[SPEAKER_07]: on radio on YouTube, streaming live on investtalk.com, and for our podcast subscribers, this is invest talk, 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 Chief Executive Officer, Financial Advisor, Justin Klein.
[SPEAKER_05]: Good afternoon fellow investors and welcome back to invest talk.
[SPEAKER_05]: This is our Wednesday, February 25th, 2026 edition and it is in video day, the largest market cap company in the world, or can other things after hours and it's moving, not.
[SPEAKER_05]: dramatically up or down it was and now it's faded and this will have a large impact on tomorrow's market and really sentiment around AI and AI infrastructure and you know that is the talk of the town these days what is the long-term impact of this new technology both on the technology sector but also the old economies industrials
[SPEAKER_05]: sectors that are impacted and frankly, every pocket of our economy is probably going to be impacting some way or shape reform.
[SPEAKER_05]: And so we are here to unpack this all for you during this hour and to your finance and investment questions as much as possible and give you data and perspective, so that you can make better decisions with your money.
[SPEAKER_05]: That's what this hour is about.
[SPEAKER_05]: So, and just to be able to talk about today's market performance and run down the show topics,
[SPEAKER_09]: Jared and North Carolina.
[SPEAKER_09]: Listen to the show all the time.
[SPEAKER_09]: I wanted to get your thoughts on energy transfer.
[SPEAKER_09]: The ticker symbol is E. T. Just wanted to get your thoughts on a good entry point.
[SPEAKER_09]: Thank you.
[SPEAKER_09]: Love the show.
[SPEAKER_05]: I'm looking at energy transfer, engage in natural gas, midstream, liquid transportation and storage business.
[SPEAKER_05]: So this is a first off, it's I believe it's still a limited partnership.
[SPEAKER_05]: Yes, it is a limited partnership.
[SPEAKER_05]: First thing you have to remember, all limited partnerships.
[SPEAKER_05]: You will get a K1 that complicates your tax situation.
[SPEAKER_05]: And that income of 7.2% is going to be tax that your ordinary income tax rate.
[SPEAKER_05]: So understand the tax implications of owning something like this, any limited partnership.
[SPEAKER_05]: That's number one.
[SPEAKER_05]: Then you go into what the strength of its business.
[SPEAKER_05]: And I tend to like pipeline companies, they collect a toll to move product through their pipes, and that tends to be a very consistent business.
[SPEAKER_05]: Thought it was capital intensive.
[SPEAKER_05]: They do have a lot of debt in their balance sheet.
[SPEAKER_05]: But they can maintain that as long as their cash flow remains strong.
[SPEAKER_05]: Now one issue is that their cash dividend pay ratio is 120% meaning that their cash flow is started to roll over and now they're paying out more from their cash flows to dividend than they're they're being all of their cash flows plus 20% out in their dividend.
[SPEAKER_05]: It's better way to put it.
[SPEAKER_05]: which means that they are taking on more and more debt in order to pay that dividend debt since late 2023 has gone from $48 billion to $69 billion, okay?
[SPEAKER_05]: And if you go look at the dividend amount, it's been relatively flat.
[SPEAKER_05]: for the past few years, gonna have a little bit, but I don't see why it's going up.
[SPEAKER_05]: Shouldn't really be going up.
[SPEAKER_05]: And one big issue about this whole pipeline space within the US is that
[SPEAKER_05]: Our shale production is starting to flatten out and in certain regions decline and ultimately, when you're collecting tolls on the movement of product, if the product volume goes down and ultimately your cash flows and your earnings go down.
[SPEAKER_05]: And that is a bit of a worry for me.
[SPEAKER_05]: So I don't like that, it's limited partnership.
[SPEAKER_05]: I don't like that it has a lot of debt.
[SPEAKER_05]: I don't like that it's cash flow has started to dwindle.
[SPEAKER_05]: And I don't like the overall trends in the shale space domestically.
[SPEAKER_05]: So overall, I don't like it because of those reasons.
[SPEAKER_05]: Still solid business, but I just think there's too much to overcome and too much risk for the price you're paying for energy transfers.
[SPEAKER_05]: That's E, T, thanks for the call.
[SPEAKER_05]: Now, we'll add a ground to cover over the next 45 minutes or so.
[SPEAKER_05]: And time permitting will get to all of it.
[SPEAKER_05]: And our main focus point is about the housing market revival construction surge signals a new chapter as we enter 2026.
[SPEAKER_05]: Housing starts jumped the highest level in five months.
[SPEAKER_05]: So that helped the construction stocks.
[SPEAKER_05]: So what does this mean for
[SPEAKER_05]: Companies within the market that operate within the housing market economy, and then what does it mean for just the housing market as a whole?
[SPEAKER_05]: With signal as it said, look at that.
[SPEAKER_05]: And then oil, oil is secretly up nearly 20% on the year.
