heard more about fighting crime and stopping the police from doing the job we will feel safer. that is it for us, i'll be back next week with more in-depth interviews at the wall street journal at large. thank yhhhhh for joining us. ♪ >> "barron's roundtable" sponsored by invesco qqq. ♪. jack: welcome to "barron's roundtable" where we get behind the headlines and prepare you for the week ahead. i'm jack otter. cars, cell phones and game consoles are all getting slammed by the global chip shortage. pat jill singer will tell us how long we can expect it to last. food stocks have been out-of-favor recently but some offer attractive valuation and

decent yields, why the makers of twinkies and oreos look appetizing. we begin with the three most important things investors should be thinking about right now. stocks had a choppy week but the spite concerns including surging covid-19 cases in india the market finished just below where it started, some quarter earnings are showing signs of inflation pressure, what is outlook for inflation and how to adjust your portfolio. president biden capital gains tax plan sent a shockwave through the mark as the administration considers doubling the rate on big earners. how investors should react. on the roundtable been levinson, carleton english and jack how. all week long it felt like a lousy week for stocks but we were down 0.1%. >> that is right, usually it is the unknown unknowns that get the downside reaction from the market but this week it was tested by what everybody already knew. you mentioned the rising covid cases in india, that shook

things up at the beginning of the week it fought back and on thursday the s&p 5001.3% from its height with low in 55 minutes with details of the capital gains tax were leaked. the funny thing details were no different than biden have been talking about before the election even operant so by friday the market had rallied back it was down 0.1% we sell this and earnings better-than-expected earnings from intel and even from netflix subscribers which again we knew was coming, that was punished as well. jack: netflix feels to me like an analogy through the whole market, we just had a pandemic when naturally anybody who watches netflix i think would have subscribes, of course subscriber growth will grow, i worry about the whole market, things are opening up and will approve but it looks priced in, what are we looking for in stocks. >> i think the next big thing is going to come for the fed we

will get fantastic numbers from gdp as it gets released on thursday, probably 5.6% growth for the first quarter, that is the consensus some people say over 8%. powell will talk before the numbers come out but is really going to have to make the case that he can stay on hold even though the economy is recovering very quickly, i think investors are going to have to pay attention to whether he can thread the needle. jack: with a great growth, we have to worry a little bit about inflation, i heard that from a financial advisors and investors and we heard it from earnings report. the ten year yield did not look inflationary but how are you sorting through all of this. >> procter & gamble said this past week it'll raise prices by mid to high single digits and people say that is an ordinary consumer good. we heard from a lot of companies talking about price hikes aaa,

coca-cola, nearly half of s&p 500 companies have mentioned inflation on their earnings calls, then we look at the consumer price index the latest reading is 2.6% and a lot of that is explainable by going from not driving all to driving some if you back out food and energy is 1.6%, the way to see the higher prices of the company will flow through to the main consumer number. if you get higher inflation, that is trouble for stock investment because you only need the federal reserve reserve to respond but it might respond but it could be enough to tank stocks. a couple of things they told investors every time the subject of inflation comes up people like to talk politics, one side will say were gonna be the next zimbabwe in ten years ago, with your party and on and on, you

have to put that aside and look at the facts, think to yourself what are the factors that might be, you see spikes in lumber, steel, just as much related to supply, constraint as the man, were likely to see inflation over the next couple of months, what matters whether it last beyond that, i look for signs of panic in the bond market. jack: until we get higher wages you won't get a whole lot of inflation speaking of wages and taxes, we had a big proposal from the biden administration it feels like an open negotiation to me, what do you think. >> absolutely we are going to get more details next week but basically it's looking like the capital gains tax for the wealthiest americans could double under what's been reported, to put that into perspective to be in the top 1% of earners you're making about 500,000 a year, what is being proposed earners of more than a

million it is going to directly affect a sliver of the 1%. but the effect for everyone else what is a 1% going to do their holdings, the people sitting on the highflying stocks, are they going to be selling down the holdings and will that affect other investors. to put this into perspective last time when the taxes were increased the wealthiest had 1% of the equity holdings, if you figure at the end of 2020, the wealthiest had 18 trillion equity holdings that amounts to a selloff of 180 billion. jack: i'm guessing the ones to watch are the stocks that had huge run ups where people want to take not-for-profit but it's only investors with over a million dollars and adjusted gross income. thank you for that. president biden has proposed 50 billion census and i conducted industry in the conducted industry in the massive chip short

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yeah, they will. geico motorcycle. fifteen minutes could save you fifteen percent or more. jack: the global chip shortage is hurting industries from cell phone to carmakers, chip giant intel is planning to spend $20 billion to build factories in zona but how long will it take to recover from the shortage. pat gensinger joins me now. i know you are a busy guy these days. >> thank you, a pleasure to join you. jack: i want to talk about earnings and all of that but let's start with the chip shortage, let's talk about what's happening and how long to get out of it in the 20 billion-dollar investment. >> demand was accelerating with everything, every aspect of our life becoming more digital and covid a huge accelerant to the growth and disruption of supply

chain, that is catated a large gap in capability, our estimates are two years for the industry to work through it because as you say it takes a while to build a fabrication or a fab as we like to call it in the industry, we just announced two major new fabs in arizona, meaningful acceleration to our manufacturing capability and it takes a while for them to come online. we announced a major new business area intel foundry services were were opening the door of our fab for everybody in the industry to bring their chips into them as well a globally balanced supply chain, that is more resilient to such disruption making big steps forward and excited by the jobs act from the administration of president biden and specific funds for the $50 billion towards accelerating manufacturing on american soil on american companies pre-we believe the right things underway will be here a while as

we work through the shortage. jack: the foundry thing is a big thing for detail. i want to pick up on economist about biden, the $50 billion, on the one hand to people surprised the government has a good record in early stage, the internet gps, there is an argument to be made, you're in a business with 50% plus margin, do you need taxpayer money, what is the case on that. >> we've seen a shift, 25 years ago, 37% said i conductor manufacturing was on american soil, today that number is 12% and forecast to go down even further, its enormous incentives, other governments have seen the semi conductor and industry and we are seeing fortyish% of a major investment in the 20 billion-dollar factory being given to our foreign competitors. that creates an enormous

disparity that we see the industry gravitate primarily to asia and we believe it is so critical for our nation that we must step in and close the competitive gaps. we see a very positive response from the biden administration but it's also gotten strong bipartisan support as well and congress and the senate. were optimistic, this is the right step forward and not only do we think we need advanced technology like quantum nai but we need the bread-and-butter of this bill on american soil and covid and all the disruptions associated with that have shown that to be even more critical for our industry and our nation. >> the national security argument with the geopolitics around taiwan. let's pivot to automobiles. in the near-term the shortage has reduced production in detroit but long-term you're an interesting place with mobile why cars will get more computerized. tell us where that is going, you have good result in your

division. >> the mobile i team is crushing it, i'm so proud of them, what we see cars, automobiles are becoming computers with rubber on them. it is a major shift, every aspect of the car is becoming much more dependent. and what were seeing really transforming industry at a fundamental way. we are leaning into say what can we do near-term to help the shortage getting the factories working again throughout our nation but also in the medium-term taken advantage of our intel foundry services in the longer-term, this is a big segment for us in our mobile life leading the way to help transform the automotive sector overall to become more critical to our nation, the leadership, a.i., autonomy, it is an exciting time for the automotive industry.

jack: i would ask about the results on thursday, you be expectation on top and bottom line but the stocks sold off, investors were concerned about your data center margin, is a street missing something, what is your response. >> i think there is some of that, we had extraordinary last year and this year it was a digestion cycle for the cloud guy and we are starting to see that come back. we beat top line, we raced through the year, usually i expect the markets to get more credits to a beaten race but we understand some of the competitive concerns in the area but we beat our expectation to the quarter we launched a major new product area and seen market response in a positive way and have a strong and improving roadmap for the year, we realize they want to show us, show us pat, do we believe you were on our way to make intel again. jack: one more question sense covid started in my household

alone, two new laptops and three new ipads join the family i cannot imagine that continues in the reopening, are you worried consumer demand for no other reason that we pull demand forward. >> we respect the world is needing more digital infrastructure, workers are going to be hybrid workers, more online education, more healthcare being provided, there is large portions of the planet that yet have online capability. this year's growth will continue into next year into the years beyond and were seen a revitalized ecosystem. we are quite a bit optimistic then your question would indicate. and everything received from hp, dell, and novo, new players like samsung another stepping in more aggressively, we are more optimistic than that would indicate this is to us we

