tv Nightly Business Report PBS May 25, 2012 4:30pm-5:00pm PDT
captioning sponsored by wpbt >> this is n.b.r. >> tom: good evening, i'm tom hudson. the summer driving season gets going with sharply lower gas prices across much of the nation. >> susie: i'm susie gharib. we wrap up our week long series on veterans and hiring with a look at a unique partnership in the healthcare industry. >> tom: and greece-proofing your portfolio, where best to invest if greece exits the euro. >> susie: that and more tonight on "n.b.r." 31 million americans are hitting the road this weekend to celebrate memorial day. this was supposed to start a driving season marred by record high gas prices. but, with the price of oil at its lowest level of the year,
travelers are getting some unexpected relief. darren gersh reports. >> reporter: when was the last time you heard this about the price of oil? >> it should be a reason for calm. >> reporter: after a winter of soaring prices and low demand, oil inventories are now high enough to make it through the summer driving season that begins this weekend. and that means prices could even fall another nickel or dime by august. >> don't get too nervous. you don't have to go out and change the car you own. it seems to be, if you can live with it now, you'll be fine for the rest of the summer. >> reporter: of course, if you live in california, you may not be feeling fine. refining shortages and the switch to cleaner summer fuels has sent gas prices of $4.30 a gallon. but for the rest of the country, that average has come down by more than a quarter from it's peak in april to $3.67 a gallon. the key question is what happens over the summer. if more americans than expected take to the road, prices could rise.
but for now, predictions of $4 or $5 a gallon are in the rear view mirror. >> i would like to hope that there is going to be an award given out to the evil speculators that must have pushed the price down. i know we all got blamed for taking the price up. >> reporter: many americans won't be worrying much about summer gas prices because they are staying right here-- at work! polls show between 40% and 50% of americans are either too busy to take a vacation or can't afford one. darren gersh, "n.b.r.", washington. >> reporter: coming up, i'm suzanne pratt. we'll tell you if it's possible to greece-proof your portfolio. "nightly business report" is brought to you by:
>> susie: stocks finished in the red today on continued worries about europe, despite some better news on the american consumer. it was spain where investors were fixated today and word, tom, that country is preparing to inject billions of euro's into rescuing one of its biggest banks. >> tom: susie, stocks were weak most of the day and today's trading capped a volatile week. the dow closed down fell almost 75 points, the nasdaq lost nearly two points. the s&p off almost three. for the week the indices notched some gains. the dow was up 0.7% the nasdaq gained 2.1%. and the s&p is 1.7% higher compared to a week ago tonight. >> susie: as we mentioned, some optimistic news today about american consumers. they're feeling upbeat about the economy. the thomson reuters university
of michigan consumer sentiment index hit 79.3 in may, that's its highest level since the beginning of the financial crisis in 2007. surprisingly, the drama in greece is barely registering with american consumers: they're still focused on the u.s. job market. >> tom: europe's mess is however resonating with american investors. so much so, that may is shaping up to be the first losing month for the dow since september. this week the big focus on wall street has been greece and whether it will exit the euro. as debate over that outcome heats up, investors worry what to do with their money. suzanne pratt got some advice from the pros. >> reporter: who would ever dream that a european country the size of alabama could affect so many american investors. if you own stocks that trade here, they've dropped in the last few weeks. that's as the probability of greece going it alone grows. if you own treasuries, they've rallied.
that's as u.s. debt, even when it pays next to nothing, appears the safest place for the world to park cash. jeff goldberg manager of this manhattan ameritrade says he is getting a lot questions about europe. >> i don't think they're overly worried. but that there is a bit of fog out there. there are events out there they don't have control over, and they're waiting for some at least directional indication. >> reporter: with greece likely to dominate the headlines this summer, is there anything you can do to protect your portfolio? experts say minimizing exposure to eurozone securities is an obvious first move. after that treasuries bonds will continue to be a good bet. >> if we were to see a deepening of the crisis, if we were to see deepening concerns about a greek exit, i think it would likely push interest rates lower. it would be driven by more flows into the u.s. treasury market. >> reporter: ryan does not think greece will be forced to abandon the euro.
but, as the crisis evolves this summer, stocks could slide further. at that point, however, there might be some opportunity. >> we're not yet willing to step into equity markets in an aggressive manner right now. but, if we see further dislocations, if we think equity markets become compellingly cheap, at that point we would change our asset allocation and likely take on some more risk. >> reporter: and, then there are retail investors who aren't too worried about greece at all. >> i hope that greece doesn't leave. if they do leave, i think the remnant of the european union will be very strong. i like to keep some cash on hand, so that when the market panics, i can buy stuff. >> reporter: suzanne pratt, "n.b.r.", new york.
