tv Nightly Business Report PBS January 30, 2014 1:00am-1:31am PST
this is "nightly business report" with tyler mathisen and susie gharib. brought to you in part by -- >> the street.com. founded by jim cramer, the street.com is an independent source for stock market analysis. cramer's action alerts plus service is home to his multimillion dollar portfolio. you can learn more at the street.com/nbr. stocks skid. the market goes from bad to worse after the federal reserve decides to stick with its strategy to wind down its stimulus. despite the recent emerging market turmoil. strong medicine but not strong enough as turkey's massive rate hike fails to stabilize its currency. now the business community in istanbul is frustrated and looking for answers. losing altitude. boeing the world's largest
planemaker says profits this year won't be as strong as expected. why, and should investors be concerned. we have all that and more tonight on "nightly business report" for wednesday, january 29th. good evening, everyone, and welcome. the weather outside continues to feel like, well, january and why not it is january. but inside in trading rooms and on computer screens all across the country it feels more like november. specifically today's closing stock market numbers do. the dow had its lowest close since november 7th. the s & p 500 since november 12th. trading was choppy, volatility high. ongoing worries about emerging market economies and currencies contributed to the slide but so did a downbeat outlook from the dow component boeing. but the third part of the triple whammy came from the federal reserve. its policy setters announced a further $10 billion reduction in its stimulus bond buying program. on the day the dow fell more than 1% to 15,738.
the nasdaq also tumbled and s & p finished at 1774. in every other way, though, natural gas it finished at a four-year high up 10%. as tyler just said. the federal reserve stuck to its plan to trim back its bond-buying program. wrapping up a two-day policy meeting and ben bernanke's lasts one as chairman of the fed, the central bank seemed unsafazed i the recent emerging markets. . neither recent emerging market currency turmoil in turkey and elsewhere nor the disappointing december jobs report was enough to get the federal reserve to change its mind about trimming its bond buying program. at ben bernanke's last meeting as chairman of the federal reserve, monetary policymakers were unanimous to reduce purchases by northerly $10 billion to 65 billion per month starting in february. leading analysts were not
surprised. >> we couldn't see any real way that they would have stopped the process because of some increased volatility in e.m. and recent selling in the s & p. it just didn't make a lot of sense. >> reporter: the economy appears to be a mixed bag for monetary policymakers. on the positive side, growth in economic activity picked up in recent quarters with both business investment and household spending improving. but there are notes of caution about the mixed job market indicators. and the housing recovery that has slowed somewhat in the fed's view. >> is in is more of a macro strategy the fed is trying to employ. i think they're just trying to get out of the center stage here with quantitative easing and go back to their traditional monetary policy. >> reporter: mon monetary policymake -- for "nightly busi report" i'm hampton pearson in
washington. >> joining us now to talk more about what's next for the fed and the u.s. economy is allan blinder, former vice-chairman of the board of governors at the federal reserve and now professor of economics at princeton. welcome. >> good to be here. >> is the fed doing the right thing at the right pace and dca the economy continue to expand? >> the economy can continue to expand. the fed is doing what it can with quantitative easing, but nobody including the fed this this is a first order importance in how fast the economy is growing. we're talking the decimal point or beyond. it can keep growing with the fed withdrawing stimulus. is it doing it exactly the right time and pace? nobody knows the answer to that. i have to admit some sympathies with eric rosengrin who dissented on the grounds they were starting too easy.
