TDI Podcast: Curzio’s Breaking Point (#992)

23:45So let's get to the next topic here. Let's talk about the Fed, because you've been pretty vocal on that the Fed needs to get tougher on inflation. And I recently saw, I think it was on Monday, there was a Tuesday, there was somebody that was one of the Fed guys. He was talking about, oh, you know, we need to be tough on inflation and all this because, you know, people are having tough times right now with all this. And he's standing in front of a banner. He's at a conference at the Housing Affordability 2026 conference talking about how we need to get tough on inflation. I'm thinking, what are you talking about?

24:19This is a housing conference. It's not what they want to hear. What is the Fed getting wrong? And I guess what happens if you believe that they stay behind the curve? This is why I'm nervous about the markets. When I say nervous, it's going to create great opportunity because we have a market where since the credit crisis, every downturn happens. Even COVID was a month. right, a 35 % decline a month. Even if you look at the credit crisis, it was this downturn that was, all right, nine months into it and came back and government helped out and started bailing everybody out. But this isn't like a 2000, which you remember during the dot-com, right, when that burst, it was three years of horrible.

24:59NASDAQ down 70%. We don't have that. So this is going to lead to opportunity. But what I'm looking at the whole picture here in interest rates, Andrew, it's the impact it's going to have with the Fed is, and this is what's scary because they say, never fight the Fed, never fight the government. This is the first time that I've seen in a long time two things. One is that the government stepped in when stocks were at all-time highs. They're increasing their bond buying and long-term bond buying, which is, by the way, 2 billion, 6 billion is absolutely nothing. So dumb, so dumb. It's like somebody trying to bail out the ocean, a river or the lake into the ocean.

25:32It's just the dumbest thing ever. You see these moves when stuff breaks. You don't see it at all, which means they see it. They're nervous. They have a massive amount of damage. That's the message, Frank. That's the message. And then you have the Fed where the Fed used to be able to come out. And look, a rate hike right now isn't going to filter into the market for 18 months. But you want to be transparent about what you're doing because they could say it's almost like the United States is like, hey, we're going to blow this country off the planet. They don't have to do it, but it's going to change perception.

26:00It's going to be like, whoa. And that's the goal, right? You just want to flex your muscles sometimes. The Fed is trying to flex its muscles saying, hey, we're going to control inflation. And they were thinking they didn't have to raise rates. They have to raise rates to bring long-term rates down. It sounds kind of intuitive, but the reason why they have to do this is because they have to slow this economy because inflation and people – there's so many economists. I love economists even though I hate them, but I don't love them. They're great looking at models. That's why even with transitory inflation, like they can just use common sense and say, okay, this isn't a credit crisis.

26:30They're not handing money to banks. They're handing money directly to people and businesses. It's going to result in massive inflation. It's going to be transitory. They're saying this. A lot of economists are like, you're crazy for raising rates, and this is the argument for raising them, is because this is temporary. And they're in, and it's going to be okay, and then oil prices are going to come back down. We are seeing prices continue to go higher and higher. Did you see – you and I focus on this, and most retail investors don't pay attention and better off. When we look at economic data, you look at CPI, you look at PPI, you look at unemployment.

26:58Did you see the PMI, the Purchase and Manager Index? Yeah. This just came out last week. Hot. I mean, hot. But, I mean, I have some of the details here that I wanted to write down just to show you how hot this was. It was – they said fastest increase in five years, both manufacturing and services. Did you see retail sales number come out? Crazy. That was the week before. Crazy. 12 out of 13 categories posted month-over-month increases. And you could say, well, that might not be from demand. It's from raising prices. It doesn't matter. Right? You're still seeing people buy stuff, buy stuff, buy stuff.

27:28We look at the nominal number. So it's demand minus the – the differential from over a period should be the demand, which is equal to the volume-based with pricing adjustments. Yes, with pricing adjustments and unit costs and stuff. So – but those numbers – I mean retail sales – we're hearing how bad the economy is. But we're seeing a market where we have to control inflation because we have – for the first time that I've seen in a long time, we have a government that's trying to stop the 10-year from going higher, and they can't do it. Yeah. And the Fed can't do it either. So the only way they're going to be able to do it is a lot of people believe the rate hike for October is off the table because we have the midterm election coming.

28:07I think that's BS. I think we're going to see five rate hikes from now before 2020. Wow. You heard it here, folks. Five rate hikes. People say in one. Remember, there was zero, one. Now we're already – I think we're up to a 70 % chance on October, which that was like 20%. Which usually is unheard of during a midterm.

28:24Frank Curzio:Midterm. But we have to – I mean, look, the two-year and the spreads were two years. and what it's telling us from the Fed run rate is that you need to hike at least four or five times. It's telling us, but they're trying to say, hey, we're going to do it and try to get the word out saying, this is where we're going. We're going to control inflation and washers. That's the biggest thing for us, but it's not working. It's not bringing the 10 year down and we're not pricing in a 10 year for 5.5. I mean, that's disastrous. That's going to be disastrous. Look at the private markets with private equity.

