[SPEAKER_02]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers, this is Invest Talk.
[SPEAKER_02]: Independent Thinking, shared success.
[SPEAKER_02]: Invest Talk is made possible by KPP Financial, a registered investment advisor for serving clients throughout the United States.
[SPEAKER_02]: Here is KPP Financial Portfolio Manager, Luke Guerrero.
[SPEAKER_01]: Good afternoon, fellow investors, and welcome to the Friday March 27th, 26th edition of Invest Talk.
[SPEAKER_01]: I'm your host over this next hour before we head off into the sunset into the weekend, and we have yet another great show scheduled for you today.
[SPEAKER_01]: As always, the objective of this podcast is to help make you a better and more informed investor.
[SPEAKER_01]: In order to do that, we will talk about today's market performance.
[SPEAKER_01]: We will run down those show topics that we have for you all.
[SPEAKER_01]: But first, let's tackle this call or question.
[SPEAKER_04]: Hey Justin, we're going to call in today about Pfizer, take your PSE and try to consolidate my portfolio.
[SPEAKER_04]: But I'm wondering if I should all end with this one.
[SPEAKER_04]: 10% have not held it for too long, but I think I may keep it as sort of a defense of stock at his hanging in there here today.
[SPEAKER_04]: I mean, your thoughts.
[SPEAKER_04]: Thank you very much.
[SPEAKER_04]: Appreciate the show.
[SPEAKER_01]: Pfizer is of course a global bio-farmonyne, they specialize in oncology, vaccines, inflammation, rare diseases, and more recently COVID products.
[SPEAKER_01]: It's roughly $150 billion market cap company in over the past year.
[SPEAKER_01]: It's range between about $20 and $0.90 per share and $27.94 per share, settling out today at $27.04.
[SPEAKER_01]: Now, last quarter, Q42025 revenue, about 17.6 billion, it was a beat.
[SPEAKER_01]: Adjusted earnings per share, 66 cents, did beat the 56 cent consensus.
[SPEAKER_01]: On the full year, revenue was actually down 2% in terms of operational revenue, while non-COVID revenue was up about 6%.
[SPEAKER_01]: They did guide to 59.5 to 62.5 billion in revenue for this upcoming year and roughly saw about $5 billion from their COVID products.
[SPEAKER_01]: Over the past six months, we did see the stock bottom near about $21 per share in mid-2025 before we're covering two where it is now.
[SPEAKER_01]: Really, the catalyst for that bounce was their non-COVID portfolio showing real momentum.
[SPEAKER_01]: At 6% operational growth, year over year in Q4, while at the same time, showing
[SPEAKER_01]: that the exemption from Terra-Frevenue didn't hurt input costs as greatly as was expected.
[SPEAKER_01]: So you did have near-term margin pressures on one count, but in terms of the mid-long term not too bad.
[SPEAKER_01]: Now, the bullcase here is well.
[SPEAKER_01]: There's a bit of a dividend yield here.
[SPEAKER_01]: 6.4% that's where it's been roughly in the five to six percent range since 2023.
[SPEAKER_01]: And it's all a pair ratio.
[SPEAKER_01]: I mean, it's well covered about a 58% payout ratio.
[SPEAKER_01]: You're seeing it's non-COVID portfolio genuinely growing.
[SPEAKER_01]: On the downside that EPS is declining or set to decline even by their own guidance into 2026, there's a patent clip for a lot of their COVID products.
[SPEAKER_01]: The RC a lack of growth within that respect.
[SPEAKER_01]: They are also not really big participants in the or at least not winning participants in the big driver of pharmaceutical industry over the past couple years, which is obesity drugs.
[SPEAKER_01]: They do have a GOP one injection.
[SPEAKER_01]: But compared to Eli Lilly, enough of Nordisk, really nowhere to be seen there.
[SPEAKER_01]: That being said, they do have solid products in the pipeline and do have solid x-covid revenue growth at an incredibly reasonable valuation, sitting at 9.4 times priced for looking earnings.
[SPEAKER_01]: One of the reasons why it has held up year to date, where it's up 8.59%.
[SPEAKER_01]: I think as a defensive position, I certainly wouldn't be adding any more here that stocks down another 2% today and has a consensus hold rating, but as a defensive position, I think that this is a solid name to keep in your portfolio.
[SPEAKER_01]: That is Pfizer, ticker, PF, thanks for the call.
[SPEAKER_01]: We got a lot of ground to cover in the next 45 minutes or so, and my main focus point is about home prices and mortgage rates, could they be creating a housing crisis?
[SPEAKER_01]: The traditional spring housing market is facing a perfect storm.
[SPEAKER_01]: a lot of challenges, as mortgage rates hit three month highs amid Middle East tensions, real estate investors, and home buyers are navigating unprecedented uncertainty in what is typically the industry's strongest season.
[SPEAKER_01]: We'll also touch on the shipping industry where shipping companies are foregoing cargo in order to carry fuel,
[SPEAKER_01]: Also touch on how the president's tariffs are choking U.S. China trade, should we have time with the end of the show?
[SPEAKER_01]: A bit of an update, and really a bit of a discussion broadening what is really been focused on the straight-of-war moves recently, but we'll take a look at some of the other weak spots to global trade.
[SPEAKER_01]: We also have some voice-mate calls ready to play, some questions that came in from the comment section of the investor
[SPEAKER_01]: We're headed into our first break, it'll be a quick one.
