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Alfred "Bill" EV Newman

Why Are Companies Sitting on Cash Right Now?

ROUGH TRANSCRIPTION - NOT EDITED - PURE ROUGH VOICE TO TEXT

Paul Grant Truesdell, J.D., AIF 0:00
One of the interesting articles that appeared in The Wall Street Journal is about the technology companies we're always talking about in the video, and we're talking about Facebook, or meta or Amazon or Apple, but looks like an old school name has come back to be popular. Yes,

Paul Truesdell, II 0:16
everybody forgets how influential the energy industry is. But it keeps everything chugging including all the aforementioned companies that everybody is so obsessed with.

Paul Grant Truesdell, J.D., AIF 0:25
So we're talking about Exxon. Exxon is a company that has amazing strong demand, because the global economy is stronger than ever. And guess what? Because of Ukraine and the Middle East, and now Israel, and oh, gosh, everything that's going on the increase Israel in Iran escalation looks like oil prices are steady Yeti. Yeah, definitely. And sometimes old school companies tend to come back and smile.

Paul Truesdell, II 0:58
Well, it's one of the it's a bedrock company, I kind of view it, you know, in more ways than one. Yeah.

Paul Grant Truesdell, J.D., AIF 1:04
I mean, look, everybody's been talking about falling inflation. I've been talking about bond yields. And, you know, listen, a lot of people in bonds got slaughtered few years ago. Yeah, especially. So you know, a lot of people, not our clients. Right now, not our clients, those of you who were buying bonds in the 0% range, or the 1% range, when inflation went up, and they lost value, if you sold them, if you hang on to them, you're doing fine. But problem is

Paul Truesdell, II 1:31
a lot of people don't have the option to not sell because they own bond funds, whether they're mutual funds, or ETFs, or whatever. And those funds are forced to rotate based on certain criteria or whatever. And, you know, they lost value, purely because they the fund itself is a marketable security and speculation against the assets that they hold, causes the value of the fund to go down. So it's just a lot of people got screwed, no matter which way you slice it. You know, I mean, we've talked about this in the past. So few people own individual bonds, it's actually kind of scary. It's almost entirely funds and large institutions. And

Paul Grant Truesdell, J.D., AIF 2:15
I've talked about extensively the cost for funds. I'll mention the name Carol who works with us. She said there when I did that thing like, man, you scare the hell out of me on bonds, because there's the cost of it. And the lack of of transparency is really substantial. Yeah, absolutely. So bond funds are bundled financial products, and very few people buy bonds. But yeah, basically, the Federal Reserve is doing what the Federal Reserve needs to do. Paul's doing what Paul's doing. But I gotta tell you, Exxon, ahead of Microsoft, and Apple and alphabet, Tesla has gotten slaughtered. We think about that. I

Paul Truesdell, II 2:56
haven't done the analysis. But my guess is that Tesla's overly exposed, but just as expose on a kind of electric car, per capita basis, and in the drop in interest in them, a lot of people who've purchased them got them. You know, there's not a lot of switching back as far as I've seen, statistically, I mean, you hear about it, but most what is it in the us most? Was it most electric car owners are two car households and they own at least one gas engine vehicle. Still, that probably won't change for obvious reasons. Like you can work the math and like kinda understand the inconveniences of owning all electric for both of your cars. So you keep one and you keep another so you get the convenience of one and you get the convenience of the other depending on your circumstance. What is it uh, a lot of the what is it? Major car manufacturers have since substantially reduced or eliminated their electric or Evie rollout over the past? Six months to a year right? Yeah,

Paul Grant Truesdell, J.D., AIF 4:05
General Motors and Ford have both suspended as well as canceled all plants all plans to build new facilities. Both were designating few additional facilities to be exclusively battery and Evie assembly and they're done.

Paul Truesdell, II 4:25
Because that's one thing people don't realize is it's you know, you build a new car and we need a new facility to manufacture said new car right because of different processes and assembly techniques and procedures, but the thing everybody forgets is EVs. They require more additional facilities to provide extra components that you don't need as many of or at all traditional vehicles. You know, car car companies have benefited from extreme supplier efficiency over the years with things like car companies don't make their own lead acid batteries. There's no point right? No Oh, so now they're stuck in a place where there's not enough production capacity to deal with to create the batteries. So they need to make them themselves if they're gonna compete at all now, you know, you have this domino effect going back downstream. It's kind of interesting. I the exuberance of to reuse a phrase that's common in this industry. The irrational exuberance. Evie market is something that even as it happened very much befuddled me.

Paul Grant Truesdell, J.D., AIF 5:29
Well, you know, I put on Facebook a a video where I was very sarcastic about a Green Party candidate running for the US Senate in New Jersey or New York or recall. Did you see that? No, yeah, this lady claimed that it was the man made in environmental change. Remember, used to be global warming, global cooling. Oh, was Al Gore. He was global warming, wasn't he?

Paul Truesdell, II 5:58
I think it was global warming. Well, what is it was global cooling when he was in college, then it became global warming. And it became cl...