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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_00]: Good afternoon, fellow investors, and welcome to the Thursday March 12th, 2026 edition of Invest Talk.

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[SPEAKER_00]: I'm your host, Luke Guerrero, and I'll be with you over this next just about hour.

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[SPEAKER_00]: To bring you the stories that matter, summarize what happened in the market today, but most importantly to answer your finance investment questions.

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[SPEAKER_00]: To that end, before we run down today's show atopics and talk a little bit about how the market did, let's tackle this color question now.

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[SPEAKER_06]: Good afternoon, Justin and Luke.

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[SPEAKER_06]: This is Steve from Colorado.

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[SPEAKER_06]: And I'm just calling if I could get your assessment on Dow Incorporated, Tigger Symbol D-O-W.

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[SPEAKER_06]: it is a stock that they have a small position in and whether you think I should continue to add to it or consider selling.

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[SPEAKER_06]: Thank you.

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[SPEAKER_00]: Take a look at Dow Dow Inc.

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[SPEAKER_00]: It is a global material sciences company that was spun out of Dow DuPont in 2019.

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[SPEAKER_00]: This is coming operates in three major segments.

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[SPEAKER_00]: They're packaging and specially plastics, so I think polyethylene.

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[SPEAKER_00]: They're industrial intermediates and infrastructure, so polyurethane and construction chemicals.

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[SPEAKER_00]: And then they're performance materials and coating, so I think silicones, coatings, and industrial solvents.

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[SPEAKER_00]: Their largest business segment is that packaging and specialty plastics about 51% of their business.

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[SPEAKER_00]: Industrial intermediates about 28% of their business and then performance materials about 21%.

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[SPEAKER_00]: Now here to date, this name has been absolutely surging after a prolonged period, a really flat ranging and then a consistent downward trend.

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[SPEAKER_00]: It's up 9.34% today alone up 60.74% here to date, up 56.78% over the past three months, but even with this only up 5% over the past.

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[SPEAKER_00]: year.

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[SPEAKER_00]: So what's going on here?

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[SPEAKER_00]: What is driving this stock forward?

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[SPEAKER_00]: Well, one thing certainly is a prolonged commodity chemical straw, global polyurethane and MDI prices.

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[SPEAKER_00]: They've been pretty depressed since 2022 due to over capacity, primarily Chinese capacity additions and weak industrial

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[SPEAKER_00]: Down, 8% year over year in Q4, every segment, decline.

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[SPEAKER_00]: This is the core fundamental problem that the stock has priced in a lot of it, right?

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[SPEAKER_00]: We had totally seen this consistent drawdown since really the middle of 2020, 4.

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[SPEAKER_00]: There was a bit of a sentiment shock as well over the past year when the dividend was cut.

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[SPEAKER_00]: It was a 50% dividend reduction, which was announced alongside their Q4 earnings, which reinforced just how stressed the balance sheet.

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[SPEAKER_00]: is.

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[SPEAKER_00]: And so they're doing this bit of a balance sheet repair in progress.

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[SPEAKER_00]: They've sold off three billion and assets already.

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[SPEAKER_00]: They've cut one billion in capex.

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[SPEAKER_00]: That bond issue and says there's that dividend cut that I mentioned.

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[SPEAKER_00]: So the management is aggressively trying to shore up

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[SPEAKER_00]: in the range of $10 to $15 billion in total liquidity.

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[SPEAKER_00]: So in the near term solvency, it's certainly been addressed a bit.

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[SPEAKER_00]: And the question is now earnings recovery and timing.

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[SPEAKER_00]: So why is it up so much in really the past couple weeks?

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[SPEAKER_00]: I mean, it was trading at $30 a share at 227.

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[SPEAKER_00]: One of the effects is as a result of what is going on in the Middle East and what that might mean for their main product lines.

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[SPEAKER_00]: IE chemicals, fertilizers, aluminum, we talked about it a lot already over the past week.

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[SPEAKER_00]: All of these things that come through the straight-of-form moves.

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[SPEAKER_00]: and what the supply side crisis does for overall price levels.

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[SPEAKER_00]: And certainly, that is one way for revenue to increase, but that being said, sales growth in the past five years, 0.7%, actually lost money in 2025, projected to just turn a profit in 2026.

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[SPEAKER_00]: And so even though you have this structural macro problem,

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[SPEAKER_00]: Do you want to buy it after it's up 9.34%, I would argue that if you have purchased it sometime in the past year, you're pretty significantly outstretched human profits, but either way, this is a company that still has some fundamental issues and some structural problems I.E.

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[SPEAKER_00]: China's over capacity and how much that is a structural overhang.

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[SPEAKER_00]: And so given this run up the bear case seems to be in the medium to long term, more likely than the bull case.

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[SPEAKER_00]: So given these gains,

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[SPEAKER_00]: I would probably look to start triving a little bit on my position.

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[SPEAKER_00]: That is a dow US to your D.O.W.

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[SPEAKER_00]: Well, we got a lot of ground cover in the next of 45 minutes or so.

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[SPEAKER_00]: And here's a little bit of what we have planned.

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[SPEAKER_00]: My main focus point is about emerging markets, more specifically, the possible emerging market Exodus when global tensions start to trigger capital flight.

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[SPEAKER_00]: India stocks, for example, have dropped to almost one year lows while other emerging markets face similar pressures as this Middle East conflict drags on and sends investors fleeing to developed market safety.

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[SPEAKER_00]: The capital flight pattern in a way is creating both significant risks for young heavy portfolios, but more importantly, potential buying opportunities for patient investors.

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[SPEAKER_00]: Also, touch on an announcement by the International Energy Agency, the IEA, that the Iran war is causing the largest disruption to oil in history.

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[SPEAKER_00]: The other thing we'll talk about is fertilizer stocks and why they are jumping.

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[SPEAKER_00]: Should we have time at the end of the show the Fed unveiled that they are going to be easing capital requirements?

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[SPEAKER_00]: What does that mean for Wall Street?

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[SPEAKER_00]: Thanks and for you as investors.

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[SPEAKER_00]: We also have some voice bank calls rated play, including one on trailing stop losses, and other on CF industrial holdings.

