[SPEAKER_06]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers, this is Invest Talk.
[SPEAKER_06]: Independent Thinking, shared success.
[SPEAKER_06]: Invest Talk is made possible by KPP Financial, a registered investment advisor firm serving clients throughout the United States.
[SPEAKER_06]: Here is KPP Financial Portfolio Manager, Luke Guerrero.
[SPEAKER_00]: Hey there everybody and welcome to the Tuesday, May 12th, 2026 edition of Invest Talk.
[SPEAKER_00]: I'm your host Luke Guerrero and I'll be with you over the next hour as we dice seced what happened in the market today.
[SPEAKER_00]: Go for some important stories and most importantly, answer your finance and investment questions.
[SPEAKER_00]: Before we get started, I do want to mention that we recently uploaded our most recent, and best talk.
[SPEAKER_00]: That's right, Odie.
[SPEAKER_00]: Our most recent, invest, talk, wealth, webinar over to our YouTube channel.
[SPEAKER_00]: If you didn't have a chance to catch it, it was on a important topic, I think, and everybody's life.
[SPEAKER_00]: And that is inflation.
[SPEAKER_00]: So we had a brief presentation followed by as always answers to finance investment questions.
[SPEAKER_00]: If you didn't get a chance to catch it live, it is now available on replay.
[SPEAKER_00]: We'll run our YouTube channel.
[SPEAKER_00]: Now, just a bit.
[SPEAKER_00]: I'm going to talk about today's market performance and run down those show topics.
[SPEAKER_00]: But first, let's tackle this color question.
[SPEAKER_01]: this James from New York.
[SPEAKER_01]: I'm looking at P and C financial.
[SPEAKER_01]: Sticker symbol P and C and wondering what you guys think of it.
[SPEAKER_01]: We'll be listening to your answer on the podcast.
[SPEAKER_01]: Thank you so much.
[SPEAKER_01]: Have a great night.
[SPEAKER_00]: Let's pull up P and C find natural.
[SPEAKER_00]: It's going to be Tigger PNC.
[SPEAKER_00]: Though they are as a Pittsburgh-based Super Regional Bank, so they combine retail banking, corporate, and institutional banking asset management that actually have 230 billion under management and treasury management services as well.
[SPEAKER_00]: Now, in terms of size, it's an 86 billion dollar market cap company.
[SPEAKER_00]: It's billion with a billion.
[SPEAKER_00]: It's up about 3.1% in your date.
[SPEAKER_00]: Up 22.98% over the past 52 weeks.
[SPEAKER_00]: Now, they recently reported earnings April 15th, where they saw net income at 1.8 billion.
[SPEAKER_00]: That was a beat.
[SPEAKER_00]: by about seven to 10% on earnings per share.
[SPEAKER_00]: Actually, I had a loan growth about 11% year over year, which is phenomenal as well.
[SPEAKER_00]: But revenue, revenue actually missed.
[SPEAKER_00]: The estimate was 6.24 billion came in about 6.16 billion.
[SPEAKER_00]: Spider that, they still had net income growth, 18% year over year, revenue growth of 13% year over year, as well.
[SPEAKER_00]: Now for the full year, it looks like they guided earnings per share of 18.56 with a GDP base case of 1.9 in 2026 and saw unemployment drifting to 4.6 with no Fed rate cuts.
[SPEAKER_00]: Now with the best 6 months what you've seen is
[SPEAKER_00]: numerous analysts raising targets certainly in the wake of their acquisition that increased dramatically the size of their discretionary AUM from their management business, but mostly because they have some bullish numbers on growth.
[SPEAKER_00]: Again, net interest earned up 14.5% loan growth at
[SPEAKER_00]: And if you're an income investor, pay in the 3.2% dividend yield, they have 56 consecutive years of paying a dividend.
[SPEAKER_00]: So it's been executing some solid organic growth, but at the same time.
[SPEAKER_00]: Any rate cut accelerates their net interest margin compression.
[SPEAKER_00]: They're banking on zero rate cuts certainly we think that's plausible.
[SPEAKER_00]: But if you think that rates are going to head lower, then this is certainly not where you want to be.
[SPEAKER_00]: Overall, I would say from the super regional banks, those banks that are not quite regional, right?
[SPEAKER_00]: Not under 50 billion in market cap, about 50 to 150 billion in market.
[SPEAKER_00]: Cap, this is one of the best ones because of their growth story.
[SPEAKER_00]: and they're trading at about 11.1 times price to forward-looking earnings.
[SPEAKER_00]: Overall, I think it's a pretty solid bank that may have a little bit of upside here, not the most exciting area to be in, but if you're looking for those smaller than mega-banks, this is a solid one to be in.
[SPEAKER_00]: It is P and C financial services,
[SPEAKER_00]: We've got a lot of ground to cover in the next 45 minutes or so, including my main focus point, which is about the gold price forecast for 2026, is it a safe haven or will it be a victim of rate uncertainty?
[SPEAKER_00]: Now, gold prices are whip-sign as war uncertainty collides with shifting expectations on Federal Reserve Raycuts.
[SPEAKER_00]: We're going to take a look at whether gold is still the safe haven investors think it is in today's complex macro environment.
[SPEAKER_00]: Also touch on in a inflation soaring to 3.8% in April the highest level since I believe 2023.
[SPEAKER_00]: Then you've heard of the taco trade, but have you heard of the nacho trade.
[SPEAKER_00]: This is a new trade that seems to be becoming more dominant on Wall Street.
[SPEAKER_00]: And it should be a time with the end of the show.
[SPEAKER_00]: We'll take a look at the housing market.
[SPEAKER_00]: This primarily is for answering your findings and investment questions, so of course we have plenty to answer from our voice bank, including one on Colgate, Palm Olive Company, Take your C.L.
