for decades, and decades, and decades ago, right? But now, we’re seeing a market where earnings are not going higher, sales aren’t going higher. They’re still declining. I mean, this is supposed to come back this year. It’s not coming back this year. Now it’s not even 2021. People are pushing out GDP estimates and earnings returning back to normal in 2022. Right? That’s a long time from now.

Frank Curzio: But yet, it’s one of the first times we’re seeing the market roar higher, and it’s not because of companies reporting stronger earnings. It’s companies like Levi’s going down 2% after they missed by a mile. Nike, disaster core. Nobody cares. 95% profits are down for Walt Disney. I don’t even know how they’re making money, generating money, yet the stock hasn’t gotten crushed. It’s just holding up pretty well. Do you have to update your system to these new measures? Because everyone says, “Well, be careful because it’s never really different.” It’s different. This thing’s going on that we’ve never seen before, and it seems like it’s going to continue for a long time.

Rich Suttmeier: Well, my system is based upon nine yearly closes, nine semi-annual closes, et cetera, down below. So, it’s looking at nine years of market volatility and my assumption in doing it that way is that nine years of data for any stock or any market, anticipates all possible bullish and bearish events. So what I come up with is, there’ll be a value level that could be way below a stock price, and all of a sudden if a stock crashes, it’ll go down to that level. And that’s where you would buy it. And in similar vein, if a stock goes ballistic, there’s usually a risky level at which to sell it.

Rich Suttmeier: For example, if you look at obviously the stocks that are hitting all-time highs now like Apple, and Amazon, and Facebook, and Netflix, Tesla, and Microsoft, there are risky levels for some of them that are there for the sell. And even with Amazon, there’s a risky level at which to sell. So to me, I believe that the upside to this market and specific stocks is now limited in that it’s time to reduce holdings, book some profits. There’s nothing wrong with taking profits in a market, even if it keeps going higher. You don’t have to be 100% invested to be a good investor. There’s nothing wrong with booking profits. And then, that gives you some room if the stock goes down 10%, 20% to buy it back.

Rich Suttmeier: And that’s the way I think the active investor should be playing this game right now. If you’ve been in the market, you made a lot of money, it’s time to be booking some profits and trading the volatility that’s going to happen. Everyone’s comparing this year to maybe 2008 when we had a pretty good market falloff, but I think it’s more like 1987, when we had the crash of October of 1987. The market it was going up, up, up, up, up, with big volatile swings like we’re getting now, from much lower levels of course in 1987. But then, all of a sudden one day there were no buyers, and it went down with the steepest percentage decline in history. And I can see that happening again in 2020, Frank.

Frank Curzio: Sounds like you’re cautious, but as I mentioned earlier, there are a lot of sectors still trading well off their highs. We saw a lot of these sectors catch a bid a little bit over a month ago where the cruise lines, the casinos, the airlines really surged. And they pulled back some, especially the casinos and also the cruise stocks. But is there areas that you’re looking at that look attractive considering, again as we mentioned earlier, it’s really limited to a few sectors that are pushing this market higher. And there’s a lot of laggers, and with the amount of money being spent, the inflation that’s going to be generated, there’s more money in people’s pockets, which is incredible considering May.

Frank Curzio: And I mentioned this stat numerous times, May personal income was down 4%, but May personal spending was up 8%. So people are generating less, and they’re spending more. So, they’re generating less in income, but they’re getting free checks from the government which is going to continue. I would think that might have to filter down to some of the players that, and even maybe the infrastructure players with the new plan coming out, maybe there’s some ideas or other sectors that you could share, that are attractive?

Rich Suttmeier: Well, I think it’s more of stock specific choices. In our portfolio, we have Caterpillar, which is the play on infrastructure spending. So pretty much, we cover a lot of different things in terms of sectors that we look at when we choose stock for our TST portfolio. And so, I like Caterpillar, but obviously that’s also related to the China trade thing. Caterpillar tends to go down if there’s bad news from China, and it tends to rally when there’s not bad news on China. So, there’s a lot of different variables that will affect the individual stocks that you pick.

Rich Suttmeier: And when I’m looking for new stocks, sure I have levels at which to buy it on weakness, and levels at which to sell it on strength. But then, I look at the weekly chart and I say, “I can’t recommend that, the chart’s negative.” So, it’s very strange to see this dynamic where the technical tools are telling you not to buy, but the indicators of where prices are and you see the market rally, you kind of have to go with it. Have you ever heard of the employment population ratio?

Frank Curzio: No.

Rich Suttmeier: Well, okay. 47.2% of Americans are jobless at the end of May. 47.2% of Americans were jobless at the end of May. In January, it was 38.8% jobless. So, we’re still not fully recovering from the great divide that we had when we had the bear market decline through the March 23 lows. So, the statistics look good, but when you look at a chart of these statistics, you’re only recovering partial of what you lost in a lot of these indicators that, “Oh, look at this. That indicator is bullish.” Yeah, sure. It’s bullish. But it’s not recovering to the extent that you think it should be. And that’s what’s underlying economic weakness that you’re seeing, like states reopen and then they stop reopening.

Rich Suttmeier: I mean, look at the state of Florida. Our number of cases is 213,000 cases of the flu, and it grows every day. That means there’s fewer people going to the stores, fewer people shopping, and that’s a problem for the economy. And on state by state basis, if enough of these big states are having problems, it’s going to filter down to the whole rest of the county. Even my favorite restaurant here in Land O’ Lakes, Florida, it’s closing on July 12th. They’re just staying open to get rid of the food that they have in their lockers, and then they’re not going to come back until September, because they can’t make money with 50% occupancy in their restaurant. They need 70% to break even.

Rich Suttmeier: And that’s what you’re seeing as a problem for this economy, and it’s not going to stop unless we really start to see these COVID cases start to decline. And they’re not declining, they’re rising. But the so called experts on the street are saying, “Oh, it’s declining. Don’t worry about it.” And that’s ridiculous. And I think you agree with me on that point.

Frank Curzio: It is. And it’s funny, because when you said with over 200,000 cases of the flu, it’s COVID, but the thing is right now in Florida people are talking about the flu, because it’s going to be hard going into flu season to figure out people do they have the flu, do they have COVID? More people are getting tested. I mean, because that’s a big deal. I mean, if you have the flu, I mean people are scared to death of COVID, and some should be, even though death rates are incredibly low. But people who have the flu are going go, “Eh.”

Frank Curzio: And they’re not going to do anything or go anywhere, which they shouldn’t anyway, but they’re going to probably quarantine themselves for two weeks unless they really get confirmation from tests whether they have it, but how do you know the difference, and how are you going to be able to tell the difference? You’re going to have to get tested. And all the people that are going to get the flu are now going to be flooding these places and getting tested thinking that they have COVID. So, it is interesting to see how this is happening, and stores are going to close, and what’s going on.

Frank Curzio: And I love your take on the Fed, too. Because it just shows how this is driven, this whole market’s been driven by the Fed. For me, I got it wrong, because I never thought the Fed would go crazy like they are now which there are going to be huge consequences for later on. Not in the short term. The amount of money they’re spending, again guys, 12.5X, so 12.5 times what they spent to back the entire financial system has already been spent, and we’re not even close to being done. 30% of GDP. So Rich, love having you on. Love getting your take. I know you always love sharing your ideas and I appreciate you coming on. And if someone wants to reach out to you personally, how could they do that?

Rich Suttmeier: Oh, you can reach out to me via email at rsuttmeier, S-U-T-T-M-E-I-E-R, at gmail.com. And I do respond to all emails, and I do like to hear from people.

Frank Curzio: Rich, thanks again so much for coming on. And as always, we’ll talk again soon.

Rich Suttmeier: Okay. Thank you, Frank.

Frank Curzio: All right, guys. Great stuff from Rich. And it’s interesting, right? The last few guests I’ve had on the podcast all said the same thing. They’re scratching their head. It’s weird charts and different things are telling them different… Again, he has his BlackBox, which did not perform that well, I’ll be the first to tell you that, during the downturn and coming back. But there’s just things that are different now this time around. And it took me a while to get it, too. I mean, there’s still going to be plenty of opportunities to short, which if you’re a Moneyflow Trader subscriber, which uses conservative option strategies to bet against individual stocks, because again, not everything is going higher, as you can see.

Frank Curzio: There’s a lot of sectors that are underperforming tremendously. But it’s amazing to just hear someone else that had been in this industry for decades scratching their heads going, “Wow.” You have to adapt. You always have to adapt. It’s something that I’ve always taught you from the beginning days of doing this podcast of 12 years. You need to adapt. You can’t be stubborn. If you had a value strategy this whole entire time, you’ve gotten murdered. You’re probably out of business. You lost all your money. You have to focus on growth. It’s a growth market.

Frank Curzio: There’s going to be a time where it’s a value market, there’s going to be a time where you need to be safe, but when you have a bid under the market like this, with a Fed that you thought may spend a trillion dollars to help backstop this market, and already spent six-and-a-half, close to $7 trillion, 30% of GDP. And chances are they’re going to spend even more than that going forward, where it could be 50%, 60% of GDP. And our economy is definitely operating at 50% plus. I mean, you can look at restaurants, and cruises, and travel industry, fine. I get that. But look at where the big money comes from.

