tv Nightly Business Report PBS October 11, 2010 6:30pm-7:00pm EDT
>> it all is evidence of a system that needs more resources and more certainty. >> suzanne: the problem of foreclosures continues to snowball as 40 state attorneys general prepare to launch an investigation into forged loan documents. >> jeff: the white house says there's no need to stop foreclosures nationwide, and an industry group says doing so would be "catastrophic." you're watching "nightly business report" for monday, october 11. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
>> jeff: good evening everyone. state attorneys general in most of the country are joining forces to investigate foreclosure processing. a formal announcement could come tomorrow. suzanne, several banks have already voluntarily stopped foreclosures and pressure is building on others-- like citigroup and wells fargo-- to follow suit. >> suzanne: jeff, the obama administration seems to have ruled out a nationwide moratorium on foreclosures. and a major securities lobbying group said such drastic action would be "catastrophic" and mean big losses for investors in the housing market. >> jeff: as stephanie dhue reports, experts say there's a better solution. >> reporter: banks will take over 1.2 million homes this year, up from 100,00 before the housing bust. that huge number of foreclosures has exposed a flawed system never designed to handle that kind of volume. michael calhoun runs the center
for responsible lending. he says the issue isn't just about bad paperwork, but also whether borrowers have had a chance to get their loans modified. >> if you can't get the basic paperwork right it raises real question about what kind of job is being done on the modification. >> reporter: bank of america has one of the biggest messes to clean up, since it carries the countrywide portfolio. last week, the bank temporarily halted foreclosures nationwide to review its process. on friday, c.e.o. brian moynihan said he is optimistic. >> we haven't found any problems in the foreclosure process, and what we're trying to do is say "we'll clear the air, we'll go back and check our work one more time, but we haven't found any errors." >> reporter: but many are doubtful lenders will be able to clear the air so easily. ohio secretary of state jennifer brunner says americans need something more concrete. >> lenders are going to check their process, but they're going to come back and they're gonna say "it's ok." do you really think the public is going to believe that? when it was the employees and the agents of the lenders who were carrying out these
practices anyway? >> reporter: brunner wants a foreclosure review strike force of private attorneys supervising law students to review foreclosure documents. the program would be paid for by banks and help people who may have been wrongly evicted to recover damages without going to court. >> if the lender's process could be certified-- and the way they would be certified is if they agree to contribute to this fund-- you would actually be working in the existing grooves of the system, keeping things moving, but addressing the problems many people have had over the last few years. >> reporter: analysts expect foreclosure sales to slow until the banks can get their internal controls in order, and no one's sure how long that will take. stephanie dhue, "nightly business report," washington. >> suzanne: here are the stories in tonight's n.b.r. newswheel: stocks ended the day pretty much where they started. the dow added three points, the nasdaq and s&p 500 each added a fraction. big board volume was light at 825 million shares due the
columbus day holiday. nasdaq volume settled at just over 1.5 billion shares. two americans and a british economist won the nobel prize in economics. they were honored for figuring out why so many people can be out of work when there are so many job openings. m.i.t.'s peter diamond, northwestern's dale mortensen and christoper pissarides from the london school of economics will equally share $1.5 million. in april, president obama nominated diamond to the federal reserve, but the senate has yet to approve his nomination. a hearing is expected when lawmakers return. still ahead, the do's and don'ts of picking stocks in the currently unpredictable market. >> jeff: here's a surprise, the saudi oil minister would prefer to see energy prices fall a bit. the minister said again today that oil should trade between
$70 and $80 a barrel. crude futures settled at $82.21, down $0.45 in new york trading. despite the move, crude is up 12% since the beginning of september. erika miller explains why oil prices are rising, and how that could affect the economy and your wallet. >> reporter: normally oil traders don't have time to sit down and chit chat. but today was different. the columbus day holiday meant an unusually quiet day in the new york oil pit. trader ray carbone says the calm gave the market time to figure out what's behind recent energy price gains. he believes the rally the past few weeks is almost entirely due to weakness in the dollar. >> oil is denominated in dollars. when the dollar loses value, oil becomes cheaper for, let's say, euro countries and that becomes an attractive buy for them, and it pushes up the price. >> reporter: it's not just the currency market that is affecting oil prices-- it's the stock market, too. traders say the rally in equities the past few weeks could suggest the economy is