[SPEAKER_00]: and another on Mercado Libre ink, take your M.E.L.I.
[SPEAKER_00]: As always, we have some questions from the comment section of the Invest talking YouTube channel, and hopefully we hear from some of you live throughout the show.
[SPEAKER_00]: We're headed into Break, it is a quick one, please remember you can call any time and your questions on the Invest Talk Voice Bank.
[SPEAKER_00]: If you're listening via our live streamer on AM1220 in the Bay Area, pick up that phone and dial 80-89 chart.
[SPEAKER_00]: I've next, we'll talk about today's market activity.
[SPEAKER_04]: When you tell your friends about Investor, and they ask you why you listen, let them know there are many reasons and one is parallel investing from KPP Financial and Investor Coast Justin Klein.
[SPEAKER_04]: Parallel investing means Justin invests right alongside KPP financial clients.
[SPEAKER_04]: He makes the same trade for KPP financial on the same day at the same price and the same percentages as KPP clients.
[SPEAKER_04]: There's no front running and no special treatment.
[SPEAKER_04]: In this way, Justin and KPP financials share the same risks and the same potential for success.
[SPEAKER_04]: Parallel Investing aligns the interests of Justin and KPP Financial with those of his clients.
[SPEAKER_04]: Justin, Klein and Luke Guerrero are ready to answer your questions about Parallel Investing.
[SPEAKER_04]: And you can learn more anytime at InvestTalk.com.
[SPEAKER_04]: In the early days, in Vestock was Jerry Klein and Steve Peasley.
[SPEAKER_04]: Now the torch has been passed and a new generation of hosts is on the job.
[SPEAKER_04]: Just in Klein and Luke Guerrero.
[SPEAKER_04]: So when you've got finance and investment questions, don't forget to call in Vestock.
[SPEAKER_04]: 888-99 chart.
[SPEAKER_00]: 88899 chart is the number of course if you want to get through live sometime over the next 45 minutes but even if you can't
[SPEAKER_00]: It is also the number for any time voicemail.
[SPEAKER_00]: Leave us a voicemail and we will tackle those questions on the show.
[SPEAKER_00]: For a movie further, we do have to talk about the market today.
[SPEAKER_00]: U.S. stocks finishing mostly lower as higher yields and higher oil really combined to pressure this AI complex and the broader appetite for risk.
[SPEAKER_00]: Now the S&P fell to tens of a percent on the day.
[SPEAKER_00]: And as that dropped seven tenths.
[SPEAKER_00]: Russell 2000 is shed nearly 1%, though it doesn't really enough the Dow, which is a meaningless index, managed a bit of a fractional game.
[SPEAKER_00]: We're donning, I think the S&P did steadily improve from its midday lows, but still finish the day.
[SPEAKER_00]: Negative.
[SPEAKER_00]: Now the formula from March seems to be creeping a bit back in May, oils up, yields are up, stocks are down.
[SPEAKER_00]: WTI crewed climb to her 4% to settle back above $100 a barrel, treasurer yields backed up another 4 to 5 basis points following Monday's similar move pushing to 2 year above 4% in the 30 year back above 5.
[SPEAKER_00]: Then today's $42 billion 10 year auction tailed by 4 tenths of the basis points.
[SPEAKER_00]: It's the fourth straight time.
[SPEAKER_00]: There's been a tail there.
[SPEAKER_00]: Market price in his now is actually shifted away from using and fractionally towards more monetary tightening through your end.
[SPEAKER_00]: Now the inflation data certainly didn't help.
[SPEAKER_00]: We'll dive into that a little bit later on.
[SPEAKER_00]: The highlight being that Core Able CPI came in at four tenths, month over month versus the three tenths consensus.
[SPEAKER_00]: And so you had semi-cap equipment, sharply lower.
[SPEAKER_00]: Pairing some of that recent strength with memory and software, also under pressure.
[SPEAKER_00]: You had the AI disruption theme, still remaining in play as the latest batch of earnings featured more workforce reduction announcements.
[SPEAKER_00]: You had a parallel homebuilders, airlines, trucking, regional banks, some of the worst performers.
[SPEAKER_00]: You had small caps, underperforming as well.
[SPEAKER_00]: But on the other side, you had energy leading on this crude move, while ensures managed care, pharma, and biotech.
[SPEAKER_00]: also who had held up in what was really a classic defensive rotation.
[SPEAKER_00]: Now the Jubilot of backdrop is stuck in what's becoming a familiar holding pattern, though the possibility of return to this kinetic action continues to loom as the president looks to push towards
[SPEAKER_00]: What could be the most possible favorable ending to the war?
[SPEAKER_00]: Investors also looking ahead to the Trump G summit later this week, the President stressing today, the meeting would be more about trade than Iran, though it remains unclear whether it will generate anything beyond another extension of the country's rolling trade.
[SPEAKER_00]: Truce.
[SPEAKER_00]: Elsewhere, the dollar gained three tenths of percent gold, fell nine tenths.
[SPEAKER_00]: Bitcoin features dropped one and a half percent.
[SPEAKER_00]: Now, looking ahead to the rest of the week, Wednesday brings April, PPI Thursday will deliver us a new retail sales report, as well as import prices and claims, and the week will close out on Friday with Empire Manufacturing and Industrial Production.
[SPEAKER_00]: Who we already answered one from the invest talk, a voice bank?
[SPEAKER_00]: So I think it's time to tackle one from the comment section of our invest talk YouTube channel.
[SPEAKER_00]: Or if you haven't checked it out yet, we have been dropping a new series of videos that we have dubbed our deeper focus series.
