[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]: Good afternoon, fellow investors, and welcome to the Friday, July 31st, 2026 edition of Invest Talk.
[SPEAKER_00]: I'm your host Lou Guerrero and I'll be with you over the next 50 minutes or so as we round out the month of July and get ready to head in to the rest of 20, 26.
[SPEAKER_00]: As always, our show will be a mixture of educational and actionable material and we'll answer your findings and investment questions as well.
[SPEAKER_00]: That being said, before we talk about today's market performance and run down those show topics, let's tackle this call a question now.
[SPEAKER_05]: My name's Dave from Fresno.
[SPEAKER_05]: I'm calling about CRS.
[SPEAKER_05]: It's been an ATM machine for a long time, but it's at the 100 day moving average.
[SPEAKER_05]: I was calling to see if I should sell more.
[SPEAKER_05]: or hanging in there.
[SPEAKER_05]: Thanks a lot.
[SPEAKER_00]: Let's take a look at CRS, which has some earnings pretty hot off the presses because they did report yesterday.
[SPEAKER_00]: And in that report, looks like they had a record quarter in every single margin metric.
[SPEAKER_00]: But at about a $21 million revenue miss, which said the stock down after hours, it is since recovered, it was up 3.17% today.
[SPEAKER_00]: Then in fiscal year 2027 guidance, while they raised that to 800 and 50 million to 880, it looks like.
[SPEAKER_00]: So a bit of a revenue guidance rather guidance raise, which was beneficial for the stock today now, trading about 519, though, down from an all-time high of 603, which we saw pre-earnings on July 24th.
[SPEAKER_00]: Now there's a lot of good that is happening in this company.
[SPEAKER_00]: There's a reason why over the past 100, sorry, over the past 52 weeks, it's up a 108%
[SPEAKER_00]: I mean, they're operating margins are solid.
[SPEAKER_00]: The return on equity has grown from negative 3.6 in 2022 to 25.8 in 2026.
[SPEAKER_00]: It is kind of the picks and shovels play.
[SPEAKER_00]: I guess I should mention what it does for you guys.
[SPEAKER_00]: They, what they do is they manufacture these high-performance specialty outwise.
[SPEAKER_00]: So they take nickel and titanium and stainless steel,
[SPEAKER_00]: And their products are used for a bunch of things, for defense systems, for medical implants, or power generation.
[SPEAKER_00]: And so when you're talking about the need for next generation weapons, the need for next generation power, this is the picks and shovels play that every single jet engine defense missile power turbine that is being built through the decade may end up using.
[SPEAKER_00]: It is
[SPEAKER_00]: Probably one of the most disciplined of its peers from a capital perspective.
[SPEAKER_00]: I mean, they only have $691 million in debt on a $25 billion market cap company.
[SPEAKER_00]: They've a five times operating income growth in three years.
[SPEAKER_00]: And their margins are industry-leading.
[SPEAKER_00]: I like this name.
[SPEAKER_00]: There's a reason why it's run up.
[SPEAKER_00]: It's become very expensive.
[SPEAKER_00]: So it's pricey cash, that's about 41.8, but it's thus far been able to justify that growth.
[SPEAKER_00]: Will it into the future?
[SPEAKER_00]: I'm not sure, and it sounds like it's been, as you said, an ATM for you.
[SPEAKER_00]: I don't know if I'd fully exit the position here, but I certainly would trim back.
[SPEAKER_00]: Given maybe you're starting to see a bit of a momentum fade over the past month, and valuation seemed to be...
[SPEAKER_00]: Not necessarily stretched from historical standards of the past five years, but a bit high compared to what you'd expect across the industry.
[SPEAKER_00]: That is carbonate technologies, ticker CRS.
[SPEAKER_00]: Thanks to the call.
[SPEAKER_00]: All right, are we a great show yesterday looking into the story about how AI is kind of an a spending problem?
[SPEAKER_00]: And more importantly, when are we going to see this massive cash burn really start to pay off?
[SPEAKER_00]: And so Justin talked about that critical question.
[SPEAKER_00]: He also answered a listener question on ticker CRWD, which is crowd strike holdings ink.
[SPEAKER_00]: If you happen to miss that episode, I encourage you to go check it out.
[SPEAKER_00]: And remember,
[SPEAKER_00]: 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 we're shifting gears and going to talk about something we've never talked about before.
[SPEAKER_00]: Terriffs, I'm kidding, being sarcastic.
[SPEAKER_00]: And how they are here to stay because there are some permanent trade barriers that may in effect reshape long-term investing.
[SPEAKER_00]: I mean, you're seeing it out of reporting from Bloomberg.
[SPEAKER_00]: Saying that Trump's tariffs are likely to stick around despite their own popularity, and that signaling that businesses and investors need to treat elevated trade barriers, as more of a structural feature of the economy and not really a temporary headwind, any more.
[SPEAKER_00]: So we'll talk about the long-term investment implications of a world where tariffs are the new normal.
[SPEAKER_00]: Well to talk about the U.S. Treasury and how it warned banks that they may start to dip their toes in the end market and what that might mean for everybody.
[SPEAKER_00]: Another story on a man named Leopold Ashen Brenner, who let's just say his fund did not do to well in July.
[SPEAKER_00]: So more of a story in a warning I would say.
[SPEAKER_00]: And interestingly, at the end of the show, we'll touch on a private funds.
[SPEAKER_00]: And how, if you're an investor, you've got to be concerned about the potential for a very large tax bill.
[SPEAKER_00]: Also, got some questions.
[SPEAKER_00]: Fresh from the invest talk, voice bank, including one on return on equity, verse return on assets and another onverted holdings.
[SPEAKER_00]: We get this question a lot, I'd say,verted holdings company.
[SPEAKER_00]: As well as some questions that came in from the comment section of the invest talk, YouTube channel.
[SPEAKER_00]: With that being said, we are headed into a quick break.
[SPEAKER_00]: Please remember, you can call anytime and leave your questions on the Invest Talk of Voice Bank.
[SPEAKER_00]: And if you're listening to your livestream or am 1220 in the Bay Area, you can pick up that phone and out, 88899 chart to talk to me live.
[SPEAKER_00]: Recome back.
[SPEAKER_00]: We'll talk about today's market activity.
[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 client makes the same trade for himself and KPP.
[SPEAKER_03]: On the same day, at the same price, and same percentage.
[SPEAKER_03]: No front running, no special treatment.
[SPEAKER_03]: Learn more about Parallel Investing at Investalk.com.
[SPEAKER_00]: Pretty green day in the market overall, though not every index ended up positive.
[SPEAKER_00]: The Russell 2000, the one that was negative 50 basis points, we saw small caps underperforming.
[SPEAKER_00]: But he has some P, up 70 basis points, NASDAQ up 1% down up 53 basis points.
[SPEAKER_00]: You had a pretty big, strong, intraday move, because a lot of these indices did start the day off negative,
[SPEAKER_00]: because of this, all major indices logged pretty modest weekly gains, which considering what we saw coming into the weekend of the beginning of the week, a bit of a surprise compared to where we expected to be.
[SPEAKER_00]: Now, big tech was one of the leaders you saw Amazon, a big gainer after earnings.
[SPEAKER_00]: networking and calm names, oil services did well.
[SPEAKER_00]: Biotech managed care, restaurants, some of the worst performers.
[SPEAKER_00]: On the day, you also saw some weakness in treasuries.
[SPEAKER_00]: Across the curve, yields were rising, four to five basis points, the long end.
[SPEAKER_00]: yields saw pretty solid move up for the whole week.
[SPEAKER_00]: At the same time, the dollar was flat, gold finished down, 1.3 silver was down, 2.1 and crude oil was
[SPEAKER_00]: bit off of best levels, but still ending the week up more than five percent.
[SPEAKER_00]: Overall, monomoving pieces.
[SPEAKER_00]: It was a pretty busy week.
[SPEAKER_00]: We had momentum better again today on the back of the big Thursday bounce that we saw.
[SPEAKER_00]: You had that blowout Amazon web services results on the back of AI and chip business momentum from Amazon that led them to the upside.
[SPEAKER_00]: We also had a bit of,
[SPEAKER_00]: earnings decliners today.
[SPEAKER_00]: Apple had softer guidance, which they chocked up to supply chain and input cost pressures.
[SPEAKER_00]: You had that renewed backup in yields, which I think was probably the overarching overhang on the market writ large.
[SPEAKER_00]: Now, on the data front, final July University of Michigan consumer confidence came in at 55.2 against the 54 consensus, and
[SPEAKER_00]: It's the highest headline reading since February, inflation expectations matched what was expected at about 4.2% for the one year in 3.3 for the 5, July, Chicago PMI also printed at 57.6 ahead of the expected 56.
[SPEAKER_00]: Next week is the first week of August.
[SPEAKER_00]: It is another big week for earnings.
[SPEAKER_00]: Features a lot of high profile sets of data for July as well.
[SPEAKER_00]: You're gonna get ISM manufacturing on Monday.
[SPEAKER_00]: ISM services on Wednesday and the employment report on Friday.
[SPEAKER_00]: With respect to the latter, it looks like Wall Street's currently looking for non-farm payrolls up about 82.5.
[SPEAKER_00]: 1,000 following a 57,000 increase in June, unemployment rate expected to tick up 10 basis points to 4.3.
[SPEAKER_00]: Alright, let's keep things moving and answer a question from the comment section of the Invest talk YouTube channel.
[SPEAKER_00]: That was this coming from me as it is and it says, Hey Justin and Luke, thanks for all the input and help that you guys give truly amazing.
[SPEAKER_00]: My question is on BSX Boston Scientific and G-I-L-D.
[SPEAKER_00]: I'm looking to add a healthcare name and these names seem intriguing.
[SPEAKER_00]: Thank you so much.
[SPEAKER_00]: I listen to the show every day for almost two years.
[SPEAKER_00]: We really appreciate that Sam for being a loyal listener.
[SPEAKER_00]: So,
[SPEAKER_00]: Let's take a look at this, because I think this is actually a pretty good question from a timing perspective.
[SPEAKER_00]: You know, we have for a while discussed health care is under performance.
[SPEAKER_00]: And both of these names are, I would say it a pretty interesting inflection point at the moment.
[SPEAKER_00]: BSX is Boston scientific, so their med devices think cardiac specifically, so cardiac rhythm management.
[SPEAKER_00]: They also got some
[SPEAKER_00]: uh... some blood work as well and then you have a gillian sciences so also in the health care space biopharma company uh... so they do oncology HIV work uh... they're they're um... they're drug uh... i forget what it's called but it's it's the number one use HIV treatment makes up about seventy percent of their revenue
[SPEAKER_00]: You know, Q2 for both of them has been pretty decent from earnings perspective for Boston sciences.
[SPEAKER_00]: You know, they beat estimates on earnings, they beat estimates on on a top line revenue.
[SPEAKER_00]: They saw a really good growth from their cardio segment, which I think across the board has been growing across the industry, but they did cut for your guidance.
[SPEAKER_00]: And then, for Gilly, they had FDA approval for a new line of oncology treatments, specifically for breast cancer there.
[SPEAKER_00]: long-acting strategy within the HIV spaces is certainly one of those areas that has reinforced their revenue.
[SPEAKER_00]: It isn't often talked about because it's not necessarily a virus that is in the forefront today.
[SPEAKER_00]: But I think between these, I think, Gillia is probably the better bi-right now, you know, they're more defensive.
[SPEAKER_00]: In this environment, we've talked about inflation, we've talked about recession risk.
[SPEAKER_00]: I would say they're a bit more recession proof than the other company in the BSX.
[SPEAKER_00]: Your pipeline momentum is also a bit more accelerating, and they also just have a solid balance sheet.
[SPEAKER_00]: In BSX is adding,
[SPEAKER_00]: nearly 15 billion in acquisition debt.
[SPEAKER_00]: So between these, I mean, I think they're both solid companies.
[SPEAKER_00]: I think the space is important.
[SPEAKER_00]: But frankly, I'm more of a fan of GIL.
[SPEAKER_00]: Thanks for watching.
[SPEAKER_00]: I don't want to briefly mention the newest KPP premium newsletter, which will be distributed tomorrow.
[SPEAKER_00]: This week in the inside section, we discussed the bond markets warning after the federal reserve move.
[SPEAKER_00]: The stock idea section, we mentioned an advanced semiconductor packaging company in a pharmaceutical turnaround company.
[SPEAKER_00]: In the consumer watch section, we mentioned the 18.8 trillion dollar consumer squeeze and the rise of bankruptcy filings.
[SPEAKER_00]: If you're interested in learning more, visit us at invest.com and subscribe.
[SPEAKER_00]: The newsletter will come to your inbox Saturday after news.
[SPEAKER_00]: Our 24-7 voice bank never closes, so you can leave your finance and investment questions anytime at 888-99 chart.
[SPEAKER_00]: Our work after this break.
[SPEAKER_03]: It's official.
[SPEAKER_03]: Total lifetime downloads for the Invest Talk podcast are now more than 63 million.
[SPEAKER_03]: Luke Guerrero is here now, taking your calls live.
[SPEAKER_03]: Invest Talk 888-99 chart.
[SPEAKER_00]: Reapolash and Brenner is a name you're probably familiar with if you've been following.
[SPEAKER_00]: Hi, leverage investment in the AI space.
[SPEAKER_00]: This guy was a former open AI researcher.
[SPEAKER_00]: He worked for FTX, future fund, and he founded a hedge fund called Situation Awareness in 2024.
[SPEAKER_00]: And because of his aggressive concentrated leverage bets on AI, was assets ballooned over $20 billion.
[SPEAKER_00]: And it's also 24 years old.
[SPEAKER_00]: He had zero previous trading experience.
[SPEAKER_00]: And as tends to be the case, Wall Street just couldn't get enough of this dude.
[SPEAKER_00]: Now, in July, the fun lost 67% of his value.
[SPEAKER_00]: On Wednesday and what could probably only be described as a fire sale, he hashed out an emergency exit with Ken Griffin Citadel selling the majority of his public equity holdings at a discount of more than 10%.
[SPEAKER_00]: The remaining portfolio, including private investments,
[SPEAKER_00]: was worth about 10 billion on Friday, down from 20 billion, and it wrote a letter to investors where he compared what happened to a bank run.
[SPEAKER_00]: He said that the fund experienced, quote, adverse trading and names publicly associated with us, meaning the market knew what he owned and sold those stocks specifically because they knew he'd be forced to liquidate.
[SPEAKER_00]: Now, here's what I want people to understand.
[SPEAKER_00]: Because I think there is a bit of a lesson here that goes well beyond what this guy did.
[SPEAKER_00]: He used borrowed money from prime brokers to lever up his positions.
[SPEAKER_00]: When you concentrate a portfolio in a small number of AI stocks and then borrow against those positions to make them bigger, you're creating a structure that works incredibly when the trade is going your way.
[SPEAKER_00]: You look like a genius.
[SPEAKER_00]: But when it turns,
[SPEAKER_00]: You'll look like an idiot.
[SPEAKER_00]: The leverage that amplified his gains on the way up, amplified his losses on the way down.
[SPEAKER_00]: And when Prime Brokers pull their financing, which is what happens when your collateral drops 20 or 30%, you gotta sell, not because you want to, because you have to.
[SPEAKER_00]: It is credit, he was direct in his letter, he said he takes responsibility and the fun would no longer borrow money from banks to magnify its bets, and that's an admission at least that he understands his main problem, other than concentration risk was leverage, but here's the thing, the fun is still up 80% on the year, even after the wipeout.
[SPEAKER_00]: If you got an early, you made money, you got into the top, you've been destroyed, and many early investors are locked up until September, which means they can't even redeem.
[SPEAKER_00]: If they wanted to, but the problem here is exactly what you see in situations when trading is overblown.
[SPEAKER_00]: When people just spend way more money than I should.
[SPEAKER_00]: This kid's 24 years old, he has no trading experience.
[SPEAKER_00]: He builds a $20 billion fund using leverage concentrated.
[SPEAKER_00]: This is exactly what happens at the tail ends of Mania.
[SPEAKER_00]: The fact that it worked for two years before a blue up, it doesn't validate this strategy, it starts to validate the cycle.
[SPEAKER_00]: cycles always end.
[SPEAKER_00]: Let's put it back to the the University of Voice Bank.
[SPEAKER_00]: You know the number?
[SPEAKER_00]: 888.
[SPEAKER_00]: 99 chart.
[SPEAKER_04]: Hey guys, this is the out from Wallet Creek.
[SPEAKER_04]: Thanks for always being willing to answer my questions.
[SPEAKER_04]: I've got one on relative Holdings.
[SPEAKER_04]: On my shoulder, a little while ago, I think it's up to 97.
[SPEAKER_04]: It's down to the 220s now.
[SPEAKER_04]: And I'm looking for a place to get back in at some point.
[SPEAKER_04]: It looks like it's
[SPEAKER_04]: and it's got good return on equity.
[SPEAKER_04]: Morris has it on the cell and the FRA as it doesn't buy.
[SPEAKER_04]: Wondering which you guys thought of the stock and the good entry point to get back into it.
[SPEAKER_04]: Thanks very much.
[SPEAKER_00]: Yeah, I mean, this thing's had a rough time.
[SPEAKER_00]: It is a digital infrastructure company.
[SPEAKER_00]: So power management, think, cooling, rack systems.
[SPEAKER_00]: It's essentially life cycle services for AI data centers.
[SPEAKER_00]: kind of a pure play, AI infrastructure beneficiary.
[SPEAKER_00]: And so as you started to see a bit of an unwind of that trade, I mean, this name has followed suit.
[SPEAKER_00]: It's up 50% year to date, but over the past three months, it's down 26.46% so it fell from its all-time high around 370 to where it stands right now at 241.
[SPEAKER_00]: it was a bit of a precipitous fall and one of the reasons why is I mean they missed on revenue in a couple of days ago when they reported they beat on earnings per share just barely free cash flow look pretty solid free cash flow conversion was above 150 but this revenue miss has has really been driven by supply chain timing and these are issues that
[SPEAKER_00]: Can't give yourself quickly.
[SPEAKER_00]: You have copper and you have high-grade steel input volatility.
[SPEAKER_00]: You have expedited delivery logistics and that creates shipping delays.
[SPEAKER_00]: And so it's not a demand weakness thing.
[SPEAKER_00]: Orders are still at record levels.
[SPEAKER_00]: It's a can-you fulfill orders and recognize the cash kind of thing.
[SPEAKER_00]: So, as lot going for it's got massive EPS growth, like 60% it's got over 200%
[SPEAKER_00]: uh, for cashflow growth, it's one of the essential AI names, and it's trading in a bit of a discount relative to where it's been 28.3 compared to 52.4 price to afford looking earnings.
[SPEAKER_00]: But for me, when you've got a little confirmation of this after momentum starts to fade, this is where things can drop pretty quickly.
[SPEAKER_00]: So, in spite of this rotation back into some of these names today, I'm hesitant to open up a new position.
[SPEAKER_00]: or enter here, I'd have to wait to see some sort of support level.
[SPEAKER_00]: Otherwise, I mean, this thing could continue to fall.
[SPEAKER_00]: You see it in volatile asset classes all the time.
[SPEAKER_00]: That is averted of holdings.
[SPEAKER_00]: Take a VRT.
[SPEAKER_00]: Thanks to the call.
[SPEAKER_00]: On the next investment, we will look into this story, the GLP-1 Ripple Effect, how obesity drugs are reshaping logistics, healthcare, and supply chains.
[SPEAKER_00]: That's Monday.
[SPEAKER_00]: For now, I'm Luke Guerrero, ready to take your calls any time at 8.98.99.
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[SPEAKER_00]: So last Thursday, the US imposed these new section 301 tariffs on about 60 countries, which cover roughly 99.4 percent of American imports.
[SPEAKER_00]: The rates are 10% of our countries with forced labor and poor bands, and 12.5% for everybody else.
[SPEAKER_00]: These are places temporary section 122 tariffs that expired at the exact same moment after hitting their maximum 150 day statutory limit.
[SPEAKER_00]: And then three days earlier, Trump announced a separate 50% tariff on Canadian goods, covering Otto's alcohol and dairy and then that comes into effect in the 19th of next month,
[SPEAKER_00]: Now, I want to take a step back from this monthly tariff drama and talk a bit about something that most investors probably have not internalized.
[SPEAKER_00]: These tariffs, they're not going away, not under this administration, probably not under the next administration.
[SPEAKER_00]: And the sooner you adjust your portfolio for that reality, the better off you're going to be.
[SPEAKER_00]: And here's like permanent matters.
[SPEAKER_00]: The Supreme Court struck down those other tariffs, the IEPA tariffs in February because they ruled that the administration exceeded the President's emergency powers.
[SPEAKER_00]: Those section 122, they were temporary, right, 150 days, no extension.
[SPEAKER_00]: But three on one's different.
[SPEAKER_00]: It's been a well-established legal basis for U.S. trade action, for
[SPEAKER_00]: more than four decades.
[SPEAKER_00]: I mean, the Supreme Court even recently declined to review an appellate court decision, which affirmed existing section 301 tariffs against China.
[SPEAKER_00]: So the legal vulnerability that killed the first round, it doesn't apply here.
[SPEAKER_00]: It essentially removes the legal out, meaning markets may need to
[SPEAKER_00]: really structurally price in what tariffs mean in terms of their drag on global growth rather than some sort of temporary risk that we can just get out of.
[SPEAKER_00]: And more coming to additional section 301 investigations are ongoing.
[SPEAKER_00]: Those are required.
[SPEAKER_00]: before you put tariffs in place, one covers excess manufacturing capacity across 16 countries and more than 75% of U.S. imports.
[SPEAKER_00]: Those could produce additional tariffs as early as later this year.
[SPEAKER_00]: And so it's not just about winners and losers.
[SPEAKER_00]: Now we're talking about structural shifts.
[SPEAKER_00]: The sector's most permanently disadvantaged, those are the ones that depend on brand stuff in, right?
[SPEAKER_00]: With no domestic substitute.
[SPEAKER_00]: Your consumer electronics, your parallel footwear, categories where the US has virtually zero manufacturing base.
[SPEAKER_00]: You're gonna face permanent high costs that get passed through to consumers.
[SPEAKER_00]: auto-part suppliers that source their components from multiple countries you're going to get this stacking compounding effect at every stage of the supply chain retailers that build their business models on low cost global sourcing think dollar stores or fast fashion or fast market furniture that's going to face structural margin compression.
[SPEAKER_00]: You have the re-shoring investment theme right where you have mixed feelings about that honestly
[SPEAKER_00]: And tariffs are going to bring manufacturing back to America.
[SPEAKER_00]: The data says, well, not so much because reassuring indices remain negative in 2025, despite full years of elevated tariffs.
[SPEAKER_00]: And but you can't deny that supply chains are restructured, right?
[SPEAKER_00]: They're moving away from China and Vietnam and Asia.
[SPEAKER_00]: But they're probably not coming back to the U.S. at scale.
[SPEAKER_00]: I mean, building a new factory takes three to five years hiring and training a workforce.
[SPEAKER_00]: It takes longer and the economics of American manufacturing, your higher wages, your higher energy costs, labor shortages, from immigration crackdowns.
[SPEAKER_00]: I mean, it makes it uncompetitive for most consumer goods without even larger subsidies.
[SPEAKER_00]: We're reshoring does work.
[SPEAKER_00]: Probably strategic industries.
[SPEAKER_00]: Places where you have,
[SPEAKER_00]: National Security justification for government support, so your chipsack funding, your semiconductors, your defense supply chains are deliberately on short.
[SPEAKER_00]: And then the natural question is, okay, if these costs are going to be higher, if it's going to be passed through to me, what does it mean for inflation for the next couple of years?
[SPEAKER_00]: The next two, three years.
[SPEAKER_00]: It's tough to quantify, probably when all said and done, it may look at another 30 basis point, 50 basis points of structural pricing pressures, later on top of whatever the war and oil are doing.
[SPEAKER_00]: There was an independent analysis I saw from the tax foundation, which estimated that the current tear regime amounts to about $900 average tax increase per household in 2026.
[SPEAKER_00]: Now, that number definitely goes up if the excess capacity 301 investigation has those additional duties, but it's not the primary driver inflation, it's just an add-on to where we already are.
[SPEAKER_00]: So looking at sectors, who benefits, maybe, maybe domestic industrials, infrastructure companies, because they're protected from foreign competition, you know, a small cap funds who
[SPEAKER_00]: There's rather small cap companies who have predominantly domestic revenue bases that are insulated.
[SPEAKER_00]: Certainly could do well, defense and aerospace obviously benefit from that national security spending.
[SPEAKER_00]: Commodities, particularly US produced energy, certainly could do well.
[SPEAKER_00]: But no matter what you do, you have to treat these tariffs as a permanent feature of investing going forward.
[SPEAKER_00]: Not because they can't change a can, but because the legal tools, the political incentives, the bipartisan support for protectionism,
[SPEAKER_00]: It's all pointing in the same direction.
[SPEAKER_00]: Even if a different president takes office, the history of tariffs in America is that they're easy to impose, almost impossible to remove.
[SPEAKER_00]: Those very damaging smooth alley tariffs in 1930, they didn't fully unwind those until 1967.
[SPEAKER_00]: So as you're looking at your portfolios, as we head to the end of the summer, you need to build it around a world where trade barriers are the new normal, because the reality is, that's the world we're living in now.
[SPEAKER_00]: Don't Friday's, we generally make time to thick, to thick, to thick, to fit in a quick rundown of key benchmark numbers, so let me hit you with that list right now.
[SPEAKER_00]: The two year was at 428 last week, it was 433 and 239 weeks ago, it was at 64 basis points.
[SPEAKER_00]: The 10-year, 474, last week it was 467 and 236 weeks ago, it was 1.762.
[SPEAKER_00]: Gold, 454 per ounce, that is a $2 decrease compared to last week.
[SPEAKER_00]: Year back it was 3348 and 238 weeks ago, it was 1806.
[SPEAKER_00]: Silver, 5788 per ounce, that is 37 cents a lower than last week.
[SPEAKER_00]: 129 weeks back it was 2280 and 229 weeks back it was 2394.
[SPEAKER_00]: oil 84 79 per barrel that is $4.96 less than last week.
[SPEAKER_00]: A lot higher than 97 weeks ago in a 6779 and 139 weeks backward is 7430 and 230 weeks ago when it was 66 62.
[SPEAKER_00]: National average for a gallon of regular gasoline is 410, that it's unchanged from last week.
[SPEAKER_00]: 165 weeks back, it was 356, 213 weeks back, it was 425, then looking back 233 weeks.
[SPEAKER_00]: Gowner regular gas was 357.
[SPEAKER_00]: California?
[SPEAKER_00]: It's averaging five, 65 per gallon, six cents higher than the last week.
[SPEAKER_00]: 142 weeks ago, it was five, 32, 218 weeks ago.
[SPEAKER_00]: It was five, 87.
[SPEAKER_00]: For comparison, in Indiana, who's your state?
[SPEAKER_00]: Gas is averaging 362 per gallon, that is $2 in three cents less than gas and California.
[SPEAKER_00]: Isn't best, invest, this is Invest Talk.
[SPEAKER_00]: It's Friday, guys.
[SPEAKER_00]: Isn't Invest Talk in our 24-7 voice bank never closes?
[SPEAKER_00]: So let's play another question now from 888, 99-chart.
[SPEAKER_07]: I'm wondering what the difference between return on equity and return on assets is, and if I'm a value-waiting, a equity company, I'm not a re, which one is more appropriate for you?
[SPEAKER_07]: I'd love to show.
[SPEAKER_07]: Thanks for all the help guys.
[SPEAKER_00]: Sure.
[SPEAKER_00]: Great question.
[SPEAKER_00]: I love getting down to no fun pun intended fundamentals.
[SPEAKER_00]: Return on equity.
[SPEAKER_00]: Well, the math is different.
[SPEAKER_00]: Return on equity is net income divided by shareholder equity.
[SPEAKER_00]: Return on assets is net income divided by total assets.
[SPEAKER_00]: So with return on equity, what you're looking at essentially is.
[SPEAKER_00]: how effectively a company generates profits from the money that shareholders give it.
[SPEAKER_00]: So higher leverage amplifies return on equity, both on the plus side and on the downside.
[SPEAKER_00]: Now, ROA is how efficiently a company generates profit from all resources.
[SPEAKER_00]: So dead and equity combined, meaning leverage is neutral.
[SPEAKER_00]: It is a, I would say harder to manipulate ratio between the two.
[SPEAKER_00]: But if you're an equity investor, ROE is measuring their turn to your money.
[SPEAKER_00]: ROE is measuring the return to all money, including that borrowed money.
[SPEAKER_00]: Now for a non-oreed equity, ROE definitely matters more.
[SPEAKER_00]: You own the residual after debt is paid.
[SPEAKER_00]: ROE is directly measuring your claim.
[SPEAKER_00]: It captures the decisions that management makes about capital structure and what drives EPS growth, and what drives stock prices,
[SPEAKER_00]: But it's also not something you should look at alone, right?
