In this podcast, Motley Fool senior analysts Jason Moser and Matt Argersinger discuss:
- First Republic getting $30 billion in deposits from 11 major banks.
- The latest CPI and PPI numbers continuing the trend of cooling inflation.
- Whether the Federal Reserve should raise rates again.
- The latest from FedEx, Adobe, Lennar, and Williams-Sonoma.
- Two stocks on their radar: Charles Schwab and Zebra Technologies.
John Ourand from Sports Business Journal and the "Sports Media Podcast" analyzes the economics of March Madness, why he's bullish on the upcoming MLB season, and Disney CEO Bob Iger's latest thinking on ESPN.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center . To get started investing, check out our quick-start guide to investing in stocks . A full transcript follows the video.
This video was recorded on March 17, 2023.
Chris Hill: We've got the business of March Madness, ESPN's future and a lot more. Motley Fool Money starts now.
From Fool Global headquarters this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill joining me in studio Motley Fool Senior Analyst Jason Moser and Matt Argersinger. Good to see you as always gentlemen.
Jason Moser: Howdy.
Chris Hill: We've got the latest headlines from Wall Street. John Ourand from the Sports Business Journal is our guest and as always we've got a couple of stocks on our radar. But we begin with the state of play in banking. Last week the big story with Silicon Valley Bank and on Friday morning of this week, SVB's parent company officially filed for bankruptcy. The more intriguing story involved First Republic Bank. On Thursday, a collection of major banks including Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup agreed to deposit a combined $30 billion as a sign of confidence in the overall banking system and while the deal does not include government funding, JPMorgan Chase CEO, Jamie Dimon reportedly discussed the idea of the First Republic rescue package earlier in the week with Fed Chairman Jay Powell and Treasury Secretary Janet Yellen. Matt, I will start with you. Where are we now?
Matt Argersinger: Oh my gosh. What a week. Well, right now I think as an investor you're watching here on a Friday, you just gave the news about the First Republic Bank rescue, in a sense, I just think there are too many unknowns. Investors obviously believe that there are more problems, more shoes to drop because if you look at the performance of regional banks today and how they've performed all week and we get the news about Silicon Valley Bank, we got the news about First Republic.
But if you look at a lot of regional banks whose deposit bases, whose loan books look a lot different from those banks, I'm talking Regions Financial, PNC, M&T Bank, in many cases banks have been around for more than 100 years, have been doing business, they've all been killed and they're getting killed. Investors are just selling first and ask them questions later and I actually don't think that's a terrible strategy when it comes to banking because the short-term full of unknowns long-term you have to believe that no matter how this comes out, they're going to be more regulations, there are going to be more costs, insurance premiums are going to go higher. What is the future for regional banks, small to mid-sized banks? I don't know if it's an investable class anymore and that's what I'm trying to figure out and I just don't know right now and I don't blame the investors for selling first and asking questions later.
Jason Moser: You hope that the intention on Jamie Dimon's part and then in the executives and the industry is to lend some more credibility to the smaller banks. It remains to be seen whether that's going to stick. We're clearly seeing a lack of faith in the banking system right now, they are right to try to contain this as quickly as possible but optics matter and I think that's why you're seeing these conversations between Jay Powell and Jamie Dimon and other banking executives. Can you imagine the phone conversations with Mr. Dimon? We've Mr. Powell on the line for ease. You tell him to hold, I'll get to him, I know he needs me more than I need him, that's probably the way they're thinking right now.
Chris Hill: It might be but we're talking about 11 major banks involved in this deal. We were talking about this earlier today. At some point, there is some self-preservation involved here. Because they don't want to be in a situation that they were in 15 years ago where the phone call coming from the treasury secretary or the Federal Reserve Chair at the time is more along the lines of, "Hey I need you to buy this troubled bank," as opposed to, "Go get some cash out of the register and deposit it into the bank."
Jason Moser: These deposits that were put down for First Republic and you're right, the return on that could mathematically be zero for these 11 banks. I'm certain they are thinking longer-term, they're thinking, listen we got assured these banks up, we got to keep credibility within this space and we got to prevent this thing from really spreading up, so I think they're absolutely taking a longer-term view here which makes a lot of sense. When you look at First Republic and you think about what we've seen just over the course of one week with this bank, we've gone from everything is fine don't worry to, it's a bank run to, never mind we're good to, hey, a $30 billion backdrop from our industry peers to what we're suspending our dividend, wait now we probably are going to need to be acquired.