28:55They were done at like five and a half, 6%. and that market's frozen. They're sitting with all these assets. They can't get off their books. They don't want to mark to market, right? That market's frozen. They're dying to get rid of it. They purchase these companies, supposed to like grow and go public and they can't do it. That market's frozen. That was at 5.5%. That was at 4.5%, right? So now the 10 years is approaching 4.25. It's very dangerous. No, the 10 year is - The 10 year. 10 year is, no, the 10 years is, it's 5.15. 5.15. Yeah, 5.15. It's a 5.2 briefly. But remember, we weren't at five, what, two weeks ago?

29:29No, I get it. I get it. So we're pushed through that like nothing, and it's going to continue to go higher. And we have a government that came out with stocks at all-time highs and everything supposedly good saying, oh, we're going to buy more long-term bonds to try to get that rate down. It's very important. That rate needs to come down. And it's not just here. It's globally. If you look at Japan, you look at UK, you look at everywhere. Rates are going higher, and that's going to result eventually in a slowdown. People are going to cut back spending. Yeah. I want to give you a slug, and then I want you to talk about if this is a movie we've seen before.

30:00Before we do that, we're talking with Frank Curzio. He's the founder, and he is the president of Curzio Research, and he does all sorts of great stuff for individuals. You go check him out at curzioresearch.com. Also, listen to his epic podcast, Wall Street Unplugged. The second best. We're tied, neck and neck. We're tied. So Wall Street Unplugged, where you can find Edward. He has a great guest, talks about a lot of things, and definitely follow him on Twitter. Frank Curzio is his handle on - I got to tell you, the X really quick. Yeah, what's going on? Holy cow. What happened? We figured it out.

30:34Well, I bought this AI company, which I was fascinated with. It costs a lot of money. And basically the staff behind it. And we figured out the algorithms and how to work it and how to write and stuff like that. And everybody says they do, but our traffic this month alone in September is up to over 14 million impressions right now. And we've added, I think we had 8 ,000. We had like 52 ,000. I know. It was like a hockey stick you went up on. It's great because, and now it's good. So, you know, just you can follow us there at Frank Curz, which is for free. That's what we like to do. Give away some free stuff and you'll see some analysis and some stock picks.

31:09And then, you know, and, you know, when people like it, that's when you subscribe to our products. But we like to show you what we're about first before you pay. That's good stuff. Yeah, thanks. Hey, let's take a moment and talk about Interactive Brokers now, because, you know, as investors, we research our investments, right? We analyze the markets. But have you researched your broker? This is an important question. For the past three years, Interactive Brokers' individual clients averaged 24.3 % annual return, beating the S &P 500. Lower costs, competitive rates, and access to more than 170 global markets has helped investors keep more of what they earn.

31:45because the broker you choose matters. Interactive Brokers member SIPC. Learn more at ibkr.com slash performance. Again, that's ibkr.com slash performance. Want me to help you out with that? Yeah, sure. What do you got? Interactive Brokers, right now, if you have over$100 ,000 in your account and you put it in there, you probably earn close to 4 % risk-free. Oh, there you go. Nice job, too. Yeah. There you go. I'm helping out your sponsors for you, too, buddy. Thank you. Thank you very much. Yeah, Interactive Brokers. I love them. They're great. All right. So let's talk about back to inflation.

32:15We're back with Frank Curzio. Back from break. Back from break with Frank Curzio. We've heard inflation is temporary, right? Before we've heard this about, you know, now we're starting to hear, you know, well, you know, energy is not going to stay up forever. And it's feeding back in transportation. You know, there's a problem, by the way, where every few days there's a discussion about how we're going to have some new end of the war and how we have control of the straits. Go look at a map. Look at them. There's nothing there's nothing really of significance plowing through the Straits of Hormuz.

32:47Let's just get that straight. We've talked about this in a lot of past podcasts, but, you know, it's feeding into food and corporate costs like we talked about. But but again, you tease this before how this movie ends. How does it usually end? With what? With Iran or with? I'm talking about we're talking about stock markets, you know, with all of this. I think the stock market, I think it's interesting because you may see the major indices stay elevated because it's driven by seven or eight companies with their margins at record highs. They're incredible. They're all laying off employees because AI is doing an amazing job for them.

33:23They're the best-run companies around, and everything within AI filters into what? Cloud, right? And that's, I think, some people they can get. Did you see the cloud numbers from Microsoft, Google, Amazon? I mean they're growing like gangbusters, right, which is unbelievable, which means since they're the major population, part of the NASDAQ and also a major part, not the doubts, that's, you know, it's not a, you know, just whatever. It's just based on your stock price, how high, the number of your stock price, how high that drives that index. But when you look at the NASDAQ and the S &P 500, those companies are doing so well, it may keep it up.

33:52Under the hood though, if you're looking at consumer discretionary stocks, I mean, I went out to a place that I always go out to, it was Hibachi, my daughter's 16th birthday yesterday. And when I went out, it was, they automatically charged me gratuity 20%. They didn't tell me, but, and they said for parties more than four or more. I don't think I've ever seen, it's always six or more, right? I mean, I'm going to give, they're great. I'll give 20, 25 % sometimes. And if they're not, then I'll get lower. But the fact that they did that for the first time, and I saw that several restaurants, several bars I've gone to just to, grab a drink, a couple of friends and stuff like that, where they're all charging extra, extra, extra, extra.

