With overseas markets in focus, morningstars International Stock fund manager of the year will tell us which companies he thinks can ride out the storm and make money for you. All that and more tonight on nightly Business Report for friday, january 24th. Good evening, everyone. An ugly day for stocks on wall street and all around the world. The dow tumbled more than 300 points but stocks in europe and asia were down. The worries started yesterday as we reported on concerns about a slow down in chinas economy. Rolls royce in latin america and other countries big trading partners in china. Add to that lackluster corporate news. The dow fell 118 points. The nasdaq down 90 and the s p lost 38 points. Bob pisani has more on todays Market Action from the new york stock exchange. Reporter it was another tough day for the markets. The second day theres been concerns over emerging markets. But its really a concern about china. Theres lots of reasons why traders dont like china. But the main problem is that its a bit of a black box. Not only is there economic uncertainty, theres a lack of transparency. Theres just not much information coming out of the country, and investors arent sure they can trust the numbers. These issues have been around for a very long time, but recently theres been some signs of economic weakness and also a credit crunch. So investors have been getting nervous and pulling back. In the u. S. There was red right across the board. The biggest decline came in industrials and materials, two sectors that are very exposed to emerging markets. Two groups that have been strong all year reversed today. The dow transports were down over 4 . Thats the worst showing in nine months. And the small cap russell 2,000 dropped almost 3 . Yield on the 10year treasury dropped below 2. 75 . Thats the lowest level in two months. Gold also rallied to its highest level in two months. Now for the week, the dow is down nearly 4 . For nightly Business Report, im bob pisani at the new york stock exchange. So why is stress in smallish or even tiny foreign economies and in their currency and stock markets having such a negative impact on wall street . And on your portfolio . Sara eisen explains. Reporter they were the bright spots. They had a catchy name the bricks that became a shorthand for the fast growing emerging markets that helped lift the world from the depths of the financial crisis. China, the ukraine, argentina, brazil. Reporter investors are heading for the door in these emerging markets right now because of mounting economic and political tensions in countries like turkey and argentina. Uncertainty in russia and south africa. And worries about chinas super fast growth slowing down. The big worry is that problems in these individual countries could escalate into a bigger crisis. When its one country specific like credit, if its namespecific and were at that part of the world, how is this country doing, that country doing. But at some point it becomes kind of a macro event. When all these countries that are very far apart on the globe are very, very close together in invest ors minds. Reporter these countries are starting to look worse to investors now that the Federal Reserve is in tapering mode, scaling back some of its massive stimulus that, giant flood of money that has masked some of the worlds problems. The big fear is that a currency crisis could spin into a Major Economic and financial crisis. Think 1997. A steep slide in thailands currency the bot triggered a fullblown asian crisis causing economic pain in the United States as well. I think theres a balancing test going on right now between the strength in the United States and a little bit of a slowdown in the e. M. My guess is that this is not the correction that people are expecting, and primarily because were still in dramatic qe. Whether it will spark a fullblown crisis or not economists are getting more gloomy on prospects for growth in the developing world. Instead its the united now that the world is looking to be to be the engine of global growth. For nightly Business Report im sara eisen. Joining us now to talk more about the big global selloff, david gordon, chairman and head of research at the eurasia group. Thank you both for joining us. David, let me begin with you. You heard our reports. China china china. Everybody is saying that thats what got it started. But you dont see thought way. Tell us what you think is a catalyst for this big selloff. I think a little bit of this is bad news in china. But i think a lot of this was mounting concern in argentina, a deteriorating political and Economic Situation in turkey, huge unrest in thailand, increasing instability in venezuela. So i think a lot of this that the worst cases here are quite country specific. And even on china, i think to the extent that china was the spark in the last 36 hours, i think its overstated. I dont see the kind of severe downturn that i think that some people in the markets are pricing in. A lot of this, frankly, is davos yesterday where there were these hostile issues around china, japan, and i think theres a lot of group think negative group thinking. Huge numbers of big players in International Markets are in davos. I think a lot of this is a negative davos effect. Thats a very interesting point. Mark, do you see it that way . David focuses on a political uncertainties, instability in some key players. Do you see it that way . Or do you see it more a sort of reverberation of a slowing chinese economy with its strong appetite for commodities affecting some of those countries that are in many cases though not necessarily turkeys case, commodity driven . Tyler, i think its more the latter than the former. We