Transcript was automatically generated.

0:00:02 – 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.

0:00:32 – Daniel Creech

How’s it going out there? It’s Wednesday, October 9th, and you are listening to the Wall Street Unplugged podcast, with one major change from normal. The one and only Frank Curzio is out of the office conducting boots on the ground research, wheeling and dealing, meeting with companies and CEOs, leaving me, Daniel Creech, behind the mic to fill in. Happy to be here. Thank you for tuning in, so I’m going to tell you what’s moving these markets. I don’t do that as well as Frank, but great to be with you.

I was catching up with Frank. He is, like I said, out and about I’ll tease his super secret location. I know you regular listeners know, but have no fear, he only leaves me in charge behind the reins completely for 20 to 30 minutes at a time, so nothing to worry about here. I was catching up with Frank and he’s talking about meeting with a lot of mining companies and CEOs and he said something that really caught my attention and he’s going to go into more detail next week when he’s back in the saddle again. But he said he feels like Warren Buffett in a sense because he’s looking at all these companies and the resource and mining industry and he feels like Buffett because there’s such opportunity that he could buy up a bunch of these assets that nobody else wants right now. But if you have, say, a one to three year timeframe, as this process or this business cycle unfolds, Frank is excited, talking about gains of three X over a one to three year timeframe. That is what’s possible because the industry is so beaten up, investor sentiment is so beaten up. Investor sentiment is so beaten up. You could just tell his excitement is buzzed. You guys know Frank. He’s a personality plus emotional guy and for him to say that he feels like Buffett and kind of not buying at the complete bottom, but it’s just not. There’s no investor sentiment. He’s talked about that in previous interviews and Wall Street Unplugged podcasts, so check those out. But have no fear, Frank will be back next week and tell us all about his trip, what’s on his mind and the opportunities in front of us there in the resource sector.

So today we’re going to talk about what I give a flying Florida about and I want to give some perspective or at least kind of shake the old eight ball and see what the markets are telling us having good fun. We can talk about anything here when it comes to stocks and stuff. We could talk about the Joker because Warner Brothers evidently the Joker part two, the Joker sequel. However you want to say, that is bombing at the box office. Quickly here.

I’m not a big movie goer. Please, if you are, if you’ve seen it or have any opinions on it, please share that with me. At daniel@curzioresearch.com. Frank’s a movie guy and a series guy, so email Frank@curzioresearch.com as well.

I’ve not heard hardly any good about the Joker, the new Joker movie, and that’s interesting to me because typically you see somebody out there defending it. But on the radio, from the shock jocks or rock stations talks in the morning that I listen to, to the country talk show radios that you know I’m just scanning through dodging commercials on my commute. That you know I’m just scanning through dodging commercials on my commute, even some headlines and such around Yahoo or Drudge or anybody. You know both spectrums here. I haven’t seen anything. So that’s funny. We’ll see what Warner Brothers does. Thank goodness we’re out of that stock. I don’t want to talk about that, but just to show you, we can go anywhere. So if you’re a movie fan, enjoy that.

But let’s start with what are markets telling us right now and I’m recording this here before the market opens on Wednesday. And if you switch over to FinViz this was yesterday’s close Of course markets continue their melt up. And if you look at the S&P 500, knocking on all-time highs, as well as the tech-heavy NASDAQ, again not at all-time highs but wedging up there, and the Dow Jones Industrial Average as well, knocking at or near all-time highs, I don’t have that pulled up. What are markets telling us? Well, they’re telling us that this soft landing idea is in play. When I say everybody, investors are buying into this.

We had Jerome Powell cut by 50 basis points, excited everybody. And then when you give them something, they want just more. So then there was an excitement about another 50 basis point coming in November after the election. Powell himself has kind of walked that back and said ah well, you know, toby Keith sung. Oh easy, now he’s just talking about tonight. So Powell walks back. Investors expectations on rate cuts, markets have been him hauling around. You’re going to see some volatility.

