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

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[SPEAKER_02]: 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,

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[SPEAKER_01]: Good afternoon fellow investors and welcome back to Invest Talk.

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[SPEAKER_01]: This is our Friday, January 23rd, 2026 edition of Invest Talk and we've closed another week.

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[SPEAKER_01]: It's only the third full week of the year, but a lot has happened.

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[SPEAKER_01]: The dollar is rolling over a big time, you're seeing gold, silver, continue to rally.

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[SPEAKER_01]: Geopolitical tensions continue to arise.

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[SPEAKER_01]: You're getting protests on the street.

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[SPEAKER_01]: So a lot to have a lot happening in today's world.

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[SPEAKER_01]: And we are here to unpack all of it.

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[SPEAKER_01]: I want to hear your questions about whatever is on your mind.

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[SPEAKER_01]: Money related is at a particular sector, a particular company, asset class,

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[SPEAKER_01]: Maybe it's a comment of what's happening in the world where it's headed.

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[SPEAKER_01]: Whatever is on your mind, give us a call eight to eight, 99 charges, have you been asked your question on today's show.

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[SPEAKER_01]: Now, in just a bit, we'll talk about today's Mark performance and run down the show topics, that we'll hit on for the hour, but as usual, we'll tackle this call a question now.

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[SPEAKER_04]: Hey, Justin Luke, it's a John from Georgia.

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[SPEAKER_04]: I was just wondering what you guys thought about Lulu Lennon?

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[SPEAKER_04]: I know it's been falling for a while.

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[SPEAKER_04]: I was wondering what a good price point would be to pick it up, or if it's even worse, they're going to thank you for everything.

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[SPEAKER_01]: Alright, looking at Lulu Lemman, I think I'm going to explain what they do.

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[SPEAKER_01]: One of the largest F-leisure names out there, $21 billion market cap, and it was a darling for a while.

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[SPEAKER_01]: But...

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[SPEAKER_01]: Growth is slow and it actually is turned negative.

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[SPEAKER_01]: 2025, full year earnings.

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[SPEAKER_01]: Remember their fiscal year, I think is different than most of the companies, but their fiscal 2025 was $14.64 in earnings.

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[SPEAKER_01]: This fiscal year, $20.6, it'll be $13.4 down 11%.

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[SPEAKER_01]: And then down another 4% in the following year, a lot of competition.

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[SPEAKER_01]: out there and that is certainly squeeze that their profits, their sales, but they're still a very, very profitable business.

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[SPEAKER_01]: Be cash flow 1.1 billion, return equity 40% return on best to capital 29% all those are very, very strong numbers and it provides value to about 23 billion.

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[SPEAKER_01]: So about a 5% free cash flow yield, which that's probably the biggest knock from evaluation standpoint is that.

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[SPEAKER_01]: It's a thought high yield for kind of a business that is shrinking overall.

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[SPEAKER_01]: Now, what are they doing with the cash flow that they're making?

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[SPEAKER_01]: They are buying back shares.

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[SPEAKER_01]: And that's one thing I really, really like.

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[SPEAKER_01]: They're paying that down in a really deliberate way.

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[SPEAKER_01]: And overall, I kind of like it for the longer term.

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[SPEAKER_01]: Now,

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[SPEAKER_01]: Technically, it's still in a longer-term downtrend, even though it did find a bottom, kind of a triple bottom around 160 rallied recently, although if the 225 now is pulled back into the 190 area.

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[SPEAKER_01]: And I still think it's a pretty good value here, even if their business is slowing.

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[SPEAKER_01]: You're talking about $12, $13 an earnings this year and a $191 stock.

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[SPEAKER_01]: So, you know,

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[SPEAKER_01]: You know, that's okay, but I think it's the quality of the brand that that I think is staying power.

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[SPEAKER_01]: So this is a name that I would probably deliberately add to slowly over becoming years because I'm like the brand is going anywhere.

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[SPEAKER_01]: And I do think that it's out of at a good.

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[SPEAKER_01]: What we call margin of safety in Warren Buffett terms, you want a margin of safety when you're buying names, and so I think it's there now once again, it's not going to double in a short period of time.

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[SPEAKER_01]: I think it needs to find the bottom, find that earnings leveling off, and I think that's all you need if earnings can level off around here and start to grow once again.

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[SPEAKER_01]: then I think there's a good amount of upside back up into potentially a 300 level over the number of years.

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[SPEAKER_01]: So I like the profitability, I like the balance sheet, I still like the business, but going to be I think some time to turn it around.

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[SPEAKER_01]: Now we have a lot of to cover up next 45 minutes or so and time for meeting will get to all of it.

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[SPEAKER_01]: My main focus point is about big tech earnings and the profitability test, especially around AI.

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[SPEAKER_01]: So we'll look at what to expect as we head into this earnings season and it's a very important earnings season, especially

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[SPEAKER_01]: how these hyperscalers and the companies around them, how they view the current trajectory of CapExpend, of AI revenue, of the major projects that they have in store, whether they're going to be finished this year, delayed, what new projects are going to be coming on board, etc.

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[SPEAKER_01]: All that is going to have large ramifications on the market.

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[SPEAKER_01]: So we'll dig into that story

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[SPEAKER_01]: includes the big beautiful bill as President Trump called it, but really what impact is that going to have in 2026?

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[SPEAKER_01]: Fiscally, we're in what we call fiscal dominance, where yeah, you can talk about the Fed all you want, but ultimately they're there to lookify the treasury market, make sure that it is functioning and yeah, they'll raise the lower rates, but overall,

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[SPEAKER_01]: What's going to matter far more is it's going to be spending more, are they taxing more or less?

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[SPEAKER_01]: What happens is the fiscal side of the balance sheet, especially compared to the previous year, because that's how you calculate GDP growth, earnings that feeds in earnings growth, et cetera.

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[SPEAKER_01]: So we'll dig into what that means in 2026.

