[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 made possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.
[SPEAKER_01]: Here is KPP Financial Chief Executive Officer, Financial Advisor, Justin Klein.
[SPEAKER_00]: Good afternoon, fellow investors and welcome back to Invest Talk.
[SPEAKER_00]: This is our Monday, February 23rd, 26th edition of Invest Talk and we started for this hour.
[SPEAKER_00]: There's a lot going on in markets when it comes to AI disruptions.
[SPEAKER_00]: It's pretty clear that we are in a new era.
[SPEAKER_00]: And it's going to change the way that various industries operate.
[SPEAKER_00]: And that's going to create a lot of winners and a lot of losers, which means you have to rethink your strategy, your allocation, both domestically and globally.
[SPEAKER_00]: In some ways it's going to be inflationary and other ways it's going to be deflationary.
[SPEAKER_00]: You really have to reset.
[SPEAKER_00]: You're thinking on almost every sector of the economy.
[SPEAKER_00]: And that's where we are here to help you with, help navigate you through these very challenging times, both economically and geopolitically, so over the weekend violence erupt in Mexico.
[SPEAKER_00]: It looks like there's going to be some action taken on Iran and all this impacts markets.
[SPEAKER_00]: Help dial in your strategy.
[SPEAKER_00]: Based on your restaurant's level, your goals, and the current market environment.
[SPEAKER_00]: It would do that by answering your finance and investment questions so that you can get clarity.
[SPEAKER_00]: On the various aspects you have questions about.
[SPEAKER_00]: Your plan, your strategy, it's multidimensional, and it's to fill in those holes.
[SPEAKER_00]: Now, just to be able to talk about today's market performance, run down the show topics, but as usual, we'll tackle this first-color question now.
[SPEAKER_03]: Hey Justin, Luke, Jake here from North Carolina, calling about Craco, Tipper, GGG.
[SPEAKER_03]: Looks like a mid-cap industrial's name specifically in the machinery industry.
[SPEAKER_03]: The business looks like they do far more than just machinery, but just wondering, for sure, pinning on the company at a price point.
[SPEAKER_03]: Thanks so much for listening to podcast.
[SPEAKER_03]: Bye-bye.
[SPEAKER_00]: We're looking at Great Go, G, G, G. They manufacture a market systems and equipment used to move measure mix control dispense and spray fluids and powder materials here in the United States, Europe and Middle East Africa in Asia.
[SPEAKER_00]: So they're worldwide.
[SPEAKER_00]: And so they're in the industrial space when IPO 1986.
[SPEAKER_00]: So they've been around a long, long time.
[SPEAKER_00]: So certainly not a new company and the chart is good.
[SPEAKER_00]: It's strong.
[SPEAKER_00]: It's one of those, they're not calling it the Halo businesses.
[SPEAKER_00]: So heavy asset and what they call low up to lessons.
[SPEAKER_00]: That's what it is, low up to lessons.
[SPEAKER_00]: And this is one of those names.
[SPEAKER_00]: What's it get in the?
[SPEAKER_00]: Industrial space revenue lost quarter grade percent in sale earnings grew 20% So nice growth there 1.2% dividend yields and overall these are the type of names that are likely to do well on-shore manufacturing and clearly it's bucking the trend of the broader market which is rolling over and this is
[SPEAKER_00]: relative strength is 66.
[SPEAKER_00]: So on the top, third of the market over the past year, that's not cheap.
[SPEAKER_00]: I will say that, not trading at the cheapest multiples that they ever traded at.
[SPEAKER_00]: But it's certainly trending well.
[SPEAKER_00]: And when money is flowing, you have to pay attention.
[SPEAKER_00]: And that's the type, but these are the type of names that money is flowing into.
[SPEAKER_00]: love that net cash in their balance sheet.
[SPEAKER_00]: And they recently raised their dividend.
[SPEAKER_00]: So I like it.
[SPEAKER_00]: I like it.
[SPEAKER_00]: Once again, not a bargain, but not too expensive either and I like the trend.
[SPEAKER_00]: Thanks for the call.
[SPEAKER_00]: Now, let's take a live call.
[SPEAKER_00]: Mike from Utah wants to talk about Amazon.
[SPEAKER_04]: Hey, Justin.
[SPEAKER_04]: I just want to tell you I appreciate all that you do.
[SPEAKER_04]: You help us all out a lot
[SPEAKER_04]: just want to let you know that we appreciate you.
[SPEAKER_04]: But on Amazon, I just got to, yeah, this is a different question.
[SPEAKER_04]: So, Amazon, I've kind of noticed like RFK junior in Trump and all of the push to eating healthy.
