tv Nightly Business Report PBS March 26, 2013 4:30pm-5:00pm PDT
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schuller about what's next. >> two techs go bust. well, not exactly, but dell and blackberry, former tech titans are in a fight for their lives. can they come back? >> and courtroom drama. the supreme court hears the first of two cases on same-sex marriage. what are the stakes for business? we'll have all that, plus the simplest trading strategy you've ever heard of tonight on "nightly business report." good evening, everyone. tyler, we had a lot of positives today about the stock market and also about the economy. >> and those economic numbers really did drive stock prices higher today. the dow has done it again, climbing to a record close. rebounding from monday's losses. investors shook off concerns about the debt and banking crisis over in europe and focused instead on higher home prices. in january, in the u.s. which rose at the fastest pace in almost seven years, and on a sizeable jump in factory orders for big-ticket durable goods in february. when all was said and done the dow was higherby 112 points
closing at a fresh all-time high of 14,559. the nasdaq was up 17 and the broader s&p 500 added 12 points now just a point and a half away from its own record high close. >> as tyler just said home prices went through the roof in january, up more than 8% year over year and this is in the nation's largest cities. it's the biggest jump in prices since the summer of 2006 and that's according to the latest case shil schuller home price index. some of the cities that took the hardest hs during the housing collapse saw some of the biggest gains including phoenix, las vegas and san francisco all with double-digit price gains. joining us now the co-founder of the case schuller index, robert schuller. he's also economics professor at yale university. you know, robert, a lot of people are looking at these statistics if you'ra i home buyer or home searle, you'll come away with conclusions and if you're a home buyer you're saying maybe this is the time to
buy that house because prices are going go up and if you're a home searle, maybe rethink holding off before selling because you mightet a better price. how should paid people strategize through this? >> it's very important to keep a distinction between the housing market and the stock market. momentum is much, much stronger in the housing market. so the fact that we just set a record on the dow means very little about the outlook for the stock market and that the increases we see in the housing market means a lot. it's not as efficient a market so this might be a time to accelerate a purchase of a home to g the increes tt are likely over the next year. are you at all worried that there might be a repeat of the mid to last decade? >> well, i don't think it's going to be as momentous as that one. that was the biggest bubble in the history of the united states. so we don't expect that to happen again, and in fact, in
history when we've seen big booms regionally in the united states they've often not repeated for another half century. so i don't expect that, but it doeseem possie that it uld substti and it depends on a lot of things including political factors. >> you know, robert, we've been hearing anecdotally stories that a lot of people investing in real estate is a good way to make some fast money buying properties and then flipping them. does that strategy make sense to you? for people who know what they're doing, i think it naturally does. one thing that's changing is i don't know about flipping. i think buying and holding it as a rental or someone who wants to be a renter, and that seems to be a shift for now, at least, in public demand. so i think it's a natural, economic thing to be doing right now. >> as you take apart the housing market or you analyze it, what's making prices go up so much?
you know, usually i don't know the answer to that, even after the fact. i'll tell you the first thing that comes to mind. the fed, very low interest rates. in fact, in december we set an all-time record low mortgage rate. it was 3.35% and it was t u much from that today. that is -- for buying a house it's the low mortgage rate that might be the more important factor, and that is to lock it in for 30 years. that is pretty incredible. can you talk us in for the numbers and you look at the metro areas of the cities on your list and they'll pull up a graphic here. phoenix was up year over year, san francisco, 17.5 and then you look at the bottom of the li d new york city up just half a percent. what kind of conclusion should we draw from looking at these
numbers and what's the story behind the numbers. >> short run go for phoenix. long run, go for new york. by the way, the financial sector is very low priced now, too. new york is the world's financial sector and it looks beaten down right now, but my feeling is that has a good, strong future. >> let me get you as a student of value to commt iyou ul the values of the stock market today. do you think the market is priced too high for the economic underpinnings. >> it is priced highly. i have my own -- and cyclically adjusted price-earnings ratio, and that ratio is 23 which is high. then you have to remember that interest rates are very low. so it's not unnatural for them to be high. so what i'm saying is based on the cape ratio and the real return on the stock market for the next ten years might be something like 3% a yrhich isn't bad ithe current
