6 Episode results for "Bank of America Citigroup Wells Fargo"
TIP293: Intrinsic Value Assessment of Bank of America w/ Bill Nygren (Business Podcast)
"You're listening to Ti on today's show. We're going to be doing a deep dive intrinsic value assessment on an individual stock pick and the company. Today Is Bank of America to help us with today's assessment. We have Mr Bill. Nygren and Mike Nicholas Bill is the CIO at Oak Mark Funds which has over seventy six billion dollars under management. So get ready to hear some indepth discussions about the intrinsic value of Bank of America. You're listening to the investors podcast while we study the financial markets and read the books that influenced self made billionaires the most. We keep you informed and prepared for the unexpected always. I'm here with my co host Preston Pysche on the show we have bill nygren and Mike Nicholas. How are you guys today? We're hanging in there. Stay can't really say we're good. Markets down ten percent today after a couple bad weeks. We're doing okay and it is definitely special times. Is Bill set there? The Magas down ten percent. Yes you heard right. Ten percent be recording here. Mon- Sixteen but guys. I'm sure someone like you managing a lot of money. Your inbox must be full these days. What are the typical questions? You're beginning and what do you tell your clients question. We get most often is ranked will happen with the corona virus. I think something is always important for investors in crisis is to remember. What your expert at and what. You're not an expert and we are certainly not infectious disease experts here at Oak Mark. We read a lot with what they write. We listened to what they say. And unfortunately the views of the path this could take or so diverse is hard to base any kind of investment strategy off than opinion on or the virus might go but what we are good at it. Mark is valuations and that's been our expertise for a long time. Stocks are really cheap today. If you believe as we do the five to seven years from now things will look sort of normal again. Most of our approved lists I think all one or two names are beneath there by targets. Typically it's a third to a half of our list that's below by targets and like two thousand eight. We're trying to take advantage of the market volatility to restructure portfolios typically. We sell things close to sell targets and by close by targets. Today we'd be selling close to buy target to buy something that would have to double to be. His by. Argon is really unusual times so bill the last time you were on our show you talked about your investment process. Some of the picks that were on your radar back then were net flicks alphabet in mastercard and on today's show we're GONNA be talking specifically about Bank of America the Ticker for Bank of America for everyone out there be a see the bill. Could you please provide us? Just a basic overview of the business model of America is one of the largest money center banks in America today in our house perhaps the bass consumer banking franchise in the US industry leading wealth management platforms that that typically operates under the Merrill Lynch ran a really really great management team is strong balance sheet at in. Our view went along runway for market growth. We believe that the bank is priced attractively today. Engine used only wide minutes bogged specifically as relates to its lead within consumer facing technology where Bank of America in part due to it still has been able to invest that much higher rates than a lot of their molar regional competitors into technology solutions. Which have really named to lower their direct deposit. Costs engage in to focus on the consumer drive more value scenario customers so we believe the valuation is attractive. The steel that they operate within congenial remand significant competitive advantage and underlying business are on par with some of the best financial institutions. Thank you for your thoughts on that Mike now. I also want to preface this by saying that at the time of Recording Bank of America has dropped from just short of thirty five dollars to twenty one dollars in less than a month and today it changes all the time but it dropped another twelve percent. I mean it's just incredible. Just even talking about these numbers now. The Corona viruses already had a meaningful negative impact on economic activity and this negative impact will continue. I'd say that the hand is how negative the impact will come along. Persist and finally how economy will behave after the corona virus recites. Now what are your thoughts on the economic impact off the corona virus and has already been priced into the current Stock Price. Off Bank of America. I think one of the things we do well at stake is to focus on business. Value and quite a business will be worth in for lack of a better term. We call normal times and we're not GONNA be any better guessing than anyone else. As to how severe the impact could be in the short term or Bankamerica. Or how many quarters of bad performance has been already discounted? But what we do know. Well is to say the stock price has gone from thirty five to twenty one and that's basically but four five years of free cash flow that we expected it make America so a lot has been priced in things ought to be really dire to justify this kind of decline. We're at our best but we can focus on saying. This is what we think we'd have to happen to justify how big a move. The stock is already had. Our guest is no better than anybody else's and we saw yesterday that even the Venture Jerome Powell had a difficult time going out with a forecast or economic activity for two thousand twenty. What we do now is be resilient economy bills written some bar pass ladders about America's economy by extension the equity markets who grew another astaire's time wars and natural disasters and Real Estate Valentine's and other viruses. You name it. We all feel. This'll be now different banks as you mentioned that punish they're viewed as macro proxies that report particularly worldly during the last. Turn but I think what's missing and some of the analysis in the way. The socks recently is how much improvement. There's been debate since last night and Branson of that perception Yoga's actually's assail who's been enormous amount of capital built by Bank of America. Number of the large banks performed very vulgar anxious and they do have really diverse revenue streams and unlike other sequels reinvestment. They set aside money for today's talk the lumber experiencing so we think they're going to perform much better than they have prior downturns early. This is an opportunity for them to approve the underwriting discipline in the capital bell the way they do business is far superior than the way that usually guys talked about the low interest rates just recently fed chair. Pow has cut the rate by one hundred basis points. It's been since nineteen eighty two that we've seen such a significant cut Not to mention all the bailouts in quantitative easing now for a bank lower interest rates simply mean that interest income Get smaller and smaller. Which is the top line of the business? So do you guys see this as a bad thing or do you think a normal interest rates are going to be coming back into the future despite the downward pressure that we've seen in yields for decades at this point. How are you guys seeing that? Low rates are undeniably verse for banks than higher rates especially with the sheep of Yule curve as we see if they were longer term rates. Aren't you are of her? Shorter-term rates are today. And if you think about a bank or Bank of America in particular that's largely funded by overnight deposits but that ultimately leads further out mccur. You could imagine that the more narrow that difference or that spread is more impactful. It'll be on. Its first margin and net interest income makes up roughly half or so of Bank of America's revenue. Jeez rates look nothing like history by the absolute level or that this ravaged Michelle report rates at a long-term rates. We don't necessarily believe this looks like environment on the shoulder of this year. America's earnings or the underwear brushing they'll have lower net interest income like we hire charge offs next fence as the economy slows down here. So earnings number that we see here or two thousand twenty we all think is what they're capable of earning allows a business cycle on average over time when you think about the services of the banks provide binger patient respected. They're very necessary. They're extremely valuable to the consumers. They store money. They protect your money. They live and move and transfer money. They give you advice. Invest your money from our perspective. You don't believe that there are over earning relative to the value that are provided in Or certainly not. The highly competitive offering around here are in so remark perspective. Where you see this year is not likely to be remarks. By the normal earnings power of the bane wiping to remember lower for longer mate environments. His debate business models have been very adaptable over time. You think back to the nineteen eighties interest rates in the high teens. Most icy insured banks were generally a mid to high teens percentage of their revenues. Beatty's but if you fast forward to today some of the big banks like Bank of America are generally almost half the revenue from fees. So it's not just interest income that dictates the growth of the business anymore. But of course there's also the other side of the mystery of Michigan June nine assault of his past where no rates could go up. They have historically been previous in short. We're seeing today. In that specific instance we think the banks have to typically higher power perhaps even higher than what we saw last mirror would make America org about dollars a share so from our perspective. They'll be able to weather the storm. They'll be apple. Business model perhaps even cosby lead to and some of their competitors so-called intimate bags they compete under positively might not harder time beating this market as well as they face. Samri investment risks on the acid side of their balance sheet about physicians. Virginia so let's talk a bit more about that. What are the key factors of success and banking? And what Does Bank of America do better than its competitors US I think? There's a couple stringent underwriting discipline of course a very solid risk management platform increasingly scale being one of the biggest branch years steel really enables the ability to invest in technology. And it's a client systems regulatory reasons it really allows them to ask the residual tools for their customers. And when you think about the absolute stale bet that Bank of America is appointing now new technology facing services and solutions last year. That number was about three billion. It's been like that for almost half a decade longer and the magnitude of that is really enormous. I was listening to your interview with Sean Sandercock outburst public. Not long ago really enjoyed the shots interview reading. Shawn's long as well. But First Republi- total operating expenses for the whole bank is less than what Bank of America spends. I knew proctor. Vouching loan every single year. So their ability to reinvest multiples of some of US more medium sized banks expense bays are being truly widening. They're about to the neighboring investment accounting customer students. How would you describe the competitive situation between the biggest banks like Bank of America Citigroup Wells Fargo? And if you honors I would describe it as highly competitive but in our opinion the Big Three Banks. Wells Fargo J. P. Morgan and Bank of America. Of course will ultimately are the winners. The all in deposit costs for the Big Three banks today which is an important driver of profitability given how significant deposits are as a percentage of the overall funding sources for the banks. Those costs are about half of what most regional banks would pay. And if you think about user growth a fifty percent of all new checking accounts they are being opened up one of those big three banks. Despite the fact that they only control about a quarter of the country's branch network so we believe they're taking considerable share even younger cohorts and the most of that is due to what we talked about before it was scale and their ability to invest that much higher levels than many of their smaller competitors to improve the customer experience so while obviously going through its own issues today and we have a lot of respect for J. P. Morgan's franchise but ultimately believe that the big three banks were spending by far the most to continue to separate themselves in terms of digital solutions services that they offer will ultimately be the winners in a highly competitive market. Might mention the the big three in the. Us heard about fifty percent share of new accounts. If you follow the model that you see in most of the rest of the world it's unusual for the top three banks to only have fifty percent market share. So I think there's a historical precedent that we've seen a lot of other countries where the growth of the big three becomes the best part of the story. Yeah Bills Right today. Those top three are probably thirty percent of deposits but a much higher percentage of new accounts that are happening in the market today. And you look back maybe ten or twelve years ago. That number was closer to twenty percent. So if you do look at a lot of developed markets. The top three owned a lot. Bigger percentage of share of total deposits and Bank of America alone has talked about their desire to double their consumer deposit share over time. So we think there's a long runway for Bank of America to continue to win in the market and continue to gain share so bill. The last time you were on the show you talked about how. The market remembers the two thousand crisis. You said that was maybe one of the reasons that banks were still so unpopular. How has that thesis evolved? And how do you see that today with the crisis is going on twenty twenty for starters if you think about the way the banks were positioned a little over a decade ago into the Great Financial Crisis? The quality of their balance sheet in a lot of different ways was way inferior to what it is today. I if you start with capital the average bank today has almost twice as much capital per dollar of assets is it had in the great financial crisis. Then if you look at the quality of the underwriting any loan that's been written in the past twelve years has been to a substantially higher standard that it was going into the crisis. Frankly banks mortgage loans as all they really cared about was the quality of the House. They weren't worried about the quality of the borrower. And today it's more like good old fashioned lending where a bank is worried about. Whether or not they're going to get paid back I think. Investors have heavily punished the banks for this higher level of capital which means the return on equities are unlikely to be as large as they were fifteen twenty years ago but they haven't given them credit for the flip side of that. Which is they become much less risky businesses because they have so much more capital in fact. Some of the people who've been negative on the banks talk about the banks because they have so much capital becoming almost like utilities. We think they're really cheap. They're better businesses. They're motzer growing their market. Shares are growing. They're just much better position than fifteen years ago. So banking stocks are extremely regulated. Howdy recommend somebody get smart on. All these legal frameworks. That are very complicated. That an investor. A new investor can feel comfortable taking on a position. There right stick. There's been a number of new regulations put in place since the great financial crisis in two thousand in two thousand nine. Almost all of these regulations were designed to ensure that the banks are better prepared for the next downturn. There's been more stringent rules placed on the types of instruments that the banks can put on their balance sheet that liquidity of those instruments their ability to perform proprietary trading. You're more recently. The way reserve against bad loans and of course the amount of capital. They must hold throughout cycle in two thousand ten senator. Chris Dodd and Representative Barney. Frank past probably the most sweeping bank regulation that we've seen since the Great Depression. The Dodd Frank Act and among a number of the different provisions within the act one of which forced the banks to adhere to annual stress tests and these stress tests would be conducted by the Federal Reserve and they would put the banks through stress scenarios one of which they call a severely adverse scenario. This scenario is very adverse at assumes the equity markets declined by fifty percents on employment goes up to ten percents. Fed funds goes to zero residential. Real estate prices declined by twenty five percent. Commercial prices down thirty five percent a tough environment severely adverse and. What's interesting is even at the trough of that hypothetical environment that the Fed would run. Somebody like Bank of America. Through Bank of America has more capital at that trough than they did entering the prior downturn. So I think it's it really shows how much better capitalized the bank. And the whole system is relative to what we saw. Twelve years ago the regulators are taking a much more hands on approach. But for your listeners. I would advise perhaps reading through which the Fed makes public a number of these reports. That the dowd fast annual stress test reports to get a better feel for how your potential investment might perform a much tougher environment interesting. Mike you mentioned the interview with it with Johnson Toxin from Samba capital. We had not too long ago where he was pitching. First Republic. Bank pee on the podcast and one of the things that he highlighted was the net promoter score and he hide that as an example of the strength of the bank. Now the net promoter score is a customer loyalty metric that measures customers willingness to not only return for another purchase a service but also to make a recommendation to the family friends or colleagues. So when I was looking for Bank of America the score was minus twenty four and that is about ass popular or unpopular if you like facebook. Scores higher than zero typically considered to be good and scores about fifty considered to be excellent so in comparison the Industry Everett's financial services and banking is eighteen and again bank of America. That was minds twenty four. Should we asked potential in Bastos in Bank of America? Be Concerned about the negative. Net Promoter. Score? It's a good question. The net promoter score for Bank of America that you quoted. It doesn't really seem to sink much with the business trends that they're actually seeing within their own business of course they're on customer satisfaction. Scores are at all time highs. They continue to take a lot of market share. Purdue accounts and the overall deposits for the bank have grown by more than forty billion every quarter for the last five years. That's adding the deposit bakes base of like nearly the twentieth largest financial institution. America every quarter. So I think jd power was just out talking about how the average customer relationship duration for Bank of America has increased significantly from two thousand eight thousand nine to today. And you can't help but see references littered about customer centrisly and doing the right thing when you read. Bank of America's annual report so we think customers are voting with their actions. I can certainly speculate as to perhaps why that perception may exist or where it may have come from based on on some of the actions that took place during the great financial crisis but when we look at the actual fundamental trends in the customer trends within the business. It really doesn't seem to sync up well with the score that we're seeing. Let's take a quick break and hear from today sponsor. Although we're value-based investors at heart it has long been known among investors around the world that systematic or quant base strategies have become a highly successful way for professional investors to extract returns from the market. In fact most of the top ten hedge funds in the world today like bridgewater associates and renaissance technologies discovered this decades ago. And there's one podcast that covers this area and finance in great detail in its top. Traders UNPLUGGED DOT com. And Right. Now you can get a free book explaining how to systematically identify and follow market trends as well as a comprehensive guide to one hundred of the best investment books of all time just go to top traders unplugged DOT COM SLASH T. Ip to get your books today again just head over to top traders unplugged dot com slash T ip. You'll be glad you did Preston and I are looking for a host for a brand new show. The Intrinsic Value Podcast we expect the show to feature different Intrinsic Value Assessments and for you interview guests. Just as we do with John Steiner Stockton detailer felder. And so many others here in the master's podcast. Who also likes the you have your own mastermind discussion where you pick your favorite stocks and talk about the Kurd Mike conditions if you want to learn more about the position and how to be a part of the team. Please send me an email at stake at the master's podcast dot com in your email together with your resume. Please include a stock analysis off a stock. You recently found interesting all right back to the show so guys thank you so much for laying the groundwork there so let's dive into the fun stuff here. How are you guys looking at the intrinsic value of Bank of America? Sure per any idea that we're looking at or looking for three criteria to be mad. The first of which is that company is trading for steep discount to what we think it's worth is be always require that the businesses run by manager that truly think and act like owners and we want her share value to be growing over time from our perspective. Bank of America passes all three of these tests. As you mentioned earlier this dachshund the low twenties today. Call it twenty one or twenty two dollars a share and last year. They aren't about three bucks generated. Roughly a sixteen percent return on its tangible. Common Equity. This year is going to be more challenging rates as we talked about we'll be a headwind bad debt expense or bad loan expenses. Likely to go up. There's going to be some headwinds that they're going to be facing but over time we believe make. America is capable of earning a low to mid teens return on tangible common equity and we think that tangible common equity on a per share basis looking out a few years is going to be twenty two twenty three dollars a share so using our substance we think the earnings power for the bank is north of three dollars a share so today's level the stocks trading about six and a half times our estimate of a normal earnings