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tv   Nightly Business Report  PBS  January 26, 2011 6:30pm-7:00pm PST

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>> susie: steady as she goes. the federal reserve said today the recovery continues, but it's still not strong enough to cut the unemployment rate. that's why policymakers are pledging to keep buying billions of dollars in government bonds to boost the economy. you're watching "nightly business report" for wednesday, january 26. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
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this program is made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt >> susie: good evening everyone. it's unanimous. federal reserve policymakers were united today in deciding to keep interest rates near 0%. tom, this was the first meeting of the year, and the fed's thinking though is the same: hold rates super low to stimulate the economy. >> tom: susie, the fed is also sticking with its "qe2" strategy-- that's the plan to buy billions of dollars of government bonds. >> susie: but you know if you scrutinize the fed's language in its policy statement, there are some clues about the future direction of interest rates. suzanne pratt reports. >> reporter: it's not easy being the federal reserve these days. talk up the recent strength in
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the economy too much, and financial markets will worry a hike in interest rates is coming. say something bad about the rising price of food or gas? same problem. economist aneta markowska says policymakers struck the right tone in the statement accompanying today's decision on rates. >> if they were a little bit too optimistic, the market would take that the fed is getting ready to start tightening, they're getting worried about inflation. and that would certainly not be a good message. so i'm glad they didn't go there, and i'm glad that they showed some caution. >> reporter: even with policymakers walking on eggshells, they made some minor changes to the statement language when compared to december's version. on inflation, the fed acknowledged commodity prices had risen but repeated its position that underlying inflation is still low. economist drew matus says also important was the central bank's characterization of the labor market. >> what they're really saying is that we don't really care if the
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unemployment rate drops; we care why the unemployment rate drops. they don't want to see the unemployment rate dropping because people are leaving the labor force, they want to see if because there are gains in employment. experts say the language shifts suggest that despite an improving economy, the fed will stick with its plan to buy billions of dollars in treasuries by july-- known as "qe2." and, most economists still expect the central bank will keep interest rates unchanged until next year. >> in the second half of the year, i believe they are going to let their balance sheet begin to shrink, and at u.b.s. we expect that the first fed funds rate hike will come in the first quarter of 2012. >> reporter: to some, the stock market offers the best proof the fed's plan to stimulate the economy is working. the dow is up nearly 7% since policymakers announced a second round of bond buying in early november. suzanne pratt, "nightly business report," new york. >> susie: the president is challenging american businesses to be more competitive. he singled out robert and gary allen as innovators in his state of the union address.
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the brothers run a small michigan roofing company. >> reporter: after september 11, they volunteered their best roofers to help repair the pentagon, but half of their factory went unused and the recession hit them hard. today, with the help of a government loan, that empty space is being used to manufacture solar shingles that are being sold all across the country. in robert's words, "we reinvented ourselves." >> susie: you can't get better endorsement than that. n.b.r.'s darren gersh spoke with robert allen this afternoon and asked him what a presidential endorsement means for his business. >> well, i guess that remains to be seen, doesn't it. until i get back home and at my desk. but from what i have seen so far i think it's going to mean a lot. >> two calls, three calls, 100 calls, 1,000 calls? >> yeah, that last figure you used was the last count, i think
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the phone has been just literally ringing off the hook. >> what do you think this story, first of all, what about the story attracted the president? what is the message of your story and your company and the way you reinvented yourself? >> being invited to be at the state of the union address by the president, i think is not so much that or me or what we've done, but what we represent, as a couple of guys that normal guys, contractors that saw their industry shrinking, saw things kind of going south and came up with a way to reinvent themselves and do something different. and not only for ourselves now, but our product can invigorate the whole construction industry. >> now, i'm sure you've heard a lot of the rebuttals to the president and people talking about how a lot of the stimulus
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money didn't work. what is your response to people like that who say the stimulus money wasn't worth it? >> well, i can't talk about the entire stimulus package. but i can certainly talk about the portion of it that we received. which was advance clean energy manufacturing. and without that, without that little grant that we got, we wouldn't have been able to do this. because we could not get any more capital any other way. >> in your case how much help are you talking about, how much did you get from the stimulus? >> we received $500,000 from the american recovery act monies. >> $500,000 and you couldn't get a bank to do that? >> no. >> when you went to the bank what did they say? >> they said they wanted to see balance statements, they wanted to see income statementss, balance sheets, purchase orders. i mean how can you show purchase orders when you don't have a product yet. >> so you were a couple guys
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swinging hallers, you meet with some guys who make solar cells, you come up with this idea to make solar shingles and the president of the united states has you over for a big speech and mentions you by name. did you ever in your wildest dreams think any of these things would happen? >> well, i had some pretty wild dreams. so, to be honest, i thought, i've always thought it was the kind of story, not because it about me or us, you know, our company, but it's the kind of story that needs to be told. people need to hear these kind of stories. and when they do, maybe there will be some inspiration, and that's, you know, we all want to be inspired, right? >> robert allen, thank you very much for your time. >> tom: here are the stories in tonight's n.b.r. newswheel: a surge in new home sales helped the dow conquer the 12,000 mark,
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but not at the close. the dow gained eight points, just shy of 12,000. the nasdaq added 20. the s&p 500 gained five. trading volume rose on the big board, topping a billion shares; over two billion on the nasdaq. as i mentioned, new home sales rose in december, up 17.5%. but overall, last year was the worst on record for the home building industry. we'll take a closer look at the housing recovery in south one hard hit region in a few moments. the number's in, and it's big. the congressional budget office now puts the nation's budget deficit at $1.5 trillion. that's up from a trillion last year, on the extension of the bush tax cuts. c.b.o. director doug elmendorf says congress needs to act. >> to prevent debt from becoming unsupportable, the congress will have to substantially restrain the growth of spending, raise revenues significantly above the historical share of g.d.p., or pursue some combination of those two approaches. >> tom: just two months after going public, general motors has declared a dividend on its preferred stock. 65-cents a share is payable
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march 1 to owners of g.m.'s preferred series "b" stock. >> susie: still ahead, strapped for cash? need a little extra spending money? tonight's "money file" has a creative solution. >> tom: while new home sales had their worst year ever last year, things still ended with a bang, as we mentioned earlier. and that upswing is echoed by a new forecast from moody's analytics. its chief economist, mark zandi, predicts "the housing crash will end this year." zandi points to an improving job market, the affordability of housing and low mortgage rates. that optimism is growing in one of the epicenters of the housing boom and bust. >> reporter: florida. the sunshine state. the foreclosure state. florida has been among the top three states for home foreclosures four years running. almost a half million properties received a foreclosure notice last year, according to real
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estate data firm realtytrac. in south florida, from palm beach south to miami, there have been more than a quarter of a million foreclosures since 2007. but the sun may be slowly rising again on the sunshine state's housing market. >> a day like today, where it's going to be in the high 70 degrees and it's snowing everywhere else in the country... as trite as it sounds, our weather is still one of our number one assets. >> reporter: ron shuffield has been selling florida real estate for more than 30 years. he's president of e.w.m. realtors in miami, and he's seeing condo sales come back. >> this building began to see a lot of foreclosures in 2007. so 2007, 2008, 2009, 2010... those four years was really a period of cleansing for this building. >> reporter: the building shuffield is talking about is the jade. it is a higher-end condominium near downtown miami. it opened in 2004, fetching an average of $580 per square foot. with the housing boom in full swing, prices jumped to $808 per
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square foot by 2006. but then the bust. in 2009, prices collapsed to $360. last year, though, prices staged a small rebound, increasing to $415. >> i think it's a combination of people that are searching for these values... but probably the overriding decision has been the price. >> we've been here about 15 months. three bedrooms, two bathrooms... >> reporter: 90 minutes north of miami is where lisa and herb miller bought a home in the p.g.a. national housing development. it's a golfing community in palm beach gardens, florida. the millers paid $265,000 for their home just one year ago. are you happy with your investment? >> oh... absolutely. it's paradise. ( laughter ) >> i think there's just pent-up demand. >> reporter: chappy adams is president of illustrated properties in palm beach county, florida. >> i think buyers finally realize that we're at or near the bottom of the market, and that now's the time to get in, and that they don't want to miss
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that opportunity. so... and i believe that prices have come down far enough, we're basically back to levels of 2001, 2002. >> reporter: that may be the case. while the pace of sales in south florida is picking up, it's not clear prices have bottomed. just this week, the s&p case shiller home price index found miami home prices in november hit new lows since the collapse began. south florida's housing recovery will be faster and more steady than the rest of the nation, so says shari olefson-- a real estate attorney and author of "foreclosure nation." >> if you look at the historical picture instead of just the bubble picture, we're back in line with something that looks normal... and i'm sure we'll struggle here in the south florida, just like the rest of the country for the next year or so. >> tom: a big challenge for the florida housing market is the hangover from thousands of foreclosures and repossessions. how fast those filter through to the market will be one factor in how much, and how quickly, prices are able to stabilize.
