An economic number tells investors the coast is clear. But this week the market has been tough to figure out. There were the paris attacks exactly one week ago and a fresh terror siege in mali today. More on that in a moment. And add to those jolts increasing fed chatter this week, pointing to not aInterest Rate hike less than a month from now. Usually not the best of recipes for stocks. Yet up stocks went today and this week, and by a lot. In fact, for the s p 500 this was the best week in more than a year. For the nasdaq the best since july. Here are the numbers. On the day the Dow Jones Industrials gained 91 points to close at 17,823. Nasdaq added 31 and finished at 5105. And the s p 500 rose 7 to end the day at 2089. For the week the industrials gained about 3. 4 . Nasdaq was up 3. 6 . And the s p 500 rose nearly 3. 3 . The dow and the s p are now positive for the year, joining nasdaq. Mark luchini joins us now to talk more about this weex stock market activity and what we can expect going forward. He is chief investment strategist at Janney Montgomery scott. Good to see you, mark. Welcome back. Thank you, sue. You know, ty so perfectly laid out what happened this week. Are you as surprised as some others are that the market performed so well against a backdrop of terror and other issues . Well, it was a little bit surprising. Obviously, investors had the whole week to contemplate the economic ramifications of the tragedy in france that was friday night, and of course we also were able to take our cue from overseas markets opening up sunday night into early monday morning. And the muted effect i think gave investors some confidence that it would be an opportunity to continue to buy equities after the week before where the market was down about 3 1 2 . So it kind of set up for a bit of a rally and of course it was only compounded on by the fact that the news from the Federal Reserve was that likely even though they may raise Interest Rates the subsequent glide path is going to be extremely shallo which gave investors confidence that its not going to derail the equity bull market. From what you were just saying, mark, it feels like you think there is maybe more up side from here. Of course we can never figure in headline risk of the sort weve seen over the past couple of weeks. Absolutely, tyler. Barring obviously the unforeseen, i think the bias is for the market to continue to work higher. I think were in the midst of a seasonal time of the year in which equities typically do rally, particularly in a short holiday week like next and of course into christmas. But in addition to that i think investors look around and realize theres no alternative for riskbased capital in the equity markets. Corporate earnings, while mixed, are pointing to improvement in 2016. All right, mark, have a great weekend. Well leave it there. Thank you for joining us. Thank you, sue. Mark luchini with Janney Montgomery scott. To the economy now and the job market. The rate of unemployment fell in 32 states last month as employers picked up hiring. According to the labor market, california and florida saw the biggest job gains. The jobless rate rose in just three states and was unchanged in 15. And ty, the firming labor market is one of the reasons why many are predicting the Federal Reserve will raise rates at its next meeting in december. Today the president of the new york fed said the economy is in good shape and that it may meet the criteria needed to hike rates in the near future. And now to paris, where one week after those deadly attacks the country of france deals with yet another terror crisis, this time in the northern african nation of mali. Michelle carusocabrera reports tonight from paris. Reporter a hostage siege lasting more than nine hours left at least 27 people dead including one belgian diplomat and five attackers in the capital city of mali overnight. An unknown number of gunmen attacked a Radisson Blue Hotel at about 1 00 in the morning and at one point held 170 hostages. The news gripped france, still reeling from last fridays terror attacks. French troops have been in mali since 2013, when they invaded the northern part of the country to fight off islamic extremists who were trying to take over mali. Under president Francois Hollande france has had an aggressive antimilitant military policy in north africa. Back here in paris the French Senate voted overwhelmingly to extend the state of emergency to three months and to give the state much more power to fight terrorism, including the power to conduct searches without a warrant, the power to block internet sites that are deemed to incite acts of terrorism, public demonstrations are banned and organizations considered dangerous can be fully dissolved. Anyone suspected of posing a threat can be put under house arrest for 12 hours and can be electronically monitored to make sure they remain where they are. Today marks one week since the attacks on paris, and parisians continue to mourn. In front