Motley Fool Money - What the Fed's Move Means for You

Episode Date: December 16, 2016

The Fed raises interest rates. Chipotle makes big changes in the boardroom. Yahoo! gets hacked. And Pier 1 stuns Wall Street. Plus, CNBC's Carl Quintanilla talks about the business of binge-watching and previews the year ahead. Get a free preview of our brand new service Motley Fool Explorer at GoExplorer.Fool.com .     Learn more about your ad choices. Visit megaphone.fm/adchoices

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That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio show. Chris Hill and joining me in studio this week from Million Dollar portfolio, Jason Moser, from MDP and Supernova, Simon Erickson, and from Motley Fool 1, Ron Gross. Good to see you, as always, gentlemen. Hey, hey. You got the latest on tech, travel, retail, and more. CNBC host Carl Kintania is our guest this week. And as always, we'll give you an inside look at the stocks on our radar. But we begin with the big macro, all eyes on the Federal Reserve this week,

as the Fed raised interest rates, a quarter percent. And Ron Gross, we all live to tell about it. Hopefully, to the surprise of no one. I was going to say, we all knew this was coming. We all knew this was coming. I'm going to put the optimist glasses on and say this is a good thing because it means the Fed thinks we're on the right path in terms of growth, which is less than 2%, but perhaps 2% is the new normal, although sometimes we think of it as a 3% in a relatively robust economy. Maybe that isn't what we should be striving for any longer.

And also, they want to get ahead of inflation because inflation is bad. So at 1.5 percent now inflation, 2 percent being their target, you don't want to wait. You want to be proactive, not reactive. We start to raise rates slowly now. They've signaled additional rates coming next year, 2017 and even 2018 and 2019 are coming. We raise them slowly over time. We get back to a normal rate. Obviously, they've been so low for so long and add in all the QE1, QE2, QE1, QE2, QE

100. We've been under stimulus packages for quite some time. I think it's good to see, it's appropriate to see things getting a little bit more back to normal. Yeah, I think it's a good sign. I agree with Ron. I mean, it was done for the right reason, right? The economy is better than it was, and that's ultimately a good thing, unless you're betting against the economy, and I wouldn't recommend doing that. But it is interesting because we have held rates down for so long. And we had talked earlier in the week, about how retail sales this holiday season have been deeply, deeply discounted versus last year, and these discounts are going on and on and on.

So the point was that retail consumers have been conditioned really just to expect low, low prices, and they'll just wait for them. We've had rates so low for so long, I think that probably a lot of people have become a little bit used to it, probably living with a bit higher debt load than maybe they would normally live with. As rates go up, I mean, that's great in that there's some fixed income instruments out there. It could potentially help a savings account, but it's also worth remembering that these are rates that are going to affect your credit card balances, longer-term interest rate, your mortgage rates and whatnot.

So you need to keep that in mind and understand the cost of living will go up. Yeah, and in addition to that, like Jason said, we've gotten so used to rates being almost nothing for so many years now, which has been a boon for several sectors of the investment world. I mean, utilities kind of hitting all-time highs, consumer staples, solid dividend-paying stocks have been a very high appetite for investors these days because they were the way to get that income. I think things are going to maybe get back a little bit more to normal now with rates going back up again. And certainly, these should be good for banks and finance-type companies.

But for the rest of companies out there, the cost of borrowing is going up, and we have to think about that. The discount rate, that's a fancy kind of finance term that we use when we value stocks, theoretically will go up, which speaks to valuation. Our stocks worth less in a higher interest rate environment, you could argue the answer is yes. And therefore, will we see some lackluster performance or a pullback? We possibly could. But again, that's healthy. It happens over time as these cycles ebb and flow.

And for long-term investors, I don't think it's something to worry about. The cost of borrowing money is going up. It's still historically low, but it's going up. Do you guys think we're going to start to see more companies offering, secondary offerings, just assuming that they look at their balance sheet and go, well, it costs a little bit more to take out more debt. Our stock's done well over the last few years. Let's just put a few extra shares out there.

