tv Barrons Roundtable FOX Business March 14, 2021 11:30am-12:00pm EDT
run america have invited back the prince and princess to help them impose their own views on the rest of the country. well that's it for this week on the "wall street journal" at large, thank you very much forg. ♪ ♪ ♪ ♪ jack: welcome to "barron's roundtable" where we get behind the headlines and prepare grow forget week ahead. i'm jack otter. one week ago the covid crisis took hold and jobs and the economy start to rebound. we'll look at what's next for the market and how to invest. we bin, as always, with what we think are the most important things investors should be thinking about right now. stocks rallied this week lifting the dow to record levels. investors are looking ahead to a federal reserve meeting next week for any change in policy. fiscal stimulus, the reopening of the economy and the
possibility of inflation are pushing bond yields higher. how fixed income investors should respond. and pharmaceutical companies mobilized quickly to tackle the pandemic, but most u.s. drug stocks have badly lagged the market over the past year. now they could be one of the best pockets of value. on the round table, ben levisohn, carlton english and beverly goodman. so, ben, it looked like yet another great week in the market, but under the surface there was a lot of volatility going on. can you explain? >> it was a fantastic week. the dow finished up 4% to a record high, the s&p was at a record high, and the nasdaq even managed to rise more than 3%. the problem is it was just a wild trading week. the nasdaq started off by actually entering a correction with a 2% drop on monday. even though it bounced back, it's still not showing any signs that it really wants to go higher. just peeking at a chart suggests there might actually be more downside there, and even the s&p 500 -- which also closed at a record high -- looks like it's more likely to go sideways than
make a big push right now. jack: yeah. stocks like tesla, i think it's down about 35% at its low. for elon musk, that's like the gdp of lithuania he lost from his savings account. what is causing all this volatility? >> it's all about bond yields. early this week the 10-year looked like it was going to settle down. the ecb in its monetary policy meeting had made some noise about not wanting yields to go higher, and it said it was going to accelerate its purchases of it own bonds. but by the end of this week, bond yields were rising again. now everyone is looking to the fed which meets next week for its response, if any. the fed might not want to do anything. it's probably going to raise its growth forecast, and in some ways rising bond yields help because it's going to make some of those speculative stocks less appealing to investors. and tech investors would love for the fed to come in, but i
just don't think they'll get it. jack: beverly, given that, what is pushing these bond yields higher? >> well, things are going pretty well. we're looking at a pretty robust opening of the economy. but especially that $1.9 trillion fiscal stimulus package that was just signed into law on thursday, people could start getting their $1400 checks this weekend. there's a lot of, a lot of money and a lot of joy in the economy right now. jack: so that all sounds happy but, of course, if you own a bond as yields are going up, the value of that now lower yielding bond dose down. so what should bond investors do? >> yeah. all this spending can lead to inflation which limits the appeal of future income whether that's tesla's earnings or the bonds in your portfolio. so in general whenever rates are rising, you want to stick with shorter-term bonds, 3-5 years, and if you're looking for income, there are some areas of opportunity right now. preferred stock is one
interesting area getting historically high yields, around 5%. preferred are a hybrid. their income is a bit safer than, like, the dividend on a common stock. but it's not guaranteed the way bond income is typically thought to be. jack: and barron's also says emerging markets and high yield are a place to put a little bit of your bond portfolio? >> two to other good areas, yeah. high yield bonds are yielding about 4%, you can do a little bit better without too much risk. emerging bonds, room for more price appreciation. jack: if we think the economy's going to do well but bonds will get hurt with high yield, at least you don't have to worry about credit because fewer companies are going bankrupt. [laughter] let's pivot, carlton, to drug stocks. really interesting because everyone thinks vaccine, vaccine, vaccine. that's not really where they make most of their money. might be a good time to take a look at drug stocks. >> you described phenomenon
