[SPEAKER_04]: On radio, on YouTube, streaming live on investtalk.com, and for our podcast subscribers, this is invest talk, independent thinking, shared success.
[SPEAKER_04]: Invest talk is made possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.
[SPEAKER_04]: Here is KPP Financial Chief Executive Officer, Financial Advisor, Justin Klein.
[SPEAKER_02]: Good afternoon fellow investors, and welcome back to Invest Talk.
[SPEAKER_02]: This is our Wednesday, March 18th, 2021.
[SPEAKER_02]: Other Invest Talk, and as always, in 2020, six, a lot is happening.
[SPEAKER_02]: Markets mainly politically, geopolitically, and obviously that has an impact on.
[SPEAKER_02]: economies, industries, and of course the broader market today was fed day, and that is always something the market pays a lot of attention to, so we'll look into that, even though frankly, there wasn't a whole lot to discuss, no move, and no real changes to their future path of policy expectations compared to the market was expecting, but we'll dig into that in much much more during this hour, most importantly, we'll be what's on your mind.
[SPEAKER_02]: How can we help you become a better investor what questions do you have?
[SPEAKER_02]: As your portfolio are performing in this environment.
[SPEAKER_02]: How is it performed in 2026?
[SPEAKER_02]: Don't think this is going to be a flash in the pan.
[SPEAKER_02]: We have probably a number of years of political geopolitical chaos before we settle into a new norm.
[SPEAKER_02]: We're in the midst of a lot of change, which means your portfolio can operate in the same manner that it did a decade ago or two decades ago.
[SPEAKER_02]: You have to think differently and go outside the box on understand the trends that are taking place in markets and economies.
[SPEAKER_02]: And so that's what this hour and each and every hour in a best talk is about.
[SPEAKER_02]: helping you kind of a better investor giving you perspective and data so that you can make better decisions with your money.
[SPEAKER_02]: Now, in just a bit, I will run down the market performance for today and the show topics for the hour, but as usual, we're going to tackle this first-collect question now.
[SPEAKER_01]: stack it once the last few months down.
[SPEAKER_01]: I'm up a little bit.
[SPEAKER_01]: I'll tell you that around some sort of announced good time to sort of move on or if it's sustainable.
[SPEAKER_01]: I love to hear you thoughts.
[SPEAKER_01]: Thanks so go on.
[SPEAKER_02]: Looking at UL solutions, they provide testing, inspection, and certification services within the Tech Hardware space.
[SPEAKER_02]: So its customers are making industrial products.
[SPEAKER_02]: they make medical devices, consumer electronics, information technology products, appliances, HVAC, et cetera.
[SPEAKER_02]: But a $17 billion market cap, earnings was supposed to be up 11% this year, 12% next year.
[SPEAKER_02]: And it is approaching its highs, which it made back in late last year.
[SPEAKER_02]: Well, the market has rolled over.
[SPEAKER_02]: So there's clearly relative strength.
[SPEAKER_02]: I like relative strength.
[SPEAKER_02]: The relative strength right now is 87.
[SPEAKER_02]: Very strong.
[SPEAKER_02]: Probably higher if you're looking over the past couple of weeks since the war and Iran started.
[SPEAKER_02]: Returned equities 39% high profitability.
[SPEAKER_02]: No debt.
[SPEAKER_02]: Love that.
[SPEAKER_02]: Free cash, $400 million.
[SPEAKER_02]: And it's at the highest level since what's this December?
[SPEAKER_02]: Since December 3rd, now it is up and to the little resistance, so maybe you could say you take a little off the table, but considering what's happening in the broader market, I hold this name.
[SPEAKER_02]: Once again, great balance sheet, good profitability, good cash flow, great relative strength.
[SPEAKER_02]: It is in the heart of the AI data center build out.
[SPEAKER_02]: Meaning, they test the end of products and the software for those products.
[SPEAKER_02]: Inspect them, they certify them.
[SPEAKER_02]: It doesn't matter what the end technology is, they're the ones that are making sure it's good to go out of the factor.
[SPEAKER_02]: So, I don't see a lot of reason to trim it, or say sell it.
[SPEAKER_02]: Now, trimming it may be because it's in resistance, but that relative strength tells me that this resistance in your term is probably transitory, so I hold it.
[SPEAKER_02]: Let's take a live call, Dan, in Walnut Creek, once we talk about precious metals.
[SPEAKER_07]: Hi there, Justin, thanks for taking a call.
[SPEAKER_07]: First, yes, just kind of curious.
[SPEAKER_07]: Yes, since precious metals can be a little bit of a downtrend right now, it's been a good time to buy.
[SPEAKER_02]: I do think we're getting to that point where it's going to be a nice buying opportunity.
[SPEAKER_02]: Now, we still may see a little bit more down from here, but we're starting to enter the zone.
[SPEAKER_02]: And when I say it is own, it means, very aware these stocks broke out, broke out.
