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tv   Nightly Business Report  PBS  December 31, 2013 6:30pm-7:01pm PST

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this is "nightly business report" with tyler math son and su matheson and susie daly. >> our ratings service provides objective, independent ratings daily on over 4,-300 stocks. learn more >> on a high note stocks rally ending at record highs on the dow and s&p putting a capper on 2013 and huge gains for investors. the nasdaq up nearly 40%. the s&p's best year since 1997. the dow, best since 1995. the january effect. old man winter may be rough on
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us, but the first month of the year tends to be kind to investors. will the same hold true in 2014? and big payoffs. our market monitor says he has three stocks that could get you at least 20% in the year ahead. all that and more for this final day of 2013, december 31st. good evening, and happy new year, everyone. tyler's off tonight. well, champagne on wall street was flowing today as the dow and s&p 500 ended the year with another round of new record highs. 2013 will be remembered as the longest bull market winning streak since the 1990's. the dow posted 52 record closes, and the s&p taxed on 45 new highs -- tacked on 45 new highs. here the scorecard for this last day of 2014 and for the year. -- of 2013 and for the year. the blue chips reached 16,576, a new milestone. the nasdaq added 22, closing at a fresh 13-year high.
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and the s&p rose seven points to 1,848. for the year, the dow surged 26.5%. the nasdaq skyrocketed 38%. and the s&p soared almost 30%, its best year since 1995. looking at the sectors of the s&p, all ten rose in the past year. consumer discretionary stocks did the best. they were up an amazing 41%. now the biggest winner on the s&p was netflix. its stock almost quadrupled, rising 297%. the biggest loser -- new mont mining. it plunged 50%. in the commodities markets, gold lost its glitter in 2013. the precious metal tumbled 28% for the year, closing at 1,201 -- $1,201 an ounce. oil prices rose 7%, closing at $98.62 a barrel. now that we've closed the
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books on such a sensational year, what's in store as the calendar turns the page to january? as we report, wall street history shows january is usually a good month for the markets. [ bell ] 2013 was a great year for stocks, and if history is any guide, 2014 could at least start off with more positive momentum. the number crunchers at the investment groumdp found over t last 100 years, the dow got 1% everian and increased two of three years. the numbers are more positive if you look at a broader measure of stock performance like the s&p 500. >> january, typically a seasonally strong month of the year. in the last 20 years, it hasn't been as positive. but when you look at strong years like we've had, a 25% gain in prior years where we've seen that, the s&p has averaged a gain of about 2.5% with positive returns over 80% of the time.
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>> so stock bulls like the odds of a positive january. speaking of the s&p 500, we looked at what sectors tend to have good january runs. during the most recent bull run over the last three years, investors have liked the cyclicals. the stocks that are more tied to the ups and downs of the overall economy. on average, over the last three januarys, industrial, financials, and energy stocks have done the best as investors have bet on a recovering u.s. economy. they're all up around 5.5% for the month on average during that time frame. the worst performing sector has been telecom, down around 2%. the question becomes whether investors should even worry about details like this. >> we're long-term investors, so what goes on in any particular week or month is difficult for us to extrapolate from. it probably is a valid trading mechanism. as any momentum-type strategy becomes. and that's really what i think the january effect is about. >> reporter: in the end, no one
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really knows what the future holds for stocks. but the bulls are hoping historical patterns repeat themselves this time around. for "nightly business report," i'm dominic chu. another positive for the markets in 2014, the world is getting back to normal. so says patricia edward, she's managing director of investments at u.s. bank wealth management. patty, we have not heard the word "normal" in a long time. it's been anything about that. tell us what you mean by this. >> well, i think if you look at what's been happening the past five years, there's been a heck of a lot of intervention on the parts of governments. we've had overhang from things like the health care initiative, and so it really hasn't been a market that's been based necessarily on the fundamentals of the underlying companies. it's been more of a market that's been based on the global macro outlook. and that we think is going to be changed as we go into 2014. >> all right. how should investors look at this new normal world that you're talking about?
