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

[SPEAKER_01]: Independent Thinking, shared success.

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

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

[SPEAKER_00]: Good afternoon, fellow investors, and welcome to the Thursday, April 16th, 2026 edition of Invest Talk.

[SPEAKER_00]: I'm your host Luke Guerrero and I'll be with you for the next hour when we dive into what happened in the market today and bring you a bunch of important stories you need to know.

[SPEAKER_00]: That being said, before we do all of those things, I just mentioned, let's tackle this collar question.

[SPEAKER_05]: Hi.

[SPEAKER_05]: Just on Luke.

[SPEAKER_05]: This is Andrew.

[SPEAKER_05]: I appreciate everything you do.

[SPEAKER_05]: Calling to us about a stock called Transmedics, Dr. GerttMDX, during the Oregon Care Transportation Industry.

[SPEAKER_05]: They provide the end-to-end services, everything from harvesting to transportation.

[SPEAKER_05]: Just kind of wonder what your thoughts are on the overall future of the stock, a big draft along the way, but still pretty big percentage of my portfolio.

[SPEAKER_05]: So just curious what you guys think about the stock, and I'll be listening on a show.

[SPEAKER_00]: Thanks.

[SPEAKER_00]: TMDX, which is Transmedics Group Inc, is a $4 billion medical technology company.

[SPEAKER_00]: that focuses on the commercialization of organ care system.

[SPEAKER_00]: So they have a portable perfusion platform that keeps donor hearts donor livers, donor lungs, viable outside of the body.

[SPEAKER_00]: Last quarter, it looks like revenue was up 32% year over year, beat by about 3% earnings per share.

[SPEAKER_00]: Beat by about 40%.

[SPEAKER_00]: The full year, 2025 revenue was up 37% year over year.

[SPEAKER_00]: Margins, gross margin specifically expanded to 60% the first full year of positive cash flow.

[SPEAKER_00]: An author of a year that was very solid for them.

[SPEAKER_00]: They guided revenue that was 20 to 25% you over your growth in 2026 with long-term targets that they say could move operation margin to about 30% by 2028.

[SPEAKER_00]: Now, in terms of where it's been trading, TMDX did hit a local high in February.

[SPEAKER_00]: At the end of February, it was training about 145 per share before pulling back to where it is right now.

[SPEAKER_00]: 109 after actually being down, 6% today, a lot of places are cutting their price targets in early April after multiple insiders were selling shares in March that added on to near-term pressure.

[SPEAKER_00]: And so if you want to be in this name where you're hoping that, because it's the only FDA cleared warm profusion system on the market for all of those organs that I mentioned, because of their proprietary logistics network that it's close to impossible to replicate.

[SPEAKER_00]: But the downside is sequential declines in aviation metrics, gross margin misses and questions about scaling, they've raised doubts, and it's currently sitting at a 41 times price to forward-looking earnings,

[SPEAKER_00]: multiple.

[SPEAKER_00]: So growth acceleration is going to be brutally punished.

[SPEAKER_00]: Now they do have FDA approval for their next gen system in hand.

[SPEAKER_00]: They have positive clinical data.

[SPEAKER_00]: Maybe that resets the growth narrative.

[SPEAKER_00]: I would say clearly this is an undeniable category creator and transplant medicine.

[SPEAKER_00]: They have a defensible note that the stock needs clean execution on its 20 to 25% guide and progress in their kidney platform.

[SPEAKER_00]: They have earnings coming up on May 5th where they will be reporting, and so it's going to be interesting to see how well they've been able to stick to that 2026 momentum coming out of a cell stellar year.

[SPEAKER_00]: I would say with an aim that this big if it's a significant part of your portfolio, the momentum's pretty poor.

[SPEAKER_00]: I hope that you're up a good amount.

[SPEAKER_00]: I would think of trimming my position.

[SPEAKER_00]: Thanks for the call.

[SPEAKER_07]: Yep, I'm here.

[SPEAKER_07]: I'm sorry about that.

[SPEAKER_07]: I was on mute.

[SPEAKER_07]: Oh, not a problem.

[SPEAKER_07]: We're everything you do every day.

[SPEAKER_07]: We appreciate it.

[SPEAKER_07]: Looking at the ticker symbol, ARXS, that's ARXS, the IPO today.

[SPEAKER_07]: And wondering what you guys think about it.

[SPEAKER_07]: And if this is a good entry point or whether or not I should wait.

[SPEAKER_00]: Yeah, so Arxis Inc is, it looks like it's a PE back to designer and manufacturing company.

[SPEAKER_00]: They focus on mission critical electronics and mechanical components, so I think microwave products, sensors, varying seals, and their hope is that their products will be bolstered by spending in space, aerospace and defense spending, med tech, and their semiconductor testing platforms.

[SPEAKER_00]: If you've been listening to the show, you know the number one warning I give about companies like this, is that historically speaking, on average, IPOs have negative expected returns in the first year.

[SPEAKER_00]: Now, the reason why we like investing in IPOs psychologically is because we always remember the ones that do well.

[SPEAKER_00]: But sometimes there are rules that you should not go against, no matter how good the company looks, just because investing is about finding ways to have positive returns, and one of the easiest ways to

[SPEAKER_00]: Achieve that goal is not investing in new IPOs until they've been trading for a year.

[SPEAKER_00]: Not just because of what's going on with the company, what's going on with trade volume, you also have insider shares locked up for 160 days.

