[SPEAKER_03]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers, this is Invest Talk.
[SPEAKER_03]: Independent Thinking, shared success.
[SPEAKER_03]: Invest Talk is made possible by KPP Financial, a registered investment advisor firm serving clients throughout the United States.
[SPEAKER_03]: Here is KPP Financial Portfolio Manager, Luke Guerrero,
[SPEAKER_01]: Hey there everybody and welcome to the Friday March 20th, 2026 edition of Invest Talk.
[SPEAKER_01]: I'm your host Lou Guerrero and I'll be with you over this next hour as we dissect the news.
[SPEAKER_01]: Talk about the stories that matter and answer your finance and investment questions.
[SPEAKER_01]: That being said, before we talk about today's market performance and run down those show topics, let's tackle this color question now.
[SPEAKER_00]: Hi, you know, Dave from Ohio, he was calling in about UPS, just get your general thoughts on it, a long-term hold and love the show, and I'll be listening.
[SPEAKER_01]: Thank you.
[SPEAKER_01]: UPS is the United Parcel Service.
[SPEAKER_01]: It is a global package delivery and supply chain logistics company operating both domestically where they get about 65% of their revenue.
[SPEAKER_01]: Internationally, where they get about 20% of the revenue, then they also have a tiny business called their supply chain solutions, where they get about 15%.
[SPEAKER_01]: It is the world's largest package delivery network.
[SPEAKER_01]: Both air and ground, it has 460,000 employees.
[SPEAKER_01]: And right now, well, it's in the middle of the most significant strategic restructuring in the history of this company, a company that is 111 years old.
[SPEAKER_01]: Now, you to date, it is down 3.36% down 18.05% over the past 52 weeks.
[SPEAKER_01]: And in fact, has been on a bit of a downtrend since 2021.
[SPEAKER_01]: Why?
[SPEAKER_01]: Well, it's revenue growth, not pretty.
[SPEAKER_01]: Reach a post-pandemic high of 100 billion in revenue in December 2022.
[SPEAKER_01]: That number of falling significantly.
[SPEAKER_01]: Down to 88 billion in 2025, projected to grow again.
[SPEAKER_01]: I'll be at slightly to 89.2 this upcoming year.
[SPEAKER_01]: The same time?
[SPEAKER_01]: margins have contracted from a pandemic high of 13.3 to about 6.3 is where net margin was last year.
[SPEAKER_01]: Same time return on equity is fallen from 172 and 2021 to 33.8 in 2025.
[SPEAKER_01]: And so what has been driving this?
[SPEAKER_01]: Well, a bit of a divorce between UPS and Amazon,
[SPEAKER_01]: Pretty much the defining transformation for this company, Amazon built its own last mile delivery network, Amazon Logistics, and UPS proactively chose to reduce low margin Amazon volume rather than fight for it.
[SPEAKER_01]: Amazon was 12% of UPS's revenue, but at the lowest margins, it's portfolios with the theory here was that removing the volume while cutting the associated costs creates a leaner, more profitable.
[SPEAKER_01]: Network.
[SPEAKER_01]: But the math requires the cost cuts to exceed the revenue loss and so far in H1, 206.
[SPEAKER_01]: The cuts are lagging the revenue loss, hence the issues we're seeing.
[SPEAKER_01]: It's creating an earnings profit.
[SPEAKER_01]: They also did a bit of a health care logistics pivot, and that has increased the revenue within that segment from 10 to 20 billion.
[SPEAKER_01]: But the long run story here is automated facilities
[SPEAKER_01]: Roughly about 28% less per piece than conventional building.
[SPEAKER_01]: So this is their big value ad here, moving forward.
[SPEAKER_01]: But it is a freight company.
[SPEAKER_01]: It moves things.
[SPEAKER_01]: And so as the cost of moving things becomes a bit more expensive.
[SPEAKER_01]: And if people are moving fewer things, well, then this company stands to take a hit.
[SPEAKER_01]: But it's trading a lot, 13.3 times price to forelooking earnings.
[SPEAKER_01]: Nearly as low as it's been over the past five years.
[SPEAKER_01]: But all in all, with this headwind, with these rising costs of shipping because of the surging cost of energy, I'm surprised it's not down a bit more.
[SPEAKER_01]: There is a headwind, significant headwinds trade, tariffs.
[SPEAKER_01]: injunctions from the team's jersey and who moved in February to block the $150,000 dollar driver buyout program.
[SPEAKER_01]: And so you have judicial risk there.
[SPEAKER_01]: Legal risk.
[SPEAKER_01]: And given the evolving situation in the Middle East, it seems to me like the downside economically we're seeing rates surging today could mean that shipping volumes fall yet
[SPEAKER_01]: Thanks for the call.
[SPEAKER_01]: We got a lot of ground to cover in the next 45 minutes or so, and here's a little bit of what we have planned.
[SPEAKER_01]: It all starts off with my main focus point, which is about the labor market and the impact from the Iran war.
[SPEAKER_01]: How a changing economy, which certainly we're seeing very quickly.