[SPEAKER_05]: What does that mean for inflation figures and how that might feed into fide policy?
[SPEAKER_05]: Well, dig into that.
[SPEAKER_05]: And we had an announcement on tariffs, but President Trump pivoted and he's imposing a new temporary 15% global tariff.
[SPEAKER_05]: That was interesting is this so far, it's been implemented at 10%, even though he announced 15% will see if it goes there.
[SPEAKER_05]: But who are the winners and who are the losers with this tariff shift?
[SPEAKER_05]: And then lastly, if we have time,
[SPEAKER_05]: kind of connecting to the oil market, but in that inflation print, but there's a new FedPher, or FedPresent, Raphael Bostick, that is stepping down at the end of this month.
[SPEAKER_05]: It's again, to this week.
[SPEAKER_05]: And his comments are pretty interesting, what they might mean for future policy as well.
[SPEAKER_05]: So we'll take into that.
[SPEAKER_05]: We also have voice bank calls, one is on retirement, and the other is on Valle, Vee, and of course, we have questions that came in via the comment section over on the Abestaki YouTube channel as well, and of course I welcome your finance and investment questions right now.
[SPEAKER_05]: We're heading into a break and we welcome your finance and investment questions, whatever is on your mind, no question is too simple or too complex, give us a call here in Abestaki 8889 chart.
[SPEAKER_06]: When you tell your friends about Investor, and they ask you why you listen, let them know there are many reasons and one is parallel investing from KPP Financial and Investor Coast Justin Klein.
[SPEAKER_06]: Parallel investing means Justin invests right alongside KPP financial clients.
[SPEAKER_06]: He makes the same trade for KPP financial on the same day at the same price and the same percentages as KPP clients.
[SPEAKER_06]: There's no front running and no special treatment.
[SPEAKER_06]: In this way Justin and KPP financial share the same risks and the same potential for success.
[SPEAKER_06]: Parallel Investing aligns the interests of Justin and KPP Financial with those of his clients.
[SPEAKER_06]: Justin, Klein and Luke Guerrero are ready to answer your questions about Parallel Investing.
[SPEAKER_06]: And you can learn more anytime at InvestTalk.com.
[SPEAKER_06]: Your questions are free.
[SPEAKER_06]: The answers are unbiased.
[SPEAKER_06]: Justin Klein is here now.
[SPEAKER_06]: Ready to take your calls live.
[SPEAKER_06]: Invest talk.
[SPEAKER_06]: 888-99 chart.
[SPEAKER_05]: Meltska take a look at the market today.
[SPEAKER_05]: It was a nice little bounce back day in, and I think anticipation of a potential
[SPEAKER_05]: Great earnings announcement from Nvidia so far.
[SPEAKER_05]: It's kind of falling flat.
[SPEAKER_05]: Nvidia's about neutral after hours.
[SPEAKER_05]: But you did have a nice bounce back from the softwares patch from really the mag seven overall.
[SPEAKER_05]: Microsoft was up 3% of the day, met up over 2% on the day, Tesla up 2%.
[SPEAKER_05]: You did have some weakness out of some of the AI.
[SPEAKER_05]: Infrastructure plays, names like AMD, GE, we're down, you had Rayceon down, Lockheed Martin.
[SPEAKER_05]: I think the defense industry was down a little bit with some hope, I think, that President Trump would announce on his day of Union yesterday that we were going to move on Iran in some way, but he didn't really announce that.
[SPEAKER_05]: He just kind of talked about it briefly.
[SPEAKER_05]: So that was a bit of a disappointment for those stocks at least you had health care down a little bit as well.
[SPEAKER_05]: So the the areas that had been gaining over the past number of weeks or really since the beginning of 2026.
[SPEAKER_05]: They were either flat to down and then the ones that were struggling bounce back.
[SPEAKER_05]: So we'll see maybe that's a brief short covering rally.
[SPEAKER_05]: It's one day, it doesn't really tell us a whole lot.
[SPEAKER_05]: If you look at the NASDAQs about one and a quarter percent, S&P up about 81 basis points.
[SPEAKER_05]: and the Dow up about two thirds of 1%.
[SPEAKER_05]: So that was the broader market today.
[SPEAKER_05]: The dollar next was down point two percent gold was up 1% silver up 4% back above $90 per ounce for silver.
[SPEAKER_05]: Bitcoin features definitely bounce back and you definitely could see a, I think a bear market rally here.
[SPEAKER_05]: Senate was pretty poor over the past couple of weeks.
[SPEAKER_05]: talking about the demise of Bitcoin and I've been saying, I think we're in a downtrend probably until next year, but you're always going to have these kind of trend rallies.
[SPEAKER_05]: And those cash and rallies tend to be actually stronger than normal bull markets, meaning
[SPEAKER_05]: You look at today, up to 7.4 percent.
