Motley Fool Money - Motley Fool Money: 7.16.2010

Episode Date: July 16, 2010

Congress passes financial reform.  Steve Jobs admits that Apple's not perfect.  Intel reports big earnings. And Google disappoints Wall Street.  On this week's Motley Fool Money Radio Show, we tackle those issues and talk brands with GSD&M Chairman and CEO Roy Spence, author of It’s Not What You Sell, It’s What You Stand For:  Why Every Extraordinary Business is Driven by Purpose.     Learn more about your ad choices. Visit megaphone.fm/adchoices

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Thanks for being here. I'm your host Chris Hill, and I'm joined by Motley Fool Senior Analyst, Seth Jason, James Early, and Shannon Zimmerman. Guys, good to see you. Good to see you, Chris. On this week's show, a big announcement from Apple, big earnings from Intel, and a big financial reform bill. Really big. pages big, plus three stocks on our radar and one reason why you don't mess with Texas. But we begin with the Financial Reform Bill, which Congress passed this week.

The bill establishes an independent consumer protection agency within the Fed, gives the government new power to seize and shut down troubled financial institutions, and sets up a council of federal regulators to watch out for threats. Derivatives will be subject to government oversight, and we've got new restrictions on proprietary trading and headings. fund activity. James Early, obviously, there's a lot there. It's a massive bill. What got your attention? Chris, I'm going to go through one by one. I would say the biggest thing is derivatives, which sounds boring, but the world has 200 trillion in financial assets, but 600 trillion

and derivatives outstanding on those same financial assets. So it is really the elephant in the room. All of it completely necessary. Exactly, exactly. And it's basically four or five top banks that do all the derivatives trading in the U.S. And one thing that I saw was that it looked like the banks were going to have to spin off their swap desks, and swaps are a form of derivatives, and come to find out that's not going to happen. Basically, swaps that deal with interest rates or with gold or precious metals are exempted, and that's 80% or more of swaps. So these are swaps that get to stay on these bank balance sheets. In other words, they're still sort of too big to fail in that regard. Nothing has changed. The banks won. They get to keep the higher risk, higher

reward proposition here. Shannon's the, well, sorry, I'm not Shannon, but you'll approximate you. You got one in response to this question. Well, that's the problem with when they try to make these reforms is they get hung up on, say, a type of derivative. And they write rules or they write guidelines on what you should do with it. And instead, the idea here is, listen, there are valid uses for derivatives and swaps, which is hedging risk. We need to create guidelines so that that continues to happen, but get rid of all the derivative gambling. and so this is what happened in the past.

They get hung up on the letters of the law, and they miss the big picture. Yeah, and that's exactly right. And as we were talking about a couple of weeks ago, you know, it's an impressive piece of legislation. I guess it required gigantic blue boxes to shelf, to store the whole thing and bring it over to the White House. But the devil is in the details, and the details will be written not by Congress, but by the regulators. How are they going to interpret these things? And so even the, I know James was a big fan of the transparency of the derivatives trading. Well, you know, how long traders can wait before they disclose the prices?

That's in play. So if it's immediate, that could be transparent. If it's 30 days, then that's next to meaningless. And the stage has been set to water down even the derivatives pieces. James was just alluding to at one point. And I thought that the derivatives piece was the proxy for how serious the reform would be. It doesn't seem that serious to me if that's going to be backed out because having the banks spin off their derivative units, which are little printing presses of money for them, that's not going to happen.

And that's too bad. And even on the transparency, in terms of putting derivatives on exchanges, it's the SEC. now who gets the decision printed to them to decide if the derivative is, quote, standardized enough to put on exchanges. And the SEC, even if you think they're good at what they do and I don't, they're certainly, they don't have the staff to do it all anyway. But they're about to get a bigger staff. Have to wake up somebody there to get them to pay attention here. So, I mean, was this a situation where it was almost inevitable that Wall Street was going to find a way around this? Absolutely. All that talk about financial innovation, they innovate for themselves.