Not anytime soon. They won't turn to that because they're still so low. But over time, you definitely could see that. But you should be doing that anyway as a company. If your stock has really done well and you should kind of take capital when it's available to you, not necessarily when you're desperately in need of it. So we could see that anyway. But for now, rates are still historically very, very low. Big changes at Chipotle early in the week. Co-CEOO, Monty Moran resigned. He is also leaving

the board of the board. And speaking of the board, activist investor Bill Ackman, flexing his muscles, adding four new members to Chipotle's board. Jason, let's start with Moni Moran. He was the operations guy. And as Steve Ells called out last week, at their investor conference, operations in 2016 have been below standards. So in a way, the writing was on the wall for Moni Moran. In hindsight, it really does look that way. Certainly, 2017 is going to be a very crucial year for Chipotle, I think. I mean, this is the opportunity for them to really fully put this

mess behind them and move forward and grow. I think it was really, it was fascinating to me. They had an investor conference here earlier in the week where they were speaking to sort of internal measures of how their business was doing. They were looking at all of their stores, over 2,000 of them and basically grading them on an A, B, C, D scale. And I was floored, actually, to see that by their own measure, basically half of their store base is a C or worse. I mean, no matter who's coming up with that scale, that just isn't good. And that obviously happened under Moran's watch. And I don't think we've ever really looked at Steve Ells as the operator. He's sort of the artist behind the concept. I'm certainly not trying to place blame on anyone here, particularly

Mon-Moran. There could be a number of reasons why he's moving on. But I think ultimately, this could be a good thing. It's definitely an opportunity because I feel like they've identified a number of key problems. And now we're going to hold them accountable to fixing those problems. And I think diversifying the board, they have a lot of people on that board that have been there for a long time. It's always helpful, I think, for a business, particularly in this sort of stage of its life to get some fresh eyes out there, see some different perspectives. And Ackman, I mean, hey, he's in this to make money, right? I mean, we give him a hard time because he's made some kind of questionable bets in the past, I guess. But he still does this to make

money. And so, generally speaking, I like seeing the fresh set of eyes on the board. And again, I think we looked at 2017. We know what we need to hold them accountable to. And I think they know what they need to hold themselves accountable to. It's going to be a very, very important year for them to really put this behind him. Also, Monty Moran over the last three years has made more than $65 million. You can make that money. You can be overpaid when things are going well and shareholders are being rewarded. But when your stock gets cut in half, it backfires quick.

Totally backfires. I think from an activist investing perspective, this was probably a pretty easy one for Bill Ackman to get done. From my experience, when you have a situation like Chipotle has been going to Chipotle, has been going through. You kind of go to the company, you say, here, we can put forth a proxy contest and go through all that battle back and forth, and it's going to cost everybody a lot of money. Or you can just settle and give us seats. And let's remember, they're expanding the board. So, Acman has four of 12 now. So he has by no means control of the board. He has nice representation

there, but not control. So it was probably an easy thing for Chipotle to give up. Ackman's happy because he doesn't have to go through a protracted fight, and hopefully shareholders are the beneficiary. Shares of Oracle falling on Friday after the Tech Giant's second quarter sales came in a bit light. This is a $160 billion company. They're still selling a lot of stuff, Simon. But, you know, call it what it is. Yeah. Well, I mean, let's dig a little bit deeper into this. This is a company that is disrupting itself, Chris. I mean, when you look, the bulls for Oracle will point. at 81% growth year-over-year in software as a service. This is cloud-based software.

But then you have to look at the other side of that, too, and realize that that licensing software that's on-premise that they were really big into selling in the late 90s was down 20% year-over-year. So you've got a business that between the two of those had basically revenue that was flat, that's kind of transitioning how it's approaching its customers and what it's selling. And so as an investor, I think that the thing that we really need to look at is the operating margin line. How much incremental operating income is this business producing, and what kind of margins is getting going forward. I saw that operating income was only up about 3% year over a year.

Operating margin is still pretty strong. But for this to really work out for Oracle, so they're not just completely neglecting that business they've built for decades, they're going to have to show some incremental growth in that operating income line. This is, when you look at this industry, it is just a classic clash of the Titans when you look at Oracle and Microsoft and IBM and even throw in Amazon with its web services. You got people saying if Amazon somehow decided to spin that off, web services alone, you know, put your price tag on that.

I mean, it's maybe not the size of Oracle, but it's a monster, too. It's about 20 times larger than Oracle is right now, even though Oracle would like to think they're in the same class with Amazon. The interesting part also, Chris, is that on Wednesday, President-elect Donald Trump met with 13 tech executives, including Jeff Bezos, including Larry Page, including Elon Musk, and including Safra Kats, which is co-CEO of Oracle. So, a lot of discussion about what is the potential of a tax holiday, what is the potential of lowering the business income tax rate. What does that mean for the tech world in the coming four years of this country? Shares of Pier 1 up huge this week after a great third quarter report. They also raised guidance for the full fiscal year. I never would have seen this coming, Ron. This stock has doubled

in the last three months. You would be both up 70 percent this year. This one is a perfect example to me as why I've specialty retail is so hard to invest in. It's very hard to get it right. There's so much competition out there. Companies ebb and flow and the bankruptcy courts are littered with the corpses of former specialty retailers. This stock was at 11 cents a share back in 2009. We're now back to the eight or nine level. To their credit, they have turned the business. Things are not great, but they're better. The big number here is e-commerce sales are now 20 percent of sales, up 20 percent, 8 percent this quarter. That's nice to see. Com sales were positive,

profit up 69 percent. And as you said, they've raised guidance. The CEO is retiring. The chairman, Terry London, is taking over, probably to the chagrin of another activist investor, Alden Capital, Alden Global, who really wanted a seat at the table to be part of the CEO search. And for them to put the chairman in, probably didn't make them too happy. But they are probably not unhappy with the stock price performance. It's amazing because, Jason, we've talked before about Bed Bath and Beyond. As close to direct competitor as you'll probably find in the public markets, BetBass and Beyond for all of its struggles is still 10 times the size of Pier 1 imports.

We touched on this a little bit, Ron, the other day. Whereas I look at Bed Bath and Beyond, and I think, wow, that just looks like a mess. I look at Pier 1 imports and certainly their recent performance, and I think, who knows? They might be considering their small price tag, someone might decide to snap them up. Yeah, I think there was a time ago when Bed Bath and Beyond was a far more attractive concept, really before the days of e-commerce. Because I feel like Bed Bath and Beyond is more things for more people. I think it's generally speaking.

When you look at Pier 1, I think it's a bit more of a niche offering. And perhaps they hold a little bit of pricing power in those products. that they offer, because they are unique and a little bit differentiated, I guess. But again, I look at it. They're wickery. Yeah, that's the first thing that comes to mind is wicker, I guess, whatever I've seen. I hadn't been in a pure one in, I think, a decade maybe. Look, someone's buying the wicker.

Someone's buying the stuff, right? And it's amazing to see this turnaround. I don't know, though, that looking at what it's done to this point, that it makes me any more interested in it as an investor. I think that typically, Ron's right. I mean, you see a lot of ebbing and flowing here in the retail space. These guys did something and did it really well and came back from the grave, but that doesn't mean that the road going forward is paved with gold, so to speak.

I think the challenges are still plain to see. Yeah, and one thing that's really interesting is we always talk about e-commerce as the next evolution of retail sales out there. And it's growing consolidated rate about 15% year in the U.S., but it's still only 8% of retail sales in this country. So there's definitely a place to continue those bricks and more. retail locations. People are still going out and shopping at some of these places. And buying Wicker. That's right. Coming up, a hot IPO that's actually cooler than it appears. We'll explain.