[SPEAKER_02]: Now, you're talking about gold and silver itself or the miners.
[SPEAKER_07]: The miners, mainly, they held on for a little while, but they're starting to go down a little bit down too.
[SPEAKER_02]: Yeah, they pulled back the GDX hit the lowest level today since early January.
[SPEAKER_02]: So even with this large pullback, it's actually still up on the year.
[SPEAKER_02]: And it's approaching levels where you saw the peak back in October, and you had a bit of a cell off that refreshed everything went through a consolidation period and then broke out kind of beginning of the year.
[SPEAKER_02]: And that high in October was right around $85.
[SPEAKER_02]: GDX today closed at 88.
[SPEAKER_02]: So I think there's.
[SPEAKER_02]: There's support in this area.
[SPEAKER_02]: When you have a pivot, we call it a pivot point where it hit high and reversed for a period of time.
[SPEAKER_02]: And then it broke back above and broke out of that pivot point.
[SPEAKER_02]: Oftentimes when it returns to that price, after the subsequent sell off like you're
[SPEAKER_02]: Does, is there another two to three percent down on minors, maybe over the next week or two?
[SPEAKER_02]: Absolutely.
[SPEAKER_02]: I think that's certainly possible.
[SPEAKER_02]: But this is that zone mid 80s is where you want to pick up GDX or the subsequent minors within it.
[SPEAKER_02]: If you,
[SPEAKER_02]: feel you need to up your position in precious metals.
[SPEAKER_02]: Now, a lot of people have a lot already, especially if this program for a period of time, you've probably bought some precious metals and you own a lot, so maybe you're feeling a little pain in the near term, but clearly it's still in a broader uptrend and it's starting to enter that zone of
[SPEAKER_02]: adding to positions, especially if you may be trimmed your positions over the past a couple months ago when I was saying, you know, a sentiment was a bit brothy.
[SPEAKER_02]: Now it's starting to get reset and I think that's a good buying opportunity.
[SPEAKER_07]: Can I have some more questions please?
[SPEAKER_07]: Sure.
[SPEAKER_07]: I'm sorry to address.
[SPEAKER_07]: What about copper?
[SPEAKER_07]: I know that so many copper's been going down and I don't know if that's because of the issues and people are concerned with Mexico or
[SPEAKER_02]: Yeah, that's just, um, no, it's, it's simply industrial rapid when that we need input to industrial products is energy of some kind with its natural gas or oil, then it makes it less economical to produce those goods.
[SPEAKER_02]: And that means less money, or less demand for things like copper.
[SPEAKER_02]: There's also the stronger dollar that's an aspect here.
[SPEAKER_02]: There's, uh, a, a, a,
[SPEAKER_02]: Adorth of supply coming out of the Middle East as well.
[SPEAKER_02]: So there's a lot of reasons for this pullback in metals in general and copper, I think it's just getting caught up in that.
[SPEAKER_02]: And I also think that we're close to getting to a point where it's a good place to pick up some names.
[SPEAKER_02]: Thanks for the call.
[SPEAKER_02]: Don't stay here quick break.
[SPEAKER_02]: Lots to come and welcome your calls right now.
[SPEAKER_02]: I'll give you a rundown of today's market activity next to Hang on.
[SPEAKER_05]: KPP Financial is excited to announce the third annual in Vestock Market Madness Contest.
[SPEAKER_05]: Instead of basketball brackets, Justin and Luke will be watching companies perform head-to-head in an epic showdown.
[SPEAKER_05]: In Vestock participants can compete for the $1,000 grand prize.
[SPEAKER_05]: and demonstrate their market prowess by locking in their stock victory predictions, and get this.
[SPEAKER_05]: If the contest winner is also following the Investog YouTube channel, Justin will bump up the prize to $1500.
[SPEAKER_05]: So if you are ready to test your skills in this unique competition, do not wait.
[SPEAKER_05]: It's free to join the fun.
[SPEAKER_05]: Visit Investog.com and search market
[SPEAKER_05]: Then submit your bracket predictions to enter.
[SPEAKER_05]: You better hurry.
[SPEAKER_05]: Your last chance to enter is today at midnight.
[SPEAKER_05]: In the early days, in Vestock was Jerry Klein and Steve Peasley.
[SPEAKER_05]: Now the torch has been passed and a new generation of hosts is on the job.
[SPEAKER_05]: Justin Klein and Luke Guerrero.
[SPEAKER_05]: So when you've got finance and investment questions, don't forget to call in Vestock.
[SPEAKER_05]: 888-99-Chart.
[SPEAKER_02]: The time is running out.
[SPEAKER_02]: I hope you have told your friends about our third annual Invest Talk Market Madness Contest set of basketball brackets.
[SPEAKER_02]: We're matching companies head to head in an epic showdown.
[SPEAKER_02]: The winner will win a thousand dollar grand prize.
[SPEAKER_02]: And if you are a subscriber to our Invest Talk YouTube channel, we'll bump that up to 1500 as well.
