Well, we have a lot to get to today. First of all, the stock markets in the red slightly, despite a huge blowout in the jobs number. This is a highly anticipated number because it shows what the US economy. Just did in the previous month and in July the u.s. added 528,000 jobs. Now without context, that may not sound that impressive. But the expectations, the forecasts were for roughly half this amount.
So this was a massive blowout. I want to go into this number further, The into the unemployment rate into default rates to try to paint, what is more of an accurate picture of how the US economy is doing? We also have news that Amazon went on an additional shopping, spree Amazon continues to buy
things left and right. They bought a medical company just like two weeks ago and now they're buying iRobot the maker of the Roomba the little vacuum that goes around and bumps into things and your dog plays with it and your kids sit on top of it. That vacuum Amazon, just bought it for Point seven billion dollars to expand their ever-growing profile of In-House items. And I want to go over this as someone that's a huge Amazon Bowl. I actually own this company in a
growth portfolio. I have studied this company as much as any other company that I own and I want to go over how I think this will fit into their overall strategy. Now, in addition to that, we also have a company that struggling right now. It's called Warner Brother Discovery. It's the combination of HBO and HBO. No, Max and Discovery with their reality shows, all trying to be put together into one service. And this company just posted a horrific earnings report really
bad. It's down 15.8% on the day and some of the numbers in this report, we're just staggering like this. Net income looks a little bit different than the previous month. So we're going to be going over Warner Brothers, Discovery, and trying to piece together. What's going on with this company? So as always, we have a Jump into in this episode. If you haven't already, make sure to like the video. Subscribe to the channel That helps boost it out and show it to other people.
Now, I also do something in addition to going over the news, I track my own portfolio, it's called the passive income account. The reason that I track this publicly is because I feel like there's not a lot of transparency in finance in general. And when there's not transparency and people don't share and discuss things, they become a little bit more ignorant to it. So by showing what's going on with my portfolio, how I perform my Ins and my losses.
I feel like that could potentially help out other people. What I do at this portfolio is invest in high-quality dividend-paying companies that I consider to be more than just dividend payers. I consider them to be Compounders which means they have resilience. I can rely on them to earn growing amounts of money in almost any Market environment. And this has been put through the test over the past six
months. We just had earning season and I recorded the amount of companies that I had in my portfolio. And which ones beat their earnings And gave strong forecast of the future and which ones missed their earnings or gave week forecast, around 71% of my portfolio, beat their revenue and their earnings projections and gave very strong forecast. It would have been around 80% but Microsoft missed on their earnings and revenue but they did give strong forecast. So, we're actually doing better
than the rest of the market. In terms of this earnings season, we still have a couple outliers though, a couple companies that haven't reported yet Disney and Target So we'll see how they do August 10th and August 17th but overall, I focus on Compounders I focus on dividend payers and companies that can grow their earnings grow, their revenue grow their dividend over a long period of time and I've been trying to reshape and reforge my portfolio to be as strong as possible
going forward. There's one tool that I use from time to time that I developed called the dip finder. This is part of qual trim. It's available to all Patron members and it shows you how my companies are trading, or how any companies that you're And are trading at any given time.
This is a technical way of looking at it called the price versus the 200-day, simple moving average, which it technically shows the price momentum of a stock how its trading compared to the previous two hundred days. And as you can see, there's some companies at over the past, 200 days are way underneath their average Target, which got crushed with extra inventory, having to slash the cost of different items having to make room for the back-to-school sales. This company's down Big Year to
dates down around 30%. Luckily it's a very small holding of mine. JP Morgan and tiro price are two other companies that the price momentum has moved sharply and a negative Direction and that's a given. These companies are cyclicals their financials and they're moving down and preparation for the big recession that we're having right the big recession coming up. Then on the other end of the spectrum, we have Vici.
This is one of my largest Holdings right next to Apple and Microsoft and it's Up, 16 percent above its 200-day. Moving average VG's performance has been nothing short of spectacular. The company's up 14 percent year-to-date not counting the Hefty dividend that it pays another company that I'll mention that I think is outperforming expectations to a large extent is Texas Roadhouse. Who would have thought that a restaurant company in 2022 would
do this? Well, the company is facing all sorts of problems with inflation commodity prices, high and labor and were projected to go until Accession, or by many people's estimates, were already in a recession. But yet, despite all of that, a restaurant company, a casual dining restaurant is moving in a positive territory. It has positive price momentum. Texas Roadhouse has been performing really well, both in terms of price and fundamentals.