Don't go anywhere. This is Motley Full Money. Welcome back to Motley Full Money. Chris Hill here in studio with Jason Moser, Simon Erickson, and Ron Gross. Travago, the European Hotel Booking Company went public on Friday with the stock trading 10% higher than the IPO price of $11 a share. Always It's nice to see a successful IPO, Jason, but this wasn't really what the company was hoping for when they priced this IPA. Very good point. I'm glad you mentioned that. This was one where they were looking at price, hopefully, between $13 and $15.

As you mentioned, they priced around 11. They were not even able to offer as many shares because the demand simply wasn't there. We've seen this act before. Expedia spun off TripAdvisor back in 2011. I don't see personally any reason at all for investors to rush into this. its simplest form. Travago is an advertising company. It's a hotel meta-search engine. And it's good. They're good at what they do. But this is a business that really is going to have to evolve at some point. It's going to have to become more than just this hotel search engine because you have

all of these OTAs out there, these online travel agencies like Expedia, like Priceline. We're seeing TripAdvisor morph into this sort of model with its instant booking measure now. I have to believe it at some point here. Travago is either good. going to try to evolve as a business, or I think the stock price is probably going to language for some time to come. Because again, I just don't see what their edge is. I don't see what their competitive advantage is. There are more ways to book a hotel room than just Trebago. And I think as we all agree here around the table and even the man behind the glass there, it seems like the guy in the commercial sort of annoys us.

He's a little annoying. Am I the only dinerstar left that still just books a hotel the old way? You absolutely are. You absolutely are. I know. I'm sticking with it. For the second time, Yahoo has revealed a data security breach, this time to the tune of one billion accounts that were hacked in 2013. Verizon is paying $4.8 billion for Yahoo's core assets. They had been aiming to close this deal in the middle of the first quarter. And Simon, I have to believe, this stuff ain't helping.

Oh, billion users. I know. I thought that was just it. Like, ugh. But next. That's basically my analysis on the piece. Geez, again. This is happening again.

The other thing, Chris, is this happened years ago. I mean, we're looking back at 2013. They've had hacks in 2013, now 2014 also. This latest one was over a billion users, as you said, but it's been sitting around for two years. More than two years it took for them to figure this out that the hackers had actually compromised some user personal information. And now as a cleanup, if you are a Yahoo user, you need to go in and change your passwords.

They're asking their user base of over a billion users to go in and change passwords. And I think that's the key of this of, is Yahoo going to keep that user base? Now, this happened twice in the last three years. And what's the impact of that going to be for Verizon and the outstanding offer we're looking at? Before we get to our final story, Simon, you are heading up a new service here at the Motley Fool called Explorer. Can you just give me 20 seconds on the nuts and bolt? Yeah, absolutely, Chris.

We're really excited about opening this as a standalone service for the very first time. Motley Fool Explorer is the name of the mission. We pick a relevant theme every month that we believe is a long-term trim. that's developing the market. And from that trend, we pick four active recommendations from our Motley Fool recommendations that we already have, and we vote March Madness-style for which of those four, we believe, to be the best investment in this trend. Right now, we're right in the middle of narrowing down on our top stock of 2017. We're down to our two finalists, and we'll reveal that winner on December 22nd.

All right. If you want to join Simon Erickson, along with David Gardner, Tom Gardner, and the entire Explorer team, you can check out all the details at go-explorer.fool.com. That's goexplorer.com. Thanks to foolwriter Dan Klein for this final story. The McRib sandwich has a cult-like following here in the U.S. But in Japan, McDonald's has another limited time offering that inspires a similar passion among the locals. The Gorakoro Burger. Fried shrimp and macaroni croquette served on a bun with lettuce with your choice, Ron, of cheddar cheese or... Thick. Thick. Egg.

sauce. Who's with me? Literally thick egg sauce makes me want to gag. It's hard for me to think about it or say it. So you're a cheddar cheese guy. Should you put you down on that? Jason? Yeah, I kind of feel like I like these two separately.

