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[SPEAKER_01]: This is Invest Talk, from KPP Financial, helping investors make sense of the markets one day at a time.

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[SPEAKER_01]: Here's your host, Justin Klein.

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[SPEAKER_00]: Good afternoon, fellow investors, and welcome back to Invest Talk.

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[SPEAKER_00]: This is our Friday.

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[SPEAKER_00]: June 5th, 2026 edition of Invest Talk in what a Friday.

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[SPEAKER_00]: It was a lot of movements in markets,

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[SPEAKER_00]: Big red day, especially for tech on good jobs numbers.

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[SPEAKER_00]: For if you've been in the market for a while, you should know what that means.

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[SPEAKER_00]: Good job numbers means X, Y, and Z.

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[SPEAKER_00]: That's why stock sold off.

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[SPEAKER_00]: It's important to know that.

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[SPEAKER_00]: I'll talk about that in my little market recap, but these are examples of how you have to know how to tie these headlines together where it really matters.

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[SPEAKER_00]: Could we talk about how you don't want to chase the headlines on the show?

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[SPEAKER_00]: But then you ignore them because some actually do matter.

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[SPEAKER_00]: It's just far fewer than CMBC would like you to believe.

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[SPEAKER_00]: So that's our job here is to separate the wheat from the chef.

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[SPEAKER_00]: Make sure that you are focusing on the right data points so that you can make better decisions with your money.

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[SPEAKER_00]: Money or decisions that, or so you'd be data points

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[SPEAKER_00]: actually mean something to your portfolios, the broader economy, to policy decisions and Washington and beyond, etc.

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[SPEAKER_00]: So that's what the show is really about helping you navigate this very interesting time that we are living in.

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[SPEAKER_00]: Now I'm Justin Klein and our objective here each every week in an on-invest talk is to help you become a better investor and we do that by

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[SPEAKER_00]: and bringing topics to the table so that you are you have more insight, more perspective.

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[SPEAKER_00]: Once again, beyond just headlines.

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[SPEAKER_00]: So that's what this show is.

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[SPEAKER_00]: And heads up, our next wealth webinar.

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[SPEAKER_00]: It's coming up on Tuesday, June 30th from 12 to 1 PM.

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[SPEAKER_00]: Civic time, potatoes beyond the yield, how to invest for your income needs.

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[SPEAKER_00]: So make sure you head over to invest.com and register.

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[SPEAKER_00]: But we're here now, we're ready for your calls at 8, 8, 9, 9 chart.

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[SPEAKER_00]: So whatever's on your mind, don't hesitate to reach out now and just a bit.

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[SPEAKER_00]: We'll talk about today's Mark performance and run down the show topics for the hour.

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[SPEAKER_00]: But as usual, we'll tackle this first call

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[SPEAKER_06]: Hi, Jess and Luke, great show, first of all, let's get a look at this thought for me.

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[SPEAKER_06]: It's a link in financial, the tickets L and C, and it's tell me your opinion.

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[SPEAKER_06]: I would appreciate it.

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[SPEAKER_06]: Thanks for the interview.

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[SPEAKER_06]: It's everything you guys do, and a great show.

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[SPEAKER_06]: Thank you.

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[SPEAKER_00]: We're looking at Lincoln National Corps, provides life insurance, group protection, and duties, private planning, investment services, et cetera.

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[SPEAKER_00]: What I worry about all these insurance companies is how much private equity exposure they have.

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[SPEAKER_00]: really since the beginning of the year, that's one private equity kind of peaked.

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[SPEAKER_00]: You go look at the PSP.

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[SPEAKER_00]: It's a good proxy for that.

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[SPEAKER_00]: I mean, that peaked really back in the fall.

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[SPEAKER_00]: Rallyed into the beginning of the year and then rolled over in earnest.

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[SPEAKER_00]: So the fact that LNC has fallen along with it gives me a bit of pause.

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[SPEAKER_00]: It's also a small cap name 6.6 billion dollar market cap.

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[SPEAKER_00]: Remember, these insurance companies, they take

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[SPEAKER_00]: The premiums, they invest them and many have chased fixed income, many have poorly allocated capital within the space.

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[SPEAKER_00]: And when you're seeing this relative strength at 37, which is not horrible, but it's certainly not good.

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[SPEAKER_00]: It's telling you a lot about

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[SPEAKER_00]: with the market thinks underneath the hood.

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[SPEAKER_00]: And you're probably going to look at this and you're going to say, oh, it looks cheap.

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[SPEAKER_00]: So it's earned $7.67 this year, $8.34 next year, and it's only a $34 stock, $34 change.

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[SPEAKER_00]: So yeah, for looking earnings, multiple is only a four times.

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[SPEAKER_00]: Once again, it looks cheap.

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[SPEAKER_00]: But this is where you always have to dig deeper.

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[SPEAKER_00]: What's cash flow?

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[SPEAKER_00]: Pre-cache falls only 243 million.

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[SPEAKER_00]: But these financial firms, it's very easy to, I don't want to say cook the books, but manipulate the earnings numbers to make that look better than it actually is.

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[SPEAKER_00]: So on the surface you'll say four, five P.E.

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[SPEAKER_00]: The payout ratio is 20% with a dividend yield

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[SPEAKER_00]: But when I see that, that should be a red flag to all of you.

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[SPEAKER_00]: What's the things that cheap?

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[SPEAKER_00]: You have to ask one thing.

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[SPEAKER_00]: The first thing is, let's go on with a balance sheet.

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[SPEAKER_00]: Is the balance sheet stretched or not?

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[SPEAKER_00]: What's the strength of those underlying assets as well?

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[SPEAKER_00]: And they have about $6 billion in net debt in their balance sheet.

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[SPEAKER_00]: But once again, and the market of $6 billion,

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[SPEAKER_00]: The debt is 6, roughly 6 billion, and that's a lot.

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[SPEAKER_00]: A lot of debt for a company that might own a lot of private equity.

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[SPEAKER_00]: And the cash dividend pay ratio is 219%.