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[SPEAKER_01]: And then it was something I wanted to get to yesterday, which is private credit and some data around where some of the big investors are are going with their money within that space.

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[SPEAKER_01]: So that's what I want to talk about, but

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[SPEAKER_01]: More importantly, we'll always be what you want to talk about.

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[SPEAKER_01]: We have voice bank calls, one is on advice for a new graduate in financial management, as well as Grokgov, GRACO, Incorporated, and we also have some questions that came in via the Vestock YouTube channel as well.

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[SPEAKER_01]: And of course, I welcome your finance and investment questions right now.

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[SPEAKER_01]: Now it's Friday.

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[SPEAKER_01]: We still have things to look into before we wrap up the day.

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[SPEAKER_01]: Now we are going into a quick break and please remember that you can call any time and leave your question on the Invest Talk Voice Bank and you're really listening via the live stream or an AM1220 in the Bay Area, you can call right now at 80-909 chart.

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[SPEAKER_01]: Hang on because I'm going to get today's market activity coming up next.

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[SPEAKER_07]: It's a new year, and you may have decided that it's time to get serious with your investment portfolio.

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[SPEAKER_07]: Justin Klein and Luke Guerrero of KPP Financial are ready to help.

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[SPEAKER_07]: Have you heard about Parallel investing?

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[SPEAKER_07]: That's where the firm's principles invest their own money in the exact same investment programs at the same price and percentages as their clients.

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[SPEAKER_07]: parallel investing differentiates KPP financial because it aligns the interests of KPP principles with those of their clients as they each share the same risks and potential for success.

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[SPEAKER_07]: Learn more anytime at investalk.com just click on portfolio review.

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[SPEAKER_07]: The Invest Talk phone lines are open waiting for your financial investment

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[SPEAKER_07]: The Invest Talk phone lines never closed, and now Justin Klein is here taking your calls live.

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[SPEAKER_07]: Invest Talk 88899 chart.

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[SPEAKER_01]: 899 chart, 899, 2, 4, 2, 7, 8.

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[SPEAKER_01]: So I could do an ask your question on today's show notes.

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[SPEAKER_01]: Take a look at the market as we wrap up the week.

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[SPEAKER_01]: And it was kind of the home day.

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[SPEAKER_01]: The S&P only up 2.0.03% so pretty much a flat day there.

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[SPEAKER_01]: The dial was down about 58 basis points, then 285 points.

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[SPEAKER_01]: And then NASDAQ was up 65 points up about a quarter of one percent.

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[SPEAKER_01]: names that can video up one and a half Microsoft up three met up one point seven Tesla flat Google down brought Tom down a little bit apple flat as well but you had some weakness out of areas like finance you had capital one down seven and a half percent on earnings Goldman Sachs down three point seven five on the day health care as well either Lily down two percent on the day and that's where those are the two areas where there was a lot of red

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[SPEAKER_01]: You also had Intel had a pretty big pullback on earnings as there's a lot of expectations for business improving and it proved but not as much as the market had hoped.

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[SPEAKER_01]: And so that had a pretty big drop.

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[SPEAKER_01]: But really the story of the day is gold and silver and the dollar.

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[SPEAKER_01]: If I'm really summing it up, the dollar is finally rolling over.

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[SPEAKER_01]: And how much of this is the geopolitics that are going on in Davos right now?

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[SPEAKER_01]: you have multiple EU countries saying they have or going to sell their treasuries.

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[SPEAKER_01]: Other countries who have bought a lot of US assets, especially index funds, tech companies, Swiss national bank is one of them, you know, are they, are they, they're investing.

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[SPEAKER_01]: and moving to overseas assets.

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[SPEAKER_01]: You're seeing that as well.

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[SPEAKER_01]: They're moving to golden silver with gold is right near five thousand dollars an ounce up one point three percent on the day a new record high in silver hit that one hundred dollar number that everybody had been talking about

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[SPEAKER_01]: Not a shock.

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[SPEAKER_01]: I thought it would consolidate a little longer, but, you know, with the geopolitics, it accelerated even though it was overbaged a few weeks ago and is continued to the upside.

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[SPEAKER_01]: WTI was up 2.9% and it's pretty clear that once again, what happened in Venezuela, that oil is being taken off the market, that was hitting the market now.

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[SPEAKER_01]: It's not, you know, a lot of the companies in Venezuela are not sending ships out because they don't want them confiscated.

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[SPEAKER_01]: right and so that's what's happening in the short term and that's why you're seeing oil prices go up as well.

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[SPEAKER_01]: You had what happened with the dollar index was 0.8% fresh session lows or near session lows.

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[SPEAKER_01]: It posted it's worst week since last May last May this is the worst week for the dollar since last May.

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[SPEAKER_01]: I don't think it's a coincidence what's happening in Davos obviously a lot of

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[SPEAKER_01]: Geopot political infighting and that is pushing the dollar down yields were up one to two basis points across the curve not a huge move, but you can just see interest rates move up their inch up gradually.

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[SPEAKER_01]: So that was the market today as we closed this third full week of 2026 and next week we have more earnings and we have Fed Day, Fed Week, excuse me.

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[SPEAKER_01]: So we'll get some Fed announcement.

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[SPEAKER_01]: It's very unlikely they'll change rates, but what do they say about the overall economy, about the path of policy, drone power only has three more meetings this one and two more.

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[SPEAKER_01]: in the bag, they're not going to move rates, but the market could react to hints of the next two meetings.

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[SPEAKER_01]: And obviously, as I'll get to it a little later, what's going on with tech and earnings will have a large impact on the broader market.

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[SPEAKER_01]: Now let's briefly mention the newest KPP premium news that I wish we'll be distributed tomorrow in this week in the KP Insights section.

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[SPEAKER_01]: We discussed the current market update.

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[SPEAKER_01]: In the stock section, the mention of chip maker and a tech company, and in the portfolio management section, we touch on fundamental analysis.