that we think they can grow off of now as you think about evaluation on from downside protection perspective. The stock is trading about what we would appraise to be liquidation value or tangible book value. What we think they could sell other assets and pay Back Liabilities for and the valuation relative to the S. and P. Five hundred is near historic lows so from our perspective. We don't think the market is really rewarding. Bank of America for some of the improvements that we discussed since the last downturn whether it's credit quality or capital levels for expense reduction or more sustainable return profile and the companies taking advantage of that repurchasing a high single digit percentage of their shares. They're paying out a really competitive yield. Today and the total capital yield the combination of the two is amongst the highest of any public company. That's in existence today. God forbid there is some existential threat. Every businesses facing some form of technological obsolescence today in the case of Bank of America if that were to come to fruition. It's nice to know that the majority of today share price is reflected in tangible asset value. That could be ultimately returned to shareholders as for what it's worth by our math assuming that return structure and a reasonable discount rate. We see no reason why the bank can't be worth two time tangible book value or more and that would lead you to believe the stocks were somewhere in the mid forties or so are more than double today share price. Look at how. Our assumptions differ from consensus. I think the first thing you see. Is that most people who write about. Bankamerica are unwilling to give them as much credit for growth that comes from reducing their denominator. The share base as they do for companies that grow the top line. But it's important that it's just as valuable to an investor and it creates just as high. Eps growth rate this denominator shrink is the numerator grow. Secondly who see a lot of reports written that say over the past thirty years? The average bank stock typical P. E. was ten to twelve times earnings. And I think what that MRS is during a lot of that time the SNP multiple wasn't much higher than that but today pre corona virus scare the SNP. Multiple is getting close to twenty times earnings and yet the bank analysts were still talking about a target ee of ten to twelve times earnings as we said earlier because of the way these companies have expanded their moats their competitive power is growing the safety of the companies much better than it was during the past thirty years. We think the gap to the market P. E. should be shrinking so we're looking at a higher earnings per share number out five to seven years from now. The average analyst is and we're putting a higher multiple on that. So would you say that? There's a catalyst to this happening or is it just as much the that's called the. Maga wising up and understanding that that difference Cadillac Suv always been a hard thing for us to anticipate even when you look back on. Some of the biggest market terms like when the Internet bubble popped in early two thousand. It's still hard to look back. And they this was what the catalyst was that started. That declined the Internet names. I think one of the things we look for is companies that are generating a lot of excess capital so the longer the market the company undervalued the more shares they can repurchase another thing. Is We like companies that pay back cash flow to shareholders via dividend and the average bank? Hang out about a third of their earnings. In dividends The dividend yield will become so compelling on these stocks as will the growth rate investors will have to stand up and take notice. Now let's go to the next segment of the show and we not going to talk about Bank of America but we're going to talk a bit more. About the industry of asset management. All audience are primarily value investors. And the way that we are brought up is with the zero six twenty five fee structure that Warren Buffett used for his partnership as the optimal fee structure for both investors and portfolio managers. We also have other value investors like Guy Spear and Moore's pop riots. Who had been here on the podcast with the same structure for their fund. The fee structure implies that asked vast you pay zero percent management fee but they're patrolling manager has a six percent annual performance hurdle with a high water mark that means investors need a minimum of sex percent return before the portfolio manager is paid and the high watermark is the highest peak in the value that the investment has reached. Meaning that demand you can collect incentive fee. Less the funds value is above the high water mark and returns are above the hurled rate. So the is then pay a twenty five percents fee returns over six percent now that is not the model that oakmont funds has chosen taking oakmont select fund ethnic sambol. You chosen a more conventional fee structure with a one percent expense ratio. Why did you choose your fee structure? And what are your thoughts on the Euro Sex twenty-five model? We would've loved to have gone to the model that you suggested the no fee until we make six percent and then a quarter of the profits above that since the Oak Mark Fund was launched in Nineteen Ninety. One the fun went up about twenty four times. Its initial value. The fees to US would have been substantially higher under that arrangement than they were a fraction of one percent of the assets. But realistically the reason we chose that fee is regulation doesn't allow the Mutual Fund industry to adopt that fee. You're going to take any positive. Incentive fee than the shareholders have to get refunded that same amount. If you don't meet the hurdle so if you're going to take twenty five percent of all prophets above six percent that anytime you fall short of six percent you have to return twenty five percent of that shortfall to the investors with the month that we've just been through with a crisis like the corona virus every mutual fund has an equity portfolio would have been out of business if they had that kind of fee structure so the only way we can get the mutual fund industry to move to an incentive fee based model via change in the regulatory environment. I'd certainly be supportive out. So mutual funds have really had a bad name in the marketplace. In the last I would say in the last decade relative to ETF's if you're going to argue against that ideal what would you say? I think the biggest issue that active management has had generally that also specifically within the mutual fund industry is for a long time mutual funds ran what I would call closet index portfolios where typical model might be the portfolio manager saying. I think utilities look expensive today. So instead of owning the market weighed in utilities all on eighty percent of the market way and I think banks look really attractive so instead of the market wait boost that to one hundred twenty percent but you have these industry weightings that are very tightly. Clinging to what the SNP index weighting is and effectively eighty percent of the portfolio. Our so is nothing more than an index bond and then the manager is charging the fee only on the twenty percent. That's actively managed so I think the active management industry has brought a lot of this problem on itself by basically running call it an index fund plus but charging active management fees on the whole portfolio. I think the way you defend yourself against it. Is You do what the Oak Mark Fund family has done. And we don't hug. Index is at all we buy stocks we think are cheap. We hold them long term. We analyze them in depth. And we don't worry about what our tracking error is versus the S. and P. Five hundred every dollar that's invested in our court. Folio is an actively managed dollar. And we've seen all the studies that say that the funds that rely on long-term Holdings of active share high active share portfolios have tended to be the best performing funds and the thing is very important for the listeners. Also to hear that because we have a lot of each absolutely have caught a lot of different partnership models and very often. A mutual funds have been brought up as the skier example of how? It's not supposed to be so a really appreciate you. Stepping up to the plate and giving US another perspective for listeners. It would be safe to say that. The asset management industry have changed dramatically over the past few decades passive. Men's funds with lower and lower fees have increased in popularity and we see more and more algorithm trading. Just mention a few of the changes for US investors and perhaps those listeners who are thinking about a career in management. What does the future hold for activist funds employing traditional portfolio managers? It's interesting I think. Been a lot of focus passive management in just the past couple of years but my view of it is if I look at the time I've been interested in the stock market which goes back to I was in high school and there's been kind of a natural progression where the equity market has been able to provide high rates of return better than almost any other asset category. And because of that it's been an attractive place for individuals to put money back in the nineteen seventies and eighties the easiest way to access that as an individual was through your local stockbroker given a very extensive way to do it not a well diversified way but it be putting all your assets in bonds and then he started to see mutual funds. Come in and that was a much lower cost. Way of investing in the local stockbroker was a typical fund had hundreds of holdings in basically performed in line with the market. Then you saw index funds. Come that said why should we try differ? Just a little bit index in charge of big feet. Let's lower the fee and just produce average returns. And then you saw the value based bonds and growth based funds and after that it was value. Etf's in growth. Ats All along the way the active managers have had to do something that justify their fees and I think that keeps changing when I started at Harris Associates the advisor to the Oak Mark Funds in the early eighties. Simply being value-added there was a reason to earn an active feet. It provided a better return over a long period that an index fund did and there weren't a lot of easy ways for investors to access just a diversified value portfolio. Today you can do that with a value. Etl The charges nothing. That's why it's so important that we've had to evolve in stock selection criteria. You mentioned at the start of the show. That last time we were on a we talked about our holdings of Netflix an alphabet and how those were such unusual names to see in value portfolio. We've had to be responsive to how the economy has changed to an asset light model that gap accounting doesn't do a particularly good job of defining so the old statistics of price to book and P. E. don't work really well on a lot of the industry and at Oak. Mark we've evolved and we've owned a lot of the names that don't necessarily look cheap on gap metrics but on another form of business valuation. Metrics look stunningly attractive. And that's been one of the reasons that oak mark funds has been able to outperform most of its value peer group over the past decade. As we've talked about what a tough decade it's been Value Managers the people thinking about a career in this industry. Just have to understand. It's a constant evolution and you have to stay a step ahead of the computers if the computer can do what you're doing it's going to charge a lower fee than you can but you have to have human judgment human analysis that can't be done. That effectively zero cost in order to make a career in this industry. Thank you for the Liberation on that and for the piece of advice to many of the younger listeners. Now Bill and Mike. You have been very very patient with me here today and you've been very gracious with your time. So thank you so much for coming on. The masters podcast. I'll definitely like to give you guys opportunity to talk a bit more about my funds. What you do and whether Audience Kalin more about you. The Oak Mark Fund family has seven funds. We invest with a long term value framework. If we do that across markets the United States and internationally equity and extend so. We've got the Oak Mark Fund the Mark Select Fund market or National Oak Mark small-cap and then three global funds where we handle the asset allocation between international markets and domestic markets. We also have an equity income fund where we handle the asset allocation between stocks and bonds. You can read about how we think about investing at our website. Okay Mark Dot Com. The commentary pieces that we right. We put a lot more focus on that a lot of our competitors do if you go through and read a couple years worth of our commentaries. You'll have a very good idea about how we invest everything we do is long term value. So that in a snapshot is what we try and do it out. Mark Fantastic and we'll definitely make sure to linked all of that in the show notes and we'll also make sure to link to the previous interview that we have with bill guys again. Thank you so much for time and for coming on the Masters podcast. Thanks for having all right guys so this part time in the show we'll play question from the audience and this question comes from Brad. Let's take a quick break and hear from today sponsor this free podcast episode is brought to you by Radius Bank. The Best Online Bank in two thousand twenty according to bankrate dot com as a forward thinking digital bank radius has always been well prepared to handle all your banking needs with their interest. 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And they're so confident in the product that all the bedding counts with a lifetime warranty get ten percent off your first order and free shipping when you use Promo Code investors only at Brooklyn Dot Com. That's B. R. O. K. L. E. N. DOT COM Promo Code Investors Brooklyn. Everything you need to live your most comfortable life all right back to the show. I really enjoyed your recent episode number. Two Eighty eight where he built discuss current market views physicians. In how you believe the next few months or going to play out. I'm a big follower of the podcast in in enjoy keeping up with some of the great minds you both follow like radio. Lebron Row Powell. On episode two eighty eight you indicated. It might make sense to purchase gold and oil towards the second half of the year. Can you provide some input on why you would favor physical gold over paper gold especially since the current flocked to cash is providing? Good bar ends in the paper. Gold and silver markets. Thanks Gus so Brad. I think this is a fantastic question. And to understand the argument for fiscal gold or paper. Gold I think it's important to understand history the US dollar replaced the British pound sterling as the world's premier restore currency back in nineteen forty five in the courts with the Bretton Woods Agreements. And at the time the. Us dollar was the currency with the greatest purchasing power and the only currency backed by gold but in effect the world bus To gold because other currencies were packed to the dollar now throughout history have multiple occurrences the happy in the dominant currency for instance in the seventeenth century. He can be argued that the currency was even the most important as a credit system was reinvented by the Dutch and the enforcement off credit claims were art. No better place in the world now. My point by saying that is that believed that. Us dollar will forever be the world's most important currency in its current form is just very very unlikely. The reason biggest change was nineteen seventy one when Nixon took the US off the gold standard. Yes it was still called the US dollar before and after that but it was a very different currency than must before because we entered the rail mafia occurrences where central banks around the world could print infinite amount of money. And perhaps that is best exemplify here. In the corona crisis where money has been printed an unprecedented levels so when we look back in history which currency has maintained his purchasing power gold has and gold has thousands of years so when we talk on the show about the risk of hybrid inflation one way to hedge against that is through gold. And just for the record. I would like to say that I think the inflation numbers can go much higher than today but anywhere near the higher inflation rates that you have seen with hundreds of percents in annual inflation or even higher than that. I think that it's very very unlikely in the US but I do think that we will have more inflation in the time to call or these. Their significant risk that we'll have more inflation in the time to come in especially in the case shoot hardware. Inflation happen fiscal goal. Becomes much more attractive than paper gold because as soon as you have goal in the financial system say through an ETF dod or through a derivative. It doesn't mean that you have access to the fiscal gold when push comes to shove and that's whenever you need fiscal the most so even if you do own goal on paper it won't really do any good if the government takes away the goal from you and if you don't think that's possible consider what happened in nineteen thirty three through the secretary or a six one zero to president. Franklin D Roosevelt made it a criminal offence for US citizens to own trade gold anywhere in the world with the exceptions for some jewelry and collects coins. But the reason why I'm saying this is that a hope that you breath worth look back in history and see that the system that we have a stable as it may look like we've just throughout history seen so many changes just in the last hundred. We've seen dramatic changes in the monetary system so fiscal gold. Dust makes sense or paper gold even though it can be a little more troublesome to own it now to end my response with a quote from. W If you don't go you know neither history north economics so Brad I think Stig provided a just an outstanding overview of kind of the history of the risk associated with governments potentially stepping in Whether they can do that now with how interconnected and digital the economy has become compared to the last time that Some of these things were implemented on the gold market is something that is just really insanely difficult to quantify what this really are because it is different We we just have a different economy at this point I don't know that I have a good answer for you. I just when I look at the physical. Gold market verse. The paper market These are my concerns with the physical gold market is just the speed at which you can receive your payment and if there would be something else that would that would takeoff Other than gold your ability to sell out of that position due to the speed at which you can settle. I think is a concern for me personally On the paper gold market the the big story right now at least for the last month has been The separation between the the premium that you actually catch on the physical market versus the paper market now whether that trend persists or not. Or what's even driving? That is yet to be determined and I don't think anybody can say with a whole lot of confidence which driving that If that trend would continue to persist in the coming months I I don't know I think that's a little bit concerning so I don't have a good answer for you. I'm like everybody else kind of standing there on the from aside kind of looking at what's happening in saying this is very interesting. This is very fascinating. What's taking place? And I just don't know if there's a good answer as to where to be positioned based on everything that stig laid out there Based on these nuances between the price difference between the physical market and the paper market. And then just the con- the whole confiscation pieces just something that I don't even know how you'd put a determination on that I do as as anyone who's listened to the show knows has a concern. I have concerns about Fiat currency moving forward to not just the US dollar but all the Fiat currency around the world because like sticking mentioned Everything when when the. Us came off the gold standard seventy-one everyone else came off the gold standard at the exact same time because they were pegged to the they were pagan their currency. To the dollar. So you've had this competitive devaluation that's been going on for literally decades and now that you got interest rates in real terms pegged at zero. I just think you're gonNA see some crazy things happening in the market Especially with respect to volatility When they're printing this much money and they're pumping the Q. E. AND THEY'RE PUSHING INTEREST RATES. They're going to sustain interest rates at zero percent. The market's going to be looking at that and saying oh things aren't things aren't unstable because the yields in the fixed income market aren't volatile. There's going to be pegged at zero and people are GonNa be lulled into thinking that there's nothing wrong there when in fact behind the scenes. I think there's there's a lot of things wrong And then what's the implications of all this universal basic income? That's rolling out. And what does that mean? There's there's so many unknowns. This is so crazy that what we're seeing I just don't know that I have a good answer for you so Those are our thoughts. That's how we're looking at all the different variables and maybe it's helping you determine where you may be. You have more confidence after hearing all that. So Mike for asking such a great question. We're going to give you free access to RTP finance tool on our website. And one of the great things about the T. I P finance tool is like you learned in this episode where we're calculating the intrinsic value of a company. This tool on our website allows you to go into any company on the US markets. You can pull it up and automatically Graphs the free cash flows of the company. You can come up with an array of of what you think. Those future free cash flows will look like and then the software automatically does the intrinsic value. Estimate of what that company will be worth. We're really excited to be able to give this away to you for free and we really appreciate you asking such a great question on the show so if anybody else out there wants to get a question played on the show and get free access to. Rtp finance tool on our website. Go TO ASK THE INVESTORS DOT com. And you can record your question and if it gets played on the show you get a free subscription to RTP finance tool our guys. That was all the press on. I had for you for this week's episode of the PODCAST. We each again next week. Thank you for listening to ti to access our show notes causes or forums go to the investors podcasts dot com. This show is for entertainment purposes only before making any decisions consult professional. This show is copyrighted by the investors podcast network written permissions must be ended before syndication.
