Performer behind utilities. And while most strategists arent expecting much from earnings season they say the news wont be all bad. Especially when it comes to the banks. Dominick chiao takes a look at what to expect and why this group is so important to investors. Theres a reason why so many investors care about what happens in the Financial Sector that sector is the second most heavily weighted one in the entire large cap s p 500 index. Financials are expected to be a bright spot with the highest anticipated Earnings Growth of any sector out there. There are a number of things working in their favor. The key tail for financials is really rates. And the expected rising of rate environment. If you look historically at the last four rate hike cycles. Financials outperformed the overall market. That makes sense. A particular insurer should benefit from a rising rate enenvironment. A host of big cap names will report later on this week and next. Including jpmorgan chase, wells fargo, bank of america, Goldman Sachs and city group 37. And every analyst has their favorite. I like morgan stanley, given the fact that theyre changing more to a wealth oriented business m half of their earnings is coming from institutional opportunities. Its not all positive for the big Financial Companies in america. There are significant hurdles to overcome. Its clear that regulation the increased Regulatory Environment were in really is a significant head wind for financials. Its going to impact some financials more than others but its certainly something that could be a speed bump for financials goingforward. Most of the largest Financial Institutions out there report earnings early on in the season. Well get a good idea of how the sector looks over the next few weeks. For nightly Business Report im dominick chiao. Eric wasserstrom joins us now with his take on what to expect when the banks start their First Quarter earnings this week. Eric welcome, good to have you with us were delighted you could join us tonight. Overall, you think that the Bank Earnings will be mezza, mezza, one part of those banks will do better than others. Which is it and why . Well i think that the banks that are more concentrated in the carpal markets base are probably going to do better this quarter. As you point out, the quarter contains some good elements and some poor elements one of the strongest elements has been Capital Markets results, the brokers should reflect that we think. Who do you like as an Investment Strategy for the longer Term Investor who wants to play in the financial arena. Sure so the my topic in this space remains morgan stanley, its exposed to this quarterly trend, the secular story there is pretty good. And we also like some of the other larger banks that we think are positioning themselves for better longer term growth such as bank of america. Bank of america, goldman, i assume would be one that you would like as well because of its exposure to the Capital Markets . This quarter, i think goldman is longer positioned. The longer term story is a bit tricky with the Global Economic outlook still somewhat cloudy. Goldmans going to do quite well. How much of this is predicated for the larger banks, not necessarily the goldmans of the world, but on higher interest rates. We know that the fed or we suspect anyway that the fed might take a little longer time after some weak data points before they start to raise rates. After waiting for several years it looks like we may wait some more. Our outlook is not especially predicated on higher rates. Although i will say i think that creates a risk for this group in terms of the consensus earnings outlook, for next year is calling for a rapid acceleration in Earnings Growth. Where are the weak spots eric who do you are you watching . The weaker spots are among some of the regional banks where theyre rate sensitive, the hope or maybe the expectation was they would get that benefit, and also several of those names, particularly in the southeast and southwest have exposure to the Energy Industry which is coming under stress with the decline in the price of oil over the past two quart thank you very much eric we appreciate you being with us. Thank you very much. And sticking with earnings late today, Norfolk Southern warned its profit and revenue for the First Quarter will not meet expectations. The railroad citing reductions on surcharge revenue and reductions in coal shipments. The company is expecting overall volumes to recover in the second quarter, apart from goal. That sent shares lower in afterhours trading. On wall street stocks started the week on a dip. On concerns about the rising quarter. The down day followed two consecutive weeks of gains. The dow jones was off 80 points to 17,977. Nasdaq which had been above 5,000 earlier in the session, ended up lower by 7. And the s p 500 declined neighbor points. Chinas exports collapsed by an unprecedent eded collapse. Some say the decline, which was the worst in about a year could increase worries about how that countrys rise inging yuon has lagged. The budget deficit widened slightly during the first fiscal year. Spending on Social Security and Health Services increased, the total deficit of around 440 billion for six months up about 6 from the same period a year ago. As spends outpaced a revenue figure and that means the taxe despite that rise deficits are still near their lowest level in six years, and that prompted fitch to reaffirm the United States aaa credit rating. The narrowing of the budget deficit from a peak of 1. 