[SPEAKER_07]: On radio, on YouTube, streaming live on investtalk.com, and for our podcast subscribers, this is Invest Talk.
[SPEAKER_07]: Independent Thinking, shared success.
[SPEAKER_07]: Invest Talk is made possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.
[SPEAKER_07]: Here is KPP Financial Portfolio Manager, Luke Guerrero,
[SPEAKER_00]: Good afternoon fellow investors and welcome back to invest talk.
[SPEAKER_00]: I'm Lou Guerrero and today's Monday, July seventh, twenty twenty five.
[SPEAKER_00]: And I hope you all had it very relaxing weekend and a very safe weekend.
[SPEAKER_00]: You know, my sister for a while was a trauma surgeon.
[SPEAKER_00]: So I know just how dangerous the fourth of July can be with all those fireworks and everything that's going on.
[SPEAKER_00]: So I hope everybody had safe fun.
[SPEAKER_00]: Now that being said,
[SPEAKER_00]: The point of this show is not to talk about the Fourth of July in order to talk about fireworks.
[SPEAKER_00]: It's to talk about the markets.
[SPEAKER_00]: And that's because we as investors care about the things that are going on around us because they help inform our decisions in order to allocate our portfolios to reach our financial goals.
[SPEAKER_00]: And as an investor, you cannot afford to not be paying attention.
[SPEAKER_00]: And so we here at Invest Talk have one objective here.
[SPEAKER_00]: And that is to help make you a better and more informed investor.
[SPEAKER_00]: In order to do that, we bring some things to the table, some educational stories, some actionable items, some checklists from time to time, some warnings.
[SPEAKER_00]: But the most important part of this because the goal of this show is about helping you is to hear from you.
[SPEAKER_00]: for your voicemails, through your iTunes review questions.
[SPEAKER_00]: Over on our email, on our YouTube channel, or live throughout this show.
[SPEAKER_00]: Now, in just a bit, we'll talk about today's market performance and run down the show topics that I have for you.
[SPEAKER_00]: Let's tackle this question now.
[SPEAKER_00]: Hi, this is Mad Miami.
[SPEAKER_01]: Thank you guys so much for everything you do.
[SPEAKER_01]: I love the show.
[SPEAKER_01]: I wanted to get your take on a mining company effort.
[SPEAKER_01]: I'm trying to make it fine as a position as more of a play with copper in the requirements for semiconductors.
[SPEAKER_01]: It's starting to get hot and I'm just curious if you would enter in at any point in time for a position.
[SPEAKER_01]: Thank you so much and have a good day.
[SPEAKER_00]: All right.
[SPEAKER_00]: Let's take a look at FCX.
[SPEAKER_00]: It is a free port and McMurren ink.
[SPEAKER_00]: It is a minor.
[SPEAKER_00]: It's one of the largest publicly traded copper producers and a big producer of gold as well.
[SPEAKER_00]: Now when you take a look at this,
[SPEAKER_00]: business breakdown, right?
[SPEAKER_00]: They have a lot of exposure to their Indonesian operations, and a decent amount of exposure to South America as well.
[SPEAKER_00]: In the coming weeks, we are supposed to hear a little bit more about the administration's tariff policy.
[SPEAKER_00]: We did get today the rates on South Korea and Japan and a handful of other countries, but we should be hearing more soon.
[SPEAKER_00]: Maybe that is why it is one of the, maybe that's one of the reasons why the company is underperforming the market today down to one point four six percent down twelve point four percent on the past fifty two weeks.
[SPEAKER_00]: But in spite of that, probably because of their Q one revenue and bottom line earnings and pricing beat and their copper sales being a bit above guidance, right?
[SPEAKER_00]: This is offsetting some of the market pressures that we've been seeing.
[SPEAKER_00]: It's why year to date the rep eighteen point five one percent with the past three months up forty eight point six percent.
[SPEAKER_00]: Now, we like copper plays because, well, even if the U.S.
[SPEAKER_00]: is slowing down its transition, it is inevitable at this point, right?
[SPEAKER_00]: And there is a market for electric vehicles.
[SPEAKER_00]: There is a market for renewable energy, renewable technologies, and copper is a big part of that, not just in the United States, but globally as well.
[SPEAKER_00]: The big question for me here is given that well, ninety deals and ninety days didn't exactly pan out and forty one percent of their operations are in Indonesia and fifteen percent of operations in South America.
[SPEAKER_00]: You do a lot of risk here from importation costs being a bit higher.
[SPEAKER_00]: I think if you want a copper play that is not a pure play right because they do have a decent amount of exposure to gold if you look at their performance relative to their industry well that's why it's underperforming right because they are more heavily oriented towards copper less oriented towards gold you can see here you know what they are producing
[SPEAKER_00]: in terms of both of these metals and very heavy towards copper.
[SPEAKER_00]: So if you're looking for a non-pure play that gives you exposure, understanding that it's not just a cyclical risk now about well demand being lower production, but I also have the tear for risk from those Indonesian and South American operations, and you can slowly accumulate here
[SPEAKER_00]: Certainly, I would wait to see how the next week or so shakes out in terms of what the numbers, that the White House is proposing, may look like it may adversely affect companies such as these.
[SPEAKER_00]: Either way, though, freeport and more and is a good name, trading at a little bit of an expensive valuation, twenty three point two times forward looking earnings.
[SPEAKER_00]: So a little expensive for now, but I would certainly keep it on my watch list, see how things progress in the coming weeks.
[SPEAKER_00]: That is a ticker FCX, thanks for the call.
