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[SPEAKER_01]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers, this is Invest Talk.

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[SPEAKER_01]: Independent Thinking, shared success.

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[SPEAKER_01]: Invest Talk is made possible by KPP Financial, a registered investment advisor firm serving clients throughout the United States.

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[SPEAKER_01]: Here is KPP Financial Portfolio Manager, Luke Guerrero,

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[SPEAKER_02]: Good afternoon fellow investors and welcome back to invest talk.

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[SPEAKER_02]: My name is Luke Guerrero, and I'll be with you on this Tuesday, September 30, 2025.

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[SPEAKER_02]: Now, it is 930, September 30th.

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[SPEAKER_02]: That means a couple of things.

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[SPEAKER_02]: It means it's my mother's birthday, so I have you birthday to her.

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[SPEAKER_02]: But it also means we are officially

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[SPEAKER_02]: through Q3, officially through the month of September and headed in, turn in the corner towards the end of the year.

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[SPEAKER_02]: And what a year it has been.

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[SPEAKER_02]: Certainly there have been a lot of changes, there's been a lot that has been noise, a lot that has been signals, a lot to sift through, ups, downs, high volatility, low volatility, and through it all, we here at Investox see our singular mission as trying to help you decipher.

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[SPEAKER_02]: What is going on in the world?

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[SPEAKER_02]: To figure out how it's going to affect you, how it's going to affect your finances, how it's going to affect your portfolios, and how it's going to affect how you can achieve your financial goals.

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[SPEAKER_02]: And in order to do that, just in an eye, come here each and every day, five days a week, except on holidays.

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[SPEAKER_02]: And we bring a mixture of educational and actionable material to the table, but you are the most important part of this show, your contributions.

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[SPEAKER_02]: through your voice mails, through your questions over on our Invest Talk YouTube channel, your reviews.

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[SPEAKER_02]: And also by bringing more people in to the Invest Talk family, is the most important part of this show.

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[SPEAKER_02]: And so, as always, before we talk about today's market performance, before we run down those show topics, why don't we tackle this color question now?

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[SPEAKER_07]: here from Orange County.

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[SPEAKER_07]: Just one of the ask you about UTI, Universal Technical Institute.

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[SPEAKER_07]: Just wondering if you think it's a good idea to load up more on this and hold it long-term.

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[SPEAKER_07]: Sure, if you hear your thoughts and appreciate your all the work that you guys do.

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[SPEAKER_07]: Thanks so much.

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[SPEAKER_02]: Universal Technical Institute, ticker UTI, is exactly what it sounds like.

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[SPEAKER_02]: It is a college, a post-secondary education, and they focus on technical and trade skills.

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[SPEAKER_02]: So they run multiple brands.

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[SPEAKER_02]: They have the technical institute, the Concord Career Colleges.

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[SPEAKER_02]: Those are the motorcycle mechanics institute, the Marine mechanics institute, the NASCAR Technical Institute,

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[SPEAKER_02]: And its programs include automotive, diesel, collision repair, marine aviation mechanics, HVAC, electrical trades, and on and on and on.

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[SPEAKER_02]: This company's headquartered in Phoenix, Arizona and from a performance perspective, well, pretty strong Q2 and Q3 results, including a raise in guidance, 12.6% year over year revenue growth in Q2 2025.

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[SPEAKER_02]: It has had a lot of this growth because of the massive growth in demand for technical and trade education.

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[SPEAKER_02]: They had a program expansion that has worked very well.

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[SPEAKER_02]: The industry itself has massive tailwinds because there's more technical jobs now.

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[SPEAKER_02]: EV battery maintenance, electrical power infrastructure.

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[SPEAKER_02]: We just did a webinar.

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[SPEAKER_02]: about AI and talked about all the picks and shovels and investments and ways you can invest in the theme outside of the big tech companies.

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[SPEAKER_02]: And we talked about AI infrastructure, electrical power infrastructure.

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[SPEAKER_02]: All of this demand for energy has created a demand for jobs that help create this infrastructure and maintain this infrastructure.

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[SPEAKER_02]: And so this company's

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[SPEAKER_02]: year-to-day.

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[SPEAKER_02]: It is now as a technical college at the upper end of its five-year range, 34.2 times forward looking earnings, 16.9 times price to capital, 2.3 times price to sales.

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[SPEAKER_02]: How does this balance sheet look?

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[SPEAKER_02]: Well, it's only got about $269 million in debt on a $1.84 billion dollar market cap company.

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[SPEAKER_02]: It's got $167 million cash on hand, so nearly half of its debt

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[SPEAKER_02]: At the same time though, right?

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[SPEAKER_02]: There are a bit of rising cost labor facilities equipment.

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[SPEAKER_02]: These could squeeze margins, especially in its low margin programs.

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[SPEAKER_02]: There's that valuation sensitivity with that very high forward-looking price earnings.

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[SPEAKER_02]: This stock is somewhat priced for a lot of growth, so any underperformance or missed execution could certainly lead to some substantial downside.

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[SPEAKER_02]: And it's margins, although expanding or still pretty small, right?

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[SPEAKER_02]: It's 2024, 5.3% at margin.

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[SPEAKER_02]: Though that's the highest it's been in about five years projected to grow up at 7.1, but there is not a lot of room there compared to some other businesses.

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[SPEAKER_02]: And so, although I do like the tailwind here for growth,

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[SPEAKER_02]: It's price for a whole heck of a lot of growth.

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[SPEAKER_02]: 34.2 times for a looking price earnings.

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[SPEAKER_02]: So I would, especially because of the past three months, it's down 4% maybe on a bit of a downward trend after this massive surge of the past 52 weeks.

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[SPEAKER_02]: I'd keep it on my watchlist for now a bit too expensive for me.

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[SPEAKER_02]: That is a universal technical institute.

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[SPEAKER_02]: Take your UTI.

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[SPEAKER_02]: You've got a lot of going to cover in the next 45 minutes or so, and it all starts off with my main focus point, which concerns this story, the shrink-flation problem.

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[SPEAKER_02]: How you're paying more for less.

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[SPEAKER_02]: At the grocery store in this episode, we will reveal how manufacturers secretly decrease the size of products like coffee and paper towels, resulting in a hidden price hike that contributes to overall inflation.

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[SPEAKER_02]: The government is set to shut down, shut down at the end of the day to day as a deal has yet to be reached as we record this podcast.

