tv Nightly Business Report PBS November 8, 2013 6:30pm-7:00pm EST
this is nig"nightly busines report" with tyler mathisen and susie gharib brought to you in part by. >> thestreet.com. 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 street.com/nbr. october surprise, the economy powers through the government shutdown and adds way more jobs than everybody thought last month. the impact for the fed, the market and you. >> jobs generated. this sector once again was the top job creator in the economy, as it has been for the last four years. why travel in leisure is hot,
hot, hot. honest accounts, what the makers of a leading beverage company have. that and more for this november 8th, 2013. i'm sue herrera in for susie gharib. >> i'm tyler mathisen. shocking just about everyone slugging off the partial government shutdown and adding significantly more jobs than predicted. 204,000, that's the number added to payrolls blowing away the consensus forecast of 120,000. the unemployment rate is higher to 7.3%. hampton pearson digs deeper. >> reporter: in october job growth accelerated with employers looking past the government shutdown and debt ceiling fight. data was revised adding 60,000 more workers and the growth was wide spread. leisure and hospitality, retail,
manufacturing and health care all gaining strength last month. but the labor department says some 448,000 government workers were laid off due to the shutdown boosting the unemployment rate to 7.3%. >> the economy continues to be resilient, not with standing the self-inflicted wound s but the numbers show unemployment went up. >> reporter: baltimore based fire line corporation is one small business throwing and prospering in spite of the washington turmoil. they service and install every type of fire protection device and service you can imagine for commercial businesses, generating around $20 million a year in annual revenue and jobs for 160 workers. the plan began more than a decade ago is now paying off. four years ago at age 27, anna gavin took over a family business founded by her grandfather back in 1947. and yes, she's hiring. >> the hiring we're seeing,
we're hiring designers, technicians and what happens eventually you end up having to hire administrative people to support those people and growth. >> reporter: there are loath of head winds in the overall jobs market. the labor force shrank again declining by 720,000 persons who simply stopped looking for work, bringing the participation late down to the lowest level in 35 years. for "nightly business report", i'm hampton pearson in washington. stocks took off on the news. there was added good news as consumer spending rose and the market slugged off a drop in consumer sentiment. so in the dow rose 167 points to close at an all-time high of 15,761 and the nasdaq jumped nearly 62 and the s&p 500 added about 23.5 points. but interest rates spiked with the ten-year treasury bond hitting 2.75%. one question did arise, if that
jobs number was so strong, suggesting the under lying economy is firming up and the markets are concerned with the feds starting to ease up on the bond buying purchases, why did stocks go higher? we asked bob. >> reporter: the surprisingly strong october jobs report pushed interest rates up again today, yields on ten-year treasuries are at six-week highs putting pressure on interest rate sensitive groups like utilities, real estate investment trusts, all of which are down for the week but the idea just because interest rates go up, the stock market is supposed to go down didn't hold water today. yesterday was the worst day for stocks in two months but aside from interest rate sensitive names, most of the market was up today, particularly beaten up groups like biotech stocks, oil and gas, airline and momentum names like netflix. part of today's strength was due to financials. higher rates are generally good
for banks because it increases the chances banks can charge higher rates for loans. twitter had a debut on the new york stock exchange yesterday but drifted lower on the second day of trading ending down 7%. for the week, the dow jones industrial average was up 1% and closed at a historic high. for"nightly business report." >> what does today's job report mean for the overall economy and financial markets? to put context around it is joe davis, the chief economist at the muni twel fund company. good to have you with us. >> thank you, tyler. >> terrific to have you here. jobs today, obviously the economic growth numbers yesterday. how stock is the economy in your view now and is it strong enough for the federal reserve to dial back on bond purchases? >> i certainly believe it's strong enough to just weather the federal reserve. i mean, our theme for our investors throughout the year is
that despite the head winds the u.s. economy faces is that it's resiliency may be under estimated and today's jobs report under scores that sort of theme, despite the head winds, the private sector in particular is weathering those forces very well, and so i would expect more positive formative news on the labor market front over the next several months. so i think that clearly brings into focus a federal reserve that is beginning it's tapering program. >> you know, joe, the other aspect of it, though, the participation rate dropped so dramatically. does that worry you at all, and might it concern the fed enough they hesitate to pull back because people are leaving, they are discouraged? >> it does. i mean, it's the biggest question economist for investors is how much of the drop in the labor force participation rate is temporary, meaning not permanent in that some americans may return to the work force and actually look for work.
