Out. Will the gradual recovery from covid19 hurt stay at home stocks . And a wild ride this week for Nikola Motors after announcing a 2 billion partnership with gm, the focus of a negative report by a shortselling firm whats next for the deal. On the round table, ben levisohn, carlton english and jack howe. Guys, its great to see your Smiling Faces again. Had a little hiccup at the end of august with a bike accident, but im back in the saddle. Ben, what goes up must come down was the story in the Nasdaq Market this past week. Yeah. I mean, it was a bad week for the market, but it was a really bad week for the nasdaq and tech stocks. With the dow finishing the week down 1. 7 , but the nasdaq off 4 . And it wasnt really bad news out there to really knock them down. Good earnings from the Tech Companies that reported from the most part. There was a little fear that stimulus wouldnt happen but nothing that really causeed it to go down other than the it seemed they were overcrowded and people were a little bit afraid. Looking awe heed, earnings from adobe, were going to have an apple announcement, probably a new iphone and a fed e meeting, but right now those seem like things that could possibly disappoint. Jack one thing weve all been looking for is whether were going to finally see this rotation to other a areas of the mark, value stocks and so forth. Are you seeing any hints of that yet, or is this just people that decidedded that maybe up 74 was a little much for tesla . [laughter] were definitely seeing some, a bit of a rotation the, especially on friday. Materials have gone up, utilities have gone up where tech has gone down. And youre also seeing a rotation within sectors. Within tech marley, you saw particularly, you saw ibm, hp and oracling do quite well even as the high fliers had gotten hit. So there is this rowation going on, its just a question of whether its going to last. Jack carlton, i want to talk about something very exciting that happened this past week which was the chiefs and the texans played an actual game of nfl football, and in the stands instead of cardboard cutouts, there were real fans cheering and booing, occasionally. A blockbuster movie opening, is this a return to normal . Am i going out on a limb by suggesting that . Youre not going out on a limb, but we have a ways to go. So people are wondering if some of these stay at home and work from home stocks are going to run i out of gas, and were finding that might not be the case. Goldman sachs has been tracking this reopening on a 10point scale, and this week we moved to a 5 after movie theaters reopened. For reference, a 10 would be back in early february, a 1 would be in late march. For some of these stay at Home Companies like zoom and peloton the, this bodes pretty well while the pace of growth may slow down, there definitely is still some growth for them. Prime example would be you look at peloton against the backdrop of judgements reopening, and its not going to be too much of a challenge because gyms are operating at a reduced capacity, and people have learned to work out at home. Theyre able to mostly replicate that experience. Some typeses of workouts like yoga, why head to a gym if you dont have to. Jack why get on a bicycle might be a good lesson for me. What about covid19 victim stocks that might do a little bit better . Do you see any hope there . Yeah. So this is an area where all want to be definitely careful and definitely patient, but you would look at names like macys and gap. A lot of the retailers that have survived, they are rightsizing their physical footprint. So, you know, the retailers that are left, they could be in a position, in a good position down the line. Jack gotcha. So, jack, we saw nikola and gm maybe flirting a little bit, a little bit of a hookup there, and its kind of interesting because gm desperately needs something that nikola has which is cool, and they need something that gm has which is an actual building to build cars and be a real company. Gm is looking for that spritz of the e, eau detesla. You say to yourself, whats the big deal . Nikola wants to make these zero emission big rig trucks, but it doesnt have any vehicles in production, probably wont for a couple of years. Theres been some discussion in the media about just how far along it is on the technology. So this deal was kind of the validation maybe that shower holders were looking for shareholders were looking for. I spoke with their founder about it. The problem is just after that deal we had a report from a short seller that really attacked the company and its technology. It erased all of those stock gains and more. I dont want to sound like a fuddyduddy here, im not going to suggest something as radical as, like, investors waiting for profits, but maybe given the controversy you want to wait for vehicles in production and revenues in this case. Jack yeah. We had hum on the show, trevor, and he responded to this idea that hes more Business Plan than business by promising this cool pickup, the badger, by promising these big rigs, but i think it is kind of a showme stock at this point. Yeah. He says the stock is still undervalued, and he believes