tv Nightly Business Report PBS October 17, 2014 1:00am-1:31am PDT
this is "nightly business report" with tyler mathisen and susie gharib. brought to you in part by. the street.com, feature stephanie link who shares her investment strategies, stock picks and market insights with action alerts plus the multi-million dollar portfolio she manages with jim cramer, you can learn more at the street.com/nbr. the day after stocks seemed to find their footing after the big stumble. and tonight, one of wall street's biggest bulls stands by his call on the s&p 500 by year end, he will tell you why. missing the mark, google's shares coming in weaker than expected and it could impact the trading day tomorrow. and if you're looking to get aggressive or defensive we have
investments you may want to make right now. all that and more tonight on the "nightly business report" for thursday, october 16th. good evening, everyone, drama, it defined wall street these past few days. and tomorrow there could be more of it following disappointing late-day results from google. we'll have more on that in just a moment. but first today's drama, with stocks rebounding again with early losses before mixed and little change. some encouraging economic reports out today helped to turn things around like a 14-year low and jobless claims, a better than ever boost in productions last month and solid earnings from goldman sachs, united health care and delta airlines, the dow down nearly 200 points this morning lost just 24 points by the closing bell. the nasdaq added two points and the s&p rose by a fraction. the yield on the benchmark ten-year note edged below 2%
again before closing above that level. over in the oil markets, crude oil dipped below $80 a barrel this morning but closed nearly a dollar higher, lifting the energy prices. bob pasani has more. >> what a different a day makes, well, volume today was heavy, today's activity was not nearly as frenzy as yesterday's when we saw a huge volume of sell anything trading right at the open. now stocks did start down, but unlike yesterday the lows were right at the open. we rallied immediately then dipped after 10 a.m. eastern time. the s&p was down 27 points at its worst at 10:20 a.m. and james bullar dna somewhdbullard-
fed should delay. very few believe the fed would back another round unless there is some disastrous problems in the economy, regardless, the markets moved up. the markets were stable today, and two of the other issues, weakness in europe and concerns over ebola are not close to being resolved. so nobody believes that volatility will go away. the european market, particularly greece and portugal and spain, they were notably week today with banks particularly hard hit. on ebola, there were no segments that hit the market, and costs were up today. but fear of new cases emerging are not far below the surface. for "nightly business report," i'm bob pasani at the new york stock exchange. and weeks of market turmoil with fresh scores of a two-week low. they bounced back smartly ahead
of the blue chips. but what about some of the most widely-held stock shares you may hold directly or almost certainly in some of the new funds, how have they fared? >> dominic chu has more. >> reporter: you may be holding some of the most popular stocks in america, chances are if you have an ira, a 401(k) or college savings account that holds mutual funds you probably have exposure to these big companies. according to the market data firm, the five most popular stock holdings among institutional investors are apple, microsoft, wells fargo and johnson & johnson, so how have these companied done during the market down draft? well, the dow jones has fallen around 7%, the broader market s&p has fallen by nearly 8%,
during that same time span, apple, the maker of all things ipad and phone, fell 6%, microsoft, 10%, oil giant exxon mobile dropping 8%, america's biggest mortgage lender wells fargo losing 10%, and drug and consumer products johnson & johnson dropping by 11%. basically, some of the most widely held stocks fell by more in the overall market, this has some wondering if there is a buyer opportunity or more to come ahead as we head to 2015. for "nightly business report," i'm dominic chu. so where do stocks go from here? our guests tonight have completely different answers to the question, barry banister is chief investment analyst, and jack apple, chief investment officer. let me begin with you, barry,
you have a 2300 target on the s&p by year end. it is a very bullish forecast. and you're sticking with that. tell us why. >> you mean, 450 points in 50 trading days? >> exactly. how do we get there? >> yeah, we entered this year with a flat view of 1850 for the first nine months and clearly i jumped the gun for this october which is a slippery period for the stocks. keep in mind you have the continuing growth, the free rates, accommodating policy, a fairly bullish back drop. >> look, all of that makes sense, i get it, but you have investors freaked out about ebola, about weak economies all over the world. even though you make a lot of sense they may be too fearful to buy stocks, where is that rally going to come from? >> keep in mind a lot of countries had to be dragged in to the kind of policy maneuvers
that we did. for example, europe just de-valued the euro, we did that with the dollar years ago. they just sampled to the qe form. the chinese still have a strict monetary policy. there is a lot of ammunition left to use. you have to keep in mind we've thrown a lot of bad news at the market. if there was a 7 to 10%, they're not fairly bullish. >> you have a somewhat more dour view of what may be ahead for the market, why? >> what i would say is i agree with barry on the economy. i do think there are a lot of good things going on. we got low energy prices and jobs being created. but the problem is that market became untethered from the economy just about the time that the federal reserve announced qe 3 toward the beginning of 2013.
