Reporter overall, homes sales are up more than 10 over last year. And builders are picking up the pace. They are now on track to build around 900,000 homes this year, but by the end of the year, the National Association of realtors expects the pace to pick up to an annual rate of 1. 1 million starts. Thats great, but keep in mind a normal year for Home Construction is closer to 1. 8 million. The outlook for apartments and other multifamily construction is also good, even though those starts dropped last month. Rents rose 4. 5 last year and researchers at zillow expect a similar increase this year. Thats why investors are pouring into the market and building new apartments. Assuming you can buy the property cheaply or build it cheaply and rent it out, then you seeing 4. 5 growth in your top line numbers for what you are able to rent it out for looks attractive. Reporter but the outlook varies depending on where you live and how strong the job market is in your area. The market will be up a lot more in texas than it will be in parts of the east coast. Of course, on the west coast weve got a bit of a housing shortage. Inventory is tightest there. So i think there we will continue to see starts and more starts in the future, simply because weve got tight inventory. Reporter so while far from normal, economists say housing is once again Strong Enough to play its traditional supporting role for the economy following a tough recession. Darren gersh, n. B. R. , washington. Susie joe davis joins us now, hes chief economist at vanguard, the giant mutual fund company. Susie joe, nice to have you with us on this important day. Let me start by asking you, do you think the fed is taking on too much risk . I think there is an argument that can be made. Weve had a concern for more than a year that there are both costs as well as benefits with respect to very aggressive Monetary Policy. And just some of the behavior weve seen in the financial markets. I know the report talked about excessive risktaking. So ive had a concern that those costs associated with Monetary Policy may not have been given the sort of credence they should have been. So a positive development, in my mind, to todays minutes it was that Federal Reserve policymakers were more aggressively talking about both the pros and cons wreaptwith respect to aggressive Monetary Policy. Susie one thing weve been hearing repeatedly from the Federal Reserve is theyre not going to make any change in this policy, raising Interest Rates, until the economy is stronger. Most notably that the job market picks up, and the Unemployment Rate gets to the 6. 5 level. So given the numbers in the housing, and given were seeing gasoline prices are going up, is the economy Strong Enough to even begin talking about raising Interest Rates . I dont know about that, but i think it is important to talk about the beginning of the end in terms of how aggressively the Federal Reserve has purchased certain securities, particularly fixed income securities. I would make the case that the economy is marketly stronger today than it was just a year or two ago. You mentioned housing. The business sector, consumers are less debtburdened than two or three years ago. By those measures, im hardpressed to find why even six months from now the Federal Reserve would have the peddl pedal to the floor of the car as they have for the past two or three years. Susie what is going to be the time table on this . We saw with the gold prices that the commodities are already responding. But when you did think that the fed realistically will be acting on an exit strategy . I think the exit strategy will be over the next six to 12 months in terms of more vocal conversations and guidance with respect to the amount of the frequency of their purchases. I think a later stage is then contemplation of raising Interest Rates, and the funds rate, which is effectively at zero. I think there they willmuch more labor market front in terms of job progress. I think all of the other conditions are in place to see a modest acceleration in job growth, but it is going to take some time to bring that unemployment down, if im correct, that some americans return to the labor force. Susie one concern for a lot of people as investors is what do i do now . A lot of people started putting money in the market. I know youre an economist, but you also are at vanguard with all of the mutual funds. What is the view at vanguard as to what investors should be doing, given thegoing on in washington. I think what many investors actually are doing is to look through some of these headlines, and to embrace that longterm orientation, look at the balance and risks and what youre trying to achieve with your portfolio. And if that ascertation of this plan is the same today as it was two, five, 10 years ago, it is critical to stick with that plan. I think even going back three years ago, our message to clients was, listen, the economic environment may be challenging, but you can still have decent portfolio returns. And since that time, weve had decent portfolio returns, both on the equity market and bond portfolios. So continuing to reaffirm that message, and for investors to stay invested in markets. Because were going to have ups and downs as the economy muddles through some of this. Susie a lot more to talk about, and well continue this conversation, but