tv Barrons Roundtable FOX Business March 6, 2021 11:30am-12:00pm EST
telling us it is no laughing matter, that is it for us as we, for the latest updates follow me on twitter, facebook, and instagram i'll be back next week with mark in-depth interviews with the wall street journal at large. thank you f us. ♪ >> "barron's roundtable" sponsored by invesco q queue queue. ♪. jack: look at the "barron's roundtable" where we get behind the headlines that prepare you for the week ahead i'm jack otter he predicted the.com bubble, the housing bubble now he's morning were in a bubble again legendary investor jeremy grantham will be here to tell us why, later it releases the 100 most influential women in finance and will tell you who made the list. as we begin the three most important things investor should be thinking about right now.
tech stocks got clobbered by rising bond yields jerome powell not rushing in to rescue stock investors, mortgage rates top 3% since july rising rates dampen housing demand, yes or no ahrens has investment ideas for the sector and one year ago this week the culminating crisis with the u.s. triggering widespread shutdown, what is the outlook for stay home stocks in which sectors will benefit from the real putting on the barron roundtable ben levisohn, karl, and jack how, in the markets we see this on phenomenon where good news is bad news or vice versa and will get lousy economic numbers that they figured the federal russian in support and stocks rally, on friday morning we had a strong jobs report in the market did not know what to do it was good news good news, bad news, what, what's going on there? >> you like the jobs report was fantastic 370,000 new jobs far more than 200,000 expected in the market at first went down it
was typical good news is bad news, then went up and then went down again and finally at the end of the day it went up and really a microcosm of everything mark has been struggling with which are we going to focus on higher yields or faster growth. on thursday jerome powell spoke in the market was hoping he would say something to limit the rise in the yelled, gave them nothing in the market freaked out with the nasdaq in particular dropping more than anything else that friday once the market decided to focus on growth you sell they're down lead the way higher with stocks like chevron and american express to wean really well that's what were going to see is a push pull between growth and yield fears. jack: what we do know is accelerating growth, rising rates of the long and but for the moment power keeping them as low as they can get the short end, what is the trade there? >> i think were going to see a sideways stock market for now if
the market continues to struggle with the two forces you will have days that are really good and you will have days that are pretty bad and you're gonna end up where we started, one reason you have a number of top strategist who are keeping their calls on the s&p 500 around 3900 which is dipped a sideways market for the year and people do have to worry are the ones the bond investors the price goes in the opposite direction of yields when yields go up price goes down and were seen investment grade bonds get hit high-yield bonds are flat on the year but if you're 60 - 40 investor this is not a great time. jack: speaking a bond yield that has an interesting effect on the bond market usually the conventional wisdom is rising mortgage rates make it a bad time to buy a house in the other hand maybe you should get in there before mortgage rates you hire. >> the 30 year fixed rate crossed over 3% for the first time since july we all know
someone over the past couple of months locked into and 58% were jealous of that person but what's going to happen with prices, the latest reading we have is 10% year-over-year because that's a big catch a couple of months steel, now days you have to call it the s&p core logic case shiller national home price nsa index it's almost saudi ability, but it comes from december and that's before the latest ramp-up and rates started happening we won't know the effect of house prices until we get fresh numbers that we need it could be that the higher rates people say i don't want to pay more on my financing they can do the opposite and say i better get in before it's too rates before rates run higher or they can say if rates are rising i'm a 60 - 40 investor the 40 stinks i'm worried about the 62 i'm not financially into crypto
currency all put in the house because i might not make great money i can live in it, i think people say 3% is higher but it's not that high, the housing market will stay strong but not 10% year-over-year strong moving ahead. >> will click those people might put money into the house once they've got it. >> the rates and low stock has been great over the past year but is still cheap 16 times earning catching up with home depot improving e-commerce remodeling stores one analyst spoke with 20% more upside. >> it's been a year since any of a solid chiller in person we all remember what happened when everything went into lockdown, what happened in the market since in? >> the companies we were skeptical you're talking about the beginning of 2020 as in video communication pellets on had an incredible run of last
year, that's zoom the way people are committing hitting and pellets on i know been turned into a fanatic, how much more room is there for them and what is an extra going to be. jack: i know this is a excuse to talk about your favorite trade financials, you're going to santa goodbye. >> you know me way too well, this time last year we were wondering if banks would survive the crisis expecting wave losses to becoming banks or 30% from where we were a year ago and that's even without the economy being fully reopened. jack: the bank investors have been dying for the day when the yield curve stevens, he predicted the.com bubble in 2000, the housing bubble in 2007, jeremy grantham says were in that middle of an ethic bubble. he's here to explain that next. ♪
