[SPEAKER_03]: This is Invest Talk, from KPP Financial, helping investors make sense of the markets one day at a time.
[SPEAKER_03]: Here's your host, Luke Guerrero.
[SPEAKER_00]: Hey there everybody and welcome to the Friday June 12th, 2026 edition of Invest Talk.
[SPEAKER_00]: I'm your host Luke Grant.
[SPEAKER_00]: I'll be with you over this next hour as we dissect the market and talk about the stories that affect your portfolios and your investment lives.
[SPEAKER_00]: Now, before we go forward with our regularly scheduled programming, I do want to mention the topic of this show that we do have an upcoming Invest Talk Welp webinar to set for June 30th from 12 to 1pm Pacific Time.
[SPEAKER_00]: The title is Beyond the Yield.
[SPEAKER_00]: How to invest for your income needs.
[SPEAKER_00]: If you're interested, head over to investsuck.com and register.
[SPEAKER_00]: The webinar as always is free for everybody.
[SPEAKER_00]: All right, now just a bit.
[SPEAKER_00]: We'll talk about today's market performance and run down our show topics.
[SPEAKER_00]: But let's keep things off by answering a color question now.
[SPEAKER_07]: I just didn't have a move in time today about ticker of O and A, B, O, M, A, B.
[SPEAKER_07]: It's a care port in Mexico.
[SPEAKER_07]: I know you guys are bullish on Mexico.
[SPEAKER_07]: And I was just wondering if you could go to the stock.
[SPEAKER_07]: If you think it is worth getting in and what you feel about just that care port sector, I guess, we call it that.
[SPEAKER_07]: Thank you very much.
[SPEAKER_00]: Sticker O and AB as I pull things up is actually a name that we looked at recently.
[SPEAKER_00]: The name that we actually get a decent amount of calls on.
[SPEAKER_00]: It is a Mexican airport company, but they trade on both the NASDAQ in dollars and the BMW Mexico.
[SPEAKER_00]: Now, this company is a Mexico City-based airport operator.
[SPEAKER_00]: They manage 13 airports across North America and Central Mexico, including Monterey, the largest and most important in Masatlán, Chihuahua, and it's San Luis Potos, not even to say that one.
[SPEAKER_00]: They also operate cargo hotels.
[SPEAKER_00]: and VIP lounges.
[SPEAKER_00]: Now Mexico is a market that we do like.
[SPEAKER_00]: And this airport has been benefiting from increased growth as well.
[SPEAKER_00]: Passing your traffic was up 4.7% year over year, domestic traffic up 5.7% international was pretty much flat.
[SPEAKER_00]: And there's not room to up.
[SPEAKER_00]: 4.1% year over here, but at the same time they're still seeing cost pressures from contracted services and so net income in pesos was actually down.
[SPEAKER_00]: Over the past six months, this name is
[SPEAKER_00]: kind of ranging a little bit here to date.
[SPEAKER_00]: It is down 6.44% over the past 52 weeks.
[SPEAKER_00]: It is down 3.36%.
[SPEAKER_00]: But the margin is pretty solid.
[SPEAKER_00]: I mean, EBITDA margin, sitting at 73.4, they have really low leverage.
[SPEAKER_00]: They pay a solid dividend.
[SPEAKER_00]: Looks like their dividend is sitting at 4.9%.
[SPEAKER_00]: Right now,
[SPEAKER_00]: And the tear-for-lated increases, I mean, they've kind of already hit the bottom line of this business, they're factored in already.
[SPEAKER_00]: One thing that worries me is something that I mentioned.
[SPEAKER_00]: The top, which is international traffic, I mean, net income fell 4.1% on 20% cost inflation.
[SPEAKER_00]: You have pay-so-depreciation, it kind of creates this structural USD return head-wing for US investors, because if you're investing in a company,
[SPEAKER_00]: that trades in pace, those even if it's on the U.S. exchange, the company itself's revenue is derived from pesos.
[SPEAKER_00]: And so the price is going to adjust and dollar terms based upon the strength or weakness of the currency, and that's been a real headwind here.
[SPEAKER_00]: So, you know, this is probably the purest, near-shoring infrastructure play in the Mexican space with great margins, but
[SPEAKER_00]: I think given the likelihood that US dollar strengthens should there be some sort of resolution to the Iran conflict means at least in the short and medium term on top of how the Mexican pays so it's performed for a US investor, I don't know if I'd enter this right now.
[SPEAKER_00]: That is, O-M-A-B, thanks to the call.
[SPEAKER_00]: Now we have a great show yesterday, we looked into the story about Florida's home insurance reform, and how it's working, and how it could reshape the entire market.
[SPEAKER_00]: We also answered a listener question on SCHD, which is the Schwab US dividend equity ETF.
[SPEAKER_00]: It was submitted by a listener on AM1220 in the Bay Area.
[SPEAKER_00]: If you have an MSD yesterday's show, 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]: Now on to today, where our main story is about the wealth effect paradox and why rich consumers are spending big while markets wobble.
[SPEAKER_00]: Even as geopolitical tensions roll financial markets, wealthy consumers are defying the glue, private jet demand is surging and events like Monaco and Can, and Broadway just recorded a record $1.9 billion in this divergence.
[SPEAKER_00]: between financial anxiety and high-end consumer spending, raises important questions about where the real economy stands.
[SPEAKER_00]: Also, we'll touch on how the Iran War is tightening and already tight metals market.
