it's odd that the president is not going there is a foreign-policy thing. gerry: biden doesn't seem to like britain is that fair. >> i wouldn't say that i think there is a policy in the prime minister's train to get a free trade deal out of the united states. at this point in time it doesn't seemed like biden is going to give it to them that's probably why he's backward to the coronation. we have to deal with them at gala in the famous people in the coronation. my thanks to brian brenberg and richard fowler thank you for being here i'll be back next week with the "wall street journal at large" thank you for joining us have a great week but if you are watching the coronation, enjoy it >> "barron's roundtable" sponsored by global x etfs.

peloton jack otter: welcome to "barron's roundtable" where we get behind headlines and prepare you for the week ahead. for taking interest rates for the tenth consecutive time has banking turmoil continues. will the jobs report take a generate pause off the table? i will ask greg peters. some businesses are getting swept up in the culture war. what happens to company stocks when they become involved in politics? the answer may surprise you. with the debt limit decision looming how should investors prepare for a possible default? we begin with three things investors ought to be thinking about right now. stocks rallying on solid jobs data despite it being a down week for the market. new hope for all timers patients after an encouraging drug problem, eli lilly and safety concerns. will medicare coverage it.

americans feeling a i anxiety as technology threatens to take over thousands of jobs. are you at risk of being replaced? my colleagues, ben levisohn, it looked like it is going to be a lousy week in the market and apple turned in a pretty good earnings report, jobs earning came stronger-than-expected in the dow was off to the races. ben: the nasdaq turned a sizable loss into a 0.7% gain and the jobs report that did, the sentiment got bad with the banks being in danger of collapse and getting this jobs report suggested we are not going into a hard recession. there's a chance the fed will engineer a soft landing and that brings the market off. jack otter: now that things

look stronger the prediction has changed and earlier in the week it looked as if a rate cut was on the table for july. jobs are odds are the possibility of a rate hike. ben: it caused a shift. there was a sense of a chance for a rate cut in june and a better one in july and it dialed that back where markets are accepting the fed will be on hold for a while. that's not great news for a market that is still priced at a high level and is looking for that catalyst. jack otter: what is that catalyst? ben: i am not sure. it has to be sentiment. i will point to one, we are looking at cpi next wednesday. the number is 5% year over year. a stronger number probably sends the market down but if we

get more signs the economy is slowing and inflation is weakening. jack: some exciting news out of eli lilly, drugmakers are trying to crack that for decades. what happened this week? jacob:we got eli lilly with positive results on their all timers drug. we know all timers, 6 million americans suffer from it. this follows biogenic and its partner having good results. looks like the all timers drug is turning a corner. this is a $10 billion market for alzheimer, a good opportunity for both. jack otter: there are potential side affects but even if we get that, what is the next thing investors will be watching? jacob: you have to look at if

you are a patient, if not, you are talking about a drug that has historically been the type of drug over $20,000. if you have that type of price you have to look at the demand situation. analysts are talking about that. jack otter: eli lilly stock is rich at this point. jacob: not that it can't go up from here. 44 times earnings even adjusted for the earnings growth, it looks pretty rich. if you get upside surprises in terms of market share and fda getting approval quickly, the stock will do well but is a parabolic rise so any bad news will knock them down. jack: let's pivot to ai. i've been a skeptic on a lot of tech trends, 3d printing, wearables, the meta verse but this one could be a case where the hype doesn't even match the reality. this is pretty serious.

kirstin: if anything this week proved your point. we saw the ai threat move out of the pure tech companies. interesting to see what happened to online twitter company that is seeing, losing some customers, instead of coming to us they are going to chat gpt for tutoring. the market did not like that at all. stock fell 50%. the contagion went to the rest of the education network, pearson's stock got hit, the language learning apps solder stock fall. jack: maybe it's doing your homework for you. another question is could ai take jobs? this always happens with the technological develop and, the reality is usually the opposite but in this case ibm suggests we could lose jobs. kirstin: they are pausing hiring for jobs ai can do. 30% of their back office jobs

over the next five years which is a big deal but a bigger deal to think they won't be the only company, so many are under pressure to cut jobs, to become more efficient. we will see that. jack: will robots take over the world and are we doing anything about it? kirstin: the white house think that's a possibility. they got together big tech players to talk about regulation. we don't necessarily have a great track record when it comes to regulating new tech. jack: let's let some smart people think about it. a solid jobs report is boosting homes for a soft landing but the market is racing recession amid continued rate hikes and banking roads.

