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tv   Barrons Roundtable  FOX Business  December 24, 2021 8:30am-9:00am EST

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extraordinary scientific advance. thank you for joining us you. i'll be back next we're with more interviews on the wall street journal at large. thank you for joining us and have a very merry christmas. ♪ >> welcome to a special holiday edition of barron's round table. we'll look at the year ahead. the u.s. energy landscape is changing and we have advice on how to profit from the move to greener resources. tax season is approaching and for many it was a complicated year with stimulus checks, unemployment and more. h & r block ceo breaks down the
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challenges. plus, the stocks we think you should avoid next year. it's our 2022 grinch list. we begin this special edition, expecting the unexpected, some surprises we think may lie ahead in 2022 that defy conventional investing wisdom, including bold predictions about inflation and the cooldown of one of this year's hottest markets. my colleagues on the round table. to read the headlines, you would think 2022 is going to look like 197 # when it comes to inflation -- 1979 when it comes to inflation. you say you expect something more like 1992. >> i think that's right. we're all worked up about inflation. we should be. 6.8% was the last reading. that's the highest since 1982. but there's a good chance that inflation won't be a problem next year. it starts with supply chains, they should start to ease up. there's also a limit to what people can buy. they've gotten a lot of payouts, those payouts aren't coming
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anymore. i think the demand might pull back a little bit too. of course we have the fed. the fed is finally tightening up monetary policy. that should keep inflation in check as well. so all in all, i just don't think it's going to go much higher than it is now and by the end of 2022, we'll probably be talking about something else. >> i get that a lot of these forces are temporary. i get that the fed is acting. but one of the interesting things we're seeing is that wages are finally rising after more than a decade of really not much growth. so that's a force that could have a momentum all its own where wages go up, companies have to charge more because they're paying employees more, et cetera. does that concern you? >> it has to concern me. we are seeing wages rise a lot. but there's also, part of that is pandemic related. i think as the pandemic continues to ease, we'll see the labor force start to normalize a bit and while wages will probably keep going up, i don't think they'll be going up at the level they have been. to be sure, companies think they
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do, they're predicting a 3.9% increase but workers actually don't expect any increase next year which is kind of interesting. >> okay. ben levinson makes a good argument but what does mr. market think, are there market indications that inflation is a concern or not? >> well, the market was very worried. what we're seeing is that the inflation, the amount of inflation priced into the treasury inflation protected securities markets was breaking of out until powell finally said, that's fed chairman powell of, finally said you know what, we've got to stop using the word transitory. as soon as he did the inflation expectations came back down. they're still elevated above pre-pandemic levels, but doesn't look like they're breaking out in a worry some way. >> thanks for that, ben. jack, meanwhile, everybody thinks tesla's the future of automobiles but you look at the chart and some company in detroit has actually been doing a little better recently when it comes to stock market. >> yeah, i think that will
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continue. i think ford will outperform tesla in 2022. the stock at least. electric vehicles are only 3%, just under 3% market share in the u.s. and it's not because americans don't like electric vehicles. it's because americans don't like sedans. in europe, electric vehicles are over 20% of market share. that's the future but we have to see the trucks and 2022 is the first year when that happens. i think that that f-150 lightning electric truck from ford is going to be the vehicle that really sets things on a higher course for electric vehicles in the u.s. ford is almost being treated by investors as a regular, viable company, 10 times earnings. that's not a desperation multiple quite anymore. i think it can continue to creep higher. i think sales are going to be goo. i think some of the -- good.
