tv Nightly Business Report PBS January 28, 2015 6:30pm-7:01pm PST
this is "nightly business report" with tyler imagine son and sue varella. >> stocks take a late day tumble and so do bond yields. investors try to make sense of the federal reserve statement. >> the hard part the central bank says the u.s. economy is expanding at a solid pace. inflation is below its target and the global economy is sputtering. how the fed will try to thread the policy needle. the airline industry flush with cash spent it on new planes. all that and more tonight on nightly business report for wednesday january 28th. good evening, everyone and welcome, another turbulent day in the markets today. stock investors tried to calibrate what uncertain
earnings oil prices and interest rates mean for equities. stocks blazed hire earlier in the day. yesterday's blowout numbers from apple, the falling price of fuel. black gold sapped the rally. and then there was the fed. it did nothing leaving rates unchanged. it said a lot sort of. the economy is solid. inflation is very weak. the feds said it will remain patient about raising interest rates. with that money zipped out of stocks and into bonds. here's how the major equities looked at close. the nasdaq down 43 and the s&p 500 lower by 27. u.s. treasury prices by contrast sored as yields moved lower. the rate on the ten-year bond closes at a fresh 20 month low on the 30 year it dipped to 2.3%. a record low. oil prices fell to a nearly
6-year low after the government reported record high stockpiles of fuel. two times as much as expected. raising fresh worries of the global glut amid demand. now more on today's big fed decision. >> reporter: janet yellin and fellow monetary policy makers wrapped up the first fed meeting of the year by making clear no rate hike is imminent. the overall economy has been expanding at a solid pace. and thanks to falling energy prices plus a strong dollar inflation has fallen even further below the feds 2% target. reason enough it can be patient in beginning to normalize the stance of monetary policy. leading economists and fed watchers are looking toward the mid june meeting as the first real test of the fed's patience. >> they are going to look at
inflation as transitory low. a couple years from now, inflation will be higher. it isn't going to be zero rates. when do we have a small rate hike and what will the path be. the economy is going to get very hot. it's even getting a little hot now. >> while the feds did not mention the slowing global economy, it did say it will take international developments into account in determining when to start raising interest rates. that triggered concern in the bond market. with yields on u.s. treasuries going lower. >> keep in mind that the ecb has made a big move. that's going to put more upward pressure on the dollar. it's going to affect the economy. >> nothing about what the fed is saying they're going to do it's that they're saying for the first time we're worried about international markets. money floods into the u.s. >> the first fed meeting of the new year finds janet yellin and fellow policy makers unified and
yes patient when it comes to what's next for monetary policy. for "nightly business report" i'm hampton pearson at the federal reserve. >> joining us now to talk more about today's fed action and what it means for the u.s. economy is allen blinder, he's former vice chairman of the board of governors and he's now a professor of economics and public affairs at princeton university. welcome, nice to have you ba >> good to be with you, sue. >> how do you read the fed's statement today in terms of what it means for any future rate hikes. >> i think it's steady as she goes i don't think based on this statement people should really revise whatever view they had previously about when the feds are going to start hiking rates. for most people that was probably june for some people it was september. i don't think it was any news in this. to the extent there was a tiny tiny morsel of news probably would push you to a little later
or a little earlier. there wasn't much. >> job gains are pulling the feds seemingly one way. low inflation seemingly pulling it another way. which way is europe and the european central bank pulling it if at all. >> i think europe is pulling it up toward later, toward worrying less about an overheating economy, because as you set up he said there's probably going to be a diminution of exports. american exports, both due to the exchange rate and due to incomes abroad. offset a little but only a little by the ecb's quantitative easing program. >> one of the things that was troublesome to me a little bit is the way that interest rates dropped today, and the fact that we had a 20 month low on the ten-year and a record low in the 30-year. frequently the bond market knows something before the stock market does. what is the bond market and
these record low yields telling you? >> i think you're seeing in the bond market a substantial amount of pessimism. driven more by events outside the united states than inside the united states. but what of course that means when you think about international bond markets is that money flows to the united states. and that boosts the dollar and boosts bond prices which is to say reduces bond yields. these portfolio flows, we don't measure them on a daily basis, they seem to be coming toward the united states not away from the united states. >> i'd like you to take us into the world of central banking, if you might for a moment. it seems as though the u.s. central bank wants ultimately to raise interest rates a little bit. at the same time the central banks in japan and europe want to keep liquidity flowing into the marketplace. that would seem to put them sort of in a disconnect posture.
