tv Nightly Business Report PBS March 21, 2013 1:00am-1:30am PDT
a temporary improvement. so we've seen periods before where we had as many as 300,000 jobs for a couple of months and then things weeken again. i think an important criterion would be sustained for a number of months. >> significantly, the federal reserve did reduce its outlook for unemployment in the united states. the fed saying that it sees unemployment falling to 6.85% is in in 2014. that's the first time since the fed has been forecasting and making those public that it's been below 7%, a quicker pace of improvement in the unemployment rate could bring a near end to the fed's effort to stimulate the economy. and the fed chairman made comments about what's going on in cyprus and the economic and financial difficulties in that small country. >> so a lot of uncertainties and questions about how the way
cyprus has created for other countries and the like. it does have some consequence. having said that, you know, the vote failed and the markets are up today. and i don't think that the impact has been enormous. >> finally, the federal reserve in its statement for the first time made mention of fiscal restraint, which is another way of saying the sequestration that many analysts did not think was going to happen. fed chairman did say that he has concerns that reducing federal spending could reduce economic growth. back to you guys. >> well, two big companies that could be considered bellwether to the economy had two big misses today. oracle, the world's third largest software maker came in shy as new software sales sell. on the numbers, oracle shares took a big hit. and the other miss, fed-ex, the company reported weakness in international market as well as
customers choosing cheaper options. with us now, more analysis of the fed decision and on the outlook for the economy in light of those numbers. chief economist at gold mab sachs. between those following the accident- that there are still downside to the economy. do you think that policy has made the right move today? >> i think so. i think, in general, the moves that we've seen over the past six months have been quite helpful. the further move in the direction of trying to get the economy back onto a stronger trajectory for the labor market, more rapid labor market improvement and i think the message from what they did today is, you know, for the time being, stay the course. of course, he's not willing to commit what, you know, what's going to happen in the future as
far as the quantity of easing programs are concerned. guns, there's still quite a lot of uncertainty about how long that's going to continue for. but our expectation is that it's still going to continue through this year and then will wind down in 2014. but, yeah, we do expect to support the federal reserve. >> and that, yon, is what i wanted to ask you about. did you divine any hints in the press conference or the statement today about when the federal reserve might take its foot off the gas pedal and begin to taper off those $85 billion a month of bond purchases? >> i don't think there was a strong signal. i mean, he was obviously asked several times to opine on that. and he didn't really provide a lot of additional information. i mean, i think if the economy continues to add the sort of job
growth that we've seen in the last report, then probably they would taper earlier than in our forecast. but we would expect them to keep going for longer because we don't expect that pace of growth in the light of the slow down that we're likely to see from the tightening of fiscal policies that they also report to. so it does depend on the economic outlook a lot. they will be responsive to economic conditions and the pace of job and gep growth. but i don't think he really volunteered a lot of additional information. >> yon, bring this home to our viewers. what is the message of the fed today and what it means for home buyers? business owners? home sellers? investors? >> so i think the broad message is that the fed's view is that they're still failing on the employment side of the mandate in terms of the level of
employment and the level of the unemployment rate. and they want to get back to full employment more quickly. so they will be supportive as far as housing as one important sector in the economy as concerned as business investment and business spending is concerned. i think it's a broadly supportive message. they're also saying that they're not particularly concerned about the inflation pressures that will come further down the road that they're not expecting it in the short term, and i would agree with that. >> we'll continue to monitor it with you. >> and now, to the latest on the financial crisis in cyprus. all banks there will remain closed until at least next tuesday. michelle is on the ground with the latest efforts to overt the threat of a banking system collapse. so, michelle, the first question is obviously, why are the banks still closed and why won't they open before tuesday? >> well, the reason they're still closed is if they're
afraid they reopen them, the banks will collapse because everyone will try to take their money out. so what they'll do is try to extend the banking holiday through the weekend. that's going to give the government, they hope, time to recapitalize the bank. that's a long-winded way to say pitch the bank. put a lot more money in them so they are stronger. not until tuesday because it happens to be a holiday. >> michelle, this is suzie. what do you think could happen on tuesday? there's been so much pent-up anxiety, what happens when those banks open? >> well, it all depends on what happens over the next four days. so cyprus rejeblcted the first idea and they try to raid a pension fund to come up with money to meet the requirements of the bail out from the european partners. now that all of those things have happened, they face two choices. they need to shut down some banks that are very, very weak. or they're going to have to
