tv Nightly Business Report PBS April 16, 2012 6:30pm-7:00pm PDT
>> on wall street, the major averages go in ops directions. the wall street tum bems, and the blue chips were higher as consumers continue to spend. the nation's retailers. >> consumer spending is going to save a buck, and it will remain in the 3 to 5% growth rate since 2011. >> and nightly business report for mond, april 16th. >> announcer: this is nightly business report with susie gharib and tom hudson brought to you by
>> good evening, everyone. a tug much war on wall street today between earnings in the u.s. and problems in europe. there were fresh signs in spain where the country's bond yields caused a key psychological level indicating a higher cost to borrow money. we'll have more on that in a moment. >> tom: susie, investmentors were encouraged by better earnings. good news about consumer spending nationwide. but the closing bell today. here's the split tape. the dow rising 71, points and the nasdaq pulling back 23 points with a sell-off in apple and google. the s&p down a fraction.
>> susie: small investors may be puzzled what to do with portfolios. suzanne pratt reports. >> nothing like 84° in april to get new yorkers dreaming about summer. while summer may be great for many things, it's not for stocks. may tlie october is historically the worst six month stretch for the market. and some experts worry the old wall street warning sell in may and go away might make sense this year. market strategist predicts the road will get bumpy for stocks as the thermometer rises. >> i think investors should temer their xchations. >> last year a sell-off began in may. it was triggered by at euro
zone. it fell 20% from a may high to a low in october. >> this year many of the issue that is preoccupied investors in 2011 are still around. europe's financial crisis is yet to be resolved. on top of that, the reserve is due in june to end the so-called operation twist. that's the central bank's latest effort to stimulate the economy. even with that big lift. small investors outside this manhattan ameritrade office say they're unlikely to sell. >> probably not, i'm a buy and hold, although that strategy seems to be moving away nowadays. others were fixateed on politics more than the stock market. >> the year of a presidential election tends to be a strong performance around or after the election. >> it's slowly picking up. >> and i think it will get hopefully better in the election year.
>> some say the problem selling this may is what to do with the money. not only are money markets paying next to nothing, but the bond markets are looking volatile. >> tom: investors of all sizes were wading through citigroup's earnings. it's consumer banking business was up as well as the stock and bond business. the ruts helped lift citi stock today, and several other financial earnings are die later this week. a strategist with the firm in new york. fred, great to have you. >> do banking stocks present a good value ahead of earning season. >> great to be here, tom. we think selectively they do. the challenge for investors has been the lack of dividends. we're starting to have those come true, and starting to think these stocks can work
worry smaller investors and looking for yield and price appreciation. >> leetsds talk about the core business of banking. that's getting deposits and lending it out. that's a profitable business with the low interest rates, isn't it. >> the low interest rates on the one hand helped the borrowers a lot. however, for the banks, the flat yield curve means taking deposits at low levels and not lending them out at high levels. the second challenge is the deposits, investors aren't getting paid anything in the banks because the banks aren't making anything on deposits. >> tom: what about the quality of earnings? last week chase, wells and today from citigroup? >> generally good, but selective. there's a lot of refinancing going on, and trading. equity markets were up for financials, and that's a good thing for earnings. however, the core business of
banking is moving okay. what i mean by that is loan growth is about matching nominal national growth product, which is a good thing, but it's not robust. overall, the numbers are coming in pretty good this quarter. >> in the meantime, one measurement can tell how much is hold k back from lows, and the capital raisha gets into the weeds where you operate, but for citigroup, at 7% of assets, and j.p. morgan close tore 10%. that's a big difference, isn't it >> it is, and it prevents citigroup from doing what wells fargo and j.p. morgan can do, and what is pay dividends and repurchase shares. that's a challenge for citigroup. >> tom: in the last 20 seconds, goldman sachs is due out tomorrow. you rate it outperform. itra the range for a year or so. what do you anticipate?
>> the trading numbers have been pretty good, and we think that will have pretty good flow through to goldman sachs. i wouldn't want to be short that stock. >> tom: are you long goldman sachs? >> we'd be long goldman sachs. >> tom: thank you. the extraordinary nairp fred cannon. >> >> susie: and still ahead, much of the country seeing warmer weather than normal, and summer retail sales getting off to an early start. >> today was the first trading day since the chinese government announced a big change over the weekend. it was loosening up control over the kurntiony. the chinese yuan fell in value against the american dollar. darren girsh reports that's corrects a strong message to us. >> reporter: for years, many criticized the chinese trade policy, and the yuan is massively undervalued. 20 to 30% too cheap against the dollar if not more.
so when the chinese market gave the market more flexibility to set the exchange rate, it's worth noting that the yuan actually got cheaper. >> i think they're just saying you know what? there's two way risks, don't count on us to deappreciate the currency. >> it's where the chinese government thinks it should be, especially considering growth is slowing. >> the fact of their monetary policies, and all shines that china is worried about the economy, and that they don't want too much more appreciation of the currency, and they're doing the best to boost the economy going forward. >> still the long run collection is clear. they want to be a global economic power with the currency to match. that's a long slow march.