[SPEAKER_04]: And Amazon owns Whole Foods.
[SPEAKER_04]: So, I'm wondering if this will help, you know, Amazon in that area of business.
[SPEAKER_04]: I want to do your opinion on that because Whole
[SPEAKER_04]: you know that this push towards healthy eating will boost people's motivation to eat healthier and whole food is one of those groceries to you know buy from healthy wise so just wanted your opinion on something like that.
[SPEAKER_00]: Well I do think that's a a secular trend that's but before Trump, before our RFK, I mean I live in I live in Southern California.
[SPEAKER_00]: We've been talking about organic food for
[SPEAKER_00]: since I was in middle school, and this is an area that's been kind of the leader and that's been spreading around the country a bit more and obviously with the Ma'am movement and all that, that is maybe brought it to a wider audience, shall we say.
[SPEAKER_00]: Now, yeah, you know, if that's coming to fruition, you know, have the glyphosate issue, they just kind of rubber stamps.
[SPEAKER_00]: So whether or not they're actually executing it in a material way as another question, but clearly more and more people are wanting to eat healthier.
[SPEAKER_00]: Now, you're correct, whole food.
[SPEAKER_00]: They have Amazon a lot of whole food some years ago.
[SPEAKER_00]: We were out.
[SPEAKER_00]: We were, I remember when we owned Whole Foods when they bought it out, we also owned sprouts farmers market for a while and it rolled over, we had sold it, but it's getting to a reasonable price now and to me, that's a better way to go.
[SPEAKER_00]: You know, you're talking about Whole Foods yes on its own, it's pretty big and frankly, I shopped all the time.
[SPEAKER_00]: It's
[SPEAKER_00]: I hate to admit it.
[SPEAKER_00]: It's so easy.
[SPEAKER_00]: I just jump on the the app and I had the things that I that I typically buy and I added to my cart and it shows up in the matter of hours and the cost of $10.
[SPEAKER_00]: So it's well worth my that $10 to, you know, my time to go there and go through the shopping experience.
[SPEAKER_00]: So.
[SPEAKER_00]: I actually really like that experience.
[SPEAKER_00]: Now, if I'm going to go into the store, I rather go to a sprouts, I rather go to, there's one locally called Mother's Market, that I really like.
[SPEAKER_00]: Actually, it was there yesterday.
[SPEAKER_00]: So,
[SPEAKER_00]: I think there's just better pure play options for you.
[SPEAKER_00]: I like what you're thinking and I like your the the way that you're the long term secular trends that you're expressing, but I wouldn't be buying Amazon for that because it's a I don't know what person pull it up.
[SPEAKER_00]: I have a million systems so I have they're all over the place.
[SPEAKER_00]: So some of them give me different numbers, but if I'm pulling up Amazon I don't know what whole foods would do for Amazon stock.
[SPEAKER_04]: So I kind of get where you're coming from there for not being all play cake.
[SPEAKER_00]: Yeah, it looks like they're so Amazon has
[SPEAKER_00]: 37% of the revenue comes from online stores that's your traditional Amazon business.
[SPEAKER_00]: Then third party seller services that's usually ads in other types of sales on the Amazon sales platform that's 24% so right there, that's about 60% of their business.
[SPEAKER_00]: 18% is Amazon web services and then there's other which is 20% and assuming that Whole Foods is lumped into that other.
[SPEAKER_00]: So it's less than 20% of their overall revenue
[SPEAKER_00]: You're gonna buy, you want to just buy sprouts.
[SPEAKER_00]: I'm not sure if there's another brochure that is more aligned with that, but if you're not going to a public company aligned with healthy eating, pure play, sprouts is kind of the name of the game there.
[SPEAKER_04]: Okay, all right, just appreciate it.
[SPEAKER_00]: No problem, thanks for the call.
[SPEAKER_00]: Then we're going into a break.
[SPEAKER_00]: Please remember that you can call any time, leave your question on the Investock Voice Bank.
[SPEAKER_00]: And if you're listening via our live stream more possibly an AM1220 in the Bay Area, you can call right now at 8 a date, 99 chart and hang on.
[SPEAKER_00]: Because I plan to talk about today's market activity, and I'll talk to Sammy from San Francisco, asking about PayPal.
[SPEAKER_00]: You'll be next.
[SPEAKER_02]: When you tell your friends about Investork and they ask you why you listen, let them know there are many reasons and one is parallel investing from KPP Financial and Investorkos Justin Klein.
[SPEAKER_02]: Parallel investing means Justin invests right alongside KPP financial clients.
