[SPEAKER_02]: This is Invest Talk, from KPP Financial, helping investors make sense of the markets one day at a time.
[SPEAKER_02]: Here's your host, Luke Guerrero.
[SPEAKER_01]: Good afternoon, fellow investors, and welcome to the Tuesday July 28th, 2026 edition of Invest Talk.
[SPEAKER_01]: I'm your host, Luka Guerrero, and I'll be with you over the next 55 minutes or so.
[SPEAKER_01]: As we die, set the market today, talk about the stories that matter and answer your finance and investment questions.
[SPEAKER_01]: To that end, just a bit, we'll talk about today's performance and run down those show topics.
[SPEAKER_01]: But let's tackle this color question now.
[SPEAKER_07]: I would like to hear your thoughts on I and G. Thank you guys for what you do.
[SPEAKER_01]: All right, ING is a Amsterdam-based global banking company.
[SPEAKER_01]: And I think you could even call it maybe one of the largest banking giants of Europe.
[SPEAKER_01]: But a hundred billion dollar market cap this line that I imagine you're looking at is one of the trades on the New York Stock Exchange.
[SPEAKER_01]: And so this company is servicing a whole bunch of markets, primarily in Europe, though they also do service Asia and Australia as well.
[SPEAKER_01]: It also has a mobile first digital banking strategy that it started to implement a couple years ago.
[SPEAKER_01]: That hit allowed it to reach record profit in 2025 of $6.3 billion in fact in their most recent earnings.
[SPEAKER_01]: They actually beat estimates on earnings per share about 13% of the beat revenue just slightly buy about 1.22%.
[SPEAKER_01]: And that's pretty really driven by two things that a bank like this really cares about, deposit growth and growth in their mortgage lending are.
[SPEAKER_01]: In terms of guidance, looks like they guided revenue up a bit as well.
[SPEAKER_01]: You know, this puts it in a position for a pretty strong pre-earning setup as we go into our next earnings, which is in a couple of days.
[SPEAKER_01]: But really what's been happening here is a search in this company's performance.
[SPEAKER_01]: I mean, it's up over 50% in the past 52 weeks, making it one of the strongest performers, not just in Europe in terms of the banking sector, but really globally amongst large cat banks.
[SPEAKER_01]: It recently was at an all-time high.
[SPEAKER_01]: And there's a lot to be bullish about.
[SPEAKER_01]: I mean, 16.57% return on equity, that record profit, a 7% share count reduction in a single year.
[SPEAKER_01]: I mean, for a lot of reasons, this is Europe's best run digital bank.
[SPEAKER_01]: But I mean, it is at a record high price here, then in a lot of ways is justified.
[SPEAKER_01]: Now, given that earnings are approaching in a couple of days, you know, the setup is pretty strong here.
[SPEAKER_01]: I would say the easy trade is likely behind us, given where we are in terms of valuation.
[SPEAKER_01]: So this is a name that I do like.
[SPEAKER_01]: It certainly has born itself out in its strategy, the proof as they say is in the pudding.
[SPEAKER_01]: But for me, this is the type of name that I wheat for a pullback before entering into a position.
[SPEAKER_01]: That is ING.
[SPEAKER_01]: Thanks for the call.
[SPEAKER_01]: Well, we had a great show yesterday, Justin looked into gas prices going up in 2026 and more importantly, what $4 at the pump means not just for your wallet, but for your portfolio as well.
[SPEAKER_01]: So, he discussed the need for investors to understand how there's a bit of a ripple effect that reaches into your wallets.
[SPEAKER_01]: He also answered a listener question on ticker AXP, which is American Express Company.
[SPEAKER_01]: If you happen to miss yesterday's episode of Invest Talk, I encourage you to go check it out and remember the best way to never miss an episode is to subscribe wherever you get your podcasts.
[SPEAKER_01]: Alright, today, entirely different story, we're going to be talking about the bond market outlook for the rest of the year and really what treasure yields near multi your highs means for your portfolio.
[SPEAKER_01]: We've seen the 10 year yield hovering near January 2025 highs because of oil driven inflation and those fears colliding
[SPEAKER_01]: with what is probably the least certain fed path we've had in quite some time, so that's created this serious turbulence in bond markets.
[SPEAKER_01]: So we'll talk a little bit about that and what these yields mean for bond investors, for mortgage borrowers and really anyone trying to build a balance portfolio right now.
[SPEAKER_01]: We also have a couple other stories including one on a big banks and how they are starting to move back into the commercial real estate lending business, another about big text credit risks and how credit defaults will swaps are showing a big rise in those, and to be of time at the end of the show we'll touch on those massive supply deals that are feeding the AI frenzy and how they may not necessarily be a sure thing.
