tv Barrons Roundtable FOX Business December 12, 2021 10:00am-10:30am EST
and more populous and very powerful military is still up in the air. gerry a pasty read about politics, thinking that's it i'll be back next week with more interviews on the "wall street journal at large", thinking for joining us, have a great week ♪ >> "barron's roundtable" sponsored by invesco qqq. ♪. jack welcome to "barron's roundtable" where we get behind the headlines and prepare you for the week ahead. i'm jack otter. part two of our interview with the world's biggest hedge fund manager and how biden's build back better plan could affect your taxes. we began is always the three most important things and investors ought to be thinking about right now.
inflation hit a 39 year high in november with consumer prices jumping 6.8%. why is the market rally, despite skyhigh inflation and rising covid-19 infection demand is exploding. how the boom is helping companies like louis vuitton and what it has to do china. and apple in the lead for the race for 3 trillion-dollar market value. who else is nipping at apple steels. my colleagues ben levisohn, carleton english and jack cal. the cpi numbers all over the headlines when the market hit a new high shrugging it off. >> it's pretty amazing isn't it. i think it doesn't have much to do with inflation. it could go back to the beginning of the week we saw the market started to relax about the newberry of covid-19 that perhaps is not as bad as delta. backup things started the market was up over 3% even before inflation came out. inflation came out and it was a
shock, the reaction but you're feeling pretty good about things. >> if i told you inflation was 6.8% and growth was surging and i said what do you think the ten year bond is yielding you would not say 1.48% is the bond market sending a signal, is this all temporary. >> it might be there is a lot of discussion when the central bank people are trying to figure out the fed is buying so many bonds that the tenure can act as a economic indicator anymore but it could be there is something going on in the market that bonds are seen in the looking at the inflation number saying this might be temporary. jack what you expect the fed to do in the meeting or say after the meeting and famously the often overreacting to these things and pulls away the punch bowl and causes the recession.
>> it is true, right now the good news the fed is probably going to do what everyone expects it to do. it is going to ramp up the taper. it'll reduce the bond purchases even faster but the markets are ready for that. you might have to hike rates a couple more times and people were hoping for. the markets are dealing with at two. jack let's pivot to the covid economy which did interesting thing and put more spending money in regular people's pockets and put more spending money and rich people's pockets. that's been very good for luxury manufacturers. the cover story is lvmh. >> global financial wealth in 2020 increased about 8% to $250 trillion. we sell the ultra high net worth, the number of people qualifying rising about 24%. as you pointed out that helps companies which houses tiffany,
none of which i'm wearing but when people put in trouble during lockdowns that money was going into luxury goods but you had lbm expected to see revenues increased by 38% this year. jack one of the biggest customers of these companies is china but now china is cracking down on the wealthiest, zach would cause a problem? >> this is where we have to tread very carefully. obviously there's risks to investing were trying to expose companies, ray was on the show speaking about that but at the same time he launched a 1 billion-dollar financial china and he talked more about that on the podcast but when you look about 12% of its customers come from within china not counting the people that are traveling from china buying elsewhere throughout the world but as china looks to crackdown on the elite wealthy, they are looking to expand the more middle-class.
there is reason to think that it is possible there may be more potential buyers of luxury goods if the plan works out. any political economic situation may not pan out as intended so it would be one to watch. jack i think we should crack that bottle for jack cal. his podcast won an award and that is not all, jack got an award from the national press society, prestigious organization. but jack were here to talk about apple which went from 1 trillion to 2 trillion in market value in two years, an incredible zip and now is pushing 3 trillion, what is going on there. >> i heard your pronunciation on louis vuitton at the top of the show and it was super fancy. i want to congratulate you too, jack. apple 30 times earning, if you adjust for the cash it's no more pricier than procter & gamble. i say that tech is a new
consumer staple. ask yourself how many times did you use your iphone or apple watch and how many times did you use your bounty paper towels unless you have a really messy day, three catalyst that could get the stock over $3,000,000,000,000.1 is the chip shortage in the surplus iphone demand story read i think it'll be a strong christmas selling for handset. i think higher inflation will continue to push people out of the pitiful bonds that they proceed is safe and apple makes from services. there also supposed to launch smart devices next summer. i know ben will be buying the anticipation could help the stocks. it's only half a smidge away from $3 trillion now. i'm not exactly babe ruth calling his next homerun. jack you might have an option on the applecart.