All in the period of one week and I will also remind you that a week ago, First Republic published an 8-K on the front of their website claiming that everything was OK and I'll quote you some of the numbers they quoted from this 8-K. They said their consumer deposits have an average account size of less than $200,000. Business deposits have an average account size of less than $500,000. Within business deposits, no one sector represents more than nine percent of total deposits with the largest being diversified real estate, Matty, and technology-related deposits represent only four percent of total deposit. They put all this information out there a week ago to instill confidence that clearly didn't stick.
Matt Argersinger: That's it, it's confidence and what you said earlier about faith in the banking system. Right now, there's very little right now. Think about beyond the banks themselves, think about the depositors, think about small to mid-size businesses across this country. Real estate for one that you mentioned but even if you're industrial company or a health services company you've got to likely have deposits that are uninsured at a regional bank and you're trying to think to yourself, what's going on with my bank? Do I just need to pull those deposits out? I just need to make sure I'm protecting my balance sheet. I think those are questions being asked to all across the country and that's why the tentacles is this thing, can really reach out really wide and there's so much uncertainty and we just don't know where it ends.
Jason Moser: Well, it throws a lot of just rational thinking out of the window. Rationally, we know our deposits are protected. But that flies out the window during times like this, everybody just gets into self-preservation mode and wants to ultimately protect themselves and it's very understandable. It's your money, nobody should care about it more than you care.
Matt Argersinger: You can't ask depositors, especially individuals to analyze the creditworthiness of their bank. I'm not going to go in and say, well, should I be worried about my bank, understanding what my banks exposed to because my deposits can be risk. You can't ask that at depositors which makes this situation so precarious.
Chris Hill: Matt, you talked earlier about the regional banks and they are at least for the moment in the stay away category for you personally as an investor. Where are the big banks in this? Are there enough question marks out there that you think, I'm not necessarily rushing to invest in those either?
Matt Argersinger: You would think, well, that's where the capital is going to flow, these banks are higher regulatory requirements so they're going to be fine and that's maybe where I should be thinking about investing. But I think the problem is, the long-term picture is very cloudy because you're talking about overall faith in the banking system and what the regulatory changes are going to be. Even the big banks are going to probably going to face higher costs which I think is why companies like JPMorgan, Bank of America are so interested in trying to prevent First Republic Bank from really going under on the depositor basis. Because they're worried about the greater implications for their industry over time, no matter what it's going to be costly or in the future and that makes it harder to invest.
Chris Hill: This week we also got the latest data related to inflation, the consumer price index and the producer price index numbers for February continue the trend that we've seen for months, inflation is cooling off and with that, Jason, next week, all eyes are going to be in the Federal Reserve's meeting and what they decide to do with everything related to inflation and everything related to the banks that we've talked about when it comes to, do they raise interest rates and if so, by how much?
Jason Moser: That is going to be the topic de jure for these next few days and I think rightly so. It's an interesting exercise to go through in your mind. We were talking about it and in production you hear every perspective and it's like, "Yeah, I get that, that makes sense." You hear someone with the contrarian perspective, "Yeah, I get that too. It makes sense." It's hard to figure out exactly what they will do because this is such a unique situation. We've seen rates rise at such a rapid pace, is the fastest we've seen this push and interest rates instance back to the 1980, something that's not normal. The last three years have not been normal and it's all coming to a head here. It does seem we're seeing signs that inflation is easing, the producer price index numbers there indicate that things could be cooling off at least a little bit.
I don't know that we necessarily need to make a call, but my mind is thinking that if I was going to make a call here, I personally would probably say, you know what? Let's just hold tight this time around. The main reason why let's not cut, let's not bump up. Let's just leave things where they are because what we're seeing is still plenty of uncertainty. There's enough uncertainty to my mind that for Powell and company to be able to say they can predict the ripple effects of their policy decisions here over the last year. For them to say they can predict these effects over the course of the next six months, much less six days, I think it would be difficult to take that very seriously. I think that it would make sense to just stand down and reassess the next meeting.
Matt Argersinger: That makes sense Jason, but it's the prisoner's dilemma. It's like Powell's thinking themselves if investors know what I'm thinking, but I'm thinking this and what are they thinking if I do this? The thing is if they if they hold PAT and I think that is probably a sound thing to do given all the uncertainty, but if you don't raise 25 basis points, our investors are going to say, well, wait a second, wait. You're saying there's a problem? There is a problem here. I'm even worried that the Fed has changed course, there are bigger problems here that I knew about.
