tv Nightly Business Report PBS August 31, 2012 7:00pm-7:30pm PDT
captioning sponsored by wpbt >> this is n.b.r. >> tom: good evening. i'm tom hudson. convincing talk from ben bernanke today that the federal reserve is ready to act to boost the economy. >> susie: i'm susie gharib. investors around the globe welcome the fed chairman's speech with a spirited rally. >> tom: planes, trains and automobiles. 33 million americans are heading out for the holiday. the travel outlook for labor day and beyond. >> susie: that and more tonight on n.b.r.! >> susie: ben bernanke made a strong case today that the u.s. economy needs more stimulus and he's ready to give it another dose to boost growth. his message was clear and delivered with conviction. investors around the world had been waiting eagerly to hear the fed chairman's speech in jackson hole wyoming and stocks in the u.s. rallied in reaction. here are the highlights:
bernanke said even though the economy has benefited from fed policies over the past few years. the outlook is still quote "far from satisfactory." he described the high unemployment rate a grave concern. he believes the fed should continue using non-traditional policies to spur growth. and bernanke concluded by saying the fed will provide additional policy accommodation as needed. >> tom: that statement was a buy signal for investors. they bought up stocks on the belief that the fed is on the verge of taking more action to stimulate the economy. blue chips rallied triple digits but pulled back by the close. the dow jumped 90 points. the nasdaq added 18 and the s&p rose seven. traders liked what they heard from the bernanke today. >> traders saw some optimism with the last line of bernanke's speech after some positive comments that the e.c.b. might
be getting close to buying sovereign bonds. don't worry the fire department is still here. if a fire breaks out, we'll take care of it. so they had that as kind of a reassurance and europe as a beginning. although with a three-day >> susie: so what was the reaction from bankers at that jackson hole conference? i talked with alan blinder, the former vice chairman of the fed and now a professor of economics at princeton and asked if he agreed with the wall street assumption that bernanke gave the go-ahead today for more stimulus for the economy. september 13 that is the next fed meeting for some kind of action, does that make sense to you. >> it does make sense.it gives -
distance to the election. these days the feds carnlts -- can't keep out of politics but they would like to it's super close to the election. i think if you let it go more we are talking about after the election. they are giving off vibes saying they are more eager than that. >> as you know many peopledebatd policy so far. chairman bernake made a good defense and saying the more we do the more good it does for the economy. your thoughts on that. >> i think they have beeneffect. there was a numerical estimate in his speech that seemed like on the high side to me. and he heads that estimate also. i think the issue in the forward
guidance is one of diminishing returns. >> he also said that the fedpoln jobs. do you agree with that number? >> that is the estimate i wasre. it seemed on the high side to me. >> we get a new job report nexto del us -- tell us about the economy. >> , i think for anyone to situd signal you have to have over 200,000 jobs. in the clinton administration over 200,000 was average for eight years. and we need to do a lot better than average to climb out of the hole that we are in now. i i think while it would be nice to have a number over 200,000 that is not enough to deter the fed bernake and the majority.
unless we get a number north of 300 000 that is not likely at all that is not going to be a deterant to the fed. recent numbers about the housing have been encouraging. what is your take on the health of the economy right now? >> i think it's looking a littlt better is not enough better. since we started recovering from the deep recession the growth rate has been little less than 2 and a half percent. those numbers that you are referring to susie are consistent to the scenario and that is not good enough and that is what has the feds concerned. allan blinder. >> europeer's financial >> tom: another hot topic at that meeting in jackson hole, europe's financial problems. until policymakers solve that crisis, bernanke and others say europe could weigh on the u.s.
