tv Nightly Business Report PBS April 1, 2011 7:00pm-7:30pm PDT
>> tom: more americans are finding work as the employment picture brightens. over 200,000 jobs were added to payrolls last month and economists think the labor market is finally on the right path. >> the march employment report was very solid. it was an encouraging indication that hiring is starting to strengthen and to broaden out. >> suzanne: we ask the president's top economic advisor if the hiring will continue. you're watching nightly business report for friday, april 1. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> suzanne: good evening, everyone. susie gharib is off tonight. the u.s. economy is creating jobs in a meaningful way and it's no april fools. tom, the march employment report was better than expected, capping off the strongest two months of hiring since the recession started. >> tom: suzanne, the labor market recovery finally appears to be gathering speed. the unemployment rate slipped to 8.8% last month. that two-year low came as more people stopped looking for work and were no longer counted as unemployed. employers added 216,000 new jobs
to payrolls and the february number was revised higher. >> suzanne: it was the kind of labor news that wall street and main street have been waiting to hear for a long time. >> reporter: not one, but two straight months of solid job creation for the u.s. economy. the private sector did the heavy lifting in march adding positions across many industries, including retail, manufacturing and health care. still, lots of americans who stopped looking for work during the recession have yet to start pounding the pavement again. economist bruce kasman calls it a painful healing. >> what we're seeing is less people losing their jobs per month. the people that are out of the labor force are still have a very difficult time coming back into a job. that's a point of structural weakness in a number of regions, a number of sectors that's not going to go away. >> reporter: most economists agree the job market is making good progress, after months of poor traction in hiring.
but, they're concerned about the lack of pay raises. paychecks were again flat in march with average hourly wages holding just below $23. over the past year, wages have lagged inflation, not what consumers need as food and energy costs spiral higher. >> i think what it does mean is that we're going to be somewhat vulnerable here in a world in which gasoline prices continue to pick up and that some of the momentum in the economy is definitely going to be blunted by the energy price shock. >> reporter: the federal reserve has engineered much of that momentum stimulating the economy with low interest rates. the question now brewing on trading floors is whether the central bank will feel compelled to raise rates sooner rather later. economist julia coronado says not a chance. >> i think they're going to be very cautious. i think they're going to end their quantitative easing program in june, and hold steady for a while and see how conditions evolve. and, then maybe next year move toward raising interest rates. >> suzanne: weighing in on the interest rate debate, new york
federal reserve bank president bill dudley said today he sees no reason to start tightening monetary policy. dudley also called the recovery quote, "tenuous and far from the fed's goal of full employment." meanwhile, president obama welcomed the dip in the unemployment rate, calling it a sign of strength. for more on the administration's reaction, darren gersh spoke with austan goolsbee, the chairman of the president's council of economic advisers. darren started by asking goolsbee to describe the job market now. >> first three months of this year we added more than half a million jobs. and if you look at the private sector, the last one year and one month, we've added 1.8 million jobs, the biggest drop in the unemployment rate over four months that we've seen in 27 years. so i'd say overall, this is the definitely the right trend, though we've still got a lot of work to do. >> how soon do you think we'll
get back to something approaching normal? >> i don't know. we make an official forecast, and it shows that the unemployment rate-- our forecast is that it will be coming down pretty steadily. but we've got a long way to go. i mean, this was the deepest hole since 1929, and we're making good progress coming out of it but it's going to take a while. >> some states have been cutting back on unemployment benefits and reducing the amount of time that workers can be on unemployment. is this the right time to begin doing that? >> well, you know, it depends on the state. there are some states that have quite low unemployment rates. and the way the unemployment insurance system works, if you're in a state where the unemployment rate is-- has dropped a lot and is low, that naturally happens. >> what about 20-somethings. their unemployment rate is 15%. what can be done to help them? >> look, the youth unemployment rate is-- is too high. but the overall unemployment rate is too high. we've been making good progress
