tv Nightly Business Report PBS December 16, 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 where jim cramer and fellow portfolio manager stephanie link share their investment strategies, stock picks and market insights. you can learn more at thestreet.com/nbr. chutes and ladders. the dow gives up 250 point gain and ends up down, triple digits. what was behind the wild swings one day before the federal reserve wraps up its final meeting of the year? economy in crisis. russia's ruble rounded steepest drop in 16 years as the country's economy gets hit both by tumbling oil prices and financial sanctions. is russia's pain the west's gain or not?
and conservative forecast. general elec profit in the co industrial u low crude prices could restrain overall growth. all that and more tonight on "nightly business report" for tuesday, december 16th. welcome, everybody and good evening. susie gharib has the night off. but if you like market action, then you loved today. volatility was everywhere. in stocks, in oil, in bonds, and most especially, in russia's battered currency. let's start with stocks though. the dow was of and then up 247 point, it jumped 155 points in 30 minutes. then came a slow fade that quickened in the final hour. here's what the dow looked like in graphic form today. kind of an ekg in desperate need of a beta-blocker. at the close, the dow was off 112 points, nasdaq down 57, a
drop of 1.25% and s&p lost 16. now down 1.4% fo far. as for oil, it was a wood blast job too. at today's finish, west domestic texas crude snapped a four day losing streak. it ended a whopping 2 cents higher to close at 55.93 and traded above 57 too. brent international global prices contin prices lower at fresh 5.5 low at $60 a barrel. as economic tremblers rattled around the globe, epicenter most cow, money haven u.s. bonds. ten year treasury, its yield, landed to 0.27%, lowest close of the year. well, now to russia where so much of today's attention focused its energy driven economy is a mess to put i bluntly. its stock market all but crashed today. one reason? the country's currency is in
free fall even though russia's central bank raised interest rates to 17% last night. access to internna >> russian stock market is down too. . it still wasn't enough. >> russia is in a full blown currency crisis, the ruble plunging in the past two days. selling the ruble in large part due to the dramatic fall and the price of oil. russia is one of the world's largest exporters of oil and it's an important source of revenue for the government. just this week, the finance ministry announced russia's economy would fall 4.5% next year if oil stayed at $60. also causing fear, russian business investors have $100 billion in debt coming due next year but because of sanctions kboefd by the west, nearly impossible for them to refinance because western banks are prohibited from helping them
borrow money. carlos pasquale said this may be the thing that backs vladimir putin into a corner and getting him to stop backing russian separatists in eastern ukraine. >> i think this is an opportunity, actually, to find a way out of this crisis because the way out of the crisis for russia is to get access to international capital markets. you can't fix it any other way. >> reporter: thus far, russia remains defiant. denies that russia is suffering an economic meltdown. >> russia would come out stronger out of this. we have been in much worse situations in our history. >> reporter: like the currency, the russian stock market is down sharply too. long time russian investors don't think the worst is over qu >> there are signs of bottom formations but there are so many other factors at work here like the oil price that geopolitical situation. we need to see what putin is going to say on thursday when he gives his speech. maybe he'll say positive things. that would give the market a
boost. >> reporter: although putin makes important end of the year speech later this week, some investors say it doesn't matter what he says because russia place to invest peri >> we like places where there's some semblance of the rule of law. russia seems to be much more the law of the ruler. >> reporter: thus far, putin appears to be unphased by the market's negative response. for "nightly business report," michelle carusa cabrera. some of the major u.s. companies with exposure to russia are citi, exxon mobile, and visa. paul christopher joining us now to talk more about what russia's ruble collapse means for you and your money. chief international investment stra advisors. paul, good to have you with you. in 1988, russia had a financial crisis that almost crashed the world's economy. is this anything like that
