this is "nightly business report" with tyler mathisen and susie gharib brought to you in part by. >> thestreet.com, up to the minute stock market news and in depth analysis. our quant rating service provide s objective independent ratings daily on over 4300 stocks. learn more at the street.com/nbr. digesting the data, conflicting economic reports leave investors screeching their heads. whate fed do next and when? >> one direction, higher. that's where many believe mortgage rates are headed. leading some brokers to declare now is the time to act. >> how safe is your pension? >> does the ruling in detroit and the overhaul in illinois signal a change to retirement benefits nationwide? all that and more tonight on

"nightly business report" for wednesday, december 4th. good evening everyone. it's four in a row. the dow and s&p fell again today backing away from last week's record setting highs. blame it on a new bach of positive reports on jobs, housing and the upbeat survey on the economy. the take away for investors, the fed will taper back stimulus plans and that might not be good for the markets. all this comes just two days before the release of the monthly jobs report. a key data point for central bank policy makers. it's no wonder stock averages between gains and losses and finally ending mostly in the red for the day. the dow lost 25 but down as much as 125 earlier in the day and the nasdaq edged up a fraction and s&p fell two points. the same concerns about the fed's next move sent the yield on the benchmark treasury note above 2.8%, the highest since september.

>> how does the federal reserve see the economy right now as it prepares for the next policy meeting next month? steve liesman looks at the beige book survey and what that, along with this friday's november jobs report, could mean for the future of its stimulus program. >> reporter: some strong employment data today raising prospects for better job growth and less stimulus. adp in a much followed monthly report forecast that payrolls in november rose by a strong 215,000 in the private sector, far above estimates of wall street economist. once more, adp upped the october report by 54,000 to 184,000 jobs. now adp is only an indication of the more important government report on payrolls that comes out friday but if two months of strong job growth are concerned, it could raise hopes for a green christmas.

more people working means more salespeople spending on holiday gifts. that's the collection of economic reports. the retailers were hopeful but cautious. employers look through the 16-day government shut down and hired anyway and that suggests strength to despite the cups in washington. on the downside, the fed is looking for sustained gains in employment as a condition to reduce the amount of stomach less in the economy. if friday's report shows strong employment growth, it will raise market fears the fed could cut back on bond purchases. the market will have to judge whether stocks can have more americans working but less stimulus from the federal reserve. for "nightly business report", i'm steve liesman. well, another strength in the economy has been housing but last week applications for new mortgages fell nearly 13%, the

fifth straight weekly decline with mortgage rates ticking higher now averaging 4.3% for a 30 year conventional loan. sales of newly built homes soared in october, that's the biggest monthly increase in over three decades. too good to be true? some thing so. also that jump in interest rates has some lenders saying act now before it's too late. diana olick reports. >> reporter: at pennsylvania based orleans homes business has been brisk since the government shutdown ended. >> the government shutdown being resolved contributed to people's peace of mind, and i think they have gotten hesitant prior to that and when that passed, they came back from the sidelines right away. >> reporter: and according to new government numbers out today, the story was the same nationwide. contracts signed to buy newly built homes jumped 25% after falling 6% in august. so eye popping in fact some

analysts don't buy it. >> the real increase in new home sales looks much closer to a 5% increase year over year. not a 25% increase month over month. >> i don't believe those new housing sales numbers. overall the single family construction market is completely in a slump. >> reporter: why the distrust? sales have been weak for months. august numbers were revised down by 15% we learned today and september's numbers fell from there down 10% from a year ago, then this huge october leap? >> this number will likely be revised down but if you take it at face value, you're only going back to the april levels of new home sales, which is nothing stellar. i want was a better market but certainly isn't a market that's soaring. >> reporter: that's because mortgage rates are rising right along with home prices, and that will continue into 2014. >> in the summer months, i think it contributed to demand. i think people thought we better get in now and lock up at the lower rates, and i think as that

passed, it may pull demand forward. >> reporter: mortgage rates fell and held study but last week they began to rise again and continued this week on positive economic data, a good jobs report on friday could push them even higher and that's why some lenders are urging their customers to lock in now. for "nightly business report", i'm diana olick in washington. >> to read more about new home sales and whether now is the time to lock in your mortgage, head to our website, nbr.com. a new survey of ceos from some of the biggest companies show they are more optimistic about the company and expect to hire more workers but representing chief executives at 200 large firms, expects the economy to grow at 2.2% next year, unchanged from previous surveys. while those ceos may have a rosey outlook on the economy, lawmakers in washington appear to be doing their part. reportedly, they are close to a deal on a federal budget.