environment. that's way better than your ten-year treasury. >> we'll leave that for another conversation, but thank you so much. robert shiller, co-founder of the case shiller index and also economics professor at yale university. >> today's case shiller house price confirms why americans are once again bullish on real estate. according to the latest cnbc all-america survey, 33% believe their home prices will rise during the next year? that's up from 9% from november and it is the highest that number's been since december of 2007. 54% think home values will stay the same. only 13% think they will decrease. and while stocks and real estate look promising, gold is the preferred choice of american investors. 35% say they believe gold is their best investment. 27% of the respondents named real estate and 21% like stocks the most. >> so while most americans prefer gold, that investment
hasn't paid off recently and jackie deangeles takes a look at why the precious metals is oking tarnished. many instors e wdering if the gold rush is over as the dow has made a record run and money is rotated into equities, bouillon has remained rangebound, what lies ahead and is it time to add the precious metal into your portfolio? when fear runs high, gold has run even higher. one recent example, the summer of 2011 when the s&p prompted to downgrade the rating of the united states, gold hit an intraday high of $19.23 an ounce. ld h also managedo rally alongside the markets. for example when the fed announced several rounds of monetary stimulus, bouillon moved higher as an inflation edge had. gold hasn't managed to move much. the rangebound metal wasn't where investors flocked when worried about the fiscal cliff and it wasn't where the they
turned as the markets climbed higher. traders say gold's behavior is o odd, but explainable. it's been held back by the dollar's strain. >> it's been denominated in u.s. dollar, right? so when there is strength in the u.s. dollar that implies there's weakness in a foreign currency so there is less gold that can be purchased per euro, per yen, per swiss. >> in addition, there has been evidence that they funded into gold. >> there have been outflows in terms of the gob for the funds to participate and initiate gold exposure. so the open interest has come off substantially in the gob. >> even when gold does tend to catch a bid it tends to be short covering and not necessarily new buying. still, experts say that all signs indicate that gold is headed higher. here at home, fears of sequestration and new debt ceiling deadlines are a cause for concern and the eurozone
debt crisis is far from over as highlighted from recent events in cyprus. >> when we have the crisis out of cyprus, this is the definition of headline risk. so we have this demand for safe haven. >> for "nightly business report" i'm jackie deangeles. >> two blue chips in the dow hitting all-time highs todayand that ishere we begin our market focus tonight. american express and johnson & johnson both hit as the market gained and the amex on the $150 million a share buyback plan and j & j after ubs raised the price target on the stock to $87 from $81. johnson & johnson also part of the nyse pharma index and that index hit its highest level in almost 12 years today. here are some other top performers in that group. bristol-myers squibb leading the way up most % year to date, followed by eli lilly, pfizer, amgen and merck. it is set to become one of
the ten largest shareholders in goldman sachs. the move comes as goldman gives berkshire millions of shares in place of warrants dating back to the depths of the financial crisis and that's when buffett came to the rescue of the wall street firm by investing $5 billion. goldmaniay stock was closing at their 146. at that price berkshire would receive 9.5 million shares. netflix was the biggest gainer in the s&p 500 today after an analyst boosted the company's price target to $225. he says the company's streaming video business has the potential of drawing in more subscribers. netflix shares have doubled this year and they rose today to $190 and that's a gain of 5.5%. >> a historic hearing on the u.s. supreme court on whether same-sex couples would have time to rally. john harwood joins us from the
supreme court in washington. what did the justices hear today? >> the two-day sense of argument on same-sex marriage. tonight it was about ate, ban gay maerj after earlier it had been conferred in california. justices will have to decide if they can take a right after having granted it. the arguments tomorrow will be about the defense of marriage act which was signed by bill clinton in 1996. even bill clinton has said that it was unconstitutional and we'll see if the justice agree and there wassy cautioning expressed in their questioning to the lawyers today. >> while we're waiting to hear on from the supreme court on this case and many businesses are providing benefits from gay couples and we've gotten ahead of the law and the culture. why the disconnect? >> well, business executives worked on a different metric than politician-seeking votes. business executives have
approached it as a bottom line issue, if you look at these compiled by the human rights campaign and we have 99% of businesses that have anti-discrimination policies on sexual orientation upon. 75% say they provide domestic partner benefits to same-sex couples and you also got 13 out of the 20 biggest companies on the fortune 500 list that got a perfect score on those sorts of issues. so the business community is the head. the politicians are catching up and we'll see what the supreme court justices decide a couple of months. john harwood, thank you very much. john harwood report sgloog coming up on the, dell and break berry, two iconic american brands at a crossroads. we'll see what happens when technology kings get beaten at their own game. here's how international markets closed out the day.
apple shares in a serious swoon since september were off slightly today and this despite positive comments from an influential tech analyst and fund managers. the analyst gene munster reiterated his dollar 67 price target on the stock more than $300 above today's close. he said the next two quarters would come in below consensus estimates as iphone sales slow but then he thinknew product launches will power demand and the stock. fund manager channing smith of capital advisers growth basically makes the same argument. his forecast, $600 a share by new year's. before shares of apple climb
any higher the company has to battle concerns about declining sales of its signature products. iphones and ipads. at china's foxcon, a major supplier to apple and where many of those apple gadgets are made those fears may be real as workers describe a slowdown in production. eunice yu has more. >> what happens at fox con is a barometer for activity. we heard it slowed and we headed to the notoriously secretive manufacturer to find what's happening behind the heavily guarded gates. we spoke to a half dozen foxcon workers and only one would talk to us on camera, but they all said the same thing. there are no orders, he says. generally, there's nothing to do. the worker moved from the countryside to make big bucks in the big city. he like the others we spoke to say foxcon pays the best. beg clients like apple and dell
mean steady orders. to the workers that means a chance to work longer hours and get better pay, but not since february. the worker who inspects ipad normally rakes in $480 a month. now he says he'll be lucky to earn two-thirds that. sometimes, he says, they don't do much at all. there's no overtime, he says. a lot of people have left. >> foxcon empys 1.5 million people in china and the company isn't hiring as much as before. in a statement foxcon says 97% of employees returned after the lunar holiday and this period has always been considered low season for the industry, but all of the workers who have been at the factory for over three years said the slowdown was more pronounced this year. what the workers tell us could be a sign of weaker sales and something we'll know for certain this earnings season and this worker may not stick around until then. killing time is pointless, he says. i might as well check out other
jobs. for "nightly business report, eunice yun shenzhen. if you think apple is facing challenges get a load at this. it's nothing to what's happening at dell and blackberry. both were stock market kings and must sfls many portfolios. today, dell is in the middle of a buyout battle and black berry is battling for its survival as an independent company. technology correspondent john ford is here along with andrew ross sorkin who wrote about dell's predicamt. drew, if i mht sta with you. in your column you reference criticism that michael dell has been receiving for the way he brought forth his buyout proposal. talk to me a little bit about that and whether you believe that if any outcome here with dell, michael dell will still abe part of the company or won't he? >> the second part of the company is still the question whether michael dell remains part of the company. he clearly wants to own the
company. he tried to buy out the company and in the process has put it in play to the point where he may not ultimately be part of the futuref this company. to your first question, there are rarj issues around management-led buyout and there are questions among shareholders who were saying to themselves why has michael dell want to buy this company? is he buying it on the cheap and if he's buying it on the cheap why should i sell it to him and leon cooperman said this is the equivalent of insider trading and he knows something that other shareholders don't and to some extent now that we have a separate offer from blackstone who came with a bid of $14.25, against michael dell's bid of silver lake of $13.65 and an additional bid of mr. icahn of $15, you could say that perhaps the original bid was too low. >> you know, john, dell was once considered one of these tech darlings that could do no wrong, and it seems like the issue
here, whether it's a private company or a public company, the business model is out of date. how do they survive and how do they make that changeover? >> well, they got so big and so popular making pcs more efficiently than anybody could at the time and what happened is everybody else got better at making pcs ask now pcs are less popular than they used to be as people use smartphones and tablets. so what they need to do is one of two things. either figure out how to be a great mobile player and they tried a couple of times and have them figure it out. they're doing a bit better at that, but this big pc weight is just dragging them. >> that was one of the big issues here, right? that's part of it, but they were depending on software from most or from google and they were depending on other companies to figure out how to put the objects and products together and they couldn't compete as much with apple. >> speak of a company that missed a big move, blackberry,
