tv Nightly Business Report PBS February 1, 2016 6:30pm-7:01pm PST
this is "nightly business report" with tyler mathisen and sue herera. change at the top. google's parent alphabet rise above profit report to a new title, world's most valuable company supplanting apple. henry iv says uneasy lies ahead that wears the crown. wild card. will they change the path of oil prices? big week. what next few days could answer a key a question for the market. just how healthy is the american economy? all that and more tonight on "nightly business report" for monday, february 1st. good evening. welcome. major milestone for google's parent, alphabet. it's taken over apple.
it crossed the mark briefly today and solidified that position after recording solid fourth quarter earnings. it's lift bid strong sales of online ads and tighter cost controls. the company whipped expectations earning 8.07. wall street was looking for 8.10. there was an increase of 17% from last year. the result sent shares of alphabet higher in initial afterhours trading. this was the first report to separate google's main search business from risky investments like self-driving cars and glass. josh has more on the quarter reports. >> reporter: $6.8 billion. that's one big number from the recent alphabet report. it refers to operating income at google core and that refers to search, maps and youtube, the real business drivers of
alphab alphabet. the company is breaking out the number, stripped away from nest and fiber and all those moon shots. i investors have a much cleaner look. they call it a massive number that beat his forecast. the number he says suggests that despite the competition from rivals such as facebook, the company continues to perform well in its core businesses, a display advertising mobile, advertising and youtube. i'm josh lipton in san francisco. >> that profit report for alph and last week's equally impressive one from facebook teams up a great debate. which company deserves the poll position in your portfolio? scott likes facebook and has a buy on the stock. max wolf favors google. he's chief economist at an investment firm based in new york city. this reminds of those high
school essayti tisests where th say google, facebook, discuss. that's the whole mission here. scott, why don't you take it first. it's not that you don't like google, but you think facebook has a little more going for it and maybe a better price. >> right. i don't think you can go wrong with either of these names. i'll give you a few reasons why we like facebook more. first, we have a lot more growth. if you facebook and what they deliver. i think it was a top line gain of 52%. 60% and that's really without any help from basic cacqusition anything like that. think about video, instagram and occulous. we think the growth story has a number of years to go. third, they haven't really started the process of
allocating that capital to shareholders. google started. apple starts last year with a buy back. facebook is close to that process. there's another lever to generate sha genera genera shareholder values in the years to come. >> you say google is the next new thing. >> i agree both are great names and should be portfolio elements to people who want growth. i think the next little while. facebook is the now company. google is the next thing. usually depending on what your investment style is, you want the next thing. google is the most likely to be executed start up on with the lowest multiple while throwing off enormous cash. i think google is closing in on one of the hardest things to do and one of the things that only companies are built to last have ever done which is keep that
engineering culture and keep plowing profits and earnings not just into the next corner or the next year which wall street tends to favor but the money ideas that are self-driving cars or balloons providing internet. i think facebook is a great name. i think it has more margin than google for a well. i think that alphabet owns the bigger piece of the future and because they take more chances and more diversified and more matu mature. >> i was speaking to someone who took the view that some of the things within the google or alphabet portfolio that as you call them, out of money ventures, are sapping capital from the company. it might be a little inefficient as a result do you see that as weakness or a strength.
>> i think it's called innovation. if you're not willing to spend a lot of money on a whole bunch of dreams that won't come true, come true, you're not really in the innovation business. it's hard to stay creative and nimble without just buying things. i think it's hard to do. i think there's a good chance google will be one of the few companies that does it. that means built to last. i love that for a portfolio. >> what about instagram? that seems it's one of its most valuable assets now. it goes across all different age groups. facebook doesn't necessarily do that. >> i remember a year or so ago when facebook was talking about concerns from a demographic perspective. youngers users won't flocking on facebook. instagram has become the biggest network for that younger
demographic, say for teenagers. they're just really starting the process of monetizing instagram. they are using new features to engage them and pricing accordingly. we think that's an exciting opportunity that will last years for come. >> what's app is big with the younger crowd. are they making money off of it? quick yes or no. >> no. >> they paid 19 billion dollar but are you making money or not. >> great discussion. we appreciate it. a new month, february started out fairly calm especially compared to january. the major averages were down more than 1% early in the day. then they climbed back. when the closing bell rang, stocks were flat. the dow jones fell 17 points to 1
16,4 16,449. the s&p 500 was lower. what lies ahead for february especially after the worst january performance since 2009? we look at the past for a few clues about the future. >> reporter: good riddance january. hello february. falling oil prices gave stocks their worst start to the year since 2009. as investors look to a fresh month, history may be on their side. over the last decade, february has been a better month for markets. the s&p 500 and the dow jones have been positive of the last ten. the best time to get in may be at the start of the month according to a data analytic platform for markets. stocks moved higher and seen better returns for the first two weeks of february. >> i think investors will start find we created bargains. >> reporter: the best performing has opinion technology following
