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tv   Nightly Business Report  PBS  December 20, 2012 4:30pm-5:00pm PST

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>> this is nbr. captioning sponsored by wpbt >> susie: good evening, everyone. i'm susie gharib. an historic sale here on wall street-- the new york stock exchange, home to the world's greatest companies, agrees to a takeover by the intercontinental exchange. >> tom: good evening. i'm tom hudson. former republican senator judd gregg joins us as the u.s. house prepares to vote on the republican plan "b" for avoiding the fiscal cliff. >> susie: and investors gobble up shares of blackberry maker research in motion as the smart phone maker posts better than expected quarterly results. >> tom: that and more tonight on nbr! >> susie: here at the new york stock exchange, the big trade of the day was the big board itself. the n.y.s.e.-euronext has agreed to sell itself to the intercontinental exchange, an acquisition that would reshape wall street. it's an $8.2 billion deal that
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values the n.y.s.e. at $33 a share, a 38% premium to wednesday's close. so what are the implications of an upstart exchange buying the venerable big board? erika miller reports. >> reporter: the new york stock exchange has been the symbol of capitalism for nearly two centuries, but now it wants to give up its independence and be bought by a little-known rival in atlanta. the intercontinental exchange, or "ice" for short, was started 12 years ago as an energy trading platform. since then, the exchange has evolved into an internet-based marketplace trading futures, options, and derivatives. the reason it wants to buy the n.y.s.e. is not the plain vanilla stock trading business. the jewel in the deal is a division called "liffe," a leading futures and options exchange. it's based in london and drives over 40% of n.y.s.e. profits. >> it has a business that deals, for instance, in financial derivatives.
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these are derivatives contracts tied to financial products like interest rates, and ice has been wanting to expand in that direction for a while. >> reporter: as for the n.y.s.e., it's no secret that this year has been a tough one for the stock trading business. in addition, fewer companies are going public, so the i.p.o. market has dried up. on a conference call, n.y.s.e.- euronext c.e.o. duncan niederauer was asked why not try to ride out the storm? >> our responsibility to the shareholders was pretty clear. our job is to create value as best we can in the near term, and position the company to be successful in the long term. i think this deal does that. >> reporter: this is not the first time ice has made a bid r the big board. last year, it made a joint hostile bid with the nasdaq o.m.x. group for the exchange. but that move was blocked by regulators. and a friendly merger between the n.y.s.e. and the deutsche boerse was also rejected by regulators this year. so what are the odds this deal will be approved? >> it's a big deal, and these things always get scrutiny, so
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you never want to say anything is just going to get rubber- stamped. and regulators can certainly provide surprises. but i do think this one should face fewer hurdles than some of the other transactions. >> reporter: the companies exct to complete t deal in theeconhalf of next yea by then, they should have a name for the combined company, which will have dual headquarters in new york and atlanta. erika miller, nbr, new york. >> tom: late-day gains help stocks move higher, despite the nasty tone of the fiscal cliff negotiations in washington. after trading near breakeven for most of the day, the dow moved up in the last hour of trading to close up nearly 60 points. the nasdaq added six, the s&p up almost eight points. >> susie: on capitol hill tonight, lawmakers in the house of representatives are getting ready to vote on a fiscal cliff bill. house speaker john boehner calls it "plan b" and it is expected to be a close vote. the bill proposes to extend tax breaks for everyone making less than $1 million.
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the move comes as talks to avert the fiscal cliff hit an impasse. darren gersh reports. >> reporter: as washington looks over the edge of the fiscal cliff, democrats and republicans were throwing elbows and getting personal. speaker boehner explained why he pushed the house to vote on a republican plan "b" tonight. >> i did my part, theydid thing. and frankly, i'm convinced that the president is unwilling to stand up to his own party on the big issues that face our country. time is running short. the house will act today, and then it will be up to senate democrats and the president to act. >> reporter: the white house has already declared plan "b" dead and buried, branding it a multi- day exercise in futility. >> it's proposals would give, on average, a tax cut for millionaires and billionaires of $50,000, hardly what the american people thought they were getting as a result of the debates and of the election. >> reporter: there are many scenarios that lead to the
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fiscal cliff and even over it. but here's what plan "b" could do. it could put more pressure on the senate to respond to house republicans, perhaps pushing negotiations forward, though senate democrats promised they would not take up plan "b" under any circumstance. >> we are not going to do anything to protect the tea- party driven leadership in the house. it's not what the american people wan it's not what they voted for this november, and we are not going to do it. >> reporter: the white house and the speaker are actually quite close to a substantial agreement to avoid the fiscal cliff. but the speaker is trying to strengthen his standing both with his own members by holding a vote on plan "b" and by giving republicans in the house an alternative in case talks with the white house fail. >> what people have to understand is the shortest distance between "a" and "b" in washington is never a straight line. politics requires a zigzag. >> reporter: to most of us, this zigzagging feels more like going n circles.
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buthere is still time to get an agreement before january 1, and that's what many analysts still expect to happen. darren gersh, nbr, washington. >> susie: we turn now to judd gregg for his perspective. he's a former republican senator from new hampshire, and currently senior advisor at new mountain capital, a private equity firm. senator, great to you have back on nightly business report. let me begin by just asking that if you were in the senate today would you be voting for plan b? >> well, yes, but i don't think plan b is going to be the final option here. i general binly believe that it's in the interest, both of the speaker and the president and both party to its reach an agreement before we go over the fiscal cliff. and that because it is in both their political interests to do that and because when you look at the numbers that they are debating over right now they are reasonably close, especially in the context of ten year numbers, i just think you're going to get an agreement here probably on the thursday, friday after
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christmas. >> susie: so you think there will be a deal? some people were saying that they are hoping that this going it to put political pressure, this vote on the president and the democrats. but then today we heard from senator harry reid saying this say political stunt. i mean which is it? >> well, harry tends to get carried away sometimes. he's a friend but he does get carried away. i don't think it's a stunt. i think the speaker needs this vote in order to make it clear that he has the votes in the house to deliver a package and secondly, he needs it because the senate has done the exact same thing to the house. they've-- they're holding a bill at the desk which is basically-- mirrorshe house bill except it is 250,000 instead of a million. they are both playing this process of trying to be the person who doesn't hold the hot potato so to say, but as a practical matter. >> go ahead. >> as practical matter, neither of these-- neither
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bill sgoing lead to a solution here. we need a comprehensive agreement that covers both the spending side and the revenue side and i happen to think it should be built off the simpson bowles plan or off the ratios of the simpson bowles plan commission that i served on. and mi co-chairing along with alan simpson, erskine bowls and ed rendell and mayor bloomberg, the fix the debt initiative to try to get that done. >> well, you know, you probably heard this so much. the american people are so frustrated by this political theatre in washington. and a lot of the c.e.o.s who i am talking to and interviewing who are also on fix the debt are saying that the lawmakers are playing politics with the economy. i mean this is a really serious matter. why is it so difficult to get a deal and this balanced approach that you are talking about? >> well, it shouldn't be. but it is. and it is for this reason. you're dealing with extremely significant idea logical differences here.
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republicans believing strongly that the government is grow too fast and the spending needed to be restrained. democrats believing that there needs to be much more in the area revenues to support the government as it grows. and these are deep feelings. and toes are going to have to be stepped on by both sides. and the president is going to step on folks, toes on people on his left, and who don't want to go down the road of entitlement reform. and the speaker will have to step on toast of people on the right who don't want to do revenues. to do that, under our system it takes awhile to get the pie cooked to bring it out of the stove. and recesses tend to drive decisions in washington in the congress. and now you have a recess, significantly increased by a multiple of 10, probably, or 20 by the fact that we are heading into a fiscal cliff. so those two forcing mechanisms should cause the
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sides to come together and reach an agreement in my opinion, in addition it's also in their political interest to do that. it is time to govern. it's time toned the politics and time to govern. >> susie: you won't get any argument from most of the american opinion lech on that and you surely know the ways of washington. so we hope are you right on that i would like to switch gears, my last question to you because i understand just before the program you were telling me that you are on the board of intercontinental exchange, ice, that made this big acquisition for the nyse. this was a big deal for you guys. why is it so important? for you and for investors? >> well, first i think it's a good proposal and it will be very good for both companies. you're bringing together a lot of synergies here and a lot of talent on both sides. there are a lot of talented people at the new york stock exchange. i know there are a lot of very talented people at ice. and the two sort of fit together very nicely. ice's expertise are in the futures funds and in the clearinghouses.
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the nyse expertise are, of course, in the listings and in the life, which was mentioned by your reporter there, in europe. and so i think you're going to see these two companies combine with ice taking over the nyse. you're going to see a much stronger company, a company that is going to do very well. and i think the stockholders are going do very well because of that. >> susie: we're go stock watching that story right here in our backyard. we will be watching it closely. thank you so much, real pleasure talking with you. senator judd gregg, former republican senator from new hampshire. >> i'm >> reporter: i'm ruben ramirez. still ahead, we'll take a look at how mobile payment technology may soon replace having to carry a plastic credit card. >> tom: we got another look at the economy between july and september, and it grew faster than first thought. third quarter gdp was revised higher today to just over 3%. that's up from the first estimate of 2.7%, and more than
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double the growth in the second quarter. fast forward to last week, and more americans filed for first- time unemployment insurance. new claims for jobless benefits rose by 17,000 to 361,000. but home sales continue strengthening. sales of previously owned homes jumped almost 6% in november to an annual rate of just over five million units. that puts 2012 on track to be the best year for sales since the housing the bubble burst. >> tom: the deal between the
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new york stock exchange and the intercontinental exchange caps really quite an eventful year in this industry. back in february the nyse merger with deutsch-- was blocked by european regulators so the year ends with a new deal. john kozey is with us. from manhattan. john, does this deal-making and this exchange business, is it a reflection of strengthening profits expected in the exchange business in the year ahead? >> there doesn't seem to be any kind of indication of strengthening profits in the nearterm, tom. in fact, according to starmine analysis, we've seen some estimates, earnings estimates for the remaining three exchanges being taken down slightly or moderately for the coming quarter and the coming 12 months. >> so it's not some of that these companies may be inrest in loong to grow their own profit, their's buying that growth. so how can this consolidation maybe impact expectations over the course of the next few years if? >> i think what you are going to see, perhaps s a lot more attention being
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paid to the remaining stocks. we can talk about the nasdaq, the chicago mercantile exchange and the cboe group. each of those three of course have been under intense scrutiny today by investors and by the market. and i think there's a question of whether or not you're going to see economies of scale benefitting those types of potential relationsps >>nd want to talk about that trio in a moment. but what about the role of regulation. this is something that it's difficult to put that together in a quantitativistical analysis but that dodd frank regulation financial-services regulation bill continues to roll out next year. >> it seems to be something that people are just going have to learn to deal with. it's like you and i individual income tax situation, we're not sure what it will be next year but we have to keep on proceeding. i don't think that there is any more clear visibility on the part of senior executives at any of these companiethannythinthat we've heard out in the public press. >> yeah, a lot of those rules still have yet to be written let alone put into place. all right, you mentioned the
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nasdaq stock exchange. it certainly got a nice bid today on this consolidation with its competitor the nyse, up to its highest price since march. what. >> reporter: expectations for the nass-- nasdaq. >> the five year analyst expectations are for about 7% growth rate. that's moderately better than the s&p 500 growth rate of around 7.3%. so that's reasonable growth and you have a businesshat results in operating margins lately of about 23%. >> tom: sounds like maybe there is some value there. the cme a competitors with the intercontinental exchange saw a sell-off, lowest price since august. a big part of their business is derivatives. does this competition perhaps begin to bring down expectations? >> i believe that that was more of a reflection, it could have been a reflection 69 disappointment of the cme not being involved in that, and perhaps not benefitting from those types of economies of scale. that saids, the cme still
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h a reasonable growth expectation. i think their five year analyst growth according to star mine is around 7.2%. but they enjoy even better operating margins. the last number that i had seen for the quarter was around 58%. >> yeah, twice what the nasdaq does. finally the chicago board options exchange, less than a dollar away from a two year high, speculation this could be the next exchange to be bought out. >> the cboe being a derivative exchange also has the ability to generate better margins. theirperating margins e almost up almost 50% from the last quarterly report. >> tom: dow own any 6 these shares yourself. >> no, i don't. >> tom: john kozey with thompson reuters investors.
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stocks reversed much of yesterday's losses as the u.s. house approached a vote on the republican's plan "b" to avoid the fiscal cliff. the s&p 500 didn't get any lift from the stronger third quarter economic data, but around 1:30 eastern time, prices began moving higher with the index, finishing at its highest level of the session, up six tenths of a percent. trading volume fell down to 678 million shares on the big board; just under 1.7 billion on the naaq. while all ten major stock sectors were higher, the financial sector had the best day, up 1.4%. materials was the second strongest, up nine tenths of a percent. telecommunications rebounded eight tenths of a percent. with the big news about the big
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board, the buyout of the n.y.s.e.-euronext, exchange stocks led the way for the financial sector. the n.y.s.e. shot up 34.1%, closing at $32.25 per share. this is its highest price since the summer of 2011, and is less than a dollar below the buyout price om the intercontinental xchange. the deal-making helped shares of nasdaq o.m.x., up 3.5% on heavy volume. big banking stocks also got a boost. a handful of wall street analysts have turned positive this week on a few big banks, helping fuel an extended rally. bank of america, for example. today's 2.9% rally comes on top of a huge jump this year. b-of-a shares have more than doubled since january, and they continue to break out to 18- month highs on stronger than average volume. after the close, the market focus was on research in motion. with its newest blackberry device due out early next year, the stock has been rallying, even as the company continues to lose money. but the silver lining is that it didn't lose as much money as feared in its latest quarter,
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and it generated more revenue than was anticipated. on its conference call tonight, the company said the quarter was a reflection of "the successful transition the company is making," even though it acknowledged losing one million blackberry device customers. investors and traders have been betting on the transition. the stock was up 3.6% during the regular session, closing at its highest price since march. and then, in extended hours trading after reporting its quarterly results, the stock added another 7%, trading over $15 per share. another stock to watch tomorrow will be nike. after closing the regular session up 1.3%, they rallied another 5% to over $100 in after-hours action. quarterly earnings were stronger than expected with a double- digit sales increase for its nike brand in north america. google is selling its tv set-top cable box business to arris group. google inherited the busine when it boug motorol mobilit google will get $2.4 billion in cash and stock. shares moved only a fraction.
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arris group jumped to a new 52 week high, up 3.6%. meantime, it is no deal for all- scripts health care solutions. the hospital services firm decided against selling itself, and instead named a board member as its new chief executive. shares fell 14.4% on very heavy volume as it now goes it alone. four of the five most actively traded exchange traded products ended higher, led by the financial seor fund. the nasdaq 100 tracking fund was unchanged. and that's tonight's "market focus."
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>> susie: 'tis the season to shop till you drop. retailers hope the stores will be crowded this weekend, and shoppers hope the lines will be short. from local gas stations to the grocery store, so called "tap and go" technology is surging in popularity. ruben ramirez reports. >> reporter: the swipe of the credit card and the big wad of cash could soon give way to what's called the mobile wallet. it's basically a way for consumers to pay for purchases using their smart phones, and efforts are picking up to get consumers to buy this way. >> we're seeing the mobile evolve into our wallet, our keys, and a health hub, and this mobile fingerprint of sorts. but there are still some hurdles to overcome, because people, as they input more information on these devices, such as their credit card and debit card information, their loyalty card information, their identification onto this phone.
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>> reporter: earlier this year, starbucks inked a deal with square, a tech startup that developed mobile payment technology. but it's not just coffee purchases. trend watchers say we'll be seeing a lot of the mobile wallet in the coming year. ed mclaughlin is the chief emerging payments officer at mastercard. >> we've really shifted from having a plastic card in your wallet to an integral part of how you use your smart phone to shop. >> reporter: mastercard has seen the highest adoption rates of the tap-and-go technology in poland, australia, and canada. in canada, one in ten mastercard transactions are tap and go. here in the u.s., its no surprise those who have embraced the mobile wallet are between the ages of 18 and 30. >> if you particularly look at younger consumers, we've seen a tremendous appeal, not only to use mobile phones to make payments, but eliminating of using cash all together. >> reporter: while mobile payment technology may make shopping easier for consumers, retailers who use the tap-and-go technology say they are able to complete each transaction 40%
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faster. paypass is now available here at toys "r" us, and at more than half a million merchants around the world. carrefour, the world's second largest retailer, found that getting consumers through checkout lin faster ineased it's number of transactions. the results were so striking, the european chain did away with its store-branded credit cards entirely and went completely mobile. the ability to get consumers through the cash register line faster could mean they spend more time shopping and less time standing in line. ruben ramirez, nbr, new york. >> tom: tomorrow on nbr, with the federal government peering at the fiscal cliff, we'll have an outlook for state and local government budgets. and our friday "market monitor" guest expects stocks to go even higher in the new year. we'll have the top picks for 2013 from richard steinberg of steinberg global asset management.
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we learned brother of bernie maddoff was sentenced to ten years in jail for his role in that famous fraud. 67 year its old and he said he was quote deeply ashamed of his conduct. he pleaded guilty in june to criminal charges on conspiracy to commit securities fraud. it was three years ago that maddoff became a household name for duping hundreds of investors out of billions of dollars. >> susie: when it comes to financial education, parents are usually the ones who teach their children about money. in tonight's "kids & cash," getting personal finance into the classroom. here's alisa weinstein, co-founder of "financial & life literacy for youth." >> okay, touchy subject. should financial literacy be taught in school? well, of course, i say "yes." i'm a fan of teaching our kids about money anywhere and everywhere-- the classroom, the dining room, the bathroom. but i get the challenges. there's the cost of the curricula, or even finding curricula that fits individual state standards and can easily be integrated into existing lessons and won't be obsolete as
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those state standards change. there's also the issue of time. teaching money management means not teaching something else. and i've heard extending the school day is not an option. what about the fact that most teachers don't feel prepared to teach personal finance? but none of this helps students, who are thirsting for this information. so what can we do, as parents, to address these challenges? if you're in finance or business, offer to speak to your kid's class for an hour about your job. volunteer at an organization that teaches after-school money classes, or reach out to education advocates and representatives with the departments of education. look, we can sit around, waiting for the school systems to catch up, or we can make our voices heard by being the ones who help make the change. nothing touchy about that. i'm alisa weinstein. as my 7 year ol often asks me, daddy, how many dollars is that. >> susie: teach them now so we won't have a fiscal cliff
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in the future for them. >> tom: that's "nightly business report," for thursday, december 20. have a great evening, everyone, and you, too, susie. >> susie: good night, tom. we'll see you online at, and back here tomorrow night. captioning sponsored by wpbt captioned by media access group at wgbh
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