34:25In the meantime, everyone's like, inflation's coming down. It's getting lower. It's moderating. Well, it was moderating about a couple of months ago, but it wasn't moderating in the last month with CPI, PPI, and even a month before that, you're seeing it go higher and higher. And you might not notice because it met the estimates. It met the estimates. It's only grew 2.73%, but it met the estimates. It's still very, very, very high. So - Five years of this. Yeah. So what happens is you're going to see a lot of companies, especially companies that have a lot of debt, are going to be in trouble. You've seen them get hit already.

34:53There's lots of names that are down 25, 30, 40%. Look at the names I just mentioned. Those are large caps. And by the way, I want to mention something. to all you restauranteurs and waiters and waitresses that are listening. If an automatic gratuity is added to your check, to our check, that does not qualify for the no tax on tips concept. That is considered not a gratuity. That is not considered a gratuity. It is considered a service charge that is not a, like, donation. So in other words, we're being forced to provide that to them. Listen, you can always say I'm not paying this, by the way. Just to be clear, people, you could always say, I am not paying this.

35:30Take it off. It doesn't matter if you're thinking that. I'm paying what I want to pay on the gratuity. That is not mandatory. But nonetheless, restaurateurs, waiters and waitresses, food service, bartenders, whatever, that goes on. You're getting screwed because that is not a tax-free income. Wow. I didn't even know that. That's interesting. That is very interesting. Yeah, that sucks. Yep. But you said, how does this – I think you're going to see during this earnings season, You're going to see more companies fall over 15 % in value in a day because I think the CEOs are going to say, hey, you know what?

36:03Again, you don't want to overpromise, right? It's overpromise under delivery. You get crushed, right? Under promise and over, that's what you want to do as a CEO all the time, right? You want to be optimistic, but you have to make sure you meet those estimates because that's how your stock's trading. That's how all the analysts cover your institutional. Everybody's based on what you're saying. So I can't see them being really that super optimistic, which they have to be because earnings are growing 30 % plus year over year. So that's one of the things you have to worry about. The good news is there's going to be great companies.

36:31I mean, Nike is horrible right now. McDonald's horrible right now. Nike is interesting to me. Nike is interesting to me. It is basically every bad thing that can happen to it has happened. The only problem I have is with some of these companies, they've lost their creativity. Look at Nike. Look at an Under Armour. Look at a Lulu. It's kind of, I don't think I'm lazy if they have people that are working for them that are not up to snuff creating this. But, you know, you used to have Nike shirts and, you know, you play sports like tennis or I don't care what sport it is. But they have these dry fit shirts.

37:02They were kind of awesome looking, right? Now they're like, blue. And the sneakers, the sneakers are just. Oh, I got some good sneakers. The Metcom Nikes are my faves. I got actually a closet full. I'm not a sneaker collector per se, but when I like a sneaker, what I do is I buy it. I buy a couple of extra pair to stick it there because I figure they're eventually going to change the freaking design and I'm going to hate it. So I might as well have what I want from years ago, you know? Anyway, but where is this? You think this is going to show up in margins first? Do you think this is going to show up in just right out of the gate earnings?

37:37I think it's going to show up where you're going to have CEOs just say, hey, we're expecting whatever, 12%, 13%, 15 % growth, whatever it is. And I think they're going to lower their growth. Really? Because energy prices are – I mean you're looking at a major input cost that I don't think the market is going to look past because we thought this was going to be simple. It's going to be a month or two. I mean you want proof. We just saw the latest round with Trump at the UN and then come out and say, hey, Iran is agreeing for another deal. It's like the seventh time. And oil prices are like, you're right.

38:04So they haven't really come down a lot. They're still 90, you know, wherever they are. But this isn't a short-term problem. I think it's going to go right through the midterm elections. And I think, you know, stocks are at risk over the next couple months. I think it's going to be quick. I think you see a pullback. Our downturns are so quick and people get so nervous. So quick. And there's so much money out there. Have dry powder on the side. And you should have dry powder because one of the best investments right now is you could park your money in different places that are 4 % risk-free, right?

38:34That wasn't the case for so many years. That's a good return for sitting on your hands and saying, oh, I want to wait to see what all prices do. I don't know. Let's just see. If they come down fine, I have some stocks in my portfolio. Yes, they'll do better. But if it does come down, don't short. Don't do inverse ETFs. It's very hard because this market whipsaw back and forth. NASDAQ was down four days in a row, and then boom, jumps right back up. Very difficult to time markets like that. But if you're sitting on the sidelines saying, you know what? I like these stocks. These are my 10 names that I like, and I want to buy them 20 % cheaper.

39:04I think you're going to get the opportunity over the next couple of months to do that. Yeah, there is – there's a lot of really interesting things happening. There's a lot of things that also I've been wrestling with. There's a lot of contradictory matters happening, right? The economy has held up. We know that. Generally speaking, the economy – I think if we both were to just say, you know, give me the answer to this. It's either good, bad, indifferent, right? So the economy has held up. And I think we'd say, yeah, well, it's held up pretty well, right? I think we both agree with that. But earnings have been strong.

39:34We know that. AI spending, enormous, enormous. But money, somebody get the phone. Please, somebody get the phone. But money and energy are both getting more expensive. At what point does the math stop working that the AI companies, the hyperscalers, the soft banks borrowing$10 billion to put it into open AI? Is it now with this whole Oracle scare with the owl investment, the blue owl investment, where they're putting a halt on one of their projects? I mean, is something going to – does AI actually become the thing that keeps inflation and rates high? I mean, where does this math stop working? The math is working right now because every dollar they spend, they're generating over$3.

