tv Nightly Business Report PBS March 9, 2016 6:30pm-7:01pm PST
this is "nightly business report" with tyler mathisen and sue herera. turning 7. stocks have tripled since the 2009 lows, but is the tide starting to turn for one of history's greatest bull market runs? wage rage? are stagnant paychecks fueling the frustration of americans this election cycle? what are the proposals to fix it? attention shoppers. amazon is going old school for the youtube generation. all that and more tonight on "nightly business report" for wednesday, march. good evening, everyone, i'm sue herera. tyler mathisen is on assignment this evening. well, happy anniversary. seven years ago today the stock market bottomed in the depths of the great recession. seven years later investors have witnessed the third longest stock market upswing in history.
the blue chip index, dow index, increased more than 150% putting $16 trillion into the pockets of investors according to wilshire associates. dominic chu takes a look at the stocks and sectors driving this bull run. >> reporter: for some it seems like so long ago and for others the wounds from the financial crisis are still fresh. but the market has come a long way since bottoming out on march 9th, 2009, and that was the day, remember, stocks hit a closing low during the crisis. since that day, the dow jones industrial average is up close to 160%. the s&p 500 index has gained about 190%. and the nasdaq composite is up a staggering 265%. taking a closer look at the industries and sectors that have really been driving the gains, it's been consumer discretionary or retail-oriented stocks that have really led the way higher followed by financials then industrials. each of those sectors is
characterized as cyclical means companying within them are closely tied to the up and downs of the overall economy. take a stock like coffee giant starbucks. at the crisis lows, it was worth around $4 a share after adjusting for stock splits. today it's about $57. or athletic apparel maker underarmor, back then it was close to $3 on a split-adjusted basis. today it's around 80 bucks. the laggers have been defensive sectors or not as linked to econ growth like telecom stocks and utility stocks. given the huge drop in oil prices over the last couple of years the energy sector has lagged the most of the major sectors. oil and gas drilling company transocean was worth close to $50 a share back then. today it's worth closer to $12. now, we know where the leadership's been, but as we head into what could be the eighth year of this bull market, a lot of questions remain about whether the run can continue.
for "nightly business report," i'm dominic chu. one prominent investor says the recent rebound in the stock market is done. doubleli doubleline's jeffrey says there's plenty of reasons to be pessimistic including relatively high valuations, lackluster economic growth and falling profit margins. >> this is one of the reasons i think we're not out of the woods relative to risk. the fundamentals aren't that good. the characteristic of a bear market rally. >> he also said he does not expect a further rally in commodities and gold could go to $1,400 an ounce. let's turn to our bull and bear guests for their opposing views on the market. kevin nicholson at riverfront investment group and he's our bull. he says this bull market does have more room to run and our bear is financial journalist ron ensana who sees many risks for the market ahead. gentlemen, welcome to both of you. kevin, i'll start with you.
you know, he seems to disagree with you. make the bull case for me. >> well, this market that we're in right now is highly correlated with oil, and as oil on production has been cut here in the u.s. and opec is now starting to talk about cutting oil, i think that you're going to get opportunities to see the market go higher because as oil has stabilized, the market has begun to rally. >> all right. ron, you're a little bit less optimistic about the market. you think this upcoming year we're in, the year we're in now is going to be tougher than last year. >> i agree with jeff a great deal insofar as we're in the midst of a cyclical bear market in stocks. going to go down 20% in the averages. most stocks have gone down. 60% of the s&p has gone down 20%. i thucink you got the fed possiy raising rates, rest of the fed weakening. people's bank of china, bank of japan are going to do more to
ease. i don't think that's going to stimulate demand to such an extend that the world grows more quickly and the u.s. stock market doesn't have difficult digesting all this news. >> what about thats, kevin? >> well, i think that, you know, as i said, with oil, you know, it's going to -- if oil goes up, that's going to help emerging market economies. that's also going to change the sentiment as far as global growth is concerned. i do believe that as far as the fed is concerned, you know, they only have one hike on the table now. you know, earlier this year it was four, but i think that you will get the economy to be stimulated by the ecb and the bank of japan as they are easing in their economies. >> what about, ron, the fact that if there is one more fed hike, then our fed is doing the opposite of most central banks around the world. >> and this policy divergence is very important. the more the fed raises rates, the stronger the dollar and the more we restart the cycle that we saw last summer and again early this year. so a stronger dollar drives
