Welcome to a Sunday Meet Kevin report. It is a Sunday February 5th and we've got some stuff to cover. Boy oh boy. There's always something going on in work. It's starting of course with that spy balloon finally being out of our airspace has it drifted into the Atlantic Ocean off the east coast. It was finally taken down. We had an F-22 fighter jet uh launch a one a missile uh, heat-seeking missile and took down that Don's Bible Now what? really? From from my point of view and we won't go super deep into the details of all the spy balloon stuff you've probably already heard about. But from my point of view, this is really simple. This is China being aggressive and exerting their relevance on a global stage. That's all this is. Look, The Spy balloon was obvious. it wasn't a weather balloon, it was a spy balloon with propellers. It was motorized. It can move angles and people say hey, why would they do you know some sort of balloon as opposed to satellites. The reality is, spy balloons can give you substantially different angles that you just can't get from satellites. and potentially you could use both images together. Satellites and spy balloons. Uh, get a pretty good look at things you otherwise wouldn't have had a really good look at now. Uh, talks were that Joe Biden wanted to shoot this thing down as soon as he heard about it, but the Pentagon apparently advised him not to until they had uh, the opportunity to so in a safe area that it wasn't necessary to to take the Spy balloon out as uh, it wouldn't reveal too much information anyway. uh, who knows, who knows what ends up being true here. Who knows if Joe Biden just ended up responding to that sort of backlash by saying well, I asked them to shoot a town earlier which could have really been like why don't we shoot it down You know, more of like a rhetorical question. who knows, but that's not behind us. But the tensions with China won't be behind us for a while, so we'll be paying attention to China a lot. uh, going forward. and uh, one of the things that I'll we'll be talking about in in this here it will be what's a way to maybe get exposure to investing in China without investing in China I Personally think there's a high risk of if you're investing in. For example, Chinese Adrs that are listed here. there's still that de-listing risk remember we went through that years ago. This fear that oh no, Chinese companies are going to get delisted if they don't follow U.S Accounting uh requirements. Those things are still a risk and those things become more and more of a risk Has tensions with China continue to escalate so we'll see. Obviously China was not very happy that their balloon got popped, but then again, you know neither are children. So uh, Barons this morning had an interesting piece talking uh, briefly about the wage price spiral. They they had this argument that, really, uh, they believe it seems sort of ludicrous to think that people can ultimately demand higher wages. Uh, they? They kind of believe that No, it's actually companies that set prices and companies will set prices based on what customers are willing to pay. So if customers are willing to pay more, then companies might raise their prices. That's sort of the thesis that we actually did see play out over the last few years of increasing prices. But Barons kind of tries to throw cold water on the idea that if there's a shortage of workers, we might end up having wages go up. Now what they didn't mention in this because I think what they're trying to do is they're trying to evoke sort of your own thesis that hey, there's inflation I'm gonna go to my boss and ask for a raise and the odds are just not going to go that well. But I think what? Baron's missed. Here is the job Switchers issue. See, when people switch jobs, that's usually when they have the largest amount of pricing power because obviously a business who's hiring is looking for workers in demand with a certain skill set and at least in for example, piloting, it's become very difficult for people and businesses to hire Pilots to where Guess how they end up convincing people to work for them? They pay them more money. That's how you can ultimately, in my opinion, get sort of that wage push inflation flowing through the economy which again Barons tries to throw some cold water on. but I think they're doing so uh, while ignoring the fact that job switchers have a lot of power uh in in pricing, their goods and services, or their skill sets basically. So another thing that we noticed is, or at least over the last 24 hours here is that yeah, there was a lot of backlog flash over the Cyber truck and this potential that the Cyber truck would not actually receive the full light bar that it was originally pictured with. Uh, it ended up uh, being spotted with with mirrors on the sides. The wheels weren't as cool as the prior mirrors. uh, or as the prior. Wheels A lot of things about the vehicle were were different and it led to quite a few concerns. on Twitter Uh, here's the picture of it. You can see the bottom. there shows no light bar across the middle, just these sort of two small baby style brake lights on the left and right. maybe? uh, you know, uh, you know, small four inches of brake lights on each side with no larger light bar which spanned the width of the entire vehicle. Previously, you could see the uh, what looks like the hubcaps on the tires are different and possibly some more uh, basic style tires here. And you've also got mirrors which you previously did not have and the original, uh, sort of uh, hey, look at the Cyber truck version. It also looks to me, uh and this is a little bit more challenging to tell because it could be just an angle manipulation. But it also looks to me like the back which was angled in more and was longer. So in other words, that sort of that back hatch which again was angled into the cardboard and extended lower looks like it's kind of shrunk a little bit in in, uh, depth? uh and and then it's also not as angled in anymore. It might be difficult to tell just because of, uh, the way these photos are taken. Uh, this photo or or the new photo was taken from a lower angle. The other photo was taken for more of a high to low angle so that could be manipulating your perspectives a little bit. but there are definitely some changes here. Uh, that. uh, that led some folks to wonder, hey, wait a minute, what's what's going on here Elon Are you click baiting us with a different vehicle now? Uh, now. Elon did come out and suggest that. Don't worry, fear not. the production version of the Cyber truck will have a full light bar, so the full light bar will be coming. Uh, in addition to that, the mirrors that are attached to you on the side will end up being removable mirrors. uh which I thought was quite interesting as well. So removable mirrors coming to the Cyber truck now? Uh, There's also another thing that I went through on Twitter that I saw. Let me see here, this was so last yeah here it is. Last week we went through the Uh service or we saw. So we did two things. Uh, we we looked at the servicenow dude on CNBC and then in our Uh course member live stream we actually went through the earnings for this company for servicenow and I Personally have had a thesis of wanting to stay away from software as a service businesses and the part of the reason for that is this idea that if companies are tightening the belt uh so to speak and and they're potentially hiring less employees at Uh at individual companies uh, who might need more software, right? More software seats. If companies are tightening the bills on hiring, then you need less software seats. Which rather than leading to growth at software companies, could potentially lead to a reduction of growth at software companies which is the last thing you want to see at SAS businesses. Uh, God is sort of looking a little bit deeper into the financials of service now, especially since the CEO went on CNBC and it just seemed like something was off. We couldn't really put our finger on what was going on with the CEO of servicenow Why? Why do they seem so characteristic uh-esque If