improving, and that could lead to a pickup in demand but currently, energy supplies are more than ample to meet global energy demand, much of which is coming from emerging markets. what happens to oil prices can have big implications for the economy. but for now, economist bob brusca does not worry higher oil prices could derail the recovery. >> oil is a real commodity that we really need. you've got to heat your home with it. you've got to put it into your fuel tank after it's refined. it's used as an input to a lot of industrial products. so, it's really very important. but its price needs to move a lot before it becomes a separate economic factor. >> reporter: that's the good news. the bad news is there could be higher gasoline prices coming. and there could be higher heating oil prices this winter than last. all because crude prices are expected to keep climbing. >> we are above $82 a barrel,
and we are probably going to push that up if we do see the dollar's value continue to fall. >> reporter: if he's right, things certainly won't stay this quiet in the oil pit. erika miller, "nightly business report," new york. >> suzanne: another reason behind higher oil prices? expectations the federal reserve will soon move to boost the economy. investors think the weak economy will push the fed into a buying spree, snapping up treasury bonds in a policy known as quantitative easing. the goal? lower long-term interest rates and raise lending. in anticipation, central bankers from around the world met in washington today, vowing to keep close tabs on the global economy. former treasury secretary john snow was there too. washington bureau chief darren gersh talked with snow, and began by asking why the fed is considering this unusual step. >> well, the u.s. economy is way, way underperforming. we have slow growth. we have high unemployment, we have output levels that are far short of our potential output levels. and we have just come through the biggest financial catastrophe,
cataclysmic events of the last 70 years. so the fed's worried about, properly so, about the future path of the u.s. economy and quantitative easing. in simple terms, it's simply the feds applying more credit to the markets by buying paper of one kind or another. >> and will it work? what specifically does the fed want to do and will it work? >> well, what the fed wants to do is to get the economy on a better growth path. the idea behind quantitative easing is you buy paper, government paper that's now held by financial institutions or individuals. and then they have the money. and then they go out and buy some other financial assets, stocks. and they drive up the value of those other financial assets so we get an increase in the value of financial assets which means an increase in the value of lots of people's household wealth. and the idea is if household
wealth goes up, then that will be a spur to spending. but if people are afraid to spend will giving them more money solve that problem. >> if their assets go up in value, if the stocks and bonds they hold go up in value, they will be inclined to feel wealthier and more confident about the world. that's the theory. >> let me ask you about another theory. the united states is pushing very hard to get china to revalue the yuan. when you were treasury secretary you worked very hard on that. will the u.s. succeed right now. are they going to get china to move. >> which think long-term china will move. but china will move at its own pace. i don't think you can be successful threatening china which is why i'm not in favor of these congressional measures that are now before the congress. but i think open dialogue, honest dialogue, showing respect for the chinese, and showing an expectation that we're friends but we expect
our friends to behave in the right way with. i think that's the right way to approach them. >> you talked to a lot of business leaders. you talked to a lot of people who are in the deal making business. what are you seeing. are you seeing signs that the economy is picking up speed or that it's bumping along the bottom? >> i think we are weigh sort of going sideways, unfortunately. i don't see a lot of lift under the economy. i think the financial crisis has been put behind us by actions of the central bank governors and others. but we're not yet at a robust strength in financial markets. they're still struggling. and i think we have made a lot of progress but we're nowhere near where we need to be. >> john snow former treasury secretary, thank you for your timeness. >> thank you. good to be with you.
>> hey, jeff, a very quiet day here at the new york stock exchange. the bond market was closed and of course maybe some of the traders went apple picking with their kids, many of whom were off today. >> jeff: that's right there wasn't too much going on. but the quiet before the storm. also because the bond market was closed, you know, we don't have a bond number today. anyway. let's take a look at tonight's "market focus. >> jeff: wall street's focus turns to profits and revenue-- or lack thereof-- as the third
quarter reporting season kicks into high gear. microsoft is hardly mentioned these days as a developer of smartphone operating systems. the company is hoping to change that with windows phone 7, a complete makeover of windows mobile software. the handsets will come from at&t, sprint, verizon and t- mobile. but investors seemed unimpressed. the general consensus seems to be that windows phone 7 is a solid product, but hardly a threat to apple's iphone or google's android. the allure of apple's string of successes pushed the stock to an all-time closing high. yet another closing high. and the chart certainly reflecting its success. just shy of $300. ipad has the market to itself,
but new tablets are expected. for a quiet, low-volume day, it was the information technology sector heading up the markets, led by qlogic. the shares broke out to a 2.5- month high after qlogic raised its profit and revenue forecasts last week. they're also rolling out new products aimed at the ever- growing cloud computing area. which is interesting, since firms associated most closely with cloud computing did poorly in today's action. these stocks were all big winners for the past year, until last week, when equinix said the economy was making it tough to sell new systems and resorted to deep discounting. and here we see the fallout from a week ago, headed up by equinix. yet another of the companies associated with cloud computing- - citrix systems-- could be next, and the stock tells that tale. analysts are worried about a sales disappointment for citrix's desktop products. third quarter results are out next week. solar stocks were another ray of sunshine in today's session. l.d.k. solar-- a chinese company-- saw big gains in the session. the company claims it still sees
strong demand for its products in europe, despite cuts in solar subsidies from national governments there. and here's another one, canadian solar, advanced almost 5%. the firm says it can hit the high end of its sales targets this year. that, despite being the focus of an s.e.c. probe of its accounting practices. they just got a new chief financial officer as well. and, viva las vegas? casino stocks were on a roll with investors. the nevada gaming commission said the state's casinos earned 12% more revenue in august compared to year-ago levels. the analysts at jefferies and company says that's a big positive for m.g.m., las vegas sands and wynn. the stocks all made nice gains on the back of that news, and optimism about growth for gaming in asia, particularly singapore. and finally, gymboree, the retailer of children's apparel, is going private. bain capital is the buyer in a deal worth $1.8 billion, or $65.40 a share. the deal setting off takeover speculation on which of gymboree's peers will be next.
gymboree's shares rose more than 22%. children's place rose 2.5%. carter's picked up 3.2%. and that's tonight's "market focus." i[i[i[i[i[i[i[ >> suzanne: on wednesday, j.p. morgan chase will be the first major financial firm to report third quarter earnings. financial firms are expected to be top performers when it comes to year-over-year profit growth, so it's likely investors will look closely at financial stocks. but, how do you pick a winner? that's one of the articles in
the november issue of "bloomberg markets magazine," titled "the world's best financial stock pickers." earlier, i spoke with nic gammeltoft, the author of the article and asked what surprised him the most in his research. >> i think two things that surprised me the most. one with the first one is how difficult it was for the professionals in the industry to pick stocks in the past two and a half years. goldman sachs which came out number one in our survey only had 38% of the calls hitting spot on. and the second thing that i was surprised about was when they were right they were really intelligent and smart in their calls and they were really able to call the stocks when they were just about to go up or go down. and that is what made them stand out in our survey. >> so that brings us of course to the question which is what can individual investors learn from these professionals in terms of
picking stocks and one of the first things that you say is those who do it best think outside the box. what do you mean by that? >> so, it is good to be a contrarian investor. when everybody says buy it's often a good idea to think about selling and vice versa. when people were buying in 2007, october, when the market was at its peak it was the best time to sell and when the market was at its bottom in march 2009. it was probably the best time to buy even though everybody sat still. >> one of the other things you point out is that investors educate themselves in terms of picking stocks. be a little bit more specific about that. >> with the analysts that i interviewed, they were all about seeking information from new sources from the management teams of the companies that they cover, from reports, and obviously the every day of an individual retail investor is different from a
professional stockpicker. but an individual investor can do the same thing. they can reap the business press, they can read books, they can listen to different voices, not just the local stockbroker. >> and the final stock picking-- is buy you what know. explain what you mean by that as well. >> i think investors should first of all buy instruments so that they understand so if they are uncomfortable with auctions they shouldn't be buying options or selling options. they should stick with the sector that they understand, an industry that they understand. so they should be, use common sense in their investment decisions and be informed in their trading. and don't go into something that's exotic. don't go into something that's not comprehensible to them. >> and of course with the dos come the don'tsment and as far as stock picking don'ts are concerned one of the diferns is don't day trade, the other is don't chase last year's winners.
