tv Nightly Business Report PBS March 29, 2013 1:00am-1:30am PDT
estimated. what's next for the u.s. stock market? let's get some answers from mike holland, chairman of his own money management firm, hole lalan holland & company. you have been in the markets for years. you've been telling me this is the least enthusiastic market in your career. do you think by monday they're going to be more enthusiastic? what's next? >> i don't think so, suzy. i think the comments i heard today from a lot of people who are in the marketplace, it's a smaller number than there used to be at market highs, i should add. the people are looking for when will the next correction be? is this over? it isn't the way it was when the market had its recent highs several years ago. this time around, the market valuations are as low as i've seen them, at a new market high. in other words, 10, 15 times earnings rather than 20, 30 times earnings and also the psychology is totally different. much more negative. >> all right. much more negative.
but still for those who are positive and do want to invest, you say the u.s. stock market is the place to be. tell us why. >> well, i think as you were just talking about a second ago, the numbers in the u.s. economy continue to be better than most other places in the world. so say for a place to be, look at europe, it's more predictable. look at china. we do have a valuation level here that i think continues to be one that is actually kind of crazy to me in terms of attractiveness. it's crazy attractive. and i think that when you get great companies in the u.s. trading at 10, 12, 14 times earnings with 1, 2, 3, almost 4% yields in some cases versus what else is out there, it's not even a close call. >> i want to make a quick switch over to commodities. i know you're not a fan of gold. it closed just under $1600 an ounce. but you like other commodities. which ones and why? >> i think overall the economy is going to move up by china and the u.s.
i think overall the commodities -- i don't expect the kind of run over the past decade when china was red hot, but i think i have the support level under the commodity markets. i actually would probably buy the stocks rather than commodities directly. if you bought in the energy area, exxon and devon energy, natural gas and great commodity player, i think you could do very well over the next five to ten years. >> in really few words, best advice to investors right now. >> please lose some of your fear as the market goes down over the next year and get reinvested in the stock market. >> okay. fair enough. thank you so much, mike holland, chairman of holland & company. one of the few bright spots this quarter has been housing. earlier this week we learned home prices are rising faster than at any time since 2006. but as we look ahead to the second quarter and beyond, diana olick says the outlook may not be all sunny days and warm nights. >> reporter: here's what to watch for in the housing sector
in the quarter ahead. spring is supposed to be the busy season, but a severe lack of inventory may push sales lower or at least keep them from surging ahead. prices will push higher due to this short supply. watch for the possibility that foreclosures will ramp up as banks seem to be pushing more delinquent loans through the system more quickly. hungry investors are waiting and that continues to be good news for home builders. expect to see new home orders rise but watch for slow deliveries as they're lacking in both land and labor. that's your q2 channel check for "nightly business report." i'm diana olick. we move to technology. an earnings surprise from blackberry formerly known as research in motion returned to profitability last quarter selling about a million of its new z-10 smartphones worldwide even before they went on sale here in the u.s. chief executive thorston hines says it's no fluke and is ready
for sustainable profits despite the competition. >> we have designed blackberry in a way that its cost structure going forward is a very competitive cost structure. what we're talking about is not a one-time effect in q4. we have established an efficient engine in blackberry that allows us going forward on the volumes that you will be seeing to be profitable in the future. >> well, that may be a tough sell with investors, though. shares of blackberry down nearly 1% today. blackberry isn't the only company that will have to convince investors it's on the right path. from oracle to qualcomm. as john fortt reports, a number of tech giants have their work cut out for them. >> here's what to watch for in the technology sector in the quarter ahead. mobile ads and enterprise. contrast that with pcs from dell and hp. we know they'll sell less of everything than in the holiday quarter, but how much less is
the question? over at google and yahoo! the display ad business has been under tremendous price pressure. well see if it can recover. and finally enterprise we'll have to watch cisco and emc to see whether it was oracle's salespeople or if customers had a reluctance to sign on the dotted line. that's your q2 check. i'm john fortt. overseas news in cyprus today, a big sigh of relief. banks finally reopened after being closed for nearly two weeks. branches opened on time. lines were long. restrictions on how much money people could withdraw. and officials were prepared for the worst. but as michelle caruso-cabrera tells us, things remain calm and the worst never came. >> reporter: the banks here in cyprus open for the first time in nearly two weeks. the event marks a key step for the country's economy and also puts an end to days of uncertainty. late last week the panic started to set in. word spread the eu was forcing
cyprus to shut down at least one of the country's two largest banks. the ceo of the bank destined to be liquidated appears stunned after being informed at parliament he'll be out of a job soon. is this not more fair that the most troubled bank and the investors in that most troubled bank are the ones who suffer the most? >> it's absolutely fair, the causes of the failure belong to the bank. >> reporter: the protests strengthened over the weekend as bank employees learned thousands will lose their jobs. >> i'm going to lose every penny with no job. no pension. no money. nothing. >> reporter: the atms give less and less money. >> $100. >> reporter: the days roll on but the economy screeches to a halt. security is needed to protect the employees of the central bank. and today after much preparation and negotiation, the banks finally reopen to depositors desperate for their cash. there are restrictions in place
to prevent runs on the banks. deposit holders are limited to withdrawals of no more than 300 euros per day. that's nearly 400 u.s. dollars. no checks will be cashed. they can only be deposited. business owners, they can do transactions up to 5,000 euros per day. beyond that they have to get special permission from a committee at the bank. for "nightly business report," michelle caruso-cabrera, nicosia, cyprus. major market global stocks failed to keep pace with u.s. shares in the first quarter. exception, japan up almost 19%. but many emerging markets struggled. brazil lost more than 7%, for example. and the msci emerging markets index down about 2% since the beginning of the year. but our next guest sees plenty of buying opportunities on the horizon. david is president and founder of readle research group. david, welcome. how are valuations across the emerging markets as a group? are they relatively value priced? >> well, they're at 11 times pe. they've got very strong balance
sheets, very good growth, and they've got stronger economies behind them than many of the developed countries. i think they're a great value. >> there are some stumbles in the emerging markets group in the first quarter. i wouldn't include italy there, but india didn't do very well. russia didn't do very well. and china both hong kong and shanghai were roughly flat, down about 2% by the numbers i see. where in the emerging markets do you see the greatest upside potential second quarter and beyond? >> we would be looking at midcap hong kong. we think the chinese economy is going to surprise to the upside. we think germany is going to surprise to the upside. we'd be big buyers of poland and turkey, those markets tied to that industrial growth in europe which we think is going to surprise. >> poland had a pretty rough first quarter, but you think as europe comes back, it will pull poland and some of the other emerging countries in that part of the world along with it. >> exactly right. poland is the largest economy in central europe. they were first into the euro. so they've gone through a lot of those teething pains.
they kept their own currency which gives them some mormon tear flexibility. it's a very good, established market with a lot of domestic pension activity. it's a great place to invest. >> let's go to cyprus now and a country that is near to it, and that is turkey. that is a country that you like going into the future. >> yeah, we saw s&p upgraded their sovereign debt today, improving environment there. we think people are starting to recognize what solutions turkey provides for european corporates, a very skilled, large, young work force. that has the ability to manufacture cars and white goods and all kinds of other things for those european countries. it's almost like greece without being part of the euro. they've got a lot of great advantages including their demographics. and it would be a place we'd definitely have on our radar gre screen. >> you said the way to play china is through hong kong. why? >> the shanghai exchange is not an appropriate place for people to invest. it's dominated by very low-quality companies. hong kong over the last 20 or 30
years has proven itself for the best gateway into china. the companies are well regulated, well vetted, well run and good at getting earnings to the bottom line. >> david readle, we'll leave it there. thank you very much. still to come on the program, it's the question most american vin esters want answered. is the bull market in bonds ending? first, the best performing sectors of the first quarter and a look at how the international markets closed today.
here's what to watch for in washington in the quarter ahead. at the supreme court the nine justices will decide the fate of two cases involving the right of same-sex couples to marry. in the capitol, the house and senate are going to try to work out a deal on comprehensive immigration reform. both involving enforcement and a potential path to citizenship. at the white house, president obama and his economic team are going to continue to work with both rank and file and leaders in congress to try to come up with a long-term budget deal involving some tax increases and some cuts to entitlements. that's your second quarter channel check. for "nightly business report," i'm john harwood. policy out of washington, as usu usual, is likely to drive the bond market in a big way for the remainder of the year. treasury yields had been creeping higher but then have settingsed back in light of europe's struggles. so what's your best move in bonds and fixed income right now? welcome to the program. brian railing, chief fixed income strategist for wells
fargo advisers. mr. railing, welcome. what is your outlook for yields in treasuries between now and year end, up from here? flat? down? >> we do see treasury yields moving a bit higher. modestly higher. we have a 250 yield target on the ten-year for year end. we think as we get into late this year, there will be some visibility on the end or the scaling back of fed purchases which should lead interest rates to creep up a bit. >> so yields on the ten-year today are about 1.85. you see them going to 2.5. that would suggest that you feel that people might well lighten up on their bond holdings. >> absolutely. people have been piling into bonds over the last four years. they've provided great returns. but those returned are in the past. really mathematically possible to see those type of returns in the future. even if interest rates stay relatively low, we're looking at very low single-digit returns.
so it's time to begin liquidating, especially some of those longer maturity positions at these quite high prices. you know, shifting some of those assets into the equity market. >> so what ideally should a portfolio have in it? obviously everybody's different with respect to fixed income. is it 30% now? 45%? 60%? what is it? >> you know, obviously, everyone, as you mentioned, is different. kind of in our most popular models, kind of in the middle of the risk spectrum, we have about 40 to 45% across all of our fixed-income asset classes. but remember, you want to be very well diversified there, not just in the u.s., but also have some, you know, high yield emerging market and international fixed income positions. >> a lot of individuals, with their fixed income, reach for higher yields. and i'm looking at high yield or junk bonds, among other things. what is your advice for them, and what do you foresee in the
high yield and corporate market for the remainder of the year? >> well, i do think high yields will provide better returns. i don't see a big selloff there. however, i don't necessarily think there's a lot of value for the risk clients are taking. we're neutral in that sector. one thing that concerns me a little bit is we are starting to see the covenants of the new issues. it's really more of a seller's market. so the issuers are holding the upper hand here. so i'm a little bit concerned that we are seeing some of the -- some of those covenants lighten up a little bit which is concerning for the ultimate buyer. >> very quick thought on munis if you don't mind. >> munis, we continue to like munis. we buy higher quality munis. we think they should continue to perform in valuations there, continue to look relatively attractive to us at least relative to the other sectors in the fixed income market. >> brian railing, thanks so much. >> great. thanks for having me. >> chief fixed income strategist for wells fargo advisors.
in three years by expanding globally and using mobile technology. the company's also planning to double the volume of its paypal unit to almost $300 billion. ebay stock closed up more than 4% to $54.22. game stop was the top gainer on the s&p 500 thanks to better than expected quarterly sales and earnings. but the video game retailer warned of weaker than expected results for the year as customers wait for the rollout of new game consoles. still investors focused on the positive and shares jumped more than 5.5% to about $28 a share. suzy, metro pcs is being sued by shareholders seeking to block its merger. earlier met repcs urged its shareholders to vote for the merger after iss, an advisory group, urged them to vote against the deal. during the trading day, investors bid up the shares of metro pcs on heavy volume, betting that t-mobile usa will have to sweeten the proposal. metro pcs closed up more than
3.5% at $10.90. pvh which owns brands like tommy hilfiger and izod was the big loser on the s&p 500 today after warning that itzhak decision of warnicle will weigh on earnings for the rest of the year. pvh bought the company last month getting full control of the calvin klein brand, among other things. and pvh said warnico nieds more investment than it estimated. shares of pvh lost more than 5%, down a big $6. and the ipo of the day, pinnacle foods, debuted nicely. pinnacle's brands are names you know like bird's eye, vlasic pickles. pinnacle priced at $20 a share and closed up more than 11% on its first day. our market monitor tonight says we're in a new secular bull market. and get this. that lasts decades. chief investment strategist at
raymond james. jeff, really? decades. make the case for this bull market. >> the last time that the dow jones industrial average and the dow transports broke out to new all-time highs was after a long multiyear -- in fact, it was about 17-year trading range between 1965 and 1982. both averages broke out to new all-time highs in late '82 and early 1983. and you started an 18-year secular bull market. this just happened again. you have the transportation break out to new all-time highs? january and the dow jones industrial average just confirmed it about three weeks ago. that is the fourth dow theory buy signal since the bottom in march of 2009. >> and that's even though the u.s. economy is still on the weak side. we can still have that kind of a market rally over the next couple of years? decade? >> the market has been a better predictor of an improving economy than any economist i know. and i think there's a lot of good things afoot here. i think you're getting a change in the constituency of congress
for the better. i think you've got this reindustrialization of america going on. this energy independence and my energy team thinks we're going to be energy independent by 2020. i think all of those things are vastly bullish for the u.s. economy. >> jeff, let's go down your list of stocks you think will do well in this rally. at the top of your list you have walgreens. the sftock is now at $47. you have a $60 target on it. what's going to power wag ticker symbol on the big board? >> obamacare is going to drive more people into the drugstores. they made an acquisition a couple months ago, alliance boots, which was the largest drug chain in europe. and it was actually misunderstood initially, and the stock kind of stutter stepped. but when the -- all the metrics come together, my fundamental analyst who has an outperform rating on it thinks that they have $5 a share in earnings power in fiscal 2015. if you put a decent multiple on it, you get a 60 plus dollar stock. >> the next one, rainier, the big timber and lumber company.
i'm guessing that this is a play on the housing boom that we've been seeing. what's the story here? >> the housing stocks have been hot. we have been in front of that up until recently. my team downgraded most of the housing stocks a few months ago. this is a second derivative play on the housing market. they have 2.8 million acres of timber. they've increased their dividend recently. and yet they still have about a 3% dividend yield. we like the company a lot. and here, too, we have it outperform rated. >> you like callaway golf. right in time. tell us why you like ely. >> that's why they got a new ceo, chip brewer, i think it's appropriate to have a ceo with the first name chip. he, in essence, turned adam's golf around. anybody that knows anything about adam's golf and the specialty clubs they made, it was a huge win. he is now ceo of this company. he's gotten them out of the golf ball business that they couldn't make any money on, out of the clothing business.
and he's refocused the direction of the company on the golf clubs. >> less than 0 seconds. see if we can squeeze in the last one, etf for technology. tell us why you like this because tech stocks haven't really benefited. >> that's one of the reasons. technology as a group is priced cheaper than the utilities. and the market's telling you that they're expecting utilities to grow more than technology over the next few years. and i don't believe it. i think tech's undervalued. they have clean balance sheets and i think you'll do well going forward. >> you've given us a lot to think about. any disclosures to make? do you own any of these stocks? >> i do. >> all of them? >> all of them. >> all of them. okay, great. thanks. have a great weekend. chief investment strategist at raymond james. and tomorrow with the markets closed, we've got a special report on the american recovery. it's been an interesting first quarter. let's look forward to the second. >> be sure to tune in for that. i'm suzy gareb. have a great weekend. >> and i'm tyler mathisen. thanks for watching.
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