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[SPEAKER_00]: So that dividend is not going to go up.

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[SPEAKER_00]: In fact, it's more than likely going to get cut.

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[SPEAKER_00]: There's a reason it has not touched its dividend.

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[SPEAKER_00]: It's been flat since 2022 after years of increasing it.

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[SPEAKER_00]: Something has changed.

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[SPEAKER_00]: You know what changed?

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[SPEAKER_00]: Their private equity investments are probably now impaired.

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[SPEAKER_00]: This is a quintessential value trap.

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[SPEAKER_00]: You do not want to touch this name LNC Lincoln National Court.

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[SPEAKER_00]: Now in this great show yesterday, we looked into story about how net worth milestones by age can tell you a lot about your

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[SPEAKER_00]: financial security, your income needs in retirement.

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[SPEAKER_00]: So we looked at that.

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[SPEAKER_00]: We also answer a question on Expand Energy EXE, one of the larger natural gas companies.

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[SPEAKER_00]: In the United States, it was submitted via our best stock of YouTube channel.

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[SPEAKER_00]: If you happen to miss it, go check it out and the best way to get every show is to follow invest stock wherever you get your podcast.

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[SPEAKER_00]: Now, we have a lot of ground to cover over the next 45 minutes or so in time for many, we will get to all of it our main focus point.

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[SPEAKER_00]: because defense spending is changing.

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[SPEAKER_00]: There's a boom in global defense spending security, spending, and this creates a lot of investment opportunity, mainly abroad, but here as well.

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[SPEAKER_00]: But it's not your typical names.

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[SPEAKER_00]: There's a different bet to how these governments are spending their money on defense.

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[SPEAKER_00]: fighter jets and submarines, like it used to be.

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[SPEAKER_00]: It's very different.

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[SPEAKER_00]: So we're gonna look at that.

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[SPEAKER_00]: Also, lithium, lithium is up a lot.

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[SPEAKER_00]: This is being the year.

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[SPEAKER_00]: Can it be sustained?

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[SPEAKER_00]: We're gonna talk about the boom and bust cycle of lithium.

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[SPEAKER_00]: And then if we have time, how big is private equity?

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[SPEAKER_00]: We just talked about Lincoln and their exposure to private equity, but is the total exposure to private equity?

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[SPEAKER_00]: worrisome for the financial for the broader economy.

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[SPEAKER_00]: We'll look at that as well if we have time.

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[SPEAKER_00]: We'll set up questions on Hartford Insurance Group HIG as well as Westco International WCC.

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[SPEAKER_00]: And we'll set up some questions that came in via the comment section on the Invest Talk YouTube channel.

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[SPEAKER_00]: But we're gonna do a quick break.

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[SPEAKER_00]: Please remember you can call anytime and leave your question on the Invest Talk voice bank.

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[SPEAKER_00]: If you're listening via our live stream on or on Amazon 20 in the Bay Area, you can call right now.

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[SPEAKER_00]: I ate a date then, you know, chart.

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[SPEAKER_01]: This is Invest Talk, now closing in on 63 million downloads.

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[SPEAKER_01]: And Justin Klein is here taking your questions live.

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[SPEAKER_01]: 888-99 chart.

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[SPEAKER_00]: In 1999 chart, it hit 992, 4, 2, 7, 8 to how you get through and ask your question on today's show.

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[SPEAKER_00]: Let's go take a look at a very interesting close to this week in markets.

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[SPEAKER_00]: And it all had to do with really jobs.

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[SPEAKER_00]: The jobs number came in at 170,000 jobs created.

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[SPEAKER_00]: You also had ISM's manufacturing and services PMIs.

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[SPEAKER_00]: and the city U.S. economic surprise index at its highest level since October of 2023.

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[SPEAKER_00]: Does that seem like an economy that needs great cuts with inflation, pushing closer to 4%.

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[SPEAKER_00]: So Blancher that is no.

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[SPEAKER_00]: And now, there is a better than 50% chance.

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[SPEAKER_00]: actually now over 80% chance, there'll be one rate hike between now and year end.

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[SPEAKER_00]: And that's what sparked us off.

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[SPEAKER_00]: That's why I talked about the beginning of the show, which is understanding the connection here.

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[SPEAKER_00]: Just go back to 2022.

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[SPEAKER_00]: The market started selling off before even there was a rate hike, but the market started a price in a rate hike when they realized, hey, inflation was not transitory.

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[SPEAKER_00]: The Fed is waking up to that, and they're going to have to raise rates.

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[SPEAKER_00]: So that's what they did, but the market front ran that, front ran.

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[SPEAKER_00]: So how do you say it?

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[SPEAKER_00]: And that's what you're seeing here.

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[SPEAKER_00]: Could this be the top?

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[SPEAKER_00]: Well, I think it depends on, do we get a re-except, continue re-exceleration in the economy?

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[SPEAKER_00]: Because of,

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[SPEAKER_00]: so much consumer spent and extrusing at fiscal spending when the government, that's certainly one thing.

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[SPEAKER_00]: Also, the balance sheets of all these major tech companies which had been rock solid for a long period of time.

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[SPEAKER_00]: They're deploying all of that capital now to build that infrastructure which bleeds into the economy, those are dollars that are going into the economy that were kind of trapped on their balance sheet for a long period of time.

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[SPEAKER_00]: That's a huge factor here.

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[SPEAKER_00]: And then you have bank lending

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[SPEAKER_00]: healthy clip, let me see what are we at now.

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[SPEAKER_00]: I always take a look at this, comes out.

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[SPEAKER_00]: Yeah, that was basically flat week or week, but 6.4% year over year.

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[SPEAKER_00]: That's healthy.

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[SPEAKER_00]: So, and then you're like I said, you have inflation that's elevated and there's no resolution to this Iran conflict.

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[SPEAKER_00]: So it tells you as the Fed is now likely moving towards a tightening cycle.

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[SPEAKER_00]: We're right now, they are modestly restrictive.

