tv Nightly Business Report PBS April 4, 2013 6:30pm-7:00pm PDT
this is "nightly business report" with tyler mathisen and susie gharib. brought to you by -- thestreet.com. interactive financial multimedia tools for an ever changing financial world. our dividend stock adviser guides and helps generate income during a period of low interest rates. real money helps you think through ideas for investing and trading stocks. action alerts plus is a charitable trust portfolio that provides trade by trade strategies. online, mobile, social media. we are thestreet.com. >> help from abroad. investors cheer. aggressive stimulus out of japan, and that helps send stocks higher. >> lackluster labor softening data on the jobs front has some concerned about tomorrow's employment report. are stocks ignoring the numbers?
and heading home. facebook hopes its new software will be all the rage in the mobile telephone industry. all that and more coming up. good evening, everyone, and welcome to our public television viewer. susie, welcome back, number one. number two, several crosscurrents in the market today. >> absolutely. and you know, tyler, it was kind of a wait and see kind of day today on wall street as investigators sorted through mixed economic reports here at home and outside the united states. in the job market, first-time unemployment claims came in higher than expected. they rose by 28,000. that raised concerns that tomorrow's employment report could show that american businesses weren't doing much hiring in march. meanwhile, investors were encouraged by some news from japan. its central bank is launching a program to stimulate the japanese economy through a bond buying program. while stocks rallied in japan, and some of that enthusiasm spread to wall street, with the major stock averages bouncing back from yesterday's losses. the dow rose 55 points.
the nasdaq and s&p both added six points. a bumpy run of economic data in recent days, including the jobless claims numbers that susie just mentioned has put a more halting rhythm in stocks over the past week, and it has raised the stakes for tomorrow's official employment report from the government. hampton pearson has more now from washington. >> reporter: the lines at unemployment offices across the country got a little longer last week. jobless claims increased by 28,000. that's the third straight weekly hike. and the new seasonally adjusted average of 385,000 has not been this high since the end of november. unemployment claims are often a proxy for future layoffs. a closely watched report from challenger gray and christmas shows employers announced just over 49,000 job cuts last month, down 11% from february, but 30% higher than a year ago. >> certainly it means there is volatility out there, and there are certain sectors of the economy that seem to be taking the hit harder than others. >> reporter: earlier this week, there was also disappointing
news about private sector job growth. businesses only added 158,000 jobs last month. according to the closely watched survey from payroll processor adp, far short of economists' expectations for nearly 200,000 new jobs. last month, the labor department told us payrolls increased by 236,000, and the unemployment rate fell to 7.7%. but this week's soft jobs data has wall street traders softening expectations about tomorrow's jobs numbers. >> starting to hear people dial back to 160, 170, somewhere in there. >> if tomorrow's jobs numbers from here at the labor department come in lower than expected, look for businesses and investors to start to worry about still another soft patch for the economy. for "nightly business report," i'm hampton pearson, in washington. >> well, what happens with the economy will shape what is next for stocks. joining us to talk about what we can expect, bruce kazman, and
bob doll. gentlemen, welcome to you both. bruce, let me begin with you in asking you about the economy. you say you're a half glass full kind of guy on this topic. but what do you say to the critics who say that the economy is slowing down there. is some bad data coming, and this isn't going to be good for the stock market? >> well, i think we came into the year with a real surprise to the upside. there were some temporary lifts to growth. consumers proved more resilient than the face of tax increases. the first quarter is tracking about 3.5% growth. i don't think 3.5% is where the underlying trend. i think we've got some slowing. we've got the sequestration drag in. the second quarter is going to be slowing. but i think when we look through it, we're going to feel the economy is growing 2.5% in the face of a fiscal drag. and we're going to look at this economy and say this is pretty solid performance. >> bob, it's nice to see. i haven't seen you since you moved over to nuveen. it's been a while. i want to ask you about treasuries. what are treasuries saying, if
