it's not just embarrassing, it clearly is dangerous for this entire planet at this point. james: okay. we'll have to leave it there. that's it for us this week. gerry will be back next week with more in-depth interviews right here on "the wall street journal at large." thanks for joining us. ♪ ♪ >> "barron's roundtable" sponsored by global x etfs. jack: welcome to "barron's roundtable" where we get behind the headlines and prepare you for the week ahead. charles schwab chief investment strategist liz ann saunders on how far the market might fall. patterns for the coming decade, big trends to watch and new strategies to consider.

plus there was a lot of alarm about the housing market this week. is it time to worry? we begin as always three things investors ought to be worried about. wild gyrations on wall street as the market continues to fall, could good news be more bad news for the market. the bank of england stepping in with emergency bond purchases to calm market turmoil. investors have rarely been so focused on the uk economy. the bubble has popped and investors can't seem to dump him them fast enough but since back companies could still take off. on "barron's roundtable" my colleagues ben levinsohn, megan costello and jack hough. the market was down this week. that is the headline but you are glad it wasn't down even farther. ben: the dow, the s&p at the nasdaq finished, but it took a long time to get there. especially given the news where we had pension funds going up

and really good jobless claims numbers. all good news is bad news given the interest rates. the market was holding its own, the nasdaq was close to positive before everything gave up and it was a massive selloff. jack: are we somewhere close to a near-term low or dare i hope for a long-term low? putting a bottom in the market? ben: we are closer to a near-term low but it goes to the fed and as long as the fed is doing that we will see more problems like we saw in england where pension funds had strange financial engineering. now we know what ldis are. then it forced the bank of england to come in and we will see more of that and it will put the fed in a bind where they will have to decide about fighting inflation and risk

these kind of things or dial stuff back and i don't there is a good solution, could be a short-term balance of 10% to 15%. jack: real quick, predict black swan, anything? ben: we have to watch payrolls, one number the fed is watching, wants to see the job market slowdown, it's too high and that number is still coming in, 400,000 jobs, could be a problem. jack: tell us why we need to care about the uk bond market? some said this was a lehman moment. jack: i think the three things investors want to know about guilt, but our guilts? why is this guy talking about uk monetary policy? get to something less boring like chesler. these are uk government bonds, the original certificates had

gold colored edges, almost a fun fact and there was a corresponding run up, the uk government debt was yielding more than debt increases in italy, that's not where you want to be in the uk, high yields in the mortgage market, did appear to threaten pension funds which would have been a disaster. they suppress yields. the uk is raising rates to fight inflation and suppressing rates to prevent panic. difficult to call a winner when someone is arm wrestling themselves, the reason you should care, we went through a decade where investors didn't care about -- this guilt panic is related by a plan for the uk government to have a big tax cut without detailing what the spending cuts would be. if we are entering an era where investors care about deficits, could be the end of endless

easy money and that was supported for risk assets like tesla. could be a difficult period ahead. jack: this was a record setter, rarely has someone only been in office 17 days before unleashing financial chaos. that was impressive. speaking of bad investments let's talk about backs were investor in this right a blank check to managers to buy what they want, they decided it wasn't a great idea. megan: maybe it was too good to be true. you are looking at a this back bubble and it has burst. 76 have come to market in 2022, more than 600 last year for comparison. we looked at one hundred 60 of the largest companies in the next etss which liquidated at the end of august. at its peak they had a combined market cap of one. 9 billion and out of 300 billion, you could argue this is deserve, there are a lot of financial projections that were

missed and bad guidance but there are couple diamonds in the rougher investors who are willing to way back into territory. jack: tell us about a couple of those things. megan: there's a couple. a mini space x of sorts, it is a good one. lumen are makes the laser-based radar for self driving cars to make cars safer and vivid seats are rare unicorn that makes the profit as a spac. a good place to look. jack: even a blind squirrel can find a nut or one oh 2 or 3. how much farther can stocks fall and what are wall street analysts missing? i'm asking liz ann saunders

