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[SPEAKER_02]: This is Invest Talk from KPP Financial, helping investors make sense of the markets one day at a time.

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[SPEAKER_02]: Here's your host, Luke Guerrero.

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[SPEAKER_04]: Hey there everybody and welcome to the Friday at May 15th, 2026 edition of Invest Talk.

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[SPEAKER_04]: As always, we got a great show plan for you today.

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[SPEAKER_04]: We're going to talk a little bit about the market.

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[SPEAKER_04]: Going to sum up those stories that matter, and most importantly, we're going to answer your finance and investment questions.

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[SPEAKER_04]: To that end, why don't we kick it off by answering our first caller question now?

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[SPEAKER_07]: Hello, my name is Joseph calling out a Hayward California.

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[SPEAKER_07]: I would look and see if maybe you could do a quick dive into Dell, the ELL, thank you so much.

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[SPEAKER_07]: Bye-bye.

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[SPEAKER_04]: Well Joseph Dell is Dell Technologies, it is a round rock Texas based technology infrastructure giant.

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[SPEAKER_04]: It's a 161 billion dollar market cap company, only got about 24 billion dollars in debt.

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[SPEAKER_04]: What do they do?

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[SPEAKER_04]: Well, they've been doing a lot of work on AI optimized servers.

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[SPEAKER_04]: They of course have those traditional in server and storage segment.

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[SPEAKER_04]: They sell those PCs and laptops.

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[SPEAKER_04]: I'm using one right now.

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[SPEAKER_04]: Sometimes it works.

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[SPEAKER_04]: Sometimes doesn't work as well.

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[SPEAKER_04]: And more than anything, they really have the most dominant direct to hyperscaler AI server supply.

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[SPEAKER_04]: Computing really primarily with SMCI, who, as we all know, is currently under a DOJ investigation, and so Dell is capturing a lot of this enterprise share.

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[SPEAKER_04]: Now, they recently hit an all-time high of $263.99.

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[SPEAKER_04]: So that's back on May 8th.

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[SPEAKER_04]: They have since fallen down a bit.

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[SPEAKER_04]: They settled around $242 per share.

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[SPEAKER_04]: But they're up 118% over the past 52 weeks, up 92.24% year to date.

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[SPEAKER_04]: Let's dive a little bit into their earnings because they were pretty darn good.

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[SPEAKER_04]: They recently reported in February of 2026, meaning they're upcoming earnings is actually at the end of the month, putting them within the two week window such that I probably wouldn't enter a position now, but their earnings are great.

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[SPEAKER_04]: They beat on revenue by 5%, they beat on non-gap EPS by 11%, they had a record full year revenue.

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[SPEAKER_04]: And a lot of that is from that business that AI optimized server business.

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[SPEAKER_04]: It was up, I'm pausing for dramatic effect here.

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[SPEAKER_04]: 342% year over year.

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[SPEAKER_04]: There were 34.1 billion dollars in new AI orders in queue for a load.

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[SPEAKER_04]: They had a record free cash flow of 11.2 billion.

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[SPEAKER_04]: And so, looking ahead to the full year for 2027,

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[SPEAKER_04]: They expect a 23% Euroving increase at the midpoint for revenue.

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[SPEAKER_04]: They expect server revenue up another 103% year over year to 50 billion.

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[SPEAKER_04]: They expect earnings per share up 25%.

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[SPEAKER_04]: They expect Q1 earnings per share up 87% year over year.

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[SPEAKER_04]: On top of that, a 20% dividend increase and a $10 billion increase in share.

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[SPEAKER_04]: We purchase otherizations.

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[SPEAKER_04]: Things are looking pretty good.

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[SPEAKER_04]: Now it's trading less expensive than it was.

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[SPEAKER_04]: Last week, it's only trading about 18.6 times price to forward looking earnings, but that's on the back of a bit of a downgrade from some analysts who said, okay, things are looking great.

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[SPEAKER_04]: But AI server demand, it's already priced in.

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[SPEAKER_04]: After this 170% rally, and so there is a real tension now between the bulls and the bears, because the bulls are saying, all right, 43 billion in a committed AI backlog.

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[SPEAKER_04]: 50 billion full-year 2027 AI sales revenue guide, SMCI, not doing great in a bunch of hot water.

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[SPEAKER_04]: And yes, it's more expensive than it's been in a while.

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[SPEAKER_04]: But 20 times forward-looking earnings is cheap relative to the 24 times industry average for a company that is growing AI revenue 100% year over year.

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[SPEAKER_04]: The same time we did get some margin compression.

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[SPEAKER_04]: You saw EBITDA margins compressing slightly, you saw net margins actually growing a little bit.

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[SPEAKER_04]: But the idea is that the earnings power thesis kind of breaks if multiples reset towards 190, which is the consensus target that prevailed just a few months ago.

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[SPEAKER_04]: The bottom line is it is probably one of the most compelling AI infrastructure compounders outside of Nvidia because of their backlog, because of their demand, because of their server growth.

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[SPEAKER_04]: And yes, margins are under some structural pressure here and earnings are right on the horizon.

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[SPEAKER_04]: So this falls under my two weeks.

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[SPEAKER_04]: If it's within two weeks of earnings, do not buy.

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[SPEAKER_04]: You are paying a volatility premium for whatever people expect on earnings.

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[SPEAKER_04]: But this is kind of a duordiprint for the rest of the year for them.

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[SPEAKER_04]: So given that, got to wait.

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[SPEAKER_04]: Great name.

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[SPEAKER_04]: Keep it on your watch list.

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[SPEAKER_04]: And it's Dell Inc.

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[SPEAKER_04]: Sorry, Dell Technologies Inc. To your D-E-L-O.

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[SPEAKER_04]: We're just gonna have a great show for you guys yesterday, taking a look at the US dollar outlook for 26.

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[SPEAKER_04]: So I think answer to a really great question at least from my perspective.

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[SPEAKER_04]: On a name that has been beaten down recently and that was into it to your I-N-T-U.

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[SPEAKER_04]: You happen to miss it, go check it out.

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[SPEAKER_04]: Remember the best way to hit every episode is to follow in Vestalk wherever you get your podcasts.

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[SPEAKER_04]: That was yesterday, but we got a lot of ground to cover today over the next 45 minutes or so, and it all starts off with my main focus point.

