tv Nightly Business Report PBS December 9, 2016 1:00am-1:31am PST
this is "nightly business report" with tyler mathisen and sue herera. far and wide. the record rally is reaching just about every corner of the market. so what should you do with your money now? losses mount. sears sees its sales spiral. as more stores close, the challenges are only getting tougher. 30 years of picking stocks. what are the beardstown ladies investing in now? we went for a visit. those stories and more tonight on "nightly business report" for thursday, december 8th. good evening, everybody. and welcome. four indexes, four new highs. the dow, nasdaq, s&p, and small cap russell closing at record
levels. after a quiet morning, momentum picked up midday thanks to gains in financials and material stocks. investors are betting the new administration's policies would support growth and inflation. today, the dow added 65 points to 19,614. the nasdaq advanced 23. and the s&p 500 was up four. one of the hottest groups since the election has been the transportation sector. tonight, morgan brennan explains why. >> reporter: transports keep on trucking, driving the prospects for stronger economic growth. infrastructure spending and corporate tax reform, which investors seem to believe outweigh the risk of for protectionist trade policies. it didn't just about the election. the dow jones industrial average has rebounded off january lows when economists were warning of recession. for the year it's poised to gain 25%. the biggest winners, trucking names including landstar rider
and jb hunt and rail stocks like csx and union pacific. many of them are companies with big exposure to industrial production, mining, and manufacturing, which has shown signs of stabilization in recent months. >> i think some of the gains have been pulled up. they benefit from tax reform. that has the power to drive earnings. we are coming off a bit of a bottom from a freight perspective. we have seen a rally in the late summer through fall. volumes are up a bit. there's a fundamental underpinning of this as well. >> reporter: after a year and a half long freight recession, volumes are beginning to grow. a closely watched index ticked higher in october with domestic fright shares climbing 3% since last year. though still well off their peaks, data reads from hard hit rail and trucking companies show early signs of recovery as well.
at least one analyst says soaring tonnage is a clear signal that consumers are ramping up spending. it's all fueling a transport rally. one that experts warn comes with risks, including higher oil prices, rising interest rates, and the trade impact of a strong dollar. for "nightly business report," i'm morgan brennan. let's look at how far the market has climbed. in the past month, the dow is up 7%. small cap russell index has toward 15%. look at the market's performance since the lows of february. the dow is up 25%. nasdaq 27%. the s&p 500, 23%. the small cap russell index, a sharp 44%. timing, folks, it's all about timing. speaking of which, what should you be doing with your money at this time? let's get some answers from brian jacobson, chief portfolio
strategist at wells fargo funds. welcome. >> thanks for having me. >> if i'm sitting at home and i have not committed new money to this market at this point, is it too late? or do i just have to be very selective and continue putting money in? >> it's unfortunate, i do talk to a lot of people who seem like they've been sitting on the sidelines, there's almost a risk gauntlet that people have been running through. you get hit on every side, whether it's brexit or china's currency devaluation, the presidential election. the market is pretty adaptive. a lot of times you have to ask yourself what's priced into the markets. right now we've had a general repricing or reflation of assets to pretty reasonable levels, from a valuation perspective i don't think that anything really worries me all that much in the near term or even for the long term. so the key thing i think is the focus on the long term, and actually try to get your portfolio back in line with your
long term investment objectives. that's a hard thing to do, because everybody wants to try to time the market. but the fact is, sometimes you think have to bite the bullet and do it. >> what do i do, brian, with my bonds, if i've been investing in bond funds as so many americans have over the past half decade or so, now they'll look at their statements and see some down months. what should i do? >> they're going to see some down months. put those down months into perspective as far as the magnitude. oftentimes the drawdown in bonds is significantly smaller than the drawdown in stocks, because stocks are inherently riskier. remember the role that bonds play in your portfolio. they're there to diversify away some of the risks inherent in the stock market. they've actually done a pretty good job of that. as the equity market has gone up, bonds, unfortunately, the prices have gone down. that's the problem with diversification, sometimes it works against you. but having it as a central part of your portfolio to diversify,
add some stability, and generate income. what i've been really looking at, encouraging people to consider, is looking at shorter duration strategies, short term, especially high yield bonds. those are the ones that some people call them junk bonds. i want to speak highly of them so i don't want to call them junk bonds, i'll call them high yield. you're paid to take a little bit of that credit risk. that can hopefully offset decline in price as a result of rates. >> thank you, brian jacobson with wells fargo funds. one popular investment strategy that gets a lot of attention at the end of the year is the dogs of the dow, the ten stocks in the dow with the highest yields. if you bought shares in these bow wows, you're probably in good shape. domin dominic chu explains. >> this is basically looking at the 30 stocks in the dow jones
