tv Barrons Roundtable FOX Business January 11, 2020 10:00am-10:31am EST
public is financing their lifestyle. thank you for joining me i'll be back next week with more in-depth interviews on wall street at large. ♪ ♪ jack: welcome to barron's roundtable where the sharpest minds on wall street meet to get behind the headlines and prepare you for the week ahead. i'm jack otter. we begin with what we think
are the three most important things investors should be thinking about right now. defense stocks jumped on stocks with attention and iran how missile technology could affect your portfolio. this week tesla was the most valuable car company of all time. the outlook for the musk empire going forward. and big bang supporting next week and what they will tell us about the economy. on the barron's roundtable tonight my colleagues al and jack. jack i'll start with you. missiles flew, and then tension seemed to ease a little bit. that because the broader market to rally, but defense stocks jumping pulled back a little bit. word uci ron the u.s. and stocks going from here? >> its price in the short term with defense stocks but the long-term outlook for the stocks is still good. i don't think many investors thought i week ago that we would see tension eases quickly as they did. but the white house had a choice of whether to escalate or not, the president set iran
appears to be standing down which is good for all parties concerned. a very good thing for the world. the stock market get really like to hear that. just over a year ago with raytheon northrup, and the thing was people were worried about defense cuts. we focused on hypersonic missiles is the reason why we don't think that's gonna happen. and in the same we talk about under construction or many hypersonic missiles. why would he mention such as specific then? russia fielded these weapons last year. very briefly they've got the maneuverability of cruise missiles but many, many times faster. and they could render defense systems obsolete they could neutralize fleets. >> tomahawk is. [inaudible] it's basically a transformer type of weapon.
and there's the potential for weapons like that to spark a new arm spending race between the u.s., china, and russia. and so there have been increases, the stocks are up there sizable gains there up 40% all of them are beating the market. but they are still unbelievably price, and the earnings outlook is great for the market. jack: i want to go to al on tesla, it became the most valuable car company and all times. does it deserve that title words ago from here? >> that's a good question and that's a good thing with them and elon musk you have a very polarized groups. it became the most profitable, most valuable car company in america, ever. bigger than ford, gm by market value. market value is 86 billion. it topped forward back in 99. now the question is does it deserve it?
tesla makes a fraction of the cars comments newly profitable it trades for about 70 times earnings. jack: it's got earnings. >> traditional car guys look and say i just can't stomach the evaluation i don't get it. but tech investors see much more than a car company. they think it's can have its own a thomas sequence for the thickets can build a monetize the nationwide charging network someday. it's. >> are the bears capitulating general monitors is six times earnings. elon musk is kicking me in the rear end every day by proving himself. i've been wrong on tesla. >> i've invest exactly what's going on. tesla was a heavily shorted stock. they bet on price declines than good things happens. to build the plant under a year end starts delivering cars in china nabbing the shanghai facility. it made money in q3. and it gets the stock going,
and then short sellers all rush for the doors at a star's to feed on itself. >> gets less expensive. >> they literally have to buy the shares of the opposite of what they won the happen happens in stock was up. >> said that things are happening the stock is up under percent in three months. >> it's a play on batteries if they complete that technology to go beyond the economy. >> were talk but 80 times valuation going to banks now. so we had j.p. morgan kicking things off next week golden later in the week. the thing that's really interesting about the banker ring is the window into the consumer and a window into the business sense. and you see that in growth on both sides for its that's one thing people will be looking for for the q4 figures. but also it's about the 2020 outlook. and that's a people are going to be focused on. our consumer still going to be borrowing? are businesses going to be borrowing for their growth as
well? i think one interesting fact is loan growth. they are expecting it to moderate across all the big banks a bit. net interest income will increase a little bit, but margins are going to continue to be compressed a little. and that is because we have persistently low rates. >> a little over a year ago we had interest rates rising in the view was paid the banks are the starting line the ready to go, they're ready to race ahead in the market. and then there was a flop because rates are no longer rising as fed cuts rates. so how should investors think about that is the opportunity over where can they perform while we don't have this rising they said the lack of the rise really affects the community banks where their lending and deposits there that's their business. the bigger banks like the j.p. morgan's in the goldman sachs with their lower rates there's more activity. you see more business lending and use the other things going on to help their bottom line. jack: 's we've got a lot more about banks because we spoke
talk to your doctor, and call 844-234-2424. beyond the routine checkups. beyond the not-so-routine cases. comcast business is helping doctors provide care in whole new ways. all working with a new generation of technologies powered by our gig-speed network. because beyond technology... there is human ingenuity. every day, comcast business is helping businesses go beyond the expected. to do the extraordinary. take your business beyond. ♪ ♪ everything your trip needs, for everyone you love. expedia. for everyone you love. you may have gingivitis. when you brush, and the clock could be ticking towards bad breath, receding gums, and possibly... tooth loss.
