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 February 26. I’m Frank Curzio, host of the Wall Street Unplugged podcast where I breakdown the headlines and tell you what’s really moving these markets. Say, a lot’s going on with the market. What do you think? I’m looking, the Dow is up 350 points rebounding after two days of a massive, massive sell-off. You have the coronavirus.

Frank Curzio: And again, this is going to be a special podcast. I’m not going to have a guest come on. I know you guys love when I have guests, but anyone I bring on, unless the people that are reaching out to are officials, are leading scientists, lead infectious experts, trying to get those guys on the podcast because anybody else right now is just going to take away from the important message and the point of this podcast is you need to protect yourself.

Frank Curzio: Okay. You’re going to see bounce backs here and there. There’s still tons of uncertainty and people may think, “Well, it’s oversold. We’re fine here. Going to rebound like we always rebound.” I told you this time it’s different. If there’s one thing that I taught you over the past in this podcast for 12 years, I say it over and over and over again. What are the worst things for stocks is uncertainty and right now we have uncertainty. There’s hardly any facts out there. We don’t know how quick this virus goes by. We don’t know anything. We just know that everything is shut down. Most everything is shut down and Chinese school is still closed. It was supposed to come on two weeks ago. Now, it’s other weeks then it pushed out to March, beginning of March, mid-March, April, some of these things.

Frank Curzio: We don’t know and if you don’t know, you can’t invest and that’s a problem. That’s why, yes, we’re going to see little rebounds here and there, but they’re probably going to be short lived. Now, right now, you still have to be worried. If you go to markets right now, we’re down 5%. We’re only down 5% from the all-time highs. What is it? That’s nothing. I mean, take out the last, take out even before the credit crisis or you could add the credit crisis, you could do two to two, whatever, 2010, 2011. We have recessions. We have market pullbacks of 10% 12% that’s normal. All these markets do well and all these companies, everything starts going up. They don’t deserve to get it then they pull back.

Frank Curzio: And now we have uncertainty in the market, we’re down 5%. Everybody’s panicking like, “Oh, we’re down.” We’re bellied down. We’re bellied down. Some stocks have gotten hit more than others as you know, once that have more China exposure. Well, you have to be worried because the world’s biggest growth engine is still shut off and we don’t know what it’s going to come back on.

Frank Curzio: Four weeks ago, I sounded the alarm in my newsletter podcasts saying that this is not priced into the market. I mean, company is 30% S&P 500 companies in their last quarter, not the ones that I warned you, that I told you. We’re going to get hundreds of warnings, hundreds. So that’s two, three weeks ago, we’re getting a hundred. We just starting and like 20 companies had warned, there’s going to be a major impact. But Apple remove this guideline and they even said on their column that yes, we could see disruption. These companies were telling you that they’re going to see disruptions. China was telling you we’re shutting things down.

Frank Curzio: Nobody cared. Nobody cared. It was amazing to me. This isn’t like you know Tesla. Will they get out their shipments? Well, they won’t. Do they have enough money? Yeah. Other cutting costs and get it, you go do a quote. No. No, that’s debatable. That’s debatable. The companies, these are facts. It was saying you have to, well, we’re worried. We don’t know. It’s the worst thing you could say as a company when you can’t forecast. You don’t know. There’s a reason why when companies say, “Hey, well, we’re moving off forecast for next quarter, next year.” They fucked. They crashed. They’re going to go down tremendously when they say that because now, there’s no certainty there. You shouldn’t be surprised the market’s coming down and you shouldn’t be a surprised it’s going to come down a lot more.

Frank Curzio: Now, you guys know I cover my losers more than my winners and I’ve been wrong a couple of times. People would send me emails, Frank, thank you so much.” I’ll go over this in a second, but I’ve been right on everything. I mean, I thought airlines would be a great buy because they can measure, okay, we’re not good, we’re closing down flights to and from China. Okay. You could model that. This is how much we’re going to lose. Fuel costs are down 25%. I’m like, “Wow.” You’re going to see airlines sell off and when they sell off, they’re going to be a good buying opportunity because it’s a washed. Their earnings aren’t going to get hurt and they’re still cheap. And you know what? Look what happened. The fires are spreading to over 35 countries now. And it’s not just like one case here, two case here in South Korea, over a thousand. In Iran, you’re seeing this spread, which means what?

Frank Curzio: I discussed it with my wife. We will usually go away when I have a time with Sheryl. We used to go to Dominican Republic and we can go to different places and we go around March in every year and I talked to Sheryl. She said, “I don’t think it’s good idea to hop on a flight.” And you know what, I agree. She hates me for this. I’m at least paranoid person out there. I’m jumping off buildings and stuff and skydiving and having fun. Never really worry about anything, but that’s the sentiment right now.

Frank Curzio: So airlines, people aren’t flying. Nobody’s taking a cruise, right? If you take a cruise, like just one of my friends said that they got a cruise. “Yay. We’re taking a cruise. I got it for $3,000.” I told him to cancel it. They’ll come back with you and tell you it’s $1,000. I said, “You’re going to be the only two people on the cruise.” Like, “We’re going to Alaska.” “The virus okay over there?” “Yes.” The virus travels the most and during cold, that’s seasonal. The reason why the flu happens. The flu is not during the summertime. Heat usually kills these things.

Frank Curzio: But one person, just one person, needs to get the virus on this ship and you’re out to sea for three weeks. Nobody’s going to say, you could dock here, you could dock there. No way. They’re going to say you should have known better after you saw what happened with past cruises, but the travel industry, nobody’s traveling. There’s fear. A lot of fear out there.

Frank Curzio: So for me, I came to the conclusion and I’m saying like, I cover my losers as much of my winners, so you know I’m not saying, I’m patting myself. No, it’s not about that. I wish I was wrong on this because people are going to die. There’s more and more people that are going to die. I don’t want to be right on this. I don’t want to brag about this. I’m hoping this gets contained. If it does, stock’s going to go a lot higher. We’re all going to make money. That’s great. I mean, how many you go short. It’s dangerous going short. Just ask some of the people, the smartest people in a world who’s short at Tesla, like 100, 200, 300, 400, 500, 600 and 700. It’s hard to short and you can get wrecked. You’ll be living on a parked bench if you’re working with something like that.