[SPEAKER_00]: There's just a lot of dynamics going on that drives prices that are distinct from the fundamentals of a company.

[SPEAKER_00]: So I'm going to stick this in that bucket.

[SPEAKER_00]: Call me back next year.

[SPEAKER_00]: Have a good day.

[SPEAKER_07]: Thank you.

[SPEAKER_00]: We got a lot of ground to cover in the next 45 minutes or so, including my main focus point about the resilient market paradox, why stocks keep holding up, despite chaos.

[SPEAKER_00]: Even with the Iran War, a Hormuz blockade, oil topping 100 and failed peace talks.

[SPEAKER_00]: The stock market has shown remarkable resilience, leaving many investors puzzled and cautious in equal measure.

[SPEAKER_00]: We will dig into what's really holding markets up and whether the resilience is a sign of strength.

[SPEAKER_00]: or dangerous complacency.

[SPEAKER_00]: Well such on weekly job as claims falling in manufacturing production, retreating in March.

[SPEAKER_00]: And a story about the relaxation of US day trading rules, what that means for risk in the market.

[SPEAKER_00]: And should we have time at the end of the show?

[SPEAKER_00]: We'll touch on that story.

[SPEAKER_00]: I tried to bring you on Tuesday about America's corporate boards and the role of activist investors.

[SPEAKER_00]: We also have some voice bank calls ready to play, including one on Oracle Corporation and Cavco Industries to your CVCO.

[SPEAKER_00]: So, there's some questions that came in from the comment section of the investor hockey YouTube channel, and hopefully some live calls throughout the show.

[SPEAKER_00]: We're headed into our first break.

[SPEAKER_00]: It is a quick one.

[SPEAKER_00]: When we come back, we'll talk about today's market activity.

[SPEAKER_02]: Sirious investors are certain to have finance and investment questions.

[SPEAKER_09]: I'm looking at an EPS in Goldman Sachs Nasdaq.

[SPEAKER_02]: And the best person to ask your question in the right way is you.

[SPEAKER_02]: If that would be a good hold to have in the Roth IRA for the long term horizon.

[SPEAKER_02]: And 24-7 rain or shine, Justin Klein and Luke Guerrero stand ready to provide their unbiased answers.

[SPEAKER_02]: This isn't really a copper plate, this is a iron ore plate with some aluminum copper.

[SPEAKER_00]: If you're looking at each of these, you have to hold so few names that are so top-heavy, I think it is probably ill-advised to pay.

[SPEAKER_00]: An expense ratio like this in order to get exposure that you could really get yourself.

[SPEAKER_02]: Your participation makes an investment talk better.

[SPEAKER_07]: Hey guys, Brian, from Rokirhan here, I'm a big fan of the show.

[SPEAKER_07]: I haven't missed an episode in a five years.

[SPEAKER_02]: So don't forget to call in Vestark, 888-99 chart.

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

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

[SPEAKER_02]: Justin Klein and Luke Guerrero.

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[SPEAKER_00]: U.S. stocks grounded higher today and what was overall a pretty quiet session, but both the S&P 500 and Nasdaq set fresh record closes.

[SPEAKER_00]: Nasdaq is now risen for 12 consecutive sessions, the Dow added a quarter percent.

[SPEAKER_00]: The S&P gained a quarter and the Nasdaq rose about a third of a percent with a Russell 2,000 edging up to Tets.

[SPEAKER_00]: Now the market continued to show really a general lack of angst about these still unresolved Middle East situation.

[SPEAKER_00]: Expectations remain that the ceasefire will hold though finality and resumption of normal hormones flows or it's all going to take some time.

[SPEAKER_00]: Mechanical support from systematic strategy repositioning continues to provide a bit of a tail

[SPEAKER_00]: around the speed and magnitude of the recent balance, because narrow breath, it's been a concern, even though there were some improvements on that front.

[SPEAKER_00]: Today, diving in a bit software remain the standout story of the week with the IG V up nearly 13% of the past five sessions.

[SPEAKER_00]: They remarkable snapback for one of the most pressured areas of the market in recent months.

[SPEAKER_00]: Private Credit has also bounced pretty sharply this week, using another overhang, semis, energy, chemicals, and media all out performed on the day.

[SPEAKER_00]: Microsoft, the Notable Mag 7 Gainer, while banks, Medtech Airlines, Asset Managers, and Pharma under Performed.

[SPEAKER_00]: Did overall pretty mixed bag we'd get some encouraging top line prints, but less favorable details underneath the April Filly Fed index came in well ahead of estimates at its highest level since January 2025 though the employment component actually turned negative and put both price indices jumping to their highest since August.

[SPEAKER_00]: Initial claims dropped to 207,000 below consensus industrial production mist, declining half a per percent against expectations for a small gain, though the prior month is actually revised higher.

[SPEAKER_00]: Fedspeak overall, I would say, a bit modestly, constructive Williams acknowledged the Ron War is adding to economic uncertainty and driving price hikes and slower growth, but said policy remains while positioned.

[SPEAKER_00]: While Miranda reiterated his view that three or four rate cuts this year are still appropriate, certainly the only member of the board with that opinion.

[SPEAKER_00]: Chargerades were weaker with curve, bare, steaming, and yields up 1 to 4 basis points.

[SPEAKER_00]: Dollar was roughly flat, while gold and silver both edged.

[SPEAKER_00]: Lower and WTI crude settled up 3.4%.