which is the most important do you think of those two? >> i think don't day trade because when uday trade or try to chase the market up and down, you end up waste ago lot of resources. your own time and a lot of transaction costs is going to go into that you have to pay for every trade you make and you are up against tremendous forces in the day-to-day market moves, computer, trading that are much smarter and quicker than you are in terms of catching a stock on the rise or decline. >> okay, nick, i think we have to leave it there. some very interesting and helpful advice for stockpickers. >> all right, thank you. >> thank you. >> jeff: here's what we're watching for tomorrow: quarterly results from delta airlines and chipmaker intel. the federal reserve releases the minutes from its last open market committee meeting. also, the chevrolet volt is one of the most anticipated new vehicles for next year. tomorrow, diane eastabrook takes the electric car for a test drive.
>> suzanne: the nation's top forecasters don't see an end to the economy's slump anytime soon. that's the outcome of a new survey by the national association of business economics. the new projection for growth is 2.6% for this year and next. back in may, the economists were predicting just over 3%. there is hope jobs will begin to come back, but also concern the unemployment rate will stay above 9% through next year. >> jeff: americans are getting into training. as in railroads. amtrak said today it set a record for ridership and ticket revenue in the fiscal year that ended september 30. almost 29 million people rode amtrak during that period, and they paid almost $2 billion to do it. the rail line says the biggest growth was in the boston-to-new- york-to-washington corridor, boosted by business travelers and riders on the high-speed acela trains. euu
>> jeff: in the world economy, when does an emerging country finally qualify as, well, having emerged? that sounds like a simple question, but tonight's commentator insists it's not. here's bernard baumhol, chief global economist at the economic outlook group. >> as the debate over china's currency policy heats up, another hot topic has surfaced.
should china still be classified an emerging country? this is not merely a rhetorical question. emerging countries are in the early stages of becoming industrialized, and they often receive favorable treatment on trade and financial aid. but it seems increasingly anachronistic to call china an emerging economy. think about it. china has already assembled several world-class industries, including aviation, autos, and computers. its technological prowess is already a cut above most other industrial countries. it owns the second fastest supercomputer, built the fastest passenger train in the world-- one that accelerates from zero to 120 miles per hour in a minute-- and has successfully launched an astronaut into space, only the third country to do so. in addition, china is the world's biggest exporter, has the second highest number of billionaires, and spends $100 billion a year on its military-- an amount that exceeds every country except the u.s.
china has even argued that its mounting economic power has earned it a greater role on the global political stage. and yet, china keeps insisting it is an emerging country because its per capita income is lower than other industrialized nations, which is true given its population of 1.3 billion. but you have to wonder: at what point does an economic superpower outgrow the status of a fledgling emerging country? i'm bernard baumohl. >> suzanne: finally, want to smell like you live in ritzy 90210? this week, the city of beverly hills is launching its own line of perfumes and beauty products. it's part of the city's plan to brand itself, to promote, as the mayor says, fashion, sophistication, and energy. but don't look for the perfumes in wal-mart. with its high-end image, the three fragrances have high price tags: 120 bucks. beverly hills hopes to raise half a million dollars from its new line of products. jeff, with all the mansions there, you'd think real estate taxes would supply plenty of revenue...
tell you what ever it smells like it smells better than in new york. >> i don't know what south florida's perfume would smell like. maybe suntan oil. that's nightly business report for monday october 11th. i'm jeff yastine, good night everyone. good night to you, suzanne. >> good night, jeff, i'm suz ann pratt, good night to all of you. we hope to see all of you tomorrow night. >> nightly business report is made possible by:
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