[SPEAKER_00]: And if you leave your comment on that one or any other video, we'll try and tackle those on the show.
[SPEAKER_00]: This question about MBLY.
[SPEAKER_00]: It says, I would like to ask your thoughts on mobile eye
[SPEAKER_00]: The stock is trading at the low end of its 52-week range.
[SPEAKER_00]: I believe its advanced driver assistant systems could drive the stock price as higher and no pun intended in the short term, but I would like to hear your opinion on it.
[SPEAKER_00]: And if now is a good time to buy.
[SPEAKER_00]: Small cap, small small small company.
[SPEAKER_00]: I was reading the wrong line.
[SPEAKER_00]: Still a small cap, actually, probably in the larger end of the range, about 7.7 billion dollar market cap.
[SPEAKER_00]: Let's take a look at their debt picture.
[SPEAKER_00]: No long-term debt to speak of, really, about $44 million in debt.
[SPEAKER_00]: Now, they may be trading at the lower end of their five-year range, but they're still pretty expensive, relative to the rest of the market trading at 30.5 times price to forward looking earnings.
[SPEAKER_00]: I'll be at underneath most of their named competitors here.
[SPEAKER_00]: Now, this company is a ADS and autonomous driving technology company.
[SPEAKER_00]: They have the IQ system on chip installed in 200 million vehicles globally.
[SPEAKER_00]: They have the super vision hands free highway driving as well as a drive autonomously platform.
[SPEAKER_00]: So they serve 50 plus global OEMs including BMW, Volkswagen Porsche, GM and a growing roster of Chinese automakers.
[SPEAKER_00]: something to flag here.
[SPEAKER_00]: Intel still owns 88% of MBLY as Intel's own stock for transformation plays out here.
[SPEAKER_00]: And so you could see this potential secondary share sale that is always a persistent overhang.
[SPEAKER_00]: Generally I don't like to get into these
[SPEAKER_00]: closely held securities here because so much of the float is unavailable and when someone holds this much single investor in this case, a company holds this much, they could find themselves in a situation where they need to drop, drop, drop it and dump it.
[SPEAKER_00]: Quickly, now last quarter they saw revenue grow 27% year over year.
[SPEAKER_00]: They saw earnings per share beat by about 33%.
[SPEAKER_00]: You know, it's not right.
[SPEAKER_00]: It is the dominant ADAS platform trading in a fraction of its intrinsic value, right?
[SPEAKER_00]: 27% revenue growth, 33% earnings per share beat.
[SPEAKER_00]: But,
[SPEAKER_00]: They have to understand two things.
[SPEAKER_00]: The Intel overhang, it's real, and the Q2 sequential revenue decline, it's coming.
[SPEAKER_00]: Where this is priced, you may find the risk reward to be a bit compelling, but because it's so closely held, I would hesitate to enter a position in this company.
[SPEAKER_00]: It's not just about this company, that's any company in general that is so closely held.
[SPEAKER_00]: That is a mobile eye global link to your MVLY.
[SPEAKER_00]: Well, folks, we are well underway.
[SPEAKER_00]: We talked about the market.
[SPEAKER_00]: We answered two of your finance and investment questions.
[SPEAKER_00]: And when we come back, we're going to dive into my main focus point on a topic that we love to discuss here.
[SPEAKER_00]: And that topic is gold.
[SPEAKER_00]: My name is Ligrero.
[SPEAKER_00]: You're listening to Invest Talk.
[SPEAKER_00]: And if you have a question burning on your mind, pick up that phone and dial 8899 chart.
[SPEAKER_04]: For investors, the goal of achieving financial freedom requires unbiased information, strategic planning, and determination.
[SPEAKER_04]: Congratulations!
[SPEAKER_04]: You found the podcast that is dedicated to helping you succeed in Vestock.
[SPEAKER_00]: Gold has fallen from roughly $5,200 an ounce at the end of February, the day before the Iran strikes began to roughly $4,700 today.
[SPEAKER_00]: That's over $500 of decline, roughly 10% during what is arguably the most severe geopolitical and energy crisis since the 1970s.
[SPEAKER_00]: Meanwhile, oil has surged over 37% throughout the same period.
[SPEAKER_00]: Now, the two assets investors have traditionally paired to protect against inflation and geopolitical shocks are moving in sharply opposite directions.
[SPEAKER_00]: If you own gold as insurance, here insurance policy has lost value in the exact scenario, it was supposed to pay out.
[SPEAKER_00]: And that deserves an explanation.
[SPEAKER_00]: Now the answer lies in a distinction that most investors miss.
[SPEAKER_00]: Gold doesn't respond to inflation.
[SPEAKER_00]: It responds to expectations about whether central banks will lose control of inflation.
[SPEAKER_00]: Those are two very different things.
[SPEAKER_00]: Before the war markets were priced two to three, two to three Fedcuts, right, by year end.
[SPEAKER_00]: Rio yields the return on Treasury bonds after adjusting for inflation-redrifting lower, and the environment where gold thrives, because a non-yielding asset becomes more attractive, when the alternative bonds pays less in real terms.
[SPEAKER_00]: The war destroyed that tailwind.
[SPEAKER_00]: The CME FedWatch tool now shows zero cuts for 2026 as the dominant scenario.
[SPEAKER_00]: Year-out market implied odds of a fed rate hike actually exceed the odds of a cut.
[SPEAKER_00]: And really yields on 10-year treasuries of climb roughly 40 basis points since late February.
[SPEAKER_00]: A Morgan Stanley's medals strategist captured it.
[SPEAKER_00]: I think pretty well.
[SPEAKER_00]: He said with the conflict triggering an energy supply shock that has reduced hope for lower US interest rates, it's not surprising that gold has struggled to work as a safe haven this time.
