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tv   Nightly Business Report  PBS  October 6, 2017 5:00pm-5:31pm PDT

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>> announcer: this is "nightly business report" hurricane hit. harvey and irma take a bite out of the u.s. labor market, leading to the first month of job losses in seven years. but there was plenty of good news too in this month's job report. stacked chips. this week's market monitor has three blue chips he thinks you need to own right now. and staying on course. how one entrepreneur is on a mission to fix what some called the broken business of student loans. all that and more for friday, october good evening, everyone, and welcome. for the first time since 2010, the u.s. economy lost jobs. most of the losses traced back to the hit from hurricanes
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harvey and irma. and while many see the decline as a short term blip, it did catch forecasters by surprise. in september, the economy shed 33,000 jobs, while economists were looking for a gain of 80,000. the unemployment rate did dip, to 4.2%, the lowest since 2001. and as hampton pearson tells us, .here were other bright >> reporter: hurricanes harvey and irma, which closed thousands of business in texas and florida, ended the 83-month streak for job gains. and the loss of 33,000 jobs in september was the first monthly decline in nearly seven years. restaurants and bars took the biggest storm-related hits, shedding 105,000 jobs. dallas fed president robert kaplan sees the setback as temporary. >> we knew that the september number was going to be affected by harvey and to some extent irma, and it has been. >> reporter: but there were also
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signs of underlying strength in the job market. the unemployment rate fell to 4.2%, the lowest in 16 years. >> it's a number that really got my attention. the bls said the survey wasn't disrupted by the hurricanes. they said the response rate was in line with normal, even in the areas affected by the storms. >> reporter: and there was a spike in wages. average hourly earnings up 5/10 of a percent to nearly $27 an hour. that wage growth may be artificially inflated because of the hurricanes. but a leading wall street economist says upward revisions on wage growth in july and organize support the overall trend. >> i think the most significant part is actually the upward revision to wages in july and august. the cumulative 3/10 of a percent
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in wage growth. >> the big theme coming out of this is we see an interest rate rise off the back of it, the probability of a rate hike from the fed is going up. >> reporter: 1.5 million people were unable to work last month because of the weather. the biggest setback in 20 years. and yet, a hiring rebound is expected as those hurricane-impacted areas recover. for "nightly business report," i'm hampton pearson in washington. let's turn now to seth carpenter for more analysis on today's jobs report. he's the u.s. chief economist at ubsf. nice to have you with us. a former mayor of new orleans said, that's right, it was an aberrant report, the hurricanes had something to do with it. but we may be at some inflection point. do you agree or reject that point? >> neither, actually.
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it's really hard to tell from this month's report any important trend in the data. we knew that there was going to be a lot of noise coming in, because of the hurricanes. and that's really the way we see this whole report. it's much too noisy to draw any true signal from. >> what does that mean, seth, for the federal reserve, who watches that kind of report very carefully in terms of, you know, the wage issue, the participation rate, all of those different things? if it's a somewhat muddied report, does it matter less to then this time around, or not? >> i think this time it probably does matter less than it does usually. the labor market report is traditionally a very, very important report. it tells you about jobs, which reflects on the health of the economy. it tells you about wage inflation, which is giving you signals about how tight the labor market is. but this time it really is pretty noisy. our view is that the fed already has the forecast and inflation will be rising gradually. we already saw them hiking rates again in december. this report is not going to
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change their underlying forecast. as a result, it doesn't change our view that they're going to hike in december. >> let's drill down on one little piece of it, that would be the wage growth number, which would fairly healthy, robust, comparatively speaking, up 2.9% year over year. was that number two sort of contaminated by the noise, as you say, of the month? >> we think it was contaminated. i think some of the stories that you'll here that we're sympathetic to are that some of the lower wage workers probably were out of work during the survey week. and as a result, you're getting an upward bias at least for this month's data in terms of the wage inflation. we think you can discount the strength we're seeing there, at least somewhat. >> how does the overall economy look to you, seth? >> regardless, even without a hurricane, any single month's worth of data is not going to be pivotal in terms of your view of the economy. looking over many, many months, in fact over years, the economy has been creating 150 to 200,000
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jobs a month. that's really solid numbers, both a reflection of a strong economy, the healthy economy creates jobs, but also a driver of the economy, because with more jobs being created, there's more household income and household spending is about 70% of the economy. so we feel like the economy is on solid ground. it's doing well. it's not gangbusters, but it's pretty solid. >> thank you, seth, have a great weekend. to wall street, stocks mostly ended the day lower. the s&p 500 snapped its eight-day win streak, its longest in four years. the dow lost almost 2 points to 22,773. the nasdaq scratched out a gain of nearly five. the s&p dropped about three. but it was a good week for the averages, with all adding more than 1%. energy, though, is something to keep an eye on as tropical storm nate threatens the gulf coast this weekend. shutting down offshore dy oil and gas rigs.
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this year has been a strong one so far for stocks, with some dubbing it an all gain/no pain market. the question now is, does this continue, or are we hitting a point of this is as good as it gets? mike santelli has more. >> reporter: call 2017 the year of the all gain/no pain stock market. the broad s&p 500 index climbed 14% this year, a brief dip of 3% along the way. that's five points of reward for each point of downside risk, making this one of the most generous market years of recent decades. even strong rally years typically feature one or more setbacks of at least 5% along the way, with 10% drops happening in a majority of years. 2017 resembles such winners at 2013 and 1995, when stocks rose 30% in remarkably gentle fashion. in year a global pickup in economic growth, stubbornly low interest rates and record
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profits help explain stocks' orderly advance. the lack of progress to date on tax reform in washington has been taken in stride. in fact those impressive rallies in 2013 and 1995 also occurred in years of d.c. gridlock with government shutdowns and stalled agendas. what does this suggest for the outlook for the fourth quarter and beyond? history tells us this is not the way stocks tend to behave right before a serious peak. markets get jumpy and unstable ahead of a major correction or the end of a bull market. so the next 5% pullback is unlikely to be the big one. in fact, stronger economic data combined with a slow pace of federal reserve rate increases is prompting predictions of a so-called meltup, as professional investors rush to get into a market that's furnished few dips to buy at lower prices. that said, fresh concerns are surfacing. one is the chance the fed might move faster in lif rates in response to a hotter economy and a pickup in inflation. perhaps under a new fed chairman
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early next year. also raising some alarms, investor optimism may be approaching a short term extreme after several successive all time highs in the indexes. while neither of these worries suggest this market is in danger of expiring, it could jolt the market in coming weeks or months and perhaps inflict just a bit more pain to offset some of the market's health gains. for "nightly business report," mike santelli, the new york stock exchange. a new wave of innovation technology is creating opportunity for job seekers. kate rogers shows us why one dow component sees it as the >> reporter: in middle school, eileen lowery swapped band for a computer science class and hasn't looked back. >> i've always been fascinated with how do things work. >> reporter: today lowery runs one of ibm's north american blockchain programs. >> every day i'm talking with clients, working with them on building blockchain applications and figuring out what good use cases exist for them in their
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industry. >> reporter: blockchain is of t transparent and tamper-proof digital ledger that allows users to share information quickly and without fear that it could be altered without users detecting it. >> it's the second wave of technology innovation since the time of the internet. it's addressing a lot of issues that robotics cannot address today, primarily because blockchain is addressing the underlying data that is used in our processes. >> reporter: blockchain makes that data permanent and immutable, increasing the level of confidence and reducing costs. companies across a wide range of industries from financial services to logistics, retail, and more are betting big on the future of blockchain. and ibm is among the leaders. >> when you think of making the complex very simple, that's what we look to do, in both technology and business. >> reporter: they're currently working with some of the leading food suppliers like walmart to help address food safety challenges. >> it's still a complex network, getting, let's say, a mango from
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the farm to the fork. there's a lot of exchanges in there. right now, that causes lots of challenges and trouble with regards to that food safety. >> reporter: ibm employs more than 1500 people to help clients build blockchain based solutions. as the business grows, the company is looking to hire additional talent. >> what we look for are people who are ready to move quickly, think creatively, and be very close to our client. >> reporter: ibm is ready to train the right candidate. >> blockchain is a new technology. finding people with experience and expertise in the enterprise is not easy. so we do look at a lot of adjacent skill sets. software development, cybersecurity, cloud development. >> reporter: ibm also considers new collar workers, people without a four-year degree in i.t., as well as veterans. for "nightly business report," i'm kate rogers in new york city. big and ugly. that's what this week's market monitor calls the stocks he
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thinks would be beautiful in your portfolio. we'll tell you which ones . yesterday we told you constellation brands raised its full year guidance on the back of stronger beer sales in the third quarter. this was a figlimmer of hope fo the fizzy stuff, which is a bit of a buzz kill for the industry as more people turn to wine or liquor. landon dowdy is in denver. she got the assignment to learn about what companies are looking for to compete with beer. >> reporter: it's the great american beer festival. the 60,000 people expected to attend this weekend stormed in the door at the kickoff last night. more than 800 brewers like colorado's oldest brew club are