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[SPEAKER_00]: So, some questions that came in from the comment section of the investment stock of YouTube channel.

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[SPEAKER_00]: And of course, I welcome your finance and investment questions now, or any time throughout the show.

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[SPEAKER_00]: Now, before we head to break, I do wanna mention one thing, and that is Invest Talk Market.

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[SPEAKER_00]: Madness, I hope you've been telling your friends about our third annual Invest Talk Market Madness contest.

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[SPEAKER_00]: Instead of basketball brackets, we make corporate brackets.

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[SPEAKER_00]: We watch companies perform head to head in an epic daily showdown.

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[SPEAKER_00]: Invest dog participants can compete for the $1,000 grant prize and demonstrate their market prowess by locking in their stock victory predictions.

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[SPEAKER_00]: If the contest winner is also following the Invest dog YouTube channel, we'll bump the prize up to $1,500.

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[SPEAKER_00]: So if you're ready to test your skills in this unique competition, don't wait, it's free to join, and the fun all starts at investalk.com.

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[SPEAKER_00]: Don't forget to submit your bracket by March 18th at 1159 PM.

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[SPEAKER_00]: Alright, we're going into our first break, please remember you can call any time and leave your questions on the Invest Talk Voice Bank.

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[SPEAKER_00]: Hang on, because when we come back, we'll talk about today's market activity.

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[SPEAKER_00]: Talk a little bit about the markets today, U.S. stocks falling pretty sharply on this.

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[SPEAKER_00]: There's day closing near their worst levels.

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[SPEAKER_00]: We saw a bit of a hawkish turn in the Iran conflict rhetoric and a big backup and treasure yields and that combined to pressure risk on assets across the board.

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[SPEAKER_00]: The Dow dropped 1.6% S&P 500 fell 1.5, Nasdech shared 1.8 and the Russell 2000 slated over 2%.

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[SPEAKER_00]: Both the S&P and Nasdech are now on pace for weekly declines.

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[SPEAKER_00]: Really, the geopolitical picture, I mean, it deteriorated further Iran's new leader, the son of the former Iatala company, said the state of her moves closer should continue.

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[SPEAKER_00]: President Trump said destroying the Iranian regime is a bigger priority than energy prices.

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[SPEAKER_00]: The U.S. Energy Secretary indicated it could be a couple of weeks before military escorts for tanker traffic or operational.

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[SPEAKER_00]: Despite steps to ease the oil shock, including a Jones Act waiver and a coordinated reserve release, none of it has really been enough to offset the supply reality.

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[SPEAKER_00]: W2AWTI crude surge nearly 10% to close above $95.

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[SPEAKER_00]: Brent settled above the $100 mark for the first time since August 2022.

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[SPEAKER_00]: But that energy driven inflation impulse is now hitting rate expectations pretty hard.

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[SPEAKER_00]: The federal funds futures are pricing just 17 basis points of cuts through year end, down from 53 at the start of the month.

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[SPEAKER_00]: Treasure yields backed up meaningfully again the two year jump 10 basis points.

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[SPEAKER_00]: The curve continued to flatten.

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[SPEAKER_00]: The dollar gained half a percent on the day one bright spot in the rate complex.

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[SPEAKER_00]: Today's $30 billion 30 year auction stopped through by 7 at 10 to the base's point.

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[SPEAKER_00]: Contrasting with the trailing of 3 and 10 year sales earlier in the week.

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[SPEAKER_00]: Private credit again remained an overhang Morgan Stanley became the latest to limit revampions at one of its funds, following Cliffwater and J.P. Morgan's decision to reduce lending to the space.

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[SPEAKER_00]: Tariffs are also creeping back into the discussion after the administration announced multiple section 301 investigations not far ahead of Trump's scheduled late March visit to Beijing.

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[SPEAKER_00]: Big Tech was uniformly lower on the day, led to the downside by Tesla, meta, semi-s and the broader AI link trade sold off as well, while PE ensures investment banks, memory, home builders, again, among some of the worst performers.

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[SPEAKER_00]: The clear, clear app reformer on the day, as you can imagine, I don't need to tell you.

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[SPEAKER_00]: Energy, just on this crude move, with chemicals, exchanges, discountures, and brochures all holding up as well.

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[SPEAKER_00]: On the day-to-front claims held steady at 213,000 and housing starts surprised to the upside and a 1.487 million pace, though building permits declined more than expected.

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[SPEAKER_00]: The trade deficit narrowed meaningfully to 54.5 billion.

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[SPEAKER_00]: Looking ahead to my brings a pretty packed calendar, we got Durable Goods, January PCE, the second read on Q4GDP, Joltz openings, and preliminary March Michigan Consumer

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[SPEAKER_00]: Voila, above 95, and rate-connected expectations, collapsing.

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[SPEAKER_00]: The inflation expectations number carries a particular weight this week.

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[SPEAKER_00]: All right, let's go back to the investment talk.

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[SPEAKER_00]: Voice Bank for a question that came in earlier.

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[SPEAKER_07]: Hi, my name is Ernesto from Bicelli at California, and I'm calling about a stock ACGL of the ticker.

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[SPEAKER_07]: And I'm calling to see if you have any revenue estimates and earnings per share estimates will be forward.

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[SPEAKER_07]: See if you have any growth.

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[SPEAKER_07]: I've owned it for about a year now.

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[SPEAKER_07]: I just want to know if you see any growth.

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[SPEAKER_07]: And I think it's a good chance company.

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[SPEAKER_07]: And let me know your thoughts about it.

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[SPEAKER_07]: Moving forward.

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[SPEAKER_07]: Appreciate what you do.

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[SPEAKER_07]: Thank you very much.

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[SPEAKER_07]: Have a good one.

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[SPEAKER_00]: A, C, G, L is the ticker, and that is arch capital group limited.

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[SPEAKER_00]: It is a bermuda-based specialty insurer, reinsurer, and mortgage insurer.

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[SPEAKER_00]: So they have three business lines, insurance, reinsurance, and mortgages.

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[SPEAKER_00]: Over the 52 weeks, over the past 52 weeks, it's been kind of ranging only at 5.68% down 1.77% year to date.