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i think some of the supply chain shortages will lift and i think ford will put up an excellent year. >> tesla's multiple will be slightly higher than 10. do you think all the good news that's possible is priced into the stock already? >> i'm by no means a tesla hater. i think tesla is an incredible company and they get the credit for electric vehicles catching on here. it's being valued like it will own the entire automotive industry and some adjacent businesses besides that. i think that's a little too ambitious. i think we need to wait a while before the business catches up with the valuation. >> buy the car, stick the stock. it's been a heck of a year if you're an investment banker. you think this year's bonuses might be a high water mark. >> going into 2022, expect m&a volumes to cool down. we were seeing record levels in 2021 to the tune of in excess of
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$4 trillion. i don't think it's going to come to a full stop. you've got a tougher regulatory climate coming on deals going through, that will impact financials and tech companies. with the fed moving to lift rates next year, getting the financing to get some of these deals done is definitely going to be getting more expensive. i wouldn't expect to see those same record levels next year. >> is there a connection between what's going on there and what we're seeing amongst activists. you saw 2021 put seats on the exxon board, activists have been trying that forever. big year for activism. will that cool as well? >> when engine one was able to get -- >> not 21. >> no problem. that was a huge moment. but when you have stocks at such elevated levels, activists have a tough time making their case for shareholders. that will weigh on the type of activism we see. there might be people nudging management but i don't know that we're going to see full-on problems hey wars. >> it's interesting, i spent --
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proxy wars. >> i spent a lot of time looking at the wealth management industry. i was in a closed door meeting where an old timer told everybody there, if you think of selling, do it this year. you won't see prices like this again in your lifetime. it will be interesting to see what happens. coming up, president biden's green energy goals could bring big changes to the industry. big changes to the industry. john dohr will j j
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jack: the energy industry is in a major transition from traditional resources to renewables. what will the shift to green energy mean for the markets and how could investors profit from the change. joining me now the author of the new york times best seller speed and scale, john doerr. thank you for coming on the
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show. appreciate it. >> pleasure to be here. what a great topic. jack: absolutely. some people framed the fight against climate change as an expense or a tax. in your book, you make the argument that the capitalist system will help solve the problem, you frame it as an opportunity, not a burden. could you explain. >> in the early days of the internet, the start of google and amazon, i kicked up quite a ruckus when i declared the internet had been under-hyped. i'm saying today that the clean energy transition has been under-hyped where at the very least it's misunderstood. it's under-estimated and not well appreciated. the move to a clean energy economy, it represents frill i trillionsof dollars of investmet opportunity and importantly the only way we're going to get there is through investment and engaging businesses. business is account for some 70%
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of today's carbon emissions and they're all going to transition for the right reasons to clean renewable energy sources. jack: that's a really interesting point about under-hyping because i think this happens to investors a lot, that they fail to recognize huge transformation, they kind of underestimate it, whether it's platform companies, they didn't realize how big that would be or kodak, they didn't realize how much trouble that company was in. can you be more specific about a particular transformation or of innovation maybe that the market's not recognizing right now. >> the analysts estimate that to move from fossil fuel, internal combustion engine, to electric vehicles and trucks, we will require for 20 years $400 billion per year of batteries. batteries to fuel this transition. it's approximately equal to the amount that is spent on gasoline
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and diesel fuels today. that's the mother of all markets. it's been under-estimated and i dare say under-hyped. jack: i want to pivot, though, to the retail side of this equation, which is there is a bit of a green premium. at what point does that go away? in other words, when does it not cost more to be green? >> exactly right. so the green premium is the additional amount you need to spend to get to a zero carbon solution. the answer to the question is complicated. it varies by what product and service you're talking about. for example, in electricity generation, globally right now the green premium is about 15%. it's two cents per kilowatt hour on average but it varies around the world. what's important is to take the green premium for every sector of the economy, for steel, for cement, and then apply research
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and development to lower those costs, because the only way this transition will happen is if it's a profitable transition. jack: brian: we go, can -- a. jack: before we go, can you leave us with an investment idea, either from your portfolio or something you like, where investors can hop on that train now and make money as the transition occurs. >> well, i'll tell you the public companies i've invested in, without making any forecast of about whether or not they're going up or down. but beyond meat is pioneering their transition to protein-driven meats. quantum scape is making progress on a very advanced battery for that largest of all markets that i described. and i'm a broad believer in solar on residential rooftops and their end phase with their
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micro investors is setting the pace for the industry. but rather than pick those three, i think it's important to remember what larry fink has to say. he's forecasting there will be 1,000 companies with more than a billion dollars in market value. so that's 1,000 unicorns that will come out of this climate revolution. he's a pretty conservative guy and very smart. jack: it's great to get your insights. goods luck with your book and your campaign. coming up, h & r block ceo on 2022 tax changes and the moves you may need to make before the end of the year. thatat thanks for coming. now when it comes to a financial plan this broker is your man. let's open your binders to page 188... uh carl, are there different planning options in here?
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jack: the upcoming tax season will be a challenge for some filers, 2021 returns may be complicated by covid related
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benefits such as extended unemployment benefits and stimulus checks. h & r block is seeing challenges of its own from fin tech disrupters. here to sort it out, h & r block ceo, jeff jones. thank you for coming on the show. >> great to see you. thank you. jack: h & r block will file more than 20 million returns. what are some of the big issues you're helping taxpayers sort through? >> i think this year it's coming off of two very, very unusual years, obviously, where the tax season started late and they ended late. but i think from the consumer perspective, it's really about child tax credit and making sure that those that may have missed the stimulus payment have the ability to recover the stimulus payment that they missed. so those are two unique things that we see moving into the tax season. of course, that's in addition to what we always do, which is navigate through the literally
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tens of thousands of tax code changes that happen at the federal and state level and get ready to serve our clients and give them the best experience possible. jack: two questions there. so one, you mentioned the child tax credit. i guess some people have gotten disbursements already thanks to the change in law. so could they end up seeing a smaller refund check basically because they've already gotten the money? >> well, it's possible for sure and child tax credit is likely one piece of the purchase you zell for a cons -- puzzle for a consumer so it depends on the rest of their lifestyle and conditions but there's no question it's one of the things that we're helping our clients try to understand, is if they're getting an add a vansment of that child -- advancement of that child tax credit, it may mean a reduction in their refund when that time comes. jack: are there things your accountants are recommending people do before the end of the year, either because of changes in the law or just the oldies but goodies that everyone should be doing before the calendar changes over.
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>> one of the classic things that we know people can do better is change their withholding based on a lifestyle change they may have had during the year. that's always a sure fire way to make that decision, do you want more in your refund or more every single week in your paycheck. you know, the typical consumer gets about a $3,000 refund and so every dollar really matters, the stakes are high, and unfortunately most of them have their tax refund spent before they receive their check. jack: that is not good. jack, jump in here. >> how do you get young people in the door? i think of young people as who want to do everything for themselves online and knowing everything and not wanting to pay for everything. how do you get them as customers, how do you graduate them to high value services down the road. >> about 50% of all of our new clients that come into our retail officeses are millennial. obviously, we have an incredible
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competitive diy software product. but what we learned is that just because you're young and tech-a savvy doesn't mean your tax-savvy and so they still rely on expertise including consumers who start at diy filers but then they're upgrading to access human help. they push the button and on demand that get connected to one of our tax experts to either answer their questions or check their work. that part of the business we're seeing growing 50% year over year. so access expertise is important, really no matter your age. >> just curious, taking a look at the stocks from an investor perspective, it's troublesome for the past few years, but it's up 50% this year. can you tell us about some of the initiatives that h & r block is doing. >> last year was the best year in more than a decade for the consumer tax business.
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that's really driven by the work we did in pricing and quality and to digitize that tax experience so you can blend human expertise and digital tools on your terms. we're serving small business owners in more and more ways through the block advisor brand and wave. and then finally, tour point about -- to your point about spruce, last week we opened up the wait list at this is a product we'll be launching over the first of the uniform it's a fully -- first of the year. it's a fully featured banking alternative. we can't wait to launch take product in january. jack: we're running low on time. i want ben to get a question in here. >> given the tight job market, are you having trouble hiring cpas, especially given some of your workforce is seasonal. >> labor is our biggest asset and our biggest expense. we have a very, very high
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retention rate among our frontline professionals, our tax experts. on average, they've been with us for 10 years. this year as we brought back our tax experts, we saw record high retention really driven by the strength of our business. and so the macroeconomic and labor conditions have not seemed to touch as quite yet. jack: jeff jones, thank you so much. i don't normally give ceos advice but i've got to share this tip with you. if you want to drive that stock price up, just call it h & r block chain. [laughter] >> thanks for the tip. i really appreciate that. jack: any time. come back soon. thanks, jeff jones. up next, the stocks this panel thinks you should avoid next year, it's our 2022 grinch list. stay right there. ♪ you're a mean one, mr. grinch. ♪ you're a mean one, mr. grinch. ♪ you really ♪♪ care. it has the power to change the way we see things.
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jack: we're switching things up this week, instead of investment ideas to act on, the pan he he'll has a few stocks to avoid. it's our 2022 grinch list. so jack, it's tough to look at the game stop chart without getting a case of the fomos. you say people shouldn't be chasing that one in 2022. >> i don't think you can continue to trade on the present value of your future means. i get that this company became an ironic stock market darling. that's lucky for them. they haven't really articulated a plan for how they're going to make money in the post video game disc world which is coming quickly. so i would just stay away. it doesn't make sense to he me. jack: got you. i thought we already were in a post video game disc world.
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maybe we're moving quickly in that direction. carlton, you've got an analog thought here, it's time to get off the macy's train. >> yes, macy's was a reopening play, they had an activist coming in pushing for a split. even if a split happens, it will be messy. the stock got ahead of it, not to mention with inflation hitting wallets and stimulus easing, customers won't be feeling so flush with cash. jack: last night i put ice in a yeti cup, this morning it's still frozen. how could you be against the stock. >> they make wonderful coolers, wonderful cups. i'm worried about the stock. it was a stay-at-home beneficiary and all the stocks, zoom video communications, peloton, things like that, they've all tumbled. yeti is still up double digits this year and it's trading about 27 times forward earnings. it's just not cheap.
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don't be surprised if 2022 turns out to be a much tougher year for it. jack: all right. viewer, you have been warned, carlton of, ben, jack, thanks for the warnings. don't forget to follow us on twitter at barron's online. that's all for us. merry christmas. we'll see you next week on barron's round table. today. ♪ ♪ >> a visionary architect. >> the building is iconic and maverick. >ambitious man of god. stuart: build an impossible church of glass. >> he was ready to give up multiple times. >> to creating the largest glass building in the world. >> okay. let's do it. >> the crystal cat


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