tv Nightly Business Report PBS November 28, 2014 7:00pm-7:31pm PST
this is "nightly business report" with tyler mathisen and susie gharib. funded in part by thestreet.com and action alerts plus with jim cramer and fellow portfolio manager stephanie lynch share their investment strategy, stock picks and market insight. you can learn more at thestreet.com/nbr. >> crude crushed. energy stocks slammed. the industry rattled by opec's decision not to change output. and that sent the sector in bear market territory. and black friday frenzy. bargain hunters hit the malls. but are they putting their money where their feet are? all that and more tonight on "nightly business report" for friday. november 27th. and good evening everyone and welcome. susie gharib is off today. i hope you all had a very
pleasant thanksgiving holiday. the dow was able to squeeze out just enough of a game to notch a fresh record close on a holiday shortened day on wall street. but, the big story of the day was another tumble. and i do mean a tumble in the price of oil. rattling the energy sector and keeping equities from making even more gains today. today's big drop in crude prices. comes after opec ministers voted on thursday not to cut production levels, despite lower demand and an oversupply on the market. some analysts expected the cartel to cut production to help end a month-long free-fall in oil prices. they are down about 40% just since june. but no cuts came, and oil prices spilled like they had sprung a leak. domestic crude off 10% today, tanking at $7.54 to close at a 4 1/2 year low of $66.15 a barrel. the international bench mark
brent fell another $2 to a fresh multiyear low of $70.15 a barrel. now with the price of oil plunging how bad could it get in the energy sectors? bertha coombs has more. >> reporter: opec's decision to leave its production levels unchanged at 30 million barrels a day is certain to unleash volatility in this market until somebody blinks. analysts say at this point opec is already producing more than what the market needs. and more than its own production level of 30 million barrels a day. number traders say if we start to see any kind of pickup in demand because of low prices that might bring in some stability. but overall a number of players say expect a lot of volatility in this market. opec's job in the past has been to bring stability to the market by cutting prices. but at this point they brought prices down to a five-year low and for a number of players,
whether it's investors, or producers, that's going to mean an awful lot of uncertainty and a lot more pain to the downside. >> now we're seeing a totally different market where the swing in prices could be $50, $60 a barrel on a forward basis. so this is going to lead to a rethinking of the way people operate in industry. >> for now consumers and the economy certainly benefiting from lower oil prices because it results in lower prices at the gas pump. but longer-term analysts say it could also pose a problem for the economy. if producers in areas in the country where they employ a lot of people just can't produce oil profitably anymore. they'll have to cut back. and that could mean a loss of jobs. bertha coombs, "nightly business report," new and here's a look at how some of the biggers energy plays ended today after that 10% drop in crude. the oil majors among the biggest
decliners, chevron the biggest single loser in the dow. down nearly 5.5%. exxon mobil off 4%. bp and conoco phillips also moving decidedly loper. some are the hardest-hit shale oil producers like sanchez and clayton williams fell more than 25% today. and look at laredo down 32.25%. the selling didn't stop there. producers of oil, oil field services companies, they fell hard. continental, marathon, transocean, seeing sharp declines along with slum berger. but with jet fuel and airlines' biggest expense shares of the big carriers, you know what they did. they moved higher with united, continental and american up 8%, delta up more than 5%, jetblue up 7 2/3 percent. shippers, u.p.s. and fedex also seeing some very nice gains today. so should investors expect more near-term volatility in the oil market? our guest tonight says you can
bet on it. janle nelson is portfolio analyst with rbc wealth management. welcome and happy day after thanksgiving. i want to talk to you broadly about the market. but let's begin with oil. how close does your spidey sense tell you we are to that point at which oil company shares are a buy, and the oil price might turn north? >> well, i think what we need to see, ty, is we need to see a response to the outlook for 2015 by the exploration and production companies. i just attended a conference down south and my sense at that conference was there was a lot of complacency. nothing gets a company's attention more than when the commodity price falls 10% in one day. >> let's go to a broader question about where the markets you think are headed. my notes tell me that you think we're in the middle or the early innings, i should say, of a secular bull market that you
think began in 2012 and '13. what does that look like? and does that mean necessarily that we won't have 10%, 15% declines within that context? >> well, exactly. when we say a secular bull market what we mean is that the markets get substantially better over time. bull markets start when everyone is still crying in their beer at the end of the day. what we believe is happening is that the trend toward energy self-sufficiency, the valuation of the markets, and the fact that most people are still skeptical of equities means that we're on a trend after 15, 16 years in a bear market on a secular basis, towards better underlying markets over time. >> let's go to a couple of your choices, if we might. and i guess your framework here is, if oil prices start to turn up, if oil prices remain relatively stable, or if oil prices decline, so let's start