[SPEAKER_01]: When we come back, we'll talk about today's market activity.
[SPEAKER_03]: Serious investors are certain to have finance and investment questions.
[SPEAKER_03]: Wanted to get your take on WW Granger.
[SPEAKER_03]: And the best person to ask your question in the right way is you.
[SPEAKER_00]: I was wondering, from your standpoint, it's very downside in buying fractional shares versus whole shares.
[SPEAKER_03]: And 24, 7 rain or shine, Justin Klein and Luke Guerrero stand ready to provide their unbiased answers.
[SPEAKER_00]: The issue, though, is really over the last decade or so.
[SPEAKER_00]: It's never maintained this level of profitability for a longer time.
[SPEAKER_01]: The modities are incredibly volatile, so when the going is good, take some profit.
[SPEAKER_03]: Your participation makes an invest talk better.
[SPEAKER_03]: My name is Mike, I'm calling in from Orange County, California.
[SPEAKER_03]: This is Lewis, calling from Bolivia.
[SPEAKER_03]: Let's go talk to Chris and me.
[SPEAKER_03]: So don't forget to call, Invest Talk.
[SPEAKER_03]: First off, great show.
[SPEAKER_03]: I went a lot for you, too.
[SPEAKER_03]: You've got finance and investment questions, and Luke Guerrero is ready to provide his unbiased answers, call now or any time, 888-99 chart.
[SPEAKER_01]: U.S. stocks closed lower again on Friday.
[SPEAKER_01]: We saw them ending near their worst levels.
[SPEAKER_01]: In fact, S&B 500 logged its fifth consecutive weekly decline.
[SPEAKER_01]: Nasdaq has now fallen in 10 of the past 11 weeks.
[SPEAKER_01]: The Dow dropped 1.7% S&P 500 fell 1.7% as well.
[SPEAKER_01]: Nasdaq shed 2.2 and the Russell 2000 lost 1.8.
[SPEAKER_01]: Now, the easiest explanation remains the same one that has dominated for weeks.
[SPEAKER_01]: You have this near term, de-escalation skepticism, following another stretch of headline volatility out of the Middle East.
[SPEAKER_01]: But the story is evolving, extended conflict timelines and Iran's continued control over the straight-of-her-mose.
[SPEAKER_01]: has really shifted the market's focus increasingly towards those spillover effects.
[SPEAKER_01]: You have price eye headlines, piling up on the inflation side while demand destruction concerns are gaining traction on the growth side.
[SPEAKER_01]: The latter dynamic may have actually provided some reprieve for yield today, the two year topped 4% early in the session, but dropped nine basis points by the close, but still,
[SPEAKER_01]: The ramp and bond volatility has been a widely discussed overhang on risk sentiment, writ large all week and crude oil settled up five and a half percent now up more than 40 percent on the month under the surface you also see liquidity deteriorating thin markets tight risk controls and overall waning retail interest and buying the dip all really highlighted.
[SPEAKER_01]: The more upbeat flow headlines have centered on month and quarter-end revouncing demand and positive April seasonality, but neither has been enough to offset this selling pressure.
[SPEAKER_01]: Big Tech was broadly lower, led to the downside by meta and Amazon, software sold-off on AI disruption fears, banks, investment banks, credit cards, airlines, managed care, biotech, and travel all underperformed on the day.
[SPEAKER_01]: Energy once again, the stand-out on the crude move with memory staples, retailers, food and beverage and precious metal miners, also outperforming.
[SPEAKER_01]: On the date of front Michigan consumer sentiment closed out at 53.3 below consensus in the lowest level since December, your head inflation expectations ticked up to 3.8% from the flash rating of 3.4, the five year expectation held steady at 3.2.
[SPEAKER_01]: Suggesting consumers aren't expecting the war's price impacts to persist far into the future.
[SPEAKER_01]: Richmond's Barkin flag on certain these potentially impacting both sides of the mandate but added he sees some hope on inflation.
[SPEAKER_01]: Gold Rally today 2.7% so over gain nearly 3% on the day, while Bitcoin futures fell over 3 and the dollar added 3-10% of the percent.
[SPEAKER_01]: Next week brings a heavy day to calendar.
[SPEAKER_01]: You got consumer confidence.
[SPEAKER_01]: You got Joltz, who got ISM manufacturing among the highlights, building to Thursday's trade balance and claims number.
[SPEAKER_01]: Market is closed on Friday.
[SPEAKER_01]: It is good Friday, though the March Employment Report will still be released that morning.
[SPEAKER_01]: As you are certainly aware by now, we do have a YouTube channel where we provide independent separate content, additional content from what we provide on a daily basis on this podcast.
[SPEAKER_01]: While you're over there if you have a question, you don't need to pick up that phone and dilate it at $89 chart, you can in fact just leave that question in the comment section of any of our videos and we will answer it as soon as they come in.
[SPEAKER_01]: This one coming in today and it's on ticker MOS.
[SPEAKER_01]: It says, what would love your take on the show on Mosaic?
[SPEAKER_01]: Try to get into the agricultural space, which I assume should benefit from the ongoing worn Iran.
[SPEAKER_01]: Thoughts on this if it's goodbye and if so, at what price?
[SPEAKER_01]: The Mosaic companies, the world's largest producer of potash and phosphate fertilizers, mines, manufacturers, and cells crop nutrients globally.
