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captioning sponsored by wpbt >> this is n.b.r. >> tom: good evening. i'm tom hudson. the sequester is here and the federal government spending cuts will soon be enacted. >> susie: i'm susie gharib. good evening, everyone. we'll look at what sequester means for the u.s. economy, jobs and the markets and how long it may last. >> tom: one bright spot for the economy: auto sales. february was another strong month of sales. >> susie: that and more tonight on "n.b.r." >> tom: before midnight tonight, the sequester takes effect. those automatic spending cuts
will trigger federal government furloughs, cuts in government contracts and cut backs in federal services. congressional leaders met with the president this morning to talk about the situation, but no one expected a break through and no one was disappointed. our washington bureau chief darren gersh tonight on what happened and what comes next. >> reporter: by now, you know how this story goes. after the last-minute meeting at the white house, the speaker emerges grim-faced. >> the discussion about revenue in my view is over. it's about taking on the spending problem in washington. >> reporter: cut to the white house briefing room. the president says he's been reasonable. some tax cuts, some spending cuts and some entitlement reform. that's his prescription for budgetary pain. and since republicans won't accept it, the president says the middle class is about to feel the pain of those automatic spending cuts known in washington spk as the sequester. >> i don't anticipate a huge financial crisis, but people are going to be hurt. the economy will not grow as
quickly as it would have. unemployment will not go down as quickly as it would have and there are lives behind that. and that's real. and it's not necessary, that's the problem. >> reporter: but wait, this movie already has a sequel. march 27, the government runs out of funding and without congressional action will have to shut down most operations. it's unclear whether the sequel will have a happy ending, but it will certainly be a cliff- hanger. here's the backstory. the real fight is over what government should really do? bill hoagland worked with republicans for 30-plus years to craft their budget strategy. he says the sequester slashes at categories of government spending that have been cut and cut again. >> and i think we're going to find that that's where the investments to the future are. that's infrastructure, that's science, that's technology, that's education. and i think we will start to realize that we're really
jeopardizing long-term economic growth by cutting back on investments, but retaining current consumption if you like. we have to change the mix there and maybe that will start to resonate out there with the american public and maybe then we'll be able to move forward with some sort of more reasonable fiscal path to the future. >> reporter: by easter, hoagland expects the sequester pain will probably be bad enough to force some sort of compromise, if not how bad is it going to be? what i'm hearing from a lot of people is the feeling this whole sequester thing is way overblown, is it? >> okay, play the washington number game with me for a minute. you heard the 2% number. "oh, it's only 2% of federal spending over the next 10 years. it's no big deal." but there's another washington number which is because of the way the sequester is structured, it's 10% to 13% in some programs this year. and that's going to cause some
pain. >> susie: all right, well, talk us through this a little it. i mean, you have said that the automatic spending cuts are going to be gradual. they officially kick in at midnight tonight. so talk us through what happens after midnight. >> reporter: right, it's kind of like explaining the indefensible but here's how it goes. the government is going to have to start deciding, because it's going to be real, who gets furloughed. they're going to have to send out letters. they're going to say, "hey, we think you're going to be furloughed." they're going to have to decide which contracts they have to cancel. it will take them time to nofy peoe. all that is going to start unfolding over the next couple of woks. then people will find out and actually be furloughed. the money will come out of their paychecks, the contracts will be kansasled, the pain will be felt. >> susie: darren, you've been covering so many of these washington crises over the years. so you know the mentality.
who is it going to take to get problems and democrats and the white house to sit down and really hammer out a deal to get us out of this mess? >> reporter: will folks who are watching this at home are going to have to get really upset, andhat's whatoth sides are now counting on. they're counting on either they're going to win the public opinion battle or the president will win the public opinion battle. one side will be proven right. but that pressure is what's going to force a change or we'll have the sequester for the entire time. >> susie: all right, well we can see what happens on monday at least, or saturday and sunday as well. darren, thanks so much. washington bureau chief, darren gesh. >> susie always a pleasure. >> tom: still ahead, best buy rings up a better than expected holiday season. what's next for the struggling electronics retailer, now that its founder has given up on taking it private. it was a volatile end to a wild week on wall street. stocks opened sharply lower today, but quickly rebounded on positive manufacturing news.
the dow added 35 points to close just 75 points from its all time high. the nasdaq tacked on 10 points and the s&p 500 gained 3.5. still the 800 pound gorilla on wall street today was the spending cut showdown in the nation's capita kno as sequesr. suzanne pratt reports. >> reporter: there was little evidence here today at the new york stock exchange of the looming sequester in washington. even as the clock ticked closer to those government spending cuts it was business as usual. stocks were bought and stocks were sold. big board trader jonathan corpina says he's not surprised by the nonchalance of investors. >> i think both parties have expressed enough insight to give us the ea that nothing was really goi to t accomplished today or up to and leading to today that was really going to have a big effect on our economy or on our markets.
>> reporter: speaking of the economy, it turns out investors today were more interested in some favorable economic data, suggesting u.s. manufacturing isn't too bad after all. that took some of the sting out of a report showing the average income of most american is at the lowest level in two decades. yikes! and, corpina thinks it's the economy in the u.s. and europe that's going to push and pull stocks in the coming weeks, not american politics. >> next week we've a lot of economic data that's on the plate. we've got an unemployment number coming out at the end of the week next week. i think that's going to help us give a little bit on an insight as to what the mentality of the investors are. >> reporter: others say investors will only shrug off washington for so long. if there's no deal by march 27 and the government shuts down, the stock market will undoubtedly show it. suzanne pratt, "n.b.r.,' new york.
>> susie: as darren mentioned, those automatic spending cuts could hit nearly 1.5 million jobs. while that could push the unemployment rate higher, many u.s. states were actually adding jobs in 2012. ruben ramirez breaks down the numbers. >> reporter: there were fewer people standing in unemployment lines in 2012 as the vast majority of states saw their jobless rates drop. in new data out today, the average unemployment rate dropped in 46 states and the district of columbia last year. it stayed the same in new hampshire and pennsylvania and was up in just two states, new
york and new jersey. north dakota continues benefiting from the shale energy boom with the lowest state unemployment rate in the naon for the fourth year in a row. also making the list, nebraska and south dakota. and the states with the highest unemployment include two where the housing collapse hit full force. nevada and california. rhode island had the third highest. regionally, the west was the only area to have an unemployment rate above the national average. the northeast sits relatively close to the national average. and the two bright spots for job seekers were the midwest and the south. ruben ramirez, "n.b.r.," washington.
>> tom: best buy won't be bought out, at least not by its founder. richard schulze ended his efforts to takeover the company. that news came as the retailer lost less money than feared during the holiday quarter, as it continues to turnaround its business. erika miller has a closer look. >> reporter: finally, some good news from the world's largest consumer electronics chain. yes, the company reported a big loss of $409 million in the latest quarter. but that's a lot better than the $1.7 billion it lost in the same quarter the prior year. but most analysts we pleased with the results. >> i do think the company has still got a long road ahead of itself. do think they face ve serious competition from the likes of amazon, costco and wal- mart. but i do think the company is in a better place today than it was a year. >> reporter: in addition, the company's founder richard schultze appears to have abandoned plans to buy the
company, providing more certainty about leadership. investors are growing more confident current c.e.o. hubert joly's turnaround plan is working. among the positives in today's earnings report: better than expected profit margins, as well as an 11% increase in u.s. online sales. and earlier this week, the company annoced a 25 milli cost cutting plan. best buy also plans to revamp its website. so, is now a good time to buy the stock, which is up more than 40% this year? >> right now i think the shares might be a little bit over- valued. they've had a nice run. >> reporter: but bestbuy's turnaround will not be easy. the company gave a cautious outlook got the first quarter, because it is ramping up investments. and a quirk of the calendar means there will be one week less sales this quarter compared to last year. erika miller, "n.b.r.," new york. >> susie: more cars and trucks zoomed off show room floors last month, as february's sales moved decidedly higher. ford motor lead the way, sales
there up over 9%, g.m. up 7% chrysler sales rose 4%. as for imports, toyota fared the best up over 4%, honda sales fell 2%, but v.w. sales notched higher by 3%. the head of volswagen america jonathan browning fears the fast start to sales this year will moderate, tom, as the sequester's cuts drag on the consumer. >> tom: i guess it depends on your vantage point. ford's sales chief said he think the sequester will do little to derail sales. it comes down to the availability of capital to purchase the cars. a bright spot for the socks today. the major indices overcame some morning session to end with small gains, capping a volatile week. the s&p 500 began the session by falling 1% as personal incomes fell by the most in 20 years in february. but encourage data from u.s. manufacturers helped cut the losses and the index finished out the session up a fraction. markets began t week with profit taking and big drops, but
by today's closing bell the dow industrial average was up 0.6% this week. the nasdaq gained 0.3%. and the s&p 500 is 0.2% higher tonight compared to a week ago. volume today was moderate. 742 million shares traded on the big board. 1.9 billion traded on the nasdaq. the health care sector put up the best gain among the major sectors, rising 0.8%. the consumer discretionary added 0.6%. apple held back gains in the broad market, as a federal judge cut apple's payday over patent infringements by samsung. the judge cut apple's $1 billion award to just under $600 million. she overturned the patent ruling involving several of the samsung devices apple accused it of ripping off its patents and the judge ordered a new trial for those devices. hedge fund investor david einhorn dropped his lawsuit to stop apple from a specific shareholder vote.
