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tv   Nightly Business Report  PBS  December 26, 2013 6:30pm-7:01pm PST

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. this is"nightly business report" with tyler mathisen and susie gharib brought to you in part by. >> the street.com up to the minute stock market news and in depth analysis. our quantity ra rating service provides ratings daily on over 4300 stocks, learn more at the street.com. the stocks take off and more records for the other indexes. >> retail rush. retailers looking to keep the holiday season going as shoppers flock to stores in person and online in the hopes of getting big deals and continuing the spending. three of a kind, our market monitor has the trio of big caps
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he says you need to have in your portfolio for 2014. that and more for this thursday, december 26th, 2013. good evening everyone. looks like santa claus decided to hang around a bit. dropping off a few late gifts on wam street. stocks rose sharply today with another record close for the dow and the s&p. for the dow, the 50th record of the year. the blue chip average on track for the best yearly percentage gain since 1996. driving stocks higher today, good news about the job market. first-time filings for jobless benefits dropped more than expected. the dow dropped triple digits up 122 points and the nasdaq rose 11 and s&p added nine points. the yield on the ten-year note touched 3% for the first time since september. well, our market monitor tonight is here to talk more about the record setting day on wall street and the stocks he's
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adding to his holdings for 2014. he is peter, senior portfolio manager at hunting ton asset managers. good to have you with us. your prediction for the s&p 500 next year is about 2047, roughly 11% higher than it is today. what are you worried about that could, you know, cause that prediction not to come true? is it that earnings won't be as great as you forecast or the multiple won't expand? worries you? >> tyler, you touched on a couple key factors right there. when you get the later stage of a market like this and this takes shape over the summer, you go from the value market to a growth market built on pe expansion. normally rising interest rates don't go hand and hand and we had a collapse in ka modty prices this year, the lapse of a decade run for most of them. that in our mind is a return to higher pes next year, that means
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we'll have a more volatile market. any time you get that forward looking and forward discounting, the market gets volatile. in our view, in a market where psychology is fragile, that could be a real issue next year. we could see, again, you know, you talked about the ten-year. our fears if it spikes for some reason on bad news, that could rattle investor confidence, but we do see earnings growth continuing next year. a lot of positive fundamentalsth u.s. economy. we think at the end of the year we post nice returns. >> you have a couple stocks you think will post nice returns in the new year. let's look at some of them, dover as the first pick. what is it that you like about that company? >> it's a continuation of a theme we've had for a couple years. you're seeing a renaissance in a number of different sectors of the u.s. economy, agriculture, manufacturing and dover behind the scenes is built into those
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and they will continue to be there and this is a good market for them. it's not a cheap stock but a profitable company and has, what we think, earning potential that will drive the stock price higher in the years ahead. >> like large cap multi nationals, that's a theme you're hitting and john deere is certainly one of those. what will drive it in 2014? >> deere suffered from the collapse in commodities with good harvest. yet, deere's earnings go higher and the stock is one of the most profitable in the industry and right now trading at a discount to some of the foreign rivals, if you look around. deere is trading cheaper than they are and by far a much more profitable company. we think the theme of food and better diet about the globe continues and deere we believe is the industry leader and the stock we want to own. >> tell us about ibm.
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it's a pick that had a rough year. why do you think it's a buy at $184? >> again, we think this -- we're into later stages -- technology was a real hit or miss in the last couple years, the likes of apple and facebook getting attention. again, here is a very, very profitable company, great margins. it's probably selling at a 30% discount to the likes of hewlett packard. so it's the kind of value name, but a well-run company and again, it fits into the renaissance for american manufacturing and export, and with some of the highlighted security glitches we've seen in recent weeks, we think companies are keenly aware and will spend heavily to protect themselves from these intrusions going forward. >> peter, we're short on time, but do you own any of these stocks personally or have them in your portfolio? >> we have them in the funds. i do not own any personal. >> peter, thank you very much.