40:20And that's why they don't – and these guys have all AI systems located every place. They know exactly what they're doing. It's just the investments are, you know, now they're burning through their cash flow. And these are the smartest people, right? They've been through a lot of ups and downs if you look at the management teams for these AI companies and hyperscalers. But it's the fact that so much of this is out a couple of years and now you're seeing rates go higher. In order for them to continue to invest, the cost is rising. It's rising a lot. So if you look at Oracle and SpaceX, these are companies that people didn't realize it's about Oracle, right?

40:50So it went up tremendously. And we had that one did well and then we tried to do it again. we didn't do as well and buy it again. But it went all the way to 300. But people realized that Oracle, all these 600 billion plus in RPOs, you know, remaining performance obligations, that's like a backlog for technology companies. They used to be a software company. Okay, those are massive margins. But now they're an infrastructure company. You have to build all this stuff and take out a lot of debt at the same time. And now all this build, which was a lot cheaper, it's the reason why they're starting to tap equity.

41:18That's why Google went out and said, hey, you know, we're going to use our equity. You're going to see that a lot going forward. You're going to see that with these deals where more equity is going to be released because of the higher cost of debt. And also you're going to see deals like we just saw recently with, I think it was Akamai came out with an Anthropik deal. And Anthropik and OpenAI and CoreWeave and all these billion dollar deals get announced at so many different companies. But did you notice with the Akamai deal that Anthropik and NVIDIA is doing this as well, they're getting warrants.

41:44Really? So basically Anthropik has the ability to own a lot of these companies. All these companies that they're going to be doing business with and OpenAI, they're like, hey, you know what? Why don't we just get some warrants? Well, that's a circular financing deal. Circular financing, yeah. And if it works out, that's great. So now let's turn this into a portfolio conceptually, right? We have fresh money today, and there's a lot of places to put it. Not in themes and all that. Let's talk about actual names. You've recently discussed, as a matter of fact, I think it was this month on Curzio Research and in Wall Street Unplugged, You talked about uranium being at an inflection point.

42:23And by the way, full disclosure, Frank, you've been on the uranium train on and off, I would say that. But you have been notably an expert, I'll call it, on uranium, right? It's been kind of like been through a lot. One of my best friends is Amir Adnani. So he was at the conference last year and he's the founder of UEC. So I've known him for 15 years. So there you go. So give me some areas that we want to look at now over the next year, six months to a year, that are setting up reasonably well into all the things we just said are like, holy crap, this could happen bad. Yeah. No, don't worry. But I think it's a great buying opportunity.

43:04I think people don't talk about that enough. And you know me. I'm optimistic. I don't really – I don't say – but you know our portfolio. We've pulled back. We sold a lot of stocks. There's just too much risk right now. So – and I could be wrong, and if I'm wrong, then we still have exposure in some areas. But the areas I think – companies within crypto I think are great, like the Robinhoods. Not so much Coinbase, but I do like Robinhood Galaxy. There's also – I have access to AI data centers I think is a safe place because Bitcoin is going to go higher as – we have more debt. People want to buy gold.

43:34Gold is the worst investment in the world with higher interest rates because it doesn't pay you anything. So be very careful. And when it comes to uranium, uranium and mining stocks I put in the same basket. Those companies, please, I hope none of the CEOs that I talked to are going to be listening to this because I know so many people over the past 30 years. Those are called rentals. Those are rental companies. Those aren't companies that you buy and hold forever. If you look at uranium, just look at the charts in uranium. Look at UEC. Look at just all the biggest names within the industry. And these things, they all move up together.

44:04They all come down together. And it's just right now where UEC is, it's a 50 % discount. You know uranium. They're going to do everything they can develop. Of course, they have to build processing facilities. And that takes years, by the way. Just to be clear, this whole uranium thing. It takes years. But everybody wants it. Yeah, but the government, for the first time in a very long time, on both sides of the aisle are behind it. And that means there's going to be less red tape, which is huge, right? It cuts time down by 50%. But even if there's no red tape, I mean zero red tape. Everybody's like, let's build.

44:31And not only let's build, here's land and here's the company. It still takes a good number, I think, what is it, three years to build or four years to build a uranium plant. That's why the small modular reactors have gotten so much attention, right? And the technology is not even available yet for that. I mean, for nuclear subs and stuff, but still, it's still a technology. It's still in its infancy, but they're hoping that it will catch up. The hope is that it catch up. You know, you look like the Oklos. You look at SMR, right? You look at these companies, everybody's like, you know, that's an interesting place to put some money right now.

45:05And because either we're going to get the big deals done, I'll buy the uranium companies or I'll buy some other, maybe some of the utility companies that have that kind of exposure or this. And it's going to take that long to restart or to get it going anyway. I might as well park my money somewhere. And if there is the opportunity for this SMR to happen in the future, people, I think, are pretty sharp about it. I mean, if you look at Oklo, just to put in perspective, this is a stock that was 190, it's 40 now. We rode that up, by the way, full disclosure, about 500%. Yeah,$7 billion market cap.