[SPEAKER_02]: But you do need to submit your bracket by
[SPEAKER_02]: midnight tonight.
[SPEAKER_02]: So if you're going to do it, you need to do it right now.
[SPEAKER_02]: It starts tomorrow.
[SPEAKER_02]: So head over to investtalk.com to submit your bracket.
[SPEAKER_02]: Now, a lot of ground to cover the next 45 minutes or so, and here's what we have time for meeting.
[SPEAKER_02]: Our main focus point is about mortgage rates, and if it's going to kill the spring housing market.
[SPEAKER_02]: We'll look at some recent data.
[SPEAKER_02]: And then we have other topics.
[SPEAKER_02]: One is in regards to inflation, inflation expectations were rising or reports were rising before the war in Iran in a $100 oil.
[SPEAKER_02]: But now inflation expectations in the market are rising as well, but only up until a point.
[SPEAKER_02]: So we'll look at that data.
[SPEAKER_02]: And then lastly, if we have time, we'll check in on consumer spending before the Iran War.
[SPEAKER_02]: Everything's in context now because these last two weeks are going to be very impactful to the broader.
[SPEAKER_02]: economy, and you've seen that in markets already.
[SPEAKER_02]: So we'll dig into those stories.
[SPEAKER_02]: We also have voice bank calls.
[SPEAKER_02]: One is on hurts global and the other is on investing apps.
[SPEAKER_02]: And of course, some questions that came in be the comment section over on the invest stock YouTube channels.
[SPEAKER_02]: Well, and of course, I welcome your finance and investment questions right now at 888 992 4278 is how you get through and ask your question on today's show.
[SPEAKER_02]: Now what are you pivoting to?
[SPEAKER_00]: Hi, I wanted to know if using such apps as the cash app for investments is a legit way to get into the game of investing.
[SPEAKER_00]: Thanks.
[SPEAKER_02]: Now this, it varies mostly by what app you're talking about.
[SPEAKER_02]: I'm not a huge fan of the apps when it comes to investing, okay?
[SPEAKER_02]: Now, they can be good when it comes to saving, helping you save.
[SPEAKER_02]: But the problem is, is that you need to be educated when you're investing.
[SPEAKER_02]: And most of these apps aren't really educating you.
[SPEAKER_02]: They're just getting you bought into their ecosystem and wants you making trades.
[SPEAKER_02]: And they don't have usually the full features of a larger brokerage, like a tribe or fidelity or an e-trade, etc.
[SPEAKER_02]: So the cash app, they don't offer options, bonds, mutual funds, etc.
[SPEAKER_02]: So mainly just stocks, ETFs.
[SPEAKER_02]: And that can be fine, but are there any other resources they give you?
[SPEAKER_02]: Research?
[SPEAKER_02]: Resources, mainly, that's the question.
[SPEAKER_02]: So, these can be good to transfer assets or transfer money they can be good to save in some short of sort of way, but you should always be actually investing on a real brokerage platform.
[SPEAKER_02]: Even, I don't even consider Robinhood.
[SPEAKER_02]: a great investing platform.
[SPEAKER_02]: It's they gamify everything to make it look cool and fun, but it's a more serious endeavor.
[SPEAKER_02]: And so I would always recommend the big brokerage firms because you're going to get a lot more of the better customer service.
[SPEAKER_02]: You have more flexibility and your investment options, etc.
[SPEAKER_02]: Let's go talk to John and we're off to San Rafael looking at Eli Lilly.
[SPEAKER_06]: Hi, Justin.
[SPEAKER_06]: Thanks for taking my call.
[SPEAKER_06]: Sure.
[SPEAKER_06]: I wanted to get your opinion on Lilly.
[SPEAKER_06]: In a diversified portfolio, I've had it for quite a while, so I have a pretty big gain.
[SPEAKER_06]: Now, it's just wondering, it's in the tax shelter, so if I were to sell out of it, there'll be no tax.
[SPEAKER_06]: Just want to know about what would you do as far as holding on, maybe it's maybe a 2% part of my whole portfolio going forward, is it a long-term buy or what would you think at this time?
[SPEAKER_02]: Well, I've always said this GLP1 craze is a bit overblown.
[SPEAKER_02]: There's a lot of side effects with a lot of problems, especially for those that don't really need it.
[SPEAKER_02]: Now, if you're overweight and that's a big problem for you, it can be a lifesaver in many instances.
[SPEAKER_02]: So I don't certainly recognize that, but a lot of people are using it when they're already relatively, you know, they have a low body fat percentage, et cetera.
[SPEAKER_02]: And it reduces your muscle and causes a lot of potential problems.
[SPEAKER_02]: And so, I've seen these throughout the years, they usually spike and then they fade, and I think they'll eventually fade.
[SPEAKER_02]: And so, I think the valuation on this name, at 40 times earnings, is way too high, it's too expensive, and so I would sell it, and move on to catch better opportunities in this market.
