tv Nightly Business Report PBS March 15, 2013 1:00am-1:30am PDT
fall over its fiscal cliff. none of those things happened. >> reporter: but several good things have happened including more signs today of a turnaround in the labor market. the number of people claiming initial jobless claims falling last week to a lower-than-expected 332,000. that following last friday's february employment report which showed the unemployment rate fell to its lowest level since 2008. but while the outlook on jobs is improving, inflation is putting more pressure on u.s. businesses. producer prices or the cost of businesses to manufacture goods rose again in february, climbing nearly 1.7% in just the past year. pushed higher by rising gas prices. at the same time, the u.s. dollar has shown some relative strength, up 4% in just the past two months against the other major currencies. while a stronger dollar sounds great, it can hurt american business making u.s. exports more expensive to foreign buyers. >> to the extent that you continue to see the dollar
appreciate means you want to be more cautious about buying multinational companies whose profits weaken when the dollar goes up. >> reporter: so far the tug-of-war playing out hasn't been enough to derail this rally. but experts on wall street caution that even the strongest markets face headwinds. >> it would be completely irresponsible not to expect some sort of volatility, you know, within the first half of this year. but there's a soft floor for equities, and any discount like that presents a buying opportunity. >> reporter: for "nightly business report," i'm jackie deangelis. let's delve deeper into the rally and get a pulse of the individual investor. brian belski and john sweeney, heads up retirement services for fidelity. welcome to both of you. mr. sweeney, let me begin with you. i know you have a survey that you'll give us a sneak peek look at tonight. it doesn't really come out till tomorrow, in which you look at what you call high net worth investors, people with more than $50,000 5
$250,000 in investable assets. the survey indicates that those individuals are getting more bullish and specifically more bullish on u.s. stocks. tell me. >> that's right, tyler. so we're pleased to see that we've been trying to get into the market for about 14 months now, it's really resonating with invest investors. you've seen this in the flows over this period of time. certainly the recent euphoria in the market has been something that attracts a lot of media attention. what we try and remind investors is not ten days but ten years is what you want to be focusing on when it comes to equities. >> let me ask you about the strength of this rally. is this just a market rally or something bigger? is this the beginning of a bull market cycle? >> well, we take a look at major bull markets. typically they start when doubt is very high and what i like to call the bunker bull market. most investors are still in the bunker and not believing. from a longer-term perspective, we think we're on the cusp of the next great equity bull
market that could be 15 years in length. that doesn't mean we can't have some periods of excess volatility and even down years. case in point, if you take a look at the 1982 to 2000 bull market in 1987, was a volatile year, if you remember, 1994 was a flat year. so we could have periods like that. but the bottom line is we believe individual investors are very under weighted equities. and institutional investors around the world are extremely underweight u.s. stocks. and we think from a fundamental perspective, u.s. companies are the best and most attractive asset in the world. >> well, that certainly seems to be, brian. what do folks who responded to john sweeney's survey indicates. they indicated two-thirds of them were going to put money into u.s. stocks. mr. sweeney, let me ask you, do you see what brian sees in your complex there at fidelity, namely that people are still underweight u.s. stocks compared with what they ought to be, and
is that behavior changing? is the flow of funds more into equities so far this year or not? >> it is, tyler. we're seeing more flows into equities this year which is a good trend. obviously, we've seen a cycle over the last four years, and that's really rocking the boat. and what we need to do is get people back to the middle. think about a diversifiy eied portfolio, we'll see people continue to buy as the population ages. we need to keep inflation in mind. equities are the only place that is really going to outpace inflation over long periods of time. and people investing in whether it's for accumulation or even income distribution, you need to be thinking about inflation when they think about their allocation to equities. >> brian, i want to ask you about we're all waiting for the s&p to hit its closing highs, just a few points away, for investors. and i guess for a market strategist, which is more important for you to see the strength of this rally?
is it these new highs on 30 dow components or is it the s&p 500? >> it's really the s&p 500. for instance, we do not forecast 30 stocks. we forecast a target both in terms of price and earnings for the s&p 500. i remind investors that our target last year was 1425, and the market closed at 1426. this year's target is 1575. clearly we're within reach of that, and it has an upward trend especially given the fundamental construct we think can improve over the second half of the year. but the 500 stocks of the s&p clearly much more diversified way to look at the u.s. market. and frankly, u.s. investors -- u.s. portfolio managers benchmark themselves against the s&p 500, not the dow. so that's really the clear component that most investors should focus on, and it would be a really key element with respect to the longer-term strength of the u.s. market. >> you said that bull markets go up and down and along the way. what could jolt this market? >> we think from a macro
perspective, it's employment. employment's the great circle of life. that's why housing's come back. that's why the stock market's come back. that's why the economy's come back. if we see some sort of bump in the road with respect to employment, i think that could really surprise people. now, from an historical perspective, the job gains that we're seeing relative to history are very slow. that's why we like to talk about the construct of the u.s. market in a bit of nursery rhyme-type situation where it's the little engine that could. we continue to kind of climb higher and trudge higher, slow job growth, slow gdp growth, slow earnings growth and low interest rates is a great, great time to be invested in equities. bear in mind, investing is not a binary event. you have to own fixed income, commodities, real estate and own some equities. it's not an either/or type of event. but overall from a longer-term perspective, we still believe that people are you understand
exposed equities because of the ills of the last 20 years. >> john, i really want to ask brian, he said 1425 close on the s&p. it close the at 1426. i don't know how he got it so wrong there. at any rate, i ask you this. when baby boomers start to retire and pull money out of their accounts to pay for expenses, what do you think's going to happen to equities? >> you know, tyler, the important thing, as brian mentioned, you want to keep exposure to equities within your diversified portfolio, equities will be the place that outpaces inflation. when they're planning for a 30-year time frame in retirement, really have a significant allocation to equities. for a 65-year-old, that means almost 50% of their portfolio. over the past five years that's been a difficult market to weather through. as the equities have had a significant pullback over the last five years. but really when they keep a perspective of how long they're going to need their money to last, 30-year time frame, equities provide a really good perspective. >> i take it if investors do
what you think they ought to do, they would have little effect on equity values. >> over a long period of time, you'll have people continue to pull money out. the population's going to continue to grow, whether it's nufacturing, the u.s. economy is well poised to capitalize on that from our perspective. >> gentlemen, thank you very much. brian belski, john sweeney, appreciate your being with us. treasury secretary jack lew visited a siemens plant highlighting the importance of infrastructure and manufacturing and creating new jobs. steve liesman spoke with lew about his role at treasury, the budget negotiations in washington and the challenges the u.s. economy still faces. >> reporter: treasury secretary jack lew in some of his comments in the new position, talking about the value of the dollar, the budget deficit and the economy. i began my interview with him by asking whether or not equities which have seen new highs are in what he would consider to be a
bubble. >> the analysis i've seen doesn't give me reason to be worried right now. i think one of the lessons we learned from 2008/2009 is that even when things are not a problem, we always have to ask those questions. we need to make sure that we have the transparency to see what's going on. in firms and markets. we need to have the regulatory tools to deal with problems as they develop. that doesn't mean we should jump in when we don't see a problem. >> every treasury secretary serves at the pleasure of the president. you have no way of knowing how long you'll be in the office or how much time you'll have to do it. at the end of your tenure in the secretary's position, what is the shape of fannie freddie, fannie mae and freddie mac? have they changed? >> we'll have more to say about it in the future. while we have interest rates in the attractive place they are right now, as the president said over and over again, american families can save $3,000 if they
refinance. it's good to be the economy. it creates jobs. >> reporter: he said he supported the position of his predecessors in favor of a strong dollar policy on the issue of the budget, there's a big battle over sequestration. secretary lew said he thought he heard cooler heads prevailing and seemed somewhat optimistic that a deal could be reached that would end the automatic sequestration cuts. steve liesman in alpharetta, georgia. meanwhile, timothy geithner will write a behind the scenes book on the financial crisis and how he and other officials debated and worked together. crown publishers commissioned the book and made the announcement today. the book is due out next year. no word on what crown is paying mr. geithner. the second report card on the health of u.s. banks came out late today with mixed results. the federal reserve rejected the capital plans from bb&t bank and allied financial which was the only bank to fail the original test that came out last week. goldman sachs and jpmorgan got
only conditional approvals and were told to revise their plans by the third quarter. the fed approved the plans from the nation's other 14 banks for dividends and their share repurchases, but american express will have to submit an adjusted capital plan after the feds said its proposal would have eroded its capital position too much. now, the central bank said the so-called stress tests show that overall american banks have sufficient reserves to withstand another severe economic downturn. tyler? analysts sent two major to come stecks in opposite direction today. that tops our market focus. amazon dropping as jpmorgan lowers it because of gross margin profit returns. and amazon closed off more than 3% at 265 and change. meanwhile, apple was up on the day. its competitor, samsung, reveals a new smartphone. btig analyst says there are significant revenue opportunities still for apple. and that brought apple up almost 1% to 432.50.
we'll have more on that new samsung phone a bit later tonight. legendary investor kirk kerkorian says he wants to raise his stake in mgm to as much as 25%. that made mgm a big winner today, up almost 7%. men's wearhouse surging after it said it was considering strategic alternatives for k&g unit. shares jumped 19% to $34 and change. teen retailer aeropostale reported better than expected earnings after the bell today, but the company sees a first quarter loss ahead. analysts were expecting a small gain. shares dropped more than 5% in after-hours trading. and suzy, e-trade's largest shareholder, citadel, is dumping its entire stake in the online broker. the hedge fund had been pushing for e-trade to sell itself. shares of e-trade off 8.2%. intuitive surgical got a negative recommendation from the american college of
gynecologists, and that sent its shares down. the group's president said there is no good data proving that robotic surgery for hysterectomies is as good as other techniques. the stock lost almost 4% closing at $489.89. and coming up, the change in tsa policy that could make for shorter lines at airport security. but does it come with a price? first, though, 126 s&p 500 companies traded at new 52-week highs during today's session. that's about 25% of the index. 57 of those names hit new all-time highs. here's a look at some of them.
a lawyer who represent eed chrysler has been chosen by michigan's governor to be the emergency manager of detroit. kevin orr will try to fix the city's finances and try to avoid a bankruptcy. detroit is now the largest american city ever to have its finances placed under state control. there's also trouble in many of the nation's counties. new figures from the census bureau show a record number of u.s. counties more than one in three are dying off as aging populations and weak economies force young adults to look elsewhere for jobs. airport safety officials say they are allowing small knives and items like golf clubs on aircraft again to conform with international standards and make airport security checkpoints move more freely. the decision by the tsa particularly about the knives has been met with a storm of
protests from a broad range of groups. hampton pearson has more. >> reporter: today the growing backlash against the tsa's decision to allow passengers to carry small knives on planes starting next month made its way to capitol hill. a coalition of flied attendants, pilots and air marshals joined massachusetts congressman ed r markey who has blocked the tsa move. >> we will not rest until america's flight attendants, pilots, air marshals and passengers are protected. >> any way you slice it, a knife like this is a weapon, and it doesn't belong on an airplane. >> reporter: opposition also includes the union that represents some 45,000 tsa screeners as well as at least 3 major airlines. usair, american and delta. but reaction among passengers is surprisingly mixed. >> i don't think it would endanger anyone. it's such a small thing. >> i just think it's totally
wrong and unacceptable. >> i fly all the time. i do not like the idea of having knives on a plane. >> reporter: embattled tsa chief john pistole is not budging, telling lawmakers at a house committee hearing this afternoon the agency focus is on terrorists using explosives to blow up planes, not knives. >> it is the judgment of many security experts worldwide, which i agree with, that a small pocketknife is simply not going to result in a catastrophic failure of an aircraft. and an improvised explosive device will. >> while it has bipartisan support, the question is can it get through both houses of congress before the april 25th tsa policy change? for "nightly business report," i'm hampton pearson in washington. and tomorrow on "nightly business report," we'll be looking at the impact of higher energy costs on the consumer price index. we'll learn how confident consumers are right now with the michigan survey out. and we'll get alan greenspan's views on the economy right now.
first here's a look at the international markets and how they did today. a big night in the big apple for samsung tonight. it's expected to launch its newest smartphone, the galaxy s4. the company rented radio city music hall for the unveiling. samsung hopes it will help it gain share over apple's popular iphone. apple is still number one with 34% share. samsung has 19%. joining us with more, dennis berman from "the wall street journal." dennis, a lot of hype for this new samsung phone. what's new? what are the bells and whistles? >> of course, the hype -- it's
supposed to be unveiled at radio city music hall. they chose a pretty cool venue for it. they're not saying precisely, but there have been some things that leaked out their business speculation. one of the possibilities is perhaps that the phone follows your eye. so as you look at your phone or looking down at an imaginary phone, it knows as your eye moves, and it perhaps adjust its web browser or do a number of other functions as it monitors your own eye. so pretty crazy science fiction stuff if it happens to be true. >> one of the things i've noticed about samsung's devices, dennis, is that they tend to be slightly larger, particularly the screen size. >> yes. >> tends to be larger than many of the competitors. is this one of the things that they think differentiates them from the rest of the class and gives them an edge? >> well, tyler, i've got to tell you, you go to asia, and it is not a taboo thing to have a large phone that perhaps almost even looks like you know, a big piece of bread you're holding up
to your ear. it just culturally is different. what's interesting is that we're really seeing that change. people's attitudes and behaviors change here in the u.s. as well. the bigger phone, you know, of course they now call it a phone/tablet. they're calling it a fablet. terrible name. it really is changing how people use their phones. they can look at a bigger screen, do more with it, they can read books more easily. and that, in fact, is killing barnes & noble's own reading product, the nook. >> dennis, where does this leave apple? it's not going to have a new launch of its iphone months away. what kind of damage could samsung do in the meantime? >> we've really seen a change in perception. the fact that we're talking about a samsung phone launch is in itself sort of an important moment in time. apple, you know, the stock has come down, but it still has a majority -- the leading share of smartphones in the united states. it still makes an incredible sum of money every quarter. it's still an incredibly impressive company. but again, the perceptions are changing.
and on the margins, people are more willing to consider a samsung smartphone. and we've seen it remarkably apple, when apple executives talked to "the wall street journal" and other outlets yesterday, he went on the defensive or offensive, basically trashing the product that samsung has. they definitely feel the threat, the heat bearing down on them. >> here's the question of the hour. what kind of phone do you carry? >> i carry an iphone. i'm happy with it. i used to have a blackberry for ten years, tyler. unfortunately it went by the way. that's the other casualty through all this. the biggest loser has been nokia and blackberry. people just aren't carrying them as much as they used to. >> is apple your choice because it integrates your life? in other words, your photos you have, your music that you have? >> yes. >> why? >> i'd say that's probably the reason. you could say it dominates my life perhaps too much. but, you know, that's the criticism is that the apple executives made is that it's not truly seamlessly integrate ed i the way that apple is and a lot
of people prefer apple. samsung is going to make a difference. we'll see tonight whether the hype lives up to the advanced billing. >> well, enjoy the launch. dennis berman from "the wall street journal." >> thank you. coming up tomorrow, john fortt looks at the generational shift. why samsung might be replacing apple as the cool kid on the block. you know, i got an iphone -- it's not even a year yet. i thought i was cool. now i guess i'm not hip and cool. >> i'm hip and cool. this is a motorola. i'm 1 of 10% as our pie chart showed. i think there's a switch that people want bigger screens. this phone is quite thin. it's light. might not appeal to ladies who want to carry something small in their purse, but it has a bigger screen. i think that's a big selling point for a lot of these new-generation phones. watch apple. i bet they come out with a bigger screen. >> soon it's going to be the size of your ipad like dennis was saying. there's no hang-up about holding this big piece by your ear. >> isn't it interesting that the cool factor may have flowed away
a little bit from apple, particularly among younger users. >> i want to be hip and cool. >> you are. you are. doan worry. >> that's "nightly business report" for tonight. thanks for watching, everyone. and remember, support your public television station. >> and on behalf of your public television station, thank you so much for your support. have a great evening, everyone. we hope to see you right back here tomorrow night.
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