Frank Curzio: If you’re looking at a dollar value, if you’re looking at the Amazons, you’re looking at the Microsofts, you’re looking at all the FAANGS, those technology companies, the profits, the revenue that these companies are generating are huge. And it amounts to well more than 50% of the economy. You throw in another 50%, 60% of the Feds backstopping, and that’s where the money’s coming from. We’re seeing it in the numbers, as I mentioned with the May income and spending numbers. Income down, spending up. The handing checks to people, that’s a game changer. You see, assets inflate, interest rates come down, okay. You need to adapt. We’re doing a good job on our portfolios.

Frank Curzio: I love that Rich came on, explained a lot of that stuff to you with the Fed balance sheet. Very, very important. I love that he explains it the way you could understand it, right? Most economists, it’s really tough. They’re talking about bell curves and stuff like that. When the economy is really about you, what’s going on, it should be… Man, I wish I taught economics class, I’d make it so much fun because they’re so boring these days. Anyway, podcast about you, not about me. Let me know what you thought about that interview at frank@curzioresearch.com, that’s frank@curzioresearch.com. Now, let’s get to my educational segment. Because what I’m seeing right now is absolutely incredible. Incredible. Interest rates, super low. Mortgage rates just hit a new low, the 10 year, 0.66%. Put that in perspective.

Frank Curzio: What does that mean? That’s 10-year treasury. It was over 2% a year ago, and the long term average is 4.45%. It’s 0.66%. What does that mean? It means the quest for yield is, I wouldn’t say impossible, but it’s very difficult to get. To the point where, yields across the board are just at record lows. Now, why is this such a huge deal? When you look at the markets, the things that you don’t see, you see different stocks, the institutional money, the trillions, the sovereign wealth funds, the insurance companies that make all these premiums, the best business in the world, right? You pay all the money up front for something that probably is not going to happen. Hey, you need to do something with that cash.

Frank Curzio: Their goal is to generate the most money while taking on the least amount of risk. And that was cool, you could do that through different vehicles. But now, a lot of this stuff is down a lot and it’s hard to get yields. But in today’s market, there’s an opportunity that’s absolutely huge. It’s the biggest opportunity for every single investor. Because when you’re looking at dividend paying stocks, now I’m not talking about crazy dividend paying stocks, ones that are growing that are safe, these are going to be the new Amazons and Microsofts. These are going to be the new growth stocks of the market, as crazy as that sounds. Your shot to generate 10% annual returns with these dividends included, while taking on, I don’t want to say minimal risk, but much less risk.

Frank Curzio: I’m not talking about generating 200% returns annually, which we provide and we try to have stocks like this in my Curzio Venture Portfolio. But that means we’re going to have to take a significant amount of risk. And we want to limit that risk by putting 35% stops or whatever. But we want to make sure, if we’re right, that reward justifies the risk we’re taking. That’s fine. I’m not talking about that. I’m talking about increasing you’re overall rate of return while reducing your overall risk, which is the holy grail of investing. As boring as that sounds, it’s the holy grail of investing. Imagine you could generate significant returns, 10% plus annually, without taking on that much risk. I know, you should all have your portfolios where you want to hit that grand slam. I get it. I’m an investor. I’ve been in this industry for my entire life.

Frank Curzio: I understand it, and I do that as well with my money, okay? I put money aside that I invest in gold stocks. I got crushed. They’re doing absolutely amazing right now, some of them. You always want to take on that risk, the chance that you could become incredibly wealthy. Millions, and millions, and millions of dollars you could generate. But I’m talking about the core portfolio. Your core portfolio right now. Because the way the market is set up, it’s never been this great of an opportunity. I put this example. You’re looking at collateralized debt obligations, CDOs. This is basically just a pulling together of a bunch of loans, which reduces the overall risk. Because if you pull together a hundred different loans, yeah you might have a couple defaults here and there, but as long as most of them maintain, that keeps it safe compared to having one loan and lending off of that.

Frank Curzio: So, that’s where CDOs really took off, especially 2005, ’06, ’07, as banks paid the credit agencies under the table to rate many of these bonds triple A. And you know what, a lot of them deserved those ratings early on. I mean, talk about prime loans. Good loans. Even the ones that are mediocre. But then what happened? The greed kicked in. People wanted higher returns, and they’re running out of products. They needed more loans. Where do you get them? Well, let’s go to the shitty market, the subprime loans. Which by the way, everyone things subprime loans crashed the market in 2008/2009. It wasn’t subprime. It was the super leveraging of subprime loan, of subprime CDOs by 20X. They’re creating synthetic of synthetic CDOs, which if you have a market account you can’t really identify because you’re not as leveraged as they are, but you needed a 3%, 4% decline in the housing prices.

Frank Curzio: And remember, back then everyone said, “Home prices never decline. They never decline. They keep going up.” Well, there was a five year stretch into 2007 where they usually go up 2% to 3%, and they went up an average of 20% plus annual for five straight years, so you know it’s going to revert back to the mean. And that’s what happened. But you just needed a small decline to crash this entire market. And that’s what happened. It sparked an unprecedented selloff. Right? Crashed the world economy. But we’re talking trillions of dollars that were in these vehicles. Why? Because the big crazy money, the sovereign wealths, the pension funds, insurance companies, trillions, trillions, and trillions of dollars, they need to generate income off this money.

Frank Curzio: And their goal was generate as much income as possible while taking on as little risk as possible. Which is why trillions flowed into those CDOs. Because these money managers, insurance companies, pension funds, the people who are running it could justify putting massive amounts of capital into those CDOs, because, hey, they’re triple A. You’re good. They’re rated triple A. Yet they were just rated triple A because the credit agencies are getting paid, and if you didn’t rate them triple A, then they would go across the street and whatever. You guys should know the story by now. There’s a million books written about it. Now fast forward to today. Why am I bringing up that story?

Frank Curzio: Where are these firms going to find yields that are basically negative after subtracting the rate of inflation? You’re looking from 2005-2007, a 10 year yield of more than 4%. That sounds great. That’s a big number. But inflation, CPI, was 4% to 5%. So, you’re basically losing money, the real rate, which includes inflation, because inflation was higher than the yield that you generated. So, instead of going to 10-year, that’s what the flood of money went into some of these CDOs. And people were high fiving each other, making a fortune, everything was great. But putting money in a 10-year back then meant that you were losing money when accounting for inflation. Now, the past few years have been hovering about 1.5%-2%. Right now, the rate is even lower than that because of COVID.

Frank Curzio: But even at 1.5%, and to put your money in a 10-year, a 0.6%, makes little sense. Money market funds, savings accounts, CDs. And right now there’s a massive search for yield. And I’m talking about trillions of dollars searching for a home. And the greatest opportunity right now is dividend paying stocks. And more important, I’m not talking about buying a dividend aristocrats. Be careful with dividend aristocrats. I think there’s definitely one, I think there might be two or three that have come off that list. I think it’s 25 consecutive years of increasing their dividend annually. 25 years plus. Well, with COVID, revenues down tremendously, a lot of company’s I think it’s 30% of the S&P 500 is suspended or just cut their dividends. And probably more are coming.

Frank Curzio: But it’s not just buying high dividend paying stock. No. It’s not that. It’s buying stocks that are in the right growth markets that pay a dividend. That’s the formula that is providing a level of safety in this market that’s insane. It’s an incredible opportunity. You can say it’s once in a lifetime because of what COVID created, the Fed’s spending trillions. 30% of US GDP, which I covered with Rich. You put a floor under this market. More money is coming. I mean, returns like this are going to be a layup. And stocks like this will continue to run higher and higher. Take Microsoft and Apple. Both of them pay a little bit less than a 1% yield. I think a year ago it might have been 2%. These stocks have run up tremendously.

Frank Curzio: But now, you’re generating 2% yield buying growth stock that have that liquidity, and you have a Fed backstopping the market. Where do you want to invest in? You look at 10 year treasury market, trillions of dollars, I mean you’re looking at these market caps are well over a trillion. I think they’re past a trillion-and-a-half now. Pretty close. Liquid. That’s where you’re seeing this money coming in, and it can come in and out whenever it wants. You’re generating more than a 10 year, and you’re buying companies that are supported by the Fed. Makes sense, right? I’m not talking about buying the 5% yield, or the 4% yields, which will do good in this market, but you have to make sure that these companies are growing.

Frank Curzio: And it’s amazing. You’re looking at Intel. I remember recommending Intel at a 4% yield. It’s 1.7% now because the stock has surged. There’s money flowing into it. Oracle, another company doing 1.7%. Notice how these technology companies, with these tech instruments close to a two week high. Cisco at 3%, Broadcom over 4%. Taiwan Semi over 4%. Companies trading at 52 week highs or near that. They’re in the right growth markets where money is pouring in, and they’re paying you a yield. These conditions never existed before, where you could generate great returns, while also getting a yield which are going to result to more than 10% annual returns. And as crazy as that sounds, since the 1950s, the S&P 500 companies have returned on average around 8%, including dividends and compounding them.