[SPEAKER_02]: Now we're heading into a break.
[SPEAKER_02]: We take you for helping us achieve one of the 62 million downloads in our history, but we love to hear your calls now at 8.99 chart.
[SPEAKER_05]: There are a few things that make KPP financial special, one of them is parallel investing.
[SPEAKER_05]: This means they invest right alongside their clients.
[SPEAKER_05]: Here's how it works.
[SPEAKER_05]: When KPP financial makes a trade for their clients, Justin Klein makes the same trade for himself and KPP, on the same day at the same price and same percentage.
[SPEAKER_05]: No front running, no special treatment.
[SPEAKER_05]: Learn more about parallel investing at investtalk.com.
[SPEAKER_02]: Let's go with a YouTube comment question, and Shane Slate says, what's your take on hurts?
[SPEAKER_02]: High short interest, Bill Actman Investment travel in Q1 strong CO turn around.
[SPEAKER_02]: Narrative.
[SPEAKER_02]: So herds has been languishing for some time at loss money in 2024, 25, and expected to lose money.
[SPEAKER_02]: This year, but returned to profits next year, even those expectations are declining as well.
[SPEAKER_02]: And this has been in a pretty solid downtrend ever since they went private for a little while and they went public back in 2021 and really it's been in a downtrend ever since a good example of an IPO that you just never wanted to touch.
[SPEAKER_02]: Did IPO around $20 per share and it's been a downtrend pretty much ever since announced at $4.18 and why is it in a downtrend because they have a ton of debt and the free cash flow is negative.
[SPEAKER_02]: I don't see a reason for optimism of a turnaround.
[SPEAKER_02]: I just don't.
[SPEAKER_02]: There's now going to be a lower amount of travel.
[SPEAKER_02]: You have the issues with the TSA funding.
[SPEAKER_02]: And then the cost of airline flights is going to go up considerably because of the jet fuel costs.
[SPEAKER_02]: And consumers are just going to have less discretionary spending, which means they are going to Rick Cars Less.
[SPEAKER_02]: There's a high short interest on this for a very good reason.
[SPEAKER_02]: It is a name that looks to be on the path to bankruptcy.
[SPEAKER_02]: That's why it's in such a long downtrend.
[SPEAKER_02]: So you're a bat bill, Akman bought it, narrative around the CO turn around.
[SPEAKER_02]: But what do we always say about investing in narratives?
[SPEAKER_02]: Don't invest in narratives, investing good businesses, with good cash flows and good balance sheets.
[SPEAKER_02]: This is the opposite.
[SPEAKER_02]: This is the reason why there's a high short interest.
[SPEAKER_02]: There could be some good news that comes out that makes it little less likely that they go bankrupt and therefore you get a big short squeeze because of that high short interest.
[SPEAKER_02]: Sure, absolutely.
[SPEAKER_02]: Is that an investment thesis?
[SPEAKER_02]: No, it's speculation.
[SPEAKER_02]: So if you wanna speculate on that, great.
[SPEAKER_02]: If you wanna invest, this is not the name for you.
[SPEAKER_02]: Let's keep things rolling and drop in another listener question now from eight to eight.
[SPEAKER_02]: Nine and a nine chart.
[SPEAKER_00]: Hey Justin and Luke, I had a quick question about stock SBSW C-Banes still water.
[SPEAKER_00]: It's been on my watchlist for a couple of years now and I'm just going to want to get your opinion on it.
[SPEAKER_00]: I'm having a tough time getting a deep dive in on some of their numbers and appreciate any insight.
[SPEAKER_00]: Thanks.
[SPEAKER_02]: Bye.
[SPEAKER_02]: No problem looking at Sabanyee.
[SPEAKER_02]: still water.
[SPEAKER_02]: And this is Symbols SB SW, they're out of South Africa.
[SPEAKER_02]: And they mine for gold, rodeum, palladium, those are the main ones.
[SPEAKER_02]: South Africa is 73% of the revenue of the US 20% I'll show you four year up to.
[SPEAKER_02]: Those are down as luck for a period of time until the beginning
[SPEAKER_02]: Three dollars, hit a recent high of 21, but it's pulled back to 12.
[SPEAKER_02]: So you can see the volatility here, and you have to be very comfortable with that volatility.
[SPEAKER_02]: With that said, kind of like it.
[SPEAKER_02]: If you're at, but it's mainly a play on palladium.
[SPEAKER_02]: It goes into kind of the converters, and there's a big reason why this is recovered not just because the dash for all types of metals,
[SPEAKER_02]: There's still that continued demand for internal combustion vehicles.
[SPEAKER_02]: It hasn't taken over the world like everyone had expected.
[SPEAKER_02]: So there's still consistent demand for their business earnings.
[SPEAKER_02]: We're up 334% last year to 59 cents from 14 cents the previous year.
[SPEAKER_02]: And then this year is just $3.34.
[SPEAKER_02]: So if that's true,
[SPEAKER_02]: 12 dollars pretty cheap even if they're going to make 263 next year.
