tv Nightly Business Report PBS March 28, 2017 5:00pm-5:31pm PDT
♪ >> this is "nightly business report" with tyler mathieson and sui herrera. >> surprise rebound, stocks snap back as investors focus on the three pill ars of the market, the economy, interest rates and earnings. >> securing your retirement, how you can protect your savings in a market that is more than the normal number of question marks. disrupting class. what some start-ups are doing to clang the way we learn throughout our lives. those stories and more tonight on "nightly business report" for tuesday, march 28th. >> good evening, everyone, welcome. stocks surged today as investors went shopping for equity, putting to an end the dow's week-long slump. today it wasn't about washington, health care or tax
reform. it was about getting back to basics, investors turned their attention to upbeat reports on the economy, comments on interest rates from an influential member of the federal reserve and corporate profit t. dow jones industrial average snapped an eight-day losing streak rising 150 points, the nasdaq added 34 and the s&p 500 was up nearly 17. let's start with earnings. the end of the quarter is a few days away, already the expectations are high. >> reporter: the end of the first quarter is just around the corner. the bulls are hoping a strong earnings season may provide a market stabilize tore what is likely to be a very rocky debate over tax reform and infrastructure spending. first earnings are expected to rise 10% from the same last year. >> that would be the best quarterly showing in six years, it might be better than that,
the first 12 companies, micron, nike, oracle, they've reported average earnings gained of about 12%. those have also seen the best quarterly gains since the second quarter of 2018. it's not just earnings, revenues are expected to jump more than 7%. >> that would be the best growth we've had in five years. so what's the key to these rising numbers? first, the two biggest sectors are technologies and financials. they're set to deliver earnings gains of 15% apiece. that's huge. these are the two biggest sectors, second, energy earnings, after nearly two years of decline, you know what's going on there, they've turned positive as well. is there any risks? yeah the big one is to oil. the ability to pull off big gains in 2017, it seems problematic. oil is in the new 40s, many of the earnings estimates closer to $60 a barrel. but the average price per oil this quarter is $52, and that might be enough to pull off
expectations tore earnings for the oil companies this quarter t. bottom line is the markets are about to enter a seasonally couple of weeks, prior to the april rooen 18th tax deadlines, any good news on earnings will be welcomes by traders. >> and with a plethora of uncertainties facing the market in the next couple of months, how should you position your portfolio? joining us is a market strategist of an investment firm heritage capital. great to have you here, welcome. >> thanks, for you having me. >> you think investors should use the weakness we saw in the last couple of days to buy to add to positions, why? >> well, first of all, nothing new, stocks are really still the only game in town. it's been that way year after year after year during the secular bull market. it remains that way today. we've gone through an 18 month stealth market. you want to calm it an earnings recession. whatever you like to call it. i liken it to 1994, 2004, we had
a year-long plus period where stocks regained it, regathered themselves, paused to refresh, now earnings are kicking up into high gear, as bob just mentioned the economy is more stable, better than it has in a while. and the dna markers that you typically see before a bull market ends are not present today. so although the bull market is very old, it's wrinkly, it's not over. we should pick at least 23,000 but before the bull market ends. >> old and wrinkly but not over. you are describing how i feel right now, palm. let's turn to those earnings, which i think are really important. are earnings really good and getting better or are they, were they just so bad a year ago that they look better by comparison today? >> sure, you know, you are not old and wrinkly, you got many more years left of this. to your point, we're talking about cops, remember, the first
quarter of last year was disastrous. right, it was right at the end really to the end of that pretty good earnings report. >> are they that much healthier today than then? or are we going back to a year they batted 220, now by comparison, they're doing better? >> i think it's twofold, one, the comps are easy, anybody can walk over comps. also, look at we know that whether you want to say it's coincidental or because of the election the economy is doing better. look at consumer confidence. look at what ceos are saying. people feel better. they feel there is a hugely strong pro growth agenda, the strongest since bush chose first time or after clinton, people are feeling better, the economic prospects, the average person is feeling better than they did. whether that is fiction or reality, it's certainly contradict to the economy and the markets. >> very quickly, with the last 30 seconds on the sector side of things, where would you put
money to work? >> well, assuming i had some, at least a little bit of growth or a bounce from, i think you have to start with large caps. i'm not sure a really aggressf investor. i definitely find any dip, any weakness, you have to be a pieer of stocks. i look at if are you an index investor, stick with the anne p s&p 500. don't overthink this. i think europe offers values for people. i'm really concerned about the bond market long term. i don't mean the next couple of months. i would use rallies. a lot of people own tons of treasuries the exact opposite the dollar cost average, at a bonds in the stocks and commodities, protect against inflation. >> palm, thank you so much. >> thank you. >> you bet. more now on that upbeat economic news we told you about, consumer confidence jumped in march to levels not seen since the year 2000. the optimism driven by solid job