[SPEAKER_05]: Bull markets is just kind of a grind higher, you know, one, two percent a day, and overall it's constructive and healthy.
[SPEAKER_05]: When you get a rally like this, that's so strong, it kind of tells you that short covering and, you know, forced buyers forced, uh,
[SPEAKER_05]: people forced to get back in for some reason.
[SPEAKER_05]: And so that's why it was pushed up.
[SPEAKER_05]: WTI crude ended down.
[SPEAKER_05]: Point three percent on the day once again around the disappointment around AI Iran and go US air strikes on Iran.
[SPEAKER_05]: I still think we get there.
[SPEAKER_05]: I don't think we move this much military might into the region without actually
[SPEAKER_05]: some sort of action.
[SPEAKER_05]: And my guess it happens over the next month or so.
[SPEAKER_05]: Treasures where weaker yields up about one to two basis points across the curve.
[SPEAKER_05]: So that was the market today, and we'll see how the market reacts to and videos earnings to Marrow.
[SPEAKER_05]: Now let's do take a live call.
[SPEAKER_05]: Frank from Fremont, looking at A, B, B, and Y.
[SPEAKER_05]: What do you know about it?
[SPEAKER_10]: Hi, I'm calling because this is an auto let's say it's about automation and electrification and I really like this company and I had a question because every time I try to buy or sell this stock it's a conditional order versus other stocks on this app that I use I could buy any fraction of a stock I want.
[SPEAKER_10]: I was just wondering, is there any risk in this stock as far as, like, if I wanted to invest a little bit more into it, as far as your overall guidance and why I have to do a conditional order for this particular stock?
[SPEAKER_05]: What app are you using?
[SPEAKER_05]: So fine.
[SPEAKER_05]: And it is an OTC stock needs over the counter.
[SPEAKER_05]: Now, this is ABB limited.
[SPEAKER_05]: And this used to actually have it domestically.
[SPEAKER_05]: Listed ADR, meaning it was traded on, I think in New York Soccer Exchange, or NASDAQ, I don't know which one it was back in the day, but it came off that exchange and now it's over the counter.
[SPEAKER_05]: And so that's what you're dealing with.
[SPEAKER_05]: There's going to be probably extra fees as well, buying an over the counter for in a company like this.
[SPEAKER_05]: So just be aware of that.
[SPEAKER_05]: It doesn't mean it's
[SPEAKER_05]: more risky.
[SPEAKER_05]: This is a 167 billion dollar market cap.
[SPEAKER_05]: It's want to get used to be listed here on domestic exchanges.
[SPEAKER_05]: It's profitability is really strong.
[SPEAKER_05]: It's balance sheet is arguably even stronger.
[SPEAKER_05]: And cash flow continues to power to the upside now.
[SPEAKER_05]: The question is, is it to expensive after this big run?
[SPEAKER_05]: Because it's from an enterprise value to even a perspective,
[SPEAKER_05]: meaning three about 21 times enterprise value to EBITDA.
[SPEAKER_05]: So I worry a bit about the valuation, but once again, it's a good business.
[SPEAKER_05]: Business is growing.
[SPEAKER_05]: I love the area that it's in and momentum is strong.
[SPEAKER_05]: But I understand that you're not getting a bargain based on a pricey here.
[SPEAKER_05]: And I would understand that there are cost there.
[SPEAKER_05]: You know, a couple hundred bucks into this name, you know, the transaction cost of buying a foreign stock might be too high.
[SPEAKER_05]: You know, you go back to paying commissions again.
[SPEAKER_05]: And so if you're going to fire on it, make sure that it's a reasonable amount to make up for whatever commission you might pay.
[SPEAKER_10]: Got it.
[SPEAKER_10]: Awesome.
[SPEAKER_10]: Thank you very much.
[SPEAKER_10]: I appreciate them.
[SPEAKER_05]: No problem.
[SPEAKER_05]: Thanks for the call.
[SPEAKER_05]: Those A, B, B, and Y, A, B, B, limited A, B, R, once again, domiciled in Switzerland.
[SPEAKER_05]: They were heading into a break.
[SPEAKER_05]: I welcome your finance into any best of questions.
[SPEAKER_05]: Right now, no question.
[SPEAKER_05]: It's too simple or too complex.
[SPEAKER_05]: Whatever is on your mind, money related, you set the agenda.
[SPEAKER_05]: I can talk about whatever is on my mind all day.
[SPEAKER_05]: I don't want to blow a V8 like that.
[SPEAKER_05]: I want to hear what's on your mind.
[SPEAKER_05]: So give, invest talk to call right now.
[SPEAKER_05]: It eight, eight, eight, nine, nine chart.
[SPEAKER_07]: Invest talk is ready 24-7 for your finance and investment questions.
