tv Nightly Business Report PBS January 15, 2013 7:00pm-7:30pm PST
chips moving higher. it was disappointment over the facebook announcement that led to more selling in textbook shares as apple's stock continued for the second day in a row. the dow industrials closing up 27 points, and the nasdaq lost six, with the s&p 500 rising almost two points. >> as tom mentioned, we got an early read on how american factors are doing. and it is not good. manufacturing contracted for the sixth straight month. and the federal reserve tallied the numbers and said the index for december was pressured by a drop i in new orders and shipment. and the conditions index fell to minus 7.8. clr in december. any reading below zero suggests contraction. economists were expecting a flat reading. some business watchers believe that weakness in manufacturing will continue. >> well, i think the weakness in manufacturing is a chronic weakness that has been going on
for quarter after quarter, period after period, and the problem is the underlying competitiveness of the u.s. these data... this slow recovery is really a symptom of a deeper, underlying problem, and we have to get onto that problem or we're going to have these weak numbers for many years to come. >> susie: and we'll have more with michael porter on innovation on monday. u.s. markets are closed for the martin luther king, jr., holiday, so we're looking at american innovation and competitiveness. join us for this "n.b.r." special edition: "u.s. innovation."
>> tom: a rebound in the housing market and a multitude of new models may help truck sales to their best year since the financial crisis. new trucks unveiled at the north american international auto show in detroit this week aren't just more powerful, they're also more fuel efficient and loaded with new technology. ruben ramirez reports. >> reporter: if 2012 was the year of the fuel efficient "green car," 2013 is shaping up to be the year of the truck. the big three-- gm, ford and chrysler-- all are out with new 2013 models or concept pickups that will start hitting showrooms over the next few years. the three are fierce competitors in the full-size pickup segment where profit margins are larger compared to cars. jeffries auto analyst peter nesvold says automakers make $12,000 to $15,000 in profit for each full-size truck they sell. >> to put that into perspective, small cars might be anywhere from $2,000 to maybe $4,000. so when you get that shift towards trucks, that's quite powerful to earnings. >> reporter: g.m. has two new models, the chevy silverado and g.m.c. sierra. >> the truck margins are still certainly strong for us; they continue to be for the entire industry. and with this new truck, that'll be no different, but it's still a great value for the customer.
>> reporter: even with the higher margins, buyers may find some deals as truck makers work to move older inventory off their lots. pickup trucks made up about 11% of the u.s. market last year, well below the historical averages. the ford f150 has been the best- selling truck in the category for decades. ford is looking to maintain that dominate position with its new atlas concept, though it likely won't hit showrooms till late 2014. >> we're showing off this concept to show you the design direction that we are going in the future, and also the technological direction with a lot of new innovations on this truck. >> reporter: also likely to help truck sales: a strengthening housing market as contractors and builders need to haul materials. but the big question remains, will the interest in new models keep consumers from opening their pocketbooks and buying older models? ruben ramirez, "n.b.r.," new york. >> susie: while pickup truck sales are expected to dominate the u.s. vehicle market this year, there's another category getting a lot of attention in
detroit this week: luxury cars. and tomorrow, from a sleek new corvette to bentley's $300,000 convertible, we get the latest on the market for high-end wheels. >> tom: as ruben mentioned, one of the reasons automakers are optimistic this year is the pickup in pickup truck sales. that's just another indication the housing market continues to rebuild. another sign came from the nation's third biggest home- builder. in the fourth quarter last year, lennar earned more than three times what it earned a year earlier, easily beating wall street estimates. according to the builder, it saw "solid profitability in all our business segments." richard dekaser is housing economist at wells fargo. he joins us from our washington, d.c. bureau. richard, very optmistic outlook when it comes to housing. can it continue this pace through recovery this year? >> i think so. if you look at the availability of houses on the market today, we're actually looking at record lean levels. new homes have never been as lean as they are now.
