pandemics like the one we're facing now. that's it "the wall street journal at large." that's it for this us, have a great weekend. >> barron's round table sponsored by: ♪ ♪ jack: welcome to barron's round table, i'm jack otter. we begin with what we think are the three most important things investors should be thinking about right now. stocks took a big hit in response to the coronavirus, but the s&p 500 and big tech are showing surprising resilience. health care companies at the center of the pandemic, which stocks to watch and the impact of the crisis on automakers. how the entire auto ecosystem might function in our new reality. we spoke to ford ceo jim hackett. on the barron's round table, ben

leveson, jack howe. ben, we saw stunningly horrible economic numbers last week, really unbelievable, but the market actually was higher on the week. what is happening? >> yeah. i mean, this data was just terrible. retail sale, industrial production, empire state manufacturing, you name it, it was probably the worst ever on record. unemployment, the jobless claims continued to rise another 5 million people lost their jobs. i mean, it's just bad. but we knew it was going to be bad, and there's also two rays of hope out there. one was a new set of treatments that gilead is working on for covid actually might be work. we don't have all the data on it yet, but that provided a boost for stocks x. then there's talk of reopening the economy, and that's also helped too because it signals perhaps there is a light at the end of this tunnel. jg jon so, jack howe, i know you're looking at valuations, and as ben pointed out, there is

light at the end of the tunnel, but still stocks look a little pricey given what we do know, no? >> they do. i mean, look, jobs matter most right now, and i'm hopeful that this stimulus will get the economy going again. look at the s&p 500, it's now 17 times last year's earnings. i don't know many people who expected us to bounce back to last year's earnings level right away. i think you have to hold them for the long term. i'm saying is anyone worried that the stimulus will have a faster and strongerfect on the stock market -- effect on the stock market than it does the economy and before long we'll be talking about new highs, melt-ups, maybe bubbles. jack: so, ben, tell us whew -- why the s&p 500 is a little different from other global indexes. >> yeah. i think it's not to confuse -- important not to confuse the s&p 500 with the economy. it's got tech and health care really working now. big tech, the fangs are back, amazon and netflix hit new highs

earlier this week. they're both up more than 10%. and then you have, and then you have health care which is doing great as well. and then you have this little middle area, banks and industrials and energy, that if the economy does start to do better, they're going to do okay. so the s&p's up 2% or so this week, maybe a little bit less, but the small caps in the u.s. are down 3. so if you look everywhere else, they're not saying great things. it's really about the composition of the s&p 500. jack: you mentioned health care. i know, carlton, you've taken a look at health care. barron's is doing a big package on health care. i know there's some sort of second derivative effect. of course, there's the search for a cure, but there's more than that going on. >> absolutely. and i urge everyone to pick up a copy or to read it online, so, of course, while gilead is getting a lot of attention, you need to look at the broader base, and that's what we're

doing this weekend. you look at the managed care companies. a not of elective procedures are not happening, you know, the knee replacements, things like that, united health cares, humanas, you're going to see lower costs for them. this is going to be a tricky spot because we do have the election year going, so companied tend to face headwinds in those sorts of situations. but outside of the gileads, you want to look at the other pharmaceutical companies. we're examining potential opportunities in your mercks, your pfizers, eli lilly. they make most of the u.s.' stock of tylenol -- i should say the sup is element, not supplement, but generic, excuse me. and other generics that people are using right now as they're treating or potentially stocking up on. and then finally you've got to look at the teledoc space. it's kind of like the zoom for medicine. people aren't going to the doctor's office right now. they're seeing their doctors

remotely, and there's also some plays to be making for some of these medical device companies, some of these monitoring devices so people can still get health care even if it's not safe for them to go into the doctor's office or hospital. jack: like a lot of things we're seeing right now, there's a decent possibility that this has changed for good, that even after this crisis passes, we may very well see more teledocs and seeing your doctor virtually rather than literally. >> exactly. and i think this has kind of accelerated that dynamic. telemedicine has existed, but it was always more of a curiosity. and i think now we're going to see that acceleration to a new normal for certain types of issues. jack: so, jack howe, you have taken a look at a very different industry, the automobile manufacturers. what do you see there? >> well, the business is so important to employment, i mean, millions of people work in this industry. we want these people to remain employed as much as possible. but the business is going to change going forward.

i mean, we're looking at what's going to be different. i think you're going to see consolidation among dealers, that's inevitable. it could help some of the larger chains like auto nation. there may be more digital and touchless service offered by the car dealers and the service stations. you can actually see a younger fleet of cars. adam jonas at ohio morgan stanley is calling for a cash for clunkers program, we might get one that's more than three times the size of the one we saw during the great recession. i'm going to call that clunkers humonkers until i find a better name -- jack: try to find a better name. [laughter] >> i'll work on it. we've got a tblut of used cars, so we have to find a way to get people to buy cards. i did speak with jim hackett at ford, and he said ford learned a lot during that downturn. let's have a listen. >> remember, ford didn't take any bailout money. it was able to manage itself. it was really tough and a big

challenge, but it did it. well, think of that influence that said if you ever face a challenge again, you really want to be ready. we are really ready this time. >> and, jack, jim hackett even said -- i found this interesting -- he talked about how ford is exploring new material for vehicle interiors that can kill viruses on contact. jack: wow, that's interesting. and, you know, i do think on a consumer note we are going to see deals in used cars. i don't think that's taking advantage of the situation. anyone spending money will be good for the economy right now. coming up, the fed taking extraordinary measures to keep the economy afloat, but are we helping the right people? former

