facebook and instagram. i'll be next week where my guest will be white house adviser peter navarro right here on "the wall street journal at large." thank you for joining us, and a mother's day to all of you mothers out there. >> barron's round table sponsored by: ♪ ♪ jack: welcome to barron's roundtable where we get behind the headlines, i'm jon otter. we -- jack otter. we begin with the three most important things investors should be thinking about right now. stocks keep climbing in the face of devastating unemployment level ares. how long can this last? volatile markets have some investors looking at the safety of cash. with interest rates still low, we'll tell you how to maximize your returns. and alcohol sales surging, we'll tell you what consumers are stocking up on as they hunker down at home. on the roundtable tonight, ben

levisohn, carlton english and jack howe. ben, i'm going to start with you. according to the textbook, the value of stocks is based on future cash flows. and with interest rates so low, of course, those future cash flows are a little more valuable. add that to the fact that this coronavirus crisis presumably will pass over a couple quarters, and that he's eye academically at least the stock market should be rallying. to you buy that? >> -- do you buy that? >> i think the market in some ways have lost its mind, but there's so much money out there right now. the fed's dumped money and the government's put money, and now we're seeing this good news in terms of reopening. and, you know, it's as if we can just look past, the market is looking past all the bad stuff right now to a time when everything is back to normal. and if we can get back to normal, if earnings can get back to the trajectory they were on before, if the economy can get

back to the trajectory it was on before, then the market make makes complete sense. i'm just not that optimistic. jack: because you think we'll get bad news before we get out of this? >> i just think that when you're looking at earnings, that they're not going to be quite what people have extrapolated them to be. right now, you know, earnings are doing pretty much what they've always done, you know? companies are beating about 59% of the time which is right around the long-term average. and, you know, stocks it doesn't really matter what they're doing. this week we saw stocks go up on pretty much anything. if you beat earnings, they went up. that was something like paypal which was a stock that was expected to do well. it still went up double digits. stocks that have been having a tough time because people thought they weren't going to do well like lincoln national, an insurer, they went up. then you have companies like lyft who everyone knows is not doing well but seems to have a plan for when the economy reopens, and they went up double

digits. and so the earnings don't really seem to matter. but in some ways they're also telling us about some of the things about the future. when you look at the earnings that have been doing the best, the sector is the health care sector. biggest gains on the day of the earnings release, and that, i think, makes sense. this is a sector we've talked about that we like that we just think is going to be really made for this kind of market experiencing that we're going to have. jack: jack, you had a thought? >> i never like to pass up an opportunity to argue with ben, but i've got to say when you say that investors are forward-looking, i'm wondering how much forward are they looking from now? stocks are expensive relative to last year's record earnings. we're not going to be back there, i think, for at least a couple of years. look, i'm a perma-bull, i'm still in stockings. but if you're someone who had thought raising cash because you're getting nervous, i'm not sure the penalty is so high. i think long-term for stocks before might be below average.

jack: that said, when people look at what they're getting in cash, it's pretty darn low. carlton, you've got a few strategies to boost that up a little bit north of 1% which actually sounds good right now. >> absolutely. you guys know how much i love cash. you can look at it -- jack: who doesn't? >> exactly. problem is for years it hasn't even earned that much for you, i should say, and you know the fed lowering rates near zero, it's earning even less. we've identified a handful of savings accounts, most of them on line, where you're able to get interest rates in excess of 1%, sometimes even 1.5%. so that's one way where you can put your cash to work. you still is have it, you still access it, but you're earning a little something on it. when you look at short-term cds, you're not really earning as much there. again, a lot of the rates are kind of near zero, but there is a potential strategy where if you go longer term, you could look at maybe a five-year cd, that the allied financial's

offering, it's at 1.6%. you could park your money there. and if the outlook for interest rates improve down the line, this would be a chance for you take the withdrawal, i'll be honest, you could trade up for maybe a bond fund that could be getting more of a return. so there's a few different ways that you can play with cash right now. also interesting, if you've been on the sidelines, you're feeling income-secure right now, looking to get back into the market, dollar cost averaging into companies that, you know, reflect the current situation we're in, defensive stocks, things hike that, that could just be a way to start making money on that cash that you've been holding for a while. jack: one thing i love about that cash approach, carlton, is that often people feel like, well, institutions, big banks, they get all the advantages. the little guy, you know, gets the dregs. in this case this is something that average retail investors can do that goldman sachs cannot. they can't put a billion dollars in a cd, but you can, and you're

getting a far better return than you'd get on a 30-year bond even at 1.3%. all this bad news has sent people to stock up the liquor cabinet. you've been looking at those stocks. >> well, there's this narrative that we're all, you know, boozing hard, that we're hitting the quarantine-s is. i was going to inspect your recycling bins, but fortunately, some better evidence came out and it suggests that after this initial pantry loading period, you know, where people stocked up right after the shutdown, there has been growth in alcohol purchases from school. it's growing about 23%, but it would have to grow at 22% just to offset the lost business at bars and restaurants right now. so maybe we're boozing a little bit more, but it's just a little bit. no need for an intervention. i will say liquor and wine sales are way ahead of pace, beer

sales are way behind. and the top performer by far is hard seltzer. really going bananas on the hard seltzer, and that speaks to a company called boston beer, its truly brand really growing quickly. jack: yeah, that's a fascinating story. jim koch kind of ushered in the whole craft we're, he's doing very well with hard cider. coming up, what the coronavirus crisis means for the value of your home. one of barron's 100 most influential women in the u.s. finance wororororor