4 trillion in 2009 as well as expectations that it will continue to strength. The strength of the nations economy and its Capital Markets. Off and running, marco rubio of florida threw his hat into the president ial race just one day after Hillary Clinton made her run official. And both have very different ideas on the economy and policy. John harwood usually reports for us from washington were happy to have him here in studio tonight. John good evening. Lets talk a little built about the economic approaches of the various declared candidates. Hillary clinton yesterday seemed to make income disparity the middle class Income Growth her basic basicthrust. That basically where shes going. There was a report that came out from a think tank linked t tha is suggestive of where its going. Spending money, education, infrastructure job training but also requiring business to do more to cut workers in to the profits that theyre making profit sharing, ways in which people can buy stock in companies that theyre working for. A way to figure out t take an economy where corporations are making profit but workers arent getting wages, make those two go together. What about the republican candidates that are out there and running, what can we expect to hear in terms of economy and the deficit and taxes and all those key top line items . Theyre also focusing and making a point of saying middle class incomes are stagnant theyre going to fwoek us on inequality much different solutions. Marco rubio getting in the rate today has a massive tax cut that he acknowledges would expand the deficit. He would elimina the estate tax, the Capital Gains tax, lower the top rate to 35 , lower the business rate to 25 . And it would provide a lot of tax relief at the top. Also for the middle class, the question is are people willing to accept an expansion of the deficit . Hes going to test that . Is he a classic supply sider in that sense . Lower rates concede that tax revenues are going to go down in the short term theyre going to get better growth out of it in the long term . The preferred term right now, is a growth republic. Republics are contrasting themselves with democrats by saying we are going to be the party of Economic Growth theyre the party of redistribution. Youll see that throughout the republic field, and marco rubio has a chance to make a mark in this fie. Dont presume that president obama will automatically throw his support behind former secretary of state clinton in this president ial race. It was an interesting comment from him. Well its hard for him to do that at this point when his Vice President is still formally thinking about it exploring it playing with the idea. I think at the end joe biden will not get in a race against Hillary Clinton, but until thats made clear, president obama is going to take some hands off. John great to have you here. Sur. Now to executive compensation. A preliminary look at the ceo pay at some of the countrys biggest companies, finds the pay at the highest levels of Corporate America keeps going higher. Mary thompson reports. The biggest money for ceos is in tech and media. With all the technologies and significant improvements they bring to American Life i think investors are willing to pay those folks. A preliminary look at the pay for the ceos by revenue found microsofts new ceo taking home over 84 million in 2014 thanks to his 79 million stock grant. Oracles founder and chairman pulling down 67 million. A huge number but 14 less than in 2013. The numbers, courtesy of sec filings, called by the executive Research Firm looked at firms filing their proxies by april 3rd, the findings put qualcomm in the number three spot with a more than 60 million paycheck tied to an option award. Number five cbs healths larry mur low took home just over 24 million. The early survey shows median ceo pay rose 5 last year to over 14 million the average showing no change at close to 16 million. Professor Robert Jackson saying the increase reflects the adoption of pay for performance. American corporations have performed well in the last two or three years for a variety of reasons. Big names with big paychecks. Ceos, firms, whose revenues are too small to be included in the top 100, or firms that filed their proxies too late to be incl. This includes discoveries, taking home 156 million, he would have been at the top of the list. With discoverys revenue just over 6 billion, its too low to put it among the 100 biggest firms. Less moonves missed the cut as. Still with the pay package of over 57 million, moonves will sure to be at the top of the list when the final one is published in may for nightly Business Report, ion still ahead, why the best rated