tv Nightly Business Report PBS December 6, 2011 6:30pm-7:00pm EST
>> tom: what happens in europe this week could have a big impact on the future of u.s. financial markets. >> the financial sector all around the world, but not less than the united states, depends in part on what the europeans decide. because banks around the world hold government debt. >> susie: as europe deals with its crisis, u.s. regulators give lawmakers a progress report on reforms implemented after our financial collapse. it's "nightly business report" for tuesday, december 6. this is "nightly business report" with susie gharib and tom hudson. "nightly business report"
is made possible by: this program is made possible captioning sponsored by wpbt >> tom: good evening and thanks for joining us. european policymakers are working furiously to craft a rescue plan before thursday's crucial summit. susie, the "financial times" reports e.u. leaders are creating a so-called "financial bazooka". >> susie: tom, that "bazooka" would include two separate rescue funds to bail out troubled countries and financial firms in the euro-zone. here in the u.s., investors were encouraged by signs europe is pulling together to solve its financial crisis, but there still is skepticism.
the dow rose 52 points, but the nasdaq lost six and the s&p added only a point. investors around the world are waiting anxiously to see what european leaders will announce by the end of the week. erika miller reports. >> reporter: there have been dozens of high profile meetings of european leaders since the debt crisis flared up in the spring of last year. but this week's summit is different. >> many of the summits, up until now, have dealt directly with greece. this is the real big one that deals with the entire euro-zone and an important treaty change. >> reporter: strategist paul christopher is hopeful european leaders will hammer out new rules for their union, including a mandatory 3% limit on the deficits of member nations. but what if the meeting is a failure? economist bruce kasman warns there could be big trouble for financial markets. >> i think if we got to a point where we felt the summit was reflecting an impasse, was
reflecting conflicts that were pulling governments apart, i think it could have severely damaging effects on u.s. markets, on equity markets. >> reporter: without an agreement, u.s. investors fear the european economy will fall deeper into recession, hurting demand for u.s. goods and services. but economists say the bigger concern is the global nature of the banking system. >> the financial sector all around the world, but not less in the united states, depends in part on what the europeans decide. because banks around the world hold government debt, and if government debt is ultimately seen as no longer believable, very reliable, very trustworthy, then the holdings of those banks will be sold off, written down. >> reporter: and that, in turn, could spark another financial crisis similar to what happened in the u.s. in 2008. unfortunately, even if this week's summit is a success, that doesn't necessarily mean its full speed ahead for stocks. >> we still have to see whether governments can actually
implement plans, particularly the italians and the spanish government can actually begin to move in a direction of getting their debt down and actually grow. >> reporter: the biggest investor concern is the future of the european union. many strategists do not think the union will split up in the next few months, but they say it's not out of the question in the next few years if european leaders don't follow through with reforms. erika miller, "nightly business report," new york. >> susie: some sharp words from ben bernanke today. the federal reserve chairman responded to recent reports claiming the fed directed over $7 trillion in secret loans to big banks during the financial crisis. in a letter to lawmakers, bernanke said those reports contained "a variety of egregious errors and mistakes." last month, "bloomberg markets" magazine reported that banks reaped an estimated $13 billion in income by taking emergency loans from the central bank.
meanwhile, progress for creditors of lehman brothers, the investment bank whose collapse accelerated the financial crisis. a federal judge today signed off on lehman's $65 billion plan to exit bankruptcy early next year and pay off its creditors. but it won't be the same lehman- - after the biggest bankruptcy in history, all that's left is a collection of assets like real estate, private equity, and banking investments. unsecured creditors will get between 21 and 28 cents on the dollar for their investments, but shareholders will get nothing. >> tom: a cornerstone of the dodd-frank financial reform bill is tougher protections for consumers. but some of those protections have been on hold as the senate spars over who will lead the consumer financial protection bureau. president obama's nominee is former ohio attorney general richard cordray. a showdown vote on his nomination could come as soon as thursday. as darren gersh reports tonight, the debate over leadership at the new agency comes as another market watchdog comes under
fire. >> reporter: republicans and democrats traded jabs today over financial regulation. democrats charged republicans with blocking the confirmation of a new leader for the consumer financial protection bureau. >> without having a director, there are a whole host of rules that can't be written, which only perpetuates an uneven playing field where community banks and credit unions have to abide by regulations and non- bank lenders don't, which is not fair to consumers or industry members who play by the rules. >> reporter: a top treasury official argued the problem goes beyond fairness. with financial markets still unsettled, holding up the implementation of new regulations puts the economy at risk. >> without a director, the cfpb is unable to exercise its full authority, and as a result, our economy remains vulnerable to some of the same regulatory gaps that contributed to the financial crisis, and consumers continue to lack common sense protections.