Frank Curzio: Here’s an opportunity. People say, “The returns are going to be 1% going forward. 2% a year going forward.” All these studies. Throw them out the door. They’ve been totally wrong. Totally wrong. They’ve been saying that for 10 years. Totally wrong. The market conditions, like I said, you need to adapt. Take what’s being given to you. If this is being handed to you on a silver platter where you could buy some great names, some great stocks, that are growing, and maybe that yield will be 1.5%-2%, and you might say, “Well, I’m generating.” These stocks will soar, because that dividend is much, much higher than the yield that you’re going to get almost anyplace else, plus you get the opportunity to buy a growth stock which is being backstopped by trillions which is being spent by the government. We’ve never had that opportunity before.

Frank Curzio: So where am I going with this? Because I was supposed to launch this. I was supposed to launch this product, Unlimited Income, about a month ago, but we pushed it off. COVID, a lot of things going on, our token as well. But now, we’re going to launch this product, Unlimited Income, next week. It’s going to be run by Genia Turanova who’s been an expert in this industry for a long time. Find these products that will be launched. This is something that I listened to you about. Okay? This is what my company is. We want to listen to our customers. So even if they’re criticisms or anything, frank@curzioresearch.com. That’s what makes us a better company. That’s why customer service is such a big focus for us, because that’s when you know the problems exist right away, and you could end them right away, and come up with a plan.

Frank Curzio: You see it. If something’s wrong, whether it’s a simple as link, or something didn’t work, or whatever, people pissed off about something that was written, we see it right away from you, from our customers. That’s what this business is about. And across the board, when I said, “What newsletter do you want me to start,” almost everyone, I would say more than 80% of those emails, “Please start an income newsletter.” And I didn’t want to start an income newsletter. I didn’t want to start one that’s going to give you dividend aristocrats and charge you for that. No. That’s not what we’re about here. This is going to be different. You’re going to see lower than expected yields, but companies that are in the right industries, growth industries. And Genia is one of the best at doing this. This is what she’s done for decades.

Frank Curzio: So having her on this product is fantastic. I know a lot of you, if you subscribe to Moneyflow Trader, or if you’re a Curzio One member, which means you’re a member to all of our products, it’s a premium membership, this has been in beta version for a couple of months, look at homework. Now we’re going to release to the public. And the best part of it is, I’m putting it at a price point because I know so many of you wanted this. This is something we could charge easily over $1,000, which we call in our industry a backend. This is going to be an incredibly cheap newsletter that every one of you can afford. But that price point is only going to be available to you, podcast listeners. We offer this to you first before we go out to the masses and market these products.

Frank Curzio: Again, we’re a business, we want to generate money, but we want to listen to our customers, provide you the best products, or the best people on those products. Because the end of the day, you’re listening to us to help you become better investors and to make money. And that’s what we do in this product. It’s been carefully crafted. You’re going to see lots of cool ideas, preferred and close end bond funds, close end funds. Things that provide yield, but also the opportunity to buy growth stocks that are paying 1%-2% yields where a lot of people out there may be looking for 5%-6% yields, you could’ve bought IBM which I love. I like IBM. But imagine buying Microsoft, 2% yield a couple years ago, and look how much you’re up in the stock. This is growing much, much faster because they’re in the right growth markets.

Frank Curzio: Just like Apple. Apple’s growing as well. Tremendously. And these are incredibly liquid stocks where you’re seeing tons of money flow into them, you’re going to continue to see that trend as long as interest rates are low, because buying those dividend paying stocks in these growth markets, I cannot think of one place better to put your money if you’re an insurance company, if you’re a pension fund, sovereign wealth. And that’s why you’re seeing the market caps for some of these large companies explode higher even though the fundamentals may not support where they are. It’s because they’re liquid and people need. They die for yield. There’s trillions searching for it, and you’re going to see that money flow down to so many other stocks. This is going to be a new growth area and you don’t have to take on a considerable amount of risk to generate very, very good returns going forward.

Frank Curzio: But you have to start now. We’re launching this product next week. Any questions or comments about it, frank@curzioresearch.com. We’re really proud to launch this. We haven’t launched a product in let’s say a year. So always careful, always ask our customers what they want. I know you guys really want this, and I know you’re going to be really happy with this product. I love Genia, and we’ll talk more about it. But if you’re not on our email list, send me an email frank@curzioresearch.com, I’ll make sure you get the promotion. Please, sign up to the link that we’re sending you. Do not sign up just going directly to the website. I will provide a link for you. But it’s going to be a special deal available only to Curzio Research podcast listeners and to our subscribers.

Frank Curzio: Okay, guys. That’s it for me. To see more of me live, I tweet a lot, I do live videos. Found on Curzio Research YouTube page. Subscribe to that. I think we had a few hundred subscribers, now well over 2,000. I mean, it’s getting bigger and bigger because I’m doing more and more live videos which are pretty cool. Just two or three a week at least, updating market conditions and stuff like that. Love the comments coming in, which is really cool. And again, if you want to tweet me, @FrankCurzio is my handle. I probably post about three, four times a day. Always great information. Information that I have the privilege to have access to, and I’ll just quote different people, quote different research out there. Bullish, bearish, there’s no bias to it, but a lot of stats that are going to make you think and be like, “Holy shit.”

Frank Curzio: Like the one I recently posted where when we saw the market increase by more than 17%, which I think was only five times in our history, and this was in a quarter, the following quarter GDP increased by more than 4%, and the following quarter after increased by 5% every single time. To me, that’s an interesting fact. A lot of you see this huge run up and, “Wow. It’s going to come down.” But GDP usually explodes when, so it’s lagging, when you see a market move like that in any given quarter. But just things that make you think, whether you agree with my thesis or not, I post a lot of great stuff on those social media channels if you want to join me. Again, Curzio Research YouTube page, or you can tweet me, follow me on Twitter, @FrankCurzio. Thanks, guys. Really appreciate all the support. Love you guys. And as always, I’ll see you in seven days. Take care.

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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 July 8th. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break down the headlines and tell you what’s really moving these markets. It’s pretty interesting out there when it comes to the state of our county. It ranges from being the richest most powerful country in the world, somewhere where you’re proud to live and raise your family, to America is a horrible place, we need change, and we need to remove anything that symbolizes our history of becoming a free nation. It seems like there’s no middle these days. If you’re looking at that, where America a terrible place, this includes knocking down statues, not just of slave owners, but of people that helped abolish slavery.

Frank Curzio: And what I found interesting in the past week, is seeing people calling for the destruction of Mount Rushmore. And to make matters worse, these calls were even louder on the 4th of July when the president gave his speech about the history and freedoms of our county. And some politicians were trashing the US, how bad we need change. Even our potential Vice President, Tammy Duckworth, believes that we should, “Have a conversation about removing statutes of George Washington.” And to be fair, she didn’t say, “Well, we actually need to remove these statues.” She didn’t actually say that. But she did not say that we shouldn’t remove statues of our first president. Which is better described as being a politician. Or bitching about everything while having zero solutions, or let me wait to see what the polls say before I express my opinion.

Frank Curzio: That’s how you become a good politician. Complain about everything, never solve anything, and that’s how you win elections. You touch into the emotions of people. But more to the point here, to suggest that we should have a conversation about this, and for people to be talking about this on the 4th of July, our county’s independence, what a bunch of spoiled, rotten, assholes. Sorry to use that term. I can’t think of a better one. Especially considering, you would not be where you are today, none of us would be, without George Washington. Someone who spent most of his life in the military, became commander-in-chief. Biggest goal was to be part of a self-governing nation. That’s what he was fighting for. Unity, togetherness.

Frank Curzio: We can have healthy debates among people to help achieve the best outcomes for America. That’s what he fought for. A guy that lost plenty of battles, but got up and kept fighting. Which is what America is all about, never giving up. Always fighting. Always going to make mistakes, always going to fall. Keep fighting and move forward. That’s the American dream. There’s a reason why there’s what is it, 10 Rocky movies? And it’s the reason why most people are going to watch it, including me, the next 20. Because you see you just keep fighting. You get up. That’s the American spirit. People love that. It sells in America, it’s great. It’s awesome. This country allows you to achieve things that you can’t achieve in other counties.

Frank Curzio: You’ve got Washington, someone who after his victory at Yorktown could establish monarchy, where he would become king. And it was up to him to become a king, which is normal. We’re talking about 18th century. Kings, right? There were tons of big name offices, big name people that wanted him to become king. Think about that for a minute, how much power comes with being a king. I mean, Roman Empire. I mean, you’d be the strongest individual in the world. What you just achieved, you are the king. How many people would say no to that? Washington said, “No. That’s not what I want.” He actually said the offer was not just inappropriate, but dishonorable. And made sure that a topic of speculation, anything, any talk of it was never to be brought up again.

