Motley Fool Money - 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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I'm Chris Hill and joining me in studio this week from Million Dollar portfolio, Jason Moser and Matt Argusinger. Good to see you as always, gentlemen. Hey now. We will dig into the latest headlines from Wall Street. Carl Kintanilla will give us a preview of CNBC's new series on the business of entertainment. And as always, we'll give an inside look at the stocks on our radar. But we begin this week with the big macro. And 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, Maddie, 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 is 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, he had 59,000 negative revisions to prior months. Bad result overall. And we talk a lot about this report as being kind of a lot of noise. In the short run, it gets revised a lot. Years from now, we'll look back. It probably won't be a 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, generally, 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, $3,000, $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. Is Maddie saying what I think he's saying Chris? 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 DC area or the jobs picture. Because it looks like they both suck. Pretty bad. The jobs picture. I mean, really? I like to consider myself a sympathetic human being. 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 I mean, we saw this. 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, okay, car sales fall off a cliff. And in the case of Ford Motor, 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. You look at, I would consider we are in a state of sort of under-employment, even if the employment numbers are getting better, I think that we're in a state of really under-employment. 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 zero percent financing or longer financing. That'll be another one that comes up to roost at some point here. People taking these eight, nine, ten year car loans out. That doesn't work so well, right? A car is not an asset like a home. It's not growing in value over time. But I think another headwind that probably it's a bit sort of longer term.

It doesn't get talked about as much. But I started thinking about this more and more. There are fewer drivers, like people not getting their driver's licenses like they once did. And 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 3 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 percent in 1983,

and then you think, well, 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, and 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. And 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. And that has helped propped up what could have been a little bit of a bubble in

terms of auto sales. And that could come crushing 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. All right, let's get to some of the companies making news this week. Ambrella's first quarter revenue came in as expected, but adjusted profits were higher than expected, and shares of the chipmaker up 12%. Shareholders needed this one, Maddie.

Well, they needed this one, and I think the shorts didn't need this. I think part of the today's, or this week's rise, was short covering. I mean, 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 actual. 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 percent 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. I think that's what's happening a little bit. You have some short covering in, which is boosting the stock. Shares of Michael Corr's up 15% this week after a fourth quarter report that looked fine, Jason. That's really all it looked. 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 Coors, the thing you have to remember with Coors, when it comes to the prospects of discounting, it's not a matter of if. It's a matter of a win. And we saw this story play out with Coach over the past few years. And it's really weird. When you read through a Michael Cours 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 with 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, you think if there's a value thesis, you

here, then you do your, 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 Morgan Stanley reports, citing increased competition, while Under Armour issued a warning related to the Sports Authority bankruptcy. 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, right? I mean, it's still restructured.

Under Armour just got restructured out of about $100 million in revenue. Well, yeah, and 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 is 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. In Nike, and really anyone sort of tied to that Sports Authority chain. But I think Nike and Under Armour particular, because they are the most familiar brands in the athletic world today, and they are building out big-time direct-to-consumer businesses already, whether it be e-commerce or stores. within malls. And it's interesting. I mean, you can walk to a mall, and there could be a Dick Sporting Goods right there in the center. And then on either side of the mall, you'll see a Nike store and or an Under Armour store, and those stores are smaller. They have better

inventory. They tend to have what you want. They tend to offer pretty good deals. And I think they're able to target their customers more because it's a more singular message tied around a singular brand. And these companies like Dick Sporting is, they have to maintain these huge footprints and just inventory nightmares. So, yeah, I'm a lot of it. I'm just, I'm I've got no worries where Underarm is concerned. I think this could be a rare opportunity. I mean, these are two really wonderful brands. Nike's certainly a global brand.

Under Armour trying to be a global brand. And any time you can get somewhat of a discount in these companies, and we see Under Armour and Nike both down double digits so far this year, start paying attention to these names. I think they're high-quality businesses. Yeah, and I'll add. I mean, 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 yourself stocks based solely on what you hear. Welcome back to Motley Fool Money.

Chris Hill here in studio with Jason Moser and Matt Argusinger. Radio at Fool.com is our email address. That's Radio at Fool.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 Kemet, whose two segments are Rhodo Rooter and a hospice service, or National Presto Industries, which sells ammunition, kitchen appliances, and adult diapers.

Nice. Wow, that's... The name is just... It's 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, and I think that's a very good question because certainly you look at businesses that work sort of 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, I think it's, you can see it play out both ways.