45:43And got out of it. Let me just full disclosure for another thing. And got out of it. We don't have it anymore. $7 billion market cap. You know what that revenue is? Zero? A million. Yeah, I mean, it's not. So the reason why it works is I think it's PDTL back, but you're seeing a lot of these big hyperscalers sign deals with them because, again, a lot of the red tape is removed And just like Microsoft reopening and investing in Three Mile Island, it's five years away, four years away. You need local, state, federal approval for that. Who knows if that's going to happen? But then after that, I think they're able to buy the power 20 years out, right?

46:14So nuclear is – it's – the fact that you have the government behind it for the first time in a very long time, governments globally as well, you want to buy these things when they're really down and beaten up. And man, that sector is beaten up and you still have the AI, right? $7 billion plus is going to be spent over the next five years. Your job, which is our job, is to figure out where that money is going to – that's real money, right? So regardless if you think this company is going to get hit or a circular finance, that's real money going into this, and you need to find out. So you said you had – oh, we had Bloom Energy, right?

46:45Oh, yeah, BE. Awesome. Bloom Energy. $20 we got that. We talked about that last time. It's volatile, but that's a beauty. So we got into that. Celestica was another one. You know, we needed switches, a lot of these places, and they were able to solve that before Cisco and everybody else. And that was a stock we wrote up. I think we've recommended it at, you know, 3540 that went to 300. And again, massive profits for us. And the reason why is, you know, I've been doing this a long time. And the podcast, as you know, you could definitely test this because people are like, why do you do a podcast 15 years?

47:15Where's the money? Where's the generation or whatever? Well, it goes, you know, Wall Street Unplugged goes out to 130. It's been downloaded over 130 countries. And so it gives us access where people write in real-time access. And now I have several people, I'm not going to tell you the companies they work for, but that give me information who help build these data centers. And they let me know what's in shortage supply. And again, a lot of this is public, but they know it first. What's in a shortage? What's new fuel they're using? What's a new company they're trying out with technology? Where these guys are building?

47:43What states are they going to next? Because of all laws that are coming in just pre-election now, it's a big theme of where you're going to build data centers in the future. So that's where you want to figure out. That's where the money is made. And the biggest thing that's never going to change is we need power. I've been modeling this for two years and, you know, banging the drum just trying to tell everybody. We do not have – all the models in the past two years were based on large language models of how much power. And large language models is nothing. Now we have frontier AI. We're going to have robotics.

48:10It's going to increase. It's going to get faster. Agentec is going to be the deal where it's running on its own. You don't have to prompt it to do anything. And that was the Facebook or Meta Muse, number one in the app store right now. Stock goes from$570 to$750 recently. I mean, just an unbelievable move because it could do things like just one thing. If it just does this one thing, just one, nothing else, I think it'd be successful, which is an arbitrage between Lyft and Uber. Because I looked around for this, and I was going to write a program for it. I said, I'm not doing that. But there basically is nothing out there of significance where you could just have both of those feed in.

48:47I want to go to this place because sometimes I want to go to the airport. Lyft will come in at, you know,$22 and Uber will come in at$34 or vice versa. And you never know when that's going to switch around. Muse does that. Yeah, which is great. Yeah. And that's why you see, you know, Meta Rerate. Right. And when things change, you got to change. Right. I mean, I didn't like meta because I think digital advertising, there's other ways of digital advertising. People are able to pay lower costs and generate traffic. But now you change something that's a game changer. This is a game changer. This is big.

49:18So in fact, I just got a subscription to GrokBot, which is the bot agentic version, standalone desktop for Grok, for SpaceX, that deal. And 30 bucks a month. But basically you could set it to, you could do things that I basically can't do with other things because it, just like Muse, it sparks up and it loads up an instance for you of your own computer generator, right? You're not like in the cloud with everybody else. You've got your own little thing going on. But like clipping clips and doing things and grabbing information and it goes to a page. I said, look, I want to find where it says this.

49:57I need the transcript. Okay, when we start with the word the and finish with thank you very much in this, I want this 30-second piece, pull the audio out and put in my download folder for me. You think that's an easy task to do? I mean, it's incredible, right? It's unbelievable what they're able to do. And it's going to get crazier and crazier and crazier. I mean, we have it all over our systems too. It's resulted in us increasing traffic dramatically, traffic we've never seen. And now we get to compete with the big guys where they could stand in limited spending in our industry and lose our industry.

50:26And it helps out tremendously. But getting back to the AI trade, where the money is going and the power, start looking at the crypto miners that transition from tier three to tier one. They're all different, right? Some of them have stuff going on right away. They're generating revenue now from AI, but they own their power. And now the hyperscalers are in dire need of it, right? And they even came out and said, okay, well, everything coming out with the new states and the laws, and maybe we're not going to be able to build. Everything that's on schedule is going to be built, but everything new, it's got to go through a process.

50:56And a lot's going to change. The red states are going to flip-flop after the election, right? So midterms elections. But I would look at companies, you know, Iron's one of them, Hut 8, the two that I love the most, DGXX, building a lot of this infrastructure in Alabama. Hut 8, we owned that for a while. Boy, that was a rocket ship. Yeah. Wow. These have come down tremendously. And just to be clear, just to be clear, if people don't understand what he's saying, these were the companies, the Bitcoin miners that had their day in the sun. They looked really good. and got to give them credit because when that was kind of like no longer a good idea because a Bitcoin mining became an expensive proposition, they were suffering for a while.

