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[SPEAKER_02]: On radio, on YouTube, streaming live on investtalk.com, and for our podcast subscribers, this is Invest Talk, independent thinking, shared success.

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[SPEAKER_02]: Invest talk is made possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.

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[SPEAKER_02]: Here is KPP Financial Chief Executive Officer, Financial Advisor Justin Klein.

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[SPEAKER_00]: Good afternoon fellow investors and welcome back to

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[SPEAKER_00]: soon to be here.

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[SPEAKER_00]: We have just a couple weeks left in this quarter and then we're down into the home stretch of the year and it's been a very interesting year both economically and politically.

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[SPEAKER_00]: And for many it's been a surprising year and so we're going to try to

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[SPEAKER_00]: uncover the the reasons why the market remains buoyant and teach us some lessons that can you can take back to your own personal situation.

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[SPEAKER_00]: We do that by answering your finance investment questions as well as giving you perspective and data that that matter that are relevant to smart decision making.

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[SPEAKER_00]: And that's what this hour will be dedicated to, to you and what's on your mind.

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[SPEAKER_00]: And in just a bit, we'll talk about today's market activity and run down the show topics for the hour, but as usual, we'll tackle this first call question now.

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[SPEAKER_07]: Hi guys.

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[SPEAKER_07]: Love your podcast.

01:56.986 --> 01:58.287
[SPEAKER_07]: Listen to what every day.

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[SPEAKER_07]: I've been following Jepoty Mexican Grill Symbol CMG and I see it hit a 50 to

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[SPEAKER_07]: If this was a good time to buy it, or should I stay away?

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[SPEAKER_07]: Thank you.

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[SPEAKER_00]: All right, looking at your portfolio, Mexican grail down 42% from its 52-week high was around $60 and change.

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[SPEAKER_00]: Now we're not at 38 and change.

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[SPEAKER_00]: There was a recent split, so you might have...

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[SPEAKER_00]: heard it turning to hundreds of dollars recently, but there was a split.

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[SPEAKER_00]: And since that split, it's been going down pretty consistently, no dividend here.

02:36.280 --> 02:38.762
[SPEAKER_00]: And earnings are expected to be up 8% this year to $1.21 from $1.12 last year, and to $142 next year.

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[SPEAKER_00]: And that sounds like pretty solid growth.

02:47.176 --> 02:49.938
[SPEAKER_00]: However, the growth has slowed considerably.

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[SPEAKER_00]: Actually, last quarter, earnings were down 3% year over year.

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[SPEAKER_00]: And revenues were only up 3% year over year versus a year ago, when earnings were up 36% and revenues are 18%.

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[SPEAKER_00]: So you saw that sharp desoloration and really the story here is multiple contraction.

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[SPEAKER_00]: a name trading at elevated multiples, 40, 50 times earnings.

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[SPEAKER_00]: A slowdown in growth is inevitably going to cause a multiple contraction in markets.

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[SPEAKER_00]: Right now, the PRAESHIO going forward is somewhere in the 30s, low 30s based on this year's expected earnings.

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[SPEAKER_00]: And that's pretty high for a pretty, what is now a relatively slow growth market.

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[SPEAKER_00]: And that is the ultimate issue, that's a market, slow growth profit picture, shall we say?

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[SPEAKER_00]: And if I bring up a chart of Chipotle, what you can see is there is really major major support till about $35.

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[SPEAKER_00]: So you're getting there.

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[SPEAKER_00]: That's the positive here.

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[SPEAKER_00]: You're getting there.

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[SPEAKER_00]: It's after being now 42%, you're starting to enter some decent support levels.

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[SPEAKER_00]: But it's also not trading cheap yet.

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[SPEAKER_00]: Univ you go by next year's earnings at $42, you're in the high 20s on a multiple.

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[SPEAKER_00]: And once again, isn't trading at or isn't showing good profit growth.

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[SPEAKER_00]: I know they've been pressured from input cost to their business.

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[SPEAKER_00]: as well as labor costs.

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[SPEAKER_00]: And I think that is certainly an issue.

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[SPEAKER_00]: So between $35 and $37, that's probably the next major support level, but really the ultimate ultimate support is around $30.

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[SPEAKER_00]: So that's a 618 retrace from the lows back in 2018.

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[SPEAKER_00]: So I would be very patient on this name.

05:00.931 --> 05:03.652
[SPEAKER_00]: I would also want to see a high volume

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[SPEAKER_00]: day or week to where, okay, everyone has just puked this name, right?

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[SPEAKER_00]: They are tired of the downtrend, they're tired of the losses, and they just throw the baby out the bath water, and ultimately that is a sign that the selling pressure is hitting a

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[SPEAKER_00]: hitting a crescendo.

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[SPEAKER_00]: And while you've seen a little bit of elevation in volume recently, it's not at a level that gets me excited about buying the name right now.

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[SPEAKER_00]: So...

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[SPEAKER_00]: I'd be patient.

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[SPEAKER_00]: I'd watch it because it is a good business, but I wouldn't be buying it.

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[SPEAKER_00]: Probably frankly, from valuation perspective until $30.

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[SPEAKER_00]: Thanks for the call.

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[SPEAKER_00]: We have a lot of ground to cover over the next 45 minutes, or so, and our main focus point is about the AI job paradox.

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[SPEAKER_00]: Why AI isn't causing layoffs, but it's hiding hiring cuts.

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[SPEAKER_00]: We'll dig into that story and analyze a new fellow reserve report.

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[SPEAKER_00]: There reveals how AI is quietly influencing, hiring.

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[SPEAKER_00]: for jobs, or acquiring a college degree, typically, and the difference between service sector as well as the manufacturing sector.

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[SPEAKER_00]: So we'll take into that.

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[SPEAKER_00]: We'll also have questions in RS, we have other topics on the bucket as well.

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[SPEAKER_00]: We pull that up here.

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[SPEAKER_00]: One is in regards to a new trait on Wall Street's called Render Hot.

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[SPEAKER_00]: In many ways, I sympathize with the narrative that is being under discussed and I'll dig into that story and more as well as

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[SPEAKER_00]: how U.S.

