[SPEAKER_01]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers, this is Invest Talk, independent thinking, shared success.
[SPEAKER_01]: Invest talk is may possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.
[SPEAKER_01]: Justin Klein and Luke Guerrero, stand ready to take your finance and investment questions and share their unbiased answers.
[SPEAKER_03]: Good afternoon fellow, investors.
[SPEAKER_03]: And welcome back to Invest Talk.
[SPEAKER_03]: This is our Tuesday, July, twenty second, twenty, twenty, five edition of Invest Talk.
[SPEAKER_03]: And being Tuesday, sometimes we like to surprise our listeners.
[SPEAKER_03]: And we are doing that today with the two for Tuesday.
[SPEAKER_03]: Luke Guerrero is joining me on the show for Tuesday.
[SPEAKER_03]: I know you're a big fan of a liberation.
[SPEAKER_02]: So I am a big fan of a little bit of a liberation.
[SPEAKER_02]: And that also sounds like a Taco Bell meal special or something like that.
[SPEAKER_02]: Two for Tuesday.
[SPEAKER_03]: Now I want some talk at the sea we did.
[SPEAKER_03]: Hey, nobody's going to deny tacos on taco Tuesday.
[SPEAKER_03]: So nobody's sure.
[SPEAKER_03]: Yeah, exactly.
[SPEAKER_03]: Maybe we'll go get tacos after this now.
[SPEAKER_03]: But we have an hour left before we can go get our tacos and during this hour we are going to help our listeners become better investors giving them actionable advice perspective data so they can bring that back to their own situation.
[SPEAKER_03]: and make better decisions with their money.
[SPEAKER_03]: And when just a bit, we'll talk about today's market performance.
[SPEAKER_03]: We'll also collect some calls or gather some calls and answer them from our any time listener line.
[SPEAKER_03]: But as usual, we'll tackle this call a question first.
[SPEAKER_05]: This is Rob some Florida long time listener.
[SPEAKER_05]: Appreciate everything that you do.
[SPEAKER_05]: I have a quick question on a particular stock.
[SPEAKER_05]: Take a symbol KMI Kinder Morgan.
[SPEAKER_05]: I'm just interested in probably purchasing this for immediate long-term.
[SPEAKER_05]: I would like to get your opinion on it.
[SPEAKER_05]: Thank you.
[SPEAKER_05]: Again, and have a great day.
[SPEAKER_03]: Or looking at Kingdom Morgan is one of the largest midstream energy firms in the United States.
[SPEAKER_03]: I believe this used to be a limited partnership, but no longer is.
[SPEAKER_03]: So that's the good thing is that dividend yield, which is right around four point three percent, that's going to be qualified dividends, which used to not be.
[SPEAKER_03]: So that's a positive there.
[SPEAKER_03]: And earnings are expected to be up a lug percent this year, six percent next year.
[SPEAKER_03]: And it's, uh, it's relatively thanks around fifty-four.
[SPEAKER_03]: So, you know, kind of middleing on it's a strength of the past year compared to the overall market.
[SPEAKER_03]: And it's been kind of going sideways over the past six months or so.
[SPEAKER_03]: Uh, what are your thoughts, Luke?
[SPEAKER_03]: What are you seeing in the data?
[SPEAKER_02]: Well, in terms of revenue growth, it's pretty decent coming out of twenty twenty three right.
[SPEAKER_02]: The hit peak revenue in December of twenty twenty two with nineteen point five five four billion dollars job dramatically to fifteen point one projected to be about sixteen point five at the end of this year.
[SPEAKER_02]: The same time margins have been expanding a bit though up from thirteen percent that margin in twenty twenty two projected to be seventeen.
[SPEAKER_02]: point two percent this year so you're seeing strong growth in their fee-based natural gas pipeline volumes rising EPS as well and because of that they really outperform the industry though it's kind of not difficult to outperform energy broadly if you aren't an oil name this year and so they're only outperforming by one point six percent
[SPEAKER_02]: year to date they're down one point five seven over the past year up twenty three point four three and that's all Brett led them to be trading in the upper end of their five year range from a relative valuation perspective looking at forelooking price earnings about twenty point five
[SPEAKER_03]: Yeah, I think that's my biggest worry here is that growth is not that great.
[SPEAKER_03]: And profitability return equity is eight and a half percent, but they have a lot of debt on their balance sheet, which is common for these types of names because it's a highly incapital intensive, right, building out those pipelines, maintaining those pipelines, et cetera.
[SPEAKER_03]: But the free cash flow has dipped about two points, seven billing training, twelve months from a peak.
[SPEAKER_03]: and twenty twenty one around four point four billion so certainly some weakness on that front and it and the pair ratios that ninety five percent so it's not like there's room for that dividend to go up without them really adding more debt on their balance sheet which I don't love I just think there's better opportunities out there it's okay but it just doesn't get me juiced up and then you look at the chart
[SPEAKER_03]: It's kind of the neutral to bearish as well from it's all time high back in, what was it?
[SPEAKER_03]: January, late January, so, I don't know, I'm not really getting excited.
[SPEAKER_03]: It's not terrible, but it doesn't exciting.
[SPEAKER_03]: What about you?
[SPEAKER_02]: Yeah.
[SPEAKER_02]: No, I do tend to agree there and would you add on with what you mentioned, right?
[SPEAKER_02]: With that slower growth, then it's in the upper end of it's five year relative valuation.
[SPEAKER_02]: That's where it becomes one of those names where
[SPEAKER_02]: I like the theme and I like the demand for energy and natural gas and nuclear and all these things over the next five, ten years, but maybe this isn't the right way to play it.
[SPEAKER_02]: Bye, you're.
[SPEAKER_03]: Now, we have a lot of ground to cover over the next forty five minutes or so in time for meeting, we will tackle all of it.
