[SPEAKER_08]: on radio on YouTube, streaming live on investtalk.com, and for our podcast subscribers, this is invest talk, independent thinking, shared success.
[SPEAKER_08]: Invest talk is made possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.
[SPEAKER_08]: Here is KPP Financial Chief Executive Officer, Financial Advisor, Justin Klein.
[SPEAKER_07]: Good afternoon fellow investors and welcome back to Invest Talk.
[SPEAKER_07]: This is our Wednesday, January 14th, 2026 edition of Invest Talk.
[SPEAKER_07]: Happy hump day to everybody.
[SPEAKER_07]: We are almost through the middle part of the week.
[SPEAKER_07]: And sooner than the weekend.
[SPEAKER_07]: And
[SPEAKER_07]: It's a long one.
[SPEAKER_07]: We have MLK Day coming up, so reminded everyone the market is closed on Monday, hopefully everyone takes a little time to rest, regroup, so she after a grueling, long holiday, season, and...
[SPEAKER_07]: You know, start to the ear that has certainly caught headlines, that's for sure.
[SPEAKER_07]: And our job here is to help you navigate these interesting times, these trying times, so that you can make better decisions with your money, avoid the pitfalls that are usually driven by fear and greed emotions, and focus on the facts at hand, the reality on the ground.
[SPEAKER_07]: Not the way you wish the world to be, but the way the world is.
[SPEAKER_07]: And that's what we are here to deliver.
[SPEAKER_07]: It goes facts that perspective that you can put the odds in your favor.
[SPEAKER_07]: It's never going to be right at home for the time, but making good decisions based on sound principles and data will put you on the right track to success.
[SPEAKER_07]: So that's what this hour is about each and every weekday.
[SPEAKER_07]: And we mainly answer your findings and have some questions.
[SPEAKER_07]: That's the main point of this show.
[SPEAKER_07]: So I encourage you to call right now at 8.899 chart.
[SPEAKER_07]: Now in just a bit, we'll talk about today's market performance and run down the show topics for the hour.
[SPEAKER_07]: The number one goal on the show is answering your questions.
[SPEAKER_07]: So let's tackle this first-collect question now.
[SPEAKER_02]: I'm Beth Talk, this is Dave's call on from Minnesota.
[SPEAKER_02]: I'm currently calling about the Stock Skywater Technologies, SKYT, is a tip or symbol.
[SPEAKER_02]: I invested in this stock about three or four years ago.
[SPEAKER_02]: It's a chip company.
[SPEAKER_02]: When you guys are talking about buying chip companies that are from the United States.
[SPEAKER_02]: and it's gone out pretty big for me.
[SPEAKER_02]: I'm currently up about 320% of it and it's making up about 4% of my portfolio.
[SPEAKER_02]: This wondering you guys as a view of this stock, are this company moving forward?
[SPEAKER_02]: Do I trim?
[SPEAKER_02]: Do I sell out?
[SPEAKER_02]: What do you guys thought?
[SPEAKER_02]: Thanks.
[SPEAKER_07]: Looking at sky water technologies, SKYT is the symbol and this is a very interesting one because they never heard of it.
[SPEAKER_07]: I've heard of most companies that are listed out there that are thief's decent size.
[SPEAKER_07]: This one's still pretty small about $1.5 billion market cap and it has had quite the rally last April is trading around $6 in change.
[SPEAKER_07]: Now we're at $30 in change.
[SPEAKER_07]: And so the question is what do they do?
[SPEAKER_07]: semiconductor development company meant they do have manufacturing services packaging services and they're located here in Bloomington, Minnesota, obviously Minnesota is going through some trying times, but clearly this is going up and simply of an administration that is really focusing on
[SPEAKER_07]: Domestic producers like an Intel and maybe smaller names like this.
[SPEAKER_07]: So is this something that other companies are going to buy?
[SPEAKER_07]: That's what it looks like to me here because there's just a lose money next year.
[SPEAKER_07]: Yeah, they turned a profit last year and it's in this year.
[SPEAKER_07]: Sorry last year in the year before, but for most of their history, they've lost money.
[SPEAKER_07]: So I'd have to really understand the technology once I haven't heard of it, but it's probably a name that you want to trim at these levels.
[SPEAKER_07]: It's certainly over bought.
[SPEAKER_07]: It's moved a long way in November and it'll lower around $13.
[SPEAKER_07]: And now it's over $30 for shares.
[SPEAKER_07]: So that's a very, very big move for coming doesn't make money.
[SPEAKER_07]: Now, if the narrative shifts, obviously this will round trip that move rather quickly,
[SPEAKER_07]: But I probably wouldn't get rid of it because I do think there is some merit, some momentum to more demand for domestic semiconductor production companies and development companies like this, and so I'd hold on to some of it, but it would be more of a time to rebalance and take some profits off the table.
[SPEAKER_07]: Thanks for the call.
[SPEAKER_07]: Those pivot in take a live call, Christopher Atlanta looking at ORI, which is old republic international.
[SPEAKER_07]: You're under looking to buy it.
[SPEAKER_11]: I've owned it in the past.
