Is the Yen Carry Trade Unwind Risk Being Ignored by Markets?

This is Invest Talk from KPP Financial, helping investors make sense of the markets one day at a time. Here's your host Justin Klein. Good afternoon fellow investors and welcome back to another edition of Invest Talk. This is Wednesday October 28th. There's a few more days left until Halloween. Hope everyone has some fun plans lined up for the weekend. But those spooky times are a few days away. Now we're dealing with spooky times in the markets. We are amidst the burning season. We have good one, good report out of Microsoft, not so much out of Google or alphabet. And then we have a mix bag across the board as well. We are also a fed day today. If I didn't do anything, we knew that they were not going to do anything, but that's not what the market reacts to. Market reacts to how they think about the future path of policy. What that means for currency markets, interest markets, etc. So we're going to dig into that in much, much more. Most importantly, though, in the much, much more section is you, the caller, the listener. That's what the show is about. I can sit here and bloviate all our about whatever is on my mind. Hopefully you find it interesting. Hopefully you find it helpful. But the most impactful thing you can do is call with your question, not only for yourself, but for other and best talk listeners as well. So don't hesitate to reach out. Once again, the number is always 8 to 899 chart. And now just a bit. We'll talk about today's mark performance and run down the show topics for the hour. But as usual, we'll tackle this first call a question now. Hello, Justin. Our look at this is Lewis and Seattle. I've had CGI took a code GIB on my watch list. What's willing? What is your present on the company? And do you see how that this is a good entry point? Or do you feel it could go down more? I look forward to your answer. I just have a good day. What's that GBI or GIB? GIB. Okay. Yeah. GIB. This is GILAT satellite networks. GIB. It's bounce back. I have CGI. Some of our systems. CGI. Let me just sometimes you type in something. There we go. CIG is lost here. Okay. Provided information technology, business process, Western Southern United. So Europe, United States, Canada. Interesting. Okay. I see consulting. Yeah. So it looks like one of those names that's been taken down to the woodshed on the back of the AI trade because it's a kind of more related to software name, right where it offers IT consulting kind of like a kind of like an Accenture in a way. If you look at the valuations, they're pretty cheap. P's 13. First book is two which is that's the lowest. It's been in the last 10 years for sales 1.4. Once again, the lows. It's been in the last 10 years. All of these figures are cheap. Then you go look at its profitability metrics. Return of Best of Capital is around 18. That's kind of in line with where it's been for the last 10 years. Same with return equity. It's come down a little bit. So it's on the lower end of the last 10 years, but still healthy at 16 earnings for this year or Q3, the one that just quarter just passed up 8% year-over-year, next quarter, up 11, 1/2% year-over-year. So from earnings perspective, it's fine. And then you look at the technicals. It had been in a long downtrend below all the major moving averages for the most part for the past year-to-year. But recently, it started to rally at bottoms back in June, kind of with a lot of these software names. And it's working its way higher. It's gaining momentum. It's making a series of higher highs and higher lows. So I'm going to say, yeah, I'm going to give this one a thumbs up. I think it's a good value. The fundamentals of the business have not deteriorated even though you know the market. What's the what's the famous quote? The rumors of my demise have been greatly exaggerated. Who said that? I forgot who said that. But that looks like this. It looks like this type of name. So I'm a fan of it. 16-billion dollar market cap, very little debt, good free, about 10% free cash flow yield. I'm giving CGI, simple GIB, a thumbs up. It was a great show yesterday. We looked into the 10-year treasure yield being up being up 5%. What does that mean for your portfolio? Has that changed the way to look at valuations in the marketplace, both for equities as well as other fixed income type products? What else to answer? Listen to questions on QXO. And that was a surprising answer that I put forth. And if you haven't missed it, go check it out. The best way to get every show to follow the best talk wherever you get your podcast. So I've a lot of ground to cover over the next 45 minutes or so in time for many. We'll get to all of it. And I mean, focus point is something we haven't really talked about in earnest for two years. Plus those three summers ago now, this last account this were past the summer of 26. So there was a Yen Carrey trade online. And is that risk being