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[SPEAKER_00]: companies are putting them breaks on hiring because of tariffs, what industries are really suffering and are ultimately having those layoffs.

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[SPEAKER_00]: So we'll dig into all of that and more here for this next, you know, 45 minutes.

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[SPEAKER_00]: Or so we also have voice bank questions.

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[SPEAKER_00]: What is on cash allocation and the other is on the Vanguard Total World stock market index fund,

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[SPEAKER_00]: And then we have some questions that came in via the comment section over on the Invest Talk YouTube channel.

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[SPEAKER_00]: Well, and of course, I welcome your finance and investment questions right now.

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[SPEAKER_00]: But we're going to head to a quick break.

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[SPEAKER_00]: Please remember you can call any time and leave your question on the Invest time.

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[SPEAKER_00]: Voice bank.

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[SPEAKER_00]: And if you're listening via our live stream or an aim 1220 in the Bay Area, you can call right now, 8.89 in the chart, but hang on, design, going to talk about today's market activity in the next segment.

07:54.048 --> 08:00.973
[SPEAKER_03]: Get ready for an all-new Invest talk with Webinar, beyond the Mag7.

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[SPEAKER_03]: How to identify AI opportunities across sectors.

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09:12.839 --> 09:20.245
[SPEAKER_00]: Let's go take a look at the market today, and it was another positive day overall in markets.

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[SPEAKER_00]: And if you take a look at, let me pull up the data here.

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[SPEAKER_00]: If you look at the broad S&P that was up about a little less than half a percent, 31 points on the day,

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[SPEAKER_00]: and if you look at the NASDAQ you had that up nearly 1% really driven by Tesla and that was the rumor that Elon was putting a billion dollars in the Tesla stock and Google also was a driver up 4.5% on the day and video was flat, Apple up 1% same with Broadcom, Microsoft, Meta.

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[SPEAKER_00]: Amazon, those are about one, one and a half percent on the day.

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[SPEAKER_00]: You did see weakness in health care once again.

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[SPEAKER_00]: He had names like intuitive surgical down three and a half percent, Boston scientific down 2.7.

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[SPEAKER_00]: You had a consumer's staples down as well.

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[SPEAKER_00]: He looked more as down 2.7 Pepsi down 2%.

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[SPEAKER_00]: on the day.

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[SPEAKER_00]: Energy was roughly flat, industrials also had a pretty solid day overall.

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[SPEAKER_00]: The banks were, or the finance sector were pretty mix.

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[SPEAKER_00]: You're taking more than a half a percent, but names like Schwab down one and a half percent progressive down over one percent.

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[SPEAKER_00]: and then some of the private acronyms, KKR was up, that was solid, blackstone up.

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[SPEAKER_00]: So you saw some strength there, the rest of the big banks were roughly flat.

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[SPEAKER_00]: So pretty mix, pick your picture on the, on the finance front.

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[SPEAKER_00]: So while the market was strong on the indices, you really had a, it didn't have great breath.

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[SPEAKER_00]: It was,

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[SPEAKER_00]: You saw some deeply red sectors as well as some nicely green sectors so pretty interesting to note we do have the Fed meeting coming up here on Wednesday, yeah, Wednesday, which we will get a rate cut that is almost the sure But if you look at the odds of a 50 basis point cut that is still sitting around 4% so pretty low odds that will get something like 25 basis points

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[SPEAKER_00]: When it comes to the rest of the market, it's the treasures were a bit stronger across the Caribbean, down one or two bases points, no big move there.

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[SPEAKER_00]: Dollar next is down point two percent gold finished up.

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[SPEAKER_00]: Once again, nearly one percent on the day, above $3700 for the first time ever.

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[SPEAKER_00]: Bitcoin features were down 1.3% and WTI was up 1% on.

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[SPEAKER_00]: the oil price.

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[SPEAKER_00]: That was the market today for September 15th, 2025.

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[SPEAKER_00]: Every day we see questions from the comments section of the Invest Talk YouTube channel.

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[SPEAKER_00]: So here's one that came in earlier.

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[SPEAKER_00]: Love this take.

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[SPEAKER_00]: Have another one for you.

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[SPEAKER_00]: I'm trying to increase health care exposure in my raw for long term is market goodbye and hold at the current levels.

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[SPEAKER_00]: M, R, K is the symbol.

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[SPEAKER_00]: Let's pull up the the data here if you're watching on YouTube.

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[SPEAKER_00]: You'll be able to see this.

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[SPEAKER_00]: But Mark, one of the largest, sorry, largest farm and names out there.

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[SPEAKER_00]: That has been in a very strong downtrend.

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[SPEAKER_00]: over the past year or so, 52-week-high was $219, but if you look all the way back into early 2024, it did peak out around $133.

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[SPEAKER_00]: Now we're done at $81 and change at the close today.

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[SPEAKER_00]: We're out to strength is 15, 15, not great.

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[SPEAKER_00]: And you're starting to see earnings decline down 7% year over year last quarter, revenue is down 2%.

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[SPEAKER_00]: And you would say that, you know, this is no big deal.

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[SPEAKER_00]: This is, it's in a downtrend for a really no reason.

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[SPEAKER_00]: And you get a 4% yield.

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[SPEAKER_00]: The Ford PE is in single digits, which would be very cheap.

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[SPEAKER_00]: What bothers me though is the technicals are not lining up here.

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[SPEAKER_00]: If you are going to get

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[SPEAKER_00]: a true rally in this name.

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[SPEAKER_00]: You would want to see more technical

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[SPEAKER_00]: validation.

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[SPEAKER_00]: This recently rallied from below in May around $73 hit the 200 day moving average and has just rolled back over.

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[SPEAKER_00]: And the healthcare space in general has certainly struggled.

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[SPEAKER_00]: And this is not really any different.

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[SPEAKER_00]: So my problem is while the valuations look cheap, I'm not convinced on the chart that this is going to turn around any time.

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[SPEAKER_00]: When I say it in the near term, because you're getting that technical weakness, they do have some depth and not a dramatic amount.

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[SPEAKER_00]: That's a positive here.

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[SPEAKER_00]: Their enterprise value to even is right around 8.7, which historically is the low end of the range.

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[SPEAKER_00]: So from evaluation perspective, you like this 35% return equity, all of that.