[SPEAKER_01]: Maybe saved.
[SPEAKER_01]: by Jobs' data's resilience, because US job was claims they continue to show a bit of sluggish but stable labor market.
[SPEAKER_01]: There's low layoffs, and that is anchored economics to ability even as global conflict is raging.
[SPEAKER_01]: But economists, they're warning this prolonged Iran war tensions could eventually threaten the labor market strength.
[SPEAKER_01]: We also got a couple more important stories as well, including one on the cost of borrowing in the U.K.
[SPEAKER_01]: It's reached its highest level since 2008.
[SPEAKER_01]: What's up, Trichon America?
[SPEAKER_01]: Even though it is the world's largest producer of oil is an energy shock still gonna hurt us.
[SPEAKER_01]: And in truth, we have time at the end of the show, a warning from Goldman Sachs's chief about the risks of private credit.
[SPEAKER_01]: We also have some voice bank calls ready to play, including one on SMCI that is super micro computer ink, another on the Vannich Uranium and Nuclear ETF that is thicker and LR.
[SPEAKER_01]: As well as some questions that came in from the comment section of the Invest hockey YouTube channel.
[SPEAKER_01]: And hopefully some live calls throughout the show.
[SPEAKER_01]: Well, everybody, we are headed into our first break of the day.
[SPEAKER_01]: Please remember you can call any time and leave your questions on the Invest Talk voice bank.
[SPEAKER_01]: While you're at it, if you're listening via our live stream or on AM 1220 in the Bay Area, pick up that phone and dial 888-99 chart.
[SPEAKER_01]: When we get back, we'll talk about today's market activity.
[SPEAKER_06]: 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_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]: In Vestalk, your questions are free, the answers are unbiased.
[SPEAKER_06]: Luke Guerrero is here now, 888-99 chart.
[SPEAKER_01]: U.S. stocks sold off to end the week with the down S&P and Nasdaq all lagging their fourth consecutive weekly decline each off roughly 2% over the five days.
[SPEAKER_01]: The Dow failed just under 1% on the day S&P dropped one and a half.
[SPEAKER_01]: Nasdaq shed two, and there was a 2000, led the downside
[SPEAKER_01]: The only bright set out of all this is that stocks did finish a bit off of their worst levels.
[SPEAKER_01]: Now, the bounce attempt early on the week, it ultimately failed to gain traction, despite some de-escalation hints that we saw on Thursday afternoon, the market swung back to pricing a longer duration conflict after reports that the White House is mulling an occupation of Carg Island
[SPEAKER_01]: Oil moved higher on the session with WTI, West Texas Intermediate up nearly 3% and searched further after the close on news that Iraq declared force measure on all foreign oil fields, a significant escalation in the regional supply picture.
[SPEAKER_01]: That said, crude still notched a weekly decline as the narrative has become a bit more nuance with demand destruction concerns not running alongside supply fears.
[SPEAKER_01]: The bigger overhang, through a sentiment though, appears to be the bond market, Treasure yields backed up 12 to 16 basis points of the long-end on Friday alone, and the double digit moves this week reflect deepening worries about a hawkish central bank reaction function.
[SPEAKER_01]: Gold's weekly performance told the exact same story was down nearly 10 percent, it's worse week since 2011, as real rate expectations, while they were priced higher.
[SPEAKER_01]: Silver.
[SPEAKER_01]: Another rough week, fell over 14%.
[SPEAKER_01]: Sector action?
[SPEAKER_01]: Convespi described as familiar.
[SPEAKER_01]: Big tech semi's memory, software, airlines, home builders, metals.
[SPEAKER_01]: All monks, the worst performers, energy outperformed on the big crude oil while larger cap banks, investment banks, credit cards, managed care, were all the relative winners.
[SPEAKER_01]: The resilience versus complacency debate, it continues, positioning and sentiment data show meaningful the risking.
[SPEAKER_01]: But still, no real capitulation.
[SPEAKER_01]: Fed speak also offered some texture as well, vice chair Bowman said she'd pencil it in three cuts this year and added that wash when a strong impact on the Fed if confirmed.
[SPEAKER_01]: Governor Waller noted he was ready to hike before the energy prices jumped, but stress that being cautious doesn't mean holding for the rest of the year.
[SPEAKER_01]: Elsewhere the dollar gained four tens of a percent bit coin futures were roughly flat.
[SPEAKER_01]: Looking ahead next week is light on the data.
[SPEAKER_01]: We do get March flash PMIs on Monday.
[SPEAKER_01]: I think that's the highlight of the week with final Michigan sentiment on Friday.
[SPEAKER_01]: Well, let's keep things moving and play another listener question now.
[SPEAKER_04]: This is Dan from Wisconsin.
[SPEAKER_04]: I have a question for you regarding now one main holdings.
[SPEAKER_04]: Simple as OMF.
[SPEAKER_04]: I do not own it.
[SPEAKER_04]: It looks really good to me and I would like to purchase this.
[SPEAKER_04]: Let me know what you think of the stock and what might be a good by point.
