tv Barrons Roundtable FOX Business March 18, 2023 11:30am-12:00pm EDT
politician, but biden does seem to be particularly prone to the it now. >> yeah. i mean, look, if his caddied have that conversation with him, which i highly doubt, it went in one ear, out the other because for 50, 60 years thereafter he posedded gay marriage. president biden has never met a lie or exaggeration that he didn't like from corn pop to the saying he was raised by pert eerie cans in delaware, he drove a track the to have trailer, he bottom arrested for protesting civil rights. it's just one thing after the next, and he just loves to go back to his high school stories. gerry: well, we've only total end of this week's show. thank you very much, indeed, to the mark ten or and richard fowler for joining me. i'll be back next week with more commentary on and interviews on the "wall street journal at large." enjoy >> "barron's roundtable" sponsored by global x etfs.
jack otter: welcome to "barron's roundtable" where we get behind the headlines and prepare you for the week ahead. coming up, with bank stocks battered and depositors anxious, will the fed still raise interest rates next week? i am asking market strategist lori calvo sena. who's to blame for a two of the largest bank failures in us history and where do we go from here? we begin as always with three things investors ought to be thinking about right now. after a wild week for bank stocks, bonds, and bailouts, how safe are your investments? out about your savings deposits? a nationwide tiktok band could be booming, not superhigh on my list of concerns, but what does it mean for the rest of social
media and planning a summer vacation? yes, please shell out a lot more for your travels. my colleagues, ben levisohn, carleton english and kristin bell strum. we had two of the biggest bank failures in us history, two more banks with plunging shares meeting cast tab - cash infusions but the overall market ended up higher. ben: takes them to get the animal spirits flowing. people looking at this right now contain to banks. and during the financial crisis. and all that fear causes bond yields to follow that's good news for tech stocks and tech is a safe haven, microsoft
gained 10%. and a huge portion of the s&p, 26% to financials, and banks don't matter that much. jack: he they are wondering about bank turmoil, what does it mean for my savings. is the money safe, what do you want to tell them? carleton: looking at measures they took last weekend, everything to protect not only the insured depositors up to 250,000 about the uninsured depositors with balances above that. bank stocks, that is one matter but in terms of people, what they are keeping and banks are there money. jack: what are you looking for from the fed? ben: the fed is in a tough spot, the fed funds futures market, 65% chance the fed will raise rates 1/4 of a point down
from half a point a week and a and 1/2 ago. 13% chance of no hike. that's probably right, no hike, can send two possible messages. one is things are bad. it could also be a green light for taking on lots of risk and i don't think the fed want to those things to happen so it does raise rates by quarter point. i worry higher rates caused this problem for the banks in the first place. not sure the quarter point over a longer period is anything to do. jack: but fed chairman ben levisohn would not raise them. i noticed the treasury took time out putting out bank fires to take a tough stand with china-based parent of tiktok. what can you tell me?
carleton: cityhias is looking o a potential us ban of tiktok. tiktok has been in the government's crosshairs for some time because of allegations or concerns about security threats, the justice department now investigating surveillance of american journalists by tiktok owners. there's a reason government officials are concerned. jack: will there be a us shutdown of tiktok? dogs knock their owners into swimming pools, that kind of thing? carleton: it will be months before we know if there's a shutdown of tiktok. one thing to note, if there is, huge benefit for companies like meta. ben: jack: what did we learn from airlines? kristin:a mixed bag. you have united saying we are expecting a loss in the first quarter, surprising investors, stocks fell on that news but on
tuesday all the major us bank ceos are an investor conference. they are delighted how the business is looking, delta airlines ceo ed bastian said they recorded the 10 highest saves in its history so we are in a weird place where the airlines are saying we can agree about business and everything looks good but investors don't seem like they are buying it. jack: those who haven't finished the fine details on the summer travel arrangement, what can we expect from prices this year? kristin: you have to expect prices to go up. at the end of february, prices for to mystic affairs, 20% above the previous year, it was worse for international affairs, not just airlines, hotel and lodgings also up. bottom line, start saving now.