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[SPEAKER_00]: Once again, I still don't see a technical picture

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[SPEAKER_00]: So I would continue to watch it.

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[SPEAKER_00]: There's a lot of late state drugs that are expected to be approved.

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[SPEAKER_00]: Maybe if they do, then this will rebound, but the market is telling you that it's maybe unlikely to do so.

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[SPEAKER_00]: So that's why I would pass on it.

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[SPEAKER_00]: And yeah, I would definitely pass.

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[SPEAKER_00]: He also asks whether or like more than a UNH or an LA lily lily lily or a novel Nordisc.

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[SPEAKER_00]: Uh, I would probably, if I'm looking at some of the other names that you listed, we've looked at Novo Nordisk, and I think, fundamentally, that looks a bit better, even technically, the reason we didn't buy it was the technicals that they haven't improved, but they do look a bit better than Merck, and so I'm picking one of any of these, I would be picking Novo Nordisk.

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[SPEAKER_00]: Now, I'm moving to a break, still to come.

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[SPEAKER_00]: I focus point and more answers to your questions, I encourage you to call right now on the best talk at 8-899 chart.

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[SPEAKER_03]: In Vestock, tell your friends they can listen live, download the free podcast, or watch Vestock on our YouTube channel.

15:45.287 --> 16:00.641
[SPEAKER_00]: Now let's take a look at our main focus point for the day and that is regards to the AI job paradox and the fact that businesses are both laying off and hiring people because of AI.

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[SPEAKER_00]: This is a report from the Federal Bank of New York Federal Reserve Bank of New York.

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[SPEAKER_00]: And they talk about the concerns that AI have sparked that will, that the technology or place jobs and reduce higher.

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[SPEAKER_00]: And what they looked at and they surveyed many different companies, especially in the Northeast.

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[SPEAKER_00]: And this is a business report, a Nobel increase in AI use over the past year, but very few firms reported AI layoffs AI driven layoffs, okay?

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[SPEAKER_00]: What I basically said, it was that those already employed are likely to simply be retrained in AI then laid off.

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[SPEAKER_00]: And that recruiting overall,

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[SPEAKER_00]: is being scaled back due to AI and some firms adding workers proficient in the use of AI.

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[SPEAKER_00]: No, it's even more interesting is that it depended on what type of company you're talking about.

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[SPEAKER_00]: Now, 40% of service firms reported using AI this year, the suffering 25% last year, and 44 expect to use AI over the next six months.

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[SPEAKER_00]: So it is growing, especially in the service sector.

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[SPEAKER_00]: But on the manufacturer side, there was a large jump, but it's still only to 26% from 16% last year.

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[SPEAKER_00]: And about a third, expect to use AI over the next six months.

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[SPEAKER_00]: So it's growing, but not as fast as the service sector.

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[SPEAKER_00]: Now, what sub-sectors use of the most?

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[SPEAKER_00]: Well, over half of firms in the information finance and professional business service sectors reported using AI as a part of the business process.

17:54.532 --> 18:00.554
[SPEAKER_00]: And this kind of ties to something we're gonna speak about at our webinar later this month and 30th, 15 days from now.

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[SPEAKER_00]: And that is not just

18:04.192 --> 18:07.873
[SPEAKER_00]: what companies are helping build out the AI infrastructure.

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[SPEAKER_00]: But what also companies are going to benefit from utilizing AI.

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[SPEAKER_00]: And this is their first kind of hint at that.

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[SPEAKER_00]: It's a service sector and a lot of the sub sectors.

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[SPEAKER_00]: And we're in this space, right?

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[SPEAKER_00]: We're in the finance industry.

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[SPEAKER_00]: We are using AI extensively for a lot of business processes.

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[SPEAKER_00]: And then you look on the flip side.

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[SPEAKER_00]: No firms in the agriculture space are using AI.

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[SPEAKER_00]: So once again, some firms are going to benefit drastically from higher efficiency, others none at all.

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[SPEAKER_00]: Now, 40% to 45% of firms in the wholesale and leisure hospitality sectors are using it.

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[SPEAKER_00]: And about a third of firms in education and healthcare, personal services, and the retail sector.

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[SPEAKER_00]: So once again,

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[SPEAKER_00]: some, not at all, some a little bit, some extensively.

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[SPEAKER_00]: And when it comes to those that are paying for it, about half of service rooms are now paying for AI tools in some capacity.

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[SPEAKER_00]: That's up 16% of its points from last year.

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[SPEAKER_00]: Now, what's interesting on the job front is what sectors are laying off, what are simply retraining, hiring, or hiring fewer.

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[SPEAKER_00]: So far, this year, service firms barely laid off any workers because of AI.

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[SPEAKER_00]: But about 10 to 12% should 13% of service firms anticipate

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[SPEAKER_00]: And that's about even to 100 people hired fewer, how many companies hired fewer.

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[SPEAKER_00]: But about 35% are going to have retrained workers this year to use AI.

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[SPEAKER_00]: And nearly 50% next year expect to retrain workers.

20:07.562 --> 20:11.323
[SPEAKER_00]: And that's the same on the manufacturing side, the expected retrain workers.

20:12.343 --> 20:14.624
[SPEAKER_00]: And the manufacturing side, nearly 15% of those firms

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[SPEAKER_00]: And about 13% of workers on the service side or companies on the service side, it's back to higher and more.

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[SPEAKER_00]: And that's what's interesting here.

20:32.035 --> 20:36.877
[SPEAKER_00]: Is everyone's focusing on the jobs that are being replaced or the hiring less?

20:37.677 --> 20:42.559
[SPEAKER_00]: And the reality here is it's a lot more complex than that.

20:44.160 --> 20:50.262
[SPEAKER_00]: And they're seeing that the reduction in hiring due to AI was contrary to among jobs that require a college degree.

20:52.865 --> 21:01.409
[SPEAKER_00]: So that's probably why you're seeing youth unemployment rise so significantly, especially those that are leaving college over the past couple of years.

21:03.070 --> 21:09.274
[SPEAKER_00]: So the suggestion is that the effect of AI on individual firms is simply complex.

