this is "nightly business report" with tyler mathisen and sue herera. snapback. stocks break a five-day losing streak because of a gusher of oil. the question now, can it hold? recession or not? the stock market seems to be ringing the alarm bells but the economy doesn't want to play ball. so which is right? tread lightly. this week's market monitor thinks the next few months hold more risk than reward but he has some names he says you may want to think about nonetheless. that and more for friday february 12th. good evening. welcome. it was a strong finish to an otherwise dismal week on wall street. the catalyst to the upside is the same catalyst that has been triggering sell-offs and that of course is oil.

oil posted its best day in seven years gaining 12% on hopes of a possible production cut that we told you about last night. the banking sector also pitched in having its best day since 2011. helped out by a big buy-back that we'll tell you about in just a few moments. some strong economic data helped out as well. add it up and a recipe for a rally. the dow was up 2% to close at 15,973. nasdaq rose 70. the benchmark s&p 500 added 35. that's also about 2%. for the week it was a different story. the dow was the big loser down nearly 1.5%. the nasdaq and s&p both off more than .5%. bob pesani has more on today's rally. >> reporter: the market cannot decide how it feels. all week we were in the usual quasi-panic mode that characterized the entire year. oil down, bond yields were down,

gold up, yen strengthening, global stock markets down. then everything changed at 2:30 p.m. eastern time yesterday. oil trading at $26, a 12-year low, turned around on remarks of the uae opec minister that opec may agree on some kind of production costs and no one really believed that. but the world changed, everything reversed. oil rallied, bond yields rose, the yen weakened, stocks rallied. that trend continues into friday. the s&p rallied about 50 points since 2:30 p.m. yesterday. this is all the more remarkable because we're going into a three-day weekend. and you know the drill. with all the volatility, traders are wary holding positions when china will reopen monday and our markets were closed but that apparently was not a worry today. if oil puts in a convincing bottom that would be important. but nothing has changed to indicate that it has. it's amazing. next week we'll hear from ecb head mario draghi who speaks in

brussels monday. we'll get japan's fourth quarter gdp and hear from big retailers including walmart later in the week. the market plunged to start the year, has some investors wondering whether stocks are signaling recession. others say the economy is saying, no way. today people in the economy camp got a lift. we got data showing the consumer was alive and well last month as retail sales in january were stronger than expected. if stocks are warning recession, steve leishman tells us why the economy isn't playing ball. >> if you could cover one eye and block out the dismal stock market numbers, if you could look only at the economic data, you'd have no idea we're in the middle of some apocalyptic panic. the u.s. economic data has not been great but it's been good. good enough to contradict the view from the stock market that a recession is imminent. retail sales for january were a bit better than expected. helping confirm the early read

that first quarter growth would show a modest bounceback from that weak fourth quarter. jobs are up as are wages. unemployment is down. add to that a sterling household credit report from the new york ted showing bankruptcies and foreclosure in the u.s. hit their lowest levels in 2015 in the 13 years the bank has track the it. >> i think the u.s. economy is in quite good shape. you know, we've talked today about the household sector. you also look at the outlook for housing. you look at the fact that fiscal policy in the u.s. is turning stimulative as brought by support this year. there's quite a bit of i think momentum in the u.s. economy. >> to be sure there are weaknesses and warning signs. the stock market can be a leading indicator of growth in recessions. corporate earnings are contracting and the manufacturing sector of the economy seems already to be in recession. in addition, the economy itself doesn't always give warning signs when the economy will slow down. that said, the early read from the january economic data does

not confirm the dismal market outlook. and low oil prices, low unemployment, and higher wages set up the consumer to keep spending this year. the biggest danger then may be the damage in the decline in stocks, undermining confidence and prompting some companies not to hire or to cut back on their capital spending. so the only thing the economy may have to fear franklin roosevelt might have said is fear of the stock market itself. okay, but what about on the corporate side? earnings season is wrapping up and the numbers haven't exactly been something to write home about. a look at how the earnings have been and why they could be a possible red flag. >> reporter: there's a reason why some investors are worried about both the economy and the stock market ahead. it's earnings season. and while reports from america's largest companies have generally come in better than expected, the expectations were already low to begin with. so here's how things are shaping

up. around three-quarters of s&p 500 companies have already reported numbers. among those, more than two-thirds of them have beaten the average analyst estimate. the problem is it still means if all remaining companies in the index report earnings as expected, earnings growth will post a decline of 4% over the same period last year. if that does happen, it will mean two straight quarrels of earnings declines which some experts categorize as an earnings recession. all of this according to thompson reuters ibis. the concerns don't end with bottom-line earnings results. there are worries about top-line revenues or sales. s&p 500 companies are on track to deliver sales declines of nearly 3.5% this past aware. if that does come to pass, it would be the fourth consecutive quarter of year over year sales declines. the last time that happened was during the financial crisis. it also means a sales recession is already under way. both will argue if you strip out