Frank Curzio: Because that’s not what he wanted. And in his second term as president, which you can go basically anything you want, probably said, “I’ll be president until I die,” he could’ve said. But he said, “No. I’m stepping down.” He transferred his presidency to John Adams in 1797, which was hailed as one of America’s greatest democratic traditions. In fact, after refusing to be king and stepping down as president after his 2nd term, King George III said, “Washington is the greatest character of this age.” So think about that. Take that in. The opportunity to be king. King. Anything you want. Everybody kisses your ass for the rest of your life. You dictate everything. But he changed our entire history, freedoms, constitution, wouldn’t even have states right now. Senators to govern. Congress. Free speech.

Frank Curzio: I mean, North Korea maybe looking at us right now saying, “Wow, those guys are crazy over there.” It’d be totally different. A person that built the foundation of the freedoms that you live today. So that people who are in congress right now even hinting at the thought of washing away Washington’s memory? You are a complete and utter asshole. I can’t say it better than that. And you really need to brush up on your history. Now, I’m not saying Washington did not make mistakes or have flaws. But our freedoms today exist because of him. And everybody has flaws. We all do. And Martin Luther King Jr., who outside of Washington, is the only American whose birthday is a national holiday. Little fact there. He plagiarized his doctoral dissertation. Fact.

Frank Curzio: He was banging dozens, if not hundreds, of women while being married. In fact, he had three women in his room the day he died. There was a woman right outside waiting for the other women to finish to go back in. That’s when he got shot. He called himself a democratic socialist. That’s what Martin Luther King called himself. Kind of? Not kind of. But you’ll get politicians, Democrats, Republicans, crucify Bernie Sanders for admitting to being the same thing, a democratic socialist. And they threw him right out of there, really quick. Democrats especially threw him right under the bus. Now they love him, they need his votes, they’re going to be nice to him. But man, when he was running, all of them destroyed him.

Frank Curzio: Did you see the debates? They destroyed him. They destroyed him. But do you take away all of Martin Luther King’s achievements? Do you erase his history because he wasn’t perfect? Should we knock down statues of him all over the county and change the name of what, hundreds of streets that bear his name? Even though his efforts for racial inequality, civil rights movement, changed the course of history for black people, helped end segregation. Unbelievable achievements. I mean, looking at Washington, there’s a reason why there’s no Hollywood movies made about the guy, right? Because he wasn’t exciting. He believed in unity, not power. Not division. He helped establish the Supreme Court, create the first US Census. Laid the cornerstone of the White House. Helped create our national government.

Frank Curzio: Made sure America stayed neutral when foreign nations went to war, which allowed us to become a powerhouse nation. I mean, when it comes to movies, people don’t want to hear about that. They want to watch movies about dictators, death, not people doing good shit. That’s not exciting. So, I’m going to look, mob movies, violent, serial killer movies, Troy, Caesar, death, chaos. That’s what sells. Politicians, and anyone for the matter, especially, especially politicians really shitting on Washington. It’s like AT&T knocking down statues and removing all the history associated with Alexander Graham Bell. I mean, are you kidding me? The reason why the company exists today. The reason why you have these freedoms is because of this guy and you want to knock down his statue because you don’t know your history?

Frank Curzio: I know many of you out there on this podcast, a pretty big audience, millennials, gen-xers that email me all the time, but millennials? And growing up, when I listen to them talk and yell, I mean, I just feel like you’re being taught to hate and focus on all the negatives. I mean, everybody has negatives. Everybody you know has negatives. But your best friends are the ones that know those negatives, and don’t judge you, and treat you the same, because they know you’re a great person. And those are your best friends. Not the ones that want to be with you when you’re successful or things are good. No. It’s the ones when you’re down and the calls that you get when you’re down, those are the good friends.

Frank Curzio: But the hate out there. I mean, I’m not sure how it happened… Where, and I’m not talking about the whole younger generation, but a lot of it and they talk about America as they hate it. And I’m struggling to find out why that is. And think about it. They’re telling everyone they hate it on their social media accounts, which they’re logging in through their $1,200 iPhone while they’re drinking Starbucks coffee, hanging out. I mean, it’s crazy. I mean, get out there. I traveled later on in probably my late 20s, and I traveled a ton, as you guys know for business. But really started in my late 20s and early 30s. Go to other countries.

Frank Curzio: When you go to other countries you realize how great you have it. When you’re bitching about traffic, you’re bitching about different things. When you go to China, they don’t have access to clean water in some places. You have to follow the government regime. You can’t speak out about anything. There’s no freedom of speeches in many countries. It’s not like it is here. And now you’re shitting on that and people are teaching you how bad things are? I mean, what is going on? Get out there. Millennials, getting tons of emails from you guys because like I said I’m going to start a clinic right after we launch our security token, which is going to go free trading in about six weeks, very excited. Going to have a big announcement for everyone. I mean, our offering was only available to accredited investors, and now it’s going to be trading on the global exchange where anyone can buy it.

Frank Curzio: And after that, I’m going to start this clinic, it’s going to be filled with millennials to help you guys become better investors. It’s going to be tough. It’s not going to be easy. I’m going to get on you. But I just feel like it’s a group, or your group that people really don’t care about. They’re just trying to steer you into the direction they want. They want you to support their agenda, when you should be free thinkers. Do your own research. I mean, it’s the best advice I can give you. This is the best advice I can give you as a young investor. And it’s based on the mistakes I made when I was your age, okay? I’m not a genius or anything. I made mistakes. I’m trying to help you out because I want you to avoid the mistakes I made, and hopefully you’ll be able to pass that down to the younger generation when you’re my age, which is 35. Actually, I’m pushing 50, so a little bit older. Anyway.

Frank Curzio: But the best advice I can give is forget about all the political bullshit. Forget about protesting, holding up signs, forget about hating Trump or hating Biden. Stop hating the Fed. Stop hating bankers. Stop hating Wall Street. Because that’s for losers. That’s what losers do. I’m not saying you don’t have to be passionate about it, but if you want to be a winner, if you want to be successful, if you want to start building generation wealth, starting a family, making sure they’re taken care of, starting early, instead of focusing on all the BS, all you need to do is ask yourself one question. How do I make money off it? No matter what the situation is, that’s the question you should ask.

Frank Curzio: How do you make money from the Fed spending an unlimited amount of money? How do you make money if Trump loses the election? How do you make money from interest rates being super low for a very long time. And every time you go out, every time you do travel, ask people questions. Cab drivers. “How’s business?” They know more than anyone out there. They know how busy Vegas is at certain times, and the building going on. They know everything that’s happening in that town. They drive every single day. Every single day some of them for 10, 20, 30 years. I mean, you’re going to barbecues, ask your friends, your neighbors, “How’s business doing?” In their industry. Educate yourself. Talk to people who have a different opinion than you, but be respectful.

Frank Curzio: I mean, hell, I don’t agree with everyone I interview on this podcast, but I respect them and I respect their opinion, and I’ll challenge it, but I’m not calling them curse words or saying, “You’re crazy. You have no idea what you’re talking about.” Because in the end, when we look a year later, they may be right. They’re not going to be right all the time. But talk to everyone, because every person, every person out there, I’m a true believer of this, is good at something. They are. Like my wife, she’s the best at busting my balls. There’s nobody better in the world, there’s nobody better. I’m just kidding. I’m making a point here. And believe me, I bust her chops much, much more. She’s doing a great job. She’s being at home with the kids, which has not been easy during this whole entire time.

Frank Curzio: But more to the point here, people are just good at different things that you don’t cover. I mean, you guys listen to this podcast for investment advice, but I mean, a lot of this investment advice comes from so many emails. frank@curzioresearch.com, that I get from all over the world. And it’s not just CEOs. Thing about it from a millennial point of view, with Facebook. I mean, Facebook bought Instagram. And you go back and watch TV, and you look at every 45 year old plus analyst on CNBC, Fox Business, wherever, Bloomberg, destroying Zuckerberg for buying that company. What was it? Two, two-and-a-half billion dollars? “He doesn’t have revenue. He’s too young. He doesn’t know anything. He should be fired. He should get out. He’s got to get out of that company. He can’t run Facebook.”

Frank Curzio: What’s the valuation in Instagram? I don’t know. I haven’t checked. $25, $30 billion dollars? Some genius, some person who follows finance all their lives could figure that out. He knew social media. He knew what people want. This is what he does, whether you like the guy or not. And it’s amazing, right? This is the millennial crowd of a company. If you’re looking at our biggest companies in technology are created by millennials. And people are shitting on you right now, which I think is a joke. Not giving you a chance and complaining that you guys don’t work too hard. You guys have more access and are 10 times smarter than we were. We didn’t have access to what you have access now to, in terms of getting real-time information in a second.

Frank Curzio: And when I first started in this business, there was no emails or anything. You had to wait for the 10k. You couldn’t even get on a conference call. Now anyone can go on a conference call, or a quarterly conference call for these companies. And listen just same time analysts are listening to. You didn’t have that advantage back then. You had to get your 10k. You found information weeks, sometimes months later. There’s no access. The stuff you have access to, the productivity is incredible. You guys have. And when you’re out there, talk to everyone. There’s experts in real estate, manufacturing, people who own their own businesses. You see sports agents, restaurant owners, software developers. Talk to people who live in California, what’s really going on there since it’s a hate Trump crowd, but if Biden gets elected and raises taxes, it’s probably going to result in a lot fewer jobs in technology.

