Motley Fool Hidden Gems Investing - Bad Jobs

Episode Date: June 3, 2016

What do worse-than-expected jobs numbers mean for investors? Is Michael Kors stock back in fashion? Are Nike and Under Armour undervalued? Our analysts tackle those questions and share some stocks on their radar. Plus, CNBC's Carl Quintanilla talks about the new CNBC series, Binge.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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Check out Rocket Mortgage today at quickenloans.com slash fool. Everybody needs money. That's why they call it money. But you can give them to the birds and bees From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill, and joining me in studio this week from Million Dollar Portfolio, Jason Moser and Matt Argersinger.

Good to see you as always, gentlemen. Hey, Matt. We will dig into the latest headlines from Wall Street. Carl Quintanilla will give us a preview of CNBC's new series on the business of entertainment. And as always, we'll give you an inside look at the stocks on our radar. But we begin this week with the big macro, ago. This was when we learned that the month of May was worse than we all thought. The

Friday jobs report had the U.S. economy adding just 38,000 jobs in May. Earlier in the week, the auto sales numbers were almost as bad. Let's start with the jobs report. There is no way to spin this, Matty, as anything other than bad. It was jarring to see. Month in, month out, we've had jobs growing at excess of 200,000. And to see a number like this, 38,000, you wonder if something's wrong with the data, but no, this is what the data's showing now. There are a bunch of Verizon workers striking, apparently, and quite a lot of them, actually, and if they had come back to work in May, the number would have been better. But still, it would have been around 70,000, but still

very, very low. And then, of course, you had 59,000 negative revisions to prior months. Bad result overall. And we talk a lot about this report as being a lot of noise. In the short run, it gets revised a lot, years from now we'll look back, it probably won't look a lot smoother, and it really doesn't mean a lot for the economy. Well, if you go back exactly 10 years ago, to May 2006, 2006 generally a good year for the economy, and you look at January to May of that year, here were the jobs reports that year, starting in January. 278,000, 316,000, 281,000, 183,000, and then dropping down to just 23,000 in May of 2006. And of course, after that, numbers eventually turned negative, and we entered a pretty big

recession starting late 2007. O' Is Matty saying what I think he's saying, Chris? It sure sounds like it. O' I'm just saying. I'm just saying, that when it's a change of this magnitude, we should pay a little more attention. So, I am paying a little more attention to this number. It's got my attention. Alright, quick around the table here. Worse May, the weather here in the D.C. area, or the jobs picture? Because it looks like they both sucked pretty

bad. The jobs picture. O' Really? sympathetic human beings. So, yeah, I'd say jobs are better than rain, or worse, I guess. I guess, yeah. People would take the rain as long as they could have a job, and that makes a lot of sense. When you look at the ... you add in the auto sales numbers, though, and we saw this. This was not any one particular automaker. You go across the board, General Motors, Ford. It was sort of the same theme,

Jason, where truck sales, OK. Car sales fall off a cliff. And in the case of Ford Motor, cars, just the car sales, year-over-year, fell 25%! Yeah. And I think there are a lot of forces that are going to be working against these automakers in the coming years. We've been talking about this for a while now. I would consider we are in a state of, sort of, underemployment. Even if the employment numbers are getting better, I think that we're in a state of really underemployment. A lot of people out there feeling like they're maybe not being utilized to their fullest. And that makes a lot of sense. I mean, technology continues to displace a lot of what we've been used

to doing. But in regard to automakers, you think about a lot of incentives that have been pushed through these dealerships in order to move products, whether it's rebates or 0% financing or longer financing. That'll be another one that comes up on the roost at some point here, people taking these 8, 9, 10-year car loans out. That doesn't work so well. A car is not an asset like a home. It's not growing in value over time. I think another headwind that probably is a bit longer-term, it doesn't get talked about as much, but I started thinking about this more and more. There are fewer drivers, people not getting their driver's licenses like they once did. The data really backs that up. If

you look at this today, the proportion of license holders among Americans in their 50s to late 60s is down by roughly three percentage points since 2008. But when we start looking at the younger demographics, that's when it becomes a bit more telling. Less than a quarter of 16-year-olds today have their licenses, down from 46% in 1983. Then, you think, yeah, they're younger drivers, maybe they're not the ones going out there buying the new cars. Perhaps not. But a lot of those drivers are taking the hand-me-downs from their parents when their parents decide to upgrade and buy a new car. So, if the kids aren't getting their license and aren't driving, I think we're looking at a situation, because there's

