>> barron's round table sponsored bill. this week ceos stepping down, why prominent executives are on the hot seat. tech titans talk regulation, disruns and uniforeign -- disruption and unicorn ip os. the 2020 election and more. barron's round table starts now. ♪ ♪ >> well welcome to barron's round table where we get behind the headlines and prepare you for the week ahead. i'm jack otter. what we think are the three most important things investors should be thinking about right now. tech earnings, facebook, apple and alphabet reporting next

week, how tech is faring this quarter. and a slew of prominent ceos on their way out. why topicstives are in the hot seat and why boards are trying to make them accountable. will the fed cut rates again, and how will it affect your portfolio? on the barron's round table, my colleagues join me. so what are we starting with, ben? tech. it's all about tech, but it hasn't been so pretty at least this past week. >> no, it hasn't been great for these tech company. we'ved had earnings from twitter which were a disaster, and even the ones that weren't a disaster weren't great either. investors just don't seem excited about them. i think that's partially because these stocks have been all bad for so -- all that for so long, and now we're asking more of them, and it's just hard to actually get that bar. and you have all these other things which have gotten cheaper and maybe a little more attractive, things like financials which are actually outperforming quite a bit over the last few weeks. >> so let's look ahead to next week.

we've got facebook, apple and alphabet. that's right. you know, i wouldn't be surprised if this is some disappointment in there, some numbers that are considered disappointments. the one i think i do like is apple. we all know apple's profits aren't as good as they once were, aren't growing as fast, but it's a free cash flow machine, and it's making its transition from being a hardware company to a services company. and i think as long as that free cash flow keeps coming through, investors are going to give them a pass. >> those other companies have very much been leading the market higher. if you take out big tech companies, the s&p hasn't done better than the rest of the world. so if they start to flag, does that bode ill for the markets? >> i don't think so. financials are starting to perform a little bit better. they keep that up, they're probably big enough that they can -- as long as tech doesn't crash, they can start doing some of the heavy lifting. industrials are starting to look good, they're performing better, and we might be at that point where if manufacturing sentiment is starting to trough the, maybe

they start heading higher as well. >> gotcha. al, let's talk about the musical chairs in the c suite. what's going on? why are so many ceos losing their jobs? >> it's an interesting trend, and i do think there's definitely a cluster of ceo turnover. very broadly speaking, the average tenure of a ceo is falling. i think there's a couple of things at work. i think, first of all, we've had in the incredible long-running bull market for the last ten years, and i think there's definitely some people that want the go out on top and have been in seats for 10 or 12 years. you take a look at nike, you know, mark parker has been the for 14 years, tremendous record. it feels like he's going out on top. and i think the other thing is there's still a lot of disruption in the economy. retail streaming, thing like this. so there are a lot of people on the hot seat. if you take a look at sports apparel maker kevin clank, he was a founder -- >> at under armour. >> generated tons of value over a long period of time, but the stock is starting to flag.

he got into some hot water over comments he made, and they've brought in more of a retail apparel operator, and he's develop on to the executive chairman role. and there's also just, you know, the situations which are sort of one-offs like the boeing situation where a couple of executives, notably kevin mcallister, the head of boeing commercial airplanes, that's almost a special case because of the turmoil tied to the 737 max. >> that ceo is still in his seat, a cynical person might say that's because they're going to haul him out in front of congress, and who knows he how long he lasts after that. >> well, they took the chairmanship away from him a couple of weeks ago. now dave calhoun, a former ge executive, is chairman of the board. they said it was to focus the ceo of boeing's efforts on returning the 737 max to service. he got the vote of confidence from dave -- >> quick question for you, who's next? >> if you look at the kevin plank situation, that's interesting. tesla and elon musk is a very

controversial guy, a very highly valued stock, very volatile around earnings. it could benefit from a real car operator coming in to improve margins and stabilize results and stabilize rollouts of some of these new models that they have planned. and then elon could graduate to the non-executive chairman role. >> stock did finish out the week very strongly though. warren, let's go to fed. are they going to lower rates again? >> it looks like they probably will. that would be the third cut this year, i do think they'll deliver a pre-halloween treat for investors. >> the market is certainly building that in, i think a 94% chance of a cut. is there going to be a fourth cut? >> well, that's -- no way of knowing. it's, there might be, there might not be. one of the things that's interesting is that rates around the world are starting to bottom out a little bit. it looks like there are about 13