[SPEAKER_11]: Looking to get back in, I have zero financials in small portfolio.
[SPEAKER_11]: And this one of always like courses run up a good bit.
[SPEAKER_11]: They're still a good value of this kind.
[SPEAKER_07]: Yeah, so this is actually a name that we own for clients.
[SPEAKER_07]: It's not a sexy name.
[SPEAKER_07]: That's for sure.
[SPEAKER_07]: Old Old Republic is an insurance company about $10 billion market cap and they provide property casually in liability, commercial coverage, title, and mortgage insurance, etc.
[SPEAKER_07]: And it's just an consistent up transfer.
[SPEAKER_07]: So they're in $3.52 next year that will be, sorry, this year now will be an all-time high in earnings, 2.7% dividend yield, not a ton of,
[SPEAKER_07]: earnings growth, 8% last year, 8% this year, but outstripping inflation, that's for sure.
[SPEAKER_07]: And I think there's an underrated play that a lot of people are not paying enough attention to, and it's not just a little heroic with many other names that are in the, you know, the white color work is AI.
[SPEAKER_07]: These, I'm, we're using it internally, you know, and obviously insurance companies are, the same is it's, there's so much more that can be done by the white color worker using AI and making these companies more efficient and more profitable.
[SPEAKER_07]: And already older Republic has consistent mid-teens or turn-equity, just solid, good cash flow.
[SPEAKER_07]: Like I said, cash flow is $1.3 billion on a $10 billion market cap.
[SPEAKER_07]: That's over a 10% free cash flow yield.
[SPEAKER_07]: They're what are they doing with that cash flow?
[SPEAKER_07]: Whether buying back shares, they're obviously paying out that dividend and the dividend, just a big, special dividend recently as well.
[SPEAKER_07]: So yeah, a recently pulled back from the mid 60s into the low, sorry, mid 50s into the low 40s and into some support.
[SPEAKER_07]: So I think this is perfectly a good time to be picking up older public.
[SPEAKER_11]: Also, my appreciation to help.
[SPEAKER_07]: Thank you for the call.
[SPEAKER_07]: That was O R I.
[SPEAKER_07]: Now we're heading into a short break.
[SPEAKER_07]: Lots more to come during this hour, but most importantly, we'll be your live call.
[SPEAKER_07]: So don't hesitate to reach out right now at 8.899 chart.
[SPEAKER_05]: Sirious investors are certain to have finance and investment questions.
[SPEAKER_00]: I'm looking at an EPS in Goldman Sachs, Nasdaq.
[SPEAKER_05]: And the best person to ask your question in the right way is you.
[SPEAKER_05]: If that would be a good hold to having a Roth IRA for the long term horizon.
[SPEAKER_05]: And 24-7 rain or shine, Justin Klein and Luke Guerrero stand ready to provide their unbiased answers.
[SPEAKER_07]: This isn't really a copper plate, this is a iron ore plate with some aluminum copper.
[SPEAKER_01]: If you're looking to eat, you have to hold so few names that are so top-heavy, I think it is probably ill-advised to pay.
[SPEAKER_01]: An expense ratio like this in order to get exposure that you could really get yourself.
[SPEAKER_05]: Your participation makes an invest talk better.
[SPEAKER_04]: Hey guys, Brian, can we carry on here?
[SPEAKER_04]: I'm a big fan of the show.
[SPEAKER_04]: I have a missing episode number five years.
[SPEAKER_05]: So don't forget to call in Vestalk, 888-99 chart.
[SPEAKER_05]: The official numbers are in now with 62 million downloads in Vestalk.
[SPEAKER_05]: Listen live or download the free podcast, call anytime 888-99 chart.
[SPEAKER_07]: 899 chart 899 to 4278 so I could do an answer question on today's show we are going to take another live call.
[SPEAKER_07]: I love these live calls Tom from or Rindic, California.
[SPEAKER_07]: What's your question about Tom?
[SPEAKER_12]: Hi there.
[SPEAKER_12]: My name is Latter Portfolio out five years.
[SPEAKER_12]: I have a bond that will be
[SPEAKER_12]: in 2021, I was looking at the company Petro's Metzaconos figures P-E-M-E-X.
[SPEAKER_12]: What do you think of that company for a bond?
[SPEAKER_12]: It's owned by the Blyam Mexican government.
[SPEAKER_12]: And should I be concerned
[SPEAKER_12]: with all of the stuff that's going on in this administration in this.
[SPEAKER_07]: I think the simple answer is yes you should.
[SPEAKER_07]: What you're probably looking at my guess is you're looking at something that has pretty good credit rating and has a high yield for that credit rating, right?
[SPEAKER_12]: Yes.
[SPEAKER_07]: Yes.
[SPEAKER_07]: And we've looked at that one as well.
[SPEAKER_07]: We do the same searches.
[SPEAKER_07]: And we have a much larger library of investment choices, especially on the bond side than the retail investor.
[SPEAKER_07]: And we stayed away from that one because of that geopolitical risk, not just with Trump and his
[SPEAKER_07]: Now, Mexico, Mexican politics are more stable than many other central and South American countries, but there's still some potential volatility there.