[SPEAKER_03]: Our main focus point is about stable coins and we just had a, the genius act coming, and Lucas is an interesting story of the naming of the genius act.
[SPEAKER_03]: So we'll talk a little bit about that and then kind of what stable coins are and a different type of stable coins that are out there and will likely come to market due to this new bill that just passed.
[SPEAKER_03]: We also have other topics like tariffs, Reuters has looked at two hundred seventy-nine different companies worldwide that have reacted in some way to the tariff war, and we'll dig into the numbers there.
[SPEAKER_03]: Also by now and pay later.
[SPEAKER_03]: That's a common way that's in individuals are financing purchases these days through companies like Affirm and Clarna, and there's a new way that FICO and the other
[SPEAKER_03]: other rating and rating agencies, but credit rating, there we go.
[SPEAKER_03]: They are looking at incorporating those into their model.
[SPEAKER_03]: So we'll look at what that means for people that have those loans.
[SPEAKER_03]: And then if we have time, look at how investors are positioned
[SPEAKER_03]: into tech stocks that max seven according to the latest bank of America survey.
[SPEAKER_03]: We also have voice bank questions on Nvidia and in plans for kids and of course questions that came in via the investor talk YouTube channels.
[SPEAKER_03]: Well and of course, your live calls will always be number one.
[SPEAKER_03]: So give us a call now at eight to eight ninety nine chart board heading into our first break of the hour.
[SPEAKER_03]: I'm ready.
[SPEAKER_03]: We are ready to talk about whatever is on your mind.
[SPEAKER_03]: So don't be afraid, think of the phone, give us a call, at eight a day, nine a.m.
[SPEAKER_03]: and chart.
[SPEAKER_04]: Serious investors are certain to have finance and investment questions.
[SPEAKER_04]: Wanted to get your take on WW Granger.
[SPEAKER_04]: And the best person to ask your question in the right way is you.
[SPEAKER_04]: I was wondering from your standpoint, they're at downside in buying fractional shares versus whole shares.
[SPEAKER_04]: And twenty four seven rain or shine, Justin Klein and Luke Guerrero stand ready to provide their unbiased answers.
[SPEAKER_03]: The issue, though, is really over the last decade or so.
[SPEAKER_03]: It's never maintained this level of profitability for a long period of time.
[SPEAKER_02]: The modities are incredibly volatile, so when the going is good, take some profit.
[SPEAKER_04]: Your participation makes an investor talk better.
[SPEAKER_04]: My name is Mike.
[SPEAKER_04]: I'm calling in from Orange County, California.
[SPEAKER_04]: This is Lewis calling from Bolivia.
[SPEAKER_03]: Let's go talk to Chris and Maine.
[SPEAKER_04]: So don't forget to call investor talk.
[SPEAKER_04]: First off, great show.
[SPEAKER_04]: I went last week too.
[SPEAKER_04]: Hey, day eight, ninety nine chart.
[SPEAKER_04]: Have you heard about the new Invest Talk Store?
[SPEAKER_04]: That's right, you'll find great merch for the savvy investor.
[SPEAKER_04]: It's all there for you now at InvestTalkStore.com.
[SPEAKER_03]: Luke, let's go take a look at the market today.
[SPEAKER_03]: We close near the lows yesterday and today was kind of a choppy day overall.
[SPEAKER_03]: You have the NASDAQ down about eighty one points so about thirty nine bases points to point
[SPEAKER_03]: or percent roughly.
[SPEAKER_03]: S&P was up four points, so barely positive there about six basis points.
[SPEAKER_03]: The Dow was the strongest up about forty basis points.
[SPEAKER_03]: And really large kept growth was where the weakness lied, getting a video down to an apercent, brought calm down over three, and video, sorry, Netflix down over three, Oracle down about two percent Amazon.
[SPEAKER_03]: down about one.
[SPEAKER_03]: So definitely have the bigger cap tech names, you had some weakness, but some strength that of the finance sector, consumer non-derables, and the industrial space as well.
[SPEAKER_03]: So what we're using in the markets today.
[SPEAKER_02]: Yeah, certainly, I didn't seem to see a lot of reason for the direction in the market.
[SPEAKER_02]: You did see that rotation as you briefly highlighted towards value out of growth, but not really a specific factor for why that was happening.
[SPEAKER_02]: Could it be just positioning ahead of earnings, right?
[SPEAKER_02]: We're now going deeper and deeper into earnings season.
[SPEAKER_02]: You have big tech earnings and the August first
[SPEAKER_02]: I don't even know what deadline is this the third third iteration of the tariff deadline approaching.
[SPEAKER_03]: I think there was a I saw some today that best in hinted at that deadline being pushed back again.
[SPEAKER_02]: I believe what he said was the deadline doesn't matter, something like that.
[SPEAKER_02]: So, not only about it being pushed back, but essentially saying these deadlines are pointless anyway.
[SPEAKER_02]: But, you know, I don't think that the market is believing that this deadline is the final deadline, or probably be another deadline after that deadline.
[SPEAKER_02]: I think probably what you're seeing is positioning towards earnings, because as I mentioned, right, you have big tech earnings,
[SPEAKER_02]: going to be focused on the outside as a capex.
[SPEAKER_02]: Are they going to continue with those capital expenditures?
[SPEAKER_02]: The thing that has been floating the market for the past two and a half years is spending to be going to be cut back as we start to see some deterioration of the US economy.
[SPEAKER_02]: And so not just seeing how the performance was in Q to, but seeing what guidance is moving forward is how people are generally going to start to position money over the next couple of weeks.
[SPEAKER_03]: Yeah, that makes sense.
[SPEAKER_03]: Now, you did have rates down a little bit, especially in the back end of the curve.
[SPEAKER_03]: The dollar was down a half a percent.
[SPEAKER_03]: Gold finished up one point one percent.
[SPEAKER_03]: Bitcoin up about two point four percent.
