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Beating after reporting solid earnings, when a to expect what to expect next, and m, and a is ramping up following a pandemicinduced slowdown. Which deals are on the table. On the barrons round table, ben levisohn, carlton english and jack howe. Happy halloween, ben. We just saw the worst week since march cap off the worst month since march. What do you see happening in the markets . Yeah. This week was definitely more trick than treat. [laughter] theres, this was the week where everything just came home to roost. We had the election uncertainty which the market had been able to put aside for a while. It came back bigtime. We have these rising covid cases, and theres something about the fact that it hit a record that really stock spooked the market. And then you can have the end of the stimulus dream, earnings from all kinds of companies that no matter how good they were, they really didnt seem to really help the market at all, stocks at all. And by the end of the week, it was just awful. Jack so is there any particular outcome to any of these problems that will help, or is it just anything that shows us heres the course from now on well get a boost in the markets . I think the good news is that despite everything, the fundamentals are looking good. Apples stock got hit really hard after earnings, but its numbers were pretty decent. Industrial Companies Like g exe, honeywell, their guidance was decent. Everything is looking fine. We just need to get past the election. A daut looming in the future that just had so much uncertainty associated with it that once you get past it, things will help. But we also have the fed meeting election next week and payrolls, and the fed can really do a lot to help the market just by saying it has investors backs. Jack lets just hope we actually know who the next president will be are. Jack, ben mentioned tech stocks. It was pretty incredible. I mean, all the numbers kind of rolled off good, it all sounded great, and then the market just took each stock out to the wood shed one by one. Yeah, the numbers were good. Hey, jack, quickly, i just want to nominate carlton for employee of the month. [laughter] because last week on this show carlton pointed out the numbers were good for snap, she thought that that looked good for pinterest, and this week pinterest went bananas after earnings. The stock was up 26 . I want to give an atta boy to carlton, whatever an atta boy is for laid duhs ladies. [laughter] thank you. Amazons getting ready for a huge holiday quarter. Facebook had a big beat, but it did have a cautious outlook. I dont think investors loved that. Alphabet beat across pretty much everything, search, youtube and cloud. Now, apple had a beat, but it was kind of small, and as ben said, investors didnt love that. I have actually kind of changed my thinking on apple. I was unsure about whether investors would rush to i upgrade to that new iphone, but when i saw the carrier subsidies, i ordered a couple new phones for myself and my wife. Of its basically like getting free phones right now because the subsidies are so generous. Piper sandler upgraded their forecast for iphone volumes in the holiday quarter. I think you could see upside there but maybe a shortterm profit pinch for the carriers if they turn in a price war. Jack i think we sometimes forget about a company like amazon. Thats growing like, you know, what Young Companies used to look like. And amazon is basically, you know, its an algorithm. It goes into new industries and tries new things, and if it works, it sticks with it. If it doesnt, it moves on. So a company like that could have plenty of room for growth. Jack carlton, with md buying psi lynx, that could herald a surge in m a . Absolutely. Back in march everybody thought that activity was going to be ted for a or year dead for a year. But we are seeing m a recover. Recent data from Goldman Sachs shows announced deals with up 8 quarter over quarter. Year to date we are still down about 20 on value of m a transactions, but if you 2,000 e 2014. So why not use that currency to buy something . Do you think theres fear that antitrust could be coming back in and they want to get these deals done before that happens . You know, for some sectors, that may very well be the case. We certainly heard that earlier this week with some of the big tech names. But i think overall m a activity, the conditions are ripe for it to continue. You have low Interest Rates and also you have the conditions of the recent market volatility kind of forcing some tieups, so if a deal makes sense to go through, it will still probably go through. Jack not to mention money is cheap. Are efforts by the fed to prop up the economy distorting the market, and where are the Investment Opportunities . Ceo all otc pain relievers including voltaren have one thing in common none are proven stronger or more effective against pain than salonpas patch large theres surprising power in this patch salonpas dependable, powerful relief. Hisamitsu. [ engine rumbling ] [ beeping ] [ engine revs ] uh, you know theres a 30minute limit, right . Tell that to the rain. [ beeping ] for those who were born to ride, theres progressive. Jack of the many forces that move the stock market, none have had a bigger influence than the Federal Reserve in recent years. Here to talk about market issues is Thornburg Investment management ceo jason brady. Jason, thanks for come coming on the show. Yeah, its a real pleasure. Thanks for having me. Jack the question of whether and when we might see investors rotate into cheaper areas of the market. There are good reasons, of course, behind techs dominance, but i want to ask you about Federal Reserve policy. This week the barrons cover