ignored in markets? So we'll revisit what's going on over in Japan? And could that rear tagly head in the new year? Will some other topics on the docket as well? There's some comments earlier this month from Scott Besson. And I think it has some, it's something to keep in the back of the mind of investors. When looking at that policy, future path and what this administration is probably going to try to do to keep the economic engine running. And what ramifications that could have in different asset classes. So we'll look at that. And then we had Microsoft earnings after hours and it was up. But it was up for a very interesting reason. We'll see what ends up. But there's a big part of that report that I think has a wider potential wider ramifications for the AI industry. We're going to look at that. And of course, we're going to answer your voice mail questions. One is on tips and the other is on clean harbors, incorporated CLH and of course questions that came in. Be the comment section on the Invest Talk YouTube channel. Now we're going to head new quick break. Please don't be called any time or leave your question on the Invest Talk voice bank. You're listening via the live stream on Invest Talk.com or possibly an aim to all 20 in the Bay Area. You can also call right now at 8 to 899 chart and ask your question. So whatever's on your mind, money related, we are here for updates. I'll comment on today's market activity. It's official. Total lifetime downloads for the Invest Talk podcast are now more than 63 million. Justin Klein is here now taking your calls live. Invest Talk 88899 chart. It did 99 chart 8889924278. So I get through and ask your question on today's show. Let's take a look at the market today on Fed day. Overall, it was a positive day. You had the SMP up a little over a quarter percent. You had the NASDAQ about the same Dow up about 19 basis points to the less than a quarter percent Russell 2000. Small caps are up nearly half a percent. So some of our performance there. Treasuries were a bit weaker with the curve steepening yields up five to six basis points on the long end. The short end was relatively stable though because if you don't think that if you look at the expectations for a hike in December and going out to June of next year, it didn't really move much to be honest with you. But the ultimate takeaway from the Fed no action was mildly dubbish. No, they did was they removed September's language that rate hikes would support a timely return to inflation to 2%. So leaving that out saying that, you know, because back then it was we need more rate hikes so we can get back down get back down to 2%. They left that out. And so that's why it was a bit dubbish. That's why I think of the long end. You saw rates rise that would, that's because inflation expectations probably are up a little bit on that news. And so that's kind of the long short of the Fed meeting. What's getting not a lot of news from this Fed meeting overall because those odds of future rate path really hasn't changed. The investor day from Oracle, they were pretty upbeat. They projected $30 billion for Fiscal Year ending May 2029. So there's a lot of positive expectations built into Oracle. And that's one of those problem children, the Neo clouds that are out there. As leverage is a core weave, but certainly taking a lot of risk with this build out. And so that I mean, you day, I think, maybe. quelled a little bit of worry within the space. So I think that was a notable report to a notable news item that Oracle did today. I have this here. Trying to find the -- oh, yeah, it was up 10 percent on the day. There we go. What else do we get? Silver down 1.5 percent, gold finished down 0.6 percent, dollar and next down 0.2 Bitcoin was up 0.8 percent. WTI crude up 2.9 percent back above $100. A barrel. There's also a media report said US has told several gold countries to prepare for a short intense military campaign over the next weeks midterm elections. So that will be very interesting to see how that evolves. The White House has certainly been quiet as we head into the midterms. So I do expect fireworks over the next month and that's probably why you had oil rebound back above $100. A barrel. So that was the market today or the Fed day. Not huge reaction. But to me, it's going to refocus back on these earnings numbers and how the market reacts. Like I said earlier, Microsoft's initially rallied. I think it's come back in a little bit. Google has been lower. So there's a lot of movement here after hours on some of these bigger Mag 7 names. And remember, this is really where the market lives and breathes. If those fall at a bed in some way, shape or form, that's going to bring momentum to the downside for the product market, which underneath the surface, there are a lot of sectors that continue to struggle. Now we have, we've got time. So let's answer an Invest Talk Voice Bank question right now from 889 