Wall Street Breakfast March 11: Extreme Market Volatility
"Welcome to health as Wall Street breakfast. Your daily source of Market News Analysis. Subscribe to this podcast on Apple. Podcast Google podcasts. Spotify stitcher morning. Today's march eleven. I'm Dan Schwartzman in for Steve Brown and this is Wall Street breakfast following Monday's plunge in Tuesday's rally. Us futures fell another two percent overnight as traders sized up fiscal and monetary policy responses. President trump suggested a zero percent payroll tax rate. That could last. Until the end of the year and said cruising airline industries will be getting aid but the details still remain unclear. Us Corona virus cases have also topped one thousand nationwide according to Johns Hopkins University data. Need at least twenty. Eight people have died from the disease looking to curb the economic impact from the Krona virus outbreak. The Bank of England has cut its main interest rate from point seven five percent two point two five percent quote although the magnitude of the economic shock from Cova nineteen is highly uncertain activities likely to weaken materially in the United Kingdom coming months according to a press. Release the B. O. Ea will also introduce a new term funding scheme with additional incentives for small and medium-sized enterprises financed by the issuance of central bank reserves. While it didn't say when the capacity increase will take place. Saudi Aramco has received a directive from the Kingdom's energy ministry to up its output capacity to thirteen million barrels. A day on Tuesday. The company said it would raise its crude supply to twelve point three million barrels per day. Starting April I only days after it slash most of its official selling prices. Crude futures slipped two point four percent on the news to thirty three dollars. Fifty four cents per barrel following a twenty four percent plunge on Monday and a ten percent rebound on Tuesday weighed in with debt falling. It's thirty eight billion dollar. Acquisition of rival Anadarko petroleum last year Occidental Petroleum is slashing its quarterly dividend to eleven cents. A share from seventy nine cents a share. The company also plans to cut fiscal year. Twenty twenty six to three point five to three point. Seven billion dollars from his previous plane of five point two to five point. Four billion and to implement additional operating and corporate cost reductions. These actions lower our cash flow break even level to the low thirties west. Texas intermediate excluding the benefit of our hedges. Positioning US TO SUCCEED IN LOW COMMODITY PRICE Environment. Occidental said in a statement corporate America's attempting to bolster its quantity plagued by a plunge in oil prices and the global corona virus outbreak. Exxon has filed for an unspecified. Board offering Royal Caribbean cruises increased its credit capacity by five hundred fifty million dollars and united airlines raising extra two billion dollars in financing companies voting up on cash when you can get it. They are effectively building up. That war chest said Jeremy Swan managing principal at accounting tax advisory firm cohnresnick. The trump administration is likely to extend the April Fifteenth Tax Deadline for filing income tax returns as part of its fiscal stimulus plan to combat the impact of the Corona Virus Whilst Journal reports that would effectively act as a bridge loan for individuals and businesses facing disruption from the virus delaying tax payments could also force the Treasury to borrow more in the near term as April is the largest month for federal tax payments. Ceos from Bank of America Citigroup Wells Fargo Goldman Sachs and truest financial her scheduled to meet with President trump in the White House. Cabinet Room at three PM. Gordon Smith C. O. J. P. Morgan's consumer in community banking division will also attend the gathering in place. Jamie diamond WHO's recovering from emergency heart surgery. What's being discussed estimations? On how long and how much the krona virus can cause markets to fall as well as plans to waive some fees in offer other assistance to consumers and small businesses. Google has sent a memo to all of its one hundred thousand. North America based employees recommending work from home until at least April tenth Virus Tech Titan had only previously told staff in the San Francisco Bay area Dublin in Seattle to log on remotely. Google officers will remain open to workers if they have to be physically present. Ceo Senator Pichai urged people to contribute to social. Distancing cases are coming in so intensely. Now that we're not able to give a detailed case breakdown. New York City Mayor Bill de Blasio told reporters as the National Guard was sentenced to new. Rochelle a suburb north of New York City. Washington governor Jay inslee further warned that the state's cove in nineteen cases could reach sixty four thousand by. May If officials in the public failed to take action. The port of Los Angeles reported a twenty two point. Nine percent annual drop in container volume for February as low output from Chinese factories dented transpacific maritime trade. While the New York Auto Show in Coachella music. Festival have been postponed. Most stock in the five hundred of tumbled over the past month but shares in the consumer staples in healthcare sectors have generally suffered smaller losses. In fact only twenty nine stocks in the five hundred have gained over the past month. Most of them are related to the demand jumped prompted by quickly spreading krona virus outbreak on the list regeneration pharmaceuticals Kroger autozone dollar general. Campbell Soup clorox and Walmart in other news. Disney will host its annual shareholders meeting with new CEO. Bob Shaye Peck in the hot seat for the First Time. Tesla looks to build its cybertrust in central United States. Uber may suspended accounts of those with Corona virus. Hilton withdraws its Q one and full year outlook due to covert nineteen. Dnc Technology agreed to sell its Medicaid services business for five billion dollars and Wells Fargo chief executive testifies to Congress that concludes. Today's Wall Street breakfast. Thank you for listening and stay safe out there. That concludes today's Wall Street breakfast. Thank you for listening. The Best Investment Analysis and news on the web seeking out the DOT COM. Subscribe to this podcast on Apple. Podcasts podcasts. Spotify STITCHER. You can sign up for other podcasts. Behind the idea referees let's hope. Ups cannibus investing podcast and multi player table. Almost five owns as well have a great day.
Big Banks' Profits Continue to Roll In Despite Pandemic
"Support for what's news comes from facebook there many questions facing voters this election to make sure there are answers. FACEBOOK has launched the Voting Information Center for official information from election authorities visit facebook, dot com slash voting, Info Center. Big Bank earnings are rolling in this week and so far they're all turning a profit. These banks are still printing money, which raises a really interesting question about. How do you square that disconnect with the rest of the economy which is in pretty shape. We'll talk more about that disconnect plus we'll check in on the confirmation hearings for supreme. Court nominee Amy Coney Barrett and how fashion accessory could help restaurants stay afloat as temperatures drop. It's Wednesday October fourteenth I'm Ameri for totally for the Wall Street Journal here's what's News. Senators are questioning president trump supreme court nominee judge amy Coney Barrett for a second day. Republicans continued to praise the nominee while Democrats resumed pressing her on issues including voting rights healthcare, our legal affairs reporter. Brent Kendall has been monitoring this week's hearings. What we've seen a lot of today is rehashing of yesterday that's again talked heavily about the affordable care act asked Judge Barrett several times again about her views on abortion rights and other cases in judge, Barrett again that she. was, extremely limited and things she could say particularly in disputed areas of the law that might come before her Republicans hope to have Barrett confirmed by the full Senate in the final week of October just ahead of the November election the outcome here is not really in doubt, Republicans have the votes to confirm Judge Parrot for the High Court and Absence Unexpected circumstance that is almost certainly where we are headed for our full coverage of this week's confirmation hearings had to wsj.com. Barron trump president trump and first lady melania trump's forty, nine year old son tested positive for the corona virus earlier this month and has since recovered the first lady revealed the news and a rare personal essay posted on the White House website today she said, she immediately had baron tested when she and the president tested positive themselves for the virus on October. First the first lady says she and her son have since tested negative the White House said yesterday that President Trump has tested negative and is no longer contagious. Tomorrow Night President Trump and former vice president Joe Biden will hold dueling town halls after the second planned presidential debate was canceled NBC. News. Says it will host the president for an event in Miami at eight PM Eastern. That's the same time as Biden's appearance in an ABC. News Forum in Philadelphia. The second presidential debate was canceled after trump tested positive for the coronavirus and refused to participate in a virtual debate. A final debate is scheduled for October twenty second in Nashville Tennessee. And we report exclusively that two Americans held hostage by Iran backed who the militants in Yemen have been freed. A US backed trade as part of the deal Saudi Arabia, and its allies released more than two hundred of the militant groups loyalists. The agreement is part of an effort to help revive peace talks in the hopes of ending Yemen's five year civil war. Coming up after the break, how big banks are turning a profit in pandemic? Support for what's news comes from facebook the pandemic has changed the way we do a lot of things. It's also going to change the way we vote naturally there are a lot of questions whether it's how to vote by mail went to register or how to vote safely in person. That's why facebook has created the voting information center full of up to date state specific information to help you find the answers to your questions and make sure your vote is counted because of vote counted is a voice heard for official information from election authorities visit facebook, dot com slash voting, Info, center? US stocks sunk lower today as investors weighed a mix of quarterly earnings reports from big banks Goldman Sachs nearly doubled its profit from last year while Bank of America's declined sixteen percent wells Fargo's profit fell by more than half still the five big banks that have reported so far all turned a profit in the latest quarter but how does that square with what we're seeing in the broader economy joining me now is our finance reporter Liz Hoffman Hi Liz. Thanks for joining me. Glad to be here. So Liz big banks have been reporting their third quarter earnings this week today we heard from Goldman Sachs which has been doing. Fairly well amid the crisis, can you tell us about how they've whether this as compared to other banks? So Goldman is having probably the best pandemic of anybody on wall. Street in part that's just a reflection of the businesses that they're in. They're much bigger in trading and things like helping companies do deals and raise money. There are much smaller player in things like consumer lending and credit cards and commercial real estate that are having a lot of problems right now. I'm so just sort of by nature of what they do. They're doing much better than the big commercial banks, but pretty much every big bank is doing remarkably well. Overall what can you tell us about the health of these banks during the pandemic their surprisingly healthy I'm surprised as anyone if you'd asked me six months ago I would have thought we would have seen a lot more pain in the financial sector. You know the quarterly profits were up your every year at at bank so far flat to down slightly at a few. But the thing to remember is that these are still profitable. You go back to the last time that the economy was in this bad shape, it was two. Thousand Eight, two, thousand, nine, and these banks were bleeding money I mean they had not only no prophets they had huge multibillion dollar losses and the five big banks that have reported third-quarter earnings so far that shaping Morgan Bank of America. Citigroup Wells Fargo and Goldman Sachs and we'll hear from Morgan Stanley tomorrow they twenty, three, billion dollars in profits so you can talk a little bit early yes it's up or it's down a little bit over last year but these banks are still printing money which raises a really interesting question about. How do you square that disconnect with the rest of the economy which is in pretty bad shape. Right, it does seem we are seeing a bit of a split between investment banking commercial banking. What does that tell us more broadly about the US economy and the path ahead? A lot of change in the financial sector since the last crisis mostly in good ways, which is that banks can't be as risky. They can't do certain things they used to do like make big bets with their own money. They can't borrow as much as they used to. They have to be a lot safer and so regulators pushed through those changes with. An eye towards the next crisis hoping that banks would be sturdier and better able to whether it, which they certainly have been. The other big thing that happened though was that he remember all those like subprime mortgages and subprime loans that got banks in a lot of trouble back in the two thousands they basically don't do those anymore. You know banks that. Deal with consumers have gravitated towards more affluent consumers with better credit scores the ones that lent companies and investment managers have done the same and so you've seen the sort of this shift towards safer clients which might also explain why they are doing better when a lot of the sort of middle and lower class you know in the economy is having a Lot of trouble right now so that you know there's a little bit of a lot of different things in there, but you know in part they are they are just healthier than they used to be, but they're also serving clients at the done better through all this. There's been this real economic divide in the pandemic between middle and upper class mostly white collar. Workers who haven't been laid off are spending less because they're going out more on are actually wealthier than they used to be versus the middle and lower class people who've been laid off in huge numbers and don't have that that savings cushion to see them through. So part of it is that banks have just gravitated towards that former wealthier group of people. Over the last ten years and so when the when the ladder falls into all kinds of financial distress, you don't see it perhaps come through quite clearly in banks financial results right now, we have historically low interest rates. How is that impacting big banks and might that be something we see passed onto consumers at some point? So we're now at a period. The Fed has said interest rates are at or near zero and they're going to stay there for a couple of years, which is the Fed trying to stimulate the economy it. Lawrence rates are generally very bad for banks. They make their money by borrowing at certain interest rate and lending to you at a slightly rate. So when all those rates get collapsed. That little profit margin get squeezed banks. They can make up some of it by passing it on to the consumer. So you're likely to see fee interest rate that you get paid at your savings account come down. You'll see perhaps your mortgage rate come down to, but probably not as much. So some of that is going to get passed on to the consumer. I should say on banks trading, Gus? Low rates are not great but rates that are moving are. So when rates moved down or up, there's a short period there where you can make a ton of money and we've seen that over the last six months or so in banks securities, trading operations have done very well trading products that are tied to movements in interest rates. So badly is among the big. Banks. We've heard from what are they projecting for the remainder of this year? What big bank executives are saying is of what we're all thinking, which is really depends on Washington at the moment discussions for a new round of stimulus that almost everyone agrees is badly needed to shore up the economy have been held up in Congress were heading into a presidential election so. The note that most banks Llosa struck this week is we could be fine reason prevails and some kind of middle of the road economic stimulus package gets past. If not, we're probably under reserved and we're probably going to have to to write down more loans. So you know as always these things like hinge on the prevailing whims of Washington, but it's likely to be another pretty good year for big banks which you know if you dial back the clock to March I, think would surprise a lot of People Wall Street Journal Finance reporter Liz Hoffman Liz, thank you so much for joining me. Thanks emery. And finally, dining ALFRESCO has taken off during the pandemic especially in places with indoor dining restrictions. But now the weather is getting colder that seems to be sparking a new B. Y. O. B. Trend Bring your own blanket lane floor, Shaima digital staff writer for the WSJ magazine says big shawls or thin blankets have become a goto fall accessory and some New York City restaurants or embracing it. Some are offering blankets themselves where they provide them for diners to borrow, and then they, of course. Washed them in between every where and use, and the other is that it's kind of a cool merch opportunity for restaurants. One of the restaurants I interviewed and the piece, the four horsemen in Brooklyn. Her logo is for a little men riding on a horse, and so they're offering a twenty five dollar fleece blanket with that lower embroidered but the men and the horse are all wearing masks. So it's kind of fun you know as much as it can be a fun symbol of the Times. And that's what's news for this Wednesday afternoon. We'll be back tomorrow morning if you like our show please rate and review US wherever you get your podcasts. I'm an for totally for the Wall Street Journal.