[SPEAKER_03]: And WTI was down about one percent.
[SPEAKER_03]: So definitely some movements underneath the surface.
[SPEAKER_03]: The dollar continues to be weak.
[SPEAKER_03]: Gold continues to be strong.
[SPEAKER_03]: Looks like it's trying to break out to the upside.
[SPEAKER_03]: And like you said, Luke, we are in the midst of earning the season.
[SPEAKER_03]: So some big winners, some big losers on the day as you would expect.
[SPEAKER_03]: But overall, not a whole lot of movements on the major indices as we had closer and closer to that potential deadline, which, you know, like you said, may or may not be a real deadline.
[SPEAKER_03]: Now we see questions from the comments section over on the best talk YouTube channel.
[SPEAKER_03]: I don't really like it.
[SPEAKER_03]: Basically, I'll attack one of those questions.
[SPEAKER_03]: Now Luke, Gary Miller, Gary Miller, Gary.
[SPEAKER_03]: He's from the department of redundancy department.
[SPEAKER_03]: So as you can analyze, can you analyze Ralph Lauren, RL, and share if this is a good time to pick it up.
[SPEAKER_03]: RL is the symbol.
[SPEAKER_02]: Is it a Lorenther Lorenther?
[SPEAKER_03]: Well, he spells it Lorenther, but I'm pretty sure it's Ralph Lauren.
[SPEAKER_02]: Hopefully we'll come to figure that out during this discussion.
[SPEAKER_03]: There you go.
[SPEAKER_03]: So Ralph Lauren is, let's see, about seventeen billion dollar market cap earnings.
[SPEAKER_03]: Most of you have about twelve percent this year, ten percent next year, revenue growth last quarter, about eight percent.
[SPEAKER_03]: Certainly a strong stock relative strength at ninety one, but did he miss the boat here?
[SPEAKER_03]: Look.
[SPEAKER_02]: Yeah, it is strong, and one of the reasons why it's strong is comparatively looking at other clothing companies, right?
[SPEAKER_02]: The return on equity here is about thirty percent American Eagle competitors, about twelve point two percent, and that's why it's trading at double the forward looking earnings trading, about twenty point three times.
[SPEAKER_02]: Again, on the upper end of that range, just like the last name that we've looked at,
[SPEAKER_02]: And this is at a time where you are seeing slowing revenue growth as people start to pair back spending new clothes being one of those areas where they would do that.
[SPEAKER_02]: Yet again, we see margins are expanding here.
[SPEAKER_02]: We're seeing a pretty consistent share buyback program down from seventy five million shares a couple years ago down to about sixty million now.
[SPEAKER_02]: Now, one thing to note though, there's a little bit of short interest out there, nothing too crazy.
[SPEAKER_02]: I think that the reason why this company has done particularly well, especially compared to its peers is because of that margin expansion.
[SPEAKER_02]: If growth is slowing, but your business is becoming more efficient, such that your utilization, your profit from your operations becomes better than market, obviously, likes those things.
[SPEAKER_02]: And at the same time, you're seeing the brand galoreo internationally as well.
[SPEAKER_02]: Twenty point three times?
[SPEAKER_02]: No laughing matter in terms of expensive or rather in terms of cheap, right?
[SPEAKER_02]: That's a pretty high valuation for a clothing company.
[SPEAKER_02]: Did he miss the boat though?
[SPEAKER_02]: I'm not sure.
[SPEAKER_02]: It seems to be justified given what we've seen of this company in terms of earnings over the past couple quarters.
[SPEAKER_03]: Yeah, see, I worry a bit that the profits expansion is more short-lived.
[SPEAKER_03]: That's the history of clothing brands, right?
[SPEAKER_03]: You go through periods where you're in style.
[SPEAKER_03]: There's a lot of consumer spending, consumer balance sheets are strong, and you've seen that as of late.
[SPEAKER_03]: styles go in and out and usually when you're your old news at some point and suddenly you probably created over capacity over supply within the market and then you have to cut prices and dump in the dory and your margin suddenly contract and and if you look historically if you just look at return on assets for example right now it's at about
[SPEAKER_03]: ten twenty seven but it went uh... it went negative and twenty one which is expected to have it yeah but pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-pre-
[SPEAKER_03]: But I just don't like history of these names where there's still a lot of volatility to its earnings.
[SPEAKER_03]: And right now, it feels like peak earnings, especially when he looked back in history.
[SPEAKER_03]: Now, we're heading to a break filled to come.
[SPEAKER_03]: Today's focus point more answers to your questions.
[SPEAKER_03]: And we encourage you to call right now on the best stock at eight and ninety nine chart.
[SPEAKER_04]: You've got two for the price of one.
[SPEAKER_04]: Justin Klein and Luke Guerrero are here and they're taking your financial investment questions now.
[SPEAKER_03]: Now look our main focus point today is about stable coins and first I think we need to address the recent bill that just passed Congress called the Genius Act.
[SPEAKER_03]: First off, what do you know about the Genius Act and can you tell the listeners of why it's called the Genius Act?
[SPEAKER_02]: Well, it's called the Genius Act because it's the government encouraging new innovations and utilizing science act.
[SPEAKER_02]: So genius is an acronym.
[SPEAKER_02]: If you recall back in the day, this was Trump won, right?
[SPEAKER_02]: He calls himself a stable genius.
[SPEAKER_02]: There's a lot of
[SPEAKER_02]: conjecture about whether or not that is also the reason why they've named it that bill that's never been fully confirmed though the president did make a nod to it when he signed the bill saying that they named it after him so make of that what you will but essentially at a high level
[SPEAKER_02]: What the genius that attempts to do is create a regulatory framework by which stable coins can be regulated and issued in the United States.
[SPEAKER_02]: Now, we can dive into all the positives and negatives of those things and specifically of this bill, but there's a whole bunch of reasons that the administration thinks it'll be beneficial, a whole bunch of reasons that it might not be.
