tv Nightly Business Report PBS October 30, 2013 1:00am-1:31am PDT
. this is nig"nightly busines report" with testimony and season zj brugt tow you by. >> thestreet.com. our dif debld stock advisor guides and helps again raid neck during a period of low interest rates. we are thestreet.com. stocks are hot but the economy is not. what does it mean for your investments. >>? plans can led, sticker shock anded to a white house official on capitol hill was asked to explain why millions may not be able to keep insurance plans. and one your later, on the anniversary of hurricanesandy, helping homeowners keep heads above water.
that and more tonight on "nightly business report" for tuesday, october 29th. good evening everybody and ç welcome. on this day in 1929 the stock market crashed and 20 points meant 12%. today, 84 years later the dow closed at a record high and the s and a 500 and the mid cap 400. call it green tuesday, if you'd like and some economic indicators market pros watch are flashing yellow, maybe even red. more on that in a moment. here for the record are the numbers on wall street today. a day of historical irony as the policy makers convene to discuss the economy and what to do without it. the dow with a last-hour sprint was 111 points and nasdaq gained 12 and s&p add add 10.
investors bought up stocks. retail sales fell in september down 1/10th of a percent, the first drop in six months. the decline because of a big drop in auto sales. home prices cooled off. the s&p index that tracks shows home prizes rose 1.23% in august. theç slowest gain since march. the data points down but stocks continue to go up. in normal times, this probably wouldn't happen, but these are not normal times. on wall street stocks keep going up a. slow grind upward, a steady dream beat of new highs. it is not the s&p 500 it might be the russell 2,000 or dow transport and hundreds of companies watching the stock prices hit new 5 2-week highs.
what is going on? not because of earnings. >> market sometimes follows profit and sometimes doesn't. >> and not because of consumer spending. auto sales fell more than 2% last month and the pace of home sales is also slowing. in fact, consumers are feeling pretty lousy these days. a new survey shows a sharp drop in consumer confidence, partly because of the government shutdown. partly because hiring is still weak and partly because people are just palain worried. so why the disconnect between here and here? because of this man. ben bernanke has been deliberately keeping interest rates super low making more money available to consumers and businesses. the result, cash is pouring into the stock market. >> this party is artificial.ç this party is i hate to call it a harry potter market. okay? this is a dream whirl market. >> reporter: so far there nothing that will rattle people out of that dream. policy makers meeting today and
tomorrow in washington are expected to keep stimulating the economy, and wall street pros say as long as the economy mutt ls along, they don't see policy changes coming any time soon. >> we have had modest economic news. why will that change? we continue to have growth that's okay but not great. >> reporter: until economy is healthy enough to take the fed out of the equation, looks like stocks have an all clear to run even higher. >> many market pros and economists are saying the fed won't trade back on the stimulus program until april or even later. to talk more about the weak economy and strong stock market is william, a market strategist with robert w. bear. welcome. good to have you with us. harry potter market, dream market. you heard, do you agree with that? >> to some extent, yeah. some disconnect between the cow skmeen stock market.
stock market all-time highs and economy is stuck in first year three years after the recession ended. >> what will it take for the economy and the stockç market track each other better, like more normal, the way it is in normal times? >> i think first, we should step back and realize that the market and the economy can move away from each other for an extended period of time. but given that to get them back kind of on the same page, i think we need policy makers to get out of the way and uncertainty in d.c. start to fade and then those underlying positives in the economy can start to kind of bubble to the top and we can start to get going again. >> so you seem to be saying that the disconnect between the economic fundamentals, between say corporate fundamentals eeshings and stock prices can be persistent for long periods of time. do you think we're in that -- we're obviously in that situation now. what could derail that?
>> well, i think an aggressive back i away by easing from the fed would be one thing to look at but that's not likely to happen. they know the boat they are in and what is going on. i don't think they will step back aggressively right now and until then you have to sea weakness in the market or optimism on the part of investors and that isn't present just yet. >> the economy is pretty weak, about 1% çgrowth, maybe 2% growth. what do you see as the speed limit for the economy looking ahead. >> i think in the immediate term, 1.5 to 2% growth but if you think about it, 2% growth and really low infrags isn't an all together bad situation for stocks historically. as long as we continue to have low inflation and some growth, i think the stock market can muzzle higher. >> and you got very low interest rates, which reduces the cost of
capital and makes borrowing -- >> exactly. >> more accessible to more companies. if you had discretionary money to put to work at these prices, where would you put it sector-wise. >> consumer discretionary industrials and materials. they are the strongest and been strong for awhile. >> but why consumer discretionary if they are low on confidence and not spending much? >> that's the ironic think to construct an argument why that would be a bad sector to be in but the reality is that that's a sector that moves higher and at the end of the day it doesn't matter what you think might happen but what is happening. what is happening isç consumer discretion narcoticry stocks are rallying higher. >> thank you. some stocks trading at sky-high prices actually have what's known as price to
earnings ratios that would cause most investors to pull money out but that's not happening in this market. dominic chu looks if those stocks and companies are worth it. >> reporter: stock price isn't the only way to value a company. many investors use other measures, as well, like price to earnings rate owe. simply put, how much you pay for each share of stocks relative to the profit each shire entitles you to. some companies trade at high evaluations. take 3 d systems, they surged 66% this year and trades at 132 times earnings meaning you pay $132 for every one $1 or profit. facebook is up 86% this year and
trades at 206 times earnings or $206 dollars in price for every 1 dollar of corporate profits. wendys is up 83% this year and trades at 208 times, which means you'll pay $208 for every one dollar of profits. for comparison, the dow jones trades at 14 times earnings. some investors are only going to pay up if they think the company will be able to meet the expectations that come with these lofty evaluations. >> if you have a small part of your portfolio where you want to take a chance, you have to do where you're confident and management knows what they are doggi ing. in terms of keeping guidance at a level where they can beat it. >> reporter: earnings mull tips are one piece of the puzzle but worth considering if you're looking to buy fresh, hot stock.
for "nightly business report," i'm dominic chu. there is no down playing ibm. when it moves it doctorings the index along with it. lower price stocks, and today was big blue's best day since jan. it added $15 billion to the buy back plan and said it will go over even more. up more than ç2.5% was the biggest gainer responsible for 30 of the indexest 111 point gain. morgan stanley wants to buy back. big banks have to get the red fell reserve's approval before they repurchase their stocks or pay a dividend. the wall street journal says morgan stanley is looking to widen the $500 million buy back plan approved early they are year but scheduled to wrap up next year. major snag in the proposed
13 billion-dollar settlement between the justice department and jp morgan chase. dow joins says the massive deal may be falling apart over the inclusion of possible criminal charges against the bank and over liabilityi issues about wht bares responsibility for bad loans tied to washington mutual, jp morgan chase or the fdic. they acquired that struggling lender, washington mutual during the financial crisis from the fdic which federally insures. sears wants to spin off some successful businesses. they are considering splitting the retail and catalog business and auto centers outlets into separately tradedç companies a close some department stores. the plan shares of sears holding shot up 12% to $33 $62.
millions may have to keep health insurance plans even if they don't like them and they had to explain why. 3 . today's kick off of the federal reserve's policy meeting of interest rates will be one of the last ones with ben bernanke as chairmen. janet yellen nominated by president obama to be the next head of the fed is expected to have the confirmation hearing in
the senate begin on november 14th. even though kentucky senator ran paul says he'll oppose yellen's nomination unless the full senateç votes on his bill supporting more transparency, yellen is expected to win the senate's approval. fiezer reported earnings that beat estimates and that's where we begin market focus. cost costs and a jump in sales of cancer drugs helped deliver strong results but global sales fell because of competition for generic drugs like cholesterol fighter lip tore and the good out weighed the bad. it hit $31.29, the stock is up almost 23% this year. a big earnings beat from linked in after re knew close. the social networking site reported progress in transitioning to mobile devices. but the company did issue a conservative revenue forecast for the fourth quarter and full year that pushed down the stock in after hours trading.