Frank Curzio: But I came this conclusion after doing tons of research and this is what I do with every single trend, you hear me on this podcast. Got it all over the world. I mean, I analyze the reports on thousands of miles sometimes to get the real story. You think I want to go to Vancouver to speak at mining conferences and things like that. I mean, I’m in Florida. It doesn’t get further than that. Staying inside the same country, especially leaving from Jacksonville, which I have to take two, at least two flights, sometimes three. Not fun, but it’s worth it because that’s the hub for the mining industry to give you the best ideas.

Frank Curzio: But that type of dedication helps me find the real story behind trends. A story that you’re not hearing out there and you know what and let’s we find these trends with zero bias and you know what that means? It means my opinions are unpopular a lot. I’ve got hate emails on topics like fracking, saying it doesn’t cause water contamination because I went there and I saw it. It doesn’t. Anyone who says it does, has an agenda. They don’t want to read. They don’t want to look at the facts. They don’t want to study. I mean, I went there thinking that there was going to be dead animals at every place based on everything that I read and that I heard.

Frank Curzio: When I went to Brazil during the Olympics, Zika virus is going to kill you and then they said, there’s people’s body parts in the water. I went there. I’m telling you, I just got my back surgery, I was scared shit to go there. It was one of the nicest places I’ve ever been to my life. It was beautiful there. The people were nice. I was at a bar watching that game against Germany when Germany won 100 to two, whatever the score that game was. I mean, they scored three goals basically in the first five minutes. What was it? Nine goals, eight goals, they scored whatever it was, destroy them. You know what? They weren’t throwing bottles or going crazy. They were all cool. They realized they lost.

Frank Curzio: You got to be careful what you read out there, but doing a homework, boots on the ground, again, it lets me look at a subject from scratch and have zero bias. Look at the tariffs. All the bullshit about the tariffs guys. I mean, China’s killing us. They’re crazy if U.S. is going to crash with the trade war. I mean, if you go on Google and look just trade wars. Type in trade wars, you’ll get like 300 million stories over the past two years. I was like, just ignore it. Ignore it. It’s all bullshit. It’s all smoke and mirrors. China has to work with the U.S. They have no choice. That was before the Hong Kong nonsense. They have no choice.

Frank Curzio: I mean, who would you want to be the person who makes everything or have the money to buy everything because if you make everything you’re selling it and you’re the biggest consumer in the world, right? You’re the biggest consumer of the world and they say, “You know, we’re not buying your stuff anymore.” Who are you going to sell it to? We could buy it from anywhere. We’re going to pay a little bit more money, but that puts us in the dry receipt. That’s common sense. Nobody wants to look common sense. Trying to own treasuries. They’re going to sell treasuries unless they want to collapse their entire economy, that ain’t happening anytime soon. Give me a break. How’d you to ignore all the stories buy stocks on pullbacks. It’s all bullshit.

Frank Curzio: Trump. Oh my God. I can’t tell you how many emails and negative emails I get on Trump, saying, pedal to the metal. It’s going to be good for the economy. I realized that pretty much six months into the presidency. The tax reforms, everything. People just listen, if you hate Trump, you hate Trump. My job is to tell you how to make money on stocks, that’s what I do. And his policies a very, very favorable for businesses and paying less taxes, they’re hiring more. They’re going to generate more profits. Earnings are surging. That’s why unemployment rate is at a record low, companies hiring. I’m not saying Trump is the best thing in the world. I’m saying Trump is very, very good for the stock market. It doesn’t matter how many hate emails I get.

Frank Curzio: And you know what? I don’t give a shit about them. I don’t. I don’t give a shit about the hate mail. The only thing I care about is providing you with information so you can make the best financial decisions for yourself and for your family. That’s my job. My dad taught me 25 years ago, it’s the foundation of Curzio Research today. At the end of the day, my research, it’s not based on stubbornness, it’s not based on emotions. It’s based on crunching tons of numbers, doing a ton of work and then you have to throw in good old fashioned common sense.

Frank Curzio: And when I did that, that’s when you come to the conclusion that the coronavirus, four weeks ago I said, can cause the biggest global disruption since the credit crisis and investors that don’t position themselves accordingly are going to get crushed this year. Now, this has been going on for a month. We’ve seen the market come down, people are nervous and I’m going to make you more nervous, not on purpose because I’m fortunate to have access to a lot and a lot of stuff and there’s stories out there that few people are talking about and they’ve come out just over the past week. Okay, this isn’t talk about past podcasts about, this is right now. This is right now. So it’s important, so I don’t have a guest today, okay?

Frank Curzio: And the source I have right now, you’re not going to get a better perspective or have someone probably more on the inside right now, especially when it comes to financial investments and I’m not saying, it’s important. Again, I have tons of sources emailing me about this. Supply chain disruptions now, they’re reading almost every single sell side report, which is hundreds over the past month and watching what these guys are thinking and what they’re saying, which led me to my thesis saying, “Wow, these guys just don’t get it.”

Frank Curzio: I have people emailing me from China, real boots on the ground, so I’m going to share with you. Sure, these stories are going to be new to a lot of you because I’m not seeing these things report in a lot of places and I’m not talking about pulling stories off of Reddit, social media or BS news sources. These are credible. Leading infectious doctors, scientists that run major institutions.

Frank Curzio: So here’s some of the things that I’m hearing. The most alarming stories I heard, and Reuters reported this, a 70-year-old man living in China, Hubei Province, which is you know, almost ground zero for the coronavirus. He went 27 days without showing symptoms. If you’re not familiar with coronavirus, there’s a two-week incubation period. They say symptoms show up, you can get them, they show up anywhere from two days to 14 days after that, you’re good, you’re fine. Go ahead. Go to the public. We’ll release you like a wild animal. Go, you’re fine. Go. Go play with everybody. This guy got it 27 days ago. It didn’t show any symptoms until 27 days.

Frank Curzio: So think about that because the Chinese government and a lot of other countries have a 14-day incubation period. What does that mean? It means that these people could still transmit the virus or you can still get infected and everyone had thrown these people back out into the population, which means a lot more people are going to get it, a lot more people. That’s pretty crazy when you think about that. That’s one of the biggest stories out there. You’re trying to contain and saying, “Oh, it’s slowing in China.” Don’t believe the numbers in China. They’re all bullshit. This is the third time, I think a couple of days ago, that they changed their method of counting of how you’re infected, either you’re fucking infected or you’re not. It’s pretty simple. It’s pretty simple.

Frank Curzio: Even if you bought a line, you should be thrown into the infected pile, just to make sure. No. We’re going to change our method again, our methodology. We’re just going to keep changing it and changing it and changing it. Okay. That makes sense. That does a lot, but just based on this data, you could see why it started to spread to so many countries. We’re closing in on what, the third month of the outbreak? We have 80,000 infected, 2,700 people have died. The numbers keep going higher and higher and despite these numbers being high, the virus is nowhere near being contained and China refused to allow leading scientists, infection experts into the country. Not even the members of the CDC.

Frank Curzio: And why do you think that? Why? Why wouldn’t you want people, and I had some great sources. One of them emailed me, “Don’t use my name.” He’s a great, great source, a fantastic source and not a crazy guy and he brought up something to me. I’ll tell you this story and just think about it. It made me think, okay? If you’re looking at China, who does it target when it comes to fatalities? Old people. What’s the worst thing for an economy? Well, when you have lot of old people and you don’t have a lot of young people being born, which they have the two-child policy, so you can’t really do anything about it, but maybe this is a way to say, “Hey, let it spread and you know.”

Frank Curzio: You think that’s crazy? I thought it was crazy. When I first read it, I thought it was crazy, but remember you got to take yourself out of America where everything is free. We’re talking about dictatorship, communism, where the government wants to rule everybody and rule the world. How do you do that? Well, it’s nice if you can get rid of a large portion of your older population. Again, this is somebody else’s opinion and to be honest with you, I don’t believe it, but I like hearing the other side, but the last line was like, look, you know the guy’s not conspiracy theorist. Again, he’s a great contact. He’s not some crazy guy. He’s given me amazing information on China and the markets over the years. But it made me think, even said at the end, “Listen, this is different. This isn’t America. This is different. This is communism basically, dictatorship. I mean, so the government wants full control of everything. Otherwise, look just sure in fact that that they’re not letting leading scientists, leading doctors in there to help them out, to save lives, why?”

Frank Curzio: I don’t know. Do I believe that? Again, I don’t believe it. I’m just throwing it out there. As crazy as it sounds and I think as crazy as it sounds, because I can never ever, ever picture anyone doing that. I hope there’s zero truth to that, but it did make me think because you know what? We all know China’s government is full of shit. Now, the past few days, China has released statements, downplaying the spread of the virus and it’s starting to slow. And I don’t know.

Frank Curzio: I mean if their current numbers are to be believed, the infection rate amounts to just 0.005% of China’s entire population. Think about that for a minute, okay? Think about that, of the entire population. What is it like 15, 20% get the flu here? Okay, this is 0.005% of China’s entire population. As for the fatality rate, I mean, more people in China die, I mentioned this last week, from being struck by lightning every year, right? Now, if just 0.005% of the population is infected, don’t you think it’s a little drastic like China’s measures here? Let’s close down every plant, every factory, all stores throughout the country, just about and place over 500 million people on lockdown. Everyone was reporting 50 million. It’s 500 million people on lockdown. Not 50 million, it’s 500 million.

Frank Curzio: This isn’t SARS. It’s spread to every province, all 31 of them, but why would China do that if it’s not a big deal? Why is school still closed if it’s not a big deal? Why won’t you let anyone in the country if it’s not a big deal? It’s because the outbreak is much worse than what the Chinese government is telling us. I’ve provided examples showing how Lancet, prestigious magazine, medical journal is saying that, the number of cases are probably 10 times higher.

Frank Curzio: I mentioned Tencent accidentally put something on their website showing, I think it was 27,000 at that time; 154,000 confirmed cases. They immediately took it off and Tencent is not just some news source. It’s not like a CNN or Fox. No. They’re a lot bigger than that. Close to $500 billion market cap, now we place them at top 10 S&P 500, owns WeChat over a billion users. Largest gaming platform, controls the whole music services industry basically. I mean, they have access to more consumers than anyone in the world. This isn’t a BS company reporting that.

Frank Curzio: Again, I’m not giving you BS numbers here, apart from BS sources. One of the most recent stories, another one that you’re not hearing. Dr. Gabriel Young, one of the world’s leading experts on studying the patterns of infectious diseases, right? He suggested the coronavirus could infect 60% of the world’s population if left unchecked. Dr. Young, he received his Masters from Harvard. He’s a SARS expert. He managed Hong Kong’s response to the swine flu outbreak in 2009. You know what? I think he’s wrong, but what happens if it’s 10% of the population, that’s not even close to being factored into markets. Again, he’s saying 60%. What about if it’s 10% or if it’s 5% of the world’s population. Again, we’re talking about a small, small, tiny itsy bitsy percentage of people that are infected right now.

Frank Curzio: Again, four weeks ago told you this is something I’m worried about. Warned that the markets, they’re not factoring in this risk and coming to that conclusion after doing tons of research, but I have to tell you from this podcast today from back then, my thesis did not include the spreading of this virus into other countries. It did not include that. I mean, just over the past few days, hundreds of more cases continue to pop up in other countries. South Korea is seeing the biggest surge in new cases. Cortellis report more than 1,100 citizens have been infected; 1,100 put that perspective. It was 51, seven days ago. That’s insane.

Frank Curzio: And it’s starting to close public facilities, schools. You have Samsung, big plant in South Korea closing it after one employee tested positive for the coronavirus. Japan’s Health Minister acknowledged, this is crazy, that government isn’t unable to track the root of infections of the country, which is now up to 160, 170? We lost track of them. We have no idea. We don’t know where these people are. We don’t know. We’ll figure it out. That’s a big deal considering Olympics are in Japan this year and it’s what, like 140 days until the opening ceremony. It’s kind of a big deal that you lost track of those people, don’t you think?

Frank Curzio: I mean we were able to scare athletes from not going to Brazil because of the Zika virus. What do you think athletes are going to do here? Any athlete that has a kid, any athlete that lives at home with their grandmother, their grandfather, they’re not going. They can’t contract this. Especially some of our athletes who are pros in all the sports who need to come back and play to earn their money, but is it worth the risk because you know the media is going to hype this thing up 10 times more than even it is, even if it dies down. They’re going to say, “Oh, well, we have one person in Japan that had it.” That’s all you need to hear and the Olympics are going to be totally, totally different this year.

Frank Curzio: But I have to tell you, it’s not just limited to Asia. More than 150 new cases report over the past weekend in Northern Italy, recluse, Milan. Six elderly people died, this is as of February 24th and what did the Italian do? They quarantined 50,000 people. Sure, that that was going to skyrocket, but there was a radio interview where Lombardy’s regional governor and that’s kind of where the most effective people are actually. He actually said, “To be honest, nobody thought the spread would be so aggressive.”

Frank Curzio: I know. I got to tell you, look at the U.S. Why is the CDC coming on TV yesterday and saying and kind of warning us, almost like “We don’t think it’s going to come, but it could come.” I mean that’s the CDC telling us that it’s in the U.S. I mean, there’s 53 cases in the U.S., but you have to say that there’s no measure. There’s no measures taking place saying people coughing. They have no idea. You think it’s not going to spread to U.S.? It’s in Iran. You think it’s going to spread? Of course, it’s going to spread in the U.S. I mean, it’s not going to be crazy. We have the measures and I think we’re going to see much fewer fatalities. Again, think of it as the flu, but to say that it’s not going to come to America, where it’s in Italy, it’s in Iran, Germany, France, U.K.

Frank Curzio: You saw a lot of these markets sell off Monday and Tuesday. You look at Iran Health Minister, he said, total number of infections grew to 61 with 12 fatalities so far, 61 with 12 fatalities. God, that is huge. So, a lot of people think that they’re lying about their numbers, but if they’re not, that’s a 20% fatality rate? What’s going on there? I mean, it’s now up to three and a half percent in mainland China, which people aren’t talking about. That’s the fatality. It was 2.4, 2.7, 2.9 that’s past three weeks. Now, it’s three and a half percent. You will say, “Well, that’s because they’re slowing down with the cases of more infected and then you know the people are infected.” We don’t know what the numbers are in China. You can’t tell me they shut down the whole economy, 500 million people, shut everything down with 80,000 people infected, no way.

Frank Curzio: And what happened when Iran said, “Look, we have a problem here.” Turkey, Iraq, Pakistan, Afghanistan, Armenia, all closed their borders to Iran. People who are closing their borders. There’s no travel. There’s nothing going on, but we’re going to be fine. Stock should be trading at all-time highs. I’ll cover that in a minute. Meanwhile, Israeli officials are scrambling because we have a group of nine South Korea tourists, every one of them tested positive for the coronavirus after returning home. So they’re like, “Whoa, we’ve got a problem here.” It’s just insane. There’s no measure being taken by all of these countries. They thought it was a China problem.

Frank Curzio: And look, I said this before, Wall Street doesn’t get it. I’ve been looking at their sell side reports. They’re finally starting to get it a little bit more. Most economists don’t get it. I’m not saying that I’m some kind of brilliant genius or whatever and I get nobody else, but the stuff that I’m reading. You want proof economists, I look at Kelly Evans and Kelly Evans, I love her. She receives a lot of criticisms and people like, “Kelly Evans. Why she’s on TV,” I think she’s one of the best hosts because she speaks less than the people she’s interviewing, which a lot of hosts don’t do that. But she is an amazing, amazing economist. Amazing economist. I mean, she’s on TV so much talking about the economy and that’s how she got this job because they liked her so much.

Frank Curzio: So, I know we’re used to listening to Squawk Box on CNBC and then whatever, Street Signs or Kramer, it’s entertaining and then Fast Money at 12, whatever. Yeah, they’re tiny shows, but at 3:00, 4:00 slots ratings wise, tail off. Let me tell you, if you missed that interview with Larry Kudlow. Larry Kudlow came on. Why? Because he knows Kelly Evans because they’re both economists and she was grilling him. “What if it comes to America?” “Well, the numbers based on the data that I’m seeing,” he couldn’t answer the questions. “You know it doesn’t look that.” And she’s like, “Yeah, but what about this? What about that? This is going to impact the economy.” She had all the numbers, all the facts, Larry Kudlow had no idea. He wasn’t prepared for the interview at all.

Frank Curzio: Listen, I hear what you’re saying, but you know from the data that I’m seeing and that’s the biggest thing, people, from the data I’m seeing and this is why Wall Street doesn’t get it and most economists don’t get it. They look at numbers all day. They use history as a guide or historical analyst where they compare a trend based on what happened in the past of something similar and then they use this kind of cash flow model to try and predict the future, right? That’s Wall Street.

Frank Curzio: Even economists, they look at data. Look at Ben Bernanke. Everything I learned was from the depression in the ’30s and this is why I was able to figure out what to do, which is fine, that’s great. The only problem is with this particular subject, there’s nothing in history to compare this to. It’s the first time we’ve seen something like this in the history of mankind. You can say, “All right. Wait a minute. There’s other huge outbreaks in 1800s and 1900s.” Yes, you’re right, but never in history of 500 million people been on lockdown, in fears of contracting a virus. Everything gets shut down.

Frank Curzio: So what are all these people doing? They compare it to SARS, which is so fucking dangerous. Sorry to curse. It’s so dangerous because when SARS happened, it was such a quick rebound after the initial scare. If you look at SARS, it took place over nine months from 2000 to 2003. Only 8,000 people were infected. If you believe the numbers. It’s 80,000 now, and that was over again, nine months. This is just three months. Only eight Chinese provinces were impacted during the SARS outbreak. Now, it’s all 31 of them and 500 million people are locked down. You’re comparing this to SARS? Before SARS hit in 2002, Chinese residents took 16 billion trips outside of the country. Now, they’re taking over 160 million trips. It’s a 10-fold increase.

Frank Curzio: In 2003, China was the six largest economy of world, accounted for 4% of the global GDP. Today, it accounts to 17% of global GDP and you’re comparing it to SARS? Oh, it’s going to be a recovery, just like SARS, just like the swine flu. Let me put this in perspective for you because Goldman did a good job. I want to point out some good research data. They didn’t take it serious. They said, “It’s just temporary. We’ll be fine.” Now, everybody knows it’s not temporary.