commodity prices back down. it creates a dent in u.s. exports, multinational corporate profits and doesn't help the stock market in any way, shape or form and we have political risk and geopolitical are risk to throw on top of that this year in a manner we haven't seen in a while. so i think there are more headwinds for the market than tailwinds hence i think it's going to be a tougher year than people expect. >> kevin, what about the political risk? i mean, it's been an absolutely wild political season, certainly, and the market generally does not like uncertainty but i don't see that as something you're concerned about at least in my notes. >> no, i'm not concerned about the political risks right now because when you look at the economic data that has been coming out, you've been seeing nonfarm payrolls that surprise to the up side. you saw retail sales very strong the last time it came out. so it's our belief that the improving economic data in the u.s. is going to help the economy really weather any type of rate increase and let's just be honest, at this point the fed
is pretty much on hold while the rate increase is on the table, it probably will not come until the second half of the year if at all. >> would you agree with that is. >> i don't know. depes if inflation keeps moving to the fed's target, as oil rebounds, that's one of the factors in the inflation outlook and could push the fed to do more rather than less which would be a mistake. i would prefer they're on hold. china's exports dropped 25% in february, their car purchases also fell internally. they're not strong internally, not strong externally. the rest of the world is effectively in recession. i would prefer the fed does nothing but if we start to see this commodity rally continue and inflation move toward the 2% target the fed has, this raise rates based on what they've been telling us for quite a long time and a policy error like that could upset the apple cart. >> very wickly, kevin, does china worry you? it seems to worry the market on almost a daily basis when we get data that's weaker than expected
or surprising but does it factor into your investment philosophy for the market? >> well, we look at china, but china hasn't really worried me because i kind of equate china to how japan was back in the '90s. you know, they were a big exporter as china has been, but china doesn't buy anything from the u.s., and so from our standpoint, the u.s. consumer is what's important. we're not seeing, you know, recessionary levels here. you've seen the high yield markets even tightened by 150 basis points in just a 2 1/2-week period. so i think when you look at everything that's going on here in the u.s., you know, things will be okay, and that the consumer will weather this storm. >> okay. on that note, kevin nicholson with riverfront investment group, thank you, ron ensana as well tha well. thank you, ron. oil prices rose as investors looked ahead to a meeting of the european central bank tomorrow
and possible easing markets as we mentioned. the seven-year anniversary of the bull market the dow jones industrial average rose 36 points to 17,000. the nasdaq added 25. the s&p 500 gained 10. as dominic reported earlier in the program the stock market has come roaring back since the depths of the great recession. s&p 500 has nearly tripled gaining more than 190%. that's been good for just about under half of the adult population. bank rate reported last year that 48% of americans have money in stocks. for those that don't, they depend on wages which haven't grown as fast as the stock market has. the bureau of labor statistics shows that since early 2009, average hourly earnings have increased about 15%. and that discrepancy may be one of the reasons why voters are being described as angry in headline after headline this election cycle. joining us now with his thoughts is andrew friedman with the "washington update." good it have you here. welcome back. >> thanks. >> would you agree with that,
that the income inequality equation is part of what's driving the anger? >> absolutely. i think it's going to be the issue of the campaign once we get to the general election. both parties acknowledge income inequality is a problem. paul ryan came out with a large report on it a couple of years ago about what had to be done. and i think this will be the issue and the question is, you know, how do we reconcile what the two sides are going to say which are very different? >> i was just going to say, they have very different approaches as to how to solve income ine wallty or whether they actually can. >> yes. if you look at the democrats, their view is capitalism has hard edges, government has to step in to try to smooth out those edges and programs that create jobs and provide education raise the minimum wage, all of that will help income inequality. the republicans say just the opposite. republicans say 50 years of these kind of programs haven't
helped and what we need is to take the government shackles off and let businesses grow. and then if you look at the tax side, it mirrors what i just said. democrats say more programs requires more revenue, taxes need to go up on the wealthy. republicans say it's the exact opposite, you need to drop taxes so entrepreneurs can grow. >> how -- >> sorry, sue. >> go ahead. >> one last point just on the statistics, income inequality is the worst it's ever been in the history of the country and that makes a big difference. like 22% of all income is earned by the top 1%. that's pretty staggering. but on the other hand, the republicans note this, 37% of all taxes is paid by the top 1%. so maybe raising taxes isn't the right answer. >> right. how much of this anger, which is fueling kind of wild election cycle right now, also has to do with not just the candidates, themselves, but -- and the
