Welcome to barrons roundtable where we get behind the headlines and prepare you for the week ahead. Im jack otter coming up key data out this week shows cooling inflation boosting hopes that the fed might not raise Interest Rates again this year. Ill ask korean partner andy capron how investors can best position themselves in the uncertain environment. Then car owners may be taking another hit to their wallets as the cost of Auto Insurance is driven higher. Our expert panel will dive into whats causing this and how drivers can save some money. And later, theres a gold rush at costco for members only. Well explain. But we begin, as always, with three things investors ought to be thinking about right now. Another september slump, stocks ending the last trading week mixed after new inflation data showed prices rose less than expected in august for the month, the major averages were down more than 2. Plus, how the looming Government Shutdown will impact october markets. Then ford pausing construction of a michigan ev battery plant that was set to use chinese technology. And finally, meta continues to flail in the metaverse. But getting likes from investors for its big ai initiatives. On the barrons roundtable, my colleagues ben levenson and al root. So ben, once again, the bond yields went up and the stock investors got spooked that they did. And bond yields one way, way up. And this was, i think, highest level since 2007 for the ten year. And it really did spook the market. But partially what was going on was this a september and september always spooks the market and so we ended up with the s p having its worst month of the year. Bonds got crushed actually, the only thing that you probably would have done well in besides cash were energy stocks, because oil just kept going straight up. But thankfully, september is ending and that could mean a better month ahead. October may begin with a Government Shutdown. What do you see the effect on the market from that . Well, historically, there hasnt been much of an impact. You go back to 1976, the average return during a shutdown was 0. So the market doesnt go up. It doesnt go down, but its not a big deal. And then when it ends the week after it ends, market goes up 0. 6. And so things are usually it just doesnt matter all that much. And that kind of makes sense. I mean, government, it kind of gets in the way of corporations and businesses doing their thing. And so a little less government, its not so bad. Now, normally next friday, wed be reporting on the jobs number. Is it possible we wont get that jobs number . Well, thats exactly whats going to happen if there is a if there is a shutdown now, they wont be able to get this data out and that will be weird. It will create a vacuum for the stock market. I think the good news is, is that we had this pce reading that came out, this inflation reading on friday and it was weaker than expected. This is the inflationary and the fed really likes. And so it means the last piece of data that will have had has been this thing that shows that inflation is maybe less of a problem than we thought. Whether that fed actually ends up caring about that remains to be seen. But well have to worry about that in november. And also, investors can look at the adp number for the first time and actually Pay Attention to it. Thatll be the only one they get. So, carlton, this time we got this this week we got a fascinating thing where in real time we got to see how investors reacted to Mark Zuckerberg. It was thumbs down big time. On his metaverse ambitions. But then he started talking about ai and investors perked up. Yeah that was exactly what happened. So facebook had its kind of connect conference where they got to unload new features and kind of announce some developing things that theyre working on and exactly at that, as Mark Zuckerberg is talking about, the quest three, this kind of new almost 500 device, you sell shares of sorry meta meta go down about 4 the moment that zuckerberg starts talking more about ai, basically reverse losses. So if you had any doubts about how much the market hated the whole move to the metaverse, all of that, you definitely saw it in trading at meta, not facebook this week. So with ai, hes partnering with bing at microsoft, not google, but how does he actually monetize this . How do investors get wealthy off of the ai move . Yeah, so its going to take some time because its going to be a huge investment. One of the things that happens with ai is generating images, things like that, things that will keep people on instagram longer. So meta still an ad game less an ai game engagement et al. Lets pivot to for which said it was pausing work on an ev battery plant for a lot of reasons. But lets start with the fact that those batteries use chinese technology. Yeah it was was the most interesting story for me this week. Well, youre into that stuff. Absolutely. But you know, the chinese portion, this plant has sort of become a political football because ford is going to use low cost leading technology from the largest battery maker in the world. Catl catl, which is a chinese company. And its wholly owned by ford. It will be ford employees. And, you know, its become a bit of an issue. But this is an example of where technology is flowing this way. Youve usually we read about and worry about technology being adulterated in some way. So thats not a bad thing. But if it escalates and, you know, catl ends up on sort of the no fly list for ev components and then ford vehicles with those batteries wont qualify for the tax credit. So its very complicated and weve got less than a minute left. But also explain theres a uaw angle to this, too. Another reason ford might not want to build. Well, this plant is in michigan. It would likely be unionized and ford Ceo Jim Farley came out on friday and talked about hes worried about the cost structure. And he and he pretty much made it a bargaining chip. We could make this plant this big. We could make this plant that big. He also has facilities are being constructed in the southern us. So definitely also paused for union considerations. So maybe batteries only get built south of the masondixon line, huh . So so the yes, yes. The short answer is yes. And thats something that one of the reasons that the workers and ford and gm and stellantis are on strike. All right. Well, thanks very much, al rates, meanwhile, expected to stay higher for longer, but new inflation data has investors hopeful the feds Hiking Campaign may be over. 