of here, and the result is mayhem. gerry: brian, do you think the tide is turning here? maybe this'll be a result of the midterms? >> yeah, it'll turn for no other reason than people will vote with their feet and get out. even in places -- my wife's not a politically active person normally, she is is so invested in the gubernatorial race right now -- gerry: here in new york city? >> you want to figure out how it's really going in new york, ask a mom with kids. they'll tell you whether it's reality or perception. gerry: polling suggests the democratic incumbent may actually be facing quite a race, which would be an extraordinary story. that's all the time we've got this week, we'll be back next week with more commentary and interviews here on the "wall street journal at large." thanks very much for joining us. ♪ >> "barron's roundtable" sponsored by global x etfs.

i jack: welcome to "barron's roundtable". is a time for the fed to stop hiking rates? i am asking ron kruchevsky what he recommends and the group of companies turning to big oil. 3 things investors ought to be thinking about right now. stocks rallied as treasury yields continue to march higher. have investors come to grips with the fed? does the beat third-quarter earnings but came up short on revenue. will elon musk fund's upcoming twitter deal and how will that affect investors? the pandemic boom for chip stocks is ending, is it too sent to buy the dip?

my colleagues ben levinsohn, carleton english and andrew bary. we set here a while ago and i said the market is happy because the fed will stop hiking and you said too optimistic. now, once again, markets rallying, investors think they see the end of rate hikes. what do you think? ben: it is more realistic this time. last time we had a rally, rates were expected to go to 3. 5% and then come straight back down and the markets pricing in is nothing like that. we look at rates getting as high as 5% and staying for a while. you look at the fed. what they want to have happen, something they are comfortable with, that probably leaves less room for the fed to shock the market, to have to do any of those things. the market at the same time is pricing in that kind of level and rates. that helps the market get going. jack: is the fed seeing

something that makes fed officials think we are finally seeing results? ben: there are signs things are slowing down. an interesting earnings report from an employment firm that pointed out that hiring is slowing down among big companies. the fed is aware that is happening. they know they hiked rates very quickly and monetary policy works with the lab. they came to the point they want to see how it is impacting the economy. jack: companies would rather pair back than go forward. what are you watching next week? a lot of earnings. ben: we got apple, facebook, meta, alphabet, i was about to call them google, amazon and microsoft. those are five of the biggest companies in the market. if they do well the market can go up more. if they don't we could see the

rally fizzle out. they've gotten beaten up so much i would bet they are doing okay. jack: that is good to hear. back to last week's earnings, andrew, tesla, people focus on production. you say people out to look at demand. andrew: demand is the key long-term issue and very ambitious production targets, a million cars this year, 2 million next year, 3 million in 2,024, 5 million in 2,025. will there be enough demand for all those cars? they are ramping up production of electric vehicles and you are seeing lead times fall for tesla cars. most are worried about whether there will be demand for all those evs. jack: competitors are ramping up with evs and you have mercedes, bmw, porsche, volvo going all electric. i would think that would add

more choice for consumers. andrew: more choice and more competition and that is the challenge going forward. a lot of ev buyers are wealthy people for whom this is a second or third car, almost a toy. will have to go mainstream for tesla or long-term for the industry to do well with evs. jack: barron reported he might have to sell $8 billion of tesla shares, that puts downward pressure on it. andrew: i wouldn't worry about that. jack: and other interesting earnings report, lam research lowered their earnings or revenue expectations, the stock popped. what is going on? carleton: it is 20% industrywide. maybe all this bad news is baked into the stops. we 've seen them trade down for

a while. i don't know that that is true. there's a lot still going on in the semi conductor space. the one obvious thing is we outfit our home offices or whatever we call our home office, not all of us have one, our homes during the pandemic, some of that demand for top products isn't what it was two years ago. you have a rising geopolitical concerns with the us trying to block exports of chips and equipment to china and american technology for that sort of thing. as we see the effects of that it will take time to see how that affects semiconductor companies. jack: is a do. hourly to hold stocks? carleton: is down 40% this year but it would be an area you want to nibble at the industry, or want to wait and see how it shapes up the next few months. jack: new reports the fed is

considering smaller rate hikes after a 75 basis point increase in november. is the fed making it against inflation? i'm asking ron kruschevsky next. another busy day? of course - you're a cio in 2022. but you're ready. because you've got the next generation in global secure networking from comcast business. with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud. you can run things the way you want - your team, ours or a mix of both. with the nation's largest ip converged network. from the most innovative company. bring on today with comcast business. powering possibilities.

