tv Nightly Business Report PBS March 24, 2015 6:30pm-7:01pm PDT
this is "nightly business report" with tyler mathisen sue herera. building a foundation is probably the biggest purchase you'll ever make and a lot of americans bought new homes last month. but there's more to the data meet it is eye. >> payout at risk? mack macklamor dividends, will others follow? don't leave home without it. american express ceo addresses investors tomorrow. and the pressure is on for him to outline a fix. all that and more tonight on "nightly business report," for tuesday, march 23 24. good evening, and welcome. the federal reserve today didn't exactly get the definitive economic signals it might like to have. the fed say it will be
data-dependent. and today's data were not definitive. consumer prices measuring everything from rent payments to cost of a new shirt rose 0.2% in february. that's the most in four months. it was merely in line with expectations and flat from a year ago. the fed would like to see price inflation pick up a bit. what did was the sales of homes last month. newly built home soared 8% highest level since early 2008. strong headline number sent shares of home builders higher including kb home and lenoir. but as diana olick reports, there's a back bump. >> reporter: soared on news of an expected jump in february sales. and while it was a welcome improvement, it needs a bit of perspective. >> we're trending slightly higher.
we're still 40%, 50% below 30-year averages. >> reporter: february sales of newly built homes hit the case in 7 years at $539,000 for the year. but just undergone an epic boom to bust and building fewer homes than 15 years ago and that's with 11% more people living in the u.s. that is benefitting the bigger wealth capitalized public companies like tripoint homes. >> our orders are up 59% through february and what we're seeing is the consumer that wasn't engaged last year is engaged this year. >> reporter: but the overall number for housing is still anemic largely because builders who face 50% of the market are facing hurdles. >> they are somewhat capital constraint. that may something to do with the overall starts and permit
data. >> reporter: the supply of existing homes for sale is also far lower today than it was in 2000. again, with that population growth. so builders' sales are likely getting a boost simply because there are so few homes altogether on the market. so while february sales were good for the builders, the na simply needs more houses. with supply so tight going into the heart of the spring season prices have nowhere to go but up which will price ever more buyers out. for "nightly business report," i'm diana olick in washington. on wall street stocks drifted lower dropping for a second day putting the brakes on the recent march towards new highs. the dow jones industrial average closed at the lowest of the session falling 104 points to 18,011. nasdaq sank 16 falling below the 5,000 level and the s&p 500 dropped almost 13 points. as for treasuries the yield on the ten year also pulled back remaining below the key 2% mark.
and west texas intermediate eked out just a small gain settling to $47.51. brent crude fell 1.5%. the steep decline in oil prices is the reason freeport mack ma ran, a diversifyied company is slashing dividend 84%. the company said it will curb spending on oil and gas and that finished the day lower as you see there by about 3/4 of 1%. investors wonder if other energy companies follow freeport's lead. as bob pisani reports cutting dividends doesn't really happen all that often. >> reporter: copper and gold in freeport mackmaran. it's a fairly rare event. companies do not like to cut their dividends. besides freeport there's only two other companies in the s&p 500 that have cut their dividends this year and they're
both energy companies. drillers ensko and drivers offshore. many because they have a high dividend yield. bp has a 60% dividend yield. conoco 4%. a lot better than s&p 500 as whole, only a 2% yield. any talk of cutting dividends, particularly in energy stocks gets a certain class of investors were nervous. exxon is a very sensitive case in particular. they're the biggest payer of dividends in the united states. they pay $11.6 billion a year in dividends. that's more than apple paid $11 billion and more than microsoft was paid. exxon raised dividend every year for 32 straight years. and since 2007 chose the race of dividends in april. a few days away and worries ant dividend cuts in stocks all eyes focused on exxon. what are they going to do?