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[SPEAKER_00]: Sorry, dovesh, accommodative, shall we say, better way to put it?

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[SPEAKER_00]: If you look back, the Fed shouldn't have cut rates last year.

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[SPEAKER_00]: There's no real impetus for it.

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[SPEAKER_00]: And that's why you see the markets so resilient, because policy, both on the fiscal and monetary side, are stimulative.

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[SPEAKER_00]: And then what's again, you get the corporate side that's spending as well.

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[SPEAKER_00]: So that is what is happening right now.

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[SPEAKER_00]: That's the backdrop.

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[SPEAKER_00]: But there's always that potential in flexion point.

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[SPEAKER_00]: And if you're the market pricing and may be a rate hike by your end before it didn't really cause the market to wake up.

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[SPEAKER_00]: But now it's like, yeah, they're gonna hike at least once, probably twice by your end.

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[SPEAKER_00]: And that's why you got to sell off in the NASDAQ was down 4% of the day, SV.2 and a half, 0.6.

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[SPEAKER_00]: large cap growth was really where the blood was.

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[SPEAKER_00]: In video down six, Tesla down six and a half, broad calm down eight, micron down 13, Intel down 11, all the names that had bid big winners are starting to roll over because of that inflection.

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[SPEAKER_00]: They were the winners of the backdrop and the question is, is this the inflection?

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[SPEAKER_00]: Now, it doesn't necessarily have to be, but the start of a potential inflection

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[SPEAKER_00]: was today, doesn't mean it's absolutely going to happen, but this is the first sign they're moving in that direction.

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[SPEAKER_00]: Now we're heading to a break, give me a call now at 88899 chart.

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[SPEAKER_01]: Get ready for an all new Invest talk wealth webinar beyond the yield, how to invest for your income needs.

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[SPEAKER_01]: Tuesday, June 30th, noon to one Pacific time.

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[SPEAKER_01]: Learn more and register now at Invest Talk.com.

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[SPEAKER_04]: Hey, Justin, this is Becky from Kansas City.

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[SPEAKER_04]: Would you rather a person by AT&T or

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[SPEAKER_04]: would you rather than buy chlorox, chlorox is currently $88 a share, pays a good dividend, AT&T, 24 a share, I think.

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[SPEAKER_04]: Which one do you think would be the best to own?

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[SPEAKER_04]: Thank you.

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[SPEAKER_00]: Well, first off.

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[SPEAKER_00]: I never really care.

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[SPEAKER_00]: You should never really care whether it's stock is trading at $20 dollars a share, $200 a share, $2,000 a share, on its face, that means absolutely nothing.

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[SPEAKER_00]: It shouldn't ever mean anything to you.

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[SPEAKER_00]: It's always in comparison to its earnings per share, it's cash flow per share, it's dividend per share.

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[SPEAKER_00]: That's how you, that's it.

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[SPEAKER_00]: That's it.

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[SPEAKER_00]: There are, I would say, there are far more stocks that are cheap above $5 per share than below $5 per share, although a lot of people say, oh, it's trading at $3.

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[SPEAKER_00]: That's cheap.

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[SPEAKER_00]: Now, usually those ones are trading for $3.

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[SPEAKER_00]: They're very expensive because they have to lose money or make only a few cents per share.

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[SPEAKER_00]: So, everybody out there should always completely generally ignore, it means nothing, and it's face, like I said.

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[SPEAKER_00]: Now, getting to the names,

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[SPEAKER_00]: You're talking about two very different companies.

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[SPEAKER_00]: Yes, they both pay dividends, about 4.8% of an AT&T, chlorox is right around, what do we have five and a half percent?

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[SPEAKER_00]: So you're clearly looking for an income pair.

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[SPEAKER_00]: But obviously AT&T, it's a big telecom name, very slow growth, very, it's in a very mature industry, basically a triopoly between them, Verizon and T-Mobile.

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[SPEAKER_00]: customers, the team mobile over the years is cheaper, and actually I'm one of them.

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[SPEAKER_00]: I used to be a AT&T, I moved to a new place, and the reception there was so bad.

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[SPEAKER_00]: It was only good with team mobile, the team mobile, being good, cheaper.

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[SPEAKER_00]: And fine, some example of that.

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[SPEAKER_00]: Not that I'm here touting it, but I'm just showing you an example.

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[SPEAKER_00]: And so, it's also a very capital intensive business,

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[SPEAKER_00]: The raw ingredients that go into running a telecom company, a wireless telecom company, like AT&T, you're competing now with these AI infrastructure companies.

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[SPEAKER_00]: And so I would imagine their capex is gonna have to go up because of it.

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[SPEAKER_00]: And they have a lot of data already, about 170 billion dollars in net data in this balance sheet,

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[SPEAKER_00]: return equities about 18%, which is good, but a lot of that's because of the leverage to turn domestic capital's only eight.

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[SPEAKER_00]: Now, Clark's is much smaller, only about $11 billion mark cap, but only about $3 billion in that debt.

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[SPEAKER_00]: So much better balance sheet, less capital intensive, yes, it has some exposure to higher inflation inputs that

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[SPEAKER_00]: could shrink their margins a little bit.

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[SPEAKER_00]: But overall, their profitability is much better.

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[SPEAKER_00]: Return of S the Capital 21%.

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[SPEAKER_00]: And then I look at today.

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[SPEAKER_00]: Horox was up, nicely.

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[SPEAKER_00]: Was up about 4% on the day, 5% on the day.

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[SPEAKER_00]: AT&T has been in a downtrend.

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[SPEAKER_00]: And it was much better than the market that they only had down about.

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[SPEAKER_00]: It was down marginally today.

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[SPEAKER_00]: But that was down big yesterday.

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[SPEAKER_00]: So this is a very easy answer.

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[SPEAKER_00]: It's Horox.

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[SPEAKER_00]: Better balance sheet, better profitability, even better profit growth.

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[SPEAKER_00]: So CLX is my choice.