help turn back the clock on gingivitis with parodontax. leave bleeding gums behind. parodontax. you get the freedom of what a 7-day return policy. this isn't some dealership test drive around the block. it's better. this is seven days to put your carvana car to the test and see if it fits your life. load it up with a week's worth of groceries. take the kiddos out for ice cream. check that it has enough wiggle room in your garage. you get the time to make sure you love it. and on the 6th day, we'll reach out and make sure everything's amazing. if so... excellent. if not, swap it out for another or return it for a refund. it's that simple. because at carvana, your car happiness is what makes us happy. were cooking with mom. she always said, "food is love," so when she moved in with us,
a new kitchen became part of our financial plan. ♪ i want to make the most of every meal we have together. ♪ at northwestern mutual, our version of financial planning helps you live your dreams today. find a northwestern mutual advisor at nm dot com. jack: brian moynihan just celebrated its tenth anniversary as ceo of bank of america what better way to mark the occasion but join us on barron's roundtable. here's my discussion with him. jack: brian tennant years ago your bank was pretty unpopular. incense then your stock is gone from $3.14 to like 35 or $36 and you have not only bounced back but gain market share from can editors. had to do that?
>> we did that by giving great service to great capabilities across all of our businesses. and really driving to the core business driving responsible growth. we got rid of a lot of stuff that was not that important. be committed that we are driven from the customer ends. we deliver great products and services and we keep investing heavily to do that. whether it's digital or physical plant or whatever. and that is come to for ration for a great platform and greatcoat capabilities and a great company. jack: i when asked about that investment. skeptics say you know what these guys are right for disruption. some start up is gonna command to move them out of the way. and yet you spent $10 billion a year on digital, and again you're growing there. so what's in store for the customer from the digital experience? >> we have gone from probably five or 6 million mobile banking customers to 29 million digital customers and 38, billion and a half
more digital transactions a quarter. the idea was just a drawback technology temptation across the whole pack platform. you can spend money and not spend it wisely. we spend money where you can bring great products and services to the customer. but also scale them across a base that few people have. jack: so what else differentiates bank of america from the other competitors? >> if you think about the three core sets of customers its people institutional investors and companies. if you could the people side, whether to general consumers are wealthy consumers it's what we can do for somebody. and if we can do it the way they wanted to be done. jack: investors are still assigning a low to bank of america and your competitors in general what your theory? >> our model is actually come up and tightens up to the highest in the industry, but just the whole industry is come up a bit especially recently. but it's just a lot about sustainability earnings. whenever they worry about the
economy and interest rates stocks for the banks are going to move up and down. $3trillion of consumer payments go through our franchise every year just on the consumer side. too that's a substantial part of the economy. of the economy slower facets can affect us. right now i feel really good on the consumer side. but the reality is you will see that. but our multiples are out because our performance and stress test it appears that those prove our performance will sustain through whatever crisis comes out is next. jack: you talk about your view of the economy tell me low bit more about that. tell me more about that. jack: for 19 over 18 it cost $3 trillion in payments, they grew 5.89% 17 to 18 nager about 8%. it's a slow down a little bit, but the growth rate before that was for 5%. so you are seeing a consumer that is employed, that is getting paid more and spending money. a lot of experiences, the christmas season was strong.