of the bataclan theater a gentleman arrived with a piano to play a song in honor of the dead. We also learned today the death toll has risen by one. 130 people died as a result of the attacks one week ago. For nightly Business Report michelle carusocabrera, paris. Following the paris attacks, investigators are examining how the terrorists communicated. One theory is that they may have used devices with ultra secure messaging tools. And that is intensifying a standoff between Silicon Valley, who are in favor of strong encryption, and Law Enforcement. Earlier this week attorney general Loretta Lynch addressed that issue. For us this is an issue in which we recognize not only the importance of encryption but the need to do everything we can to protect the american people. And as we stated, we are pursuing a number of options. Were in discussions with industry looking for ways in which they can lawfully provide us information while still preserving privacy. Daniel wiesner, director of m. I. T. s Internet Policy Research initiative, joins us along with eamon javers. Gentlemen, welcome to you both. Daniel, let me start with you if i could. The attorney general and others have called on Silicon Valley to give them access to some of these ultra encrypted areas. Under the auspices that terrorists have an advantage over us. But push back against that argument. Well, i think that any company thats providing a service to the public wants to cooperate with Law Enforcement and be as helpful as possible, especially in times like this. What we looked at from a technical perspective is the question of whats a smart way to do that. If we open up back doors for Law Enforcement, if we dumb down our Encryption Technologies so that its easier for Law Enforcement to get access even with a warrant, what we found is that were going to create insecurities that are going to be spread throughout the infrastructure we depend on. So this is not really a question of privacy versus security. We have a lot of debates about how much authority Law Enforcement should have or shouldnt have to get access to private communications. This is a question about security versus security. If we open up a back door for Law Enforcement, criminals can go through that same back door and terrorists can go through that same back door. Eamon, i dont intend for you to debate mr. Wiesner, thats not your role, but do tell us what the position of Law Enforcement, most especially federal Law Enforcement, the fbi, would be in response to what mr. Wiesner says. Yeah, look, fbi director james comey has been talking about this for over a year now. He calls it the going dark problem, the problem that Law Enforcement has when theyre going after a particular device and they suddenly cant get access to the Communications Inside that device and the Company Involved cant get access to it either. He says that the problem for Law Enforcement and to the point daniel just made, what the fbi director would say to that, is they are confident theres a technological fix to that. Silicon valley might say hey, we know a lot more about technology than even the fbi does. But Law Enforcement feels this is an absolute must have piece of access in order to get into these communications in a modern day and age where terrorists can strike very quickly. They want to be able to respond as fast as the terrorists are able to communicate. Law enforcement wants to be able to get those communications. And this is just a fundamental debate in this country when you talk about the Business Concerns Silicon Valley has the fbi and others will say ultimately theres a cost of doing business in the United States of america and this maybe one of those costs. Mr. Wiesner, have you given some thought, and im sure you have, as to what might be the best approach at this juncture, given what we have seen happen in paris and given what we just saw happen in mali today, what would your best advicing, that perhaps is a middle ground between the privacy and security or the security and security argument . Well, look, the events in paris and in mali are terrible and everyone obviously wants to do Everything Possible to be able to respond at least in the future. I think you have to look at this from the position of the adversary. If we open up a back door in the products, for example, that apple or google or others provide, there is still nothing that will stop a determined terrorist from adding their own layer of encryption on top of that approved technology. No one, including director comey, is proposing that we should prevent people from installing their own software on their own computers and their own phones. We have enormous benefit that we get from the growing app economy. You feature it on your program all the time. And individuals get enormous social benefit from it. So we dont want to clamp down on the internet so it becomes like the old telephone system. And i think we just have to recognize that there may be some communications and some