decade. does anything you observed in the last month suggest he's ready to spend those dollars wisely? that is it for us, jerry will be back with more in-depth interviews on the wall street journal at large. thank you 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. famed value investors got black with the best stock picks, the risks and rewards of investing in china. we begin with what we think are the three most important things investors ought to be think it all right now. stocks continue to set records with steady rates, will they

keep stocks on their winning streaks, a lot of good news for vaccine makers and now the time to buy. the world's largest contract chip maker taiwan semi conductor is raising prices by as much as 20% what it could mean for consumers and investors. on the "barron's roundtable" ben levisohn, carleton english, i'm going to start with you as i often do, let's talk about jerome powell in jackson hole the market seems to take his comments as double vision therefore bullish. >> he told investors that the taper would start by the end of the year but he also said there wouldn't be rate hikes for a very long time. economically sensitive stocks did well because economy should grow but the nasdaq and the high-priced tech stock did well because rates are low. i hate using the term but it was a goldilocks moment. jack: that term does fit. the good news, it wasn't just

powell we had a few good indicators this past week. >> the market was having a decent week even before powell spoke on friday morning and started with the covid vaccine getting a full approval and decent economic data as well. powell made a good week great. jack: i want to talk about the covid approval by pfizer approved by the fda. when the fda gave full approval that open the door for people, we assume it works we all got the shot but what does this mean for the economy that the fda gave it a stamp of approval. >> with the fda given the stamp of approval there is some people that may have been hesitant to get the vaccine but say full approval i may do it now. the opens of businesses to put

mandates in place for their employees to get the vaccine rather businesses to say customers yet to be vaccinated before coming in. were starting to see a slight increase in the number of people who have been getting vaccinated over the last few weeks. jack: disney, delta, i had a controversial thing where employees will have to pay $200 a month if they don't get vaccinated. one aspect of this, is not the best news, and emerging consensus that we will have to live with covid-19 or another, it's probably not going to go away completely. >> that is the fear it could potentially be something like the flu but one positive aspect is a pharmaceutical companies appear to be ready we did have the pfizer ceo saying there may be a variant of the current covid vaccine or variant of the virus that may rent not respond to the vaccine that happens with viruses they mutate however, pfizer and the other vaccine makers are working on other vaccines that they would be able to get into the public faster

even faster than the current vaccine, it is something that we will deal with that will be a bit more ready to deal with that if it emerges. jack: obviously a rough few months. in the coming months i have two conferences i was supposed to present both have gone virtual and no longer life but a few commentators are saying the current wave may be peaking. >> if it is in fact peaking that would be fantastic and that could be a buying opportunity for some people who have been hesitant to be in the market, we need to pay close attention we have people going back to school and more people going into the workplace in the next few weeks we will help those downward trends would continue but we would have to wait to see the data. jack: thank you for that, we talked about bullishness across the market but one particular area that did well was semi conductors, what is behind that.

>> usually we see chipmakers cut prices but the wall street journal reported that taiwan to my conductor manufacturing is raising prices as much as 20% as it tries to cool the demand with a major shortage in chips for months into design more is law it underscores how critical chips are within on and off button, that is why we were bullish long-term back in june when we told readers they could take a little bit of time to get in because the summer could be bumpy in the stock is still around $118 in the longer-term got stronger and the pricing power that we witnessed with the increase should continue as we see more consolidation and we

saw western digital is an advanced to buy a japanese chip maker and that would consolidate the chip market again in different pricing for them. not so good for others. jack: an interesting point on moore's law this is an idea that chips will get cheaper and faster as time goes on that is always held true, real quickly i want to ask you you made a reference, not good news for everyone, it is good for chipmakers but as you said everything within on and off switch uses those chips. >> it's a lot of trouble for compliance makers, automakers like toyota into curve their output goals, 40% because the chip shortage in higher prices for them means higher prices possibly for us all of that feeds into inflationary pressures which been outlined the goldilocks outlook but if the pressures continue they may not be transitory and that is something that the fed is concerned about.

jack: i am watching v

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jack: twice a year around table of expert investors to make predictions for the market recommendation for stocks a long-standing member of this group is founder and president of delphi management scott, it's great to see you again. >> thank you for inviting me, i appreciate that.