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>> the federal reserve to had with quarter point rate hike despite regional bank weakness and recession fears. what happens if lower paid workers start to gain the ground they lost in recent decades. joining us is greg peters. >> thank for having me. jack: let's start with friday's job numbers, and interesting data point was the sheriff prime age workers in the workforce didn't go to pre-covid levels, higher than it has been before the great financial crisis. what does that say about the economy? >> it is strong. that coupled with the fact that wages accelerated half of 1%, the labor market looks extremely strong. this is the 14th straight labor report that beat expectations.

we have unemployment rate dipping 3.4%. the labor market is as strong as we seen in a long time. jack: the cloud around that silverlining is inflation and all of this is good for growth but good for inflation. >> that is the tricky part. if you look at the service sector, 56% of the inflation basket, that is driven by wages. it is difficult, almost impossible to shake inflation out of the system when the labor market is as strong as it is. jack: the fed's and some it is pretty blunt, raising rates does not mean hotel will pay lower wages, do we get any help as perverse as it sounds, from this banking turmoil where regional banks are pulling in their horns and lending less money? >> that remains to be seen. the question on the table is how that will be pulled

forward, it will have an effect. the regional banking system is into the smaller community and medium-sized businesses. the starting point is bright and robust. jack: back to wage growth. that is interesting. a mackenzie study says the 1980s, labor's share of gdp has been shrinking. that helped company margins. do you see a structural change as wages go up. 's labor going to have a bigger piece of the pie? >> i do. if you look at the past couple decades it has been punctuated by the return to shareholders. it is a secular shift. with labor becoming more forceful, wages coming up, changes the dynamic of the

economy and the federal reserve response function and frankly, it is more balanced and more equal. jack: for shareholders, less return on it, there will be generous stock on it? >> we are coming off of record margins. the margins have been elevated for quite some time. the margin picture and pressure, the discretionary income going into that part of society and that part of the population more than offset it. jack: what is the investor playbook? >> early right now but it bodes favorably for bonds. i don't foresee the same returns that we experienced in the past. it is a balanced portfolio. fixed income really starts to assert itself. i foresee investors moving into

the more balanced portfolio scheme where less equity exposure, more fixed income exposure given the fact that margins and returns will be lower but also higher on the fixed income. jack: said the country fixed income manager. with this fight over the debt ceiling do investors have to worry whether the government will pay them back if they have short-term loans? >> there is real risk on the table. we have 5% probability, we redesigned any probability as notable in and of itself. it is about the x state, when the government runs out of cash, runs out of money. we think it is mid to late july. some others think it is june. either way, the chicken and egg type of reaction function where it has to get sufficient marks from a market perspective to get policymakers to do something about it. it is a dangerous game to play. there will be more volatility

in the market. the short end which is supposed to be safe, there's lots of dislocation given where it has landed. jack: is there a solution? >> absolutely. jack: thanks for coming on the show. the war over awoke, companies (fisher investments) it's easy to think that all money managers are pretty much the same, but at fisher investments we're clearly different. (other money manager) different how? you sell high commission investment products, right? (fisher investments) nope. fisher avoids them. (other money manager) well, you must earn commissions on trades. (fisher investments) never at fisher investments. (other money manager) ok, then you probably sneak in some hidden and layered fees. (fisher investments) no. we structure our fees so we do better when clients do better. that might be why most of our clients come from other money managers. at fisher investments, we're clearly different. what will you do?

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goli, taste your goals. jack: companies are pulled into the culture wars as politics is intertwined with business operations. bud light has taken hit since its partnership with the transgender tiktok star but it is not the only company feeling the heat. the story is by barron's manager, thanks for coming on to talk about this. i want to ask you about bud

light. it pairs with dylan, the transgender influencer and suddenly takes a massive sales hit, 20% down on bud light sales, sounds pretty painful. >> it sounds painful but it wasn't that bad. 20% may sound like a lot but it was less then one% of their overall global sales volume for the first three weeks of may. they did see some sales of miller light and coors increase a bit, they reported earnings this past weekend, earnings were pretty good and cut forecast for the rest of the year so this doesn't seem to indicate the impact of this will be fairly minimal. it won't have a lasting effect on anheuser-busch overall. jack: the reaction was to stubbornly violent, kid rock shooting up a case of beer, deliveryman getting protested as they dropped off cases of beer. >> bud has done a couple things

to address this controversy, they increased advertising for bud light, doling out cases of beer to distributors on the front line to experienced the protests. they have also been in a bind. they put a couple executives on leave who were involved in the campaign with dylan mulvaney but that only seems to have triggered threats of protest from progressives who felt they went too far in the other direction. companies want to stay the course and reach new customers but don't want to put political targets on their backs. kirstin: how are other companies addressing these culture war issues? >> you are seeing a hushing trend going on. trying to get all 30 companies of the dow jones industrial average to see if their ceos

will speak about woke capitalism and esg and not a single one agreed. not that surprising. it is a controversial issue that raises passions. we are seeing some signs of proponents of esg going a bit quieter. on wall street, larry fink who has been a proponent and advocate, hushed up a little bit but not everybody is going quiet. disney is in a big fight with ron desantis and his counter punching. desantis claimed political retribution on the company. jack: is this the end of esg investing? >> we have to be careful there. what happens with esg, it is a risk communication tool that companies develop in response and demand for shareholders to quantify and disclose their risk, things like climate change, lack of diversity in

the workforce or government practices, woke capitalism is a turn that is being deployed pejoratively to refer to policies that some politicians on the right disagree with. they are not the same thing. it's important to separate the politics from the economics of this. ben: what more can we learn about the economic issue? >> they stay the course in esg, trillions of dollars in global assets are pegged to esg, addressing climate change alone will cost 30 trillion over the next decade. a lot of asset managers, notably black rock can make money off of esg. black rock, for example had 1/$4 billion in funds last year from state been exposed esg practices, the company brought in $200 billion overall. this is not going away.

jack: those outflows cost taxpayers significantly. is that right? >> there is evidence the anti-esg initiatives are costing taxpayers money in texas, they passed a law in 2021 to ban some banks and financial companies that had policies texas opposed on firearms, climate change from underwriting municipal bonds in the state and the study found that ended up costing taxpayers several hundred million dollars in increased interest expense. there's a cost to this. jack: good to get the bottom line on all of this. you guys have some good stock picks for next - double check that. eh, pretty good! (whistles) yeek. not cryin', are ya? let's tighten that. (fabric ripping) ooh. - wait, wh- wh- what was that? - huh? what, that? no, don't worry about that. here we go. - asking the right question can greatly impact your future. - are, are you qualified to do this? - what? - especially when it comes to your finances. - yeehaw! - do you have a question? - are you a certified financial planner™?

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jack: we are nowhere near default or panic but there are little ripples in the bond market about the possibility the government might not make its checks on the day they are due. jacob: treasury secretary janet yellen worn to the united states could run out of ability to pay its bills june 1st and the stock market isn't too worried about it and maybe they shouldn't be. we will have biden and mccarthy talking tuesday and maybe they will work something out. the markets worry about it. the cost of insuring the us government against default has spiked since the beginning of the year and we had a treasury bill auction that expires on the june 1st date to 5.8%. that market is worrying about it. there are couple things you can do. if you are going to put money someplace you might consider putting it into a bank. not all of it into money market

funds because they own u.s. treasury debt and you might go ahead and be patient with the stocks that you have. you don't need to take your money to purchase stocks or put it into the market, you might want to wait until this gets passed. patience is a virtue. jack: if there is panic i think we will pair with anybody else. ben: the united states did default in 1979. a combination of the debt ceiling fight and a computer glitch and people did not get paid for a few weeks. they ultimately did and got paid with interest. it will be fine. jack: let's go to actionable ideas. jacob: ikea is in growth mode. e-commerce is taking share from traditional, nike is one of the best consumer brands, understand its customer,

leverages digital extremely well. e-commerce is a tale in two margins. you have margins going up and sales going up you have a earnings-per-share growth that is really good, sustainable land 30 one times earnings not a bad purchase. jack: what do you have? kirstin: we are cranking up our air-conditioner, i'm looking at carrier global, they did a big acquisition of a german firm that makes heat pumps. this is eco-from the, more environmental way to heat and cool, their move to be the tesla of hvac. it's interesting, a company going in on this technology that more customers are going to be wanting a. jack: to read more check out this week's addition of barron.com. follow us at barron online. see you next week on "barron's roundtable".