[SPEAKER_03]: That's stable coins.
[SPEAKER_03]: are aimed to be an alternative to cryptocurrencies that are typically very volatile.
[SPEAKER_03]: trying to turn them into, or cryptocurrency in general, into mediums of exchange as opposed to what the vast majority of the industry has turned into.
[SPEAKER_03]: So far, which is more of elements of speculation and just trying to, you know, hold on and hope the number goes up right.
[SPEAKER_03]: Now, stablecoins in general are pegged to some sort of external asset.
[SPEAKER_03]: And we'll talk to a little bit about what they can be.
[SPEAKER_03]: But the primary one is going to be peg to the US dollar or dollar assets.
[SPEAKER_03]: So it could be actually US dollars or can be treasuries, for example, that are denominator and dollars that are very safe, et cetera.
[SPEAKER_03]: And, you know, the end goal here is to say, okay, while you might
[SPEAKER_03]: except Bitcoin, for example, as a vendor, as a store.
[SPEAKER_03]: When you do that, you open yourself up to currency risk, right?
[SPEAKER_03]: The fluctuations of that currency, which can be good, can be bad, but ultimately most companies don't want that exposure.
[SPEAKER_03]: And so they want the convenience potentially of
[SPEAKER_03]: a stable coin or cryptocurrency, however they don't want that currency risk.
[SPEAKER_03]: And so the idea here is to turn cryptocurrency more into a medium of exchange.
[SPEAKER_03]: What do you think of that concept loop?
[SPEAKER_03]: Do you think that holds water or do you think that is an excuse for just expanding the types of crypto assets that are out there?
[SPEAKER_02]: I talk for hours about this.
[SPEAKER_02]: But, you know, here's my primary thinking on the payment method thing.
[SPEAKER_02]: And that is, you know, you see it with Walmart and one other company said they wanted to issue a stable coin because the businesses themselves are incentivized to do what, move away from having to pay processing fees to Visa, MasterCard, American Express, whomever they use.
[SPEAKER_02]: And so they want to be able to do something that makes it cheaper for them.
[SPEAKER_02]: But in order for a transaction to happen, right?
[SPEAKER_02]: There are two parties do a transaction.
[SPEAKER_02]: In this case, there's a buyer, and there's a seller.
[SPEAKER_02]: And so the buyer, who is using their Visa, their MasterCard, their American Express, is incentivizing to keep using those things through reward programs, right?
[SPEAKER_02]: That is one of the reasons why people use credit cards to rack up points, hopefully they're paying off those credit cards.
[SPEAKER_02]: But essentially, if you really want to move from the payment clearance system we have today towards stablecoins,
[SPEAKER_02]: You have to incentivize not the sellers who are very much incentivizing not pay fees, but the buyers and I just don't see anything in here or any real proposal that suggests that is feasible at least in the near turn.
[SPEAKER_02]: And that's just on that side.
[SPEAKER_02]: There's a whole other host of things we can get into about stablecoins.
[SPEAKER_03]: Yeah, I mean, I think there needs to be incentive to hold the assets in those coins that pay some sort of yield, for example, right?
[SPEAKER_03]: So if it's a stable coin and it's invested in treasuries, those treasuries are in a yield and I know there's a lot of companies are out there trying to create stable coins to basically capture that yield.
[SPEAKER_03]: The not pay the user ends and capture that yield.
[SPEAKER_03]: So to me I think there needs to be and should be some sort of asset or stable coin that does pay some sort of a yield so that it isn't your incentivized right to somehow over time keep more money in that stable coin earned the yield and then when you need to spend it you go and spend it and I think
[SPEAKER_03]: That's one way I think the industry can evolve.
[SPEAKER_03]: I will say that this is, to me, the first shot across the bow of the visa and massacre networks that there's development of alternatives in a real way, but I think there
[SPEAKER_03]: is more work to be done or that's actually come to fruition.
[SPEAKER_02]: I don't necessarily agree with that because certainly there's more work to be done but the problem here is this bill doesn't extend FDIC insurance.
[SPEAKER_02]: So let's say you want to get your yield from your stable coin but the company goes under doesn't matter.
[SPEAKER_02]: Let's say, you know, there is no risk scam protection within this bill.
[SPEAKER_02]: And so I'm saying to you, put it in a money market fund or put it in a high yield savings account that is FDIC insurance.
[SPEAKER_02]: You're getting your four point two percent.
[SPEAKER_02]: You don't have the risk and then you spend on your credit card.
[SPEAKER_02]: It just is this so many gaps that they have to fill that I think this bill is absolutely nothing for.
[SPEAKER_03]: Well, we'll talk at the after the break about the different types of stable points that are out there as well, and we think of each type.
[SPEAKER_03]: Now, next and best of all, we're looking to this topic.
[SPEAKER_03]: US Housing Market Flash is warning signs for the economy.
[SPEAKER_03]: That story is tomorrow, but for now, I'm Justin Klein here with Luke Rero today, and we are ready to take your calls now on eight and eight ninety nine chart.
[SPEAKER_04]: Invest talk.
[SPEAKER_04]: Tell your friends they can listen live, download the free podcast, or watch Invest talk on our YouTube channel.
[SPEAKER_04]: And they can leave their finance and investment questions any time on eighty-eight ninety-nine chart.
[SPEAKER_03]: Now, before the break, we talked a bit about stable coins and the new Genius Act, but let's talk about the types of stable coins that are out there.
[SPEAKER_03]: Now, the most common one is a stable coin that is collateralized by the US dollar or US dollar denominator asset.
[SPEAKER_03]: So, the most common are teather or true USD.