Yeah, just as a quick example, the way the bill reads, there's a sort of, swap pushout rule. This is what we're talking about. It says banks with swap dealers won't get federal assistance, which sounds so bad, but the only swaps that it applies to are less than 1%. These are like pork bellies and soybean oil. And even the administration knows this. Larry Summers is out saying, you know, this is an important piece of legislation, but how important it is, is really going to be down to the regulators, not us. Yeah. Apple's problems with the iPhone 4 got taken to a new level on Friday. At a press conference, Steve Jobs referred to the ongoing reception troubles as antenna gate and offered free cases to everyone who owns an iPhone 4.

Shannon Zimmerman, anytime you've achieved gate status, that's just not a good thing. And did he confer on himself? Is that the way that it worked? Yeah, he was up there talking about antenna gate. Well, I thought there wasn't an antenna problem. You just hold the phone differently, and you're all set. I mean, this is the obvious thing to have done a while ago. They came out with a firmware fix that made it clear that they were overreporting signal strength to begin with. But that was a headvake. That wasn't the real problem. Consumer reports comes out and says, oh, lo and behold, we do think there's a hardware problem here. 48 hours later, 72 hours later, Steve Jobs, who does not like to admit error,

is there and say, here's your free prophylactic for your iPhone. And really didn't admit much error. The press conference, it began with, oh, the phone is great, people love it, et cetera, et cetera. And then the thing I don't get is he wants to be denying that this is a hardware problem, and essentially for folks who are behind the curve on this, the outside of the, the outside of the case forms a couple of different two or three antennas. And if you bridge those antennas with your fingers and you are nice and electrically conductive, you screw up the signal. So that's why having the condom on the phone can help with that. So he's on the one hand saying, here's this thing that will fix the problem. But before they did that, they showed a video of other phones

and changing hand positions to try to claim that all phones had the same problem. Well, these are phones that have internal antennas. It's a completely different issue. So Steve's mincing words, at least they're sort of doing the right thing. It's still a really weird episode in Apple's history. So as long as you hold it with tongs, you're in the clear. Yeah, rubber gloves, dishwashing gloves would work too. It is weird, but it's sort of thematically correct with the whole passive-aggressive stance that he manages with.

I'm disappointed. They were censoring negative comments on their discussion boards. Apple was, you know, about this consumer report stuff. So to me, that goes a little too far under the cult status. Shannon, a couple of weeks ago, you set on the air. You were rushing out to buy your iPhone 4. I was, and I was foiled by the fact that I could not pre-order and going to the Apple store that's nearby in the Pentagon City Mall.

They said, oh, dude, come back in two or three weeks and maybe. So it slowed me down, and I'm kind of happy now. So I don't have to, I guess they're going to refund everybody who paid the $29 for the case, but I don't have to go through that. And I'll wait for a while and see if anything else comes out that Consumer Reports doesn't like. The new scandal here is the rip-off prices for those cases, $30 for a case that the estimate costs actually about a buck to give people. And apparently a rubber band will work, too, if you just stretch it around.

Seriously, if you stretch it around your phone. I need duct tape is what consumer reports recommended, actually. But it's not aesthetically correct. You're listening to Motley Fool Money. We're going through some of the big stories of the week. Potentially good news on the BP front. At the time of this taping, the Gulf well remained capped, but there's some ambiguity about pressure levels in the well,

and that could require BP to reopen the well. Seth, Jason, we don't know if the well is capped for good or just capped for now, but you took a lot of heat this week. You wrote something for Fool.com, and the headline was Obama's gusher in the Gulf. Yeah, people didn't get it. I was talking about a gusher of ego. That was partly a failure of the way we format our articles online. And I was talking about the moratorium, which I still think is an ego-based policy decision,

and it's completely arbitrary with an end date that has no bearing to reality on whether or not they will know enough at that point to make drilling safe. and I think that it's just bad for the Gulf economy for them to make decisions like that. But to get back to BP, I think that this is a pretty interesting development. BP is finally, I actually heard a couple of good comments in the press about BP. I thought hell had frozen over when I heard those.