Eyes On Wendy's, Domino's And Discount Brokers (Stocks To Watch)
"Welcome to health as Wall Street breakfast. Your daily source of market news and analysis subscribe to this podcast on Apple podcasts podcasts certified and stitcher welcome to seeking stocks to watch whilst you breakfast weekend edition any hosts its investor day event on October eleventh in Dublin Ohio the company says it plans to provide an overview of its long term strategic vision including additional D sales regarding its plans to launch breakfast across the US system in twenty twenty an update on US business operations digital experience initiatives in international active third party delivery services will Wendy's show us the non-beef in notable earnings report this week Domino's pizza reports on October Eighth Mahdia an astronaut Scott. Kelly are two of the keynote speakers the attention of the restaurant industry will be on Wendy's company when the in Powell due to talk at a fed listens event in Kansas City and FOMC meeting minutes set to blast out on the economic front release any of the world's leading security experts frontline heroes government leaders and executives from various industries to address the challenges of today's Threat Landscape Co Kevin to sell shares on the Saudi Stock Exchange later this year fireeye hosts a Cyber Defense Summit on October ninth and tenth bringing together the business are also anticipated when he's is likely Dacia additional long-term guidance and weigh in on the alternative protein phenomenon during the last earnings call therapeutics and sit Suma Pharma on October seventh and eighth there could be some news of the Saudi Aramco IPO after the kingdom fully restored oil production the company aims thirty one percent year to date heading into the event Intel is slated to launch its cascade lake ex family high end desktop processors two thousand the new Intel processors are likely to be available in November it's a big week ahead for the airline sector with traffic reports do at Sir do out on consumer prices consumer credit and consumer sentiment meanwhile Wendy's and Domino's headline corporate calendar what will domino's say about the it's well as Julia on October night analysts are due to start buzzing on smile direct club ten x genomics cloud fair our is financial spring works along with Levi Strauss in on October tenth Delta Airlines reports in October eleventh facile in Lindsay Report on the IPO front bio N TEK is expected to price its IPO on October ninth in a bid Theresa Andhra million dollars while HP on October seventh early reports suggest the pricing of the tenth generation core x series is much lower than the previous generation in comparable with advanced micro devices thread ripper Santeuil and Vir biotechnology are due to hit the market on October Tenth IPO Sheryl walk-ups arrive for pager duty and toughen software on October eight Wendy CEO Todd Pentagon said the chain is taking a hard look at options in the plant based meat space but wants to do it in the Wendy's way shares are up storylines going into twenty twenty the high level metrics including accelerating supply growth slowing GDP and cost per available seat mile pressure from new labour contracts the deputy level meeting on Monday and Tuesday and minister-level officials gathering on Thursday and Friday the Federal Reserve is in the spotlight on October nine with chairman in for renewable we begin with the breakdown of the week ahead from seeking office news team the week ahead will feature plan meetings of US and Chinese trade negotiators aren't particularly bullish which is certainly contributing to long only interest in the group being at a low for this cycle observed stiffle analysts Joseph de Nardi on the sector Okay Delta poised to lead off the Q. Three earning season sentiment on airlines is cautious it best heading into next year quote while there is no shortage of incredibly interesting typically the airline sector does well in Q.. Four but consensus estimates on US carriers in Latin America carriers like American Airlines Group Zoo are seen as being at risk for downward revisions the Federal Reserve is scheduled to vote on October tenth on measures that will complete some of the most significant change United Airlines Spirit Airlines golden as Copa Holdings Delta Villares Southwest Airlines Hawaiian Holdings Alaska Air Jet Blue Eighth. This year's group of ECLECTIC speakers includes Whitney Tilson Joe Lippman Mark Code Mark Spiegel Jim Grant Neuro Rubini George Gilder Charlie others are also expected to dole out recommendations last year glue mobile jumped over ten percent after mentioned at the conference the Charter Bank rules since President Trump took office the rules will ease liquidity and capital rules for large US banks alter the way decides which wires banks will be subject to the the toughest regulations large banks like Bank of America Citigroup Wells Fargo JP Morgan Goldman Sachs and Morgan Stanley could be freed up from some of the restrictions put in place Shrem Chris Iran's notice quoth the Raven on twitter and seeking Alpha an comedian Dennis Miller Tilson has promised to release his top four stock picks the third annual genetic medicines conference is called the largest sell side conference focused exclusively on advancing the field of genetic medicines major themes genetic medicines will be discussed through addicts Andy Serna Pharmaceuticals overstock dot com says it will celebrate its twentieth anniversary with the biggest retail event in company history on October since the government bailouts in failures of two thousand eight and two thousand nine Hundred Nineteen Stanbury conference runs in Las Vegas from October seven to eight repudiates solid biosciences reprimand racket pharmaceuticals Celsius John krystal biotech translate bio region next bio procure therapy aside chats individual company presentations one on one partner meetings in panel discussions companies due to appear include sinn logic afro bio are tourists stock split in a move that is usually well received by the market the Oregon lottery is set to watch a sports betting APP called scoreboard on October seventh or Potentially Warner Brothers filmed the joker will be in the spotlight this weekend during its debut at over four point three thousand locations the film is tapped to break the all time October opening record proctor and gamble holds its annual meeting on October eighth amid the woman question of if the company will split its shares a fifty percent chance that PNG fires off the condition the rapid fire cuts by Charles Schwab e trade financial interactive brokers group and TD ameritrade holding two zero commissions is sized up in detail it's betting is totally breaking into the Pacific northwest the first sportsbook just opened at the Chinook Winds Casino resort in Lincoln City Oregon closed on Friday at ten point three seven dollars per share I a fifty two week trading range of eight dollars nine six cents to twenty nine dollars seventy five cents a share earlier the water is looking to secure payment deals with visa mastercard and other banking partners before the launch scoreboard is expected to go live next week six the customer day event will run for thirty six hours in feature more than one point three million products on sale from all over stock categories over soccer Schwab is forecast to emerge stronger than rivals that don't have diverse business lines to prop up revenue just ahead of the earning season blitz five high-drama names that ten a fair shake in the publication this week ahead of a new rule that requires ships use cleaner fuel or be outfitted with new exhaust systems to buy new international rules of eighty million dollars by venom even with some controversy over the films USA violence a strong weekend will be positive for AMC entertainment cinemark Marcus Corporation with the US box office down five point seven percent year to date this week embarrassed mentions the stocks and themes drawing attention embarrassed store crude and refined products shipping companies like frontline and Scorpio tankers that install scrubbers earlier also seen as being positioned well in the short term tk Tang cours Golden Ocean Group starbuck carriers indeed she holdings are also mentioned positively we end this week stocks to watch with our single stock focus companies are seen benefitting by the new regulations including refiners like the Leiro energy in marathon petroleum the process low-sulphur fuel companies that transported to move around reporting time are identified net flicks Mattel Hasbro gap in eighteen team the short list finally shipping gets drew change the company announced a new co Charles Sheriff formerly CEO of being wide Mallon and visa before that the stock jumped over fifty dollars a share ISIC points out that the banks efficiency ratio has been unusually high meaning their costs are up which is due to the legal and compliance costs it has had to pay for its various problems it is by looking at Bien y Mellon stock since the announcement down over eight percent in the following week there's more to this story than a management change though acid base this also means they can save on performance bonuses in other related costs the other main driver to the story is wells Fargo strong balance sheet week we discussed Wells Fargo in in physics case for buying the company before the scandal discount disappears the stock symbol is w AFC and the stock closed Friday at forty nine ars in twenty one cents a share with a dividend yield of four point one five percent a recent years have been tough on wells Fargo bessette points too obvious but one last note for your weekend our newest podcast channel the investing edge debuted last Thursday feature shows from our top authors kicking off with James Myers value investors come back down to more or less where it was before the announcement the boards fulfillment of a promise to bring in outsider marks a turning point as it rights and one can see what sheriff's reputation office quant rating is very bullish on Wells Fargo are authors rating is Bush with eleven bullish or very bullish authors to to neutral and to bearish or very bearish authors here by back that would improve returns excess capital winds down and provide a shareholder return underlying all this is the bad reputation the wells Fargo is occurs President Robert Bug be about those oil regulations mentioned earlier in the podcast have a great week I includes today's Wall Street preface thank you for listening earnings power is those legal costs are cut in the share buyback potential there could be twenty five to thirty percent total return upside over the next year or two overall seeking GASCO GOLDMAN SACHS HSBC of link to international scandals in td was hit for aggressive marketing BESIC's argument is that with the new CEO increased the sell side rating on average a hold perhaps pointing to the upside as they changed their minds that concludes this week stocks to watch thank you for listening hat since it scandals argues this isn't fair given the company Wells Fargo Keeps J. P. Morgan had problems with the London whale and is involved with the we work the best investment analysis and news on the web seeking out the DOT COM subscribe to this podcast on apple podcast Google podcasts spotify stitcher you can sign up live in Akron racers the razor's edge you can sign up for the podcast wherever you get podcast and you can listen to the first value investors July episode which is an interview with Scorpio over the years as those phaseout serious savings should accrue to the company and thus shareholders also points out that while many are worried the company isn't allowed to expand its our news teams weekend preview of many of the key events that could impact stocks set you up for the week ahead in the
Trillion dollar companies and tax season; how the Black List shapes Hollywoods big business and is podcasting coming for radio dollars?
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This is pivot from the VOX media podcast network. I'm Cara Swisher with a really bad cold and I'm Scott Gallery with some news. It'll tear up care. The New York Times is decided to endorse me Angela. Angela Lansbury for General Consulate of Australia. Oh my God we'll get to that that is I'm sorry indoors. Right what are they does. He had only one testicle each or one. I don't know what the Oakland literally they're endorsing. I don't know what to say. I think were surprised you work there. I was surprised and I I would say we're going to talk a lot about lady issues this week because I would never do that to a man. I'm sorry like two women. Oh these are good ladies. It's just it takes just throw throw in Hillary Clinton it's just like one just pick one. Well they I think they're like the entire electorate they're like well. We like Elizabeth Warren. But she can't win. And then Amy Amy Klobuchar ours kind of okay. And she's the realist versus the radical. It anyway anymore. Do you like them doing it. Through the video thing do a lot of people thought it was like a reality show it felt like a trump show but when he kinda liked it I thought that part of it was innovative and I love how they the I thought the graphics. It's online the New York. Times are fantastic. And they went into the pluses and minuses from their viewpoint. I thought there was a lot actually courage the article. I think they came out and said if I don't if you read burnish right up. He's seventy nine years old and he just had a heart attack and that's dangerous and we need new blood. I thought that was surprisingly honest and Politically incorrect for the did they say behind the size. Why not? That's what they say. I think if it had been an all male race they would have picked one candidate. What it does what? It is an interesting argument. Fours plurality voting or ranked voting which I think is going to get a lot of steam but yeah it did it did. I don't know it just seemed very far Wouldn't pick two candidates right. It's only the politically now. Well they'll just pick one donald trump and then donald trump yes. It was very odd but speaking of lady. I'M GONNA to get your Sheryl Sandberg Grant in a minute but I just WanNa say people loved our fight last week on privacy. I think we're GONNA have another one ever Sheryl Sandberg but people were on my side for the most part by the way. FYI But they were. They were very pleased with you for going out on an idiotic. I think that's that's how your four those limbs I know. Oh you had a lot this week. But I'm saying they liked it. What do you think I liked our debate i? I was surprised that people reacted in such a way that enjoyed the the they thought it was a very civil back and forth on on an important issue and that we were respectful to each other. We were respectful. Carry you ignorance slot. But anyways there's there's like I think it's important born to argue to learn not necessarily to argue right and I think our society has lost a lot of that and I think that if we have respectful data driven thoughtful thoughtful debate will craft more thoughtful solutions or at least. That's what the framers initially thought. We've lost a lot of that. Yeah I would agree. Are we going to talk about our debate do. Is this part too. Is that what we're we're doing. You know we can talk. This is no. I'm just saying I just noticed the New York Times giant piece about clearview and facial recognition. Some asshole decided to do this. Like I'm just saying if there's no laws awesome plays. This is how it's GonNa go. They're going to these. Little companies are going to pop up. And then there's GonNa use someone with no ethics that guy who ran that company with the visual recognition and selling it. Someone's going to do it. It's like the cloning guy I think I'll just do it and so we need. We need the government in here to talk about this. I'm sorry I think this is an this is an important part of our society. And if it's just you know all hell broke breaks loose. All Hell's going to break. I agree with you but that's that's different. There's some nuance. There's a difference between technologies and runamuck inviolate people's privacy and the need for regulation and laws to prevent people from doing that so that you can put on a pair of ray ban glasses and then see see everything about somebody including their phone number and decide to abuse that information or stock. People are whatever you could see where technology goes a lot about places but we were arguing about was whether Apple's should create a doomsday failsafe. Box that no matter. How dangerous at information to to national security or safety that? There's a right for people to have a place a safe box. If you will kind of the ultimate safety deposit box that no one can ever get into regardless of the threat. I feel like those are two different issues. I don't know I think these guys are selling to the government. That's who they're selling to anyway. New shall keep going we. If there's another we need laws we need long debate like we had about it so and the people can really decide and then let our elected officials decide once we give them instructions or put people in place anyway so very important to have my mom because I do learn a lot from the feedback I get and I would say. The feedback was sort of like two thirds negative one third positive to my position. What I found is that people have a knee jerk reaction in their a triggered and they do what Daniel Conham call slow thinking and that is? They immediately make assumptions about their viewpoint. Because they're unable to separate the ideology from the person in this instance because attorney attorney general bar and president trump had proposed or highlighted a need for a back door into into the IPHONE. A lot of people were very upset about it and assumed it was the wrong thing to do. What I found is that People don't realize they don't WanNA recognize. There's a lot of discussion that the UK government government the Australian government. The union government have all asked for a back door and the Department of Justice under the Obama Administration asked for the same thing they did more elegantly. Yeah and they've all asked for for Kinda the same thing. Of course they want it if I was a spy wanted to. Obviously it's it's the thing that makes government life easier in terms of these things. But eventually these people go to these encrypted other apps it just goes on and on in terms of chasing these people and if you give a back door to apple they go to another app they go to another APP. Whatever when they're using and it just it never ends and it makes everybody more vulnerable so anyway it goes on? We're going to move on because Google joined Apple Amazon and Microsoft to become the fourth trillion dollar company in the world they're creating enormous value for shareholders. This is as you've been talking about you own stocks stocks. We've talked to lots of people about this idea of where they go in the future and how they get bigger than ever. But it's taxis in Amazon didn't pay any federal taxes speaking of which trillion trillion dollar company on eleven point two billion dollars in profits. I am allowing you to rant right now about this issue. You like the idea that these are trillion dollar companies shareholder you know taxes same thing with JP Morgan Bank of America Citigroup Wells Fargo Goldman Sachs and Morgan Stanley. Posted earnings this week showing they saved eighteen billion dollars in in two thousand nineteen more than the prior year and thanks to trump's tax. Overhaul so I mean. This is like great for shareholder not so great for citizenry. Yes so the like every other government policy. It is effectively an elegant transfer from the lower middle classes to the wealthy or from small and