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tv   Nightly Business Report  PBS  December 27, 2013 6:30pm-7:01pm PST

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report" with tyler mathisen and susie gharib brought to you by. >> up to the minute stock market news and in depth analysis. our quant rating service providings objective independent ratings daily on over 4300 stocks. learn more at the into the breach, target confirms personal identification numbers were stolen but says the data is safe. others say that are not so sure. shredded tweet. shares of twitter get slammed today and that will likely deepen the divide on wall street. do you buy this high-flier or not? and finding quotety. our market monitor says he has quality names you should own in
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a world of record highs on wall street. we have that and more for this friday, december 27th, 2013. good evening, everybody and welcome. target now confirms that debit card pin data was stolen in the massive security breach affecting 40 million customers that began last month. that's a backtrack from target easterlier claims this week but the retailer says the pin information is quote safe and secure because it's encrypted. that news turned up the volume on an industry debate over just how safe your personal data really are. dominic chu has more. >> reporter: today target says debit card pins remain quote, safe and secure because the extradition key, is held by a payment processer and not stored in systems. >> it would probably take decades for each one of those to be cracked and it's not worth
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the criminal's time. the return of investment is bias mill. >> reporter: others are not so sure. >> target may be under stating what is going on here because based on history, we have seen pins decrypted and cash withdraws as a result. >> reporter: mark rogers of mobile security vendor lookout takes it a step further saying quote, in my world there is no such thing as permanent secured encrypti encryption. i do think people should change their pins as a precaution. damage control is the order of the day both for consumers and for target as it seeks to win back the trust of shoppers. for "nightly business report", i'm dominic chu. wall street stocks ended the day in red but up for the week but investors were focused on the option for the market.
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the yield topped 3%. it's the first time in two years that treasury yields reached that psychological level. and strategist are mixed on whether higher rates will threaten the bull market and stock. here are the closing numbers for wall street today. the dow lost one point and nasdaq down ten and s&p off a fraction. over in the oil market, crude prices closed over $100 a barrel due to a drop in inventorienven. this is the first time since october that oil closed above the 100-dollar level. shares of twitter got the tweet knocked out of them today. they fell after the research was cutting to sell saying the stock is rallied for no apparent reason, nearly tripling since november 7th. not bad for a company yet to show a profit. the move won't quiet the debate on wall street over the stock. >> reporter: what is clear is that twitter is a social media darling. what is not clear is why
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investors seem to love it as much as the tweeters do, up 7% monday, another 5% thursday, up 76% this month through yesterday. when it closed above $73 a share. but not everyone is so smitten. >> when i look at twitter, i think who in god's name is willing to buy this thing? >> by any ordinary stretch of math mat kill thinking, it doesn't make sense. >> we don't see earnings until 2015. one buyer is neil. >> this is the fastest growing internet stock out there. >> reporter: the buyers see a future loaded with ad revenue, especially video commercials targeted to tweeter users based on web browsing history. >> you will see it grow from low single digits to more. >> reporter: when? possibly the second half of next year but others warn this is one stock that's come way too far too fast worth more than target or timewarner cable.
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>> it seems like now we're approaching some type of mania. it's voluble to a crash, i'll let somebody else trade it. i won't. >> and take a look at twitter. that's the action today. it was down 13% to 63.$63.75 af closing above 70 just yesterday. also in the spotlight today, small banks complained one of the rule's requirements mean they have to get rid of debt investment and that could result in big losses. the america's banker association is suing agencies. federal regulators are reviewing and will decide whether to change requirements by january 15th. if you're trying to get a mortgage in 2014, it may be harder. new rules go in effect in january. the need for almost perfect credit is one reason the housing market is only slowly recovering from the recessionary bust but as diana olick reports, lenders will ask for more information.
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>> reporter: during the last housing boom, lending standards went occupant the window and we know how that turned out so congress passed a law making sure lenders can make sure borrowers can base pay the loans. they have rules to help ensure that. the rules are not mandatory but if a lender follows them, they made a so-called qualified mortgage and get legal protections should the loan go bad. >> the biggest change for the average borrower is going to be just increased documentation. >> reporter: but borrowers will also be limited by the new rules, which ban riskier products like interest-only loans. the lender must verify income and assets and not charge excessive fees and the borrower cannot spend more than 43% of their income on debt. that last one will knock a lot of borrowers out, especially those who might actually be quite wealthy outside of their income. that's where some lenders will choose to operate outside the
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new rule. >> looks like a nice niche from a lender's perspective because you're not going to have as much competition. certainly, you're going to have much more regulatory risk. >> reporter: that's why choosing to operate outside qm like wells fargo will only do so for the very best candidates. >> we're going to apply a very strict table of qualifications to ensure there is additional income, as well as additional assets to be able to support the case that these borrowers did in fact have the ability to repay when we made them the loan. >> reporter: in other words, wealthy boar rowers who happen to be driving the housing market right now because lending is so tight. the average loan size today is at an all-time high, almost $270,000 because less after flew end less credit worthy borrowers can't get a loan or a loan they can afford. >> the buyers out there are much
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more flew ent and have much more savings and looking for a larger type of house, and the first-time buyer remains locked out of the market. >> the rules won't make it easier for first-time buyers to get a loan but as rules settle in and lenders are more comfortable operating outside of them, that may change. some lenders may take on the borrowers and the risks that go with them. of course, they will charge a hefty fee to do it. and to read more about the new mortgage rules, head to a midnight deadline coming up tonight for some americans receiving unemployment benefits. an estimated 1.3 million people who have been out of work longer than six months will stop getting federal unemployment benefits tomorrow. the 2008 program which continued the benefits for as much as 99 weeks has been extended 11 times but it was dropped as part of the budget compromise signed into law by president obama and
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john harwood joins us here on our set. thank you for coming in. this has been such a democratic issue. why did they let it go? >> well, i think there is a psychological turn in washington, and that is from thinking about the economy as one that is in crisis and then recovery from crisis to one that is growing the labor market is strengthening. democrats are for the extension of the program. the president today called two senators, republican dean helder a democrat, jack reed and encouraged their effort for a three-month extension but you don't get the sense there is going to be a final push across the finish line by democrats and that's because they are thinking about stronger economy, stronger labor market and these were after all, intended to be emergency temporary benefits. >> what would a three-month extension cost or an extension of any length cost? >> full year extension would cost $25 billion and that's a lot of money, not in the context
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of the federal budget but what it would take. we had the parties agree that lifted the budget sequester by $63 billion. it replaced those cuts. it was very difficult to find that money in ways that they could get democrats and republicans to support it. doing that for $25 billion for this purpose, very difficult. >> you know, what happens to these one million or so people? are they hirable? do you think this news in the headlines will make some companies say let's bring them in? >> this is a bad news story, susie. a lot of these people have been out of the labor force for awhile, and the longer you stay out of the labor force, the longer you're unemployed, the more difficult to get back in. so i think that many people are not going to get back into the labor market, some will. as we do get stronger growth, you know, we have 4% in the last quarter and we see the unemployment rate beginning to come down. there will be opportunities, but i don't think everyone will take advantage. >> there are arguments on both sides about extending the
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benefits. what happens to these people when those benefits dry up? do they, will they go on to other assistance and what is the economic effect of the fact that this money will not go into these vinindividual's pockets? >> it will be a fiscal drag. the recycling of that money throughout the economy and people who don't have much money, you put some in their pocket -- >> it doesn't circulate quickly. >> i think that what we're going to see is that as the economy gets better, people will count on some of that demand getting replaced by private sector growth, and i think that's what we're looking at. >> quickly, do you think this will impact the unemployment rate? right now we're at 7%. the will this make a ripple event? >> there is a debate whether longer benefits keep people from looking for work aggressively.
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some of that effect could happen, but you also could have some people if they get discouraged and drop out that could cause the unemployment rate to go down for the wrong reasons. >> thank you. >> nice to see you, john. looks like a large number of high income households are spending less, especially those who moved into the higher income brackets after the recession. unlocking that consumer spending power in 2014 could be a key to boosting the economy. >> the top five percent of american households now earn more than 22% of the total income according to the latest census data fueled by a big jump in what economists call the new rich, incomes from $250,000 to a million dollars earned since the end of the recession. there are older professionals, working married couples and educated singles. they are heavily dependent on
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wages, not accumulated wealth in investment profollow owes. >> the new rich are those who survived the situation employed and built upon the opportunities most of the rest of the population was left out on. >> reporter: but the scars from the recession, including witnessing the housing market collapse and seeing the portfolio shrink, makes them reluctant spenders. >> everything could disappear overnight. even though we gained a lot of wealth and see wealth build, those who are new to it know it can be gone overnight and you can't get rid of that. >> reporter: this new group, which includes a large number of baby boomers is focused on saving for retirement and rising health care costs. it's a sharp contrast to the green is good period in the '80s when consumption equals status, but their economic power is enormous. the 25 million households with that new found wealth capture nearly 40% of consumer spending.
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leading market strategist say unlocking that power could be the key to the next face of the economic recovery. >> $650 billion that this seg the can contribute if they were only brought back to the level of spending that they had in 1984. >> reporter: those same marketing experts say what people with money want are high value products at low cost and more signs of a stronger economic recovery in 2014. for "nightly business report", i'm hampton pearson. and coming up on the program, if you think the tech run is over, our market monitor might beg to differ. he tells you what he thinks you should own next year. that's next.
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general motors and toyota issued recalls over sea today and that's where we he gin the market focus. gm and the chinese partner issued a 1.5 million car recall, one of the biggest ever in china. the auto maker said certain buicks and chevys may have defective fuel pump brackets. this is an unwelcome hit for gm that lost its spot as the top selling spot to volkswagon this year. meanwhile, toyota is recalling 400,000 cars in saudi arabia because of concerns of unintended acceleration in some toyota and lexus models. gm off about 1.5% to 40. 94. shares of toyota rose 121.88.
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beach craft exited bankruptcy this year. the deal to combine the two small plane makers is an effort to counter the slump in jet sales. shares of text ron up to $36.61. shares of pharmaceuticals surged on news the drug maker bought the rights to 31 ga near rick drugs. tiva will clutch on the deal plus a percentage of future sales. ani stock popped on the news of 16% to $19.89. and a top kbgainer. the chinese internet giant said it will pay $32 million for a reading website from perfect world. the news excited investors about the potential for the new unit, which could help expand badibu's consumer business. shares rose to $173.77.
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>> the market monitor is looking for a 7% gain in stocks next year, at best, but he says you can do better if you can embrace the idea 2014 will be the market. he's kevin corone and joins us tonight by phone. kevin, welcome and happy new year to you. >> happy new year to you. >> our chief economics correspondent says 2014 is likely to be a year of synchronized global growth that bodes well for the markets. the u.s., europe, japan and emergi emerging markets will grow. do you think that's a key follow through for 2014? >> i think so. the world is accelerating. we saw growth in the united states reach 4% in the third quarter. we're seeing growth starting to lift around the world. europe in particular. we're seeing less bud tarry drag coming out of washington d.c. consume series feel better. profits are strong and the stock
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market enjoyed the best run this year since 1997. we do have very good momentum into 2014 and the stock market is certainly reflecting that. >> and you say, though, even in the positive environment, you have to be selective on which stocks you do buy and you have a couple text stocks to tell us about. let's start with cisco, which at $22 had a pretty bumpy year looking at this chart here. >> yeah, so cisco is obviously the networking giant is a stock that has lagged this year, lagged by the 10%, the overall market this year, and one of the big nagging concerns with cisco has been emerging markets. they were slow. there was a big drag out of china, but i think that fades over time. so i think ultimately, what's going to drive cisco is the rapid rise in band withand will continue more video, more mobility, collaboration. you can buy the stock at a discount 13 times earnings, 3% yield, big boost in the dividend last year. i think you can earn 17% in the stock. >> let's spend a few seconds on
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oracle. >> enterprise solutions. the company has very aggressively embraced cloud computing. they are going out and making some very significant investments in that space. i think the stock may have gotten alittle ahead of itself. i would like to buy it on a pull back but they will be with us for quite sometime. they are doing that much every year in free cash flows. it will be with us and they have a large base of customers means sister and brotherty. >> tell us kwiquickly why you l ibm. >> china is weak. revenues under pressure. stock is trading about $185. i think it goes to $220. we like it here. we think a 21% rate of return is about right. the near term issues relating to weakness and business spending i think go away as 2014 carries
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on. china -- >> right. >> less of a drag. >> all right. >> and warren buffet likes the stock, 12 times earnings, i think -- >> buffet's endorsement is second only to yours kevin. have a great new year. do you have any disclosures on those stocks? do you own any of them? >> i don't own any of them. steeple looks to do investments with them. >> thanks very much. happy knew year. now despite the current told weather draw downs, the u.s. is virtually floating in its energy supplies so it's not a total surprise the community found a way to invest and congress made it more attractive. morgan brenham explains. >> reporter: there is an energy boom sweeping america because congress created a special tax advantage way to invest, master limited partnerships, better known as mlps, these
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partnerships pay no corporate tax. kind of like another popular security the real estate investment trust. the dramatic rise in domestic energy supplies lead to a wave of new mlps not likely to stop any time soon. >> last year, the eia thought that we would see a small increase in u.s. crude production and actually what happened was it was a huge increase. we're averaging around 8 billion barrels a day. the technology is there and only getting better. so i think this coming year, we'll see more production from crude and that's going to help mlp. >> in 2009, there were only 66 worth a combined $160 billion. today, there are more than 150 companies worth over $500 billion. in fact, 2013 has been a busy year with 20 mlps going public and cash hungry investors have welcomed them. one index showed mlps outperformed the s&p 500 by a wide margin and since mlps are
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key sources of financing for engineer g energy sources, so is 2014. next year could prove tough. mast near partnerships are exposed to rising rates, a scenario playing out as they scale back the bond buying stimulus program and there is growing concern mlps are increasingly used to shelter a more volatile range of assets like cole producers, shipping companies and in one odd case, even a cemetery operator. high evidents and the country's swelling outlook continue to drum up interest including from retail investors since shares can be purr classed. a number of analysts suggest sticking to the established large cap partnerships that own more stable energy related assets like oil and gas pipelines and already pay sized dividends. it's a lower risk approach to
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one of wall street's fastest growing operating systems. still ahead, we profiled a man making a difference by trying to clean up wall street. that's coming up next. we know americans love big suvs but auto says bigger is better calling 2014 the year of the full-sized truck. half of the newest popular vehicles were trucks. ram 1500 was number one and number two the jeep wrangler and the most popular of all, the ford f-150. finally tonight, as 2013 coals to a close, we're looking at difference makers in business this year. and when it comes to regulation,
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in one has made more of a difference than the top federal prosecutor in new york. we're talking about pete. now in the fifth year in the job, he's showing no signs of letting up. scott cohn reports. >> good afternoon, everyone. my name is pete -- >> reporter: when the u.s. attorney speaks. >> today, we announce three law enforcement actions. >> reporter: the financial world listens. pete bharara is the sheriff of wall street and in 2013 he's been busy tackling stride did transactions. >> the largest international money laundering case. >> reporter: dubious deals and insider trading. >> the scope of the legal trading was deep and it was wide. >> reporter: pete's crack down has completely changed the way information flows on wall street in that critical phone call, there is no telling anymore whether a federal agent is listening in.
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77 people convicted since 2009 and in 2013 the propeeked with the guilty plea of sac capital, the hedge fund's owner steven cone in the government sites. >> there is no immunity or protection. >> reporter: he's not just fighting insider trading. he charged two jp morgan traders with hiding losses at the nation's largest bank and part of a nation-wide task force investigating the financial crisis. >> we're as aggressive as any in the country. >> reporter: some say not aggressive enough. in a stinging opinion piece for the new york review of books, the new york district judge says the failure to prosecute individuals could be one of the most agreous failures in many years. bharara's office declined to comment but reed who left for private practice said the lack of walks is not for lack of
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trying. >> federal prosecutors want to find it. >> reporter: besides bharara is not through yet. >> no one is too big to indict. no one is too big to jail. >> reporter: he's out to make more of a difference in the new year. scott cohn, "nightly business report", new york. that's "nightly business report" for tonight. i'm tyler mathisen, thanks for watching. >> i'm susie gharib. have a great evening, everyone and we'll see you on monday. "nightly business report" has been brought to you in part by. >>, up to the minute stock market news and in depth analysis. our quant rating service provides objective independent ratings daily on over 4300 stocks. learn more at the
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sandra: 9:02 p.m., 7th of february, 2004. this is the 7 p.m. train from charing cross to dover, and it's two hours into its journey. two hours? shouldn't they be in dover by now? yeah, it should be, but a couple of miles out of the station, someone pulled the emergency handle. now watch this. four seconds. it takes four seconds to go through that first door, along the short connecting corridor, and then into the buffet car. four seconds. this guy here is dr. phillip mackenna. he's a physics professor at university college london. he was due to catch the ferry from dover to calais, and then another train to paris, where he was going to speak at a conference on theoretical physics the following evenin


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