I were if I may, uh. And so the thesis was that oh well, you know he's got his sunglasses on, he's got some kind of blindness in one of his eyes. Uh, and and maybe that's just his personality. He just sort of has that sort of loosey-goosey personality and I don't know something about it, just seemed off and we couldn't quite put our finger on what it was. But now we got these filings that are showing up uh, at the SEC and take a look at some of these filings. So pop open the first one. We have a filing of a a change in ownership servicenow dated after the CNBC interview and it's William McDermott Who's the CEO of the company? You could see his role right here, Chairman and CEO and take a look at this folks. Here is a list of stocks that he sold. We know it's a sell because of the D right here which says Disposed and you can on the right side see how many shares this individual actually holds. And it started at 53 000 shares which worth noting at 50 three, approximately thousand shares at about 455 bucks. it's about 24 million bucks worth of shares that this guy owned. Well, he sold 53 000 shares all the way down to 1933. So the CEO of servicenow basically just dumped completely out. Now there's a theory maybe that oh well, he's about to get a bunch of new stock based compensation and that'll pop that right back up. That's a nice Theory but it's not one that uh, that I would want to necessarily speculate on. but it's definitely a theory that people have. Okay, so that's just the CEO. Who knows, You know? Then again, maybe maybe he's got. you know I don't know. Some expenses coming up, right? Let's let's give them the benefit of the doubt for a moment. Who Who knows, Who knows, right? All right? So now what do we have over here? We have another filing from the Chief People Officer. Yeah, they have a CPO Okay anyway, this particular person on January 27th just a few days before the CEO ended up dumping 1083 shares being left with now 267.. So the CEO dumped like over 96 of his shares. This guy's dumped over 75 percent of his shares. and this guy over here. this is uh, Smith Paul John or John Paul Smith I Don't know. it's three first names over here. This person is the Chief Commercial officer and this person literally sold all of his shares they own Zero. Literally nothing. So all of a sudden you have three pretty large Executives at Servicenow basically zeroing out their ownership in the company. and again, who knows, maybe maybe there's this big uh, new, um uh uh push of stock based comp that's coming out and and they're basically taking their January uh dollars off the table so to speak and they're all going to go buy new homes I Don't know, but uh, it certainly raises the the question of like, wait a minute, what what's going on Over here at Servicenow? So we could briefly look at some of their financials and we'll find that their subscription revenues have been growing pretty decently. They're at almost 66.9 billion dollars in revenues here, which if we divide that by last year, you're sitting at somewhere around a 23 gain, which is pretty impressive. Uh, you've got subscription costs of only about 1.2 so their margin is incredibly High Uh, and this is a company that does actually take funds to the bottom line. They've got about 325 million dollars coming to the bottom line after. uh, marketing expense is research and development and Sgna expenses of a 5.3 billion dollars ton of money going into marketing. but this is pretty darn typical of a software as a service business. So the idea is you get people in, they end up becoming pretty sticky and they stick around. Now when it look when you look at actual cash I Mean they are generating cash. You got 2.7 billion dollars in cash coming down to operating activities. Uh, they're uh, free Cash flow is in excess of about two point. Uh, one. 2.2 billion dollars? Pretty good as well. And uh, their liabilities. Take a look at their liabilities. here. we've gone. current liabilities. Most of the current liabilities are deferred revenues. We've got a long-term debt of about 1.5 billion dollars, but they've also got 1.5 billion dollars of cash. uh, and uh, receivable short-term Investments We've got plenty of current assets. over six billion dollars in current assets. So just from a very brief look at the financials, you couldn't really tell from the financials that things are looking necessarily Bleak or horrible. But for some reason, uh, the executive certainly felt it was an opportune time to uh, dump after their Q4 report which just came out. And it does. Doesn't really send the best of potential signals for what that could mean for Q1 q1. In other words, software service businesses could end up getting whacked and to some extent, it kind of makes sense. I Mean, think about it this way: most of the layoffs that have been happening they seem to have concentrated in Q4 right? So if you have Q4 layoffs, you're probably not going to see those subscription cancellations until the expiration of of that term, even if those employees are laid off, right? So for example, let's say you have employees who got fired in Q3 or Q4. It's quite likely I Feel that most of those subscriptions would probably come up for Renewal or at least a significant portion of them at the end of the calendar year. possibly you know, year over year for for when they were hired, you know, say they were hired in March Maybe those would expire in March But a lot of these larger contracts with companies end up getting negotiated at the end of the year. And that's specifically because a lot of companies try to really maximize their year-end bonuses. And so they they have these special sales to get new companies signed up. New companies sometimes try to spend some extra money towards the end of the year to get some more deductions in for tax purposes. Although that could temporarily hurt some of the, uh, the earnings per share. one of the ways accountants offset that is, they end up. You know, signing up for these things on like, the 25th of December and then they only actually, uh, you know, expense. Five days worth of that contract because the rest would just be a prepaid expense. So that way it doesn't show up as a negative to your earnings per share in English Uh, companies do their books a little differently than people do. Okay, like when we buy something at the end of the year, we're like, yes, IRS we're writing the whole thing off. Uh, companies. They sign these things and then they often only expense a small portion of it until they actually use the product throughout the rest of the year. But that's because they've got a lot more accounting staff involved. Uh, and so the rationale: There is a lot of contracts you do usually get signed at the end of the year, so I Wouldn't be surprised if Q1 just ends up being so miserable because you get the layoffs from the second half of last year coming into Q1 and your renewals and Q4 sucked. So maybe your churn went up and it wasn't necessarily churn because your product was bad, but it'll look like it was churned because your product bad is actually because of layoffs. And so maybe just maybe the services industry is getting reamed. or at least potentially is going to get reamed because of the idea that layoffs and end of the year signings were so miserable that the executives over at Servicenow are booking out of there. And when we look at other software service companies, you can look at a company like Bill.com The fundamentals and financials look good. Don't get me wrong, these companies are very expensive. Like the service sector businesses. uh, the software service businesses High Multiple still today. but uh, but you know, Bill.com reported earnings. The earnings weren't actually that bad, but guess what ended up hitting them? They missed slightly on the guidance. And when companies don't grow as software companies, those really expensive multiples vanish companies or or investors I should say really really like to see growth at SAS companies and if the growth goes away, the valuation multiples go away and you get a big old stock compression. It's exactly what we