[SPEAKER_01]: This is Invest Talk, from KPP Financial, helping investors make sense of the markets one day at a time.
[SPEAKER_01]: Here's your host, Luke Guerrero.
[SPEAKER_04]: Good afternoon, fellow investors, and welcome to the May 26th, 2026 edition of Invest Talk.
[SPEAKER_04]: I'm your host Luke Gray.
[SPEAKER_04]: I'll be with you over the next 45 minutes or so.
[SPEAKER_04]: And I hope you all enjoyed the long weekend.
[SPEAKER_04]: Now, that being said, it is a short week.
[SPEAKER_04]: So we have no time to waste.
[SPEAKER_04]: Before we talk about today's market performance and run down those show topics, let's tackle this call your question now.
[SPEAKER_07]: Hi, I'm Cliff today about ticker symbol A.G.M.
[SPEAKER_07]: You're all agricultural workers company.
[SPEAKER_07]: I was looking to get some financial exposure.
[SPEAKER_07]: and doctors might be good, a little bit of agriculture exposure as well, wondering if you thought it was a good price to get some shares.
[SPEAKER_07]: Thank you very much.
[SPEAKER_07]: Have a great day, everybody.
[SPEAKER_04]: To your AGM is Federal Agricultural Mortgage Corporation.
[SPEAKER_04]: It is a Washington DC-based government sponsored enterprise or GSE.
[SPEAKER_04]: The secondary market for agricultural real estate and rural infrastructure loans, purchases, and guarantee farm mortgages, USDA loans, rural utility cooperative bonds, renewable energy, and broadband loans as well.
[SPEAKER_04]: It's essentially Fannie Mae, but for American farmland financing.
[SPEAKER_04]: Now, there's something reported earnings on May 5th.
[SPEAKER_04]: They saw a beat by about 6.76% on earnings per share.
[SPEAKER_04]: Then missed by about 110 million, or sorry, rather missed by 1.2% on revenue year over year.
[SPEAKER_04]: Despite of that, stock rose 4.91% hours after the print.
[SPEAKER_04]: So why was that?
[SPEAKER_04]: Well, they had a record of business volume, 34.8 billion.
[SPEAKER_04]: rose to about 17 percent for this name in the quarter.
[SPEAKER_04]: And so diving in deeper than just top line numbers, things looked a bit better.
[SPEAKER_04]: And, you know, it's also important to note that you get a little bit less out of earnings from this name because Farmer Mac does not provide formal earnings per share or revenue guidance.
[SPEAKER_04]: Now, over the past six months, what has been happening to this name?
[SPEAKER_04]: Well, here to date, they're up 1.98 percent.
[SPEAKER_04]: Over the past three months, they're
[SPEAKER_04]: And it is now currently trading at about 8.8 times price before look earrings, which is well below its five year average of about 10 at least on a percentage basis.
[SPEAKER_04]: Now, one thing that I like and I already mentioned it was this record business volume their net margins rising to 49.5 percent.
[SPEAKER_04]: their 3.5% dividend yield.
[SPEAKER_04]: It is because it's a GSE.
[SPEAKER_04]: It has an implicit government backstop and it trades at a deep discount to both its peers and also its intrinsic value.
[SPEAKER_04]: But at the same time you are seeing
[SPEAKER_04]: Increase credit loss provisions.
[SPEAKER_04]: You're seeing agricultural credit stress from these commodity price volatility we've been talking about, and on top of all that, high input costs.
[SPEAKER_04]: I would say it's probably one of the most overlooked GSEs in the U.S. financial system and for all those reasons, you know, there are a lot of positive reasons there.
[SPEAKER_04]: If you're looking for a high quality and come oriented financial with a government backstop and ag exposure, it's a compelling story in here, but it's important to note that because of the thin analyst margins, because of the low liquidity,
[SPEAKER_04]: It's a bit difficult to understand the price discovery in this name and you add on the rising farm credit stress.
[SPEAKER_04]: There are reasons why a deep discount is persisting.
[SPEAKER_04]: So for those reasons and spite of the good, I'm going to have to pass on AGM.
[SPEAKER_04]: Thanks for the call.
[SPEAKER_04]: Well, we had a good show on Friday.
[SPEAKER_04]: We looked into a story about rising sovereign debt, and how that could become a bigger market risk this year.
[SPEAKER_04]: We also answered a list of questions that came via Am 1220 in the Bay Area about ZTS, which is Zoeta's ink.
[SPEAKER_04]: If you didn't check out that episode yet, I encourage you to go check it out at your earliest convenience.
[SPEAKER_04]: And remember, the best way to never miss a show of Invest Talk is to follow Invest Talk wherever you get your podcasts.
[SPEAKER_04]: Now onto today my main focus point is about gold and how it's climbing while oil in the dollar are falling and here's what that tells investors because gold has been quietly climbing.
[SPEAKER_04]: Even as oil prices drop on Middle East peace hopes and the dollar drifts lower a combination that reveals important dynamics about how investors are thinking about risk right now.