Frank Curzio: And this is Biden, what he said he was going to do. He wants to take more money out of corporations, and if he does that, they’re not going to hire as much. I’m not saying that’s a reason to vote for Trump or not. I’m just telling you, that’s what you have to look at. There might be other things that are more important to you. Immigration or whatever. Whatever you want, that’s your choice. That’s your choice. But is interesting to see how this is going to play out. But talk to everyone. Make it a state of mind. Just start conversations with everyone you meet. Because there’s one thing that’s a certainty. People love talking about themselves. And I’m not saying that’s a bad thing, but it’s the reason why social media exists. It’s, “Hey, look what I’m doing here.” Everyone needs to post everything they do in every second of the day. “Watch me. I’m here on vacation. Look how much fun I’m having. Oh I love my husband, I love my wife.” It’s all about you, you, you.

Frank Curzio: People love that. Just shut up and listen. Because these people have access to stuff that you don’t have access to in real-time. In small business, when I put it all together with the network we have this podcast talking about well over 100,000 downloads every month, the emails that come in are incredible. The information you get before it’s reported because a lot of this stuff is lagging, like economic data, same store sales on a company like Chipotle when Ebola kicked in. I mean, how many emails did I get where it was like 400 or 500 stores, I must have got 100 emails from people in different states saying, “Everything is empty. We’re expecting same store sales to go up 30% plus.” And I’m like, “There’s no way it’s going to happen.” And the stock winded up crashing. Yes, it’s at an all-time high now, but getting ahead of that news before a company reports is real-time information.

Frank Curzio: So what you need to do is change your mindset. Always ask that question, “How do I make money?” Because it’s easy to follow the crowd, it’s easy to hate Trump, it’s easy to hate Pelosi. That’s the easy thing to do. But the rich, successful people, that’s how they think. They figure out how these policies can make them money. Don’t worry about the outcome. If it happens, how are you going to make money? Because at the end of the day, you’re fighting for someone, political agendas for people who don’t give a shit about you. They only care about power. And to get that, they need your vote. There’s a reason why no one’s talking about racial inequality. It’s a big thing now. It’s huge. Because they want votes, they want power. And they’re going to use whoever they can to get in there.

Frank Curzio: They don’t actually care about you. They didn’t care about the subject you’re talking about before this, did they? No. Has Biden talked about racial inequality? Has Trump talked about racial… No. Everybody wants to talk about it now because it’s a hot topic, and they need your vote, and it’s an election year. But be different. Don’t be the same as everyone else. It’s easy to hold up a sign and yell at people, and bark on social media. That’s the easy thing to do. They want you to do that. You must be different. Let’s look at how is it going to benefit you, your family. Because in the end, that’s the thing that matters most. It’s your family. It’s your reputation. It’s how your kids are going to look at you. That’s what matters the most.

Frank Curzio: And I can tell you, most millennials even the ones I talk to, they don’t think that way. And I didn’t think that way when I was young. So hopefully, you learn from my mistakes, hopefully you’ll be able to retire in your 50s instead of your 70s, but again, look at different policies. What you need to do to create generational wealth. Low interest rates. Stop buying assets. Straight to low across the board. I’m going to go over that with my educational segment. It’s crazy. But there’s so many things going on right now that it is different this time. It is different. The Fed this spending as much money, never happened before. 10 year, 0.6% never happened before, mortgage rates, record lows. Stuff going on right now, where profits really don’t matter.

Frank Curzio: You’re seeing momentum names that were expensive. Man, they were expensive months ago, have tripled. And understand the conditions that are going on and what’s going to happen. Instead of looking like, “Oh, I hope this person loses the election,” what’s going to happen? What’s your play if Biden wins, what’s your play if Trump wins? What’s your play if Goldman gave out a good report on this? If you see that the election is very close, which is a huge possibility, and extends where they’re recounting votes? Man, forget it. I think that’s going to crush the markets, if that lasts a month or two months, like we saw with Gore, right? A good possibility that could happen. A lot of states a very, very close. The last election was a blowout, you didn’t have to worry about it.

Frank Curzio: How do you make money off that? That’s how you need to look. That’s how you need to think. And most important here, man, learn your history. Talk about a guy where all of our freedoms exist because of this person. Yes you could pick and choose little things that are bad about anybody, anyone. But man, you got to take the whole package, and when you look at the whole package, George Washington, unselfish with what he did for this country, and you want to destroy his monument because you don’t know the history behind it? Because you had the right to that freedom of speech because of him? Come on. Holy cow, man. Do you know how bad that is? It’s terrible. It’s terrible that people are being conditioned this way. Stop being conditioned. Do your own homework. Do your own research, and start caring about yourself. Because that’s what matters most.

Frank Curzio: Now, speaking of respectfully disagreeing with my guests sometimes, I have a great interview set up for you today with Rich Suttmeier. He was a long time bear. I was a long time bull. But I always respected his opinion, and yes, he’s a very smart analyst which you’re about to see in a minute. He’s an expert when it comes to analyzing the Fed’s balance sheet, which is out of control. Something he’s been doing for over three decades. Rich, as you know, also runs our 2-Second Trader newsletter which he uses Black Boxes to find the best trade for our subscribers. Again, I don’t have to tell you how the balance sheet has exploded higher, spending trillions to inflate our economy, and it’s going to continue. So, what does that mean for you? How do you make money off of it?

Frank Curzio: What’s going to happen? What’s going to happen in the short-term? What’s going to happen in the long-term? It’s a great conversation we’re going to have, so definitely listen up. And my educational segment, I’m going to break down a sector, what every single investor needs to be invested in right now. I’m not talking about tech, I’m not talking banking, healthcare, small caps, infrastructure, it’s something else. And this sector’s about to see trillions in inflows over the next couple years. It’s going to push many names significantly higher starting now. And trust me, this educational segment, it’s a must listen to for everyone who owns stocks in this market. I promise this segment will not disappoint. But first, let’s get to my interview with the one and only Rich Suttmeier. Rich Suttmeier, thank you so much for joining us on Wall Street Unplugged.

Rich Suttmeier: Hey. How you doing, Frank?

Frank Curzio: Really, really good. So, I was looking forward to this conversation because, and we’ll get to your 2-Second Trader newsletter in a minute, because I know we have a lot of subscribers to that. But I wanted to bring you on because you’re one of the smartest people I know when it comes to analyzing the Fed’s balance sheet, and what’s going on today is absolutely insane. Even after the money is spent, which is 30% of GDP, we’re looking at a Fed that said, “We’re not even concerned about a balance sheet.” Which you’re going to see more stimulus come out. The market issues are favorable, where Main Street’s going to struggle, how Wall Street’s going to be doing… people won’t ask if it’s going to be doing good.

Frank Curzio: We’re just going to continue, right? We’re going to maintain that we need to continue to hand out checks to people and provide stimulus. So, this isn’t a short-term thing. It’s not even a US thing, it’s a world thing. But let’s talk about the Fed balance sheet and the consequences with someone that studies this, because it seems like short term, nobody cares. But for someone that’s being doing this for a long time, what are some of the things that worry you of what the Fed’s doing right now?

Rich Suttmeier: Well the Fed balance sheet, it’s been in around the $4.5 trillion area for a long time. Pardon me. And then, just before the market low of March 23, they started to spike the balance sheet significantly. And it rose to $7.16 trillion on June 8th, which was the day of the market top. So, clearly this rally since the March 23 lows is purely based upon the spike in the Fed balance sheet. Now if that starts to taper off, then you’re going to see the stock market decline, because the Fed stopped increasing its balance sheet. And so, that’s the critical thing to look at, is to keep an eye on this balance sheet to make sure it’s not peaking. If it peaks, then we have a correction in the stock market.

Frank Curzio: So I think we’re all on the assumption here, at least from what the Fed’s telling us, that this isn’t going to stop anytime soon, so they’re going to continue to spend money, spend trillions. They’re calling it phase four which is going to come out, more checks to people. We’re not even talking about a trillion dollar infrastructure plan that’s in the works that both sides agree with, but who knows if we’ll get it. Considering that’s going to happen, almost, I don’t want to say guarantee which is a bad word in finance to use, but should we assume that stocks are going to continue to have the bid under them because even when things go bad, it seems like the Fed’s going to be there to back everything up and just to continue spending money.

Rich Suttmeier: Yeah. But I see some problems on the negative divergences on the various indices. Like an island reversal for the DOW, and an island reversal for the S&P. What happens with an island reversal, they gap higher, and they did on June 5th, gap higher. And then they gapped lower on June 11th, and that created what’s called an island reversal. In other words, you can circle those daily bar charts on the charts, and now the DOW is below its 200 day simple moving average, which is also a warning since it can’t get back to that island that it created at the June high. June 8th was the high for this particular move.

Rich Suttmeier: And now we’re a month away from that June high, so it’s starting to show negative divergences in some of the charts, like a declining weekly stochastic reading for the DOW, the island reversal for the S&P. The only thing that’s doing the bidding for the market right now is the NASDAQ. Now, I have a semi-annual risky level at 10,639 for the NASDAQ, and it’s now in an inflating, parabolic bubble formation. Meaning, that its stochastic reading is above 90 on a scale of zero to 100. And that I call an inflating parabolic bubble. So, I have a feeling that we’re going to have a surprise quick downturn if you don’t see the balance sheet for the Federal Reserve spiked a little bit higher from its $7.17 trillion dollars.