[SPEAKER_00]: Next week's marquee event is Kevin Worsh's nomination hearing to become Fed Chair on Tuesday.

[SPEAKER_00]: We'll also get retail sales on Tuesday, Flash PMI's on Thursday and final Michigan sentiment on Friday.

[SPEAKER_00]: Now from time to time, we also received questions on webforms from invest.com.

[SPEAKER_00]: Here's what they came in a little bit.

[SPEAKER_00]: Okay, so as thank you for sharing your knowledge every day.

[SPEAKER_00]: I listen every morning at work with the aging population I was looking into investing into elderly care or funeral services.

[SPEAKER_00]: I was looking at CVS ADUS and NHC.

[SPEAKER_00]: I would love to hear your thoughts look forward to hearing the answers on your podcast.

[SPEAKER_00]: Well, I think this is an example of how oftentimes there can be things to talk about their a bit morbid and you can ignore them.

[SPEAKER_00]: Or you can think about how certain trends can benefit your life, right?

[SPEAKER_00]: These are things that are going to happen.

[SPEAKER_00]: The population is aging.

[SPEAKER_00]: And you think about what does that mean for the secular trends in investing?

[SPEAKER_00]: Because there's 10,000 baby boomers that turn 65 every day in the U.S. And that can trend continues through 2030, meaning the demand for elder care for home health, for hospice.

[SPEAKER_00]: And end of life services, it's essentially guaranteed to grow.

[SPEAKER_00]: These businesses are already recession resistant.

[SPEAKER_00]: People age, pass away, regardless of the economy.

[SPEAKER_00]: And the government reimbursement met for Medicare for Medicaid, it provides a relatively stable revenue stream.

[SPEAKER_00]: Now, if you're looking at these companies, we don't have time to dive into each three, or each of the three really deep.

[SPEAKER_00]: So I'll get a high level, CSV has about 13 times earnings.

[SPEAKER_00]: It's cheapest, ADUS, looks like has about 25% revenue growth, so you're looking for fast growth there.

[SPEAKER_00]: NHC is low beta, has a good dividend history.

[SPEAKER_00]: But you got to worry about the debt to equity of some of these companies.

[SPEAKER_00]: CSV is 2.17 times the best recession hitch probably funeral services as it's truly non-discretionary, but bottom line is this, right?

[SPEAKER_00]: Your thesis is sound.

[SPEAKER_00]: Aging demographics is as close to a guaranteed growth driver as you'll find.

[SPEAKER_00]: All three play different parts of the aging life cycle, so they actually complement each other.

[SPEAKER_00]: If you want to pick one, maybe the one with the most growth profile ADUS, as the strongest

[SPEAKER_00]: But if you want value, CSV is cheapest with decent fundamentals.

[SPEAKER_00]: If you want stability and income in HC has the dividend and longest track record.

[SPEAKER_00]: So I would say that your theme is right and at a high level, I think attacking it at any angle is a good way to go about it.

[SPEAKER_00]: Thanks for the call.

[SPEAKER_00]: We're headed to break.

[SPEAKER_00]: My focus point is coming up on the resilient market paradox.

[SPEAKER_00]: We also have plenty more answers to your finance and invested questions.

[SPEAKER_00]: So stay with me.

[SPEAKER_00]: You're listening to Invest Talk.

[SPEAKER_01]: Look, Guerrero is here and ready to tackle your questions.

[SPEAKER_03]: I wanted to pick your brain about Apple.

[SPEAKER_03]: What did you think about their earnings call?

[SPEAKER_03]: To just a good chance of add to my position.

[SPEAKER_01]: Call in Vestock, 888-99 chart.

[SPEAKER_02]: The official numbers are in now with 62 million downloads in Vestark.

[SPEAKER_02]: Listen live or download the free podcast.

[SPEAKER_02]: Call anytime 88899 chart.

[SPEAKER_00]: So here's something that should genuinely puzzle you.

[SPEAKER_00]: We've had an active war with Iran for nearly seven weeks.

[SPEAKER_00]: The straight of her moves has been effectively shut to commercial shipping oil has been above $100 for most of the last month.

[SPEAKER_00]: The U.S. just imposed a naval blockade piece talks collapsed last weekend.

[SPEAKER_00]: Inflation is reigniting consumer confidence hit record lows.

[SPEAKER_00]: The IMF issued its most alarming forecast in years.

[SPEAKER_00]: And the S.B.

[SPEAKER_00]: 500 is basically fat flat for the year.

[SPEAKER_00]: How is this possible?

[SPEAKER_00]: The answers that there are powerful forces working beneath the surface that are offsetting the geopolitical drag and understanding them is critical for knowing whether their resilience is genuine or a trap.

[SPEAKER_00]: Now, the most important factor is corporate earnings.

[SPEAKER_00]: BlackRock just upgraded US equities to overweight and the reasoning is worth absorbing.

[SPEAKER_00]: S&B 500 companies are expected to post 12.6% profit growth in the first quarter.

[SPEAKER_00]: and companies almost always be lower expectations that number could approach 19%.

[SPEAKER_00]: The tech sector alone is rejected to deliver 43% earnings growth in 2026 up from 26 last year.

[SPEAKER_00]: Even since the conflict began on February 18th, earnings expectations have been revised higher, not lower.

[SPEAKER_00]: That's pretty remarkable.

[SPEAKER_00]: Market isn't holding up in spite of fundamentals.

