plutocrats were supposed to be smart as well. well, that's it this week. please be sure to follow me on twitter, facebook and instagram, and i'll be back next week with more in-depth interviews on the "wall street journal at large." thank j j j j joining us, have a great weekend. ♪ ♪ ♪ jack: welcome to "barron's roundtable" where we get behind the headlines and prepare you for the week ahead. i'm jack otter. coming up, john emerson explains where the new power centers are in washington. and later, safe haven picks going into 2021. but we begin, as always, with what we think are the three most important things investors should be thinking about right now. the markets surged this week in the face of election uncertainty. why investors seemed happy with the outcome. the fed is continuing efforts to sustain the economy during the pandemic. chairman jerome powell saws

recovery will be slower without additional stimulus, but more aid may require cooperation between democrats and republicans. mind-altering drugs, is it time to invest in pot stocks? ben levisohn, carlton english and reshma. ben, voters are always half unhappy, half happy after an election, but investors were clearly gleeful, and the market was up 7.5%, almost 7.5%, its best postelection return since 1932. break it down for us. >> yeah. i mean, it's a new narrative going around the market now. before the election it was all about the blue wave and how you were going to get this massive stimulus that's going to drive the market. now it's about glued lock, that we're not -- gridlock, we're not going to get tax increases, massive spending, but without the tax increases, everything's going to be okay. we're basically going to have status quo with some small changes around the edges, and you could even get lucky e and see a little cooperation between

biden and mcconnell who knew each other from years in the senate, actually worked together when biden was the vice president and mcconnell was in the senate. so there's actually a lot of optimism that gridlock is going to be good. [laughter] jack: i remember that word, cooperation. haven't heard it in a while, but i do remember that term. what are you looking for in the next few weeks? >> i really think this is more about the economy, that we've been seeing the data come in, and it's fantastic. the manufacturing survey was great showing continued growth, our payroll report today, the unemployment rate dropped. the economy is just fantastic at this point. not fan tsaing e, i -- fantastic, but it's recovering a lot faster, and if we keep it up, there are going to be good things ahead for the stock market. jack: it's true that there were other things happening in the market other than an election, this week, erik reshma. for starter, the fed did not want to make waves, but

investors were reasonably happy with what came out of that meeting. >> yeah. they went out of their way to reiterate support for continued stimulus and indicated they have more tools to help that's definitely given investors comfort. but the fed officials did also warn of considerable risk to the economy for the surge in coronavirus cases that we're seeing. you know, we hit a grand new daily record here in the u.s. of 120,000 reported infections. and the fed genre it rated the need for another stimulus package. it's fallen on deaf ears, negotiations at a stand still before the election. and now the $3 trillion package the democrats had wanted is likely off the table. but both leaders of congress did say today that they would kind of restart negotiations. i guess that, you know, if the election is -- even if those guys get an agreement hammered out, we could see a delay in stimulus. jack: and friday's job numbers came in better than expected. i think we lost about 20 million

jobs, we've got 10 million back. that's a positive, right? >> that is a positive -- [audio difficulty] and optimism here. there are other signs that show we may be losing some in the recovery and that, perhaps, sort of worried that in the medium term if with don't see some sort of stimulus, the market is not really factoring in the possible hit to the economy. small businesses are still suffering, there are concerns if we we don't see more stimulus, we could see another wave of layoffs in november and december. blackrock's bond guru says growth could vary by several percentage points based on what type of stimulus we see. and then, of course, there is the coronavirus risk not just here, but also in europe. we've seen new restrictions put into place in france and germany and the u.k. not as strict as before, but still raising concerns of potential double dip in those parts of the world. jack: thursday was the worst single day in this country for new cases.