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Item classification . Ahhhhhh. Crossborder sales . Ahhhhhh. What about . Ahhhhhh. Ahhhhhh. Do you have those budget markups . Thank you. Mmhm. [bubbles] the federal reserves preferred inflation, an indicator showing prices rose less than expected last month. Core pce matched its annual estimate, hitting its lowest level in nearly two years. My next guest says lingering uncertainty on the feds next moves may create more volatility in the market. Joining me now is andy capron, a partner at coriant, which is an independent Wealth Advisory firm managing just under 150 billion. Andy, thanks for coming by the studio. Appreciate it. My pleasure. So when people talk about what the fed is doing, theyre always focusing on is there going to be another Interest Rate hike . Youre looking at something else. Can you explain that . Sure so, so far, over the course of the past year and a half, the feds primary tool for managing inflation, managing the economy has been to increase Interest Rates from where i think a lot of us have gotten used to 0 to over 5 today. I think that may be behind us now. There may be another hike or two in our future, not likely to be significant, but that doesnt mean that the fed is finished. The fed may be finished hiking the next stage of the feds getting back to normal is getting its Balance Sheet back to normal. The fed owns multiple trillions of dollars worth of government bonds by sucking all those bonds out of the market has done a few things. Stoked Economic Growth , likely stoked inflation to and pushing on that particular brake pedal is the next thing that i see coming. Now, when the fed raises Interest Rates, it creates a lot of turbulence, in particular for bonds. Thats what we experienced in my view last year. In my opinion, when the fed transitions to focusing mostly on its Balance Sheet, that could push volatility and a lot and a lot of uncertainty into the stock market. Instead, before we talk stocks, though, one more question on bonds, which is right now, you mentioned volatility, uncertainty, but i could get 5 in a short term treasury bond in a bank and a cd. So its really tempting to just sit right there. Is that a good idea . So it is really tempting. But like many traps, it is a it is a tempting trap to sit in cash. Cash does offer higher yields today, but i think what investors need to keep in mind is that the market, the bond market is upside down. Cash has higher yields than bonds. Government bonds have. Intermediate maturity may be 4 over 5 in cash. That is not a statement of value. So yes, if youre shopping around for the highest yield, youre going to find it in shorter instruments. It is a it is a prediction about the future. And that prediction is that Interest Rates today are high enough to slow the economy down once theyve succeeded. In my view, the fed is likely to lower Interest Rates. And you may regret not locking in todays higher. Whats the investment for the bond investor right now . Sure. I think the bond investor ought to keep it relatively down the middle. I think one of the most down the middle investments in bonds Ticker Symbol bnd is a broad index of Investment Grade american bonds that includes government paper as well as corporate. Okay. You mentioned stock volatile city. Whats the play in stocks . Right now . Sure. I think i think the plain stocks is to not be a hero. Not being a hero means two things. One is dont sit out of the market because youre making a bet that you may regret. Two is dont take undue risk. And i think the way to take to avoid taking undue risk in the in the stock market is to focus on Higher Quality companies, companies with stronger Balance Sheets and low leverage ratios and higher dividend payouts. Are companies that tend to have Business Models that are conducive to running through a lot of uncertainty and you get that dividend. Thats right. Before we go, i want to pivot to one thing, which is you are predicting something nobody really wants to hear, but lets get it out there, which is oil prices might creep even higher here. What are the forces pushing oil up in your view . Sure. So thats actually one of the risks for the fed. One of the risks for inflation, the oil market has accelerated a lot over the course of the past few months. And i think its been for a number of reasons. One is the economys outperformed expectations is stronger, economy leads to Higher Oil Prices is the other one is saudi and russia are pulling back on oil supply at a moment in time when we dont have a rabbit in our hat anymore. So if you remember last year, oil prices surged after russias invasion of ukraine. But but we were able to use the Strategic Petroleum reserve as a governor on that to try to reduce that price pressure. Weve used a lot of it up and havent had a chance to replenish those reserves. The only good news, i guess, is if oil prices go up and up, its almost like raising Interest Rates, right . People will spend less. That could keep a lid on inflation. Thats right. So thats actually, i think, something a lot of people dont expect inflation that happens in the form of oil prices. We feel it when we fill up at the tank. But yeah, its a higher cpi. Its a higher Consumer Price index, but thats money that is not going to get spent on other things like going out to eat, like going to the movie theater, not enjoyable, but it actually reduces core inflation. Not a great reward, but good to understand that. Andy kaplan, thanks so much for coming by. My pleasure. Drivers unhappy about those gas prices have something new to worry about. A spike in the cost of Car Insurance. Well take a look under the hood at whats driving up prices. Plus, how consumers can save some cash next. He hits his mark center stage and is crushed by a baby grand piano. Youre replacing me . Customize and save with liberty bibberty. He doesnt even have a mustache. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. This isnt just freight. These arent just shipments. Theyre promises. Promises of all shapes and sizes. Each, with a time and a place theyve been promised to be. 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Since starting golo and release, i have dropped seven pant sizes and ive kept it off. Golo is real, our customers are real, and our Success Stories are real. Why not give it a try . Rising gas prices arent the only thing squeezing drivers wallets. The cost of Car Insurance is also seeing a surge with rates up nearly 20. Thats the biggest increase in almost 50 years. And prices could go higher. Barrons Senior WriterMegan Leonard joins the panel to discuss how consumers can curb costs and what it means for investors. Megan great to see you on the show. Thanks so to you and your story. Describe whats going on in Auto Insurance or you quote someone as saying its the perfect storm. Explain some of the forces pushing up rates. Well, i mean, how much time do we have . No, i mean, honestly, the bulk of the nearly 20 in Auto Insurance rates that were seeing are certainly due to higher car costs. And we saw that during the pandemic. And of course, you know, theyve continued to be a bit higher trending historically. But i mean, also youve got issues like parts and repair costs. I mean, you certainly saw the increase in the time and the expense that were all spending at the mechanic shop. These days, up 12 by itself just in august. And now we have things like extreme weather events increasing and believe it or not, even worsening Car Insurance and, you know, things of that nature when it comes to driving habits, americans driving habits, also taking a little bit of a nosedive there. Yeah i mean, one of the things that stood out to me when i read your story is just that you said that americans are worse drivers than before. Now, im a bad driver, so i just try not to do it very much as possible. But how how is this possible with all this technology and stuff . You know, the technology should be actually helping us. And it does. It really does. But the problem is, during the pandemic, we had less people on the road and we apparently all became speedier drivers. Of course, when you do get an accident at a higher rate of velocity, as we all know, for those of us who had to take physics, that means more severe crashes and that of course increases us claims costs. And so were seeing that actually push up Auto Insurance prices in a very big way. Now, thankfully, weve sort of seen a decline a little bit in this trend, but were still seeing above average rates at this point. And even the way cars are built now, i got i got somebody ran through a stop sign, hit me in the back. I thought, okay, thats going to be expensive. Repair bill Insurance Company said total loss. Yes, because it was just the way they construct cars. Unfortunately, megan, this is not going to stop here. You think its going to keep on going higher . Well, insurance insurers have outright told us that its going to go higher, certainly in almost all of your earnings reports. And a lot of the statements that theyve given, theyve said, hey, were going to continue to increase costs. Now keep in mind that this is a regulated industry, so this is going to take some time to work its way through the pipeline. We have the regulators that have to grant their approval and then even once that happens, it takes about six months to a year for that to hit consumer tires in a big way because they have to renew their policies. So theres a lot going on in this pipeline that is still yet to hit us. That was one of my favorite parts of your story. The, you know, prices, record prices, record increases, increases years to come. And yet the companies themselves are not necessarily benefiting, like you would think. Why is that . Its so true. You know, weve so used to seeing things like Consumer Staples prices, for example. You know, those ended up having record profits during high inflation periods. Auto insurers, unfortunately, not so much. So they are seeing a huge squeeze on their business. And this has actually been going on for a number of years now. And a lot of experts think that this is not only going to go on into 2023, 2024, hartford actually noted 2025 in its latest earnings report. So this is something that you know, were going to be around for a while. Were going to stick with it. And unfortunately, the outlook is a little bit murky for the insurers. Were certainly seeing a number of issues still coming into play. Those weather events, those repair costs, labor shortages, all of that. Having a big impact. And even things like the uaw strike could actually keep this much more in the loop longer. Now im trying not to cry too much for the auto insurers because customers are facing higher and higher costs. You dont have the option of not having insurance. So what are drivers able to do to mitigate some of these higher costs . You