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 January 25th. 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.

Wednesday. Daniel Creech day. How’s it going, man?

Daniel Creech: That’s right.

Frank Curzio: A lot going on. Earnings, craziness. Right?

Daniel Creech: Happy Florida Wednesday, everybody. Yes, it’s wonderful. But to kick things off, normally, we try to do this in a timely manner, Frank, your name is on the door, but you’re a little later than normal. What’s hung you up this morning?

Frank Curzio: I appreciate that. Thanks for bringing that up.

Frank Curzio: So, my daughter had this thing today where she’s… You go to chapel, and she carries one of the banners up while the kids… And then they had Dads for Donuts Day, which is funny because I don’t remember when I was younger ever, ever, that my mom or dad went in the middle of the school day and they had events in the middle of school days, like people don’t work, which is crazy. And a lot of dads, a lot of dads showed up, but you could see some of them were like, “All right, I got to get out of here,” whatever. It’s like right in the middle of the day. And I was just…

Frank Curzio: The good thing is when I went there, they had me sit on the altar, which was cool because one of the girls was carrying something and the banner and stuff, there’s like four or five of them, they had the candles and ring the bells and stuff like that. And just to see her face and how happy she was, it’s remarkable because I also have a 14-year-old and this one is 12, my youngest, but the 14-year-old, she’s like, “Dad, drop me off here. I don’t want to be seen with you.” She’s at that stage right now, which is cool.

Daniel Creech: Hey, thanks for the ride.

Frank Curzio: And the youngest one is like, “Dad, you’re here!”

Frank Curzio: And when I look at it that way, I’m glad I have… So it’s older, because you kind of missed that stuff, so I’m glad I’m there. It’s tough to get there all the time. I get there as much as I can, probably about 85% of the time, but it’s results and sometimes things are more important. This is what we do this for. We do this because we want to better our families and be financially whatever you want to call, whatever word you use, but just we want to be smart with our investments and build futures and build generational wealth. At the end of the day, it’s all for your family. So, being there for her was really cool.

Frank Curzio: I find it funny that I don’t know if that only happens in Florida. I’m interested to hear from you, frank@curzioresearch.com, if they have all these things in the middle of day and just telling you, “Hey, you got to go to these things.” And I just think it’s funny and nobody works, which is crazy, but it’s definitely worth it just to see her face and how excited she was and spend some time this morning.

Frank Curzio: So, we are bringing this a tiny bit later than normal.

Daniel Creech: Well, that’s okay. And to keep with the randomness here and fun things, Frank, if I say something, I’m going to say something to you and I want to know what this means. Okay? And everybody needs to pay attention.

Daniel Creech: If I say it’s 90 seconds to midnight, what do you think? What do you think I’m referring to or what comes to mind? 90 seconds to midnight. Frank, it’s a big deal.

Frank Curzio: I don’t know.

Daniel Creech: I mean, don’t smile. It’s serious.

Frank Curzio: I don’t know. What is it?

Daniel Creech: Well, what if I say the Bulletin of Atomic Scientists?

Frank Curzio: Mm-hmm.

Daniel Creech: Okay. So Frank, there’s this World Doomsday Clock out there, and every January, this group of brilliant people meet, and I don’t know, I don’t know if you have a picture of it over there, I don’t think you do, but they only show a quarter. If you think of a picture of a clock, they only show the upper-left portion of this clock. So from the 9 o’clock to 12 o’clock, it’s pretty lazy if you ask me.

Daniel Creech: However, it’s 90 seconds to midnight. Midnight is game over, humans are extinct. And this is not… Now, over the years, they started this in the ’40s or ’50s or whatever, and it’s moved back and forth. So, I think it’s been 16 or 17 minutes to midnight, all that kind of thing. People were just having fun. This is absolutely something you could ignore. This is absolutely not important at all.

Daniel Creech: And this just goes… Let me explain what’s going on here, Frank.

Daniel Creech: The Bulletin of Atomic Scientists met and they bumped it from 100 seconds to 90 seconds to midnight, the closest we’ve ever been, Frank. That’s the big takeaway here.

Frank Curzio: Great. This is great.

Daniel Creech: It’s not all about the war in Ukraine, that Russia invaded Ukraine, but it’s mostly, and then you got to throw in some climate change and biotechnology fears, think COVID.

Daniel Creech: I watched about half of this hour presentation the other day for our listeners. The thing that stuck out to me was one individual said that we must work on disease surveillance programs to help with future COVIDs and things like that. And I want to just point this out because this goes hand in hand, there’s nothing new under the sun. All these artists drink from the same Kool-Aid.

Daniel Creech: This goes hand in hand with the World Economic Forum that just met last week in Davos, Switzerland when old Tony Blair… What’d he run, the UK? What did Tony Blair do?

Frank Curzio: Yep. Prime Minister, yep.

Daniel Creech: Anyway, he was over there touting the same thing and saying how we need, I wrote this down, this is crazy, “Digital libraries to track individuals.”

Frank Curzio: Why? They just want to track you so bad.

Daniel Creech: They want to track you.

Frank Curzio: We were talking about, even at CES, and one of the guys that was in a presentation in Google was saying, “We will get there to where people actually have chips on them,” like embedded inside of them.

Daniel Creech: Yeah, Frank, it’s called the Matrix. There’s like three movies out.