perfectly. what's been interesting is everyone's excited about what we're going to be doing after we get vaccinated, going out and all that stuff, but the vaccines themselves haven't really been a describe for the pharma stocks. they're lagging the s&p 500, trading roughly 13 times earnings while the s&p is trading around 21 times earnings. it is a possibility for investors to get in now. you know, a lot of focus rightly has been on covid for the last year, but we also have to remember that a lot of these big pharma names, bristol meyers, eli lillys, they have a huge price line of drugs for alzheimer's, for cancer, for diabetes. so there is another reason to take a look at these stocks. jack any particular names that barron's likingses right now? >> not everyone is going to be watching the pipeline so much, you can get in on some of the etfs like the health care spider etf which looks at the whole health care sector or the vesters pharmaceutical etf, a lot of exposure to the big
pharma names without having to pick any one. it's also worth noting this is a sector that has at least a 3% yield growth, the s&p 500 yields around 1.5 president. jack: and also with the etfs you don't have to worry so much about, you i don't know, if youn a single stock and one of the drugs fails at a trial the, that can be ugly. >> exactly. jack: thanks very much, carlton. coming up, businesses around the world scrambled to adapt to covid reductions. the ceo of autodesk joins me on how his company's software and how his company's software and services are continuing they said it couldn't be done... but you managed to pack a record 1.1 trillion transistors into this chip. whoo! yeah! oh, hi.
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look at how they're doing business. technology company autodesk develops software and services to help companies grow and change with the times, joining me now, the ceo, andrew aganost. before we get started, can you briefly just explain what it is you do? >> yeah. you know, autodesk makes software for people that make things. think about architecture, engineers, designers, construction professionals. we make software for those people, and our job is to use the power of the cloud, power of almost infinite capacity we have in the cloud and artificial intelligence to help those people make better, more sustainable, more profitable and more reliable solutions to the things they design and make. jack: so it was saturday was probably the last day that some viewers set foot in their office. i realize that while a year felt like a long time, you probably
haven't redesigned all of corporate america yet. but i imagine you're thinking about what the office of the future looks like now that we've all got pandemics on the mind. how is autodesk helping offices reshuffle things? >> yeah. we're all thinking about the office of the future and how people come into offices and how they work, but more importantly it's how people work that matters. one of the things the pandemic taught our customers is that if they weren't digital first, they were not resilient and responsive to disruptions this their processes. so one of the things worth changing and preparing for the customers that we work with is there's going to be fewer people in the office all the time k and their work forces are going to be distributed almost permanently now. jack: and that makes you a different tech company than others. zoom was suddenly needed by everybody during the pandemic. i assume some of the construction people are just coming back online. you know, your subscription service which is what wall street los, but i assume --
loves, but i assume your building slowed a little bit. are they going to accelerate as we reopen? >> interestingly enough, while buildings and construction did slow down, our in-office solutions which are what's used at the up-front part of the construction process, that actually accelerated during the year. we actually got more people collaborating with 3-d models online and virtually than we had in the previous years. so what we're seeing is a steady rise in activity with the rest of the process. so we absolutely expect an acceleration of construction activity as we head into the second half of this year. but it was interesting to see how people retooled and started buying different parts of our digital portfolio to enable their work to continue even while the construction site, the activity there slowed down a bit. jack: i'm going to take that as a good sign for the reopening of the economy. but i want to ask you even with stronger growth, you're in the automation business. a lot of people are concerned that, to be blunt, robots are taking humans' jobs.