Frank Curzio: That’s interesting, too. Because a lot of people out there even listen to this podcast. If we cover this stuff every single day of our lives, every minute of our lives, but people who have jobs, they come to us to see what’s going on, and they’re just reading papers. When you read the papers, the markets are at all-time highs. Everything is great. Not that everything is great, but they see stocks roaring higher. But yet, like you said, it’s being driven by mostly technology stocks. Yes, you have biotech in there, which sometimes they lump in with technology, communication services.

Frank Curzio: But when you look at energy, financials, travel-related companies. I mean, these are some well, well, well off their highs. From someone that analyzes every sector using your Black Box system, are you seeing ideas out there? Even though stocks are at an all-time high, there’s a lot of names that are still well, well, well off their 52 week highs.

Rich Suttmeier: Yeah. And well, when you screen with the Black Box tool, the Black Box tool provides you levels to buy on weakness and to sell on strength, but when you look at the weekly charts for a lot of these stocks, they’re negative. Because you’ve got that DOW transport under its 200 day simple moving average. The Russell is underneath it’s 200 day simple moving average. And like I said before, the DOW is under its 200 day simple moving average. The S&P is hovering above and below its 200 days. So, it’s only really the NASDAQ that’s stretching this thing to new highs.

Rich Suttmeier: And I think that’s limited to 10,639 as I said earlier, because it’s in a parabolic bubble of its own. So, I have a feeling the upside is limited on the NASDAQ, and it’s up to the Fed to expand that balance sheet every further. And if it starts to look like it’s peaking, the market’s got a problem. Because it definitely tracked the balance sheet higher since the March 23 lows. And that was a great observation that you seemed to imply to me when we chatted the other day.

Frank Curzio: Yeah. I mean, it is amazing. And even when you look at your system, your Black Box system, and I going to say that for a lot of systems out there, I’m not talking about the algorithm systems where these guys are front running the market. I’m not talking about those which they get away with. I’m talking about systems, like yours, and so many out there, and I love yours, that that had been built over decades to focus tons of variables. But almost all of that, everyone that has these systems, even with tentacles, you’re looking at earnings growth/sales growth, right?

Frank Curzio: I mean, those are two factors. Even if they’re little factors or they don’t carry as much weight as the rest of the variables within the system, they have to be in there because that’s what drove stocks since we’ve been doing this for decades, and decades, and decades ago, right? But now, we’re seeing a market where earnings are not going higher, sales aren’t going higher. They’re still declining. I mean, this is supposed to come back this year. It’s not coming back this year. Now it’s not even 2021. People are pushing out GDP estimates and earnings returning back to normal in 2022. Right? That’s a long time from now.

Frank Curzio: But yet, it’s one of the first times we’re seeing the market roar higher, and it’s not because of companies reporting stronger earnings. It’s companies like Levi’s going down 2% after they missed by a mile. Nike, disaster core. Nobody cares. 95% profits are down for Walt Disney. I don’t even know how they’re making money, generating money, yet the stock hasn’t gotten crushed. It’s just holding up pretty well. Do you have to update your system to these new measures? Because everyone says, “Well, be careful because it’s never really different.” It’s different. This thing’s going on that we’ve never seen before, and it seems like it’s going to continue for a long time.

Rich Suttmeier: Well, my system is based upon nine yearly closes, nine semi-annual closes, et cetera, down below. So, it’s looking at nine years of market volatility and my assumption in doing it that way is that nine years of data for any stock or any market, anticipates all possible bullish and bearish events. So what I come up with is, there’ll be a value level that could be way below a stock price, and all of a sudden if a stock crashes, it’ll go down to that level. And that’s where you would buy it. And in similar vein, if a stock goes ballistic, there’s usually a risky level at which to sell it.

Rich Suttmeier: For example, if you look at obviously the stocks that are hitting all-time highs now like Apple, and Amazon, and Facebook, and Netflix, Tesla, and Microsoft, there are risky levels for some of them that are there for the sell. And even with Amazon, there’s a risky level at which to sell. So to me, I believe that the upside to this market and specific stocks is now limited in that it’s time to reduce holdings, book some profits. There’s nothing wrong with taking profits in a market, even if it keeps going higher. You don’t have to be 100% invested to be a good investor. There’s nothing wrong with booking profits. And then, that gives you some room if the stock goes down 10%, 20% to buy it back.

Rich Suttmeier: And that’s the way I think the active investor should be playing this game right now. If you’ve been in the market, you made a lot of money, it’s time to be booking some profits and trading the volatility that’s going to happen. Everyone’s comparing this year to maybe 2008 when we had a pretty good market falloff, but I think it’s more like 1987, when we had the crash of October of 1987. The market it was going up, up, up, up, up, with big volatile swings like we’re getting now, from much lower levels of course in 1987. But then, all of a sudden one day there were no buyers, and it went down with the steepest percentage decline in history. And I can see that happening again in 2020, Frank.

Frank Curzio: Sounds like you’re cautious, but as I mentioned earlier, there are a lot of sectors still trading well off their highs. We saw a lot of these sectors catch a bid a little bit over a month ago where the cruise lines, the casinos, the airlines really surged. And they pulled back some, especially the casinos and also the cruise stocks. But is there areas that you’re looking at that look attractive considering, again as we mentioned earlier, it’s really limited to a few sectors that are pushing this market higher. And there’s a lot of laggers, and with the amount of money being spent, the inflation that’s going to be generated, there’s more money in people’s pockets, which is incredible considering May.

Frank Curzio: And I mentioned this stat numerous times, May personal income was down 4%, but May personal spending was up 8%. So people are generating less, and they’re spending more. So, they’re generating less in income, but they’re getting free checks from the government which is going to continue. I would think that might have to filter down to some of the players that, and even maybe the infrastructure players with the new plan coming out, maybe there’s some ideas or other sectors that you could share, that are attractive?

Rich Suttmeier: Well, I think it’s more of stock specific choices. In our portfolio, we have Caterpillar, which is the play on infrastructure spending. So pretty much, we cover a lot of different things in terms of sectors that we look at when we choose stock for our TST portfolio. And so, I like Caterpillar, but obviously that’s also related to the China trade thing. Caterpillar tends to go down if there’s bad news from China, and it tends to rally when there’s not bad news on China. So, there’s a lot of different variables that will affect the individual stocks that you pick.

Rich Suttmeier: And when I’m looking for new stocks, sure I have levels at which to buy it on weakness, and levels at which to sell it on strength. But then, I look at the weekly chart and I say, “I can’t recommend that, the chart’s negative.” So, it’s very strange to see this dynamic where the technical tools are telling you not to buy, but the indicators of where prices are and you see the market rally, you kind of have to go with it. Have you ever heard of the employment population ratio?

Frank Curzio: No.

Rich Suttmeier: Well, okay. 47.2% of Americans are jobless at the end of May. 47.2% of Americans were jobless at the end of May. In January, it was 38.8% jobless. So, we’re still not fully recovering from the great divide that we had when we had the bear market decline through the March 23 lows. So, the statistics look good, but when you look at a chart of these statistics, you’re only recovering partial of what you lost in a lot of these indicators that, “Oh, look at this. That indicator is bullish.” Yeah, sure. It’s bullish. But it’s not recovering to the extent that you think it should be. And that’s what’s underlying economic weakness that you’re seeing, like states reopen and then they stop reopening.

Rich Suttmeier: I mean, look at the state of Florida. Our number of cases is 213,000 cases of the flu, and it grows every day. That means there’s fewer people going to the stores, fewer people shopping, and that’s a problem for the economy. And on state by state basis, if enough of these big states are having problems, it’s going to filter down to the whole rest of the county. Even my favorite restaurant here in Land O’ Lakes, Florida, it’s closing on July 12th. They’re just staying open to get rid of the food that they have in their lockers, and then they’re not going to come back until September, because they can’t make money with 50% occupancy in their restaurant. They need 70% to break even.

Rich Suttmeier: And that’s what you’re seeing as a problem for this economy, and it’s not going to stop unless we really start to see these COVID cases start to decline. And they’re not declining, they’re rising. But the so called experts on the street are saying, “Oh, it’s declining. Don’t worry about it.” And that’s ridiculous. And I think you agree with me on that point.

Frank Curzio: It is. And it’s funny, because when you said with over 200,000 cases of the flu, it’s COVID, but the thing is right now in Florida people are talking about the flu, because it’s going to be hard going into flu season to figure out people do they have the flu, do they have COVID? More people are getting tested. I mean, because that’s a big deal. I mean, if you have the flu, I mean people are scared to death of COVID, and some should be, even though death rates are incredibly low. But people who have the flu are going go, “Eh.”

