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tv   Nightly Business Report  PBS  April 10, 2013 1:00am-1:30am PDT

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terrible jobs report, threat from north korea, the european financial crisis, stocks just keep going up. i mean, what's driving this rally and what could derail it? >> well, i think a few things. one thing is we're, we are decenttizing a lit m bit, the investment culture of the idea of the armageddon story. we're sort of reacting less to it when we hear potential negative things. i think that's a healthy development. it kind of is one of the things you need to sustain a recovery, but i think the big catalyst this year has been that the growth in the first quarter of the united states has come in far better than expected. notwithstanding last friday's bad employment report, growth from the first quarter is probably going to be north of 3% for real gdp when coming into the year, most expected only about 2% growth and as growth reports come in better than
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expected, people have to revids up their forecast. >> the dow is up 12% so far this year. how do you think it can end in percentage terms? >> i've been a record since you're in thinking that the s&p 500 could touch 1700 this year. i'm not necessarily suggesting that's a year end target. i kind of suspect we might go up there and come back down a little bit by year end, but if it does reach 1700, then that might be another 8% upside this year that the market could squeak out and that will come about if we continue to get an economy that comes in better than expected. >> let's talk about earnings. last night, we heard from the ceo off alcoa. what do you think we're going to hear over the next few weeks and how is that going to play into the stock market? >> the importances of the first quarter are going to be good. i find when gdp does better than
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expected, then profits do as well. but i also suspect most ceos are going to have cautionary comments and the second quarter and the rest of the year, particularly focusing in on an increasing impact from sequester and other fiscal tightening forces on their marketplace, so i think it's going to be a mixed bag for the mark. good report in the first quarter, but still caution about the future and that could create some volatility about the stock market here. >> i've been noting that money is flowing back into ek with wiity mutual funds. that's often a sign that individual investors are getting in and history tells us they often get in late. if i want to believe what they're telling me, i put more money in. but say i want to play a bit defensively right now. what would be some defensive choices to protect my choices, but maybe leave room for more? >> i think a lot of that has to do with maybe going from bonds
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to stocks, you might want to look at reducing some of your exposure high quality bonds and moving lower quality bond bonds. if you go into the stock market, you can have a bigger allocation towards less price volatility and those that offer higher dividend yields. that higher flow tends to reduce the volatility. particularly in down markets. >> thank you so much. >> our other top story, the shake up at j.c. penny one day after the struggle retailer sacked its ceo. the stock nose dived. able tumbled 12%. courtney reagan went to penny's today to see what customers think and what the new ceo needs to do. >> over the past 14 months, 111-year-old department store jc
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penney has been undergoing a massive transformation, changing its pricing strategy more than once, its merchandise, marketing an even the store layout. >> since they started the price change, i was more apprehensive. that's pretty good. instead of having it marked off. saving $20, you're always saving. >> on monday, the visionary behind this transformation, ron johnson, stepped down. his predecessor becomes his successor, stepping back into the top spot. and the ceo shuffle hasn't been good for investors. the stock is trading at a 12-year low. but the shoppers in new york seemed unconcerned. those that have noticed the changes in store had positive review, noting in particular the change in prices, selection and quality. >> the low price would be more
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attractive thing. if there's a huge sale like you said, it gets real hectic and then kind of turns me away. >> they have different kinds of bags, make up, jewelry. i don't have to go in different stores. i can just stop in one place and it's all there. >> the big question now becomes whether or not they can bring back the shoppers it has lost. >> more now on jc penney with margaret. she thinks ron johnson had the right strategy, but just at the wrong company. welcome. what do you mean by that? >> i mean, i think actually johnson was on to something when he was doing this. within the department store industry, i mean, you're seeing significant shrink in terms of customer loyalty. customers who returned to brick and mortar and really customers that are driving to specific department stores. i think the store within a store concept that he was trying to