he got the judge to bar the vote at this week's shareholder meeting. shares fell.5%,ushinghe stock to a new 52 week low. shares are down 20% since the first of the year. retail stocks helped the consumer sector with a combination of clothing and high end jewelry. the gap rose 2.9% after its strong holiday earnings season. this is gap's highest close since early december. tiffany rose 2.8% to a 10 month high. walt disney led the gains for the dow industrial average, rising 1.4%, closing just below its all time high. after the closing bell the wall street journal reported disney was talking with news corp over their hulu joint venture online streaming videoervice each own about a third of hulu, but have differed on their business models for the service. news corp wants to charge subscription fees. disney wants more advertising. the maker of the da-vinci surgical system, intuitive surgical continued to see big swings for the second day in a row. analysts came to the defensive of the company after the food and drug administration announced it was looking at the company's safety data.
shares rebounded eight and a half percent after a big drop yesterday after the f.d.a. disclosed its probe. at least three investment all five of themost actively traded exchange traded products were higher. even with the small gains in the broad market, the s&p 500 short term volatility note was also higher, gaining 1.5% and that's tonight's market focus. >> tom: it's begun. taxes have gone up and government spending growth will come down. while painful, our friday market monitor thinks the sequester's spending cuts will ultimately be a positive for the u.s. economy.
randall eley is president of the edgar lomax company. he's in washington where the sequester is hitting here tonight. how about the debt debate now, randall? does it change your investment horizon if we're talking about things that are happening in the very short-term future? >> n in fact, i think in the long run, it's good for our investors who need to take a long-term perspective on investment. so much of investment action that's been taken in the last year has been based on expecting the government, the federal government to step in and save companies and in fact create business for them. now i think investors are-- will have a chance to realize increasingly they've got to look at what those companies are able to do on their own. >> tom: but with so much uncertaintwhen it comes to fiscal policy-- taxes, for instance, and government spending certainly beyond this fiscal year, how do you skill
keep that viewpoint on the long-term horizon? >> it's difficult. but the fact of life is, this is not the first time in american history wove faced these kind of difficulties. the difference between then and a couple years ago, though, i think most people realize we've got to do something. the federal debt is now a bit larger than our economic production independent last year. so we can't continual having the federalovernment run budget deficits that will have that debt run up with no end. so you notice taxes did go up in january. we're no longer talking about the possibility. it appears some sort of spending cuts are taking place, even if they will be watered down in the next year. >> tom: certainly not the first time we've seen this, nor, dare we say, the last time we've been to this rodeo here. let's talk about some investment ideas. you like really big caps here, intel being one of those, the stock down here in the low 20s. but it's one of those technology companies well known and a 4% yield, twice what the government
i.o.u. for 10 years is paying. >> that's right. and that yield is solid. they've got the earnings to back it up with the p/e ratio looking at the last 12 months of earning abou at about 10. you're talking great competition to the 10-year treasury. >> tom: getting paid and a bit of value in the large-cap technology. you also like exxon mobile. it's trading closer to the higher end of its range. we have seen oil prices come off their high. does that concern you? >> no, exxon has run a very conservative business but has run it relatively smartly. as far as building a steady, earnings-generating machine. so we expect exxon to continue doing that. it's p/e ratio is only a nine. so this company should continue producing for investors for a long time. >> tom: a single-digit ratio there. you don't see that with big companies.