[SPEAKER_02]: He makes the same trade for KPP financial on the same day at the same price and the same percentages as KPP clients.
[SPEAKER_02]: There's no front running and no special treatment.
[SPEAKER_02]: In this way, Justin and KPP financials share the same risks and the same potential for success.
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[SPEAKER_02]: Justin, Klein and Luke Guerrero are ready to answer your questions about Parallel Investing.
[SPEAKER_02]: And you can learn more anytime at Investalk.com.
[SPEAKER_00]: Well, let's go talk to Sammy.
[SPEAKER_00]: He is from San Francisco and he wants to talk about PayPal.
[SPEAKER_00]: Hey, Justin, thanks for taking my call.
[SPEAKER_05]: Yeah, I would like to get your thoughts on PayPal as you know, it's been in the news, you know, this morning.
[SPEAKER_05]: And I mean, the talk has been going down, you know, with it.
[SPEAKER_05]: last several weeks or months.
[SPEAKER_05]: And it looks pretty cheap right now.
[SPEAKER_05]: What was your point of view on that in the beginning?
[SPEAKER_00]: It's look pretty cheap for a while to be frank.
[SPEAKER_00]: And you know, it's a it's a name that we've owned in the past.
[SPEAKER_00]: We we sold it when it was kind of losing momentum.
[SPEAKER_00]: And obviously continued lower earnings.
[SPEAKER_00]: But if you used to go in
[SPEAKER_00]: broke down from the high fifties into the high thirties.
[SPEAKER_00]: Now we're trading at 44 after the news today from Bloomberg that there's some takeover interest of the company and it makes sense they have consistent cash flows.
[SPEAKER_00]: There's risks to its business but there's still a lot of businesses
[SPEAKER_00]: And it's a very clean balance.
[SPEAKER_00]: You know, debt, it's taking that about $5.5 billion in free cash flow and pays out a little bit of a dividend, but it's mainly just buying back shares and the more it goes down, the more faster it could just buy back more shares.
[SPEAKER_00]: So I think that's really interesting, still highly profitable, 26% return of equity.
[SPEAKER_00]: So if, I love, you're talking about enterprise value either around six.
[SPEAKER_00]: And it's all like it's business is melting, earnings are revenue last quarter was up 4% and earnings are up 3% last earnings are up 3% So it's not a business that isn't growing, it's growing just, you know, in a small amount, you know, kind of what inflation is.
[SPEAKER_00]: So it makes sense.
[SPEAKER_00]: And I go back to like Warner Brothers, right?
[SPEAKER_00]: Warner Brothers is the midst of this takeover bid.
[SPEAKER_00]: And before this takeover bid, it was bleeding lower for a number of years since the spin-off from AT&T.
[SPEAKER_00]: They'll be really wanted to own it until they started to, you know, once it could get those takeover bids.
[SPEAKER_00]: And it went from $8 to all the way to $29 today.
[SPEAKER_00]: If there are a number of suitors, then I think this does go much higher because it's just absurdly cheap at this time.
[SPEAKER_00]: So I like it.
[SPEAKER_00]: I would like to own it.
[SPEAKER_00]: In fact, I do own it personally.
[SPEAKER_00]: I actually was selling in my P.A.
[SPEAKER_00]: puts and I got put it.
[SPEAKER_00]: had about $50, I sold $50, so I'm down a little bit, but ultimately, I think it's gonna be taken out much higher than the 50, so, you know, that's where, you know, you wanna be selling but it's on these super cheap names because eventually they do turn around when the markets and other businesses within the space start to realize the value there.
[SPEAKER_00]: Okay, thank you, thanks for the call.
[SPEAKER_00]: Now a lot of ground to cover over the next 40 minutes or so, and it's time for meeting, we'll get to all of it.
[SPEAKER_00]: We'll talk about the Japanese surge in the Niki because of political shifts, and there's a historical supermajority win for Japan's governing party, and that has turned the tide on Japanese stock.
[SPEAKER_00]: So we'll talk about that.
[SPEAKER_00]: We also have other topics on the docket as well.
[SPEAKER_00]: The Terrafajim caused to the global marketplace of metals, okay?
[SPEAKER_00]: So we'll talk about that story.
[SPEAKER_00]: Also, the jobs report employment for 2025, it's been revised and it looks like we actually lost jobs last year, so we'll dig into those numbers and then if we have time, nuclear power, nuclear enrichment of uranium or enrichment of uranium is that critical level.
[SPEAKER_00]: So we'll talk about that and what that can mean for the,
[SPEAKER_00]: nuclear market and we have voice bank calls and retirement as well as lift.