But if you look at the major averages, other than small caps, they are at or near all time highs and that’s telling you that the investor they are at or near all-time highs and that’s telling you that, the investor, that the markets are so far in gear with this soft landing for right now. Now that doesn’t mean there’s not going to be a lot of volatility, and that’s why you want to know what you own, because when we get a big event, whether it be an outbreak of war, whether it be a currency trade, like the Japanese yen that happened a couple of months ago whether it be fears over a economic hiccup or shutdown or lockdown or supply chain issues with the longshoreman strike We’ll get to that in just a moment, whatever it may be, if you know that the market is taking a knee-jerk reaction plunge down, budget deficits, arguments when you know what you own and why that gives you advantages to buy at lower prices, and so you want to continue to understand that. And if we have a look at so, markets are loving this high budget deficits, very liquid markets right now. And what’s wild here? If you switch over to CNBC? Talk to me about bonds for a moment. These are the treasuries, and you can see it’s from the US one-month treasury down to just focus on the 10-year. It’s essentially from one month to six months, even to the one year. They’re all over 4%, even knocking on the four and a half to almost five change. Then you got two and three, five and seven years a little bit under that and then the 10 years at four and if you just click on, say, the 10 year, see this wonderful little chart. Notice it was pricing in as yields were moving lower. This is pricing in.

The Fed cut and now afterwards it has started to rise or rally again. And the reason I bring this up is because right now you have to understand the present. And I hope that I can kind of make this less clear or more clear, not clear as mud, because I was talking to a banker bankster and he’s a great guy. He works with the Small Business Administration loans. I’m not sure that they all do it the same way, so bear with me.

But the rate cut is important because it gives investors hope looking forward, or consumers hope going forward. I don’t mean that hope in a funny way, just using my dumbed down language. For me, this SBA loan or, excuse me, bank re-rates every quarter. So at the start of October last quarter of the year, consumers, clients of those banks, saw their interest rate drop by 50 basis points. And so when you know, hey, this is a positive because I’m still paying interest, but now my interest bill is a little lower because it’s a floating rate, rates got cut. And not only that, but you know going forward into next year because, remember, rates only cut or, excuse me, they only change the rates, or damn it, I just lost the word I was looking for update the rates every quarter.

Well, if Powell is going to cut again another 50 basis points two 25 basis point cuts, as he’s hinted then at least those consumers know, going into next year, when they re-rate those loans again to start January the new first quarter of 2025, you know that your interest is going to go down. So therefore, your payments are going to go a little bit lower. That gives you some wiggle room around the holidays and it gives you some wiggle room just knowing that investor sentiment is positive. It’s kind of like that wealth effect If you see your stocks and bonds and your assets rising. Well, maybe that makes it easier to bite the bullet and pay for something right now and say, well, you know, hell, I just made X percent last year so we can take this vacation, or I can replace this at home, or I can work on this. What have you? That is real because money is emotional and right now the Fed cut interest rates. People are going to see some relief on those types of loans from SBAs, but not everybody re-rates like that. And so look at credit cards, those aren’t dropping anything materially.

And as bonds are rising, bonds are telling you that the Fed may not be in for this soft landing as we all expect and want it to be. And that’s a key factor because you have to pay attention to the bond market because, as these yields continue to creep higher, it affects everything else in the economy. And that’s a key factor because you have to pay attention to the bond market because, as these yields continue to creep higher, it affects everything else in the economy and that’s going to act as a major headwind against consumers, our economy and such like that. So markets are telling us, hey, we’re loving this liquidity, these high deficits. Right now, bonds are telling us, hey, pump the brakes. It’s not so easy. We’re not out of the woods yet, inflation hasn’t been beaten, so live in the present, enjoy. Do not fight this market. Melt up. Don’t be trying to pick the top and say, aha, short the market, sell everything right now, because whatever you want to fill in there, it’s going to be incredibly hard to do that with the deficits that we are running right now.

And speaking of deficits, I like this website. It’s called the Bipartisan Deficit tracker. That doesn’t make you feel all joyful and kumbaya, I don’t know what will Now. Yesterday, across our briefing service, it came out that the fiscal year runs from October to October, for the government is in the books, it’s behind us. So 2024 is done and, as you can see here, the deficit, which is the amount we spent more than what we brought in, was a $1.8 trillion mark. Yes, tip to Austin Powers For those of you not watching but just listening while you’re doing errands and living life, have my pinky up next to my mouth like Dr Evil and Austin Powers, because $1.8 trillion is pretty impressive.