saw at um, uh at Bill.com and it's one of the reasons Bill.com shot right back to its lows, dropping over 20 percent in just one day. So personally, it sort of reiterates this feeling that I have that. Okay, yeah, we want to probably limit our exposure again. Not personal financial advice for you, but well, I'm I'm thinking about limiting my exposure to SAS businesses, not only because of the layoffs of contract Cycles but also because their value relations are higher. and if their growth shrinks, they're very quick to potentially correcting on price. Just look at Bill.com for example. We went through this with course members: you got Bill.com over here. It was growing at 78 at the beginning of the year, then uh, it uh, it dropped its growth to 66 uh, percent, quarter over quarter and I Hate to say it. but in the earnings call and the earnings report, the company warned that they actually expect Revenue to be relatively flat for Q1. So they beat expectations right? They came in with 260 mil of Revenue. They were only expecting 247 mil of Revenue. but they expect Q1 to be basically flat. So think about this: you're paying an infinite price to earnings ratio. Because this company loses money. Bill.com Bill.com loses money I'll do the valuation for service now in just a moment. So Bill.com loses money. It's you know Again, it's over here at negative 90 cents. Uh, for the quarter last Q4 2021, it was also sitting at negative A negative EPS negative 78 cents. Uh and uh, they've been negative uh for for any of the reporting periods that we have uh here from Bill.com So not yet profitable and you're really building in to the valuation for Build.com that this company is going to keep growing. but their growth slowed from 78 to 66 and now guess what? It's going to slow to zero. That's scary That scares a lot of people. People are very nervous about that idea that oh no, Bill.com's growth is going to slow because guess what Bill.com spends a crapload of money on SG A Uh sales marketing uh General Administrative R D Services Just consider sales and marketing alone for a moment. Just sales and marketing of this company 2.3 x year over year. Yikes. Makes people pretty nervous. Now they do hope to get to about a buck of Eps in 2023, but consider that for a moment if you have flat growth in Q1 because people aren't renewing or they're canceling at higher rates at corporations. Generally for these companies, you're getting larger companies. although Bill.com is pretty useful for individual people as well. But now you're looking at this company or you're like Kathy would just loaded up on this sucker on the dip. but I'm looking at it I'm going Kathy what are you seeing? The darn thing set 94. and they're projecting a dollar of Eps. Maybe if they even can turn around and go profitable in 2023, Which Wall Street does expect them to go profitable but if they don't it's going to be disaster. But at 94 divided by a buck, 94 per share divided by a buck, you're paying 94 times earnings for Bill.com That's really, really expensive. especially in a recessionary environment where people are getting laid off. the people were getting hired. Also, this is worth noting the people who are really getting hired a lot right now. At least this is what we see. Uh, the people getting hired a lot right now are: Hospitality Leisure Restaurants travel not not in places where people are using software. Suites Okay, your software suite that's getting hired right now is is your glove seller. You know, like in other words, like physical stuff that you're doing with your hands. those are people getting hired. Look at Chipotle They're hiring 15 000 people for burrito season I Didn't even know there was a burrito season. Apparently it's March to May It's insane. They're actually finding it easier to hire people though, which is good for potentially eliminating that uh wage price spiral. But look at even service Now when you're looking at these SAS businesses. Servicenow is selling for 51.4 times their projected earnings per share for 2023. 54 times and their growth might end up of only being like 15. So they're selling for like a three peg. And and this is why I so much have aligned with the idea of my goodness I Could get a sick, a sick And low PE or PEG ratio at companies like AMD Ridiculously low. right now you could look at Tesla Even after its run up, it's still pretty dang low. Uh, a lot of companies selling not too darn expensively outside the uh, uh, the software business software Biz that one's still moving pretty expensively. Uh, and and so it wouldn't shock me to see that some of these profitless companies especially end up having run-ups. Uh uh. you know, as sort of the stock market in general moves up. But then what happens after the run-up? Uh oh Well, after the run-up you end up getting a Miss on those growth rates. All the numbers switch and flip-flop. What do you have? You end up getting pain. Here's some other companies with low Peg ratios by the way. Uh, pain like you just saw Bill.com Nvidia is trading for about 1.4 times Peg the lower the better. Okay, Tesla's under one at 0.75 That's assuming a 45 EPS growth. But let me drop that. I'll drop Tesla to 38 and that brings them to a 0.89 pay. So 0.89 on Tesla Apple's at about three. A little pricey. people kind of still see. uh Apple that's assuming eight percent growth. You've got Uh Embry errors trading for 0.52 NVIDIA 1.42 AMD 0.94 End phase is at 1.72 after their correction Solar Edge 0.94 Cloudflare. Here's another software: Biz They're projected to be profitable this year, but trading for like eight times Peg The software businesses just haven't gone through the peg Corrections yet. Well, yeah, well. some of them have Adobe is only at 1.9 Autodesk at 2.26 Uh, so so there's some potential opportunities or Generac sitting at 1.4 five. so some things to look at. But yeah, I don't know that service now in the bill.com Reaction: A little bit of a red flag for the SAS companies, especially the profitless one. so I would just, uh, just be. uh, be careful, you're exposed to SAS So all right, that gives us some insight into the good old Sus businesses. Uh, all right, let's see here. Next up, we're gonna look at some earnings calls. These are actually pretty insightful. Uh, okay, here we go. it's fine. Bye for earnings cars. Okay, we got. yeah, we have four of them to look at. We're gonna talk about earnings calls because we get a lot of insights from these and I'm gonna give you the bottom lines on four big ones. We're gonna start with Starbucks and we're gonna go into Apple, Amazon and Qualcomm And what we're going to be looking for are hints because these are all companies that just reported two days ago and we want to look for hints of how's China doing. How quickly is China going to rebound? because the faster China rebounds, the more oil prices and commodity prices might end up bouncing and the more risk we have of potentially an inflationary second wave or inflationary shock, right? So I was trying to doing is one thing we want to look at. What's it like hiring people? Is it getting easier or harder to hire people? What are we expecting in terms of a bottom for earnings per share? And where is the real pain in this market? Let's find out. and I think one of the best ways to do that is regularly studying earnings calls because you get insight leading hints. I Don't want to say like leading warnings because CEOs don't like to sandbag their own company share prices. but let's just say you end up getting hints and those hints end up being sort of a liability preservation method to make sure they can look back and go. Yeah, well, we did warn you so we'll go ahead again. We'll start with Starbucks and then we'll get into Apple Amazon Qualcomm Let's get started first. Starbucks And speaking of Starbucks it's time for a sip of coffee. Um, that is some delicious Kirkland brand coffee that unfortunately I have let sit too long and now it's room temperature so it's not that great actually. Anyway, what do we have here? So we start with China The first thing Starbucks tells us about China is that a lot of their