so many new options out there, especially in these big metropolitan areas with Lyft and Uber and whatever else. I just think automakers definitely have their work cut out for them in the coming years. I think we came off such a robust period of time for them last year, I think they're going to have a really difficult time convincing me that this is a great place to invest in the coming couple of years, at least. And your earlier point about the financing, I think that's been a big catalyst for the demand over the last few years. You've had some analyst bankers come out and say, a lot of the banks, especially smaller regional ones, have really gotten into auto lending

in recent years. That has helped prop up what could have been a little bit of a bubble in terms of auto sales, and that could come crashing down. Not only going to hurt auto sales, it's also going to hurt banks. The old argument, right? I can't afford to buy that car. Hey, with this deal I'm about to give you, you can't afford not to buy this car. Alright, let's get to some of the companies making news this week. Ambarella's first quarter revenue came in as expected, but adjusted profits were higher than expected and shares of the chip maker up 12%. Shareholders needed this one, Matty.

Well, they needed this one, and I think the shorts didn't need this. I think part of this week's rise was short covering. You had better-than-expected results. You also had positive comments from the CEO, talking about some of the design wins in areas like drones, home security, dashboard cameras. This company for so long has been linked, and still is to the action sports camera market. But the fact that they're diversifying out of that and getting some traction is great news. And they launched a $75 million repurchase plan. Nothing new. A lot of companies are doing that. But if you're short this stock, and about 10 million shares were short going into this release, about 30% of the companies

float, this is the kind of news which, slightly positive, can tip a lot of hands, force you to buy into the market. And I think that's what's happening a little bit. You have some short covering, which is boosting the stock. Shares of Michael Kors up 15% this week, after a fourth-quarter report that looked fine, Jason. That's really all it looked. I was just saying, it didn't do a lot of confidence. I mean, same-store sales were barely in the plus column. What is going on with this stock that expectations are this low?

So, I think for investors, when it comes to Michael Kors, the thing you have to remember with Kors, when it comes to the prospects of discounting, it's not a matter of if, it's a matter of when. We saw this story play out with Coach over the past few years, and it's really weird. When you read through a Michael Kors earnings release and earnings call, it's like deja vu all over again. You hear so many of the same things. China's this huge opportunity, men's going to be the billion-dollar market here, yada, yada, yada. So, I think that there are a lot of indicators that I think rightly should keep a lot of people on the fence with this stock. I mean, I think it's been a decent recovery for them in the face of a tough retail

environment. But again, you have to ask, is there really the brand power that can lead to sustainable long-term growth? I don't really think there is, to be honest with you. I mean, I think this is just another one of those, it's certainly not luxury brands, just affordable luxury, if we still want to call it that. And that's fine. Investors can win there. But I think that for investors, this is not a stock that you buy and hold blindly. I think If you think if there's a value thesis here, then you do your work, you identify your price, and you be ready to sell when you feel like that price has been met. Because these types of retailers do not just grow to the sky.

From accessories to sports apparel, shares of Nike and Under Armour both down this week. Nike stock was downgraded by a Morgan Stanley report citing increased competition, while Under Armour issued a warning related to the Sports Authority bankruptcy. see. Jason, initially, we all thought Sports Authority was going to be restructuring. That got escalated to a full-blown liquidation. Well, that's restructuring in a different way, though, right? I mean, it's still restructuring. Yeah, well, Under Armour just got restructured out of about $100 million in revenue. Well, yeah, this is a good question. We sort of batted it back and forth on Twitter

over the week, and I think most people who, at least if you invest the way we invest, business-focused, longer timeline, Under Armour's going to be just fine from this. I mean, this is not anything where Under Armour's success was not levered to the success of Sports Authority, because that would imply that Sports Authority was actually successful, which it obviously wasn't. I think, if anything, I look at this as an opportunity for Under Armour, and Nike, and really anyone tied to that Sports Authority chain. But I think Nike and Under Armour in particular, because they are the most familiar brands in the athletic world today, and they they are building out big-time direct-to-consumer businesses already, whether it be e-commerce

or stores within malls. It's interesting. You can walk to a mall, and there could be a Dick's Sporting Goods right there in the center. Then on either side of the mall, you'll see a Nike store and or an Under Armour store. Those stores are smaller, they have better inventory, they tend to have what you want, they tend to offer pretty good deals. I think able to target their customers more because it's a more singular message tied around a singular brand. These companies like Dick's Sporting, they have to maintain these huge footprints and inventory nightmares. I've got no worries where Under Armour is concerned. I think this could be a rare opportunity. These are two really wonderful brands.