[SPEAKER_00]: I'm hoping you'll give me your take on or Matt Technology.
[SPEAKER_00]: O-R-A.
[SPEAKER_08]: Is it a good idea to sell your losses in a Roth IRA and just use whatever you have left to reinvest into better stocks?
[SPEAKER_07]: Don't forget to call.
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[SPEAKER_06]: In the early days, Invest Talk was Jerry Klein and Steve Peasley.
[SPEAKER_06]: Now the torch has been passed and a new generation of hosts is on the job, Justin Klein and Luke Guerrero.
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[SPEAKER_05]: Let's go back to the barrier and talk to Sammy in San Francisco wants to ask about Netflix.
[SPEAKER_01]: Hey, thanks Justin for taking my call.
[SPEAKER_01]: Yeah, it looks like Netflix has hit the bottom and it is starting to bounce back.
[SPEAKER_01]: Do you think there's a good time to get in or should I wear some more?
[SPEAKER_05]: Well, I will say from a technical perspective, this is pretty good support.
[SPEAKER_05]: Now, one of the reasons that it rallied over the past a couple of days is because it looks like Paramount is raising their offer for Warner Brothers.
[SPEAKER_05]: And that could basically take out the Netflix offer.
[SPEAKER_05]: And one of the reasons this has been in decline
[SPEAKER_05]: The markets worried that I think they're looking at buying them for something of $80, $90,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,
[SPEAKER_05]: That ultimately is going to take away from their ability to, you know, buy back shares and it just makes them a risky endeavor, which reduces the multiple that they should trade at.
[SPEAKER_05]: And that's really what's happened here in a material way.
[SPEAKER_05]: So that is the big worry is that, or not, the big worry, the big relief rally.
[SPEAKER_05]: It's it's all around the paramount actually coming in and winning the bid.
[SPEAKER_05]: TBD.
[SPEAKER_05]: Netflix clearly has more, it is more, more cashier, it has more financial flexibility, Skydance, Paramount Skydance has a lot of debt itself, so there are some issues on that front.
[SPEAKER_05]: So it's still a lot of TBD on whether or not, which direction this is going to go.
[SPEAKER_05]: But I generally like the resources reward here.
[SPEAKER_05]: It's still not over cheap in my mind, but it's the cheapest Netflix's ban, basically sends the beginning of 2024.
[SPEAKER_05]: So, you know, I think there's an argument that this is a pretty good place from risk reward perspective.
[SPEAKER_05]: Now, it doesn't mean that it's not with that.
[SPEAKER_05]: It's risk it can't turn back over, because it hasn't,
[SPEAKER_05]: gotten above any really major moving averages.
[SPEAKER_05]: It's still even below the 50-day moving averages.
[SPEAKER_05]: It's just got above the 20-day moving average, which has basically been below since November.
[SPEAKER_05]: And until it recovers the 50, then unless it recovers the 50, it's still in a downtrend.
[SPEAKER_05]: So we'll see if there's some follow-through.
[SPEAKER_05]: It's only been two days, but I generally like what I'm seeing, but once again, a lot just depends on whether they actually win the bid for one or others.
[SPEAKER_05]: Thank you.
[SPEAKER_05]: Thanks for the call.
[SPEAKER_05]: Yeah, Netflix is starting to be interesting down here.
[SPEAKER_05]: We'll see if they they win this.
[SPEAKER_03]: Those pivoted back to the investment stock voice bank for a question that came in earlier on 20 on the 24-7
[SPEAKER_03]: off the gold minor.
[SPEAKER_03]: They got really really high.
[SPEAKER_03]: But my question is this, does my plan to retire in the next four years and I have 30% of my portfolio, my wife's retirement account, of course she has not because she was working with me.
[SPEAKER_03]: I was wondering if I needed to fully start building up a 20 or 30%
[SPEAKER_03]: additional exposure to accounts for her accounts in other words, her account in my account put together for both of us as partners next couple of years, over and above because the usual asset allocation.
[SPEAKER_03]: So, your thoughts for future retirees, what percentage when you combine the two spouses together at least in a commodity marketplace?
[SPEAKER_05]: Thank you.
[SPEAKER_05]: Bye-bye.
[SPEAKER_05]: Well the general thought is good here is
[SPEAKER_05]: understanding your full allocation with all of your assets, not just, you know, you're with that one account, it's looking at your wife's money as well and looking to big pick at the big picture of something we do when we do portfolio reviews for listeners is put all of their assets into our system and what does it look like in aggregate, you know, from a sector perspective, from an asset allocation perspective, meaning stocks, gold, commodities, bonds, etc.
[SPEAKER_05]: 30% in this environment, I think it's perfectly fine.
[SPEAKER_05]: I would certainly want to be building up the exposure elsewhere, probably more on pullbacks, but I would be looking to add to that.
