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tv   Barrons Roundtable  FOX Business  December 13, 2019 10:00pm-10:31pm EST

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welcome to barron's roundtable with the sharpest minds on wall street made to get behind the headlines and prepare you for the week ahead. i'm jack otter. we begin with that we think the three most important things
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investors should be thinking about right now. the u.s. and china reached a phase i agreement trade deal after united states mexico canada trade. but all means for your portfolio. with charles schwab announced last month his two that shook up the brokerage world and surprise wall street. what it will made for consumers, financial advisors, and brokers. and fedex is set to report earnings next week, what could we expect and what will it tells about retail stocks? on the barron's roundtable tonight my colleague sal beverly and jack. jack trade deals are breaking out all over the place, grabbed his on mexico and maybe some good deals on china? and the stock market is is what? >> i have the party streamers, the air horn, the rally to sound the horn but i never got to sound the horn because we got a limited china trade deal. we avoid another round of terrorist. the market didn't really do much. i think that means the good news is kind of pricing at this.on china trade, that's not so bad. i expect pretty good news.
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what would become bad news from here is a total breakdown in talks, and a chance of further terex collation. but as long as we see good faith discussions, and maybe some pumping into deep next year, i think that's supportive of the stock market investors are here. if we wouldn't have had a canada mexico deal that would've been real problems. that would've been a big problem. the new usmca looks like we have a deal between the president and the speaker and organized labor. and i think the biggest take away here for investors is we avoid having to tear down and remake supply chains that took 25 years to build under nafta. i think people talk about this substantially similar to nafta, you can quibble over how similar it is. i think it's modestly better. i think there are things here for certain players to like, u.s. autoworkers probably gonna see more contents of cars made here in the u.s.
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more trade is always good for trade and dairy farmers there's more access from canada and mexico there will be a freer hand to bring organized labor down there which could help our workers here. so one. >> one particular stock you like is for warner? >> will you s mca, i don't date a stockpicking case of what to buy and why. it's incrementally positive for borg warner who makes car components. organist in warm manufacturing here. i'll like them they like money on gas cars, hybrid car they have high staying power. for them and kansas city southern which is around. >> it's really the removal of any risk with respect to borg warner right? >> i think so, it would have been a negative had this work not come through. but now i think we're in the
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position to grow. >> steel company stocks are still down from the election when good things were gonna happen. how does that play into the car industry? >> steel is a tough business to check out. there's a world price first deal so what goes on here is dependent upon the supply around the world. i think usmca is quoted for steelworkers here in the u.s. but car manufacturers i think their cost could go up because they're more things built here. so you look at the ca and that's a slamdunk for buying gm. if you're gm anyhow, that's fine. but cars he got below bit. >> beverly a want to go with you, we've got a big story in barron's about the ameritrade deal. a lot of stuff jumps out at that. i would go straight to the.that there's a few weeks before announcing this deal, schwab cut conditions to zero. why is that interesting in this business deal? >> it made the deal a whole lot cheaper. what could've been a 30 billion-dollar deal goes more
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like 26 billion. because ameritrade suffered a lot more them when the industry basically decided it was not in a charge transaction fees. >> 's a lot of its revenues as commissions. >> or swab is much more revenue stream. >> is their competitive issue with your choices? >> there's still plenty of choices but it's amazing to me how often fidelity and vanguard get overlooked in these conversations. they are not publicly traded so from a stock investor's.of view they are kind of out of the mix. but schwab even after this deal, even after doubling the number of the accounts it has. is still smaller than both of those companies. jack: them with everything being free now, how do you distinguish between swab fidelity and any other cut their country? >> is an individual investor it's all about service. almost every thing is free these days. so you can expect prices to come down anymore. so it's really the little things like how you interact with the company prayed with the customer service like what's a technology
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like customer what's the website like? the advice that it gives through robo plans. and some things on the margin like sweep accounts and how much money you can make on your cash. before that is interesting how many damage the player. woody of spacing with fedex? >> is going to be high drama for a variety of reasons. but the stock is pretty beaten up. it's a very low expectation right now. so on balance things will probably work out okay because stock markets a funny thing. even bad news can be good news. if it's just not to disastrous news and they cut guidance big time last quarter and there are several things going on so people have been avoiding the sun for the last few months. jack: things are basically flat on the year when it's been pretty good for stocks but is down from two years ago. but the bigger picture the retail industry. the fedex is sometimes look at as a barometer for online real-time retail sales produce still do that? >> logistics is a lifer to the
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economy they always look at fedex this get a sense of what's going on as a global global macro as retail and commerce growth. but this quarter they walked away from the amazon business there and talk about e-commerce growth but it's going to be a subset of east commerce growth. and now we have to decide if we have a broad read on retail just from fedex earnings. kennedy: last year some people told me free two-day shipping is now table stakes during the holiday seasons and retail. you have to have that if you want to play. is that still the case? is there an increase in the arms race? is there free one-day shipping where you have to be to be a big retailer right now? >> i think two days is table stakes everyone is racing to one-day shipping to same-day shipping. amazon wants to deliver packages, walmart wants to deliver packages. to this race for the last mile and how you're gonna get step as fast as you can, in theory it should be good for fedex. everybody's can be ordering online for volume.