leave the euro. that's the choice they face. and depending on which one they make, that's what's going to happen on tuesday. >> michelle, how did the banks in cyprus get so bloody. is it really traceable basically to the fact that it's a kind of "don't ask, don't tell" kind of banking culture. >> well, certainly, this is a place that advertised discretion and what they call tax optimization. and they did have lower corporate tax rates. so there are legitimate reasons to put your money here. but, also, previous governments than the current one, they wanted to be a international financial center. they worked very hard to attract capital from all over the world. it is the business model of this country. but it's not going to be very for long. they just can't do it anymore. one statistic to leave you with. the banking system is so much larger here in cyprus, if we wanted to have one in the united states that was as large equivalent to our economy, we
would need 45 more jpmorgans. that's how much bigger we would have to get to match the size that they've done here relative to the size of this place. >> thank you very much. well, a big bipartisan vote at the capital, the senate overwhelmingly passed a massive stop-gap spending bill that will keep washington up and running through the end of september. it leaves federal spending cuts in place. but that could mean job furloughs for hundreds of thousands of federal workers between now and that point. and the measure moves to the house on thursday where it is expected to pass. >> america's biggest bank has had a bad year. a huge trading loss. a congressional scolding. and today comes news of more than a half a billion dollar settlement related to the bankruptcy of ms financial. more on the tough times at jp morgan. >> it's big. and so is the target on jp morgan's back. just this week, mortgage giant
freddie mac named jp morgan in a lawsui the charge? it cost them billions. >> i simply do not know where the money is. >> ms global, the firm john corazine led into bankruptcy settled the bank amid criticism it withheld emergency cash as the brokerage teetered on the edge of collapse. if that wasn't enough, the bank has also come under fire for assisting harmful payday lenders. sometimes charging interest rates upwards of 500%. also, foreclosing on homes of members of the military while on active duty. pay slashed in half in january and the bank disclosed 17,000 layoffs in february. the flood gate of bad news first opened last year when jp morgan's european arms made a giant trade on the global economy. dubbed the london whale for its sheer size, it cost the bank $6
billion. >> the rules need to be revamped. >> grilled over that very trade last week on capital hill, senator carl leaven took executives and the bank's regulators to go awry. >> the occ has issued a cease and desist order. but i believe you and your colleagues have a challenge to get america's biggest bank back on the straight and narrow. >> for now, jp morgan is taking strides to right its wrong. when diamond discovered the payday practices, he called them horrible. though suffering a bit of tarnish, jp morgan's sterling reputation is not in long-term jeopardy. even amid the misdepths, the bank posted record profits. its stocks up 50% from last summer. for "nightly business report," i'm kayla tashi. >> meantime, banks are gearing
up for a busy season. application for home mortgages dipped more than 7% last week. main reason, rising interest rates which did climb to a seven-month high. but it's still pretty low. lenders have been making more loans lately. even the kinds of loans we haven't seen in some time. why lenders are loosening up in the second part of our series on housing. another industry on the rise, airlines that expect eed profits to climb higher. the world's airlines will make $2 billion more this year than previously forecast. and that's on growing confidence in the global economy and a boost in cargo shipments. meanwhile, some of the biggest u.s. carriers have found new ways to squeeze out higher profits by offering few receipts, but focusing on high-end fliers. >> hi, suzi. this is all about the airlines getting more out of those very
lucrative business-class seats. and the reason why is because when you look at these transcontinental flights, wh whr it's from san francisco or boston, the fares are about 50% higher than coach fares. this week, united airlines started changing out the business class on some of those transcontinental flights, putting in flat business class seats. there will be fewer in business class. and, by the way, the question becomes why are they doing this? it's all aut selling a higher per scentage of business class flights. what united has started, we're seeing now with other airlines following. later this month, we'll see the same from delta. later this year, american will follow. and then you have jet blue announcing that it will upgrade its transcontinental service with premium service next year. what do frequent fliers think about all of this? generally speaking, they like it.
>> it's great. a lot of times, you have very, very long days. you can get rested up on these flights. >> i think it's nice if you can get the upgrade, you know. but for most people, it's going to be tougher with the airlines consolidating. >> and it will be tougher because there will be fewer seats in business class once these conversions take place. the airline index today hit a six-year high and is up 51% this year. suzie, we saw something rare in the first quarter with the airlines reporting a profit. expect that to be continued in the second quarter. >> well, you know, those seats look comfy in business class, but what can we expect on some of the shorter flights? will we be seeing any of these kind of services being offered? >> i think what you're asking is will we see this with other routes certainly in the domestic area other than the trarns continental flights. and the answer is probably not. for the most part, what we can expect is that the longer
flights where they can get the people to pay for those seats, those higher-priced seats. and you're not going to see this on a flight from new york to chicago or los angeles to denver. it's likely not going to happen. >> all right, thanks a lot, phil, phil reporting from chicago. coming up, how do they really feel? some of the country's lowest-paid workers weigh in about their jobs and their future. now, let's take a look at some more big winners on the s&p including dollar general and bestbuy, as you see there. and on the losing end, windscreen. and also, here's a look at how the international markets closed today. in our market focus,
machinery hits some rocks in the road. cat reporting weakening sales in asia, down 26%. and north america, down 12% in the three months through february. caterpillar was the biggest drag, down 1.5%. deere was cut because wells expects demand for farm equipment to weaken. deere shares off 3% today to $87.74. conaco phillips announced a big oil find in an area considered to be one of the last places for undiscovered oil deposits in the gulf of mexico. in a spike early, up 3 3/4%. its partner up as well rising almost 2%. >> general mills feeling its cheerios this morning. it also raised its yearly forecast saying the business environment is improving. shares of general mills rose more than 2.5%.
and the big jump in shares of blackberry thanks to a morgan stanley upgrade. morgan stanley saying now there may be room in the smart phone market that's dominated by an droid and the iphone operating system for blackberry. the vote of confidence comes just two days before blackberry's make or break z-10 goes on sale at at&t stores. blackberry rose $16, that's a gain of almost 6.5%. >> and, suzie, one of the roadblocks to the housing recovery has been tight mortgage credit. rates may be low, but they're only good if you can get them. as we look at the spring buying season, lenders are starting to ease up. not so much on their standards, but on the types of loans they can offer. >> after being turned down for a mortgage last year, leah harris has been renting in washington, d.c. now, she is finally moving into a home of her own. >> i tried last year at about the exact same time and nothing was different than it is now.
same income, same assets, pretty much everything was identical. >> in time for spring, mortgage credit is beginning to thaw. specifically the return of the low down payment loan. since the housing crash, 20% down was the rule. with fha, the government mortgage insurer, the only exception. >> i think a lot of it has to do with different underwriting standards. they may have their traditional guidelines. many people are qualified today. >> government-backed fannie may says it has not eased its underwriting but is buying more with between 3% and 10% down. why? fha loans are getting more pensive. facing a $16 billion shortfall, fha raised its insurance premiums. meanwhile, as home prices rise, the private mortgage insurer's hard-hit by the housing crash are easing some
standards. >> if it's not about the down payment, it's about making sure that the borrower has the ability to pay a mortgage after its made. >> also, fuelling more loans are more home buyers, especially first-time home buyers who need that low down payment mortgage. until now, they've been largely sidelined by either tight or pricey credit. >> the loan down payments are necessary for the first-time buyers so we can have the second-time buyers moving out, moving up. >> their refinance business is drying up, putting the focus back on home buyers. for "nightly business report," washington. >> coming up, chicken wings and basketball. a winning combination. coming up, the ceo of buffalo wild wings weighs in on the impact of the ncaa tournament has on business. first, a look at treasury, currency and metals closed today.
a new survey of lower-wage american workers. those taking home $35,000 a year or less. they're the most pessimistic about job security and their personal finances. two-thirds say they see little or no opportunity for advancement at their current jobs. and half say they're not confident that those jobs would help them achieve their long-term goals. 65% of the jobs added to the s u.s. economy since the recession ended have been lower-wage positions. >> march madness is back. tomorrow, 65 teams will tipoff the men's basketball tournament. fans around the country are gearing up. in addition, the ncaa tournament
needs big business during last year's tournament, fans ate nearly 70 million buffalo wild wings. here's president and krerceo. so, sally, can you top 70 million buffalo wings? >> i think we will this year. i think we have close to a hundred more restaurants across the country that will be showing the big games over this weekend and coming. so my guess is we'll go well-passed 70 million this year. >> what are your favorite wings on your menu? i'm just curious? what do you like the most? >> what do i like the most? >> well, i do like our spicy garlic wings. spicy garlic. when they're done right, they're hot, steaming, just enough burn. you dip those in a ranch or a bleu cheese and it just a burn a bit. >> and you wash them down with a nice, cold beverage of your choice, right? >> yes, you do. >> is there any truth to these
stories we heard last year about a shortage of wings? >> we have faced very high wing prices this past year. i would ntd sn't say that there shortage, you yjust have to be willing to pay for them. it's something that we've managed over the years. but we have great relationships with our suppliers. and they've ensured -- they've told us and worked with us to make sure that all of our restaurants have fresh wings in to serve those raving fannings. >> sally, i thought i saw that the prices on wings have dropped sharply, something like 20%. if that's right, could that mean more business for you? >> well, it's really interesting. we have seen wings come off their high, which was january and february of this year as we approached superbowl. and they are down. i think that our fans come in -- luckily, we've been able to take just modest price increases and will make up other ways to ensure that our prices, although
they're still a great value for our fans. we think there's always a great reason to come into buffalo wild wings. march madness, you can't beat that. it is the busiest time. our team members are ready. they love this time of year. there's so much competition and the guests, it's ra ee's raelly atmosphere. >> i wonder how closely you do follow those input costs, like grain costs. last summer, there was all of that concern about corn and feed cost. that's obviously going to trickle through in the price of your ultimate commodity, which is chicken wings. >> it does. and, as i said, traditional wings, they float with the market. so we do feel the input costs. our other commodity basket, we entered, you know, longer-term yearly con trabltracts with our suppliers. and we try to moderate that a little bit. have some items on the -- >> well, it looks like we lost sally smith. just before i was going to ask
her, suzie, what her pick was. i believe the university of minnesota, where they are based, is actually in the tournament.. >> she was saved by the bell. >> sometimes you lose the satellite in a middle of a feed like that. we apologize. let's take a look at tomorrow. and we were just talking about crops and feed. we're going to get a report on spring weather and possible flood impact on crops as the planning season gets underway. two closely-watched housing reports come up. existing home sales for february and the house of representatives takes up that senate bill that was passed today to fund the government through september. >> and, finally tonight, a fascinating story about a small, ceramic bowl. it was purchased for just $3 at a tag sale in new york state. it was on display in a family's living room. but then, this week, it sold for more than $2.2 million. turns out it's a one thousand-year-old bowl. there's only one other like it
and it's in the british museum. it's only five inches. >> you could put some wings in that bowl, couldn't you? i'm going up to my attic tonight to see if i've got anything. that will do it tonight for tonight's edition of "nightly business report." >> have a great evening. we'll see you back here tomorrow night.
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