growth, wage growth, along with rising stock prices and cheap gas. the conference board's confidence index is used as a gauge of future spending and in nearry as confidence rises, consumers spend more. >> that, of course, 15 part of overall growth because consumer spending is worth reminding you, that accounts for 70% of u.s. economic activity. >> and home prices rose at the fastest pace since 2014 and are appreciating more than twice the rate of inflation and wage growth. according to s&p case index, single family home prices rose nearly 6% if january as we have been reporting, lean housing inventory is helping drive those prices higher. but those high prices are also making it difficult for some americans to transition from renter to homeowner. >> and now to the federal reserve. okay, every investors wants to know what the second most powerful central banker in the u.s. thinks of the economy and the direction of interest rates. today, vice chair stanley fisher shared some thoughts with steve
leishman. >> reporter: among essential banking colleagues, said vice president stan fisher has generally been someone that wants to hike business rates sooner, it's news to the market when he says in this exclusive cnbc interview, he aligned with other fed members that want to raise rates just twice more this year. >> with the average forecast of two rate hikes this year, does it seem to be just right? should the market prepare for more? >> that seems to me to be about right. that's the smart course as well. i think there is some more. >> reporter: part of his reasoning, the recent health care bill which changed his internal calculus about how much fiscal stimulus should come from washington this year. he says the fed is right to wait and see which of the trump administration's policies are adopted, rather than acting preemptively. >> it's the sensible thing to do. i mean, you get out there and say i expect a deficit or such-and-such and tax cuts of such-and-such a size.
you know, it comes from the administration. it will go through the congress. it will be different than what went in. and you don't, i think it's a good way of doing it. >> reporter: fisher said tax cuts, if enacted, probably won't affect the u.s. economy until 2018 at the earliest. another reason for the fed to be cautious about counting up too much growth, the possibility of trade protectionism from the trump administration. >> i'm concerned about the possibility that something that all in all worked very well, which is the policies put in place after world war ii and that continued until recently. >> that worked spectacular for china. it worked for us. we are able to buy many, many things, we wouldn't have been able to make had it all been up to us. so we benefit from that as well. i'd be concerned if that basic model is overturned. >> so fisher mayened up being a
fed who may want to hike more and sooner. he made clear he will only change when he is sure the policies are going to clang as well. for the "nightly business report," i'm steve leishman in walk. the auto maker is not firing on all cylinders, green light capital david einhorn is now calling on gm to split its stocks into two classes. he wants one class to receive gm's current dividends and another to be more growth oriented. in a phone interview earlier today, mr. einhorn explained his plan. >> i would compare it to an ice cream stand, that just serves chocolate and vanilla swirl ice cream. if you gave investors more choice, some people like chocolate. some like vanilla, some like swirl. if you have to implement in our policy, you would wind up with one share each. so if you like the swirl that you have today, you could keep the swirl. if you would like to have more
dividends, you could sell the capital appreciation sales. if you like just the capital appreciation the lone multiple, then you could sell the dividend shares and buy the capital depreciation shares. >> general motors is not buying the chocolate, vanilla or the swirl. they say it creates unacceptable risk. it is not in the shares, of gm up 2.5% today. ford motor plans to invest $is billion at jobs. the investments were in the works, though, before president trump took office and the announcement comes a week after the auto maker provided a first quarter profit outlook that was below expectations. the white house wants to bring back coal jobs in an effort to do that the president today reversed obama era energy policy, while the industry applauded the move, others say fixing the coal industry won't be easy, especially now that other fuels are cleaner and
cheaper. >> reporter: the trump administration took steps tuesday to gin dismantling barack obama's climate change effort on what this white house called his war on coal. >> we will put our miners back to work. >> reporter: in an executive order the president initiated a review of obama's clean power plant regulation on emission, with an eye towards rolling it back in the future. trump also rescinded obama's leasing moratorium and began review of methane rules and hydraulic fracking regulation zpls we are ending the prosperity and rebuilding our beloved country one of the actions it will not fix is economics. natural gas has become more inexpensive and available t. white house said it did not have an estimate of the football of jobs its actions would create. >> i see it maybe eliminating or reducing the reduction of coal in jobs. i definitely don't see it as a
revitalization of the industry. the coal industry is having to compete with natural gas. that's been the biggest problem. >> reporter: the energy industry largely applauded the move. >> one of the greatest advantages america has is its natural resources, now what we can do is unleash those forces, whether it's nuclear, comb, gas, renewables, or even kind of new modems for energy efficiency. to have job growth to make lives better. >> reporter: the white house dismissed the concerns of environmentalists who said the president's actions could have disastrous consequences. a senior administration official at the white house says the best way to protect the environment is to have a strong economy. for "nightly business report," i'm eamon javers at the white house. still ahead, conflicting signals, how you should manage your retirement savings in an uncertain market.