[SPEAKER_00]: They're moving to a break, give me a call now at 8.899 chart.
[SPEAKER_02]: Millions of downloads have proved there's value in every invest talk podcast.
[SPEAKER_02]: Call any time 24-7, invest talk 888-99 chart.
[SPEAKER_00]: Let's go dig into today's market news, and it was another, I don't wanna say bloodbath, but in certain sectors, it was overall a very negative day for market, especially on the growth side.
[SPEAKER_00]: You have the NASDAQ down about 1.13% S&P down 1.04% the Dow down 1.66%.
[SPEAKER_00]: Large cap growth down two and a half percent on the day.
[SPEAKER_00]: pretty big losers from IBM, down 13% on the day, uh, what else you had, Sally made down 12, ring central down 12, and a lot of software stocks down big Microsoft down three, meta down 2.8 Tesla down about three, and then in the finance base, a lot of banks from city group, Morgan Stanley, Mastercard,
[SPEAKER_00]: all down four or five percent on the day American Express down seven blackstone down six so more fallout from what did the worries uh the the worries about the problems in the private credit space that i've been warning about for a number of years so obvious and the blue aisle is just kind of finally been the the first shot across the bow in that space in a major way it's kind of like the
[SPEAKER_00]: I was that six eight nine months before the financial crisis and I think this is something similar now as it turned into a full blown crisis probably not but if you own private equity private debt it could get much worse and that's what the market is starting to price in as well as
[SPEAKER_00]: Multiple contracting for a lot of the software names that used to be growing a lot and more worries of whether their business models are going to be challenged in some way or shape or form.
[SPEAKER_00]: So really a lot of weakness in tech finance as well, but there were some strength also.
[SPEAKER_00]: You can see where staples up nicely proctor and gamble up nearly 3% on the day energy up decent x on up 2.3% on the day some of the telecom names are strong utilities were strong transportation was negative with names like door dash and Uber in the red so anything kind of related to related to tech certainly took it on the chin as well and what's interesting is
[SPEAKER_00]: You also had cell-offs in some of the AI infrastructure names that had been strong, a lot of semis were down and industrial names tied to that, certainly were down as well.
[SPEAKER_00]: So that was the tender of the market as we entered this week.
[SPEAKER_00]: And a lot of stem from a satrini research note that gave a hypothetical scenario describing
[SPEAKER_00]: a global intelligent crisis as AI advancements led to a ton of productivity gains and really transform the economy and just the handful of years.
[SPEAKER_00]: And so I think it was a bit of an over exaggeration of the impact, but in general, I think that is the direction that we're moving.
[SPEAKER_00]: I think it's always about the speed.
[SPEAKER_00]: That's always the case when it comes to hot narratives and hot growth stories is
[SPEAKER_00]: There's always some inkling of truth.
[SPEAKER_00]: It's just a matter of how intense it is and how fast moving that change in industry will be.
[SPEAKER_00]: So once again, as I said before, there's a lot of winners, a lot of potential losers as well.
[SPEAKER_00]: And it's going to be a market of landmines for some time.
[SPEAKER_00]: And fortunately for the major indices, and I talked about this in my YouTube video over the weekend, is that most of those landmines are some pretty big companies that have hefty weights in the overall indices, both in tech as well as finance.
[SPEAKER_00]: And
[SPEAKER_00]: If you go look at the S&P, there are four sectors that are the biggest waitings within the S&P.
[SPEAKER_00]: Number one is obviously technology.
[SPEAKER_00]: Number two is financial services.
[SPEAKER_00]: And yeah, there'll be some parts of that market that will be unscathed, but the vast majority are going to be caught up in the AI default cycle.
[SPEAKER_00]: And whether that's private equity or if they lend a private equity, remember a lot of these banks are lending to private equity.
[SPEAKER_00]: And so there can be contagion there as well.
[SPEAKER_00]: So financial services is next up, like I said, there week, so tech financial services week, consumer cyclicals, also week as the consumer weekends and a lot of names within that space like Amazon are struggling and then communication services, same type of thing, being held up a little bit by the telecom names, but you have the Googles and the Netflix in that area as well.
[SPEAKER_00]: And the Metas,
[SPEAKER_00]: and so all of this is means that the broader indices are heavy and that's why you continue to see a lot of deep red even though there are pockets that are still strong.
[SPEAKER_00]: The problem is those pockets are almost not existed within the indices.
[SPEAKER_00]: Materials are doing incredibly well and it's less than 2% than the S&P.
