Mr. Money Talk

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Episode Transcript

(00:10):
Afternoon. This is Josh Arnold mistor Money Talk with Judd Martin here to
answer your questions on stocks, bonds, mutual funds. You should position your
investment dollars including your IRA in fourone k. Do give us a call
nine five two nine two five fivesix eight. That's nine five two nine

(00:33):
two five five six o eight.You always get straight talk, not sugar
coaded advice. Judd, What aweek? What a week that we've had.
I am exhausted from all of theearnings reports, the FED talk,

(00:56):
FED speak, the job's number.What is going on? Oh you lost
your breath? I lost my breath. What is going on with banks?
They're going lower? That's what's goingon. We've talked about it for several
weeks. Banks are in real trouble. There are no easy answers. In

(01:18):
many ways, you can argue thisis far more difficult than oaight for banks.
In OA, you had a toxicacid problem. At some point,
those assets were going to find alevel and recover because they were based on
a housing prices, so that asthe economy recovered and housing prices recovered,
those bonds the underlying collateral value wouldincrease. Right now, we have banks

(01:41):
stuffed with really good securities in generaltriple A government securities and a bunch of
loans that may or may not begood. But all of those securities are
done at interest rates that were farlower than today, and with interest rates
higher, it's going to take thematurity of those securities for you to get
back all your money, and soyou need a lot of time. And

(02:05):
then on the funding side, thatwould be liabilities or equity costed deposits going
up, amounted deposits going down.We peaked at about eighteen point three eighteen
point four trillion in deposits in USbanks last April, or at seventeen point
two trillion today we should be excludingCOVID if you were through a trend line,
we should be at fifteen point twotrillion. So we have two trillion

(02:28):
of excess deposits in banks, whichis a real problem when the amount of
equity in banks is only two pointone trillion. One hundred percent of the
equity in banks may come out inthe form of deposit with rolls now that
needs to be offset by more equityinvestment or more of debt. The problem
is the asset side is probably onlyworse seventy cents on the dollar. So

(02:50):
what do you do while if you'rea bank, you on a blanket basis,
just say, guys, as loanscome due or credit facility of our
customers come to or mortgages, we'reonly going to roll over seventy eighty percent
of them because we had to shrinkthe assets side. Now that that's going
to really put a gamper on theeconomy if companies or individuals can't get loans

(03:15):
and particularly for expansion, or there'sanother way that they're going to have to
raise money. I mean, thecost of capital is going out. Credit
is really big shrunk, and theFED is really not the issue anymore because
the Fed they've done the damage thebanking systems upside down, and people like

(03:37):
to focus on the headlines of thisbank may fail, that bank may fail.
What's scary to us is a reallygood bank that you know is going
to make it take hometown favorite USbank. I think it's the fifth or
sixth largest bank in the country.You look at that balance sheet, you
just say, they really can't growthe assets side, they can't do more
loans. It's going to be onein, one out. It might be

(04:00):
one in two out. Okay,because the deposit side's going down, because
it's going to revert back to Trentline COVID deposits surge during COVID because of
excess savings and government stimulus, that'snow reversing. It's very bad. I'm
not going to say scary because alot of the banks now that are going

(04:20):
to actually fail. These are smallbanks. It doesn't matter. I mean,
it matters for the people who arethere. But in the seven the
economy, but the issue is thebanking system. Inaggregate, you're going to
see a lot of credit intraction,and what that means for the economy is
pretty darn't bad. Now, forthe equity markets, you can also say,

(04:42):
wow, banks are about twenty percentof the top three thousand stocks the
Russell three thousand, which is areally broad measure of the stock market.
Right, and you say, wow, twenty percent of the stocks. They
might be flatted down over the nextfive to ten years. So on one
you're you're saying banks are uninvestable,and on the other the other sense,

(05:04):
you need you need banks for credit. Yeah, Now, let's let's unpack
the uninvestable thing, because there's adifference banks on average, you're still training
at one time's book value, whichis the price they paid for all their
their's stuff, all their stuff bookreally is probably worth sixty to eighty cents

(05:26):
in the dollar if you liquidated thesebanks today, Okay, why would you
pay one time's book? And letme put this in further context too,
with the best bank investments in mylifetime, and by best I mean best
risk adjusted where the money where whenthe money went in. Everybody looked at
it said, that's not really scary, that's just really smart. Bank of
America. When Berkshire Pontend in twentyeleven he invested at point four times book.