how about wells fargo. with the housing market rebounding yao seen the stock rebound, to >> that's right. ndne o the more solid of our large banks when it comes to our financial structure. this isn't a company that has been caught up, at least not as badly, in the huge mortgage write-offs. we have not seen questions about its very survivability. i think we have a player here that will be profitable. >> tom: it's seen a lot of activity with that refinance business we've seen over the last several months. let's go back to your previous picks, you liked wal-mart down about 4%, and the travers company up7.fi%nd you still like wal-mart despite the fact you haven't made profit yet. why? >> wal-mart, if you remember, not only was it profitable when the economy was expanding, but when the late recession occurred late 2008, into 2009, wal-mart did quite well in comparison to most retailers. they've got the capability to
believe a player, whatever the economy. their stocks simply declined on a temporary basis but it's got great potential. >> tom: do you owning everything we mentioned total, randall. >> we do. >> tom: randall eley from washington, and the edward lomax company. >> susie: a look tonight at the impact of technology on healthcare. from c.t. scanners to supercomputers, the vast u.s. healthcare industry relies on the latest advancements to bring us breakthroughs in medical care. "the street's" james rogers reports. >> reporter: the latest technology is crucial in fighting diseases like cancer. but also presents a massive america's largest companies. we're here at long island jewish medical center to see how advanced technologies are revolutionizing health care. g.e.'s healthcare business generated more than $18 billion in revenue in 2011. now, doctors like john pellerito are using g.e.'s latest ct scanners to improve patient care. >> the acquisition of these 16
c.t. scanners is part of our system-wide initiative to improve patient safety and reduce dose. $12 million was invested with g.e. for these scanners and this is part of a $50 million program to improve patient safety. >> hopefully, we want to get to the point where we c get the amount of radiation on these scans as low as an x-ray. >> reporter: if you're a hospital patient, though, you may not even see some of the advanced technologies that are driving revenue for both the healthcare and technology industries. i.b.m.'s aiming its watson supercomputer, famous for its appearance on quiz show jeopardy, at the lucrative healthcare market. and number three: the doctors, >> the ibm watson technology and msk collaboration is just an extraordinary opportunity. what it can do is it can take all medical information from scientific proceedings, guidelines, textbooks, publications it can have that
available. available in a way that's never been available benefit. >> there's a huge opportunity here for ibm, which want wants to generate $20 billion in big data and analytics revenue by tonight 15. with more than $2 trillion at stake, expect health care to keep boosting tech's top line. i'm james rogers, the street, for nbr. >> susie: warren buffett says he's still on the hunt for a big acquisition with his elephant gun at the ready. in his annual letter to shareholders today, he said his one disappointment last year was that he quote, "pursued a couple of elephants, but came up empty- handed."
already this year he's launched one big purchase: $27 billion deal for ketchup maker heinz. and monday on "n.b.r.," warren buffett takes your questions! the billionaire investor wants to know what's on your mind. you can submit your questions on facebook. you'll find us under bizrpt. >> tom: tonight marks the end of a chapter and the beginning of a new one in the legacy of "n.b.r." since 1979 this program has been based in miami. tonight that comes to an end. on monday cable financial news channelnbc kes over "n.b.r." the program will remain on public television and i am confident it's future is bright with our colleagues. for most of us with "n.b.r." this will be our last evening with the program. it has been our honor to work on "n.b.r" it occupies a special place because of your support-- the viewer. you have never been shy about letting us know when we have come up short of your
expectations, nor expressing your loyalty. thank you for inviting me into your home, onto your laptop on your tablet or smartphone. this isn't goodbye. just see you next time. >> susie: tom, i will miss working with you and all the creative, hard-working people, past and present, who made "nightly business report" a success over the past three decades. but as you said, "nightly business report" is starting a new chapter, so i'll be back on monday with the program that so many viewers have grown to trust. "nightly business report" will still be covering the business and economic stories important to our viewers and with the same unbiased and thoughtful analysis. but the program will also have the added resources and support
of cnbc. good luck to you and everyone at we always have to have noise at the new york stock exchange. good luck to you, tom, and everybody at the nightly business report. >> tom: the sound of progress, susie. the sound of progress. have a great evening, and we'll see you monday, susie >> susie: goodnight, tom. thanks for watching, everyone, and as paul kangas would say wishing you the best of good- buys. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org