and so as a result of that it is like as if the federal reserve is like the older brother, and the -- and we all have become so bombastic and aggressive because we have someone protecting us. well, now, as paper is ending, older brother is graduating and we have to fend for ourselves. if i look at valuation, pure simple valuation, it looks like we're still 20% over-valued. and the last few months have been fuelled by liquidity, and appears to be turning downward. >> jack, you say you're sanguine, you say you're 20% over-valued. but if you're sanguine, do you think we might have a 20% decline? >> well, i would say there are a couple of ways we can close that
20% gap. i mean, we can continue to get liquidity into the market place and have fundamental earnings and revenues catch up. i mean, granted this quarter, for example, analysts are expecting roughly 5.5% earnings growth on 4.5 revenue growth. that should be pretty achievable. if we keep chipping away like that and have stocks trade sideways we can close that valuation gap without much pain. >> barry, as recently as august you were very bearish, one of the most bearish forecasters about stocks. could you see a scenario that jack was talking about, that stocks come back down 20%? >> yeah, it was kind of remarkable through august with having a flat view through the year 2018 was considered very bearish. but big up years are usually not followed by large down years. and one thing i would draw
attention to is the whole concept of seasonality. the market is remarkable in the sense that the six months from november to april has historically been 30 times more rewarding on a cumulative basis than the six months, may to october. mid-terms, especially second mid-terms and then 2015 will be the third presidential cycle year. those returns have been twice as high as all the other years for the last 65 years. so it is pretty hard to be bullish going into the later part of this year and early 2015. >> all right. well, two different views, we'll see how it all plays out. barry and jack, thank you for joining us. barry bannister, jack apelin. and more on the surprising third quarter earnings with google after the bell, top and bottom line misses disappointing numbers on paid clicks per add. earnings per share were 18% short of estimates after some
adjustments. revenues topped $16 billion up from last year but just missed the more aggressive forecast. the investors didn't miss that. the shares were down initially as much as 6% after that report but they climbed back a bit as you see there since then. morgan brennan joins us now with the one big take-away from the numbers. >> well, it is paid clicks, the number you just mentioned and the fact we see google's core growth continue to slow down. how do you measure that, it's paid clicks, 17% increase versus last year, analysts expected it to be a 23% increase, in recent quarters we saw that number as high as 30% so that is why you are seeing the stock move lower in after hours. the one brave spot is the cost per click, the revenue brought in on those clicks actually only declined 2%, analysts expected a decline of 4% which is closer to what we've seen in recent quarters. even though that was a negative
number that was the one bright spot. >> very quick, what is a paid click? >> so you're talking about the total number of advertising clicks, what people are clicking on when they go to google. >> they're hitting the ads, seeing the ads. >> and that is google's core business, we talk about drones -- but that is it. >> morgan, thank you very much, morgan brennan. here is another story over at goldman sachs which reported blowout earnings before the opening bell today. profits shot up 50% to more than $2 billion thanks to a pickup in bond trading. the ceo says that an improving u.s. economy helped the company's performance. >> at this point it is pretty much better in the united states and not better in very many other places. but still the united states is an important market for us and that kind of confidence is creating more transactions. if you have more mna you create more financing and securities, securities trading. >> but like a lot of banks over
the past weeks, shares of goldman sachs were down 2.5%. also the dow component united health care which beat forecasts on earnings per share. revenues, though, less than expected because fewer enrollees went to the doctor last year. and the profit outlook is looking up thanks to medical costs. with that, shares of unh closed today 4% higher. still ahead is the ebola crisis keeping travellers from flying and hitting the airlines where it hurts in bookings for future flights. a report from dallas/ft. worth airport is next.