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formula recommended by the nei to help reduce the risk of moderate to advanced amd progression. i have amd. it is my vision so my plan includes preservision. jack: investors have predicted market bubbles, he called the.com bubble in 2000 and the housing bubble in 2009 now he's warning were an ethic bubble set to burst, the reason we caught up with jeremy the cofounder of gmo why he's convinced another bracketing is close. jack: germany you recently published a sobering memo warning of a stock bubble but before i ask you i want to tell viewers why take your warning fiercely, in 2002 i convened an investor roundtable and you said the market would be lower seven years hence we were coming out of the tech bubble which he warned about but this prediction sounded crazy sure enough seven
years later the market was tanking as the housing bubble burst in on march 9, 2009 you published a memo called investing when terrified announcing it was time to buy stock that turned out to be the exact day the market bottomed, without please explain why now you see a bubble. >> i have to admit the timing of that call was extremely lucky and the calling of bubbles is never easy and each bubble is a little bit different, you have to go for the third the spirit of the expo sites can be divided into three pieces, have to be overpriced it is magnificently overpriced is about as expensive at 2000 tech bubble which is the most expensive in american history, you have to have an acceleration of stock price to be fortunate in your timing, every bubble has ended with a
spectacular blowoff and we have passed that test also very easily, were up 110% and the russell 2000 up over 100% in the last year, this is about three times the normal rate which is what you need to see in the third and final component the most important of all is crazy behavior you need to see demonstrations of the individuals are completely losing their head and getting carried away on a wave of euphoria where the stocks go up not for the fundamentals but because the prices rising and we have seen, i believe even since i wrote my letter in early january we have seen magnificent examples of the gamestop variety of tesla et cetera. roaring through the roof and bitcoin of course. jack: are you referring to it as hysterically speculative investor behavior. >> those people who are more bullish than you are which is
not to say much i guess would point to the tech bubble when the prices were crazy but the earnings were nonexistent, today maybe the prices are crazy but at least the earnings are there and the argument were about to come out of this and they will increase as pent-up demand is spent, you're not buying that? >> is not really accurate, the measure of value you can find on the database which is excellent is to normalize for earnings and then to take the tenure moving pe shiller pe and if you do that you find slightly higher price in 2000, the 2000 tech bubble was outlier of all time way more expensive than 1929 if you don't adjust for earnings were not quite as expensive as 2000. and the reason you should adjust for earnings they have been
abnormally high in the recent window of time because they have been so encouraged by fed behavior, fed behavior is going to run out of steam we had a 16% long bond in 1982 and it's come down 16 to 12, 8 - 4, 4 - 4.5, now one and a half and that game is being played out and from now on we have some headwind from rising long rates. jack: that montiel when is certainly gone, what should investors do you go to cash in the areas of the market that are more interesting back in the tech bubble you recommended going to small caps and that was good advice. jack: the tech bubble was full of up sexual opportunities for places to hide, this is in as good but is not as bad as the housing bubble overweight where there was almost nowhere to
hide, this time you have the most overpriced bond market history you have overpriced housing market and magnificent equity market in the u.s. but it is not that bad outside of the u.s., they have lower rates by the way so the low rate comparison justified the stock market does not make any sense they have lower rates and much lower pe and so much for the argument that outside of the u.s. stocks are much cheaper and reasonable in emerging markets, emerging markets are about as cheap relative to u.s. as the ever get they have been this cheaper couple of times before to which level they did very well, the other place to semi-hide is in the low growth or value end of the market that had a brutal ten or 11 year and the ratio of the logo to the high-growth is as extreme as it
has ever been many would argue the most extreme point we have ever seen if you look at the intersection of the two ideas and that is to say the low growth of value stock i'm sure you make a decent return on a buy-and-hold basis ten or 20 years you would do pretty well, i'm pretty confident that you have abysmal year in the u.s. growth stocks and in the s&p 500 and in the bond market, your portfolio ask about as ugly on a ten year basis as i have ever seen in my career. jack: psychologically it'll be easier on investors if they do own emerging markets and see greener pastures. thank you so much for your insight, one of the most influential women on finance and join the panel on market gender equality and more.
