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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 Friday, March 13th, 2026 edition of Invest Talk.

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[SPEAKER_00]: Hopefully none of you are too superstitious for those of you didn't get it Friday the 13th.

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[SPEAKER_00]: But that doesn't change.

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[SPEAKER_00]: We have another exciting show for you today.

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[SPEAKER_00]: We'll be running down the developments in the market.

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[SPEAKER_00]: As well as answering your finance and investment question.

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[SPEAKER_00]: So to that end, before we talk about today's market performance, before we get to those show topics, let's tackle this color question now.

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[SPEAKER_06]: Mark from San Diego, just wondering about soil, S, O, I, L, to NETF that does fertilizer, agricultural products.

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[SPEAKER_06]: Is it too late to get them at this point?

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[SPEAKER_06]: Let's hear talks.

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[SPEAKER_06]: Thanks.

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[SPEAKER_00]: S-O-I-L was the global X fertilizer potash ETF.

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[SPEAKER_00]: And the question is, given what we've been talking about, understanding that the closure of the straight given the situation in Iran is not just about the effect that's gonna have on oil, but the effect that's gonna have on components of fertilizer.

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[SPEAKER_00]: As we approach the season, when a lot of farmers are starting to utilize those things.

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[SPEAKER_00]: We've already seen the price of fertilizer for farmers even in the US, increase substantially.

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[SPEAKER_00]: So the idea here is trying to invest in this ETF in order to benefit from the potential rise in price, rise in revenue from some of these companies.

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[SPEAKER_00]: It's a good investment idea, but the answer to your question directly, is it too late to invest in soil?

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[SPEAKER_00]: Yes, it is because that fund actually closed in August of 2020.

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[SPEAKER_00]: I like the idea, certainly not the way to approach it.

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[SPEAKER_00]: Thanks for the call.

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[SPEAKER_00]: We got a lot of ground to cover in the next 45 minutes or so, and it all starts off with my main focus point.

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[SPEAKER_00]: Just about energy security and how that might be an investment theme, specifically how nuclear power is getting a geopolitical boost and you're seeing it not just in the United States, Japan's opposition party is calling for increased nuclear plant usage to offset the Iran crisis and that's highlighting how energy security is becoming a critical investment.

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[SPEAKER_00]: theme.

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[SPEAKER_00]: So this shift towards energy independence, it's driving renewed interest in nuclear power in renewable energy infrastructure and in domestic energy production across multiple countries.

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[SPEAKER_00]: We'll also touch on the areas of the U.S. economy that are most vulnerable to the Iran war,

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[SPEAKER_00]: Then try and answer that age-old question that people really say all the time whether or not they understand the data is another point.

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[SPEAKER_00]: But people tend to say that war is good for the economy.

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[SPEAKER_00]: So we'll touch on that.

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[SPEAKER_00]: And should we have time at the end of the show a quick rundown on what's really going on within the private credit industry?

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[SPEAKER_00]: We also have some voice bank calls ready to play, including one on investing in international markets, as well as a question on CF industries, holding sync.

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[SPEAKER_00]: As always, we got some questions from the comment section of the Invest Talk YouTube channel, and hopefully we hear from some of you live over the next 45 minutes.

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[SPEAKER_00]: Well, folks, before we had to break, I do want to remind you once again about invest talk, market madness because the deadline is less than one week away.

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[SPEAKER_00]: For those of you who have not participated before market madness is our competition where we pit companies head to head to see on a daily basis who the winners are.

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[SPEAKER_00]: You fill out that bracket just like you would a March madness bracket and the winner, the end of the competition, which ends on the day of the college basketball championship, we'll take on the grand prize of $1,000 or $1,500 if they are a subscriber on YouTube.

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[SPEAKER_00]: That sounds interesting.

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[SPEAKER_00]: Head over to www.investalk.com to learn more.

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[SPEAKER_00]: Your brackets must be submitted by March 18th at 1159 p.m. What we're headed into, break, still to come.

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[SPEAKER_00]: A focus on what is really driving the market.

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[SPEAKER_00]: Bunch of stories and more answers to your questions.

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[SPEAKER_00]: Here on www.investalk.

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[SPEAKER_02]: When you tell your friends about Investork and they ask you why you listen, let them know there are many reasons and one is parallel investing from KPP Financial and Investorkos Justin Klein.

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[SPEAKER_02]: Parallel investing means Justin invests right alongside KPP financial clients.

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[SPEAKER_02]: He makes the same trade for KPP financial on the same day at the same price and the same percentages as KPP clients.

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[SPEAKER_02]: There's no front running and no special treatment.

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[SPEAKER_02]: In this way, Justin and KPP financials share the same risks and the same potential for success.

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[SPEAKER_02]: Parallel Investing aligns the interests of Justin and KPP Financial with those of his clients.

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[SPEAKER_02]: Justin, Klein and Luke Guerrero are ready to answer your questions about Parallel Investing.

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[SPEAKER_02]: And you can learn more anytime at InvestTalk.com.

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[SPEAKER_02]: In the early days, in Vestock was Jerry Klein and Steve Peasley.

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[SPEAKER_02]: Now the torch has been passed, and a new generation of hosts is on the job, Justin Klein and Luke Guerrero.

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[SPEAKER_02]: So when you've got finance and investment questions, don't forget to call in Vestock.

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[SPEAKER_02]: 888-99-Chark.

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[SPEAKER_00]: 888-99 chart is the number if you want to get through to me live before the weekend begins, but we do have some business to take care of before we answer another question.

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[SPEAKER_00]: That is to talk a little bit about the market today.

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[SPEAKER_00]: The US stocks did close lower after reversing earlier gains on the latest hawkish Iran development sending the S&P to its lowest level since November.

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[SPEAKER_00]: The Dow dipped a quarter percent of the S&P fell 60 basis points in Nasdaq dropped nearly 1% Russell 2000 lost about a third of a percent, stocks ended near their worst levels of the session.

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[SPEAKER_00]: The internet reversal was driven by a fresh round of Escalatory headlines.

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[SPEAKER_00]: The Pentagon is deploying a marine expeditionary unit to the Middle East, Reddit, Kermbooth, Turan, and the White House turned a bit more hawkish and press reports.

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[SPEAKER_00]: Flag significant challenges in resolving the state of Hormune's situation, which may ultimately require a diplomatic agreement.