>> reporter: republicans like alabama's richard shelby promise to hold up the vote, saying the agency needs to be accountable to a board, not a single director. shelby also laid into another regulatory agency, the commodity futures trading commission. shelby said he was bewildered the cftc can't seem to figure out what went wrong at bankrupt broker m.f. global. it collapsed in october as investments in european government bonds lost money. >> according to the m.f. global bankruptcy trustee, as much as $1.2 billion or more of customer funds are missing from the cftc... are missing there... assuming cftc is a regulator, where have you been there? and secondly, do you know where the money is? >> reporter: gary gensler, who once worked for m.f. global
chairman john corzine, has recused himself from the case and referred questions to his colleague. >> we're working closely with the forensics accountants that have been hired by the trustee to try to locate any missing customer funds. we continue to work through those issues, but we have not located all the funds that are missing, but we continue to... >> so the answer is you don't know where the money is. >> that's right. >> reporter: a senate panel voted today to subpoena john corzine, the former c.e.o. of m.f. global to testify on thursday. no word yet on whether he will answer questions or assert his fifth amendment rights. darren gersh, "nightly business report," washington. >> susie: a debate is heating up over insider trading in congress. the house financial services committee heard testimony on a bill today that would stop
lawmakers from trading based on non-public information they learn on capitol hill. the bill would also impose new disclosure requirements on lawmakers and their staff members. but the securities and exchange commission enforcement director warns if lawmakers go too far with the new rules, it could have unintended consequences outside of washington. >> in light of existing insider trading legal precedent, any statutory changes in this area should be carefully calibrated so that they do not narrow current law and therefore make it more difficult to bring federal trading actions against individuals outside of congress. >> susie: right now, lawmakers are subject to the same rules on insider trading as the general public. still ahead-- tonight's word on the street: "technology." thestreet.com's james rogers weighs in with three tech stocks for 2012. >> tom: the owner of the west virginia mine where 29 men died in an explosion last year will pay $209 million in civil fines and penalties.
it's the largest settlement in a criminal investigation of a mine disaster in u.s. history. alpha natural resources acquired massey energy in june. the company will pay $46 million in restitution to the families of those who died. that's about $1.5 million per victim. alpha natural resources also will spend $80 million to increase safety in all of its underground mines. today's settlement addresses only the corporate criminal liability for alpha natural resources and massey. the investigation is ongoing, and others, including former executives at massey energy, still could face prosecution. >> susie: on wall street investors are on standby. they're waiting to see what happens at the european summit. and there have been summits before with high hopes and then big disappointments. so they're on standby. >> tom: no doubt about it. the european leaders really are in the driver seats when it comes to u.s. investor confidence. let's roll with tonight's market focus.
it was a mixed market for stocks as investors await word out of europe later this week on plans to address the debt crisis there. we can call it a quiet day of trading. the s&p 500 spent much of the sessions trading in a narrow range. the index caught a bid with about 90 minutes left in the session, but it lost steam, ending with a fractional gain. that means the index has been able to retain the sharp gains from last week, putting it close to the top of its range over the past 90 sessions. general electric led the dow industrials with its almost 2.5% gain. volume was heavy as the stock is at its highest price since halloween tonight. a move over $17.25 would take it to its highest price since august.
today's buying as the company's finance business forecast double digit earnings growth next year, thanks to better lending margins and improvement with its real estate portfolio. the financial unit also said it is on track to resume paying a dividend to its corporate parent next year. fellow dow industrial stock and conglomerate 3m rallied 1.5%. the company's outlook for next year was on the higher end of expectations. the company sees slow growth in the u.s., and the c.e.o. said he thinks europe will experience a mild recession. the day after the standard and poor's warning about european government credit ratings, the strongest stock sectors today highlight the general lack of conviction. the material sector was the best, but even it was up less than 1%. health care and telecom were up a half of a percent or less. one of the health care stocks moving higher was drug maker pfizer. shares rose 2.5% on heavier than usual volume.
p-f-e stock was able to break above $20 per share to close at its highest price since late july. a study of a bladder medicine in elderly patients had encouraging results. fellow drug market eli lilly led the health care sector, jumping almost 4%. it received a bullish research note from the analyst at bernstein who thinks shares could surge if it gets positive results next year from an alzheimer's treatment. a note worthy milestone for mcdonald's. today's less than 1% gain may not seem like much, but it is enough to push m-c-d to an all- time high. over the past year, mcdonald's is up about 20%. casual restaurant operator darden restaurants saw its share price drop more than 12%. darden runs the olive garden and other chains. its quarterly outlook was disappointing, pushing the stock to close less than $1 off its 52
week low hit in early october. a couple of apparel retailers were moving after the close tonight. women's clothing store talbet's closed just above $1.50, but after the close, shares jumped as much as 70% to over $2.50. reports indicate the company has received a buyout offer for $3 per share. men's wearhouse lost about 2% ri hengdusi s ton, but rallied 8% after the close. it reported strong earnings growth. it reported higher selling prices which helped improve its profit margins. it was a relatively quiet day for commodities. crude oil closed over $101 per barrel, gasoline futures rose 1%. precious metals saw a little action ahead of the european leaders meeting later this week. silver gained 1%. and that's tonight's "market focus." >> susie: pink slips on the way at citigroup-- c.e.o. vikram pandit told an investment conference today that the bank
will be cutting 4,500 employees over the next few quarters. citi plans to take a $400 million charge tied to those layoffs. pandit also said citi may have to take a $200 million charge to write down the value of its own debt. >> tom: one of the companies involved in the gulf of mexico oil disaster last year claims halliburton intentionally b.p. is not telling the truth. b.p. claims oil service firm halliburton intentionally destroyed evidence about the work it did on the cement used on the deep water oil well that blew out, killing 11 workers. that blowout led to the worst off shore oil spill in u.s. history. halliburton called the accusations it destroyed evidence untrue.