Nike's certainly a global brand, Under Armour trying to be a global brand. Any time you can get somewhat of a discount in these companies, and we see Under Armour and Nike both down in double digits so far this year, start paying attention to these names. I think they're high-quality businesses. Yeah, and I'll add, we have Under Armour in MDP, we have Nike on the watch list in MDP, and Nike's getting right down close to that price that is really starting to catch our interest. Coming up, we will dip into the Fool mailbag. Stay right here, you're listening to Motley Fool Money.

As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against. So, don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser and Matt Argersinger. Radioatfool.com is our email address. That's radioatfool.com. From Sam Conway in Boston, who writes, on the show, you devote time to large companies which offer a diverse line of related or semi-related products. What are your thoughts on companies which have segments of their business which are very different or seemingly unrelated, like Kemed, whose two segments are Roto-Rooter

and a hospice service, or National Presto Industries, which sells ammunition, kitchen appliances, and adult diapers. Nice. Wow, that name is just great. I do love the name, National Presto Industries. But to his question, we talk about synergies all the time, and here's a couple of businesses that have pretty diverse sets of businesses. Yeah. That's a very good question, because certainly, you look at businesses

that work in interrelated segments, and you love to see how management can put the pieces together and make it all work together, because you can really see some good leverage and profitability there. With businesses that are not so related, you can see it play out both ways. With ChemEd, ChemEd has done very well over the past five years. It's beaten the market handily. On the other side of the coin there, National Presto has done very poorly. And so, there probably is something to actually what their portfolio of business segments comprise. A lot of that really is going to help dictate success. But I also think that these types of businesses are very dependent on leadership. It is having leaders

that can see around the corner, connect the dots, even when two segments of the business don't seemingly really relate to each other, and it can definitely work out. I think it's neat that you can have some diversity there. I'm going to go ahead and call out the biggest example. Berkshire Hathaway is a wonderful example of a collection of businesses that don't really have much to do with each other. You've got railroads and energy and candy and jewelry and home furniture, but a wonderful leadership team and a tremendous culture that has made it all work over the past 50 years. So, yeah, you can definitely see it play out both ways.

Another good-named conglomerate I'll throw out there is Otter Tail Corporation. O' Ah, yeah. It's a utility company, but they also make plastic moldings, and they do farming equipment and horticultural equipment. So, just another one to throw out there. But I also just add that, if you go back to the 70s and 80s, conglomerate businesses got a a really good multiple in the market. For some reason, investors in the market really liked when you had companies gobbling up non-associated companies and building an empire. But if you look at the last couple of decades, conglomerates, including Berkshire Hathaway, have actually

gotten a lower multiple from the market. They're just not considered the same quality of business as your tried-and-true, pure, core, non-diversified businesses. So, just something to keep in mind. Do you think that has to do with this move to tech? Tech has really taken over the world and changed things so much in the past 10 years. I feel like everything is starting to revolve around tech in some capacity, and if you don't have that aspect to your business, the market's probably not as interested. It's possible. Yeah, it's possible. Alright, one more email from Gary Fischer in Ithaca, New York.

At the moment, I own stock in 12 companies, and the question of what do I buy now has come up. After spending time reading articles online, I find myself even more confused and in need of a better place to start my thought process than a Google search. What should I consider when buying stocks in my existing portfolio with a dollar-cost average strategy? Well, I think that's the best place to start, is with your own portfolio. I think one of Peter Lynch's core principles was, the best stock to buy may be the one you already own. So, I'd start there. If you own 12, and the question you ask yourself is, the next stock I'm looking for, is that better than the 12 stocks I already own? And if you're

looking to build beyond that 12, I think you always have to diversify in terms of risk. That's how I always look at it. For example, if he has a portfolio full of rule breaker companies, small cap rule breakers, that's probably a very heavily risk-rated portfolio. You're doing fine on risk. Yeah, you're right. You might want to consider, I know, for example, adding large cap dividend payers to your portfolio. I'm always thinking, what am I going to do next with my portfolio? It's really trying to optimize risk. If I feel like I'm too focused in one area in terms of risk, I want to diversify that in my next stock.

