tv Nightly Business Report PBS May 30, 2014 6:30pm-7:01pm PDT
. this is "nightly business report," with tyler mathisen and susie gharib. brought to you in part by. >> thestreet.com, featuring herb greenberg who reminds investors that risk is real. with herb greenberg's reality check, researching stocks in terms of risk. you can learn more at thestreet.com/reality check. double play, the dow and s&p end the month in record territory. what is next for stocks and bonds? we'll take a look. power portfolio, this week's market monitor has three energy key items that can help, break out your notebook. and why walmart is offering classes to students about life after high school. all that and more on "nightly business report" for friday, may 30th, 2014.
good evening, everyone, well, it looks like sell in may and go away didn't quite work out this time. both the simply and dow closed at new record levels today on the last trading day of the month, stocks lower for today following a disappointing surprise on the economic front showing consumer spending in april fell for the first time in years as prices started to inch up. but despite that the bulls persevered. the dow closed at an all-time high, the s&p putting on three and a half points to 19,023, but the nasdaq fell five months, for the months the nasdaq was the best, gaining 3%, the dow up 1%, the s&p rose almost 2%. and despite the strong gains this month many smart investors are confused.
stocks are up, and so are bonds, not just before the federal reserve is buying them. what is going on? dominic chu has more on why people are so confused. >> the bulls and bears are both sitting around scratching their heads. they're trying to figure out what to do in the current land of confusion. the bad news bears say there is no reason for things to be as good as some would believe. if so why are investors flooding into the safety of treasury bonds and there is no reason to be bullish on the economy. some of the data coming out has been pretty much mixed at best. them if you're on the bulls side of the equation you are also puzzled by what happened. after all, the s&p is at record highs, the nasdaq around 13 and a half year highs and stock market volatility is the lowest it has been in over a year. that should mean that things are basically good. we have a market that everyone just loves to hate. that is the real read. but no matter your position next week could either lead to more
clarity or more calamity in the markets that is because there is a slew of data coming out, marketing and manufacturing data, and of course a slew of jobs coming out. more from the central bank, the uecb. so buckle your seat belts, things could get very interesting next week in the overall market. for "nightly business report," i'm dominic chu. well, those stocks don't worry art hogan, who is bullish on the stock market. he is chief market strategist. so art, this month of may as dominic was just talking about there was a different story if you talked about the s&p 500, a different story for the bond market and different story for the economy. how do things look for the rest of the year? make your case. >> well, susie, that is a very good point, a very confusing time. one of the things we can count
on is the second quarter will be much more robust in terms of gdp rates than the first one, by more robust, if we settle in it will look like something like minus 1%. that is 450 or 500 base points in an adjustment to the economy. we'll probably start to cool off the bond market a bit. that is the big driver. the things we're looking at in the economy that have been increasing steadily, like sales of homes like industrial, capacity, car sales all pointing to a stronger economy in the three quarters ahead of us versus the one quarter behind us. >> what is going on with bond, art, and where do you expect the yields to end this year? >> i think the bond market is much more tactical than fundamental. i don't think we're issuing as many quality bonds, the government certainly is not
issuing as as much. massive gains last year, i think there is a short squeeze in a very crowded short trade. i expect the yield for ten years to be closer to less than two and a half where we have been spending time in the last couple of years. as the economy gets more normal the bonds will raise at rates close to 3.5 by year end, versus where we stand at 2.5. >> and eight stocks, as you recommend to your clients, four of them in the energy area oil and gas production companies and the other four are in regional banks. a lot of them are not household names. just tell us what the theme is here, why do you like them generally? >> sure, the simple one-liner here, all the regional banks we looked at, we looked at hundreds across the country. we see low growth, newer to the cycle. that just basically means these guys are making money and there is demand for their product. it wouldn't take much of an
up-tick in market rates, there is a lot of solid balance sheets. i think that regional banks are in great play, the four that we gave you are some favorites. there is an energy revolution going on, not a secret, great shale plans going on. the things that the four companies have in common that we pointed out to you is very similar. they're in the right locations, so they're in the right shale place. they're terrific operator, all four of them currently trading at fast rates, faster than their fast-growing peers. you look at bargains, the most important sector in 2014 and 2015. >> art, i want to mention the names of banks on your buy list. first financial and hancock holding, unless the energy holding, you say gulf port, and good old bill barrett, whoever he is he is going to do just
fine. let's talk about an area you don't like, that is gold, very quickly, 20 seconds why. >> yeah, you know, you have seen the collapse in gold. but i believe that part of that was a big ploy on a flight to safety. this is not a new move. i think we'll see a thousand before we see 1300 again, i think that is the dynamics of that market place. i don't think there is a flight to safety in the gold market much longer. >> all right, you've given us a lot to think about in the second half of the year, art hogan. and one issue not helping oil production is plunging in the country of libya, it prompted them to say many in libya should leave immediately. even though libya's future is not certain the world is watching a conference being held in london to persuade international oil companies to
invest in the company. >> three years after the fall of dictator moammar gadhafi, the country is racked by violence. competing militias taking over oil facilities, shutting down ports and even trying to sell stolen oil themselves on the international market. geologist david bioot is one of the presenters at a conference, endorsed by the oil association. >> i felt sure somehow myself that libya was the one place this could work, because there is a small population, and very, very large oil reserves. you compare that to egypt, very large populations and smaller oil fields, they have resources, libya has these tremendous resources, now they're all fighting over it. >> as a result, oil production seems to fall by the minute. now at only 165,000 barrels per day, down from more than 1.5 million in 2012.
analysts say the loss of nearly a million and a half barrels of oil from the international markets every day is one reason that oil prices remain very high. the most recent turn of events, a general who ammassed a small army of extremists. in a phone interview he told me if he was successful in stabilizing the country in ridding it of terrorists he will then call for elections. some believe the general may be supported by the cia because he lived in exile in virginia for nearly 20 years after being involved in a reported failed coup attempt against moammar gadhafi in the '80s. in our interview he denied any outside support in any country. in what turned out to be a case of bad timing the libyan oil convention today finished a two-day conference in london, designed to bring other companies to invest.
it was a hard sell. >> and not worry about getting killed. >> he is libyan and chairman of an oil services company. >> we have got some problems, but however i believe that these problems are expected. building a country from scratch, because that is exactly what we're doing in libya, we have no institutions or constitution. we have no army or no police force. so everything has to be built from scratch. and you know, obtaining freedom and democracy is not an easy task. >> reporter: one geologist in attendance told us if libya could regain stability and independence it could produce more than 2 million barrels a day which could help to lower prices. london. the first shoe has dropped in the mismanagement scandal engulfing the veteran's affairs department. today, president obama says the head of the agency was out. >> a few minutes ago secretary
shinseki offered me hisñiñi own resignation. with considerable regret i accepted. >> john harwood joins us now from washington with more on this story. so john, i guess now the search is on for a new chief of the v.a. and given all the problems there that have been going on for decades, all the dysfunction, what is the key skill he needs to have in your view? >> well, i think you will need to have a high energy leader and somebody with tremendous management skills. sloane gibson who has been put in place, somebody running a military family and also has a masters in business administration. they has management skills, but they will look for somebody permanent and get on the job. that job is so important given the political pressure that is mounting and the revelations of the difficulty and care. the president said today he simply couldn't afford anymore distractions by having shinseki
take so much fire. here is the president. >> he has worked hard to investigate and identify the problems with access to care. but he told me this morning that the v.a. needs new leadership to address them. he does not want to be a distraction because his priority is to fix the problem and make sure our vets are getting the care that they need. >> so john, what kind of fixes are on the table? >> well, one of the fixes which both parties are expecting, they talked about the bureaucracy, many are under civil service protection. diane feinstein says that it was unfortunate that shinseki was not given the tools he needed. they are talking about giving the secretary some authority. and they talk about money and being under-funded but i see their budget has tripled in the
last decade or so. >> the v.a. budget has increased in the last ten years or so and of course you would expect it given the surge of the veterans coming home from the two wars we have been fighting. today, the president talked about a surge of doctors to service some of the people waiting. others say if you have been on a wait list for a certain amount of time the government ought to pay for private care. we'll see what gets enacted. you can bet there will be changes. >> and we'll keep talking about changes, thank you, john harwood in washington. coming up, want double gains on your stocks? well, this week's market manager says he has three power names for you that will be 20% winners.
the world's largest retailer, walmart, the biggest employer in the united states is heading back to school. courtney reagan shows how the company is offering high schoolers a new way to look at retail. >> reporter: when it comes to retail, this may come to mind as the only career big box stores have to offer. >> how are they going to get merchandise together? >> reporter: but in houston, texas, that perception is starting to change. >> there is a perception of retail out there that it is a go nowhere job, that it doesn't pay well. so why would a parent say hey, son, daughter, have you ever thought about going into retail? it doesn't happen because it is the perception we have to change. >> reporter: tracy davis is with the university of houston downtown. he is behind this pilot program aimed at teaching high schoolers
retail is more than just ringing a register. the four-year class is called e-tail retail and has the support of retail giant walmart which has set up a retail lab at the school and provides student with the hands-on training at the retail stores. >> as long as they have a smile on their face and they have the ability and desire to work hard every day they will have a very successful career. >> reporter: a career in anything from logistics to marketing to store managing. jobs high school junior ramon didn't realize was in retail. >> i had no idea in retail, the huge amount of jobs that are carried. >> reporter: also a surprise to the students the potential pay. upwards of $150,000 a year for big box store managers. >> all around us, we have perfect examples of people who started off from scratch, from nothing, from pushing carts to becoming a manager, to becoming
a store manager, to eventually moving up to a corporate level. i mean, it is amazing that the opportunity can get here. >> maybe i can start my own business since i already have so much insight on retailing. it is being or even bigger than walmart. >> reporter: lofty goals from students with more confidence and knowledge to take on the world of retail. for "nightly business report," i'm courtney reagan. call it stumble iing out ofe blocks. that is where we start tonight's market focus, shares of the network equipment maker infoblocks were hammered today because of profits being slower because of contract delays and orders. the company ceo is stepping down from the top. shares down 37% to $12.96 today. but a positive outlook sent shares higher today. the parent of ann taylor and loft brands raised its second
quarter revenue. traffic picked up in may following that severe weather. shares of ann up 4% to $38.37. and valeant upping the offer once again for the botox maker allergan for the second time this week. valeant will now offer $55 billion in cash and stock up from $49 billion. the bid values allergan shares today. shares up almost 6% to $167.46. while valeant also ended up higher up 1.5%. meanwhile, uk drug maker shire is reportedly considering a cash offer for nps pharmaceuticals. it is a specialty maker of drugs for rare diseases. for its part, np says it has not been contacted by shire, their shares jumped, shire fell a
fraction to $1703.39. and the ongoing saga between joseph a. bank winding down, shares of both companies got a bump after the fcc approved the merger of the two clothing stores, joseph a. bank up to $64.95, and men's warehouse spiked as well. and the dividend nearly 28, the dividend paid on august sixth to shareholders of record as of july 23rd. now the company has declared a dividend every quarter since it went public in 1961. lowe's was up a fraction today to $47 and change. while lowes is hiking its dividend, max realtor is cutting its. the real estate investment trust is slashing its to 50 cents a share. shares of kelly fell to 21.$21.
our market monitor is cautious, but that is what makes a market. charlie smith expects stocks to be flat for the rest of the year but says investors can still make money. he will show you how. he is the portfolio manager of the firm's total return fund. mr. smith, welcome, good to have you with us. >> thank you for having me. >> our earlier guest, art hogan has a year-end target on the s&p 500 about hundred points or more from yours, you see it basically flat, $19.38 or thereabouts. why the different opinion? >> well, i they the big issue is earnings, where we believe earnings will be. our estimate for the earnings for the s&p 500 this year is about 5% under the consensus. you put a 17 multiple on our earnings number, that gets you to 19.38. i have a feeling that art is closer to ours.
>> you said you have a couple of stocks in the energy space that you think can improve by 20% or more. let's find out why. what is the attraction with kinder morgan which has been stuck in the $30 range this year. >> kinder morgan is a very large energy pipeline and oil and gas pipeline company. they have 80,000 miles of pipeline in the u.s. the biggest in the u.s. 25% of the stock owned by richard kinder who is the ceo. really the opportunity here is to take advantage of moving all the shale gas that we're producing at record levels in the u.s. over the last six or eight years. the opportunity for kinder is yield. they pay a 5% dividend. and the company says that they're going to grow that dividend to the tune of three to 5% per year over the next two to three years so we think the stock can move up to $40 plus you're getting a 5% dividend
offer while you wait. >> your second choice is chart industries, but as you point out it is down to 130 from the 70s, what is the catalyst to turn the stock around? >> we have been patient with this one, we began to follow it under a couple of years ago, under a 100, got to 130 as you said. now back in the low 70s. they should earn around four dollars next year, five. they have seen a slow growth partly due to a slowdown in china. they're a big overseas operator. their main business is infrastructure for natural gas and natural transportation. that business is growing quite nicely. so i think there is a growth opportunity here. the stock symbol is gtl. >> okay, seems like we had a little technical problem there. that was charlie smith with fort pit capital group. his third stock was axlil,
strayeding on the indexes ceo not the first to cover a franchise t franchise. we'll look at why sports are becoming a play thing for the ultra-wealthy, that is next. madison square garden is on a winning streak, shares rising for the 11th day in a row, the longest streak since it spun off from cable vision four years ago. the stock got a pop today after the new york rangers, which msg owns, advanced to the stanley cup finals last night along with word that the l.a. clippers basketball franchise could sell for $2 billion. that kind of price tag would bode well for msg's teams, the
rangers and the knicks. shares up to $54.86. now, as for the l.a. clippers who was the winning bidder? none other than former microsoft ceo steve ballmer. that $2 billion price tag though is still not a done deal. the embattled owner donald sterling could still fight the sale. but it seems the new past time for the very rich is buying sports teams. robert frank takes a look at whether sports franchises are becoming a new collectible for billionaires. >> reporter: call it billionaire inflation. the prices of things that billionaires really want are soaring. sports teams may be their h hottest new status symbol. steve ballmer, former ceo, has bid to buy it for $2 billion. he is obsessed he says with basketball, and needs something to do. he as $18 billion.
>> ultimately, $2 billion was the price steve ballmer had to pay because this was a very competitive bidding process and he knew if he came in low he would not win this team. >> now if this deal happens it will underscore a fundamental shift in sports. sports teams have become more like collectibles, driven by the money and desires of today's billionaires. basically they're more like picassos than profit machines. here are the ways in which they're like a collectible. the list of bidders, david geffen, oprah, and tony wrestler. ballmer did with nearly twice the competing offers, and after missing out on two previous deals he didn't want to miss another. the nba, the nfl and the mlb are not creating new teams so it is not repla not replaceable. it also gives you access to an elite club. just like the ferrari club, buying a sports team gives you
membership in a special group. there are more than 2,000 billionaires in the world so owning a sports team makes you special, kind of like having one of those five balloon dogs made by jeff combs. >> being part of that club it is a purchase that some cannot resist. >> and finally, valuations, sterling bought the clippers in 1981 for $12.5 million. it is a gain of over 16,000%. ballmer would join other money billionaires who bought teams, mark cuban and ballmer's fellow microsoft alum, paul allen. not a bad club to join. for "nightly business report," i'm robert frank. rich guys have always bought sports teams, but one of the differences is there was a period when large corporations like time warner or gulf and western owned a lot of sports teams including time warner
owning the braves, and gulf and western, the knicks and braves. >> you say rich guys, but you know what is interesting, a lot of women, oprah winfrey, so was steve job's wife. >> she was supposedly one of the bidders. we'll see how it pans out, it is not a done deal yet. thank you for joining us, i'm tyler mathisen. >> and i'm susie gharib, have a great week, we'll see you back on monday.
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