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[SPEAKER_02]: What does it all mean for the U.S.

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[SPEAKER_02]: economy?

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[SPEAKER_02]: Also, touch on the credit market, which is it's moving along, it's humming, but Wall Street is a bit, there may be a worry, so we'll touch on that and should we have time at the end of the show.

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[SPEAKER_02]: We'll talk about how some investors

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[SPEAKER_02]: who bought property for rentals have become landlords accidentally and they're trying to get out and what does that mean for the property market?

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[SPEAKER_02]: We also have some voice bank calls, ridded playing, including one on Roth IRAs and MLPs.

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[SPEAKER_02]: Another on Daldy Vardin Silver Corporation to take her DVS as well as some questions that came in from the comment section of the investor on YouTube channel.

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[SPEAKER_02]: And of course, I welcome your finance and investment questions now or any time throughout the show.

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[SPEAKER_02]: Now head into our first break, please remember, you can call any time and leave your questions on the Invest.voysbank.

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[SPEAKER_02]: And if you're listening via our live stream or possibly on AM1220 in the Bay Area, call now at 888-99-Charm.

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[SPEAKER_02]: Hang on, because I'm back about today's activity.

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[SPEAKER_05]: Serious investors are certain to have, finance, and investment questions.

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[SPEAKER_05]: What do you think is a good price?

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[SPEAKER_05]: And the best person to ask your question in the right way is you.

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[SPEAKER_05]: And 24-7 rain or shine, Justin Klein and Luke Guerrero stand ready to provide their unbiased dancers.

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[SPEAKER_04]: Okay, he is the simple, you like the business.

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[SPEAKER_04]: I will say we've trimmed it a bit and cut it as a lower waiting.

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[SPEAKER_02]: Now while gold is hitting these record highs, it's driven by the safe heaven demand by central bank buying across the board.

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[SPEAKER_05]: Your participation makes an invest talk better.

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[SPEAKER_04]: Hey, Justin and Luke, this is Josh and North Carolina.

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[SPEAKER_04]: This is Marlow from New York City area.

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[SPEAKER_04]: Let's take a live call, Sam from San Jose.

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[SPEAKER_05]: So don't forget to call, Invest talk.

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[SPEAKER_05]: Great advice.

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[SPEAKER_05]: Thank you.

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[SPEAKER_05]: 888-99 chart.

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[SPEAKER_05]: The calls are free, the unbiased answers are free.

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[SPEAKER_05]: So what are you waiting for?

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[SPEAKER_05]: Call in Vestock, 888-99, chart.

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[SPEAKER_02]: Let's talk a little bit about the market today, U.S.

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[SPEAKER_02]: stocks, finishing mostly higher, ending near their session highs, the down.

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[SPEAKER_02]: Up 18 basis points, S&P 500, up 41, NASDAQ, up 30, Russell 2000, just barely positive, up 5 basis points.

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[SPEAKER_02]: With that close, the Dow, finishing at a fresh all-time high S&P just below its record close.

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[SPEAKER_02]: But majoring to see is really all posting solid gains for not just the month, but also for Q3.

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[SPEAKER_02]: At performers today included pharma, life sciences, hospitals, multispensy insurers, stable retailers, and media, big tech pretty mixed though in video fairing particularly well today.

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[SPEAKER_02]: And under performers included energy, banks, credit cards, restaurants, and home builders.

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[SPEAKER_02]: On the bond side treasuries, a bit mixed, curve steepening.

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[SPEAKER_02]: It's just slightly yields up one to two basis points at the front end, the dollar index, down 10 basis points, gold finishing up 50 basis points reversing some of the earlier declines we saw at the beginning of the day.

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[SPEAKER_02]: And crude oil ended down 1.7% after falling nearly three and a half on Monday on the news of OPEC plus's output.

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[SPEAKER_02]: Few dynamics in focus today, of course, the looming government shutdown has received a lot of attention, but frankly, Wall Street really pricing in and down-playing concerns about the economic risks.

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[SPEAKER_02]: It would not be the first time the government is shut down, typically they are short-lived, events, biggest issues for the market.

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[SPEAKER_02]: It seemed to be the delay, though, in September's employment report on Friday should the government be shut down.

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[SPEAKER_02]: The economic calendar, not a big directional driver, not a lot of big directional drivers today.

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[SPEAKER_02]: The Jolts job openings was largely in line, more signs of cooling from housing prices and bit softer consumer confidence and regional manufacturing data again, not really changing market sentiment too much.

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[SPEAKER_02]: As of the scrutiny, surrounding consumer finance names, though, particularly those exposed to the lower income segments, following the recent bankruptcy headlines within that sector.

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[SPEAKER_02]: And Farm was a big gainer today, with some pricing and deals with the White House helping to avoid tariffs.

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[SPEAKER_02]: Digging in a bit to that economic data, the joke's job openings did beat while the July print was revised slightly higher.

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[SPEAKER_02]: The quits rate at 1.9% has fallen to its lowest levels since the December, while Leia for rate remains unchanged, adding more support to the low-churn labor market narrative.

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[SPEAKER_02]: So that had a conference board consumer confidence missed, though the labor market differential, those who say the jobs are plentiful versus those who say they're hard to get.

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[SPEAKER_02]: Now, a bit further, the same time inflation expectations fell 30 basis points to about 5.8% still sounds pretty high.

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[SPEAKER_02]: In fact, it's still higher than the level of 5% from the beginning of the year.

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[SPEAKER_02]: And September, Chicago PMI posted an unexpected decline.

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[SPEAKER_02]: Today, an unexpected decline.

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[SPEAKER_02]: July, F.A.

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[SPEAKER_02]: Home prices index slipped as well.

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[SPEAKER_02]: July, S&PK, Shiller.

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[SPEAKER_02]: Home prices index fell by a bit less than expected.

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[SPEAKER_02]: A lot of data today, but again, not much that is actually moving the market in a big way.

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[SPEAKER_02]: Looking ahead to the rest of the week, looks like we get ADP private payrolls and ISM manufacturing for September, so it's construction spending for August out on Wednesday.

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[SPEAKER_02]: Thursday will bring us initial claims and August factory orders and ISM services, the highlight on Friday with the expected government shutdown, delaying the employment report.

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[SPEAKER_02]: Alrighty, let's keep things moving.