it's actually the single biggest variable with respect to win the federal reserve and may raise interest rates longer term. we're of the view that part of that job we have seen is more temporary temporary, there is a decent amount of slack. what we're closely watching is wage growth numbers. in the report today is 2%. so not suggestive of a tight labor market everyone if we had strong consistent numbers like today. >> joe, you point to the idea of temporary jobs, that being one constituent here but a lot of people working in part time jobs and at low wages in today's economy. that -- the under belly of this job's report is a little soft, isn't it? >> yes, i mean, you can point to the fact of the percentage of jobs that are so-called part time. it's been elevated since 200 8, tyler, as you know. that said, if you look back over
the past three or four years and net out the volatility, 80 to 90% of the jobs created are full-time. that said, there are industries more high paying than others and i think that's a force we'll have to contend with in the economy not just for the next year but several years. there are clearly areas of softness in terms of hours worked that we can point to but clearly an important ingredient for the federal reserve is that we have underlying strength and i think we saw that today. >> you mentioned the fed maybe pulling back on bond buying. does that start as soon as december, or perhaps early in the new year, and how aggressive might they be in terms of that cut back? >> well, i don't think we'll see tremendous amount of regressiveness. i think still, they will want to see consistent compelling evidence of the strength. just this time last month there was a considerable concern that the jobs report was too weak and so i think we'll want to see consistent evidence chl i think the december announcement is
possible. i think much more likely could be in the first quarter, particularly january. for investors, actually, we continue to be of the mind that it's good news if we're talking about a federal reserve that is under taking the tapering program, because that means the under lying strength of the economy can actually weather -- >> absolutely. >> and is in need of less spin off. >> this is definitely good news. >> joe davis, chief economy most -- >> thank you. more americans are letting fingers doing shopping. third quarter desktop based sales rose $7.5 billion, 16th consecutive quarter of increases. it has been a rough week for the white house and it's embattled health care website. the promise is made to have all the bugs worked out by the end of the month, but as bertha coombs tells us, that might be a tough promise to keep. >> touring a call center in atlanta, kathleen sebelius said administration is searching for a way to help millions of americans whose health plans have been cancelled but won't
qualify for insurance subsidies under the affordable care act. >> we're looking at a range of options. there is not a specific propo l proposal. >> reporter: after weeks on the defensive, it's a tone echoed by the president himself. in an interview with nbc news he apologized for his blanket pledge if people like their plan, they would be able to keep it. >> i am sorry that they, you know, are finding themselves in this situation based on assurances they got from me. we got to work hard to make sure they know we hear them and that we'll do everything we can to deal with folks who find themselves in a tough position as a kops kweconsequence. >> reporter: the president maintains many americans will find better deals on the online marketplace and pledge that the federal site health kecare marketplace and pledge that the
federal site health kecar.gov wl be fixed by january 1st. >> i'm confident that it will be better by november 30th and that the majority of people will be able to get on there, they will be able to enroll. >> reporter: with hundreds of fixes still to be completed on the federal exchange, supporters are expressing doubt that the problems on the site can be resolved in the next three weeks. >> i worry about the glitch because they set an art fish deadline of december 1st that i in my experience, that -- >> you don't think -- >> i think it will be tough, i really do. >> state run exchanges are reporting their enrollment process has been going more smoothly and contrast with federal officials who have so far refused to provide numbers until next week but local numbers are a point of contention. republican senators chuck and orin hatch on the washington d.c. exchange the the insurers reported at the end of the october they only received five official enrollments combined. that contrasts with the
district's exchange reporting that 320 people selected plans as of october 21st, with more than half requesting invoices. it's a wide discrepancy to be sure but washington d.c. officials say there is an explanation. enrollment isn't official until the first premium payment is received and enrollies have until mid december in order to start coverage on january 1st. it is now official, steven a cohen's hedge fund pleaded guilty to criminal fraud as part of a 1.8 billion-dollar deal to resolve a long-running investigation. although authorities didn't charge him with wrongdoing they will continue to investigate by individuals at the one-time 15 billion-dollar hedge fund. >> coming up, as we continue the market monitor, tells us why consumer stocks may be the way to go in this market.