(05:53):
Wow, Okay, Wells Fargo inthe mid nineties when Julian Robertson of
Tiger Management and Warren Buffett invested atpoint three times book, we're at one.
So while there's a lot of badstuff and people like to see stocks
that are down a lot, youhave to remember with banks, they are

(06:13):
ten times levered. There's ten unitsin debt for every one unit of equity.
The equity can go to zero andyou've only decrease the value of the
enterprise by ten lest it doesn't matter. That's why do you see these wild
swings with banks when they're about togo under, which is the stock just
all of a sudden goes down tofifty percent, and you don't have buyers
rush in because what they're really sayingis the depositors and the lenders may be

(06:35):
impacted. So not to scar anybody, not to be alarmist. I it's
just a lot harder sitting here towant to buy a bank, and the
price that you're getting to compensate youfor that risk. It's just it's inferior.
But I am you know, I'venever been a bank investor, except
except once in two thousand and eighton a short term trade with JP Morgan.

(07:00):
Ye had the safest of the safe. I mean maybe Morgan ever has
an issue. You have much biggerissues in your life than your JP Morgan
investment. But I think to putthe back or out bond. We had
a FED we I mean, wow, we're almost it. Were deep into
the first segment. We haven't talkedabout the Feder raising interest rates twenty five
basis points this week. They didsignal a pause. But the issue for

(07:21):
credit creation in the economy I thinknow front and center is the issues with
the US banking system. Well,I think one of the things when the
when the FED did have their allthey post mortem or press press conference after
raising interest rates twenty five basis points, they seem to be oblivious too the

(07:46):
banking crisis and it's impact on theeconomy and on inflation. I think the
most charitable thing you can say aboutthe FED right now is it's this is
as hard of a time if Iwas running the FED to make the call
as I've seen in my career,meaning I don't like any of the options

(08:07):
if you're Powell. So let's gothrough that. Inflation is still rampant and
underlying, and I think where weend up is the Fed's going to have
to surrender with it, with itwith inflation somewhere between three and four percent.
Well, it's very very interesting whenyou talk about inflation, because I
got got asked this question this week. Well, geez, the FEDS mandate

(08:28):
is to bring inflation down to twopercent. I said, no, that's
not the FEDS mandate. That thatbecame a guideline for the FED during the
Obama administration. But prior prior toyou know, prior to prior to that,
you know, the FED did notbring up any inflation target too.

(08:50):
Is the right target? Look they'redoing mandate is price stability right? And
employment? And look we can debate, and I am I'm I guess I'm
tacitly agreeing with you by saying we'regonna end up probably at three to four
percent inflation, that the fencer's gonnahave to give up because their choice,
by default, men is well,we can jack interest rates to ten and

(09:13):
then we can really do damage.And what's the point We might not win
anyway on inflation because I think inflationis long cycle. Long cycle, meaning
you see these periods of higher thanaverage inflation because of wages, commodities,
what have you, and the underlyingroot cause of those things. It's not
easy to solve them in a quickperiod of time. Well, inflation average

(09:37):
during the nineteen nineties little over threeperiod, I know, and we were
fine. So well, I guesswhat I'm getting at though, just to
go back to the quandary of thefete, is that we're still at elevated
inflation. You're seeing cracks in theeconomy, you're seeing clear cracks in the
banking system. Well, to me, that to me is a the worst

(10:01):
thing is the cracks in the bankingsystem. And that's one of the things
that I had talked about where we'vetalked about, you know, for over
a year, the Fed's going todo something until they break. Yeah,
well break something. They broke brokethe bank. The banks pretty pretty heavily,
right, and I think it justall goes to caution. But you

(10:22):
know, these things, we getthrough all of them. We're gonna have
to talk a little bit when wecome back about our big win with Apple,
seemingly the greatest company in the faceof the earth, largest market cap.
But we're gonna talk about that whenwe come back. We've got plenty
to talk about, not just justApple. We've got Microsoft, we have

