tv Nightly Business Report PBS May 4, 2012 7:00pm-7:30pm PDT
>> this is nbr. >> susie: good evening, i'm susie gharib. jobs grow slowly, just 115,000, some worked last month. >> tom: some beg selloffs today in stocks and oil as investors worry about the health of the u.s. recovery. >> susie: the economy is one topic for warren buffett here in omaha, ahead of berkshire hathaway's annual shareholder meeting. >> tom: that and more tonight on nbr. we begin this evening with the april job numbers. the u.s. economy added just 115,000 jobs last month, that's way below what economists had expected. it's the slowest job growth we've seen in six months. the unemployment rate did
manage to fall slightly down to 8.1%, as more people dropped out of the work force. wall street though didn't like the job numbers at all. the dow fell 168 points, the nasdaq lost 68. the s&p 500 off 22. sylvia hall reports. >> reporter: while the economy added jobs in april, it wasn't nearly enough. for the second month in a row. >> the recovery continues, the private sector is continuing to generate jobs, but it's muted. >> reporter: professional and business services, including temporary workers, picked up the most jobs in april. but government lost jobs, so did the transportation and warehousing sector. >> inventories have been rebuilt, we don't need as much of that activity, some of those stocks are being drained and mafrers are rebuilding, rather than rebuild inventory. >> reporter: it's a sign of frustration many feel about job prospects.
342,000 people stopped looking for work in april. and fewer workers raised concerns about how much the recovery is slowing. but today's report is not seen as a sign of economic growth headed for a halt. >> the participation rate went down again, re ached a new low. that weakness in labor supply has been striking and continuing here for quite some time. >> reporter: sylvia hall, "nightly business report," washington. >> the omaha world herald, the paper is warren buffett's newest acquisition. "nightly business report" is brought to you by: captioning sponsored by wpbt
>> susie: while the weak reading on jobs leak stopped, it also drove oil prices lower. >> tom: this was the biggest one-day drop in oil prices that we've seen since december. the official data here oil is down over $4, to 98 a barrel, the first time since february that oil has been below $100 per barrel. >> i think a lot of peel don't realize this economy still has huge amounts of problems and hills to climb. with geo political themes on the sidelines right now, by that i mean iran, it was the perfect storm for correction. >> tom: more now on jobs, austan goolsbee was the chairman of the president's council on economic advisors under president obama, professor at the university of chicago, booth school of business. austan, always good to see you. the job numbers not encouraging, are they?
>> no, but they weren't terrible, but they certainly weren't good. i think it's natural reflection that compared to the end of has year things slowed down a bit, they are still growing, just not growing fast enough to really get progress in the labor market of any substantial form. >> tom: you mentioned the end of last year, let's take a look at the trends we've seen. last year compared to this year. we saw the job market gains really build after springtime last year and then all off the cliff until may and didn't pick up until labor day. this year we've seen it slow in the first three months of the year and down again this month compared to last month. we've seen a repeat of what we can expect for this summer? >> it feels lining it, and it feels ironically like the year before that, too, where you came in at the end of the year feeling good and then at the beginning of the next year it kind of dipped off. i think what we have to see is how is manufacturing, how is
production, how is consumption, how are those big drivers of economic growth, how are they going to do as we go into summer and fall, because that will determine whether the job market sustained improvement or just stagnant. >> tom: is there something we're seeing in the hot or warmer weather months that is impacting the job market? is there something going on in this 12-month cycle, strng job growth the begining and end of the year, but not the middle six months? >> yes, possibly. it's... some of the months were high than would be expected and now maybe you're getting some payback. we've seen the pattern in the data that the end of these years has been stronger than the beginning of these years, and then that just ends up translating directly into the job market. the other thing that's a little weird is the numbers
get revised up, looking backward, so they come out and they look bad, but then they revise up the next month for what you already saw. >> tom: less than a half minute left. i got to mention the participation rate, we heard it in our reporting out of washington. the percentage of the working age population in the labor market hasn't been this low since 1981. what do you make of it? >> well, you know, some of it is obviously from the aging of the population and demographics it but a big chunk of it is not and that's the weakest part of the labor market is so many dust couraged workers. so as the -- discouraged workers. so as the economy starts getting better, you easily could see the unemployment rate rise, even though it getting better as some of the people come back to the labor force. >> tom: professor, we'll heave it will. austan goolsbee from chicago tonight, thanks, austan. >> susie: turning now to europe, it's election weekend this sunday in europe with both france and greece holding important contests, first the
parliamentary elections in greece where its two ruling parties are polling at his foric lows. at issue, whether they can... meanwhile in france, the socialists lead over sarkozy has narrowed. if elected hollande will try to forge a new consensus with germany on growth. ian bremer explains why holland is the favorite. >> he's the favorite in part because he insists that french leaders need to worry about france first and ump second. -- and europe second. >> susie: president sarkozy said today a socialist victory could turn france into another greece.