[SPEAKER_07]: Now, does that mean you should avoid it altogether?
[SPEAKER_07]: Not necessarily, but understand that there are a lot of risks.
[SPEAKER_07]: We aren't taking that risk for clients, so I can advise you to do it.
[SPEAKER_07]: But,
[SPEAKER_07]: doesn't mean that it's a bad investment.
[SPEAKER_07]: It just means that you have to go in with your eyes wide open to those potential risks.
[SPEAKER_07]: What happens if President Trump wants to go into Mexico right, hit on the cartels and then do what he's done with then it's way the which is steel the Mexican oil and use it, you know, he's he's it looks like he's going to put it in a own offshore bank account who knows what what happens with it.
[SPEAKER_07]: right, not to the benefit of Petros Mexicano or any other.
[SPEAKER_07]: So, not to say that's going to happen.
[SPEAKER_07]: You know, I said earlier that they're probably going to hit Iran.
[SPEAKER_07]: I think that's very likely here in the near future.
[SPEAKER_07]: Now, Mexico, that's very much up in the air, probably won't happen, but that's not, it's a non-zero risk in today's world, and you just have to be very aware of that
[SPEAKER_12]: Yeah.
[SPEAKER_12]: Okay.
[SPEAKER_12]: Yeah.
[SPEAKER_12]: Thank you very much.
[SPEAKER_12]: I will definitely take care of the consideration.
[SPEAKER_07]: Sounds good.
[SPEAKER_07]: Yeah.
[SPEAKER_07]: My honest opinion is I would stay away from it.
[SPEAKER_12]: Yeah.
[SPEAKER_12]: I would like to thank you very much.
[SPEAKER_07]: Does she with the marginal improvement in yield?
[SPEAKER_07]: You'll probably get it's kind of picking up pennies in front of this team rolling.
[SPEAKER_07]: Now we have a lot of ground to cover over the next 40 minutes or so, and our main focus point is about CPI Day, sticky 3% inflation.
[SPEAKER_07]: We had two days inflation report that was out, and we discussed why the last mile of the inflation fight is proving impossible for the Fed to win without breaking the labor market.
[SPEAKER_07]: So we'll dig into that story, and obviously today's
[SPEAKER_07]: PPI number.
[SPEAKER_07]: So that would be important to cover.
[SPEAKER_07]: In addition, we'll take a look at the bank earnings bank earnings were out as well.
[SPEAKER_07]: What did that look like?
[SPEAKER_07]: How did the market react to it?
[SPEAKER_07]: Apollo Global also coming out in
[SPEAKER_07]: Kind of pulling back the reins on a wrist, and I think that's something to discuss.
[SPEAKER_07]: And then lastly, if we have time, McKinsey, a large consulting firm, is starting to have their consultants use AI assistance.
[SPEAKER_07]: What does this mean for the future of work and white color work, as I said before?
[SPEAKER_07]: So we'll dig into all of that if we have time, that most importantly, we'll be your live calls.
[SPEAKER_07]: Our voice bank, we have voice bank calls on Colo Plast as well as Margin, and then we have some questions that came in earlier on the Invest Talk YouTube channel.
[SPEAKER_07]: And, of course, I welcome your finance and investment questions right now at 8.989 chart.
[SPEAKER_07]: Let's take a look at the market today and it was a decidedly negative day.
[SPEAKER_07]: As that was down 1% overall.
[SPEAKER_07]: And you had some weakness out of some pretty big tech names such as Microsoft down 2.4% meta down 2.5% Google was flat and I think that's a story that is picking up Steam here.
[SPEAKER_07]: Anything around OpenAI and that's
[SPEAKER_07]: AI theme is starting to weaken and video down 1.4% today, broad calm down 4% today, and Google and Apple hanging in there.
[SPEAKER_07]: And Google Apple is using Google for their AI.
[SPEAKER_07]: So it's pretty clear, Google is the winner.
[SPEAKER_07]: As of now, things could change, but there's a lot of potential unwinding that could happen with so many people bedding on open AI and companies linked to it and they amount of investments
[SPEAKER_07]: So I think that's a big theme here.
[SPEAKER_07]: You also had Tesla down one point.
[SPEAKER_07]: 7.9% on the day.
[SPEAKER_07]: So, a day where you had bank earnings which would get to in a little bit, as well as inflation data and the market to continue to rotate out of the growth side of the market and into value.
[SPEAKER_07]: Large-cat growth down 1.79% of the day, whereas large-cat value actually was up over a half percent on the day.
[SPEAKER_07]: So, quite the move in today's market.
[SPEAKER_07]: Now, we're moving you
[SPEAKER_05]: The Invest Talk phone lines never closed and now Justin Klein is here calling Best Talk 888-99 chart.
[SPEAKER_14]: I'm Ms. Hawke.
[SPEAKER_14]: Do you feel dopey here?
[SPEAKER_14]: Calling about colon class took a symbol CML TBY.
[SPEAKER_14]: I said Denmark companies that candles, corn storage for certain marketing care devices.
[SPEAKER_14]: It's been a downturn for a bit now, and I'm wondering if this would be a possible time to take some up.
