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tv   Nightly Business Report  PBS  March 7, 2015 1:00am-1:31am PST

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this is "nightly business report" with tyler mathisen and sue herera. out of patience? stocks tumble as hiring surges and pressure ramps up on the federal reserve to possibly hike interest rates sooner rather than later. a taste for apple. the most valuable company join the most prestigious stock market index. meet the men who are findi a high-tech solution to an everyday problem and creating jobs in the process. all of that and more tonight on "nightly business report" for friday march 6th. good evening, everyone and welcome. a surprise addition to the exclusive dow jones industrial. apple will soon join the blue chip index, but we begin tonight with the blowout february employment report and how stocks reacted to it. 295,000 jobs were created last
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month. many more than expected making it the 12th straight month in which at least 200,000 new jobs were added. the unemployment rate dipped to 5.5% a level not seen in nearly 7 years. sometimes what's good for main street isn't welcome news on wall street. many say the strong economic data could pressure the federal reserve to hike interest rates sooner than thought. that sent stocks tumbling and how. off 275 points to 17,856 and nasdaq down 55 and the s&p 500 fell almost 30 points. and for the week, all three indexes were lower. now with stocks dropped on today's job report treasury yields jumped with the dollar soaring to a new 11 year high against the euro for good measure and hampton pearson takes a closer look now at the labor market and what the fed might do >> reporter: in february the job market got stronger despite bad weather in much of the country, a major slowdown at
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west coast ports and layoffs in the energy sector. the 295,000 workers added to payrolls last month brings job growth over the last 12 months to 3.3 million. at a town hall speech in south carolina, president obama called th job growth historic. >> our businesses have now added more than 200,000 jobs a month for the past year and we have not seen a streak like that in 37 years. since jimmy carter was president. >> reporter: job growth was widespread. the leading sectors, hotels and restaurants adding 60,000 new workers. professional and business services up by 51,000 and retailers adding another 32,000 new employees. however, wage growth remains stagnant. at just under $25 an hour average hourly pay up just 2% in the last 12 months. but watchers believe job growth is strong enough for monetary policy makers to start sending signals preparing the markets
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for an interest rate hike as early as the june meeting. >> i think that the next rate rise by the fed is probably out for june. i think that the job data confirms what we've been seeing from client data which said jobs are increasing and pay is beginning to increase. and i think it's only a matter of time until pay rises come through the economy, quite stimulating too. >> reporter: won't have to wait long until the first signal. fed meeting is just 2 weeks away. for "nightly business report," i'm hampton pearson in washington. >> chief economist with wells fargo securities. john good to see you again. welcome. >> thank you. >> let's start with if you think the timetable is up for the fed. >> there's two for this. the job number was very good. it was broad based except for
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mining which incorporates the oil drilling the number was very strong. the unemployment rate did decline. from the real size of the u.s. economy, it's a good story. but i think early, you mentioned a change in timing and that's why i think caught the markets off guard. it brings forward a lot of market expectations that the fed could easily signal in june and increase in the federal funds rate. that would change as timing i think, really impacted the equity market as well as long-term interest rates. that's the second part of that interesting story. >> the stock market react as if can't go up if interest rates do. what is the stock market performance rise? >> that's an interesting line tyler. in fact historically the stock market has improved as interest rates have risen as long as the perception is the economy is pretty strong.
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it may be in this case the market over the last year or two has run up a little bit ahead of the interest rate increases and especially now when we think about the federal reserve surprising where you know many people say no interest rate increase at all in 2005. >> john one of the worrisome factor is interest rate and lack of wage growth as well. does that worry you? >> it has to sue. as you know and probably have talked about significantly there is this part of the economy that's growing. there's another part of the u.s. economy that either doesn't have the skills located in the wrong spot perhaps still suffering in the housing that isn't catching on. that sort of income disparity continues to grow in the u.s.
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economy and does present social as well as political problems. >> there has been, and you referenced a lot of labor force participation but i wonder how much of that rise in the number of people dropping out of the workforce isn't merely because they're discouraged but because demographically, they're ready to work out of the workforce. >> yes, tyler. there's a challenge here in terms of analytically figuring out, how much is the demographics? and we think right now it's about one-third of the demographic. two-thirdss just a lack of skills and there's a little part of that that discouraged workers as well. >> thank you, john so much for joining us. with wells fargo. ty? to apple the world's most valuable company joining the 119-year-old blue chip dow industrial index. the phone maker will replace at&t that entered the industrial average way back almost a century ago. 1916. shares of apple rose a bit while
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at&t stock fell. dominic chu explains now what the shake-up may mean if anything for investors like you. >> reporter: after years of waiting, now will get to see apple as part of the dow jones industrial. pretty simple reason. >> dow, major large blue chip corporation. leaders in the industry sector and that kind of thing and apple clearly fits that mold. it is the largest corporation in the u.s. in the world. it's without question a leader in technology. what everybody's expectation is of a blue chip company. >> if apple goes in another stock has to get kicked out. now it's at&t. that decision was a bit tough tore come by. >> a bit overweight and two telecom companies. the other one being verizon.