[SPEAKER_01]: We also have some voice-making calls ready to play.
[SPEAKER_01]: Including one on Return on Equity vs Return on Assets.
[SPEAKER_01]: Should it's a great question.
[SPEAKER_01]: And another on Crowd Strike Holdings Inc. As well as some questions that came in from the comments section of the Invest Talk YouTube channel.
[SPEAKER_01]: Now, we're going to do a quick break.
[SPEAKER_01]: We have plenty of show ahead of us.
[SPEAKER_01]: If you're listening to our live streamer on AM1220 in the Bay Area, I encourage you to pick up that phone and dial 8-8-99 chart.
[SPEAKER_01]: We give back.
[SPEAKER_01]: We'll talk about today's market activity.
[SPEAKER_02]: It's official.
[SPEAKER_02]: Total lifetime downloads for the Invest Talk podcast are now more than 63 million.
[SPEAKER_02]: Luke Guerrero is here now, taking your calls live.
[SPEAKER_02]: Invest Talk, 888-99, chart.
[SPEAKER_01]: Well, after yesterday's down day, we saw a bit of a reversal.
[SPEAKER_01]: The market closing not far off from its highs, but this wasn't really a strong day across the board.
[SPEAKER_01]: You had a pretty big disparity here between the Dow that was up 1%.
[SPEAKER_01]: The S&P, that was up 22 basis point, the Nasdaq, the opposite direction down 22.
[SPEAKER_01]: And the Russell 2000 up 20 basis points as well.
[SPEAKER_01]: Now, with that you still had breath being pretty solidly positive, I mean, the Equal 8SMP led the cap-weighted index by about 90 basis points on the day, and a lot of that was focused in health care and staples in regional banks and airlines.
[SPEAKER_01]: At the same time, some of those names that did well last week, energy, uh, rodent rail, iB's, custody banks, some of those retail investor favorites, still even though the market was positive, didn't really do well today.
[SPEAKER_01]: On the bond side, you did see a bit of a stronger move across the curve yields were down about four to five basis points.
[SPEAKER_01]: same time dollar was off 10 basis points gold finished down 90 silver down to 2% on the day and crude oil ending down another 4.1 remember on the back of losing 7.5% to start the week now it's back below $80 a barrel.
[SPEAKER_01]: Overall, bit of a sizable rotation and broadening move, the big momentum drag that you saw specifically within the names that have done really well, those memory names, and some I conductor names, really,
[SPEAKER_01]: kind of offset by upside that you saw from some pockets of cyclicals from big tech ahead of uh... of big tech earnings with his momentum sell off it's continuing and it's still reflecting these fears around how much money is being spent by these air companies and the fact that the returns are just not manifesting themselves yet
[SPEAKER_01]: Then you also have the competition we've seen from cheaper models in China.
[SPEAKER_01]: And then that issue we've had type of for long time now.
[SPEAKER_01]: The circularity is spending within the AI theme itself.
[SPEAKER_01]: Now, what probably helped a little bit is you did have some dovish updates about Iran.
[SPEAKER_01]: That was somewhat of a tailwind to risk sentiment.
[SPEAKER_01]: You have these reports that mediators believe they're nearing a brilliant breakthrough deal, though, before we started the show, we did see that Iran had a couple of surprise strikes after some days of it being quiet.
[SPEAKER_01]: I mean, overall volume was still low.
[SPEAKER_01]: The market is still in somewhat of a waiting mode ahead of this week's max 7 earnings, we're seeing Microsoft, we're seeing meta, we're seeing Apple, we're seeing Amazon all within the next couple of days.
[SPEAKER_01]: But then you got Wednesday's FOMC decision, which certainly will be an impactful thing.
[SPEAKER_01]: I think the probability is about 60% to 70% at a pause, a hold on rates.
[SPEAKER_01]: Look at on the data side, July can super confidence 90.8.
[SPEAKER_01]: That was below the 92.1 consensus, ADP weekly employment estimates about 15,000 and weekly private payroll job growth for the four weeks ending July 11th, the fifth straight week of deceleration.
[SPEAKER_01]: Looking ahead, no data scheduled for tomorrow that we do get the FOMC meeting, that's the macro highlight for the week.
[SPEAKER_01]: June personal income and spending report is going to be out on Thursday.
[SPEAKER_01]: It's going to show you core PC E inflation.
[SPEAKER_01]: And Friday will bring Q2, ECI, Chicago PMI, and the final University of Michigan Consumer Sentiment and inflation expectations report.
[SPEAKER_01]: All right, let's keep things moving.
[SPEAKER_01]: And answer a question that came in earlier from the YouTube comment section question bank.
[SPEAKER_01]: And it says, where did it go?
[SPEAKER_01]: It disappeared.
[SPEAKER_01]: Oh, here it is.
[SPEAKER_01]: Okay.
[SPEAKER_01]: It says, I've been looking for some exposures for silver.
[SPEAKER_01]: I've been comparing WPM and PAAS which would you choose?
[SPEAKER_01]: The difficulty I'm having is trying to understand WPM with their streaming contracts on low cost silver until 2030.
[SPEAKER_01]: Does this mean that the long-term long-term streaming contracts will need to be re-negotiated or purchased and with a higher price of silver won't that hurt WPM in the long-term since they are not a minor?
[SPEAKER_01]: Thank you.
[SPEAKER_01]: All right, so this is a great question.
[SPEAKER_01]: And the streaming contract concern is probably the exact right thing to think about right now.
[SPEAKER_01]: So first, let's take a look at that question.
[SPEAKER_01]: So here's how the streaming model for WPM, which is a Wheaton Precious Medal, actually works.
[SPEAKER_01]: What they do is they pay,
[SPEAKER_01]: a pretty large upfront sum to a mining company and in exchange they get the right to purchase a set percentage of future metal production at this pre-determined below market price.
[SPEAKER_01]: So think about this deal they did, they paid BHP over $4 billion upfront for about 33% of their mining production and so it'll pan on going price of about 20% over spot once delivered.
[SPEAKER_01]: So silver
[SPEAKER_01]: It is $30 an ounce, then wheat and pay is six.
[SPEAKER_01]: If silver goes at 50, wheat and still pays 10, the margin expands as silver rises.
[SPEAKER_01]: So if silver rises, does that hurt WPM?
[SPEAKER_01]: When the contract spreads, no.
[SPEAKER_01]: The reason why is because most streaming contracts are life of mine agreements, so they don't actually expire, this likely won't expire in 2030, it'll last for the entire lifetime of the mine, which could be 20, 30, 40, 50 years.
[SPEAKER_01]: And additionally, you know, this is more of a boon to companies like this because you've been more predictable or revenue stream.
[SPEAKER_01]: Now, for new minds.
[SPEAKER_01]: they would be likely to pay more upfront.
[SPEAKER_01]: But the ongoing per ounce cost is likely to stay locked for the term of that contract as well.
[SPEAKER_01]: So it's more about new entrants into new minds and not really re-up in contracts on existing minds.
[SPEAKER_01]: I mean, I would say,
[SPEAKER_01]: that the concern you have over the contract for WPM is actually it's greatest strength, right high solar prices don't hurt, they expand those margins.
[SPEAKER_01]: And so if you want lower risk higher quality silver exposure, this streaming model really produces kind of hedge fund like margins and leverage without having the operational risk
[SPEAKER_01]: of mine.
[SPEAKER_01]: So it gives you this no cost inflation exposure and the ability to get the benefits without all those labor permitting regulatory headaches.
[SPEAKER_01]: So, you know, I would say generally for most people between these companies, generally speaking, I would prefer WPM.
[SPEAKER_01]: I think those 70 plus net margins and zero debt and locked in low cost is just one of the big benefits of owning
[SPEAKER_01]: that type of metals exposure.
[SPEAKER_01]: Thanks for watching.
[SPEAKER_01]: This is Vestock, our work continues after this break.
[SPEAKER_01]: You can give me a call now or any time 24-7 at 888-99-show.
[SPEAKER_03]: Look Guerrero is here, and ready to tackle your questions.
[SPEAKER_06]: Is it a good idea to sell your losses in a Roth IRA and just use whatever you have left to reinvest into better stocks?
[SPEAKER_06]: Just wanted to ask you about one stock that I'm looking at,
[SPEAKER_02]: There are a few things that make KPP financial special, one of them is parallel investing.
[SPEAKER_02]: This means they invest right alongside their clients.
[SPEAKER_02]: Here's how it works.
[SPEAKER_02]: When KPP financial makes a trade for their clients, just in-cline makes the same trade for himself and KPP.
[SPEAKER_02]: On the same day, at the same price, and same percentage.
[SPEAKER_02]: No front running, no special treatment, learn more about parallel investing at investalk.com.
[SPEAKER_01]: So for about two years, you've seen the big banks essentially go pencils down on commercial real estate lending.
[SPEAKER_01]: And we made sense, you had office vacancies, you had rising rates, you had a bunch of maturing loans, you had the specter of widespread defaults and understandably that drove them out of the market.
[SPEAKER_01]: they left the field to these private credit lenders, these alternative managers who essentially stepped into field of oil to fill the void rather.
[SPEAKER_01]: And so developers, a lot of them couldn't get financing.
[SPEAKER_01]: Buyers couldn't close deals because there was no way to borrow money.
[SPEAKER_01]: And in effect, you had commercial real estate for a period of years just ground to a near halt.
[SPEAKER_01]: But that appears to be over.
[SPEAKER_01]: Banks are back and they're not really tiptoeing in.
[SPEAKER_01]: They're just diving, diving head first, both Bank of America and US Bankorp increased CRE loan balances by about 8% in Q2.
[SPEAKER_01]: PNC, grew its book by about 15%, truest 25%.
[SPEAKER_01]: There's a recent federal port that showed the total US Bank CRE loan exposure.
[SPEAKER_01]: hit 3 trillion in June.
[SPEAKER_01]: It's about 3% year over year growth.
[SPEAKER_01]: The mortgage bankers association showed 455 billion with the B in new CR loans originated in Q1 alone.
[SPEAKER_01]: That is 80% higher from year ago.
[SPEAKER_01]: So that's not really a slow and steady recovery.
[SPEAKER_01]: That is a massive spike.
[SPEAKER_01]: It's just going pretty much gangbusters right now.
[SPEAKER_01]: You know, banks in a way are, or rather, where is they before we're saying absolutely not touching this.
[SPEAKER_01]: This is poison.
[SPEAKER_01]: Now they're competing for loans.
[SPEAKER_01]: They're trying to grow this pipeline.
[SPEAKER_01]: And that's creating a pricing war, because people want to offer loans for lower rates.
[SPEAKER_01]: And, inherently, that's going to you compress margins.
[SPEAKER_01]: Now the reason why this happening right now isn't because there was any meaningful move in a commercial real estate other than the fact that there's just a huge revival in data centers and multifamily housing.
[SPEAKER_01]: I mean data center lending barely existed five years ago.
[SPEAKER_01]: Now it's one of the most sought after property types because the tenants
[SPEAKER_01]: Who are they?
[SPEAKER_01]: They're Microsoft, they're Amazon, they're meta.
[SPEAKER_01]: They have investment-grade credit, and the longest of term leases.
[SPEAKER_01]: There's also been a bit of movement in multi-family because the fundamentals are resilient.
[SPEAKER_01]: People need places to live regardless of the economy.
[SPEAKER_01]: And so you have this coupled with industrial properties and logistics properties, and that's really drawing a lot of capital.
[SPEAKER_01]: What isn't doing well?
[SPEAKER_01]: Still?
[SPEAKER_01]: Office.
[SPEAKER_01]: Now, banks will lend to what are called class A offices at top-tier markets, but anything below that is still pretty much unfundable, because the vacancy rates still have not improved enough to change underwriting in math.
[SPEAKER_01]: So, I would say the return of bank lending to CRE, it's positive for REITs, it's positive for commercial real estate back securities, it's positive for developers, who for so long have been starved for capital.
[SPEAKER_01]: It's also a headwind for private credit managers.
[SPEAKER_01]: You fill the gap.
[SPEAKER_01]: And it changes the dynamics around this idea of distress because with more capital available, the wave of force sales, the doomsayers, or the doomsayers predicted, maybe a bit smaller that expected.
[SPEAKER_01]: All right, let's move back to the best stock voice bank for a question that came in earlier.
[SPEAKER_05]: Hi guys, this is Kevin Cohen from Locker Center, California.
[SPEAKER_05]: I was coming to ask about a company AutoLive.
[SPEAKER_05]: Picker is ALV as in Victor.
[SPEAKER_05]: They supply safety equipment like airbags and be built to a lot of different car companies around the world.
[SPEAKER_05]: And this is a good stock to pick up for long-term hold.
[SPEAKER_05]: Appreciate your thoughts as always.
[SPEAKER_05]: Thanks.
[SPEAKER_01]: All right, let's take a look at auto-live ink.
[SPEAKER_01]: Auto-live is a creator manufacturer, distributor of these automotive passive safety systems.
[SPEAKER_01]: So think airbag seat belts, steering wheels, have about 45% market share in passive safety, the massive operations they got.
[SPEAKER_01]: 70 plus thousand employees and what they've been doing recently that has been a big boom to their business is shifting rapidly towards being a Chinese domestic OEM
[SPEAKER_01]: because what you're seeing is this huge shift in the global production, right?
[SPEAKER_01]: You're seeing Chinese vehicles really become at the forefront of international purchases outside the United States.
[SPEAKER_01]: And so in most recent earnings, revenue was up about two, three percent year over year.
[SPEAKER_01]: You had cash flow free cash flow margins up from 6% to 12.1.
[SPEAKER_01]: I mean, things are looking really good here.
[SPEAKER_01]: Uh, that being said, it dropped off a little bit, you know, margins are still solid.
[SPEAKER_01]: Uh, valuations are also pretty reasonable as well.
[SPEAKER_01]: I think that given their market capture, given their reasonable valuations, how they're starting to position themselves and the fact that they're seeing real growth, it's going to be a good opportunity to get into a company like auto-living.
[SPEAKER_01]: Thanks to the company.
[SPEAKER_01]: On the next investment stock, we'll look into this question, is the US dollar losing its edge?
[SPEAKER_01]: The dollar outlook in the age of oil shocks and geopolitical risk.
[SPEAKER_01]: That's tomorrow.
[SPEAKER_01]: For now, I'm Luke Guerrero, and we are ready to take your calls any time at 888-99 chart.
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[SPEAKER_01]: Alright, so last Thursday, the 10-year yield hit 4.7% and that's the highest level we've really seen in the 10-year sense January of last year.
[SPEAKER_01]: The same time you had the 30-year reach 519, it's longest stretch of a 5% since 2007.
[SPEAKER_01]: As important to me before the Iran War started in late February, the 10-year was below
[SPEAKER_01]: 70-plus basis points of yield, in five months.
[SPEAKER_01]: And the reason is exactly what it's been all year.
[SPEAKER_01]: Oil hit 100 on Thursday after reports of tanker strikes and every time oil spikes, inflation expectations, go up and when that happens yields are pushed up.
[SPEAKER_01]: Now you'll stick pull back a bit today.
[SPEAKER_01]: Ten year was around 4.65, the intercession after the U.S. suspended strikes late Friday and Toronto open talks with Oman about Hormuz shipping.
[SPEAKER_01]: I'm Arquita's hoping again.
[SPEAKER_01]: That this is the beginning of de-escalation and maybe it is, maybe it's the seventh fall start.
[SPEAKER_01]: I mean, we've been through this
[SPEAKER_01]: enough times that any time we hear about de-escalating tensions, maybe we approach it with a healthy dose of skepticism.
[SPEAKER_01]: I mean, as I mentioned earlier, before the show started, we had ongoing surprise strikes.
[SPEAKER_01]: Let me set aside the day-to-day noise and talk about what these yield levels mean for your portfolio, because whether the tenure settles it for five or four seven or five,
[SPEAKER_01]: The broader question is the same, how do you invest in fixed income when the bond market has fundamentally changed?
[SPEAKER_01]: And the question we get asked most often right now is really weather long duration bonds at these yields are a trap or more of an opportunity.
[SPEAKER_01]: where inflation's gonna go from here?
[SPEAKER_01]: I mean, if you buy a 10 year treasury at 47 and hold it to maturity, you earn 4.7% a year for a decade.
[SPEAKER_01]: That's a known quantity.
[SPEAKER_01]: You get your principal back at the end.
[SPEAKER_01]: If inflation averages two and a half over that period, your real returns two, two, as genuinely attractive.
[SPEAKER_01]: But if inflation's one, five, you're only getting one, too.
[SPEAKER_01]: I mean, that's acceptable, but certainly not exciting.
[SPEAKER_01]: If inflation stays at four, you're essentially earning nothing after inflation for a decade while your capital is locked up.
[SPEAKER_01]: And the last scenario is the trap.
[SPEAKER_01]: And looking at where things have been, I don't think it's impossible.
[SPEAKER_01]: The Ron Wars 5 months old, the straight is still contested.
[SPEAKER_01]: The IEA's emergency releases are about 75% depleted.
[SPEAKER_01]: You have companies like Chevron who CEO is saying, hey, the buffers are gone.
[SPEAKER_01]: I mean, the structural forces that are pushing inflation higher your supply shocks physical deficit at 6% of GDP, all this spending AI capex.
[SPEAKER_01]: They're not going away.
[SPEAKER_01]: Now, that's about the decision to purchase bonds in the future.
[SPEAKER_01]: How does it affect your existing bonds today?
[SPEAKER_01]: Because a lot of you own bond funds and don't fully understand this.
[SPEAKER_01]: When yields rise, the price of existing bonds fall.
[SPEAKER_01]: The longer the duration, the more they fall.
[SPEAKER_01]: It's a simple rule of thumb for every one percent increase in yields.
[SPEAKER_01]: A bond or bond fund loses roughly its duration in percentage terms.
[SPEAKER_01]: So if you own a fund with an average duration of seven years and the yield rise one percent, your fund drops about seven percent in value.
[SPEAKER_01]: The Blueberg Global Aggregate Index has erased all its unit gains within weeks of the war starting and it's given back even more since then and it's important to understand this because the relationship between all of these things is the single most important correlation in markets this year.