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what should they be doing differently, what should they be doing the same? >> we're looking at the market for next year, and we're thinking it's going to be a little like a b student in an overachieving family. it's going to be a perfectly nice return in the united states, but it's not going to be anything to write home about. 2013's probably going to have been better. so what we're doing is we are making some tilts within our asset allocation. we're doing some things like overemphasizing international equities and, merging markets' equities over u.s. equities. beyond that, also emphasizing equities in general over fixed income because fixed income has had a 30-year bull market. >> we've been hearing this a lot from many strategists saying time to look outside the united states. as you look at international emerging markets, how should investors get into the areas? should they go into etfs, mutual funds? >> it's one of those things where it's very difficult to buy individual stocks. what i think you want to be looking toward especially in the
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emerging markets is someone who has got their hand on the market and is looking over it for you. certainly you can use the exchange traded funds which are usually based on an index, but in a market like this, i think that one of the things you'll really wanted to consider is having a professional manager who can overemphasize asia if they think asia is going to be better than latin america or if they think that turkey is going to be the next hottest market, that they can make those adjustments for you. >> you know, some of the things that we've seen over this past year that were so successful were big blue chips, large cap stocks, many multinationals that did have a little bit of international exposure. what are going to be the themes for 2014? >> i think that you need to be looking at companies that have got that multinational exposure because that's where the greatester growth is. u.s. is grow -- greater growth is. u.s. is growing at 3%, emerging markets. china is going to be growing greater than that. you want exposure it the emerging markets. you also want to be looking at
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companies that do well in an environment where you're in low growth and low inflation. companies that have good, strong fortress-like balance sheets with lots of cash on them. that cash can be used not only for growth, but also for dividends and for stock buybacks. >> you mentioned that you're overweight stocks and underweight fixed income. some people like to have some bonds in their portfolio. what are you recommending? >> absolutely. for most of our investors, we are always going to have some piece of fixed income in the portfolios. we would be looking toward taking more credit risk and being neutral in terms of duration on the portfolio. having a moderate length of time that the bonds mature in. >> all right. thank you very much. happy new year. hope to see you in the new year. >> happy new year. >> patricia edwards from u.s. bank wealth management. investors got their last batch of economic reports for the year, and they were kind of disappointing. first up, housing news. prices of single family homes rose in october, the s&p case
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schiller index of 20 metro areas gained 13.6% year over year. on a monthly basis, prices rose less than expected, just a fraction of a percent over the strong september gain. this suggests higher mortgage rates have slowed home sales. also slowing, business activity this month in the manufacturing heavy midwest. the closely watched chicago purchasing managers index fell to 63 in november. that still indicates some growth, but the new order segment plunged. but in the same time frame, consumer confident rose. this is after two months of pessimism triggered by the government shutdown. the conference board's consumer confidence index notched up sick points. that shutdown didn't stop new laws from getting passed. at the stroke of midnight, just like every new year, many of them will go into effect. and in 2014, many of those laws, state and federal, will have a major effect on low wage workers and on the individuals and
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businesses which employ them. jane wells explains. ♪ >> reporter: new year, new laws. [ chanting ] >> reporter: and beating back the boss attack is at the top of the list. 2014 will see the minimum wage rise in more than a dozen states led by washington, oregon, and california, all at $9 an hour or higher. it will hit the restaurant industry hard. >> we've seen things like dollar menus going away by and large or other increased pressure on the price that the consumer actually is going to end up paying. >> reporter: another new law will affect restaurant workers in a different way. tips which are often automatically added to the bills of large parties could disappear because the irs says if someone is forced to pay a tip it's not a tip, it's a service charge and should be counted as wages. restaurants which stick with the practice will have to deduct income taxes, adding to paperwork. so chains like darden
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restaurants are phasing out the forced tipping. instead providing a suggested gratuity, not on the tip line of the bill. it came out of a concern that servers in the restaurant industry weren't accurately reporting all of their tips. but instead of the irs going and dealing with it directly to the servers, they ended up putting this burden on the employer, the restaurant itself. >> when it comes to new laws, california always takes the cake, and in 2014, the golden state is ushering laws that include things like mandatory overtime pay for many live-in nannies and maids, or extending paid family leave to include taking care of a sick grandparent or grandchild, sibling or in-law. finally, back to food. california will up its farm worker protections. one new law will punish employers who threaten to report a worker to immigration authorities for complaining about substandard pay. and while farm workers already have state mandated meal and rest periods, they will now also
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have heat recovery periods of at least five minutes as needed in the shade. add it up, and 2014 will make life better for those at the bottom, but as always at a price. for nightly business report, jane wells, los angeles. more headaches for target. the retailer still reeling from the massive holiday hack of credit and debit cards. confirmed today that some of its gift card were not fully activated and contain no value. target hasn't said how many gift cards were involved, but a spokeswoman says it's less than .1% of the holiday total. target says all the cards will still be honored. coming up, our market monitor has three dividends in place you should have in your portfolio in 2014. first, here's a look at how some of the international markets fared for today and the year.
