wave that imperils police, and indeed, citizens everywhere. well, that does it for this week. be sure to follow me on twitter, facebook and i'm sorry frame, and i'll be back next week more on "the wall street journal at large." thank you for joining us. ♪ ♪ jack: welcome to "barron's roundtable" where we get behind the headlines and prepare you for the week ahead. coming up, will the video conferencing boom continue after the covid-19 conference is over? zoom's cfo will join us. we begin with the three most important things investors should be thinking about right now. a rebound in tech stocks failed this week, pulling the markets lower. what will reenier eyes that market? a storm of cloud soft ware debuted this week.

what's next in tech? and fedex has been on a tear during the covid-19 crisis along with other transportation stocks. will the gains continue after we get a vaccine? on the "barron's roundtable", al root, carlton english and jack howe. good to see you guys. jack, i want to start with you on the market. tech stocks tried to get a rally going, but they just couldn't pull it off. >> well, monday and tuesday they tried to get that party started again, and then wednesday, thursday, friday they just kind of spent those days gent9ly pulling -- gently pulling down steadily. and it's mostly tech stocks, right? they've led the stock market rebound so far this year, but the five biggest tech companies are now in unprecedented 23% of the s&p 500. how are investors going to get more excited about these same companies? the economic news was so-so. retail sales grew not as quickly as they had the month before,

industrial production improved, not quite as fast as over summer. the fed said the economic outlook is uncertain, not exactly breaking news, but it signaled it will keep interest rates near zero all the way out to 2023. that's not exciting? investors kind of yawned it off. go ahead. jack: interesting point about that. obviously, the reason we've been lowering rates is to try to spur business investment, but if you tell somebody rates are going to be low as far as the eye can see, there's no wig hurry. if you tell me, hey, jack, or you better buy now, maybe i'll run to the car dealership. unithere's a possibility that buzzes say we'll buy when we're going to buy? >> how do you feel about more zero? not that exciting. i think investors are more looking for some kind of fiscal stimulus rather than more fed action. just point out, jack, one story

to keep an eye on is as soon as this coming sunday you might see a shutdown of downloads for wechat and tiktok, that'll be interesting to watch. tiktok is trying to come up with a deal to keep its u.s. service going. it'll still function, you just won't be able to download it. you have about two more months before the app gets shut down, and then you also have invidia signed a kind of anticipated $40 billion deal to buy arm. china's a big buyer of arm chips, watch to see if china doesn't try to throw up some roadblock for this invidia deal in realuation for what's going on with tiktok and wechat. jack: yeah, i think they're a bigger deal geopolitically than in terms of investing right now. the way it's looking, i guess oracle would host tiktok on its cloud which is nice for larry ellison, but it doesn't really solve the security problem if the edge years are still employees in i china. we're just going to have to

watch. i want to talk to you, carlton, about ipos. jack says maybe investors weren't that excited about paying more for big tech, but boy, they sure like to pay a lot for some of these new software companies. >> it's been something to watch this year. the ran sans ipoetfs that the attracts companies up 60% this year while the s&p 500 is up about 4%. that gain doesn't account for those companies we saw go public this week, unity, sumo logic, jfrog and snowflake which doubled in its first day of trading. to put that into perspective, it's market cap is roughly that of goldman sachs, one of its underwriters, right now. jack: just because that stock doubled on day one, retail investors actually didn't make any money. >> exactly. so there's often that confusion between the offer price the night before and the opening price. that's what the retail investors are buy, they're buying that

opening price. but, you know, with a lot of these tech stocks already running up, there are investors that are looking for a gain. they might not get it much more. peloton and some of these stay at home games, it's that lottery ticket type deal that they're hoping they can continue to advance. jack: exactly. al, you love industrial stocks. you're our mundane business reporter. so tell me why, with all this e-commerce excitement, fedex was actually the one that blew away earnings? >> i take exception to that. nothing about industrials is mundane. well, very simply, they destroyed, they smashed earnings. analysts were looking for less than $3, they earned almost 5. and, you know, it really shows that, you know, some of these transportation logistics companies aren't just industrial companies, they're sort of consumer hybrids. the story for fedex was all e-commerce. jack: now, obviously, you know, probably going to have a covid christmas, it's going to be a

great holiday season for e-commerce, but looking down the road a little farther, do these companies continue to make money? is there anything on the horizon that can boost growth? >> yeah, i don't think it's as good as it can get for either fedex or ups. i think that you're going to have, along with e-commerce, you're going to have a vaccine that's going to be needed, you know, hundreds of millions of doses are going to be needed to be the delivered to billions of people. we're talking about e-commerce and everybody ordering things, town the road we'll have an industrial recovery, that's good for the networks as well. things are looking pretty bright for the parcel shippers. jack: who are a few cheap stocks that might benefit? >> the industrial rotation, that's something people should consider. i love high quality industrials like honeywell, even 'em orson electric, these are stocks people can look at as they think

about what to do after the tech rally. jack: any signals in the next couple weeks? >> ups is going to meet with investors next week, and you're going to get all these truckers reporting third quarter earnings in the middle of october, so lots coming down the pike. jack: thank you so much, al, jack and carlton. coming up, americans are totally zooming now, but will they still want to after the pandemic is over.

