Barron's Round Table -- Monday Holiday -- January 15, 2024

Locator: 46553INV.

Todd Ahlsten: 

We are looking for earnings to grow by at least 10% in 2024, and more than half that growth will probably come from the Magnificent Seven [Alphabet, Amazon.com, Apple, Meta Platforms, Microsoft, Nvidia NVDA, and Tesla]. There are massive waves of capital investment going on in the economy, in AI, cloud computing, and elsewhere. Mentions AMD when talking about AI. Also, Intuit, MSFT, Adobe, Amazon, Google. Picks: Intel (INTC), Oracle, Deere, TMO, Marriott International (MAR), Intercontinental Exchange (ICE).

Sonal Desai: 

We expect the Fed to lower rates by 75 basis points, but March is too soon for reductions to begin. The economy is robust. Inflation isn’t falling rapidly enough to justify a cut in March. Given the massive bond and equity market rallies at year end, financial conditions take us back to when the fed-funds rate was 1.75%. The market has eased for the Fed. 

William Priest:

Globalization is over. The law of comparative advantage is running backward. We are unwinding the efficiency and security of supply chains, which means higher costs. Different trading blocs could develop as the year unfolds. Countries will want to trade with “friends.”

We’ll wind up with a world of more tariffs.

Nevertheless, the dollar will maintain its haven status.

The deficit, and spending on Social Security and healthcare, military and education, and the interest on the debt are enormous.All these trends create a modest negative backdrop for the stock market. They are also bad news for emerging markets, which benefited from low-cost labor.

Now, AI and other technologies are supplanting labor. If you can substitute technology for labor costs and hold revenue constant, your margins go up. If you can substitute technology for physical assets, your asset returns go up. There isn’t a company in the world that isn’t focusing on these principles.

Abby Joseph Cohen:

Mario Gabelli: 

Rajiv Jain: best of the bench. Very bullish on US.

Power prices in Germany have gone up more than 50%. You can’t operate a chemical or almost any manufacturing plant with those kinds of prices, if sustained. Germany is reopening lignite coal mines because it shut down nuclear power plants and offshore wind isn’t dependable. The ESG [environmental, social, and governance] bubble is bursting in stock markets because reality is sinking in. You can’t say no to fossil fuels because half the world would starve without fossil. China is getting cheap Russian gas for $2.50-$3.50 per MMBtu. They’re doing fine from an energy perspective. 

What were the best-performing currencies against the dollar in the past three years? Not the euro. The yen is a disaster. The winners are the Mexican peso and the Brazilian real. I disagree with Bill. Emerging markets are doing fine, with the exception of China.

Henry Ellenbogen:

Duolingo: one of his 2023 picks. Mentioins Uber and Domino's Pizza when talking about AI.

David Giroux: 

Managed care, life-sciences tools, utility stocks, and waste. MSFT premier way to play AI.

Meryl Witmer:

First pick is Graham Holdings. Next and last pick, Wintrust Financial.