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tv   Barrons Roundtable  FOX Business  December 3, 2021 10:30pm-11:00pm EST

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around the country as well. when that reaches suburban voters that are swing voters that's where democrat wills pay the price. >> we have to go. thank you very much to our panel. we will be back here next week. thank you very much for joining us. ♪ ♪ welcome to barron's roundtable where we get behind the headlines and prepare you for the week ahead. coming up, billionaire investor responds for the first time to his controversial remarks on china. and later, whether you're a buyer or a seller, the housing market is red hot. should you make a move? but we begin as always with what we think are the three most important things investors ought to be thinking about right now.
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the markets were rocked by the omicron variant and worries about an end to the fed's easy money policies. twitter co founder stepped down as ceo to concentrate running square or its new name block. what's next for the social media giant? and now that omicron is in the u.s., the big question is whether existing vaccines and treatments will be effective against it. on the roundtable tonight, my colleagues. ben, we knew volatility was coming eventually, and boy when it hit, it hit hard. what forces are pushing this market up and down? mostly down recently? >> yeah, jack, this has been a pretty bad week for the markets. you know, we have to worry about the new variant of covid. we know almost nothing about it right now, though there are some talk about it, but i think what really spooked the market this week was fed chair jerome powell basically going out there and saying, you know what? i was wrong. inflation isn't transitory and
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then acknowledging that he might have to taper the bond purchasing that the fed does faster than expected. some people are confused about why he would do this right now when everyone is concerned about covid. but i was told that it is actually he could have come out with a lot stronger language if there weren't the covid problem right now. >> that's really interesting. it is also interesting what you didn't say. you didn't use the word jobs.di. >> the headline number was pretty bad. you know, i think it was a miss of around 300,000 jobs, but what that left out is everything else. we had unemployment rate dropped to 4.2% which isn't that much higher than it was before covid, which was when it was around 3.5%. the number of people returning to the workforce was better. it was actually a pretty strong number. that really jives with what we are seeing in the other economic data, that the economy is pretty
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strong. that does give -- that gives powell a lot of room to go ahead and tighten monetary policy. the market doesn't have to like it, though. >> true enough. next week we will be watching the cpi to see what it tells us. carlton, twitter has managed a really neat trick. that is a very popular, very powerful tech platform and it is actually selling at below its ipo price, kind of unheard of. at the risk of oversimplifying, it is missing on monetization, innovation, back end tech is lagging. all i can say at least i have [inaudible]. >> jack dorsey announced this week he is stepping down focusing more on square or what's called block. twitter has about 200 million daily active users not making a lot of money on them. they had to figure out how to do that. on innovation, they tried fleet. that product was fleeting longer
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in its existence. they launched [inaudible] years ago. that could have been tik-tok. they got rid of it. they needed to get users engaged, help advertisers. on the back end, the platform has been difficult for some users with harassment and things like that. they need to have better tech to moderate those sorts of things. >> i think subscription would be the way. i wouldn't be surprised if the company gets bought out. funny things in the drug stock area this week. we saw some go up. some go down pretty dramatically. i guess it's what investors think omicron's effect will be? >> one company out there, says its mono clonal antibody one effective against omicron variant. that stock went higher. regeneron said its monoclonal antibody may not be as effective. with how much clarity we don't have an omicron, we spoke with a
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top fda official, he told us two to four weeks before we know whether the vaccines we have already taken work. if they don't work well enough, probably looking around april to create a booster that's specifically made for omicron. we're certainly hoping for the former, but by year's end, hopefully we will have some more clarity. >> i hope so. thanks a lot for that jack. coming up, a billionaire investor react for the first time to widespread criticism about his controversial remarks ♪ about his controversial remarks about china.
