Nightly Business Report for wednesday, august 21st. Good evening everyone and welcome. As a basketball announcer marv albert likes to say at the critical moment of a series, its all come down to this. When exactly when the fed begin to taper the bond buy . Today investors sought clarity in the minutes of the july meeting. They didnt find it. The market forensic scientist probed patience and soon and how soon is soon and how patient is patient when an economys fate is at stake . All that is clear is fed officials seem broadly united that the bond buying will end eventually. Maybe by mid 2014 or not if the economy stumbles. The lack of definitiveness is why the dow soared and sank today down 122 after the release of the minutes, then up by 17 briefly before closing down 105. The dow finished behud the hud 15,000 mark for the first time with the losing session. The nasdaq lower by 13 points and the s p 500 off by nine. Meanwhile, treasury yields moved by the british boy band, one direction up, constantly up. Up to 2. 9 on the tenyear bond. With so much uncertainty about the market and the feds tapering plan, the fed has enough to make them head for the hills, which is what they did. Steve liesman has the report. Reporter good evening from wyoming where the Federal Reserves gathers every year for the retreat on the policy and economy. This year there is a high but not unprecedented level of uncertainty surrounding this meeting. Every four years they get together with uncertainty about who will be the fed chairman n. 2009 whether president obama would reappoint ben bernanke and then who would succeed. This year who will replace fed chairman ben bernanke and there is two leading candidates. Janet yellen and the economic advisors. Both have plus and minuses, the lead candidate thought to be larry summers. The fed chairman wont be attending. Other top fed officials will be here like bill dudly, the president of the new york fed, jim from st. Louis and John Williams from San Francisco along with christine la garza head of the imf and central bankers from around the world. Big top picks will be whether quantitative easing will be working and if not, what the Federal Reserve should do instead. Is the strategy adequate . The conference beginning tomorrow night with a dinner and academic papers and discussion over the next two days and i think one of the things ill listen for is whether or not the Federal Reserve believes the economy is Strong Enough to reduce the stimulus as soon as september or whether or not that will happen later. For nightly Business Report im steve liesman. We turn to lee ann sundayers for her thoughts. Liz ann, it seems like there was a lot of doubt, a lot of confusion about what was in those fed minutes, what the fed will do next. What do you think was the message of the markets, and just what do you think in general what is next for the market sns. I think the skiddishness about the market may be more than the minutes today. I dont know that that provided a lot of additional color but we put a note out we thought the fed would pull back. Its part of the reason for that. Again, im not so sure the minutes specifically were a function of todays volatility. I think were just in a fairly skiddish environment for the market, at least in the shortterm. We know the bond buying will end. What we dont know is when the end will begin. What is your guess . Look, i mean, we have no reason to think it will be other than what the consensus believes, which is at least an announcement on september 17th or 18th, which is the next meeting. And maybe an announcement as well as the beginning of a tapering. The treasury is issuing fewer treasuries right now so i hope when the fed does it, they put the tapering in. So they are really not changing the supply demand balance. If they continue buying at this pace given lower issues, they would be buying an even bigger portion of out standing treasuries. So i think they could maybe ease some concerns and cement the idea that tapering is not tightening. You just mentioned your report that you came out with last week that was titled pause and you report longterm things look good. Why are you positive on stocks . Again, i think, you know, were probably in a pull back mode here. I dont think it will be sinister but they are against us, at least a week and a half ago and technical deterioration and we may not be through it. Looking past nearterm issues and other macro issues with the imp men take of Affordable Care act, the sequester cuts. Evaluation is reasonable, corporate earnings are descent and i think investors are only now four and a half years start in starting to get more enthusiastic about the market. There is really very little indication that what i believe was the secular bull park at the end. There will be times in a longterm bull market you need to correct and pause. I think thats the environment. Im not swayed by the shortterm worries in terms of longterm optimism. Are you in the camp with so many others that think the u. S. Economy may be the one, the place that out performs in the shortterm and hence, u. S. Stocks are a