is that something they should be worried about? >> well, you know, the short answer to that question, jack, is robots are going to take some jobs. but the long answer is a little bit more complicated. see, what's happening is that robots and machines in general are augmenting human capability, and with any one of these transformations what you see is some jobs go away, but new types of jobs are created. you know, let's take, for example, the telecommunications boom over the last century, for example. it represents kind of where we're going. highly automated, highly networked tools. and, sure, we don't have operates putting plugs into pinboards anymore, but we have a whole ecosystem of people that maintain highly automated telecommunications infrastructure, that maintain the infrastructure that carries the signals, that builds new infrastructure to carry those signals, 2g, 3g, 4g, 5g, and we have whole new types of jobs. in many cases, higher paying
jobs that support that highly networked, highly automated environment. that's what we're going to see in this new world. jack: clearly, the message for people is whether you like it or not, you do have to get retooled and skills. we're out of time, but you made a reference to the planet. i know sustainability is important for you, you were number four on barron's list of the top sustainable companies. give us one example of a thing you are doing that is sustainable but also helps your bottom line. >> well, you know, one thing we're doing is we, ten years ago we set a target to reduce our carbon emissions by 43%, and we did it, and this year we're going to be net zero, and that's not only good for the planet, it's good for our bottom line because how did we get there? we changed behavior. we put a price on carbon internally in the company, and that changed people's behaviors in ways that allowed them to get things done in, frankly, economically better ways while reducing the carbon footprint of the company.
that's just one example of where we're trying to lead by example and lead our customers. jack: that's really interesting. andrew, thank you so much. appreciate you coming on. >> pleasure. jack: coming up, after a year of lockdowns and roller coasters in the market, what's next for the economy and how should we invest? the possible tackles that and cell phone repair. did you know liberty mutual customizes your car insurance so you only pay for what you need? just get a quote at libertymutual.com. really? i'll check that out. oh yeah. i think i might get a quote. not again! aah, come on rice. do your thing. only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪ ♪ ♪
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♪♪ jack: the covid-19 lockdown began almost one year ago shutting down businesses and sending the stock market plunging. today the economy and job market is rebounding and setting the stage for strong growth over the coming years. ben, your cover story in this week's barron's does a great job of giving an idea where we go from here, but can you explain some of the assumptions we made a year ago that turned out to be very wrong? >> sure. one year ago we were really
worried about the possibility of a depression. we were heading into a lockdown, we were all stock thing up on food and campbell's soup and what not, and it really looked like the possibility that, you know, the world might end. but we underestimated a few things. the first is science. we have the technology to, for many people to be able to make a seamless transition to working from home. and i don't think we really considered how smoothly that might go for a lot of people. but second is the fed. the fed acted very quickly. it used the tools from the financial crisis, and it put them into action super fast. and this was nothing like the financial crisis where it took really ages to get things moving. i think the biggest difference has been the federal government response. last march we put on the cover that the federal government had to do something, and i'm still surprised at how quickly that happened and how much money was spent. jack: both you and i have small children, so i think seamlessly isn't quite the perfect world to
describe what happened at home, but i get your point. but tell me, looking forward, economists you speak to see really big growth ahead. >> that's right, jack. really what's going on here is that this is a very different recession than the financial crisis. there was a full stop to the economy, and what we know historically is that those kind of recessions often are deep, but they bounce back very quickly. and that's what's happening now. gdp is off just about 1.2% from where it was before this recession started. and we'll probably be back above that level after the first quarter of this year. and then we have this massive amount of money, $5.9 trillion that are helping the recovery along. and if you look at the money supply out there, it's just soared. rae it's unlike anything we've seen in quite a while. and when you put all that together, you're likely to see
much stronger economic growth than we're used to. there's been talk of even 8ing % growth this year -- 8% this year and strom strong growth even in the years to come, stronger than we're used to. and that'll be just a massive change. >> i'm just curious what we're going to see in this economic recovery. if seems like some of it may be lumpy. people are booking family vacations, but any sort of business that depends on commuter traffic, your sandwich shops, your dry cleaners, your newsstands, i don't know that we're going to see a huge recovery there because the dynamics of office work have changed. beverly, i know this is something that you've also taken a look at too. >> yeah, definitely. we have a real k-shaped recovery here. there's a lot of good news, but there are parts of this economy that are not doing that well, and those areas are getting our most vulnerable people. like you said, work from home doesn't benefit everyone. if buildings are closed, they don't need janitors. and in a consumer-driven
economy, lower income households are a critical source of growth because they're more likely to spend any additional money they get. it's why the stimulus has been great for the short term, but it doesn't help the underlying problem. and getting back to to where we were pre-pandemic isn't good enough. the wealth gap in this country is real, the pandemic exacerbated it. but low income workers have seen virtually no wage growth since the last recession more than ten years ago. that's not pandemic-related, and the bull market hasn't helped them. almost half of all americans don't own any stocks, 10% of americans own 85% of the u.s. market. there's a big segment of our population that a really isn't benefiting from this recovery, and i still think there's a lot that can go wrong, right, ben? >> yeah, you're right, beverly, and there's a risk here that meshes won't be able to -- americans won't be able to return to work because the jobs just won't be there, and they won't have the ability to spend, and this recovery doesn't happen the way aye laid out.