john harwood joins us now from washington. so john, tell us how things are going and where do those budget negotiations stand now? >> well, susie, i would say lawmakers are doing their part a little bit. it does not look as if they are on the brink of a huge grand bargain deal that would put entitlement programs and restream on sounder footing but it's a modest deal they are getting close to announcing perhaps by the end of this week that would reshuffle $90 billion over two years and lift the see kwek ed caps with equal amounts being raised for domestic and discretionary spending and that would be offset so that it doesn't add to the deficit by some revenue increases, though not taxes and some entitlement cuts, though in the medicare and social security. it's a modest deal but lawmakers hope they can announce it by the end of the week, enact it next week and avoid a government

shutdown in january. >> who are winners and losers to the extent we know what stays and goes and maybe more pointly, what does this mean for those looming deadlines the government shutdown number which was i think middle of january and then the debt ceiling debate, which resurfaces then again, i think, right around the super bowl? >> tyler, it means both that the debt ceiling increase and the government funding are likely to occur as scheduled, avoid a crisis like we had. lawmakers don't have much appetite for that, especially going into an election year. so in that sense, it's good news for the entire country. in terms of losers, the kinds of fees they are talking about and again, we don't have a final deal are things like higher airline ticket fees, the president had those in the budget. when you look at the budget cuts, not medicare, social security cuts but federal retirement benefits would be cut somewhat so federal workers could be losers to a small degree in the deal. >> john, i want to ask you about

president obama's speech today about the nation's growing income divide, but first, let's listen to this clip. >> the idea that a child may never be able to escape that poverty because she lacks a descent education or health care or a community that views her future as their own, that should offend all of us and compel us to action. we're a better country than this. >> so, john, what does the budget have to do with the speech the president gave today? >> well, the president has two goals. one -- the first is do no harm to the economy and if they can get a budget deal, avoid a shut down, that would meet the goal but longer term he has more protective things, raise the minimum wage and spend on education and he may not get those out of this congress but what he's hoping to do is plow the ground for future years, maybe future presidents to make progress on the priorities. >> i'm sure it will create

heated debate. thanks for the update, john harwood from washington. still ahead, how safe is your pension whether you work for a city, state or private company? the price of oil moved higher for the fourth session in a row. crude prices up today more than a dollar closing at a five-week high. meanwhile, opec oil meeting today decided to keep production quotas unchanged. the decision comes despite a new burst of oil production in the u.s. and the possible return of iran's oil to the market.

steve has more. >> reporter: they decided to keep output levels unchanged, a lot of questions remain for 2014. with the announcement that arir is back at the top table. iran is having report with the west over nuclear issues and potentially in 2014 we could see more iranian oil come to the market. it's technically they hope to put 4 million barrels of oil on the market later in 2014, once sanctions were aid but iraq is producing 3.75, 4 million barrels a day and there are hopes nigeria and libya can produce more oil and this could lead to over surprise at some stage in 2014 but the next meeting scheduled for opec is june 11th. it promises to be an interesting meeting and the fact we're seeing an increase in non-opec supply, which the group said was not a threat to opec, in fact was a welcome audition to global

oil surprise. this is steve for "nightly business report" in vienna. carl icahn wants candy from app and will that's where we begin market focus. he wants the company to spend cash to buy back $50 billion in company stock. the investor revealed he filed a new shareholder proposal with apple in late november. the fresh detail, his 50 billion-dollar pitch is $100 billion less than october, that may be because the stock has gone up from when he suggested a repurchase of $525 a share. shares were off slightly but traded above 525 at 565. disney is raising the dividend. they declared an annual cash payout of 86 cents a share, up 15% and payable at the close of business on december 16th. the announcement was made after the close, shares finished the regular session slightly higher

$69.97. express is forecasting a weaker than expected holiday season due to aggressive discounting and reported a third-quarter earnings miss and the ceo says he does not expect the promotions to end any time soon. shares down a big 23% to $19 even. the hedge fund relieves shares of the auto maker could rise by more than 40% over the next 12 to 14 months. gm is one of the largest investments now. general motors popped 2%, $38.71 the close. higher prices and remodelling costs weighed on the second quarter earnings. the food and restaurant company reported profits plunged 46% and gave a weak outlook for the upcoming fiscal year. to counter slowing sales, the chain bumped up menu prices and remodel eateries tacking on extra costs. the stock dropped 5% to $52.33.

standard employees upped the credit rating on las vegas sands. they did not quite lift the stock to investment grade but predicts a stable outlook for the world's largest casino. that sent shares up almost 4% to $74.51. the famous shorts seller, jim chanos, a -- healthcare.gov. reports of the short against the tech firm sent its shares down more than 3% to $34.99. and the nation's largest dealership chain, auto nation reported a 13% gain in new vehicle sales for november. demand for domestic import and luxury cars rose by double digits. they say black friday powered the sales gain. >> if you look at the saling rate for the industry of annual

and compare that to a selling rate of 15 million 2 for september and october, you see we really needed a big black friday, and we got it. >> and the stock jumped nearly 3% to $50.21. tyler? >> a new report from experian shows how americans are paying for all those new cars and pickup trucks we've been buying, with loan rates so low, new car buyers are taking out bigger loans with longer pay back periods. right now the average loan amount is nearly $28,000 and the average length of one of those loans has been stretched to five years and five months. student loan debt is higher, too. a new report shows seven out of ten college graduates had to borrow money to wear the gap in gown in 2012 and came out with $20,000. households, businesses and