how much do the central bankers talk to one another. specifically how much do you expect miss yellin is speaking with mr. droky. what are they talking about? >> the conversations, when they're not casual conversations, they meet in meetings there are many cash eulogy conversations, when one picks up the phone to call the other, which by the way doesn't happen that much it's usually to give them a heads up about what is about to happen. i assume janet yellin was tipped off in advance, maybe minutes. what the ecb is going to announce. given that the fed didn't really announce anything i'd be surprised if janet yellin had picked up the phone and given advance warning to mario. there was nothing to warn about.
on very rare occasions, they're trying to coordinate. there may be a bunch of phone calls. that really is rare. very rare. >> on that note. good to see you again, allen, thank you for joinin. >> one of the bright spots in the markets today, was boeing. shares up 5 1/2% on this down day, that was easily the biggest gayner in the dow. this all coming after the big aerospace company walloped wall street last quarter. how did boeing do it and are there more blue skies ahead for the company. >> a record bank log of orders for new plains. annual deliveries hitting an all time high. boeing is soaring. >> this is a case where they've only just begun to pick up momentum there's more to go. the 787 is getting better and better in terms of reliability.
they've got a whole host of productivity initiatives, and their organization is learning to do better and they're finding ways to break barriers. >> while boeing's defense and space operations boasted strong results. the airplane interest is surges. they plan to build more than ever for one year. airlines flush with cash want the new plain h planes. even though jet fuel costs are making odor models more profitable. >> lower oil prices have not substantially changed their views on planning or commitment to existing delivery schedules. >> the 787 sold in large part because it's more fuel efficient than comparable planes will be cashflow positive next year. even though the backlog stretches beyond 2020. orders for the dream liner could pick up later this year. >> i would anticipate toward the
end of this year and end of next year a rekindling of orders on the 87 as we get a little closer to the end of the decade. >> the challenge for boeing is hitting milestones as it develops the new 737 max. analysts admit, this company is in a suite spot right now. >> the weird thing is at the moment i can't find something to really be worried about. >> after getting knocked in recent months boeing shares are once again climbing. and edging closer to an all time high. phil lebeau nightly business report chicago. >> also giving the markets a lift on a down trading day was apple. shares surged more than 5.5% today. closing in on an all-time high after record breaking sales of its newest iphones last quarter. what's next for apple? >> we're not kidding, that just happen ed
happened. >> apple is selling iphones as fast as the company can make them. he isn't kidding. apple shipped over 74 million iphones in its december quarter, way more than analysts had predicted. that's a hard number to actually comprehend. cook described the results this way. apple sold over 34,000 iphones every hour, every day of the quar by country. unit sales were very strong in the u.s. up 44%. but the real standout in the quarter was mainland china. there unit sales surged 100% as a man for the new iphone 6 and 6 plus boomed. analysts at piperafterry say mainland china accounted for 21% of apple's revenue in the quarter. of course there are challenges for apple in china, including local rivals who are competing fiercely for customers. but on a conference call with analysts cook didn't sound
concerned. >> the local competition was there this quarter and has been there for many many quarters before about the local competition isn't new, i think we did really well there i'm proud of how we're doing. >> apple's stunning iphone results help so farren the blow of another disappointing corner for apple's ipads. apple says it shipped some 21 million ipads a drop of nearly 20% from a year earlier. part of the problem is that consumers don't upgrade their ipads as quickly as their iphones. cook remains confident in the product. he talked about the company's new partnership with ibm which is helping apple move the ipad harder into the enterprise. >> i think the partnership with ibm. and the work we have going on the enterprise is profound. i think we're going to change the way people work. i'm really excited about the apps that are coming out and how