with eog resources, which is the assumption that oil prices are at or near a bottom and start too move back. why do you like that one? and what's your price target on it? >> fundamentally, what we like about eog resources is their free cash flow positive so they're self-funding. they're able to grow acreage, without make being acquisitions. thirdly their in a position where they have a footprint in the major core acreage in the bakken and the eagleford and even at $40 a barrel oil we see them still getting a 10% overall return. at present they're getting 100% return on their core wells. we think the stock can trade well above where it trades currently. perhaps as much as $20 per share higher. bottom line, we think the company is quality. you want to buy quality because quality gets thrown out in the bathwater, with the stuff that isn't so quality. >> i've heard a lot of people
talk about the capital structures and the level of debt that some of the shale places have. this one you believe has a very strong and stable capital structure. >> absolutely. >> oil prices continue to decline. your second pick would be walmart. had some nice runs here lately. >> well, you know, as a girl from minneapolis, it's not often that i would recommend walmart. but here's what walmart is doing. one, they're getting great opportunity from e commerce. their investments are working. secondly, they're opening smaller stores in the most recent quarter, comp store sales were up 5.6%. versus just one half of one percent for the whole. and perhaps most importantly the demographic for people who make $40,000 a year or less, low gas prices at the pump means more money spent at walmart. >> and trading range pick is lennar. the housing company. quick thought on that one. >> bottom line we believe that the housing sector is still in
recovery. tepid recovery, but in recovery. lennar has one of the best returns on invested capital in the space. secondly, over the past six years, when most of its peers were selling land, they were acquiring land. and we think that they are a key company in what our industry analysts have termed the golden horseshoe. california, oklahoma, texas, arizona, florida, georgia, segments of the market that got hurt the most. >> right. >> they have done a great job picking up acreage. >> all right, we've got to leave it there. now you get busy and go to mall of america there in minneapolis. >> i will do that. >> all right. >> absolutely. >> janle nelson with rbc capital management. let's take a look at wall street. stock exchanges closed early this friday after thanksgiving ending the session mixed. little change generally but again the dow gained just enough to finish at a new all-time high. you never get tired of saying that. the dow up just a fraction but it was enough. the nasdaq added four points and
the s&p on this mixed day lower by five. that translates into six straight weeks of gains for all three dust indexes and for the just completed month of november. the blue chip dow and the subpoena were each up about 2.5%. the nasdaq fared even better up 3.5%. and that index is now just 5% or so below an all-time high of its own. some of the big winners on wall street today were retailers. many attributing it to the fall in oil prices. but the move coincides with the other big story today, of course. and that's black friday. the unofficial start to the holiday shopping season. and with the major stock averages at or near all-time highs gas prices at four-year lows and a brightish labor market. chief executives at some of the nation's biggest retailers are looking for strong sales. >> the combination of rising consumer confidence, the change that's taking place from an employment standpoint and the fact of the matter is gas does cost a lot less than it did a
year ago. so i thinked combination of those factors is certainly boding well for the retail environment as we enter this important holiday season. >> it's very value driven. you know, whether it be a $10, you know, coaster, or a $20 sheet set that's what people are gravitating toward. they're clearly gravitating toward the values. >> over the next few weeks our sales will grow every single week right up to the week before christmas. >> macy's, target, along with walmart and jcpenney just a few of the retailers that finished the day higher. and not by just a little bit. the national retail federation forecast 140 million americans will do some kind of shopping over this long holiday weekend and it looked like most of them got things started last night and continued into today as people rushed to take advantage of some black friday bargains. >> the crowd today were not as too bad like every other year. >> it's all about the deals.
>> i'm not finding as big of deals. >> after today i plan to do more shopping. >> after tonight i think i'm done. i think i'm good. >> done. and courtney reagan joins us from the mall at fairfield commons in dayton, ohio. courtny, how busy is it today? >> you know, i have to tell you, tyler, as the day has worn on the crowds have actually gotten a little bigger. i think overnight, and in the late thanksgiving day hours is when the crowds hit up the big box stores. that's the walmart, targets, best buys of the world for those door buster specials. some of those electronic deals. and then there was a lull in the crowd overnight, and as the morning and afternoon has worn on here, at the mall at fairfield commons, we've seen the traffic pick up, about at the level that i saw last year on this day when i was here at this very place. but i do think the traffic levels at the big box retailers was a little bit higher than what i saw particularly at the one walmart location that i visited. lots of full carts. i counted 112 carts in line at one point. i actually lost count.