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[SPEAKER_00]: Let's go answer a YouTube comment question.

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[SPEAKER_00]: No delusion investing in a like that name.

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[SPEAKER_00]: says, hey guys, I want to get your take on insulate corp. P-O-D-D-P-O-D-D-D.

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[SPEAKER_00]: It is taking a big hit in the last 12 months from what looks like a geopolitical increase.

17:15.944 --> 17:17.506
[SPEAKER_00]: However, I think this is a bit overblown.

17:17.526 --> 17:20.469
[SPEAKER_00]: The thermos look relatively strong from what I can see before I get my toe.

17:20.909 --> 17:23.252
[SPEAKER_00]: In this pool, I wanted to see if I was missing something.

17:24.910 --> 17:38.132
[SPEAKER_00]: Yeah, so I actually think this is one of those areas where GOP ones are going to disrupt this insulin industry.

17:39.092 --> 17:48.634
[SPEAKER_00]: The reason, so there are so many type two diabetics out there is because we eat too many carbs bottom line.

17:49.914 --> 17:50.514
[SPEAKER_00]: Go study this.

17:54.631 --> 17:58.134
[SPEAKER_00]: You want to be healthier, you eat less and you eat less carbs.

17:59.495 --> 18:07.741
[SPEAKER_00]: And usually if you're type two diabetic, you have an over, you have too much excess carbs stored up in your body.

18:09.262 --> 18:11.523
[SPEAKER_00]: So it happens when you take a GLP one, you stop eating.

18:11.563 --> 18:16.527
[SPEAKER_00]: Well, you slowly burn that off, you'll lose weight.

18:17.087 --> 18:21.571
[SPEAKER_00]: And suddenly the type two diabetes goes away because you don't have a ton of excess

18:23.842 --> 18:32.487
[SPEAKER_00]: It's very simple, simple science, and so I think less and less people are going to need insulin.

18:33.428 --> 18:41.233
[SPEAKER_00]: So I think this is one of those value traps, and it's frankly not even trading at cheap price, it's really about 20 times for looking at earnings.

18:43.014 --> 18:50.138
[SPEAKER_00]: Good balance sheet, I like that, but I do think it's in a downtrend for a very good reason.

18:52.310 --> 18:54.292
[SPEAKER_00]: In that next investor, look into the story.

18:54.852 --> 19:00.297
[SPEAKER_00]: Our index funds enough in a volatile market the case for and against active strategies.

19:02.579 --> 19:05.702
[SPEAKER_00]: We'll talk about that tomorrow, but for now, I'm ready to take your calls at 8.98

19:08.805 --> 19:12.909
[SPEAKER_00]: At KPP Financial, Accountability means more than advice.

19:13.589 --> 19:18.333
[SPEAKER_00]: It means we invest alongside you, through our parallel investing approach.

19:18.974 --> 19:30.444
[SPEAKER_00]: When we recommend an investment for clients, one or more KPP principles invest their own capital at the same time, same day, same price, same percentage.

19:31.124 --> 19:34.328
[SPEAKER_00]: If your portfolio moves, ours does too.

19:34.989 --> 19:37.652
[SPEAKER_00]: That is alignment, that is transparency.

19:38.153 --> 19:40.175
[SPEAKER_00]: That is the KPP difference.

19:41.076 --> 19:45.762
[SPEAKER_00]: Visit investtalk.com to get your free portfolio review.

19:51.753 --> 20:03.656
[SPEAKER_01]: The weekend is here or almost here, but you've got finance and investment questions, so step up and call in in Vest Talk, 888 99 chart.

20:05.416 --> 20:08.157
[SPEAKER_00]: Training focus point today is about defense docs.

20:09.337 --> 20:19.600
[SPEAKER_00]: We're 2026 now, the global security boom is creating long-term investment opportunities, but it's not necessarily in the traditional defense contractors.

20:20.890 --> 20:29.756
[SPEAKER_00]: because things are changing around the globe when it comes to defending, spending, what is important, what isn't.

20:32.258 --> 20:38.662
[SPEAKER_00]: But what's clear is that we are certainly in a giant structural growth cycle.

20:39.903 --> 20:44.266
[SPEAKER_00]: Believe the largest since the Cold War, we know geopoliticians are rising,

20:45.540 --> 20:48.462
[SPEAKER_00]: AI is now powering warfare in many ways.

20:48.482 --> 20:54.305
[SPEAKER_00]: You have drone systems that are new, cyber conflicts, which have been going on for a while, but certainly intensifying.

20:55.085 --> 21:02.250
[SPEAKER_00]: And then just overall military modernization to make things more up to date, since the Cold War.

21:03.650 --> 21:08.493
[SPEAKER_00]: So, used to be defense spending was all about conventional weapon systems.

21:08.513 --> 21:11.275
[SPEAKER_00]: You're talking about missiles and

21:12.645 --> 21:17.466
[SPEAKER_00]: fighter jets, and submarines, aircraft carriers, et cetera.

21:18.627 --> 21:19.387
[SPEAKER_00]: But things are changing.

21:19.507 --> 21:21.168
[SPEAKER_00]: Modern Warfare looks very different.

21:21.708 --> 21:37.192
[SPEAKER_00]: Once again, typically powered by AI, you have autonomous drones, cybersecurity systems, space defense infrastructure, missile defense networks, quantum computing, as well as surveillance systems.

21:38.333 --> 21:39.073
[SPEAKER_00]: So more and more,

21:40.152 --> 21:44.873
[SPEAKER_00]: Defense spending is looking a lot like traditional text spending.

21:45.973 --> 21:51.954
[SPEAKER_00]: And global military spending reach nine point two, sorry, number two point nine, trillion dollars last year.

21:53.314 --> 21:56.855
[SPEAKER_00]: Spending grew for the 11th consecutive year globally.

21:57.695 --> 22:03.376
[SPEAKER_00]: Europe, Asia and NATO members continue accelerated their defense budgets, but most of all, it's coming out of Europe.