[SPEAKER_00]: You need to look at other things like debt to equity or liquidity ratios.
[SPEAKER_00]: I would say between the two, I would lead probably with ROE for stock evaluation and answers how well is this company compounding my money.
[SPEAKER_00]: But it's also important to understand what goes into it because the leverage behind it
[SPEAKER_00]: is critical right a clean 20% return on equity with zero debt definitely beat something more flashy like 35 that is built on that mountain of leverage great question thanks to the call why do we answer a another voicemail from 80 to 99 chart hi this is Daniel from Galveston Texas uh... just calling about this topic or fox corporation yes oh x
[SPEAKER_08]: If you want to know your opinion on this one and a good interview point, thank you.
[UNKNOWN]: Goodbye.
[SPEAKER_00]: Alrighty, let's take a look at F-O-X-A.
[SPEAKER_00]: Looks like my computer wants to head off for the day early as well.
[SPEAKER_00]: F-O-X-A is Fox Corporation.
[SPEAKER_00]: It's their A shares.
[SPEAKER_00]: It is the media conglomerates of the television production.
[SPEAKER_00]: and broadcasting services, so Fox News, Fox Sports, Fox Entertainment, Fox television stations, they also own two-be media, massive company, a big big big company, uh, they're roughly $23 billion market cap company.
[SPEAKER_00]: and you're today they're down about 20% but over the past 52 weeks they are up about 4.43% now the beginning of the year they hit a high before earnings about 72 78 and the most recent fiscal earnings still showed some pretty solid numbers mean you had to be revenue
[SPEAKER_00]: Excuse me and after the most recent earnings you had a bit of a bit of a consistent move upward into June I'm gonna a bit of a precipitous drop-off in Early July now if you'll get a revenue it's about six percent on any annualized basis over the past five years and this name is trading
[SPEAKER_00]: Pretty cheap compared to where it's been, about 10 times price to forward-looking earnings.
[SPEAKER_00]: One thing that I like is really it has some pretty solid growth, right?
[SPEAKER_00]: 2B, 80 million plus monthly users.
[SPEAKER_00]: That's growing significantly.
[SPEAKER_00]: It had the FIFA World Cup exclusive English rights.
[SPEAKER_00]: Certainly the midterm.
[SPEAKER_00]: election cycle, political ad cycle is going to do well.
[SPEAKER_00]: There's that Roku acquisition, which will create a bit of a combined content and distribution platform that really know other pure play media company can replicate.
[SPEAKER_00]: But, you know, from a earnings perspective, it's expected to decline, maybe nine and a half percent, year over year, they've revised estimates down in the past 30 days.
[SPEAKER_00]: They're facing some structural headwinds because the Fox News audience tends to skew a bit older and,
[SPEAKER_00]: old people at a certain point, no longer part of an audience because that's just how time and life works.
[SPEAKER_00]: And so that's definitely a structural headwind that they have.
[SPEAKER_00]: We actually hold this for clients in one of our strategies.
[SPEAKER_00]: I'll be at a slightly lower weight than we have in the past.
[SPEAKER_00]: Because if it's focused live content platform, I mean, they're executing a pretty bold acquisition of Roku, they're creating a massive TV ecosystem.
[SPEAKER_00]: I imagine when they report the most recent earnings from revenue made.
[SPEAKER_00]: from the world cup rights, from midterm ad cycle building, from NFL package expanding.
[SPEAKER_00]: I wouldn't be surprised if they had positive surprises from the top line all the way to the bottom.
[SPEAKER_00]: So I mean, this is a name that we hold for clients for a reason.
[SPEAKER_00]: We like it.
[SPEAKER_00]: It's momentum is fading, but it seems to have a bit of strong support of that 54 level in spite of its most recent downturn over the past three months.
[SPEAKER_00]: That is Fox Corporation, ticker F-O-X-A.
[SPEAKER_00]: Thanks for the call.
[SPEAKER_00]: All right, you know what?
[SPEAKER_00]: We got a timely answer one quick question.
[SPEAKER_00]: So it's about the 20-year treasury bond fund TLT, experience of decline.
[SPEAKER_00]: Is this an opportune moment to purchase it and hold onto it until the bond market recovers?
[SPEAKER_00]: You know, no, rates are moving higher.
[SPEAKER_00]: And the problem with bond ETS bond funds is you don't get your money back in maturity.
[SPEAKER_00]: So you saw TLT's historic destruction of value and capital from 2022 into where it currently is.
[SPEAKER_00]: That's one of the benefits of a strategy like we operate for our clients buying individual bonds.
[SPEAKER_00]: Obviously you have credit risk for companies, what have you, but when you hold the individual bonds themselves, so long as the entity doesn't default, you get your money back at the end.
[SPEAKER_00]: That is not the case for these ETFs.
[SPEAKER_00]: Your value is based on the price of the ETF.
[SPEAKER_00]: You don't get anything back in maturity and because of that, would rates are moving higher, your portfolio can really suffer.
[SPEAKER_00]: Thanks for watching, that was a comment over at HubSpot.
[SPEAKER_00]: Is it best talk?
[SPEAKER_00]: I'm Lou Greer.
[SPEAKER_00]: We have one goal here to help you achieve your financial freedom, and I work continues after this break, so get your questions in now at 888-99 chart.
[SPEAKER_02]: The 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 reinvestance a better stock?
[SPEAKER_06]: Just wanted to ask you about one stock that I'm looking at.
[SPEAKER_02]: Interging EPR.
[SPEAKER_02]: Call in Vestock.
[SPEAKER_02]: 888-99 chart.
[SPEAKER_03]: The weekend is here or almost here, but you've got financial investment questions, so step up and call in.
[SPEAKER_03]: Invest talk, 888 99 chart.
[SPEAKER_00]: So I wanted to talk before the weekend about something that is genuinely unprecedented in the modern era.
[SPEAKER_00]: We saw today the U.S. Treasury warned banks through the Federal Reserve Bank of New York that it actually might intervene in foreign exchange markets in order to support the Japanese again.
[SPEAKER_00]: New York Fed called U.S. banks to ask about rates on yen versus the euro.
[SPEAKER_00]: And Scott Bess and Treasury Secretary posted on X that he looked forward to seeing Bank of Japan governor U.A.
[SPEAKER_00]: to at the G20 noting the two countries quote continue to enjoy a strong relationship and close coordination.
[SPEAKER_00]: Close coordination, that is some pretty specific language from a U.S. Treasury Secretary about the U.S. Treasury, about currency markets.
[SPEAKER_00]: I mean, think about what that means.
[SPEAKER_00]: The U.S. is effectively telling the world it's willing to sell dollars or at least he uses your reserves to prop up another country's currency.
[SPEAKER_00]: That is a massive departure from the standard American
[SPEAKER_00]: Now a broadness about is we saw a bit of a fall, right, the end had fallen close to $164 to the dollar earlier in the week.
[SPEAKER_00]: That was, I mean, it was absolutely crushed by rising oil prices.
[SPEAKER_00]: by this widening, rate differential between Japan and the U.S. and also about concerns that the Prime Minister is about to input a fiscal stimulus package.
[SPEAKER_00]: Then we saw on Thursday, Japan's government appearing to have intervened directly, spending 8.45 trillion yen, which is about $52,53 billion in order to support the yen.
[SPEAKER_00]: That caused the currency to surge roughly 3% in a single session.
[SPEAKER_00]: Then on Friday, the Bank of Japan held rates at 1% as expected, but you ate a delivered what Mizuno strategist called a clearly hawkish press conference.
[SPEAKER_00]: I mean, he said it was entirely possible that the Bank of Japan could accelerate the pace of interest rate increases, if inflation risk warranted it.
[SPEAKER_00]: And so you saw the end get stronger, 159,
[SPEAKER_00]: You know, maybe we're going to see in the future additional small scale intervention.
[SPEAKER_00]: But the implication of coordination between the U.S. and Japan and currency interventions, that's pretty significant.
[SPEAKER_00]: If the U.S. is willing to actively support the yen, it's a pretty broad shift in currency policy.
[SPEAKER_00]: resisted the idea of intervention and pressured Japan not to weaken the dollar.
[SPEAKER_00]: Now it's effectively doing the opposite.
[SPEAKER_00]: It's weakening the dollar in order to help an ally.
[SPEAKER_00]: Meaning, it's probably less likely that we see the yen return to 164 in the near term because both the Japanese government and now the US government has shown, okay?
[SPEAKER_00]: Well, we're going to act.
[SPEAKER_00]: You know, others are
[SPEAKER_00]: a bit more skeptical than I am.
[SPEAKER_00]: There's a bunch of traders that I saw in a discussion, noting that clients are already testing the government's commitment by putting on the end short positions targeting 162.
[SPEAKER_00]: which is feasible if you don't see rate hikes from the B.O.J.
[SPEAKER_00]: And as of right now, markets are only pricing about a 40% move in September.
[SPEAKER_00]: I just think for me, intervention alone is not going to reverse the fundamental forces that are driving yen weakness.
[SPEAKER_00]: Because this story connects to the broader dollar and rate narratives that we've been tracking.
[SPEAKER_00]: a weaker dollar benefits international equities, it benefits commodities, it benefits EM assets.
[SPEAKER_00]: Now if the US is actively pursuing dollar weakness, even selectively, that's a tailwind for anybody to diversify outside the US.
[SPEAKER_00]: Japan focused investors finally have a floor under the currency, which makes Japanese equities way more attractive in dollar terms and the coordination between Washington and Tokyo to be suggests the geopolitical relationship is tightening in ways that could have investment implications well beyond just currency markets alone.
[SPEAKER_00]: Well, that does it for another episode of Invest Talk.
[SPEAKER_00]: I'm Legreiro and I thank you for listening and encourage you to tell your friends and family members about our free podcast downloads, which of course you can get it iTunes and Spotify.
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