Political and cultural conversation, what jack dorsey told barrons. My colleagues, ben levisohn, carlton english and jack howe. So, ben, according to lpl, the market had its best 50day streak in all of history, and that was before fridays 800point jump. Is this all about jobs . Whats going on . Yeah, i mean, the market certainly sniffed out something, Something Big happening, and it really, i think, was shown in this jobs report. 2. 5 million jobs were created last month, and to show just how crazy that number is, the most optimistic economy who was surveyed expected a job loss of 800,000. I mean, its just an enormous dishes, and this is difference, and this is fantastic news showing that the recovery from the coronavirus shutdown is going faster than anybody really expected except for maybe the stock market. [laughter] jack so as investors, with we a always want to think about risks, right . There could be a second wave of pandemic, we still have three times as many people collecting Unemployment Insurance as we did at the peak of the great recession. There has been blood on the streets, it could get worse. But what ill ask you is what more can go right . If nothing else can happen that the market likes, this rally could stall. What we need to see now is the rest of the Economic Data start to confirm what the payroll shows. Is it going to show up in our industrial manufacturing surveys, is it going to show up in production, is it going to show up in retail sales, are consumers going to start spending. Thats how this becomes a positive feedback loop that can keep driving markets higher and the economy. If those things dont happen, then there really a lot of risk for a market that may have gotten ahead of itself. Jack one thing that has been happening this past week is bond yields have risen, bond prices have fallen as stocks went up. At some point could those yields get high enough where the stock market would start to get worried . I think they could. This move has been very large. It went up a quarter of a percentage point in the 10year yield this past week which is pretty enormous, especially when yields are this low. And i think the faster that goes, if it continues to accelerate, that could be a problem. Were not at that point yet, but at some point you have to start wondering does the federal reserve, which has certainly helped this rally with all of it monetary stimulus, have to back off of some of that, and all that could impact the market. Jack carlton, the obviously, its been a tumultuous week, and africanamerican unemployment actually ticked up slightly to 16. 8 . Interestingly, the corporate response to whats been going on has been stronger than weve seen in the past. Youve been writing about this a bit, talking to some chiefs. Yeah. And, you know, in the past corporations generally would not want to weigh in on social issues, and i think at this point a company cannot avoid it anymore. So a lot of corporations have issued statements, obviously, deannouncinging racism and sometimes even denouncing, and even showing support of the protests that have been going on. You know, thats part of the issue, but its also, okay, what are you going to be doing next to improve the situation. We have a number of pieces in the magazine this week where management were saying we need companies not just to say, okay, we denounce racism, but what do our leadership ranks look like, what are the pay disparities going on, and what are we going to do to fix those disparities. We also are are an interview with bank of americas Brian Moynihan who talks about its not just charity and government programs, its also about investment and partnering with communities to close some of those gaps that exist. And ive also been talking about how activist shareholders may may a role in this down the line where they urge more diversity on boards. That hasnt been top of mind lately, but a lot of the Institutional Investors that these activists support have the make a factor of their voting, and theyre looking for new ways of finding trekker candidates director candidates. Old ways of doing things are going to get you the old results, so a lot of investors have said theyre using things like linkedin is finding incredibly quality, diverse candidates. Jack jack, these angry conversations in the country have been taking place on twitter. Barrons caught up with the ceo this week to talk to him about his company. Yeah. This story is not about the controversy surrounding twitters efforts to police its content. This is a stock call. Bill albert sees significant upside, he says, for this stock in the year ahead. Twitter is a company thats getting some of the best growth its ever seen, tons of attention. But it has, for a long time now, underperformed in terms of turning that usage into ad dollars. There are now two activist investors on the board, jack dorsey in this conversation with barrons, he says hes accountable. You know, this isnt like one of these other social Media Companies where you have super voting shares and the the company is working on improvements to its advertise thing product and giving advertisers better ability to critical create campaigns. So bill sees upside for earnings and the stock. Jackie yeah. But, of course, he might be picking a fight with the president as well. Well see how that ends up. Coming up, how corporations have responded and should respond to the can killing of george floyd. Morgan stanleys carla harris next. There are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. 