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2014 is shaping up to be a big year for tech hiring. global i.t. spending will grow 5% next year to more than $2 trillion, that's according to idc. here's josh lip ton with a look at the high-tech jobs forecast. >> reporter: if you have a degree in computer science or electrical engineering, then there might be a job waiting for you in the new year. tech employers are feeling more confident about adding new employees to their payrolls in competition for the top engineers is intense., a tech job site, recently conducted a survey of tech-focused hiring managers and
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recruiters. three out of four say they plan to hire more tech pros in the six months ahead. and there seems to be more security in the workplace when it comes to tech. most hiring image aren't planning on any new layoffs. katherine ulrich, a recruiter specializing in silicon valley, expects a lot of demand for those with expertise in cloud computing and data analytics. >> everybody needs to figure out what's their strategy for putting data and applications in the cloud. and how do we use big data and data analytics, how do we figure this out, do we need to do hiring in that space. >> reporter: jewelry riulrich s is coming from chinese, japanese, and korean firms, setting up in silicon valley and looking for new sales and marketing talent. if you do get hired in tech, you can expect to get paid relatively well, according to robert hastert, the staffing -- haft, the staffing firm u.s.
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salaries will increase an average of 3.5% next year for professional jobs. technology positions are expected to see the largest gains with about a 5.5% increase in the average salary for newly hired workers. technical engineers, software developers, and mobile application developers could also see big bumps in their paychecks. and at the top tech companies like apple, google, and facebook, bonuses are being paid to the best and brightest. and that's pushing salaries at startup ventures even higher. josh lipton, nightly business report, silicon valley. netflix is ending its big year by giving ceo reed hastings a fat raise and possibly upping prices. that's where we begin tonight's "market focus." netflix shares almost quadrupled for this year, making it the top performing stock in the s&p 500 index. that performance landed hastings a 50% salary increase for 2014, according to an sec filing. the video streaming service is also experimenting with a new
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model that makes you pay more depending on how many screens you watch on. on top of that, netflix is ending its poison pill or shareholder rights plan two years early. it adopted the plan to protect itself from a takeover when activist nor carl icon took a huge -- investor carl icon took a huge position in the company. last night we told you that hertz adopted a shareholder right plan to protect itself from a possible takeover. today activist investor dan lobe's third point capital admitted to taking a stake of 5% from the car rental company. the share rental right program at hertz will only be activated in a person or group acquires 10% or more stock. heart also said it's held discussions with investors including corvex about enhancing shareholder value. that news sent shares up almost 10.5% to $28.62. merger buzz about marvel
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technology as well today. private firm kkr has reported a 6.8% stake in the chipmaker. the firm said it may talk to marvel about a potential merger or reorganization of its business. the stock jumped 4.5% to $14.38. warren buffett's berkshire hathaway is swapping around $1.4 billion in shares of phillips 66 for ownership of one of phillips' businesses. the unit berkshire is acquiring make chemicals designed to increase flow in energy pipelines. shares of phillips 66 rose 3% to $77 and change. shares of berkshire hathaway were also up a fraction to $118.56. hewlett packard is cutting 34,000 jobs by the end of next year. that's 5,000 more than the company originally estimated when h.p. first announced the layoff plan in 2013. the company did say the cuts could increase. shares were off a fraction to
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$27.98. revlon also cutting costs. the cosmetics company is leaving china and reducing its work force by 20% as part of a plan to slash costs by about $11 million a year. the move comes as revlon sales have dropped in the asia pacific market. shares are at $24.96. our market monitor guest says investors shouldn't assume that stocks will be just so-so in the new year just because 2013 was such a phenomenal year. he's corn charlotte son -- chuck carlson from horizon investment services. thank you for joining us. you say there are bullish factors that investors should consider so they realize that this could be a pretty good year, 2014. tell us what they are. >> first off, our firm looks at a tool called the dow theory to discern the primary trend. the dow theory is firmly in the bullish camp. we've had a continued series of new highs in both the dow jones industrials and the dow
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transport which is perfect under the dow theory. that's bullish. second, the three major engines of the stock market in my opinion are interest rates, inflation, corporate profits. and i think all three of those things remain net bullish for stocks in 2014. and finally while people are getting interested in the stock market again, we still don't know the type of over-the-top enthusiasm for stocks that you typically see at market tops. people are still fairly skittish, and you'll see that skittish not on any type of de-- skittishness on any type of decline in the markets. in 2014, it probably won't be as good as 2013, but it wouldn't be surprising to see a 1 % to 15 -- 12% to 15% gain. >> you've given us stocks you think will do. maybe up by 20% or more as investors put new money in. let's go down the list. you have apple at the top. this is always a controversial stock in terms of the bulls and