better bet over the next few months than emerging markets or foreign stock sns. We have a prou. S. Stance in our global allocation views right now. Certainly relative to emerging markets, which we have been suggesting investors lightening up on, particularly china. U. S. Is our favorite market. Second to that outside of the u. S. Would actually be european equities right now. Were a big believer naturaltive u. S. Story. Tell us real quickly, we have half a minute. You said that your clients are feeling, investors are feeling enthusiastic. What is the mood . Where are they putting their money . Im talking about the individual investor. They are feeling better and the markets gains support that but investors are looking past policy uncertainty and getting more enthusiastic about fundamentals. In the nearterm there is concern. There is a number one list of shortterm concerns in an environment of improvement sentiment. Thank you. Nearly five years after the financial crisis, not one criminal case has been brought against executives who nearly brought the u. S. Economy down with risky behavior, toxic investments and trades. That could change. Eric holder said anybody that inflicted damage on the Financial Markets should not be of the belief they are out of the woods because of the passage of time end quote. He wouldnt say who is in dojs cross hairs, if anybody or specified whether any charges will be criminal or civil but he did mention individual people as well as institutions are being looked at. A new survey says that most High School Graduates are not ready for College Level course work. The folks who administer the act College Entrance exam report that only 39 of High School Graduates tested this year met three or more of the four benchmarks in english, reading, math and science that would prepare them for higher learning. A third of graduates, 31 met none of the benchmarks. Just a quarter of this years High School Graduates cleared the bar in all four subjects. More americans are working these days, but only part time. A new report from roiter shows three out of four of the 1 million new hieres this year wee for parttime workers and it was in lowpaying jobs like retail and food service. Economic growth has been tempted and providing healthcare to workers would drive their business cost too high. While employers worry about the cost of providing coverage for workers, were six weeks away from what state and federal healthcare exchanges are slated to be operational under the Affordable Health act. One of the Biggest Challenges for administrators, getting the word out to people that may need to sign up for coverage, especially to young people, many of who arent focussed or aware of what they have to do and spend to obtain Health Insurance. Bertha coombs has the story. Reporter in Health Policy circles, they are called young invincibles. 20 somethingyearolds dont buy insurance. A new report shows otherwise. Affordability is really the key reason why young adults dont enroll in health plans. Reporter two thirds of 19 to 29yearolds they surveyed take up insurance when offered at work. Among those who dont, 22 say that they couldnt afford the policy and only 5 said they didnt sign up because they didnt need it. Reporter 15 million young adults in early 20s are coverered under the obama plan. I plan on using my moms insurance as long as i can. Ill stay under it until im 25 or 26. Reporter while it remains controversial, the survey found politics dont enter into commonwealth choices. 26 of those who identified themselves as republicans were covered under insurance plans, up from 54 in 2011 that compares to 45 percent of selfdescribed democrats. What it says is this a longterm problem for all families, regardless of political affiliation. Coming under the parents policy benefits young adults. Reporter for 2014 is getting young adults that cant get insurance through their parents to buy it on oir home. The Obama Administration wants to sign them up through state Health Insurance exchanges. The nontraditional advertising, the department of health and Human Service ss using social media to reach them. They arent alone. The Heritage Foundation launched a Counter Campaign to coincide with this falls open enrollment to get young people to post pictures of themselves with stop obamacare. We want to package the information in the in a way the reader can digest it and meet those people where they are. Reporter both sides will be watching young adults enrollment closely this fall, because without their participation the Insurance Market will suffer from adverse selection, that is only older and sicker people applying for coverage which ultimately push premiums higher. Sarah colin expects to see strong enrollment, but the bottom line will be the premium price. Affordability is going to be key. Reporter for nightly Business Report, im bertha coom coombs. Still ahead, exxonmobils losing streak is the worst performing stock in the dow this month. What is going on at one of the Worlds Largest energy compae s pans . Well take a look. First the closing International Markets today. Companies . Well