>> susie: the u.s. treasury says china is not a currency manipulator, but it does say the yuan is undervalued. u.s. republicans and democrats have both accused china of getting an unfair trade advantage by valuing its currency artificially low. but a report today on currency policy said that since 2005, the yuan has appreciated by 40% against the u.s. dollar, taking inflation into account. but american manufacturers say that's not enough, they want china's currency revalued. >> the overall benefits for the american economy a revaluation in china would be enormous. it would mean less debt in the united states, a healthier trade balance. we would be bringing our unemployment rate down, and that's ultimately the type of economic activity that we need.
>> susie: not everyone wants the u.s. to slap a currency manipulator label on china. the u.s./china business council supports the treasury's decision. it says calling china a manipulator would only complicate the fragile relationship between the two countries. >> susie: billionaire investor carl icahn is turning up the heat on chesapeake energy, the embattled energy producer. he wants to replace at least four directors on the company's board, saying they have failed to hold its c.e.o. accountable in a quote, "dramatic fashion." chesapeake shares have tumbled sharply, since the company's sweetheart loan and investment
package for c.e.o. aubrey mcclendon came to light earlier this month. icahn is the company's third largest shareholder. >> tom: june 7 is circled on jamie dimon's calendar. the j.p. morgan chase c.e.o. has been invited to testify before the senate banking panel that day. he's been called to washington to explain how a trading unit at his company lost over $2 billion on complex financial derivatives tied to corporate bonds. so far, dimon's office is not commenting about what he might say. last week, a spokesperson said dimon had agreed to testify, but had yet to be formally invited. >> susie: meanwhile apple's c.e.o. is mastering the art of employee relations. apple says tim cook will forgo $75 million dividend payout. that comes as the maker of iphones, and ipads says it will allow employees the same dividend as other apple investors. in an unusual move, apple is awarding them a $2.65 a share quarterly dividend on their restricted stock units.
tom, you surely remember that apple announced the dividend payout back in april. the stock at that time was around $600 a share. now it's more like $560. but it was a very controversial move because steve jobs was always opposed to dividends but they're doing it and giving the employees a big chunk. >> tom: lots of shareholder pressure because of the hundreds of millions of dollars in cash on the books there at apple. until about 2:00 p.m. eastern time, the s&p 500 hovered on either side of unchanged, encouraged partly by the stronger consumer confidence report. but the index settled into negative territory and finished with a fraction loss. the index remains well off its april high for the year, but still is up almost 5% since january. trading volume fell considerably, 588 million shares on the big board.
1.3 billion shares on the nasdaq. not much volatility with investors in a defensive mood heading into the memorial day weekend. the telecommunications and utility sectors were the only two stock sectors in the green each with fractional gains. the story for investors this month has been overseas. with so much investor focus on europe, the u.s. dollar continues climbing this month has been booming for the dollar, rising against a basket of international currencies as investors flee the euro especially. this is the dollar index's highest level since the fall of 2010 this rally in the dollar has pushed down prices of all kinds of commodities. this index captures the broad picture of commodities, including energy, gold and grains. it's hovering down around levels not seen since fall of 2010. one of the exchanges that trades commodities is the c.m.e. group. the company announced its first stock split, hoping to attract new investors. investors were buying stock with
shares up 2.5%. the exchange's business has been hurt by lower trading volumes and the threat of new trading regulations hurting future growth. it will split it's shares five for one in july. meantime, one of the newest stocks continues having trouble. it's now been one week since facebook sold stock to the public and it's been a rough week. shares lost 3.5% today as volume shrank quite a bit along with the overall market. the stock's initial offering price was $38 and has lost 16% in the past week. investment banks u.b.s. and citigroup reportedly lost $50 million combined on trades during facebook's glitch-fille debut last week. with a long weekend ahead of us, we'll see if any merger deals are hammered out over the holiday. we have learned the pursuit of bio-pharmaceutical company amylin is heating up. according to bloomberg, drug makers merck and sanofi have made initial buy-out offers worth at least $25 per share.