♪ ♪ jack: how will the coronavirus crisis affect home prices? joining me now, a member of barron's 100 most influme women

in finance, ivy zelman. how is the coronavirus crisis affecting housing? >> well, surprisingly, housing has been much more resilient than i would have expected and certainly fearedded. when the economy shut down initially are, activity plunged, as you would have expected. but over the last several weeks, builders and brokers have been reporting subsequent improvement in each of the recent weeks. so we went from declines of 50-80% to some reporting as much as only 11% decline like dr horton. so it's within remarkable. -- it's been remarkable, definitely better than feared. jack: well, one aspect of that improvement is that new home sales are doing a little bit better than resales, and that's kind of logical given what's going on. >> right. builders are able to sell homes that are move-in ready whereas a lot of homeowners that had their

homes on the market, they pulled their homes off the market. in fact, inventory already at record lows declined probably another 25%. people really don't want having others coming through their homes. but, you know, the new home market has already been gaining substantial share over the last several years as a lot of people want brand new homes. they don't want people's old homes, they want open floor plans, the newest technology. smart homes are all the rage. so we expect that that trend will continue. jack: now, before we get into what regions are doing well, can you explain, you've got cities, suburbs, how is this affecting the popularity of those various options? >> well, prior to the pandemic what we call the e- -- ex-urbs, that had been the strongest area because builders were finally building affordable homes in that third ring. and that trend, in fact, has continued post, you know, the shutdown. so builders are seeing in the

entry level the strongest. but as you move closer into the sub you suburbs and the higher e points, that's where we see more of the challenge continuing. and that trend had been the case, and the luxury is probably the most challenged especially in those dense urban markets. jack: so let's talk about regions of the country. who's doing well and who's hurting more during this? >> well, you know, markets that are exposed to regions, to industries that have been the hardest hit, hospitality, recreation, entertainment, we've seen definitely weakness on the west coast, las vegas. markets that have actually fared better have been predominantly in the southeast. we look at low risk versus high risk based on where the employment base is, so the technology industry the which is still very strong right now, market like seattle even though it was shut down seems to be doing very well with multiple bids on that first entry-level price point which is like a half

a million. so definitely differences. new york city is very, very weak right now, as you'd imagine. so i'm happy to go into more detall, but -- detail, very significant differences based on region. jack: i do want to get a stock pick from you with. investors know that the best place to look for value is where the market doesn't really fully seem to understand the dynamics of a company. and you say that's playing out right now amongst the mortgage insurers. >> right. the mortgage insurers have been definitely hit very, very hard. the stocks have plunged. they're trading below book value, and they're really thinkd ready to withstand the significant pressure and likely to still generate positive roe. they did even indicate they can withstand up to 20-30% defaults which right now we have about 7-8 percent of mortgages that are currently in forbearance. so i think below book value is a compelling entry point. it could be very volatile, but

think they're very well positioned. and, in fact, most of them, they have over 90% of their book reinsured. so their losses are capped on those individual mortgages at about 2-3%. so i think we feel pretty good about the long-term opportunity for sn and the other insurers like magic and radiant. jack: maybe investors are just skittish after the last rash. that was a very different reason. i wish we could talk longer. the good news is we've got a long interview with you in barron's this week, and we've got a deeper dive into the real estate industry including commercial as well. coming up, how long before laid-off americans can get back to work? and what will the post-covid economy look like? michelle meyer there if bank of

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♪ jack: what does the dismal unemployment report mean for the economy and investors, and how can could it take for laidoff employees to return to the work force? joining the round table is bank of america's head of economics, michelle meyer. i'm going to start with you, carlton, to talk about this week's cover package in "barron's." obviously, these numbers are horrific, but looking to the long term, how do you expect it to play out with unemployment? >> exactly. the numbers don't necessarily reflect the true reality. as people start to come back to workings we may still see lore wages or workweeks. a quick example is imagine the restaurants that reopen because of safety and social distancing measures, they're going to be maybe serving at 50% occupancy to a client base that isn't going to be that excited to be

spending. that's going to mean all those workers are going to be hired back. and also that's lost tip revenue or lost wages for them. jack: yeah. that can reverbing rate throughout the economy. you think about new york, i don't think a restaurant can stay in business at 50% occupancy, but then if it tells its landlord it can't play, the landlord's probably leveraged. michelle, i'd love for you to address that but also your thought is that we might be able to bounce back quickly from 20, 25%, whatever awful number we'll have but getting much below 10% unemployment could be a slog? >> i think that's exactly right. so you have to think about these numbers, put 'em in perspective here. so we had considerable job loss all at once. based off the numbers we saw this morning, just over 70% of those that went into unemployed were considered temporary. so that means they have some attachment the their employer once there is a reopening. a portion will be hired back