[SPEAKER_00]: Story about European defense stocks, the theme we've been looking at, and how the rally is started to go into reverse, and we'll should be of time at the end of the show.
[SPEAKER_00]: We will touch on gold, and how its record rally is
[SPEAKER_00]: We also have some voice bank calls ready to play, including one on IRA, Rollovers, and another on Powell Industries, Dr. P.O.W.L.
[SPEAKER_00]: So, also some questions that came in from the comment section of the Invest Talk YouTube channel, and hopefully we hear from some of you live throughout the show.
[SPEAKER_00]: Now, we're headed into New Break.
[SPEAKER_00]: When we come back, we will talk about today's market activity.
[SPEAKER_00]: Don't forget, if you're listening via our live stream, or in the Bay Area on AM 1220, feel free to pick up that phone and dial.
[SPEAKER_03]: This is Invest Talk, now closing in on 63 million downloads, and Luke Guerrero is here taking your questions live.
[SPEAKER_00]: 8.899 chart is the number if you want to get through live some time before the weekend, but you know what the great thing about that number is that it doesn't have to be during the show you can leave your voicemail anytime and I encourage you to do so because we tackle those questions all the time live on air.
[SPEAKER_00]: Now being said, and let's talk a little bit about the market today, U.S. stocks finished higher on Friday and an up-and-down session as the market navigated headline volatility around the latest U.S. Iran developments.
[SPEAKER_00]: Now the Dow gained 7-10% of the S&P added half a percent.
[SPEAKER_00]: The Nasdaq looks like it was up 3-10s and the Russell 2000 up about 80 basis points, stocks did end off of their best levels.
[SPEAKER_00]: Bright was actually positive,
[SPEAKER_00]: and we did see some stabilization and semis after the most recent sell-off.
[SPEAKER_00]: Now the Iran deal on its surface appears to be getting a bit closer.
[SPEAKER_00]: Iran's Foreign Minister said a memorandum of understanding or an MOU if you see that abbreviation and the news is closer than ever, stipulating a ceasefire on all fronts, though he also warned the straight-of-remus will not return to its pre-war state.
[SPEAKER_00]: White House officials said they're 80 to 85% confident that you also sign an agreement that would reopen hormones.
[SPEAKER_00]: With US taking control of Iran's nuclear material and economic benefits, accruing to Iran as they comply.
[SPEAKER_00]: No clarity on timing.
[SPEAKER_00]: And Iran media pushed back on reports of a deal ahead of next week's G7 summit in Geneva.
[SPEAKER_00]: On this news, crude oil fell 3.2% to its lowest close, since mid-April meaning the market's getting a little bit of a build in optimism.
[SPEAKER_00]: But the big story, SpaceX's IPO shares open at $150 and we're trading up roughly 25% from the IPO price.
[SPEAKER_00]: SpaceX has at least full capacity of its Memphis data center to Anthropic and the broader IPO and equity issuance pipeline.
[SPEAKER_00]: Well, it's getting attention as a growing overhang.
[SPEAKER_00]: With this week's equity raise announcements from Super Micro, Oracle and potential meta-offering adding to the supply discussion, while analysts flagged semis in memory being sold as funding sources for SpaceX contributing to their recent weakness.
[SPEAKER_00]: On the date of front, Michigan consumer sentiment improved to 48.9 bouncing from May's record low.
[SPEAKER_00]: coming in just a bit ahead of expectations, your had inflation expectations actually fell three-tenths to 4.6% and the 5 to 10-year?
[SPEAKER_00]: Well, that dropped half a point to 3.4 but still above pre-war levels.
[SPEAKER_00]: Nonetheless, a meaningful step in the right direction.
[SPEAKER_00]: Diving into sectors, energy banks, insurers, exchanges, credit cards, looks like asset managers, rail, some of the best performers on the day, while software at MedTech Defense and Autos lagged.
[SPEAKER_00]: Treasuries of it weaker yields up 3-4 basis points, though rates finish the week lower.
[SPEAKER_00]: The market is still pricing in 17 basis points of hikes through year and actually with that number fluctuating pretty much day to day based upon what is happening in Iran.
[SPEAKER_00]: Now next week we'll center around two big events.
[SPEAKER_00]: First, the G7 meeting in Geneva earlier in the week where Trump and world leaders will convene.
[SPEAKER_00]: Secondly, Kevin Worsh's first FOMC meeting has fed share and that will happen on Wednesday.
[SPEAKER_00]: The market obviously broadly expecting great sustain change, but inflation and potential future tightening will dominate the discussion as we start to see what messages are crafted by the new Fed.
[SPEAKER_00]: I want to briefly mention the newest KPP premium newsletter, which will be distributed tomorrow.
[SPEAKER_00]: The KPP Insights section, we talked a little bit about what is going on with inflation, diving deeper than what the headline number suggests, because there's a lot that's going on.
[SPEAKER_00]: And you have an administration that says, well, in the war comes down, things are going back to normal.
[SPEAKER_00]: Is that true?
[SPEAKER_00]: What does that mean for your portfolios?
[SPEAKER_00]: Stock idea section.
[SPEAKER_00]: We mentioned a water infrastructure distributor and an energy royalty company, and in the portfolio management section, we gave you important tips on how to manage your portfolio.
[SPEAKER_00]: If you're interested in learning more, visit us at investalk.com and subscribe.
[SPEAKER_00]: The newsletter will come through your inbox on Saturday mornings.
[SPEAKER_00]: Let's answer our first question from the YouTube comment section, and it's on ticker CSX.
[SPEAKER_00]: It says, what do you think of CSX?
[SPEAKER_00]: I looked into some transportation companies and this seems pretty good compared to other names within the sector.
[SPEAKER_00]: What are your thoughts?
[SPEAKER_00]: Well CSX Corporation is a class I railroad.
[SPEAKER_00]: They operate
[SPEAKER_00]: across 23 Eastern US states, plus Canada.
[SPEAKER_00]: And what they do is they move merchandise, they move chemicals, they move automotive, they move agriculture, they have intermodal containers, they got coal, they are probably the most dominant rail franchise on the eastern seaboard and the Midwest industrial corridor.
[SPEAKER_00]: They are,
[SPEAKER_00]: Hey, roughly.
[SPEAKER_00]: Let's see what's their market camp today.
[SPEAKER_00]: As my computer likes to lag on a Friday.
[SPEAKER_00]: It looks like it's already headed for the weekend.
[SPEAKER_00]: Now I still got to do some stuff.
[SPEAKER_00]: Terms of size.
[SPEAKER_00]: I mean, it's trading at 47 to 57 per share right now.
[SPEAKER_00]: Looks like it's about $86 billion where it stands.
[SPEAKER_00]: And from a earnings perspective, didn't look great.
[SPEAKER_00]: Revenue missed in April.
[SPEAKER_00]: Net income though is up 24.9% year over year and earnings per share.
[SPEAKER_00]: Beetle expenses failure over your about six percent.
[SPEAKER_00]: I think that's really driving poster earnings is costs coming down.
[SPEAKER_00]: I mean you're today.
[SPEAKER_00]: It's up thirty one, twenty three.
[SPEAKER_00]: The past 52 weeks.
[SPEAKER_00]: It's up forty six, eighty seven and for guidance for your revenue growth raised to mid-single digits from low-single digits.
[SPEAKER_00]: So obviously this margin expansion, which was guided towards the high end of two to three percent range and free cash flow growth.
[SPEAKER_00]: It's sixty percent year over year.
[SPEAKER_00]: Woo!
[SPEAKER_00]: that is going to make investors hit that green buy button.
[SPEAKER_00]: I mean it's impressive they got 26.5% EPS growth and only 2% revenue growth and they're pretty low operating leverage compared to a lot of the business here.
[SPEAKER_00]: I mean there's a reason why I called it best in class at the top then you'd layer on $5 billion in buybacks in a capacity expansion that structurally lowers cost per unit and it's playing out in real time.
[SPEAKER_00]: Is it trading at high multiple?
[SPEAKER_00]: It's the highest it's ever been.
[SPEAKER_00]: It's a bit expensive.
[SPEAKER_00]: I'd keep it on my watch list for now if this thing starts to pair back towards the low 30s.
[SPEAKER_00]: I think that's where I would want to enter.
[SPEAKER_00]: That is CSX Corporation.
[SPEAKER_00]: Thanks for the call.
[SPEAKER_00]: All right, folks, we are headed into yet another break as our first long one.
[SPEAKER_00]: But you know what?
[SPEAKER_00]: We still got plenty more show to go.
[SPEAKER_00]: So if you wanna pick up that phone and dilate it at 99 chart, you know what?
[SPEAKER_00]: This is in Vestock.
[SPEAKER_03]: Get ready for an all-new in Vestock Wealth webinar beyond the yield.
[SPEAKER_03]: How to invest for your income needs.
[SPEAKER_03]: Tuesday, June 30th, noon to one Pacific time.
[SPEAKER_03]: Learn more and register now at investock.com.
[SPEAKER_00]: So here's a number that captures where the American economy actually stands right now.
[SPEAKER_00]: Macy's just reported it's first quarter sales growth in nearly four years.
[SPEAKER_00]: Bloomingdale's compared to the sales to up 10.2% Blue Mercury was up 6.4%.
[SPEAKER_00]: The company raised its annual forecast, shares surge 20% in CEO, Tony Spring, attributed the turnaround to one thing.
[SPEAKER_00]: affluent shoppers.
[SPEAKER_00]: Customers with incomes above 100,000 now represent more than a half of Macy's transactions and at the same time.
[SPEAKER_00]: consumer sentiment is on an all-time low real wages just turn negative gas is above 450 lower income households are cutting spending on everything from fast food to fertilizer.
[SPEAKER_00]: The economy is being held up by the top 20% of owners who count for nearly 60% of all consumer spending in the United States that is the wealth effect paradox and understanding it is essential for knowing which investments will work in this environment.
[SPEAKER_00]: and which will not.
[SPEAKER_00]: The wealth effect is a behavioral phenomenon where people spend more when they feel wealthier, even if their income hasn't changed.
[SPEAKER_00]: They do it.
[SPEAKER_00]: When your stock portfolio is up, when your home equity has grown, when your 401k balance hits a new high, you feel richer and you act on that feeling by spending more freely.
[SPEAKER_00]: The S&P hit all new highs and may, despite the war, despite inflation, despite every scary headline portfolio values, record-y holding households, their near records, and its flow and directly into spending.
[SPEAKER_00]: Broadway just posted a record $1.9 billion season, private jet demand is surging a monocone can, Ralph Laurenne, beat quarterly sales estimates, pre-holdings the parent of Michael Cores and Versacee provided an upbeat annual profit target, Delta.
[SPEAKER_00]: adding a record number of premium seats because premium cabin demand?
[SPEAKER_00]: It's up almost 10% and will basic economy is down 7%.