take a look. First the closing International Markets today. It is still august, but walmart is out with an early Christmas Gift for shoppers. They will offer a free nointerest lay away plan and will eliminate the 5 account set up fee to help the lower income shoppers budget. Toys r us is gearing up for the holiday season. The nations largest toy store chain announced that its expanding its price match guarantee on toys from any online retailer including amazon or walmart. Com. Toys r us matches with brick and mortar competitors. Big week for retail earnings continues with target. Thats where we begin the market focus. The nations second largest retailer behind walmart is warning the profit will be near the lowend of the forecast. The expansion into canada is costing more than anticipated and sales in the u. S. Are being pressured. Shares fell more than 3 to 65. 50. Shares of staples dropping sharply after weaker than expected quarterly results. The largest u. S. Office supply chain cutting the outlook for the year because of the soft sales in europe and australia. The stock slumping 15 to 14. 27. That made it the worst performing stock in the s p 500 today. Similar story for american eagle. Fewer customers shopping at the retailer which is forecasting a big drop for the current quarter. Siting increased competition and promotions, which the ceo calls unprecedented. The stock fell more than 9 to 14. 76. The housing recovery helping lows bottom line. The Home Improvement retailer reporting a rise in profit and boosting the fiscal year outlook as americans spend more to spruce up their homes. The ceo char actorizing it as strong. Sticking with housing, Toll Brothers saw revenues jump thanks to higher home prices. They expect to raise prices again in the quarter despite rising mortgage rates. Toll ceo says the recovery is quote real and he sees early stages of the rebound. Shares rose a fraction to 31. 65. More signs today that the once mighty Hewlett Packard is struggling. Quarterly earnings were in line with estimates but revenues dropped 8 . The Company Reported that pc sales plunged more than 22 during the fiscal third quarter. Hp, though, still raised the outlook for the rest of the year. The stock dropped 2 to 25. 38 in the regular session and fell more after hours. The exxonmobil losing streak continues. The stock falling in 20 of the last 21 trading sessions. Exxon along with chevron have accounted for about 1 3rd of the point losses this month. They closed at 86. 42. Shares are down more than 9 since the end of july whanchts. So what is going on with exxon and chevron since Energy Prices are so high. We have an energy analyst. Good have to have you with us. Why are these two shares struggling so much . Sure, i mean, several reasons. One is very simple. Until maybe the last week or so, weve been in a bull market for equities. Exxon and chevron are inherently defensive stocks. They are simply not in favor in the context of a bull market where investors generally want something more growth, higher, more speculative. This is the opposite. Second reason is, you know, were finding stocks have also been very weak lately because the spread between the price of crude and wti has compressed and remember, we think of exxon and chevron as Oil Producers and for the most part they are, but they also have a big u. S. Refining business which suffered as those spreads tightened. Thirdly, yields have gone up, as we all know and yieldbaring securities have generally traded off in that context and both exxon and chevron are, you know, high dividend yielding stocks. You have right now bye recommendatireck men remember mck men dapgss. They believe oil price wills soften into next year. We think there is quite a bit of downside to oil and in the context of a falling oil price, it is precisely these kinds of highquality defensive Energy Stocks that tend to out perform. Now, in the last six months its been the smaller cap, more higher beta, you know, enp independence, Service Companies doing better and we think there is opportunities in those sectors, too, but the mega caps screen very well, again, if in fact, oil prices do soften into next year. So if i own as many as our viewers presumably do exxon as a core holding, chevron because they like the yield in the stocks, you would say definitively hold them and maybe buy on weakness . Yeah,. Yeah, we would absolutely buy on weakness. Supply demand analysis weve dontee tells us that, these stos should do better than most of the higher beta engineer he. Tell us about oil prices, if they go down. How much could they go down this year or next year . Right now west texas crude is 104 a barrel. Yeah, we think that by the end of the year, it will be in the low to mid 90s. So down, you know, 10 , maybe more and then next year we think wti could potentially get into the 70s. That depends on a lot of factors. For example, right now the price of oil is being prompted up by egypt even though the crisis has nothing to do with oil supply whatsoever. So psychology has propertied up the price because of the news on tv but thats all it is. Its just a fair trade. Pure sentiment. Thank you very much. Coming up, whirlpool field the pain of the housing bust and is riding the recovery. Sales surging but could the appliance maker be in for a bumpy ride ahead. First, how treasuries, commodities and currencies faired today. Those western wildfires that have scorched thousands of acres of land from arizona to Washington State just got a lot more costly. New estimates in idaho show that the cost of fighting the fires topped 1 billion. 