trillion of global bonds yielding negative rates, and that's down from 17 trillion just a month or so ago. >> and i wonder what would happen to u.s. rates should this negative interest rate thing stop. one theory is that foreigners are buying our bonds because 2% looks great, i guess there could be some upward pressure on rates? >> i think you answered your own question there. that would definitely look to be the case. >> and great news for income seekers. coming up, surprising findings from barron's fall big money poll, positional money managers responded on a range of issues. but first, top tech execs weigh in on shaky ipos, online privacy and the next big disruption. that's next. ♪ ♪ ♪ ♪

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♪ ♪ >> tech titans converged in laguna beach, california, this week at "the wall street journal" tech live conference. we asked them about a variety of topics that will impact your portfolio. let's get right to it. whether and how to regulate tech companies is an increasingly hot topic. we caught up with a cybersecurity ceo and a regulator to get their a take. >> there's a question of what's the change in the regulatory environment around tech, and i think tech went from an industry that could do no wrong to now one that almost seems like it can do no right. >> every consumer in america is impacted by technology. and technology can be very positive and beneficial to a lot of consumers. and when we look at it, a law enforcement body, it's so see if anybody has abused that market power. >> i mean, this is right. these companies could do no wrong, and now they can do no

right, and have or little has changed. as an investor, they're still minting money, they still is have these customers that are very happy to use their products. and so so it's a little strange to see them go from love to hated so quickly. but i'm not really worried about the whole regulation aspect. we've kind of seen this before, and -- >> from a stock perspective. >> exactly. we've seen this before. it's kind of like microsoft where this become an overhang for a while. the stock kind of does nothing but right now microsoft is a $1 trillion company vying with apple to be the most valuable company in the united states. it did not have a long-term impact. and then the other option is at&t, broken up and all these little companies became big companies and merged, and everybody who had shares of these did pretty well. what they can do is break up facebook into instagram and facebook and, you know, we'll get pieces of each, and both of them will become more, and someday they'll buy other companies, and as an investor,

we'll win both ways. >> we had scott galloway on the show, and he felt you could actually become the most valuable company in the world. you look to europe where they regulated google, and what happened? the competitors actually lost market share because google is big enough to handle it. >> it's better. >> so would you give us any odds on whether any of these companies will be broken up, and if so, which would be first in. >> i don't think they'll get broken up. i think it's just an overhang for a while. we'll be talking about it in a couple years still, but nothing is actually going to happen. >> this seems like one of those situations where it sounds almost cold to say, but not every political and social issue becomes a stock market issue. >> that's a good point. but a few ipo flops is have shaken the market for new issues. we caught up with two experts for their take. >> there's no getting away from the fact that some of the bigger consumer names whether it's uber and list this year or -- lyft or

snap, blue apron have had a bumpier time in the market. to some extempt, it's because they waited longer to go public than was historically the case. >> i think what the public markets did is their job. they have, generally, a higher level of skepticism about some of these assets that are coming public. >> so, lauren, what happened here? were these companies simply baking too long in the private equity oven? >> well, some of them were probably baking to a race p. but the -- crisp. but the problem is we didn't know it until they filed their regulatory papers to become public. sunlight is the best disinfectant, and the public markets are a ray of sunlight for many companies that had been doing a lot of silly things in the private market when they come public and they don't have earnings and there's no path, investors get pretty upset. >> that makes a lot of sense. al, you look at a company like wework which was the more at least space to -- the more expensive it got. that just doesn't scale.