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[SPEAKER_01]: And if you're interested in learning more visits at invest talk.com, the subscribe, the newsletter will come to your inbox on Saturdays.

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[SPEAKER_01]: Those keep things rolling and play another listener question from eight to eight, nine you nine chart.

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[SPEAKER_06]: Hi, guys.

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[SPEAKER_06]: This is Dennis from East Coast of Iowa in an era where we'll go investing seems to be going from just

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[SPEAKER_06]: automated rebalancing to with AI to full agency AI in the not so distance future.

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[SPEAKER_06]: What advice would you give to a bright young man who's about to graduate with a degree in financial management and interest in wealth management?

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[SPEAKER_06]: Thank you.

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[SPEAKER_06]: We'll look forward to your reply on the podcast.

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[SPEAKER_06]: Thanks.

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[SPEAKER_01]: Well, I'm from believer that

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[SPEAKER_01]: I don't think AI is going to replace investment advice, investment management, because there's always going to be that human nature to fear and greed that goes into investments.

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[SPEAKER_01]: There's going to be themes that could overcrowded, and then it reverses those expectations are dashed.

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[SPEAKER_01]: And it takes a level of,

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[SPEAKER_01]: personal experience and and data.

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[SPEAKER_01]: And I think it will be like like a lot of things that will augment and already it's we're doing it right now.

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[SPEAKER_01]: We're using AI to augment our investment management and to help us in research to make it make it faster.

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[SPEAKER_01]: Go a little deeper, etc.

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[SPEAKER_01]: And so if I'm giving advice to somebody

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[SPEAKER_01]: Learn AI, and this is everybody who's in a white culture profession, is embrace AI, learn how to speak to it, learn how to get the most out of it, if you can go to an employer and say, here is how I'm using AI, here is how we're making sure that the data it's giving us is correct, here is how we're applying it to our process, and this is going to make the decision making,

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[SPEAKER_01]: process faster, more efficient, more accurate, et cetera, then there's a lot of value there.

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[SPEAKER_01]: But like all things, AI is not going to be a problem solver.

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[SPEAKER_01]: It's going to, it itself.

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[SPEAKER_01]: It's going to take a level of humans to say, okay, this part of what they're giving us is good.

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[SPEAKER_01]: This part doesn't seem right, so let me double check that.

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[SPEAKER_01]: And

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[SPEAKER_01]: ultimately use it as a tool for better and improvement and if they can do that and they can bring that to a firm then they're going to have a lot of value.

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[SPEAKER_01]: So that's the way I would go about building a career within this space.

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[SPEAKER_01]: Now we're heading to a break and ready for your calls right now.

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[SPEAKER_01]: So you can be called now at 8.99 chart.

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[SPEAKER_07]: In the early days, in Vestock was Jerry Klein and Steve Peasley.

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[SPEAKER_07]: Now the torch has been passed and a new generation of posts is on the job.

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[SPEAKER_07]: Justin Klein and Luke Guerrero.

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[SPEAKER_07]: So when you've got finance and investment questions, don't forget to call in Vestock.

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[SPEAKER_05]: 888-99-Chart.

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[SPEAKER_05]: Long, long time, Mr. to the show here, probably for 15 years or so.

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[SPEAKER_05]: Quick question for you, gentlemen.

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[SPEAKER_05]: I need some exposure to energy.

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[SPEAKER_05]: Don't know what would be best.

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[SPEAKER_05]: I know a lot of places you say are nuclear and different things, but I'm kind of lost.

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[SPEAKER_05]: I found a couple of companies that are wondering or building energy.

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[SPEAKER_05]: And the other one I've kind of found, I believe it's a French company, Snyder Electric.

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[SPEAKER_05]: I was wondering if either one of those would be a good play or anything good to buy of those, or if I should keep looking maybe for an ETF like Excel E or something.

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[SPEAKER_05]: Thank you for your help.

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[SPEAKER_05]: Look forward to listening to you on the show.

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[SPEAKER_05]: Have a great day.

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[SPEAKER_01]: Alright, well looking, thank you for your loyalty of the last 15 years, glad you're getting a lot out of the show and your voice all the time, so appreciate the calls.

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[SPEAKER_01]: Now, you're looking for energy exposure, then the unfortunate thing is the two names that you asked about are certainly not.

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[SPEAKER_01]: HPE Hill Packard Enterprises is a global edge to cloud company.

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[SPEAKER_01]: It's in IT technology, enterprise solutions, et cetera.

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[SPEAKER_01]: This really has nothing to do with energy.

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[SPEAKER_01]: Now, shine your electric, even though electric's in the name,

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[SPEAKER_01]: is not really energy either.

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[SPEAKER_01]: This is more of a industrial name.

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[SPEAKER_01]: So it has energy management automation, but you're talking about in regards to AI data centers, cloud infrastructure, modernization of electric grid, et cetera.

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[SPEAKER_01]: So when you think of energy, when I think of the energy sector, that's usually more oil and gas companies,

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[SPEAKER_01]: which index you're talking about or which classification you're talking about, some call it materials, some call it energy, we call it energy at KPP, anything you're re-name related.

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[SPEAKER_01]: So, you know, that's, that's what you're looking for, those type of names.

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[SPEAKER_01]: That may be it's companies that are, whose, whose main customer are those EMP companies, right, the exons and Chevron's of the world, or maybe smaller EMP companies.

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[SPEAKER_01]: So there's the oil service side that's what kind of what I'm talking about there.

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[SPEAKER_01]: So there's definitely difference categories of energy, but the companies that you spoke of are simply not it.

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[SPEAKER_01]: So you really just need to broaden out your search, the sub-industries, like I said, our vast.

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[SPEAKER_01]: You can talk about coal, coal is also another kind of sub-industry.

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[SPEAKER_01]: You can also in a

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[SPEAKER_01]: You could also think of transportation, so pipeline companies are those within the energy space as well.

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[SPEAKER_01]: So keep searching because the two you named are certainly not energy.

