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tv   Nightly Business Report  PBS  August 18, 2014 7:00pm-7:31pm PDT

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this is nightly business report. >> no news is good news, investors were in a buying mood on a quiet day on wall street, turning out a triple digit gain on the blue chip dow index. sending the nasdaq to a 14-year high. why home builder confidence is gaining steam, even as the housing market itself is cooling off. cute, but expensive. why it will cost you almost a quarter million dollars to raise a child. and that's not including college. we'll have all that tonight on nightly business report for monday august 18th. >> welcome. it's been a kind of two steps forward, one step back year on wall street. today may be a little
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surprisingly, was a step forward kind of day. the catalyst was there was no negative catalyst. there was no deterioration in eastern ukraine over the weekend thankfully. ukraine's and russian's foreign ministers met for lengthy talks in berlin, with moderate progress. iraqi and kurdish troops retook a dam in northern iraq. gaza and palestinian militants have extended their truce. dollar general bid $9.7 billion for family dollar. you have a 14-year high for nasdaq, and a rally in the s&p 500 that took it to within a percentage point of an all time high. here's how the stocks finished their day at the highs, by the way. the dow up 1%, adding 175 points. disney and home depot, all time highs for those two. nasdaq ended at its highest close since march of 2000.
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and the s&p 500 was up 16. crude oil down 94 cents. it settled at 96.41. lowest level in seven months on easing tensions in iraq. and news that libya has increased production. falling price of oil helped lift airline stocks, including united, continental, american, delta and jet blue. they were all up more than 2%. our guest tonight says investors are buying up stocks of american companies, u.s. because the u.s. is the global safe haven. scott, nice to have you on the program tonight. i guess the question is, is it safe? is it safe for investors to be putting new money into the market, given all the uncertainties that are going on around the world? >> suzie, there really are a lot of uncertainties. i think on a relative basis the u.s. is safe. the reason i say that, because i think the economic growth here, and the modest inflation is something that investors can count on, and i think that's why
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the money's coming here. >> scott, the president last week took some heat for an alleged foreign policy principle that was -- don't do anything stupid. and that was sort of -- is that your principle? if the economic principle or the stock market principle is, the u.s. is good because everybody else is bad, is that really a long term formula for success? >> that's really probably not, tyler. here's what i would say, i believe this modest growth, modest inning nation environment is probably something we're going to be living with for the next few. stocks can do well in that type of an environment. especially when that growth is dependable. and valuations are reasonable. they're only in line with the average if you look at something like a p.e. i think the stock market's a good place to be. >> i want to ask you about the nasdaq, because it's been red-hot recently in spite of all this geo political stock.
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we know it's driven a lot by technology stock. but if things do get a little bit intense on the geo political side. what does that mean for technology stocks, will the nasdaq sell off like all the other stocks averages. >> i think large capped technology which drives the nasdaq, it's a big driver of the s&p 500, i think in the type of an environment that i envision, tech's going to do well. i think it's a place to be overweight. but if there's some sur moil in the market, the smaller cap tech names they're going to feel it. i think the larger caps are. there's uncertain the. i expect higher volatility, not just in tech stocks, i think for the market as a whole over the next couple months, we could see some good buying opportunities. >> is the end of the federal reserve's bond buying. known as quantitative easing, has that been priced into the
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market? i ask because the last couple times the feds stepped back from pumping money that way into the system. stocks stumbled. >> i think the fed realizes that particular qe program was pretty ineffective. i think the market likes it that the fed is starting to get out of this. always, tyler, you know this as well as anybody else. when the fed starts to reverse course from easing to tightening, you don't know the timing, there's lots of uncertainty. it causes volatility. the tapering program they have going on right now, the market's completely fine with that, it's going do have no effect on the stock market in my opinion. >> we're going to be talking about the fed as the week goes on. scott wren of wells fargo. good news in housing, confidence among the nation's home builders surged to an eight month high in august.