Now this marks the fifth consecutive going back to 2020, fifth consecutive trillion dollar deficits per year. And that’s only because 2019 was $980, some billion. Okay, so can’t exaggerate. You can’t say, oh well, it was trillion and we could round up, but let’s just give these government dogs a bone here. And as you can see from this deficit tracker, from these bipartisanship, the 2024 1.8 trillion is the highest since 2020 and 2021. Now those were absolutely huge over 3 trillion, and then call it 2.7, 2.8 trillion, but at least and not that I’m agreeing with this, I’m against lockdowns and all that kind of stuff but 2020 and 2021 were significant because you had the COVID lockdowns. You had the economic lockdowns where the government just sent money to everybody businesses, individuals and then that influx of money into the economy, printed out of thin air, injected right to the hands of the consumers to put into the economy, is what led to this massive inflation that we’re still fighting with today.

And this is why I continue to say and we’ve been right and I’m not trying to say aha, we’re know-it-alls, I’m simply saying we’ve been right on the fact that this is melting up to the rate cut. Now the first rate cut has been here or is behind us and markets are still kind of melting up to all new all-time highs. I expect it’s going to have it being. The market is going to have a lot of momentum leading up to the end of the year. Once we cross the new year, then we’ll reevaluate and I’ll look to kind of lighten up at the end of the year because you have this massive liquidity, these massive deficits, massive government spending on a global scale, and that’s good for asset prices. It’s going to be very difficult to have a recession on paper when you’re printing this kind of money and putting it into the economy, and that’s why we have and listen.

One perspective from the bulls is hey, we got historically relatively low unemployment, gdp is hanging in there, our economy is hanging in there, interest rates are coming down, so relief is coming. Inflation has at least slowed its pace of rising. Those are all solid points, and if you just take that as a macro level, you could say, yeah, that’s okay. But we here at Curzio Research and Wall Street Unplugged, and you listeners understand that what’s driving the markets right now is this massive liquidity and these massive deficits. So there’s no signs of this slowing down between Harris or Trump. Whoever wins is going to spend money like crazy, maybe on different areas, but we’ll have to reevaluate. But that is absolutely key. And so deficits are definitely the fuel for this fire, and it’s going to continue. Doesn’t mean it’s going to be perfect forever, but I’m just saying you don’t want to try to fight this tape right away.

Now, if we switch back, let’s see what else markets are talking about. And if we look at oil and I don’t mean to say this in such a lighthearted way, because the escalation between Israel and Hamas, and Iran as well, has caused the oil to spike and listen, you guys know I’m a major bull on energy, but I don’t want to see this going up for the wrong reasons. And again, using a CNBC chart, you can see oil really was selling off here. Hedge funds were short like crazy and then the escalations, retaliations started happening and oil has kind of spiked recently. Now it is pulling back and the only reason I want to point that out and again, I’m not trying to make light of what’s going on in the situation that out. And again, I’m not trying to make light of what’s going on in the situation.

But we follow the money here and at least the money and oil prices are not expecting a much larger escalation, and that’s a good thing. Hopefully that all gets resolved over there. Chances of that are very little. But listen, the world isn’t the way we want it to be or wish. The world is the reality around us. So we have to invest and pay attention accordingly, at least not seeing oil spike to 80, 85, 90, $100, whatever you want to use as a spike term. That’s positive in general for geopolitics. So pay close attention to oil because that is kind of a leading indicator on at least the market sentiment. I’m not saying that’s right. I’m not saying, ah, just pay attention to oil and wars are okay. I’m simply saying it’s a positive for everybody that oil is not spiking on top of this sad escalation that’s going on between Israel and its enemies.

And finally, let’s talk about gold and Bitcoin. I love gold. Finally, let’s talk about gold and Bitcoin. I love gold. Gold is sitting around near all-time highs. Who says stocks and yields and gold can’t go up at the same time? This is proof that it can. We’ve been on this. Gold is basically telling you that we have an old S moment coming. It’s a family Frank and Cuss, not Daniel, this is and you need to have exposure to gold. And then, finally, crypto, which is just down under the 62,000. It’s hanging out just below. You know it’s bounced between 70 and 50 a couple of times over the last couple of months. But those are also telling us that you need to hedge reckless government spending.

And finally, china. What is China telling us? Well, China has been in. Let’s see here. Now China has absolutely skyrocketed. As you look at this chart, this is just almost funny because they’ve come out with these bazooka stimuluses and Frank has been spot on about being cautious on China and wanting to trade it. But look at this Now it’s rallied absolutely double digits. It’s just really taken off. This has been a great trade if you’ve been in it. But the market just pulled back the market, meaning the Shanghai composite 6.5%. Okay, now why? What is China telling us about this?