Frank Curzio: And I was like, “Holy sh…” I was like-

Daniel Creech: You just plug in.

Frank Curzio: Yeah, it’s yeah.

Daniel Creech: Now, you can ignore this. This is from some fun tongue-in-cheek thing, but I’m why I bring this up and what I’m talking about here is that investing gives you the opportunity to make money or bet against or invest against certain things that you think are absolutely crazy.

Daniel Creech: So case in point, if you hate people that don’t want to get a vaccine or flu shots or whatever, are anti-COVD, anti-vaxx, then buy Moderna and buy Pfizer stocks. Invest in that so that you can better your family if those go up and you can put money towards your calls. Vice versa, if you think some of the policies that we do in energy are absolutely crazy, then you can buy oil companies and you can invest in oil companies and fracking and oil refining and all that.

Daniel Creech: The point is that the reason I, I don’t want to put words in your mouth, but the reason I pay attention to society, society breakdowns, what’s going on in and the silliness of the world is because all that influences, all that makes up the economy, which is where you and I find ideas. You have anything to say about the doomsday?

Frank Curzio: No. I mean, it makes sense. We make a joke of this.

Daniel Creech: Other than it’s silly. Well, hell yeah, Frank, if you don’t laugh at it, you just go crazy.

Frank Curzio: No, no. I was laughing when I brought it up because it’s like we moved up the clock because now the Ukraine War, that the world’s going to end type thing. But it’s funny because whether you believe in ESG policies or you don’t, and ESG policies don’t really impact some of the big companies because they could afford all the bullshit that you have in their presentations and all things you’re doing to save the world and stuff like that.

Frank Curzio: And again, they have to announce it, right? They can’t do it. They have to announce it, right? It’s publicly… Again, it’s all politics, a lot of this stuff. You could do it on your own and not say anything. You could just do the right thing. But you have to announce it, you have to put it in all the presentations. But when you see mid-cap stocks, this initiative being forced on them, it becomes expensive because it’s not something that’s a moneymaking thing. It really isn’t, if you look at most ESG projects.

Frank Curzio: And another thing too, if you’re a believer in it or not, it doesn’t matter. But what you know is based on this, when you have people from the board able to capture seats in Exxon, which is an oil company, to force them to stop drilling, right?

Daniel Creech: Well, encourage them, yeah.

Frank Curzio: You know what I mean.

Daniel Creech: Yeah, absolutely.

Frank Curzio: I mean, really, in reality, as a shareholder, do you want this? Well, as a shareholder, you do want that. You know why? Because that’s why you’re seeing oil prices rise. That’s why you’re seeing these stocks go through the roof. That’s why this whole investment thing… And you saw Ukraine. Regardless, whether you agree with it or not… And people are way right and way left, I think 85% of the people are in the middle of that, and people love each other. I really believe that. But you know, have a lot of hate on both sides and they go at it.

Frank Curzio: And again, that’s what gets page views and that’s what they’re conditioning, that’s what you’re hear in the media. They want to get you pissed off because that’s when you’re going to post and do more things, and they make more advertising dollars, we all know that.

Frank Curzio: But bottom line, you pay attention to stuff like that because you can make a lot of money off it. And just an easy example is oil. I mean, just to see how much they cut back on drilling and now you’re seeing Russia, Ukraine. Russia cut off energy and look what happened to Europe. Now, you’re seeing them go back to what, coal?

Daniel Creech: That’s right.

Frank Curzio: All right? There’s this whole ESG, everything. Right now, they’re going back to coal?

Daniel Creech: Record uses of coal in 2022.

Frank Curzio: Tomorrow I got a fantastic, fantastic interview with Amir Adnani on uranium. Holy shit. You got to see the things taking place in uranium. I mean, the people all the way to the left that always hated uranium, even though it’s the cleanest fuel, it’s the cheapest fuel. It’s safest fuel, right? All facts, even though they hated it, hated it, now they’re all coming aboard. And that’s a big change because now it’s getting more widely accepted, even at Davos. I’ll talk about that later on.

Frank Curzio: But yeah, no, it’s a good point to bring up. And that’s how we’ve always invested, right?

Daniel Creech: Yeah.

Frank Curzio: You know, you want to invest on these policies and make money off of them. That’s the most important thing, whether you agree with them or not.

Daniel Creech: Last thing before we get to something important on earnings is I got to give a shout out. Did you know today, Frank, is National Florida Day?

Frank Curzio: Is it National Florida Day?

Daniel Creech: That’s what the people talking through my speakers in the car this morning told me, National Florida Day. Fun fact. Apparently, Florida’s the only state that you can watch the sun rise and then drive across the state and watch the sunset. That’s kind of cool.

Frank Curzio: Ah. But what do you do on Florida Day?

Daniel Creech: Put that on your-

Frank Curzio: I mean, you want to go get some shots after this?

Daniel Creech: Sure, absolutely.

Frank Curzio: All right, we’re in.

Daniel Creech: Yeah. And fun fact, Florida joined the old US of A in 1875. How about that?

Frank Curzio: Look at that.

Daniel Creech: I like to say Florida in replace of the other f-word that everybody likes to say. My name’s not on the door, you can say that. This is a family show.

Daniel Creech: All right, we got to get something important, Frank. Earnings, right?

