Spooked investors and the major stock averages fell sharply. While worries about a possible russian invasion pulled down stocks, treesryes rallied and tenyear note fell to the lowest in a year. Stocks recovered a bit. Here is a run down to the closing numbers. The dow lost 50, a dramatic rebound from a triple digit loss early in the session and the nasdaq added 12 and s p off a fraction. For the week, all three averages higher. Its best weekly gain since may and the s p up more than 1 . Over in the bond market, investors turn to safe haven u. S. Treasuries and the yield on the tenyear fell to 2. 34 . Michelle has more on the latest developments in the ukraine, russia conflict. Reporter the markets demonstrated again today of the geopolitical concerns out there, the one most worrying to investors is the situation between russia and ukraine. Thats because russia is such a large economy, its one of the biggest suppliers of energy in the world and has deep trade ties with western europe. Every time there is an escalation between russia and ukraine, we see the west increase sanctions against russia and while that has hurt the russian economy as intended, its starting to hurt the western economy. Particularly germany. They warned that exports to russia declined sharply. Its not a huge part of the german economy, but when weve just seen german gdp come out negative, suggesting perhaps that country is going into recession, its one of the last things the western european economy needs. Thats why when we see a situation like that that erupted today shs we see investors run from stock and buy the swiss frank and u. S. Treasuries and also why when we seen Vladimir Putin, the president of russia make remarks, we seen the u. S. Market rally. Its unclear if investors will continue to believe him if he says those things in the future. Stocks were not the only investments affected. The price of oil, wheat and other commodity spiked today. Oil up nearly 2 a barrel. Wheat prices advanced two bucking the trend gold which initially moved up but settled at a tenday low. Jackie deangelis has more on how commodities were impacted by todays unrest in ukraine. Reporter prices on both sides of the atlantic reacting to the news out of russia and ukraine of increased tensions. West texas intermediate and brent crude with gains of more than 1 . The worry is if the situation intensifies, they cant react. The market felt too bearish overall and there was buying of recent dips. On a relative basis, crude on the lower side because of over supply. The global output is up as the u. S. Is producing more oil and international output hasnt been affected. Crude lost more than 3 closing today above 97 a barrel but well under the 100 a barrel mark. Other places impacted including gold which managed to recoup some early losses to get back over the 1300 level but gold typically used as an inflation hedge didnt move to positive territory saying inflation will be subduped until 2018. Wheat and corn did spike on gio politics. Gains of 3 and 1 respectively because ukraine is the worlds fifth largest exporter of wheat and third biggest exporter of corn. For night blitz report, im jackie deangelis. What does this mean for you and your investments . Jeff rosenburg is chief investment strategist for fixed income black rock and chief investment strategist at raymond james. Welcome to the two jeffs tonight. Let me get the conversation, jeff, a week ago last friday we got the nice comments from Vladimir Putin of russia and the stock market rallied and stock investors were happy. This friday, just the opposite. More money going into bonds. Who has this right . The people putting their money into stocks or bonds as this Russia Ukraine situation develops . Well, typically the bond market is smarter than the stock market. In this case, its a flight to safety. The german tenyear bond dropped under 1 yield. So on a competitive basis, the funds into our treasury market make sense to me but the economy is recovering except for retail sales we had this week and i think stocks are a buy on any dip from here. Lets go to fixed income, jeff, Jeff Rosenburg of black rock. I think we kind of know why bonds rose in price down in yield today and in prior days but lets move the film forward into next week. What do you expect and specifically, what do you expect out of the jackson hole conference where ms. Yellen and several bankers will be . Its been a general conversation so far talking about bonds and talking about stocks, but what were not talking about is really which bonds have benefits and the key here is, you know, historically when investors think about flight to quality, that benefits a short erma tourer maturity bo. The flows are going into the long curve because of zero Interest Rates and a flight to quality in the front end of the curve. The move is on the back end. What do we expect next week . Its hard to predict what is going to happen in ukraine. Any alleviation of the concern, youll see some of this back end, long er maturity come off little bit as you relief some of that flight to quality bid that we saw. That depends on what happens in the geopolitical situation. The question about jackson hole, thats about expectations for fed policy and impacts short shorter maturity bonds. What i expect next week is for janet yellen to reiterate what shes been saying all along, that the labor Market Recovery is not fully or sufficiently in place for them to begin contemplating tightening Interest Rates. Youll hear a dubbish message. What do you think about that . Let me ask the question and frame it a little differently. If these geopolitical events are not a factor, would we see this action with bonds, or is the there something going on in the treasury market and u. S. Economy that gets so many bond market fans . I think its purely a flight to quality. I think its a competitive yield basis from around the world. You know what the yields are in japan. You know what happened in germany. Almost assured hell continue in essence a quantitative easing policy. That takes the eros down against the dollar. The strengthening dollar is positive and very positive for