22:03.576 --> 22:07.037
[SPEAKER_00]: European military spending grew sharply in 2025 as you expect.

22:08.967 --> 22:15.229
[SPEAKER_00]: since the start of the Ukraine war, and even Asian military budgets are rising as well.

22:15.729 --> 22:17.209
[SPEAKER_00]: So there's certainly a boom here.

22:18.069 --> 22:20.590
[SPEAKER_00]: But once again, it's not your traditional players.

22:21.250 --> 22:30.153
[SPEAKER_00]: Modern military is usually used as systems for things like drone coordination, battlefield analytics, intelligent intelligence gathering.

22:30.873 --> 22:32.313
[SPEAKER_00]: So I was security defense, things like that.

22:33.113 --> 22:36.274
[SPEAKER_00]: So the future battlefield is going to be heavily

22:39.822 --> 22:44.125
[SPEAKER_00]: And you see this now in two of the major conflicts that are going on in the world.

22:45.026 --> 22:53.573
[SPEAKER_00]: You have two weaker nations fighting the two largest, most powerful militaries in the world.

22:53.593 --> 23:05.261
[SPEAKER_00]: You have Ukraine that's basically been holding off Russia for what going on four years now, three plus years, and they're doing it mainly with drone technology.

23:06.262 --> 23:06.863
[SPEAKER_00]: Think about that.

23:07.882 --> 23:08.763
[SPEAKER_00]: That's powerful.

23:09.403 --> 23:15.026
[SPEAKER_00]: They're fighting a defensive war in a far more efficient way.

23:16.047 --> 23:17.888
[SPEAKER_00]: And then you have what's going on in the Middle East with the run.

23:18.988 --> 23:19.729
[SPEAKER_00]: We're in the stalemate.

23:19.829 --> 23:21.230
[SPEAKER_00]: Here we're going with three plus months.

23:22.971 --> 23:30.555
[SPEAKER_00]: And they are also able to keep us at bay by simply drum technology.

23:37.405 --> 23:37.946
[SPEAKER_00]: in decades.

23:40.368 --> 23:41.909
[SPEAKER_00]: These are low cost drones.

23:42.750 --> 23:44.792
[SPEAKER_00]: All you need is a few thousand of them.

23:46.753 --> 23:51.117
[SPEAKER_00]: And you can do a lot of damage to defend your own country.

23:52.218 --> 23:57.303
[SPEAKER_00]: So traditional military procurement models are changing rapidly.

23:58.591 --> 24:08.735
[SPEAKER_00]: So there's increasing focus on cyber security and investing in cyber defense systems, critical infrastructure protection, AI power side with cyber security, all that.

24:09.996 --> 24:14.057
[SPEAKER_00]: And then it's about aerospace companies as well.

24:15.118 --> 24:18.319
[SPEAKER_00]: Not just here domestically, but it brought us around the world.

24:19.540 --> 24:24.322
[SPEAKER_00]: So don't think that this is just about US focused companies.

24:24.682 --> 24:27.243
[SPEAKER_00]: There are many opportunities around the world to invest.

24:29.357 --> 24:33.678
[SPEAKER_00]: I don't just think Lockheed Martin, General Dynamics, Raytheon, et cetera.

24:33.978 --> 24:42.820
[SPEAKER_00]: Big, those can be good investments, but the question is, are they going to lose a lot in your traditional platforms and investment in those platforms?

24:43.880 --> 24:47.301
[SPEAKER_00]: Will they make up enough in other categories, most likely not?

24:48.321 --> 24:53.502
[SPEAKER_00]: And then there's actually space, space is becoming increasingly more important.

24:54.194 --> 25:00.078
[SPEAKER_00]: For things like satellite surveillance, obviously, missile tracking, communication systems, navigation infrastructure, all of that.

25:00.418 --> 25:04.001
[SPEAKER_00]: So these are overlapping systems, and they're becoming very critical.

25:04.381 --> 25:06.583
[SPEAKER_00]: They need supply, they need semiconductor supply chains.

25:06.803 --> 25:11.926
[SPEAKER_00]: A lot of what is going on with AI infrastructure markets is overlapping in the defense markets as well.

25:12.347 --> 25:19.712
[SPEAKER_00]: So don't just think of defense spending as once again, missiles and aircraft carriers and submarines.

25:20.700 --> 25:26.043
[SPEAKER_00]: It's far more sophisticated and frankly, a lot of those platforms are obsolete.

25:26.403 --> 25:30.705
[SPEAKER_00]: Let's keep things going and drop in another fresh listener question from 88899 chart.

25:31.405 --> 25:33.386
[SPEAKER_05]: Yeah, this is Corey calling from Texas.

25:33.526 --> 25:41.490
[SPEAKER_05]: Had a question regarding, like, our symbol HIGs on the stock for a while, just curious about your perspective on the stock.

25:41.910 --> 25:43.971
[SPEAKER_05]: I know they've missed on recent earnings.

25:44.271 --> 25:48.533
[SPEAKER_05]: It looks like top line revenue has kind of stalled out over the last quarter or so.

25:49.081 --> 25:52.483
[SPEAKER_05]: just curious your perspective on continuing to hold the stock.

25:53.023 --> 25:55.865
[SPEAKER_05]: They've recently dropped below the 200 day moving average.

25:55.945 --> 26:02.869
[SPEAKER_05]: Just curious if now is a good time to pick up more or get out of the stock and look for better opportunities elsewhere.

26:03.529 --> 26:05.710
[SPEAKER_05]: I'll be listening for your answer on the podcast.

26:05.850 --> 26:06.450
[SPEAKER_05]: Thanks so much.

26:06.771 --> 26:06.991
[SPEAKER_00]: Bye.

26:07.511 --> 26:10.473
[SPEAKER_00]: I'm looking at hard-fired insurance group.

26:10.853 --> 26:14.495
[SPEAKER_00]: It was actually actually named WeveOwn for one period of time now.

26:15.330 --> 26:20.932
[SPEAKER_00]: 302 dollars per share still in a longer-term uptrend fall of 2024.