know that china has been deliberately attempting to engineer a slowdown in this economy. It just happened to be in the context of Global Economic activity slowing over the last couple of years until recent. And as a consequence, it has already had a backlash effect on so many other emerging Market Countries that are today much more reliant on exporting amongst themselves, particularly to china, than so to exporting to markets like europe and the United States. Within that context, though, certainly some countries have specific issues, some of which were named previously by the other guests. I dont think individually those countries are necessarily the cause for concern. This emerging market story is not new. Theres a reason why last year in 2013 where you had the s p up 32 , the e. P. Up 25 and emerging market index down 3 that was already signalling problems in the emerging market area. I think what we basically are seeing is after basically two to three months of economic surprises that kept mounting on each other, if you look at the Citi Group Economic Surprise Index thats gone parabolic since november of last year. Met the intersection of rich valuations. That combination took less than perfect news to trigger the most anticipated correction that anybodys seen in about 27 months. So david, you just talked a moment ago about negative davos think. Lets bring it forward to next week and see what you think the fed thinks is going to be. Because a number of people have been speculating that maybe several policymakers are look at this big selloff may dial back on their plans to taper back on these stimulus measures. What do you think . You know, i think the fed still overwhelmingly will base their decision on the dynamics internal to the u. S. Economy, but i think if you do have this continuing market volatility, that will definitely have a negative impact domestically. So i very much do think we could see a little more caution on the part of the fed policymakers, yes. All right. Quick thought, mark. Should i get out of emerging markets right now and just let this blow over . Got about 25 seconds. I think real quickly, emerging markets are the basket, yes. We are not constructive on emerging markets overall. We think its going to be a much more nuanced story on a go forward basis. We like vietnam, we like mexico, we like developing europe, i. E. Poland. But in the aggregate, to hold erging Market Equities we think there could be more pain yet still to come. Mark, david, thank you both so much. We really appreciate it. Have a good weekend. Thank you. Another Market Investors are paying attention to is puerto rico. 70 of all Municipal Bond funds have some exposure to the islands mounting debt. Now there are questions about whether it can ever be paid back. Michelle cabrera reports from san juan on the small island with big debts. Reporter seven years of recession, chronic deficits, lots of borrowing. Now puerto rico with a population of only 3. 7 Million People owes more than 70 billion. The islands bonds have been selling off sharply as investors free, fearing they wont get paid. Trying to turn the situation around, david chafey, chair of the Puerto Rico Government Development Bank and mel ba acosta, treasury secretary. We need a little time in the process. But clearly we have taken a significant amount of measures that should give people comfort we are well on our way. Reporter to raise revenues theyve raised taxes. Utility rates are up dramatically. Some water bills have doubled. To cut costs, government workers have been laid off, their Retirement Benefits cut sharply, leading to strikes and protests. Its unfair. Because if youre going to retire in two or three years and you are supposed to receive 2,000 monthly in benefits, and now you know you are going to receive 600 less monthly, its unfair. Reporter besides pension cuts, Teachers Union president says newly hired teachers will have to work until 62. Thats a dramatic change from once being able to retire at 55, and sometimes even as young as 47. And its not just the government thats under fire. Many clients of ubs are take legal action against the swiss bank which runs one of the largest Brokerage Firms here. They say they were put into closed and mutual funds that were inappropriately risky for them. Those closed end mutual funds contained lots of puerto rico debt. Marco and maria are brother and sister and have lost more than 1 million combined in the last year. They think they were misled by their broker. I write to him at 2 00 in the morning. Ive gained about 20 pounds and im very anxious. Im fighting all the time with my husband. Reporter in response, ubs says for more than 20 years, investors in puerto rico Municipal Bond and closed end funds received excellent returns that frequently exceeded the returns available through investments in other bonds or bond funds. But securities lawyers like jake zamanski are flocking to the island in search of ubs kufts mers. The customers told me the brokers said these were safe and conservative investments. They were never told these were risky investments, there was limited liquidity. Theyve lost everything once the bonds started collapsing. Reporter but puerto rico hasnt missed a payment yet, and there are still buyers of the bonds because the yields are so high, as much as 8 or 9 . Thats tax free to boot. But with higher yields always comes higher risks. For nightly Business Report, michelle carusocabrera, san juan, puerto rico. Still ahead, why this bonechilling winter across much of the country could also be an expensive one. Very expensive. Get ready to pay a lot more to heat your home this winter with much of the nation in the grips of another blast of arctic weather, the price of natural gas spiked to a multiyear high today. Sharon epperson has more on how and why the bills will add up. Reporter with the extreme cold, this years best performing commodity is bad news for consumers. More than half of u. S. Households heat their home with natural gas. And as well below average temperatures are expected to last into february, prices for the heating fuel are skyrocketing. Natural gas futures trading at the highest price in 3. 