fast the partnership is getting up and running. >> now the big question for investors is whether apple can keep the momentum going. one way the tech giant can keep pleasing shareholders boost the capital return program. certainly apple can afford it. it's current cash pile $178 billion for nightly business report i'm josh lipton in silicon valley. >> the next big sector to report latest quarterly earnings this season will be the oil majors with demands so low and oil prices sliding nearly 60% over the next 7 months. what should investors expect from the energy sector. >> earnings season kind of like the super bowl on wall street. we've heard from the banks and some big names in tech. what will energy companies have to say now that oil's trading around $45 a barrel. it all kicks off tomorrow with
conoco phillips valero and royal dutch shell. to close the week we'll hear from chevron on friday and next week exxon mobile picks it up on monday with a report from bp on tuesday. analysts will be looking for energy companies to cut costs and increase efficiency to help the bottom line. but will it be enough? >> i think cost-cutting will absolutely be a main theme of this earnings cycle. right now, we're seeing estimates on the range of 10 to 20% reductions and service costs. >> the street will see 5% earnings growth in the fourth quarter of 2014. also projecting that energy will be the worst performer with the drop in earnings around 20%. what are the other concerns? job cuts in 2015. oil prices declining, and rigs shutting down. will more companies announce layoffs? >> i think head count reductions
are all but inevitable at this point. given the severity of the downturn capex, budget reductions. we're talking about hundreds of billions of dollars that won't be spent this year. >> what will management say about oil prices will they decline further and how long will they stay depressed. goldman sachs is calling for $40 oil before they expect prices to rebound in the back half of the year. >> the lower we go the only certainty is the harder we're going to snap back toward a marginal cost of production. over time. >> shares of energy companies have already taken a hit, the sector is the second to worst performer on the s&p 500 year to date. down 4%. financials down slightly more, they've already reported. for nightly business report i'm jackie deangelis. still ahead, facebook blows past wall street's earnings estimates. there's something else that investors are focusing on. the key takeaway next.
gains in light trading. julia bors ten's one takeaway from facebook. >> facebook mobile advertising accounting for 74% of facebook's income. 34%, 745 million people access facebook mobile every day. mobile ad dollars are following movers shifting to mobile. they're still shifting slowly. that's an area facebook plans to accelerate moving forward. the company has an average of 3 billion video views per day. that's up from just 1 billion in september. the mobile growth didn't help facebook stock which is way down on concerns of 87% increase and expenses in the quarter.
for nightly business report i'm julia borsten in las vegas. the sands had a record fourth quarter and full year for 2014 and is raising its dividend by 30%. that sent shares initially higher after the results. as jane wells tells us the entire gaming sector is working to make sure its luck didn't run out. >> a betting person might put it all on black in gaming this year. why? vegas, baby. sin city is in the black, flush with new business. not at the tables. las vegas strip has seen a slight dip in gaming revenues. and this week slot machine maker igt reported a sharp drop in earnings. more visitors are coming to las vegas, and revenue per available room which basically measures how much people are spending overall is up nearly 9%. in other parts of the country, regional gaming companies are not having the same luck a situation which could get worse as the big boys expand east.
