tv Nightly Business Report PBS November 11, 2013 6:30pm-7:01pm PST
coren, core . this is nightly business report, with tyler mathisen and susie gharib. our rating service provides objective independent ratings daily on over 4300 stocks, learn more at the street.com/nbr. many wonderful if the individual investor is piling into stocks again, and what it may mean for the market's next move. the economic power house, china's leaders are meeting to talk about the second largest economy, and the outcome could have an impact at home.
and the heroes, what businesses large and small are doing to help make the veterans transition from active duty to the work place. we have all that and more on nightly business report. and good evening, everybody, i'm tyler mathisen in washington, d.c. at the schwab impact conference, the nation's longest running gathering of the nation's investors. it comes at a time when the dow is at a record high, the s&p 500 in the running, by no means they say is everybody back buying stocks. thank you for joining us, i'm susie gharib, with the bond markets closed for the veterans day holiday, trading was subdued, still, any trading was up, the index posted its 35th record for this year. the dow added 21 points, the nasdaq went up a fraction, and
the s&p added a point. so with the dow at another new high and the s&p 500 just a point away from a new all-time close, where are we in the markets right now? are we in the middle of an extended bull run or on course for a slight pullback. we look at the pros and cons of what could happen next. >> reporter: with just weeks to go before year end, many investors are left wondering what to do about their stocks. should you keep riding this bull wave higher, sell some of your winner, buy stocks now? the responses vary. >> our ages right now are much, much more conservative in this economy. >> i love to see stock go up. >> i bought most of mine at the record lows. >> what has changed in the last year is that i personally just don't trust money managers. >> reporter: the uncertainty doesn't change much when it comes from the view of the market professionals, the experts. on the one hand, you have the
optimistic camp. corporate earnings continue to flow in and for the most part they have been better than expectations, economic data in the u.s. is also improving, and europe is slowly working its way out of recession, even the market for initial stock is heating up, that can be interpreted at bullish industries, mark newton is keeping a close eye on stocks, they have been under-performing lately and that may indicate that stocks could be due for a pullback. paul hickey is looking at the market sentiment, saying that one indicator to watch is the investment's intelligence survey, saying that 85% of the responses are bullish. the last time it got to that number was back in may, and the s&p dropped. the important thing to remember is that no one can predict the future. for nightly business report.
and as dominic just mentioned, as we saw in today's "wall street journal" many investors are putting their money back into stocks five years after the financial crisis, and just as the u.s. economy seems to be getting a little steam. the individual investor was never far from anyone's mind. after all, the 2,000 registered investors in attendance managed to gather tens of thousands of investors, what i asked walt bettinger what he was seeing in his retail business, his answer was a surprise. so walt, there is talk that the retailer is back, is that what you see in your business? >> it is really not, people are pouring into the equity markets, what we've seen is investors are highly engaged with their portfolios. we don't see them saying i have
to get back in the markets. >> reporter: when you say engaged, what does it mean? >> it means they're looking at their portfolios on a regular basis and planning around it, certainly not timing the markets. >> reporter: are they afraid, bullish, what? >> i think they're concerned, two thirds of our clients indicate they expect a market correction sometime in the next nine months, that is a pretty high statistic historically. they're not looking to bail out. >> one of the selling points we were going to give the individual investor a fair shake, a low investment. is that still the main part of your business or is it more sticky money, less trading money? >> well, the important part of this, it is a very small percent overall, maybe 15%, the vast amount of our clients are long-term investors, and we help
them manage that money at a great model. it is a lot smarter business model than 40 years ago. >> i assume a lot of buying the business models. >> individual equities for the most part have been replaced by etfs for many investors, the idea of buying that single company and hoping your right just doesn't measure up to the individual company. >> reporter: we're here in washington for this event, 2,000 registered advisers, how concerned are your clients about what they see going on in washington, and are they more concerned about the budget and debt mess or more concerned about the fed? >> i think they're more concerned about the fed. i think many of our clients look at the politics of what happens in washington and they almost brush it off. it has been going on so long it is not going to drive their decision-making. the fed, on the other hand, is
part of this debt instrument, no investor knows how this ends up. how does this unwind and that causes a lot of fear among very long-term and wise investor inv >> reporter: so what you seem to be saying is the fed propped up asset prices, and kept interest rates down. has that meant that people who would otherwise be in safe, secure bonds have migrated up the risk spectrum? >> that is exactly what it means, people that counted on retirement making 5, 4,% in bonds it is not possible. so they invest in higher risk stocks or dividends. again, i don't know how it ends, our investors don't know how it ends, we would love to see the feds and the stimulus, that is what the clients what.
>>. they're a lot smarter than i am, their decisions are above my pay grade but my clients say it is time to back off. >> well, bettinger's kmints are backed up by hard numbers in a survey for the conference, 55% of investors' advisers say their clients want lower etf index funds in their portfolios. susie. tyler, turning thousands of miles away in china, a meeting is under way with the leaders to pave a future path for the country. this secret, closed-door meeting of communist party leaders takes place every five years, now, some china watchers predict the gatherers will see big economic and social changes. >> well, those leader's probably welcomed a report today showing that china's economy is picking up strength. the industrial output at chinese factories rose more than 10% in october, the gains far more than expected and adding to recent
data showing momentum in china's economy. our next guest returned from china where he met with policy-makers and business leaders to talk about what reforms to expect in beijing. he is the former under-secretary at the u.s. state department, now vice chairman at kissinger associations. so bob, a lot of talk about this meeting having a big breakthrough, bold reform. is that what you expect? what did you hear from the people you talked to in china last week? >> well, i think most chinese people enof engaged in this -- engaged in this are not expecting bold reforms, you had major reforms opening you china and introducing a dramatic series of changes to make the economy more market-oriented. this time, it is comprehensive and deep and they need to cover a wide range of things, they need to improve the efficiency of the banking system to make
sure that capital goes to more efficient uses rather than largely state enterprises. they need to free up the depose is rate so the depositors will get a more marketable rate. they need to change in the capital output, so there is greater degree of output. they need to work on obtaining reven revenues because now they engage in very unwise practices about selling land and giving it to developers. and they don't have their own sources of revenues so they have to do this. and this disturbs a lot of people whose land is being c confiscat confiscated. so there are a lot of issues that need to be addressed. >> but bob, we heard a lot of things from the ceos at companies is that their profits were impacted by slower growth in their china operations.
so is there was hope there would be more liberal profits in china to boost the economic growth. will we hear any of that out of this meeting? >> well, there are a lot of points, there will be greater liberalization, there will be a reduction that makes it easier to make investments and less elements for the approval process and lots of business transactions. so the economy will be a lot more market-oriented and that will help growth. at the same time there is a lot of excess capacity and the government is tightening up credit to help to shrink that capacity. also they will try to re-orient capital to less efficient to more efficient utilizing. it will not go for the all-out growth it had years ago, 9.10%, but 7% to enable this transition to take place and the capacity
to take place and to deal with environmental issues. the difference for american business will be the kind of things china buys. the kind of things they buy will be high-end consumer goods. capital equipment to make sure high-quality technology products, rather than the more traditional capital intensive products of the past. >> so how can u.s. businesses and investors act on this new information? i mean, is this a game changer in terms of doing business with china? >> it may not be a game-changer or quite as dramatic as the past, but i think it will put china's growth, if it works on a steadier stream, a more secure stream of growth around 7 and a half or 8% in the next few years, and investors should look at the compositional changes, that is to say the kind of things china will buy will move from raw materials and a sort of
heavy capital-intensive kind of things that are more technology-oriented and high-end consumer products that will be more growth. and we'll look at the headlines -- >> it make take a little time, but we should hear a press conference after the meeting and hear a plenum report afterwards. >> all right, bob, thank you so much. former undersecretary with the u.s. state department. all right, susie, thank you very much. today is 11-11, known as single's day in china, sort of their valentine's day in china when single gentlemen are supposed to confess their feelings for someone. and everybody is encouraged to shop on line. they week they estimated a $1.5 billion from single's day gifts, mostly that from the website,
alibaba, breaking a record for e commerce sales. and a lot of talk about iran and the weekend talks in geneva. the negotiations in the past six days between the u.s., iran, and five other world powers ended without a deal on iran's nuclear powers. it could end with a deal regarding oil, the talks will resume in ten days. meanwhile, with no deal reached oil prices closed today just $95 per barrel. and the lundburg report shows gas at 3.22 for resignatiregular nationwide. and is it enough to deal a blow to amazon's biggest
competitor? first there is a look at how the international markets closed today. bank of america has engaged in settlement talks with government mortgage giant freddie mac after the bank was found liable for fraud after the country-wide financial unit sought millions in damages, and a bank that would shield them from so-called put-backs regarding loans sold from 2012. the world's biggest on-line retailer is teaming up with the world's biggest delivery service for something that has never been done before, door-to-door
deliveries on sunday from the post office. john ford has the story. >> reporter: when amazon got its start as a book seller, the biggest pitch was prices and selling. now that it is expanding into everything, speed is as important as ever. that is why today's news is especially important. working with the postal service, amazon is beginning to roll out the package delivery starting with new york and the l.a. area. for the postal service it may actually make customers happy, after plenty of talks of cutbacks to 49 cents to send first class mail. amazon will charge nothing extra, so the postal service, which had $12 billion in revenue last year, it is a boost, what is in it? loyalty, customers, with sunday delivery will likely be happier with the company.
>> so in our retail business, we know ten years from now people will still want low prices and fast delivery. we never have to worry that we'll wake up ten years from now and customers will say i love amazon, i just wish you delivered a little more slowly. that is not going to happen. >> and what will this do for amazon's bottom line? probably won't help in the short-term but it could help the company grow faster than competitors, which is what investors want to see. >> i just think this is a win, win for both amazon and the united states postal service. i think by offering a variety of different ways to get products that is a huge win for amazon. >> we'll have to wait until the next call in january for amazon to find out if the package change is a hit for amazon, either way it looks like the reindeer wouldn't be the only ones working hard. we begin in tonight's market
focus, the irish company, shire, is placing big bets on the market for diseases, by acquiring the marketing price, that is almost 30% more than virafarma, 42 cents on the news, shira was up 39. and eli's pipeline worrying that the goldman sachs downgraded the drug to sell from neutral. amazon looking at patent outlooks for new drugs. shares of eli fell a fraction to $20. and carl icahn reaching an agreement after a months-long fight. they agreed to pay dividends of three a share and to shrink the number of seats on its board. now, icahn owns a small stake on
the driller, saying that there were problems with investment strategies, shares closed at $55.37. facebook director, selling one third of their stake in the social media company, according to an sec filing. the venture capital still owes more than 4 and a half million shares of facebook, the stocks dropped to $46.20. and go-go shares going up, the company provides inflight-access, and reported better sales, they boosted their four-year profit sales guidance as more people are signing up for services. the stocks surged $20.15. and after haiyan, it is believed to have killed 10,000 people, they are working with disaster relief organizations
including the red cross, salvation army and heart to heart to donate and transport equipment and supplies to impacted areas. and washington voting to extend nearly $9 billion in tax breaks to the aerospace agent, boeing, they are looking to expand their passenger jet at a facility outside seattle. boeing has not announced where they will build the new aircraft. meanwhile, lawmakers in illinois thinking of extending $3 million in tax credits to offers depot, after the planned acquisition of office max which has 2,000 jobs in naperville, illinois. they will decide whether or not to move their base to boca raton, florida. and down grading some $8 and a half billion worth of municipal bonds issued by the city of chicago, cutting them three notches lower.
now it is the latest recognition of a massive pension crisis in america's third largest city. and as we report, chicago is by no means alone. >> reporter: the city of the big shoulders has a giant albatross around its neck. >> our pension debt threatens all the investments we've made in the past two years to reform and strengthen chicago for the future. >> reporter: that is chicago mayor rahm emanuel who told the city council last month that the city is recovering from the worst of the recession, but there is that one big issue. >> we must deal with our looming pension crisis. >> reporter: a $27 billion crisis, that is the shortfall in chicago's six employee pension funds. >> we cannot allow the future to become a stark choice between a pension payment or a police officer. a pension payment or a parks program. a pension payment or a school principal. >> reporter: but that is already
happening. with 1700 fewer police officers on the street than there were five years ago, chicago is the murder capital of america. pension risks overshadow recent fiscal improvement, wrote fitch, in chicago's massive debt. rahm emanuel is proposing new taxes and fees to shore up the pension fund which chicago has been short-changing for years. and in that respect, chicago is hardly unique. virtually every municipality in america is facing some sort of pension issues, some estimates as high as $4 trillion. after all, when the economic area gets tough, one of the ways to put it off is the pension funds. >> pretty much everyone who has a pension problem will skip payments. and that comes home to roost. >> reporter: and pensions are just one of the issues facing america's cities, which together make up 85% of u.s. output.
there is aging infrastructure. budget cuts, an economic engine that is sputtering. scott kohn. and scott will be highlighting some of the other issues facing american cities, five cities, five issues in five days. >> and coming up, how businesses large and small are helping veterans transition from active duty to a job. first, how the commodities performed today. the bond market was closed today for veterans day. it is veterans day, and sadly, many of the nation's vets, transitioning service members and spouses are currently unemployed. but now there are big strides in
changing that. hampton pierceon has the latest. >> reporter: after paying tribute to the nation's veterans at arlington national cemetery. now, the nation is paying tribute for those coming home from iraq and afghanistan. >> our time for our service to our newest veterans has just started. >> reporter: jason served two tours in afghanistan, but when the infantryman came home last year after a medical discharge due to combat injuries, he spent eight months looking for a job, his service and sacrifice overlooked by potential employers. >> they just looked, they said yes, you're infantry, anybody can hold a gun and go to afghanistan. what is your other skill set. >> reporter: he and his wife are on the verge of losing their military health insurance and exhausting his separation pay when jason decided to go to
another job fair when he got a job with a richmond telecom company. >> it was life-changing, the night before we went to the job fair, i was laying in bed crying, i didn't know what else to do. >> reporter: in the next five and a half years, an estimatman making their transition, the unemployment rate is 12%, for vets under 25, the unemployment rate is closer to 20%, two years ago, the u.s. chamber launched job fairs in all 50 states and partnering with businesses large and small. >> the pentagon, the v.a., all estimate it could be anywhere from 280,000 service members transitioning each year for the next five years, not including their spouses. so we'll see a significant number of post-9/11 veterans who will all be looking for jobs in
the next five years. >> reporter: the message from veterans to potential employers, give us a chance to take what we learned in the military to prove it can apply to jobs in the civilian economy. >> and that is nightly business report tonight. i'm susie gharib, thank you for joining us. and i'm tyler mathisen, have a great evening everybody. we hope to see you right back tomorrow night. nightly business report harahas been brought to you by street.com, up to the moment marketing news and independent news daily. learn more at street.com/nbr.