[SPEAKER_02]: So to me, this is very high risk, but I like the risk.
[SPEAKER_02]: I like that.
[SPEAKER_02]: They also produce nickel, chromium, all different types of copper, cobalt, all different types of metals, and I like that diversity here.
[SPEAKER_02]: Now, there's some jurisdictional risks with South Africa, but in general, South Africa's relatively
[SPEAKER_02]: kind of.
[SPEAKER_02]: So I'm going to give Sabani a still water SPSW a thumbs up.
[SPEAKER_02]: Then the next and best talk.
[SPEAKER_02]: We'll look into this question.
[SPEAKER_02]: Should you invest during war volatility?
[SPEAKER_02]: We're going to look at a market strategy guide.
[SPEAKER_02]: Market veterans are advising investors not to let Iran
[SPEAKER_02]: The Iran War induced volatility scare them out of quality stock.
[SPEAKER_02]: The key is the signification between temperature and political noise and fundamental business challenges.
[SPEAKER_02]: That story is for tomorrow, but for now I'm Justin Klein and ready to take your calls right now at 8.8.99 chart.
[SPEAKER_04]: Invest talk is ready 24.7 for your finance and investment questions.
[SPEAKER_06]: I'm hoping you'll give me your take on or Matt technology.
[SPEAKER_03]: Oh, are A.
[SPEAKER_03]: 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_04]: Don't forget to call.
[SPEAKER_04]: In Best Talk, 888-99 chart.
[SPEAKER_05]: KPP Financial is excited to announce the third annual in Vestock Market Madness Contest.
[SPEAKER_05]: Invest talk participants can compete for the $1,000 grand prize.
[SPEAKER_05]: So if you are ready to test your skills in this unique competition, do not wait.
[SPEAKER_05]: It's free to join the fun.
[SPEAKER_05]: Visit investtalk.com and search Market Madness.
[SPEAKER_05]: Then submit your bracket predictions to enter.
[SPEAKER_05]: You better hurry.
[SPEAKER_05]: Your last chance to enter the market madness contest is today at midnight.
[SPEAKER_02]: I don't know about you, but it already feels like spring to me.
[SPEAKER_02]: You're in the good beach.
[SPEAKER_02]: It is in the 80s today.
[SPEAKER_02]: Pretty hot.
[SPEAKER_02]: Now officially spring does not start until Friday.
[SPEAKER_02]: We're all, for all intents of purposes, we are there.
[SPEAKER_02]: So we're gonna touch on the housing market as our main focus point today and spring selling season.
[SPEAKER_02]: That is fresh upon us.
[SPEAKER_02]: Now there's a reason report about the housing market for the month of February, US existing home sales,
[SPEAKER_02]: Beat expectations because of lower mortgage rates, a moderation in home price growth as well.
[SPEAKER_02]: But there's still a lot of tight supply that's constraining activity.
[SPEAKER_02]: The good news is affordability was improving, say that.
[SPEAKER_02]: And the share of first-time home buyers are at the highest level in five years.
[SPEAKER_02]: So does that mean the housing market is turning a corner far from it?
[SPEAKER_02]: especially with now this war that is going to tighten pocketbooks, re-ignite inflation, and as already, pushed to interest rates.
[SPEAKER_02]: Up, mortgage rates back above 6%, rest for most of the year, up until the war, mortgage rates were below 6%.
[SPEAKER_02]: Home sales overall last month were up 1.7% and it's seasonally adjusted basis at the 4.09 million units.
[SPEAKER_02]: That's definitely from 4.02 in the previous month.
[SPEAKER_02]: Economists are only expecting 3.89 million in it.
[SPEAKER_02]: So remember last month's sales represent contracts that were signed in December and January.
[SPEAKER_02]: And that's really when more debates were down a lot.
[SPEAKER_02]: So what regions did the best?
[SPEAKER_02]: Clearly it was the West, sales are up 8.2%, the South also did okay up 1.6% Midwest up 1.1% but the Northeast region was pretty rough, sales were down 6% in that region.
[SPEAKER_02]: So West dragging us up, Northeast dragging us down and the other two regions marginal gains.
[SPEAKER_02]: Overall home sales, Bell 1.4% year over year.
[SPEAKER_02]: So despite the beating of expectations, you're still seeing a housing market that is deteriorating from a sales perspective.
[SPEAKER_02]: And that's with low mortgage rates.
[SPEAKER_02]: The meeting existing home price last month increased 0.3% from a year ago to $398,000.
[SPEAKER_02]: Now, the National Association of Realtors, their housing affordability index, actually ticked up to 117.6 in February from 117.1 in January, and that's all the way from 103.1 a year ago.
[SPEAKER_02]: and affordability improved in all the regions.
[SPEAKER_02]: That's the good thing.
[SPEAKER_02]: But that's not translating into a ton of new transactions.