i couldn't get to the total end of the line so there were more than 112. >> 112 carts in line. that is my idea of a disaster. i would hate to be number 113 or 112. tell me what times are these malls opening and closing? was it open real early today? >> this mall actually opened up at 6:00 yesterday. it's been open all night long, and so that's why we saw all these dips and valleys and peaks, and the different crowds. folks know when the stores are open, when they're offering different deals at different times so there's reason for different crowds of people to come at different times. we saw a lot of the millennial shoppers here overnight and in the later thanksgiving hours. as the day's worn on you've seen more families and the kids coming out, too. these malls have been open and running for some time. >> courtney, thanks very much. courtney reagan in dayton, ohio. electronics always seem to be bigger issers during the holiday season. will this year be any different? josh lipton takes a look.
♪ >> americans lined up coast to coast to buy as many gadgets, and electrelectronics, as they carry. so what were the most popular tech products on this black friday? analysts say as always, televisions were red hot. and this year, the ultrahigh def 4k tv attracted a lot of attention. >> if you want to sell tvs to the american public, you need two things. they need to be as big as they can afford. and they need to have the best picture that they want. and 4k really addresses the, this is a state-of-the-art of the picture. >> if 4k was a hit, and that's good news for samsung, which controls about 50% of the market. samsung now sells several 4k models for less than $2,000. gamers were also out in force on black friday. looking for deals. they shopped for games, as well
as consoles, and finally, analysts say americans were buying a lot of gopros, which now start at $130, and go up to as much as $500. >> they dominate the categories that they're in. and you know, we've seen promotions on some of their older models for this holiday, we think they'll have another big holiday just like they did last year. >> and it's not just television, games and gopros that likely sold like hotcakes. smartphones were also expected to be very popular. sam's club sold the iphone 6 for $99 with a two-year contract. for "nightly business report," i'm josh lipton in silicon valley. >> not everyone was out shopping and looking for deals. some were protesting, about walmart. and the wages the world's largest retail pays its employees. eamon javers was there. [ chanting ]
>> it's become the new black friday tradition. union organized protests at walmarts across the country, to spur the giant retailer to boost pay for its associates. these protesters are walking from capitol hill over to the brand-new walmart here in washington, d.c. what they say they want are $15 an hour wages for the workers at walmart. and they want more flexibility for the ability of the workers there to get a full 40-hour work week. a lot of the workers there, these guys say, aren't able to get enough hours in the week to have a real sustainable job and provide for their families. we met up with melinda, a d.c. resident who says her $9.90 hourly wage is not enough to keep her from being forced to collect federal food benefits to feed her family. >> i do depend on the government. i still receive medicaid and i also receive s.n.a.p. >> but inside the store other walmart workers were getting on with the annual black friday sales and walmart arranged for us to speak with the store
manager, earnest reed. >> i make a pretty good wage as far as i'm concerned, i make a livable wage. walmart has afforded me the opportunity to make a livable wage. there are so many benefits for walmart. >> in a statement, walmart dismissed today's protests saying perception is never reality with labor unions. the crowds are made up of paid union demonstrators and they are not representative of our 1.3 million associates across the country. union organizers today targeted the walton family, which owns walmart, saying the family is padding its $150 billion fortune on the backs of the majority of walmart workers who make less than $25,000 a year. for "nightly business report," i'm eamon javers in waon >> and still ahead, there are deals to be found at stores today, and a potential deal being reported in the telecom industry. we have the details next.
is europe trying to force google to split up? not exactly, but european union lawmakers are coming down hard on google. looking to force the search giant to unbundle or break up its search engine from other services it offers, because google says the eu has just become too powerful. vodafone and liberty global rise on takeover buzz and that is where we begin tonight's market focus. vodafone reportedly exploring a gings with liberty in a deal that would create europe's largest phone, internet and tv company. the company is trying to
determine the financial and regulatory hurdles it would face if it goes ahead with the merger. no formal negotiations are under way yet. shares of vodafone rose 3% to $36.80. liberty popped at 8% at $52.25. procter & gamble apparently working with goldman sacks to sell one of its units and a big one. today the company is exploring the sale now of its wella hair care unit which could fetch $7 billion. this is the consumer products giant looks to streamline its portfolio. shares of p&g almost 2% higher at $90.58. twitter's co-founder has sold some of its company stock for the first time. according to a filing he divested more than 700,000 shares. that amounts to roughly more than $28 million. shares of the social media company up 1% today. they finished at $41.63.