we have to wrap it up for now. Thanks so much, joe davis, chief economist at vanguard. Thank you, susie. Reporter still ahead, marthas in the middle, of a courtroom showdown between two major retailers, whats at stake for the stores, and her brand. Tom there is progress to report tonight from boeing on the battery issue plaguing the its 787 dreamliner. Still the planes remain grounded. The aircraft maker may have found a fix for the planes battery problems, by making bigger gaps between battery cells, thats according to reuters. Boeings head of commercial engines is expected to meet with the head of the federal Aviation Administration friday to present a 10 point plan to prevent battery fires or meltdowns. Neither boeing nor the f. A. A. Are commenting. Boeing shares rose slightly to close at 74. 78 per share. Susie two big and struggling Office Supply companies are teaming up. Office depot is merging with office max in a stock deal valued at more than 1 billion. A union of the two companies has been rumored for years, given trouble in the Office Supply sector. But investors didnt buy in shares of office depot tumbled 16 , office max fell 7 , and even rival staples was down on the news off 7 . Erika miller reports. Reporter if you want a good read on the economy, it helps to watch demand for office supplies. When the economy is booming, businesses need more pens, paper, and printers. But growth has been weak since the great recession, and that has meant less demand for office products. Office depot and office max have been struggling behind industry leader, staples. Staples, their retail store is about 2530 more productive than comparable locations. And they also have a much more attractive Business Customer mix. They have the midsize customers, compared to office depot and office max which are dependent on the lower margin large customers. Reporter office depot and office max hope by merging, they will be able to save big bucks by closing stores, combining operations, cutting advertising costs, and negotiating better prices from suppliers. But Office Supply stores are also facing stiff competition from walmart, costco, and amazon. Those retailers have lower cost structures which often means lower prices. Whats worse, the Office Supply stores are losing their most lucrative customers your highest margin customers are your small Business Customers. Or someone who just wants to buy something for the home office. And what weve seen is that amazon and costco are targeting these higher margin small Business Customers. Reporter those struggles are reflected in the office depot and office max stock prices. Shares of both companies have plunged more than 70 from their highs back in 2006 and 2007, respectively. Staples and office depot tried to merge in 1997, but the deal was blocked by regulators because of fear it would lead to higher prices. But most Industry Experts give this deal a high probability of going through. Longerterm, this deal is expected to be good for office depot and office max, but also for their biggest rival. If office depot and office max close stores, staples will have less competition. Erika miller, n. B. R. , new york. Tom combined the two companies have about two thousand retail stores. And as erika mentioned, some of those stores are expected to close, leaving vacant millions of square feet of commercial real estate. Brian jones is a Portfolio Manager for the Neuberger Berman real estate fund. Tom brian, what kind of shape is retail reestate in as it faces what could be a big consolidation well, thank your having me tonight. I think Retail Real Estate is in a very good situation right now. What weve seen over the past two years have been improving occupancies, and in many of the better markets were beginning to see rental rate growth. This is largely driven by the fact there is very little new construction of Retail Centers going on in the United States currently. And,walooking to grow have to find space in the existing centers in order to fund and continue their growth efforts. Tom lets assume that office depot and officemax are successful in combining their resources. Does this square footage, that presumably would become vacant in the years ahead, actually help relieve some of the pressure that youre seeing today . Well, what we would say is that these two tenants are still relatively small when compared do the total pie of Retail Real Estate. When we looked at the reits in our coverage universe, we found that combined office depot and officemax were in every case at less than 2 of the rental revenues for the reits in our coverage universe. So together, theyre relatively small tenants for the overall retail reit universe, and the retail space in general. What it will provide is the opportunity for some of the retailers that have growth plans to actually find centers to grow in. And so we think that over time, a lot of the stores that are closed will be released to stronger tenants. And in many cases, that will end up strengthening the underlying center, where the office depot or the officemax have gone out. Tom you mentioned your coverage universe, and you did bring along one kind of outdoor shopping Real Estate Investment trust that you like, federal Reality Investment trust, frt. What make this stand out in a crowded market . One thing i would like to point out is