tv Nightly Business Report PBS November 28, 2016 6:30pm-7:01pm PST
this is "nightly business report" with tyler mathisen and sue herera. up in the air. fidel castro is gone and the american president-elect wants a better deal between the u.s. and cuba. what's next in the evolving and fragile economic relationship between the two countries? buy low, sell high. after a massive market run-up, are retail investors buying stocks at the wrong time? and guessing game. can opec members set aside their differences and cut oil output for the first time since 2008? those stories and more tonight on "nightly business report" for monday, november 28th. good evening, everyone, and welcome. new doubt is being cast this evening on america's economic relationship with cuba following the death this weekend of
revolutionary leader fidel castro. this morning preside-elect donald trump threatened to roll back recently restored relations with the island nation. in a tweet he wrote, "if cuba is willing to make a better deal for the cuban people, the cuban/american people, and the u.s. as a whole, i will terminate deal." the tweet came the same day commercial flights to the island nation resumed. american airlines took off from miami, jetblue departed from new york. michelle caruso-cabrera reports tonight from havana. >> reporter: although fidel castro stopped ruling cuba ten years ago, his presence loomed large until the end. observers have long speculated that his successor, younger brother raul, might make more meaningful economic changes once fidel was gone. >> the economic reform program that raul began in 2011, which is to move toward more of a
market socialism on the china model, was something that fidel castro had always rejected himself. and the normalization of u.s./cuban relations is something that fidel castro was very skeptical about. right after obama's visit to havana in march, he said that cuba didn't need anything from the united states. >> reporter: it's the third official day of mourning for fidel castro here in cuba, and thousands of cubans have lined up here at the plaza of the revolution so they can go see his ashes and sign a book of condolences. >> nothing is going to change. >> we don't want change. life is about changing so that's it. >> reporter: notice no one is staring at their phone, texting, tweeting or posting on facebook. that's because internet service is almost nonexistent in cuba of the part of the legacy of nearly 60 years of communist rule that severely restricted both political and economic freedom. not to mention an economic embargo imposed by the united states government dating back to the '60s.
but the thawing of relations between the united states and cuba initiated in december of 2014 has meant thousands more u.s. visitors to the isolated island. loosening of regulations means it's easier to visit. and just this week, many u.s. airlines began direct flights to havana. what remains unclear is whether or not those changes are rolled back by president-elect donald trump once he takes office. for "nightly business report," michelle caruso-cabrera, havana, cuba. >> for more on what u.s./cuba economic relations might look like, john harwood joins us outside trump tower. john, good evening. elaborate on what the president-elect's position is and what he may do and what he can't do when he takes office. >> reporter: well, first of all, he put out over the weekend a very strong statement criticizing the crimes and repression of fidel castro, but he also said, tyler, that he wants to help the cuban people on their journey to prosperity
and security. that suggests that as in his tweet today when he said that he wants a better deal for cubans and for the united states, that he is open to trying to make a deal that sustains what president obama has done so far and builds upon it. >> so what did the white house have to say about it all today? >> reporter: well, the white house noted that even though executive action is all that's taken place, remember, there's an embargo that is legally in place, that congress needs to overturn if they decide to do that, but the white house said that it's not so easy. airlines have made plans based on the change that's taken place. hotel, the hospitality industry has made changes. people have become accustomed to some of the new regulations about travel and sending remittances back and forth and that sort of thing, so it's difficult to immediately uproot
changes that have begun to seep through all corners of american society and the economy. >> moving at the same time, john, is the decision apparently on who might be the secretary of state. it sounds like the choice has divided the trump team. what do we know about the search? >> reporter: well, we know that kellyanne conway, the former trump campaign manager, trashed mitt romney over the weekend in very stark terms. we know that david petraeus, the former general, who of course has been on probation for leaking classified -- or giving classified information to his then mistress was at trump tower today, we believe interviewing for the secretary of state's job. rudy giuliani has been a front-runner. and bob corker, the chairman of the senate foreign relations committee is coming tomorrow and mitt romney is coming for a second interview. this is a jump ball. it's wide open right now.