airline among consumers may not necessarily be the best in. Heres something that may not surprise you, especially in you fly a lot. The performance of airlines has dropped once again. The latest Airline Quality ratings show carriers landed on time and caused more flyers to file complaints with the federal government. Phil lebeau has the best and worst airlines. Flying frustration. Travelers in the u. S. Are getting squeezed by cramped planes and more delays. And they dont like it. The experience isnt always great because they keep putting more and more seating in there. And then some of the airlines charge you for a seat with more leg room. I think the prices favor the airlines that doesnt really favor the passenger, the quality, it really doesnt favor the passenger. Airlines did worse in all four areas measured by the study. Including on time aivals, mishandled bags and customer complaints. Why . Since merging a few years back airlines have packed more seats into fewer planes. While charging passengers for services that used to be free. Like changing a ti. This year, for the Third Straight year Virgin America ranked as the top airline, followed by hawaiian delta, jet blue and alaska. At the bottom were regional carriers envoy, express jet and skywest. Right behind united and frontier. Dont expect this study to dramatically change how airlines operate. Theyre profitable and investors like it take united it may be the lowest rated major able. But over the last six months its stock is up 48 . Phil lebeau, nightly Business Report chicago. The new York Attorney general is taking aim at a handful of taylors. Eric schneider man is examining how 13 major chains schedule their workers and wedge their use of socalled on call scheduling violates labor laws. On call shifts require employees to call employers the day before or the day of a potential shift to find out if theyll be needed to work. If employees are not needed they dont get paid. Theyre required to pay workers for at least four hours if they report to work. Even if they are then sent home. We placed calls to all 13 of the retailers of the responses target and sears dont really use on call shifts. Jcpenney Burlington Coat says its scheduling practices are fair for all employees. Its committed to establishing sustainable scheduling practice. Protesters crashed an Investor Conference today in new york. The union group called the hedge clippers specifically called out activist investor of pershing square. Who until recently was an investor of burger king and jeff smith which owns a steak in darden. The protesters want 15 an hour pay for lower level workers. An activist investor who attended that conference in new york is targeting qualcomm and that is where we begin tonights partner focus. Potentially spinning off its chip unit from its patented licensing business. Barry rosen stein says he sees a lot of value in the company. We made our biggest commitment to a company that has tremendous potential and tremendous value opinion this is an opportunity to inve in a Market Leader high quality company, dominant company, and a fast growing cell phone, mobil smart phone space. Shares today off slightly to 68. 73. The apple watch could spell trouble for fossil and movado. Apple could sell more than 20 million apple watches this year which would be nearly half of the market for watches, worth 200 bucks or more that certainty shares of fossil down 4 to 81. 89. Movado off 2 to 30. 73. Apple down 2 today. It was down also i should say down 25 cents to 126. 85. Builders first source is building its rival Building Material for more than a billion and a half dollars. Last year the companies had a combined revenue of about 6 billion. Shares of Builders First Source sored to 11. 57 and pro build is privately held, sue . Another deal to tell you about. That transaction is structured as a merger of equals and will recrete a gold producer with a market cap of about 1. 5 billion. This comes as the smaller minors are looking to offset a drop in gold prices. Shares of alamo bopped nearly 7 to 6. 28 rico was already 9 higher closing at 3. 25. Ups plans to invest over 1 billion to expand its european Package Delivery network, thats according to reports, this comes a few days after fedex announced it will buy a dutch Package Delivery company to expand in europe. Shares of ups were off a bit to close at 96. 15. Sears has struck a 50 50 joint venture deal with mall owner Simon Property group. Lease them back from simon. Its an attempt by sears to cash in on the value of its real estate. At the start of National Retirement planning week you know its National Retirement planning week folks. A new report sends a warning about how unprepared many boomers are for their golden years. Sharon epperson here with a Retirement Reality check. The reality isnt so good. Boomers are really unprepared. Theyre unprepared theyre not saving enough. Oath 60 of them are saving something for retirement. 