[SPEAKER_05]: Now, you didn't give me numbers, and so I would really need to see, what is the total value?
[SPEAKER_05]: It's 30% in one account, but if you combine everything,
[SPEAKER_05]: You know, as it's still 30 is a 20 is a 10.
[SPEAKER_05]: I don't know.
[SPEAKER_05]: So really you should be building it up, but if you want to do a portfolio view, I would encourage you to head over to our website, CapeFinancial.com or investtalk.com, and then submit your statements, we would run a full analysis, and we can tell you what your real true exposure is to the commodity space.
[SPEAKER_05]: Now, I'm moving into a break, still to come.
[SPEAKER_05]: My focus point, and more answers to your questions, so I encourage you to call now on the best stock at eight a day, and you need an answer.
[SPEAKER_06]: Justin Klein is here and he's ready with answers to your finance and investment questions call in Vestalk 888-99 chart now I made a focus point is about the housing markets and we had some delayed data come in recently about new home construction
[SPEAKER_05]: that rebounded in the final couple of months and beat analyst expectations.
[SPEAKER_05]: Construction of new US homes in the homes arose 6.2% at an annual pace of 1.4 million.
[SPEAKER_05]: Highest level since July.
[SPEAKER_05]: And a lot of this had to do with inventory is being drawn down, drawn down, and you saw, more graduates come down a little bit and they'll come back up as of late.
[SPEAKER_05]: But,
[SPEAKER_05]: During this period, mortgage rates were coming down, and that certainly helped move inventory.
[SPEAKER_05]: The expectations were only a 5.1% increase to 1.31 million, so definitely be that.
[SPEAKER_05]: And then building permits.
[SPEAKER_05]: That rose 4.3%.
[SPEAKER_05]: That's the higher.
[SPEAKER_05]: That's higher than the 1.4 million rate expected by Wall Street, came in at 1.45 million.
[SPEAKER_05]: And it's heavily concentrated on single family homes.
[SPEAKER_05]: So the boom in multi-family and apartments is really gone.
[SPEAKER_05]: It's really about plugging the whole of new home buyers and move up buyers.
[SPEAKER_05]: And that's really what is, you know, with so many people locked in through some mortgages, there's not a lot of inventory out there on the existing home market.
[SPEAKER_05]: So the new home builders are plugging that hole.
[SPEAKER_05]: Now there are still some headwinds for the space as a whole, which is mortgage rates.
[SPEAKER_05]: Once again, they've come down a little bit, but they're still relatively high and much slower population growth.
[SPEAKER_05]: Those are the two.
[SPEAKER_05]: big issues, and then also prior over construction.
[SPEAKER_05]: So, and that's what's getting mainly in the multi-family space.
[SPEAKER_05]: So, builders are facing other challenges as well, such as labor shortages, lately there are about 300,000 job openings in the construction industry as of December.
[SPEAKER_05]: So what you're seeing here is despite an economy that clearly is backsliding into what is could be a recession by your end.
[SPEAKER_05]: The labor market clearly is in a recession.
[SPEAKER_05]: You had flat to negative job creation last year.
[SPEAKER_05]: And it's not getting much better so far in 2026.
[SPEAKER_05]: So that's certainly a drag on housing.
[SPEAKER_05]: because there's been, because there's a earth of existing inventory, it's the new home market that is plugging that hole.
[SPEAKER_05]: So I think near term, there's still a lot of decent tailwinds for new home demand.
[SPEAKER_05]: And if you look at the inventory levels, so there's month supply of inventory, zoom this in here on my chart.
[SPEAKER_05]: So that has come down.
[SPEAKER_05]: It'd a peak in October of 10.5 months, and now it's back down to about 8.2 months.
[SPEAKER_05]: Now that is still a bit elevated, but clearly these home builders are able to move inventory.
[SPEAKER_05]: And that's the story here.
[SPEAKER_05]: Well, it's not a boom in housing market and housing-related stocks.
[SPEAKER_05]: They're still a underlying strength that persists.
[SPEAKER_05]: And that's why if you go look at the poulties of the world and the dear hortons of the world, their earnings are roughly flat over the past few years, but that's actually good,
[SPEAKER_05]: In 2023, for example, Polti had all time high earnings of $11.30, then in 2024, $13.29.
[SPEAKER_05]: Now, it's cooled off a little bit, but still next year earnings are expected to be right at $11.30 levels.
[SPEAKER_05]: So margins have come down from their 2024 highs, but overall, it's still elevated margins, elevated prices, and that is helping a lot of these home builders and the
[SPEAKER_05]: businesses that supply products to them.
[SPEAKER_05]: So that's the housing market in nutshell as we head into 2026.
[SPEAKER_05]: Let's go with a YouTube comment question.
[SPEAKER_05]: Mikey Chan says, Hey guys, I wanted to get your thoughts on into it.