5 years, surging 20 in a week. And cash prices in the northeast have hit new records. The market was unprepared for this level of cold. And really, weve seen big drops in inventories which is really whats driving prices higher. Reporter the recent price spike could trickle down to consumers who are already expected to see higher heating bills this winter in a report released earlier this month, the u. S. Energy Information Administration predicted consumers would spend 665 on natural gas this winter. Thats 62 or about 10 more than they used to heat their homes last winter. Those in the northeast are expected to pay significantly more, spending over 1,000 to heat their homes this winter, about 150 more or a 17 increase from last year. But the severe cold is lingering longer than some forecasters had expected. So utilities that did not lock in prices before the winter and their customers could be in for an even greater shock. As a consumer, you really dont have any protection or way to know just whether your particular utility is one that is well hedged or one that is going into the winter short and therefore in a winter like this has to pay up to get gas in times of high peak demand. Reporter tradition energys Addison Armstrong says many consumers could be in for a rude awakening when they open their heating bills in march. Bristolmyers squibb beats but shares sell off. That is where we begin tonights market focus. Earnings beat estimates. But the drugmaker says it isnt ready to move ahead with a study for a new cancer drug, including one of its top prospects. The stock fell 5. 5 , finishing the day at 50. 94. Earnings out of Kimberly Clark and Proctor Gamble were also better than expected thanks to growth in emerging markets, cust cots and a bump up in organic sales helped kimberlyclark. Proctor gamble had positive results in all of its units except for beauty supplies. Shares of both companies were higher on this very down day. Look at kimberlyclark up nearly 3 to 108. 45. And Proctor Gamble up 1 , finishing at 79. 18. A recovering Housing Market helped Stanley Black and decker boost its revenues but restructuring charges demolished that increase. Earnings were off almost 90 . Thats because of millions of dollars in charges related to mergers and acquisitions. Shares slumped 3 to 77. 81. And earnings at Juniper Networks topped wall street estimates. The networking equipmentmaker credits the solid results to increased spending by its core telecom customers. Separately, Jana Partners has reportsedly taken a big stake in the company and is trying to get juniper to cut costs and return cash to shareholders. Both developments pushed up juniper stock to a 52 week high, up 6. 5 to 27. 82. Our market monitor tonight is david samra,morningstars 2013 International Mutual fund of the year an honor he cochairs with andrea okeefe. They have two fivestar rated and his International Entry is in the top 1 of its category over the past one, three, five and ten years. David, welcome. Good to see you again. Lets talk first about the e merging markets. And often when there are sharp selloffs as there have been this week, it points to opportunities to buy. Do you see that in emerging markets today, or do you think its kind of game, set and match there . Well, interestingly, tyler letter, what we do see are aggregate multiples that make those markets look very cheap. But we very much believe that that is a reflection of two different parts of the market. On the one hand, there are a lot of large cap governmentcontrolled commodityoriented businesses that look relatively cheap. But we think that the earnings power coming out of those companies as youre starting to see china slow down and Commodity Prices coming off are not reflective of what the normalized earnings power is. So we dont believe on a long term theyre very cheap. Now, below that you find Higher Quality businesses. There the valuations are still relatively high. Now, those are starting to come down now, and we are very selectively finding some opportunities. But on a broadbased basis we still think these markets have a long way to go before well find a broad swath of attractive investments. David, you talk about opportunities. A lot of times when you see these Big International selloffs, the knee jerk reaction of american investors is im going to stay away from nonu. S. Stocks. Yet you have a couple you say selectively will be good. Lets go down your list. Royal bank of scotland. Its trading now at about 11. 14. Tell us why you like this. Well, i think the backdrop here is the u. K. Economy, where under Prime MinisterDavid Cameron the economy has really turned around and is starting to grow now. Royal bank of scotland is one of the u. K. s largest banks. It has a terrific franchise but has been beaten down as a result of the financial crisis. And the company is still working through some of its losses. And as the economy starts to improve, as the Company Works through its losses, we see that the earnings should start to grow. The valuation here is what really pulls us in at 80 of tangible book. And it looks like to us its trading on about 5. 