[SPEAKER_00]: The Ron War has produced a supply shock, not a credibility shock.
[SPEAKER_00]: Physical crucial difference, a supply shock means oil and energy prices surge.
[SPEAKER_00]: Inflation rises and the central bank is expected to respond by keeping policy tight.
[SPEAKER_00]: Market trust the Fed to handle it.
[SPEAKER_00]: Gold doesn't rally in the environment because the alternative holding bonds at higher real yields becomes more attractive relative to a metal that pays nothing.
[SPEAKER_00]: Gold's real moment arrives when that trust breaks.
[SPEAKER_00]: When inflation becomes unankered, when the central bank is seen as unwilling or unable to stop it.
[SPEAKER_00]: When investors question whether the currency itself will preserve purchasing power, the 1970s under Arthur Burns, the Eurozone debt crisis, the 2020 pandemic would fiscal and monetary expansion rent simultaneously.
[SPEAKER_00]: Those are credibility shocks.
[SPEAKER_00]: Gold rallied massively in each because the alternative,
[SPEAKER_00]: being repudiated was the currency itself.
[SPEAKER_00]: So the question becomes could the Ron War evolve from a supply shock into a credibility shock?
[SPEAKER_00]: I mean, it could under specific conditions of the Fed faces a stack, inflationary bind, rising inflation, rising unemployment at the same time.
[SPEAKER_00]: Chooses to cut rates.
[SPEAKER_00]: in order to support employment despite elevated prices?
[SPEAKER_00]: That's when credibility comes under pressure.
[SPEAKER_00]: Government deficits balloon from more spending in the Treasury market show signs of stress, which we've already seen from foreign central banks selling 82 billion in a month.
[SPEAKER_00]: That could chip away at confidence in the dollar.
[SPEAKER_00]: But we're not there yet.
[SPEAKER_00]: Fed's holding rates steady inflation is uncomfortable.
[SPEAKER_00]: Labor market is weak but not collapsing.
[SPEAKER_00]: The market still trusts the Fed's reaction function and as long as the trust holds gold-faces headwinds from rising real yields and a strong dollar.
[SPEAKER_00]: Dollar relationship is straightforward.
[SPEAKER_00]: Gold is priced in dollars.
[SPEAKER_00]: When the dollar strengthens as it did ruin early weeks of the war, gold-faces mechanical selling pressure because it becomes more expensive for foreign buyers.
[SPEAKER_00]: that all of his since weekend, since late March peak, which has provided some support for gold, de-escalation hopes persist and that all our continues decide gold gets a tailwind from currency weakness even if a rate expectations don't change.
[SPEAKER_00]: It's important to note Goldman Sachs still forecast gold reaching 54 hundred by year and anchored by continued central bank buying roughly 70% of central banks surveyed by Goldman in their recent conference, expect global gold reserves to rise over the next year.
[SPEAKER_00]: by expectations that the Fed will eventually resume cutting.
[SPEAKER_00]: But Goldman warns that near-term risks skew lower gold remains vulnerable if the streets disruption persists and rate expectations keep climbing.
[SPEAKER_00]: Now for investors evaluating their goal allocation, the framework is this.
[SPEAKER_00]: Gold's value, as a long-term strategic holding, has not changed.
[SPEAKER_00]: We actually talked about this in our most recent wealth weapon.
[SPEAKER_00]: The structural drivers de-dollarization by central banks, physical deficits expanding across developing economies, the gradual erosion of confidence, in fiat currency, are all intact and arguably getting stronger.
[SPEAKER_00]: Gold ETF allocations are still under 1% of global fund assets, well below.
[SPEAKER_00]: They're recommended 5 to 10% strategic range.
[SPEAKER_00]: Over a multi-year horizon, Gold's place in a diversified portfolio remains strong.
[SPEAKER_00]: But as a short-term tactical trading in Toronto, the Iran War specifically, Gold is failed.
[SPEAKER_00]: If you bought Gold as a warhead in March, you lost money.
[SPEAKER_00]: But oil investors made money.
[SPEAKER_00]: The lesson is that Gold is broken.
[SPEAKER_00]: It's that Gold doesn't hedge every kind of crisis.
[SPEAKER_00]: It hedges currency, debasement, and central bank credibility loss.
[SPEAKER_00]: It doesn't hedge supply shocks where the central bank is expected to respond with tighter policy.
[SPEAKER_00]: The practical move.
[SPEAKER_00]: Maintain your strategic allocation long-term 5 to 10% of your portfolio don't add tactically at current levels and unless you believe the Fed is about to lose credibility and recognize.
[SPEAKER_00]: that if the war ends and the Fed resumes cutting, gold will likely rally in rally sharply as the tailwind from falling real yields returns.
[SPEAKER_00]: The current weakness could be the entry point for the next leg higher, but only if the macro environment shifts back towards easing.
[SPEAKER_00]: On the next invest talk, we'll look into this question, is Goldman Sachs' right about the Fed rate cut forecast?
[SPEAKER_00]: Major Wall Street banks are now pushing back, their expectations for federalors or rate cuts, as inflation risks and jobs data complicate the picture.
[SPEAKER_00]: We'll discuss what a longer wait for a rate relief means for your bond portfolio, mortgage and stock valuations.
[SPEAKER_00]: That's tomorrow, but we still got plenty of show to do today.
[SPEAKER_00]: I'm Luke Graer, and I am here for you over the next 30 minutes ready to take your calls any time at 80 to 99 chart.
[SPEAKER_00]: Hang on Robert, we'll get to you when we come back.
[SPEAKER_04]: There are a few things that make KPP financial special.
[SPEAKER_04]: One of them is parallel investing.
[SPEAKER_04]: This means they invest right alongside their clients.