Frank Curzio: And they’re not going to do anything or go anywhere, which they shouldn’t anyway, but they’re going to probably quarantine themselves for two weeks unless they really get confirmation from tests whether they have it, but how do you know the difference, and how are you going to be able to tell the difference? You’re going to have to get tested. And all the people that are going to get the flu are now going to be flooding these places and getting tested thinking that they have COVID. So, it is interesting to see how this is happening, and stores are going to close, and what’s going on.

Frank Curzio: And I love your take on the Fed, too. Because it just shows how this is driven, this whole market’s been driven by the Fed. For me, I got it wrong, because I never thought the Fed would go crazy like they are now which there are going to be huge consequences for later on. Not in the short term. The amount of money they’re spending, again guys, 12.5X, so 12.5 times what they spent to back the entire financial system has already been spent, and we’re not even close to being done. 30% of GDP. So Rich, love having you on. Love getting your take. I know you always love sharing your ideas and I appreciate you coming on. And if someone wants to reach out to you personally, how could they do that?

Rich Suttmeier: Oh, you can reach out to me via email at rsuttmeier, S-U-T-T-M-E-I-E-R, at gmail.com. And I do respond to all emails, and I do like to hear from people.

Frank Curzio: Rich, thanks again so much for coming on. And as always, we’ll talk again soon.

Rich Suttmeier: Okay. Thank you, Frank.

Frank Curzio: All right, guys. Great stuff from Rich. And it’s interesting, right? The last few guests I’ve had on the podcast all said the same thing. They’re scratching their head. It’s weird charts and different things are telling them different… Again, he has his BlackBox, which did not perform that well, I’ll be the first to tell you that, during the downturn and coming back. But there’s just things that are different now this time around. And it took me a while to get it, too. I mean, there’s still going to be plenty of opportunities to short, which if you’re a Moneyflow Trader subscriber, which uses conservative option strategies to bet against individual stocks, because again, not everything is going higher, as you can see.

Frank Curzio: There’s a lot of sectors that are underperforming tremendously. But it’s amazing to just hear someone else that had been in this industry for decades scratching their heads going, “Wow.” You have to adapt. You always have to adapt. It’s something that I’ve always taught you from the beginning days of doing this podcast of 12 years. You need to adapt. You can’t be stubborn. If you had a value strategy this whole entire time, you’ve gotten murdered. You’re probably out of business. You lost all your money. You have to focus on growth. It’s a growth market.

Frank Curzio: There’s going to be a time where it’s a value market, there’s going to be a time where you need to be safe, but when you have a bid under the market like this, with a Fed that you thought may spend a trillion dollars to help backstop this market, and already spent six-and-a-half, close to $7 trillion, 30% of GDP. And chances are they’re going to spend even more than that going forward, where it could be 50%, 60% of GDP. And our economy is definitely operating at 50% plus. I mean, you can look at restaurants, and cruises, and travel industry, fine. I get that. But look at where the big money comes from.

Frank Curzio: If you’re looking at a dollar value, if you’re looking at the Amazons, you’re looking at the Microsofts, you’re looking at all the FAANGS, those technology companies, the profits, the revenue that these companies are generating are huge. And it amounts to well more than 50% of the economy. You throw in another 50%, 60% of the Feds backstopping, and that’s where the money’s coming from. We’re seeing it in the numbers, as I mentioned with the May income and spending numbers. Income down, spending up. The handing checks to people, that’s a game changer. You see, assets inflate, interest rates come down, okay. You need to adapt. We’re doing a good job on our portfolios.

Frank Curzio: I love that Rich came on, explained a lot of that stuff to you with the Fed balance sheet. Very, very important. I love that he explains it the way you could understand it, right? Most economists, it’s really tough. They’re talking about bell curves and stuff like that. When the economy is really about you, what’s going on, it should be… Man, I wish I taught economics class, I’d make it so much fun because they’re so boring these days. Anyway, podcast about you, not about me. Let me know what you thought about that interview at frank@curzioresearch.com, that’s frank@curzioresearch.com. Now, let’s get to my educational segment. Because what I’m seeing right now is absolutely incredible. Incredible. Interest rates, super low. Mortgage rates just hit a new low, the 10 year, 0.66%. Put that in perspective.

Frank Curzio: What does that mean? That’s 10-year treasury. It was over 2% a year ago, and the long term average is 4.45%. It’s 0.66%. What does that mean? It means the quest for yield is, I wouldn’t say impossible, but it’s very difficult to get. To the point where, yields across the board are just at record lows. Now, why is this such a huge deal? When you look at the markets, the things that you don’t see, you see different stocks, the institutional money, the trillions, the sovereign wealth funds, the insurance companies that make all these premiums, the best business in the world, right? You pay all the money up front for something that probably is not going to happen. Hey, you need to do something with that cash.

Frank Curzio: Their goal is to generate the most money while taking on the least amount of risk. And that was cool, you could do that through different vehicles. But now, a lot of this stuff is down a lot and it’s hard to get yields. But in today’s market, there’s an opportunity that’s absolutely huge. It’s the biggest opportunity for every single investor. Because when you’re looking at dividend paying stocks, now I’m not talking about crazy dividend paying stocks, ones that are growing that are safe, these are going to be the new Amazons and Microsofts. These are going to be the new growth stocks of the market, as crazy as that sounds. Your shot to generate 10% annual returns with these dividends included, while taking on, I don’t want to say minimal risk, but much less risk.

Frank Curzio: I’m not talking about generating 200% returns annually, which we provide and we try to have stocks like this in my Curzio Venture Portfolio. But that means we’re going to have to take a significant amount of risk. And we want to limit that risk by putting 35% stops or whatever. But we want to make sure, if we’re right, that reward justifies the risk we’re taking. That’s fine. I’m not talking about that. I’m talking about increasing you’re overall rate of return while reducing your overall risk, which is the holy grail of investing. As boring as that sounds, it’s the holy grail of investing. Imagine you could generate significant returns, 10% plus annually, without taking on that much risk. I know, you should all have your portfolios where you want to hit that grand slam. I get it. I’m an investor. I’ve been in this industry for my entire life.

Frank Curzio: I understand it, and I do that as well with my money, okay? I put money aside that I invest in gold stocks. I got crushed. They’re doing absolutely amazing right now, some of them. You always want to take on that risk, the chance that you could become incredibly wealthy. Millions, and millions, and millions of dollars you could generate. But I’m talking about the core portfolio. Your core portfolio right now. Because the way the market is set up, it’s never been this great of an opportunity. I put this example. You’re looking at collateralized debt obligations, CDOs. This is basically just a pulling together of a bunch of loans, which reduces the overall risk. Because if you pull together a hundred different loans, yeah you might have a couple defaults here and there, but as long as most of them maintain, that keeps it safe compared to having one loan and lending off of that.

Frank Curzio: So, that’s where CDOs really took off, especially 2005, ’06, ’07, as banks paid the credit agencies under the table to rate many of these bonds triple A. And you know what, a lot of them deserved those ratings early on. I mean, talk about prime loans. Good loans. Even the ones that are mediocre. But then what happened? The greed kicked in. People wanted higher returns, and they’re running out of products. They needed more loans. Where do you get them? Well, let’s go to the shitty market, the subprime loans. Which by the way, everyone things subprime loans crashed the market in 2008/2009. It wasn’t subprime. It was the super leveraging of subprime loan, of subprime CDOs by 20X. They’re creating synthetic of synthetic CDOs, which if you have a market account you can’t really identify because you’re not as leveraged as they are, but you needed a 3%, 4% decline in the housing prices.

Frank Curzio: And remember, back then everyone said, “Home prices never decline. They never decline. They keep going up.” Well, there was a five year stretch into 2007 where they usually go up 2% to 3%, and they went up an average of 20% plus annual for five straight years, so you know it’s going to revert back to the mean. And that’s what happened. But you just needed a small decline to crash this entire market. And that’s what happened. It sparked an unprecedented selloff. Right? Crashed the world economy. But we’re talking trillions of dollars that were in these vehicles. Why? Because the big crazy money, the sovereign wealths, the pension funds, insurance companies, trillions, trillions, and trillions of dollars, they need to generate income off this money.

Frank Curzio: And their goal was generate as much income as possible while taking on as little risk as possible. Which is why trillions flowed into those CDOs. Because these money managers, insurance companies, pension funds, the people who are running it could justify putting massive amounts of capital into those CDOs, because, hey, they’re triple A. You’re good. They’re rated triple A. Yet they were just rated triple A because the credit agencies are getting paid, and if you didn’t rate them triple A, then they would go across the street and whatever. You guys should know the story by now. There’s a million books written about it. Now fast forward to today. Why am I bringing up that story?

Frank Curzio: Where are these firms going to find yields that are basically negative after subtracting the rate of inflation? You’re looking from 2005-2007, a 10 year yield of more than 4%. That sounds great. That’s a big number. But inflation, CPI, was 4% to 5%. So, you’re basically losing money, the real rate, which includes inflation, because inflation was higher than the yield that you generated. So, instead of going to 10-year, that’s what the flood of money went into some of these CDOs. And people were high fiving each other, making a fortune, everything was great. But putting money in a 10-year back then meant that you were losing money when accounting for inflation. Now, the past few years have been hovering about 1.5%-2%. Right now, the rate is even lower than that because of COVID.