[SPEAKER_14]: It's profitable as a market cap of around 20 billion.
[SPEAKER_14]: And I think it could be on a little bit of a discount.
[SPEAKER_14]: I love it because there's thoughts.
[SPEAKER_07]: Thank you so much and looking forward to hearing on the show.
[SPEAKER_07]: And these four names are always dealt with definitely out of Denmark.
[SPEAKER_07]: Obviously Denmark is dealing with the Greenland situation right now.
[SPEAKER_07]: This is starting to rally a little bit recently.
[SPEAKER_07]: What I like about it is it's gaining a little bit of momentum on the chart.
[SPEAKER_07]: And it does still have a pretty good
[SPEAKER_07]: valuation or pretty good business with very minimal debt and I like those businesses now the chart isn't showing me enough yet to get me excited about it but it's something certainly to have on watch return equity is 30 sorry 21 and a half percent which is still pretty good with a free cash flow around about 800 million on a 20 billion dollar market cap
[SPEAKER_07]: That's a pretty good ratio there.
[SPEAKER_07]: Now they are paying out a good amount of their dividend.
[SPEAKER_07]: So I wouldn't expect their dividend to increase dramatically in the longer term because of just simply it's not making enough to pay out that dividend consistently over the long long.
[SPEAKER_07]: I would like to see them take some of that cash flow and buy back shares, which they're not doing, but they're not also issuing shares either.
[SPEAKER_07]: So that's kind of the neutral part of the analysis here.
[SPEAKER_07]: So overall, I like it because that valuation and I'm starting to get intrigued by the chart, but it's still in a downtrend.
[SPEAKER_07]: So, I'm not quite there, I would need to get this above the 200-day moving average, which is kind of around the 950 range, 940 range.
[SPEAKER_07]: So, if I can get above, let's say 950, 950, sense right now is that 863, then I would say, okay, the trend has changed, the trend has shifted.
[SPEAKER_07]: And so, I'll be on the watch for that trend shift, and then I would pick it up.
[SPEAKER_07]: Let's see, oh,
[SPEAKER_07]: P-B-Y that is Kolo Plast out of Denmark.
[SPEAKER_07]: Thanks for the call.
[SPEAKER_07]: Let's keep things moving and drop in another fresh listener question now.
[SPEAKER_04]: I'm Justin and Luke and calling today with the question about margin.
[SPEAKER_04]: I know Justin has always said a little bit of margin.
[SPEAKER_04]: It's okay as long as you keep it under control.
[SPEAKER_04]: My question is, so let's just say hypothetically, I borrow $5,000 on margin and use that to buy a stock.
[SPEAKER_04]: And I make up that $5,000 back.
[SPEAKER_04]: Does that mean that I no longer am under margin, and I no longer get charged at interest?
[SPEAKER_04]: Or do I have to recuperate that money by putting it in myself through my own check-in account?
[SPEAKER_04]: Or transferring money into somehow?
[SPEAKER_04]: I'm just curious, if I do bomb any of the margin and I make it back up right away, does that mean that those are my gains that I don't have to pay that interest anymore?
[SPEAKER_04]: information is going to be appreciated.
[SPEAKER_07]: The simple answer is no, it doesn't take you off margin just because you've made money on the stocks that you're your owning.
[SPEAKER_07]: So let's say for example, 100,000 dollars in your account, you, in your example, buy 105 dollars, 5,000 dollars, 105,000 dollars of equities.
[SPEAKER_07]: And it goes to your whole telecom value, it goes to 110.
[SPEAKER_07]: You still are on $5,000 in margin.
[SPEAKER_07]: You have to either, as you said, put money into the account to cover that $5,000 or what you could do is you could sell a little bit of your appreciation and pay off that $5,000 margin debt.
[SPEAKER_07]: Benz on your situation, Benz on what you're looking to do, you're looking to add more capital into your account or not.
[SPEAKER_07]: I always say margin should be used very sparingly, and I think anything more than 5% of your account, your study to get over your skis a little bit.
[SPEAKER_07]: And remember, it costs you money to be on margin.
[SPEAKER_07]: So that $5,000 typically you're going to be paying.
[SPEAKER_07]: minimum probably seven in the upwards of maybe 12% annually.
[SPEAKER_07]: So that means the positions that you're holding have to go up as much or more for you to make profit.
[SPEAKER_07]: And so the calculus over an extended period of time is nine in your favor.
[SPEAKER_07]: So you want to use margin very sparingly.
[SPEAKER_07]: And no, doesn't just magically go away because you made the right that and it paid off in the short term.
[SPEAKER_07]: But if you ever on margin like that, you're doing well.
[SPEAKER_07]: Take a little chips off the table, pay that back, and get a little bit more conservative.
[SPEAKER_07]: It's not conservative to be a 100% invested in equities.
[SPEAKER_07]: It's just not crazy by going on too much margin.
[SPEAKER_07]: Thanks for the call.
[SPEAKER_07]: 8.899 chart, 8.892, 4.278.
[SPEAKER_07]: Do you have time for Tom?
[SPEAKER_07]: Would you not have time for Tom?
[SPEAKER_07]: We will get to Tom from Oregon.