Chris Hill: But mathematically, there's not a huge difference literally and figuratively, between holding PAT and raising it a quarter percent. This leads to this question, we talk all the time about companies reporting earnings and the earnings results are one thing, but the guidance is something else and that's what guides today. Is the language that we get out of the Fed next week more important than what they actually do? Is the press conference and I hate to say that, but it does make me wonder, is it essentially the Fed interest rate version of that where it's like whatever they do, the language around whatever they do is more important.
Matt Argersinger: I think that's right and it's just one of those things where we wordsmith every Fed statement. We look for subtle changes, word to word, month to month, and this is going to be the ultimate one. Because that's what investors want to know, is exactly what the Fed is thinking and the way they disclose things and it's going to be parsed to death.
Jason Moser: Yeah, it's the math. I think this is what makes investing in what we do for a living so fun and so fascinating because there's the mathematics involved. There's the objective answer, but then there's the psychology that comes out with it, and that obviously is a much broader brush.
Matt Argersinger: We play the weighing game. We try to, at The Motley Fool, long-term weighing game. We weigh the value of stocks, but investors are voting right now. In the short run, they're voting like crazy and the votes, they're being counted in so many different ways right now.
Jason Moser: Yeah, but ultimately you have to ask yourself, is that psychology? It sure feels like there's a bit more glass half-empty out there right now. Is that offering up some opportunities? I think we all would agree there probably are some opportunities that are starting to bubble up to the surface.
Chris Hill: After the break, we've got the latest in the housing industry, retail, software and more. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in the studio with Jason Moser and Matt Argersinger. The cost-cutting that has been going on at FedEx appears to be paying off. Third-quarter profits were much higher than expected for the bellwether business, and shares of FedEx up on Friday man.
Matt Argersinger: That's the key question, Chris, for every company actually right now, but in FedEx particular it's could they cut cost fast enough and raise prices fast enough, to offset the big slowdown in volume that they started to see last year. I think right now the answer is yes. Because if you look at the pricing power they're getting, particularly in the ground and freight business segments. They saw revenue per shipment rise 11 percent there, the guidance that they gave was much better than expected. They are looking at a range between 13-14 dollars a share for the entire fiscal year. Now ranging $14.60 to 15.20 roughly $15 a share per earning.
Clearly it's working, I just think the question for FedEx is they're doing all this cost-cutting and efficiency. Will that matter if the topline doesn't come back? Because this is an operating leverage business all the way, so that's down. They're still seeing big slowdown, they're express business, which is the biggest part of the business, almost 50% of revenue. That's got to come back. I think today though, based on those earnings projections, you're getting FedEx at roughly 15 times forward earnings. It's a below market multiple, they've been raising the dividend, they are absolutely hammered last year. You're getting a pretty big break there, so if volume start to come back, the economy turns around, FedEx is a leaner, meaner machine that could be producing a lot more cash flow.
Chris Hill: Shares of Adobe up seven percent this week after the software giant's first quarter results came in higher than expected. Adobe also raised guidance for the full fiscal year. That is the one-two punch we'd like to see.
Jason Moser: Yes. In a world where budgets continue to tighten and companies are playing more defense, Adobe, I think they really did report a very encouraging quarter. It's been a tough stretch for the business and for shareholders alike, I think really by any measure over the last several years. But revenue $4.6 billion, it was up 13 percent from a year ago excluding currency impacts. You saw non-GAAP earnings per share of $3.80. That was up almost 13 percent as well. They saw some big customer wins in the quarter with Accenture, BBC, Disney, IBM, Mphasis, Nintendo. It was a nice quarter for their document cloud business, which grew revenue around 16 percent from a year ago.
They continue to do a good job and repurchasing shares and bringing that count down, it's down about six percent from 2018. As you mentioned, raising guidance they're calling for earnings per share of $15.45 at the midpoint. That value share is today at around 23 times full-year estimates. Historically, I would argue an opportunistic look at this stock. Now the wildcard, the big question mark still is this Figma acquisition that has not happened. It's not clear that it necessarily will, but management is optimistic that it will. They are continuing to go through the process and meet the requirements that regulators are asking, they see this closing by the end of this year. Again, it's still a question mark as to whether regulators will actually let it happen.
