tv Nightly Business Report PBS August 10, 2012 7:00pm-7:30pm PDT
temper concerns, saying americans won't see an immediate jump in food prices. >> tom: crop insurance should cover many farmers for their losses, losses that likely will be counted in the billions of dollars. diane eastabrook traveled to central illinois where insurance adjusters already have been driving from farm to farm looking at the damage. >> you don't have the height with the plant that you usually have. >> reporter: country financial claims adjuster steve worthington is appraising just how much damage the drought has caused the harms brothers corn crop. >> okay kevin and norman. we're gonna measure off 17.4 foot of row here, and then we want to harvest and shuck the ears off the plants and the harvestable ears. >> nothing on this stalk or this stalk. another blank stalk. >> it should be about four times as long and about twice as thick. >> in a normal year with good rain all year and everything
goes right, this bucket would be full. >> reporter: throughout central illinois corn stalks are withering in what is the worst drought in a quarter century. some farmers are already grinding up their burnt crops for livestock silage. crop insurance should cover much of the loss. the u.s.d.a. say farmers bought policies covering about three quarters of the nearly 100 million acres of corn planted last spring. total liability for the crop is roughly $50 billion. many claims won't be settled until after the fall harvest. >> we anticipate record numbers as far as losses, but certainly in the millions-- multi- millions. >> reporter: the harms brothers bought a $60 thousand policy to cover the 2,000 acres of crops they planted. last year they harvested 200 bushels of corn per acre. their policy guarantees payment of 170 bushels per acre. their settlement could be huge.
>> we got four pounds of growth so, three pounds net which equates to three bushel per acre. >> after going 24 yeas without a claim it gets to be a difficult decision to keep putting that money out and not getting anything back and so obviously this year it was a good decision to go ahead and continue with it. >> reporter: even though crop insurance will provide the harms with an economic cushion this year they worry the drought will have repercussions down the road. they say if grain prices soar too high that could dampen demand next year and drive down future grain prices. diane eastabrook, "n.b.r.," fairbury, il. >> reporter: i'm suzanne pratt in new york, still ahead we'll take you inside a famous manhattan restaurant and tell you how they're dealing with the midwest drought. >> susie: on wall street today, stocks rose, despite new worries about china's economy. the asian nation reported a weak trade report, raising fears of a global economic slow down. but the major stock indexes
still managed to finish the week on the upside, and ended friday in positive territory. the dow rose 42 points, the nasdaq added two, the s&p gained three points. >> tom: this has been the longest winning streak for the s&p 500 in six years, up six sessions in a row. but investors have continued pulling money out of stock mutual funds. we finish this week's series on investor confidence in the markets, by talking with two members of an investment club about what keeps them investing. >> joining us. members of the polaris investment club. gentlemen, after all we've seen in the past years, the bear market uthe flash crash, knight capital trading almost collapsed in the last week. is the stock market still meeting your investment goals? it is. it's a business, and businesses have imperfections, but i still think there's profit to be made and gains to be made if you're prudent.
and willing to take a little risk. >> does this shake your confidence? >> i wont say it has shaken my confidence, and i'm almost fully invested in the market. >> tom: what do you say to those who have sworn off the stock market, too risky and too much potential of fraud? >> i think in terms of growing wealth, it's still one of the best places can you go, and i know real estate is good. but for right now general knowledge of stocks will pay enormous dividends over the course of their life. >> the price of a stock directly follows the earnings per share, and if they're going up, you're going to find a good horse to bet on. >> your polaris investment club reinvests dividends and profit pro, and quality growth stocks and diversify investment. do you think that wall street values the retail investmentor
like yourself. >> they have to. if the customer walks away -- >> they have a branding problem right now. in fact, they need to address that because people of all ages are skittish about the market, and many of the youngest investors are not investing in the market not realizing there's a varty of excellent ways to participate. i think it's safe if you are in the corner stone like the polaris investment club. >> it has been pretty good. >> it has. >> tom: what do you attribute that to? >> we take the emotion out of investing. we look at a stock. we have a system and a set of rules wh. you get hurt is when you start bending and flexing the rules that work. >> i'm taken to the wad shed when i'm out on my own. i've learned a lot by being involved with better investing, and certainly with
the polaris investment club. >> tom: what would you apply to wall street considering the scandal and the performance fear that we've seen in the past five years? >> we don't have the luxury of being able to be immersed in the information. someone has to break it down and explain what the issues were sdp, what the remedial steps are to make sure they don't happen again. >> tom: how about you? what's your message to wall street? >> be accountable. once your accountable, you can set about fixing it. >> tom: the polaris investment club. thank you, guys. >> thank you, tom.