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bears. why do you like it? >> we like it because it fits the theme of where you can buy growth and buy it at reasonable prices. and apple really fits that. they're going to have easier comps in 2014 in terms of their earnings. their earnings are going to grow. we're seeing, you know, better business now as they're expanding in china. you can buy that growth at less than 13 time the 2014 estimate. plus, you get a kicker in a 2.2% dividend yield. apple boosted its dividend 15% this year, and i think you'll see at least that in 2014. >> all right. it's at $560 now. do you have a target on it? >> well, we typically don't do targets, but i wouldn't be surprised to see the stock move at 650, 660 in 2014. >> your next stock is benefitting from the boom in energy. helmerick and payne, trading around $83. why do you like this one? >> they have a nice technological advantage in terms of horizontal drilling. they have about 300-plus land
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drilling rigs in high demand right now. also, a nice dividend kicker, 3% dividend yield. they've rapidly increased their dividend. it's gone from seven cents per share per quarter up to 62.5 cents in about 12 months' time. and i think you'll see the dividend continue to grow. again, i can buy that growth at less than 15 times earnings. a good story, growth at a reasonable price. >> and your third pick is in the financials, capital one. tell us about that. >> yeah, i like the stock. most people know it for its credit card business. the reality is capital one is one of the ten largest banks in the u.s. and i like that blend of banking with other financial services. i can buy the stock at 11 times 2014 earnings estimates. so it's certainly cheap. i got the dividend yield, 1.6%. the dividend has grown in 2013
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from five cents per share quarterly up to 30 cents. you'll see that dividend continue to grow at a rapid rate in 2014. >> all right. terrific. any disclosures to make, chuck? >> yes. our clients own them as well as i own the stocks, too. >> okay. happy new year again. thanks for coming on the program. chuck carlson, ceo at he at hor services. coming up, the biggest impact on the financial market. one guess. finally tonight, we've been profiling all week some of the people who were the difference-makers in the world of business and finance. it's safe to say no individual had more influence on the stock and bond markets than ben bernanke. the federal reserve chairman kept market ratings guessing all
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year on when he would begin tapering the bond buying which helped fuel the bull market. here's steve leaseman with more on ben bernanke. >> reporter: for most of the second half of 2013, fed chairman ben bernanke sang a single tune. don't fear the taper. but it wasn't always well received on wall street. he first warned in may of a possible reduction to the fed's bond-buying program known as quantitative easing or q.e. >> if we see continued improvement and have confidence that that is going to be sustained, then we could in the next few meetings, take a step down in our pace of purchases. >> reporter: the dow industrial average would lose 90 points over the next two days. and 400 points over the next week. in june, bernanke spelled out a schedule for ending q.e. >> we would continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid year. >> reporter: the dow would shed another 500 points over just two days.
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but after a weak august jobs report and the government on the sherj of a shutdown, bernanke -- verge of a shutdown, bernanke would reverse course. >> the committee concluded the economic data do not yet provide sufficient confirmation of the baseline outlook to warrant such a reduction. >> reporter: the dow up 20% on the year, would raise a percentage point on the day. and then in december, after working all summer and fall to convince markets that tapering wasn't a tightening of interest rates, bernanke took it the podium for his last press conference as chairman. >> starting in january we will be purchasing $75 billion of securities a month, reducing purchases of treasuries and mortgage-back securities by $5 million each. >> reporter: the market surged 300 points, and bernanke finally got his taper in a way that did not spook markets. over the year, bernanke and the federal open market committee ballooned the balance sheet by more than $1 trillion and pushed up growth from 2% in 2012 it an estimated 2.5% this year.
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the ten-year benchmark treasury bond would rise by more than a percentage point. unemployment would decline by .8% to 7%, and inflation would remain quiet. what's clear is that bernanke's decisions made a huge difference this year and will for many years to come. as the effects of current policy play out. perhaps through higher growth and lower unemployment. perhaps also, as some fear, through inflation and a more difficult ecoit-- exit strategy left to his predecessor. that is "nightly business report." make sure you tune in tomorrow for our special report, "predictions 2014." as we go, we want to take you around the globe as the world rings in the new year. and from all of you here at nbr, we want to wish you a very happy new year. ♪
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