Frank Curzio: But even at 1.5%, and to put your money in a 10-year, a 0.6%, makes little sense. Money market funds, savings accounts, CDs. And right now there’s a massive search for yield. And I’m talking about trillions of dollars searching for a home. And the greatest opportunity right now is dividend paying stocks. And more important, I’m not talking about buying a dividend aristocrats. Be careful with dividend aristocrats. I think there’s definitely one, I think there might be two or three that have come off that list. I think it’s 25 consecutive years of increasing their dividend annually. 25 years plus. Well, with COVID, revenues down tremendously, a lot of company’s I think it’s 30% of the S&P 500 is suspended or just cut their dividends. And probably more are coming.

Frank Curzio: But it’s not just buying high dividend paying stock. No. It’s not that. It’s buying stocks that are in the right growth markets that pay a dividend. That’s the formula that is providing a level of safety in this market that’s insane. It’s an incredible opportunity. You can say it’s once in a lifetime because of what COVID created, the Fed’s spending trillions. 30% of US GDP, which I covered with Rich. You put a floor under this market. More money is coming. I mean, returns like this are going to be a layup. And stocks like this will continue to run higher and higher. Take Microsoft and Apple. Both of them pay a little bit less than a 1% yield. I think a year ago it might have been 2%. These stocks have run up tremendously.

Frank Curzio: But now, you’re generating 2% yield buying growth stock that have that liquidity, and you have a Fed backstopping the market. Where do you want to invest in? You look at 10 year treasury market, trillions of dollars, I mean you’re looking at these market caps are well over a trillion. I think they’re past a trillion-and-a-half now. Pretty close. Liquid. That’s where you’re seeing this money coming in, and it can come in and out whenever it wants. You’re generating more than a 10 year, and you’re buying companies that are supported by the Fed. Makes sense, right? I’m not talking about buying the 5% yield, or the 4% yields, which will do good in this market, but you have to make sure that these companies are growing.

Frank Curzio: And it’s amazing. You’re looking at Intel. I remember recommending Intel at a 4% yield. It’s 1.7% now because the stock has surged. There’s money flowing into it. Oracle, another company doing 1.7%. Notice how these technology companies, with these tech instruments close to a two week high. Cisco at 3%, Broadcom over 4%. Taiwan Semi over 4%. Companies trading at 52 week highs or near that. They’re in the right growth markets where money is pouring in, and they’re paying you a yield. These conditions never existed before, where you could generate great returns, while also getting a yield which are going to result to more than 10% annual returns. And as crazy as that sounds, since the 1950s, the S&P 500 companies have returned on average around 8%, including dividends and compounding them.

Frank Curzio: Here’s an opportunity. People say, “The returns are going to be 1% going forward. 2% a year going forward.” All these studies. Throw them out the door. They’ve been totally wrong. Totally wrong. They’ve been saying that for 10 years. Totally wrong. The market conditions, like I said, you need to adapt. Take what’s being given to you. If this is being handed to you on a silver platter where you could buy some great names, some great stocks, that are growing, and maybe that yield will be 1.5%-2%, and you might say, “Well, I’m generating.” These stocks will soar, because that dividend is much, much higher than the yield that you’re going to get almost anyplace else, plus you get the opportunity to buy a growth stock which is being backstopped by trillions which is being spent by the government. We’ve never had that opportunity before.

Frank Curzio: So where am I going with this? Because I was supposed to launch this. I was supposed to launch this product, Unlimited Income, about a month ago, but we pushed it off. COVID, a lot of things going on, our token as well. But now, we’re going to launch this product, Unlimited Income, next week. It’s going to be run by Genia Turanova who’s been an expert in this industry for a long time. Find these products that will be launched. This is something that I listened to you about. Okay? This is what my company is. We want to listen to our customers. So even if they’re criticisms or anything, frank@curzioresearch.com. That’s what makes us a better company. That’s why customer service is such a big focus for us, because that’s when you know the problems exist right away, and you could end them right away, and come up with a plan.

Frank Curzio: You see it. If something’s wrong, whether it’s a simple as link, or something didn’t work, or whatever, people pissed off about something that was written, we see it right away from you, from our customers. That’s what this business is about. And across the board, when I said, “What newsletter do you want me to start,” almost everyone, I would say more than 80% of those emails, “Please start an income newsletter.” And I didn’t want to start an income newsletter. I didn’t want to start one that’s going to give you dividend aristocrats and charge you for that. No. That’s not what we’re about here. This is going to be different. You’re going to see lower than expected yields, but companies that are in the right industries, growth industries. And Genia is one of the best at doing this. This is what she’s done for decades.

Frank Curzio: So having her on this product is fantastic. I know a lot of you, if you subscribe to Moneyflow Trader, or if you’re a Curzio One member, which means you’re a member to all of our products, it’s a premium membership, this has been in beta version for a couple of months, look at homework. Now we’re going to release to the public. And the best part of it is, I’m putting it at a price point because I know so many of you wanted this. This is something we could charge easily over $1,000, which we call in our industry a backend. This is going to be an incredibly cheap newsletter that every one of you can afford. But that price point is only going to be available to you, podcast listeners. We offer this to you first before we go out to the masses and market these products.

Frank Curzio: Again, we’re a business, we want to generate money, but we want to listen to our customers, provide you the best products, or the best people on those products. Because the end of the day, you’re listening to us to help you become better investors and to make money. And that’s what we do in this product. It’s been carefully crafted. You’re going to see lots of cool ideas, preferred and close end bond funds, close end funds. Things that provide yield, but also the opportunity to buy growth stocks that are paying 1%-2% yields where a lot of people out there may be looking for 5%-6% yields, you could’ve bought IBM which I love. I like IBM. But imagine buying Microsoft, 2% yield a couple years ago, and look how much you’re up in the stock. This is growing much, much faster because they’re in the right growth markets.

Frank Curzio: Just like Apple. Apple’s growing as well. Tremendously. And these are incredibly liquid stocks where you’re seeing tons of money flow into them, you’re going to continue to see that trend as long as interest rates are low, because buying those dividend paying stocks in these growth markets, I cannot think of one place better to put your money if you’re an insurance company, if you’re a pension fund, sovereign wealth. And that’s why you’re seeing the market caps for some of these large companies explode higher even though the fundamentals may not support where they are. It’s because they’re liquid and people need. They die for yield. There’s trillions searching for it, and you’re going to see that money flow down to so many other stocks. This is going to be a new growth area and you don’t have to take on a considerable amount of risk to generate very, very good returns going forward.

Frank Curzio: But you have to start now. We’re launching this product next week. Any questions or comments about it, frank@curzioresearch.com. We’re really proud to launch this. We haven’t launched a product in let’s say a year. So always careful, always ask our customers what they want. I know you guys really want this, and I know you’re going to be really happy with this product. I love Genia, and we’ll talk more about it. But if you’re not on our email list, send me an email frank@curzioresearch.com, I’ll make sure you get the promotion. Please, sign up to the link that we’re sending you. Do not sign up just going directly to the website. I will provide a link for you. But it’s going to be a special deal available only to Curzio Research podcast listeners and to our subscribers.

Frank Curzio: Okay, guys. That’s it for me. To see more of me live, I tweet a lot, I do live videos. Found on Curzio Research YouTube page. Subscribe to that. I think we had a few hundred subscribers, now well over 2,000. I mean, it’s getting bigger and bigger because I’m doing more and more live videos which are pretty cool. Just two or three a week at least, updating market conditions and stuff like that. Love the comments coming in, which is really cool. And again, if you want to tweet me, @FrankCurzio is my handle. I probably post about three, four times a day. Always great information. Information that I have the privilege to have access to, and I’ll just quote different people, quote different research out there. Bullish, bearish, there’s no bias to it, but a lot of stats that are going to make you think and be like, “Holy shit.”

Frank Curzio: Like the one I recently posted where when we saw the market increase by more than 17%, which I think was only five times in our history, and this was in a quarter, the following quarter GDP increased by more than 4%, and the following quarter after increased by 5% every single time. To me, that’s an interesting fact. A lot of you see this huge run up and, “Wow. It’s going to come down.” But GDP usually explodes when, so it’s lagging, when you see a market move like that in any given quarter. But just things that make you think, whether you agree with my thesis or not, I post a lot of great stuff on those social media channels if you want to join me. Again, Curzio Research YouTube page, or you can tweet me, follow me on Twitter, @FrankCurzio. Thanks, guys. Really appreciate all the support. Love you guys. And as always, I’ll see you in seven days. Take care.

Announcer: The information presented on Wall Street Unplugged is the opinion of its host and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money, and your responsibility. Wall Street Unplugged produced by the Choose Yourself Podcast Network, the leader in podcasts produced to help you choose yourself.

Frank Curzio
Frank Curzio, founder and CEO of Curzio Research, is one of America’s most respected stock experts. His research is regularly featured on media outlets like CNBC’s Kudlow Report, The Call, CNN Radio, ABC News, and Fox Business News. His weekly Wall Street Unplugged podcast—ranked the No. 1 “most listened-to” financial podcast on iTunes—has been downloaded over 8 million times.

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