u. S. Stronock. I want to get in touch with my inner geek without getting too technical. Because longterm Interest Rates are coming down because thats where the flight to safety is taking it and you have a flattening curve, that typically signals something wrong in the economy and when the yield curve inverts, its usually a sign of a recession. Do you see that . No, and you know, its a very good question, tyler and one in the context of stock investors versus bond investors. Its very important for investors to understand what is different this time when you see the flattening of the year old curve, the differential between longterm Interest Rates narrows shortterm Interest Rates. Typically, thats a recessionary sign often interpreted as bad news. Be careful about using that typical interpretation this time. The reason being, youre at zero Interest Rate policy. There is really no room for the front end of the room curve to go down. I would say the flattening of the year old curve youre seeing today is very different, its not as negative of a signal as you would typically attach to the bond market signal for equity market investors. Its about much more of flight to quality issues, the relative yield story and low yield environment, tenyear Interest Rate yield 30 and coke rose 2 . Morgan brennan has more on the coke monster deal and what it could mean for the beverage business. Reporter cocacola will acquire a 16 stake in monster beverage. The deal includes exclusive distribution and the swapping of certain brands with monster receiving almost 2. 2 billion in cash. Analysts say this could help cocacola jump start the lackluster growth. Sales of soft drinks, 70 of cokes business have continued to tumble as more consumers choose healthy drink options over soda. Between Green Mountain and monster, what youre seeing is an admission that they need to shift focus. Reporter earlier this year, cocacola increased stake in single serving coffee maker kerig. Its a market that attracts a new kind of customer. Monster is the energy drink leader accounting for 40 of market share. For its part, monster will be able to access countries like china and russia where it doesnt already have a presence. On an investor call today, the ceo said the move will enable monitor to be a Energy Drinks company on a global level and turned sacks and the president of the company into billionaires but what about the competition . He has a partnership with rock store, which is a distant, distant number three player. There wasnt much they could do to catch up other than support it or try things like yellow mellow or Energy Drinks. Im not sure pepsi will react much to this one. Reporter this deal expected to close by early 2015 does have the risk, most notably increased energy drink regulations as monster faces lawsuits tied to the advertising practices and injuries allegedly caused by its products. For nightly Business Report. Im morgan brennan. Still ahead on the program, why the once hot restaurant sector fast casual is not so appetizing for food and investors coming up. More trouble for fedex, the delivery giant is facing charges including conspiracy to launder money from the justice deputy. You may recall last month fedex was indicted for conspiracy to distribute controlled substances by delivering drugs from Online Pharmacies which critics say often accepted dubious prescriptions. Fedex says its innocent of all charges. Shake shack, the burger and milk shake chain may go public. The upscale restaurant that began with one kiosk in a new york city park just a decade ago is currently preparing its paperwork for an ipo. Shake shack wont confirm it, but if the ipo is anything like a shake shack location, you wont be able to get in. Some other big name eateries havent seen the same kind of enthusiasm as shake shack lately thats leaving diners and investors what is leading the fast cash industry. Reporter americans love to eat and they have loved eating up just about every new restaurant going public, especially those in the socalled fast scasual segment. They basically globbled them. They werent taking into account some of the differences both from the Human Capital and Financial Capital aspects. Reporter now many investors are going on a diet shedding shares as chains disappointed. Noodle shares are down 40 , pot belly 50 and pa nnerra is down. One reason, americans have a lot of choices. Pf changes. Chipolte. Starbucks. Reporter the lines are blurry on what is fast casual. It usually means Higher Quality prepared on site with Minimal Service at a good price. Many food trucks are saying were doing that. Places like wendys are making over stores to look like chipol chipolte. The only clear winner remains chipotle that sees traffic grow as they raise prices. Restaurant startup says ethnic foods will out perform in burger and fries. When you see a Restaurant Company go public, a lot of time the passion gets disbursed and you have false money that allows you to expand quicker than maybe you should. Reporter perhaps the best advice comes from a man whose made a fortune feeding people. Dont get caught up in the hype. This is food. Take a look what is behind the curtain and see who is making the decision and cooking the food. Reporter food for thought, jane wells. Disappointing earnings from another retailer is where we begin tonights market focus. Dillards saw the Second Quarter profits drop. The Department Store operator blamed increase discounting for the weak performance. Shares slumped, down 8 to 106. 11. Possible data breach at super value may have impacted as many as 200 of the grocery and liquor stores. The retailer is investigating the matter and says the breach appears to have taken place from june to july and was possibly the result of Malicious Software installed by hackers. Shares down 3 to 9. 31. Deer announced its laying off more than 600 workers at four plants. This comes as falling grain prices have hurt demand for deer tractors and other agricultural machinery. Youll remember on wednesday, the Company Announced a drop in Third Quarter sales and cut the profit outlook for the full year. So shares were off slightly today to 84. 