wall street anticipates they'll continue what that i alwaysr "nightly business report," i'm bob pisani at the new york stock exchanges. >> so are any other dividends in the energy industry at risk and what do investors need to know? we're joined by john stevenson, ceo of capital management. thank you for being here. >> thank you, sue. >> that's the question. is freeport the exception rather than the rule in this environment? >> i think pretty much so. i mean keep in mind freeport is energy and oil and gas on the side. oil and gas, pre the top of the market and as you know, really over the last 9 months or so, this 50% slashing in oil prices. so their timing couldn't possibly be worse and of course
coincides with a drop in copper prices as well. >> are you expecting any of the majors to cut their dividends starting with exxon? >> yeah tyler. i don't think so. especially not exxon. i think they have a fabulous record. chevron also should be able to hold up their dividend as well going forward. many of these companies have their capital expenditure greatly reduced going forward. they're doing a lot of large building in terms of their production operations over the next year or so. but that really falls off in 2016. they can get to it this year. be fine. i think most of them will. the one with potential risk is bohnshe but certainly conoco and exxon and chevron, nothing on the dividend front for cutting perspective. >> what are you expecting in terms of oil prices? because that will determine the bottom lines of many of the companies we're talking abou we close tore a bottomr to a bottom
you think or dramatically lower prices from here? >> i don't think dramatically lower but i think we could touch in the 30s before this is all said and done. one, if production continues to grow in the u.s. and around the world. that's an issue. we have to curb production. two, inventories are very high and of course those inventories have to be bled off turned into products. gasoline and heating fuel et cetera. and that will pressure oil prices. so i'm expecting oil prices to bottom by the end of this the next quarter by the end of june and then i look for it to firm. could see softness in the equities and that will be compensating investors who were willing to wait a little bit before jumping in it. they'll buy it at a lower price, exxon, chevron, some of the others. >> is that softness the opportunity of an investor who might like to nibble in energy should wait for and when the time comes, what would you buy, what would you say to avoid or sell? >> okay. that's great question tyler. yes, i think it is a great
opportunity to wait a little bit if you're not yet in the market or looking to invest. the yields i believe, are sustainable and they'll likely be higher if prices fall. so i'd be looking to buy chevron and conoco and avoid oxy and exxon simply because it has such high valuation, even though i think the dividend is sustainable. if you want to go further yield, shell looks attractive higher yields. so and toe tal as well. some of the international majors look very attractive. >> let's just go over it again. you buy the integrated oils and you sell the others, correct? you sell the services, the exploration, and also the production companies. >> yeah. i think you want to be avoid exploration production companies. they're higher data or higher risk. tend to move more dramatically with oil prices. integrated have a refining arm and a marketing arm. that makes them much more defensive because friening margins actually expand when oil prices are low. that's a natural offset to lower
oil prices. and so that's where you want to go. you want to be more defensive. be in the integrated oil and gas camp, which is you know in the u.s. it's exxon, chevron, conoco objection dental oil. and avoid production companies or independent refiners but that would be the way to avoid. and avoid the drillers absolutely because that's an area that the majors are cutting back on. they're reducing capital expenditure. >> john thank you so much. john stevenson with stevenson and company, capital management. ty? saw shares fall hard today. whiting petroleum announced major equity offering selling debt raising concerns about the oil and gas to find a buyer for the company. whiting buys with others that have shares up to the balance sheets. whiting petroleum is the largest producer in the bach and shale
region and shares fell almost 19% today. and now to a blue chip company, american express, which is looking a little black and blue these days. the payments giant lost some key business recently prompting some to ask if the company has lost its way. and that is the question ceo kenshin nolt will likely have to answer. mary thompson looks at what's ailing american express. >> reporter: its cards, a fixture in millions of wallets. the company in need of a fix. >> the biggest threat that american express faces is i think, it's instilling confidence in the business y tha the business model is not broken. >> ken shinnolt is looking to do that wednesday. a long-term holding of the bill area investor warren buffett, the firm run into recent trouble. the stock the third worst performer in the dow over the
last 12 months and an anti-trust suit by the justice department and lost a co-branding relationship with jet blue and come january, analysts chris doena points out it loses profits and status as the only card accepted at costco stores. >> there's no way around it. that's a big loss when you combine canada with the u.s. you get to a number that looks like it' pretty close to 10% of earnings. >> reporter: w speaks to investors, shinult needs to lay out the deadline of 2015. sees cost cutting being the primary tool chinult uses to lift like in the past. >> the reason they've been able to drive revenue growth and get the positive operating leverage is expense control. there's still more expense left. >> reporter: along with cost cuts buybacks and higher income from loan balances is part of the plan.
