for the latest show updates, be sure to follow us on twitter, facebook and instagram. we'll be back next week right here at "the wall street journal at large." i'm james freeman. thanks for joining us. ♪ ♪ jack: welcome to barron's round talking about where we get behind the headlines and prepare you for the week with ahead. i'm jack otter. the nasdaq hitting record highs this week, the future of red hot tech stocks. we begin with what we think are the three most important things investors should be thinking about right now. stock pick pers say they do best in aing volatile market. well, they sure have one now. a round table of top investors gave us their picks. shares of tesla and other electric vehicle makers have been racing higher, and the covid-19 crisis has increased the pain for struggling

retailers, but some companies found creative ways to engage consumers. on the round table the, ben levisohn, carlton english and al root. ben, you used a great phrase earlier this week when we were talking about the market, you said this week the market was violently flat. what'd you mean by that? >> right. so the market, it seems like every day the dow is going up 400 points or is dropping 400 points, or it looks like it's going to drop 400 points but then does an about face and heads higher. we're seeing coronavirus cases spike in many states, and some days the headlines seem to matter and other days they don't. and it's really not clear what is going to get the market sort of knocked out of this range that it's been in. the s&p 500 did finish higher this week, but it's still below the june 8th high from the rally off the marlo. so it's going to be -- march low. it's going to be interesting to watch as these headlines continue to keep the stock market in place or if market can

get going. but it's not a great thing if you're an indexer who's waiting for your etf to go higher, but it is really good for stock pickers. to our round table members are all saying think think the market has gone too far too fast, but they're still finding stocks that they like. jack: give us a few of those picks. >> sure. so one of them is sony. they've been, basically, been looking for stocks that could be winners coming out of this environment but don't reflect that yet, and sony's one of them. it's only up 8% this year which is still better than the market, but it's not nearly as much as a lot of other stocks that should be benefiting from the stay at home kind of environment. and they see another 50% upside. another is next era energy and also partners, they do renewable energy, have a nice dividend yield. again, they're not up a lot this year, but for yahoo! tilts that's -- utilities that's

actually pretty good because utilities have just been awful this year. and then o'reilly which makes auto parts to pro customers and others as well. this is from goldman's alabama i by joseph cohen, and she sees that it's really going to benefit people going out and having to drive more and do things like that, that before they might not have done. so these are three stocks that our round table members think could do pretty well. jack: al, you took a look at the industry, but specifically the electric vehicle part of the industry which has just been on fire. >> right. thanks, jack. everybody, everybody loves a volt. and the performance in the stock is almost unbelievable. if you take a look at sort of a quick look at alternative fuel stocks, they're up about 150% over the past month. i mean, some of these gains are truly amazing.

neo, a chinese maker, up 124. workhorse, making electric commercial vans, up 306. tortoise acquisition, they're buying a company that wants to be the cummins of heavy-duty trucks, making alternative power trains like cummins makes diesel engines. nikola, but before you say, oh, it's not a bubble, they're up 426% year to date, and even tesla, tesla shares are up 64% over the past month. and, of course, now it's the most valuable car company in the world. jack: so with fewer people driving and maybe a lot of people worry about their wallets, it seems an odd sector to be cruising. what's going on with that? >> yeah, it's a really good question. i don't think it's a covid story. i think three things have really happened. first of all, tesla's results have been outstanding.

it's difficult to argue anything but that. and i think it's really helped investors believe that they're here to stay. there's been a walkout in california, and the third thing is there has been another announcement from lyft, the ride-sharing company, that wants to be all e by 2030. so you take the confluence of that, and the stocks go on fire. jack: i want to get to carlton real quick before we run out of time. i look at a much less-loved sector, and that's retail. but you found a few winners. >> yeah. so lululemon, i mean, out of the gate has been doing it. they had a great in-store experience. obviously, that's not happening now, but their online offering has been fantastic, and they've reconnected with their customers by offering yoga classes, and

they made that purchase of the peloton competitor, mirror. they're showing some strength coming out of this, in order tom and the real real. both cater to that higher-end consumer, and they've tone a lot to get their customers shopping, to show them how the clothes move and work so when we come out of this, they'll look stronger. jack: in a week that brooks brothers has declared bankruptcy, it's nice to see some people are figuring out at least that amazon's not the only option. coming up, tech stocks hit another record high.

