Is the Fed Rate Cut Still Coming Despite Geopolitical Inflation?

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Here is KPP Financial Chief Executive Officer, financial advisor Justin Klein.

Good afternoon fellow investors and welcome back to Invest Talk.

This is our Monday March 30th, 2026 edition of Invest Talk.

I'm Justin Klein and I am here to help you become a better investor,

a lot going on in markets.

We're having this pullback on the inflationary spike that is that we're in the midst of.

I don't think most people have felt it quite yet, but we are going to feel it very, very soon,

and the market is starting to price that in, and that means certain areas of the markets are struggling more than others,

and we're going to dig into that and much, much more during this hour.

It's going to be really about the current market environment, the current trends that we're seeing,

and how they will impact you, your portfolio, and the broader economy.

So that's what this hour is about. We're going to bring you data and perspective.

I have over 25 years of investment experience.

And we're also going to answer your finance and investment questions.

Whatever is on your mind, we are here for it.

So in just a bit, we'll talk about today's market performance and run down the show topics that we'll hit on for the hour,

but as usual, we'll tackle this first column question now.

Hi, I was hoping that you would talk about Evolve Technologies EVLV.

I just want to know if you think it might be a good long term.

It has any good long term potential. Thank you.

Evolve Technologies is about a billion dollar market cap, and what do they do?

They provide AI-based, touchless security screening systems.

So if you're looking for a name to capitalize on a potentially dystopian future,

this is probably the type of name that you want to own.

So from a long perspective, if you think that's the world that we're heading in,

then it will this be the winner. That's another question.

Revenue's last quarter up 32 percent.

That is slowing a year ago. It was up 44 percent.

And earnings were getting better.

And last quarter, they were flat year over year.

And when I say earnings, I mean negative earnings because they have never made money.

Free cash flow has reduced, however, which I like.

It was deeply negative at about 100 million in the middle of 2024.

Now it's only about 18 million.

And last quarter, that's trailing 12 months.

And actually last quarter, it turned positive for the first time at about 12 million dollars.

That is the positive.

It's moving in the right direction from a cash flow perspective.

Now it's still issuing a ton of shares, which I don't like.

I would like them to stop that now that their cash flow positive.

Maybe they can get there.

No dividend.

Pretty much no debt like that.

And then if you look at the chart, it has pulled back along with a lot of the other growth names in the market.

So it makes sense why it's pulled back over the long over the medium term, shall we say.

This is about to a weekly chart.

It has been in a consistent uptrend really since 2019.

So I like the growth here.

I like the trajectory of the cash flows.

I like the balance sheet.

And once again, if you if you were going to bet on this is still being a future of basically AI just scanning all of our faces that everywhere and giving us access.

Then this might be the name for you.

But that's really what you are betting on here.

And it's digging itself out of this negative earnings hole.

I just don't like growth stocks right now.

And so I would keep on the back burner until things improve from a technical perspective.

Now we have a lot of ground to cover over the next 45 minutes or so.

It's time for me.

We will get to all of it.

And our main focus point is the rate cuts still coming despite geopolitical inflation.

Federal Reserve officials are grappling and central banks around the world grappling with conflicting signals.

As you see a reignition of inflation worldwide.

Should they reconsider rate cuts should they consider rate hikes.

We're going to dig into all of this.

And much, much more for this hour, much more is a few other topics on the docket.

What is consumer stable stocks?

They're actually down more than the S&P since the start of the war.

And most people.

Most lay people, shall we say, would think that.

Consumer Staples are a flight to safety and that's really going to invest.

But the opposite's been true so far.

And I'll tell you why we'll explain.

In addition.

We're going to look at.

What percentage of.

Fun types.

Outperform.

In particular time periods.

Intent.

Once you move outside of the large cap growth names.

It gets a lot of large cap names large cap funds.

A lot lower.

So we're going to dig into those data, that data as well.

And then also the supply chains beyond just oil and gas.

We're going to look at fertilizer, aluminum, helium, etc.

And what type of impact that might have on the broader economy.

We also have.

Questions about.

Luxotica as well as synchrony financial.

And we have some questions that came in the Invest talk YouTube channel as well.

And most importantly, will be your live calls.

8899 chart is the number.

Tell you get through and ask your question on today's show.