[SPEAKER_04]: Thank you.
[SPEAKER_01]: Well, the stocking question is ticker OMF that is one main holdings ink.
[SPEAKER_01]: It is a $5.9 billion consumer finance company.
[SPEAKER_01]: What they do is they originate, they underwrite, and they service both personal loans from primary to non-primary customers.
[SPEAKER_01]: Over the past year, it's up 2.94%, but here to date, it's down 23.79, down 24.63 today, and while the rest of the market for the most part was red, the sky was up 0.94%.
[SPEAKER_01]: Now, this company is the largest non-prime consumer lender in the United States.
[SPEAKER_01]: When we're talking non-prime, we're looking at borrowers who have about
[SPEAKER_01]: Like many other financial institutions, it is getting its revenue from net interest income.
[SPEAKER_01]: And so what's really driven this stock down, right?
[SPEAKER_01]: Because it's down nearly a quarter of its value.
[SPEAKER_01]: In the past three months, well, you had an earnings recovery from a credit tightening cycle.
[SPEAKER_01]: So they dramatically tightened underwriting in August of 2022 after the deterioration of pandemic era credit.
[SPEAKER_01]: There's a lawsuit, there's headline risk in New York as the attorney general of New York, along with a multi-state coalition filed suit in March, alleging hidden fees and interest in abusive tactics.
[SPEAKER_01]: I mean, in reality, most of this drop-off is coming off of some highs at the beginning of February.
[SPEAKER_01]: You also have non-prime credit and macro sensitivity here.
[SPEAKER_01]: I mean, yes, it's a bright spot on here today.
[SPEAKER_01]: If consumers need to stretch, they're gonna have to lean more and more on those non-prime sources of credit.
[SPEAKER_01]: But one other thing that I didn't mention, earnings per shares or earnings per share, kind of all over the place.
[SPEAKER_01]: And so you have a situation where you have this big drawdown.
[SPEAKER_01]: It's led to a company that has 8.2% dividend yield at this point.
[SPEAKER_01]: might not be with a bit more economic deterioration, plus the buybacks that have been accelerating, they're about at the end of that program there.
[SPEAKER_01]: And so I'd be hesitant as rates move up in spite of the additional demand they could see.
[SPEAKER_01]: You could see what we saw in 2022 with consumer credit destruction.
[SPEAKER_01]: They would asymmetrically hurt a company that is already lending to non-prime borrowers.
[SPEAKER_01]: Headed into New Break.
[SPEAKER_01]: My main focus point is it's coming up as well as more answers to your findings and investment questions here on Invest Talk.
[SPEAKER_06]: 24-7, Rainer Shine, there's always value in the Invest Talk podcast, 888-99, chart.
[SPEAKER_01]: So yesterday's jobless claims number, surprised it outside a bit, 205,000 initial claims, the lowest since January, and well above the 215,000 economists expected.
[SPEAKER_01]: Continuing claims, fell by 21,000 to 1.85 million.
[SPEAKER_01]: This is now three straight weeks of stable to improving claims data, and it comes after the February jobs report showed the economy losing 92,000 jobs, which had a lot of people wondering whether we were tipping into something worse.
[SPEAKER_01]: But here's the important distinction, the February payroll number.
[SPEAKER_01]: It reflected a labor market that's sluggish, not collapse.
[SPEAKER_01]: The claims data confirms that as Oxford economists, or economics chief U.S. economists put it, the steady level of initial claims suggest the big February drop.
[SPEAKER_01]: It was a blip, not the start of a trend.
[SPEAKER_01]: The February weakness was partly driven by a 31,000 healthcare worker strike, as well as harsh winter weather and payback from outside January gains.
[SPEAKER_01]: If you strip it out, and what you're left with is a labor market that's not growing, but not falling apart either.
[SPEAKER_01]: It's a boring job's market.
[SPEAKER_01]: In fact, the Fed, Chair, Jerome Powell, described it as a zero employment growth equilibrium.
[SPEAKER_01]: So the first question a lot of listeners are probably asking is how resilient is the US jobs market to global conflicts in the answer based on three weeks of data since the Iran war started?
[SPEAKER_01]: It is honestly remarkably resilient thus far.
[SPEAKER_01]: Oil prices have jumped more than 40% since the conflict began gas prices are up over 90 cents a gallon.
[SPEAKER_01]: The strain is effectively
[SPEAKER_01]: I've embudged claims have been in a narrow 199 to 232,000 range all year and the reason is structural, business is leaned and learned during the pandemic that firing and then trying to rehire, it's costly, it's disruptive and an environment where finding qualified workers has been difficult.
[SPEAKER_01]: Most employers would rather hold on to their workforce.
[SPEAKER_01]: There would temporarily shock them, let people go and scramble to replace them later.
[SPEAKER_01]: Producers are unlikely to fire staff, while there's a strong chance the price jump is temporary.
[SPEAKER_01]: But here's the new ones.
[SPEAKER_01]: Low laughs.
[SPEAKER_01]: Don't mean a healthy labor market.
[SPEAKER_01]: The problem is on the hiring side.