>> john harwood, thanks very much. john harwood in new york city. on wall street, the trump rally took a breather as the financial sector weighed on the broader market. even the small cap russell 2000 index fell back after rising for 15 straight sessions. the dow jones industrial average closed lower by 54 points to 19,097. the nasdaq fell 30, the s&p 500 was off 11. despite today's pullback, though, there has been a massive run-up since the election but are retail investors getting bullish and buying stocks at the wrong time. >> if you're a little skeptical about the markets hitting historic highs twice last week, you should be. the market is on a little bit of thin ice right now and here's why. first, investor sentiment has gone from skeptical to extremely bullish. that's not a good sign, particularly when you see it happening among retail investors. at the end of last week a survey of retail investors spiked to almost 50% bullish from 23% bullish just the week before the
election. it was the highest reading in nearly two years. a big spike in retail investor sentiment have traditionally been associated with at least a short-term top in the market. second, going long stocks and short bonds is a lot less attractive now than it was a month ago. the trade has been made. the small cap russell 2000 is up 13% in three weeks and bond prices, the ten-year yield down about 3%. the retail investor seems to be excited right at the market top. finally the rally is pricing at a near perfect environment but there's a lot of things that can go wrong. a strong dollar could be a problem for multi nationals that export. second, any move to aggressively translate trump's trade war rhetoric into reality will be a big problem. third, lengthy delays are likely in enacting any stimulus or infrastructure plan. tax cuts and reductions in regulations late 2017 and 2018 events. finally the biggest problem
could happen if the fed raises rates more aggressively than expected. the markets definitely have not priced that one in. i'm bob pisani at the new york stock exchange. gabriella santos joins us now to talk more about the market and the potential risks she sees that could derail this rally. gabriella, welcome, as always. great to see you. you just heard bob pisani characterize this market as being on thin ice. he also said that retail investors are increasingly bullish. do you see this as a market on thin ice? and what do you make of this sent meant of retail investors. >> we do not. i think you have to keep in mind two things. the first is the fundamentals are actually positive for u.s. equities before the election so there's an acceleration in sentiment and in performance after the election, but this has already been on a foundation that was quite positive. growth was picking up, earnings were turning positive again and a global economy was healing, so
it's already a positive backdrop. when it comes to the second part, when it comes to retail investors, our conversations with our long-term clients is still one where there's still tremendous amount of cash on the sideline. over $12 trillion. so it's still a situation where a lot of retail investors are very underweight equities or underweight investments in general. >> what are the warning signs that you are keeping an eye on or possible problems that the market may encounter? bob mentioned the fed may be getting a little bit too aggressive as one of them but what else is on your radar? >> well, there are short-term risks. part of investing in u.s. equities comes with normal pullbacks and normal volatility. these could arise around central bank meetings, they could arise around political concerns in europe, that's possible. but if we think about the median to long-term outlook, it has to be about a change in fundamentals. as we mentioned, they were
looking positive even going into the election. so what we keep an eye on are variables that could change the course in the medium term. wage pressure, u.s. dollar strength, u.s. policy over the next few years, those are the long-term themes that could shape our long-term view of u.s. equities. >> let's take a closer view at some of the sectors you like. i know that you and jpmorgan were early to say that financials would do well and indeed they have. do you still feel that they're a good place to put money, number one. and number two, what other sectors do you like? >> we do. this is part of a broader theme of cyclicals over defense. if we think about the market hovering around all-time highs and it had a nice run in the second half of the year, there's a lot of dynamics going on underneath the surface. the whole first half of the year was about defensive sectors, sectors used purely for yield and as a safe haven in the case of a u.s. recession, which was a
concern a few months ago. now the picture is very different. it is one where economic and earnings growth is picking up. as a whole we would be looking at cyclical sectors, financials being one of them. >> gabriella, thank you as always. the meeting of oil producers is just two days away and crude prices have been whipsawed. today the commodity rose 2% after tumbling 3% on friday. and as jackie deangelis reports, it's all because of very big question marks surrounding the opec meeting on wednesday. >> when opec said it would cut production in late september but announced final details at its november 30th meeting, everyone wondered why. now as that meeting approaches, it's becoming increasingly clear. some members of the cartel, like the saudis, want the cut. others like iraq and iran are still holding out two days before the meeting, and it seems there still may be no consensus. to further complicate matters,