[SPEAKER_00]: It's holding up because fundamentals are strong enough to absorb the geopolitical shock.

[SPEAKER_00]: But the valuation reset also matters.

[SPEAKER_00]: Textdocs they so off hard in the first quarter, which means the price investors are paying relative to earnings have actually come down meaningfully.

[SPEAKER_00]: The max 7s forward price to earnings ratio relative to the S&P 500, it's compressed from 1.7 to 1.2.

[SPEAKER_00]: That's the narrowest premium since the mid 2020.

[SPEAKER_00]: So, the same companies.

[SPEAKER_00]: with accelerated earnings are now cheaper than they've been.

[SPEAKER_00]: And here's in that combination better earnings, lower prices.

[SPEAKER_00]: These are Drew BlackRock, JP Morgan, and Morgan Stanley, all the upgrade US stocks in the past two weeks.

[SPEAKER_00]: There's also a structural floor.

[SPEAKER_00]: Under the market from the AI buildup, regardless of what happens in the Middle East, tech and companies have committed hundreds of billions and capex to data centers, to semi-conductor thefts to AI infrastructure.

[SPEAKER_00]: That spending is contracted, it's flowing, and it's supporting earnings across industrials utilities, materials that build and power the physical infrastructure.

[SPEAKER_00]: This is why the market can sell off on war headlines and rally on earnings.

[SPEAKER_00]: The AI investment cycle is operating on a different timeline than the geopolitical one.

[SPEAKER_00]: Now the ceasefire, fragile as it is, has also changed risk calculations.

[SPEAKER_00]: The fact that talks happened at all, even if they collapsed over the weekend, tells the market there are strong economic incentives for all parties to end the conflict.

[SPEAKER_00]: If that's the case, you can understand how geopolitical dips can ultimately prove to be buying opportunities.

[SPEAKER_00]: The threshold for a return to full-scale war is pretty high.

[SPEAKER_00]: The market is essentially priced in the view that the worst case, a multi-year conflict with permanently elevated oil, is pretty unlikely.

[SPEAKER_00]: But here's what investors need to be careful because there's a fine line between resilience and complacency.

[SPEAKER_00]: The bounce, back to all-time highs, while oil is at 99, the straightest blockaded and the fetus froze in is not normal.

[SPEAKER_00]: It requires the earnings story to hold perfectly.

[SPEAKER_00]: And the risks to that story are real.

[SPEAKER_00]: Q1 earnings are mostly pre-war.

[SPEAKER_00]: The real test comes in Q2 when the full impact of higher energy costs, disrupted supply chains and cautious consumer spending, hits the income statement.

[SPEAKER_00]: Consumer spending is starting to crack already.

[SPEAKER_00]: Credit card data from Bank of America shows spending growth in gasoline has slowed, or rather ex-gastly and has slowed to 3.6%.

[SPEAKER_00]: Lower income households are diverting more of their budgets to fuel discretionary spending on restaurants and travel and entertainment.

[SPEAKER_00]: That's under pressure.

[SPEAKER_00]: And the labor market is stable, but it's still fragile.

[SPEAKER_00]: Jobless claims are low, yes, but hiring is plunged to a six year low excluding COVID.

[SPEAKER_00]: The technical indicators worth watching, credit spreads to the move index, the ratio of consumer discretionary to staple stocks.

[SPEAKER_00]: Let's take a look at those, because credit spreads have widened only modestly.

[SPEAKER_00]: If they blow out its signals, credit stress that equity markets can't ignore.

[SPEAKER_00]: The move index, let's drop from drop to 72 from 115, which suggests bond market volatility, it's subsiding.

[SPEAKER_00]: And if consumer discretionary continues down to perform staples, it tells you the defensive rotation is accelerating even as the headlight index looks calm.

[SPEAKER_00]: Morgan Stanley's chief investment officer said he's seeing the market rotate back into pre-cyclical positions throughout their pro-cyclical positions, which he interprets as the market pricing in a bottom.

[SPEAKER_00]: interactive brokers took a more cautious view noting that Monday's tech lead rally was actually narrow investors are reaching for max seven names as defensive positions because those companies can weather elevated rates in super cool slowdown that's kind of a different resilience than what a broad based buying would be

[SPEAKER_00]: Bottom line, markets resilience, it's real, and it's been driven by legitimate forces, like strong earnings, cheaper valuations, AI infrastructure spending, and the market's assessment that the conflict will at some point end, but resilience is not invincibility.

[SPEAKER_00]: The gap between the headline index holding steady and the underlying consumer and labor data deteriorating, it's a warning sign.

[SPEAKER_00]: If Q2 earnings disappoint on the blockade, or rather the blockade escalates into something worse,

[SPEAKER_00]: Enjoy the comp, but don't confuse it with safety.

[SPEAKER_00]: Keep your hedges on diversify across the rotation themes we've been tracking.

[SPEAKER_00]: And remember that the market doesn't have to be right about the war ending soon, just because it's acting like it will.

[SPEAKER_00]: Just a narrow off tomorrow, but have no fear.

[SPEAKER_00]: We have put together a best of show for you, and we will be back on Monday.

[SPEAKER_00]: That being said, still got plenty of time to answer your finance and investment questions.

[SPEAKER_00]: So give me a call at 808-99 chart.

[SPEAKER_02]: KPP financials special.

[SPEAKER_02]: One of them is parallel investing.

[SPEAKER_02]: This means they invest right along side their clients.

[SPEAKER_02]: Here's how it works.