[SPEAKER_01]: It is a roughly $8 billion market cap company.
[SPEAKER_01]: It's been trading between 22 and 37 over the past 52 weeks, selling out at $25 per share today after being down 4.54%.
[SPEAKER_01]: Despite of that, year-to-date, it's up 3.78 over the past two months.
[SPEAKER_01]: It's up 2.84, and over the past two weeks, it's down 9.02%.
[SPEAKER_01]: Now, last quarter, it's Q4 2025.
[SPEAKER_01]: Revenue beat.
[SPEAKER_01]: Coming in at 3 billion though earnings per share came in at 22 cents, which missed the 49 set estimate by 50 percent.
[SPEAKER_01]: Four-year net income, 540 million and Q4 included a 519 million net loss driven by some big impairment and some cost spikes related to sulfur.
[SPEAKER_01]: Now guidance wise, guidance didn't look too terrible heading in to the new year.
[SPEAKER_01]: By the past six months, those stock did run from 25 to 37 between September and November on Chinese phosphate export restrictions tightening the overall global supply.
[SPEAKER_01]: So understandably, if the price of phosphate and fertilizer goes up, the company's revenue tends to increase.
[SPEAKER_01]: Now, this Middle East conflict is threatening the straight of hormones.
[SPEAKER_01]: Fertilizer flows in genuine operational improvement and phosphate production should be a boon to this company, but they did give back almost all of those gains.
[SPEAKER_01]: especially after we saw a Q4 earnings miss.
[SPEAKER_01]: So the bull case here is one grounded in a bit of reality.
[SPEAKER_01]: There is a structural supply story.
[SPEAKER_01]: And it's real, Chinese phosphate export restrictions remove roughly 1.5 million tons than the global supply.
[SPEAKER_01]: And Mosaic is the Western Hemisphere's dominant producer.
[SPEAKER_01]: Brazil's brick business.
[SPEAKER_01]: Groubita 190% year over here in Q3 for this company.
[SPEAKER_01]: And so the idea here would be that every $10 or move in DAP price swings, EBITDA goes up by 80 million.
[SPEAKER_01]: So a price recovery hits the bottom line pretty hard.
[SPEAKER_01]: But on the other side, earnings for shared did miss.
[SPEAKER_01]: Stock is near 52 week lows with momentum clearly in a downward position.
[SPEAKER_01]: And so although escalation, disruption in the Middle East fertilizer market, we're roughly a third of the global production exists that could spike phosphate and post-Hash prices rapidly.
[SPEAKER_01]: And Mosaic being the largest producer could capture enormous pricing upside almost immediately.
[SPEAKER_01]: It's kind of a geopolitical binary that the market has priced in a little bit.
[SPEAKER_01]: You saw the price run up coming into March and then quickly dip off.
[SPEAKER_01]: So he seems to be, to me, a bit of a risky, volatile bet that at this point given its momentum and technical positioning, I'm not sure I would take.
[SPEAKER_01]: It is Mozi Company, ticker, MOS.
[SPEAKER_01]: We want to briefly mention the newest KPP premium news letter, which will be distributed tomorrow.
[SPEAKER_01]: This week in the Insight section, we gave a bit of an update on inflation.
[SPEAKER_01]: In the stock idea section, we mentioned the a parent company of exchanges and an insurance company.
[SPEAKER_01]: And in the portfolio management section, we touched on using key ratios and indicators for portfolio management.
[SPEAKER_01]: If you are interested in learning more about our newsletter if any of those topics sound interesting to you, head over to investhawk.com and subscribe for subscribers.
[SPEAKER_01]: The newsletter will come to your inbox on Saturday afternoons.
[SPEAKER_01]: Well, folks, we had it into another break.
[SPEAKER_01]: Still to come, I mean, focus point.
[SPEAKER_01]: Some additional stories that matter.
[SPEAKER_01]: And as always, more answers to your finance and investment questions here on Invest Hawk.
[SPEAKER_03]: This is Invest Talk.
[SPEAKER_03]: Luke Guerrero is here, taking your calls live.
[SPEAKER_01]: Depending home sales actually rose 1.8% February which beat expectations.
[SPEAKER_01]: Economists, they had forecasted a decline.
[SPEAKER_01]: Contracts increased in the West, the South, and the Midwest.
[SPEAKER_01]: And heading into this year, the housing market had real reason for optimism.
[SPEAKER_01]: Mortgage rates had declined from recent highs, price growth had slowed meaningfully.
[SPEAKER_01]: inventory.
[SPEAKER_01]: It was improving and housing affordability in February.
[SPEAKER_01]: It its best-level since August 2022 according to Zilla.
[SPEAKER_01]: Existing home sales had already started rising.
[SPEAKER_01]: The frozen market, it was showing genuine signs of thine.
[SPEAKER_01]: And then the water run changed the calculus overnight.
[SPEAKER_01]: The 30-year yield, which is of course,
[SPEAKER_01]: The benchmark yield for mortgage rates, the 30 year fixed mortgage rate dropped to 5.98% on the eve of the conflict.
[SPEAKER_01]: Below 6% for the first time, it's 2022.
[SPEAKER_01]: It had been a long road to get there.
[SPEAKER_01]: It has since searched to 6.38%.
[SPEAKER_01]: 6.38, the highest sense of temper, rising for four consecutive weeks.
[SPEAKER_01]: That's roughly 40 basis points in a swing in under a month.