. there was not the same kind of buzz you see for an iphone as apple introduced the new thinner, faster ipad air 2 tablet which also has a fingerprint id sensor instead of a pass code. apple ceo tim cook unveiled it today, but was most excited about the apple pay, the new electronic payment system. apple says it already signed up five apple banks. nonetheless shares finished the day lower. one big decline in the market today was netflix. shares of the streaming video service plummeting 19% today, $86 a share. yesterday earnings were above wall street's expectations but subscriber growth disappointed and hbo announced they are entering the business.
>> as netflix shares plummeted, the numbers were defended that most concerned investors, a shortfall is subscriber growth, 700,000 fewer than forecasts, saying it was not due to competition but a lack of big hits and a price increase in may. >> with a little bit higher prices you have a little bit fewer subscribers, so that is our sense of it. but we can't be 100% sure, we have so much benefit from orange q 2 and 3, but that is what we think. >> daniel ernst agrees. >> listen, i'm not going to pound the table today, they actually missed subscribers, the subscriber growth is the key to the story, but they will be fine. >> hbo is key to launching the service, despite pressing on how bad the competition could be for netflix he insisted he is not concerned. >> you know, we compete with
them like baseball and football compete. i mean, you know, people watch both, we have different shows. >> but if of people have to choose between the two of them will they choose hbo over netflix? >> no, way, they will choose netflix. >> that is why they are investing so much in movies, with adam sandaler and the crouching tiger debuting on the same day it hit imax theaters. >> it is important to give the consumers what they want, consumers, they are tired of waiting. on movies i have to wait for months and months as it does the theater. we want to provide consumers what they want. we're not anti-theater. >> with the netflix expanding to kids' programs, hastings says that movies are natural evolution. he says they have plenty of cash. in silicon valley. another content company
cutting the cord, we begin tonight's focus there. cbs is launching its own live streaming service offering episodes from current shows to customers for about $6 a month but it will not stream nfl games. this service is the first of its kind in the networks, shares rose slightly to 51.15 dollars. and shares of barbie continuing to decline, the toy maker's american girl doll business is struggling which could also be an issue for the company. shares fell 3% to $29.62. it was a different story for winnebago, the company saw the fiscal fourth quarter earnings, improving profitability. the rv maker has seen sales improve in recent quarters as it introduced new products to dealers. despite that, shares were down a
bit, 21.60 was the close there. shares of chesapeake soaring on news of gas assets to southwestern virginia to $5.5 billion, one of the biggest investments ever for the company. the stock surged 17% to $20.79. on capitol hill today, lawmakers blasted the government's response to the latest u.s. ebola cases at a house hearing. some even called for a travel ban from the hardest-hit countries in west africa. dr. tom frieden, director for the u.s. centers for disease control assured members of congress that the virus can be controlled. meanwhile, delta airlines which has more flights from the u.s. to africa than any other u.s. airline says there has been no impact on bookings from the ebola crisis so far. delta's ceo richard anderson says he is confident that the u.s. government and his company are handling the situation the
right way. >> we monitor it on a daily basis and we have not seen any changes in the booking trends. >> the carrier says it has a lot of experience dealing with other virus and illnesses when it cleans its planes. but the case of the dallas worker traveling on a plane just a day before being diagnosed with ebola has millions of fliers questioning if they should take more precautions while they're in the air. the cdc says that flying is safe because ebola is not an airborne virus. but fliers are not convinced. >> he knows that the surgical gloves and mask could seem like an over-reaction to the ebola virus, but he says you can't be too cautious when you're packed in a plane with other travellers. >> how can they sufficiently regulate it. i was protecting myself from it.