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[SPEAKER_00]: They have an executing, a share repurchase program, they repurchase about 5.6% of their shares in 2025, that was about $1.9 billion.

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[SPEAKER_00]: And an additional $349 million through February of 2026.

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[SPEAKER_00]: And that's helped to float the price.

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[SPEAKER_00]: I mean, looking at relative strength, it's been pretty in line with the S&P 500 going back to 2020.

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[SPEAKER_00]: Now, in terms of growth,

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[SPEAKER_00]: Pretty solid here over year, looks like it's averaging 10%, though 2026 set to slow down a bit with net earned interest about 17.2 billion up from 17 billion.

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[SPEAKER_00]: So growth has certainly slowed there.

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[SPEAKER_00]: earnings per share bit all over the place though a solid 11.6 in at 2025 set to come back down to earth a little bit to 19.4.

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[SPEAKER_00]: But one thing that I really like is that they have had record underwriting profitability.

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[SPEAKER_00]: 80.6 percent combined ratio.

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[SPEAKER_00]: That is phenomenal.

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[SPEAKER_00]: But it's not all good, right?

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[SPEAKER_00]: They've also seen a bit of compression in their mortgage insurance.

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[SPEAKER_00]: You have rising competition.

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[SPEAKER_00]: You have normalizing loss ratios across the board in mortgage insurance, not just for this business, but other businesses as well.

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[SPEAKER_00]: Overall, it seems to be trading at a relative cheap valuation about 10 times forward looking earnings and given the growth over the past five years.

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[SPEAKER_00]: I like it.

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[SPEAKER_00]: That is Arch Capital Group, ticker ACGL, thanks to the call.

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[SPEAKER_00]: Head it into break, still to come by main focus point, and more answers to your questions.

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[SPEAKER_00]: Here on Invest Talk.

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[SPEAKER_02]: KPP Financial is excited to announce the third annual Invest Talk Market Madness Contest.

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[SPEAKER_00]: So emerging markets just had their worst week since the pandemic.

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[SPEAKER_00]: MSCI's emerging market equities index lost more than a trillion dollars in market cap from its peak last Thursday to Wednesday's close.

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[SPEAKER_00]: Currents, bonds, tumbled.

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[SPEAKER_00]: And JP Morgan cut its overweight EM stance to a market weight.

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[SPEAKER_00]: They were in a loan, city have their EM foreign exchange exposure.

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[SPEAKER_00]: Creos Cosby had its biggest ever crash down nearly 20% over Tuesday and Wednesday, before bouncing back almost 10% on Thursday.

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[SPEAKER_00]: And this is all to say, it's been pretty violent.

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[SPEAKER_00]: And I know a lot of you listening are looking at your portfolio as an asking, the obvious question, should I be reducing my EM exposure this day?

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[SPEAKER_00]: So let me walk you through this with a little bit of nuance because the answer isn't as simple as the headlines.

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[SPEAKER_00]: make it seem.

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[SPEAKER_00]: First, let's understand what just happened.

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[SPEAKER_00]: Merging markets have been having an exceptional year before this week.

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[SPEAKER_00]: EM nations led by Saudi Arabia, Mexico, Turkey, Poland, issued a record amount of debt in January.

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[SPEAKER_00]: Equities were soaring.

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[SPEAKER_00]: Korea's cost had been the top reformer in emerging equities up more than 30% year-to-date.

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[SPEAKER_00]: Even after the crash, driven by the AI and semiconductor trade.

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[SPEAKER_00]: yield hungry investors were pouring cash into local currency debt across frontier markets.

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[SPEAKER_00]: Flows had been building for over a year.

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[SPEAKER_00]: When the U.S. has really strikes hit Iran, and therefore shut down her moves, what happened was predictable.

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[SPEAKER_00]: The hot money it left hedge funds, non-specialist investors who had been chasing returns,

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[SPEAKER_00]: They exited fast, but all their search, gold rallied in everyone piled into cash.

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[SPEAKER_00]: It was, if anything, not about economic deterioration.

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[SPEAKER_00]: It was a mechanical unwinding of leverage positions in chip heavy indices that caught the worst of the tech unwinding plus the geopolitical shock simultaneously.

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[SPEAKER_00]: So should you be reducing exposure?

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[SPEAKER_00]: Here's a framework that might help you think about it.

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[SPEAKER_00]: If your EM allocation is primarily through diversified ETFs, like IEMG, VWO, SPM, and you sized it appropriately for your risk tolerance when you bought it, the answer is probably no.

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[SPEAKER_00]: Selling after a trillion dollar drawdown is usually the worst time to do so.

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[SPEAKER_00]: You are locking in losses.

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[SPEAKER_00]: driven by panic rather than being driven by fundamentals.

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[SPEAKER_00]: The people who made money in EM over the past year were the ones who held through exactly these kinds of episodes.

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[SPEAKER_00]: If you're overweight EM because you chase the rally and now have more exposure than you're comfortable with, then shimming to go back to your target allocation is absolutely reasonable.

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[SPEAKER_00]: But that's a portfolio management decision.

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[SPEAKER_00]: That's not a market call.

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[SPEAKER_00]: Now with emerging markets are more resilient

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[SPEAKER_00]: This is where it gets a bit interesting.

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[SPEAKER_00]: Not all EM is created equal, obviously.

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[SPEAKER_00]: And the current crisis it creates clear winners and clear losers.

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[SPEAKER_00]: The most resilient economies right now are commodity exporters.

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[SPEAKER_00]: They benefit from higher oil, higher resource prices.

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[SPEAKER_00]: Brazil is the obvious one.

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[SPEAKER_00]: It's a major oil, agricultural, and metals exporter.

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[SPEAKER_00]: Higher commodity prices support its terms of trade and current account.

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[SPEAKER_00]: Latin American commodity exporters, they broadly are in better shape.

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[SPEAKER_00]: On the other side, energy importing economies in Asia?

19:50.427 --> 20:01.126
[SPEAKER_00]: Their very exposed Korea, despite its rebound is heavily dependent on energy imports, India, which gets a huge share of its crude-through homo's faces a direct supply threat.

20:01.627 --> 20:07.137
[SPEAKER_00]: Pakistan, Bangladesh, parts of Southeast Asia, they are similarly vulnerable.

20:07.117 --> 20:15.988
[SPEAKER_00]: Among frontier markets, the stories actually encouraging countries like Egypt and Nigeria they reformed their capital markets and foreign exchange access over the past couple years.

20:16.369 --> 20:20.214
[SPEAKER_00]: The fact that money is flowing out smoothly actually proves that the reforms are working.

20:20.714 --> 20:24.299
[SPEAKER_00]: Investors can repatriate cash which builds long-term confidence.

20:25.060 --> 20:27.623
[SPEAKER_00]: That matters more than any short-term, outflow.

20:28.261 --> 20:31.006
[SPEAKER_00]: So is this a good time to buy EMETF's at lower prices?

20:31.086 --> 20:32.969
[SPEAKER_00]: Potentially yes, but with conditions.

20:33.751 --> 20:39.381
[SPEAKER_00]: EMequities will trade at roughly 28% discounted to develop markets with higher earnings growth expectations.

20:40.162 --> 20:43.508
[SPEAKER_00]: That valuation gap existed before the crisis and has now widened.

20:44.250 --> 20:49.459
[SPEAKER_00]: If you believe the disruption is temporary, measured in weeks, not months, then the drawdown is a buying opportunity.

20:50.350 --> 20:54.797
[SPEAKER_00]: The veteran EM investors, I'm reading or not panicking, they're not saying I'm out.

20:55.518 --> 20:59.444
[SPEAKER_00]: There are people on the sidelines waiting for exactly the kind of correction to get in.

21:00.565 --> 21:05.272
[SPEAKER_00]: But the critical variable's oil, a prolonged period of a hundred, could change the calculus entirely.

21:05.853 --> 21:13.725
[SPEAKER_00]: It would reignite global inflation prevent EM central banks from cutting rates and weigh on growth across the important dependent economies.

21:13.891 --> 21:21.100
[SPEAKER_00]: In that scenario, the drawdown, it extends and you want to be much more selective favoring commodity exporters over imports.

21:22.102 --> 21:24.645
[SPEAKER_00]: How do you balance EM risk with potential higher returns?

21:25.426 --> 21:28.750
[SPEAKER_00]: The practical answer is diversification within your EM allocation.

21:29.531 --> 21:32.515
[SPEAKER_00]: Don't concentrate in a single country or in a single theme.

21:33.136 --> 21:41.687
[SPEAKER_00]: Broad-based EM ETFs give you 2,000 plus stocks across 20 countries which smooths out exactly this kind of single country shock.

21:42.157 --> 21:45.324
[SPEAKER_00]: There's also a structural shift happening that provides a long-term buffer.

21:46.045 --> 21:51.457
[SPEAKER_00]: Sout the south investment capital flows from Asian wealth pools and Gulf sovereign wealth funds into other emerging markets.

21:52.058 --> 21:52.519
[SPEAKER_00]: It's growing.

21:53.180 --> 21:57.229
[SPEAKER_00]: These investors are far less likely to panic sell than western hedge funds.

21:57.850 --> 22:02.756
[SPEAKER_00]: Bottom line, don't sell into the panic if your allocation was right-sized to begin with.

22:03.557 --> 22:11.607
[SPEAKER_00]: If you're looking for entry points, this is more attractive than two weeks ago and size your position for the possibility that oil stays elevated and the drawdown has further to run.

22:12.388 --> 22:24.583
[SPEAKER_00]: Favorite commodity exporters over importers use broad diversification, which changes the price and investing in investing a lower price for the same fundamentals is usually a gift.

22:25.930 --> 22:27.852
[SPEAKER_00]: On the next in Vestock, we'll look into Nuclear Power and how it's getting a geopolitical boost.

22:27.872 --> 22:29.274
[SPEAKER_00]: But for now, I'm Luke Rera ready to take your calls at 888-99 chart.

22:29.294 --> 22:53.220
[SPEAKER_02]: [♪ music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in
background music

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[SPEAKER_03]: I would be wondering if you could explain what a trailing staff lost is.

22:58.119 --> 22:59.160
[SPEAKER_03]: Thank you.

22:59.180 --> 23:07.030
[SPEAKER_00]: A trailing the stop loss is a stop loss that automatically adjusts upward as the stock price rises.

23:07.851 --> 23:13.759
[SPEAKER_00]: It trails the stock by either a fixed dollar amount or a percentage and only moves up it never moves down.

23:13.799 --> 23:16.983
[SPEAKER_00]: So it locks in gains as the stock climbs.

23:18.385 --> 23:19.967
[SPEAKER_00]: How does it work well?

23:20.335 --> 23:23.658
[SPEAKER_00]: You buy a stock of 50, and you set a 10% trailing stop loss.

23:23.698 --> 23:25.220
[SPEAKER_00]: Let's say the stock rises to 60.

23:25.780 --> 23:27.302
[SPEAKER_00]: Well, then your stop is moved to 54.

23:27.782 --> 23:31.106
[SPEAKER_00]: If the stock rises to 70, your stop is moved to 63.

23:32.067 --> 23:35.310
[SPEAKER_00]: If it drops down to 63, well, then it triggers a sell.

23:36.311 --> 23:43.919
[SPEAKER_00]: Now, their pros and cons, the pros being, well, it lets winners run while protecting some gains that removes the emotional window-isol decision.

23:44.239 --> 23:45.000
[SPEAKER_00]: It's fully automated.

23:45.060 --> 23:47.322
[SPEAKER_00]: You don't need to manually adjust it.

23:47.622 --> 23:50.947
[SPEAKER_00]: On the other side, though, you can get shaken out on normal volatility.

23:51.828 --> 23:54.713
[SPEAKER_00]: When the stock, then the stock recovers without you.

23:55.193 --> 23:59.880
[SPEAKER_00]: Gaps down can execute well below the trailing stock law.

23:59.900 --> 24:06.630
[SPEAKER_00]: Trailing at stop loss price to tide of a trail, you know, one, two, three percent.

24:06.650 --> 24:10.476
[SPEAKER_00]: Well, then it's going to execute a lot to wide of a trail 20 percent.

24:11.057 --> 24:14.141
[SPEAKER_00]: You can give back a lot of gains before triggering.

24:14.201 --> 24:15.283
[SPEAKER_00]: So,

24:15.466 --> 24:17.208
[SPEAKER_00]: That's what the trailing stop loss is.

24:17.268 --> 24:21.812
[SPEAKER_00]: It's better for less volatile stocks because you can use tighter trails there.

24:22.112 --> 24:24.915
[SPEAKER_00]: More volatile stocks you need to give it wider trails.

24:25.615 --> 24:29.059
[SPEAKER_00]: Typically, 8 to 12% range is probably where you want to be.

24:29.939 --> 24:34.504
[SPEAKER_00]: All right, let's keep things moving and tackle another voicemail now.

24:35.164 --> 24:36.886
[SPEAKER_04]: Well, Justin and Luca, I hope you're both well.

24:36.966 --> 24:39.288
[SPEAKER_04]: My question today is on General Mills.

24:39.388 --> 24:43.752
[SPEAKER_04]: I believe the ticker symbol is GIS, the George, Idaho,

24:44.002 --> 24:47.593
[SPEAKER_04]: And I've been unhappy with the performance of this stock.

24:48.235 --> 24:52.788
[SPEAKER_04]: I would like to sell all of it, currently it's about 3% of my portfolio.

24:52.828 --> 24:54.754
[SPEAKER_04]: Thank you, and I hope you have a wonderful day.

24:55.223 --> 25:18.970
[SPEAKER_00]: General Mills, the ticker G-I-S, is of course the branded consumer food company that sells through retail stores, so it sells snacks, rid of the cereals, meals, pet food, refrigerated food, frozen dough, yogurt, ice cream, I mean it has a large portfolio.

25:18.950 --> 25:19.592
[SPEAKER_00]: of holdings.

25:19.632 --> 25:21.677
[SPEAKER_00]: It is a global package food company.

25:21.697 --> 25:26.429
[SPEAKER_00]: So Cheerios, Pillsbury, Nature Valley, Hoggendoss, Progresso.

25:26.549 --> 25:29.196
[SPEAKER_00]: These are just some of their brands.

25:30.627 --> 25:39.479
[SPEAKER_00]: It's had a rough year down 15.27%, had a rough three months as well down 15.61, although I guess three months is practically here today to this point.

25:40.140 --> 25:42.183
[SPEAKER_00]: Over the past 52 weeks is down 34.37%.

25:42.443 --> 25:50.855
[SPEAKER_00]: It's come to the point where it's pretty much at its low price to forward looking earnings over the past five years.

25:51.616 --> 25:52.337
[SPEAKER_00]: So what's going on here?

25:52.617 --> 25:55.541
[SPEAKER_00]: Well, I mean, volumes have declined.

25:57.043 --> 25:58.525
[SPEAKER_00]: This has been bad for the business.

25:59.247 --> 26:25.761
[SPEAKER_00]: They had a peak in May of 2023 of 20.094 billion in revenue over the past five years, the growth rates have been 2%, but revenue set to fall from 19.4 billion in 25, day 18.4 this year in the 18.1, the next year, the same time margins are falling, from 21.2 and 2024 down to 18.1 this year in 18.2, the following year, free cash flow,

26:26.450 --> 26:30.794
[SPEAKER_00]: down from $2.5 billion to $1.7 billion this year.

26:32.316 --> 26:45.048
[SPEAKER_00]: And so what you're seeing is really poor growth, compressing margins and a business that hasn't really necessarily done well.

26:45.068 --> 26:48.992
[SPEAKER_00]: They've also had guidance cuts consistently.

26:49.913 --> 26:54.617
[SPEAKER_00]: And so the persistence of these cuts will become a credibility problem.

26:55.492 --> 26:59.575
[SPEAKER_00]: They reduced it each of the first quarters, first two quarters of fiscal year 2026.

26:59.716 --> 27:09.244
[SPEAKER_00]: And unsurprisingly, markets don't like that, and that's driven it to nearly a 30 year low multiple.

27:09.964 --> 27:25.397
[SPEAKER_00]: I think, and certainly the fundamentals, black of growth, and the momentum are telling you this, that your inclination to sell is probably down the right path.

27:26.137 --> 27:26.698
[SPEAKER_00]: Thanks for the call.

27:27.279 --> 27:32.929
[SPEAKER_00]: We haven't tackled a question yet from the Investoc YouTube comment section question bank.

27:33.009 --> 27:39.260
[SPEAKER_00]: So let's get this fresh question on ticker CNQ which is Canadian natural resources.

27:40.121 --> 27:44.369
[SPEAKER_00]: And the question says, hi, can I get your thoughts on CNQ?

27:44.790 --> 27:50.760
[SPEAKER_00]: How does the Iran conflict affect Canadian oil and gas companies specifically compared to others?

27:51.449 --> 27:58.537
[SPEAKER_00]: Well, CNQ is Canada's largest oil producer and the second largest natural gas producer.

27:58.557 --> 28:05.285
[SPEAKER_00]: It's a pretty diversified, upstream the MP with operations across Western Canada.

28:05.825 --> 28:11.171
[SPEAKER_00]: They also have some legacy assets in the North Sea, offshore Africa, as well.

28:12.052 --> 28:20.882
[SPEAKER_00]: They are doing very well here to date.

28:21.537 --> 28:23.439
[SPEAKER_00]: over the past 52 weeks.

28:24.840 --> 28:26.001
[SPEAKER_00]: What is really cost to this?

28:27.102 --> 28:29.344
[SPEAKER_00]: Well, record production.

28:30.245 --> 28:32.006
[SPEAKER_00]: And low cost oil sand's compounding.

28:32.046 --> 28:35.449
[SPEAKER_00]: 2025 was the best operational year in company history.

28:36.790 --> 28:39.833
[SPEAKER_00]: They had very high utilization oil sand assets.

28:40.353 --> 28:42.795
[SPEAKER_00]: Had very low sustaining cap eggs once built.

