tv Nightly Business Report PBS February 19, 2016 6:30pm-7:01pm PST
this is "nightly business report" with tyler mathisen and sue herera. best week of the year. it took some time but stocks finished the week with solid gains and that could be an important milestone for the market. getting plowed. the farm economy has been soft. but now deere says it may be even weaker than many thought. the wealth gap. what some financial advisers are doing to bridge the divide between black and white in the final part of our series. tonight on "nightly business report" for friday, february 19th. good evening. i'm sharon epperson in for sue her rare ra. >> i'm bill river ton in for tyler mathisen. the three major averages logged their best gains this
year despite a rather uninspiring session today. the dow gained more than 400 points from last friday's close as concerns about china and oil took a back seat, at least for now. today the dow industrial average fell by 21 points, closed at 16,391. the nasdaq gained 16, s&p 500 basically fact. smallest point decline for the s&p since august 2012. for the week all the major averages rose 2.5% or more. and as bob fasani explains there may be a key milestone for the market. >> reporter: this was an important week. going into monday we had a one-day rally going. the s&p 500 was still down about 9% for the year. the trend was down. four trading days later the s&p is up nearly 3% for the week. and the short-term trend is sideways. that's an important change. and it's been notable bounces in the most beaten-up groups. old school tech names like
hewlett-packard, ibm, cisco, had notable bounces and big global industrials like northrop grumman and illinois tool works up 4%, 5% for the week, outperforming the market. most importantly a change in the trading pattern in the last two months. every time we've had a two-day rally it's been met with heavy se selling. the last two days the markets have been mostly sideways, no big selling into the rally. that's great news because it changes the down trend. this is all very tentative. we need to see this kind of modest sideways action for a few weeks before anybody is convinced this isn't just a temporary bear market bounce. but it is a start. next week we'll hear from a raft of fed speakers including stanley fisher, he's always important, and the remaining retailers like macy's and home depot rounding out the fourth quarter reporting season. walmart and nordstrom unfortunately have not had very good news.
for "nightly business report" i'm bob pasani at the new york stock exchange. a glimmer of inflation in the economy, consumer prices unchanged primarily because of cheap gas. over the past year prices rose at their fastest clip in more than a year and core prices, which includes food and energy, rose at their sharpest pace in four and a half years. strong inflation is something the federal reserve wants to see and today cleveland fed bank president loretta masters said the fundamentals of our economy right now remain solid and that gradual rate hikes by the central bank are likely. she pointed to a strengthening job market and she said she believes that the economy will work through any global market turbulence. in china a top securities regulator reportedly plans to step down. "the wall street journal report"s that the official announcement will come within days and follows a series of policy moves that were widely criticized. separately the country central bank reportedly said it would increase the amount of reserve
some banks must hold. experts say china may be making the changes to dispel doubts about the wealth of the world's second-largest economy. and from china to europe. there's late tonight a deal reached between britain and the european union on the future of great britain's membership in the bloc. prime minister david cameron set out to loosen his country's relationship with the eu as you know to apeetss some members of the opposition at home who are demanding an exit from the eu. but it's not a done deal yet. a referendum in the uk will likely be held in june. more now on the tenuous talks that took place in brussels. >> reporter: british prime minister david cameron put his best stiff upper lip on display. how else to deal with britain's possible exit from the european union, the so-called brexit, which could threaten the mere existence of the eu. >> as i've said i'd only do a deal if we get that britain
needs. >> reporter: late today word of a deal but no details. cameron had said he needed concessions, the most important being tighter restrictions on welfare benefits to supplement low-paid work, especially to migrant workers, as europe contends with the ongoing migrant crisis. with a deal in place, a long-promised british letter ren dumb whether to continue eu participation can be held in late june. >> he's taken a huge gamble. if he was going to have a referendum he had to justify it by having a change in our relationships. you could argue that he'd simply been put into an impossible position. he's threatening a very, very narrow needle. >> reporter: to thread that needle cameron argues restrictions would discourage eu workers from moving to britain. both sides have plenty at stake. britain is the eu's second-biggest economy, accounting for one-eighth of the eu's population and one-sixth of its gdp and a uk exit could invite demands from the other 27 members.
now the campaigning can begin. in britain, both for and against continued participation in the eu. short-term that means increased volatility in the equity and currency markets, longer-term london's big banks at the core of europe's bond market could leave and relocate to european shores. >> the really big issue is that if we vote no, what happens next is complete uncertainty. nobody knows what the new relationship will be. and so investors will have to cope with very high levels of uncertainty. >> reporter: the question becomes, are british voters angry enough to push the country into unfamiliar territory? sounds familiar, doesn't it? >> certainly does. from british politics to our own. republican presidential candidates are campaigning across the state of south carolina ahead of tomorrow's primary. john harwood is in charleston covering the race. south carolina has been pretty famous for some bitter political fights. how about this one, has it lived up to the hype?
>> reporter: absolutely, sharon. this is a state where john mccain ran into rumors about who his children were and that sort of thing, when he ran against george w. bush in 2000. this year we've got photoshopped mailers, we've got robocalls about the confederate flag, we've got charges of liar liar flying all around. it is a scramble for survival in this race. six republican republicans, dem next week. >> in iowa and new hampshire the question was not who would win but who would come in second behind donald trump. what about now? his lead has pretty much evaporated ahead of this primary, hasn't it? >> reporter: well, donald trump still has an edge. there's some polls that show it narrowing. i don't know if those are going to -- if that reflects a true trend or those are outliers. others show him a double-digit lead. most campaigns i talked to expect donald trump to finish first but there are very big stakes in who finishes second. if it's ted cruz he's going to
try to go south to the super tuesday states and make it a two-man race. marco rubio is trying to edge in and jeb bush trying to hang on and john kasich, the ohio governor, trying to finish well enough to get to the midwest where he can do better. >> let's talk about the democratic side. of course there's a lot of concern there for some people who are clinton supporters about how she's going to fare in nevada. how much trouble is hillary clinton in right >> reporter: big trouble. the polls show that this is a neck and neck race. this had been thought to be an advantage for hillary clinton because unlike iowa, new hampshire, significant number of non-white voters in nevada. hispanic voters which hillary clinton has counted on as being a strength. if she loses those caucuses to bernie sanders, he's going to have momentum. tougher road for him in south carolina, which their primary is a week later than the republicans i', because african-american voters are strong are forehillary clinton. the clinton campaign is nervous about what's going to happen in
nevada, not a state she was counting on losing. >> south carolina and nevada, we'll be watching those races very closely, john harwood in south carolina, thanks so much. and still ahead, a deer in the headlights. what the farm equipmentmaker is saying about the health of america's heartland. a continuing story we've been telling you about. the department of justice has filed a motion now to compel apple to assist the fbi and comply with a judge's order. the law enforcement agency is seeking the tech company's help to unlock an iphone belonging to
one of the san bernardino shooters which is encrypted. prosecutors say apple's refusal appears to be based on concern for its business model and public brand marketing strategy, rather than a legal basis. there's apparently trouble on the farm. commodity prices are falling as you know, incomes are declining, and today we learn that the farm economy is likely even softer than many thought. deere, the world's largest agricultural equipmentmaker, cut its fiscal full-year profit and sales forecast sharply sending shares down more than 4%. as morgan brennan reports tonight the company is placing blame squarely on the downturn in farming. >> reporter: the company continues to struggle against a global economic slowdown as crop prices stay low and demand for machinery wanes. the maker of john deere tractors expects farming and construction equipment sales to slide 10% for the full year. compared with an earlier forecast of down 7%.
the industrial giant also lowered its earnings outlook to $1.3 billion from $1.4 billion. >> in terms of the united states, looking at probably close to down 20% agricultural volumes. down at least 10% of volumes in the construction business or maybe close to 10%. europe should be okay, maybe flat. then if we look at a place like latin america, probably looking at volume declines on the order of at least 10%. >> it speaks to the ongoing down turn affecting the farming economy as the dollar strengthens and the market for crops like corn and soybeans has weakened. the agriculture department expects u.s. net farm income to total almost $55 billion this year. down more than half from 2013. when corn prices climbed to record highs. income levels are on track for a third straight year of declines. the first time since the 1970s. but the pain is being felt worldwide with farm incomes
falling in canada, europe, and south america as well. making farmers less inclined to purchase new tractors and other equipment. deere expects industry sales in the u.s. and canada to remain down as much as 20% with the largest agricultural equipment sales falling even more. it isn't just farming. >> probably the incremental data point that came out today's results is that the construction equipment business remains under pressure. a lot of that continues to emanate from a slowdown of building activity in particularly the oil and gas patch of the united states. >> the results come just days after warren buffett's berkshire hathaway disclosed it's upped its stake in the company. now the largest institutional shareholder with a position valued at nearly $2 billion. but even if the so-called oracle of omaha likes the stock analysts caution it may be best to watch for signs of stabilization and earnings and guidance. factors that may not materialize until later this year or beyond.
yahoo!'s board forms a committee to explore strategic alternatives. and that's where we begin tonight's "market focus." the technology company said its committee consists of independent directors who will help evaluate the best path for the company's core business. this announcement comes two days after activist investors' starboard value, which owns a stake in the company, said it would take steps toward a potential proxy fight with yahoo! if necessary. shares of the tech giant were up 2% to $30.04 a share. outdoor apparel company vf corp issued lower than expected earnings for its fourth quarter as an unseasonably warm winter dragged down sales. the owner of the north face brand says it expects to see continued weakness in its sportswear and contemporary brand business this year. shares fell as a result 4% to $58.55. energy explorer cabinet oil and gas reports a fair reer than
expected earnings loss for its latest quarter. the company sharply missed estimates on revenue due to the ongoing drop in oil and gas prices. still shares gained almost 2% today to close at $19.91. bill, medical device company st. jude medical is increasing its quarterly dividend by 7%. and that's up to 31 cents a share. the yield will be 2.3%. shares were up a fraction to 53.41. the u.s. government has given boeing the green light to start talking with approved iranian carriers about buying planes. boeing will still need a separate license to actually make jetliner sales. shares fell 2% to 115.16. our market monitor tonight likes big cap names. he says they are amazing brands that are available right now at bargain prices. this is his first time joining us on the program but he's no stranger to wall street. chris cordero, chief investment
officer at region atlantic. good evening, welcome back, nice to see you. >> good to see you. >> are you investing assuming that the economy is stronger than the market would suggest? or what's the strategy here? >> well, yeah, i think the market and the economy are stronger than sentiment would suggest. i think everybody's a little fatigued and feeling a little down in the dumps if you actually look at some of the numbers. you shouldn't feel that bad and i think the three stocks we're talking about really marquee brand names. all of them are selling below 10 p/e ratio. >> that's what you like, value stocks. one big name we've been talking about, you like apple, why if. >> i love apple. apple, if you can buy apple that is yielding more than a 10-year treasury with arguably better management -- i think that's a great deal. everybody's got apple products. everybody loves their products. they're making money.
even if their growth slows, at this price, it's a great bargain. >> you've got a money center bank on this list but it's not usually anybody's favorite. bank of america. why this one? >> it's usually the one people like to kick around a little bit. >> exactly. >> i think they're kicking it a little bit too hard. bank of amica was pushed down a lot with other big banks with their energy exposure. i think that's really overdone. their exposure's a little more than 2% of loans but they've taken it on the chin a lot harder than that. so you've got a great bank. they've done a wonderful job, trimming their expenses, which has caused their profit to increase. i think all banks are particularly good, especially when rates start ticking up. they'll start making a lot of money. >> a lot of people are loving these low gas prices. good news for big trucks and big truckmakers? >> who makes really good big trucks, ford. what we're seeing is consumers right now are really going after large vehicles because that's what we like in america with the gas prices where they are.
i think they'll keep doing that and that should really translate into good business. >> you like the dividend? >> 5% dividend, awesome yield. and i think certainly sustainable given what their profits are. >> does any of this change if and when the fed starts to raise rates? >> i think bank of america gets -- >> they'd like that. >> they get more attractive. i think -- so the small move in rates will really help bank of america, won't really affect apple or ford too much. we need to get at least another 100 basis points increase before youee it pinching them at all. >> chris cordero, good to see you, thanks for joining us. still ahead, "bridging the divide." in a final part of our series a look at the efforts to close the wealth gap between blacks and whites.
what to watch for next week. monday the world's biggest mobile event, the mobile world congress, gets under way in barcelona, spain. tuesday, home depot reports earnings, kicking off a big week for retail earnings. tuesday also we'll hear from a number of fed officials, including minneapolis president neel kashkari, and vice chair stanley fisher. that's what's to watch for coming up next week. two updates on stories we recently reported. we told you about a small business owner who had his account seized by the irs via forfeiture. his lawyer just told him that the irs will be giving back all of his money. $153,000. and then there's the story
of the specialty pharmaceutical company insys therapeutics, the firm under fire again after a former employee's plea agreement revealed how it allegedly used doctors and engaged in illegal business practices in order to grow profits. the two doctors in question and the company were subject of an investigative report that we aired in november. tonight the new developments for us. >> reporter: the main revenue-generating drug is a highly addictive opiate, 100 times more addictive than morphine. according to the fda the drug is only meant to be used for persistent cancer pain. the company has come under fire for illegal business practices such as kickback schemes and off-label marketing. two mobile, alabama, based doctors, partners at a practice, got over $210,000 in 2013 and 2014. in may they were arrested on
drug and fraud charges. both pleaded not guilty. a plea agreement from manager natalie reid reveals she was she was part of a scheme in which the company allegedly paid kickbacks in the form of speaking fees to the two doctors. the government charges they were involved in a conspiracy. it claims that insys allegedly hired parhax as a favor to dr. ron and allegedly improved his speaker fees and he wrote more prescriptions for substabses after her hire. according to the charges she had financial incentive to do so. december spooit a pace salary of $45,000, commissions by prescribing by the considers resulted in her making over $700,000 between april 2013 and may 2015. former sales rep shannon walsh spoke exclusively with cnbc. >> once somebody was a speaker for the company they were expected to generate a certain number of prescriptions. if they didn't, then they would be taken off the speaker list. >> reporter: not only did ron
