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tv   Nightly Business Report  PBS  August 30, 2012 6:30pm-7:00pm PDT

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>> this is nbr. >> susie: good evening. i'm susie gharib. spain puts investors around the globe on edge as the country rethinks its decision to seek a bailout. >> tom: i'm tom hudson. it's mitt romney's big night. he officially accepts the nomination as the republican candidate for president. >> susie: and when it comes to presidential politics, we'll learn what this dentist and small business owner wants to hear from the candidates. >> tom: that and more tonight on nbr! captioning sponsored by wpbt >> tom: it has been a relatively quiet month for the european debt crisis, but today, the european worries returned with the spanish prime minister saying his country may delay asking for a bailout. that comment helped push european stock indices down about 1%. losses were more modest here in the u.s., but it was wall street's biggest drop in a week. the dow fell 106 points, the
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nasdaq lost 32, and the s&p down 11. it has been a month since the head of the european central bank, mario draghi, pledged to do whatever it takes to save the euro, but a leader from a smaller member of the euro zone, slovakia, put the chances of the euro currency breaking apart at 50/50. the european central bank and troubled countries have been trading words between the bank's bailout offers, but political leaders are reluctant to sign up for the mandatory spending cuts that go along with the bailouts. from greece to spain, after two and a half years of this crisis, september is shaping up to be another crucial month for europe and its response to the continent's government debt troubles. next week, the governing council of the e.c.b. meets. the bank could announce plans to buy spanish and italian government i.o.u.s. but any action is likely to come with conditions for those government's to address their ballooning budget deficits. >> susie: what happens at those key meetings thousands of miles away from the u.s. could impact
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american businesses and investors. joining us now with some analysis of what to expect-- scott macdonald, head of economic research at m.c. asset management holdings. >> so scott, europe central bankers meet next thursday. do you think that they will finally agree on some kind of a plan to end this european debt crisis? >> well, i think, i don't know if it will end the crisis but i think what you will find is that the ecb will provide greater guidance as to how the central european central bank can buy debt. there's been a lot of speculation when they came up with this idea initially. and we have been work on the details ever since. but the rumor in the market is that something more will be provided to give you that guidance. and if the ecb has the power to buy debt from countries like italy or spain or greece, then it should strengthen the market sentiment. and it does begin to resolve
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some of the issues of liquidity facing a country like spain. >> yeah, that was certainly add a new funding source for these troubled countries. but that is pretty much a temporary solution that is not a real solution to this debt crisis, right? >> no, i mean ultimately you need liquidity. you need access to markets but you also need to make structural reforms in the economy. and the big problem in europe is then a diminishing aspect of competitiveness, especially in southern europe. you've had a buildup of debt. you have to reduce debt and ultimately at some point here you need economic growth. without economic growth, you can't grow your way out of the crisis. >> right. speaking of southern europe what about greece. there are going to be some key decisions made about greece over the next couple of weeks, do you think greece will stay in or get out of the eurozone? >> i think in the short term greece stays in the euro. stays in the, you know, i think the issue that you are looking at with greece boil
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down, can the government come up with the $14 billion euros cut. i think they will give it a game try. i think the rest of europe is not want to see another break greek crisis. consequently, i think the greeks understand they have to come up with something. so? the short run i think greece stays in. i think they will get the $31.billion euro troferj keeping them in the euro through the course of the rest of the year. after next year if greece has further problems and falls off track, it's anybody's guess. >> rooney: . >> susie: all right w all of these question marks still lingering over europe, what does all of this mean for the american scene? will this derail u.s. stocks in september? >> well, i mean if things go poorly the ecb doesn't come up with anything, if numbers and the reports coming out of greece are far worse, and spain's problems become more aggravated, yes, i think it certainly does flow into u.s. equity and debt
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markets. i don't think there is any way around that. it also puts more pressure on the u.s. fed to come out with q e3. the issues facing the fed is if europe doesn't do anything, it's going to fall on mr. bernanke and company to fill in the gap. so i think the u.s. economy has got pretty anemic growth. 1.7 to 2% growth for the course of this year. if europe goes down another notch, it's going to hurt prospects here and that will hurt the markets. >> all right. scott a lot of good information. thank you so much. scott mcdonald head of economic research at m.c. asset management holdings >> tom: two big speeches are on tap before the end of the week. one in tampa, as mitt romney accepts the republican presidential nomination today. we'll have more about that in a moment. the other big speech comes tomorrow morning in wyoming. federal reserve chairman ben bernanke makes his annual speech at a central bank conference in jackson hole with investors
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listening for clues to how and when the fed may do something to help the economy. just last week, the central bank gave its strongest signal yet that more help might be on the way. but behind that signal are a range of opinions, and some dissent from others inside the fed on exactly how to boost the economy. sylvia hall explains. >> reporter: the big question for the fed these days is simple-- is it time for more action? but the answer is proving to be much harder. across the country, regional fed bank presidents have very different opinions. >> the fed obviously is in very unusual times. we're in what they call unorthodox, unusual circumstances, so monetary policy is being conducted in a very different way than it has been in the past. we don't have a lot of experience about how that works, what to do, how much of it to do, and what the ultimate impact will be. so just in that scenario, there's going to be a wider set of opinions. >> reporter: unemployment still hovers over 8%, and the economic recovery is only creeping along.
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just last month, the central bank's interest rate setting committee indicated it was strongly considering a program of bond buying, known as quantitative easing or "qe 3", if the economy didn't make significant gains soon. since then, data has improved, and more help would come with some risks. >> the larger the fed's balance sheet, the more complicated the future exit strategy can be. at some point, the fed will have to normalize policy. and the more asset markets that it's involved in, the larger its balance sheet, the more there is the potential that things could go wrong as it tries to disengage. >> reporter: just last week, charles evans of the chicago fed bank openly supported a new round of easing. on the same day, james bullard with the st. louis fai would oppose it. >> there's one common agreement i think they all share is that none of these monetary policy options are going to do much. i have not heard someone from the open market committee try to argue that this would make a huge difference.
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>> reporter: regardless of the impact of any action, economists do think the board will vote to do something in the coming months. >> you know, the minutes have suggested that there is a fairly large grounds for support for doing more, unless the economy accelerates quite significantly. whether the fed ends up going in september or a little bit later, it's extremely likely to happen. so they should be preparing themselves for a new quantitative easing program, and they should be preparing for the fed to extend the forward guidance. >> reporter: economists don't expect many hints tomorrow from chairman bernanke about what the committee might do when it meets next in september. even those inside the bank may be unsure. today, dennis lockhart, who heads the atlanta fed, said its next decision would be a close call. sylvia hall, nbr, washington. >> susie: meanwhile tonight, the spotlight will be on mitt romney and his plan to fix the nation's economic problems. he will officially accept the republican nomination for
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president. millions of american voters, including many small business owners, will be listening carefully to that speech. romney has been campaigning on a promise to jumpstart the economy and cut taxes. but as diane eastabrook reports, one chicago dentist wants details on how he'll do that. >> reporter: dr. marianne schaefer's been a dentist for more than 30 years. but the last few have been perhaps the most difficult. >> did we get the case back? >> reporter: she had to reduce the status of one of her three employees from full-time to part-time after patients who lost jobs either stopped coming for visits or had trouble paying. >> we're a family practice. we've seen each other, been together some of us 30 years. so, of course, we're always going to try to assist and help them, and their state of the economy reflects my state of the economy. >> reporter: when mitt romney accepts the republican nomination tonight, and president obama accepts the democratic nomination next week, schaefer wants to hear how they plan to create jobs.
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other small businesses we talked to want the ongoing housing crisis addressed and loan programs tailored to them. for schaefer, a possible plan to revamp medicare is another hot button issue. she fears if seniors have to pay more for medical care, there will be less money left over for other essentials, like dental care. she also wonders how a change in medicare could affect her personally. >> i'm terrified. i'm approaching retirement. it frightens me. yes, changes have to happen, but i'm not sure we can come up with an instant answer. the problems that occurred were not instant in development. >> reporter: romney favors tax reform. schaefer is in favor of that, but wants more details on the republican candidate's plan. >> many other people in small business are finding that their expenses are far exceeding what they are able to provide in terms of their service, and we're still trying to stay true to the line of quality and quality care, which is very
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hard. >> reporter: schaefer considers herself an independent and hopes whoever gets elected makes an effort to problem solve with the other party. >> i wish they'd be less divisive and put in some long hours like we are. diane eastabrook, nbr, chicago. >> tom: still ahead, the kindle fire is sold out. does that mean a new version of amazon's hot selling tablet could be coming soon? >> susie: more signs today that the economy might be picking up. consumer spending climbed in august by the most in five months.
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much of that spending also helped boost the fortunes of retailers. but the big question is whether it was merely a back-to-school blip on the radar. ruben ramirez reports. >> reporter: it's back to school time across the country, and already, the nation's retailers are chalking up a good report card. according to thomson reuters i.b.e.s., same-store sales climbed nearly 4% this month. that's almost double what most analysts on wall street were expecting. among the standouts, target, gap, limited brands, and costco all handily topped forecasts. >> if it was a fashionable-type product, if it had color, denim, if it was the right type of product, it was selling. home was another good category. housing has been a little better. maybe that is translating to some better home sales. so, there are some underlying factors that are helping to drive the sales trend. >> reporter: but one of the biggest laggards-- teen clothing retailer wet seal. its august sales slid more than 18%. but investors shrugged off the
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news. shares ended the session up a little more than 6%. after the december holidays, back to school is typically the second biggest selling season for retailers. so, does the strong august showing mean we'll see an even stronger christmas? >> you may see a little bit of a slowdown in the trend. but comparisons do get a little easier toward the end of the year as you approach the holidays and inventories are running lean, so we think it's going to be a profitable holiday period for the retailers. >> reporter: consumer spending accounts for about two-thirds of the nation's economic activity, and if worries about the economy continue to linger, it could put a damper on what's looking like a sunny start to fall for the nation's retailers. ruben ramirez, nbr, new york.
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>> tom: food prices are on the rise around the globe, jumping 10% from june to july, with drought hitting big producing regions in the u.s. and eastern europe. the world bank is asking governments to support programs helping those most in need. month over month, corn and wheat prices both jumped 25% in july. soy beans rose 17%, but rice prices were down 4%. the world bank's food price index, which tracks internationally traded commodities, shows year-over- year prices rising 6% in july. >> susie: isaac continues to weaken. it's now officially a tropical depression, slowing moving out of southern louisiana and heading north. the storm left behind heavy flooding and massive power outages. oil refineries in isaac's path are still not back to normal. six of the region's 11
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refineries are operating at reduced capacity, four remain shutdown completely, and one was restarted today. oil prices headed lower today as the refiners worked to get back to business. october crude fell almost a dollar to $94.62 a barrel. but gas prices continue to tick higher, climbing two cents overnight to $3.82 a gallon. >> tom: let's get going with tonight's "market focus." a quiet week of trading was interrupted a little bit today with those european concerns returning, sending stocks lower. the s&p 500 spent the entire session in negative territory, ending down eight tenths of a percent. while it's the biggest move we've seen all week, it's been almost a month since the index moved more than 1% from open to close in a single session. despite the drop, trading volume remained very light. 511 million shares on the big board; 1.2 billion on the nasdaq. all ten of the major stock sectors were down.
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the technology sector saw the biggest percentage drop, down 1.3%, energy fell 1.1%, and the materials sector shed 1%. solar panel maker first solar saw a lot of red today, the leading tech sector losers. shares sank 18.7%. volume was more than three times average. the stock fell after bloomberg reported the company has stopped deliveries at a solar power plant it's building in arizona. but the report indicated construction is ahead of schedule though. first solar also may have fallen victim to disappoint results from other solar companies hit by weaker demand and falling prices. technology gear maker jds uniphase also was hit by disappointing results from a competitor. j-d-s-u fell 5.8% to its lowest price since announcing better than expected results two weeks ago. the competitor that weighed on jds uniphase was ciena. adjusted earnings were disappointing, and its revenue forecast was less than anticipated. the company cited the broad economy and "slower than
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expected roll-outs of new design wins." its stock fell 19.5%. volume was more than six times average. t share price since early june. as ruben reported earlier in the program, a number of retailers rang up big back to school sales, but it was something different moving sears holdings. tomorrow will be the stock's last day to be included in the s&p 500. that sent shares sliding, down 7.9%. usually, stocks are moved in and out of the index due to mergers or spin-offs, but s&p says sears will no longer be part of the 500 index on tuesday because it no longer represents the index. replacing sears is the netherlands-based chemical manufacturer lyondell basell. the news pushed its stock up 3.8%. funds mimicking the s&p 500 index have to re-balance when changes like this are made. one more note from the chemicals industry. dupont is selling its auto- paints business to private
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equity firm carlyle group. the price tag is $4.9 billion in cash. shares of dupont didn't register much of a reaction as the company has been auctioning off that business for eight months. the sale is part of dupont's strategy to sell slower growing businesses. all five of the most actively traded exchange traded funds were in the red. three of the five-- the emerging markets, nasdaq 100 and russell 2,000 funds-- fell by at least 1% each. and that's tonight's "market focus."
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amazon has soldz out its kindl fire tablet this business probably is not extinguished from good, far from it. the kindl for is amazon's low price answer to the apple ipod. the company says it went on sale for 199 in november, it has captured 22% of the tablet market in the u.s. >> covers for morningstar with us tonight's from chicago. plenty of speculation that amazon next week will announce the new tablet. what does it need to do to stay competitive. >> i think the first and foremost thing is maintain the price. i think that the key selling points of the amazon-- amazon kindl fire was that low price, 199 price point and we expect them to maintain that to stay competitive in what has become a pretty aggressive market in the tablet space. but i think you have some product enhancements. will you see a better screen, a faster processing speed. but i also think will you see things that help consumers of the kindl for
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become amazon shoppers such as i believe there will be a camera in some extent in the product just to help through the price shopping that you go out there with. you see that app has become dangerous for bricks and mortar retailers out there i would expect to see tham. i also think will you see some other enhancements whether it be volume control buttons on the side of the product. but still maintaining the price point of the company, 199, potentially multiple products. >> that is a key point though, competing on price. a lot of consumer good companies try to avoid that. amazon seems to embrace it. is it making any money off the tablet itself? >> no, we consider the tablet, the kindl fire to be a loss leader which mean these are losing slightly on every one. >> any idea how much? >> in our view it is a slight loss in our mind. in terms of specs, the due diligence it is a slight
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loss on a per unit basis but the company has made it up in terms of member acquisition. i think they have done a great job packaging in amazon prime membership with the kindle fire because i think that is really where they will make up a lot of the margin, enticing members to be amazon prime members which i think ultimately helps the longer term margin too. you also have the ancillary sales. take a look at the impact on the stock price, amz and amazon--, rallying nicely. does it wind up continuing the new tablet perhaps next week? >> i think we'll see some momentum with the name. our estimate is $250 per share on the stock right now. so we do think shares are fairly valued but i think the release of this product could service a nice catalyst for this product to continue the momentum we have seen in the past couple of weeks. continue to view amazon as one of the most disruptive forces in retail today. this will only continue to act as a catalyst.
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>> just ask best buy about that. do you own any shares yourself, rj? >> nothing to disclose. >> rj is along with us, an analyst with morningstar. >> susie: monday on nbr, the markets are closed for labor day. we focus on an important issue for the u.s. economy and investors, the fiscal cliff. economists predict that if nothing is done to head off automatic spending cuts and tax increases scheduled for january, the u.s. will fall into recession. on labor day, we'll talk with the men who lead president obama's deficit reduction commission-- former white house chief of staff erskine bowles and senator alan simpson. bowles explains the risks of falling off the fiscal cliff. >> if we do nothing by the end of this year, the negative impact on economic growth in 2013 will be enough to throw us back into recession. and it won't be just 2013, because companies will have to start preparing, so we will
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start seeing negative growth in the fourth quarter of this year. >> tom: tomorrow on nbr, our friday "market monitor" guest is alan lancz of lancz global. he'll explain why he's taking profits now and lowering risk. and from the housing market to internet stocks, we look at a new study on how to spot an investment bubble before it pops. >> susie: when it comes to teaching your kids about money, one of the keys to success is making a plan and sticking with it. in tonight's "kids & cash," alisa weinstein says it's not as hard as it sounds. she's author of "earn it, learn it." >> one of most important rules when teaching kids about money is to be consistent. one of the biggest challenges when teaching kids about money is to be consistent. no matter what method you're using-- paying for chores,
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paying for careers, paying for nothing at all-- everyone's all excited at the beginning, and then it gets harder and harder to stick with it. the biggest culprit? having money around for payday. you find yourself frantically looking through couch cushions, praying you can find what you need to pay your kid on time. so let's see if i can't help you out a bit. if you pay weekly with cash, try taking out enough to cover at least one month at a time so you'll only panic every four weeks. you can also keep an at-home register, on paper or on the computer, where money doesn't actually change hands, but your child can see what he has. at our house, we'll also recycle-- when my kids pay me back cash they owe, i just drop it into the money bowl to be used on our next payday. and you should absolutely check out online money-tracking systems for families. they track money like real banks, without requiring real money. they've got online registers, separate accounts for saving and spending, apps for your mobile devices, which means no more couch cushions. challenge solved.
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i'm alisa weinstein. >> tom: finally, it's that time of the year again-- football season starts next week. while football fans cheer, it could mean some wasted time at the office. more than 22 million working americans play fantasy football. human resource firm challenger, grey, and christmas did a rough estimate and says that if each one of those players spends an hour a week at the office shaping their rosters and chatting up their picks, those hours would cost the nation's employers as much as $6.5 billion in pay over the course of the season. but john challenger says there is an upside, susie-- companies allowing fantasy football tend to benefit from employee loyalty and better office morale. >> so get those picks in early, the season begins next week. >> i'm working on it right now. >> i'm sure are you. >> tom: that's "nightly business report" for thursday, august 30. good night, susie, and everyone. >> susie: good night, tom. we'll see you online at, and back here tomorrow night. captioning sponsored by wpbt
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