[SPEAKER_01]: And the speed of the move is what's rattling by us?
[SPEAKER_01]: As Bank of America's head of consumer lending, put it, you generally don't see a half point jump in the span of a week or two.
[SPEAKER_01]: By a reaction has been, I would say, mixed to put it lightly.
[SPEAKER_01]: So how did that bear itself out?
[SPEAKER_01]: Well, purchase applications fell five percent last week.
[SPEAKER_01]: KB Home CEO said the last couple of weeks have been softer than usual for this time of year.
[SPEAKER_01]: One Virginia Real Estate Agent said he started this year feeling enormous pent-up demand and it hasn't materialized.
[SPEAKER_01]: The Redfin survey found that 25% of Americans planted delay or canceled big purchases, like a home or a car because of the war.
[SPEAKER_01]: So here's the question on every listeners mind, should I wait to buy a house?
[SPEAKER_01]: It'd more good to keep rising.
[SPEAKER_01]: Well, the honest answer, kind of depends on your personal situation more than the macro environment, if you're buying because of a life event new job, growing family relocation.
[SPEAKER_01]: Waiting is costly in its own way.
[SPEAKER_01]: Rents aren't going down.
[SPEAKER_01]: Life doesn't pause for interest rate cycles, and rates are still lower than a year ago when they stood at 6.65%.
[SPEAKER_01]: Buyers who are moving for reasons that matter to them,
[SPEAKER_01]: They're still in the market, though some are looking at cheaper homes or adjustable rate mortgages to keep payments manageable.
[SPEAKER_01]: If you have flexibility and more importantly, no urgency, then yeah, awaiting makes sense.
[SPEAKER_01]: If you believe rates will come back down.
[SPEAKER_01]: And there's a reasonable case for that.
[SPEAKER_01]: The rate spike is driven almost entirely by Middle Eastern conflicts and inflation fears.
[SPEAKER_01]: If the war ends or de-escalates, if oil pulls back, if it turns out the damage isn't as extensive as some believe and the fed signals rate cuts well, mortgage rates they could reverse quickly, potentially back below 6% by summer or fall, but if the conflict drags on,
[SPEAKER_01]: An oil stays above 100 rates could climb further and stay elevated, deep into 2027.
[SPEAKER_01]: That's the uncertainty you're buying into either way.
[SPEAKER_01]: How did geoplical events actually affect the housing market?
[SPEAKER_01]: It's a two-channel story.
[SPEAKER_01]: The direct channel is through mortgage rates, right?
[SPEAKER_01]: The war pushed up oil prices which pushed up inflation expectations which pushed up treasury yields which dragged mortgage rates higher.
[SPEAKER_01]: That's mechanical.
[SPEAKER_01]: It's immediate.
[SPEAKER_01]: than there's the indirect channel through confidence.
[SPEAKER_01]: When people are anxious about the economy, when they see gas prices spiking, stocks falling, the job market headlines getting worse, they pull back from the biggest purchase of their lives.
[SPEAKER_01]: Consumer confidence was already flat, fragile before the war.
[SPEAKER_01]: Is this a good time to refinance?
[SPEAKER_01]: For most people, absolutely not.
[SPEAKER_01]: Most people are locked into lower rate mortgages.
[SPEAKER_01]: If you are locked into the 2020-2021 window at 3% or below, there is no scenario where refinancing your home makes sense at current rates.
[SPEAKER_01]: If you bought in the 7% range last year, refinancing at 638 might save you modestly, but the closing costs could eat up any benefit unless you plan to stay in the home for several more years.
[SPEAKER_01]: Now we'll host housing prices drop of rates to high.
[SPEAKER_01]: This is the big question.
[SPEAKER_01]: And the data suggests modest moderation rather than a crash.
[SPEAKER_01]: As Reuters suggests, as a survey predicts, house prices will increase 1.8% this year, and 2.5% in 2027.
[SPEAKER_01]: Now that's positive growth, just slower.
[SPEAKER_01]: Prices rose 1.8% in 2025.
[SPEAKER_01]: The fundamental constraint here is supply, not demand.
[SPEAKER_01]: About 943,000 housing units were started in 2025, down from over a million the year before.
[SPEAKER_01]: Builders are not ramping up construction because of expensive materials from tariffs, labor shortages, from immigration crackdowns, a shortage of building lots and an over supply of unsold new homes.
[SPEAKER_01]: So you have a market where it demand a suppressed by high rates and low confidence, but supplies also constrained by construction costs, labor costs, and land availability.
[SPEAKER_01]: That means prices stay sticky rather than collapsing.
[SPEAKER_01]: If you're waiting for a 2008-style crash to scoop up a bargain, structural dynamics of this market suggest that is very unlikely.
[SPEAKER_01]: What's more plausible is a grinding sideways market where prices barely move, transaction state oppressed, until rates come down.
[SPEAKER_01]: The bottom line, the spring housing market that was supposed to be the turning point.
[SPEAKER_01]: It's on hold.
[SPEAKER_01]: Whether it's a few months or a few seasons, depends almost entirely on the duration of this conflict.
[SPEAKER_01]: On the next invest talk, we'll look into this question.
[SPEAKER_01]: Is the Fed rate cut still coming despite geopolitical inflation?
[SPEAKER_01]: Federal reserve officials are grappling with conflict signals, as Middle East turmoil threatens to reignite inflation just as they were considering rate cuts.