>> susie: regulators are tightening rules on the mortgage servicing industry. the consumer financial protection bureau released proposals today aimed at making the mortgage-servicing business more friendly to borrowers, and helping prevent foreclosures. sylvia hall opens up the new rulebook. >> reporter: many homebuyers say their biggest headache isn't taking out the mortgage, it's dealing with the companies who service the loan. >> documents that they're submitting to try and modify their mortgages are either lost or misplaced, or they're not sent along to the next person in line in the company. >> reporter: for distressed homebuyers, the effect has been devastating. the consumer financial protection bureau issued rules today to clean up the mortgage servicing business. the proposals include requiring mortgage servicers to give clear billing statements. they'd also have to warn homeowners in advance of interest rate changes on adjustable-rate mortgages, and
make a good-faith effort to help borrowers prevent foreclosure. >> it just can't be underestimated how important that's going to be for putting in place even things that seem like they're pretty common sense reforms. >> reporter: bankers worry the provisions are too close to the one's in a $26 billion settlement with a handful of mortgage servicers reached earlier this year. >> we'll support some parts of the rule, we are behind the concept of the rule, we think some of the implementation is heavy-handed and restrictive because it focuses too much on what happened to the few institutions who were large players during the crisis as opposed to the servicing regime we want across the board for the whole industry in the future. >> reporter: the public has two months to comment on the proposed rules. the c.f.p.b. hopes to enact them early next year. sylvia hall, "n.b.r.," washington.
>> susie: j.c. penney reported a steep drop in sales and a big quarterly loss, but surprisingly the retailers stock skyrocketed 6%. the company posted a loss of $0.67 a share. much bigger than the $0.25 analysts were expecting. sales tumbled 22% to just $3 billion. despite the dismal results, there are signs c.e.o. ron johnson's plan to re-invent the retailer may be taking hold. ruben ramirez reports. >> reporter: some silver lining in today's quarterly numbers out of j.c. penney, which at first blush looked pretty bleak. penney was able to move more merchandise at full price and widen its profit margins. the showstopper though, j.c.
penney expects to end the year with $1 billion in cash, money it can use for c.e.o. ron johnson's turnaround plan. >> one of the fears was even if this all well and good, great plans, great strategy, if you run out of money before you get to lap those easy comps, you're not going to get to do all those exciting things you planned on. >> reporter: much of the plan hinges on a store within a sre concept it started to roll out earlier this month. already, penney's says shoppers like the levi's store, but the change also comes with challenges. >> the problem is they've got to attract a whole different set of consumers. probably a younger, more fashion sensitive consumer who is going to want that national brand. >> reporter: but the clock is ticking. swinand says johnson, who has been on the job for nine months, has a year to try and turn around the retailer. ruben ramirez, "n.b.r.," new york. >> jc penney found buyers, and
thanks to buying in the final 45 minutes of trading the major indices pulled themselves into the green today. the low of the day for the s&p 500 was in the first hour of trading over concerns about chinese trade slowing. the losses were pared back throughout the session, with the index finishing higher by a fraction. trading volume dropped from yesterday's pace. 565 million shares on the big board. slightly over 1.5 billion on the nasdaq. for the week, the dow industrials gained 0.9%. the nasdaq saw the biggest gains among the big three indices, up 1.8%, and the s&p 500 added 1.1%, its fifth straight weekly gain. today's best performing stock sectors reflect a mix of investor sentiment, ranging from global economy to more defensive positions. the telecom sector put up the best gains, up 0.8%. the industrial sector and healthcare were higher by a 0.5% each. the lowest price stock in the s&p telecommunication sector continues to see heavy buying.