that its going to be, as he puts it, one of the funnest rides of your life. I dont know how much fun youre looking for. Ive got enough fun. [laughter] jack i think so too. We should note that nikola issued a press release in response, they called the allegations inaccurate and said its exploring legal recourse. Coming up, an antibody treatment for covid19 patients that would neutralize the virus. Ceo george again goes is next. Here . Nah. Here . Nope. Here. When the middle of nowhere. Is somewhere. The allnew chevy trailblazer. So youre a small businor a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. When you think of a bank, you think of people in a place. But when you have the chase mobile app, your bank can be virtually any place. So, when you get a check. You can deposit it from here. And you can see your transactions and check your balance from here. You can save for an emergency from here. Or pay bills from here. So when someone asks you, wheres your bank . You can tell them heres my bank. Or heres my bank. Or, heres my bank. Because if you download and use the chase mobile app, your bank is virtually any place. Visit chase. Com mobile. Jack as a Pharma Companies a race to develop a coronavirus vaccine, Vir Biotechnology is in the testing face of an antibody injection. Ceo George Scangos joins me now. George, i know conditions are pretty tough with the fires in san francisco. I hope you and your family are safe. Thanks for taking time out to be with us right now. I want to start with kind of a big picture. Of most firms seem to focus on oncology or genetic conditions, but your company took a different approach which is to look at infectious diseases. Wade you do that . Yeah. Well, we started about end of 16, beginning of 17, and we saw both an amazing need and a great opportunity. The need is obvious. Infectious diseases are one of the leading killers of people around the world. Flu, hepatitis b, her piece virus, antibioticresistant bacteria, the need is huge both in the developed world and the developing world. At the same time, pharmaceutical companies were pulling back from working in infectious diseases. Some of them had eliminated their efforts entirely. Within the biotech industry, there were a few Companies Working on this many, but they were narrowly focused, underfunded. Jack your timing turned out to be pretty good with what happened this year, of course. So can you gu us an update on your partnership with glaxosmithkline to develop an antibody for covid19. Sure. Look, i think its clear were not going to be able to get out of this mess that were in until there are vaccines to prevent or reduce the rate of transmission and to make drugs to prevent and treat them. There are several classes of drugs. I think the most promising are the antibodies. Antibodies are proteins that your body makes in response to a disease when you get a vaccine or get infected, your body makes antibodies. In the case of a vaccine, thats what prevents you from getting infected and if you get infected, to get other it. Our scientists have to go to patients who have recovered from a disease, screen a lot of patients to identify those who have had a particularly effective response, and from those people isolate the most interesting and most effective antibodies. Now, not all a antibodies are the same. Theyre different from each other. All of the antibodies being developed for covid potently neutralize the virus, block its ability to get into cells and replicate. Some antibodies, not all, have an additional property which is that they are able to recruit cells in the immune system to kill cells that are already infected. So our antibodies are especially potent and not characteristic. Thirdly, viruses are clever x they escape and mutate and become different, and they look different to the immune system. Some antibodies that were effective at the beginning of a pandemic lose their poe tenty because the virus has figureed out how to escape from that. So our antibodies, i think, are more resistant to the development of resis dance by viruses than many others. And then we have engineered our antibodies to last longer in the serum. Is so we think that they can provide months of protection, potentially up to six months of protection. So i think we have antibodies that are differentiated. We have, we are pretty excited about them. In a phase 23 study right now where we are dosing patients, and we should have data by the end of the year to know whether and to what, e tent theyre helping. Jack i know its not your business, but viewers are wondering how quickly do you think well get an effective vaccine out to the public . Yeah, look, i when were going to have a vaccine the most common question. I just want to take a moment here, because i think there are other questions that are more important than that. How well will the vaccine work . Will it reduce infections by 50 , by 70 , by 90 . Will it work equally well in all segments of the population . Will it work in the elderly people who need it the most . How long will the protection last . Three months, six months, a year, many years . How safe is it . And so were going to want to know the answers to those questions. Were going to want reliable data on those questions so that patients and their physicians can make the right decisions for themselves. So more important to answer those questions carefully than it is to rush the vaccine to the market a couple months earlier. Jack that certainly makes sense. I know everyone is rooting for you and your industry to this problem. Thanks very much for stopping by. Okay. Thank you. Jack coming up, is the tech stock bubble about to burst . The as a caricature artist, i appreciate what makes each person unique. Thats why i like liberty mutual. They get that no two people are alike and customize your Car Insurance so you only pay for what you need. Almost done. What do you think . I dont see it. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. Always have been. And always will be. Never letting anything get in my way. Not the doubts, distractions, or voice in my head. And certainly not arthritis. New voltaren provides powerful arthritis pain relief to help me keep moving. And it can help you too. Feel the joy of movement with voltaren. Feel the joy of mov ent the big events are back. Xfinity is your home for the return of live sports. Jack it can stocks have been on a tear unlike anything weve seen since the dot. Com craze of 1999, but is this a bubble . Thats the subject of this weeks barrons cover story. Ben, im not going to keep the audience in suspension. The first hine of your story is make no mistake, this is a stock market bubble. It is. I mean, i hate the term because its usually thrown around by people who have missed the trade to the upside [laughter] and are looking for an excuse. But when you look at the valuations, how has outperformed value, how the s p has lacked the nasdaq and the metrics are starting to look a lot like 1999, its clear were in a bubble. Sorry, go on, jack. Jack you reminded me in the early 2000s there was a bumper sticker, please, god, give me one more bubble. I want to ask you what caused that one to burst, and, yeah, valuations can get out of control, but you dont actually see the our coming out until earnings really disappoint. And to investors this time around, again, have to sniff out some bad quarter withs before they start really selling these things in earnest . I mean, i think thats a possibility. Right now earnings are fantastic, and its easy to keep believing this idea that growth can go on, you know, just forever in a lot of these stocks. Weve seen zoom quadruple sales, you know, perhaps they could keep doing that. But you also have to remember that a lot of the time they just stop going up. I think that was also the case in 2000. You can look back and say that this was, that, you know, there were earnings problems or whatever. We had our famous cover calling it. But really it just comes down to investor, they stop believing. And then the market starts coming down. Jack so you in your story point out that a shortterm investor should have or speculator really should have a very different strategy than a longterm investor in this environment. Can you explain that for viewers . Sure. I mean, i think if youre someone whos trying to capture the next move in the market that were getting to a point where buying these highflying tech stocks is going to be a good thing. Youre going to see a next leg up. But if youre looking out a few years, three years from now, its time to start making a shift from growth into these stocks that have been kind of left behind. Covid is going to get solved at some point. Life will start looking something more like normal at some point. And those stocks will start to outperform again, at some point. Jack so, carlton, one of the things thats driven these stocks higher has apparently been the options market. Softbank had some huge bullish positions in tech stock options, and retail investors, robin hood and ore others, really jumping into the options mark. How does that affect a bubble . The retail aspect is really fascinating. We spoke to a trader who described the past few weeks as a roller coaster, retail trader, who described it as a roller coaster. Apple and amazon ran up in august, and we now know there was an 8ing 0 increase in options trading value volume during that time. And we also have evidence that a lot of those contracts were smaller contracts, indicating it was probably retail investors. Now, theres nothing wrong with options trading. Its a good strategy to use as a hedge against other investments, be i some of these plays have been very speculative, shortterm, all or nothing bets, and thats what becomes worrying. Jack yeah. They dont understand, i think they might mistake skill for luck or luck for skill. You can literally lose everything if it turns against you, usually not the case in a stock. Jack, you have said that you think that actually in contrast to nikola, falling earnings are knot not the only thing that could hurt a bubble. Earnings are going to be terrible this year, the stock market doesnt care. Were hitting record highs whats the only thing that threatened to derail this bull market over the past decade . When the fed was raising rates a little, little butt toward the end