40 have no retirement savings. In terms of having 250,000 saved or more. Only 19 are doing that. A lot of them are undersaving, what theyre relying on is Social Security becat saved enough on their own. Theyre not looking at iras or 401 k s really. Are there certain changes theyve been making that perhaps are going to help them or not . Maybe theyre not making any changes. Theyre not adding to their savings. People want to know what they should be investing in for retirement rather than how much should they be saving. Thats really critical for people. Particularly boomers who may not have saved enough. Theyre not working with someone to help them along the way. And the only thing that were finding is that theyre thinking its still going to be enough. It might be if they have a different style of living. The realities with medical expenses many are going to have to postpone retirement. You raise two questions there are they going to have to work longer and what does this mean for their lifestyle, presumably baby boomers have lived for the now. Its been the me againgeneration the now generation. Many youve saved enough if youve already paid off your mortgage if your kids are now grown and you dont have to pay for College Education for them. Maybe youre going to be okay if its just you and your spouse and youre relatively healthy. You dont know for sure. You dont know how long youre going to live and so the key is really to save and save more than you think youre going to need. And even once some of those big expenses are done with you may still have to keep saving a little bit. I know i know. Mortgage kids. Well see you back tomorrow night with some final tax tips with one day to go. Thanks sharon. Coming up recovery in ferguson unusual signs of progress for Small Business owners in a city that was torn apart just months heres a look at what to watch tomorrow earnings season will be in full swing. Jpmorgan wells fargo, johnson and johnson and intel all reporting. Well have the details. The latest retail sales numbers, are consumers actually spending theyre saving on gas. Another data point, the produce price index is out, and its an important inflation indicator. Thats whats on the agenda for tuesday. Pepsi will replace coke as the official sponsor. Cocacola has been the nbas partner for nearly three decades, they decided not to renew their contract for the upcoming season. With this latest deal pepsi will have sponsorship deals with all the major sports leagues, including the nfl, mlb and nhl. Months after violence and looting ripped apart ferguson missouri. A few days ago, the city started tearing down those buildings that were destroyed. Thats not a bad sign it means that Small Businesses are one step closer to rebuilding. Kate rogers has more from fergus ferguson. It may not look like it, but this is progress. In ferguson missouri Small Businesses are tearing down to rebuild. After months of unrest, following the shooti death of michael brown, 250 businesses were impacted in ferguson and neighboring del wood and now burned out buildings are being demolished. This demolition is taking place thanks in part to a program from the st. Louis Economic Development for Business Owners like Juanita Morris this is an important step forward. Moore has raised 23,000 to open a new store in the city but shes committed to coming back to her old lot and keeping her new store. That was horrible when the feeling that i felt when i saw the building burn. But as i saw the building coming down i felt like okay youve cried enough over this so lets move forward. Hidden treasures antiques owned by Denise Andrews was also hit hard during the riots. However, months without a store hasnt kil. Ive been working toward being able to open back up. Its helping me realize my dreams again. Once the demolitions are complete many businesses plan to return to their locations in the coming months. After so much pain and unrest this is welcome destruction in ferguson. For nightly Business Report in ferguson missouri im kate rogers. We know with sadness tonight, the death of veteran Business Reporter ken pruitt. I was a fixture on Bloomberg Radio in the mornings. Before that he worked on television for cbs and abc news and on radio in new york for wcbs. He was a friend a flawless broadcaster and as Michael Bloomberg described him, 5u8z a gentlemen. He died over the weekend in new york city of cancer at age 68. I worked with ken back many many years ago, i learned a lot from him. Absolutely he was passionate about his craft and trade, and i you know he was just very careful, absolutely fan daftic editor which is always important. Terrific guy. That does it for nightly Business Report for tonight. Have a great evening, everybody. Well. Rnes and noble is pleased to support miss fishers murder mysteries on public televsion. Barnes and noble has a smart selection of books educational toys, games, music movies and our Award Winning nook tablets and ereaders. Visit your local barnes and noble today or shop online at bn. Com. Acor n proudly presents miss fishers murder mysteries. [ hinges creak ] you. We need to tal k. I know what youve been doin g. I kn ow everything. The game is up. [ grunts ] [ breathing heavily ] [ creaking ]
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