getting people back to work. but we've got a long way to go. the number one most important thing for young people is the same as for all of the others who are looking for jobs-- we've got to get the engine of growth really humming, like we've seen in the first three months of this year. but i think, also, the education and the training programs that the president has been an advocate for are quite important in case of new workers coming out into the labor force for the first time often that they-- they've got to have the skills they need to succeed. >> so we had good news on the number of jobs but wages didn't budge at all in the last report. and c.e.o. pay, though, was up 27% last year. are we going to a two-track economy? >> you know, i certainly hope not. we've get to get wages up. you know, you saw in december the president put in place this substantial payroll tax cut for 150 million workers. that's trying to put more money
in their pocket and raise their after-tax pay. the most important thing is to get people back to work. once we get them back to work, we want to get wages up, too. and so wages didn't go down. they just remained stable this month. >> so what about the concerns that we might be going into a two-track economy where we're going to create a lot of low-wage jobs but the higher end is going to do very well? >> we know over entire-- the president throughout the campaign emphasized it was the first boom in recorded u.s. history in 2000 where the middle class family income went down by $2,000. i think if you look at this jobs report, the strength in it is the broadbased nature of the employment creation. if you start looking at manufacturing has had the best year for employment growth that it's had i think in 13 years, things like that, where across many sectors, you're starting to see a comeback, you're going to
start seeing incomes rising and that's the way you get middle-class income. >> tom: here are the stories in tonight's n.b.r. newswheel: the employment numbers helped stocks begin the second quarter on an up note: the dow added almost 56 points, the nasdaq rose 8.5 and the s&p 500 was up 6.5. volume: 910 million shares moving on the big board, just over two billion on the nasdaq. since last friday, the dow industrials rose 1.25% and hitting more than a two-year high today. the nasdaq added 2%, gaining four out of five sessions. and the s%p 500 added 1.4% this week. oil prices topped $108 a barrel in new york trading today. but crude pulled back settling just below that at $107.94 a barrel, up $1.22. it's oil's highest level in over two years. s&p cut ireland's debt rating--
a day after the nation proposed a plan to shore up its banks. the downgrade leaves ireland's debt three notches above junk status, but s&p called the country's outlook stable. meanwhile fitch ratings slashed portugal's debt rating today, putting it on the verge of junk status. >> tom: still ahead, you're hired. we talk with a recent grad finding work in the non-profit sector. and tonight's market monitor guest is buying a japanese automaker stock. gary motyl tells us which one. he runs templeton global equity. >> suzanne: the other big story today involved a new bidder for the big board. the nasdaq and the intercontinental exchange are making a hostile offer for the new york stock exchange. the bid topped $11 billion and comes weeks after the world's largest stock exchange agreed to a merger with deutsche borse. how does the battle play out? erika miller reports. >> reporter: talk at the new york stock exchange today was about the exchange itself. floor traders were not surprised that the nasdaq and the
intercontinental exchange are making a play for the big board. but many specialists, including jonathan corpina, hope the nyse will stick to its original plan to merge with deutsche borse. >> i think everybody on the floor community is concerned and would be concerned if nasdaq did come in an take over this company. there's a history between nasdaq and nyse and they've been adversaries for so long that it's interesting to hear now how much the nasdaq would embrace the nyse and the nyse model. >> reporter: nasdaq's joint bid with the intercontinental exchange would divide the nyse into two parts. the ice would get the derivatives business, while the nasdaq would take the stock exchanges and options portions. but some skeptics wonder if nasdaq could even pull off a deal, because it would face a hefty debt burden. and both moody's and s&p downgraded nasdaq's credit outlook from stable to negative today. analyst rafay khalid says nasdaq had to take the gamble. >> i believe that they threw their hat into the ring not to be left behind.
but it's almost a bid of desperation, what they're trying to do. >> reporter: a deal between the nyse and the nasdaq would face significant obstacles, not the least of which is antitrust scrutiny. the two exchanges are direct competitors. so a merger would create a monopoly in the market for stock listings in the u.s. but the nyse's deal with deutsche borse also has anti- trust concerns, because the new company would have a lock on european exchange traded derivatives. experts say the key to approval of either deal will be how regulators define markets: >> in the u.s., if the nasdaq can acquire the nyse, then regulator are going to be asking is the cash equities business a global business or a u.s. based business. same thing in europe-- is the derivatives a global business or a pan-european business. >> reporter: it also boils down to which option regulators find more palatable: the creation of a mammouth u.s. stock exchange or a german company owning the iconic big board. erika miller, "nightly business report," new york.