this is a close call, it's not a very big difference one way or another. >> so alan, the fed tapers, which is pretty much what the markets were expecting. and we see the bond prices go up and the stock market goes down. what is that telling us? >> it tells me this is not because of a surprise at the fed. i think everybody on the planet that follows the fed was expecting the fed to say and do more or less exactly what it said and did. so you didn't get any surprise from constitution avenue. there is negative economic news if you interpret it the right way coming out of the emerging markets. frankly, as i look at it, and i think as the fed looks at it, it's hard to see what's going on in turkey and argentina and elsewhere damaging the growth prospects in the united states in serious way or affecting u.s. inflation in any serious way. so the fed looks at that and
thinks it's too bad for these countries, it would be nice fit was better, but it's not really that relevant to the united states. >> i was going to ask you about the emerging markets but you've already answered it. i'll turn to the question of inflation versus deflation. which is a bigger risk right now? >> probably inflation by a very narrow margin. i don't think we're much -- we have had some episodes in the last several years where deflation started looking like the real worry. maybe that will come back. but it doesn't look that way now. on the other hand, inflation is running below the fed's target. when we say inflation we usually mean inflation that goes too high. i don't think they're very worried about that right now. at least most of them. the fed superhawks are always worried about inflation. >> let me ask you that question a different way. some people have been saying that janet yellin will have to focus more on inflation than
jobs. what is your thought on that? >> i don't agree with that. that could come true if inflation starts rising, right? inflation has been in the ones. the fed's target is two. and the fed has warned that if it gets over two and a half all bets are off. but that seems remote. it's not impossible. it could happen. but it seems remote. so i don't think at least early in janet yellin's tenure as fed chair she's going to be worried about combatting inflation. i think she's going to be more worried about a kind of a soggy labor market despite the fact that the unemployment rate keeps going down. >> give me a final thought if you wouldn't mind on the tenure of ben bernanke. what will his legacy be? how will he be remembered? >> i think he's going to be remembered for several things. first, saving the economy from oblivion. now, it got really bad, but it could have been a lot worse without a lot of the creative and imaginative things that the bernanke fed did. secondly, with continuing that imagination, that creativity,
you might even call it bravery was such a weak recovery and trying to do very unusual, let's say, and unprecedented things like qe-2, qe 3, operation twists, to try to give the economy some life. >> allan blinder thank you. as always great to see you. former vice-chairman of the board of governors at the federal reserve. more now on the crisis in turkey. despite a massive hike in interest rates that we told you about last night, the struggling turkish lira failed to make sizeable gains today. business leaders are hoping for some stability in the turkish economy. michelle caruso-cabrera has more. >> reporter: orlando sold $150 million worth of industrial air conditioners last year. he imports the parts for those air conditioners from all over the world. he's frustrated, though, because his overseas parts are costing him more nearly every single
day. his country's currency, the turkish lira, in a steady decline since may and now down 30%. aaron killis who runs a textile business is in the same boat. his most trusted work tool lately, an app on his phone which helps him monitor the lira. >> every day we check the currencies. going up. two hours you come here it was 213 now 221. >> how often are you checking the currency? >> for the last month every hour. >> every hour. that big an impact. >> the turkish lira got strong after turkey's central bank held an emergency meeting late in the night and raised interest rates by as much as 5 percentage points. a huge move in a world accustomed to central banks moving by a quarter of a percent or half at most. the country's finance minister appeared on national television to say it wouldn't necessarily hurt the economy and it was important for the central bank to act independently.
the hike in rates came despite pressure from the country's prime minister who feels rising rates will hurt the economy before key elections in march. today he blamed an international conspiracy of bankers and the media for the country's current financial troubles. back at his textile plant, aaron killis doesn't want to blame anyone, he wants to get back to focusing on his business rather than the currency. >> just the decision you have to make, buy, sell, just make investments. every day you have to check it. it's your business investment. >> reporter: a business investment in a tenuous place at a tenuous time. for "nightly business report," michelle caruso-cabrera, istanbul, turkey. earlier we told you about boeing's weaker forecast for the year ahead despite wrapping up a record year for aircraft deliveries and orders. boeing was the biggest decliner in the dow today,y, falling mor than 5% on that lower outlook. accounting for about a quarter of the dow's drop today. so why the stormy skies ahead
for the aircraftmaker? phil lebeau has our report. >> reporter: after a 2013 that went from very bad to very good, investors in boeing are wondering if the aerospace giant is losing altitude. shares of boeing, which soared over the last 12 months, got clobbered when the company said 2014 earnings would come in 5 to 7% below analyst expectations. why the difference? boeing says its cash flow will be hit by greater taxes, a one-time signing bonus to members of the machinist union and other factors. boeing may be cautious about its earnings this year, but it's still expecting to deliver a record number of new planes. leading the way, the 737. by mid year boeing will crank out 42 per month. meanwhile, the company is still wrestling with challenges building the 787 dream liner at its plants in charleston, south carolina. as for boeing's next plane, the 777 x, planning is under way for
where that plane will be assembled. it will be in the seattle area following a new ten-year labor contract between the machinist union and boeing. >> we're exiting a period where every few years we had a dramatic event. and we're entering a period of ten years of stability. >> reporter: keep in mind boeing's backlog of orders stands at an all-time high of $441 billion, which means on some models airlines placing new orders may not be flying those planes until the end of the decade. phil lebeau, "nightly business report," chicago. still ahead, president obama is creating a new way to save for retirement. how does it work and will it encourage more people to start building a nest egg?
facebook shares were on fire late today thanks to stunning quarterly results. profits, revenues and the number of users all came in better than expected. the social networking giant earned 31 cents a share. that was 4 cents ahead of estimates. revenue in the fourth quarter shot up 63%, topping forecasts as revenue from mobile advertising now accounts for more than half of total sales. a she will will rogers joins us now from the nasdaq exchange for more on facebook. sheila, as you looked over all the numbers what's the one big takeaway you see in this report? >> reporter: the one key takeaway is that facebook has really figured out the seek republican set when it comes to monetizing social media, especially the mobile aspect of it. when facebook first came on the scene a lot of questions how is it going to monetize its users.
