>> announcer: this is "nightly busine with tyler mathis up, up, and away! stocks have their best start to a year since 2003. and our market monitor says small caps are on track to see big gains now. focus on financials. earnings are under way. so far they're strong. and this critical sector is the reason why. no steering wheel? no problem. gm envisions the car of the future. but will you get in one? those stories and more tonight on "nightly business r. good evening, everyone, and welcome. two weeks into this new year, the bulls are running on wall street. stocks surged to close at records again. in fact the dow had its third

200-point gain in 2018. that compared to only six during all of last year. today, financial stocks rose after some of the country's biggest case reported their quarterly results. here are the closing numbers. the dow jones industriaag advanced 228 points to 25,803. the nasdaq added 49. the s&p 500 was up 18. and it was a strong week for all three. so how does this start to a year compare to others? what might happen next? mike santoli set out to find some answers. >> reporter: stocks have accelerated into 2018 with a burst of fresh energy, making for the market's hottest start in 15 years. the s&p 500 index has already gained 4% in 2018. the best return over a similar span since 2003 when it was up 5.8%. 2003 turned out great for investors with a 12-month rise up 26%. that year, stocks were just emerging from a nasty two-year downturn that followed the tech

bubble. not exactly a similar setup for this year, which begins nine years into a bull market. before 2003, the best year was 1987, known for a stupendous 40% surge into the summer before a crash. interest rates are beginning to rise and public excitement over stocks starting to boil over. while it's hard to generalize about what a year's start means for market performance to come, in general a strong gain in early january has led to better than average returns. with growing confidence in the economic picture today and few signs of recession on the horizon, investors are focused more on grabbing a piece of further upside than on worrying about potential losses. stock funds pulled in $24 billion in new money in the latest week, according to bank of america/merrill lynch, sixth highest ever. some strategists say the bull market has entered a new phase and investor euphoria builds and risk is embraced.

yet the rapid pace of gains and rush of new money into stock funds this year also hint we could be in for a more jumpy market. at last year's impressive 19% climb was among the calmest in history with tiny daily moves market is year is making jumpie moves as investors chas for "nightly business i'm mike santoli. it's not just the market but the economy that is also picking learned that spending is up a lot, adding to a string of strong economic reports. as steve liesman tells us, that could mean an even more aggressive fed. >> reporter: for retailers, it was a very, very merry christmas. based on government data report friday, the national retail federation estimates that holiday spending surged 5.5% for the best season since 2010. >> we saw from the thanksgiving

we could, it was clear the consumer was back and retailers were in a good place to responsibili to consumer demand. >> reporte onlin sales showed the strongest growth with combined november and december revenue in the category that includes e-retailers hiding $110 billion, up almost $13 billion from last year. with consumers leading the charge, economi now believe the u.s. registered another 3% quarter growth in the fourth quarter. that's the third three in a row. the u.s. is not only benefiting from domestic growth but overseas economies are helping as well. >> we are seeing synchronized global growth period which is really quite rare. i think that's one of the key offsets of why both the market in the u.s. and markets globally are doing so well. >> reporter: the one downside, markets are beginning to believe the federal reserve may hike rates three times this year. and perhaps more th three. >> my base case is still that we shou increase rates three times this year.

i probably have a little stronger conviction that three times, not less than three times, is appropriate. it's possible it could be more than three times. but that's still the base case. >> reporter: it seems as long as the economic data and the earnings are strong, the market will remain untroubled by those rate hike clouds on the horizon. for "nightly business" i'm steve liesman. and now to those bank earnings we mentioned a bit earlier. jpmorgan's resul were stronger than expected. the biggest u.s. bank by assets reported decent loan growth and got help from higher interest rates. that sent shares of the dow component higher. blackrock also topped analysts estimates. it now has a record, sit down for this, $6 trillion in assets under management, as investors flock to low cost funds. the company raked in the equivalent of a billion dollars of new client money every day last year. on the flip side is wells fargo,

which saw total loans decline and was not able to benefit from rising interest rates, at least not so far. in trading today, shares did what you might expect them to do. blackrock went up. wells fargo wt the other way. here to dig a little bit deeper into today's earnings and what we might expect to see from other banks reporting next week is marty mosby, the director of bank and equity strategists at vining sparks. nice to have you here, marty, welcome. >> thanks for having me this afternoon. >> you say there's basically four catalysts that you think are going to continu to push this particular sector of the market forward. it sounds as though you think they're really in the sweet spot. >> we are. this is the las half of the normalizat that we started coming out of the recession and financial crisis. unfortunatel we had four years from 2012 to 2015 when we kind of just stalled out and we didn't get any of this improvement that we should have had five to seven years ago.