employees have already been infected and they're actually now back to work. What's very interesting though is the customer base is not actually running back to the stores. This was a surprise to me I Thought that after the reopening, we would have somewhat of a United States kind of return to everybody. kind of. all of a sudden in boom, we're going back outside and going uh, uh, you know, basically eating, uh, right back into normal daily life. uh, with a lot of excitement. Well, what Starbucks is noticing is a gradual return to Starbucks's I Was surprised by that. I Thought we were going to get a lot faster of a return so the reopening is not as uh Jerome Powell Even puts it, it's not like a light switch, it's it's this more soft and gradual return that we're seeing at Starbucks which is actually good if you think about it because you don't want inflationary pressure to come all at once. Now they mentioned this a few times throughout the earnings call that the return in China. While they are very bullish on it and they expect the eventual return to be very good and strong, for Starbucks, it's not going to come all at once. It's going to come substantially, uh, gradually, and uh, really, just over time. Uh, then we have now a total of 3.3 billion dollars in gift cards loaded up at Starbucks. It's worth noting that gift cards about 10 to 15 of gift cards are never used, never used. So think about that. If a company sells a gift card for a hundred dollars, the company's looking at that and basically saying to 10 to 15 bucks of basically a donation. So if you ever buy gift cards in your life, realize that you're basically donating 10 to 15 percent of the value of that card to the company. So uh, Starbucks and China they're expected to get up to 9 000 stores in China by 2025..

now this is really remarkable growth. In fact, one of the things that I did is I looked back at 2018 and how many stores uh Starbucks had and in 2018 they had 3 521 Chinese stores. In the third quarter of 2022, they had 5 368 stores. Now this was really remarkable because think about that over the covet pandemic. Basically through the lockdowns, they ended up growing their store Base by 52 in China. But this was even more remarkable in 2018 Starbucks had 15 341 Global stores in Q3 2022 they had 17 133. Now I'm not expecting you to do the mental math on that, but let me give you what I'm getting at. They added 1792 stores in those four years, but guess what A net? 97 of the stores they added or in China That's wild. So in other words, during the three years of Covid lockdown, they blew up their focus on China and in Q3 of last year they were sitting at 5 358 stores today. Which is just like two quarters later, they're at six thousand one hundred stores. So another 700 Plus stores on top of that. and by 2025, they expect to again grow Chinese stores by another 50, going from six thousand one hundred to nine thousand stores by 2025.. that means the next two years they're going to build about 3 000 stores in China. If you are investing in Starbucks you are going all in on China's recovery. It's actually very interesting because personally I think there's less risk investing in a company like Starbucks to get Chinese exposure then investing directly into Chinese companies that have a potential risk of getting deed listed in America It's kind of interesting. Now, listen to why you go to the earnings call and they literally tell you they say our customers in China are creating a full return familiar, pre-pandemic or returning to uh routines from pre covet and they believe uh, that China is basically a huge set of customer demand waiting to be Unleashed So I mean this. This is pretty bullish on China here. Early indicators are that the beginning is starting to happen in the largest cities now with many Chinese recovered from covid people returning to work, border and travel restrictions lifted mall traffic and Retail Store activity on the rise and consumers reintroducing social activity back into their daily lives. We are expecting the second half of fiscal 2023 in China to be stronger than the first half, but uncertainties remain and we remain cautious in the short term. So in other words, again, there's super super bullish on China. But they're also trying to like moderate our expectations that we're not going to go basically from Zero to Hero in one quarter that it's probably going to be more towards the second half of the year that we actually start seeing. Uh, this this build out. Now keep in mind the second half of the Year part because when we look at some of the other earnings calls, you're going to learn a lot about the second half of the year. But I'll tell you they think they are in the early chapters of growth for China and I mean it makes sense when they're expecting to grow their stores by another 50. Really remarkable. So I was very impressed with that. Uh, Now another thing that I thought was interesting here is they talk about how they gained productivity by uh by basically rolling out more uh and and higher quality or better equipment. and they think they're going to see margin expansion in the second half of the year and More in future years to come now. I Know this is Starbucks but I have a very strong thesis and I continue to see it get reiterated. So I am looking for signs that I'm wrong. Don't get me wrong. I I don't like confirmation bias. but I really have this thesis that Supply chains are like a rubber band when covet hit that rubber band. stretched out really really far and in many cases snapped. And now companies are like what the heck. We never want to be in a situation again where we can't fulfill the crazy demand that we have. and so now companies are investing more and more into equipment including uh Starbucks. But even like look at the chip manufacturers, the chip manufacturers is the perfect example for you. The chip manufacturer uh or or the chip equipment manufacturer. Basically, the company that makes the machines that make chips a the big one for advanced manufacturing is called Asml. They've got like a 90 market share on the advanced chip making equipment. Market You can invest in them I I Have exposure to Asml of myself. It's a Dutch company so that company is actually expecting at the same time as PC sales are plummeting like 32 percent year over year and memory demand is in the trash. Uh, Samsung's Samsung reported Revenue declines the 69 Tsmc slowed production Nvidia AMD and Qualcomm are all complaining about high inventory sitting on shelves at stores at the same time as that's happening. Guess what Asml says? the equipment manufacturer. They expect growth of 25. I'm like what, you guys are still growing. Yeah, it's because the chip manufacturers, while they realize inventory is high, they're actually still investing in equipment because they know when that next demand wave comes after we get through this nonsense of a recession or whatever it is we're going through right now, this economic contraction, they want to be prepared to fulfill that demand. So I have this belief that Supply chains are basically a scrunchied up rubber band right now and when we actually reopen whether it's with China or or you know, China and the US whatever the market going back to normal Supply chains are ready to absorb it. They're so ready to absorb it. Try, try to try to break a rubber band that's scrunchied up like you have to stretch it pretty far. certainly a lot further than you would if it started unscrunchied up, right? So this is really where companies are actually saying hey, look, we're going to invest in all this equipment, but we're not actually even turning it on yet. That's hence the scrunchy idea, right? Like we have all that potential. But we're actually purposefully compressing that potential right now because we don't yet have all the demand. but we're ready from a supply side. Even Starbucks is talking talking about that, right? We'll see more of that anyway. So they do expect to see this: this slower reopening and trying to lead to some more pressure going into their Q2 which is really January to March for them. Uh in January