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tv   Nightly Business Report  PBS  December 30, 2016 7:00pm-7:31pm PST

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♪ this is "nightly business report" with tyler mathisen and sue herera, funded in part by hss. ♪ our value principles are patient first and we want to deliver the highest quality care. >> the goal of creating and sustaining value is all about putting the patient at the center of the equation. >> the purpose of this organization is to help people get back to what they need and love to do. ♪ out with the old. wall street says goodbye to 2016 and investors are probably sad to see it go, but what will the beginning of 2017 hold? >> bringing in with a raid,
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nearly two dozen states will hike the minimum wage in 2017, but what might a trump presidency mean for the federal wage? >> and smartening up. why experts think smart homes will make their mark in 2017, and what homeowners and buyers should know. all that and more for this friday, december the 30th. ♪ good evening, everybody, and welcome. i'm bill griffin in for tyler mathisen. >> i'm contessa brewer in for sue herera. after what was the worst start to the year, the major averages all had their best performance in several years. as for today, it wasn't all fireworks and streamers to end 2016 with stocks ending on a three-day losing streak. today the dow lost 57 points to 19,762. the nasdaq fell nearly 49 and the s&p dropped 10, but here come the big numbers. ready for this? for the year, the dow rose
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nearly 13 1/2%, its best performance since 2013. the nasdaq gained 7 1/2%, and the s&p jumped 9 1/2. the best showing for both since 2014. oh, let's not forget about oil here. domestic crude soared 45%, its biggest gain in seven years. >> not bad. so now that 2016 is out of the way, how are the markets setting up for january and beyond? bob fasani looks into his crystal ball for us tonight. >> what is next for the markets, despite some disappointment about the failure to hit dow 20,000, the markets enter january in excellent shape. the s&p 500 is less than 1% from an historic high and most stocks are continuing to advance rather than decline. good news. the trading community is focused on what will drive markets higher in 2017. and what speed bumps might occur along the way. so there's two topics dominating the conversation. first, is this trump rally going to translate into more consumer
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spending? second, how much will the expectations of a tax cut in the fiscal stimulus program really make a difference in earnings in 2017? the practicing ma tises are insisting investors are wildly optimistic about translating this improved consumer sentiment and hopes for more tax cuts and infrastructure programs into higher earnings. but the optimists are insisting consumer sentiment and business sentiment surveys are already improving, and that even modest tax cuts could increase earnings 10% or more. now, who is right? well, the impact on earnings from more consumer spending would be moderate, maybe up 3%, but that's still important. but as we saw this year, the benefits are likely to accrue to a small group of retailers as well as restaurants, travel stocks and possibly auto manufacturers. but the impact on earnings from a corporate tax cut across the board? well, that's potentially very significant for everybody. some estimate it could boost overall earnings as much as 20%
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for the s&p 500. finally, the impact from an infrastructure program is likely small for 2017. this is mostly around cater piller and industrial names. most agree it is a 2018 event. i'm bob fasani at the new york stock exchange. >> let's turn to kevin curran to talk about what he expects from the markets in january. he is a market strategist. it is great to see you here, kevin. >> good to be here. >> when we are looking at january specifically, how important is the employment report next week? >> well, it is important for a couple of reasons. some in terms of the economy, some a little bit more in terms of politics. so if you look at what the fed has been doing, they have been responding late in the cycle, starting to increase interest rates, and they're obviously going to be keying in on the employment data next week. we're thinking that maybe if you get a number as hyatt 200,000,
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given the data has been strong. and then politically this sets up, it will be the last employment report of the obama administration, and the one that sets the tone for the incoming trump administration. so both in terms of economics, what the fed is going to do and politics, this will be an important number. >> beyond that, kevin, we all know the rally since election day, a lot of it is predicated on what the trump administration will be able to achieve economically, a tax cut of some kind, some sort of infrastructure spending program. do you think the market has priced all of that in or have we gotten too far? what do you expect to happen here? >> no, i think the rally actually began back in june with the improving data globally, but there has been a strong rally since the election and some of it has priced in in improvement in terms of lower tax rates. but it really hits on two fronts. number one, it is going to bring potentially, if it gets passed and we'll have to see what actually comes, it does lift earnings but it also affects how companies allocate capital going
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forward. so it could actually provide a tonic to real growth in the economy that could extend well beyond the initial impact of a reduction in corporate income taxes. >> what are the head winds or the challenges you are looking for to see this kind of continued growth? >> well, there are three of them. the first one would have to be valuations. we've got a $25 trillion stock market sitting on an $18 trillion economy, forward looking earnings multiples are wrapped 20% higher than normal. they're not at extremes but we have to account for that. number two, you have to look at stock buy backs, which have been an important source of return to investor, and those have slowed down. then lastly, i think that you have to just be mindful of the fact that the data has been strong and it could cool somewhat. so as we move through the year we're going to have to be very watchful of the data and how it comes -- how it transpires. those would be the three things we would be looking for. >> headwinds and tailwinds, i'm curious which category you put the fed in for 2017 as they