tonight's market focus. >> tom: a late afternoon swoon wasn't enough to knock the major indices into negative territory. they hung onto small gains. let's start by looking at the dow this year. with today's small gain, its up almost 7% since january first. we roll out a three-year view showing the dow has popped to a new post-recession high. the index is at its highest price since the late spring of 2008. it's up 87% from its recession low. among the leaders of this rally for the dow has been caterpillar. shares led the index today up more than 1.5%. that was enough to push it to a new 52-week high. cat shares have been building on the back of stronger farm
commodity prices and emerging market demand. the industrial sector was the strongest sector today with heavy equipment maker joy global on top. shares jumped almost 3%. it also hit a new 52-week high. joy has also benefited from a booming mining business. while we're on the topic of mining, here's the past quarter for the gold trust exchange traded fund. it's been bouncing off of $140 for the past month. during this quarter, this fund saw its biggest every outflow of money. from gold to gambling. macau, china reported a record month of gaming revenue. these three-- mel-co, wynn resorts and las vegas sands all have joint ventures in macau. each saw nice rallies today. business isn't so sweet at krispy kreme doughnuts. sellers took a 21% bite out of its stock after reporting a fourth quarter loss on weaker profit margins.
meantime, ocean shipping company alexander and baldwin jumped to a new high, up almost 20% after it was disclosed hedge fund manager bill ackman owns almost 9%. a couple of fiber optic equipment makers that had been high fliers fell today. exfo shed 25% thanks to disappointing earnings and guidance. that took 8% out of j.d.s. uniphase. a trio of new companies hit the market this week. private equity firm apollo global went public at $19. health supplement retailer g.n.c. holdings priced at $16. and finally, qihoo 360 technology. this is china's third largest internet company based in beijing. shares have doubled from their initial price of $14.50. and that's tonight's market focus.
>> suzanne: ford outsold g.m. in march as the u.s. automakers continued their comeback. but the disaster in japan has clouded the outlook for sales of both japanese and u.s. vehicles. that's as imports of parts and vehicles have stalled from the country. ford sales were up 19% last month. it sold more cars than g.m. for the first time in a year. still, g.m. sales rose 10%. chrysler was the u.s. standout, enjoying a 31% sales jump. toyota continued to struggle after a string of recalls. sales fell almost 6% for the automaker, while honda's soared 23%. >> tom: here's what we're watching for next week:
our friday market monitor guest is elaine garzarelli, president of garzarelli capital. the federal reserve releases minutes from its march policy meeting and we'll see monthly wholesale trade inventories. monday, with public worker unions under pressure in several states, we'll talk with a.f.l. c.i.o. president richard trumka. >> suzanne: american apparel may file for bankruptcy. the company warned today it may seek chapter 11 protection or liquidate its business as its finances get worse. known for risque marketing campaigns, the retailer reported a fourth quarter loss yesterday. the bankruptcy warning also follows recent allegations of sexual harassment against the company's controversial c.e.o. dov charney. >> tom: bankrupt video chain blockbuster heads to court on monday and it may have two new suitors. dish network and billionaire investor carl icahn have reportedly made bids for blockbuster. in february, a group of hedge
>> tom: the disaster in japan and upheavel in the mid-east hasn't hurt investor appetite for stocks. and that includes tonight's market monitor. he's gary motyl, chief investment officer at templeton global equity. welcome back to nbr, golf course nice to see you again. >> thank you, tom. >> tom: let's talk about where we were a year ago and where wea today. a year ago when you were here you were finding value across the grob. are you still? >> that's still the case. united states, europe, asia, we continue to find bargains everywhere. >> tom: what type of bargains are you finding? what types of industries? >> it's interesting that we've been finding a pretty eclectic mix of names over the last several months, financial stocks some energy stocks. >> tom: across the board. what about emerging markets? i know you voiced concerns about emerging markets a year ago. we've seen volatility in the global markets amplified in emerging markets. time to get in? >> a number of those stocks have come down in last few months and they're back to levels where we
think investors can make some money going forward. >> tom: you mentioned europe. europe has been wrestling with debt problems for the better part of a year now. now it has higher inflation. next week it may see higher interest rates. are you concerned about putting money to work on the continent? >> we think to a certain extent the sovereign debt issues have been a bit overblown. you've got a $500 billion plan which we think can keep things under control for the next two, three years, and the majority of companies in europe are really global in nature, and the valuations there are extremely attractive. >> tom: does the inflation picture in europe concern you at all, or does that make you a net buyer? >> we're watching the inflation picture globally. we're not concerned about a sharp, stand increase there. we think some of the inflation pressures are more of a temporary phenomenon. >> tom: you certainly run the global fund. what about japan, last three weeks, wrestling with the twin disasters of the earthquake and the tsunami, and of course the nuclear problem. >> this is a really unfortunate situation. we have operations there. fortunately, none of our colleagues were injured. >> tom: good to hear.