[SPEAKER_01]: The economy has lost jobs in three of the past six months, employment growth.
[SPEAKER_01]: It's basically flatlined.
[SPEAKER_01]: Businesses aren't cutting, but they're not adding.
[SPEAKER_01]: The labor market has become what economists call a low-higher, low-fire equilibrium.
[SPEAKER_01]: If you have a job, you're probably keeping it if you don't have one here in trouble.
[SPEAKER_01]: Continuing claims had been climbing steadily for years, before leveling off recently.
[SPEAKER_01]: Recent college grads are experiencing exceptionally long spells of unemployment because many have no work history and don't even show up in the claims data.
[SPEAKER_01]: Which industries are most vulnerable?
[SPEAKER_01]: The most exposed sectors of the ones with direct energy cost sensitivities, airlines, top of the list, fuel is one of their biggest expenses, trucking logistics companies, because of the higher diesel cost, and those, oh, by the way, get passed through to consumers.
[SPEAKER_01]: hospitality and leisure, which lost 27,000 jobs in February, is normal because consumer discretionary spending, it's the first thing to get cut when gas prices start to eat into household budgets.
[SPEAKER_01]: Agriculture is exposed through increasing fertilizer, cost-food because of the issues with the fertilizer supply chain.
[SPEAKER_01]: On the other end, energy production states Texas, New Mexico, Alaska, North Dakota.
[SPEAKER_01]: They're benefiting directly.
[SPEAKER_01]: Energy sector employment and profits are rising.
[SPEAKER_01]: The fracking revolution made the U.S. a net energy exporter, which means the country as a whole has some insulation that it didn't have during the oil shocks of the 70s, but the insulation, it's unevenly distributed.
[SPEAKER_01]: The oil patch wins, while the coast pay.
[SPEAKER_01]: Now, could oil price spikes trigger playoffs in consumer sectors?
[SPEAKER_01]: This is the key question, and the answer depends entirely on duration.
[SPEAKER_01]: If the straight-of-form news disruption resolves in weeks, the impact on the labor market is more likely than not to be minimal, a temporary squeeze on margins that employers can absorb.
[SPEAKER_01]: Goldman Sachs estimates that a $10 increase per barrel reduces annual GDP growth by about
[SPEAKER_01]: Now if it sustains above a hundred dollars a barrel for two to three months, that picture changes.
[SPEAKER_01]: Inflation could reach 3.5% by summer.
[SPEAKER_01]: Consumer spending, 70% of GDP it starts to contract as households are cutting back.
[SPEAKER_01]: Companies that depend on discretionary spending will begin to feel revenue pressures, and that's when you start to see hiring freezes, turn in layoffs.
[SPEAKER_01]: Airlines, restaurants, hotels, retail, auto dealers.
[SPEAKER_01]: They would be the first to crack.
[SPEAKER_01]: The k-shape economy we've been discussing, means lower income households they get hit first, but eventually it works its way up to the middle class.
[SPEAKER_01]: So how long can the labor market stay strong?
[SPEAKER_01]: I made all this uncertainty.
[SPEAKER_01]: The answer is it really depends on whether the war ends.
[SPEAKER_01]: The Fed have rate steady this week and projected a higher inflation, a steady unemployment rate and only a single rate cut this year.
[SPEAKER_01]: That's a remarkably cautious stance.
[SPEAKER_01]: Pal is essentially saying we don't know what's coming.
[SPEAKER_01]: So we're not going to move.
[SPEAKER_01]: For the labor market, that means no help for monetary policy.
[SPEAKER_01]: Businesses are sitting on their hands.
[SPEAKER_01]: They're not hiring, they're not firing.
[SPEAKER_01]: They're waiting to see how things play out, which is understandable.
[SPEAKER_01]: Now, if the conflict wraps up in the next few weeks in oil polls back, March payrolls could actually rebound as the temporary February drag fades.
[SPEAKER_01]: But if this drags on the compounding effects of higher energy costs, tighter financial conditions, stock market volatility, hitting upper income spending, and the AI driven restructuring we've been tracking all converge on a labor market that has absolutely no margin for air.
[SPEAKER_01]: The foundation is stable right now, but it's then.
[SPEAKER_01]: And every week the work continues, it gets
[SPEAKER_01]: Well, everybody, we are about two and 30 minutes head off for the weekend.
[SPEAKER_01]: So if you have that question burning in your mind, pick up that phone and dial 8899 chart.
[SPEAKER_06]: There are a few things that make KPP financial special.
[SPEAKER_06]: One of them is parallel investing.
[SPEAKER_06]: This means they invest right alongside their clients.
[SPEAKER_06]: Here's how it works.
[SPEAKER_06]: When KPP financial makes a trade for their clients, just inclined makes the same trade for himself and KPP.
[SPEAKER_06]: On the same day, at the same price and same percentage.
[SPEAKER_06]: No front running, no special treatment.
[SPEAKER_06]: Learn more about Parallel Investing at InvestTalk.com.
[SPEAKER_01]: On the next invest talk, we will look into this question.