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>> susie: tom as you mentioned the dow didn't quite cross, well it crossed the 2,000 mark but didn't close at that level. but investor has a lot to digest today. that fed meeting we talked about, the state of the union address last night from the if the. so a lot of information, and earnings reports. >> tom: yes, let's not forget earnings, because that was one of the big drivers that we saw in the market today. so susie let's go ahead and roll out tonights market focus.
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>> tom: it was a modest rally today, with the federal reserve staying on course. but that had the bull rally staying on track. we'll pull out and roll out today's 0.5% gain for the s&p 500 was enough to push the index closer to 1,300. we're looking at the last 12 months. since labor day, the index has jumped more than 23%. pulling out to a three-year chart, we can see tonight's close is the highest since the august of 2008-- a few weeks before lehman brothers collapsed. now with the fed continuing its efforts to keep the economy rolling, energy was strong. gasoline, heating oil and crude oil each saw decent rallies. heating oil is close to a two- year high. now the energy rally translated into energy stocks. halliburton jumped 8%.
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high. nice move here, new 52 week high. this break out over $40 came on twice its usual volume, bringing the stock to a new 52-week high. the higher oil prices didn't hurt ford, and neither did a recall of 400,000 windstar mini- vans to fix some brackets. shares saw buying as competitor toyota will recall 1.7 million vehicles worldwide, most in japan. the problem is a defective fuel device. toyota stock fell almost 2%. energy wasn't the only commodity moving. coffee prices continue near new highs, which has led starbucks to raise prices in the past. those higher prices didn't hurt starbucks' latest quarter. after the close, starbucks reported better-than-expected results. sales were helped by food sales. let's take a look at starbucks chart. starbucks stock slipped almost 2% before the results, falling from four-year highs. shares dropped another 2% after the close on a disappointing
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outlook. one to watch tomorrow. while starbucks is looking to get more bang from its food business, the possible competitive sale of sara lee is running into some difficulty. the stock fell almost 6%. the firm has been looking for an offer of at least $20, according to the "wall street journal." it has an offer for close to $19. just above tonight's close. you got to have a movie with those snacks. and lots of people are getting them from netflix. fourth-quarter earnings easily beat expectations, and its first-quarter forecast was strong. it plans to expand internet streaming later this year. neflix was down 2% today, but it could make another run after $200 per share tomorrow. after the close tonight, shares added 8% to this closing level. mobile phone chip maker qualcomm finally saw a nice pop in its business at the end of last year, and it raised its guidance for this year thanks to growing
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demand for smartphones. the stock came into its earnings call tonight with a fractional gain. but the stock has jumped more than 60% since the low in july. and that's tonight's "market focus." >> tom: the federal reserve's strategy may be buying bonds, but many others are buying stocks. tonight's "street critique" guest hears the hooves of bulls running to wall street. she's hilary kramer, editor at gamechangerstocks.com.