by consumers. after typical weeks ofthey make up lost rounds in the first trading days of the new month. >> if consumers believe oil price will stay where they are, they will be encouraged and wanting to spend that money on items where it's restaurants, leisure or clothes. >> reporter: it's also opportunity in commodities. it's been a rough start to the year for oil. if you think the floor is in, crude has been a good bet this month. oil has moved higher eight of the last ten februarys and returned nearly 4% on average. past performance is no guarantee. knowing the history may wash out some of that noise from january as investors look to a fresh month. the month started with a number of multibillion dollar mergers. abbot labs to by alier for nearly $6 billion. it makes abbot a bigger player
in the rapid testing space which helps physicians speed up testing. striker is acquiring sage. they also raised their earning guidance for 2016. dominion resources to acquire quester for more than $4 billion. it's basic week for the economy. started with new reports on how much americans saving. it will end on friday. the new information will tell us a lot about where things stand. >> reporter: it's a week full of data that will hopefully show strength in the economy. personal report was okay but spending came in below expectations and construction spending in december also missed the mark with only a slight gain. the first data for january was also disappointing. a key survey showed manufacturing contracting for
the fourth straight month opini. >> we don't see strong growth. it's really chugging alone that square root shaped long term sub trend growth we're in. >> reporter: there's still hope for the data. auto sales on tuesday and important for the sector on wednesday could show the u.s. economy is with standing its considerable challenges be pp. a top fed official offered a hint they could ease back on plans. >> further declines in oil prices and increases in the value of the dollar for an exchange value of the dollar suggested inflation would remain low for longer than previously been expected before moving back to 2%.
>> reporter: less inflation means it doesn't have to move as previously thought. fisher remains optimistic about job growth. markets will see if the optimism is well placed beginning with the employment report on wednesday and with the friday jobs number from the government. the fact calls for gains of 185,000 jobs in january. that's a mark cool down from the near 300,000 in december when it's still enough to keep unchanged or edge it down below 5%. the key test is whether the data show the weak fourth quarter continuing into the first where mostly foreign troubles are u.s., domestic concerns. oil prices suffered their first decline if five sessions. here we go again. factory data out of china raised concerns for the energy demand. it settled down nearly 6% at 31.62 a barrel.
>> the low prices of oil is hurting the finances of nigeria. africa's largest economy has asked the world bank and the african development bank for emergency loans totaling $3.5 billion. according to the financial times it will help fund a 15 billion dollar deficit. the russian economy getting hit hard by the low price of poli oil. there's been meetings to support prices. is that all it is, just talk? or is russia a real wild card in the crisis. >> reporter: as oil prices continue to go south, russia has been at the forefront of trying to figure out whether some action, like a production cut, should be implemented to stabilize oil prices. an opec official stated it's all in the hands of the russians now. could russia be holding a powerful card here? >> we think russia is a wild card. if you look at 2015, they
surprised many analysts by being are they going ed to be up or down. if they are up, everyone will have to take their oil forecast down. what i think is interesting is the we are getting some russian producers coming out and saying maybe we should consider cutting production. >> reporter: some say it's much easier said than done. >> i don't really see russia being the one that's more willing to cut production on its side. you have a lot of disagreements amongst russian energy officials as well. >> reporter: several analysts say russia's role in an oil production cut is a side show, and russia is trying to talk up the oil market even if it does want to cut production without saudi arabia's cooperation, it will be all talk and little action. >> there's a lot of distress there. i think the saudi's will be much
more focused on u.s. production than coordination talks with russia. >> reporter: some argue russia will do whatever it can to get other country's cooperation perhaps more now than ever. >> the price heading down into the 20s is going to impact russia's economy even more significantly than where it is today, which is in dire straits. >> reporter: russian president has admitted that low energy prices have led to dangerous revenue prices. since russia relies in oil and gas exports as the main drivers of its economy. economic sanctions has caused russia's gdp to contract significantly. still ahead, the big money behind the race for the white house.
iowa voters will caucus tonight. it's the first nominating contest in a race like few we've seen before. there won't be any lines for voting booths but rather public meetings. we hear why it could be a historic night in the hawk eye state. >> reporter: we he finally reached the point in the american presidential campaign where it's not up to pollsters or pundits, it's not even up to campaign speeches. the voters have their say in iowa with the caucuses. we forget despite the complex policy papers, and issues and stances that the candidates take, sometimes for voters it
comes down to simple gut reactions to the candidates that they see in front of them. let's take a look at a few we have seen. >> voting for clinton, pragmatic progressive. >> marco rubio because he can unite people. >> ted cruz, constitutionalist. >> bush and honesty. >> carly, confident, strong and she has a blue print for america. >> trump. wall. >> we love you donald. >> i love you too. >> hillary. seniors. >> bernie, approachable. >> hillary. >> my status right now is undecided. >> reporter: those voters did get stark rhetoric especially on the republican side at the t ta end of this fight. listen to this back and forth between ted cruz and donald trump, the two leading republican contenders. >> both trump and marco are attacking me. they are attacking me with all their might. we drawing contrast. the contrasts are clear and they
are substantive and policy based. a vote for marco rubio is a vote for amnesty. a vote for donald trump is a vote for obama care. >> ted cruz is a total liar. i'm so against obama care. i've been saying it for two years in my speeches. i'm going to repeal and replace obama care. i don't know where he gets this. he's a liar. >> reporter: trump comes into caucus night with a five-point lead. ted cruz is believed to have a stronger organization. on the democrat side hillary clinton has a three-point lead. she's believed to have the stronger organization. she's considered the favorite going into tonight. the results here, however they come out, will shape the contest as we move forward to new hampshire which has the primary in eight days and nevada and south carolina after that. then the race goes national. i'm john harwood.