[SPEAKER_02]: And now with mortgage rates higher, and pockets book pocket books tighter, and more people worried probably about their job, you're going to see another tick down in transactions.
[SPEAKER_02]: Inventory, increase 2.4 percent.
[SPEAKER_02]: That's kind of a positive.
[SPEAKER_02]: because buyers have a little bit more to choose from, but still at 1.29 million units, that's still well below the pandemic levels of 1.5, 1.5, and between 1.5, 1.6 million units.
[SPEAKER_02]: So inventory is still down from those pre-pandemic levels.
[SPEAKER_02]: Why?
[SPEAKER_02]: Because there's not a lot of forced sellers
[SPEAKER_02]: The stress sales, including four closures, made up only three percent of transactions.
[SPEAKER_02]: That was unchanged from a year ago.
[SPEAKER_02]: So you're not seeing a tick up enforced sales and distressed sales.
[SPEAKER_02]: Typically, hangs around the two for two to two and three percent mark.
[SPEAKER_02]: That's why you're not seeing prices decline materially.
[SPEAKER_02]: They're just kind of flatlining.
[SPEAKER_02]: Now, I've said this for a while, we're going into a period where there is going to be
[SPEAKER_02]: not in price very much, most likely.
[SPEAKER_02]: Now, you'll have negative real returns, meaning after you back out in inflation, you'll probably have flat to negative returns on the housing prices in general.
[SPEAKER_02]: Obviously, there's different housing markets.
[SPEAKER_02]: I'm just talking nationwide.
[SPEAKER_02]: Supply was up 4.9% from a year ago,
[SPEAKER_02]: And at February's sales pace, that's 3.8 months of supply of current inventory up from 3.6 months a year ago.
[SPEAKER_02]: Typically when that gets above five, that's when you really have a strong sellers market, excuse me, buyers market, strong buyers market, and that's where you're probably going to get actual nominal price declines, meaning more pressure from sellers to offload their property
[SPEAKER_02]: Right now, the meeting day is on market, it's still 47 up from 42 a year ago, higher, but not crazy, 47 days.
[SPEAKER_02]: That's a relatively normal number.
[SPEAKER_02]: First time home buyers kind of for 34% of sales up from 31 a year ago, but a healthy market of first time home buyers is about 40.
[SPEAKER_02]: So it's getting better, but it's still not where it needs to be.
[SPEAKER_02]: So the question is, will mortgage rates kill the spring housing market?
[SPEAKER_02]: I think, yeah, through degree, I was going to crash the market.
[SPEAKER_02]: No, this is where people need to separate their vision of the history of, oh wait, and all the housing crash, or prices fell 50% across most markets.
[SPEAKER_02]: Because that was a distressed seller's market.
[SPEAKER_02]: The return of distressed sellers for closures, you're not getting that now.
[SPEAKER_02]: So this is likely going to be a three to five year period where you're going to get a very low level of sales, negative real returns on the actual nominal price of the home.
[SPEAKER_02]: And so if you're a real estate investor, you have to focus on cash flow.
[SPEAKER_02]: If you are just a buyer of real estate to live in, you buy it for utility, not for making money on the price appreciation.
[SPEAKER_02]: at least for the next three or five years.
[SPEAKER_02]: Let's keep things moving and pivot back to the two questions that came in via the best talk voice bake.
[SPEAKER_02]: You can call any time 24-7.
[SPEAKER_02]: Hope you know the number.
[SPEAKER_02]: As always, it's eight and eight ninety-nine chart.
[SPEAKER_03]: Calling about FPH suburban propane partners.
[SPEAKER_03]: Then on my watch was for quite a while and kind of looking at that and wanting to know what your guys' evaluation on that one is.
[SPEAKER_03]: Maybe we're kind of at a good five point here.
[SPEAKER_03]: to get in or what your guys' thoughts are on that one.
[SPEAKER_03]: Appreciate all you guys do and keep up to good work.
[SPEAKER_03]: Thanks.
[SPEAKER_02]: Looking at suburban pro pain, this is a master limited partnership, and like all limited partnerships, you are going to get a K1 if you invest in it.
[SPEAKER_02]: So will complicate your tax situation, even if it's in an IRA, even if it's in a 401k, you get more than I believe it's a thousand dollars.
[SPEAKER_02]: They change the tax laws all the time.
[SPEAKER_02]: But from last time I checked there's a thousand dollars, you get more than that.
[SPEAKER_02]: Then it complicates your tax situation.
[SPEAKER_02]: And at 6.3% dividend yield is going to be taxed at your ordinary income tax rate.
[SPEAKER_02]: It is not a qualified dividend.
[SPEAKER_02]: So understand that as well.
[SPEAKER_02]: It does not the same as your dividend coming from a proctor and gamble or Coke or Pepsi, et cetera.
[SPEAKER_02]: That's those are the bad things, if you call them that.
[SPEAKER_02]: It could be more bad for some people if you're not very high tax bracket.
[SPEAKER_02]: That's probably what you want to really avoid.