28:43.496 --> 28:51.443
[SPEAKER_00]: And so that leads to expanding margins.

28:52.553 --> 29:05.534
[SPEAKER_00]: and given what's going on with the issues in the Middle East and the inability to get oil out of a region that has upwards of 25% of oil.

29:07.076 --> 29:17.773
[SPEAKER_00]: Well, the natural companies that have assets and other places are going to see their supply have an ability to be sold and then also the increase in prices, increase revenue as well.

29:19.015 --> 29:20.417
[SPEAKER_00]: And revenue was already growing.

29:21.612 --> 29:26.757
[SPEAKER_00]: Revenue in 2024 was 35 billion, projected to be 38.762 billion this year.

29:27.017 --> 29:28.859
[SPEAKER_00]: And that's just talking about oil and natural gas.

29:30.020 --> 29:32.723
[SPEAKER_00]: Something that we have and we'll continue to talk about.

29:33.284 --> 29:37.167
[SPEAKER_00]: Cutter is one of the largest producers of natural gas in the world.

29:37.808 --> 29:43.734
[SPEAKER_00]: And so this company having that type of exposure that diversified exposure to natural gas, certainly a benefit as well.

29:43.814 --> 29:47.738
[SPEAKER_00]: So overall, I do

29:47.920 --> 30:01.940
[SPEAKER_00]: You can see how this company has reacted, given what's going on in the Middle East, but I do want to caution people, because the companies that tend to run up the quickest, tend to give that gains the quickest as well when there starts to be a resolution.

30:01.960 --> 30:05.124
[SPEAKER_00]: It doesn't mean that it's not a good idea to invest in oil companies.

30:06.186 --> 30:07.688
[SPEAKER_00]: I think CNQ is a great company.

30:08.109 --> 30:11.273
[SPEAKER_00]: I would just be careful about your position size for that reason.

30:11.914 --> 30:15.038
[SPEAKER_00]: That is CNQ, Canadian Natural Resources Limited.

30:15.920 --> 30:16.881
[SPEAKER_00]: Thanks for watching.

30:17.418 --> 30:25.049
[SPEAKER_00]: So here's a second order consequence of the Middle East conflict because everybody's been talking about a way.

30:25.329 --> 30:28.293
[SPEAKER_00]: But this one is gonna hit consumers in a very tangible way.

30:29.255 --> 30:39.068
[SPEAKER_00]: The war, it's choked off big chunks of the world's supply of ammonia, of urea, of sulfur, of phosphates, the building blocks of fertilizer.

30:39.990 --> 30:46.699
[SPEAKER_00]: It's also blocked roughly 20% of global LNG supply which fertilizer producers in Europe depend on.

30:47.557 --> 30:51.040
[SPEAKER_00]: European natural gas prices, they've climbed 60% since the strikes begin.

30:51.941 --> 30:59.287
[SPEAKER_00]: US gas futures are up a more modest 14% which is creating a massive advantage for American fertilizer producers.

31:00.649 --> 31:11.898
[SPEAKER_00]: And investors have already zeroed in on this tree, CF Industries, which consumers or rather consumes huge volumes of natural gas to make nitrogen fertilizers up more than 70% year to date.

31:11.919 --> 31:17.023
[SPEAKER_00]: One of the hottest stocks in the market, Mosaic, nutrient, or each up over 30%.

31:17.189 --> 31:25.021
[SPEAKER_00]: It said the thesis is simple, CF can raise prices to match global competitors, who are paying way more for gas, while it's own impocausts.

31:26.022 --> 31:33.012
[SPEAKER_00]: Relatively stable, the wider the spread between US and European gas prices, the fatter the margins will become.

31:34.635 --> 31:38.541
[SPEAKER_00]: But while that's great for fertilizer stock shareholders, it's bad news for American farmers.

31:40.003 --> 31:44.850
[SPEAKER_00]: Prices for certain fertilizers have jumped about 30% from the disruption.

31:45.168 --> 31:46.789
[SPEAKER_00]: In the timing, it couldn't be worse.

31:46.910 --> 31:49.152
[SPEAKER_00]: This is when farmers are mapping out their spring planting.

31:49.792 --> 31:59.060
[SPEAKER_00]: Many are in a precarious financial position after consecutive years of bumper crops that depressed grain prices and Trump's tariffs that hurt export markets.

32:00.862 --> 32:05.786
[SPEAKER_00]: What we're already hearing from the ground is that farmers are making substitutions.

32:06.747 --> 32:13.453
[SPEAKER_00]: More acres will go to soybeans, which fix their own nitrogen to the soil and require less fertilizer than corn.

32:14.007 --> 32:21.435
[SPEAKER_00]: Bear with cells, crop seeds, and pesticides is expecting the shift and said it will hurt its bottom line since corn is a more profitable business for them.

32:22.136 --> 32:26.640
[SPEAKER_00]: Other farmers are simply counting back on how much fertilizer they apply in accepting lower yields.

32:27.962 --> 32:36.030
[SPEAKER_00]: The ripple effects, they extend beyond the farmgate if corn acreage drops and soybean acreage rises, that shifts the supply dynamics or both crops.

32:36.591 --> 32:39.153
[SPEAKER_00]: It affects ethanol production, animal feed costs.

32:40.275 --> 32:42.597
[SPEAKER_00]: And eventually, your grocery prices.

32:43.623 --> 32:52.130
[SPEAKER_00]: One silver lining, higher oil prices boost demand for corn, and soybeans blended into biofuels, which is providing some price support for farmers, even as input cost rise.

32:53.371 --> 32:59.096
[SPEAKER_00]: But for investors, the fertilizer producers are the obvious winners in this environment.

32:59.116 --> 33:07.984
[SPEAKER_00]: But watch the X-applied chain more broadly, seed companies, equipment manufacturers, and food processors will all feel the effects of how farmers respond to this cost shock.

33:08.845 --> 33:12.668
[SPEAKER_00]: This is in Vestock, our work continues after one minute, so hang on.

33:13.188 --> 33:20.380
[SPEAKER_02]: KPP Financial is excited to announce the third annual in Vestock Market Madness Contest.