>> it's strange because in private markets every milestone, everybody just expects valuations to go higher and higher, and it's like this extended period of private ownership head to this strange bubble. >> we've got one more. managing through disruption may be the number one challenge for ceos and investors. the founder of a consulting firm surprised us with his prediction. let's watch. >> the next big financial trading market, it's not what you think it's really going to be about sports betting. all of our forecasts expect that e-sports betting will be one of the big drivers of revenue. so we're forecasting e-sports is going to become a $7 billion global business, and a great deal of that is going to be from betting on e-sports. >> i'm excited about e-sports and sports betting in general not just because i want to bet on sports, but this is new revenue streams and opportunities for the gaming companies like the casinos outside of vegas, and it's also an opportunity for some of the publicly-traded sports franchises. you can buy the knicks, the

braves, and you can participate in the uifn value from sports betting. >> you can even buy e-gaming stocks, right? what are a few of those names? >> act vision, the companies that produce the games that now people will pay to watch teenagers play. >> personally, i just want to be playing myself. coming up, our ideas on what you can do right now to improve your portfolio. but first, results from barron's big money poll. we'll show you what professional money managers are saying about the current investment outlook, their predictions on when the next recession will hit and more. plus, rbc capital gets a seat at the table. we'll be right back. ♪ ♪ ♪ limu emu & doug hour 36 in the stakeout. as soon as the homeowners arrive, we'll inform them that liberty mutual customizes home insurance, so they'll only pay for what they need.

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survey of professional money managers about a variety of topics that could make or break your portfolio. lauren, when you look at the results that you got in this story, they're not very on optimistic. what's going on? >> at the moment they're not. this poll represents the views of people who manage probably more than a trillion dollars, so this time around the bullish component we asked are you bullish, bearish or neutral, was only 27 %. and that is the lowest percentage of bulls in more than 20 years. and by the same token, the bearish percentage, 31%, wuss the highest percentage -- was the highest percentage of bears. >> so they say they marked it as fairly valued though. they're not saying this is a to the come bubble situation. >> not at all. the reasons they give, we also ask follow-up interviews, the reasons they give are valuation, longevity finish the fact that we're in the tenth year of a bull market and an economic recovery, and concerns about the

political landscape and what it will do to stocks. >> so, lori, does this track with what you're seeing? >> i think so. i mean, i think the key thing most people are in that neutral camp, and there are very few bulls out there. i would say when i talk to most investors these days, they don't feel overwhelmingly bearish, but i think they agree valuations are extended, they are sifting through things that are lagging. but there's a lot of frustration and fatigue out there. >> that's kind of big news, actually, value stocks may finally have their day after so long in the doghouse. >> it's interesting, you seen the industrials acting better in this reporting season, and one of the things we've been talking about is how cheap they are, and we're finding there's a lot of ap teat for that discussion. >> that's interesting because, among other things lauren found, the recession oddses were not high in the view of these people, and industrials coming back would suggest maybe recession is a little far off, ben. >> yeah. you actually saw it this past week with some of the trading

action. caterpillar came out with numbers, guidance is bad. i mean, it was a really bad number. stock got hit hard and then rallied back. that's not the behavior of a stock that people think is heading for a resession. >> yeah, that's more like bottom of the economic cycle. actually, do you think that industrials are sort of in the trough of sentiment or actual data. >> you know, it's interesting, we did our monthly report last week on the market outlook, and if you look at sentiment, sell side, net buy rating, so the bulls on the industrial sector less the bulls in the market, you're seeing extreme bearishness, basically back down to 2016 and historical lows. so we think the bad news is pretty much baked in there if we do have that recession coming. >> lori, where do you see extreme bullishnd when you do that exercise? >> on one area we've seen it has been on the health care side. communication services. so it's a combination of

internet and telecom names. >> lauren also looked at some political questions. the money managers you surveyed see trump overwhelmingly winning in 2020. >> correct. >> and so i want to see, lori, what you think the implications of a trump win would be on the market. >> so, you know, with we've tried to stick with our own survey to gauge the potential market reaction, and we've generally found that when we can ask people what if trump wins re-election, most people view that as a bullish event. when we've asked about biden, it's been viewed neutral, and the prospects for another democrat, there's been more pessimism there. >> now also interesting, lauren, you do this every six months or so, and while trump is seen as the overwhelming favorite, when they're asked to grade him, his grades have been going down which suggests maybe the election could be closer than the 62% favorable would suggest. and, lori, you have some thoughts on that as well. if we don't know who's going to win, what does that mean for the market? >> so we've said that we hi the

market risk from potentially a more progressive democrat, we would say look for that as a risk factor in the first half of next year. but regardless of what election cycle you're in, regardless of who's in power, markets don't tend to like political uncertainty in the short term. of so we have a gauge of economic policy uncertainty, and guess what? when it rises, so does stock market volatility. and we've certainly seen that in other administerings as well -- administrations as well. regardless of who's controlling congress or the white house, stocks do tend to rise over time. so they get past that short-term volatility and up certainly. >> drilling down into the sector, you've also done some work if, say, a warren win were to happen, who would be the winners and losers in terms of sectors? >> so we surveyed our analysts, and we asked them consider the possibility that we had a warren victory and a democratic sweep,

and would that be a positive or negative for your industry based on policy outcomes. and what we found was about two-thirds of our analysts thought it would be a negative event. health care, energy, financials were the highest, industrials and tech not quite as high. the only two areas we didn't find a policy issue that might unsettle the market was rates and utilities. >> up next, the round table gives their investment ideas for the coming week. stay right there. ♪ ♪ no. in the basement. why can't we just get in the running car? are you crazy? let's hide behind the chainsaws. smart. yeah. ok. if you're in a horror movie, you make poor decisions. it's what you do. this was a good idea. shhhh. i'm being quiet. you're breathing on me! if you want to save fifteen percent or more on car insurance, you switch to geico. it's what you do. let's go to the cemetery!

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♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ muck. >> in barron's tradition, we want you to go into the coming week ready to make your next move. so let's get one actionable idea from everyone. ben, there's an interesting tell in the market for walmart stock you spotted.

>> that's right. this actually was court i of morgan stanley, but they noticed there' an increased correlation between the sales of walmart and sales over at procter & gamble. and procter & gamble had a wonderful earnings report. and they went up a lot after that, deservedly so, and this could mean that walmart might see that as well. but we also like walmart for ore reasons -- other reasons, just making a lot of good decisions in a pretty tough retail vironment. >> is it because walmart sells procter & gamble productsesome. >> that's part of it, but it also has to do with the bigger companies are able to take advantage of scale, so you're seeing bigger companies do a a lot better than smaller ones. >> al, you've got maybe a sell? >> i think it's time to take profits on square. you know, it's been a great stock, financial tech payment technology, it's been a great --

>> it's the little thing you stick in your iphone and pay with a credit card. >> but it starting to see more competition from clover and other alternative offerings, other large financial institutions want to get in. it trades for about twice as much as similar companies, and its earnings don't even include stock-based compensation. i think it's going to be a tougher road for square going forward. >> last week, lauren, you warned us about boeing, but this week you have an unloved stock that you say maybe we should give a little love to. >> maybe give a little love to gilead sciences. the stock was down four and change today after disappointing revenue results and their latest earnings report. this is a big biotech stock. they have a rock solid balance sheet. there's been a shuffle in the executive suite that suggests they may be doing some deals going forward, and you get paid about 4% on the dividend while you wait. >> and if they get their next big drug discovery, then it's a real winner. lauren, al, ben, thank you very much. all great ideas.

to read more, check out this edition at barron's.com. that's all for us tonight. see you next week on "barron's roundtable." mug. ♪ n underwater strange inheritance. >> we've had this in the family since 1899. >> their world's an oyster. >> do you want to try and shuck >> i would. it's all about the shuck. >> but their biz is belly-up. >> they pretty much said this oyster-planting business is over. >> they want to revive it. >> a couple drinks make anything sound good. >> so, will they sink... >> we looked at our debt for the first time, like, "whoa. it's, like, $350,000". >> ...or float? >> okay, here we go. come to mama. ♪ [ door creaks ] [ wind howls ] [ thunder rumbles ] [ bird caws ] ♪ >> i'm jamie colby, in virginia,