Chris Hill: Lennar is the second largest home-builder in America. First-quarter profits and revenue were higher than expected, but Lennar said that orders for new homes fell. What do you make of their latest?
Matt Argersinger: With the homebuilders and Lennar, I think right now it's a matter of balancing demand against trying to protect margins. We know demand is lower obviously, and yeah, new orders were down 10 percent. I like to look at backlog which was down 29 percent, that's a pretty big drop. Cancellation rate was 21 percent, that's up from 10 percent, which is more typical of homebuilders. The future right now is they're not building a lot homes, or are not going to be delivering a lot of homes, but I think with homebuilders right now, with Lennar, it's more about design. I think it's protecting sales price.
If you look at their average sales price of homes in the quarter, 448,000 versus 457,000 a year ago. Not a huge drop. I think a lot of us following the housing market would say, wow, I expected that to be a bigger drop. They're protecting price, protecting margin and by going slower now doing less business, they can recharge when the demand returns and there's better pricing power. Tough in the short-term but Lennar makes the argument that a lot of homebuilders do, which I agree. Which is that we have a national shortage of housing still, even after this housing bubble that we saw and it might even get exasperated. They're still long term, a pretty good demand outlook for homes.
Chris Hill: The fourth quarter capped what Williams Sonoma called a year of record revenue and profits, despite that shares down a bit on Friday after the report. Jason, you look at the chart. Wall Street is not rushing to reward Williams Sonoma for their last 12 months.
Jason Moser: Well maybe so, but they have rewarded them for the last three years. It's been a very good stretch for shareholders with shares up 250 percent over that stretch. That seems like it makes sense though, people had a lot of money to spend over the last few years. I think the question really is, what does this story of look like going forward? That remains to be seen because it's so dependent on the consumer, but the business itself fundamentally doing very well. Revenue was essentially flat for the quarter and gross margin was down a good bit from a year ago. That was driven by higher shipping and freight costs, occupancy costs, whatnot.
Not terribly surprising and that ultimately resulted in earnings per share of $5.50, also basically flat from a year ago, but they continue to grow the business and they are taking this business in a number of different directions. You see e-commerce that now represents fully 2/3 of overall revenue, and I think a neat dynamic that probably most investors aren't considering is the company's B2B business, the business-to-business. These consumers you're talking about Williams Sonoma being a furnishings company for restaurants and hotels and football stadiums. They're growing this business considerably, closing in on a billion dollars in revenue for the company and grew 27 percent from a year ago. I think putting that together with the share count down better than 20 percent over the last five years as well. Again, a lot depends on the future of the consumer here, but this is a business that's being run very well.
Chris Hill: All right, Jason Moser, Matt Argersinger, guys, we'll see you a little bit later in the show. March madness is exciting for sports fans, but is it translating into ad dollars for the TV networks? We'll get into that and more with our guest, John Ourand right after the break. This is Motley Fool Money. Welcome back to Motley Fool Money, I'm Chris Hill. As March Madness gets underway and Major League Baseball is just around the corner, seems like a really good time to check in on the business angles related to the sports world with our friend John Ourand who covers media for the Sports Business Journal and he joins me now from Washington DC. John, thanks for being here.
John Ourand: Anytime, Chris.
Chris Hill: It occurred to me this week that every year before the super bowl, there's a lot of conversation around the advertising. Some of that is because there's genuine excitement about what are the ads going to be, the creative of advertising, but a lot of it is about the money and how much the network is going to make off of a 30 second commercial, that sort of thing. This week for the first time I started to think, wait a minute, the NCAA basketball tournament is a big event that lasts for the entire month. How are the economics for the networks involved in the NCAA basketball tournament? Because my hunch is they're looking pretty good.
John Ourand: They are looking great. In fact, Turner and the NCAA tournament is so unique, the Super Bowl, Fox had it this year. Fox sold the advertising this year and it's network by network. The tournament is shared by CBS and by Turner. You have the ad sales groups for each network who usually are competing against each other, now working together. It has been working out really well this year to where they brought in a record hall of revenue, more than a billion dollars, and just the advertising revenue. The advertising around the NCAA tournament doesn't have as much panache as say the Super Bowl where people wait and look. But they are unique. They have these commercials that stars a lot of the talent. You'll see Samuel L. Jackson, Charles Barkley, and Jim Nantz on a road trip. There are different commercial campaigns that are really just launched off of the NCAA Tournament. The business behind not just the tournament, but all of college basketball this season has been really healthy.