[SPEAKER_01]: Central Bank's delicate, balancing act between economic growth and price stability faces its biggest test since the pandemic.
[SPEAKER_01]: That story's on Monday, but we still got plenty to go, here on invest talk.
[SPEAKER_03]: and Luke the Raro is here taking your calls live in Vestock, 888-99 Church.
[SPEAKER_08]: Hi, guys.
[SPEAKER_08]: Absolutely amazing about 10 years.
[SPEAKER_08]: This is Frank from Illinois.
[SPEAKER_08]: I have a couple of facts.
[SPEAKER_08]: Portos is one of them.
[SPEAKER_08]: PTOL and natural groceries, Vitamin Cattage.
[SPEAKER_07]: NGVC.
[SPEAKER_07]: I really appreciate it.
[SPEAKER_07]: Thank you.
[SPEAKER_01]: Proteo Zanktiger PTLO is a Chicago style fast casual restaurant that hot dogs beef sandwiches, burgers, salads, and they have been expanding a bit nationally from its Midwest core.
[SPEAKER_01]: That's trading, there has traded between 441 and 1355.
[SPEAKER_01]: Over the past 52 weeks, looks like it closed the day, and about 518.
[SPEAKER_01]: And what's happened over the last quarter is well, Q4 Revenue was 185.7 million basically flat year over year, all growth coming from new locations, not existing ones.
[SPEAKER_01]: Because same store sales actually fell 3.3%.
[SPEAKER_01]: Traffic was down.
[SPEAKER_01]: The same amount and restaurant level EBITDA margins kind of collapsed nearly 2.7% down to 21.8%.
[SPEAKER_01]: What they're guiding to is uncertain because there was no top line guidance given due to macro uncertainty a sign that typically is not a good one.
[SPEAKER_01]: Despite of that year today they're up 3.78% up 2.84%
[SPEAKER_01]: over the past three months.
[SPEAKER_01]: Now the stock was already in decline from its post IPO highs when Texas results kept disappointing.
[SPEAKER_01]: It ran briefly on the development reset announcement in the fall and investors hoped that slower, more deliberate expansion would stabilize margins but Q4 comps of down 3.3% and the flat EBITDA guide kind of killed that trade.
[SPEAKER_01]: The stock
[SPEAKER_01]: And it is near some of its lows.
[SPEAKER_01]: Pull this back up on my screen here.
[SPEAKER_01]: Tell you, look at this company, even deeper.
[SPEAKER_01]: What do you hope the good story is, right?
[SPEAKER_01]: The core Chicago area restaurant is genuinely exceptional.
[SPEAKER_01]: They have high loyalty customers, strong brands,
[SPEAKER_01]: They did see solid growth in their openings.
[SPEAKER_01]: Their Kennesaw branch did over 3.8 million and it's first 100 days, but the comms are negative and they are worsening.
[SPEAKER_01]: This is a stock that is in effectively freefall.
[SPEAKER_01]: Bottom line is that the brand has real fans, but a bit of a broken national expansion strategy.
[SPEAKER_01]: So for this one, definitely gonna have to pass.
[SPEAKER_01]: On the other name, natural grocers by Vitamin Cottage is a specialty natural and organic grocer, operating about 170 stores.
[SPEAKER_01]: It is a roughly $580 million small cap company.
[SPEAKER_01]: Over the past six months, they had a massive run-up.
[SPEAKER_01]: Over the past 52 weeks, they've been training between 29, 98 and 61, 22.
[SPEAKER_01]: Pull this up here.
[SPEAKER_01]: And here to date, they're up 3.67%.
[SPEAKER_01]: Now, after that runup that really started at the end of 2022, they've been on a bit of a persistent downtrend since the beginning of this year.
[SPEAKER_01]: But over the past three years, they're roughly 200%.
[SPEAKER_01]: So what are you hoping for here?
[SPEAKER_01]: One good thing is they have consistent comps, they have discipline management, they have a loyal customer base, you're seeing solid growth, 5% year over year, your margins are not stellar, but pretty in line with grocery stores.
[SPEAKER_01]: And they're now trading in a valuation that is a bit lower.
[SPEAKER_01]: I would say, given the discount in this name and this tends to be a bit of a quiet compounder, and despite it falling from its recent highs, the business is fine.
[SPEAKER_01]: One flag is it's a bit of liquid.
[SPEAKER_01]: Volume trades pretty low.
[SPEAKER_01]: It is a small name, meaning it'd be very volatile.
[SPEAKER_01]: So if you wanted to enter a tiny, tiny position here, I think that's reasonable, but I don't think either of these should be a large position in your portfolio.
[SPEAKER_01]: Thanks for the call.
[SPEAKER_01]: Now on Fridays, we make time to fit in a quick run down of key benchmark numbers.
[SPEAKER_01]: So let me hit with that list right now.
[SPEAKER_01]: The two year treasure yield is at 3.93% today.
[SPEAKER_01]: Last week, it was 3.887.
[SPEAKER_01]: 221 weeks back, it was 0.64.
[SPEAKER_01]: The 10 year was at 4.42 today.
[SPEAKER_01]: Compared to last week, when it was 4.388, 218 weeks ago, it was 1.762.
[SPEAKER_01]: Gold, 45, 31 per ounce today,
[SPEAKER_01]: Higher, though, than 34 weeks ago, and it was 33-48, and higher still, from 213 weeks back when it was 1806.