[SPEAKER_02]: If you're in a low tax bracket, then the taxable account, you're okay with the tax situation,
[SPEAKER_02]: then you go for it.
[SPEAKER_02]: Because the trends are good.
[SPEAKER_02]: We'll have to take this 70 earnings.
[SPEAKER_02]: So we have 11% this year, flat next year, but trading at 10 times multiple.
[SPEAKER_02]: And they market industry, be propane, we will propane fuel oil, refined fuels.
[SPEAKER_02]: And clearly, this will be in more demand as the price of oil and natural gas worldwide.
[SPEAKER_02]: Go up, return equity is 21% solid.
[SPEAKER_02]: They're a bit of dead on their balance.
[SPEAKER_02]: She don't love that, but what's going on there?
[SPEAKER_02]: And these are going up and they're consistent.
[SPEAKER_02]: They're solid.
[SPEAKER_02]: Cashflow is on decline.
[SPEAKER_02]: That worries me a little bit.
[SPEAKER_02]: Shares outstanding are also going up.
[SPEAKER_02]: That also worries me a little bit.
[SPEAKER_02]: I don't like to see the consistent uptrend in shares outstanding.
[SPEAKER_02]: Their pair ratio is 64%, but their cash dividend pair ratio is 137%.
[SPEAKER_02]: What does that mean?
[SPEAKER_02]: It means they're paying out 37% more and they're given in there and they're getting in cash flow from their business.
[SPEAKER_02]: That is why they're debt, let's see if they're deck going up.
[SPEAKER_02]: Yeah, debt's going up, shares outstanding or going up.
[SPEAKER_02]: And so I don't think that dividend is going to go up or be sustainable over the long term.
[SPEAKER_02]: In fact, it's been flat for,
[SPEAKER_02]: Actually, it's been into Clyde back in 2017 there's they were paying 88 cents a share in dividends then it fell in 2018 2018 to about what is a 60 cents then it fell again to zero or no, not zero 30 Back in 2021 during the pandemic and now it back up to 32, but that was as a 20 late 2021
[SPEAKER_02]: and based on the trends of debt and shows outstanding and that cash-driven pair ratio, which is rising, that's not a good thing.
[SPEAKER_02]: I think a dividend will eventually get cut and when the market starts to sniff that out, the price is will decline.
[SPEAKER_02]: So while I kind of like the chart, I kind of like the current trends, I don't like
[SPEAKER_02]: those underlying business fundamentals.
[SPEAKER_02]: So to me, this wouldn't be a long-term hold because it's paying out too much in a dividend that dividends likely to get cut.
[SPEAKER_02]: It's issuing more shares.
[SPEAKER_02]: It has a lot of debt, etc.
[SPEAKER_02]: So I'm going to pass on SPH Suburban propane partners living in the partnership.
[SPEAKER_02]: Let's talk about inflation.
[SPEAKER_02]: Central banks are taking notice of how the oil shock is hitting inflation expectations.
[SPEAKER_02]: Cost of living is already going up before this work.
[SPEAKER_02]: And now we had the Fed meeting today and they're clearly on hold because they need to see how the Iran related energy supply shock will impact the broader economy both demand as well as inflation will this be temporary or will it drag out the market is clearly concerned.
[SPEAKER_02]: oil prices are up 70% this year and up 50% from a year ago, gas prices are up 25% over the past 12 months and still climbing.
[SPEAKER_02]: And like I said, inflation was already on the rise before this.
[SPEAKER_02]: And Bank of America's monthly global funding manager survey conducted between March 6th and March 12th, so after the start of the war.
[SPEAKER_02]: Show that a net 45% of asset managers expect higher global inflation over the next year compared to just 9% a month ago.
[SPEAKER_02]: And less than a fifth, expect a lower interest rates ahead of the lowest rating.
[SPEAKER_02]: Wait, they're lowest amount in three years.
[SPEAKER_02]: Now, how's the market pricing is?
[SPEAKER_02]: Well, one year inflation swaps are pricing consumer, price inflation to go to three percent.
[SPEAKER_02]: And that's for the first time since last October.
[SPEAKER_02]: And almost 1 percentage point higher than where we were at the start of this year.
[SPEAKER_02]: And if you go out further, many years ahead, it doesn't fall below two and a half percent for five years.
[SPEAKER_02]: And break even inflation data, so this is how tips are being priced, is that for the next five years inflation will average about 2.65% the highest level in more than a year.
[SPEAKER_02]: And this is being repeated across markets around the world, especially in Europe, because they're exposed, heavily exposed to energy inputs.
[SPEAKER_02]: And we still don't have a lot of data from the last couple of weeks to really understand the true impact on inflation.
[SPEAKER_02]: So this is the best we can go with.
[SPEAKER_02]: how our markets viewing this.
[SPEAKER_02]: Number four of this, New York Feds Survey showed one to five-year inflation expectations, gravitated to 3%, before the spike in oil prices.
