The Best One Yet - Netflix splurges on Seinfeld, Amazon’s secretive “A9” algorithm, and Oil’s surge

Episode Date: September 17, 2019

Oil prices just surged after an attack in Saudi Arabia, so we break down why it’s not as big a deal as Wall Street made it seem. Netflix is treating itself to $500M of Seinfeld reruns from Sony because sitcoms earn your loyalty. The WSJ reported that Amazon’s secretive A9 search office made a change to its algorithm with huge implications for your online shopping life.Learn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is Nick. This is Jack. This is snacks daily. It is Tuesday, September 17. We are bringing a salted, medium rare tea boy. What are you thinking on this way? Not T-bone. Yep.

Plant-based T-boy. This is the best snacks daily we have ever done. Jack, what's going on with markets? Well, markets sank. No, not the best. It broke their eight-day winning streak because of oil prices. Exactly. Oil surged by 15% yesterday.

We're going to cover that story. You're getting ahead of yourself there. We're actually going to tell you, though, why you don't need to worry about the oil price surge. And that is our first story. Second story, what'd we got? Netflix is spending over $500 million for nine seasons of reruns. We're talking re-re runs of the best kind. Seinfeld reruns.

Yada, yada, yada. This is a big story and a big move for Netflix. And it says a lot about the seller, Sony. Third and final story is Amazon. It's secretive A-9 department just made a tweak to the Amazon search algorithm. This is good for profits, potentially bad for Amazon customers. And they just took down the website that describes what A-9 does. Yeah, they were embarrassed.

by this story that the Wall Street Journal scooped. It's juicy. So we're going to make sure that you hear about that story. Extra juicy. Now, before we jump into all that, we got to talk about the new Monopoly board game that's happening. Yes, Monopoly, the famous board game where you try to corner the market. Yeah, make fun of people. A new version just came out called Ms. Monopoly. Jack worked on that pronunciation for a good five minutes before this. Now, it's made by Hasbro. Legendary. Gaming Company based in... Lovely Pawtucket Road Island. Batucket Road Island. Right near Providence, great part of the country. Now, before we talk about Ms. Monopoly, let's talk about the 1,100 different versions of the Monopoly board game that have been made over time.

I feel like we could have asked that as a can you guys guess it? Because that is a keeper for Trivia Night, that kind of a question. Yes. Put that one in your back pocket. What else we got here? They've got one on Cleveland. There's a Cleveland version of Monopoly. There's a Poodle version of Monopoly for the Poodle lovers.

There's a Smurfs version of Monopoly. There's a 1996 Olympic Games in Atlanta version of Monopoly. And then I feel like this is low effort and like low hanging fruit, but they're doing like a 20th, 30th, 40th, 50th, 50th, 60th version. of anniversaries of Monopoly. I have a professor at the raw school of business at Michigan who has like 600 of these versions of Monopoly? By the way, Ben and Jerry's Monopoly? Yes.

Not a thing. Vermont Monopoly? Yes. Shockingly, not a thing. Ohio has like six cities that got thrown monopolies. We have some anti-dairy people at the Monopoly. New York State, by the way, spoiled 12 of them. Let's get back to Ms. Monopoly.

It's the first of those 1100 versions that actually changes the rules. Here's how it goes. Men get paid $1,500 when they start. Women start out with 19. $1,200. And when women pass go, they get $240 instead of the 200 that men get. And you're not investing in real estate, you're investing in female entrepreneurs. Here's the deal. They're reversing the gender discrimination that typically happens in the business world. And we jumped in snack style. Notice that Hasbro is doing the same thing on their own board. Yes, it has five female board members out of 13. Now, it still has some way to go. Very true. But how does that compare to the rest of the S&P 500? It's double the average 22% of women who hold board memberships in the S&P 500. Hasbro, we like what you're doing.

We love Rhode Island. We want to fly. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. The snacks about to hear ain't food. It's air candy. They don't reflect the views of the robberhood family.

It's all informational just so. You know, we're not recommending any securities. Nope. It's not a research report or investment advice. Not an offer or sale of a security. Right. Snacks is digestible. Business news for you.

Robahood Financial, LLC, member Fenra, For our first story, the price of oil surged by its biggest amount since 2009, because Saudi Arabia got attacked. But Jack, should we really care about this? Well, there were missiles and explosions involved. So there's a lot to be concerned about. A lot of fireworks. But we're going to put this story in perspective, like markets and business-wise. And the way to put into perspective is you've got to look at the stocks involved, and it got to look at the core numbers.