21:10.554 --> 21:15.557
[SPEAKER_00]: And AI is creating job opportunities for those that know how to use it effectively.

21:18.567 --> 21:35.251
[SPEAKER_00]: are simply hiring less, but most are actually retraining their current workers, so don't think that this AI is the real driver here of a week jobs market, more likely it's actually immigration policy.

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[SPEAKER_00]: Now, the next investor, we'll look into this topic.

21:40.016 --> 21:48.086
[SPEAKER_00]: The millionaire mindset, successful individuals have a perspective that sees money as a tool for unlocking opportunities and building sustainable long-term wealth.

21:48.746 --> 21:51.570
[SPEAKER_00]: That story tomorrow, but for now, I'm Justin Klein, and we're gonna take your calls now.

21:52.131 --> 21:53.753
[SPEAKER_00]: On the best talk, eight, eight, nine, nine chart.

22:01.900 --> 22:11.149
[SPEAKER_03]: The All-New Invest Talk Wealth Webinar Beyond the Mag 7, how to identify AI opportunities across sectors.

22:11.649 --> 22:21.578
[SPEAKER_03]: Join Justin and Luke is they talk about the energy grid, data center infrastructure, and how AI is boosting profits in a wide range of industries.

22:22.059 --> 22:25.001
[SPEAKER_03]: The Invest Talk Wealth Webinar, September 30th,

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[SPEAKER_03]: One to two p.m.

22:26.943 --> 22:27.863
[SPEAKER_03]: Pacific Time.

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[SPEAKER_03]: Online seats are limited, so register now, head in vestalk.com.

22:34.546 --> 22:41.809
[SPEAKER_06]: Hey, Justin and Luke, this is Dan and Minneapolis, and I just have a question regarding my portfolio and my Roth IRA.

22:42.278 --> 22:54.969
[SPEAKER_06]: I currently am a new investor and was looking for, you know, as much exposure as I can get invested in VPI and the XUS to get some domestic and international exposure.

22:55.550 --> 23:08.702
[SPEAKER_06]: I don't really keep up with my investments that much and I was wondering if it's more worth it just to put all of it into total world like VT instead just because I don't really keep up with balancing.

23:09.312 --> 23:10.433
[SPEAKER_06]: the two every year.

23:11.053 --> 23:23.122
[SPEAKER_06]: And if so, should I just sell all my shares in both those and put it all into VT, or should I dollar cost average into that slowly over time?

23:23.746 --> 23:26.508
[SPEAKER_06]: I will look for your answer on the podcast.

23:26.688 --> 23:26.929
[SPEAKER_00]: Thank you.

23:26.949 --> 23:31.692
[SPEAKER_00]: All right, they're looking at VXUSBTI and VT.

23:31.732 --> 23:33.073
[SPEAKER_00]: These are all being heard funds.

23:33.134 --> 23:38.678
[SPEAKER_00]: So VTI is the domestic all, I think, all stock index.

23:39.539 --> 23:43.141
[SPEAKER_00]: The VXUS is the international.

23:44.022 --> 23:44.382
[SPEAKER_00]: index.

23:45.163 --> 23:48.626
[SPEAKER_00]: And then the Vanguard's little world stock market ETF is VT.

23:49.727 --> 23:53.230
[SPEAKER_00]: And VT is a mix of those first two.

23:54.071 --> 23:59.935
[SPEAKER_00]: It's about 63% US equities and 36% foreign equities.

24:00.936 --> 24:03.999
[SPEAKER_00]: And I kind of like that breakdown a bit better.

24:04.019 --> 24:08.182
[SPEAKER_00]: And I don't know what your waiting is with VXUS versus VTI.

24:08.943 --> 24:09.744
[SPEAKER_00]: If you have

24:11.036 --> 24:16.582
[SPEAKER_00]: more than 36% in VXUS, then this would be lowering your foreign exposure.

24:16.682 --> 24:18.063
[SPEAKER_00]: I rather opt your foreign exposure.

24:18.524 --> 24:23.568
[SPEAKER_00]: But imagine it might be less than 36% I do like having kind of simplified.

24:25.547 --> 24:29.788
[SPEAKER_00]: version of this and the ability to rebalance a bill we rebalance for you.

24:30.568 --> 24:34.369
[SPEAKER_00]: So I do like the VT and I would do that.

24:34.889 --> 24:36.909
[SPEAKER_00]: I wouldn't be coy about it.

24:36.929 --> 24:43.611
[SPEAKER_00]: I'd just sell the other two and then just buy this one VT, which is the Vanguard Total World Stock ETF.

24:44.531 --> 24:45.751
[SPEAKER_00]: Thanks for the call.

24:46.531 --> 24:49.652
[SPEAKER_00]: Now let's go answer to a row right now.

24:50.472 --> 24:50.972
[SPEAKER_04]: Hi guys.

24:50.992 --> 24:51.472
[SPEAKER_04]: This is

24:55.857 --> 24:57.518
[SPEAKER_04]: really help me on my investment journey.

24:57.538 --> 25:02.002
[SPEAKER_04]: I have a quick question regarding allocation of cash in your portfolio.

25:02.082 --> 25:19.175
[SPEAKER_04]: As we enter into the typically more volatile September, Q4, period of the year, I'm trying to free up a little bit of cash so that way I can take advantage of any of any dips take place during this time.

25:19.575 --> 25:22.798
[SPEAKER_04]: I'm wondering what your suggested allocation would be

25:23.957 --> 25:33.104
[SPEAKER_04]: Maybe an expected solitude period or what would be your cash allocation in your portfolio for a non- solitude period.

25:33.464 --> 25:36.647
[SPEAKER_04]: Thanks very much for your advice and I'll listen back on the podcast.

25:37.867 --> 25:43.349
[SPEAKER_00]: All right, looking at the potential for market volatility over the next few months.

25:44.549 --> 25:47.110
[SPEAKER_00]: And I would say I wouldn't get too cute with it.

25:47.130 --> 25:49.250
[SPEAKER_00]: I don't think you need to have much cash right now.

25:49.270 --> 25:50.291
[SPEAKER_00]: And I didn't know.

25:50.311 --> 25:52.191
[SPEAKER_00]: Now do I expect the market to pull back a little bit?

25:53.292 --> 25:53.572
[SPEAKER_00]: Sure.

25:54.012 --> 25:57.193
[SPEAKER_00]: But I think it's going to be relatively minor whenever that happens.

25:57.233 --> 26:01.154
[SPEAKER_00]: Maybe the catalyst is the fed meeting that isn't as dove-ish as the market was expecting.

26:01.714 --> 26:02.194
[SPEAKER_00]: Etcetera.

26:02.834 --> 26:04.155
[SPEAKER_00]: Charge to know the exact catalyst.

26:05.660 --> 26:11.222
[SPEAKER_00]: You know, this is the time September or the October where things get, uh, can't get a little squirrely.

26:11.302 --> 26:17.103
[SPEAKER_00]: Now, so far in the August of Temporary period, we haven't had much volatility really at all.

26:17.984 --> 26:23.825
[SPEAKER_00]: And so the backdrop of liquidity in the market is still relatively robust.

26:24.566 --> 26:30.007
[SPEAKER_00]: And that means pullbacks to be bought pullbacks are likely to be minor.

26:30.507 --> 26:32.468
[SPEAKER_00]: They're not going to be a major move.

26:33.273 --> 26:36.458
[SPEAKER_00]: Major move to the downside in all likely it.

26:37.319 --> 26:42.367
[SPEAKER_00]: And so, as the enemies, you get back into, you get into the holiday season of the fourth quarter.

26:43.156 --> 26:54.882
[SPEAKER_00]: You know, things get definitely relatively bullish if the Santa Claus rally you have the options market that kind of will drive things into the end of the year.

26:55.362 --> 27:06.288
[SPEAKER_00]: If we have a positive year and so far, you know, we are positive, you know, load double digits and for the S&P and that certainly can continue once again through the end of the year.

27:06.969 --> 27:08.710
[SPEAKER_00]: So I don't expect a

27:10.245 --> 27:26.473
[SPEAKER_00]: major market drop probably until their minimum back half a second quarter next year probably later to be honest with you a lot does depend on the liquidity dynamics, but they're unexpected to really turn for at least a quarter or two.

27:26.653 --> 27:30.035
[SPEAKER_00]: So I wouldn't be having elevated level of cash.

27:30.055 --> 27:32.717
[SPEAKER_00]: Could you rebalance and and and

27:33.617 --> 27:36.939
[SPEAKER_00]: raise a little bit, you know, three, five, seven percent of the portfolio.

27:37.679 --> 27:37.940
[SPEAKER_00]: Sure.

27:38.360 --> 27:48.446
[SPEAKER_00]: But this wouldn't be a double digit cash allocation and this market considering the liquidity backdrop that we remain in, which is the overall positive.

27:49.026 --> 27:57.891
[SPEAKER_00]: Now let's pivot and talk about something similar, which is the new trade and the reason why the market just kind of continues to power higher.

27:58.551 --> 27:59.032
[SPEAKER_00]: And that's what

28:01.739 --> 28:06.222
[SPEAKER_00]: And it's betting on not a recession, but an economic resurgence.

28:06.842 --> 28:10.524
[SPEAKER_00]: And frankly, I have a lot of sympathy for this.

28:11.665 --> 28:22.371
[SPEAKER_00]: While I do think we're in the latter innings of the growth phase, the rate cutting cycle that we are headed towards is likely to precipitate a increase in

28:23.602 --> 28:27.964
[SPEAKER_00]: the yields curve and incentivize banks to lend more.

28:28.444 --> 28:32.786
[SPEAKER_00]: And that typically is the end of the economic cycle.

28:32.806 --> 28:47.571
[SPEAKER_00]: When you've already had growth and you've got the last burst of bank lending, the creativity and money and the system, that can keep economic growth going for a little bit longer.

28:53.055 --> 29:06.598
[SPEAKER_00]: it's falling, but also you have the new tax bill that keeps everything kind of in place and could also fuel the next round of growth.

29:08.719 --> 29:16.341
[SPEAKER_00]: So even though the labor market is weakening, the expectation is that it's only at the margins

29:22.668 --> 29:29.314
[SPEAKER_00]: that the weakest labor market has more to do with the immigration policy right now, right?

29:29.534 --> 29:37.001
[SPEAKER_00]: Lack of labor supply, that is kind of zapping the hiring process.

29:38.602 --> 29:43.907
[SPEAKER_00]: Now, a lot of you will expect tariffs to be attacks on real incomes and overall they are.

29:44.869 --> 29:56.496
[SPEAKER_00]: But mostly traders are shrugging off those concerns, embracing the idea that lower rates and a continuation of government spending will continue to boost corporate profits.

29:57.496 --> 30:07.062
[SPEAKER_00]: And once again, I have a lot of sympathy for that, and that's why I don't think that we are in a period whether it's going to be a major market setback in the short term.

30:08.662 --> 30:10.904
[SPEAKER_00]: Now, I think the biggest argument for

30:13.431 --> 30:22.747
[SPEAKER_00]: The economy weakening to some degree or liquidity weakening, let's say that, is actually the effect on fiscal policy that a rate cut will have.

30:23.789 --> 30:27.154
[SPEAKER_00]: What I mean by that is that a free drop

30:28.677 --> 30:35.038
[SPEAKER_00]: That's less money from the government spending on interest payments, which sounds good and aggregate in the long term.

30:35.498 --> 30:39.519
[SPEAKER_00]: But in the near term, it is less money going into people's pockets, right?

30:39.819 --> 30:44.000
[SPEAKER_00]: Less money they're earning on CDs, savings accounts, treasuries, et cetera.

30:44.840 --> 30:46.981
[SPEAKER_00]: So to me, that is the biggest argument.

30:47.021 --> 30:52.342
[SPEAKER_00]: But what you see right now is that this ricketing cycle could be relatively slow.

30:53.162 --> 30:53.502
[SPEAKER_00]: They're still

30:55.455 --> 30:58.456
[SPEAKER_00]: some level of interest in economics is your interest rates, right?

30:58.476 --> 31:05.319
[SPEAKER_00]: We might go for four to three and a half or three, but there's still well off the zero bound.

31:06.200 --> 31:13.563
[SPEAKER_00]: So I think that impact will be relatively minor compared to the incentives that a steeper yield curve will have for banks.

31:14.963 --> 31:21.946
[SPEAKER_00]: And then on top of that, you have the AI investment boom that continues and that's really driving a lot of the cap expanding out of corporate America

31:25.022 --> 31:34.507
[SPEAKER_00]: perpetuating a consumer that continues to book air travel, go out to restaurants, all of that data remains solid.

31:36.108 --> 31:49.735
[SPEAKER_00]: So it's important to not get so caught up in one particular narrative that, oh, the labor market, shows weakness that that automatically means a recession.

31:51.015 --> 31:51.876
[SPEAKER_00]: It can mean many things.

31:55.232 --> 31:55.672
[SPEAKER_00]: not a lot.

31:58.054 --> 31:59.515
[SPEAKER_00]: You know, I think of it as this way.

32:01.577 --> 32:07.021
[SPEAKER_00]: If you have a job, you have a certain level of spending habits.

32:10.203 --> 32:12.465
[SPEAKER_00]: If you don't have a job, you also have a certain level of spending habits.

32:12.505 --> 32:19.770
[SPEAKER_00]: And so if the hiring situation is relatively meager, well, yes, that's zapping,

32:22.113 --> 32:25.155
[SPEAKER_00]: from the labor market that would feed into the consumer market.

32:26.476 --> 32:38.045
[SPEAKER_00]: But when you're not getting also a requisite number of layoffs, well, that's also keeping those people have jobs, and they're spending habits in place as well.

32:38.986 --> 32:42.649
[SPEAKER_00]: So you have a more stagnant economic environment than a recession area you want.

32:44.270 --> 32:46.752
[SPEAKER_00]: And then once again, a Fed cutting cycle,

32:48.098 --> 32:51.859
[SPEAKER_00]: could precipitate likely will precipitate a growth and lending.

32:52.819 --> 32:53.499
[SPEAKER_00]: And that's liquidity.

32:53.719 --> 32:58.600
[SPEAKER_00]: So overall, I have sympathy with this trade, even though it's not guaranteed.

32:58.620 --> 33:04.301
[SPEAKER_00]: And this is one of those things we have to balance the approach the way you look at markets and economic data.

33:05.241 --> 33:07.122
[SPEAKER_00]: Let's go with another YouTube comment question.

33:07.762 --> 33:11.442
[SPEAKER_00]: Jim Lace says, MMRN, just at a 52 week.

33:11.482 --> 33:14.663
[SPEAKER_00]: Glow, do you think now would be a good time to pick it up?

33:15.719 --> 33:27.751
[SPEAKER_00]: When you probably know that when, takes that a 52 week low, well, that's probably not a wonderful sign for the business and it's down 32% from a 52 week high, picked out a three and a $65 per share.

33:27.771 --> 33:28.051
[SPEAKER_00]: Now we're at $246.

33:28.091 --> 33:28.512
[SPEAKER_00]: Now why is this?

33:28.532 --> 33:29.352
[SPEAKER_00]: Well, I think it's because of,

33:37.463 --> 33:37.723
[SPEAKER_00]: AI.

33:38.784 --> 33:42.187
[SPEAKER_00]: And the potential for, you know, morning star, we use morning star.

33:42.508 --> 33:44.549
[SPEAKER_00]: They have a lot of good data, look at analysis.

33:45.270 --> 33:53.718
[SPEAKER_00]: But if you're able to use AI to pull data, maybe you need morning star a bit less, and revenues have started to slow as well as earnings.

33:54.378 --> 34:02.280
[SPEAKER_00]: So earnings last year of 54% to $7.88, but this year earnings are expected to be up $18 to $9.30, but those estimates continue to come down because last quarter revenue only grew 6% and profits only grew 19% versus 56% the year of four.

34:02.360 --> 34:06.661
[SPEAKER_00]: And the next year earnings are supposed to be up 15% once again, those estimates continue to come down as well.

34:21.383 --> 34:24.124
[SPEAKER_00]: And this was trading at a pretty high multiple in the 30s.

34:24.164 --> 34:29.086
[SPEAKER_00]: I think even reached the 40s for a little bit and now we're back down to the high 20s.

34:29.346 --> 34:37.229
[SPEAKER_00]: And if you go based on forward looking earnings, which once again, continue to get ratchet down, that is now in the mid 20s.

34:37.989 --> 34:46.572
[SPEAKER_00]: So if you're getting a kind of broader modern economy growth, you're going to pay broader market

34:50.893 --> 34:55.856
[SPEAKER_00]: And so I think there's more downside to go and I'd be very patient with morning star.

34:55.876 --> 34:56.736
[SPEAKER_00]: You know, we use it.

34:57.837 --> 35:00.318
[SPEAKER_00]: I do see some potential AI disruption.

35:00.719 --> 35:03.400
[SPEAKER_00]: You are seeing short interest rise for this name.

35:03.840 --> 35:06.942
[SPEAKER_00]: And I think that could continue for the foreseeable future.

35:07.582 --> 35:10.424
[SPEAKER_00]: Let me give you a support level on this name.

35:11.684 --> 35:17.466
[SPEAKER_00]: You know, we are getting the support around 240, but frankly, I wouldn't be buying at at least until about 220.

35:17.826 --> 35:22.447
[SPEAKER_00]: That's where the major support is and would be right around that market multiple.

35:22.487 --> 35:29.929
[SPEAKER_00]: So I think that's the level to take a look at it, but also once again, want to see a spike in volume that tells me.

35:31.414 --> 35:50.702
[SPEAKER_00]: capitulation is here that everyone is throwing this name out or tire the losses and you could then see a resumption of a potential whole market in this name but for now I would stay away from it because it's not cheap enough and it remains in a very very strong downtrend.

35:51.622 --> 35:54.743
[SPEAKER_00]: Now let's go back to the best I've always been for a call that came in earlier.

35:54.763 --> 36:01.026
[SPEAKER_01]: Hi there Justin Luke longtime caller here from the Midwest love the show

36:01.815 --> 36:04.596
[SPEAKER_01]: Thank you for everything you teach us on and educate us on.

36:04.616 --> 36:07.137
[SPEAKER_01]: I have a quick question for you.

36:07.778 --> 36:16.041
[SPEAKER_01]: Looking for a good stock to buy right now, that hopefully would return me some gains over the next few years on that.

36:16.882 --> 36:25.345
[SPEAKER_01]: I was wondering what you thought about getting into, I believe it's ticker symbol, ffm, sprouts farmers market.

36:25.886 --> 36:28.887
[SPEAKER_01]: I've heard you talk about it a few times on your show,

36:29.592 --> 36:33.494
[SPEAKER_01]: And I think you guys might own it or you did it one time.

36:34.194 --> 36:34.955
[SPEAKER_01]: What do you think about it?

36:35.235 --> 36:37.716
[SPEAKER_01]: Will it make any money in the future here do you think?

36:38.197 --> 36:40.338
[SPEAKER_01]: Would it be something good right now to get into?

36:40.898 --> 36:46.481
[SPEAKER_01]: Or should I just pass on it and keep it on my watch list for future time down the road?

36:47.021 --> 36:48.102
[SPEAKER_01]: Thank you for all your help.

36:48.342 --> 36:49.102
[SPEAKER_01]: I appreciate it.

36:49.262 --> 36:50.403
[SPEAKER_01]: Look forward to your answer.

36:50.903 --> 36:51.444
[SPEAKER_01]: Have a good day.

36:58.418 --> 37:00.880
[SPEAKER_00]: in the 20s, I believe, now it's at 128.

37:00.940 --> 37:04.683
[SPEAKER_00]: So this has been one of our big winners over the past five, six years or so.

37:05.503 --> 37:12.869
[SPEAKER_00]: And we did trim it recently, I believe in the 150s, 160 range, it picked out around 180.

37:13.690 --> 37:19.074
[SPEAKER_00]: And it is now in a bit of a downtrend, but to us, this is a corrected period.

37:19.634 --> 37:22.516
[SPEAKER_00]: And we expect it to find support around the 121, 17 range.

37:22.616 --> 37:23.597
[SPEAKER_00]: And that's where we would,

37:26.890 --> 37:40.557
[SPEAKER_00]: be aggressively picking it back up maybe up our allocation because we really like the name overall what they do is they have a 240 different stores and 24 states offering natural and organic foods.

37:40.898 --> 37:46.080
[SPEAKER_00]: So we saw that trend that we think will continue for that we as it's what's as a secular trend.

37:46.341 --> 37:54.005
[SPEAKER_00]: You are more and more health conscious and looking for organic and natural foods that's crowds offers and there's a lot of runway for their growth.

37:54.805 --> 38:05.020
[SPEAKER_00]: 42% growth this year, 18 or 15% expected growth next year, but it is trading a little bit elevated multiple, and so once again, 1, 21, 17, that's the range I'll be buying.

38:05.180 --> 38:05.721
[SPEAKER_00]: Sprouts.

38:06.482 --> 38:07.123
[SPEAKER_00]: We're heading to a break.

38:07.163 --> 38:08.104
[SPEAKER_00]: Give me a call now at 8.89 and chart.

38:18.615 --> 38:26.922
[SPEAKER_03]: The Invest Talk phone lines never close, and now Justin Klein is here taking your calls live.

38:27.523 --> 38:28.984
[SPEAKER_03]: Invest Talk, 888-99, chart.

38:32.833 --> 38:33.834
[SPEAKER_08]: Hi, this is Tammy.

38:33.894 --> 38:35.735
[SPEAKER_08]: I'm calling from Spokane, Washington.

38:36.015 --> 38:38.517
[SPEAKER_08]: It's been about six years since I've called in.

38:38.858 --> 38:42.080
[SPEAKER_08]: You may have covered it, but I am curious about Lulu Lemon.

38:42.901 --> 38:44.542
[SPEAKER_08]: I invested in it.

38:44.562 --> 38:46.684
[SPEAKER_08]: I think back in 2017.

38:46.724 --> 38:49.265
[SPEAKER_08]: I loved the product.

38:49.726 --> 38:52.928
[SPEAKER_08]: I never felt like I could afford it, but I thought it was a great product.

38:53.509 --> 38:58.993
[SPEAKER_08]: I had to sell the stock because I needed to liquidate some, and I hadn't paid attention for a long time.

38:59.951 --> 39:07.857
[SPEAKER_08]: It ran up a long ways, a rig really far and now it's crashing and I keep hearing news about it.

39:08.657 --> 39:10.659
[SPEAKER_08]: I had kicked myself for selling it.

39:10.979 --> 39:16.603
[SPEAKER_08]: I still think it is an amazing product as the person that wears a athletic wear.

39:17.183 --> 39:20.666
[SPEAKER_08]: It's really high quality and I love it.

39:20.786 --> 39:23.368
[SPEAKER_08]: So I am just curious if you could explain

39:24.500 --> 39:26.120
[SPEAKER_08]: what happened to Lulu Lemon.

39:26.341 --> 39:29.001
[SPEAKER_08]: I still really believe in the product.

39:29.361 --> 39:31.662
[SPEAKER_08]: I was hoping you could explain what happened to it.

39:32.222 --> 39:39.544
[SPEAKER_08]: I would still like to invest in it and I was wondering if there was a way to look at where a price point would be to get back in.

39:39.784 --> 39:40.224
[SPEAKER_08]: Thank you.

39:40.664 --> 39:48.507
[SPEAKER_00]: All right, looking at Lulu Lemon and this is interesting because you ask what happened to it.

39:49.727 --> 39:50.507
[SPEAKER_00]: I think it's pretty simple.

39:51.567 --> 39:51.887
[SPEAKER_00]: This is

39:54.937 --> 39:58.478
[SPEAKER_00]: with any market leader, in any industry.

39:58.798 --> 40:14.204
[SPEAKER_00]: And this is what it comes down to the economic mode, a company can build, especially when things are going right, can they prevent competitors from coming in and stealing their market share, stealing their thunder?

40:15.345 --> 40:19.566
[SPEAKER_00]: And the reality here is that, while Lulu Lemon was the first big,

40:21.838 --> 40:26.162
[SPEAKER_00]: fleisureware company to really crush it, right?