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[SPEAKER_02]: Oh, I was gonna get to a YouTube question, but it looks like we have a live call, our friend.

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[SPEAKER_02]: Jean from LaFayette, how can I help you?

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[SPEAKER_08]: We're going to question about a stock symbol is

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[SPEAKER_02]: A, B, K, C. So we're looking at A, B, T, C, which is American Bitcoin Corporation.

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[SPEAKER_02]: American Bitcoin Corporation is engaging the management of a Bitcoin accumulation platform.

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[SPEAKER_02]: It's a $1.1 billion market cap company.

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[SPEAKER_02]: It's price chart going back to 2019 is not very pretty.

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[SPEAKER_02]: And essentially what it does is that this infrastructure company, right?

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[SPEAKER_02]: It's the majority owned by Hut 8 Corp and leverages Hut 8's infrastructure.

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[SPEAKER_02]: So data centers, ASIC hosting to scale mining operations, it's a Bitcoin minor.

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[SPEAKER_02]: Now, it's NASDAQ debut was, again, several years ago, traded at a very high price, and it's been slowly and steadily moving downward ever since.

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[SPEAKER_02]: As I mentioned here, to date up 236.41% up 97.83% in the past 52 weeks.

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[SPEAKER_02]: Revenue growth looks pretty volatile though.

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[SPEAKER_02]: I do imagine it probably is as volatile as the asset class that it is exposed to because you see revenue growing from 10 to 20 billion in 2021, then down to 6.8 billion in 2023.

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[SPEAKER_02]: Now, peaking up again in 2024 as you saw the crypto run in about 20.539 billion.

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[SPEAKER_02]: Same time margins though pretty negative in the negative 100% range here.

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[SPEAKER_02]: Now, it has a big partnership, and that has, in a way, allowed it to have some sort of cost efficiency there.

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[SPEAKER_02]: The company's expanded.

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[SPEAKER_02]: It's mining operations.

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[SPEAKER_02]: It's an, it's increased cash rate significantly from what I can see.

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[SPEAKER_02]: There is a large institutional presence, like I said, within this company.

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[SPEAKER_02]: as well, but you do have a lot of Bitcoin price risk and volatility inherent to this, right?

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[SPEAKER_02]: You also have questions of the efficiency of mining operations at a time when Bitcoin, at times when Bitcoin is volatile.

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[SPEAKER_02]: You have a relatively uncertain crypto regulatory framework that is still being put into place, SEC oversight taxation rules, all these things.

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[SPEAKER_02]: And so this is really going to be exposure to Bitcoin, I would say, if you want to get exposed to Bitcoin,

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[SPEAKER_02]: Now, I'm moving into break, still to come.

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[SPEAKER_02]: I mean, focus point and more answers to your questions.

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[SPEAKER_02]: I encourage you to call now at 888-99 chart.

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[SPEAKER_05]: In Vestock, your questions are free, the answers are unbiased.

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[SPEAKER_05]: Luke Guerrero is here now, 888-99 chart.

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[SPEAKER_02]: Now my main focus point today is about a topic called shrink flation.

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[SPEAKER_02]: Now shrink-flation is also known as product downsizing essentially, you're getting less quantity for the same or nearly the same price and that raises the per unit cost.

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[SPEAKER_02]: And this phenomenon, it quietly boosts inflation since consumers pay more per ounce, they pay more per unit, even if the sticker price itself doesn't rise.

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[SPEAKER_02]: Now, downsizing peaked in about 2015.

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[SPEAKER_02]: It was pretty rare in 2020 to 2021, but this resurgence happened again in 2022 as inflation spiked.

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[SPEAKER_02]: Overall, impact on inflation is pretty small since only a fraction of a tract good can be downsized.

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[SPEAKER_02]: Let's say you buy a bag of Doritos and the Doritos now instead of having 20 chips.

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[SPEAKER_02]: It has 19 chips.

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[SPEAKER_02]: But they're still charging you, the same price.

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[SPEAKER_02]: That is what shrink-flation is.

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[SPEAKER_02]: Interestingly enough, in order to measure this, the Bureau of Labor Statistics sends in economists, trained people into these warehouses.

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[SPEAKER_02]: And I'm not kidding you.

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[SPEAKER_02]: They measure chips and bags.

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[SPEAKER_02]: They measure the length of hot dogs, the weight of hamburgers.

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[SPEAKER_02]: To do all these things to try and accurately figure out

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[SPEAKER_02]: How much inflation is out there in grocery prices, and anything that would be in a grocery warehouse?

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[SPEAKER_02]: Now many factors choose downsizing over price, hikes to protect sales, right?

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[SPEAKER_02]: They assume that consumers that you and me won't really notice as much.

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[SPEAKER_02]: Who really counts the amount of chips they have in their Dorito bag and study show, understandably, that shoppers, they tolerate downsizing, tolerate it more than outright price increases, especially from trusted brands.

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[SPEAKER_02]: Maybe if only because they aren't noticing, less than 5% of surveyed products were downsized.

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[SPEAKER_02]: But popular high volume items tended to be hit the hardest, why?

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[SPEAKER_02]: Because it's the hardest to notice.

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[SPEAKER_02]: Paper goods toilet paper paper towels and household staples like coffee were among the most affected.

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[SPEAKER_02]: Nobody who is listening has ever counted the amount of paper towels they have on their paper towel roll.

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[SPEAKER_02]: I would bet my life on that.

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[SPEAKER_02]: Now per unit price increases from shrink-flation, about 12% from paper towels, up to 32% for coffee.

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[SPEAKER_02]: You certainly would notice if the cost of your bag of coffee went up 32%.

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[SPEAKER_02]: But if they change the size of it, maybe you won't.

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[SPEAKER_02]: Downsizing disproportionately impacts households that buy these items regularly and also in bulk.

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[SPEAKER_02]: and fixes to transparency could potentially include mandatory downsizing labels, standard unit price labeling, consumer education, acknowledgement of what companies are doing.

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[SPEAKER_02]: In fact, France already mandate trinkflation disclosures, and so some U.S.

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[SPEAKER_02]: states now are starting to require unit price labels, but these rules are varying pretty widely.

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[SPEAKER_02]: Still, at a time when investors are concerned about the cost of things about rising sticker prices, one thing they may not know is you have to sometimes look beyond the sticker to see what you're really paying for the products that you love.

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[SPEAKER_02]: All right, every day now we receive questions from the comment section of the Invest Talk at a YouTube channel.

