[SPEAKER_06]: This is Invest Talk, from KPP Financial, helping investors make sense of the markets one day at a time.
[SPEAKER_06]: Here's your host, Luke Guerrero.
[SPEAKER_00]: Good afternoon, fellow investors, and welcome to the Wednesday June 10th, 2026 edition of Invest Talk.
[SPEAKER_00]: I'm your host Lou Guerrero, as I will be with you over the next 15 minutes as we break down the market today, the stories that matter, and of course answer your finance and investment questions.
[SPEAKER_00]: Now, I do want to do a quick heads up because we will have an upcoming invest talk wealth webinar set for Tuesday, June 30th from 12 to 1 Pacific, the title is Beyond the
[SPEAKER_00]: All right, and just a bit, we'll talk about today's market performance and run down those show topics.
[SPEAKER_00]: But first, let's tackle this color question.
[SPEAKER_02]: Now, this is calling to get your opinion on Hingham institution for savings.
[SPEAKER_02]: That's ticker, H-I-F-S. That's a regional bank, very solid, very risk-averse, and all their deposits are 100% in shirts.
[SPEAKER_02]: I was wondering if I could get your take on it.
[SPEAKER_02]: Thank you very much, guys.
[SPEAKER_02]: Bye.
[SPEAKER_00]: So look at HIFS's Hingham Institution for Savings.
[SPEAKER_00]: It is a Massachusetts-based community bank.
[SPEAKER_00]: Pretty old, founded in 1834 and it is one of the most capital efficient community banks in the US.
[SPEAKER_00]: Primarily, they do commercial and residential real estate mortgage lending, funded by their retail and wholesale deposits.
[SPEAKER_00]: It is a pretty small business, fewer than 100 employees and has a market cap of just under 630.
[SPEAKER_00]: Million.
[SPEAKER_00]: Now, look at the most recently reported earnings, it looks like GapNet income was down 60.2% year over year, Cornet income was up 72.3% year over year, trailing 12 month revenue was up from 65.5 million into 102.8 million.
[SPEAKER_00]: And so from a fundamental perspective, what we saw from their income statement, kind of all over the place.
[SPEAKER_00]: Now they're cost to income ratio since about 34.87% versus the industry average of about 60%.
[SPEAKER_00]: They've got a 51.6% net profit margin.
[SPEAKER_00]: They have 11.3% five year book value, annualized growth rate.
[SPEAKER_00]: They have core earnings up 72% you read.
[SPEAKER_00]: I mean, it is one of the most operationally efficient banks in American and sitting at 12.
[SPEAKER_00]: 13 times price to forward looking earning, 1.5 times book value, so it's not really cheap, but it's not expensive for the quality that you're getting.
[SPEAKER_00]: But on the other hand, they have huge concentration within the commercial real estate space, specifically in Eastern Massachusetts.
[SPEAKER_00]: And that's pretty meaningful given commercial real estate stress nationally.
[SPEAKER_00]: They've had no special distributions of 2022, signaling management may be a little bit more cautious, but really what is the big flag for me is it is a relatively,
[SPEAKER_00]: it'll liquid name.
[SPEAKER_00]: I mean, on average, only trading 44,000 shares per day that is an extremely thinly traded community bank.
[SPEAKER_00]: It is a thinly traded name even considering how low its market cap is.
[SPEAKER_00]: And so because of this, along with the fact that there's really no institutional analyst coverage, no formal price targets, you open yourself up to a lot of risk there because of the lack of coverage.
[SPEAKER_00]: So in spite of it being one of the most efficiently run in community banks and spite of it having some pretty solid numbers from a growth perspective, unless you want to size extremely small, I would hesitate to include this name in my portfolio.
[SPEAKER_00]: And we had a great show yesterday.
[SPEAKER_00]: We looked into this story.
[SPEAKER_00]: Is the AI trade over the bare case against hyperscaler spending?
[SPEAKER_00]: We also answered a listener question on REEZ.
[SPEAKER_00]: That's the I shares residential and multi-sector real estate ETF.
[SPEAKER_00]: It was submitted on our 24-7 voice mail line.
[SPEAKER_00]: If you have an MSESR days episode, I encourage you to go check it out and remember the best way to never miss an episode of Invest Talk is to subscribe wherever you get your podcasts.
[SPEAKER_00]: Already on to today, where our main focus point is, is the Fed's next move, a rate hike.
[SPEAKER_00]: What a strong jobs report means for your portfolio.
[SPEAKER_00]: Friday's stronger than expected jobs report sent stocks tumbling and re-agnited fears of the Federal Reserve may be forced to raise rates rather than cut them.
[SPEAKER_00]: With gold, falling sharply in bond markets repricing investors need to understand what a potential rate hike cycle means for their portfolios.
[SPEAKER_00]: Also, we'll touch on the market today and how it was affected by new clashes in the Middle East as well as inflation fears.
[SPEAKER_00]: As we get the worst inflation print since 2023.
[SPEAKER_00]: We'll also touch on how the recent, not really recent, but the near future IPOs of OpenAI, SpaceX, inthropic, may affect equity markets in general.
[SPEAKER_00]: Should we have time at the end of the show?
