tv Nightly Business Report PBS April 29, 2013 4:30pm-5:01pm PDT
this is "nightly business report" with tyler mathisen and susie gharib. brought to you by the street.com. interactive financial multimedia tools for an ever changing financial world. our dividend stock adviser guides and helps genate income dung the periods of low interest rates. real money helps you think through ideas for investing and trading stocks. action alerts plus is a trust portfolio. online, mobile social media. we are thestreet.com. >> the resilient consumer. americans keep spending.
is the consumer and the economy stronger than many think? golden opportunity. is gold still the precious metal to own despite all that recent volatility. and restore the shores. six months after superstorm sandy hit the coasts. allinothat and more on "nightly business report," monday april 29th. good evening, everyone. we had a nice start to the week for investors. stocks opened up and kept on going. >> yeah, a little bit of a surprise, but it was one of those days. it has been a few weeks indeed since we said this, but it was another record-setting day on wall strt with stocks getng a bigboost. pending home sales, contracts that assigned, not yet closed rose 1.5% in march. and personal income and consumer spending rose two-tenths of 1%
in march. the dow rose 106 points days. nasdaq good for a 12 1/2-year high. and the s 500 closed 11 points higher, ending the session at 1593.61, tenths of a point above the old record close. things may just be warming up. on wednesday we'll get the latest road on how much homes are selling for. and federal reserve policy makers will wrap up a two-day meeting on interest rates and those billions in monthly asset purchases. and then on friday, the big economic report of the week and the month, the economic report from the labor department. for more on the rise in the markets and what may come next, we get more from bob pasani on the floor of the new york stock exchange. >> reporter: the s&p closed at
an historic high. it's been quite a run with the s&p posting gains for six straight months, it's longest monthly win streak since 2009. what's powering stocks? the two pillars of the rally remains. central banks are back-stopping the world and there is nowhere else to put money for global economic returns. china is fragile, and the u.s. with subpar growth of a little more than 2% is the best of the lot, hardly the stuff of record high stocks. that anemic global growth is showing up in corporate revenues, while many companies are beating on earnings, more than 40% are missing revenue targets. eaten today reported earnings that beat the revenues that were light, with european auto parts a drag.
>> eaton's revenue growth will be very hard to come by. perhaps only 2%. that 2% has become the new normal for both gdp and for revenue growth. for "nightly business report" i'm bob pasani. >> as we mentioned a moment ago, stocks got an unexpected lift from consumer spending in march, up two tenths;)c of 1% last mon following a jump of ç9w>seven-ts in february. more from hampton pearson. >> reporter: consumers aren't exactly lining up the cash registers, but shrinking paychecks, curbed consumer spending. it turns out spending in the first quarter was 2.3% higher than the fourth quarter of 2012. people like ann kanabi who
counts herself among those more optimistic about where the economy is heading. >> i think the economy is starting to rebound and i think modest growth and a sense of optimism among americans. >> reporter: higher home prices, less debt, record stock market prices. and on main street, cheaper gasoline prices, all blunting the impact of tax increases. >> we're not buying as much, but we are buying. probably a little more than we did last year. >> reporter: but the jobs picture remains the biggest uncertainty. only 88,000 new jobs in march after averaging 188,000 the previous six months, leading wealth managers seeing a resilient but cost conscious consumer. >> i disagree with those that say the consumer is going away. they're not going away. they're here to stay but they're going to be more cost conscious when they make purchase
decisions. >> reporter: consumer spending may up but the latest polls on consumer sentiment shows it's at a virtual standstill. for "nightly business report" i'm hampton pearson in washington. a short while ago i talked with vanguard. joe davis says there is a quote, striking disconnect between how the economy is doing and those new record highs in the stock market. >> there is clearly a disconnect between where jobs are today and where the stock market is. and i would ascribe some of that disconnect both to the effectiveness, quite frankly, of monetary policy in helping to estimate investor risk-taking. at the same time i think there's also a disconnect that the u.s. economy could be stronger in its recovery, and part of that is due to an uncertainty tax, if you will. >> what we saw in the wall street journal today, that vanguard ceo wrote this op-ed
piece, saying that uncertainty is the enemy of the recovery. let's flip it around. if we didn't haveuncertainty, how much growth, how much better off would we be? >> sure, we actually tried to estimate that very question. the answer to that question. what we found is that just since the early part of 2011, over the past two years, had policy uncertainty not risen strongly through the debt ceiling crisis as well as through the fiscal cliff concerns, that the u.s. economy would be over $260 billion higher in a gdp perspective. that's around $800 per person in the united states. i think the u.s. economy would have grown 3% per year over the past two years rather than 2%. if the level of policy uncertainty had not been so strong and so high. >> you talk about policy uncertainty, and we know that the federal reserve is meeting tomorrow, this week.