you will have different people having different outcomes. their products and capabilities and delivery system at the end of the day the overall spending was high so we feel good about the consumer side. well still get about the commercial side but when you go from a small business where we were the number one small business lender in the country in the portfolios going nicely. we go to the biggest in the country, all the stuff you talk about all day long on the shows, affects their view of what can happen. while meanwhile the economy keeps playing along as it needs it. jack: let me ask you internally you said you're raising all employees have minimum of $20 and are what's the thinking behind that? spain. >> we feel we have to have the best place for teammates to work we have to have the best talent to win this business. we are building a completely organic growth. we have one choice and that his teeth to continue to drive business into do that you have to the best talent. and that talent has to be the person coming at a high school or college all the way tand so e
sharing our success with our teammates. we earn good money and we've brought their wages from 15 to $20 of the last three years. it starts at $40000 with four full benefits, healthcare 4o1k. we think it's the right thing to do for the teammates. now most of our people learn far more than that, but our average compensation is 140 to $150,000. but the teammates there that is our minimum starting late even if it's a high school intern. kennedy: one cloud you said you might see on the horizon is concerned over leveraged loan. he said that salver $1 trillion what you thinking? >> right now i feel it's manageable me feel good about our position. we worry about the impact on the economy if these companies get in trouble and have to downside. right now they are going right or wrong for some particular business model on a given day. 70000 busines70000 bankruptcy and somebodies successful.
if the economy slowed down. jack: before i let you go you've been at the helm for ten years she just turned 60. are you enjoying this are going to keep going for a while? >> i have the best job in the world in terms of a great team that does great work and i get to admire every day. the great group of clients they do their work for. i like what i do, and i like to do as long as the board will have me. jack: brian moynihan thank you very much. ideas on what you can do right now to what you can do to improve your portfolio. but surprising 2020 predictions from this year's round table. the epson ecotank. no more buying cartridges. look at all this ink it comes with. big ink tanks. lots of ink. no more cartridges. incredible amount of ink. the epson ecotank. just fill and chill.
♪ do you recall, not long ago ♪ we would walk on the sidewalk ♪ ♪ all around the wind blows ♪ we would only hold on to let go ♪ ♪ blow a kiss into the sun ♪ we need someone to lean on ♪ blow a kiss into the sun ♪ we needed somebody to lean on ♪ ♪ ♪ ♪ all we need is someone to lean on ♪ i need all the breaks as athat i can get.or, at liberty butchemel... cut. liberty mu... line? cut. liberty mutual customizes your car insurance so you only pay for what you need. cut. liberty m... am i allowed to riff? what if i come out of the water? liberty biberty... cut. we'll dub it. liberty mutual customizes your car insurance so you only pay for what you need. only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪
today, john got dressed first date with sarah. john told his stitch fix stylist evan that tonight was a big deal. so his stylist did the hard work for him. browsing hundreds of styles and sizes to find the perfect fitting shirt and blazer. so that tonight john could feel totally himself. at stitch fix we don't just see your size or your style. we see you. let us find your perfect fit at stitchfix.com. this is the epson no more buying cartridges.. big ink tanks. lots of ink. print about... this many pages. the epson ecotank. just fill and chill. beyond the routine checkups. beyond the not-so-routine cases. comcast business is helping doctors provide care in whole new ways. all working with a new generation of technologies powered by our gig-speed network.
every year for decades we've convened barron's annual investment roundtable. as a group they are cautiously optimistic about the year ahead see little chance for recession but a little chance for strong market. rupal bhansali participated in that roundtable and joins us now. but jack i'm in a start with you. no one around that table saw another year of 30% gains but they didn't see recession either. see. >> this is the best roundtable i have attended and i'm not just saying that because she's sitting right here. the view, i would say -- i would describe as less bullish as they have been in the past but how can you not be after 30% spot gains and no earnings growth. we expect returns to be lower going forward. but generally we are pleased with the state of the economy because the economy is going quite well right now. there were some out of consensus views, there were some people who thought maybe the market wouldn't do as well
going forward but that group describes you but what's not to like about the stock market here. >> i think people keep be focusing on the economy and it's about the market the two can be different. i don't think they want to see an economic recession it's too strong for that. but i think we might see a small recession. earnings did not grow but the markets went up because of his multiple going upwards. so i think the baseline for we step out is a pretty bad one. and i think with all the good news that's in but the bad news does not. there's only one way the market goes and that's down. >> you said the earnings of the recession some of the older industries like energy and basic materials led the declines in earnings. does that mean you like tech or you don't like tech? >> we certainly have a bifurcated market for a long time but it's not so much about tech and non- tech. i think it's a broader issue