[SPEAKER_00]: We'll talk about a CFTC rule proposal on what is allowed to trade on prediction markets.
[SPEAKER_00]: As always, we got some voice bank calls ready to play, including one on investing in industrials and another on the Vanguard Total World Stock Market index ETF, Tigger VT.
[SPEAKER_00]: There's also some questions that came in from the comment section of the investment community YouTube channel.
[SPEAKER_00]: And hopefully, we hear from some of you live throughout the show.
[SPEAKER_00]: That did a new quick break, please remember you can call any time and leave your questions on the investor.
[SPEAKER_00]: Voice bank, if you're listening to your live streamer on AM1220 in the Bay Area, give me a call now at 888-99 chart.
[SPEAKER_00]: When we come back, we'll talk about today's market activity.
[SPEAKER_06]: This is Invest Talk.
[SPEAKER_06]: Now closing in on 63 million downloads.
[SPEAKER_06]: And Luke Carrero is here taking your questions live.
[SPEAKER_06]: 888-99 chart.
[SPEAKER_00]: On to the market today, where US stocks sold off pretty broadly and closed near their worst levels as the rotation out of tech intensified.
[SPEAKER_00]: The Dow drop 1.9%, the SBF L1.6, the Nasdech, Shed 2, and the Russell 2000 lost 1.1.
[SPEAKER_00]: The morning bounce attempt pretty quickly fizzled out.
[SPEAKER_00]: Now, the semi- and memory cell-off still remains the dominant story.
[SPEAKER_00]: The socks is now down more than 12% since June 3rd and overbought conditions combined with the crowded positioning are fueling an unwind that's weighing on the broader index.
[SPEAKER_00]: Several mag seven names fell more than 2% on the day.
[SPEAKER_00]: Analysts have been flagging index level risks from the concentration trade and this week is starting to bear that out.
[SPEAKER_00]: Software, largely lower, but more mixed, holding up better than the hardware side of tech.
[SPEAKER_00]: Now, the geopolitical backdrop added another layer of uncertainty while the latest back and forth U.S. Iran strikes didn't in themselves appear to overly spook the market.
[SPEAKER_00]: Trump's more militant comments today and media reports that he may again consider striking bridges and power plants underscored the long road to any negotiated settlement.
[SPEAKER_00]: Because of this, the B2I crude settle up 2.1 points to 0.1 percent, though a bit off of best levels.
[SPEAKER_00]: On a more constructive note, the inflation data was genuinely encouraging.
[SPEAKER_00]: Core may CPI came in at two tenths of a percent month of a month, cooler than me.
[SPEAKER_00]: three-tenths consensus and down from Apple's four-tenths shelter inflation was relatively contained at three-tenths and there's little evidence of bleed through from higher energy prices into core readings.
[SPEAKER_00]: However, the softer print only modestly move the needle on market pricing for further fed tightening.
[SPEAKER_00]: The rotation into defense across the board is pretty textbook.
[SPEAKER_00]: These high energy ensures regional banks, restaurants, staples, some of the best performers
[SPEAKER_00]: On the AI infrastructure front, OpenAI is reportedly in advanced negotiations for a 20 year lease of a 10 gigawatt data center campus with a potentially providing financial backing.
[SPEAKER_00]: Google is providing a financial backstop for its $35 billion chip lease with anthropic and SpaceX IPL on Friday is generating enormous buzz with reports that the deal could be four times over subscribed.
[SPEAKER_00]: Thursday will bring me PPI and claims along with a $22 billion 30 year auction Friday delivers preliminary June Michigan sentiment and the date view of SpaceX.
[SPEAKER_00]: Let's go ahead and answer a question that came in to our YouTube comment section.
[SPEAKER_00]: And this is on ticker CEG.
[SPEAKER_00]: It says, what are your thoughts on constellation energy after its recent pullback?
[SPEAKER_00]: Thanks, love the podcast.
[SPEAKER_00]: As I pull this up, constellation energy
[SPEAKER_00]: is the America's largest clean energy producer they operate 21 nuclear reactors.
[SPEAKER_00]: plus a natural gas fleet geothermal wind and solar and are the largest supplier of 247 carbon-free power to hyper scale AI data centers via long-term PPA.
[SPEAKER_00]: Now they are a $90 billion market gap company that had quite a run up since their IPO in the beginning of 2022, but it've really been trading sideways to the better part of,
[SPEAKER_00]: seven months, you today they're down 31.41% of the past three months, they're down 23.59 of the past 52 weeks, they're down 16.74 and that's in spite of having 8.8% growth in revenue on an annualized basis.
[SPEAKER_00]: And that margins approaching double digits.
[SPEAKER_00]: And so what's going on here?
[SPEAKER_00]: Well, last quarter revenue was up 64% year over year.
[SPEAKER_00]: That beat earnings per share was up 28% year over year.
[SPEAKER_00]: That beat as well.
[SPEAKER_00]: Now a lot of that was due to the CalPyent acquisition, which contributed $2 per share annualized to earnings per share.
[SPEAKER_00]: But they also authorized a $5 billion buyback.
[SPEAKER_00]: David it was raised to $42.65 per share.
[SPEAKER_00]: But their stock performance hasn't been great.