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[SPEAKER_04]: AI's next chapter is the NASDAQ 30,000 rally sustainable.

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[SPEAKER_04]: or dangerous hype.

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[SPEAKER_04]: Analyst Dana is calling for NASDAQ 30,000.

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[SPEAKER_04]: As the AI rally expands beyond the original handful of winners, we dig into whether the broadening AI trade is built on solid earnings fundamentals, or if euphoria is getting ahead of reality.

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[SPEAKER_04]: Also, we got great stories to bring to you today, including a little bit of a lesson on the oil futures curve.

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[SPEAKER_04]: I think a lot of investors, a lot of Twitter personalities, misunderstand how to read the oil futures curve and what it's actually telling you.

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[SPEAKER_04]: So we'll talk a little bit about that.

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[SPEAKER_04]: We'll also touch on a recent development.

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[SPEAKER_04]: where people are saying they can give you private company access.

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[SPEAKER_04]: Access to shares in private companies in hot startups.

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[SPEAKER_04]: Well, anthropic came out today and said something that made people feel a little bit uneasy about that practice.

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[SPEAKER_04]: To reattire the end of the show, we'll touch on the housing market and how spring is shaping up as a bust after April sales were flat.

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[SPEAKER_04]: We also have Savoy's fake calls rated playing, including one on Intel Corporation, INTC, and another on Verizon Communications Inc. Ticker VZ.

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[SPEAKER_04]: As well as some questions that came in from the comment section of the Invest hockey YouTube channel, and of course, I welcome your finance and investment.

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[SPEAKER_04]: Questions now or any time throughout the show.

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[SPEAKER_04]: Head it into a quick break.

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[SPEAKER_04]: Please remember you can call any time and leave your questions in the Invest Talk Voice Bank.

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[SPEAKER_04]: If you're listening via our live stream or on AM-1220 in the Bay Area, give me a call now at 80-899 chart.

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[SPEAKER_04]: A next, we'll talk about today's market activity.

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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.

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[SPEAKER_02]: 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-Chart.

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[SPEAKER_04]: Now let's talk a little bit about the market today because US stocks will be sold off to end the week.

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[SPEAKER_04]: Giving back a chunk of really some gains we saw earlier is the familiar cocktail of rising yields and elevated oil and geopolitical uncertainty started to reassert itself in the psyche of the market.

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[SPEAKER_04]: The down fell just over 1% on the day.

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[SPEAKER_04]: The S&P dropped 1.2.

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[SPEAKER_04]: The Nasdaq shed 1.5 and the Russell 2000 led to the downside with a 2.4%

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[SPEAKER_04]: decline finishing a bit off of worst levels.

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[SPEAKER_04]: Now the bond market, the bond market, the most important market was headline.

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[SPEAKER_04]: Treasure yields surged 7 to 12 basis points on the day.

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[SPEAKER_04]: They finished the week up 18 to 25 basis points.

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[SPEAKER_04]: The two years now, it's highest level in 14 months in the 10 year and it's highest level in the past.

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[SPEAKER_04]: 12.

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[SPEAKER_04]: So the market is now pricing 14 basis points of hikes by December with a full hike priced in by next April.

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[SPEAKER_04]: That is a dramatic shift.

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[SPEAKER_04]: from the 53 basis points of cuts expected back in the start of March.

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[SPEAKER_04]: And it reflects this week's re-agnited inflation concern, the resilient macro data, and crude oil backed above $105.

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[SPEAKER_04]: Now, semi's in memory, saw some pretty sharp cell-offs, Tesla and Nvidia both off over four percent.

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[SPEAKER_04]: Consumer discretionary extended its recent weakness.

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[SPEAKER_04]: You saw home builders, the auto complex at Parallel, home improvement all under a bit of pressure.

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[SPEAKER_04]: Industrial metals, China tech machinery, banks and airlines, also some of the worst performers on the day.

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[SPEAKER_04]: On the other side, you saw energy, you saw staples, trucking casinos, software, all holding up.

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[SPEAKER_04]: Retail investor participation by the Dip Dynamics really continuing to seemingly put a floor under sell-offs.

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[SPEAKER_04]: It's keeping the market off of the worst levels day in and day out.

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[SPEAKER_04]: Now the broader setup reflects a market that is now caught between these competing forces.

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[SPEAKER_04]: There's a lack of a progression toward an Iran resolution and an absence of concrete takeaways

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[SPEAKER_04]: And that really weighed on sentiment.

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[SPEAKER_04]: But, I mean, AI enthusiasm hasn't gone away.

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[SPEAKER_04]: Apply materials, beat, and guided above.

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[SPEAKER_04]: With semi-capacutment sales growth now, forecast above 30% for the year, and there are signs of a thaw in the Strait of Hormuz traffic.

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[SPEAKER_04]: On the day to front, Empire Manufacturing came in strong at 19.6, the highest since April 2022, new orders and shipments did improve considerably though.

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[SPEAKER_04]: We're noting prices paid and received both rose to four year highs while employment dipped.

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[SPEAKER_04]: Industrial production also beat at 7 tenths of a percent.

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[SPEAKER_04]: Elsewhere, the dollar gained half a percent, gold dropped 2.6 percent, silver plunged over nine.

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[SPEAKER_04]: Next week is quiet on the macro front, FOMC minutes will be out on Wednesday, flash PMIs on Thursday and housing data scattered throughout next week.

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[SPEAKER_04]: Let's pull another question.

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[SPEAKER_04]: This time from the YouTube comment section, because we do like to dive into those.

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[SPEAKER_04]: If you don't know yet, we did start a deeper, focused video series where we dive deeper into one of our main focus points for the week.

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[SPEAKER_04]: Because sometimes, 7-10 minutes is just not enough to cover a topic.

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[SPEAKER_04]: And while you're over there watching those videos, if you've got a question, burn it in your mind, feel free to leave it in the comment section.

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[SPEAKER_04]: This question, but C-D-N-S, as hey Justin and Luke, curious to hear your thoughts on cadence-designed systems.

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[SPEAKER_04]: Let's take our CD-N-S, buy holder cell, if buy at what?

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[SPEAKER_04]: Entry.

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[SPEAKER_04]: Now, CD-N-S,

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[SPEAKER_04]: is a $97 billion market cap electronic design automation company.

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[SPEAKER_04]: What they do is they provide software.

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[SPEAKER_04]: They provide hardware.

