Transcripts For FBC Barrons 20240703

Welcome to barrons roundtable where we get behind the headlines and prepare you for the week ahead i am andy and for jack otter. The World Economy is slowing down as global Government Debt levels spike World Bank David Malpass is sounding the alarm on why its a major concern. Then the buzz around green energy is getting louder but dont count oil and gas out yet, the expert panel will impact the future of the Energy Sector and dive into her smart investors to put their money. Later the bond king does not like bonds anymore will look what hes buying instead the expert panel and three things investors are to be thinking about right now on the barrons roundtable ben levisohn, andrew bary and meghan. The big news the dow cracked 40000 at the close real drama because it was nip and tuck at the very end. Last week we asked you why the market was up he was bad news initiate proximate cause this week. This week we have bad news without good news for the stock market first we had inflation weaker but also a weakening economy and that was clear from her retail sales number that came in below expectation that was when you got the good news or bad news is good news reaction from the market. Also cooling overall you saw the gdp number for the First Quarter and jobs this is a good sign for fed officials looking for the Lower Consumer demand coming down and controlling inflation a little bit better. Andy is a goldilocks situation, i know thats a cliche but right now things are looking so good im finding bad pockets there are stories everything is great everything to you by works gold crypto, stocks savings accounts are yielding great numbers, too good . The market as well on sentiment and when it gets too much of what direction you want to think about going the other way and the little bit happening under the surface when you see utilities that a good week not the best but some of the best sector this month and theyre doing fantastic and staples are doing the same thing another defensive sector, thats a little bit of the defensiveness going on even though some of that has to do with deals. Another big story terrorist from the bottom of the administration whats up with that. The bite of the administration of raising tariffs on 18 billion worth of goods this is Aluminum Steel that we talked about before but also semiconductors and medical supplies in the big issue is 100 hearsay announce on electric vehicles and 25 against ev batteries in the battery component this comes as we tried to tamp down the known inflation, inflation is usually a component when you sit there and talk about tariffs that can be attacks on consumers. This is the inconsistency of the Biden Administration policy on green energy we want to encourage adoption of electric vehicles putting a hundred tariff on chinese elected vehicles i brought in the market and they have been blocking and development for another mining project which is critical to the green energy. They have been talking out of both sides of her mouth. Its an Election Year end the tariffs are playing into some of that but no doubt the Chinese Government is subsidizing manufacturing vehicles and while no chinese branded cars currently we have seen this really taking place in europe so i think theres a get ahead of the situation before it becomes a situation scenario happening investigating india, brazil hit the chinese would tariffs this is something going around the world. Summer elon musk im sure. We want to shift gears and ask you about the great mystery of the week on wall street are concerned warren buffett. We got news about the ministry stock that bursts under Brookshire Hathaway has been accumulating they requested confidentiality for the end of last year basically we found out what that stock is in brookshire has accumulated 6 stake in the big Property Cash with about 7 billion. Buffett has been selling a lot of stocks in the last quarter he was trimming apple and getting out of hp and paramount but its a business he knows very well in brookshire has been involved for 50 or 60 years and is probably the best run most profitable leader in the pnc business. Will he buy the whole enchilada crymac thats an interesting question i think you might like to buy a and is an elephant size acquisition that hes been seeking in vain and it valued 100 billion in brookshire has 200 billion of cash to play with and i think it be a good strategic fit for brookshire to make financial sense. Is he interested in is seller both Companies Wont comment but intriguing confidentiality he turns 94 in august we doesnt have a lot of time to pull off the big deal. Andy great stuff the Global Economy is limping along with rapid Government Spending is skyrocketing that World Bank David Malpass warning about the risk and what can be done to im 9 out of 10 people dont get enough fiber benefiber is the easy, gentle solution for every day. Its plantbased prebiotic fiber nourishes good bacteria in your gut working with your body to promote digestive health. With so many ways to enjoy, benefiber is your fiber, your way. The codes not working. Dad, she really needs to pee. Were gonna get in in a minute, okay . Representative. [cs line] please continue to hold. Meanwhile, at a vrbo. When other Vacation Rentals leave you hanging, try one where you can reach a human in about a minute. 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Com the Global Economy is facing the slow down as Government Debt levels continue to search the world bank projecting Global Growth to slow down to 2. 4 , the United Nation is out with an updated forecast expecting growth of 2. 