jack senate democrats are pushing the past president biden's build back better by christmas but can they hit the deadline and will include tax hikes during the top women conference in palm beach i sat down with the libby cantrill, she told me what the investment firm is expected in the final bill. >> a key party your job is to predict what is going to happen
in washington, d.c. since there making multibillion-dollar decisions based on your outlook you can't let politics get in the way you have to call it like you see it. handicap the build back better plan, what will it look like and can it pass? >> that's a great point we emphasize what is likely to happen not what should happen so we don't overlay our political beliefs. we do think it will happen and may happen by year end or may slip to january or february with a high conviction that this will get done. the democrats are too far along politically to let it unravel. the price tag may go down. right now it's 1.9 trillion and it may land at 1.6 or 1.7. but an investment perspective this will get done. >> i want to talk about the inflation application but what are the tax increases that might make it. >> this is something super important to reemphasize.
very few tax increases in the original proposal back in march are going to be in the final bill no individual tax increases for all intents purposes unless you're making within $10 million and no statutory tax increase or capital gain tax increase, note tax exemption modification. the bulk of the things the democrats ran on in 2020 are largely going to stay under current law. the tax changes that will get signed into law some salt relief were expecting and as a margin some changes to the international tax laws. jack on inflation there's a lot of discussion on implication of this bill in the spending in washington is been going on over the past 20 months since covid started but sometimes the nuances loss. can you explain this one in all the others. >> just as a refresher we seen $5 trillion as covid relief we put into the economy through congress in 18 months. inevitably that has been and now we need the data to emphasize
it. it has been inflationary especially the pay checks in people's pockets that they received earlier this year. the bbb in the bipartisan infrastructure framework the best ~ 30 been signed into law a few weeks ago, we do not expect this to be as inflationary and the administration is leaving that they can be deflationary and help labor force participation and productivity. the proof will be in the pudding so to speak in any deflationary impact will be more long-term but the point is the composition of these bills is quite different from the $5 trillion of covid relief that we saw and less emphasis of cash in pocket more long-term investment. >> to pivot to a 1% excess tax on stock buyback, will that pass and have any effect on the market? >> that in the current version of the bill.
it's very likely to pass, it raises some revenue but also a good political talking point for the percussive democrats who want to show that democrats are handed it to corporations. in terms of the impact on the market it is surprising that it did not move the market. i think the market was expecting much worse injury conan if they saw buyback tax 1% is incremental and we saw the market adjust. jack let's look at a little bit further with the midterm elections come along it's assumed the democrats will lose by a little or lose by a whole lot. what is in play is the senate. whichever way the senate goes what are the practical implications for the market for investors of republicans having one house of congress. >> the midterm elections are a referendum on party in power in the approval rating as of now and things can change. they look pretty bleak for the democrats. it's a question of how many seats they lose not necessarily if they lose the house.
the senate is a different ball of wax only the third are up for reelection and it looks a little bit better for democrats. it's unclear whether they can overcome the headwinds. i think the point is from a market perspective, if republicans take one chamber back, if not to it a be gridlock. >> one-way tax question you made a reference to salt this is the idea that people in high tax states can deduct the real estate taxes and estate taxes from the income taxes. right now $10000 and the proposal is to raise it to 80 or you can deduct up to 80000, what is that in-depth. >> politically speaking speaker pelosi in chuck schumer from the state income tax states cannot afford not to have a salt relief but we think it will look different from the current proposal with the 80000-dollar cap through 2030 maybe 30 or
$40000. the point for those in california new jersey and new york especially there will likely be salt relief but maybe not as high in the current bill. jack thank you so much for coming up (judith) in this market, you'll find fisher investments is different than other money managers. (other money manager) different how? don't you just ride the wave? (judith) no - we actively manage client portfolios based on our forward-looking views of the market. (other money manager) but you still sell investments that generate high commissions, right? (judith) no, we don't sell commission products. we're a fiduciary, obligated to act in our client's best interest. (other money manager) so when do you make more money? only when your clients make more money? (judith) yep, we do better when our clients do better. at fisher investments we're clearly different. ♪ ♪ ♪
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jack cpi data shows consumer prices from groceries to gasoline surged last month at the fastest pace in four decades. billionaire investor ray dalio how long inflation will last and how investors should position themselves right now. >> do you expect higher inflation to last and does it have to last. has the debt reached a point of no return, where we have templated away it's too difficult to pay back you expect
higher inflation to last for that reason. >> there's two types of inflation. there is supply and demand and demand presses up against supply and one thing. there is monetary inflation. the amount of money and credit and buying power that is handed to people. if the amount of money and credit handed the people to spend is greater than the marginal production of things you will have an inflation and good services and financial assets and a depreciation in the value of money. that is the dynamic that were in. this is not a transitory inflation. one can calculate what is the budget deficit. how will that be paid, who will buy that and how much money will the central banks, federal reserve most importantly how much money will they. in order to do that and how much will that depreciate. it is a real thing.