>> wells fargo agreed to pay for a action scandal. it requires approval and will cover customers who put in a claim they authorized an account without their concept. in december, they settled with the government. corporate america is always focused on policies out of washington and no more so than now. but for the fast food industry, the unanswered questions are starting to pile up. we talked to one of the biggest players in fast food. the ceo of young brand. ♪ >> the fast food industry is being pulverized on the failure to repeal and replace obamacare
in the house, some hope to maybe gain health care costs for employees. the former ceo of cke restaurants, parents company of carl junior and hardee's no longer in contention to be the labor secretary and there have been recent executive orders cracking down on immigration, threatening one of the biggest industries that employ immigrant's labor, fred craig the parent company of taco bell, pizza hut and kfc is optimistic, particularly about the prospect for tax reform. >> a lower tax rate i do believe would increase investment from people. remember, our corporate tax rate is low, our franchisees living in individual companies, our u.s. franchisees would have a higher tax rate than we have. i think lowering the tax rate, it's business would be a good thing for industry. >> if you get personal tax cuts, i think that would be helpful for your consumers? >> absolutely. we give tax cuts to the middle income in the u.s. and below,
that people will spend money. >> reporter: traders hope all that deregulation will go a long way towards helping the restaurant industry. >> we just immediate to make the it simple. when the federal government has won the state government has another and the local authorities have another, it just makes it particularly difficult and in our case, our franchisees are doing most of the investment in the u.s. and regulations can just drive them insane and away from investment. >> reporter: we also hope despite consumer sentiment after the election will translate into higher spending. he describes the u.s. consumer as still value oriented. so despite some possible early setbacks, on a policy front the fast food industry still has a lot of room for improvement and hopes of a bump if business from washington. for "nightly business report," i'm sar have a eisen outside jacksonville, florida. >> positive trial results is where we gin tonight's market focus t. biotech company said its medication for a chronic
condition-related kidney disease has no approved treatments in the u.s., performed well during a trial, they said they plan to discuss next steps with the food and drug administration. shares up 5 morris to $19.09. porpoisetive news on the biotech front, regeneron says the fda granted approval for the ecsema drug t. treatment will carry a list price of $37,000 a year, regeneron shares were off a fraction at 8255, santafee flat at 4535. carnivale said strong demand for caribbean cruises and higher on board spending helped profit top expectations. the company says it is see theing strength in the number of bookings for the remainder of the year. prompting it to raise its outlook for 2017, carnivale shares higher at 5926. shares of darden restaurants continue to surge today,
following the company's stronger than expected earnings that came out after the bell last night t. owner of olive garden gave an upbeat profit forecast and said it was taking over restaurant chain for almost $800 million. darden up 98% to 8262. the competition between facebook and snapchat is heating up. facebook launched three new features similar to snapchat abilities, including adding filter effects to your pictures and send video and photos directly to your contacts. wall street sent shares down about 7% for snapchat. facebook was up 1% to 14176. rest rakes hardware posted sales ahead of expectations. the upscale home furnishings gave upbeat guidance and noted the transformation were behind it. shares initially rose more than
10% in after-hours trading adding on to a 3% gain in the regular session where they finished at $38 even. with uncertainty lingering heavily in the markets these days, what should you be doing right now to protect your retirement savings? here with us to discuss is rick edelman, founder of edelman financial services, always good to see you. i want to gin with a question a little off topic here. let's assume for a moment that i as a result of this very nice run in stocks now have more stocks than i'm comfortable with. 70% as opposed to 60%? >> all right. >> we are talking retirement accounts here. i want to get back to 60%, should i sell stocks within my tax sheltered retirement plans or outside of them to get back to my ideal mix? >> given the choice, do it inside your retirement account. because that way it's tax free. if you were to do it outside the account, you will occur a capital gains on the profits.