economy. here's reuters business reporter rhonda schaffler. >> reporter: with dismal economic headlines out of europe almost daily and just days ahead of a very important e.c.b. meeting federal reserve chairman ben bernanke used part of his speech to hone in on the european debt crisis he urged policymakers to press ahead toward resolving that crisis i spoke about that issue with the i.m.f.'s david lipton >> we see decisions from europe in high political levels and i think we're going to see this fall this shift from the question of what's to be done to how do we go about implementing it. >> reporter: lipton also told me the i.m.f. would be willing to play a larger role in europe if asked. also making headlines here on the european front was the arrival of the president of bundes bank jens weidmann. there were press reports that he is considering tendering a resignation over a dispute with the e.c.b. on the planned bond buying program. when questioned by reuters he gave a terse no comment to those
reports. rhonda schaeffler of reuters in jackson hole for "n.b.r." >> susie: still ahead, our market monitor guest explains why he's getting defensive now. we talk with alan lancz of money management firm lancz global. >> tom: about 33 million americans will be hitting the road, boarding a plane or getting on a ship this weekend to enjoy the last days of summer. a.a.a. says that's up about 3% from last year and marks the highest level of labor day travel since 2008. but will those crowded roads and airline terminals be fleeting? ruben ramirez reports on the return of the american traveler. >> reporter: on the road, in the sky, or on a ship. americans are traveling in record numbers this labor day holiday. despite concerns about the sluggish economy, executive travel's editor in chief janet libert says after four years of staycations. travel now is a priority for many americans. >> so what we're seeing is that
travel continue to inch up bit by bit and americans are traveling more this year since than they have since the recession started in 2008. going forward into the fall and into 2013 we'll continue to see americans out there and traveling. >> reporter: the majority of americans will take to the road for their vacations this fall. where are they going? big cities across the country. if labor day is any indication, the most booked hotel destinations this weekend-- chicago, new york city, las vegas and san francisco could be busy this fall. if flying is more your speed, tafari travel's president leah smith says bookings for the fall and winter are already up from previous years. >> things are definitely picking up. luxury travel is booming right now. adventure travel is booming right now. less traditional destinations are booming right now. western europe is kind of flat lined right now. we're definitely seeing more
bookings right now which is fantastic. >> reporter: if you're searching the web for flights, don't expect airfares to come down anytime soon. maxim's airline analyst ray neidl says airlines have been able to push through fare increases because demand has remained strong and capacity is tight and could be getting tighter this fall especially on overseas routes. >> the leisure traveler won't be flying solo. business travel is also back, after taking a big hit during the recession as company's cut costs. companies are saying to themselves. can we make business travel even more profitable to our bottom line. companies have a lot of cash and they also recognize the incredible importance of getting people out face to face. so, with the need to be out there generating revenue and then the cost constraints around is this profitable travel, putting all that together we will see business travel continue to increase. >> reporter: and impacting every mode of transportation: energy prices. gasoline prices are higher than they have ever been heading into
a labor day weekend. ruben ramirez, "n.b.r.," new york. >> susie: some signs today that american airlines and u.s. airways might be moving closer to a merger. the two carriers said today they have agreed to share confidential information, but warned that a deal is far from reality. parent company a.m.r. has been in bankruptcy protection since november and has said it wants to stay independent. but now both carriers say they'll work in quote, "good faith" and in "close collaboration" with american's creditors. one sign that a merger could happen: american's three biggest unions have signed off on conditional labor agreements that would cover their members, if u.s. airways succeeds in a takeover of a.m.r.
>> tom: the federal reserve's low interest rate policy after the dot-com bubble burst has been blamed for contributing to the housing bubble. that bubble also burst with devastating consequences. new research into another bubble popping, the chinese stock market crash in 2007 finds investment bubbles can be more preventable. we spoke with the researchers sandro andrade and tim burch, finance professors at the university of miami. >> what contributes to a markete fundmental value? >> i think certainly there is nw bright line we can draw between we are now in a bubble versus we are not in in a bubble.
you look at things like elevated volume. you look for people being drawn into this market. you also look at holding periods. you will see holding periods are going to shorten because people are looking to buy something and quickly flip it. so you really need to look at how the market activity differs from your period. >> in regard to the housingbubb. the reserve and banking regulators have said it's tough to identify that bubble before it pops? what is your prescription? >> anything that might reducecue of the assets will reduce the likelihood of future public -- bubbles. so this policy prescription does not require written policy makers to spot bubbles in real-time. this would be something that
would be going on all the time. >> what is the information bein. >> let's talk about real estate. a centralized website put together by the say the federal reserve that collects and centralizes all of the information that is relevant for the the participants in the real estate market. information in prices and -- rent, vacancies and units under construction and paint payment payment -- meant maintenance costs. is that feasible? >> a lot of this informationthas actually already been collected. but by various parties. it's not being dessimilar nated and pro -- disseminated and produced on a centralized website. it's not being promoted to people where they can go to find
that information. >> ok.do you see any of these bs characters isic -- characteristics in the united states. particularly with the u.s. bond market. >> i don't see any there.to thes are valued highly is because people have a lot of fear. they worry about inflation long term. people are snake bitten by the volatility that we have been through. they are looking for places to park cash. >> is there a normally highturns right now? and i'm a fleyed -- afraid that the answer is they are not. >> they tell us gold ask isshow >> tom: the researchers did tell us they think gold is showing some signs characteristic of a price bubble.
>> susie: today was clean up day for communities along louisiana's gulf coast, after days of strong winds and heavy rain, residents and businesses began the process of getting things back to normal after hurricane isaac. early estimates on the cost of the storm are running at $2 billion according to calculations by the firm air worldwide. the company says the numbers could go higher because of heavier than expected rain and flooding from that category one hurricane. president obama will tour the area on monday, for a first hand look at conditions. >> tom the weather conditionshey today besides the stuff going on with the fed and bernanke in jackson hole. investigators closed out the day and the month of august on the upside. >> the rally here continues, al.
let's get to it with tonight's market focus. >> we saw in the major indiceso. stocks saw a modest positive reaction to the federal reserve chairman's comments on the economy today. the s&p 500 spent the session in positive territory, except for just a couple of minutes as ben bernanke began his speech this morning in wyoming. trading volume picked up just a little from the low levels this week. 745 million shares on the big board. just under 1.4 billion on the nasdaq. all three of the major indices are lower tonight compared to a week ago. the dow industrials was down a half percent for the week. the nasdaq slipped just one- tenth of a point. and the s&p 500 fell 0.3% but for the month of august: gains. the dow was up 0.6% this month. the nasdaq gained 4.3%. and the s&p 500 was up 2% with the federal reserve chairman talking about the possibility of future action, that helped feed some gains
today in economically sensitive stock sectors. materials was up 1.1%. energy stocks were on the rebound, up 0.9%. and technology added 0.8%. the tech sector was the best sector in august and is the best so far this year. among the top tech stocks today was semiconductor giant intel. it was the leading percentage gainer for the dow jones industrial average. shares were up 2.3%. even though overall trading volume was low, trading of intel stock was heavier than average. speculation is building apple may be getting close to introducing a new imac computer, which would include intel chips. today's leading tech gainer was s.a.i.c. it does a lot of government defense business. shares gained 3.4% to their highest price since early july. the company will split into two publicly traded firms, separating its government services businesses from engineering and health care. with the possibility for more
economic stimulus from the fed, mining stocks took the lead in the materials sector. gold miners newmont mining and freeport mcmoran were both up more than 4%. this is newmont's highest price since mid-june. the odds of more federal reserve stimulus has helped gold. settling at $1,687.60 today. up almost 9% since mid-may. it's been a different story since mid-may for facebook. it was in may facebook went public at $38 per share. tonight, the stock is at a new low. shares fell 5%, slipping to just above $18 per share. two analysts from investments that were involved in its stock sale cut their price targets. bank of america and bank of montreal cited different reasons though. bank of america is worried about insiders being able to sell their stock after lock-up periods expire. bank of montreal instead is worried about slower growth. all of the five most actively traded e.t.f.'s were up, gains
ranged between a half percent to 1%. and that's tonight's market focus. >> tom: the american economy may be inching along, but a slowdown overseas threatens to drag down the u.s. that's the worry of tonight's market monitor. alan lancz is the director of research at lanczglobal.com. always great to see you allan. would you be more optimistic if the federal reserve took additional action in september. >> i think there is a chance,the
situation is that japan and germany had disappointing retail sales this week. in the u.s. the retail sales are good. industrial out put had to be adjusted downward. and when you combine that with the highest unemployment ever and the euro zone the fifth consecutive month germany which is supposed to be the grothe -- growth engine had higher unemployment. it does not make for a good back drop if the fed does qe 3 next months. we have a situation where they are taking money and risk off the table. >> you are willing to take some. beginning with energy transfer partners. etp one of of your new picks. a lot of folks move in with a yelled. -- yield. but the share performance has
been negative since the springtime. >> they have made a majoracquis. the stock has not risen with the increase in energy. it offers a good situation for a long term investor. next year they should start incross -- increasing for distribution and you have an 8 and a half percent yield and it should increase next year. >> that is hard to beat. >> you are also looking to theu. exc. one of the largest power companies out there. a difficult -- difficult tend play. we sold some in the mid 40s and we are buying it back in the mid 30s here. five and three quarters difficult and hitting new lows. and the stocks are down and for
long term investors it's a good situation that i think can provide good total rush. >> some of these power companiee capitalizing on the low input cost. you are looking at employment services firm. kelya services. with um unemployed at 8% lots of talking about permanent temporary workers. is that the play here. this seems to be some degree optimistic about jobs. >> this is the first sign.this l go to pick up employees instead of making long term commitments. if we do see improvement on the job front in the u.s. kelly can do really well. that is more aggressive of the three picks. but i think it's a good combination of the three. >> let's look at the combinatio.
ak steel off by more than a third from when you first picked it back in february. csg systems international up nicely up 30% there. and you liked a smaller gold miner ego the ticker for el door -- el doored a do gold. >> cfg made their move already.o strength with a lot of things. the macro head winds are too tedious for ak steel. >> i would avoid that position. >> do you own everything that w? >> we own everything as far assn some ever those. >> our guest allan lanc
>> as the election unfolds, the nation is heading for the first planned recession in its history, courtesy of the fiscal cliff. why are politicians ignoring the danger? on labor day, we'll hear from two men working to change our course: erskine bowles and alan simpson, the co-chairs of the commission on deficit reduction. we'll also hear from businesses and workers with jobs on the line. please join us on monday for a special report on jumping the fiscal cliff. >> susie: as we wrap up the week, we turn to author and educator lou heckler. in tonight's lou's been thinking, sleepless nights versus a clear conscious. >> it's pretty hard to see the news these days without encountering yet another story about formerly admired personalities getting caught in some form of wrongdoing. it cuts across all areas, too. sports, entertainment, politics, big institutions, local officials. is it more prevalent or do we just know more than we used to? there was a day when big news media outlets looked the other way if someone in prominence erred a bit, but that doesn't happen now.
i am asked fairly often by younger colleagues how i would handle a certain situation they find themselves in a place where they see more shades of gray than black-and-white. it's not always simple to respond, to be sure, but i do find myself going back to an old french proverb that goes something like this. there is no pillow so soft as a clear conscience. i don't want to lie in my bed at an old friend of mine used to say, honesty is total, there are no qualifiers. i certainly agree how soft is your pillow? i'm lou heckler. z.my pillow is very soft, tom. i sleep well at night. >> we'll have to get moresleepoy weekend. we can sleep in on monday. >> absolutely everybody has the. that's "nightly business report" for friday august 31. have a great weekend, everyone. and tom hope you have a good one, too. >> tom: you, too, susie. we'll see you online at nbr.com and back here monday night for our special report on the fiscal cliff.