They came on praise for BP. They came on public radio. Wow. But yeah. But this is pretty good news. And of course, now they're testing the well right now, trying to figure out if the well itself is cracked. so that, in other words, if you cap the top on this thing,

but there's too much pressure and there's cracks in the sides of the oil, we'll find its way out somewhere else. But the good news is they should be able to siphon off the oil without losing much if this cap holds, and that should give them enough time to get the relief wells done. And then, of course, there's the long cleanup process. But this is pretty good news. But this is a temporary step, right? It's the relief well that's going to really solve the problem.

Yeah, well, they want to be able to kill the well from there. Right. I mean, does it go without saying that the stock is going to benefit once the well is capped? Well, today this week has been a bad week for stocks at the end of the week and so, you know, I don't know that you can say the stock will go up

from here for sure, but I think the worst is over for BP unless something else unforeseen happens. We still don't know whether they're going to be billed for the damages though. I think that's a big wall card. Well, I think the $20 billion they've already set aside is probably adequate. And there are two installments that they've already paid.

I think the tap can go up. I don't understand. Yeah, absolutely. Absolutely. Coming up, Intel surprises and Google disappoints. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in the studio with Seth Jason, James Early, and Shannon Zimmerman as we dig through some of the companies making headlines this week. Guys, we could be looking at a record year for foreclosures. Seth Jason, you're our housing man in the room. Can you break down? Housing bear. Can you break down the latest numbers? Hey, I was bearish on housing way before it was cool. I used to get hate mail from mortgage.

from mortgage people and for real estate agents about my bearishness on housing. When Barish wasn't cool. You actually wrote a thing for Fortune magazine in, what was it, 2006? Yeah, I said that the housing markets collapse might cause an entire recession. And weren't you on the other side of the abacus transaction as well? But I don't think there's much of a doubt that this is going to be a record year for foreclosures. And that's continued bad news if you were interested in home builders a few weeks ago. Maybe it was months ago.

I said I thought the bottom might be in for home builders. I don't think so. When you have another million or so foreclosed homes coming up, which is probably what we'll get, that's a lot of competition for new homes. So this is not a good report. At all. And just a further confirmation that this was never a subprime problem to begin with, even though that's the way the kind of reductive financial media wanted to cover it.

This is a widespread problem. Everybody paying too much for houses. Exactly, exactly. A new twist in the Toyota unintended acceleration story. The Wall Street Journal reported this week that, Federal regulators were blaming dozens of the unintended acceleration cases on driver error. On Thursday, a Toyota company spokesperson said the company was, quote, not anywhere near close to reaching a conclusion on what caused the incidents.

Seth, what did you make of that? Well, that's the politically correct thing to say. I don't think they are close and they don't want to come across as if they know what's going on. But according to what seems like a leaked report, recording data from the cars shows that people who said, this thing was accelerating on its own, had their foot on the accelerator and nothing on the brake. Now, I think that's an open question still. I have not seen this resolved, at least in the press, the technicalities on where that information is recorded in the electronic chain of command there.

So if this information comes from the same faulty place that people allege, which is, you know, that the controller was confusing brake with gas, then, of course, it would be no good. We haven't heard the end of this. But if it turns out that it's driver error, and I think that's always probably the most likely conclusion because it's the simplest, then a lot of us of Toyota, a big apology. The CEO came over in front of Congress and got his face torn off.

Yeah, and of course, they admitted a problem with a gas pedal and with floor mats pinching the gas pedal, but the real scandal here is that they supposedly have not been able to find this electronics flaw that did this. Well, it sounds now like it's possible that there simply is no electronic flaw. My Prius is buggy, though. I've got to say that. The brakes could jumpy sometimes, and lights come on and stuff, but I've never had any accelerators. But in Toyona's defense, James, you're a really bad driver.