4 wildfires are still raging and uncontained around the country and nearly 18,000 firefighters had been dispatched to fight them. Two blazes in idaho near the resort towns of sun valley are currently the top priority. Facebook founder mark suc R Mark Zuckerberg wants to bring the internet to everyone. Its to bring access to 2 3rds of the nation. His company is teaming up with nokia and others to lower the cost of Internet Access and help businesses create ways to drive internet availability. Zuckerberg spoke about the idea this morning on cnn. We use things like facebook to share news and catch up with friends, but there, they will use it to decide what kind of government they want, get access to healthcare for the first time ever, connect with family hundreds of miles away they havent seen in decades. Getting access to the internet is a really big deal. I think well be able to do it. Another giant apple is having trouble gaining access to customers in china. Shares plunged in the Second Quarter this year accounting for 28 of shipments, thats down from almost 50 a year earlier. Idc says that smart phones made by samsung and competing products made by dozens of local Chinese Companies put the squeeze on ipad sales there. Kitchen appliances have been on a tear lately thanks to the turn around in home sales and prices. One of the biggest beneficiaries of that recovery, wirl pohirlpo. Shares up 83 over the past year when the company added jobs and expanded the manufacturing facilities. Jack jackie with more. Reporter microwaves, some of the appliances used to upgrade. Existing home sales jumped to the best level since november of 2009, and whirlpool is one of the Top Manufacturers benefitting from the recovery. We think home prices as they appreciate get the customer to buy more appliances. The replacement cycle is really long on those products, so an oven can last 10, 20 years, so to get a customer to invest in new appliances before they break, they have to think that home prices are improving, that they are making an investment inside an investment that is appreciating. Reporter whirlpool stock is benefitting up more than 30 year to date. Still, analysts point out that whirlpools high correlation to the housing recovery could be its achilles heel if Interest Rates rise. They have talked about rising Interest Rates. We think were at least a year off from that having any real impact on the result soft we expect at least another year of strong samestore Sales Numbers from Home Improvement. Reporter other risks are Consumer Spending and if the economy sourers, they might tighten up. The price of homes have increased so we felt more comfortable that this was a comfortable thing to do for us financially. Its more Discretionary Income and you have more income to upgrade your place is redo your kitchen, me refrigerator and oven. Reporter roughly 30 of whirlpool sales come from the international operations. Operations outside of north america typically tend to be more volatile. Still Raymond James has an out perform rating on the stock which expects the company to out perform the s p 500 over the next 12 to 18 months. For nightly Business Report im jackie dean gles. Are you ready for football on youtube. Google is talking with the nfl and it looks like the search giant might make be a bit for the sunday ticket package, giving viewers streaming access to all games on youtube. Right now direct tv pays about 1 billion a year to air the out of town game package but that contract expires after this season and google along with cable channels, broadcast networks and satellite providers are all tackling to win it. And tell us the one stock, only one you would like the market monitor guest to discuss on friday. Go to the website, nbr. Com and click on the link to submit your question. Tell us where youre from and maybe well tackle your question on friday. Football on youtube. We shall see. Long way to go before that happens. Thats nightly Business Report for tonight. Im susie gharib thanks for joining us. Thanks for me, as well v. A great evening everybody. Well see you back here tomorrow evening. Nightly Business Report has been brought to you by. Sailing through the heart of historic cities and landscapes on a river, you get close to iconic landmarks, to local life, to come toultural treasures, vi river cruises, exploring the world in comfort. Tonight on quest after two centuries of logging, only 5 of californias old growth redwood trees remain. Climb into the canopy as scientists try to protect these giants from what might be an even greater threat to their survival. 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