and couch coown and codirect a pain management clinic with two locations in alabama, they also owned a pharmacy next to one of the clinics. the charges state that nearly all substance prescriptions they wrote were off-label for noncancer patients. the prescriptions were filled at their pharmacy which then billed federally funded and private health insurers over $500,000. we reached out to dr. john couch but our calls were not returned. dr. ron's lawyer did talk to us and confirms although dr. ron still has his medical license, he's no longer actively practicing medicine at this time. the doctor continues to deny allegations of kickback schemes. as far as where the case stands against the two doctors, they are awaiting jury selection in july. insys says height reviewing these developments but told us it is a vice of the company's compliance policies to give deposits of value to health care providers in order to induce them too write more prescriptions. the stock down about 39% year to date. >> by the way, separately, a class action lawsuit filed
against this company yesterday brought up additional charges that said the company was engaged in the illegal and improper off-label marketing of substances and certain employees, including former ceo michael babbidge, were "complicit in an illegal kickback scheme operated for the purpose of increasing prescriptions of subsys." insys did not respond to a request for comment on this allegation. the gap in retirement security among blacks and whites in america is startling. african-american families on average have about $100,000 less in retirement savings than white families, according to the urban institute. and this racial divide in savings contributes to a widening inequality in overall wealth. in the final part of our series "bridging the divide," here's a look at how some financial adviser groups are working to help close that wealth gap. >> job changes, layoffs, helping
kids get through college. you know, life happened. >> reporter: cindy and ron williams, both 57, admit thehey are not as financially secure as they want to be. >> the vision that we had 20, 25 years ago, is not the reality that we live now. when you make missteps midway, they become more critical the older you get. >> reporter: ensuring a secure retirement is a struggle for many americans but the problem is much more acute for blacks than whites. 62% of black working-age households have no assets in a retirement account, compared to just 37% of white house holds. only 25% of black households have more than $10,000 in retirement savings. about half as many as white house holds. a significant earnings gap between blacks and whites is partially to blame for the divide. but experts say the wider and growing wealth gap is also cue to key disparities in investing.
african-americans have far less money in the stock market. a recent survey by aerial investments found among households with incomes of at least $50,000, only two-thirds of blacks own stocks and mutual funds, compared to 86% of whites. >> for african-americans, our welg wealth has been understood with things that are tangible like homes. so what we have seen with the housing crisis, it's been harder for african-americans to rebound. >> reporter: lisette, certified financial planner, works with clients including the williamses, helping them understand how to invest widely to build wealth. >> when you make strong, clear financial decisions, the momentum really allows your wealth to grow exponentially. >> reporter: she's president of the association of african-american financial advisers, quad a, a group working with the financial planning association, the largest membership organization for financial advisers to bring more blacks into the profession
and bring financial advice to more african-americans. >> financial advice certainly will narrow the wealth gap. >> reporter: only 6% of u.s. financial advisers are black. fpa chair jurtson says increasing diversity among financial professionals helps more people. >> they're able to take that message back to their communities and help those individuals close that gap. >> reporter: the williamss agree finding a financial adviser who understands their needs has helped them build trust so they can plan together how to increase their wealth and eventually retire. >> a little bit of pain in the beginning but it's worth it. >> reporter: the williams were able to step outside of their comfort zone, yet only 14% of african-americans currently work with a financial professional, compared to 31% of whites. that's according to a recent study by prudential. that report also found that blacks are more likely than whites to describe themselves as savers rather than investors, underscoring the need to increase knowledge as well as
access to investment skills. >> the number that jumps out to me, 6% of all financial planners are black. that's it. >> it starts with education. ron williams, who's dean of a business school, said look, even though education is a big part of this community, we need to really stress financial services and financial education and that's what many colleges like the american college are doing. >> clearly an opportunity for students out there. >> absolutely. that's "nightly business report" for tonight. i'm sharon epperson. thanks for watching. >> i'm bill griffeth. have a good weekend, everybody. we'll see you monday. god help me to make
good my vow and god bless all of you. if you haven't got a queen, you make do with film stars and pop stars, but if you've got a queen it obviously is so much better. narrator: for over six decades, queen elizabeth ii has been among the most famous and influential women in the world. simon lewis: the queen has connected with the british people in the most extraordinary way. she's been as constant as the northern star. (explosions and gunfire) narrator: she came of age amid the death and destruction of a world at war. sir ben kingsley: in her lifetime we have been grievously threatened by a power that would've annihilated us. her parents were putting their lives on the line. and elizabeth knew that. a german plane dropped its bombs. (explosion) and nearly killed the king and queen. (queen elizabeth ii reading)