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[SPEAKER_01]: Thanks for the call.

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[SPEAKER_01]: Let's go to a voice call another one.

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[SPEAKER_03]: Hey Justin, I look thank you so much for a lovely program.

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[SPEAKER_03]: A very educational and very helpful.

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[SPEAKER_03]: I do have one stock which I have kept on my voice.

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[SPEAKER_03]: We'd like to know what your take is for and link up for this year.

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[SPEAKER_03]: Thank you so much.

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[SPEAKER_01]: We're looking at FFI V. This is F5.

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[SPEAKER_01]: This is a name that recently topped around 330 or $40 per share.

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[SPEAKER_01]: It's come off considerably and it's down 25% from its 52 week high.

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[SPEAKER_01]: That high was back in, let's see what it was that.

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[SPEAKER_01]: Back in October.

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[SPEAKER_01]: Frankly, a lot of tech names peak then.

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[SPEAKER_01]: And this is a provider of optimization technology for delivery of network-based applications, performance and network services.

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[SPEAKER_01]: So it's in the internet network space, delivery of data, et cetera.

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[SPEAKER_01]: And it's a business that historically is grown pretty steadily.

20:27.901 --> 20:28.602
[SPEAKER_01]: So I like that.

20:29.983 --> 20:35.689
[SPEAKER_01]: Growth is slow, though.

20:35.939 --> 20:51.180
[SPEAKER_01]: If you look at the balance sheet and has a cleaning balance sheet nearly a billion dollars in just cash sitting there, free cash will around $900 million, so pretty solid 7% or so free cash will yield return on equity right around 21%.

20:52.072 --> 20:55.542
[SPEAKER_01]: So certainly good profitability there.

20:55.582 --> 20:57.427
[SPEAKER_01]: Now it kind of stopped buying back shares.

20:57.448 --> 21:01.399
[SPEAKER_01]: I would like it to resume that in a major way, but you're not really getting that.

21:01.439 --> 21:06.975
[SPEAKER_01]: But enterprise value even going forward based on forward looking earnings is right around 12, which is,

21:07.360 --> 21:07.780
[SPEAKER_01]: Not bad.

21:08.121 --> 21:13.245
[SPEAKER_01]: It's not that expensive, but it's also not the cheapest it's been over the last 10 years.

21:13.325 --> 21:18.170
[SPEAKER_01]: Usually it's cheap when it's creating kind of blitz hen on that scale.

21:18.750 --> 21:20.572
[SPEAKER_01]: So, and the teching goals are poor.

21:20.652 --> 21:27.979
[SPEAKER_01]: You've had that initial rally or sorry, initial sell off from October until the bottom here in late November.

21:28.919 --> 21:37.367
[SPEAKER_01]: And it's bounced a little bit, but remains below all the major moving averages.

21:37.347 --> 21:39.269
[SPEAKER_01]: It's not over cheap.

21:39.710 --> 21:41.793
[SPEAKER_01]: It's could have been a downtrend.

21:42.754 --> 21:47.700
[SPEAKER_01]: It's a name you should have in your watch list, but I would be much more patient here.

21:47.961 --> 21:52.286
[SPEAKER_01]: Below $200 per share, that's where I would think about picking up F5.

21:53.047 --> 21:55.510
[SPEAKER_01]: F5 is the symbol.

21:55.530 --> 21:56.892
[SPEAKER_01]: Thanks for the call.

21:57.158 --> 21:59.382
[SPEAKER_01]: Now the next and best talk we'll dig into this story.

21:59.562 --> 22:10.140
[SPEAKER_01]: The silver industrial boom, goal is getting the big headline, attention, but silver is quietly surging due to industrial demand, solar panels, and electronics.

22:10.801 --> 22:17.192
[SPEAKER_01]: That story is for Monday, but for now, I'm Justin Klein and ready to take your calls at 8 to 899 chart.

22:26.065 --> 22:37.818
[SPEAKER_07]: weekend is here or almost here, but you've got finance and investment questions, so step up and call in, invest talk, 88899 chart.

22:41.042 --> 22:43.925
[SPEAKER_01]: They spent billions on infrastructure.

22:44.465 --> 22:55.077
[SPEAKER_01]: Did they make any money back?

22:57.014 --> 23:19.933
[SPEAKER_01]: Now, in the fourth quarter, the investment world started to reflect, reflect on the animal spirits that brought the market drastically higher from the April lows, really driven by results from AI companies and those around it.

23:22.512 --> 23:25.997
[SPEAKER_01]: But the question as we enter this year is what is 26 look like.

23:26.458 --> 23:27.659
[SPEAKER_01]: And that's what the market cares about.

23:27.679 --> 23:31.064
[SPEAKER_01]: The market frankly doesn't care much about last year anymore.

23:33.348 --> 23:36.933
[SPEAKER_01]: Remember, investing is through the windshield, not the rear view mirror.

23:37.013 --> 23:39.216
[SPEAKER_01]: Everyone, love you will look in the rear view mirror.

23:39.957 --> 23:44.023
[SPEAKER_01]: What in the reality you should be looking straight ahead and that's what markets tend to do.

23:46.927 --> 23:51.574
[SPEAKER_01]: So what will 2026 look like?

23:52.668 --> 23:56.773
[SPEAKER_01]: The demand for AI CapEx companies will remain strong.

23:58.996 --> 24:02.300
[SPEAKER_01]: Google and Meta, they're betting a lot on AI.

24:03.181 --> 24:07.006
[SPEAKER_01]: If you look at the charts, you'll know which one's winning.

24:07.026 --> 24:07.787
[SPEAKER_01]: Pintint, it's Google.

24:09.269 --> 24:21.865
[SPEAKER_01]: For now, but then the question is, will revenue from AI remain limited?

24:22.570 --> 24:27.095
[SPEAKER_01]: relative to hundreds of millions of dollars of CapExpend.