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expect to raise rates maybe three, maybe even four times in 2017? >> yeah, i think that would be a headwind because the market has not set up for that. there's been a bit of complacency on the part of the market. the fed has been very easy during a period of exceedingly large slack in the economy, but that slack has been coming in. so as we push up against the latter part of the cycle and particularly if you get some more chance of a fiscal push, that might put some more pressure on the fed to raise faster than the market is currently expecting, and we would have to make -- we would have to be a little watchful that doesn't go too far. >> well, clearly all of the other folks at steeple private client group have already flown the coop for the holiday weekend. kevin curran, thank you for joining us. i appreciate your time. >> thank you for having me. happy new year. all right. now what does wall street expect from stocks in 2017? dominic shu polled the egs perts. >> it is the season when wall
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street analysts and strategists forecast what the next year will hold, and next year we may not see many moves in the overall market. here is what we are talking about. if you look at the overall forecast for what the market will be, the wall street strategists we polled think that on average in the middle we'll see a 23, 25 move in the s&p 500, which means it is only about 3% higher than where we are right now. the low end of the forecast comes from wells fargo. they think it is going to be around 22 80, pretty much flat from where we are right now. on the high end, an optimistic one, rbc capital markets which thinks 2500 for the s&p 500. that's about 10% higher. now, if you look on a chart, we kind of laid it out for you here about where things will move because over the course of the pastier we haven't moved in that wide of a range. still though, the general trend has been up after the lows we saw early on in the year. this line right here, the low end, orange, means we're about flat all year long. green is the middle. on the yellow side we have the
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high end of the range. so as you talk about the moves of the market next year, keep in mind markets don't move in a straight line like that extrapolation there, but we could however see muted returns this time around at least if wall street strategists have their way. i'm dominic chu for "nightly business report." >> as for global markets, great britain following brexit gained 14%, first time positive in three years. for the most part europe was higher with the exception of italy which fell 10%. as for asia, japan and hong kong were barely higher and china had worst year since 2011, down 12%. michelle cabrera makes bold predictions about what to expect internationally in the upcoming year. >> reporter: 2016 was the year of political revolt. double down on that for 2017. predictions aren't worth making unless they're bold, so here is number one. eu disintegration. there's going to be a new vote in italy in the spring and the
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euro skeptic party i think comes to power. that could spell the end to the currency the euro. my second prediction, france, a loss of assumption since donald trump won that means marine le pen will win. she is a euro skeptic but not that radical when it comes to economic policies. far more radical fran waugh ferrone who eval elizing margaret thatcher of the united kingdom. he is going to win. prediction number three, guess who is coming to dinner? president-elect trump will host state dinners for both leaders of russia and mexico, maybe statement. for "nightly business report," michelle caruso-cabrera. >> bold predictions. speaking of russian president putin, he ignored his own foreign minister's suggestion to retaliate against u.s. sanctions levied in response to russia's alleged cyberattacks to interfere in our presidential election. he instead said he would not expel american diplomats like
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the u.s. did to 35 russian officials. donald trump meanwhile tweeted about mr. putin's great move on delays. i always knew he was very smart. but a new report serves up as a wake-up call for the government and for corporate america. our josh lip ton joins us from san francisco. who authored the report and why did they publish it, josh? >> reporter: so, bill, this is a new joint report from the fbi and the department of homeland security in which really u.s. authorities are sort of laying out their case of why they argue it was the russian government that hacked those democratic party organizations and operatives, and really laying out the case going through the tools, the tactics and the techniques they say these russian hackers used. they talk about these two russian groups and these two campaigns, one in the summer of 2015 another in the spring of 2016, and they say those campaigns have actually continued. they say they continue right into november, just days, they
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point out, after the election, guys. >> okay. so when the president and the state department announced the sanctions against russia and announced they're going to declassify the kind of tactics that the cyber criminals, the cyber intelligence and cyber civilians were using in the attack, how much of that is new information to our tech community and how much of it was already known? >> reporter: i think there was a great deal that was already known. i do think though this report did make an impression. you know, i spoke to steve groveman who is intel security's chief technology officer. he said when he looked at the report, he read through the 13 pages, that coupled with the statements from u.s. intelligence agencies, that to him convinced him this attack did originate with the russians. what also impressed him was just as he went through the report, what was interesting to him were the kinds of tactics that were used. these were not new tactics. they were not novel. they weren't even all that really complicated according to groveman. they were really very simple,
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straightforward, tried and true hacking attacks we know of like spear fishing for example. >> so as long as we figure out what the tactics are, anything american companies can learn from the report as far as their security goes? >> reporter: yeah, i think because we do know what the tactics are, according to, you know, ctos like groveman, he does think there are lessons for american companies. for example, because these are spear fishing attacks that, again, bill, i sent an e-mail to you, i pretend to be a friend, family member or colleague and i trick you into opening an attachment or clicking on a link and unwittingly giving me your pass word. because we know it is human error, the biggest thing american companies can do according to ctos is educate and train your workforces. we know hackers will continue. we know the methods might not change so much and that's where the lessons are so important. >> josh lipton in san francisco. thanks, josh. >> coming up, why our market
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monitor thinks you should be in healthcare in 2017. ♪ ♪ so as the calendar flips to january, workers in 19 states will ring in the new year with raises as the minimum wage rises in those places. kate rogers tells us where and by how much. >> do we want it. >> no. >> reporter: 2016 was a banner year for wage advocates in the fight to raise wage for workers.
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across the country 19 states will ring in the new year with pay increases on or before january 1st. in addition, nearly two dozen cities and municipalities will hike wages giving some 12 million low wage workers a raise. currently 29 states and washington d.c. have wages above the federal floor, a number that hasn't moved since 2009. despite pushes from congressional democrats and the obama administration. the new weigand creases don't impact that number but many are significant. for example, workers in arizona will see a raise of 24% while employees in w washington state and massachusetts will have the highest minimum wages in the country at $11 an hour. over the next several years new york and california will increase pay at the state level to $15 an hour, thanks to a law signed in 2016. >> i think there was an expectation not a lot would happen in 2016 at the washington d.c. level, so there was
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redoubled focus on the state level. the fight for 15 campaign has been generating successes. new york state increased the minimum wage for fast food workers in 2015. there was a lot of activity to pass landmark legislation to improve family leave policies. so there's been a lot of focus at the state level. the campaigns are working, and hopefully, you know, progress at that level will continue. >> but critics say continued mandatory increases may wind up hurting the nation's smallest companies. >> reporter: quite frankly, these are people with very low margins. some of them are making 2% to 5% on a dollar of sales, and they cannot pass these increases on to their customers. i mean if they could raise their prices tomorrow to cover these weigand creases, obviously they would have raised their prices before they had to. the smart money knows that this
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causes unemployment effects, and i don't think that the politics should trump the economics. >> one thing that advocates on both sides of the argument can agree on, there's likely to be little movement at the federal level with donald trump in office. trump spoke out in support of a $10 federal minimum wage on the campaign trail, but when andy pusner asked his labor nominee, an increase seems near impossible. for "nightly business report," i'm kate rogers. apple reportedly plans to cut iphone production and that's where we begin market focus. according to report from the knee kay which cited data, they will cut production of iphones by 10% in the first quarter of 2017. the report added the reductions likely will focus on the seven and seven plus as that's been weak demand for those models. shares fell fractionally to
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115.82. cavella said the federal trade commission requested additional information regarding the hunting and fishing retailers pending the $4.5 million merger with bass pro shop. but they said they expect to win anti-trust approval by next year. they were off 5%. >> iconics brand says it has entered into an agreement to shell its sharper image brand to toy maker 360 group for $160 million. the sharper image sells home tech devices like massage chairs. iconic says it plans to use it to trim down debt. shares rose to 9.34. ship maker qualcomm says it has settled legal disputes with chinese electronics company. earlier they sued the company alleging it infringed on their patents for wireless phones, and as part of the settlement the two entered into a patent licensing deal. shares of qualcomm fell by 1% to
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$65.20 today. and our final market monitor for 2016 is betting on healthcare in the new year. he is richard steinberg, president and chief investment officer at steinberg global asset management. great to see you today, richard. >> thank you. >> let me ask you. i know you think that the healthcare industry is unwanted and unloved. why do you love the ensin group so much? >> the stock has been beat up some. they are a leader in the skilled nursing, assisted living facility area. stocks trading at 14 times earnings. we have a $31 target. we think it is really cheap, playing on the aging of the population theme. >> rich, you are the classic value investor. you wait for a company to hit your area of buying opportunity, and you think sur group is in that area right now, yes? >> yes, serta is super cheap, trading at three year low in pe and other valuation. they're the leader in it healthcare, and the digitization
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in hospitals bill and the upgrading in systems makes it look cheap to us. we have a $64 target and we think there's a mode of safety around that and the estimates look good for 2017. >> in fact, a lot of hospital stocks got a hit after trump election on his threats to obamacare. what is that doing in general to stocks like serma? >> are you starting to see a little bit of a bid coming in that as the rotation out of the big cyclical names have occurred. we think the trend could continue for people looking for bargains. >> allergan pharmaceuticals, another area donald trump talked about, you know, with the fear if hillary clinton were elected there would be price caps put on the company. even mr. trump has talked about that. what about a company like allergan or something in that category? >> allergan is a special pharma name like you said, the product everybody knows about is botox which tends to be a cash
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purchase. it got hammered when the pfizer deal overseas fell apart. we think it is really cheap, one of the cheapest names in the group. we have a $375 target. today when i was looking it is now in the top 25 in the s&p value index. if money goes towards value, allergan will catch some of the cash coming into the indexes and etf. >> generally speaking when looking at this industry, what would happen if congress decides to side with president trump and take -- and obamacare takes a hit? >> yeah, i think that these names already are trading at valuations that reflect that. so i think where we're buying them we're giving ourselves some safety in terms of free cash flow and the pe ratios, and in a diversified portfolio these look the cheapest to us right now. >> by the same token, what would be the catalyst to move these guys higher? what are you waiting to happen to get to the price targets you are after? >> i think as tv 'seen kiyou've
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of a bloated market that needs to digest itself some, you will see some rotation. again, i think value is going to out perform growth. so you will start to see bargain hunters coming into healthcare because it underperformed last year. >> richard steinberg with steinberg global asset management. thank you for joining us. happy new year, sir. >> happy and healthy new year, guys. >> thanks, rich. coming up, getting smarter about smart homes. we'll explain. ♪ ♪
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we know the housing market has been hot, and now we know just how hot. zillow says the total value of the u.s. housing market grew nearly 6% this year and now stands at -- are you ready for this? almost $30 trillion. that's a record high. it also means the market has regained all of its value lost during and after the housing crisis. >> finally tonight, 2017 will be the year of the smart home. at least that's what some industry analysts are predicting right now. the technology was popular this year but not as much as it could have been because one thing stood in its way of its growth. diane o diane olick explains for us tonight. >> reporter: it helps save energy, it protects you, lets you manage your home while you are away. it is in a word smart, but smart home technology is still not really on the average
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homebuyer's wish list. >> it's not something that my buyers are asking for. >> reporter: real estate agent theresea taylor says it is not that they don't like it. it is that they don't know enough about it. >> i think if they knew the benefits about how it could save them money it would be a more attractive feature and, you know, start -- instead of being at the bottom of the list of things people want, it probably would move up to the middle. >> reporter: in 201,680 million smart home devices were delivered worldwide, a 64% increase from 2015 according to a new report from ihs market. that's your nest, your august smart door locks, ring smart doorbells, and a big chunk was personal home assistance like google home and amazon's alexa. but analysts say 2017 will be the year of the smart home because the companies behind the technology will be smarter about educating their consumers. >> the consumers today are incredibly confused as to, you know, what is the value they're getting. you know, they could be -- a consumer could spend upwards of
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$1,000 if they go to the retail market and they don't understand, you know, what value. are they getting energy savings? is it simply fun and they're not going to want to use it, you know, in a couple of weeks time? >> reporter: companies also will broaden from home security and therm stat specifically to home appliances. let's say your ask your personal home assistant for just the right meat loaf recipe and choose one, and then it preheats your often ven to the perfect temperature. >> they're looking to create a total ecosystem. >> reporter: the focus for 2017 also will be lowering prices and enhancing security to prevent cyberattacks, as bigger companies acquire smaller tech providers it should be easier to integrate and simplify all of the systems. but in the end, the key to selling consumers on the smart home is helping those consumers be smarter. for "nightly business report" i'm diana olick in woug. >> washington. >> until they can clean the
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bathroom. i'm contessa brewer, thank you for watching. >> i'm bill griffin. have a great evening, happy new year. see you on monday. >> "nightly business report" has been funded in part by -- ♪ our value principles are patient first and we want to deliver the highest quality care. >> the goal of creating and sustaining value is all about putting the patient at the center of the equation. >> the purpose of this organization is to help people get back to what they need and love to do. ♪ ♪
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amy: the u.s. retalliates against russia. a war of words over middle east peace and a ceasefire in syria. we ring in 2017 with a look of the global issues facing the president and his successor tonight on "washington week." as the clock ticks down towards a new year, the white house tackles some unfinished business sparking tensions between the outgoing president and the president-elect. president obama made good on a promise to punish russia for hacking the u.s. elections and the president-elect dismisses as an action saying there is no conclusive evidence that russia

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