26:20.972 --> 26:23.412
[SPEAKER_00]: It was trading around $70 per share.

26:23.472 --> 26:26.793
[SPEAKER_00]: So it's had a nice move for the past couple of years.

26:27.333 --> 26:31.834
[SPEAKER_00]: To us, this is just consolidation, the overall trends and earnings remain solid.

26:32.295 --> 26:36.516
[SPEAKER_00]: So there are all-time high earnings of $14.24 next year.

26:36.536 --> 26:41.757
[SPEAKER_00]: And it's outperforming the broader financial services sector.

26:41.857 --> 26:42.997
[SPEAKER_00]: So the fact that

26:45.879 --> 26:46.779
[SPEAKER_00]: tells us all we need to know.

26:46.799 --> 26:56.663
[SPEAKER_00]: A lot of times, you have to compare it to the industry, because money is flowing into the value of these hardware names and tech and out of things like financials.

26:57.363 --> 27:03.365
[SPEAKER_00]: So naturally, it's going to sell kind of everything, but what's outperforming, what's still getting some flows and hard for it's a good example of that.

27:04.726 --> 27:09.788
[SPEAKER_00]: They have very good balance sheet only $3 billion in net debt on a $36 billion market cap.

27:09.828 --> 27:11.128
[SPEAKER_00]: So pretty minimal there.

27:16.222 --> 27:24.108
[SPEAKER_00]: Let's, a healthy, with this size of a company, right, 36 billion dollar market gap.

27:25.349 --> 27:26.931
[SPEAKER_00]: What are they doing with that cash flow?

27:26.951 --> 27:30.313
[SPEAKER_00]: Well, they're dividend solid, less than 2%.

27:31.534 --> 27:36.058
[SPEAKER_00]: And they continue to raise that dividend, that 60 cents per share.

27:36.138 --> 27:43.263
[SPEAKER_00]: Now, in 2016, a decade ago is at 23 cents, so they just pretty much a year after year keep increasing that dividend.

27:47.534 --> 27:48.554
[SPEAKER_00]: buying back shares as well.

27:50.795 --> 27:54.036
[SPEAKER_00]: A decade ago, they had 379 million shares outstanding.

27:55.776 --> 27:56.377
[SPEAKER_00]: Now they're at 274.

27:56.417 --> 27:59.778
[SPEAKER_00]: They're consistently buying back shares.

27:59.798 --> 28:06.800
[SPEAKER_00]: So high return and invest a capital 18% return equity 22% these are those names that are kind of boring.

28:09.020 --> 28:12.021
[SPEAKER_00]: But they perform because guess what?

28:12.701 --> 28:14.782
[SPEAKER_00]: They are good stewards of capital.

28:16.656 --> 28:21.621
[SPEAKER_00]: and money continues to flow to shareholder to be a buybacks, be a dividends, et cetera.

28:23.122 --> 28:29.868
[SPEAKER_00]: The trailing three year return, 25% total return, five year, 16 and a half percent.

28:30.869 --> 28:35.974
[SPEAKER_00]: So I would continue to own Hartford, we do for many of our clients.

28:38.033 --> 28:40.194
[SPEAKER_00]: Now, in Friday's, we generally make time to fit in a quick rundown.

28:40.214 --> 28:41.594
[SPEAKER_00]: I was some key benchmark numbers.

28:41.614 --> 28:43.915
[SPEAKER_00]: So let me hit that list for you right now.

28:44.676 --> 28:48.157
[SPEAKER_00]: The two-year treasure yield was at 4.16, last week.

28:48.777 --> 28:50.158
[SPEAKER_00]: It was at 4.01.

28:50.198 --> 28:52.639
[SPEAKER_00]: So you can see it's a big move on the two-year.

28:53.439 --> 28:59.881
[SPEAKER_00]: And that's usually what were the market moves on the two-year is where the Fed Funds is heading.

29:01.242 --> 29:04.123
[SPEAKER_00]: So right now, the Fed Funds, what do we at?

29:07.308 --> 29:22.740
[SPEAKER_00]: The fact that two years at 4.16 tells you there's at least a couple of hikes for the next year, 10 year, 4.54, when we go as 4.45, so up about 10 basis points there, gold, down, 43, 22 announced.

29:24.585 --> 29:26.507
[SPEAKER_00]: down $231 from the last week.

29:26.807 --> 29:31.853
[SPEAKER_00]: Obviously higher insurance rates weighing on gold prices a bit as well as a bit stronger dollar.

29:32.334 --> 29:36.378
[SPEAKER_00]: Silver, 68, 15 per ounce, down $7.35.

29:38.952 --> 29:39.332
[SPEAKER_00]: over the week.

29:39.972 --> 29:48.554
[SPEAKER_00]: Not shocking, once again, we're in the midst of a correct period with Impressed Metal still a broader opportunity to attack, but definitely a pullback in that space.

29:49.214 --> 29:54.935
[SPEAKER_00]: Oil, $90.18 to up $2.45 from last week.

29:55.975 --> 29:57.435
[SPEAKER_00]: So, continued big moves there.

29:58.335 --> 30:08.317
[SPEAKER_00]: Gasoline, $4.22 nationally, a 17 cent decrease compared to a week ago, but still well above where we were, uh, just

30:09.884 --> 30:15.566
[SPEAKER_00]: A few years ago, back when it was what two years ago, we got $350, all right, $4.22.

30:16.726 --> 30:22.388
[SPEAKER_00]: And Colorado, average gallon of gas, $4.27 per gallon today.

30:23.468 --> 30:28.749
[SPEAKER_00]: Here in California, we are at what $5.00 and yeah, we're over $5.00.

30:29.550 --> 30:31.670
[SPEAKER_00]: That's all right, over $6.00, excuse me, $6 per gallon.

30:38.045 --> 30:41.307
[SPEAKER_07]: Mrs. Kevin, calling from Lockerson to the California.

