Role, on the Long Distance round table, ben levisohn, carlton english and jack howe. The fed has been sometimes blamed for propping up the market, but it looks like fridays selloff may have been in part due to what the fed was saying and doing. Thats right. I think the fed made a mistake. They released the results of their a bank stress tests, and at first they looked just fine. The dividends were capped for the third quarter, but that wasnt much of a surprise. Normally the suspension of buybacks because no ones really buying back banks anymore, but they left a lot of uncertainty about future quarters. As investors looked at those numbers, they a really started to get a bit afraid of what it meant for bank stocks, and then they started to fall on friday. And it really isnt good for the market at this point or investors. Tech is about 27 of the s p 500 right now. If thats near dot. Com levels. Investors really need other choices besides tech, and they were starting to feel comfortable with finance and banks. The fdic on thursday had approved some changes to the volcker rule that would allow banks to take a little more risk, and that sent banks flying up. And then these stress test results came out and kind of undid everything that had happened the day before. Jack now, of course, the stress test would not have been stressful if it were not for covid19, and those numbers are not looking good. The raw numbers are moving higher, and the percentage of positive tests is up, and thats a scary thing. Thats right. Were seeing the numbers rise in states like florida and arizona. The positivity level rose over 10 in texas, which is what was giving us a reason for dialing back the reopening there. And everything really does come down to the coronavirus. If we can get that virus under control the way that it seemed to have been before, the economic reopening could continue to happen, and stocks that are connected to the economic activity, banks, industrials, materials, can do well. But they really need to see those coronavirus cases get under control. Jack carlton took a deeper look at banks for this weeks barrons magazine. Carlton, whatd you find . Yeah, so i think ben hit all the main points on what the stress test did. You know, i think investors were really looking for some positive news to come out of it, and they didnt get it. The news on the buyback, a lot of the large banks already halted the buybacks and even the ceos said, so that was a nothing burger there. On the dividend front, i think investors were looking for some sort of lairty, and they clarity, and they didnt get that. You will get some banks may not be able to meet them, theres still some ambiguity there. And the fact that the banks are going to have to take a test again later this year is just another overhang of uncertainty for the sector. And another thing that typically happens after the stress tests are released is almost immediately you have all the banks come out and say, okay, after the test were going to raise our dividend. Obviously, that didnt happen. On monday the banks are allowed to say what their capital plans are going to be, and we really dont know what theyre going to say. Are they going to talk about the level of dividend or push down the road, we got the results, and were going to look to see what we can do going forward. Jack and there is a dichotomy in performance, ubs, Morgan Stanley did a bit better. Whats that all about . Absolutely. So one of the factors of whether or not the banks can pay their dividends is it looks at average earnings over the last four quarters. In the case of wells fargo, you know, it doesnt look like theyre able to earn that dividend. In the case of Goldman Sachs, under one of the worst Case Scenarios for the banks, it does come up with the minimal capital environment. On the other hand, when you look at Morgan Stanley, you know, with this acquisition, theyre going to be diversifying their revenue sources, so thats going to help that bank down the line. Jack gotcha. So im going to pivot to jack who spoke to a ceo this week who said that cars are going to become more like iphones. Whats going on there, jack . Yeah, this is jack at invidia. When youre trying to tell everyone that your kids are playing all those video games but we all secretly know youre up late at night playing them, that has long been invidias main business. It makes the chips that handle those games and graphics. On tuesday it suddenly announces a deal with Mercedes Benz to redesign its entire car fleet starting 2024 using hardware, software, services. Theres going to be over the air software downloads, theres going to be autonomous driving features, and theres going to be recurring revenue for both companies with apps over the life of the vehicle. So, jeff called this iphone moment of the car industry. I spoke with him, i asked him how do you get from video games to selfdriving cars. Heres a clip. Its just two sides of the same coin. People thought we were a video game company, but we are an accelerated Computing Company where video games was our first killer app. Ive got that full conversation on my barrons street wise podcast. What youre talking about, his first killer app, his second is very clearly Artificial Intelligence because this year for the first time database revenue is going to overtake gaming revenue as invidias biggest moneymaker. Jack thanks very much, jack. Ive got a programming note, neil cavuto, thursday july 9th, america together open house. Among the special guests will be real estate icon Barbara Corcoran wholl be answering your questions about the changes in the housing land scape. Message fox business on facebook or instagram or email. Coming up, Telecom AnalystCraig Moffett with insights on the long road to 5g, and well get his stock picks too. Thats next. , there are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. Comcast business is prepared for times like these. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. Tums ver bell rings la stick when heartburn hits fight back fast. With tums chewy bites. Beat heartburn fast tums chewy bites jack Telecom Companies tell us 5g is finally here. The longawaited rollout promises to transform the way we live if work. Here to separate the signal from the noise, an list and founding partner, Craig Moffett. Thanks so much for joining us, craig. Theres a lot of hype about 5g, but youve been warning people that they have to make a tradeoff between coverage and speed. Can you explain that . Well, thats right, jack. The problem is, is spectrum, right . To get the very high speeds that have been promised as this kind of 5g hype story, you need to have very big blocks of spectrum in very high frequencies. And the problem is to do that you only get very short coverage distances. Alternatively, you get very slow speeds, and the problem is theres no one right now that is offering the best of both worlds which is good speed and good coverage. Verizons network you might get extremely high speeds, but youll only be on the 5g network 1 of the time. T mobiles network you might get very good coverage, but youre not going to get speeds. Right now were still a long way from satisfying both of those conditions. Jack well, one case where you wouldnt need both would be like, say, a stadium or an airport, assuming we ever go back to such places. It sounds like it could be great in that kind of situation, right . Oh, a thats right. And, in fact, thats where verizon has spent most of its money over the last few years, is developing small cells in whats called millimeterwave spectrum in very dense areas. Again, a great experience if you can get coverage. But the problem is, first, were not there. As you say, were not there very often anymore. But what about the rest of the time . If thats 12 of the time that youre on your phone, what about the other 98 of the time . Its just not a compelling Value Proposition yet when the very high speeds are only available in those extremely limited areas. Jack so more realistically, when do you think the first real use cases for 5g will be here . Well, youll start to see some use cases, i dont mean to sound so pessimistic that its not going to happen. Youll start to see some use cases and perhaps the most important will actually be in private Networks Rather than public networks. So ironically, the verizons and at ts and tmobiles of the world may actually not participate in the early use cases. It may be factory of the future types of use cases that inside factory walls. Itll use 5g equipment, but it wont be the network in the way you think of it as the phone network today. Itll be more of a highspeed replacement for wifi. Some of the use cases you hear, Driverless Cars and that sort of thing, just dont make any sense economically as a way to use a network or in the case of the Driverless Cars, youd never engineer a network to rerequire a ubiquitous 5g Network First because youd drive off the road when you got to maine. Most of the use cases, unfortunately, havent really within fleshed out, and you have this chicken or the egg problem. There arent ways to generate revenue to support the capital to build the network, and until the network is built, its going to provide the revenue. Jack theres also a geopolitical element here because if we dont build that network, were in danger of falling behind china, is that right . Well, theres a couple of layers to the issue of china. You know, in a very simple sense, obviously, we dont compete with china for building out 5g networks. The 5g network is fundamentally a local thing. But there is this very real sense that we want to have a robust 5g ecosystem including suppliers of equipment. And the risk that we are wholly dependent on Companies Like huawei, for example, that manufacture in china would be a very scary, from a National Security perspective, would be a very scary outcome. So you do have this desire to say we want to make sure we have a robust enough ecosystem that it includes suppliers of critical infrastructure, and thats above my pay grade as an analyst of the carriers, but it is a very legitimate concern about how do we make sure 5g evolves in that way. Jack and were out of time, but i just want to say of the stocks you mentioned, you do think tmobile looks the most interesting . Well, i talked about that tradeoff between speed and coverage. Tmobile has a very large block of mid band spectrum that they got in the deal with sprint. That will be the first part of the story for really making speed available with wide coverage, and tmobile will get there long before anyone else. So youve got a carrier that charges less for its service and will leapfrog to having the best network. And the best network by a pretty wide margin, and thats an exciting story for us. Were very bullish about the tmobile story. Jack thank you so much for the insight. Appreciate it. My pleasure. Jack coming up, the covid19 crisis and concerns about Workplace Diversity have accelerated interest in sociallyresponsible investing. The panel tackles it next. vo at audi, we design cars that exhilarate with versatility, whether on the track, or the everyday drive. Today, that philosophy extends to how we connect with you. We call it, audi at your door. Whether a remote test drive, shopping, tradein, or even service pickup, audi at your door can do this and more at participating dealers. The premium audi dealership experience, on your terms. Audi at your door. Me too. Me too. And if youre a small business, were with you. Standing by you every step of the way. Bye bye. Did you know Liberty Mutual customizes your Car Insurance tada so you only pay for what you need . I should get a quote. Do it. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. Sawithout evenon yoleaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, youll only have to pay for the data you need starting at just 15 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. Its the most reliable wireless network. And it could save you hundreds. Xfinity mobile. Jack recent years have seen a i growing interest in Sustainable Investing often referred to esg for environmental, social and Corporate Governance lenses. Barrons Senior WriterLeslie Norton joins us now to discuss this trend. Is so, leslie, the old school of Sustainable Investing meant simply avoiding stocks and saying companies that sold alcohol, tobacco or firearms. But that has changed. Thats right, jack. So what we have now is whats called esg investing which is investing according to environmental, social and governance factors. You know, its also called Sustainable Investing, its also called responsible investing. You know, typically people have used financial metrics to evaluate companies. What esg does look at