[SPEAKER_01]: Silver today was $70.79 per ounce, $2.15 higher than last week.
[SPEAKER_01]: 111 weeks goes, 2280, and 211 weeks goes, 2394.
[SPEAKER_01]: Oil was selling for 98-16 per barrel today, that is a 75-cent decreased compared to the last week.
[SPEAKER_01]: 79 weeks ago was 67-79 and 121 weeks back it was 74-30.
[SPEAKER_01]: National average for a gallon of regular gasoline is 3-97, a 6-cent increased compared to last week.
[SPEAKER_01]: 147 weeks ago was 3-56 and 195 weeks back it was 4-25.
[SPEAKER_01]: California is averaging 584 per gallon, a 19 cent increase compared to the last week, 124 weeks back.
[SPEAKER_01]: It was 532 and 200 weeks back.
[SPEAKER_01]: It was 587.
[SPEAKER_01]: For comparison in Nevada, gas is averaging $4.87 per gallon that is 97 cents less than gas in California.
[SPEAKER_01]: All right, it looks like we still got plenty of time.
[SPEAKER_05]: So let's roll in a listener question now.
[SPEAKER_05]: the stock in OSpec.
[SPEAKER_05]: I O S E. It's a small cap chemical company with net debt on the balance sheet.
[SPEAKER_05]: And I don't know right now, but I was wondering, is this worth keeping?
[SPEAKER_05]: And if so, what would be a good level to add more?
[UNKNOWN]: Thank you.
[SPEAKER_01]: IOSP is inospeck and it is a global specialty chemical company, what they do is they sell fuel additives, performance chemicals for both personal and home care and oil field services.
[SPEAKER_01]: Now, it's a relatively small company, about $2.1 billion market caps have been trading between $70 a share and $12 per share.
[SPEAKER_01]: Right now, it's set off at about 72-20 down 23 basis points on the day, down 7.9% on the month and down 25.87% over the past 52 weeks.
[SPEAKER_01]: Now, Q4 Revenue was 455.6 million down 2% year over year and adjusted earnings per share came into $1.50.
[SPEAKER_01]: They guided with no formal, full year guidance because they expected to be impacted by a lot of exogenous factors for this company.
[SPEAKER_01]: Now, over the past six months, iOSP has ran from a low of $70, nearly $113, and then back down driven by fuel specialty out performance.
[SPEAKER_01]: You have seen a weaker performance chemical results, not just in this company, but really across the board, combined with a January storm disclosure, the Q4 call, showing a bit of a weakness in this stock.
[SPEAKER_01]: It's now sitting 25% off of those 52 week highs and has been on a persistent downturn.
[SPEAKER_01]: Now, taking a look at its balance sheet.
[SPEAKER_01]: There is zero net debt.
[SPEAKER_01]: They have $37 million in debt, but $293 million in cash on their balance sheets.
[SPEAKER_01]: So that is certainly a positive there.
[SPEAKER_01]: There are buybacks.
[SPEAKER_01]: There are perhaps a merger in waiting type of company.
[SPEAKER_01]: Fuel specialties is a steady high margin business with real pricing power built around.
[SPEAKER_01]: They're additive technology that engine makers depend on.
[SPEAKER_01]: And so there is some good there.
[SPEAKER_01]: But performance chemicals, it's structurally challenged.
[SPEAKER_01]: as consumers have been trading down to commodity products and really there's no clear catalysts to reverse that.
[SPEAKER_01]: The end of a weakness, a loss in their oil services from their volumes in Mexico and there has been no recovery there.
[SPEAKER_01]: It is.
[SPEAKER_01]: Bottom line, a well-run conservatively finance specialty chemicals business going through a bit of a rough patch.
[SPEAKER_01]: In two or three segments, and the hair, stock has not been able to overcome that to the point where they are in a consistent downtrend, and they have been
[SPEAKER_01]: The better part of three years.
[SPEAKER_01]: So I think this is an opportunity cost story for me.
[SPEAKER_01]: You're not even trading at your 52 week or your five year lows, or forward price to looking at earnings, forward looking price to earnings.
[SPEAKER_01]: I think that by sitting in this name, you're missing out on better opportunities.
[SPEAKER_01]: Thanks to the call.
[SPEAKER_01]: So we've covered the oil shock pretty extensively, but there's a downstream crisis developing and global shipping, that's adding billions of dollars in costs and could compound the supply chain disruptions for months.
[SPEAKER_01]: Ships are literally foregoing cargo to carry fuel instead and that's how severe the bucker fuel shortage has become.
[SPEAKER_01]: Here's what's happening.
[SPEAKER_01]: Straight ahead moves closer, it hasn't just blocked oil tankers.
[SPEAKER_01]: It has disrupted the global supply chain for marine fuel, which is what powers the entire commercial shipping fleet.
[SPEAKER_01]: The world's third largest hub for ship refueling has effectively been shut down by the conflict.
[SPEAKER_01]: Multiple major fuel suppliers there have declared force Majora and stopped quoting for the rest of March.
[SPEAKER_01]: Once existing stocks from ship to ship
[SPEAKER_01]: Prices for marine gas oil, one of the key bunker fuels were up 190% at their peak compared to a month earlier.
[SPEAKER_01]: Even after coming down from that peak, there's still about 55% higher than the end of February.