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♪ jack: covid has supercharged the tech take over of our economy,

powering the nasdaq exchange to new highs. adena friedman is looking forward to the future of the exchange. adena, congratulations on being named top ceo by barron's, and thanks for joining us. so you were in the marketplace where all the excitement is right now. the valuationses are looking high relative to the rest of the market, so how do you see this playing out over the second half of this year and in coming years? >> well, first off, thank you, jack, for having me on the show, and i am honored to be on the list. is so in temples of technology companies, i think we have to recognize over the last ten years there have been a whole range of innovate ors in technology that have gone towards two trends. one is consumer convenience in terms of online shopping, online delivery, things like that. as well as in terms of enterprise software that's really supporting a global distributive work force. and those two tech trends have gone from kind of a nice to have to a need to have over the

course of this pandemic. and i think investors are realizing that the longer that the pandemic really infects our society and causes us to have, to have to be more flexible in terms of being at home, i think the more they get confident that these are long-term trends that will continue to play into the strength of what technology's bringing to us today. i think that's really what's causing the valuationses to occur. i is can see they are hooking at it from a long-term perspective. jack: i.suspect a lot of these things will stay with us. i want the ask you about the exchange itself. obviously, in march massive selloff, there were circuit breakers, volume was huge, and everything kind of seemed to go smoothly at the exchange. were there any glitches people didn't notice or even maybe something you learned that prepare for the next big selloff? >> i don't think we could have expected this pandemic, i don't think we could have anticipated exactly what it would mean. our exchange has, honestly, operated in a distributive world

for the last 49 year, since we were born. that was the whole purpose of nasdaq, to bring wall street out of wall street and onto main street and allow for exchanges to operate and investors to invest no matter where they are. but the fact of the matter is over the last ten years the entire industry the has really focused on business continuity planning, and it takes all of us to be prepared for an event like this. and what was great was that we were well prepared. the market infrastructure did hold up well despite the surges in volumes and the massive amount of volatility. and so we were able to move our employees home into a safe environment to help flatten the curve and also an enormous if amount of activity in the markets. i think i'm very proud of the industry for what we were able to achieve. jack: i do want to ask you about your role in the business round table. you have argued that capitalism has to change to survive. can you explain that? >> sure. we believe in something called cooperative capitalism, and what you've seen over the last

several months is that companies have realized they have a role. we've always known it, but the pandemic has really created an acute understanding of hour role in society, our role in our communities and this need to really address social injustice. i think it's a confluencing factor that really brings us closer to working together, but also working with government to say what is the role we play in making sure our society can heal itself and to become a better society going forward. and i do think that companies play a huge role in that. you've seen great examples of companies, for instance, supporting local farmers, buying up their produce and providing it to food banks, moving their manufacturing plants to create ventilators and masks. those were not economic decisions, those were societal decisions they were making. and i think on the issue of social injustice, you're seeing just an enormous wave of interest and a power move by companies to say it is time to change, and we are going to be a part of that change. so that a sense of cooperative capitalism, i think, is really

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♪ ♪ jack: with big banks set to report earnings next week, we take a look at how financial institutions are faring and what that tells us about the market and the economy. tom, thanks for joining us. one of the things we'll probably see next week is that the biggest institutions are hanging in there, and smaller banks are struggling. why that divergence?

>> so it really has to do with the business mix. it's been a very, very robust quarter for investment banking activities. we've had a record or near record equity capital issuance, we've had some records set for the investment grade and high yield markets for new issues. and banks that have investment banks inside them are going to really benefit from them. companies like goldman sachs, morgan stanley, jpmorgan, group and wang of america -- bank of america, we think, will do really well because of that. that's going to be the difference and the driver between the big banks and the smaller banks. jack: they're not as reliable on that interest income which is tough these days. i do want to ask you about what you're looking for. so often when earnings come out, there really aren't that many surprises because guys like you already know what's coming up. but what tells will you be looking for in the commentaries surrounding earnings? >> i think you're so right because, look, we're in a really

unusual time. we have a global pandemic underway, unfortunately. we voluntarily shut down the economy. interest rates are headed back or near zero. so there's a lot going on, and there's a lot to look for to understand what the major trends are. we think it's going to be a difficult quarter that they're going to report this week because the loan loss provisions are going to be so large. but we also believe it's going to be the worst quarter of the year. a key thing for investors and observers is that we have a new accounting treatment this year and this cycle. so the first time we're doing a recession with the accounting treatment where the banks are required to front load loan loss reserves before the losses even come. so what we want to hear from these banks is what's happening in the trends and the expected losses. there won't be many losses in the quarter, but we're going to be listening for what management says about the expected losses and what's a happening to all

these deferred loans that are in their portfolios. jack: something about the strength of their balance sheets there won't be that many losses. i know carlton has a question for you. >> hi, tom. thanks for joining us. just curious, we have is such a busy week with the big banks reporting and just kind of curious, you know, where do you see the winners and losers? >> so we, we think, again, the big banks, the banks that have a diversified revenue dream and then also -- and those would be the bigger new york city-based banks typically. also the banks that had a strong level of profitability coming into this crisis. what's fortunate for the industry is that profitability was strong coming into the pandemic, so that's going to help banks earn their way through. we, as far as stock selection goes if, some of these banks are at remarkedly low prices. while the stocks on friday participated very well in the up market, they outperformed the