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at&t smaller with a lower stock price. two items that at&t is the one. but it was a decision we looked at for some time. >> this move doesn't fundamentally change how it willan operate or operate in the future but some investors note there can be a silver lining for getting kicked out of the dow and that inclusion isn't all it's cracked up to be. >> historically it's been a pretty reliable indicator going back through time. dow tended to add the leaders antd doing well. it boots out the laggers. as a result maybe just a reversion of the mean. typically though it's done a lot better than those that have been added. >> as for what it means for the dow, am has become the most valuable company in the world thanks to a huge gain in its shares. if that trajectory continues, that can help drive the dow
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higher. what does apple's inclusion mean for apple stocks? not a whole lot. unlike when stocks get added to the s&p 500, there aren't a lot of mutual or fund managers that benchmark the dow meaning there flood of funds to immediately go out and buy apple stock. however, if apple's massive size means the highest growth days are behind it it might not affect the index at all. for "nightly business report," you might be surprised to learn the dow will actually be less tech heavy once apple added on march 19th. another tech company and visa according to the dow is a tech company, a payments company, is splitting its stock 4-1. that cuts the price, it gets quartered. because dow is a price weighted index, visa and tech will have less influence in and on the dow index. our market monitor tonight recommending apple to his clients along with other names you may recognize.
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mark loutini. nice to have you here. >> thanks sue. >> what do you think about apple going into the dow? what effect it might or might not have? >> actually pretty well in light of a market that was down 1.5%. it gets short-term boost. a few etfs will have to buy the stocks now interesting entered kons dense to help. i wouldn't buy it or not buy it. it's part of the dow jones industrial avera at the end of the day, stock's own merit. for that reason we do own it. we think they're doing good things and what they expect to be launching here shortly. and possibly other products including a car out toward the end of the decade. a cash flow rich company.
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paying dividends with a likely increase and other good reasons why we think we want you to own the stock as opposed to being a membere dow jones industrial average. >> apple can be a slightly lumpy company in terms of earnings and very lovely lumps lately but the boost that it got from the i-phone 6 is relatively going to fade over time. >> i don't disagree with you. they got a big boost from the six and likely in the second half of this year a larger ipad to reflat activity with the sales of the ipad recently started to decelerate and of course the watch is going to have a splash. still open ended but the mayor said the company in terms of 15 times the fact it's 15 billion
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or a free cash flow has 150 billion of cash on its books. all together said you can afford a little lumpiness. >> there in lies the opportunity in the stock. the chance to maybe remake the menu. a little bit cleaner and attract an audience and maybe the millennials who drifted away from mcdonald's because they perceive it to be not high quality food product relative to other options like chipotle and so on. so as a consequence, we think there's a chance a new ceo makes immediate progress and in the meantime for investors, today with clothes, 3.5% a very attractive coupon in this interest rate environment. >> city group. >> city is a lined institution,
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failed the last go around. next wednesday, know whether it can reallocate the capital back to shareholders in terms of buybacks or raising the dividends. one of the most cheaply valued money base in the market today. we think it's attractive and great value in the share price. >> thank you, mark so much for joining us. have a great weekend. >> thank you, sue. >> mark lutini. the rise of the machine as jobs become more and more automated and more manufacturers use robots what happens to workers? we'll give you the surprising
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consumers increased their borrowing in january. at the slowest pace in more than a year. the federal reserve reports the borrowing expanded by nearly $12 billion in january. following an $18 billion gain in december as americans cut back on their credit card use. staples shares fell after the retailer reported mixed fourth quarter results. that's where we begin tonight's market focus. the office supply chain beat earnings by a penny but missed on sales with a stronger dollar and decreasing demand for computers and computer peripherals. the company saying sales for the current quarter fail to match those from last year. shares off almost 3% on this down day, finished at $16.05. investors cheered foot locker easily beat on the top and bottom lines.