my open is that the recovery does happen quickly enough that people are able to go back to their old jobs or the old kind of jobs and at a pace that's very much, very unlike the financial crisis. and that even if they don't have the same jobs to go back to, they will be able to find work elsewhere. president biden's infrastructure bill, if it passes, would certainly help on that account. jack: real quick, ben, if your thesis of strong is right, what looks interesting in the market right now? we're still pretty pricey. it's almost as if we've priced in a lot of the good news. >> yeah, i think what the market's reflecting is slow yields, and that's going to be one of the big risks here. as yields go up and often because inflation is going up, valuations drop, and so the market could very well be gnat as earnings have to make up the difference. and in that kind of environment, energy stocks look pretty good, though i'm always terrified of
how volatile they are, materials do, industrials do x. then there are banks which have emerged from this much stronger than they did from the financial crisis. and you could look at someing this like the speeder bank etf if you want to -- spider bank etf. jack: a great story. up next, beverly has an idea of what worried investors should be dealing with their money, and dealing with their money, and ben and dealing with their money, and ben and dealing with their money, and ben and ♪ ♪ ♪ dealing with their money, and ben and easy tools on the chase mobile app. simplicity feels good. chase. make more of what's yours. ♪ ♪ ♪ ♪ ♪ ♪
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complicated, but i'm a big believer in financial advice. most of us don't cut our own hair or even do our own taxes. we need help. jack: that's great advice. if i want a financial adviser, i can look at that list, but it's not that simple, right? what are some things that people should be thinking about when interviewing an adviser? >> well, there's a lot of talk around the world fiduciary that is basically just means that this person needs to put your interests first. that's certainly important, but i actually think you need a really good gut check. you're going to be talking to this person in some of the worst moments of your life. you need to be able to develop a good relationship with them, you need to be able to talk with them through some tough times, and also you want them to help you with your entire financial life. this isn't just about setting up with an asset allocation that you can ride for a couple of years. you want to talk to them about paying for college, taking care of sick relatives, anything that
involves money is something your adviser should be helping you with. jack: yeah, and talk to up more than one person. ask tough questions and make sure they can explain them to you in english. great advice. let's go with actionable ideas. ben, what do you have for us? >> i'm looking at discover financial services. they're -- there's set to be a big jump in consumer spending because of the stimulus checks and because people are going back to work, and people are going to use their credit cards more. the stock pulled back in january after earnings report that left a little bit to be desired, but it's come back up to those levels, and i think it's worth a look here. jack: carlton, what do you have for us? >> i'm looking at the recovery, i'm looking at lvmh, a ton of spending in luxury goods, burberry lifted guidance, tiffany has stronger forecasts for 2021. i think it's going to be a big year for luxury spending.
>> dom perigno finishes. greated idea, thank you. don't forget to follow us on twitter @barronsonline. be safe, be healthy, wear your ... dr. michael youssef: whenever you ask him, he will give you faith to believe in his promises daily, a faith that will not quit interceding, a faith that will never give up, a faith that is willing to trust god regardless of the visible circumstances, a faith that takes god at his word and never, never, never let go. male announcer: coming up next on "leading the way." announcer: as the eyes of the world focus on the latest flood of calamities,
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