or carlton, if all of this drives you to drugs, you are in luck! i think it was arizona, south dakota, new jersey -- remind me, one more -- recognized recreational use of marijuana. mississippi said medicinal use was okay. how can this help investors? finish. >> so montana was that fourth one you were talking about. so it was kind of interesting in the trading this week because initially i think those cannabis investors had expected a blue wave. when that didn't quite seem to be happening on wednesday, those stocks sold down. but on thursday as joe biden started to take the lead, the stocks rebounded. and the reason behind that is a joe biden presidency, even with a republican-controlled congress, might be one that can pass banking reform that will help some of these cannabis companies grow. if you remember, cannabis is still federally a class i drug, so that means banks face a number of compliance issues, many of the larger banks have stayed away for that reason. so any measures that pass, that, you know, would help, would

certainly help the cannabis industry. now, it is worth noting that even though those states are allowing recreational use, us typically takes some time before you see that retail rollout. it's usually around 18 months. and for investors it is a volatile sector to involved in. a lot of these stocks do often look expensive, but in light of tuesday's voting on green thumb and harvest health are some that are poised to benefit. jack: it turns out that if pot's not enough, mushrooms may be coming back, used for depression and everything else? >> yes. so i encourage everybody to look at the piece by bill alpert. there are some publicly-traded companies that are investigating this. again, or t an area of caution, but bill wrote a really fantastic piece that i urge everyone to read. jack: we will all check it out. coming up, what the election results could mean for your [ thunder rumbles ]

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tell that to the rain. [ beeping ] for those who were born to ride, there's progressive. ♪ ♪ jack: every election creates new allies and new animosities. understanding what's happening behind the scenes can help investor prepare for next year. few people are better plugged in than john emerson, vice president of capital international who served as u.s. ambassador to germany from 2013-2017. john, it is great to see you again. i know it's been a crazy 72 hours for you, so let's just dive right in. i want to start with an interesting dynamic. while joe biden's odds look pretty good at the top of the ticket, when you go down ballot, it was actually the republicans who had a better election. >> well, i think that's right and very -- first of all, thanks so much for having me. and that's a very interesting

point. it appears that, and you will need to know more from the exit polls, but it appears that a lot of voters who voted democratic in 2018 as a way of expressing displeasure with donald trump, now they had the opportunity to directly express their displeasure with donald trump, and so if they were republicans, they went ahead and voted republican down the rest of the ballot. so i think we need to examine that more, but it does appear to be an interesting dynamic of this particular campaign. jack: and at this point, what you're actually focused on is the georgia election. can you explain that? >> well, georgia, i think, will be close in the presidential, but what's really interesting because, honestly, the way the numbers are looking, joe biden doesn't necessarily need the one in georgia to be elected president. what's really interesting is the fact that both georgia senate races under georgia law are require 50% for someone to be elected. if they don't get the 50%, they go on to a runoff, the top two

candidates, on january a 3th. -- january 5th. and lo and behold, current lu you may well have two senate races as runoffs on january 5th. why that important? it's important because the democrats needed to flip two more senate seats in order to gain control of the united states senate. is so consequently, if both seats, both races are thrown into a runoff on january 5th, we will have a race for control of the senate and, boy, will that be a doneny brook. [laughter] jack: absolutely. let's assume for the sake of argument biden wins the presidency but doesn't sweep in georgia. the business world is going the to be watching carefully to see cabinet appointments, especially commerce and stuff like that. how to you see that coming together? >> commerce, treasury in particular if, maybe even defense and some of the other positions will be of great interest to the business world. i mean, look, joe biden has

pledged he wants the most diverse cabinet in history. i think he will honor that pledge. but he also clearly is going to want an experienced cabinet and a group of people who can really hit the ground running in terms of getting into office and pushing forward with his agenda. but the intriguing aspect of having a democratic president with a republican senate is mitch mcconnell. if he can hold his, at this point it looks like it would be a 52-48 senate majority in the democrats don't pick up anything in georgia, if he can hold that, there's going to have to be some deal making done in order to get top appointment positions confirmed. and this goes for judges as well. so you might think that there'd be more of a tendency towards people who are, the republicans or at least a handful, enough republicans to put them through their nomination -- their

