tv Barrons Roundtable FOX Business January 28, 2023 11:30am-12:00pm EST
this moment. [laughter] gerry: it is nice if you agree, but it is weird to be praising communist china. >> it is, when they're really the largest producer of -- for the climate, etc., when it comes to plastics in the oceans and when it comes to carbon emissions, etc. it's a strange disconnect. it's virtue signaling on one hand with a group of creatures that you can control, you think, a bunch of cows, versus the chinese who you cannot control. we need to focus on, if we're serious about issue, we need to focus on chinese. gerry: good to end on a note of agreement after a lively show. my great thanks to tammy bruce and richard fowler. i'll be back next week here on the "wall street journal" >> "barron's roundtable" sponsored by global x etfs.
jack: welcome to "barron's roundtable" where we get behind the headlines and prepare you for the week ahead. the investment outlook for 2023 with jason brady. the opportunity and risks of investing in china. we begin with three things investors out to be thinking about. stocks rallied after stronger-than-expected gdp data but recession fears are looming. layoffs are spreading beyond the tech sector, wages keep going up. what it says about the economy. a few weeks after we turn bullish on tesla the company posted record earnings. on "barron's roundtable," ben levisohn, carleton english and jack hough. another great week in the market. ben: it has been fantastic. the nasdaq had its best january start to figure since 2001.
it has to do with one thing, inflation coming down. we saw that this week. it is lower than the previous month and the market is getting excited about a soft landing. they are sending the stocks they hated last year, straight up. jack otter: january 2001 is not the best time to invest in the nasdaq now that we have a crystal ball. you are skeptical of this rally. it is this optimism -- ben: i see a lot of similarities to 2,000 one. we have the kind of broth we had back then and people are excited. there are reasons for that. everyone had sold everything by last year. you have to buy stocks that they had already sold. now we have to see what happens. you have to keep an eye on recession indicators. doesn't mean we can't could get the rates down between now and amended year. sometimes there's a recession at the end of the year.
jack otter: it is a good set up for the bond market unless it is priced in. ben: if we are talking about right now, the bond market had a heck of a rally and i don't think you want to jump right into bonds and scooping them up. this would be a better environment for bonds. we have will have a lot of data next week. a rate hike is coming a quarter point. we will see payrolls and the employment cost index which is what wages are doing. all these things have an impact on the market in the short term. jack otter: we are seeing layoffs in big companies, yet what is walmart doing? raising the minimum wage from $12, to $14. they are not hiring people and have to hike wages. carleton: there's a huge disconnect in the labor market with companies like amazon, alphabet, microsoft announcing massive layoffs, not showing up in the broader economic data.
even though we use these tools every day, they represent 2% of the labor force. the thing with those jobs, no one wants to minimize the impact of job losses but workers tend to get absorbed quickly, rehired. might not be amazon to google, could be amazon to bank of america looking to build more products. to your point on the other side of the economy, where we see chipotle planning to hire 15,000 workers, 1/3 of that into cravings, on the surface side of the economy, anyone who has been to a restaurant realizes the challenges in the service sector. restaurants are in room dining, there are take out places. on the surface side of the economy, not enough people. jack otter: what does it say about the broader economy? carleton: i don't think there's a reason to get worried.