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happy new year to you. >> happy new year. and twas was the day after christmas, looks like everyone was headed to the big post holiday sales, at least that's what retailers hoped. many attacked sales with gift cards in hand. target says the day after christmas is the most popular day to redeem them, and not surprisingly, even up scale stores were running 70% off sales. julia boorstin has more on what retailers are pinning their hopes on. >> reporter: this mall and others around the country are hopping. nearly 80% of americans said they plan to shop post christmas end of year sales and take advantage of what are some of the deepest discounts in the years. so deep, they could discourage consumers from paying full price again. >> the prices are much, much cheaper, compared to prior to
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christmas. >> i saved 40%. >> i'm getting a better deal on these today. >> reporter: many consumers got started yesterday. christmas day online sales are up over last year driven by the highest ever mobile purchases. 29% of the day's online sales. following on the trend of online shopping growing 15% this holiday season. >> i think the weather, particularly, across the midwest was pretty nasty over the last week, and people definitely feel more comfortable shopping at home. >> reporter: the day after christmas, consumers hedged the malls to return unwanted gifts and crash ash in those gift car. $163 each expected to be send according to the national retail federation. gift cards aren't counted as revenue until they are redeemed, retailers hope they will spend early and more than the value of the card. >> i'll probably spend the gift
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cards in the next week, the next day. >> nobody gave me a gift card, if you can imagine. >> reporter: while cashing in the cards is a good thing for retailers, the other bighing retailers are doing today, returns isn't great. some 6 0 billion dollars in returns, all americans return at least 1/3rd of a gift. retail es hoping they will buy more stuff when they go in for returns. for "nightly business report", i'm julia boorstin in los angeles. although the vast majority on gifts ended up under the tree where they belong, for some the grinch, the bag cage delivery stole christmas. that made this a day for damage control because some packages promised for christmas eve never arriv arrived. ups and fedex under estimated the volume of online sales and
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angry shoppers raged. d diana olick has more. >> reporter: it was a black eye for brown. >> frustrating. >> reporter: even the competition was sympathetic. >> everybody had free express shipping. i think it was a little more than they expected. >> reporter: but ups added to it's own p.r. nightmare claiming two weeks ago it was more than ready for the christmas rush. >> we continue to become more efficient and use technology on the ground for routing and scheduling, so we can, you know, meet increased demand. >> reporter: ups predicted 7.75 million packages would enter its system over the holidays. they handle 45% of all u.s. packages. what they did not predict was that online sales would jump 37% last weekend, as delays mounted, ups issued a statement tuesday saying the volume of air packages in our system exceeded the capacity in our network as demand was much greater than the forecast, and then another statement today. ups apologizes to both shipping and receiving customers who may
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have delays. some said bad weather and a shorter holiday season contributed to the trouble, but a jump in mobile shopping may have tipped the balance. >> i think you have people trying out, you know, for the first time or one of the first times purchasing products online via mobile devices and accelerated it. >> reporter: the question now, is how much will this affect online retailers like amazon that rely so heavily on the carrier? >> i think the ease of shopping online will make people continue to shop online. it's important not to over estimate how significant it is. online shopping accounts for 15% of retail spending, so most people still hit the stores. >> reporter: amazon placed the blame squarely on the carrier saying in a statement amazon fill fullment centers tendered and delivered on time for holiday delivery. we're reviewing the performance
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of the delivery carriers. frustrated online shoppers, of course, chose to vent frustrations online. twitter lit up with complaints, the hash tag ups fail emerged late chris has eve with some calling ups a scrooge. some clearly remembered another christmas character who had delivery issues of his own but had this thought, maybe christmas doesn't come from a store, maybe christmas perhaps means a little bit more. for "nightly business report", i'm dianna olick in washington. they are just beginning to understand the power of online shopping, the chief retail strategist at boast and company. let's look at the change in behavior, the power in online shopping. what does that mean? will that be good for bad for the players in this space, whether a retailer or shipper?
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>> it will be great for the retailer and shipper. what happened this past weekend was an interesting perfect storm. lots of shopping online, and people not having enough money toward the end of the month and shopping over the weekend. >> tom, when you were here last, you suggested i get the automatic crock pot for susie and she was thrilled, by the way. what are you hearing about mall traffic and selling today? this is a big day, one of the biggest in the year. >> i was out at 6:00 a.m. at walmart, toys r us, traffic was phenomenal this morning as people were searching for great deals for this holiday. >> the numbers we've seen early on, 2% up so far for the holiday season, how is this all going to play out when the retailers start reporting earnings in a couple weeks? >> you know, i think it's going to be a tough period, a tough
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year. i think on the previous segment you had, there was a comment about, you know, margins perhaps and about how profitability is going to be generated. i can this is going to be a touch year at retail. >> we hear at amazon, those who didn't receive gifts will pay $20 to them. that's pretty small. >> i think if amazon is attempting to do what it wants to do best, which is please the shopper. this glitch was unexpected. very tough to plan this season. >> tom, let's talk a little bit about 2014. what can we expect? retailing is an all year round business. any new trends we should look for in terms of what retailers should do? >> i think we're going to see
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about late february, some tremendous sales on electronics, watch smart phones, tvs, personal wrist computers, et cetera to be a big item. a lot of home appliances will go electronic, cars will go electronic. 2014 should be a pretty strong electronic year. >> do you see the shipping glitches as anything that will reverse american's move towards online shopping or using mobile devices to shop? >> tyler, i don't think so. i think this is a glitch. i mean, i want was an unexpected glitch this season. i think people are absolutely glued to the online environment going forward. >> all right. well, we'll leave it there. tom, thanks so much. happy holidays, happy new year. susie, president obama sign add two-year compromised budget agreement that took place early they are month. the measure will ease automatic spending cuts and reduce the
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risk of another government shutdown. and still ahead on the program, merger activity was down, but not out this year. we saw some blockbusters like the mega deal for verizon wireless but the next guest says 2014 will be the year of even bolder ones. he'll tell us why. that's next. talk about a deal, some travelers that bought tickets on delta.com this morning, got fairs for as little as $5 because on a computer glitch and that's where we begin the market focus. that allowed luck kip customers to score dirt cheap flights
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including a $25 round trip cross country tickets. delta fixed the issue and doesn't know why or how but the company will honor cheap prices. the mistake didn't weighen the stock. a legal setback for bp related to the 2010 gulf oil spill. a u.s. court rejected bp's argument it should not compensate businesses if they can't prove their losses were caused by that oil disaster. the federal judge ruled the energy giant's new position went against a previous argument. despite the news, bp shares rose to $47.97. blackberry's co-founder cut the stake in the company sending shares way, way down today in a filing, considering not long ago a joint bid to take over blackberry and said in the filing he's no longer interest in a buyout. shares tumbled more than 8.5% to $7.06 at the close.
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t-mobile shares were up today on news japan's soft bank is in talk to acquire the carrier. soft bank to take a majority stake through sprint subsidiary it took over. the stock, t-mobile said is up more than 3%. while we wait for a deal in the telecom space, tech always seems to be attractive for investors. so where might the capital flow in 2014? josh lipton asks some of silicon valley's top investors for some of the best ideas for next year. 2013 was a big year for tech ipos. the poster child was twitter. the social network debuted for trading on november 7th. analysts expressed caution about the sitest evaluation, but investors haven't shared in that concern. the stock hit a new record today, and it's up 170% since the ipo. so what could be the next bipg tech ipo?
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scott cooper is the managing partner. he's a friend of cyber cloud that protects data in the cloud. >> people are worried about the security of their information when it's living a cloud. cyber clouds allowed them to encrypt that information so a normal employee can get it. if anybody tries to hack in, they can get that data. >> reporter: they have 1.2 users, the company raised $30 million. the site's cloud computing, another area of interest for investors is cyber community. she is playing the theme who rates the security on a daily basis and can tell how vulnerable it is. >> it's like moodies and gives a score for every company and allows you and the company to know, measure the security and over time mitigate any risk they
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have. >> bid site raised $20 million. some are worried silicon valley could be heading into a dot.com bubble but the people we spoke to didn't share in that concern. >> what i try to tell about technology, first you have the inventors, then you have the i'm may tors, then you have the idiots. when the idiots show up, the bubble is in full flow. we're in the imitators space, so i think we have a long way to go. >> reporter: so no sign of idiots for now, but there is a lot of money chasing a few good ideas. josh lipton, "nightly business report", silicon valley. 2014 could be a big year for mergers and acquisitions. the number of deals could be up by 10%, a big improvement where transactions were down by 6% or more and robert is the chairman of the global mna practice.