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[SPEAKER_02]: Here's one that just came in the other day from Jim Lehi, and it's on to your KBR.

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[SPEAKER_02]: It says, do you think KBR is worth buying at the current prices?

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[SPEAKER_02]: Will KBR formerly Kellogg Brown and Root is an American global engineering.

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[SPEAKER_02]: procurement, construction, and government services company, they operate across various sectors, energy, infrastructure, aerospace, defense, intelligence, mission support, all sorts of categories.

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[SPEAKER_02]: In a recent years though, right, they've shifted towards the higher tech and mission critical services, science, engineering, rather than purely heavy contracting work.

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[SPEAKER_02]: Now we'd recently announced that it is going to spin off mission technology solutions, MTS one of its business units as a separate public company leaving its core as a new KBR focusing on that sustainable technology solutions.

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[SPEAKER_02]: Now that one particular unit counter for about 7% revenue growth in Q2 2025 so pretty substantial they could have big backlog of operations here.

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[SPEAKER_02]: Now, here to date, this company's down 18% down 27% over the past 52 weeks.

20:34.993 --> 20:40.517
[SPEAKER_02]: It's not on a downward march since they November of 2024 is really since the election.

20:41.237 --> 20:44.079
[SPEAKER_02]: Now, it's government contract, government solution 76% of its business.

20:46.060 --> 20:52.001
[SPEAKER_02]: 53% of its revenue comes from the United States a lot of contract money from NASA.

20:52.021 --> 21:04.124
[SPEAKER_02]: They want a contract from NASA value to 2.46 billion with the extension potential for 3.6 billion large international energy products, projects rather large contracts with government entities.

21:04.184 --> 21:10.065
[SPEAKER_02]: And so as you see, government spending pairing back a bit, especially within the science

21:13.586 --> 21:16.269
[SPEAKER_02]: What you're seeing is the price pairing back as well.

21:16.309 --> 21:21.594
[SPEAKER_02]: It's becoming a bit cheaper 11.4 times forward looking price for earnings near its low of 10.7 times 12.6 times price to cash flow.

21:25.180 --> 21:32.045
[SPEAKER_02]: It's revenue growth slowing to a near crawl down to less than 5%, probably about 3.5% from 2024 to 2025.

21:32.746 --> 21:39.891
[SPEAKER_02]: And so the outlook doesn't look too great given the prevailing conditions under which this company needs to thrive, right?

21:39.911 --> 21:41.813
[SPEAKER_02]: They need large contracts.

21:41.853 --> 21:43.034
[SPEAKER_02]: They need government contracts.

21:43.134 --> 21:45.936
[SPEAKER_02]: It makes up 76% of their business.

21:45.956 --> 21:47.737
[SPEAKER_02]: And I don't see that changing anytime soon.

21:47.797 --> 21:50.940
[SPEAKER_02]: So I don't really see a way out of this downward trend.

21:51.420 --> 21:54.323
[SPEAKER_02]: I would definitely keep my eye on it, but I don't think now is a good time.

21:54.403 --> 21:56.806
[SPEAKER_02]: Kick your KBR, KBR ink.

21:58.147 --> 22:06.476
[SPEAKER_02]: Headed in New Break, when we come back more answers to your questions, a couple more stories to go over and hopefully, hopefully, another live call.

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[SPEAKER_02]: Feel free to give me a call any time throughout the show or any time really any time a day.

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[SPEAKER_02]: You know the number?

22:11.541 --> 22:12.202
[SPEAKER_02]: 888-99-Chun.

22:23.197 --> 22:43.495
[SPEAKER_05]: millions of downloads have proved there's value in every invest talk podcast call anytime 24-7 invest talk eight eight eight ninety nine chart So can we get another live call Richard from Santa Clarita listening on M 12 20 how can we help you?

22:44.135 --> 22:48.559
[SPEAKER_08]: I look I want to say I've sure got a good education.

22:48.579 --> 22:50.741
[SPEAKER_08]: I think from invest talk come on one

22:51.168 --> 22:51.888
[SPEAKER_08]: time listener.

22:52.168 --> 22:53.468
[SPEAKER_08]: So I really appreciate that.

22:53.989 --> 22:55.789
[SPEAKER_02]: Yeah, well, we thank you for being a long time with me.

22:57.469 --> 23:07.091
[SPEAKER_08]: My question is on the impact of the lowering of interest rates and the market and the economy and so forth.

23:07.711 --> 23:16.853
[SPEAKER_08]: We know that, you know, Jerome Powell has explained, you know, where he's coming from in the federal reserve based on

23:20.403 --> 23:38.418
[SPEAKER_08]: And I also understand you the importance of the independence of the Fed, but the president has made it quite clear that he would want to see interests want to see interest rates lowered considerably more than what the Fed did recently.

23:39.118 --> 23:46.604
[SPEAKER_08]: My question is on the wisdom of what the president is positioned in terms of significantly

23:48.810 --> 23:56.616
[SPEAKER_08]: You know, I remember Steve talking about that we had, you know, after a war at the last time it was, you know, this bad.

23:57.297 --> 24:03.702
[SPEAKER_08]: And basically, I remember him saying, what he began out of the debt, he played our way out of this.

24:04.522 --> 24:09.686
[SPEAKER_08]: And one of the impacts, I think, you know, concerns about really learning interest rates is inflation.

24:10.727 --> 24:17.432
[SPEAKER_08]: But I wonder if you could comment, yes, and, you know, causing more inflation and going

24:19.872 --> 24:44.009
[SPEAKER_08]: Is there is that the way to handle the horrendous debt we have would be, you know, the impact of significantly lowering the interest rates, which are there is always, there's an upside and downside of everything in order to get, maybe talk a little bit that and explain how that may work in terms of also dealing with our big national debt.

24:45.051 --> 24:45.992
[SPEAKER_02]: Yeah, that's a great question.

24:46.593 --> 24:48.815
[SPEAKER_02]: It's a very, very complicated answer.

24:49.015 --> 24:59.306
[SPEAKER_02]: So let's take a step back first and say, I would guarantee I'd bet a lot of money that any president would really like interest rates to be lowered during their administration.

24:59.326 --> 25:00.026
[SPEAKER_02]: The reason being,

25:00.767 --> 25:06.853
[SPEAKER_02]: because a president is inherently really concerned about the performance within their four years or their eight years, right?