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over? zoom's cfo kelly steckel berg joins me now. sales are up 355% last quarter, i think you've got about 150 million monthly active users, and, of course, to me, the coolest thing is your name has actually become a verb. but it is hard to imagine that the growth really doesn't slow dramatically over the next couple years. these are pretty much impossible comps. what are you going to do to try to keep it going? >> so we have lots of opportunity ahead. we are excited how video communications has really become integrated into all aspects of our high, and we've seen growth not only in the up-market segments with large multi-national fortune 500 companies as well as also significant growth with, in our customer base with fewer than 10 employees, and that's really exciting. we see large companies that have seen that they can seven their employees home, keep them safe, and they've been just as

effective if not more efficient in using video communication. the great thing is everybody turns their video on now, people feel really comfortable using it. and then in that segment of fewer than ten, we've seen countless cases where people are doing yoga lessons, piano lessons, you know, with their family, clubs, poker games. and, you know, we really believe that we're never going back to a world the way that it was before. as this has become so integrated in our lives, and people don't need to travel as much as they did before. they can wake up with their kids, have an amazing, productive day and have dinner with their family and be just as effective without flying around the globe. jack: might be nice if those kids were back in school. just a few minutes would be helpful. i think the enterprise customers have a really good case for keeping zoom, right? snow days, pandemics, you mentioned the poker games, the families, are you trying to

condition accelerate those finish convert those people to paid or keep with your free offer? >> a lot of them are on our paid offering already because we do have a full featured premium version of our products, and if you're having a one-on-one meeting, it works perfectly, and you can use it for unemploymented numbers or hours. if you have more than one attendee, a duration of 40 minutes. most people want to have these lessons go on for more than that, so they are faying for our monthly -- paying for you are our monthly version of our product. jack: as great as your product is, there is zoom fatigue. it's not your fault, it's just, oh, my gosh, another screen meeting. something the new yorker wrote yesterday, a zoom cocktail party has no kitchen. you can't sneak off to gossip in another room. are you doing anything to try to make this a more realistic experience in the future? >> well, we actually do have a fun thing which is called the breakout room where you actually

could break off from the larger meeting if you wanted to go have a little sidebar conversation, for sure. yeah, we do. we also have some other really cool features, we demo'd one one on our earnings call with our filters which make it a little bit more fun to interact. you can put a different screen around your window, put on a hat. we also have a great feature called touch up my appearance which just softens your look a little bit, makes you look a little better for one of those morning zoom meetings. jack: there must be something in your culture that has allowed you to innovate, the background, the slightly better video quality, it is interesting. i want to pivot though and ask about policy, specifically h-1b visas. i believe your founder came over on h-1b, but now you have 3,000 employees or more, you're a $150 billion company, but the administration wants to crack down on those h-1bs.

what's your position on that? >> so we have a very diverse work force, which we were very proud of. as you say, our founder is not from the u.s. we are a u.s., american company founded and based in san jose. and we really believe that a diverse work force is key to the ongoing success. you want to make sure, we want to make sure that our product reflects the demographic of our users. jack: thanks very much, kelly steckel berg, i appreciate your time. >> great. jack: coming up, the fed wants to see inflation, but could we be headed toward who is usaa made for? it's made for him a veteran who honorably served and it's made for her she's serving now we also made usaa for military spouses and their kids become a member. get an insurance quote today.

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what could change that scenario? joining now, head of global value at first eagle investment management, matt mcclennan. thanks for joining us, matt. i want to talk to you about the parallel that you've said they you see between now and the late '60s. this did not feel like a summer of love to me. [laughter] >> well, superficially, at the end of the late '60s, 1968 specific iically, we did have some parallels. there was, unfortunately, an influenza pandemic that killed over 100,000 americans, there were student protests that got pervasive, and we had the election of nixon as a law and order president. but perhaps more importantly than some of those superficial parallels, we start to see a fundamental transition in the currency markets. we'd started to see the financing costs of the war on vietnam, a build on inflationary pressures. we had a fed chair, arthur burns, who got a little bit

behind the curve, and with the emergence of the deterioration of the trade balance in north america back then, the fundamental link between the u.s. dollar and gold was broken. the bretton woods agreement broke down, and that ushered in a decade of stagflation. the reason i mention that is that the 1960s, disinflation was good for the growth stocks, but financial assets were very troubled in the 1970s. jack: it didn't work out well in the end for the nifty fifty. do you see a parallel between what's going on there and in tech stocks today? >> well, if you look at the tech stocks today, and you could just take a cursory look, for example, at the ncse, fangs plus index, and it would suggest that valuations in that space may have reached levels that we may, after the fact, see as having been speculative. yes, it's fair to say some of these tech companies have experienced wonderful sales growth, but if we look at the teslas, the invidias, netflix,