[SPEAKER_00]: Industrials are doing incredibly well and it's only
[SPEAKER_00]: sector.
[SPEAKER_00]: So, pretty interesting times right now, and that's how you sum up today's market.
[SPEAKER_00]: The next investor talk will look into the story, the great American stock Exodus.
[SPEAKER_00]: When U.S. markets lose their crown, U.S. stocks are falling behind international markets in what could signal an epic shift towards global investing, a 40-year-walshuit veteran is telling clients to sell everything American.
[SPEAKER_00]: As the decades long dominance of U.S. equities shows cracks.
[SPEAKER_00]: That story tomorrow, but for now I'm just inclined and ready to take your calls now on 8-8-99 chart.
[SPEAKER_02]: There are a few things that make KPP financial special.
[SPEAKER_02]: One of them is parallel investing.
[SPEAKER_02]: This means they invest right alongside their clients.
[SPEAKER_02]: Here's how it works.
[SPEAKER_02]: When KPP financial makes a trade for their clients, just in line makes the same trade for himself and KPP.
[SPEAKER_02]: On the same day, at the same price, and same percentage.
[SPEAKER_02]: No front running, no special treatment.
[SPEAKER_02]: Learn more about Parallel Investing at Investalk.com.
[SPEAKER_00]: Now, our main focus point concerns this story, Japan's political shift and the NECA surge.
[SPEAKER_00]: And there's a new supermajority in Japan's governing party and that pushed the NECA to 25 up 5% to a record high over 58,000.
[SPEAKER_00]: This is being called the Takachi trade.
[SPEAKER_00]: And there's, it's really about new prime minister
[SPEAKER_00]: And this really grants her a mandate, the strongest mandate, post the World War II, to really pursue aggressive fiscal expansion.
[SPEAKER_00]: And this is one thing you have to remember, they're battling with inflation because of the week yet.
[SPEAKER_00]: And spending is probably going to make that worse,
[SPEAKER_00]: economic growth.
[SPEAKER_00]: And you can see this when you look at sectors within Japan, such as banks, real estate, AI suppliers.
[SPEAKER_00]: This is really a re-exceleration in the overall economy.
[SPEAKER_00]: And we have to remember that the indices, whether that's in Japan or elsewhere, are not priced in real terms, meaning they're not adjusted for inflation.
[SPEAKER_00]: So if you go look at like the whimer republic when the currency was just disintegrating, the indices went dramatically higher.
[SPEAKER_00]: So you can't confuse higher prices in the indices for an automatic win.
[SPEAKER_00]: You have to adjust it compared to other assets, how they're performing, as well as how the currency is performing.
[SPEAKER_00]: Now the good news is that so far the currency has
[SPEAKER_00]: hung in there, at least the good news for Japanese investors, it's not making new lows.
[SPEAKER_00]: In fact, it's well off its lows from mid January.
[SPEAKER_00]: Now, what they're trying to do is what is called defense canesianism, a lot of public private investment, things like
[SPEAKER_00]: and then tax relief on food, so trying to help lowering come consumers.
[SPEAKER_00]: Now what does this mean for investors?
[SPEAKER_00]: Well, investors are buying, not just domestic investors, but global investors as well.
[SPEAKER_00]: Global investors are now net buyers after kind of meandering for years.
[SPEAKER_00]: And mainly because that yen has stabilized.
[SPEAKER_00]: So have interest rates.
[SPEAKER_00]: And this just goes along with the theme that foreign investor, besting is outperforming these foreign markets that have real businesses that have political stability and in today's world, Japan is pretty strong, political stability compared to most.
[SPEAKER_00]: They're getting re-rated higher.
[SPEAKER_00]: And it took a few decades, but they're balance sheets have healed from the misallocation of capital during their real estate bubble in the late 80s.
[SPEAKER_00]: They've made reforms to their business laws as well that is attracting capital.
[SPEAKER_00]: And it's a good example of how these reforms can really help a broader economy.
[SPEAKER_00]: And so that's been certainly helpful.
[SPEAKER_00]: But it's a story that's underappreciated and under discussed.
[SPEAKER_00]: Now, do I like Japan more than, say, countries that are resource rich, like a Brazil
[SPEAKER_00]: Probably not, because they are resource consumers.
[SPEAKER_00]: And so those are some, I think, longer term headwinds as long as well as their debt levels, but reforms can have a meaningful impact.
[SPEAKER_00]: And smart government spending can also have a meaningful impact on that economic growth, including efficiencies, and with their debt levels, efficiencies are what they need to grow out of that debt.