[SPEAKER_05]: I N T U.
[SPEAKER_05]: analysts have slashed their price targets, even though they haven't officially lowered their guidance or a fiscal year 2026.
[SPEAKER_05]: I understand that AI will impact their core tax and accounting business models.
[SPEAKER_05]: But at what point is this stock valuation fair?
[SPEAKER_05]: Thanks for all you do.
[SPEAKER_05]: So here is the issue I think with into it.
[SPEAKER_05]: They are the leader in
[SPEAKER_05]: Credit Karma, they bought Credit Karma some years back.
[SPEAKER_05]: They have Turbo Tax, they have QuickBooks.
[SPEAKER_05]: This is dominant within the tax and bookkeeping space.
[SPEAKER_05]: The issue though is this is all relatively simple stuff for AI to handle.
[SPEAKER_05]: And all you have to do is feed in your financials.
[SPEAKER_05]: And it will process and be able to interpret everything on its own.
[SPEAKER_05]: So to me, into it is actually in the crosshairs of the type of business that will probably be over time you served by AI.
[SPEAKER_05]: Why sign up for TurboTax when you can have?
[SPEAKER_05]: Hey, I'll ask you a series of questions.
[SPEAKER_05]: Say I want to prepare my tax returns, ask me 20 questions so that you can fill out my 1099 or whatever.
[SPEAKER_05]: And I can go and do that at least give you the answers to for you to go fill it.
[SPEAKER_05]: So why go pay turbo tax?
[SPEAKER_05]: And it can prepare a balance sheet or a cash flow statement based on your bank information.
[SPEAKER_05]: and learn about your business over time and get much, much better at it.
[SPEAKER_05]: So while I don't think that's going to be a short-term issue, I still think generally or they're going to do fine, but I think this puts pressure on their business, pressure on the margins, pressure on their ability to raise prices.
[SPEAKER_05]: These, that's another aspect of this sell-off in software stocks that most people are not paying attention to, and that it's not just about the demand.
[SPEAKER_05]: for their software, because the demand for what they offer is probably not going to go anywhere.
[SPEAKER_05]: And it could go up in many instances.
[SPEAKER_05]: It's the supply of what they do suddenly becomes a lot easier, which means pressure for them to maybe not raise their prices.
[SPEAKER_05]: You have for years, a lot of these companies that this economic melt wants to get into it.
[SPEAKER_05]: And they were able to just consistently raise, consistently raise their prices and expand their margins.
[SPEAKER_05]: And into its operating margin is 27%.
[SPEAKER_05]: Their gross profit margin is 77%.
[SPEAKER_05]: So these are fantastic high margin businesses.
[SPEAKER_05]: But if it's easier for a competitor to come up with an alternative and charge lower prices, it's going to be a lot easier.
[SPEAKER_05]: You can vibe code your way to a quick book so like space to software.
[SPEAKER_05]: or once again, get around it by just turning to AI and having a track all of your documents and your financial transactions and do everything that they're doing.
[SPEAKER_05]: So I really think that this is a, in the crosshairs, and I would not be buying it.
[SPEAKER_05]: I don't think there's a fair valuation because I think this is the exact type of business that will struggle in the age of AI.
[SPEAKER_05]: Those two, the back to the Vestock Voice Bank.
[SPEAKER_05]: You should know the number by now.
[SPEAKER_05]: It's 80 to 99 sure.
[SPEAKER_02]: Hello, Jessica, Luke, Chris from New York.
[SPEAKER_02]: I want to get your analysis on company VAL, also the ticker is VALE.
[SPEAKER_02]: It's about, over 20% of my position.
[SPEAKER_02]: I am concerned about 2% of my portfolio.
[SPEAKER_02]: I want to see your thoughts if I should be adding to get a full position at 3%.
[SPEAKER_02]: before to the answer in the podcast.
[SPEAKER_05]: Thank you.
[SPEAKER_05]: Bye.
[SPEAKER_05]: Looking at Valle and this is a Brazilian company and their businesses typically all over the place and my issue with this is that it's very tied to iron ore.
[SPEAKER_05]: 78% of its revenue comes from iron ore and iron ore is fairly abundant.
[SPEAKER_05]: It's used to make steel and, you know, what is the overall global demand for steel going to look like, especially as China pulls back from building as many buildings as they had in the past, and that's really what worries me.
[SPEAKER_05]: Now, it's momentum is strong.
[SPEAKER_05]: They have other base metals that they produce as well, which I really like, things like nickel, 9% of their business,
[SPEAKER_05]: uh, they have copper is 7% of their business, but it's once again, basically 80% iron ore.
[SPEAKER_05]: So I don't love that.
[SPEAKER_05]: I just think they're better alternatives.
[SPEAKER_05]: I like that it's a Brazilian company.