I think with KEMED, KEMED 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, right? I mean, 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 kind of 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. And I'm going to go ahead and call out the biggest example. I mean, Berkshire Hathaway is a wonderful example of a collection of businesses that don't really have much to do with each other. I mean, you've got railroads and energy and candy and jewelry and home furniture, but a wonderful leadership team in 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 as Otter Tail Corporation. 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 you know, they're going to be a lot of in 80s, conglomerate businesses got a really good multiple in the market. For some reason, investors, the market really liked when you had companies gobbling up sort of non-associated companies and building an empire. But if you look at the last couple decades, conglomerates, including Berkshire-Hathaway, have actually gotten kind of a lower multiple from the market. They're just not considered the same quality of business as your sort of tried and true,

pure core, non-diversified businesses. So just something to keep in mind. Do you think that has to do with sort of this move to tech, that we've been, I mean, 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. All right. One more email from Gary Fisher 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 in 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, maybe the one you already own. So I'd start there. So if you own 12, and the question asked 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.

So, 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. You might want to consider, I know, for example, adding large-cap dividend payers to your portfolio in the sense that. So I'm always thinking, what am I going to do next with my portfolio? It's really trying to optimize risk. And if I feel like I'm too focused in one area in terms of risk, I want to sort of diversify that in my next stock. And I think also take a look at your risk beyond your stock portfolio, right?

I mean, if you have a 401k, 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 Roydow, on the other side of the glass, because it's time to get to the stocks on our right-o. But before we do that, also joining our man, Steve on the other side of the glass, this week, special guest longtime listeners, Lucas 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. All right. 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, and probably surprises people, because I'm not saying, go out there and 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 and quarter out, we just are starting to look more and more at the actual growth prospects of the business. We've come up 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 is done very well, and they face in the face of a very volatile market.

And 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. All right, Matt, you've got about a minute left. What are you looking at? So, Jason's thinking about selling Costco, I am saying definitely sell Walmart. I just think, well, here's one number to know, 7%.

That was the growth in Walmart's e-commerce system. I'm sorry, e-commerce segment last quarter. Compare that to the overall growth of e-commerce of 15%, Amazon's 27% growth. I just think Walmart lost the war that it should have won Hanley starting 10 years ago. They're way late to the game and many billions of the dollars short. Steve, question about Walmart? Have you ever actually gone into a Walmart come out and been like, I cannot believe this cost 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 Grover. see here. Steve, Costco, Walmart, you interested in neither? I mean, I'm a Costco shareholder. I'd probably go with that one. All right, Jason Moser, Matt Argusinger. Guys, thanks for being here. Thanks. Chris. Coming up, we will delve into the business of binge watching with CNBC's Carl Cantania. Stay right here. This is Motley Fool Money. You can keep your Marxist's ways, but it's only just a phrase, for it's money, money, money, money, money makes the world go. This episode of Motley, Money, Money, Money is brought to you by Rocket Mortgage

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slash fool. Equal housing lender licensed in all 50 states, NMLS Consumer Access.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 Kintania. 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 digital media is slowly eating the world. But I think the network was interested in, I don't want to call it, experiment because it's quite deliberate, but seeing what we're capable of doing in this arena where you produce content that does not automatically go to television first. If I would like

to spearhead an effort, and if so, what topic would I want to talk about? And I mean, you know me. I'm sort of a pop culture junkie, almost majored in film and 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. Colin argues that was one of the original moments of what we now refer to as binge watching. Jane Rosenthal of the Trebekah 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 axe 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. Amazon and same with stars. 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, try in some cases developing their own audience measurement systems to compete with Nielsen,

even though they still subscribe to Nielsen. We just had the up-fronts where the networks present their goods to the advertisers, and a lot of the big traditional networks argue that they're undercounted. So that is 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, 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. How are these guys going to make profits in a big way down the road? You're listening to Motley Full Money talking with Carl Cantiniah, 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 one and a half. billion dollars. 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 dollars. And I guess my first question is, when you saw that, did that surprise you? That YouTube alone could represent 15 to 20 percent 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 cell side with essentially posing the same question, but arguing that YouTube's valuation has gone

3x since the last time. It just, 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, you know, maybe rivaled by Instagram, Facebook. There's probably a couple of 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 bread. 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 shows? runners, 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.

have, you know, 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 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 surprised you? You know what? 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, we'd like to, you know, see what producing a Hollywood film is like. So even a guy like that who's been around, far as, who 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 Cantonea. This is Motley Full Money. Welcome back to Motley Full Money.

I'm Chris Hill talking with CNBC's Carl Cantinia. 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 with over-the-top services. you're not going to subscribe to 15 of these things.

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 just permeates everything people are talking about uh... and the degree to which robots will help in decision making everything from managing railroads bunch of other things autos there's a big question about where whether a car is now a moving computer or a car

as uh... the interfaces between the driver and and ride sharing for instance uh... make just driving a different experience uh... a i autos and video Video. It's almost all people can talk about. It makes you wonder about the future of the 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 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, I 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 going to go with Homeland. I'm sort of surprising myself because we love we love Amazon show catastrophe but I mean come on Mandy Patinkin and Plare Daines with her crying face I mean with Quinn I mean you can't lose man that that show is just 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 6. You can find all the episodes online at CNBC.com slash binge. Carl Quintania, 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.