in the regular session, it rose to $247 and change. goodyear tires shares tumbled after reporting earnings that miss.ed estimates. the biggest u.s. tire maker said revenues fell blaming lower tire sales and changes in the evaluation of asian currencies. a modest increase didn't ease investor worries. shares plummeted almost ç6% to $20. $20.76. the maker of engines reported profits below estimates and the company cut the full year outlook and is seeing weak demand in most markets. the stock off to $127.90. nokia forecast a more profitable future. the unit will become the main business since it sold the cell phone division to microsoft and revenue missed expectations.
the stock was up more than 10% to $7.45. aetna, revenue did come in abovest hits boosted by it's recent acquisition of coveren trihealth care. the stock dropped more than 1.5%. aetna's ceo was asked about the new health law and report that says the obama administration knew millions of americans would not be able to keep their insurance plans. >> the only people who can keep their plan indefinitely are people who in the individual and small group market were in that% market before march 23rd, 2010 and over that period from march 2010 until now did not change
plans. >> acquisitions that the white house misled people to believe they could keep insurance plans and the website resulted in heated questions on capitol hill today about what went wrong and who is to blame. bertha coombs has more. >> reporter: mike was surprised when anthem blue cross notified him the family health plan would no longer before offered. >> the primary reason they said is there is ten or 11 components that every plan has to carry. >> reporter: the retierped executive say as comparable plan on healthcare.gov will cost twice as much 140 0 a month. >> i was shocked to find out my plan was being cancelled and not compliant and my shock, i guess, kind of turned maybe to anger. >> reporter: there was plenty of that anger at today's ways and meanings hearing directed at the chief of cms, the centers for medicare and medicaid.
>> this man wrote me and said my wife has been recently informed that her health care policy does not compile with the affordable care act. >> reporter:ç the defense, ina you were -- insurerers had the option to update and could cancel plans before the law. >> half the people in the market before 2010 didn't stay on policies, they were kicked off or preexisting conditions and premiums went up at least 20% a year. >> reporter: the white house knew between 45 to 75% of plans cannot compile and would have to change countering unqualified assurances from president obama. >> if you're one of the more than 250 million american whose already have health insurance, you will keep your health insurance. this law will only make it more secure and more affordable. >> reporter: but change was to be expected says georgetown's sabrina with the individual market effectively now one large
pool. >> if you have employer based coverage and a healthy person you're subsidizing your fellow employees that may need more. >> reporter: for some it's not delivered like the healthcare.gov website. >> the white house site says if you have health insurance you like you'll be able to keep it. she has health insurance she likes. she's been paying premiums and wants to keep itç but she can'. isn't that a lie? >> reporter: mike would like to see less partisan fighting and more flexibility for millions like him. >> allow choice and allow us to be better shoppers and get something that meets our requirements. >> reporter: it's kathleen sebelius' turn in the hot seat tomorrow. in her remarks, she says for most americans premiums will be lower under the affordable care
act and she'll no doubt be grilled about that. bertha coombs for "nightly business report." coming up, fees for checking bags, printing out boarding passes are helping airlines with revenue but what's the real cost to you? the proposed merger of u.s. aways and american may beç clor to lift off. both carries have agreed to use a mediator to help settle the lawsuit. justice officials are concerned the merger would limit
competition and would result in higher airline ticket prices. if they can't settle their differences with a federal mediator a trial to stop it is scheduled. airlines around the world will collect a record $46 billion in revenue this year. a big chunk comes from the fees passengers pay from everything from checking bags to printing out boarding passes so how much more is it adding to the soaring cost of air travel? you'll be surprised. >> reporter: let's be honest, travelers are fed up with airline fees. >> these airline fees that bother me particularly would be baggage, that should be participant of the price. >> baggage fees and internet. nickel and diming. >> charging you extra money to put a bag on the plane, which i think is a little over exaggerated.
>> reporter: answer larry revenue for airlines worldwide keeps climbing, almost doubling in the last three years to 4ç 6 billion. >> the hesitancy they had is fading and it serves the consumer well. >> reporter: so how much can fees add to the cost of a plane ticket? we went online to united airlines to book with one-way ticket. 4 22, the base fair but if i need to check a bag, that's another $25. priority check in to board early and get over head bin space $9. if i want extra leg room on this flight the last seat in the middle costs me $72. wi-fi in flight so i can surf the web, $14.
lunch, turkey and swiss is 8. 99. all together, the extras will cost me just over $137 and drive up the cost of my trip by 32%. different flights on different airlines could mean higher or lower fees. united and other airlines point out they are not forcing you to pay for lunch, board early or other extras when you fly and carriers say the averageç airfe in the u.s. since 1980 adjusted for inflation is down about $200. >> it's about as cheap as its ever been to fly. you look back at the last 70 years, in the 1950s, 1960s, nobody was flying. most of the countries was not flying because the government regulated the airlines and unaffordable to fly. >> reporter: you may not like it but airline fees are here to stay and will likely go up in the future. phil lebeaux.
>> for more on the fees and how much consumers like you and me are paying, head to our website, nbr.com. and finally tonight, one year after super storm sandy hit the eastern shore of the united states, causing an estimated $62 billion in damages, lawmakers are moving to push back big increases in flood insurance premiums that could threaten the finances of hundreds of thousands of american homeowners. mary thompson reports. >> reporter: inspect last year, floo floods took homes from colorado to twin cities to the jersey shore. forging rare bipartisan support to delay rate hikes that will threaten these homes again. bob hmenendez. >> we have too manyç people ou of their homes and too many people afraid of losing their home. we suffered from a natural disaster. we need not create a man-made one. >> reporter: the bigger waters
about. well intentioned legislation aimed at restoring the financial health of the insurance program, which is $26 billion in debt. the act saying refund the program by charging market rate premiums for hundreds of thousands of homes in flood zones. the problem, a lot of those previously subsidized homeowners can't afford the rates. >> nobody is arguing against reasonable rate increases but rate increases that could go to 20, $25,000 a year and push people out of the homes and out of the program. >> reporter: to counter it, louisiana senator and others introducing the homeowners insurance affordable act. the act saying rate hikes on insurance that covers homes in flood zones that were built in accordance with previous building codes and homes sold or policies bought after july 6th, 2012 when bigger waters was
passed. the homes and flood zones, secondary homes and businesses would still pay higher rates. the delay giving fema time to complete flood maps and0the rules on how to implement them. given the bipartisan support there is optimism this bill will pass, probably when it's folded into a budget bill that will be approved later in year or in 2014, keeping many homeowners from going under financially. >> the anniversary brings us home to so many on us here. >> beautiful sunny day today, you wouldn't think there were, you know, strong winds and couldn't get to work and roads were closed and people homeless. >> all right. >> that's it for us. nightly business report for tonight, i'm susie gharib, thanks for watching. >> i'm tyler mathisen. thanks from me, as well. have a great evening, everybody. we'll see you back here we hope tomorrow night. "nightly business report" has been brought to you by. >> thestreet.com.
yeah, if you're wiped out, if you're wiped out, do something -- over decades of teaching theater, all of ruth zaporah's classes have started the same way, but from here, anything can happen. ruth calls her blend of movement, acting and improvisation action theater. when she first began performing, back in the 1970s, her methods seemed like madness. now they're part of the theatrical mainstream. improvisation and live response have become commonplace in the contemporary art world. not just on stage but in galleries and site-specific performance art. tonight on "spark!", we'll experience the magic of improvised performance. we'll see how ruth trains her students to abandon past and future for the present.