another company that we're talking about in this segment tonight, it missed the move to sort of touch screens and multi-function devices. can this company come back? >> it's going to be a struggle. i hate to say it because i'm a blackberry user and i have loved my keyboard from the absolute very beginning like so many opleut there, but i also carry around an iphone these day, and i think that's become indicative of what you're seeing. by the way, on wall street and the defense department and others who have taken up other devices. it's very difficult once you start looking at the ecosystem that is the apple os, the operating system and all of the apps that are around that to think that blashg blackberry will be what it used to be. having said that, if blackberry can just eke out small little gains they can make big wins for the company and for the stock, i wouldn't count them out just yet. >> let me ask both of you this, andrew and john. when you look at these companies
and others of this ilk, is it a technology problem that got them here or is it a management problem or is it both? >> in both cases management was too proud of what they had already accomplished and didn't look around the corner and see what was coming. on the technology side, both had a similar problem. blackberry didn't design an operating system that could do web surfing and can handle apps and apple had that already and they figured they were fine ruling email and messaging just like they'd done before. they need to figure out what the next big thing will be. don't just mess with them -- and the word is not favorable. so the word is better than the early sales. people said, yeah, we've done things some feeks do do and why buy this instead of the stuff all your friends have. >> andrew, what is your thougs
all this? it sounds look a hafb art school case study. >> the lesson is they all need to turn around and it's a real gamble either way which way they go and some people look at dell transaction and the shareholders say they're not paying me enough money. pay me more. it's possible that michael dell makes a fortune as he loses a fortune and that's the thing we have to remember. >> andrew sorkin, thank you. >> why it's more important to teach children about the value of a buck, but fit, aook at how commodity, treasurys and currencies fared today.
teaching children about money is an issue parents are struggling with and some are required to study personal finance. as we continue the sear, hitting the book, sharon epperson reports that the push to spread that knowledge and make it mandatory is growing. one big thing we went over how to form a budget and financial lessons for students in ohio. >> i actually worked with my mom and we formed a budget that we still use and it's helpedous tremendously. >> since u.s. economic crisis many schools and teach verse been searching for strategies to help students deal with the real-world economy. >> as our financial industry continues to get more complicated the lessons are becoming more and more painful. so it's time that our legislators recognize that we need to evolve.
our education system needs to evolve and we need to prepare our children to be able to manage their money in a much more complicated financial society. >> brian paige's class is an example of what many wld like to see become law. a requirement that all high schools in the state offer a personal finance course. >> it's our hope that people learn that at an early age and carry that through throughout their lives. >> ohio is one of 46 states that includes personal finance education in standard curriculum for kindergarten through 12th grades and there is no mandate to teach it yet. according to the council of economic education only 13 states require high school students to take a personal finance course to graduate. there's a national push to grow thosnumbers starting in elementary school. >> it's good that more and more are adopting a financial education course, but waiting until high school is too late. it needs to start in
kindergarten and there needs to be a foundation laid every single year. >> in the next few months the treasury department is expected to launch a website offering teachers ready-made personal finance lessons that can be incorporated for math and english in schools across the nation. >> we need to know that a student in michigan in the fourth grade is learning what a stent in new yo in the fourth grade is learning. it is so far beyond how to write a check. its tremendously empowering to teach children you have control over your own life. >> this course is more than just about how to become rich. it's about leading a rich life. >> when i come back and they tell me that they have opened a savings account or they tell me that they have a high credit score or they tell me they have a direct deposit into the 401(k) which they're fully matching, that's how i measure my impact on them. >> that's the real world test of lessons that can help them throughout their financial lives. for "nightly business report," i'm sharon epperson.
>> we have mbr.com. what you thought about teaching financial lit ras toe younger students. christy said very important especially since it appeared that parents have abrogated their experience in this area. >> i applaud this long overdue move. >> do you want to make money in the stock market? the answer may b as easy as invest on a funny day. the nyu's stern business school, researchers studying trading patterns a cross 26 world markets found between 1982 and 1987 stocks rose more on funny d sunny days than cloudy, or rainy ones. or go with simple-sounding names. after studying hundreds of u.s. stocks that those with easy to pronounce names outperformed the tongue twisters and as warren buffett says, simpler is better. it was a sunny day here, susie,