[SPEAKER_07]: He has a call for us after this quick break.
[SPEAKER_05]: Every investor is working to build a secure financial future.
[SPEAKER_05]: The more you learn about how the market works, the better your chances for success.
[SPEAKER_05]: In Vestock, 888-99 chart.
[SPEAKER_07]: Let's go talk to Tom from Oregon.
[SPEAKER_07]: He wants to talk about Airbus.
[SPEAKER_06]: Do you want it or looking to buy it?
[SPEAKER_06]: But as I was looking at buying it, it came up with a foreign transaction fee because I guess it's an unlisted ADR.
[SPEAKER_06]: And I was wondering, is there any way around that?
[SPEAKER_06]: Because it looks like it could end up eating away at potential games.
[SPEAKER_06]: Only solution I potentially found was investing in to an ETF like EAD that held it.
[SPEAKER_06]: But I was just wondering, maybe there are any other options to avoid that.
[SPEAKER_07]: Now, I think it just comes down to which broker has the lowest foreign transaction fee.
[SPEAKER_07]: So, you know, you can limit that fee, but you're not going to get rid of it.
[SPEAKER_07]: And now, I probably wouldn't avoid it altogether just because of that, if it's super attractive, then if the...
[SPEAKER_07]: Number is small enough, compared to the total capital that you lay out, then it probably makes sense.
[SPEAKER_07]: So if it's $50 fee on $50,000, that's not that big of a deal.
[SPEAKER_07]: It's $50 fee on $500 that is a big deal.
[SPEAKER_07]: So it makes the friends on what you're looking allocate to Airbus.
[SPEAKER_07]: Now I like it.
[SPEAKER_07]: aviation, large aviation company out there.
[SPEAKER_07]: Why?
[SPEAKER_07]: Because Boeing has been terrible for the past decade plus on safety, on management, et cetera.
[SPEAKER_07]: And with kind of what's happening if the United States kind of separating themselves from the rest of the world, it has made it so,
[SPEAKER_07]: Investors are moving towards other types of aerospace companies, or are playing manufacturers.
[SPEAKER_07]: Now, we own another foreign plane manufacturer for our clients that can tell you which one it is, but it actually does have an ADR listed on the US exchange.
[SPEAKER_07]: So that may be a way to go.
[SPEAKER_07]: If you're looking for foreign airplane exposure, but
[SPEAKER_07]: I think Airbus is a fine company.
[SPEAKER_07]: It has good profitability, a good balance.
[SPEAKER_07]: The trend is obviously very positive.
[SPEAKER_07]: Turn equity 22%, very minimal debt, pays a little bit of a dividend.
[SPEAKER_07]: So you definitely can't go wrong by buying Airbus.
[SPEAKER_07]: And if that's the name you choose, then I would, as long as it's enough capital, and it's a that foreign transaction is actually a small enough, then I would just go ahead and do it.
[SPEAKER_06]: Okay.
[SPEAKER_06]: Thank you.
[SPEAKER_06]: I appreciate it.
[SPEAKER_07]: Thanks for the call.
[SPEAKER_07]: The Fed promised 2%.
[SPEAKER_07]: But we're stuck at three.
[SPEAKER_07]: We explained why higher for longer is no longer a slogan.
[SPEAKER_07]: It's the reality for 2026.
[SPEAKER_07]: And we had a slew of inflation data.
[SPEAKER_07]: We'll get a little bit more tomorrow with import and export data.
[SPEAKER_07]: But overall, you had PPI and CPI.
[SPEAKER_07]: So yesterday was the big news was about CPI.
[SPEAKER_07]: And it came in at about 2.7% on the straight up CPI core was at 2.6.
[SPEAKER_07]: And today we had PPI in a most real talk about CPI that the PPI is far more important because it's the leading indicator.
[SPEAKER_07]: And that actually re-accelivated a little bit to about 3%.
[SPEAKER_07]: Okay, so what you should probably expect is inflation to re-accelerate in the next 2-3 months.
[SPEAKER_07]: Not dramatically, but mildly.
[SPEAKER_07]: Now overall, the inflation data was in line with expectations, but it was really driven by a few categories.
[SPEAKER_07]: So housing was number one, coming at 3.2% year over year.
[SPEAKER_07]: Sorry, not number one, but the biggest driver because of its weighting, let's show we say.
[SPEAKER_07]: The biggest growth in price was actually in utilities and gas services.
[SPEAKER_07]: So natural gas prices going up, that was up 10.8% year over year, electricity prices up 6.7% year over year, part of that is natural gas, another part of that is increasing demand from AI data centers, and that's gonna be increasingly a hot button issue.
[SPEAKER_07]: Now gasoline prices, year of year would down 3.4 percent.
[SPEAKER_07]: Fuel oil down, sorry, up 7.4 percent.
[SPEAKER_07]: So that was certainly high food away from home, 2.4 percent year of year, food at home, up, sorry, that was 2.4 percent.
[SPEAKER_07]: Food away from home, 4.1 percent.
[SPEAKER_07]: So clearly the labor aside of,
[SPEAKER_07]: Running a restaurant is hitting restaurant owners, they're raising prices, and that is reflected in the data here.
