'INFLATION FEARS:' Panel breaks down what's driving the market sell-off

♪ ♪ ♪ ♪ ♪ ♪ ♪ SUPER WELCOME TO BARRON'S ROUNDTABLE GOT BEHIND THE HEADLINES AND PREPARE FOR THE WEEK AHEAD I'M JACK CARTER. COMING UP TO LOOK BEYOND THE A.I. BUILD UP AT THE BIGGEST INFRASTRUCTURE INVESTMENT OPPORTUNITIES OUTSIDE OF DATA CENTERS. PLUS WE WILL CHECK BACK IN ON SPACEX AFTER THE IPO IS IT BUY, HOLD OR SELL COURSEWORK WITHOUT THE INSIGHT. LET'S BRING THE EXPERT PANEL THREE THINGS INVESTORS OUGHT TO THINK ABOUT RIGHT NOW FOR THE BROWNS ROUNDTABLE MY COLLEAGUES JOSH SCHAEFER, MEGAN LEONARD AND AL ROUTE. THE MARKET PRETTY MUCH FREAKED OUT THIS WEEK. THERE COULD BE OF A LOT OF THINGS INFLATION, TERRORISTS MAYBE SOMETHING SOMEBODY SAID GOOGLE, JAMIE DIMON WHAT DO YOU THINK? IT'S A BIG THING THAT HAPPENED THIS WEEK IS JUST INFLATION FEARS YOU BEEN WAITING FOR THE SUMMER STORM WE USUALLY GET AT LEAST ONE EVERY YEAR PEOPLE START TO GET REALLY WORRIED ABOUT SOMETHING THE LAST COUPLE OF YEARS IS MORE THE SCARED STRAIGHT NOW GROWTH LOOKS UP BY NOBODY'S WORRIED ABOUT THE LABOR MARKET. INSTEAD IT'S OH BOY'S INFLATION IT REALLY GOING TO BE OKAY? WHAT'S A DRIVE THAT WAS A BIG SPIKE IN OIL USED ON WTI CRUDE HERE IN THE U.S. GOING ABOVE $90 A BARREL. THE CRUDE WAS OVER $100 A BARREL TO GET AT ONE POINT THIS WEEK THAT'S DRIVING THE BOND YIELDS HIGHER 10 YEAR TREASURY YIELD 4.7% THIS WEEK HIGHEST LEVEL IN 18 MONTHS. AND THAT I THINK STARTED SPOOK INVESTORS TO MAY BE HIGHER FOR LONGER RATES WE DO NOT KNOW WHEN THE WAR IS ENDING. MAYBE OIL IS GOING HIGHER, NOT EVEN GOOD EARNINGS CAN HELP THAT KIND OF STORY. JACK: HER EARNINGS WERE PRETTY GOOD BUT NOT GOOD ENOUGH FOR. >> EARNINGS ARE GREAT FOR BEING HONEST ABOUT THE PROFITS WE ARE SEEING THEY ARE FANTASTIC BUT LOOK AT THE S&P 500 NOW PACING FOR EARNINGS OF OVER 25% YEAR-OVER-YEAR GROWTH FOR THE BEST COURSES 2021. THAT IS FIVE YEARS YOU ARE SEEING GREAT ACTUAL EARNINGS FOR THE STOCK REACTIONS THOUGH, NOT SO GREAT. LOOK AT THE S&P 500 AVERAGE COMPANY THAT BEATS ON TOP AND BOTTOM LINE ONLY INCREASES 0.8% BUT LESS THAN 1%. ABOUT IN LINE WITH WHAT YOU SEE IT NORMALLY. IF YOU MISS RIGHT NOW YOUR STOCK IS GETTING CRUSHED DOWN OVER THREE AND A HALF% THAT'S WELL OVER THE FIVE-YEAR AVERAGE SPREAD THINK INTEL WAS A GREAT EXAMPLE OF THIS BUT LOOK AT HOW IT TRADED ON FRIDAY DOUBLED WALL STREET'S ESTIMATES FOR EARNINGS-PER-SHARE THE STOCK FELL OVER 7% HAD BEEN UP 300 OVER THE LAST T YEAR END THAT'SA PROBLEM FOR A LOT OF THE STOCKS AFTER BIG RALLY IT'S HARD TO BEAT THAT. >> ASYMMETRIC RISK THE GOOD NEWS IS IN BAD NEWS IS HORRIBLE BUT REAL QUICK YOU MENTION 4.7 ARE YOU WEARING ABOUT THE BOND MARKET YET? ... THINK IT'S TIME TO WORRY ABOUT THE BOND MARKET TECHNICAL ANALYST DOUG BUSH LOOKS AT THE CHARTS HAS GREAT EYE FOR WHERE THEY'RE HEADED, HE SEES 5% I THINK 5% IS AN AREA EQUITIES ARE GOING TO STRUGGLE I THINK YOU MIGHT SEE SOME FOLKS TAKE SOME RISK OFF THE BOARD TO GET THE 5% SBARRO ALTA DIG A LITTLE DEEPER FOR US. BUT FIRST WHY DID A READER OF THE BARRON'S DECIDE YOU ARE CLOWN? THAT'S WHAT THE E-MAIL SAID. QUINN UP FRONT AT THE END OF THE DAY IT WAS OVER TESLA. I SUGGESTED HE LED MOSCOW SUPERPOWER WHICH OF COURSE IS BASICALLY CONVINCING PEOPLE TO GIVE THEM FULL CREDIT FOR POTENTIAL WAS A FADING PRINT TESLA'S EARNINGS WERE DREADFUL. A BIG MISS ON THE BOTTOM LINE. DESPITE THE FACT THEY SOLD 25% MORE CARS. AND THEN THAT CONFERENCE CALL AT THE HYPE ON THE CONFERENCE CALL IT WILL BE THE BIGGEST THING IN HUHUMAN HISTORY CAME UP WITH THT NEW IDEA THAT MAGA POD IT'S ESSENTIALLY A MODULAR A.I. DATA CENTER YOU CAN PUT ANYWHERE. THAT DID NOT JUST INTRODUCE THE STOCK IS DOWN 14 AND HALF% ON THURSDAY. FOLLOWING EARNINGS WAS DOWN 2% OF SOUNDBITE 19% FOR THE WEEK. IT JUST WAS NOT GOOD ENOUGH. AND IT'S PRETTY MUCH A.I. HYPE A I HYPENEEDS TO BECOME A.I. RE. JACK: THAT'S GREAT. >> GOOGLE? WHAT GOOGLE IS GREAT. I THINK ELON NEEDS TO RUN GOOGLE SO HE CAN TELL A STORY ABOUT THIS INCREDIBLE CAP NEXT BILL AND HOW IS GOING TO BE WONDERFUL THAT CAN SETTLE DOWN GOOGLE INVESTORS AND SENATORS SHOULD RUN TESLA AND FOCUS ON THE A.I. EXECUTION. GOOGLE, 80% CLOUD GROWTH. A BIG EARNINGS THE STOCK WENT DOWN 7% IT IS JUST THIS NERVOUSNESS THEY RAISE THEIR CAP EXES SAID PEOPLE SING A GREAT DAY AS WONDERFUL THEY ARE SAYING IS SHOULD I BE SPENDING THAT MUCH? WHAT'S THE THING THAT STUCK OUT WITH ALPHABET'S CASH FLOW NEGATIVE GORDA FOR THE FIRST NEGATIVE QUARTER OF CASH FLOW SINCE THEY BECAME PUBLIC IN 2004. A MICROSOFT NOT QUITE THAT STORY YET MICROSOFT HAS PUT PLENTY OF CASH FLOW FOR NOW THAT STOCK IS DOWN OR 30% FROM A 52 WEEK HIGH YOU MIGHT GET A DIFFERENT EARNINGS REACTION OUT OF MICROSOFT BUT A LOT WAS IN THAT PRICE IT ALPHABET IT'S RISEN 80% OVER THE LAST YEAR'S BEEN A GREAT PICK FOR US. MICROSOFT IS BEEN A DOG MAY BE THE EXPECTATIONS WILL BE JUST LOW ENOUGH FOR THEM. STUART GOT TO MAKE IT IN HERE, PRETTY GOOD ARE NOT GOOD ENOUGH? STEERABLE REACTION PARKING WAS TALK THAT I HOPE I GET A BETTER REACTION THIS COMING WEEK FROM KEVIN OR WASH A SECOND MEETING FOR THE SECOND MEETING YES IT WILL PROBABLY BE MUCH THE SAME AS THE FIRST MEETING. I THINK WE'LL HAVE A RATES HOLDING STEADY. WE DO STILL HAVE A PRETTY WIDE ODDS OF FOR A RATE HIKE PRETTY THINK THAT'S A LITTLE BIT OVERBLOWN GIVEN THE UNCERTAINTY OF THE SITUATION. JACK: THE MARKET DOES SEEM TO SHRUGGING OFF A CHAIR SO THAT PLANES WITH THE FED HAS A SAY AT ALL QUESTION OF COAXING US BACK TO THE INFLATION WE'VE BEEN TALKING ABOUT WE DID HAVE HIGHER OIL PRICES. RECEIVING BIG GAINS AT THE PUMP FOR THE RETAIL FOLKS. WE HAVE GAS AND DIESEL PRICES IN PARTICULAR HEAEADING UP WITH THAT'S GOING TO CHANGE THE DYNAMICS OF THE NEXT COUPLE INFLATION REFLECTS. TARIFFS ON THE OTHER HAND WE DIG AT THE NEW TERRACE COMING IN BUT THEY DID NOT REALLY CHANGE THE OVERALL TRAJECTORY OF THAT EFFECTIVE TARIFF RATES. I THINK THAT FOR NOW A LOT OF THOSE A PASS-THROUGH IS PART OF THE WORST IS BEHIND US. THAT SAID WE DID GET SOME ADDITIONAL NEWS LATE IN THE WEEK ABOUT MAY BEAT NEW TARIFFS ON THE EU. THAT COULD BE SOMETHING THAT DOES CHANGE THE DYNAMIC EXPRESSION OF THEIR LOT HIGHER FOR THE PRESENT IS NOT HAPPY ABOUT THAT THANKS VERY MUCH. THE MARKET FACING A TRIPLE THREAT NEXT WEEK WITH BIG ATTACK EARNINGS THE FED MEETING AND RISING GEOPOLITICAL RISK APOLLO GLOBAL