25:07.493 --> 25:10.937
[SPEAKER_02]: And so lowering interest rates does a couple things.

25:11.017 --> 25:19.805
[SPEAKER_02]: It makes barring cost cheaper, not just for businesses, but mortgages, auto loans, credit cards, housing demand tends to rebound businesses, can finance projects.

25:20.306 --> 25:23.368
[SPEAKER_02]: You can have lower interest expenses, it frees up cash.

25:23.729 --> 25:25.370
[SPEAKER_02]: It essentially heats up an economy.

25:26.211 --> 25:32.733
[SPEAKER_02]: Now the problem is is in the long run, if an economy runs too hot, you end up with inflationary pressures.

25:33.153 --> 25:35.714
[SPEAKER_02]: You end up with a potentially weaker dollar.

25:35.754 --> 25:43.077
[SPEAKER_02]: You end up with a bunch of things that can lead to sustained periods of poor economic activity.

25:43.717 --> 25:53.520
[SPEAKER_02]: And so the Fed typically takes the long lens in which they have to manage labor and employment with inflation expectations and inflation itself.

25:54.838 --> 25:59.419
[SPEAKER_02]: And so the problem is is what happens when you overheat the economy?

25:59.779 --> 26:02.500
[SPEAKER_02]: Now, your question about, okay, can we inflate away the debt?

26:03.140 --> 26:06.841
[SPEAKER_02]: Kind of, I mean, inflation does reduce the real value of existing debt.

26:06.861 --> 26:18.944
[SPEAKER_02]: It makes it easier for governments to repay them in cheaper dollars, especially if wages and tax revenue rises with inflation and the government collects more nominal revenue to cover interest costs.

26:18.984 --> 26:21.865
[SPEAKER_02]: But at the same time, bondholders are losing purchasing power.

26:22.425 --> 26:26.546
[SPEAKER_02]: So they are going to demand as debt gets rolled over higher interest rates.

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[SPEAKER_02]: I think the core of it is, and I think people have a little bit of a misunderstanding here, is how much control the Fed has.

26:32.828 --> 26:37.449
[SPEAKER_02]: Because the Fed sets the overnight lending rate, which is a very, very short term rate.

26:38.229 --> 26:47.151
[SPEAKER_02]: There's a reason why historically speaking, the effect that a Fed cut of rates on mortgages kind of inconclusive.

26:47.732 --> 26:48.412
[SPEAKER_02]: Sometimes rates go up,

26:51.012 --> 26:54.293
[SPEAKER_02]: Like anything else, rates are market.

26:54.974 --> 27:04.438
[SPEAKER_02]: It doesn't matter what the Fed is lending out overnight to banks for if investors are all of a sudden saying, you know what, there's too much debt being borrowed here.

27:05.058 --> 27:06.819
[SPEAKER_02]: You're just rolling it over on the credit card.

27:07.519 --> 27:12.922
[SPEAKER_02]: We don't care what banks are able to borrow at, we aren't going to take on this level of risk.

27:13.702 --> 27:22.729
[SPEAKER_02]: And I think that's the thing that investors have to keep in mind here is that there isn't some omnipotent fed that sets a benchmark rate that everybody else adheres to at the end of the day.

27:23.189 --> 27:27.593
[SPEAKER_02]: It's a market like any other and market forces are going to decide what rates are going to be.

27:28.093 --> 27:28.613
[SPEAKER_02]: Thanks for the call.

27:29.254 --> 27:29.494
[SPEAKER_02]: All right.

27:29.514 --> 27:33.257
[SPEAKER_02]: Let's put it back to the investor's voice bank for call that came in earlier from Miami.

27:33.677 --> 27:36.900
[SPEAKER_03]: I just want to get your take on a stock DVS,

27:38.841 --> 27:44.163
[SPEAKER_03]: I had been following them since they went from OTC to the New York Stock Exchange and got them out of really low price.

27:44.944 --> 27:48.425
[SPEAKER_03]: I really like this company because they have little debt.

27:48.985 --> 27:58.529
[SPEAKER_03]: Eric Sprott was an early investor in them and they are silver and also some gold mining opportunities in the kitsalt region of Canada.

27:59.270 --> 28:06.633
[SPEAKER_03]: So with silver kind of following the long and making a push, I think this is like an interesting long-term play and I'm already in as a

28:07.780 --> 28:10.101
[SPEAKER_03]: I want to add a little bit more and just curious your thoughts.

28:10.442 --> 28:12.003
[SPEAKER_03]: Thank you very much for listening to the podcast.

28:12.623 --> 28:17.766
[SPEAKER_02]: It sounds core assets, including as was mentioned in the kit salt valley project.

28:18.266 --> 28:26.932
[SPEAKER_02]: That's what holds in big bulk properties of copper and gold potential and has acquired additional properties to expand its footprint across Canada.

28:27.632 --> 28:31.715
[SPEAKER_02]: Now, it is currently in an expiration stage, it's not yet in full production.

28:31.755 --> 28:36.758
[SPEAKER_02]: And so because of that, it's financials are reflecting a lot of those losses, right?

28:36.778 --> 28:45.143
[SPEAKER_02]: It's return on equity negative 22.7% as you can see if you look at its revenue, just about zero here.

28:45.203 --> 28:46.885
[SPEAKER_02]: Now, in anticipation,

28:47.645 --> 28:56.255
[SPEAKER_02]: of this coming online and anticipation of moving into the revenue phase, coming is up 55.42% of the past 52 weeks up 84.79% year to date.

29:03.524 --> 29:16.035
[SPEAKER_02]: Now, in September, they reported pretty strong results in terms of their expansion and expanded drilling program through acquisitions, financing and capital raises have gone pretty well, but there's still a lot to be seen here, right?

29:16.115 --> 29:17.836
[SPEAKER_02]: What are future drill results going to be?

29:18.997 --> 29:21.359
[SPEAKER_02]: As an exploration firm, they need capital infusion.

29:21.419 --> 29:25.643
[SPEAKER_02]: So how much delusion are you going to get as a shareholder with new issuances?

29:27.045 --> 29:48.328
[SPEAKER_02]: Company also hinges on commodity price cycles, gold, silver, copper, no, we talked about all the reasons why gold and copper specifically, you're primed to do pretty well of the next couple years, political instability, fear out there in the marketplace, the amount of copper that's going to be demanded for green energy revolution for AI infrastructure, all these things.