municipalities as detroit's bankruptcy decision makes clear. experts all across the country have been trying to figure out just what the detroit decision might mean to them. here to help us tonight, is jp aubrey, assistant director of research at boston college. j.p. welcome. if this decision is upheld, by how much might a typical detroit pensioner receiving, say, $20,000 a year see their benefits cut and how much do municipal workers in municip municipalities outside detroit need to worry about changes to their pensions? >> well, it's unclear how much cuts they will get to their pension benefits. that hasn't been decided yet. what is clear, that cases such as detroit have very little implications for the nation on the whole. detroit is a special case. pensions were part of the issue but it has been a shrinking city

with an industry declining and a revenue base declining for sometime, and so it's hard to see how cities around the nation could draw much from the situation in detroit being that it's so unique. >> you know, this whole question of pensions has been brought up before because of detroit. let's say i'm someone working in a city that doesn't have any problems. the question those people are wondering, how safe is my pension? can we answer that definitively? >> not definitively. in most cases pensions are very well protected. you can look at the example of detroit. they had to go through banks result see proceedings to touch these. the burden of proof is on the city to make a case they are eligible and that's a high threshold. pension benefits are usually safe around the nation. pension benefits are protected for current employees and retirees. >> i'm looking at research that

your own group put out saying 126 public plans were only 73% funded using the most optimistic pension return formula. 50% using the more conservative 5% return figure. what percentage are underfunded and not by just a little but in some cases by a lot? >> right, this is correct. those numbers are right. currently in 2012, based on 126 state and local pension plans that we maintain at the center, the funding rate owe was 73%. a lot of that unfunded lighty isn't due to current workers. pension funding really wasn't involved until the '70s or '80s. a lot of these are legacy costs from a past time and plans have been working steadily to fill the gap. >> so is it real or not? are the costs real or not? are those numbers really speaking to anything? are you telling me they don't really matter? >> no, those numbers are real.

what you need to understand is that a plan have been working steadily to fill that gap. so that was a unfunded lighty from a past time and they have been working steadily to increase the funding over the period in order to fill the gap. so we're just not to the point where this funding of that gap has been completed yet. >> jp, let me ask you this, this raises the question that a lot of people used to take a job as a teacher in a public school or join the police force because even though their salary would be low, they would get good benefits and pensions. it seems like that formula is changing. what does this mean for cities and municipalities? >> you raise a good point. with e did a study preparing public and private compensation, total compensation that is salaries plus pensions and fringe benefits like reteary health care. they basically get the same

total compensation when once you control for age, education, time in the work force. so if you just cut an employee's pension benefits without giving them an increase in the salary in any way, they are basically offering them less in total compensation. now, if i'm a young employee choosing where to go in the work force, public or private and i have a certain set of skills, get more money in the private sector -- >> you'll go there. jp thank you very much. appreciate your help tonight. complicated question. jp aubry from boston college. with cold temperatures deliver hot sales for some retailers this year.

the calendar says december but an arctic cold front is sending temperatures lower. in california's central valley citrus growers are preparing for below freezing temperatures that is threatening orange, lemon and other crops. they plan to turn on water and circulate air. that same snap of cold weather is making retailers thankful they won't be left out in the cold this holiday shopping season as this wicked winter weather is coming at the right time. courtney regan explains. >> reporter: a little chill in the air is at the top of many retailers wish list during november and december and on the first key shopping weekend, santa delivered earlearly. arctic cold air sat during the black friday week pushing temperatures three to 15 degrees cooler for average, making this

year's black friday the coldest in more than 20 years for a large portion of the country. the results followed through as retailers would help. the f corp and north face and ugg boots were up. footlocker says strength in the timber land business is making the shoe retailer optimistic about boots this season. jp morgan analysts say the weather has been a positive x factor noting evidence suggests it is impacting consumer buying. he says macy's cfo told investors the department store sees increased opportunity to sale outer wear into the hole say season. in fact, the weather channel survey shows consumer demand for heavy outer wear increased 125% compared to last year. stronger demand shows retailers can sale goods at full price, especially important for one of

the most emotional holiday seasons in a long time. >> the goldie locks condition for macy's or kohl's is colder than normal weather, not too cold, some snow, feels like holiday gets people really sort of in the mood for christmas. weekends, they don't want anything falling out of the sky. >> reporter: the weather channel forecasts the colder than normal temperatures will continue for at least the next two weeks. while current winter storm cleon will hurt foot traffic temporarily, it is christmastime. gifts have to be bought somehow so retailers with strong online offers could benefit. and finally tonight, news week is making a come back. the struggling magazine ended the print edition last year producing only an online version but now it plans to turn the presses back on. starting as early as january, news week is planning to print a 64-page weekly edition and they

will rely on paid subscriptions for revenue instead of advertising. i don't know how that will work out. >> make a try and come back. >> that's "nightly business report" for tonight. i'm susie gharib. we want to remind you this is the time of year your public television station needs your support to make programs like ours possible. "nightly business report" has been brought to you in part by. >> thestreet.com, up to the minute stock market news ask and in depth analysis. we provide objective independently dent ratings daily on over 4300 stocks. learn more at the street.com/nbr.

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