[SPEAKER_05]: I like that.
[SPEAKER_05]: Yeah, I like that it's a Brazilian company.
[SPEAKER_05]: I like that it's an commodity space, but I'm actually either hitch my ride to a different name.
[SPEAKER_05]: Bill, let's go pivot back to actually let's go talk a bit about
[SPEAKER_05]: oil.
[SPEAKER_05]: And it's recent price increase.
[SPEAKER_05]: And you're today, oil, whether you're looking at WTI or Brent Crude is somewhere up in the high teens around 20% range.
[SPEAKER_05]: And that's significant because since May 2024, oil has been consistently a drag on inflation figures because prices
[SPEAKER_05]: But now that's about to change, because the tensions on U.S. are on or sparking an oil rally globally.
[SPEAKER_05]: And oil prices are at the highest in seven months, which means that the year on year increase is rapidly, sorry, it means the year on year decrease in prices is windily.
[SPEAKER_05]: At this point, Brent Crude is now only 2% cheaper than it was a year ago for the Fisky Neutral on the inflation figures.
[SPEAKER_05]: In early January, it was negative 30% year over year.
[SPEAKER_05]: So it was once kind of a deflationary impact on the inflation figures.
[SPEAKER_05]: And so these base effects are as the year goes on going to slowly turn more difficult for it.
[SPEAKER_05]: around the $70 per barrel range or maybe even go higher, suddenly it can now be a driver of the inflation numbers.
[SPEAKER_05]: And it's important because oil raised the cost of producing goods and providing services, typically, or in by the consumer.
[SPEAKER_05]: Transportation, including the cost of fuel gasoline, makes up 16% of total monthly consumer price indexes.
[SPEAKER_05]: It's higher than any other category except shelter.
[SPEAKER_05]: The Fed paper in 2023 found that the second round effects of a permanent 10% increase in low prices lists headline CPI across non-US advanced economies by 0.4% which means that yes, it does impact gas prices, but it slowly feeds into the cost of other goods as well over time.
[SPEAKER_05]: And it owes already up $10 this year.
[SPEAKER_05]: And by the Fed's inflation figure,
[SPEAKER_05]: up around 3%, this year, with oil being a drag on inflation.
[SPEAKER_05]: So what happens when it turns to a driver of inflation?
[SPEAKER_05]: Now, the good news is there's still a abundance of oil worldwide.
[SPEAKER_05]: So a lot of this is geopolitical tensions that could calm down, but once again, as I said earlier, it's, I think, low odds that we won't do something in a wrong.
[SPEAKER_05]: So I wanted to highlight that because not many people are talking about it.
[SPEAKER_05]: and it certainly does have an impact on or will have an impact on the inflation figures.
[SPEAKER_05]: To take a live call from New York, asking about Meli talking to Chris, how do you impress?
[SPEAKER_05]: Good Justin, how you doing?
[SPEAKER_05]: Doing pretty well.
[SPEAKER_05]: You're looking at Mercado Libre.
[SPEAKER_11]: Yes, I currently own a 3% position.
[SPEAKER_11]: I'm down about 10% after the recent earnings call yesterday.
[SPEAKER_11]: I'm so want to get your thoughts.
[SPEAKER_11]: On the company, I know they're the top lines growing, their payments growing, and active users is growing, just wanting to get your thoughts if it's a buy hold or sell at these levels.
[SPEAKER_05]: Well, here's my issue with this name and a lot of the others, is that yes, it's been growing top line, but when it's not growing as profits, well, that becomes
[SPEAKER_05]: that comes in issue now it is it is expected to grow its profits pretty dramatically this year 45% and then another 41% next year now those estimates are coming down and I think that's what the multiples are coming down and if you look at the technicals it certainly is in a downtrend over the past seventy months or so now today's action was a bit encouraging for me
[SPEAKER_05]: Gapped down, it sold off early in the day, and then it rallied and closed near the high of the day on volume.
[SPEAKER_05]: And it nearly touched the 200 week moving average.
[SPEAKER_05]: So that gives me some solace that this could be a near-term bottom.
[SPEAKER_05]: And what I do like is that, while earnings aren't accelerating to the upside, the cash flow is.
[SPEAKER_05]: But once again, you aren't getting a bargain on this name.
[SPEAKER_05]: So I would probably hold it for now, but if it breaks below the 200 week moving average, which is right around about $1,600 per share, right now at $1,177, then if it breaks below $1,600, that would tell me that broader problems are a foot.
[SPEAKER_05]: So you're pretty close to some pretty good support.
[SPEAKER_05]: And I would be certainly able to look out for it.
[SPEAKER_05]: But if it breaks, you know, below probably today's low, and especially that 1600 level, that's when I would probably have it out and move on.
[SPEAKER_05]: Thanks for the call.