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I know youre kind of moving past the obvious beneficiaries of ecommerce and work from home and look for the Second Derivative beneficiaries. Can you explain that . Yeah. What were looking for right now is, you know, well, first of all, you know, we believe that the market, you know, sr. Ed good at very good at, you know, looking backwards. And, actually, its very bad at, you know, basically valuing, you know, change in the future. So what that means today when you had such a significant, you know, event like corona is, you want to look for sec la changes secular changes and understand what underlies them. So, you know, the obvious thing would be ecommerce is, obviously, going forward, but what are the platforms that are going to allow companies to basically, you know, thrive and be built on that. That might be more durable. Or the other thing that weve been spending a lot of time on is that you may have, you have Many Companies where 2020 is going to be, you know, a poor year. You know, certainly much less than one would have thought in 2019. But its about relative competitive advantage in companies. And so they could be having poor years, but if what theyre really doing underneath is building on capabilities and or their relative advantage versus the rest of their competitors, thats something that the market, you know, has a tough time understanding in the short term. And thats what were looking for at the moment. Jack one programming note, henry is kicking off the barrons investing in tech Virtual Conference thats going span six weeks coming up. I know jack howe has a question for you about one of your holdings. Does that come with a song and dance number, henry . You can tell me later. I want to ask you about bright horizons. I know you like the stock. I think of it as a place where parents drop off kids when theyre on their way to the office, a a daycare business. Whats the case for the stock in this environment where you have more people working if home right now . Yeah, you know, jack, its i think its a perfect example of something where 2020 is going to be, you know, a are poor year for the company. But when you look out whether you believe that the economy gets to a normalized in 2022, its actually getting relatively stronger. And ill break it down into two parts. You have their traditional business, the Center Business where they have about 1,000 preschool and daycare centers. And if you look at those companies, you know, twothirds of their centers are basically in partnership with corporate employees. And thats always been veried good for them very good for them because by teaming up with corporates, theyve been able to invest more in their teachers and their curriculum and then create a Virtuous Cycle where you have Better Service and better experience and you attract better customers. And that creates a positive vibe. And then, you know, if you look at that business today, you know, 80 of its been closed, and they havent even announced when theyre reopening. The second thing is if you look at their competition, the two largest competitors are owned by private equity, and then theres a number of, you know, very small competitors who really also dont have a balance sheet. So you think about the competition for teachers on the other end, for real estate and also the ability to really continue to invest in your product, theyre going to be, certainly, stronger on the way out. Jack thank you very much, henry. Unfortunately, we have to leave it there. I use bright horizons, and i like their service. Next time well talk about red fin. Up next, round table members give their investment ideas for the coming week. Stay right there. Introducing new voltaren arthritis pain gel, the first and only full prescription strength nonsteroidal antiinflammatory gel available overthecounter. New voltaren is powerful arthritis pain relief in a gel. Voltaren. The joy of movement. An herbal stress reliever ashwagandha, new voltaren is powerful arthritis pain relief in a gel. That helps you turn the stressed life. Into your best life. Stress less and live more. With stressballs. Jack so, jack, during the week when im on a zoom call with all you guys and my sons playing fortnite and my 6yearolds watching big hero 6, apparently theres a Hardware Company making that happen. I thought that was you playing the fortnite on the zoom call. [laughter] yeah, broadcom, its almost run like a Mutual Fund Business filled with chip companies, other types of tech companies. Diversified chipmerrick. They reported maker. They reported in line results for the quarter, so big whup, right . They had serious supply issues, and despite that, theyre okay. Theyre benefiting from 5g, that gives them a 40 increase in iphone content over 4g, making good money on cloud computing, even from Home Broadband with so many people working from home right now. Stock looks cheap at 15 times free cash flow. Jack thanks, jack. Carltons idea a little more old school. It is. Taking a look at caterpillar, its looking interesting to me now. Earlier this week we noteddededd that dividend looks safe, 3 yield, but also about the reopening story. The stock has been running up as some regions have reopened. New york city is expected to allow Construction Projects to continue next week. So it might mean that caterpillar has a little more room to run. Jack thanks. And, ben, youre looking at a financial. I am. Im looking at capital one. With this kind of payroll, more people have jobs, more people are paying their credit card bills, so capital one will benefit. It has a Little Energy kicker in there, thats held it back, but it actually could be a benefit if the energy patch keeps improving. Jack cc one interesting thing, you know, jpmorgan is not with us, al zahner hamilton is no longer with us, but the founder of capital one is still running that company. Great ideas, thank you. To read more, check out barrons. Com and dont forget to follow us on twitter. That is all for us, wear your masks, see you next week on barrons roundtable