[SPEAKER_00]: Got a lot of ground to cover it in the next forty-five minutes or so and here's a little bit of what I have planned for you.
[SPEAKER_00]: My main focus point concerns this question.
[SPEAKER_00]: Will tariffs raise home prices?
[SPEAKER_00]: The newly enacted fifty percent tariffs on imported steel and aluminum are raising construction costs for builders which are likely to be passed on to home buyers thereby worsening what we all know is already a home affordability crisis.
[SPEAKER_00]: We'll also touch on additional tariff which I briefly mentioned, twenty five percent on goods from Japan and South Korea.
[SPEAKER_00]: The president announcing that in letters, public letters, to leaders saying more will come, so we'll touch on that story.
[SPEAKER_00]: And sticking with the home theme, interesting data I saw about first time home buyers.
[SPEAKER_00]: Spoiler, they're nowhere to be seen.
[SPEAKER_00]: And so what does that mean for supply?
[SPEAKER_00]: What does that mean for pricing?
[SPEAKER_00]: What does that mean for your ability to buy a home?
[SPEAKER_00]: Should we have time at the end of the show, we'll dive into why the American economy has been particularly resilient in spite of, well, a lot of pressure coming from all angles.
[SPEAKER_00]: Also, we have some questions from our voice bank ready to play, including one on closed end funds, and one on cloud, a flare, ink, which is ticker and ET, as well as some questions that came in from the comment section of the Invest hockey YouTube channel.
[SPEAKER_00]: And of course, I welcome your finance and investment questions now, or any time throughout the show.
[SPEAKER_00]: Head it into a short break.
[SPEAKER_00]: On the other side, we'll touch briefly on today's market activity, but then we'll dive right back into the questions that you have and you submitted to the any time lesson in line.
[SPEAKER_00]: That number, eight, eight, and ninety nine chart.
[SPEAKER_08]: Serious investors are certain to have finance and investment questions.
[SPEAKER_08]: Wanted to get your take on WW Granger.
[SPEAKER_08]: And the best person to ask your question in the right way is you.
[SPEAKER_08]: I was wondering from your standpoint, they're at downside in buying fractional shares versus whole shares.
[SPEAKER_08]: And twenty four seven rain or shine, Justin Klein and Luke Guerrero stand ready to provide their unbiased answers.
[SPEAKER_08]: The issue, though, is really over the last decade or so.
[SPEAKER_08]: It's never maintained this level of profitability for a long period of time.
[SPEAKER_00]: Modernies are incredibly volatile, so when the going is good, take some profit.
[SPEAKER_08]: Your participation makes an investor talk better.
[SPEAKER_08]: My name is Mike.
[SPEAKER_08]: I'm calling in from Orange County, California.
[SPEAKER_08]: This is Lewis calling from Bolivia.
[SPEAKER_08]: Let's go talk to Chris and me.
[SPEAKER_08]: So don't forget to call investor talk.
[SPEAKER_08]: First off, Rachel, I want to ask you to.
[SPEAKER_08]: Eight eight eight eight nine chart.
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[SPEAKER_08]: Justin Klein and Luke Guerrero provide unbiased answers to your finance and investment questions.
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[SPEAKER_00]: Alright, let's talk a little bit about the market today.
[SPEAKER_00]: U.S.
[SPEAKER_00]: stocks finishing a bit lower, though ending off of their best worst levels.
[SPEAKER_00]: That is, the Dow down ninety four basis points, S&P five hundred down seventy nine, Nasdaq down ninety two, Russell do thousand small caps down at one point five five percent.
[SPEAKER_00]: And this comes in the back of what we saw last week, right?
[SPEAKER_00]: The S&P- five hundred and NASDAQ both retreated today from their prior sessions record highs.
[SPEAKER_00]: Big tech.
[SPEAKER_00]: Bit lower, pretty broadly lower Tesla though, the big decliner from that subgroup.
[SPEAKER_00]: Other underperformers included, looks like semis, networking communication names, insurance names, airlines and credit cards, not a lot of green, but relative outperformers included exchanges, ad chemicals, healthcare distributors, and dollar stores.
[SPEAKER_00]: Treasuries, bit weaker, right?
[SPEAKER_00]: The curve steepened and the long end yields were up about four to five basis points.
[SPEAKER_00]: At the same time, dollar index was up about a thirty and gold finish just fractionally lower ending bit off of the worst levels that we saw trading throughout the day.
[SPEAKER_00]: Big surprise from the top line for me, crude oil settling up a one point four percent percent that is, despite over the weekend, OPEC plus saying, well, we're going to have a larger than expected production hike for August.
[SPEAKER_00]: Typically, you'd expect that to drop prices downward.
[SPEAKER_00]: But from a macro perspective, from an economic perspective, not really much happened, right?
[SPEAKER_00]: You had some over-bought conditions from last week.
[SPEAKER_00]: You did have an expected announcement from the White House Trump began issuing letters to countries that have not concluded a trade deal, so pretty much all of them, beginning with establishing a twenty-five percent base tariff on both Japan and South Korea.
[SPEAKER_00]: It was supposed to be this month.
[SPEAKER_00]: Now it's effective August first.
[SPEAKER_00]: and five other countries, including South African Malaysia.
[SPEAKER_00]: Now at the same time, the White House also said that others should be expected to, or should be expecting letters to come to them with an effective deadline of August first as well.
[SPEAKER_00]: But we did get a report on a positive note from Reuters saying that the EU, not really expecting a letter from the president because of ongoing negotiations.