[SPEAKER_00]: analysts have trimmed price targets over the past six months.
[SPEAKER_00]: They had a March 31st business outlook which caused an 8% single-day drop when guidance fell slightly below consensus.
[SPEAKER_00]: One of the biggest stories for this company was the restart of three mile island that we start with delayed by transmission interconnection challenges.
[SPEAKER_00]: There are calpine integration costs and higher interest expense, kind of suppressed near term margins and guidance fell below consensus, triggering that sell off and it's still trading at 20 times price to forward looking earnings.
[SPEAKER_00]: Now, that is a bit below their average of the past five years, but given the run up in revenue, given the run up in growth,
[SPEAKER_00]: I would say that 20 is probably still a bit high compared to where they have been historically.
[SPEAKER_00]: Now, the plus side, as I mentioned, they are the largest US nuclear fleet.
[SPEAKER_00]: They have that calpine gas now, which is an unmatched 24-7 carbon free, dispatchable power combination between the two of them, and they really are at the center of AI data center power demand structurally.
[SPEAKER_00]: That is something that you cannot set aside.
[SPEAKER_00]: But from a
[SPEAKER_00]: From a technical perspective, it does not look good.
[SPEAKER_00]: And so this repricing along with what Analyst have done starts to make sense.
[SPEAKER_00]: Overall, this is
[SPEAKER_00]: America's AI power company.
[SPEAKER_00]: And it's at its cheapest price in 12 months.
[SPEAKER_00]: The implied upside to consensus is 50% they have a buyback running.
[SPEAKER_00]: If you believe AI data center power demand is a multi-decade structural story and you trust more importantly that nuclear's regulatory pathway,
[SPEAKER_00]: is feasible.
[SPEAKER_00]: Then you have a compelling attribute point here at 242.
[SPEAKER_00]: But you still have a bunch of regulatory headwinds.
[SPEAKER_00]: You have a bunch of structural headwinds.
[SPEAKER_00]: And you have some issues that the market doesn't seem to believe constellation has passed.
[SPEAKER_00]: So for now, for me, I would keep this on my watch list.
[SPEAKER_00]: That is constellation energy group, ticker, c, e, g. Thanks for watching.
[SPEAKER_00]: Now, I did briefly mention it at the top of the show, but I wanted to do, do want to mention it one more time.
[SPEAKER_00]: That is our upcoming wealth webinar beyond the yield.
[SPEAKER_00]: As always, we will give a presentation about a topic that is important to every investor followed by about 30 minutes of Q&A.
[SPEAKER_00]: If you're interested, our wealth webinars are free, but you must register head over to investalk.com to register today.
[SPEAKER_00]: This is Investalk, and our work continual
[SPEAKER_00]: But you can call that, or at any time, 24-7 at 888-99 chart.
[SPEAKER_04]: Luke Guerrero is here, and ready to tackle your questions.
[SPEAKER_09]: I wanted to pick your ring about Apple.
[SPEAKER_09]: What did you think about their earnings call?
[SPEAKER_09]: They're just a good time to add to my position.
[SPEAKER_04]: Call in Vestock, 888-99 chart.
[SPEAKER_06]: You've got finance and investment questions, and the invest talk phone lines never closed.
[SPEAKER_06]: Call anytime 88899 chart.
[SPEAKER_00]: So Friday's jobs report landed really like a bomb.
[SPEAKER_00]: The economy added 172,000 non-farm payrolls in May, roughly double the 80 to 89,000 consensus.
[SPEAKER_00]: Unemployment held steady at 4.3% the labor market that many economists had described as fragile, vulnerable, and sitting in a zero-employment growth equilibrium just delivered a blowout number, the nobody saw coming.
[SPEAKER_00]: The Marguer reaction was swift, stocks old off-bonyled, jumped gold, fell sharply and Goldman Sachs won a walled street to most closely watch forecasters, officially pushed its rate cut expectation out to 2027.
[SPEAKER_00]: They now see no cuts at all in 2026 with the first 25 basis point reduction, coming next summer and a second, next winter.
[SPEAKER_00]: That's a dramatic shift from just months ago.
[SPEAKER_00]: When markets were pricing two to three cuts this year, Goldman also doubled its estimate estimated probability of rate heights from 10 to 20%.
[SPEAKER_00]: Now, the conditions that would cause the Fed to actually raise rates are specific and they are convergent.
[SPEAKER_00]: The first condition is inflation remaining persistently above target while the labor market shows strength.
[SPEAKER_00]: We now have both CPI came in at 4.2% in May a 3-year high.
[SPEAKER_00]: Core inflation is running above 2.5%.
[SPEAKER_00]: And the May jobs report eliminated the argument that the Fed needs to cut to protect employment.
[SPEAKER_00]: When inflation is elevated, and the labor market is strong, the textbook says the central bank should be tightening, not easing.
[SPEAKER_00]: The second condition is inflation expectations becoming unankered.
[SPEAKER_00]: Five-year consumer inflation expectations hit 3.9% in the Michigan survey, a level that makes it nearly impossible for the Fed to justify patients.
[SPEAKER_00]: The public starts expecting high inflation to persist indefinitely, businesses raise prices preemptively, workers demand higher wages, and the inflation, it becomes self-fulfilling.