[SPEAKER_02]: When KPP financial makes a trade for their clients, just in client makes the same trade for himself and KPP.

[SPEAKER_02]: On the same day at the same price and same percentage.

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[SPEAKER_02]: Learn more about parallel investing at investalk.com.

[SPEAKER_00]: It's good to Todd from Sunnyvale, listening on AM 12 at 20 in the Bay Area.

[SPEAKER_00]: How can I help you?

[SPEAKER_08]: I don't know, Luke, yeah.

[SPEAKER_08]: I have missed a program by you or SDV or just and then like six years, I really appreciate the programs.

[SPEAKER_01]: We appreciate you.

[SPEAKER_08]: I have a question about the, yeah.

[SPEAKER_08]: I have a question about stock.

[SPEAKER_08]: I'm down about 22% in O, L, and it seems to, you know, not have a real short interest right now.

[SPEAKER_08]: It seems to have a good balance sheet.

[SPEAKER_08]: I just don't know why it's not more profitable.

[SPEAKER_08]: I just don't know.

[SPEAKER_08]: Maybe a lot of competition from China.

[SPEAKER_08]: I don't know.

[SPEAKER_00]: Yeah, let's take a look at this, this name.

[SPEAKER_00]: OLED is universal display corporation.

[SPEAKER_00]: It's a new jersey based company that essentially licensed their IP and provides materials because they own the core fast for us in OLED technology.

[SPEAKER_00]: So they collect royalties and sell these emitter materials to Samsung to LG and other panel makers for every OLED screen.

[SPEAKER_00]: produced.

[SPEAKER_00]: Last quarter, they reported revenues about 6.6% year over year growth, essentially in line with what the estimate was earnings per share, actually at a beat by about 9% and on full year, their net income did hit a record.

[SPEAKER_00]: Looking at a 26, it looks like they guided to gross margins of about 74 to 76% of the wide range.

[SPEAKER_00]: Reflecting that there's genuine uncertainty around

[SPEAKER_00]: really how much flow they have from customer orders.

[SPEAKER_00]: Now, you may be saying, okay, well, they beat in Q4, you know, what?

[SPEAKER_00]: Why are we seeing some issues here, right?

[SPEAKER_00]: Well, one of the reasons is because markets are forward looking, their guidance was kind of flat.

[SPEAKER_00]: They didn't upgrade their guidance at all.

[SPEAKER_00]: In fact,

[SPEAKER_00]: One of the most more distressing things that investors hate to see is compressing margins.

[SPEAKER_00]: So net margin is set to compress from 37.2 to 33.9.

[SPEAKER_00]: Eba to margin from 45 to 43.

[SPEAKER_00]: And then return on equity from 14.3 to 11.

[SPEAKER_00]: And so that's, you know, one of the things that kind of reinforced this continued selling this persistent downtrend.

[SPEAKER_00]: And then you throw on top, you got terraphones, certainly on consumer electronics on smartphones on TVs and potential demand softness.

[SPEAKER_00]: And so that's really what can be compressing these multiple.

[SPEAKER_00]: So why you like it is because it's essentially a royalty told booth, right?

[SPEAKER_00]: Every OLED panel made has to

[SPEAKER_00]: give them money.

[SPEAKER_00]: There's no manufacturing risk.

[SPEAKER_00]: It gives them a pretty long runway, but revenue growth, it's staggering.

[SPEAKER_00]: It has low single digit growth over the past five years.

[SPEAKER_00]: It's only 8.7%.

[SPEAKER_00]: It's only supposed to grow from 650 billion to 673.

[SPEAKER_00]: I'm sorry, million.

[SPEAKER_00]: Excuse me.

[SPEAKER_00]: was upcoming year.

[SPEAKER_00]: And so it's kind of just a depressing growth story to me.

[SPEAKER_00]: And then you couple on, it's got some pretty weak momentum and technicals and has been on a really a drought downtrend since 2024.

[SPEAKER_00]: I think there's just a lot of opportunity costier you're eating by by staying in this name when it's just done so poorly compared to his peers.

[SPEAKER_00]: That makes sense.

[SPEAKER_00]: Awesome.

[SPEAKER_00]: Well, thanks for the call and thank you for catching all the programs.

[SPEAKER_00]: I really appreciate you.

[SPEAKER_08]: You bet.

[SPEAKER_08]: Thank you very much.

[SPEAKER_00]: I folks, it's keep moving and drop in a fresh listener question now.

[SPEAKER_04]: This is Vee from Atlanta, Georgia.

[SPEAKER_04]: I have a question for a stock, or else, ORC.

[SPEAKER_04]: It has been going down for quite some time because of the depth on the balance sheet and co-aggressively they have been building AI data center, but lately it has started

[SPEAKER_04]: going up in the last few days.

[SPEAKER_04]: Do you see or foresee that this is the bottom of this shell?

[SPEAKER_04]: And it will start going up.

[SPEAKER_04]: I have been part of for Oracle recently got laid off, but I still believe in their business model where they have well-dend data centers to cater to the large language models down the line.

[SPEAKER_04]: What are your thoughts on that?

[SPEAKER_04]: Will they recover from the debt or is it, you know, too early to say anything about them?

[SPEAKER_04]: Thank you

[SPEAKER_00]: Take a look at Oracle Corporation, of course, the enterprise software and cloud infrastructure giant.

[SPEAKER_00]: So they do databases, they do net suite, and they're rapidly scaling their cloud infrastructure.