[SPEAKER_04]: Here's how it works.
[SPEAKER_04]: When KPP financial makes a trade for their clients, just in client makes the same trade for himself and KPP.
[SPEAKER_04]: On the same day, at the same price and same percentage.
[SPEAKER_04]: No front running, no special treatment.
[SPEAKER_04]: Learn more about parallel investing at investtalk.com.
[SPEAKER_00]: It's going to robber from Pleasanton.
[SPEAKER_00]: Thank you for being patient.
[SPEAKER_00]: Nothing else, Robert?
[SPEAKER_03]: Hey, I was looking at wingstop today.
[SPEAKER_03]: W-I-N-G. And boy, that's stock.
[SPEAKER_03]: Like a lot of the restaurant stocks.
[SPEAKER_03]: Really taking it on the chin.
[SPEAKER_03]: I think it's down about 60% year to date or I'm trying to pass year.
[SPEAKER_03]: And I'm just wondering what your thoughts are on that stock.
[SPEAKER_03]: And if it might be a time to buy or it's still a little too early.
[SPEAKER_00]: Yeah, it's basically a wing stop, which is the Dallas-based fashion fashion.
[SPEAKER_00]: That's not the way I'm looking for.
[SPEAKER_00]: Fast casual, chicken wing franchisers.
[SPEAKER_00]: They have over 3,000 locations across the United States, as well as 10 international markets.
[SPEAKER_00]: They have probably a dozen sauces, mango hop and arrows, my favorite hot sauce all the time for wings, but that's besides the point here.
[SPEAKER_00]: Now, taking a look at this name, it's down about 48% year-to-date down 56.73% in the past 52 weeks and probably over 60% from its all-time hide is, as falling like a rock really, since about February, where it was a steep drop-off, and then I noticed steep drop-off coming off of the end of April.
[SPEAKER_00]: Revenue was up 7.4% year over year, but missed by 2.4% earnings per share actually beat by 15.1%, but the big number here is that domestic same source, uh, it's always hard to say this.
[SPEAKER_00]: Same store sales is down about 9% now part of that was attributed to a temporary closure of about 700 of their restaurants from winter weather.
[SPEAKER_00]: But elevated gas prices are also hitting lower income
[SPEAKER_00]: Pretty hard.
[SPEAKER_00]: And so not only is that hurting same stores sales, but that's hurting their ability to open new stores as well.
[SPEAKER_00]: And in their most recent guidance, they actually reduced their expectation of same stores sales, declining by low single digits.
[SPEAKER_00]: Now, they do assume in 2020, seven they will reach growth again,
[SPEAKER_00]: But this is kind of difficult here, because what they're essentially saying is, while gas prices remain elevated, their consumers are hit particularly hard.
[SPEAKER_00]: And that explains, I mean, their bait is 1.4 over the past year.
[SPEAKER_00]: I think they're 5-year bait, and maybe closer to 1.8.
[SPEAKER_00]: So you have a restaurant business as being beaten down.
[SPEAKER_00]: But these guys take it on the chin.
[SPEAKER_00]: more than any other name almost within that sector.
[SPEAKER_00]: I mean, they're underperforming the industry by about 50%.
[SPEAKER_00]: Last year, they underperform the industry by about 10%.
[SPEAKER_00]: And that level of beta runs both ways.
[SPEAKER_00]: And so this is undoubtedly not only one of the steepest drawdowns in the history of this company, but in the restaurant industry,
[SPEAKER_00]: off of their peak, and so unless you think there's going to be a big change in affordability and the cost of gas, which asymmetrically hurts their customers in the medium term, which one of our next upcoming stories is probably going to make a claim that that's unlikely.
[SPEAKER_00]: I for now would stay away from a company like wingstop.
[SPEAKER_00]: That is wingstop big, take your W-I-N-G, thanks to the call.
[SPEAKER_00]: Alright, let's play a fresh question that came in earlier from Minneapolis.
[SPEAKER_05]: Good day, they're Justin and Luke, since you're long, long time listener from the Midwest here.
[SPEAKER_05]: Love the show.
[SPEAKER_05]: Thank you guys for everything, you're great.
[SPEAKER_05]: Quick question, looking just to get my portfolio a little solidified here right now.
[SPEAKER_05]: And I'm looking for a stock that will not have as much volatility in it.
[SPEAKER_05]: The one I've been searching and looking at is ticker symbol C. L. Colgate, what do you think of it?
[SPEAKER_05]: It looks like a stable stock that slowly goes up over time, pays a dividend, and it carries products that will always be needed by its consumers.
[SPEAKER_05]: I don't know.
[SPEAKER_05]: Does this range maybe a good buy-at or what would you consider a good buy?
[SPEAKER_05]: And you consider this stock
[SPEAKER_05]: Thank you for all your feedback.
[SPEAKER_05]: Look forward and listening to it on the show.
[SPEAKER_05]: Have a great day.
[SPEAKER_00]: Colgate Palm Olive Company is the world's number one toothbrush brand, toothpaste brand.
[SPEAKER_00]: has them rather inculgate.
[SPEAKER_00]: They are a global consumer staples giant.
[SPEAKER_00]: They have hills pet nutrition.
[SPEAKER_00]: They have palm olive.
[SPEAKER_00]: They have speed stick, home care, pet nutrition.
[SPEAKER_00]: And they're present in over 200 countries with 55% of their sales from the emerging markets.
[SPEAKER_00]: So not only are they a giant in the consumer staples space,
[SPEAKER_00]: Not only are they a giant in the consumer's staple space, they also have a lot of their revenue outside of the United States.
[SPEAKER_00]: Now, you're to date, they're up about 11%.