I have been sentenced to defensive driving school four times. I'll get that. That's nothing to do with the Prius. Final word, Chil. Yeah, but they have recalled millions of cars. And what's the opposite for recall? Is it a call? Is that what happens? If it turns out not to have been a problem after all? Time for this week in banking. Goldman Sachs agreed to pay a fine of $550 million imposed by the SEC.

plus Citigroup, J.P. Morgan, and Bank of America all reported quarterly earnings, but the results were mixed depending on which media outlet you were paying attention to. James Early, what did you make of all this? Chris, the bottom line is the top line, which revenue basically, which was weak for all these banks. But earnings were kind of mixed, and to your point, I'm looking at a Financial Times headline that says J.P. Morgan signals end of Wall Street rebound. Investors Business Daily, meanwhile, says J.P. Morgan tops Q2-2 views as credit trends in improve. No wonder people are confused out there. I prefer the analysis of the peach-colored paper. Exactly, the financial times. I'm going with that. Banks are using, I would say, the worst possible method to juice their earnings, which is to release reserves. In other words, these are

cushioned for bad times that banks have built up when they think the coast is clear. They released some of them. I don't think the coast is clear yet, especially after this FAS 157 accounting rollback we talked about last week. Yeah, where they're not reserving against a lot of likely bad stuff. Exactly. They have more leeway to. to keep valuations of these loans, whatever they want. So I'm not jumping in yet. The Goldman Sachs settlement was quite interesting to me. So it's $550 million, which sounds like a lot of money because it is a lot of money,

but not to Goldman. It's a drop in the bucket. But perhaps the most ridiculous part of the settlement, which it's good. They've come and they fessed up implicitly to something, but not to fraud. Although in the settlement with the SEC, they had to agree to ban themselves from committing intentional fraud in the future, which I had always thought banks were prevented from doing that anyway. It's better if it's on paper, though. It's all really political.

You know, somebody at Goldman did the calculation, which was, listen, we need a lot of Patsies to take the opposite side of these trades. And the Patsies include, oh, pension funds, small-time pension funds, you know, small cities, et cetera. And they took the opposite side of this trade with Paulson, and they got burned. And Goldman, I think, did the calculus and said, we need to look like we're coming clean. So we'll pay this fine. Otherwise, we lose our pool of Patsies for the future. You're listening to Motley Fool Money.

We're going through some of the companies making headlines this week. Intel posted the strongest quarterly results in its 42-year history. Revenue was up 34% with profits of nearly $3 billion. Intel easily beat Wall Street's expectations. Shannon, is this assigned businesses or starting to spend some money on technology? Absolutely. Intel is a big player in the industry generally with consumer products being a part of the demand stream for their chips. But yeah, the big thing is capital spending. and the analysis that I have seen suggests that there is sort of a wave of spending on laptop computers in particular.

How long that sustains itself that will have a big bearing on Intel's future results, and then also the cycle, the replacement cycle, seems to have gotten longer. But for right now, this seems like remarkable news for Intel and also for AMD, I guess you can't really call it its chief rival because it's such a small player relative to Intel, but they had a good quarter too. Seth? Earlier this week on Fool.com, I wrote an article called something along the lines of time to panic on consumer spending, because we had a consumer spending report,

and the gist of it was something we've talked about here before, which is that spending on gadgets and computers remains pretty strong while spending on things like cars, furniture, hardware is pretty weak. So if you're looking to invest where consumers are spending, it's on stuff like computers. Google's net revenue for the second quarter was over $5 billion, but it wasn't enough for Wall Street. Heavy spending on hiring and R&D meant Google's bottom line results were lower than expected.

Shannon, $5 billion in revenue. That's still a huge number. Is Google now at the point where it's just a victim of its own success? In some ways, because people are looking for it to be, you know, there's all this talk about Google being endlessly inventive, but the one thing that it can't invent is a diversified revenue. 97, 98% of its revenue comes still from search advertising. And they had some interesting color around that,

the way that their customers are having integrated campaigns that run across the web and across mobile devices is quite interesting. But I guess cost per click, the revenue that they're generating per click didn't increase as much as analysts. unless we're expecting, nor the company itself. Until Google succeeds in making some of these initiatives that are underway now profitable, this is going to continue to be a problem for them. And finally, YUM Brands' second quarter earnings were down 3.6% and shares fell on the news.

Yom Brands is the parent company of KFC, and on the earnings conference call, Yom's CFO took a shot at our beloved double-down sandwich. What? The CFO badmouthed? When he referred to sales of the sandwich as, quote, immaterial. Immaterial! They've sold over 10 million of these things. That's Wall Street speak for it. It's pretty small.