Uh, China's comp sales were still down about 15 year over year, which is a lot better than the 42 percent they were down before. Again, this is this is going to be gradual for China but it's still very, very exciting. Uh, they talk about China probably contributing positively to their margins. By uh, the second half or end of the year, they're expected to continue with dividends and BuyBacks at Starbucks which is pretty attractive to investors. And uh, excluding China they talk about enormous growth. They also talk about the following: They say uh, China performed even better than we thought. And so what we're seeing now with 25 growth is growth overgrowth and performance over performance. And we are expecting in some markets to see the economy inflation slow or or were expecting. Okay, let me rephrase this because they said it in a funky way. So basically they're seeing tremendous growth at Starbucks and they thought that people would end up spending less money on Starbucks drinks. Uh, because of the inflation, right? that the world economies have seen. but they've actually seen the opposite. If anything, they've seen substantial growth in spite of all of the inflation. Uh, that uh, that we've been experiencing which I thought was quite remarkable. especially since when we look at Amazon's call, you're going to see that Amazon's kind of like yeah, consumers are uh, choosing cheaper stuff now. uh, and uh, and less. Um, you know, less high margin stuff for us Starbucks isn't seeing that? Uh, so yeah. see, look at that here. They literally say it here at a time when people are generally trading down and there's a lot of discounting going on. We've actually had the highest average price per ticket and we don't see a situation where our customers are trading down. Uh, now look. I I Know there's the thesis that companies could just be lying to, but they don't do that in the earnings calls. Uh, generally. I Mean, don't get me wrong, they like they will Dodge questions. but that's where you want to be careful when companies Dodge questions. That's usually where they're hiding. stuff is the it's in the Dodge But when they do say stuff, they expose themselves to massive liability if if they straight up lie. So generally you won't get lies in earnings calls, you'll get Dodges and it's often the Dodges you want to pay attention to. There weren't many uh that I actually noticed in Starbucks Starbucks was very very bullish. Now don't be wrong. they're like, you know they're not like super cheap okay as a stock right now and I don't have any exposure to Starbucks myself. but it's very interesting even just from the point of view of trying to understand what's going on in the economy. I Mean right now Starbucks is trading for about 32 times on a PE basis? Uh, now they're expected to grow substantially, especially with that Chinese exposure. They could potentially expand. Uh uh, You know their EPS by about 18 per year. Those are the current estimates, but still, that puts you around uh, you know 1.7 times Peg So so it's not like you're getting this crazy deal investing in Starbucks right now. but uh, I don't know I'm I'm very excited about at least what I'm hearing here in the very early stages of our recovery. All right, let's see here, let's keep going. Where are some other meats we do? Oh yeah, yeah, this was interesting. So I'm always interested. especially after all of this crazy labor report that we just had where a lot of people are saying oh no, we're gonna have massive wage inflation. Oh no, Jerome Powell is going to rug pull us because jobs came in hot. Look, the the January seasonal adjustments for jobs is so ludicrous. It doesn't surprise me that economists couldn't get it right. I mean economists so far have been wrong and wrong and wrong and wrong. Like almost every single data release this one they just happened to be off by a factor of eight standard deviations. But that's in part because every January you get a substantial amount of layoffs and the Bureau of Labor Statistics throws in a seasonal adjustment of oftentimes like three million jobs where they're like, okay, the first three million jobs will just pretend those didn't exist just to give you an idea of of how the labor market sort of works. So for example, if the labor Department's like we're going to assume we lost 3 million jobs to uh, you know, for seasonal effects and then all of a sudden they do the numbers and they're like, oh, it looks like we only lost 2.9 Now it's kind of like you had a hundred thousand job gains report Once you factor in that seasonal adjustment, right? Well, if they come in and say Hey, you know, this season we think we only lost 2.6 million jobs jobs right And and the numbers substantially off from that because their estimate was bad because more businesses retained employees, which is exactly what happened. What happens. You get this crazy labor report that nobody could have predicted substantially, in part because of weird seasonal adjustments that are pretty arcane and difficult to understand exactly the method behind all the January Madness But uh, not. a lot of people are really super concerned in the finance space about, uh, the January report because januaries are very commonly weird. But not only that, we know that Chipotle is talking about low, lower turnover I've mentioned that like 17 times on the channel. so sorry for being redundant. but I think it's great because if you think about it, you've got a substantial uh, a lack of pricing pressure from employees at companies like Chipotle and these are the ones growing, right? The retail Hospitality Restaurants travel. Those are the sectors growing so we want to see less wage pricing pressures in the services sector. Well, guess what? Starbucks does services And guess what? Starbucks Just said we do not have any labor shortage issue and we're ready to rock and roll in hiring more people for our new store openings. Great! I Don't see any issue at all with our hiring or our people staying with Starbucks This is fantastic because if people again are changing jobs a lot, you have a problem because you could potentially Drive wages up a lot and because and training costs go through the Moon But now you get Chipotle and Starbucks Reiterating, they're not having the labor problem that they used to have which is great And so they're seeing their turnover substantially reduce. Uh, and they're also listen to this we continue to. Despite record low unemployment, we continue to see and experience strong and consistent overall applicant flow to support our store hiring with typical seasonality. This is fantastic. This is really great news. We Additionally, on inflation, we're seeing inflation elevated relative to years prior uh to fiscal 22, but we're starting to see it soften slightly. That's great so we don't have expectations that we will have to further increase prices. This is also fantastic. We don't want to hear that businesses are pulling off what they did in January of 2022 where everybody's like we're raising prices because we can. We have unlimited elasticity of demand so we will raise prices. Uh, instead here. Starbucks expects to see prices normalized towards the back half of the year. uh and Starbucks also mentions that Uh, well okay, that's just a reiteration of prices moderating. So here, just just in: Starbucks we got a lot of insights about China inflation and wages. Really insightful in my opinion. I'm very excited about all of this Insight because it doesn't make me nervous about the markets and I'd like to read all the information I can to see am I missing something Should I be being nervous? why am I Am I blinding myself biasing myself thinking uh, maybe you know I'm in the market so I just need to look at everything through those colored glasses I Don't think so because again, we're seeing this reiteration significantly. And it's not just the chips, but it's also companies like Apple Look at this. So Apple obviously blamed their uh, their iPhone Miss on supply chain issues and uh, we. And then they also talk about how the iPads beat because Supply chains came back uh