Frank Curzio: Yeah. I mean, we can start with Microsoft here. And look, I tweeted yesterday and said I thought you were crazy to actually buy Microsoft ahead of earnings only because they just laid off 10,000 employees, which is 5% of their workforce. And there’s no way. I knew the numbers are going to be okay, the current numbers are going to be okay. And I almost like shot myself in a foot because the stock immediately went up 4%.

Frank Curzio: The numbers of the reports are the past three months, and they were okay, in line. It’s not a surprise a lot of companies are going to be either in line or beat because they lowered… These analysts have lowered estimates dramatically, dramatically, significantly into the quarter, more than 7%. So, it makes it a lot easier for these companies to beat.

Frank Curzio: But it’s the guidance, right? And if you’re laying off 10% or 5% of their workforce, 10,000 employees, and you are going to report that, guidance is great and good. I mean, you want to see those 10,000 people on your front lawn protesting. That’s how you get it. But Microsoft is no way going to report the… And that’s what happened.

Frank Curzio: So, when the call came out, the stock immediately went up 4%. Now, it’s down like 3, 4% for the day, bringing down the whole market, bringing down a lot of cloud companies, and the guidance was not that good. And people think it’s going to get a lot worse based on what they’re saying. So, when I’m looking at earnings, I think they’re going to have to come down sharply for Microsoft and a lot of these cloud companies.

Daniel Creech: This is a great situation or learning example of how do you look at markets because Microsoft is one of the greatest companies out there. Yes, it’s dropped, what? Give or take 40% from its recent highs, along with the other tech sector.

Frank Curzio: Is it down that much? I didn’t know it was down that much.

Daniel Creech: Well, it was over 3, what, 340?

Frank Curzio: Mm-hmm.

Daniel Creech: 340 to 220ish. It’s bounced off the least 20. Anyway.

Frank Curzio: Yeah, wow.

Daniel Creech: But I was actually impressed. Even though growth is slowing in the cloud division, it’s still impressive to see them growing at 30-plus percent. And what was wild is, you’ve talked about this in the past and now, in going forward, we want to pay more attention to this, the cloud grew 38% constant currency. I think that got dropped down to 31 when you factor in currency, to your point.

Frank Curzio: Which is the real number.

Daniel Creech: Right. But to your point, that just shows you the significance in international, in currency exchange rates, nobody kind of cares about that when things are going up. That’s a significant difference, significant dollar amount. You’re right, it’s reality. But my point is it helps investors kind of understand what’s going on and why that’s important.

Daniel Creech: Overall, this is an easy thing. If you want to trade Microsoft, it’s going to bounce around a little bit. If you can buy Microsoft and hold it for what, three years, four years? I don’t think there’s much risk there at all. This is a company with optionality because it’s going to print money, it’s got a good senior manager, at least, and in line and Frank, they’re getting into that AI chatbot GPT billion-dollar investment that’s going to take over the world and do everything.

Frank Curzio: Which is amazing. You guys, you got to look at that technology, it’s unbelievable. And remember, it’s the AI. It’s already built. So now, from this point on, it gets smarter. I mean, it’s going to be able to write things for you, in your voice. It’s really incredible. I mean, I’m really starting to really dig in, especially from the publishing side of the industry. It’s unbelievable. It’s fascinating.

Frank Curzio: And the fact that their investment that they made, I think they said that they’re going to be one of the exclusive providers of that investment where their early investment, they just invested I think another billion dollars, but the early investment included that… I’m pretty sure it’s like exclusivity where nobody else… In the private stage, they have access to invest in it. And I’m not sure if nobody else does, but they have a special clause in there, which that’s why you’re not seeing some of the other companies invest in specifically that technology. That technology, but not that company. But it is interesting and Microsoft did a great job with that.

Frank Curzio: Now, here’s my take on Microsoft, which is a little different. It is one of the greatest companies in the world, but we push the Amazon’s, even the Apples, the Googles, the Microsofts, all these companies, we’ll push them to the trillion-dollar valuation, this cloud. It was a game-changer where this is a massive high-margin business. And when you have high-margin businesses and you see them slow or you see your company slow, mostly technology and software companies, the reason why those companies get hit the most is because it’s much harder to cut costs when the only way it’s just to get rid of employees, which is why what you’re seeing across the industry where factories, you can close factories. I mean, immediately, in two quarters, you can cut, there’s just so many things. When your margins are that high, it’s not as easy in terms of cutting.

Frank Curzio: But you talk about the growth, which is 31%. Okay? Now, the stock’s trading at a pretty high multiple, which is 23 times fold earnings. So, that’s a little high. I mean, there’s a lot of companies that are trading much higher. You deserve that premium to the overall market because you are Microsoft, and you’ve been growing, but now, this is one of the only growth drivers and it’s fine because it’s massive. But now, you’re seeing the slowdown and that’s what’s scary because it’s pretty strong at 31%, and you can say that’s great, but it’s much less than the 35% that was expected, which drives the multiple.

Frank Curzio: So, you could be one of those people that say, “Well, it’s 31%,” but here’s what happened because when the stock went up, they reported good numbers like I figured they would because they lowered their estimates, and then the guidance was weak. And then on the quarter, I mean, management really got into it and they said, “The PC market was in line with expectations, but executional challenges impacted our surface business.” They said, “Advertiser spending declined slightly more than expected, which impacted search and news advertising and LinkedIn. The company is seeing customers exercise caution in this environment, and so results weaken through December.” That’s the last part of that quarter, which means they’re weakening through December, which tells me they’re going to be weak going forward.