I'm not too convinced that putting them together is the solution. From longtime listener Jay Melton, who lives in Kumamoto, Japan, he wrote to us saying, I just can't, guys. Not going to happen. I tried the chocolate fries, but there is a line that I will not Cross. This comes with tomato cream seasoning for the fries that you could shake on. So it's a bonus. Yeah. All right, Ron Gross, Simon Erickson, Jason Moser, guys. We'll see you later in the show. Thanks, Chris. Time to check in with one of our favorite guests, CNBC host Carl Kintanilla. That's next.

This is not a full money. All right. Before we get to Carl Kintania, I've got to say a quick word about short payroll. If you own a small business, you already know that payroll can be a headache. Small businesses pay hefty fines on a yearly basis due to payroll oversight. Well, now you can protect your business and remove the payroll tax complications with sure payroll. It's simple and can be used on any device with just three easy steps. Steve Broido, you're a share, you're a sure payroll customer. I am indeed. We have two children. We have someone that watches them during the day and we use sure payroll every week.

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of worrying about late fees and fines. And be honest, isn't that what your customers want? They want you focused on your business, not the payroll headaches. Customers include not just Steve Broido, but a range of business types, including dental offices, insurance agents, restaurants, barbershops, charitable foundations, tech startups, and more. And they've got an A. plus rating with the Better Business Bureau. So, go to SurePayroll.com slash Fool and fill out a free quote form. That's SurePayroll.com slash Fool. Now let's get to Carl Kentinea from C&BC. Christmas is just around the corner. Welcome back to Motley Fool Money. I'm Chris Hill. Carl Kentonia has a front row seat when the opening bell rings at the New York Stock Exchange.

He's the host of CNBC's Squawk on the street, which you can catch every weekday morning at 9 a.m. Eastern, and he joins me now from New York. Good to talk to you. Happy holidays, Chris. And to you as well. When you look back at 2016, is there one or two business stories that really stands out to you in terms of their weight? I think at this point you can call the election of business story, probably more so than we've had in the past, I don't know, half a dozen cycles, perhaps. I mean, maybe going back to Reagan. I think our attitude on election night was, wow, this story is really coming to us at CNBC, meaning it's coming to financial media. It happened in the very short term as futures went limit down and the following day. But ever since into the transition,

the cabinet appointees, the policy suggestions, the white papers they're drawing attention to, I mean, it's all about taking the handcuffs, some argue, off of the economy. So I just think it will resonate and continue to be the biggest business story of this year and obviously probably next year. I think secondarily, there's probably an interesting running theme of companies and mea culpa's. Ferranos, Valiant, Volkswagen is going a little farther back, Samsung. This week it's Yahoo and their billion account hacking. I think whether it's through their own fault or not, companies are having to apologize more and more

for the things they've done wrong are gotten wrong. One of the interesting things about that last point you made is that we live in a time when there's more information available to us than ever before, it is arguably harder to keep a secret today than it was 30 years ago. And yet, in the case of Theranos, in the case of Yahoo, you have this information, this damaging information that is kept under wraps for years. It's true. I mean, look at WikiLeaks and DNC.

again, you're talking about some dated material, but it obviously wasn't any less relevant or powerful. But yeah, I think there's a sense that everybody is in this sort of potentially living on borrowed time, right? Potentially sitting on a product that is going to be recalled and fail or harboring emails that will eventually be damaging. We just, we, we, we, we, we, we, we, we do not know what everyone owns at any given point. That's the nature of this electronic age we're in. And when it bites you, it's very, very public and painful. You mentioned the election and President-elect Trump constantly in the news as befitting a president-elect. This week, he met with pretty much a who's-who list of the biggest names in technology,

Tim Cook, Jeff Bezos, Cheryl Sandberg, on and on. If you are a shareholder of a large tech company, as so many people are, what do the next four years look like for you? Because to the point you made about how the election really brought the story to the business media, certainly in the short term, since election day to right now, the biggest beneficiary appears to be the banks, and how there appears to be near unanimous consent that a Trump presidency portends very good things for the banking industry. Does it necessarily portend the same for the technology companies? Obviously, it'd be hard to argue that, given the gulf between the companies and the president elect in terms of policy on encryption, a policy on manufacturing overseas, China trade,

I mean, there's all sorts of things they just are nowhere near being in agreement on. So I think nothing will compete with the banks in terms of upside potential as a result of his election. You know, on tech, what do you do? I mean, if you're a shareholder on some of these companies, I think you have to, I mean, they've gotten criticized for going to this meeting from some. some very harshly that somehow Silicon Valley was bowing before the throne and now they were the ones being disrupted

whereas they should be disrupting they're the most dynamic part of our economy I get all that but these companies they have to operate in the political context they do it overseas all the time right I mean they're constantly negotiating with the EU some of them have had real debates about how far to go into China this is the same kind of conversation you know, hammering it out with a political leader, only this time it's at home. And we're just not used to that. But I don't think it's all that different. And as a result, I think they're actually pretty prepared for it. It's just a little uncomfortable because the election is so fresh in our

mind. What's your biggest question for Donald Trump if you get a sit-down interview with him? I'm not saying you're angling for one. But if you get a chance to sit down with him, what are you asking him? Well, it's probably not a business question. I mean, it would depend. If I were doing it for CNBC, you'd have to, I could think of some things that are business related. But for myself, I think, you know, I'd like to know come inauguration if he is going to make a real attempt to unify. I just through rhetoric, like, you know, he's made sort of mild attempts on 60 minutes, turning to the camera and saying to those who would deal in hate crimes, stop it, or in harassment, stop.

But is he really going to deliver soaring rhetoric the kind that we got from Reagan, who is his closest analog, his supporters argue, that can bring his detractors to say, hey, all right, you know what? Maybe it's time to give him a shot. I just think that has been lacking, and it may still be in store. I have no idea. That's probably why I would ask. The last time you were on the show, we talked about binge, which is the interview series with stars and creators of binge-worthy television that people can check out on CNBC.com slash binge.

First of all, how was binge watching, how has it changed the way shows get made? And how has it changed which shows get made? Well, from a production standpoint, it's shot much more like a movie. A house of cards, for instance, they don't even call them episodes anymore, and they call them chapters, like a book, a book that you can, just like we read a book. You pick it up, you might read it all the way through, you might read two chapters and quit, pick it up later and resume. So that's, they think about it that way from a narrative standpoint. It's a lot more about the producer than the director. In film, the director's the author and the creative locus of everything. in this new age of episodic content the producers the only constant directors they do they come and they do an episode they leave another one comes through and they leave so there's

it put a huge amount of power in the hands of showrunners and producers which we which we know if you follow television and the likes of shonda rhymes right and lee daniels that kind of thing um but it's it's just it's just become more renewerative right it's and there's more money there's a lot more residuals down the road and that's why

years ago uh... you couldn't get film actors to be on tv uh... somewhere brian grazer told us that gary cnese was one of the breakthroughs when he went to uh... n c i s i think of the show on cbs and uh... that was a big deal like why this accomplished film actor from forest gum going on television

and then all of a sudden everybody wanted to be on television and then they wanted to take it a step further and everybody wanted to be on on streaming as Kevin Spacey led the charge on house of cards so uh... it's changed everything it's changed the business model it's changed the artist's model uh... it's it we we i think we take it for granted now because it's so much a part of our lives but it's these are pretty heady times we're living

in it if you're a fan of content speaking of streaming amazon announced this week that prime video which to this point is only been available in five countries, is it going to be expanding to more than 200 countries and territories around the world? So for anyone who was wondering, the degree to which Amazon was gunning for Netflix, I think that's your answer. For all of the success that Netflix has had in building and growing this industry-changing business, is it still an acquisition target? Because it kind of seems like it is.

Yeah, I mean, this has obviously been tossed around a lot by the street. Some analysts have argued it would be, you know, as delusive as it would be, it could still make sense for a Disney, for example. But I don't know. I don't know. Watch this come back to bite me. I'm skeptical. I'm skeptical at this point that someone would be willing to take it on, at least, I mean,

to buy a majority stake or the whole thing. I think that would be a lot to swallow. Amazon is, I think it's interesting, you know, we talk about how great they are at scale, by innovating at scale, which is exactly what Prime Video is doing. But eventually we're going to figure out, you know, that's not all roses.

You know, Netflix just canceled Marco Polo after spending $200 million. That was not a hit. Amazon now has the most, pirated show on streaming, surpassing Game of Thrones. So welcome to the party on that front. So they're going to quickly realize that, you know, you don't hit a home run out of the park every time at bat,

and you're going to start living with the headaches and failures that have hounded, you know, broadcast and studios for years. You're listening to Motley Full Money talking with Carl Cantania from CNBC. NBC, Real Sports on HBO. Let's talk about sports for a second. This week, Frito-Lay announced it's not going to advertise on the Super Bowl. Now, the parent company is Pepsi.

Pepsi's still sponsoring the halftime show. I don't know about you, but I was surprised by this announcement because, yes, they make Doritos, and that's obviously a good target audience for them if you're going to advertise on the Super Bowl. But it's more than that. They have been advertising on the Super Bowl for 10 years, and their ads have been very effective. So this was not a situation where Frito Lay said,

we're going to spend some money, oh, it didn't really work. They spent the money, Carl, and it did work. They had very effective ads, and they're still walking away from the opportunity to spend $5 million for 30 seconds of advertising. And I'm wondering if this is, as much as anything, a sign that the NFL is finally not quite bulletproof. I think it's, you know what, I was just looking at the list of the top rated shows of the year.

I mean, aside from the Oscars, they're all sports. So if you can envision a mountain sort of being engulfed in water slowly, right? I mean, sports is going to be the last thing we see before it submerges, right? I mean, NFL is still the highest rate of content on average on our televisions. But companies like Pepsi, if they're going to migrate their ad budgets to digital, which if you look at every chart, that's exactly what all companies are doing, their spend on digital grows. And that has to come out of somewhere because ad budgets are not infinite. So I would, you know, I guess I don't take it as an indictment of football, but I would expect Pepsi to make up for that lost exposure. or who knows where, on Google's new live YouTube channel,

on Twitter, God forbid. I mean, somewhere on Snapchat for sure, where they think they can make that back up in smaller increments, but more effectively and certainly more targeted. I mean, that's the beauty of if we had the Chris and Carl show, we could go to Facebook and say we want to hit guys in their mid-40s who live in Charlotte and root for the Broncos, all five of them. But we could find them on Facebook.

That's a lot harder to do if you're going broad on NBC. I bet $5 million buys you a lot on Snapchat. Yes. A couple more questions, then I'll let you go. As we head into 2017, is there something that you're watching, an economic indicator, a company, and industry. What has your focus as we start the new year? Well, two things. The most obvious, and you'll be reading about it all year, is wages and inflation. There's a big debate about whether or not the labor market is fully, if we're a fully employed economy, some people say yes,

because the employment rate so low and small business, you know, their metrics show that jobs are hard to till. If you look at the participation rate, though, others argue there's a slew of people who gave up looking for work a long time ago, whether that's a retirement or not. Who knows? But maybe more people are encouraged to look for a job, and that creates some slack. So inflation will be a big debate, whether or not it heats up. And, of course, that is huge ramifications for the economy and the Fed, as we saw this week. I think the other one, you know, it's, I, it's, it's, it still sounds silly when we say it, but we talk about it almost every day now is artificial intelligence, automation, robotics, the degree to which, you know, what can be

mechanized that's now done by a human. We saw it in bank tellers years ago. We're seeing it in fast food now with kiosks. Obviously, it's a manufacturing issue, but there's a whole generation of millennials for whom a human interaction, when they, when they conduct business, business or having a relationship with a business, where that's, they don't want that. They don't want to talk to anybody. They text their friends. They go on Tinder to date. I mean, having a phone call is anathema to them.