[SPEAKER_04]: We'll unpack all of that, including what's a driving gold prices higher and what it signals about broader market sentiment.
[SPEAKER_04]: Also, touch on two stories that are trying to bring you on Friday, including how crypto platforms are rushing to launch derivatives linked to SpaceX, and also the how angst over rising costs is reaching across the political aisle.
[SPEAKER_04]: We have some voice bank calls rated playing, including one on text drawn ink, ticker, TXT, and another on Starbucks, as well as some questions that came in from the comment section
[SPEAKER_04]: We hear from some of you live throughout the show.
[SPEAKER_04]: All right, I did a new break, it is our first one and it is a quick one.
[SPEAKER_04]: If you're listening via our live stream around AM1220 in the Bay Area, pick up that phone and dial 888-99 chart.
[SPEAKER_04]: We come back, I'll talk about today's market activity.
[SPEAKER_01]: The Invest Talk phone lines never closed, and now Luke Guerrero is here, call Invest Talk 888-99-Chart.
[SPEAKER_04]: U.S. stocks having a solid day on Tuesday finishing mostly higher the S&P 500 NASDAQ Russell 2000 all setting fresh record closes now the NASDAQ search about 1.2% the Russell jumped 1.8 the S&P 500 gains 6 tenths the down finishing the opposite direction down 0.2
[SPEAKER_04]: Momentum, continuing its recent surge with semis, memory, high-bed in name, small caps, and retail favorites, all rallying, transports, machinery, cruise lines, and nuclear, also outperform.
[SPEAKER_04]: Now there wasn't a single catalyst behind the move.
[SPEAKER_04]: It's more of a continuation of the momentum trade that's been building, but several pieces of narrative came together.
[SPEAKER_04]: Duvish developments around the U.S. Iran conflict over the weekend suggested a deal maybe nearing, with the market largely playing down the impact of Monday's U.S. strikes.
[SPEAKER_04]: The baseline assumption is that an agreement will be hashed out in our moves' traffic will resume, and oil reflected that optimism.
[SPEAKER_04]: WTI crewed settled down nearly 3% to its lowest close in over a month treasuries rallied
[SPEAKER_04]: and those dynamics were a welcome relief for a market that has been dealing with tightening financial conditions for quite some time.
[SPEAKER_04]: Individual stocks micron cross the one trillion dollar market cap milestone of the latest memory rally with UBS tripling its price target.
[SPEAKER_04]: Qualcomm and bite dance agreed to an AI shipped deal lily announced deals to acquire three vaccine companies for a combined total
[SPEAKER_04]: The Uber Delivery Hero saga continues through the ports Uber may raise its bid while DoorDash is also interested as well.
[SPEAKER_04]: Software, energy, managed care, insurers, exchanges, payment staples, and quantum computing, some of the worst performers on the day while Big Tech was pretty mixed without much standing out.
[SPEAKER_04]: Now the bullish narrative,
[SPEAKER_04]: Remains underpinned by strong earnings growth with upper divisions, but the scrutiny list hasn't gone away.
[SPEAKER_04]: You have extended positioning and sentiment.
[SPEAKER_04]: You have narrow breadth.
[SPEAKER_04]: You have a weak, soft, data sticky inflation and a market still pricing 18 basis points of rate hikes through your end.
[SPEAKER_04]: Consumer confidence came in slightly ahead of expectations at 93.1 though dipped from April, with fewer consumers seeking jobs as plentiful, rather seeing jobs as plentiful, home prices showed another monthly decline as well.
[SPEAKER_04]: Elsewhere the dollar and gold were roughly flat on the day silver edged higher, treasury 69 billion dollar to your auction stopped on the screws, the first of 183 billion in sales this week.
[SPEAKER_04]: The big day though is Thursday with April PCE revised Q1 GDP, durable goods and new home sales.
[SPEAKER_04]: We'll also see a heavy slate of fedspeak throughout the rest of the week.
[SPEAKER_04]: Skipping's moving and tackle our second question of the day.
[SPEAKER_05]: Hi, my name is Zach, I'm calling out of Minnesota.
[SPEAKER_05]: My question is in regards to Starbucks, to your SB UX.
[SPEAKER_05]: Just curious on what you guys would think a good entry point for Starbucks would be now.
[SPEAKER_05]: Have it on my watch list.
[SPEAKER_05]: looking into pick up a position for a long-term hold and wondering if now is a good time to maybe get in.
[SPEAKER_05]: We'll be your opinion on a good price.
[SPEAKER_05]: Okay.
[SPEAKER_04]: Starbucks.
[SPEAKER_04]: To your SBUX is the global coffee house giant.
[SPEAKER_04]: Don't like their coffee, but we'll talk about it in the night.
[SPEAKER_04]: 41,000 locations across 90 plus markets, and they are currently undergoing what their CEO says is the most consequence for turnaround in the company's history.
[SPEAKER_04]: They recently closed a $3.1 billion dollar China joint venture with Boyu Capital shifting China from consolidated to licensed revenue.
[SPEAKER_04]: The most recent earnings in the end of April showed revenue up 9% year over year.