>> well, you've got some similar external conditions with the u.s. being the strongest and the leader in the world. you've got falling oil prices and you've got a falling ruble and rising interest rates in rouge. a lot of concern there. but there are things that isolate russia more than 1958. the russian foreign currency concerns are much larger. russian official debt, government debt which was the source of the trigger of the problem is much, much lower. russian corporations do have some debt overseas but low by international standards and really not enough to really tank or cause a big disruptio the western financial systems. and finally, most importantly, russia's economy is really quite isolated. aside from one product that it sells to one part of the world, it really doesn't have a lot of trade ties with other people. >> that would be energy to western europe you're referring to, right? >> exactly. >> i hear you say it's in a
better position than it was 15 years ago and so the west needn't worry quite to the extent that we did back then but you may have heard in the prior segment, former ambassador of the ukraine, saying the only way russia can get out of this mess is to have access to foreign currency markets. do they have that? >> no, they don't have that. i believe he's right. i think that's the way out for russia. certainly the most strags forward way out for russia. but it doesn't mean we have the financial crisis that ends in default for russia. could be mr. putin to let the currency fall further and print more money at home to pay wages, allows a lot of inflation to creep up, even to explode. and let the problem and the pain be felt by the russian people worst while he consolidates his military gains into political gains in the eastern ukraine and then once he has those regions, he can be more open minded about negotiating or perhaps even his
oligarch friends to remove him. >> putin is nothing, if not unpredictable. there is a weaker russian economy, does it mean more dangerous or potentially a sooefrl -- severely crippled? >> i think a weaker russian economy first ha pain of the russian econ the russian people which is where the pain is mainly going to be felt. the pain has to be unsupportable for them before his hand is forced or the pain has to become unsupportive for the people in power. the oligarch types. once that's in reach, he's in danger. >> thank you with paul christopher from advisors. big impact on the dow component. general electric with the annual investors today. could it help or hinder the
industrial giant's oil and gas businesses and its overall outlook for 2015? mary thompson with us. i gather it was a conservative one today. >> reporter: it was a fairly conservative outlook but also, i think it's a first time in a few years since we've actually heard g.e. give actual numbers. the company is expecting to earn $1.80 a share and $1.75. on the call, jeff said this did include a worst case scenario. they don't know where oil is going but it gave some room to manage if oil prices -- >> what did he say beyond that beyond oil and gas and why is it so important? >> the reason it was so important, oil and gas business has been a revenue and profit driver for g.e. it's grown tremendously over the past few years. that won't be the case in 2015. lower oil prices mean revenue in this segment will actually decline by about 5%.
that was the forecast given. additional, keep in mind, g.e. is making these acquisitions to $4 billion and tend to be in the energy space. said he likes the space but th right now. >> what about the broader company, what about the integration of the french company that's buying? >> alsome is on track. what's working for ge is the records orders were high, he said. transportation, locomotives are going to set a record this year as far as orders go and also, what's working, they anticipate lower gas prices to help the u.s. economy to which g.e. has the g exposure. >> you think about the evolution of this company ten years ago, you think lightbulbs, ge capital. nbc universal, it got rid of, it's n industrial com >> it's a very dif and it remains on track to have 75 of those earnings from these industrial companies he's working on, 25% from g.e. capital which they say will
continue to try to shrink in an investor . in the fin >> mary thompson reporting, thank you. in the meantime, troubling news about a company g.e. is in the process of acquiring. we just mentioned it. reports say u.s. prosecutors are close to reaching a deal with the frenc engineering giant alstom to pay close to $7 million for a foreign bribery probe, the biggest settlement of its kind ever. well, with oil prices half of what they were in june, volatilit returning to the stockke raising out russia and europe escalating and the federal reserve kicking off its final meeting of the year. what do top economists expect to hear from the central bank tomorrow and in 2015? steve liesman reports. >> reporter: wall street sees the federal reserve reacting to lower inflation and concerns about global economic not by delaying rate h hiking rates more slow respondents of the nbc survey see the first rate