And if you're listening via our live stream or possibly an aim 1220 to Bay Area.

You can call right now at 8899 chart.

I'm next I will comment on today's market activity.

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8889 chart.

Let's go check on the market today and it was a very interesting day overall.

You had the broader markets down deep and negative territory, but it was really dragged down by tech.

Everything AI related and is this the market starting to figure out that higher energy prices and disrupted supply chains will impact that sector broadly.

And there will be a they'll have a difficult time with the build out and sourcing products.

I think that's kind of what the market said today.

You had Nvidia and Apple down about one one and a half percent, but that was not the worst of it at all.

You had the chip manufacturers down your chip equipment manufacturers down.

You had some of the industrial names linked to the AI data center supply chains down.

You had name like Sandisk and micron down big wasn't digital down big.

But if you look elsewhere, there's a lot of green.

Staples were strong health care was strong, even the financials did fairly well.

So if you look at the NASDAQ down about three quarters of one percent, the Dow said the S&P down four tens of one percent.

You would say that's a rough day, but once again drag down by big tech and even medium tech.

In fact, mid cap growth was down the most today about one point eight percent versus large cap value actually was up a quarter percent.

The Dow overall was up about 50 points about point one one percent to some very interesting trends underneath the surface.

There's still a lot going on with the what's going on in the Middle East and how that doesn't look at its ending anytime soon.

Trump said he wants to take Iranian oil.

It's hard to understand heads or tails of what's really going on over there.

That's why I'm actually watching the market so far.

It's not really dramatic escalation, but I think the market is starting to realize that this is not ending anytime soon.

And that $100 oil probably here to stay for a little while.

Even if you ended the war today, the damage to infrastructure within the Middle East would keep oil at $75, $80 a barrel or higher, most likely.

So very interesting trends underneath the surface you had yields down.

So bonds actually rallied or as before it was really about stocks and bonds selling off.

So I thought that was a note.

You actually had a bit of movement from the treasury market.

We'll talk about later that the market's now pricing in a little bit better chance of a rate cut by your end and a rate hike is going into the weekend.

The odds of rate hike were actually higher than a rate cut by your end.

So kind of bouncing around the either side of neutral between now and your end.

Once again, I'll talk it in deeper on that, but that's what brought the interest rates down a little bit.

$1.4% on the day.

Mainly this is about a stronger yen looking at more forceful intervention, intervention overnight.

And that's a little bit of a potential carry trade unwind, shall we say.

It's the only minor, but that could be a factor in today's sell off goal finished up one and a half percent.

And silver up 1.1%, Bitcoin up 0.6%.

WTI crude finished over $100 a barrel for the first time since July of 2022 at up 3.3% on the day.

Brent crude finished about flat.

So a lot of moving pieces in the markets.

I think we're getting close to good support.

I think we still have another 1 to 2% down in the major indexes before you get real good support in markets.

I've said this for a little while once the uptrend breaks in the S&P.

The first major major support is at 61.75.

Today we're at 63.43 on the close.

That's about 175 points from here.

Maybe it's closer to 3%.

So 2.5% or so, 3%.

I think that's where we'll find major support in markets.

Now you probably know you have questions submitted via our comment section on YouTube channel.

So here's one that came in earlier.

CK-52 says I'm starting to get intrigued by VNT after this pullback.

Mike grabbing a falling knife.

Take a look at VNT volunteer.

I know that because we used to own this name.

Wow, back.

It's been choppy for a number of years because earnings have really been flat.

$3.20 earnings last year.

So it's been 3.45 this year, 3.78 next year.

Okay, so it's a decent growth.

But they're in 308 in 2022.

No, what did they do?

They provide equipment, components, software and services for the transportation industry.

Very strong business.

We owned it.

So you've got to know about that.

You have a return equity at, let's see what it's at today.

I haven't looked at this since we hold sold.

Yeah, 34% return equity.

So very high there free cash flow at about 400 million.

Let me look at this pullback chart.

I think we sold it well over a year ago.

Okay, so this had a big reversal back on February 11th.

And it is at support now.

I'll give it that they don't like that reversal candle.

I mean, you are kind of catching a falling knife, at least in the short term,

because you're getting that strong downtrend.

And you have not seen any signs of a real reversal.

Either a capitulation, meaning a spike in volume.