33:20.860 --> 33:28.833
[SPEAKER_02]: Instead of basketball brackets, Justin and Luke will be watching companies perform head-to-head in an epic showdown.

33:29.334 --> 33:34.943
[SPEAKER_02]: In Vestock participants can compete for the $1,000 grand prize.

33:34.923 --> 33:40.632
[SPEAKER_02]: and demonstrate their market prowess by locking in their stock victory predictions.

33:41.212 --> 33:51.648
[SPEAKER_02]: And yet this, if the contest winner is also following the Investog YouTube channel, Justin will bump up the prize to $1,500.

33:52.249 --> 33:57.858
[SPEAKER_02]: So if you are ready to test your skills in this unique competition, do not wait.

33:57.878 --> 33:59.640
[SPEAKER_02]: It's free to join the fun.

34:00.161 --> 34:04.187
[SPEAKER_02]: Visit Investog.com and search Market Madness.

34:04.167 --> 34:06.893
[SPEAKER_02]: Then submit your bracket predictions to enter.

34:07.234 --> 34:16.113
[SPEAKER_02]: Get it done before the deadline, March 18th at 11.59 p.m. Hey, Justin and Luke, this is Josh from the UK.

34:16.614 --> 34:19.561
[SPEAKER_05]: I had a quick question about my employee stock purchase program.

34:19.841 --> 34:22.868
[SPEAKER_05]: I'm employed by KBR Kellogg Brown and Ruth.

34:23.270 --> 34:28.137
[SPEAKER_05]: I have a 6% discount with this and so I've been still employee stock purchase program.

34:28.157 --> 34:33.105
[SPEAKER_05]: I'm going to have been in for about 2 years and I'm not overweight in it according to my whole portfolio.

34:33.125 --> 34:36.710
[SPEAKER_05]: And I'm just wondering what you think about this stock and kind of where it's headed the next few years.

34:37.010 --> 34:44.822
[SPEAKER_00]: I appreciate any in post-packs.

34:45.089 --> 34:54.299
[SPEAKER_00]: It is a $4.7 billion science technology engineering and logistical support solutions company.

34:55.500 --> 35:01.067
[SPEAKER_00]: Terms of debt is about 2.7 in debt, so a decent amount of debt for a company at size, certainly.

35:02.648 --> 35:09.696
[SPEAKER_00]: Over the past 52 weeks, it's down 27.36% down 15.39% in the past three months.

35:11.718 --> 35:26.436
[SPEAKER_00]: And down 8.48% in the past year, revenue has been growing at a slow and steady pace I would say about 6.2% on an analyzed basis, though most of that was really from 2020 into 2021.

35:26.496 --> 35:29.820
[SPEAKER_00]: Then right right revenue growth actually turned negative.

35:29.840 --> 35:34.165
[SPEAKER_00]: So there's a lot of volatility here in revenue growth, what about margins?

35:34.685 --> 35:44.363
[SPEAKER_00]: Margins actually remained relatively stable, a bit biased towards the upside actually grown from 7.7% even to margin to 12.4% is where it's projected to be in 2026.

35:44.383 --> 35:55.383
[SPEAKER_00]: Now, the same time price for looking earnings is at a very low figure, 9.3% that is near the low of the past five years.

35:56.705 --> 35:58.228
[SPEAKER_00]: We're about free cash flow.

35:58.529 --> 36:05.838
[SPEAKER_00]: pre-casuals actually growing pretty steadily up from 347 million to 800 and 11 million.

36:06.660 --> 36:09.203
[SPEAKER_00]: Now this company has two main businesses.

36:09.243 --> 36:13.008
[SPEAKER_00]: They're mission technology solutions and they're sustainable technology solutions.

36:13.028 --> 36:26.325
[SPEAKER_00]: So sustainable technology think process technologies licensing engineering for an energy transition, then mission technology think defense intelligence,

36:27.925 --> 36:31.010
[SPEAKER_00]: From a technical perspective, I mean, it doesn't look great.

36:31.631 --> 36:40.527
[SPEAKER_00]: Momentum has been pretty poor since the middle of 2024, which has really been driving this is revenue's missed.

36:41.048 --> 36:44.674
[SPEAKER_00]: Stock has been derated by analysts because of that.

36:46.157 --> 36:47.419
[SPEAKER_00]: And so,

36:47.720 --> 36:51.468
[SPEAKER_00]: For this company, I would probably be hesitant to buy in just given the trends.

36:51.508 --> 36:57.721
[SPEAKER_00]: I mean, even a 6% discount, if you bought it a year ago, isn't really worth the fall off in a price that you've seen over the past 52 weeks.

36:58.602 --> 37:05.256
[SPEAKER_00]: But I think the broader lesson is, in general, I tend to not want to concentrate and hold positions.

37:06.248 --> 37:15.407
[SPEAKER_00]: And a company that is also my primary source of income, because if the company doesn't do well and therefore the stock price is falling, then they have to do layoffs.

37:15.427 --> 37:27.092
[SPEAKER_00]: There's a scenario in which you are both laid off and your big asset concentrated asset and the stock that you've purchased through this purchase program, in your company is devalued as well.

37:28.287 --> 37:33.457
[SPEAKER_00]: Now, given what you said about they're not being a lot of high concentration here, I'm not necessarily worried about that for you.

37:33.898 --> 37:35.741
[SPEAKER_00]: I just think you could take a general lesson in that.

37:36.322 --> 37:45.380
[SPEAKER_00]: And from what I'm seeing from fundamentals, from momentum, from growth, for now, I would be hesitant to buy more.

37:45.821 --> 37:48.085
[SPEAKER_00]: That is KBR ink, ticker KBR.

37:50.815 --> 37:58.187
[SPEAKER_00]: Well, I know we talked about it once, but I want to mention it one more time because I am very excited about invest talk market madness.

37:58.788 --> 38:04.618
[SPEAKER_00]: So one of the favorite things I think that Justin and I do, we love setting it up, we love talking about it, the team loves it as well.

38:05.319 --> 38:06.802
[SPEAKER_00]: And we love for YouTube compete.