(10:43):
some semiconductors, and definitely talk aboutsome of the other positive and negative earning
surprises that have come up. Comeup. This is Josh Arnold Missed or
Money Talk with Jet Arnold here toanswer your questions on bonds, mutual funds,
how you should position your investment dollars. Don't hesitate to give us a

(11:03):
call nine five two nine two fivefive to six o eight. You'll always
get straight talk, dot sugarcoated advice. This is Josh Arnold missed or money
talk with Jet Arnold. You answeryour questions on stocks, bonds, mutual
funds, how you should position yourinvestment dollars including your IRA in four oh

(11:26):
one, K, don't hesitate togive us a call at nine five two
nine two five five six oh eight. That's nine five two nine two five
five six eight. You always getstraight talk, not sugarcoated advice. Friday
morning, as we as we recordthis favorite Apple's stock is up and is

(11:52):
up big time. And there's oneof the one of the stocks that's leading
to dal Jones to a big,big one of the first big days or
positive days that Dallas had in infive Apple trading up seven and three quarters
at one hundred and seventy three fiftyfive. That is a big, big

(12:16):
of win for Apple. Apple didreport Thursday after the after the close,
and another we'll say beat on thetop line and bottom line, better than
expected. iPhone iPhone sales not asgood sales with Macintosh computers and iPads,

(12:48):
record services, sales, record subscriptions. There are now two billion users of
Apple products worldwide. And during theconference call, I could not believe that

(13:15):
Tim Cooked, CEO of Apple,kept mentioning India and how India is at
a tipping point, primarily towards movingto or more to the middle class.
Apple's guidance, as usual, wasfairly conservative. They did increase their dividend

(13:39):
and announced another ninety billion dollar sharebuyback. Apples one of the few companies
that did not go overboard and talkingabout artificial intelligence, although artificial intelligence has
been part and parcel of Apple's productsfor a very very long time. I,

(14:07):
of course, as a long termholder of Apple, dating back to
two thousand and four and having itas i'll say the biggest position in client
portfolios, a very very pleased withthe results and the and the continued future

(14:31):
of Apple. I still have mytwo hundred and fifty dollars price target for
that, but that's not necessarily goingto be getting there tomorrow. Of course,
there are let's unpacked the two fiftyfor a second. Your two fifties.
Right now, they're doing a littleover seven to share free cash flow

(14:52):
two fifty. You're really saying theyget to eight twenty five or thirty times
that we're going to add into cash. It's about a twelve month thous target.
Okay, fair, that's fair.Okay, but it may or may
not get there in that period oftime. Apple, according to one analyst,
Dan Ives of Wedbush, who wasone of the more bullish analysts on

(15:13):
Apple, has said that Apple maybea good sized position in most retail or
individual accounts, but institutionally Apple isunder owned, So there's still plenty of
upside for Apple. And I eventalk about Apple being under owned. If
I listen to most comment commentators onI'll say CNBC or other financial networks,

(15:48):
most of the commentators there are notpro Apple. That is, typically Apple
is too expensive. We might lookadded if Apple comes down to a certain
price really hard. But really there'sa lot of dynamics in the short run
about Apple. If you run SMPfive hundred tract money, which is a
lot of institutional money, you're ina quandary because I think Apple or Ata

(16:12):
seven percent of the SMP five hundred, a little over seven percent, and
it's one of the most expensive stockson a P basis. Nobody doubts that
it's a great company. It continuesto grow incredibly well, benefiting from the
mixed shift to services revenue, whichis now over fifty percent of profits.
Apple used to be forty percent ofearnings used to be Q four based on
the phone cycle. Correct. Nowit's this cash machine with monthly services revenue

(16:37):
that just money comes out of everybody'saccount. That's a really positive mix shift.
It's also a law of large,large numbers, and people just ask
where it can go. So there'sbeen a nice move. I think we
can acknowledge that when Buffett came in, it's one of the best invest buffets
ever made. He bought in atten times earnings, and you want on
multiple and you want to one onearnings. But it's also there's the business

(17:00):
reality of running an SMP five tractportfolio, which is it's really hard to
raise money and look investors in theface. I'm really smart. I'm overweight
Apple, the biggest most liquid companyin the index. And you haven't had
a problem saying that. I havenot had a problem saying that for a
very long and it's been correct.But I think you everybody has a view

(17:25):
on Apple. I think the easiestone is the business stability is clearly there.
The balance sheet is unbelievable. TimCook's done arguably a better job than
Steve Jobs. Now, to befair to Steve Jobs, Okay, the
order of Tim Cook going after SteveJobs was critically important, meaning if Steve
Jobs went after Tim Cook, wewould be talking about we might not even

(17:48):
be talking about Apple, because Apple, at the stage that Steve Jobs ran,
it needed the innovation and the thoughtfulness, and Steve Jobs laid the groundwork
for Tim Cook, who's more ofan execution guy, to really take it
to the next level. But whatever, well, let's you've got to say
that app you know, Apple,uh Apple, Steve Steve Jobs baby,

(18:12):
and you know it was his innovationand you know, to get that company.
It's compounded earnings. It's just anunbelievable rate. I think, you
know split its just I think itwas earning less than fifty cents a share.
Now we're up over seven bucks justten years ago. So it's it's
it's been a journey and earnings goup, stocks go up. It's the

(18:34):
simplest formula out there. Yeah.I mean, the other the other big
component in in the SMP is Microsoft, and they continue to keep churning moment.
Nobody likes Microsoft either, all thepeople on TV for a lot of
the same reasons. And there's there'sMicrosoft continues continues to lead continues to print

(18:56):
money um and even when they reportedtheir their earnings a week ago, their
focus happened to be on artificial intelligenceand they got a big big boost from
that and some of the other productsthat they're expanding expanding into. So just

(19:18):
Apple and and Microsoft, they havejust been producing well. Apples above it's
COVID high now and Microsoft is prettydarn close to its COVID high. And
that's a very interesting dynamic because we'reseeing, you know, in the tack

(19:41):
rackets that's occurrent, most of themhave gone back below COVID high. So
we've really separated the thronging from theweek, if you will. And now
you you had pointed pointed something outor have continued to point something out that
well, the S and P fivehundred is still flirting around forty one hundred,
which was we'll say at a highend of the range. There are

(20:07):
only a few companies that are supportingsupporting that that number, with an awful
lot of companies in the SMP thatthe top ten companies, the SP five
is down down for the year.Now, I would point out the offset
to this a little bit is theequal weighted SMP five hundred, which gives
no obviously size advantage the big ones. It's still you know, a bottomed

(20:29):
at one twenty five. It's backto one forty two. So we've a
sorry bottom at one thirty, alittle bit under one thirty late last fall.
So we're still healthily above. Andthere's just been a lot of bad
stuff. And then you look atand I mean, I guess this dynamic
that we're really getting into is alot of things are bad. And you

(20:52):
look at the SMP five hundred,up seventy eight percent for the year.
Here, okay, wow, howare we here? And you look at
the VIX or the fear index ifyou say here is under is under twenty
way under twenty twenty is the longterm average in times of stress and fear.
It jumps up to thirty five toforty. You know, we were
mid teens this week, and youwatched the KRI which is the bank etf

(21:15):
just continue to get obliterated. Sothat's that's all very fascinating. I think
the other thing, you know,while we go to break that we just
continue to watch is the bond curve, which is the treasury market. And
you look at this dead ceiling thingcoming up. And you know, people
say, what is the dead ceilingthing? Well, the one month two

(21:38):
month was heavily inverted one month notetwo month note that has now elapsed.
You've got to be kidding. Sothe one month two month at a seventy
basis point spread point seven percent atthe start of the week, okay,
and now the one month is abovethe two month at five point five sent

(22:00):
first five point two seven percent.Now that's that's more normal. But the
crazy thing is the peak of thetreasury curve for much of this year has
been at these between six months inone year, meaning the highest interest rate
you can get is if you buythat bill, right, the highest interest
rate today is the one month.We're inverted from one month wow, which

(22:22):
has now I can't remember the lasttime that's happened. And the inversion of
the one month, the one monthsat five to five, the ten years
at three to four sous two.Well, when we come back, I
do want to talk about the treasuries. You brought up the debt ceiling,
so we've got to we'll cover thatin a little little bit and more.

(22:44):
This is Josh Arnold, mister Moneytalked with Judd Arnold. Give us a
call nine five two nine two fivefive six h eight. You always get
straight talk, not sure your codedadvice. This is Jobs Minister, Money
talk with Judd Martin here to answeryour questions on stocks, bonds, mutual

(23:07):
funds. I used to position yourinvestment dollars including your IRA and four oh
one K. Don't hesitate to giveus a call at nine to five two
nine two five five six o eight. That's nine to five two nine two
five five six oh eight. You'llalways get straight talk, not sugar colored
advice. Judd, you've got I'llsay this path past week, we've had

(23:33):
numerous we'll say, big headlines todeal with. We had the fer Reserve
raising interest rates. We've had acontinuation of a banking crisis. We've had
favorite Apple report better than expected numbers. We had a job's number that came
in on Friday, higher than thanexpected. But the job participation rate is

(24:00):
still low. Unemployment is that itslowest point since nineteen sixty nine. And
wages are you know, creeping creepingup again. And the next big worry
we'll say for the mark market,uh, you know, might might be

(24:22):
the debt ceiling and how Congress maydeal with that. And then you look
at um bonds and while the longend of the curve is you know,
it seems to be coming down.The two year is under four percent,

(24:48):
but the rates on short term bondsare still very very high. Is that
something we need to be concerned withthe interest rate? When the bond curve
is this inverted, it's scary.I mean, we have over a two

(25:10):
percent difference between one month treasuries atnorth to five to five and the ten
year bond to three four, screaminga recession. And it's screaming that the
fence is going to start cutting ratesdespite just raising them. We obviously have
the bank turmoil. It's a verydifficult time. Most people I talk to
don't know what to make of it. Most people are including ourselves, hiring

(25:34):
cash right now. Let's just it'sreally hard. And the nice thing about
when it's really hard is it usuallygets really easy shortly thereafter. So that's
it. I think you want theearnings on average, this earning season was
on average better than expected. Well, you also have a lot of analysts

(25:59):
that have been cutting the numbers,and now we have an analyst raising numbers
a little bit. We haven't seenthat dynamic for a while. Higher numbers
mean higher stocks. So we've beenin this this world for the last year
and a half where the recession hasbeen coming every three to six months,
and every three to six months theyhave to pish it out another three to
six months, and so the marketlikes to gyrate and sentiment from well maybe

(26:25):
soft at some point it's well,I guess we're gonna have a soft landing
too. It's gonna be really badnow. It's just hard to call.
The bank thing is objectively bad.Objectively it's terrible. On the flip side,
we had commodities really weak in thisweek. Oil after the OPEC cut
rally from earlier in the month isback down to the lows for the year.

(26:48):
That's pretty good for the consumer rate, the FED signaling they may be
done. That's good bank stress.As we talked about really bad prices,
they're kind of fair. I don'tknow what to do with this market.
You just kind of hang out.You don't have to do a lot all
the time. Well, that's that'sone of the reasons, you know,

(27:08):
in our asset allocation model, wedo keep a lot of cash both for
safety and to take advantage of opportunities. Yeah, and the my gutt is
that the banking sector issues are goingto lead at some point one night.

(27:29):
My gutt is they're going to getworse, not better. I'm not going
to just disagree with you. Andevery time I've seen o real stress in
the credit market, it's led atsome point thereafter to a real hit to
the equity market. If you wantto go back to the global financial crisis,
the stress in the credit market,you know, we bought the equities
bottomed in lait end of February orearly March. I forget two thousand buying.