That usually will tell you, okay, the selling period has reached a crescendo.

And has a good chance of reversing.

So I'd be waiting on that.

I like what you're looking at.

We obviously like the company good profitability.

Returning to growth.

I like that.

Good balance sheet.

It's taking that cash load right buying back shares.

We like that.

But I think this is probably headed in the high 20s from 35 now.

So I would be very patient on it.

I would be waiting for some capitulatory volume for the reversal.

Now this is the best talk.

And I work continues after this break.

So if you have any questions, don't hesitate to give us a call now.

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Hi, good day, Justin and Luke.

Long time listener here from the Midwest.

I have a question for you.

What it is is I own MU.

Had a good run on it.

And now I've had a fall on it, you could say.

I heard I believe it was just in last week.

I mentioned that it might be a good time to pull out of MU

because its run might be over.

I was wondering if I should pull out completely or what on that matter.

Take my profits that I have remaining and put them into AMAT.

AMAT, which I heard you gentlemen say the other day was a good stock

that you guys own and a fund.

Do you feel in the future?

AMAT might be going up as MU is going down.

Thank you.

Look forward to hearing your answers on the show.

Have a great day.

All right.

Thanks for the call and your correct.

I did call it talk top in M.U.

And today it was down 10%, 9.88%.

Oh, 10%.

On the day, it was a very obvious topping pattern.

And then you layer on top of it the simple understanding

that the memory business is extremely cyclical.

And these profit margins are not going to last.

So if you look at it based on current earnings,

it's going to look really cheap.

But those are not going to stay there.

That's just me having 25 years plus of experience.

And that's why it has reversed.

So yes.

And I think it's going to drop much, much more.

Now, should you roll it into AMAT?

Well, if you're saying, should I own micron or AMAT?

I'm absolutely 100% could say AMAT.

But AMAT was also down 4% on the day.

We do want it for clients.

We want it for a while.

We bought it back in the low 100s.

And now it's at 323.

So it's pulled back.

It probably needs to pull back like the whole chip industry

and memory micron and AMAT.

They're in the chip industry.

Micron pie is a lot of equipment from applied materials.

It's AMAT.

So there's going to be some correlation there.

So micron stopped.

Well, AMAT's going to have a pullback as well.

So from a timing perspective, no, it's not a good time

to own either of them.

So I wouldn't just go and throw it in AMAT.

I would probably be allocating it somewhere else for the time being

until the follow-through correction in semiconductor stocks

in general comes to a head.

Right now you're not seeing it in media.

The time to buy the semiconductor stocks

or related companies like my materials, AMAT,

will be when you see it in media.

I had not seen it yet.

A lot of these names are going to drop 30, 40, 50, 60,

maybe 70% putting out speculative there.

And then you'll see it on CNBC.

And you're going to see it articles about it written on Wall Street Journal.

And that's the time they pick up these names.

So it's sell micron.

I put in cash for now.

And I be patient and wait for the proper buying opportunity for applied materials.

Here's a question that came in from our website.

It says Jen Digital GEN has some of the most recognizable consumer-focused

security-identified production products.

Is it a good investment at today's levels?

Well, this has dropped.

Oh, yes.

So this is Norton Life Lock.

All of these services.

Here's the issue with a lot of these services that I think they are getting disrupted

by or going to get disrupted by AI.

And Jen Digital has a lot of debt.

This is going to be an issue for a lot of these companies in the software space,

the subscription software space.

Especially if you go into a session that's triggered by $150 oil.

You're going to cancel their subscriptions.

And that's an interest that's going to go up.

And that makes the debt service go up.

That service costs go up.

That eats into profit margins.

That's why this is down so considerably.

Now, yes, at some point, this gets really, really cheap.

Let me take a look here.

They're buying back shares, but not in a dramatic way.

The dividend is okay.

Let me give you a support level at least.

I just don't...

I just think that these type of services are going to be easily replicated by AI.

I mean, it is at support.

I'll give you that.

I just...

It's so weak, though.

The technicals are pretty atrocious.

And I'm not seeing that spike in volume that's getting me excited about it yet.

So yes, the names are recognizable.

But are they services that are sorely needed in the marketplace?

I think for most people, not really.

And they're just going to be a flood of them because it's going to be easy to use AI

to develop these type of softwares that do what they do.