speculation is building that opec may be pressuring russia to cut output as well, so it's not alone in its bold move. but the russians need the revenue and may not be eager to play ball. all the volatility has raised crude prices over $45 a barrel but all the doubts have kept them under 50. >> they're closer to agreement than disagreement right now. i think they have tempered some of their rhetoric and i think there's a chance of some sort of a court of sorts. i wouldn't say that it's a full-fledged lock solid kind of a line in the sand, but i think there may be some sort of talk about at least moderating production. >> over the weekend a surprising comment from the saudi energy minister saying that the markets will rebalance with or without a cut, possibly setting the stage to take no action. in late september, opec said it would cut 750,000 barrels per day from its production. the market now hoping that it would see a steeper cut than that. >> if there's no deal, i don't see the catastrophic dropoff
that people are predicting. i think this market could back off a bit and certainly trade let's say to the mid-40s, but i don't think this market is going much lower. it seems to have built a pretty strong base here. i'm leaning more to the fact that we probably can work our way higher. >> with the dollar strengthening and the opec deal hanging by a thread, crude prices might just see that three handle again. for nightly business report, i'm jackie deangelis. still ahead, why some say the most beaten down sectors could livdeliver the biggest comeback and the best return among stocks. a blow to boeing. the world trade organization
said that washington state offered billions of dollars in illegal tax breaks to the plane maker. the key tax benefits came on the condition that boeing keep production of its newest long haul jetliner in that state. the ruling is part of a long-standing battle between boeing and its european rival, airbus. "time" reportly says no to a takeover bid from a billionaire investor. multiple reports say edgar bronsman jr. along with two other executives approached the publisher of "people" and "sports illustrated" with a deal worth $18 a share. that values "time" at $2 billion but the company rejected that offer. "time" shares soared to $16 even. the activist invest fund elliott investment sent a letter to cognizant technology urging them to make changes it said could lift cognizant's share price above $90 by the end of next
year. elliott management, which owns more than 4% of cognizant outlined plans for improvement which include job cuts. cognizant rose just about 7% today to finish at $56.95. btig slapped h & r block with a sell rating on concerns that potential changes to the tax filing process under a trump administration could cut into the demand for the tax preparation company's services. btig also cut its price target on the stock to $18 a share and shares plunged today by 9% to $21.82. slumberge signed a preliminary agreement with iran to study oil fields. it gives the company access to three fields but doesn't include any services operations. shares were off a fraction to $81.06. united health gave an upbeat forecast for 2017, forecasting earnings and revenue to come in
above analysts' expectations. that news sent shares initially higher in after-hours trading. they finished the regular session down just a fraction to $152.11. there is a school of thought that the best stocks or sectors to buy are those that have fallen dramatically. it's a high-risk strategy but one that could bring big rewards for those with a strong stomach. mike santoli runs through some of the deeply discounted groups. >> 2016 has turned out pretty nicely for wall street with the average u.s. stock gaining more than 10%. that hasn't stopped the annual ritual of searching for the most beaten down sectors to play for a dramatic comeback in the new year. it's difficult to buck the market tide. buying stocks that have suffered extreme declines over a prolonged period can offer spring-loaded gains in years to come. a good example from the past year, coal stocks had lost some 80% over four years entering 2016. so far this year, coal stocks as a group have more than doubled.
in hunting for such potential comeback plays, investors can start with sectors down more than 50% from their highs over two or more years. one group that now meets these conditions is specialty pharmaceutical stocks. makers of generic drugs have seen their shares drop by 50% to 80% since early 2015 on a litany of concerns over drug pricing and regulatory threats. names such as endo international, and mylan now trade at unusually depressed valuations. the pricing and policy outlook remain unclear, but is all that uncertainty already priced into those shares. looking toward the rest of the world, several countries have seen their equity markets battered. index funds of the italian, turk i and russian markets have lost 60% in recent years. investors might find cheap entry points. another area out of favor, owners of broadcast stations,
which have shed more than half their value in recent years. certainly the economics of tv are being squeezed, but local television hardly seems destined for extinction. one final laggard, uranium stocks. it has fallen 90%. there is no sense making these hard-hitting investments an essential part of one's portfolio and it's critical to do your due diligence. but in a market trading near an all-time high, these high risk, high reward opportunities offer a chance to potentially profit from stocks that are way down but not yet out. for "nightly business report," i'm mike santoli at the new york ock exchange. coming up, think santa's workshop for corporate america. what an amazon fulfillment center looks like on one of the busiest days of the year.