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same store sales surged 10% thanks to strong holiday numbers, by the way: the stock 4% higher it closed at $59.37. also beating earnings and revenue estimates. higher traffic helped bolster those results. guidance came below wall street forecast for the current quarter and the full year. stock 1.5% higher nonetheless to $48.52. and lifetime fitness is in advanced talks with private equity bidder with the wall street journal. bidding is down to basically two firms. shares surged to $56.32. >> some might call it the invasion of the job snatchers and other say it's inevitable as roeblts get cheaper and more sophisticated, more and mo companies employ robots over humans onlt factory floor. it's a trend to cost some jobs but add many others. mary thompson has the latest installment of where the jobs
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>> reporter: a pioneer in robots irobot's neighborhood in bedford, massachusetts. eight years ago, you couldn't find another robots company for 150 miles and today, russ kap kapanelo said it's a different story. >> from this location you can catch a hundred companies that are doing some form of robots. >> reporter: a trend seen by boston consulting grum. estimated to hit $75 billion by 2025 up from estimated $27 billion this year. companying spending more as robots become easier to program and easier to afford. ten years ago, cost $250,000 and now some go for as little as $25. it can lead to big savings for manufacturers to buy into the next ten years of the robot
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revolution. >> we're thinking about something like a 16% drop in the labor cost for manufacturing plants over this time period. >> reporter: a computer auto electrical and machinery. >> this year we have plans to do the same. >> reporter: the labor market that remains the question. it's expected some manufacturers may bring work back from overseas if they find mixing robots and humans lowers cost enough and then of course the industry is hiring too. it seems strong demand for its products like chosen by security and defense firms, ava robot for teleconferenceing teleconferencing. and the rumba vacuum. working on 3-d mapping that might be used in future household robots. >> 3-d maps would allow the robot to scan your house. if you tell it to go find your keys it could search and find
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the keys go and grab the keys and give it to you. >> reporter: eric peterson became interested playing with legos as a kid. now he sees a future in defense. >> i can see where robots can come into play in the military. >> reporter: all this as robots play a bigger role in the workforce. in bedford, massachusetts, i'm mary thompson for "nightly business report." and coming up keeching office space clean. it's a real world problem two men believe the digital world can soe and they're turning their bright idea into a fast-growi
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intuit about the tax maker, abruptly stopping state taxes for a day because of a surge in fraudulent claims for refunds. a lot of small businesses are looking to solve recently-world problems using modern technology. most though don't have the time or the staff needed to do the basics like keeping the office clean, restocking supplies or finding a plumber. that's why two new york city entrepreneur the bright idea to find ipads equipped with a system they built to take care of the physical space. >> reporter: in a month, jose
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has been to take the office space of a web-based ipad app. remember the character that supplied james bond's high-tech toys? it's restocking supplies or finding a handyman and jose lara is hoping q can be a career builder, not just a job. opening last april, q has hired 175 employees. wages start at $12.50 an hour and q is taking cues from the likes of star bucks and traders joes providing benefit. >> it wasn't providing none of that. when it comes to q, they're getting paid at a higher rate than they would normally and now getting benefits on top of that. >> reporter: quickly realized hiring their own employees raerlt than contracting out makes it easier to train them
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and easier for clients to commune came with them. at home both had issues with all of the above. >> the shoes were terrible. no experience in maintenance but as a member of my building i knew what type of experience and service i would want. >> we have the exact same. the space needs to be run and the way it's done and unique in every case and broken and fragmented. >> reporter: developing the site was the easy part. rakmani has been doing that since he was a preteen. met teran while working in a business incubator pre-hype. found in buyers until another prenamed business signed on. >> the schedule was here and different people from the handymano the cleaner, all the different players you need to help keep up this running smoothly. >> reporter: whitney donald son was managing the office at
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barkann company, one of the many thousands of small businesses in new york city that tend to be tech friendly and understaffed. >> the companies want to focus on running their business. nobody gets into business to run an office. >> reporter: getting face time with q is probably easier than it was for james bond. >> starting today, every one of you guys can download the app. >> also a brand new phone app for directions to their next job. cue won't win on price at $25 an hour. they're on par with other new york services. instead, cue is about setting a new standard for employees ands customers. >> we have the technology that makes the relationship more personal. they can provide feedback and say this was great or not so great. it's transparency and if it doesn't exist, incredibly painful when people say that's the way it is. it's not just the way it is.
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>> apps are changing everything. doubled to 200 and expect to offer major service beyond new york city later this year. >> good for them. >> cool right? >> great to end on that. >> cleaning. >> and that's exactly what it is. uber for cleaning. we could use that around here. all right. that's it for "nightly business report" for tonight. i'm sue herera and we want to remind you that this is the time of year your public television station seeks your support. >> and i'm tyler mathisen and on behalf of your public tv station, thanks for your support.
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>> fixing ferguson, parsing obamacare, probing emails and israel versus obama. >> our investigation shows that members of ferguson's police force frequently escalate rather than defuse. >> a searing indictment of the
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police in ferguson, missouri. and could four words be fatal for president obama's signature legislative achievement? israel's prime minister addresses congress, challenging the administration's diplomatic outreach to iran. >> this deal is so bad, it doesn't block iran's path to the bomb, it paves iran's path to the bomb. >> and the pre
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