jack it sure seems that way, he seems to confirm what dalia was saying, break it down going under the hood of the report what you see inflation across all sectors? >> is pretty strong everywhere i want to point out the 6.8% number is the fastest gain since 1982. i was nine i cannot remember being nine. if you look underneath the surface on a month over month inflation rose 0.8% prevent gasoline prices were up 6.5% month over month, airline fares 4.7% month over month, lodging 2.9%, used cars 2.5%, food 0.7%. in the years after the financial crisis we would be lucky to have inflation of 2% on a year-over-year basis. now were getting crazy high numbers. jack one thing lost about cpi
growth is also a unheard levels, gdp growth is going to be at 8.7%. you also have to go back to the early '80s to see anything like that. will that tamper inflation or work together to push anything higher. >> it works together to push everything higher but it should get rid of worries about stagflation. you can't have stagflation unless you're stagnant and you're not stagnant with 8.7%. jack the standard playbook is to invest like golden treasury inflation securities? you're not buying it? >> the only reason we associate gold with wealth because the lucky position on the periodic table of elements it doesn't cost the guys and before we had machines you could stamp a king's face on a coin, we don't use them for money anymore is not relevant to the goods and services. i don't use a lot of gold in my
everyday life, that might surprise you but i think it's a good hedge against him praise unto inflation. the problem is your starting yield at negative 1.5%. you better be right about the inflation. stocks are the best hedge because they represent companies in their run by smart people who can respond to changing conditions including higher or lower inflation's b1 carlton tell us what sector are run by particular smart people who can do well with or without inflation. >> one area is financial particularly banks we see inflation that makes rates go up bad for us with a credit card payment to make but the banks are able to make more money in periods where inflation is moderate, when you get right away you see consumption curve and that does negatively impact the bank.
jack right now housing looks interesting, prices are surging but you can lock in a mortgage at negative rates right now in an inflationary situation the house is probably going to go up roughly equivalent to inflation. >> this box a lot of traditional financial wisdom but if you were able to lock in a mortgage at the 2.8, 3% rate you may not want to rush to pay it off you may want to put the excess money to get out of debt put it to work elsewhere so it's working for you. it's definitely unique advice for a unique time. jack if inflation sticks around you pay the loan back in cheaper and cheaper dollars so it does make sense. up next roundtable members will give the investment ideas for the coming week and carlton explains why peloton regrets the starring role on the and the city reboot. ♪
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jack carlton it's been a rough road for peloton which fell from 171 to the mid-40s over the course of the year. then the star turn in the and the city reboot didn't do very well, now it's down another 7%, what happened. >> peloton has had problems people going back to the gym not as many people buying the bikes they cut the forecast earlier this year. yesterday don't tell my boss but i was reading spoiler alerts for the new reboot and big spoiler a big development in which a
noteworthy character dies after writing a peloton. they didn't know how it would be in the show and it tumbled 11% additional 5% on friday. jack let's go to actionable ideas. i'll start with you i think is really interesting. >> tesla selling season the markets biggest losers are falling even more but they do a good job at the beginning of the following year i'm looking at global payments and other big losers that could get a bounce once we get out of 2021. jack no offense jack about your pick but it's a little unusual. >> cf industry i don't think we talked nearly enough on this program manufactured urea used in fertilizer, russia and china are both restricting their exports, that has crimped the
flow worldwide prices are up and cf is profiting bfa just racist price target 35% more upside. jack more coming up with the new year. i don't promise you, safety on the street is like a tax cut. i am larry kudlow, we'll see you next week. ♪ >> from the fox studio in new york city, this is "maria bartiromo wall street". maria: happy weekend everyone welcome to the program that analyzes the week that was in position you for the week ahead, i am maria bartiromo another wild week for stocks this past week as new data shows inflation is running at a 39 year high. the number spiking in november, getting reaction from international investor. remaining mexico policy reinstated aimed