industrial average, picking out the ten with the highest dividend yields, buying the stocks, holding them for a year, doing the same thing again next year. the strategy doesn't always outperform, but it has in a big way this year. the idea is to really get investors to focus on beaten down names in the dow and the ones that give bigger dividend payments. if you look at the list this year, it's an interesting one. and we have some real gainers, ones that really propelled the dow jones industrial average. and of cose the dogs of the dow to be outperformers. if you look at the biggest gainer in this dog strategy, it's construction equipment maker caterpillar, one of the most beaten down last year, now up huge, if you factor in dividends, it's up 49%. oil prices have recovered, chevron up 32% if you factor in the dividend payment as well. ibm a laggard, but big blue is now up 24% this year if you factor in dividend payments. walmart and merck kind of round out some of the biggest gainers
in the dogs. what about next year? as it stands right now, you take a look at some of these, verizon, pfizer, chevron, ibm, exxon, coca-cola, caterpillar, merck. these are the ten highest yielding stocks if the dogs were named right now before the end of the year. check out these, according to analysts these are the ones that have the biggest percentage to gain. pfizer, merck, coke, caterpillar and ibm because they're big games now, perhaps laggard. as we talk about the dogs, keep in mind those stocks and the analyst outlooks for next year. i'm dominic chu. feeling richer? maybe you should be. household wealth in the united states has hit a record. according to the federal reserve, a buildup of real estate and stocks helped drive american wealth to more than $90 trillion in the third quarter. and the number is likely even higher now, since the market has rallied over the past month. the outgoing chair of the
securities and change commission warns against rolling back wall street reforms. mary jo white says the rules implemented following the financial crisis are indispensable to investors and markets. and in her view it would be a grave mistake to weaken or dismantle them. the house of representatives passed legislation that averts a government shutdown. the measure provides funding for government agencies. it now goes to the senate for passage. a provision in the bill will make it easier for donald trump to win confirmation of general james mattis to be defense secretary. the former marine needs a special exemption that lets him skirt a requirement that ex-military officials need to be out of the service seven years before becoming the pentagon chief. there are also reports that donald trump has chosen a fast food executive to be his secretary of labor. andy puzder is the ceo of cke restaurants which owns the burger chains carl's and
hardees. john, what do we know about where mr. puzder stands on some of those labor issues? >> reporter: first of all, sue, just before we came on air, it was officially announced that andy puzder will be the labor secretary of donald trump. what we know is that he is a long time republican, staunch know of regulation, somebody who has -- he backed mitt romney in 2012 and he expressed on cnbc earlier this year the view that the accelerating cost of labor is going to increasingly push businesses to reduce labor and use robots instead. take a listen. >> the working class needs a period of transition. we need to be able to train them. we need to be able to set people up for better jobs. we need to revamp the education system so people actually are qualified to do the jobs that exist. what's happening now is, the cost of labor is accelerating at
such a pace that it really moves up how fast you want to automate. >> reporter: in a different interview, andy puzder indicated that the attraction of those robots and automated devices is they don't take sick days, they don't have slips and falls, they don't need vacations. all of that is part of the broader trend in the american workforce. the question for donald trump is, as the candidate who has run as a populist to help workers, how are he and andy puzder going to do that? >> john, the former ford ceo did a marvelous there, alan mullaley scheduled to meet with the president-elect today, do we know why and what he might be talking about? >> reporter: it's a little unclear. some reports have him as a candidate for secretary of state, others for united states trade representatives. we didn't get any confirmation on that from donald trump's aides today. but clearly he's looking to corporate america as somebody who brings a business resume
into the oval office. he's looking to two really unusual sources or unusually robust sources of potential cabinet members, both the military, the marine generals like james mattis that you mentioned, but also corporate america. >> john, we'll let you go, thank you so much. john harwood at trump tower in new york city. still ahead, sears' slump. sales plummet and problems deepen at this one-time titan of american retail. it was an iconic american retailer. but sears lost its way. and things aren't getting any better. losses continue to mount. and today the company said there is no guarantee as to when it
will return to profitability. >> reporter: it started in the 1880s, when richard warren sears began selling watches. it quickly added appliances, groceries, sporting goods, even automobiles to a booming and really ubiquitous mail order catalogue business. it was essentially amazon for early 20th century america, becoming the country's largest retailer, until walmart claimed the top spot in 1989. sears owns iconic brands. craftsman for power tools, diehard products for your car, and kenmore hope appliances. at one point it would have been silly to ask a passerby whether they shopped at sears. now? >> i used to go more for appliances. but not as much anymore. >> we just kind of don't really shop there. >> what are the options? we have kohl's, promotions. >> i do a lot of shopping online. >> reporter: in 2005, series was bought by kmart and hedge funder
eddie lampert took over the new sears holdings. but that company has been on a downward spiral, sales dropping from $41 billion in 2012 to an estimated $24 billion this year. the stock price is down too. more than 40% this year. and down more than 70% in three years. >> sears holdings is like the mythical headless horseman, wandering aimlessly in the night, looking for its lost, never to be found head. >> reporter: the number of stores, now 1500, is less than half what it was ten years ago. at one time sears anchored many malls. now when its stores close, malls are often left with dead space, putting the malls themselves and many jobs at risk. >> sears is probably hived off well over 100,000 jobs since lampert took over. >> reporter: there is value in sears' stock. it might be able to sell the real estate it owns, more than
160 million square feet of retail space, and its iconic brands, kenmore and craftsman, are sold in a lot of places. but with only two profitable quarters in four years, sears will likely struggle to get top value selling its assets. >> the sears physical footprint shrunk. they need time. >> reporter: the irony is sears, an american icon that started out selling watches, could be on the clock. >> shares of sears may have been higher today, but over the past five years, they are down 70%. last year we reported on a company called insys therapeutics, being investigated in seven states, allegations ranging from health care fraud to off-label marketing and kickbacks for its main drug, subsis, a highly addictive opioid, a fentanyl spray, basically, that the fda says
should only be used with cancer patients in severe pain. today we learned several managers including the former ceo have been arrested, charged with leading a nationwide conspiracy to bribe medical practitioners. nita, you first reported on this story. what were they charged with? >> the reason we're talking about former executives was because we have sort of seen this exodus of high level employees from insys since we reported on that story a year ago, including former ceo michael babbage. my sources say it was really john kapor who orchestrated all of these alleged schemes, everything from health care fraud to kickback schemes, trying to persuade doctors to not only write prescriptions of this highly addictive opioid for patients who did not have cancer, which is against fda rules, but also to keep upping that dosage so they get more
reimbursement from the insurers. it's interesting that dr. kapor was not named today. i spoke with the u.s. attorney's office in massachusetts who filed the complaint, and they told me that this is still an ongoing investigation. the matter is still not closed. it's going to be very interesting to see what happens. >> and so is there proof he did what your reporting suggests he did? >> john kapor has not been named yet. in terms of michael babbage, yes. he's been arrested and charged. like everybody else, he's obviously going to have a fair trial. it's also interesting because there were so many different government agencies that had to come together for this, the fbi, the department of veterans affairs, the department of health and human services. insys, i reached out to the company, they did not respond to my requests for comment. >> hopefully they will. >> to be continued. thank you very much. investors like the way taylor brands looks. the owner of men's warehouse
turned a profit in the latest quarter beating analysts' estimates as well as revenue. taylor brands says it expects to see sales improve at its joseph a. bank brand. lululemon shares continued to soar today following the company's better than expected earnings and a $100 million share buyback program that we told you about last night. following those upbeat results, several firms upgraded the yoga apparel maker's stock today. lululem lululemon's shares rose 15% to $68.84. and horizon pharma said it was terminating a drug trial of a medication intended to treat a rare neuromuscular disease. the biotech company said the drug, which has already been fda approved to treat other diseases, failed to present a statistically significant benefit over the placebo during testing. express scripts saw its
shares fall after citron research tweeted that the pharmacy benefit manager was the culprit behind drug price gouging. he suggested that president-elect trump may target the company when he takes office. expresses scripts fell 6% on the day to $70.75. according to a report by the "south china morning post," china will impose atm withdrawal limits at atms in macao. starting saturday, account holders will only be able to take out 600 u.s. dollars. following the news, casinos were all sharply lower. restoration hardware beat street targets, but the home furniture company give guidance for the holiday season that was sharply below estimates. shares were punished after hours, initially falling more than 15% after they have finished the regular session up more than 2% at $38.99.