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[SPEAKER_00]: Regional oil production shutdowns continue and military escorts for tanker traffic are still likely weeks away.

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[SPEAKER_00]: To beti crewed first earlier declines to finish up over 3% on the day, just under $800 a barrel.

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[SPEAKER_00]: The day to dump was pretty heavy and didn't do the bulls any favor either.

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[SPEAKER_00]: The first revision to Q4 GDP was cut in half down to 7-10th of a percent from 1 percentage point.

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[SPEAKER_00]: So I had 1.4 percent as where it was before.

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[SPEAKER_00]: Personal consumption revised down 4-10th to 2 percent.

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[SPEAKER_00]: January Core PCE came in at 4-10th's month of a month as expected with a year over year print.

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[SPEAKER_00]: We'll surprise to higher at 3.1 percent the hottest since March 2024.

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[SPEAKER_00]: Drivel good orders were flat, missing consensus, and core capital, good shipment the component that feeds into GDP posted a surprise contraction.

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[SPEAKER_00]: That's not the kind of mix that supports an economic resilience narrative especially with oil near $800.

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[SPEAKER_00]: Laring on additional inflation and growth headwinds.

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[SPEAKER_00]: Wasn't all bad though on the brighter side, Joltz job opening surprised to the upside nearly seven million.

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[SPEAKER_00]: And Michigan Consumer Sentiment Edge passed expectations, though the survey period, well, it mostly predated the Iran conflict, the report itself noted some deteriorating sentiment and inflation expectations after hostilities began.

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[SPEAKER_00]: Then we saw a hawkish repricing in rate expectations, and that was really the key overhang with markets now pricing just about 20 basis points of cuts through year end.

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[SPEAKER_00]: Big Tech, uniformly lower led by meta, semis and software were weak while private credit fears lingered in the background.

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[SPEAKER_00]: Casinos, cruise lines, China Tech, home builders were among the relative outperformers on the day.

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[SPEAKER_00]: Vonsei treasuries were mixed with some curved steaming and yields up 3 to 4 basis points of the long end.

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[SPEAKER_00]: The dollar hit year to date highs up 7 tenths on the day.

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[SPEAKER_00]: Same time gold fell 1.3% silver dropped over 4% and Bitcoin futures edged up slightly.

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[SPEAKER_00]: Looking ahead to next week, well, that centers on Wednesday's FOM DEC decision.

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[SPEAKER_00]: The Fed is widely expected to hold, but the

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[SPEAKER_00]: It's going to be closely watched and Powell almost certainly face pointed questions on inflation pressures from the oil shock.

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[SPEAKER_00]: Trade is also on the docket, Brett Bessent and Greer meet their Chinese counterparts in Paris out of Trump's expected late March visit to Beijing.

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[SPEAKER_00]: So next week, shaping up to be a big, potentially big week of market moving news.

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[SPEAKER_00]: Actually, let's briefly mention the newest KPP premium newsletter which will be distributed tomorrow.

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[SPEAKER_00]: This week in the KPP Insights section, we discussed something that we've been talking about a little bit, but we're going a little bit more in depth on other products outside of oil that are affected by the closure of the straight.

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[SPEAKER_00]: The stock idea section we mentioned a home-building company and a wood and building materials company and portfolio management while we touch on using macro events to help shape your portfolio management decisions.

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[SPEAKER_00]: If you're just in learning more, visit us at invest.com and hit subscribe.

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[SPEAKER_00]: The newsletter will come to your inbox on Saturday afternoon.

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[SPEAKER_00]: Let's keep it going and tackle another question now.

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[SPEAKER_03]: Just had a quick question for you.

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[SPEAKER_03]: Wonder if we should be investing in other exchanges and how exactly we would go about doing that.

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[SPEAKER_03]: So, obviously, I'm invested in a much international companies or international stocks through the New York Stock Exchange or the exchanges we have available here in the US.

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[SPEAKER_03]: For diversification purposes or others outside of the US, other exchanges that we should be looking at trading stocks on.

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[SPEAKER_03]: Uh, appreciate any information or any thoughts you may have on it.

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[SPEAKER_03]: Thanks, fight.

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[SPEAKER_00]: So this is a great question.

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[SPEAKER_00]: Especially given the returns recently of international versus US.

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[SPEAKER_00]: It naturally begs the question.

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[SPEAKER_00]: Not only should I increase my allocation towards international stocks international assets outside, diversify outside of the US.

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[SPEAKER_00]: But how should I do it?

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[SPEAKER_00]: And so most investors are going to do it through ETS.

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[SPEAKER_00]: that'll give you broad or pointed exposure to various markets in order to beef up that XUS allocation.

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[SPEAKER_00]: But then you might be saying yourself, okay, what if I want to buy individual stocks?

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[SPEAKER_00]: Well, there are stocks that trade on US exchanges, the ADRs, American depository receipts.

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[SPEAKER_00]: And effectively, they are one for one translated to the benefits of holding a share in the domiciled market.

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[SPEAKER_00]: That also means that the value of an ADR stock is going to match the value of the stock in the market in which the company is not a side.

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[SPEAKER_00]: Now, if you see differences, the reason why there may be differences as well in the UK, their stamp duties, any taxes or monetary frictions, that's generally going to be the difference between the primary line in the country of origin and the ADR.

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[SPEAKER_00]: Now, not every company has an ADR.

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[SPEAKER_00]: ADR's tend to be the companies that are larger, have been around longer, more liquid.

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[SPEAKER_00]: But for the average investor, it's probably not as advisable to go in and try and trade on international exchanges.

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[SPEAKER_00]: The companies that tend to be less liquid, smaller, been around less long.

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[SPEAKER_00]: If you're trying to get exposure on small and midcap names,

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[SPEAKER_00]: Then our ADRs, I would probably stick to ETFs.

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[SPEAKER_00]: And then when you talk about EM, it becomes even more difficult because of the requirements to trade in those markets.

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[SPEAKER_00]: So there's a lot of hurdles for investors.

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[SPEAKER_00]: Ordinary retail investors to do it.

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[SPEAKER_00]: So the best way in my opinion is stick to those ETFs or those ADRs listed on US exchanges.

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[SPEAKER_00]: Thanks to the call.

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[SPEAKER_00]: Just take a look at this question that came in earlier to the Invest talk YouTube comment section question bank.