you are absolutely right, do it inside the tax deferred account. you are right of the fact of rebalancing back to your desired allocation modem. a lot of people miss this point. >> that i don't realize there was a run-up of stocks, we have enjoyed the portfolio allocation is different than it was just six months ago, if you don't pay anything e any attention to that, you could be taking a lot more risks today than you realize. >> what about the emotional component? it's all nice and rosy and sunshiny when we have a big rally. but when we get dips and volatility increases, the emotional aspect tends to come back in with the individual investor. >> you are absolutely right, it's really fascinating. nobody complains about upside volatility. it's only the down side volatility. you can't have one without the other. if you find yourself nervous because you think a market correction is in place the president's agenda is now weakened because of last week's activity on the hill, if are you nervous, it's causing you to lie awake at night, that is an
indication you have too much of your money alocated to equities, this is a wonderful opportunity to rebalance that. when you do, focus on your tax deferred account, the opportunity to do that. >> let's talk a little about the possibility of a correction next whichties, you know, we went eight day there is a row with dow losses, it was a long streak. but really a relatively small decline in prices, should you look at corrections as opportunities to buy more or what? >> yes or ignore them entirely. i mean, let's remember, we haven't seen a week like the one we just had since september. and so the stockmarket isn't meant to rise the way it has since the november election. at one point, we were running at an annualized pace at 70% a year. well, we know that's unsustainable. it's inevitable the stockmarket will either go flat for a while, which is kind of what we seen or dep kleined maybe a lot to get back to the normal rates of return, that we typically
experience. >> 70% a year from your lips to my portfolio, rick, thanks,. we appreciate, always good to see you, rick edelman, edelman financial services. >> coming up, making the grade, why classrooms today and in the future will look a lot different than they did just a couple of years ago. >> a look at what to watch tomorrow, bids helping president trump's proposed mexico border wall are due a. number of fed officials will speak on the economy and the uk prime minister is expected to trigger article 50. that's the mechanism that will start the process of leaving the european union for great britain. >> that is what to watch
tomorrow. speaking of which, scottish lawmakers voted in favor of a new risk independence referendum. >> that gives scotland's first minister the okay to ask the uk parliament for a referendum between later this year and early next year. the british prime minister has indicated that she will reject that time table. teresa may says that now is not the time for a vote on the breakup of the united kingdom, because britain is expected to leave the eu in 2019. well, remember when you sat at your desk in school and listened, oh, listened so intently to your teacher as she wrote on the chalk board or he wrote on the chalk board? walk into a classroom today, things are different thanks to startups turning education inside out. julia boresen has our story. >> reporter: we have about half of the highest paying jobs requiring coding knowledge arc raj of start-ups are looking to close the skills gap, targeting mid-career adults, looking to
get better jobs, start-up core sarah is targeted with 150 universities around the world, along with professional certificates and digital and customer training, ibm, l'oreal looking to advance tear employees. >> there are many, many jobs requiring middle of high level skills that go have a can't, even while many other jobs, many other people are unemployed or under employed. so we think there is a real opportunity by giving people the opportunity to require new and better skills. >> reporter: of course, their arrival is focused on the tech sector, with 25,000 students enrolled in one of its nanodegree programs. hot topics, including robotics, digital marketing and self driving cars. and as early as kindergarten, knowledge is transforming classrooms and leveling the playing field as teachers around the world embrace software that finds best practices, hopes to manage assignments and submit valuations. learning management systems,
such as bright space are already a $5.2 billion industry, projected to triple in four years, google, microsoft and apple are all offering free classroom tools, outside curriculum, choice start-ups are lining up to offer fun ways to learn valuable coding skills. ozmo has pen and paper and blocks, it's most popular explorer kit costs $189, wonder workshop brings coding to life by teaching kids to program robots and dash. the pair cost itself $200 and has been adopted by 10,000 schools world wide. >> it's almost very affordable. that's been a core focus for what we have been trying to do is to make technology very affordable for the speakers and for parent. >> reporter: the global market for child development toys is projected to reach nearly 40 billion by 2019, with over
three-quarters related to science, technology, engineering and math. the ed tech market helping children and adults learn the skills needed for a fast changing work force. for "nightly business report," i'm julia boresen in los angeles. >> before we go, here's another look at wall street. the dow rose 150 points the nasdaq added 34 the s&p 500 was up nearly 17. and that does it for us on "nightly business report." i'm sue herrera. >> i'm time ler mathson, we'll see you tomorrow.
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