This, in a nutshell, is proof that markets are loving stimulus and when you give them stimulus and asset prices react. They want more stimulus. It’s like a drug. You don’t want to come down off your high and the Chinese stock market was closed for several days. Big holiday over there, big partiers, these Chinese but it reopened and there was this investor sentiment and this expectation of more stimulus. We want more. Like more cowbell, you want more stimulus. You want bank reserves ratios cut so they can loan more. You want interest rates lower. You want to have people that remember real estate is massive over there in terms of where people keep and hold their wealth on the consumer side or the individual side. So you want to be able to refinance, you want to make it easier to buy your second properties, et cetera, and they’ve done some of those and we covered that. And Frank was warning everybody not to pile into China right away. And listen, he said it was a good trade and so far he’s been right, because you had that nice pop and now it’s pulling back.

I personally think this is a good trading opportunity. I would let and see if markets come back a little bit more on the Chinese markets before making a trade and looking for another bounce, because here’s how this is going to play out. In my opinion. It’s a controlled economy, much like ours, but they can get things done and say a lot more abrupt or blunt things and, as you can see, they can really impact markets with that rally that’s had. I’ll show you this one more time impact markets with that rally that’s had. I’ll show you this one more time this huge spike here from 27 all the way up to 35, call it Now.

Why I think this is presenting to be a trading opportunity and not a buy and hold is I don’t think that the government, the Chinese government, comes out, announces all these stimulus plans and then walks away and never talks about it again. And they’re playing this just like Jerome Powell is trying to fly our economy and do this soft landing type deal. I just disagree that and I could be totally wrong on this, of course. But from a trading standpoint I think that if the markets in China come down a little bit more, you can start nibbling at some of these names and buy this as a trade, because I do think that as we get in later to October or November, before the end of the year, I do think there’ll be another round of announcements and just trying to goose their markets and goose their economy and that kind of thing. So I would continue to be a trader in this.

I know David Tepper is a big bull on China. He’s much smarter than I am. So take this with a grain of salt. But I just think I don’t understand why you would do that in politics. On raising expectations, getting that up, if you think they’re shocked that more and more investors are screaming and pounding the table and wanting more stimulus, I just agree to disagree. I think they know what they’re doing. They’re just kind of dangling the carrot out in front. If markets come back, boom, they can hit you with some more announcements. I don’t think it’s going to work long term. Remember it’s communism, people for crying out loud. It doesn’t work. Keep that in mind. But it could be and will be a trading opportunity, no doubt. All right.

So last week we talked about the International Longshore Association strike and I said that it would be transitory, and I had no idea that it would be as transitory, as it turned out being basically a day of shutdowns. Now, one day is equivalent to roughly five days on the logistics side, the container side, per Wall Street notes, and the one day was anywhere between three and a half and five billion dollars in trade amounts and things. But there’s a great lesson here in this ILA strike. And now potential or quick resolve. Number one it’s not completely resolved. The can is just kicked down the road. All they did was they went back to work, which is good. They agreed to tentative terms around the 60 plus percentage point raises, from what I’ve heard.

But the big takeaway here is this all got kicked to January 15th and the reason I want to point this out is A there’s no coincidences in politics, and here you had what was that gentleman’s name, harold Daggett, the spokesman, the leader for the IAL, and he was out there and we talked about this last week on WSU between Frank and I. He had some serious comments about crippling the economy, shutting down the economy. Auto salesmen and women are going to lose their jobs, construction workers are going to lose their jobs. He’s going to show these greedy bastards being the ports and shipping companies about how half the world relies on us and we’re going to cripple the US economy. And those are major headlines and that gets everybody thinking about just how important logistics are.

And the reason I’m recapping this is because this is all going to occur next year in January, because they’re going to, if they don’t have a deal and they don’t meet the ILAs they, the containers and shipping companies don’t meet their deals, they’re going to strike again. They’ve been very adamant about that. Now there’s no coincidences. It didn’t. They kicked the can down the road to January to get through the holiday season, more importantly, through the election, because you don’t want to have a lot of hiccups, you don’t want to have this supply chain issues, you don’t want to have a spike in inflation before the election and before the end of the year. Remember, we have Halloween coming up, then we have Thanksgiving, then we have Christmas and the New Year, and you don’t want that sentiment or that emotional tug of war to be negative during that time. You want it to be positive, get positive, get joyful people. You understand what I’m saying and so there’s no coincidence that they kicked the can to January.