29:49.513 --> 29:51.755
[SPEAKER_02]: So, specifically, they probably are going to stand a benefit there.

29:51.775 --> 29:58.780
[SPEAKER_02]: But you also have to monitor what's going on with this business internally and that understand expiration stocks tend to be volatile.

29:59.060 --> 30:00.301
[SPEAKER_02]: They tend to be new sensitive.

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[SPEAKER_02]: And so, if you want to invest in this, expect very sharp moves, especially for a company that really can't control

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[SPEAKER_02]: much because they're a pre revenue enterprise here.

30:09.787 --> 30:28.337
[SPEAKER_02]: So I think if you want to get some exposure to the silver space, they're better ways to do it, especially given the fact that they aren't able to generate that revenue control and deal with some compression, compressing margin, they're really going to be at the whim of wherever the cycle is once they start generating that revenue.

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[SPEAKER_02]: So I would probably look elsewhere, very high risk, but potentially

30:36.901 --> 30:42.566
[SPEAKER_02]: It's like the other live call from Thomas from Santa Cruz as a question about M. O. D. The owner, you're looking to buy it.

30:42.806 --> 30:47.470
[SPEAKER_06]: Yeah, I'm calling about M. O. D. As well as the R. T. I'm looking to buy it.

30:48.050 --> 30:59.560
[SPEAKER_06]: I listened to the webinar today and I was already looking into each back company and basically after listen to you guys talk.

30:59.600 --> 31:01.602
[SPEAKER_06]: I'm very interested in getting into one of them.

31:02.178 --> 31:11.360
[SPEAKER_06]: So I was basically calling about these two to see good entry price for these and see if these align with kind of what you were getting at in your webinar.

31:11.640 --> 31:12.140
[SPEAKER_06]: Thank you so much.

31:12.520 --> 31:13.000
[SPEAKER_02]: Yeah, of course.

31:13.060 --> 31:14.180
[SPEAKER_02]: Well, thanks for coming to the webinar.

31:14.220 --> 31:15.000
[SPEAKER_02]: Thanks for calling in.

31:15.160 --> 31:18.861
[SPEAKER_02]: I did mention if anyone had any questions because we ran out of time with all the questions the Collins.

31:18.881 --> 31:19.921
[SPEAKER_02]: So I'm glad somebody listened.

31:20.421 --> 31:26.902
[SPEAKER_02]: But Modeen manufacturing is a US company and they specialize in thermal management solutions.

31:26.922 --> 31:27.942
[SPEAKER_02]: So it's an HVAT company, right?

31:27.962 --> 31:31.143
[SPEAKER_02]: Their products include heat exchangers, HVAT refrigeration systems,

31:32.063 --> 31:47.018
[SPEAKER_02]: and because heat and thermal transfer is so critical in vehicles industrial machinery climate control and also the data center business, moody's business is a bit sensitive to cap capex but they've really benefited a lot right they

31:47.819 --> 31:58.625
[SPEAKER_02]: have grown pretty significantly in terms of revenue from 2020 from 1.9 billion through the pandemic cycle, projected to be about 3 billion this year.

31:59.226 --> 32:05.549
[SPEAKER_02]: The same time margins expanding a bit 6.7 is where it's sat in 2024, projected to be about 8.5% this year net income, growing it

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[SPEAKER_02]: And the price reflects that, year to date up 22.53%, 3 months up 44.32%.

32:19.680 --> 32:24.442
[SPEAKER_02]: They have, like I said, been a big beneficiary of this industrial cycle and capex.

32:24.462 --> 32:29.424
[SPEAKER_02]: They've had pretty decent product innovation, games in thermal efficiency, lighter weight materials.

32:30.164 --> 32:42.228
[SPEAKER_02]: The macro regulatory environment looks pretty solid as well, from the energy efficiency and emission standpoint, loosening of some building codes, regulation, trying to help build these things and they have a big order book.

32:42.368 --> 32:43.609
[SPEAKER_02]: They have visibility into the order book.

32:44.169 --> 32:46.832
[SPEAKER_02]: They provide their engineering systems or often built to order.

32:47.032 --> 32:51.157
[SPEAKER_02]: So, you know, within the custom design space, they also do that as well.

32:51.177 --> 32:55.061
[SPEAKER_02]: This is a name we have looked at on and off for quite some time here.

32:55.602 --> 33:00.307
[SPEAKER_02]: But you know, you've got to remember it's a little bit of margin pressure on this from raw material, input costs.

33:00.868 --> 33:04.649
[SPEAKER_02]: Technologically, they do stay ahead in terms of thermal efficiency.

33:04.689 --> 33:06.790
[SPEAKER_02]: Their product line is very good.

33:07.870 --> 33:10.831
[SPEAKER_02]: Their balance sheet looks pretty decent as well.

33:10.851 --> 33:16.753
[SPEAKER_02]: It's 377 million in debt on a $7.6 billion market cap company.

33:17.633 --> 33:21.274
[SPEAKER_02]: And it's trading at a pretty decent valuation relative to where it's been.

33:21.294 --> 33:23.955
[SPEAKER_02]: I mean, it's still 26.2 times for looking earnings.

33:24.015 --> 33:29.797
[SPEAKER_02]: But a lot of these HVAT companies are going to be relatively expensive.

33:30.615 --> 33:33.196
[SPEAKER_02]: Now, I believe the other question was about VRT, correct?

33:33.736 --> 33:33.916
[SPEAKER_06]: Yeah.

33:34.396 --> 33:34.916
[SPEAKER_02]: Okay, cool.

33:35.436 --> 33:36.076
[SPEAKER_02]: Simply VRT.

33:36.296 --> 33:38.857
[SPEAKER_02]: Vertive holdings is another one that we've gotten questions on.

33:38.877 --> 33:40.858
[SPEAKER_02]: It's up 22, sorry, 32.79% year-to-date up 51.63% over the past 52 weeks.

33:40.878 --> 33:43.438
[SPEAKER_02]: It's 54 billion dollar market cap company, so quite a bit bigger.

33:51.260 --> 33:55.922
[SPEAKER_02]: little bit of debt only 3 billion in debt, but you know they got 1.2 billion in cash on hand.

33:56.382 --> 34:01.944
[SPEAKER_02]: Now they design manufacturer and service critical infrastructure, especially in data center.