>> by the time they walk through a door, they're pretty certain about what the outcome is going to be. >> the yuan loosening story has been somewhat oversold. china still uses what market pros call a dirty slow. >> meaning the central bank intervenes heavily, and markets can only move the price one percent up or down a day. that's up from half a percentage point last week, and many u.s. companys are focused on other problems with china. >> the market access bairpiers, and investment barriers. property protection. those are thing that is allow u.s. companys to sell more to china. >> reporter: while the value of the yuan is clearly less of an economic issue it remains a political issue. both republicans and democrats see it as a proxy for china's willingness to address the persistent trade surplus with the united states. nightly business report.
>> susie: joining us is europe's analyst at the eurasia group. thanks for being here. >> thanks for being he, uzisusi. >> we see the market north of 6% today, and in terms of the euro strategy, we don't have to worry. i think the euro zone policy have a strategy for dealing with spain if it faces the same pressure in the market. >> susie: how would you compare the crisis in spain to greece a few months ago? >> i think they're very different. essentially spain has a problem with it's banking sector, and a difficult environment and high rates of unemployment. greece has a dysfunctional state, and it's very unclear
where the growth is going to come from, what are the sources of potential growth in greece. i don't think that's an issue in spain. they're export competitive. >> susie: we know the european policy makers have been demanding tough austert measures from greece and now from spain and italy and other troubled countries. i don't know if you saw paul krugman wrote an article saying what europe is doing is economic suicide by just pushing the envelope, and that this is going to have an impact that the whole world has to pay a price for it, this strategy of getting these countrys to do the austerity measures. >> is he right? >> that's a perspective, and widely shared by many people in europe, and the emphasis is on the countrys and fiscal adjustment, and i think there is a click saying that's at
the expense of growth. we're seeing rumblings, and seeing that in frons, and the presidential candidate. who i think will -- the presidential elections, and clearly have concerns about one side of fiscal adjustment. germany remains ready to review that. the problems began with excessive fiscal policies essentially. >> let's just talk about the g 25 finance ministers meeting in washington. >> susie: is there anything they can do in policy moves. >> the resources. >> something around 400 billion we're looking at, and
i think we're going to make a small commitment from china, japan and other economies. potentially brazil and india, and how will that be received in world global markets? will that make a difference? >> i think in terms of the actual resources, not really, but in termings of the symbolic commitment, other county radios willing to get on board. >> susie: okay, leave it there. thanks for coming on the programme. >> thanks a lot. >> susie: weave been speaking with mujtaba rahman of the eurasia fruep. >> tom: we have american health expert, , his selection is despite calls. >> dr. kim was the director of the hiv aids dptd at the world health organization.
>> the economy is weak, and gas prices high. retail sales rose a greater than expected 8/10ths of a percent. whether the sales were -- >> and what's interesting about march is every category. clothing stores rang up the busy gains, and also increases in everything from clothing to electronics. >> record sales to $411 billion in march. that's 24% higher than the recession low three years ago. warmer weather encouraged shoppers to buy spring and
summer merchandise, earlier than usual. that has analysts warning there could be payback in april. >> we're going to see weakness due to the shift in the easter holiday, and then a pickup in may because of higher refounds. >> reporter: and prices at the pu. remain high forcing some households to got back on spending. >> the increase raises the odds that the first quarter is stronger than expected. >> nightly business report, new york.
whether avon should accept a takeover offer from coty. >> they want to prod avon's board into negotiations with coty. the ceo said he had financing lined up, but has no intention of going hostile with his bid. he also said that the company won't wait forever. avon responded saying no thanks again. it's still believed coty's bid undervalues avon. and avon shares fell again today. they're now trading below coty's offering price of $23.25 a share. >> tom: down about two percent side. 22.03. twice the trading volume. so loots of activity going on in avon, and across the broad market. you know it's going to weigh on the broad market, and certainly that was the case with apple today.