40:27.343 --> 40:34.009
[SPEAKER_00]: Other names have slowly started to encroach on their business.

40:35.890 --> 40:38.693
[SPEAKER_00]: And I think of Alo is probably the main one.

40:39.193 --> 40:40.695
[SPEAKER_00]: You have others like Viori.

40:41.435 --> 40:45.218
[SPEAKER_00]: There's one Athleta, which is owned by Gap.

40:45.879 --> 40:48.842
[SPEAKER_00]: So there are many now that's

40:50.295 --> 40:56.338
[SPEAKER_00]: are attempting to steal their market share and many have succeeded in some ways.

40:56.938 --> 41:01.981
[SPEAKER_00]: And you see that in last quarter, revenue growth is only up 7% earnings were down 2%.

41:02.021 --> 41:08.204
[SPEAKER_00]: And earnings this year expect to be down 12% and then flat next year.

41:08.884 --> 41:10.965
[SPEAKER_00]: So you've sat all the growth here.

41:12.125 --> 41:17.048
[SPEAKER_00]: And if you look at their cash flow, it is slowly slipped as well.

41:18.070 --> 41:22.199
[SPEAKER_00]: Now, it's starting to become a pretty strong value.

41:22.920 --> 41:25.526
[SPEAKER_00]: Enterprise value is around six, six and a half.

41:26.450 --> 41:35.277
[SPEAKER_00]: That is the lowest, really, it's ever, close to ever been, since two else in nine is at 2.3, which is in the depth of the recession.

41:35.798 --> 41:39.801
[SPEAKER_00]: But outside of recession, this is as low as really, it's ever been.

41:39.821 --> 41:47.947
[SPEAKER_00]: We're trying to equities still 42% still very high, very little debt on its balance sheet, which you, you have to like as well.

41:48.848 --> 42:01.733
[SPEAKER_00]: And so I think we are getting levels to levels that are very attractive for the lemon, but it's not without us risk because of the encroachment by those other brands on their market share.

42:02.793 --> 42:05.234
[SPEAKER_00]: There is a major support around $100 in with this.

42:05.254 --> 42:06.234
[SPEAKER_00]: $130, $35 in that range.

42:07.115 --> 42:07.495
[SPEAKER_00]: We're still at

42:17.048 --> 42:20.671
[SPEAKER_00]: So it still has, sorry, 160, excuse me, the close today.

42:21.792 --> 42:23.674
[SPEAKER_00]: So still has some more downside potential.

42:25.216 --> 42:27.298
[SPEAKER_00]: Due to its momentum.

42:28.519 --> 42:30.561
[SPEAKER_00]: But let me look at the volume as of late.

42:30.581 --> 42:33.723
[SPEAKER_00]: I like to always take, yeah, it did have on that earnings.

42:33.764 --> 42:34.985
[SPEAKER_00]: It did have pretty high volume.

42:36.690 --> 42:46.899
[SPEAKER_00]: It's not been followed up by major volumes, so that's of note to me, it's not fully reversing, but I do think from evaluation perspective were there.

42:47.680 --> 42:57.109
[SPEAKER_00]: I don't think the brand is going anywhere, I think it's still thinking it's going to have its loyal customers, you sound like one of them.

42:58.029 --> 43:01.653
[SPEAKER_00]: And I think it's going to maintain it's pretty strong, cash flow,

43:03.181 --> 43:04.602
[SPEAKER_00]: It's balanced, she doesn't need to go anywhere.

43:04.622 --> 43:07.825
[SPEAKER_00]: Hi, it's going to be a stronger buying back shares.

43:08.306 --> 43:09.567
[SPEAKER_00]: Obviously, it's prices declined.

43:10.087 --> 43:12.169
[SPEAKER_00]: That cash flow can buy back even more shares.

43:13.002 --> 43:21.729
[SPEAKER_00]: So, I am starting to believe it is a good value here, but I understand that there is some more downside potential in the near term.

43:22.029 --> 43:24.952
[SPEAKER_00]: So it's hard to pick that bottom when it's in a strong downturn.

43:25.692 --> 43:28.815
[SPEAKER_00]: And therefore, you have to understand that.

43:28.835 --> 43:34.500
[SPEAKER_00]: You have to be okay with a little short term volatility because I think medium's a long term.

43:34.800 --> 43:37.762
[SPEAKER_00]: This is a pretty good level to be buying Lulu Lemon.

43:38.383 --> 43:40.965
[SPEAKER_00]: L-U-L-U is a symbol.

43:41.366 --> 43:54.649
[SPEAKER_00]: Now, lastly, let's talk about the labor market and the fact that sectors like manufacturing wholesale, wholesale retail and energy of experience, a wave of job losses recently, and mainly that is due to the tariffs.

43:54.709 --> 43:56.490
[SPEAKER_00]: Manufacturing should 12,000 jobs.

43:56.910 --> 44:05.312
[SPEAKER_00]: We've lost a total of 78,000 manufacturing jobs this year, the mining sector, which includes oil and gas, lost 6,000 jobs in August,

44:05.892 --> 44:11.833
[SPEAKER_00]: and host wholesale trade felt by 32,000 jobs total this year.

44:12.253 --> 44:24.255
[SPEAKER_00]: Cummings like John Deere, they laid off 2838 workers across factories in Illinois as its net income felt 23%, that's only 6% in the third order.

44:24.936 --> 44:32.017
[SPEAKER_00]: So it's very interesting to see where the job losses are concentrated, you're seeing construction, financial services,

44:33.347 --> 44:48.138
[SPEAKER_00]: Even information, the tech sector's laying off workers, manufacturing once again, leisure hospitality has been a strength to be honest with you, but mining and lodging has been weak as well as wholesale trade.

44:48.638 --> 44:52.961
[SPEAKER_00]: That's where the job losses have been so far in 20, 25.

44:53.061 --> 44:53.642
[SPEAKER_00]: We're heading

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[SPEAKER_00]: In the end, this is the end of today's show.

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[SPEAKER_00]: I'm Justin Klein.

44:58.939 --> 44:59.619
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44:59.639 --> 45:03.040
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45:03.521 --> 45:09.443
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45:09.503 --> 45:12.504
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