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[SPEAKER_04]: They provide IP that some I conductor engineers use to design every single chip on the planet.

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[SPEAKER_04]: So in a way, it's kind of a computational software monopoly.

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[SPEAKER_04]: They recently reported earnings on April 27th.

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[SPEAKER_04]: You saw an 18% year over year growth in revenue for Q1, revenue beat by about 2% almost.

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[SPEAKER_04]: So earnings for share beat by about 2.6%.

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[SPEAKER_04]: And more importantly, more you're just importantly, that's not a word, most importantly, you saw non-gap operating margins expanding the 3% year over year.

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[SPEAKER_04]: So they have the fourth consecutive quarter of earnings beats and an expansion in margins.

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[SPEAKER_04]: I would say this is probably one of the most essential software company names in the I chip supply chain.

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[SPEAKER_04]: Every chip that powers AI runs through cadence tools at design time, they have an $8 billion backlog, they have 44.7% margins, they have a guidance raise, they have 22 buy ratings with zero cells.

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[SPEAKER_04]: I mean,

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[SPEAKER_04]: I think this could be a pretty core holding that one would want, and it's pretty darn expensive.

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[SPEAKER_04]: 41 times price to forward looking earning this.

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[SPEAKER_04]: I think I have it as a buy, but it's at quite the run up over the past three months.

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[SPEAKER_04]: Looks like it's facing some resistance.

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[SPEAKER_04]: I think around 300 is around one end.

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[SPEAKER_04]: Caden's design system zinc took her CDNS, thanks to the call.

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[SPEAKER_04]: When we come back, plenty more to talk about, including your finance and invested questions, feel free to give me a call at 888-99-shart.

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[SPEAKER_02]: [♪ music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in background music playing in
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[SPEAKER_04]: Dan Eves, or Ives, managing director at wet bush securities, went on CNBC on Monday and called for the Nasdaq to hit 30,000 within the next year.

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[SPEAKER_04]: And the Nasdaq is up nearly 13% year-to-date, the PHLX semi-conductor sector index has stored 38% in the past month alone.

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[SPEAKER_04]: And one of my cats is very excited about those price movements.

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[SPEAKER_04]: Intel.

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[SPEAKER_04]: So over 200% since last March in video, Apple and Alphabet have all posted double digit gains.

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[SPEAKER_04]: And now, Eves is calling this the early innings of a multi year AI super cycle.

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[SPEAKER_04]: On the other side, he got Michael Burrie, the big short investor who called the housing bubble and is called, every one of the past 10 bubbles that didn't happen since then.

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[SPEAKER_04]: But he warned Friday that the market's excitement about AI is starting to mirror the last months of the dot com bubble.

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[SPEAKER_04]: Paul Tudor Jones also told CNBC, the AI bull market has furthered a run, but added there could be breathtaking valuation corrections along the way, so who's right?

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[SPEAKER_04]: The answer is with most things, probably both, but the timeline matters enormously.

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[SPEAKER_04]: The fundamental case for the AI Rally is genuinely strong.

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[SPEAKER_04]: S&P 500 companies are beating profit estimates by 18.2% this quarter that is well above the five year average of 7.3.

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[SPEAKER_04]: Tech sector earnings are projected to grow 43% this year.

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[SPEAKER_04]: Microsoft raised its KAPX forecast by 25 billion meta added 10 billion.

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[SPEAKER_04]: These are promises.

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[SPEAKER_04]: It's committed capital flowing into data centers GPUs, memory, infrastructure, right now.

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[SPEAKER_04]: There was that anthropic Goldman Blackstone joint venture we covered last week and that showing that AI monetization is moving beyond Silicon Valley and into mainstream corporate operations.

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[SPEAKER_04]: For every dollar, company spend on software.

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[SPEAKER_04]: They spend six on services.

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[SPEAKER_04]: AI is capturing that service's spend in a way that generates real recurring revenues.

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[SPEAKER_04]: The memory's super cycle.

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[SPEAKER_04]: It's real memory chip demand for AI is so far outstripping supply that Micron and Sandisk are generating 80 cent gross margins.

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[SPEAKER_04]: It's historically unprecedented.

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[SPEAKER_04]: Buyers are signing three to five-year contracts instead of the traditional 30-day deals, which could structurally reduce the boom bus volatility of the sector's known for.

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[SPEAKER_04]: Samsung had a trillion dollars in market cap.

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[SPEAKER_04]: Micron and S.K.

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[SPEAKER_04]: Heinrichs are each worth more than Exxon.

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[SPEAKER_04]: These aren't speculative companies.

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[SPEAKER_04]: They are manufacturing businesses with tangible products generating extraordinary cash flow, but the valuation question.

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[SPEAKER_04]: That's where investors need some intellectual honesty.

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[SPEAKER_04]: The semi-conductor index is up 38% in a single month.

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[SPEAKER_04]: That pace is faster than the equivalent period of the dot com bubbles in late 1999.

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[SPEAKER_04]: And the bird comparison is an unfounded.

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[SPEAKER_04]: The last time, semi-conductor stocks, appreciated this fast.

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[SPEAKER_04]: The subsequent circumsurrection was severe.

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[SPEAKER_04]: Nasdaq lost 78% from its March 2000 peak to its October 20, 2002 trough.

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[SPEAKER_04]: Not every bubble comparison is valid, but not every rally that looks like the bubble is safe, either.

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[SPEAKER_04]: The critical difference between now and 99 is today's AI companies are profitable.

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[SPEAKER_04]: The.com era was built on eyeball counts and revenue-free business models.

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[SPEAKER_04]: Today's leaders, they generate massive free cash flows.

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[SPEAKER_04]: Their AI spending is funded from operations not from burning venture capital and the physical infrastructure being built, data centers, labs, fabs, power plants, that's tangible asset value even if AI revenue growth disappoints.

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[SPEAKER_04]: The sector is benefiting from the AI spending wave and to extend well beyond ships.

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[SPEAKER_04]: You want to own derivative place, software, cybersecurity, infrastructure, power.

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[SPEAKER_04]: Utilities connected to data center demand have rallied industrial construction companies.

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[SPEAKER_04]: Building AI facilities are seeing earnings tailwinds, memory and storage companies are in this super cycle we've been talking about.

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[SPEAKER_04]: Energy companies, providing power for AI computer benefiting as well.