market, we're up typically 5%. but on the year they're still down about 40%. so there are a couple of great franchises. our analysts like truist financial, and they like pnc which trade at just a small premium to book value which is a low valuation for that as well as having near 5% dividend yield. those are the types of companies. we like the trophies that are on sale, and those are two trophies that we think are on sale in this market. jack: al? >> tom, you know, you made an interesting point, the sector's still beaten up. you know, do you think there's some confusion on how to value these things, or what are the one or two reasons that people just don't want to get into some of these things, like you said, with great diversified franchises trading at historic prices? >> i think you're right. again, it's called cecil, the cumulative expected loss analysis that the f if asb --

fasb has put in place. we're providing bad loans that haven't shown up, making estimates for what the bad loans are going to cost the banks. so we've never done this before. that's why it's shocking when you see these provisions, but you have to remember we're front loading several quarters of losses in the future. so that's why i think it's been a little bit more of a reaction to these earnings. but really what we're looking for for signs for this industry are what's happening to these deferred loans that are out there. that's an uncertainty. we'd like to see the economy continuing to improve. i think that's enough. even if it's not vast improvement, as long as it is improvement. and then investors also want more comfort on the dividend. the dividends are become more of a question since the federal reserve did their stress test about two weeks ago.

jack: yeah. lots of people buy e the stocks for the dividend. that certainly is important. tom, thanks so much for your insight. >> that that's great, thank you. jack: up next, round table members give their investment ideas for the coming week, is so stay right there. ♪ i had shingles. horrible. a young thing like me? [camera man] actually anyone 50 or over is at increased risk for shingles. the pain, the burning! my husband had to do everything for weeks. and the thing is, there's nothing you can do about it! [camera man] well, shingles can be prevented. shingles can be whaaat? [camera man] prevented. you can get vaccinated. frank! they have shingles vaccines! -whaaat? -that's what i said. we're taking you to the doctor. not going through that again. [camera man] you can also get it from your pharmacist! talk to your doctor or pharmacist about getting vaccinated.

♪ ♪ jack: is so, ben, this week civil rights activists met with mark zucker egger, sheryl sandberg -- zuckerberg. and they came away pretty disappointed, but the market was happy, and facebook shares went up again. >> yeah. i mean, the stock just won't stay down. even with these businesses boycotting, they're just not going away. and neither are the people who use it. so the stock has made back most to have losses that it had after

this boycott was first announced. jack: so, carlton, you talked to him as part of the barron's investing in tech series about a lot of different topics including facebook. what did he have to say about that? >> he had some interesting views on the boycott and some of the unintended consequences that the boycott could have. jack: one of his points was that he feels it could hurt small businesses. i think we have that clip to show. >> if you severely affect the platform and diminish its effectiveness, diminish its performance, you damage the performance of small businesses. jack: so what do you think of that, carlton? i'm actually going to disagree with sir martin, but give me your thoughts. >> yeah. i think it is interesting. i mean, you know, small business does drive the economy, and the platform really does need small businesses advertising. they're a significant portion of

facebook's advertisers, and that's really the only way small businesses can get in front of customers and grow their sales. jack: yeah. with the big advertisers, i think a thousand of them are boycotting, but because facebook literally has eight million advertisers, it's not a big hit. where i disagree we sir martin, and i do that advisedly because he's a smart guy, i think that the reason small businesses need facebook is because it's a monopoly. they would be perfectly happy if they had other options. they don't. if things were to change, maybe instagram was a separate company, then they'd have some competition to advertise on. and secondly, you know, let's face it, the reason those civil rights advocates met with facebook because they don't like things that go on there. i mean, it live streamed a massacre in new zealand. if that went away, people would still be very happy to advertise there. guys, i want to get from each of you one of your favorite picks from the "barron's roundtable."

let's start, ben, with what stock did you like? >> i liked james anderson's pick of alibaba. the stock has done really well this year, but not nearly as good as amazon. if he thinks it can rally, i think that's not a bad pick. jack: a high beta pick, for sure. a.m., what are you looking at? >> i'll stick with goldman sachs, abby joseph cohen picked technology, they peddle in air quality among other things. jack: that's very important right now. carlton, what are you looking at? >> looking at the vendy. they control a senate portion of the music -- significant portion of the music that spotify streams, and shares could increase by 50%. jack: all those picks and more are in barron's right now with, of course, round table members' arguments for them. to read more, of course, check out barron's.com.

also check us out on twitter. we'll see you next week. wear your mask, be healthy and stay tuned to "barron's (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.