Motley Fool Money - America’s E-Cigarette Addiction

Episode Date: July 12, 2019

The S&P 500 and DJIA both hit record highs. Ford Motor and Volkswagen team up on autonomous vehicles and EVs. Zoom Video has a bug problem. Slack shares fall as competition from Microsoft Teams heats up. Pepsi hits a new high, and Lululemon starts a surprising new business. Andy Cross, Emily Flippen, and Jason Moser analyze those stories and share three stocks they’re watching closely this earnings season.  Plus, Carl Quintanilla discusses the growing popularity of vaping, the focus of CNBC’s new documentary “Vaporized: America’s E-Cigarette Addiction”. Thanks Netsuite.  Get the FREE guide, “7 Key Strategies to Grow your Profits” at www.NetSuite.com/Fool. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Full Money Radio Show. I'm Chris Held, joining me in studio this week, senior analyst, Jason Moser, Emily Flipping, and Andy Cross. Good to see everyone. Hey, Chris. We've got the latest headlines from Wall Street. CNBC's Carl Kintanilla is our guest, and as always, we'll give you an inside look at the stocks on our radar. But we begin with the market in general. Both the S&P 500 and the Dow Jones Industrial Average hit record highs this week. This comes as earnings season is set to kick into gear later this month. Jason Moser, I will start with you. Does this temper your expectations?

at all for earning season, because I feel like we shouldn't expect stocks, even if they report great results, to pop 10, 15%. I mean, I always try to keep my expectations somewhat tempered. I mean, I don't want to go in feeling overly optimistic or pessimistic. I mean, I think we're in the face of a very good performing market right now. Enjoy it because it won't last forever. And it does appear that many companies are setting us up for perhaps a lot. little bit of a stumble this earnings season. When you look at the facts, that data, they're projecting

a 2.6% decline in S&P 500 index earnings. And that's down from a decline of just a half a percent predicted at the end of March. And then when you look at the actual companies, you've got 88 companies thus far issuing negative EPS guidance versus 26 that have issued positive guidance. So, I mean, at some point, things have to pull back a little bit. But, you know, I mean, as a parent, one of the toughest things, as a parent is just letting your child fail. watching them fail and understanding that it's for the greater good. It will help them be successful later on. It feels like we're living in a market right now where the powers that be are just not able to let this thing fail. Like, if something bad comes up, even a scent of a problem, I mean, they're getting in there to adjust interest rates or do whatever they can to keep the market chugging upwards.

I kind of wish they'd just pull back and let things just play out, but it doesn't seem like that's going to happen. Well, what I'm really paying attention to is the revenue growth. So just thinking about so much of the companies that were focused on these, mostly around technology, which have just grown their revenues at like 25, 35%, or more. I mean, look at Zoom video. That's up with the revenue is more than 100%. So just seeing how much the market, how much leeway investors, traders, really, a lot of them driven by algorithms will give if these companies kind of give,

weak guidance looking forward on the revenue side because so much of the market performance has been driven by the revenue growth and the expectations that, hey, this revenue growth will eventually turn into profits, but we're going to give a lot of room for these companies to show their growth before they even have to show the profit. So I'm really focused on how their revenue growth expectations are going to shape up. I couldn't agree more. It kind of feels like price to sales now is the new P.E. Right? I mean, everybody cares a lot more about revenue growth, the net income. So the fact that people are projecting negative earnings doesn't concern me so much as lowered guidance for revenue growth, because that's a general indicator

of the strength of the economy. But I do think the market's hot mostly because of the potential for a Fed rate cut. So coming into earnings season, I don't think it's impossible that we'll see a stock pop maybe 10 percent or possibly drop maybe 10 percent. I don't think that's all the question. The automotive industry just got more interesting. On Friday morning, Ford Motor and Volkswagen announced they are adding autonomous vehicles to the list of projects they will be working on together. Andy, I don't know if this is a match made in heaven, but it certainly shifts the landscape in the automotive industry. Man, it really does. Now, to be fair, this has been, they've been talking about this.

