tv Nightly Business Report PBS December 21, 2016 1:00am-1:31am PST
♪ this is "nightly business report" with tyler mathisen and sue herera. funded in part by: hss. our value principles are patient first. and we want to deliver the highest quality care. >> the goal of creating and sustaining value is all about putting the patient at the center of the equation. >> the purpose of this organization is to help people get back to what they need and love to do. in sight. dow 20,000 is oh so close! but as attention focuses on the rip-roaring rally here, is the big opportunity for investors overseas? just do it. and that's what nike did.
the world's largest sportswear maker cited demand in the face of increased competition. russian ring? did hackers trick advertisers and steal millions of dollars a day with bots and fake websites? those stories and much more tonight on "nightly business report" for tuesday, december 20th. good evening, everybody. i'm sue herera. >> and i'm bill griffith in tonight again for tyler mathisen. good to be back. the blue chip average did it again today, spent the day in record territory and flirted with that 20,000 level. the dow industrial average arguably the world's most recognizable market index came within a few points of the magic number. early today, the market rally since the election has been powerful and broad. and has been driven by the expectation that the incoming administration is going to cut taxes, roll back regulations and spend heavily on infrastructure. and today the dow notched its
17th record close since the election. it rose another 91 points to 19,974. it's a record, as i mentioned. the nasdaq advanced to its own all-time high. the s&p up 8, just shy of its own record. but how much longer can the bulls remain in control? bob pisani reports on the mood of the market from the new york stock exchange tonight. close but not quite. the dow fell back. financial stocks like jpmorgan and goldman sachs led the charge, but weakness in consumer names like procter & gamble and johnson & johnson halted the advance. no matter, the trend in the market is up for two reasons. this powerful season force and momentum. seasonal forces because the last two weeks of the year, the market tends to rise. momentum because the market has been moving since the election on hopes that a division of tax cuts and fewer regulations and massive stimulus program will improve the economy and particularly translate into higher earnings for u.s.
corporations. these two factors mean traders have been reluctant to sell stocks, so instead of selling and getting out, they sell one sector like bank stocks and then go and buy another one like technology stocks. this is called rotation. and while the market may just move sideways for a few days, it doesn't sell off to any appreciable expense, at least not so far. for "nightly business report," i'm bob pisani at the new york stock exchange. >> but not every stock has contributed to the rally. some have been left behind. dominic chu explains why and what it might mean for investors. >> reporter: with stocks still trying to punch through that dow 20,000 level, there are a number of places in the markets that have been left behind in the rally towards record highs. currently around 20 stocks in the large cap s&p 500 index are at least 15% below their average price over the last 200 days. think of them as some of the most beaten up stocks on a relative basis. included on that list are stocks like generic drug maker perago,
under armour, cody and solar energy company, first solar, among others. money managers are constantly on the hunt for their own list of stocks that appear to be beaten up or at least trading at an attractive valuation. >> one of the most beaten down and prominent areas has been health care. a lot of cross currents there about what the changes are going to be and yet we think the stocks are -- have fully priced in any particularly down side risk. united health is an example and one of the names would be a winner, under most every condition that all the proposals have. and that's one we have been buying. >> but it's not just about individual stocks. the experts are looking at investing themes, given the current environment. and economic optimism plays a big part in the story. >> if you have an environment where you have inflation going up, consumer confidence going up, interest rates going up, where you want to be investing the banks. when you're done investing the banks, you want to buy more banks. beyond that, you want to buy companies that are benefit for improving economy. it's energy, it's materials,
it's industrials. and the consumer really looks like they're picking up in an environment like this. the consumer discretionary stocks, brick and mortar retailing another place you want to be. >> overall, there is a lot of debate on just how much higher the market can run after what's been a very sharp rally over the last month and a half or so. but markets don't always go up in a straight line, and that's something to keep in mind in the coming weeks and months. for "nightly business report," i'm dominic chu. so with the u.s. stock market on the cusp of hitting dow 20,000 and investors focused on the record-setting market, could they miss out on other investment opportunities elsewhere around the world. joining us tonight, david kelley, chief global strategist at jpmorgan funds. and he joins us to talk about, you know, our own market, which has clearly been on a tear. but the dollar has also been on a tear, and there are those who feel that could cap our own earnings capabilities here in the united states. what about overseas? what do you think? >> well, yeah. i think a rising dollar does hurt earnings a bit.