7 , my guest writing a wall street journal oped they are undercutting growth and could cause further slowdown former World Bank President David Malpass joined me now, global Government Debt may seem abstract to many of us but spell out the problem and tell us why we should be concerned about it. There was a period when government was borrowing heavily in the u. S. Of course still is in that props up gdp growth but it doesnt really create wealth for the longterm and doesnt create Business Investment and thats whats missing in the World Economy now and its especially missing in poor countries around the world which gives rise to the fragility around the world. Andy what is our responsibility, what could america do and what should america do about the problems its really something on us to fix. I think its for our own good and for the worlds good and from our standpoint we have a huge flow of capital into the u. S. Government and its making the decision for peoples lives so right now theyre making the decision to borrow shortterm which puts a huge burden on Small Businesses, they have to compete directly with u. S. Treasury and with the Federal Reserve to borrow in the shortterm market, that means they cannot hire workers and they cannot reinvest in their businesses, our own good we need to do this and i think we have to recognize that one of our markets in the world is going to be foreign economies and what is happening right now the u. S. Government is crowding out the whole rest of the world in terms of their investment rates. It allows the topline numbers to look okay but if you look underneath and Small Business are hurting in the u. S. So they are abroad. Lets switch over to the u. S. We sell numbers about the u. S. Federal deficit. You are concerned as well but people are always concerned as is something finally coming home to roost. At tickets much worse now and you can measure that in terms of the National Debt as a percentage of gdp so it has gone up and its doubled as a percentage of gdp sense i first started harping on this in 1990, what that means the government is taking more than its share in doing it through taxation and through debt in both of those hurt Small Businesses its a crowding out getting more and more intense and also goes into the regulatory as the government gets more and more money what they do is pop it into people that will write regulations to regulate businesses to make them get more of their money to the government and i think were in a dangerous spiral right now. You said changes needed in washington but the stock market hit a new high and inflation is cooling and employment strong, whats not to like about that. Be careful on the stock market, often times people are talking about the s p 500. If you look at the russell 2000 its been severely underperforming and that shows up in the Small Business bankruptcies, the difficulty of starting business and the Midcap Companies Earnings Growth has been severely hit by the Rising Interest Rates so the Big Companies are able to borrow in the bond market which is favorably a bias by the government and the government is doing everything that it can to prop up the s p 500 but that leaves the rest of the economy strained thats why we see so much problem with affordability. Andy a quick last question. If donald trump is reelected would you anticipate he would get rid of an independent Federal Reserve . Absolutely not there has not been any indication of that there was one story and one newspaper that was on source that said that but the independence of the fed is helpful because it allows the defense of the dollar and that allows the u. S. To grow faster than everyone else. We are in a giant global competition so having the fed do a good job is really important, now recognize they were way behind the curve on raising Interest Rates they stayed at 0 two long, that is part of what were paying for now but were also pain for Government Spending and regulation. Andy thank you very much for joining us david not pass, good to see you. The green push is gaining steam but the oil industry is not done yet where to invest in the energy secto after last months massive solar flare added a 25th hour to the day, businesses are wondering what should we do with it . Im thinking company wide power nap. [ employees snoring ] anything can change the world of work. From hr to payroll, adp designs for the next anything. The shift to green energy is in full swing for oil and gas as of role to play a top Energy Investment experts to breakdown the industry and look at ways to invest in traditional fossil fuels and renewable alternatives. It is the barrons cover story this week. It is interesting oil, renewables, waited they fitting together should you invested one, together, both, what is the big picture for the world business. Things are doing decently if you look at oil prices, they are under 80 a barrel and probably going to stay around at 75 because you dont have a ton of production, u. S. Is at record level but it will not be going much higher, russia which is pulling back on production in saudi arabia good about opec in line with not overproducing and as long as that going on in a time when demand is good to be higher in people are driving to the u. S. In one of our participants thought it was a 25 chance the oil prices could go to 100, right now its looking pretty decent. Andy what about the geopolitics and wars. I didnt mention that because its not having much of an influence right now its partially because this is not the 1970s in the u. S. Is pretty much energy self sufficient at this point in all of russias oil which is not coming here is going to asia and it doesnt need to go through the channels that it did before in regards to iran and needs to be able to export the oil to so we will not do anything to jeopardize that, for now geopolitics is not priced into oil the all the panelists say and lets hope it stays that way. Andy how do you play oil and gas. The Energy Stocks have been doing pretty well this year, the xle the leading etf is up about 15 which is topping the market many of the oil stocks are at or near new highs no bargains to be had but if you want to invest in energy i would consider the super major which is exxon, chevron, shell and bp in europe, exxon is the Industry Leader got an overweight rating from the Morgan Stanley analyst Devin Mcdermitt he sees the stock 140 live from 120 where it is now and rising cash flow and earnings in the coming years chevron has been out of favor the recently because they are trying to do has gotten hung up a 4 dividend in a reasonable evaluation and european majors are supercheap, shell and bp eight times earnings, 4 dividend yields in the u. S. Major, part of that has to do under a lot of pressure in europe from environmental activists and a lot of european owners know what i own it but there could be catalyst ahead in a potential merger of the two companies and some other positive developments for the companies right now. Is there an a. I. Play here . A. I. Is helping to gas stocks because gas is used a lot for electricity production and using increased demand for electricity at least they would hope for and you have lng supply which will be ramping up in this country so you see stocks like eq t and big Gas Producers that are doing better and natural gas which was week is showing signs of light in the utility sector, the independent power producer by constellation has the biggest lead of Nuclear Power plants in the country had been on fire because basically companies are looking to basically get scarce power. Andy meghan, renewables, used to be a thing, not so much. What is going on are there still places to play . Im going to push back is a renewables are not a thing Energy Demand is up 2 and a. I. Has something to do with that in the data centers theres been a significant shift in the Power Generation away from coal into new will bulls this is not just a young person talking about green energy, the shift is in the process of potentially tripling solar power in the u. S. By 2030, that is not priced in the most stocks at the moment. Lets talk about stocks and investments in the sector. The sector is volatile and you have to be careful and play with the little bit of nuance butter panelists are bullish on the Solar Installer that we hear about and developer son ron lucas white mentioned, portfolio at gmo he like solar manufacture for solar and solar edge in the bio field space that we were talking about Darling Ingredients and nest are some of the companies that he things are high quality with competitive edges. Of course you dont just want to pick one player, you do need to pick a basket of stocks Global Clean Energy etf might be the way to go. Absolutely probably need diversity although diversifying this always happens. Thank you guys, ben and meghan have a pair of investment ideas plus the bond king doesnt l qb this is it. One play. This is when we find out. luke hey, quick question. Student body math proficiency, would we say its good . Fair . Satisfactory . player 1 what . luke like a percentage, if you had to guess. players hey, get out of here man. Get off the field. luke understood. players security grab him marci great studentteacher ratio. luke marci weve got to go marci we have got to go we bring you the real, indepth school info. marci what were you thinking . luke i dont know. I. Dont know. vo ding dong homes. Com traffic noises the road to opportunity. Is often the road overlooked. At enterprise mobility, we guide companies to unique solutions, from our team of mobility experts. 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I need indeed. Indeed you do. When you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. Visit indeed. Com hire and get started today. Andy now part of the show where we talk about investment, action items. Andrea i want to start with you and ask you about the bond market, tough times for fixedincome investors. Bond set up the party most bonds are showing flat to negative returns and i might highlight treasury keep it simple around for a half yield also mortgage security which dont get a lot of credit either half or 6 in speaking to bond kings you have the doubling over return fund which is a pretty good play on the mortgage market. Speaking of the bond king and bill gross i was in california talking to him and hes the one who built pinko to the giant, 80 years old retired, there is bill gross but he does not like bonds is a bond bear markets always looking for yield equivalents he likes mlps massive limited partners, oil and gas and some utilities that we talked about a. I. Going on with con edison and dominion its interesting to see a guy backing out of bonds. Meghan i want to go with you and ask you about your pic here was sleeping European Food giant. Im stealing andrews pick in all given full credit but is looking at nestle and i am as well as an interesting company, it is a Sleeping Giant as he calls it with this consumer goods behemoth includes nespresso, gerber and its been a disappointment in recent years but the secure 3 dividend, it cant be too bad. Andy this is another yield equivalent . You also have that upside as well, food, im getting hungry do we have more food to talk about. More food or mel the maker of spam or mel has been a terrible stock but it jumped 15 after reporting earnings at the end of february because its finally doing the things that investors wanted it held onto the gain since then and earnings coming up at the end of the month its looking really interesting take a look at her before the report. I want some more brands, did teamwork, applegate that is a healthy stuff. I did not know that black label bacon, skippy peanut butter. Also your planters nuts. That is a great place to end right there is some nuts. Ben, andrew, meghan, thank you very much. Check out this weeks edition of barrons. Com that is all for us, see you next week on barrons the roundtable. From the fox studio in new york city this