advertisers really flocked to the platform would facebook be effective? this really seems to have thrown cold water on all those doubts. facebook showing it's at the forefront when it comes to digital advertising. another thing a lot of people have been questioning is facebook losing its cool when it comes to users. in the past year facebook said it added 170 million users to the platform. >> sheila, stay there. there's a deal to talk about tonight. china's lenovo apparently buying google's motorola handset division for almost $3 billion. that unit makes the motox and g smart phones. google bought the company not too long ago, in 2011 in fact for $12 billion, little more than that. that 12 billion is more than four times now the amount it is said to be selling the unit for. this is going to end google's move into hardware. sheila, what do you make of this report and what has been the reaction in google stock early today? >> reporter: tyler, let me tell
you. shareholderers are really applauding the move. google stock has climbed higher in the after the hours. there's a lot of skepticism when they made the move. investors are happy they're going to focus on their core business. if there was one key take away from this, even great companies can make mistakes. google kind of acknowledging it's made a mistake by buying this business and now cutting its losses. >> sheila, thank you very much. reporting after the bell today, qualcomm whose snap dragon mobile chips are used by both apple and samsung in their smart phones. qualcomm pulled in 1.26 per share, 1.26 in the first quarter. their first fiscal quarter. a top line beat of 8 cents. revenue was 10% higher than a year ago but still a little less than forecast. shares of qualcomm popped initially on the report, but there's one thing that qualcomm is counting on for future growth. josh lipton explains.
>> reporter: if you use a smartphone from apple or samsung, then you rely on qualcomm's technology. its chips are the brains that make smartphones smart. the company's chips are in 70% of smartphones around the world. analysts say it's china that holds the key to qualcomm's future. in the second half of the year, china mobile, the world's largest carrier, will continue to roll out its new wireless 4 g network, a cell phone standard in which qualcomm is the cheerleader. >> so china mobile rolling out the networks this year and volumes ramping this year. that's a new incremental growth driver to qualcomm's business. >> reporter: the potential for qualcomm in china is huge. according to market researcher i.h.s., the 4 g smartphone market in china is set for explosive 1500% growth this year. analysts say qualcomm is well-poised to capitalize on the opportunity. >> they have over 95% market
share by units of the chips that go into lte handsets worldwide. so that maturity is going to be a differentiator for them. >> reporter: but there are also risks for qualcomm in china. reports say regulators there arr threatening the company with a $1 billion anti-trust fine. the details aren't clear, but he says it looks like the chinese government is trying to win concessions from qualcomm as it rolls out faster mobile networks. low-cost tablets and smart phones made in china are also pressuring qualcomm. the competition is coming from chinese chip companies such as rock chip and all winner. mark sears with rbc is looking for a possible quote snowden effect. companies doing business in china such as cisco has said that nsa revelations by edward snowden have spooked customers there. the question is whether qualcomm could suffer from anti-american sentiment. qualcomm is in negotiations with the chinese government over
licensing fees over its technology and possible anti-trust fines. the company offered no comment on the status of those talks. josh lipton, "nightly business report," silicon valley. shares get a boost even though profits at the health care industry plucked. well point customers raced to use medical services before policies were canceled at the end of 2013, which is why profits fell. but the company gave an optimistic enrollment outlook saying it expects applicants in the affordable care act plan will be in the age and demographic range that it anticipated. well point shares rose more than 1% to $85.37. shares of dow chemical surged and that's thanks to good earnings. on top of that news that the company is hiking its dividend and tripling its share buy back program. dow was recently targeted by activist investor dan loge of third point capital. he's been urging the company to spin off its petrochemical unit.