[SPEAKER_01]: For a large crude oil tanker, that translates to an additional $82,000 per day in fuel costs.
[SPEAKER_01]: Across the industry, the extra cost of total about 5 billion since the conflict began.
[SPEAKER_01]: That severity is driving behavior that industry veterans have never really seen before.
[SPEAKER_01]: Once senior trader said his firm had was taking the extraordinary step of foregoing cargo to load additional fuel between the US and Singapore.
[SPEAKER_01]: In his entire career, they had never done that.
[SPEAKER_01]: Containerships are filling their bunker tanks beyond normal levels as a way of redistributing fuel across their global networks.
[SPEAKER_01]: Mayor Scio described it as a completely new situation requiring real time adjustments to their fuel supply chain.
[SPEAKER_01]: Singapore, the world's biggest port for ship fuel, is the immediate pressure point, reserves there have been taking up as the city-state boost stockpiles, but with more ships rerouting away from the Gulf and heading towards Singapore, those reserves are expected to be quickly depleted.
[SPEAKER_01]: Several Singapore-based petrochemical suppliers have already issued force measure notices to customers.
[SPEAKER_01]: Most major shipping companies have introduced emergency fuel surcharges to compensate.
[SPEAKER_01]: Mostly,
[SPEAKER_01]: A lot of our suffering from elevated fuel prices, fuel costs typically account for about 60% of a ship's operating expense.
[SPEAKER_01]: So when fuel prices double, it flows directly through to shipping rates, which flow through to the cost of everything that moves by sea, which is about 85% of global trade volumes.
[SPEAKER_01]: And there's an interesting environmental angle here too.
[SPEAKER_01]: The gap in costs between conventional marine fuel and cleaner e-fuels, produced using renewable energy has almost disappeared and some ports due to the search.
[SPEAKER_01]: Their policy officer argued, this crisis should be the catalyst for more investment and green shipping fuels to reduce dependence on fossil fuel price shocks.
[SPEAKER_01]: There's a longer term investment theme.
[SPEAKER_01]: and maybe it's one that's interesting to know.
[SPEAKER_01]: So for investors, the shipping fuel crisis matters because it's an amplifier.
[SPEAKER_01]: Every disrupted supply chain from the home use closure gets more expensive and more delayed because the ships themselves are struggling to fuel up.
[SPEAKER_01]: It adds friction.
[SPEAKER_01]: It adds costs at every single note of global trade.
[SPEAKER_01]: Satellite data shows the global fleet is sailing 2% slower in March in order to conserve fuel.
[SPEAKER_01]: Charter and rate to the biggest tankers have soared from 90,000 a day before the war
[SPEAKER_01]: This is the kind of compounding disruption that extends well beyond the immediate conflict, even if the straight reopens tomorrow.
[SPEAKER_01]: It takes weeks to revisit redistribute fuel inventories and normal eye shipping patterns.
[SPEAKER_01]: Looks like we got time, so let's drop another caller question now.
[SPEAKER_06]: Hey, Justin and Luke, I look with question for you guys.
[SPEAKER_06]: I am looking at the stock called ACIC, alpha Charlie in the Eta Charlie.
[SPEAKER_06]: I would like to know what your takers and your export opinion really appreciate your thoughts.
[SPEAKER_06]: Thank you so much.
[SPEAKER_01]: ACIC is the American Coastal Insurance Corporation.
[SPEAKER_01]: What do they do?
[SPEAKER_01]: Well, they're a Florida-focused, specialty commercial property and casualty insure.
[SPEAKER_01]: Primarily think of condominium associations, HOA's, and apartments that are exposed to hurricane risk.
[SPEAKER_01]: Over the fast past 52 weeks or down about 4.3%, down 11.88% over the past rather year to date, down about 11.24% over the past three months.
[SPEAKER_01]: Now, for the most part, the price has really been arranged bound.
[SPEAKER_01]: Since the end of 2023,
[SPEAKER_01]: Sitting at about eleven to twelve dollars per share nearly the entire time.
[SPEAKER_01]: No, with past six months, it was about seven to eight dollars per share at one point.
[SPEAKER_01]: Years ago, and randomly thirteen on a combination of strong twenty-five, twenty-twenty-five results in a bit of a weak hurricane season.
[SPEAKER_01]: Now, one good thing is that this company has posted an underwriting profit every single year since its founding in 2007.
[SPEAKER_01]: Through multiple major Florida hurricanes, their combined ratio of 60% is pretty elite for catastrophe-exposed property insurance, their book value is growing rapidly, their debt to equity has been declining.
[SPEAKER_01]: But the rate softening is real and accelerating.
[SPEAKER_01]: Premiums written down 19% year over year is not a small number.
[SPEAKER_01]: As competition returns to Florida, the exceptional combined ratios of the past two years are unlikely to repeat.
[SPEAKER_01]: A single active hurricane season puts all of this in a bit of a reverse overnight.
[SPEAKER_01]: And so it is a pretty well run, Florida, and sure.
[SPEAKER_01]: Writing for now no pun intended a perfect storm of legal reform, light hurricane seasons and shrinking reinsurance costs, but the results have been solid, but a quiet weather year and softening rates are already showing up, so for conservative investors who understand the binary hurricane risk, it is reasonably priced, but very pretty else seems to be a bit of a bet on weather rather than a balance sheet.
[SPEAKER_01]: This is in Vestock.