So I just don't...

I don't know the technicals.

I don't like the debt.

And I don't like this area of software.

I think they're...

They're going to have difficulty defending these businesses from AI.

Now, the next and best talk we'll look into this question.

Are growth and value stocks ready for a major reversal?

Technology stocks are suffering their worst week in nearly a year,

as investors realize that even the most innovative companies can escape the gravitational pull

of rising interest rates and economic uncertainty.

The cell office forcing a reassessment of sky high valuations

and growth assumptions that dominated markets for years.

That story is tomorrow, but for now, I'm Justin Kalining ready to take your calls

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Our main focus point today concerns this question.

Is the Fed rate cut still coming despite geopolitical inflation?

That's what the market is kind of grasping with right now.

As well as the Fed itself, they're conflicted.

They're trying to create a delicate balance or navigate a delicate balancing act between economic growth

and now price the stability that has its biggest test since 2021.

And going into the weekend, the odds of a rate hike by year end

was at 22%.

And no cut at all or no move at all was at 72%.

Those are the overwhelming odds.

Now today it has moved a little bit.

It's now an 82% chance of no move.

And a 13% chance of a rate cut one rate.

Cut only a 4% chance of one rate increase.

So you can see, day to day, just depending on the market,

day to day, just depending on the news where oil prices go,

how supply chains are evolving,

the market is trying to figure this out and the Fed as well, like I said.

Fed Governor Waller said just a couple of weeks ago that he was looking to vote for a rate cut,

but instead opted for pause at the meeting.

He said, quote, this inflation problem may be worse than I think it is.

We'll wait and see.

We have to sort of think me.

We have to sort of think maybe caution caution is warranted.

End quote.

So this is something that all of them are grappling with.

And the simple answer here is probably they do nothing for a number of meetings

until this is really resolved in some way.

We're now less than a month between before the April meeting April 29th.

The odds there are 97% chance of no cut.

And there's actually a 2.6% chance of a rate hike.

I'm guessing that's if a inflation data comes in even hotter than it already has.

So I think the simple answer to this is depends how this all goes.

All major central banks are now in a cautious stance.

So this isn't just a fed thing.

And Jerome Powell said said as much.

He said whether this is a problem or not is how high and how long prices are elevated.

A one month spike in oil prices and supply chains getting clogged up.

Not that big of an issue, but you saw during COVID if that drags out to months and months and months.

And then you throw stimulus and government spending on top of on the fire,

which we're obviously doing with the war, spending billions and billions of dollars a day.

That pushes prices across the board up.

You're already seeing in trucking industry, diesel up over $6 a gallon.

Airlines are raising prices because of jet fuel, all that.

So as a rate cut still coming, I'm going to say no, I don't see a rate cut coming at all.

And this is what is driving the market down.

It's a more hawkish fed and frankly hawkish to me is just they're going to be handcuffed.

They're going to sit here for I think a long while.

So that's kind of the true answer to this question.

Let's go take a live call. James from New York looking at PayPal.

It's a good evening. I'm looking at PayPal.

I know like herding's are a little bit off and the growth is flowing,

but do you think this ever becomes cheap enough to be interesting again?

And that's fallen.

What do you mean is it does it come cheap enough?

It is cheap enough to become interesting.

It's that's already there.

I thought it was. I thought so. I thought so.

Yeah. Yeah. It's it's absolutely there now to be frank.

It's been there for a little while.

But trading at high single digit multiple is it with no debt.

And the business that is still growing earnings are supposed to be up 9% next year.

Now flat this year.

But still they're taking this cash flow and they're plowing it back into share buybacks.

They're accelerating free cash flow at 5.5 billion.

That has come down.

So that's a bit of a worry, but the profitability is still high.

As I said, no debt.

And trading at enterprise value, but are right around six.

That's cheap.

It is very cheap. So I would I think this is.

Cheap already. And if you look at the chart, you have that spike down on high volume after the latest earnings announcement.

It's held and at a recent spike on rumors that there was going to be some sort of acquisition of buyout.

We haven't heard much since then.

But it's just been consolidating right around this $45.

A level for the last call it month.

And that's bullish.

So it has a bullish flag pattern.

It's cheap. I think this is.

Could be ready to go in the next month or two.