anything, about the state of the u.s. economy, or are the yields coming down based on global tensions? >> i think they're coming down, tyler, because there is some slowing going on because we have good news for monetary policy out of japan. and it's breathing a sigh of relief. look, we've been trading in this 180 to 2% for a ten-year treasury, really since the first of the year. so i don't want to make too much of the fact that rates have dropped a little bit here. but we'll keep our eye on it carefully. a break below 180 in the ten-year treasury, and we were talk about. >> a lot of people are talking about a correction in the stock market. maybe 5%, maybe more. what do you say to that? >> well, susie, lots of people waiting for that correction, really, since the end of last year. and of course we had a great first quarter. and it seemed like there weren't any down days. of course there were. the stock markets always have
corrections, predicting them is impossible. having said that, i think the stock market is acting a little tired. really, despite some recent new all-time highs, the stock market today is about where it was a month ago. so it's really marked time and begun to consolidate. >> you know, bruce, i would like to get your thoughts on where you think the economy will be a year from now or over the next year in terms of the overall growth rate, and whether you think that at that growth rate, profits, corporate profits can continue to grow and support stock prices. >> well, we have growth on average about 2.5%. and again, i would emphasize that's an outcome that does reflect strong underlying performance, absorbing fiscal drag, still pretty soft global backdrop as well. a private sector that is doing well, and maybe picking up steam as time goes on here. i think the other point to make here is corporates are sitting with relatively good leverage. labor costs aren't growing very rapidly. they don't have much in terms of pressure on any kind of an underlying cost.
so i think it's a good solid environment in terms of profit growth. it's a solid environment for growth here with a lot of wiggles. and we're probably going to be wiggling a little softer here in the next couple of months. i don't think there is anything serious. i would argue the big event of the last six months as we moved a lot of tail risks from the picture, events in europe not being a threat to global financial stability, and the u.s. political scene not really being a threat here anymore as well. >> bob, bruce is just talking about corporate profits. i wanted to ask you about that. as you look near term, which is more important for investors in the stock market. it is going to be earnings that come out throughout the next couple of weeks, or it is tomorrow's labor report? is the labor report more important? >> i think the labor market is really important here, susie. it gives us some idea of what corporations are thinking about the future. earnings will be what they were, and they're already history, as we know. and of course forward guidance will be important. i think bruce hit the nail on the head, however.
the reason the stock market has done well is a bunch of them. but the main one is the reduction of tail risk. the absence or the lowered probability of a real problem. that's caused investors to get a little less concerned, maybe a little more confident. >> bruce, speaking of tail risks there, is north korea the kind of tail risk you worry about? >> certainly there is a lot of things geopolitically, including north korea that can keep me up at night. but those are things i can't control in terms of my understanding. i think europe is still weak, but it's not a threat to global financial stability. china is not booming, but it's not a threat of weakening substantially. and we have taken out i think the threat of a fiscal cliff of a debt ceiling crisis in the u.s. so the picture is relatively clean from the macroeconomic policy risks that we've been worrying about a lot for the last year. >> okay. interesting discussion. thank you so much, bruce and bob. bruce kazman of jpmorgan and bob doll of nuveen 8 management.