34:01.964 --> 34:09.927
[SPEAKER_02]: They support a lot of these, excuse me, digital operations, so that these power systems, again, cooling systems, rack cabinet infrastructure.

34:10.267 --> 34:17.090
[SPEAKER_02]: Really, both of these companies represent the picks and shovel businesses that we actually talked about in our webinar today.

34:17.470 --> 34:27.715
[SPEAKER_02]: Now, for this company, there's a bit of a concern about slowing order book more so than the other company, MOD.

34:28.255 --> 34:41.241
[SPEAKER_02]: But revenue growth is solid too, right from 8 billion to 10 billion, 2024 into 2025, net income tripling in that time margins a bit better, 14.8% net margin worth projected to be this year.

34:41.901 --> 34:43.502
[SPEAKER_02]: But at the same time, a little bit more expensive, 31.7

34:47.624 --> 35:04.470
[SPEAKER_02]: 17.5 times price to book now from a diversification perspective about 78% of their business is critical digital infrastructure whereas the climate solutions business is about 56% of the money.

35:04.490 --> 35:11.933
[SPEAKER_02]: So it really comes down to do you want to be a bit more concentrated on data center capex or do you want to be spread out a bit more?

35:12.513 --> 35:13.853
[SPEAKER_02]: Do you want a larger company?

35:13.953 --> 35:19.055
[SPEAKER_02]: There would be VRT, do you want a smaller company that may be prime for a bit more growth, MOD?

35:19.575 --> 35:22.236
[SPEAKER_02]: I think they're both good companies, they're both companies we have been looking at.

35:22.276 --> 35:25.357
[SPEAKER_02]: They're both a bit expensive, but again, really comes down to what you do want.

35:25.377 --> 35:27.678
[SPEAKER_02]: Do you want that focus and data centers that go with VRT?

35:27.898 --> 35:32.999
[SPEAKER_02]: If you want a bit more wide angle, the bit more diversification, they'll probably go with MOD.

35:33.700 --> 35:34.160
[SPEAKER_02]: Thanks for the call.

35:34.720 --> 35:47.782
[SPEAKER_02]: All right, let's talk about, so I got to shut down, there are just hours left before a possible government shutdown and both parties remain deadlock trading blame over failed negotiations.

35:48.913 --> 36:03.355
[SPEAKER_02]: Federal agencies will lose funding, starting at Wednesday at 12,001 AM, triggering closures of parks, museums, many offices, essential workers, so military or traffic controllers must stay on the job, but won't receive pay till funding resumes.

36:04.096 --> 36:09.697
[SPEAKER_02]: Social Security and Medicaid, or sorry, Medicare, they will continue, but payments could potentially face delays.

36:09.737 --> 36:16.518
[SPEAKER_02]: Now, shutdowns are less frequent now than they were in the 80s and 90s, but they have tended to last a bit longer, 2018 and 2019.

36:18.850 --> 36:20.392
[SPEAKER_02]: The government shut down for 35 days.

36:20.532 --> 36:26.818
[SPEAKER_02]: Now, it's not scary, but economic impacts, they're usually pretty limited.

36:28.119 --> 36:30.061
[SPEAKER_02]: However, they could be a bit worse this time.

36:30.161 --> 36:30.442
[SPEAKER_02]: Why?

36:31.708 --> 36:34.349
[SPEAKER_02]: Because when the government is shut down, reports do not go out.

36:34.389 --> 36:37.951
[SPEAKER_02]: There will be a delay in the release of key data jobs inflation.

36:38.372 --> 36:45.035
[SPEAKER_02]: Wage it's things that market participants and the Fed in particular are looking for before they decide their next move.

36:45.075 --> 36:46.516
[SPEAKER_02]: Data gaps can really complicate.

36:47.036 --> 36:49.458
[SPEAKER_02]: The Fed's already contentious industry decisions.

36:50.257 --> 36:51.957
[SPEAKER_02]: Now, financial markets often shrug, right?

36:51.998 --> 36:55.538
[SPEAKER_02]: The S&P rose to day, rose 10% during the last shutdown.

36:56.359 --> 37:02.981
[SPEAKER_02]: And the dollar is historically weakens, as probably it's a bit embarrassing that we can't come to a deal to keep a government open.

37:03.041 --> 37:09.602
[SPEAKER_02]: Certainly, you see investors want to leave to more green pastures in these types of situations.

37:10.123 --> 37:15.124
[SPEAKER_02]: But also about 900,000 federal workers, 40% of the workforce will be furloughed.

37:15.644 --> 37:18.085
[SPEAKER_02]: Temporarily pushing up unemployment.

37:18.785 --> 37:24.187
[SPEAKER_02]: Now, past shutdowns saw quick revounds with back pay, but this time job loss is in hiring phrases.

37:24.487 --> 37:25.047
[SPEAKER_02]: They may linger.

37:25.727 --> 37:31.429
[SPEAKER_02]: One B-director Russell Vaude's urging agencies to treat the shutdown as it chants to permanently cut staff and programs.

37:31.469 --> 37:39.212
[SPEAKER_02]: Now legal hurdles exist, but the administration may move quickly and may make changes that are hard to reverse even if later ruled unlawful.

37:39.752 --> 37:40.132
[SPEAKER_02]: Certainly,

37:41.378 --> 37:52.021
[SPEAKER_02]: Certainly any time the government shuts down, it's not something to be proud of, it's not a good thing, but as we've seen in shutdowns past, they tend to be short-lived and the economic damage tends to be pretty limited.

37:52.541 --> 38:09.205
[SPEAKER_02]: Now, on the next invest talk, we will look into this story, Roth or Bust, the $145,000 401k ketchup rule change for 2026, starting next year workers aged 50 and older, who earned over $145,000 in a previous year, will be required to make their 401k ketchup contributions

38:11.665 --> 38:14.870
[SPEAKER_02]: That's tomorrow, but for now I'm Luke Guerrero, and I'm ready to take your calls.

38:14.910 --> 38:18.875
[SPEAKER_02]: This is our final break, so if you want to talk to me, give me a call at 808-99-chart.

38:31.703 --> 38:32.904
[SPEAKER_05]: numbers are in.

38:33.525 --> 38:38.590
[SPEAKER_05]: Invest talk downloads have now surpassed 61 million.

