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tv   Nightly Business Report  PBS  May 16, 2014 1:00am-1:31am PDT

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this is "nightly business report" with tyler mathisen and susie gharib. brought to you in part by. >> featuring herb greenberg who reminds investors that risk is real. with herb greenberg's reality check resurging stocks in terms of risks. you can learn more at check. sharp selloff, stocks plunge and so do bond yields, what should nervous investors do. consumer concerns, the world's largest retailer walmart reports its weakest sales growth in five years and its outlook is not much better. are its core customers tapped out? when he speaks, wall street listens, and what this hedge fund billionaire said about the
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market matters to investors. we have all that and more tonight on "nightly business report" for thursday, may 15th. good evening, everyone, it is an evening for your beverage of choice. if you own stocks, the funds that invest in them, japan, europe, here, everywhere you turn investors were selling shares today. at one point the russell 2,000 index of smaller u.s. stocks dipped into correction territory off 10% from recent highs. and unlike the recent indexes, it managed to end off its lows but there was lots of damage done nevertheless. the dow fell 167 points making for a two-day loss of nearly one and a quarter percent, the s&p ended lower at 17, about 1%, what worries them is how swiftly sentiment has changed. the dow component earnings cast doubt on the american consumer. the jobless claims fell to a
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seven-year low. and the key regional manufacturing sector hit a high. the home builder confidence was off, the technical analyst told cnbc he had a sick feeling that smaller stocks could fall 25% soon. meanwhile, in las vegas, influential hedge fund investor david tepper told the conference he was worried that stock prices were stretched and warned investors not to be strongly long on the market. maybe what is said in las vegas should have stayed in las vegas. >> reporter: so why all the fuss over david tepper's comments? back in 2010, when he first appeared on cnbc he said the fed's stimulus program is a start to get aggressive. >> then what is going to do
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well? >> everything in the near term. >> so what do i do? i got to buy. i can't take the chance of not being a little bit longer now. that is not meaning i'm going [ bleep ] through the walls. can i say that? >> reporter: he said it. and what followed was the tepper rally, a bump in the next six months. >> i'm the animal at the head of the pack, and like i said i either get eaten or get the good grass. >> reporter: tepper was at it again last may talking about the fed winding down its stimulus program or the taper. >> if there is a true taper there better be a true taper, otherwise you're at the last half of '99. so guys with a shovel better get them out of the break. >> reporter: they stalled a bit, over the next six months the s&p 500 was up a little over 8%. and just last night at the salt conference in las vegas, tepper
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told investors don't be too long right now. once again today the market responded with a selloff. the advisers often like to warn that the past is no indicator of future performance. but one thing seems to be certain. when david tepper speaks, the market listens, for "nightly business report," i'm dominic chu. and as stocks fell, so did the ten-year treasury notes now below 2 and a half percent, a seven-month low, so what is driving the bonds lower and will they drop even further. steve liesman has more. >> reporter: funny thing happened on the way to the year that interest rates were supposed to march higher. they went lower, much lower, some are doing an about-face so they can keep going down from here. the cycle below 2 and a half percent for much of the day, a place it has not been since 2013, and some think the rates could fall further.