because the manufacturing sector is slowing down at large. and that's what i mean by the two speed economy that we referred to. the economic indicators are great. but when you cross them, consumer confidence is great but ceo confidence is at record lows. you look at loan growth, consumer credit growth is growing at 4%, and loans to the corporate sector there are 0%. so i think you need to look beneath the surface, beneath the headlines to understand that actually the economy is more vulnerable and fragile than the headlines suggest. jack: why is there so much optimism in one area and not in the other? >> i think economic activity is definitely going worldwide. i think the effect his ward off a tom time ago. i think using the last stages of an economy pack trying to power through but is held back by structural challenges. while the did not do very much
and outcomes, it created a lot of uncertainty. and that's what i made about ceo confidence. and able to investments you need to have longevity to your strategy and plan, and they simply don't have that now. and political uncertainty. >> wonders that manufacturing situation become a problem for the consumer? those are jobs, those are people contribute into the economy and we have not seen that affect the consumer side yet we seems. >> you are spot on what people underestimate as they look at the headlines and they see the details of the manufacturing is up and people think that means the very small portion of the economy we can ignore it. but you cannot. for the last 70 years is the most time-tested and to relationship that manufacturing group and growth have been at the exact same rate. so it seems like something -- one has to do with the other. so in manufacturing slowed down it has slowed down dramatically. this is what the feds talked
about lester in q1 and q2 of 19 was below 50 they immediately decided to accelerate their growth. >> i thought that was the market it you think it's manufacturing? >> the fed has said so themselves if you look at those reports they say that themselves. i'm not suggesting the market didn't have some impact but i'm saying with the real economic slowdown because when stocks fell in the manufacturing it seeps into the private sector and employment. so it's a leading indicator to absolute correct the consumer is not seen the pain yet. they are seen the gains because wage sensation is growing. jack: we need to have you back there is a lot more to talk about here up next round tables give their investment ideas for the coming week. stay right there. i'm your mother in law. and i like to question your every move. like this left turn. it's the next one. you always drive this slow? how did you make someone i love? that must be why you're always so late. i do not speed.
and that's saving me cash with drivewise. my son, he did say that you were the safe option. and that's the nicest thing you ever said to me. so get allstate. stop bossing. where good drivers save 40% for avoiding mayhem, like me. this is my son's favorite color, you should try it. [mayhem] you always drive like an old lady? [tina] you're an old lady. aleit's a master stroke ofe's heartachew. and redemption. the lexus nx. modern utility for modern obstacles. lease the 2020 nx 300 for $359 a month for 36 months.
jack: jack if you ask people what to guess with the best-performing stock in the past 20 years would be they would come up with some tech name, but there's another company that said monster gains. >> a monster beverage app to say very tough way. look, the names on these beverages are getting so frightening that the mobile bart nobody feels like a safe space paid here's some names java monster triple shop, full throttle, burn, and rain total body fuel and that comes to flavors of orange dreams sickle and con candy. [laughter] the growth on this stuff is bananas. the stock has hadow, so icheape. one analyst came away from that meeting saying time to buy the stocks in its the topic of the year.
>> talk about fueling athletes have got a huge football weekend coming up. allie got a stock point on that. wings stock is in chicken wings. the stock is a high growth stock, they benefit from a lot of current trends like home delivery services, they have an exclusive agreement with dora. lots of orders coming in on the app. the stock and keep working and you can eat the wings we watch football. thank you al. arik carlton huge run gains cane attributed to apple what you say? >> the there are 24 times expected earnings so take a little bit off the table where you go? if you still want some of that apple exposure look at the taiwan, apple is whether clients and another broader play would be the eye share. trish: nick course everybody has big apple exposure in
their index fund. to read more check out this week's edition of barron's.com. with got the full round table in there. and don't forget to follow us on twitter. that's all for us, see i hope ya lot of money to get a lot more. marie's next. space. maria: happy weekend everybody welcome to the program that analyzes the week that wasn't help position you for the week ahead. i am maria and thanks for joining us. coming up in just a few moments a pair of explosives this weekend. first bank of america's 2020 productions. chief investment officer chris is giving us his outlook and then later my one-on-one with auto giant carlos on the heel of his amazing escape to lebanon from japan. he was in house arrest he's going to tells all about it and what his plans are next. but first the december jobs report friday capped off a ca