shares jumped almost 4% to $44.73. earnings at jetblue airway saturday on improved passenger traffic and stronger revenue. but recent bad weather and flight cancellations prompted the airline to slash its revenue outlook for this quarter. that worried investors and sent shares down almost 3% to $8.50 even. and shares of the auction house sothebys which trade under bid were lower today. the climb came despite news that bid will return more than $450 million to shareholders through a special dividend and buy back program. investors put the paddles down nonetheless. the stock was off slightly to $48.74. moving from stocks to big news in the world of fixed income. pemco the world's largest bond fund manager has to fill some big shoes ahead of the announced departure of their ceo. bill growth appointed four new deputy chief investment officers to help replace him. but growth still doesn't appear
to know where his high-profile colleague is headed next. >> all we know is that he does have a new job. he said that if one develops it won't be in the financial industry. so that's an important consideration. so wall street and the city can breathe easier, i guess. where do we think it will wind up in 2015 and beyond? well, certainly somewhere i think at elevated circles of influence. >> olarian is scheduled to leave pemco in mid march. the house bassed that bipartisan $1 trillion farm bill today. it is the first comprehensive legislation covering everything from federal assistance for farmers to crop insurance to food stamps since 2008. the measure now heads to the senate where a vote is expected as early as next week. a lot of talk and curiosity today about president obama's proposal for a new simpler way for americans to save for retirement in his state-of-the-union address last night, the president announced a
retirement savings plan that he called my r.a. sharon epperson explains how it works. >> reporter:won a visit to western pennsylvania steel plant, president obama today signed an executive order creating in new plan designed to give those with no retirement savings and no workplace retirement plan a place to start. the president first announced program called my r.a. in his state-of-the-union speech. and today he hit the road to promote it. >> those of you who don't have a 401 k on the job, don't have a pension on the job, don't have a mechanism to start saving especially younger workers, you can get started now. and in an emergency you can withdraw contributions without paying a penalty. so it's a pretty good deal. >> reporter: as long as your 2014 income is less than $129,000, 191,000 for married couples, you can contribute to a my r.a. it will work like a roth i.r.a.
earnings and contributions grow tax free. you can withdraw contributions tax free, too. for savers worried about the volatility in the financial market, the money you put into a my r.a., your principal is protected, guaranteed by the u.s. government. and invested in the government securities investment fund, which is currently available to federal workers. you can open a my r.a. through your employer with as little as $25. once your balance reaches $15,000, you can roll it over into a privately managed i.r.a. >> $25 here isn't going to make or break someone's retirement account but it will start the ball rolling early on and encourage healthy savings habits. y reporter: some say it would be more effective paired with automatic savings options. the big is how many employers will want to offer the my r.a. >> this is a good idea if it's paired with some other policy
proposals that are out there that make it more attractive for employers to offer retirement savings plans. and we do have to pay attention to what employers need. >> reporter: the treasury department says a pilot my r.a. program will launch with an initial set of companies by the end of the year. and will later be offered to more workers through their employers. for "nightly business report," i'm sharon epperson. >> coming up as football fans converge on the new york city region for the super bowl, many homeowners are finding ways to cash in on the big game. and finally tonight, just four days to go until the super bowl at met life stadium in new
jersey. it's the first time the big game is being played outdoors in a cold weather state, but some local homeowners are warming up to the idea of renting out their houses to fans headed to the game. dominic chu has our story. >> reporter: new york and new jersey homeowners are hoping to cash in on the super bowl in the garden state. an increasing number of homeowners are offering to rent out their homes and apartments on web sites like home away and air b and b to football fans planning a trip to the big game. >> many people feel opportunistically they can make some money during that period. >> reporter: homeowner peter tishy is charging $1,000 per night to rent his home. that's $600 more than what he usually charges. >> the hotels and the hotels are going to be completely booked in this area. people just want to stay close to the stadium. and my house i believe is located perfect location. >> reporter: home away says they're seeing a 221% increase
in home rentals in the region during the super bowl period. >> hotel prices have really gone through the roof for that small window of time. and so you see the same thing happening with home rental prices as well. >> reporter: this six-bedroom super bowl vacation dream home complete with a personal chef is going for $119,500 per week. tickets to the game not included. trip adviser estimates that fans staying in hotels within ten miles of the stadium can expect to pay more than $400 per night, that is if they can still find a room. >> a typical three or four-bedroom house might sleep up to six people. people also have a kitchen so they can save money on food. but nighttime instead of being distributed in a different hotel rooms they have a place that they can gather. >> reporter: factors like that make renting a house an appealing option for many, especially for those traveling in groups. for "nightly business report," i'm dominic chu. >> got to get the tickets. >> yeah. got to get the tickets.
>> that's "nightly business report" for tonight. i'm susie gharib. thanks for joining us. >> and i'm tyler mathisen. thanks from me as well. have a great evening, everybody. we'll hope to see you back here tomorrow night. >> "nightly business report" has been brought to you in part by -- >> the street.com. found by jim cramer, the street.com is an independent source for stock market analysis. cramer's action alerts plus service is home to his multimillion dollar portfolio. you can learn more at the street.com/nbr.
tonight on "quest" -- for most people, corals evoke images of vast tropical reefs. but gardens of spectacular corals also thrive in the deepest parts of the ocean. now, scientists are rushing to learn more about these mysterious creatures before they disappear. and find out how bay area engineers are using laser technology to make virtual recreations of the world's greatest monuments. support for "quest" is provided by -- the s. d. bechtel, jr. foundation, the david b. gold foundation,