story is about Jerome Powells influence on the market. Can you explain why low Interest Rates help tech stocks . Sure. So i think a key thing to understand about tech stocks, particularly those with less profitability today is that a lot of the value in those names is a punitive value far to the future. As you have lower and lower rates, a lower discount rate, it increases the value of that long distant future value. That names that are typically called values, ones with a dividend today, those are paying you cash now so a lower discount rate thats maybe worth less relative to cash in the future. One thing thats very interesting is the experience in 2020 is almost exactly the opposite of the experience as recently as the end of 2018 when the market was down in the context of rising rates, and you saw better performance by things traditionally considered value and worse performance by growth. Jack so rising Interest Rates could trigger that rotation weve been waiting for. I want to ask you about the bond market. One little niche that youve noticed is that recovery in bankruptcies recently has been going down. How does that play into all of this . Well, its really coming back to the fed again. Of course, pursuant to your cover story. So in march, Jerome Powell announced that one of the key elements of the focus of the fed was making sure lending markets were working. Now working maybe in the context of continuing money may not be working in the context of assessing risk appropriately, but the fed was very successful in opening up markets and pumping a lot of liquidity in. But the fed can solve liquidity much better than solvency problems, particularly in the context of companies overlevered even coming into the covid crisis. Its important that investors know that Corporate America was more levered in january and february than it had ever been before, before we even had a recession. So the fed can solve liquidity challenges, but ultimately, a number of these companies are in trouble regardless of covid. So so when they go bankrupt, theres not a whole lot left for bond investors. Jack just a quick question, the focus is not on Jerome Powell, its on the white house and the senate. How important do you think elections are to what goes on in the stock market . Sure. Look, at thornburg were looking much longer term and, frankly, the elections are not really much of a black swan event. We know a lot of what were about to get. We have some pretty clear choices, and frankly as far as markets are concerned, other than taxes not a small thing, but a known thing theres really not that much difference between the two candidates. So its something that were watching but isnt a primary focus of you ours, quite frankl. Jack you mentioned financials before. Theyve not been popular, theyve gotten hammered pretty hard. A lot of Value Investors have been hopping theyll come back. Are you one of those . I consider us to be balanced investors. We want to make sure we dont have all one thing in our portfolios whether its stocks, bonds or multiasset. There is earnly a place for growth certainly a place for growth names, and theyve been pouring the market powering the market forward. I think investors realized that all growth names are not awe cyclical. Acyclical. Financials, on the flip side, are pretty cheap relative to the market and somewhat to their lets history. But more importantly, we think theyre underearning. Theywe would be beneficiaries ie context of rates righting. And so its important to have balance in your portfolio. So just not all growth names as, frankly, or the s p 500 is continuing to trend toward as those names outperform. You want to have some balance in your portfolio, thats whats key. Jack very quickly, 15 seconds, obviously, the bond market is not giving you a lot of returns, but you see an opportunity in consumertype investments . Yeah. We looked at Corporate America is overleveredded, but consumers are doing better today better than precovid. So mortgages are interesting and, frankly, the investors in those names got a little bit over their skis earlier this year, we were able to pick up great bargains there. Jack jason brady, thank you so much. Its a pleasure. Jack coming up, the panel comes back with their picks for stocks hi, im dorothy hamill. As i look toward 65, im thinking about medicare. I know i want coverage that connects all the different parts of my health care to keep me aging actively. Keep doing what you love. Thats the aetna medicare advantage. Jack it may seem like everything is becoming a political issue these days, but barrons has a refreshing antidote. This week we found five stocks that we think are poised to do well no matter who is in the white house. Ben, lets point out one thing. While were all fascinated with the political narrative, the president and Congress Actually have less influence over stock prices than many investors believe. Yeah, thats right. What weve seen is that the market really moves with the economic cycle, and it doesnt really matter if the president is a democrat or a republican. And when youre trying to bet on sectors that will benefit under one or the other, you can often misyoung it completely. E misjudge it completely. Under President Trump there was a lot of talk that banks and Energy Stocks were going to benefit, and they did well right out of the gate when he won, but sincen then theyve just been awful. And the same, the stocks that have done the best did well under obama, the giant tech companies. And weve even seen that during the last four president ial elections the s p 500 has dropped in october, heading into it. So i think its less about who the president is and just more about the market and the cycle. Jack yeah. Its funny when you think about remember