shirt. Hello, this is Brett from California. I like his vital farms and I think he talked about it while back. Just wanted to see if it's still something that you recommend or there's something close to it. If you have another recommendation of this type of stock, I'm just looking for a good egg company that's going to be a good growth for the next five years. If you give me some information, I'd love to hear your information on what you think about that stock. And if you have another one that you think is better, I'd really appreciate it. Thank you. Well, Vital Farms is the only real egg company, egg is a pure play egg producer that's public that I know of. And it was doing really, really well for a long period of time and then it kind of fell out of bed as profitability came back in as, you know, I think there was some shortages around bird flu, et cetera. Well, this is a great, great lesson not for the caller, but every single Invest Talk listener out there. Now, when you're talking about eggs or any type of general commodity, the ease of getting new supply onto market is vital, pun intended, to whether or not these companies can sustain a high level of profitability over a long period of time. The vitals, bond in 2023, around $10 per share, as high as 51 in change in the fall or summer of last year, now we're at $9.26. Why? Because profitability dropped considerably. Operating margins are now only a half a percent and it peaked out at 11%. So, no, I don't think I only use investing in egg companies. I don't think this is something that a type of business that is going to lend itself to some sort of competitive advantage that's going to be durable over time. Those are the businesses you want. This is not what you want. You want to run far away from all of these egg companies. Writing to a break and ready for your questions now at $88.99 chart. If Invest Talk has helped you become a more informed investor, but now you realize you'd be better off if you had someone help manage the entire picture. KPP Financial is ready to put their focused efficiency to work for you. So, learn more, request a conversation, or get a free portfolio review. You can start now at investtalk.com. Let's talk about life postment terms economically. And I think it's important to follow what's this administration has set. They tend to be unconventional, but they also tend to signal their intent in advance. The Secretary of the Treasury, Scott Besson, sat down with at the Newsmax Summit and talked about the growing national debt. This was early this month. What he said was that he's working directly with President Trump and White House Budget Director Russell Vaat on a strategy to bring federal spending and borrowing under control without creating a recession. That's a delicate balance. Because it's part of the GDP equation. If you ever were to get an economics class, you'll know that government spending is part of the GDP calculation. So, if you shrink government spending, well, then you typically will cause some type of recession. So, you have to be very careful with how you manage your spending, getting to relying on spending, etc. Which, obviously, over the years we have, and that's why our deficit continues. The deficit GDP continues to be very, very high even in a non-recessionary environment. Now, what he said was, Russ Vaat, the President and I are working on a fiscal consolidation plan. So, I think we're going to unveil that right after the midterms, really a week away from the midterms. Obviously, the Treasury Secretary is talking about 41 trillion dollars in debt that's growing at about, or that's cost about 1 to 2, 1.2 to 1.3 trillion dollars annually to service. He says that what point is this a crisis that's impacting the average American family? And that's certainly true. He also acknowledged, though, that the deficit is not getting better, elevated borrowing costs, military operations, etc. It's all keeping the deficit elevated. It says, if you back those out, though, that deficit would be more flat. Which, that's probably true. Right now, the GDP now figure for Q3 is at about 3, a little over 3 percent economic growth. But what he said was that the suggests the administration approach in the coming two years will combine spending restraint with policies designed to accelerate economic growth. And to me, this is setting up for the government to create a sovereign wealth fund. I think the Trump accounts are part of this is to think of Elon giving chairs of SpaceX to everybody. To me, this is all setting up for really Chinese style capitalism, where you have a lot of state-owned entities that are part of a sovereign wealth fund or part of Trump accounts, the column, in order to stimulate investment and stimulate economic growth. Because that's really the thing, right? He's not about cutting spending. It's about how do you grow the economy? That's what they said, right? It's about growing the economy. And this is also an administration that's very unconventional. We know that for better or worse, whether you agree with those policy or not, they're unconventional. But I'm just reading the tea leaves here. They're signaling something major, and maybe it's revaluing gold. It could be a lot of different things. But you have to think outside the box in this scenario, because once again, this is administration that is very unconventional. So I wanted to highlight that because we're getting closer to the midterms, and I expect this probably to be unveiled in the next three to six months. I hope you know, your finance questions are welcome anytime 24/7 at 8/8/9/9 chart. And here's one that came in earlier. I was calling you guys about ticker symbol CLH, which is clean harbours. And I've helped this for a while. It's done pretty good. Should I turn this curious to know your analysis? We really appreciate the show and hope you guys have a great day. Thank you. Well, clean harbours is certainly a good company, but it is trading at pretty expensive valuations. And the chart has certainly lost a bit of momentum, and that would be a bit of a worry. $16 billion dollar market cap, good balance. She returned equity 15%, free cash flow, about $450 million and a $16 billion dollar market cap. That's not amazing, but pretty good. Enterprise value to EBITDA, about 13, but the recent peak back in July, and then it reversed, and it's just been consolidating. I had a pretty big down day today. I'm not sure if that was on earnings or not, I guess it was. I am seeing a lot of deterioration underneath the surface on the chart, and it's certainly not cheap when you're looking at price to sales, price to book, enterprise value to EBITDA, etc. Those are both all on the high end of the 10-year range. So yeah, this would be a good time to trim CLH. Now next, the best talk we'll look into the story. US consumer sentiment near record lows, what it tells us about the economy ahead. That story is for tomorrow, but for now, I'm Justin Klein. We're ready to take your calls anytime on 888-99 chart. At KPP Financial, accountability means more than advice. It means we invest alongside you through our parallel investing approach. 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. If your portfolio moves, ours does too. That is alignment, that is transparency, that is the KPP difference. Visit investtalk.com to get your free portfolio review. Every investor is working to build a secure financial future. How they get there and when they get there. That depends on many factors. The more you learn about how the market works, the better your chances for success. So don't forget to call investtalk 888 99 chart. Our main focus point today concerns the yen carry trade unwind risk and whether it's being ignored by investors and markets. The banking Japan is expected to hold rates steady, but leaving open a hike in December. That is what is widely expected now. The reason they are hiking is because Japanese inflation is breaking above 2% once again. It makes sense to move towards a more neutral rate. You might say it is 1.25% now and that is true. It is still higher than the zero that it has been for a long period of time. What is the yen carry trade? It is basically an arbitrage strategy. You go and you borrow Japanese yen at nearly 0% rates and you use that capital. You take it. You take those yen that you got on that loan and you go and turn into usually dollars and you go invested in U.S. denominated assets. It could be treasuries before yielding 3 or 4% now 5% of the 10 year. Before you go buy, you want to be aggressive, U.S. equities. It is usually the two avenues, depending on how much risk you really want to take. This is a global source of capital. For long, long period of time, it continues to be to this day. But if borrowing costs there continue to rise, the cost of servicing that underlying debt increases and it compresses those profit margins. If you go look at what the yen has done, as of late, if you want to look at the yen just bring up FXY, you can see the direction, it bottomed in July. That was really when the 10 year started to take that next leg higher and it is not a coincidence. From the yen starts to strengthen, it means that if you have dollar assets, suddenly you are losing a little bit on that foreign currency translation becomes riskier and now what do you do? You go and you unwind the position, you go sell those underlying assets. It could be treasury, it could be tax stocks, etc. And when did the tax stocks peak out? Well, just slightly before that as well, in June. The timing lines up here and it shows you that a strengthening yen is bad for treasury rates, bad for U.S. equities in general, especially big tech. So if traders, let's get in bar and again, there is a short squeeze potentially here and that's the big worry. Is that a small uptrend in the yen could turn into a large move and once again that was what was seen back in the summer of, yeah, summer of '24 or the yen moved up about 20% in just the span of, against the dollar, two months. And right now if I look at the chart, frankly, this is a bullish chart for the yen. The move up in late July and just been shopping sideways pretty much ever since. That is what we call bullish consolidation. So historically, sunshifts in the yen and B.O.J. policy can directly drain assets from U.S. markets. So it leaves the market even more vulnerable. This is another vulnerable, what I meant to say. This is another kind of worry, I think at the back of people's minds, along with higher interest rates. This is kind of in conjunction with it, right? To one of the reasons why you continue to want to hold shorter duration bonds, if you have them, be a bond at all. Because these Japanese investors, a lot of times they would, like an insurance company, for example, like a afflac. They're going to go and probably do this carry trade or go invest in maybe treasuries. But now if bank at Japan assets are yielding something once again, are you going to deal with the currency volatility that could be ahead? The worry of a yen carry trade on wine, why would you do that? I'll just go earn by one and a half to percent I'm going to get on Japanese treasuries. GGBs. Now how can you take advantage of this? Well, actually, Japanese stock market. If you want to go own four assets, well, I think if you go look at like a EWJ, the broad exposure to Japan, it seems strong uptrend, doing well. So to me, that's actually a pretty good hedge against the yen carry trade on wine is the own asset that are dominated in yen. That was an invest stock and if you never called, why not do it right now? It didn't end in a chart. It's the number. Let's keep things moving and play another listener question now. I'm calling today about ticker CDE coer mining. I used to own silver crest metals and they got bought out by this company. So now I own fear of this company. I was hoping to take a look at the fundamentals and the chart and let me know. Give me some guidance on what I should do if I should fall onto this stuff or choose to move into something else. I do own some other silver companies. Thank you very much. And have a good day. Are looking at core mining CDE is the symbol and frankly, I think I would just continue to hold it. It is a precious metal producer high quality cash flow of a turn of cap returns a capital to the two shareholders through dividends and buybacks, $1.1 billion in free cash flow on a markup of 14, almost 15 billion, so pretty good free cash flow yield right there. And then if you look at it's that profile like net cash and it's balance sheet return equity is around 14% that's good. Yeah, it's going to be volatile, but frankly, all of these names are right all the silver miners are. So it's one of the better producers out there if I'm being honest with you. I would continue to hold core mining, I give it, I think it's one of the better silver miners out there. It's mostly silver play and I would continue to hold CDE. Let's play two in a row from 8 to 8, 99 chart. Hey, Justin Luke, this is Aaron from Livermore, California. I just want to see what you think about her holding B.R.I. Looking at her coldings, in the provision of equipment rental services, interesting. Nice little bounce over the last couple of days. The issue here overall is that you have higher cost to capital, it's a very capital-intensive business because what do they do? They go buy capital equipment and they go lease it out. That typically is a good business, but it's also a cyclical business. It's also in a lot of ways of commodity business, you have to scale, but once again, in order to get scale, you need to have a lot of equipment on hand. You need to maintain that equipment, it's expensive, finding workers, paying workers to maintain it. That's expensive. They have good operating margins, profitability is not great for cash flows negative. Once again, it's that debt of about $10 billion in that debt on a markup of 5 billion notes. Once again, it's because they have all the equipment that they're probably financing themselves. Then they go lease it out or rent it out. Overall, in this environment, where the economy is slowing, where cost-capples going up, I just think there's better opportunities than hurt coldings. HRI is the symbol. Let's make room for an Invest Talk YouTube channel question. Rumar says, "Great job, huge fan, having the ability to leave a question on your YouTube cows very easy. I have a question about Nike. I do not own Nike and I'm looking for a good entry point. You take a deeper dive in a Nike and tell me what you think. Now that Nike's interesting. It's been in a long downtrend. I've been saying kind of stay away from it until they can find some traction. And they're they're kind of searching. I do have some secondary connections. So I would say it's a to Nike and I don't think that they