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the problem is this isn't free. can't just sound the drive faster in the work hardy has put capital in the ground. and with new entrants, essentially with people trying to deliver packages that used to be delivered by fedex or ups, everything sort of is up in the air. one analyst put it it's going to be an incredibly interesting quarter in incredibly nerve-racking. jack: i know i will be ordering online december 23 so i'm glad there's two-day shipping. coming up the panel debates the investing outlook for 2020. but first baron stock top stock picks for the next year andrew berry explains why these investments will outperform in the coming year. he'll give the names next.
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jack: andrew berry is a 28 year veteran of barron's and a pillar of our newsroom. he has just written his much and pissed dissipated stocks for the coming year. enjoins us now to share his pics and explain his thinking. thank you for stopping by the studio and earth that look before we to 2020 let's look back to 19. their neck and neck with the market but one that stands out is apple. it's a very close to stock up but you decided correctly that 19 was a good year for it and it's up 6%. why did you decide that? >> there is a lot going on with that especially the iphone sales. they've also been better accepted than we thought. especially in increase and their accessories. they have an aggressive buyback proposal that's helping really well. so be force that's gone really well so you've got ten more pics for this year. the markets fairly valued right now.
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>> it's up almost 30% with a total return of the s&p 500. so were a little bit more defensive and value-oriented as we approach 2020 with our pics. the. kennedy: the average pd of your stocks is 14 versus 17 looking at 2020. >> that's right and some around ten, some are below the market, actually most of them below the market. jack: so let's look at alphabet that's a little cheaper right now. >> alphabet is a technology conglomerate of businesses including local search engine plus businesses like youtube, maps, waves, and economist driving vehicle company. jack: and some think it could be broken up but i've talked to investors it's not really says that's a good idea from a corporate level. it was actually invents the value of the stop. >> i think there's talking about the breakup, especially if trump wins the election next year. but some of the parts of the
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companies are worth more than worth trading for for right now. i. jack: number two shar hathaway why is this the year for that? >> that had a real to reap poor year this year which is up about 9% which is 19% below which is one of the worst showings than i think it's a time to look for the stock. jack: and the new one is viacom cbs, cvs is not been doing wellin recent years after nice runoff. >> i think the word stock is doing worse in the company i think there are concerns about cutting and just what's gonna happen to the future of traditional tv. and that's weighing on the stock. but that creates a leading company in booktv and movie business in the streaming service as well. i think it's pretty well-managed company with an underappreciated ceo. jack: and may be your most contrarian pic's royal dutch shell energy market which is not popular with investments right now. >> that has been the worst of the market this year end last
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year. energy is very much out of favor in a particularly european like bp is out of favor. climate activists are targeting the companies over there, and investors are increasingly skittish about owning oil companies. so they now have six and half% yield in a very low price around 13. and that yield is safe? i think it's pretty safe consuming oil prices don't collapse edited that's pretty good bet. kennedy: and finally dell technology. even watching this company closely in fact the traffic stop vmware you had an interesting exchange. >> this is a convoluted means a year ago when they basically bought out the tracking stock for vmware which is a software company that they controlled. but dell is also a technology conglomerate hardware as well as a stake in theater which is actually worth more than dell's entire market value. so it's an intriguing situation that could have some catalyst in the coming year.
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jack: view pointed out that anomaly and a while ago tell us about your call from carl icahn after you wrote that. >> will qualify as a good idea, and he ended up buying the tracking stuff and also vmware. he actually reads barron's. jack: you're being very careful here but he made off a lot of money on that so thank you for pointing that out. thank you so much andrew to see the rest of your pics you can pick up a copy of barron's or go to barron' coming out of ideas on what you can do right now to improve your portfolio. but first, j.p. morgan's fund she for global strategist gets a seat at the table. out... this many pages. the epson ecotank.
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ahead to 2020. this week's barron's cover story examines the views of. >> market strategist for joining the ray town j.p. morgan chief global strategist speaks of influence strategies. there's a lot to talk about david, let's start with the big big picture. looking at the global economy, but particular in the u.s. if a depression is one and one of them best times is ten where do we stand right now. >> closer to ten prayed we have to look at levels and growth. the levels of this economy are excellent. between the unemployment and we don't expected to rise last year. we think that we will be able to get through 2020 with probably without a recession starting. this is the only decorator in american history where there has not been a recession. we have a stable economy, low unemployment, and slow growth. but their slow growth in the economy overall, with got more challenging returns from both
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equity growing forth. and that's a concern to some investors periods before you've been pretty vocal on an interesting.of growth. while the president has berating the feds for not lowering the rates more. you have been berating the feds for not raising it more for couple years now. >> it's amazing what you can learn about was sewing on the night states but also japan and europe. with all this monetary stimulus but you don't see is stimulating anything. and there's a reason for this. any medicine taken to an extreme text makes a poison. when you look at all of the mechanisms for which this is supposed affect the economy, the parlor affects temporal fate and the negative increases. i don't think it works overseas, but i don't think anything this year will really change the attitude of the u.s. economy at all. jack: and one thing is the fact that it's the fear that rates will be going up that will drive people to spend stuff. >> that's right simmons among relatively low but people think it's going up.
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i should borrow that money now. i should sell my house now. i should sell my house now i should take advantage of low rates. they say don't worry, each of breath for breakfast it'll be low forever more. so. jack: maybe we don't have enough drive powered or when this next recession hits to stimulate enough. but it sells i should not be staying up at night crying about it. >> i think with military and physical stimulus being applied to the u.s. economy over the years that i'm not too worried that this army is can run out of ammunition. but also we should have a faith in the american economy. every day 325 million americans, they get up they want to work more hours, they want to spend more hours, they want to get ahead. growth is the normal situation for an economy not stagnation. to the economy can recover from any weakness if you can reduce uncertainty and give businesses more clarity on the environment.
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>> given that there is less upside going forward is this a time when americans who have country bias should be looking more overseas? >> absolutely i think the united states must be close to a record, of stock market capitalization. and i don't think america having 56% of anything. usually seasoning that hides going to come down. but ask yourself this. how many americans have 44% of their equity exposure international? almost nobody. they are almost all below that. it does not make sense. i know people get scared of the rest the world, but the truth is, the rest of the world will grow in the long run just like the united states will. the rest of the world were grow faster. the emerging markets, americans should get over that fear an investor on the world. jack: will more question for you what can we do to use growth rate on this country? >> i think we should look at the population growth. the it's only two tenths of a%
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year of this decade ahead. we should actually look at immigration. we had 2 million people immigration going forward. then 1 million, now we could add about half of that growth i wish we could take immigration out of the political sphere. of course it has to be regulated. but this is a time when america actually needs immigrants and immigrants who work. the kind who would like to come to america. >> tells on the younger viewers to make babies, wouldn't that help? jack: the long run that will be good but i have a team of millennial's and the shock on their face and they actually realize what parenthood really is. [laughter] i think they tell stories to their friends that's kind of discouraging everybody. jack: on that score we have to leave right there. but we up next roundtable members give their investment ideas for the coming week. stay right there.
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kennedy: 's untrained and your call this week you talk about buying high and you're not dogma the cannabis industry. that's right i deliver a statistical wedgy to anyone who is ever use the phrase by low sell high. it's not helpful, it's a truism rapids around a node.inside something yogi berra wouldn't announce. and also the evidence stands against it. there's a vast body of research that says you're better off buying high and selling higher. because momentum investing works. at the stacks up a lot it's a good sign. with got a great interview with peter lynch next week, when things he said to me was trying to sell your winners and put more money into the stock that's going down. which is kinda classic value. it is like watering your weeds and cutting your flowers.
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>> but i don't think momentum investing and value investing are opposites. instead of buying shares that look cheap, and you're sure you're right in the world is wrong you are gonna wait till everyone is going to come round to review. you can search for stocks that look cheap and they're already looking like that we were in a screen like that maccallum. jack and barons traditionally want you to go into the coming week making your next move. so beverly one actionable idea. >> emerging markets i believe with david kelly for international exposure. i would focus on emerging markets. it's not really recovered but they are set to. in an easy way to play the indexes ing. i hope you're right. >> at there's a new king of the mountain, the largest market capital in the world is an old economy company saudi aramco almost $2 trillion, knocked all the tech giants off the mountain. i would rather stay with the tech giants like a google parent alphabet which and or barry writes about this week.
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before i think that's a great call to read more check out this week's and be sure to join us next week when we talk to legendary investors, the lynch. that's all for us. see you next week on barron's roundtable.


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