tv Nightly Business Report PBS October 14, 2011 7:00pm-7:30pm PDT
>> susie: nothing spooky about stocks this october. the market puts up its third straight week of gains, despite touching bear market territory just last week. >> they were looking forward to hope for the new year and the fourth quarter year end rally. so i think the odds favor a continuing rally for the next few weeks. >> tom: from wall street's winning streak to protests, some among the occupy wall street movement say forgiving student loans would go a long way to it's "nightly business report" for friday, october 14. this is "nightly business report" with susie gharib and tom hudson. is made possible by:rt"
this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> susie: good evening, everyone. stocks are back in the black. the dow and nasdaq rallied. so tom, stock market investors can say they finally broke even for this year. >> tom: but susie the s&p 500 index just missed that distinction. still, it was an upbeat end to the week across the board. the dow closed the day up 166 points, the nasdaq added 47, and the s&p 500 was up almost 21 points. this week, the dow checked in
with big rallies three days for a net overall gain of almost 5%. the nasdaq went five for five adding almost 8%. and the s&p 500 tacked on almost 6% on the week. >> susie: positive news about the consumer spending and retail sales also lifted investors' hopes. retail sales jumped in september as americans spent more on cars, clothing and gas. some analysts are worried it's simply a one month blip, not an encouraging open for holiday sales. erika miller previews what retailers can expect for the season. >> if you are looking for the start of the uniqlo line. it's at 51st street and 6th avenue. >> reporter: long lines are a retailers dream. but don't expect this to be the norm this holiday season. today just happens to be the opening of the new uniqlo flagship store. on the whole, retail sales are expected to be lackluster this holiday season analyst john long says there's no way retailer's will beat last year's 5% increase.
>> we expect that we're going to see, probably add 2% overall for holiday this year. >> reporter: many shoppers are reigning in spending, due to stock market volatility, a slowing economy and high unemployment. today's michigan consumer sentiment survey, fell to a three-decade low, another indication of americans' sour mood. >> but what shoppers say and what they do are often two different things. in many cases, people know they need to spend less. but they just can't help themselves. >> reporter: and because many people have been scrimping this year on big ticket purchases, retailers hope they'll be more comfortable splurging at holiday time. >> i think consumers are saying, "well, i didn't actually buy that new car, so i'm going to buy myself a new handbag or new shoes or even a necklace." so we're seeing a lot of sales of smaller items, accessories, small apparel items. >> reporter: the winners this year are expected to be similar to last year-- dollar stores and luxury merchants.
those two extremes are doing well for very different reasons. >> what we have seen over the past 12 months play out pretty dramatically is the tale of two consumers. you have the luxury consumer which has been spending quite nicely throughout the year. and you also have the valuer or discount oriented consumer on the other end of the spectrum. >> reporter: while those sectors are expected to do well. for investors, that's not always a reason to buy the shares. some analysts say the best stock bet is mid-tier department stores like kohl's. >> longer term, kohl's actually has higher operating margins. they've got a younger store base, and i think eventually they are going to start accelerating store growth again. >> reporter: even if consumer spending is weak this year, it doesn't necessarily mean retailers profits will be too. many stores have already starting raising prices. and most are planning lean inventories this holiday season. erika miller, "nightly business report," new york. >> tom: with consumers under
pressure from the slowing economy, the occupy wall street movement continues to gain strength. protestors in new york city today, claimed a small victory as they were allowed to stay in the park they've been occupying near wall street for several weeks. the private owner of that park had threatened to throw everyone out this morning so the area could be cleaned, but backed down. still a couple of protestors were arrested outside of the nyse early today. >> susie: many of the protestors are fresh graduates from the nation's colleges with few job prospects and heavy debt loads. u.s. student loan debt could top $1 trillion this year, over taking credit card debt. with so much money at stake, the occupy wall street movement is pushing the idea of debt forgiveness for students. darren gersh looks at whether that idea could really boost the economy. >> reporter: kelly mears says his high school counselors and everyone else in the student loan system told him not to worry about the debt he was taking on. >> they told me to dig my grave, essentially, and you know, really.