Chris Hill: Well, I remember when you and I talked last year and we'll talk more broadly about ESPN in a minute. But I remember you saying when we talked last year that one of the best television deals when it comes to the rights of live sports is ESPN's deal with the NCAA. If you think John, not just about the men's basketball tournament, but the women's basketball tournament, and the compelling storylines there. It really does seem like the economics are working out very well for the television networks.
John Ourand: Especially ESPN does not pay for the women's basketball tournament. They pay for this whole bucket of rights that include everything from college rowing that they stream to college lacrosse, to the college world series and the NCAA women's basketball tournament. What makes me so bullish about the next couple of weeks with March Madness is that over the last two decades, college basketballs struggled somewhat. The play isn't nearly as good. You have people going directly from high school to the NBA or staying for one season and then going so the idea of having a Coach K with a player for three or four years and building like a really good, high-quality team, or that doesn't exist anymore.
Ratings generally have been soft, like the march madness is so popular. The theory was that it devalued regular season. Well this season, Fox set an all-time record with viewership, CBS was up, ESPN was up. Fox had the most watched basketball game in its history, and on the women's side, ESPN had the most watched women's game in history as well, South Carolina game and ratings were also up over there. Everything is working out really well. The business behind college basketball for the 2022-'23 season was very healthy.
Chris Hill: Let's move on to baseball. Because a year ago at this time, you and I were talking about the animosity between the MLB players and owners. There were serious questions about whether the season would start on time. Here we are a year later and the story is about the rules changes implemented to speed up the game. The early reviews are good, and I'm wondering if you think this is going to translate into higher ratings for all of the networks involved in Major League Baseball.
John Ourand: I think that's almost a certain bet that that's going to happen. Reports coming out of spring training and it's hard to look at spring training and see if it's going to translate to regular season. But the reports are they cut off about a half-hour of game time, there have been viral videos about a picture that gets all three outs and an inning in the same time it took a pitcher two seasons ago to make one pitch. The game moves a lot quicker and there's different pacing and that translates to television as well. There's an expectation because they got rid of the shift and they increased the size of the bases. That matters because you're going to get more stolen bases, you're going to get more people trying to leg out doubles, and there's going to be more exciting plays in the field than the traditional home runner strike out, which has been a problem with the last little bit.
TV networks expect the ratings nationally to increase. I don't know what significantly as, but they expect them to be up from last year. It's baseball. Of course, there's a red flag, right, Chris? The only red flag right now is locally where a Diamond Sports, which owns all the Bally Sports RSNs and has deals with close to I think it's 17, close to 20 majorly league baseball team. They filed for bankruptcy. Then there's Warner Brothers Discovery, which own four regional sports networks including the Pirates in Pittsburgh, and the Rockies in Denver. They've put old teams that they're just going to walk away from this and then the rights are going to revert back to the baseball. Right now, everybody is still going to be able to see those games locally, but how that transpires and what happens in July and August is a question that I'm going to be reporting on until July or August.
Chris Hill: Well, and it seems like part of the challenge for Major League Baseball and the networks at a national level is one is the length of the game. If you live on the East Coast, you're unlikely to stay up for a West Coast game if the East Coast game takes three-and-a-half hours. They're addressing the timing challenge. But it seems like it could have a good ripple effect when you think about some of the biggest stars and Major League Baseball are on the West Coast.
John Ourand: The idea that I could see possibly the first half of the game with Mike Trout in Anaheim or all the stars, Manny Machado's in San Diego, the Dodgers are the stock team again. Those have been games that it started on the East Coast at 10:00 PM, and end well after midnight. Well, a while after 1:00 AM there are not a lot of friends of mine in the East Coast that are committed to stay up to the end of those games.
Chris Hill: One other change since the last time you and I talked Bob Iger is back as the CEO of Disney. One of the big questions he is being asked about are the company's plans for Hulu, and increasingly a question he's getting asked about is the fate of ESPN. What are you sharing? Where do you think this story is going?
John Ourand: The question about ESPN has been around for a while and it's funny because from the early 2000s to right before the pandemic, that's a question that would have been laughed at because ESPN drove that entire business. Well with cord-cutting and the rights fees that ESPN is paying out, all of a sudden, like ESPN, its profits are not coming in as wildly steep as they had been. What Iger has decided to do is he took Disney and he basically cut it into three different parts.