51:34These companies sucked. I mean, is that an understatement? No, no, it's not an understatement. I mean, these guys are smart because when you have Bitcoin miners, you only make money when Bitcoin goes higher. It's an unsustainable business model because when you're looking at their old business model, it's an unscalable model. What does that mean? It means like when you scale something, And, you know, say for my newsletters, like I know if I sell, you know, whatever, a thousand newsletters, once I get a thousand people, everything else is gravy. I'm just giving away a password, right? So it's scalable.

52:01With this, in order to build it, you have to pay more money for the new computer systems, the faster chips, more money for electricity. Electricity prices go higher. To generate one costs you a lot more. And then you have the halving, which cuts your margins in half every four years. It's an unsustainable business model. So now they're like, wait, we've got the biggest companies in the world, massive cash flow, tens of billions, a dire need for power. Let's switch this over from tier one to tier three, which costs a little bit. But you're looking at a company like Vivo as well. Vivo, a lot of people don't know because they're focusing on international markets where Europe is absolutely a disaster.

52:32However, they're in a Nordic buying up tons of assets. They just signed their first big deal. And this is a name that's under the radar. Amazing management team. When you look at that management team, it was a guy that followed different trends. And so people – well, they're just like, hey, this guy is following different trends. This is different. Like what they've gotten into right now, I feel like it's core weave being very early where the power is very cheap. A lot of people don't have access to the AI trend in those areas. And these guys are first in the market. Now you're seeing the hyperscale say, hey, you know what?

53:03We're going to go to these areas because it doesn't really matter where you are. It's cool. It's hydropower. It's already there. They have excess amount of it. It's one of the few places that have this excess power. And that's a great company. But those are the names I'd look at because they own the power and we're in dire need of power. We're going to see blackouts pretty soon. And by the way, oh, God, let's not say that. Blackouts? In Texas, likely, it's going to happen first. And I hope I'm wrong. Well, we've had that before in Texas. I mean, we've had those blackouts and brownouts and all that good stuff.

53:32That happens, unfortunately, you know, because of the way their grid is set up, et cetera. And now that you have more of these companies that have moved to there because of the tax benefits and the lifestyle and the political beliefs that they want to be a part of versus the others. I mean, all of this has been a move that is probably going to compound the problem over there. But just to put a fine point on this, on some of these players that you're talking about, like DGX and all these other guys, they have not only the power, but they have the systems that allow for the management of the power that helps many of these hyperscalers, et cetera, get the, we'll say, I don't want to say the cheapest, but do the greatest efficiency.

54:13How's that? Is that the right word? Yeah, no, great efficiencies. I'm trying to look at this note that I recently had as well, but it's just when you're looking at the electricity control, I think it's PGM for Texas, they have to double their capacity to meet demand over the next four years. Yeah, and in that time period, other players may move there, which means they may have to add even further. So prices have to go up tremendously, but it takes five years, four or five years to get all this stuff built, transmission.

54:44Frank Curzio:So how do they have this – they have – again, based on current demand, they have to double their gigawatts. It's pretty much – I believe it's 500 total, right? So it's like 480 from like 250 where they are. They're already maxed out. So they have to build more, and it takes five years to build transmission lines, all this stuff, but yet they have to do it within two, three years. Something has to break. So it's either they've got to raise prices significantly, but if you believe in this AI trend, it's not going to slow down. That's what it's telling us. Every single quarter that goes by, the companies say the same thing.

55:13or investing more, increasing CapEx more, all of that filters down the one need. None of it works unless you have power. Well, if you want to keep this local, Frank, I will tell you that I pay for Copilot, right? That was the first one I paid for because it integrated with MS, Microsoft 365 and all the different apps and stuff like that. But just generally speaking, that was an easy no-brainer because it's sitting on your computer. By the way, announcement this week, they're going to merge their personal and their corporate versions together, which I don't understand why they never had that before.

55:40But they're going to do that and you can kind of keep it. that's if you look at the corporate version, you can already see it says there's a little work, non-work. So if I click the work one, it will go in and it will go into my SharePoint directories and my emails and say, hey, you talked to this guy about this. Here's the item of this and this. What do you want me to do with it? Versus the other one is just like individual chats, if you will, right? You know, we're outside that. But I pay for Copilot. I pay for ChatGPT. I didn't want to do it because I kind of wanted to hate ChatGPT. I pay for that here.

56:10We pay for that here. Just this week, we added RockBot pay service and we added Claude pay service. We paid for it. Claude's insane. Claude's ridiculous. It's like, really? It's insane. We did a spreadsheet last week that we have one here. but let's throw the parameters of this very intense multi-tabbed spreadsheet with calculations, with grabbing data from outside. It took 10 minutes for Claude to do that, which if you think about that, that's a long time, right, for an AI. Oh, my gosh, it came up fantastic. We have to continue checking to make sure it's all right, but it takes, I don't know, 60 different parameters of tax issues and gives us the best solution on a particular tax question.

57:02It's pretty cool. Anyway. Yeah, it is cool. Let's flip this around now. We talk about some of the things that look good. We talk about the economy and all that. Let's flip it around. What wouldn't you touch with a 10-foot pole except for leave gold out of it? Yeah, well, I would worry about companies that have lots of debt on their balance sheet right now. So, I mean, you could – and that's a separation of AI. If you take out the hyperscalers, a lot of these names are down 25 % plus. That's why I gave you Vivo and DGXX. We're in very, very early. We've held them long-term because we recommend them early.