[SPEAKER_00]: And then to end the day, we got another terrifying announcement, an extra ten percent for countries adopting bricks inspired, quote, anti-American policies.
[SPEAKER_00]: Honestly, not much else affected the narrative today.
[SPEAKER_00]: Nothing on Monday's economic calendar, pretty light economic calendar for the week, broadly, no fed-speak schedule at all.
[SPEAKER_00]: So in terms of events that might drive the markets this week, it looks like Wednesday will see the release of minutes to the June, seventeen, eighteen, the FOMC meeting, and a bunch of treasure experiences.
[SPEAKER_00]: Fifty-eight billion in threes on Tuesday, thirty-nine billion in tens on Wednesday, and twenty-two billion in thirties on thursday.
[SPEAKER_00]: All right, let's keep things moving and get to a question that came in on the invest talk YouTube comment section question bank.
[SPEAKER_00]: This one says wondering what you think of IQ VIA.
[SPEAKER_00]: I've asked about a competitor icon, which you rightly aren't interested in, but IQ V feels like a bit of an opportunity at these levels.
[SPEAKER_00]: All right, IQVIA Holdings, it is a life sciences support company, so they offer analytical systems, clinical research services, and healthcare tech solutions to about a hundred countries and operates primarily within their R&D solutions, contract sales and medical and technology businesses.
[SPEAKER_00]: They've got eighty-eight thousand staff worldwide, so a very established company, twenty-eight billion dollar market cap, and you're today, though,
[SPEAKER_00]: Down about seventeen point three three percent we do know the healthcare sector and not performing particularly well this year but this name is still underperforming the industry by twenty point six percent.
[SPEAKER_00]: Pull that back to a full year down twenty one point nine four percent.
[SPEAKER_00]: Past three months though little bit of reversal up six point one seven.
[SPEAKER_00]: So with that, they're trading at a pretty cheap valuation, thirteen point three times.
[SPEAKER_00]: They're thirteen point two times for looking earnings.
[SPEAKER_00]: And in spite of all this, or rather contrary to all this, they've had some decent financial highlights.
[SPEAKER_00]: Revenue in Q-N-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty-Twenty
[SPEAKER_00]: saw some segment resilience with six point four percent year over your growth for their technology segment.
[SPEAKER_00]: They also started to leverage their relationship with Nvidia and build out some of what they've been trying to do, which has increased their AI enabled healthcare services.
[SPEAKER_00]: And so why is it performing poorly?
[SPEAKER_00]: In spite of this strong EPS performance, a lot of spending.
[SPEAKER_00]: a lot of spending and just a poorly performing industry broadly.
[SPEAKER_00]: And so taking a look at this name, right?
[SPEAKER_00]: In terms of revenue growth, six point eight percent year over year, growth has slowed, but not really that much.
[SPEAKER_00]: That margin still hovering above where they have been.
[SPEAKER_00]: Return on equity, still sitting at twenty two point five percent, particularly to be thirty point eight percent next year.
[SPEAKER_00]: From a momentum perspective, from a momentum perspective, this is not a name you would want to buy, because it is underperforming pretty broadly, and it's relevant strength has lost, okay?
[SPEAKER_00]: Typically speaking, names that are down momentum tend to stay that way in the short to medium term.
[SPEAKER_00]: But from a revenue growth, from an industry growth, from a balance sheet perspective, it's only got thirteen billion in debt, for a twenty-eight billion dollar company, from a cash-low perspective, for cash-foot one point nine to a billion.
[SPEAKER_00]: It doesn't look too bad, and it looks pretty cheap.
[SPEAKER_00]: So when you start to see a technical turn here, this might be a decent name to invest in.
[SPEAKER_00]: That is IQ VIA Holdings, ticker IQ V. Moon and New Break still to come.
[SPEAKER_00]: My main focus point, more answers to your questions, and hopefully some live calls.
[SPEAKER_00]: If you're interested, you want to talk to me live over the next forty minutes.
[SPEAKER_00]: Give me a call at eight eight and ninety nine chart.
[SPEAKER_08]: Luke Guerrero is here, and he's ready with answers to your financial investment questions.
[SPEAKER_08]: Call in Vestock, eight, eight, eight, nine, chart.
[SPEAKER_00]: It's got a Richard in Valencia who has a question about ticker R-E-Z.
[SPEAKER_00]: He honored you looking to buy it.
[SPEAKER_02]: I'm looking to buy it, Luke, I was wondering because looking for something in terms of a reach that is well diversified, but as a mix of commercial as well as residential.
[SPEAKER_02]: And wondered if this particular reach ETF at this price would be a good entry point, and do you think it's
[SPEAKER_02]: a good rate to invest in in the first place.
[SPEAKER_02]: Give it the goal that I'm looking for.
[SPEAKER_00]: Yeah, let's take a look.
[SPEAKER_00]: Well, Res is the I shares residential and multi sector real estate ETF.
[SPEAKER_00]: Unlike what you'd see right from or you'd expect from Res, it actually is in fact a multi sector real estate ETF.
[SPEAKER_00]: It invests in a broad spectrum of US read securities.
[SPEAKER_00]: prior to about September, eighteenth, twenty, twenty.
[SPEAKER_00]: The fun did focus on just residential properties.
[SPEAKER_00]: Now the underlying index is all market caps and it's part of the footsie marry US real estate cap index series.
[SPEAKER_00]: So when you're looking at this, you're going to see a bunch of sub sectors.