One of those parts is ESPN. ESPN is almost like it's still a part of Disney of course, but it's almost like a stand-alone company right now where it's responsible for its revenues, for its profits, for its expenditures, and it has to exist on its own. People inside ESPN insist to me that that is not a step toward selling this piece of ESPN. Rather, Bob Iger is totally committed to ESPN. Bob Iger and Jimmy Pitaro who runs ESPN have a extremely close relationship. I would be very surprised if anything happens within the next two years of Disney unwinding ESPN from its books. Not only would I be surprised, but my sources who are generally on target would be dead wrong.
Chris Hill: Does the increase of non-traditional broadcast companies, Apple Plus, Amazon, getting into live sports, does that increase the pressure on Iger and his team to get this right?
John Ourand: A little bit. I will say that that's a trend that I've been writing about a ton. Amazon has Thursday Night Football, Apple, of course, just did a major league soccer deal. I think that there's a big question mark about the appetite for Amazon and for Apple to do these volume deals that ESPN has been known for. Amazon really likes having Thursday Night Football, one package of one game a week of the NFL. You look at what Amazon does in England. They have a couple of really unique deals with English Premier League, including boxing day games. On December 26, every Premier League team plays a game. They bought that package of games. You have to go to Amazon to watch that.
Amazon isn't particularly interested in having all of the college basketball that ESPN has, like all of the, you name the sport, all the NBA. They would like an NBA deal and they would like an NBA package, but they don't want all that volume that ESPN has. While there's an unmistakable trend going toward streaming, I will tell you that in 2033, you will be watching the NFL on broadcast television. 2028, the Stanley Cup playoffs, every single game will be available on linear television. The NBA deal that's coming up, they're redoing a deal that their rights are up in 2025. I guarantee you that their Championship Series will be on broadcast television until the end of that. This isn't a Netflix situation where they pretty much decimated the entertainment programming on cable, this is a situation where the sports leagues still need that reach that traditional linear television provides.
Chris Hill: I know you're a prior graduate of the University of Maryland. As March madness heats up, good luck to both the men's and women's teams.
John Ourand: I think I'd be happier with the women's results than the men's.
Chris Hill: You can hear him every week on the sports media podcast with Andrew Marchand of the New York Post. John Ourand, always great talking to you. Thanks for being here.
John Ourand: Thanks, Chris.
Chris Hill: Coming up after the break, Jason Moser and Matt Argersinger return. They've got a couple of stocks on their radar, so stay right here. You're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here in studio once again with Matt Argersinger and Jason Moser. We talked earlier in the show about interest rates and what the Fed might be doing next week. Let's face it. When interest rates rise, that is a good thing for certain industries.
Our investing team has put together a special report highlighting five stocks they think are fit for this environment right now. It's free just for trying out Motley Fool Stock Advisor, which comes with its own membership fee-back guarantee. You get 30 days to decide whether Stock Advisor is a good fit for you. Even if you cancel, the special report is yours to keep. Just go to fool.com/interest to get your copy of the report entitled Top Stocks for Rising Interest Rates. Again, go to fool.com/interest. On Thursday, Google announced the price of YouTube TV is going higher. For those unfamiliar, YouTube TV is Google's answer to cable television subscription packages and the cost is moving from $65 a month to 73. Matt, Google's reason is pretty simple. Content costs are going up, so the price of YouTube TV is going up.
Matt Argersinger: Makes total sense.
Chris Hill: It does.
Matt Argersinger: We have Jason here who's a subscriber himself. I doubt many investor subscribers are going to cut the, I guess not cutting the cord. Well, what do you do with YouTube TV? Turn off the subscription or you cut the cord? But anyway, no, I think that's fascinating and I think the cable bundle in a way has come back a little bit with YouTube TV and Hulu TV and others. But what I've heard and I'm not a subscriber, is that it's a much better experience. It's more seamless, good quality, good content. By the way, we know that YouTube TV won the NFL Ticket contracts. Obviously, that's probably going to be an additional cost from what you get just with the basic YouTube TV package. But I'm intrigued by it especially to see what impact the pricing increase is going to have.
Chris Hill: Jason, I don't have YouTube TV, but I'm an Alphabet shareholder, so I approve of this move.