hike coming in july 2015. that would bt eight years. but they see the feds hiking west and taking longer to get to the end of its cycle. two-thirds of respondents expect to remove the phrase considerable time from the policy statement tomorrow, a move the fed has to make in order to hike rates in coming months. now seen below 2%, the end of 2016. janet yellin and the federal market committee are seen taking it all the way until first quarter of 2018 to get to their end point for rates, a very low 3.2%. a tenth below what the market previously bou >> hey, how's it? >> reporter: the forecast comes amid rising optimism for the u.s. economy. the chance of a recession in the next year has fallen to the lowest level in the history of the survey. growth is estimated to pick up in 2015, all the way to 3% 2.4% this year. and lower oil prices should add more to that growth while reducing inflation. the outlook for inflation looks
to be the real driver for that. that and european economic weakness which is now seen as the bigges economy. although there's good agreement on the path to policy, now looking to janet yellin and her press conference tomorrow for any hint of plunging oil prices and global economic weakness could alter the fed's course. for "nightly business report," i'm steve li >> and william lee joins us now to talk about what we may hear from the fed tomorrow and into 2015. he's head of north american economics at citi. mr. lee, good to have you with us. you heard steve's report there. do you side with the general consensus that suggests that interest rates, when they start to move up, will move up slower and less steeply than maybe we might have thought three months or four months or five months ago? >> absolutely. because one of the things you've
emphasized in your report, all the repo uncertainty now and decision role on uncertainty? do less, do it later. consensus, i think starting later, probably december of this year but i absolutely agree that whatever they do, it will be a lot less than what they would do before because the key is they need to figure out what's going on. and right now, we're getting a positive there's a lot of downside risk to the economy's wealth. >> you anticipate my next question. what does oil mean to the today? >> what it means is that for at least 2015 and possibly a little bit into 2016, the consumers are going to be a lot better o. they're going to have more income to spend and we expect a lot stronger economy. but maybe on the order of extra, maybe .75%, 1.5%, those are the estimates to how oil will hel also you a temporary help. if all prices stabilize at 65 or even 40, right, we will all only
get whatever benefit we have as the oil price declines. once it stays there, that's the end of the b what we have then is a return potential growth. >> you know, bill, economics, they may call it a dismal science but i got to tell you, it is anything but uninteresting. when you think back to how we started this year with the ten year yield at 3% and most people forecasting that it would stay there or maybe edge higher, we're going to end the year at roughly 2%. how much did that surprise you and what do you think you be surprised by next year? >> i think that was a great surprise to everybody because we were all anticipating a more robust recovery and instead, got meandering 2.5 to 3% recovery. what we're anticipating also is the rest of the world is going t matter more for the u.s. than ever before. the sector has grown in the last five years from 15% to 20% of gdp to almost 30%. we're much more vulnerable. that's the lesson into next year, i anticipate more
surprises abroad as well as in the economy. >> that's interesting. bill, let's bring it home to stock investors as we look tomorrow with the fed and the possibility of rising inte rates next year. are we past the point where equity investors are going to worry so much about whether and when and by how much the f raises interest rates and we move to something different? >> i think equity inveor been interested . where are the profits comi from? we have a robust recovery and we start to have some positive price increases because after all, the market over costs. if we can mark up over costs and raise pr a very good pi equity market. >> bill, thank you very much. bill lee with citi. thank you for your help. just when it looks like things won't get worse for son they did. that story next.
there has been a surge in sign-ups for a health insurance plans under the affordable care act this year. more than a million americans picked a plan in just the past week bringing the total of enrollees to nearly 2.5 million this season. that's according to the obama administration and that number is just for the federal healthcare.gov marketplace. 13 states have their own web sites and marketplaces. well, apple is making some headlines. first, it is halting online sales in russia because of the extreme fluctuations and the value of that country's currency, the ruble. the company apologized to consumers over there s needs to review its prices now that the ruble has lost half its value.