to what extent is the federal reserve policy impacting this uncertainty? is all of the stimulus that they're puttg into the economy helping or holding back growth? >> i think it is helping. it's tough to argue otherwise. when you look at the fact that the u.s. economy has expanded at an albeit modest pace, despite the elevated level of policy uncertainty. so i think the federal reserve should receive some credit for trying to estimate the economy. that said, i think importantly they are starting to point out that there are costs to their strategy. savers at home and in very low interest rate paying investments i think are clearly feeling the negative ramifications of some of the extraordinary stimulus of the federal reserve. >> one thing we hear a lot from all the ceos is because of all this uncertainty they're holding back on ring. do you think at we will see
any progress on the hiring front? >> i think we'll see modest progress but i still think we have to brace for some disappointments in economic data through the summer. the fiscal sequestration, some of those impacts are starting to hit. job growth should be 45,000 jobs more strong per month. >> you come in contact with a lot of individual investors ativan guard. what your reed on how they feel about spending money and investing it? >> well, i think broadly speaking, we are seeing investors -- and we do have millions of clients and shareholders, continuing to execute on a long-term plan. many remain fully vested in the market. that said, this is a level of concern both with respect to the low level of interest rates as well as open any questions such as is the recent recovery net market, is this sustainable?
so i think they're legitimate questions, but at the end of the day we continue to see very strong demand from investors and they continue to place faith in the financial market. >> and there's more encouraging news about the economy, and something we haven't seen since president obama took office. the u.s. government will pay down debt instead of adding to it. and that's thanks to higher tax revenues, lower costs and some up beat forecast that the treasury plans to pay down 35 billion in debt during the third quarter. for the third quarter, the treasury's already predicting it'll have to borrow more than $220 billion. gold prices are making a bit of a comeback. up nearly $14 a day to $14.67 an ounce. it is almost back to where it was before the big sell-off. our next guest expects that that upward trend will continue.
he's the ceo of world gold trust services. welcome. you know, gold had been on a very powerful bull market run for about a decade, well into 2011. but since en it has been in charitably, i would say, a bit of a bear market. what do you think will turn that around and get gold moving up again?ñ why? >> sure. i think there was a little bit of a shift in demand. we look at the first quarter, a lot of investors were caught off-guard with the voracity and upward trend in domestic u.s. stock markets, so there was a bit of a rebalancing going on. as a result of this price pullback, is the voracious appetite for gold investors around the world, taking advantage of that and seeing it as a buying opportunity. so if we look at the reasons why investors here and abroad have turned to gold, as you mentioned, a decade ago, they are as valid today as they were
when they put those transactions on back then. so gold definitely has a role in today's portfolio construction. >> in mid-april gold took a very sharp sell-off, and there was a lot of money throwing out of etfs, including the one you're associated with, the gld. who was doing that selling and why? >> we think that the, without having perfect information, the markets are telling us that the selling that went on in the futures markets in the u.s. and some transactions out of the etfs, including spider gold shares, were more short-term focus, more trading focused, traders in the marketplace, not necessarily long-term investors. and i think what we're seeing here is a little bit of a disconnect between what's happening in the u.s. market, led by as i mentioned, short-term trading, and the fundamental demand for gold around the world. we always point to india and
china. they account for over half of gold demand now, and they are driven by economic expansion, albeit maybe not at the 8%, but the reasons for buying gold are varied around the world. and that we see as a short-term price pullback. >> the two commis you just mentioned, china and india, india has the wedding season ming up, i suppose, so there will be more buying associated with that, but both of those commis are not has thriving. how important will it be for the price of gold for those economies to get kick started again? >> sure. i think it's important to understand that gold purchases in india and china, in addition to the wedding season and festivals, it is a fundamental asset to them. so it's not necessarily a
fashion purchase or a luxury item. it is something that they buy that they understand and have for generations that gold is the foundation of long-term wealth creation. so despite the fact that they are slowing down somewhat, we need to understand that there is a long-term wealth creation engine here, which is creating increasing discretionary incomes and frankly, a vastly expanding middle class. they're affinity for gold means more demand for gold. >> thank you, jason. jason is ceo of world gold trust services. and to market focus now. some new all-time highs were set today, including the dow component disney. saying the parks division should be more profitable than the market expects.
ubs boosted its price target for disney. disney closed at 63 even, up almost 2%. >> shares of both moody investor services and mcgraw-hill jumped today after the companies announced a settlement on friday of lawsuits charging that they had misled investors about the safety of risk debt vehicles. moody led the s&p 500 today closing more than 8% higher while mcgraw-hill gained over9n 3%. express scripts reported profits and revues above expectations and lifted profit guidance for the rest of the year. the stock was up roughly 1% for the regular session and then moved higher in after hours trading. live by the wing or die by the wing. buffalo wild wings posted profits of 87 cents a share. the company did say full year profits will be higher as costs
for chicken wings trend downward. sales for the current quarter are up more than 5%. shares for the company were down ahead of the reporand moved higher after the close. herbalife reported profits above expectations with revenues in line with estimates, but it reduced guidance for the current quarter. the direct marketing nutrition company said that defending its business model from attacks cost it 7 cents a share in profits. it was actively slammed by activists earlier this year. and coming up a little later in the program, a big drug company is accused of using big dinners and outings to hooters. but first a look at how the international market finished today.