economy, but congress? i mean, if you have a democratic president but the republicans, you know, hold the senate, what's going to get done? i mean, there's a lot of issues dealing with the congressional side of things, is there not? >> no question. if you look at what donald trump has tapped into, it is dissatisfaction primarily by working-class white voters who feel they've been left behind economically and culturally in this political correctness question. so they feel the democrats haven't helped them. the republicans haven't kept their promises. and so obviously congress bleeds into this problem. it becomes part of the problem. and we -- as you point out, if you get a democratic president, we know we're going it have a republican house, how's anything going to get done and how are these people going to feel if they continue to be left behind? >> exactly. we will see. thank you, andrew. appreciate it. andrew friedman with the "washington update." and still ahead, amazon takes an old idea and adds a new twist. but will it attract millennials
and increase sales? amazon signed a deal to lease 20 boeing aircraft, part of amazon's strategy to handle more of its deliveries and in turn cut costs. the planes are being leased from air transportation service group. as part of that agreement, amazon has the right to buy 19.9% of air transport stock over five years at $9.73 a share. and that sent shares of air transports soaring more than 16%. amazon fell fractionally. and amazon as of late has been the retailer that others follow but now it's flipping the
script a bit taking some plays from veteran retailers' playbooks. courtney reagan has that story. >> we love your collection. i love it. >> reporter: it's a tactic media properties hsn and qvc have benefited from for years. >> you have to preserve your skin. >> reporter: tv personalities selling everything from jewelry to body lotion and beyond. now amazon is in on the game, too. >> welcome, live from new york. >> reporter: amazon launched its 30 minute live streaming internet show, "style co live" last night. the hosts talked fashion and beauty trends, live chat with viewers and, of course, the products are available for purchase immediately on amazon.com. a clear strategy to prop up amazon's newly launched private-label brands. private-label brands are notable because they're cornerstones for many traditional retailers. think costco's kirkland brand and jcpenney's st. john's bay. such names capture higher margins and appeal to consumers
for exclusivity. >> it helps them go a long way in establishing credibility in apparel. private label is a big business for most apparel retailers. for amazon to be serious about apparel, private label makes a lot of sense. >> reporter: amazon's apparel push could pay off for investors estimating the segment could add at least 25 recents to earningsn 2017. should mainstream retail and home shopping networks be worried? >> amazon is targeting a younger consumer but clearly, you know, qvc and hsn will have to watch very closely. that said, in some ways it validates their model l. we also think we have a tremendous amount of data they collect and can collect on their consumer base which can certainly help them buy better. we think amazon could be a real disrupter in apparel. >> reporter: account and company surveys show the number of consumers buying apparel on amazon rose 25% in february over last year which means amazon is
likely taking share from apparel retailers like macy's or gap. companies that have built their entire business on selling clothing but are struggling lately to grow sales. so as more consumers turn to amazon for clothes, its new style show is poised for that extra sales push. for "nightly business report," i'm courtney reagan. square reports quarterly results for the first time and that is where we begin tonight's "market focus." the mobile payment company saw a more than 49% rise in profit since going public but that wasn't good enough to beat analyst expectations. the company did, however, beat revenue targets. ceo jack dorsey said he expects the company to become profitable this year and outline the company's top priority. >> our main focus is on making sure our sellers can accept any form of payment including people's phones and we're seeing that behavior shift very, very quickly. and we're taking full advantage of it by putting ourselves
first. >> shares of square initially rose in after-hours trading. they close the regular session up nearly 5% to $12.03. cloud storage company, bucks, posted a narrower than expected loss and results that topped analyst estimates. the company also issued guidance for the year that came in above street expectations. the shares rose more than 10% following the after hours news release. during the regular session shares were up 4% to 1252. a robust holiday shopping season lifted profit and same-store sales at express beating analyst targets. revenue, however, lagged. the fashion retailer's ceo said the company is optimistic about this year and issued an upbeat forecast. shares rose more than 3% to 1966. an employee at a massachusetts chipotle restaurant has tested positive for neurovirus. the store was closed yesterday after several employees reported feeling sick. it's expected to re-open tomorrow. chipotle has been trying to recover after a rash of health scares around the country in