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it was the economy, first, with a strong improvement in jobless claims offset by weaker manufacturing report. the housing data, meanwhile, continues to be weak. the upshot the economy might have contracted in the first quarter, while looking for a decent rebound in the second quarter, the first quarter expected to be a small 1.6%, mostly it was a bet on smaller growth this year and higher under-pinning for higher rates. second, central banks are still easy and getting easier, the european central bank is expected to ease in june. the u.s. fed is reducing bond purchases but still buying, helping to drive down rates. long-term yields have been coming down for 30 years. some experts believe they will fall further because the economy will grow slowly for years to come, since companies have cash on their books they don't need
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to borrow as much as they did. consumer consumers, meanwhile, burned by too much debt during the recession are less willing to take on more of it. less demand for debt means lower interest it -- rates. the lower the yield on bond tuesday more attractive stocks could become. relatively that is. for "nightly business report," i'm steve liesman. our guest tonight says he is advising clients to stick with stocks. alan, good to have you with us. i'm sure you heard what david tepper said. he doesn't seem to share your view. he says don't be too long, he said don't go short but don't be too long. why is he wrong, alan? >> well, look, david tepper is hard to argue, but i am reading a book called "think like a freak." in the book i was reminded of this, this morning they analyzed -- there was a report that analyzed 6,000 stock predictions
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over the last ten years. and about 40% of them came true. so the prediction business is very, very difficult. especially in a time where there is so much mixed economic data. beginning this year everybody thought bond yields would be higher right now. they're not. the prediction game is very, very difficult, that is for sure. >> so alan, why stocks? >> because there is nowhere else to put your money right now. for as long as the fed is going to keep interest rates low, just last week yellen said they will keep interest rates low for at least a lengthy period of time. there is nowhere else to put money right now. so let me ask you this if you can put money in a treasury and get 2 and a half percent for ten years does that sound like a reasonable investment? a lot of investors flooded into the bond market but they will scratch their heads pretty soon and release wait a minute, we're not making money in bonds. so as long as the rates stay low, there is nowhere else to go
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especially with the stocks that pay a lot of dividends. >> there were a lot of stocks as we pointed out today on the s&p that actually yielded more on the ten-year treasury, but we said why do you want to tie up your money at 3%. but so far this year, alan, the ten-year bond has out-performed the s&p, the dow, lord knows it out-performed the russell and the nasdaq. it is up in returns at about 6 and a half percent. >> great point, so here is where i would expand on that theory instead of staying in stocks. because the market right now as a whole is very tricky. not very attractive. the bond market is out-performing the stock market as a whole. and that being said, to stay in stocks right now on the big proponent of staying in individual stocks, you have to get picky right now. you can't exactly swear by the indexes and the broad sectors.
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being very picky right now in stocks is the best place to be at least for the short term, you're not going to make money right now. as you point out, you're not going to make money right now as a broad measure of what is going on. >> all right, so help us pick one of the picky stocks. >> i'm not a big fan of predictions, but i will say today when we were on the call earlier i did say at&t is one of my favorites, especially for the longer term. because look at a company like at&t. it is paying a little over 5% dividend which is much, much higher than the bond rates are right now on reasonable quality companies. so if you're going to pick a stock like an at&t and you're going to get paid 5% and the dividends are pretty reliable if you have to stay in at&t for five, seven, to ten years will it be worth more than it is today? for my money, absolutely. so that is why stocks like an at&t are a much better place for me to put my money than some
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long-term bond that is going to see me at maybe 2 or 3%. >> may all of your predictions come true. >> thank you. all right, more now on walmart, we talked about that at the top of the program. with the stock the biggest decliner in the dow today falling about 2 and a half percent, as we reported it posted disappointing first quarter results and is forecasting more weakness for the current period. courtney reagan has more on what is working, what is not working and what needs to be done at walmart. >> reporter: it is another weak quarter for the world's largest retailer. walmart's first quarter profit dropped falling short of expectations. revenues also came up short. like other retailers, walmart says the severe winter weather not only hurt sales but also increased expenses including maintenance and utilities. plus, it paid a higher than expected tax rate. it is hard to deny that weather did impact the retail sector in the beginning of the year. but this is the fifth straight
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quarter of stagnant or negative growth for sales at walmart's u.s. stores for at least a year. the problem goes beyond the polar vortex. >> the consumer that they target is in a tough spot until they see real wage growth, real improvement on the jobs front it will be tough for walmart to really deliver any meaningful upside. >> reporter: plus, walmart says the cuts in the government food stamp program continues to pressure shoppers. they said the disappointing profit forecast for the current quarter comes as a result of a cautious but resilient consumer. walmart launched five new programs in the first quarter including a lower priced money transfer service, video game trade-ins and an auto show comparison. none of those are big enough to move the needle for the world's largest retailer. not all of walmart's segments are struggling, the neighborhood markets post strong sales, the international business performed
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well and global economy sales grew 27%. but many believe that as long as the lower income consumer suffers walmart's core sales will limp along, as well. for "nightly business report" i'm courtney reagan. still ahead, an early look at promising cancer drugs and the companies behind them. they're expected to come out of this year's big event for cancer research. fast food workers left their friarss and took to the streets today protesting in 150 cities in 30 countries, today's one-day wild cat strike with workers demanding as much as $15 an hour and better working conditions
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targets chains like burger king, saying they make huge profits while paying many workers the minimum wage. and a crucial vote on the internet or rules on so-called neutrality. the fcc voted to move forward with new proposals that could allow internet service providers to charge consumers for services, which means slower traffic for everybody else. and a lot of people are not happy about it. hampton pearson has more. >> reporter: fcc commissioners were met by compromises outside the agency headquarters and inside the packed hearing room. before a new set of internet rules were even put on the table. >> a common carrier is required to provide service in general terms. >> reporter: what followed was a divided fcc debating new internet rules crafted by chairman tom wheeler. aimed at banning broad band
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providers from blocking or slowing down websites but opening the door for providers, striking deals with content companies despite misgivings from the chairman. >> there is one internet. it must be fast. it must be robust, and it must be open. the speed and quality of the connection that the consumer purchases must be unaffected by what content he or she is using. >> even the ardent supporters of neutrality recognize that some amount of traffic prioritization must be allowed or even encouraged, prioritization is not a bad word. it is a necessary component of reasonable network management. >> reporter: the commissioners voted along party lines to put out proposed rules that will be open for public comment for the next four months. today was net neutrality advocates, those who feel all
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internet traffic should be treated equally whose voices are the loudest. >> right now we're facing a frightening future where there could be internet for the rich, and companies like verizon and at&t would be able to dominate the internet, flood the internet with their content at the expense of the rest of us. >> i already pay a lot for my internet bills and don't want them to go higher. >> over and over, tom wheeler emphasized that today's action is the first step by regulators on the road to drafting new rules for a truly open internet. at the fcc, i'm hampton pearson for "nightly business report." and we should note that comcast, one of the companies that hampton mentioned in his report is the parent company of cnbc which produces this program. also today, another important vote from the fcc, in a story we told you about yesterday the agency voted to limit how much wireless spectrum
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space giant telecomes like verizon and at&t will be able to bid for valuable air waves slated to take place next year. the idea is to prevent the companies from stopping the low band spectrum while allowing smaller competitors and newer ones valuable access to air space. and more from berkshire hathaway. berkshire hathaway disclosed a stake of more than half a billion dollars or about 11 shares in the tell-- telecom giant. shares were slightly off at $47.96. shares of j.c. penny off after revenue that beat estimates. same store sales were a little higher marking the second straight quarterly gain after
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nine straight declines. the retailer also announced they obtained a larger credit facility to strengthen its balance sheet. the stocks went up initially after the bell up as much as 27%. look at that chart. during the regular session the stock was down nearly 3% at $8.37. nordstrom posting strong quarterlies after the bell thanks to sales on line and at its rack outlets. earnings were down from the previous years mainly from investing and spending from the canadian market. the high end retailer backed its market for the full year, shares were off in regular trading to $61.49. rack space shares also jumped on a bloomberg report that they hired morgan stanley to evaluate the provider. they may be looking to team up with bigger technology companies, the stocks spiked up more than 7% to $30.6.
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kohl's saw profits drop as the retailer recorded lower sales. same store sales also fell missing analyst estimates. the company did reas firm the previous full year guidance, shares fell to $52.21. and shares of eli lily fell after the blockbuster lung cancer drug ruling, the court ruled they can launch a generic drug. the stock was 58.21. a handful of biotech stocks ahead. the year's biggest event for developments in the big money field of cancer research and medication. meg terrell joining us with more on the newest drugs creating buzz and which companies are watching. >> hey, tyler, so one of the big
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themes we've seen in years past and we'll continue to see is drugs that harness the muren system to fight cancer. now one of the drugs including astrazeneca, merck and roche, you saw some of that last night. another big theme this year is one we've seen over the last year and that is in blood cancer. some of these drugs are moving to chronic leukemia, a big new advance there. finally, i think there will be a lot of discussions around drug prices. of course this is not therapy. but this has been a huge and growing issue as some of the new cancer drugs get very expensive. >> so i understand, meg, there are a lot of studies that come out just before the meeting. what can you tell us about what invest investors as well as consumers can expect to hear from all of that? >> yeah, big data drop, with more than 5,000 studies coming out of the meeting in advance.
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of course you are seeing a lot of stocks move todd as investors react to that move. now, bristol meyers is interesting, one of the leaders in oncology, bristol myers and lung therapy, the stock fell today. and early stage trial from a company called insight, that stock also down today. but that was a very, very small study. only in eight patients and we should see updated data at the meeting. new positive study from astrazeneca, of course this is very important in the context of pfizer's $106 billion bid for the company. astrazeneca putting a lot of kba citizen on its pipeline saying it could bring billions in sales. in an interesting twist we saw the rise of a small company
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called clovis, which has a similar drug. so that stuck went way up. >> all right, thank you very much. to read more about the companies working on cancer treatments head to our website at and coming up. the fight for your car's dashboard and why apple wants it to look like an iphone. general motors has already recalled 8 million cars this year alone and just today, five more recalls were announced. adding another 2.7 million vehicles to the list. today's new recalls involve
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cadillacs, corvettes, chevy suvs and new chevy malibus, that range from tail lights to power brake software problems, gm says these problems will cost the company $200 million in charges this summer. go to for more information. and apple and pioneer are teaming up to make any vehicle a smarter one. they have created car play, an in-dash multi-media system that brings the internet right to the driver's seat. josh lipton has more. >> reporter: and certain functi functions. for the tech titans, the next big battle is not for your home or office it is for your car. in that fight, apple made news today. pioneer electronics will soon start sell iing five radios tha are compatible with apple's car plate. they allow consumers to use iphones in their cars to make calls, use maps, listen to music
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and access messages with their voice or touch. the pioneer radios will sell from between 700 and $1400 at retailers such as best buy. >> it really is a matter as simple as plugging into the lightning connecter. >> reporter: in march, apple announced they were partnering with a range of car makers from mercedes to toyota, which will offer a car player this year. but now you wouldn't have as to buy a new car, you can upgrade the car you already own with pie near's technology. >> there are still a lot of consumers that don't want to go out and make investments but they have iphones and want to use them in the vehicle. now to give them the choice to upgrade their radios to a new pioneer component and get the apple playingability. >> tech companies are working hard to get the operating systems into your car. google is partnering to bring the android platform to automobile automobiles this year.
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and microsoft's operating system powers ford's in-car entertainment system. there are concerns about all of this in-car entertainment. thousands of people are killed every year because they're distracted while driving according to the national highway traffic safety administration. >> taken us to the hyatt. >> reporter: apple argues that drivers use their voices to control car play which means they can keep their eyes on the road. >> we're always looking at how do we make sure we make the driver distraction minimal, which is why the voice becomes so important to the experience, we don't have to actually look at the screen. >> i found your places matching the hyatt pretty close to you. >> right now it is impossible to say which tech titan will come out on top. at least for today, apple is taking the spotlight. pioneer says the car radios will be available in just the next few weeks. josh lipton, "nightly business report," san jose, california. finally tonight it was not just a difficult day in the markets but a difficult day for
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thousands who lived through the 2001 terror attack in the world trade center in the heart of new york's financial district. today, president obama was in lower manhattan helping to dedicate the national september 11th memorial and museum. located at the site of the former world trade center. he said the museum tells the story of 9/11. so that future generations will never forget. no act of terror can match the strength or the character of our country. like the great wall and bed rock that the embraces today, nothing can ever break us. nothing can change who we are as americans. >> right now, the museum and the multi-media displays, archives, and artifacts only opened to survivors. it will open to the pickublic n
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week. >> we'll never forget that day and i believe the artifacts that are very personal like clothing, watches, things like that, very emotional. well, that is "nightly business report," i'm susie gharib, thank you for joining us. thanks from me, as well, i'm tyler mathisen, have a great evening, everybody, we hope to see you right back here tomorrow night.
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man: it's like holy mother of comfort food.ion. kastner: throw it down. it's noodle crack. patel: you have to be ready for the heart attack on a platter. crowell: okay, i'm the bacon guy. man: oh, i just did a jig every time i dipped into it. man #2: it just completely blew my mind. woman: it felt like i had a mouthful of raw vegetables and dry dough. sbrocco: oh, please. i want the dessert first! [ laughs ] i told him he had to wait.