have the right direction quite yet. They have a new CEO, but is that CEO taking enough risk to turn the business around? Don't think so. They're too. They've said this before. This is the perfect example of why you never want to see a foe or a former consultant to come in and run a company because they get to in the weeds of a, especially consumer facing company. Now a beat a beat a B company. Maybe behind the scenes industrial name. Sure. But consumer brands need need a spark. You know, Nike goes big, not because the swoosh was cool is because Michael Jordan was cool. And he took that brand to new heights. Obviously greater zone brand off of it. So you can't take that type of business and just apply some some cute. Consulting strategy that's going to expand the margins a little bit. No, you have to excite your customer. Your customer is the consumer and they failed to do that over the last day, five years. Can they get that back? I think they certainly can, but are you going to try to catch that falling knife? It continues to get weaker earnings expectations for next year continue to go down. And it's still not really cheap. I miss cheap based on a lot of sales metrics and press the book, but P still 18. That's not cheap. So I would pass on it for now. I would continue to watch Nike wait for capitulation. It's got a nice bounce recently, but still blob made below all the major moving averages. And until I see that management team take some risks, I'm staying away from it. No, no reason to stop now. Here comes a listener question from 8 to 8, 99 chart. Yeah, hey, Justin. Yeah, I'm just calling and find out about the ball arrow. I've held it for a while and I'm wondering if I should sell it and take profit. I've had it for about four years. Thanks a lot for all you do. You have a great show. And I appreciate all the help you give us. Okay, appreciate your help. Thank you very much. Bye. Thank you for the kind words. The first thing I want to first thing I want to address here is we all own a name for a long period of time. You've done well. Everyone is quick to sell. And, and that could be, that's fine. You know, you want to protect your gains. That's certainly true. But you want to step back and more than just what is the, you know, how much have I made? You really have to understand what type of company you are. Is it cyclical? Is it something great about the business that has changed over the long term? And for this name, Valero VLO, there are some geopolitical wins that have shifted a lot of refining capacity in the Middle East has been destroyed and they're not bringing that back on until probably everything settles down over there because just going to hit again. And so global for finding capacity has been taken offline. And I think overall that does change the structural value of having refining capacity in a jurisdiction that is safe from war, at least in the shorter term. You never know when war is going to break out at any point in around the world. But my point here is that I think there are some structural advantages here. But on the cycle, I think we are getting near, I don't say the end of the cycle, but if the economy turns certainly the demand for these will go down. You're already seeing people complain about these surprises around the country. It's become kind of a political talking points. And that has shifted, that's going to shift the man that already has. And so I think Valera is set for a near term setback, but that's more of a setback of buy. So it depends on your time horizon here. I do think it is a good time to trim it. I have to be looking at from a holistic portfolio perspective under for four years. You've done really well. How much of your portfolios in this name? You want to be trimming these when it gets hefty, it gets too much of your portfolios. Good risk mitigation strategy. So when I sell some of it, yes, would I sell all of it? No, unless I want to be out of the market completely over the next few years. So I do think this goes higher over time, but in the near term, I think we're set for a pullback within this entire space. This is Vestalk, I'm Justin Klein. We have one goal here each and every week. So I hope you achieve your own version of financial freedom. And it continues after this final break. So if you're going to call, you want to do that right now at 888 99 chart. Justin Klein is here and ready to tackle your questions. Curious if you think it'd be better for me to let it go and spend money elsewhere. Well, first off, never take one man's opinion as gospel, including my own. Vestalk is ready 24/7. When you give a recommendation on your show for a buy-in, like an entry point to buy a stock, if I already own it, should I go ahead and be looking to sell it? Don't forget to call Vestalk, 888 99 chart. In the early days, Vestalk was Jerry Klein and Steve Peasley. Now the torch has been passed and a new generation of hosts is on the job. Justin Klein