Let's go back to what happened on Saturday and Sunday. Exactly. There were attacks on Saudi Arabia. Arabian oil fields, and Saudi Arabia had to shut down half of its oil production. Now, you associate Saudi Arabia with oil, but where does it sit on like the top ten charts over here? Number two. Number two.

By the way, biggest oil producer in the world? The United States. Shocking, but it's true. Recent development. So Saudi Arabia is number two. Yes. And half of its oil was offline. So that created a supply shock to the world oil market.

And that meant that there was less oil available for companies to use. And that meant there was probably a shortage somewhere where people were expecting their oil delivery and didn't get it. And when there's a shortage, there's more demand, and that means that the prices ended up surging. So 15% jump in a barrel of oil. That is the biggest ever jump in one day. So what happened here on the ground is that rebels in Yemen, where there's a civil war, took credit for the attack. They used drones for it, but it turns out there may be more behind this. Yeah. U.S. intelligence officials think Iran was behind this attack. And Saudi officials say it was Iranian weapons that were involved in the attack. That was a lot of geopolitical breakdown right there.

see which stocks were actually affected by it. Okay, first, airlines and cruise lines, they went down because they buy a lot of oil and it was 15% more expensive yesterday. Energy companies ended up going up because they sell a lot of oil to all those companies, Jack just mentioned. And it's 15% more expensive yesterday. And overall stocks in the United States went down. Because the American economy still runs on oil. Tesla's working on them. Just like Bostonians run on Duncan. So Snackers, we looked into the numbers a little bit further. And that's why we realized this is less of a big deal than a 15% jump in oil would make you think. Yes, we told you we were going to provide perspective.

So here's perspective number one. A dose of it. What do we got? The outage for oil in Saudi Arabia, it's actually going to be really short. One third of the lost production already got back online last night. They got the guys with like the, the wrenches and the other things. They got to work. To getting this stuff back, an incredibly quick response.

And Saudi officials believe the rest of the production that was damaged by the attacks we'll be back online within days. Second key number here is 6%. 6% of oil production in the world was cut off because of yesterday's incident. Yeah, about half of Saudi Arabia's oil production. Saudi Arabia does like 12 or 13% for the world. So that's a relatively, it's not a small amount,

but there's still 94% production that was fine yesterday. And then the third key here are the strategic U.S. oil reserves. Wow. I hate to boast. But the USA has 600 million barrels of oil. Just sitting there. It's like a rainy day fund. We're talking like on the sideline.

The kind of thing we're like, you know, a junior varsity player on like your high school lacrosse team is ready to jump in and play for the varsity team. I love a good sports analogy. Got called up on there. Those 600 million barrels, they could have supplied the oil from the downed part in Saudi Arabia for 100 days, if that makes any sense. It kind of did. I think I'm following on it.

So, Jack, what's the takeaway for our buddies over in oil? So this oil outage in Saudi Arabia, it won't be a big deal unless it becomes a really big deal. Because this conflict, it involves the world's biggest oil producers. In fact, U.S. defense stocks, they rose when this whole thing happened. So President Trump suspects Iran was behind the attack. Iran is a huge U.S. foe. And then he tweeted that the U.S. is locked and loaded, ready to respond. So if things devolved further, the U.S. would back its ally, in this case, Saudi Arabia. And Russia might back its ally Iran. Let's go back to our old top 10 list at big oil producers. Four of those countries, all four are in the top five.

oil producers in the world. So if we have a conflict between the U.S., Iran, Russia, and Saudi Arabia, that would be a big deal. Nick Serenity now. Signfeld is coming to Netflix. No more Hulu commercial. Sinfeld is coming to Netflix. Worlds are colliding. George is getting upset. Now, Netflix just signed Seinfeld. That's like getting Seekwon Barkley for your fantasy. It's like getting T. Swift to headline your show slash Bob Mitzvah. You want another? Peter Lugar catering your graduation dinner. Or it's like Taylor Swift is doing our Snacks intro. She's already a listener is Taylor.

Why don't you just do it already? Taylor at Robin Hood Snacks DMS. How many times we'd have talked about this? Now, Netflix has been under pressure recently because it's losing its most beloved shows to the streaming wars. Jack, can we hit these off? Let's start with number one. The Office.

