Means for the Energy Sector and your portfolio. And sony and microsoft are set to reelite next generation video game console ahead of the holidays, is and most repreorders have already preorders have already sold out. On the round table, my colleagues, ben levisohn, carlton english and jack howe. Ben, i thought the debate might be the big story of the week until we all woke up friday morning to find out thats president and first lady have covid19, but the market largely shrugged it off. Whats going on . They say that the market hates uncertainty, but investors have been planning for a lot of it. If you look at the vix, the markets fear gauge, theyre expecting a heightened level of volatility all the way through january. So Something Like this comes along, and it shocks the market, but it doesnt shock it, i think, as much as people would have normally if it had just come out of nowhere. And theres also stimulus talk going on, and actually i wouldnt say in the background. That was taking up a lot of attention this week, the negotiations between mnuchin and nancy pelosi. And that also got the market excited because it would love to see a stimulus bill get passed and have a new cash infusion into the economy. Jack yeah, they both sounded fairly positive, they were making nice noises about compromise. One other thing that might possibly push us toward stimulus was some kind of bad news about a layoffs. Yeah. There were a lot of headlines this week about big layoffs first from disney which was laying off almost 30,000 the people, the Airlines Announced theyre going to be furloughing a lot more now that a stimulus bill hasnt been passed. Royal dutch shell announced 9,000 layoffs, and these headlines really dont look good. I think they add to this sense of unease out there about the economy. Theres a lot of talk that the market may not need stimulus, more stimulus to e keep it going. A lots already been passed. It surely wants it, and i think it would provide a lot of comfort for investors who are watching nervously. Jack one of the great things about ben levisohn is he looks under the hood of the market. Explain why you see more evidence the market is looking for a stimulus. It had to do with the outperformance of the dow which gained almost 2 versus the nasdaq which finished the week up almost about 1. 5 . When you see the dow outperform, it usually means economicallysensitive stocks, stocks that do well when the economys doing well are outperforming and not the growth stocks, the tech stocks that have been fueling so much of the markets rise. Thats what happened this week. And the one thing that could really get those cyclical stocks going would be a stimulus plan that gets money out into the economy, gets people working and gets people spending money. Thats just what these companies need. So the fact that they outperformed this week means that theres actually might be a decent chance we get something down the road. Jack carlton, always the contrarian publication, barrons takes a look at the energy patch this week which has really been maamerred. Hammered. It certainly has. You look at Energy Stocks so far this year, and they started im sorry, in the third quarter, and they fell 20 while the s p 500 gained 8. 5 . Thats probably one of the widest spreads weve seen. But there are those incomehungry investors that look for opportunities in that sector. Jack speak of hungry, the sharks are looking around for some merger and acquisition activity when things get ugly. Weve seen some of that too. Yeah, there was a deal between devon energy and wpx that was announced earlier this week, and analysts are expecting were going to see more consolidation in the industry possibly into next year. Jack so one way to play energy is mlps, Master Limited partnerships. They were very popular for a while, fell out of favor, but they pay nice dividends. And so andrew barry has an interesting story about how to do that. Yeah. I encourage everyone to read andrews story. He he gets into a lot of detail. But they primarily focus on these Pipeline Companies could be a good bit. Now, they dont have those same tax consequences. Up by, these funds are trading at very steep discounts, the yields are ranging from 717 , and andrew identified several of these funds that could be good investments. Two of them, and again, i urge everyone to read the story, but two of them are keen Anderson Energy infrastructure and Tortoise Energy infrastructure. Jack thanks a lot, carlton. And one more reason to stay at home, a big story on video games. Jack, what do you have on your head . Jack, i know what youre thinking, and i agree. I do look cool now. The problem is as soon as next month were getting new hardware from microsoft and sony that will make my familys video game gear hopelessly out of date. Im talking about the new consoles, the xbox series x, the playstation 5. 