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tv   Barrons Roundtable  FOX Business  May 21, 2022 11:30am-12:00pm EDT

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around it will still leading the departments work intact. conspiracy theories basically what she said. will i be happy when government gets out of the business of censoring speech? absolutely. i think this announcement signifies that customer i'm not convinced. >> might thanks to vivek ramaswamy and jason riley. explain much for joiningng >> "barron's roundtable" sponsored by jpmorgan asset management. jack: welcome to "barron's roundtable" where we got behind the headlines and prepare for the week ahead. coming up, president biden says taming inflation is his top priority. jason furman on what they had been a station should be doing and whether the us is headed for recession. some high-profile ipos have
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fallen down to earth. our own andrew bary tells us which are deals and which i don'ts. what are the most important things investors ought to be thinking about right now? inflation and recession fears, the s&p barely avoided closing the bear market, retail stocks plunged after earnings reports revealed inflation was reducing profit margins. and why warren buffett bought billions of dollars of paramount stock instead of streaming giant netflix. been levisohn, carleton english and jack hough. it looks like the s&p finally in bear market territory and at the end of the day friday a furious bout of buying kept us out of our bear market, that means all clear? ben: the s&p barely avoided closing the market and it is down 18% from its all-time high, the way i look at it the
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nasdaq is down 25, 9%, the russell 2000 is down 20%. 40% of stocks in the nasdaq, 50% or more. whether we call this the bear market, the s&p didn't get to the 20% threshold seems immaterial because it deals like one. the bulk of the selling has shifted from things, high-priced stocks with no profits that deserve to be hit. now it has moved onto companies we thought were okay like target and walmart. and no place to hide. jack: the bond market finally starting to play that role. the 10 years above 3%. 3.8 and that could be concerning in terms of economic signal.
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ben: i'm glad to be a pool back. at the beginning of the year up to 3%, too fast, the market could use some calm, not worried about a recession yet. and it is correlated to gdp growth. earnings are not and sales have been okay but companies having a tough time making their margins. jack: in the coming weeks, what are you watching? ben: personal income spending data. it is going to take inflation and jobs are can retail
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spending, those need to cool down. jack: is it too harsh to call this a resale apocalypse? carleton: something like target lifting 1/4 of its market in a day. triggered selling into a bunch of retail names like dollar tree and dollar general which report next week. you are seeing the customer is not as healthy as they were. economic data, if you look at it upfront it seems okay, everything might be fine. they found while customers might appear to be spending more, it is more money, not buying as many things with it and that is what we have seen with target, walmart, lowe's and a number of other retailers. jack: despite the pain, there's
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nuance, and the home depot ceo said he doesn't see inflation stopping his customers spending. carleton: there are weird things going on. if you look at home depot, toward the professional project, more do-it-yourself, lowe's, home depot people are counting our backlog of projects but when you look at decker's and footlocker, going crazy over boots still and we are seeing weird nuances in the market, that is what we are paying attention to next week as we see these other retailers like macy's, costco, the dollar store, but especially dick's sporting-goods. i'm curious to see if they will continue the trend we saw the past week. jack: that will be fascinating. jack, i've got to pat you on the back, you wrote that the
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company then known as cvs looks attractive compared to netflix. warren buffett was reading your stuff. a bunch of money into paramount. jack: you are welcome for that. i think buffett is making a bet that traditional distribution of shows and movies on television and in theaters is more valuable than investors are giving credit for. that is something paramount has been arguing for years gunite - nice to take a new show for streaming and get a fan base, nice to take a new movie and put it in theaters for a 45 day window to recoup production costs. you can look paramount, television remains a cash cow. this company could easily generate $2 billion a year in cash, it will generate less than a billion because it is spending so much on streaming content but you see a possible path that that level buffeting a free cash flow yield, 10%,
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netflix totally different story, $8 billion in cash over the past six years. you can run this kind of business if you are willing to lose that kind of money. i know how jack hough feels about the fuller house remake but we need to see how this look like when we see money moving forward. jack: we are not just saying that because we are on tv. it is a cash cow. growing number of analysts worried the us is headed for a recession. jason furman will
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jack: inflation fears cause
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another sharp swing and the fed slows the economy without a recession but what can the biden administration do to help? joining me is chairman jason furman of the national council of economic advisers. jason, thanks for coming on. >> thanks for having me. jack: there's not a great track record of hiking rates without recession. investors fear we are headed that way. what's your take? >> there is a lot to be nervous about whether we are talking about global events, domestic events or high inflation. i am not that optimistic about how the fed can land the plane softly but over the next year the economy has a lot of strength so my near-term recession worries just aren't that much higher than usual. jack: how high will powell raise rates to tamp down inflation?
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>> growth is going to be stronger than the consensus, inflation is higher than the consensus right now. as result i think you will need to raise the fed funds rate to four and higher by the end of next year. jack: that will be a shot to the market, good growth could be a good sign. that is the fed which is the main battleground in this front against inflation. what can the white house do? what would you tell president biden to do? >> president biden is not a great place but he doesn't have a lot of tools to bring that inflation down. done some of the right things in terms of improving supply chains, shipping, trucking and the like, from the strategic petroleum reserve was a good idea too. one of the biggest unturned stones is to lift the trump
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china tariffs. jack: the reason for putting those in place was to protect us manufacturers and steelmakers, would it hurt the domestic economy? >> we are at a time of record job openings when any single good you can make there is someone to buy. i can't think of a better time on the employment side or more necessary time for consumers. jack: another step you advocated is to end the pazienza student loan payments. >> it is injecting more money to the economy, enabling people to spend more money but we can't make more stuff, the result is prices go up. we could easily be adding a quarter to half a point to the inflation rate.
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the unemployment rate for college educated workers is less than 3%, should go back to paying that interest. jack: hard to argue with that. let's talk about the democrat point corporate greed is pushing inflation higher, the results from target and walmart suggest that is not true. what do you think? >> i think it is not true. corporations are trying to maximize profits meaning they can charge more or they can't charge more, they don't get to choose when charging more. corporations are paying more in wages, paying more for their input. in some ways the greed hypothesis seems strikingly refuted by what is happening. jack: i will toss you another political hot potato. who's to blame for higher gas prices? is it biden?
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is it prudent? is it oil companies that have capital discipline they didn't have before? >> a lot of the inflation is homegrown but on top of that homegrown inflation is high oil prices due to president putin's invasion of ukraine, that raised oil prices globally, relatively little president biden can do about that, release from the strategic petroleum reserve, that is a good idea but gasoline price is largely president putin's price. jack: this trip janet yellen took to poland to get that country on board with a 15% minimum tax. as an economist what is your view of that? >> i'm supportive of the minimum tax, something the whole world agreed to that will put companies on a more competitive footing because everyone is doing it. it will stop a race to the bottom and enable us to cut
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taxes. it is a very efficient way to tax this in a way that won't hurt our company. jack: thank you for your insights. really appreciate it. shares of highflying ipos have fallen back to earth. i they goodbyes now? i they goodbyes now? companies have a look next. you know liberty mutual customizes your car insurance, so you only pay for what you need? like how i customized this scarf? check out this backpack i made for marco. only pay for what you need. ♪liberty. liberty. liberty. liberty.♪ lemons. lemons. lemons. the world is so full of lemons. when you become an expedia member, you can instantly start saving on your travels. what's it like having xfinity internet? so you can go and see all those lemons, for less.
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jack: 2,020 one was a banner year for ipos. a lot of them are below their initial price. should investors go bargain hunting? andrew andrew bary answers that question. 2021 was a great year but this year ipos have given it all back and more.
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andrew: this is the worst year for ipo performance in more than a decade. many ipos that went public are down 80% or more from their highs. nothing has been immune. jack: any companies coming to market in the coming months or is the ipo window just shot? andrew: there's nothing on the calendar, ipo buying is down 90% so far this year. the only company that went public is bausch & lomb, the maker of contact lenses. jack: some of those, based on free money never should have gone public at all or if they did at a lower price, but you say some babies were thrown out with the bathwater. how should investors be analyzing those broken down stocks to decide what is good and what is not? andrew: companies with solid growth projects and good management. ben: you like parker, but robin hood? what are you thinking? andrew: robin hood is a stock a
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lot of people like to hate. critics say it is inexperienced to investigate the market, berkshire hathaway price chairman charlie munger is the biggest critic who says the plunge amounts to divine retribution for his activities but the stock around $10 looks cheap, $7 a share in cash on the balance sheet, not paying much for the franchise at all, company seeking to move the prophet, could be an acquisition candidate. ben: what you like about that company? andrew: it is stylish, it lifted $95 a pair a pair and basically taking on the optician business which sells glasses for double the price so essentially a disruptor with very good growth prospects ahead of it, the stock is half of its ipo price.
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all birds is known for will be sneakers that were popular in silicon valley. the knock against it is it is a fad company but it has a strong following among eco-conscious consumers and is down 90% with $2 a share in cash on the balance sheet. carleton: if people are nervous about picking and choosing ipos is there a way to get into this space and how long do holdings last? do you see a company mature past its ipo time? andrew: a broadway to play through the market as the renaissance ipo ets ticker, it holds one hundred companies that have gone public in the past three years so you get a little seasoning added includes company like zoom video, snowflake, uber, and air b and b. stock is down 50% so far this year so it is very depressed right now. jack: i'm wearing parker's right now, they don't make my
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face look ragged. passing ipos to the broader market. give me some bargains, what should investors be looking at? andrew: i look at big banks, jpmorgan hit a 52-week low today, yielding 3% right now. goldman sachs down sharply this year creating close to book value, very profitable, book value could provide support. i highlight homebuilders right now discounting a collapse in the housing market, down sharply this year. i don't think housing market is close to a collapse. toll brothers and lennar trade for five times earnings around book value. i think they bottomed. epic jack: the old song is by goldman at book. you came on a few weeks ago talking about energy, far and away the best performing sector in the s&p, the only one in the green. are you still keen on energy stocks?
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andrew: they look good, gas stocks, international oil like shell only trading six times earnings with 3% dividend yield. energy prices have held up well despite recession fears. that could tell you that energy will do well. jack: roundtable members invest in the coming week and the summer blockbuster that jack summer blockbuster that jack is it possible the only thought that comes to mind is... ♪ finally? this is financial security. and lincoln financial solutions will help you get there. as you plan, protect and retire. ♪
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clearchoice dental implants solved her dental issues. [ kimberly ] i feel so much better. i feel energized to go outside and play with my daughter. i can ate anything. like, i don't have to worry. clearchoice changed my life. jack: earlier in the show you talked about terror mount. a big season of blockbuster
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movies held because of covid. which of the blockbusters are you most excited about? jack: i think i will give you five words. she hulk ethernet he at-large. everyone is talking about top gun, the minyan, the movies in the movie theater. we are talking about a lady with a demanding career. you think it is easy be in the gamma power green strong woman and a man's world? we can find out in august on disney plus, the trailer came out this past week, 78 million views in 24 hours. she hulk smashed, jack. jack: disney more broadly, theme parks are coming back, marvel keeps producing blockbusters. jack: stock got pounded down 40% in year. cash flow being depressed by content spending for streaming but i think it will bounce back to record levels in three years. look at warner bros. discovery over their free cash
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flow, strong and getting stronger. jack: it is that time we do the barron tradition, and he was inspired. >> live sports is hot right now, professional wrestling follows the line of sport, contracts coming up could set some records for them and stocks held up well in the recent selloff. but interesting. jack: and that will give them a lot of power over the networks when it's time to renegotiate. what do you have for us? carleton: i'm inspired by she hulk but i'm looking at cybersecurity after palo alto networks had a boost in friday's training after it raised in guidance and elevated security awareness following increased cyber attacks from russia. the etf is down 20% due to chip shortages and broader techs
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fell off but the industry is dealing more with supply issues, not demand issues and cybersecurity is not an area -- jack: i think they have pricing power. great ideas, thanks. to read more check out this week's addition of barron.com and follow us at barron online and that is all for us, see you and that is all for us, see you (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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