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innovate at jc penney was actually where this industry's going and i wouldn't be surprised if you see nordstroms, nieman marcus, maybe even macy's push this strategy. >> bloomingdale's already doing it with some success. so do you think the new ceo ought to walk away from what johnson was trying with the store within a store? they're not inexpensive to do. >> right. well, i think what johnson with was trying to do was he was trying to overly innovate 10% of the store and ignored the 90% that was left behind. that was really jc penney's core base. if i was walking into this situation as a ceo, obviously, you have to integrate part of johnson's plan. they bled more than $2 billion over the last three years, so obviously, there's been a lot of money put into this and obviously, consumers are reacting to specific parts of
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the plan. you have to revisit who your traditional customer base was and try and bring them back in. >> is there a place for penny in a world with walmart and target and kohl's and nordstrom and a whole host of others and he the right man for the job at this mome moment? ? ? >> absolutely. one key thing that's being lost in all this concern in johnson's leaving, it is still a multibillion dollar retailer. we are talking about a two location boutique, so there is obviously a place for this environment. i think it's a different place. because i work in turn around, i like to think about things being relative versus absolute. is it going to be what it was 50, 60 years ago? no, but there is a specific type of consumer that will dgo to jc
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penny. i thi . >> it did lose more than a half billion dollars last year. it's going through a lot of cash. if there's one thing you think he should do immediately, what would it be? >> first of all, i would let the media have their fun with johnson for the next few weeks. he really does have to reset the culture and the strategy at jc penney. i think i would put a stop to 90% of what's going on right now, this plan. you have to work with your suppliers and your vendors. you need to tighten up cash management. 600 million spent in the last 12 months and you really need to stabilize everything. i know that's the word everybody is using. but you really have to figure out what you're spending money on and what you don't have to spend on. >> coming up, the secrets to virgin america's success. richard branson outlined his
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strategy to take on the competition. but first, a look at how the international markets closed today. the first solar sore. the maker of solar panels forecasting 2013 earnings well above wall street estimates. this as the company expands its power plant development business. the stock was halted much of the
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day and when it opened, it rocketed higher and closed up 45% on more than 12 times the usual volume. >> tech stocks in the spotlight today, microsoft and intel leading the blue chip. no surprise given their link to pcs, but both jumping more than 3% today. intel closing at 21.75. microsoft at $30 a share. both companies report earnings next week. the s&p materials sector, the best performer today as china reported slowing inflation. investors see it as potentially bullish as credit restrictions in china may be allowed to ease and that could translate into higher demand. the index was up more than 1% and components cliffed almost 9% higher. trades in herbal life and
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sketchers were halted much of the day. they both used the same accounting firm and that giant firm was forced to resign from both companies because of an insider trading scandal involving a senior partner who allegedly sold private information on both companies. the shares tumbled to $37, but sketchers rose 2.5% to $22. >> and republic airways group is in talks with two investment firms to spin off its subsidiary, frontier airlines. this according to dow jones. republic bought frontier in bankruptcy in 2009 and has been trying for a year or more to find a buyer for it. frontier services the west from a denver hub. republic shares were higher today and you can see the spike in the chart there when dow jones ran its report. >> a new flight pattern for virgin america. the upstart airline is now offering flights from newark to san francisco and los angeles. it will compete with united airlines that dominates the new
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york hub. typically, a ticket to the west coast runs around $1,000, but fares are as low as $360. i asked richard branson if he can make money on those cheap tickets. >> we can make money. virgin america attracts people. we love flying. we're the best airline in america. if we can fill our planes, we can make money. >> so, are these cheap tickets just for now, a special launch, or is this going to be the way of business? >> we like the offer great value, but we also like to offer tremendous quality. so, anybody traveling with us at every seat, they get wi-fi, fantastic entertainment system. leather seats in economy class. they get the delightful cabins,
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new planes. i think virgin won't stop with the best quality service that offers the best value in fares. >> there's no question that people really do enjoy traveling on virgin, but virgin america has been losing money over the past couple of years. can you get enough people on your planes so you can start making money? >> yes. the last quarter was very profitable. next year will be very profitable. despite united airlines dumps capacity on its and for them, they just managed to double is amount of frequencies out of newark on top of our flight. so blatantly to come back to this behavior. because people like to fly virgin, we will be very profitable this year. >> that is exactly the case. you are now in markets where you're competing with united, american, delta. these are big guys that provide service to a lot of different cities. how do you successfully compete
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against them? >> by being much better. united, the worst airline in america yesterday. we were voted the best. if you're the best, people seek out the best and we've been competing with these carriers in every market since we started. one thing i would say though, the competition having allowed the carriers to become dominant carriers, they have got to watch the competitive practices by the big carriers. you need more carriers to survive and thrive and the big carriers act as competitively, the department of competition. >> sounds like you want more regulation. >> we want competition authorities to act as they should do. so if every time we set up a new route and our rivals -- that needs to be looked at by the department of transportation. >> let me ask you about the global economy. a lot of people are getting
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worried that the economy's in trouble. you operate businesses all around the world. not just airlines. but mobile phones, financial services. from the way you look at things, how is the global economy doing? are you worried? >> there's been a slowdown. i really do think the corner is turning. i think business people must help government to turn that corner and we must be positive. >> i'm curious about your, the virgin space program and i know you've been running some tests recently. how much longer before you have takeoff? >> it's very exciting. this is going to be the year for virgin galactic. very, very excited. >> how much? >> initially, it's a couple of hundred thousand dollars. if you're willing to wait a few years, i think the pioneers that are being good enough to help fund it by booking their space
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will enable us to bring the price down. in five, ten year's time. >> and still ahead, the investment that's returned more than 200% over the past decade. the answer may surprise you. but first x, a look at how commodities, treasuries and currencies fared today.
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our tax tip series continues tonight with a look at important ways to save for retirement. 82% of workers participate in some sort of employer sponsored retirement plan if one's available to them, but many may not realize that they now have two types of 401(k) plans to choose from. a regular and a roth. sharon especialjoins us now to . what is the difference between a roth an a regular 401(k). >> a lot of folks don't get this and it's an important fact that a lot of financial planners say they're overlooking if they have this option. the way it works is a roth 401(k) works a lot like a roth ira. it allows you to place after tax do dollars into your contributions and you're able to take this money out tax free. the difference is that there is no income restriction. that's the difference is that you are able to put in this after tax money and then take it out tax free and that's why a lot of people are very attracted to it, particularly younger
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workers and people who don't have, who actually make too much money to contribute to a roth ira. >> is this something you can get no matter with where you work? >> many employer es are starting to offer. we're looking at about 37% of workplace retirement plans that now offer the roth 401(k) option and that's according to fid fidelity. fidelity is the largest retirement provider, 401(k) provider, in the country. we're also looking a t the fact that in 2009, there were only 22%, so it's increasing. >> so, there are some new rules also governing roth. there are new rules that apply to them. what are they? >> that's why it might be more attractive for some employees and employers to have this. what is happening with the american taxpayer relief act is new legislature that says that you don't have to necessarily take distributions from a 401(k) to be able to convert it to a roth 401(k). you can now without having taken distributions, you can now
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convert that money, so that means you don't have to necessarily be 59 and a half or disabled. about 12% of those companies that have the roth 401(k) option are allowing you to convert. >> should you do it? should people just do it as -- >> that's the big question. that's often the big question with converting to a roth ira. the three factors, the first is really do you need to money right away. then how much are you going to have to pay in taxes to do the conversion and where is this money going to come from. you don't want to take it out of your retirement asset. the final thing you need to look at is where your tax bracket is going to be in the future. if it's going to be higher, this is something you want to consider. if it's going to be lower or if you need to money right away or have to dip into the retirement, probably not a good idea. you can put in $17,500 or 23,000 if you're 50 or older and that is per taxpayer.
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so if you decide you want to mix it up and have different tax strategy, have a regular 401(k) and a roth 401(k), which is a great idea for many people, remember, that combined, you can only have that 17,500 or 23 thou ,000. >> thanks very much. our series is going to continue tomorrow with a look at women and retirement. how they're finding new ways to save despite living longer and facing higher health care expens expenses. >> and finally, if you ever had a stamp collection, you know the satisfaction of gathering and inspecting new postal stamps from all over the world, but you may have never imagined cashing in on those stamps for millions of dollars. robert frank has more of today's auction and who's behind it. >> bill gross is best known as the bond king, but the billionaire bond trader and founder of pimco is also america's stamp king and today, he had a huge trading day in
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stamps. >> sold in 650 to bidder 654. >> bill gross sold more than 300 lots from his collection today at an auction for charity. that is a tiny slice of his collection, which is far and away the largest and most valuable collection in the u.s. some lots sold for more than twice the original estimate. a few lots sold for more than $60,000 each. >> this sale certainly attracted a lot of attention because a lot of this material hasn't been on the market in literally decades and it also helps this mr. gross is dpifing the proceeds to charity. >> as a collectible, they have great investments. stamps returning more than 200% over ten years. better than art, wine and even stocks, but it takes expertise to buy the right stamps at the right price. >> quality and rarity are the two things that you want and to get both together, that's what
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somebody wants, ten years from now, 20 years from now. >> since bill gross is considered one of the smartest collectors, his sales tend to generate high prices. many of the stamps were the first ever issued by the u.s. postal service. these are the 5 cent franklin stamps and 10 cent washington stamps. there was a 10 cent washington stamp postmarked from canada that could fetch more than $30,000. bill and sue gross will donate all the proceeds from the sale to doctors without borders and mill lineal villages. >> they are beautiful to look at. his mother got him started in all of this. the stamp collecting. none of her stamps were really worth that much. my son was collecting stamps and i tossed them out with the baseball cards at one point. >> i guess it proves that bill gross, it translates from bonds
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to having an eye for value. >> the gifted investor. >> terrific investor and a good guy. >> thanks so much for watching. >> thanks for joining us. have a great evening and we hope to see you right back here tomorrowing night.
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[ ♪music ] >> creativity involves lots of experimentation. sometimes artists use unusual methods, and unconventional tools. >> john chiara: i kind of made photography as labor intensive as i think it could be. [laughter] >> kara davis: nobody knows really what it is yet. things are always shifting, and you can't get attached. and i think there's a life lesson to be learned in that. >> experimenting, this time on
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spark. [ ♪music ] major funding for spark is provided by the william and flora hewlett foundation, supporting creativity and innovation in the arts since 1967. and by the kqed campaign for the future program venture fund with additional support from the walter and elise haas fund the george frederick jewett foundation the marin community foundation the koret foundation the phyllis c. wattis foundation and diane b. wilsey. [ ♪music ] >> in five days, kunst-stoff will present the world premier of a new dance piece. they're an experimental company, and maybe a little unorthodox.
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>> how can you make a sound without moving your head? [laughter] >> things aren't quite worked out just yet but artistic director yannis adoniou isn't phased. >> yannis adoniou: just make simple-like sounds. that's right. up and down. yeah, one more time. >> the piece is called "as we close their eyes." it was commissioned by the yerba buena center for the arts. the dancers have been rehearsing for the past six weeks. but today is their first time at the theatre. it's time to see what they've got. >> jose campos: i don't know, i haven't seen it come together yet. i'd like to see it all come together today, because we're here at the stage. just so that we can run through it like the order, so we know what we're doing. >> kara davis: nobody knows really what it is yet. so if you can just relax into that then, cause that's always the way it is. and i think the more you do it, the more you realize, like, oh yeah, here i am again, not really knowing what this really is. >> y

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