30:42.127 --> 30:46.010
[SPEAKER_07]: Today I had a question about Westco International.

30:46.410 --> 30:59.838
[SPEAKER_07]: Ticker is WCC, wondering what your thoughts are on this company and what a good buy price might be for this thanks for your thoughts in advance.

30:59.958 --> 31:03.620
[SPEAKER_07]: And I look forward to listening to your answer on the show with thank you.

31:07.975 --> 31:10.616
[SPEAKER_00]: which was electrical and industrial products.

31:11.057 --> 31:14.718
[SPEAKER_00]: A name that's been booming down pretty big today about three percent.

31:15.639 --> 31:24.143
[SPEAKER_00]: Since an $18.92 next year, earnings at 18 percent from this year and this year and this year, so let's be a 25 percent.

31:25.724 --> 31:29.926
[SPEAKER_00]: For else the strength is 91, mid-teens multiple.

31:31.046 --> 31:32.367
[SPEAKER_00]: I like, I kind of like this.

31:33.487 --> 31:34.028
[SPEAKER_00]: I'm being honest.

31:37.000 --> 31:40.001
[SPEAKER_00]: about $3 billion, it's like $6 billion in that debt, it's fine.

31:41.681 --> 31:44.382
[SPEAKER_00]: Freak cash flow, though, is only $215 million.

31:44.402 --> 31:46.543
[SPEAKER_00]: That's not a very good free cash flow yield.

31:47.623 --> 31:50.324
[SPEAKER_00]: So I'm wondering, where's the beef here, right?

31:50.344 --> 31:53.125
[SPEAKER_00]: Where earnings are going up, but I'm not seeing cash flow.

31:54.285 --> 31:55.866
[SPEAKER_00]: Go up with it.

31:58.307 --> 31:59.187
[SPEAKER_00]: So that worries me a bit.

32:00.497 --> 32:01.978
[SPEAKER_00]: But I generally like this business.

32:02.358 --> 32:04.800
[SPEAKER_00]: I like the, I like any exposure.

32:04.980 --> 32:12.025
[SPEAKER_00]: Over the long term to electrical infrastructure, type stocks, AI infrastructure related businesses.

32:12.265 --> 32:13.105
[SPEAKER_00]: And this would be one of them.

32:14.066 --> 32:25.834
[SPEAKER_00]: They have logistical services, supply chain solutions, electrical, and electronic solutions, security solutions, utility broadband solutions, just solid business.

32:26.822 --> 32:45.475
[SPEAKER_00]: Now, did you miss it as the question, I think we could be in the start of a correct period with these hardware names, these AI infrastructure names, and so I would probably patient with it because it's not cheap and I don't like that cash flow is not moved with it.

32:45.495 --> 32:46.936
[SPEAKER_00]: Now, eventually could certainly could.

32:48.250 --> 32:55.832
[SPEAKER_00]: But if you look at, for example, enterprise value to EBITDA, it's about 13 and a half, which isn't bad, but that's the highest it's traded out of last 10 years.

32:56.552 --> 33:00.993
[SPEAKER_00]: So I'd be patient with it, a pullback, let me give you a number on that.

33:01.033 --> 33:04.034
[SPEAKER_00]: 275 in that range, right now we're at 354.

33:04.194 --> 33:07.015
[SPEAKER_05]: That's right, pick up 275, WCC.

33:07.395 --> 33:10.576
[SPEAKER_00]: Now our premium newsletter comes out tomorrow.

33:11.196 --> 33:14.797
[SPEAKER_00]: So let's take a look at what we are putting out this week.

33:16.093 --> 33:20.918
[SPEAKER_00]: KPP Insight section will discuss the current market environment and the forces shaping investor sentiment.

33:21.559 --> 33:30.129
[SPEAKER_00]: In the stock section section, stock idea section, excuse me, stock idea section, we mentioned an enterprise software company and an energy royalty company.

33:31.290 --> 33:32.131
[SPEAKER_00]: That's gonna be interesting.

33:32.792 --> 33:37.417
[SPEAKER_00]: And the portfolio manager section, we touch on understanding the differences between volatility and risk.

33:38.372 --> 33:42.557
[SPEAKER_00]: And if you're interested in learning more, visit us at vestalk.com to subscribe.

33:43.218 --> 33:46.181
[SPEAKER_00]: Use it or come out to your inbox every Saturday.

33:47.022 --> 33:48.324
[SPEAKER_00]: But as a vestalk, I'm Justin Klein.

33:48.344 --> 33:49.845
[SPEAKER_00]: We have one goal here each every week.

33:49.866 --> 33:51.768
[SPEAKER_00]: They help you achieve your own version of financial freedom.

33:52.168 --> 33:53.970
[SPEAKER_00]: And I work continues after this final breaks.

33:53.990 --> 33:55.032
[SPEAKER_00]: Which questions is now at 8.99?

34:01.236 --> 34:05.120
[SPEAKER_02]: Justin Klein is here and ready to tackle your questions.

34:05.521 --> 34:09.645
[SPEAKER_02]: I've heard you say multiple times that you prefer shorter duration Treasury Barnes.

34:09.825 --> 34:12.007
[SPEAKER_02]: Can you explain to me why it is more advisable?

34:12.227 --> 34:14.069
[SPEAKER_02]: Call in Vestock, 888-99 chart.

34:22.905 --> 34:26.486
[SPEAKER_01]: There are a few things that make KPP financial special.

34:27.046 --> 34:29.327
[SPEAKER_01]: One of them is parallel investing.

34:29.707 --> 34:33.029
[SPEAKER_01]: This means they invest right alongside their clients.

34:33.489 --> 34:34.489
[SPEAKER_01]: Here's how it works.

34:34.989 --> 34:43.052
[SPEAKER_01]: When KPP financial makes a trade for their clients, just in client makes the same trade for himself and KPP.

34:43.572 --> 34:47.714
[SPEAKER_01]: On the same day, at the same price, and same percentage.