[SPEAKER_00]: That's become the primary AI training platform for opening AI for meta for XAI amongst others.

[SPEAKER_00]: Now, Oracle's a name that we did used to hold for our clients.

[SPEAKER_00]: We sold out of it a while ago.

[SPEAKER_00]: And I will answer the first question pretty quickly, which is this is the bottom.

[SPEAKER_00]: I don't tell you any here, if it's the bottom, but diving into the numbers a bit, looks like revenue grew 22% year over year last, quarter non-gap EPS, beat estimates, and cloud infrastructure grew about 84% year over year to 4.9 billion.

[SPEAKER_00]: I mean, these are solid numbers here.

[SPEAKER_00]: They hit a 52-week high of about $3,100 and some odd dollars per share.

[SPEAKER_00]: I mean, it was training up around $3,20 at one point, I believe, in the middle of 2025.

[SPEAKER_00]: And then it's just been a persistent beat down ever since.

[SPEAKER_00]: They've collapsed to as low as like the 120s.

[SPEAKER_00]: And a certain point now, they've paired back some of those losses.

[SPEAKER_00]: Training about 178.

[SPEAKER_00]: And it's stage a pretty massive recovery this week, up 27% for the week, on track for the best weekly gain since 1999.

[SPEAKER_00]: What really drove that was the partnership with Blue Energy expanding their power deal and renewed software sector strength.

[SPEAKER_00]: Now, the bulk case here is that the 553 billion RPM, I mean, it's a binding

[SPEAKER_00]: That means Oracle may be the only hyperscaler adjacent name, not burning its own balance sheet to build a high capacity, but gross margins have compressed from, you know, EBITDA margins, albeit look better in the future, you go down to return on equity.

[SPEAKER_00]: It's fallen from 85.8 to 33.7 by 2027.

[SPEAKER_00]: Free cash flow with negative.

[SPEAKER_00]: And so it's put itself in a pretty precarious position.

[SPEAKER_00]: I mean, it is one of the most probably dramatic reversals in large cap tech.

[SPEAKER_00]: They do have a huge backlog, but the debt load, the margin compression, the RPO to revenue conversion risk it means that this is a high conviction call if you invest in it.

[SPEAKER_00]: It requires a bit of a long runway in patience.

[SPEAKER_00]: I think,

[SPEAKER_00]: But at this point, the reason we don't hold it anymore is that the debt for me is a bit too much.

[SPEAKER_00]: The negative free cash flows a bit too much.

[SPEAKER_00]: The compression is a bit too much.

[SPEAKER_00]: So it's still trading at 21 times, price to forward looking earnings.

[SPEAKER_00]: I don't know, I think there are better ways to play.

[SPEAKER_00]: And I wouldn't think that and I wouldn't confuse a three-day trend for a reversal of what we've been seeing for the past six months.

[SPEAKER_00]: That is Oracle, ticker, ORCL.

[SPEAKER_00]: So today's jobless claims came in at 207,000, down 11,000 from last week, and well below the 215,000 that economists expected.

[SPEAKER_00]: Claims are in the lower end of their range for the year.

[SPEAKER_00]: On the surface, this continues the story we've been telling you.

[SPEAKER_00]: The labor market is stable.

[SPEAKER_00]: Companies aren't firing people, but the details, as always, Pete.

[SPEAKER_00]: Bit more of a nuanced picture in the vulnerability is building even if the headline numbers don't show it yet.

[SPEAKER_00]: The Fed's beige book released yesterday revealed that businesses are responding to the war with a weight and sea posture.

[SPEAKER_00]: Several districts reported increased demand for temporary and contract workers, and firms remain cautious about committing to permanent hires, the Middle East conflict.

[SPEAKER_00]: Was cited as a major source of uncertainty, and that's complicating decisions around hiring, and pricing, and capital investment.

[SPEAKER_00]: That is the textbook set up for a labor market that looks fine until it suddenly doesn't.

[SPEAKER_00]: What economists drew a direct historical parallel that should be a bit sobering?

[SPEAKER_00]: During the 73 oil shock, it took about three months for claims to start rising in any meaningful way.

[SPEAKER_00]: We were seven weeks into this conflict.

[SPEAKER_00]: If historical pattern holds the labor market stress from elevated energy costs would start showing up in May or June.

[SPEAKER_00]: At some point, the cost of oil, the cost of materials, the cost of inputs that have been squeezing margins are going to force companies to cut marginal workers to protect profitability.

[SPEAKER_00]: At the same time, continuing claims ticked up to 31,000, or rather ticked up 31,000 to 1.81 million.

[SPEAKER_00]: The youth labor market remains particularly tough.

[SPEAKER_00]: Unemployment for 20 to 24 yields?

[SPEAKER_00]: 6.4% well above the overall 4.3% rate.

[SPEAKER_00]: And the continuing claims data doesn't capture young workers who never had enough work history to qualify for benefits or people who've exhausted their eligibility.

[SPEAKER_00]: Certainly become more vulnerable since the war started, and concerns about the labor market, may eventually lead the Fed to cut rates this year, looking past the oil-driven inflation hit.

[SPEAKER_00]: Markets are right now only pricing about a one in three chance of a cut this year, and it's pushed off into December, but there could be meaningful repricing hit.

[SPEAKER_00]: On the manufacturing side, factory production dipped 10 basis points in March though it did grow in a 3% annualized rate in Q1 and rebound from Q4's 3.2% decline.