we're going back decades. the demand side of the market is coming back quite nicely. there is a lot of people doubling up, staying with their parents, who are now moving out. there is growing household formation, complimenting this lean supply. that tells me this has legs. we're not talking about a brief movement, but something that is likely to be sustained for many years to come. >> tom: but where are the legs located? in other words, not all housing markets are created equal. fitch credit ratings put out this note, quote,"although home prices have stabilized and started to improve, we believe that home price appreciation will tend to be relatively narrow focused." where? >> well, there is different parts of this? if we're talking about housing demand, actually increased sales, that is occurring across the board. but building activity is being limited to certain markets, where we have lean conditions that i just described, which are true for the nation. but we do have gluts in some parts, mostly in the south and in the west. prices, however, are going
up across the board. even the so-called sand states, the west and the south, where we saw prices take especially huge hits are showing especially large rebounds at this point in time. the price rebound is across the board, and construction activity a little more mixed. >> tom: we learned a few weeks ago that the federal reserve has begun an internal debate about pulling the bond strategy, by the end of this year. that has helped push down those mortgage rates to record lows. what could be the impact? >> it will hurt. affordability today is extraordinary. that is to say, the amount of a typical family's income required to buy the typical home is extraordinarily low. if you begin to move interest rates up a point, or even two, you're simply moving the housing market back towards more normal conditions, rather than overvalued or highly priced conditions. so it would hurt, but it is not sufficient to
derail this recovery. >> tom: finally, what about that shadow inventory? you talk about that inventory being low, and still lots of built-up foreclosures and short sales out there? >> absolutely. there is still excess supply in parts of the market, foreclosures and the like, and while new homes are scarce, there are still a bunch of existing properties come to market. that, however, has come down. we were talking 2.5 million potential units a year ago, that is down to 2 million. i would emphasize that offsetting that is latent demand, all of these people doubling up are beginning to move back into the market. and it is giving them the wherewithal to buy homes of their own. >> tom: richard dekaser with us in washington with wells fargo. thanks, rich. >> my pleasure. >> susie: after weeks of speculation, facebook is adding
a new search feature to its social media service. it's called "graph search," and it's designed to help users sort through content on the site. but is this a game-changer for the company? erika miller reports. >> reporter: it was facebook's first major press event since its initial public offering flopped in may. before the announcement, there was speculation facebook could unveil a smartphone or a web search engine, so a social search feature came as something of a letdown. the tool will help users search their social network for information that has already been shared with them. for example, a facebook user taking a trip to london might ask for "restaurants in london my friends have been to." one feature touted by facebook is that the request can be in plain english. >> i like the idea of being able to quickly parse my friends via groups. that's pretty cool.
so, if i have a common interest- - whether it's a tv show, food, an area that i'm interested in visiting-- that's very nice to be able to very quickly parse that out. >> reporter: as part of this strategy, facebook is partnering with microsoft's bing internet search engine, and if facebook can't find results in your network, it will switch to bing to search the entire web. the news helped push up shares of microsoft up more than a percent today. google shares also rose on relief that facebook is not challenging it head-on. as for facebook, its stock is still below its $38 i.p.o. price, but investors have big hopes for the company's fourth quarter earnings, which comes out in two weeks. so the big question is whether this new tool will significantly boost revenues. >> this is something people have talked about as one of its big potentials for a long, long time now. this immediate product we saw today wasn't the game changer, but, over multiple years, this could turn into real game changer for facebook.
>> reporter: if you are on facebook and you want to check out the new feature, you can't. the tool is still in its testing phase, and the company plans to roll it out slowly. erika miller, "n.b.r.," new york. >> susie: joining us now with more on today's facebook announcement: scott kessler, head of technology research at s&p capital i.q. >> susie: so, scott, what is your take on all of this? facebook stock down 3%. you know, is this not a game changer for the company? >> well, susie, we don't look it as a game-changer, at least right now. facebook made it pretty clear that, look, we're in the early innings of their search initiative. and today, obviously, they announced graph search. just in a soft, kind of beta launch, in a very limited fashion in terms of geography and in terms of categories. over the longer term, this could have some material financial impact for facebook and its
investors. >> susie: all right, so does it concern you that there is not a real hard-core product here, that it is a test, and there was no announcement of a mobile platform, given that so many facebook members use facebook on their cell phones? >> yeah, i think those are fair points. look, i think what most people probably took away from today's announcement is that it didn't live up to the expectations of a lot of folks. and that's not necessarily facebook's doing. they essentially put out an invitation, referred to something they were building, and left the rest to people's imagination. unfortunately, we think that folks might have gotten carried away in terms of what they anticipated from the company and when their expectations weren't met, the stock fell today. >> susie: another stock that fell today was yelp.
it was down sharply. do you think that this facebook announcement is a threat to yelp, or was there overreaction. we heard from erica's package, that microsoft was up on the news and so was google. >> if we don't cover yelp with a recommendation with our research, but if you think about the implications of what facebook is talking about, which is essentially tapping into not just collective wisdom, but the collective wisdom of your friends on facebook, there is the potential that instead of potentially going to yelp for information about restaurants, for example, maybe you just conduct searches based on restaurants that-year that your friends may have visited or liked. there is a potential benefit of that. one of the things that we wonder about is whether or not those searches and those results will have the kind of scale benefits that will provide really
authentic and valuable information to users. at least over the near term. >> susie: scott, i want to ask you about another company you following, switching gears, apple. as you saw, it closed below $500, $485, and a lot of investors are wondering what do they do with it. what is your view, buy, sell, or hold? >> we have a strong buy recommendation on apple. clearly that $500 price has been a line of demarcation and the fact it was broken today is somewhat discouraging. but the reality is, look at s&p capital i.q., we fundamental equity analysts. we see apple as a very good company, and a compelling buying opportunity right here. especially ahead of their q-1 earnings for december quarter. we think the company did very well over the holiday shopping season, and we'll prove that out when they report results. and not just the fundamentals being solid
and not just the evaluation being very attractive, but $$122 billion in cash and investments. we expect more dividends, and more buybacks from apple, helping the shareholder. >> susie: very interesting points. scott, do you have any disclosures about apple or any other, facebook, that we discussed? >> suffice it to say that we're not allowed at s&p capital to own any of the stocks that we cover, nor can anyone in our households. >> susie: fair enough. scott kessler at s&p capital and i.q.
>> tom, some interesting news from the walmart c.e.o. today. he said that walmart will hire every veteran who wants a job, who has come off the active duty over the last 12 months. he said walmart will hire more than 100,000 vets over the next five years, as long as they have an honorable discharge. and the effort officially begins on memorial day, may 27th. >> tom: it is a heck of a promise and pledge, and comes at an interesting time for american's vets, as we're drawing down the troops in afghanistan, due to complete that by the end of next year. and also walmart not only talking about hiring veterans, but talking about buying $50 billion more products made in the u.s., a big bet on american inginuity there. lots of focus today in our "market focus." here is susie.
the major stock indices finished mixed for the second session in a row, with apple again weighing on the technology sector. the stronger december retail sales figures and low inflation didn't lead to any early stock buying. after spending much of the session in the red, the s&p 500 was able to climb into positive territory in the final hour of trading, finishing up a fraction but enough to be a five-year high. volume picked up with 602 million shares on the big board. over 1.8 billion traded on the nasdaq. with a decent retail sales in december, the consumer discretionary sector led the gains, up 0.7%. telecommunications saw the heaviest selling, falling 0.9%. apple stock saw a second day of selling on heavier volume. several wall street analysts were out with encouraging comments after yesterday's worries over the company reportedly cutting orders for some iphone 5 components. the stock closed below $500 per share for the first time since last february. at least two analysts said concerns about cutting supply orders are misplaced, and the reduction may have more to do with better manufacturing processes or the timing of
supply orders. the three big national wireless carriers who sell iphones also saw a second day of selling. verizon's 1.5% drop today takes shares down to two-month lows. sprint was off 1.2%. a.t.&t. fell 0.8%. one bright spot in technology was dell. the computer maker is talking with two private equity firms about going private. the stock built on yesterday's gains, adding another 7.2%, climbing to its highest price since mid-may. volume was huge, with more than 150 million shares trading. talk of a possible buyout comes as the stock is down 17% in the past year even with the rally of the past two days. concerns have been building about dell's traditional computer business under pressure by competition from smartphones and tablets. as a group, retail stocks were stronger thanks to the encouraging retail sales data from last month. the s&p retail exchange traded fund rallied 2.1%, closing over $64 per share for the first time since september. among the leaders, dollar
general's 3.8% rally, big lot's 3.6% increase, and j.c. penney up 3.4%. these three are among the worst performing retail stocks over the past six months. two other specialty retailers in focus today. young adult apparel store express jumped 23.8% after the company raised its financial guidance thanks to a stronger- than-expected holiday season. and then lulu-lemon, best known for its yoga clothing, fell 3.9% on heavy volume. it raised its financial outlook, but only brought it up to what wall street was already expecting. in other words, the new prediction is not better than expected. a noteworthy moment in precious metals today with platinum regaining its traditional lead over gold. for the first time in ten months, platinum trades at a higher price than gold. both rallied today. platinum settled at a three- month high after the largest producer said it would cut production at mines in south
africa. three of the five most actively traded exchange traded products were higher. the emerging markets and nasdaq 100 tracking funds were the losers of the group. and that's tonight's "market focus." >> susie: fitch ratings warned it could downgrade the credit rating of the united states if lawmakers fail to raise the debt ceiling in a "timely manner." the ratings agency said any delay in action could trigger a prompt review and potential downgrade of the u.s.' aaa credit rating.