confirmation process will be comfortable with in the appointments process. jack: so tell me more about the mcconnell dynamic. can he and biden actually work together? are republicans too poisoned right now? can they work together and get something done in the next few years? >> joe biden has said on multiple occasions he wants to be the president of all americans. not just the democrats, not just the americans who voted for him, but all americans. he wants to be a unifier in this country. and hopefully we'll see that in some republicans. now, you know, mitch mcconnell famously said when barack obama was elected, his job was to make sure he was a one-term president. but i think one thing we can be encouraged about is if there's anything that just about every republican and every democrat on capitol hill agrees with, it's that they like joe biden. they know he's a decent human being, he's a good listener. there's a sense that he will take their concerns into account. and over his long experience in

the senate and as vice president, he's had a real proven track record of being able to pull together from both sides of the aisle majorities, legislative majorities. so hopefully we'll see them have some things they can work on together. first and foremost, a great big, robust stimulus package. jack: two more questions. one is any funny business going on in the polls? you've been watching this for decades. should we be worried about that and, secondly, how's american funds capital group suggesting we position our portfolios? >> well, on the first one, the answer is absolutely not. everything that's happening, we knew it was going to happen. we knew that 70% of the democrats were going to vote absentee or i by mail partly because of concern of covid. donald trump was telling his supporters not to vote by mail and to vote on election day. ballots are typically counted first the ones on election day, then the ones by mail. so what we see happening in

astronauts like pennsylvania and georgia -- states like and georgia and nevada and arizona, completely expected, completely predictable, nothing wrong with that whatsoever. in terms of capital group? we want people to really remember don't confuse or mix your politics and political beliefs with your portfolios. the fact of the matter is markets tend to do well whether it's a democrat or republican in the white house over time. and what's much more significant in terms of client portfolios are going to be things like the actions of the fed, whether and how quickly we get a vaccine to this virus and how quickly it gets disseminated. and then, of course, the fundamentals, which companies are going to do well as we come out of the covid situation, who's positioned to do well, who are the winners and losers likely to be. those are the kinds of things that the analysts and portfolio managers that we have all over the world are looking at on a daily basis.

jack: john emerson, thank you so much. those are important points, and we're going to be talking about them next whether you're looking for a safe haven or opportunities in the market's when you're through with powering through, it's time for theraflu hot liquid medicine. powerful relief so you can restore and recover. theraflu hot beats cold. - any idea how much it will cost? - [doctor] i recommend goodrx. you get free coupons to save on your prescriptions. - goodrx, smart.

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♪ jack: we've seen huge moves in the market over the past week, mostly in the direction that investors like, up. but how should you position your portfolio now? to help answer that question, we're joined by alex you'll. thanks -- uhl. reshma, i want to start with you. if investors are nervous about what comes next, how can they hedge their stock holdings? >> sure. there's a down potential buffers. there's, obviously, treasuries or investment grade corporate bonds, you can pair those with

etfs. gold, of course, holds up especially during periods of panic. and another safe haven is japanese yen which really did well during the march selloff, and you can get exposure through that, through an etf like fxy -- >> reshma, can i just jump in i want to put out a strange one, tech stocks. we saw on wednesday morning that they just soared, up 4%. i really, in some ways, tech stocks have become the ultimate safe haven. jack: that's a really interesting dynamic because bonds really are priced to give you, at least the 10-year treasure true, no return after inflation. so, reshma, if you want to maybe have a lower multiple on your stocks, where might you invest? >> sure. so, actually, good point on the tech stocks, and it's true. that's why a lot of strategists are still hanging on to them for hike a barbell approach. but any volatility is really an opportunity to rebalance your portfolio for a postelection