>> the s&p 500 was caught in a choppy session. >> and hurting technology by the close, and the s&p 500 down a fraction. >> today the market value shrunk. sending shares below $600. the stock has been down for five straight sessions. it may be a case of profit taking to some degree. and apple is off 40% since the start of the year. apple sent the tech sector lower off one percent overall, but utility stocks were stronger as was the financial sector. barbie doll sales were down. mattel had a disappointing beginning of the year and the
biggest percentage loser. mattel's weakest wart after the holidays, and earnings coming in a penny less than expected. they couldn't make up for a slowdown in north america. ubs retail analyst is looking for mattel to grow in profit charges, and not sales growth. mattel's revenue has been ntd high single digit range, and above trend. that translates to above seasonearnings growth. it's less revenue than it is a margin expansion year. baitioned on that, we have a 15 to 16% earnings growth rate this year. >> looking for profit margin continuing with the nine% on volume. >> and barbies, and other toys
are not must have items. >> must have items, finding buyers today. grocery stocks. safe way and super value continue to rally with numbers continuing to move higher off a week ago, and proctor and gamble gaining. and p&g announced a dividend hike for the 56th consecutive year. an appetite for new medical treatment. merck is going after a cancer treatment, a $1 billion deal for endocite. >> endocite skyrocketing doubling in price. baxter international fell 11%. its parnl plunged after drug regulators in the u.s. asked for more information regarding an experimental drug they're working on.
>> every e they'll and facebook posting is a source about you, and there's a big rush to mine all the data for potential business uses and profit. that brings us to the word on the street. daa. big data. ken rogers follows technology. how does this big data push differ from all the other information pushes? >> tom, we have so many buzz words. it refers to vast quantities of unstructuredidate a. i mean data that fits naturally into data braces that could be e-mail messages, power pointed presentations, audio, video,
social media, and it's a hot space and one that's really going to grow. >> tom: one of the first ones in the space was ibm. they didn't invent it, but got their arms around it. $200 a share. ibm is a forerunener this, isn't it? >> sluemgts. >>idateda supplies the devices from a company that ibm bought in 2010. this was a smart move by ibm. ibm even sold off in the last quarter. and in addition to that, there's a lot of moving parts to ibm. they're selling specialized software into the space as well as mixtures of storage, and server networking gear. and push sbog an area called analytics. ibm expects to generate $16 billion from analytics in 2015, and i think it's on the way to do t. >> tom: the analytical part
tries to make the data so people with use t. speaking of appliances, that's the hardware that gathers theidate a.emc is a leader. it had a niceeral nethe first quarter, can it continue? >> emc is a company i really like. sells a lot of hardware. it's a key player in the data space. it's basically using it as a launch pad for data, and on the strength of a lot of new business, and health care. health communications and technology, and also with the cold storage hardware so i think this is a stock we need to keep an eye on. >> tom: a year ago it was cloud computing. >> do you own any of these stocks we mentioned? >> no, none whatsoever.
>> tom: you can read james' article. word on the street with jame rogers and the street.com. >> susie: we've been reporting a lot about the nation's growing mountain of student loan debt. tonight a top communist pults in his perspective at moody's analytic. >> student lending is a big problem. not for the financial community, but for students, parents and taxpayers and the economy. the hysteria of defaulting student loans will blow up the system like subprime mortgages is misplaced. the bultk of student loans are guaranteed by the federal government, and they have a mountdain of debt it means higher tuitions at colleges and universities. >> it's tripled to a trillion
dollars, and collegeature wigss dounlt the. geting a college degree is viemgts to financial success, and our economy's growth depends on a highly educated workforce, but we need to rethink student lending. instead of using taxpayer money to fund student loans use those resources to hire more professors, and build labs and fund internships. >> make it more affordable, and students won't need as many loans. i'm mark zandi. >> talk about tomorrow. busy day from health care to banking technology, that earnings parade continues. we'll have full coverage tomorrow night. the results of johnson and johnson, goldman sachs, and intel and ibm also due. and tomorrow, a closer look at the selling we've seen in apple shares over the past week. >> susie: and finally, word that the president's so-called buffet rule has been blocked by senate republicans.
pay at least a 30% tax rate. tonight's vote was a procedural one to get the votes to move forward. >> tomorrow, a big day. tax day. federal returns are due back to uncle sam by midnight. >> i hit late last night. >> i was the early bird. >> tom: that's nightly business report for monday issue the 16th of april. good evening and thanks are for joining us. have a great night, susie. >> susie: thanks for watching everyone. tom and i hope to see all of you again tomorrow night. >> announcer: nightly business report is made possible by: investing takes perspective from up and down markets for 60 years. spotting unites at home and abroad. global investing. gain from our perspective.