500 apiece. Microsoft has a new pricing plan where you can pay 25 a month or 35 a month for the hardware, it includes some software and services. So why should investors care . Acti havevision blizzard, electc arts, those are the video game publishers, they have a history of outperforming the markets for many months after the new consoles drop as the youngsters like to say. This is a really big business right now, jack. Video games are four times the size of the u. S. Movie box office. This year the top tier games go from 50 up to 70. Jack wow. Well, thanks a lot, jack. Im looking forward to reading bare rons on that thing youve got barrons on that thing on your head. All ive got is donkey kong, but im looking for it. Jack coming up, when the pandemicking hit, americans were suddenly unable to buy everyday items. Whole foods ceo john macke jack since its merger with amazon, whole foods has transformed into an online force. Joining me now, john mackey, whole foods cofounder and ceo to and the author of conscious leadership. Thanks a lot more joining me, john, i really appreciate it. Thanks for having me on. Jack id like to start with whats in the news right now. The wall street journal has reported that theres been some fear of grocers, excuse me, grocery stockers looking to stock up. Are you seeing nick like that . Anything like that . We havent really noticed anything different. Jack gotcha. What about online sales . Obviously, they spike, i think you said they tripled during the pandemic. Are you seeing those level off a little bit, more shoppers coming into your brick and mortar locations . No, t about the same mix its about the same mix between instore and delivery. Jack gotcha. I want to ask you about prices. Its no secret that ined stead of whole foods, it was whole paycheck. Prices are coming down even as grocery prices elsewhere are going up. How have you managed to do that . Well, one of the great things about amazon and one of the reasons we wanted to merge with them, be acquired by them, is they think really long term, they take a longterm perspective. So weve already had three significant price cuts since the merger, and now were working on our fourth. We hope its never going to be the Cheapest Grocery because we sell the highest quality produce, meat, seafood available. But if we try to cut our costs back, amazons helping us to do that, we can also reduce our prices. So thats been the strategy. I anticipate. That continuing in the future. Jack how have you been able to reduce costs . You know, theres a saying about retail. Retail is detail. And that means you have to Pay Attention to every little aspect of your buzz, and you have to look at where are you wasting money, where are you spending money that its not really necessary, that is not creating value for your customers. So weve just taken that critical eye towards pretty much every aspect of our business. And one of the big areas is technology because with amazon to is good at technology, were just aligning with them. We dont need to make the same investments in technology that we needed to make when we were independent. Jack sure. Obviously, thats helped with online sales immensely. Theres no Better Company at that than amazon. Youve also said that amazon has made you, and this is understandable, a little more datadriven, less going by the gut. Is it possible to give us us an example of what that data up covered if few yo and what decisions you made based on the data. Sure. The best example of that is the way amazon has helped us apply data and measurements to our shrink, the stuff thats spoiling or stuff thats disappearing from your shelves for unknown reasons, maybe theft. And tracking that in more detail in every single store, in every single category. We tended to just be cavalier about it, well, thats just part of doing business. But as we began to track it more carefully, we began to measure it, and we can compare it between stores, and we could ask, well, why is this store having a problem, and the other stores around it are not. And so you dig deeper, and weve made significant improvements in our shrink. And that can be, you know, thats worth tens of millions of dollars a year. So thats one example. Jack especially when youve got a lot of fresh produce. I want to pivot slightly. You recent city said, quote were getting fat and were getting sicker. Theres a very high correlation between obesity and covid deaths. I think its certainly understood that eating better is better for your health, but there are a lot of subtle things going on with the american diet and other things. Youre obviously an expert in that. Share briefly what some of those lesser known effects of where americas headed right now with this tighten . Well, of course with this diet . Well, of course, i do think i was misquoted, and that narrative is not correct based on what i actually said in the interview. I welcome the chance to correct slightly. The main thing to emphasize is statistics. 70 and this is easily check bl. 70 of americans are overweight, and 42. 5 are obese. So almost half of the population of American Adults so obese. And its also a well known fact that obesity correlates with certain disease factors such as heart disease, cardiovascular disease, type ii diabetes as well as a variety of autoimmune diseases. So those also correlate with covid. So were, were getting and its not just america, and its not any particular, its not poor people. That was, again, taken out of context. Americans at every income group are getting fatter, and its been a trend thats been going on for over 50 years. It just hasnt peaked yet. Its just still continuing to happen. And its not just the United States that has this problem. Its a problem that the whole world is beginning to experience. Were sort of out in front of it. Jack in the one year that barrons roundtable has been on the air, the market was slammed by coronavirus, but our next guest searching for a way to help stop your cold sore . Only abreva can get rid of it in. As little as 2 1 2 days when used at the first sign. Abreva starts to work immediately to block the virus and protect healthy cells. Abreva acts on it. So you can too. I cantwhat . Ve it. That our new house is haunted by casper the friendly ghost . Hey jill hey kurt movies . 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Absolutely, it intelligently senses your movements and automatically adjusts to keep you both effortlessly comfortable. Will it help me keep up with mom . You got this. So you can really promise better sleep . Not promise. Prove. Dont miss our weekend special. Save 25 on the sleep number 360® c4 smart bed with any Smart Adjustable base. Plus 0 interest for 36 months. Ends tuesday. Jack we thought 2019 was a big year for disruption. No one, of course, predicted what wed experience in 020. T. Rowe price Portfolio Manager david giroux was on our very first show one year ago. Im so glad you could come back for the oneyear anniversary. When we were together in person in october of 2019, we talked about one hallmark of your investing which has been to recognize the massive disruption that has been a tailwind for some companies while stymying others. Has the accelerated course just been a fast forward on the same script, or are things going different hi than you expected . I think it is. You think about things hike retail, you think about malls, you think about legacy tech, it really has kind of accelerated their demise in many respects. Weve seen a lot of bankruptcies in retail and malls, if you will. So i think but i would say that, for the most part, covid has not created new companies or new industries that are under secretary attack with the possible exception of office and apartment as well. Jack in the midst of the pandemic in march you had allnighters as you loaded up on stocks. Can you tell us about that . Yeah. We came into the year pretty conservatively positioned, and all of a sudden with the pandemic we tried to take advantage of that for our shareholders. Within less than a month we deployed 8 billion of capital buying stocks, buying highyield and leveraged loans and took an equity position to the portfolio and took our cash down to 2 . And even today even as the markets recovering, we still are about 57 equities. Jack its a go anywhere fund, you could own bonds, stocks and other asset classes, and its a pretty neat trick. Ill i say in the 14 years youve run it, youve slightly outperformed the s p 500 even though youre not fully invested in stocks. I to want do can you about those i do want to ask you about the zooms and others that were perfectly positioned to take advantage of where our lives have gone. Are you fans of those companies . Were absolutely not fans of those companies. Whether it be zoom or tell doc or, honestly, any covid19 winner that is benefiting temporarily from this pandemic were all living through, you know, you have a situation next year, year after youre going to probably face some very difficult comparisons as well as high valuations and being overowned. I would much rather play the covid losers who have longterm Good Business models than kind of the nearterm covid winners. Jack what are those opportunitieses . Who are the losers that look like theyll make it out . Sure. I would say think about medical devices, think about payments companies, you know, boston specific, a pfizer boston scientific. All companies that haved had stocks under pressure, but weve seen multiple year upside especially as we merge into a posercovid postcovid world. Nor. Jack one caught carlton englishs eye. What opportunities are you seeing there . Well, i love p and c long term. Youve got a great management team, a dividend thats very, very safe, but i think your point about blackrocks sale is really, theres a lot of optionality around that. Its both positive from an offensive and defensive perspective. If you think about it, they now have the strongest Balance Sheet in all of banks today, so if you think about a double dip, pncs well positioned but its also offensively attractive because they have the ability to go do an acquisition, buy back stock and really increase their earnings power that they have coming out of this down turn. So this is a high, you know, a name that we think has multiple dollars upside over the next five, you know, 35 years. Jack and bens got a question. Hey, david, your leverage lending loans benefit from rising rates and arent prices supposed to stay low for a while . Well, see, i think whats really attractive about leverage loans is even if rates dont go anywhere, you can still earn a 4, 4. 5 kind of return. And if the markets wrong, which it often is, about rates, you know, you have the ability to participate in the upside there. And i think thats really attractive. Leveraged loans are the only asset class in fixed income that kind of goes up in value when rates are on the, increasing, if you will. And im a believer if you have a 35 year view, rates are going to be higher than they are today 35 years out. Jack that is all the time we have. I will point out you have a mere 1 of your fund in Investment Grade bonds like treasuries and Investment Grade corporates which suggests youre not optimistic about those asset classes. David, thanks so much for joining us. My pleasure. Jack up next. Round table members give their investment ideas for the coming week. Stay right there. See yourself. Welcome back to the mirror. And know youre not alone. Because this is not just a mirror, its an unstoppable community. Come on jesse, one more its every workout. Come on you two, lets go for everyone. So join in now. And see your best self. In the mirror. When i came to the u. S. , i was fifteen years old. My family was really poor. Now, ive got fifty employees. When the pandemic hit, i was really scared about losing my business. But osmar, my Financial Advisor from northwestern mutual, he told me, brother we got your back. His Financial Planning helped to save my business. If i could talk to my younger self, i would say, youre going to be proud of yourself. Jack jack, one thing you and i and all of us market geeks have been talking about for years literally is when will value stocks ever come back to challenge growth which is, of course, been on a tear for is so long. This week you said bank of america is saying we may be close . I mean, ive stopped predicting the shift because it feels like rooting for the team that the Harlem Globetrotters play against. Theres a lot of getting dunked on, sometimes your shorts get pulled down, the crowd laughs. But in september value had a pretty good month. Bank of america thinks this will continue. They say the discount for value stocks is at record level. Value has outperformed coming out of the past 14 consecutive recessions. If you want to make that shift yourself, they say look for a cheap stock that has high returns on equity, thats to avoid value traps. A couple of their separate just with recommendations, at t, comcast, Goldman Sachs and alaska air. Jack being a value investor, i guess, is kind of like being a jets fan. Now we have two actionable ideas, carlton has a deep value stock. Right. Im looking at bed and beyond. More than a year ago the company had a attracted activist investors, and they made the management changes, they started the cost cuts, they really started to gather their momentum, and then covid threw a wrench in those plans. But the Company Recently reported its results, seems to be back on track. They have an investor day later this month, and it seems like a theyre in place for that turnaround to finally happen. Jack ben, what do you have for us . Dominos pizza, the stock is up 50 president , but it could 50 . This past week we saw papa johns report samestore sales above 20 , and that should mean that dominos own samestore sales will probably beat estimates. It could be interesting. Jack thats a stay at home stock with postpan deming appeal. Listen, guys, on the oneyear anniversary of our show, i want to thank you for sharing your insights every week and, of course, thanks to our loyal audience. As always, to read more, check out this weeks edition at barrons. Com and dont forget to follow us on twitter. Wear that mask, be healthy. See youououououout this. That does it for us. See you next week. Lou lou good evening, everybody. President trump and the first lady, melania trump, are being treated this hour for the china virus. Both, we are told, are in good spirits but remain in isolation as they will be for at least the next several days. It remains unclear how or when the president was infected, but his positive test result came just hours after his close adviser, hope hicks, also test thed positive. Republican National Committee chair Ronna Mcdaniel and senator mike lee also tested positive today. At least 16 of president trumps cabinet members