those four things are very easy. it's low credit cost. number two is it's rising interest rates. that continues to push margins wi it's the deployment of capital. we built up capital that now needs to be pushed back and used more prudently and being productive.la you get some oper leverage, expense savings, synergies from acquisitions. those are coming together now to produce growth and profitabil each bank has its ow individual circumstances, obviously. would you compa and contrast the reports from jp morgan on the one hand and wells fargo on the other for us? >> sure. jpmorgan and the money center banks are having some pressure from the capital markets. they're not hitting on all with that, they're being able to grow earnings per share from those catalysts at around 10%. wells fargo is an outlier in the sense that it has pressure from the representatiol crisis it's

dealing with. they're increasing expenses to make sure they're taking care of employees and customers as much as possible. it's also caused them to de-risk their business, to make sure there's no more hiccups down the road. it's created some revenue headwind. just one last thing, super regional banks are the ones that really will benefit the most from this environment. >> you really think that we're going to see a considerable earnings per share growth, 30%. so if you're not in these stocks, it sounds like perhaps they are not overpriced yet, and have more room to run. would that be a correct assessment? >> it would be. as returns will go up three full percentage points this year, we think price to tangible book values that are averaging two times average book value could round up to 2 1/4 to 2 1/2. so there is earnings momentum to still come and get the outperforman, that e banks can still perform as further

upside is realized with the profitabilit impro we'll see. >> marty, thank you so muchus. have a great long weekend. >> you too, thank you. >> marty mosby with vining sparks. in washington, the trump administra kept alive the iran nuclear deal for now. the president waived sanctions for the third time but said it will not do so again unless the agreement is amended. the white house's statement appears to set a mid-may deadline to make whatever changes it desires. the supreme court will hear an internet sales tax case. that decision could force consumers to pay more for certain purchases and allow states to recoup what they say is billions in lost revenue annually. the case was brought by south dakota, which has no state income tax and relies in large part on retail sales taxes for revenue. kentucky has become the first u.s. state to implement medicare work requirements for able-bodied adu on the program. the approval comes one day after the government, federal

government, issued guidance that lets states test programs that require jobs or work training as a condition of receiving benefits. conditions have r been attached to medicaid before. still ahead, food fight. why you may want the german grocer lidl to set up shops in yo have you heard of lidl? it's the german grocery store that if it opened in your town, you probably have. and your wallets may have felt the impact. courtney reagan explains. >> reporter: w low priced german grocer lidl opens a new

store, it brings a food fight. consumers are the ultimate winners. the university of north carolina looked at prices at 48 grocery items at walmart, kroger, publix, and food lion, in towns that also have a competing lidl grocer store and towns that didn't have one. the study shows on average co retailers near lidl stores set their prices 9% lower than in markets where lidl isn't present. th german grocer entered the u.s. seven months ago and has less than 50 stores so far. more than 50 are planned. while nearly all products it sells are brands only found at lidl, lidl says its prices are as much as 50% lower than rival stores. it to see how its entrance to a new area impacted competitors' pricing, which is why lidl paid the university to do the study. the professors who conducted the study found a half gallon of milk can be priced as much as 55% lower at competing grocers in towns with a lidl compared to

towns without. avocados and bread are 30% lower. ice cream, bananas, and cheese are 15% less in lidl markets than nonlidl markets. that means kroger shoppers save $22 on their total in markets where lidl is present compared to markets where there is no competing lidl store. $17 savings at food lion. $14 at alde. $3 at walmart. one analyst says lidl's entrance into a new area does push grocery prices lower at other stores, but lidl hasn't been as strong out of the gate as first expected. >> they haven't gained the share i think that originally was expected. but you are seeing u.s. retailers come down, and they'll match those prices. i don't know for how long, though. the pricing power of walmart, of costco, is extensive. getting consumers to recognize the brand name of lidl takes time. >> reporter: walmart declined to

comment on the study itself or its pricing plan but pointed to its ongoing mission to lower costs and prices in certain unspecified categories. the other grocers didn't respond to our request for comment. but the study totals the story, and there is a different ending if your town has a lidl than if it doesn't. for "nightly business >> every lidl bit helps, i suppose. facebook shares get hit after changing the company's news feed. that's where we begin tonight's market focus. yesterday the social media giant said it wants its users to interact with each other more often, so it's making changes to its news feed algorithm that will result with more updates from family and friends and less content from brands and media. facebook says it is confident about the chang even if it means people will spend less time on the platform. shares fell, though, 4.5% to $179.37. gamestop reported same-store s for the holiday period that topped expectations.

but shares came under pressure when the company said it expects to record a charge of as much as $400 million at the end of the quarter. s more than 1,400 branded and at&t stores and said sales fell in its technology division as more consumers hold off on upgrading their smartphones. shares plunged 11% to $17.76. the nordstrom family is reportedly still intereste in taking the retailer private. cnbc says one hurdle standing in the family's way is securing the necessary financing for a potential deal. last year, the family's efforts to take the retailer private were stalled by lack of financing and investors' uncertainty around retail's future. shares rose 3.5% to $51.82. aflac is under fire after new site the intercept alleged the insurance giant exploited its workers and deceived shareholde and customers. the allegations were based off of conversations with several former employees who have sued

aflac. aflac says the allegations are baseless and it plans to file for a dismissal of th suit. shares were off about 7.5% to $84.94. liberty oil field services began trading on the new york stoc today. the company raised more than $200 million by offering nearly 13 million shares at $17 apiece, which above the expected range. libert said it will use the proceeds to pay down debt. shares rose 28% in their debut. the activist hedge fund d.e. shaw has reportedly built up a stake in a home improvement chain, lowe's. reports say the hedge fund is worried about lowe's performance when compared to its peers and it's planning to seek changes at that company. lowe's shares jumped more than 5% to $100.86. several reports says cbs vice chairwoman shari redstone is seeking to combine viacom and

cbs, more than a decade after the two companies split. but subsequent reports said viacom is not in any active talks with cbs regarding a potential merger. viacom shares ended the day up 9% to $33.76. cbs shares rose 2%. time for our weekly market monitor segment. this week's monitor has three small cap picks, capitalizing on growing demand among consumers for experiences and services. the russell 2000 hit a new high today, up 80% over a five-year period. we welcome tighe sanders from tighe, welcome, good to have you with us. we're a little pressed for time. beginning with monarch cart casino and resort, not a name i know, which doesn't say much at all, but where do they do business and why do you like them? >> so monarch casino resorts is a regional dominant player.

we like this because of the mana team and the way they've been able to utilize data analytics to better segregate the market and get a better overall customer experience for the user base. we like that they're doing an intelligent expansion into the black hawk region outsi denver, colorado, with similar characters to th reno, nevada area. >> you also like winnebago, the customer service experience. they have, you say, a lot of rvs that they rent out, so they have a couple of dif income streams. >> yes, so what this is really capitalizing on is our thesis that we're going from, you know we're going more towards everything as a service, right? and so you talk about experience versus things, everything is a service. what they're really providing is vacation as a service. if you think about the millenials and younger generation buying rvs and air streams, then there's companies that buy those rv house as and pe to rent them.

winnebago is well positioned to take advantage of this movement. >> third is bright horizons family solutions, a childcare center provider, correct? >> that's correct. so what this is, this is on-demand childcare as a service. again, the service is childcare. they go right into large corporations, headquarters, and set up shop actually inside of that facility. whs provides is childcare on demand. so in this busy lifee we have dual earner households, it allows for parents to bring in environment to the they're comfort with and a group they understand. it really fits into this movement of everything is a service. >> how do you feel about the market overall, tighe? we've had such a strong run for the last year. and even just since the beginning of 2018, you gave us three stock picks, but in general, are

>> finding value versus recognizing that growth is going to be the driver are two different things. i agree, it's difficult to find value in the classical sense. but we don't see anything on the horizon that's going to cause a major recess maj decelera in growth. in fact we didn't see much earnings growth at all in the last t year, we were expecting see that. if we get that and see some multiple compression, we still think we'll see some positive upside in 2018. >> seei thank you very much, tighe sanders at whittier trust. you can read more at nbr.com. coming up, no hands and no steering wheel. and no pedals. gm thinks that's exactly the kind of car drivers will want in the not-

a titan of energy investing is getting out of the industry he helped to shape. 89-year-old t. boone pickens closing his energy-focused hedge fund, citing deteriorating health and poor returns. pickens started out as a geologist, eventua founding mesa petroleum. he made a name for himself as a wildcatter corpo raider, then a successful investor in oil, natural gas, and clean energy. the decision to close his fund brings an end to a nearly seven-decade career. a new passenger rail service is open for business in florida. but what makes this one different is that it's the nation's first privately funded passenger train. morgan brenn >> reporter: it's taken seven years, but bright line's fleet of colorful trains are finally barreling full steam ahead, carrying passenger along

florida's east coast, starting this weekend. >> so far in this first phase of our business, which is between downtown miami and downtown west palm beach, we've invest 1.8 about this total in trains, stations, infra upgrades, everything that was necessary in r for us to launch this new private business. >> bright line is the first and so far only passenger-fund it's owned by fortress investment group. it's not technical high speed service, but fortress's chairman says it will eventually be possible. >> these rail lines were put in place when henry flagler put them in originally. you can go at grade a maximum of 135 miles an hour. if you want to go true high speed, over 200 miles an hour, you basically have to build a bridge for 250 miles that you then put a train on. that sounds hard and expensive and it's both of those things. it will take us about three

hours to go from miami to orlando. a high speed train might be two hours 20 minutes, two hours 30 minutes. a huge difference in cost and time to build, and not that much of a reduction in service. >> reporter: fortress owns 1.5 million square feet of mixed use real estate along the line. he's identified eight to ten corrids across the country where a project like this will make sense. the first line are one between west palm beach and ft. lauderdale with service to miami coming this spring. officials are betting it will boost travel for tourism and also for business. >> this is a long term project that is going to be immensely successful and really create a lot more economic prosperity for south florida. >> reporter: ticke will be 10 to $15 with the equivalent of toll costs to drive the same distance. br line hopes it will drum up demand. eventually that will shift to a dynamic pricing model. work isn't done yet. fortress expects to spend another $2 billion to extend

service to orlando, work expected to be complete in two years. while it's too soon to know how all of this will turn out, the project comes online just as lawmakers turn to infrastructu, hoping to enlist the private sector to rebuild america. for "nightly busine. ford and federal regulators are telling nearly 3,000 owners of certain 2006 ford rangers to stop driving them. that's because of the vehicle's that cae airbags. they say the airbags need to be replaced immediately. do not drive the cars. the inflaters can explode and spew shrapnel. are you ready to ride in a car with no driver, no steering wheel, and no pedals? i'm not sure if i am. but general motors thinks we are. the automaker has asked the government for permission to build and test drive an

autonomous drive car, stripped of the controls that we've used for decades. phil >> reporter: this is the future, according to general motors. a self-driving car without a steering wheel and pedals. driving around cities, giving people rides in robotaxis. >> obviously there will be an adoption curve. and it will take some time for people to get used to d idea. but ever all about safety in the approach. we want people to feel comfortable with technolog rit from e outset. >> reporter: gm is asking the federal government to waive vehicle rules that have been in place for decades so it can put self-drivi cars on the road without steerin wheels and other contro radical departure, going back to the days of henry ford, steering wheels and gas pedals have been at the heart of every car and truck. but gm and other automakers believe there's no need for a steering wheel if there's no driver. >> we see these vehicles getting

deployed in a ride share environment. that's what we're aiming to do in 2019. obviously having maximum space inside the vehicle avail for passengers as customers is a . >> reporter: other companies like waymo are also developing self-drivi cars without steering wheels. and late last year, an autonomous drive shuttle without a driver hit the strip in las vegas, and almost immediately was hit by another vehicle. which raises the question -- will the public feel comfortable in a car where there's no way to take over steering if there's an emergency? >> sounds really dangerous to me. >> i would feel pretty safe, i think. i think i would feel pretty safe with that. >> i would prefer if there was an option where you could take control over the vehicle and remove it from automation. but i think hopefully that the company put their time and effort and tried to protect the users. >> reporter: gm's steering-whee c does have an emergency button riders can push if they need to stop the car immediately.

but otherwise, general motors says these cars will know where to go without a driver or a steering wheel. phil lebeau,y and before we go, let's take another look at today's record day on wall street. the dow advanced 228 points. nasdaq added 49. and the s&p up 18. and that is "nightly bu tonight. i'm sue herera. thanks for j us. >> i'm tyler mathisen. thanks from me as well. have a great weekend, everybody, a long weekend. .e'll see you monday for a

>> this is "bbc world news." >> funding of this presentation is made possible by the freeman foundation, and kovler foundation, pursuing solutions for america's neglected needs. >> planning a vacation escape that's relaxing, inviting, and exciting is a lot easier than you think. you can find it here, in aruba. families, couples, and friends can all find their escape on the island with warm, sunny days, cooling tradewinds, and the