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[SPEAKER_00]: And it says, would love to know your thoughts on Arista Networks, take your A&ET on a 2% position in my Roth and considering allocating more?

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[SPEAKER_00]: Well, Arista Networks is a cloud networking hardware and a software company, what they do is they design and sell high performance ethernet switches and routers.

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[SPEAKER_00]: In terms of size, the company is roughly 160 billion in market cap.

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[SPEAKER_00]: So it is very large in terms of the size spectrum.

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[SPEAKER_00]: And it's out of strength has been stellar going back to 2020.

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[SPEAKER_00]: It's revenue is up 31.2% year over year.

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[SPEAKER_00]: It's trading in the middle of its range in forward-looking price to earnings.

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[SPEAKER_00]: About 36 and a half.

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[SPEAKER_00]: It's margins are stellar.

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[SPEAKER_00]: It's free cash flows about 4 billion.

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[SPEAKER_00]: They have zero debt, not even virtually zero debt.

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[SPEAKER_00]: And so, you know, what's really been driving it is, we know the AI network in a hyper-scaler arms race.

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[SPEAKER_00]: This backend AI networking, connecting these GPUs and training clusters is the fastest growing segment in enterprise networking history.

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[SPEAKER_00]: And Arist is even at switches, are the infrastructure backbone.

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[SPEAKER_00]: I'm going to keep it short because this is actually a name that we hold for some of our clients and one of our strategies.

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[SPEAKER_00]: So we like this name.

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[SPEAKER_00]: That is, Arist and Networks to your A and E team.

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[SPEAKER_00]: going to break?

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[SPEAKER_00]: Still to come, my main focus point about nuclear power, and more answers to your finance investment questions here on investment.

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[SPEAKER_02]: The weekend is here or almost here, but you've got finance and investment questions, so step up and call in.

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[SPEAKER_02]: Invest talk.

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[SPEAKER_00]: So the Middle East crisis is now about to enter its third week, and something important is happening beyond the oil price headlines.

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[SPEAKER_00]: Governments around the world are having a collective wake up moment about energy security, and it's accelerating investment decisions that we're already in motion.

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[SPEAKER_00]: The most concrete example this week, Japan in the United States are working to include a nuclear power project in their $550 billion investment package with Westing House at the center of a deal potentially worth up to $100 billion in reactors.

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[SPEAKER_00]: Span's opposition party is calling for increased nuclear plant usage to offset this Iran crisis in Tokyo.

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[SPEAKER_00]: They just started, one of their restarted rather, one of their nuclear facilities.

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[SPEAKER_00]: The most significant nuclear capacity restoration since the Fukushima disaster.

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[SPEAKER_00]: And it's not just Japan.

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[SPEAKER_00]: The IEA forecast, the global nuclear power generation will hit an all-time high in 2026.

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[SPEAKER_00]: The Trump administration has set a goal for at least three new reactors online by July 4th of this year and signed executive orders to accelerate uranium mining and reactor deployment the UK will they invested 38 billion in size well see China approved another 10 new reactors in 2025 NATO members their tying energy infrastructure to national security budgets and listen this raise recent crisis didn't start this trend.

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[SPEAKER_00]: But it's certainly pouring gasoline on the fire, bit of a puttner.

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[SPEAKER_00]: Now, I know a lot of you are listening and thinking should I be investing in nuclear power companies.

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[SPEAKER_00]: Right now, and let me walk you through this, honestly.

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[SPEAKER_00]: The investment case is strong on a secular basis.

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[SPEAKER_00]: AI data centers require enormous continuous electricity.

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[SPEAKER_00]: Unlike solar and wind nuclear delivers 24-7 base load power regardless of the weather.

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[SPEAKER_00]: Microsoft Amazon Google, they've all signed long-term nuclear power agreements to secure carbon free electricity for this infrastructure.

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[SPEAKER_00]: That demand driver exists independent of any geopolitical crisis.

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[SPEAKER_00]: Lair on, energy security imperatives, Japan sources 95% of its crude for the Middle East with 70% transiting harm moves, and you understand why countries are treating nuclear capacity as national security priority, not just an energy policy change.

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[SPEAKER_00]: The valuation matters, and some of these names have already run hard.

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[SPEAKER_00]: Uranium stocks and nuclear ETFs have been strong performers.

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[SPEAKER_00]: Camico, a name we hold for our clients, the world's second largest uranium miner, is one of the most widely held names in the space.

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[SPEAKER_00]: Constellation Energy, which operates the largest US nuclear fleet, has benefited from long-term power-produced agreements with tech companies.

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[SPEAKER_00]: Centres Energy is the only US-based uranium in richer positioning it, for the type of fuel the next generation small modular reactors are going to require.

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[SPEAKER_00]: But the cyclical nature of uranium means these stocks can be pretty volatile.

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[SPEAKER_00]: You need to buy at the right place, not just because the thesis is exciting.

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[SPEAKER_00]: For the average investor, asking how to get exposure without picking individual stocks.

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[SPEAKER_00]: There are several nuclear ETS worth knowing.

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[SPEAKER_00]: The global X uranium ETF gives broad exposure across uranium miners and nuclear companies.

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[SPEAKER_00]: Sprite uranium miners ETF is more concentrated in pure plane miners.

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[SPEAKER_00]: Vanic uranium and nuclear ETF blends.

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[SPEAKER_00]: both minors with utility operators who run nuclear power plants, which gives it a more defensive character.

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[SPEAKER_00]: These types of ETFs let you access themes without making a single stockbed.

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[SPEAKER_00]: And I'm not saying that these are the best ones.

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[SPEAKER_00]: These are just some examples of a wide array that you should, if you're trying to invest in uranium and don't want to worry so much about individual volatility, should look at and do your own research about.

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[SPEAKER_00]: Now, what about the broader energy security theme beyond nuclear?

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[SPEAKER_00]: The way I think about that is three buckets, first domestic energy production.

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[SPEAKER_00]: The US is a net energy exporter, and it has been for some time now.

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[SPEAKER_00]: And the companies that produce oil gas and refine products domestically are direct beneficiaries when global supply chains are disrupted.

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[SPEAKER_00]: We've seen energy stocks lead the S&P 500 this year for that exact reason.

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[SPEAKER_00]: Second, energy infrastructure.