that this highlights one of the benefits of investing in reits, as opposed to a single piece of real estate. Most of the reits own dozens, if not hundreds, of Retail Centers. So theyre generally diversified by geography, by tenant mix, and byproduct type. So federal realty is an excellent example of a retail reit in areas that have high population densities and above average incomes. And these are the locations where many of the growing retailers, such as t. J. Max and marshals and nordstrom rack, five guys, burgers, panera bread the retailers that are looking to grow are focused on these higher income, higher density markets. And this is where federal is positioned. And we think that theythre positioned to do well in the future. Tom okay. Office depot and officemax are not within their top 25 tenants. Tom gotcha. And thats something you like for f. R. T. Do you have position in the fund in that stock . Yes, we do own federal reality in our mutual funds newberger fund. Tom and you help manage that. It is brian jones with us, from newberger, berman. Thank you. Susie its macys versus j. C. Penney in a high stakes fight over bed linens, cocktail napkins and kitchen tools. At issue who will be allowed to carry products with Martha Stewarts name on them. Macys has been the selling stewarts merchandise since 2007. It claims it owns the exclusive rights to carry her home furnishings. But rival j. C. Penney argues it has the right to sell other stewartbranded products that macys doesnt carry. Ruben ramirez reports. Reporter marthas in the middle, as two of the nations bestknown Department Stores fight in New York State Supreme Court over just who can carry the domestic divas home products. Two Different Companies are looking at an agreement and interpreting it two different ways. Macys is interpreting it very broadly and pennys is interpreting it very narrowly. Reporter theres no denying the appeal of carrying Martha Stewarts brand. Macys says it has billions of dollars on the line. For macys, having a differentiated exclusive brand is critical to their competitive strategy and theyve invested a lot of time and effort in building up the Martha Stewart brand giving her a lot of exposure in their stores and its a linchpin of their home strategy. For, j. C. P. , martha is a key part of its store within a store turnaround plan. She can appeal to the kind of customer that penneys has and the kind of customer that they want to get which i think is a little more upscale than what they have right now so its a dual win for penneys in that regard. Reporter penneys is counting on a clause in stewarts original contract with macys, which allowed her to open standalone stores, arguing the clause never said that stand alone shop could not be inside a bigger store. If j. C. P. Is successful, appel says it opens up another retail channel for stewarts company. For Martha Stewart its really about the merchandising end of her business is the only part of her business right now that is growing and is profitable and for her to be able to increase her distribution is critical to her business strategy. Reporter the trial got underway in a manhattan federal courtroom today, and now that its begun, attorneys say a settlement could be coming. There is something about a trial that forces the parties to look at a case a little differently than they do when theyre not at trial and it may well be that they reach a compromise at that point. Reporter Martha Stewart and the c. E. O. S of macys and jc penney are expected to take the stand. The trial is slated to last about twoandahalf weeks. Unlike other court cases which are decided by a jury the outcome of this one will be decide by one judge. Ruben ramirez, n. B. R. , new york. Tom what started out as some mild selling picked up this afternoon with some Federal Reserve officials worrying about how long to keep buying bonds to help the economy. That news came just after two oclock eastern time, which is when the s p 500 selling gathered momentum. The index finished down by 1. 2 . It was at a five and a half year high yesterday. Trading volume grew. 815 million shares on the big board. Two billion traded on the nasdaq. All 10 of the major stock sectors were lower. The materials sector saw the biggest loss, down 2. 8 . Followed by the selling in the energy and Consumer Discretionary sectors. Two gold and copper miners saw the heaviest selling among material stocks. Gold and copper metal prices both were down sharply. Freeport mcmoran was down 6 . This is a twoandahalf month low. Newmont mining fell 5. 5 , both stocks saw heavy volume. This is a new 52 week low. Aluminum maker alcoa was hit too, falling 3. 3 . Alcoa has seen Aluminum Prices recently stabilize. In addition to the drop in new Home Construction last month, we heard from home builder toll brothers. It earned 0. 03 per share in the last quarter. While thats an improvement from the loss a year ago, it was considerably less than the 0. 10 per share in earnings forecast by wall street analysts. While toll saw more home sales close, it also saw its average selling price drop. And so did the price of its stock. Shares fell 9 . The stock has lost 10 in less than a week, after staging a big rally over the past year. Other homebuilder stocks got hit. Pulte group fell 6. 8 , d. R. Horton was off 5. 