that's next but first, a look how the international markets faired. recalling 1.2 million ram pickup trucks in the u.s. to check for a front end problem that could cause a loss of steering. the largest part of the recall covers an estimated 840,000 ram 2500 and 3500 trucks from 2003 through 2008. their defective tie rod assemblies will be fixed at no charge beginning in january. much of the growth in the jobs number came from house pa it willty and leisure. not just today and simon hobbs with a look at the big jobs
generator. >> reporter: whether it's that take out franchise, the luxury hotel, drinking establish the or the fitness staff at your gym, months after months leisure and hospitality consistently generated more jobs than other parts of the economy. in fact, of the almost 7 million jobs generated over the last four years, 18% have come from leisure and hospitality, according to the burro of labor statistics. partly because the industry is coming from a base slammed in the wake of the financial crisis. now business travelers are traveling again and tourist from home and abroad, you can see it in the results of big hotel brands like marriott. >> what we've seen is built back to essentially peak levels. so we're full midweek, and we've seen that we've been able to both raise like for like pricing but also shift towards higher rated business. >> reporter: returning for the airline and as with the hotels,
capacity on supply remains restricted, so prices are rising, profits are rising and operators have the cash to add back jobs and concentrate again on customer satisfaction. >> we have had rising airfares. we have add rising average daily rates for hotels because there is good business and leisure demand. >> reporter: those big cost theme parks with visitors are again becoming major cash generators for the likes of bob iger at disney. >> with cars land and fantasy land in orlando and that helps a lot. our product is being welcomed by our public and in demand. >> reporter: critics will argue that many of these jobs that are being created are low-skilled, low-waged paying on average across the country $11.15 an hour. for "nightly business report", i'm simon hobbs. while all was good in leisure land, home builders got
slammed because interest rates spiked on that strong jobs number. there you see most of the big names down between 2 and 4% today. attempts to strengthen sales with more brightly colored clothing and more attractive stores seems to be paying off for gap and that's where we start the market focus. third quarter revenue with stores open at least a year grew 4% well ahead of estimates and gap forecast a better than expected earnings outlook. the shares were up 10% to $44.43. groupon, they saw strong growth in north america. revenue came in below consensus but that didn't worry investors. shares rose to $10.11. shares of in video jumped after the company posted profit that best estimates. the chip maker issued a weak
outlook for the current quarter because of a declining pc market and hash mobile device competition. the stock rose about 7% to $15.56. cable division, revenue there up to 2% met best mitts but the new york cable area cable company lost 29,000 total customers from the second quarter. cable vision facing competition from verizon and media companies charge to carry networks. the shares down 3.5%. the market is not yet over valued. he's mark mckaren. welcome, mark, nice to have you here. >> thank you. >> let's start, first of all, it's not over valued but are you still able to find value in this market because we always hear it's not over value but fairly valued. >> yeah, fairly valued, no longer cheap, that's for sure and, you know, the volatility
levels are very uncomfortably low. so that combination isn't comfortable with us, but there are pockets of areas of interest, pockets of expensive stocks but also pockets of cheap stocks we think. >> mark, jump in and tell us what sectors you like and why don't you start off with your first investment pick for this evening. >> if we look across the world, global health care is a big trend and cvs is a name we've held in client portfolios for awhile and benefitting from the increase demand for prescription drugs and well position in the market. so that's one example, and that's a u.s. oriented play. if you look across the world, in particular europe we have positive outlook we think on european pharmaceuticals. >> you like consumer stocks, visa is one of them. >> yeah, visa, we just heard earlier in the program about the increased travel and leisure
demand and a lot more payments going through electronic systems and visa is a major player there. very competitive market but visa for us is a good opportunity to play that continuing growth. >> you know, as we move on to another choice of yours, which i believe is amazon, i'm noting that you seem to be picking or gravitating, there nothing wrong with it, mark, to storks that outperformed the market. do you worry that these stocks have gotten ahead of themselves and may slow down? how should i think about a stock that is oh, 12 or 15% ahead of the baseline market? >> you know, if you look at, i think it all depends on how you look at its growth at top line and bottom line. amazon i would highlight is probably the most expensive stock that we have on tonight and that's because the earnings are quite minuimal and growth line is significant, and it's popularity in the market is quite strong. amazon to us benefits from
increased online purchasing where they are taking market share from some of the other traditional retailers. >> mark -- >> i think it's very important to look at -- yes, please, sue? >> go ahead and finish your thought, mark, sorry. >> i was going to say if you look at the top line growth in anticipation of earnings in the future, i think that's where you have to look. >> can you address the overall market because at the beginning of the segment you said stocks certainly aren't cheap but finding pockets. that takes me to whether or not we've seen the lion's share of the runup in the s&p for instaps or the dow for the year. do we have a significant amonth of run or not so much? >> it's moved up quite a lot. the market has been more resilient given the underlying economic growth but if you look beyond just the u.s. into europe and into asia, there are a lot more opportunities we think from evaluation standpoint and also to benefit from a rebound in europe in particular. >> mark, among the stocks you
mentioned, do you own any of them personally or does your family? >> no, none of those. our clients do but we do not, no. >> all right. mark, thank you very much. chief investment strategist out drexel morgan. up next, an honest assessment of a multi million dollar idea but first a look at commodities, currencies and treasuries. . it's jobs friday and that brings us to a bright idea. the entrepreneurs with honest tea, made with real tea and less sweetener. coca-cola bight it for a price reported to be above 1 $00
million dollars. >> given the thinks, you would think this is a recipe for disaster. >> reporter: he and his former student seth gold man have been telling the story of honest tea. >> a simple idea, tea that takes like tea as opposed to liquid candy. we had no preexisting knowledge of beverage industry. as we all know, it's a brutal industry and grew it from thermiss to a snapple bottle. >> reporter: it spent six weeks as a new york times best seller like the less sweet drinks, it's different. >> just as the beverage industry didn't need another beverage, the business world or book shelf didn't need another business book. >> reporter: a couple years ago goldman noticed one of his sons
was hooked on comic books. >> i said don't read comic books, do your homework. he said dad, we got to make a business book as engaging and inspiring as a comic book. >> lessons stick with people, that's why we do tv. if you want people to remember what you did in the lessons, show. >> reporter: she did a show and tell at comic-con who took on the task about a take a day of converting their story into a graphic novel. >> it's not rocket science, but it wasn't easy, either. >> it's not fiction. i prefer that. >> reporter: the process was novel, too. >> i've never read any business strip before. >> reporter: she learned things like how they expanded beyond natural food stores and how a decision to buy a bottling plant cost tens of thousands of dollars a day and turned their
lessons what amounts to a screen play. >> countless rejections. >> those bubbles are basically the length of a tweet, so written in tweets with good grammar. but our story has so many visual elements, the tea gardens, the label design, bottling plant, the personal stories that go on and this is a way to make the story come alive. >> i tried to make you or seth react to the office figure explaining. >> reporter: troy grew up in south korea reading a japanese story telling. in japan the monga business is $5 billion a year. here it's a tiny fraction, maybe 200 million. >> if anything else, like using a life story like monga. >> reporter: she has high hopes. "mission in a bottle" popped up in college classrooms not just at yale, michigan, maryland, american. >> we're able to take
complicated ideas and by illustrating them, get people to pay attention, have it sink in. >> reporter: he may be on to something. earlier this year the university of oklahoma study showed students retained more information after reading a graphic novel than a traditional textbook. >> it's not as if people are doing a lot of homework these days. so if you get somebody to read it and remember it, call it a victory. >> reporter: a different medium delivering a potentially valuable message. >> this book is emphasizing the things that went wrong because if you can avoid mistakes we made, that will save you millions. >> the guide to building a mission driven business in a profit driven world. >> seth goldman is still in charge staying on as teo. barry nail buff not with the company. he kept his day job teaching at yale where they sing bula, bula he's got the mula.
>> he does. >> the fight song. >> the simplest come the greatest. >> come the greatest fortunes that's so true. have a great weekend everyone. that's "nightly business report." i'm sue herrera, susie will be back monday. >> i'm tyler mathisen. have a great evening from me as well and weekend. see you back here on monday night. "nightly business report" has been brought to you by. >> thestreet.com, up to the minute stock market news and in depth analysis. our quant rating service provides objective independent ratings daily on over 4 00 stocks. learn more at thestreet.com/nbr.