data that Law Enforcement will not be able to get access to. Thats always true when Law Enforcement does investigations. Sometimes criminals destroy evidence. Sometimes criminals are good at hiding. And i guess the advice i would give, and im humble in giving advice to someone like fbi director comey, but what i would say is for better or worse we know there are no systems that are perfectly secure and weve seen Law Enforcement and National Security agencies be very clever about finding ways to conduct surveillance even in the face of encryption. I think theyre going to have to learn how to do that more. And i think as governments were going to have invest more money in helping Law Enforcement to develop more and more sophisticated techniques. Quick final thought, eamon. Whowhat would the rejoinder be to mr. Wiesners welltaken point, that even if you did have a back door that would allow Law Enforcement to decrypt things that the perpetrators would find ways around it one way or another . Law enforcement says thats a risk theyre willing to take ultimately. And we know Law Enforcement and u. S. Intelligence feel very confident this week theyre in a good position to make this argument in the context of whats happening around the world. We know there was a meeting today here in washington involving Technology Companies and capitol hill aides in which they talked about a path forward on encryption. What that path is still remains to be seen. But negotiations definitely are going on right now on this issue here in washington. All right. Thank you so much both of you, daniel wiesner. I know well be talking more with you about this. And eamon javers, as always, thank you so much. You bet. Coming up, google making a big move and ramping up its rivalry with two other tech companies. Well tell you what its all about. A Class Action Lawsuit related to daily Fantasy Sports targets, credit card companies. The suit claims that visa, mastercard, american express, and others participated in a racketeering scheme that facilitated illegal gambling operations. The class action also names the banks that issued the credit cards. The complaint states that the parties should have known that draft kings and fan duel were Online Gambling sites under new yorks law. The Cloud Computing business is firing on all cylinders and google recently made a big push into that area by making a big hire. Potentially sharpening its rivalry with amazon and microsoft. And this comes as alphabet, the parent of google, saw its shares hit an alltime high at 777 on the button. Josh lipton has the story. Reporter its the hire that everybody is talking about in Silicon Valley. Google is bringing on diane green, one of its board members, to lead its cloud businesses. Green is one of the most prominent women in the tech world and cofounder and former ceo of vm ware. Twitter erupted with reaction, with aaron levy, ceo of Cloud Software provider box, noting goingll hiring diane green is a brilliant move on their part. The cloud is about to get very interesting. For all the excitement, though, green will have her work cut out for her. While google has a lot of cloud products such as gmail and google docs, when Companies Want to run their most powerful applications they turn to amazon and microsofts azure product and those products are growing fast. Amazon web services, for instance, last quarter reported revenue of more than 2 billion. And microsoft Ceo Satya Nadella has gone all in with the cloud. Revenue in microsofts cloud business, which includes azure, reached nearly 6 billion last quarter. But greens hire sends a message to the competition. By hiring someone like diane, they are saying we are ready to get serious about competing with microsoft and amazon and the others who really exclusively target the corporate i. T. Side of the house, that theyre ready to go into that market themselves. Reporter and google does boast unique strengths. Analysts say there is no company in the world better at extracting insights from data, a key advantage for a Cloud Computing provider. Gartner says that cloyd infrastructure will be a 21 billion market next year, and analysts say much of that growth is still up for grabs, with google now in the position to claim a bigger piece of the pie. For nightly Business Report im josh lipton in san francisco. Abercrombie fytch sees its quarterly profit more than double, and that is where we begin tonights market focus. The teen retailer posted results that easily topped estimates. Despite the fact that samestore sales fell. The company benefited from fewer discounts, but it did say it expects heavy promotional activity in the industry during the Holiday Shopping season. Shares surged 25 to 24. 37. Chipotles e. Coli outbreak just got worse. The centers for Disease Control and prevention warned that the outbreak has spread to a total of six states, showing the problem is more widespread than just in the northwest. The cdc says 45 people have been infected, in california, minnesota, new york, ohio, oregon, and washington. Shares tumbled some 12 . They finished at 536. 19. And the Health Insurers anthem and aetna trying to reassure investors today that their Affordable Care act businesses arent doing that poorly. It comes after United Health warned of mounting losses in that unit, which we told you about last night. Aetna rose 4 1 2 . Anthem was more than 2 1 2 higher. Foot locker posted strong results and a big increase in samestore sales, increased demand for running and basketball shoes helped the retailer deliver. Shares popped more than 5 1 2 . They finished at 65. 02. And sprint announced it will get a more than 1 billion cash infusion by striking a deal to sell certain devices it has previously leased to its customers. The company says it will free up resources for Network Investments and operations. Shares, however, slipped about 5 1 2 to 3. 83. The hottest sector this year has been Consumer Discretionary stocks. Made up of companies that sell nonessential goods and services. But will this group continue to do well with an Interest Rate hike looming . Morgan brennan takes a look. Reporter in a rocky year for the market Consumer Discretionary has been the Top Performing sector. Up 12 versus the broader 12347s 1 1 2 gain. Gasoline savings at the pump have translated into more spending on Certain Services and goods, propelling a number of these stocks to alltime highs. Analysts say consumers are in recovery mode al betteit a gradual recovery and theyre being very selective about what they buy. There arent a lot of trends that carry over from year to year, but we do see interestingly the first Time Consumer Services has done well, its performed well. Thats an odd catchall. It includes durables, education stocks, some apparel stocks but that typically has done well. According to Market Data Firm kensho there are some stocks that tend to outperform during the holidays from black friday to years end. Walt Disney Company is one of them, averaging a 4 1 2 gain over the last ten holiday seasons. And with a new star wars coming out in just a few weeks, a name to consider again. Goodyear tire and rubber has also been a strong performer gaining an average of 8 . As people need new tires thanks to all that Holiday Travel and winter weather. But this december may also be differe different. There are increasingly more signals the Federal Reserve could raise rates next month. If history is any indicator consumer stocks could selloff. The Consumer Discretionary sector as a whole has high valuations. So its vulnerable to a rerating, to a repricing when the fed raises rates. Now, will it be traumatic . No. Because again, were coming off a very low base. But we do have to worry about vulnerability there. So really any names within the Consumer Discretionary space, and there are many, most are highly valued. They are vulnerable to seeing some deterioration in stock price as a result. According to kensho, since 1990 there have been three rate hike psych sxlz a onemonth increase following each of those liftoffs. Consumer discretionary sell more than 2 , largely in line with the broader market. Among the worst performers, auto parts retailers like auto nation and oreilly automotive. Still, some names may provide relief. Mcdonalds tends to hold up and a few retailers. Best buy and kohls. But as the year winds down, the two biggest winners have centered around the internet. Netflix and amazon have both logged twiplldigit percentage gains in 2015 and many on the street consider these names to keep benefitting from recovering consumer next year. For nightly Business Report im morgan brennan. Now to our market monitor who recommends three small cap retail stocks. Welcome jay kaplan, performance manager of the royce Small Cap Value fund. Jay, welcome, lets start with g3 apparel. I thought it was a coat company mostly and coats arent really selling. Why do you like it . I tell you, it is pretty warm in the northeast and you have an opportunity now like we had in 2011 where it was very warm. Theyre a leader in coats. They sell a lot of dresses. If you go to macys, they dominate in macys. Macys is having trouble. But we think its a wellmanaged company. Its down big from its high. Its one of those opportunities where i think you have to sort of hold your nose, jump in, look out 12, 24 months. Its going to be pretty good i think. Buckle. Its mallbased and a lot of people are projecting that the mall is not where people are going to shop. Why do you like the buckle . 9 buckle is very well managed. It has very high margins. They sell denim. Denims been a little out of favor for them. Its highpriced denim but its great cash flow. Its a 2 yield. They pay a special dividend most years. That could be coming up. For the long term we like it a lot. You like unpopular stuff. Clearly steve madden which is a great way to invest by the way. Steve madsen a third choice. Shoe company. Is this company one that could be a takeover target at some point . Its hard to say if it would be a takeover target. At royce we dont buy companies with the expectation that someone will take them over, but its a wellrun business. There hasnt really been a fashion cycle in shoes in a while. Boots are really important. Theres not a lot of snow yet. No ones buying boots. Well see what happens. Theyve been buying back their stock in a very big way. Theyre confident and were confident as well. All right. Thank you very much, jay kaplan with the royce small cap fund. Coming up, a grand experiment. Why california farmers are planning to do something that was once considered unthinkable. Lots of Economic Data to watch next week. Especially as we inch closer to a potential rate hike from the fed. And those data include a report on personal income and spending, a read of gross domestic product, which is considered the broadest measure of economic activity. Housing datas coming out, including numbers on existing and new home sales. And that, folkss what to watch next week. The epa says the volkswagen emissions scandal is wider than previously thought. The automaker has told the agency that the emissionscheating software is on some of its larger vehicles dating back as far as 2009. The automaker also plans to slash its Capital Budget by more than 1 billion next year. The german carmaker will delay some projects and put a new Design Center on hold. The ceo has said that anything not absolutely necessary will be canceled or postponed. Meantime, a long and highstakes court battle between the sugar and Corn Industries has come to an end. Those two businesses have reached a settlement but the terms not disclosed. Sugar processors had been seeking 1. 5 billion in a false advertising claim against corn refiners and agribusiness giants Archer Daniels midland and cargill. Californias almond and Grape Growers use a lot of water and thats something theyve come under fire for during the states historic drought but now some farmers are trying something very different in an effort to protect their livelihood. They want to flood their farms with the coming el nino. Jane wells tells us about this grand experiment from helm, california. Reporter as california prepares for el nino rains, farmers are discovering a new market. Flood water. Before flood water was something everybody wanted to get rid of. Now people are seeing it as a resource. Reporter no one has seen that potential more than farmer don cameron. This is the north fork of the kings river right here. And right now it looks like a des sxert its looked that way for four years. Reporter but this is how the river looked four years ago, when cameron decided to do an experiment. He diverted some storm water to flood his vineyard. Why . Here in californias Central Valley where most of the countrys fruits and vegetables and nuts are grown, many of them shipped overseas, depends on underground water. Drought has decompleted that water, and farmers have been accused of overpumping. But even before the drought cameron figured if he used storm water to flood his vineyard during the winter the water would seep underground, replenishing the ground water and costing him less to pump in the summer. It is a risk and a lot of our neighbors thought we were crazy. But that experiment in 2011 worked. The vines and the grapes were fine. Now with el nino coming other farmers growing other crops such as almonds are also thinking about flooding the fields to try to replenish the ground water. But it only works in certain areas where theres porous sandy soil. I think you have to be a little more careful with the almonds. Some growers are concerned if you have too much water and a big wind storm during the winter you could have trees blow over. Still cameron is giving it a way in this new almond feel. Hes spendsing millions to increase the size of a canal to capture more storm runoff using a grant from the government awarded to help divert flooding downstream. That leads to a whole new idea, farmers finding financial incentives to capture el ninos rains. Thats a new discussion going on in the state capitol, what are the rights to flood water. No ones ever asked that question. Its always been a surplus. All of this depends on one very important condition, that it actually rains. For nightly Business Report story. Lls, helm, california. Fascinating stuff. That does it for nightly Business Report for tonight. Wa. And im tyler mathisen. Have a great weekend, everybody. Well see you on monday. Morning, brian. Aagh knock it off, jack bit early to be skulking around, isnt it . Whos in there . Wellthats the point. I dont know. I got here ten minutes ago, and it was already sealed to the outside world. low chatter sandra, certainly. Strickland . Sounds like. Theres someone else. Yeah, who is that . loudly morning oh argh oh ow. Brian, are you all right . Whats happened . Does he need a doctor . Hes fine. Just nosy. Whats going on in there . Nurse
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