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accused of a former top chinese government official of sexual assault. boston celtics player told maria bartiromo earlier that other sports leagues should follow the wta example. billionaire china investor ray dalio came under fire for controversial comments he made earlier this week saying we have our own human rights issues here in the u.s., and that the ccp is behaving like a quote, strict parent. dalio was asked about that earlier. >> there was a backlash this past week to some comments you made, off new fund in china -- you have a new fund in china, you were asked about human rights there, including the disappearance from public life the tennis player. some of the comments struck some listeners as jarring. you said you thought china was behaving like a strict parent. some people thought you were equating human rights concerns in china with those in the u.s. so i want to give you an opportunity now. tell me what you meant by those comments. what's the role of a money
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manager putting work to china in assessing human rights? what's your assessment? >> thank you for letting me clarify this. a lot of misunderstanding. i get thrown a question, and i'm trying to answer the question in a straightforward way. and just let me be clear that i really think i at that spontaneous moment did not make clear. first of all, this issue, this human rights issue is obviously a big issue, and i was not meaning to suggest that they are operating in a way that is the same as we are operating in dealing with those things. i was not meaning to equate those things. on the question of being asked about, quote, the strict parent, that was not my intention. i wasn't making that statement. i was intending to convey a statement that was made to me by
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a policymaker. and in order to try to pass along understanding. i wasn't commenting on what i thought about the strict parent. i was commenting on what's autocratic and what's democratic, two different approaches. and on this issue, i think i don't want to minimize that issue. that is an important issue. and i want to also describe that as an american, who knows the differences between these two countries, i have spent all of my life here and also about half of my life going to china, and i find myself in the middle of those two things, and i'm deeply concerned about war, about the conflict between these two ideologies or these two types of approaches because i think that there is a risk of that. and being in that position, i
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want to try to help that understanding, and i did a lousy job of conveying that. this is a situation which is faced by something like 40,000 investors and hundreds of thousands of banks, businesses, and so on, that are american businesses that are operating there. they face the same question that we're dealing with. and that's a difficult question, of how to approach that. and when we're trying to balance those things, we also realize that if there's disengagement, what that would be like for the society and so on. >> tell me about risk and returns. you have been investing in china for so long. how have the risks changed? are the risk added to by the kinds of things we're talking about now? how do the opportunities for returns that you see there, how do they compare with what you have seen in decades past? >> well, in decades past, we didn't have the market choices that we have now.
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i mean, since i started going there, per capita income's increased by 26 times. the economy has gone great, and then you see the investments of the businesses, different businesses. they have developed capital markets, the second largest capital markets in the world, so now the opportunities to be able to invest are just really largely opening up, and yeah, and i think that they are attractive for reasons we can get into, but i also think diversification is important in this kind of an environment. so when i think of the u.s. markets or i think of any markets, i'm in 40 countries, something like 40 countries, when i think about that, i have to think about diversification, particularly given the competition that's going on. >> i was going to ask you if you feel you can trust the government there putting so much money to work but, you know, maybe you're saying with that level of diversification, it is about you know staying safe by spreading the money around.
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>> well, okay, let me get to what i'm trying to get to is the issues that we're really dealing with in terms of the issues of war and the conflicts; right? so i think that like a lot of countries, there are a lot of risks that are existing in china and exist in the united states. and that combination of those risks are something that i'm trying to communicate clearly here in order to understand what that diversiication looks like. >> tell me what's behind the book. the book is called "principles for dealing with the change in world order, why nations succeed and fail". what were your thoughts behind writing this book? >> there were three big things that happening in my lifetime, happening now that never happened in my lifetime, in our lifetimes before that happened many times in history. those three things are financial, in other words, spending a lot more money than
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we are earning and creating a lot of debt, which is then being monetized, and it works its way through the system to produce the types of results that we're having. it causes good services, financial assets, prices, all to go up, produces a type of inflation, in that event. the second is the internal conflict, the combination of wealth gaps, political gaps, the left and the right is having a conflict, a level of conflict that is the highest since 1900. and the third is the rise of big great power to challenge the existing power, the existing world order, and that conflict. those three things have not happened since the 1930 to 45 period, and i've learned in history, that i need to understand that pattern. by studying, for example, the great depression, i was able to anticipate -- we were able to anticipate the 2008 financial
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crisis. >> you write about what you see is a 30% chance of civil war in the u.s. over the next decade, which is alarming. what do you mean by civil war? what would cause that? what should we do to prepare for that? not just as investors, i suppose, but as citizens? >> well, when the causes that people are behind are more important than the system, the system's in jeopardy. that's shown repeatedly in history. and so if we really take the elections, and we take the splits that are taking place now, there's a question, and a likelihood that we will go to higher and higher levels of polarity in which neither side is going to give up losing, that they will operate in a certain way that would be at risk. i think we're seeing that shift in values, the shift, the conflict in values causing movements to different states,
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not just taxation, and those -- there's a tendency, history shows, for those who are similar, the rich going down to some place, the poor going -- [inaudible], the hollowing of location, financially as the tax base goes, intensifying those conflicts. so i think that that type of a conflict is at risk. i do think that -- >> you mean a metaphor civil war, or you mean an actual armed conflict? >> no, i don't think that we're going to have an armed conflict, but i do think you're going to have a power decision making, not decision making when there's going to be following the legal system exactly. for example, when the federal government is going to mandate something where the state and local governments are going to have to do things, i think there will be an argument as to who has what power.