black friday sure isn't the day you want your website to crash, folks, especially if you're best buy. the electronics retailer's website did go down for more than an hour today as shoppers, flooded the internet looking for deals. company says it was caused by a concentrated spike in traffic. i guess that's in the category of good problems to share. shares at best buy up almost 2%. they finished at $39.50. coming up, the big stores may be packed this black friday but mom and pop shops are getting ready for their big day. small business saturday.
it's the holiday shopping season officially under way, a lot of consumers are finding that toys are going hollywood this year. julia boorstin looks at the big entertainment brands in the spotlight at toy stores. >> reporter: this holiday season the most popular toy they're going straight from the big screen to under the tree. as hollywood brands take the toy store spotlight. >> the boys action category which is about a $2 billion category, account for about 99% of that aisle. you walk down that aisle it is teenage mutant ninja turtles, star wars, transformers, spider-man, batman. it's all licensed. another aisle that is heavily licensed is the preschool aisle. where you have doc mcstuffings, minnie mouse, and account for about 30% to 40% of all toy sales. >> the hottest of all the
licensed brands, disney's frozen. >> elsa hair. >> oh, you want elsa dress? what else elsa. >> elsa tiara. >> my nieces are obsessed with "frozen." they were all elsa, for halloween so they can get them absolutely anything frozen related and they would be thrilled. >> toy industry expert says frozen licensees, primarily mattel and hasbro half a billion dollars in wholesale revenue this holiday season. frozen success as holiday bodes well for hasbro which is already benefiting from licensing disney's marvel brand the toymaker secured the licensing fights to disney's frozen and princesses starting in 2016. >> froizen is going to wind up being the number one movie property for the toy industry this year even though it will be more than a year after it came out. that's very unusual.
it's kind of like what happened with toy story. it's what happened with cars but it's not typically what happens. >> when it comes to competition for consumers dollars, toys based on familiar characters have an advantage. >> they watch the shows and then any time they see a commercial for the disney anything they want that toy. so, that's -- that goes on the list. anything disney, yeah. most of the toys that we own are disney based. >> mega holiday toy sales keep brands alive, and fans poised for sequels. for "nightly business report" i'm julia boorstin in los angeles. >> and finally tonight with so many people focused on black friday shopping at the nation's biggest retailers mom and pop stores are gearing up for their big day. it's tomorrow. small business saturday. kate rogers has more. >> sandwiched between two of the year's biggest shopping days. black friday, and cyber monday, on small business saturday, lomb
shops get their chance to strike holiday gold. for owners like guy who runs new york city jewelry store phoenix rose it's the official kickoff for retail madness. >> so for the past year seeing increasing sales on small business saturday. we make everything by hand, and everything is done here. and you know, everything's made in basically the west village, and the people like that. >> anthony, owner of lilac chocolates, is also feeling the community lo he says the american express sponsored promotion brings added foot traffic for the 91-year-old manhattan based store. which does about 20% of its annual sales between thanksgiving and new years. >> one of our busiest saturdays of the year, and it really kicks off our holiday season. >> and the holiday is certainly gaining traction. last year small business saturday saw nationwide sales up 5.7 billion dollars. but for ron and joan fish owners
of hampton house furniture store in mont claire, new jersey, it's not so easy bringing in shoppers for big ticket items on small business saturday. >> unfortunately we can't drive the customer into the store anymore. when they're ready to shop, they come in. so hard for us to, you know, bring them in with any type of promotion. >> promotions, however, are working for phoenix rose. customers are finding out about the business on instagram, where the store has more than 24,000 followers who will see the small biz saturday deal this year. >> promotion 10% off everything in the store. >> and while not every business will see a big boost the good news is that according to the national retail federation, nearly 75% of americans plan to shop this small business saturday. for "nightly business report," i'm kate rogers. >> and that will do it for this edition of "nightly business report." i'm tyler mathisen. thanks so much for watching.
and continue to have a great holiday weekend, everybody. we'll hope to see you right back here monday evening. >> "nightly business report" has been funded in part by -- >> thestreet.com and action alerts plus. where jim cramer and fellow portfolio manager stephanie lynch share their investment strategies, stock pick and market insight. you can learn more at thestreet.com/nbr.
depfl americans may have depiven thanks for many things this holiday but in many cases it's not for the people who run their government. we hear what you have to say on "washington week." >> no charge exists for officer wilson. >> what are you saying, our lives are not worthy? >> we here to recognize the situation in ferguson speaks to broader challenges we still face as a nation. >> as the holidays rev up, we enter a season of d