know, its one of those things that unfortunately, youre absolutely right. You do need Car Insurance, otherwise youre going to be driving illegally. In most of the us. So sitting there and having a multi pronged approach is really important for consumers right now. Its taking time to not only sit there and look at all the discounts available that you may need to look at things like aarp memberships and Alumni Networks that could give you a discount. But also sitting there and saying, hey, you know, when youre going out and looking for a new car, maybe getting an insurance quote before you even purchase the car so that you know what this is actually going to do to your budget. I think last but not least, and this cannot be overstated enough, look for good driver discounts. I mean, that comes in the form of not only you know, having a great record, but maybe its time to brush up on your skills, take a defensive driving course or sitting there and saying, hey, maybe ill actually use that app or those incar devices that were going to sit there and check my behavior. Maybe its better for all of us if were just a little bit more careful on the road. Yeah, the Insurance Company will actually give you something to plug in and monitor what youre doing. We had to do that. Well see what happens quickly. Megan, one more factor was interesting. You explained theres still a covid hangover from lawsuits that are going to send the prices higher. Explain that. Exactly. So its really interesting because again, a lot of this is still in the pipeline. Remember during covid, we had courts getting shut down or certainly having fewer hours, things like that. That has delayed lawsuits. And while this does make a bigger impact on the commercial side of the business, it does make an impact on the personal side as well. And so youre going to see those higher claims costs going through that court system at a much longer rate. Theres no good news here. There is no good news here. Sorry, guys. All right. Megan leonard, thanks so much. Meanwhile carlton and ben and al have some really interesting stuff, including a look at the gold rush thats happening at costco. Stay right there. Carlton, if i had to costco this weekend, is it aisle six where i pick up my gold . No it is actually not aisle six. And the amazing thing is the hottest item at costco right now is not the dollar 50 hot dog and soda combo. It is actually gold bars which are being sold on costcos website, limited to two bars per member ship. But basically this is the hottest item when they drop, i guess we can say thats what happens in this parlance at reddit forum gold reddit forums are going nuts, almost like meme stock mania. You know, they just launched. I got mine. I wasnt able to get them. When do they happen again . Even came up in a costco earnings call. How popular gold is. But no, youre not getting them in the aisles. You are actually having to get them online if youre lucky, if youre fast. And i love that. The website says theyre not returnable. You know, what if the price skyrockets . I bet you can return it. Okay. You can do this. Does that mean its a good idea . Not necessarily. I mean, look, theres people who want to get into gold during times of an economic downturn that might not always be the smartest thing to do, but sometimes its kind of when investing in gold, you think about the whole picks and shovels thing, right . During the gold rush and this might be a time where you think of a new type of picks and shovels, which is actually a company like costco or even walmart, which does sell gold bars as well, where if you look at their stock charts over any meaningful period of time compared to the price of gold, probably better off buying a share of costco or perhaps even a walmart than a bar of gold. I always go back to jeremy siegels chart that shows 210 years of gold inflation adjusted 1 200 years ago is now worth four. Thats not a great return. Yeah, im not excited about that. All right. Lets go to better actual ideas. Al, what do you have for us . Im a believer in the commercial aerospace recovery. In april, Domestic Travel started to eclipse prepandemic levels as International Travel still lagging a bit behind. But more planes in the air mean more repair costs, more parts needed. So thats a company r and the ticker is air does a lot of this. They fix and supply parts for engines that are coming back for service. Thats a good stock. All righty. Im doing my part. Im flying internationally to australia next week for barrons. Carlton is going to be in the seat. What do you have for us, ben . Im looking at agco. Its combining its ag tech business with that of a Company Called trimble, and its going to make it a better competitor with deere, the best part about this is that agco trades at just seven times earnings. Deere is 11. 4. This is going to help those valuations come back together. Its looking pretty interesting here. The other thing thats going to do is youre going to have this precision agriculture business. Its the big thing in agriculture. And so thats going to help boost agcos profit margin as well. And so the stock hasnt done great this year. I think its down a little bit, but this could really give it a boost going ahead this week. Stock picks brought to you by the letter a. Thanks, guys. To read more, check out this weeks edition at barrons. Com. You can also follow us on formerly known as twitter. Thats aberrans online and friday marks six months since wall street journal reporter Evan Gershkovich was wrongfully detained in russia. We hope youll support evans release on social media. Please use the hashtag i stand with evan. And thats all for us. Well see you next week on barrons roundtable. See you next weekend. Grab the pumpkins. Maria good sunday morning, everyone. Welcome to