8 . Foxconn is not a household name in the u. S. , but if you use an apple iphone, Hewlett Packard computer or any of dozens of other electronic devices, foxconn is the Taiwanese Company that assembles it. Today foxconn said it has frozen the hiring of assemblyline workers in china after the lunar holiday there. That fed speculation about demand from apple and h. P. Apple shares fell 2. 2 since the plant freezing hiring makes the iphone five, but foxconn said its decision to stop hiring was not related to making the iphone. An analyst at Investment Bank u. B. S. Thinks it could be because of less demand for Hewlett Packard desktop computers. H. P. Q. Shares were down by 1. 1 . Hewlettpackard reports its latest Quarterly Earnings tomorrow after the closing bell. Independent Energy Companies devon and anadarko updated their shareholders on their strategies, but both were greeted with selling. Anadarko petroleum was down 4. 5 . Its Energy Production outlook was less than expected while its forecast for Capital Spending was more than anticipated. It expects to be among the most active deepwater drillers this year. Devon energy fell 6. 6 after saying it may try again to spin off its pipeline and processing businesses. It tried that six years ago but stopped after the economy weakened. Four of the five most actively traded Exchange Traded products were lower. The s p 500 volatility note jumped 8. 6 . It usually moves in the opposite direction of the broad market. And thats tonights market focus. Susie whether its facebook, instagram, or pinterest, there always seems to be a hot start up in the tech pipeline. But as tonights commentator explains the next Big Tech Company might not be as original as you think. Hes harry lin, executivein residence at idealab, a Technology Incubator in pasadena, california. An irony in the world of Technology Startups is that we tend to copy each other a lot. I call this ironic because the image of Tech Startups is that theyre all about innovation and risktaking. Yet, venturecapital investors and tech entrepreneurs all know that for every instagram that gets launched, there are at least 10 other startups that pretty much are instagram. Just with a different name. Did you know that there are at least three wellfunded startups; im talking more than 10 million of investment capital, that match dog owners with dog sitters . The number of metoo startups goes crazy when you look at other types of products and Services Project management software, ordering food online, music streaming, cloud file storage. And i cant even keep track of all the fashionandclothing sale sites duking it out on the internet, there are scores of them even pinterest has at least halfadozen straightup clones. So why is an industry thats supposedly about innovation and disruption so quick to copy itself . Investors may call their capital venture, but theyre looking for safe bets, so when something seems to be working, why not invest in the same thing . We also know that in some niches, theres space for several winners, so maybe investing in the metoo will work out. The entrepreneurial myth is that we invent new stuff, when, much of the time, we engineer twists or slants on old stuff. Its really, really hard to come up with a brandnew idea thats never been tried. So this copycatting will continue and ill continue to call it ironic. Im harry lin. Tom whether copy cats or not, all entrepreneurs face difficulty at one time or another staying motivated. Our nbru partners at Vanderbilt University have eight steps for staying motivated to reach longterm goals, just head to www. Nbr. Com and look for the nbru tab. Susie tomorrow on n. B. R. Ford is hiring its adding jobs at its cleveland plant that builds the ecoboost engines. But its not alone, we look at job creation in the u. S. Auto industry. Tom finally, neither snow, tom thats nightly Business Report for wednesday, february 20. Have a great evening everyone, and you too susie. Susie goodnight tom, thanks for watching everyone, well see you online at www. Nbr. Com and back here tomorrow night. Captioning sponsored by wpbt captioned by Media Access Group at wgbh access. Wgbh. Org join us anytime at nbr. Com. There, youll find full episodes of the program, complete show transcripts and all the market stats. Also follows us on our Facebook Page at bizrpt. And on twitter bizrpt. Tonight on quest all living beings share a common ancestry. Today, this is a basic idea. But when Charles Darwin published it, he transformed the biological sciences forever. In celebration of darwins 200th birthday, quest follows California Academy of sciences beetle expert david kavanaugh. Can darwins principles on evolution, coupled with modern dna analysis, help him prove the existence of a New California species . Major funding for quest is provided by the National Science foundation. The gordon and betty moore foundation, investing in partnerships for environmental conservation, science and the San Francisco bay area. The richard and Rhoda Goldman foundation, celebrating more than 50 years of innovative grantmaking. And the amgen foundation. Additional support provided by the s. D. Bechtel, jr. Foundation. The william k. Bowes, jr. Foundation. Ann s. Bowers the robert noyce trust. The dirk and Charlene Kabcenell foundation. And the vadasz family foundation. Support is also provided by
comparemela.com © 2020. All Rights Reserved.