tv Nightly Business Report PBS December 29, 2009 12:30am-1:00am EST
>> it makes meot want to travely plane as much. >> paul: newecurity measures an tough times for air travels but they could also mean a tough fure for the airline industry. an industry just gaining altitude aft struggling with costly fuel prices a recession. >> susie: the blue chips mar fresh highs for e year. we look at where wall stet cod be headed in the new year with joe battipagl. he's mket strategist at stiffel nicolaus. >> paul: retailers were ong e winners on wall street today. early resus show late shoppers may have rescued the holid shopping season. >> sie: then, when it comes to investing ri is a 4-letter word. we talk with a profeor who ys our risk tolerance when i comes investing is often hard-wired intour dna.
caioning sponsored by wpbt gharib: good evening, everyone. frustrating day for air travelers. people travelling for biness orvacation, an the increased security rules afr the teorism incident over the liday weekend. but the restrictis are causing more than just headaches for passengers. theyre calling into questi the ouook for the airline instry. erica mill reports. >> reporter: at ma airports aroundhe country you'll see frustrated faces. and long lines. you'll also hear comments li these: >> i think it'sounds like a loto ask at this point given what we go though alady. it's seems likthey comb througeverything pretty meticulously at this pnt already. >> reporter: b it's not just paengers who are being affected. exrts say the u.s. airline industry could get hitard if travele become less willing to fly due to terrorisfears and added security hassles.
in hawi, president obama promised the government wi do all it can to keep america safe. we do not yet have all the answers of this latest attpt, but the united stas will not on strengthen our defense, but we will continue tuse every element ofur national power to disrupt,ismantle and defeat the violent extremists who threaten us. >> reporr: while leisure avel will be impacted, exper say the biggest reat is to business trave the bread and butter of the industry. those passengers fly mor frequently, typilly pay higher fas. kevimitchell of the association of corporate tvel executives says just few busine ticket cancellations per flight can have big imct. >> if you lose three or four high paying business travele on a flight, you c go from beinin the black on a flight, to bei in a red. in today's economic vironment,
for the airline industry, wh we're really talking aut is deeper losses. >> reporter: as a sult, airlines are appealing t federal officials not to sre away travelers with unnessary security msures. concern aboulost revenue pushed airlinetocks lower toda the decline follows gainover the past sixonths on optimism about the economic recovery. the big question iwhether we'll see more bkruptcies and mergers in the secto like we diafter 9/11. analysts say the answer dends on how burdensome securi precautions beco. and how long ty last. erikmiller, "nightly business report", new york. >> susieafter pumping over $2- trillion into the bankg system, it looksike the fed is eparing its exit strategy. the federal rerve today proposed new tool that will help ipull money out of the banking system, when it arts to rai rates. the fed says the "rm deposit facility" just prudent planning a has no implications on near-te policy decisions.
but the central bank says will not impacpolicy decision >> paul: wall street posted modest gains in eay trading on rerts showing holiday retail sales were a bit better an expected the rail details comi up. the dow rose about0 points at the tset while the nasdaq gained 8 points. with many trads taking time offor the holiday period, the upturn had littlstaying power the airlinsector was weak after at attempted bombing of a jeon christmas day, but some late buy programs lped stocks recover their rly gains at the close.
susie: our guest tonight sa 2010 will not be a greatne for the marks because of a sluggish economy and a poor b market. joining us now to explaijoe battipaga market strategist of the ivate client group at stifel nicolaus. , joe. >> hi susi >> gharib: i want to say aot of investorshis year were pling it safe, waiting for them to put the money backn the marts and now this terrist incident ov the weekend, what would you sato investors whare worried about putting their money into the markets because of this stress? >> well, this thre was an isolated inciden it looks like the unid states is going t be very tigh on
this issue. it w an international incident and therere many that hav occurred throughout e year and unfortunely that's a possibility that will occur the yes ahead. unless there's something orchestrated of significan side, it wl probably not deter thenies or the markets -- the economies or markets from behaving as oppos to terrorism. gharib: aside from the terrorism anxiet you still have very lukewarm outlook for 2010 in terms of stock market performance. ll us a little bit about your thinkinghere, about t ecomy and the jobmarket and other issues. >> we had this stellar rally from the march lows a the expectation that the fixes from the financial system wi sustain themselveonce the governme pulls away and tt the economy uld have a robuness about it, that the private secr will have robust gdp gains. i exct us to have weaker quarters in 2010 as the government pulls awayhe props. ifthat's true, then earnis
will disappoint to some degree, paicularly in theecond half. that might mean e market will be difficult place for investors in 2010. >> gharib: tell us more abo investment pfits because instorlook to earnings. can you give us hour analysis on that? >> whope to have a v-shaped recovery nt year, tt employment would start to ga momentum so uneloent would fall dramatically. profits would ow 50% from currt levels. here'she problem. if the economy only grows at 2% or 3% we won'beble to knoc down theunemployment rate. the consumer will still be working throh the leveraging and as the federal reserve pls away from the ops interest ras may change, the banking system may go through gut-wrenching chan and in the process you don't get the eas results you hahoped for. let's face it, azil, india and china are great stoes but the can't pull t rest of the engine a the market with th. that would be the united stes, japan and europe who are ill
ve uggish. >> gharib: wt's -- it's interesting you ought up the internatnal twist to your analysis, but many stratists are sayi it's a sensible strategy for american invests to put more ofheir stock portfolio to international markets. at is your thinking on that? does that ma sense to you? well, over a long period of time i wld agree beuse the capital turns will be greater. let's not lose sight of theact that thearkets are synchronized. it gets bad theere and there d they tend to be more volatileso the swings up are great, but the swings down ar haer. so we have a synchnized situation going into aluggish u.s.japanese and euro market for 2010. the chinese are talkingbout excesspeculation in property and real estate generay. so it could be difficult time make the commitment now. the loer-term point of view y bear out that capital is going the markets d if we reregulate andhange the way we
do business weay not be as coetitive as we used to be. >> gharib: one quickuestion, yohave the aocation of the 60% investor put their money into bon, 40% into stocks. interesting mix. you think the investors a better off for bonds? >> well, for the baland investor it is reversed. we believe you'll see modest single rates retn and they'll ouerform the mket, and we're oking for corpotes and municipals in a laddered way to hedge against future changes in rates. on the eity sideou want to stay globally diversified, companiethat are leadintheir category around the world, not just in the united states. and go with technolo and healthcareo name two sectors where there's a competitiv advantagand there's no carry over from the mortge bust. >> gharib: thank y, a lot to talkbout. >> susie: my guest tonht: joe battipaga of stifel nicolaus.
>> susie: so mucfor gloom and doom holiday shoppg forecasts, new mbers out today show retailers had a greenethan expected christmas. mastercard "spending-pulse unit" trackseceipts. it says sales jumped over 5% from november 1 through dember 24. but if you factor out thextra shopping day this year betwe blk friday and christmas eve, the increa was only 1%. the shopng season isn't over yet. stores are expected to remn busy this weeks shoppers cash in oafter christmas sales and giftcards. paul? >>aul: susie, we'll get a better picture next ek, as several reilers report their deceer sales numbers.
and those e the stocks in the news tonight, susie. >> susie: from lownterest tes to homebuyer tax credits and foreclosurprevention programs, the u.s. gernment has come a major player in the housing market. it's even taking on whole neighborhoods, through a gra program designed thelp areas ha hit by the foreclosure crisis. money for that "neighborod stilization program" is just nogetting out the door, even though it was sign into law two suers ago. stephanie dhue reports. >> reporter: in thlast year, foreclosures have doled in east baltimore's belaiedison neighborhood. homeowner larry mickey knowshe reality of tt statistic. >> look righacross the street there,ou got at least 2 or 3 right ross the street that people couldn'afford to stay and they had to move. >> reporter: 13% of homein baltimore stanvacant.
the goal of the neighborho stilization program is to fill those empty houses is house is boarded, is that typical? >>you may have vacts, but they havet reached the point of being boarded, this is a somewhat uque property and mething we can address hopefully fairly soon. lisa evans heads up . ambros. it's a non-profit grouthat buys vacant operties, fixes em up, and resells them with subsidy for low income bers. >>e want to make sure somebody comes in and they' not ending a great deal on their first five years oownership. >> rorter: st. ambros will get $1.6 million from t neighborhood stalization program. >> for us,t's a continuation of what we've beenoing in using development, buying, acquing and then rehabbing foreclosed propeies in certain pas of the city and totally rehabbinthem and then offering them f resale to home owners.
>> reporter: b st. ambros hasn seen any of the money yet. >> we had high hopes olast spri and then we had high hopes early in theummer and now we're hoping tbe able to do some funding inhe very first pa of the year. we're hoping that come janry 1 we'll actuly have dollars to actually start purchasing properties. >> reporter: the neighborhoo stabilization prram was supposedo help communities likehis make it through the foclosure crisis, but like here in baltimore, arod the country, the program has bee slow to take hol criag nickerson heads e national commuty stabilization ust. he hps bring together banks that have foreosed properties with local governments andon- profits. its an effort that takesime. >> we need tbe patient, we are starting slow, but i've beenn this busins of affordable lending and communit develoent for over 35 years ani've never seen a new hud progm, national in scope that has gottenff to a fast start. >> reporr: so far only a arter of the money in the
program s been assigned to projects, meanwhile thprivate market ishowing some signs of recovery. investors are now competg with non-prits to buy vacant homes. but evans worries some iestors are just lking for a quick ck. >> what we're concned about is the investors who come in o will not do a ve good job, who will just do the cosmetic approach, sell, then youave a homeowr who has a property that may need,n fact, more work then they're equippedor and you're back in theycle of foreclose. >> reporter: nickeon says the progm hopes to encourage private investment. >> certainly, the $6 billion th has been approved and appropriat over the last year and a half isn't going to do more than scrah the surface of the prlem - we have whole neigorhoods that are vastated. >> reporte expect non-profits like st. amos to be busy over the next nine months. they're reired to spend the stabilization ney by septber. stephanie dhue, "nhtly busine report," baltimore.
>> paul: tomrow, we talk with jo bogle, the founder of vanguard group, abt his outlook for the marketand small investors. susie: corn prices popped 2 to a 6-month hh today closing at $4.16 a bushe yocan blame the spike on mother nature. last wees snow storms delayed the final harvest of this ye's co crop, leaving about 5% in the field. but you won't necessarilsee an increase athe supermarket eckout line. somexperts say there's no correlatiothese days between co prices and food prices. >> paul: holiday shopps on e- bay wentobile this year. the web site s a surge in buyers usingell phone applications. every two seconds, an eb item was sold wldwide on a cell one. 5 million items, worth more than half a billiodollars were bought by mobi shoppers this ye. that's triple the nuer sold last yea those purcses ranged from designer handbs to vintage
>> kangas: investing invves some area ofisk, but the abity to tolate risk vies from perso to person, so your mind, yo money is looki at e trade of risk tolerance. joining us is an expert, professor meir statman, of the leavy school of business at santa clara univerty. welcome to "ghtly business port". >> good toe with you, paul. >>angas: you have studied persalities as a factor in risk tolerance. so are peopl with certain types of personaliti more risk tolent than others? >> yes. some people are extroverts, for example. th're outgoing pele, they're willing to take more risk. conscientious ople are less wiing to take risk. >>angas: do genetic factors make some pee willing to take bigger financial risk? >> yes there's gd evidence
that it mes you more willing to take risk, but of crse environment d upbringing matter as well. >> kangas: finanal planners often ha their clients answer riskolerancequestionnaires. but do you thinkhe findings on the tests are often inaccurate? >> yes, they are. ey neglect otherthings that matter to investorand to financiaadvisers. for exple, overconfidence. people who are overconfident think that they can ke risk, but th cannot. regret, me people look back and they saygee, i should have been out of the mket in 2007. other peopljust take it in ride. >> kangas:o those questionires aren't all that accurate you say? >> well, the question has be augmented and it has to be focused d seem thatnvestors whare willing to takeisk as far as007, surely are not willing to take risks last march.
>> kanga so is risk tolerance just one factor in aerson's overall nancial profile? >> precisely. prisely. i think th regret mters at least much. yo can see tt in th juiness of people, in march o this year. i think thtrust mters as well. that there's peoplwho are generalltrusting, me willing to trust t adviser andollow advice. those who are alwa suspicious are t. that toos part of our nature. >> kangas: we have less than a minuteess, prossor, but how do you find risk level that lows you to sleep at night? >> well, what you do is when yo divide your moneinto parts, andou put in one part-- that's money that ll enable you to sleep at night. and the other part you c put the moneyhat will make you rich some day. if you' lucky. >> kangas:o you've got one part gambling and thother one
for saty sake? >> thais whoe are, we want both. weant not to be poor and we want to be rich, and good way of gting both is splitting your money. >> kgas: professorstatman, mostnteresting. i wa to thank you very much for your insights. >> thank you, paul. >> kangas: my gut professor meirtatman. >> susie: tonight's mmentator is bidng a not so fond rewell to 2009. 's alan sloan, senior editor at large at "fortu" magazine. >> the best things to y about this yeaare that its almost over. and that i giving us an object lesson in the differce between the stock rket and the overall economy, on thone hand and the al world, on the her. stocks are way up this year. theconomy-as measured by the gross domestic produ-seems to have spped shrinking. a year or so, the arbiters business cycles may le that the great recessn ended this spring. but despite the upat market and economy numbers, the onl green shts many people are seeing consistf weeds in the
parking lots oabandoned malls. unemoyment has gone way up this year, the feclosure and home price situations ha gotten wor. and lets not forget thtraumas, such as stocks crashinthrough d-march, bank failures in tripleigits, and gm and chrysler going bankrupt. sure, thers been some good ne lately, with big banks repaying their tarp ans to the governnt. but even thamay turn out to be bad news. i think the banks y end up back in trouble once there frd from the government, because they haven't changedll that much. so lets bid a not-so-fond adu to 2009. and to t whole decade, one of the few which ended wi stocks lower than they gan. lets hope for a betterew year. and a better decade. we sure could e them. i'm allan sloa >> susie: that's "ghtly business rort" for monday, cember 28. i'm susie gharib goodnight everyone. and good night to yopaul. >> paul: gdnight susie. i'paul kangas wishing all of you the best of gooduys. "nightly business report" is made possible :