24:30.778 --> 24:31.659
[SPEAKER_01]: So will that catch up?

24:33.301 --> 24:39.948
[SPEAKER_01]: Will the applications, will there be killer apps beyond just coding and chat bots?

24:43.892 --> 24:46.094
[SPEAKER_01]: Now, those areas are gonna do very well.

24:47.255 --> 24:50.839
[SPEAKER_01]: But the promise was much bigger that AI was going to be

24:51.680 --> 24:57.166
[SPEAKER_01]: implemented for large companies in a major way and solve all types of problems.

24:59.669 --> 25:15.346
[SPEAKER_01]: But the reality is, a lot of those efforts have fallen on their face, led to a lot of fatigue and many companies and workers are disappointed as it now.

25:15.366 --> 25:19.510
[SPEAKER_01]: So what will investors be looking for in these earnings headlines?

25:21.380 --> 25:27.789
[SPEAKER_01]: and their prognostications of word demand and cap expend will be for the year.

25:30.273 --> 25:33.036
[SPEAKER_01]: The one thing that we're looking at are delays.

25:35.280 --> 25:45.514
[SPEAKER_01]: It's a couple of times the delays and probably the most important delay for the economy as a whole will be these data centers.

25:46.118 --> 25:49.442
[SPEAKER_01]: Most of them take most of these AI data centers to take a couple years to build.

25:50.082 --> 25:52.005
[SPEAKER_01]: And they started in 2024.

25:53.566 --> 25:57.050
[SPEAKER_01]: That means a lot of them will start to come on this year.

26:00.454 --> 26:04.839
[SPEAKER_01]: But like most things supply chains matter.

26:07.302 --> 26:12.868
[SPEAKER_01]: Most products that have multiple inputs, if you miss one thing, the whole system doesn't work.

26:16.139 --> 26:23.630
[SPEAKER_01]: You're already seeing a shortage of memory and chips once again.

26:25.052 --> 26:26.935
[SPEAKER_01]: And a good example of this is TSMC.

26:28.417 --> 26:32.383
[SPEAKER_01]: Revenue is up 50% since 2022, but the CAPX is only up 10%.

26:33.125 --> 26:35.628
[SPEAKER_01]: So can they keep up?

26:35.648 --> 26:37.551
[SPEAKER_01]: There's a capacity constraint here.

26:39.033 --> 26:45.403
[SPEAKER_01]: And that's also true for the industrial players.

26:47.510 --> 26:55.919
[SPEAKER_01]: Generators, AC units, are also very important to the inputs of these data centers.

26:55.939 --> 27:01.125
[SPEAKER_01]: So there are dozens of different inputs and if any of those are delayed, well, the timeline gets pushed out.

27:05.990 --> 27:07.091
[SPEAKER_01]: And that's just the physical product.

27:07.111 --> 27:08.793
[SPEAKER_01]: What about skilled labor?

27:10.034 --> 27:11.616
[SPEAKER_01]: These are complex systems.

27:12.477 --> 27:17.162
[SPEAKER_01]: They take a lot of engineers, and we don't make as many engineers as we used to, right?

27:19.775 --> 27:29.528
[SPEAKER_01]: It's our simple projects to put up, they're like building a house, let it technical aspects to it.

27:31.390 --> 27:42.104
[SPEAKER_01]: And then the industrial suppliers that actually put these or build the pieces of the data centers are they expanding their own capacity.

27:45.749 --> 27:48.212
[SPEAKER_01]: The gain market share to improve pricing, et cetera.

27:53.457 --> 28:08.112
[SPEAKER_01]: So the year when many of these construction projects, begin to face delays and will companies talk about it in this earnings announcement, what are they going to do with these chips?

28:09.053 --> 28:14.378
[SPEAKER_01]: If the whole construction project is delayed, well that means the chips aren't being used.

28:14.418 --> 28:16.761
[SPEAKER_01]: So today, resell them, do they warehouse them?

28:19.003 --> 28:21.085
[SPEAKER_01]: That'll be something, investors will be watching.

28:22.735 --> 28:25.257
[SPEAKER_01]: Now, the other delay is AGI.

28:26.118 --> 28:38.048
[SPEAKER_01]: I always said this was bunk that many in Silicon Valley were saying AGI, which is artificial general intelligence, would be here in 2027.

28:38.168 --> 28:44.774
[SPEAKER_01]: Now that's being pushed out to 2030 at the earliest.

28:46.915 --> 28:52.320
[SPEAKER_01]: And like most things in tech, it's hyped up early.

28:53.549 --> 28:54.791
[SPEAKER_01]: for many years into the future.

28:54.831 --> 29:05.965
[SPEAKER_01]: When in reality, it's early adopters or early applications that make sense, but the real work takes a while and usually growth slows.

29:06.846 --> 29:10.250
[SPEAKER_01]: And that's most likely what you'll see in AI as well.

29:13.494 --> 29:19.962
[SPEAKER_01]: And the big risk always is that these hyperscalers capex will end up being outdated.

29:21.730 --> 29:38.949
[SPEAKER_01]: What if the systems are building get delayed and then maybe it's a year, maybe it's two years and now all the invaderships they bought are out of date and their use cases are more limited.

29:42.934 --> 29:46.658
[SPEAKER_01]: So really the layers are going to be a big thing.

29:47.195 --> 29:49.918
[SPEAKER_01]: for this year, it's just a matter of how widespread are they?

29:50.939 --> 29:57.326
[SPEAKER_01]: And how much is it impact the ROI of these projects?

29:57.346 --> 30:01.731
[SPEAKER_01]: But does that mean that AI is going away or adoption is going to slow?

30:01.771 --> 30:08.938
[SPEAKER_01]: No, I still think there's going to be a push for implementing AI in many, many verticals.

30:10.840 --> 30:15.345
[SPEAKER_01]: And there are a lot of entrepreneurs that are exploring the application of it in different niches.

