[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, Justin Klein.
[SPEAKER_01]: Good afternoon fellow investors, and welcome back to Invest Talk.
[SPEAKER_01]: This is another edition.
[SPEAKER_01]: So Thursday edition, the lie 23rd, 2026.
[SPEAKER_01]: And we thank you all for being here.
[SPEAKER_01]: We're in the midst of earning season.
[SPEAKER_01]: We had some pretty big market moves today to mainly the downside for most sectors, most companies, and we'll unpack that and much, much more throughout the hour.
[SPEAKER_01]: But this hour is really dedicated to you, whatever's on your mind, what questions do you have?
[SPEAKER_01]: Maybe about?
[SPEAKER_01]: earnings, reactions, upcoming earnings, different sectors, different asset classes, we know oils, researching to the upside of what does that mean for portfolios and the market as a whole, we're going to dig into all of this as the hour goes on and that's, and I go on, Justin Klein and my job is to answer your finance and investment questions and give you data and perspective so that you can make better decisions with your money.
[SPEAKER_01]: So that's what this hour is about that sets the stage.
[SPEAKER_01]: And in just a minute, we'll talk about today's mark performance and run down the show topics for the hour.
[SPEAKER_01]: But let's tackle this first-color question now.
[SPEAKER_00]: Good morning, Luke and Justin.
[SPEAKER_00]: This is Josh from New York.
[SPEAKER_00]: I just opened my Trump account for my methods on it.
[SPEAKER_00]: Took advantage of free $1,000.
[SPEAKER_00]: I was wondering if you had any insight on contributing to the Trump account versus a 528 account, or if I should just split my contribution to 5050.
[SPEAKER_00]: Just curious on your thoughts, and if there's anything that I'm not considering between the two.
[SPEAKER_00]: Thank you.
[SPEAKER_00]: Bye.
[SPEAKER_01]: All right, I think he was talking about a 529 account.
[SPEAKER_01]: There's definitely some differences.
[SPEAKER_01]: Now, 529s are typically for college savings.
[SPEAKER_01]: They made them a lot better over the past few years, more flexible and the type of schooling that it can be used for, not just kind of accredited for your universities, but things like trade schools and just other other use cases beyond just a university.
[SPEAKER_01]: And then if you have a beneficiary, maybe you have multiple kids, and one of the kids has 529 plan.
[SPEAKER_01]: and they don't use it, maybe they go directly to starting a business or something that doesn't include getting a qualified education under the 529 side, then you can pass that on to another beneficiary of the account, say another kid, I think you even do cousins, things like that.
[SPEAKER_01]: So,
[SPEAKER_01]: And that's made five to nine plans a lot better over the years.
[SPEAKER_01]: And state that five to nine plans are state sponsored versus the Trump account is a kind of like an Artificial IRA for a child.
[SPEAKER_01]: It's tax deferred.
[SPEAKER_01]: It's officially called the five 30 A IRA.
[SPEAKER_01]: That's what it's officially called.
[SPEAKER_01]: and it's one of the federal level, right?
[SPEAKER_01]: So it's for long-term savings, not just education or short-term gains, it's any child under the age of 18 with a social security number, no income limit, no earning, income limit.
[SPEAKER_01]: That's a good thing.
[SPEAKER_01]: The child is the beneficiary and legal owner, but the adult administers it.
[SPEAKER_01]: Now the government will see it with $100 or sorry, $1,000 if
[SPEAKER_01]: make sense to do it.
[SPEAKER_01]: You can contribute up to $5,000 per child per year.
[SPEAKER_01]: So, there's a limit on it.
[SPEAKER_01]: And it can go, I think, when you, when the child is amazed, they can use it to buy a home, for example, a lot of other use cases versus education.
[SPEAKER_01]: It does convert to an IRA, eventually.
[SPEAKER_01]: There's some other things that can get into the details, but it's very, very different.
[SPEAKER_01]: Okay, so, and in there's limits to it.
[SPEAKER_01]: So if you're trying to put away a lot of money and it's for education, I would stick with the 529.
[SPEAKER_01]: The Trump account, I think it's been hyped up.
[SPEAKER_01]: The $5,000 limit is not that much, it's nice.
[SPEAKER_01]: and probably something everyone should do if they have a child between last year and 2028.
[SPEAKER_01]: But overall, it would not be something that I would rely on for college savings.
[SPEAKER_03]: That would still be the 529.
[SPEAKER_01]: Thanks for the call.
[SPEAKER_01]: So in a great show yesterday, we're looking to the story about stocks.
[SPEAKER_01]: Beyond Tech, where is the market actually working right now?
[SPEAKER_01]: And that's very apropos for today's market, which we'll get into in a little bit.
[SPEAKER_01]: We also answer questions about Avalan Bay.
[SPEAKER_01]: And if you happen to miss it, go check it out.
[SPEAKER_01]: The best way to get every show is to follow and Vestock wherever you get your podcast.
[SPEAKER_01]: Now, have a lot of ground to cover.
[SPEAKER_01]: Over the next 45 minutes or so, in time permitting, we'll get to all of it.
[SPEAKER_01]: And I mean, focus point today, concerns a story.
[SPEAKER_01]: Dollar versus emerging market currencies,
[SPEAKER_01]: US dollar has been gaining ground as investors fully to safety, and been escalating Middle East concerns, but a strong dollar has its own set of consequences, formal, they nationals, emerging markets as well as commodity prices.
[SPEAKER_01]: So we'll dig into what a strong dollar means for the broader domestic economy as well as foreign economies as well.
[SPEAKER_01]: We also have other topics on the docket.
[SPEAKER_01]: One is in regards to the Kate.
[SPEAKER_01]: We talk about the K-shaped economy and most people think that the tie-in to top end of the K is narrow and certainly there's a lot of wealth concentration at the very, very tipy top, you know, the standard 1%.
[SPEAKER_01]: But the mass of fluid is actually pretty strong.
[SPEAKER_01]: It's we're going to look at some data here to see how thick is the top of that K?
[SPEAKER_01]: and that'll be an interesting exercise.
[SPEAKER_01]: And then private label brands, private label brands.
[SPEAKER_01]: Some trends into the retail industry that everyone needs to understand that is really grown.
[SPEAKER_01]: To be a very big, big part of major retailers revenue, allow them to expand margins, keep prices lower, names like Walmart, Costco, Target, etc.
[SPEAKER_01]: So we'll dig into that story if we have time, but we'll also get to your voice bank questions one is on blue chips stocks and the other is on
[SPEAKER_01]: Aberdeen, physical, special, or precious metal basket shares ETFGLTR, look at that.
[SPEAKER_01]: And of course, questions that came in via the Invest Talk YouTube channel.
[SPEAKER_01]: As well, but we're going to head to a quick break.
[SPEAKER_01]: Please remember you can call any time and leave your question on the Invest Talk Voice Bank, and if you're listening via our live stream, either on our website and bestalk.com or possibly listening on Amtalk 20 in the Bay Area.
[SPEAKER_01]: You can call right now at 8.89. chart.
[SPEAKER_01]: Up next, I'll comment on today's market activity.
[SPEAKER_03]: It's official.
[SPEAKER_03]: Total lifetime downloads for the Invest Talk podcast are now more than 63 million.
[SPEAKER_03]: Justin Klein is here now, taking your calls live.
[SPEAKER_03]: Invest Talk, 888-99 chart.
[SPEAKER_01]: Let's go take a look at today's markets.
[SPEAKER_01]: It was deeply in the red.
[SPEAKER_01]: You have the NASDAQ down over 2% S&P down 1.2.
[SPEAKER_01]: The Dow down nearly 1%.
[SPEAKER_01]: Really it was concentrated in major cell-offs in names like Google or Alphabet down 7% and met it on three.
[SPEAKER_01]: Big downside for Tesla down 14% their cash flow went negative.
[SPEAKER_01]: two-thirds of their earnings were booking gains on their SpaceX stock, which is now under water.
[SPEAKER_01]: So, uh, clue their business is not doing very well, so there's a lot of sell-offs.
[SPEAKER_01]: Uh, names Oracle down 4.6, uh, sales force down 3.7, so some software names Adobe down 2.8, software names selling off.
[SPEAKER_01]: Uh, service now had good earnings, but didn't about market reaction was not very good.
[SPEAKER_01]: So once again, we're in the midst of earning season, Amazon down four and a half percent, the mag seven continues to drag.
[SPEAKER_01]: And really the big worry here is Google up to their capex spend target going forward, which the market doesn't like.
[SPEAKER_01]: It kind of reminds me of what happened with Mehmet Mehmet Mehmet and the metaverse and the stock crash because the market just did not like the amount of money that they were spending on this metaverse thing that they didn't think there would be really good ROI.
[SPEAKER_01]: Now, I think the ROI is not as clearly negative on AI CapEx spending as it was on the metaverse, but if very well could be negative or very, very low.
[SPEAKER_01]: And the market isn't going to like that situation for the major Mac seven names.
[SPEAKER_01]: And that's why you're seeing a lot of those names struggle the Mac seven down 5% on average.
[SPEAKER_01]: What else did you see?
[SPEAKER_01]: You sell healthcare actually strong Johnson Johnson up 1.4.
[SPEAKER_01]: percent on the day, uh, names like Striker up 3%, but you did have continued sell-off in in names like Disney, as well as booking.
[SPEAKER_01]: So travel names struggling on higher energy costs.
[SPEAKER_01]: Oil, researching, uh, kind of around the hundred dollar mark now for WTI up 6.2%.
[SPEAKER_01]: uh... finished above the ninety dollars a barrel so it's not quite uh... to a hundred but pushing towards that direction as what's happening to the least continues to drag on on and on and on okay and you had the ten year yield the highest point since january of last year the market's pricing in and more hawkish fed going forward
[SPEAKER_01]: That pushed silver down 3.7% of the day, gold finished down 2.4 after a nice little rally over the past couple of days.
[SPEAKER_01]: So we'll see how that battle for potential breakouts ensues here for a lot of the precious metals.
[SPEAKER_01]: So that's something I'm watching for a big breakout to the upside or maybe continuation to the downside that we've seen for the past number of months.
[SPEAKER_01]: But I'm starting to feel like reversal to the upside is in order
[SPEAKER_01]: What else did we get, but initial jobless claims fell by 22,287,000, which was the lowest level, and looks like over a year, actually the lowest level since 1969, excuse me, very, very low.
[SPEAKER_01]: What else did we get?
[SPEAKER_01]: That's pretty much at additional jobless claims.
[SPEAKER_01]: Yeah, I'm just trying to go over any data that I'm missing here.
[SPEAKER_01]: But overall, that's what you're seeing is a potential more hawkish fed, more worries about the amount of money these AI companies are spending.
[SPEAKER_01]: It's, I think that's another reason why interests are going up, not only what's going on in Middle East and higher oil prices, that's going to feed into inflation, but also,
[SPEAKER_01]: the crowding out effects, these hyperscalers are spending so much money that they're borrowing so much money in order to fund these buildouts, it's actually crowding out capital 4 things like treasuries.
[SPEAKER_01]: So longer data treasuries are selling off in earnest, a very interesting day today and we're in the midst of earnings season.
[SPEAKER_01]: So a lot could happen to borrow, I think we had to earnings after hours until it was strong
[SPEAKER_01]: So far, it looks like we're going to get a bit of a bounce to Maura.
[SPEAKER_01]: Well, it's keep things moving and pivot to the best talk, voice being for a fresh listener question.
[SPEAKER_08]: Hey, don't forget me, George.
[SPEAKER_08]: Thank you for all that you do.
[SPEAKER_08]: So I've been listening about precious medals, and it seems like maybe now it would be a good time to buy.
[SPEAKER_08]: I've got a couple of stocks.
[SPEAKER_08]: I don't want you to just go over all of them.
[SPEAKER_08]: I'm just giving you an idea of what I have.
[SPEAKER_08]: I have GLTR, B, SSRM, then E, M. I'm trying to add more into G, L.
[SPEAKER_08]: I actually have that's the most amount of value of loss after holding it for about like six to eight months.
[SPEAKER_08]: So GLTR had evolved and then I had to add more to it right now.
[SPEAKER_08]: Should I wait a little looking for your thoughts?
[SPEAKER_08]: Thank you for all that you do.
[SPEAKER_08]: Bye.
[SPEAKER_01]: All right, looking at GLTR, this is the Aberdeen physical precious metals basket shares.
[SPEAKER_01]: And obviously the pullback and precious metals, over the past six months has brought this into, let's see, it was down down about 10% on the year.
[SPEAKER_01]: So we started off the year very strong, so the pullback has been,
[SPEAKER_01]: been a lot but it's come from very high levels so it's not really down too much this year but I do think as I said top of the show I think we're at near an inflection point and precious metals remember last year this particular fund was up E7% so it's natural to have a little bit more of a consolidation or choppy year going forward as we've seen so far.
[SPEAKER_01]: Now the question is is this the right vehicle for it?
[SPEAKER_01]: Now, first off, this is a perfect example of actually it's type of fund.
[SPEAKER_01]: Those people that want to go and just they want to buy if it's gold and hold on to it.
[SPEAKER_01]: I think you're going overboard.
[SPEAKER_01]: I think buying something like this is a much better way to go.
[SPEAKER_01]: Yeah, the expense ratio is 60 basis points.
[SPEAKER_01]: It's not exactly cheap, but it's cheaper than the spread you're going to pay on the physical gold.
[SPEAKER_01]: That's what you got much.
[SPEAKER_01]: So if you want physical gold,
[SPEAKER_01]: then this is probably the way to go, but if you're looking at something like just exposure to gold, out of the other own like an IAU, which is the IASHA's Gold Trust only 25 basis point, expense ratio, much cheaper, and you're basically going to get the same exposure.
[SPEAKER_01]: So I definitely am okay with allocating more towards gold, because I think we're at a flexion point, but I would be using a cheaper alternative to GLTR.
[SPEAKER_01]: We've got work continues after this break, so give me
[SPEAKER_03]: In the early days, in Vestock was Jerry Klein and Steve Peasley.
[SPEAKER_03]: Now the torch has been passed and a new generation of hosts is on the job, Justin Klein and Luke Guerrero.
[SPEAKER_03]: So when you've got finance and investment questions, don't forget to call in Vestock, 888-99-Chart.
[SPEAKER_01]: Let's talk about the K-shaped economy.
[SPEAKER_01]: Something you probably heard, it's a buzzword about the faint of the shape of our economy, that there's a cohort that's doing very, very well.
[SPEAKER_01]: That's headed up into the right, and there's a cohort that mainly doesn't own assets, and they are struggling, because their incomes are not keeping up with the inflation.
[SPEAKER_01]: And everyone kind of agree about that.
[SPEAKER_01]: But the misnomer, if you actually look at the numbers,
[SPEAKER_01]: The top of that K is narrowed.
[SPEAKER_01]: And the reality when you crunch the numbers is that it's actually fairly wide.
[SPEAKER_01]: It's a misconception that small number of wealthy elites are running away with all the cash while everyone else suffers.
[SPEAKER_01]: Now a lot of this did start during the pandemic for numerous reasons and this has played out over over the years.
[SPEAKER_01]: U.S. spending has been casheaked, but it's been the most exaggerated since 2023.
[SPEAKER_01]: Mainly since the interests have gone up.
[SPEAKER_01]: There are two main drivers that poor households were hit much harder from higher inflation, and the elevate of the interests, then the wealthier group, in fact, higher constraints have actually helped a lot of them, because they have a lot of cash, and that cash is being now earning interest, for example.
[SPEAKER_01]: The assets they own, financial assets, real estate, those who've got up because of inflation.
[SPEAKER_01]: Richard households owned the lion share and do the lion share of consumer spending.
[SPEAKER_01]: Super spending, represents the lion share of GDP, so it's kind of a feedback loop here.
[SPEAKER_01]: As long as no major meltdown, this could continue for a while and it really has.
[SPEAKER_01]: So I really haven't seen a real recession since so wait, you look at it.
[SPEAKER_01]: rising overall spending, creates GDP growth, which spurs more earnings for corporations higher stock prices.
[SPEAKER_01]: And then they take that money out and they spend it.
[SPEAKER_01]: So let's look in the numbers.
[SPEAKER_01]: Of the 135 million US households, 135 million US households, more than 50 million own a mortgage home that has on average risen 50% in value since 2020.
[SPEAKER_01]: It's about about a third of households.
[SPEAKER_01]: 96% of those mortgages have relatively low long-term fix rates.
[SPEAKER_01]: In Europe, there's a lot of floating rate debt.
[SPEAKER_01]: So when each rate's moved up in 2022 and beyond, that's when a lot of problems in Europe happened.
[SPEAKER_01]: economically, because you had problems with the carrying of that debt.
[SPEAKER_01]: Whereas here in America, most people were locked in at 3%.
[SPEAKER_01]: And that's unlocked a massive amount of disposable income.
[SPEAKER_01]: Then there's the 73 million households that have 401k's that are up about 12.7% since 2020, annualized.
[SPEAKER_01]: And so this is really the core of what's keeping the economy going.
[SPEAKER_01]: If you have a 401k, if you own assets of your own real estate, locked in mortgage, you are the one at the top of the k. But let's roll in another, listen to a question now.
[SPEAKER_06]: Hey, guys, this is a private boarder.
[SPEAKER_06]: Again, just want to call and get your take on to see if industries.
[SPEAKER_06]: I know you guys were a fan of it for a period of time.
[SPEAKER_06]: And it was a kind of a play on the natural gas prices.
[SPEAKER_06]: And I'm curious, you know, where you see this going, you know, it's a good entry price at this point.
[SPEAKER_06]: looking forward to the economics, you know, probably someone delivered to Nashville, so just want to get your take on it.
[SPEAKER_06]: Yep, let me know, we'll be looking forward to it.
[SPEAKER_01]: Thank you.
[SPEAKER_01]: Yeah, looking at CF industries, the manufacturer nitrogen fertilizer.
[SPEAKER_01]: One of the, we used to own this for a while, we no longer do.
[SPEAKER_01]: Although it's starting to do well once again, because it's moved up from the beginning of the year when it's trading in the mid 70s and now we're at 126, so it's had a good year so far.
[SPEAKER_01]: That's because earnings are expected to be over nine, 57 last year to $16.00 per share in earnings this year.
[SPEAKER_01]: But back down to $11 a share.
[SPEAKER_01]: Next year, that's $126.00.
[SPEAKER_01]: So for looking earnings, you're still dig this year.
[SPEAKER_01]: Next year, you're kind of at a 10 times multiple.
[SPEAKER_01]: If you're smoothing the earnings volatility.
[SPEAKER_01]: So it's relatively cheap.
[SPEAKER_01]: And what I said before is a lot of fertilizer, this most we would know about half a fertilizer that's used is artificial, meaning that it's produced using mainly natural gas, they're pumping it, there's a process to it.
[SPEAKER_01]: But basically, natural gas is a big input to that artificial fertilizer.
[SPEAKER_01]: And so domestic fertilizer producers,
[SPEAKER_01]: that can access very cheap natural gas are creating this fertilizer and they're exporting it abroad and it's basically an arbitrage because natural gas in Europe, for example, is double or triple the price.
[SPEAKER_01]: So that's why CF Industries continues to do very well.
[SPEAKER_01]: You're having disruptions in supply chains in the Middle East.
[SPEAKER_01]: Therefore, if you have supply chains here domestically, then you're able to extract higher profits.
[SPEAKER_01]: And that's why I think you have high profits this year and expectation of lower profits.
[SPEAKER_01]: Next year and have a return to normal.
[SPEAKER_01]: But actually, they're the issues in the Middle East and geopolitically you're going to continue and so I would be bullish on CF industries.
[SPEAKER_01]: Now, the next in Vestock, we look into the story.
[SPEAKER_01]: The feds impossible position.
[SPEAKER_01]: War, inflation versus rate.
[SPEAKER_01]: Huts, that story is for tomorrow, but, for now, I'm Justin Klein.
[SPEAKER_01]: I'm ready to take your calls now.
[SPEAKER_01]: Or any time, at 8-899 chart.
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[SPEAKER_01]: When we recommend an investment for clients, one or more KPP principles invest their own capital at the same time.
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[SPEAKER_01]: Our main focus point is about the dollar versus emerging market currencies.
[SPEAKER_01]: The dollar has been on its hair as of late as the market started to price in.
[SPEAKER_01]: You know, it came into this year.
[SPEAKER_01]: expecting the Fed to continue to cut rates with a new Fed chair, whoever that might be, now it's Kevin Worst, we know that is, but there hasn't been a lot of rhetoric around cutting rates.
[SPEAKER_01]: Maybe keeping them where they're at now, but the market continues to think the Fed will
[SPEAKER_01]: It makes sense what the dollar has been relatively strong.
[SPEAKER_01]: What's interesting though is the dollar isn't breaking out amongst major currencies.
[SPEAKER_01]: The main currency has been strong against is the yen.
[SPEAKER_01]: But that's because of the getting carried trade, the structural.
[SPEAKER_01]: Issues in Japan and the amount of debt that they have that they need to monetize to the dollar continue to gain against that, but if you look at it based on against like the Swiss Frank it's still down about 10% against the Swiss Frank against the euro if from the beginning of last year is what I'm saying and same with the euro
[SPEAKER_01]: That's, yeah, also down about 10%.
[SPEAKER_01]: So yes, the dollar has been strong, but as I said, they kind of closed yesterday's show.
[SPEAKER_01]: I think that is more of a kind of trend rally in the dollar than some big long-term breakout, but it could be wrong.
[SPEAKER_01]: But what does a strong dollar, what impact does it have?
[SPEAKER_01]: Let's talk about multi-nationals, so many of the companies within the S&P have businesses overseas.
[SPEAKER_01]: I don't know what it is lately, but I want to say it's somewhat in the 2030% range of the revenue of the S&P comes from overseas, which means that when they translate those dollars or those foreign currencies back in the dollars,
[SPEAKER_01]: they convert it into fewer dollars, which reduces report earnings, profit margins, et cetera.
[SPEAKER_01]: So there is a headwind to earnings per share growth from a higher dollar, especially for the mega caps.
[SPEAKER_01]: But oftentimes, can impact smaller caps as well because it makes our products more expensive.
[SPEAKER_01]: So a lot of those that are maybe mid in small cap names that are exporting physical products, cause it's be real, a lot of the large cap names are software companies.
[SPEAKER_01]: Whereas physical products oftentimes they are competed with competing with other producers around the world.
[SPEAKER_01]: better selling a different currency.
[SPEAKER_01]: So a stronger dollar makes our products less competitive.
[SPEAKER_01]: So if, for example, President Trump, a lot of talk has been around how to reshore manufacturing, well, you can't really do that without devaluing the currency in a major way and the opposite of that is happening right now.
[SPEAKER_01]: So it does suppress demand for
[SPEAKER_01]: Domestic physical products, mainly.
[SPEAKER_01]: So that's domestically.
[SPEAKER_01]: It does tend to slow economic growth.
[SPEAKER_01]: Overseas, it can accelerate or make those countries more competitive, but if they are in a debt problem, for example,
[SPEAKER_01]: It actually can make their economy weak and overall.
[SPEAKER_01]: Why?
[SPEAKER_01]: Because if it always rallying and they are collecting taxes in their local currency, now they are less able
[SPEAKER_01]: to pay those dollars nominated debts and that's one tailwind to the dollar over the long term that is changing to a degree but it's going to take a long time which is most global debt is the nominated dollars which means when they need to pay the interest or principal on that debt they need to go get dollars no matter what currency they may hold so the dollars rallying it makes them that that local currency translated dollars less which makes it harder for them to
[SPEAKER_01]: That's a big factor of why when the dollar is exceedingly strong, you see defaults in emerging markets, especially those emerging markets that have.
[SPEAKER_01]: historically bad balance sheets.
[SPEAKER_01]: Love those are typically in South America and Africa and Eastern Asia.
[SPEAKER_01]: Now, lately, the currency that's been hurt the most is actually Indian Ruby because not only are the seeing higher instruments here domestically that when you chant when you compare them to Indian
[SPEAKER_01]: interest rates, comparatively, they're higher, that weakens the rupee, but also the fact that they are big oil importers.
[SPEAKER_01]: So higher oil prices, priced in dollars, makes them struggle more.
[SPEAKER_01]: So that's why you continue to see the rupee weak.
[SPEAKER_01]: So these are big factors that are in play right now historically, though, is something I one shift and I highlighted this at the end of the yesterday show, which is that
[SPEAKER_01]: If you look at global cross-border flows into US assets, it's far more right now going into an record ratio into equities versus the bond market.
[SPEAKER_01]: So typically, it's all about, okay, safe haven status, we're gonna move into the US Treasury market, it's the deepest, most liquid market in the world.
[SPEAKER_01]: And that's still true.
[SPEAKER_01]: But the problem is, is our death situation is spiraling out of control and countries around the world are less likely
[SPEAKER_01]: view the U.S. Treasury market as a safe haven, no matter how liquid it is, flow times they're moving into gold, for example, or maybe Remindy that I'm going to be a bonds.
[SPEAKER_01]: But the real crossboarder flows right now are risk on, meaning that these demand for dollars is going into
[SPEAKER_01]: equities of some kind, usually growth year names, AI names, that's where the demand for dollars is happening.
[SPEAKER_01]: Now, so that's another aspect here that is likely going to make this rally in the dollar a bit short-lived, especially if those foreign investors start to pull money out of the stocks if they're not performing the way that they were expecting.
[SPEAKER_01]: So the dollar safe havens status in that way is starting to shake.
[SPEAKER_01]: under the, under the weight of our debt markets growing so large.
[SPEAKER_01]: Then lastly, on the commodity side, stronger dollar is going to be a head win to commodity prices in general, but what's interesting of note, whether you're looking at gold and silver, obviously a decent pullback, but not breaking along to your map trend, but then you look at other commodities like copper, silver mains relatively
[SPEAKER_01]: And you're actually seeing ag prices move higher.
[SPEAKER_01]: So in the face of higher dollar, stronger dollar.
[SPEAKER_01]: So there's some relative strength there that I'm taking note of.
[SPEAKER_01]: I think is very important to consider.
[SPEAKER_01]: So it's, these are how these are the ways that a stronger dollar impacts both domestic markets, as well as foreign economies and different asset classes.
[SPEAKER_01]: They'll swing back to the investment stock voice bank for a question that came in earlier in 80 to 90 nine chart.
[SPEAKER_05]: Yeah, Mark from San Diego.
[SPEAKER_05]: I have a swab account and I notice that is here a regular account.
[SPEAKER_05]: You can do a whole not your stock and they will split whenever
[SPEAKER_05]: I thought about it, looked into it, I read a lot online about it.
[SPEAKER_05]: Some people like it, some people hate it.
[SPEAKER_05]: Of course, you cannot have margin as well, and it has to be a regular account.
[SPEAKER_05]: So why will it be a realistic thing, at least for like the blue chip stock?
[SPEAKER_05]: What would you make with an ear, I can understand how it is all to stuff that people have to borrow with short, but have more of a blue chip portfolio.
[SPEAKER_05]: I'm just curious.
[SPEAKER_05]: So any insight would be nice.
[SPEAKER_05]: Thank you, bye-bye.
[SPEAKER_01]: So basically what you have to do is lock up your shares and you can't sell them.
[SPEAKER_01]: So if you have a long-term time horizon, then it can be good.
[SPEAKER_01]: How much you make depends on the stock.
[SPEAKER_01]: So stocks that are basically what you're doing is letting it out to short sellers.
[SPEAKER_01]: Schwabony making some sort of rate on the short sellers and then they're paying you portion of that.
[SPEAKER_01]: They're making a spread there.
[SPEAKER_01]: that yield that you're getting is gonna be different based on how much demand there is to short those pick their names.
[SPEAKER_01]: So if you have blue chip names, kind of boring businesses, say a proctor and gamble, for example, maybe.
[SPEAKER_01]: You're gonna get a lot less than if you won't say what are the mag seven names?
[SPEAKER_01]: There's gonna be more volatile.
[SPEAKER_01]: So the pens are which you mean by blue chip stocks.
[SPEAKER_01]: This is something you have to talk to Schwab about and what they offer based on your holdings.
[SPEAKER_01]: Thank you for the call.
[SPEAKER_01]: Let's go answer another voice mail question now.
[SPEAKER_07]: Hi, good evening.
[SPEAKER_07]: This is a sad song Charlotte North Carolina.
[SPEAKER_07]: I would like to discuss because symbol MEPA meta platform.
[SPEAKER_07]: Do you think is there any good entry point
[SPEAKER_07]: Give your guidance.
[SPEAKER_07]: Thank you so much.
[SPEAKER_07]: I've been listening to your answer on the next podcast.
[SPEAKER_07]: Thanks.
[SPEAKER_01]: Bye.
[SPEAKER_01]: Looking at meta platforms.
[SPEAKER_01]: One of the mag seven names and name that's really talked out back in what was this August the last year.
[SPEAKER_01]: Talked out right around $800 per share.
[SPEAKER_01]: Now we are at the through down about 24% down about 606 per share at the close today.
[SPEAKER_01]: It's hyperscaler, it's hyperscaler, spending hundreds of billions of dollars on infrastructure.
[SPEAKER_01]: So there's many times these are names that are now the market is starting to look at it with a side eye, like what's going on over here is this really gonna be worth it.
[SPEAKER_01]: That's why it's struggling.
[SPEAKER_01]: So relative strength now is 32.
[SPEAKER_01]: Which means two thirds of companies are over the past year of outperform this name.
[SPEAKER_01]: And earnings are expected to go up 40% this year, but then flattened out to 7% growth next year.
[SPEAKER_01]: But the real issue is cash flow.
[SPEAKER_01]: And this is a name historically that has issues with cash flow or with say strategy and strategy that is good for shareholders.
[SPEAKER_01]: What am I talking about?
[SPEAKER_01]: It's in the name meta platforms.
[SPEAKER_01]: Remember, when they pivoted to the Metaverse, not exactly well received by the market.
[SPEAKER_01]: And I think this is probably gonna happen in most of these names, including Meta, which is, where's the beef here?
[SPEAKER_01]: Where's the return?
[SPEAKER_01]: Where's the ROI?
[SPEAKER_01]: Pre-cache flows expected to drop considerably over the coming year, and that is the issue.
[SPEAKER_01]: And that means,
[SPEAKER_01]: bi-backs are going to slow down if not be eliminated.
[SPEAKER_01]: In fact, this is a company who hasn't really net bought back shares since the first quarter of 2023, which is considerable.
[SPEAKER_01]: They bought from 2017 to 2023, they bought back about 20% of the shares.
[SPEAKER_01]: So far, since then, they're not buying back any shares.
[SPEAKER_01]: In fact, over the past year, more shares of being issued.
[SPEAKER_01]: sterilize their share issuance to their employees the way they used to.
[SPEAKER_01]: Is this spending it on CapEx?
[SPEAKER_01]: So where is the ultimate buy point?
[SPEAKER_01]: I probably, I think this is probably headed sub 400.
[SPEAKER_01]: So around 400, 375 in that range, that's probably the major support level.
[SPEAKER_01]: And I think we get there as the market, once again, looks at these type of names with a bit of a side eye.
[SPEAKER_01]: Let's talk about private label brands, private label brands.
[SPEAKER_01]: We know inflation has been high for a number of years.
[SPEAKER_01]: Consumers are now focusing more on the value that they're getting from every dollar they're spending.
[SPEAKER_01]: And the interesting thing about the retail market, especially grocery stores is that the shift is transcending income classes.
[SPEAKER_01]: It's not just the lower end that are looking for the better value.
[SPEAKER_01]: Those on the high end are also as well.
[SPEAKER_01]: Retailers are seeing consumers trade down, mainly for privately well brands.
[SPEAKER_01]: And there's a lot, the stigma of buying those brands has gotten off the window in a lot of cases.
[SPEAKER_01]: And that's another reason why a lot of these big name brand package food companies are struggling.
[SPEAKER_01]: If you look at their charts, they're down into the right.
[SPEAKER_01]: Why?
[SPEAKER_01]: Because not only have they paid out two eyed dividends for years, and they've overlapped with their balance sheets, but there are earnings that revenue growth through very meager and sometimes in negative.
[SPEAKER_01]: From January through May, value retailers grew 11.6% against just 2.3% growth from conventional retailers.
[SPEAKER_01]: So consumers are looking for more value.
[SPEAKER_01]: Walmart is increasing the number of their own brands called Better Goods.
[SPEAKER_01]: When it was launched in 2024, just a couple of years ago, they had 300 skews.
[SPEAKER_01]: Now they have nearly a thousand.
[SPEAKER_01]: So it just shows you that increasing demand for their, these private-level products.
[SPEAKER_01]: So the trend is structural.
[SPEAKER_01]: It's not just sick of all the economies, though growing, right?
[SPEAKER_01]: We have very low unemployment.
[SPEAKER_01]: Typically, people trade down to these private-level brands during tougher times.
[SPEAKER_01]: during recessions, but now the tougher time is inflationary environment.
[SPEAKER_01]: Let's just show as you have to shift your mindset.
[SPEAKER_01]: What's interesting here is value retailers and premium retailers are both growing pretty nicely, but the mid-market source of the ones that are struggling that goes back to the case shape.
[SPEAKER_01]: So when you're thinking about companies within the retail industry,
[SPEAKER_01]: Does this shift to more store bought brands?
[SPEAKER_01]: Does that help their business or their business?
[SPEAKER_01]: If they're a retailer, it's helping their business.
[SPEAKER_01]: If they are competing with store bought brands, it's probably going to hurt them.
[SPEAKER_01]: So this is something you need to take back if you're so sure to income investor chasing these brands that you've known for number of years that have high dividend yields that probably is a value trap.
[SPEAKER_01]: Those is Invest Talk, I'm Justin Klein.
[SPEAKER_01]: We have one goal here in January.
[SPEAKER_01]: Today, it's help you achieve your own version of financial freedom.
[SPEAKER_01]: And I work with you after this final break.
[SPEAKER_01]: It's questions in now.
[SPEAKER_01]: 8-899 chart.
[SPEAKER_03]: There are a few things that make KPP financial special.
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[SPEAKER_04]: Hi, good day.
[SPEAKER_04]: Just in a loop.
[SPEAKER_04]: Long, long time we'll certainly your great show here, Matt, from Minneapolis.
[SPEAKER_04]: Thank you guys for a great show and everything you teach us in.
[SPEAKER_04]: If you like to take an economics class every time I listen to it.
[SPEAKER_04]: Hey, I have a quick question here that I'm kind of frustrated with.
[SPEAKER_04]: What do you think of ticker symbol VDE Vanguard energy fund it is?
[SPEAKER_04]: Has it really gone any place it seems like in the last almost year to me or so since I've had it for more than that?
[SPEAKER_04]: Just been in like a 10-point range or so, I don't know if energy is really going to do much here for a while, it seems kind of flat this year, I'm thinking of dropping it and moving into a sector and stock that seems to be moving pretty good.
[SPEAKER_04]: CB, shop that is good insurance company.
[SPEAKER_04]: I know Buffet liked it a lot.
[SPEAKER_04]: What do you think of this move?
[SPEAKER_04]: Would it be a thumbs up or thumbs down?
[SPEAKER_04]: Thank you.
[SPEAKER_04]: I'll be listening on the show.
[SPEAKER_04]: Have a good day.
[SPEAKER_01]: I'm confused about VDE because it has been in an uptrend.
[SPEAKER_01]: It's been actually consolidating sideways for a little while.
[SPEAKER_01]: And, but generally, I think lowering your exposure to the energy space after what I think will be a super, I think it'll be a spike in the one that truly squeezes the current administration because it's clear that the Iran wants to, they're leveraging their cars, which is controlling the straight-of-arms.
[SPEAKER_01]: they're trying to drag this out as long as possible to hurt this current administration in the US.
[SPEAKER_01]: It's very obvious.
[SPEAKER_01]: And if we're getting to inventory levels where this is becoming a bigger and bigger issue, especially if you get into mid to late August and help people singing for a while.
[SPEAKER_01]: But if you look at the inventory levels, our strategic reserve and all of that, this is this is going to be a problem by the end of the third quarter.
[SPEAKER_01]: Let's say that.
[SPEAKER_01]: as long as it's not resolved.
[SPEAKER_01]: So I think in the near term, I would hold it, because I think it will go up.
[SPEAKER_01]: But long term, I like the shift to CB.
[SPEAKER_01]: Very different company.
[SPEAKER_01]: It's one of the best insurance companies out there.
[SPEAKER_01]: They write commercial and personal property, cashily insurance, accident insurance, very large 137 billion dollar market cap.
[SPEAKER_01]: Return equity about 14%,
[SPEAKER_01]: free cash flow about $17 billion on a $137 billion market cap.
[SPEAKER_01]: It's a company whose earnings just continued to grind higher.
[SPEAKER_01]: So long term, would I rather own CB or VDE out of rather own CB?
[SPEAKER_01]: But in the near term, because of the geopolitical uncertainty, because of what's going in the Middle East, what is clear to me anyway is that this is going to result in a major
[SPEAKER_01]: probably above maybe one 50, one 30, one 50, who knows.
[SPEAKER_01]: And then that's where I would take advantage and actually sell out a BDE and rotate into something like Chub.
[SPEAKER_01]: But once again, Chub is the better long term.
[SPEAKER_01]: We'll look at the 15-year return, 12.74% for Chub.
[SPEAKER_01]: That is total trailing return, including dividends.
[SPEAKER_01]: What about BDE?
[SPEAKER_01]: Well, the trailing 15 year return is 5.6% not great.
[SPEAKER_01]: Just shows you that the, as I've said before, if the closing the straightive moves isn't going to create a sustained spike in oil, what will.
[SPEAKER_01]: And so I'm more about owning the infrastructure companies,
[SPEAKER_01]: Mainly on's Exxon, Chevron, Conoco Philips, a lot of the ENP companies.
[SPEAKER_01]: So near a term I like those names, but long term I'm shifting our thought process towards more of the refining companies, the pipeline companies, et cetera.
[SPEAKER_01]: I think it's a better way to gain exposure to energy.
[SPEAKER_01]: There we go.
[SPEAKER_01]: Well, that about does it?
[SPEAKER_01]: I'm Justin Klein, your mind dear, about KKP financials, parallel investing.
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