also, a victory for apple in a decade-old billion dollar class action lawsuit over its pricing of the ipod music player. a california jury decided apple did not use restrictive sore in the ipod to freeze out make of competing mp3 players from accessing the itunes marketplace. well, a different mood at sony pictures where the fallout from that massive hack attack on the company's computer system just keeps getting worse. julia boorstin has more on the latest troubles at the studio. >> reporter: the group that claims responsibility for hacking sony systems and releasing a personal e-mail and information is now going as far as to threaten theaters and theater goers over sony "the interview" threatening unspecified but ominous action for the premiere in new york on thursday and film's release scheduled for christmas day. >> we're now in a completely different level. they have complained. they have brought sony's
internal network to a halt. they have released one trove of data after another. leaked movies to file sharing sites and now we have an implied threat of violence. >> reporter: we have to keep in mind, the threat comes fro group determined to prevent the movie from being released and people from seeing it. sources telling nbc there's no credible intelligence to indicate an active plot against u.s. theaters. landmark theaters hosting the premiere said they're moving ahead as planned. the fbi issuing a statement saying, quote, the fbi is aware of recent threats an continues to work collaboratively to investigate the sony attack. this latest threat comes along with reports of a new data dump of e-mails from studio chairman and ceo michael linton. >> who knows what's in michael linton's e-mail? hackers promised to release more. more data yet to be rele. who ? >> reporter: sony is hit by the
first class action lawsuit against sony on behalf of current and former employees. alleging the studio is negligent failing to secure computer systems despite weaknesses known for y quote, failed to timely protect confidential information of current and f from law-breaking ha sony did not immediately respond to requests for a commen the suit or the threats. we're also awaiting our request for comment from amc and regal theater chains. i'm julia boorstin for "nightly business report" in los angeles. a dow component raises its quarterly dividend and that is where we begin tonight's market focus. the diversified industrial giant 3 m lifted the dividend and said it expects 3 to 6% in foreign exchange rates. shares of 3 m up 1.5% today it closed at $16.05. not to be outdone,
cvs health raised dividends 27%. announced new $10 billion stock buyback plan and raised its growth as much as 16% over 2014. that was just what the doctors seemed to order. shares of the drugstore chain rose nearly 3% today. it finished at $92.31. not what sprint wanted to get. various reports saying that the fcc is preparing to fine the tell come gi for unwanted services. sprint said it doesn't comment on rumors or speculation but investors sent shares 6% lower. sprint closed today at just $3.81. after the bell, earnings from garden restaurants, the parent company of the olive garden, long horn steak house and other eateries in the first report since it spun off, red lobster, better than forecast profit and 5% jump in sales next quarter. even though it did lose $33 million. shares initially rose in
after hours trading but they closed the regular session 2% lower at $55.91. after the closing bell today, american apparel officially terminated the controversial company founder and ceo dove charni. willful misconduct and past harassment claims. paula schneider, a former exec has been n company's first fe and coming up -- from houses to works of art, the eye catching price tags of some of the most expensive things bought this year.
and this story under they paid how much? with 2014 coming to a close, we took a look at some of the outrageous prices some of the wealthiest people in the world paid for massive homes, one of a kind artworks and others in 2014. >> reporter: starting with real estate, the most expensive homes sold in 2014 was the 18 acre estate in the east hamptons that wasn't even on the market. it sold for $1 hedge funder barry rosenstein. the most expensive real estate listing was the square foot house in bev hills called plattzodiamorte.
listed for $195 million, got a 13,000 square foot entertainment complex and the wine cellar holds 3,000 bottles. the most expensive work of art sold this year was chairiot sold for over $100 million and broke a record for the most expensive car ever sold at auction. this 1962 ferrari 250 gto sold by pebble beach for $38.1 million. but some experts are warning that the car boom may be about to stall. >> no one wants to be made a fool of and i think we just might be seeing a little bit of a collective inhale, maybe people taking a little bit of a break and waiting to see where this market goes. >> reporter: the same one cent magenta expensive stamp ever sold at $9.5 million. and the henry graves super
complication by fe leap for $24 million for proof that the cupcake trend has reached its ridiculous apex, t $900 cupcake sold by a toronto bakery with jamaica and champagne and 24 karat gold flakes. 2014 was good to the rich and it may end up being a warm-up for spending the wealthy in 2015. for "nightly business report," i'm . >> no comment. finally tonight, if you plan on hitting the roads or taking to the skies over the christmas and new years weekend, expect to have a lot of company. aaa is out with holiday travels forecast as it is this time of year. it predicts that a record 99 million americans will travel at lea from home over the h most of them will be on th jersey turnpike, thanks to growing consumer confidence, lower gas prices and a lot of people taking the
fridays after both holidays off. that's "nightly business report." i'm tyler mathisen. thank you so much for watching. have a great evening and hope to see you right back here tomorrow night. "nightly business report" has been funded in part by -- thestreet.com and action alerts plus where jim cramer and fellow portfolio manager stephanie link share their investment strategies, stock picks and market insights. you can learn more at thestreet.com/nbr.
this time on "spark" -- first, "spark" joins renowned visual artist kerry james marshall as he creates two massive new murals in sf moma's atrium. >> i wanted to completely transform the entire atrium into something else to try and compete with the architecture. next, performer dan hoyle gets to work on a one-man show based on his experiences driving through small-town and rural america. >> part of what made me begin this show was wanting to do political theater that had conservative characters. then, the modern dance company levydance collaborate on a piece based on a previously untold family history -- next on "spark."