recent months. shares of chipotle fell nearly 3.5%. that's off the worst level of the day to 506.63. are you planning a trip? google wants you to do it on your phone and launched a new service to get you all the information you need in one spot. but as simon hobbs explains, google is not necessarily on a mission to shake up the traditional business of online travel. >> reporter: google's worked hard to make destinations as streamlined a product for mobile as possible. pull up the normal google search bar and type, say, europe destinations. the two most popular search solutions pop up. more if you press the blue down arrow. for each you get the best travel dates, best airfares, and average hotel prices. it attaches videos, ideas on local tourist sites. you can even price cap your search to browse only those vacations that are within your
budget. for google, huge potential profits lie in drawing in members of the public, identifying what elements of a holiday each might buy, where, and on what date, then funneling or selling those qualified leads to supplier to be inventory who bid in realtime for the busine. google hopes its new destinations product will make it the platform that people naturally turn to to search for travel. >> you can look at when is the best time to go based on weather information. you can actually look at itineraries from folks who have taken the trips. may not know where you want to go or when you want to go but we within show you. >> reporter: google's destination will compete with kayak and trivago owned by expedia. ever since google took over ita software six years ago, the industry has been placing for google's big move. the doj even recently allowed expedia to take over more rival
brands in anticipation. the negative impact that google destinations will have on its rivals is far from certain. google needs its partners like priceline and expedia to buy its qualified leads and google isn't involved in consumer-facing parts of the industry like consumer healthlines or people wanting to cancel their travel and it's certainly not dealing with local hotel owners. both expedia and pricelinine ar. and in fact, they've employed thousands more people to increase their presence in that area. >> if we went down to transit action engine route, it would be a very, very different business model. we have great partners we work that do a great job when you want to transact and have great customer service. >> reporter: in other word dest substantially increase the share of the travel market it's able to sell onto its partners, it's a potential win/win for all involved. fir "nightly business report," i'm simon hobbs in new york. coming up, the internet's
dark side. where your personal information can be sold to here's what to watch for tomorrow. the european central bank may announce new easing measures at its meeting tomorrow. it is the deadline for the government to file its legal response to apple. american express whose shares are down 15% this year hosts its annual investor day meet. that's what to watch for on thursday. the dark web. it's a term that refers to a collection of hidden websites where users remain anonymous. it's a place where illicit business deals get done and where you do not want to find your personal information because once it's there, it can be used by people looking to commit tax fraud. andrea day has our crime and punishment report. >> we're talking about millions
of records in just one website on the dark net. >> reporter: his job is to help ibm stay one step ahead of the hackers, taking us into the dark web where criminals go to sell and buy personal information. info they can use to steal your tax refund. >> it's exactly like going -- >> reporter: today's dark web is fightingly easy to wruse. >> criminals take the time to write reviews about their fellow peers and how good the information they sold were. >> reporter: to get on, hackers download a special browser that they lows them to search the dark web. >> this guy's selling full information about your victims, name, birth date, social security number, address. >> reporter: the data for sale stolen by hackers around the globe. sometimes making its way here just minutes after an attack. according to mior, the number-one target last year, health care records packed with sensitive medical info and even your social security number. >> so just last year, over 100 million health care records were stolen. >> reporter: and those records
unlike credit cards aren't likely to expire any time soon. what's the hottest ticket for criminals to find in the dark web? >> credit cards go for about $1. sometimes they're given out for free. talk about social security numbers, date of birth, more personal information will go to $15. talk about health care records, those there $60. >> reporter: a big concern for the irs, hackers using stolen info to file fake returns. >> the irs are saying in 2013 they stopped $24.2 billion worth of fraudulent tax returns but didn't stop $5.8 billion and they're expecting that number to hit over $20 billion in 2016. >> reporter: that's why mior says it's so critical to safeguard your information even at your doctor's office. his advice? >> every time you give information to any entity, you're actually exposing yourself in one way or another. if your doctor asks you for your social security numbers you should not be afraid to ask why, why do you need that information to take care of me? >> reporter: he says in most cases they don't really need that information.
if the doctor insists on having your social, always suggest using a p.i.n. number instead to i.d. the account. i'm andrea day for "nightly business report." and that is it for "nightly business report" tonight. i'm sue herera. thanks for watching. we want to remind you, this is the time of year your public television station seeks your support and we appreciate it. have a great evening, everybody. we'll see you tomorrow.
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