[SPEAKER_00]: luxury brochures like Aeroon, they are booming.
[SPEAKER_00]: The Sacks Global luxury pulse found that while only 32% of luxury shoppers are optimistic about the economy overall, 59% are upbeat about their personal situation, and that rises to 78% among shoppers earning over $200,000.
[SPEAKER_00]: Now this bifurcation between wealthy and middle class spending, it's not a sign of economic health.
[SPEAKER_00]: It is actually the opposite.
[SPEAKER_00]: It means the economy is fragile.
[SPEAKER_00]: Because when the economy depends on the top quintile
[SPEAKER_00]: Any disruption to the sources of their wealth becomes a systemic risk.
[SPEAKER_00]: A stock market correction of 20% doesn't just reduce portfolio values, it triggers a pullback in the discretionary spending that's been carrying GB GDP growth.
[SPEAKER_00]: The trillion dollars wipe from the mag 7 since SpaceX file for IPO is exactly the kind of wealth destruction that could dent high in consumption if it continues.
[SPEAKER_00]: Now look at a credit card data from the Boston Fed shows that the wealthiest household to driven real aggregate spending since 2022.
[SPEAKER_00]: High income earners were the only cohort to see real wage growth in the last year at 4.2%, low and middle income, flat.
[SPEAKER_00]: Credit card debt among the wealthiest remains below pre-pandemic levels, and that gives them more room to spend, meanwhile, middle income consumers.
[SPEAKER_00]: Their confidence fell off a cliff according to Morning Consult.
[SPEAKER_00]: Dollar General, Walmart, McDonald's, they've all flagged trade-down behavior from their middle income customers.
[SPEAKER_00]: This case-shaped economy is not an error if it is showing up at every earnings, call it every day to set that you look at.
[SPEAKER_00]: The sectors that are best positioned to capture this trend, luxury retail obvious premium brands, split experiential, leisure, travel hospitality, dining entertainment, financial services, wealth management, Macy's pivot towards blooming gales and blue mercury.
[SPEAKER_00]: It's a case study.
[SPEAKER_00]: The company is literally closing its weaker mass market stores and reinvesting in its higher-end locations because that's where affluent shoppers are spending.
[SPEAKER_00]: Airlines, adding first class in business class while cutting basic economy
[SPEAKER_00]: Family offices and ultra-high net worth investors have been diversifying into ults, and that reflects both investment returns and lifestyle preferences, sports team ownership.
[SPEAKER_00]: Art, collectible cars, private aviation.
[SPEAKER_00]: These assets often behave differently from traditional stocks and bonds, and they provide portfolio diversification, but they also deliver enjoyment, social capital.
[SPEAKER_00]: The growth of sports franchise valuations and FL teams now average 5 billion,
[SPEAKER_00]: Now, I can't afford an NFL team, unfortunately.
[SPEAKER_00]: But it doesn't mean that I can't understand what is happening here and benefit in other ways.
[SPEAKER_00]: Because it creates, in a way, a little bit of a dilemma here, the stock that benefit from this affluent spending.
[SPEAKER_00]: luxury brands, premium leisure, wealth management, are performing well now, but they depend on portfolio values staying elevated.
[SPEAKER_00]: The market corrects these are the first to crack because the wealth effect reverses.
[SPEAKER_00]: People feel poorer.
[SPEAKER_00]: That means they pull back sharply on discretionary spending.
[SPEAKER_00]: The defensive play is to pair luxury and experiential exposure with genuine consumer staples.
[SPEAKER_00]: The companies that benefit when everyone, including the wealthy, trades down.
[SPEAKER_00]: Costa Walmart, private label grocery producers, they do well and exactly this environment or luxury, falters.
[SPEAKER_00]: The economy seems to, in many ways, standing on a one leg.
[SPEAKER_00]: That leg, it's strong, it's strong now, but it doesn't change the fact that it's just one leg.
[SPEAKER_00]: And the market volatility, rising rates, geopolitical uncertainty, we've been covering all year.
[SPEAKER_00]: These are all forces that can knock that leg out, understand this, and understand how to protect yourself.
[SPEAKER_00]: On the next invest talk, we will look into this story, Silver, is now a monetary medal.
[SPEAKER_00]: Silver didn't hit 121 because people suddenly wanted more silverware.
[SPEAKER_00]: It exploded because the market is starting to recognize silver for what it is.
[SPEAKER_00]: All that on Monday that we still got plenty of show to go.
[SPEAKER_00]: My name is Luke Gray, and I'm ready to take your calls anytime.
[SPEAKER_00]: 80 to eight, 99 chart.
[SPEAKER_01]: At KPP Financial, Accountability means more than advice.
[SPEAKER_01]: It means we invest alongside you, through our parallel investing approach.
[SPEAKER_01]: 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.
[SPEAKER_01]: That is alignment.
[SPEAKER_01]: That is transparency.
[SPEAKER_01]: That is the KPP difference.
[SPEAKER_01]: Visit investtalk.com to get your free portfolio review.
[SPEAKER_03]: There are a few things that make KPP financial special.
[SPEAKER_03]: One of them is parallel investing.
[SPEAKER_03]: This means they invest right alongside their clients.
[SPEAKER_03]: Here's how it works.
[SPEAKER_03]: When KPP financial makes a trade for their clients, just in line makes the same trade for himself and KPP.
[SPEAKER_03]: On the same day, at the same price, and same percentage.
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[SPEAKER_04]: Hello, Investalk.
[SPEAKER_04]: I was trying to call you guys about digger symbol P-O-W-L-Powel Industries Incorporated.
[SPEAKER_04]: I've heard it for a long time.
[SPEAKER_04]: It's going great.
[SPEAKER_04]: I'm listening to you guys what you're saying about how things are kind of transitioning.
[SPEAKER_04]: Is this something I need to trim?
[SPEAKER_04]: If you could please advise.
[SPEAKER_04]: I appreciate your advice.
[SPEAKER_04]: I'll listen on the podcast.
[SPEAKER_04]: Have a great day.
[SPEAKER_00]: Tigger POWL is pal Industries Inc.
[SPEAKER_00]: It is a Texas-based custom engineered electrical equipment manufacturer.
[SPEAKER_00]: What does that mean?
[SPEAKER_00]: Well, they design and they build switch gear power control room substations, motor control centers, and duct systems for oil and gas for LNG and for electrical.
[SPEAKER_00]: utilities and it's been on an absolute tear over the past year.
[SPEAKER_00]: Up 357.38% it is climbed all the way to 10.5 billion dollars in market count.
[SPEAKER_00]: So what has been driving this?
[SPEAKER_00]: A lot of this has to do with crazy demand growth.
[SPEAKER_00]: Now the most recent quarter, it wasn't great.
[SPEAKER_00]: They saw revenue only up 6% year over year.
[SPEAKER_00]: They missed on revenue.
[SPEAKER_00]: They missed on earnings.
[SPEAKER_00]: They missed on gross margins.
[SPEAKER_00]: They were down about 30 basis points year over year.
[SPEAKER_00]: But look back the past five years.
[SPEAKER_00]: It was grown by 16% on an annualized basis.
[SPEAKER_00]: They're also an interesting company because they don't provide any formal EPS or revenue guidance.
[SPEAKER_00]: But they do talk about their backlog and order Momentum.
[SPEAKER_00]: And they had 490 million in new orders in Q2.
[SPEAKER_00]: That's up 97% of year over year.
[SPEAKER_00]: Their backlogs at 1.8 billion.
[SPEAKER_00]: So they've essentially extended revenue visibility well into 2028.
[SPEAKER_00]: And so they actually fell on earnings day because of those misses.
[SPEAKER_00]: They've kind of reached a resistance level around 309.
[SPEAKER_00]: They kind of been just trading sideways since the middle of May.
[SPEAKER_00]: Now they look pretty expensive.
[SPEAKER_00]: Training at 46 times price to four looking earnings.
[SPEAKER_00]: It's below their average of 76.
[SPEAKER_00]: They're price to book values.
[SPEAKER_00]: Fourteen price to cash flow 52.
[SPEAKER_00]: Man, that backlog is juicy.
[SPEAKER_00]: It's a tough one because it's very expensive.
[SPEAKER_00]: Well above, analysts, consensis, targets, but it is one of the most explosive, small and midcap industrial stories, probably of the past year, they did great for a million dollar data center win, but you're starting to see some insider selling and frankly, traditional valuation models or screaming, hey, sell this guy.
[SPEAKER_00]: So I think a bare minimum, you got to trim out of this thing.
[SPEAKER_00]: Momentum was ha-stopped, halted in its tracks, right?
[SPEAKER_00]: This technical setup was halted in its tracks here.
[SPEAKER_00]: It is a great time to take profit.
[SPEAKER_00]: As Powell Industries took a P.O.W.L.
[SPEAKER_00]: On Friday's, we generally make time to fit in a quick run-down of key benchmark numbers, so let me hit you with that list right now.
[SPEAKER_00]: To your yield was at 4079 last week, it was 4164 and 232 weeks back.
[SPEAKER_00]: It was 0.64.
[SPEAKER_00]: Ten year, 4479, when we back it was 44544 and 229 weeks back, it was 1.762.
[SPEAKER_00]: Gold was 42225 today that is 97 cents less than last week.
[SPEAKER_00]: 45 weeks sales 3348 and 224 weeks back.
[SPEAKER_00]: Silver, 68, 15 per ounce, same as last week.
[SPEAKER_00]: 122 weeks back, it was 2280 and looking back 222 weeks.
[SPEAKER_00]: It was 2394.
[SPEAKER_00]: Oil 8495 per barrel that is 523 less than last week.
[SPEAKER_00]: 90 weeks back, it was 6779 and 132 weeks back, it was 740 and 231 weeks back, it was 6662.
[SPEAKER_00]: National average for a regular gallon of regular gasoline is 410 that is 12 cents lower than last week.
[SPEAKER_00]: 158 weeks back it was 356 200 and 6 weeks back it was 425.
[SPEAKER_00]: 226 weeks back a gallon of regular gas was 357.
[SPEAKER_00]: California, 7578 that is 16 cents less than last week.
[SPEAKER_00]: 135 weeks.
[SPEAKER_00]: It was 532 and 211 weeks back.
[SPEAKER_00]: It was 587 for comparison in New Mexico.
[SPEAKER_00]: Gas is 3.95 per gallon today that is $1.83 less than gas in California.
[SPEAKER_00]: All right.
[SPEAKER_00]: The financial times published a pretty deep analysis this week.
[SPEAKER_00]: What they looked at was what executives and analysts are calling a super squeeze in industrial metals and the implication extends well beyond the commodity markets because these metals are used in industry.
[SPEAKER_00]: Infrastructure manufacturing more recently the AI build out.
[SPEAKER_00]: Copper is trading near an all-time high aluminum which we did a video on on our YouTube channel is that it's highest level in four years both are being driven by the collision.
[SPEAKER_00]: of two powerful forces, surging demand from data centers, EV production renewable energy infrastructure, and then on the other hand, you got supply constraints, made dramatically worse by the Iran War and the Hormuz closure.
[SPEAKER_00]: Little known bank called Goldman Sachs initially forecast a 60,000-ton copper deficit this year outside the U.S. market.
[SPEAKER_00]: That number's been revised.
[SPEAKER_00]: to 640,000 tons, more than 10 times larger.
[SPEAKER_00]: Partly because of mine disruptions at Grossberg and Indonesia and Kamala Kukula in the DR Congo and partly because the war has driven up the cost of sulfuric acid, a critical input for copper, as well as nickel processing.
[SPEAKER_00]: So for a byproduct of oil refinery, refining that is, has more than doubled in price since the conflict began.
[SPEAKER_00]: Wood McKenzie estimates, this could remove 125,000 tons
[SPEAKER_00]: alone.
[SPEAKER_00]: Morgan Stanley flagged another 200,000 tons at risk in Chile from sulfur disruption.
[SPEAKER_00]: Plus, China's banals of your gas at exports.
[SPEAKER_00]: In aluminum, the war has had a direct impact.
[SPEAKER_00]: The Middle East accounts for nearly 10% of global refined production, major smelters in Corning, Alba, and EGA.
[SPEAKER_00]: They curtailed output after Iranian strikes damage infrastructure.
[SPEAKER_00]: And our moves close off raw material imports.
[SPEAKER_00]: What makes the difference from a typical commodity price spike is that the supply constraints preceded the war.
[SPEAKER_00]: My name is Echtives.
[SPEAKER_00]: I've been warning for years that an investor pressure for capital discipline, the same discipline we praised in the oil sector has led to chronic under investment in new minds.
[SPEAKER_00]: Since early 2000s, companies have been returning cash to shareholders rather than building new supply.
[SPEAKER_00]: Now demand from AI and the energy transition and electrification all surgeon at the same time in the splice that can't catch up because new minds take five, seven, 15 years from discovery to production.
[SPEAKER_00]: A.J.S.B.C.s chief economists for commodities has been calling this a super squeeze.
[SPEAKER_00]: super squeeze.
[SPEAKER_00]: It's a good name.
[SPEAKER_00]: Super squeeze.
[SPEAKER_00]: It's 2022 and it's tinglishes it from traditional super cycles.
[SPEAKER_00]: Here's what we said.
[SPEAKER_00]: This is very different because it is driven by supply disruptions not strong to land.
[SPEAKER_00]: It's a positive story for copper nickel aluminum over the medium term but also acts as a huge negative supply chalk to the global economy.
[SPEAKER_00]: The demand side shows little to no signs of cracking.
[SPEAKER_00]: A cable manufacturer supplying offshore wind farms in oil rigs said he hasn't seen demand destruction even at these prices.
[SPEAKER_00]: People are not going to stop buying cables for a new energy anytime soon.
[SPEAKER_00]: And costs, who pays them, you guessed it, you and me, being passed through to end users.
[SPEAKER_00]: We have no choice.
[SPEAKER_00]: Goldman raised its copper price forecast 10%.
[SPEAKER_00]: by year-end, 13,735 per tonne.
[SPEAKER_00]: For investors, the mining and metal sector offers exposure to both the AI infrastructure built out and the energy transition.
[SPEAKER_00]: Two of these strongest structural themes in the market will also serve as a natural hedge against inflation and supply disruption dynamics that are dominating the macro-environment.
[SPEAKER_00]: It's keep things moving and roll in another listener question
[SPEAKER_06]: Thank you so much, Justin.
[SPEAKER_06]: Great to know.
[SPEAKER_06]: I'm calling you from Shelby, Shelby, Charleston, and I have a question about my role over at Iris.
[SPEAKER_06]: I'm retired, and I'm 60-plus, and I would like to circling money out slowly over the next few years instead of all at once to avoid a big text bill.
[SPEAKER_06]: My chapters will definitely be higher down the line.
[SPEAKER_06]: You might as well as it is for me, that's what we're seeing up on this would be great.
[SPEAKER_06]: Thank you.
[SPEAKER_00]: Now a backdoor Roth is specifically for high income earners who cannot contribute directly to a Roth IRA, it involves making a non-deductible, traditional IRA contribution and then converting it.
[SPEAKER_00]: That's not really what you need.
[SPEAKER_00]: What you're asking is is there a Roth conversion strategy i.e.
[SPEAKER_00]: systematically converting portions of your traditional roll over IRA to a Roth IRA over multiple years.
[SPEAKER_00]: These are called Roth conversion ladders.
[SPEAKER_00]: Now, here's why you might be a good candidate.
[SPEAKER_00]: You are 60 plus and retired, which means you're not taking Social Security.
[SPEAKER_00]: You're not taking RMDs which started 73.
[SPEAKER_00]: And so this is this gap
[SPEAKER_00]: And so if your current tax bracket is lower now, then it will be later, which you've said it was, or rather it will be, then it makes sense to pay the tax on the conversion that today's lower rate, then on your all-future growth and withdrawals down the road.
[SPEAKER_00]: Well, you probably don't wanna do as convert your entire RA in one year.
[SPEAKER_00]: That would push you into the highest tax bracket possible to defeat the whole purpose of this.
[SPEAKER_00]: So you wanna convert strategically each year, filling up to the 22, 22, 12, 22, or 24 bracket, but not going higher.
[SPEAKER_00]: This minimizes your total lifetime tax bill.
[SPEAKER_00]: It's called bracket filling or bracket topping.
[SPEAKER_00]: It's probably one of the most powerful tax planning strategies that really exists there.
[SPEAKER_00]: And this is a powerful tool, not just for you, but for anybody.
[SPEAKER_00]: This is something we help our clients with all the time.
[SPEAKER_00]: We have various tools that can say, okay, this is how much room you have.
[SPEAKER_00]: This is how much benefit you can get out of it.
[SPEAKER_00]: But the key is, you need to work with CPA or taxidize.
[SPEAKER_00]: You need to map out this projected income year by year through age 73.
[SPEAKER_00]: When you have to start taking those RMDs and you're obviously beyond social security.
[SPEAKER_00]: because you don't want to mess this up.
[SPEAKER_00]: You don't want to push yourself into a higher tax bracket and pay more taxes than you need to.
[SPEAKER_00]: The common misconception is you actually don't need or didn't come to do Roth conversions.
[SPEAKER_00]: There's no income limit on conversions, anyone can convert regardless of how much they make.
[SPEAKER_00]: There's a five-year rule on converted amounts.
[SPEAKER_00]: You can't withdraw the converted principal penalty free until five years after each conversion, but you're over 59 and a half, so it's largely a non-issue bottom line.
[SPEAKER_00]: In your situation, a Roth conversion may make sense, but given the tax complexity, it is critical.
[SPEAKER_00]: Thanks to the call.
[SPEAKER_00]: It's good to Dave and California.
[SPEAKER_00]: So he got a question on ET, do you own it?
[SPEAKER_00]: You're looking to buy it.
[SPEAKER_05]: I'm looking to buy it or either that one or EPA.
[SPEAKER_05]: Either one, I think the pipeline companies might be good for inflationary times in next few years.
[SPEAKER_05]: And I don't know if this is a good time to get in or not.
[SPEAKER_00]: Yo, let's take a look at ET.
[SPEAKER_00]: And E.T.
[SPEAKER_00]: is energy transfers L.P.
[SPEAKER_00]: This is a Dallas-based midstream pipeline MLP and is one of the largest energy infrastructure companies in North America.
[SPEAKER_00]: So they own and operate over 130,000 miles of pipelines plus storage and terminals and processing facilities.
[SPEAKER_00]: They're up about 15.65% year over year, they have a very strong track record of performance.
[SPEAKER_00]: They also have a very strong track record.
[SPEAKER_00]: of revenue growth.
[SPEAKER_00]: I mean, they had record volumes in every single segment in their most recent earnings.
[SPEAKER_00]: They had 750 million in EBITDA guidance, a 750 million dollar EBITDA guidance raise.
[SPEAKER_00]: That was a mouthful.
[SPEAKER_00]: A 7.1% distribution grant that's growing at 3% annually.
[SPEAKER_00]: You know, they have a pretty much consensus by ratings across the board.
[SPEAKER_00]: If you believe consensus targets, which I don't always, but it's always a nice thing to look at, that gives it about 20 to 25% upside from here.
[SPEAKER_00]: But I mean, it wasn't all good EPS missed by 8% they've had higher costs and kind of cost discipline for the past four years has been a bit of a big concern.
[SPEAKER_00]: They also have a co-CEO retirement that's going to create a bit of a leadership uncertainty.
[SPEAKER_00]: I think the biggest flag here that I got to mention is this is an LP MLP, which means distributions are not dividends.
[SPEAKER_00]: 80 to 90% typically classified as as a return of capital so you don't get an immediate tax and then you receive a K1 at tax time.
[SPEAKER_00]: IRAs and tax deferred accounts, they may trigger UBTI, and so if you don't want to deal with this tax complexity, which for most people, it doesn't make sense, frankly, you know, I think you wouldn't want to go with this one.
[SPEAKER_00]: There are some ETFs I've seen around that kind of take those MLPs and restructure them in a way that is more tax friendly.
[SPEAKER_00]: So if you really want to get in on one of these pipeline MLPs, I think you might want to do your research on that, save yourself a big tax headache.
[SPEAKER_00]: Thanks for the call.
[SPEAKER_00]: Enjoy your weekend, Dave.
[SPEAKER_05]: Thank you.
[SPEAKER_00]: All right folks, we have a little bit of time left when we come back from this break.
[SPEAKER_00]: Now, one more great story to bring you, but I want to mention it one more time before we head off for the week and actually two things I want to mention, first is the Invest Talk of Wealth webinar.
[SPEAKER_00]: Coming up, just a couple weeks away, head over to investalk.com.
[SPEAKER_00]: It's called Beyond The Yield, or going to be talking all about your income needs, and how to fill them in your portfolios.
[SPEAKER_00]: And the next thing I want to mention, just give you a quick heads up.
[SPEAKER_00]: Next Friday is a market holiday, so we will be having a best of show next week.
[SPEAKER_00]: This is Investalk.
[SPEAKER_00]: I'm Lou Greer, we have one goal here, and it's to help you achieve your financial freedom.
[SPEAKER_00]: So, if your question can't wait till Monday, pick up that phone dial, 880-99-chart.
[SPEAKER_03]: The weekend is here or almost here, but you've got financial investment questions, so step up and call in, in Vestar, 888-99-chart.
[SPEAKER_00]: The stocks year up targeted defense index has fallen more than 15% from its peak in January.