Jason Moser: Me too. A small correction, I am a subscriber to Hulu Live.
Matt Argersinger: I'm sorry, that's right.
Jason Moser: But very same thing with the same dynamic playing. Great service, but those costs just continue to go up. They have raised the price, I think every year since we started subscribing about six years ago. But we continue to pay it because it is a very good service that gives us access to virtually everything we want to watch.
Chris Hill: Let's get to the stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Matt Argersinger, you're up first. What are you looking at this week?
Matt Argersinger: Chris, I can't take my eyes off Charles Schwab. Ticker SCHW. Now we talked earlier in the show about the other regional banks. Charles Schwab is not a regional bank, but it does own a bank and operates a bank. But this is a blue-chip company in the brokerage space. For investing services, it's an incredibly recognizable brand, and incredibly sticky as well. It's one thing if you're a customer at a bank and you're going to pull your deposits out. Are you going to do that in your brokerage account, in your retirement accounts with Charles Schwab? Probably not.
This makes Schwab's business far more stickier. On the bank that they own and operate, more than 80 percent of their total bank deposits fall with FDIC insurance limits. Their bank loan-to-deposit ratio is just 10 percent. For the average bank, it's over 60 percent. I don't understand why Schwab is being thrown out in the bathwater, so to speak. It's down more than 30 percent in a week. Essentially five years' worth of gains wiped out in a second. It caught my attention. I'm not saying it's a fantastic opportunity. I'd like to learn more, but it's got my attention.
Chris Hill: Dan, question about Charles Schwab?
Dan Boyd: Not really a question, Chris, but I'd like to commend Matt's bravery on picking a $100 billion company for stocks on our radar today.
Matt Argersinger: Well, it's not every day, Dan. A $100 billion company falls 30 percent in a week.
Chris Hill: I was going to say. A week ago, it was much higher than $100 billion. Jason Moser, what are you looking at this week?
Jason Moser: Digging a little bit more into Zebra Technologies, ticker is ZBRA. They provide Enterprise Asset Intelligence solutions. Isn't that a mouthful, Dan? In the automatic identification and data capture industry. Ultimately the business itself is divided into two parts. There's the asset intelligence and tracking side. They sell things like the printers that produce those high-quality barcodes and labels. Then you also have the enterprise visibility and mobility segment. They sell mobile computing products, barcode scanners, RFID; that's radio frequency ID, Dan, readers, machine, vision cameras, all cool stuff. This is a company that they're poised to benefit from strong tailwinds in the coming years when you look at things like IoT, Cloud-based data analytics, intelligent automation, mobility, computer vision. I could go on and on Dan, but I'll stop there.
Chris Hill: Real quick before I go to Dan. Is this one of those businesses that is competing against larger tech companies that have their own version of what Zebras doing? I'm thinking about a company like Honeywell's, seems like they would have their version of this.
Jason Moser: It absolutely can. You definitely will see some homegrown solutions, but it is a very very big market.
Chris Hill: Dan, question about Zebra Technologies.
Dan Boyd: Not really a question again. Sorry, again. But I'm really loving the trend that Jason is bringing. Boring tech companies that do a good job at what they do to stocks on our radar.
Jason Moser: You're very welcome, Dan.
Chris Hill: We say this all the time. Boring is beautiful. When it comes to investing, boring is beautiful.
Matt Argersinger: But I got to a backhanded compliment from Dan. Jason got a real compliment. I don't know how I feel about this.
Chris Hill: Well, Dan's been storing these up. He's been on leave recently. He's back from that, so he's back to form. Dan, two very different businesses, you got one you want to add to your watchlist?
Dan Boyd: I'm actually going to go Charles Schwab this time because you guys are right, not every day. It is 100 plus billion-dollar company that fall 30 percent for what feels like not really earned motives or reasons there. I think Schwab's very interesting.
Chris Hill: Ride on, Dan. I'm just concerned that when Matt said he can't take his eyes off Charles Schwab, that we're going to get an angry email from "This is Schwab." I don't know.
Matt Argersinger: Chucky is pretty attractive.
Dan Boyd: All home-wrecking Argersinger over here.
Chris Hill: Jason Moser, Matt Argersinger, guys, thanks so much for being here.
Matt Argersinger: Thanks, Chris.
Chris Hill: That's going to do it for this week's Motley Fool Money radio show. The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you next time.