[SPEAKER_03]: And so, you basically get one for one
[SPEAKER_03]: a one for one ratio of the value of the stable coin and the dollar and and that's very straightforward and that allows for lower or lower no volatility to crypto currencies that are out there so that you know if you have a certain amount of the tether for example one day you'll have the same amount the next day.
[SPEAKER_03]: Now, then from there, you get more volatile.
[SPEAKER_03]: And the next would be commodity-backstable coins.
[SPEAKER_03]: So the most popular is a tether gold, and script the currency back by gold reserves.
[SPEAKER_03]: And they say that they have gold reserves in Switzerland.
[SPEAKER_03]: But there are fees according to that.
[SPEAKER_03]: So just to store that, just like there would be if you owned a
[SPEAKER_03]: gold backed ETF and storage there.
[SPEAKER_03]: And then there's crypto collateralized stablecoins to me.
[SPEAKER_03]: That just sounds a lot like owning cryptocurrency.
[SPEAKER_03]: Even though they're over collateralized to some degree, meaning that they have more than one dollar in the underlying cryptocurrency.
[SPEAKER_03]: So there's that.
[SPEAKER_03]: And then there's algorithmic stablecoins.
[SPEAKER_03]: This is
[SPEAKER_03]: To me, with the bigger problems come in when there's some sort of, what was that?
[SPEAKER_02]: Luna Terra was an algorithm.
[SPEAKER_03]: Yeah, exactly.
[SPEAKER_03]: And that one plunged back in twenty twenty two.
[SPEAKER_03]: And because the the peg to the US dollar was broken because Luna slept more than eighty percent overnight, which we know these cryptocurrencies can move dramatically.
[SPEAKER_03]: So if Dow grew them, puts you puts the the coin into a cryptocurrency that is
[SPEAKER_03]: very volatile and has a big dip, you know, suddenly that stable coin isn't so stable.
[SPEAKER_03]: So to me, that's where the most risk is, how do you think about these four different types of stable coins?
[SPEAKER_02]: Well, one of the arguments for the benefit to everybody with passing this bill, and certainly I am of the opinion that you do need a regulatory framework for these things.
[SPEAKER_02]: They're going to exist.
[SPEAKER_02]: You should have mechanisms.
[SPEAKER_02]: You should have enforcement mechanisms.
[SPEAKER_02]: One of the big arguments was, well, the U.S.
[SPEAKER_02]: is in a lot of debt.
[SPEAKER_02]: Thanks to the big beautiful bill, we're going to be in a lot more debt in the CBO's estimates now up to three point five trillion over the next ten years, and that's only with some of the spending reductions being for a five-year period.
[SPEAKER_02]: And what happens is you have your treasury batch stable coins.
[SPEAKER_02]: And those stable coins means that there's more treasury demand.
[SPEAKER_02]: And so if you're doing it one to one, you have to buy those treasuries.
[SPEAKER_02]: If there's more demand for your debt, well, then you can use cheaper yields, right?
[SPEAKER_02]: You can you can pay lower interest because there's all these people that want to.
[SPEAKER_02]: The problem is is
[SPEAKER_02]: They're going to be focused on the short end.
[SPEAKER_02]: And as we all know as listeners of this show, the bigger problem is on the long end of the curve right now being blown out, right?
[SPEAKER_02]: Ten, thirty years.
[SPEAKER_02]: That's the big systemic risk there.
[SPEAKER_02]: And that's not really going to do much there.
[SPEAKER_02]: Nor can you as a government that is paying nearly a trillion dollars an interest every year, continue to roll over short term rates without long term yield curve.
[SPEAKER_02]: issues.
[SPEAKER_02]: And so, you know, that I think is probably going to be the most prevalent of the stable coins, the ones that are backed, one to one by US treasuries.
[SPEAKER_02]: And so I think that that does maybe carry some benefits to it, but there's definitely a lot of uncertainty there as well.
[SPEAKER_03]: Yeah, definitely.
[SPEAKER_03]: And I think there's some merit to things like commodity backed cryptocurrencies, because as we know gold continues to go up and central banks around the world are buying more and more gold.
[SPEAKER_03]: So I think that makes a lot of sense.
[SPEAKER_03]: I think the collateralized crypto collateralized stable coins don't really make a whole lot of sense, because just like the algorithmic one, right?
[SPEAKER_03]: Where Luna dropped the age then overnight.
[SPEAKER_03]: Why can't a crypto?
[SPEAKER_03]: Backstable coin also dropped eighty percent overnight.
[SPEAKER_03]: So even if it's over collateralized, suddenly it's not over night.
[SPEAKER_03]: So I think those are the ones that would be very, very risky that I would never touch.
[SPEAKER_03]: Something that I would feel more comfortable with obviously is anything that's treasury backed or gold backed or hard asset backed.
[SPEAKER_03]: But the question is more about regulatory framework.
[SPEAKER_03]: And whether this bill actually checks on the boxes, I'm a bit skeptical on that.
[SPEAKER_03]: Now let's keep things moving and pivot back to the investor's type voice bank.
[SPEAKER_03]: You know the number?
[SPEAKER_03]: The call it's eight to eight, ninety nine chart.
[SPEAKER_06]: Hello, this is David and San Jose.
[SPEAKER_06]: Thank you for all you guys did.
[SPEAKER_06]: Had a question, required to start from my site in video.
[SPEAKER_06]: Look at your investment in it and hold it for a long term.
[SPEAKER_06]: Want to know your thoughts?
[SPEAKER_06]: Good time to get in.
[SPEAKER_06]: Thank you.
[SPEAKER_03]: All right, well, Nvidia probably the most popular stock in the market today historically when Palantir has got to be more popular at this point.
[SPEAKER_03]: You think so?
[SPEAKER_02]: I don't know.
[SPEAKER_02]: There's some big Palantir lovers out there.
[SPEAKER_03]: Well, I will say Nvidia has a much better business and at least existing business than Palantir.
[SPEAKER_03]: But there's
[SPEAKER_03]: Obviously, a lot of hype around it, AI hype, a lot of investment, and it'd be chips to build that AI infrastructure.
[SPEAKER_03]: And that's why earnings have gone from thirty-three cents in twenty-three to five dollars and eighty-two cents expected.
[SPEAKER_03]: Next year has a hundred sixty-seven dollar stock.
[SPEAKER_03]: So even based on forward-looking earnings, Luke, you're still a mid-high twenty-s摸, which isn't egregious to be frank.
[SPEAKER_03]: As long as this growth continues, the question is, will the growth continue?
[SPEAKER_03]: Will the hyperscalers, the Amazon's Google's?
[SPEAKER_03]: It's the Amazon, Google, everything in meta, what's the fourth one?
[SPEAKER_03]: There's one Microsoft, those four, those in the hyper scalars.
[SPEAKER_03]: They're spending a dramatic amount on CapEx.
[SPEAKER_03]: Obviously a lot of that goes going towards Nvidia.
[SPEAKER_03]: And the question is over time, can they keep a Stranglehold on the AI chip market or will companies like AMD, Intel, and others kind of edge into that and still market share with comparable chips
[SPEAKER_03]: maybe cheaper prices, et cetera, similar to what AMD did to Intel, you know, a number of years ago.
[SPEAKER_03]: I think that's certainly a big risk.
[SPEAKER_03]: That's out there.
[SPEAKER_03]: And this stock is certainly ran over the past few years.
[SPEAKER_03]: Like I said, turning a hundred and sixty seven dollars, it's recent low was around eighty six.
[SPEAKER_03]: So it's doubled basically from its April lows.
[SPEAKER_03]: So I mean, how do you think somebody should
[SPEAKER_03]: look at in video from a long perspective at these prices.
[SPEAKER_02]: Yeah, I mean, everybody knows in video.
[SPEAKER_02]: It was the first four trillion dollar company had achieved that this month.
[SPEAKER_02]: Congratulations to that and everyone who has invested in it, the growth is undeniable.
[SPEAKER_02]: You're looking at sixty four point two percent growth on an annualized basis going back to twenty twenty.
[SPEAKER_02]: And I think there's a lot of
[SPEAKER_02]: There's an analogy a lot of analogies drawn towards the dot com bubble and companies like Cisco.
[SPEAKER_02]: I think you're in a different situation here, you know, and Nvidia is a hard product maker, right, with the chips, whereas the other situations you're talking about a lot of software companies, which are far more replaceable than the hardware, right?
[SPEAKER_03]: So Cisco was hardware, right?
[SPEAKER_03]: It is hardware.
[SPEAKER_02]: Oh, yeah, that's correct.
[SPEAKER_02]: Yeah, but I think that generally speaking, within the tech space, it is such a winner take all space that it is conceivable that a company that has held the dominant position within the GPU space could continue to do it in perpetuity.
[SPEAKER_02]: Now, the question is, is that going to happen?
[SPEAKER_02]: Is the downside risk right now higher than the upside risk?
[SPEAKER_02]: I think there is a lot of downside risk right now.
[SPEAKER_02]: That's not because I'm a permabar on Nvidia.
[SPEAKER_02]: It's just because they have been continuously hitting it out of park and the expectation is they continue to hit it out of the park and at some point Capix does have to slow down right businesses are cyclical the economy is cyclical at some point as you saw earlier right when it was trading it around eighty dollars in
[SPEAKER_02]: And when was that?
[SPEAKER_02]: That was in April, right after the tear announcement, it slowly marched upward, you do see how volatile a name like this, which is pretty remarkable if you ask me that a four trillion dollar name can be this volatile.
[SPEAKER_02]: So there is just a lot of downside risk here in my opinion.
[SPEAKER_03]: Yeah, it's not just that other competitors might come and
[SPEAKER_03]: and make similar or better products than in video, but it's also with history of the semiconductor space, which is very cyclical.
[SPEAKER_03]: Meaning you want to recession, companies cut back, and it may not be just a recession.
[SPEAKER_03]: Like I said, the high-prosetler spending tens of billions of dollars per year on CapEx.
[SPEAKER_03]: All they have to do is step back a little and say, while AI is important and we're going to continue to
[SPEAKER_03]: build AI tools, you know, the bigger question is, can AI, will AI drive actual positive business outcomes?
[SPEAKER_03]: Will there be an ROI on these tens of billions of dollars of investments for each of these companies?
[SPEAKER_03]: And, you know, as time goes on, it's going to be more than just, you know, ten or twenty dollars additional in
[SPEAKER_03]: monthly subscription revenue for a chat GPT or something like that.
[SPEAKER_03]: It's going to need to be something that's more robust.
[SPEAKER_03]: I actually think that over time, and you see this back in the dot com bubble, I think the analogy more is who benefited the most from the AI bubble?
[SPEAKER_03]: Sorry, from the tech bubble, excuse me, tech bubble, one point out in the late nineties.
[SPEAKER_03]: And was it those tech companies?
[SPEAKER_03]: Yeah, there were a few like an Amazon that really benefited dramatically.
[SPEAKER_03]: but there were the rest of the economy benefited far more right the efficiency of information and data and and and they're the ones that really
[SPEAKER_03]: we're allowed to, or you're utilized that technology to its fullest.
[SPEAKER_03]: And the big question is now, is what's going to will those big, eh, hyperscalers will they be able to monetize all this investment, or will AI just suddenly become a standard feature on an every piece of software?
[SPEAKER_03]: Right, just like being in the cloud suddenly become became the standard feature of software everywhere, starting in the late the late OTS.
[SPEAKER_03]: Okay.
[SPEAKER_03]: So that's where I think it's going is more, hey, the large language models are generally going to be for the use case for the vast majority of applications are going to be very
[SPEAKER_03]: fine, right?