Frank Curzio: So, it wasn’t like, “Hey, it was weak.”

Daniel Creech: When they report current earnings? Yes.

Frank Curzio: When they report the next earnings, that’s what’s scary, right? Because now you’re seeing it, you’re really seeing this thing. And that’s what scares me about this market is it’s constant demand destruction. That’s not going away. It’s not like, “Oh, okay, we’re done.” The Fed continues to reduce liquidity. I don’t know if you saw Capital One. I mean, horrible numbers. Delinquencies up. Just the numbers are getting worse and worse and worse and they’re going to continue to get worse throughout the year. And the Fed’s not going anywhere, I talked about that yesterday, when there’s a lot of measures and inflation that’s actually going a lot higher now.

Frank Curzio: It was supposed to slow down and moderate, it’s going in the right direction, but I mean, if you look at gasoline prices, you look at oil prices, you look at copper prices, you look at food prices are still very, very elevated. And these are ones that impact consumers the most. So the Fed, if you’re bullish, the Fed’s going to reverse course. They’re not. They’re not lowering rates by next year unless we see an absolute crash.

Frank Curzio: But the company also saw moderated consumption growth in Azure, and lower than expected growth in business across the standalone Office 365, EMS, and Windows commercial products. So, that’s tied into the rest of their business. You look at personal computing, which includes Xbox, it’s down 19%. So, when cloud’s not working, it really hurts the rest of its businesses.

Frank Curzio: So, if that wasn’t bad enough, the EU is about to launch an antitrust investigation into Microsoft, which is just reported. This follows the Justice Department, and I think it’s like seven or eight states. A final lawsuit against Google, which is the monopoly in digital advertising and search. And Google’s like, “No, we don’t. You’re going to hurt publishers,” even though they do have a monopoly.

Frank Curzio: But slow cloud growth is significant because this is what drove the biggest companies in the world to those trillion-dollar valuations, Google, Apple, Microsoft, Amazon. And with this slowing, these companies, Amazon’s taken a hit today, you’re going to see this bring down the entire sector because it’s such a heavy weight, and it’s why one of the things, when you look at the NASDAQ, why I suggest buying puts against the NASDAQ. And yes, it’s been up 8%, those moves are absolutely normal. If you’re looking at 2008, we had a move of 20% higher, just from October to December or from December. It was like two and a half, three months. We had a 20% move higher, a 24% move higher, and a 10% move higher in 2008 in the middle of the market of 2008-2009 going down 45%. Those were moves. In three weeks, that happened, four weeks, that happened.

Frank Curzio: So this is normal, what we’re seeing, but the bottom line is it’s about earnings, and you could lower those estimates, and you could revise those freaking numbers as much as you want, Daniel. But I’m going to tell you, when you look at the actual numbers, they’re trading at 23 times forward earnings. Do they deserve that premium? Because year-over-year, how much do you think their sales grew, if I had to ask you? Year-over-year, at a company trading at 23 times forward earnings?

Daniel Creech: I would guess single digits for Microsoft.

Frank Curzio: Okay, only 2%.

Daniel Creech: Oh, I would’ve guessed higher that. I would have guessed 7 to 8%.

Frank Curzio: Year-over-year, so this quarter compared to the last comparable quarter last year, where do you think earnings are? If you had a guess?

Daniel Creech: Flat.

Frank Curzio: They’re down 7%.

Daniel Creech: Frank, don’t put me on the spot like that.

Frank Curzio: When you’re revising those estimates, there’s still the numbers, right? You’re still reporting the numbers. You might say, “Oh, they beat the analyst estimates,” and they go up like they did the yesterday, a little bit. When you look at the numbers at a company trading 23 times forward earnings impacted where their biggest growth driver is clearly slowing, they said that on the call, it’s impacting all their other segments. I mean, this is the bellwether of technology that’s in everything telling you it’s slow.

Frank Curzio: And they just laid off employees recently. They didn’t do it six months ago, three months ago, they did it last week. Okay? They’re not going to lay off employees if they believe that this is the bottom and we’re going to start growing. They think things are going to get a lot worse. And they expressed that on the call and good for them. They were open. They weren’t like Ford who bullshit you. It wasn’t like Disney who bullshit you and said, “Things are great, things are great, things are great” until finally, it’s going to blow. It’s going to blow up in Ford’s face too because now with Tesla lowering prices, I don’t know how they’re going to make money on cars. I really don’t. The EV vehicles and a $50 billion in spending, I mean, good luck with Ford.

Frank Curzio: But again, they’re going to keep saying the right things and reporting and manipulating their earnings and pushing forward contracts. Eventually, those numbers are the numbers. So, you’re looking at this and we’re going into tougher times. So, if you’re growing earnings per share, like you said, if you’re growing 10 to 15%, a 23 times multiple, it’s not expensive. But when earnings percent are declining year-over-year, and Microsoft is saying that we’re going to see even slower growth, I mean, you’re seeing a stock that could easily decline 15 to 20% from here at that 23 multiple.

Frank Curzio: And that’s what worries me about the overall market with Microsoft. But you see where the weakness is. I mean, how do you buy Microsoft here when it’s one, you have weakness, and it’s still relatively expensive stock here?

Daniel Creech: Absolutely.

