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tv   Barrons Roundtable  FOX Business  June 7, 2020 11:30am-12:01pm EDT

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and i'll be back next week with more in depth interviews right here on "the wall street journal at large." thank you for joining us. ♪ ♪ >> "barron's roundtable" sponsored by: ♪ ♪ jack: welcome to "barron's roundtable" with we get behind the headlines. i'm jack otter. we we begin with what we think are the three most important things investors should be thinking about right now. stocks rallied this week after a surprising rebound in unemployment, and despite national unrest after the police killing of george floyd. one of the forces that lifted the markets, and can they keep climbing? demonstrations across the country bring renewed focus on racial inequality and police brutality. will it improve diversity in corporate america? and twitter at the center of the political and cultural
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conversation, what jack dorsey told barron's. my colleagues, ben levisohn, carlton english and jack howe. so, ben, according to lpl, the market had its best 50-day streak in all of history, and that was before friday's 800-point jump. is this all about jobs? what's going on? >> yeah, i mean, the market certainly sniffed out something, something big happening, and it really, i think, was shown in this jobs report. 2.5 million jobs were created last month, and to show just how crazy that number is, the most optimistic economy who was surveyed expected a job loss of 800,000. i mean, it's just an enormous dishes, and this is -- difference, and this is fantastic news showing that the recovery from the coronavirus shutdown is going faster than anybody really expected except for maybe the stock market. [laughter] jack: so as investors, with we a always want to think about risks, right? there could be a second wave of pandemic, we still have three
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times as many people collecting unemployment insurance as we did at the peak of the great recession. there has been blood on the streets, it could get worse. but what i'll ask you is what more can go right? if nothing else can happen that the market likes, this rally could stall. >> what we need to see now is the rest of the economic data start to confirm what the payroll shows. is it going to show up in our industrial manufacturing surveys, is it going to show up in production, is it going to show up in retail sales, are consumers going to start spending. that's how this becomes a positive feedback loop that can keep driving markets higher and the economy. if those things don't happen, then there really a lot of risk for a market that may have gotten ahead of itself. jack: one thing that has been happening this past week is bond yields have risen, bond prices have fallen as stocks went up. at some point could those yields get high enough where the stock
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market would start to get worried? >> i think they could. this move has been very large. it went up a quarter of a percentage point in the 10-year yield this past week which is pretty enormous, especially when yields are this low. and i think the faster that goes, if it continues to accelerate, that could be a problem. we're not at that point yet, but at some point you have to start wondering does the federal reserve, which has certainly helped this rally with all of it monetary stimulus, have to back off of some of that, and all that could impact the market. jack: carlton, the obviously, it's been a tumultuous week, and african-american unemployment actually ticked up slightly to 16.8%. interestingly, the corporate response to what's been going on has been stronger than we've seen in the past. you've been writing about this a bit, talking to some chiefs. >> yeah. and, you know, in the past corporations generally would not want to weigh in on social issues, and i think at this point a company cannot avoid it
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anymore. so a lot of corporations have issued statements, obviously, deannouncinging racism and sometimes even -- denouncing, and even showing support of the protests that have been going on. you know, that's part of the issue, but it's also, okay, what are you going to be doing next to improve the situation. we have a number of pieces in the magazine this week where management were saying we need companies not just to say, okay, we denounce racism, but what do our leadership ranks look like, what are the pay disparities going on, and what are we going to do to fix those disparities. we also are are an interview with bank of america's brian moynihan who talks about it's not just charity and government programs, it's also about investment and partnering with communities to close some of those gaps that exist. and i've also been talking about how activist shareholders may may a role in this down the line where they urge more diversity on boards. that hasn't been top of mind lately, but a lot of the
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institutional investors that these activists support have the make a factor of their voting, and they're looking for new ways of finding trekker candidates -- director candidates. old ways of doing things are going to get you the old results, so a lot of investors have said they're using things like linkedin is finding incredibly quality, diverse candidates. jack: jack, these angry conversations in the country have been taking place on twitter. barron's caught up with the ceo this week to talk to him about his company. >> yeah. this story is not about the controversy surrounding twitter's efforts to police its content. this is a stock call. bill albert sees significant upside, he says, for this stock in the year ahead. twitter is a company that's getting some of the best growth it's ever seen, tons of attention. but it has, for a long time now,
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underperformed in terms of turning that usage into ad dollars. there are now two activist investors on the board, jack dorsey in this conversation with barron's, he says -- he's accountable. you know, this isn't like one of these other social media companies where you have super voting shares and the -- the company is working on improvements to its advertise thing product and giving advertisers better ability to critical -- create campaigns. so bill sees upside for earnings and the stock. jackie: yeah. but, of course, he might be picking a fight with the president as well. we'll see how that ends up. coming up, how corporations have responded and should respond to the can killing of george floyd. morgan stanley's carla harris next. ♪ ♪ at mercedes-benz, nothing less than world-class
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♪ ♪ cc jack as the u.s. begins to emerge from the covid-19 crisis, some companies are poised to come back even stronger than before. managing partner at durable capital partners, thanks for joining us, henry. since durable is not yet a household name, will be soon, i'm sure, i want to tell viewers you managed a mutual fund. it ranked first in the mid cap growth category returning a kind of amazing average of 21% a year for the last ten years that you ran it. could you start out by telling us what you're looking for in companies now? i know you're kind of moving past the obvious beneficiaries of e-commerce and work from home and look for the second derivative beneficiaries. can you explain that? >> yeah. what we're looking for right now is, you know, well, first of all, you know, we believe that the market, you know, sr.ed good
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at -- very good at, you know, looking backwards. and, actually, it's very bad at, you know, basically valuing, you know, change in the future. so what that means today when you had such a significant, you know, event like corona is, you want to look for sec la changes -- secular changes and understand what underlies them. so, you know, the obvious thing would be e-commerce is, obviously, going forward, but what are the platforms that are going to allow companies to basically, you know, thrive and be built on that. that might be more durable. or the other thing that we've been spending a lot of time on is that you may have, you have many companies where 2020 is going to be, you know, a poor year. you know, certainly much less than one would have thought in 2019. but it's about relative competitive advantage in companies. and so they could be having poor years, but if what they're
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really doing underneath is building on capabilities and/or their relative advantage versus the rest of their competitors, that's something that the market, you know, has a tough time understanding in the short term. and that's what we're looking for at the moment. jack: one programming note, henry is kicking off the barron's investing in tech virtual conference that's going span six weeks coming up. i know jack howe has a question for you about one of your holdings. >> does that come with a song and dance number, henry? you can tell me later. i want to ask you about bright horizons. i know you like the stock. i think of it as a place where parents drop off kids when they're on their way to the office, a a daycare business. what's the case for the stock in this environment where you have more people working if home right now? >> yeah, you know, jack, it's -- i think it's a perfect example of something where 2020 is going
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to be, you know, a are poor year for the company. but when you look out whether you believe that the economy gets to a normalized in 2022, it's actually getting relatively stronger. and i'll break it down into two parts. you have their traditional business, the center business where they have about 1,000 preschool and daycare centers. and if you look at those companies, you know, two-thirds of their centers are basically in partnership with corporate employees. and that's always been veried good for them -- very good for them because by teaming up with corporates, they've been able to invest more in their teachers and their curriculum and then create a virtuous cycle where you have better service and better experience and you attract better customers. and that creates a positive vibe. and then, you know, if you look at that business today, you know, 80% of it's been closed, and they haven't even announced when they're reopening. the second thing is if you look at their competition, the two
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largest competitors are owned by private equity, and then there's a number of, you know, very small competitors who really also don't have a balance sheet. so you think about the competition for teachers on the other end, for real estate and also the ability to really continue to invest in your product, they're going to be, certainly, stronger on the way out. jack: thank you very much, henry. unfortunately, we have to leave it there. i use bright horizons, and i like their service. next time we'll talk about red fin. up next, round table members give their investment ideas for the coming week. stay right there. ♪ ♪
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♪ ♪ jack: so, jack, during the week when i'm on a zoom call with all
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you guys and my son's playing fortnite and my 6-year-old's watching big hero 6, apparently there's a hardware company making that happen. >> i thought that was you playing the fortnite on the zoom call. [laughter] yeah, broadcom, it's almost run like a mutual fund business filled with chip companies, other types of tech companies. diversified chipmerrick. they reported -- maker. they reported in line results for the quarter, so big whup, right? they had serious supply issues, and despite that, they're okay. they're benefiting from 5g, that gives them a 40% increase in iphone content over 4g, making good money on cloud computing, even from home broadband with so many people working from home right now. stock looks cheap at 15 times free cash flow. jack: thanks, jack.
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carlton's idea a little more old school. >> it is. taking a look at caterpillar, it's looking interesting to me now. earlier this week we noteddededd that dividend looks safe, 3% yield, but also about the reopening story. the stock has been running up as some regions have reopened. new york city is expected to allow construction projects to continue next week. so it might mean that caterpillar has a little more room to run. jack: thanks. and, ben, you're looking at a financial. >> i am. i'm looking at capital one. with this kind of payroll, more people have jobs, more people are paying their credit card bills, so capital one will benefit. it has a little energy kicker in there, that's held it back, but it actually could be a benefit if the energy patch keeps improving. jack cc one interesting thing, you know, jpmorgan is not with us, al zahner hamilton is no longer with us, but the founder of capital one is still running that company. great ideas, thank you. to read more, check out
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barron's.com and don't forget to follow us on twitter. that is all for us, wear your masks, see you next week on "barron's roundtable." ♪ ♪ ♪ ... ♪ ♪ dr. michael youssef: whenever there is something of global nature, events that grasp the news, you find that a lot speculation starts. but those of us who have their faith anchored firmly in the lord jesus christ know for certain several things.

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