and and people were actually able to buy iPads again. But uh, they talk about how the macro economic environment in the past quarter was much more challenging than it was 12 months ago. In other words, at the same time as they experienced supply chain shortages for their iPhone the market is clearly one where people are spending a little bit less. Uh, I mean that's obvious. uh, people are taking on more debt so people are getting squeezed a lot more. A lot of folks still trying to support their existing spending habits, certainly. But uh, let's let's see what kind of forward-looking data we can get from Apple Here from a supply chain point of view says: Tim Cook We're now at a point where production is where we need it to be and so the problem is behind us. Now that's actually quite interesting to see. Tim Cook Mention: Look, it's over. We had a supply chain issue. Now it's over. and now we think we have a very resilient supply chain in aggregate. That's good. That's again reiterating the scrunchie analogy uh, of of uh Supply chains and Apple is clearly seeing those. But there's also more that Apple gives us. Apple talks about India and I Thought this was neat. They talk about India being a hugely exciting market for us and a major Focus Now Apple is trying to get some of their manufacturing and assembly out of China and India seems to be one of those places a lot of companies are going. so you really want to potentially start paying attention to India as an Emerging Market A bit. Obviously, you've got that massive adani Scandal that's that's making people quite fearful about India. But anyway. uh, I Thought this was fascinating. So they're talking about how they basically see India as the next China and they're taking what they learned in China how they scaled in China and bringing that to India. Now another thing that I thought was really neat is Apple reiterates how excited they are about being the largest customer for Taiwan semiconductors and they expect to continue to be the largest customer for Taiwan semiconductors in Arizona. Now the reason I mentioned that is because a I have exposure to Taiwan semiconductors as a stock but number two B uh I am a big fan of investing in real estate where there are jobs and there are a lot of jobs going into uh, you know Arizona and Ohio for chip making even Intel while a lot of people poop on Intel they've they've been screwing up pretty badly, but the potential of the next three years actually doesn't look that bad. they're they're making some pretty smart changes I'm I'm very impressed and usually I I Caution: the old companies are just value traps but I don't think you can cast everything with the same blanket and uh, you want to keep an eye on Intel So anyway, uh, let's see here. Oh this I thought was a fascinating line from Tim Cook Here this is basically an elasticity of uh demand statement. Here he talks about how basically iPhones have become so integral in people's lives because it contains their contacts, their health information, their banking information, their smart home and everything. their vehicle blah blah blah blah. and Tim Cook literally says I think people are willing to really stretch to get the best they can afford in the category I mean I Hate to say it, but he's kind of saying we got it. We got Big Peepee and we're proud. I mean it's pretty obvious. Uh, Anyway, they did have weakness and Mac and wearables and the industry is challenged. You know the industry across the board, especially in PC is Contracting but uh, what's what I think is very interesting about this is you have an analyst who asks, hey, how is the PC industry going to go forward and what do you have right here you have Tim Cook dodging the question basically saying look challenged A lot of uncertainty, not in a position to be able to predict how 2023 is going to go. so not a lot of enthusiasm for the PC market. So something to pay attention to, especially if you're exposed to the peripherals Corsair Logitech or or other companies more specifically, just relying on PCS right? At least when you invest in something like uh, AMD Of course they have a PC segment, but you also have a server segment uh, and an automotive sector, right? You've got. You've got some balancing effects. The Logitech I I don't think you have as much of a benefit in that. uh, that sort of diversification. Now let's touch on the Apple earnings call. Uh, sorry, we just did. Apple Let's look at Amazon now. so Amazon was probably one of the the weakest I mean Starbucks and uh Apple Not bad. Not bad at all. but uh Amazon I'm not terribly excited about and you're going to see why we've seen. During periods of economic uncertainty, customers are very careful about how they allocate their resources and where they choose to spend money. You get a lot of caution from Amazon a lot. We continue to see inflationary pressures in worldwide stores. Now this is sort of in their intro here and that's not great. We don't like to see that, so we want to see if we can get some more insight. What do they mean on this right? This is in their intro and they see customers shifting to lower cost items so you're really seeing more of the pain at Amazon They also and I thought this was fascinating, just sort of broadly for for companies. Uh, companies are taking large Severance expenses in Q4 and that's because they've laid off a lot of people and those Severance expenses should go away obviously. uh, as long as they don't lay off more people in future quarters. so it's actually potentially a Tailwind for the future. They also saw productivity improvements and full of fulfillment centers and Logistics It's worth noting that if you look at the Baltic dry index of uh freight costs and this is basically how much does it cost to ship stuff over the sea and uh, you can see that massive Spike we had at the end of 2021 and then of course the war Spike we're we're at Lowe's uh of of the Baltic uh dry index I Mean we're we're at as low as what we saw during or nearly is what we saw during covet. which is actually insane. Uh, to think about So so that's very good for disinflationary forces on Logistics Especially when they talk about trying to, uh, improve not only their productivity within their own Logistics But we're trying to see this from a deflation point of view as well. Uh, difficult operating environment, macro environment? Yeah, whatever. Amazon Okay, we continue to believe grocery is a significant opportunity that's for Amazon I I Personally think that's like a terrible business to be in and relatively low margin. Do keep in mind that Whole Foods just came out and started talking about the potential for lowering uh, uh, prices at Whole Foods because they've started to see less Supply costs. Uh, and and they want to pass those benefits on to Consumers It's suggesting that probably a lot of customers are leaving Whole Foods and they're going to Walmart or something cheaper Costco whatever. Sam's Club And that's not great for Amazon because a business they want to expand in is seeing weakness. So now they're talking about cutting prices substantially. All right, we'll see Amazon Uh, So then we have the second thing. Okay, this is probably the biggest reason I do not invest in Amazon I Think they are in a race to basically teleporting Goods to you and that is not a race that I want to invest in because I don't think teleportation is going to be real. But not only am I not going to invest in teleportation I'm not going to waste my money investing in companies. my personal opinion: where those companies are going to take all that money and throw it into trying to get your stupid package to you 30 minutes faster because you're impatient Now don't get me, don't get me wrong I Love that two-day shipping is becoming one day shipping is becoming a same-day shipping is becoming three hour shipping and in the future might be drone delivery services. This is extremely expensive and Amazon here is basically saying look, we're optimizing but yeah, we are going to spend a ton of money making sure we could get Goods to our customers faster because as they say, we believe