Frank Curzio: So, Goldman, which still believes it’s probably going to be a short-term problem. It was basically a month or two problem. Now, they’re saying it’s like a four-month problem, which I think through the year, we’re going to have problems. They do a good job putting it in perspective, so they’re actually saying on Acorda, the sheer breadth and depth of the disruption is simply unprecedented. With, for example, the number of missing hours owing to the virus. This is equivalent to the entire U.S. workforce taking unplanned break for two months, the entire workforce. This statement came out last week. Those two months already took place. What happens if it happens for another month, three weeks, four weeks? Now you’re taking four months out of the market or unplanned break. Six months, nine months, now you could see the impact of it and the reason why all is crashing. The reason why travel companies are crashing.

Frank Curzio: Nobody. I mean, the numbers are absolutely insane. Absolutely insane when you look at it. I mean you’re looking at the virus nowhere near being contained. I think we all agree with that, so we’re not going to see fuller production anytime soon and if you want to know if that’s a big deal, well, hey, the U.S. won’t get impacted at all. If you look at the numbers, China accounts for 17% of the imports coming into the U.S. If we put that in GDP terms, it’s 1.7%. Do you want me to put that in perspective for you?

Frank Curzio: Economists believe the U.S. economy is going to grow 2% this year, yet you’re taking 1.7% of that is from China and it’s offline, and everything’s going to be fine. Everything’s going to be fine. I mentioned Ed Hyman, Chairman, Head of Economic Research team at Evercore a couple of weeks ago. They’re ranked number one by Institution Investor pretty much forever, 39 in the past 45 years. He says China’s going to see zero economic growth in the first quarter, zero. Goldman Sachs said 5-1/2, 4-1/2, 3, I think they’re 2% now.

Frank Curzio: You know those numbers are pretty crazy considering China’s economy grew 6.1% in 2019. That seems like fast growth, right? But again, they’ve been growing at 12, 10, 8. That’s their slowest pace in 30 years, 6.1%. I mean, throw in Hong Kong. Throw down slowdown economy. It was bad there before this, and people are telling you to buy China, everything’s going to be okay. They’re crazy. They’re absolutely out of their mind. Yes, they’re going to throw everything at this. I don’t know what low interest rates are going to do. I mean, talking about the fed lowering interest rate, is that a good idea?

Frank Curzio: I don’t know because this is not a problem with numbers. I mean, you’re looking at sentiment. These are people scared to spend money. There’s a reason why if you look back at the credit crisis in the heart of it, in 2009, they were giving checks for you to buy cars and buy houses. They were giving you thousands of dollars, saying please spend, everything’s going to be okay. You know what? They were right. People bought a house, car, any asset you did very, very well, but they were paying you, they were trying to entice you to spend money. How are you going to tell people to spend money when they scared shit to leave their houses? You think they care? This isn’t a problem where people are going to be okay.

Frank Curzio: I mean, think September 11th, again, that’s drastic, but I do think it’s a little comparable to the emotional state of it. I mean, I remember going up my house a few days later. I’m looking up on the sky at planes and worrying that they may crash. I mean, just crazy stuff that, it sounds crazy now, but the emotional toll. Again, I’m in New York, I saw this. I have friends that died from this. I mean the emotional toll it took for many, many, many months. People aren’t looking to spend money and to think this is going to be a V-shaped, which means it’s going to come down and then go right back up. It’s crazy. It’s got to be U-shaped and that part of the U, I’m just arguing, it’s going to be much longer than expected. Again, we have uncertainty and everyone’s just predicting, “Oh, it’s probably like a one quarter problem. We’re going to be fine.”

Frank Curzio: Now, the biggest takeaway you need to understand, okay, get it. The biggest takeaway from everything I’m saying here, you have to understand just one thing I’m going to throw at you and you can understand why the market’s coming down and why it still has more risk. It’s China accounting for 39.2% of the global economic growth in 2019. That’s according to the IMF. I mentioned that stat. Just that stat alone should be enough for you to reduce your exposure to stocks, especially ones that have exposure to China because you’re looking at 40% of the economy growth, right? That growth engine has been turned off. That’s an incredible number after all, we’re in a full blown growth market where you as companies like trading near historic highs.

Frank Curzio: Now why is that significant? In the last week, the S&P 500 were trading at 19-1/2 times forward earnings. That’s the most expensive evaluation since the credit crisis, more than 25% higher than a 10-year average of 15 times. The premium was warranted. The market has been better. Interest rates are historically low. Earnings projected about double digits this year. When the election year was thought usually outperforms historically, companies are paying less taxes. Favorable trade deals now.

Frank Curzio: A lot of positives, but the coronavirus throws a wrench in the entire system and when you have the world’s biggest growth engine completely shut off, what do you think is going to happen. It’s not likely going to be fully operational for months. I mean the significance of that risk cannot be understated. Now, I’m going to throw some more stuff at you that you’re probably not hearing. If you get a chance, follow me @FrankCurzio on Twitter. I’m posting a lot of this on Twitter. I’m pointing to my subscribers if you’re not a subscriber.

Frank Curzio: The Baltic Dry Index, did you see it? It’s a leading economic indicator that tracks shipping rates of vessels that transport commodities basically all over the world. It’s down 70% since the WHO officially declared the coronavirus global health emergency, 70%, the world container index. I’ve mentioned this before. This might have been on Friday’s podcast, Frankly Speaking, which is just for paid subscribers. It’s a composite of container freight rates, so basically, it tracks the price of cargo on eight of the biggest major routes from U.S., Europe and Asia. It plunged an incredible 16% over the past two months and so then so, in some precedence, it’s huge.

Frank Curzio: China passenger car sales were down 92% in the first half of February. Okay, let’s put that in perspective. I love the economy. I’ve been citing the economy. I love economic indicators. It’s something that that I take pride in. For me, I love it because the economy is about all of us. It’s what we spend, what we buy, our houses, our cars. For me, I wish I was an economics teacher, I’d make it so interesting and so much fun to talk about bell curves and buy or sell, by demand and all that bullshit. I’m just fascinated by economies, okay? And studying them, writing about them, I have to tell you, in my 25 plus year career, I’ve never seen a major economic index fall by 92% year over year, never ever, 92%. They were all shut down. They were all shut down.