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robert, welcome, good to have you with us. how would you rate 2013 not a great year, obviously, but what will be different in 2014 to make it so much better than you see this one having been? >> the overall environment has been good. there is money everywhere. there is the fact that it could raise $50 billion in a week is astonishing and companies have lots of money and looking for growth because even though i think people feel that next year might be better on the growth side, it's still pretty tempted. so they have to do things. one of the things you can do is buy. what's been holding things back, though, is aftershocks, i think, from the financial crisis, 2012 it was the eu. this year has been washington. it's been all sorts of things. i think that stuff feels like it's behind us. nobody is going into a panic mode anymore. >> so, bob, are you saying that the conversation in the
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boardrooms now is much more confident, or is there still a lot of anxiety? because there has been cash on the books for a couple years now, so why will 2014 be the year they go out and do mergers or buy up companies? >> there has been a number of pretty significant transactions last year. mostly strategic, though, tokyo electr electron, amd, the verizon deal itself. so there's been some big strategic things but what really drives the market is the so-called add on, not a merger as such but buying something that fits into your business, and it hasn't been that we've been fearful. we've just lacked confidence, and frankly, almost every other month or so in the last 24, there's been something that's come sideways and sort of knocked the market off course. i think participant of it is we under estimated the impact of the financial crisis. it had lots and lots of
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aftershocks. >> bob, whose going to be doing the buying and selling in 2014? >> well, there is going to be an enormous amount in tech. this was a very good year for tech in terms on acquisition, not just capital formation mentioned a minute ago. i think we'll see a lot in the health care industry, all across the spectrum ranging from providers to device manufacturers, insurers to everything. the message of the affordable care act is you got to get more cost effective. the way to do that is to merge and reduce access cost. secondly, it's a huge story in this country and it's finally being covered by energy and energy infrastructure and not really trading reserves and sufficient but the infrastructure being billed out right now is phenomenal and a lot of the participants in it really don't have the where with all in their own to do it. >> bob, what about cross border deals? we had the big deal between china and smith field foods.
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will we see more deals like that? >> in a sense, you know, i don't think -- one of the things about smith field was that there was a little bit, a very little bit in the beginning of national push back. it was almost a 3 billion-dollar deal and china buying something in america. frankly, we have a very substantial foothold in china. the chinese clients think of it as a watershed transaction. no, it wasn't a tech deal or nap national security. it was not a political push back. >> sorry to interrupt, but we have to leave it there as we're up against the clock. appreciate you being with us. >> you're welcome. tesla shares up more than four fold this year but that's not the only reason the ceo has been a different maker this year. we'll explain coming up.
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finally tonight, we've been profiling some of the most influential people in business. one of the most visible is the billionaire inventor, elon musk. >> i want to be in the middle of the battle. >> reporter: he's challenging conventional wisdom showing the world cars can go electric. >> he's brought to the american consciousness, a thought that in fact electric vehicles can exist. >> not only exist but sell in big numbers. more than 20,000 this year. attracting buyers with unique styling and the allure of almost 300 miles on a single charge. >> in some respects, tesla is the equivalent of the moon shot where he's really, he and tesla
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are really pushing the paradigms of the industry in terms of how they retail the vehicle, how they develop the vehicle, and interestingly enough, the industry is learning lessons. >> reporter: critics say musk wouldn't turn a profit but tesla has by charging a premium. critics say you can't drive far in electric cars so tesla is building a recharging network coast to coast and critics say tesla is a one-trick pony but musk lined up orders for the model x cross over utility vehicle comes next year. >> whether or not he'll be successful, i don't know. i personally believes he'll run out of product. >> reporter: now musk is changing how cars are sold. for decades auto makers went through dealers but tesla is cutting them out, opening stores in malls where it can sell directly to buyers. >> auto dealers have been fighting muck saying he's a threat to companies and in some cases they have won, blocking tesla from selling directly to
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customers in certain states, but a few years after many considered elon musk and his model s a little story, he's making everyone think twice. phil lebeau, "nightly business report" chicago. >> that's "nightly business report" for tonight. i'm susie gharib thanks for watching. >> i'm tyler mathisen. thanks from me as well. see you back here tomorrow night. "nightly business report" has been 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 object tich independent ratings daily on over 4300 stocks. learn more at the street.com/nbr.
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kevin: today on "ask this old house"... the most important part of planting a tree is picking one that's right for your location, and i'll show you how. look at this. man: i think this is it. i love it! welcome to our basement. richard: all right. hey, i love what you've done with the place. this indianapolis basement might not look like much right now, but soon it's going to be a beautiful master bathroom. the homeowners are going to do a lot of the work themselves, but i'm going to help them get started. tom: and it's a green plastic container with two compartments. what is it? kevin: nuts, bolts, screws -- it's a mess. what do you do with them? well... that's next on "ask this old house." or, on the wall.

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