[SPEAKER_00]: So it's a very interesting story and we'll be continue to watch it and I think you should as well.
[SPEAKER_00]: No, let's pivot over to another caller question now.
[SPEAKER_00]: Oh no, are we going to, let's go to an investor.
[SPEAKER_00]: Okay.
[SPEAKER_07]: I'm calling because I just recently started a new job and they have ESPP program and I just wanna see if you guys would recommend joining the program.
[SPEAKER_07]: It is at a discount and it would be for
[SPEAKER_07]: Onto innovations, ticker simple and T-O.
[SPEAKER_07]: Let me know what you guys think about it.
[SPEAKER_07]: I'd be great.
[SPEAKER_07]: Thank you.
[SPEAKER_00]: Oh, and T-O, on to innovations.
[SPEAKER_00]: They make automated integrated measurement and inspection systems for semiconductor and flat panel displays.
[SPEAKER_00]: And this business has been doing well.
[SPEAKER_00]: They're a bit up and down with their earnings, but it general grows.
[SPEAKER_00]: My growth for a couple of years, and I have a setback, et cetera.
[SPEAKER_00]: business.
[SPEAKER_00]: I like the fact that with AI, it's about resource constraints.
[SPEAKER_00]: And, you know, these models are becoming so powerful that it's about how much can you put in place, meaning resources can be replaced, data centers, energy, chips, memory, all of that.
[SPEAKER_00]: And so they provide part of that supply chain and have a good balance sheet.
[SPEAKER_00]: So what he's talking
[SPEAKER_00]: And typically, that's a good thing to be a part of.
[SPEAKER_00]: You're getting a discount.
[SPEAKER_00]: You have to look at your vesting schedule and how long you have to work there to actually get that.
[SPEAKER_00]: But ultimately, if you believe in the business, and you think that they are good allocators of capital, and good stewards of your money, then certainly you should put some money towards that.
[SPEAKER_00]: Now be wary, don't go overboard, probably don't want that to be more than 10% of your overall net worth, but allocating some to that doesn't make sense.
[SPEAKER_00]: Now, when people take a time to leave an investment talk podcast review on iTunes, we'd like to leave them, like to thank them for their courtesy by getting to the questions.
[SPEAKER_00]: Quickly, is Lama Va Dances, ROP is a software company that seems to be threatened by AI.
[SPEAKER_00]: Your thoughts are O.P.
[SPEAKER_00]: That is, roper technologies, they manufacture energy system control, scientific instrument, imaging software, and industrial products.
[SPEAKER_00]: Interesting.
[SPEAKER_00]: Like companies that operate in the industrial space overall, look at this.
[SPEAKER_00]: Yeah, I have to really dig into their products and see how AI might disintermediate some of what they're doing.
[SPEAKER_00]: One issue I have is they do have a decent amount of debt and their profitability is pretty low already.
[SPEAKER_00]: You're talking about a return equity right on 8%.
[SPEAKER_00]: It's not very high.
[SPEAKER_00]: Free cash flow is good, but once again, if they're being as going to disrupt them, well, their current cash flow doesn't mean a whole lot.
[SPEAKER_00]: So it's really a, you're going to have to do a deep dive into this name, and there's a lot of, a lot of babies being thrown out of the bathwater right now.
[SPEAKER_00]: I can't tell you if this is what I have not looked into this one in particular.
[SPEAKER_00]: But I don't love the chart, obviously.
[SPEAKER_00]: Retails, relative strength is 11.
[SPEAKER_00]: It is down from 600, it's high to 335 today.
[SPEAKER_00]: And that high was just back in June, so not that long ago.
[SPEAKER_00]: So overall, I would be very careful to be very wary of this, unless you are very confident that they won't be disrupted.
[SPEAKER_00]: But fortunately, a lot of these software names certainly will.
[SPEAKER_00]: Let's talk a bit about the commodity industry and the trade barriers and the geopolitical environment that's causing this volatility.
[SPEAKER_00]: Free trade, how we knew it for 20, 30 years is somewhat gone.
[SPEAKER_00]: And with friction, the actors within the industries start to change their way of doing business.
[SPEAKER_00]: And initially upon the introduction of tariffs on things like copper, prices here in America searched.
[SPEAKER_00]: In fact, copper features in the US were 30% higher than cash prices on the London middle exchange.
[SPEAKER_00]: Now that was back.
[SPEAKER_00]: earlier last year that premium has narrowed but it's still an issue and it's actually caused a stockpiling here in the US and a deficit around the world and similar dynamics are playing out in silver as well and that's why you continue to see the prices of these things move higher especially the stocks because
[SPEAKER_00]: If you're selling those commodities, you just start to divert your sales to areas where you can get higher prices.