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[SPEAKER_04]: They I build out has been a broad economic catalyst not just a tech story.

18:48.833 --> 18:53.778
[SPEAKER_04]: For evaluating whether an AI stock is priced on, hype versus real earnings, the framework is straightforward.

18:54.319 --> 18:57.823
[SPEAKER_04]: Look at the forward price earnings ratio, relative to the expected earnings growth rate.

18:57.883 --> 18:58.804
[SPEAKER_04]: It's called the Peg ratio.

18:59.525 --> 19:04.290
[SPEAKER_04]: A stock trading at 40 times earnings with 40% expected growth has a peg of one.

19:05.291 --> 19:05.972
[SPEAKER_04]: That's reasonable.

19:06.532 --> 19:11.618
[SPEAKER_04]: A stock at 40 times with 15% expected growth, 2.7, that's expensive.

19:13.285 --> 19:21.846
[SPEAKER_04]: Many A and for structure socks, memory, hyperscalers, semiconductor equipment, they still are around one because their earnings growth is outpacing their valuation expansion.

19:22.508 --> 19:28.442
[SPEAKER_04]: Software and application layer A stocks, they tend to have higher ratios because their revenue models are less proven.

19:30.059 --> 19:32.704
[SPEAKER_04]: The struggle parallels are instructive, but they're imperfect.

19:33.185 --> 19:39.277
[SPEAKER_04]: The railroad boom of the forties and fifties, built transformative infrastructure, but bankrupted many early investors.

19:39.697 --> 19:47.292
[SPEAKER_04]: The electricity build out of the 1920s created genuine economic value, but coincided with the speculative excess that proceeded the 29 crash.

19:47.828 --> 19:54.940
[SPEAKER_04]: The internet boom of the late 90s produced the most transformative technology of the modern era and a 78% NASDAQ decline.

19:55.381 --> 20:03.214
[SPEAKER_04]: In each case, the technology was real, the economic impact lasting, and the early investors who paid the highest prices, they suffered the most.

20:03.634 --> 20:05.277
[SPEAKER_04]: The lesson isn't that AI will fail.

20:05.918 --> 20:10.005
[SPEAKER_04]: It's the transformative technology and overvalued stocks can coexist.

20:09.985 --> 20:10.906
[SPEAKER_04]: The practical approach?

20:11.567 --> 20:12.989
[SPEAKER_04]: Don't try to time the top.

20:13.009 --> 20:24.363
[SPEAKER_04]: If you're under exposed AI themes, building a position gradually across the sub-sectors, chips, memory, hyper-scalor, software, cybersecurity, gives you diversified exposure to the structural buildup.

20:24.383 --> 20:32.112
[SPEAKER_04]: But size your positions for the possibility that a 38% in a month rally is borrowing from the future's returns.

20:34.100 --> 20:36.885
[SPEAKER_04]: On the next investor talk, we'll look into this story.

20:36.965 --> 20:38.789
[SPEAKER_04]: Market volatility is not the problem.

20:38.869 --> 20:39.931
[SPEAKER_04]: Emotional investing is.

20:40.733 --> 20:49.269
[SPEAKER_04]: Volatility has investors and nervous yet again, but historically, emotional reactions during turbulent markets have often led to the worst investing decisions.

20:50.190 --> 20:50.751
[SPEAKER_04]: That's Monday.

20:51.212 --> 20:57.424
[SPEAKER_04]: For now, I'm Luke Guerrero, and we are ready to take your calls any time at 888-99 chart.

21:01.606 --> 21:05.832
[SPEAKER_01]: At KPP Financial, Accountability means more than advice.

21:06.573 --> 21:11.279
[SPEAKER_01]: It means we invest alongside you through our parallel investing approach.

21:11.940 --> 21:19.751
[SPEAKER_01]: When we recommend an investment for clients, one or more KPP principles invest their own capital at the same time.

21:20.552 --> 21:23.456
[SPEAKER_01]: Same day, same price, same percentage.

21:24.117 --> 21:27.301
[SPEAKER_01]: If your portfolio moves, ours does too.

21:27.982 --> 21:29.284
[SPEAKER_01]: That is alignment.

21:29.264 --> 21:30.609
[SPEAKER_01]: That is transparency.

21:31.111 --> 21:33.139
[SPEAKER_01]: That is the KPP difference.

21:34.043 --> 21:38.802
[SPEAKER_01]: Visit investtalk.com to get your free portfolio review.

21:41.515 --> 21:45.119
[SPEAKER_02]: There are a few things that make KPP financial special.

21:45.719 --> 21:47.982
[SPEAKER_02]: One of them is parallel investing.

21:48.022 --> 21:51.706
[SPEAKER_02]: This means they invest right alongside their clients.

21:52.166 --> 21:53.167
[SPEAKER_02]: Here's how it works.

21:53.668 --> 22:01.737
[SPEAKER_02]: When KPP financial makes a trade for their clients, just in line makes the same trade for himself and KPP.

22:02.277 --> 22:06.882
[SPEAKER_02]: On the same day, at the same price, and same percentage.

22:06.862 --> 22:09.525
[SPEAKER_02]: No front running, no special treatment.

22:10.126 --> 22:14.811
[SPEAKER_02]: Learn more about parallel investing at investtalk.com.

22:15.772 --> 22:17.694
[SPEAKER_05]: Yeah, Mark, you said, here you go.

22:17.714 --> 22:24.001
[SPEAKER_05]: One asked about rising, that the V is in victory, V, the telephone company, anyway.

22:24.842 --> 22:29.687
[SPEAKER_05]: Got some money, still stuck in it for years, hasn't done much, so in this fight profit.

22:29.707 --> 22:36.615
[SPEAKER_05]: I'm just wondering if it's time to let the stock go,

22:37.237 --> 22:40.082
[SPEAKER_05]: give it in a player or a player at the moment.

22:40.663 --> 22:42.006
[SPEAKER_05]: Anyway, you're so much fun.

22:42.026 --> 22:49.219
[SPEAKER_05]: Let it go, or just sit tight on it, not a big position, but I think there will be you at the spot on this.

22:49.239 --> 22:49.579
[SPEAKER_05]: Thank you.

22:49.820 --> 22:50.000
[UNKNOWN]: Bye-bye.

22:51.262 --> 22:52.765
[SPEAKER_04]: Oh, this is such a great question.