The company is zero percent year-to-date which doesn't sound great, unless you compare it to the S&P 500, which is down, 15% or the Q, which is down even more. So, overall around half of the companies in my portfolio have very positive. At a price momentum. Half are currently in a dip but overall the earnings are very strong 71% of them. Forecasted. Very strong quarters next quarter.
So I feel comfortable moving forward in the way that I'm invested and not paying attention to short-term fluctuations. Now, if you want to see every single one of these categories in the companies in them, there's a link called dividend portfolio in the description below. Now, moving on, the big news of the day is the economic news. The u.s. added five hundred and twenty eight thousand jobs in July. Payroll returned a pandemic levels, unemployment rate fell
to 3.5%. So this is what this chart looks like here. With the recovery in the jobs, this has been a very rapid recovery in job gains over the past couple of years faster than sense. Post-world War Two. So it has been an incredibly fast recovery. They say the unemployment rate now is down to three point five percent. We added 500 28,000 jobs which puts us just above pre-pandemic levels. So, we finally went back to
before Endemic levels. Now, of course this isn't that Trend but it's much better than expected and if you don't compare this against the forecasts and the analysis and expectations, it doesn't give it proper context but this is what this last month looked like compared to forecast. The actual estimates going into this month is that we were going to gain 250,000 jobs. So we roughly doubled that
528,000 verse 250,000. This absolutely blew away the forecasts and estimates from From the economists and forecasters. And where did these jobs come from the jobs gains were widespread last month employers and Leisure and Hospitality added jobs at a solid clip as restaurant and bars continue to recover payrolls. Also grew and health care and professional and business services, which included. Many white collar jobs. So I see this shift in where the jobs are at right now.
I'm seeing a lot of tech companies actually do layoffs, some are still hiring, but many companies like Robin Hood, many of these big tech companies are Going down, they're hiring or they're doing a layoffs. Meanwhile, Leisure and Hospitality Healthcare are doing a lot of hiring right now. So jobs are being lost in some areas but more hiring is going on. In most cases, this is by
economic data is so difficult. And this is why economist's aren't Filthy Rich by being able to easily predict the economy and the stock market? A lot of this data is incredibly difficult to piece together. We have a job market where we gained nearly double what the estimates are. That's a good thing. We have unemployment to almost record lows 3.5%. That's also a good thing. We have less people choosing to work, which is arguably a bad
thing. And we have two consecutive quarters of GDP decline which is objectively a bad thing. So you can try to make sense of all of this. But I just don't think it's helpful. In terms of investing, I would never base my investments off of what the economy has done, or what, I think it's going to do. I base it off of individual security analysis with my companies and how I think their earnings will grow over the next five years. Predicting the economy, I think
is a losing game. I don't think people are going to be able to do that accurately and while I think this report is good, it doesn't really say a lot of whether or not, we're in a recession, we're going into recession. If we are how bad it will be. And even if we are, and you can accurately predict that what it will do to the stock market, trying to predict all of those variables I think is literally
impossible. Now. Moving on, we have some big news that Amazon's picking up Yet another acquisition, they just bought a health care company a couple weeks ago. Now they're buying iRobot the maker of Roomba for one point seven billion dollars. Now this seems like an easy acquisition for Amazon. I think this will go through just fine but I want to go into how I think this will play in their overall strategy. The official statement here from Amazon's Hardware device, Chief
is quote over many years. The iRobot team has proven its ability to reinvent. How people clean with products that are incredibly practical and inventive. Cleaning when and where customers want while avoiding common obstacles in the home to automatically emptying and collecting bins? Customers love iRobot products. And I'm excited to work with the iRobot team to invent in ways that make customers lives easier and more enjoyable.
Now, if we dive into this, a little deeper, we can see the type of products that I Robot has. They have a lot of these little pod robots, that drive around your home, and try to clean and they've actually gotten better and better. The first iterations of These were very dumb and very clumsy. They would go over almost anything that gets stuck all the time.
They had no way of mapping out locations in your home and now the most recent iterations of them have become increasingly complex sophisticated, and overall, a much better tool. I have one of the newer roombas and they're pretty smart. At this point, they actually do a very good job of cleaning where they should clean sticking to certain parts of the house with no physical barriers, and they avoid most of the obstacles
of toys and things left. The floor in terms of capability, market, share and brand name, iRobot is by far. The biggest player in this industry. They own the robot cleaning category. So, Amazon just went for the biggest the most well-known. And by far the best in the category, I Robot is the leader here. The latest iterations of these robots actually, do a physical map of your home, you don't have to map it out. The robot, does it for you?
The first time, it goes around at bumps around to the outside of the walls and then it knows. Typically where it is relative to the rest of your home. So you can command the robot to go to a specific room, down a hallway or two different parts of your home and it will find its way there and only work in that specific room. So Amazon is now going to have maps of literally, millions of people's homes which is an
interesting thought. They're going to be able to map out people's houses and their floor plans, Amazon will be able to gather a lot of data from this company and help integrate that into their other offerings and further integrate it To their ecosystem. And I think overall that is the endgame here. It's the ecosystem. Big tech companies, love their ecosystem. All of them. Have one. Apple has, I believe the strongest ecosystem, but Amazon
has a pretty strong one as well. And it's part of their Alexa smart home ecosystem. We all know the speakers but they also are doing this with TVs with the fire TVs and the fire sticks with their cameras, with their lighting with the smart thermostats. And now with your vacuum products that's going to be, A part of this ecosystem. So I think this is one more move of Amazon to expand their ecosystem and smart products and make all of these work together.
They can make all of this stuff work unified. It gives people more incentive to buy something already in this ecosystem, then something outside of it. Now, looking at the fundamentals of this company, as an individual company or individual stock, because I Robot is a publicly traded company, it doesn't look very strong. It's a week company overall because it's a newer one, and its goal is to grow Revenue, which is what they've done.
They've grown their revenue around triple since 2014, the other metrics are so, so not the strongest company, but that's not. Why, Amazon's purchasing it. They're doing it for strategic reasons to include it as part of their vast ecosystem offering. So I think this is a great acquisition for Amazon. It's not an overly expensive company. It's one that's growing quickly.
They have high quality products that I think people will continue to purchase and it will expand Amazon's ecosystem because, you know, you're gonna be able to control these robots with your Alexa device. And Amazon's going to iterate and incorporate different integrated features. Now, moving on I have to talk about Warner Bros Discovery.
This is a stock I'm asked about frequently and they just reported their Q2 earnings which were a bit messy to say, the least it's down 15% after the earnings report because a big problems they're facing. So before we jump into this, I just have to go quick shout-out to today's sponsor of this video, which is FDX. U.s., there's a link in the pin comment of this video, you can sign up now.
And if you do use a refer code Carlson because when you create your brokerage account and use a referral code Carlson, when you do your first 100 dollar trade, it will credit you $10. Now with this, you can trade any time, the markets open, you can buy and sell using fractional shares. Its part of finra and Si P c-- insured and they are adding more and more features to it every single day. So try it out now and let me know what you think.
Warner Brothers Discovery. They just reported their earnings and it was very messy. They say that they are Row a big loss on content and merger costs and zest. Laughs here he was the guy that was supposed to make this business great and so far what he's done on this most recent earnings, call is blame the previous management and the previous estimates. He threw all of the blame onto everyone else and what they did setting, this whole thing up, he
sang, this isn't my fault. This is a problem with the estimates beforehand. Now, I have the actual earnings report here and I just want to highlight a couple things on it. First of all, they're Revenue decreased by 1 percent taking out foreign exchange so they had a revenue decline.
The net loss available to Warner Brothers Discovery was 3.4 18 billion 3 billion 418 million dollars of a net loss that includes a 2 billion dollar amortization of intangibles, a 1 billion dollar restructuring and other charges and 983 million of transaction and integration expenses lat It's of expenses added in a single quarter, causing this company, to have a massive net loss to give this a visual of how bad this actually
looks. We can take a look at this on the chart here, by pull this up, just take a look at how bad this loss, is this quarter 3.4 billion dollars of net income loss in a single quarter. And the biggest problem, they're finding now. Which seems to be a surprise for this company is free. Cash flow problems. The cash provided by operating activities increased to 1 billion and reported free cash flow increased.
You 789 million. So they're saying look we have free cash flow, 789 million and the impression this type of writing leaves to investors is that they're highly free cash flow productive. And that's not really the case because when you're looking at free cash flow, you have to consider what is creating those free. Cash flows, is it actual money being taken in from the company? Or is it just dilution? And the problem was saying that they made all of this free cash flow.
Last quarter is, it doesn't incorporate the amount of shares outstanding. If the shares outstanding went from in 2021, 589 million to two point two eight six billion. So they for x amount of shares outstanding, this is where the free cash flow came from. We can even see this more clear
on qual trim. For example, if we pull up the shares outstanding graph, you can see the dramatic increase in shares, it going up by roughly four times the amount and then if we pull up the free cash flow graph here, this is what they're saying they're doing so great. Look, everyone. We made a lot of free cash flow last quarter. It's right there in line with previous quarters.
That's not really accurate because if we filter this by the amount of free cash flow on a per share basis, it's down to 35 cents which is much lower than previous quarters. It was a decline from the most recent quarter and a comparative to the history of the company. It's nothing spectacular. So that's the biggest problem. I see this companies facing cash
flow problems. And in the meantime, they have large outstanding amounts of debt and people like to talk about how much debt Netflix has take a look at Warner Brothers, discoveries debt chart. It went from thirteen point six billion two quarters ago to the most recent quarter being 51.3 9 billion. Let's go ahead and compare this to Netflix. Netflix has talked about as a company that's highly indebted. Netflix has way more cash with
5.8 billion dollars in cash. And they only have fourteen point two three billion dollars in debt, so they have roughly a third to a fourth, the amount of debt that Warner Brothers, Discovery has These discoveries facing worse, cash flow issues, and projected on top of very high fixed costs with their large amounts of debt and Rich Green Field tries to explain how this is working out for them. I think, in this case, a little bit of this is sort of like that movie Apollo 13, right?
We're like, you know, Houston, we've had a problem and I think if you're zsasz love right now, you're going, you know, you're looking at AT&T and you sort of have like, oh my God, I can't believe I bought based on these projections. I mean John Stanky D, 18 T looks like a Genius. Because discoveries now, Warner Brothers. Discovery is now blaming sort of the AT&T projections as unreliable. Not to mention the overall
macroeconomic environment. And so what they're effectively doing Joe is there scrambling to figure out because cash flow is coming in Far Below expectations. They've got a lot of debt so they're sort of finding new ways to generate dollars. You mentioned and ad-supported streaming service something maybe like a Pluto or a to be TV. They're probably looking at doing. Very big licensing deal with Amazon and going back into Amazon Channel.
Something we talked about why they left Amazon channels on CNBC, probably nine months ago, all of this is true. They're looking at potentially having an ad-supported Terror. They're also looking at partnering with Amazon to have it included with Amazon because Amazon can get customers and drive, traffic to HBO, another word I would exchange from looking is scrambling, Warner Brothers. Discovery is scrambling right now. They're scrambling for options to solve a big problem.
They have Which is no clear Direction and strategy. They're looking at licensing catalog to Netflix and Amazon like they're just looking at how do they find dollars anyway
possible right now? Because they're coming in with a 2 billion dollar shortfall in 2023 ebitda versus what they thought back in February. So I think that's driving a lot of the changes that you heard about last night, hbm, Max and Discovery, plus create a massive combined library and the strategy right now is to somehow combine. These Companies together into one service which would require
a rebranding. Their people talking about them potentially losing the HBO Max branding, which I think would be a mistake given how much they've tried to work to create this brand. If I was going to combined Discovery, plus with HBO Max, I would just make it HBL Max and have discovered be part of it. I think people would learn that over time because I think that HBO Max brand is more powerful than Discovery has more subscribers.
It's a bigger known brand. They spent an enormous amount marketing and growing that brand, and I think it would be a mistake to ditch it. So, right now, their official plan is to combine these Services together to Rebrand it. Somehow we don't have Clarity into what that's going to mean, and then to try to grow it to 130 million paying subscribers by 2025 in this highly competitive market.
So, my opinion, when I compare Warner Brothers Discovery to Disney and Netflix, I like Disney and Netflix more, and for a couple reasons, one of them. As I think that Her. Brother's Discovery is in a state of panic. They're in a state of disarray, they're trying to piece together a strategy on the Fly. And I don't like investing in companies that don't have a very clear strategy that's been thawed out in a highly competitive market.
Like this one, I think they're in a very dangerous situation to be in. And as good as their content is with all of these great assets, like Discovery Plus in the Warner media assets, it still has a cost to it. Those assets cost a lot, they have an enormous amount. Out of debt. That's not a great thing to have on the balance sheet when you don't have a very clean strategy going forward right now. I'd rather own Disney or Netflix or even Paramount plus that's all the news for now.
I hope you enjoyed the episode. If you did, make sure to subscribe to the Channel with the Bell notification on, and I'll see you in the next one.