continuing to get products to customers faster makes customers happier. Okay, we'll keep spending money Amazon I don't know I don't know customers right now very conscious on how much they're spending will continue to be continue to work really hard on being sharp on pricing. Notice the difference between this and the Apple call in the Apple call you got Tim Cook Who's basically like yeah, we think the iPhone has huge PP and then here you've got Amazon It's like we got tiny PP Um yeah, we're gonna work on getting this a little sharper. All right. It's pretty obvious the differences between the two so far. Uh, you know. But then again, I mean when you're comparing companies, it should be pretty obvious who's got a bigger PP You know? and in this case, Apple clearly has a substantially larger set of pricing power than uh than Amazon does. What other notes did we get out of Amazon At Amazon we get advertising lower advertising spend across the board. Not great. A little bit of another red flag there for trade. This, you know, a lot of red flags on the map for trade desk people. Hope include myself included. The trade desk can continue to grow because you're you're in such a small sector of the digital ad spend. Market You think that maybe there'll actually be a downtrend from a company spending on TV advertising and switching over to connect to TV and that could continue to propel growth in CTV. But if companies just reduce their spending across the board, then yeah, you might have some transition over. but you still have less growth. so not great on AWS growth rate. So this was actually one of the qualms I had with the Amazon uh financial statement is their uh. growth rate on AWS was was faltering quite a bit. Uh, and their margins were faltering as well. Uh, and you know I Generally don't like that when you're investing in a company for growth and you're getting margin compression and you're getting slowing of revenues, it's not great. I actually happen to have that document. so here it is: AWS slowed growth to under 20 and margin compressed 420 basis points. Yoix! All right. So what does Amazon have to say for themselves? Well, they say on AWS growth rate I'm not sure I could forecast for you with any level of certainty what's going to happen Beyond this quarter, that's a red flag. Here's a Dodge right? And not only is it a A Dodge but it's also a red flag because they're like, ah, we can't really tell. Things are economically uncertain right now and there's some unique things going on with the customer base that we're seeing that we're all seeing the same thing. They literally said that there's some unique things, the grammar's terrible, but whatever, some unique things going on with the customer base that I think many in this industry are all seeing the same. This is like such a massive red flag for Amazon web services, but also folks. cloud cloud SAS This is a huge red flag. Combine that with what servicenows saying and The Dumping of the shares huge cloud and SAS red flag right here and look what I wrote on the left here because they say so I don't have a crystal ball on that one, but we're going to continue to work for customers out there. and uh, don't confuse this for saying we have no deals. We do have deals going on. but anyway I wrote on. the left side I Go! Uh, you say you don't have a crystal ball, but you do have January Tata Your financial report is only October November and December. But here you are on a conference call on February 3rd and you're saying I don't have a crystal ball. but you do have January data and you're not giving us any of the January data. All you're saying instead of providing the January Insight is yeah, we don't have a crystal ball. Uh, there's some unique things going on and um, you know, yeah, long term we think things are going to be good, but uh yeah, there's perhaps some short-term belt tightening. That's their race. Uh, not great, not great. So so a lot of a lot of pressures here that I I did not like in the Uh Amazon Earnings called. the last one was Qualcomm from the Uh from from earnings calls that we have to go through now. Qualcomm Ah, okay, I mean streamlining operations more Channel inventory. Uh, they talk about challenging macroeconomic conditions and headwinds in China. But what they do say is they expect a normalization in the second half of the calendar year. Now that's good. And it's a reiteration that even though things are challenging right now, we do expect that things will settle down in the second half of the year. Now that is something I get reiterated over and over and over again because here's Qualcomm and they're kind of guiding that things are looking flat for cell phone sales for the March quarter. So like basically, uh, January to March that's not so great for this idea that maybe iPhone sales will pick up again at Apple because Tim Cook's like, oh, our supply chain issues are behind us. Yeah, well, Qualcomm doesn't think we're seeing a big pickup in phone sales yet. But uh, they do think that January to March is more of a seasonal Decline and they'll get back to gains in the second half of the year. And after those inventory drawdowns, maybe we get back to sort of a positive uh, EPS growth territory by like June and Beyond uh. They also briefly just mentioned they have a lot of prepayments and this is a little bit of a red flag for the chip makers. They have a lot of prepayments on hand at companies like for example, maybe a Taiwan semiconductors and they're kind of calling them up and going. yeah, maybe don't spend the money yet. we just don't need that chips yet, so hold on a little bit. Uh, it's like oh so yeah. look I don't see in any of these earnings calls any any at all concerns about wages skyrocketing and labor being a big problem. I'm not saying that at all in any of them. Not only am I not seeing wage pressures, but I'm seeing companies that are like oh man, Yep, we we definitely have shrinking PP and uh, you know some companies doing better than others Starbucks Killing it with pricing power and they're about to blow up thanks to China Apple killing it more with pricing power than certainly an Apple or Qualcomm Yeah, but overall, where's the inflation? I'm not really seeing it in these earnings calls. you're just. you're basically the only mention of inflation we had was from Amazon and it was basically them saying the the inflation that has happened is still affecting us but I kind of think based on the rest of the call from Amazon that was a slight cop-out from Amazon and that's what companies do like. Look at Procter Gamble and Johnson Johnson they're like, oh, the inflation was so bad. Well is it going to get worse? No, we think it's going to get better in the second half of the year. So why are you complaining about inflation? Because our numbers are bad. That's kind of essentially what you had from from those companies. So worth paying attention to these earnings. Halls Personally I think these earnings calls were incredibly insightful and they give me a lot of of, uh, an understanding about what's going on the market now. I I Do want to add this because I Thought it was quite interesting and it's kind of out of nowhere and kind of a little bit random, but it's a fun fact. Apparently there was a study done in South Korea Seoul South Korea and their National University That apparently our findings suggest that mask wearing has shifted from being a self-protection measure to being a self-presentation presentation tactic. In other words, pretty people are less likely to wear a mask compared to uglier people who are more likely to wear a mask. That was a study from South Korea It's not me saying it, they're saying it. I Don't know, but I want to know from you. What do you think? Is that possibly true? Maybe maybe not. All right. Next up: I Don't know what's next? Let's listen to Fox for a moment while I figure that out. Do we know of any of these types of balloons going over American airspace Before not that we know of I mean Trump Administration Officials I Think it's crazy that they're still talking about the balloon when I sat down and