22:53.825 --> 23:00.453
[SPEAKER_04]: So Verizon is the New York-based telecom giant, they're the largest US wireless carrier.

23:01.054 --> 23:08.083
[SPEAKER_04]: They're gonna get fiber network and they're newly expanded fiber footprint via their $20 billion frontier acquisition.

23:09.044 --> 23:15.132
[SPEAKER_04]: Makes them a pretty key player in the 5G fixed wireless access game.

23:15.192 --> 23:15.833
[SPEAKER_04]: Now,

23:16.471 --> 23:18.416
[SPEAKER_04]: Okay, so much to address here.

23:18.837 --> 23:20.341
[SPEAKER_04]: It's a telecom company, so a lot of debt.

23:20.562 --> 23:27.600
[SPEAKER_04]: $196 billion of debt, or sorry, $196 billion market cap company, $160 billion in debt.

23:28.522 --> 23:29.164
[SPEAKER_04]: There.

23:30.089 --> 23:33.535
[SPEAKER_04]: revenue missed their earnings beats slightly.

23:33.615 --> 23:43.891
[SPEAKER_04]: They do have some growth, but overall they've been losing market share to team mobile, primarily, who's continuing to take both wireless and broadband customers.

23:44.773 --> 23:50.742
[SPEAKER_04]: And so this company has performed horribly, horribly since 2020.

23:51.503 --> 23:54.007
[SPEAKER_04]: As up to 13.8% year to date, awesome.

23:54.028 --> 23:55.590
[SPEAKER_04]: But last year was up 1.9.

23:56.701 --> 23:58.063
[SPEAKER_04]: Before that, it was up 6.1.

23:59.686 --> 24:06.156
[SPEAKER_04]: Those are years where the S&P returned roughly 25% and 15% respectively.

24:09.040 --> 24:21.219
[SPEAKER_04]: And so, here's the core of the issue of what I got to convince people is never a reason you should hold a stock because you said it, you said it.

24:21.239 --> 24:23.282
[SPEAKER_04]: It has been a reliable dividend to payer.

24:25.220 --> 24:37.239
[SPEAKER_04]: So what has a 6% dividend yield, but going back to 2022, it was $51 a share now, it's $46.

24:38.822 --> 24:49.118
[SPEAKER_04]: If something is paying a dividend, but it does not have a positive total return,

24:50.178 --> 24:51.640
[SPEAKER_04]: That is not a good thing to hold.

24:52.221 --> 24:53.983
[SPEAKER_04]: Just because you have a reliable 4%.

24:54.904 --> 25:15.932
[SPEAKER_04]: If you also have a reliable 4% drawdown in 2020, then to 11% in 2021, then 24% in 2022, then 4% in 2023, you need to frame things in a total return perspective and from a total return basis, Ryzen has not been a good investment.

25:16.283 --> 25:33.229
[SPEAKER_04]: I would say, sell it, take your money elsewhere, don't just focus on dividends because you can find yourself in a worse position than if you looked at it from a total return perspective, which is exactly where you should be looking next to the call.

25:36.382 --> 25:38.664
[SPEAKER_04]: We made it to another Friday.

25:39.125 --> 25:43.248
[SPEAKER_04]: So let's run down some key benchmark numbers for everybody out there.

25:43.288 --> 25:46.491
[SPEAKER_04]: The two-year treasure yields at 4.077 today.

25:46.551 --> 25:47.512
[SPEAKER_04]: Last week, it was 3.897.

25:47.532 --> 25:52.677
[SPEAKER_04]: 220 weeks back, it was 64 basis points.

25:53.398 --> 25:53.898
[SPEAKER_04]: What a world.

25:54.499 --> 25:56.500
[SPEAKER_04]: The 10-year treasure yields at 4.593.

25:57.561 --> 25:58.762
[SPEAKER_04]: Compared to last week, it was 4.368.

25:58.782 --> 26:03.807
[SPEAKER_04]: 225 weeks ago, it was 176.2.

26:04.748 --> 26:08.772
[SPEAKER_04]: Gold is priced at $4,558 per ounce.

26:08.812 --> 26:12.836
[SPEAKER_04]: That is a $166 decrease compared to last week.

26:12.856 --> 26:16.540
[SPEAKER_04]: 41 weeks back, it was 3348, 220 weeks back.

26:16.560 --> 26:17.281
[SPEAKER_04]: It was 1806.

26:17.501 --> 26:24.228
[SPEAKER_04]: Silver's 76.79 per ounce today that is $3.67 less than it was last week.

26:24.248 --> 26:27.071
[SPEAKER_04]: 118 weeks, it was 2280 and looking back.

26:27.091 --> 26:31.836
[SPEAKER_04]: 218 weeks, Silver was 23.94.

26:32.896 --> 26:41.810
[SPEAKER_04]: Oil, $105.40 per barrel today that is $9.99 higher than last week, 86 weeks battling.

26:41.830 --> 26:45.436
[SPEAKER_04]: It was 67, 79, 128 weeks back, it was 74, 30.

26:47.480 --> 26:50.905
[SPEAKER_04]: All the way back, 227 weeks, it was 66, 62.

26:52.049 --> 26:58.197
[SPEAKER_04]: National average rate gallon of regular gasoline is 452 today, two-cent decrease from last week.

26:58.778 --> 27:02.863
[SPEAKER_04]: 154 weeks back, it was 456 and 202 weeks goes for 25.

27:04.705 --> 27:10.894
[SPEAKER_04]: California was averaging $6 and 14 cents per gallon, a two-cent decrease compared to last week.

27:10.914 --> 27:15.880
[SPEAKER_04]: 131 weeks ago was 532 and 207 weeks back, it was 587.

27:16.315 --> 27:20.181
[SPEAKER_04]: For a comparison, in Illinois, gas is averaging five elite per gallon today.

27:20.742 --> 27:24.106
[SPEAKER_04]: It is $1.6 less than gas in California.

27:26.810 --> 27:30.476
[SPEAKER_04]: I was keeping something in play another listener question now.

27:30.496 --> 27:32.979
[SPEAKER_08]: Hey guys, my name is Ryan from Vermont.

27:33.000 --> 27:36.465
[SPEAKER_08]: I was curious what your thoughts were on a Pershing Square.

27:36.905 --> 27:39.910
[SPEAKER_08]: They recently had an IPO and they have two tickers.

27:39.990 --> 27:41.993
[SPEAKER_08]: Yes, and yes, the US.