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♪ ♪ jack: the sba's paycheck protection program, or ppp, has run out of funds to help small businesses. how the federal reserve may be able to help, is that the right move? joining me now, former fdic chair sheila bair. i want to make sure viewers know your track record. way back in 1992 you warped against loosening rules -- a decade later, enron proved you right. and just a year ago you warned that during the next cats few, we have to focus -- catastrophe, we have to focus on main street rather than wall street. so so here we are. tell me --? >> here we are. i think they're trying. i think they're trying. i think they're absolutely trying. but the problem is they're just not equipped to do this. they're a big bank and they lend to other big banks.

that's how they're set up. even when they try to get money to main street, they've got to use the banks to be their intermediary, and that creates a lot of issues. you know, there's some issues with some of the facilities they're setting up. i think "the wall street journal" has rightly called them out on imposing more conditions on the smaller businesses and the large corporate and large financial institutions who are also being helped. so i do think they need to make sure that the restrictions and programs are consistent and even across the board, and it's not clear that's being done. jack: you told my colleagues that you thought maybe the money was actually going to the wrong people. what did you mean by that? >> yeah. well, that was a very early on conversation because initially when this started, they just pumped a lot of money into the banks and the primary dealers, and that was the playbook in 2008. just pump a lot of liquidity into the big banks, and that doesn't work. bailing out wall street does not help main street. i think that was the key lesson of the 2008-2009 crisis.

so since that time they've launched which gives authority to nonbanks, non-regulated banks, and they've tried to -- they've announced interventions in the corporate debt market. i think that's necessary, frankly, just to keep credit flowing and keep the larger employers funded. i think that's important though, again, these programs should come with restrictions, i think particularly buybacks and dove depends. -- dividends. some companies are fine, but the one withs that are needing help i think they should be restricting capital distributions. they should be putting their capital into operations and payroll right now. it would be nicer to see the restrictions apply across the board. but again, the fed is trying to get more money into non-financial employers large and small, but the way it's doing it is uneven, and i think it's kind of plugging up the works for the smaller employers and businesses. jon jon just to be clear, so when the banks reported earnings, some of them made a

point of, hey, we can afford these dividends, but you're saying, no, banks should not pay dividends right now. >> no, i don't think so. we don't know how bad this thing's going to get. they've said they're so highly capitalized, the fed said they're so highly capitalized, but they've been providing all these reductions in their capital minimums, so i wonder why that's necessary if they've got so much capital. [laughter] we don't know how bad this thing is going to get -- seriously, we don't know how bad it's going to get. they need capital to absorb losses and keep lending, so at the same time tells us they can go ahead and pay dividends just doesn't make any sense. they should be conserving that capital. if i'm wrong and it turns out they didn't need capital, fine, they can invest it later. there respect many shareholders, but the ones that need the cash, they could sell the shares on

the secondary market. it doesn't compromise your balance sheet or weaken your balance sheet. if you let the cash out the door, it does. jack: you've written about what you feel is the over-financialization of the economy. i suspect you're going to say we want to avoid that. >> we are. obviously, we're down on it now because this is what we do, we get in crisis e, we fault the fed. the fed pumps a lot of liquidity into the financial sector, and it creates a bigger financial sector, more debt. so i think the good news is that congress has -- [inaudible] funding certainly to households. the small business loans are forgivable if you support payroll, so i think there's a trend to get away from that model. but once we get past this going forward, we have got to get off this financialization carousel where we just, you know, we get boo trouble, we lower rates, the economy levers up. we never really delevered after the great financial crisis that

just moved from mortgage debt to non-mortgage consumer debt and business debt and, of course, government debt. so it's not sustainable. debt is not a good way to drive your economy. it's not sustainable, and, you know, absolving companies, we're doing that more now, it's just a drag, and i hope we can break out of that after this terrible crisis is over. jack: this time i hope everyone is listening. thank you very much, sheila. as the market tries to recover, which sectors are likely to come out on top? investor strategist (music)