[SPEAKER_00]: Motor vehicle production dropped 3.7% mining output fell 1.2% and oil and gas drilling and actually declined 2.4%.

[SPEAKER_00]: The basement noted that energy producers remained cautious about increasing drilling despite higher prices, the same discipline story we covered weeks ago.

[SPEAKER_00]: A pantheon macroeconomics economist warned that we were seeing what we're seeing could be a brief period of catch-up growth, rather than a sustained manufacturing recovery given policy uncertainty, given higher rates, and the likely demand slowed down from the energy shock.

[SPEAKER_00]: Now the labor market is, it's one piece of the economy, but it's held together through everything so far.

[SPEAKER_00]: It's held together through tariffs, through immigration crackdowns, through AI disruption, and now a war.

[SPEAKER_00]: It is the last pillar standing, but every week the conflict continues every week, oil stays above 100, and every week businesses defer hiring decisions, that pillar gets weaker.

[SPEAKER_00]: The markets betting it holds, history suggests

[SPEAKER_00]: This is Invest Talk.

[SPEAKER_00]: We love answering your question.

[SPEAKER_00]: So let's grab another listener question now.

[SPEAKER_06]: Hello, my name is David from San Francisco, California.

[SPEAKER_06]: Would you take a look at Capco Industries, Ticker, CV, CL?

[SPEAKER_06]: It's a manufactured home building company.

[SPEAKER_06]: I've been buying this talk the last two months.

[SPEAKER_06]: We'll see you in the in on it.

[SPEAKER_06]: Thank you.

[SPEAKER_00]: First off, love San Luis Obispo.

[SPEAKER_00]: That's where my fiance is from, always a great place to visit.

[SPEAKER_00]: Let's say it's your question about CVCO, which is CavCo Industries Inc.

[SPEAKER_00]: Pull that up right here.

[SPEAKER_00]: What it is is it is a manufacturer of factory built homes and they sell them through independent retailers and company owned locations with an in-house financial services segment.

[SPEAKER_00]: So they're selling you the homes and they're also doing the mortgage lending as well as the insurance.

[SPEAKER_00]: Now it's a small cabinet.

[SPEAKER_00]: Looks like its market cap is sitting around $3.9 billion.

[SPEAKER_00]: It's got a little bit of debt only $39 million in debt.

[SPEAKER_00]: And growth loop in the past five years is looks solid about 13.7%.

[SPEAKER_00]: Now revenue in Q3 of 2026, their fiscal year 2026, above about 11.3% year over year, but net income was down 22%.

[SPEAKER_00]: earnings per share was $5.58 versus $6.90 a year ago factory capacity utilization declined to $70 from $75 a year ago backlog fell to $160 from $2.24.

[SPEAKER_00]: That's a demand softening story.

[SPEAKER_00]: Now they did not provide formal revenue or EPS guidance so we can't really comment on that.

[SPEAKER_00]: I think one of their things to note that's important is they actually do have a 100 million left in their share repurchase authorization, which is an active buyback program they've been using.

[SPEAKER_00]: Now let's talk you to high about 690 about 700 per share back in January of this year and it's been downward ever since down 27.9% over the past three months.

[SPEAKER_00]: So what are you thinking is the reason to buy this?

[SPEAKER_00]: Well, manufactured housing is the most affordable housing option in the U.S. And with the affordability crisis, that could be a meaningful structural tailwind.

[SPEAKER_00]: It certainly could, and a recent acquisition give them a footprint in the south and in the central part of the United States with a reasonable price, but at the same time.

[SPEAKER_00]: Numbers are falling.

[SPEAKER_00]: I mentioned them capacity utilization dropping to 70, backlog shrinking to four to six weeks, net income, down to 22%.

[SPEAKER_00]: Those are all signs that even affordable housing demand is suffering softening under rate pressure.

[SPEAKER_00]: And with that American home store integration, there goes some execution risk as well.

[SPEAKER_00]: Now, any fed rate cut that unlocks lending,

[SPEAKER_00]: would be a disproportionate catalyst for Kafka, versus site build home builders, because this is the rate-sensitive lever that market underwates.

[SPEAKER_00]: Overall, structurally well-positioned affordable housing play, yes.

[SPEAKER_00]: But the near term earnings compression and the slowing industry shipments kind of mean the stock needs either a rate catalyst or a clear backlog recovery before I would suggest deepening or entering a position.

[SPEAKER_00]: That is Cav Co Industries Inc. Take your CVCO.

[SPEAKER_00]: Well folks, I forgot to mention our focus point today.

[SPEAKER_00]: about this market recovery and spite of economic data we're seeing is actually the topic of the deeper focus video that we recorded this week, which will be released on our YouTube channel next Tuesday, Wednesday, just so that I sat down for a 20 minute discussion, going all over the sorts of things that have been driving this market and whether or not the market has become fractured from reality.

[SPEAKER_00]: You want to learn more?

[SPEAKER_00]: You want to view that video?

[SPEAKER_00]: Head over to our invest talking YouTube channel, search invest talk with 2Ts.

[SPEAKER_00]: This is invest talk.

[SPEAKER_00]: I'm Lou Guerrero, we have one goal here to help you achieve your financial freedom.

[SPEAKER_00]: Our work continues after this break, our final break of the week, because tomorrow was a best of show, so get your questions in now at 888-99 chart.