[SPEAKER_00]: about one point, but in spite of that down about 9% over the past three months, in terms of size, 69 billion dollar market cap company that is very little debt.
[SPEAKER_00]: And oftentimes, you find yourself in a position where you're looking at some of these older consumer staples companies, and it's the opposite.
[SPEAKER_00]: They have a lot of debt on their balance sheet.
[SPEAKER_00]: This one does not.
[SPEAKER_00]: Now, it's trading near the middle of its range about 22.4 times price to forward looking earnings, and it recently reported earnings on May 1st, where they beat on revenue, and beat on EBITDA, and beat on earnings per share.
[SPEAKER_00]: They're operating margins, though, down a bit to 18.1% down from 21.9, you over year, because of tariff cost inflation, because of raw materials costs,
[SPEAKER_00]: But, net margins still supposed to grow from 10.5% to 14.2% return on assets, said to grow from 13.2 to about 18.3.
[SPEAKER_00]: If you're a dividend focused investor, this is good.
[SPEAKER_00]: They have 62 years of dividend growth streak.
[SPEAKER_00]: They have a, what are they sitting at right now?
[SPEAKER_00]: Two point.
[SPEAKER_00]: 4% dividend yield.
[SPEAKER_00]: They have zero cell ratings across analysts.
[SPEAKER_00]: They have about a 10% implied upside from Consec consensus and they have four consecutive quarters of beating estimates.
[SPEAKER_00]: The thing that really attracts me to them, rather attracts them to me, me to them.
[SPEAKER_00]: Anyway, one of the things that I really like about them is something I mentioned at the top.
[SPEAKER_00]: They have great growth in
[SPEAKER_00]: emerging markets.
[SPEAKER_00]: They're accelerating growth in emerging markets.
[SPEAKER_00]: They also have that Hills Pet Nutrition, which I've had to buy for my cats when they get sick.
[SPEAKER_00]: That is a premium secular growth engine that has a bit of a low beta and has been a huge, huge compounder in terms of growth in their business.
[SPEAKER_00]: But at the same time, we mean margins are falling a bit.
[SPEAKER_00]: They had to deal with raw material cost inflation, North American tariffs or a bit of a headwind.
[SPEAKER_00]: And I mean, they are a bit expensive.
[SPEAKER_00]: 22.4 times price to afford looking earnings.
[SPEAKER_00]: I don't know, in this environment, seems to be the quintessential defense compounder.
[SPEAKER_00]: Training about 15% below, it's 52 week high.
[SPEAKER_00]: I think if you're in an income-focused investor, you're worried about volatility.
[SPEAKER_00]: Now, this company's beta is 0.31.
[SPEAKER_00]: This could be a good addition to your portfolio, good diversifier, for times of volatility.
[SPEAKER_00]: It is co-gate palm all of company, ticker, CL.
[SPEAKER_00]: Thanks to the call.
[SPEAKER_00]: This morning, we got a CPI report.
[SPEAKER_00]: And that confirmed what everyone has been feeling of the pump and the grocery store.
[SPEAKER_00]: Inflation is re-accelerating.
[SPEAKER_00]: Consumer prices rose 3.8% in April from a year earlier, up from a 3.3% in March, topping the 3.7% consensus.
[SPEAKER_00]: It is the highest reading in three years.
[SPEAKER_00]: Month of a month, prices rose 60 basis points with energy accounting for over 40% of the increase.
[SPEAKER_00]: Now the energy numbers are staggering to be frank.
[SPEAKER_00]: Energy prices overall were of 18% year over year.
[SPEAKER_00]: Gasoline was up 28% fuel oil jumped 54% air fairs rose 21%.
[SPEAKER_00]: These aren't subtle inflationary pressures.
[SPEAKER_00]: They're hitting household budgets like a sledge hammer and inflation adjusted average hourly earnings declined 30 basis points from a year earlier.
[SPEAKER_00]: The first time inflation is outstripped annual rage growth since April of 2023.
[SPEAKER_00]: Real purchasing power is falling now when you strip out food and energy you get core CPI came in it 2.8% still above the 2.7% forecast and higher still from a previous month where it was up 2.6 that's the number of the Fed cares about most and it's moving in the wrong direction.
[SPEAKER_00]: Services prices excluding energy and housing firms up, which complicates the argument from rate doves that inflation pressures are just temporary energy effects.
[SPEAKER_00]: Services inflation reflects domestic demand conditions, not oil prices.
[SPEAKER_00]: And it's telling you the underlying economy is still generating enough spending to keep prices rising.
[SPEAKER_00]: The American economy has, in a way, entered this chapter that we've been talking about for some time
[SPEAKER_00]: Meaning, it is more likely that headline CPI moves towards 4% later this year, then back down towards 2.
[SPEAKER_00]: Now there is a data quirk worth noting.
[SPEAKER_00]: Last fall's government shut down prevented the labor department from collecting rent data, so they penciled in 0% for October.
[SPEAKER_00]: That artificially depressed CPI in subsequent months, and this report is the first, where that zero drops out of the calculation.
[SPEAKER_00]: housing costs are about a third.
[SPEAKER_00]: The CPI basket, so the rent correction alone, explains part of the pickup.
[SPEAKER_00]: The Fed policy debate has essentially shifted fundamentally.
[SPEAKER_00]: Four months ago, the question was when to cut rates.
[SPEAKER_00]: To support a shaky labor market, now that a debate is when to start signaling that a rate hike is as likely as a cut.
[SPEAKER_00]: Trader C less than a 5% chance of any rate cut this year.
[SPEAKER_00]: That's a complete repricing from the two cuts markets expected in January.
[SPEAKER_00]: Kevin Worst will inherit a situation
[SPEAKER_00]: that he did not want to inherit and he takes over as the fed share under a precedent who has made clear he expects rake cuts.