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will the fed raise rates this coming week? what do investors want to hear? >> our economist put it will hang said it was a gametime decision. he can see them doing 25 and if things continue to be volatile they might decide to take a pause and doesn't seem like there's a lot of financial meeting but quite a few days. jack: if the fed, is that inevitable now. >> they didn't come down enough, we haven't seen the peak of inflation past downward but the work the fed has done will take time and filter into the system but that medicine is in the process of blowing through the economy's banks. jack otter: jack hough: what is reasonable excitation for return for investors? >> valuations don't look bad. they don't look fantastic. there is a lot of uncertainty where things will end up but
even on my below consensus numbers we are pretty reasonable for this year. jack hough: far below? >> i meant 199. even -- jack hough: that a big difference. >> we don't look fantastic but we look okay. jack hough: does that anticipate a recession? sound like a big difference. >> if you look at stock market pricing in october, it baked in a mild short shallow recession that takes place in 2023. the things that takes valuations lower, this is the risk, if you see a recession in 2,024 that hasn't been priced yet. jack hough: are their part of the stock market that are more vulnerable than others, to missing earnings in a roundabout way of saying what would be your favorite sectors to invest in? >> the tech space is really interesting. we can overrate that sector because we want to keep our toes in the growth trade.
they got the risked last year. the value sector, things like energy, financials, before banks blow up, those are the last dominoes, expectations were resilient and they've got to bake in some pain. jack hough: what about banks? >> we didn't anticipate what unfolded over the past week. the bank team thinks this is a contained implosion. we will wait and do see. if you are a longer term investor, whenever you have big dislocations like this there are always opportunities. a short-term investor will need something else. jack hough: what do you think about large caps? >> in the short-term, large caps have the advantage because they are biased towards defensive end growth sectors like technology, financials are being a drag on the small-cap space. small caps are more cyclical. we have the fears and risk movement, it's a tough place to be but valuations look fantastic.
if we keep that 2,024 recovery thesis on the economy intact, we need to add to some. jack: layoffs are creeping up. are you concerned about the effect on the economy? >> i'm comforted by the affected industrial layoffs are nonexistent, industrials did most of their layoffs around the pandemic as much as we saw in the gf the anti-tech level, that gives the economy some resilience. outside that, we see areas like media, financial, healthcare, consumer-products pickup. before the bank issue, sibley because we are seeing the labor market deteriorate. that's better news for investors getting started sooner rather than later. jack hough: do you see any mistakes investors are making? >> there's a big rotation into growth this week. that makes sense given what has happened with interest rate expectations but industrials have been getting hit hard.
energy stocks hit pretty hard. there are cyclical concerns, nothing to do with what is going on in the banks. jack hough: who is at fault for the banking blow up and where do we go from here? more on that next. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so... ...glad we did this. [kid plays drums] life is for living. let's partner for all of it. i'm so glad we did this. edward jones
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barron all-star andrew bary is here. let me start with carleton. blame someone. carleton: i blame a little bit of everyone but the buck stops with bank management teams. if you were paying attention two years ago when the fed was saying inflation was transitory, analysts were saying it is not. everyone knew inflation wasn't transitory. everyone knew the fed would have to raise rates rapidly. the response. of the bank to adjust its portfolio a boringly. if they made longtime bets on data treasuries you hedge of those bets, look at the silicon valley bank which failed last week, what happened for 8 months? it did not have a cheap risk officer. jack hough: if you are bank that sounds bad. carleton: everyone is responsible for risk at any corporation but the bank let its hedges lapse. one of the biggest rate hike cycles ever. jack hough: for this month that extra yield, i'm a cheap risk
officer. what do you see? andrew: first republicans having trouble, that's the focus the last couple days. it is troubling. a consortium of 8 banks, with a $30 billion deposit infusions that would solve the situation, stock took a big hit friday. one of the problems is unlike 2,008-2,009, the biggest banks were reluctant to purchase the troubled banks, they would pick off people, and inherit the loan portfolio. jack otter: everyone knows the movie it's a wonderful life, there's one on the bank and people of bedford falls come together to save it. and silicon valley bank, twitter is not bedford falls. has this combination of social media and smart phone bank withdrawals made the banks riskier? carleton: we saw it coming