57:31We're up over 100 % on them each. But they also were almost double the price they were, and then they pull back. So that's why I come out here and say, hey, you've got to buy these names because they're really good. Just like you always see at nine is a joke, right? And it's a company I recommended below a dollar, I think, when I first met Amir, dollars or so. And it was at 20 a year ago. So you want to look at some of these companies where, all right, there's a lot of risk. And I mentioned I'm not going to recommend Nike. I still think there's innovation issues there. I wouldn't touch Disney at all.

57:55Disney's a disaster. As long as I have streaming. You've always seemed to hate Disney, by the way. I don't want to hate them. I don't. But you do. You're raising prices again by 13%. I think since I met you, you didn't like Disney. Oh, it's just, yeah, I know. And look what's happened to the stock. What is that? You're just pissed off. You have to pay so much to bring your kids. You go to Universal now. It's even better. You're going to lose out on that. But it's just, you know, the streaming, streaming is one of the worst business models in the world. So, you know, be careful with streaming companies.

58:21Although you might want to buy Paramount here. That might work. Really? But yeah, only because, you know, the Time Warner deal is a big deal. They have the best content. I don't know if you want to pat him out with Taylor Sheridan and Bob Land. That guy's ridiculous, isn't he? Yeah, that guy's ridiculous. Well, how does he think of this stuff? But their content is absolutely great. And plus, they have problems with California. But he controls CNN now and some of the other, you know, far leftist news programs. And I know that's a big deal for the Democrats. So I could picture some of these things, you know, overlapping where saying, hey, you know what, as long as you're not going to lay off a lot of people here, whatever.

58:55ever again, that's speculation. That's me. It's not conspiracy, but that's the way business works behind the scenes. I just think, you know, not only did I have great content, but I think the California thing is going to go away. And these guys are much better than everybody else right now in the industry because even Netflix having trouble getting good content out right now. So those guys just, you know, I feel like I'm watching Paramount all the time. So it's great. But other than that, I would say, watch out for restaurants, consumer discretionary. I know they've gotten hit already. Uh, I could tell you one thing we I've been to this, uh, you know, I just told you earlier about the story that they never charged me 20%, right.

59:22And that was the hibachi grill we went to. I can tell you because they did that, I'll never go back. And I think businesses don't understand that when you get treated like that or you're raising prices, we're okay, we're going to be okay raising prices, but you better provide a better service. Wait, what kind of better service do you want to them throwing a shrimp tail into their hat? You want to hear something? They didn't do that. Oh, come on. They didn't do that. They didn't do the egg thing? They didn't make you laugh. They didn't do anything. They didn't do the ketchup bottle thing? They didn't do anything.

59:49They didn't even do like the little train where they light all over. Young daughters used to go there all the time. They didn't do anything. And yet you're charging us more, which for a service that's less. And nobody's going to stand for that. And that's why you're seeing companies like Airbnb in jeopardy, right? Where you're raising fees throughout the roof. Now, you like Airbnb because it was much cheaper than hotels. Same thing with Uber. Look at Uber. Uber was the greatest thing ever. Taxis are now cheaper than Ubers. But you have to wonder, Frank, if this is what happens. And that is an issue on the AI side as well that I'm worried about.

1:00:18that if in fact people are thinking that the pricing elasticity of what they could charge is, you know, with tokens and all that, right? It's just right now people are just experimenting. They're paying what they have to pay and they're getting this done. But you see this time and time again where companies get, I don't know, too big for their britches. They either charge too much or, like you just mentioned, a couple of companies or they stop innovating, like you've mentioned a few companies for that as well. And, you know, all of a sudden everybody gets lazy and they feel like they're just cash cows and all that.

1:00:49One of the companies that stopped innovating to a degree, and people don't freak out when I'm going here, was Apple for a number of years, right? Particularly with the iPhone. You know, the iPhone, what's the new thing? The iPhone is a little bit bigger and it has another button or one less button or we're changing the charger port. Foldable now, foldable. Foldable now, yeah. And now Siri was terrible. Siri is, by the way, the new version of Siri on the new iOS It just says, let me ask ChatGPT when you ask. Yeah, but the new one does even something worse. It just sits there and spins for a while.

1:01:23So I guess they tried to integrate it further, but it's like, would you like me to ask ChatGPT? I'm like, no, I do not want. Don't you have any kind of mind of your own? You know, I want to know the answer to this. And what I end up doing is not doing it because that takes a while. I just open up one of my other apps on my phone and just ask the question. You brought that up. This is key. I want to say that really quick because so why would people buy Apple stock? The reason why you buy Apple stock is because Apple has pricing power. Yes. All right, now we're getting to a level where companies, like, does Disney have pricing power?

1:01:50You're not coming out with new content. You've raised prices more than anyone over the past four years, and you're raising another 13%. So you're going to throw commercials all over everything and charge me more, and you don't have good content. Full circle. Right? So the pricing power is the thing. You know what has incredible pricing power? Coca-Cola. I think it's 16 straight quarters. They raise prices, right? That's why you're paying$3.50. They either raise prices or they shrink sizes. Yeah, and that's the thing. And that's what Nestle said, the shrinking package sizing. So annoying. So if you have pricing power, it's different, but you're going to get to a limit where Lululemon doesn't have pricing power.