That is the most popular show on Netflix. It's gone next year. NBC is taking it back. Number two, Friends. The number two most popular show on Netflix. It's gone the year after that, 2021. because AT&T is taking it back for HBO Max. Number three? Well, all of Disney's movies and all of Disney shows. We've got to watch Cocoa already, Jay. We've been saying for like weeks now. I am dying to watch

Coco. Well, we actually are running out of time because it's getting taken away. So in November, Disney is taking all of its shows away from Netflix because it's launching Disney Plus a Netflix competitor. Notice a theme here? Yeah, Netflix is losing its shows to its competition because its competition are doing streaming networks. Yeah, they're doing Netflix killing streaming. So Seinfeld is coming to Netflix in 2021. Not that there's anything wrong with that. Not at all. And it will be on Hulu until then with some commercials. Yes. Hulu is a classic double dipper. Exactly. Timmy, you dip the chip and you're done with it. And you're over. Now, by the way, Hulu had a great feature when they had Seinfeld. If you wanted to watch a random episode, you could push the yada, yada yada button.

Boom, anything comes up. Which is a random episode. We loved what they did with that. Now, this is just as telling about the buyer Netflix as it is about the company that's actually selling Seinfeld. Sony. Exactly. The only production companies that are still willing to work with Netflix and give up their shows, they're the ones that don't have streaming networks that are just like Netflix's. Let's look at the ownership of Seinfeld. Okay, so you got Sony Pictures Television. Yes, you got Larry David. You got Jerry Seinfeld. And then AT&T actually owns a small part of Seinfeld because it bought the production company. And you don't have the soup Nazi. He didn't get in there. So Sony doesn't have a streamer, and that's why it's willing to keep working with Netflix. Now, some interesting thing about Seinfeld, Technically, if you look at the price here, the rights to Seinfeld are a lot bigger than our friends over at friends and our buddies over at the office. So technically, Seinfeld is better than friends and better than the office. And if you think differently, you're probably a close talker. Yes, but we're going to get some hate at Robin's Staghan.

Also, wild stat here. Please just sit down and listen to this one. Since that brutal finale episode in season nine of Seinfeld, Jack, I'm listening well. Seinfeld has made three to five billion dollars in revenues. Jack, I am speechless. Billion with a B. I am without speech. So, Jack, what is the takeaway for our buddies over at Seinfeld?

I'm sorry, Netflix. Cordcutters aren't loyal to streaming networks. They are loyal to sitcoms. Sitcom reruns have been more valuable lately than they ever have been before. Look at Netflix's last quarter. It actually lost subscribers in the United States for the first time in a decade. New shows? Can you name any of them? I can't because they were duds.

Netflix's new shows were duds, and when people are watching new shows, they get to the end of the season, then they cancel their subscription. What Netflix leads is something we've referred to before. They need a loyalty leader. And Seinfeld is the clear loyalty leader. Jack, these pretzels are making me thirsty. Ladies and gentlemen, Kenny Banya! For our third and final story, Amazon's secretive A-9 team just tweaked its algorithm, and it's betraying one of Amazon's core principles.

This was a really good intro like that. The team is called A-9. Exactly. So the Wall Street Journal did a ton of reporting, and we have to give them full credit for the story. Right. Now, let's talk about what Amazon does because you may not realize the extent of this. Half of online sales in America, they start with the Amazon search bar. We're not just talking about Amazon. We're talking about the greatest piece of digital real estate on the planet. Yes. When you search for something, the results that come on the very next

page, that is crucial and it can make or break a product. That's because two thirds of all purchases come from the very first page of search results on Amazon. And who's looking at anything beyond the first page. No one knows what happens beyond the first page of Amazon. The second page for as if you're looking for an obscure Halloween costume. Exactly. So people aren't flipping a page two. And then get this, 20% of all Amazon purchases are whatever was number one. So that number one spot after a search is right downtown. It's got great views of the beach. On a corner. It's the best digital real estate in the world. And a lot of windows with good light. So Jack, let's move on to the keepers of the search. The keepers of the search. The keepers of the search. The keepers of the search.

This is the highly important, highly powerful team at Amazon that figures out what goes first. We're talking about the crew that would go to Mordor and get the ring out of there. This is the only team that Voldemort is afraid of. If you stare this team in the eye, you don't come back a lot. Gallum responds to this team, no one else. Definitely one person from that team listening right now

who thinks that there may be something wrong with this. So A-9 is the name of this team. They're based in Palo Alto, California. They're not in Seattle with the rest of Amazon. And they're called A9 because the word algorithm has nine letters and it starts with an A. Now, this used to be a subsidiary of Amazon and they had their own CEO for a while, but here is their big responsibility. J4, N7, hit me up with the big responsibility. There is.

The relevance is in the eye of the customer and we strive to get the best results for our users, aka they own the search. So they intentionally separated this team from the rest of Amazon because they need this team to ignore like profit pressures or from the rest of the company. But that means they're also in a position that is ripe for potential corruption. Imagine like an executive of Nike coming up to this team A9. Hey, nine, how you doing? I'm just in Palo Alto for the weekend. Hey, I really appreciate it if you get my golf clubs to the top of the search results.

Maybe I'll leave an extra pair of golf clubs right here in Palo Alto. How you doing? There you go. Or some guy in Amazon's retail team that's trying to show good numbers and says, hey, I got this new product. I'm really trying to push it up. Well, the Wall Street Journal Report came out, and the A9 website immediately went down because of what just happened. Now, here is the Wall Street Journal report. Late last year,

Amazon changed its 10-year-old algorithm. Exactly. The most relevant best-selling stuff, that's what you used to see up there. I would get books on the history of New York and some essay nail polish because my wife uses it. And showing customers on the first page, the most relevant and the best-selling stuff, that is what's best for customers. Now it's showing products that happen to be maybe more profitable for Amazon at the very time. Yes, Amazon is giving a bias to the companies that it makes the most profit from. And those are its 10,000 products that are actually Amazon brands. So if you're wondering why you see so many Amazon basic stuff hitting the top of your search results on Amazon, this algorithm tweak was why. We thought it was because those were just great products that were great selling.

Every American dorm room has an Amazon power surge cord in there. Turns out they might have got a little bit of extra help by Team A9 through pressure from Seattle. So Jack, what's the takeaway for our buddies over at Amazon. This algorithm tweak breaks Amazon's cardinal rule, the customer obsession. First of all, it might even be illegal because Amazon's supposed to be unbiased. Yeah, antitrust regulators are probably going to look in news. And a big challenge for Amazon is it has two roles these days. It's both a marketplace for other goods and it's selling its own stuff. So it has a conflict of interest. Exactly. But Amazon also has 14 leadership principles and this happens to break the first one. We've talked about those principles on this pod. One of them is have a bias for action. Another one is frugality,

which is classic. Another one is like, if you disagree with something, disagree, but then once the decision is made, commit to it. It's a long one. It's wordy, but it's one of the principles. But the main one is customer obsession. It's number one. And this report suggests that Amazon is focusing not on the customer, but on its own profits. This is Jack, and I own stock of Amazon. Jack, can you whip up the takeaways for us over there? The oil market disruption probably will be just a blip on the radar. High oil prices are bad for stocks in the short term. War is bad in the long. Yes, I hope no war happens. Yeah, we're hoping on that one. Second story, thank you Snackers for tolerating our Seinfeld impressions, but Seinfeld is coming to Netflix. And Netflix is willing to pay over $150 million a year because it needs a loyalty

leader. Third and final story, according to the Wall Street Journal, Amazon isn't showing what's best for customers. It's showing the best products for Amazon profits because it has the best digital real estate in the country. Betrayal of principles. The search bar. Time for our snack fact of the day. We've got to have a little ticker off right now. Yeah, I love ticker A good is a good ticker off. This is a good one. Jack just took off his head. He's kind of rough. Oh, he's rolling his sleeves up over there. Don't get me stretching. Okay. All right, I got you. All right. So the ticker symbol, T-E-C-H. Tech. Tech. Who do you think has it? Who should have tech? Who should have tech? If Mark Zuckerberg IPOed his body, it'd be tech.

That would be the stock's ticker symbol for Zuck. Now, Kenny from Oakhurst, California. Great snack or Oakhurst, by the way, right near Yosemite, apparently. Yep. In the heart of California. He wanted to update us that tech, the ticker symbol, is not used by the consumer-related tech company you made expected to do. It's actually the ticker symbol for the company he works for, which is called biotechna, which is a biotech company. Kind of tech. Kind of tech, but not consumer. They make tools and diagnostics for medical industry. Kenny, we appreciate you reaching out. We loved it. It made us think thanks to the snack fact. Snackers, this was a good one. We loved being with you today. You guys look great, by the way. Happy T-Boy Tuesday. We'll be back.

to mom. Keep doing what you're doing. The Robin Hood Snacks podcast you just heard reflects the opinions of only the hosts who are associated persons of Robin Hood Financial LLC and does not reflect the views of Robin Hood Markets, or any of its subsidiaries or affiliates. The podcast is for informational purposes only, is not intended to serve as a recommendation to buy or sell any security, and is not an offer or sale of a security. The podcast is also not a research report and is not intended to serve as the basis. of any investment decision.

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