34:48.334 --> 34:50.875
[SPEAKER_01]: No front running, no special treatment.

34:51.435 --> 34:56.176
[SPEAKER_01]: Learn more about Parallel Investing at Investalk.com.

34:56.996 --> 34:58.117
[SPEAKER_03]: Hi Justin and Luke.

34:58.717 --> 35:12.081
[SPEAKER_03]: I'm considering selling my fidelity, total bond bond, symbol FTP, FX, and buying the Vanguard short-term bond index bond.

35:17.765 --> 35:20.807
[SPEAKER_03]: think of me at this time doing something like that.

35:21.508 --> 35:22.809
[SPEAKER_03]: I wanted to get your opinion.

35:23.349 --> 35:23.790
[SPEAKER_03]: Thank you.

35:24.750 --> 35:34.258
[SPEAKER_00]: I think of looking, taking a look at the Vanguard short term at Bond Index and replacing it, sorry, for the fidelity total bond index, replacing with the Vanguard short term at Bond Index.

35:35.239 --> 35:39.122
[SPEAKER_00]: And simply the answer is yes, main reason here is duration.

35:39.967 --> 35:46.355
[SPEAKER_00]: The way to keep on is about four and a half years, the effect of duration is six on the fidelity total bond.

35:46.675 --> 35:53.022
[SPEAKER_00]: Index versus effect of duration for Vanguard, 2.6, and the fees are much lower.

35:54.158 --> 36:02.842
[SPEAKER_00]: So in the finale total bond, you're about 45 basis points, and for BSV, BSV, the Vanguard short-term, bond index only through basis points.

36:03.442 --> 36:16.347
[SPEAKER_00]: So you're getting lower fees, you're cutting iteration in half, your average credit quality is actually going up slightly, although it doesn't want you to double A to double A minus to double A, it's kind of the same.

36:16.367 --> 36:21.770
[SPEAKER_00]: Now your yield's not going to be, let's see, let's take a look at the yield.

36:23.668 --> 36:28.590
[SPEAKER_00]: ICCL 4.2%, versus, where are we?

36:29.431 --> 36:40.596
[SPEAKER_00]: 4.36, so you are taking a little bit hit on the yield, but you're getting far less duration, lower fees, it's more likely because you can sell it whenever you want to the ETF.

36:41.537 --> 36:42.437
[SPEAKER_00]: I think it's very clear.

36:42.457 --> 36:49.901
[SPEAKER_00]: I would absolutely want to be shortening my duration and lowering my fees without the same amount of income.

36:50.801 --> 36:52.122
[SPEAKER_00]: So yes, on this move.

36:53.187 --> 37:14.550
[SPEAKER_00]: Let's talk about lithium lithium a lot of people get all hyped up about lithium when it comes to investing for green energy transition and all of that and I talked about this all the time, but I wanted to highlight it once again because lithium prices are rolling over once again after a pretty big move recently

37:16.191 --> 37:25.731
[SPEAKER_00]: Pricer up 86% since the start of the year, mainly because a major mine with the largest in the world in China basically shut down because it's lost its license.

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[SPEAKER_00]: And this was after Lithium prices, hey, rock bottom in 2024 and 2025, once again, rallied pretty considerably.

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[SPEAKER_00]: But this is what happens within the Lithium sector.

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[SPEAKER_00]: It's boom and bust, especially now that it's an industrial, it's moving from just being an industrial lubricant to powering electric vehicles.

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[SPEAKER_00]: The underlying, and then you have the demand growth, right?

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[SPEAKER_00]: That's a supply of supplies dropping a little bit.

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[SPEAKER_00]: And now you also have seen demand growth slow down as well.

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[SPEAKER_00]: First quarter EV sales, pretty disappointing.

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[SPEAKER_00]: So that's another catalyst for a potential roll over.

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[SPEAKER_00]: And then it's about replacing that supply.

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[SPEAKER_00]: And I said this many times before.

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[SPEAKER_00]: Lithium, it's the biggest salt.

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[SPEAKER_00]: It's everywhere.

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[SPEAKER_00]: I think we just found one of the largest lithium mines recently in America in the world.

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[SPEAKER_00]: So it's always just about the timing of when they're rallies.

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[SPEAKER_00]: And this is a saying that you could apply to a lot of different sectors.

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[SPEAKER_00]: Depending on easy it is to bring on supply.

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[SPEAKER_00]: That's the big question.

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[SPEAKER_00]: You always have to ask yourself an answer, the question.

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[SPEAKER_00]: How easy is it for the industry to bring on new supply when prices go up?

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[SPEAKER_00]: Because the cure for high prices are high prices.

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[SPEAKER_00]: Bring incentivizes new production, brings on new supply, which brings down prices.

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[SPEAKER_00]: So when you're investing in commodities, you want to be careful and very selective.

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[SPEAKER_00]: If you're focusing on only those commodity sub-sectors, where new supply is difficult to bring on.

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[SPEAKER_00]: That takes years and billions of dollars that's really hard to add new capacity.

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[SPEAKER_00]: Because the only those sectors are the ones that are attractive from an investment point over the long term.

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[SPEAKER_00]: I'm Justin Klein, reminding you about Kate P. Financial's parallel investing will make a trade for our clients and make the same trade for ourselves.

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[SPEAKER_00]: Same day, same price, same percentage, no front running, no special treatments.

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[SPEAKER_00]: We invest right alongside our clients.

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[SPEAKER_00]: Trees are the same risk and potential for success and you can learn more by heading over to Invest Talk.com.

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[SPEAKER_00]: Please tell your friends and family, but our free podcast downloads we can find any time that iTunes or Spotify or check out our YouTube channel as well.

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[SPEAKER_00]: And heads up, our next wealth webinar is set for June 30th Tuesday, Baldwin, P.M. September, beyond the yield, how to invest for your income needs, once again, registered at imbesttalk.com.

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[SPEAKER_00]: It depends on thinking.

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[SPEAKER_00]: It should success.

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[SPEAKER_00]: This is the best stock.

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