[SPEAKER_03]: We'll use a Proplex City or a ChatGPT or any of the other options that are out there for large language models.
[SPEAKER_03]: The basic use case for AI will be, for most people, will be similar.
[SPEAKER_03]: And so, it won't really matter which one you use outside of specific cases.
[SPEAKER_03]: And that will make the economic viability of the models a lot more challenging.
[SPEAKER_03]: And I think that's the biggest risk to Nvidia is that those names step back and they say, we're not adding capacity at the same rate.
[SPEAKER_03]: And so I think you, and this is a volatile name.
[SPEAKER_03]: It does tend to fall and I think it's a better time to buy this on a pullback when liquidity abs probably sometime next year versus right now.
[SPEAKER_03]: Now let's head over and take another call to in a room at eight and eight ninety nine chart.
[SPEAKER_00]: Hey, Luke and Justin.
[SPEAKER_00]: This is Kevin from Southern California.
[SPEAKER_00]: Have a question regarding plans for kids.
[SPEAKER_00]: I have a twelve and thirteen year old and I've already set up five twenty nine for them.
[SPEAKER_00]: I've set up at most for them and I'm interested in setting up some Ross IRAs for them as well.
[SPEAKER_00]: And I know they're not old enough to get a lot of additional jobs wondering if you had some thoughts about some ideas or some jobs that they could have now so they can get some earned income and
[SPEAKER_00]: and we can get those set up for them to plan for their long-term retirement goals already.
[SPEAKER_00]: Look forward to hearing your thoughts as always.
[SPEAKER_00]: Thanks again for having a great show.
[SPEAKER_03]: All right, great question here.
[SPEAKER_03]: I like that you're already starting with five, twenty-nine and other ways to save for your children.
[SPEAKER_03]: And a Roth IRA for kids is something that is a great idea.
[SPEAKER_03]: The problem is the child needs earned income.
[SPEAKER_03]: And so if you have your own business, you can hire them.
[SPEAKER_03]: That's one way to do it.
[SPEAKER_03]: There's obviously,
[SPEAKER_03]: There's labor age requirements, so it depends on how old your kids are.
[SPEAKER_02]: It also depends what you're hiring them for, right?
[SPEAKER_02]: If you're hiring your three-year-old to be a receptionist, certainly the IRS is going to come knocking and say, you know, this is a very talented three-year-old or you're lying to me.
[SPEAKER_02]: So, you know, I think from what I've heard
[SPEAKER_02]: A lot of people who want to do this for younger kids, try and get them some sort of brand ambassador, modeling, stock photography type of thing.
[SPEAKER_02]: Because again, it does have to be necessary for fairly compensated age-appropriate work.
[SPEAKER_02]: So you're right, it does depend what age you are.
[SPEAKER_02]: I kind of got the inclination that maybe it was a younger child from the way they were talking about it.
[SPEAKER_02]: But do keep in mind, for all those of you who are listening who are now thinking, you know, I want to get my young child involved in the family business.
[SPEAKER_02]: The IRS will come knocking.
[SPEAKER_03]: Yeah, exactly.
[SPEAKER_03]: It does need to be, like you said, age appropriate and it needs to be reasonable for them to do.
[SPEAKER_03]: Like you said, not reasonable for a three year old to be a receptionist.
[SPEAKER_03]: But, you know, I think there's flexibility in most businesses, right?
[SPEAKER_03]: Like you said marketing, is it photography?
[SPEAKER_02]: Yeah, sure.
[SPEAKER_02]: If you had a local tool business, right?
[SPEAKER_02]: And you wanted to stage your, you know, your baby holding the wrench, and that's your wrenched ad, you know, so like that.
[SPEAKER_02]: That seems perfectly reasonable to me.
[SPEAKER_02]: But certainly as always, you know, neither so.
[SPEAKER_03]: We use Kobe in some of our photography things.
[SPEAKER_03]: Can I set up a Roth IRA for a dog?
[SPEAKER_03]: I don't know.
[SPEAKER_03]: Probably not.
[SPEAKER_03]: He doesn't have a social security number, so there you go.
[SPEAKER_03]: Well, that leads us into our final break on Invest Talk.
[SPEAKER_03]: I'm Justin Klein here with Luke Guerrero, and we have won goal each and every week.
[SPEAKER_03]: They need to help you become a better investor and help you achieve your own version of financial freedom.
[SPEAKER_03]: And I work continues after this final break.
[SPEAKER_03]: So good questions in now at eight and eight and a nine chart.
[SPEAKER_03]: And don't forget to cruise over to the new Invest Talk Store.
[SPEAKER_03]: It's open now at InvestTalkStore.com.
[SPEAKER_04]: Every investor is working to build a secure financial future.
[SPEAKER_04]: The more you learn about how the market works, the better your chances for success.
[SPEAKER_04]: In Vestark, eight, eight, nine, chart.
[SPEAKER_03]: There's another question submitted from online web far in the best talk.com.
[SPEAKER_03]: And here, Barrier, he says, Centine Corporation.
[SPEAKER_03]: It's already dropped quite a bit.
[SPEAKER_03]: And the high volume does the price per share now.
[SPEAKER_03]: Look at attractive relative to the value.
[SPEAKER_03]: What do you think now?
[SPEAKER_03]: Centine is one of those names being caught up in the Medicare cuts and more scrutiny on Medicare.
[SPEAKER_03]: Expenses in general and earnings are expected to fall dramatically from seven, seventeen last year to four dollars and ninety five cents.
[SPEAKER_03]: Next year, three dollars and five cents.
[SPEAKER_03]: This year, now it's a twenty seven dollars and eighty nine cents.
[SPEAKER_03]: But obviously, animals are kind of still searching for where the bottom is in earnings.
[SPEAKER_03]: Luke, do you think this is worth a worth a worth a worth a gamble of these levels?