38:39.111 --> 38:47.340
[SPEAKER_05]: Justin Klein and Luke Guerrero provide unbiased answers to your finance and investment questions.

38:48.021 --> 38:49.602
[SPEAKER_05]: Invest talk 88899 chart.

38:52.823 --> 39:07.957
[SPEAKER_00]: I was wondering, with a Roth IRA or regular IRA, if you buy MLPs, do you still have to deal with K1 or do K1's not apply if it's in an IRA kept for the count?

39:08.598 --> 39:10.420
[SPEAKER_00]: Thanks so much for answering my questions.

39:11.366 --> 39:18.188
[SPEAKER_02]: So in a Roth IRA, investing in an MLP will still generate that K1 each year and it'll go to your custodian.

39:18.988 --> 39:24.669
[SPEAKER_02]: And if the Roth IRA share the UBTI from all K1s is under a thousand, you're fine, no taxes are triggered.

39:24.749 --> 39:26.269
[SPEAKER_02]: But it's greater than 1,000.

39:27.350 --> 39:36.732
[SPEAKER_02]: Well, the Roth IRA still must file that form and you got to pay taxes out of the Roth IRA assets, even though Roths are otherwise tax-exempt.

39:37.212 --> 39:37.792
[SPEAKER_02]: The reality is,

39:38.751 --> 39:48.160
[SPEAKER_02]: you're not gonna get away from it from the tax man just because you're holding it in the IRA or the Roth IRA or this happens in both traditional and Roths even though Roths are usually tax-free.

39:48.520 --> 39:57.529
[SPEAKER_02]: That's why MLPs are usually better to hold in a regular brokerage account why people often buy MLP ETFs or mutual funds instead of holding them in those accounts.

39:58.250 --> 39:58.990
[SPEAKER_02]: Complicate a question.

39:59.511 --> 39:59.991
[SPEAKER_02]: Thanks for the call.

40:00.312 --> 40:00.852
[SPEAKER_02]: Before we head off.

40:01.653 --> 40:02.374
[SPEAKER_02]: The mention of U.S.

40:02.494 --> 40:04.656
[SPEAKER_02]: credit markets are running hot, right?

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[SPEAKER_02]: Investors are piling into corporate debt, even though yields are nearing multi-decade lows.

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[SPEAKER_02]: And this is because the hunger for bonds has really some on a wall street warning that markets are vulnerable to shocks, right?

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[SPEAKER_02]: They're priced for affection.

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[SPEAKER_02]: They were two pretty sudden bankruptcies, tri-color and auto parts maker first brands.

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[SPEAKER_02]: And they got bond investors a bit scared to raise some red flags.

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[SPEAKER_02]: Hard marksmoked tree cautions that excess optimism often breeds poor quality lending.

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[SPEAKER_02]: The worst loans are made at the best of time to make sense if times are good you don't think things are going to be bad, the terms of your loan may be a little bit more loose.

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[SPEAKER_02]: A Barkley's analyst likened the situation to Star Wars's trash compactor scene, when the risks are compressing on all sides, even though risks in that scene are compressing on two sides, not all sides, but we'll leave it to that.

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[SPEAKER_02]: Now, investment grade sprints have shrunk a bit, just 74 percentage points over treasures.

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[SPEAKER_02]: That tightest since 1998.

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[SPEAKER_02]: Junk spreads are hovering near 2007, lows and investors expect the Fedor rate cut to push yields even lower.

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[SPEAKER_02]: That expectation has fueled a record 210 billion dollars in investment grade bond issuances in the month of September.

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[SPEAKER_02]: And it's not just the issuance side.

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[SPEAKER_02]: Biodec TV is heating up.

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[SPEAKER_02]: With silver like in talks for a $50 billion take over of EA, which was announced, could be potentially the largest LBO ever.

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[SPEAKER_02]: Now, Tricol is collapse exposed some risks in asset backed debt, and the buy here pay here lending model where week oversight leaves a lot of room for abuse.

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[SPEAKER_02]: And rising defaults aren't just limited to autos, you're seeing private credit, it's flashing warning signs with loans and you're in two trillion dollars and payment in kind deals on the rise.

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[SPEAKER_02]: Roughly 11% of business development company loans now paying interest and I'll use rather than cash.

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[SPEAKER_02]: And Fitch's private credit default rate hit 9.5% in July.

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[SPEAKER_02]: So the big question is, can inflation ease in the labor market hold long enough for the Fed to meaningfully cut to really pressure?

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[SPEAKER_02]: Or will the hot credit market tip into tomorrow's default wave?

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[SPEAKER_02]: Now, what I mentioned for those of you who did not join us, we had

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[SPEAKER_02]: Well, over 100 people join us for our Invest Talk webinar, where we went over AI, not just what the theme has been over the past couple years, but how you can better invest into it while managing and hedging risks.

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[SPEAKER_02]: We talked about the picks and shovel businesses, the electric infrastructure, the industrial infrastructure, and

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[SPEAKER_02]: and various sectors across sectors how the benefits of the AI revolution and all of this capex may benefit different companies outside of your traditional themes.

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[SPEAKER_02]: We have plenty of great questions.

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[SPEAKER_02]: We included the questions as well in our webinar recording.

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[SPEAKER_02]: Now, if you weren't lucky enough fortunate enough to have the time to join us for our webinar and you really wanted to give it a listen, give it a watch.

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[SPEAKER_02]: It will be available on our YouTube channel in the coming days.

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[SPEAKER_02]: I haven't checked.

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[SPEAKER_02]: It might be available now.

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[SPEAKER_02]: Either way,

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[SPEAKER_02]: Keep an eye out for when it comes available on our YouTube channel just head over to Invest Talk and type Invest Talk with two T's.

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[SPEAKER_02]: I'm Le Guerrero and Justin and I thank you for joining us for another episode of Invest Talk.

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[SPEAKER_02]: Today's show made you think about your own financial picture, your investments, your taxes, your retirement, and whether all really is working together, we would love to speak with you.

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[SPEAKER_02]: At KPB Financial, we offer a no-cost portfolio reviews.

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[SPEAKER_02]: no commitment, confidential, just go over to invest.com and click on the portfolio review button.

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[SPEAKER_02]: We do post YouTube specific content over there.

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[SPEAKER_02]: This is Invest Talk.

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[SPEAKER_01]: Good night.

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[SPEAKER_01]: Specifically, nothing said she'll be taken to be investment advice.

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