Frank Curzio: Even though you can’t look at how much it’s down. Stock can go down 60, 70%. You can be like, “Wow it’s a great bargain.” No, it could be much more expensive if earnings are crashing. You’re starting to see earnings come down for these names and they’re all starting to warn, and you saw it yesterday, even with the GEs, the industrials. That was the place to be, industrials. I don’t know if you saw the rails. I mean, demand is falling off a cliff. It’s falling off a cliff and it’s supposed to fall off a cliff because that’s what happens when you significantly raise rates by the fastest pace in the Fed era.

Frank Curzio: They’re going to stay that way for a while. The Fed is 100% in QT mode. Remove hundreds of billions of dollars every quarter from the market at least over the next four to six quarters. That’s what you’re going to see. And a lot of these companies, you think it’s factored in. After this rise in NASDAQ, I’d be very, very careful. I covered that yesterday, but that’s just my take on Microsoft.

Frank Curzio: It’s a great company, but I just think you’re better off buying other stocks. I think there’s other names that are much, much better, including another company I reported, AT&T.

Daniel Creech: Especially in the short-term, absolutely. Yeah, AT&T.

Frank Curzio: AT&T! I mean, that’s a company we have in our portfolio. And for me, I was a little early on it because I knew that when they spun off this Discovery Time Warner, it was going to be huge for them, but it took them forever to do it.

Frank Curzio: So when they did that, AT&T, they spun it off and they generated $40 billion in cash from that spinoff, and they had, I believe it was something like $25 billion in short-term debt. So now, you have no balance sheet concerns. You’re looking at a stock that pays a nice yield of almost 6%. That’s perfectly safe. You’re generating free cash flow, $17 billion a year, and now you’re looking at the gross certificates. I mean, I’d rather own the AT&Ts. It’s a perfect stock for this environment, but there’s just so much more of that story.

Frank Curzio: And that’s how you should be looking. Do you want to buy Microsoft here? And don’t look at AT&T like you looked at in the past when it was a crappy company, it never grew, it was terrible. These guys are in a perfect environment, growing their earnings, laying fiber everywhere. I mean, this is a really fantastic story with A&T, and The Street agrees. I mean, the stock was up like 5%, 4 or 5% today, on a down day after earnings.

Daniel Creech: Yeah. And to your point, it’s got a got a good streak of adding phone net adds. Some of the way they describe these are pretty funny, but they have 12 straight quarters with more than 200,000 net adds. To your point, fiber is the big growth thing. This is a free cash flow generator.

Daniel Creech: What I like about AT&T is that it’s very boring and it doesn’t have any respect yet. We’ve talked about this transition. The forward PE on Finviz with AT&T is around 8. So to your point, Microsoft is still a premium to the overall market. AT&T is a huge discount to the overall market. It’s paying a much bigger dividend than the overall market.

Frank Curzio: And it’s growing faster.

Daniel Creech: And it’s actually growing on those earnings per share.

Daniel Creech: Now the market, from an investor’s standpoint, I’m the same way. I want instant gratification as well. The hardest thing to do here is be patient because you’re getting paid to wait. The market is going to turn but turn slowly. And to their credit, yes the spinoff took a little longer and all that kind of stuff, but after years and years and years of under-performance, there’s no reason to just flip the switch and give them all the credit. That’s not how the world works. But they are putting up, like I said, the ads are good. This is just a great boring company because… Well, you have a good story on why you think they’re going to grow even more because of their new sales tactics. But again, this is just a buy and forget about it.

Daniel Creech: What’s exciting to me from a “younger” analyst and investor is these are going to be the growth stories going forward for at least the next couple years in this high-inflation environment. And I don’t want to say easy in an arrogant way, but the Average Joe can now buy solid companies like this when fundamentals matter and compound their capital at a competitive return during a terrible time in global markets.

Daniel Creech: That, I’m not doing any justice, Frank, to get people excited about that as I should be. But we’ll practice on that over time. But this is a great… This was a solid quarter and for it to go up 5% on a down day… Is the market overall still down? I’d assume it is.

Frank Curzio: Yes. It’s down-

Daniel Creech: So, this is a 4 or 5% stop in the face of a large headwind after a huge rally and everything. It’s participating in the rally as well. This is a buy and forget about it, throw it in a box and bury it, Frank.

Frank Curzio: Here’s the thing, and it I might start with AT&T. So, I just built my new house. I’m going to be moving in there in three weeks, finally. Man, it’s stressful. It’s crazy. Yeah, it’s building your own house. It’s great. It’s a good thing. But man. So, we got internet service and AT&T has fiber there, and AT&T’s been aggressively laying fiber for a long time, and it’s a difference maker because the fiber is now they’re giving you one gig where Comcast was like, whatever, it’s 200 Mbps, right? And you go to 400 and they say, “Well, we can offer two gigs in some spots,” or whatever. I have Comcast here, I pay $500 a month for my Comcast. And that’s business.

Frank Curzio: So, there’s residential, and if you don’t know difference between business or residential, it’s very simple. They automatically charge you 2 to 3x just because you’re a business. That’s what Comcast does. But even regular Comcast, it’s going to be $200 just to get fast internet speeds and their fast internet speeds are half as fast as AT&T overall. They do have places where they’re like, “Oh, we have two gigs,” or whatever and AT&T goes as high as two gigs as well, but everything’s like the average and almost the lowest part is one gig. So now, I’m getting super-fast internet, it was $89 just for the month. No monthly contract, won’t get raised, and I can cancel whenever I want.