[SPEAKER_00]: And that means higher margins and higher profits.
[SPEAKER_00]: That means higher prices for businesses and consumers, but that's the end result of this friction.
[SPEAKER_00]: And it's not just copper and silver.
[SPEAKER_00]: It's aluminum as well.
[SPEAKER_00]: Trump put a 50% tariff on that metal in June.
[SPEAKER_00]: And today, U.S. aluminum prices are 57% higher
[SPEAKER_00]: Now global trade alert shows that there are three times the number of discriminatory trade policies.
[SPEAKER_00]: You're talking about tariffs, export controls, and sanctions over the last five years put in place that in the preceding five years.
[SPEAKER_00]: So five three times as many and this creates a succession of shocks.
[SPEAKER_00]: And so companies and countries are becoming more focused on resource scarcity, making sure they have what they need, whether that's food, metals, or even energy.
[SPEAKER_00]: China's been buying a lot of Russian oil at a discount and stockpiling that at low prices.
[SPEAKER_00]: That's one of the reasons why oil despite general oversupply and many parts of the world hung in there for, you know, kind of around the $60 per barrel mark.
[SPEAKER_00]: And earlier this month, the United States unveiled a 12 billion-dollar critical mineral stock mile.
[SPEAKER_00]: So what's happening here is these trade barriers are pushing up prices and creating of inefficiencies around the world, which is, once again, bad for consumers, bad for businesses.
[SPEAKER_00]: And investors are catching on.
[SPEAKER_00]: They're buying commodities as a differentiated investment.
[SPEAKER_00]: That supports the rally and further pushes prices higher.
[SPEAKER_00]: And so this is a trend that isn't stopping, because I don't see those trade barriers stopping to you.
[SPEAKER_00]: Just look at the tariffs after Trump one point out, fighting kept almost all those in and then added on top of that as well.
[SPEAKER_00]: So will the next administration do the same?
[SPEAKER_00]: Very possible in a world of protectionist policies
[SPEAKER_00]: and populist policies, this is likely the trend going forward.
[SPEAKER_00]: So this is why those sectors continue to perform.
[SPEAKER_00]: And you have to take notice.
[SPEAKER_00]: Are we going to go to another?
[SPEAKER_00]: Yeah, it's got a one quick voicemail now.
[SPEAKER_08]: Hey, guys.
[SPEAKER_08]: I was calling about C and Q. I think you guys might have talked about being interested in the past,
[SPEAKER_08]: I just want to have no skill to be a good time to get in.
[SPEAKER_08]: I've been, it's been all my watch lists for a while.
[SPEAKER_08]: I just want to hope for a nice healthy pullback.
[SPEAKER_08]: Thanks guys.
[SPEAKER_00]: Are you looking at CNQ, Canadian National Resources?
[SPEAKER_00]: Today we did own for clients for some time.
[SPEAKER_00]: We actually switched out for a different Canadian oil name.
[SPEAKER_00]: That was a bit more diversified.
[SPEAKER_00]: Had some refining capacity, which we really liked.
[SPEAKER_00]: CNQ, which is, once again, Canadian National Resources, certainly a good name, but it's more of a peer play.
[SPEAKER_00]: It's a peer play, E&P, out of Canada.
[SPEAKER_00]: That one problem with Canada, Canadian oil companies is that they are very reliant on the United States, and obviously with trade policies that can be an issue right now.
[SPEAKER_00]: They're trying to build the building a pipeline that goes out to the West Coast and exports products to Canada, it's going to China.
[SPEAKER_00]: And that's going to help a lot of these companies as well.
[SPEAKER_00]: But ultimately, I want something that's a bit more diversified.
[SPEAKER_00]: That's what that was what we ended up doing.
[SPEAKER_00]: We liked the name, but in this environment, because refining capacity is so constrained around the world, that business is just much better than being at the whims of the oil and gas market and Trump policies.
[SPEAKER_00]: Why we like Canadian attribute sources?
[SPEAKER_00]: It's no longer our favorite in the Canadian oil patch.
[SPEAKER_00]: Those are the best stock.
[SPEAKER_00]: I'm Justin Klein, I'm ready to take your calls now.
[SPEAKER_00]: So give me a call now at 8.899 chart.
[SPEAKER_02]: or you learn about how the market works.
[SPEAKER_02]: The better your chances for success.
[SPEAKER_02]: So don't forget to call, in Vestark, 888-99 chart.
[SPEAKER_06]: Hi, Justin, I'm Luke.