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[SPEAKER_00]: This includes everything from grid monetization to pipeline capacity to LNG export terminals.

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[SPEAKER_00]: The physical buildout required to make energy systems more resilient is a multi-year investment cycle.

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[SPEAKER_00]: Industrials, material companies tied to this buildout, they have real earnings tailwinds.

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[SPEAKER_00]: Third, renewable energy and storage.

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[SPEAKER_00]: This recent crisis is a reminder that dependence

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[SPEAKER_00]: A rather countries that diversify into renewable plus, battery storage, reduce that exposure over time.

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[SPEAKER_00]: Solar Wind, grid-scale storage companies benefit from the same energy and dependence logic as nuclear.

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[SPEAKER_00]: Though their investment profiles are different, there's lower capital intensity, there's faster deployment.

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[SPEAKER_00]: But, Intermittency challenges that nuclear doesn't have.

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[SPEAKER_00]: How do you evaluate renewable energy versus traditional energy investments?

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[SPEAKER_00]: The honest answer is you probably want both.

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[SPEAKER_00]: Traditional energy oil gas nuclear provide the base load reliability that economies need right now, especially in a crisis.

21:17.519 --> 21:23.309
[SPEAKER_00]: Renewables provide the long-term cost curve advantage and the policy tailwinds from decarbonization commitments.

21:24.110 --> 21:26.013
[SPEAKER_00]: The mistake is treating this as an either-or.

21:26.434 --> 21:28.898
[SPEAKER_00]: The smart energy portfolios are bar bell strategies.

21:29.359 --> 21:35.950
[SPEAKER_00]: Traditional energy for the near-term cash flow and geopolitical hedge, renewables and nuclear for the structural growth of the next decade.

21:36.638 --> 21:39.702
[SPEAKER_00]: Which countries offer best energy and dependence investment opportunities?

21:39.722 --> 21:41.764
[SPEAKER_00]: Well, the US is the most obvious.

21:42.185 --> 21:46.670
[SPEAKER_00]: We talked about Japan as an emerging as a particularly interesting story.

21:47.170 --> 21:51.856
[SPEAKER_00]: South Korea as well, their nuclear industry is actively expanding its export business.

21:52.437 --> 21:59.144
[SPEAKER_00]: The bottom line here is that energy security has moved from a policy talking point to an investment theme with a real capital flow behind it.

21:59.985 --> 22:06.493
[SPEAKER_00]: Nuclear powers at the center of that shift and the Iran crisis is accelerating timelines

22:07.823 --> 22:13.276
[SPEAKER_00]: On the next invest talk, we'll look into this story, major shipping routes like the Strait of Hormuz are facing blockages.

22:13.897 --> 22:18.448
[SPEAKER_00]: The emerging supply chain crisis is therefore reshaping global trade patterns.

22:19.450 --> 22:25.444
[SPEAKER_00]: That's from Monday, but for now I'm Lou Guerrero and we are ready to take your calls at 80-899 chart.

22:31.972 --> 22:39.143
[SPEAKER_02]: KVP Financial is excited to announce the third annual Invest Talk Market Madness Contest.

22:39.664 --> 22:44.913
[SPEAKER_02]: Invest Talk Participants can compete for the $1,000 grand prize.

22:45.494 --> 22:50.662
[SPEAKER_02]: So if you are ready to test your skills in this unique competition, do not wait.

22:51.002 --> 22:59.616
[SPEAKER_02]: Visit InvestTalk.com and search Market Madness.

22:59.917 --> 23:11.576
[SPEAKER_05]: My question is regarding ticker symbol, M-O-G slash A, this company designs and manufacturers control systems in the aerospace and defense industry.

23:12.097 --> 23:20.291
[SPEAKER_05]: Looks like they have a good balance sheet and I would like to know your take if this talk is worth purchasing at the current valuation.

23:20.651 --> 23:22.775
[SPEAKER_05]: My look forward to hear your thoughts and thank you.

23:22.795 --> 23:24.017
[SPEAKER_05]: I have a great evening.

23:24.082 --> 23:28.206
[SPEAKER_00]: Let's take a look at Moug ink to your M-O-G-A.

23:28.967 --> 23:36.494
[SPEAKER_00]: It is a precision motion and fluid controls designer and manufacturer as well as a systems integrator.

23:37.335 --> 23:44.522
[SPEAKER_00]: The operate within four business segments, space and defense, which is missile actuation and defense vehicles.

23:45.242 --> 23:50.207
[SPEAKER_00]: They've got military aircraft, so they're primary and secondary, a flight control systems.

23:50.744 --> 24:01.682
[SPEAKER_00]: Commercial aircraft, their flight critical control systems for wide body, jets, and their industry, which is automation, medical, simulation, and energy.

24:01.915 --> 24:04.178
[SPEAKER_00]: plus they got a little bit of a data center cooling business.

24:04.258 --> 24:11.167
[SPEAKER_00]: Now, terms of revenue, it's been a steady grower about 6% on an annualized basis.

24:11.928 --> 24:17.316
[SPEAKER_00]: It's a $9 billion market cap company with only about $1.1 billion in debt.

24:17.336 --> 24:22.663
[SPEAKER_00]: It's trading quite a bit of a premium relative to where it's been trading over the past five years.

24:22.743 --> 24:26.708
[SPEAKER_00]: It's sitting at 20 and a half times price to forward-looking earnings.

24:26.688 --> 24:30.374
[SPEAKER_00]: Ties about 33, 4.8 times price to book value.

24:30.454 --> 24:35.081
[SPEAKER_00]: Ties 5.6 with an average of 2.7 price to cashflow 27.2.

24:35.281 --> 24:44.916
[SPEAKER_00]: Now relative strength compared to the S&P 500 really took off in let's say October of last year.

24:45.723 --> 24:53.648
[SPEAKER_00]: And the company itself, well, it's up 75.34% in the past 52 weeks, up 23.83% year to date.

24:53.668 --> 24:59.867
[SPEAKER_00]: In terms of profitability, margins seem to be expanding.

24:59.948 --> 25:09.442
[SPEAKER_00]: In September 2020, EBITDA margin is about 11.9 projected to be 14.6 this upcoming year return on equity a bit lower than some of its peers.

25:09.462 --> 25:12.126
[SPEAKER_00]: Well, I guess actually it's higher than the average about 13.3%.