world. and that means adding to companies that could benefit from positive news that we might get in the next couple weeks on a vaccine, covid impaired stocks are natural beneficiaries. there were a lot of postponed family vacations, and news of a vaccine could change sentiment on those quickly. there's pent-up demand that could benefit a marriott international or a wynn. airlines could take a little bit longer to recover as companies have reassessed business travel, but we could see these your puck up as people take a road trip to vegas or a getaway to a city nearby. jack: i've got to hear what alex's tech stocks are because a lot of them are so expensive. what names do you like at these prices? >> i think tech stocks are very expensive, but we have to remember that tech has worked in a bull and bear market, as one strategist told me today and, you know, works in an election

recount as well. so there are a few plays, tech is expensive, but compared to consumer staples, there's some names that still aren't that expensive. one i would point to would be google parent alphabet. the stock trades about 29 times per earnings. it's cheap relative to the rest of tech. and so i think that's one way to play the tech sector, going forward. i think you could also look at microsoft. it's sort of under the radar in some ways, and it's also more diversified than a lot of tech from the cloud to productivity software, to gaming. and then there's amazon, right? i still think investors haven't fully grasped just how important a role and just how good the holiday shopping season is going to be for them. jack: so, ben, if people don't fully understand how great amazon and some of these other companies are, what looks to you like maybe market expectations are too high? >> i always get afraid when i see a sector move a lot just because of the election result. a good example is health care

which jumped about 8% this week really on hopes that now medicare for all is off the table. but did anything really change to make cigna worth 20% more today than it was before the election? or unitedhealth up 13%? the big thing is don't chase these guys. usually when this kind of move happens, there's two months of going sideways to down. get your chance if you still like 'em. jack: real quick, carlton, perennially unloved financial stocks, can you give us a couple you like. >> yes. tree that i like -- three that i like, morgan stanley is well positioned for the recovery thanks to recent acquisitions. truant, that's a result of bb&t and suntrust from last year. it's starting to see the benefits of the merger, it was recent aa barron's stock pick, and finally, it's another regional bank, one that's poised to do well and is benefiting from some cost-cutting measures.

jack: these financials have rate, rock solid balance sheets. someday their earnings remember ♪ it's still warm. ♪ thanks, alice says hi. for some of us, our daily journey is a short one. save 50% when you pay per mile with allstate. pay less, when you drive less. you've never been in better hands. allstate. click or call for a quote today. anna could only imagine a comfortable night's sleep without frequent heartburn waking her up. now, that dream... . ...is her reality. nexium 24hr stops acid before it starts, for all-day, all-night protection. can you imagine 24 hours without heartburn?

♪ ♪ jack: one of my favorite barron's traditions is to get actionable ideas from anyone who ever comes on a panel. we've already had quite a few in this show, but we're going to get some more. carlton, we talked about the low yields that bonds are getting right now, so you've got an alternative the for income. >> yes, i'm looking at the vanguard dividend appreciation etfs, and i don't know if you noticed when wingstop announced its $5 special dividend, this is at a time when dividends are under pressure. a lot of companies suspended theirs. but what we're seeing now is

even with those moves that several companies made to suspend their dividends, payouts are expected to only be down 1% this year and another 23% drop that was anticipated. several company including darden and estee lauder have already resumed, so it's for income-hungry investors that are looking for companies that reliably increase their dividends. jack: you love your wingstop, carlton. reshma, what's your idea? >> you are bull you should about the possibility of a vaccine or -- bullish about a vaccine or stimulus, ijr ticker, it's a high quality small cap etf and a good recovery play. jack: and, ben, what do you have for us? >> vulcan material. this stock dropped because it was thought to be a play on a blue wave and making an infrastructure plan. without that, the stock dropped, but it could be a good buy here.

>> thanks. interesting pick. carlton, ben, reshma, good ideas. thank you so much. to read more, check out this week's edition at barron's.com. don't forget to follow us @bare louis vuitton's online. -- barron's onlin ... male announcer: coming up next on "leading the way." dr. michael youssef: this is the battle of our generation. we must firmly and lovingly say that according to god, there is right and there's wrong. god wants to use human instruments. god wants to give us a share of the victory that he wrought on the cross. as long as we are contented with our comfort, we will never see god's power working. announcer: coming up next. ♪