especially into massachusetts. wynn plans to build a casino outside of boston. >> they want an established level of luxury that we've proven we can deliver here. >> there's china, where most of the gaming revenues come from. and right now, maybe not such a good bet. >> some high rollers are fleeing macau, smoking may be completely banned many long term this could be a good thing. and union gaming thinks more people will want to invest in a market with more scrutiny and accountability. few seem to say maybe about business this year. janney analysts have a buy on mgm. the biggest player on the strip, betting on more visitors and conventions, and with so many visitors driving in from california low gas prices may help vegas maintain a full house. for nightly business report i'm
jane wells many. qualcomm's outlook disappoints. the chipmaker lowered its guidance over the next two quarters as one of its two chips was dropped by a large customer. the company blamed concerns over its business in china. shares nshlly dropped after the bell before the close, the stock was off 1% to 70.99. tupperware posted earnings and revenue that easily topped estimates. the company offered investors a rather downbeat outlook, and that fell below expectations. shares popped 11 1/2% to 66.67. the e commerce giant was accused of fake goods and there by earnings customers. the initial public offering last year was the world's largest.
today the stock was off 4% to 98.45. sears said it has cut 150 corporate jobs outside chicago. as it tries to cut expenses. this is part of a string of efforts, the retailers made to return to profitability as it works to reverse falling sales and truly dismal earnings. shares fell 4 1/2% to 42.66. things are really cooking over at shake shack. the new york based hamburger chain has raised the projected price range for its initial public offering which is expected to take place tomorrow. in a regulatory filing today, the company now expects to sell 5 million shares as high as $19 each up from a high of $16 a few weeks back. coming up a trip to the windy city to see how chicago's reinvented downtown is helping to push property values up.
some changes at the top at mcdonald's, ceo don thompson will retire as president and ceo of the company march 1st. thompson will be replaced by mcdonald's chief brand officer. >> the new far left prime minister of greece is wasting no time shaking things up alexis who was just sworn in yesterday has already halted plans to privatize the major port and has begun rolling back tough austerity measures that have been in place for the past five years, as part of its bailout loans. that sent the greek stock market down hard for a third day straight.
off 9% more today, with bank stocks plunging 26%. >> a top ratings agency is reportedly close to settling costly lawsuits stemming from unrealistic ratings that it gave to mortgage backed securities during the mortgage crisis. s&p is poised to pay 1 $1/2 billion to the justice department and a handful of states that sued it over risky investments that later went bad. now moving to chicago, losing both jobs and population now, a new resident tech is taking hold of the city's downtown, and pushing property values up. diana olick reports. >> the record sale price of a 60 story luxury apartment is turning up the heat on windy city real estate. 111 west whacker sold for $328 million. related, the new york based firm
behind hudson yarn acquired the project after the recession. it focused on ultrahigh end amenities, rents upwards of $12,000 a month followed and then the sale. >> i think it talks most to how chicago is one of the great american cities. and whereas in the past it hasn't been recognized as much by the very high end purchaser, today the people that drive investment across the country are recognizing the viability of the city. >> behind the boom jobs tech jobs. chicago based apartment and office developer hasn't bought an office tower in 7 years, but is now acquiring a 100-year-old building downtown and rehabbing it with tech tenants in mind. this after motorola moved into the merchandise mart. >> the large companies, particularly the high-tech companies, the banks, financial institutions and the like are
following those millennials. they're bringing their jobs to where the millennials live. why? the millennials would rather live work and play in the same area. >> that in turn is fueling the luxury apartment market. >> latest record sale is just the beginning. it's starting a new project right across the street on the tower i'm standing on now. that will offer both condos and rentals and bigger units that could accommodate families. a chinese developer is putting up an 88 story condo just south of here. >> looks at real estate as a liquid deappreciating asset. and they are looking for some place to rent and they're going to bide their time. i think that will change in the future. we will move to more of a 50% renter 50% buyer marke in the condo market will come back. for today, you know apartments are where people want to be and we're filling that need. >> that need for ultrahigh end
amenities, an equinox gym, whole business center movie theater, party rooms, all catering to downdown renters who may eventually become buyers. diana olick in chicago. >> looks pretty nice. that does it for us on nightly business report i'm sue herera thanks for watching. >> i'm tyler mathisen. have a great evening, everybody. we hope to see you tomorrow night.
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