tv Nightly Business Report PBS December 25, 2013 6:30pm-7:01pm PST
this is "nightly business report" with tyler mathisen and suzy guerin brought to you in part by -- >> thestreet.com. up-to-the-minute stock market news and in-depth analysis. our service provides objective independent ratings daily on over 4,300 stocks. learn more at thestreet.com/nbr. good evening, everybody, and welcome to a special holiday edition of "nightly business report." i'm tyler mathisen. >> well, 2013 is almost in the books, and what a difference a year makes. from what seemed like daily record highs in the stock market to a bumper crop of new companies going public, 2013 was a good one for investors. >> a very good one. but away from wall street, things seemed to get mostly better as well.
home prices came roaring back in many parts of the country, and the consumer dug deep and started to spend again. and that's just scratching the surface. so many big stories this year. and while we can't possibly touch on all of them tonight, we're going to look at the year that was in some of the biggest areas, the market, the economy, washington, health care and real estate. >> and in all the topics that tyler mentioned and elsewhere, change both dramatic and subtle is one of the key underlying themes of 2013. and boy, a lot's changed in the past 12 months. >> reporter: few wall street pros could have predicted the stock market would soar 25%, hitting one record after another. the dow above 16,000. the s&p perched at 1,800. numbers hardly imaginable a year ago. investors snapped up stocks because where else could they get big returns given super low interest rates? the federal reserve and this man
get some of the credit. fed chief ben bernanke stood firm on the central bank's policy of stimulus measures to pump up the economy. which led to a year-long guessing game, when will the fed taper that massive stimulus program? well, now we know. the taper talk wasn't the only guessing game. there was intense speculation about who would replace bernanke when he steps down in january. janet yellen, the first woman ever nominated as fed chair. she'll preside over an economy that's doing a whole lot better. unemployment at 7%, down almost a full percentage point from a year ago. consumers are feeling better about spending. cars and trucks, new homes and the new new thing in electronics, you name it, and they were buying it. tech was also hot on wall street. twitter was one of this year's hottest ipos. google crossed the $1,000 mark for the first time, and facebook
became popular again. airlines took off, too. american is now the world's largest carrier after its merger with us airways. plus more fees are coming. even carry-on bags can cost you. but prices at the pump are costing less, down 12 cents a gallon from a year ago. and they could go even lower as the u.s. is suddenly on its way to becoming the world's top oil producer. no such cheer in detroit, though. the largest american city ever to declare bankruptcy. or for the big bad banks. jpmorgan reaching a record settlement of $13 billion with the justice department, just one giant slap in a series of lawsuits for misbehaving during the financial crisis. 2013 also brought a whole new world in health care. it's the law now. but consumers found it difficult to sign up thanks to an ailing government website. and health care wasn't the only crisis in washington. but this month congress agreed
on a bipartisan budget deal, perhaps the biggest and most hopeful change in a year that's had its share of them. >> so it has been quite a year. where do we start? easy, wall street. with the dow and the s&p hitting all-time highs for the first time since 2007, investors have been treated to 20-plus percent gains. 30% gains on the nasdaq. dominic chu is here to talk about the biggest themes of the year for stocks. why don't you run us through the numbers. >> it's superlative to say the very least. those are great numbers. talk about a momentum trade. the dow has hit around 44 all-time record highs just this year. 39 for the s&p 500. thes that dak kp the nasdaq, the best for 13 years. you have to go back to 2000. this is all such a huge move for the stock market, and it's been driven like you said before by the consumer. the consumer discretionary stocks are among the best performing sen ining sectors.
that means when you spend your hard-earned money, it drives our economy. >> the other trend we saw in year, all those stock buybacks. we were reporting at least one a week of a big company announcing a stock buyback. how important were they? >> you can't keep track. you can try. at the end of the third quarter, there were an estimated $346 billion with a "b" of stock buybacks. corporations have emerged as some of the biggest buyers of stock just in general in the entire market. now, it's not just about those dividends or buybacks. it's also about dividends as well. we had a record payout for dividends this year. and we're not even over yet. the year's not even over. about $310 billion has been paid out in dividends. that's huge. we're returning all kinds of cash to shareholders. >> companies deploying their cash. then there were cases of companies seeking cash. i can't remember a year when more. cans were stumbling all over themselves to come to market for stock offerings. >> it's been amazing.
and maybe this is the biggest sign of investor confidence returning. this idea that private investors want to go out and seek public capital to grow their businesses. i mean, again, we're not over yet. we're not anticipating any more big ones, but 222 ipos, the most ever. even with the dotcom, even with the highs of 2007, we're seeing so many companies go public, and they're going hot. the container store, more than doubles. sprouts farmers market, more than doubles. of course, twitter, like you said, the banner one of the year so far. >> so everybody's wondering what happens next year. can we top anything a year like this? >> it's interesting because you've got to say hey, maybe there's got a little bit of a pullback. but a lot of the wall street strategists are already putting out forecasts for this coming year. and you've got to say a lot of them are bullish. morgan stanley, over 2,000, a couple others are the same way. this could be a good year for the s&p 500 if they're right. >> dom chu, thank you very much. and happy holidays to you. >> same to you guys.
>> you bet. and while stocks took off, the economy plodded along but showed some sign s of improvement. jobs are created and the unemployment rate is coming down although still sitting at 7%. the consumer seems to be spending more and the federal reserve feel things are getting better and started to pull back on its bond-buying program. steve liesman and hampton pierce have been our go-to guys. steve, let's begin with you. we had the fed last week announce that taper. and fed chairman bernanke, the kind that he announced the cutbacks, he said the economy is healthier and that the job market is improving. what is your take? how healthy is the economy right now? >> well, what seems to have happened is this nice revision upwards to the fourth quarter after a very strong third quarter. we're going to probably average 3% growth in the second half, and that's up from around 2% in the first half. and that extra percentage point means more jobs, says better
werings for companies and better economic growth. i think what the fed did is it's still going to be providing a lot of stimulus next year. it just said it's going to be providing less as the year goes on. it's kind of like it didn't announce last call at the bar, but it said here's the time when we're going to have last call, when it comes to quantitative easing or those bond purchases by the fed in order to drive down long-term interest rates. the fed said you know what? towards the end of the year is when we'll stop doing that. but it also promised to keep interest rates low well into 2015. so there's a lot of stimulus yet coming from the federal reserve for this economy for next year. >> i thought that fed statement last week, steve, was sort of the art of monetary needle threading. and i thought bernanke was incredibly adroit at doing it. he is going to be moving on from the stage. how much are we likely to miss him? how much will you miss him? >> well, i think he was the right guy at the right time for a financial crisis. he was an expert in the depression.
and that was very instructive for him for keeping really the gas pedal down on the economy even while many around him said that he should draw back. i think he's going to be missed, but i also know that janet yellen is also known as a monetary policy expert. she was there during the financial crisis. and i think what we're hearing is that policy's going to continue very much the way it has. >> hampton, you cover the job market for us, and every month you tell us, you know, what happened in that monthly jobs report that investors and everybody is waiting on. what is your take? still a lot of people are out of work, right? >> yeah, absolutely. but here we are at the end of the year now. essentially according to the bls, we've added about 2 million jobs including the last couple months of 200,000 plus jobs added per month. as you mentioned, 7% unemployment rate. there was so much drama tied to the numbers of how we got there. for example, i've had the luxury and the privilege, if you will, of getting a first look at the monthly jobs numbers for the
better part of ten years. i cannot remember a year where every month there was so much at stake in every month the report for both wall street and main street, and oh, yeah, the federal reserve, by the way. we even had changes in terms of security measures being increased to make sure that there were no leaks of the data. there was even a challenge, if you will, to components, the two major components of the jobs report. the household survey and the employment survey as to how those things were calculated. so much riding on those monthly jobs numbers for wall street and main street, and let me do a 180, if you will. however, just in the last three months, the most rewarding thing for me in terms of the stories we did for our "nightly business report" viewers, finding so many cases were still small businesses out there willing to take a chance to expand in a still shaky economy. dealing with people who were getting their first jobs after being on the sidelines for long periods of time.
the euphoria of what that meant to them going forward. a couple components of the jobs story going forward, seeing that veterans hiring is really beginning to take hold in terms of the coordination between the private sector, the government and the public. again, all those vets out there want is one employer willing to take them a chance on giving them a job going forward and even, again, those small business stories of a young lady who ran a small business in baltimore that had been a family business for generations. her business expanding and hiring selling of all things fire alarms, you know. wall street to main street-type stories really made it all worthwhile. and the jobs story was just so huge. in 2013. >> you know, steve, hampton hits on the idea of confidence coming back among small business owners. i, for one, what do i know, but i was surprised that unemployment did drop to 7% as quickly as it did. do you think that there is a growing confidence about the
economy's ability to sustain itself into 2014? >> i think there is. and when you get three-month average job growth at 200,000, that creates confidence. when you have a budget deal in washington, that creates confidence. the fed provides a glide path for reducing quantitative easing. that creates confidence. and those are among my predictions for next year. i think a couple things will be out there. small business hiring is one to watch. that's still the economy still has in the tank. it really has not taken off the way it can. capital spending by businesses is going to be another interesting sign of confidence out there. they have held back. they've held on to their cash or distributed it to shareholders. that kind of capital spending can create even more job growth. finally, tyler, i'm looking for some serious synchronized global growth. japan, the u.s. and europe combined could have their best year since 2005. i went back and looked. we haven't had a inc. isle year without at least one quarter from one of the big three. 2014 could be that. and that's going to create
interesting investment opportunities and interesting growth opportunities here in the united states. >> okay. you know, steve, we hear all the time from ceos, they're worried about uncertainty. i'm hoping you're right, they're going to start talking about feeling confident. thanks so much, guys, for joining us tonight. steve liesman and hampton pearson joining us from washington. coming up, we talked about the fed, but ben bernanke was not no way the only story in washington this year, not by a long shot. we'll talk shutdowns, health care when we come back. as usual, it was a busy year in the capital from no budget deal to a government shutdown and finally to a budget deal. d.c. left its mark on business in 2013. our man in the middle of it all, john harwood. john, you know, i think back to
october and the government shutdown. and it feels to me as though the markets and the economy stepped past it almost effortlessly. >> well, they have. washington has made a practice in the last few years of getting in the way of economic recovery both in terms of crises over the budget, the debt limit, that sort of thing. the fiscal drag that was imposed by some of the short-term spending cuts. washington ended the year by pulling back. and one of the things that has created an amount of confidence is the underlying growth -- improvement in the job market, the underlying growth in the economy and finally washington realized if we just get out of the way, that's going to create better conditions going forward. >> well, that's something that you hear from ceos all the time, that they would just like washington to get out of the way so they can do their business. how do you see it going? it seems like we ended off the year on a hopeful note in washington. you think that they can continue this mood into 2014 and stay out of the way of businesses?