And I think, also, take a look at your risk beyond your stock portfolio. If you have a 401 or if you have real estate or any other kind of assets that would alter that risk profile a little bit, then you can maybe look at your stock portfolio in a little bit of a different lens and understand exactly your total exposure to risk. Let's go to our man Steve Broido on the other side of the glass, because it's time to get to the stocks on our radar. But before we do that, also joining our man Steve on the other side of the glass this week. Special guest, long-time listeners, Lukas and Tara Kempke, who brought donuts for National Donut Day.

Perfect! First question, Steve, did you celebrate National Donut Day? Unofficially, by buying a donut without knowing it was National Donut Day. So, yes, every day is National Donut Day in my world, pretty much. Alright, let's get the stocks on our radar. Jason Moser, you're up first. What are you looking at? Sure. One that probably surprised a few people out there, because it's a long history with us is Costco, ticker C-O-S-T. It probably surprises people, because I'm not saying go out there and buy, buy, buy this stock. I mean, this is one that is really on my radar

as I wonder if it's not time to start talking about possibly selling this stock. Quarter in, quarter out, we just are starting to look more and more at the actual growth prospects of the business. We've come up with questions like, how much longer will the market assign a premium multiple to stock? How will younger generations flock to this model? Is there any kind of optionality. And really, they have so much exposure to this executive membership. The executive membership is responsible for two-thirds of its overall sales. What kind of pricing power do they have on that membership as well? I don't think they have as much in the face of e-commerce, Amazon, all of the other options out there. So, it's really got

me rethinking this one and how the next five years are going to look. Steve, question about Costco? Does that stock chart tell a very different story? No, I think the stock chart tells us a good story. The last five years, the stock has done very well in the face of a very volatile market. Certainly, it's not to take away from its past successes, Steve, but as you know, I think you know, you better know, investing is all about what's to come. It's looking forward, and that's what we have to do. Alright, Matt, you've got about a minute left. What are you looking at?

Jason, thinking about selling Costco, I'm saying definitely sell Walmart. Here's one number to know, 7%. That was the growth in Walmart's e-commerce segment last quarter. Compare that to the overall growth of e-commerce at 15%, Amazon's 27% growth. I just think Walmart lost the war that it should have won handily starting 10 years ago. They're way late to the game and many billions of dollars short. Steve, question about Walmart? Have you ever actually gone into a Walmart, come out, and been like, I cannot believe this costs so little money? I'm not a big fan of Walmart, but the pricing there

is unbelievable. I haven't been inside a Walmart in more than 20 years, so I can't even answer that question. We get some competition for Ron Gross here. Steve, Costco, Walmart, are you interested in either? I mean, I'm a Costco shareholder. I'd probably go with that one. All right, Jason Moser, Matt Argersinger, guys, thanks for being here. Thanks, Chris. Coming up, we will delve into the business of binge-watching with CNBC's Carl Quintanilla.

Stay right here. This is Motley Fool Monday. This episode of Motley Fool Money is brought to you by Rocket Mortgage by Quicken Loans. You know, if you have ever bought a home, you already know how frustrating, how time-consuming getting a mortgage can be. Well, Rocket Mortgage brings the mortgage approval process into the 21st century by taking all of that complicated, time-consuming stuff of applying for a mortgage out of the equation. With Rocket Mortgage, you can easily share your bank statements and pay stubs at the touch of a button, helping you get approved in minutes for a custom mortgage solution that's been tailored to your own financial situation. And here's the best part, you can

do it all on your phone or tablet. So, if you're looking to refinance your mortgage or buy a home, check out Rocket Mortgage today at quickenloans.com slash fool. Equal housing lender, licensed in all 50 states, NMLSconsumeraccess.org, number 3030. Welcome back to Motley Fool Money. I'm Chris Hill. There is more media content available to more people in more ways than ever before. But with the rise of binge-watching comes both business opportunities and business risk. This intersection of entertainment and commerce is explored in the brand new CNBC series, Binge, which is hosted by Carl Quintanilla. He joins me now from the Code Conference in Southern California. I'm sorry to pull you away from