38:07.262 --> 38:13.633
[SPEAKER_00]: You want to compete for the $1,000 grand prize, $1,500 if you're a YouTube subscriber.

38:13.613 --> 38:17.563
[SPEAKER_00]: head over to www.investalk.com and fill out your bracket.

38:18.064 --> 38:28.872
[SPEAKER_00]: Just a reminder, the deadline to submit your bracket is March 18th at 1159 p.m. Head it into our final break, so get your questions in now at 888-99 chart.

38:33.982 --> 38:37.606
[SPEAKER_02]: There are a few things that make KPP financial special.

38:38.166 --> 38:40.449
[SPEAKER_02]: One of them is parallel investing.

38:40.469 --> 38:44.593
[SPEAKER_02]: This means they invest right alongside their clients.

38:44.613 --> 38:45.614
[SPEAKER_02]: Here's how it works.

38:46.134 --> 38:54.163
[SPEAKER_02]: When KPP financial makes a trade for their clients, Justin Klein makes the same trade for himself and KPP.

38:54.723 --> 38:59.348
[SPEAKER_02]: On the same day, at the same price, and same percentage.

38:59.328 --> 39:02.010
[SPEAKER_02]: No front running, no special treatment.

39:02.551 --> 39:07.335
[SPEAKER_02]: Learn more about parallel investing at investtalk.com.

39:11.098 --> 39:18.785
[SPEAKER_00]: The International Energy Agency published a report today that puts an official stamp on what we've been covering all week.

39:19.505 --> 39:25.310
[SPEAKER_00]: They called the Middle East War the largest supply disruption in the history of global markets.

39:26.091 --> 39:28.373
[SPEAKER_00]: And it's not hyperbole the IEA.

39:28.977 --> 39:29.979
[SPEAKER_00]: It's numbers back and up.

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[SPEAKER_00]: Gold producers have cut oil production by at least 10 million barrels a day.

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[SPEAKER_00]: Because the straight-of-remuse is effectively impossible.

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[SPEAKER_00]: The IEA expects world output to fall by 8 million barrels a day in March.

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[SPEAKER_00]: That's a decline of more than 7% from roughly 107 million barrels a day produced in February.

39:52.118 --> 39:53.601
[SPEAKER_00]: To put that in context.

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[SPEAKER_00]: The disruption from Russia's invasion of Ukraine, which was considered massive at the time, displaced far less supply than this.

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[SPEAKER_00]: The production cuts are hitting all over the place, rock.

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[SPEAKER_00]: Cutter, Kuwait, the UAE Saudi Arabia.

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[SPEAKER_00]: Kuwait, as we have already talked about, has started shutting a lot of production.

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[SPEAKER_00]: Because their storage tanks, they're filling up.

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[SPEAKER_00]: They literally cannot load tankers.

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[SPEAKER_00]: Vessel traffic through the state crashed from an average of 138 ships a day to just two in a recent 24 hour window.

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[SPEAKER_00]: And neither was a tanker.

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[SPEAKER_00]: Now there is a partial offset.

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[SPEAKER_00]: Saudi Arabia is rerouting exports through its Western Red Sea ports.

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[SPEAKER_00]: They hit a record 5.9 million barrels a day through these ports on March 9th, up from 1.7 million, which is their normal level.

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[SPEAKER_00]: Abu Dhabi's adnok is loading through the port of Fijara, which connects to pipeline infrastructure that bypasses this trader who moves.

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[SPEAKER_00]: Kazakhstan and Russia are also increasing output.

40:58.348 --> 41:01.251
[SPEAKER_00]: Non-OPEC producers are ramping up where they can't.

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[SPEAKER_00]: But the map doesn't close.

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[SPEAKER_00]: The IEA cut its forecast for global supply growth this year to just 1.1 million barrels a day.

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[SPEAKER_00]: And remember, even with the rerouting, Saudi, UAE, can only push a fraction of their normal volumes through these alternate ports.

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[SPEAKER_00]: The pipeline and terminal infrastructure it simply was not built for this volume.

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[SPEAKER_00]: Brent Crude hit over 90 today.

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[SPEAKER_00]: After cutters energy minister warned oil could reach $150 a barrel in two to three weeks if the straight remains closed.

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[SPEAKER_00]: WTI is above 86.

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[SPEAKER_00]: These aren't speculative scenarios anymore.

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[SPEAKER_00]: They're the base case if the conflict doesn't de-escalate and de-escalate quickly.

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[SPEAKER_00]: For investors, this is the macro variable that dominates everything else right now.

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[SPEAKER_00]: The oil price effectively determines the inflation outlook.

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[SPEAKER_00]: Market participants are great.

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[SPEAKER_00]: We talked about earlier in this show.

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[SPEAKER_00]: The expectations for Fed cuts.

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[SPEAKER_00]: In 2026, absolutely crashing.

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[SPEAKER_00]: We talked about fertilizer, needing the inputs that come through the straight.

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[SPEAKER_00]: We haven't even talked about another larger issue.

42:30.195 --> 42:40.630
[SPEAKER_00]: Asian countries, this being a large source of their energy supply, the same parts of the world that are producing semi-conductors, the ripple effects,

42:42.263 --> 42:50.353
[SPEAKER_00]: The ripple effects are likely, too, go throughout the economy beyond just your traditional thoughts about the cost of energy.

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[SPEAKER_00]: For investors, this is and could be without de-escalation, an inflection point.

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[SPEAKER_00]: The inflation outlook determines the Fed.

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[SPEAKER_00]: And the Fed determines where stocks, bonds, and the dollar go.

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[SPEAKER_00]: Watch straight traffic data and any ceasefire signals, that's the only thing that changes this equation.

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[SPEAKER_00]: Well, we did it, this concludes rather another episode of Invest Talk.

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43:24.163 --> 43:32.875
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43:33.456 --> 43:36.079
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43:36.119 --> 43:40.165
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43:41.242 --> 43:45.809
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43:46.369 --> 43:58.567
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43:58.587 --> 44:06.919
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44:06.939 --> 44:08.802
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44:10.132 --> 44:10.934
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44:11.475 --> 44:12.176
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44:12.998 --> 44:13.840
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