they also anticipate ask amex. their biggest asset is the high spending client base. >> when you look at the annual spending on an american express card it's in the neighborhood of about $15,000. when you compare that to like a discover card or cards of other major issuers, it tends to be three or four times larger. >> reporter: amex's clients are oil too. that customer base is what they will build on to bri busine back to where it was. for "nightly business report," >> china's manufacturing fell to the lowest level in nearly a year as new orders shrank that according to a new report out today that week reading adds to signs that the world's second largest economy lost momentum.e hiking interest rates, reducing bank reserves and atechlts by the country's central bank to reduce fngsinancing
costs. euro zone's economy is gaining momentum. the businesses in the country reach add 4 year high and saw its business activity grow to the best level in eight months. still ahead, will a high profile legal case in silicon valley shatter the glass ceiling? we'll tell you w wall street's most powerful women is heading to silicon valley. ruth parot, morgan stanley's chief financial officer starts in late may. some say the move may be a sign
that google is looking to reign in expenses after embarking on a number of ambitious projects google shares up 4% today. >> as ruth parot, women are getting new attention. closing arguments in a high profile case that alleges venture capital firm kliner perkins, kov field and buyers discriminated against former employee ellen pow due to her gender and that's not the only case of gender discrimination, ald discrimination. julia boorstin examines the issue and what's being done about it. >> reporter: found kliner perkins isn't the only one under fire for gender discrimination. facebook and twitter hit by lawsuits in the past week, alleged gender discrimination. and laura pierson said this is just the beginning. @encourage people to come forward and wakes up silicon
valley and the rest of corporate america that they need to pay attention to these issues. >> reporter: while sheryl sandberg advocates for companies to be more inclusive, said all of silicon valley needs to do better. silicon valley has a reputation for a boys club. last facebook reported 69% of the global workforce is mail right in line with google and twitter. 70% male workforce. yahoo, 62% male. at facebook women comprised at 23% at senior ranks and though that's better than t 11% of executives as silicon valley vall top. 5 percentage points less than the s&p 500. according to a report by fen wick and west. >> there is a vicious cycle that needs to be broken and it's not, it's something that will require really conscious active thought by current decision makers and leaders.
>> reporter: these companies are key trading grounds for capital investors. so industry watchers say improving the numb giants is key to driving up quality across the whole industry. silicon valley is rising to the challenge. intel is addressing the lack of female engineers with a $300 million diversity and technology initiative to train and recruit family and underrepresented group groups of compute scientists. >> having women involved in decision making leads to better decision making in some cases. >> reporter: lean in and make the company more diverse. it tries to attract a diverse mix to the training programs it spends $200 million on annually. chamers points to the three women on c board and five women on operating cpl initi have one thing in common the belief that increasing gender diversity isn't just good for women, it's good for business.
for "nightly business report," i'm julia boorstin in san francisco. network slashing current quarter guidance and that's where we begin tonight's market focus. the outlook, rather dull comes as the communications company said it doesn't expect to receive some orders that it had counted on and is also planning to review its cost structure. shares down get this 34% today to $8.70. ihs is cutting its profit in sales outlook for the year. the information and analytics company blamed head winds from slumping energy prices and currency volatility. those are the two biggies this earning season. shares off more than 7% to $110.26. mccormick's first quarter results topped estimates. the spice maker did note the earnings weighedn by a stronger dollar. currency fluctuations takes a bite out of the sales outlook for the year. still, shares up more than 2.5% to $75.12. ross stores announcing a 2 for 1 stock split. the retailer said the move
reflects recent strong performance and optimism about the future. the split would be paid out as a 100% stock dividend in june. shares up a fraction to $106.64. colfax saw its stock after hours as agreed to be acquired by lexx mark. valued at $1 billion and lexx mark said it will double the size of its enterprise software business. shares of colfax shot up as much as 35% after the close. lexx mark popped as much as 4% after hours. and merck's board of directors authorized a new $10 billion stock repurchase program that brings its total buyback program to nearly $12 billion. announcement sent shares initially higher in after hours trading. the stock finished the regular session slightly lower to $58.63. for the better part of a decade, a joint venture between boeing and lockheed martin had a virtual monopoly on supplying rockets to the government.