But, from an investor standpoint, we talked about several companies here and I’ll show you this list from Goldman, and we talked about Costco and Dix and Dollar Tree and even Home Depot and Target, and you want to figure out if you were looking at making this a trading opportunity, which is a great idea. Also, you can balance these retailers with looking at different trucking companies, look at companies that are getting more goods from either the West Coast or maybe Canada and Mexico. There’s several ways to play this, even if it’s just sitting on the sidelines, letting asset prices drop or come down over these fears and logistic headaches and such, and then maybe buying back in. But as you can see, you know, let’s see who was it that Target, like Target, noted that the majority of their shipments are processed in the West Coast. Okay, so if Target is going to drop because everybody in retailers and everything about this strike in January if it persists again, tailors and everything about this strike in January if it persists again goes down. That’s a good opportunity to look at that stock Because, again, you know, the reason the knee-jerk reaction is going down is because the baby’s getting thrown out with the bathwater. Yet if they’re not impacted by East Coast screw-ups and they get most of their goods and shipments from the West Coast, that’s a positive for them and I. Just the lesson here is whatever you guys, if you guys and gals went out there and you’re thinking through the process, that’s an excellent deal.

When you hear these threats and all this from Mr Daggett about shutting down the economy and making life hell for everybody, well, okay then what are we going to do to get around that or what’s going to impact? My point is that any research that you did to find these other companies and logistic players is not lost. It’s just simply kicked down. I need to make a reminder to revisit this. I have no doubt they will, because we’ll see some headlines about the upcoming strike. If there’s a deal, look for that in early January to start the new year. On an up note, look for that in early January to start the new year on an up note. But you can look at some of those retailers and you can definitely play that.

Anyway, markets continue to be in bull mode. Do not fight the tape. Have exposure to hedges. Have exposure. You can look at buying puts Frank has been big on that over time. You can look at just lowering your exposure to certain stocks or maybe assets, and you want to focus on these mega trends and mega growth trends, like the power demand, power generation that we’ve talked about been pounding the table on.

But enjoy this melt up. It’s going to continue because of deficits and spending. That is the biggest. That is what I want you to pay attention to right now and until that changes, that’s going to have a massive impact on asset prices. So that’s why you have record housing prices, near record asset prices, stocks and such, and you also have a Fed cutting interest rates. So, yes, it’s a Willy Wonka, wizard of Oz environment, but we do not get to pick and choose how the world works. We just have to navigate and invest accordingly. So that’s what we do here. Questions, comments. Thank you very much for tuning in Daniel@CurzioResearch.com. That’s Daniel at CurzioResearchcom. Love me, hate me. Just don’t ignore me and I’ll see you guys tomorrow on Wall Street. Unplugged Premium Cheers.

0:27:30 – Frank Curzio

Love this episode of Wall Street Unplugged. I think you’ll really love Wall Street Unplugged Premium. The Wall Street Unplugged Premium is my members-only podcast where I dive even deeper into this week’s events, where I’ll do even more than tell you what’s moving these markets. I’ll tell you specifically what moves you can make today. So this is going to be about trading. Put big money in your pocket right away due to the inconsistencies I see daily in the market.

I’m talking about specific investment ideas. I’m recommending and tracking each week that I believe will be impacted directly by everything I just talked about today. Plus, you’re going to get the chance to go even further down the rabbit hole with me and my co-host, Daniel Creech, as we discuss which of these week’s trends could turn into massive windfalls, Could the big trends that we see lurking on the horizon. Also the news we’re picking up from our network of insiders, which has gotten bigger and bigger thanks to you and so many people listening to this podcast in over 100 countries. And you’ll get a chance to talk to me directly in my special Ask Me Anything Q&A session. All that and a lot more like premium interviews with world leaders in finance, technology, industry and politics. This is all part of Wall Street Unplugged Premium, and becoming a member is super simple and super cheap, so head on over to WSUoffer.com to check it all out. Sign up today and you won’t miss a thing. That’s WSUoffercom.

0:28:59 – Announcer

Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its host and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility.