tv Nightly Business Report PBS November 29, 2010 6:30pm-7:00pm PST
>> susie: after a busy black friday, the nation's retailers are hoping for an even busier cyber monday. but it's not just the retailers who win when it comes to shopping online. >> we have a buy on ups. we have a strong buy on fedex. >> tom: from the shippers to the companies powering online shopping. you're watching "nightly business report" for cyber monday, november 29. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
call it "tarp european style." and tom, european officials have approved a plan that will bail out european countries with financial problems in the future. now the idea here? reassuring investors that europe is united in solving the region's massive debt problems. >> tom: susie, it's called the "european stabilization mechanism." here's what we know about it. it launches in 2013 and will provide emergency loans. 16 euro-zone countries can ask for help. if a country needs a bailout, anyone holding that country's bonds will have to agree to a haircut on their investment before bailout money is doled out. >> susie: europe's finance ministers also okayed a bailout for ireland, $113 billion worth. so what does all this mean to the u.s. economy and american investors? joining us now, kenneth rogoff, professor of economics at harvard university and author of "this time is different".
>> nice to you have back on the program. >> pleasure, susie, thank you. >> well, let's start talking about ireland. is this really an honest to goodness bailout or just a band-aid? >> it isn't a band-aid, i mean $113 billion say pretty big band-aid but is a loan it is a loan for many years. it gives the irish time to try to fix things but they still have to pay it back and they charged a pretty hefty interest rate, almost 6%. >> so when it is all said and done, will this help ireland to get out of its problems or is it just a temporary solution? >> i think it's just a temporary solution. i think at the end of the day the debt burden is too much. they've got to find some way to write it down but they don't want to trigger panic across europe. they're hoping to work it out later when the economy is working more smoothly at least in the rest of europe. >> susie: we're hearing that port began and spain will be the next ones to get emergency loans and belgium
and italy are also not in great financial shape. so how many more checks are the europeans going to be writing to help out the countries that are in trouble? >> i don't think it will get all the way to belgium and italy. portugal, yes. they are in big trouble. spain, probably. again, bailouts, bridge loans. italy and belgium have a lot of cards to play. a lot of their government borrowing from their own people and there is really more things they can do. i don't think this is something that is going to blow up all of europe. it is a problem at the periphery, a severe problem, a problem they haven't fully confronted but eventually they will figure out where to draw a line in the sand and stop it. we're not quite there yet. >> susie: to what extent do these problems impact the u.s. economy and why should americans be concerned about this financial crisis in europe. >> well, europe is a big part of the global economy. they buy a lot of our exports. our financial markets are really connected.
so certainly it is not good news. to see them thrashing about. on the other hand bear in mind that the economies that are in trouble at the moment, ireland and greece are very small compared to germany and france. it's not the youreau zone as a whole is doing okay. but they are having trouble, we have a lot of states in trouble here and yet we're healing gradually from our recession. >> what about the your owe there has been some talk and speculation that at some point we might see the demise of the europe or the splitting of the euro between northern europe and southern europe is this something realistic down the road and what would it mean for the dollar. >> starting with the american dollar clearly the youreau is the big alternative for now, some day it might be the chinese currency. right now it is the euro and the makes the euro look better, at least it is longer on top t good for our interest rates. and the dollar may go up
result. >> i don't think the euro is going to blow up. i really don't. they can work this out. this is not easy t is possible that a couple of the smaller countries might get put on sabbatical, told to take a leave of absence from the euro. that is extreme. i think we're very likely to see some restructuring of the debt. it doesn't mean they have to pull out of the euro. as long as germany, the biggest most important countries will have the euro, and germany very strongly believes that if they abandon the euro it will have huge symbolic facts that they cust don't want given the history of the last century. >> susie: all right. we will have to leave it there. thank you so much for explaining this complicated issue to all of us. >> thank you. >> ed: we've been speaking with kenneth rogoff, professor of economics at harvard university.
>> tom: here are the stories in tonight's n.b.r. newswheel: those european debt woes had u.s. stocks under pressure. the dow fell 39 points, the nasdaq was off nine and the s&p 500 lost 1.5 points. trading volume a little light coming off the holiday weekend, with 923 million shares moving on the big board; 1.7 billion on the nasdaq. president obama today proposed a two-year pay freeze for all civilian federal workers. it's a deficit-cutting move that could save $28 billion over the next five years. >> in these challenging times, we want the best and brightest to join and make a difference. but these are also times where all of us are called on to make some sacrifices. and i'm asking civil servants to do what they've always done: play their part. >> tom: the president met with the head of the nation's largest retailer, walmart c.e.o. mike duke. topics on the agenda included job growth and getting companies to invest in the u.s. and speaking of walmart, it's expanding overseas with a $2.3 billion offer for a majority
stake in south african retailer mass-mart. mass-mart's board supports the bid. still ahead, "beyond the scoreboard" looks at one of the most heated rivalries in sports. and you'll be surprised to learn it has nothing to do with on- the-field play. >> susie: today is cyber monday, one of the biggest shopping days of the year. and not in stores, but on the web. and retailers tempted shoppers with special "web only" deals. now it's estimated over 100 million shoppers will buy something online today, spending close to $1 billion. erika miller looks at some of the big winners. >> reporter: as you looked around offices today, most people seemed hard at work. or were they hardly working? today is expected to be the biggest online shopping day ever . and, experts say half of all online purchases happen at work. today alone, web sales are expected to rise at least 8% from last year.
some think it will be double that. u.b.s. analyst brian fitzgerald says amazon is likely to be one of the stars, thanks to smaller companies that use amazon as a sales portal. >> what you are seeing specifically with amazon, coming out of the holiday weekend sales, was strong third-party growth of anywhere from 80% to 105%. these are third party sales, and these are margin accretive to amazon. >> reporter: his firm does business with amazon. not surprisingly, ebay is also expected to do well, but not simply because of rising sales and listing fees. paypal-- the company's online payment unit-- has been growing in popularity outside the site. it currently processes one out of every six online transactions nationwide. strong online sales also benefit package delivery companies like fed-ex and u.p.s. transportation analyst jim corridore likes both stocks. >> we have a buy on ups. we have a strong buy on fedex. that represents the fact that we
think fedex has stronger presence in international air express channels, which we expect to do better over the next year. >> reporter: and there are plenty of lesser-known players that benefit from a strong cyber monday. one is a company that runs operations for internet retailers. it's called g.s.i. commerce. >> they are an e-commerce outsource provider for a host of companies-- about 120 different clients. we continue to think they will do well. they will do everything from running the website to holding the inventory to doing fulfillment. >> reporter: u.b.s. does investment banking for g.s.i. commerce. cyber monday is big. but the second monday in december may be bigger this year. that's one of the last days to make an online purchase and get standard shipping in time for christmas. erika miller, "nightly business report," new york.
>> susie: tom things kicked off here on little on the nerve-racking side in the morning with the do you trading below 1-- dow trading below 11,000. then the buying kicked in in the afternoon, what happened. >> tom: we still ended down on the day. but are you right, maybe value oriented buyers saw some buying opportunities here on this cybermonday in the stock market. let's get everybody updated in today's market focus. >> tom: the major indices were down, but they were able to climb up from their worst levels of the day.
here's the s&p 500 index today. after a weak opening brought on by the irish news, buyers stepped in during the final 90 minutes. closing with just fractional losses. financial stocks helped fuel the stock turnaround during today's trade. three of the top five biggest gainers of the dow industrials were financial firms. american express was the leader, up more than 2%. luxury spending is expected to be strong this holiday season. some analysts think that could help american express, since it concentrates on wealthier consumers. bank of america gained almost 2%. it hit a 52-week low last week. j.p. morgan was up 1%. holding back the major indices were telecom service giants verizon and at&t. these stocks had rallied sharply through the summer and fall before dropping off lately. we'll begin with v-z. verizon sank 1%. this is its first close below $32 per share since mid- september. both verizon and at&t had benefited from investors looking
for dividends. at&t dropped almost 1% to a 2.5- month low. the best gainer of the day for the s&p 500 was fedex. erika's report mentioned holiday shopping and shipping. credit suiise upgraded its opinion of the stock to out- perform. shares jumped almost 5% on heavy volume. today's rally breaks it above $90 per share to its highest close since april. now a fight is brewing between kraft and starbucks. starbucks wants to end a distribution deal with kraft, but kraft is taking the fight to an arbitration panel. since 1998, kraft has distributed starbucks bagged coffee to grocery stores. the deal brought in $500 million a year in revenue. the business could be worth $1.5 billion. starbucks says kraft didn't meet ad and promotion spending requirements. kraft says the deal remains in place. shares were both fractionally weaker today. but it certainly bears watching. we saw a huge move in a company looking to fight heart disease. amarin is a drug developer focused on cardiovascular treatments. check out this move today: up 66% on 43 times its average daily volume.
this is a three-year high. its leading drug has been successful in lowering tri- glycerides. that's fat in the blood that can raise the risk of heart disease. unlike other drugs, though, amarin's medicine does not raise bad cholesterol at the same time, which is seen as good news. finally, data storage has been very hot for buyouts, but after the close tonight disk drive maker seagate ended talks with private equity buyers because it said their prices weren't high enough. shares of s-t-x are down 11% over the past year, and could fall further. after the bell, the stock fell another 5% from this closing price. and that's tonight's "market focus."
>> tom: competition among professional athletes is nothing compared to the competition between the world's two biggest sports drink makers. tonight's "beyond the scoreboard," our look at the business of sports, begins with the battle between pepsi's gatorade and coke's powerade. rick horrow is a sports business analyst and c.e.o. of horrow sports ventures. always nice to see you, welcome back. gatorade versus powerade. the sports drink business about $7 billion a year this year alone. but as we're going to see here portion we are aid has been coming on strong in terms of market share, gatorade still owns about 70% market share. powerade almost a third market share. what is powerade doing riingt? >> what they are not doinging by the way, is using traditional endorsers as much as somebody else. which is interesting, chris paul, ryan howard. big time names but not the needle moving names, lebron
james was in the family, shifted over to vitamin water. so they are doing creative marketing but not including big time endorsements. >> tom: meantime sales volume has been growing for both of these company, bigger base for gatorade so the growth rate is smaller. total products up about 7% but when you get rid of the stuff it is no longer selling like tiger wood gatorade up 15%. powerade, a volume growth this year. what does gatorade have to do. >> they started about by jettisoning tiger woods. we can all talk about that as a positive pov but also to kountion other athletes and teams and leagues and a significant ad campaign to try to recover some of their lost ground. i find it ironic that gatorade b 800 million portion we are aid 600 million. sugar water o 30 years ago if somebody said let's go out and do sugar water, crazy. american entrepreneur y'allism on display. >> tom: speaking of which one week agoing a little more, general motorses came back, roared back as a publicly-traded company and now we are learning it getting back into the golf business, golf sponsorship business, world golf championship and event turnment in south florida next year.
is this a good use of shareholder money? >> it is a lot of shareholder money, a multiyear deal. the title sponsorship alone over $10 million. the hospitality added on to it it's good if you consider the demographics and the value. because first of all this is a world golf championship event. second they're also talking about getting involved in a local event in detroit as well. and that could be significant. >> tom: how many town crowd. gm stock began 33 dollars per share a little more than a week ago, hovering just above that tonight. 50 years before bankruptcy was involved with pga. is this a return do you think for gm, the beginning of its return. >> beginning of its return on the links that is important because of the high dem grachbling-- demographics there cadillac will sponsor a big time event. hit on all cylinders. >> tom: they can only hope. disney's espn a staple of basic cable subscriptions for years and years and years undergoing a test market with time warner taken off basic cable subscription. could this be a precedent for disney, espn, fox and others. >> usually consumer toys is good, maybe not in this particular case because it
involves a basic cable system that is tnt and also comedy channel and also espn. so there are a hundred million base homes, espn takes credit. if you offer the consumer the choices they may not be there. >> tom: a lot of money at risk. espn gets-- it is about 20% of overall revenue from cable somebody description fees, does disney have a lot to lose. >> they have a lot to lose we will see the implications when they test it market wise h in new york 39.99 basic package, northern ohio 29.99. maybe people don't care about lebron up there. >> tom: maybe. we won't forget about this. beyond the scoreboard, rick harrow our guy, c.e.o. of harrow sports ventures. >> susie: here's what we're watching for tomorrow: a check on the housing recovery with the s&p case shiller home price index for september, and a look at the consumer, in november's consumer confidence index. also tomorrow, our "word on the street"?
"dividends!" thestreet.com's david peltier gives us the names of the best dividend-paying stocks under $10. ebay won today a crucial court battle against luxury jeweler tiffany-- without going to court. that's because the u.s. supreme court refused to hear an appeal of tiffany's lawsuit against ebay over the sale of counterfeit merchandise. by rejecting the suit, the high court let a previous ruling stand. ebay cannot be held liable unless it knew specific items were bogus. this case was seen as a legal landmark for doing business over the internet. >> tom: meanwhile, the supreme court has agreed to hear another major business matter, this one involving microsoft. at stake? a $290 million dispute between it and canadian firm i4i over a tool used in the popular "word" program. lower courts have ruled microsoft infringed on i4i's patent. microsoft wants those rulings thrown out, and the rules changed for proving a patent is valid.
and this week, "kiplinger's" editorial director kevin mccormally joins us for his year-end tax tips. tonight, how to plan when the rules are still being written. >> quack. quack. thats the sound of a lame duck congress limping into washington to face a serious case of taxpayer indigestion. im sure you know that if the bush tax cuts expire on schedule, almost everyone's taxes will rise in 2011. the uncertainty here is playing havoc with year-end planning. you're supposed to look at this year and next, with the goal of holding the overall tax bill as low as possible. that might mean delaying income or accelerating deductions, or vice versa, depending on what tax bracket you'll be in this year and next. but when nobody knows what next year's tax rates will be, well, its awfully hard to plan. at "kiplinger," we think congress will extend the bush tax cuts, probably for even the wealthy-- at least for a couple of years. so, you can draw up a year-end strategy that assumes no across- the-board tax increase in 2011. another sore point, of course, is just what rules will apply
for this year. several popular breaks expired at the end of 2009, and congress hasn't gotten around to reviving them. again, we think the lawmakers will act in the next couple of weeks to restore many breaks, including the right of taxpayers to deduct sales taxes in lieu of state income taxes, for parents to write off some of the college tuition they pay and for classroom teachers to claim a little write-off for supplies they purchase. what about the alternative minimum tax? if congress fails to act, some 24 million taxpayers who never had to worry about the a.m.t. before will have to pay it for this year. don't worry, that's not going to happen. the lawmakers will fix the a.m.t. but, as usual, only for one year. tomorrow, i'll talk about another tax break that died at the end of 2009, but that we expect to be resurrected by the lame duck congress. i'm kevin mccormally. >> tom: that's "nightly business report" for monday, november 29. we want to remind you this is the time of year your public television station seeks your support.
>> susie: support that makes programs like "nightly business report" possible. >> tom: thanks for joining us, and don't forget to support your public television station. i'm tom hudson. good night everyone. you too, susie >> susie: good night tom. i'm susie gharib. we'll see all of you again tomorrow evening. "nightly business report" is made possible by:
this program was made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> more information about investing is available in "nightly business report's" video "how wall street works". to order this dvd, call 1-800- play-pbs or visit online at shoppbs.org. >> be more.