1:02:19Nike doesn't have pricing power anymore. You see, and Disney doesn't have pricing power where people are like, you know what? I'm not going to go to Disney. Pay$200 a person. Let me go someplace else. Better experience. I don't have to wait online to see my daughter to go see a princess with a mustache. It doesn't help either. Jesus, I don't know what they're thinking. Know your target market, please. But it's like Budweiser with, you know, whatever. Oh, the Bud Light things? Yeah, yeah. The Bud Light, but know your target market. But that's the companies you want to focus on that have pricing power.

1:02:45Who does? And, you know, it's not that hard to figure out because you're using a lot of these brands and you know you're going to pay up a little bit more for them. So I think Walmart has pricing power. Walmart has pricing power because they're the last in the line of where you can actually shop that there's reasonable things. And not only that, Walmart, I've talked to a variety of people. What's really fascinating is they say the thing that you don't really understand about Walmart is they are not a consumer discretionary. They're a technology company. they are they are they have more technology to know exactly when where who what is going to buy uh at any different walmart why is this walmart at this particular location different than the walmart at that location my wife always says hey let's go here you want to grab some like gym shorts but let's go to this one they have a better selection of men's gym shorts and and shirts over at this one i'm like okay and she'll be like i'm going to this one because i'm picking up a blender or they have a better appliance.

1:03:37I'm like, wait a minute, the appliance section at the Walmart there is different than the one over here? How is that? Yeah. You know? It's good for Walmart. And looking at it this way too, for me, my analysis which took me and making lots of mistakes over my 30-year career is, you know, same with Disney. Like if you're buying it for streaming, you really believe in that, why don't you buy Amazon? Or Netflix. No, not even Netflix. I mean, Netflix is down a lot too. It's a pure play, but you can get Amazon. Or Amazon. Google, YouTube, TV, right? Which is amazing. Amazon's beautiful. Beautiful company.

1:04:08But now you get the cloud, you get the AI, right? Part of it. So now you have to get that exposure where, you know, you're looking at companies like Walmart and say, wow, technology, Amazon is much better technology-wise, right? And you have the AI and you have the cloud in it. So for me, when I look at companies, I want to buy Walmart, I'd rather buy Amazon here. Yeah, no question about that. No question. Amazon is like the package, right? It's got everything going on. It's got between space to a degree, right, with some of that. That could work. We'll see if it ever catches up. it has the consumer side of things, right?

1:04:37Which is a backstop of just constant money flow. And they basically told Muse, by the way, screw off. We're not allowing you to arbitrage our pricing here this week. They said Muse is not allowed to be linked to Amazon. Did you know that? Yes, I saw that. I saw that they said, yeah. It makes sense. I mean, why they would do that? Yeah, because, you know, they don't, which makes you rethink that, because Amazon sometimes, you got to be careful. You'll click on something like - Them too. I bought these pens last week. They were$12. Now they're$42. I think, is that the right place? Although, I had no idea.

1:05:12I mean, I'll order something on Amazon. I feel like the guy's going to knock on the door before we finish this. I have no idea how they do that. I have no idea. It's like it'll be there in four hours. I'm like, and it's not something that's a common product. It might be whatever, whatever. It's like radio. It's like radio. When I was little, I was like, oh my God, how'd they make those bands so small to fit inside the radio and play in the car? I don't understand. All those bands are in that radio. So simple with the kids, right? So simple. Anyway, Frank, we're going to end on this note here. Lots happening.

1:05:39Lots of great things. Lots of names. You know what's really cool now is that the AI with the transcriptions will be able to yank every single symbol out of here on the fly. And what we talked about, which was always, I was always being, look, I have like my pad here, always like scribbling down what we're talking about and all that. Now it's like I can sit back and actually focus, seriously, focus on this discussion. Oh, you have a two, right? But focus on this discussion of what we're having. And at the end, I get a full recap of what we talked about so we can then utilize it for show notes, for example, or for social media discussions after the fact.

1:06:13So always a pleasure you being here. And I really thank you so much. I will see you in three weeks down here. I'm looking forward to – for that, inviting me. And yes, we didn't mention this. I'm speaking actually. I'm going to be on the big stage. I'm going to be interviewing you on stage. It's going to be great. We should be talking like this. It's going to be really cool. It's going to be great. That's going to be awesome, man. Frank Curzio. Go to CurzioResearch.com. Hey, thanks for joining us this week and every week on the Disciplined Investor Podcast. You know where to find us. Over on YouTube, Apple Podcasts, Amazon, Spotify, wherever you get your podcasts, you do.

1:06:43We have some great guests coming up. Claire Flynn Levy is coming up next week. We have some option traders coming up over the next few weeks as well. Jack Schwager with his new book. The list goes on. I'm trying to get Scaramucci with his new book coming out as well. We're trying to, if anybody knows, ping Jason Calacanis. and by the way, next week I am the guest host on the No Agenda podcast. That's a three hour ordeal with Adam Curry that's happening Thursday, next Thursday, which is October 1st or 2nd, 2nd I think, that's happening live at 2pm Eastern time, noagendastream.com just look up the No Agenda stream, you'll hear me there.

1:07:20It's going to be a lot of fun. Thanks for joining me this week and every week. I'll see you again real soon.

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1:08:58We'll be right back.