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here pouring their latest bruew to stand out in a competitive marketplace. >> we brewed beer recently with yams and marshmallows, we have a beer we made with doughnuts and coffee, cucumbers and black sea salt. we're trying to use as many interesting ingredients and inspirations as we can. >> reporter: you wouldn't have any idea by the looks of the screen, but the beer category is struggling. overall beer sales were flat for 2016 and have been on the decline so far this year. >> wine and spirits is definitely cutting into beer's share of total alcoholic beverage. is really loyal to a particular type of beverage. that's had an impact on beer's overall market share. >> reporter: so with spirits and wine killing beer's buzz, brewers are having to adapt and get innovative. >> people want more flavor and
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variety. we're seeing companies respond. there's more options. people are experimenting with one-offs, brands that change constantly by the season. the other thing is, clearly beer lovers want that experience. they want to connect with brands. so ways that you can engage with beer lovers rather than just offering them a product. give them an experience. >> reporter: don't throw beer out just yet. we're seeing signs of hope, growth year over year. 800 brewers are here, a record 5700 breweries are operating nationwide, investing in businesses and betting on beer's turnaround. craft brewers are finding ways to stand out. they've adapted a seal of independence to let consumers know what they're drinking is truly craft. the seal is a response to big beer companies like anheuser-busch and others buying up more than a dozen craft breweries in the past few years to mass produce. does the seal actually impact the purchase power to help
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consumers know they're supporting the little guy? >> i don't really care. i'll try out anything. >> if i'm somewhere else and i see, you know, i'm not family with any of the local beers, absolutely, i would say, yeah, let me get a craft beer instead of some mass produced stuff that i don't really like anymore. >> it's kind of nice, things that you might not taste anywhere else, it could be a one-time thing, there's not necessarily consistency when you get that. >> reporter: jury is still out on the impact of the seal, analysts say it may make a difference with a niche group of consumers. for "nightly business report," i'm landon dowdy in colorado. amazon is reportedly close to d it will get into the prescription drug business. that's where we begin tonight's market focus. according to cnbc, the e-commerce company will decide by thanksgiving if it will start selling prescription drugs
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online. previous estimates predicted that in the next year or two. analysts estimate the market to be worth more than half a trillion dollars a year. that news sent news of cvs and walgreens and express scripps lower. amazon finished slightly higher. data center operator switch went public on the new york stock exchange today. pricing more than 30 million shares at $17 apiece. that was above the expected range. the offering value switched at $4 million. shares soared more than 22%, closing the day at $20.84. and the cereal giant kellogg is bryauying a protein bar make. kellogg hopes to attract more millennial customers, saying that generation is big consumers of that brand. kellogg's shares fell fractionally. flexion says the fda has
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approved its treatment for osteoarthritis knee pain. shares of flexion up 10% to $29.93. the personal care products helen of troy reported results that beat analysts' estimates. but investors were disappointed to hear that troy was cutting its full year forecast to restructure its business. and shares went to helena hand basket, it sold more than 9.5% to $87.80. late today tesla's ceo elon musk says the automaker will delay the unveiling of its electric truck to next month. musk says the company is focusing on fixing model 3 production bottlks and increasing battery production in puerto rico. tesla shares were initially lower after musk's announcement. they finished the regular day up fractionally at $356.88. time for our market monitor, who says now is the time to be a buyer of these big cap stocks with the yields higher than u.s. treasuries. the last time he was on in
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march, he recommended dh horton, up 24%, toll brothers, which is up 20%, and lennar is 8% higher. joining us is chris bertelson. nice to have you back, chris, welcome. >> thank you, glad to be here. >> your stock picks are unloved, unwanted, and had been underperforming. but you think they're a good addition to the portfolio, correct? >> absolutely. you felt little pain with owning these over the last four to five years. but that's about to change. partly because they all pay grade dividends and they are really in the stages of transformar ways. >> you have three picks that nobody in the audience will ever have heard of. let's start with one of them, at&t. why do you like it? >> tyler, 5% dividend yield when there's 1% cds out there. certainly you're getting paid while you wait. everybody knows they pay this
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bill before they even pay their mortgages now. you know that it's going to be around in four or five years, it's only going to increase their dividend. the integration of time warner, which is a big step for them, is going to make them a far more interesting media company than they are now. >> walmart is next on the list. we just did at&t. you say it's time to sell amazon and move into walmart. >> absolutely, sue. amazon is a great company, but look at all the things they're getting involved in, groceries, pharmaceuticals. you say, this is going to cost them a lot of money. where is walmart has been in the grocery business for years. plus walmart pays a very robust dividend that they have been raising every year. walmart knows how to compete. they are the ultimate systematic cheap skates. amazon will have real competition with walmart. >> you say time to sell some