sprint added another 2.5% on heavier than average volume. this is a new 52 week high. shares have almost doubled since memorial day as the wireless carrier has increased its financial outlook. another stock finding buyers after a steep decline is hewlett-packard. h.p.q.'s 1.5% rally today made it the best percentage gainer of dow industrial stocks. the stock is at its highest price since early july. the troubles at research in motion are well known. its blackberry devices have seen their market share shrink due to apple's iphones and smartphones running google's android operating system. shares were up 6.3% after reuters reported i.b.m. considered buying rimm's business unit that operates the computer servers for its blackberry system. and a bloomberg report, said the company has yet to receive any offer for its phone business or the entire company. and speaking of beat-up stock, facebook was friended by one of its board of director members, netflix c.e.o. reed hastings. he bought roughly $1 million worth of facebook stock this
week. facebook shares were up by 3.8% today, but they still trade well below their i.p.o. price of $38 when the stock debuted in may. its been a tough week for monster beverage. the company disclosed a state attorney general has subpoenaed it in an investigation into monster's energy drink. shares fell 11.3%. the investigation follows a disappointing earnings report earlier this week. four of the five most actively traded e.t.f.'s ended higher. the lone loser was the russell 2000 e.t.f., down 0.3%. and that's tonight's "market focus." >> susie: one of the world's most popular soccer teams, didn't score with investors today. manchester united, offered shares to the public here at the big board, but they ended the day right where they began, at $14. tonight's "beyond the scoreboard
with rick horrow" takes a look at the english soccer club's disappointing debut. >> most americans couldn't name a player, but the world's most valuable sports franchise is now publicly traded in the u.s. manchester united sold stock on the new york stock exchange today at $14. that was below the expected pricing range forecast by its investment banker, and the stock failed to inspire much enthusiasm in its first day of trading. one reason could be the team's massive debt load. the soccer club has more than $600 million in i.o.u.'s. some of the money raised today is earmarked to cut that in half. but another reason may be the tricky strategy of running a world class, publicly traded sports team. is the goal to win championships for its fans, or generate profits for shareholders? the team claims to have nearly 660 million supporters worldwide. owning shares of your favorite team is a unique novelty, but before adding the club to your retirement account, recognize why so few sports teams are traded on the open market. their goals don't always align with yours.
i'm rick horrow. >> the stock indices at three months high, but market monitor says watch out. stocks are about to run into election year jitters. mark leibovit is with us tonight from phoenix. mark, it's always great to see you. you brought a chart along to really show what you see for the jitters ahead for the dow jones industrial average, comparing it during presidential election years to non-presidential election
years. the gold here, the yellow representing the election year. you're looking for a larger tharn normal sell-off into the fall s. this getting you out of the market entirely? >> yes. i'm bearish here because of that. you have to be looking to exit the market here, at least not getting aggressive on the long side. the model we showed six months ago called for a top in april which was a bullseye call, and seems to be tracking nicely. the non-election year cycle shows top in may. sell may go away. so this got you out in time, and now says be careful into the september, october period, and we should top out here by the end of august. so we've got to be watching the volume indicators very carefullyly over the next week or so. >> tom: you mentioned the forecast model. let's update that compared to the actual performance. clearly you're looking for volatility on into the fall, but perhaps maybe a little bit of an uptick into the end of the calendar year, right?
>> yes. the afm.xd the annual forecast mod cell my model. and we showed you the overlap. and both are calling for this august top, and a correction into september, october. they're in sync. let's see the correction we get. and take it a day at a time. >> tom: and not just regulateed to stocks. also looking for volatility in gold which is a defensive area, and clearly an area of focus for you. you're annual forecast is the barot right-hand side which corresponds to october. do you think gold moves to a new high. >> i'm already in gold. i've been bullish for 10 years, but if we get a wash out, i want to be ready >> tom: you want to buy more. and looking for protection in a closed end fund, global gold natural resources and income. ge the ticker symbol. a falt yield on this one. 12%.
>> is that the play? >> that's the play. the stock is down from the high 20s to the low teens. natural resource gold related. that's a 12% yield. if you're in the market this is the only kind of thing i'd be looking at now wue you were looking for the silver exchange traded fund. smith and wesson, the gun manufacturer. almost a 90% jump since then. do you still hold these? >> i sold the smith and wesson and i think they're still in play, but we're waiteding for the correction >> some complaints about manipulation nlt silver market. i'm going to wait for the fall to see if we get the correction fur the metals. keeping the powder dry. tammy and you own ggn, correct
>> tox*ch >> susie: back now to our top story, the drought and your wallet. it's been a rough few years for the restaurant industry, what with the recession and penny- pinching diners. now restaurateurs are facing a new challenge: mother nature. the 2012 drought, is starting to drive up prices for soybeans and corn. suzanne pratt reports on how restaurants are dealing with the drought. >> reporter: gotham bar and grill has been serving customers for nearly three decades. an american classic, the restaurant is known for contemporary cuisine, fresh ingredients and lively atmosphere. still, even a new york institution isn't immune to the midwest drought. chef and co-owner alfred portale says the price of poultry and dairy items are starting to inch up, as the cost of feed escalates. but he's most worried about the expected spike beef prices, a
popular menu item at gotham. >> when those prices go up by 10%, or 15%, or even 20% it has a much bigger impact on our food costs because it represents a larger portion of our sales. >> reporter: restaurants like gotham bar and grill are holding off hiking prices. before that ever happens, they say they'll eat the higher food costs or change what's on the menu. alobar restaurant in long island city is already planning for the anticipated jump in food costs, likely to hit in the next six months. executive chef ian kapitan tries to buy as much as he can from nearby stockyards and farms, which should help keep costs in check. >> we're going to have to adapt. the one good thing we do here at the restaurant is we try to source locally as much as possible. so i get my hogs from northern new jersey, we're starting a grass-fed beef program out of vermont.
>> reporter: large restaurant chains are also unlikely to raise menu prices this year, as most long ago locked in what they currently pay suppliers for food. but, experts predict 2013 will be different. >> a lot of the executives, managers have yet to make their plans for next year. what we're looking at is food cost inflation at least in the mid-single digits. >> reporter: and, that means eating out could get pricier, even though many restaurants have gotten smarter about trimming other expenses. and, then, there's one morsel of good news, at least for some restaurateurs. while the drought is wreaking havoc across much of u.s., it's been hot and rainy in the northeast this summer. and, that's kept a lid on the price of produce. >> our vegetable and fruit purveyors are using local products from new jersey, upstate new york, long island and they're having a bumper crop. >> reporter: maybe mother nature
wants to see her children continue to dine out. suzanne pratt, "n.b.r.," new york. >> tom: next week on "n.b.r." earnings season continues monday, daily deal site groupon reports results. on wednesday, the company who's routers and cables power the internet releases its latest earnings, we will be joined by cisco systems c.e.o. john chambers. and monday, we kick off a series of reports on back to school spending, with a look at the tech stocks that could benefit. >> susie: as we wrap up our week-long look at trust and wall street, we close out with some thoughts on leadership and honesty. here's author and educator, lou heckler. >> what do you look for in a leader? a few years ago authors james kouzes and barry posner posed that question as they prepared a wonderful book called the leadership challenge. of all the traits they listed, these were the top four: a leader must be honest.
a leader must be competent. a leader must be forward- looking. a leader must be inspirational. i have smiled as i read the first two again, given that honesty trumped competence. maybe its not surprising. we have had a spat of so-called leaders do a lot of lying in the past few years: lying about company profits, lying about extramarital affairs, lying even about college degrees they didn't earn. we understand that our leaders will stumble and not always be competent in every area, but we seem to long, i seem to long, for ones who will lead me with honesty and forthrightness. mark twain once said, always do what's right. this will gratify some people and astonish the rest. if i'm goingo play the grown- up version of follow the leader, honesty does come first. i'm lou heckler. >> a lot of businessmen could use a refresher course >> tom: lots of food for thought when it comes to leadership and honesty susie.
captioning by vitac, underwritten by fireman's fund after the blaze at the chevron refinery in richmond prompts community outrage, prices begin to rise at the pump. bay area sikh react to the deadly hate crime in wisconsin. >> we are in a state of shock. because of the mistaken identity, we are going through some things. >> and in the wake of the shooting, a gun control measure gets renewed in the state. when the two largest makers of smartphones battle in a courtroom, what does it mean for