So there's a bunch of service jobs that could be lost to automation. And where does that put people who are not trained to do anything else? We had Elon Musk on the other day, and I said, are we eventually going to wind up with this universal basic income that people talk about? the government guarantees you a minimum amount of money just to survive because robots have already taken on so much work. And he essentially said yes. Who knows when? I think he probably doesn't think it's a phenomenon for another 15 or 20 years. But those are things that we, you know, obviously are going to start thinking about now and have to. When people look back at 2016, they're going to be talking about an upset that, let's face it, none of the professional

prognosticators saw coming. None of the modeling predicted it. And I'm talking, of course, about your alma mater, Colorado University. I had a feeling. Bull bound. A second place finish in the Pact 12. Are you heading to San Antonio for the big game on December 29th? No, I'll be on vacation, but interestingly, I did speak and see you a couple of weeks ago. And to say the mood is euphoric, just sells it short. They are extremely happy, and it is, I mean, it's a, it's a throwback to the years when I was there in the, in the late 80s, early 90s. I mean, I wish, believe me, I'll be, I can't be in San Antonio, but I'm going to do my best to watch. You can find him on CNBC, NBC, HBO, Twitter. He's everywhere for a reason. Carl Cantania. Have a wonderful holiday.

And you too, Chris. Thanks so much. Up next, we'll give you an inside look at the stocks on our radar. 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 solely on what you hear. Welcome back to Motley Full Money. Chris Hill here in studio once again with Jason Moser, Simon Erickson and Ron Gross. Just a couple of minutes, guys. So if you could, let's go with radar stocks with a holiday theme. Steve Brodo is going to hit you with a question. Ron, you're up first. What are you looking at?

Oh, I got Diageo, PLC, ticker DEO, leading adult beverage company, headquartered in London for your holiday cheer. They McGuinness and Kettle 1 and Johnny Walker Black had a lot of success recently with Bullet Whiskey. Crown Royal continues to be a staple of theirs. And the Scotch market is pretty hot right now, so they could have a bright future. Steve, question about Diageo? What should I never drink at a holiday party? Gin. Jason Moser, what are you looking at?

We were talking about Pier 1 reminding us of Wicker. My ticker reminds me of Danny. It's Akushnet Holdings. Ticker is GOLF. This is a new IPO. What golf are out there isn't hoping for a Voguey wedge or some ProV-1s under the tree. And Titleist and Footjoy are the biggest names in golf, really. About 24 million golfers in the U.S. today, 80% of those make up a very committed base who accounted for about 95% of the rounds played in the country. These are the guys buying that top-line equipment, like Titlist and Footjoy. So this is one of them digging deeper into. Steve?

Shouldn't I just buy this stuff used? I mean, it's price. Why no? Not at all. Simon Erickson. What are you looking at? Chris, what better gift than investing in yourself, which is why I'm recommending to you, ticker TWOU, which provides graduate education over the internet. They work with UC Berkeley, USC University of North Carolina to administer those programs over the net.

They take a good cut of tuition, and it's all upside for the universities that are offering that. Steve? How do I know I can trust these people? Oh, well, it's investing in yourself. This is good teaching, education. I don't know, Steve. You can trust them.

You got one you like, Steve? I feel bad about Jason, so I'll go with Jason. Hey, hey. You can't invest because you feel bad. You know my history, Steve. The first golf lesson is on me. All right, guys, thanks for being here. That's going to do it for this week's edition of Motley Full Money.

Our engineer is Steve Royto. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.