thanks to chase, angie's not sweating this text since there's zero overdraft fees if she overdraws by $50 or less. and, kyle, well, he's keeping calm with another day to adjust his balance if he overdraws by more than $50. overdraft assist from chase. make more of what's yours. jack: are interest rates high enough to tamp down inflation? should the fed stop hiking? joining the is ron kruszewski. thanks for coming back on the show. >> pleasure to be here. jack: you told us you were concerned covid stimulus and supply-chain problems could cause an inflation spike. check that box. you said recession was inevitable. we seem to be close. we will see where that goes. more recently you have been saying the fed should ease back a little bit and not hike so

aggressively. tell us your thoughts. >> first of all we have to look at what caused inflation and that was a whole bunch of stimulus the reopening of the economy, supply-chain disruptions that it has taken us 15 months to get to what i think is peak inflation. today, if you look at the last quarter annualized inflation is 2%, wages are trending down according to the atlanta fed. i believe inflation is coming down, the big risk to the market -- jack: where we are right now, what the next hike will be, what are your odds on the recession? >> it is inevitable. at some point, i don't think we

have to end in recession. if i was the policymaker which i'm not, i acknowledge that, i think another 100 basis points, lo 4s with the effective rate. to allow inflation to come down and may allow a soft landing. the markets today, in general, believe the fed will get to the high 4s and that would be too much. jack: what do you see for the market for the coming months? >> depends. first of all, status quo i believe this market is set up for a rally. there has been a lot of bad

news and investors can have a seasonal rally. if you think about what to invest in, cyclical stocks, homebuilders, can do well here. there are riffs to the scenario too. the fed over kills a risk. no one is talking about the lack of liquidity in the bond market, may be technical to be talking about here but when you look at the lack of liquidity a lot of professionals realize that is a problem but the biggest risk is geopolitical and that is going on in russia and you cane, the south china sea, but december 5th. that is where the g7 said they will effectively prices on russian oil. i don't know about you. i've been in the business a long time. i've never seen price caps ever work ever.

jack: the liquidity point, i tf that issue but on wall street it is a big deal and could get worse. i want to take this to the retail level. you have a force of 2000 financial advisors. what are they hearing from clients? what are the big concerns? >> a lot of the things i have been saying but interestingly the clients are okay with not trying to time a bottom. what they are doing is moving cash into what is a pretty good alternative yield. the one year is one hundred 60 so clients to the extent they want to see how this plays out are happy with leaving money in a short-term treasury because that yield is so much higher

than it was before so i don't see clients in any way panicking or trying to sell out of this market. jack: we haven't seen rates like that for a long time. they are dangerous in some ways but seems pretty good for savers and if we have that recession you might get capital gains too. >> absolutely. our investors are looking, they see the long-term benefits. what i tell investors, you have to realize the days of 0 interest rates and 2% inflation are gone. we may get to 2% inflation but we are not going to get back to 0 rates. jack: 0% was not normal. ron kruszewski, thanks very much. >> thank you. jack: oil companies report record profits and they what you some of that cash to transition to renewable energy. how could that affect investors

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jack: big oil may be the driver behind the transition. what is behind that strategy? it is the barron cover story this week but before the cover story, i want to ask about an interesting develop and in oil. the biden administration said that it might pay oil company $70 a barrel to refill the strategic petroleum reserve that has been empty do. emptied to. what do you make of that? andrew: the decision to release oil from the strategic petroleum reserve is political, the only crisis was the democrats are facing problems because of high gasoline prices but guess what, it worked, it

was a political decision that turned out to be good economics, the government sold oil at $100 a barrel. it will be buying back around 70 or so. this may work believe it or not. jack: oil companies have told barron they are reluctant to increase drilling and production because oil was pricey now but could be cheaper by the time the wells come online. is this enough of a promise to sort of give them confidence they can keep pumping? andrew: i don't think will make a difference. it will be drawn by what investors want, they want to see oil companies do more drilling. don't think it will matter as far as what oil comedy plans are. jack: the salzman story, big oil is starting to invest heavily in the green renewable transition. tell us about that. carleton: we may have to stop saying big oil and say big energy. it makes a lot of sense. who else would be positioned

with regulatory know-how and infrastructure to do that. one of the ironic thing is it it is actually higher he prices that we are seeing now with oil and our reliance on it funding this expansion into lower carbon producing a things so we are seeing the big oil companies can see free cash flow, $1.4 trillion this year and that could extend to 2030 being one. $5 trillion which can fund their own expansion and production, paying dividends to shareholders and paying down debt and can also fund this expansion into renewables so it looks like there's a lot of promise here. andrew: investors are dubious of the returns they can earn from renewables, would rather see them focus on their core business. carleton: it is a challenging, when energy companies are seeing growth in the 20% range but we have to remember where we were 5 years ago when we saw

a lot of energy companies on the smaller side fail, have hefty debt problems and other difficulties so you are seeing now this belief that a lot of renewable programs will generate returns of 10% so when you are looking against 20%, not that exciting but when you are looking at where we were a few years ago this could be a more reliable door for companies to be in and keep in mind this is probably where the rest of the world is going, there's talk of your getting 60% of its energy from renewables by 2030, the us 35% in that timeframe, you have a lot of government aid going to this area in terms of tax credits and other incentives so when there's a money pot there it does make sense for the energy companies to explore renewables. andrew: which energy company should i look at? carleton: one with the bp.

we are waiting for the energy transition to take place but you are getting up 4. 8% dividend yield. doesn't look bad at all and expects that the renewable business could generate $10 billion by 2030. the other one to look at would be exxon mobil getting a healthy dividend, seeing its growing business generated returns of 4,000,000,000 x 2030. jack: i sense a little skepticism on your part. if you were advising the big oil companies would you tell them to keep pumping oil? andrew: that is what exxon and chevron are doing, investment in renewables but focused on core business. that's why they traded big premiums to the european majors which are focused on renewables. investors like the approach american companies are doing. jack: supercheap those european big oil companies. is that interesting? andrew: they are cheap for a

reason but trading for half the valuation of the us companies because of the pressure on european companies for the government and climate activists, much tougher to operate an energy company, an oil company in europe than it is here. jack: another big earnings week with tech company's report, great investment ideas going into the weekend. andrew's take on losses elon musk could take on the twitter deal. they only cover select cities with 5g. and with coverage of over 96% of interstate highway miles, they've got us covered.

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and save at trelegy.com. >> "barron's roundtable" brought to you by global x etfs, for information visit foxbusiness.com/"barron's roundtable". jack: rather than facing a pretty humiliating courtroom defeat elon musk decided to pay that hefty price tag, $34 billion for twitter, 44 times ebitda. what will it look like once he takes ownership? andrew: elon musk is underwater by 50% in his equity or more, maybe it is worth $15 billion,

worth no more than $30 billion. twitter has a lot of issues, valuation has a lot of debt on the company, $13 billion doesn't sound like a lot but it is barely $1 billion, loaded with stock-based compensation. it is a real challenge for him. jack: is that one billion dollars in cash flow enough for the debt service? andrew: it will cover the debt service but not much more. people always said they have too many people there. this is a key test of whether it is true. musk is talking about firing 70% of the staff, he denied it but no secret he thinks there is too much fat at twitter and cut a lot of costs but interesting to see what the impact is on twitter.

jack: they get stock options, at $54 on the open market. let's move on to better investment. carleton: this will be a longer-term quaver cost border and remittance payments. on thursday they were talking about banking services, why haven't you been doing this all along? you have all the customer information and pipelines to do that sort of thing. stock went down sharply. also as part of this and broader macro concerns they expect the challenging 2023. you should see the benefits of this plan in 2,024-twenty five. jack: you have a name that's more in the news recently.

ben: moderna, it has dropped 50% this year. it is on concerns that covid vaccines will go out of fashion and they have so much cash they will do a stupid acquisition and that would not be good obviously. my dharna has good news from pfizer who will raise prices on their covid vaccines which means they will do the same to help their cash flow and other vaccines in the works, stock is looking cheap, 12 times right now with all the cash. stock looking interesting. jack: thanks, great to have you on the show, andrew bary. check out this week's edition of t1. check out@barron.com, that is it for "barron's roundtable". well. ♪ ♪ >> 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