30:18.717 --> 30:21.359
[SPEAKER_01]: So there's a lot of value to be unlocked.

30:22.440 --> 30:24.883
[SPEAKER_01]: But it's going to be harder than people realize.

30:25.203 --> 30:27.025
[SPEAKER_01]: Life you'll just thought just like with the chat box.

30:27.105 --> 30:33.691
[SPEAKER_01]: It's you type a couple sentences, you ask it to do something and then boom it, spades out something great.

30:34.051 --> 30:40.978
[SPEAKER_01]: Well, more and more people are realizing that you have to prompt it, you have to give it the right data, you have to work at it.

30:40.998 --> 30:47.644
[SPEAKER_01]: You have to train it, not in the general sense, but train it on your business or train it on the,

30:49.143 --> 31:02.202
[SPEAKER_01]: one vertical you're trying to solve for and that's going to take work from individual entrepreneurs, business owners, their employees, but also the average user.

31:03.984 --> 31:04.585
[SPEAKER_01]: So I was all the time.

31:05.006 --> 31:17.884
[SPEAKER_01]: If you don't understand it's a new language, you have to learn how to speak to it to get what you want.

31:18.438 --> 31:19.480
[SPEAKER_01]: or to even businesses.

31:23.485 --> 31:35.443
[SPEAKER_01]: Now the best businesses will be creating a flywheel where AI's is not only helping them grow their business but create more data to feed into AI and it creates an ecosystem and a flywheel effect.

31:36.324 --> 31:38.067
[SPEAKER_01]: There's gonna be those businesses that explode.

31:43.094 --> 31:47.280
[SPEAKER_01]: So the question is what tech companies are actually doing that?

31:48.222 --> 32:05.868
[SPEAKER_01]: are finding those real world applications, educating the end consumer and driving real revenue that makes up for massive cap expense.

32:05.888 --> 32:15.782
[SPEAKER_01]: Ultimately, I think the story by the end of this year that most people are going to catch on to is that these businesses that used to

32:16.657 --> 32:34.400
[SPEAKER_01]: very high margin, very safe businesses, suddenly become low margin, high cap X requirements, and in a world that's highly competitive.

32:36.763 --> 32:44.993
[SPEAKER_01]: And there we went, there's going to be some major dots.

32:46.998 --> 32:50.125
[SPEAKER_01]: but AI will not be a benefit to them.

32:50.186 --> 32:51.829
[SPEAKER_01]: It will be their downfall.

32:54.015 --> 32:58.385
[SPEAKER_01]: So something I'll be watching as we go through earnings season this year, but this quarter.

32:59.849 --> 33:03.437
[SPEAKER_01]: Now in Fridays, we generally make time to fit in a quick rundown of

33:03.940 --> 33:06.146
[SPEAKER_01]: He bench mark numbers, so let's do that right.

33:06.186 --> 33:15.589
[SPEAKER_01]: Now, two-year treasure yield, 3.4% last week is at 3.6% so pretty big drop in the two-year yield.

33:16.451 --> 33:20.802
[SPEAKER_01]: The 10-year was at 4.23%.

33:20.917 --> 33:23.760
[SPEAKER_01]: And that was slightly up from last week at 4.2%.

33:23.960 --> 33:29.426
[SPEAKER_01]: So you can see the long end go up.

33:29.827 --> 33:39.797
[SPEAKER_01]: Gold price was go prices up to $4,987 per ounce, up $399 in one week.

33:41.820 --> 33:43.982
[SPEAKER_01]: I'll repeat that again because that is not a typo.

33:44.643 --> 33:48.747
[SPEAKER_01]: $4,987 per ounce.

33:49.688 --> 33:50.209
[SPEAKER_01]: Pretty amazing.

33:50.729 --> 33:52.832
[SPEAKER_01]: I've been bullish on gold and silver for a while.

33:54.495 --> 34:03.667
[SPEAKER_01]: Frankly, it's outpaced my expectations, not dramatically, but materially, I'll say that.

34:03.687 --> 34:04.028
[SPEAKER_01]: Silver.

34:05.490 --> 34:06.391
[SPEAKER_01]: I'll repeat this one again.

34:07.232 --> 34:10.276
[SPEAKER_01]: 102 dollars and 97 cents per ounce.

34:10.977 --> 34:18.868
[SPEAKER_01]: That's a $13.79 increase in one week.

34:20.907 --> 34:42.730
[SPEAKER_01]: Not a shock, not a shock, but, hey, the trend is your friend, and I've been saying for number years, you want more gold, how much more, how much more, 20, 30% of portfolios, I hope most people listen.

34:43.199 --> 34:46.563
[SPEAKER_01]: because it continues to just power higher.

34:46.824 --> 34:53.753
[SPEAKER_01]: And the backdrop of good listeners yesterday show as they close, kind of the drivers of this, they're not changing.

34:53.793 --> 34:56.436
[SPEAKER_01]: I don't see any of those changing in the short to medium term.

34:56.596 --> 35:00.121
[SPEAKER_01]: Maybe long term, but short to medium term, probably not.

35:00.141 --> 35:04.987
[SPEAKER_01]: Oil, $61.33 per barrel, that's a dollar 94 increase.

35:05.568 --> 35:12.717
[SPEAKER_01]: As I said earlier, I think the was happening in Venezuela

35:13.523 --> 35:15.947
[SPEAKER_01]: It's actually bullish for oil in a short-term medium term.

35:16.588 --> 35:19.052
[SPEAKER_01]: A long-term, do I think it was going to break out above 100 notes?

35:19.072 --> 35:24.480
[SPEAKER_01]: They don't think it's really the swing, molecule, the swing, energy molecule in today's world.

35:24.520 --> 35:25.762
[SPEAKER_01]: That's more natural gas.

35:26.183 --> 35:34.616
[SPEAKER_01]: Obviously, uranium is picking up a green energy and renewable energies are becoming and continuing to be relatively cheap and being deployed throughout the world.