[SPEAKER_00]: You're going to see apartments.
[SPEAKER_00]: You're going to see manufactured homes.
[SPEAKER_00]: You're going to see health care.
[SPEAKER_00]: You're going to see a self storage.
[SPEAKER_00]: You're going to see single family homes as well.
[SPEAKER_00]: And it looks like the index also undergoes a quarterly review and applies a twenty two point five percent cap per stock.
[SPEAKER_00]: And so because of that, when you scroll down here, or when I scroll down here, you look at these big greets, the top two being well tower in public storage.
[SPEAKER_00]: Well, instead of about eighteen point nine percent exposure to well tower and about eight point eight four percent exposure to public storage, you can see this breakdown here.
[SPEAKER_00]: If you're watching at home of the various exposures via sector, well, it's all going to be in a reach as understandably would be so.
[SPEAKER_00]: But from these top ten names, you see some pretty broad diversification.
[SPEAKER_00]: What you're looking for is a broadly diversified multi-sector read.
[SPEAKER_00]: Well, it does a pretty good job of attacking mechle.
[SPEAKER_00]: Now, it's expense ratios about forty-eight basis points.
[SPEAKER_00]: It's about in line with what I would expect there.
[SPEAKER_00]: Fairly large fund, about seven hundred and eighty-eight million.
[SPEAKER_00]: Let's take a look at its distribution yield.
[SPEAKER_00]: Here, it's dividend yield, about three point five, six percent.
[SPEAKER_00]: So slightly higher than the segment benchmark, about three point four, six percent.
[SPEAKER_00]: price to cash flow also in line weighted average market cap tends to be smaller as well.
[SPEAKER_00]: Now, if what you're looking for like I said is a
[SPEAKER_00]: broad spectrum exposure, then again, don't be fooled by what the ticker is.
[SPEAKER_00]: This is a broad read managed by BlackRock with again a pretty inline expense ratio, and a slightly higher than what I would expect a dividend yield here.
[SPEAKER_00]: One thing that does worry me a little bit is how concentrated it is, but it is good to know that they do cap
[SPEAKER_00]: some of those things to really work towards that higher diversification.
[SPEAKER_00]: So I think that it does a pretty decent job of attacking the goal you have, especially if it's a longer-term investment, you know, we are seeing some interesting things with REITs as yields tend to move out people tend to push towards bonds.
[SPEAKER_00]: But from a long-term perspective, I think it's a pretty decent ETF.
[SPEAKER_00]: That is ticker, R-E-Z.
[SPEAKER_00]: Thanks for the call, Richard.
[SPEAKER_00]: All right.
[SPEAKER_00]: Let's talk about my main focus point today, which interestingly enough is also about property.
[SPEAKER_00]: So thank you, Richard, for that segue.
[SPEAKER_00]: And it's about our tariffs are new tariffs implemented on July third on steel and aluminum.
[SPEAKER_00]: And what are they going to do for home prices?
[SPEAKER_00]: Well, a fifty percent tariff on imported steel and aluminum began earlier this month.
[SPEAKER_00]: And it's impacting suppliers from China and Canada and Mexico and to South Korea.
[SPEAKER_00]: A survey done by the NIHB found sixty percent of builders reported supplier price hikes.
[SPEAKER_00]: The average estimated additional cost, ten thousand five hundred dollars.
[SPEAKER_00]: Higher material costs as we know about input costs, ten to eventually be passed along to consumers.
[SPEAKER_00]: And so as we're already grappling with historically expensive housing prices, here comes another wrinkled of the picture.
[SPEAKER_00]: And you're starting to see this ripple a little bit across sectors, right?
[SPEAKER_00]: Tariffs could impact notches housing and construction, infrastructure appliances, commercial projects, fabricators, some contractors.
[SPEAKER_00]: And again, you and me.
[SPEAKER_00]: So what can the US do to alleviate some of these supply issues?
[SPEAKER_00]: Honestly, not much.
[SPEAKER_00]: The US doesn't really have the capacity to replace foreign steel and aluminum.
[SPEAKER_00]: That takes years, not days, and certainly not months to fix.
[SPEAKER_00]: We also are cracking down a bit on immigration, if you don't know.
[SPEAKER_00]: And so you may start to see some worker shortages as well from that side, increasing labor costs.
[SPEAKER_00]: Now, you'd think, okay, well, if I'm just going to buy a home, I might be the only one in trouble, but at the same time, it also affects renters as well, because if you have a slow down from a construction perspective of new housing supply, multi-family units, well, that's going to put a crunch on the supply of rental property, meaning that it's likely
[SPEAKER_00]: That, unless that gets resolved, rental prices go up as well.
[SPEAKER_00]: This comes at a time where you already have other reasons for higher prices, credit tightening, economic anxiety, all of these things which are artificially suppressing home buying.
[SPEAKER_00]: And so, it's important to understand if you are looking for a home, if you're looking to invest in real estate, if you're looking to invest in REITs,
[SPEAKER_00]: If you're looking to rent a new apartment, understanding the dynamics that affect the housing market, not just for buyers, but for renters can help you make more informed decisions, not just for your daily lives, but for your investing as well.
[SPEAKER_00]: On the next investor talk, we'll look into this question, does the big, beautiful bill eliminate taxes on social security?
[SPEAKER_00]: President Trump's new bill offers most social security recipients temporary tax relief, but does not eliminate taxes entirely.
[SPEAKER_00]: That's tomorrow.
[SPEAKER_00]: For now, I'm Luke Guerrera, and we are ready to take your calls at eight and eight and ninety nine chart.