(27:53):
Correct, you had a really badobviously two thousand and eight. The
stress in the credit market you startedseeing in late oh six. It just
takes a while all the you know, we'll definitely the stress and the credit
credit market are definitely in the we'llsay in the bond in I'll say mortgage

(28:14):
mortgage backed securities back back then reallystarted showing up in to me in early
two thousand and seven. Yeah,the tightness and credit for region, what
it means for regional banks is thatfor me is from the center the debt
ceiling to go back to all theheadlines. I hate being optimistic when when

(28:36):
it's so disappointing. I mean,politicians are going to be politicians, that's
my Now, let's just point thefinger at the other guy. We're not
going to do anything that the otherguy is doing something, but we don't
agree with what he's doing. Look, at some point in my lifetime,
we're going to default on the USgovernment deed. One of these debt ceiling
fights is gonna is gonna ruin US. Now what is the default in the

(29:00):
US. I'm not I don't thinkit's really that bad, because it's not
when a third world or second worldcountry defaults on its dead people don't get
a hundred cents on the dollar.Okay, they defaulted, and you know
you're not going to get and thesecurity prices mostly the bonds trade off into
that that the market is pretty intelligentand people know that they're going to take

(29:25):
big losses. Say Argentina, whichhas been in default for fifty percent of
the time for the last two hundredyears. Okay, all right, you
know when Argentina defaults, the bondsare already at ten cents. You know
you're getting wiped out, all right, What does a us default look like
it's gonna be a failure to pay. I don't show me the person who

(29:45):
thinks that if we default, thatyou're not getting a hundred cents on the
dollar with your T bills. Oncethey turn on the you turn on the
spigot, if you will, you'regetting one hundred cents. You're just gonna
get it ten twenty thirty days later, okay. So and they're going to
figure it out and kind of atthe point that maybe a bad thing has

(30:07):
to happen so that good things canhappen after that. That's kind of the
silver lining on the Chicago thesis rightnow. Chicago just didn't, you know,
elected not to be political. Theyelected a person more extreme than the
previous extreme person that they voted out. And I think you have to bottom.
New York bottomed, you know,during the Nixon administration and they almost

(30:29):
you know, had to file bankruptcy, and that really set up a great
thirty years for New York the recovery. It was pretty ugly at the bottom.
But um so that's my view onthe deaths of thing. I don't
think it's nearly as bad as thetwo stayers will say. I don't know
if it's going to happen or not. My gut is they'll usually figure it

(30:49):
out at the last minute. They'llbe a horse trade, as there always
is, because politicians are going tobe politicians. Well, even when you've
talked talking about the depths, becausethis was also brought up to me,
these drifts, we ought to beselling our stocks. But why don't you
consider selling selling stocks with the issuewith the death ceiling and putting all the
money into a silver and goal.And you know my respond responses, there's

(31:15):
no sense this is a Well,let's unpack that, because when bad things
happen, you have to ask yourselfwhat you would do, and that's really
the guiding light of what you shoulddo in the moment, not what you
should do after the event. Andmy point on what happens if the US
government defaults, as long as youbelieve if you disagree with the thesis that
you're not getting back one hundred centsof the dollar within I'll say thirty days

(31:37):
at worse. Okay, all right, then we have somebody to talk about.
I think that's wrong and I'm youknow, so, assuming you're going
to get the money back, whichI think is a foregone conclusion. What
you're really saying is that the USgovernment defaults. In the stock market trades
down ten percent, you're buying itall day. And if you're buying it
all day, guess what, it'snot going down ten percent because it's obvious.

(32:00):
That's entirely different than a financial crisisissue, which is, if I
told you that ten banks are goingto fail with a trillion dollars of bank
assets in the next one month,you would be rightly be terrified. And
I'm not saying that, but youwould rightly be terrified. And I don't
think you could blindly step in andbuy anything. And that was the problem

(32:22):
with the global financial crisis, whichis bad things were happening, and you
looked at the price of being wrong, while the price of being wrong was
the global economy ends and we losemore banks, and you really need to
see stability before you could step in. US government default. You can step
in. Everybody's well aware of what'sgoing on. It's too obvious. It's

(32:43):
not to sell everything. I'm tooI'm too chipper too, I'm too optimistic.
You know, I couldn't. Icouldn't make a deal for the dead,
stealing or maybe I could maybe meon the other end of the table
for the people threatening me saying whereyou know, you can't let the government
default. And if I said,get know, it's the Nixon thing,
crazy guy right, the crazy guynegotiation, it's not that bad. Well,