[SPEAKER_01]: It's operated through this same mechanism every time oil goes up.
[SPEAKER_01]: Energy costs flowing to CPI, CPI flows into inflation, inflation flows into term premium, which is that extra yield that investors are demanding to hold larger, sorry, longer dated bonds.
[SPEAKER_01]: I think the question is, at what level does the bond market become genuinely attractive for long-term investors?
[SPEAKER_01]: I would argue we're getting close.
[SPEAKER_01]: I mean, unless you have that horrific 4% inflation scenario for 10 years, a 4.7% 10-year yield looks pretty good, you're locking in what is at least the highest and nominal yield in nearly two decades, but getting close and there are completely different things.
[SPEAKER_01]: Right?
[SPEAKER_01]: That's why we have been saying we want to tilt towards shorter duration here.
[SPEAKER_01]: That's the positioning that we believe generally is where you want to be if you're concerned about inflation tips, treasure inflation protected securities is a great way to invest right now if you need fix income in a defined stream.
[SPEAKER_01]: With this oscillation in yields, the bond market is something broken.
[SPEAKER_01]: It's more just operating on an environment.
[SPEAKER_01]: It hasn't really seen in 20 years.
[SPEAKER_01]: And so the playbook from 2010 to pre-pandemic, or even coming out of the pandemic, bideration, ride the rally, click the coupon.
[SPEAKER_01]: It doesn't really work when inflation is structurally higher.
[SPEAKER_01]: So as the bond market is,
[SPEAKER_01]: Changing its expectations of inflation, so too do you need to change your expectations of what type of bond investing is possible in this environment?
[SPEAKER_01]: All right, let's keep things moving and listen to a fresh listener question now.
[SPEAKER_04]: Hey, this is Michael from Cleveland.
[SPEAKER_04]: I'm calling about two stocks I'm watching today.
[SPEAKER_04]: It's been really crashing today, especially.
[SPEAKER_04]: What do you think about those two things?
[SPEAKER_01]: All right, let's take a look at crowd strike, crowd strike, of course, the cyber security behemoth.
[SPEAKER_01]: Don't pretty well this year, up about 54% over the past 52 weeks, up 55.13 crowd strike that CRWD and, you know, most recently,
[SPEAKER_01]: That's our revenue up 26% year over year.
[SPEAKER_01]: They saw EPS be estimates as well.
[SPEAKER_01]: I mean, these are the reasons why this company is up so much.
[SPEAKER_01]: You're to date and it's continued to be a dominant theme.
[SPEAKER_01]: Think about this.
[SPEAKER_01]: If you have an AI ecosystem that is predicated upon databases that store, you guessed it, data.
[SPEAKER_01]: Companies that work in cyber security are going to be the ones that do particularly well or should see an increase in revenue.
[SPEAKER_01]: That being said, it's trading at 129 times price to four looking areas.
[SPEAKER_01]: Now the average 121 trading at 40 times book that.
[SPEAKER_01]: This is not a cheap name by any means.
[SPEAKER_01]: It's also a name.
[SPEAKER_01]: And the past couple years has seen negative return on assets and negative return on equity.
[SPEAKER_01]: And so, in spite of this growth, which again is absolutely massive.
[SPEAKER_01]: I mean, they only had 874 million in revenue in 2021.
[SPEAKER_01]: The number is about to be 6 billion this year.
[SPEAKER_01]: It is in a way priced to perfection.
[SPEAKER_01]: And so I'm a little bit concerned about what the downside looks like from here.
[SPEAKER_01]: GLW is corning ink, notably the glass creator, what they have benefited from is also creating those fiber optics that physically link data centers.
[SPEAKER_01]: For this name, I mean, it's down 12.10%
[SPEAKER_01]: Over the past, sorry, that's just today.
[SPEAKER_01]: It's down 17.67% of the past three months.
[SPEAKER_01]: I think the issue that you're seeing in this name, which is still inspired to everything up 43.91% this year, is this blockage issue with an AI that if there is a bottleneck in production, companies that are specifically moving to create parts that are implemented in the buildout of infrastructure,
[SPEAKER_01]: may see revenues collapse a bit because the singular thesis here depends on AI capex and AI spending.
[SPEAKER_01]: So I would say between the two, corning is probably the better risk or war because of valuation.
[SPEAKER_01]: I think both benefit from the AI mega trend because ones protecting it ones connecting it, but
[SPEAKER_01]: We are at a time right now, we're seeing this continued rotation.
[SPEAKER_01]: So until we see a bit of a trend change here on Corning, I mean, it's down again, nearly 20%.
[SPEAKER_01]: Three months, probably moving towards a more reasonable valuation.
[SPEAKER_01]: I'd probably keep this one on my watch list.
[SPEAKER_01]: Thanks for the call.
[SPEAKER_01]: So like we had a live call, Will from San Diego.
[SPEAKER_01]: How can I help you?
[SPEAKER_08]: Oh, yes.
[SPEAKER_08]: I'm taking a look at ticker symbol ET for income.
[SPEAKER_08]: And I wanted to know what your thoughts were.
[SPEAKER_01]: Oh, kiddo, let me pull this up on my screen right here.
[SPEAKER_01]: And ET is energy transfer LP.
[SPEAKER_01]: So what they do, excuse me.
[SPEAKER_01]: Uh, what they do is they are a pipeline company.
[SPEAKER_01]: So they have pipelines for crude natural gas and gls refined products.
[SPEAKER_01]: You're to date they are up about 22.50% they have a very solid dividend yield.
[SPEAKER_01]: It's range from about six to eight since 2021.
[SPEAKER_01]: And overall they've just benefited from massive energy demand.
[SPEAKER_01]: I mean they have about 7% distribution yield about 3% annual growth.
[SPEAKER_01]: I mean that's that's pretty solid.
[SPEAKER_01]: They have been seeing natural gas demand grow by about 20% to 30% by decade and I think it's probably one of the cleanest.
[SPEAKER_01]: midstream stories with a little bit less volatility than some of the other names as well.
[SPEAKER_01]: And so I like this company, but it is an MLP, so your distributions are not dividends.
[SPEAKER_01]: 80 to 90 percent of return at capital.
[SPEAKER_01]: You have UBTI risk and IRAs.
[SPEAKER_01]: You're going to have to file a K1.
[SPEAKER_01]: I think for most investors, it becomes a bit too tax-complicated, so generally speaking, I would think I'd like to stay away from anything that makes my taxes a bit more complicated through that K1 process and MLPs.
[SPEAKER_01]: If you're looking to get exposure to these names, I know there are various funds out there that restructure into more of a corporate shell so that you don't have to deal with that tax-complication.
[SPEAKER_01]: So,
[SPEAKER_01]: If you want to get exposure to an MLP, that's kind of the way I would go about it, but for me, energy transfer partners, which we do get calls on a lot, I would generally stay away from because of the tax complexity.
[SPEAKER_01]: Thanks for the call.
[SPEAKER_08]: Okay, thank you.
[SPEAKER_01]: Let's go with another YouTube comment section question and this one says service now we've actually been taking a look at service now recently it says good afternoon I was interested in your opinion on service now it's a little bit high or rather is it a little bit high or is it worth buying the stock is only up 15 to 20 points above its current low.
[SPEAKER_01]: And service now, excuse me, is a package software company that really works on end-to-end workflow automation, specifically for digital businesses.
[SPEAKER_01]: So it's cloud-based.
[SPEAKER_01]: They've been doing a lot with machine learning, a lot with artificial intelligence.
[SPEAKER_01]: But it's been on a bit of a downtrend since the middle of 2025.
[SPEAKER_01]: It's down about 43.89 over the past 52 weeks.
[SPEAKER_01]: It's down 27.79% year-to-date.
[SPEAKER_01]: And that's a spite of revenue growing from about 13.2 billion to about 16.209 billion is where it's supposed to be at the end of this year.
[SPEAKER_01]: This has moved valuations back down to a bit more reasonable valuation 22.9.
[SPEAKER_01]: They go a lot that has driven service now
[SPEAKER_01]: And that is threat of replacement.
[SPEAKER_01]: Now, I don't necessarily buy into that.
[SPEAKER_01]: I think it's important to note that they absolutely crushed earnings.
[SPEAKER_01]: There's a reason why, even though you see this horrible reversal over the past 72 weeks, it's up 22.25% over the past three months.
[SPEAKER_01]: You've seen a bit of a reversal in the trend.
[SPEAKER_01]: Now, is it meaningful enough to suggest to me that you have a bit of a capitulation here, that you have a leg higher?
[SPEAKER_01]: I'm not so certain about that.
[SPEAKER_01]: There are positives, right?
[SPEAKER_01]: I mentioned a revenue growing pretty significantly.
[SPEAKER_01]: They have huge subscriber growth, about 25% subscription growth.
[SPEAKER_01]: and about 40% growth in large deals, but at one strong quarter is just one strong quarter, right?
[SPEAKER_01]: I think that you have a lot of issues with where the revenue is derived from, 59% of the revenue is from the US, everything else is XUS, so you have a lot of FX exposure,
[SPEAKER_01]: I think that of the enterprise software names that have been beaten down, this is one that I like because of those growth numbers that we talked about, they also have a huge renewal rate in their business like 98% and so I think for me this becomes a situation where yes, you've had good earnings.
[SPEAKER_01]: things are starting to look better from a momentum perspective and from the valuation perspective, my dad.
[SPEAKER_01]: But I need to see a couple quarters of consistency here and a bit of a breakdown in these overarching momentum trends over the past couple years before I would want to enter a full position here.
[SPEAKER_01]: So that is service now, take her N-O-W.
[SPEAKER_01]: Thanks for the call.
[SPEAKER_01]: Just kidding, it was a YouTube comment.
[SPEAKER_01]: Thanks for watching.
[SPEAKER_01]: This is Investoc, I'm Luke Guerrero and we have one goal here to help you achieve your financial freedom.
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[SPEAKER_01]: Okay, last one for today.
[SPEAKER_01]: And this might be probably one of the most important signals for any of you out there who are exposed to AI.
[SPEAKER_01]: More important than earnings, more important than stock prices, more important than token price indices.
[SPEAKER_01]: Because the credit default swap market is flashing red on the company's are at the center of the AI boot.
[SPEAKER_01]: You have CDS prices, credit default swap prices for Oracle SpaceX, alphabet, Amazon, Meta, Broadcom, and video.
[SPEAKER_01]: They have all hit record highs and recent days.
[SPEAKER_01]: You have Oracle's five-year CDS at 215 basis points, meaning investors pay 215,000 annually.
[SPEAKER_01]: to ensure $10 million of Oracle debt against its default.
[SPEAKER_01]: I mean, that is up from roughly 144 at the start of the year.
[SPEAKER_01]: Nvidia's hit a record 79 alphabet, which only started trading in late November.
[SPEAKER_01]: Is it a new high of 67?
[SPEAKER_01]: Now, no one thinks Alphabet earned video or going to default, right?
[SPEAKER_01]: Investment grade CDS isn't about default risk.
[SPEAKER_01]: It's about downgrade risk.
[SPEAKER_01]: You're spread widening and the market has this growing discomfort with how much debt these companies are issuing in order to fund this infrastructure.
[SPEAKER_01]: And in Meta's number was crazy.
[SPEAKER_01]: The company's latest borrowing cost for $12 billion Texas data center loan has risen to levels comparable with B-rated junk bonds.
[SPEAKER_01]: B-meta, one of the most profitable companies in America, is borrowing it rates that companies on the verge of distress normally pay.
[SPEAKER_01]: It's a pretty remarkable situation, but it's effectively what has become the norm today.
[SPEAKER_01]: Now, we're a whole different story.
[SPEAKER_01]: They're the cautionary tale.
[SPEAKER_01]: The company committed to spending 70 billion a year on data centers.
[SPEAKER_01]: The SMB downgraded it to triple B minus one notch above junk citing what they called an uncertain path to profitability, amid massive AI investments.
[SPEAKER_01]: And so the question is,
[SPEAKER_01]: do other companies fall soon?
[SPEAKER_01]: Is this level of capex growth permanent?
[SPEAKER_01]: And when is this point at which we start to see positive cash flow?
[SPEAKER_01]: And that's how it connects to the equity story.
[SPEAKER_01]: Alphabet's free cash flow turned negative in Q2.
[SPEAKER_01]: For the first time, since going public more than two decades ago.
[SPEAKER_01]: I mean, that company has been an absolute free cash flow machine for its entire public life and it's now spending more on AI than it generates from operations.
[SPEAKER_01]: So for a lot of these companies, it becomes more important to watch credit default swaps than it does to watch what earnings look like.
[SPEAKER_01]: And this is the signal that people need to be paying attention to.
[SPEAKER_01]: In CapEx, heavy cycles, the credit market often reprices risk long before equity is due.
[SPEAKER_01]: I mean, Oracle Stockfell 60% from his peak after CDS is widened.
[SPEAKER_01]: The credit market sees the risk.
[SPEAKER_01]: The stock market decided to pay attention to it later.
[SPEAKER_01]: So CDS is on other hyper-scalers, continue to widen, and it's kind of the R for every major name.
[SPEAKER_01]: Do we start to see a bit of an equity reprisate?
[SPEAKER_01]: That doesn't mean sell everything that has an AI label that would be insanity.
[SPEAKER_01]: It means that you need to be aware.
[SPEAKER_01]: that the market for AI risk has shifted from can they build it to can they afford to build it and how long are they going to be building?
[SPEAKER_01]: The bond market is answering that question for itself with this growing skepticism, evident in the widening of these spreads.
[SPEAKER_01]: And historically, the bond market is usually right long before the stock market ever realizes what is happening.
[SPEAKER_01]: Well, folks, that does it for another episode of Invest Talk.
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