Frank Curzio: And not only that, you’re just looking at passenger car sales in China, China makes the most parts. So now you have South Korea, which is shut down, with Hyundai, shut down their two plants, which is responsible for, I think it’s like 35 to 40% of their world global production, shut down. No one’s getting their parts for cars. How do you make them?

Frank Curzio: Now with the coronavirus spreading across the world, countries are shutting their borders everywhere. I mean, again, I didn’t factor that in. So you’re looking at China, every industry with exposure to China at risk, sell China, China is not bouncing back anytime soon. China is dead. I hate to say that. Again, I hope I’m wrong on that, but just again, with Hong Kong, they go through so much at this problem and you’re going to see bounces here and there and forgive all loans, forgive all debt, but it’s not going to be enough. It’s not going to be enough?

Frank Curzio: Even insurance companies are taking a hit here and you just have insurance to cover the risk of supply disruption, but I have to tell you, they shouldn’t really be taking a hit, the insurance companies because they dealt with the SARS epidemic and you know what insurance companies do, right, with that and flood insurance, they lower their risk as much as they can and they charge those wonderful premiums and a lot of them don’t cover epidemics, even though a lot of them are getting nailed right now because they said, “Whoa. We’re not covering this. No. No one’s going to notice if we don’t put this in a contract. No one’s going to notice, right. None of this. This never happens here. This never happens.” So, insurance companies getting hit, but it really shouldn’t be.

Frank Curzio: And that’s one of the things here guys, because what I want you to do if you’re on the sidelines is you want to look at opportunities. You’re going to see tons because those names that are getting hit that had no exposure to China because people are just nervous and they’re going to take everything out of the market, which means good stocks and bad stocks. That’s what you want to do right now. We want to always stay ahead. How do you stay ahead? I’m not going to talk about talking. I’m giving you all update of facts here, but for me, I’m looking for new ideas.

Frank Curzio: I still think a lot of mark could be short. I mean, I was telling you they short Disney at 146. My thesis was based on that whole entire strategy is on streaming and there’s not a company in the world that makes money off of streaming and also I’ve got to tell Disney that. “Oh, we have 28 million subscribers in a year. That’s great.” Yeah, a lot of them are free and you’d basically say, “Well, we’re going to have a little bit of content here and there.” Well, you have Netflix playing $15 billion for content a year and you go like, “Oh, but we’ll spend like a billion dollars.” Okay, you’re going to be able to keep those subscribers. Not to mention they’re paying $5 and you had no pricing power, right? You can’t raise money with streaming. There’s just too many services.

Frank Curzio: Now, new CEO and now, Disney parks being closed. Now, are people really going to go to Disney world right now? Because I can guarantee you, you’re going to see people with masks on and it’s going to scare the shit out of you because if you have really young kids, they’re at risk. You think traffic’s going to be up? People going to go to Disney? Again, I’m one of the least paranoid people, I may go to Disney because a lot of foreigners aren’t going to be there. If I had a guess, it’s about 60%. When I go, I’m in Florida, it’s about two and a half-hour drive to Orlando for me. It might be a good time to go. I bet you the parks are not crowded at all because there’s so much restrictions on flying.

Frank Curzio: I mean, Tesla, Tesla’s growth model is based on China, opened up their new plant. It’s closed. Is that right? Keep going higher. Automakers, of course, you know about. Clothing companies manufacture most of their products in China. There are tons of delays with the London Fashion Show, which is huge. You know a lot of people didn’t show up, a lot of people canceled, they just didn’t have their supplies from China. Credit card processing company, you’ve seen MasterCard warning. You see a lot more warnings. You know, just simple common sense, forget the numbers. Fewer people are shopping. Again, MasterCard is a global company.

Frank Curzio: And more importantly, every company that’s dependent on China for its growth will be at risk. Okay, you look at things like McDonald’s, Broadcom, Nike, Starbucks, Intel, Proctor & Gamble, Caterpillar, Tesla, Apple, and we only had Apple, United Airlines, Proctor & Gamble, and MasterCard, they already lowered their earnings estimates just the past week. You can’t expect hundreds of companies to file. We had a couple more today that I heard. They’re going low at 20/20 estimates and this isn’t money that you’re going to get back. This isn’t like, “Oh, well, we didn’t drink Starbucks or we didn’t eat McDonald’s for four weeks, so we’re going to go and buy four weeks’ supply to make up the difference.” Common sense guys. That money’s gone. That revenue is lost.

Frank Curzio: Now it’s important because one of the biggest things here is how to position your portfolio and how do you do that. One of the most obvious ways is to protect yourself from companies that have the largest sales exposure to China. You can find this everywhere, but you know what? I screened for this. If you remember Curzio Venture Opportunities, you’re going to get one of the best newsletters you ever got. It’s going to be 20 pages. All updated statistics. It’s coming out today after the bell. I’m giving you two amazing ideas, I think at a surge, but it gives you the whole game plan, but you’ll see that list.

Frank Curzio: So, I screened for the largest 3,000 U.S. based companies and it’s based on market cap and showed 132 of them have more than 15% revenue exposure to China. I listed the top 30, which is one of 30%. A lot of crazy names on this. A lot of good names. Chevron is on this list. Goodyear Tire and Rubber, Marvel, Broadcom, Go Daddy, Tapestry, Decker’s Outdoors, Danaher, Texas Instruments. A lot of names that you probably have your portfolio either directly or indirectly to your 401K. DuPont and watch out for chemical companies, huge exposure. Ingersoll Rand, ply materials.

Frank Curzio: If you are in any of those names, probably a good idea to lower your exposure. You could probably do it and you’re going to hear about this after the bell, but it looks like, well, the market is coming down. Again. I’m doing this at 11:00 to 12:00 and the market was up, I think 450 points and now, it’s up 122 points. Get this podcasts going right today, surely you’re going to get it a little bit later.

Frank Curzio: Definitely, lower your exposure to semiconductors. I could tell you a lot of these names, they’re not really going to show up on revenue screens. I just mentioned some, but roughly 75% of the industry manufacturers, they have parts in China and it’s closed. Semiconductors make parts for everything that’s electronic, anything, think internet of things, think connectivity, everything in your house that’s plugged in, everything. They make parts in China, it’s shut down, but we’re going to be okay.