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apple and buy ibm, a much-unloved stock, even warren buffett dumped it. >> yes, he did. however, you know, ibm, gino rometty has done a terrific job, they've changed from big company orientation systems back to the consumer. you see that with their watson type of apps and all that they're doing on the basis of the cloud. they may be a little late to it but you're getting paid 4%. the stock is super cheap. i think they're under a real transformation, going back to their roots. >> and the exchange rate you say will work in their favor as well? >> absolutely. all of them. >> all right. on that note, chris, thank you so much. . and coming up, helping manage the debt load from student loans for those still in school and those who a
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and here's a look at what to watch for coming up next week. on tuesday, we'll get the minutes of the last federal reserve meeting, as usual, the market will be paying close attention to anything related to possible timing of future interest rate hikes. inflation in focus at the end of the week with producer and consumer price data out. and believe it or not, we're there again, earnings season is coming. the banks get the party started when citi and jpmorgan release results on thursday. that is what to watch next week. >> the most wonderful time of the year, earnings season. student loans are the second
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largest source of debt in our economy, trailing only mortgages. 44 million people and counting hold, believe it or not, $1.4 trillion worth of student loans. that's why one entrepreneur got the bright idea to give borrowers a better shot at a good rate and a guiding hand at managing their debt better. >> reporter: for five years alex kubo put his startup dreams on hold, working at exxonmobil to pay off roughly $40,000 of student debt. >> ended up going to whatever company could pay me the most amount of money. >> reporter: kubo's worked hard to manage his loan situation, entering business school at wharton in 2015, he found common bond, a private online lender started by wharton students. he locked in a good rate on a $70,000 loan. david klein got the idea to offer lower rates and better
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service in 2011, as he entered wharton with loans of about $90,000. >> the market itself is pretty broken. high rates, complex process, poor service. >> reporter: ten years earlier, klein consolidated his college loans with the federal government at about 2%. but the game changed after 2010, when the government stopped guaranteeing loans by private lenders. 8% rates were common. >> if consumers are paying 8% and investors are receiving 2%, there's a lot of room to provide more value to the consumer by lowering their rate, to the investor by increasing their return, and then eke out a modest profit in between. >> reporter: klein won't say if common bond is profitable, only that it began by making $2.5 million worth of loans to 39 wharton students in 2012, went national a year later, and now it's doing direct loans and refis for students at more than 2,000 schools. >> we have lent over a billion
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dollars to tens of thousands of people. >> reporter: margins are improving. early on, common bond paid investors 5% for loan capital. now it's about half that. but still more than the big banks pay. klein says common bond beats its competition on operating cost. it has no bank branches, for example, and its high credit, low risk customers rarely default. that's partly due to the ability to communicate and keep them on track. >> 95% of the people who go through that process, even mba students, don't know exactly what their month payment will be. >> reporter: which is why a thousand high schools are using a new video game, "payback," to simulate college costs. >> you'll see many financial service firms providing financial education. what i think is lacking overall, one in six high school students
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graduates with a personal finance course. that for me is the biggest issue. >> reporter: it's an issue alex kubo values too. he's now at the new york startup borough, an online furniture retailer. he wanted to see for each loan it makes, the company is funding a year of study for a student in developing country. >> building schools, providing opportunity, made me feel a lot better about the fact that i owe these people a lot of money. >> reporter: feeling good about a lender? now, that's a new one. >> a lot of the big folks out there don't seem to make the connection between treating the customer really well and having a long term sustainable business model. >> interesting business model. like a lot of companies these days, common bond offers a benefit to help its own employees pay down their student debt, and it's been partnering with other companies looking to do the same. before we leave you, let's take a quick look at the day on wall street. the s&p 500 snapped its eight-day win streak, its
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longest in four years. the dow lost almost 2 points to 22,773. nasdaq scratched out a gain of nearly five. the s&p dropped about three on the trading session. that will do it for tonight's edition of "nightly business report." m tyler mathisen. thanks for watching. >> i'm sue herera. have a great weekend, everybody. we'll see you ck.
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