a whole host of nonfinancial metric ranging from whether a companys board and management are functional to how a company treats its employees to whether it is, it is saving money by using renewable energy. And growth in this kind of investing has been spectacular. Last year inflows into these kinds of funds quadrupled. Right now theres 120 billion in assets in esg funds, and this is growing strongly. Youre also seeing it more and more broadly accepted on wall street, main street firms like Morgan Stanley and Goldman Sachs are offering these kinds of funds, and in january you saw blackrock, the Worlds Largest asset manager, say that it would put sustainability at the heart of its investment process. Now, its not just, you know, asset managers, of course. Its also companies that are driving the momentum birdies closing this by disclosing this kind of nonfinancial data. Part of the reason is they want to be able to show their constituent is says what their employees constituencies, what their employees, how responsible they are. And, you know, this is whats driving the momentum. Jack thats an interesting point. Employees are a stakeholder. And last year the business round table came out and said that business should not just focus on shareholders, but stakeholders, employees, customers, even the Community Around them. And then this year, of course, we saw covid19, and then the killing of george floyd. Corporations are all taking this into account, and thats why the special section in this weeks baer rons focuses barrons focuses on the s of that sg. Thats right. So, again, there are three things that kind of underlie the sudden and extremely strong interest in the s factors this year. And the three things are the pandemic, the recession and also the widespread recognition of income and racial inequality that was triggered by the death of george floyd and so many others. As you point out. So while governance and the environment were critical, now the social or part is important. So what you saw this year is you saw bank of america, for example, during the pandemic raising wages and deciding not to do layoffs. In response to the protests, you saw blackrock say that it will dramatically increase the proportion of black employees in its work force and in its senior management. This is all consistent with stakeholder capitalism. What stakeholder capitalism is about, as proponents say, is paying attention to everybody in the food chain. Loyalty matters, and these constituencies can help a Company Survive and thrive into the long term. Thats why its called sustainability. Jack carlton had a question for you, i know. Yeah, leslie, im curious, this week the Labor Department said it will require fiduciaries to choose investments solely on financial consideration. Curious what the the esg communitys response to that has been. Right. Well, obviously, its been a really strong response. When i spoke yesterday to joe keith who heads one of the largest Sustainable Fund complexes in the united states, patchwell funds, he said, you know, what year is this . You know . One of the things that labor secretary scalia has said or said in an oped in the wall street journal yesterday was that people who are investing according to esg are often trying to promote a social or political outcome rather than trying to maximize returns. And so, as you point out, theyre trying to restrict how retirement plans offer esg funds. And, in fact, its not just the dol, its also the sec. Theyre trying to decide whether esg funds need to follow rules that require their names to broadly match what they invest in. And, of course, theres a lot of different definitions, so its a thorny issue. Jack leslie, really appreciate it. Up next, round table members give their investment ideas for the coming week. Stay right there. At mercedesbenz, nothing less than worldclass service will do. Thats why were expanding your range of choices. Many dealers now offer optional pickup delivery and athome maintenance, as well as Online Shopping with Home Delivery and special finance arrangements. So, whether you visit your local dealer or prefer the comfort of home you can count on the very highest level of service. Get 0 apr financing up to 36 months on most models, and 90day firstpayment deferral on any model. Jack so, jack, this week marks barrons annual top ceo issue. You spoke to ten chiefs of Big Companies in this country. Any threads running through them . Anything in common they have . Everyone is using the phrase fortress Balance Sheet. That phrase has spread like wildfire. I spoke with a lot of chiefs over the past week. I spoke with jamie dimon, jpmorgan. Larry merle at ups as youve had on the show. Ive heard jamie dimon use that phrase, i think he might have started it, and youd expect a banker to tell you that. All of a sudden im hearing, hey, during the shutdown, terror dress Balance Sheet really came in handy. I looked to see whether i had a fortress. I would characterize it more of a sturdy picket fence. Im not quite at fortress levels yet, but that seems to be the thing on every chiefs mind right now. If. Jack ill swing by, and well wild build a great big wall around your house. Carlton, actionable ideas. Yeah, i like moth. The company has been doing everything it should be, meeting the work from home demand. They made the tough but correct choice on friday to close its retail stores. Jack and, ben, youre doing a risky stock, i think. Yeah. Its im looking at the u. S. Global jets etf. Airlines zoomed off their bottom, but theyve pulled back hard including just 8. 8 this week. Theyve fallen to support, and in that holds, you could see that etf and stocks like delta perhaps really take off. Jack interesting trade, big tech and flying. Opposite sends ends of the spectrum. Thank you so much. To read more, check out this weeks edition at barrons. Com. Follow us on twitter, thats all for us. Wear your masks, see you next week on barrons round taik. announcer the following is a sponsored program for prostagenix, furnished by prostatereport. Com. upbeat music hi, this is larry king. Over 30 million men in america have prostrate problems. I know, i was one of them. And all these natural prostate supplements like the ones i have here in front of me are everywhere. Drugstores, health food stores, on the internet, and all over tv, selling millions of bottles every year