tv Barrons Roundtable FOX Business May 7, 2022 11:30am-12:00pm EDT
to put a label on it and budget it and have this crazy person with a crazy eyes and her singing on top of it. what is more dangerous is that it is pervading this government and has to stop. spin got a rapid things are much indeed thanks to tammy bruce and >> "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. i am jack hough in for jack otter. is there more downside ahead for stocks? we will talk about what investors should do right now. if it is complain, i'm already on it.
a fresh look at electric vehicles but we begin as always with three things investors ought to be thinking about, it was a wild week on wall street, dramatic swings after jerome powell raised interest rates but the market is moving on more than the fed. amazon and other e-commerce stocks pummeled after disappointing earnings reports. is the pandemic online shopping boom over? energy prices on the rise again, which stocks are still worth buying. on "barron's roundtable," my colleagues, ben levinsohn, carlton - carleton english and andrew bary. imagine my luck having you here. i don't get it. wednesday, stocks soar because powell rules out a 75 basis point rate hike. i've been crunching the numbers which i'm pretty sure three,
50s gets you two, 75s. what were investors excited about wednesday and why did stocks dive more than they rose come thursday? >> on wednesday people got excited that we weren't going to get a series of 75 but a series of 50 and your math is right but the pace would have taken it a lot higher. it was a bit of an overreaction. powell left it open where things go next even if you get a couple of 50s in a row and on thursday some new economic data, productivity fell a lot. labor costs rose. friday we got payrolls that beat expectations and showed wages rising but there is more than the us. china put out a purchasing managers index that was atrocious and showed that the economy might be slowing. it would be glad for the economy. one thing to remember, the s&p 500 and the dow finished 0.2%
this week, the nasdaq got hit the hardest down 1.5% and that tells us this is about the fed and the impact it is having on tech stocks. jack: we are 3 quarters of the way through. how's it looking for earnings and does anyone care or is it all about rate hikes on the macro picture? >> they are looking at inflation the weight is hitting earnings went wandering of the fed contempt on inflation without blowing up the economy. if you look at stocks they are down more than earnings estimates. analysts are coming up with what they suggest they should be. if it is right the stock market can bounce but if there is a recession or slow down and the analysts are wrong, the stock
market could have more downside ahead. ben: i would like to report three murders, shopify, at see -- ets why and what went wrong with e-commerce? >> we are going to stores and spending on events, theater, travel. we are not spending so much money on things. when companies top expectations the outlook was not so good. jack: are any of these stock buys right now? carleton: you might look at amazon. the outlook for etsy, pulling back on discretion a spending when looking at the possibility of a recession. amazon is not just e-commerce
business but also media business at a web service business which gets people excited and is not recognized by the market. jack: natural gas, 14 year high, texas crude way over $100 a barrel. you say it is not too late to invest in energy. tell me about that. andrew: energy stocks are the best performers in the market, the companies are gushing cash and evaluations are reasonable considering the outlook. if we get a repeat of the inflationary 70s we could have a long-running energy. jack: what do you like? jack: andrew: ceo warren buffett, the restaurant energy giant in the world and shale, the cheapest of the supermajors of the world trading from 6 times earnings compared to 11 for chevron.
i highlight occidental petroleum, another buffett purchase trading 7 times earnings and coattara, energy production company that is gushing profits and paying big dividends to shareholders, dividend yields almost 8%. jack: all the shale chiefs where they got religion on capital discipline and the shareholders are loving it because free cash flow is great. consumers are not loving it because prices are high at the pump, how long will shale drill is get away with not increasing demand are keeping free cash flow going but keep gasoline high? andrew: there's enough pressure not to drill too much and difficult for them to drill if they want to. shortages of steel, concrete, not sure if they can ramp up production if they wanted to.
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farms, the stock market, the s&p is down but all indexes down double digit percentages this year. further to fall? >> i hate to be the bearer of bad news. it is the weekend but the answer is yes. there have been a lot of yellow flashing lights. valuation stocks got really expensive last year. 10 year ratio had 40. all the craziness with ipos, yield curve inverting, inflation going up and a war to boot but if you look at us stocks they are expensive particularly the era of high inflation or 8%. the send area if you look at multiples people are willing to pay for high inflation environment is about half of
where we are. doesn't mean it will crash, just means historically speaking stocks are really vulnerable, in a downtrend today which has been a dark scary place. jack: i like everything except half, dark, and scary. i am a buy-and-hold guy, i'm the worst market timer in america. am i doing something wrong, something more tactical i should be doing in this market? >> part of his education in history, you look back far enough bear markets are normal, stocks go down 50%, even in the great depression they went down 80%. that's a feature, not a bug. that's part of the intrigue to be a stock market investor and get the gains. we manage to buy-and-hold, etf we think is fantastic. the problem with buy-and-hold is the hold and for a lot of people is tough sitting through
the downdraft, hiding -- having the emotional fortitude because it all happens at the same time. usually buy-and-hold hits the fan when you have a recession going on and bonds help. this is one of the top 5 worst years ever for 60/40 and even 60/40 had a 60% drawdown. it can get worse, stocks and bonds are sometimes exact but not always, one of the best things you can add to a traditional buy-and-hold portfolio is an old strategy called trend following, but 90 to follow. jack: let me ask about one of these funds you have called cambria shareholder yield, dividend and buyback, focusing on beating the market, dividend stocks doing great. is it time to buy a dividend
fund like this? >> if you look at what the strategy is, a basic value buffet style strategy, big cash flows trying to buy them cheap and making sure companies and ceos behaved by returning the cash to shareholders and not dividends or buybacks. historically a fantastic way to invest. particularly in the last couple years as you have this value trade coming back into fashion. now you have a little more sobriety and the markets. that spread is the widest we've ever seen despite the big move in value stocks. jack: cambria value and momentum. what in the heck is value and
momentum? i thought momentum was the expensive stuff and value was the stuff that is cheaper that you are embarrassed to tell friends about? >> usually there is a you in and yang idea, momentum you are buying what is going up or has gone up. sometimes they overlap, sometimes they don't. my favorite investment is when you have achieved stock that is also going up. this strategy we wrote a piece called totally not crushing it, this strategy was terrible for five years and something changed, regime changed and all of a sudden value is coming back so you have cheap stocks going up, we were buying energy stocks. this fund has one additional feature. it will hedge with futures the total market exposure based on the broad market of it is
extensive or in a downtrend, this fund is 100% hedged against the s&p. people call that market neutral, trying to buy the good stuff in case you have further declines so right now we like the way it is positioned. jack: bill gates and elon musk squabbling over the microsoft founder's short position in tesla. what about gm, toyota and the other car stuff? other car stuff? that is next. you'll always remember buying your first car. and buying your starter home. or whatever this is. but the things that last a lifetime like happiness, love and confidence... you can't buy those.
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the cover story takes a fresh look at evs and if my eyes don't deceive me, barron's senior writer, you have been following this kerfuffle between bill gates and elon musk over gate's position on tesla stocks. here's what gaetz told the bbc last week, there's a difference between electric cars being adopted and companies becoming infinitely valuable. it sounds sensible yet sassy. tesla stocks, are you bill or elon? >> i am with bill, tesla is at $1 trillion, as much as the rest of the industry combined. the stock trades are 70 times earnings, 50 times next year's earnings, can't be price with perfection but there's a lot of
news discounted right now. jack: you are elon, i can tell. al: i said long time ago if tesla continues to oppose the earnings beat it has it will continue to rise. i we all feel that way. there's a lot of momentum and the company has been performing very well. in the first quarter tesla made more operating profit than 4-door gm. jack: the stories on cars that you wrote, you say gm looks cheap but what is going to stop it from staying cheap? andrew: right now the industry, investors are judging companies by their success and gm could be a winner in evs, one of the best platforms in the industry but it has been slow to roll out electric vehicles, delivered less than 500 in the first quarter but aiming to do
500,000 over the next two years, million in north america by 2,025. we will know more about its success later this year, 2,023, if it succeed stock could go a lot higher. jack: is mary barry doing a good job? andrew: she's not getting a lot of credit because gm is slow in delivering cars but ultimately gm could be a big winner here. jack: you wrote about toyota and you see downside there. why? al: they are less aggressive in our battery electric vehicles, they are taking multiple shots approach to the market. they want to do better electric vehicles, fuel cells, huge and hybrid electric, that is a transitory technology and the automakers that are most aggressive will win in the long run.
jack: don't you drive a hybrid? there's there is a tension between long-term strategies -- jack: he's accusing you of being a hybrid driver, keep it civil. ben: i am a proud owner of two hybrids. i drive a 2015 pre-aside bought used, very responsible of me. there's a difference between the stocks and what is best to buy now but if hybrids start to lose market share to full battery electrics like already happened in china, that trend is evident in china where the most electric vehicles and the largest car market in the world is in china the market will punish toyota stock, they will see that as a negative things and you get a gm like multiple on toyota but over the next few years hybrids make a lot of sense. i'm very fond of my previous.
jack: carleton, i don't have to ask what your next car is going to be, you are you awake devoting but if you are behind today and there were gasoline buick and battery-powered you in and both were equal which one would you buy? you like gasoline or battery? carleton: a lot of ifs but i'm going for gasoline. only reason is if you are looking for the resale value of the car later the move on evs is making the more accessible meaning prices would go down. if you are looking for something with low mileage i might go with gas but tough to say with gas prices where they are. jack: thank you all. roundtable members give their investment ideas for the coming week and andrew has the lowdown on warren buffett's buying. on warren buffett's buying. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are?
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jack: a lot of people watch was worn buffett is doing, i prefer watching you watching warren buffett, are there any stocks the rest of us should be buying? andrew: he woke up and started buying stocks in a big way. berkshire hathaway's biggest purchased was chevron, $20 billion and bought occidental petroleum, $6 billion deal. jack: what is your favorite? andrew: aux the could be the backs -- the best bet. it is minting money right now. jack: is it the whole thing? andrew: berkshire owns 50%. he might want to buy the whole thing.
buffett loves american companies. jack: what are you watching? carleton: i am watching the box office. there is this movie out, doctor strange in the multi-verse of madness the parting $120 million. box offices are back, people are spending money to go out and disney which hasn't faired so hot this year but also beat the market so far. jack: i love a good cineplex multi-verse. give me a stock i can fall in love with. >> i got craft hines, stock is up 20% this year but it is up half of 1% the past few months, it's earnings last month show it past the higher costs to consumers and trades 15 times earnings and 3.7% dividend looks good. jack: catch up speaks to me in a personal way.
great ideas. to read more check out this week's addition of barrons.com and follow us on twitter,@barrons online, see you next week on "barron's roundtable". roundtable". ♪♪ (announcer) the following is a paid presentation furnished by rare collectibles tv, llc. (announcer) the morgan silver dollar is without a doubt the most iconic coin in united states numismatics history. designed by united states mint assistant engraver george t. morgan, this silver dollar series was minted from 1878 to 1904 and then again for one year in 1921. the morgan dollar is nearly an ounce in weight and has a 90% silver content thereby containing over three quarters of an ounce of pure silver.
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