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tv   Nightly Business Report  PBS  December 6, 2013 1:00am-1:31am PST

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this is "nightly business report" with tyler mathisen and susie gharib brought to you in part by. >>, up to the minute stock market news and in depth analysis. our quant rating service provides objective independent ratings daily on over 4300 stocks. learn more at the growing stronger, the u.s. economy grows at its fastest pace since early 2012, but is the 3.6% rate as strong as it appears? and why do american businesses still seem so hesitant? >> protests over pay. fast food workers strike in the biggest push yet for higher wages. they want $15 an hour. they average around $9 now. what a big raise would mean for
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businesses and consumers. >> and the sticker shock, why washington lawmakers could be the reason you pay more, lots more for milk. we have all that and more tonight on "nightly business report" for thursday, december 5th. good evening everyone. stocks kept sliding today, the losses though modest marked the fifth day in a row of declines for the dow and s&p 500, the longest streak since september and the government shutdown. the indexes are less than 2% from the all-time highs. today's declines were driven by rekindled concerns the federal reserve may reduce the $85 billion a month in bond purr chases and might do it as soon as this month because economic news out today pointed to a strengthening of u.s. growth. the come he domestic product wa more than a half point to 3.6% for the summer quarter, the quickest pace of growth in a
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year and a half. jobless claims fell by 23,000 last week to 298,000, the lowest level in seven years. in the meantime, october factory orders fell but that decline was less than forecast. the dow off 67 points, the nasdaq four and s and a 500 lost seven. the fed might buy less. the yield on the benchmark ten-year treasury edged closer to 3%. meanwhile, one top federal reserve official gave an upbeat outlook on the economy and said the time is nearing to reduce the stimulus program. in a speech today, atlanta fed president said once the fed does begin tapering, it should plan to completely wind down the massive bond purchases. investors he said should be ready for the program to be done by the end of next year. y how strong is the economy
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really and why aren't businesses more confident? brian west berry, chief economist at chief advisors. good to have you with us. let me start with top pick number one of the day, that is what the fed may or may not do. if you have the economy growing 3.6% and a good jobs number tomorrow, as many anticipate with the adp number and jobless claims today and a budget deal washington may hit as early as next week, why wouldn't the fed begin to cut back on buying bonds this month at their next meeting and week after next? >> i think they will. there is only really one reason that they wouldn't, and remember, what the fed is going to do is end the purchases of bonds. they will taper that. it will take awhile to do that, but they want to convince markets they will keep the short-term interest rate at zero for a long time. when you try to do both of those things, it's kind of a
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complicated process, but i think they are going to try to do it. as long as they believe they can do that, they will start soon with the tapering. everybody knows quantitative easing was put in during a crisis and we no longer have a crisis in the united states. so it's time to end this extraordinary monetary policy. >> brian, your upbeat on the economy, a lot of economists are. they are upbeat on the economy. >> right. >> but it seems like american business ceos are more cautious, seems like there is a disconnect. why so? >> well, i think, gosh, we had this year, the fiscal cliff at the start of the year and the sequester kick in, then we had the government shutdown and the debt ceiling debate, and then we've had obamacare and all of the issues, forget the website and all of that, just the cost, what does it mean for my
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business, and as a result, there is tons of uncertainty in u.s. businesses. so businesses invested strongly in 2010, again in '11, again in '12 but this year they slowed up a bit. nonetheless, if you look at the cash that businesses have on their books, the profitability of u.s. corporations, they have never been more profitable. they are hiring. we're going to see a 200,000 job growth in the month of november, probably, and that tells me that we're about to see a surge in investment. boy, if corporations put the cash on their books to work, imagine the kind of surge we would see. >> what would it take to get then to go put that money to work number one and number two, become more confident? what's it going to take? >> you know, i think right now we're sort of -- we keep calling this economy at first trust the plow horse economy. it ain't a racehorse. it ain't going to run the kentucky derby but it's not going to kill over and die,
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either. right now business leaders and executives are stuck in the middle. they don't see a boom coming but worried about problems and clearly worried about uncertainty with government policy. what that does is sticks them in the middle. i think another couple quarters of good economic data, more news of positive job growth and you're likely to see that happen. >> okay. >> one other quick thing and that is it just costs less to buy computers today, to make investmen investments. their businesses are investing but sometimes when we look at the spending itself, if they spend less on a computer, it may look like they are not even though they are investing. >> we'll see what 2014 holds. meanwhile, mortgage rates edged higher this week following encouraging data about new home sales and job growth. the average rate on a 30-year fixed rate is 4.46%, up from
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4.29% just last week, according to freddie mac. a year ago the rate was 3.34%. signs of a fall in federal budget negotiations in washington, john boehner said he would entertain a possible extension of emergency unemployment benefits set to expire at the end of the year but says the white house has to offer a specific proposal about the benefits and do it in the coming days. fast food workers across the country were protesting to get paid more. the demonstrations came a day after president obama raised the federal minimum wage. workers in 100 u.s. cities called on corporate bosses to increase wages to as much as $15 an hour. so what will that mean for businesses and for those workers? hampton pearson has the story. >> reporter: the biggest push yet for higher pay started early this morning with protests and calls for a fast food worker
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raise in more than 100 cities, including very vocal disruptors in pittsburgh. in atlanta. >> make our wages supersized. >> reporter: and a large crowd on the move in detroit. mcdonalds is the primary target with calls from coast-to-coast for a super siesized minimum waf $15 an hour, more than double. >> my checks alone don't pay my rent a month. my rent is 1050, i get food stamps and i'm structuraling. >> if they pay us enough money, you know, during the process of it all for what we're doing here today and stuff, then we'll be able to make, you know, pay our bills, you know, and live a descent life and stuff. >> reporter: mcdonalds said our owner operators are committed to providing employees with opportunities to succeed. we offer employees advancement opportunities, competitive pay
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and benefits. today's orchestrated strikes and protests are part of an effort to build momentum to raise the minimum wage by labor unions, democrats and advocacy groups but there will be a push back from small businesses and the restaurant industry. >> doubling the base wage and driving wage and labor costs up as dramatically as a $15a an hor minimum wage, would have a very dramatic impact on the cost of goods and work force planning at restaurants across the country. >> reporter: the protest nationwide has mixed results. turnouts varied at any given location and it's not certain how many workers actually walked off the job or just how much business was impacted. for "nightly business report", i'm hampton pearson in washington. treasury secretary jack lew says the largest economies need to tighten up the financial regulations to avoid a repeat of the 2008 financial crisis.
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he wants them to meet the standard of banking laws. >> with the completion of the vocal rule, resolution authority, stronger capital, the tools of financial reform are being used to make the financial system safer and hold financial institutions responsible for baring their risk. >> lieu heads to australia in february for a meeting. jp morgan chase is warning holders of a million prepaid cash cards that their personal information may have been accessed by hackers. the cards were issued by several corporations to pay employees and by some government agency s issuing tax refunds and unemployment benefits. still ahead, will twitter's big plan to make more money pay off for shareholders, or will this add strategy potentially backfire?
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the biggest decliner in the dow today, microsoft. invest tors dumped shares on hearing that alan the ceo of ford may not take the wheel. there is intense speculation he will step into the job after the contract at ford ends in 2014. here is how he answered to phil lebeau about taking the top job. >> i'm honored to serve ford and we have no change in the plan. >> reporter: i understand that but you didn't answer my question. have you been approached? >> i did answer your question.
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i'm honored to serve ford and we don't comment on speculation. >> shares of microsoft fell nearly 2.5%. shares of twitter went the other way today, rising almost 4.5% after announcing adds targeting tools designed to give its advertisers a boost and prove to investors it can make more money. julia boorstin has the story. >> reporter: twitter's newest advertising tool targets users based not on what they tweet about but the websites they visited. if you visit trip advisor, that site plus any company interested in reaching consumers planning a trip could show promoted tweets with relevant deals. this is valuable because advertisers can reach consumers who already expressed an interest in making a particular purchase. it's reaching them online and on mobile devices.
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key because mobile is the fastest growing add category. >> because the ads are targeting, they will be willing to pay more per impression, greater revenue for the ad inventory that twitter has available and better performance for advertisers. >> reporter: partnering with twitter on this new approach says that when testing twitter's new product, it saw twice the engagement rate as prior twitter add -- kad ad campaigns. >> reporter: there is no debating this shows twitter is serious about improving its ads. ad roles partner with facebook on targeting says this will give twitter a big boost. >> facebook has a similar product available, and it's been very effective in driving direct response on facebook, and from the results that we're seeing, they are having analogous on
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twitter, as well. >> reporter: we'll see whether better targeting helps twitter gain a much larger rival, facebook. for "nightly business report", i'm julia boorstin in los angeles. more on twitter, it announced the first female board member. she's 66-year-old margry and a publishing and education company. twitter was criticized for not having any female directors on the all while-male bored. the news came by tweet and she responded with her first tweet saying it's an exciting time in twitter's history. today is the 17th anniversary of alan green span's comment. remember that? it was about sharply rising stock prices. so how much has changed in the march gets since then, and what companies right now may be seeing exuberance in share prices if the bottom line share a different story? dominic chu has more. >> reporter: 17 years ago, two words were forever eached into
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the history books of financial markets, irrational, exuberance. >> how do we know whennish rational exuberance has unduly escalated which becomes subject to unexpected and prolonged contractions? >> reporter: former federal reserve chairman used the term to characterize the market. things back then were not that different than they are now. sure, the s askand p 500 were closing to 1800 today but evaluations today were close to what they were in 1996. there are some companies they may be kpub rant over. pandora is up more than 200% this year and managed to eke out a profit in two of the last four quarters. solar city, the renewable energy company more than quadrupled but
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yet to turn a profit since going public last year. just because profits are not slowing now doesn't mean they won't slow in the future. >> a lot of these companies are investing large amounts of money and that's why they have losses but you have to see a light at the end of the tunnel in terms of profitability. if that light is not going to come, the valuations are not close to being substanuated. >> reporter: the stock market didn't reach a peak until three years after green span expressed his concerns. that's why some traders think the market still has room to run. for "nightly business report" i'm dominic chu. there was a runup in shares of timewarner cable before the closing bell today and that's where we begin the market focus. just before 4:00 eastern time it was reported the cable operator would likely accept a 150 to 160 billion-dollar buy off offer. no word who the buyer might be
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but there is speculation that tops communications, charter and come past. comcast is the parent of cnbc which produces this program. shares erase most of the gains closing at $132 and change, up a fraction. j.c. penney stock fell sharply because of a note from wells fargo today. although penny sales jumped by 10%, that may be as good as they get. shares tumbled 8% to $8.85. apple hitting a 5 52-week high. this from the wall street journal it signed a deal with china mobile to carry the iphone mid december. it's the largest mobile moan carrier. the stock closed at $567.90, up more than 2.90%.
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costco says sales were soft in electronics and lawn and garden. the stock fell more than 1% to $120.95, tyler? >>. dollar general beat estimates. the discount retailers profits have grostaedly as it opens new stores. dollar general also added a billion dollars to the stock buy back progap, shares up 6% on this otherwise soggy day. 59.81 the close. kroger, the biggest u.s. supermarket operator issuing a cautious outlook for the rest of the year. the company reporting earnings in line with estimates but concerned with cuts to the food stamp program and how it will impact the current quarter. the stock dropped 3.5% to $40.06 the finish there. mattress firm beat earnings and revenue estimates and raised the full year sales guidance.
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the company that sales national mattress brands such as sealy and simmons said increase advertising is helping to drive traffic and sales growth. the stock rose 14% to $38.90. in the meantime shares of electronic arts says on going problems with the battle field 4 game forced the delay of future games from the developer. the issues including the game crashing repeatedly and problems accessing downloadable content. battle field is one of electr electronic arts' biggest franchises the stock to 2 $21 a a penny. can you imagine paying 7 or $8 for a gallon of milk? those scary dairy prices could happen unless congress passes a farm bill by the end of this year. jackie deangelis looks at the impact on companies, farmers and
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consumers. >> reporter: chances are you have heard of the fiscal cliff but have you heard of the dairy cliff? it could send milk prices skyrocketing from $3.46 a gallon now to over $7 a gallon next year. it started with a farm bill passed in 1949. >> the 1949 farm bill is permanent law and we had extensions on the 1949 law every several years and the most recent one being in 2008 we had a five-year extension that congress put through, and now here we are again at that deadline that will expire on january 1st and could drive milk prices much, much higher and dairy prices much, much higher if it expires. >> reporter: the problem with the law is that it was implemented at a time when the dairy industry was smaller and less sufficient. so it received bigger subsidies from the federal government. if the u.s. reverts to that policy, taxpayers will foot the bill of those subsides to the
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tune of an extra $12 billion according to experts. while consumers could see a big stocker shock for milk at the grocery store, the impact would be much more than just milk. the impasse would impact food producers that use dairy in their finished product. think butter and yogurt companies and cream crease and sour cream and packaged food makers, general mills, all use various forms of dairy as ingredients, as well. farmers are worried high prices could make customers cut back on all dairy products. >> initially, people would be buying it and farmers would ben p -- benefit for a short period of time. >> reporter: this isn't the first time we faced the dairy clip. it happened last year but congress passed an extension. analysts hope we could get a
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12-month or 24-month extension as well to keep milk prices in check. still ahead, the passing of one of the world's most inspiring leaders coming up. finally tonight, nelson mandela died. he spent nearly three decades
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in prison for crusades. the time he was released in 1990 the country was an international out cast. by 1994 with a painstakingly dismantled, mandela was elected president. president obama said this. >> we lost one of the most influential, courageous and profoundly good human beings that any of us will share time with on this earth. through his fooes fierce dignit will to sacrifice his free dop for others, he transformed south africa and moved all of us. >> nelson mandela, his country's george washington and abraham lincoln dead tonight. he was up there with gone did and churchill. >> not only a great leader for his country but such a role model for the world. >> absolutely. >> and he will sorely be missed. inspiring life story. thank you for watching "nightly
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business report." i'm susie gharib -- >> i'm tyler mathisen. thank you very much. we'll see you back here tomorrow night. "nightly business report" has been brought to you in part by, up to the minute stock market news and in depth analysis. our quant rating service provides objective independent ratings daily on over 4300 stocks. learn more at the
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