[SPEAKER_01]: Our flight to safety assets, still working in 2026.
[SPEAKER_01]: Swiss money managers are expecting increased inflows from Gulf Nations, as regional conflicts drive capital flight to safer jurisdictions.
[SPEAKER_01]: Meanwhile, merging market funds are seeing outflows as investors seek stability amid schoolable security.
[SPEAKER_01]: Let's talk all about that on Monday, but for now, let's keep things moving and tackle another question from 888-99 chart.
[SPEAKER_02]: Hi, good day, Justin and Luke.
[SPEAKER_02]: One time, listen to your show here for many years from Minneapolis, Minnesota.
[SPEAKER_02]: And I have a question for you, gentlemen.
[SPEAKER_02]: I believe it's a nuclear and copper stock.
[SPEAKER_02]: And I hear you gentlemen speaking of those two items, a lot saying they're both going to be good here in the future.
[SPEAKER_02]: So I've been looking at that.
[SPEAKER_02]: But then the other day I heard, I believe it was just and mentioned that on each S.Y.
[SPEAKER_02]: Hershey was kind of a good buy rate.
[SPEAKER_02]: Now it had good earnings.
[SPEAKER_02]: Oh, looks for the future.
[SPEAKER_02]: So I was wondering if that may be a better bet
[SPEAKER_02]: Would either of these be a recommendation you'd want to put in your portfolio or should I just pass on both of them.
[SPEAKER_02]: Thank you.
[SPEAKER_02]: Look forward to your kind words.
[SPEAKER_02]: You guys have a great day.
[SPEAKER_01]: Let's take a look at these two names.
[SPEAKER_01]: The first is NLR, which is the Van Eck Uranium and Nuclear Energy ETF.
[SPEAKER_01]: What it does is it tracks the MVIS global Uranium and Nuclear Energy Index.
[SPEAKER_01]: So it holds companies across the full nuclear value trade.
[SPEAKER_01]: Jane, thank Uranium Miners and Nuclear Utilities, Construction and Engineering and Pure Play Tech as well.
[SPEAKER_01]: Now, you're to date, it's up about 7.58% though in the past month, it's down nearly 10.
[SPEAKER_01]: And the big macro thesis here is that AI data center power demand plus the global energy security, which is more of a hot button issue now, certainly.
[SPEAKER_01]: Plus, new nuclear renaissance could drive this higher.
[SPEAKER_01]: The DOE Department of Energy is aggressively supporting.
[SPEAKER_01]: the domestic sector.
[SPEAKER_01]: Uranium supply is structurally tight versus the long-term demand curve and nuclear is the only carbon-free base load power source.
[SPEAKER_01]: Couple on hyperscalors having purchase agreements and so it kind of validates the demand thesis here.
[SPEAKER_01]: Now the bear case here is that the stock is run about 65% in a year.
[SPEAKER_01]: It's near its all-time high valuations and priorities can shift certainly
[SPEAKER_01]: from this administration.
[SPEAKER_01]: That being said, we do hold nuclear power names for our clients in our portfolio.
[SPEAKER_01]: So we think that nuclear power, nuclear energy and uranium, do have a great medium-along term future despite what is inherently going to be a volatile investment.
[SPEAKER_01]: Now on the other side of that is an iconic U.S. confectionary and snack company, the Hershey Company.
[SPEAKER_01]: They have Hershey's Reces, Kit Kat, Kisses, Jolly Rancher,
[SPEAKER_01]: They operate in three segments, North America, Confectionary, which is about 75% of the revenue, North America's salty snacks, which is about 15% and international, which is about 10.
[SPEAKER_01]: Now, this is an individual company.
[SPEAKER_01]: It is about 25 to 30 billion dollar market cap.
[SPEAKER_01]: And here today, it is doing very well up 15.47% up 27.77% over the past 52 weeks, and on a day when most of the market is red, it's down only 21 basis points.
[SPEAKER_01]: Now what really drove this is the 2025 Coco Shock, it's the entire story.
[SPEAKER_01]: West Africa saw catastrophic harvest due to disease, due to weather.
[SPEAKER_01]: And so Coco's spot prices, they hit an all-time high in 24 and 25.
[SPEAKER_01]: Hershey's gross margin got crushed.
[SPEAKER_01]: So 2026 is a big recovery year.
[SPEAKER_01]: It could cow prices.
[SPEAKER_01]: The stock was down 19.5% in 2023 down 9.2 in 2024 had a bit of a recovery in 2025 and started out performing its industry again.
[SPEAKER_01]: We also hold this name for clients in one of our strategies and so we do like both of these names.
[SPEAKER_01]: Hershey is a classic cycle recovery play with a bit of defensive protection.
[SPEAKER_01]: And LR is a high beta thematic bet on AI power demand and nuclear restaurants.
[SPEAKER_01]: They are completely different risk profiles, which means they both have a place in your portfolio.
[SPEAKER_01]: Today's Friday, and on Fridays we generally make some time to fit in a quick rundown of key benchmark numbers.