[SPEAKER_02]: Every investor is working to build a secure financial future.

[SPEAKER_02]: How they get there and when they get there, that depends on many factors.

[SPEAKER_02]: The more you learn about how the market works, the better your chances for success.

[SPEAKER_02]: So don't forget to call, in Vestalk, 888-99 chart.

[SPEAKER_00]: The SEC just approved the elimination of the pattern day trader rule.

[SPEAKER_00]: And if you're an active trader or thinking about becoming one, this is a big deal with some genuinely important caveats.

[SPEAKER_00]: A pattern day trader rule has been in place since the aftermath of the dot com bubble in the year 2000.

[SPEAKER_00]: Finn recreated it to limit speculation by requiring anyone who wanted to make more than three day trades within a five business day period to maintain at least 25,000 in their own margin account.

[SPEAKER_00]: You had less than that, you were locked out of frequent day trading.

[SPEAKER_00]: The rule kind of designed as a guard rail to prevent under-capitalized traders from blowing up their accounts.

[SPEAKER_00]: That rules now gone.

[SPEAKER_00]: The SEC approved its removal on Tuesday and shares of Robin Hood and Weeble both jumped over 10% on the news.

[SPEAKER_00]: The average weable client is about 5,000 in their account far below the old $25,000 threshold.

[SPEAKER_00]: For those investors, this is a meaningful expansion of access.

[SPEAKER_00]: Now the proponents, they frame it as democratization.

[SPEAKER_00]: We will see you call the old raw arbitrage arguing it till to the playing field in favor of wealthy investors.

[SPEAKER_00]: His pitch, quote, it just shouldn't be big brother saying you're not rich enough anymore.

[SPEAKER_00]: And there's a point there, if it's sophisticated trader with $10,000 identifies a clear opportunity forcing them to sit on their hands because of an account balance threshold doesn't obviously protect them.

[SPEAKER_00]: But the risks are real, and critics aren't wrong either.

[SPEAKER_00]: Capital Market Laboratory CEO was blunt, removing the restriction makes it easier for under-capitalized traders to make more, quote,

[SPEAKER_00]: Academic research consistently shows that higher-transaction volumes among retail traders correlate with greater losses, not greater profits.

[SPEAKER_00]: The North American Security's Administrators Association argued the SEC hadn't made a strong enough case for moving the rule.

[SPEAKER_00]: The timing adds another layer.

[SPEAKER_00]: Retail traders have been a growing force since the pandemic.

[SPEAKER_00]: They now account for up to 25% of daily trading volume on U.S. exchanges, up from just 15% pre-2020.

[SPEAKER_00]: Markets have become more volatile and headline-driven, with the Iran war creating exactly the kind of sharp-injury-day moves that tempt impulsive trading, giving millions of small accounts the ability to day trade without restriction, in this environment, could amplify volatility during already turbulent sessions.

[SPEAKER_00]: Now there will still be some guardrails instead of 25,000 traders will need to meet certain margin requirements based on their market exposure, brokerages will still assess whether clients have sufficient knowledge and experience before granting access to options and leverage products, but the hard gate's gone.

[SPEAKER_00]: For the brokerage industry, this is straightforwardly positive.

[SPEAKER_00]: More trading activity means more order flow, means more revenue from payment for order flow.

[SPEAKER_00]: Rebrokers sell trade data to market makers, and potentially more interest income from margin lending.

[SPEAKER_00]: Robin Hood and Webel are obvious beneficiaries.

[SPEAKER_00]: Their entire business model is built on a high volume retail participation.

[SPEAKER_00]: For the market as a whole, impact is a bit harder to predict.

[SPEAKER_00]: More retail participation can certainly mean more liquidity, which inherently means tighter spreads, which benefits everyone.

[SPEAKER_00]: But it can also mean more momentum driven, sentiment, face trading that amplifies moves in both directions.

[SPEAKER_00]: Mean stock style episodes where retail crowds piled into a name based on social media buzz, could become more frequent and more intense

[SPEAKER_00]: The new rules take effect 45 days after they're posted on Finra's website.

[SPEAKER_00]: If you're a small account trader who's been bumping up against the PDT rule, this opens up opportunities you did not have before.

[SPEAKER_00]: Just remember, opportunities come with risks, and day trading has a long historical track record of separating over-confident investors from their capital.

[SPEAKER_00]: The guard rail is gone.

[SPEAKER_00]: The responsibility now lies with you.

[SPEAKER_00]: I'm Lou Guerrero, and this completes another episode of Invest Talk.

[SPEAKER_00]: Justin and I thank you for listening, and encourage you to tell your friends and family members to listen to our podcast, and enjoy our free downloads at both iTunes and Spotify.

[SPEAKER_00]: While you're over there, if you don't mind leaving us a rate and review on iTunes and Spotify, we would greatly appreciate that, and while you're at it, head over to our YouTube channel.

[SPEAKER_00]: Check out our videos, our exclusive YouTube content.

[SPEAKER_00]: One more thing I want to mention is if this show made you think about your own financial circumstances, if you feel even remotely uneasy about your retirement plan, about your children's education, Justin and I implore you to steadily portfolio review, by heading over to in vessalk.com and clicking on the portfolio review button.

[SPEAKER_00]: It is a free and confidential service because sometimes it's just good to have the second set of eyes.

[SPEAKER_00]: Independent thinking, shared success.

[SPEAKER_00]: A reminder, we're off tomorrow, so enjoy your weekend.

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