80. Shares soared today because the hepatitis c drug performed well in a new study showing no levels of the virus in patients after four weeks. The drug was used in combination with the 90 success rate but the drug is controversial since it costs 1,000 a pill. The stock popped 9. 5 . Our market monitor says were in a rip roaring bull market despite concerns about ukraine and russia. Hes chief investment officer. Marty, welcome. Lets make our audience some money tonight, shall we . Always up for that. All right. Lets start with your first pick, which is carlisle group, why . Carlisle is a big Global Asset Management firm. They manage Something Like 200 billion for some of the biggest pulls of capital, big pension plans. We like carlisle because pure valuations and we think its a growth vehicle. They are the best in class operator. Carlisle earns money three ways. They get an Asset Management fee like some of the other firms that your viewers might be familiar with but get whats called an Incentive Fee thats called carry where they get to share in the underlying profits and thirdly, what they do is own some of the invest thes underlying the portfolio, as well. Thats another way they can earn money. Carlisle is trading at around 10 times earnings. The dividend yield is 2 , however, every year that carry that i mentioned is paid out to shareholders and last year, it worked out so that as a shareholder at current prices, your dividend yield is 5 3 4ths percent. We think thats attractive. Finally, its a 30 discount to the book value. Okay. That sounds good. Lets talk about your next one, aqua america, this is a water firm, wtr is the ticker symbol, which makes sense. Why should somebody buy this at 24. 39. It also looks expensive because its trading at 20 times earnings but averaged higher over the last 15 years every year. As the dividend yields 2 3 4ths. Its a predictable growth story. They have the organic business thats supplying water to consumers in pennsylvania and other areas, however, the great opportunities that 85 of the Water Systems in this country are muni nice p municipally own. The advantage is buying the Water Systems from municipali municipalities from cash and buying them cheaply and investing in the systems making them world class and getting regulated return thats attractive. We think they can grow 8 to 10 both through a dividend and earnings. Lets move to the third choice, a Little Company not many people would have heard of, marty . Yeah, ibm is much aligned, perceived as a no growth story and the earnings compounded by 13 over the past five years and 14 over the last ten years. They are selling cheap, cheap, cheap 9 Free Cash Flow yield that gives them a lot of money to reinvest in business but as to pay out a dividend and buy back more stock to continue to shrink the share count. What ibm is not given credit for, its one of the most Innovative Companies on the planet. Every year they are either number one or number two in terms of the number of patents awarded to them by the u. S. Patent office. Lets get disclosures, do you or your family members own any of these companies personally or in funds . I own all three personally as do my clients and family members. Thank you, appreciate you being with us. Have a good weekend. My pleasure. Coming up, beyond stocks, a look inside the revved up market for collectible cars. If your taste in cars runs high, spending millions to asquare rare or antic autos, the pebble beach auction is for you. Are prices too high and could there be a bubble brewing in the car market . Selling the car, youre finished. Last chance. You own the car. Reporter fast and furious, prices for collectible cars hitting alltime highs and raising questions whether were seeing a new bubble forming in vintage ferrara s and classic cars. Last night this ferrara was the most expensive carous ever sell for 38 million. When you buy a gto you gain access to the most exclusive auto club in the world, only 36 owners and if you dont want to spend 50 million to join, you can get one of these. A gto replica that will only cost you 50,000. The ferrara kicked off sales here at pebble beach which is woodstock for car collectors. Cars up from 300 million last year. The boom will keep on going because cars are scarce and the world is creating more collect tors. The car market is at an alltime high but i dont believe it should be a bubble at all. Its not the entire car market that prices have risen, just certain sectors of the car market. Its just the beginning for the very, very Upper Echelon of auto mobiles. Jay leno, the comedian and car collector himself says the collecting world diversified. There is a guy in saudi arabia that buys every Ashton Martin and has 212 of them. When they come up, he buys them. Thats just that collection. Exactly. Americans used to have all the money. The guy from texas with the big cigar. Thats replaced by chinese and saudi arabia. So its different, you have to compete on a world market. There are some warning signs, flashing on the dashboard of this market, dealers and specklators are starting to pour in and flip cars for multimillion dollar profit in a year or two and lots of buyers are new, new money is not always the smartest money, but at least for this weekend, it looks like the collectible car boom will keep on rolling. For nightly Business Report, im robert frank in pebble beach, california. Real works of art. Beautiful, beautiful, beautiful. Thats nightly Business Report for tonight, im susie gharib and we want to remind you, this is the time of year your Public Television station seeks your support. Im tyler mathisen. On behalf of your public tv station, thank you for your support. Well see you back here monday. Have a nice weekend. What was she so nervous about, then . Oh, god knows, troy. Its this bloody village. Remember last time . Nobody will ever tell you the truth. Dci tom barnaby detected his way onto our Television Screens in march, 1997. Find out what calls miss simpson made after 6 00. So youre taking it seriously then, sir . No, troy, actually, im just filling in time until tea. Right
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