5 times normalized earnings. So from the target price perspective, we think it should trade at about ten times. And that will take a few years to come in. But from 5 1 2 times earnings to 10 times earnings you just about double your money on that stock over the next few years. The Second Holding of yours you like very much is tesco, the u. K. Retailer. Theres a british theme here, david. There is a british theme. And i thought it was appropriate in an environment like this to highlight that there are parts of the the developed markets that are improving today, and within the european context the u. K. Economy is out in front of that improvement. Tesco fits right into the wheel house. It is the largest food retailer. You can think of it as sort of a walmart of the u. K. It has very strong market position, about a third of the market. Its valuation is very cheap at about ten times earnings. And the valuation is underpinned by the fact that the company owns real estate that approximates the market cap. Lets see if we can squeeze in one more. Samsung and its not cheap, over 1,000 a share. Tell us about this. Well, cheap to us is relative to its earnings. Samsung is a global powerhouse in handsets, semiconductors and displays. And the stock trades at about 6 1 2 times earnings. If we can just get it up to a modest discount to where apple trades whos their major competitor it should trade on nine or ten times earnings and you should earn a very good return on that investment. David, thanks you very much. I assume all these stocks you mentioned are in your portfolio in one way or another. They are. Very much so. David samra, thank you very much. Manager of the year in the international category, Artisan International value and global funds. Thank you. You bet. Coming up, what some of the worlds business and political leaders are saying about the Global Economy as the World Economic forum comes to a close. Ceos attended this years World Economic summit in davos, switzerland. It just wrapped up today. Are drew sorkin has the story. Reporter the current falls on another davos. The big issues this year, the future of the middle east and inequality in developed nations. America succeeds by raising everybody up. It doesnt succeed by tearing anybody down. Its never better to make somebody poorer, even if theyre very rich. And the rhetoric of envy and the rhetoric of tearing down i dont think is the right rhetoric. At the same time, i think that there are many who are prepared to cry robin hood and socialism at the very suggestion that we need to do something about inequality. Reporter but perhaps the Biggest Issue was what to do about the emerging markets. Somebody said you take a position on the emerging markets and you cant change your mind for fill in the blank, one year, five years . However long not sure. Doesnt mean im going to feel good about the next sure, in the long run you have to bet on growth. And you see growth, education, mobility in these countries, basically the flattening of the world giving tremendous opportunity in these countries. Reporter and europe is now looking better. Weve been investing in ireland and spain and the u. K. And northern italy. Weve been pretty active in a lot of different areas in different Asset Classes there. And of course, being bullish on the american economy. The u. S. Economy is doing quite a bit better. The projections for growth are consistently rising in forecasts. The confidence measures are rising. Were seeing across sectors in manufacturing and services, even in constructions, good recovery. In places where the recovery has been slow coming out of this financial crisis, take construction, theres still more potential for improvement. We havent seen the kind of turbo charge that comes to the economy when you have really increased activity in construction. And i think everything is queued up for the u. S. Economy to continue to do well in 2014 and beyond. Its been a big week here in davos. A lot of big names here. The president of iran was here, as was the secretary of state john kerry. Bill gates was here, as was jamie diamond. For nightly Business Report im Andrew Sorkin in davos, switzerland. Andrew, turn off the lights in davos. Finally tonight, 30 years ago today steve jobs introduced the world to apples brandnew macintosh computer. It brought in a hefty price tag at 2500 a pop when the Median Household Income in this country was a little over 22,000 a year. Think about this. If you spent that 2500 in 1984 on apple stock, with one share going for just 3 a piece, you could have now 450,000. A 15,000 increase. Who would have thought those personal computers would be so personal to us . I wonder what one of those original computers would be worth today. Probably a lot more than 2500. Thats nightly Business Report for tonight. Have a great weekend, everybody. Im susie gharib. And im tyler mathisen. The same for me. Thanks for watching. Well see you back here on monday. Nightly Business Report has been brought to you in part by the street. Com. Founded by jim cramer, the street. Com is an independent source for stock market analysis. Cramers action alerts plus service is home to his multimillion dollar portfolio. You can learn more at the street. Com nbr. Its all right, its okay doesnt really matter if youre old and gray its all right, i say, its okay listen to what i say its all right, doing fine doesnt really matter if the sun dont shine its all right, i say, its okay were getting to the end of the day just tell me that again, please. I recorded commander embleton saying he was responsible for Anthony Kayes death. And you have since given that recording to Anthony Kayes mother . I thought we were done with embleton. I was there when you told him he wasnt worthy of your attention