either the conference or the beach. It's more conference than beach, I can tell you that. But it's good to be with you again, Chris. Let's talk about this series. And let's start with the fact that, I mean, normally when you and I are talking about a new project that you've been working on, it's got a specific date that it's airing on CNBC. This is something that your network is launching online at cnbc.com slash binge how did that idea come about well it's no secret that um digital media is uh slowly eating the world uh with varying degrees of success but i think the network was interested in um i don't want to call it an experiment because it's quite deliberate uh but seeing what we are capable of doing in this arena where you you produce

content that does not automatically go to television first. So they asked me if I would like to spearhead an effort, and if so, what topic would I want to talk about? And you know me, I'm sort of a pop culture junkie, almost majored in film in college, and I said, I want to talk about what we all talk about at work and with our friends and our families, And that is, what are you watching? What have you seen lately that's good? And sort of explore the creative decisions through filmmakers and musicians and showrunners. How are they winding up on various distribution channels? Why is Woody Allen suddenly writing for Amazon? That made no sense to me initially, but within that is a really interesting turning point for how we all consume media. So we're thrilled about it. The guest list is really cool, and I think it's going to be an effort that can take us really far. I want to get into some of the different industries and some of the players and certainly the people you talk with,

But let me touch on binge-watching as a phenomenon, because one of the companies that is obviously right at the forefront of all of this is Netflix. And Netflix is a business that is increasingly looking outside the United States to expand. Is binge-watching uniquely American, or is it just one of those things that you're getting more binge-watching in America than elsewhere? Or is this a global phenomenon? Well, I think it's increasingly global. But I would probably give us credit for introducing the concept, but it happened well before Netflix. One of our interviews is with Andy Cohen of Bravo, who argues that the Real Housewives marathons, remember those, where over Christmas break one year, the network didn't have any fresh episodes. They said, heck with it, let's just run Real Housewives all day long.

They came back from Christmas break, and the show became an even bigger hit than it was before. People, it turned out, did not OD on the franchise. Cohen argues that was one of the original moments of what we now refer to as binge-watching. Jane Rosenthal of the Tribeca Film Festival is another guest of ours. She argues that the film festival is the original binge-watch. But Netflix has made it mainstream, and you're absolutely right. They're definitely exporting it to areas well beyond the United States. But like all things cultural, Americans are more than happy to take credit for inventing it.

It's interesting from a business standpoint because you have, certainly at the beginning, you have a lot of alliances, businesses that seem to compete with one another, are working together. You talk about sort of the early days of binge watching. Vince Gilligan, the creator of Breaking Bad, has publicly given credit to Netflix for the show surviving because both after season one and season two, there was a very real sense that AMC Network was going to put the ax on Breaking Bad. And it's because it moves to Netflix and you get more people consuming it, devouring entire seasons at a time, that it ends up being the huge success that it is. But now, of course, you've got AMC with a little bit of success and seeing what Netflix is able to accomplish. And then they say, well, you know what? Let's start to stream a lot of our stuff on AMC.com. And same with HBO Go and same with Amazon and same with Starz.

everybody wants a piece of this pie. But you're right. I think Netflix has saved more than a couple of shows. Gilligan's a great example. But it's interesting, to a T, the creatives that we spoke to are fawning over both Amazon, but especially Netflix, not just because it has the capacity to rescue a flailing show, but they don't give you notes. They don't give you ratings. They sign you to an entire season. There's none of this drama over whether your pilot will be bought or not, whether you'll be canceled mid-season. When they jump in, it's whole hog,

and they can do that because of the enormous amount of money that they're spending on content. So if you and I have a script or a concept for a show, it's just a great new buyer to bring into the market, someone who's going to give you artistic freedom and financial freedom to a large degree. It's amazing how they've changed the game. I'm curious of all the people you talk to that are representative of different industries,

if you have a sense of which industry is the most nervous with this changing landscape. Because you gave a great example with Netflix and how they don't give ratings. And I think if I were an executive in broadcast television, which lives and dies with ratings, I would be ripping my hair out about the fact that Netflix just says, no, we're not doing that. Yeah, TV is definitely, and we struggle with this throughout the industry, is audience measurement, right? Nobody believes Nielsen delivers a true picture, and so you have broadcast networks trying, in some cases, developing their own audience measurement systems to compete with Nielsen, even though they still subscribe to Nielsen. um we just had the up front where they the networks present their goods to the advertisers

and a lot of the big traditional networks argue that they're undercounted so um that is a that's a key sticking point in terms of who's most nervous you know i think it goes beyond tv i think the music industry is especially freaking out because they just don't have a good answer yet, to making a profit, keeping the margins fat enough to make money, and also paying the royalties that the big artists like Taylor Swift and Garth Brooks say they deserve. They're working on those new models, but that just has not been answered to anyone's satisfaction. And so you see stocks like Pandora and, to a lesser degree, the valuation of Spotify just reflect this uncertainty is, how are these guys going to make profits in a big way down the

road? You're listening to Motley Fool Money, talking with Carl Quintanilla, host of the new CNBC series, Binge. It launches on June 6th at cnbc.com slash binge. When you look across all the different industries that are involved here, cable companies, content providers, even video gaming and sort of the rise of e-sports. One company that doesn't get as much attention is one that is actually part of a larger company, and that's YouTube. Google bought YouTube almost 10 years ago for a little more than $1.5 billion. And a few weeks ago, there was a Wall Street analyst firm that put out a report saying

their valuation of YouTube as a standalone business is somewhere in the range of $67 to $86 billion. And I guess my first question is, when you saw that, did that surprise you, that YouTube alone could represent 15 to 20% of the total value of Alphabet? I'll tell you what surprised me. I remember when the report came out, because I remember an exact, almost the same report done probably five or six years ago, and their number was $20 billion. So here we have the sell side with essentially posing the same question, but arguing that YouTube's valuation has gone 3x since the last time.

So what struck me is how we are still here wondering, because they don't break it out, what YouTube is truly worth. But clearly, it is going to go down as one of the top five purchases ever in tech, maybe rivaled by Instagram, Facebook. There's probably a couple others you could throw in there. But Google is very interested now in unlocking that value. I'm not saying they're going to break it out or spin it or anything like that. But you can see them already starting to invest heavily in original shows. They're going to have 20 original shows on YouTube Red. So I think the time for sort of letting YouTube bake, so to speak,

is coming to an end, and they're going to take it out of the oven and start passing it around. So if on one end of the spectrum we have traditional broadcast television probably a bit more nervous about how unsettling and how much change is going on, At the other end of the spectrum, do we have the creative side? Do we have showrunners, directors, actors, writers who now have more options, more outlets, even if they don't mean the big paydays necessarily up front that an NBC sitcom would promise? They definitely benefit from having more buyers in the market.

There's no doubt about that. And that goes to streaming outlets. It goes to syndication opportunities, which have always been there, networks, cable. So surely if we have a project, we suddenly have 40% more people who we could potentially pitch. I think what probably has them more nervous is this element of uncertainty because there is just so much content now. Who's going to curate it? Are you going to be found? What if you're not on the App Store? What if your placement in the Hulu stack is low? I mean, you and I, we know this dynamic. You're at home with your wife. You spend 20 minutes scrolling through the menu, arguing about what you're going to watch.

Curation will be the central challenge of the media consumer for the next, I don't know, a few years at least, because there is so much and so much money willing to finance it, what do you choose to watch? I mean, how many times have you been at work and you've said, hey, have you watched The Americans? No. Actually, I'm too busy catching up with the last season of House of Cards. So that fragmentation means that you might have more opportunity for your project, but

it's going to have to cater to a smaller and smaller sliver of all the interviews you did for this new series anything surprise you you know what um interestingly some of the old lions gary marshall right executive producer of happy days mork and mindy directed pretty woman the flamingo kid i mean basically you know tv shows and films from our youth they are actually managing to hold their own in this environment. Gary Marshall's latest movie, Mother's Day, while not a commercial success, was financed with an army of basically millionaires,

ex-Amazon millionaires in Seattle, who decided we'd like to see what producing a Hollywood film is like. So even a guy like that who's been around forever and has been a studio guy all his life is managing to adapt. Just because you've been in the business for 40 years doesn't mean you stop having to change. Coming up, more with Carl Quintanilla. This is Motley Fool Money.

Welcome back to Motley Fool Money. I'm Chris Hill talking with CNBC's Carl Quintanilla. Earlier this week, since you mentioned Amazon, at the Code Conference. Founder and CEO Jeff Bezos was interviewed for almost 90 minutes by Walt Mossberg. And one of the topics that came up was the video efforts that Amazon has undertaken. And he was asked about competing with Netflix. And he said, you know, we don't really compete with Netflix because it's not like buying a truck. You know, if you're looking to buy a pickup truck, maybe you're going to buy a Ford, maybe you're going to buy a Chevy, but you're only going to

buy one. Whereas with video, you're going to subscribe to Netflix and Hulu and Prime Video and HBO Go and all that sort of thing. And I get that. But I have to believe that the people at Netflix and Hulu and HBO and everyone else has to feel like they are very much in competition with Amazon. Oh, yeah, I agree. I think, I mean, as you say, Bezos's logic makes sense, but it's probably it's not too cute by half maybe it's too cute by a quarter because i do believe there is such a thing as subscription fatigue just as remember when we were adding apps to our phone like you know without limit and eventually you figured out i can't have five pages of apps on my home screen and you began to call them i think the same thing could happen uh with over

the top services. You're not going to subscribe to 15 of these things. I just, I don't know, I don't believe that people have the bandwidth or the money for that. So people will make choices, and to that degree, it will be more of a zero-sum game between some of these big players. All right, before I let you go, I've got to ask you a couple of questions about the Code Conference that you're at. I know you just got there, but any headlines emerging so far? I would say the big three things are artificial intelligence, which just permeates everything people are talking about, and the degree to which robots and machines will help in decision-making, everything from managing railroads to health care and a bunch of other things. Autos, there's a big question about whether a car is now a moving computer or a car, as the interfaces between the driver and ride-sharing, for instance,

make just driving a different experience overall. AI, autos, and video. Video, it's almost all people can talk about. It makes you wonder about the future of written text. I mean, there will clearly be a place for it, but the economics of video, the return on investment for an ad buyer, for instance, on video, puts everything else to shame. And it's increasingly how we are gathering our information. We want to hear someone say it rather than have to read it. So those are big three, I think, the big three dynamics in the first day.

We'll see what day two brings. I want to go back to autos for a second, and maybe this is unfortunate timing. But Mark Fields, who's the CEO of Ford Motor, is at the Code Conference just when the auto sales numbers come out for the month of May. And it's not Ford Motor alone, but holy cow, their car sales in the month of May just fell off a cliff, down, I believe, 25%. The truck sales are looking good. But I'm curious, are months like this putting even more pressure on people like Mark Fields to really change what they're doing, what they're fundamentally doing at their companies? You know, there's been a lot of, for probably a year, there's been a school of thought. We call it peak auto, where people had satisfied their pent-up demand for a new car.

They went and got the cars. Then they started to be offered more and more incentives to keep the sales going, and that's why sales were so strong in recent months. Maybe this is a bit of a payback. We'll have to see if it's a one-off. I do, though, think the larger, the longer-term challenge for the big three is whether ride-sharing can go beyond the major cities. I mean, there's been some research on Wall Street that posits

if Uber and its competitors change the way we drive as a nation, that new auto sales could be cut in half. That's a problem. That would be a big problem for a company like Ford. There are others who argue because it's America that's leading this disruption with Uber, with Tesla, because we have the lion's share of the components business, that Detroit could actually turn into the global hub of auto manufacturing once again, having lost that title. But yeah, it's going to be a crazy time for the auto business,

for the parking garage business, for the parking lot business, because we may not be driving our own cars the way we do in 10 or 15 years. All right. We've got a few seconds left. Desert Island, you're there for a month. You get to take one show with you to keep you entertained. What are you taking? i'm gonna go with homeland i i'm sort of surprising myself because uh we love um we love house of cards and um we actually love this new amazon show catastrophe but um i mean come on mandy patinkin and claire danes with her crying face i mean with quinn i mean you can't lose man that that show is just an ripped from the headlines so gripping every season that

I don't know. What about you? I think I would have to go, just because of the number of episodes, I think I'd have to go Breaking Bad. The new CNBC series, Binge, launches on Monday, June 6th. You can find all the episodes online at cnbc.com slash binge. Carl Quintanilla, always good to talk to you, my friend. Thanks, Chris. That's going to do it for this week's Motley Fool Money.

Thanks for listening. We'll see you next week.