>> reporter: like many of the students in the occupy wall street movement, mears hasn't been able to find a job, and now he and many other protesters are pressing for relief on their student loans. >> i think interest should be forgiven, at the very least. i would like to see student loan debt forgiven, i think it would actually be a huge economic boost. and for our generation-- a whole generation of people it would re-empower them. >> reporter: but analysts say that empowerment would be expensive. >> i'm sure we all feel that we deserve forgiveness. >> reporter: justin wolfers is a visiting professor at princeton university he says forgiving loans-- a typical student takes out $23,000 in loans-- would boost consumer spending by a few hundred dollars a month. but wolfers says most college graduates may not need the help. they have a lower unemployment rate than most americans and they already have their education. >> let's not be backward looking. backward looking would be forgiving debts that were incurred over the previous decades. forward looking is about helping
education and its about democratizing access to education. it's about reforming student loans. >> reporter: congressman hansen clarke is pushing congress to forgive student loans and cap interest payments so graduates who can't find work aren't faced with spiraling debts. so you are talking about folks being in debt for 30 years or so. that's debt that they will never be able to pay off. that's not fair, that's outrageous. that's making a mockery of the american dream. clarke and others say students should also be able to include their student loans in a bankruptcy filing. student loan expert mark kantrowitz agrees. >> it doesn't make sense that you can discharge your credit card debt, but not discharge student loans. i don't think that this is the argument that it's a way of stimulating the economy is an appropriate one. but it does provide a clear evidence of young people being under severe financial distress and maybe congress needs to do something to provide more financial relief to borrowers.
>> reporter: but analysts warn interest rates on student loans could rise if private lenders worry students will declare bankruptcy, and republicans worry it will lead to abuse of the bankruptcy system. darren gersh, "nightly business report," washington. >> tom: still ahead, what can a hospital learn from the factory floor? you might be surprised how lean production techniques are turning one midwest hospital into a model of efficiency. >> susie: secretary of state hillary clinton said today economics must be at the heart of u.s. foreign policy. speaking to a group of financial leaders in new york city, clinton explained that the combination of diplomacy and business are critical to the nation's global power and prosperity. >> right now, the challenges of a changing world and the needs of the american people demand that our foreign policy community, as steve jobs put it, "think different."
>> susie: by "thinking different" clinton said the u.s. needs to use diplomacy to boost job growth, open up trade and learn lessons from the european debt crisis. it was somewhat unusual for a secretary of state to make a major policy statement before the economic club of new york. the reaction from many in the audience was positive. >> i liked it. i thought it was very outward looking in a time of high unemployment when people tend to be inward looking and bring in the fences. she was pushing away from that. i think it was critically important that the secretary stood up and acknowledged that the national interest of the united states is tied to our economic interests. >> susie: but others were more critical, saying clinton gave more of a pep talk than a plan of action. international economist david malpass noted the speech was an admission of america's weakening global position. >> it looked to me like, my takeaway was that the u.s. was pushing back against the weakening of our role in the
international economy. >> susie: and china is part of the u.s.'s challenges. responding to question, clinton addressed the prickly topic of china's currency manipulation saying the asian nation continues to game the system. >> it think it's appropriate and fitting and timely for us to be standing up and saying this is not acceptable. >> susie: secretary clinton also said she supports a bill that aims to punish china for holding down its currency. the legislation, sponsored by democratic senator chuck schumer, passed in the senate this week.
>> susie: today was the day. the iphone 4s arrived in stores. it's the first product release since last week's death of apple co-founder steve jobs. from london to new york city to california, people waited for hours, to get their hands on the newest iphone. even apple co-founder steve wozniak got in on the action. "the woz" set up camp outside a store in the heart of silicon valley yesterday afternoon, tweeting out, quote, "the long wait begins, i'm first in line." while the iphone 4s unveiling was initially met with disappointment, the passing of steve jobs played a part in a sellout of pre-orders online. analysts estimate that fourth quarter iphone sales-- get this-- will top 30 million, almost double what they were the same period latter year. >> tom: no doubt about it a
big success already. apple rallied today, size, along with the broad market, and it continues climbing, certainly from the numbers we saw just last week with all that news. in fact, a week ago some criticism about the newest ifop and a weaker market overall, apple was below 370 per share. lots going on tonight as well. beyond apple let's go ahead and take a look with our market focus. >> tom: it was a strong finish, extending the recent stock rally into its second week. the dow jones industrial average saw another triple digit rally, ending at its high for the day. the one and a half percent jump today brings the dow back into the green for the year, up 0.6%. fueling the dow's rise today; economically sensitive companies. construction and farm equipment maker caterpiller and chemical
maker dupont were up at least 3% each. dupont rallied after failing to get the okay to take a majority stake in a south african seed company. energy giant chevron added almost 3%. transportation stocks were moving up thanks to trucking firm j.b. hunt. this almost 9% increase came after j.b. turned in strong quarterly results with revenue increases across its businesses. tonight the stock is at its highest price since august. one input cost for the transportation industry may be heading higher. oil prices have been staging a bit of a rally as stock prices have been moving higher. more confidence that europe's problems can be addressed, coupled with today's much stronger than expected retail sales in the u.s. helped push oil up to its highest price in three weeks. crude is back into the upper '80s, closing at $86.80 per barrel. another factor that may be pushing up oil is the falling dollar. here is the dollar index. the u.s. currency against a basket of six others.
the dollar has fallen sharply this month as the euro especially has rallied. we saw this dynamic play out in today's best performing stock sectors with energy and materials coming in one and two. energy up more than three and a half. materials up 2.5%. technology stocks also moved up, the sector gaining 2%. google's much better than expected earnings reported last night helped out tech stocks. it was the best stock in that sector, up almost 6%. volume almost tripled. the rally brings google stock to its highest price since august. heading into the most important tome of year-- the holidays. profits from the largest u.s. toy maker held no surprise, coming in as expected. barbie sales and its cars movie franchise toys were strong. mattel did increase it stock buyback program by an additional $500 million.
but that didn't help shares today, down 1% on heavy volume. despite the tough stock market this fall, mattel traded at a 52 week high on wednesday this week. finally, metal prices continued rebounding. palladium and copper rallied. its a two week high for copper. and silver added another 1.5%. and that's tonight's market focus. >> susie: a dusty, dirty factory may not be the obvious source of inspiration for a clean and sterile hospital. but many hospitals are finding better ways of doing business by looking at factories. the strategy of lean manufacturing cuts out waste, increases efficiency, and usually results in better products. hospitals are using the process to increase safety and improve patient outcomes. diane eastabrook takes us to an award winning hospital near chicago that's using lean ideas to attract patients and save
money. >> reporter: this group of japanese doctors recently toured advocate good samaritan hospital in downers grove, illinois. they snapped pictures of imaging equipment and checked out a patient simulator. >> does he speak japanese? >> reporter: the doctors came to see how a manufacturing process developed in japan helped the hospital win a malcolm baldridge national quality award. lean production got its start at toyota decades ago. the company uses the process at all of its plants to cut waste improve efficiency and build better cars. good sam hospital started using the lean strategy a few years ago in its cardiac unit to speed up response time and improve patient outcomes. dr. charles derus vice president of medical management says it worked so well the facility is rolling out the process hospital-wide. >> i can't imagine any business that doesn't have people wasting their time or wasting energy
transporting things back and forth or getting things that are defective or aren't done right the first time. waste is everywhere. there's a big difference between caring for humans and building a car, but there are similarities between the hospital floor and the factory floor. both involve a number of different processes that affect the patient and the product. >> reporter: giving the wrong medication to the wrong patient is one potential problem at all hospitals. good sam bar codes prescriptions and hospital wrist bands to make sure the right medicine goes to the right patient. >> for attention to detail you can use star. star stands for stop, think, act, and review. >> reporter: and every employee from surgical scheduler to data processor gets schooled on how they can use lean. the process has meant good business for good sam. hospital president david fox says in the past few years patient satisfaction has increased and that has
translated into a nearly 20% increase in market share. >> that has translated into an improved operating margin for the hospital and it has enabled us to invest dollars back into the hospital so that we could build new surgical facilities for example, upgrade our diagnostic imaging equipment, provide private rooms in our mother baby unit. >> reporter: despite good sam's success with lean, only about a quarter of the nation's hospitals are now using some form of it. dr. mark chassin, president of the joint commission center for transforming healthcare, hopes that will change. >> healthcare more than politics is completely local and it isn't until there are many more examples and many more easily transferable lessons that we'll see the widespread adoption of these tools. >> reporter: good sam thinks as hospital performance becomes more critical to physicians, patients and insurers, lean will become a more widely used prescription for success.
diane eastabrook, "nightly business report," downers grove, illinois. >> tom: here's what we're watching for next week. randall eley is back as our friday market monitor guest. he's president of the edgar lomax company. we'll also see the september reports on producer prices, consumer prices and housing starts. monday, big banks continue to report their quarterly results. we'll hear from citigroup and wells fargo. >> susie: it's official-- skype is now part of microsoft. the acquisition cost microsoft $8.5 billion-- the company's biggest deal ever. skype users made 207 billion minutes of voice and video calls last year. microsoft is counting on skype's popularity to help it catch up in some areas of technology and media. it's still unknown if skype will continue to offer is voice and video calls for free. >> tom: meantime, there's a buzz kill at google. the social messaging platform
called buzz that was meant to rival twitter is getting the heave ho. users didn't seems to like the service and the only buzz it really ever got was over privacy issue violations. google now is focusing its social networking efforts on plus a three-and-a-half month- old service that has been catching on quickly.
>> tom: it was less than two weeks ago the stock market dipped into bear market territory from its spring time high. now we've seen the longest weekly winning streak in six months. tonight's market monitor is robert stovall, managing director and strategist at wood asset management. >> thank you, tom. thanks for asking me. >> tom: is the rally here off of the october 3 low we've seen sustainable? >> i think it is. you have to expect some stuttering along the way. but i think seasonally, we know september is a tough month, and it was a very bad one last month, and they were looking forward to hope for the new year and the fourth quarter year-end rally, so the i think the odds favor a continuing rally for the next few weeks. >> tom: that's seasonal outlook. what about the fundamental outlook. we know the financial earnings
are under pressure. what about the rest of the market? >> earnings are strongest from some of the commodity companies, the oil industries' earnings are usually pretty good. i don't think you can expect too much from earnings. we're still in a sluggish period, but it's hopeful some of the market rally the last fortnight tom has been because of hopes of what is going on in europe, which is a place where there is a lot of trouble and i don't have much confidence in their straightening it out quickly. but there is hope and i think it will apply to u.s. earnings as well. >> tom: that's interesting, you hope but not much confidence in reality. with that in mind, that investment environment, seals to be challenging doesn't it? >> yes, "hope" is a big word here. hopeful is the way to go, and i think the kind of stocks i've been using the last year or so are dividend ariftcrats, company with powerhouse balance sheets, a steady stream of earnings
because of the business they're in or the way they run their business, and the ability and the inclination to raise dividends regularly. >> tom: let's get to some new ideas here that you still like the stock prices of. b.c.e., the old bell canada. how long should investors wait? >> well, i think b.c.d. is going to raise the dividend regularly. that's been their past performance, anyway. and the return is over 5%. i think the longest they pay an increasing dividend stream, the more attraction the stock will have. and in the meantime, it reduces your cost price by the amount of the dividends, if you want to look at it that way. i'd stay with that one. >> tom: you're not afraid of curls looking at ardent restaurants, known as olive garden and red lobster brand. the stock has been choppy here, bob. >> yes. well their average take per ticket, per customer, has been
reduced somewhat because of the economic environment, but the stock has reflected that price action. and also they, too, have a policy of raising dividends. i know it has some sick liicality to it but i do, next year could be better for them and the economy in general, hence i include it. >> you mentioned energy earnings expected to be bullish in the quarter ahead. you're looking at the b- shares for royal dutch shell, r-r.d.s, yielding just under 5%. how touchy is in for oil prices? >> i think that oil prices, as long as they stay above $70 a barrel, it's going to be okay for the biggies like royal dutch. and i think royal dutch has very powerhouse position globally in their current discovery ratio and their costs. >> tom: your previous picks back in early may, may 6, you liked the insurance giant chabov, kraft foods up three and
a half%. do you still hold these? >> i do. chub is a strong company and one of the better insurance companies in terms of the quality of their book and i think in the case of kraft, their acquisition of cad berry has been good for them. >> tom: do you own anything you mentioned tonight? >> everything i mentioned is in the wood asset dividend aristocrat portfolio, yes. >> tom: our market monitor this friday evening is robert stovall. he's with wood asset management. >> tom: that's "nightly business report" for friday, october 14. i'm tom hudson. goodnight everyone and have a great weekend. you, too, susie. >> susie: good night, tom. i'm susie gharib goodnight, everyone. we hope to see all of you again next week. "nightly business report" is made possible by:made possible by contributions to your pbs station from viewers like you. thank you.