tv Barrons Roundtable FOX Business April 9, 2022 10:00am-10:30am EDT
not want to sing this him it's written by some a white guy. i don't think there's a lot of black people screaming for this. as you say, every week that goes by it gets crazier, wackier. make that happen next week two. six my great thanks to deroy murdock and josh. right here on the wall street journal at large great thank you so much for joining >> "barron's roundtable" sponsored by jpmorgan asset management. jack: welcome to "barron's roundtable" where we get behind the headlines and prepare you for the week ahead. a new proposal could keep struggling homeowners from foreclosure. fed president parker will tell us about it and how the fed plans to engineer a soft landing. how a rise in smash and grab retail theft is affecting the economy.
we begin with the three most important things investors should be thinking about right now. a volatile week, bond yield surge to the highest level since 2019. the world's richest man, elon musk, in hp. whose who lead should you follow? jetblue ada surprising bid for spirit airlines plus one airline stocks that might be a lot. so, been, it was quite a week. seemed like the market was ignoring stuff the federal reserve was saying. don't they know what is coming? the bond market certainly took notice and then in the stock market we saw a divergence that suggests stock investors are repositioning their portfolio. >> the entire market finished lower this week and ranged from
so what for the dow too bad for the nasdaq. the market was caught off guard when the fed governor said it was time to shrink the fed balance sheet and do it quickly. that hurts more expensive stocks like the one you find in the nasdaq and less of them in the dow. it explains the discrepancy in the performance there. jack: early in the week we saw the yield curve invert a number of times which is a scary signal of possible recession and suddenly steep end for the 40 basis point move in the 10 year which is a dramatic move. ben: it was a huge move. on top of the 10 year yield, than the thought that they might not be doing that anymore helped the 10 year come up. higher yields are bad for higher priced stocks.
it is one of those things that helps explain what is going on in the market. ben: all eyes are on the fed and we have a comment about fundamentals. what are you looking at? >> that is interesting about earnings. people stop paying attention to the big macro stuff and fundamentals. we get bank earnings from jpmorgan and citigroup and delta airlines, that means you get a chance to see how these beaten-down stocks do and small surprises can turn into big gains. jack: carleton, interesting story. the world's richest man, the guy who used to be the world's richest man taking big stakes in companies, warren buffett quietly revealing a stake in hp, elon musk seizing a board seat at 9. 2% of twitter. should investors follow either of those guys into those
stocks? carleton: does elon musk ever do anything quietly? classic warren buffett play, it is a screaming by a few months ago, we don't know what buffett wants to do but there's a lot to like about company that buys back shares, back in february lifted its annual profit target. this is where it gets tricky. it is during the pandemic as people outfit their home offices. that may slow down but hp is taking steps to diversify its business, it recently bought poly with a maker of workplace munication tools so there's a lot to like here, just we will see what warren buffett wants to do. jack: we have an hour to talk elon musk and twitter including the sec and not to mention shareholders could be looking at lawsuits against the guy. he had a 5% stake, should have
announced his ownership, he didn't until we got to 9. 2%, had to change his filing. break that down. carleton: when an investor has 5%, the company they are supposed to file with, whether they have active or passive state, one must quickly file, and meanwhile, when he did file, meanwhile 36 hours or so, a lot of questions there. jack: tell us about jetblue and spirit, why do you want to buy spirit airlines? jack: no one saw this deal coming, there were more things that make obvious economic sense. jetblue is offering $33 a share to buy spirit, outbidding frontier in the process, jetblue shares are down, spirit shares are up but nowhere near the deal price where markets are saying, we don't know if
jetblue will be successful but punish them for even trying, it will create a stronger competitor for the dominant market share. the -- spirit is like a rock-bottom price airline. they feed them cheap to cheap and keep costs way down. jetblue has higher prices, and to refit the planes. it would mean a 10% capacity reduction. then to the department of justice, what is awkward is the doj is suing jetblue and american and over an agreement to sell each other's flights in the northeast. plans for capacity growth look
jack: officials are ready to shrink assets and move fast on interest rates but will their plan do enough to cool red-hot inflation. joining me is patrick parker. thanks for coming on the show. appreciate it. you and many of your colleagues acknowledge the fed got caught behind the curve on inflation.
now you are taking serious action. is it possible to handicap for the audience how high rates have to go and can you raise rates, the age-old question, without causing a recession. the historical precedent is not great on that score? >> where i am, we need to raise rates methodically, to get us to neutral. we are raising the fed funds rate but i'm supportive of starting sooner rather than later the normalization of the balance sheet. it also removes accommodation from the market. raising rates by shrinking the balance sheet. we can get inflation under control. we may not have a soft landing
with china opening and closing because of the tragedy of the coronavirus and the incredible tragedy of ukraine but it will be turbulent. ibly15 jack: let me talk about the balance sheet. this is an area plus historical precedent. you haven't been in the situation at all. is there any equivalency between qt by x amount equals a half point rate hike and how will the economy respond to that? >> we haven't done it very often. rough estimates, hard to map. hard to pinpoint the exact number and that will remove accommodation. we talk about reducing the balance sheet. and they are doing it.
we very policy by accelerating or slowing down the rise. jack: monetary policy, fiscal policy, but on that account part of the effort is to reduce demand but supply chain is making stuff scarce for lack of a better economic term do you raise rates higher because there's not as much to buy? >> we have to be careful about that. we are starting to see some signs of healing in the supply chain so we need to move up to neutral with a reduction in the balance sheet, we will be above neutral. how much we don't know. we are seeing it with the 30 year mortgage rates, housing starting to slow down but we don't want to go into recession
and that's not my forecast that we would enter recession. >> we are seeing pressure on wages, restaurants, walmart saying trekkers going up to $110,000, seeing signs of life in the union movement. how do you look at wages? >> they are increasing but not keeping up with inflation. folks who are working, any increase, and i don't expect we will go into a major wage price spiral. we are seeing an increase in productivity. this needs to play out. i can't say where this will land. we need to take some action but not overly aggressive.
we need to read the data month by month. jack: an interesting op-ed you have written for barron's, you suggest the federal housing authority out to extend loan modifications, 40 years to 30, it sounds technical but could help the situation. >> we want people to stay in their homes and have a place to live, and the financial system, the banks, to not lose that much money in the process. there are ways of thinking about it. there is one such way which had has proposed. for a 60 day comment period, that does propose a 40 year mortgage modification. that has benefit to the work we have been doing. a million mortgages are seriously delinquent, half our loan modification and half are
not and those who are not in loan modification need some help. there is a win/win for the banking system who can stay in their homes. jack: we've got fewer people underwater. >> $10 trillion on equity right now. jack: appreciate it. billions of dollars of merchandise since the beginning of the pandemic. the crime wave hurting companies, and investors. you can't buy love. happiness. or confidence. but you can invest in them. at t. rowe price our strategic investing approach can help you build the future you imagine. ♪ ♪
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making off with millions of dollars worth of merchandise which gets resold and online marketplaces, the cover story in this week's addition of barron. joining me now us chamber of commerce executive vice president neil bradley. thanks for talking to us. give us some background, retailers are being hit hardest and what items are being sold. >> all sizes and all industries, you see reports of luxury items being stolen. thieves making off with $60,000 in eyeglass, to do what we described, to resell them through online retailers through this organized theft,
no one seems immune to this. jack: you've written a letter to congress asking for action. heavy written steps on how to stop this? >> we sent letters to local government officials, the governors of the 50 states and congress, local officials, state officials and the federal government all have a role to play. let's start at the local level. one of the most important things that can be done is local prosecutors have to prosecute these crimes, we've seen declines in many jurisdictions because of refusal to prosecute decisions. to way above these crimes, at the state level we have to reverse the trend over the last two decades.
over 40 states, and in organized crime. we have members of the chamber telling, taking what they're stealing, under the state threshold they won't be prosecuted. we have to shut down black markets, used to be when someone stole something they tried to get rid of it in a pond shop. a seller stolen goods and pawnshops. on modern version of that, using anonymous platforms to sell these goods, to ensure these retailers, to shut down these black market sites. >> what can these online platforms, switching to small platforms. >> we are not going after folks selling one or 2 items. on an online platform but those
who are trying to move large quantities of goods. you provide drivers license information, the employed identification number. your requiring them to verify that, people are selling online are not criminal and if they are criminal we begin to track them down. >> i'm curious. plastic where to protect items at pharmacies, and employee costs too and act as security guards. >> this is the most tragic, business owners, small business
owners and retailers have to worry about the safety of their goods. that puts the failure of government to go after these criminal syndicate rings who are operating, stealing from sports mean store employees were caught in the middle of this. jack: i want to ask real quick, eye-popping to the drugstore for a bag of corn chips, i don't want to call over the regional manager to open the safe 4-man don't want to worry about being tackled on my way out the door because my speed stick is booby-trapped with a sensor. how to stores make sure antitheft initiatives are not annoying law-abiding customers? >> that's the problem. we are putting the storeowners in oppose edition where because we are not sending police to respond to these thefts because
prosecutors aren't prosecuting them, because we have repeat offenders, storeowners are facing an impossible choice, they either make it more difficult for you, the law-abiding consumer or they watch more of their products walk out the door in the arms of some bandit. >> hope we can handle this, thanks for giving us that information. roundtable members have an investment idea that will make you feel good at tax time and jack shares ideas that defied conventional wisdom, stay right there. at liberty butchemel— cut. liberty biberty— cut. liberty mutual customizes your car insurance so you only pay for whatchya... line? need. action. cut. you can't say that. [phone rings] sorry. is this where they're gonna put the statue of liberty? liberty... are we married to mutual? cut. only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪
inflation, come tuesday we will get an 8% inflation number for the month of march and then they think inflation will slow, lots of people do, to under 2% by the beginning of next year. slowing inflation is disinflation but it could be a new thing, whiplash inflation setting off economic airbags. jack: that would be fascinating is great news if it happens. you've got an actionable idea? ben: our star reporter andrew bary was looking at municipal bonds, some have the same yields as treasury even though they are tax-free. that's free money. a lot of advice on how to play. jack: for somebody not so pathetic about inflation is ubs, you have an idea too.