together but in the opposite direction. if you follow the reporting, customers, banks were saying we are all pulling out, that sort of thing, these messages are happening on chat and the next screen, i am moving out, the speed at which you move money these days can accelerate any panic and get difficult for any bank to get ahead. jack hough: kristin, jump in. kristen: this bank had a homogenous client base. a lot of folks were tech founders, this is a tight community, talking to each other constantly and they got to get her not to save the bank but to bury it. apple 24 hedge fund manager bill ackman says relators need to do more and soon. time is running short before the fire becomes a
conflagration, i was too scared to look the word up in the dictionary. it means an even bigger fire, regulators doing enough? >> i really agree with him on twitter but it seems inflation is too strong but markets like to go where they see weakness. in this case, the fact that the fed hasn't come out yet or the ftse hasn't come out yet and said we will back these depositors above the $250,000 limit. until that is done you will see many continue to pull out of the regional banks towards the big banks because that's the safest place to be. people don't want to be in a place where they see their money disappear. jack hough: investors should buy the big banks. why? andrew: they are benefiting from their too big to fail status, deposits are going their way. i emphasize jpmorgan, a great managing team, and pretty good valuation with 2% dividend
yield, morgan stanley and goldman sachs, they are banks in name only, goldman is getting attention because of consumer troubles with the powerhouse and investment banking and trading. jack hough: regional banks? carleton: i would say pay attention to the space. jack hough: we are all paying attention. carleton: last time i said look at the kba, that is concentrated on the larger banks but this week, you have ken griffin, citadel, giving up 5% stake in western alliance, one of the banks that is caught up in this. you have people looking at oklahoma based bank first. the bank has 38% of its deposits uninsured, they look at sticky deposits, the bank trades well. cristiano amon four politics make me break out in a rash but some conservatives said the culture and focus at svp contributed to the problems, they used the w word, woke. what do you make of it? i will count the number of times you use the word woke in case people email about that.
andrew: silicon valley bank has the most woke credentials in the industry, it is accorded into look on valley which is the beating heart of woke america, has big emphasis on diversity, equity, and inclusion, which is with the woke route, habits borders women, the woke crowd likes that too, but whether or not that contributed is debatable. management miscues. jack hough: that is a four woke answer. do you agree or disagree with andrew? kristen: i'm with you that the board was not doing its job. where you lose me is to connect that to the fact that some of these board members are women and people of color. look at the last financial crisis, boards of company of lehman brothers, to say having a board of white men is no guarantee of anything. jack hough: we have to have a whole segment on this next time. i will bring the whiskey. you have some great investing ideas for next week. been tells us about a stock
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beyond ordinary etfs. visit foxbusiness.com/"barron's roundtable". jack hough: you have a stock that is almost 3. why does this involve me selling girl scout cookies? what do you have? ben: nothing is ever really free but we are looking at r rivian stock. jack hough: i thought this was ago growth stock? ben: it has $12 billion in cash on the balance sheet, at least it did at the end of 2022, the same as this market.
you are getting the company for free under normal conditions but it is burning through cash the way my grandfather's cadillac ran through gas. it has negative margins, 68% margin per vehicle and plans to build 50,000 vehicles this year. this is going to money super fast. if it cut that cash burn and keep vehicles going -- jack hough: stuff it into the cars it has and sells it. ben: it could work for facebook. carleton: i need carbs. the parent of olive garden, it can whether a recession, it can protect its margins pretty well. i'm happy to have breadsticks. jack hough: the chairs had wheels, you could overeat pasta. how about you? okay to my pick comes from ge
healthcare, the company that spun out of ge at the beginning of the year. the stock has gained 26% and analysts say it is underpriced. investors want to see what the company can do. there's a lot of upside. jack hough: the most influential women in finance. kristen: the new ceo of meta has been relatively low-profile, one of the most powerful people. jack hough: thank you, check out this addition of "barron's roundtable" to one.com. let's offer us, see you next week on "barron's roundtable". - [announcer] this program is a paid advertisement from u.s. money reserve, a company not affiliated with u.s. government or the u.s. mint. philip n. diehl is the president and spokesperson for the company.
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