medium-sized businesses says to large businesses. And along the way we are incrementally gutting the greatest force in mankind. And that's the American middle class combined with capitalism and democracy I see in a in a free nation in slowly eroding that in our tax policy. Mrs Moore more evidence. This would big tech is doing to avoid taxes taxes. Is there really the ultimate kind of gangster move here around. Tax Avoidance is international arbitrage so effectively apple can license their Ip to who international group in Ireland and then they tax other high tax domains a licensing fee to use the apple brand thereby suppressing prophets in high attacks remains and depressing prophets increasing profits and low tax domains thereby decreasing their total tax burden. And and the general argument around the tax cuts for from trump trump. Were that it would unleash all this. Corporate investment going from thirty five to twenty one and there was some validity around the notion that we had to stay competitive there was a lot of these reverse mergers taking corporate headquarters outside of the US but effectively. What's happened is big corporations or multinationals now enable to use this international arbitrage and their affect effective tax rate is around eleven or twelve percent? And that's the kind of the effective tax rate for big tech. And what you have now is if you look through history you have corporations are now. They're total tax. Burden has been reduced by third. We thought that was going to result in cap ex didn't resulted in share buybacks which by the way benefits could shareholders eighty percent of shares are owned by guests in the top ten percent and small at. That would be you right. I'm the eleventh percent. I just missed it. So and then you have of small and medium-sized businesses. That get the majority of the revenues. Domestically don't have access to this incredible tool of tax avoidance and they're big multinational companies so like everything else else everything else. It's a transfer of wealth from people who don't have the backbone to think long term and that is our elected officials and we have to take some some some blame for not electing the right ones but if you look at lower and middle income taxes they haven't gone up they've stayed the same. Corporate taxes have gone Wayne Down as taxes on the top one percent percent who are now paying a lower tax rate than everybody else and effectively. The real resulted in what turns us from economic policy to a moral issue. Is that our GDP or our taxes. they're not historic. We're going to do one trillion dollar deficits I should say are devils aren't historic. We're going to be one trillion dollar deficit this here. It was bigger in two thousand eleven because we were trying to get out of a recession as a percentage of GDP they they are now five or six percent again. That's not historic in nineteen forty-three to pay for D Day Iwo Jima. They were at twenty four percent of GDP. What has he? I thought those were good things. What is historic about these tax tax rates is that if you look at the ratio of debt to GDP that number and then you look at unemployment? They have literally tracked each other almost almost perfectly and that is when unemployment ten percent means economy's bad it means we need to amuse. We need more social services and that that deficit to GDP goes up up to five six eight percent and then when unemployment goes love when unemployment goes to three percent typically that that deficit to GDP plummets to one on sometimes zero and during the Clinton years even positive what is historic about our approach. The deficit right now. Is that for the first time in history. We have a deficit sued. GDP of five percent in a in an era of record so basically have decided you know. The deficit is no longer IB PROFE- it's longer anti-inflammatory. It's cocaine to keep this party going. which is what's immoral about? This is that I love this notion of this contract and wrap up and I'm blathering odd but the money is effectively the transfer of working time. If I give you money or if you give me money rewarding someone time with loved ones your awarding them the inability ability not to have to work as much and when we have these kind of record deficits that are now the interest on these deficits in this exceptionally low interest rate environment is now greater than what we spent on national defense if these interest rates double what we're effectively looking at as we as a nation have decided collectively that we are going to borrow or take take time with loved ones from our kids and our grandkids such that we can have more so this has become a moral issue. We are trading in our kids and our grandkids and we're giving it to corporations that can take advantage of this multinational arbitrage anyways. That's my ran. I think this has become a moral issue. That's a good ramp. That's full of math. Then everything else. This is not good. This is what basically would Scott Gallery is saying. This is not good. mathematically speaking Obviously we're not Davos which is happening right now. The president is going. There is the World Economic Forum. We we have both been there. I find it a place where rich people like each other up and down and so I tend not to want to attend but Donald Trump. Is There Greta. Thunberg is is there Uber boss. Derek closer shot. He's there mark. Benny off told me he was going. It's trump will give a speech on Tuesday of the day. His impeachment hearing starts so climate change has been one one of the discussions happening in this weather having Grad there but the the these these gatherings seem so like ridiculous at this point and maybe it's just me who who just has gone to these things in sort of seen sort of the wheels turning in a way that I don't like that it's so clear exactly what you're talking about. which is that everybody else is paying paying the price for rich people? It just goes back to talk about climate change climate change income inequality decaying infrastructure. We're going to need well-funded governments and the idea idea that we've decided governments don't need to be funded is unusual. I in general. I think you're wrong about rich people licking each other. Generally I find rich people pay less rich people to lick them. But so that's our one point one point one departure here. It's I like I generally think `Davis deserves to deserves the criticism Minna cynicism but I generally find that these gatherings are a good thing and my experience at Davos. Is that because people get together. And that's Chris any empathy. He's like like no other people down them. I ended up hanging out with some guys from the golf. And I've always say I. I think I like a lot of people have a tendency to stereotype people and I got. I've I've stayed kind of lose contact with and I think I understand understand them a little bit better but I think people getting together from different. They're just likely likely to declare war on each other where we get together on a regular basis. I suppose it's just like so much money like Washington these parties those ridiculous. I'll have to say I agree with you. I was just spent obsessively reading about Muhammad. The New York Times had a big Ziad in at the United Arab Emirates. He's running the richest guy in the world. I think he's one point three trillion dollars dollars and well that is at his disposal. It's almost more than Putin. Yeah exactly and he's been you know super close to the trump people it was there've been several really fascinating stories about on him and his decision. That autocracy is better than Islamicism and it was it was. It's been really interesting. I think he's there and I just I do agree with you. It's good that these people all go there. I just don't think everybody gets access. And when you're talking about this issue of every the rich getting getting theirs and they have these meetings and it's just his part part of that elitism and there was a real pushback to does a couple of years ago. If you remember the protests I was there one of the years there was a lot of protests That's sort of died down. It's sort of die down and while they talk about climate change the idea of doing it something about it seems farfetched at this point just even if they have Greta Thunberg there. I don't know how she got there on a bicycle. Or whoever she she gets there but but it's it's really I find it. I agree it's it's just I just feel so uncomfortable in those salons and those parties of which if anyone has been there the parties are insane and the wine is insane and the food is insanely expensive beautiful and everything else. I just there's something that's not the way I want my a representatives to behave that's just yards. It's A. It's an unusual gathering. I think on the whole I think what Professor Schwab is built actually think is productive productive for the world. I think it's I think. The world is a net net gainer from Davos but I think the scrutiny they get in when they show up and talk about it when the Chopin talk about about climate change and the board there Gulfstream's it's you know it's important that the media highlight the inconsistency there I don't but in general I think it's good that people get in a room with other world leaders and say hey we're we're having problems with the board. Or what do I just think it's good when people get together. I guess I guess I think to fix his inside just the way they don't hey taxes I'm starting to turn into Elizabeth Warren radical according to the New York Times are so radicalized by the tube right exactly but but It's just I. I think there's a lot of people have a low hearing. Whatever Elizabeth Warren or Bernie Sanders is saying has a lot of resonance for a lot of people Much more so than you realize. Anyway we have to take a quick break. We'll be right back with a friend of pivot. 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I didn't interview with Franklin Franklin Leonard on Rico Decode. He is the film executive and a founder of the blacklist. The blacklist is a yearly survey of the most like screenplays that were not greenland lots of which were not big blockbuster action films but more unconventional characters like Juno spotlight and slumdog millionaire because of the blacklist people notice them and a lot of them go on onto produced and last week the Oscars after basically Basically not paying attention to this in any way nominate a bunch of white man again not to say white men are talented but you know there are a lot of stories that aren't about four one race car drivers he wrote an OP. Ed in the Washington Post and how that did not need to be the case so we asked him whether he thanks. The streaming wars will have an effect and he'll be represented in movies and television in the future. Let's go to the tape. I think the increased competition for talent and the business will require people to look further afield in the traditional places. They've looked and the sort of insane size of their slates means that those people will be left alone to make things they see fit which I personally believe will make it more likely with the stuff will be high quality. Not only that. It's good business if you're trying to make money by making content you'd be a fool to not be focused on a strategy that includes a full embrace of the country's diversity. These companies need to hire women and people of Color both as talent writers directors producers et Cetera but also in the boardroom and separate from hiring them they need to give them the resources sources in order to realize their vision and empower them to do so with real autonomy because they know better their audience than likely the people that are hiring them. All Right Scott. What do do you think about this? I mean Oscarssowhite is back as you know. And then it was coupled by the grammy's controversy they had hired a woman to shake up. Everything Debra do good and then and fired or over what sounds like trumped up charges because of the sort of old boys network at the grammys. What do you think what do you think about this issue and what Franklin is saying well? I think it's hard. It's hard to argue with where I think it starts though is is Earlier again with education. And that is I'm a big believer in affirmative action which at the end of the day. Let's be honest discrimination cremation when you pick one kid because of the color of his skin over the color of her skin over other people but I think that education I think if you have more people people of color going to the greatest film school in the world and Ucla School of film and also the distant second is in thirds. Why you and USC that some broom pride coming through by the way Cara? Then you're going to have more people of color collecting gold statue so I think it's important that the greatest upward lubricant and and means of advancement for economic power to contribute to our society to make our economy more robust because companies perform better. We're better when there's more diversity a city that has economic power in the ability to tell these stories but I think where you start is not with now with these kind of what I'll call artificial means of different awards. Awards categories which. I just don't think work I think it's ensuring that people of color have the same access to opportunities include Grad school sex that they can get on stage. They are making the movies as look at Netflix and others have had. There's much more diversity now of movie making and there were plenty of choices in this year's Oscar. I mean J.. Lo was robbed. I'm sorry that if you saw Oh that performance and the fact that she was not even named Greta Gerwig took a couple of people. I think the I think these awards matter from Komo you know this is a worldwide television show. They are making these movies and they're not getting the recognition in comparison whenever there's a black movie or like Black Panther or a woman's movie like Little women which both did amazingly well at the box office. They're seen as an outlet. Oh look at this. I think it's I think it's a a mentality in Hollywood of this good old boys network that still exists. That does this voting even though they've been trying to get the the committee that all the people that vote for the Oscars to be more diverse and they've added lots of people overall into the into the mix and they've been trying to do that. That is one hundred percent right. They still remains in such areas like the director's Arabia or others. I mean the difference between nineteen seventeen at little women. I think is ridiculous like I. Which one did you see barn? I fallen onto the exact stereotype. And that is. I'm a white dude and I was dying to see nineteen seventeen. I went and saw this weekend and I absolutely salute would've voted for that for best picture over everything it I thought it was incredibly because who am I. I'm an old white guy that comes home and watch documentaries on Hitler I mean that's how I relax ax and you're right unless out. Everybody watches documentaries on Hiller but go ahead a year. Hi I'm exhibit one of what you're talking about and that is unless you have more people not like me who can appreciate different types of movies. We're GONNA continue to nine. Hundred Seventeen is going to continue to win and I think it deserves to and I think Kamei's film but I'm sure a little women is an amazing film too so I I agree. Listen what do you do. Then what do you do. How do you think the tech under seek benefit like we did talk in the the interview about You know the googles the Amazons and the Netflix is moving in here creating more of a diversity although I was like You know for ankle he might want to look at the top wrestle. Echelons of these companies which is very similar to Hollywood? But it's the idea of appealing to lots of audiences they also interviewed. Numa Perrier who just just did a great movie on Cam. Sex in the nineteen nineties. She was She was a scam. Girl did online sex online. It was a great fascinating. Thanks to her. And she's backed by David Veronese array of films but they're getting noticed and getting funding from some of these other outlying areas. But you would think with more. And more producers users in the mix like or or content people pay for content. Like Amazon or Netflix. There would be more of a push For these kind of movies together a hat and you just you just. It's it's sort of like tech and and and the management it just never changes. It is changing. I think glasses half full hair and even just the notion I mean. There's two things you can do and one is what you're doing and that is money. Speaks louder than anything here. And if if if great movies tell stories about and by women and people of Color make more money at the box office more of them are going to get produced the studios. CNN incentive pimping them for awards because that increases their box office. Take Take Post them getting awards again the gentleman that just died the director that did boys new heard a fantastic film. James Singleton without US name. Yeah I think he. He was the first black director ever nominated for an Oscar. He went to USC film school. We need more people of Color in film school because it starts an upward cycle. So there's been one I think like one or two women as directors and the one that one of course did a dude movie like essential to enter. I don't know I just the same. It's the same kind of their choice. Solution I'm not sure I I don't know I just I honestly don't know the same thing with with tech I really i. It just continues. Eighteen us to be the same way. And the you know the amazing grip on power that white men have over certain industries is really quite. You know they're not letting interesting. What one woman who one zero dark thirty yes? Great Movie SEE THERE I go. Why are you talking about the? Yeah the killing of Bin Laden I can tell you is Jennifer. Lopez was a revelation in Hustler. She was amazing and the fact that she just drove me nuts. All of them Gregory. Have you seen little women. Probably I have not. Why because it's called God you like being like movies about war and I mean war war? Here's what I want you to do. I Want Scott Gallery to go see and then I want you to come all right. I want to talk. I want you to go drag your ask. Take your sons to it go all. I couldn't get my sons to goes really irritated. Kids are nine and twelve. They're gonNA join little women yes of course yes very conscious go see it and then and I wanNA know sure I love it and and then you yourself can go see hustlers about strippers. You'll like it a lot in any case. I'm very pissed. Now we're going to win fails and my fail going to have your your thing. We're going to talk about your your continued rats speaking. This is all about sexism this week. I'm on a thing you rant on. Sheryl Sandberg Explore. We're going to play some of it. Let's go to the tape and then we're going to have it out. We have a woman running around the world making billions of dollars selling other women to lean in. Despite the fact her gross negligence led a platform Orbi weaponized. So we can elect an illegitimate president who is putting people on the Supreme Court who are slowly but surely eroding a women's rights. Sheryl Sandberg is the worst thing that happened to women in the last fifty years. Here's Scott as I have said. Many Times Zuckerberg avoids responsibility. We'll Sandberg takes the fall. I'm sorry I just don't see I get why you want to focus on her but he really is where the buck stops and in so many ways within the shareholders within the power within everything that went wrong in that company is his company the amount of air she gets compared to him seems smaller. Except by me Cara Swisher anyway. Explain to me your thinking on a big. You're right and I think that's that's a little unfair I have publicly on. CNBC CNN and I've taped produces said that I think mark Zuckerberg is the most this dangerous person in the world. I've called him a sociopath. I think you're right. I think the buck begins with him. I think he should be. I think he should be fired. I think he is a ninety five percent stock decline away from having an orange jumpsuit. So I think you're right. I think the buck stops with him. I think is ultimately responsible. But that doesn't stop me from also highlighting the inconsistency of someone who uses an important discussion around gender at work to service fabric softener for him. And her I don't I think there's room for both but I agree with you. Want to happen. What not want to happen there in that? I want the board to feel pressure to fire both in bringing people who are going to show some regard for Teen Depression are Commonwealth in our elections. Is I want there to be so much pressure on these two individuals who have done more damage while making more money than any individuals in the history of business. I want the board to to hold hands and say we've gotTA WE'VE GOTTA make a change here and you're right. I think the first change has to be. There's well except that's not gonNA happen. How you keep sagged the board someone on the board is GonNa get a dose of bravery? It is not going to happen. It is not the shares going great he could be the next trillion dollar company. By the way. It's the one is probably what we probably w well probably will be probably the back of instagram commerce. There's nothing like there's no reason to get rid of a CEO in this spot. They're going to get rid of get rid of of a content Dusan's who to thirty or whatever it is start holding people liable and then start well. Joe Biden mentioned that that was a winner of fail. I don't think he knows what it is is but he said in an interview with the New York Times to thirty should be wrote because face was not merely an internet company is propagating false as they know to be false No one has ever. No one has said publicly. Believe section. two-thirds should be revoked. Why do you think Biden has decided to differentiate himself? I think he doesn't know what he's talking about does me. I don't think so either but I'm disappointed. Appointed and I think they've missed an opportunity. I think a lot of income inequality tax avoidance Some of the the clip you paid I was was actually at the The DC end digital content. I forget what they are but basically the online publishers association conference. And if if you look at I mean just what's happened over the last ten years or twenty years there's been just so many negative externalities that have come from big tack whether it's a number of journalists been cut in half and a number of corporate PR executives tripling thereby increasing the ratio of bullshit spin to two people. You know the largest police force in the world that's never carried aide. Badges are guns and it's you know it's not because of big tech but big tech kind of embodies it where they now have they now have Corp.. Pr Departments that are that are larger in numbers in the newsroom. At The New York Times so there needs to be. I think there needs to be a thoughtful conversation. Around as we've talked about removing The content content you know. CD A I thought. I was a huge opportunity that was missed opportunity for candidates in the only one who shown the backbone start talking about it openly and honestly has been Senator Warren. I think I think that the worm has turned. I think the public is very concerned about these people. And it's not only the right thing to talk about but I think it's an opportunity for candidate who shows up and actually sounds CBS literate on these on these talks tech thing hasn't stuck with candidates because like look Kamala Harris was talking about twitter. Warren's tech thing has not gone anywhere I I think people are more concerned about other issues besides beating right. I think that's their sale. Right out of this and that to me is fail. But I think they're gonNA sail right out of this and once whoever's whoever's in power I don't think trump will do anything he's gaining from it. He benefits from the entire ecosystem. The way it is and then the Democrats get in place. They WANNA do it too to. They want to have that. They want to have the ability to manipulate the American public and agree. Gis Wasilla use these tools. I don't know I don't feel confident of anybody so I think find them. Aw failures all of them even though so The the the win I would say I'm GONNA do one. Win Is Bill Simmons. He's a podcast. You're and someone I know pretty well. And he is in talks to be bought by spotify. I think that's good for cares. Wisher and Scott Galloway you think yes they do. We'll talk more later occur. That's a tete but this is interesting. It's an interesting thing that spotify China They bought Gimblett. Obviously but this is what casting looks like. It has legs. I feel good the backfield. That's a win. I feel it's a win. Well they're seventeen billion dollars. Just as the success of accompany oftentimes is more dependent upon how incompetent op and the incumbents are versus the actual college of the company. And that is you'd rather be a good company. Disrupting an industry with just terrible fat and happy players than a great company company trying to disrupt an industry. That's already fairly well run. And so when you have you've had so much value created by companies going after the media industry because media was opaque a rip-off didn't know how you're spending your money small businesses couldn't advertise on TV etc.. And then you have the podcast industry where they're going after the seventeen billion dollar carcass called radio and if you've ever listened to radio after listening to satellite TV just as when you listen to broadcast TV. It's almost unbearable because it is unbearable the amount of commercials and just how poorly produced they are basically the commercials just kind of educate you about what it means to be old and poor their personal injury attorneys attorneys. They're they're essentially health remedies and a lot of it feels borderline fraudulent my favorite new AD. It's run on everything from CNBC. All all over the radio is something called tidal. Lock where they talk about. Oh my God. I didn't realize my house could be stolen online by Ukrainian gangs gangs and they say unless you fast nine ninety nine a month to protect your title online you could have your house stolen from you and I believe that that is unfairly targeting targeting seniors who don't understand that it's very unlikely someone will steal your house online. Such they can get nine ninety nine a month. I don't think that should be allowed to run. And the only places. Iran are are on radio and on bad broadcast television anyways. A seventeen billion dollar carcass called radio advertising. The podcasts are coming for and I think it's a huge. It's a huge. It's I think the only ad-supported medium it's growing double digits right now and one of the reasons is people as evidenced by aren't delightful yet snarky read overs Adams people alike ad reads from hosts they. Yes that's where you get more money so you and I are in violent agreement on how just fucking awesome. We are down. We gotta make some trouble Scott. We gotta meet quietly off to the side and shovel you and I are. We are capital T. rubble annual but I was happy for bill awesome. I love him and I think the Norm Smith. He's great. He's great. I did a podcast with him. He's really good. He's Great Fella Anyway. That's my win. What is your win? And Sam. More white men getting awards. Peter Dink Lurch won best actor for an actor in a drama series. For Game Thrones Amo thrown back to that. So there's a there's a there's a wonderful his character really wonderful in that show and I. I spent a lot of time in Virtue Signal Now but coaching coaching young men and and a piece of advice. I give them a soda. Similar to what theory Atlanta's said and that is once once you own your shortcomings they can no longer be used against you. And I think it's important for young especially for young man to realize to try and turn your bugs into a feature and that is to look at the things you're most insecure about about your physical appearance about your shortcomings and to find ways to make light of them own them and it's really liberating and I didn't the whole Scott Galloway Jam home isn't it. You know it right here in Lancaster now I see things things now. I understand you so much. Better Sam is Tyrian land. Necessarily the character Arcos gangster. Darko on the handlebars advising people. That's how I would have not. That's how I would've survived back back then but anyways I I do think there's real value especially around young people as people mature they start. They start making fun of themselves and I it's very liberating owning it right. It's like that first class you took in college. We realize Oh my God. That's the thing I'm not strange. Other people suffer from this too so I like the notion I think the winners Peter didn't coach in this notion of owning your shortcomings as a means completely opposite version of that. which is I think? Women are always constantly looking at their shortcomings so I always celebrate how great I am and I talk about it a lot because I think women do not celebrate their non shortcomings the things that are great about themselves and they're they're trained to sort of say ono or something like that and so I tend to do the opposite Nar. That's that's that's that is something I really do like about you. You're you're not afraid to say I just fucking rocked the house. I think that's nice. That would be your loss. You'll like my loss. It's about a white guy. So David Brooks wrote an opinion piece guy and and there was actually a cover. There was a very interesting point in the opinion is talking about basically doesn't buy this notion Of says the class warfare is dangerous. And that if you he cited some interesting statistics here and then income inequality is more between companies than it is is within the company and that is what's driving equality is. Google is just making so much more than any other company but everybody up and down the ladder. Google is making a lot of money. I thought that was an interesting point. Pointing there's some good research from MIT that supports that where he lost the script was you said. He pointed that in the last few years as a percentage of their base Low income wage earners increased their wages faster than the top wage earners and that is just so misleading and so dangerous because effectively. The middle class hasn't had a wage increase increasing over thirty years. And because it's popped a little bit. There's a kernel of truth in there but real income and this is another piece of advice I give to young people. You never get wealthier financial security or it's very hard to do off of current income. You need to take current income and immediately start building equity wealth stocks bonds. 401k property immediately such that you can create passive income which is where you create unbelievable wealth and of course we've decided that the income from money is more noble than the income from sweat and it's taxed at a lower rate and that has resulted in the top two point one percent capturing eighty percent of the income gains over the last ten years so the notion that there isn't an attack on the the the the lower earners in our nation that there hasn't been this all out nuclear war on them. The last thirty years is just incredibly being intellectually dishonest. So my my losses is is David Brooks somehow trying to find Trying to trying to queer data to show that somehow there isn't the effectively class war taking place a war on on poor people. Yeah that's his thing. People like to hate read him. I'll tell you that that guy. He often he's often makes people angry. But I do like your of the people kind of the thing even while you want to go to Davos. It's kind of fascinating contrast for invite me back. I am so ready to go again. I've had with Klaus. He's like leisure the have you. Yes I'm here. You're someone strong stipple. If let me just tell you a lot of men who are less prominent than me intact but invited and he keep I i. I wouldn't go. I went several times as the wife of someone but it's it's just it's just A. I'm sorry I can't believe you like it in any way. All right Scott it's always a pleasure pleasure back in DC. When I talk to you next But I will talk later this week and remember if you have questions about a story. You're hearing in the news for us to answer emails. Alyssa pivot at. Vox Media Dot Com to feature on the show Scott we've come together again. People were during the end of divorce now read they are not folks. Mom and dad are together still taxes for play for the jungle read. Read the credits please. Don All right. Today's show was produced by Rebecca synonymous. Nice Erika Anderson is pivots Executive Producer. And thanks also to Rebecca Castro Andrew Burrows. Make sure you subscribe to the show on Apple podcasts. Or if you're an android user check us out on spotify or wherever you listen to podcasts. If you liked our show please recommend to a friend. Thanks for listening to pivot from Vox media. We'll be back next week for another breakdown of all things tech and business.
Off The Charts: Dollar Index, Columbia Sportswear CEO & eHealth CEO
"Today every answer matters more than ever before because whether it's about health deliveries or finance some things just can't wait. That's why IBM is helping businesses manage millions of calls, texts, and chats with Watson Assistant It's conversational I designed to help your customers find the answers they need faster no matter the industry. Let's put smart to work visit IBM DOT COM Slash Watson. Assistant to learn more. Simple to make you money. I'm here to level the playing field all investors. There's always more work at summer and I promised to help you find. Mad Money Starts Now Crater Balkan muddy. McRae. France I'm just trying to make money my job. It's not just to entertain educate teach you input this crazy market context. So call me at one, eight, hundred, seventy, three CBC or Tweet me Jim Cramer. The S. and P. Five hundred just hit a new all time high taking out the previous. February nineteenth and. Heard is because we're having a V shaped recovery wrong wrong wrong. Wrong But actually laughable. Bishop recovery, the Dow Jones, industrial average hitting new highs but this moose and led by the Nasdaq and S&P including. Down Jones, industrials lost system put even as the SNP advanced point three, three, percent Nasdaq it in his staggering point seven, three percent. Now, you don't need to be rocket scientist to figure this out just look at the stocks that have brought us to these levels. They're not the recovery place. In fact, they are the opposite they are stocks that tend to do well, because of what we call secular considerations, no not secular like non religious secular as in they are doing well because of trends in their own industries, not the economy far from it allow me explain we have had a different v-shaped recovery in the stock market. But the stock market it's not a great reflection of the broader economy anymore. If the actual Connie's precarious shade especially now, the government stimulus packages run out and congressman home for the summer rather than trying to come up with a replacement and don't even get me started on the destruction of more business that's about to happen. So I wanna put this whole notion of v-shape recovering on trial these that doesn't stand up to even most mild of. Scrutiny. I would just for the prosecution in this list of stocks that have done well as pay pal. Yes it's the best performer in the. SNP, since February Pete now we asked we interviewed CEO Dan Schulman. He made it clear the pay bells business on fire because nobody wants to touch cash when it could be paved in covert nobody wants to input their debit card. Reader for the same reason, we contactless payments and that's pay pal in a nutshell when you see that this stocks rally fifty, seven percent since the top February nineteenth to know that's terrible for the regular banks JP Morgan Bank of America Citigroup Wells, Fargo they'll be partisan paypal, but it's just bad for their business see financial tech place like paypal thrive when money matters are. Afraid to own the real financials with actual credit risk, they need some financial exposure though so they by Fintech irs, they don't want that credit risk if the economy's about to go down again, which is what they think. Second Witness Nvidia, the company renamed my thirteen year old rescue dog after by the way, Invidia has a card to be able to get into in video. It's green. Card. It's. It's It's his ID. It card swap it he. He would not and. He's dumb as hammers and unlike invidia the dog this company can hunt. The chip maker dominates all sorts of incredibly burgeoning Marxism she learning artificial intelligence edge computing gaming data center, and video. Today is what Intel was in the ninety s C. One is a modern day Leonardo Davinci. He's an architect, he's an inventor he's an engineer and he's a visionary not to mention these. Also the nicest keeping -secutive. I've met my fifteen years show no offense to mark Benny off a very close second plus Wong is a cool leather jacket that I could never pull off. And then he reports small and I have no idea they'll be able to justify this stocks fifty five percent cases. Topic is the Barstow so high, but the point is not the kind of stock Wall Street flocks to in a rapid economic recovery. It's anti-cyclical figures out how to take how to make things that don't even exist in most of our minds. Third witnesses apple up forty, three percent for the February top. You know what can I say here for years I've said you should own apple. Not Trade it and I stuck to the Party line. Even the pandemic gut rolling stock got hit with wave after wave of downgrades a slew of negative stories about how could be crushed by China knocked out by lockdown beaten by the worldwide recession. None of it mattered to me the company put up incredible numbers because iphones and IPADS and laptops are central in the stay at home economy. The rapidly growing service revenue stream didn't skip a beat and the company's products are love with ninety nine percent. What he say says, satisfaction the best there is apple's not a recovery playable. It's a secular world play that works in good times and bad. I have a thing I like to say about Apple I. Say. Don't trip fourth witnesses Kramer fave advance micro devices. AMD's just like invidia another terrific coming taking share from. Intel. Thanks to the leadership of the incredible CEO. Lisa's sue this one's all data centers after years of playing catch up. This was the quarter were decisively beat Intel these. They can now make sports shifts that until no wonder it's thirty percents is the. February once again, Andy's recovery place classic David, and Goliath Story. It's Biblical as semiconductors get more complicated you need better technology design them like the technology from cadence design systems. The fifth best performer thirty, six percent from the feebis highs cadences pretty opaque company, but it tells us it tells the same story we're looking for at tech rally, not a recovery rally. Witness number six CORVO which is not to be confused with Cuervo Tequilas. We serve at Barcelona Gilmer small plate Mexican restaurant that's struggling mightily with social distancing in Brooklyn Cobras another chipmaker where the stock that's up twenty seven percent from February. Why you asked because they make radio chips for yet you you got it iphone have client we'll travel. Wouldn't you sevens qualcomm? Because he's actually story their intellectual property make cell phones possible, and they've been winning some major lawsuits giving them a large cup and companies like apple that's qualcomm comes up twenty four percent way nothing dudes economy. Next step, we've got a semiconductor equipment maker Kalay tencor twenty percents the same period. Again, we're selling gadgets the stay home economy these gadgets need chips and make more tips you need be seen from Kelley tencor or one of its peers. which is up twelve percent and was one of the best performing stocks and the whole market last year narrow. Witness number nine service. Now, the cloud based software company that helps businesses to automate all sorts of information technology and backoffice jobs service. Now is one of our cloud kings, the new CEO Bill McDermott. Came in hot using his rolodex to win a new clients stocks up twenty, two percent from February top and it's not done. In digitisation stock, not a Recovery Stop Finally Number Tennis Synopsis, which is in the same wheelhouse is cadence design company that Superior Semiconductor Design Work It's rally twenty one percent since the s and p's last peak. Now, for those of you think I'm Actually Cherry picking the next ten best performers look pretty similar three semiconductor. Equipment Stocks One work from home plate to Fintech one cell phone components docked to ECOMMERCE, James and Microsoft and short the S&P five hundred, not making you because of the industrials in pal stocks retailer, the banks want small businesses and companies that are hiring. No. This moves been fueled by the biggest story of the Kobe recession digitisation and we talk about digitizing economy. You know what that shorthand for cut out the fat. With that being last people who are part of the real economy. You can't afford to hire people you bring in this brigade of hardware and software companies may do it for you and they do it. Let's just say in brutal fashion. Meanwhile, the industrials are nothing to write home about the financials are dreadful. We got a few winners homedepot warmer also a lot of losers like bankrupt companies that are too small to talk about Kohl's Nordstrom the winners in this market or the companies that are. Most divorced from the underlying economy, they're not place on a v-shape recovered neither one, their place L. Shape Connie. It's going nowhere with that more stimulus. Here's the bottom line. The espy's new highs are tale told by an idiot full of sound and fury signifying nothing about the hardship of millions of people on food stamps or the millions about to be fired from service jobs or the homeless or the people were just huddled on home. Waiting for the vaccine which feels a lot like waiting for. Godot. Stefan in Florida Stefan. Jim Thanks for having me on the show. How's it going that? You're on the show? What's happening? I wanted to ask you about the Stock Madison Square Garden with the Ticker Tag MSG. Yes. At one, fifty eight, which is exactly half of it's fifty to a high of three sixteen. We're only ten dollars above its fifty two week low from late June Madison Square. Garden. At a household name that to me does not seem like it will go by the wayside even without conducting any business at the moment sports, concerts and other events have to come back eventually and Madison Square Garden was zoom normal operations when that happens, Broadway sets reopened in January. So I presume that Madison Square Garden will begin hosting. You feel that way Stefan, then just go by live nation. Okay I. It's a better company micro Pinot who's got to come back on the show he will do a much better job. That's the better one stocks down thirty percent Lauren in. Virginia loring. Buja Jim Cramer. From Virginia here I have a question about a company that has done a recent acquisition of Capella University. The get the stock get down from its last earnings call. Now looking to do public offering of shares to acquire more education. So what do you recommend for this online educator writer as? Fan of online education I. Know The day always talk a great game. They're fabulous come on and they will make you want to buy the stock, and then you get what you just see reading the screen Chris California Chris? Jim Thanks Redman show. On the show. So my question is with the schools reopen. And folks getting back to work I was thinking people might make some new teams but your thoughts on Levi I haven't the light chip Berg I like Levi's but I think that right now the Dow business unless you're in Columbia sportswear or unless you're Lou and is no place to be so I cannot recommend as much as I think Levi's is going to be a winner long-term it's. Too. Long term for this guy. All right. This is not a v-shaped covering. I need you to go. I'm not listening I'm not listing with news chalor heads excuse me when this ill advised people come on our shows and read in the paper. Tell you this market is telling you about v-shaped recovery. Look at look at these stocks look to stocks abroad as you see any recovery, they're. Now. I'll maybe take home depot. Walmart grabbed all the headlines today but I'm focused one big box retailer that's growing like wait then concerns about the US recovery put dollar defensive but retained his status as the world's number one currency. Off The charts for surprising story and Columbia Sportswear still your foil the uncertainty I'm talking about the CEO's earning stay with Kramer. Don't miss a second of mad money follow at Jim. Cramer on twitter. Have a question tweet Gramer Hashtag mad tweets send Jimmy Mail to mad money at CNBC DOT COM or give us a call at one eight hundred seven four, three, CNBC miss something bedtime mad money wbz dot com. Support for this podcast comes from Goldman Sachs through launch with gs a five hundred million dollar investment strategy grounded in the belief that teams with diverse leadership drives stronger returns. Goldman Sachs remains committed to facilitating connections and increasing access to capital for women, black, Latino, necks, and other diverse entrepreneurs learn more at gs dot com slash launch with G.. S. We're hearing from all sorts of big box retailers this week, but you can't expect them to hammer home. The full story, which is that there's more competitors have been devastated by the pandemic. So they're taking market share left and right they can't really brag about stamping out modern pop stores all over the country sportsmanship plus none of these years wants to be raked over the coals by the House subcommittee for the record the stunning numbers from Home Depot Walmart. tastic. If you have watched all day, you don't need me to tell you that ask. But every. Once in a while, you hear about a chain that owns an entire category and isn't afraid say we saw past with Poop Barnes, white assemblage of boots and Western style apparel. We saw it in Canada goose at one point which owned the high end Parker category until they couldn't maintain the growth and other competitors caught up and we've seen it with Lululemon in the high end athletes your space in today I've got another one. If you watched. So let's not you know it's called grow generation the hydroponic gardening chained it sells everything you need to grow cannabis at scale yes. It's the tractor supply of pot hydroponic rhymes with chronic. We spoke to crow generation last night and they told the best story I have heard in ages. Look at. Most wing notice. Right. Now, I'm a gardener though my plants tend to be a little more traditional. If you've ever been gardening store, you get what's known as flats plants, and then you plant them usually there's no one to help you. It's tough enough to get someone who can tell you that you might need tomato baskets or stakes. Even if you went seeds forget about the big box chains, carry the major cubs and flats and they have no real help on checkout people with drives me crazy in short. I'm into gardening stores and I'm always disappointed. Especially, by the garden centers since they all tend to have these Bonnie plants, which I think is a very iffy brand frankly. Go generations different I rarely circle back to a guest that was just on. But when it happens, you know I mean business this is an eight hundred, forty, million dollar operation like growing like well. Button growing like a weed. Twenty stores in his past quarter, the same store sales were up to forty nine percent. If used these, you have seats and that's why they work. So well, I don't suggest use these. Then you have to take the siege out and yesterday guate- gunk out anyway. Forty nine percent sanely even though it's small, it's profitable. That's facts. But honestly, even though stunning numbers don't capture the full story what really matters grow generation is a special enchaine catering to the growth of the marijuana industry the time when it's being realized state after state plus this time to get into gardening because not not ought to do for fun. What makes US special the runway they still only have a handful of stores each market where cannabis is legal they want to nearly double the score camp next year via opening their. Own Stores. Acquisitions there are roughly a thousand independence out there. They can put up hundreds of stores and be knowing your saturation quote generations, tours of all the equipment you need to get into the weep business including specialized lady. It's not easy setting up a hydroponics lab, but they've got season growers on staff to help you whether you're small medium sized business or you're an individual genius what else does this stock have going forward I it's a marijuana play with good fundamentals. The current crop of cannabis stocks is truly wanting till Ray. Canopy, they'll cut the heart of the shareholders only green really interests me second grow generation doesn't do candidates in the US only which makes a ton of sense. There's actually a lot less sketchy. Now feel about selling Gordon Quinn this country third this year seven states have cannabis legislation on the ballot in one form or another given it legalization tends to be pretty popular that means seven more states for quote generation expand. Finally, if you get a democratic sweep in November, there's a real chance to get federal marijuana legalization by against it but if Democratic Congress pass it I don't feel you tow it. In other words, a democratic sweep would make grow generation one. Of the hottest stocks, the entire market, even without that, though they've got a ton of room to grow in the states colonel chip in California's like almost no stores Oregon. Washington now one big cavity stocks up way too much and I chase but they boarding Donna fundraising they don't do that your face and there's a scarcity of pick and shovel plainly cannabis businesses. The big box chains really don't WanNa touch the stuff I think they think it's unsavory. So you might blessing to put on a small position grow generation tomorrow then wait for it to come in. So you can buy more because this is one of the best stories in retail that's going right. Stick with quick. Hello Walter Isaacson here over the past couple of seasons of this podcast, we've shared the stories of some of the greatest trail blazers of our time. Disney was very much an innovator not only was he charismatic he was an American institution and a star. Walt. Disney was Mount Rushmore. You'll hear these stories and more on trail blazers and original podcast from Dell Technologies. I like that new off the charts music open continues, but it probably won't because we're talking about the dollar and that's why we played it for months. Now, the mortgage had a secret sources strengthen. It's the weaker dollar. Governs borrowing trillions, tweets dollars. was, putting money like. Pretty much like there's no tomorrow right come on. We all know that you'd expect our currency to get hurt preserve, which is exactly how things played out. That's one reason why so many American industrial smash to have great stocks here a winked armies. Our experts are cheaper for the rest of the world because this is a big competitive advantage even though it also makes imports more expensive. This is one of those things generally is Connie. You need a manufacturing base, right but it hurts the consumer, and certainly if you WanNa, go overseas all toll but can't anyways wasn't matter. All. Told I love it when the greenback goes down because you got tons of us, PACE, bowling nationals and Overseas earnings are worth more with a weak dollar for example, just to walk you through this if you make one hundred years in France or Germany that's now rough worth roughly one, hundred, twenty dollars early this year it was barely more than one hundred dollars. That's a very big. What Call Delta huge damage holds it changed the tenor of every industrial cops call going forward. But And this isn't ominous, but for internationally oriented companies, what happens if the dollars about to get stronger again, I don't know soles thinking this. Maybe. It sounds an exceedingly unlikely to to you given the defense still money pretty mode I know which. Twitter at Jim Cramer people just hate this piece that we're doing the rest of the world on a much better job would contain the pandemic from from Brazil tonight though we're going off the charts explanatory contrary and call at a dollar rally might be in the courts and you have to get bullish on the dollar this help flyer. Williams. Legendary. Figuring the industry has been trading stock futures and commodities since I was A. Kid He's more than a dozen books. He's got his own website, I really trade dot com. He's created a bunch of different indicators us all the time and this recent track record is downright spectacular. See Williams. The dollar could be ready to rule here, which is a huge out of the box that no one is making although he's been making a lot of great calls lately in April and everyone was terrified sky was fully. Williams predicted that we'd start reopen economy in mid-may and the average or higher. Guess what a month ago he told us. Yeah. Some people are hundred was headed toward old highs. We actually made a new intraday high today although he was less sanguine about what happens to the stock market after that. Well we'll see and now Williams tells us that the greenback might be bottoming. Okay. So look at this I take take take gainer this monthly chart of the dollar index which measures are money against a basket of total currencies. Okay. It training higher for years right I mean just look at this just up up up the dollar started getting slammed when covert hit and since then continue to trend lower however, you see this red line at the bottom. This is data from the CFTC's commitment of traders report the COT report. It shows you the aggregate buying and selling of commercial interest dollar index banks garments whenever these commercial hedger's build a big net long position above the horizontal line. Whereas, points out the dollar index actually tends to rally pretty consistently. We've just got to a point where the commercial hedger's our net long and unusually bullish position that says. By the greenback next check out this monthly chart with different key indicator. Okay. This Blue Line is a model that measures the relationship between the dollar index in crude oil price. Typically, there's a strong negative correlation outweighs pricing dollars weaves no every time. The Blue Line goes into undervalued territory. Since two, thousand five it has correctly predicted a big rally in the dollar index and that's exactly where we are now. Not Not Believer Okay what about seasonal patterns? Let's zoom in not using these zoom but zoom in on the weekly chart of the dollar index zoom the Boozy Brunch Zoom. Now this is not what we're talking about. This is the zoom in on the red line shows you how tape tends to trade at a given point in the year wears points out that we're nearing the seasonal low for the dollar and about six weeks history suggests, we should get a nice rally but these seasonal patterns aren't set in stone so that you can only take that one so far to the bank. Let's zoom in even further with the dollar index is daily chart. Last week we got what is known as the t D sequential thirteen bicycle. Okay. A little complicated but long story short about forty years ago Larry Williams, and Tom to mark the other titans of technical analysis. Notice the powerful what's known as reversal pattern get into all the details right now we'll take a little too long. You can look up these td sequential setups online. Last, week this pattern, a powerful bypassing. One. Is just the decline in the coming to and okay. Moammar, Williams has forecast to some of these great taking gator at the daily chart of the dollar index over the past year the red lines forecast for the dollar-based oil presence. Just something very similar to what he saw in the season's according to Williams oil-based forecast the dollar next should put in bottom in the first part of September. Of course, this isn't a precise science. The projection might be off by days even weeks but what matters is that the dollar index is likely to change direction in the near future. How Just. Like oil gold and the dollar typically move in direction in opposite directions. Gold goes up goes down. Their goal is priced in dollars if you look at the dollar index over the last year and then later on an upside down charter gold prices, you see they move almost in Tena. Because such powerful inverse relationship when gold goes up, the dollar index goes down and lately Goldman roaring. So that should be another signal. I want to present the country for second. We just heard from Carley Garner another trip technician. She says gold speculators to build a huge net long positions the precious metal commercial hedger's. Have used network positions to so garnered predicted gold might run out of steam about words seemed peak last week because there are too many boss and Williams a lot less some gold you recognize all this institutional ownership is a bad sign a crowd tralee winning trade and goals gotten crowded giving the linkage between golden the greenback falling gold prices would likely mean a rising dollar now. Any of these things alone would make me do this piece. I wouldn't necessarily mean anything but when you put them all together well, the bottom line is that the charts is interpreted by the great. Larry Williams suggested the US dollar could be ready to come out of its funk and start rallying again I don't know. So who believes that if he's right, we're GONNA have. To reassess. American companies that have been getting a huge boost from our weakening currency, and by reassess I mean lighten up on stocks of companies with big overseas sales. Let's go to Christopher in California Christopher. Hope you're doing. Well, I'm doing well how `Bout You Very, good. Thank you in peds week monetary policy I think investors should start shifting their investments through gold and gold mining stocks. Warren Buffett who historically stay away from gold. Recently Invest I out in Barrick Gold I'm concerned by the some planetary policy citizens are you and do sequel. Always felt that gold be ten percent of your. Portfolio lately, it's gotten so big that it might not even be temperature might be more. Here's what you need to know. I, am not going to I'm totally discounting Warren. Buffett's moved to by Baruch why I don't to be picky about this. But when Mark Bristow put those two companies together, we said by it and I am mark would be the first to tell you listen it just doubled. You're not coming at the bottom and one of the reasons why like bristow so this was not an early call