north korea showing no sign of backing down in its stand with south korea and the united states. today north korea moving a medium-range missile similar to the one you see here to its eastern coast, minus the music. the missile does not have the range to reach the united states, but it could hit the u.s. territory of guam as well as south korea. and even japan. let's turn now to market focus. investors were buying up at best buy today. it was the biggest gain attorney s&p 500, thanks to a vote of confidence from samsung is. the two companies said samsung will open mini stores in 1400 best buy locations. best buy shares surged more than 16%, up 3.48 to $25 and change. quite a rebound. best buy shares have more than doubled year to date. a big management change today at hewlett-packard as the revolving door continues to turn at the troubled company. ray lane this time stepping down as chairman, just after two and a half years in that job. he has been blamed for the
botched acquisition of british software maker autonomy. the news was announced at hp's annual meeting today. meg whitman, by the way, continues as ceo. hewlett-packard shares were up almost 2% in the regular session and rose a little bit more in after hours. and dow component johnson & johnson turned around after an appeals court ruled in its favorite in a patent infringement case. that ruling wipes out a half billion judgment against one of the company's subsidiaries. j&j's shares were drifting down until that news broke, and then bounced back, ending up at $82 a share. the bank of japan's monetary stimulus announced today gave investors opportunities in the american shares of major japanese banks and automakers. take a look. mitsubishi financial up the most over 9%. honda and toyota also up in the 4 to 5% range. goldman sachs upgrading panera and raising its price target there to $215 a share, saying panera is a good growth
story. panera shares up more than 3 1/2% today to $175.78. a $6 and change gain. a new report today by the government accountability office says efforts to regulate the gathering and sharing of potentially market moving political intelligence would be very difficult to implement. the study was the result of a 2012 law aimed at clamping down on insider trading by congressional lawmakers and their staffs. today's report targeting so-called political intelligence firms said it was difficult to turn up much about the industry because there is so little disclosure required of it. the report said the s.e.c. believes more disclosure about the firm's activities would help it enforce insider trading rules. former enron ceo jeffrey skilling could get out of prison early. he is currently serving a 24-year sentence for his part in the company's collapse. six years after skilling went to jail, the justice department said today it's considering a possible deal with skilling that
would shorten his sentence, though it's not clear by how much or even when a judge would make a decision. the government watchdogs are supposed to be in place to make sure corruption is stopped and your taxpayer money is looked after. sometimes people and companies get away with it. sometimes they don't. eamon javers is our watchdog and he is keeping an eye out on where fraud might be lurking. i know you have been studying this for a while. what are you finding? >> if you're an investor, shareholder or a tax holder, there are people out there every day looking to separate you from your money. now we're going to tell you who they are, bringing you the latest in alleged scams, frauds, and a abuse. think of it as a regular reminder to watch your money. this week we've got two-stories that could have affected you if you've got a mortgage or if you pay federal taxes. just today, for example, the consumer financial protection bureau announced four enforcement actions to end what it said were improper kickbacks paid by mortgage brokers to mortgage lenders. the proposals would require four
national insurance companies to pay $15 million in penalties. >> so eamon, what did they allegedly do wrong there? tell us how this whole thing unfolded. >> well, the cfpb says the insurance firms provided kickbacks to lenders by purchasing what were essentially worthless reinsurance that was designed make a profit for the lenders. and that could have inflated the cost that homeowners paid in their mortgages every month. one of the firms, genworth u.s. mortgage insurance says it will pay $4.5 million. and the firm said it agreed to settle so we can, quote, focus on oh sources on working with customers. here is a case where taxpayers were allegedly paying for something they never should have been paying for in the first place. the department of justice announced that floor hand-held llc has agreed to pay $1.1 million to settle allegations that it used federal taxpayer funds to pay for lobbying. the government says that floor, an energy contractor misused department of energy funds that were supposed to train first responders at a federal nuclear
site. but instead of the training, the government says flor spent the money to lobby congress for more federal funding. flor says it did nothing wrong or unlawful in all of, this and it was prepared to show that its actions were known fully and overseen by department of energy officials. now we're going to keep watching for these stories. so if you see a good one out, there send it to us at nbr.com. thanks. back to you guys. >> thank you so much. eamon javers reporting from washington. from stranded cruise liners to see-through yoga pants, the big pr problems that some big-name companies are facing. but first, let's take a look at how the international markets fared today.
carnival cruise lines once again navigating some troubled waters. one person missing after the cruise ship triumph broke away from its matagorda ooring yeste. this is just the latest problem or to the triumph and the troubled cruise line. mary thompson reports. >> reporter: it's been anything but fun for carnival cruise lines these days. a ship adrift in the gulf, passengers without toilets and running water. its grand turk cruise center closed for health reasons, and the loss of 32 lives after its costa concordia" capsized off the coast of italy last year. verizon's former president of communications denny strigl, it spells disaster. >> this is no small company. this is a company with a $15 billion market gap. 90,000 employees. $25 billion in sales a year.
i'll tell you, this could really hurt this company if and when it catches up with the public that has booked cruises with carnival. >> reporter: but passengers keep coming. ceo of cruise planners michelle fi tells cnbc carnival's bookings are down just slightly, a fact she accounts to the company cancelling cruises than customers backing out. amid the mounting mishaps, investors backing out over the last three months. the maritime lawyer jason margulies points out the industry's self insurance limits a disaster's impact on the bottom line. >> well, cruise lines generally are insured with protection and indemnification clubs. they have deductibles, but that limits theirs liability beyond those deductibles. >> reporter: a bigger cost may be to the firm's reputation. even as it has built the world's biggest cruise line, ceo mickey arison stayed quiet as his shifts and company drift. >> this is an opportunity for a
ceo to get front and center, to give his shareholders, to give his -- about 90,000 employees at carnival, and his customers some assurance that things are going to be okay. >> reporter: arison's public appearances, though, tied to his other business, the nba's miami heat. he has been seen courtside at their games, not dockside as crippled ships and disgruntled passengers sail in, causing some to question his stewardship. for "nightly business report," i'm mary thompson. >> looking at carnivals a stock, closed down 1 1/2% today. year to date, it has dropped almost 10%. >> and carnival is just one well-known company weathering choppy waters. jcpenney much in the news. it's been in the midst of a sweeping and controversial revamp under the new ceo ron johnson. and some invest verse been voting with their feet. well, the stock was up 4.5% today on an analyst upgrade. jcpenney shares are down 23% since the beginning of the year.
meanwhile, the sportswear company lululemon announced today its chief product officer is stepping down. the move follows a string of recent product complaints and a recall of yoga pants that were found to be too sheer. three companies with problems big and small. so which ceo is handling the troubles properly? and which is dropping the ball. the president and ceo of tevin and company, a crisis management firm. let's start with mary thompson left off. and that's with carnival cruise lines. has the ceo dropped the ball here by not being as present as some would have him be? >> he has dropped it into the ocean. he is using some of the lessons he might have known from sports where you go down and then you come right back up, and you don't necessarily have to acknowledge what has gone wrong, and he is applying them to a totally different industry, and he is not doing himself or his passenger nice good. >> but books took a slight hit. the stock is down a little, but not much as maybe you might think given all the things the company has been through.
is the proof in the putting there the proof in the numbers? >> you never know when it can turn, and it can turn like that. and i think it's at the precipice to turn. you watch the numbers. i bet you they're going to go down. >> let's turn, then, while susie gets some water in their throat here, to the question of jcpenney. here is a ceo whose career was in retailing of electronics products. he moves famously and lucratively to jcpenney, which is a broad line department store. his early moves haven't worked. he seems to be trying his best. but it doesn't seem to be working. what should he do. >> so the question is when do you keep on toughing it through and when do you turn and do something else? and knows apple customers very well, but they are arguably not jcpenney. so how does he start to learn about who jcpenney customers are? and has he not done that quickly enough. >> i think the question for all of these ceos is what is her
obligation to their shareholders, their employees, and to their customers? i mean, they're looking for reassurances from their ceo. what do you think? >> the ceos seem to be in denial as pose opposed to stepping upe plate. the passenger comes first. we put that before and i'm not hearing that too much. >> let's talk about lululemon. they had the famous product issues with the pants that were too sheer. today they sacked apparently the product -- the chief product officer out there. is that an example of a company that is doing the right things and moving swiftly to hold someone accountable and to make the changes that are called? >> yes, it is. and they had some problems before about -- >> it's not the first. >> it's not the first. so they toughed it out for the first. but then seeing this, then she moves, christine day, and i think she did the right thing. >> i want to ask you going back to carnival, you think of companies that have a product problem. in this case it's a huge ship. do they do a recall?