They structured a partnership in January that helps them build pickups and commercial vehicles. But this is really the next evolution. And frankly, this is a big shot at Tesla, clearly. I mean, they're just the two arrangements here with partnering on EVs, so electric vehicles, as well as autonomous partnership with this investment into Argo AI, which is a Pittsburgh-based autonomous vehicle firm. Now it has a valuation of north of $7 billion, this little firm that both Ford and VW have investments into. So when you think about the landscape, Chris, that you mentioned, and the developments, and where car technology is moving, these companies clearly making these investments.

I mean, Ford's in the middle of cutting 7,000 jobs that they will basically finish that sometime this year, and yet they are making investments like this. So clearly they are putting down where they think the growth is going to be, and it's smart because if they don't make these investments now, and they're looking at hundreds of thousands of vehicles over in Europe on the EV side, they have to make these investments to see the fruits of that labor play out. over the next decade. And if they don't, they'll be behind the curve.

Yeah, I mean, I'm really encouraged by the move. I mean, I think it's a market where, I mean, you need all of the resources you can get. And to see companies collaborating like this is encouraging. It's nice to see that the lion's share of the money is going to be invested in EVs. Because, I mean, that is, to me, that's the greater near-term opportunity. I mean, the more we can get over to the EV side and less, you know, gas guzzlers. I mean, I think that's going to have a greater impact in a sooner, you know, a shorter time, timeframe there. The self-driving cars, you know, we know that's coming. We know the technology exists. That's a bit of a longer sort of timeline there. But to see them focusing on both is

certainly encouraging. I mean, Ford's going to put, they said, $11.5 billion of the next few years when it comes to these kind of investments. And so they're not joking around. Again, they're trying to turn the tide of this, you know, massive organization that clearly has about the same market cap as Tesla right now. So they have to do something or else they'll be behind the curve even further. Well, and you look at Ford Motor and Volkswagen, both stocks up a little bit Friday morning after this announcement, so definitely a little bit of optimism on Wall Street. Absolutely.

Andy, you mentioned Zoom video. Interesting week for Zoom. The newly public company hit a speed bump after a report surface that a flaw in Zoom's app on Mac computers could allow websites to take over the user's webcams. Emily, the stock dipped. It recovered pretty quickly. Investors don't seem worried, but this. does seem like, if nothing else, a reminder that rarely is technology bug-free. Exactly. I feel like

everybody just relearn that technology is never going to be 100% secure. Big data corporations are a testament to that fact. So, while it's never good to discover a vulnerability, especially in a new IPO, there's a reason why cybersecurity is a billion-dollar industry. It's because humans are innately going to mess up. Companies run by humans are innately going to mess up. So the fact that this vulnerability was discovered by a trained researcher before it was exploited, and it was responded to, admittedly, not as quickly as Zoom would like to have responded to it, but it was still responded to both by Zoom and Apple. It says a lot about the company. I think moving forward, this is not the first time we've had an issue. It's the first time I had an issue with

Zoom. It's not the first time we've had an issue with hacking, data protection, cybersecurity. It's not going to be the last. So I think it's justifiable why investors kind of quickly got over it. I don't think anybody in this market expect something to be completely error-free. Well, and Jason, it just reminds me of all the times we've talked about major retailers having announcements about credit card hacking and how many tens of millions of customers get their data exposed. I mean, it's a matter of when, not if. I mean, this stuff is going to continue to happen.