Frank Curzio: So, as they’re doing this and it took four hours to do it at my house and everything and going out, and again, it’s brand-new house so they’re just looking for all the wires and stuff like that. They have another guy come in and say, “Hey, I’m part of AT&T,” and this guy starts pitching me. I have Verizon as my phone service, and he’s there going to every house, and this is their strategy, AT&T, and you could tell it’s working because I don’t know if you saw, very weird, right?

Frank Curzio: I mean, you always saw these net adds or the declines, you always saw the declines, but now with the fiber accounts, it’s 280,000 fiber net adds, 12 straight quarters and more than 200,000 net ads. So, where they have fiber, people are getting it because it’s cheaper than Comcast, it’s cheaper than the other services, all the cable companies. But what they’re doing, and it’s 656,000 postpaid phone adds, it makes sense because if you look at 280,000, a lot of these people are on family plans. This guy came in, said, “What are you paying for Verizon?” I told him what I’m paying, he’s going to beat it by 20%, lock me into a long-term contract where it’s not going to raise the prices. And said every phone that’s not the 14 will upgrade for free.

Frank Curzio: And he goes, “Look at our service,” and I have my phone right there. He goes, “You see this? There’s 5G. You’re on LTE with Verizon.” I mean, so I’m going to switch. Why? Because it’s faster, it’s cheaper, and I just got the new 14 because I had an older phone, but my wife and two kids have the 12s, I think, but they’re going to get it for free.

Frank Curzio: So now, you’ve seen his postpaid phone adds, they’re laying the fiber, they pay that money, their balance sheet is incredible. They have enough money to spend, they’re going to continue to lay the fiber. This is a company that’s not boring. This is a company that’s actually growing. I mean, 656,000 postpaid phone net adds? Nearly 2.9 million for the full year? Are you kidding me? 12 straight quarters with more than 200,000 net adds for fiber?

Frank Curzio: I mean, they offer… A tiny bit of downside guidance, but it didn’t matter because the stock’s trading at eight times forward earnings. So, when you compare this at eight times forward earnings, a company that’s growing, expected to grow earnings and sales, they’re seeing those net adds, their balance sheet, $17 billion in free cash flow constantly. Or do you want to buy Microsoft at three times evaluation, not growing earnings year-over-year, barely growing sales and warning.

Frank Curzio: If you listen to the difference in the conference calls, listen to what these guys said. I mean, CEO went on there, he goes, “Made real good progress on restructuring. Customers are willing to pay more for services because of better performance,” which is me. “5G enhancers will come to automotive, industrial, and medical sectors,” which are massive markets. He thinks customers will be more deliberate about replacing handsets. He expressed inflation impression in 2023 with more of a moderated growth environment and they just signed a big fiber joint venture with BlackRock, which they talked about. Reduces the risk, but it’s going to expand fiber even more.

And BlackRock again, with getting the fiber-

Daniel Creech: Joining the dark side, Frank. If that’s not a bullish argument to buy right there, that is.

Frank Curzio: Just to BlackRock.

Daniel Creech: Exactly.

Frank Curzio: Just to BlackRock, a sum after all those REITs and holy cow, I mean, they’re really… Everyone wants their money back.

Daniel Creech: Imagine the shenanigans going on there.

Frank Curzio: And they’re like, “Nope, you can’t have your money back. Sorry.” Okay, good luck.

Frank Curzio: But that’s the difference and that’s how I want to teach you, and Daniel, I know you want to teach investors where instead of looking at Microsoft, instead of looking at trying to buy these things on a pullback when they’re all reporting and they’re laying off employees, AT&T’s not laying off anybody right now. I didn’t hear any layoffs in the past few months.

Daniel Creech: That’s right.

Frank Curzio: They’re growing. And you’re doing it in an environment where you’re going to generate that cash flow. These are people… Non-stop payments coming in, right? Non-stop, non-stop cash flow. These massive cash flow generators, $17 billion, and this is going up the next five years easily annually. What are they going to do with that? They’re going to buy back stocks, they’re going to return to investors. You have a 6% dividend and you have a company that’s growing.

Frank Curzio: What do you want to own? You want an AT&T or Microsoft? It’s a different environment. You got to look at this differently. In the past, interest rate zero, growth stocks, doesn’t matter. We’ll buy them, they come down, buy them. But it’s not that kind of market anymore where the AT&Ts are going to do fantastic going forward.

Frank Curzio: I saw Verizon’s… By the way, Verizon’s CEO impressed the hell out of me and CNBC. That guy was pretty incredible in that interview. He was great. I just think AT&T really surpassed them and looks much, much better going forward. But that’s how you want to look at different ideas. Okay? Which one do you want to own? Well, this one I’d rather own.

Frank Curzio: They’re not both technology stocks. It’s not like I’m owning Home Depot instead of Lowe’s, but they are both large cap stocks. I mean, they both pay dividends and this pays a higher dividend, growing faster, much more growth potential. And again, Microsoft is just warning and being cautious. And I love it. Microsoft is very open and honest about it, which is cool because you don’t see that from all companies, especially from the Disney’s, which I hated, especially from the Fords, especially from a lot of companies out there. They’re just saying, “Oh no, no, we’re okay. We’re good,” and then it’s going to come to roost like it did, that terrible Disney quarter when everyone’s like, “Holy shit, where did that come from?”

Frank Curzio: That came from you lying for six quarters telling us how great it was just because you are adding people for free to Disney streaming, even though you’re losing billions of dollars a quarter and you’re going to continue to do that for year after year. Nobody wanted to pay attention to that. Now you are in this market, especially when you have a massive amount of debt. I don’t hate Disney, even the way the stock price is, but when you have that much debt and you’re looking at a high and straight environment, it’s a different company right now. They’re trying to find their growth. They’re locked into an area that is massively competitive and very few companies outside of Netflix will make money on it in terms of streaming, and they continue to pour money into it. And that could be dangerous for the company. I just don’t see how that could be a buy as they’re putting all this money into Disney+ and streaming.

Frank Curzio: And Ford as well. I have no idea how Ford’s going to be able to make their numbers. They might make them this quarter or whatever. But again, it’s just going forward, the amount of money they have to spend, all in on EVs, and the fact that EV prices are coming down, they can’t really make money on the EVs that they’re selling right now in terms of profits. It’s going to be a tough company. It’s going to be really tough for that company to do well, but the AT&Ts and there’s others as well that will do well in this environment, and that’s what we’re going to try to find for you in our newsletters.

Daniel Creech: Absolutely. AT&T and Ford report the 2nd and the 8th, I think, of February so we’ll be watching those.

Daniel Creech: Also, we’re in the heart of earning season. The big dogs in oil report next week. Exxon kicks off, I believe, or maybe not kicks off, but Exxon reports, I believe on Tuesday of next week. Definitely want to follow them. The trend is going to continue with mature oil companies because it’s already going to the oil services quickly, Frank. We’ve talked about how oil prices have a lot of momentum behind them because despite the spikes in oil prices and volatility, you don’t see a lot of increased production and spending and craziness like you have in past oil bull markets.

Daniel Creech: That is now transitioning. They’re focusing on shareholder returns, strong balance sheets to navigate the environment. That’s actually going to oil service companies, Halliburton, Baker Hughes. Halliburton raised their dividend 33%, and going forward, we’ll use 50% of annual cash flows to reward shareholders through dividends and buybacks. That’s a big deal. Look for that trend to continue.

Daniel Creech: We’ll report on the big dogs. We’re huge ExxonMobil fans here because it’s helped our Dollar Stock Club.

Frank Curzio: You nailed that. That was a great, great pick a while ago. Again, another great pick.

Daniel Creech: Yeah, I was going to say that was a good while ago. But to your point, that was after. The reason that made me pull the trigger was because they were appointing those silly guys to the board of the clowns and it did drop 15% or 20 right after that, but now it’s up 80. So. life is good, people.

Frank Curzio: One thing with oil companies too, the bigger names and also the oil service companies that just reported, like the Baker Hughes and Halliburtons and stuff, and Schlumbergers, there’s a reason why some of those are trading near 52-week highs is because we’re finally seeing, for the first time in a while, international growth is exploding and it should be because of what happened.

Frank Curzio: They cut back significantly. It hurt a lot of these companies because you’re like, “Wow. Oil’s going higher and these service companies never really participated.” They’re participating now, and they’re the industry leaders because you’re seeing massive growth internationally as a ramp up spending because now they’re like, “Holy shit. We cannot be in this situation.” Europe got lucky, and I’m very, very happy for them that they have a much milder winter so far.

Daniel Creech: So far.

Frank Curzio: So far, which is great. We talk about people not having heat in incredibly freezing weather. You can’t even think about that. It just pisses me off, Daniel. When we live in the US, and I see so many of these young kids which don’t know better because they’ve been conditioned by whoever they’re learning from at what fucking liberal school of how they hate the United States. But man, you’re so lucky to be living in this country. It’s the greatest country in the world. I mean, you have access to everything. You have clean water.

Frank Curzio: Imagine not having heat and you have… You’re a family, and you have young kids or babies in the house, and you don’t know if your heat’s going to turn on. Now you’re going to Ukraine, and you’re just… Again, we have Genia whose Moneyflow Trader‘s done… Again, you guys know what kind of job she’s done over the past year, two years in this market, with buying long data puts on this market when it’s been going down.

Frank Curzio: But even when I ask her, it’s just when you put it in perspective, sometimes we talk about it and be like, “Why are we funding Ukraine?” But I mean, she’s worried about is, she going to talk to her family this week? I mean, put that in perspective and you’re here worrying about pouring paint on some kind of fucking painting and being pissed off when the rights that you have here for this country… Please travel abroad. You’re going to see how lucky you are, how you could become anything you want if you work hard and how great you have it. Because when I look every place else, man, it’s scary out there. And now even Europe too.

Frank Curzio: Even China. I mean, imagine China. There’s uprising in China. If you talk against the government, you disappear. You disappear if you do. And it was so bad that they had these massive, massive protests because that’s how bad the conditions were. And everyone’s like, oh, “China’s going to grow 4 or 5%. It’s open.” Listen, we’re the largest trading partner and we’re going to recession next year. We buy the most goods from them. So, I don’t know. And none of that. We’re removing a lot of… Open up factories outside of China. We’re moving a lot of business away from China. You’re seeing it with fab plants and factories and different manufacturing facilities. I mean, China’s not going to see that growth of 6% plus a year annually you saw for 25, 30 years prior to COVID. I just don’t see it grown as fast, which is also pretty scary, especially that you don’t have that growth catalyst or the Fed growth catalyst.

Frank Curzio: But when it comes to US though, again, it’s just the greatest country in the world. I love it. And I get pissed off when people tear it apart. It does have flaws and people are angry all the time, but man, just look around. You have it really, really good, much better than you think. And I wish people would travel internationally a little more to learn that.

Frank Curzio: But getting back to the oil companies real quick before we go, you’re right. You’re going to see the Chevrons, the Exxons, all the majors, those integrated that just go across whatever, diversified or finance, everything, but they have a lot of international exposure. And that’s going to take off a lot of these companies because man, they’re drilling like crazy and they should be because right now they’re going to coal because they don’t have a choice. Now they’re going all in. It’s very big drilling everything, and they understand how important fossil fuels are because when you’re talking about death and you dying now, I think that that’s supersedes anything on climate change that’s going to happen maybe 3,000 years from now, 2,000 years from now, 500 years from now or whatever. You got to worry about your family first.

Frank Curzio: And yeah, let’s get this stuff ramped up. And again, focus on alternative energy. You want a cleaner climate and I get it, but not to the point where you’re just shutting off stuff where it risks people’s lives. And you have to realize that and hopefully they do.

Frank Curzio: So, oil companies reporting, we’re going to bring a lot of that data to you and that should be a lot of fun listening to those reports, especially from the majors that integrated.

Daniel Creech: Yeah, you’re way too nice, Frank. A lot of people’s outcome and wanted outcome is less people in the world. So anyway, big oil’s great. We’ll report back to you.

Frank Curzio: One podcast, I’m just going to have you take the stage because when you talk about this offline, I love it. I’m going to get you to really talk about it because man, yeah, Dan has some stronger opinions and I love it.

Daniel Creech: Stay tuned.

Frank Curzio: And a lot of people do, and you should because… But anyway, so Dan, thanks so much. We covered a lot. Really dug into two of those earning reports. Boeing reported too, weak numbers, but not getting nailed that much because the stock has come down a lot. You’re still seeing those massive orders for new planes and that market’s good. But again, the supply chain and stuff like that, that’s stuff that’s going to get fixed.

Frank Curzio: Watch out for the transports or the industrials. I mean, you’re seeing rails and stuff like that, demand falling off of a cliff. And for some reason, that’s surprising a lot of people, even shippers and things like that. Just be careful because you’re seeing, when they’re reporting, that there’s a reason why supply chains are getting better because demand’s falling off a cliff and you’re not seeing as much traffic. Right? So, that’s why supply chains are getting better. That means demand is falling a lot and you’re not seeing good comments out of these companies, which again, we’ll talk about over the next couple weeks as more and more of these companies report.

Frank Curzio: So Dan, thanks so much for coming on. I appreciate it. Wednesday.

Daniel Creech: Yep. Best Wednesday. Best day of the week. It’s a Wednesday. Cheers.

Frank Curzio: Is Wednesday and Florida Day. Happy Florida Day!

Daniel Creech: Florida. National Florida Day.

Frank Curzio: Go do a shot. We’re going to do a shot in a little while.

Frank Curzio: All right, guys. If you have any questions, comments, you can email me at frank@curzioresearch.com. That’s frank@curzioresearch.com.

Frank Curzio: I’ll see you guys tomorrow, by the way, with another great interview, the one and only Amir Adnani, talking uranium. He’s been in this industry for 20 years, probably the smartest person ever in this industry. Just built this company from scratch, again, over the last 18 years. A lot has happened in uranium over the past year and especially recently, right? Germany announced they’re coming back online. You have a government-established strategic uranium reserve, which they actually were able to buy, I think it’s 300,000 pounds, something like that, from five or six different companies, which UEC, his company, was one of them, right? So, they have a strategic uranium reserve.

Frank Curzio: Davos where the whole climate change thing, everybody going crazy. There’s a lot of people that came out, a lot of famous people and actors and whatever. These climate change, some of the craziness, pro-climate change organizations once dead-set against uranium are now lobbying for it. But wait till you hear this interview of how uranium is setting up. It was always about the fundamentals, but there was always a politics behind it where people think you’re going to die.

Frank Curzio: That’s going away. I mean, it’s going away very, very quickly especially with what you see happening Europe and how uranium’s getting bigger and bigger. And again, you’re seeing people who are big pro-climate change organizations and people that are saying, “All right, we have to go to uranium.” I mean, you look at Elon Musk, you look at Bill Gates, just famous directors and actors that have movies out and stuff.

Frank Curzio: So, it’s a really, really good interview. We’re going to go over lots of numbers and stuff like that, really detailed, but you’re going to see why uranium is absolutely, definitely going. It’s $50 right now. It’s going over $100 dollars and I’m not too sure of the timeframe, but you got to be long uranium and just buy it and forget about it because all the fundamentals are there, everything’s there. And it’s going to come out in this interview, and you’ll see exactly why. Definitely stay tuned.

Frank Curzio: And again, any questions, comments, Daniel? Your email address really quick.

Daniel Creech: daniel@curzioresearch.com.

Frank Curzio: frank@curzioresearch.com. And I’ll see you guys tomorrow with Amir Adnani. Take care.

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