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that sent shares of home builder stocks higher by more than 1%. with that higher optimism comes despite slower home stans. diana olick explains the disconnect. >> more than two thirds of the 30 units going into this townhouse complex just outside the nation's capitol are already sold. two of them this past weekend. that developer bob young says is because he picked the right location for the right buyer. >> the after market is exploding. every time i look around, there are people like me thinking why do i need the big house in the suburbs any more. >> these units priced at around $1.4 million are taylor built for baby boomers. while construction is rampant targeting younger millennials. >> you have to be an eternal optimist. i am. i believe well located housing will continue to sell. >> and he's not alone. a monthly home builder
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confidence index surged in august, to the highest levels since january. it's three components all gaining, current sales and sales skpexpectations with prospectiv buyer confidence gaining. >> the market is cooling off, all that optimism last year pushed home prices too far too fast about. >> i think a lot of it is attributed to the fact that in 2013 there was a robust energy in the marketplace, that every builder raised their prices as you would expect them to do. and we probably price some people out of the market. >> weaker demand and a steep drop in mortgage applications, caused fannie mae to revise down dramatical dramatically. it now predicts sales of newly built homes will rise 1% from a year ago, rather than the 13% predicted a month ago. >> the most significant factor
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that drove reduction is what we're hearing about supply constraints from builders, and the difficulties they're having in finding labor and materials, permanent land, they can build down. >> 2013 is no longer expected to be a breakout year with housing. not with home prices outpacing job and wage growth. and weaker affordability bulldozing demand. i'm diana olick in bethesda, maryland. >> to read more about the disconnect between home builder confidence and the housing market itself. head to our website procter & gamble the big home product company may be shedding some of its iconic household brands. p&g is in the process of reviewing up to 100 underperforming units. duracell batteries and braun electric shavers are reportedly
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two of the first to go. dollar general looking to acquire rival family dollar for nearly $10 billion. trumping a competing offer from dollar tree. here's how shares of all three dollar retailers ended the day. dollar general up 12%. family dollar, that seems to be the one everyone wants to buy, and dollar tree down more than 2%. gordon reagan now with more on what's behind the battle for family dollar, and whether the stakes could go even higher. >> it's the deal wall street anticipated all along. >> i've been expecting dollar general to buy these guys for 18 months. and i just was surprised that dollar tree, which is a very different business from family dollar, decided to make this transaction. >> dollar general is offering 78.50 per share in cash for family dollar. superior to dollar tree's $74 and 50 cent offer at the end of july. dollar general says the cost savings of its combination with
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family dollar would roughly double the amount estimated by dollar tree. the potential merger of dollar general and family dollar creates a network 7,000 stores larger than a combination with dollar tree. combined sales with dollar general would be $28 billion annually. and because of the two retailer similarities. analysts see dollar general as the more attractive suitor. >> family dollar and dollar general should be able to absolutely attain significant synergies. it's a very similar box. same size, similar customer that they're going after, and the merchandise mix overlaps quite a bit. this is a winning deal within retail. >> the competing bid comes as walmart continues to open smaller neighborhood stores, seen as some as what would be direct competition for dollar general. dollar general ceo says the merger would keep them ahead in the smaller box store space. >> the hits we've taken on those
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has been less than what happens when a family dollar opens up. and after a year where we've taken on that walmart express competition, our stores are cycling. we view it as again just the normal day to day operation of competition. >> he will stay on through 2016 to lead dollar general through the merger, should it gain regulatory approval. delaying a planned retirement for next year. the battle for family dollar is far from over. dollar general is waiting to see how family dollar responds if dollar tree ups its offer and ultimately what regulars have to say about either combination. for nightly business report, courtney reagan. still ahead on the program, google's stock turns 10 tomorrow. not only has it changed the tech world and our every day lives, it's returns have been a gift for shareholders that many hope will keep giving.