>> very difficult. we think japan can recover from this, just as it recovered from the kobe earthquake. on an evaluation basis, a few stocks have now moved back to levels which we find attract identify a long-term basis. >> tom: so putting money to work in japan, including toyota motors. it has come off by about 50% from the high before the earthquake. if you like it at 80, what's the price target? >> we think this is a very good stock for the long term. you've got a company with a very strong balance sheet, excellent technology at its disposal and some of the issues people have been concerned about the last year or two we think can be resolved in the next six months or so. >> tom: do you think it permanents better than the overall market over the next 12-24 months? >> we would expect so. >> tom: okay. you also are going asia and technology with china mobile. this stock price has gone from $50-plus, down below $45 or so, although it's rebounded lately. trying to catch a falling knife?
>> we think the stock's back to levels which make it very attractive long term. here's a company that got itself into a bit of trouble with 3g systems, some proprietary natures that weren't competitive. they're back on track there. they also had a bit of an issue with the use of cash. some investors got very concerned when they took the cash and bought a bank. >> tom: you're confident the problems have been taken care of? >> you'll have them implement a new 4g system that will be very well received. >> tom: a year ago you were with us, march 19 of 2010. two stock picks, b.p., a month before the oil disaster, down 21%. avanity us, the drug maker, do you like any of these still? >> aventis has been a mediocre performer, along with most of the pharmaceuticals globally. we have received a dividend yield about 7%. we like it long term. the valuation still looks good. >> tom: how about b.p.?
>> we thought the stock overreact to the episode. it has a nice recovery here, and we think the valuation still looks good, and we definitely continue to hold the stock. >> tom: how about the rest? do you own them those? >> i do not own them personally but they are held in the templeton mutual funds i own. >> tom: our market monitor gary motyl, templeton global equity. >> suzanne: just a reminder, tax day, april 18, is getting close. if you're working on your return this weekend and get stumped, our tax guru can help. go ahead and submit your question for kiplinger's kevin mccormally on our website nbr on pbs.org. kevin joins us starting april 11 for a week of his last minute tax tips. finally tonight? applications to americorps have almost doubled since 2009, as many young people turn to the nonprofit sector for jobs. jamela simon graduated from penn state in december, and found work with the community service program in washington, d.c. in our ongoing series "you're hired," simon tells us why
working for americorps works for her. >> my name is jamela simon, and i am a site coordinator at lift d.c. i work one on one with clients to meet their needs. by helping them find housing, employment, apply for public benefits. i always had this obligation, this urge to work in the community one on one with people, whether it be for a community organization, nonprofit, or just any organization. this job, working with americorps, gave me a way out. it gave me a chance to do what i want to do, and at the same time, gain financial stability and independence. through the americorps program, they allow you to not only defer your loans until after you have finished your term, but they also give you the eli siegel award, which is approximately
$5,000 to use towards repaying loans or to further your education that, along with the sense of community based scholarship and service, encourages people to want to join the americorps program. it's a great experience. why sit around and wait for someone else to step in and intervene and meet the needs, the domestic needs of the people when you can do it yourself. it makes you feel like you're actually... actually making a difference. >> suzanne: that's "nightly business report" for friday, april 1. i'm suzanne pratt. goodnight everyone and you too tom. >> tom: good night, suzanne. i'm tom hudson. have a great weekend everyone.. we hope to see all of you again next week. "nightly business report" is made possible by: