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tv   Nightly Business Report  PBS  January 11, 2014 1:00am-1:31am PST

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this is nightly business report with susie gharib. >> our rating service provide objective independent ratings daily on over 4300 stocks. learn more at the street.com/npr. business miss. december created the fewest number of jobs in three years as the workforce shrank dramatically. what's causing people to drop out? in the bull's eye. up to 110 million people now impacted by target's security breach. what it all means for the retailer. and defying gravity. shares of a little-known biotech are doing something few if any have done before. gaining more than 370 points in
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just two days. why is the stock taking off and is it justified? we have all that and more tonight on "nightly business report" for this friday, january 10th. good evening and welcome. a reality check from the labor department. only 74,000 new jobs were created in december, far fewer than the roughly 200,000 kmicht economists expected. a real disappointment. it's raising concerns now about whether this is a one-time miss or a sign of a real slowdown in job growth. hampton pearson has more on today's jobs report and what it means for the economy. >> reporter: december 2013 was the weakest month of hiring in three years. after averaging 214,000 jobs per month from august through november, the economy generated just a third as many new jobs in december. lead, economists were shocked. >> i wouldn't pay any attention at all to these numbers. >> they're not consistent with
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anything. [ overlapping speakers ] >> please everybody needs to chill it down a little. we haven't fully turned the corner any more than we were down in the dumps. i think this is just a reminder that we've got to get all our ducks in a row before we declare victory. >> reporter: even the drop in unemployment to 6.7% had a dark cloud. most of the decrease was due to people giving up looking for work and dropping out of the labor force all together. the labor force participation rate dropped to 62.8%, the lowest in 36 years. once people stopped looking for work, the government no longer counts them as unemployed. ammunition for those on both sides of the debate over extending jobless benefits. >> we have seen that when people lose their jobless benefits they've not been rejoining the labor force as we thought they would. on the other side of it, you do know that in order to qualify for unemployment insurance you have to actually be looking for
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a job. >> reporter: baby boomer demographics are also a major factor in the shrinking labor force. according to a recent met life survey, the average retirement age is now just under 60. with about 25% of the oldest boomers retiring early because of the sluggish job market. some of the folks who are leaving the labor force due to retirement probably would have stayed in longer had the market been stronger. >> many economists warn one month's bad jobs report is a warning sign the job market may not be as strong as we had hoped. hampton pearson in washington. >> despite that lousy jobs report, there are many american businesses that want to hire but they just can't find enough skilled workers. in st. paul, minnesota, a group of local companies is banding together to solve this problem. mary thompson has more. >> reporter: two years ago, j.w.hume had a problem. the company's former ceo saying
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the maker of luxury leather foods and accessories couldn't find the workers it needed to meet growing demand >> it began to really worry our company. and we thought at one point it actually was strangling our growth. we had to actually slow down our sales point as a result of that. >> reporter: it's a common problem. a survey by the manufacturing institute says 82% of u.s. manufacturers have skilled jobs they can't fill. vacancies that are growing now that rising labor costs in asia are prompting many to bring work back home. work is what larry was looking for when he landed in a homeless shelter after 15 years of checkered employment history. >> i just wanted some kind of income and some kind of steady job. >> reporter: he found one at j.p.hume after a nonprofit called life tracks directed him to an industrial sewing class at minneapolis's dunwoody college of technology. the dean designed the program at the urging of the manufturing group that includes j.w. hume known as the maker's coalition
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it promotes a trade of industrial sewing and hires as apprentices dunwoody students. dunwoody's six-month course costs just over $4200. many students like larry receive grants to defray the costs. they confirmed regional firms would need regional hires over the next 6 to 18 months and more over the next seven years as retirement will claim 50% of their workforce. the first class hitting snags, though. j.w. hume vice president saying the new hires needed more work. >> the first three brought in from the program, we really saw a need to have highly skilled more refined skills for industrial sewing for leather. >> reporter: with employer's feedback dunwoody altered the course. students now spend more time at the machines, less time on the books. its placement rate is 90% and graduates earn an average hourly wage of $14.46.
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but for larry the new skills and job are priceless >> it makes you feel proud when you see a finished product. it looks real good and you know you did your best on it and everything is nice and neat and straight. and it's guaranteed for life. >> reporter: a life improved by an industry stitching a workforce back together in st. paul, minnesota, i'm mary thompson, "nightly business report." stocks ended today's session mixed and little changed with traders trying to make sense of that weak december jobs report. and what it might mean for the economic recovery and the federal reserve's plans to start pulling back on its bond-buying stimulus regimen. but the day wasn't all bad. the russell 2,000 small cap index and small transports both ended the session at all-time highs. today the blue chip dow stocks fell just 7 points ending slightly lower for the week. the nasdaq was higher by 18. the s & p 500 added four. our market guest tonight is telling her clients there's a silver lining to today's dreary jobs report.
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she's rebecca paterson from investment trust. make your case, why the sobering news is good for investors and the markets. >> well, of course we all would like to see a lot more job growth for every american. but purely from an investment point of view i think there's at least two reasons this isn't a terrible day. i think on one hand the bumpy start we've seen for stock market this year is just consolidation. we had a very very strong 2013 for equities, about three times the annual historical average gain. so some consolidation is actually quite healthy in a bull market. i think secondly, the fact that we got the soft report today is going to reinforce a view within the markets that the federal reserve is going to move slowly to take away the punch bowl and global central bank, liquidity including the fed is going to be a help for cyclical assets like stocks. >> they have said at the fed that the progression of the tapering of it is going to be data dependent. here is some data.
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do you think it's going to change whether they continue to pull back at 10 billion a month? >> i don't think this one data point would be enough to change the fed's mind at this point. as i think you had earlier in your program this evening, we've had a number of other data releases just in the last few weeks ranging from business sentiment to weekly jobless claims to consumer data showing that the economy in the u.s. while not robust is gaining momentum. so i think the fed will look through this number, given the weather distortion, i think we probably have to see more before the fed changes. but you're right. they are focusing very much to make sure the economy has momentum. >> and how about for you, rebecca, in terms of your investment strategy? to what extent does this one data point make a change in what your plans are for 2014? >> when we see volatility, today the market didn't do that much. but when we see a data point that disappoints and leads the market lower, fit hasn't changed our bigger picture view frankly
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it's an opportunity to buy. today not much opportunity. we're stick with core view overweight equities in portfolios we've built that weight over the year. we think incomes are continuing to rise this year although less quickly than last year, underweight commodities. we think the u.s. stock market will be one of the leaders this year as in last year. >> rebecca, do we have any good idea in the labor force participation numbers which are down how many of those people who have stopped looking for jobs have stopped because they are discouraged and how many have stopped because well they're retiring? >> yeah. i haven't seen any good breakdowns recently what the mix is exactly. i think that's a great question. but i do think it is becoming a greater political agenda. and i think we could hear more on the state-of-the-union address from president obama later i believe at the end of this month on the divide. the people with jobs, the people
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benefitting from this great stock market, and the people who haven't been able to find work after the great recession. and it's creating a bigger social and political issue for america. i don't know what the breakdown is, tyler, on your question. it's a good one. i'll find out this weekend. but i do think it's a bigger issue for the country that has social and political ramifications. if it continues, it could become an economic issue as well. >> reb beck ca >>. >> rebecca paterson, thank you. the data breach at target during the holiday shopping season is far far worse than initially thought. it turns out the number of people impacted is nearly triple, triple the original estimate. courtney reagan has more. >> reporter: target is now widening the scope and scale of the data breach at its u.s. stores. the retailer now says its investigation has revealed up to a whopping 110 million shoppers may have had information stolen. target now says 70 million customers' names, e-mails,
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addresses and phone numbers may be among the information stolen in the breach. that's in addition to the 40 million customers whose debit or credit card information was already reportedly stolen. target does expect some overlap in the two groups but can't quantify it at this point. well, the number of shoppers eventually impacted has nearly tripled target says the time period previously stated, november 27 to december 15 has not widened. target is attempting to reassure customers, saying shoppers will not be liable for any fraudulent charges on their cards related to the breach. the retailer is also offering a year of free credit monitoring and identity theft protection to all guests who shopped in its u.s. stores. while the company is taking steps to regain consumer trust, target acknowledged that business has already taken a hit. today target lowered its earnings guidance for the fourth quarter, noting that sales did drop off after that data breach announcement was made. now many market watchers are concerned that consumer
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confidence could be shaken a little bit more broadly than just at target. this is maybe more of a widespread industry issue that has really put some fear into the consumers' minds, are they really safe going on line and putting all their information out there. other analysts however don't think the data breach will have a long-term effect on target's sales and traffic but are concerned about what it will cost the retailer once all the legal fees and technology updates are added up. but it's hard to estimate the impact of consumer behavior on a data breach of this magnitude. for "nightly business report" i'm courtney reagan. still ahead on the program, looking for stocks that are expected to grow their dividends? our market monitor tonight has some ideas.
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another remarkable day for investors, at intercept pharmaceuticals. as we told you last night, this stock nearly qaudrupled, surging more than 200 points after positive trial results for its liver drug. today the stock added another 62%. that works out to $170 a share more closing at $445.83 a share. the drugmaker's market cap has risen from $1.5 billion to nearly $9 billion in just two days. so what's so hot about interce intercept? it has no products on the market. it doesn't make money. it has just 45 employees. joining us now to talk more about this phenom john eckert a biotechnology analyst at citi. john, this is a fascinating story. i want to get into it in the time we've got. i want to start by asking a dumb question. how can something like this happen? >> it's a really unique
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situation. so this trial that read out this week really was not expected to be positive at all. this setting of liver fibrosis is one that has had failures for years and years. so everybody was really just ignoring this opportunity. and this is just -- so the outcome was just shocking. and given that neglect of paying attention to this trial, people were neglecting the opportunity that is available here. this is a very very large market. we're talking the size of the lipid market or lipid-lowering like lipitor and crestor. tens of billions of dollars market. so it was just -- people were just not paying attention because of the lack of successes in the past. >> but as tyler just said, it has its only one product. this product isn't really a product yet. it still has to go through clinical trials. i'm guessing that's going to take a couple of years. so what happens to this company in the meantime? what does it mean for investors?
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>> well, the regulatory path from this stage is unclear. this trial we haven't even seen the details of the data. so we'll have to find out what the additional paths are taken. however, the results that we saw, at least the initial findings, seem to be pretty robust. so i think that the risk that additional trials if needed would be negative are probably fairly low. so that is more of a timing issue versus is it actually going to get to the market. so the bigger question is, how big is this opportunity? and even very frequent that drug's not on the market yet but have shown great potential. >> you say millions of people, potentially billions of dollars in revenue, a drug on the scale of the lipitor and other statins. is this a company that is going to be bought out by one of the major drug companies? >> it would arguably say this is an opportunity that large pharma and biotech would be very
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interested in having. so it makes a lot of sense that this would be a take-out candidate for sure. so we have to wait and see. as you noted, there's only 25 employees. so obviously going to have to scale up and really ante up to market a drug of this size. but realistically, this is something that probably ends up better in the hands of large pharma. >> jonathan eckert, biotechnology analyst at citi, thank you. tiffany raptor's holiday report in a blue backs but it doesn't impress investors. that's where we begin tonight's market focus. sales rose 4% from november through december. driven by demand in the u.s. and asia. but the company kept its full year earnings forecast unchanged and many view that as disappointing. shares fell nearly 2% to $90.36. shares of humana on the down side. the health insurer said it now expects unhealthier and costlier
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customers than it had first predicted. the company expects higher medical bills because of the government's decision to let some people keep their existing health plans. despite that forecast human-a fell. third largest oil field services company maker hughes warned investors of a profit miss today. hughes said it had to suspend operations at one of its fa sill tis near iraq because of a protest last year. that is going to reduce its fourth quarter profit. despite that shares were up to $53.06. shares of yrc worldwide took a major hit after union workers at the trucking company rejected a contract extension. yrc said it needed that labor agreement to refinance more than $1 billion of debt and avoid bankruptcy. get that word in there, that's what happens. the stock slumps. down 13% at $13.58. our market monitor tonight says investors should balance
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the risk in their portfolios with stocks of high-quality companies with solid earnings. jason pride, director of invement strategy at glenn meeks. jason, let's get right to it. you've got a couple of stocks to tell us about. at the to be of your list is abbott labs abt. tell us why this fits your investment theme. >> well, first for the overall picture, when you're taking and we're recommending taking a little bit more risk in the international markets, a little bit more risk by underweighting fixed income and broad portfolios. to offset that one of the best things to do is provide stability within the u.s. equity market universe where valuations are a little bit above fair value and there are inexpensive, high-quality, stable opportunities that are able to deliver good long-term growth. abbott labs fits well into this camp a very reasonable 18 times earnings sort of valuation. a stable growth story where if there are any unknowns unknowns that come about in the coming year, they're going to be less
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subject to the volatility surrounding that. and the growth very generally has been a good one recently. a good number of product deliveries in the right direction. 9% total general growth for the underlying business and paying at 2.3% dividend along the way. >> your second choice is home depot. isn't a lot of the nice run there already in the stock? >> yeah, the valuation is a little bit more pronounced, a little bit higher than what we were getting with the other companies. but interesting that final third that typically comes frin creased home sales. the home market has been reasonably strong. this is a company with fairly good profit margins and about to grow from still a lower base because of what we went through over the period following the financial crisis. and that's why we think that home improvement cycle is still coming about in the company, and they're carrying through with that investment.
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>> your next stop, accenture has had a nice run from about $70 a year ago. 82 now. tell us you like it. >> well again, going back to this kind of baseline thought process, we want high profit margin businesses, stable businesses, accenture is a little bit different from the other two. it's a cheaper valuation. it's a more globally oriented business that will move a little bit more when international markets develop and emerging markets fluctuate on you. but we think the growth story is interesting there. they are pushing an overall technological consulting franchise out into those international markets and really gaining a lot of shares through that process. it's a good growth rate, good delivery yield and a nice solid 17 times normalized earnings from our perspective. >> that apparently brought in today by the government to help pull the web site the health care web site along.
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very quick thought here -- >> hope that works out. >> we hope that works out for all of our sakes. very quick thought here, should we be worried at all abouthe kind of halting, stumbling start that blue chips have had at this beginning of the year? >> we think it can occur. there's definitely always the possibility and every market year has its fluctuations up and down and its drops down lower. so we think investors should position themselves in a way that if that drop comes for some reason nobody can really figure out exactly why it would happen the tradition to add. from our perspective after the 30% run last year, the ha valuations are reasonable and probably pretty decent from this point forward. >> any other recommendations? >> i am not personally the holder of all of them and we have no investment banking relationships. >> good to know. thank you so much, jason pride, director of investment strategy at glenn meeks. bow ties demand grows.
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a bright idea now dressing for success. bow ties are kind of in these days. boy bands, rappers and nba stars are tying them on. one estimate puts bow ties at 7% of the $850 million u.s. neck wear market that was last year and up from just 4% a year ago. that's a good thing for two guys who were already living the dream before they got the bright idea to try their hand at selling bow ties. >> this is the tricky part. >> reporter: bow ties are, well, bow ties are a little bit different. if you think tying one is difficult -- >> we're good. >> reporter: imagine what it's like trying to sell them. that's what the daves, dave cramer and dave mutter, started doing in the fall of 2012. >> our customers are distinct.
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their sartorial stamps of distinction are handmade, hardly the norm. >> it's kind of nontraditional. that's exactly who we are. >> reporter: being nontraditional makes beau ties limited of vermont a fit in middlebury, perhaps best known for its liberal arts college and the poet robert frost. the guy who wrote about choosing the road less traveled. >> we were bow tie wearers. >> reporter: the daves met in business school in the 1980s. following a more traditional path from there. one a new york investment banker, the other a california management consultant. they stayed in touch over the years, keeping in mind the talks they'd had about maybe one day going into business together. >> we wanted to see whether or not we had what it took to run a small business. >> reporter: deb ventmen founded beau ties in the 1990s with her husband.
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by the early 2000s they were looking to sell the company. when the daves came calling, their broker thought they wouldn't be the right ones to tight knot with, either. >> it was a flat out no. we had to sell ourselves to the broker, then we had to sell ourselves to bill and deb. >> reporter: bill started selling bow ties out of his house in 1993. sales of roughly 3500 ties in year one grew to more than 40,000 and kennerson who had worked with the county's economic development council, was putting people to work. >> it was very, very important to us that whoever bought this building intended to keep it in vermont. >> i think a lot of other potential people would have not done that. >> reporter: the daves are adding value through web site tweaks and marketing tacks. but customer service remains on hallmark. got an old tie you'd like to convert to a beau tie? they'll do it. precision cutting and stitching are still the main draw.
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they've got stripes, plaids, and the company logo polka dots. typical price? 40 to 60 bucks. >> this was a classic tie you would have seen churchill wear. >> reporter: they've got creations like the mad scientist. they make coupummerbands and ne ties, too. but bow ties account for the majority of the business december sales are up 55% year-over-year. bill kennerson's baby, it seems, is in good hands. >> he looked at us and said my gosh, i wish i could be you when he never realized we looked at him and said we wish we were you. you built this great american business. he did it his way. i think that's why it worked. >> one of the lessons for this little case study, sometimes you don't have to start a business out of whole cloth as it were. often the path to entrepreneurial success starts by buying an existing company,
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tweaking it and make it grow. that's what the daves say they've done with beau ties, limited. they call their changes evolutionary, not revolutionary. >> should have worn a bow tie today. >> can't tie one. >> that's "nightly business report" for tonight. i'm susie gharib. >> and i'm tyler mathison. thanks for joining us. >> the street.com up to the minute stock market news and in-depth analysis. we provide objective independent ratings daily on over 4300 stocks. learn more at the street.com/nvr.
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apologizes, robert gates confesses and democrats debate income inequality tonight on "washington week." am but i'm not a bully. >> chris christie the tough hands on new jersey governor who has his eye on the white house says he was betrayed. i am embarrassed and of liated by the conduct some of the paoepeople on my te. out of a ory straight hollywood script about politics, ambition christie takes center stage. >> as a result of what has been governor hasy this a lot of explaining to do. >> while in washington another figure former e defense secretary robert gates

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