>> i don't expect much to happen in washington in 2014, and that may be just what the doctor ordered. even though we've had this budget agreement that's passed both the house and senate and the president is embracing it because, again, it reduces fiscal drag makes conditions calmer for economic recovery next year, i don't expect that to be followed up by much ambitious legislation going forward, they sort of grand bargain for the long term. but simply calm waters in washington, i think, are a good prescription. politicians will be running to are re-election. republicans trying to retake the senate. democrats trying to retake the house. they'll probably both fall short. but political games in washington, the less consequential they are, the better for the economy. >> let's talk about the administration and the year it had. its first year of the second term. and from where i sit, it feels like it was a bit of a bumpy year. there was the nsa spying scandal, the kerfuffle over the
ira and investigating groups that had tea party in their name. there was syria and then, of course, at the end we're going to talk later about the healthcare.gov website debacle. how would you rate the president's year? >> tyler, this year was all bumps for president obama. you know, we've seen many times presidents in their second terms encounter increasing amounts of difficulty. they lose the political juice that they had when they first came in. they accumulate difficulties from governance over the first four years in office. and that's exactly what happened to the administration. you had the irs which was mostly a bureaucratic problem but one that was a huge impediment for the administration. it hurt their credibility and their confidence among the american people during the year. you had the nsa spying scandal which also from some on the left, some on the right was damaging to the administration. again, hurt the president's credibility. and then the topper was really the one, two punch of the government shutdown and the
problems, serious problems, with the rollout of obamacare. as a result of that, we see the president ending the year with the lowest ratings of his presidency. both on a professional and a personal basis. you know, you have fewer than 50% of the people rating him lily for being honest and trustworthy. that's not something that characterized the early part of his term. >> john harwood, thank you very much. washington was also at the forefront in health care in 2013. the landmark affordable care act which is aimed as reforming the health care industry started its rollout but got off to a rocky start, to say the least. bertha coombs has been covering it for us since the start. well, what a memorable year this has been in health care, bertha. so we have this rollout, but it really started off on the wrong foot. what went wrong? >> it was spectacularly bad. we had gotten warnings that there would be some glitches, and that became the word du jour for several weeks. clearly what happened here,
essentially they were trying to build a giant building without a foreman, without a project manager. the health department was trying to be the project manager on its own and really did not understand the scope of this. and was not able to knit together all the various contractors and the key contractor in the middle, cgi, clearly it seems it was not up to the task of really bringing all of these pieces together. everyone said it was a complicated process. but clearly they underestimated just how complicated it was going to be. >> i remember sitting here with you in late september and saying a lot has to go right. it seems like almost nothing did. >> almost nothing did, pretty much. essentially initially the problem was the front door. people just couldn't get into the system. now we have to talk about the problems on the backdoor, the back end, the processing of those applications, the processing of the payments which the insurers making all of that infrastructure work well. last week they named a former
microsoft office executive, so he brings both the engineering chops and the management chops because there's still a lot to do to get the whole thing seamless. >> so do you think it could r recover from this whole mess? >> i think it's really going to impact enrollment. all of the bad headlines, even if the states where it's working relatively well, people have been a bit reticent to go on because they just saw all of the problems that went on. so the administration had initially targeted some 3 million people being enrolled by new year's eve by the start of january 1st. we're not going to be anywhere near that. >> this was supposed to cover the 40 some million people who are uninsured. >> right. >> and as of late december, how many people have signed up for coverage? >> we have seen, as of late december, looks like we are probably in the range of 500, 600,000 in terms of people who are on paid plans. and then another maybe million
or so in terms of medicaid enrollment. we don't know how much of that is medicaid expansion, which is part of the affordable care act. there may also be some folks who as they say have come out of the woodwork, knowing that it's time to sign up. they may have been eligible all along, but now they're signing up. the medicaid is going better than the paid enrollments. but the paid enrollments is really the key to this because that's where you really need to expand the risk pool. and if young people stay away and wait for a long time to sign up, it really makes a much more difficult market for the insurers and for the program itself. >> obviously, lots of issues, a lot of problem spots. going into 2014, what's the key thing you're going to be watching for in health care? >> i think the key thing we're going to watch is to see what kind of mix we get in terms of the enrollment. clearly you're not going to get the huge numbers, but what's even more important then, because it's a smaller pool, is
that you have a wide and diverse group. again, that you have the healthier people signing up, not just the people who are going to use it a lot. and then just seeing how this issue of the narrow networks and people starting to use insurance, people who have been putting things off for a long time, pent-up demand for services, how that's going to impact costs as well. the insurers are not really going to have an awful lot of data by the time they have to start figuring out what they want to do about premiums for 2015. >> you're going to be busy covering this story, and we're going to be counting on you to keep us updated. thank you so much, bertha coombs on health care with us tonight. and up next, the three most important things that happened in real estate this past year. 2013 was the banner year for
housing. the industry seemed to find its footing after half a decade of being in the basement. home prices came roaring back and the foreclosure crisis does appear to be in the rearview mirror. despite all the positives, though, there was a distinctive shift in the rent versus own debate. diana olick has been covering housing all year for us and joins us from washington. welcome, diana. good to see you. >> thanks for having me. >> tell us about how home prices stole the show. they were up for double digits most of the year. >> yeah, gangbusters nationally. we saw home prices up between 12% and 13% across the nation and in some markets they were up over 20%. and while that sounds like a good thing and it certainly delivered a lot more home equity back into homeowners' pockets, it also was a bit too high, too fast, affordablity began to plummet just as home buying was starting to come back. especially those first-time homebuyers who are really crucial to a good healthy housing recovery. so we certainly want to see
prices go up, but there is already talk that those price gains will ease in 2014 because affordability was hit so very hard this year. >> it seems to be because of those very high prices, a lot of people decided no the to buy and to rent. renters were a big story this past year, right? >> they were a big story this year. they will continue to be a big story next year. we've talked so much about renting, it's an incredible phenomenon that's happened. the reason there's still so many renters that there was such high rental demand despite the fact that rents keep getting jacked up is because a lot of folks simply cannot qualify for mortgages, but they cannot afford the higher down payments in today's tight credit market. there are also a lot of younger americans who are saddled with very high student loan debt. that was a big story in 2013. student loan debt, keeping those first-time homebuyers out of the housing market. now, we also saw a lot of investors get into the rental business. we've seen that over the past
couple of years. institutional investors, buying big swaths of distressed homes and putting them up for rent. so not only do you have the multifamily apartment trade, but you also have this new single-family rental trade. and we saw that develop throughout the year. not just with large investors buying homes but also securitizing the rental screens and selling them off to investors as bonds. and most recently, we just saw that blackstone is now starting to lend to other smaller investors. what does it mean? it seems that we will see more rental housing stock on the market. we also know that builders are putting up more apartment buildings. we'll see more stock there. hopefully that will ease some of those big rent gains because i believe we are going to continue to see high rental demand through 2014 just as we did this year. >> you just mentioned builders, home builders. what kind of year was it for the home builders and their stocks? >> well, look, the home builders began building more again. that's certainly what we wanted to see. we are still way off the normal
rates for what you would see for the kind of demand that's out there. the home builders have been struggling to come back, but look, they are faced with high costs for land, labor and materials. and that really hampered them this year. they were forced to raise home prices for newly built homes. and in fact, they raised them a bit too high. one very noted analyst, zelman, just recently downgraded her forecast for next year saying that home builders raised prices too high. we can't expect to see the sales or the housing starts next year that we originally thought we would see given the demand. and new home sales, you know, they go back and forth. it's hard to tell because it's a very rough number in that market. home builder confidence is up a bit, but home builders are really not barrelling back. their stocks barrelled back, you know, a couple years ago and folks have already said they're priced way too high. that's why some are really looking more toward building materials for people renovating. we should see healthier home construction in 2014. but the builders are going to
have to start with those huge price gains just as we started with this conversation. >> thanks very much, diana olick from washington tonight. and that's it for this special holiday edition of "nightly business report." i hope you have a very happy holiday. thanks for watching. >> and thanks from me as well. i'm tyler mathisen. have a great holiday evening, everybody. we'll see you back here tomorrow night. "nightly business report" has been brought to you in part by -- >> thestreet.com. up-to-the-minute stock market news and in-depth analysis. our ratings service provides objective, independent ratings daily on over 4,300 stocks. learn more at thestreet.com/nbr.
welcome to this is us. this week, we're in albany california at golden gate field. >> this is the only major racetrack in california. >> this track has seen this history since 1941. >> even the legendary john henry raced heir. >> d here. >> we are going to introduce you to some win withers. >> we'll also meet a marin firefighter and his best friend, dog named nemo. >> and the legendaire russell bays.