and universal health services up 1%. that's after analysts upgraded several hospital operators after the federal government's projection that inpatient payment rates looked slightly better than expected. two pharmaceutical giants are teaming up to take on type 22 diabetes. pfizer and merck have joined forces to sell a new experimental drug from pfizer. they'll also study combining that new pill with merck's top selling diabetes drug. the two companies will split revenues. pfizer shares rose more than 1% today while merck ended a fraction lower. another big pharmaceutical company has teamed up with a very different partner. the justice department filed a lawsuit against the swiss drug maker novartis, charging them with taking clients out the to
hooters in exchange for prescribing drugs. >> tyler and susie, it's been a tough road for them. just last week the government excused novartis of giving kickbacks to pharmacies. now comes this. we've all heard stories like this before. doctors handing out pills and getting major kickbacks from the drug companies. but in this case they're accused of wining and dining doctors. it does pay to do educational speeches. but the justice department is accusing them of things like fishing trips and fancy dinners at fancy hot spots. according to a lawsuit filed by the u.s. attorney's office, it was all to increase sales of the company's drugs. this is the second wave of charges against novartis in just one week. authorities now saying that for
a decade the swiss drug maker paid millions to doctors in exchange for spearing patients towards its drugs. according to prosecutors, not much education was going on. here's what the u.s. attorney has to say. novartis corrupted the prescription drug dispensing process with programs that steroid patients towards its drugs. novartis disagrees with the way the government has characterized their conduct and stands behind their programs. >> theuestion tonight is what would stop companies from doing this. if being find is the only punishment, not much, because'ge all know that marketing budgets are very large and these kind of things can make or break moments for drug makers. and guys, right now we're just talking about civil charges. >> all right, so taking doctors out to dinner, that seems pretty
innocent. what was wrong here? >> it's perfectly fine to take doctors out to dinner. but in this case there are strict guidelines that must be followed. and in this case the goverent is saying those weren't followed. they did things beyond that and you must stick within these guidelines. still ahead, six months after sandy, will the new jersey shore be ready for summer? but first a look at how commodities, treasuries and currencies fared today.
three japanese auto makers each announcing recalls in the u.s. and canada today. ssanhe most. 120,000 new altimas being recalled to check their tires. honda needs to fix a faulty electronic stability system, saying that the car can tilt too far before it applies the brakes. and then subaru is calling back 10,000 2014 forester wagons. the floor mat could interfere with the gas dal. no place felt the impact of sandy like the jersey shore. and even today residents are
struggling to rebuild their homes and businesses and they're racing to be open in time for summer, just a few weeksaway. mary thompson takes a look now at new jersey's $22 billion tourism industry as it pushes to recover from sandy half a year later. >> reporter: from the deck of one of his seaside park rentals, eric seesn7ç sandy's lasting it on the jersey shore. >> every week you look south, it looks different. there's another board walk amusement that's gone. >> reporter: the patchwork recovery hurts business. >> the demand is down and we're do you think our best to advertise more and get the word out that there's towns like seaside park that's really nice. >> reporter: but drive two miles north and houses lie in ruins. sandy damaged over 18,000 rental units in the garden state, thousands of those along the shore. if the rental units, hotels and
businesses aren't set for the summer, that's the $22 billion at risk. vacationers are looking elsewhere. this website says cape cod rentals by new jersey residents up 6% from last year. inquiries indicate a seven-year high on martha's vineyard. seaside heights director of community improvement promises his town will be open for business. >> we're going to be ready. we've done two years of work in six months. >> reporter: but a full recovery still months or maybe years away. in seaside heights, new jersey, i'm mary thompson. and finally tonight, billionaire richard branson's verging galactic craft made its first rocket powered flight
today, moving one step closer to commercial flights into spa. spaceship two went nine miles above the earth and into the edge of space. 500 would be space travelers who would pay $200,000 each are waiting for a ride. branson is hoping for the initial flight next year. i'm a big fan of the jersey shore, to go back to mary's story. it was quite a storm, because there were parts of long beach island that were really badly hit and other parts blocks away ùupá got through unscathed. >> looking at some of those pictures, tyler, it looks like the storm happened yesterday. >> it certainly does. there's a lot of work still to do but they'll get it done. that'll do it for tonight's edition of the "nightly business report." i'm tyler mathisen. >> and i'm susie gharib. have a great evening, everyone.
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