All right. Exit question. What is the next step in the fast food evolution? We've got the double down which has no bun. So what's next, Shannon? I think they're going to replace cheese just with slices of fat. James? Similarly, how about like a stick of lard rolled in salt and sugar?

And you just eat that and it's fried. The problem with the double down is the double down was two pieces of chicken and that form the bread of the sandwich, correct? That's right. They need to fill that with syrup, like the McGrittle. All of this sounds wonderful. I'm there. I'm totally there.

Pretty good ideas. Steve Broido, what do you think? Last week, my wife and I and some friends ate at a restaurant where they served macaroni and cheese lollipops. Oh. Are you kidding? Yeah. Well, the name was a little bit more. It was a little generous.

They were just a little bit of macaroni and cheese on a stick. But I think the concept of the lollipop food could be huge. All right. We'll have to stop there. Especially if you're driving. Exactly. With a sharp stick, it's great for kids. The guys will be back later in the show to talk about the stocks on their radar.

But drop us an email at Radio at Fool.com, especially if you have any ideas for a sandwich that could trump the double down. Coming up, what can BP do to get its good name back? Why do bags fly free and why you don't mess with Texas? We'll talk to ad man Roy Spence. Stick around. You're listening to Motley Fool Money. Welcome back to Motley. full money. I'm Chris Hill. My guest this week is Roy Spence. He is the chairman and CEO of GSDNM

Idea City, one of the most successful marketing communications and advertising companies in America. He's also the best-selling author of It's Not What You Sell, It's What You Stand for. Roy, welcome. Hey, Chris, great to talk to you, my friend. How are you? Well, thanks for being here. How the fool's doing today? We're doing well. We're doing well. We're doing well. I want to talk about your book, but first I want to get your thoughts on BP and what's going on there.

Obviously, there's been so much that's happened over the last couple of months. And BP, for years, marketed itself as a different kind of oil company, saying that the BP stood for beyond petroleum. This was an oil company that even socially responsible mutual funds would invest in. in your mind, is this an example of a company where the marketing didn't really line up with what the company was doing? You know, it's a great. I think that the quick question, the answer is I don't know because I wasn't on the inside of BP. But I do understand, I do have people who were. And I think on one hand, there was a company who saw, I think, that after the Exxon spill,

there was a belief that within the organization and with all companies that you had to be at some point in your life stewards and responsible for the greater good. But here's the thing that I think stands out to me is that the more this comes out about BP, and again, I only know what I read and what I get from the Internet and everything else is that they had a series of other violations, and I know all companies do. The end story to me is that I don't think BP has a brand anymore. And what I mean by that is, you know, brand is often overused. But for me, a brand is a sacred promise. That's what I call it.

Whether it's Southwest, the promise to keep the skies democratized, or Walmart to save you money so you can live better, or the United States Air Force. And their brand promise was they were going to be beyond petroleum. think they're now just a corporation. And what I mean by that, Chris, is that until they fix their mess, and I know they're trying, hell, we all know they're trying, until they fix their mess, I wouldn't be doing all the advertising they're doing, I wouldn't be doing the full-page newspaper ad, they will get credit

only when they stop it and they fix it. And that's a long road. They're going to have to earn their way back into this deal. And right now they're not a brand, they're a corporation, and that makes them vulnerable. A year from now, or two years from now, when the mess is cleaned up and things are relatively back to normal, what does BP need to do to gain trust from investors, consumers, business partners? If I was in right now, I would move my corporate headquarters to New Orleans. I would say, look, we had a terrible mistake.

and by the way that shouldn't be a condemnation of all offshore drilling or all oil companies. We made a mistake. We didn't do the right thing out there. And the first thing I would do is quit talking about it and make a long-term commitment

that once they stop the leak and once they clean up the golf and by the way, that's a long-term program. I would not ever walk away from the people of the Gulf Coast ever. I would move a corporate. headquarters down there, I would move business down there. I would say, folks, we did something, you had nothing to do with this. It wasn't your fault. It was our fault. You're listening to

Motley Full Money. We're talking with Roy Spence, author of It's Not What You Sell, it's What You Stand for. Roy, the subtitle of your book is why every extraordinary business is driven by purpose. Why does purpose matter for business? It matters more than ever, and again, I did, Chris, didn't know this. This has been a journey for a long time that I've been on. And, you know, from being with Herb Keller at Southwest Airlines and Colleen Barrett and Sam Walton

and Norm Brink who started Chili's and being involved in presidential politics and governing, I found that if you have a purpose beyond making money, you'll make more money. In today's marketplace, it's even more. Purpose is really clearly defined at least the way we'll see it.

It's the difference you're trying to make in the world. Now, and I've been all over the world, and until this winter of economic turmoil, and it is a winter, it's not a recession, it's not a depression. It is a winter, and every generation has one. The last one was World War II in the Great Depression, the one before that was a civil war, the one before that was the American Revolution. We're in a seasonal generational change. I don't know why our leaders don't get this. both government and in corporate America. This is a sea change.

And right now, because the Internet, because of transparency, companies and organizations who are not in the business of improving people's lives, what is your purpose? Southwest Airlines' purpose is clear. We're in business to give people the freedom to fly. We don't charge for bags. And by the way, we made over a billion dollars charging free. Because our goal is to keep our cost down,

we can keep our fares now. So purpose, it's got a lot of traction in corporate America, as in universities now. If you don't know what difference you're trying to make in the world, and I don't mean that in any ooey-gooey, ethereal, if you're not trying to improve people's lives as your core, not as some charity things, but the core business, if you go out of business, you will not be missed. I don't miss linens and things. I just know, I miss the jobs, but if you're not in the business of life improvement, you're not going to be in business. The world has changed. The consumers have left the building.

And if your business is not in business to improve their lives, they're not going to spend money with you. That's just the way it's going to be. Now, Roy, the latest radio station to add our show to their lineup is in Houston, so it's only fitting that we talk about what is maybe your most well-known marketing campaign. And I'm referring to Don't Mess with Texas. What is the story behind that campaign? story behind it's a great story. In fact, it has Houston roots because Bob Lanier, who used to be the great mayor of Houston, who I just love, he was the chairman of the highway commission in the mid-80s,

and litter was a real problem, so he was sitting there, and just like, you know, a lot of bureaucracies, they came in, they gave, he was hearing the, you know, this is what transportation cost is, and then the litter guys came in and says, well, litter is up 17% again, Commissioner. So we need a 17% increase in our budget. And he stopped and put his glasses on his nose, and he looked down. He said, has anybody ever thought about, like, reducing litter? It was like the room was silent. So they went on an RFP, and my partner, Tim McClure, the M and GSTNM,

we were pitching the business, and one day he came in, he said, I got it. He said, we don't have trash, you know, we don't have litter on our highways. We have trash. and he wrote the line, don't mess with Texas. We pitched the business. It was very controversial. But what we did, Chris, in a sense, it was our first lesson in laddering up to a higher purpose.

We didn't even know we were doing this. We got out of the litter business and got into the pride business and didn't even know it. And at that moment in time, we did increase any fines, we didn't pass any frigging laws, we didn't try to regulate it. We got celebrities like,

Willie and Jerry Jeff Walker and the Cowboys and the Houston Oilers back then, the Rockets, and we had commercials, the Hells Angels and Tyler, Texas. And we said, don't mess with Texas. And it became more, it became the most recognized theme, not only here, but damn near around the world. And a lot of it was because the former mayor of Houston Bob Lanier was there, and he inspired people to reduce litter. If we had more leaders in politics, instead of trying to legislate behavior, let's go out there and appeal to people's best instincts.

Consumers want to change. They want the things to work. Put the consumers in charge, and it's amazing. You're listening to Motley Full Money. We're talking with Roy Spent, author of It's Not What You Sell, it's What You Stand for. Roy, what's the biggest misconception about marketing? Disconception about marketing is it looks like it's,

some kind of gimmick. It's some kind of spin. The truth of the matter is, I believe, I believe this, this, this, commerce, commerce does not happen unless somebody sells something to someone else. And whether it was the reason, whether it was a street vendor, it came over from, you know, Italy when we first started this country, we are in the business of, of commerce and in this the miracle of America. And I think the misconception of marketing is some kind of, you know, when we are at our worst, by the way, consumers are right. We're spin doctors. When we're at our best, we're trying, especially with purpose-based companies, and that's why it's so important to hear this message. If you are really in the business of improving people's lives and you

don't tell consumers about it, you're cheating them out of an opportunity to improve their life. And I know that sounds a bit, whatever, but I believe it. Now, there are a lot of companies out there who are just trying to sell stuff. I got it. They're not going to be in business, by the way. But if you are genuinely your intent, you're honorable, you actually have leaders who are purpose-based, then marketing allows you to bring to life that improvement to the marketplace. So I think the biggest misconception is, and by the way, advertising and marketing people bring it on ourselves, is that we're spin doctors. And when we're at our worst, that's what we do.

But when we're at our best, we connect life improvement products with lives. That's a good line. We connect life improvement products with lives. And that's when we're at our best, that's what we do. Roy, before we let you get out of here, I've got to wrap up with a quick round of buy, seller, or hold. Let's start with, well, the British Open is going on. So buy-seller-hold, the future of the Tiger Woods brand.

I would put it on hold. I would sure not sell it. All right, let's move over to politics. Buy-seller-hold the possibility that former Speaker of the House, Newt Gingrich, runs for president. I would do a buy on that one. Buy-seller-hold, the possibility that Secretary of State Hillary Clinton runs for president in the future.

I'm too close to it. But that was good You know, finally We'll close with one that's also pretty close to you University of Texas football team Has won at least 10 games in each of the last Nine seasons that's the longest streak in the country So buy-seller hold the likelihood

The Longhorns win at least 10 games this fall By That's why Texas hold it It is a bestseller for a reason the book is it's not what you sell, it's what you stand for. Roy Spence, you're one of the best. Thanks for being here. Hey, Chris, thank you. You've got a Houston station. That's really terrific.

You've got a good foothold into Texas, and y'all are terrific. I always enjoy visiting with you. The stars at night are big and bright, deep in the heart of Texas. The sky is wide and high. Deep in the heart of Texas. Wail along the trail Deep in the heart of Texas The rabbits rush around the brush

Deep in the heart of Texas Coming up, we'll give an official welcome to our newest station And we'll give you an inside look at the stocks that are on our radar. And as always, we want to hear from you. Drop us an email at Radio at Fool.com. Give us your thoughts on the BP situation. Give us your thoughts on Texas. Whether you've messed with Texas or not,

drop us an email, Radio at Fool.com. Stick around. You're listening to Motley Fool Money. Well, baby, what I couldn't do with plenty of money and you, in spite of the worry that money brings just a little filthy Luca buys a lot of things. As always, people on the program, they have interest in the stocks they talk about.

Don't buy ourselves stocks based solely on. what you hear. I'm Chris Hill and back in the studio with me, our trio of senior analysts, Seth Jason, James Early, and Shannon Zerwin. Guys, welcome back and it's my favorite part of the show where we actually get to welcome a new affiliate station in Houston, Texas, talk radio 650, and I think it's safe to say that no one is more excited about our new affiliate than Houston native and Motley Fool Money producer Matt Greer. Yeah. I mean, just... I mean... I love Houston. How's the, you know what, see, it's a good thing.

There's a really thick door separating, you know, you from Mac because mispronouncing Houston is just, that's just not the way to go. We were talking earlier in the show about the iPhone 4 and all of the fun that Apple is having with their press conference and all that sort of thing. But left undiscussed so far was the release of Droid X that came out earlier this week as well. If it is not an iPhone, why would I want it? I'm doing the bears. Yeah, this is, it's an enormous phone. Mac, Houston, Greer over there is very excited to get one of these. It's about the size of an ego waffle, but it's a real leap ahead,

and it shows one of the challenges for Apple, which is that when they release sort of one phone per year, the rest of the phone industry is always busy putting the newest technology into the phones, so they're always a little behind on the hardware curve. If only they could get ahead of the interface curve, they would maybe come out ahead. Yeah, and that was the thing with the Droid X. I looked at it and thought this is interesting, but then I had to do a bunch of homework to see how motor Sparola's skin compared to the one in the HTC phones, and it was just too confusing, and I decided that I would take a nap. Apparently, though, it does grant three wishes, even if one of those wishes is for an eye for four.