>> the money is rolling. we have the total contribution numbers. they have been going over the data. what do the numbers show? >> this is much different than what we have seen in past years or past quarters. it's such a different race this time around. let me walk you through numbers starting on the democrat side of this campaign. we see hillary clinton topping the list with 38 million dollar raised in the fourth quarter and bernie sanders with $33.6 million. on the republican side, ted cruz. 20.5 million marco rubio. there's donald trump at the bottom of this list. $13.6 million for donald trump. what's astonishing is this is not the kind of race we have seen before. we got a guy in this race who is leading this campaign and self-funding his own campaign. contributions matter less to donald trump than the other candidates who will depend on
them like oxygen to keep going after the iowa caucuses. >> he's made that point that he doesn't need money, but people are still giving money despite the fact he's a billionaire. sfr do you see a lot of small donations going to donald trump o you see a lot of small >sfr donations going to donald trumps a lot of the big money people in traditional politics are not writing check to donald trump. a lot of smaller people are. that's a measure of enthusiasm for the campaign. >> i was stunned how close bernie sanders was to hillary clinton. can he keep it up and raise establishment size money? >> he's raising enough money to stay competiti hillary clinton has all these big outside groups working for her but he's in the money race. twitter gets a lift on take
over speculation. that's where we begin in tonight's market focus. a report by tech websites said investor and private equity firm have considered some sort of deal with twitter. then a follow up by fortune reported that silver lake has no interest in buying even a slice of twitter. shares were up more than 6% today to 17.91. lumber liquidators will pay fines for importing illegally sourced wood. the company will also face five years probation. shares were up 3.5% today to 13.36. the centers for disease control and prevention is closing its investigation into the chipotle e. coli outbreak saying the concern appears to be over. they were unable to determine the cause. it was likely pause of a common
meal item or ingredient. chipotlee expected to report earnings tomorrow. fourth quarter property at aetma up nearly 40%. thanks in part to membership growth in the government based business that sells medicaid plans. the activist hedge funts executive capital has taken a small stake in cit group and wants the firm to break up. that's according to wall street journal. they provide commercial lending and insurance services and owns planes and rail cars. the lenders exploring a spin off of its commercial air business. shares are up nearly 2.today to 29.86. mattel beat fourth quarter
earnings target. the revenue number also better than expectations. strong sales for barbie dolls and hot wheels toys lifted the result. it was the first rise in revenue in more than two years. mattel shares plumped up on the news after falling 3% during the day to 26.07. coming up we go a different direction. the marijuana industry are grow quickly, and so are the headaches when it comes to paying taxes. legal marijuana sales recreational and medicinal are hitting a new high of nearly $5.5 billion last year. a new report predicts sales will grow 25%. by 2020, sales are expected to
hit about $22 billion. >> for those who sale marijuana legally, filing business taxes is anything but simple. jane takes a look at this growing issue for a new crop of entrepreneurs. >> reporter: it's tax time in the cannibus industry. for many new in the business, their irs bill could leaf them dazed and confused. >> companies are paying anywhere from 40, 50, 70% depending on what demographic they are on. >> reporter: the irs still insist the companies bay income. at the same time the agency bars them from making most normal business deductions. >> you could end up with tax bill far more than any potential profit you could ever make. >> reporter: that could start to happen as legalization is bringing down prices and marg s
margins. >> i've seen the profit margins drop about 40%. >> reporter: the irs does low deductions for the cost of marijuana, pu it does not allow it for the cost of retailing the it. things like rent,tizing. >> the margins are there at least in california where we operate. >> reporter: darren left wall street to start a company, a publicly traded holding company which owns a variety of cannibus companies. they also own other companies that don't directly involve pot. like one that provides growing equipment or a firm that sells regular produce to retailers. he makes sure businesses are segregated in their tax reporting. >> a lot of business is one leg in the black market. we're not able to do that because we're a publicly traded company. there's a will the of providers that because of this head wind
are still woeroperating with on foot in the black market and one in the other. >> reporter: tim owns the colorado harvest company that did about $10 million in sales in 2015. he says the lack of normal deductions will cost him $8.5 million or more in taxes. >> they cash our checks every month. >> reporter: jane wells, louisiala los angeles. >> that's nig"nightly business report." i'm sue herera. >> we'll see you back here tomorrow on groundhog's day.