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mixed news about jobs. unemployment rates rose in 30 states during july. even as employers stepped up hiring, adding more than 200,000 jobs. the reason? more americans are jumping back into the workforce looking for a new job. now, mississippi has the highest unemployment rate in the country. north dakota continues to have the lowest, 2.8%, thanks to the energy boom in that state. >> here's another interesting and surprising new survey about how little so many americans have saved for their retirement. including more than a third of us who saved zero. breaking that down,
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says more than two thirds of millennials have nothing saved for retirement yet. a third of those aged 30 to 49 have set aside no savings for retirement as well. and a quarter of the people aged 60 to 64 have nothing saved up. one of seven of those 65 and over have no savings set aside. before many of us can think about retirement, will is the daunting and increasingly high cost of raising a family. and a new government report out shows just how costly raising a child can be. >> it's getting more expensive to have a kid. >> the economy today is definitely not great, but the cost of raising a child is definitely up there. >> here across the u.s., the middle class family can expect to spend $245,304 to raise a child to adulthood.
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adjusted for future inflation, nearly $305,000p it's up nearly 2% since last year. those totals include food, child care, health care, education and housing for the first 18 years of a child's life. one thing that's not factored in, college tuition. a hefty expense that in itself has been on the rise. in 1960, child rearing averaged a little more than $25,000 or just under $199,000 in today's money. >> that increase is due to two things. the cost of health care has more than doubled as an expense, and modern day child care, an expense that was insignificant 50 years ago, financial advisers say parents do have options for navigating these rising costs. >> parents should be communicating some of the financial realities to their children. as early as 5 years old, we have the opportunity to communicate varying levels of information to
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them, inviting them into the notion of an allowance and chores. >> where a family decides to live can play a part as well. the northeast is the most expensive, thanks largely to the high price of housing. the urban south is dramatically cheaper as is the urban midwest. a high income family could expect to spend $455,000 on just one child. a low income family could spend only $145,000. but there is a silver lining. the usda finds the more kids a family has, the lower the price per child. as toys and clothing are shared and food one of the highest costs is purchased in larger bulk quantities that send to sell in discounts. >> if you want to keep up with the joness, you have no choice, you spend more than 145,000. >> even so, parents keep feeling the pinch. it's enough to make anyone want to eat their shoe. morgan brennen in ft. lee, new
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jersey. urban outfitters profits fell. the parent company of anthropology and free people blamed higher expenses for the profit drop, and said sales continue to slip. sales were flat and gross margins narrowed. all that bad news better than expected. shares were volatile in after hours trading. the stock was up about 2 1/2% to 36.92. struggling teen retailer aerepostle announced second quarter sales plunged. shares initially popped after hours, during the regular season. shares were up 2% to $3.24. well, night owls will be happy to hear that target is keeping stores open later, the retailer announced plans to extend shopping hours by one or two hours at more than half of
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the stores in the u.s. in hopes of drawing more customers to its locations after a really challenging year. shares rose 1.5% to 58.55. dreamworks animation saw its shares increase. how to train your dragon 2 became the highest grossing animated film of this year. shares jumped about 9.5 on the session. shares of fabrinet plumm plummeted. it cited an internal investigation into its accounting practices as the reason for the delay. that's never good news. shares tumbled 18% to 14.53. and the folks at google did a little shopping today. buying jet pack, a tech start-up that makes city guides and recommendations for travelers
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based on popular photos posted on instagram and other social networking sites. on the subject of google, it was 10 years ago today that the search giant priced its initial public stock offering at $85 a share. a decade later, google's grown into the world's second largest tech company, trailing only apple in market cap. if you looked inside google's numbers, the facts and figures are staggering. josh lipton has the story. google, it's not just a company, it's a verb many a lot has changed since the company first went public. let's start with the market cap, which now exceeds $390 billion. that's greater than microsoft, facebook, ibm or intel. it's nearly twice the market cap of jpmorgan and just slightly less than the value of exxon. investors who poured money into
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google have enjoyed an incredible return. shareholders have reaped the gain of nearly 1300% over the past decade. that dwarfs the return of the s&p 500 and the nasdaq over the same time period. that massive stock runup has made google's co-founders very wealthy. larry page and sergei brynn are in the group of top 20 billionaires. >> what they have created is maybe not quite as good as the discovery of oil, but up there. i mean the online advertising business that they've created generates just mountains of cash. >> google has continued to grow rapidly over the past decade, it's revenues reached $16 billion in the latest quarter. and the company now has more
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than 52,000 employees. at the core of its business is search. and the advertising generated from those queries. and the numbers on google search are massive by any metric. google processions over 3.5 billion searches every day, and more than 1.2 trillion per year. >> and all these numbers continue to grow daily, there's no question google wants to remain the world's destination when it comes to accessing information at home, at work in an ever increasing global world. why smaller biotech companies are on the front lines of the fight against obesity, not big pharma.
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as if being in a hospital isn't troublesome enough. some people may have had their personal data hacked while they were getting better. community health systems says it was the victim of a cyber attack that originated in china. and that the personal data of 4 1/2 million patients including names, birthdates, social security numbers was stolen during april and june. >> we have so many overweight americans, you think big pharmaceutical giants would be at the forefront of treating obesity. that's not the case. and there's good reasons why small biotech firms are the ones leading the fight against fat. >> it's a disease that affects one in three american adults. more than 78 million people. but using drugs to treat obesity has been an uphill battle. >> people have regarded obesity
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as the problem of the patient. very much that it's there responsibility for becoming obese. and it's their responsibility to become lean again. >> how is obesity defined? the cdc says it's a body mass index, a measurement of height and weight of 30 or more. for a person who is 5'9", a weight greater than 203 pounds is considered obese. >> the obesity space is dominated by smaller biotechs. two years ago, two companies got approval for the first new drug for obesity in more than a decade. another drug is under review with the fda now. >> it mostly pulled out over safety concerns with drugs like fen-phen, meridia all pulled from the market. >> they discouraged any investment into the space. it's taken small biotech companies to innovate.
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>> they're primarily physician reimbursement and a lack of resources we've seen so far. >> there's a fourth company on the scene, which takes a new approach to fighting obesity. >> it works to impact the way the body handles fat. in so doing it, it suppresses the way the liver makes fat out of the food we eat. at the same time, we see a very powerful reduction in hunger. >> diabetes drugs are an active space for development. the market worldwide is $54 billion. that for a disease linked to obesity. federal safety officials said today they want to require that high-tech cars of the future be able to talk with each other so they can avoid collisions. the ntsb says the technology could prevent an estimated 600,000 left turn and intersection crashes a year, saving more than 1,000 lives.
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finally tonight. what do you think cars might be like 25 years from now. with more drivers expected on the road, how bad will traffic be in another quarter century, the transportation and solutions are expected to be worked out right now. >> tired of trapping? it's only getting worse. over the next 25 years, it's estimated another 10 million vehicles will hit american roads and will spend even more time behind the wheel. >> the problem is likely to get worse before it gets better, there are a lot of things in development that give us hope for the future. >> one solution? self-driven cars. tech firms like google and automakers like mercedes-benz will use realtime traffic data. >> one of our main intentions actually, on the one hand
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increased safety, reduce the number of accidents. but also getting time back, giving convenience back to our customers. >> bob lutz, former vice chairman of general motors goes even further, by 2039, he sees autonomous drive modules driving us. the pavement recharges the modules as they zip along. without steering or controlling the speed. >> the primary driver of the vision i describe of the electrified standardized modules is the need for efficiency in human transportation. is this great news for the car fan? no, it isn't. i don't see the problem being solved any other way. >> almost everyone admits it will take time forself driving cars to take off. state and federal regulators will be hesitant to allow people to turn over their driving duties to computers and sensors
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in cars. >> make no mistake, electric and self-driven cars are coming. and with them, hopefully a whole new way to avoid traffic headaches. phil lebeau, nightly business report, chicago. >> for more on what the future of transportation might look like, including the airline industry, go to our website that's nightly business report for tonight. thanks for watching. >> have a great evening, everyone. we hope to see you right back here tomorrow night.
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