And I have to claim ignorance because it was only in the last couple of days that I realized where they got the name droid. And why don't we just bring in Steve Broido again here, because he was pretty passionate about this. Steve, would you like to explain to the folks at home where the name droid comes from? I believe it was licensed from George Lucas. That's right. From Star Wars. So they couldn't come up with another name. I mean, George Lucas doesn't have enough money.

Now he's getting residuals or whatever from every droid sold. It's ridiculous. So, I mean, I guess that's safe to assume then, right? That Lucas is getting a cut of all of these droids. Sure. That's what that little message means. Good for him. And seems like a half of time.

You're skeptical, even though you're a great collector of Star Wars action figures. Absolutely. I used to be before my father threw them all away. But, yeah. No, I have big Star Wars. On April 15th, 1981. No hard feelings, that. All right, let's talk about the stocks that are on our radar, and Shannon Zimmerman will start with you.

So it's not a stock, it's an ETF. Come on, man. The segment is called stocks on our radar. Investment on our radar is what it should be called. We talked three or four weeks ago about Bill Gross, the founder of Pimco, probably the smartest-fix-income guy on the planet, reversing his bet. He was betting against treasury debt and going along corporates. Well, now he's not reversed on the corporate side, but he has reversed on Treasury.

So he's buying treasury bonds. And, you know, lo and behold, either he was a fly on the wall at the last Federal Reserve meeting, or he's sort of influencing. His decisions are influencing the way the Federal Reserve governors approach their work. But now some folks are apparently concerned about deflation, which we've discussed on the program, looking at what the Federal Reserve has done so far, saying, you know, look, we're out of ammo on that front. What else could we possibly do? One thing that's been on the table or is now on the table is that the Fed purchasing longer-term government.

debt, which would also have the effect of keeping interest rates low. If so, that's going to be great news for longer-term treasury debt. And so the investment idea is an I-share's ETF 10-year government-slash-credit bond fund because it has both treasuries and corporate debt. Boy, that just rolls off the top. Investment grade. And the ticker is G-LJ. Look it up. It makes a lot of sense if you buy that thesis. I thought James was the boring guy. Acid allocation is exciting stuff. James Early. Chris, I am going to Minnesota, Seth's home state. and the state that gave me a $50 ticket for picnicking without a permit.

General Mills is my stock. Obviously, you know, it just raises dividend 17%, 29% return on equity. I like the 10% of its sales convert into free cash flow. And the big G, as it desperately wants to be called, but never will, because you can't give yourself your own nickname. Makes Cheerios, sweeties, checks, and my favorite is fiber choice. Eat five bowls and call me in the morning. James is the boy guy. Yeah, exactly.

And once again, the intertornment. of James Early picking stocks that he's just fundamentally opposed to. It's like, what was it last week or the week before when you picked McDonald's? Oh, exactly, exactly. Ticker is GIS, by the way. Seth, Jason. Well, Shannon doesn't have to pick a stock. There is a car wash down the street for me, which I think is an excellent investment opportunity for the first of you that can get to Annandale.

No, I am going to go back to the well on BP with the cap sort of on, and I think most of the money already set aside for what the cleanup will cost. At any rate, I think they can absorb any problems that are upcoming. Stock kind of bouncing back a little bit, I think it's a good time if you were afraid to at least put a toe in the water and wipe the oil off afterwards. And the ticker is BP, right? BP, I think, yeah. And I own that, so I could be just talking my own book. Everyone's duly warned. All right, Seth Tason, James Early, Shannon's everyone.

Guys, thanks for being here. Thank you, Chris. Thanks to our special guest this week, Adman Roy Spence. Bestselling author of It's Not What You Sell, It's What You Stand for. If you miss any part of the show, you can find it at our website, motleyfoolmoney.com. You can also get a copy of our free report, The Motley Fool's top stock for 2010. All that and more at Motleyfulmoney.com. Our engineer is Steve Roydo.

Our producer is Houston native Mac Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.