but the market clearly expects the bidding to go higher. ina soft market today, amylin found buyers, pushing the stock up more than 8% to almost $28 per share well above the reported first offer price of $25. amylin already said no to bristol-myers squibb's $22 a she offer. don't except a deal for talbots. the women's clothing retailer ended buyout talks with its second largest shareholder, sycamore partners, sending the stock plummeting. shares lost 41% of their value, dropping below $2 per share. sycamore offered talbots $3.05 per share, more than double tonight's price. the firm said it remains open to a deal with the private equity firm can get financing and close the deal. with the end of these exclusive talks, talbots is free to look for other options. with europe in a recession and china slowing down, investors may be worried about global trade, but we saw stock buying of tanker and cargo ship
companies. overseas ship-holding jumped almost 10%. ship-finance was up more than 9%. it's first quarter profits were up and it raised its dividend. front-line shipping gained 8%. overseas and front line shares have lost more than half their value in the past year. our e.t.f. market flash, the top five actively traded funds were all down. the biggest losses seen in the emerging markets and financial funds. and that's tonight's market focus. >> susie: procter and gamble is making changes to its tide laundry detergent pods, after reports of children swallowing the single dose packets and becoming ill. p&g says it will redesign lids on the fish-bowl style containers to make them harder to open. the multi-colored pods have been confused with candy.
>> tom: in the next 31 weeks, expect to hear more and more about the fiscal cliff. if congress and the white house don't come to an agreement, tax increases and government spending cuts are due to take effect. tonight's market monitor says now is the time to take action. robert stovall is managing director and strategist at wood asset management. bob, always great to see you. what is the threat to investors from the fiscal cliff? >> quite a few there, tom. a lot of things happening, or could happen. this fiscal cliff end of the year, with a lot of things likely to happen on the negative side unless congress and the
administration change some of the rules. the way things now stand, the tax on dividends and tax on capital gains will rise when the bush tax cuts expire at the end of the year, unless congress steps in and does something and the president signs the bill. in addition to that, you've got the situation out there where the federal government has to move, as i just said, in that direction, and you've got a situation where corporations are going to be facing higher taxes. it's likely that next year we will seek out a new way to-- to increase the total debt allowance that the u.s. can borrow that last time caused a stipulation between the republicans and the democrats. and things of that sort. >> tom: with that environment here you still like dividend stocks despite the possibility
of hearing dividend taxes. including general electric of elect. this stock continues to languish below $20 a share. what do you anticipate out of g.e., bob? >> g.e. is a company that suffered deeply, selling for well over 60 before it got into trouble and it dropped down to less than five. now it's 19. it's raised its dividend four times since 2010. i think it's going to keep increasing its dividend as its earnings have improved and its technology divisions are doing quite well. i think you see more dividend increases coming as earnings rally, and so i think g.e. is a good stock to buy in this era. >> tom: you also like johnson & johnson, another company that has been troubled not because of financial troubles but it's had a slew of manufacturing and drug recalls lately. do you think that's been able to put it behind it? >> that's right. well, the johnson & johnson used to be the premiere company in
the health trade business, but they stumbled. the management has been changed somewhat, and also gotten rid of some of the problem products. as a result, the stock trades on a lower multiple than the rest of the drug industry that prevailed fora quite a long time, and i can see the dividend increased a couple times the last couple of years. i think that will continue as the earnings rally. so i think johnson & johnson is a real turnaround situation. >> tom: you like dividends, and not just dividends but those companies that look to be increasing the dividends. we saw you in october. you liked three stocks, d.c.e., the canadian telecommunication companies, up 2%. darden restaurants up 14%. royal dutch shell down 8%. do you like any of these three still, bob? >> royal dutch has suffered because of what's happened to the oil price that you just covered, tom. but i think it's a good hold for a longer run. i think that eaton is a company
that is acquiring cooper industries that makes it into a big large class act in the industrial manufacturing business on a par with honeywell. >> tom: that's another of your new pictures e.t.n. for eaten. what about b.c.e. and dart? >> b.c.e. is the bell of canada. it's growing its earnings and dividends faster than at&t and i still like it, yes. darden you say, that is a restaurant chain. they have red lobster and olive garden, and they're going to raids their dividend and increase their earnings with good management. i like them all, yes. >> tom: do you own any of these? >> all in the wood asset dividend growth portfolio. i like the growth dividends. >> tom: there you go. growth dividends the message from our friday market monitor at the nasdaq, robert stovall with wood asset management. >> susie: we wrap up tonight our series on veterans and the job market with a look at healthcare.
it's been one of the few bright spots in the economy in recent years and that's helped the industry become one of the best at hiring veterans. many hospitals like the cleveland clinic have found the armed forces provide the ideal training and preparation for patient care. erika miller reports. >> reporter: toby cosgrove wears a suit these days as the c.e.o. of the cleveland clinic. but during the vietnam war, he was surgeon in the airforce-- earning a bronze star for heroism. >> it helped me a great deal in running this hospital. one of the things that i saw was troops being moved from the battle site to forward hospitals to back line hospitals and subsequently out of the country. and we've adopted that same sort of thing. >> reporter: so it has a fleet of aircraft and ambulances to move patients to the best facility for their needs. the hospital also actively recruits veterans and not just for patriotic reasons. >> we know that the military has probably thought more about
leadership over hundreds of years than probably any other organization. and they do a great job of it. they do a lot of training. they have a very right criteria of how they promote people. >> welcome to the clinic. how may i help you? >> reporter: antwon peterson is the first person many patients meet when they come for emergency treatment. >> i love it! i love it! helping people, helping sick people put smiles on their faces when they don't feel well. i love it. >> reporter: he's a former navy firefighter and says that experience prepared him well for his current job. >> in the military, you are around all different cultures all different backgrounds and you meet people from all different types of walks of life. >> reporter: many hospitals like to hire veterans because they have experience in high pressure situations and work well as part of a team. harold overton is a former army medic. >> i was in the service for four years. >> now i am a monitoring tech. i monitor arrhythmia's for
patients on different floors. >> i think my background has helped me become more focused. >> reporter: the cleveland clinic was one of the first hospitals to sign an employer partnership with the military. but that alone wasn't enough. it also had to train managers on how to interview vets because they're often uncomfortable talking about themselves. >> everyone doesn't really understand what a veteran can bring to the table. so you do have to sort of educate managers so they understand how to interview a veteran. how their skill apply and can translate to a clinical setting. >> reporter: but the hospital says the extra efforts are worth it. >> these people have sacrificed for our country. and i know coming back from a war, it's difficult to integrate yourself back from society. i had that problem. and many other people in my era had exactly the same problem. so we should welcome them back.
>> reporter: erika miller, "n.b.r.", new york. >> susie: if you missed any of this week's coverage on jobs and veterans, tune in monday, memorial day for an n.b.r. special edition. from troops to teachers to special job fairs and training programs, we look at the employment picture for the military men and women who've served our country. i also talk with two vets who are now senior executives working as consultants at mckinsey and company. they tell us why more companies are interested in hiring military personnel. >> for a year and a half i worked as general petreas' speech writer in iraq. you can liken him to a ceo with seven different boards of directors and a hugely complex mission and dispersed organization, when he was commanding the search forces and being able to see him and work with him and support him in that situation i think has served me very well, as i now help companies navigate complex challenges, and complex situations, and think about change.
>> susie: you can hear the rest of elizabeth mcnallly's story on monday on our memorial day special edition: "vets and jobs". >> tom: speaking of leaders, our friday feature with author and educator lou heckler takes on workplace politics. tonight, lou's been thinking about the difference between managing and leading. >> i've worked for a lot of managers and i've been one myself. and now, i wonder if i and they really knew what an impact we have on others. when i taught regularly at the university of michigan, we used to have lively discussions regarding the differences between a manager and a leader. i always liked this one: a manager gets people to do things, a leader gets them to want to. nowadays, with many employees seeking more meaning in the workplace and with lots employees not even in the workplace thanks to technology, maybe the role of managers is changing. doctors suzy green and erica mcwilliam say our new role is to be a broker of learning. mcwilliam says this means managers/leaders need to know
and know well everything going on in an organization and to be the key person to keep that flow of information going. where we used to think of managers as controlling and giving orders, now mcwilliam says they are better off supporting and directing. i got thinking about my best boss and that's exactly what he did: he made sure we knew everything key to our role and more importantly, where we fit in to the overall functioning of our company. so, while many business people may not think of themselves as educators, they are. the best organizations not only produce valuable information, they have managers who broker that information to everyone on staff. if the world moves at the speed of information, then our workplaces must, too. i'm lou heckler. >> susan: thanks for watching, everyone. have a safe and happy memorial day holiday weekend, you, too, tom. >> tom: you as well, size. we'll see everyone on linea at nbr.com and back here on monday night.