and Luke Guerrero. So when you've got finance and investment questions, don't forget to call Vestalk, 888 99 chart. Hello, Andrew from Maine. Thank you for your show. Very helpful. I'm following up on Justin's topic regarding laddering of bonds as an approach to get into fixed income. And I've been wondering about getting into tips that provide inflation protection. And if laddering is an appropriate approach to those as well, to provide opportunity for liquidity more so than increasing your yield, assuming that yield is going to increase with inflation. Looking forward to answering your show. Thank you. Yeah, this is actually something we talked about at our retirement summit on Saturday, which is how to think about your bond allocation, how to limit risk, but still capitalize on the yield when yields go up. And that is creating a bond ladder, but then it's what type of bonds are you owning or even CDs, right? Is this a CD ladder? Is it a treasury ladder? Is it a corporate bond ladder? That's what we typically do for our clients. And then could it be a tips ladder or a combination of all of those things, right? A little bit of each because at the end of the day, they're all fixed income securities, but they all have duration is still a thing for all of them. You could buy all all of those with the effect of materities of just the matter of months or 30 years. And that applies the same for tips. So that's why I say there's there's the tips ETF TIP. But the effect of maturity is seven years. So you are taking duration risk, even if it goes up with inflation, there's still the maturity aspect here. Then there's the STIP, which is the I share zero to five year tips bond ETF. That is 2.3 years effect of maturity still some maturity, but pretty minimal. So that's how you tweak your strategy a little bit. And I think yes, doing a ladder is good. If you want to buy some individual names, but also don't pigeonhole yourself into just tips. I think it's good part of the portfolio. But not the end all be all. Now lastly, let's talk about Microsoft's earnings after hours. And the most interesting note was that their cat X came in at 45 billion dollars for the quarter, which is still a lot of money. $180 billion a year, but that was less than about 51.7 billion that Wall Street was expecting what they said was that they're running into real world constraints. There were shortfalls due to some third party capacity deliveries. So the is all about delaying construction of new data centers. And so they're having. difficulty. I think it's going to be made up in the back half of the year, or I guess their fiscal year. But ultimately, it's still an issue. Their plan to spend $170 billion as calendar year on data centers is coming into a little bit of a question. Alphabet also came out with earnings. They had lower than expected catbacks. And I think overall, that's a good thing. But for the industry as a whole, because I do think everyone in the space needs to slow down. And I think hitting real world constraints probably is a good thing. It makes them kind of step back and figure out which ones they want to allocate their resources to, not just their chips, but also other assets they might acquire. And it also keeps their free cash flow positive. Free cash flow for both Microsoft and Alphabet came in a bit better than expected. Actually, no, I think Microsoft or Alphabet was worse. Microsoft was a bit better. But still decline continues to decline across the space. So it's really about the next phase is, OK, yeah, you want to spend money. And now the two question is, two questions are, the two questions are, can you afford it? And for the hyperscalers, the answer is yes, for the smaller neoclides, maybe not, because cost capital is going up. But then also what are the real world constraints, meaning how many people want to data center in their backyard? Can you actually plug these into a power grid? Can you get the water that's needed to cool the facility? All of that. And I think that's the next phase that the, I build out and how, what kind of constraints these companies are, are bumping up against. I'm just in climbing, reminding you about KP financials parallel investing, we make a trade for our clients, we make the same trade for ourselves, same day, same price, same percentage, no front running, no special treatment. We invest to write us right alongside our clients, which means we same, we share the same risk and potential for success. And you can learn more about heading over to investtalk.com. And I'll please tell your friends and family about our free podcast downloads, which you can find any time at iTunes or Spotify and watch our videos over on YouTube. Independent thinking should success, this invest talk, your name. Invest talk is a trademark of KP financial because of the nature of the interactive dialogue inherent in the format of this program. 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