So I think it's absolutely attractive right now.

Thanks for the call.

Let's go answer another YouTube question.

SSJ baller says.

I wanted to use this catalyst to consolidate my oil and gas between Exxon and Chevron.

Canadian natural resources in Devon.

International.

And thing, US driller, which would you say will do the best long term.

I would like to set trailing stops for the others.

Can you further break down the differences?

Love this pod segment.

Very informative.

Okay, I appreciate that.

I believe that was.

A comment on my weekend update.

Let's take a look here.

Exxon and Chevron, which one's versus international names.

Oh, this one's tough.

This one's tough.

So.

What I would say is I'm going to put one near the bottom of the list.

It probably would be.

Probably would be faint because it's a.

Shell producer historically has been one of the best growers.

And not to say.

And I'm not saying any of these are bad.

What he's trying to say is which ones.

Should maybe it prefer over another.

Okay, so I'm going to go.

From, I guess, worst or at least attractive to the most.

Okay.

So thank you number one because it's just an EMP company.

It's it's a good company.

But I rather have more international exposure.

Especially maybe Brent exposure.

Now, I wouldn't want a lot of assets in the Middle East.

Let's say that.

And so that's why I would actually in the middle of the pack here,

I would put Chevron an ex on because they do have a lot of.

And resources.

A lot of projects in the Middle East.

Better being damaged right now.

And yes, they have some exposure and some some Bren exposure.

But.

I don't want.

These assets in the Middle East that I'm dependent on.

Now, Devon, I'm not sure.

You're looking at Devon and.

Canadian after resources.

Now, these are a bit different because Devon is based in Oklahoma.

Let's say develop.

Yes.

See, this is a shale name.

So I don't know why you lumped this in with the international names.

So it would be lumped in more with thing.

So if I'm going to pick out of these five names from ex on Chevron.

Canadian natural resources.

Devon and fang.

I'm going to rank it as Canadian natural resources number one.

Why?

Because.

There.

There's a new pipeline that's going to the west coast.

They're going to be able to export oil.

Out of.

And get more money for their oil out of Canada.

I like that.

I like that long term.

Expansion of margins.

So we say.

So that would be number one.

Then I would put ex on and Chevron.

Probably ex on two Chevron three.

And then I put.

Fang.

And then actually Devon energy would be last.

Thanks for the call.

Thanks for the question.

Sometimes you got to talk those things out.

You know, I hadn't seen that question.

To really look at the numbers.

Understand.

You know what their exposures are.

Unfortunately, I don't.

I'm not AI.

I don't have the top of my head.

But I do understand how the dynamics within these industries.

So let's pivot over and discuss.

Consumer staple stocks.

Consumer staple stocks.

As I said at the top of the show.

They're doing very well.

They're not doing.

They're actually underperforming.

The S&P since the market or since the start of the war.

Why?

Because they are now raising prices.

They're bracing themselves for the second.

Inflationary search in less than five years.

When I talk to clients, I do these portfolio reviews.

I've been saying this for really since the start of COVID.

So you have to prepare your portfolio for an inflationary environment.

What type of companies do well in an inflationary environment?

Which ones do not?

What tends to do well?

Materials.

Energy.

Industrials.

Financials.

Those tend to do well.

Stables.

Tent and not do very well.

And this is the perfect example of why.

Tech also.

As we grow for your names.

Why growth?

Those tend to not do so well.

Utilities tend to not do as well.

But staples are the ones that most people don't understand.

Why?

It's because the input costs.

They feel it more than most industries.

It's talking about fertilizer prices going into packaged food.

You have to still have to grow the underlying food.

And then the cost of plastics.

That's going up.

There's a lot of packaging that goes into these products.

And then shipping.

A lot of them are very heavy.

Think of coconut Pepsi.

Shipping bottles of product all around the country.

It's mostly water, very heavy.

Now what's interesting is.

Before this whole war.

Pepsi and craft were about to.

Cut their prices.

Pepsi said they would reduce price about the 15% on certain snacks.

Citing stretch budgets for low and middle consumers.

Middle income consumers.

And craft had volumes declined for five consecutive years.

And they realize they needed to cut prices.

So cut so analysts have been downgrading earnings forecast for a range of.

Food companies over the last couple of weeks due to these higher input costs.