fairly quickly and seamlessly. and and that probably will get you to an unemployment rate somewhere around 10% or so. thereafter i think it is going to be very difficult because you have residual damage to the broader economy. you have businesses, to your point, that are going to be operating on a smaller scale for quite some time until the virus is well past us. there's going to be stages in this recovery and stages in this economic cycle, and it's certainly not as easy as flipping a light switch off and turning it right back on. >> as you mentioned, a clear majority of workers really expect to get their jobs back, but is it possible they're too optimistic? that companies are going to use this as an opportunity to get even leaner? >> well, after any recession you end up seeing companies take a step back and think about efficiency, how they want to staff. and i would argue it's to the extreme because you've had businesses shut their doors for a period of time or certainly operate on a much smaller scale.

so is as they ramp back up, as they think about the long-term trajectory and what kind of needs they have for labor versus capital, for example, i do think they're going to spend some time really thinking about the optimal levels of labor right now, how they want it fast. so there's certainly a risk that even those that are assuming they'll be able to be brought back, they were temporarily unemployeded, it might be challenging for a portion of that population as well. >> michelle, if we're going to be stuck with relatively high unemployment for a long time, is there something more that we should be doing from from a policy standpoint when people are talking about a grand infrastructure plan, is that a good idea? is there a better idea for creating jobs? >> so i think the stimulus has to be thought of in terms of stages. the stimulus that's going on right now is more stabilization. it's there to offset a dramatic loss in jobs and a dramatic loss of income associated with that. so it's just to, you know, prevent what could be an even

deeper and more sustained recession. the next round of stimulus will be around actually generating stronger economic growth and doing so in a way that can improve efficiencies. so when you think about the labor market, what we just spoke to, you have workers that might be displaced maybe from leisure and hospitality, maybe from the retail sector as these companies come back at a smaller scale or maybe not at all to some extent, these workers are going to need to find a new path and job training programs, relocation programs, incentives for companies to do on the job training, all of that could be really effective. jack: and, michelle, i guess the idea behind those big infrastructure things is not only to you, obviously, put money into people's pockets, but over the long term you can boost the efficiency of the economy with some of these prompts? >> yeah, that's right. infrastructure spending is one of the best policies, it doesn't do much in the short term.

if they do have the ability to pass additional rounds of stimulus where they can start thinking about the forward-looking trajectory for the economy, infrastructure spending makes a lot of sense. you build high-speed trains, for example, that gets somebody from point a to point b much more quickly, efficiently. so it puts people to work in terms of those projects in the short term, but the long-term benefits are each more notable. jack: thank you very much, michelle. we appreciate it. up next, roundtable members give their investment ideas for the coming week. stay right there. ♪ ♪ this is an athlete, twenty reps deep, sprinting past every leak in our softest, smoothest fabric. she's confident, protected, her strength respected. depend. the only thing stronger than us, is you.

♪ ♪ jack: so, jack, you were talking about hard seltzer earlier in the show. i understand you're using that to wash down a few slices of pizza. >> well, pizza is probably the

best performing part of the restaurant universe right now, and i'm on the hunt for things that are working. papa john's reported numbers this past week, same-store sales growth of over 4%. that's pretty good. i spoke with their new ceo, rob lynch, from my barron's street wise podcast. he said they're stressing that, look, all of the food goes into a 40-degree -- 450-degree ovens, and when it comes out, no one's handling the food. they've been putting that in their commercials, and they said customers are really responding to that. so there's some good growth there. jack: and we're seeing, certainly, kind of a technological advantage that some of these big pizza chains have over the mom and pop operators, and in the barron's tradition of getting an actionable idea from everybody, karltop, your actionable idea is connected to just that thing. >> exactly. so i'm taking a look at a paypal this week. they did report earnings earlier this week with. they've also had an incredible

runup of soft, but they -- so far, but they represent the new dynamic of paying online. they exceeded transactions that they saw black friday and cyber monday, so this is going to represent the new normal. i've reported on some financial services consolidation this week, and the overarching theme this move towards fin-tech, and paypal operates in that space. jack: and, ben, you are really getting gut city this week. gutsy this week. >> the market is always right, and right now it's telling us that the economy is going to be stronger than we think. i'm skeptical, but it doesn't matter what i think. the market is, it's what the market thinks. i think value stocks are going to outperform. looking at the russell 1000 value etf. i'm not sure it's a long-term trade, but i think this could do quite well if the market wants to get behind that idea. jack: certainly value has been lagging forever. thanks, ben, carlton and jack,

all great ideas. to read more, check out this week's edition at barron's.com and don't forget to follow us on twitter. that's all for us. wear your masks, be healthy. we'll see you next week on (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.