[SPEAKER_01]: The two-year treasury yield is at 3.887% today.
[SPEAKER_01]: Last week, it was 3.729, 220 weeks ago, was 0.64.
[SPEAKER_01]: 10-year was at 4.388% today.
[SPEAKER_01]: Last week, it was 4.283, 217 weeks ago.
[SPEAKER_01]: It was 1.762.
[SPEAKER_01]: Gold was $4,533 per ounce today that is a $487 decrease compared to last week.
[SPEAKER_01]: 33 weeks back it was $3348 into 12 weeks ago with 1806.
[SPEAKER_01]: Silver's 6864 per ounce closed $11.97 lower than last week.
[SPEAKER_01]: 110 weeks ago it was $2280 and looking back to 110 weeks it was $2394.
[SPEAKER_01]: Oil, don't know if you've been paying attention to the news, but has been surging recently with selling for $98.91 per barrel, $0.40 less than when we back, 78 weeks ago, that number was $0.679, and 120 weeks back, it was $0.74.30.
[SPEAKER_01]: National average for a gallon of regular gasoline is $0.391.28, higher than it was last week.
[SPEAKER_01]: California was averaging 565 per gallon, though I did pay 619 at the pump a couple of days ago for Diesel still hurts me.
[SPEAKER_01]: Either way, 565 per gallon is the average in California, a 24-cent increase compared to last week, 123 weeks back that was 532 and 199 weeks back it was 587.
[SPEAKER_01]: Comparison in the beautiful state of Utah, gas is averaging 388 per gallon today.
[SPEAKER_01]: That is $1.77 a less in gas in California.
[SPEAKER_01]: Keeping some moving and drop another listener question now.
[SPEAKER_05]: Hey, all, appreciate what you do.
[SPEAKER_05]: This is Drango, at a trial from South Carolina.
[SPEAKER_05]: Had a question about ticker symbol, AIO.
[SPEAKER_05]: I just want to get your thoughts, some feedback on it.
[SPEAKER_05]: I didn't find too much information on my end or holding what they're investing into exactly.
[SPEAKER_05]: Loves some feedback.
[SPEAKER_05]: Have a great day.
[SPEAKER_05]: Appreciate what you do.
[SPEAKER_01]: AIO is the Virtus Artificial Intelligence and Technologies Opportunity Fund.
[SPEAKER_01]: What they do is they try and provide total return through a combination of current income, current gains, and long-term capital appreciation.
[SPEAKER_01]: So under normal market conditions, the fund will seek to achieve its investment objective by investing across the capital structure in companies across a broad range of industries and technologies, position to benefit from evolution and disruptive power of artificial intelligence.
[SPEAKER_01]: It is managed by various investment partners,
[SPEAKER_01]: Over the past year, it's up 14.33% in terms of price.
[SPEAKER_01]: 31.67% in terms of nav.
[SPEAKER_01]: It has a management fee of 1.25% with a net expense ratio of 1.4.
[SPEAKER_01]: So it's very, very expensive.
[SPEAKER_01]: In terms of size here, it's relatively small for a fund, 840 million dollars.
[SPEAKER_01]: And so with that high cost, what do you get?
[SPEAKER_01]: Well, I can see from their top 10 holdings
[SPEAKER_01]: and bonds, about 58.45% of the portfolio's equities, 34.55% is convertible equity, and just under 20% is fixed income.
[SPEAKER_01]: It's largest holding is, unsurprisingly, Nvidia at 5.19%, they hold Taiwan's semiconductor broad-complex city group.
[SPEAKER_01]: Interestingly enough, you lie lily.
[SPEAKER_01]: Meaning, if you like the portfolio, you can get it a bit of a discount, but the market is pricing it in such a way for a reason.
[SPEAKER_01]: The gain you're looking for is hoping that price converges to nav, and historically, it trades at discounts and at premiums.
[SPEAKER_01]: The current discount though, it's pretty wide.
[SPEAKER_01]: So, if you're interested, there is a bit, I have an entry point here.
[SPEAKER_01]: Monthly, mostly funded by realized capital gains and not income.
[SPEAKER_01]: So there is a decent amount of trading here.
[SPEAKER_01]: One thing to note too is the fund terminates in October, 2031.
[SPEAKER_01]: So the discount is theoretically guaranteed to converge towards zero termination.
[SPEAKER_01]: Termination is acts as a built-in return to floor for people who are patient income investors who were trying to buy at a discount.
[SPEAKER_01]: But that doesn't mean
[SPEAKER_01]: Then in the meantime, it will continue to trade anywhere near its now.
[SPEAKER_01]: That's not what we're seeing right now.
[SPEAKER_01]: This is a very, very wide window, and it's already invested in some very, very volatile name.
[SPEAKER_01]: So who's it for?
[SPEAKER_01]: Somebody who wants AI tech exposure with a monthly cash distribution.
[SPEAKER_01]: But it's not for somebody who's looking for capital growth, generally.
[SPEAKER_01]: Are you seeing this theme be pretty solid over the past year?