started streaming an hour ago, they were talking about the balloon. Now they're still talking about the balloon, the White House or any of these top officials which because there are accusations this morning, thank you for that question. Rachel There are media reports floating out there that this happened under the Trump Administration but when you talk to Trump or high-level officials Mark asked for others, they say we never heard of a balloon during our Administration and if it did happen, we weren't told absolutely I mean I Spoke with Ambassador John Bolton yesterday. Okay, Nighthawk says that's a pretty disrespectful study. Crypto Lifer says you and I should have an educational interview. This is like the third day in a row that you've sent 20 bucks. I appreciate it I'm just not doing any podcasts or interviews right now. eventually. I'll do them again though. Um, who knows. Next, you know, a few weeks or a couple months or whatever. Once once we get the schedule dialed in. Can't believe you haven't dyed your hair green yet. Do you expect a pullback? Well, thanks for five dollars five euros. Ooh that's more valuable now for saying that. Uh well. Tesla didn't hit 200 bucks. That was the deal Tesla had to hit uh 200 bucks and it didn't Uh, let's see here. I Live 15 minutes from the new chip factory in Arizona It's huge. Okay, that's awesome. That's awesome. Typical Fox Please change the channel. Unbelievable PG How could you? How? How could you slam Fox for showing the same map that we've seen like 17 000 times over the last two days about where all of our Air Force bases are. Maybe maybe we should just send a pamphlet to China and tell them exactly the addresses of all these air bases. Foreign? All right now it's time to talk. Kathy in art. Oh Kathy What are you doing All right now? We've got to talk Kathy Wood And what is going on with this crazy Big Ideas pamphlet. It's 65 pages long. We're just gonna look at some of the bottom lines comment on them, but she's got a 65 page report on her big. Ideas We already know for or her five main. Theses For all of these public blockchain, she sees a large-scale incorporation of blockchain tech. Let me be very clear about my opinion on Blockchain Tech before. I Keep going here. But my opinion on Blockchain Tech is very, very simple. It is that in the future there's going to be no difference between blockchain technology which is fantastic and you turning on your water faucet. In other words, it is going to become a commoditized uh utility. I Don't want to say Monopoly because I think there will be many different utilities and much like in your area, you might be able to get a T or Spectrum There'll be a few big blockchains that most people use, and they can be customized for certain purposes or companies. but I I I I don't find necessarily. it's something that we can directly invest into without a substantial speculation premium at this point, and eventually they'll just end up lowering costs at corporations. So I think corporations will end up benefiting most from from blockchain. Uh, utilities. Uh, and and so that's probably the best place to invest To get exposure to them is when it becomes profitable to use blockchains, companies will be all over that efficiency. That's my take now. Ai Of course we expect AI to be big. We'll be talking about that here. Battery Storage robotics, you know? Tesla For example, buying their own robotics manufacturer in 2016? Uh, in Germany Fantastic multinomic sequencing or multi-ohmic Whatever. Genomic technology? Great. Still gonna be a while before. uh, we've got substantial Gene editing going into people who are already live. Uh, but uh, okay. it's gonna be a space to pay attention to over the next few decades. That's that's absolutely true. Uh, there's talk over here that, uh, smart glasses, and basically virtual reality and augmented reality will be constrained until we get advances in battery energy density. Yes, possibly. But this is actually where Apple has a very interesting potential solution. So Apple is coming out with this: this, uh, virtual Reality and augmented Reality headset. And what they're actually doing is they're detaching the battery from your actual head and it's probably something you'll end up putting in your pocket. and uh, then, unfortunately, you have a, like, probably a stupid lightning cable or something going down there. But it'll increase the functionality a lot because the last thing you want is some kind of headset that you can only wear for like 20 minutes in the battery's dead. Uh, yes, in the future when boundary technology is substantially better. Yes, uh, it'll be a lot more convenient to be able to use these virtual reality and augmented reality headsets. Personally, though, I'm very excited about being able to the Apple headset. I Want to play with that because they talk about being able to turn a wheel much like the wheel the Apple watch has and go from a virtual reality Vision to an augmented reality Vision Now I personally get headaches when I use virtual reality I think the best kind of virtual reality will be something more like a Google Glass where you basically look through glass and you see the world, but you get those little Holograms or or you know heads up displays that can pop up I Like that idea but uh TBD the the woozy glasses that promise to do that were not were not very good. now. I Thought this was a little remarkable is that Kathy thinks we're going to potentially see 8.5 GDP growth between 2021 through at least 2040, if not through 2025. that's crazy Now oftentimes I think a lot of the projections that Kathy and Ark invest do and I respect them a lot I agree with her will probably exceed GDP growth estimates. Uh, but I think sometimes the projections they give are designed to make you go that's nuts and then make people talk about it. It's a great marketing tool. fantastic marketing tool. but in order to sort of showcase how different this would be, we have this really highly manipulated graph on the left that takes GDP growth rates going all the way back to I kid you not 100 000 BC before the Common Era So in other words, one hundred thousand, One hundred and two thousand Twenty three years ago is is where we go back to starting to measure. GDP For historical context I Don't think this is the kind of historical context we need, but anyway Kathy believes instead of our economy is growing at 2.6 globally, they're going to grow at 8.5 percent. This is pretty remarkable I Don't think so Uh, especially with a deflation uh coming which Kathy and I agree on that deflation is is probably a greater risk than inflation uh leading to substantial more productivity with less spending. more productivity. less spending in theory should unlock more GDP growth. or just unlocks less spending and people investing more. And if people invest more, their wealth goes up, which is great. But if their wealth goes up, GDP doesn't necessarily go up because the velocity of money on investing is like one to two, whereas the velocity of money on spending is like four to five. So if people invest more, they become richer. They're able to do more with less, but they don't necessarily contribute to GDP as much. I Don't know about that and I don't like the manipulation of the chart so I'm gonna give a red flag on that now. I Do like this I Agree with Kathy when she says that AI training costs are declining at an annual rate of 70 and that now the cost to train a language model has gone down from 4.6 million dollars to just 450 000 in two years and that AI should increase the productivity of knowledge workers by more than 4X. Now there are two things that you need to know here. Number one: what should you do to prevent yourself from getting replaced by AI There's only one thing you can do. You can be a creative. That's it. You have to be able to prove that you have creative input, otherwise you will get replaced by a robot. Okay, the second thing to know about this is I and I got a lot of a lot of like. A lot of people were freaking out at me when I was talking about house hack using AI uh which which we will do with with