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nice to see you. so the bull continued to run. how does the fed strategy support even higher stock prices than the ones we see tonight? >> the fed told us quantitateive easing is going to continue, they'll be buying up bonds, keeping rates near zero and that will give support to the stock market, investors are forced into our u.s. stock market from all over the world. >> tom: one rut the federal reserve has been hoping for is more stable real estate market and you're looking at commercial real estate, not afraid to go into this asset class with a new pick in commercial real estate, an investment trust, mpg, trades below $5 per share, but has staged a nice rally in the last six week. still putting some money in here? >> i am. i'm building a big position in mpg, formerly maguire properties. this is where you want to be if you want to be early. we are bottoming out in commercial real estate, this is los angeles, occupancy is improving. this is a double for me, but it will take some time, mpg is misunderstood because of their leases, because of their
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mortgage obligations and they've shaved $2 billion off their balance sheet. this is a company to own because they really don't have negative equity value. but i am early on it, but hedge funds are starting to circle, you'll see them come in. >> tom: you've been in real estate investment trusts earlier this year, on january 5 one of your picks back then was digital realty, since then up by 4%. another company up 10.5% since then. do you still like these? >> i love both these stocks, but digital realty trust, for someone who is more risk averse you want to be in this company because it's about storage. we saw emc's earnings come out and this is a company that's in a sweet spot, with storage and data storage technology. >> tom: data storage, we should mention, not personal possessions. or maybe they're digital in nature. you can see all your previous picks on our website. we want to get to our viewer e-mails, we have a note about
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water, she writes us and says i believe the water will be the new gold of the 21st century. how can the average person best invest in water related companies? >> the only environment, the ticker symbol is ve, a french company that's all over the world providing water filtration clean water, running contracts for municipalities, and is in half of the prove iss in china, serving their -- provinces in china, serving their water needs. water is the problem of this century. >> tom: we have a note about coca-cola, came from kay, this is what she wrote. is coke a good stock to invest in now? ko, the ticker symbol on this multi-national company, it's had a heck of a rally in the last 7 months or so. do you like coca-cola? >> i love the company, it a solid stock for shareholders who own it, but there are other areas, other sectors like technology, financial ins stuss, others places to be than coca-cola right now. >> tom: outside of coca-cola do
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you own the other stocks mentioned tonight? >> yes, i do. >> tom: you can follow her on the blog. you can email us, streetcritique@nbr.com. or you can send us a note via twitter at my feed, @hudsonnbr, or n.b.r.'s feed. and facebook too. we'll feature some of your questions next wednesday our guest this evening's "street critique," it's hilary kramer with gamechangerstocks.com. >> susie: here's what we're watching for tomorrow: weekly jobless claims and durable goods orders for december. another busy day for quarterly reports. we'll hear from amazon, at&t, microft and proctor & gamble. caterpillar is also out with earnings. c.e.o. douglas oberhelman joins us to talk about his growth plans for the giant maker of construction equipment. >> susie: intel's takeover of mcafee, the data security firm, cleared a major hurdle today. european regulators okayed the deal, on one condition. the world's top chipmaker must
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make sure its products work well with software from other security firms. the $7.5 billion buyout is intel's biggest, and has already been cleared by american regulators. >> tom: walmart has rolled back plans to build a store at an historic civil war site in virginia. the surprise announcement came as a trial over the issue was supposed to start this morning. the location in question is near the battlefield where robert e. lee first met ulysses s. grant in 1864. historians and nearby residents opposed putting a supercenter there. walmart will look for other locations nearby.
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>> susie: in the "money file" tonight, the rise of the part- time entrepreneur. here's ramit sethi, author of "i will teach you to be rich." >> reporter: once again, my friend was complaining about not having enough money. he'd saved and saved, but at a certain point, there's not much more you can cut. what else could he do? "why not earn more money?" i asked him. and a few months later, he's doing just that. even in a recovering economy, americans are finding that our jobs are not the safe propositions they once were. when a career of 25 years can be pulled out from under you on a sudden friday afternoon, nothing is secure. as marketing legend seth godin
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has said, "safe is risky." but as a country born from entrepreneurship, we all have useful skills that we can deploy as our own safety net. and so we're seeing a surge of what i call "part-time entrepreneurs," people who want more income for paying off debt, or job security, or even just to have fun with-- who are turning their skills into income. part-time entrepreneurs have no intention of starting the next google, so they can keep their full-time jobs while starting something small on the side. indeed, making a few thousand dollars per month meaningfully changes most americans' lives. debating macro trends and tax policy is fun, but when it comes to our own well-being, let's use our culture of entrepreneurship to create our own safety nets by becoming part-time entrepreneurs. i'm ramit sethi. >> tom: finally tonight, the recurring snowstorms in the northeast may have many people there feeling like it's groundhog day. but kids aren't the only ones enjoying those snow days-- tv
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stations are too. viewership goes up when families are snowed in. just look at the week of january tenth. nielsen says that storm had a bigger impact on television ratings than any other in recent history. for children between two and 11 years old, viewership spiked 18%. overall, nickelodeon saw a 43% ratings increase. ther snow day winners were the weather channel, mtv and bravo. susie, parents have to watch something too. parents have to watch something too when they're stuck inside with too much snow. >> susie: not to mention "nightly business report", they can watch whether it a snowy or sunny day. >> tom: absolutely, on air, on dvr and of course online. that's our report tonight. thank you for joining us. i'm tom hudson, have a great night, you as well susie. >> susie: hope you have a great evening as well. hope to see all of you again tomorrow night.
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this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> more information about investing is available in "nightly business report's" video. to order this dvd, call 1-800- play-pbs or visit online at shoppbs.org. >> be more. pbs.
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