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♪ ♪ jack: as the market makes huge moves in response to government stimulus and coronavirus news, which economic indicator should we be watching, and which sectors are likely to perform best? charles schwab chief investment

strategist liz and sawshedders -- liz and saunders joins the panel now. we've seen economic numbers that are literally worse than anything we've seen in our lifetime. the market is kind of manic-depressive. help us make sense out of all this first thing you're looking at, you say, health care. >> well, absolutely. as much as the virus defines when and the magnitude of the shutdown, i think it will define how and when we open the economy back up which is paramount to understanding the depth of the economic hit here. we know some to have higher frequency economic indicators that are leading in nature pick this up first, notably initial unemployment claims and now continuing claims and four week average of claims now that we have about a month's worth of call it post-shutdown data. and i think those will still be very valuable metrics. but i think we need to focus mostly on the so-called high frequency measures of growth. not the backwards looking quarterly or maybe even monthly

numbers, but some of these more -- [inaudible] to get a sense of the depth of recession we're going to see. jack: what one or two of those did you like the most? >> in addition to claims, we can look at a number of other staffing-related indicators, job opening-related indicators. we can see the percentage when we get the next payrolls report of how many people have been laid off temporarily versus permanently. as of the most recent payrolls report, it was about 85% were temporary layoffs. for now that's good news, it means when we open the economy back up, most of them should go back on payroll. but i think we can also look at shorter term measures of consumer confidence and, in turn related to the stock market, measures of investor confidence as well. i would focus more on those daily and weekly measures. >> liz ann, you spoke about what we do know, the data points like the job figures and things like that, what are some of the unknowns that maybe worry you

right now? >> well, certainly, as it relates to the virus when we will fully have the economy back open. the guidelines that have been put forth by the administration and the approach that states and localities are taking is to do it on a rolling basis, and then even within a particular state that might say, okay, we're ready to start opening up, even there it will be done sort of industry by industry, segment by segment. so there's no moment in time where we're going to have a sense of this. we're going to have to look at the data on a rolling basis, and i think the risks and unknowns, number one, are do we get a resurgence in incidence after the start of opening things up. that would be one kind of negative case scenario. the other one would be even if we don't get a resurgence in the virus, what is going to happen to demand. are we going to see that pent-up demand meaning the recovery's going to happen a fatherly quickly, or is there going to be enough caution that the demand maybe doesn't come back as quickly as many hoped for. i think those are the unknowns

and questions to which we just don't have answers at this point. >> so the fed moves really seem to have given investors a lot of confidence. do you think that's a well-placed confidence? >> well, i think the combination of what congress and the fed have done, which is an extraordinary amount of money relative to the size of the overall economy just on the fiscal side it's about 12% of gdp, and then you add what the fed has done, it's clearly not the elixir for what ails us. it's not a vaccine or a treatment for the virus. it can't open the economy back up or can't sort of force demand to come back. it hopefully prevents an chick if crisis which we're -- economic crisis from becoming a financial system crisis. jack: let's talk about sectors briefly. at the top of the show, ben mention tech and health care. i think that aligns with your analysis of what might come out stronger. >> so health care is the one sector on which we have an outperform rating, and that was placed pre-the economic

shutdown. and sure during this period of time both on the way down and on the way back up, health care's been a relative leader. some of the reasons are obvious given the focus by pharma, by biotech on coming up with treatments and vaccines or, you know, purchases of personal care. and i think within tech a focus on those companies that are high quality, dominant in their tries, have strong cash flows and earnings streams, and those are the factors that are going to perform well both in this environment and when we get back to some semblance of normalcy. jack: i know you guys are worried about small caps, we don't have time to talk about that now, so we'll have you back. thank you so much for joining us, liz ann. up next, round table members give their investment ideas for the coming week, so stay right there. you think of people in a place. but when you have the chase mobile app, your bank can be virtually any place. so, when you get a check... you can deposit it from here.

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♪ muck if. ♪ jack: so, jack, as you shelter in place, i understand you are channeling your inner grease monkey. [laughter] >> it's been a little while since i got under the hood, i got that tell you. i want investors to look at autozone and o'reilly's this week, these are auto parts chains. earlier we talked about the possibility of a big cash for clunkers program, what if it doesn't work? what if we have clunker keeper es because people are feeling strapped for cash? that can work out well for some of these auto parts chains that cater to do do it yourselfers. right now stores are closed, but once the economy reopens, i think these chains are going to be among the first in the car sector to bounce back. jack: as always, we want one actionable idea from carlton.

carlton, i'm going to start with you speak of channeling, though you're going crazy cleaning that house every hour. >> i really am. [laughter] and i have to admit, i do feel a little repetitive, but i'm looking at chlorox right now. a lot of people have bought into it recently, but even when we hook at reopening the economy, there's going to be a new normal, new standard for how offices and homes have to be maintained. so i'm looking at chlorox right now. jack: and, ben, i'm not going to make a joke here, goldman sachs. why is it looking good to you right now? >> well, carlton has a great article in this weekend's magazine about the banking sector, and goldman really stands out to me. the earnings this week that all the big banks released earnings, they weren't really taken very well. all the banks dropped. goldman dropped less. it's got a lot of investment banking, a lot fewer loans to go bad. i think in this environment just with the trading going well, it's just going to be ad good stock to own. jack: thanks, ben, jack,

carlton. great ideas with. to read more, check out this week's edition at barrons.com and follow us on twitter. that's all for us. wash your hands, wear your masks. see you next week on [♪] lou: good evening, everybody. a number of important developments and all of them related to the wuhan virus contagion. the chinese coronavirus continues to spread around the world, infecting millions, killing tens of thousands of people. today the united states mounted what sources call a full-scale investigation of china's cover-up of the spread of the deadly wuhan virus while it was killing citizens in the hubei province the president xi jinping was