35:34.997 --> 35:38.502
[SPEAKER_01]: So oil, I think is not as important as

35:39.173 --> 35:48.365
[SPEAKER_01]: everybody makes it out to be, but ultimately, it does have still an important input, but just not as important as it used to be.

35:49.146 --> 35:51.489
[SPEAKER_01]: So, that's where I'll go with oil right now.

35:51.870 --> 36:06.008
[SPEAKER_01]: Gasoline prices $2.86 a gallon, that's up three cents from last week, and in Ohio, $2.87 per gallon, a dollar $34 less than here in California.

36:06.173 --> 36:09.798
[SPEAKER_01]: Now let's put it back to the Vestock Voice Bank for a question that came in earlier.

36:10.899 --> 36:16.166
[SPEAKER_00]: I wanted to call it to get your opinion on capital one financial.

36:16.887 --> 36:22.934
[SPEAKER_00]: It is a financial stock and I was interested in purchasing something in the banking industry.

36:23.075 --> 36:24.817
[SPEAKER_00]: So I'd like your thoughts on capital one.

36:25.037 --> 36:25.398
[SPEAKER_00]: Thank you.

36:26.659 --> 36:33.548
[SPEAKER_01]: Hey, look at capital one financially with my consumer and commercial lending, credit card products and automobile financing.

36:34.372 --> 36:39.258
[SPEAKER_01]: So this is a name that was on my watch list, and it had earnings.

36:40.339 --> 36:44.324
[SPEAKER_01]: It didn't react very good to earnings down pretty considerably.

36:44.344 --> 36:46.847
[SPEAKER_01]: I think that about 9% on the day.

36:46.907 --> 36:50.972
[SPEAKER_01]: Earnings expectations for this year and next year continue to be to ratchet down.

36:52.013 --> 36:55.617
[SPEAKER_01]: But I do like this longer term at some point.

36:56.498 --> 36:58.641
[SPEAKER_01]: I just don't like the recent trends, obviously.

36:59.363 --> 37:05.630
[SPEAKER_01]: The cap on credit card rates that President Trump is threatening, we'll see if that actually gets the real least talked about it before.

37:05.650 --> 37:14.540
[SPEAKER_01]: You know, it tends to be a populist type of president and he tries to push these policies forward.

37:16.302 --> 37:24.872
[SPEAKER_01]: But he also says a lot and, you know, the end results oftentimes isn't doesn't match right and or maybe it's done in a different way.

37:24.912 --> 37:26.233
[SPEAKER_01]: For example, drug prices.

37:26.814 --> 37:28.476
[SPEAKER_01]: Well, we're not paying.

37:29.789 --> 37:38.381
[SPEAKER_01]: we're not paying way more than other countries anymore because he just got out of these drug companies to raise prices on other countries and now they're more in part.

37:39.022 --> 37:44.490
[SPEAKER_01]: So it's an example of like, yeah, you fixed that discrepancy, but didn't really lower drug prices.

37:45.191 --> 37:51.139
[SPEAKER_01]: So the question is, with the credit card cap, is there something else replacing it, maybe?

37:51.355 --> 37:53.298
[SPEAKER_01]: You know, and that's usually what happens here.

37:53.979 --> 38:00.490
[SPEAKER_01]: So ultimately, I don't think that it will be a true 10% cap on credit card rates.

38:00.991 --> 38:14.373
[SPEAKER_01]: And if so, I don't even think it's gonna last very long, because it's very detrimental to the overall economy, because companies that capital one, JP Morgan, et cetera, which is a pull line to credit, that's gonna crash consumer spending, not gonna be good for the overall economy.

38:14.393 --> 38:15.895
[SPEAKER_01]: That's why I don't think it's actually gonna go through.

38:17.528 --> 38:19.912
[SPEAKER_01]: So ultimately, I probably would buy this at some point.

38:20.052 --> 38:24.759
[SPEAKER_01]: I do like their acquisition of Discover, and that's what really put it on my radar.

38:25.980 --> 38:29.426
[SPEAKER_01]: I still don't like the trend in earnings and so or the stock.

38:29.586 --> 38:36.376
[SPEAKER_01]: And so that's why I would probably continue to be patient on it, I wouldn't be aggressive getting into it, even if it remains on my watch list.

38:36.416 --> 38:45.409
[SPEAKER_01]: Now, if it gets down below, let's say, it gets down to 150 in that range, that 2017 now to 150 would be my range to pick up capital.

38:48.646 --> 38:49.388
[SPEAKER_01]: That was the best thought.

38:49.408 --> 38:50.050
[SPEAKER_01]: I'm Justin Klein.

38:50.090 --> 38:51.774
[SPEAKER_01]: We have one goal here each every week day.

38:51.855 --> 38:55.946
[SPEAKER_01]: Let's help you achieve your own version of financial freedom when I work continues after this final break.

38:56.467 --> 39:00.478
[SPEAKER_01]: So get your questions in right now, 8 to 899 chart.

39:08.812 --> 39:11.455
[SPEAKER_07]: Have you heard about parallel investing?

39:12.076 --> 39:15.621
[SPEAKER_07]: Parallel investing differentiates KPP financial.

39:15.961 --> 39:25.694
[SPEAKER_07]: Because it aligns the interests of KPP principles with those of their clients as they each share the same risks and potential for success.

39:26.314 --> 39:31.781
[SPEAKER_07]: Learn more anytime at investtalk.com, just click on portfolio review.

39:32.342 --> 39:37.789
[SPEAKER_07]: The Invest Talk phone lines are open waiting for your financial investment questions.

39:37.769 --> 39:40.052
[SPEAKER_07]: 88899 chart.

39:44.038 --> 39:45.099
[SPEAKER_01]: Let's run it hot.

39:45.560 --> 39:51.729
[SPEAKER_01]: That's frankly what the Trump administration is trying to do with the overall economy.