27:42.574 --> 27:43.555
[SPEAKER_08]: It's curious what your thoughts were.

27:45.425 --> 28:06.182
[SPEAKER_04]: Okay, PS is Pershing Square that is the investment management company that is headed by Bill Akman, one William Akman, just a side note if you ever want to be entertained, go watch this old, uh, I guess you could call it debate between Bill Akman and Carl Icon in the middle of the live interview on the trading floor.

28:06.442 --> 28:07.204
[SPEAKER_04]: This is forever ago.

28:07.444 --> 28:09.087
[SPEAKER_04]: Anyway, great YouTube video, but

28:09.067 --> 28:09.688
[SPEAKER_04]: P.S.

28:09.888 --> 28:12.731
[SPEAKER_04]: U.S. is the Pershing Square U.S.A.

28:13.312 --> 28:14.633
[SPEAKER_04]: It's the new closed-end fund.

28:14.653 --> 28:15.294
[SPEAKER_04]: It is brand-new.

28:15.314 --> 28:16.515
[SPEAKER_04]: It just started trading in April.

28:16.975 --> 28:19.818
[SPEAKER_04]: It's the largest closed-end fund launch in U.S. history.

28:20.319 --> 28:21.560
[SPEAKER_04]: It's run by P.S.

28:21.660 --> 28:23.262
[SPEAKER_04]: Pershing Square, run by Bill Ackman.

28:23.923 --> 28:26.406
[SPEAKER_04]: One of the most well-known activist investors alive.

28:26.446 --> 28:33.994
[SPEAKER_04]: And so it's a concentrated portfolio of 15 stocks.

28:34.334 --> 28:38.078
[SPEAKER_04]: So I want to say, roughly.

28:39.678 --> 28:50.295
[SPEAKER_04]: 30 trading at 18% below its IPO price, the IPO is priced at $50 a share, it's trading at $41.37 today.

28:50.917 --> 29:03.636
[SPEAKER_04]: So essentially how it worked was every five PSUS shares you purchased in the IPO, investors got one share of PS, the parent management asset, parent asset management company, it knocks your cost.

29:04.237 --> 29:07.903
[SPEAKER_04]: Now closed end fund structure means that shares trade a market price.

29:07.963 --> 29:10.126
[SPEAKER_04]: They do not trade and that asset value.

29:10.186 --> 29:16.115
[SPEAKER_04]: So it can trade at a premium or trade at a discount, relative to what the actual holdings of a fund are.

29:16.135 --> 29:20.181
[SPEAKER_04]: It's very different from a normal mutual fund, an open-ended fund, very different from,

29:20.161 --> 29:20.742
[SPEAKER_04]: and ETF.

29:21.403 --> 29:27.014
[SPEAKER_04]: Now, the structure prevents investor redemptions on like an open end fund, right?

29:27.054 --> 29:29.699
[SPEAKER_04]: You don't have to sell position to meet withdrawals.

29:30.481 --> 29:34.729
[SPEAKER_04]: It is probably lower than most hedge fund fee structures.

29:35.891 --> 29:36.432
[SPEAKER_04]: But man.

29:37.728 --> 29:38.729
[SPEAKER_04]: There's a lot of hype around this.

29:39.831 --> 29:50.364
[SPEAKER_04]: This falls under the category of one generally closed end funds or not for most people because it's not trading anywhere near net asset value.

29:52.186 --> 29:57.233
[SPEAKER_04]: But most importantly, never buy anything that has been trading for two weeks.

29:58.514 --> 30:00.296
[SPEAKER_04]: We know from empirical evidence.

30:01.017 --> 30:01.558
[SPEAKER_04]: We know

30:03.833 --> 30:09.823
[SPEAKER_04]: that stocks tend to underperform in general, in aggregate, in the first year after trading.

30:10.544 --> 30:18.037
[SPEAKER_04]: And so even if I like this, which generally I don't, because it only IPO to a couple of weeks ago, absolutely gonna pass.

30:18.878 --> 30:20.541
[SPEAKER_04]: Thanks to the call.

30:20.561 --> 30:30.297
[SPEAKER_04]: Now, Trishy's Secretary Scott Besant went on Fox News on May 4th and pointed to the oil futures curve as evidence that markets believe higher oil prices are temporary.

30:31.323 --> 30:37.689
[SPEAKER_04]: We can see in the futures market that oil prices are already lower three months, six months and nine months out, he said.

30:38.409 --> 30:42.893
[SPEAKER_04]: The White House is repeatedly used this argument to reassure the public that relief is coming.

30:44.495 --> 30:59.828
[SPEAKER_04]: The traders and oil analysts and anybody who understands what the curve is telling you pushes back hard to find actual times published a detailed analysis this week, explaining why the futures curve is not a prediction of where oil prices are heading, especially during a crisis.

30:59.943 --> 31:05.572
[SPEAKER_04]: And the distinction matters for every investor and every consumer trying to play in for the next six months.

31:06.514 --> 31:11.782
[SPEAKER_04]: The headline oil price spot Brent has risen more than 45% since the war began.

31:12.403 --> 31:15.228
[SPEAKER_04]: But oil for delivering December has risen only 30%.

31:16.229 --> 31:19.454
[SPEAKER_04]: And contracts for December 2027 are up less than 20%.

31:19.755 --> 31:24.803
[SPEAKER_04]: That downward sloping curve is

31:25.660 --> 31:27.042
[SPEAKER_04]: What best in his point, too?

31:27.663 --> 31:32.730
[SPEAKER_04]: It looks like the market expects prices to fall, but that's not how the curve works.

31:33.031 --> 31:36.095
[SPEAKER_04]: It is a misrepresentation of what the curve actually represents.

31:36.997 --> 31:45.529
[SPEAKER_04]: Futures prices reflect what hedgers, producers selling forward and refiner's buying forward, are willing to agree on today.

31:47.091 --> 31:54.402
[SPEAKER_04]: Oil producers sell futures to lock in prices for crude, they expect to pump in the coming months.

31:55.225 --> 31:58.869
[SPEAKER_04]: Refineers buy futures to secure supply and fix costs.

31:58.989 --> 32:00.831
[SPEAKER_04]: These are risk management transactions.

32:01.472 --> 32:04.075
[SPEAKER_04]: They are not bets on where prices will be.