[SPEAKER_01]: And relative to the nav is things just lagging.
[SPEAKER_01]: I tend to stay away from these types of funds.
[SPEAKER_01]: I think they're better ways to invest in the themes you're looking for.
[SPEAKER_01]: That is AIO, thanks to the call.
[SPEAKER_01]: So, what the US labor market is holding up, the UK showing us what happens to a country that doesn't have the energy insulation that the US does.
[SPEAKER_01]: British is at 10 year guild surge to 5% on Friday.
[SPEAKER_01]: That's the highest level since 2008.
[SPEAKER_01]: To your yields, which track Bank of England rate and expectations, they hit their highest level in over a year.
[SPEAKER_01]: At the same time, the pound drop nearly 1% against the dollar, and so what is driving this?
[SPEAKER_01]: Honestly, it's pretty straightforward.
[SPEAKER_01]: The UK is heavily dependent on imported energy.
[SPEAKER_01]: And when oil and gas prices spike, inflation follows, pretty darn quickly.
[SPEAKER_01]: Traders are now pricing in three, quarter-point rate hikes from the Bank of England this year.
[SPEAKER_01]: That's a complete reversal from before the conflict.
[SPEAKER_01]: When markets expected rate cuts, something by the way, US markets are pricing in here too.
[SPEAKER_01]: Buey opened the door to higher rates this week if an energy shock proves prolonged and then understandably spooked the bond market.
[SPEAKER_01]: The real world consequences are hidden.
[SPEAKER_01]: Pretty fast, mortgage lenders are pulling deals.
[SPEAKER_01]: The average two-year fixed mortgage rate hit 5.35% the highest in a year.
[SPEAKER_01]: Court of Law Insight, a respected energy consultancy warranted the energy price cap for July to September could push typical annual household bills to nearly 2,000 pounds.
[SPEAKER_01]: Up 20% in the current quarter.
[SPEAKER_01]: Capital economics warned the UK is easily
[SPEAKER_01]: easily at risk of a recession.
[SPEAKER_01]: This is a major blow, and chance of reach a Reeves who just used her spring statement to tout fiscal stability, finds yourself in an awkward position.
[SPEAKER_01]: The government plans now to sell $252 billion in guilt this year, and already pays more than $100 billion annually in interest costs, alone.
[SPEAKER_01]: Higher yields, it means those costs are rising.
[SPEAKER_01]: The fiscal headroom, she built up, and November's budget could get wiped out by higher borrowing costs and lower growth.
[SPEAKER_01]: So for investors, what do we go in from this?
[SPEAKER_01]: What do we learn from this?
[SPEAKER_01]: One thing is the UK guilt market, it's a bit of a cautionary tale.
[SPEAKER_01]: But what happens to energy importing, inflation-vonorable economies in an oil shock?
[SPEAKER_01]: It's also worth watching as a leading indicator if the street of our moves crisis persists.
[SPEAKER_01]: Other energy importing nations in Europe, in Asia, they could face these similar dynamics.
[SPEAKER_01]: The UK is just getting their first because of its particular combination of energy dependency, elevated borrowing, and, unfortunately, persist in inflation.
[SPEAKER_01]: One of the things we'd like to do on Fridays is mention the newest KPP premium newsletter, which will be distributed tomorrow, as it always is on Saturday afternoons.
[SPEAKER_01]: This week in the KPP Insight section, which is a variable section, where we go over all sorts of different things.
[SPEAKER_01]: But, given velocity, given how fast things are moving, we thought it appropriate to give a detailed current market update on the current market environment.
[SPEAKER_01]: The stock ID is section where we mention a couple companies a week that might be right for you and require a bit more research on your end.
[SPEAKER_01]: We mentioned a property insure and an exploration and production company.
[SPEAKER_01]: Then there's the portfolio management section where we get tips we give tips rather on how you can manage your money better.
[SPEAKER_01]: Well, this week we touched on having patience when it comes to managing your portfolio.
[SPEAKER_01]: If you're interested in learning more, visit us at www.investalk.com and hit subscribe.
[SPEAKER_01]: The newsletter will come to your inbox Saturday afternoons.
[SPEAKER_01]: Well, if you didn't already,
[SPEAKER_01]: I have some bad news.
[SPEAKER_01]: The invest talk of market madness, entry window is closed.
[SPEAKER_01]: It officially closed on March 18th at 1159 PM.
[SPEAKER_01]: Just a reminder, this is an annual competition where this year the winner will get $1,000.
[SPEAKER_01]: Unless they are a YouTube subscriber, in which case they'll get $1,500.
[SPEAKER_01]: And we had, well over 300 competitors this year.
[SPEAKER_01]: In years past, we did go over matchups and previews on this show.
[SPEAKER_01]: Let's put a little YouTube content out there.
[SPEAKER_01]: So just before we recorded today this podcast, Justin and I got on video, talked about what happened in the first two days and previewed the next two days as well.
[SPEAKER_01]: That sounds interesting, which I thought it was.
[SPEAKER_01]: Head over to Invest Talk, it's YouTube channel, and check it out.