[SPEAKER_04]: It's their first concurrent top and bottom line expansion in over two years because non-gap EPS was up 22% year over year as well.
[SPEAKER_04]: They had global comparable stores sales up 6.2 and that was driven by 2.3% increase in ticketing and 3.8% increase in transactions.
[SPEAKER_04]: Now, it currently sits at $117 billion market cap only about 23 billion in debt.
[SPEAKER_04]: their valuation is pretty wild 36.6 times the price to Ford looking earnings.
[SPEAKER_04]: Now, you are seeing probably the first positive US transactions in eight quarters.
[SPEAKER_04]: You had a guidance race.
[SPEAKER_04]: You had China monetized for 3.1 billion in gross proceeds and a fiscal year 2020 earnings per share target of 335 to 4.
[SPEAKER_04]: So the turnaround is in a lot of ways producing measurable behavioral changes faster than the market expected.
[SPEAKER_04]: At $133, roughly, you know, I was training at 101 right now.
[SPEAKER_04]: With a clear multi-year compound path, it could be if this continues,
[SPEAKER_04]: the best consumer brand recovery story in line, large capital retail right now.
[SPEAKER_04]: But at the same time, you still have 400 million restructuring charges with labor investment headwinds.
[SPEAKER_04]: You have that expanded valuation that I mentioned.
[SPEAKER_04]: And so, you know, 78 times, backward-looking 36 times for looking PDE, that's pretty rich for a company that is still in the midst
[SPEAKER_04]: Not to mention, you have operating margins at only 9%.
[SPEAKER_04]: That would need to reach 13.5 to 15.5 by fiscal year 2028.
[SPEAKER_04]: That's a pretty steep execution climb here.
[SPEAKER_04]: Now the wild card in this whole mix is that they are targeting a 400 store annual pipeline, a domestic base that management believes they can reach two times their current size.
[SPEAKER_04]: So if you're executing on your unit economics and double the footprint, Starbucks becomes a fundamentally different earnings compounder by 2030, then what the market is modeling today, is that gonna happen?
[SPEAKER_04]: Maybe it's a wild card for a reason, but you can't ignore six consecutive quarters of deterioration of verse and two quarters.
[SPEAKER_04]: I would say how I feel about it to be honest is the easy money's been made.
[SPEAKER_04]: bought into it six months ago with what has been positive performance on a fundamental level, you greatly benefited.
[SPEAKER_04]: So if you are somebody wants to hold it for what might happen, what compounded it might turn into in 2028, that's one thing.
[SPEAKER_04]: But even at that point, you have to ask yourself,
[SPEAKER_04]: Are you really paying a fair value for a turnaround still in the early innings?
[SPEAKER_04]: And to me, the answer is no, that increases the risk relative to the reward right now.
[SPEAKER_04]: So for now, I'd keep it on my watch list.
[SPEAKER_04]: Making great progress, not quite there yet.
[SPEAKER_04]: That is Starbucks Corporation, SPUX, thanks to the call.
[SPEAKER_04]: Remove it in the right, because still to come, my main focus point and more answers to your questions.
[SPEAKER_04]: I encourage you to call now, in Veshok, 8-8-99 chart.
[SPEAKER_01]: In the early days, in Vestock was Jerry Klein and Steve Peasley.
[SPEAKER_01]: Now the torch has been passed, and a new generation of hosts is on the job.
[SPEAKER_01]: Justin Klein and Luke Guerrero.
[SPEAKER_01]: So when you've got finance and investment questions, don't forget to call in Vestock, 888-99, chart.
[SPEAKER_01]: So gold is up a lot.
[SPEAKER_04]: It closed around $4,500.
[SPEAKER_04]: And extended a rally that's been building for the past three weeks on May 6th and 7th.
[SPEAKER_04]: Gold surge over 3% and hit two week highs.
[SPEAKER_04]: As peace talks, we keep tween Washington and Tehran started to gain momentum.
[SPEAKER_04]: Meanwhile,
[SPEAKER_04]: Brett Crude has dropped from above one 10 to around 93 on expectations that the straight could gradually reopen.
[SPEAKER_04]: The dollar index has slipped to its lowest level in more than two months, and gold would spent most of the year moving the opposite direction of what investors expected is finally working the way textbooks say it should.
[SPEAKER_04]: Now, what's happening right now reveals something important about how gold functions as an asset and how investors should think
[SPEAKER_04]: about putting it in their portfolios, gold sometimes, moves independently of oil that all are in when it does, it tells you something specific about what's driving investor behavior.
[SPEAKER_04]: During the first phase of the war, February through late March, oil in the dollar both searched, while gold dropped as much as 25% from its period or period, pre or peak, near a $5,275 to a trough of around $3,950.
[SPEAKER_04]: That seemed paradoxical, for a safe haven, as said, during geopolitical crisis, but it made perfect sense once you understood the mechanism.
[SPEAKER_04]: Rising oil meant rising inflation expectations.
[SPEAKER_04]: Rising inflation expectations meant higher rates, higher rates meant the dollar strengthened, and the real yields climbed.
[SPEAKER_04]: Goldwich-paste no interest couldn't compete with bonds that were suddenly offering significantly more.
[SPEAKER_04]: Now that dynamic has flipped, peace talks, however fragile, are pushing oil lower.
[SPEAKER_04]: Lower yield means less inflation pressure, less inflation pressure means the market is trimming its expectation for rate hikes.
[SPEAKER_04]: Look at it, the probability of a fed rate hike by December has dropped from 40% to about 12 in the past three weeks.
[SPEAKER_04]: Treasure yields, easing, the dollar, weakening, and all of those forces benefit gold simultaneously.
[SPEAKER_04]: Lower yields reduce the opportunity cost of holding a non-yielding asset, a weaker dollar, makes gold cheaper for foreign buyers, and the de-escalation of the immediate war crisis allows gold to reconnect with its longer-term structural drivers rather than being dominated by the rate-high trade.
[SPEAKER_04]: Men of the distinction between gold as a safe haven and gold as an inflation hedge is critical to understand right now.
[SPEAKER_04]: During the active phase of the war gold failed as a safe haven, it fell while the world was in crisis.
[SPEAKER_04]: That's because the crisis was a supply shock that pushed rates higher.
[SPEAKER_04]: Gold doesn't hedge supply shocks where the central bank is expected to tighten what gold hedges is the erosion of trust in the currency and monetary policy.
[SPEAKER_04]: The debasement trade.
[SPEAKER_04]: Right now, gold is rallying, not because the world is getting more dangerous, but because the world is getting slightly less dangerous and a wave makes monetary policy more accommodative.
[SPEAKER_04]: Peace hopes mean lower oil, which means lower inflation, which means the Fed might eventually cut rather than hike.
[SPEAKER_04]: That's the Goldilocks environment for gold, falling real yields in a weakening dollar.
[SPEAKER_04]: But there's a deeper layer that's worth noting.
[SPEAKER_04]: Even with today's rally, Gold is still down about 14% from its pre-war level.
[SPEAKER_04]: It dropped as much as 25% at the March Trophy, the steepest monthly decline since October of 08.
[SPEAKER_04]: Bad drawdown happened while Central banks were actively buying.
[SPEAKER_04]: China's PBOC has loaded up on gold for 18 consecutive months with reserves reaching 74.64 million fine trow ounces by the end of that month.
[SPEAKER_04]: Turkey, $8 billion, it to defend the Lear India.
[SPEAKER_04]: May have done similar selling, but the structural central bank bid 70% of Central banks surveyed at Goldman recently, recent conference expected global reserves to rise.
[SPEAKER_04]: Reins intact.
[SPEAKER_04]: The fact that gold is rallied back from 3950 to 45, 100 and roughly six weeks, even while the war remains technically unresolved and the street is still largely closed, tells you the market is looking past the immediate crisis and pricing in the structural factors, but support gold over the medium term.
[SPEAKER_04]: Because those factors haven't changed.
[SPEAKER_04]: Fiscal deficits, at 6% of GDP, jet to jet to jet to GDP, above 100.
[SPEAKER_04]: The dollars reserve status being gradually eroded.
[SPEAKER_04]: Rising gold prices become a warning sign for the broader economy when they reflect a loss of confidence in monetary policy rather than just a response to lower yields.
[SPEAKER_04]: We're not there yet, gold's current rally is benign, it's rising because peace hopes are pushing down oil and rates, which is fundamentally positive for the economy.
[SPEAKER_04]: Gold arising along side oil and along side yields, that would be the signal that something more concerning is happening.
[SPEAKER_04]: As report fully of allocation, the conventional wisdom is 5 to 10% in gold or gold related assets as a strategic halting, state tree noted earlier this year that gold ETF allocations there's still under 1% of global fund assets, well below the recommended range, Goldman Sachs maintained a 5,400 year-end target, a current price is around 45, 60 that implies roughly 18% upside if their thesis piece plays out.
[SPEAKER_04]: The practical framework for deciding how much gold the
[SPEAKER_04]: If you believe peace holds, oil normalizes the Fed eventually cuts.
[SPEAKER_04]: The economy avoids a recession.
[SPEAKER_04]: Gold should grind higher on lower yields than a weird dollar, but equities will have to perform.
[SPEAKER_04]: In that case, a 5% allocation is sufficient as a portfolio diversifier.
[SPEAKER_04]: If you believe the P stocks collapse, oil spikes, inflationary accelerates.
[SPEAKER_04]: The Fed is forced to hike.
[SPEAKER_04]: Gold faces another drawdown in the near term, but becomes essential over the medium term.
[SPEAKER_04]: In that case, you'd want closer to 10%.
[SPEAKER_04]: You'd want to add on the next dip.
[SPEAKER_04]: And if you're in the camp that believes long term to basement trade is the real story, then gold is a permanent strategic position regardless of what happens with the run.
[SPEAKER_04]: With the current gold rally telling you, is that the market is cautiously optimistic about peace, positioning for an eventual shift towards monetary easing and quietly rebuilding the gold allocation that was shaken out during the war's most violent phase.
[SPEAKER_04]: The smart money, central banks, and institutional allocators they never stop buying.
[SPEAKER_04]: On the next invest talk, we'll look into this story, hedging in a record market, strategies for protecting gains, without missing upside.
[SPEAKER_04]: That's tomorrow, but we still got plenty of show today.
[SPEAKER_04]: My name is Lou Guerrero, and I'm ready to take your calls now at 8 a.a. and 99 chart.
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[SPEAKER_09]: Thank you for your show.
[SPEAKER_09]: I have a question regarding a company called Extraordinary.
[SPEAKER_09]: D.E.
[SPEAKER_09]: X. T. R. O. N. I believe there are a Saudi Arabia company.
[SPEAKER_09]: I want to know what you think about that is a possible problem.
[SPEAKER_04]: Appreciate your health.
[SPEAKER_04]: Thank you.
[SPEAKER_04]: Texture on ink is a Providence Rhode Island-based aerospace and defense conglomerate.
[SPEAKER_04]: They have Texture on Aviation, so you're Sessna Beachcraft Jets.
[SPEAKER_04]: They have Bell, their military commercial helicopters.
[SPEAKER_04]: They have Texture on Systems, their unmanned systems of weapons and ground vehicles.
[SPEAKER_04]: And then they have their industrial segment.
[SPEAKER_04]: The reason earnings that April 30th showed about 12% year over your growth that was a beat on revenue by about 5.4% showed 13% year over your growth on earnings per share that was a beat about 11.5 aviation revenue was up 22% year over year.
[SPEAKER_04]: And then that's intended to separate their industrial segment within 12 to 18 months via sale or tax respin off essentially transforming TXT into a pure play AMD platform.
[SPEAKER_04]: Looking ahead, they guided about five to eight percent growth.
[SPEAKER_04]: in their full year, full year revenue about 15.2 billion, and really gave no assurance or timing on that industrial separation because, well, it's gonna be open to a lot of regulatory scrutiny.
[SPEAKER_04]: Now, this name, over the past six months, has underperformed the broader industrial sector.
[SPEAKER_04]: It's about 6.32%
[SPEAKER_04]: year-to-date, past two years that underperformed the industrial sector by about 18-19% respectively.
[SPEAKER_04]: So what's the positive, sir?
[SPEAKER_04]: Well, it is a $15 billion market cap company that only has $4 billion in debt.
[SPEAKER_04]: It's trading below its five-year average for looking price to earnings.
[SPEAKER_04]: So it's evaluations not too high.
[SPEAKER_04]: It is up 27.1% over the past 52 weeks.
[SPEAKER_04]: So it does have a solid up trend going for it.
[SPEAKER_04]: It has a $19.2 billion backlog.
[SPEAKER_04]: It has, if it separates,
[SPEAKER_04]: Potentially the ability to unlock 10, 15% of revenue or rather value in the A&D re-rating.
[SPEAKER_04]: But there's no certainty there.
[SPEAKER_04]: And until that discount is actually a mocked, it doesn't really mean anything for you.
[SPEAKER_04]: It is because it's conglomerate trading it from glomerate multiples.
[SPEAKER_04]: It's net margin is only at 6%.
[SPEAKER_04]: And as dividend is essentially zero.
[SPEAKER_04]: They're given out two cents a quarter, three cents a quarter.
[SPEAKER_04]: Now, they do make shadow, aerosound, and ripsound unmanned systems.
[SPEAKER_04]: They are actively deployed in military operations.
[SPEAKER_04]: So the Iran conflict has really given a spotlight to drone technology as has the conflict in Ukraine with the Russian invasion.
[SPEAKER_04]: And so any surge in DOD unmanned systems procurement, probably accelerates text-run systems revenue line and strengthens the pure play andinearative at the exact time they wanted, ahead of the separation.
[SPEAKER_04]: It is a quietly solid compounder hiding inside a conglomerate.
[SPEAKER_04]: They got 12% revenue growth.
[SPEAKER_04]: They got 13% earnings per share growth.
[SPEAKER_04]: They got a big backlog.
[SPEAKER_04]: I think it's frankly, at a time when the big five aren't doing too hot, a lot of aerospace and defense names haven't had much movement recently, you know, with it being down a bit over the past three months down six percent, I think it's a pretty solid value play.
[SPEAKER_04]: That is TXT text running.
[SPEAKER_04]: Thanks to the call.
[SPEAKER_04]: It's like we got plenty of time, so let's play two and a row from 80 to 99 chart.
[SPEAKER_08]: I want to ask you about HAC ETF, HSA, CK, ETF.
[SPEAKER_08]: I have this ETF and I'm wondering if I should sell now or keep it.
[SPEAKER_08]: Thank you for all you do.
[SPEAKER_08]: Bye-bye.
[SPEAKER_04]: hack to your HACK is the amplify cyber security ETF.
[SPEAKER_04]: What it is is it tracks the prime cyber defense index, essentially companies that provide cyber security hardware software and services.
[SPEAKER_04]: Expensory show is on the expensive side I would say that 60 basis points, especially for a name that is very top heavy.
[SPEAKER_04]: I had 7.5% in Palo Alto, 7.5% in CrowdStrike, 7 in Broadcom, I mean, these are generally pretty large names.
[SPEAKER_04]: 58% of the market cap of this ETF is in large caps, 29% in mid caps.
[SPEAKER_04]: This decent size, about 2 billion, it's been around for a really long time.
[SPEAKER_04]: It's actually the original Cycle Security ETF launched in November of 2014.
[SPEAKER_04]: But you know, because of the names that invest in, you're not going to get really any dividend here.
[SPEAKER_04]: The yield is like 8 to 10 basis points.
[SPEAKER_04]: A cybersecurity is one of the most durable secular growth themes in the market, right?
[SPEAKER_04]: Spending is non-discretionary.
[SPEAKER_04]: Spending is growing.
[SPEAKER_04]: The Iran War and escalating state sponsored cyber tax makes cybersecurity even more critical.
[SPEAKER_04]: AI is both a threat because it's more sophisticated tax and an opportunity because of AI power defense platforms.
[SPEAKER_04]: Governments in enterprise budgets for cyber security are essentially recession proof.
[SPEAKER_04]: You can't cut security spending.
[SPEAKER_04]: and companies like CrowdStrike Palo Alto, some of their largest holdings they are consolidating the market into single platform solutions.
[SPEAKER_04]: But it's expensive, especially compared to some of its competitors, which are in the 30 to 40 basis point range.
[SPEAKER_04]: It has a bit lower liquidity.
[SPEAKER_04]: Also has some weaker performance relative to its competitors.
[SPEAKER_04]: It isn't necessarily a peer play cybersecurity name.
[SPEAKER_04]: Remember, I mentioned that broad common Cisco were two of its top holdings, right?
[SPEAKER_04]: Those are more massive diversified tech companies.
[SPEAKER_04]: So this really isn't a peer play on cybersecurity.
[SPEAKER_04]: And many of these names that are pure plays on cyber, they create it 40 to 80 times, price to for looking your earnings.
[SPEAKER_04]: I mean, you know, I'm not going to mention it because we don't bring up alternatives here, but I would say look at one of their key competitors in the ETF game because their key competitors tend to be in a bit of a better position.
[SPEAKER_04]: You know, the thesis itself is rock solid.
[SPEAKER_04]: It's essential.
[SPEAKER_04]: It's growing.
[SPEAKER_04]: It's recession-resistant spending.
[SPEAKER_04]: I just don't think hack is the best way to play it.
[SPEAKER_04]: Because of how they filter for names, yes, but also because it's a bit expensive.
[SPEAKER_04]: So if you're looking for broad cyber security exposure, I think there are better ETFs out there.
[SPEAKER_04]: That is HACK, the Amplify Cyber Security ETF.
[SPEAKER_04]: Thanks to the call.
[SPEAKER_04]: I'm sure you're all aware SpaceX is expected to go public in June, and what could be Wall Street's biggest ever IPO?
[SPEAKER_04]: Elon Musk's rocket satellite AI company has discussed evaluation of roughly 1.75 trillion dollars and in the weeks before the offering, crypto exchanges have created a way, you can't see my ear quotes, for traders to bet on the stock price.
[SPEAKER_04]: Before it even exists, finance, pitget, trade xyz have all launched perpetual futures contracts, linked to SpaceX.
[SPEAKER_04]: Drivet is that let traders speculate on the company's share price with leverage as high as 20 times.
[SPEAKER_04]: Trade.xyz launched its contracts at 150, implying the 1.87, $1.78 trillion valuation.
[SPEAKER_04]: By Thursday, they were training at 210, implying a market value of 2.5 trillion, nearly 40%.
[SPEAKER_04]: Above the expected IPO price, before a single share has been publicly listed.
[SPEAKER_04]: These are not shares.
[SPEAKER_04]: Holders get no ownership, no dividends, no voting rights, no claim on the company's assets.
[SPEAKER_04]: The prices are entirely based on speculative demand.
[SPEAKER_04]: There's no company approval.
[SPEAKER_04]: There's no regulatory oversight in the traditional sense.
[SPEAKER_04]: And no guarantee the contract price will converge with the actual IPO price.
[SPEAKER_04]: Binance, explicitly warned that, quote, pre-IPO investments carry significant risk, and that it, quote, makes no assurance as to the actual total share count upon IPO.
[SPEAKER_04]: And unsurprisingly, the volumes are enormous.
[SPEAKER_04]: Centralized, perpetual future exchanges, proche assessed 85.3 trillion dollars worth of trades in 2025, going to Kornganko.
[SPEAKER_04]: Pre-IPO professionals are the newest and most speculative corner of the market.
[SPEAKER_04]: Oil link perpetuals on hyper-liquid surge from $339 million in cumulative volume in February, 28th to $22.5 billion on March 30th during the Iran crisis.
[SPEAKER_04]: SpaceX perpetuals could follow a similar trajectory as the IPO approaches.
[SPEAKER_04]: CryptoNate of Traders, one exposure to the hottest IP on history without leaving that crypto ecosystem.
[SPEAKER_04]: They can trade with leverage, they can settle in stable coins, and speculate 24-7, without waiting for the NYSE to open.
[SPEAKER_04]: For platforms like Binance, these products, they generate trading fees on enormous volumes.
[SPEAKER_04]: And attract users who might otherwise sit out the traditional IPO process entirely, but the risks are extreme.
[SPEAKER_04]: Pre-IPO Propetuals have no underlying asset anchor the price.
[SPEAKER_04]: His SpaceX IPOs at a lower valuation than 2.5 trillion implied by the current future's price, Trader 2 bought a 210 phased immediate losses.
[SPEAKER_04]: The IPOs delayed, a restructured the contracts could become untethered from any meaningful reference point.
[SPEAKER_04]: And 20-time leverage means a 5% adverse move wipes out your entire position.
[SPEAKER_04]: In a way, this connects to the broader theme of tokenized securities and the blurring line between crypto speculation and traditional finance.
[SPEAKER_04]: You, we've covered NASDAX tokenization pilot.
[SPEAKER_04]: The DTC sees plans to tokenize 100 and trillion in assets and anthropics warning about unauthorized SPV sales.
[SPEAKER_04]: The SpaceX Propetuals represent the speculative frontier of his convergence, a product that exists entirely because crypto infrastructure can create synthetic exposure to an asset that doesn't yet trade publicly.
[SPEAKER_04]: The practical advice for our listeners is simple.
[SPEAKER_04]: If you want to own SpaceX, wait for the IPO.
[SPEAKER_04]: The actual shares will come with rights, regular toy protections, and a price set through a regulated process with full disclosure.
[SPEAKER_04]: The Crypto Propetuals are a leveraged gambling product dressed up as an investment exposure.
[SPEAKER_04]: They might make some traders rich, they will definitely make some traders poor.
[SPEAKER_04]: And the distinction between the two outcomes is almost nothing to do with SpaceX's actual business and everything to do with speculative flow and leverage management.
[SPEAKER_04]: there's a different street investing in gambling and this products it's squarely on the gambling side of the line.
[SPEAKER_04]: So we'm back to the invest like voice bank for a question that came in earlier.
[SPEAKER_06]: Hi there.
[SPEAKER_06]: This is Ralph from Chicago.
[SPEAKER_06]: I was calling about 3M.
[SPEAKER_06]: I bought it around $100.
[SPEAKER_06]: It kind of surged since then.
[SPEAKER_06]: I was wondering if this is a good time to take profit or a hold on for the long term.
[SPEAKER_06]: Thank you
[SPEAKER_04]: Let's take a look at MMM, which is the great ticker of 3M company, the iconic industrial conglomerate.
[SPEAKER_04]: And right now, this company is in, how it's a bit of a transition, right?
[SPEAKER_04]: They're diversified technology, manufacturing company, tens of thousands of products across electronics, consumer segments, like post-its, scotch tape, command strips, industrial abrasives,
[SPEAKER_04]: It's been off their health care business in 2024 as well.
[SPEAKER_04]: Now recently, revenue made expectations.
[SPEAKER_04]: Organic growth was about 1.3% very modest, but they are a large company.
[SPEAKER_04]: You're today they're down about 3.79% and only up 4.34% in the past 52 weeks.
[SPEAKER_04]: Now looking ahead, management did maintain their guidance.
[SPEAKER_04]: analyst's expected, about 6.3% year over year earnings growth, I think the best thing to have going for them is probably their active buyback program.
[SPEAKER_04]: They also have 20% backlog growth, 10% order growth, 14% adjusted earnings per share growth, 2.4 billion in Q1 capital returns, and because of their spin-offest structure, it is very simple
[SPEAKER_04]: At the same time, a lot of litigation.
[SPEAKER_04]: They have what MorningScar just morningstar describes as a multi-billion dollar pending PFAS litigation that could cripple the value of the company.
[SPEAKER_04]: That is one of the reasons why this thing has been training sideways.
[SPEAKER_04]: And going back before 2024 performance wasn't great, revenue over the past six years is down 5%.
[SPEAKER_04]: It is at a deep discount compared to where it has been trading.
[SPEAKER_04]: It's trading at 16.9 times, price to forward-looking earnings.
[SPEAKER_04]: But PFAS, to me, is kind of the unresolvable variable that has kept institutional buyers on the sidelines for years.
[SPEAKER_04]: And until that liability is quantified, until it's capped, I think that 3M is likely to continue to trade at a discount to its intrinsic value.
[SPEAKER_04]: So for me, 3M, take your MMM, good afterpass.
[SPEAKER_04]: If you have not yet already, I encourage you to head over to our YouTube channel and search Invest Talk with two T's.
[SPEAKER_04]: We don't just post the same content onto our YouTube channel that we do on our podcast.
[SPEAKER_04]: We bring you new, different content.
[SPEAKER_04]: We have found that sometimes these focus points are just not enough time in any singular show to address everything we want to talk about.
[SPEAKER_04]: And you know, Justin and I love talking, we do it.
[SPEAKER_04]: All the time, some might think a little bit too much.
[SPEAKER_04]: And so we decided, you know what, how can we talk more?
[SPEAKER_04]: And the answer, the invest talk, deeper, focus, serious.
[SPEAKER_04]: We take one focus point from the week and we dive a bit deeper.
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[SPEAKER_04]: and how most importantly, how to apply that topic to your investment lives.
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[SPEAKER_04]: This is Invest Talk.
[SPEAKER_04]: I'm Lou Guerrero and we have one goal each and every day that is to help you achieve your financial freedom.
[SPEAKER_04]: Our work continues after this break is our final break.
[SPEAKER_04]: So get your questions in now and 80 to eight, 99 chart.
[SPEAKER_03]: Luke Guerrero is here and ready to tackle your questions.
[SPEAKER_01]: Every investor is working to build a secure financial future.
[SPEAKER_01]: How they get there and when they get there, that depends on many factors.
[SPEAKER_01]: The more you learn about how the market works, the better your chances for success.
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[SPEAKER_04]: The University of Michigan's consumer sentiment index fell to 44.8 in May, a new all-time record low.
[SPEAKER_04]: That beat the 49.8 reading from April that was already the lowest in the surveys at 70 plus year history.
[SPEAKER_04]: Now, economists expected the reading to hold at the preliminary 48.2.
[SPEAKER_04]: It didn't come close.
[SPEAKER_04]: The decline was broad-based, but the political composition has shifted in a way that matters.
[SPEAKER_04]: The elections now sentiment among Republicans fell to its lowest levels since November 2024.
[SPEAKER_04]: That's significant, because sentiment had been a relative right spot.
[SPEAKER_04]: The one at demographic cohort that remained optimistic through the tariff turmoil in the early weeks of the war.
[SPEAKER_04]: That buffer is now gone.
[SPEAKER_04]: 57% of consumers spontaneously mentioned that high prices were eroding their personal finances up from 50% last month.
[SPEAKER_04]: The most marked declines
[SPEAKER_04]: come among lower income consumers and those without college degrees the groups mostly
[SPEAKER_04]: Directly hit by 455 gasoline and food inflation running above 3%.
[SPEAKER_04]: The national average retail gas prices jump more than 50% since the war started.
[SPEAKER_04]: The inflation expectations numbers.
[SPEAKER_04]: Well, those are flashing red as well.
[SPEAKER_04]: One year expectations rose to 4.8% from 4.7, five year expectations, surge to 3.9% from 3.5, a massive jump driven by sizable increases of independent and republican voters.
[SPEAKER_04]: That five-year number is the one the Fed watches most closely because it signals whether inflation expectations are becoming unencored.
[SPEAKER_04]: A 3.9% they are approaching levels that make it nearly impossible for the Fed to justify retcuts.
[SPEAKER_04]: The Fed can only look through rising inflation during an oil shock provided inflation expectations remain anchored.
[SPEAKER_04]: So, in a way, that's being tested.
[SPEAKER_04]: Now, the disconnect between sentiment and market behavior is deep and further.
[SPEAKER_04]: We know, as we have seen, indices reach record highs.
[SPEAKER_04]: On the day this report was released, the Dow Jones reached your record high.
[SPEAKER_04]: So as sentiment is collapsing, as treasure yields are rising, the market is essentially shrugging it off.
[SPEAKER_04]: Investors are looking at 18.2% earnings beats, AI fuel tech rallies, and a resilient labor market
[SPEAKER_04]: Consumers are looking at 450S, 40% tomato price increases, and increasingly, new graduates who can't find jobs.
[SPEAKER_04]: The divergence is sustainable until it isn't.
[SPEAKER_04]: Tax refunds season is over, savings buffers built during the pandemic are being depleted real wages have turned negative consumer spending has held up so far but as one economist noted every last dollar is getting paid out for life's bare necessities without anything left over for entertainment or discretionary purposes that's the definition of a consumer stretch to the limit if spending finally cracks and the sentiment data has been warning
[SPEAKER_04]: The earnings story that's holding up the stock market starts to lose its foundation.
[SPEAKER_04]: Well, folks, in the next couple of weeks, we will be announcing our next invest talk, wealth, webinar.
[SPEAKER_04]: We haven't yet announced what the topic is going to be, and that will be a surprise.
[SPEAKER_04]: But when you hear it, as always, head over to investalk.com to register.
[SPEAKER_04]: Well, that does it for another episode of Invest Talk.
[SPEAKER_04]: I'm Lou Guerrero, and Justin and Klein.
[SPEAKER_04]: Justin Klein, and I thank you for listening, and encourage you to tell your friends and family members about our free podcast downloads.
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[SPEAKER_04]: If today's episode made you think about your personal financial circumstances, your investments, your taxes, whether or not you've been able to save enough for your children's education.
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[SPEAKER_04]: Good news, we posted our latest investor like a wealth webinar on our YouTube channel.
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