And some of them could even see a cut to their dividend.

Talking about higher transport cost, higher production cost, higher packaging costs.

Freight itself typically makes up seven to eight percent of food companies input costs.

So when diesel is above five and some places above six dollars a gallon up more than 40-50% over the last month.

That increases their prices.

And then the spot price for a polypropylene.

Sorry polyethylene.

That's the plastic resin used in bags and bottles.

So more than 50% since the end of February.

Colgate Paul Mollivr.

They're raising prices for toothpaste and shampoo.

Chlorox is going to raise their prices over time.

And adjust their packaging size as they said.

And volumes are declining already.

In groceries or in supermarkets, general merchandise is down four percent.

Five volume year-over-year.

Meet down about two point five percent.

Household consumer products down about two percent.

Baby care down about one and a half percent.

Health and beauty down about one percent.

What's up? Only produce, deli and dairy and bakery.

Those are the only four that are up.

Those are obviously needed. You need food.

And this a lot of these packaged food companies are heavily indebted as well.

So higher interest rates cause problems for their businesses.

And a lot of them pay dividends and people buy them for dividends,

which makes them bond proxies in many ways.

So there's a lot of factors here weighing on consumers.

Daples stocks.

And that's why they continue to struggle.

Now let's invest stock.

I'm Justin Klein with one goal here each every week.

They'll help you achieve your own version of financial freedom.

And our work continues after this final break.

We'll get to questions in right now at 8 a.m.

99 chart.

The Invest Talk phone lines never close.

And now Justin Klein is here.

Call Invest Talk.

888 99 chart.

Hi Justin and Luke.

I've got a question about Escalor, Laxatica.

EL.TA is the symbol.

Just wondering what you think about this company.

Their stock is decreased from about $300 a share.

Downs up below 200 or euro, I guess that is.

Just wondering what you think about this giant in the optical space.

Thank you.

Looking at Laxatica, I think most people know what they do.

This is a French company.

And they're the biggest within the sunglasses area they own.

I believe sunglasses, but a bunch of other brick and mortar businesses,

online e-commerce channels, et cetera.

It historically has been a very, very good business with high profitability.

The issue is that it is down considerably for $374,

and under $223 just in the past these four months.

Clearly there is an issue with a consumer with the cost of the inputs to these goods.

We just talked about the cost of plastics going up considerably.

That's certainly going to hurt them.

And the PE is pretty high.

It's in the 50s.

Yeah, that's the issue here too is growth stocks have turned over in a dramatic way.

And so it's just too expensive.

Way too expensive.

I think there's way more room for this to go down to pull up a chart here.

Yes, OLS is the symbol for the United States or US markets.

So if everyone wants to look up that ADR.

You know, I think there's just more downside to go.

That's my main issue is this is not cheap enough.

Yes, it's down pretty nicely from its high, but not enough.

Let me give you a number here.

I don't know where this is going to go.

I think this is a lot more downside.

Yeah, 145, 150 in that range.

That's where I think about buying it.

It's at 223 now.

That's what I'm asking on Laxatica.

S at lower.

Laxatica out of France.

Now, lastly, let's tackle a question that came out of your YouTube channel.

Corey Durbin says, given this option to the energy infrastructure in the least,

what do you think of domestic LNG exporter like.

Cheneer.

Cheneer ticker symbol LNG.

The stock has already run a lot following attacks on.

Ross Lafon in Qatar, but the company continues to execute well in their brownfields growth plans

and have 95% of their production backed by long-term contracts.

I think if you're going to buy this, this is probably not the time to be buying it.

That's how these things usually work.

You get a price spike.

And it lasts until the headlines die out.

And then you get a big reversal.

Even today with oil prices up, this was down a little over 1%.

Now, I'm looking for a long term.

Yeah, I think it's probably a good long term.

But this is not the time to be buying.

Why would you buy it after the spike?

It's an aim to put in your watch list.

When the headlines die down, then you could say.

Now might be a time to get in.

We talked about the infrastructure damage within the Middle East.

We're going to require a lot of LNG and natural gas throughout the world.

And new supply and a lot of is going to come from here in North America.

So I like what you're thinking.

Just wait until this reverses on major headlines.

And that's when you'd want to pick up LNG shinier energy.

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