Frank Curzio: You look at Skyworks, I mentioned, the Qualcomm, Xilinx, Lam research, Micron. I can’t believe Micron got upgraded like a week ago, whoever did that. “Oh, it’s good. The risk rate, now is the time to buy.” It was up 40%, going, now’s the time we’re going to see this thought take off. Micron has some of the biggest exposure, revenue-wise and supply chain rise in China. It’s insane.

Frank Curzio: So an analyst upgrade win, two weeks ago, you’re insane. Who’s going to go to a casino? Who are going to go a casino? Wins profits. Most of them are generated from Macau. Who are going to go to a casino? Are you out of your mind. Already closed for two, three weeks, they’re trying to open them. I mean, you’re going to have those gamblers who definitely have got to go, they need to get that fixed, that’s fine. But man, I don’t know.

Frank Curzio: But if you’re looking at the whole information technology sector, it’s the biggest expense including semis. They’re the largest sector exposure along with healthcare materials, communication services, consumer discretionary, industrials. Those are the sectors that have a largest exposure to China, so they carry a lot of risk, efficacy and use of spread. The seconds with the least amount exposure, utilities.

Frank Curzio: Even energy, even though energy companies, again, prices are coming down, so you see them getting nailed. I think they’re come into a price where it’s almost. I mean a lot of these companies, especially on the fracking side, can produce at $35 a barrel. They’re still making money and they’re down 60, 70, 80%. This is an industry that I’m looking at. Again, you want to look ahead and try to buy some of the names that are getting killed that maybe don’t deserve it. You’re going to find energy companies that have most of their production in the Permian. You don’t have to worry about shipping it to China, which is completely turned off.

Frank Curzio: Real estate, financials, consumer staples, safe areas and consumer staples, they don’t have a lot of exposure to China. These are places that could act as a safe haven and they pay high yields, but companies with revenue exposure, which everyone’s talking about, you know revenue exposure, they’re not the only ones at risk. You have to look at the supply chain exposure and that’s what’s really scary. I mentioned it earlier. We had China supply chain accounts for roughly 1.7% of U.S. gross domestic product, 1.7%. Yeah, we have economists forecasting for the U.S. to grow 2% this year. No, not all 1.7% is going to be impacted, but I would say probably 30% of that, 40% of that, and I haven’t really seen too many people lower their GDPS unless for the U.S. this year. Amazing.

Frank Curzio: Another area at risk that doesn’t come up on most screens is growth stocks. I mean, I’ve studied growth stocks for the past 20 years and it took me a while. This is why I thank Jim Kramer for this because I had a valued background, but these companies and people say, how could they be trading at these multiples. They trade those multiples because they’re expected to grow earnings much, much faster than the overall market and they’ve been doing that and that’s why the Amazons, the Facebooks, they continue to go higher and higher and higher. People just want to look at a PE ratio.

Frank Curzio: No, you have to look the price to earnings growth. That’s important. You have to look to see how fast these guys are growing. What markets are they in? Are they in markets at a huge growth markets that have basically still have plenty of room to go? Cloud data analytics, social media, online advertising. I mean, these are secular growth markets. However, a lot of these companies rely on China as their growth component. So even though it might account for like 10, 12% of sales, it’s not going to show up on ones that have 30, 40, 50% of their sales to China. But if you take away that growth component, these things shouldn’t be trading at 25, 30 times earnings. They should be trading at a market multiple, probably around 17 times.

Frank Curzio: It’s a big difference, especially when you’re looking at China as a growth component where it’s been shut down for two months and no timetable on when business is going to go back to full production. I mentioned earlier the McDonald’s, Broadcoms, Nike, Starbucks, Caterpillar, Tesla, Apple, if you’re looking at retail names, Adidas, Sketchers, Tapestry, Michael Kors, Underarm, VF Corp, names you have to worry about that depend on China for that growth component.

Frank Curzio: I look at small caps, I think it’s going to be one of the biggest opportunities. Small caps, most of them, generate revenue inside the U.S., not these huge conglomerates. However, with the market pulling off, it’s basically risk off and you’re seeing some small caps even in my CVO portfolio come down and for really no reason at all. I mean, they report a great earnings. They’re not talking about China. They don’t have their supply chains in China, but that’s what you’re going to see.

Frank Curzio: That’s the opportunity. Stay ahead of this, guys. Try to stay ahead of it. That’s how you make money. By staying ahead, staying ahead. Don’t be talking about the past, “Oh my God, the coronavirus.” When these thoughts come down, which ones am I going to buy? What stocks do I want to buy that if they fall in a 15, 20% from here that don’t have exposure to China? That’s how you have to look at this market. That’s how you make money.

Frank Curzio: One sector that I’m very, very bullish on is gold, seems like an obvious choice. It’s not just because it’s a safe haven. If you’re looking at China trying to lower their exposure a little bit to treasuries, they’re seeing lots of inflation, they’re buying gold and gold is very, very, very, very, very under owned by institutions, very. When I see gold prices going past 2,000 and you know it’s going to take off, the most risky stocks, which are junior miners, now’s the time to really start buying them. We have a couple of it in CVO portfolio. Participated in a rally in 2016, we stopped that a little bit because it’s been one of the biggest bear markets from 2011 to 2018 and ’19. Now, you have a bid under these companies.

Frank Curzio: And how do you approach it? Because we recommended Newmont Mining in Curzio Research Advisory, we’re up probably 80% on that stock. That was a great company. You know why? Because they’re all in costs to produce gold unlike, 859 so at 1,200 they’re printing money, 1,300 they’re printing money and they’re also paying a dividend. Going forward, it’s not the royalty companies and it’s not the producers. They made their money, right? Those stocks have already taken off.

Frank Curzio: It’s the more risky companies that have these crazy projects and only economical at like 1,200, 1,150, 1,200, 1,300 because now we’re looking at goal at 1,650 with a chance with a lot of tailwinds behind to go to 2,000. If that happens, all they think about a company, a tiny company who’s small doesn’t make money. It looks like they’re going to go out of business and all of a sudden they start generating profits and start generating massive profits.