[SPEAKER_00]: The Fed's entire credibility rests on keeping those expectations anchored around two.
[SPEAKER_00]: At 3.9, they're not anchored.
[SPEAKER_00]: They are drifting dramatically.
[SPEAKER_00]: The third condition is that the energy shock is sustained rather than transient.
[SPEAKER_00]: If we're moves reopens, an oil drops back to 70 much of the inflation pressure dissipates, and the Fed can't wait it out.
[SPEAKER_00]: But oil is at 93.
[SPEAKER_00]: With renewed fighting this weekend, Knock has said full flows won't resume until 2027, even with a deal.
[SPEAKER_00]: And the infrastructure damage across the goal will take a month to repair.
[SPEAKER_00]: The longer this persists, the more it looks like a structural price level shift, rather than a temporary spike.
[SPEAKER_00]: Goldman's language itself, it was pretty revealing, they said the resilient activity and employment data also lowers the bar for a rate hike, less because they suggest a risk of overheating than because a stronger starting point for the economy reduces the risk that a hike would end up being a policy mistake.
[SPEAKER_00]: What does that mean?
[SPEAKER_00]: Well, with the economy this strong, the Fed can hike without fear of triggering a recession.
[SPEAKER_00]: That removes the biggest barrier to tightening.
[SPEAKER_00]: Rising rate expectations affect different asset classes in specific, predictable ways.
[SPEAKER_00]: Bonds lose value directly.
[SPEAKER_00]: When the market prices in higher rates existing bonds with lower coupons, they sell off.
[SPEAKER_00]: The 10-year yield is pushed to 4.54%, the 30-year recently hit a 19-year high of 518.
[SPEAKER_00]: If the vet actually hikes long-duration bonds face the most pain, short-duration instruments and money markets, they benefit because they're yield to just upwards.
[SPEAKER_00]: Real estate?
[SPEAKER_00]: Real estate takes a double hit.
[SPEAKER_00]: You get higher mortgage rates, now it's 651, and potentially headed towards 7.
[SPEAKER_00]: that prices more buyers out of the market and commercial real estate, which is refinancing debt from the zero rate era dramatically higher costs, faces a wave of distress sales and right downs that are already underway.
[SPEAKER_00]: Growth stocks are the most rate-sensitive corner of the equity market, their valuations depend.
[SPEAKER_00]: On discounting future cash flows in a higher discount rate, mathematically reduces those present values.
[SPEAKER_00]: The semiconductor index lost 3.6% on the inflation print alone, AMD fell nearly 5, the entire max 7, has lost more than a trillion in value since SpaceX filed for IPO.
[SPEAKER_00]: For long-term bond allocations, the instinct of prefix income entirely is understandable, but it's wrong.
[SPEAKER_00]: of current yields for 5 on the 10-year and you're 5-2 on the 30.
[SPEAKER_00]: The income component is genuinely attractive.
[SPEAKER_00]: The question is duration.
[SPEAKER_00]: The Fed hikes short duration bonds actually benefit as their yields reset higher.
[SPEAKER_00]: Long duration bonds face price losses.
[SPEAKER_00]: The tactical move is to shorten duration overweight to the one to five, part of the curve, use tips for inflation protection, and keep money market positions as a holding pen.
[SPEAKER_00]: The now pays 35 to 375.
[SPEAKER_00]: The strong jobs market complicates the inflation picture because it supports consumer spending.
[SPEAKER_00]: That keeps demand driven inflation elevated even as supply side pressures from the oil shock layer on top.
[SPEAKER_00]: A recession would actually be easier for the Fed to handle.
[SPEAKER_00]: Why will they cut rates in college today?
[SPEAKER_00]: A strong economy with high inflation.
[SPEAKER_00]: That is a genuinely difficult scenario, and unfortunately, it's the one we're in.
[SPEAKER_00]: Kevin Worship inherits this environment as the new venture.
[SPEAKER_00]: He wanted to cut rates.
[SPEAKER_00]: The data?
[SPEAKER_00]: Well, let's point in the other direction.
[SPEAKER_00]: His first FOMC meeting, which is scheduled for next week, June 16th, 17th, will be the most closely watched meeting in years.
[SPEAKER_00]: The market expects a halt, but the statement's language, about the balance of risks between inflation and employment, will signal whether a hike is entering the conversation.
[SPEAKER_00]: If it is, asset prices have further to adjust, and portfolio's built on the assumption of lower rates, need to be rebuilt for the possibility of higher ones.
[SPEAKER_00]: When we come back, we'll answer more of your finance and investment questions.
[SPEAKER_00]: And if you want to drop your question in live, feel free to call me at 808 to 99 chart.
[SPEAKER_01]: at KPP Financial.
[SPEAKER_01]: Accountability means more than advice.
[SPEAKER_01]: It means we invest alongside you.
[SPEAKER_01]: Through our parallel investing approach, when we recommend an investment for clients, one or more KPP principles invest their own capital at the same time.
[SPEAKER_01]: same day, same price, same percentage.
[SPEAKER_01]: If your portfolio moves, ours does too.
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[SPEAKER_07]: question about investing in industrials.
[SPEAKER_07]: So right now outside of my I-Rove and my 401k, mostly my investments are in tech and energy, and there may be a growing momentum in terms of industrials, and if I am looking to just make some small investments in industrials, where would be a good place to start.
[SPEAKER_07]: Thanks so much.
[SPEAKER_07]: Keep doing what you do.
[SPEAKER_00]: Well, it's a great question.
[SPEAKER_00]: Because oftentimes, people don't realize really how under-diversified they are.
[SPEAKER_00]: Now, for you, you have a lot of exposure to tech and energy.
[SPEAKER_00]: Right now, those two things are heading in the opposite directions, because of structurally what is happening.
[SPEAKER_00]: But the core of this, how to invest in industrials, I think is really important question.
[SPEAKER_00]: For most people, the best way to invest in industrials is first to have their primary exposure be a broad, based industrials.
[SPEAKER_00]: You get why?
[SPEAKER_00]: Because it touches on a multitude of companies, under a multitude of themes.
[SPEAKER_00]: For us, however,
[SPEAKER_00]: We think that anytime you look into a specific sector, if you're diving in deeper than that broad-based index, broad-based ETF, you want to think about really what are the best themes within that individual sector.
[SPEAKER_00]: So for industrials, it's a pretty wide sector, probably wider than you'd think.
[SPEAKER_00]: Rearmament, European rearmament, global defense, is a good theme, a physical infrastructure, grid modernization, re-shoring automation.
[SPEAKER_00]: These are just a handful of themes that are likely to drive this sector forward.
[SPEAKER_00]: So to sum it up for most people, you want to have the bulk of your allocation be that broad-based exposure, but from there maybe dive into the specific themes of that sector that are likely to be the drivers of returns into the future.
[SPEAKER_00]: Thanks for the call.
[SPEAKER_00]: Let's go to Sammy from San Francisco.
[SPEAKER_00]: Let's see how I am 12, 20 in the Bay Area.
[SPEAKER_00]: Looks like you got a question about PayPal?
[SPEAKER_08]: Yeah.
[SPEAKER_08]: Thanks, Luke, we're taking my calls.
[SPEAKER_08]: So yeah, I thought this talk several months ago at about $45, $46.
[SPEAKER_08]: And it was been going down consistently, ever since.
[SPEAKER_08]: What do you think I should do?
[SPEAKER_08]: Should I just hold on to them or, uh, you know?
[SPEAKER_00]: They have, of course, will PayPal to your PYPL is a digital payments platform.
[SPEAKER_00]: So they have PayPal, check out.
[SPEAKER_00]: They have Venmo, Brain Tree, Zoom with an X.
[SPEAKER_00]: They have Honey.
[SPEAKER_00]: They have 439 million active accounts.
[SPEAKER_00]: And recently, they have a new CEO who took over in March of 1226 and immediately announced
[SPEAKER_00]: And the most recent earnings should revenue up 7.2% year over year.
[SPEAKER_00]: and guidance put EPS down 9% year over year with 4 year EPS flat to negative and this guidance is really what crushed the stock.
[SPEAKER_00]: And so you look at this name that has been struggling for quite some time.
[SPEAKER_00]: It was trading at about $90 per share at the beginning of 2025.
[SPEAKER_00]: It is now trading at
[SPEAKER_00]: his cheap it is very cheap 7.5 times price before looking earnings it is about the cheapest it has been in the past five years which makes it really the cheapest large cap fintech on the planet.
[SPEAKER_00]: It's got 15% free cash flow yield, it's got a new CEO, it's got a $1.5 billion cost plan, has a wee chat pay expansion, but their branded checkout growth is only 2%.
[SPEAKER_00]: As I mentioned, their Q2EPS project to be down 9%.
[SPEAKER_00]: I mean, those are the numbers that the market's trading on.
[SPEAKER_00]: And so for me, holding on to a name like this is a big opportunity to cost for some of the great growth themes elsewhere.
[SPEAKER_00]: Certainly, could their next earnings on July 28th as we get more clarity about whether or not branded checkout is re-accelerating or margins or stabilizing, is that really going to be a catalyst to move it ever higher?
[SPEAKER_00]: Maybe get a 5% move?
[SPEAKER_00]: I would say that holding onto this thing, you have an opportunity to cost from something that is clearly one of the worst performers in the FinTech space over the past couple years.
[SPEAKER_00]: There's PayPal Holdings Inc. Take your P-Y-P-L.
[SPEAKER_00]: Thanks to the call.
[SPEAKER_00]: It has been a rough couple days for markets.
[SPEAKER_00]: Nine of 11 sectors, closed in the red materials and industrials have been hit pretty hard.
[SPEAKER_00]: Only energy stocks have been doing well recently.
[SPEAKER_00]: And the catalyst has been a bit of a one to punch.
[SPEAKER_00]: First, President Trump announced the US would resume attacks on Iran after an exchange of strikes posting on social media that Iran was taking too long to negotiate and would pay the price that torpedoed whatever remained with a peace optimism that had been supporting markets.
[SPEAKER_00]: CPI report showed consumer prices rising 4.2% on an annualized basis in May a three-year high matching expectations but underscoring the wars relentless pressure on consumer prices.
[SPEAKER_00]: And so the tech sell off-debut.
[SPEAKER_00]: PHLX, semiconductor and that's lost 3.6% pairing its 2020-6 gain to 72% still extraordinary, but the trend is down from records.
[SPEAKER_00]: AMD, fell 4.9, the chip rally that carried markets to all-time highs is now unwinding, as rain expectations climb and investors reassess weather AI valuations can sustain their multiples in a rising rate environment.
[SPEAKER_00]: Gold has collapsed, 3.6% to 4100, its lowest settlement since November and down 23% from the all-time high, a 53-18 set in late January.
[SPEAKER_00]: And then decline, reflects exactly the dynamic we've been discussing, rising real yields and rate high expectations, crushing gold, because bonds become the more attractive non-risk asset.
[SPEAKER_00]: When the 10-year offer is 454 and the Fed might hike further, a non-yielding metal loses its appeal.
[SPEAKER_00]: Now, the 10-year treasure yield, edge is up to 454, though an auction of 10-year notes drew solid demand, which prevent any sharper rise.
[SPEAKER_00]: The bond market is still functioning, but yields are guiding higher.
[SPEAKER_00]: They are grinding higher, as the inflation outlook deteriorates.
[SPEAKER_00]: The market, for a while now, had been trying to have it both ways.
[SPEAKER_00]: But if inflation stays higher than expected,
[SPEAKER_00]: The likelihood of the Fed cutting is higher.
[SPEAKER_00]: Every asset in the economy stocks bonds real estate corporate credit is ultimately benchmark against the risk-free rate.
[SPEAKER_00]: So pricing and peace in AI upside will ignoring the inflation data?
[SPEAKER_00]: Is no longer an option the market can take?
[SPEAKER_00]: These past couple days have demonstrated that the contradictions can hold only so long.
[SPEAKER_00]: War headlines, inflation prints, a jobs report.
[SPEAKER_00]: They're all pointing in the same direction.
[SPEAKER_00]: Higher rates for longer.
[SPEAKER_00]: And possibly, higher rates outright.
[SPEAKER_00]: Until that changes, expect continued volatility and a rotation from rate sensitive growth to energy, commodities, and short duration income.
[SPEAKER_00]: All right, let's go with another listener question now.
[SPEAKER_05]: Good day, Justin and Luke.
[SPEAKER_05]: Matt from Minneapolis.
[SPEAKER_05]: I've been a holder of Micron, M.U.
[SPEAKER_05]: since the beginning of the year.
[SPEAKER_05]: So as you know, I've made a good profits this year so far.
[SPEAKER_05]: I was wondering if,
[SPEAKER_05]: Simon property is group SPG would be a good one to move some money into.
[SPEAKER_05]: I have no real estate or read funds whatsoever in my portfolio.
[SPEAKER_05]: I see SPG goes up a little bit all the time, even in good and bad volatile markets, it has a dividend.
[SPEAKER_05]: What do you guys feel about that?
[SPEAKER_05]: I know I've had micron only this year, so I'd be paying a little higher tax on it, but
[SPEAKER_05]: would it be worth doing that and taking some good profits off my crown and going into SPG.
[SPEAKER_05]: That is my question.
[SPEAKER_05]: Thank you both for everything you guys do your great.
[SPEAKER_05]: Have a good day.
[SPEAKER_00]: Well, my crown technologies is up about 212% this year up 681% over the past 52 weeks.
[SPEAKER_00]: And I know one of the hardest things in investing is trimming out of those winners.
[SPEAKER_00]: But the only way to lock in profit is to lock in a profit and using that as an opportunity to further diversify into a sector that you do not own is certainly a good idea.
[SPEAKER_00]: Now Simon property group is the world's largest retail rate.
[SPEAKER_00]: They own and operate 235 premium malls, premium outlets, and the mills across US, Europe, and Asia.
[SPEAKER_00]: They have 206 million square
[SPEAKER_00]: They are in many ways.
[SPEAKER_00]: I would say the gold standard of US retail real estate.
[SPEAKER_00]: Now as of May 11th, their most recent earnings revenue was up 20% year over year.
[SPEAKER_00]: They beat by about 16 funds from operation.
[SPEAKER_00]: It was up 7.5% year over year.
[SPEAKER_00]: They beat by 6.4.
[SPEAKER_00]: They passed property NOI.
[SPEAKER_00]: It was up 6.7% year over year.
[SPEAKER_00]: occupancy stands at 96% retail sales per square.
[SPEAKER_00]: Foot was up nearly 12% year over year total sales volume.
[SPEAKER_00]: up 5.6% year over year, they had 175 million in share repurchases.
[SPEAKER_00]: As a reason why this name has been a perennial out performer relative to its industry going back to 2021, the only year didn't do well in that time frame.
[SPEAKER_00]: All the way back to 2020 was really during the pandemic and for a retail reach, well, you can understand why.
[SPEAKER_00]: Now, in terms of guidance, there's a 5% increase on full-year real estate FFO, funds from operation.
[SPEAKER_00]: They had 29 active development projects with a $4 billion pipeline, and a 9% blended yield.
[SPEAKER_00]: Things are going well for this company.
[SPEAKER_00]: They have still most of their 2 billion share repurchase program, which is authorized in February,
[SPEAKER_04]: and that is going through 20, 28, I believe.
[SPEAKER_00]: Now, it's about 32% year over year.
[SPEAKER_00]: It is trading at or near the consensus target, meaning that according to analysts implied upside is low, but it's the Undisputed King of retail real estate and it's firing on all cylinders.
[SPEAKER_00]: That occupancy rate is crazy, 96% in this environment, $819 in sales per square foot, 7.5% funds from operation growth, and a 4.2% yield growing at 7% annually.
[SPEAKER_00]: But given where it's currently priced, I think you're probably paying near full value.
[SPEAKER_00]: I think this is a great company.
[SPEAKER_00]: A truly do, but given it's pricing currently, I would keep it on my watch list and be quick to enter, should there be a pullback?
[SPEAKER_00]: next to the call.
[SPEAKER_00]: Speaking to the road from eight and eight and ninety nine sure.
[SPEAKER_10]: Hey, Luke and Justin, this is Jake from the L. and California.
[SPEAKER_10]: I was calling today to ask about in a N R North American National Resources ETF.
[SPEAKER_10]: I've held this for a couple of years in my retirement account.
[SPEAKER_10]: This hold a lot of companies that I do like, but wanted to see what you guys thought of this company or this ETF.
[SPEAKER_10]: and what I'm trimming with the good idea here, appreciate it, and have a good day.
[SPEAKER_00]: N-A-N-R is the Spider S&P North American Natural Resources ETF.
[SPEAKER_00]: It is a passive ETF that tracks the S&P B-M-I North American Natural Resources Index.
[SPEAKER_00]: So what it does is it invests in U.S. and Canadian large and midcap companies across energy, metals and mining, and agriculture, while rebounds and quarterly with fixed sector allocations of 45% energy, 35% metals and mining, and 20% agriculture.
[SPEAKER_00]: Interestingly enough, with 45% energy exposure, it's like it's down 3% for the past month, it's surprising.
[SPEAKER_00]: Let's look at their top 10 holics.
[SPEAKER_00]: They are X on Chevron, Newmont, Freeport, Moran, AEM, all big names within their space.
[SPEAKER_00]: The best way to compare an ETF is to compare how well it tracks its benchmark.
[SPEAKER_00]: Looks like it tracks it pretty well in line.
[SPEAKER_00]: And so it was really going on here.
[SPEAKER_00]: While the Iran war is certainly driving oil prices, it is the dominant near-term catalyst for what is 45% of the sleeve.
[SPEAKER_00]: What is the 45% sleeve in this ETF?
[SPEAKER_00]: And so overall, I mean, I think it is a relatively good structure DTF.
[SPEAKER_00]: It's only 35 basis points.
[SPEAKER_00]: It's well constructed.
[SPEAKER_00]: It's got the three-sector commodity equity wrapper that's outperforming its category by about seven percentage points over five years that a pretty competitive 35 basis point fee.
[SPEAKER_00]: And so if you want North American commodity exposure with really one ticker to get energy and gold and copper and agriculture and a single vehicle,
[SPEAKER_00]: I mean, it's a good way to go about it, but it's pretty thinly traded.
[SPEAKER_00]: I mean, it's less than a billion dollar AUM, so much as your exposure here isn't too large on a nominal basis on a dollar basis.
[SPEAKER_00]: I think that this is a pretty good ETF to attack your theme.
[SPEAKER_00]: That it's NA and R, the Spider S&P North American Natural Resources ETF, thanks to the call.
[SPEAKER_00]: Well, folks, if you haven't already, I encourage you to head over to our Invest Talk at YouTube channel and check out our deeper, focused video series.
[SPEAKER_00]: So we take one focus point from our week on this podcast and dive a bit deeper.
[SPEAKER_00]: It is exclusive to our YouTube channel.
[SPEAKER_00]: So head over to youtube.com and check it out today.
[SPEAKER_00]: This is Investock, I'm Luke Guerrero, we have one goal here to help you achieve your financial freedom.
[SPEAKER_00]: Our work continues after this break, so get your questions in now at 888-99 chart.
[SPEAKER_00]: Bill, hang on, you will be next.
[SPEAKER_06]: who Guerrero is here, and he's ready with answers to your finance and investment questions.
[SPEAKER_06]: Call in Vestock, 888-99, chart.
[SPEAKER_00]: It's good to build from Northern California.
[SPEAKER_00]: Looks like you had a question about Uber?
[SPEAKER_03]: Yeah, I look good to hear you.
[SPEAKER_03]: Yeah, I bought it, I just 24 or two years ago when it was down, I got it, my cost of $60,
[SPEAKER_03]: And, you know, I considered, you know, treating some getting rid of the alphabet or something, relatively small position back in December, but I hesitate to add an arm like feeling sorry for myself, but I'll probably buy some more if it went down a little more.
[SPEAKER_03]: But what do you think about it?
[SPEAKER_00]: It's a great question, you know, Uber today isn't really the same company it was a few years ago.
[SPEAKER_00]: It's no longer a money losing, ride-hailing startup.
[SPEAKER_00]: They generated 52 billion in revenue last year.
[SPEAKER_00]: I'll be 18% year over year.
[SPEAKER_00]: We've got $10.1 billion in income.
[SPEAKER_00]: So, you know, $10 billion in profit.
[SPEAKER_00]: That's really not what it was a couple years ago when it was losing money.
[SPEAKER_00]: You got to remember that it didn't make any money until, really, 2023.
[SPEAKER_00]: It wasn't another decent quarter gross bookings hit 53 billion that was up 25% year over year.
[SPEAKER_00]: Just a deeper degree 33% free cash flow was it 2.3 billion in one quarter and so the growth story, I mean it appears to be intact.
[SPEAKER_00]: And what they're really banking on though is this autonomous vehicle play they have outlined a ten billion dollar autonomous vehicle plan including $7.5 billion from more than a hundred thousand level four capable robo taxis by 2020 eight.
[SPEAKER_00]: And so, you know, one of the big worries was always, okay, we have a bunch of companies that are moving towards autonomous driving, is that feasible?
[SPEAKER_00]: Is it not feasible?
[SPEAKER_00]: If it is, we would kill Uber and Lyft, right?
[SPEAKER_00]: And so the question is, okay, if Uber can incorporate this within their business plan, they essentially are cutting their big overhead costs, which is paying their contractors.
[SPEAKER_00]: And so they just need to be really the marketplace for
[SPEAKER_00]: These robo taxis, which is essentially what they're trying to do.
[SPEAKER_00]: And then, you couple on top of that, their delivery business is also scaling pretty aggressively.
[SPEAKER_00]: They increase their stake in delivery here out in early 37% they invested over a billion dollars and international delivery assets.
[SPEAKER_00]: And it's trading at 18.5 times price to four looking earnings.
[SPEAKER_00]: I mean, you know, the stock is trading,
[SPEAKER_00]: nearly as low as it has been in the past five years, and it's in a way based on valuation kind of underperforming its own realized earnings growth.
[SPEAKER_00]: Now, there are some issues, right?
[SPEAKER_00]: There are regulatory issues.
[SPEAKER_00]: Cities and countries can change their rules on ride-hailing overnight.
[SPEAKER_00]: You have these ongoing labor classification battles, drivers or employees or they contractors, different jurisdictions that mean different things.
[SPEAKER_00]: And they win one case and that fight isn't necessarily over anywhere else and that has pretty massive implications to their entire business, to their margins.
[SPEAKER_00]: You know, the cost of gas, squeezing consumers.
[SPEAKER_00]: You have people spending less.
[SPEAKER_00]: And that autonomous vehicle question cuts both ways.
[SPEAKER_00]: Yes, Uber's positioning well, but what if Tesla's Robotaxi network works or Waymo's expansion bypasses Uber?
[SPEAKER_00]: What if it doesn't really work at all?
[SPEAKER_00]: And so, you know, bottom line, I think that where Uber is now structurally?
[SPEAKER_00]: You know, it's at its support level.
[SPEAKER_00]: If it breaks down, I would certainly think of divesting from it, but it seems to be at a pretty strong support level going back to the beginning of 2026.
[SPEAKER_00]: And if it's successful in creating this dominant network that it's trying to, that means there's a lot, a lot of upside here.
[SPEAKER_00]: It's been, you know, nearly dead money for a couple months.
[SPEAKER_00]: But I think unless it breaks down further,
[SPEAKER_00]: Thanks for the call.
[SPEAKER_03]: Thank you.
[SPEAKER_03]: Thanks a lot.
[SPEAKER_00]: Well, folks, that doesn't for another episode of Invest Talk, Justin and I, the team, thank you for listening and encourage you to tell your friends and family members about our free podcast downloads, which you can get at iTunes, and you can get it Spotify, and while you're over there, we'd really appreciate it if you left us a rate and review.
[SPEAKER_00]: One other thing, I think you should check out in our Invest Talk, a YouTube channel, the search in Invest Talk with two T's over there on YouTube where you will find our deeper focus video series, as well as our past wealth webinars.
[SPEAKER_00]: And by the way, speaking of wealth webinars, our next one is set for Tuesday, June 30th, from 12 to 1pm Pacific Time.
[SPEAKER_00]: Beyond the yield, how to invest for your income needs.
[SPEAKER_00]: Lastly, one thing I want to mention about KPP financials are practice of parallel investing, where when we make a trade for our clients, we make the same trade for ourselves on the same day at the same price, same percentage, no front running, no special treatment.
[SPEAKER_00]: We invest right alongside our clients, we share the same risks, the same potential for success.
[SPEAKER_00]: That sounds like a quality and a practice you want in your advisor.
[SPEAKER_00]: Head over to www.investalk.com and schedule a free portfolio review today.
[SPEAKER_00]: Independent thinking?
[SPEAKER_00]: Shared success.
[SPEAKER_00]: This is Invest Talk.
[SPEAKER_04]: Good day.
[SPEAKER_04]: Invest Talk is a trademark of KPP financial because of the nature of the interactive dialogue and herant in the format of this program.
[SPEAKER_04]: It's important for the listener to understand that not all comments made will apply to them.
[SPEAKER_04]: Specifically, nothing sets shall be taken to be investment advice.
[SPEAKER_04]: or shell statements on this program be considered an offer to buy or sell security.
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