tv Nightly Business Report PBS May 6, 2011 6:30pm-7:00pm EDT
>> tom: u.s. companies went on a hiring spree last month adding nearly a quarter of a million new jobs. >> we're seeing jobs coming in, new jobs at the 200,000 amount or a little higher for many months in a row. so, it's not just a one off, but an actual trend. >> susie: but the unemployment rate bucked that trend and edged back up to 9%. we'll look at what it means for the economic recovery. you're watching "nightly business report" for friday may 6. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> tom: good evening, everyone and thanks for joining us. more americans got jobs in april as businesses stepped up hiring. susie, it was the best month for the labor market in more than five years. >> susie: tom, the jobs came from retail, leisure, healthcare, business services and even manufacturing. companies added 244,000 people to their payrolls last month. but the unemployment rate notched up to 9%.
economists were expecting it to stay unchanged at 8.8%. >> tom: it's the third straight month more than 200,000 jobs were added. the big question now: will the hiring continue or better yet accelerate? suzanne pratt reports. >> reporter: take a walk down manhattan's 42nd street and in just one block, there are three different help wanted signs-- one, two, three. a year ago, these simple words were a lot harder to find. this survey may be unscientific, but it supports the government's more official april employment report. economist julia coronado says that data was surprisingly strong, given a slew of other recent numbers that suggested a slowdown in hiring. >> it was pretty good quality job growth, broad-based, you know continuation of recent positive momentum in hiring. >> reporter: no doubt...for some americans work is getting easier to come by. the latest three-month average of new jobs created is running at 233,000.
the previous three-month average ran at only 104,000 jobs. but the increase in the nation's unemployment rate to 9% in april has some people scratching their heads. how can the unemployment rate go up, while companies are adding thousands of new positions? economists say don't make too much of the disconnect. >> you do get these months where it's giving mixed messages, you can sort of average through that and look at the bigger picture. >> reporter: for some that bigger picture is still troubling. yes, jobs are finally coming at a steady pace. but, with nearly 14 million people unemployed, business cycle expert lakshman achuthan says steady won't win the race. >> let's say we can stay at this pace and maintain this pace of jobs growth, we still need years of this kind of job growth to make up what we lost during the recession. and, here's the rub, we're not
going to get that long of a revival. >> reporter: some experts say that means it will be tough for the unemployment rate to dip below 8% in the next few years. in fact, we're more likely to see another recession before we see the jobless rate at 7%. suzanne pratt, "nightly business report," new york. >> susie: joining us now for more analysis about that jobs report and the economy-- mohamed el-erian, c.e.o. of pimco, the world's largest bond fund. hi, mohammed, nice to have you. >> hi, susie. thank you for having me. >> susie: are things getting better in the jobs market? >> they are getting better. today was a strong number, not only in terms of the overall number, but also in terms of what we call the defusion index. we had 65% of the industry reporting job increases. however, and it's important to remember that, unemployment remains high, 9%, and the poied
and the underpoied is still at 15.8%. and the thing that worries me the most, susie, a staggering 25% of the 16- to 19-year-olds are unemployed. so, yes, it's a good number, but we've got a lot to do to get back to normal. >> susie: well, you know, we hear c.e.o.s saying they're optimistic about the future, they have a lot of cash, they're doing mergers. do you expect an acceleration in hiring? >> i'm hoping for one, but, unfortunately, i don't expect it. and i don't expect it for a number of reasons. first, we are coming off an unusual period of stimulus-- fiscal stimulus, monetary stimulus. that is now ending, so tailwinds are turning into headwinds. second, the global environment is pretty difficult. it's not just oil. yes, olympia was down 15% this week but it's still at $97. and we have the tragedies in
japan, and we have what's going on in europe. so, unfortunately, i don't think we've reached what we need, which is escape velocity. we need lots of job growth. we need lots of wage increases. so it's very tentative, and i fear that it's going to remain tentative for a while. >> susie: do you expect this recovery that we've been seeing in the economy to stall out? is that the flip side of this good news today? >> the recent numbers, as you said in your-- the beginning of the program, the recent numbers have been worrisome. even yesterday's employment number was worrisome. if you look at the high-frequency data, they suggest we are slowing again. if you look at what's happening in china, they're slowing again. i don't think we're going towards a recession, but i think it's going to be this sluggish growth, this persistently high unemployment, and, unfortunately this growing income inequality. >> susie: you wrote an op-ed piece in "time" magazine and the headline is, "bin laden is dead.
now it's time to fix the economy." the connection here? >> bin ladden's death of an achievement for the united states. there's a sense of unity. there's a sense of pride. there's a sense of common purpose. and the key issue now is for the politicians in washington, d.c. to translate all that into progress on key issues on the economy. and, too, one is let's deal with the structural component of unemployment. and second, let's see what the medium-term fiscal challenge. both these issues are being hung up by extreme polarization in washington with. and let's hope that this new sense of unity and purpose that the bin laden news created can be translated into something really durable on the economy. >> susie: well, do you expect meaningful cuts on the deficit? do you think both sides in washington can get together on this? what are the chances? >> we are seeing them slowly starting to converge, but they're still too far away. we need principles, susie.
you always thought with principles when you had critical negotiations. where are our destination. on there i think we have agreement-- 3% of g.d.p. second how do we get there. let's put all things on the table, spending reform and also revenue reform. let's not try to define the whole journey. if we try to define the whole journey, we're never going to agree. let's get a certain amount of momentum and then midcourse correct. the chinese are brilliant at that. they know what they are destination is, they know what their next few stems are and then they're open to cower correct. and i think we need to do that. we need to get going. >> susie: i wanted to ask you about your investigate strategy at pimco. i said you are staying away from buying treasuries. are your bond funds becoming stock funds? what is your investment strategy? >> no, the remaining bond funds, and what we're seeing is the bond market is a global market, and shu only own something if
you see value in it. right now, treasuries are the where they are now, we don't see much value. we see better value in other bomb holdings and bond funds. that's high-quality companies. governments around the world will have better balance sheets, and a number of other opportunities, including in local markets in emerging economies. so what we're saying is, there's lots of value out there. don't buy something simply because it has a label. buy it if it has value. >> susie: all right, thank you so much mohammed, i appreciate you coming on tonight. >> my pleasure, thank you. >> my guest tonight, mohamed el-erian, c.e.o. of pimco. >> tom: here are the stories in tonight's n.b.r. newswheel: stocks bounced back on that strong employment report. the dow added 54.5 points, the nasdaq rose nearly 13 and the s&p 500 up five points. big board volume tapered off but was still above one billion shares. nasdaq volume fell as well to just over two billion shares.
for the week, the dow industrials fell 1.3% thanks to the selling on wednesday and thursday. the nasdaq dropped 1.6% for the week, finding more buyers than sellers only today. and the s-and-p 500 shed 1.7%, making it the worst performer among the three since last friday. oil prices continued their downward slide. crude futures settled at $97.18 a barrel-- the biggest weekly decline since the contract began trading in 1983. the euro saw a steep drop as well. it tumbled to its lowest level in more than two weeks. that came on the heels of a german magazine report claiming greece is considering leaving the euro currency. greece's deputy finance minister says the report is untrue and the country has no plans to re- introduce its own currency. still ahead, cheese and chocolate, mobile phone service and insurance. they are all on the buylist for
tonight's market monitor. >> susie: with oil prices falling again today, the justice department is searching for any signs market manipulation is keeping those savings from reaching consumers. u.s. attorney general eric holder directed a special task force to be on alert for fraud in the energy markets. prices at the pump are not only an economic issue, they are also high on the political agenda. darren gersh reports. >> reporter: the president said today's jobs report shows the economy can take a hit from higher oil prices and still keep going. still he recognized what so many americans already feel: high gas prices are eating away at paychecks. which is why, after touring a factory making hybrid transmissions, mr. obama took aim at the $4 billion in tax breaks oil companies get every year. >> now, if you're already paying them at the pump, we don't need to pay them through the tax code. we do not need to do it. >> reporter: take away those tax breaks and smaller, independent
drillers in the u.s. say big companies will simply shift their investment overseas. lee fuller represents domestic oil exploration companies, which he says will have to cut production if costs rise. >> so instead of developing more resources, you're going to be developing less and that certainly isn't going to get us more supply and it certainly isn't going to get us more american jobs. >> reporter: house republicans also targeted gas prices this week, passing legislation to promote offshore drilling. but analysts say that bill and the president's plans are nothing more than symbolic steps. last year, business leaders including bill gates and jeff immelt called for a much more aggressive approach on energy. they want to triple government investments in research to $16 billion a year. paul bledsoe worked on that plan and says washington needs to think bigger when it comes to energy. >> issues like doing away with small tax breaks for the oil company or drilling five more wells in the gulf of mexico,
they're side shows. they are not the main event. >> reporter: a much bigger debate will come this summer as the administration prepares new fuel economy standards for cars that could be as high as 60 miles per gallon by 2025. darren gersh, "nightly business report." >> susie: our coverage of gas prices continues monday: our series "pumped up prices" kicks off with a look at the link between falling oil prices and rising gasoline prices. later in the week, we'll look at how high gas prices are affecting gas station owners and small businesses.
>> tom: plenty of activity in the stock market throughout this week, but the real volatility was seen in the commodities space. let's get you updated with tonight's market focus. stocks were able to end on an up note after a volatile week, but it was a bruising start to the new quarter for commodities. and when we say a tough week for commodities we don't need to look any further than silver and oil. silver futures fell more than 27% this week. compare that to gold, which was down a much more modest 4%. and crude oil futures are almost 15% cheaper tonight compared to a week ago. here's the past 30 sessions of the silver trust exchange traded fund. it was up today while silver futures were down, highlighting
the difference between futures and physical metal prices. since hitting its high last thursday, the fund is down 28.5%. between wednesday of last week and this past wednesday, investors pulled out a record $1 billion from the fund. despite the solid job gains reported today, consumer stock sectors were among the weakest, but not kraft foods. this 2.1% gain led all the dow industrial stocks. the rally pushed shares up to a new 52 week high. in fact, this is kraft's highest price since the fall of 2008. the market liked these results kraft released after the close last night, easily beating estimates. higher prices helped make up for higher commodity costs during the quarter. industrial services giant fluor helped levitate industrial stocks as the best sector today. fluor jumped almost eight percent on heavy volume. late yesterday, first quarter earnings were better than expected and it announced a record backlog of orders.
c.f. industries holdings inc. swung to a first-quarter profit absent charges tied to last year's acquisition of rival fertilizer maker terra as its margins soared on higher volumes and prices. lsb industries inc.'s first-quarter earnings soared, if you own citigroup stock, the number of shares you have has been reduced by a factor of ten. citi's one for ten reverse stock split took affect after the close tonight. for every ten shares, there is now one. the reverse split reduces the number of outanding shares of citi but it has no direct impact on the value of the stock. tonight share's closed at $4.52.
with the reverse split they are priced at $45.20 because every ten shares are combined into one. citi also reinstated its dividend. one penny per share. several new stocks hit the market this week. the i.p.o. to raise the most money was chinese social network ren-ren. it came public at $14. patent protection company r.p.x. began at $19. and thermon group sells products to heat industrial pipes. it was offered at $12 per share. and that's tonight's market focus.
>> tom: if dividends from s&p 500 companies are your paycheck, you've gotten a 10.5% raise already this year. that's according to standard and poors data. tonight's market monitor is on the hunt for more dividend increases. he's robert stovall, managing director and strategist at wood asset management. bob, always nice to see you. welcome back. >> thanks,, tom. sthanks for king me. >> tom: nice increases in s&p 500 dividends so far this year. the job growth we've seen does, does that change your affinity for dividends? >> no, the job growth is good, so far as it goes, but it's far from being great, and i think the share prices will rise as the economy heats up. but the economy is still on the chili side. the improvement in jobs is good but as i said before not great.
>> tom: your strategy is to look for companies poised to increase dividends. what do you look for that ahead of the news? >> there are three or four things to look for. management has to believe in paying dividends to the shareholders, sharing some of the benefits of an improving company earnings stream with the shareholders. not all senior managements or major shareholders believe that. warren buffett doesn't believe in sharing much with anybody. so you look for a positive management attitude towards dividends. you look at the record to see if they have, in fact, not only paid a dividend for a long period of time like a list of 25 years or more of paying a dividend. we call that the dividend aristocrat list. and not only paying it but increasing it as the earnings rise. so when that happens, you get income that's on the way up without taking a high risk of waiting for interest rates to move before you get any benefit. >> tom: you've brought along a collection of those you think are poised to increase dividends including the insurance giant
chubb. the ticker symbol is cb. the stock is near a 52-week high. does it concern you to buy a stock that's been rallying, even if it is going to increase dividends, perhaps? >> not really. it's a restrained rally. i used the chubb on your program two or three years ago, and the stock has risen 20 points since then because the earnings have risen and the dividends have risen along with the earnings. it's not a runaway situation. none of these tend to be a runaway on the up side. if you see the dividends moving up that's healthy. >> tom: you also like kraft. we detailed the earnings earlier in the program. the stock, again, jumping to a new 52-week high. what makes you like kft? >> kraft bought cad berry, the confection company. there was some controversy on the part of major shareholders who thought it was a mistake. it hasn't proven to be a
mistake. you just said it yourself the kraft stock traded at a new 52- week high today,. i think they did the right thing. they diversified. they became more international. their product line has been added to it. so i think it's working out just fine. >> tom: all right, speak of working out just fine let's take a look at some of the picks you had on november 5, 2010. again you were on the hunt with dividends. with exxonmobil, even with the move down lately, still up 18%. sea drill is down 2.1% in the stock price but you can add the dividend on top of that to see some gain. and you like unileaf eup 3.6%. you still like this trio? >> i like all three there. they're very different. >> tom: bob, what about disclosures. >> we have a product called dividend growth strategies and i have a little amount in that product so i guess i have a piddling amount of all those shares, yes. >> tom: with disclosures from
our market monitors, robert stovall with wood asset management. >> susie: here's what we're watching for next week: our friday market monitor guest is eugene peroni, portfolio manager at advisor's asset management. we'll also see quarterly results from cisco systems, macy's, toyota and walt disney. monday, china's currency and ways to increase its value take center stage during talks between the u.s. and the asian nation. >> susie: the flooding on the mississippi river is now causing problems for commercial traffic. the coast guard has banned barges from one part of the river in southeast missouri. it's a five-mile stretch near the town of caruthersville, where the waters are so high, they could crest over the floodwalls. the coast guard thinks the barge ban will be in effect for about eight days, depending on the river conditions. >> tom: uncle sam helped more than 36,000 struggling homeowners get their loans under control in march. that's up almost 40% from the month before, but is too little, too late? congress has voted to kill the
>> susie: and finally, finding in our ongoing series "you're hired"-- how unemployment taught one man how to make the best of a bad situation. >> my name is bruce bixler. i'm a district product services associate lead for lowes. what that entails is management of seven employees for different projects that the stores have. i was out of work for two years, almost to the day. never been out of work before. this was the first time in my life that i'd been out of work. the first thing you do is go out and run around looking for jobs right away at places that you are familiar with, companies that you are familiar with and people that you've worked with before that you know that went to other companies. next thing i did was to start networking with different groups in the chicago area.
i went to the harper career stimulus program. that helped a lot because they it's not just networking but they would have speakers that tell you how to write your resume. how to interview; how to use social media; how to use linkedin. i learned as much as i can, or literally everything i can about it to the point where i was asked be a presenter at one of the networking groups and that's what led me to-- i actually do that part-time as an entrepreneur doing linkedin workshops and presentations. i worked at lowes part-time ten to 15 hours a week to supplement my unemployment benefits. i went through the 99 weeks of unemployment so i stayed here and worked part-time until i was offered a job, a full-time job, two months ago. try to lead as normal a life as possible. working helped, even the part- time work. keep current with what's going
on and just continue to keep searching. >> tom: that's "nightly business report" for friday, may 6. i'm tom hudson. have a good weekend everyone. you, too, susie. >> susie: good night tom. we hope to see all of you again next week. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org vo:geico, committed to providing service to