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>> the work from home trend is likely to continue even after the pandemic uses and that means more people will be eating more meals at home and that is good news, companies ranging from j.p. morgan chase and facebook say they will not have a place back in the office five days a week anymore. jack: they will be reaching for the snack. tell us about the fundamental of the company how do the evaluations look relative to other sectors. >> the evaluations are pretty good but the food industry is slow-growing but they're defensive because the products doesn't change very much was shipped in the economy and many have dividend yields 3% or more and they trace that 16 times which is a nice discount to the s&p 500 around 22 times. jack: here is my question saturday night i will do something very exciting i'm getting go to a restaurant apparently other people are doing this to, does this mean

fewer trips to the grocery store? >> fewer trips to the grocery store this year, maybe a decline in demand, i think it looks pretty good because of the work from home trend, a lot of people got used to eating more meals at home during the pandemic. jack: andrew food stocks have been a way to play a little defense when the market got a little rough. given increased evaluation is that still for food stocks. >> there still defensive, evaluation is gone up with the rest of the market and not high relative and other stock markets, we have good dividend yields an resilient earnings, i think people are looking for bond like yields in the defense, it's a pretty good area right now. >> andrew, i'm with you, a lot of mixed national exposure and the variety of oreos that people

are going for but hershey's, 24 times earnings, i think about the block of chocolate 950 times of chocolate bars, what is there to like about hershey. >> hershey does have a high valuation but to dominate the u.s. candy market and national competitors which means increased prices when they need to and reality is americans like hershey's products whether be reese's peanut butter cups, kitcat and their signature chocolate bars and they've seen the gaming market share and it makes it all a good to hit earnings growth 6 - 8%. jack: who combat against kitcat. carlton jump in. i am also a twinkies fan, of a two-part question for you, what is your take on hostess and are there any plays that you see

particularly undervalued right now? >> despite what the health critics may say, americans like hostess products which is twinkies and doughnuts and their signature cupcakes. hostess has better growth than most food companies, its sales is expected to increase 4 - 5% but earnings rising 10% anyone snacking it is been a good idea. jack: twinkies has to be one of the better to tickers on the entire new york stock exchange pray thank you for the segment. roundtable members get their investment ideas cell phone repair. did you know liberty mutual customizes your car insurance so you only pay for what you need? just get a quote at libertymutual.com. really? i'll check that out. oh yeah. i think i might get a quote. not again!

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jack: every six months behrens does the big money pull where we have big money managers were with the guy about the market, last time we did that the market was 20% below where it is now and more managers are bullish today. >> 67% bullish up from 54% last year. they're welcome to use this pull data anyway they like, some view it as an indicator when the results get to lumped on one side or the other, the part that stands out is a bearish percentage has absolutely collapsed from 13% in the fall to 7%, i just want to say if you're out there and your bearish and you feel will loan, we do laugh at you behind your back but it doesn't mean we don't love you.

jack: that is an important point, when there are no bearish people left, who is a marginal buyer. >> i think that's the thinking if you're using that as a contrary, 7% know what they're doing. >> now we have a great idea from ben and carlton. >> taking a look at stryker going into earnings surgical equipment in joint replacement and clients when elective surgeries were out, the company took a hit now that people are going back to work people scale back the surgery and see a pickup and as you mentioned the weekend warriors, people like me who are going back to the gym and finding out they were who they were broke unturned pre-covid, a lot of injuries, i see a pickup on the back half of the year for this company. jack: your idea.

>> the opening is happening, consumers are feeling more comfortable going back to the mall and the stock is still cheap, the reopening play that might still have upside. jack: bull but interesting. interesting, great ideas for everyone, check out this week's addition of barron's.com, >> from the fox studio in new york city this is "maria bartiromo wall street". maria: happy weekend everyone welcome to the program that analyzes the week that was in position you for the week ahead. i maria bartiromo. tax increases are coming this upcoming week president biden will detail his plan to double the capital gains and dividend taxes on top of increases in individual tax rates. coming up a preview right here. plus the travel and leisure industry takes a beating during the pandemic, there is a fight in congress over