however the sale of the banks. Wells Fargo was at fifty in your cellmate. Now he may be it's gone a lot lower, but I didn't like either call and not everybody's perfect. Certainly, not me market. Ohio, Mark. Kim Maher I'm caller a fan of the show for fifteen. Put years. Thank you. There you go. We've been at fifteen years. I had hair then not really what's up. Now. My three year. Old Don Night Union regularly and he loved one guy. Flammable. Importer. Good. Dip. Back in March. April. When oil prices collapsed. I thought. My way into different large-cap oil stocks, including refiners, exploration and service providers. Okay. I follow your advice religiously taking profit the few times that the country slowly reopened in the oil sector stabilized, right? Dr Phil my question for you knowing your bare thesis and the Oil Gas Doctor Your from listening to your accent alert Dot com club. Should I- consolidate my holy than to one meter del for something else or let them all and perfectly willing to let you consolidate under a Chevron. Because Mike Worth doing terrific job. But you know I look at those break even numbers in oil is really struggling here. It needs to go up to fifty to make a lot of money in those oils I refer you to take your prophets roll out of Chevron and pick something else and I loved Your Kid I. Love Your Kid and thank you so much and please remember oral is a declining commodity because of EVI and. So many other reasons, right. This is a bold out of the box call tonight this Charter Larry Williams thinks the greenback is making a comeback. I am predicated a lot of my stock picking unity that it's not going to have a combat. So maybe we got to reassess a whole host. American companies much more money had including my exclusive with a company. I Adore Columbia sportswear stock is tested top. What could the mortgage loans I got? and. I'm sitting. I'm going to see over controversial one email Stevens recent decline could be buying opportunity and all your calls rapid fire in tonight's edition of the lightning round. So stay with Kramer. Does it make sense to start dipping your toe back in the apparel stocks. In the case of Columbia Sportswear the Apparel Company. You might also recognize as surreal, Mountain Harbor Pronto among other brands a few weeks go Columbia puertas surprisingly robust quarter with a big revenue beat and much more than expected earnings loss but absolute terms business was still rough for sales damn forty percent year beer, and of course, they couldn't provide guidance because the power she really needs a vaccine and we don't know when that's coming. Then response stock initially got hammered plunging from the low eighties, low seventies in a matter of days but a funny thing happened week and a half ago the darn. Thing started rally against the quantity is now made up nearly all the post earnings losses. What happened here I? Think Wall Street, took another look at quarter with more emphasis on the possums said, the second quarter should be the weakest part of year, declines could moderate in the second half in other words. The worst is over throw in the fact that Colombia's a fabulous outdoor brandon hiking. One of the few things people can do for fun and this move makes a lot of sense. So Kennedy keep climbing. Let's check in with Timbo the chairman and CEO of Columbia Sportswear get a better sense of the border and whereas these headed Mr Boyle welcome back to make money. Jim Thanks for having me back on of course Tim. So I was on call today the home depots and the Walmart's here's what's the short supply fishing rods closed of fish. Closed hike in and I started thinking what's really in short supply is Columbia sells. Well, you know it's it's one of the few things you can do with your family. It's inexpensive. It's close to home. You can have a great time. You may you may not have to wear a mask depending on how thick the trail as the people and It's right right in our sweet spot. Well, What's interesting? Go to the website you'll see what have you represented Real people Y-. Bubble walls, real person tough guy all this stuff outdoors. You've got people skyscraper got the biggest fish I've ever seen and I always feel I go. It's people who tell you they like Columbia. Not You telling them to like Columbia. Well, we're. We've always called ourselves a democratic brand and we don't. We don't take ourselves seriously. Our marketing typically has some fun to it and you know it's supposed to be fun outdoors and then that's what we need. But one thing you don't that you don't have. You released a nineteen coresponsibility report I thought this is really important enough to tell my daughter because she's often saying they're sweatshops, sweatshop sweatshops you completed three hundred, ninety unannounced audits conducted our manufacturing partner facilities. How do they do? Well you know. It's an area frankly that we take some criticism internally not because we don't do a spectacular job will be because we don't add it to our marketing and the reason is. It's very difficult to out green or two out. Consumer is. In in our segment, there are some companies that are exclusively marketing that we just take it very seriously. We have a whole team of people that do these audits and we we have a very stringent audit protocol where we go through the books. For the company that we're using a vendor and we have teams of people, we interview employees at the factories and we take this stuff. Seriously you know for us, we have a terrific group of directors. Independent, directors and these guys all have significant reputational risk. We don't want to have anything that's a problem, and so we've we've been very very focused on that part of the business. Alright. Good. There's a lot of younger people who get that I, but I understand how you wanted to it because you guys in many ways are non apparel new, your technical company that has done clean and right on thinking about not how other Walmart has too many shirts or coles has too many pants. But how many Omni heat black dot politics can I get this year? WELL LISTEN WE'VE WE'RE GONNA have a few for you and they really they really work. We've been working on a demonstration. Processed us in some of our stores and online where people can actually see the magnet that black dot is and it's it's going be a game changer for our company for sure. Yeah I look I like to go to games. Of course. Now, we've got this problem with games not going outdoor, but is this something that I would be comfortable in hiking? In that, it would feel but at the same time keep me warm. Absolutely. The the dots that are on the exterior of the garment actually heat up with the sun's rays or even. Artificial light, and so you can get warm with a very the smaller amount of insulation and this is going to be really good stop. Will. Wear recognize how important it is that that it works allows it does or I was also not just the science that your companies develop, but this seemed to be the quarter where. I Reveal, you have a company that you've had even close some brick and mortar stores underperformed, but it seems like people feel much more comfortable going online and buying your stuff than they ever have. Well, you know it's interesting. We have a big ECOMMERCE business of our own that we started and work continue to invest in. Well, we also have a significant amount of presence and other retailers, e COM sites, which would include Dick's dot com. We have some on Amazon business of some significance. And and we have a business in Europe with firms like zone llandough. So the company has actually a quite robust omni channel exposure to its brand not just do our own websites, but it seemed to me because I watched this movie Lennon very closely the real pros. Tell me Prin is better than lose casual the real deal. Really good ECOMMERCE. There is a way to be able to just blow that out because the technical people tell me it's a superior product. Well you know we really we should spend more time and there's always more investment to be made in the e commerce site in digital in general and we're in the process. Of installing an upgrade to our whole ecommerce platform and that's going to be fully installed in this quarter, and that will help us tell the story better and to focus more on exposing the brand, all the brands to the public at all they're the superior features well, sure have them in anyone who does technical or like to be outdoors knows that you're not in a power company or your company is a hiking and outdoor recreational company Tim Boyle thank you so much for coming on. Mad Money. Thanks Jim that's Tim Boyle CEO, and Chairman of Columbia Sportswear guys this morning bottom and they are nick. Got Some great technical stuff that's coming the world's always you just want their money back. Is. ood. and. Then though I ran over, are you ready skied Daddy? I want to start with Ed New York. Jimmy J., chill who? was. Bad. What will you tell me please what is up with von Go? Am I looking back you know at Carolina people I think can tell us on creating he powerhouse Intel. Comfy in that particular space it's a must buy actually I was working on a piece with two tomorrow but now I'm GonNa. Wait a little bit too much spot about Gavin and New York Gavin. Aj. Give. Feedback on Ammon. They gotTA study coming up, we got to see because. Right now is kind of doing nothing and I I like almost always speculative stocks for I'm not going to bless that one right now let's go to read in Florida read. The me too how you doing showman house what's going on? Wondering Associate, folding stock the good at the drink. So. This thing is so hot. I gotTa Tell Ya let's do this. Let's do a whole piece on I. Love doing the drink stocks I mean member we did Sam Adams? That was fabulous monster we've got to do something on this I'm telling my I'm Ben Stone Right now. What focus by David in California David. Hey. You going Jim thinking kicking my corner. I'm calling from California. Wouldn't be literature Ta on Natural Growth Three. A company called each. In. Also I. Like way too much natural and you tell you I. The soccer act like someone said GonNa bid for gets highly unlikely. Let's go to Jake in New Jersey Jank. Kramer. Comb Meltdown Mountain Lakes win the day. Love this show blue. Mountain lakes very good elks. A by the way. Great. Cross holy cow what's up? Oh. Yeah. got a quick question about the Home Building Industry with typically Dr Ford. Eight. Is so good I mean you can be saying with Jim. How `Bout Lenora how Katie Holmes. About poulty it told they are all on fire and I think that could stay for because rates are so low everybody wants to flee the cities as they say, how about we got to Louise in were Carolina Lewis? Game Louis, B. North Carolina, we haven't talked in a long time our you could ever me. I'm doing fine but you. Fantastic I can't wait to visit barth on Miguel. But in the meantime you're very card I'm meeting the kid and the little breakfasts of the restaurant chain that I'm calling about. I. Want to know if you if okay to keep accumulating the stock now one fifteen reap in high woodland seventy it lot of value in crack Oh viral, pb l.. Travel comes back and you think will be able to have a lot of people restaurants and it's a great idea I. Myself Am not recommending any particular restaurants stories because I think things are just too difficult in the industry other than Darden which is gonNA clean up and Chili's eat brinker because they've come up with a wing solution that works. Let's go to Joe US OUT DAKOTA JOE. A big. Out from deadwood south, Dakota data was. Gone I was wondering if let's draw we. Simple WMD. Goodbye at its mouth right now there's still too much cardboard Cut. The pool new go no no no I don't want you in west Oh and that gems conclusion. Lightning round is sponsored by Judea marriage. The S. and P. Five, hundred, the Nasdaq hitting new highs I want to focus a beaten down stocks that have been pulverized. Months talks like e health. That's a health insurance marketplace with digital platform that people choose the best insurance plans and enroll in coverage online coming to the one of the greatest gross stores around the stocking going from ten ten dollars for years ago two hundred and fifty pre pandemic highs. But in the last six months, e-health has been frankly obliterated, and this case is not about Kobe as the stock bounce back rapidly from the march lows, it didn't help. Then really short seller published a super negative research report accusing management of extremely aggressive accounting assumptions and implying that there. Were a lot weaker than they looked, but the real damage came last month when elder Puerta complicated quarter while the headline numbers were much better than expected. In fact layer blow out to me. There was a lot of stuff under the hood cleaning. It very high churn rate. We go over what that means for Medicare advantage customers on top of that the company raised guidance, but the new forecasts implies that else revenue growth would keep slowing later this year that fat happens to stocks going more in response to stock employees plummeting thirty percent that pretty much the Schwartz predicted, and since then shifted even more, it was a stunning and I honestly don't know how to make sense of. The market reacting or should we be a lot more worried about this one? Let's dig deeper with Scott planners of. Their picture of what's going on your Mr Flanders. Welcome. Back to me and money. Agent thanks, or it's just cut before we get started. We have to say that you didn't just go into the market and you what fifty thousand shares, which is not a small dollar commitment. Correct. Now, what was a great value? Couldn't resist it. Okay. Now, I have to believe that insiders by stock because they think the future is brighter than the past which would imply that some of these critics think the second half might be weaker couldn't have being wrong or else why don't just wait the second half to do my? Well you Jim last time I bought shares they went up more than ten times so I'm obviously optimistic we've got we're just in a great business you know we're we're in the right market Medicare. Advantage is very popular eleven thousand seniors turning sixty five every single day have the right strategy we have competition but they have a different business model you know we're building will classy ECOMMERCE platform William ruled over thirty percent our seniors online just this last quarter into we have fantastic momentum we increased our guidance thirty million on the top line and fifteen million on the bottom line. Here, just at the end of Q. Two and I think a lot of this successes gotten lost in the noise around the churn dynamic that you mentioned. I. Don't know I ran a subscription business for twenty six years. And when I saw churn that, your turn would take up to forty two percent. What that said to me was you'RE GONNA lose everybody in three years. And I knew that when the company Iran had churned, it was anywhere near the thirties that I was doing a not good job and would have to disclose it to shareholders which caused the stock of the street which I'm talking to plummet. How do I do believe that forty two percent is too high sir having come from the business that you're in I know that's not a good number what can be done to bring it down. So Jim. I completely agree you know I've been description businesses also and it's absolutely critical that you retain your customers. See your switch their plans because they can get into a better plan right and that's part of our business models to make certain number. One that we have seniors in the very best plan that gives them the coverage they need at the economic costs that they can afford. So that will always be our north star and we will build our business model around it. When we saw churn tick up in late in the second quarter, we jumped on it we were fortunate that we were working with active they. I Know Strauss nick is Mitch and activation your Sauteed Burma. Your show and we put them on this. My original concern was you know how much of this turn is caused by these market dynamics? You know factors droll activate came back and said ninety percent of the charm is due to our own actions or inaction freely. So we've already taken the steps that activate recommended, which is not three six one hiring more internal agents increasing our mix of maternal agents versus external agents. Secondly, we align our Asia compensation to reward them for retaining our numbers and third we formed a retention. And on this one we were slow our competitors have had retentive for several years right and I fully admit we were focused on growth who grew eighty eight percent last year capturing market share helping more seniors. We really feel passionate about that, and maybe we needed to focus more on retention with saw that kick up there's no question if the if the charge continue to escalate, it would undermine our business law right so we take it. We take it very seriously. Okay when you do internal. There's a season where most businesses written. An internal guy can't be laid off I. Mean Imagine that there are seasons with other seasons that people are dead way. Yeah, that was a big change that happened in two thousand and nineteen because the Center for Medicaid and Medicare services they extended into Q. One, the ability for seniors to change plants. Now, that did elevate Okay. Normally, it seasonally normalizes over the course of the year, but it did take up for us this year we are able to keep those agents profitable busy during those periods now, because in the first quarter, the senior skins change plans, right so keeping them on staff helps us there. Now we also have ancillary products, dental vision, hearing insurance, other things that they can sell during q two q three. So the model has a fall where we can keep these agents on staff all your around when we were growing at hyper speed, we eight percent last year we too much of that growth came from stern agents so. What is changing the dials Jim I think it's great that you came on air and said that that you did of course correct. Using that company that I know which is definitely going to put you in the right direction and I understand why you points. It can change the model needed needed tweaking and you did it that is Scott Flanders CEO of the health. Again, I like to focus on the fifty thousand share by why because it's a seventy dollars stock and that's obviously not idle particularly if the business model has been tweaked where the churn is lower, which is what I cared the most about sticking. Hamlin's housekeeping but Sorrento. Therapeutics. Tonight. Oh leaves that is a sub optimal sign and you know that we've been concerned about these saliva tests and with Perkin elmer how many days they take? Anyway, it doesn't sound as specials thought after listen to Perkin Elmer. Okay. How about this oracle possible bid for Tick Tock I think it's for real. I think that's apricots the CEO of work is a genius and Oracle needs very much to start growing a lot faster even though my friend are Johnson writes on the street that they won't know what to do with the company. Kohl's was a bad quarter and they have lost their reason for be I'll say there's always a bull market somewhere and I'm finding just for you right here. Man Money. I'm Jim Cramer will see you more. CNBC'S WORKFORCE Executive Council is the Premier Group or C. Suite human resources executives from leading companies across the country. It offers a members only Portland chat plus exclusive industry contact with access to breaking news calls and digital networking experiences the networking resources HR leaders need now apply to the workforce Executive Council. At CNBC COUNCILS DOT com slash WNYC.