39:52.730 --> 39:59.760
[SPEAKER_01]: And we kind of knew this when Doge fell flat on its face and didn't really cut any spending at all.

40:00.145 --> 40:07.657
[SPEAKER_01]: And overall, the current administration is taking unprecedented steps to create a hot economy.

40:08.858 --> 40:11.262
[SPEAKER_01]: And most likely, they'll succeed.

40:12.745 --> 40:20.837
[SPEAKER_01]: Now, there are three main levers that governments have to improve near-term economic growth.

40:21.931 --> 40:25.616
[SPEAKER_01]: Number one is fiscal policy, that's taxes and spending.

40:26.177 --> 40:32.907
[SPEAKER_01]: Then there's monetary policy, interest rates, and fed balance sheet, et cetera, and credit policy.

40:33.868 --> 40:37.113
[SPEAKER_01]: Is how easy it is it for banks to lend?

40:37.133 --> 40:41.840
[SPEAKER_01]: Now, historically, they don't work all together.

40:43.683 --> 40:46.346
[SPEAKER_01]: Piscopalacy is typically driven by Congress.

40:47.708 --> 40:51.634
[SPEAKER_01]: The Congress kind of just bow to the president these days.

40:53.690 --> 41:04.759
[SPEAKER_01]: And Monterey policy was set by an independent federal reserve, but obviously, President Trump is trying to exert his influence there as well.

41:04.779 --> 41:12.025
[SPEAKER_01]: And then credit policy is usually about regulators and how they shift their stance towards that industry.

41:14.327 --> 41:23.595
[SPEAKER_01]: Usually, the White House doesn't have a lot of say in that.

41:25.246 --> 41:31.436
[SPEAKER_01]: for fiscal, monetary, and credit expansion.

41:31.456 --> 41:38.648
[SPEAKER_01]: And that comes on the heels of a 2025 where fiscal was actually relatively tight, especially if you consider tariffs.

41:40.431 --> 41:44.698
[SPEAKER_01]: Trump's tariffs raised about $200 billion additional.

41:46.161 --> 41:51.169
[SPEAKER_01]: And that's a tax, mostly paid by American businesses and households.

41:51.402 --> 41:54.266
[SPEAKER_01]: And ultimately, that is viscally restrictive.

41:54.727 --> 41:59.494
[SPEAKER_01]: But this year, tariffs are either not going up at all, I mean, maybe they will, right?

41:59.514 --> 41:59.874
[SPEAKER_01]: It's Dr.

41:59.894 --> 42:00.335
[SPEAKER_01]: He's threatened.

42:01.697 --> 42:04.862
[SPEAKER_01]: But it also could be rolled back by the Supreme Court.

42:04.882 --> 42:14.155
[SPEAKER_01]: So odds are, whatever tariff impact there is, this year, it's not going to be higher, a higher level of growth, excuse me, than it was last year.

42:14.175 --> 42:17.460
[SPEAKER_01]: Cause it went from two, but I think we're effectively 10%.

42:18.352 --> 42:36.493
[SPEAKER_01]: Now the taxes been built, that was passed into law in July, produces tax cuts, particularly the local tax deductions, over time, or a favorable treatment of over time tips, there's a credit for seniors, et cetera.

42:37.134 --> 42:42.300
[SPEAKER_01]: All this means effective tax rates across the board are mostly going lower.

42:43.597 --> 42:52.887
[SPEAKER_01]: So already workers are seeing higher take home pay and they're going to get a refund when they file their returns most likely.

42:52.907 --> 43:01.616
[SPEAKER_01]: Overall, that's going to inject about $200 billion in the economy about a half a percent increase or juicing to the overall growth of the economy.

43:03.157 --> 43:10.945
[SPEAKER_01]: And then there's provisions on investments for accelerated write-offs, things like that that are going to help cat-back spending.

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[SPEAKER_01]: Now, it comes to credit availability,

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[SPEAKER_01]: I've talked before about how you're seeing it, you're seeing banks, lent.

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[SPEAKER_01]: You're if you're growth, the bank lending is some around 5%.

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[SPEAKER_01]: Not crazy high, but it's not low.

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[SPEAKER_01]: And this is mainly because regulators have loose indertrictions.

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[SPEAKER_01]: They've loosened capital requirements.

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[SPEAKER_01]: They've reduced barriers to mergers and acquisitions.

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[SPEAKER_01]: Enforcement of consumer protection laws have been rolled back as well.

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[SPEAKER_01]: All of this should incentivize lending.

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[SPEAKER_01]: And then there's the Fed.

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[SPEAKER_01]: Jerome Powell wants to kind of keep rates of neutral to read things they're at now, but obviously President Trump wants lower rates and he's gonna be pushing for that.

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[SPEAKER_01]: So, this all lines up why small gaps are rallying, why the cyclicals are rallying,

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[SPEAKER_01]: If you look at it on its face, whether you like it or not, whether you like Trump or not, it's irrelevant, this is the reality on the ground.

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[SPEAKER_01]: I'm just inclined to take a second to touch on one of the investment hack and enhance the features we offer through KP Financial.

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[SPEAKER_01]: It's called PayreLale Investing.

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[SPEAKER_01]: Ensure our PayreLale Investing difference, differentiate its KP Financial because it aligns the interests of KP's financial with our clients.

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[SPEAKER_01]: And we share the same risk and potential for success.

44:40.593 --> 44:43.277
[SPEAKER_01]: You can learn more at investtalk.com.

44:43.257 --> 44:50.231
[SPEAKER_01]: Please tell your friends and family about our free podcast downloads, which we'll find anytime at iTunes, Spotify, or Google, or YouTube.

44:50.251 --> 44:51.354
[SPEAKER_01]: Excuse me.

44:51.374 --> 44:53.558
[SPEAKER_01]: Please be sure to rate and review on iTunes as well.

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[SPEAKER_01]: Independent thinking, shared success is the best time.

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[SPEAKER_01]: Enjoy your weekend.

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