[SPEAKER_01]: I'm Lou Greer.
[SPEAKER_01]: We have one goal here to help you achieve your financial freedom.
[SPEAKER_01]: Our work continues after this break.
[SPEAKER_01]: It is our final break before the weekend.
[SPEAKER_01]: So get your questions in now at 888-99 Church.
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[SPEAKER_01]: It was almost exactly a year ago, April 2nd, 2025.
[SPEAKER_01]: and the president stood in the rose garden and announced liberation day tariffs.
[SPEAKER_01]: And the anniversary is a good time to look at what's actually happened to US China trade, because the numbers tell a story that's a bit more nuanced than either side political narrative.
[SPEAKER_01]: And the headline for every $100 American importer spent on goods last year, about $9 went to Chinese products.
[SPEAKER_01]: That's the lowest share since 2001 when China joined the World Trade Organization.
[SPEAKER_01]: US goods trade deficit with China shrink 32% to 202 billion, the narrowest since 2005.
[SPEAKER_01]: Chinese exports to the US in January and February of this year dropped another 11% year over year.
[SPEAKER_01]: So on the surface, the trade war achieved one of the state objectives, reducing America's bilateral trade dependence on China.
[SPEAKER_01]: But zoom out, and the picture is very different.
[SPEAKER_01]: The overall US goods trade deficit actually grew to 0.1% to be record 1.24 trillion because importers simply shifted to other countries.
[SPEAKER_01]: To Mexico to Vietnam to Taiwan to India, the deficit would China shrink, but the total deficit grew.
[SPEAKER_01]: American consumers didn't buy less imported stuff.
[SPEAKER_01]: They just bought it from different places, often at higher prices, because the alternatives lack Chinese manufacturing scale and efficiency.
[SPEAKER_01]: Meanwhile, China more than compensated by boosting exports to the rest of the world, posting a record 1.2 trillion trade surplus last year.
[SPEAKER_01]: So China's export machine, it wasn't broken, it just redirected.
[SPEAKER_01]: The trade war went through extraordinary escalations at their peak.
[SPEAKER_01]: U.S. tariffs and Chinese goods reached 164%.
[SPEAKER_01]: China retaliated with up to 125% on American products.
[SPEAKER_01]: Then came the legal challenge.
[SPEAKER_01]: The Supreme Court struck down the IEEPA tariffs in February, ruling the President exceeded his authority in using emergency powers for trade policy.
[SPEAKER_01]: That eliminated roughly 166 billion in collected tariffs, which are now subject to refund fight.
[SPEAKER_01]: President immediately replaced them with a 10% global tariff under a different statute but the legal tools available are narrower than what he had before.
[SPEAKER_01]: The product level data reveals which supply chains moved in which are stuck, laptop smartphones video game consoles have seen dramatic declines in Chinese market shares production shifted to Vietnam, India, and Taiwan, but rare earth magnets critical
[SPEAKER_01]: As the Pearson Institute's Chad Brown put it, the stuff that was easy to move is moved.
[SPEAKER_01]: The supply chains that are really difficult to move, they are still stuck.
[SPEAKER_01]: The consequences for American businesses and consumers, they've been real.
[SPEAKER_01]: Customs revenue rose by $287 billion, but 96% of that was paid for by American buyers, not Chinese exporters.
[SPEAKER_01]: Businesses built up massive inventory stockpiles.
[SPEAKER_01]: Early last year to get ahead of tariff increases, which temporarily soften the blow, but is those stockpiles ran out?
[SPEAKER_01]: cost got passed through to consumers.
[SPEAKER_01]: JP Morgan estimates that 80% of tariff costs absorbed by businesses in 2025 could shrink to 20% this year as they run out of room to absorb.
[SPEAKER_01]: The political implications are obviously significant headed into the midterms, but China's export controls.
[SPEAKER_01]: On rare earths, they've disrupted production for U.S. defense manufacturers for car makers for electronics companies.
[SPEAKER_01]: Agricultural exports to China dropped, contributing to the farm crisis we've been covering.
[SPEAKER_01]: And the Trump G summit scheduled for May and Beijing will likely determine whether we get further escalation or potentially a broader deal.
[SPEAKER_01]: For investors, the takeaway is that decoupling is real, but incomplete.
[SPEAKER_01]: Companies with diversified supply chains outside of China, they are better positioned, but they're paying more for that diversification.
[SPEAKER_01]: Rare Earth and critical mineral exposure remains a vulnerability and the legal policy environment that makes long-term business planning difficult.
[SPEAKER_01]: Revolves around the uncertainty around what tariff tools the administration can actually use.
[SPEAKER_01]: The trade war isn't over, it's just entering a new phase with different legal constraints and new geopolitical implications from the Iran conflict.
[SPEAKER_01]: I'm Luke Guerrera, this completes another episode of Invest Talk.
[SPEAKER_01]: I want to thank you for joining us and encourage you to tell your friends and family members about our free podcast downloads that they can get iTunes and Spotify.
[SPEAKER_01]: While you're over there, please be sure to leave us a rate and review.
[SPEAKER_01]: And while you're at it, head over to our YouTube channel, Invest Talk with two T's to check out our Market Madness Updates.
[SPEAKER_01]: If today's show made you think about your personal financial situation and you just like a second pair of eyes to see what's going on, head over to investalk.com, scheduling portfolio review, Justin and I would love to speak with you.
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