>> he and other travellers are worried but not panicked by the latest ebola case which involved health care worker amber vinson who took a frontier flight from cleveland to dallas with an elevated temperature. the cdc gave vinson the okay to fly because she was not at a stage of being contagious. but other passengers on vinson's flight are not convinced they were safe. >> was she sitting behind me? is there a possibility that she sneezed on me? i at this point would like to hear back from the cdc, i called and did what i was told to do. >> frontier took the plane vinson flew out of service, cleaned it and replaced some of the carpeting. the cdc said these extraordinary actions went beyond cdc recommendations. these steps were taken out of concern for the safety of our customers and employees. passengers say frontier may be doing everything it can to protect them but they doubt the cdc has a handle on how the
virus is spread. >> i'm not too concerned, though, i do think the cdc is mishandling this. they didn't have a grip on this from the start. they were very slow to react on it. >> we will be trying to not touch anybody or get real close to anybody we don't know. there is too many people getting it they're not t containing it all. >> despite travellers having concerns about the ebola virus, airlines have not seen a drop in future bookings for future flights. welcome news for carriers preparing for a busy holiday travel season. phil lebeau, "nightly business report," dallas. coming up, get aggressive or stay defensive. investment pro mike holland has your tips to suit your in investigating mood.
one question hanging over every investor right now is what do i do with my money? our next guest is a veteran investor and has suggestions no matter what your personality mood is. and he is mike holland, here with some news. mike, i apologize for calling you a veteran, that means we're old guys, let's talk a little bit. if i want to make an aggressive move here and if i think this may be the bottom of the market dive and i think better days will come where would you consider putting money? >> if you swing to swing for the fence, there is no place to go but the social media stocks, twitter, the chinese internet companies like alibaba. this is getting in the batter's box and going for the fence. you can strike out. don't want to try this at home.
you want professionals to do it. but if you really want to go for the fence, the chinese internet stocks like alibaba, for example, and the carnage today did extremely well. these are the kind of companies if you say it is the bottom it will get better this time of year. these stocks tend to do better in that environment, you make a lot of money. >> mike, i'm a lot more cautious. if there were other investors like me that wanted to just play it safe a little bit, want some income. what would you want for their portfolio? >> you know in this market, susie, it is actually quite easy for the viewers. you can look at companies like apple, intel, exxon mobile, don't turn the dial, these companies if you put money into those four companies as opposed to putting 100 into a ten had-year treasury you get 50% more income out of the companies than you do out of the ten-year treasury. and those companies grow their
dividends faster than inflation. so for me the company dividends become better because the yields are going up. >> now, let's flip the coin and say i want to go play defense right now. i'm concerned. is my basic move to move into cash or are there other ways where i could be a defensive investor and maybe leave some possibility of profit even as i get defensive? >> that is for most of us, when we're nervous about the market. most people are right now. most of the viewers, 2008 and 2009, this is a crazy business. when you say i'm really conservative, i really don't want to lose any money, cash is absolutely a very good investment, particularly in low inflationary times. they're not stealing your money because inflation is not eating it away. when you have low inflation, the fed worry about deflation cash is a very superior investment in that environment. but having 100% to me in anything, you and me are survivors, i don't think you would have 100%, so i would buy
some of the dividend stocks, 10, 20, 30% and the rest in cash. >> mike, you have been a survivor, years and years of managing money. how nervous are you right now and what is your guiding principle? >> susie, when things get this crazy i step back and take a type breath and say what are the facts? the facts are, as we heard from the two other speakers at the beginning of the program things are slowing down. they're not awful, the headlines are always scary, we have had scary headlines since i've been in the. but the market psychology is already active, people are acting on the negativity. but i would say don't do anything crazy, don't go all into cash or stocks. i would take a very balanced approach. and if it goes down, buy some more. >> mike holland, the veteran. >> and don't do anything crazy,
tyler. that is "nightly business report," i'm susie gharib, thank you for joining us. and thank you from me, i'm tyler mathisen, we'll see you back here tomorrow night. "nightly business report" has been brought to you in part by. the street.com, feature stephanie link who shares her investment strategies, stock picks and market insights with action alerts plus the multi-million dollar portfolio she manages with jim cramer. you can learn more at the street.com sla street.com/nbr
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