[SPEAKER_07]: So mostly there was a re-acceleration, but modestly so like I said up 2.7% on the day.
[SPEAKER_07]: So the center bank's preferred measure is actually what's called the PCE.
[SPEAKER_07]: personal consumption expenditures index.
[SPEAKER_07]: And that registered 2.8% in its September.
[SPEAKER_07]: We'll get more data on that.
[SPEAKER_07]: But that's something we'll be looking at as more more data comes in.
[SPEAKER_07]: We're still kind of getting back from the government shutdown and getting more data on inflation that can really be trusted.
[SPEAKER_07]: And that goes across the board of a lot of different economic data points.
[SPEAKER_07]: But so far, we're just getting back into the groove here.
[SPEAKER_07]: Fed officials are happy, kind of keeping rates where they're at for a little while.
[SPEAKER_07]: And the reaction from the bond market was kind of muted.
[SPEAKER_07]: You only have the two-year yield drop point O3% on the day, that's 3.52% which usually that means is that that's where the Fed funds is heading, okay?
[SPEAKER_07]: So that's not a lot of cuts over the next year.
[SPEAKER_07]: two-year interest rates, the expectation of two rate cuts by the end of this year.
[SPEAKER_07]: So I could say, not a whole lot of easing from the Fed.
[SPEAKER_07]: So that was the
[SPEAKER_07]: inflation data and we'll get more and more as the like I said the the year goes on you know there's a lot of questions around inflation things like what sectors outperform when inflation is stuck at 3% and the simple answer that are
[SPEAKER_07]: Consumer discretionary people tend to go out and buy, they tend to try to get ahead of the inflation.
[SPEAKER_07]: They also base materials that go into these physical products that typically goes up as well.
[SPEAKER_07]: Obviously gold silver those continue to do well.
[SPEAKER_07]: Sectors that don't do well, typically consumer staples, don't do so hot, tech also typically doesn't do so hot because usually over time, longer term rates go up and you've seen that as of late, that does weigh on liquidity and multiples of those growth year names.
[SPEAKER_07]: Another reason why you're seeing, I think the value set of the market reassert itself to the upside, as opposed to the growth side, really falling on a bed and once again today.
[SPEAKER_07]: And a lot of you are wondering is it,
[SPEAKER_07]: feed into mortgage rates, and the simple answer is yes, if the long and continues to rise, a lot of people are waiting for rates to come back down, and that's simply not happening, and you shouldn't expect it to in a material way.
[SPEAKER_07]: Maybe you get down to a five handle on mortgage rates or low five, I think that could be
[SPEAKER_07]: potential later this year, but I wouldn't expect a forehandle in any way shape or form, even with another couple of rate cuts.
[SPEAKER_07]: I still think you're going to see the mortgage elevated for some time, because that's what inflation is like to this day elevated.
[SPEAKER_07]: Maybe not 7%, but 3%, we're kind of stuck with, I think, for most of the year.
[SPEAKER_07]: Those two that back to the
[SPEAKER_03]: Hello, don't be familiar, thank you for all that you do.
[SPEAKER_03]: As I continue to listen to the podcast that you guys have, it seems like I should start expanding my portfolio to international stocks.
[SPEAKER_03]: So I had VXUS for a while, but I'm trying to explore different ETFs.
[SPEAKER_03]: What I'm hopefully looking for is just an ETF that has a little bit of US stocks, but mostly European and Asia, and it looks like mostly ETFs that I am, including this one, really just have like big exposures to financials and industrials.
[SPEAKER_03]: So am I kind of on the right path right now looking for is SCHF, the right one that I should probably focus on next or should I keep on just putting money into the X U S.
[SPEAKER_03]: Thank you very much and this is probably a medium long term hold between like 10 to 15 years.
[SPEAKER_03]: Thank you very much.
[SPEAKER_03]: Bye.
[SPEAKER_07]: You know, Schwab International Equity SCHF versus the Vanguard Total International Stock Index BXUS.
[SPEAKER_07]: Now, Vanguard is just going to index.
[SPEAKER_07]: There's no real rhyme or reason to the construction of those indices.
[SPEAKER_07]: I mean, there is, it's just the largest.
[SPEAKER_07]: And that's why it's a large cap,
[SPEAKER_07]: as the caller said, international focused, holds about 8600 names and the Schwab one only owns about 1400 names, but still very similar a little bit, smaller in market cap, it's still a blend, still large cap, just a little bit smaller on that front.
[SPEAKER_07]: And let's see, it's a little bit more, let me see.
[SPEAKER_07]: Taiwan semiconductor on the Vanguard one is the largest holding of the three percent.
[SPEAKER_07]: Whereas ASML is the largest holding for the Schwab International one and you're getting a little bit more industrial exposure, which I like 15 and a half from the Vanguard and 18 almost 19 percent for Schwab.
[SPEAKER_07]: Tech is 12 for the Schwab one versus almost 16 percent for the Vanguard
[SPEAKER_07]: So I'm more inclined to go with the Schwab ETF, I think the overall exposure makes a little more sense you're getting.