[SPEAKER_00]: The political tension between the White House and the Fed is about to get very real.
[SPEAKER_00]: The White House called the war-related price disruptions temporary, but the definition of temporary matters a lot here.
[SPEAKER_00]: Commercial traffic through the Strait of Hormuz remains a largely halted.
[SPEAKER_00]: The President said Monday, the ceasefire is on a massive life support.
[SPEAKER_00]: Venergie prices stay elevated through summer.
[SPEAKER_00]: The second round affects higher transportation costs flowing into food, clothing, and service prices.
[SPEAKER_00]: Those become embedded.
[SPEAKER_00]: Companies are quick to raise prices and very slow to lower.
[SPEAKER_00]: What turns a temporary shock into persistent inflationary issues?
[SPEAKER_00]: Food prices, up 3.2% year over your coffee, jump 19 fresh vegetables, rows 12, tomatoes, already pressured by weather tariffs, surged 40.
[SPEAKER_00]: For median American families, the second half of the year, may be very challenging.
[SPEAKER_00]: This invest talk in here comes another fresh question from 8.08, 99 chart.
[SPEAKER_02]: I just didn't loop.
[SPEAKER_02]: This is Tyler and Los Angeles calling again.
[SPEAKER_02]: Thanks for all the help in the input over the last year I learned a lot and I appreciate it.
[SPEAKER_02]: Calling today because I attended your webinar last week and realized I am sorely underweight in the energy sector.
[SPEAKER_02]: So I'm looking to try to get some exposure in my iRF.
[SPEAKER_02]: Like to go with ETS instead of single stocks and I found two that I was hoping to get your perspectives on the first is XLE.
[SPEAKER_02]: So this would give me exposure to some of the big players like Exxon, Chevron, Conical Phillips, but any expense ratio actually is pretty good.
[SPEAKER_02]: That said, technicals don't look great, but I'm guessing there's upside here in the next
[SPEAKER_02]: Second name I want to get your pain on is P-O-W.
[SPEAKER_02]: This is an electrification play.
[SPEAKER_02]: I know the expense ratio is high.
[SPEAKER_02]: You probably won't like that, but the technical is look good.
[SPEAKER_02]: The performance looks really good.
[SPEAKER_02]: So I'm wondering if it isn't worth it to pay the higher expense ratio for this one.
[SPEAKER_02]: Thinking of adding both to my IRA, since I have no dedicated energy exposure right now, would love to just get your perspective before I start to dollar cost average into these.
[SPEAKER_02]: Thanks so much all of a sudden to podcast.
[SPEAKER_00]: Well, the first one is a name we get questions a lot about it.
[SPEAKER_00]: It's because it's one of the largest energy funds out there.
[SPEAKER_00]: It's got 40 billion under management.
[SPEAKER_00]: It is the state street energy select sector spider ETF.
[SPEAKER_00]: And essentially all it does is it gives you liquid exposure to a market-like basket of U.S. energy firms.
[SPEAKER_00]: It is based upon the S&P, which means it's going to be heavily tilted towards
[SPEAKER_00]: Really all in large caps, about 99.86% of it is in large caps.
[SPEAKER_00]: And the reason why it's very cheap is because they don't do anything.
[SPEAKER_00]: They just buy things in a market cap waiting.
[SPEAKER_00]: They rebalance, I think, quarterly.
[SPEAKER_00]: And that's it.
[SPEAKER_00]: So it is a good backbone, right, a good core holding for energy.
[SPEAKER_00]: Now the other name is P-O-W, which had a little bit of trouble finding, but I think it's the VISTA shares electrification super cycle ETF.
[SPEAKER_00]: It is actively managed, which means it's going to be a little bit more expensive.
[SPEAKER_00]: It there, it's POW, the new S, pull this up here.
[SPEAKER_00]: So it's actually managed, it's gonna be a little bit more expensive than only as 30 holding, so it's certainly less diversified here.
[SPEAKER_00]: It's split between large caps, mid in small caps, about 74% large, 21% mid.
[SPEAKER_00]: Very small, only about 70 million under management, and you're paying an expense ratio about 75 basis points.
[SPEAKER_00]: Now, it's as only existed for since November of last year, hasn't even been a full year yet.
[SPEAKER_00]: Profit from EV disruption.
[SPEAKER_00]: They're looking at companies.
[SPEAKER_00]: They've identified as part of the electrification super cycle value chain, meaning at least 50% of the revenue is tied to the production of components and materials used in EVs.
[SPEAKER_00]: I would say this one is far too highly concentrated, but also importantly, far too new for me to want to invest in.
[SPEAKER_00]: There's no track record here to show over the long term if their thesis holds.
[SPEAKER_00]: And so between these two, I'm going to go with the boring one,
[SPEAKER_00]: As a restock, I'm Lou Greer, we have one goal here and that's to help you achieve your financial freedom.
[SPEAKER_00]: We'll work continues after this break, which is our final break.
[SPEAKER_00]: So get your questions in now at 888-99 chart.
[SPEAKER_04]: Invest dog.
[SPEAKER_04]: Your questions are free.
[SPEAKER_04]: The answers are unbiased.
[SPEAKER_04]: Luke Guerrero is here now.
[SPEAKER_04]: 888-99 chart.
[SPEAKER_00]: So this is a new acronym that is making the rounds on Wall Street and it
[SPEAKER_00]: not show, not a chance, or moves, opens.
[SPEAKER_00]: The idea is that the straight will remain effectively shut until the economic cost of its closure higher oil accelerating inflation, strategic reserve depletion, becomes severe enough to force a resolution.