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[SPEAKER_08]: It's all there for you now at InvestTalkStore.com.
[SPEAKER_08]: Luke Guerrero is here now, taking your finance and investment questions live.
[SPEAKER_08]: Call Invest Talk.
[SPEAKER_08]: Eight, eight, eight, ninety-nine.
[SPEAKER_08]: Chuck.
[SPEAKER_04]: Hi, Luke and Justin.
[SPEAKER_04]: This is Tanner from Missouri.
[SPEAKER_04]: I have a question about clothes and funds.
[SPEAKER_04]: On Friday show, I heard Luke answer a question about the pinco fund PDI.
[SPEAKER_04]: And he gave a lot of cautionary about leverage and management fees and all these other factors.
[SPEAKER_04]: But he didn't talk about that the fund was trading at like more than a ten percent premium over NAF.
[SPEAKER_04]: someone who mainly invest in ETF I get confused on that premium and in my head that looks like a big risk because if the market is valuing ten percent above the underlying assets that's another factor that if the market were to change its mind that value could drop so what's the best way to think about premium over nav in a closed-in fund
[SPEAKER_04]: and would I be right to be afraid of investing in that due to that factor?
[SPEAKER_00]: Thanks.
[SPEAKER_00]: Question.
[SPEAKER_00]: And so let's take the initial general high level view.
[SPEAKER_00]: Open end funds are funds that are like mutual funds, right, where you're buying and creating shares directly with the fund.
[SPEAKER_00]: Mechanically speaking, if you were buying a mutual fund and open end fund, when your money goes out of your brokerage and buys a share, a share is created, right, at a transfer agent.
[SPEAKER_00]: And then when you redeem a share while that shares destroyed,
[SPEAKER_00]: Close-end funds are different.
[SPEAKER_00]: Close-end funds have a limited amount of shares and they don't issue these new shares whenever you buy.
[SPEAKER_00]: Meaning that the money that you get from an open-end fund is directly from the fund itself.
[SPEAKER_00]: The money you get from a closed-end fund is from another investor who is selling you their shares or a broker to whoever is holding these shares.
[SPEAKER_00]: Open-end funds, ETF's mutual funds, typically don't employ a lot of leverage, though they some of them can.
[SPEAKER_00]: But they also should trade to their nav.
[SPEAKER_00]: They're not asset value.
[SPEAKER_00]: The value of everything that is in that fund.
[SPEAKER_00]: But because the transaction for a closed end fund isn't between me and a mutual fund, but me and investor B, prices driven by more than just the assets that are there.
[SPEAKER_00]: As with anything, any stock, it's driven by demand.
[SPEAKER_00]: It's driven by perception.
[SPEAKER_00]: It's driven by liquidity.
[SPEAKER_00]: There are a whole bunch of things that drive it.
[SPEAKER_00]: And so you can see this divergence, like you see with PDI, between what the NNS value is of the fund and what the shares are traded.
[SPEAKER_00]: And you're right.
[SPEAKER_00]: If the premium is higher, you are taking on the potential for more riskier.
[SPEAKER_00]: For PDI, part of that is probably reputational because PIMCO is such a well respected manager of bonds.
[SPEAKER_00]: Part of it is driven by, well, investors are pretty uncertain about equity markets right now.
[SPEAKER_00]: And so if you can get a fund like that, that's returning what it is in terms of yield.
[SPEAKER_00]: Well, there's going to be a lot of demand for that.
[SPEAKER_00]: But the risk is there.
[SPEAKER_00]: The risk is that it's overvalued.
[SPEAKER_00]: The risk is that demand falls off.
[SPEAKER_00]: The risk is that the yield is cut.
[SPEAKER_00]: And so yes, that is also an important piece of not just that, but any close-end fund.
[SPEAKER_00]: Understanding the divergence in premium or discount an app can help you make a better decision about whether or not you're willing to take on that additional risk.
[SPEAKER_00]: Great question.
[SPEAKER_00]: Thanks for the call.
[SPEAKER_00]: Ready, let's go with another YouTube comment section question.
[SPEAKER_00]: And this one came in a bit earlier.
[SPEAKER_00]: And it's about Z-R-O-Z and S-Gov.
[SPEAKER_00]: Question from Iraq Dawn.
[SPEAKER_00]: Nineteen sixty-four says, I've tried to research this and think I'm good, but what you're opinion?
[SPEAKER_00]: I'm starting some tax loss harvesting and what to sell some ZROZ and by Eskov?
[SPEAKER_00]: Well, I wait for the thirty-day wash rule time to pass.
[SPEAKER_00]: They're not substantially identical in the eyes of the IRS from best I can tell, but the IRS isn't black and white as they tend not to be.
[SPEAKER_00]: The IRS is not black and white.
[SPEAKER_00]: Do you agree, as always, thanks Pakistan.
[SPEAKER_00]: Don, ZROZ is a long duration Treasury ETF, the PIMCO, twenty five plus year zero coupon US Treasury Index ETF.
[SPEAKER_00]: SGOV is a short term Treasury ETF, the I shares zero to three month Treasury bond ETF.
[SPEAKER_00]: And so yeah, from what you are saying and from how the IRS usually interprets these things, they are not substantially similar.
[SPEAKER_00]: Why?
[SPEAKER_00]: Well, they are material materially different in duration, right?
[SPEAKER_00]: One is short term zero to three months.
[SPEAKER_00]: The other is twenty five plus in structure, right?
[SPEAKER_00]: They are different instruments.
[SPEAKER_00]: And so from the IRS's view, the risk profiles different.
[SPEAKER_00]: And because of that, you're not really exposed to the same thing in terms of the wash sale rule.
[SPEAKER_00]: It's difficult sometimes to understand the IRS's interpretations, but when you're looking at fixed income, if the creditors different, the duration is different, the structure is different, those tend to be your hints of whether or not the IRS will consider this a wash sale.
[SPEAKER_00]: Thanks for the question.
[SPEAKER_00]: Let's drop in another caller question now.
[SPEAKER_00]: This came from a listener in New York.
[SPEAKER_06]: Hi, Dr. from New York.
[SPEAKER_06]: Thank you for all that you do.
[SPEAKER_06]: Call in for stock, ticker, cloud flare, NET.
[SPEAKER_06]: I'm asking just for a quick review of the fundamentals, but I'm also asking for a little bit of your two cents about a new product that cloud flare actually opened up.
[SPEAKER_06]: I'm going to try to keep this very simple, but cloud fair is now offering its clients a digital fence so that artificial intelligence
[SPEAKER_06]: does not actually just take all information from free.
[SPEAKER_06]: For example, Vogue magazine actually hired CloudFlare, and they want to make sure that artificial intelligence, jet GPT, doesn't roam their articles.
[SPEAKER_06]: So people can actually go to them first.
[SPEAKER_06]: The podcast we're just talking about how this is a new era of digital protection.
[SPEAKER_06]: They're also setting up a cashier.
[SPEAKER_06]: Meaning that if chatGBT goes to Bog Magazine, they hit the fence, but if chatGBT wants to get their information through, then they right after pay.
[SPEAKER_06]: So I'm just wondering what you think of this idea.
[SPEAKER_06]: I'm probably sure that Cloud Fair is like over expensive right now, but I think this is a really interesting idea.
[SPEAKER_06]: Thank you very much and have a good day.
[SPEAKER_06]: Bye.
[SPEAKER_00]: Cloud Flare, ticker and ET is a global cloud platform.
[SPEAKER_00]: They're security business, right?
[SPEAKER_00]: They offer content delivery developer tools and edge services to millions of websites, apps and APIs.
[SPEAKER_00]: It is a sixty nine billion dollar market cap company.
[SPEAKER_00]: It's got about
[SPEAKER_00]: One point four billion dollars in debt, so not too much debt there, it issues a lot of shares.
[SPEAKER_00]: It is a serial issue of shares.
[SPEAKER_00]: Up from three hundred million, about five years ago to three hundred and fifty million.
[SPEAKER_00]: Now that their cash flow, which was floating around zero until twenty twenty two, started to turn positive, their free cash flow, positive and twenty three, and continues to grow.
[SPEAKER_00]: net income potentially being positive for the first time this year their margin set to maybe be at thirteen point eight percent by fiscal and twenty twenty five for them which comes in December.
[SPEAKER_00]: And because they're negative while they're priced to earnings is a two hundred and eight right they are a growthy growthy growth name.
[SPEAKER_00]: Now, there are about a hundred and twenty one percent in the past fifty two weeks and one of the biggest drivers of this is exactly what the caller mentioned.
[SPEAKER_00]: AI related monetization innovation right from their pay per crawl system that's the tool he mentioned and their AI laborants that's that fence that he mentioned as well.
[SPEAKER_00]: And so this is really interesting right because one of the biggest issues associated with
[SPEAKER_00]: These models, these large language models, is getting data.
[SPEAKER_00]: And there has been a lot of litigation.
[SPEAKER_00]: There has been a lot of scrutiny about scraping everything on the internet without paying, without attributing, without asking the people to whom this content belongs.
[SPEAKER_00]: Now, from an earnings perspective, from a fundamental perspective, Q to earnings looks like continued its AI crontrad growth revenue production, margin maintenance, all look pretty solid.
[SPEAKER_00]: A lot of companies starting to adopt their AI services.
[SPEAKER_00]: And one issue though, right, is competition.
[SPEAKER_00]: The cloud business is big.
[SPEAKER_00]: You have Amazon web services.
[SPEAKER_00]: You have broader IT security companies as well that are more established.
[SPEAKER_00]: Have more foots feet rather in the door.
[SPEAKER_00]: Honestly, for a name that's this expensive, I'm surprised there's not more short interest out there.
[SPEAKER_00]: But from a balance sheet perspective, if they didn't issue a bunch of shares, that probably would be fun with that.
[SPEAKER_00]: Now that they're starting to move into their revenue generating face, you might see that share issue and to drop off.
[SPEAKER_00]: I really do like the idea behind the tools that have driven stock price appreciation over the past fifty two weeks, most of which in the past three months, up to ninety six point oh seven percent in the past three months, but you also nailed on on ahead.
[SPEAKER_00]: This is a very, very, very, very say one more time for clarity, very expensive name, trading at two hundred and eight times for the gear innings.
[SPEAKER_00]: hundred and forty six times cash for thirty seven time sales.
[SPEAKER_00]: The market is banking on a lot of down the road growth associated with these tools.
[SPEAKER_00]: It's even up today when a lot of the market is down seems to be a lot of hype in this name seems to be a lot of buying in this name.
[SPEAKER_00]: I would wait for it to come down a bit.
[SPEAKER_00]: I do like the idea.
[SPEAKER_00]: I do think it has a place.
[SPEAKER_00]: But the risk to the downside a little bit greater than the upside right now.
[SPEAKER_00]: That is a cloud flaring ticker and ET.
[SPEAKER_00]: All righty, let's touch on new tariffs that were announced, not just the ones that we mentioned were implemented already.
[SPEAKER_00]: And that is the twenty-five percent import tariffs on Japan and South Korea, Malaysia and Kazakhstan all set to no longer begin in two days, but rather pushed out to August first.
[SPEAKER_00]: Are they going to be pushed out again?
[SPEAKER_00]: Most likely who knows.
[SPEAKER_00]: Now, one thing that's of note, right, South Africa,
[SPEAKER_00]: It's going to face a thirty percent tariff.
[SPEAKER_00]: Lows in Myanmar hit with a forty percent tariff.
[SPEAKER_00]: I'm not sure how many damage goods.
[SPEAKER_00]: You know how much trade is done with with Lows in Myanmar but still forty percent tariff right.
[SPEAKER_00]: And on top of that.
[SPEAKER_00]: The President warned well if you reciprocate.
[SPEAKER_00]: If you do anything else, we're going to add more on top of that.
[SPEAKER_00]: At the beginning of this whole thing, Liberation Day, the saying was ninety deals in ninety days from Navarro.
[SPEAKER_00]: Yet as of today, there's only the UK and Vietnam that have finalized agreements to avoid.
[SPEAKER_00]: Terriffs, on the back of this, right?
[SPEAKER_00]: You saw this market movement today.
[SPEAKER_00]: You saw companies like Toyota and Honda have their socks fall off by about four percent.
[SPEAKER_00]: And you've seen trade partners scrambling trying to make last minute offer South Korea, Indonesia, Thailand all actively negotiating.
[SPEAKER_00]: The one that's most interesting to me that was announced today is the punitive tariff, right?
[SPEAKER_00]: Ten percent tariff on brick stations that adopt anti-American policies.
[SPEAKER_00]: If you're trying to de-escalate with China,
[SPEAKER_00]: That certainly doesn't seem to be a way to do it.
[SPEAKER_00]: And so this could be that we're starting to see the easy countries to go after first if you will, right?
[SPEAKER_00]: Not a lot of trade with Louss, Myanmar.
[SPEAKER_00]: I have long said, it doesn't really matter what trade deals you get done.
[SPEAKER_00]: China's what matters.
[SPEAKER_00]: If there are no tariffs on anybody else and fifty percent tariffs on China, that's going to be very harmful to US businesses.
[SPEAKER_00]: And so, the coming weeks should be very interesting.
[SPEAKER_00]: What new tariffs are going to be placed on other countries?
[SPEAKER_00]: Or is the can going to continue to be kicked down the road?
[SPEAKER_00]: Because honestly, implementation is just as bad as delay.
[SPEAKER_00]: Businesses being unable to figure out what pricing is going to look like where they should put their factories can be as harmful for the long-term growth of the economy as blatantly raising prices.
[SPEAKER_00]: All right, here comes another question from the investor like voice bank, eight to eight, and ninety nine chart.
[SPEAKER_03]: Hello, Justin or Luke, Chris from New York.
[SPEAKER_03]: Want to get your thoughts on PayPal?
[SPEAKER_03]: I've held it for a little over a year.
[SPEAKER_03]: I'm up a little bit.
[SPEAKER_03]: I'll four percent of my portfolio.
[SPEAKER_03]: Want to get to your opinion is to, I should be adding at these levels or a whole, put looking for a long-term hold, but it really hasn't done much.
[SPEAKER_03]: I do like buybacks, which want to get your thoughts on the stock.
[SPEAKER_03]: Have a look before your answer on the podcast.
[SPEAKER_03]: Thank you.
[SPEAKER_03]: Bye.
[SPEAKER_00]: Paypal is a payment company.
[SPEAKER_00]: It's a FinTech company.
[SPEAKER_00]: Paypal credit, brain tree, Venmo, Zoom, but with an X. Maybe you pronounce it exhum.
[SPEAKER_00]: Anyway, it's a name that we do hold in one of our strategies for some of our clients.
[SPEAKER_00]: Over the past fifty two weeks, up twenty seven point forty percent, up thirty point one six percent, over the past three months.
[SPEAKER_00]: Now the primary reason that it has had been down about ten percent year to date is slower branded checkout and honestly disappointing growth from their brain tree segment and that's pressured revenues downward despite margins looking pretty solid.
[SPEAKER_00]: But, you know, you see a little bit hit towards profitability here.
[SPEAKER_00]: Net income?
[SPEAKER_00]: Still growing though?
[SPEAKER_00]: Net margins?
[SPEAKER_00]: Still growing as well.
[SPEAKER_00]: Trim down from twenty twenty three into twenty twenty four, but projected to grow again.
[SPEAKER_00]: Revenue?
[SPEAKER_00]: Recently saw it up twelve point six percent on an annualized basis and pretty evenly distributed there.
[SPEAKER_00]: From a debt perspective, they have about ten billion dollars in debt on a seventy-six billion dollar market cap company.
[SPEAKER_00]: So, you know, their balance sheet isn't really being inhibited by debt.
[SPEAKER_00]: And it's trading at a decently cheap valuation, fourteen point three times for looking earnings.
[SPEAKER_00]: As I mentioned, we hold it for clients.
[SPEAKER_00]: It's done pretty well over the past three months, and spite of a rough start year-to-date or a rough year-to-date time frame.
[SPEAKER_00]: Now, we like the name.