it's a significant challenge fromon spacex spac. jane wells was given unprecedented access to the rocket facility in decatur, >> reporter: >> this is a very first stage of building a rocket. >> reporter: inside america's largest rocket company, they have never been busier. >> this is your spray on foam installation that's actually sprayed in that booth and then they come in here and shave it off. >> reporter: ula, a joint venture of boeing at lockheed martin makes big rockets but it's trying to make the price tag smaller. >> i don't u how ula is as expensive as they are. >> reporter: at a congressional hearing last week the president of ula rival space x criticized the veteran rocket company for being too expensive for taxpayers and too slow to change. pays the military launch business from the air force.
ula pointed to perfect record of 92 launches. >> national security missions some of which are multi-billion dollars, one of a kind assets upon which lives depend liability matters. >> reporter: but the pressure son and now ula is announcing plans for a brand new rocket. one with an american engine possibly made by blue origin owned by jeff bayhezos. freedom or galaxy one is the name. what can tell me about the rocket? >> more than we've made before and less expensive. >> reporter: the rocket russian engine we saw one being delivered which congress said can no longer be used after 2019. but a new engine may not be certified until 2022 and flying the bigger delta rockets all the time could be too expensive. that leads a gap which only space x might fill. the ula ceo said that can't happen.
>> the country really needs to have two systems in case there's an urgent need. i'm expecting congress to give us just a little bit more time. >> reporter: you mean to get a few more russian engines. >> this you can barely feel it. >> reporter: most agree competition has been good and making a company with a perfect record better. how much faster would you say it is to put one together now than when you started? >> when i started? 30% to 40% faster and we expect that same amount in the next two years. >> reporter: f" jane wells, decatur, alabama. coming up tax season is here and the last thing you want to do is leave money on the table. so we have a list of deductions you might not know a
here's a look at what to watch tomorrow as mary thompson reported a bit earlier, american express meets with investors. the supreme court will hear a challenge to the environmental protection agency's rules on power plant emissions. and durable goods orders for february will be released before the opening bell. and that is what to watch tomorrow. it's tax tuesday. did you know that? >> i did. i'm ready to take note. >> with april 15 fast approaching, we're going to discuss different strategies for youran if you haven't done so like me. you don't pay more than you must. hi sharon. what are the most overlooked deductions people miss? >> well you know these deductions could save you thousands of dollars and the one people often miss is charitable contributions. sure you might keep a record of the checks that you wrote or the
caps that you made with the receipt because of documentation but did you base it on your salary perhaps you deducted from your paycheck. go to the pay stub and include that amount. if you were driving to a ch activity you can deduct 14 cents a mile. some don't realize that. for millennials just starting to save for retirement is the retirement savers credit. you have to have a certain income level that's less than $61,000 for a married copy l and $31,0005 0 f a single. for a couple based on the fact you put into a retirement savings plan. so this is key. if you've lost a job or were only working part of the year you may qualify for the savers credit even if you didn't last year. another one to think about is possibly get a deduction for dependent care credit. a lot of people know about the nanny and the day care to get a credit for dependent care but
what about summer camp? u may qualify for those expenses for the dependent care credit as well. >> summer camp? i wish i'd known last year. >> you can amend a return still. >> that's true and i might. it's expensive. thank you. what are tax deductions and credits that might expire that i need to take advantage of now? >> congress always does the 11th hour and extend certain tax breaks. they did that at the end of 2014. we're good for 2014 but may not be good after that. so you want to make sure that if you're in a no-income tax state you take the sales tax deduction because you could take a sales tax deduction or income tax deduction, whichever is better to irs table, see what's for you. if you're in the no-income state tax state, and another energy tax credit. maybe made improvements to your home up to $500 if they're energy efficient improvements. that may be worth a credit to you. tuition and fees deduction. if you paying for a child's college education, you want to
figure out if there's any way you can save money there, and so there's a number of credits but also the fee and tuition deduction you may want to consider for $4,000. >> sharon, got to leave it there. than very much. we appreciate it. good ideas, one and all. >> really good advice. that will do it for "nightly business report" for tonight. i'm sue herera. thanks for joining us. >> thanks from me as well. i'm tyler mathisen. have a great evening, everybody and we hope to find you right back here to
tonight on "revolutionaries"... but i've always believed that those who feel comfortable at the intersection of the humanities and the sciences are, like steve jobs the people who are going to be the most creative. ♪ walter isaacson is one of the country's leading biographers. fresh from his 2011 profile of steve jobs, walter has now tackled a new subject in computing -- the geeks, geniuses, and renegades who created the digital age. tonight, walter isaacson and "the innovators."