25:12.686 --> 25:25.585
[SPEAKER_00]: So what's really been driving this well, as you could probably guess, a bit of a defense spending super cycle.

25:25.987 --> 25:37.503
[SPEAKER_00]: year over year in Q1, 31% and so it's been driving companies like RTX and LMT is flowing through these MOOC precision components.

25:38.144 --> 25:50.762
[SPEAKER_00]: There's also the industrial segment, albeit smaller, their industrial automation, their medical simulation, their test equipment, it is a steady business and the data center cooling angle is, it's new, it's notable, it's attractive.

25:50.742 --> 25:51.523
[SPEAKER_00]: two investors.

25:52.365 --> 26:01.640
[SPEAKER_00]: Now as a recently, I mean, they did have a bit of a headwind as a lot of these types of companies did because of tariffs, but it seemed to be a bit more manageable than it was for other companies.

26:01.680 --> 26:08.872
[SPEAKER_00]: They saw their margins being dragged by anywhere from 80 to 120 basis points in Q1.

26:08.972 --> 26:10.454
[SPEAKER_00]: And so this stock has run.

26:10.494 --> 26:12.618
[SPEAKER_00]: It's run really hard.

26:13.599 --> 26:15.282
[SPEAKER_00]: It's trading at 301.

26:16.156 --> 26:17.638
[SPEAKER_00]: Just a couple of months ago was trading at 188.

26:17.738 --> 26:21.323
[SPEAKER_00]: Again, I told you up 75% over the past 52 weeks.

26:21.824 --> 26:26.150
[SPEAKER_00]: It had a high 345 in the middle of February.

26:26.711 --> 26:30.697
[SPEAKER_00]: And so it got rejected from there down 1.56% today.

26:30.737 --> 26:34.422
[SPEAKER_00]: I think this is one of those situations where the defense trade is a bit overbought.

26:34.462 --> 26:35.904
[SPEAKER_00]: This name looks a bit overbought.

26:35.924 --> 26:37.907
[SPEAKER_00]: It's trading in a way that's a bit overbought.

26:38.208 --> 26:42.754
[SPEAKER_00]: It doesn't change the fact that it has real growth in its segments, and we'll likely continue to have some.

26:42.734 --> 26:51.911
[SPEAKER_00]: If you wanted to DCA into this position, I think that's a little reasonable here, but I'd be hesitant just given the current valuation relative to what the growth actually is, only 6% growth.

26:51.971 --> 27:05.856
[SPEAKER_00]: A lot of this seems to be speculation on what growth might be, and so any turn in the Middle East conflict, certainly would affect this stock's price adversely, but as Mouging ticker M-O-G-A.

27:05.836 --> 27:13.905
[SPEAKER_00]: On Friday's, we generally make time to fit in a quick run-down of key benchmark numbers, so let me hit you with that list right now.

27:14.986 --> 27:23.155
[SPEAKER_00]: Two-year yield is a 3.729% today, last week it was 3.5, 29, 2019 weeks back, it was 0.64.

27:24.657 --> 27:33.447
[SPEAKER_00]: The 10-year was 4.283% today, last week that was 4.113, 216 weeks goes, 1.762.

27:33.764 --> 27:38.931
[SPEAKER_00]: Gold, $50, 20 per ounce, $129 less than we saw last week.

27:38.951 --> 27:41.274
[SPEAKER_00]: 32 weeks goes, $3,038.

27:41.855 --> 27:45.560
[SPEAKER_00]: To 211 and 11 weeks go, it was $1806.

27:47.022 --> 27:59.940
[SPEAKER_00]: So over today, $80 and $61 per ounce that is $3.54 less than last week.

28:01.439 --> 28:07.767
[SPEAKER_00]: Boyle was selling for $99.31 per barrel that is $9.38 higher than it was last week.

28:07.787 --> 28:12.052
[SPEAKER_00]: 77 weeks ago is 67.7919 weeks back.

28:12.093 --> 28:15.617
[SPEAKER_00]: It was 74.30 and 218 weeks ago is 66.62.

28:16.558 --> 28:20.563
[SPEAKER_00]: National average for a gallon of regular gasoline is 363 per gallon.

28:20.583 --> 28:29.775
[SPEAKER_00]: A 31 cent increase with last week.

28:30.818 --> 28:31.299
[SPEAKER_00]: It was 357.

28:32.700 --> 28:36.345
[SPEAKER_00]: California, gas is 51 cents higher than last week.

28:36.405 --> 28:42.972
[SPEAKER_00]: At 541 per gallon, 122 weeks ago, those at 532 and 198 weeks back, it was 587.

28:44.514 --> 28:54.286
[SPEAKER_00]: For comparison, in Wisconsin, gas is averaging 332 per gallon today that is $2.9 less than gas in California.

28:54.806 --> 28:57.990
[SPEAKER_00]: All right, let's drop in another listener question now.

28:58.291 --> 29:10.291
[SPEAKER_04]: I'm calling about a sector that I don't normally invest in, after listening to invest talk for about five years, but the airline industry and the car manufacturing industry, and kind of like a do not buy sector.

29:10.792 --> 29:14.938
[SPEAKER_04]: However, I was hoping you can take a look at GM, general motors for me.

29:15.579 --> 29:17.122
[SPEAKER_04]: I think these numbers look pretty good.

29:17.162 --> 29:21.970
[SPEAKER_04]: I was wondering if you think there's any value here in buying this company for maybe midterm.

29:22.338 --> 29:27.084
[SPEAKER_04]: You know, just to hold for a little bit, but also do you think this is about your chat, maybe it's not worth it?

29:27.104 --> 29:31.710
[SPEAKER_04]: If you think about that, the numbers for me, please be greatly appreciated, thank you very much as always.

29:31.750 --> 29:32.171
[SPEAKER_04]: Have a good day.

29:32.191 --> 29:32.811
[SPEAKER_00]: Bye.

29:34.113 --> 29:34.293
[SPEAKER_00]: Nope.

29:35.315 --> 29:48.852
[SPEAKER_00]: Airlines and car companies are some of the worst high leverage low margin businesses that exist.

29:49.810 --> 29:54.617
[SPEAKER_00]: $95 billion in debt on a $66 billion market cap company.

29:55.759 --> 30:00.846
[SPEAKER_00]: Free cash flow, negative, each of the past five years with the exception of this year.

30:01.928 --> 30:07.015
[SPEAKER_00]: Training at 5.8 times price to forward looking earnings, which is just below its average.

30:08.998 --> 30:17.691
[SPEAKER_00]: Now it's up 53.66% in the past 52 weeks.

30:19.223 --> 30:24.090
[SPEAKER_00]: Think about what's going on now, think about the cost of driving.

30:25.713 --> 30:27.115
[SPEAKER_00]: Should this situation continue?

30:27.135 --> 30:30.420
[SPEAKER_00]: Think about the cost of energy inputs to manufacturing a production.

30:32.002 --> 30:36.349
[SPEAKER_00]: For a low margin high leverage business like this, a lot of down side risk.

30:36.429 --> 30:43.260
[SPEAKER_00]: And so I would say this name, which is down 11% year to date for a reason, the lesson still stands.

30:44.101 --> 30:46.224
[SPEAKER_00]: No airlines, no car companies.

30:46.244 --> 30:46.885
[SPEAKER_00]: Thanks for the call.

30:47.928 --> 30:54.078
[SPEAKER_00]: So we spend a lot of time on this show talking about the oil price and the geopolitical dynamics.

30:54.759 --> 31:02.491
[SPEAKER_00]: Today I want to focus on how this actually hits the real economy because the ripple effects their broad and their broader than most people realize.

31:03.974 --> 31:07.680
[SPEAKER_00]: Let's start with the obvious gas prices.

31:08.161 --> 31:15.252
[SPEAKER_00]: They're up 65 cents since the war began diesel, which goes in my car.

31:16.160 --> 31:17.844
[SPEAKER_00]: Who's immediately exposed airlines?

31:18.084 --> 31:23.416
[SPEAKER_00]: Fuel is one of their top costs and owe by the way in the past year most of them decided that hedging was too expensive.

31:24.098 --> 31:24.920
[SPEAKER_00]: So they haven't hedged.

31:25.902 --> 31:30.793
[SPEAKER_00]: In fact, analysts have already lowered earnings targets for most major carriers.

31:31.595 --> 31:34.000
[SPEAKER_00]: Airlines shares, they're down across the board.

31:34.621 --> 31:38.466
[SPEAKER_00]: any company that relies on fuel for transportation, for operation.

31:39.327 --> 31:40.709
[SPEAKER_00]: They're feeling the consequences already.

31:40.889 --> 31:48.259
[SPEAKER_00]: We're hearing on earnings costs from logistics companies, from concrete pumping firms, for medical transport providers, all saying the same thing.

31:49.080 --> 31:51.964
[SPEAKER_00]: Costs are going up and they're passing them through to consumers.

31:52.805 --> 31:54.127
[SPEAKER_00]: The auto industry is exposed.

31:55.108 --> 31:56.550
[SPEAKER_00]: What great timing to talk about this?

31:58.012 --> 32:01.236
[SPEAKER_00]: Ford and GM, their shares are down since the war started.

32:01.351 --> 32:04.939
[SPEAKER_00]: The irony is that the industry had partially pulled back for maybe production.

32:05.721 --> 32:09.510
[SPEAKER_00]: And now rising gas prices, they're reminding everyone why electric vehicles were attractive in the first place.

32:10.312 --> 32:11.595
[SPEAKER_00]: Then there's the inflation channel.

32:11.675 --> 32:18.330
[SPEAKER_00]: Barclays estimates that a 10% oil price increase raises US inflation by about 20 bips.

32:19.964 --> 32:21.186
[SPEAKER_00]: Now, we're not going to see it immediately.

32:21.206 --> 32:23.010
[SPEAKER_00]: That's more likely to come in the next month or so.

32:24.032 --> 32:31.386
[SPEAKER_00]: If oil stays at or above $100 for two to three months, they project inflation could reach three and a half by summer and finish the year well above three.

32:32.528 --> 32:35.213
[SPEAKER_00]: Compare that to a pre-war protection of 2.7.

32:36.195 --> 32:40.403
[SPEAKER_00]: That is a meaningful shift that directly impacts what the Fed is able to do.

32:41.007 --> 32:42.771
[SPEAKER_00]: And the effect is asymmetric for households.

32:42.831 --> 32:43.653
[SPEAKER_00]: Costs are your fuels.

32:44.335 --> 32:48.545
[SPEAKER_00]: It hits lower income households hardest because they spend a bigger share of income at the pump.

32:49.046 --> 32:56.805
[SPEAKER_00]: Expensive diesel makes it cost their to ship groceries, which lifts or prices jet fuel costs end up in air fairs.

32:56.785 --> 33:05.275
[SPEAKER_00]: Goldman Sachs estimates that a $10 per barrel increase reduces annual GDP by about 10 basis points if it's sustained through your end.

33:05.295 --> 33:07.858
[SPEAKER_00]: That may sound small, but the economy is already understrain.

33:07.918 --> 33:14.306
[SPEAKER_00]: We just lost 92,000 jobs in February and growth was revised lower for late last year.

33:14.326 --> 33:18.431
[SPEAKER_00]: Bank of America flagged that a doubling of oil prices if sustained could cause a recession.

33:18.911 --> 33:19.552
[SPEAKER_00]: Now we're not there yet.

33:20.593 --> 33:21.915
[SPEAKER_00]: But trajectory matters.

33:22.418 --> 33:32.151
[SPEAKER_00]: Housing is a potential, another casualty, more regrets had dropped below 6% last month for the first time since 2022, sparking hopes for the spring selling season.

33:32.171 --> 33:33.773
[SPEAKER_00]: Now they've risen back to 6-11.

33:34.273 --> 33:34.514
[SPEAKER_00]: Why?

33:34.694 --> 33:35.575
[SPEAKER_00]: Inflation concerns.

33:36.937 --> 33:43.265
[SPEAKER_00]: The real danger isn't just the rate, it's the uncertainty from the war and what it causes, potential buyers to hold off entirely.

33:44.006 --> 33:48.612
[SPEAKER_00]: Consumer confidence is one of the most fragile components of the economy.

33:49.435 --> 33:56.552
[SPEAKER_00]: The silver lining, if there is one, is the US is structurally less exposed oil shocks than it has been in past decades.

33:56.633 --> 33:59.079
[SPEAKER_00]: The fracking revolution made us a net energy exporter.

33:59.760 --> 34:00.682
[SPEAKER_00]: Have you manufacturing?

34:00.723 --> 34:02.086
[SPEAKER_00]: It's a smaller share of GDP.

34:03.008 --> 34:04.592
[SPEAKER_00]: And as a major oil producer,

34:05.433 --> 34:09.281
[SPEAKER_00]: Energy companies and regions like West Texas are actually profiting from higher prices.

34:09.822 --> 34:20.404
[SPEAKER_00]: But for consumers, the people we care about ourselves, our families, our costs, for the broader economy that depends on their spending, a sustained energy shock is a real headwind.

34:20.845 --> 34:23.290
[SPEAKER_00]: At a time, we can least afford it.

34:23.742 --> 34:27.206
[SPEAKER_00]: This is Invest Talk now with over 62 million downloads.

34:27.526 --> 34:29.748
[SPEAKER_00]: Are we continues that in 60 seconds?

34:30.209 --> 34:30.769
[SPEAKER_00]: So hang on.

34:31.250 --> 34:38.398
[SPEAKER_02]: KPP Financial is excited to announce the third annual Invest Talk Market Madness Contest.

34:38.858 --> 34:46.847
[SPEAKER_02]: Instead of basketball brackets, Justin and Luke will be watching companies perform head to head in an epic showdown.

34:47.327 --> 34:52.973
[SPEAKER_02]: Invest Talk participants can compete for the $1,000 grand prize.

34:52.953 --> 34:58.622
[SPEAKER_02]: and demonstrate their market prowess by locking in their stock victory predictions.

34:59.202 --> 35:08.677
[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.

35:09.618 --> 35:15.427
[SPEAKER_02]: So if you are ready to test your skills in this unique competition, do not wait.

35:15.867 --> 35:17.690
[SPEAKER_02]: It's free to join the fun.

35:18.171 --> 35:22.217
[SPEAKER_02]: Visit Investog.com and search market madness.

35:22.197 --> 35:24.900
[SPEAKER_02]: Then submit your bracket predictions to enter.

35:25.221 --> 35:32.149
[SPEAKER_02]: Get it done before the deadline, March 18th at 1159 p.m. Hi, Joffton and Luke.

35:32.709 --> 35:45.985
[SPEAKER_07]: I was interested in buying fast-minute company, ticker symbol, S-A-S-T, for a long-term hold, something just to iron, put away and that think about.

35:46.505 --> 35:47.987
[SPEAKER_07]: I'd like to get your opinion on it.

35:48.167 --> 35:48.728
[SPEAKER_07]: Thank you.

35:49.906 --> 35:58.683
[SPEAKER_00]: FAST is a fastener company, it's an industrial distributor of fasteners, safety products, tools, and MRO supplies.

35:59.285 --> 36:03.493
[SPEAKER_00]: So it serves manufacturing, it's sort of non-residential construction.

36:04.013 --> 36:06.756
[SPEAKER_00]: And it's a pretty strong company in terms of momentum.

36:06.796 --> 36:13.783
[SPEAKER_00]: I mean, over the past 52 weeks, it's up 23.38% year to date, it's up 13.28% and it's revenue growth.

36:14.484 --> 36:16.986
[SPEAKER_00]: It's been pretty consistent with the past five years.

36:17.066 --> 36:20.410
[SPEAKER_00]: It stands at about 7.7% on an annualized basis.

36:20.490 --> 36:24.734
[SPEAKER_00]: It's supposed to grow from 25 and to 26% by just under 10%.

36:26.416 --> 36:33.143
[SPEAKER_00]: And so with this growth, with a return on equity of 33.3,

36:34.203 --> 36:42.874
[SPEAKER_00]: With solid margins, it's trading at a bit of a premium, 36.2 times price to forward looking earnings.

36:44.476 --> 36:50.143
[SPEAKER_00]: One reason why this company trades at a premium and I think in a way it should is because of its onsite model.

36:50.183 --> 36:54.829
[SPEAKER_00]: They physically install vending machines and dedicated supply rooms inside their customer facilities.

36:55.429 --> 36:57.392
[SPEAKER_00]: So once embedded, churn is near zero.

36:57.832 --> 37:02.438
[SPEAKER_00]: The customer's team essentially outsources industrial supply management too fast and all.

37:02.992 --> 37:07.624
[SPEAKER_00]: 62% of the revenue is now digitally enabled, meaning it's recurring, it's contracted.

37:07.744 --> 37:12.497
[SPEAKER_00]: And it's a big mode, it is largely immune to competitive displacement.

37:13.399 --> 37:18.452
[SPEAKER_00]: They've also had a large shift in customer mix.

37:19.141 --> 37:21.645
[SPEAKER_00]: Now, one thing to note, right, manufacturing cycle is sensitive.

37:21.665 --> 37:25.351
[SPEAKER_00]: 80% of its revenues tied to manufacturing and non-residential construction.

37:26.092 --> 37:28.295
[SPEAKER_00]: There was a bit of a exposure to import tariffs.

37:28.355 --> 37:29.858
[SPEAKER_00]: I'll be at not too much.

37:30.799 --> 37:33.784
[SPEAKER_00]: But the question is, is the valuation worth it?

37:34.565 --> 37:42.938
[SPEAKER_00]: And right now, do you want to be exposed to a company and enter into a company that is asymmetrically, probably, could be a loser?

37:42.918 --> 37:44.940
[SPEAKER_00]: should things start to deteriorate in the Middle East?

37:45.361 --> 37:48.584
[SPEAKER_00]: I think for now I'd probably keep this on my watchlist next earnings.

37:48.604 --> 37:49.505
[SPEAKER_00]: It's not a month away.

37:50.867 --> 37:51.868
[SPEAKER_00]: I do like the company.

37:51.928 --> 37:52.488
[SPEAKER_00]: It's hard.

37:52.569 --> 37:56.873
[SPEAKER_00]: It's hard because it is it's pretty expensive and there are some headwinds.

37:56.973 --> 38:02.299
[SPEAKER_00]: I just think for now, given it's run up, keep it on my watchlist.

38:02.319 --> 38:06.724
[SPEAKER_00]: That is fast in all company to your FAST.

38:06.744 --> 38:08.085
[SPEAKER_00]: It is in Vestock, I'm Lou Greer.

38:08.125 --> 38:11.389
[SPEAKER_00]: We have one goal here to help you achieve your financial freedom.

38:11.555 --> 38:18.713
[SPEAKER_00]: or work continues after a final break, so get your questions in now at 88, 99 chart.

38:27.940 --> 38:28.901
[SPEAKER_02]: Invest Talk.

38:29.302 --> 38:36.953
[SPEAKER_02]: Tell your friends they can listen live, download the free podcast, or watch Invest Talk on our YouTube channel.

38:37.414 --> 38:43.743
[SPEAKER_02]: And they can leave their finance and investment questions any time on 88899 chart.

38:47.088 --> 38:53.037
[SPEAKER_00]: So this is a bit of an uncomfortable topic, but it's one investors need to think about.

38:53.692 --> 39:05.146
[SPEAKER_00]: As fuel prices search and the near-term economic damage from the Middle East conflict is obvious, this is a longer-term question, does military spending actually help the economy's grow?

39:06.688 --> 39:07.589
[SPEAKER_00]: History says it can.

39:08.510 --> 39:12.655
[SPEAKER_00]: Under certain conditions the U.S. emerged from both world wars, richer.

39:13.537 --> 39:20.425
[SPEAKER_00]: An employment fell from 14.6% in 1940 to 1.2% in 1944.

39:21.670 --> 39:27.397
[SPEAKER_00]: Military research gave us computers, they gave us jet engines, they gave us satellite navigation in the internet.

39:29.139 --> 39:36.548
[SPEAKER_00]: Defense contracts today are financing AI, quantum computing, and drone technologies, all with massive civilian applications.

39:37.189 --> 39:42.095
[SPEAKER_00]: South Korea, built a booming arms export sector, alongside its semiconductor industry.

39:42.836 --> 39:47.982
[SPEAKER_00]: Israel has posted a record tech investment driven partly by military spending.

39:48.215 --> 39:54.040
[SPEAKER_00]: And right now, defense spending is ramping up globally on a scale not seen in decades.

39:55.442 --> 39:58.545
[SPEAKER_00]: NATO members have pledged to spend 5% of GDP on defense.

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[SPEAKER_00]: Trump is proposing a $1.5 trillion defense budget, roughly 6% of GDP, comparable to the peak during the Reagan administration in the Cold War.

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[SPEAKER_00]: European countries that minimize defense for decades, they're spending on social welfare and

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[SPEAKER_00]: are now redirecting hundreds of billions in our production.

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[SPEAKER_00]: One economist at the Free University of Brussels said he's fairly convinced there will be long-run positive growth effects from this spending, pointing to new tech firms emerging around Munich, around Paris, and the Nordic region.

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[SPEAKER_00]: But the downsides are real, and they're well-documented.

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[SPEAKER_00]: Defense spending can crowd out more productive investment.

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[SPEAKER_00]: It pushes up interest rates when governments borrow more money.

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[SPEAKER_00]: is the crowding out effect.

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[SPEAKER_00]: It creates a inflationary pressure as raw materials go to weapons instead of consumer goods.

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[SPEAKER_00]: Military hardware sits on a shelf or explodes.

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[SPEAKER_00]: It's not a bridge or a factory that generates ongoing economic value.

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[SPEAKER_00]: And the Vietnam era, well, that taught us that running a war economy and a consumer economy, at full tilt simultaneously leads to stack inflation.

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[SPEAKER_00]: For investors, the takeaway is, it's nuanced.

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[SPEAKER_00]: Defense stocks have been incredible performers of 52% over the past year globally.

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[SPEAKER_00]: But as we discussed a few of a sudden, back they're trading at about 35 times earnings.

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[SPEAKER_00]: The continued success of the trade is contingent on a Goldilocks scenario.

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[SPEAKER_00]: Enough conflict to sustain budgets, but not so much that government start squeezing profits through renegotiated contracts or windfall taxes.

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[SPEAKER_00]: Trump's executive order banning bi-backs and dividends at major defense contractors is an early sign that the dynamic, authority and play.

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[SPEAKER_00]: Now, the broader point for your portfolio is that military spending is becoming a structural feature of the global economy, not really a cyclical blip.

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[SPEAKER_00]: And that creates opportunities.

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[SPEAKER_00]: It creates opportunities and defense in infrastructure, in energy.

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[SPEAKER_00]: And most importantly, the industrial base

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[SPEAKER_00]: That supports all of it, but it also comes with costs, higher deficits, higher rates for longer, not to mention lives, and so this constant tension between guns and butter, something that if you study economics, you'd understand the reference, is something that every wartime

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[SPEAKER_00]: It's not so simple as the old adage that war is good for the economy, and you typically don't find out if it even was until years later.

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[SPEAKER_00]: Before we head off for the weekend, I want to mention one more time that the deadline is quickly approaching to compete in invest talk market madness, our annual competition, one of my favorite things that we do.

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[SPEAKER_00]: We have a little fun here.

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[SPEAKER_00]: We create brackets.

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[SPEAKER_00]: See who is the best at predicting what companies will win the daily head-to-head matchups.

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[SPEAKER_00]: That sounds interesting.

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[SPEAKER_00]: If you want to win potentially the $1,000 or $1,500 if you're a subscriber, grand prize, head over to investock.com to submit your bracket by March 18th at 11.59 p.o.

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[SPEAKER_00]: Well, that about does it.

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[SPEAKER_00]: I'm Lou Greer, I want to thank you

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[SPEAKER_00]: Do me favor?

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[SPEAKER_00]: Tell one friend or one family member that are free podcast downloads are available on iTunes or Spotify and while you're over there, if you leave us a rate and review, that is greatly appreciated.

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[SPEAKER_00]: If today's show made you think about your investments, your taxes, your retirement, if you're saving enough for your kids' college education, and KPB Financial will offer no cost, confidential portfolio reviews to bring a little clarity to your investment life.

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[SPEAKER_00]: That sounds interesting.

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[SPEAKER_00]: Head over to investalk.com and click the portfolio review button.

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[SPEAKER_00]: Independent thinking?

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[SPEAKER_00]: Share its success.

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[SPEAKER_00]: This is Invest Talk.

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[SPEAKER_00]: Enjoy your weekend.

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