Frank Curzio: So yes, we’re going to see the producers, the majors make more money because gold prices are going high, but those stocks are reflecting that. A lot of juniors have not participated in the rally. You could say, “Well, some of them, Frank, are up 40, 50%.” They’re down 85%. They’re still down 65%, believe me. I’ve done a research on it, 65% by 2011 highs, even after this 30, 40% move. They barely moved higher. They’re down 80, 90% over the past six, seven years, but now if you look at these projects where you’re saying, “Oh, well, it’s 1,200. These guys are 1,300, who’s going to come here?” It could take 15 years for these guys that actually build a mine, which they’re not looking to do at Junior Miners and look, put a stake in the ground and say, “Hey, this is what we have, a couple of drilling tests and sell it to a major.”

Frank Curzio: Now the major should be buying tons of these projects and you’re going to see that. You’re going to see M&A really pick up. So you want to see the high-grade gold projects, which was dangerous with $1,300 at $1,200 gold prices that were dangerous to buy because you know the margins were so tight. All right, if you 1150 or 1200 or 1300 I’m not going to. Again, it takes 1,215 years to really develop these mines. You know what gold prices are going to be even now, but man, it’s kind of risky, so just take over. There’s so many other better projects that we could take over. Now, tons of projects are worth taking over.

Frank Curzio: I mean $1,300 an ounce. If you really have a project that it costs $1,400 all in cost to produce, you should have won in the first place. It’s probably zip it, but most of these companies were still around, all our projects under 1,300 we’re approaching 1,700 on gold, probably going to 2,000 can all these come into play? It’s a good sector to make money on, to get a little, you know. Again, risk off for everything else, this is a good area to look at.

Frank Curzio: I covered a lot today, a ton and the point of this podcast, why didn’t bring anybody on because a lot of this is going to get lost, is to really look at your portfolios, make sure you’re protected. If you listen to me, chances are you did pretty good over the past few years. If you didn’t listen to me, chances are you did pretty good as long as you were in S&P 500 or whatever, as long as you didn’t own 100% of your portfolio in freaking gold and stuff, which I’m happy for you, it’s coming back, but you missed one of the biggest rallies of all time.

Frank Curzio: Now’s the time to be cautious. There’s still uncertainty in the market. Be careful here. I told if we’re wrong a big deal, you’re still going to be wrong a little bit, just pull some off the table and if stocks come down, you’ll be able to buy them six months a year from now. Again, start making that list. I covered so many names just now. Again, for CVO subscribers, you’re going to get my two favorite picks to buy right now. Speculative names, fantastic names, you’re going to get a 20-page report. It’s going to be released after this after you’re probably listening to this, so it will probably hit your email box for you if you’re a Curzio Venture subscriber.

Frank Curzio: I covered a lot of stuff. Just be careful here. It’s not over. It’s not slowing. Don’t believe the China numbers. It’s starting to spread to other countries. The CDC came on TV. I don’t know why they came on TV as I’m doing this. The President is going to speak about it tonight. Why are you speaking about it tonight unless you’re worried, but I did read a story that the U.S. has not even been testing people. There’s nothing set up for us to test and no one is going into a hospital say, “Hey, I have the coronavirus.” They think they have a cough. They think they have something. Again, it’s not that they’re going to die, but it’s definitely more than 53 cases and I think that’s what they’re hearing right now and they are preparing you.

Frank Curzio: So I think if I had to guess in the next week or two, you’re going to see this more and more U.S. cases pop up and it’s going to scare a lot of people. It’s definitely going to scare a lot of people because only 53 people to have it and the CDC is talking about, “Oh, the U.S. could have it,” and the President is speaking today about it? Let’s see. But I read two different stories, credible that say that we haven’t really tested anybody. We barely tested anybody. We don’t know who has it. We don’t know who doesn’t have it, but there’s definitely people here that were in Asia better unaccounted for and maybe they do know more than they’re leading on, but it just doesn’t make sense for the CDC to come out and warn you about something that nobody was really worried about.

Frank Curzio: I mean if you live in a U.S., you’re not really worried about getting coronavirus. It sounds like you should be worried. That’s going to push stocks down even further. Again, I’m not calling for a 30% market crash, but a 10, 15% correction could be in the works and you might see stocks fall 20, 30% within particular industries, especially the ones that have exposure to China, lower your exposure. Just lower your exposure a little bit. You have to sell every one of your stocks and get completely out of the market. There’s going to be some great opportunities, but just be prepared. You guys did very, very well over the past few years. The market is at all-time highs. Protect those gains because we still have a lot of tailwinds with this market if we plot the coronavirus, but we have to figure that out and it’s nowhere close to being figured out. And again, when you’re looking at China, they account for 40% of the world’s economic growth last year. It’s completely shut off and we’re trading at a huge growth of multiple still, so you’re probably going to see stocks pull back even further.

Frank Curzio: All right guys, covered a ton. Hopefully, it wasn’t too much. You had to listen just to me for a whole hour, sorry, but hopefully, I’m getting through to you. I’ve got a lot of emails. I really appreciate it. I’m glad a lot of you guys took money off the table. Again, that’s the first step. Let’s keep going here and see what sectors, what stock you want to buy. And I’ll be presenting a lot of that stuff in my newsletters because everything is this focus coronavirus and I’m glad that we were able to get in there early to party and protect our portfolios.

Frank Curzio: So guys, that’s it for me. I’m sure I’m going have a lot of questions and comments, email at frank@curzioresearch.com. You could follow me on Twitter. I’m posting a lot about the coronavirus from the sources that I have, which are amazing, amazing sources right now. That’s @FrankCurzio. Again, those are free things and we also have a pre-report that’s on our website, Curzio Research. You can go in there, put your email in and I believe, it’s a 17-page report on everything you need to know about coronavirus.

Frank Curzio: So again, those are free sources and a lot of people listen to podcasts, they’re free and then in our newsletters, we’re really telling you guys exactly how to play this, how set up, position your portfolios, not just on the long side, but also what to get rid of, what to be careful, what’s going to come down, so really focused on that portfolio manager right now. It’s very, very important and you can get all kinds of access at Curzioresearch.com. So that’s it for me. I’ll see you in seven days. Take care.

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