(33:08):
the in any case, I amnot a I am not a gold
gold investor, um or rofet hasbeen proven right. Coke has done,
Coca Cola classic chaos stock has donefar better as an inflation edge than gold,
as far better. You don't likecoke, you can buy pepsi and

(33:29):
you probably find them, find thesame save with it. But when we
come back, when we come back, we can even talk a little bit
about Warren Warren Buffett because m WarrenBuffett and Charlie Munker are going to be
on stage on Saturday morning in Omahawith their annual meeting, and that is

(33:50):
always very interesting to listen to andhear about. This is Josh Arnold,
mister money Talk with Judd Arnold.Give us a call nine five two nine
two five five six eight. Thisis Josh Arnold missed her Money Talk with
Judd Arnold here to answer your questions. One stop Spawn Mutual Funds how you

(34:13):
should position your investment dollars, includingyour IRA in four oh one K,
do give us a call nine fivetwo nine two five five six o eight.
That's nine to five two nine twofive five six oh eight. You'll
always get straight talk, not sugarcoded advice. As past week, as
we have said, big week,FED raised interest rates twenty five basis points,

(34:38):
and to me, they continue tobe will say, semi oblivious to
what is going on in the realeconomy. They keep waiting for more and
more data, and I continue tosay FED has gone way overboard with their

(34:58):
interest rates. Favorite well reported theirearnings again a beat on the top line.
In the bottom line, they soldmore iPhones, they increase the dividend,
increased the share buyback, issued conservativeguidance, and to me, the
stock continues to be a must own. But that's in my my view.

(35:29):
We had a better than expected Job'snumber on Friday. Sometime next week we'll
have some decision or something more happeningon the debt ceiling. And in the
meantime, we've had companies beating,beating earnings and for the most part doing

(35:52):
better better than expected. Yes,there have been companies that have missed missed
on earnings, particularly in the inthe media space. UM Disney reports their
earnings next week, and that's alwaysa wait, wait and see. Paramount
did not do so well um whenthey they they reported Warner Brothers Discovery did

(36:19):
not do so well when they reportedum Comcast ordered last week and they were
we just say we've we've sent itmultiple times. Media is a disaster.
They switched to a direct to consumer, so they unbundled. They make no
money. Now you took a beautifulbusiness and it's your new business that makes

(36:43):
no money. The direct a consumerwhere your cost of customer acquisition is mass,
and then you're up against Netflix andnobody likes it because the bill ends
up being higher and you have tomanage to all these bills. Is killing
their legacy business. It's terrible,and their their content monopoly is just coming
away you and are super bearish guyon yesterday talking about you know, with

(37:06):
with Paramount, which is really CBSand Viacom combined and they give it your
name. A lot of that valueis sports in terms of viewership, and
they're losing out to YouTube and allthe other you know, tech giants who
have more money to spend for thoserights. It's just a really I mean,
Paramount was you know seeing that stockdown. I think that stock is down.

(37:32):
It continues to move down. Uh, there's nothing there and they you
know, they've changed, they've changedthe name UM and that has just you
are in a bat you are breakeven. You're down if you bought this
stock in two thousand, justice,you're with everything that's happened in media,

(37:58):
everything that Paramount, Viacount and cbsndone. To be down on that.
I mean, yes, you collectedsome dividends along the way, but my
goodness, oh what a design.Well you talk to talk about disaster A
long time, A long time ago. One of my big holdings was AO
AOL and AOL Um. It wasgoing to you know, merge with Time

(38:23):
Warner and that that deal was puton hold for about about two years.
And when eventually it happened the folkshad Time Warner, they were very upset
and they thought, well, hereare the AOL cowboys, what do they
know about running media? And theydid everything they could to undermine that deal

(38:50):
and we saw that stock go fromone hundred down to ten bucks. Let
me just the biggest negative with mediathat I have other than they're they're all
ridiculously valued. You want businesses whereyou don't have to constantly reinvent yourself,
and that's the scariest thing because eventuallyyou're going to reinvent wrong. Let's go

(39:14):
back to Buffett with Coca cola.Does he lose any sleep about people drinking
Coca Cola thirty to fifty years fromnow? Probably not, But he got
a great thing. I mean,unless he bud lights his brand. And
I don't mean the political statements rightabout why bud Light or what they were
advocating, but we can all agreeat this point that bud Light had at
an existing customer base that was deeplyoffended and has now left the brand.