but to me, the more important point is, make sure you're invested around the world. this looks like there is going to be the fourth straight year in which the u.s. stock market has beaten other developed countries. and a lot of people have felt why should i invest abroad overall? a lot of positive have been built into the u.s. market. foreign markets are cheaper. foreign markets have in case of europe and emerging markets, more potential to grow in the long run. and that dollar -- i think the dollar is too high and as it comes down will actually amplify. it's great to pop open the champagne cork, uncork the champagne with this move to 20,000 on the dow. but don't just say domestic. make sure you're diversified around the world. >> why do you think investors are so reluctant to do that, david? >> i think -- first of all, i think there is a lot of optimism here at home. and some of this is a little bit artificial, because nobody wants to get out in december, because
i mean, first of all, you disobediedon't want to realize the capital gains, and you think you'll have a lower tax rate next year. so in some ways, the exit door is jammed here. only people coming in the entrance. and that's helping push up the u.s. market. but the other thing, people have got quite a negative view about the rest of the world. we only see bombs and terrorist attacks, and the negative news about the rest of the world. and i think we miss out on the fact that europe really is recovering. emerging markets are getting beyond this slump. so i just don't think people have a broad enough view about what the world economy is doing right now. just one thing. if you look at the pmi index, the whole manufacturing sector around the world. it looks like december is the strongest month in over five years. not just the u.s. is doing better, the world is actually doing better. >> so where do you make the money then? do you pick it by countries, individual companies? what do you do here? >> well, i think -- i say two things. one, overweight europe and the eurozone in particular for the long run, over the next five
years. the other thing i think you use a good manager to pick those countries that avoid the normal potholes and crises in emerging markets and take advantage of cheap valuations in a lot of emerging markets and a lot of growth potential. so i do think at this time you do need to think carefully about asset allocation. overall equity markets around the world aren't that cheap. but i do think there is more opportunity overseas if you look carefully. >> david kelley with jpmorgan funds. good to see you. >> any time. one dow stock that has not rallied along with the broader market is nike, and the company is hoping its late-day earnings report will reverse that trend. the world's number one footwear maker reported better than expected quarterly revenue, helped by strong demand in some of its most important markets. nike earned 7 cents better than estimates. revenue climbed to more than $8 billion. that sent shares of the company initially higher in after hours trading. something shareholders are probably pretty glad to see,
given the 15% decline that stock has seen this year. sara eisen has more on nike's quarter. >> reporter: expectations were low going in, and nike managed to surpass them. part of the story, sales growth. the company grew revenues overall 6%, not bad in its tough retail environment. fueled by double digit growth in places like china. still, it is a marked deterioration from the kind of growth we were seeing from nike around this time last year. the strong dollar is still hurting. this is a company that gets more than half of its business overseas. and that continues to chip away at overall sales. especially with the dollar marching higher day by day here is a concern going forward. and competition. nike's stock performance has lagged of its competitors. the trend in retail is still pointing to ath leisure and a healthier lifestyle. the companies like adidas and lululemon careful to pick up on the high-fashion retro style ath
leisure trend working among millennials. one reason why nike's stock has gone from the best performing dow component last year to the worst so far this year. for "nightly business report" i'm sara eisen. >> fedex was out with the quarterly results late today and that report comes during, of course, its busiest time of the year. the package delivery company earned $2.80 a share, not quite as good as what analysts have been looking for. revenues, though, were sharply higher, up nearly 20% from a year ago. but fedex did see its operating margins slide, and that weighed on shares in initial after hours trading tonight. morgan brennen as the one key take-away for us from the company results. >> reporter: fedex reporting mixed earnings as profit grew last quarter, but not as much as analysts had hoped. as consumers increasingly turn to the internet to do their shopping, fedex is welcoming more business with average daily package volumes soaring 5% in its ground segment.
thanks in large part to that e-commerce boom. but more business has also meant more spending. as the company scrambles to expand its network to handle the surge. that once again pressured ground margins, which fell last quarter as fedex brought new facilities online ahead of the holiday season. the final days to christmas do count down. fedex chairman and ceo fred smith saying we are in the home stretch of our peak shipping season and service levels are high thanks to the outstanding efforts of our hundreds of thousands of team members around the world. the big question for investors, especially in light of today's results, high service levels at what cost. for "nightly business report," i'm morgan brennan. disney is making box office history. the dow component is the first studio to grow $7 billion worldwide in a single year. the release of its latest "star wars" movie, "rogue one," helped propel past that number. the studio is home to some of
hollywood's most powerful grants, including marvel studios and pixar. the previous record set last year by universal records. still ahead, digital ad crooks? today russian cyber gang conduct a large and very profitable front operation on one of the fastest-growing industries. ♪ ♪ the white house has permanently banned new oil and gas drilling in federal waters in the atlantic and the arctic oceans. president obama used a 1950s law that allows the president to limit areas from drilling.
the ban affects waters off alaska, including the entire chooch key sea and most of the balance fort sea. the ban is also in effect in the atlantic from new england to chesapeake bay. president-elect donald trump has pledged to make the country energy-independent, but the ban may be difficult for him to roll back. meanwhile, the european commission is looking into whether facebook gave misleading information about what's app. the antitrust watchdog is concerned that facebook with match people's sociaial networkg accounts to their mobile phone numbers using what's app's data. in 2014, though, facebook said it could not do that. facebook has until the end of january to respond and it could face a hefty fine. facebook is a big player in the internet advertising market, and today a cyber security firm issued a warning for the fast-growing digit al ad industry about a potential massive scam. eamon javers is covering that story for us.
good to see you as always, eamon. what exactly was uncovered? >> hi, sue. the firm here is called white ops. what they said they found here is a massive russian hacking ring that they're calling net bot, and they say that's targeting the digital video advertising industry by getting right in the middle of the digital exchange in which buyers and sellers buy and sell digital video ads. so they're saying they're creating fake impressions of digital video ads and then getting unsuspecting advertisers to pay for those up to 300 million of them every single day. they say they're generating as much as 3 to $5 million a day by the scam. >> what kind of impact are we talking about on the digital ad industry? how much money are we talking about here? >> well, this is the biggest scam that's been found so far. and what people in the industry have said today, as i've been talking to them, they recognize the digital video advertising stereo industry does have a problem with fraud. there are a lot of bots out there. i talked to one of these exchanges, which says it removes 1 million bots a week from the
system. a lot of people trying to commit a lot of fraud. they feel they have got to get their arms around that. they have started a number of industrywide initiatives to do that. ultimately, this is a result of the fact that online buying and selling of ads has been disintermediated. buyers and sellers no longer know each other or who is buying and selling what. all of that anonymous over the internet. they're looking for ways to change some of that and make sure buyers know exactly what they're buying and know it's real. they're not buying a video ad that is just playing for a robot. not for an actual person. >> you kind of answered my question. i was going to say, they have removed the bots. they know how to find them, certainly. but is there anything they can do short-term until they set up that face-to-face net working? >> well, the company that released this report today said one of the things they're doing is releasing all of the ip addresses they feel have been associated with this scam, so that people throughout the industry can block those ip
addresses and at least remove that in the short-term. and they think ultimately if law enforcement gets involved, they might be able to find the people in russia doing this and put a stop to it. they think whoever is doing this is a very sophisticated industry insider. somebody with experience who knew exactly how these ads are bought and sold, because they created software that faked out this exact system. very few people would have known how to do it. >> very sophisticated. all right, eamon. thanks so much, as always. eamon javers in washington. and to read more about the reported russian cyber ring, head to our website, nbr.com. rite aid sells hundreds of stores to fred's pharmacy. as u.s. regulators begin to scrutinize the proposed merger between rite aid and walgreens, those two pharmacy chains have agreed to divest 865 stores in an effort to apiece antitrust concerns. fred's pharmacy will purchase those stores, long other assets
for nearly $1 billion. shares of freds soared by 81%. rite aid and walgreens. a worse than expected decline in sales for the oplay yogurt and progresso hurt results. and shares fell billion 2.5% to $61.45. restaurant chain operator darden restaurants posted earnings and revenue that were in line with expectations. the owner of longhorn steakhouse reported better than expected same-store sales as the company said it benefited from the strong performance of its olive guarden brand. shares rose to $75.74. auto retailer, carmax, posted higher property and sales. the company also saw improvements thanks to an uptick in store traffic. carmax surged $66.06.
libbed worth more than $65 billion. the company will take on the name lind and will be run out of the u.s. while tax headquarters are expected to be shifted to europe. praxair fell to $118.39. and blackberry raised after beating analysts' expectations. they did report worse than expected sales as demand continues to fall. shares were off more than 2.5% to $7.50. a group of democratic senators has sent a letter to president-elect trump on the issue of drug prices. the senators led by sheriff brown and al franken said there is the posititential for bipart reform. including allowing medicare to negotiate prescription drug prices, stopping abusive pricing practices and supporting generic competition for branded drugs.
since the election, health care industry has been hit with an awful lot of uncertainty surrounding the fate of the affordable care act. the sector has only risen 1% since the election. much less than the broader market. it is down nearly 4% for the year. so will 2017 bring clarity in investing opportunity in the health care sector. joining us is the health care policy expert at capital street. nice to have you back. >> thank you. >> let's start -- first of all, last time you joined us, you said it was about a lack of clarity which i think is still present, certainly. but are you at all a little more confident that 2017 might be a better year for the health care sector? >> health care sentiment has not been terrific since the election, simply because of uncertainty. like you mentioned, we have got a new president in a congress that wants to repeal and replace the affordable care act. so i think what you're going to have at the beginning of next
year is some certainty in terms of the aca being gutted. obamacare going away. big portions of it, like the taxes and subsidies, et cetera. and then the real choppiness will probably come later in the year, as republicans try to coalesce around this replace option. and honestly, i don't even think a new program will come into play for a couple of years, past the mid-term election. so there is going to be, i think, a period of uncertainty before we really know what the new replace will be. >> in the meantime, how are you going to make money in health care overall. and let's focus it down a little bit. the hospital companies have suffered mightily since the election. is that a sector you would look at as a value right now or do you need more clarity on what the new system will look like? >> agreed. hospitals have taken a beating. i think that that -- there are opportunities there as the stocks, certain of them, hca pull back more. but yeah, you've got to know what the new program is going to
look like. not just the individual market going away. it's also reforming medicaid, where a lot of hospitals have seen volumes, lower bad debt and uncompensated care issues. so i would say hospitals could be an opportunity maybe mid to late next year. i think there are other pluses and minuses, some sectors i think would be attractive are bio pharmaceuticals. a president trump is going to be far more friendly than a president clinton would have been. so you could see some reforms for sure since drug prices are concerning to americans. >> what about health insurers? >> insurers, i think, could win as far as medicare advantage. these are companies like united, aetna, humana. these are companies that help the federal government run the medicare part c program. these are the ppo type products that medicare beneficiaries can buy. so i think if you're an m.a., that's a good place to be. >> all right. thank you so much.
good to see you again. capital street. coming up with dow 20,000 kind of within reach, we're almost there. should investors be concerned about the so-called curse of the round numbers? ♪ volkswagen has reached an agreement to fix and/or buy back about about 80 polluting decemberel vehicles. the owners of those vehicles would receive substantial compensation for getting their cars repaired. the court said there were some remaining issues that still need to be addressed.
the settlement is the next step in resolving the german automaker's dee'sel emissions cheating scandal. auto safety regulators have opened an investigation into a potential defect in some fiat chrysler vehicles that causes cars to roll away. the 2013 to 2016 ram pickup trucks are being looked at along with the 2014 to 2016 dodge durangos. both models have transmissions shifted electronically. the investigation centers on reports of nine injuries and 25 crashes. fiat chrysler is corporation with the investigation. uber reportedly lost hundreds of millions of dollars. the fast-growing hailing company shed at least $800 million while growing sales at the same time. those losses are due in part to heavy spending on promotions to recruit new drivers and investment in the self-driving car unit. uber is closely held company that is valued around $68
billion and many say uber will have to pare those losses. the dow got close, oh so very close. but it failed to hit 20,000 today. but landmark levels like that one get people's attention. as mike santoli reports, there may also be reason to worry about the curse of the round number. there is no fundamental significance to the dow hitting such an eye-catching level. markets have sometimes moving past such landmarks. the dow itself, for instance, struggled to get beyond the 100, 1,000 and 10,000 thresholds in years' past. the composite didn't make it its way back for another 15 years. it's not clear exactly why such round numbers should halt or reverse a market trend. crowd psychology could be part of it. catchy figures with plenty of zeros capture plenty of public attention, possibly reminding
investors how far prices have traveled. of course, it could be the case such numbers seem cursed when they happen to cap a market rally. for instance, the dow had little difficulty pushing through 15,000 a years ago. after all, the dow should certainly not be altered in any lasting life, because the index math produced a new landmark level. ultimately, though, there is no way to know where the dow 20,000 had a gravitational pull the way some earlier round numbers did. for "nightly business report," i'm mike santoli. and before we go, here is another look at where the market stands. the dow notched its 17th record close since the election, rising 91 points to 19,974. the nasdaq to an all-time high. the s&p 500 up 8, just shy of its own record. >> it will be inching across the finish line. >> or limping. one of the two. that's "nightly business report" for tonight. i'm sue herera. thanks for joining us. >> i'm bill griffith.
have a great evening, everybody. see you tomorrow. "nightly business report" funded in part by hss. our value principles are patient first, and we want to deliver the highest quality care. >> the goal of creating and sustaining value is all about putting the patient at the center of the equation. >> the purpose of this organization is to help people get back to what they need and love to do.