tv Nightly Business Report PBS August 29, 2014 7:00pm-7:31pm EDT
. this is "nightly business report" with tyler mathisen and susie gharib. >> august asent, the s&p 500 turns in the best monthly performance since january. could stocks go in a different direction? >> walmart is making a push into primary care and could change the system as we know it. market monitor, why small cap s are the big shots in this market. we have that and more on nightly business report for friday, august 29th. good evening, everyone. tyler is off tonight. forget about those dog days of summer on wall street. the major averages just wrapped up a blowout month of august, one of the best this year capping four straight weeks of gains despite low trading
volume, struggling economies in europe and deepening troubles in ukraine and the middle east. on this final trading day of the month, the dow added almost 19 points, the nasdaq rose 22 and s&p up 6.5 closing at 2003 and by the way, tomorrow will be the 2000th calendar day since the bull market began on march 9th of 2009. what a month august has been. the dow is up 3%, nasdaq posted a gain of 4 pblt 8% and the s&p hirer by more than 3.5%. only february posted higher gains for those big indexes. so why do the markets keep rising in spite of the headline risks? and what are investors looking forward to in september? bob takes a look. >> reporter: despite turmoil in the mideast and ukraine, what could derail the rally.
the market is up because of continuing low interest rates. secondly, the low commodity prices like oil. third, a slowly improving economy. fourth, we have record earnings and finally, the u.s. is still the best place to put money. next, what could derail the rally other than a significant global crisis there is two red flags. a rapid rise in rates like above expectation numbers or a change in the fed outlook. secondly, a significant profit margin deterioration, we're at record high profit margins right now but high erica mod did prices for higher labor costs could compress earnings. corporations would have to raise prices then. that's difficult for now. barring a global crisis, most market watchers say the up trend will likely continue. for "nightly business report", at the new york stock exchange. patricia edwards believes the markets will go higher through the end of the year and just raised her target to 2060.
she's managing director of u.s. bank wealth management. patty, that's a bullish forecast. if you're right, that would mean that the s&p 500 for the year of 2014 would be up 11.5%. what is going to drive stocks, according to your toforecast? >> we think we're in a gold did locks economy. it's neither too hot or too cold. the fed is behind us in providing liquidity and when you wrap that up and earnings growth which is 10.5% year over year, we're thinking that things are still going to continue to fumble along. not, you know, off to the races but still continue to bumble along. >> what do you do? how do you weigh in a headline like today about the terror alert in the uk up against good economic news? goes through your investment strategy when you come in in the morning? >> well, the headline out of the
uk was certainly startling but you can't plan for events that we just don't know are going to happen. so you really have to look at the fundamentals underlying the market first and foremost and if you look, we're not over valued, we have earnings growth. we have strong cash on balance sheets. there is a lot of good things going on and absent and absolute event, you know, some tragic event happening, you have the look at the fundamentals and investing. >> sounds like you agree with the package we just had with bob in terms of what could derail the rally, right? >> yeah, we do. our target of 2060 is just through the end of the year. about this time of year as everyone comes back, you look out toward the end of 2015 and gives us more wind in our sails. >> let's talk about a near term event, september. people coming back and looking at portfolios and september has been a nasty month for the
markets. so many people are calling for a correction. do you see like a 10% correction or more in the month of september? how feasible is that? >> you know, anything can happen and so we would not want to go on record and say there is absolutely no way, but that being said, you know, once again, it's the fundamentals, the market climbing along. people are calling for a 10% correction for a lot of days now and it hasn't happened yesterday. we think you could actually go in and buy any of the dips and we think that consumers will continue to do that. there is not a lot of money flowing into equity mutual funds. we're not near a blow off top and trading at 17 times this year's earnings. that's normal given the amount of cash on the balance sheet. >> next week, we have a lot of fresh economic data including the job's report. european central bankers are meeting on thursday. we'll have a lot of new information for investors to review. how will that play out in the
market? >> certainly, the numbers on employment are crucial and we would like to see that number continue to be above 200,000 new jobs being added. that being said, what will push the consumer to spend more is not new jobs, it's going to be greater income. so that rekwiequires the econom pick up and requires more than just new jobs, better jobs. >> patty, thank you for coming on the program. have a great weekend. patricia edwards at u.s. bank wealth management. a bit of a setback for the economic recovery, consumer spending in july fell for the first time in six months. household spending fell 1/10th of 1% with an unexpected dip in auto sales getting some blame for that decline. with consumers pulling back on spending last month, how did that impact retailer earnings and what is the outlook for consumer spending for the rest
of the year? sarah eisen reports. >> challenging, that was a commonly used word this earnings season when it came to describing the state of the u.s. consumer. >> given recent results and the environment, we expect the full year equity income will be down compared to last year in the original expectations for this year. >> low and middle consumers are continuing to struggle. they have changed the buying habits while the customer always finds a way to work through difficult times, she is struggling to overcome the sustained nature of the head wind she is facing. as we move through the second half of the year, we will begin to lap head winds that weighed on the core customer. >> macy's holding up better than most had this to say about the current state of spending. the outlook for the fall season reflects our confident optimism tempered by the relatety that many consumers are still feeling the impact of an economic environment that at best is
>> reporter: at a anytime when more workers face higher out-of-pocket costs, the clinics offer expanded services in stores like physicals and wellness checkups face-to-face with nurse practitioners for a total of $40. far less than a typical doctors' visit. for employees, it's $4. >> $4 and $40, significant disruption in the industry. >> reporter: while it's a pilot program for now, analysts say if walmart can page this level of pricing work, it will pose a big challenge not just to retail clinics but providers,
doctors and hospitals. >> they are a real opportunity and threat and if retailers don't respond, they could see profitable channels disrupted. >> reporter: walmart is facing a higher health cost as more associates are enrolling until the health plan in the wake of the affordable care act. that play as big part in the retailer's clinic equation. >> that's a good way to handle that added enrollment and first time health coverage consumers. >> reporter: and it doesn't hurt that once they are all in the clinics, they will likely shop in the store. bertha coombs, "nightly business report", georgia. >> you can read more about walmart's big push into primary care on nbr.com. still ahead on the program, what is the new way to get to the head of the class in school? the smart money says high-tech tutoring.
the u.s. tes sureasury secr will speak out. he's planning a speech on september 8th where he could offer a hint to tackle the problem of companies reincorporating over seas to avoid taxes. the corporate drone wars are heating up after amazon announces using unmanned aircrafts, they are delivering a drone system to deliver packages
and testing them right now in australia. a different kind of testing is just around the corner as millions of kids head back to school. that means a lot of parents are thinking about getting their children extra tutoring help and thanks to some high tech new tools, that business is taking off. julia boorstin has the story. >> reporter: tutoring is a $7 billion annual business in the u.s. alone and thanks to new technology, virtually connecting students, more students can access better customized help 24/7. revolution prep with $15 million a year in online revenue is growing. >> we have a platform that is very similar to skype. two-way webcam and a shared white board and curriculum is embedded into technology. >> reporter: new education giants are jumping into tech tutoring making acquisitions and investments to bolster the sector poised for disruption. this summer, prince ston review
combined with tutor dotcom. cheg bought for 30 million and pierson snapped up one and gram holdings is pushing more of the test prep tutoring business online. meanwhile, startups from varsity tutors tech platforms for finding in person tutors to revolutions online offerings are growing fast by offering the power of a personal connection. >> one to two hours per week of private tutoring on top of that can make a dramatic difference if a student being a 3.0 student to 4.0 student. it's a great roi. >> reporter: investors see the potential for technology to disrupt education. they poured over $420 million into 53 education startups in the first half of the year on track to set a record for the second tore. i'm julia boorstin. a lot of those students may
look to get a tablet this school year and lots to choose from. that's why idc cut in half the outlook on global tablet sales growth this year to 6.5% siting soft demand in europe and here in the u.s. apple is reportedly working on a system that could change the way you pay for everything from coffee to shoes and that's where we begin tonight's market focus. the tech giant is collaborating with dutch chip maker nxp on technology to enable pay to touch on the next iphone. it allows a smart phone to communicate wirelessly with devices by tapping them together. just yesterday, apple announced an event schedule for september 9th where it's expected to reveal the new iphone. shares were up to a new record and nxp added 2% to $68.52. earnings better than expected as the company posted higher sales but the discount
retailer's revenue was below estimates and the same was true for its same store sales. the chain did raise the lower end of the yearly earnings forecast. still, shares fell nearly 2% to $46.35. some promising drug news lifted shares of astrazeneca. the drug is designed to help the body's immune system ward off tumors. the stock moved up more than 2% to $76. biocristphrma received government funding for the ebola test. shares up to $13.50. tesla and a chinese phone carrier are teaming up to build 400 charging stations for electric cars in the asian nation in an effort to push
sales of the biggest market. tesla shares closed at an all-time high today $269.77 a gain of more than 2%. and ten bucks would bayou a priest of kraft foods. they are offering 1.5 million shares as part of the social stock plan. the foot giant is partnering with loyal three securities which allows investors to purchase frank l shares in the company. shared edged up to $58.85. our market monitor guest says this is the ideal time for investors to buy small cap stocks. portfolio manager of the hodge's stocks fund up 8% so far this year. craig, nice to have you back on the program. >> thanks, susie. glad to be on. >> you know, you probably hear this all the time because you managed a small cap fund, so many strategist tell individual investors, put your money in
large stock caps, they are safe in times that are uncertain. you're obviously doing well. make the case why investors should buy small caps. >> you know, i think in a portfolio, everybody needs some small caps. you know, there is a lot of advantage to small caps. you know, the one thing is they are entrepreneur in nature. the main reasons that we like them is, you know, there is not that political risk that everyone is afraid of right now. they also, you know, they also have a lot of advantages with just their size. it'si izeasy to grow a company m a billion to 2 billion than one to 20. in this slow growth environment that we're in, you know, big companies need new growth ave e
avenues and by buying small and mid sized come ppaniecompanies, grow. the small cap portfolio bought out. there is a lot of reasons to own small caps. >> you make a lot of good points. the stock you're recommending, the data points. the first one is paper and pack caking, the ticker symbol is ks and trades at $30. why do you like this particular one? >> kapstone is like a lot stocks in our portfolio. there is not much competition. a lot of competition has gone away. you know, there is a lot of consolidation in that industry and no one will go out and build new virgin paper mills. nobody wants that. with less competition and when demand comes back and the economy comes back, the earnings will go up significantly and margins go up, as well.
so we think it's a small name that's probably a good candidate. >> it's trading at $30 now. where do you see the target over the next year, year and a half? >> i think next year or the year after, they could earn around $3 a share. on $3 earnings, it could trade in the mid 40s. so it's got a lot here. >> let's talk about your next one. shoe carnival. scvl. it trades on the nasdaq around $20. the stock has been falling recently picking up a bit as you see here throw. >> yes. >> tell us what the attraction is here. >> it's a name we've been involved with for awhile and it's been disappointing. they are getting to a stage. you know, i filled up my car yesterday and it's about $30 less to fill my car up than it was say a year ago. i think this fall everyone is going to have a little extra money in there. so i think some of these very
hated, unloved retail stocks have opportunities, low expectations. shoe carnival is in the family shoe channel. they have 380 stores, we think they could take that to 700 stores. it's one that's been disappointing, trades low and we think it's got 10, 12 points of upside. >> okay. and the last one on your list, this trades on the nysc mtdr is the ticker symbol, trading at $27. >> great management. they are in the energy business. they are in texas. this is a very well-run company we think over the next several years will be able to make a really nice sum of money from the expertise in the drilling and there is oil -- as oil prices i think will continue to be elevated, they are making great rates of return on each
well and they have several, several, opportunities to continue to do well in this shale business and i think it's an undiscovered company that's really under appreciated and, you know, i think it's the company over two or three years could go up significantly. >> all right. a lot of these are off the beaten track, interesting list of stocks. thank you so much, craig. craig hodges. >> thank you, susie. coming up, playing dirty is taking on a whole new meaning. we're going inside the big business and big risk of spartan races. that's coming up next.
>> finally tonight, a new and very different type of sport is gaining popularity and interest from corporate sponsors but as morgan brenham shows us, these growling on tickle courses may be too tough for some and a bit risky for some companies. >> put the other hand there. there you go. >> reporter: when participants sign up for a spartan race, they face these obstacles and spear throwing and mud designed to push the best athletes to their limit. spartan race is part of a growing fitness craze called obstacle course raig racing.
it's the fastest growing sport in the u.s. with more participating in these races than marathons and half marathons combined. in 2009, an estimated 50,000 crossed the finish line. last year, 3 million. >> it's prime. deep down inside we're wired to climb, crawl, swim, so on social media you can share it with friends and it's gone viral. >> reporter: the popularity caught the attention of media giants. the race, reebok is a title sponsor and nbc sports has begun broadcasting and the newly formed governing body is lobbying to get obstacle course racing into an olympic sport. >> brands weren't paying attention and they have awoken to see there are more than 4 million people that did color
runs and mud runs last year and this trend is continuing to grow. i think it's likely we'll see more and more brands enter this space. >> reporter: the competitors are tough mudder and warrior dash. all three are expanding rapidly and inking deals with sponsors. not just the race company. >> cottage industries are being build around the sport. we created a shoe with rebook and certain ropes are being created and certain gyms are created and gym and clothing are being created with companies like reebok. it shows this is nis not a fad,s is here to stay. >> reporter: injuries, even deaths have been reported at some races causing critics to call for better safety regulations. and some have questioned whether the sport is reaching saturation. as more companies pop up to cater to what might be a limited number of people willing to
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