(39:37):
Like that's how you kill a brand. Short of that, we're gonna be
drinking Coca Cola for a really longtime. You think about media, the
stuff you watch on TV, andthis is the problem with Paramount is changes
every year, right, and it'sreally hard to know what people are going
to want to watch, which iswhy we the people run these companies.

(39:58):
When they do well, you think, wow, this guy it is a
magician or she's a magician. It'sreally hard and then you layer in the
competition from Netflix and other people.Now you got a lot of big money
coming in in an industry that's filledwith big money that does not feel like
a business that you can project inany way, shape or form. So

(40:19):
I don't like it. You don'tlike it. I think these stocks are
in real trouble. That's on thecontent side and on the cable side,
which used to be a great business. And you look at the Charters of
the world. Cord cutting just continuesto increase, and that's a tough business,
and Charters it's been a zero ofa stock now for eight years after

(40:44):
being just an unbelievable darling. Ithink probably the best cable related company is
still Comcast, and I'm not sosure that their their stock performances. It's
just really hoilic When you pencil outall these things, it's just really hard.
And it's kind of like what wesay about banks, which is really
hard. It's really hard. Moststocks that work are pretty easy. So

(41:07):
guilty of that mistake as much asas much as other people. But anyway,
in any event, here we areall we need. All you need
in your portfolio is one or twobig, big, big winners, and
to hold on to them and thatwill cover over. Speaking of big winners,
you know, I had a bigwin with with my dental company this

(41:29):
week. That was good to hearhim v spun off from zimmer Bioment.
Stock got obliterated last earnings. Weentered in about five bucks to share,
which was about five times cash flow. The five and the five are coincidental.
Five times cash flow and a dentalbusiness is eighty percent dental twenty percent
spine. Spine is a terrible medicalproducts business. There's too many people have

(41:50):
spine implants. A little did Iknow, but right they're going to shut
down the spine business. They justcame out earnings this week. Stock was
up thirty five percent on earnings.Still it's cheap. At nine to sixty
to share, you're paying about sevenpoint five times tental earnings. Mental companies
trade at ten to twelve times earnings. If we get it to eleven times
earnings and earnings grow a little bit, you're talking about twenty five dollars stock

(42:12):
stocks nine to sixty. But mostimportantly, it is very clear that after
you know, when Zimbi came out, it was spun off. A lot
of spinoffs are tough they can goboth ways. This was what they call
a bag of hammers. Stock wasspun out of twenty five bottoms at five
within a year. When we camein, managed had to keep cunning numbers,
cunning numbers. Just a terrible business. And now it looks like they
kitchen sink did and turned it around. You can argue whether it's an easier

(42:36):
trade or not. Right here.I had a lot of people tell me
this week, Yeah, it's alot easier now I know that they you
told me they kitchen sincton and I'mall came missing the first the first leg
of the trade. I still likethat one. A bunch we've got.
The offshore drillers reported this week unbelievablecommentary that continues to play out. All
energy stocks have struggled, and mostof them were down this year because oils

(42:59):
down to part of that is arewe going to be in a recession not
recession story? A lot more todo, a lot of year left.
I can't believe it's May. Icannot either. And I'm just just looking,
you know, looking out the window, and the leaves are just starting
to butt on the trees. Yeah, well it'll be May next week and

(43:19):
we'll have to talk to you then. If you got questions, give us
a call. It's nine five twonine two five five six oh eight.
I am Josh Arnold, mister Money. Talk with Judd Arnold. We're here
to help you. Josh Arnold InvestmentConsultant is a registered investment advisor located in
a state of Minnesota. All securitiesdiscussed are for informational purposes only. Investing
contains risks, including risk of loss. Consult your investment professional before making any

(43:44):
decisions about your investment portfolio.