[SPEAKER_02]: I don't know, nobody really knows, and it's Medicaid cuts, I believe.
[SPEAKER_02]: I don't know.
[SPEAKER_02]: I just want to get it out there, but I think nobody really knows the shape of the cuts, which is the problem, right?
[SPEAKER_02]: So with the big beautiful bill, which I swear I'm going to stop calling at that at some point.
[SPEAKER_02]: With the Trump bill, it pushed forward the continuation of the tax cuts and bonus appreciation for businesses to immediate right this year and rather next year I think and then pushed out all of the Medicaid cuts until after the midterm election for political reasons right it's a trillion dollars a year Medicaid cuts and so I think there's a lot of uncertainty of the way the shape of that is going to work out because there is no one
[SPEAKER_02]: system that polices and creates Medicaid, right?
[SPEAKER_02]: Medicaid and Medicare is funding or Medicaid is is funding from the government towards the individual states.
[SPEAKER_02]: And so each state implements things within the law as required in order to receive that funding.
[SPEAKER_02]: And so everyone's kind of trying to figure out what the shape of the cuts are actually going to be because it's going to vary from state to state.
[SPEAKER_02]: And I think that's where a lot of the uncertainty is for for a company like Centine, but also companies within that industry.
[SPEAKER_03]: exactly in and that's the that's the murkiness of their feature business and that's why everyone's kind of sold it willingly now is down extreme I think it's a reasonable that at this point because there's so much price in and the one reason why I say that is mainly because the balance sheet there's not a lot of
[SPEAKER_03]: of long term or not a lot of debt that the debt to equity ratios only point six five.
[SPEAKER_03]: So I think and they have a lot of short term cash to offset the long term debt.
[SPEAKER_03]: So I think that there there's a lot of
[SPEAKER_03]: Potential upside here, there's still potential downside for sure, but I think a lot of the bad news has been priced in.
[SPEAKER_03]: So it's still very, very high risk because of lack of uncertainty and you have to look at it such.
[SPEAKER_03]: If you can handle that high risk, then I think it's reasonable at these levels.
[SPEAKER_03]: Now lastly, Luke, let's touch about a bit on tariffs and how businesses are reacting to these tariffs.
[SPEAKER_03]: This is coming from Reuters, look at two and a seven and a different companies worldwide from quarterly financial reports, interviews, statements from company officials, et cetera.
[SPEAKER_03]: And it's pretty interesting to see how they are reacting.
[SPEAKER_03]: What are you gleaning from the data that they reported?
[SPEAKER_02]: Yeah, I think you saw a little bit of it in PPI, not that PPI is measuring in Flatier, a tariff impacts directly, right?
[SPEAKER_02]: Because it is producers' prices is domestic production, but a little look through showed you that the producers themselves had their costs
[SPEAKER_02]: higher, right?
[SPEAKER_02]: And that's exactly, you know, you have the administration celebrating a hundred billion dollars in tariff revenue, but where does that revenue come from?
[SPEAKER_02]: It comes from consumers and it comes from businesses.
[SPEAKER_02]: And a little bit of it comes from the suppliers as well, right?
[SPEAKER_02]: There's not exactly a hundred percent split, you know, cut somewhere or thirty, thirty, thirty, three, but it is obvious that businesses are
[SPEAKER_02]: being inundated with costs that they did not have last year and that seems to be a problem for profitability.
[SPEAKER_03]: Yeah, and if you look at the two estimated companies about nine-dish of them have increased prices, so it's about a third, roughly, and you had profit warnings from about a quarter, sixty-six, let's see, it's seven, it's about a little closer to a hundred of them.
[SPEAKER_03]: have had with they've withdrawn or cut guidance completely.
[SPEAKER_03]: So you're seeing the impact here across the board.
[SPEAKER_03]: It's not the majority of companies that are looking at that are reacting dramatically, but it's certainly they're all reacting in some way shape or form usually the price heights, profit warnings, drawing guidance, supply chain changes, et cetera.
[SPEAKER_03]: So that's how most of these companies are reacting.
[SPEAKER_03]: Well, that about does it?
[SPEAKER_03]: I'm Justin Klein of Luke Rare, and it's another Invest Talk program.
[SPEAKER_03]: And if today's show, maybe think about your own financial picture in any way, maybe your investments, your taxes, your retirement planning, and whether your path current path is really working for you.
[SPEAKER_03]: I encourage you to head over to Invest Talk.com and click on the portfolio review button, and you can say you'll call with myself or Luke, help bring clarity and confidence through the past path that you are on.
[SPEAKER_03]: Now, we encourage you to tell your friends and family about a free podcast.
[SPEAKER_03]: Downloads, which can find any time, I teach Spotify and you haven't.
[SPEAKER_03]: So, already, head over to the new Invest Talk store.com.
[SPEAKER_03]: Independent thinking.
[SPEAKER_03]: Sure, it's success.
[SPEAKER_03]: It's the best talk.
[SPEAKER_03]: Good night.
[SPEAKER_01]: Invest talk is a trademark of KPP financial, because of the nature of the interactive dialogue inherent in the format of this program.
[SPEAKER_01]: It's important for the listener to understand that not all comments made will apply to them.
[SPEAKER_01]: Specifically, nothing sets shall be taken to be investment advice, or shell statements on this program be considered an offer to buy or sell security.
[SPEAKER_01]: Because such advice is rendered solely on an individual basis, and at times will require that the investor review a perspective before investing.
[SPEAKER_01]: Invest talk is a copyrighted program of Plyne, Pavles, and Peasley Financial, a registered investment advisor firm, which retains all rights.
[SPEAKER_01]: For more information regarding KPP's investment advisors, call one eight hundred five five seven fifty four sixty one.
[SPEAKER_01]: Thank you for listening, and your comments and questions are welcome on our twenty four hour listener line at eight eight eight ninety nine chart.