>> well, they surely do a refit. and they surely compensate people a little bit better than they have done. i think they have to show that they're on the passengers' side a little bit more than they've been showing it. because eventually it's going to come back and bite them. >> because you're talking about a safety issue here. >> you're talking about safety and physical health if it's the gastroenteritis from norovirus. >> an interesting thing, compare the response at carnival to happened, and it was government involvement here with boeing and the dreamliner. should carnival shut down for a week and say we're bringing all the ships into a week and check them out. >> yeah. because your safety, dear passenger is more important to us than the bottom line. >> maybe that's the way it should have gone. so you're critical of arison. he wasn't throughout too much. he is paying too much attention to lebron maybe. you give an a grade to lululemon and an incomplete to jcpenney? >> jcpenney has yet to be seen. they have the opportunity to turn it around, but we'll see how quickly that move. >> nice to see i don't again. >> very good conversation.
coming up next, a new facebook experience coming to your phone. we'll have the details of the big announcement. how commodities, treasuries and currencies did today. facebook is hoping there is no place like home. ceo mark zuckerberg unveiling a new app for android smart phones sort of called home. julia boorstin joins us from facebook headquarters in california with what it all means. julia? >> reporter: tyler, facebook home is more than an ordinary app. it gives you the option of
replacing the phone's home screen with facebook updates and photos. mark zuckerberg saying he wants to reorient phones so they're about people and not apps. >> we don't want to build some kind of phone or operating system that only some people are going to be able to use. we want to build the best experience for every person on every phone. >> facebook's home app, which will be available for download on certainly htc and samsung phones on april 12th features a new tool called chatheads which allows you to chat with friends when you're on other apps so you can continue conversations across instagram or even fandango. a new htc hand set going on sale for $99 on april 12th is tailored to work with facebook home. it will be sold exclusively by at&t. to make sure there this runs smoothly, facebook is partnering with qualcomm. >> what is really important with this kind of app is the bat ray
life not being impacted and you have all the stuff scroll really smoothly and it's multimedia. it's important for that to be rendered really well. redo all that interior pluming to make all that stuff work really, really well. >> mark zuckerberg hopes by making its tools successful, no matter what else users are doing will drive more facebook usage and ultimately drive more facebook revenue. >> so julia, do you think that people like facebook enough that they would get a phone that is built around it? how popular will this be with consumers? what were you hearing today? >> you know, i think that the response is pretty positive. i think that chatheads looks really cool. and i think the key thing here is you're not buying a facebook hand set. you're not buying a phone made by facebook. you're buying a google android device. and these are such popular devices, that it's going to give people who already own phones the option of using this. and if you're a heavy facebook user, and there are 60 million people who do use facebook on
their phones every single month, if you're one of the people, you would think hey, i would like to have the option of using facebook more. maybe i'll buy a phone that is opt mied to run the system and the software. >> julia boorstin in menlo park tonight. thank you very much, julia. many of you have let us know over the past few weeks how much you missed the nbr.com website. we're happy to tell you the new site is up and rung. you'll be able to watch video and hear podcasts of every show, read transcripts as well as blog p.o.w.s from tyler and me and lots more. check it out at nbr.com. >> all righty. that will do it for tonight's edition of "nightly business report." we hope you will check out nbr.com. it's up and running. we're adding to it moment by moment. >> have a great evening, everyone, and we'll see you tomorrow. and be sure to check out our website. there is a lot of interesting stuff out there. >> "nightly business report" has been brought to you by thestreet.com. interactive financial multimedia
tools for an ever changing financial world. our dividend stock adviser guides and helps generate income during a period of low interest rates, options profits helps educate beginning and seasoned options traders. abc alerts plus is a charitable trust portfolio that provides trade by trade strategies. online, mobile, social media, we are thestreet.com.
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