>> tom: it's one of the hottest categories for holiday spending, but the stock sector hasn't been so hot this year. tonight's word on the street is "technology." i recently spoke with james rogers, a reporter at thestreet.com, and began by asking him for the outlook for tech spending in 2012. >> you know, it's uncertain with so many things hanging over the economy at the moment, and the super committee. and with europe there's a lot of things ongoing. and there could be stocks, high points >> one of those is one that's been around for a century. ibm. 30% of the revenues are from europe. and the mideast and warren
buffet owns it. ask that sent the stock to a 52 week high. ibm isn't the sexiest name in tech, but it's a consistent dividend payer. this is a return of $109 billion in shareholders since 2003 in the form of dividends and buy backs. strategically i like what ibm has done shifting from low margin areas into high margin areas. and that helps weather previous economic downturns, and i think we'll see the same again. good return on equity. profit margin and earnings growth. i think moving forward, the company is well positioned, despite the exposure to europe. put a lolt of focus into emerging markets. i think warren buffet isn't stupid. he got into this stock because it's stable and dependable, and investors can doot same. >> they call that growth geographys.
sales force.com is another one you mrook at crm. it was at a 52 week low -- cloud computing is hot. where is the business coming from for crm? >> at this point in time, sales force uses cloud computing and the internet to manage customeridate a. it hasn't had the easiest times. there's a big pullback in the stock after the third quarter numbers weaker than expected growth. and i think it's a buying opportunity here. i still like the core business story. there's been a lot of growth there. it's taking information from social networking, and the key thing to remember is we're only scratching the surface of the market. sales force.com has been a trail blazer, and i think it will continue to be.
>> tom: do you own any of these stocks? >> no, none whatsoever. >> tom: you can read the article on facebook pnltd com, and that's james rogers with the street pntd com >> susie: here's what we're watching for tomorrow: the federal reserve is expected to release its monthly consumer credit report. we'll also see the weekly reports on mortgage applications along with crude and gasoline inventories. and michael farr is our "street critique" guest. email your questions to streetcritiqueatnbr.com. it's one of the largest settlements for investors in mortgage securities-- bank of america will pay more than $300 million to settle claims over mortgage securities sold by its merrill lynch unit. the class action lawsuit was led by a public employees pension fund in mississippi. the fund claimed the investments were backed by poor quality mortgages written by sub-prime lenders, including countrywide
financial and indy-mac. a federal judge has to approve the settlement. that may prove to be tricky since the settlement includes no admission of guilt by b-of-a. >> tom: chrysler is going back to the future. the auto maker plans to reintroduce the dodge dart, with a little italian flair, thanks to chrysler's parent company, fiat. the new compact car will be unveiled at next month's auto show in detroit. it will be an important vehicle for chrysler as it works to build more fuel efficient cars. the new dart has a much more up to date look than the last time we saw it in the mid-1970s.
>> tom: tonight's "beyond the scoreboard" looks at the green bay packers stock sale. rick horrow is a sports business analyst and c.e.o. of horrow sports ventures. tonight's beyond the scoreboard finds the stock comes with plenty of restrictions. a sports analys oceo of sports vture. soyou want to spend $140 million to renovate your stadium called la lambeau field in green bay. you do a stock offering. the greene bay packers hope to raise $250 million, and raised over 400,000 in the first few minutes. the ceo jumping for joy talking about the success. paib not askful as we think.
why? a few reasons f. you're a fan, you can't trade t you can't sell it. you can only give it to immediate family, and you can't leap frog the other 85,000 people on the packers waiting list for the stadium. you get to hang it on your wall. for the team, the packers were grandfathered, and they get to do this, but nobody else. andifiablely, baseball, basketball, hockey, football. if you wanted to raise money for stadiums, you have to do it the old fationed way. deal with the equity investors. >> susie: and finally, it looks like steve jobs is more popular in print than online. amazon.com today said the hardback version of walteron ste bs was i t selling bk in print this year. the bio only clocked in at number three on its list of e-book top sellers. the stats are impressive either way, since the book only went on sale at the end of october. and tom, amazon could soon top
its own list. little, brown and company has signed writer brad stone for a book on the spectacular rise of the retail giant. >> susie: that's "nightly business report" for monday, december 5. we want to remind you this is the time of year your public television station seeks your support... >> tom: ...support that makes programs like "nightly business report" possible. >> susie: thanks for joining us, and don't forget to support your public television station. i'm susie gharib. good night, everyone. you, too, tom. >> tom: good night, susie. good night, everyone. i'm tom hudson. we'll see all of you again tomorrow evening. "nightly business report" is made possible by: