tv Nightly Business Report PBS April 16, 2014 1:00am-1:31am PDT
this is "nightly business report," with tyler mathisen and susie gharib. whipsaw day on wall street, stocks rallied out of the gate then dropped mid-day only to bounce back by the close. what is causing the volatility and will there be more to come in the months and weeks ahead. and a singular goal, safety, mary barra answers questions since the first heated congressional questions. and taking away on intel and yahoo! earnings that could determine the market's directions tomorrow. we have all that and more tonight on "nightly business report" for tuesday, april 15th. good evening everybody, and welcome. do you own a neck brace? if not, you may want to consider
getting one or visiting a chiropractor. market watchers have not seen ups and downs like todays in quite a while. stocks were up and down on ukraine worries then went up on the close on lighter than normal volume because of passover, the dow finished points higher, it was the second straight-up day, nasdaq up 11 points but had closed in on correction territory earlier in the day only to bounce back. closing higher now four of the past six trading days. the s&p 500 was up 12. so what accounted for today's wild ride. more from the new york stock exchange. >> reporter: stocks rallied at the open but quickly sold off at a pattern that is by now very familiar. selloff internet and biotech stocks then late in the day the
market reversed, a sign that traders are not sure where to price stocks. after rallying at the open it dropped 6% in a few hours then rallied all the way back, that is a little strange. and this whippiness is extending into the broader market, the dow went flat from up 200, then dropped 200, then up 200, all in a few hours, very strange. what is going on? there is more than just over-evaluation issue from stocks. tension in ukraine was likely a factor in the mid-day selloff but there were also china growth concerns. there is choppy u.s. economic data and there is tax selling from last week that is hard to quantify, but they clearly had sticker shock this month. finally, the feds winding down their program, is the strength enough to off set the liquidity
effect? we have passover and spring break that all adds up to less participants in the market. for "nightly business report," at the new york stock exchange. and more analysis on the escalating tensions in ukraine that bob just talked about, we turn now to paul christopher, chief national investment adviser at wells fargo. paul, we're hearing from russia's putin that actions from the ukraine are anti--constitutional. the white house is warning more sanctions against russia if they misbehave. at what point is this a crisis for the markets? >> i think if we begin to see the events in ukraine sort of cycle out of control. if the government in kiev loses control in events in eastern ukraine then the markets have quite a bit more to worry about. but of course between now and then the tensions will sort of
simmer at a low boil and you could get an event like in the last couple of days that could give the markets pause as they try to determine the future. >> but today sounded like a low boil. there are reports that russia has supported factions that have taken over multiple government buildings in the eastern part of ukraine. and ukraine air power was being used to re-claim an air field in that part of the country. it sounds like it is getting hot fast. >> well, it is getting hotter. but i don't think that this is going to be something that necessarily spirals out of control. look, the russians are probing here looking for weakness, they're looking to shake loose some of the eastern provinces at as low a cost as possible and i think they will continue to push this way until the ukrainians push back with the force against the probing that the russians are doing. so we may see additional violence in the coming weeks but i don't think we should
necessarily conclude it is the beginning of the civil war. >> what we saw in the bi-market was that the treasury prices rose in the ukrainian headlines, but we didn't see much action in the gold headlines, in fact it fell sharply. why is that? we would expect the opposite. >> yeah, that is a good concern, if we were going to see more skern on ukraine in the markets generally, we would expect the gold to be rising, in fact, i think gold was off today. i think gold was tracking something else. i think the gold was tracking the cpi and a modest increase in the cpi, the fed can go ahead with its plans to continue tapering stimulus in the months to come, meaning higher yields and higher interest rates and lower gold prices. >> all right, we'll leave it there. paul christopher, thank you so much from wells fargo adviser. and two big companies, intel and yahoo! report their earnings
of shares of both companies rose in the post-market session initially and that could possibly set the tone for tomorrow's trading in the closely watched technology sector. and here is more about that intel report. the chipmaker's first quarter profit beat the analysts, revenue rose by one and a half percent to $12.7 billion, but that was below expectations, still investors brought up shares of the company, they rose as much as 3% initially in after-hours trading, and dominic chu joins us to break it down, so we know that intel has been challenged over the last couple of months. so i mean, what does you see with the numbers? >> well, it is no secret with intel that it is about the secular decline, everybody is using tablets and smartphones. intel has been decidedly slow to
the game in getting themselves up to speed. this time we saw the pc design market is seeing perhaps signs of destableation. where intel is making huge gains, cloud compute iing, the a segment they had rose by 11% in revenues. the internet phase, something we talk about all the time about connecting your google glasses, watches, smartphones, everything in your house to the information super highway. that business at intel has grown by about 32% from the same time last year. now to put it in perspective it is about half a billion dollar revenue business for intel. the chip business for pcs is about an 8 million dollar investment. if you can find something like smartphone to kick off that is really where the growth is coming from. that is where the investors are slightly optimistic. >> and the stock was up after hours initially today and it is up about 24% over the past 12 months if i recall correctly. >> yes, that is big, too,
remember, smartphones want to ship 40 million by the time this quarter is over. >> dominic, thank you for joining us. and now on to yahoo! which also managed a slight beat earning 38 cents a share. revenue grew modestly, compared to over $8 billion a year ago, excluding fees paid to partner websites. but the reported excited investors sending the stock higher. let's bring in josh lipton for the numbers, the key take away is, josh? >> yeah, the key number that traders and investors are focused on, 3.1 billion. that is what alibaba just reported. remember, they may be excited by the game plan for this quarter, improves products, attracting more investors. but certainly there are a lot more traders and investors
excited by yahoo! 24% stake in alibaba, the chinese giant. there was a concern on the street about a decelerating growth rate. but alibaba saying q4, revenue up. mcquarry just raised yahoo! to a buy in part because of the upcoming enthusiasm. >> alibaba, the tail that wagged the dog, thank you very much. the two best performers in the dow today were coca-cola and johnson & johnson, both releasing first quarter reports better than expectations even though coke's profit revenue fell. but johnson & johnson's earnings topped the forecast. >> reporter: coca-cola sales were flat in the u.s. this winter and fell in europe.
strong growth in emerging markets helped to push the company's global sales volume up 2% edging past analyst estimates. >> we are improving in key markets like china, double digits, brazil is up for us, another key market. russia and india were both up 6% in the quarter. so we're improving on the prior quarter. >> reporter: that growth, despite a strong u.s. dollar resulted in higher prices in the exchanging market, and a pushback on sodas, in places like mexico which enacted a national sales tax on sugary drinks, will make it hard for coke to grow sales this year and for the stocks to grow. >> i think the sugar taxes are an issue to think about, but over the long haul the distribution is second to none. and as long as they can sell water, juices, peas and other things, that helps. >> reporter: for johnson & johnson that helped. global pharmaceutical sales
topped $7 and a half billion, well above analyst estimates, surpassing prostate medicine sells, other big cap pharmaceutical names have out-performed the market even as other health care markets have swooned. with many under the affordable care act, the drug industry could see a big boost in sales. the people who signed up for that are the ones who would be the sickest and using the pharmaceuticals. arguably, the prices would go up. with bargaining power. >> investors are looking for from s&p 500 firms, expectations are for flat first quarter growth due to winter storms but stronger profit growth into the end of 2014. bertha coombs.
and despite the strong earnings, the next guest says we're in a decline. jeff, welcome, good to have you with us. you're not saying the quarters earnings are the weakest in 55 years, explain to me what you are saying. >> stake a look back -- take a look back, you can measure the earnings or the peak from one cycle to the next. i'm looking back 27 quarters ago when it peaked, when the prior peak was back in the middle of 2007, to now. that growth rate is very poor inniin i earnings, usually every other earning cycle over the last 55 years we have been up 50 to 70% from the prior peak, this is the slowest in 55 years, not only because the trough was deeper but because the momentum over the last few years has been much softer than we usually see at this point in the earning cycle. >> so jeff, what is the takeaway
from this headline statistic that you see, what do you want us to factor in, in their investment choices and what do you think of the latest factor of earnings this week? then good so far this week. >> earnings are critical, we've seen the valuations rise, now we have to see the growth accelerate. you are seeing many high fliers in the market, the ones with the biggest priced pcs have had the biggest number, what we heard today, coke had good things to say about growth in china, and intel had good things to say about spending, we heard good things about j & j. and all that is good news and should suggest that earnings growth will rebound and justify the valuations and help to push the market higher. >> but you do seem to be suggesting that for the companies where the earnings come in a little light, a little shy, you think the prices for
the stocks have gotten beyond where they ought to be based on those earnings. >> that is absolutely right and we'll continue to see the punishing trend in the market for some of the higher fliers that are not meeting expectations. and look, you can see that, with the type of volatility we're seeing even in the day you can see stocks getting taken out and hammered while others rally to a new high. that will be a characteristic that we'll continue to see. >> all right, how are you playing it that the stocks are getting hammered, not just the tech area. but when you see the big selloffs how are you playing that? are you buying on them? are you sitting tight? what is your strategy? >> great question, i think this is an opportunity to buy. many individual investors have only started to come back to the stock market based on money flows. so i think these are good times to buy. you want to take a look at the business spending oriented parts of the market, the pent-up demand, we're talking about industrials and old technology, not the consumer new tech maybe in the nasdaq. but other areas of old technology that stocks like
intel, for example, or industries like semiconductors, hard drives, that may be one of the surest bets. >> how much does ukraine worry you, jeff? >> you know, not a whole lot, tyler. i think when you look at what we see with egypt and syria, is once the prospects for a military engagement by the u.s. appear to be well off the table the markets tend to look past the geo-political conflict, even if it tends to accelerate within the borders of that country. so i don't think this will be a major issue for the market, but until it were to involve some type of u.s. action. >> all right, jeff, thank you for joining us, jeff kleintop, thank you for joining us. and answering questions for the first time since the congressional hearing. was there enough to soothe the concerns of both drivers and investors.
rules for big banks, the federal reserve says there is a way to keep credit flowing in case of another financial crisis. speaking at a central bank conference today, fed chief janet yellen says that additional feds may be required. the fed has been pushing banks to strengthen their balance sheets since that crisis. the bankrupt city of detroit reaching a deal with firefighters to preserve their current pensions, but they could see a reduction in payments or
adjustments. detroit had proposed a 6% cut and no cost of living adjustmentings. the deal is subject to a retiree vote and review by a judge, and will look into getting funds promised by the state of michigan. >> well, you think of detroit of course you think of the auto industry. and later today at the auto show, the ceo of general motors made an announcement. mary barra said the new group, called global product integrity will develop a new way to protect vehicles. phil lebeau has more. so phil, mary talked in a question and answer after that speech. what did she say? anything stand out for you? >> nothing, really, what stood out, if mary barra thought the intensity in both the public interest of her tenure of ceo,
as well as the recall crisis if she thought it might die down, take a look at this speech at the conference she held for auto dealers. she was supposed to address repo reporters for maybe five minutes, it was a zoo. there were dozens of reporters not only from here but from around the world, muscling each other and pushing each other. it was chaos there for a while. we had a chance to ask her questions, one question i asked her was how soon does she believe the internal investigation authorized by a u.s. attorney, how soon does she believe there will be concrete answers on what went wrong with the recalled vehicles, here is what she said. >> as i said, we'll be transparent. so that is where we're at. >> how much longer for the investigation? >> again, you know what i said had i was in washington, we said 45 to 60 days, and we're still on that path. >> altogether, mary barra answered maybe five questions,
tyler and susie, and she has not broken any ground in terms of making it clear to people that they are finished with their investigation, and the new announcement on the global technology committee clearly overshadowed after her speech. >> is that too late, phil, to really turn it around? window dressing or more? >> i don't think it is window dressing, i think it is an example with any strides that gm it's making, completely over shadowed, everybody wants to see what happened over the last ten years. >> all right, we'll be counting on you, phil, to get answers to those questions, phil lebeau. and we begin after the ringing of the bell, the railroad operator said that volume increased as merchandise growth offset a drop in coal. severe weather did impact volumes in many markets but the
ceo said that cfx pushed through. >> i think these are solid numbers considering we had one of the worst winters on record, impacting all the transportation. with those trucks and airlines we grew about 3%, and despite that winter weather, and since the weather has broken we have been seeing a pace more like 10%. they approved a 7% in the quarterly benefits. the stock was up a percentage, but shares were down slightly to $28.29. charles schwab, first quarter profits surge, a lift from rising and trading commission fees from client assets. the firm says its quarterly trade volume rose to the highest level in the company's history. shares were up more than 3% on the day to $26.11. and shares of best buy after reports that the ceo is
retiring. he was just promoted a few months ago and will be succeeded by the human resources officer. the stock going from winter last year to center, came to $25 even. and zebra technologies buying motor solutions for $3 and a half billion. both companies offer bar code ska technologies and other assets that companies can use, the shares plunged more than 10% to $61.30. twitter rose sharply on news it is naming daniel graph as the new vice president of consumer products, separately, the social media company announced it was buying social data provider in ganip for an undisclosed amount. shares popped almost 11 and a half percent to $45.52. and northern trust posted
revenues and earnings up compared to a year ago but missed the analysts estimates. the chicago-based banks said that earnings rose more than 10% on the higher fees income, but the investment manager's fees were hurt by lower interests, shares fell to $59.63. coming up, tax day here, many are rushing to file on time, and others are ready to fraudulently claim your refund. and the numbers are growing big-time. that story coming up when we return.
it was one year ago today that two bombs went off at the finish line of the boston marathon, three people were killed, 260 were injured. this afternoon, vice president joe biden with a delegation of observers and first responders observed a moment of silence at the time the bomb exploded. a tribute to the dead and living, 30,000 people will run next time on patriot day, and many will be there to cheer them on. here is another day, income tax day, and if you left your electronic filing until today you could be in for a rude awakening. not your tax bill but the fact that somebody might have already claimed your refund. identity thieves are still in the tax system. >> reporter: how brazen or tax identity thieves? just listen to the u.s. attorney
general. >> identity thieves can target anyone. something that i saw firsthand last year when two people attempted to get a fraudulent tax refund using my percentage information. >> reporter: they were not successful in the case of eric holder but the two men from georgia admitted stealing more than a dozen identities, including dead people. and collecting thousands of dollars. remember that deceased person i let you look up a while ago, abibi asked in an e-mail, well, they're getting processed. i guess deceased people work. as many as two million people will fall prey to identity theft. and while the irs has made strides, the fraudulent refunds they are paying out this year are still into the billions. one taxpayer said these ten states and the district of columbia are the most at risk. even as the feds try to get
ahead of the crooks, our own reliance on technology like smartphone smartphones and technologies are playing right into the bad guys' hands. >> it brings us more functionality, the ebanking, and so forth, but we're also increasing the risks. >> reporter: experts say guard your personal information, especially your social security number like it is your most precious valuable. if you still get hit, call the irs to keep the damage to a minimum. scott cohn, nightly business report. and on this day 60 years ago, jackie robinson broke the color barrier to play in the major leagues, today, ball players across the leagues will celebrate the someday by wearing the number 42. and the memorabilia still strong, a bat robinson used in
1956, sold at auction for more than $158,000. last night i asked my son, mackie, who his favorites were. he said derek jeter, and jackie robinson. >> how did he come up with that? >> the movie last year was a real hit and resonated with a lot of young kids, the last person to wear number 42 in the majors, mariano rivera. it will never be worn again. >> thank you for joining us, i'm susie gharib. >> and i'm tyler mathisen, thank you, have a great evening. we'll see you back here tomorrow evening.
tonight on "spark!," we step away from museums and galleries and into the urban landscape to discover artists whose work emanates from life on the street. in our first story, the gift of grafitti artist david cho, once a self-described husler and thief, he's now searching for a new direction, using art to find his way. >> no one goes to museums. you have this whole attitude and get a can of paint and go out and paint all of the stuff on the freeway and 1,000 people will see it before 8:00 on the 101 freeway in our second story, tommy guerrero's innate sense of rhythm and movement has helped him forge another career.