It's just a matter of how the company responds to it. And I think that in Zoom's case, leadership there certainly seems to be very customer-centric. And so that is a sign, at least, that they're going to try. try to get out in front of this stuff, admit wrongdoings, and hopefully it makes them stronger. It is interesting, the partnership with Apple and Zoom, because it was both who put out pushes of changes to their software and updates to the plan. So it does give evidence that they do have to have good partnerships, the technology providers, as well as the carriers or the platform makers or the tool makers to actually have solutions that meet the demands

of their customers. And with Zoom, the tagline for Zoom is it just works. And, I mean, listen, it does. I love the product. I tell you, reading through the steps in order to overcome this problem, it wasn't like just delete Zoom from your laptop and then reload it. Like, you had to basically go in there and do some stuff that, I mean, I had to read it a few times to even get a grip. So that was, you know, I don't think they want to be doing that on a consistent basis. In other recent IPO news, shares of Slack down a bit this week after Microsoft announced how many people are using Teams, which is Microsoft's competing platform to say. Slack. Slack has 10 million daily users, Jason. Microsoft says they've got 13 million using teams. Well, I mean, we can only go with what they're saying, right? And we'll find out more with Slack as they report quarters. I do think that the headlines talking about Microsoft

doing to Slack what Facebook has done to Snap are a bit hyperbolic. I think that is... You're saying headline writers are engaging in hyperbole? I wouldn't go so far as to say that. I also think that based on these numbers, that Slack had better continue innovating at a very rapid pace. Because I think one lesson we've learned over these past several years is that you should not underestimate what Microsoft is capable of. This is not Steve Balmer's company anymore. And Satya Nadella has a little bit of a different approach to things. And so, listen, I mean, it is really all about users. And I think when it comes to Slack, Slack does one thing really well. We love it. It's a great productivity tool. I think the questions

I've always had regarding it is, what do they do beyond that? And I do understand that it's a very attractive product from the smaller company's perspective, particularly if costs are low, because when you have smaller companies that are keeping a close eye on the books, they want that low-cost provider. Microsoft is a far larger company, plenty more resources, better capitalized. I mean, Microsoft can wait out the storm. They can offer things at a lower cost or free altogether. I've never used teams. It does sound like it's an interesting product that combine some of Slack and Zoom. So probably both companies are taking a look at this thing and trying to figure out how to keep it at bay.

Yeah, Microsoft has more resources, more resources that are being spread out across many, dozens of different divisions, dozens of different priorities for Microsoft. So, you know, I'm a huge Slack bowl, and I see this, and I see the pullback in Slack, and it doesn't really concern me over the long term. We've seen Microsoft and other big corporations try to disrupt small. are innovators, and the vast majority of the time, they fail. Look at Microsoft and Tablo, right? Many people thought that Tablo was going to be destroyed by Microsoft's initiatives into that space, and it really wasn't because the product was far superior. So just because organizations

have lots of Microsoft products already doesn't mean over the long term they're going to settle for a less than superior way to communicate, because that's such a vital aspect of organizational management and how people communicate is rapidly changing. So when I see these reports, I see them focused on large companies. And of course, Microsoft's on a focus on large companies, which are slow to change, slow to innovate, quick to take the incumbent player. But I think over the long term, Slack's definitely going to win. I mean, the thing that Microsoft, I think, has done so well, Jason mentioned such in Adela, is as the push to the cloud and the tie-in with Office 365 and their other products, as teams integrates more with that, and they get better at those

solutions, if they have this add-on solution, I think it's actually a nice benefit to those large organizations. Whether or not that totally disrupts Slack or not, we'll have to see how that plays out. And Slack's certainly not going to sit still and watch this all happen. Well, Jason, I looked at this story and I was reminded of the classic Jeff Bezos, quote, Your margin is my opportunity. It will be interesting to see how far Microsoft decides to push the monetary aspect of this platform. If they really want to get this out there, maybe they start offering it free to pretty much any company that's out there. I mean, I think the perspective you have to approach, if your Slack or Zoom or any other small competitor in the spaces,

you better pack a lunch because Microsoft can do this for a long, long time. Coming up, we will dip into the full mailbag. We'll head to Chicago for a restaurant idea so crazy. It just might work. Stay right here. You're listening to Motley Full Money. All right, before we get back to the news, let's talk about your business. Because if you don't know your numbers, you don't know your business. And the problem growing businesses have that keeps them from knowing their numbers is the patchwork quilt of business systems.