the outsized negative effect of declining oil sales and profits there would actually be modest growth. the bears argue that you have to look at the entire earnings picture no matter how gloomy things have gotten for the energy sector. regardless, the decline in sales and profits at america's biggest companies is helping to add to the overall market caution. for "nightly business report," i'm dominic chew. one person who is firmly on the side of the economy in this little debate between the market and the economy is the billionaire hedge fund investor john paulson. his views are watched by other investors and he said last night the stock market is getting carried away. >> there's a disconnect between the performance in the stock market and the performance of comes, particularly that we've invested in our portfolio, that the companies are actually doing very well, yet the stock prices are declining.

so that's kind of an imbalance and eventually that will sort itself out. i would say that the market is somewhat overreacting. to the current state of the economy. >> so which side is right? we've set it up for you. joining us to discuss is craig disney, chief economic strategist at vining sparks. david kelly, chief global strategist at jpmorgan funds. welcome, gentlemen. craig, let me start with you. i think you heard the arguments on both sides. tell me, who do you think has it right, the stock market or the economy? >> well, i think both of them are telling different stories right now. the economy continues to run at a stable rate of growth. it's not great. it's when the 3% we're used to. but we do see the economy continuing to be fairly stable, growing between 1.5% and 2%, primarily because we have a better consumer. i think steve hit on that earlier. consumers are in a better position, the labor market's

better. they're seeing a little wage gains. from that perspective the consumer's driving economic growth and that's healthy. i think the stock market is really reflecting the fact that there's a lot of volatility out there. central banks have been driving asset prices. and to that degree, when they start to unwind it like the fed did in december, there will be a lot of volatility and that's what we're seeing play out. >> david, how do you handicap the possibility of a recession in the united states in 2016? >> yeah, i think in any given year, in any year, there would be a 15% to 20% chance of recession because of something happening. i don't think the chance of recession are much more than that, about a 20% chance. as we went into this year the key thing, i agree with steve leishman's report, you look at government spending, it's going to be rising this year. consumer spending is going to do very well this year. the consumer fundamentals are in place. housing is still heading to bounceback. c plus h plus g, that's 90% of

the economy. 90% of the economy looks fine and that will be enough to allow us to avoid recession, unless some big shock that has not already occurred, occurs. >> craig, weigh in. you say it's unlikely to have a recession short term, but the rings are elevated, and if growth contracts you have a more fragile economy. >> yeah, and that's one of the challenge wet have today. when you have a 2% economy, like we've had post the great recession, going -- sliding into a recession is much easier than when you have a 3% economy. so i think we have a more fragile economy today. with all of the turmoil that we see globally and overseas, i think that you could see, if confidence were to be shaken and we were to see the consumer pull back, then you could see it slip into a recession. i think it would be a mild one. you could see that happen. we're starting at a lower base. because of that it makes us

easier to slip into recession. >> we didn't get a chance to talk after the fed chair's testimony wednesday or thursday. what do you make of it? and more pointedly, what do you think, if anything, she signaled with respect to the pace of interest rate hikes this year? >> well, i think janet yellen was trying her hardest not to make news. i must say i don't envy her position sitting in front of the congressmen and the senators. i think she's -- i think the fed is cautious. they're sort of -- that's in their nature. i think the volatility we've seen this year probably takes march off the table, although she didn't say that. i still think the economic numbers will look good enough, that by june they will have to raise rates, and i expect to get a june, a september hike. the pace of which unemployment's coming down means they did start too late. and they're eventually in 2017 going to have to deal with an issue of wage inflation and a

very low unemployment rate. to some extent there is a risk in 2017, a greater risk of recession in 2017, but i don't think so in 2016. >> craig, what about the pace of interest rate hikes? a lot of people think march is off the table and a lot of people think the fed might be only one more interest rate hike in their cards at this point. >> ironically, if you look at fed funds futures contracts, which is just a way to determine what the market thinks, they're actually pricing in a greater chance of a rate cut this year than a rate hike. they were as of thursday. so i think it's going to be hard for them to raise rates. i think the primary reason -- i agree with david that janet yellen didn't want to make news. i think marchs off the table for sure. but at the end of the day they have to see inflation come back. and there really are no signs of any inflation anywhere in the production pipeline, earnings growth has been very weak. if there's not inflation, they're missing that side of their mandate.

at the end of the day i think it's going to be hard for them to raise rates. maybe one time this year at best. >> david, what do you make of her comments about negative interest rates in the united states? what would it mean in the u.s. if we did go negative? i know that's not what you're suggesting or forecasting at all. what could it mean if it happened her >> well, it's very disruptive. it reminds me of one of these ads for a fairly harmless disease, they tell you about this pill they spend a minute giving you all the negative side effects. i don't see any good. so i certainly hope we don't have to resort to that medicine because this isn't medicine, it doesn't fix things. i hope that the federal reserve is really looking at what's going on, where negative interest rates have been applied, indeed where zero interest rates have been appl d applied, and recognize this is not good at stimulating the economy, it's best to have the

fortitude to raise rates gradually to get back to normal. >> thank you have a much, craig and david, appreciate it, have a good weekend. with all the bank bashing from both side of the political campaign, wall street is searching for a presidential candidate to get behind. where and who might wall street look to? that's coming up next. there has been a common ground from both sides of the aisle this election campaign, blame wall street. with attack froms eleventh and right the street is trying to figure out who to back and it's not the favorites.

today a gop donor and home depot cofounder has decided to back ohio governor kasich. bill ac man wrote an op ed urging michael bloomberg to run. john harwood digs into who wall street wants. >> it's been a rough presidential campaign so far for wall street and american business. on the campaign trail, bernie sanders says wall street's business model is fraud. donald trump denounces corporate blood suckers. ted cruz rips crony capitalism. the returns on campaign money, which ought to be wall street's edge, have been as weak as the stock market. its three favorite in the race for donations -- hillary clinton with $2.9 million, jeb bush with $2.4 million, marco rubio $1.3 million -- have been struggling. that sent donors looking around. activist investor bill ac man wants to persuade michael bloomberg to run. ken langone has hired on with

governor kasich. >> i was a banker and i was proud of it. >> this was a man that was a managing general partner at lehman brothers when it went down the tubes. >> in congress, john kasich voted to give wall street banks a blank check to write billions in bad loans, lead together financial crisis. as a banker at lehman brothers, a wall street bank that failed, kasich made millions while taxpayers were forced to bail out wall street. >> guess where that ad came from? the super pac supporting ken langone's previous candidate, new jersey governor chris christie. for "nightly business report," john harwood in washington. jpmorgan ceo jamie dimon buys over $26 million in company shares. "market focus." the purchase disclosed in a company filing was for 500,000 shares and this means mr. dimon now owns more than 6 million shares according to the "wall street journal." the banks soared today over 8% to 57.49. another company that saw its

stock surge today was square. in an s.e.c. filing the credit card giant visa disclosed it's purchased a nearly 10% stake in the class a shares of the mobile payment company, in addition to an indus closed investment visa made in the company in 2011. shares of square up for the day nearly 8% to 9.30. the chinese internet search company buydue said it received an offer to buy its majority holding in a chinese streaming website. the offer was for the 85.5% stake buydue owns. shares of buydue as a result rose over 8% to 152.73. fashion retailer elle brand says the ceo of victoria's secret brand has resigned, their largest division. ceo leslie wexner will add running victoria's secret to her duties.

shares fell 2.5% to 81.87 and are off over 13% over the last 12 months. intercept pharmaceuticals spiking on a reuters report saying that companies exploring a sale and has received interest from other companies. intercept is a biotech company focusing on treatments for liver disease. reuters says intercept has been working with investment bank others a potential sale but there's no certainty a sale would took place. shares were up more than 27% to 120.22. ford said january sales in europe rose 10%, making it the best-performing january in four years. a leading driver in the sales came from high suv demand. the company also said it would launch four new sport utility vehicles over the next four years in response to their growing popularity. ford shares rose over 3% on the news to 11.55. insurance company allstate is increasing its quarterly dividend 10%. which will be paid out on april 1st. the company is the nation's

largest publicly held insurer. shares gained over 2.5% to 63.91. this week's market monitor says when it comes to the market right now he's cautious. not bearish, cautious. mark temper is president of strategic wealth partners, welcome. overall, do you think the market six to 12 months from now will be higher than today? how bumpy will it be if you think we're going to get there? >> yeah, i do think six to 12 months from today we will be higher but i am expecting quite a bit of volatility over course of the next few months. there are certainly some big issues. number one, there's a huge disparity between what the markets believe and what the fed believes is appropriate monetary policy at this point in time. markets are expecting about 15 basis points of rate hikes. the fed on the other hand is projecting around 100 basis points of rate hikes. so that's going to lead to continued volatility. beyond that, when you look at earnings season, near-term

earnings outlook is very bleak. revenues are declining. downside risks remain as far as profit margins go. pricing power is essentially absent right now. i'd expect more volatility. at the end the year we'll be higher than we are right now. >> you say there are potential value plays and you've given sinus names. first of all you say overweight utilities and duk is your pick. >> duk energy is yielding over 4%. it has paid its quarterly dividend for nikon sectiontive years. it's not the fastest grower but it is one of the safest dividends out there. for our clients, pre-retirees, post-retirees, they're concerned about making sure they have that income. >> the dividends payers typically outperform all other stock busy a good margin. retail drugstores you like. and your choice here is cvs. >> right, retail drugstores, as

it stands right now, drug demand is just completely booming. when that happens, you see increased foot traffic into the stores. and what these cvs, walgreens what these companies really want to do is they want to sell those high-margin impulse products that are sitting on their shelves. so we'd expect that to continue to happen over the course of the year. >> and then insurance. you say overweight insurance, your pick is cinf. you say if we do get higher interest rates that works in their favor? >> absolutely. insurance companies are net creditors. so they -- as interest rates do rise, that is a tailwind for their performance. and if you look at all the sec torls out there, as i just mentioned, pricing pow area minute ago, two of three sectors are unable to increase -- two of three industries are unable to increase their prices at or above the rate of inflation right now. insurance companies, however, have quite a bit of pricing power and that's going to help them to have some outside performance over the course of

this year. >> and that stock has a very nice return over the past year. i mean, there are not a lot of stocks up 18% or so from 12 months. >> no, it's done very well. and as you just mentioned, all-star state increased their dividend as well. so insurance companies definitely will be benefiting over the course of the next year. >> all right, mark, thank you very much. mark tepper of strategic wealth partners in cleveland. the bloom may be off the rose for the multi-billion dollar flower industry but we'll tell you about a few startups that are hoping to change that.

here's what to watch next week. u.s. markets are closed monday for presidents' day. nbr is still on the air. that's what to watch, folks. >> exactly. >> wednesday we'll get minutes from last month's federal reserve meeting. the investors that we'll be focused on what the committee had to say about the economy and obviously the future of interest rates. with oil a big focus, thursday's inventory numbers will be closely watched by investors and that is some of what to watch next week. valentine's day is sunday, ty. as you might expect, flowers are a big business. and although americans spent about $2 billion on them for valentine's day alone last year, sales have still been falling. as kate rogers tells us there's a fresh crop of startups that are hoping to shake up the way consumers look at valentine's day. >> reporter: in a panic over flowers for valentine's day? it's not too late. a new crop of on-demand flower startups are promising to make

your lover happy in a few hours or less. new york city's bates florist fulfilling same-day company fors bouqes, nationwide five day and next day deliveries. they've added same-day services to 130 markets from artisans like rachel. the bouques company says cutting out the middleman leads to lower costs. >> one of the things you'll see that's different versus competitors is that pricing, especially around valentine's day. go to our site today, you can order a dozen red roses delivered for valentine's day for $40 flat. because we don't have multiple layers of supply chain between us and you the consumer we don't have to bear the markups at every step along the way. we can offer that price year round. >> reporter: armed with sleek apps and a focus on sustainability, competitors in the on demand eco-friendly space

include bloom that which wraps flowers in compostable burlap and urban stems using in-house bike couriers for delivery. while spending on flowers has remained stable at about $2 billion, the more traditional flower industry taking a hit, going for more than $9 billion in 2006 to less than $6 billion last year as grocery stores and online players have increased their market share. which is why savvy florists like rachel are turning to the bouques. >> they keep growing because they retain their customers, as well as they're reaching out to many different people and the demographic has been i think very young. but it's also very broad range. >> reporter: all of this ahead of what rachel expects to be a very busy weekend for some very happy valentines. for the "nightly business report," in new york city i'm kate rogers. an iconic toy finds a new home. after more than half a century

the etch a sketch, where you draw a picture using two dials and shake it to erase it, it is being sold to a canadian company for an undisclosed amount. the ohio art company bought the rights to license and make the toy. look at that, will you. at a 1959 german toy fair. they paid $25,000. we're not sure what they sold it for but you could call it the luck of the draw. >> oh! you had to do it. >> there you go. all right, that does it for "nightly business report" for this evening. thanks for watching. >> i know what you mean. have a great weekend, i'm tyler mathisen. we'll see you on monday night. >> yes, we will.

>> we are here in post-debate milwaukee, to take you inside latest topsy-turvy political dramas. the big winners and the surprising losers. this "washington week" election special. hillary clinton, recovering from a big new hampshire defeat, strikes back. a single issue issue. and i do not believe we live in single-issue country. >> and bernie sanders, poised to giant, shows he won't back down. >> you're not in the white house yet. as the democrats spar, the republican field narrows, as the remaining candidates launch ahead. >> the last thing we need is another bush. you.i can tell that i can tell you. >> i did not do well on saturday this. so listen to that will