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jack: stocks ending down for the week, the month of the quarter. volatile currency markets and persistent inflation, what can we expect for the rest of the year, joining me, charles schwab chief and investment strategist liz ann saunders, thanks for coming on the show. >> nice to be here. excuse my voice, i'm a little under the weather. >> or trooper even though you are not feeling well you're coming to see us. let's start with inflation because everything we talk about comes back to that. investor expectations, fed's policy response, is the fed making progress tampering down inflation? >> they are probably trying to do it indirectly with the labor market, that hasn't shown up yet at least not in the traditional headline metrics of payrolls and the unemployment rate. the good news is forward-looking inflation

expectations have remained fairly tame and i think that gives them some comfort but as they suggested there is a long way to go at the rub for the fed is where we are seeing downward moves in the inflation data is on the goods side of the economy because that was the breeding ground of the inflation problem we are still dealing with. we've seen that lower demand and lower prices, but we are now seeing the offsetting increase on the services side of the inflation data and that tends to be a bit stickier of course the fed can't do anything directly to impact the shelter components so they are making marginal headway but they are telling the market the job is not done yet. jack: investors are not going to get inflation looked at without difficulties in the labor market but corporate earnings are probably going to take a hit. how bad do you think that is?

>> in the second quarter, the headline s&p rates growth number was decent, 8% change but that was accounted for by the energy sector. the earnings were down 2%. we moved into negative territory, estimates came down for the latter part of this year into the first half of next year but it is early in the process. there's more to go on the downside and once third-quarter reporting season starts in a week or so we will have more but input costs are particularly demand is down, financing costs are up and just at the beginning of seeing increasing pressure on earnings so look out for the guidance when we start getting reports. jack: all the bad news out of the way, in addition to lower

earnings, the multiple that investors are willing to put on those earnings will go down but inflation has come down a bit. what is your outlook and what do you think is a fair multiple and investors willing to pay? >> if you look back to the modern era of the s&p 500, the late 1950s and break the environment into inflation zones, may be no surprise the sweet spot for valuations is in the 0% to 2% inflation zone using cpi and that is when on average the markets, 18 forward pe. as inflation goes up, interest rates going up, higher discount rate you are using for cash flows and profits which means those future profits are worth less. for what it is worth when you're in the zone we are in now where cpi has a handle on

it, the average multiple is only 11. trend matters so i think if we start to see inflation coming down it does not suggest we have to see the multiple goal go all the way down to 11. there's a wide range around that but that explains the pressure on the market. earnings have been relatively healthy, dow pressure on the multiple because of high inflation and rising interest rate environment. jack: as important as fundamentals are, john templeton was right, the sentiment drive stock prices. can you explain that? >> the way sentiment tends to work broadly, sir john templeton of bull markets, born in despair, growing on spec disk does him and they die on euphoria, that is a brilliant way to describe a full market cycle and notice there is no word that has anything to do

with earnings or economic growth and i do think ultimately it is emotion, fear of greed especially at extremes, acting as a contrarian indicator. it is a mixed bag, you would think it is more washed out given the pain investors have suffered but it is an interesting period. jack: thanks, see you soon. a decade ago fed officials were trying to spark inflation. today they are scrambling to contain it. investors need (fisher investments) in this market, you'll find fisher investments is different than other money managers. (other money manager) different how? aren't we all just looking for the hottest stocks? (fisher investments) nope. we use diversified strategies to position our client's portfolios for their long-term goals. (other money manager) but you still sell investments that generate high commissions for you, right? (fisher investments) 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? (fisher investments) yep. we do better when our clients do better. at fisher investments, we're clearly different.

jack: the era of easy money is over and investors need to change tactics. this week's addition of

carleton "barron's roundtable" is about how to approach the coming decade. the special section in this week's "barron's roundtable," how to invest for the coming decade and it helps to figure out where we were versus where we are going. looking back to the financial crisis we came out of that with slow growth, no one is building houses because we built too many, companies are retaining earnings. there is high unemployment rippling down slowly. we had a radical maneuver by central banks flooding the market with money and fabulous returns on the stock market. tell us about the dynamics. >> it was the perfect environment for long-duration assets, the majority are growth stocks, bonds and the result is small number of stocks outperforming the market with growth companies, big tech stocks, apple, amazon, earnings, multibillion-dollar

market, 25% of the s&p 500. on the bond market, interest rates from central banks, quantitative easing, going lower and lower. at the end of the cycle you have a rally where stocks are relative to earnings. jack: we have high inflation, hawkish fed, low unemployment which is good and bad. we are probably not expecting 16% annual returns, what can we expect and the best way to play that? >> it is a different world, somewhere like mid single digits, stocks and bonds. one thing that is different is a broader group of companies are winning. of the past decade had technology stocks, the next decade will be the decade of companies that are not tech stocks using the technology to become more efficient and productive. it is the decade of the tech takers.

some examples, using ai to process loan applications and automate more back-office functions, banking apps, lower the real estate expenses and increase returns that way. and agriculture, robot an automated tractors driving around by themselves, guided by satellites up in space, more robots and manufacturing, restaurants cutting labor technologies. when i order my burrito, the winners will be broader. the s&p 500 will beat the month and to translate that that means every component of the index by market, it won't be so concentrated. >> looking at 4% on a 2 year,

8%, 9%, how will they do it? >> the bond folks, not something i can usually say about fixed and, there are plenty of reasons to expect it will stay high. 8% annual inflation rate, 2%, they will be focused on keeping inflation down rather than boosting it. and fixed income will provide some income so you won't move so far and get some return for the portfolio from the bonds. >> forget about forgetting about stocks, energy investing, the dirty barbell, how much can you tell us? >> the other one is clean, no question lower list transitioning, solar is the

next one. >> robo tractors are next. >> oil and gas prices shot up, war in europe, over the long-term over drilling, oil and gas companies are not investing in growing volume so there is a scarcity element, fossil fuel prices but you can't ignore the future so you have energy stocks and clean energy transition. >> what are the trends over the next few years and should investors be looking their? there? >> it is the globalization and restoring. every country is looking at these supply chains that spanned the world and how it operates. we think there will be your regionalization so manufacturing in china is not necessarily going to come back to the us but in the philippines, that will be a boost to those economies and consumer purchasing power.

it's not a short-term trade but emerging markets in the next 10 years, demographic trends, and lower evaluations as well. jack: nick suggests you by on unhinged portfolio the, the tailwind of the strong dollar. great section, everyone should read it. you have heard ideas for the next decade but also for next week, those are coming up from these guys and jack will weigh in on whether it is time t ♪ i got into debt in college and, no matter how much i paid, it followed me everywhere. so i consolidated it into a low-rate personal loan from sofi. get a personal loan with no fees, low fixed rates, and borrow up to $100k. sofi. get your money right.

brought you by global x beyond ordinary etfs. go to foxbusiness.com/"barron's roundtable". jack: we've seen fear mongering

headlines over real estate prices. jack: house price decline in a decade, they have run up so far. is this the big one? brace yourself for the details if you are typical homeowner, a fraction of 1% from june to july. you are only up 39% over the past two years. this one hits mortgage rates. i checked with analysts, strategists, economists, how much we were in 4. one of them says up one% over the next year, 2 of them say flat, when investment went from up 3% next year to down 3% so could be some choppiness. there is still a dire shortage of housing and back during the housing bust, we had jen next, people who look like me, not many of us, we were buying houses back then, now we have millennials. a big shortage out there come

more than one person said you could see the hottest markets in austin, phoenix and seattle, to get a national crash. jack: homemakers are selling four times earnings but we have better ideas. megan: the luxury haircare brand with shampoos and conditioners and hair oils that you are familiar with. the stock is down 53%, shares trading $12, expect sales to increase 20%. jack: i'm thinking a hair mask for halloween. ben: the shower was full of solar plexus. >> i'm looking at petro grass, the bridge legal national oil company and they are dirt cheap trending 3 times earnings, because of political

uncertainty but even if the leftist candidate wins the company should be okay, has enough cash to do things, get things back to investors even if they are not the way they should be. jack: thank you, to read more about this week's stories go to 21. or >> from the fox studios in new york city, this is maria bartiromo's "wall street." maria: and happy weekend to all. welcome to the program that analyzes the week that was and helps position you for the week ahead. i'm maria bartiromo. the bleeding continues on wall street. stocks slammed in the month of september as recession fears take hold. where to put your money now. and the wrath of ian, with the death toll climbing in florida, the massive storm is now battering the carolinas, leaving widespread flooding and devastation in its