32:06.458 --> 32:08.921
[SPEAKER_04]: Several forces push long dated futures lower.

32:09.401 --> 32:11.964
[SPEAKER_04]: Even when traders believe physical prices will stay high.

32:12.765 --> 32:17.671
[SPEAKER_04]: There are real costs involved in entering and rolling over large futures positions.

32:18.372 --> 32:23.157
[SPEAKER_04]: Margin requirements financing costs and the risk of fourth liquidation and volatile markets.

32:24.453 --> 32:38.256
[SPEAKER_04]: liquidity in more distant contracts is thinner, making it more expensive and risky to hold large positions and traders are deeply wary of getting caught long an oil when a piece deal could dump a massive volume of crude onto the market overnight.

32:39.919 --> 32:46.490
[SPEAKER_04]: When people are trading oil eight weeks out, 10 weeks out, 12 weeks out, 16 weeks out, straight might be open again.

32:46.550 --> 32:51.017
[SPEAKER_04]: You would be owning oil right into that and you'd be fired.

32:52.668 --> 32:56.973
[SPEAKER_04]: The physical market tells a very different story than the futures curve.

32:56.993 --> 33:03.079
[SPEAKER_04]: Data Brent, the price for real cargos to be delivered in the next few weeks, has been trading at enormous premiums to futures.

33:03.720 --> 33:09.145
[SPEAKER_04]: That's spread normally one to two dollars, widened dramatically in April, reflecting genuine near-term shortages.

33:09.866 --> 33:20.397
[SPEAKER_04]: Since the war began, the headline spot price has risen 45%, but the actual cost of buying a cargo of crude for imminent delivery has been even higher.

33:22.030 --> 33:28.581
[SPEAKER_04]: Once you factor in freight rates in shirts and the premium for physical availability, that's where you start to understand the price.

33:30.184 --> 33:34.491
[SPEAKER_04]: The options market provides more honest information about uncertainty.

33:35.493 --> 33:40.622
[SPEAKER_04]: Before the war contracts allowing traders to buy oil at 150, they were really traded.

33:41.323 --> 33:45.490
[SPEAKER_04]: Now 150 and even 200 options are regularly trading hands.

33:47.107 --> 33:51.833
[SPEAKER_04]: The range of possible future prices implied by the options market, it is widened sharply.

33:52.554 --> 33:57.640
[SPEAKER_04]: Four days after the war began, options implied a 10% chance oil would exceed 110 by December.

33:58.220 --> 34:02.025
[SPEAKER_04]: By May 6th, that same probability implied oil could hit 140.

34:02.986 --> 34:05.449
[SPEAKER_04]: Options tell you what traders think is possible.

34:06.110 --> 34:09.073
[SPEAKER_04]: Futures tell you what hedgers are willing to lock in today.

34:09.774 --> 34:12.017
[SPEAKER_04]: Those are fundamentally different things.

34:13.229 --> 34:16.412
[SPEAKER_04]: Historically, futures have been very poor.

34:17.093 --> 34:19.335
[SPEAKER_04]: At forecasting prices, especially during crises.

34:19.936 --> 34:25.882
[SPEAKER_04]: In April 2020, with oil at $20, futures expected a slower cover you do about 42, 2 years out.

34:25.902 --> 34:34.951
[SPEAKER_04]: The actual price by 2022, above 100, the curve missed the Russia Ukraine shock entirely because that's not its purpose.

34:34.971 --> 34:37.093
[SPEAKER_04]: For investors, the practical takeaway is simple.

34:37.734 --> 34:41.498
[SPEAKER_04]: Don't use the fruit futures curve to plan your portfolio or your budget.

34:42.102 --> 34:46.230
[SPEAKER_04]: The slow but the curve is telling you the physical market is extraordinarily tight right now.

34:46.811 --> 34:48.655
[SPEAKER_04]: Not that prices will be lower in six months.

34:49.416 --> 34:55.227
[SPEAKER_04]: If the straight reopens, prices could indeed plunge, but that's a geopolitical bet not a market forecast.

34:55.969 --> 35:00.718
[SPEAKER_04]: Plan for prices staying elevated and be pleasantly surprised if they don't.

35:01.559 --> 35:09.533
[SPEAKER_04]: I don't believe, believely, I want to briefly mention the newest KPP premium newsletter, which we will be distributed tomorrow.

35:09.553 --> 35:16.845
[SPEAKER_04]: This week in the Insight section, we talked a little bit about alternative ways to get access to a company stock.

35:17.787 --> 35:20.091
[SPEAKER_04]: And the stock idea section, we mentioned a...

35:20.847 --> 35:28.758
[SPEAKER_04]: bank and a global software leader, and in the portfolio management section, we touched on the importance of having a balanced portfolio.

35:28.778 --> 35:31.842
[SPEAKER_04]: If you're interested in learning more, head over to investsuck.com and subscribe.

35:32.243 --> 35:34.727
[SPEAKER_04]: The newsletter will come to your inbox Saturday after news.

35:36.449 --> 35:42.517
[SPEAKER_04]: Looks like we got plenty of time, so let's throw in another listener question now.

35:44.260 --> 35:46.483
[SPEAKER_06]: Hey,

35:47.003 --> 36:03.890
[SPEAKER_06]: back when it was around $26, definitely hit a rally since I was just wondering if I should hang on for the long term or if I should trim, I was leaning more towards holding on for the long term, but I just wanted to hear what you guys thought of it.

36:04.131 --> 36:05.653
[SPEAKER_06]: Thank you.

36:06.005 --> 36:17.239
[SPEAKER_04]: Intel iNTC is a name we hold for clients in one of our strategies and it's up 404% over the past 52 weeks.

36:17.299 --> 36:35.202
[SPEAKER_04]: In fact, it recently hit a new 52 week high at $132 and then it pulled back pretty hard today.

36:36.987 --> 36:44.213
[SPEAKER_04]: Intel is a bet on the US government's interest invalidating this foundry model.

36:44.750 --> 36:51.721
[SPEAKER_04]: Now earnings per share, beat by 1,400% and domestic manufacturing in semi-conductors.

36:51.761 --> 36:53.784
[SPEAKER_04]: This is the real tail.

36:53.824 --> 36:54.705
[SPEAKER_04]: The turnaround is real.

36:55.206 --> 36:57.710
[SPEAKER_04]: The turnaround is real, but the factory's still losing money.