[SPEAKER_07]: little bit better profitability, little bit better cash returns, free cash flow, returns price to free cash flow is also slightly cheaper as well.
[SPEAKER_07]: So there's just at the margins, I like the portfolio makeup of the Schwab one, better as 14 hernames.
[SPEAKER_07]: It's still very well diversified.
[SPEAKER_07]: And now from a price perspective, let's see which ones cheaper.
[SPEAKER_07]: Yeah, only three base is points from the Schwab one
[SPEAKER_07]: five basis points for the vanguard ones.
[SPEAKER_07]: So surprisingly here, Schwab actually beats it out when it comes to costs.
[SPEAKER_07]: So I'm definitely going with the Schwab International Equity CF over VX U.S. Now let's put it back to another voice call now.
[SPEAKER_10]: Yeah, I'm curious about what you might have as a suggestion
[SPEAKER_10]: for something in the emerging markets for Brazil.
[SPEAKER_10]: If you have any suggestions for emerging markets in Brazil, I appreciate it.
[SPEAKER_10]: Thank you.
[SPEAKER_10]: Bye-bye.
[SPEAKER_07]: Well, I try to repeat this every time someone asked me a question like this.
[SPEAKER_07]: And it's really about the rules around this show, being a licensed advisor and SEC advisor, we're governed by the SEC.
[SPEAKER_07]: I'm licensed, Luke's licensed, et cetera.
[SPEAKER_07]: We cannot make recommendations to people that are not our clients.
[SPEAKER_07]: If you're a client or managing assets, you can call us up.
[SPEAKER_07]: You can ask questions like that.
[SPEAKER_07]: Non-clients, you can ask us about a company we can give you our opinion.
[SPEAKER_07]: But I cannot say, oh, you want to, in this case, a Brazil company, here's a Brazil company you should invest in, does not work like that.
[SPEAKER_07]: So I can't give you a name.
[SPEAKER_07]: But I will say we do own a couple of names in our portfolio, in Brazil, we like certain aspects of their economy, such as materials that may become out of Brazil, some industrial names that may become out of Brazil as well.
[SPEAKER_07]: But
[SPEAKER_07]: It wouldn't be oil names, I'll say that, because once again, I think oil is in abundant supply and it's easy to move around the world.
[SPEAKER_07]: And you can do sanctions on all that.
[SPEAKER_07]: That's why oil prices kind of stay relatively contained here around $60 per barrel.
[SPEAKER_07]: So I like that you're looking at Brazil and I wish I could give you an answer, but I can't.
[SPEAKER_07]: So hopefully that helped.
[SPEAKER_07]: Let's play another call a question now.
[SPEAKER_13]: Hello, I was hoping you could talk about maybe comparing self-buy versus new holdings at SOFI and NU.
[SPEAKER_13]: I was just wondering if you see value in holding both of them or if there was just one like boarding the other.
[SPEAKER_13]: Thank you so much.
[SPEAKER_07]: All right, so looking at SOFI SOFI or new holdings, the new holdings is a Brazilian bank and provides digital platform and services.
[SPEAKER_07]: It's growing considerably and whereas SOFI is a more domestic FinTech company.
[SPEAKER_07]: Aaron is supposed to be 58 cents this year, turning it even higher multiples.
[SPEAKER_07]: It's growing, it's growing fast, but I don't love the, frankly, I'm not in love with either, both are pretty expensive.
[SPEAKER_07]: And I think you're chasing, you're barking up a tree that is frankly fading right now and you can see that with sofy.
[SPEAKER_07]: This one peaked out back and let me go to one year, church here.
[SPEAKER_07]: it peaked out in November kind of similar to the broader NASDAQ and has been in a kind of a mini downtrend ever since peak around there on 32 now it's at 26.
[SPEAKER_07]: So I don't love that momentum and so I wouldn't
[SPEAKER_07]: own that one.
[SPEAKER_07]: When it comes to new holdings, I like the foreign exposure, but I'm also getting the vibes that the momentum is slowing as well.
[SPEAKER_07]: Now, if I'm picking one of the other, I'm picking new holdings.
[SPEAKER_07]: Like I said, I like Brazil.
[SPEAKER_07]: I think there's some growth there that obviously it is picking up good return and equity solid balance sheet, good free cash flow.
[SPEAKER_07]: the chart is much better, then so far, and trading at more reasonable valuations as well.
[SPEAKER_07]: So, if I'm picking one of the other, I'd pick new holdings, but also I'd probably continue to look within the tech space or the fin tech space.
[SPEAKER_07]: That was the best thought.
[SPEAKER_07]: I'm Justin Klein.
[SPEAKER_07]: We have one goal here each every week.
[SPEAKER_07]: They'll help you achieve your own version of financial freedom, and it will work into news after this final break.
[SPEAKER_07]: Good to questions in right now.
[SPEAKER_07]: At 8.99.
[SPEAKER_07]: Chart.
[SPEAKER_07]: Lloyd from Wisconsin, hang on.
[SPEAKER_07]: You will be next.
[SPEAKER_05]: everybody wants to secure financial future, but getting there, takes strategy, discipline, and the right information.
[SPEAKER_05]: That means you'll have finance and investment questions, so don't forget to call, Invest Talk.
[SPEAKER_07]: 888-99 chart.
[SPEAKER_07]: We're going to go talk to Lloyd from
[SPEAKER_07]: And do you own it looking to buy a what brought you to this name?
[SPEAKER_09]: Yeah, this is when I've been slowly adding to, you know, it seems like a pretty good software as a service company in the telehealth, you know, growing space there, good, you know, top and bottom line figures, good balance sheet, buying back shares, good growth seems to be doing a lot of things right, but the stock is really pulled back recently, just curious your opinions on it and if you see this as a good entry price.
[SPEAKER_07]: There is a good business, has a clean balance sheet, free cash, about 300 million, but it's still has an enterprise value of about seven billion.
[SPEAKER_07]: So, only about, that's about a 4% free cash to the yield there, it's okay, not amazing.
[SPEAKER_07]: They're actually issuing shares as of late it looks like we look here.
[SPEAKER_07]: Yeah, they were buying back shares up until the summer of 2024, when they had about 180, 5 million shares outstanding, now they have 180, 8 million shares outstanding.
[SPEAKER_07]: So not a dramatic move in shares, but there are no longer buying back shares.
[SPEAKER_07]: So that's a bit of a worry on that front.
[SPEAKER_07]: Their earnings,
[SPEAKER_07]: are continuing to go up, which is good.
[SPEAKER_07]: But growth is slowing.
[SPEAKER_07]: So that's the issue here.
[SPEAKER_07]: Is last year earnings were up 49%.
[SPEAKER_07]: This year earnings were just the only up 11% and then up 9% next year.
[SPEAKER_07]: So what's happening here is the multiple is simply contracting for good reason, because growth is slowing.
[SPEAKER_07]: Obviously, there is risk of AI's AI going to use
[SPEAKER_07]: kind of their business in any way shape or form.
[SPEAKER_07]: That's a risk here that is non-zero that's risk with all these SaaS companies that you certainly have to be aware of.
[SPEAKER_07]: Now, where is this likely headed?
[SPEAKER_07]: I think it's just headed to about $35 per share that's where it broke out back in
[SPEAKER_07]: the summer of last year.
[SPEAKER_07]: And that's probably where I would think about picking it up.
[SPEAKER_07]: So we're trading on 40 now.
[SPEAKER_07]: We're not far from there.
[SPEAKER_07]: So another 10, 15% down.
[SPEAKER_07]: And certainly the trend is down.
[SPEAKER_07]: The trend is not your friend right here.
[SPEAKER_07]: And so I think it's going to need to hit some major bottom.
[SPEAKER_07]: You're probably going to want to see some big spike in volume as well to mark that bottom.
[SPEAKER_07]: So I'll be looking for that.
[SPEAKER_07]: But overall, I generally like it because of that strong profitability, that strong balance sheet.
[SPEAKER_07]: Free cash flow, that is good, not amazing, but good in near and all time high.
[SPEAKER_07]: So I think that's a positive.
[SPEAKER_07]: So, I think picking it up around 35 would probably be where I would be a bit more aggressive and that'd really get aggressive if I see a spike in volume and a reversal candle.
[SPEAKER_07]: That's what I would be waiting for to really get into this name and earnest.
[SPEAKER_11]: Thank you.
[SPEAKER_07]: Thanks for the call.
[SPEAKER_07]: That was a D.O.
[SPEAKER_07]: C.S.
[SPEAKER_07]: Doc Simity.
[SPEAKER_07]: Doc Simity is the name of the company.
[SPEAKER_07]: Now, lastly, as we close up, let's talk a little bit about bank earnings.
[SPEAKER_07]: We had, well, sorry, we had J.V.
[SPEAKER_07]: Morgan yesterday, which saw profits decline, seven percent due to a,
[SPEAKER_07]: drop in investment banking revenue as well as was more reserve set inside for possible loan losses, so clearly they're seeing some issues from the credit perspective, and then Wells Fargo and City Group reported today.
[SPEAKER_07]: Wells Fargo was down 4.7% City down 3.3% on the day.
[SPEAKER_07]: City reported 13% decline in fourth quarter.
[SPEAKER_07]: earnings and even as revenue was up 2% well as Fargo reported lower than expected income net income as well.
[SPEAKER_07]: And so you have that on top of the fact that President Trump is calling for a Catholic 10% on credit card rates, which that is a profit center for the banks as well as, you know, that would probably crash the economy because banks would just pull credit lines.
[SPEAKER_07]: rather quickly and so I don't really think it's going to happen but certainly it's weighing on these these these companies in the near term and you also saw weakness once again out of the tech consumer discretionary and so it was really a drag on the market today and something that you continue to watch if they're worried about the their profits and the overall economy loan loss reserves continue to rise that is a message that the economy is weakening as we
[SPEAKER_07]: Now I'm just inclined if they show up and make you think about your own financial fiction anyway, your investments, your taxes, retirement, and your broader financial plan I encourage you to head over to invest.com, click on the portfolio review button and schedule a call of myself for a loop, we can go over.
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[SPEAKER_07]: That's the best topic, good name.
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