the treasury believes the u.s. will hit the so-called debt ceiling late next month. >> tom: 2012 was one for the weather record books. it was the ninth hottest year on earth, based on records going back to 1880, according to nasa. the trend of rising temperatures always brings up a debate over climate change, but it's been four years since congress tried to tackle the issue. darren gersh reports from washington. >> reporter: it was not just the united staá?:háhat sweltered through last summer. nasa confirms 2012 was one of the hottest years on record for the entire globe. 2012 was one degree warmer than normal for the 20th century, and, compared to records dating back to 1880, the globe has warmed by 1.4 degrees. nasa scientists also believe the warming trend is accelerating, just as analysts see the political will for climate change hitting new lows. but that doesn't mean the issue has gone away; it's just taking a different form. for example, the house or representatives debated relief
from superstorm sandy today. energy analyst kevin book expects governments will increasingly be forced to spend money to mitigate or adapt to climate change. >> with every storm, with every flood, we're getting closer and closer to talking about how he handle climate change rather than how we stop it. >> reporter: pressure to address climate change may also come from outside the united states. the european union is threatening to slap trade the u.s. refuses to buy credits to offset greenhouse gas emissions from transatlantic flights. even china may help force the u.s. to act. beijing is under pressure to clear the air as pollution makes it harder and harder to breath. >> coal pollution, including greenhouse gas emissions, is something they have got to get down in their country if they're going to live there. as the largest emitter, the bogey man to which all western nation's point, begins to clean up its game, it's going to make it harder to say no. >> reporter: and progressives are hoping the president will bypass congress and use his
regulatory authority under the clean air act to fight climate change in his second term. >> the president implementing the clean air act to reduce carbon pollution from power plants and oil refineries is not acting unilaterally. it's following the law. >> reporter: a draft of a new federal report warns americans are already experiencing more droughts and floods and are seeing rising sea levels as the climate changes. and as superstorm sandy has shown, the costs of dealing with extreme weather are also rising. darren gersh, "n.b.r.," washington. >> susie: while the super bowl marks the grand finale for football season, it's also the priciest event for u.s. television advertising. viewers can expect to see ads from big brand names like taco bell, chrysler and pepsi. but can companies expect a good return on their investment this year? rick horrow explains in tonight's "beyond the scoreboard."
>> reporter: advertising during the super bowl is an expensive and risky. for nearly $4 million, companies get 30 seconds to pitch themselves to more than 100 million americans watching. making the challenge even more daunting for advertisers, it is a crowded broadcast with dozens of companies vying for your attention, buying commercial time during the super bowl broadcast. a successful ad is one that's memorable relative to the others, but companies want to make sure it's memorable because its good. soft drink machine maker sodastream will make its super bowl debut during next month's game. the company reportedly is using the ad time to make consumers more familiar with their products. but just because sodastream is advertising on american television's biggest stage, it doesn't mean the company and its shareholders should expect a significant return on investment. according to a recent survey by the retail advertising and marketing association, only 8% of consumers say super bowl commercials affect their buying habits. $4 million to change the
behavior of 8% of your buyers. it's not enough just to advertise during the game. companies need an activation plan to capitalize on the large audience. if sodastream's primary goal is awareness, this could end up being a bad buy for shareholders. i'm rick horrow. a big day for people who are invested in banks companies. j.p. morgan, goldman sachs, bank of new york, and we'll have a preview of what to expect on thursday when bank of america and citi comes out. >> tom: so important to focus on because financials are a significant sector in the overall market, and they have the pulse on the economy, in terms of housing, mortgages, hiring, and we watch that trading activity in the last quarter. >> susie: and we'll have all of those numbers tomorrow. that's "nightly business report" for tonight, tuesday, january 15. have a great evening, everyone.
cultures and modes of expression in ways that are surprising and provocative. in our first story, we'll check out the growing phenomenon of muslim hip-hop. >> home of the brave, land of the free, now this i still got to see. it's not what mainstream muslims really talk about. >> they're realizing that their kids are being influenced by rap music more than anything else, including them. then -- we'll visit the west marin studio of the incomparable sha sha higby, as she creates mesmerizing works of moving sculpture. >> sha sha's work is pretty unique, no one is really doing quite the same thing. ♪ and finally -- worlds collide, with the punk rock orchestra. >> it's like driving a very powerful automobile. you do one little thing and 40 people respond.