amazons, apples, their valuations relative to revenues have basically tripled over the last several years, so much of the meteoric rise hasn't just been driven from revenue growth, it's been from valuation expansion. the problem for these tech stocks is that the move to zero long-term rates and multiple expansion is in the rear vision mirror, and meanwhile, the broader economy's still unwell, and it's going to make it hard for these companies to sustain their relatively superior revenue growth as we go forward. they're also larger companies, so i worry that the great deceleration may be upon us soon just as the multiples are peeking. and if -- peaking. and if we look at the growth index relative to the russell 1000 value index, it's broken through it 1999 peak. it's hard not to feel that a

hazard light's not flashing in the background here. >> i'm just wondering, how much inflation, how soon will we see it, and i why isn't the bond market flashing warning signs about inflation right now? >> it's a great question, you know? i think investors are usually focused on their lived experience, and i think we know that there have been secular headwinds to inflation from factories to mobilization. i think all of those things explain why the bond market's not pricing in inflation risks. but as an analyst, sometimes it's worth asking what could be different from history. one of the things that's different this time is that money supply growth over the last year has expanded to about 25%. that's over four times the historical average of around 6 president. 6%. the central banks of the world have essentially moved to monetize or finance directly our fiscal deficit. this may be the end of central bank independence as we knew it.

the sec thing i would say is that -- second thing i would say is it was a productivity shock. if you're in the airline industry or the retail or restaurant business, you're going to have to charge higher prices at some point to just break even. also we've seen pockets of strong demand that were unexpected in parts of the economy, witness the fact that there was a window where lumber prices tripled given all the home renovation demands, but i think perhaps the most important point i want to get aclose, and this comes back to the late '60s analogy is we may be experiencing a difference in the currency markets. currency strength has basically tracked interest rate differentials, but perhaps currency's going to be driven more by trade balances. the u.s. has the most rapid money supply growth, it has a trade deficit, the largest fiscal deficits, and it doesn't have rate carry. we may be on the cusp of a weaker dollar period, and that

could filter through into more inflation than the market's expecting, and the fed has told you it will accept higher inflation for a time. now, we don't have a crystal ball, that's not a forecast, but it is a tail rusk that markets are telling you it's possible. jack: we have a lot more questions for you, we're going to have to leave it there, so we're going to have to have you back. >> terrific. thank you very much. jack: up next, round table members give their investment ideas for the coming week. jean, did you know geico is now offering an extra 15% credit on car and motorcycle policies? that's great! that's 15% on top of what geico could already save you. so what are you waiting for? john stamos to knit you a scarf? all finished, jean. enjoy! thank you. i give. the stitch work is impeccable. it's just a double fleck pattern with a reverse garter stitch. no big deal. is your hair this soft? softer.

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♪ ♪ jack: jack, you say the bond market is not pricing in inflation, but you found it in spades when you stepped onto a car lot this week. [laughter] >> well, used car prices in

august had their fastest price increase in more than 50 years, right? it's a pandemic. people aren't using uber and lyft as much, some are buying a car for the first time. carmax stock, it tanked early this year, but the stock has more than doubled over the past six months. if you have an old clunker you're looking to unload, now might be the time. if you can't get it started, sit behind the wheel, make car noises. i just caution you though, some new car models haved had production i delays. i've heard there's a car called the kia telluride, some dealers are trying to charge $7,000 over sticker price because there aren't enough cars to go around. kias might be fine, if you're tempted to pay $7,000 over sticker, it's probably time for an intervention or a life coach. jack: thanks for that, jack. let's go to carlton with an

actionable idea in bare -- baer ron's tradition. >> craft -- kraft hinds has benefited from stay at home. they sold off some assets, they're targeting some cost cuts, going to be paying down some debt, so we might be seeing that turn around that the stock, that stock hold efforts have been paying for. jack: and you could pay a lot less than warren buffett did. al, what have you got for us? >> we know that carlton loves her buick. [laughter] i want to look for some industrial stocks that have underperformed. i'm going to stick with emmerrerson electric. bell r emerson electric. i think they have an air-conditioning business, process automation business, other businesses are pretty good, they also make tools, i think emerson has potential even from here. jack: not sexy but sounds like a

good idea. thanks, al, carlton, jack. check out this week's i decision of barron's.com. don't forget to follow us on twitter. that is all for us. see you next week. wear your masks, we'll be right here ♪ >> from the fox studios in new york city, this is maria bart to proe mow's "wall street." maria: happy weekend with, everyone. welcome to the program that analyzes the week that was and help position you for week ahead. the jonathan ward is here, we will talk about china with dr. ward, then later, bobby van's steakhouse owner, talking about his effort to save new york city's restaurant industry. but first, let's take a look