[SPEAKER_05]: Those are the best talk I'm just in Clotting with one goal here, each and every week.
[SPEAKER_05]: They help you achieve your own version of financial freedom and I work continues after this final break.
[SPEAKER_05]: Good question's in right now, eight and eight, 99 chart.
[SPEAKER_06]: There are a few things that make KPP financial special.
[SPEAKER_06]: One of them is parallel investing.
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[SPEAKER_05]: It's good to get a YouTube comment question, and Selena Marie says, what do your thoughts on forxtrating understand it can be quite risky?
[SPEAKER_05]: Yet the U.S. dollar is forecasted to go down, and the currencies like the Euro and the Anna strongly forecasted to go up.
[SPEAKER_05]: I don't hear many people talking about it.
[SPEAKER_05]: Well, first off, you're correct.
[SPEAKER_05]: It is very risky, and this because the general trend of the dollar over the coming years will likely be down.
[SPEAKER_05]: It doesn't mean it's going to be down every year, and it depends on what currency you are talking about.
[SPEAKER_05]: frankly, if you're going to short any currency, it would just be the occur in season buying hard assets and I think it's a a better way to go.
[SPEAKER_05]: So, and you you mentioned to currencies euro in the yen, well, the euro strong is the dollar, but the yen remains relatively weak against the dollar.
[SPEAKER_05]: So, you really need to understand those dynamics and trading forex is really a lot about technicals, it's a lot about understanding.
[SPEAKER_05]: flows, currency flows, trade flows, all of that.
[SPEAKER_05]: And so for the novice investor, I highly advise against it.
[SPEAKER_05]: Nine and a ten currency traders blow themselves up and they lose a bunch of money.
[SPEAKER_05]: So I would not do it.
[SPEAKER_05]: Now speaking of trade,
[SPEAKER_05]: Let's talk about the decision by the Supreme Court to shoot down Trump's tariffs.
[SPEAKER_05]: And instead, President Trump put in post temporary, 15% global tariff that through world trade in a bit of confusion.
[SPEAKER_05]: So let's clear that up and talk about what countries are benefiting the most in which ones are losing the most.
[SPEAKER_05]: And the big question, first off is,
[SPEAKER_05]: What happens to the trade deals written, the huge, a pan, et cetera?
[SPEAKER_05]: Those are all called in the question.
[SPEAKER_05]: So we'll see how that ultimately plays out.
[SPEAKER_05]: But the two countries that will benefit the most, clearly, China and Brazil.
[SPEAKER_05]: So China's tariffs were at over 35% on average and Brazil's were about 27% on average.
[SPEAKER_05]: So a pretty big decline there.
[SPEAKER_05]: their average tariffs are kind of about 23% and then Vietnam and Thailand.
[SPEAKER_05]: Those will be impacted the most.
[SPEAKER_05]: Now, world countries will, so those are the ones that benefit because the tariffs are dropping the most.
[SPEAKER_05]: Which ones are going to be a herd the most because maybe their tariffs are lower versus Japan.
[SPEAKER_05]: Now, it's pretty minor only about about a half a percent difference, so not a big difference there.
[SPEAKER_05]: Then you have Germany, the one that's herd the most is going to be actually the UK.
[SPEAKER_05]: It's going to increase by about 2%, you have Italy, that's about 1.7% increase, France, South Korea, EU, in general, all.
[SPEAKER_05]: higher by about half to 1% and then you have Switzerland, Netherlands and Singapore as well.
[SPEAKER_05]: So pretty interesting to see how this is going to evolve.
[SPEAKER_05]: What I've heard recently is that, I think I said this early in the show, is that so far the implementation is only 10%, so he said 15%
[SPEAKER_05]: maybe it actually goes to 10% or sorry, the 15% in practice, but so far it's really only been about 10%.
[SPEAKER_05]: So this goes back to what I was saying on Monday about how the tear for gene is kind of throwing a wrench in global supply chains because of the uncertainty.
[SPEAKER_05]: This is a temporary
[SPEAKER_05]: When things could change in three, six months, right, that is something that is causing stockpiling of hard assets around the world, causing, you know, copper prices, gold prices, silver prices to go up and
[SPEAKER_05]: driving inflation, you know, this is one of the reasons why tariffs are just to go through Congress is because, okay, you talk about it and you ratify it and now it's law, as opposed to just kind of going around these things.
[SPEAKER_05]: And so we'll see how this eventually evolves, this may be something that he pushes Congress to actually vote on.
[SPEAKER_05]: We'll see.
[SPEAKER_05]: But, clearly, he's trying to kick the can by keeping tariffs relatively elevated.
[SPEAKER_05]: Some are going to be winners, and some are going to come out losers over all, though.
[SPEAKER_05]: It's definitely a drop in effective tariff rate.
[SPEAKER_05]: Now I'm Justin Klein.
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