trump was always fighting with tech and, oh, it was going to be terrible for tech and, of course, theyve just done wonderful flu. One interesting opportunity that i sometimes see for investors is the conventional wisdom is so strong along the lines you just talked about, sometimes you bet against conventional wisdom and do well. Hillary care was going to destroy health care, that was a great time to invest. Then there was obamacare, same thing. Elizabeth warren, remember, we were scared she was going to destroy the sector. Now maybe theres an opportunity to invest in health care, and, carlton, thats our first pick, abbott labs. Its not just about the election, but about the pandemic. They have one test that gets results in about 15 months, and it saw a 15 minutes, and it recent hi raised it fullyear guidance. Any stimulus plan that includes more testing will help the stock, but the company has very strong medical device business. Its blood Glucose Monitoring system for diabetic patients saw a 36 jump in sales. Shares are certainly up, but analysts see theres more room for this one to grow regardless of who is in office. Jack unfortunately, covid is not going away no matter who wins. Jack, youre going to talk about a stock that barrons also looked at called roper. I was not familiar with that company, although i guess i use them all the time. Their products. Roper technology, this is what you call a mull i deindustry multiindustry company. No one has any idea how to describe how its various businesses go together. The one i think youre talking about is highway tolling, electronic tolling where you and i live, we call that ez pass. They have different names for it around the cub. Thats one business. Theres another business that makes equipment for prostate procedures. Im trying to imagine what the sunergys are there, and i cant come up with it. [laughter] thats probably why im not an investment banker. Heres something more important to know about roper, the stock has returned more than 460 over the past dad. Thats almost double9 what the s p 500 has done. Lately, the company has been focusing an acquisition on Niche Software companies that generate a lot of Free Cash Flow. And investors really seem to like that. The stock trades at 24 times this years projected Free Cash Flow. Next year wall street expects Free Cash Flow to ruse by 15 . To rise by 15 . Jack software does continue to heat the world. Ben, another trend that is not going to be marley affected by whoever wins this election is 5g. So youre looking at a company that will benefit from that trend. Thats right. Its sba communications. They build the towers that allow the phone companies to do 5g and to do any kind of cellular network. And we need more of those. 5g is a huge opportunity. Those networks are getting built9 out. But sba can also benefit from building towers in rural areas, and thats going to happen no matter who wins the election. Were going to be building more towers. And theyre very good at that. And so we see them benefiting no mart who Nonvalvular Afib can mean a lifetime of blood thinners. And if youre troubled by falls and bleeds, worry follows you everywhere. Over 100,000 people have left blood thinners behind with watchman. Its a onetime, minimally invasive procedure that reduces stroke risk and bleeding worryfor life. Watchman. 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Com promo if your answer is yes, listen to this segment very carefully. The correct answer is, no, if a stock falls from 105, itll have to double, 100 gain to get back to even. Jack howe, the same math error was repeated when the gdp numbers were reported, and you became agitated about this. Thats not fair, i happen to n entire year. But the bigger eshoo is putting them in bars like this, it looks like these numbers offset each other. Its like the shutdown never happened, were back to square. Now, look, we had great Third Quarter gdp growth. Lets show a line chart that does a better job of explaining what we actually got. We did have solid growth. Im glad to see it. I hope it continues. But we have a little further to go before we get back to square. This is what gdp numbers should look like. I know that, and i only wore one calculator watch during math class. [laughter] jack now i need your crystal ball, that looks like the pretty good beginning of a v. Is it going to continue that way . I think its going to be like a v if you drew a v in the backseat of a car driving down a bumpy road. I dont know if its going to be a smooth, straight sax. I straight v. I think well get there soon enough. It depends on the course of the virus. Jack that is why people watch bare rons roundtable. Another reason, of course, is actual ideas from carlton and ben. Ill start with you, carlton, whats your actionable idea this week . A im looking at the owner of sharpie and rubbermaid. They were able to offset some of that weaker back to school send with strong week ware and home cook ware and home good sail sales. Theyre in that continued stay at home trend. Jack and once my 7yearold realizes she can order sharpies on alexa, that stock is going to pop. [laughter] ben . Stocks that could do well if the u. S. Finds the same path as china, and one of the stocks is te connectivity. They have a big auto business, theyre into electric cars among other things. They reported great earnings this week, but this was a week where it didnt matter, and the stock fell 9 . We think they look great here. Jack jack, thanks for that explaining. To read america check out this weeks edition of bare rons. Com and dont forget to follow us on twitter. Wear your max on halloween and all other times. 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

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