jack: before i get started i need to give you a pat on the back you picked six stocks in january all are up nicely at this point. before we get to that we are in a situation where stock evaluations look a little thrashed by some measures near all-time highs, what is a value guy like you make in his market? >> actually if you take the close of the s&p it is the generic for the overall market it closed today at 4509 in approximately $4800 at the beginning of the year in january at that it would be 170 but earnings have been terrific so it pushed the market multiple with 22.7 times and you can say by historic norms since world war ii, 1617 but if we have low interest rates a tenure went out at 131 there is no competition whatsoever and given the stance of the federal reserve is unlikely that rates will rise, equities are the place to be. there is no question but there has been a little bit a change

in the last three months as you probably know the beginning of the year small and mid-cap stocks are valued very well but is completely reversed from the last three months if you look at the russell 1000 growth as a proxy for large-cap growth and the difference between that in 202,500, almost 13 percentage points difference in total performance over the last three months, i think people have been worried with the upsurge in covid-19 and the economy may not be as going forward as a covid upsurge. jack: i want to get your stock picks but where does that leave you on the economy, are you bullish? >> i am bullish, the real gdp will be about 7% in next year should be three and a half. of course a fiscal stimulus will go down this year were running a deficit according to a wimpy of

3.1 trillion next year it should be about 1.5 trillion which we reduce the low of the stimulus but the fed will be accommodating and i don't see any sharps. one thing the fed has done they moved the goalpost on inflation assumption before 2% and now it's an average of a number of years and it's arbitrary and inflation is going to stay up there, i inspect inflation will still be in the order of two would have percent plus and of course this year will be more 3%. jack: let's go to your pics you found some stocks with lower than market multiples but interesting because in getting a sense that you think the semi conductor surge is going to do well let's start with ultraclean that is making his money off the business. >> ultraclean basically make subcomponents for people like applied materials those are the two biggest companies of over 75%. if we look spend it'll be over

80 billion entire next year, all-time records. you see people like samsung, taiwan semi's up on their cap ex. ultraclean closed at $43 we think that they will earn something in the ballpark of 440 in the market multiple is 23 times, this is a good company almost no debt on the balance sheet and they share the business with another company i recommend ichor but they dominate the business. jack: a little tight on time but let's hear the bull case for co-hue. >> it's really cheap and the stock has barely moved at 36.22 i had them at 310 and the estimate is about 305 they have over $4 a share in cash so if you back at the cash and you multiply is a ten pe and the company generates nothing but

cash the revenue will be flat because they sold the circuitboard business which is about 52 million in revenue but it apples to apples basis should grow the top line for - 5%, again they prosper on the backend and they do test but they also have the robotic arms of the pick and place testing and they also have the pin connectors and billions of semi conductors going through the lines and they all have to be tested to make sure the energy flows through properly. they are in the right place at the right time. it's a ten multiple no risk on the balance sheet since it's all cash and no debt and selling over 50% discount. jack: it's a job of a portfolio manager to know his stocks inside and out but if you know them as well as he do. it's always a pleasure. coming up investing in china

(judith) in this market, you'll find fisher investments is different than other money managers. (other money manager) different how? don't you just ride the wave? (judith) no - we actively manage client portfolios based on our forward-looking views of the market. (other money manager) but you still sell investments that generate high commissions, right? (judith) no, we don't sell commission products. we're a fiduciary, obligated to act in our client's best interest. (other money manager) so when do you make more money? only when your clients make more money? (judith) yep, we do better when our clients do better. at fisher investments we're clearly different. ♪♪ ♪♪

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jack: a rough year for investing in china regulatory actions of prominent chinese companies and some stocks have fallen 40% is there a safe way to invest in the middle kingdom, this week's bearing cover story on the topic new world would ban chinese companies from going public in the u.s. ali baba have plummeted in oriental is down 90%, what is going on? >> investors have gotten a painful reminder of who is in control of china and the risks of the communist country. were seeing beijing trying control as she is expected to bid for a third term.

authorities have taken heavy-handed the past and the scale of this has been really jarring and the severity of the moves we sold beijing tutoring industry did nonprofit and they crackdown on tencent and ali baba are raising questions about the profitability and growth in a new journal reported regulator on u.s. ipos accompany with sensitive user data. that is a major issue for china especially if u.s. china tensions are escalating. it's possible that that creates risks for chinese companies listed here as well. beijing is doing outlying 60s a week schedule that was used by many tech companies and strongly encouraging to give back more to society as a large shift that emphasizes common prosperity and it could mean social good over profit which makes investors

wary. jack: i've long advocated international diversification you'll never know when the rest of the world would do great things for your pro folio but your sketching out a risk reward scenario that doesn't sound too favorable to me why not avoid china altogether? >> a lot of people are asking that question and there are risks the geopolitical regulatory chinese economy flowing this is a 15 trillion-dollar economy a major engine of global growth, 1.4 million people and areas investors really care about, renewables, chips, 5g finding ways to help the middle class, it's really hard for long-term investors to ignore entirely. >> we both know the strong economic growth does not lead to strong markets. >> that is totally true the reason using an index is not working well for the past decade but finding the pockets of

opportunity led to lucrative returns for anyone who is in the big internet companies in any managers are looking for tomorrow's winners in those areas that i mentioned renewables, software firms in the lives of lower income or rural chinese. >> go back to the 15 trillion-dollar economy and 1.4 billion people there is going to be people that want to invest in some way or have some exposure to china how can we safely do that if they're in the u.s. >> you want a tour guide and that's especially true as it gets harder to invest in u.s. listed chinese companies with scrutiny from both regulators. it's a fun run by asian veteran that hold the big tech names and have companies across the industries not really well represented in the index. it was down 4% so far this year much better than china that was down 15%. two other options the emerging markets select fund we talk about that in the magazine as

one of the better performers year to date it gears toward smaller companies and some that benefit from china's policy agenda like domestic chipmakers and the other one is overseas growth and income fund the fund manager says the selloff makes china a little bit more attractive any steering clear of companies that are aligned or in the crosshairs of regulators and defining plenty of opportunity. jack: i think it makes perfect sense to find a shirt but everyone to invest on the other side of the world but a lot of americans are still watching ten sent, ali baba, do you buy the dip? >> the short answer is there's probably better opportunities elsewhere but if you want to dabble they are approaching levels being too cheap to resist for most investors i would not expect these companies to get killed off profitability and growth in the near-term could be under pressure there is still a

great dominant business. there is something that you would feel better about young china knocked down as much but not the regulatory crosshairs and it can benefit from china's policies that china is dealing with inequality and help the lower income consumers and its customers. jack: we've got to go but i have to ask even though young china holds what are u.s. companies, there in a chinese company but there associated with the u.s., that's okay? >> it is in part because of done a good job of acquiring local chinese businesses and have put a chinese flavor on that business in a way that perhaps a large multinational rain not be as much as risk. jack: up next roundtable members get their ideas for the coming week and bad news for peloton week and bad news for peloton may week and bad news for peloton may week and bad news for peloton may ♪ ♪ ♪ week and bad news for peloton may ♪ ♪ ♪

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jack: peloton stock got slammed friday down 8.5% is this a sign the stay-at-home trade is over? >> it definitely could be this is a challenging time for peloton, members of recall that estates the treadmills are more of a return and basing subpoenas from government agencies tied to the closures around the recall, issues of inventory accounting but also when they reported and gave a weak outlook and a huge price drop, the reason the stay-at-home trade is probably over i don't have a peloton in this department, what you see is what you get but this kettle bell i've done everything i possibly do over the last three

months i want to get back to the gym i am so tired of this. >> carlton i have to disagree i hate going outside to work out and i love having my peloton right next to me, and even came with the 3-pound weights but i have to agree i would not be buying the stock. jack: you have to raise the weights a little bit to catch up with carlton i would say you can't get hit by a car as long as it continues to lead class assignments peloton fan. let's go to actual ideas, what are you bringing to the roundtable this week? >> very global this week's magazine plastic is under attack but this is a plastics company to sustainable materials and trying to make plastic recyclables all while parrying debt. jack: thank you for that, do something for us.

>> lululemon the stock hasn't done anything for a year but earnings coming out in september and that can be the catalyst the stock needs to move higher. jack: i'm sure there's a connection between lululemon and peloton et cetera that we've got to go so will leave it there great ideas thank you for joining us to read more check out this edition of barron's.com don't forget to follow us on don't forget to follow us on twitter at barron's hi, everyone, in the next half hour we dive into what's more than just an industry, it's our current reality and our future. we explore technological advances that impact our lifestyles and well-being, as well as the security of our personal and professional information. welcome to "tech impact." i'm your host, marc saltzman. thanks for joining us. technology plays an undeniably critical role in our lifestyles. today, we'll reveal how new advances that enable us