holiday shoppers spent less money over the black friday weekend than last year. according to one estimate, spending totaled on average about $290 per person, slightly less than in 2015. but more people spent online rather than in stores, continuing a trend retailers hope to drive home today on so-called cyber monday. courtney reagan has more from amazon's fulfillment center in robbinsville, new jersey. >> reporter: even though online shoppers can fill their carts any day, the discounts on cyber monday have turned it into a top shopping day. the national retail federation predicts more than a third of all americans will shop online at some point today. >> this used to be the smallest
retail day of the holiday shopping season before we had the internet. nobody went shopping on the monday after black friday. now it's one of the biggest shopping days of the season and so is thanksgiving. what does that tell you, that's all internet sales. all of the growth this year came on the internet. >> adobe predicts cyber monday will again make history as the biggest online sales day ever in the u.s., and amazon is one of the day's biggest players. while amazon doesn't release cyber monday sales figures, p e piper jaffray analyst thinks amazon sales will grow twice as fast as traditional online retailers today. amazon is king of the jungle beyond just cyber monday. analyzing data, slice intelligence estimates roughly two of every five internet purchases comes from amazon. this is one of amazon's more than 70 u.s. fulfillment centers and it operates nearly around the clock every day of the year. when amazon looks to the future, it's planning for nothing but
growth. it added 18 fulfillment centers in the third quarter, five more in early october, on top of the 14 it added last year. amazon may make a lot of headlines, but traditional store-based retailers are seeing a higher percentage of sales come from their websites too. the national retail federation says eight of the top ten e-commerce players are run by traditional brick and mortar retailers. >> certainly a good chunk belongs to amazon, but we're seeing some better performance from some of the bricks and mortar, traditional bricks and mortar retailers that do have e-commerce businesses. target, for example, grew its e-commerce sales, its digital channel sales by mid-20% range in the third quarter. wal-mart has seen some acceleration in its e-commerce business with the acquisition of jet.com. >> reporter: and while traditional retailers are still playing catch-up to amazon online, around 90% of all retail purchases are still made in
stores. i'm courtney reagan in robbinsville, new jersey. there's a lot of work behind the scenes when you buy something either in a store or online. first data, the world's largest merchant processing network is one of a handful of companies that makes sure your transaction goes through and safeguards your data. taylor tauche reports tonight. >> reporter: just how much lighter did shoppers' wallets get over the thanksgiving weekend? some companies measure foot traffic, down 1%. >> it's a little less people this year. >> reporter: others discounts web traffic or the most sold-out toys. first data crunches real spending from the 6 million merchants that use its processing technology or the 4,000 banks whose credit cards are issued by the company. it found sales up 9% for thanksgiving and black friday, and cyber monday shopping on pace to grow 10% to 15%. but big spikes could still come from a post-lunchtime p
procrastination or after the work day ends. >> last year on cyber monday we saw a tremendous amount of activity, one in the 2:00 to 4:00 p.m. time frame and 6:00 to 10:00 p.m. time frame. we're seeing volumes well above last year's level. i can only imagine what we're going to see the rest of the day. >> reporter: first data's cyber command center in omaha makes sure those transactions stay secure even as they move online. >> what you can see here is our command center. >> reporter: andrew works with banks to keep the billion cards in circulation safe from cyber attacks. he said no threats have emerged this holiday season, but it's early. >> we always need to be vigilant. >> reporter: experts say late december will still be hectic for retailers and shoppers despite how much buying has already taken place. >> typically what you always have is post-thanksgiving, december 15th through the 25th is when 40% of holiday season sales take place. >> reporter: for those gift givers, thanksgiving marks a
month-long marathon, not a sprint. i'm kayla tausche, omaha, nebraska. >> i haven't started yet. >> you're usually way ahead of the game. >> i'm way behind. >> usually it's october 20th and you say i'm finished. >> not this year. >> all right. play catch-up. >> stay tuned. that does it for "nightly business report" tonight. this is the time of year your public television station seeks your support. >> thank you for your support. have a great evening and we'll see you back here tomorrow night when all of our shopping will be done. >> absolutely. every bit.
steves: westminster abbey. this most-historic church in the english-speaking world is where kings and queens have been crowned and buried since 1066. while it was first built in the 11th century, much of what we see today is 14th century. when there's a royal wedding, the world looks on as, amid all this splendor, thousands of britain's glitterati gather under these graceful gothic arches. the centerpiece is the tomb of edward the confessor, who founded the abbey. and surrounding edward are the tombs of 29 other kings and queens. this is the tomb of queen elizabeth i. her royal orb symbolizes she was queen of the entire globe. the abbey is filled with the remains of people who put the "great" in britain -- saints, musicians, scientists, and soldiers.
for lovers of english literature, strolling through poets' corner can be a pilgrimage in itself. king henry vii's lady chapel, with its colorful windows and fanciful banners, has the festive air of a medieval pageant. the elaborate ceilings is a fine example of fan vaulting, a style that capped the gothic age. at the far end, a wall of modern stained glass marks the royal air force chapel. it honors the fighter pilots of all nations who died defending britain in 1944. with saints in stained glass, heroes in carved stone, and the remains of england's greatest citizens under the floor stones, westminster abbey is the national church and the religious heart of england.
>> announcer: explplore new wors and new ideas through programs like this made available for everyone through contributions to your pbs station from viewers like you. thank you. >> hi, i'm paula kerger, president of pbs. the writing, the acting, the romance, the drama, i'm a fan of all things poldark. aidan turner and the entire cast and creative team have spun a really good yarn that draws you in wondering what will happen to our brooding hero, ross poldark. please join us as we go behind the scenes to capture the spirit and drama of "poldark" for old fans and new fans of this award-winning british drama, and thank you for watching and supporting your pbs station. >> the story of "poldark" is a british institution. >> the books were written in the s.