[SPEAKER_01]: This is Invest Talk.
[SPEAKER_01]: I'm Luke Guerrero, we have one goal here to help you achieve your financial freedom.
[SPEAKER_01]: I'll work continues after this break, so get your questions in now, and 88, 99 chart.
[SPEAKER_06]: The weekend is here or almost here, but you've got financial investment questions, so step up and call in.
[SPEAKER_06]: Invest talk, 888 99 chart.
[SPEAKER_01]: I recently saw the Economist published a pretty sharp analysis this week about how the Iran shock is redistributing wealth within the United States and I think it's worth walking through because it kind of connects to this idea we've been covering recently, the K-shaped economy's story and the headline, as I'm sure you're aware, is that the S&P 500 is down
[SPEAKER_01]: In fact, 10 of 11 sectors have declined.
[SPEAKER_01]: The one exception I'm sure you can guess is energy, which is up more than 4% Chevron alone is up 6%.
[SPEAKER_01]: So if you own energy stocks, this crisis could be making you money.
[SPEAKER_01]: If you own everything else, not so much.
[SPEAKER_01]: But the geographic redistribution is just as significant
[SPEAKER_01]: Most states GDP growth slowed.
[SPEAKER_01]: He texts us accelerated.
[SPEAKER_01]: So did Alaska, so did New Mexico, so did other fossil fuel economies.
[SPEAKER_01]: The gap, what could we even wider this time?
[SPEAKER_01]: Because USL and GX port capacity is a third larger than it was, then an oil production has risen, that is, 50% in the past decade.
[SPEAKER_01]: America's energy infrastructure, it's bigger and it's more profitable than ever.
[SPEAKER_01]: The most painful redistribution, though, between income classes, the lowest earning fifth of American spending, equates nearly twice as much of their income on gas electricity as the top fifth.
[SPEAKER_01]: Get that, the lowest earning fifth of Americans, spending two times as much of their income on those things.
[SPEAKER_01]: When a oil prices spike, poor households, they have to cut spending on other things.
[SPEAKER_01]: In order to keep their cars running in order to keep their lights on.
[SPEAKER_01]: That money, it's got to flow somewhere, where does it go?
[SPEAKER_01]: It goes to energy company income statements into the pockets of the shareholder class.
[SPEAKER_01]: It is a direct transfer from the poor of the rich and it happens in real time.
[SPEAKER_01]: Now, there are political implications to research from Stanford finds that once gas prices pass 350 a gallon, needy and voter attention to the topic explodes, gas is now nearly $4.
[SPEAKER_01]: Up from under three before the war started.
[SPEAKER_01]: If the straight, stay shut and prices hit $5, that's not just an economic problem, it's an electoral one, right?
[SPEAKER_01]: That's a pre-election gas prices are strongly correlated with the performance of the party and power.
[SPEAKER_01]: And so the bottom line here.
[SPEAKER_01]: is that when you have a economy that has two different experiences for different groups of people, naturally, shocks such as this are going to accelerate it.
[SPEAKER_01]: It's going to accelerate these K-shaped economy dynamics that we've been tracking.
[SPEAKER_01]: Energy stocks and energy producing states, they're pulling for their head, consumer-facing businesses, lower-income households, energy-importing sectors, they're falling behind.
[SPEAKER_01]: We can understand the dynamics that are going to drive, consumer spending, the dynamics that are going to drive, progress in various industries.
[SPEAKER_01]: And that should, in very real ways, change your view of the macro economy.
[SPEAKER_01]: But then you have to understand the second order effect.
[SPEAKER_01]: It's one of the things that I've been saying when people say, our artificial intelligence is going to lead to 30% unemployment.
[SPEAKER_01]: There is a lever in society to stop that.
[SPEAKER_01]: And so positioning for now, who's going to benefit?
[SPEAKER_01]: And the longer you have to also understand that if the wealth transfer becomes politically toxic enough, there is a policy response like windfall taxes, price controls, strategic reserve releases.
[SPEAKER_01]: Think back to what I said a couple of weeks ago about the defense industry.
[SPEAKER_01]: If you need to buy too many bullets, the government will make you profit less from selling it to them.
[SPEAKER_01]: With too much of asymmetric effects, changes, politically you could follow.
[SPEAKER_01]: I'm Lou Guerrero, and this completes another episode of Invest Talk, Justin and I thank you for listening and encourage you to tell your friends and family members about our free podcast downloads.
[SPEAKER_01]: Do yours any time, but iTunes and Spotify while you're at it?
[SPEAKER_01]: Head over to our YouTube channel that's in Vestock with two T's, and check out our newest
[SPEAKER_01]: If anything in today's show made you think about your taxes, your retirement, your portfolio, if the market right now is making you feel uneasy, sometimes it's good to just have a second set of eyes.
[SPEAKER_01]: So head over to investalk.com and click on the portfolio review button.
[SPEAKER_01]: It is a free and confidential service.
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[SPEAKER_01]: This is Invest Talk.
[SPEAKER_01]: Enjoy your weekend.
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