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and when they have that kind of argument, that starts to begin to produce a type of internal conflict that makes the place dysfunctional. what we have to do above all else, three things that need to be successful. first, you have to earn more money than you spend, and you have to be productive. second, you have to be able to work well together, in a bipartisan way, in a middle kind of way that's good for the whole country. if you don't make it good for the whole country, it won't work. and the third is that you have to deal with the external conflict. >> our thanks to ray dalio. coming up, the housing market is red hot. better to be a buyer or a seller? we have got new info you need to know. know. that's next. ♪ ♪ ♪ know. that's next. ♪ ♪ ♪
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the housing market is on a tear, and prices are still racing higher. how long can the trend last? it's barron's cover story this week. barron's associate editor andrew barry is joining us. andrew, so great to have you back on the show. so look, there are a lot of tail winds behind the housing market right now. during covid, our homes became our offices. people in the city said i want to get out of here. they raced to the suburbs. these two dynamics have sent home prices soaring. will this keep going? >> yes, i think it may. there's a demographic tail wind for housing people 90 million millennials are entering their prime home buying years, and many put that off before and during the pandemic. there's also been an undersupply of new homes for about a decade, and that deficit could take years to be addressed. >> so clearly, it's a seller's market, great time to be a seller. you say it is actually not too bad to be a buyer either? >> it is not bad to be a buyer.
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obviously the market is strong. it's been a seller's market, but housing affordability is still pretty good nationwide, given that mortgage rates are around 3%. you can carry a $400,000 home for about $2,000 a month, which is the cost of a two bedroom rental in many parts of the country. housing could be strong for years, and it could be an inflation hedge in a coming decade. >> another dynamic at play i was hoping to talk about which is this recent regulatory change that allows fannie mae and freddie mac to back larger mortgages. >> yeah, i mean that's a plus for the market because it broadens the availability of lower rate mortgages to homes that can cost a million dollars or more. it is definitely a good thing for the high end market. >> andrew, i was looking at these stocks. it looks like they have been going up near their highs. isn't that a little bit scary to be buying them right now? >> it is true that the group has been strong recently, but valuations remain relatively low. the stocks are trading at an
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average of just seven times projected 2022 earnings. that's about a [inaudible] of the market multiple. these companies have never been in better shape from a competitive, profit and balance sheet standpoint and housing could be strong for a couple years. >> andrew, hello, how are you, and most importantly, what stocks do you like? >> you know, there's not a lot of differentiation among the group because they tend to focus on the same area of the market which are entry level homes, but i mentioned dr horton which is the industry leader with great management. lennar has class b shares which trade at about 20% discount in more liquid class a shares. toll brothers is probably the most differentiated with the biggest mode around it because it focuses on the high end of the market with homes costing close to a million dollars. it's probably the biggest beneficiary of the work from home trend because higher income workers can take better advantage of that. >> if mortgage rates were to go up that could hurt the market,
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andrew, but then again, the ten year slipped to 1.35 on friday, so maybe rates are going to stay low. thanks a lot for your insights. we appreciate it. >> glad to be here. >> up next, roundtable members will give their investment ideas for the coming week. jack tells us whether we should trust a robot stock picker. stay right there. trelegy for copd. [coughing] ♪ birds flyin' high, you know how i feel. ♪ ♪ breeze driftin' on by... ♪ if you've been playing down your copd,... ♪ it's a new dawn, it's a new day,... ♪ ...it's time to make a stand.
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>> jack, humans don't actually have the greatest record in terms of picking stocks. you've been looking into whether a robot might be able to do it better. >> eric schmidt used to run google told me we are in the
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golden and of investing using ai. a cio has a fund that's called ai powered equity etf, ticker aieq, it scours financial metrics, twitter, reddit. it comes up with its own stock picking recipe. out of the gate the returns are not wonderful. it is lagging a little bit behind the benchmark. he has his retirement portfolio in there. he says the machine is getting smarter. we shall see. you can hear about it on my barron's podcast. >> look forward to that. i want to have eric schmidt on this show. actionable areas, you're bullish on housing? >> yes, i'm taking a look at manufacturing housing, right now a little bit cheaper, but it has an opportunity to refinance some of its [inaudible]. also has securities portfolio
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[inaudible]. >> thanks for that. ben, your idea? >> bristoly meyers squibb trades at 7 times earnings, betting 2022 will be a better year. >> interesting ideas. to read more check out this edition of barron's.com. don't forget to follow us on twitter @ barron's on-line. that's all for us. that's all for us. we will - [mike] lumber, the cornerstone commodity that frames our everyday lives. it keeps the country as we know it sheltered, heated, furnished, and a whole lot more. but wrestling this raw material out of our forest and into our homes is not for the faint of heart. - ah! mother (beeping). - [mike] it takes old fashioned grit. - i'm not getting any power up there. - [mike] monster machinery. - a lot of people get hurt doing it. - [mike] and nerves of steel to do the most dangerous job in america. sorry, crab fishermen.

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