we are looking at a strong unemployment level, up 3. 5%. even people who expect a recession, they see unemployment tapping at 5%. that is only a small bit above the natural rate of unemployment. we don't want to minimize these things when people go through difficult times but the impact is not serious. jack otter: once in a while the market turns away from inflation, markets and wages to earnings. tesla, fantastic earnings. intel managed to go below expectations. jack hough: tesla, our ruden tuten, at the beginning of this year, recommended the stock. i was sitting next to him yesterday, stock up 50%. the market has gone the woods, but of socially -- especially tesla. record earnings didn't beat wall street expectations but elon musk seeing the strongest
orders ever to start the year. the company had to cut prices on vehicles as much as 20% at the beginning of the year. that's part of spurring demand. margins take a hit but it's not that bad because they were good margins to start with. investors were cheered with this, guidance for vehicle deliveries, 37% growth, not what the company's growth algorithm was, but then you have intel, totally different story, the company lost money during the quarter, revenue declined 30%. the chip industry gone to shortages, intel is losing share to amd in arm-based designs. it is not great when industry isn't doing so well and people don't want to products in particular, that's not good news for investors. the company did not give for your guidance, it is down 50%
over three years. jack otter: new plant in ohio, maybe they can make great things. let's look ahead to next week. a lot of company to report earnings. >> the street expect an earnings decline on iphone delays, look for management comments on demand going forward, you will hear from amazon and alphabet. we want to hear about companies cutting spending on advertising and the cloud. those stocks are up, high expectations. jack otter: we tend to focus on volatility markets, but maybe we are in a period we used to call normal. jason brady shares his 2023
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jack otter: the fed raised hopes for a pivot on interest rates. recession fears persist. how should investors prepare for 2023? joining the from santa fe, new mexico, jason brady. thanks for coming on the show. i am as guilty as anyone of using the word unprecedented too much, trading markets i can an anomaly. in your recent ceo's perspective, we are returning to normal. explained that. >> what we have seen and experienced over a decade since the financial crisis has been central banks providing a lot of support to markets and that resulted in low yields and
relatively elevated multiples particularly what we saw post pandemic. 2022 is unprecedented from a price return standpoint but we normalized positive yield which is great for investors, back to averages at least at the index level for us stocks. ibly20 jack otter: another thing that is normal is what jack hough calls debt ceiling chicken. we will hear about the debt ceiling and possibility of default. you've done some that i haven't seen which is quantified the impact on gdp if the government shutdown. i would like to hear about that. >> it is a function of what government payments, how they affect gdp. government payments are important, but the underlying reality, why we don't believe
investors should be concerned about the debt ceiling, i am not sure there is a single member of congress that wants to go back to their constituency and say you are not getting social security, medicare is broken because i took a stand on a procedural issue. jack otter: stock market creations come down. are they cheap and of to be of interest? >> they are average. the opportunity to do now is determine whether the fundamentals of the companies we may invest in in context of earnings progression provide value. what we see in the earnings season is financial services have it pretty good, industrials are having more of a challenge. in particular the past week, 3m
announcing challenges. that said, ultimately, us equity was driven by the largest caps and those tends to be big tech names. it was earnings from microsoft that were most interesting. we were thinking, is microsoft a tech name? of course, do we view it as a high growth entity or high-quality entity, something akin to proctor and gamble? jack otter: valuations overseas are cheaper but i can't name a lot of french googles or german amazons. it's not innovative enough economy. is the price low enough to justify that? >> that is a point in favor of those markets, which is to say, when you saw tech leading the way, it was negative to not have google, microsoft or more
importantly, driving fantastic games in 20 one. what you are seeing now and what you saw in the course of local currency in 2,022 was the more basic blocking and tackling names are growing revenue. it is tech that is a lodestone for the markets but valuation is very good. integrated oil in the us versus europe provides a better outcome. the margin of safety is interesting and that means it is a target rich environment. jack otter: thornburg is a bond or shop, what is your pick for 2,023? >> low yields are positive. that's great news. spreads are not that interesting but it is both consumer and corporate balance sheets, all in, we are seeing a big move into fixed income.
they are able to get returns and have the 60/40 balance you describe for the first time in a decade. jack otter: thanks for coming on. china's reopening has some strategists turning bullish on that country's stocks. sometimes you're so busy taking care of everyone else you don't do enough for yourself, or your mouth. but eventually, it will remind you. when it does, aspen dental is here for you. we offer the custom dental treatments you need, all under one roof, right nearby. so we can bring more life to your smile... and more smile to your life... affordably. new patients without insurance can get a free complete exam and x-rays, and 20 percent off treatment plans. schedule your appointment today. whether you've enjoyed the legendary terrain of telluride,
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jack hough: i never got it. the economic growth has been great, stock market not so much but there is supposed to be a deal with the stock market. when the company goes to capital markets, investors get part ownership, economic participation. i'm not sure as an outside investor you have that deal in china where you know the companies are under state control. people say you have to have diversification. i've never been a believer in diversification for its own sake. i can light my money on fire, that's good diversification versus making money but not something i want. it is not for conservative portfolios. jack otter: imagine if mark zuckerberg or jeff baeza's came
back and said nice things, we would hesitate before buying shares. that said, the stock market has been doing well. ben: china might not be a place you want to put your money long-term. stocks for the long run kind of thing. doesn't have a great track record but you could get huge moves in the chinese stock market. at the two big chinese etfs. they trade sideways for a while but if you can time those, you buy them when they are cheap and sell them when you get extensive you can make good money. jack otter: buying cheap and selling high is sounds good but is tough to do. carleton: that is market timing. most people don't have the ability or appetite for that. one thing to think about you don't want to ignore the world's second largest economy but the point is not to put money into china but to get
money out of it. what you want to do, china is reopening. what regions benefit for that. the easiest way is access multinational companies, you bet on people from china buying watches, things like that, you bet on cross-border travels, you bet on regional travel, look at investments in korea or japan that will benefit from more people going in, using goods and services. without putting your money into it. jack otter: india is expected to surpass china and become the largest country in terms of population. barron wrote about stocks. carleton: part of the progress
is national identification program. there have been millions of people living undocumented in their native country and as they become documented they access financial services. you can see a growth in the banking sector. ben: rather than investing in a generic market fund, not only china but hong kong and taiwan. jack hough: china has a word for those, china, i am not sure that is as diversified -- jack otter: emerging markets distinct from china. chinese exposure, keep that separate and sell. with that, you have some great investing ideas for next week. we will ask jack about that amex bill, stay right ther ♪
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ordinary etfs. jack otter: don't take this badly. jack hough: i love the way it started. jack otter: i've never seen you as a member of the card-carrying global elite. there you were in the most - --davos. jack hough: i did go there. let's talk about amex which mister earnings estimates this past week. jack hough: despite your health. lloyd blankfein stock was up
10%, management called out travel and entertainment spending, up 38%, restaurants, lodging, airlines, the cucumber mask, aromatherapy, whatever it is. all of them points to 15%, 17% revenue growth and raises dividend payment 15%. that's aromatherapy for income investors. jack otter: you didn't take the bait. give us an impression of davos. jack hough: they don't salt the roads, don't wear dress shoes, you've got to work lobby boots and you are at risk of falling constantly. i was worried about having a cool enough coat. no one looks at anyone else. jack otter: steve schwartzman wore boots. let's go to actionable ideas.
an interesting company to take a look at. ben: the foodmaker had a rough month, down 10%. a couple things going on, head winds and pet foods and consumer staples, had a great 2,022 when the rest of the market was falling apart. now that everybody wants to get into this low-quality stuff, coin base up 85%, nobody wants to get into general mills, they are selling and buying junk so i look at that and say this is a good buying opportunity. it looks like a good place, you bss you get 12 or 13%. of the market turns at some point you will be glad --
jack hough: cinnamon toast crunch, those are american heroes. jack otter: it is playing on this. carleton: one thing is salt, next time you go there, sprinkle some. people are worried about companies like lowes because of the housing slowdown but people are repairing their homes especially if you look at the low interest rate. the company is narrowing its gap. jack otter: thanks so much. to read more check out barron.com, follow us on twitter,@barron online. see you next week on "barron's roundtable". the following is an important paid program about humana medicare advantage prescription drug plans, sponsored by humana. there are many reasons why y b
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