some good news for berkshire hathaway shareholders as they head here to omaha for this weekend's annual meeting. warren buffett's company reported first quarter profits surged 65%. the oracle of omaha is sure to get lots of questions about that and he might also be asked about the future of the newspaper industry. now that buffet bought his home town paper. not long ago, buffett shocked investors when he bought the omaha world herald, it was a surprise because he had told shareholders the newspaper industry's prospects were so bad he wouldn't buy a paper, quote, at any price. so what changed?
that's what i asked the world herald c.e.o. terry kroger. >> he's familiar with the herald, he carried it as a kid. so i think that familiarity made him comfortable enough with our business. first of all to look at the books. once he did that and he learned that we were operating pretty darn well, in a tough environment, i think that got his attention and he said, you know, this is i think what he said to our shareholders was he didn't expect remarkable return, but he expected a... >> susie: so there you are and he says he wants to buy the omaha world herald. what was your reaction? >> the first time i went to the office to talk about this is with a little nervous, and i don't get nervous really, i was a little keyed up. to his credit, within 30 seconds i was completely comfortable and felt like i was talking to my neighbor across the kitchen table. he's a very, very con jeanial
-- congenial person. >> susie: what was it like to negotiate with him? >> we didn't really create the price. he had an offer for our company at book value, and we said that sounds good to us. >> susie: it wasn't a splashy deal. warren buffett paid just $200 million. but for the world herald it was a blockbuster. the paper had been family owned for most of its 137-year history. first as the omaha world, and even after it merged with the omaha herald. in 1979, e employees took over ownership. but in recent years the company faced a financial squeeze. as long-time employees cashed out, and fewer younger workers bought in. those worries disappeared when warren buffett came calling. no wonder he got a standing ovation from the newsroom staff on the day the purchase was announced. >> people walked in to the
meeting nervous, what is this about, and then to have that kind of an ending to it, that kind of result, i think people were just relieved and thrilled all at the same time. >> susie: berkshire hathaway is obviously one of the biggest businesses here in omaha. how do you cover that day in and day out now that buffett owns the paper? >> we will not change our coverage, he doesn't expect us to change our coverage, that's just not the discussion. we will cover him, we are likely to not agree with him on occasion, and that's part of the game here. >> susie: so what's it like having warren buffett as your bosnia? >> it's terrific. what i can take,... we look at a great investment idea or something he's read and he thinks i might be interested in. but i'm amazed at the access i have to him going the other way. if i want advice about
something, i get immediate access, it almost shocking. >> susie: this weekend will be the first time you're attending a berkshire hathaway annual meeting. what are you expecting? >> what i've learned about warren buffett in the short time that i i've known him is that i expect it to be a fun event, i think there will be a lot of people there, so i expect to meet a lot of great people, and learn a thing or two. >> susie: tomorrow i'll be covering the berkshire meeting and i also hve an interview with warren buffett and i'll have a complete wrapup on monday.
>> tom: stocks saw a rise from the opening bell today and stayed down for the entire session. selling came after that disappointing jobs report, the s&p 500 hitting out lowest level of the session just after 12:30 p.m. eastern time. as you would imagine on a stiff spelloff like this, trading volume did pick up, 824 million shares,. after two straight weekly gains, the major indices lost steam as we saw indications of a slowing economy, from today's jobs reports to retail sales and manufacturing data earlier this week. compared to last friday, the dow is down 1.4%. the nasdaq lost 3.7% this week. the s&p 500 was down 2.4% over the past five sessions. today's weakness was concentrated in high-growth and economically sensitive areas of the market. the technology sector led the losers, along with energy and consumer discretionary sectors-- each down by at least 2%.
first solar was the weakest in the technology sector, falling more than 6% to a new low. the company named a new c.e.o. late yesterday, but after another weak quarterly performance. natural gas producer southwestern energy shed more than 7%. its first-quarter profit fell on the back of lower energy prices. and "washington post" was the weakest consumer stock, falling to its lowest price since december. the company's education business, kaplan, lost money in the first quarter as for-profit education has come under regulatory pressure over student financial aid money. with stocks selling off, investors crowded into the bond market, looking for some relative protection. that sent bond prices up, pushing bond interest rates down. the yield on the 10-year government benchmark note is at 1.88%. its lowest in three months. troubles in the corner office continue at yahoo. after only a few months on the job, c.e.o. scott thompson is under fire for what the company called an inadvertent error. it turns out he does not have a
computer science degree as originally claimed. shares fell more than 1.5%. an activist hedge fund that owns about 5% of the stock first raised questions and now thinks thompson should leave yahoo. it was a much different reception today for linkedin. shares jumped 7% after reporting strong earnings thanks to connecting professionals with companies looking to hire. the latest company to give us a clue about the chinese economy is estee lauder, warning of a potential slowdown of its business there. the stock fell about 5% after the firm's profit forecast was less than anticipated. shares have been strong as its u.s. business was growing strong enough, making up for declines in europe. if you are a dish network customer, and a fan of the cable television show "mad men," you are in the middle of a corporate fight. the dish network has threatened to drop all amc cable channels from its line up in june, pointing to the channel's costs "compared to their low viewership." dish stock fell 4% while amc networks dropped more than 3%.
dish argues amc programs like "mad men" are available on other platforms like netflix. in our exchange traded fund market flash, all the actively traded funds fell by at least 1.5%, led by the 2.5% drop in the nasdaq 100 fund. and that's tonight's market focus. >> susie: facebook stock today, a big stock sale to the public, j. p. morgan is leading the stock offering and heralded the big win by raising a facebook flag at its manhattan headquarters. the offering values the social
media giant as high as $96 billion. all this week we've been looking at the facebook economy, its impact on how we do business, and the businesses it spawned. pixable is one of them. it's called pixable and it allows you to see all your friends photos at one time, instead of jumping from profile to from file. >> it brings everything kind of together, right, so especially because i travel so much i get to see what my friends and family are doing. >> the company was founded by three m.i.t. business school students after a class trip to japan. the organizer had trouble making a photo book. >> it was frustrating for them to collect all these photos from different people, they
wanted to put them on facebook, flicker, some in e-mail and we were saying there's really not a way of putting all the photos that people are sharing into one place. >> but pixable does more than just post photos, it figures out which ones the user wants to see most. for now... >> it's important to all the social networks, it's the ultimate way of expressing themselves. our vision is that wherever there are photos in the social network is where we'll be. >> the service is free and there are no advertisements, so pixable is not yet profitable. its venture capital investors say the focus now is growing users. >> we want to see the users love of the product, that they're coming back every day, spending a lot of time on the site that this is a meaningful experience for them. >> but pixable faces lots of competition from other websites, facebook one of those recently, instagram, for a billion dollars, and it could use instagram to create its own version of pixable.
>> we don't see this as a big possibility for them. facebook is doing an amazing job and has huge plans, and they have huge fish to fry. for them to be solely focused on one product like photos, wouldn't be the correct way for them to do their platform. >> pixable has 3 million users, it hopes to reach 20 million within 18 months. at that point the company says they may consider selling advertising. erica miller, nbr, new york. >> tom: as investors await that facebook stock sale in the weeks ahead our free market monitor guest says stocks are still attractive. erikry steuben -- ristuben. what about these disappointing job numbers, does that cause you pause to own stocks for the next few months? >> well, certainly it shows the economy of the united states has been growing at a robust rate. we didn't expect it to be.
we think it's going to grow between 2.5 and 3%. with those numbers you're probably towards the low end of this rage, the six months, last six months taken in total average job growth just shy of 200,000, we think that is exactly what you would expect for about 2.5% growth. >> tom: but pull out here a little bit because we're seeing more economic sectors point to a slower economy, retail sales, manufacturing this week, the jobs number. in the meantime corporate earnings have been better than expected in the first quarter. so how do we balance these two together in the minds of investors? >> well, yeah, i think it's really about expectations. earnings are going to continue, they're going to grow at a slower rate than they have been, which is when they've been doing for the last year. profit margins will start coming down in corporate america, so you'll probably be disappointed. the stability of the overall economy on a global basis we think is better this year than last year and we're seeing a stumble and not a fall in the economy. and that should lead to higher
equity prices toward the end of the year if not sooner. >> tom: looking at a more stable relative environment for you as investors, comcast, cmcsa, well-known or its media properties just picked up, is trading close to out highest price. what's to push values higher? >> well, i think that expectation that people are going to be able to afford cable and they'll avail themselves of entertainment for a longer period of time be they had feared a few months ago. you've seen a pronounced rally already in comcast, we think there's more to go. >> tom: you also like microsoft. obviously software and technology, built of an entertainment play though, nice 2.5 dividend yield for this tech giant. a lot of folks like this stock because of the upcoming windows release. are you among them? >> yes, we're among them, and if you look at the common theme in a lot of the names that we like or that our managers like are really kind of industry leaders, they've
got high franchise value, and kind of a slug it out type 2.5% growth in the economy. these are the kinds of companies that typically do better than others. >> tom: and j. p. morgan is a monk those that fits that bill, j. p. and the dow stock, you're not afraid of banking, not too concerned about any european ripple effect here? >> we think that the odds of a true banking crisis in europe are greatly diminished than they were last year. it something to worry about, but not something to lose sleep over. in the u.s. we think that the fact that the yield curve is flatter will really force banks to actually lend, which should be good for earnings, particularly large markets or banks. >> tom: which is after all how banks are supposed to make money, by lending. previous picks in november you liked google and halliburton. google unchanged hallly burton down 10. do you still like them? >> we have sold our
halliburton, and across the energy sector. we do sill like google. >> tom: outside of halliburton, do you own positions in the other four? >> yes, the firm absolutely owns those stocks. >> tom: erik ristuben. >> susan: >> tom: after today's market sell-off and the disappointing jobs growth, you may not feel like a party. but tomorrow is cinco de mayo. suppliers of premium tequila already have started celebrating. sales of the luxury spirit rose 11% last year, and its popularity is not taking any siestas. suzanne pratt reports. >> reporter: jorge vasquez has been bartending for six years, and is an expert on beer, wine, and cocktails. lately though, customers are bellying up to the bar and ordering tequila. and we're not talking frozen margaritas; we're talking super- premium brands, with super- premium taste. >> some people even ask for a wine glass because they want to smell it and they want to let it breathe.
>> reporter: they like it so much they're willing to pay, in some cases, $100 a shot. and surprisingly, the big bar tab hasn't stopped tequila sales from skyrocketing. so while we've had very good growth in the tequila category across the decade, 60%, 70% of tequila growth is in the premium >> reporter: bottoms up. suzanne pratt, "nightly business report," new york. >> susie: when it comes to business, how's your endurance level? tonight, lou's been thinking about keeping up in the long run. >> reporter: my favorite sport has always been basketball. i played all four years in high school, and... well, wait a minute. i actually played two years and then stopped growing, so i spent much of my junior and senior years "riding the pine," as benchwarmers are called. but our coach wanted us to stay in good shape all year round, so he required us to also run on the track team. this presented a problem for me. i wasn't very fast, so i had to be a miler.
i realized i had good endurance. and looking back, i have used that endurance as an asset in business, as well. people who start their own companies, as i did more than 30 years ago, often don't think long term. when i started working for myself, a big part of me was just trying to keep up with the mortgage and maybe set aside a little for that rainy day. i actually thought of my business in six-month chunks. at the end of each six months, i set out some new goals for the next six months. it went on like this for about five years, until i actually started thinking, "hmm, i think this is my career." now i had a new challenge: did i know enough to sustain a business for the long haul? just as i had studied great runners to learn their best techniques, i started dissecting what made businesses last. real growth takes time. it takes a combination of purpose and patience... knowing when to hold back a little and knowing when it is okay to sprint to the finish line... knowing that it's okay to be a miler. i'm lou heckler.
>> susie: tom one person who knows a lot about endurance is warren buffett, and we'll be hearing from him on monday. so have a great weekend, everyone. >> tom: you too, susie, we'll see you right back here next week. "nightly business report" is brought to you by: captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org