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system. And right now, NetSuite's offering you valuable insights with a free guide. It's called seven key strategies to grow your profits. You can find it at netsuite.com slash fool. That's NetSuite.com slash Fool to download your free guide, seven key strategies to grow your profits at netsuite.com slash fool. Let's get back to the news. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Emily Flippin, and Andy Cross. Our email address is radio at fool.com. Question from Matt who writes, when you look at a stock, what numbers do you look at first? What grabs your attention or immediately puts you off? Emily, I'll start with you. I really think it comes down to what industry I'm looking at.

If I'm looking at maybe a dividend paying stock in a mature industry, then I'm looking at dividend yield or price to earnings. If I'm looking at unprofitable high growth stock, then I'll look at revenue. And if I'm looking at a cannabis stock, I'm probably not looking at numbers at all. Ultimately, I'm not sure if there's one thing that I look at. I do have to take it on an individual base-to-base basis. Yeah, I think that's true. That's a great point, Emily.

I'll look at a different size. I mean, we care a lot about ownership and who is running the organization. and does that person have an ownership or the team has an ownership? So I look at inside ownership a lot. And just in general, who is leading the organization? Because ultimately, as long-term investors, you're giving your capital over to people to invest that on your behalf for a higher return going forward, and you want to make sure those people are invested alongside you.

Yeah, I put this to the test and clicked over to CAP IQ during the break here in the morning. And I think most of the time I click over the income statement and look at revenue growth and then ultimately profitability of the company. I mean, I think when you look at revenue growth, you can get an idea of what kind of company you're looking at. And then, I mean, just going down the income statement to see operating profit, net income, seeing how the financials are worked together, is this a profitable company or not. So, yeah, income statement probably gets my attention first. Nobody's looking at PE. For all the attention of the P.E. Ratio bets, nobody's looking at P.E.

Not to start. Shares of Pepsi hit a new all-time high this week after second quarter profits and revenue came in higher than expected. Jason, important to remember that Pepsi owes. owns Frito Lay. The snack side of the business is doing well. I was going to say, very important to remember they own that. I mean, it's worth remembering that diversity is this business's strengths. And I think that the efforts to branch out beyond soda certainly are paying off. I mean, when we talk about Frito Lay, the North American Frito-Lay segment of the business performed very well for the quarter.

This was the strongest quarter of organic revenue growth for the Quaker division in three years. in their beverage business continues to do okay. I think a big question mark, you know, they spent a pretty penny on Soda Stream about a year ago to the tune of about $3.5 billion. So there's still not a lot of clarity as to how that's going to play out in the strategy overall. But it definitely plays into the resource strategy, trying to eliminate waste from the planet, plastic bottles and whatnot. So, I mean, this is a slow and steady wins-the-race type of company, right?

It's not going to be something that doubles overnight, but Pepsi is a dividend aristocrat yielding about 3%. That dividend is a priority, so they're going to continue to pay it and grow it, buy back a few shares along the way. Much like we talk about Coca-Cola with that distribution network all over the world, Pepsi has a very similar dynamic at play, but as you mentioned, the Snacks Division, the Quaker Division, give you a little ad bonus. Yeah, you look at how these two companies have performed over the last five years in terms of the stock, Pepsi has basically doubled Coca-Cola's returns over the last five years. It has. And again, I mean, they've had a lot. They've had a number of levers to pull

over Coca-Cola. It is worth noting that management called the back half of this year a bit more challenging, some headwinds in a form of tough comparables from a year ago. So, I mean, income investors ought to keep that in mind. We may see a point where this stock looks a little bit more attractive than it does today. And we also have a new CEO leading the way to at Pepsi, which I think is nice. It gives a little catalyst to try to mix things up and grow the business. business in a different way. LULULEMON Athletica has made its mark in the apparel business.

Now the company is moving into a new industry. Food and beverage. This week, Lululemon opened a restaurant called Fuel on the second floor of its new flagship store in Chicago. Fuel serves smoothies, salads, and protein boxes, but they also have a beef burger on the menu as well as draft beers. Am I the only one in this room who thinks this might actually work? Draft beers.

I don't know. I feel compelled to go try it. This to me is not like when Urban Outfitter said, yeah, we're opening a pizza restaurant. Like, this actually seems like it might be a little additive. You know, it's interesting. So this entire complex is going to be north of 20,000 square feet. And that's four or five times larger than a typical Lulu Lemon store. And Lou Lemon has a goal of growing their square footage in the low, like, 10, 12 percent per year. So this certainly will help them kind of get there.

But I actually, I'm with you, Chris. I started looking on Southwest to see if we can get a research trip, the little trip to Chicago for this. It's in Lincoln Park, a very wealthy part of Chicago. It's in a good spot. They have a lot of offerings in there. It's a test concept. I'm not putting anything behind Lou Lemon here. I mean, criticizing them at all for this, because if you just look at the stock performance and the way that company has performed over the last three, five years, pretty impressive. Yeah, I feel like it plays really well into their brand, which is going, buying myself some nice athletic clothes, eating an assaye bowl, and at no point going to the gym.

Steve Brodo, our man behind the glass. You're a man of Chicago. You're excited about this? When life gives you lemons. Thank you. Beer all week. Jason Moser, Emily Flipp and Andy Cross. We'll see you later in the show. Up next, CNBC's Carl Kentini has been looking into the e-cigarette industry and the results are surprising. That conversation is next. So stay right here. You're listening to Motley Full Money. Welcome back to Motley Fool Money. I'm Chris Hill. Electronic cigarettes, vaping, jueling. Call it what you want.

But the popularity has gotten to the point that by the end of this year, the market for e-cigarettes will be approaching $10 billion. This rapidly growing and controversial industry is the focus of a new CNBC documentary, Vaporized America's e-cigarette addiction. It premieres Monday, July 15th, at 10 p.m. Eastern End. Pacific. It's reported and hosted by Carl Cantanilla. He joins me now from New York City. Carl, thanks for being here. Always good to talk to you, Chris. I'm curious why this was a topic that you found interesting enough to explore on this level.

You know, I think it, I don't know if this has happened to you, but if you mention e-cigarettes, to any parent, and Lord knows you and I have occasion to hang out with a bunch of parents all the time, And this is suddenly bubbled up to top of mind. I've just been astounded even after we began work on it, the number of people who had personal stories, personal experiences, my own kid. I've busted him three times. I've found this in his room. And you couple that with the amount of money that's been plowed into it by some large players. You couple it with the fact that it's a big tech story, right?

I mean, two Stanford guys figuring out how to make this work at scale. And it just had all the ingredients for the kinds of stories that we try to do, the intersection of culture and money and tech. It seems like a natural. I was struck watching a preview of the documentary by a number of things, first and foremost, by the experience of some of the kids that you interviewed, teenagers, talking about their first time vaping, and how it was great.

And I couldn't help but harken back to when I was 18 years old, tried a cigarette for the first time, and my lungs were on fire, and I was coughing. And that's when I sort of had the light bulb moment of, oh, this is far more dangerous than I thought it was going to be because, you know, cigarette smoking when you start out is rough. This is something that is so inviting to kids right off the bat. It's true. I mean, I think it's actually an excellent point. It's a big sort of overlay to the story we're trying to tell, and that is when you smoke a cigarette, you're lighting something on fire. It's 1,000 degrees. It doesn't feel good. When you start, it hurts. It burns your throat, burns your lungs. This is cherry flavored. This is, you know, creme brulee flavored. And as a result, the ease of that draw makes it easy.

for kids to take in a lot more nicotine than you and I ever could have smoking butts. Do you know what I'm saying? Because they don't burn out like a cigarette does after 10 or 20 drags, you can just keep ingesting nicotine, and it's that elevated nicotine delivery that scientists are really grappling with and the FDA. What does it mean when you can smoke the equivalent of two packs when you're 15 years old? We just have never seen those kinds of studies on traditional cigarettes over the past 60 years. I want to get to the FDA in a minute, but let's talk for a minute about Jewel Labs, which is the market leader in e-cigarettes.

And for the life of me, I can't think of another brand that is the Pepsi to their Coke. With this documentary, you got to go inside Jewel Labs. First-time cameras are inside there. just between you and me, were you surprised that they said yes? Because watching the documentary, I was a little surprised that they said, sure, we'll let you bring your cameras in. The answer is yes. It was not our expectation. I think, candidly, we thought they would play a little bit tougher

in terms of access on a lot of this stuff. But I think they've evolved and they realize we've got a real public image issue that they need to work on. This has been the case for a while, but I think they've come to the realization that it's not going to involve a clamming up. It's not going to involve trying to distract or elude the way tobacco 1.0 did. I think the lessons of that have been made clear to the tobacco industry over the last quarter century. So I think that the playbook from this point is going to be, we apologize for any actions in our past that have resulted in team use, but we need to solve that problem, because if this goes away, this is them talking again,

if the category is jeopardized, you're going to be preventing millions of people around the world from ever getting a chance to quit traditional cigarettes. So they're looking at the survival of the category, and that's going to involve a lot more communication that you saw in prior chapters. Yeah, you mentioned the flavors that all these e-cigarettes come in, and some of them are literally named after candies, you know, sour patch, gummy worms, that sort of thing. Ten years ago, the FDA banned flavored cigarettes, with the exception of menthol, where is the FDA on this? Because this kind of seems like an easy, I'm not going to say an easy fix, but it seems like an easy

move for the FDA given the ruling of 10 years ago? I agree. Part of our, part of the story is I think the degree to which the agency has, at first off, caught off guard. They did not see this coming when the survey data came in on team use. They clearly admit that. They've been very quizzical on some of these deadlines for the kinds of approval that these companies need to file for. They've had a surprise resignation of the commissioner, Scott Godlebe, of course, who is part of our story, but we interviewed him about this very issue. He was engaged. It was a, you know, a 45-minute interview when we played serious ball on this topic, and then days later he resigned. We were surprised by that. I think the industry was surprised. So I think it's been a real curveball that

public policy has not been able to grapple with. But I do think, I mean, the reckoning is coming, and I think that's a big part of why you've seen the industry itself try to grow up and grow up in a hurry. You mentioned that big money is going into this industry and probably the biggest, going into the biggest player, is Altria, which owns one-third of Jewel Labs. If you're just going from the perspective of investing in stocks, you could do a whole lot worse over the last 30 years than owning shares of Altria. Where do you think Altria's mind is? Because obviously, they went through this with Big Tobacco 1.0. This is now Big Tobacco 2.0 in a way. are they helping Jewel Labs steer this ship?

I think it's a hedge. I do. I think certainly in developed economies, it's obvious what's happened to smoking incidents. It's gone down, right? I mean, you're talking a fraction of the percentage of a fraction of the population that smokes today versus 40, 50 years ago. So they see cigarettes becoming obsolete in the developed world.

now internationally, it's a much different story. But I think they're looking at these new technologies, and Jules specifically, and say, all right, if our product is headed for the graveyard, what can replace it? We're not just going to let a billion smokers in India and China go without any kind of nicotine delivery. I think this is a much more,

we talk a lot about the domestic worries of parents and so forth, but in the end, this is going to be about the rest of the world. where smoking rates are sky high and remain so, that's where the growth is going to come from. And I think getting past these issues with the FDA is just Chapter 1. We're going to be watching this story for decades. One of the things that struck me in the documentary was the appeal. And I say this as someone who is not a smoker, but I totally understand the appeal of this device, particularly for younger people.

You know, you ask a bunch of high school kids, you know, what's great about the jewel? And one of the things they immediately say is it's easy to hide. You know, that fits in perfectly with everything we know and expect from teen rebellion. Did anything surprise you when you were doing all of these interviews and learning about this industry? Among the kids? Or the adults? I think when you're a kid, I mean, you and you can relate to. to this. I mean, kids are going to be bad. They're going to text and drive. They're going to

sneak alcohol, and they're going to smoke. In this case, it just happens to be something that is, as you said, extremely conceivable. You know, if you and I were trying to sneak around school or our parents and smoke a cigarette, you're going to come back in and smell like smoke. That is clearly not the case here. These things look like flash drives. A lot of parents we talked to thought they were a flash drive, a zip drive. And I think, so I think that my surprise was the level of naivete, I guess, is the way to put it, among parents, who simply had no idea what this was that the fad was endemic to the entire population of their kid's school. And the degree to which, you know, their kid was willing to risk doing this literally in their house. You know, I mean, getting out of bed, getting ready for school, taking a drag.

I think that sort of shows. That explains why you're looking at the numbers that you are. You're looking at three plus million high schoolers vaping in this country. It's not, once you see how easy it is to do, it's not a mystery. A new law here in Virginia just went into effect. You have to be 21 years old to buy tobacco products that was driven in no small part by concerns about young people vaping. What do you think is the next big thing to watch when it comes to the e-cigarette industry?

Is it more states like Virginia, and I believe we're up to 16 states now that have increased the age for tobacco products to 21? Is it something at the federal level, or is it something within the industry that we should be watching for? Well, you know, San Francisco, where Jewel is based, has voted to ban the sale period, which is raising some eyebrows about whether or not that is a harbinger of future bands, at least on the city level. I'm not getting the sense from the street that they're very concerned about it, to be honest. aid, because I said, as I said earlier, a lot depends on international growth, but a lot of these early bands that we've seen on various products, soda, sugar and salt, tend to have

limited appeal nationwide and certainly at a federal level. So I think the next big thing is to see how the FDA, how resolute they are in managing this on a national level, and then seeing whether anybody can pose a real, competitive threat to Jewel. We have other players who have similar products, not quite exactly the same, but could we end up with a little bit more of a duopoly than we have right now, where Jewel just completely runs the sandbox? A couple more things before I let you go off this topic, the dominant story in investing, and I would say the economy this year is the U.S.-China trade war,

and it's always natural to look at any conflict in terms of winners and losers. based on some reporting you did last month, it seems like Vietnam could be one of the beneficiaries of the U.S. China trade war. You were in Hanoi in June. Looks like they've got a manufacturing boom on their hands. Vietnam, if you argue, if you believe we're in the midst of a real trade war that's going to last, Vietnam is probably the biggest, you know, beneficiary of all the southeastern Asian economies. You've got, especially in apparel and to a lesser degree technology, supply chains that are like, let's get the heck out of China. This is getting crazy.

These two sides are in for, you know, 50-year Cold War. Let's see if we can move some production across the border, essentially, to Vietnam. So the challenge for Vietnam is going to be how much new orders can they handle, how much distribution capacity, can their ports handle it, can their railways handle it? It's interesting, of course. We came back from Vietnam, and within days the president again tweeting about unfair practices that he sees from Vietnam. And then this week, it was about potential unfair practices out of India. But it's definitely, we're in the whack-a-mole phase now of trade disputes.

And that's, I think, you know, you look at the Fed this past week, Kyle talks about corporate uncertainty. That's what it is. But people just do not know where the next shoe is going to drop. It's disconcerting if you've got to manage a global supply chain and plan a team, you know, two years ahead of time. Earning season starts to heat up later this month. Anything in particular you're going to be watching?

You know, I mean, if you look at how earnings estimates generally change within a quarter, analysts tend to bring down their numbers as the quarter gets closer to the end. This quarter, they've not brought it down as much as they normally do. So I think, you know, hopes are actually pretty high that although, you know, earnings may not be up year on year, they might not be down that much. I think it's going to be a real mix of winners and losers, as we always like to say. But in this case, I think to a heightened degree where if you miss without good reason, you're going to get punished on a price action basis with your stock.

And if you somehow show that you've managed to navigate well, money is just going to flow in. investors have diminishing tolerance for misses and increasing appetite for winners. Every Monday through Friday from 9 a.m. to noon, he's hosting Squawk on the Street and Squawk Alley. When he's not doing that, he's working on things like vaporized America's e-cigarette addiction. The new documentary premieres Monday, July 15th, at 10 p.m. Eastern and Pacific on CNBC. From a business standpoint and a health standpoint, it is eye-open. winning stuff, so don't miss it. Carl Cantanilla, always good to talk to you, my friend. Until next time, Chris, thanks.

Coming up, we'll give an inside look at the stocks on our radar. Stay right here. This is 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 once again with Jason Moser, Emily flipping and Andy Cross. Time to get to the stocks on our radar. Our man behind the glass will hit you with a question.

Jason Mosier, you're up first. What are you looking at this week? Yeah, I had fun teasing this out on Twitter yesterday. But the company is ANSIS. Tickr is ANSS. And ANSys develops in markets engineering simulation software. So they have a reputation for being the gold standard in the space. Customer base of around 45,000 worldwide with renewal rates clocking it at 95%. So three times as large as its nearest competitor in the space when we're talking about revenue. And when you look at the overall market simulation software is a market that is large and growing, slated to hit about $15 billion by 2023, so plenty of opportunity to capture some additional share out there for this company.

Steve, question about ANSIS? I would imagine their customers are very specific. How do they attract new ones? You know, it's very interesting. They actually have a very large presence in academia. So they're getting a lot of their engineers and customers as they're going through school and learning about all. of these different types of engineering projects. Emily Flippin, what are you looking at?

About once a quarter, I get really excited about this company, and that's Domino's Pizza, because they report on Tuesday, and whenever they reports, I always crave myself a Domino's Pizza. But no, they're coming out the new strategy. It's a Fortier-String strategy, essentially building a ton of Domino's pizzas, so you must order your pizza from Domino's to get it in 15 minutes. So I'm looking forward to Tuesday, to say the least. And the ticker? D.P.Z. Steve, question about Dominoes?

I see them moving a lot beyond pizza. Is that a good thing? It's not a bad thing, but personally, I think Domino's pizza there in the name. It's vital for them to have good pizza. Andy Cross, what are you looking at? Netflix. NFLX reports earnings next Wednesday. Stocks up 40% this year. It's had a nice little run after a good quarter, but it stagnated a little bit. Chris, I'm really looking to see it, again, it comes down to new member editions for Netflix, so they continue to grow around the globe.

So they added almost 10 million net new members last quarter. So I'm looking to see how that is growing, and will that be able to continue to get their revenue growth up north of 25% year over year? Steve? What is one Netflix show every one of our listeners should be watching right now? Well, everyone was watching apparently friends in the office a lot, but no longer on Netflix. So, yeah, I don't know. Stranger Things.

Stranger Things. Yeah, Stranger Things. I'm still not through all the seasons. Three very different businesses, Steve. You've got one you want to add to your watch list? Well, I think I own Netflix. So let's take a look at ANSIS. I think ANSIS sounds pretty cool.

All right. Jason Moser, Emily Flew and Andy Cross. Thanks for being here. Thanks, Chris. That's going to do it for this week's edition of Motley Full Money. Our engineer is Steve Brodo. Our producer, Mac Rear, is on vacation. So if the show wasn't good, that's why.

I'm Chris Hill. Thanks for listening. We'll see you next week.