of 2018. The stock market threw an angry toddler tantrum, and the fed had to get the bottle and come with a diaper change and reverse course on rates. I think stocks keep rising, you know, for the foreseeable future for as long as rates stay this low, and they do until we have inflation. I dont know a lot of people who are calling for much higher inflation. I spoke with Jeremy Siegel from warden this past week, he thinks we could have 3 , 4 , even 5 inflation over the next couple year, but hes super duper bullish. He thinks the stock market will keep running. Jack very quickly, jack, if we do get that inflation, what does that mean for people who hold bonds . It means they get trashed. I dont know, you know, if im going to [laughter] on bonds right now, ive got to start with why bother. You know, youre not getting income, right . What are you trying to do . Youre trying to preserve your capital. If you want to preserve your capital and make no money, they have these things called Bank Accounts which will do just fine and have a lot more lu quid few. Forget about bonds, look at dave endpaying stocks. Thats a little too out there on the rusk spectrum for me, but i think you have to look for alternatives. Jack yeah. Bank accounts will pay more than a 10year bond. Up next, round table members give this is decision tech. Find a stock based on your interests or whats trending. Get realtime insights in your customized view of the market. Its smarter Trading Technology for smarter trading decisions. Fidelity. i need it so bad dont call it a hobby. Its way more than just a job. This is how we live every single day. Can we go and play . roaring of engines i needed to try needed to fall i needed your love im burning away i need never get old im burning away im a verizon engineer. And im part of the team building. A powerful 5g experience for america. Its 5g ultra wideband, and its already available in parts of select cities. Like los angeles. And in new york city. And its rolling out in cities around the country. With massive capacity. Its like an eightlane highway compared to a twolane dirt road. 25x faster than todays 4g networks. In fact, its the fastest 5g in the world. From the network more people rely on. This is 5g built right. Only on verizon. Even though fans cant attend this years us open,. Garlic. Theyre closer than ever to the action. At home. Ibm watson is serving up game insights from millions of data points. And ibm cloud is helping deliver flexibility and security to reimagine the tournament on and off the court. Now tennis fans have the advantage. Jack jack, you sat down with the ceo and founder of netflix, reed hastings, to talk about radical candor. Yeah. He pretended to not mind being interviewed in order to promote the book, and i pretended to be interested in the book in order to get ther interview. Thats part of the radical candor that he endorses in chapter two of the book, so i was paying attention. [laughter] i learned a few things from my chat with him. He views hbo max and streaming as really the nearest, the most similar competitor, not disney plus. He also views Companies Like tiktok and the video game fortnite as competitors. He thinks movie theaters can survive long term but they dont need these exclusive windows for movies, that people will just go to them because theyre unique venues. Ive got more of his thoughts in my street wise column this week, barrons magazine. Jack and youve been concerned about netflix taking on so much debt to build that library of content, but they seem to be doing okay. This year, actually, the spending has been cut down by the pandemic, so its kind of helping the free cash flow. Jack interesting. Listen, we wouldnt be bare rons if we didnt get actionable ideas. Carlton, youve got a stock idea. Sure. Were taking a look at citigroup. The bank is trading well below book value, but its recently gotten some analyst support, and it named a new ceo, jane fraser, wholl be the first woman to lead are a wall street bank, and this could be the beginning of that comeback that investors have been hoping for. Jack and if Jeremy Siegel is right about interest rates, well see better rates from the bank. Sherwin williams went higher this week. People are painting their houses, theyre buying new houses that need paint, and they make pretty good paint. Jack and its a heck of a company. Its advantage over competitors is actually growing. Great ideas, thank you for that. To read more, check out this weeks edition at barrons. Com. Wear your masks, and well bekkk on monday. Have a great weekend. Muck. Lou good evening, everybody. For President Trump this has been the week that was. It has been, in fact, his finest week since he was inaugust rated inaugurated president of the united states. President trump today the adding to his historic achievements, announcing that bahrain is normalizing relations with israel. Finish this historic Peace Agreement brokered again by President Trump. It is the second such agreement made over the past month, and President Trump appears hopeful that he will have many more successes in creating a new future for the
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