[SPEAKER_00]: Much of the decline coming since the Iran War started.
[SPEAKER_00]: BA Systems, Rolls, Roy, Stales, Leonardo, Ryan Metall, they've all lost significant value.
[SPEAKER_00]: And this is a sharp reversal for one of the biggest trades in European equity markets.
[SPEAKER_00]: The Defense Index rose more than 40% every year since 2022, and nearly doubled in 2025, following Germany's massive military investment plans, and natives agreement to re-spending to 5% GDP.
[SPEAKER_00]: Now the reversal.
[SPEAKER_00]: reflects three converging concerns.
[SPEAKER_00]: First, governments are struggling to fund their defense commitments, storing borrowing costs from the Iran War of made the fiscal math harder.
[SPEAKER_00]: The same time, governments say face pressure to subsidize energy costs for consumers and businesses.
[SPEAKER_00]: An energy importing Europe, the budget is being pulled in multiple directions at once.
[SPEAKER_00]: A city's European defense analyst put it.
[SPEAKER_00]: The last year was all about how great is this spending this year's all about how are we going to pay for it?
[SPEAKER_00]: Second, the spending promises aren't transiting into revenue fast enough.
[SPEAKER_00]: Ryan Matal, Airbus, fails.
[SPEAKER_00]: They all disappointed on Q1 revenue.
[SPEAKER_00]: Morgan Stanley downgraded the European Defense Secretary to neutral this week, citing lack of material catalysts and noting the sector is lagging peers on earnings revisions.
[SPEAKER_00]: Converting orders in a profits is a slower process than investors anticipated.
[SPEAKER_00]: And next to the AI sector's ballooning earnings, Defense Growth looks pedestrian.
[SPEAKER_00]: The nature of warfare is shifting.
[SPEAKER_00]: And European defense companies are on the wrong side of the shift.
[SPEAKER_00]: The run conflict has highlighted the importance of drones, of missiles, of autonomous systems, over-traditional tanks, over armored vehicles.
[SPEAKER_00]: European defenses increasingly seem as old school, old economy.
[SPEAKER_00]: Stocks investors want?
[SPEAKER_00]: What they want now?
[SPEAKER_00]: They have more of a tech tilt.
[SPEAKER_00]: Parat, a French drone maker, is up 36% this year.
[SPEAKER_00]: Swedish military IT company, Milldef.
[SPEAKER_00]: That's a risen yearly two thirds, but the big European primes, the Ryan Matolls, the B-A-E's.
[SPEAKER_00]: They're losing ground.
[SPEAKER_00]: Germany scrapping its participation in the 100 billion Euro-future combat air system program with France, that was another blow.
[SPEAKER_00]: The UK Defense Secretary resigned, and were insufficient spending commitments, the Czech Republic, said it would probably miss
[SPEAKER_00]: Institutional investors have unwound their overweight positions.
[SPEAKER_00]: If you look at data from State Street, what you see is that the defense sector has quietly become one of the worst performers this year.
[SPEAKER_00]: Is it maybe the end of the European defense trade?
[SPEAKER_00]: Now if you're an investor who rode these stocks from 2022 through to 2025,
[SPEAKER_00]: And I think this is a wake-up call.
[SPEAKER_00]: This might be a blaring, glaring, unnoticeable signal that it is time to reassess.
[SPEAKER_00]: And it's not because the structural case for higher defense spending is gone.
[SPEAKER_00]: It hasn't disappeared.
[SPEAKER_00]: If anything, current conflict the Iran war makes it stronger.
[SPEAKER_00]: But the market, the market is telling you that spending commitments and actual earnings growth.
[SPEAKER_00]: Guess what?
[SPEAKER_00]: Not the same thing.
[SPEAKER_00]: And it current valuations?
[SPEAKER_00]: After a 40% plus annual run, this is where the upside starts to require proof.
[SPEAKER_00]: This money is rotating.
[SPEAKER_00]: It is rotating towards defense tech, towards drones, towards AI-powered systems, towards cybersecurity, towards autonomous platforms, and far, far away from legacy manufacturers.
[SPEAKER_00]: So, I'm not saying get out of the defense team, but if you're staying in the defense team, follow the shift towards innovation and away from tradition.
[SPEAKER_00]: Well, folks, that does it for another episode, another week of Invest Talk.
[SPEAKER_00]: When we back, we're gonna be halfway through the month of June and almost on to the second half of the year.
[SPEAKER_00]: My name is Luke Guerrero and Justin Klein and I thank you for listening and encourage you to tell your friends and family members about our free podcast downloads.
[SPEAKER_00]: As always, you can get them at iTunes and Spotify while you're over there.
[SPEAKER_00]: We'd really appreciate it if you left us a rate and review.
[SPEAKER_00]: Want to mention it one more time before the weekend our newest wealth webinar is set for Tuesday, June 30th from 12th to 1 Pacific.
[SPEAKER_00]: The title is Beyond the Yield.
[SPEAKER_00]: How to invest for your income needs.
[SPEAKER_00]: Head over to investtalk.com to register for our free wealth webinar.
[SPEAKER_00]: Lastly, if today's show made you think about your specific financial circumstances, your taxes, your retirement, whether or not you're saving enough money for your kid's future.
[SPEAKER_00]: I'm KPB Financial just in the night, I talk to investors such as yourselves each and every day to help you answer those of what life's hardest questions.
[SPEAKER_00]: If you're interested, head over to investalk.com and click the portfolio review button.
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