36:58.291 --> 37:00.674
[SPEAKER_04]: Those are about 2.3 billion per quarter operationally.

37:01.496 --> 37:07.585
[SPEAKER_04]: Apple has a deal with them, but that's limited to the legacy chips, not their flagship to an M chip.

37:07.565 --> 37:11.471
[SPEAKER_04]: Now, if Apple eventually migrates their flagship iPhone processor, that would be huge.

37:12.112 --> 37:12.733
[SPEAKER_04]: Absolutely huge.

37:13.013 --> 37:18.401
[SPEAKER_04]: But I will say, right, this is one of the greatest turnaround stories in the semiconductor industry's history.

37:19.582 --> 37:22.567
[SPEAKER_04]: And today's pullback is a healthy reality check.

37:22.587 --> 37:28.115
[SPEAKER_04]: If you bought it 19 dollars, you should probably be trimming at the least.

37:29.577 --> 37:35.125
[SPEAKER_04]: And understand that if you're buying

37:35.915 --> 37:37.196
[SPEAKER_04]: We still hold this name.

37:37.216 --> 37:39.439
[SPEAKER_04]: We trimmed it because we are up a lot.

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[SPEAKER_04]: But generally speaking, stocks that exhibit this strong momentum and I'm tend to do so in the short and your term.

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[SPEAKER_04]: And until it turns, I would hesitate to exit fully.

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[SPEAKER_04]: That is Intel Corporation, Tiger I and TC.

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[SPEAKER_04]: This invest talk, I'm Lou Greer.

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[SPEAKER_04]: We have one goal here and that's to help you achieve your financial freedom.

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[SPEAKER_04]: I'll work continues after this break.

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[SPEAKER_04]: It is our final break.

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[SPEAKER_04]: So get your questions in now at 80 to 99 chart.

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[SPEAKER_02]: Best Talk.

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[SPEAKER_02]: Tell your friends they can listen live, download the free podcast, or watch Best Talk on our YouTube channel.

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[SPEAKER_04]: And THROPIC, the AI company behind Claude, currently valued at $900 billion, private markets updated its website this week, with a message that sent shock waves through the secondary

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[SPEAKER_04]: The company posted a list of unauthorized firms that facilitated sales of anthropic stock without board approval.

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[SPEAKER_04]: Open door partners, lion heart ventures, side car, high, forge, the language was stark, any sale, or transfer of anthropic stock, or any interested in anthropic stock, offered by these firms as void and will not be recognized on our books and records, thousands of individual investors.

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[SPEAKER_04]: Many of whom put money into special purpose vehicles or SPVs that hold interest in anthropic are now wondering if their investments are worthless.

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[SPEAKER_04]: One executive compared it to realizing you don't have the title of your home and the market rips higher.

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[SPEAKER_04]: The context here is important, with the fastest growing tech companies staying private for years, sometimes a decade or more, a cottage industry of secondary platforms has emerged to let retail and wealthy investors buy exposure before an IPO.

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[SPEAKER_04]: These platforms resell shares either directly or through SPVs, which are entities that hold the underlying shares on behalf of groups of investors.

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[SPEAKER_04]: The SPV structure is a workaround to the limit on how many shareholders, private companies are allowed to have.

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[SPEAKER_04]: The universe of SPVs has gotten pretty complex.

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[SPEAKER_04]: One banker estimates they're more than a thousand tied to SpaceX investments alone, each with around 100 investors.

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[SPEAKER_04]: Some managers have been repackaging holdings and selling them into their other SPVs, creating layers of derivative exposure to shares, that may or may not have been valiantly transferred.

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[SPEAKER_04]: Now, if topics move, it appears to be part of IPO preparation when a company goes public it needs a clean cap table, a clear, verified list of every shareholder, and how many shares they own, an authorized secondary transactions creates a mess.

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[SPEAKER_04]: It's hard to entangle, especially when shares have been passed through multiple layers without board approval.

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[SPEAKER_04]: Open AI and Defense Startup and Durro have similarly tried to restrict secondary trading ahead of their IPO timelines.

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[SPEAKER_04]: The response from name platforms varied for recently acquired by Charles Wops said all of Santhropic funds have received company approval.

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[SPEAKER_04]: Hive CEO posted that they don't facilitate transfers without companies approval and aren't aware of any power inthropic has, devoid investments.

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[SPEAKER_04]: The legal situation is murky, even if an investor purchase shares from the company had no restrictions on SPVs, Columbia Law Professor specializing in corporate loss, and the company likely couldn't lawfully void those holdings retroactively, but proving that in court takes time, takes money, and the uncertainty alone is damaging.

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[SPEAKER_04]: For investors, this is more than anything a cautionary tale.

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[SPEAKER_04]: cautionary tale about the risks of the pre-IPO secondary market.

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[SPEAKER_04]: SpaceX is planning to go public in June, anthropic and open-air, eyeing offerings later this year.

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[SPEAKER_04]: The valuations of all three have ballooned, and SPV investors are anticipating massive windfalls, but how shares held through SPVs get distributed after an IPO that remains unclear.

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[SPEAKER_04]: There could be lock-up periods, conversion delays, or, in a words case, legal disputes

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[SPEAKER_04]: The lesson extends beyond anthropic any time you invest through a special purpose vehicle.

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[SPEAKER_04]: In a private company you are relying on a chain of legal approvals and transfer documentation that may or may not hold up when the company decides to enforce its rights.

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[SPEAKER_04]: The secondary market for private shares has grown faster than the legal and regulatory infrastructure needed to support it.

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[SPEAKER_04]: In a bullmark and nobody cares about the paperwork.

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[SPEAKER_04]: When the IPO approaches and the company needs a clean cap table, suddenly, paperwork is all that matters.

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[SPEAKER_04]: If you hold pre-IPO investments through special purpose vehicles, confirm with your platform that the underlying transfers were board-approved.

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[SPEAKER_04]: Get that documentation, get it in writing and understand.

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[SPEAKER_04]: that the liquidity and simplicity, these platforms promise comes with legal risks that aren't fully priced in to the underlying investments.

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[SPEAKER_04]: Well, folks, that does it for another week of Invest Talk as always, Justin and I and everybody over here at the Invest Talk team want to thank you for listening and encourage you to tell your friends and family members about our free podcast downloads.

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[SPEAKER_04]: We make the same trade for ourselves.

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