[SPEAKER_02]: The market isn't expecting inflation to fade for over five years.
[SPEAKER_02]: So this is the early reading on the impact of the war and high oil prices.
[SPEAKER_02]: And that's an economy word,
[SPEAKER_02]: But it's still is having an impact on our economy and it will continue to do so for a period of time.
[SPEAKER_02]: Until we get to more reasonable prices, say sub 80.
[SPEAKER_02]: So I want to highlight that because this is going to be the narrative for the next month or two or three or four, however long this goes on is what's downstream impact is just having on our broader economy.
[SPEAKER_02]: That was the best thought I'm just in decline.
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[SPEAKER_02]: And it will continue after this final break.
[SPEAKER_02]: It's your questions in now.
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[SPEAKER_02]: Let's take another YouTube comment question.
[SPEAKER_02]: J-Dude 8 says, Justin has mentioned a Luminum price increases related straight closure.
[SPEAKER_02]: What would you think about investing in Alcoa or CE and Accentary Luminum or both?
[SPEAKER_02]: And I would say both is probably the best answer here.
[SPEAKER_02]: Now, century is much smaller.
[SPEAKER_02]: Elco is about a $16 billion market cap versus centuries that about a $5 billion market cap.
[SPEAKER_02]: Both have strong, bound cheats, small amount of debt for the size of their business.
[SPEAKER_02]: Good cash flow.
[SPEAKER_02]: Alcoa definitely has better profitability metrics to turn an equity right around 19% whereas versus century aluminum, that is trading around three, but had been as high as 54 as of late.
[SPEAKER_02]: Century aluminum is gonna be more volatile.
[SPEAKER_02]: It's gonna move a lot.
[SPEAKER_02]: And you have to be willing to take that risk.
[SPEAKER_02]: Alcoa is the safer play.
[SPEAKER_02]: Century does not pay a dividend.
[SPEAKER_02]: Sixth and one percent, it's not big with something.
[SPEAKER_02]: Both have strong earnings growth, as you would expect.
[SPEAKER_02]: And so my answer would be how much risk do you want to take?
[SPEAKER_02]: Out, century aluminum has more upside, but more downside.
[SPEAKER_02]: And has lower or less history of consistent profitability and high profit metrics.
[SPEAKER_02]: Outko is going to be more consistent.
[SPEAKER_02]: as a larger, more diversified in their business.
[SPEAKER_02]: And, a dividend.
[SPEAKER_02]: So if you want that, that's what I would go.
[SPEAKER_02]: It depends on what you want.
[SPEAKER_02]: I would probably buy a little bit of both.
[SPEAKER_02]: So you hedge on both sides.
[SPEAKER_02]: Thanks for the call.
[SPEAKER_02]: Let's talk about the consumer spending came out recently, and the US consumer did pretty well, even with higher prices.
[SPEAKER_02]: Now despite the slightly large and expected increase in spending by the report by the Commerce Department, other data hinted to more downside risk to the overall economic outlook, especially after seeing a sharper slowing of growth in the fourth quarter of GDP.
[SPEAKER_02]: non-defense capital goods orders excluding aircrafts, which usually is a good proxy for business spending, was unchanged in January.
[SPEAKER_02]: And when you adjust for inflation, consumer spending was barely up at all.
[SPEAKER_02]: And this is important because the consumer is two-thirds of the economy as we always said.
[SPEAKER_02]: Overall spending was at 0.4% and was expected to be at 0.3% so it did beat that but once again, most of that's just inflation.
[SPEAKER_02]: nominal spending was driven by a handful of categories health care housing utilities financial services and insurance and mainly due to higher prices.
[SPEAKER_02]: There's also increasing spending on food, recreational goods, vehicles, furnishing and durable household equipment mainly because of tariffs.
[SPEAKER_02]: but spending on discretionary services such as food, restaurants and bars, as well as hotel and motel stays, they dropped, showing that consumers are cautious.
[SPEAKER_02]: And overall spending on clothing and footwear declined.
[SPEAKER_02]: So it's clear that the consumer is kind of tapped out.
[SPEAKER_02]: and the war volatility is going to make this worse.
[SPEAKER_02]: And now that you're seeing a decline in equity prices, that's going to hit the steadiest of the consumer.
[SPEAKER_02]: And that is the wealthy.
[SPEAKER_02]: They may be forced to cut back their spending.
[SPEAKER_02]: And this could be a vicious cycle.
[SPEAKER_02]: And that's why it's so important for this spike in oil prices to be very transdory cannot drag on.
[SPEAKER_02]: The savings rate did increase to a 6-month high
[SPEAKER_02]: mainly because income rule 0.9%, that's the positive.
[SPEAKER_02]: So that's a summary summation of the overall consumer.
[SPEAKER_02]: I'm Justin Klein, and I want to remind you of the KP Financial's parallel investing when we make a trade for our clients and make the same trade for ourselves.
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[SPEAKER_02]: Good night.
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