[SPEAKER_00]: Now the term, it's a bit of a play on last year's taco trade, Trump always chickens out, which emerge when the president walked back his market rattling tariffs and sparked a rebound.
[SPEAKER_00]: Nobel Prize winning economist Paul Krugman helped popularize the Nacho concept writing that he never bought the taco meme, but Nacho looks right, or moves one open until the economic damage from its closure becomes much more severe.
[SPEAKER_00]: Signed the Nacho trade were visible on Monday after U.S. Iran diplomacy yielded no progress and the president said the ceasefire was on massive life support.
[SPEAKER_00]: Oil climbed almost 3% to about $98.
[SPEAKER_00]: We know it has since climbed over 100.
[SPEAKER_00]: 10-year treasure yield rose traders now see less than a 5% chance of a Fed rate cut this year.
[SPEAKER_00]: And yet, here's the part that confuses people.
[SPEAKER_00]: Yes, and be hit a new all-time high on the same day the NASDAQ also said a record.
[SPEAKER_00]: Chip Stocks extended their blistering rally.
[SPEAKER_00]: Micron jumped six and a half percent Qualcomm rose 8.4.
[SPEAKER_00]: The market is simultaneously.
[SPEAKER_00]: pricing in a pro-long closure and record corporate profit ability.
[SPEAKER_00]: Those two things seem contradictory, but there's a bit of logic to it.
[SPEAKER_00]: The bull case rests on three pillars.
[SPEAKER_00]: First, the S&P companies are exceeding profit estimates by 18.2% in aggregate this quarter, well above the five-year average of 7.3.
[SPEAKER_00]: A.I.
[SPEAKER_00]: driven earnings are carrying the index.
[SPEAKER_00]: Second, the labor market has steadyed April's jobs report showed healthy growth.
[SPEAKER_00]: Third, the EOS economy, as a net energy exporter with a dominant AI sector, is relatively better positioned than any other major economy
[SPEAKER_00]: It's really, it's a really hard economy effectively to destroy right now.
[SPEAKER_00]: The bear case is about disconnect.
[SPEAKER_00]: Morgan Stanley's wealth management team wrote Monday that investors driven by the fear of missing out in a historic surge in momentum factors have pushed U.S. equities to all-time highs while concerns about inflation, which have pushed interest rates higher, and the reduced probability of the Fed rate cut have ceased to matter.
[SPEAKER_00]: They warned
[SPEAKER_00]: that they're not convinced that that disconnect can persist for long, because there's a reality.
[SPEAKER_00]: Gas is now at 452 nationally, up from under three before the war, real wages.
[SPEAKER_00]: Well, they just turned negative for the first time in two years.
[SPEAKER_00]: Consumer sentiment, well, that is at yet another record low.
[SPEAKER_00]: The market is pricing in a world where corporate earnings can stay strong, even as the consumer deteriorates.
[SPEAKER_00]: And if you believe that, well, you look at history and history shows us that assumption can only last so long.
[SPEAKER_00]: Now this nacho thesis implies that the market will eventually have to reconcile two competing realities.
[SPEAKER_00]: Record earnings in the economy.
[SPEAKER_00]: and deteriorating conditions in the physical economy where most people both live and spend.
[SPEAKER_00]: Right now, the AI economy is winning this tug of war.
[SPEAKER_00]: But if gas hits $5, if Q2 earnings guidance is disappointment broadly, or if the labor market, which has held up so strong through so much,
[SPEAKER_00]: becomes a nacho trap.
[SPEAKER_00]: Well, folks, that does it for another episode of Invest Talk.
[SPEAKER_00]: As always, Justin and I thank you for listening and encourage you to tell at least one family member, one friend about our free podcast downloads.
[SPEAKER_00]: As always, you can get them on iTunes and Spotify.
[SPEAKER_00]: And while you're at it, while you're over there, we'd really appreciate it if you left us a rate and review.
[SPEAKER_00]: One more thing I implore you to check out is our Invest hockey YouTube channel where we have YouTube, specific content, including our new series, our deeper focus.
[SPEAKER_00]: Video series where we take one topic of the week and we dive deeper rather than just listening to us rather than having to see our ugly faces on video.
[SPEAKER_00]: We show you visualizations, we show you charts.
[SPEAKER_00]: We really drive home points to try and help you understand the stories that matter.
[SPEAKER_00]: Lastly, if you haven't heard yet, I wanted to highlight our practice of parallel investing at KPP Financial, where when we make a trade for our clients who meet the same trade for ourselves on the same day, the same price, the same percentage, we invest right alongside our clients we share the same risks and the same potential for success.
[SPEAKER_00]: If you'd like to learn more, head over to investsock.com and schedule a free portfolio review.
[SPEAKER_00]: Independent Thinking.
[SPEAKER_00]: Shared Success.
[SPEAKER_00]: This is Invest Talk.
[SPEAKER_06]: Good night.
[SPEAKER_06]: Invest talk is a trademark of KPP Financial because of the nature of the interactive dialogue inherent in the format of this program.
[SPEAKER_06]: It's important for the listener to understand that not all comments made will apply to them.
[SPEAKER_06]: Specifically, nothing said she'll be taken to be investment advice.
[SPEAKER_06]: or shell statements on this program be considered an offer to buy or sell security.
[SPEAKER_06]: Because such advice is rendered solely on an individual basis, and at times will require that the investor review a prospectus before investing.
[SPEAKER_06]: Invest talk is a copyrighted program of Klein, Pavles, and Peasley Financial, a registered investment advisor firm, which retains all rights.
[SPEAKER_06]: For more information regarding KPP's investment advisors, call 1-800-557-5461.
[SPEAKER_06]: Thank you for listening and your comments and questions are welcome on our 24-hour listener line at 888-99 chart.