[SPEAKER_00]: However, given some of the trends with payment, with potentially trying to move away from
[SPEAKER_00]: Some of the payment processors that have historically dominated the business, but you already mentioned it's at about four percent of your portfolio.
[SPEAKER_00]: I think that's a pretty decent weight here.
[SPEAKER_00]: We're still holding on to the name.
[SPEAKER_00]: I don't think I'd buy more because I wouldn't want to go that overweight this name.
[SPEAKER_00]: That is Ticker PYPL PayPal Holdings.
[SPEAKER_00]: This is Invest Talk, I'm Lou Guerrero, and we have one goal here to help you achieve your financial freedom.
[SPEAKER_00]: Our work continues after this break, so get your questions in now at eight, eight, eight, and ninety nine chart.
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[SPEAKER_08]: Call in Vestock, eight, eight, nine, nine, chart.
[SPEAKER_05]: I wanted to talk about stock, ticker, I, T, A, in aerospace and defense index fund.
[SPEAKER_05]: There's obviously a terrible war that's happening.
[SPEAKER_05]: I do create a shield.
[SPEAKER_05]: No, a little at odds asking if this ETF would benefit.
[SPEAKER_05]: But I just wanted to know if this would be a good short-term trade or something like that.
[SPEAKER_05]: Thank you very much for looking for the show.
[SPEAKER_00]: ITA is the I shares US aerospace and defense ETF at tracks a market cap weighted index of US listed manufacturers, assemblers and distributors of aircraft and aircraft parts.
[SPEAKER_00]: It also does have a single cap of about twenty to two point five percent of the funds assets on any individual name yet despite this right there still is a decent amount of concentration risk.
[SPEAKER_00]: Top ten names.
[SPEAKER_00]: Let's make up about seventy five point five two percent of the ETF.
[SPEAKER_00]: Now it's more diversified in terms of revenue than I would initially have expected.
[SPEAKER_00]: Right only sixty one percent of its revenue comes to the United States.
[SPEAKER_00]: Meaning should, you know, Europe or China or other countries decide to
[SPEAKER_00]: Spend less money on a U.S.
[SPEAKER_00]: aerospace and defense companies.
[SPEAKER_00]: Well, this could certainly take a hit, but still, sixty one point eight seven percent of its revenue comes primarily from the U.S.
[SPEAKER_00]: Now, it's not really well.
[SPEAKER_00]: Year to date.
[SPEAKER_00]: A thirty percent year to date.
[SPEAKER_00]: A thirty eight point six two percent over the past three months, up forty two percent over the past year, and you nailed it on the head.
[SPEAKER_00]: Why rising geopolitical tensions?
[SPEAKER_00]: At this point, I think given the, where this is trading, price earnings, sixty five point six two times, slightly less than the benchmark, but still very, very expensive.
[SPEAKER_00]: And they were trading you do have a lot of risk on a short-term basis of de-escalation.
[SPEAKER_00]: These things tend to move not that much and then pretty quickly.
[SPEAKER_00]: And so if you're looking to get into the aerospace and defense industry, I think having a small tilted exposure to it is perfectly fine.
[SPEAKER_00]: But I understand that
[SPEAKER_00]: Tensions have been rising for quite some time.
[SPEAKER_00]: DS Galation doesn't seem to be something that is on the horizon, but that doesn't change the fact that given it's run up this is pretty expensive.
[SPEAKER_00]: That being said, like I mentioned, if your goal is to get into aerospace and defense, decent way to do it expense ratio about forty basis points.
[SPEAKER_00]: gives you broad, bad amount of broad exposures you could probably get by being as focused as you are.
[SPEAKER_00]: That is to your ITA, the I shares US Aerospace and Defense ETF.
[SPEAKER_00]: All right, last story about housing, it'll be a quick one, only one point one million first time buyers in twenty twenty four.
[SPEAKER_00]: Nearly half of the twenty year average.
[SPEAKER_00]: US home sales are on pace for just four million homes in twenty twenty five to the lowest number since nineteen ninety five new home sales fell six percent year over year in May builders offering big discounts up to thirteen percent to attract new buyers.
[SPEAKER_00]: And so with this because of these numbers first time home buyers make up only forty percent of new home sales.
[SPEAKER_00]: And that's because incentives are no longer closing the deal here.
[SPEAKER_00]: U.S.
[SPEAKER_00]: Renner households at the same time hit a record, forty six million.
[SPEAKER_00]: One point two million are trap renters priced out of ownership themselves.
[SPEAKER_00]: Another big part that will affect a lot of people well.
[SPEAKER_00]: Credit score hits, right?
[SPEAKER_00]: Reporting his resumed of student loan design delinquencies, which disqualified an additional two point four million potential borrowers.
[SPEAKER_00]: And at the same time, falling apartment vacancies, rising rents, favor rates, equity residential rates, property rates.
[SPEAKER_00]: And so realize, right?
[SPEAKER_00]: What is happening here?
[SPEAKER_00]: is a trend that you don't often see and one that honestly I don't see much room to get out of here.
[SPEAKER_00]: I saw an interesting chart.
[SPEAKER_00]: This is the last thing I'll leave you with before we end for the day.
[SPEAKER_00]: And that was that people age eighty seven to ninety nine are buying more homes than people aged twenty to twenty nine.
[SPEAKER_00]: Crazy statistic.
[SPEAKER_00]: With rates unlikely to come down meaningfully, with costs likely to be on the rise, I don't see how this deep issue for first-time hope on home ownership changes anytime soon.
[SPEAKER_00]: I'm glad this completes another invest stock program.
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