forget the north pole. warehouses are holding a growing number of holiday gifts as shoppers move online and retailers ship more goods than ever before. that means big growth for the companies that own those properties. warehouse are called a hidden buy for investors looking to cash in on the gains since election day. diana olick explains. >> reporter: in cranberry, new jers jersey, developers are taking down this office building and planning to replace it with a warehouse. demand for warehouses, especially close to major metropolitan areas, is skyrocketing. and so is the potential for real estate investment trusts or reits who own these spaces. >> in contrast to real estate commercial sectors where we see a deceleration of tenant demand, in industrial we've seen an acceleration due to e-commerce. >> reporter: reits have lagged
because investors tend to buy them when interest rates are low. they offer high yields in the form of big dividends. investors then sell them as rates are rising, as they are now. >> usually you see in reaction to a rate increase, reits falling. then six months later they come right back because the better economy improves operations for reits. >> reporter: he is ceo of the largest industrial warehouse reit in the nation. e-commerce respects just 10% of its portfolio but makes up nearly one-third of its current growth. tenants include fedex and amazon. they're developing the largest warehouse park in the nation and outside san francisco. the idea is to be as close as possible to major metros as e-retailers drive to deliver goods in hours rather than days. >> what i call the last 30 or 50-mile business, where we're building large warehouses in
major metro areas that cover the entire area for major e-commerce players. >> reporter: other warehouse players like dct industrial trust have a similar strategy. >> they've positioned their portfolio so that most of their warehouses are now located in margin metropolitan areas, which has seen a disproportionate increase in demand from e-commerce. >> reporter: the stocks of warehouse reits have fared better than other sectors. they're still selling at a discount to underlying values. the one wrench, however, trade. warehouses rely on two things: trade and consumption. if trade sinks under the trump administration, so too could the value of these reits. for "nightly business report," i'm diana olick in washington. coming up, the beardstown ladies. they've been picking stocks for decades. tonight they'll tell us what sectors they like as the market rallies.
remember the beardstown ladies? well, they're one of the best-known investment clubs. after picking stocks for more than 30 years, kate rogers went to visit the group to see what they make of this market rally. [ bell ringing ] >> reporter: the beardstown ladies have seen it all, from the stock market soaring in the 1980s to the housing collapse in 2008 and the recession that followed. through it all, they've continued to meet once a month in beardstown, illinois, contributing a modest $25 each for what they call the three e's: education, enjoyment, and earnings. >> we've been through a lot of ups and downs. we've seen the market go up and we've all smiled at the meetings. when it goes down, we don't get sad. we look for bargains. >> right. >> it's a sale.
it's like a discount sale in a department store. >> black friday, let's go shopping. >> reporter: after launching in is t 1983, the ladies rose to flame but fell in the public eye after a mathematical error decreased their rate of return. they come from different walks of life and are different ages. there is a retired hog farmer and a funeral homeowner in the mix. >> 75% of our members are descendants of the original club. >> we have every age decade represented in our club, which i think is awesome too. >> it's called diversification of our portfolio. [ laughter ] >> reporter: the strategy has been simple. buy to hold and invest in things you know. but do your homework. today the portfolio has expanded to 17 countries and over $450,000. >> berkshire. berkshire b. i can't afford the a. >> yet.
>> thank you. we have apple. we have starbucks. >> aflac. >> aflac. >> johnson & johnson. worldwide wolverine shoe company. ladies love shoes. >> reporter: aside from investing in what they know, the ladies are paying close attention to the election of donald trump and the market rally that's followed. >> i was glad he was elected. and we watched that market go down one day and it came right back up. we're looking at stocks that perhaps are going to be helped by adding more to the military and defense stocks. so this is the type of thing we're looking at to consider buying. >> reporter: since their return scandal, the ladies won't reveal how their portfolio is performing. they believe they'll end the rear in the green. aside from that, they're not making any calls about 2017. you don't want to make any predictions? >> no. >> if we did, we would not be sitting here. we would be in aruba, on a beach. >> reporter: for "nightly
business report," in beardstown, illinois, i'm kate rogers. >> that's great for them. >> gotta love it. >> absolutely. >> we remember. >> i remember covering them in the '80s, you do too. that's "nightly business report" for tonight. i'm sue herera. thanks for joining us. >> i'm tyler mathisen. thanks from me as well. have a great evening, everybody. we'll see you back here tomorrow night.
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