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jack: this week's barron's revealed the top 100 most influential women in finance which includes power players jane frazier who took a verse eight entered citigroup and abigail johnson and fidelity and tia respectively, not surprisingly the list includes janet yellen treasury secretary into current fed board members, joining the roundtables another woman on this list global research at j.p. morgan joyce chang, congratulations, thank you for coming on the show even as barron's recognizing the increasing women in your industry you're about to release a port on the polar covid-19 has taken on female workers around the globe, can you share some of
findings for us. >> this is historic in nature the toll that covid has taken on women's employment that's because so many worked in that service sector and bear the responsibility for child care. we have seen female labor force participation fall to a 33 year low. we have seen 2.3 million women have left the labor force compared to about 1.8 million men. it is historic in nature after gains that have been occurring before the pandemic. jack: that is a staggering set of statistics one thing that caught my eye we've seen a decline in u.s., and europe the labor force participation for women is rising, what is going on there? >> europe did not get hit with a unemployment rate that the u.s. was hit with at the start of the pandemic that's because there's so many subsidies that are in
place and they also have much more flexibility in the labor force in government mandates as well that provide childcare and for the u.s. we sell for the service sector, women were disproportionately hit and if you take a look at the world big numbers and high income country women are about 90% of the services job, it was disproportionate, europe fared better, the u.s. went through historic decline in emerging markets had difficulty during this period in real challenges that are gonna leave lasting scarring. >> i was wondering your take on the broader market looking at saying we might be in a bubble, are you seeing that to? >> i think you can see short-term turbulence but we have no change in a long-term view which is supported by the growth and fiscal stimulus, second-quarter growth nine and half percent, 8.3% in the third
quarter of the year there is possibly a bubble some more disruptive like solar energy, wind, electrical vehicle that is 2% of the market electrical vehicle we are still very comfortable with the rotation into value and when you look at the fiscal stimulus, the fiscal stimulus support to earning we had 1.9 trillion going through were sitting 1.7 trillion going through and every trillion ads e that we think is left, small bubbles you can see short-term turbulence but no change in a long-term view which is the growth recovery and the stimulus. jack: let me follow up on the all the glimmer stocks have been clobbered all of the stocks you used to be embarrassed to tell your friends that you own the coming around, that's a rotation in the value and maybe because rates are rising, you see that
continuing are there any pockets of growth stocks and staying away from the solar, are there any growth stocks that are starting to look cheaper or do they have farther to fall? >> we believe the value of rotation is in play we like financials, we like the energy sector and we've taken our oil up to $74 by the end of the year, you are right we have some of the sectors that have lagged or where we see the best value right now, i think you're going to seek consumer services does very well leisure, gaming, hotel, off-line but overall there is a growth stock in the story that is recorded by the recovery this is the strongest recovery we will see since the 1980s. jack: thanks for ending on an optimistic note, things were coming on the show we appreciated. jack: roundtable members get
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>> jack i'm in the market for manual shift if you're familiar with that is you are a modern fellow in this week even think about electric vehicles. >> my high school car was a volkswagen rabbit with the diesel engine that got 50 miles per hour gallon but left a trail of soot a mixed bag environment for toboggan said by 2030 it seen 70% of the cars will be electric vehicles it's all in on electric, ubs did it tear down of the its three in the basic take away they feel that legacy
carmakers can compete well with electric and they say the wagon will have false parity by 2025 and they say tesla has the edge on battery cost and the battleground of the future will be software my 1980 rabbit had no software i think of except for simon and garfunkel's b1 let's go to axonal ideas as we do every week i will start with you carlton. >> many companies with our on our local paycheck, and whether to the pit of it pretty well stock has not done much but they're looking for extra growth in 2021 but it still has a lot to go. jack: we love that symbol that is for sure. jack: what is your best idea. >> tech got cut the alphabet did not that strength says a lot with advertising it could be with a look.
jack: definitely, thank you ben, carlton and jack sorry about your golf and car heaven those are great ideas, to read mark check out this edition of barron's.com and don't forget to follow us on twitter, that is it follow us on twitter, that is it for us we will see you (announcer) the following is a paid presentation brought to you by rare collectibles tv. (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. the first morgan dollar was struck at the philadelphia mint on march 11th at 3:17 pm in the year of 1878.
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