[SPEAKER_06]: I bought some lift, LYFT recently.
[SPEAKER_06]: And I paid a much more money, like 18 a share.
[SPEAKER_06]: And now they're like less than 14.
[SPEAKER_06]: And I was thinking, should I buy some more to bring my average cost down, this let me know.
[SPEAKER_06]: I like to show a lot.
[SPEAKER_06]: Thanks so much.
[SPEAKER_06]: Take care.
[SPEAKER_06]: Bye bye.
[SPEAKER_00]: Well, thank you for the kind words.
[SPEAKER_00]: And this is the lesson for everyone here.
[SPEAKER_00]: And that is, don't throw good money after bad.
[SPEAKER_00]: You're down on the trade.
[SPEAKER_00]: out.
[SPEAKER_00]: It'd be one thing if this was in an uptrend.
[SPEAKER_00]: But if you go look at the chart, it's clearly in a downtrend near term and medium term, you have to say, you know, it's probably neutral, where it was back in the summer.
[SPEAKER_00]: And you know, it could have been caught up in the AI hype or AI disintermediation hype, sure.
[SPEAKER_00]: But ultimately, it's
[SPEAKER_00]: And until that changes, you are trying to catch a falling knife.
[SPEAKER_00]: And that's very difficult in this space.
[SPEAKER_00]: Especially when you think about, you know, as lift the leader, no, Uber is.
[SPEAKER_00]: And to me, the biggest threat, both lift and Uber is Waymo.
[SPEAKER_00]: Waymo is clearly winning the autonomous driving.
[SPEAKER_00]: race, it's light years ahead of Tesla or any other platform out there, and they're continue to expand.
[SPEAKER_00]: And so if AI is going to improve that business and many others, well, lift and Uber, I think are long-term in trouble.
[SPEAKER_00]: Now, near-term, I don't think we're going anywhere.
[SPEAKER_00]: But once again, you're chasing after the weakest name within the space.
[SPEAKER_00]: And so I would pass on lift because the technicals, and frankly, I would just sell it and move on.
[SPEAKER_00]: Look at your lesson.
[SPEAKER_00]: Thanks for the call.
[SPEAKER_00]: Now, lastly, let's touch a bit on jobs.
[SPEAKER_00]: There's some interesting comment from Fed Governor Waller, and he said that likely further revisions
[SPEAKER_00]: for last year's figures on jobs will show quote a clear that payroll employment in in the United States probably fell in 2025.
[SPEAKER_00]: It's pretty interesting because the clients in payrolls have rarely occurred outside of recessions.
[SPEAKER_00]: And this is data going back to 1939.
[SPEAKER_00]: It would be only the third year that you had negative employment growth while not in
[SPEAKER_00]: And in January, job creation fell to an average about 15,000 new positions.
[SPEAKER_00]: So the job market is clearly not healthy.
[SPEAKER_00]: I think for some time, and frankly, myself included, I saw the data and I said, you know, it's not terrible, but it's not great either, it's fairly neutral.
[SPEAKER_00]: But then you look under the hood, and job gains were basically in two industries.
[SPEAKER_00]: healthcare and construction.
[SPEAKER_00]: We need more healthcare workers because we have an aging population.
[SPEAKER_00]: We need more construction workers because we have not built enough homes since the financial crisis and a lot of boomers are retiring and not moving and they have their 3% mortgage and so you push that and so you're not unlocking inventory that typically moves and that means once again more need for homes and so that industry is doing okay.
[SPEAKER_00]: But the rest of the economy, not so much.
[SPEAKER_00]: And this is why you're seeing a sharp dichotomy in the economy right now.
[SPEAKER_00]: So I wanted to highlight that because while they're dissented in January, you wanted to cut and you think that you probably want to cut in March as well.
[SPEAKER_00]: But you also want to see about February data, which we'll get here in the next couple weeks.
[SPEAKER_00]: Well, I'm Justin Klein, Mr. Mines, and I'll remind you about KPP Financial's parallel investing when you make a trade for our clients, we make the same trade for ourselves.
[SPEAKER_00]: On the same day, same price, same percentage, no front running, no special treatment, so we invest right alongside our clients, and you can learn more over at investtalk.com.
[SPEAKER_00]: And please tell your friends and family about a free podcast down those, which you can find anytime, at iTunes or Spotify, or check out our videos over on our YouTube channel, and of course be sure to rate and review on iTunes as well.
[SPEAKER_00]: Independent thinking should success.
[SPEAKER_00]: This is Invest Doc.
[SPEAKER_00]: Good night.
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