According to the latest government data, consumers spent more in april than expected and thats important because Consumer Spending is responsible for about twothirds of economic output. But it flies in the face of everything that weve heard this week from some of the nations biggest retailers who are struggling to attract shoppers and grow revenue. Jcpenney was the latest to report an unexpected sales drop and cut its gross margin guidance for the year. Steve liesman looks at the possible reasons behind the disc. Reporter a Strong National retail says report for april gave a major boost to the idea that the u. S. Economys in the early stages of a rebound from that weak first quarter. Retail sales grew 1. 3 , beating estimates in auto sales and furniture. Economists looking for 2. 5 Overall Economic growth in the second quarter. But the number raised a troubling question. Why have retail earnings been so lousy . Nordstroms had comparable sales fall 17 , kohls saw them to 4 for the quarter. Macys reg jerred a decline of nearly 6 . Theories abound. At the top of the list, internet retailers eating the lunch of Department Stores. Year over year online sale rts up double digits compared to no growth at Department Stores. The retails got to pick up its game, got to make the mall owners got to create activities in a mall, like a hotel, to pull people into the property. Do stuff that you cant do online. Reporter the ob line growth trend has been around for years, odd that anybody should be surprised by it. Others suggest the election undermining consumer confidence. We think its election related. Theres a lot of people not happy on either side with the presumptive nominees. And the consumers voting. Reporter working against that idea, Consumer Sentiment surged in may unexpectedly. How much confidence can consumers lack if theyre back to the lots buying cars . We know this, job growth has been pretty solid and wages are even rising now, up about 2. 5 year over year. Gas prices, theyre up a bit. But still low. Stock prices, theyve rebounded. Home values contie to rise modestly. Consumers have the means to spend if they want to. People are spending but what are they spending it on . An experience. Theyre spending it on something where its a sense of entertainment. Social activity. Reporter for now, the retail mystery remains unsolved. Consumers, theyre spending, but investors, theyre trying to figure out in whose Cash Register the money is ending up. So where and what are consumers buying with their money . Jan nissen, ceo of the Retail Consultant form Jay Rogers Nissen worldwide, welcome, good to have you with us. My sense is we get an idea of where that money is going, theyre spending on cars, on stuff at home depot, and spending on specious experience. But theyre not going to jcpenney or macys or nordstroms. Thats for sure, were not seeing them turn out in the mainline stores. Were seeing continued growth in fast fashion, were seeing continued growth in the offprice sector. Were seeing continued growth in online. Lets read that as amazon. We are not seeing growth in the traditional brick and mortar fullprice malbased retail space. You say youve seen this movie before how do you think the sequel, if were living it right now, is going to turn out . Well, these guys arent going away, right . I mean, macys is a big, health company, theyre going to monetize the real estate. Theyll get better at what they do, do more omni retail. My concern is not are they going to be here . Even pennys is going to be here even given the tough time they went through. Its a question of what to these Stores Look LikeGoing Forward . What does the roi on their investments look like . The problem i see is every time macys takes a sale out of the store and puts it online, roi goes down. Every time a vendor takes a sale out of the macys or another Department Store and sells it themselves, direct to consumer, they sell it at retail and their roi goes up. So were seeing the vendors doing more and more direct to the consumer. And were seeing more and more vendors selling to offprice. Were seeing a lot of price compression. I infer from that then, jan, that maybe if i want to make a buck here on retail, i might be better investing in some of the retail manufacturers who are selling direct or have their brands, whether its a polo ralph lauren, a coach maybe, a michael kors. Am i right . Youre in my bali wick. I like ralph lauren, pvh, vf, columbia, haines brands. Those are vendors are i think are going to be better in the back half of the year, sell more themselves. So i like that space. You also mentioned Something Else i like. I like strong brands that have a real serious presence in the mind of the consumer. Kate spade is a good example. Their mind share is a lot bigger than their business. You said michael kors, im not a fan, i think theyre on the downside now. But i like coachs resurgence require like them. I also like things that i would call amazonproof. Thats not going to be forever. But things like bali beauty, alta, i like things like that as well. Lots of ideas, jan, thank you so much, have a great weekend. Thank you. Jan nissen, j. R. Nissen worldwide present surprises. Our market monitor has retail names she says are worth owning three to five years. Down day on wall street. Stocks dropped sharply pressured by Consumer Companies and Energy Shares which followed oil lower. The Dow Jones Industrial average dropped 185 points to 17,535. The nasdaq off 19. The s p 500 was down 17. All the major indexes were lower for the week. The dow and the s p 500 registered their Third Straight week of losses. The nasdaq its fourth. A closely followed gauge of inflation rose slightly last month. Producer prices, the prices businesses receive for goods and services, increased. 2 in april. That was a little less than expected but it was the first increase since january. Exclude food and energy the index was up a little less than 1 . The latest data suggests overall inflation remains tame. Dow component apple is making a billiondollar bet in a country where its facing obstacles. The dow component is investing in chinas most popular ridesharing company. A major competitor to uber. Akiku fujita reports from shanghai. Reporter this is certainly a huge coup for chinas largest ridesharing company. That investment today, 1 billion, the largest investment for this company. And with the funding in place, apple joins the likes of alibaba who have been Strategic Investors in this company. Tim cook has framed this as an opportunity to get a better sense and to learn more about certain markets in china. This comes as apple looks to reinvigorate sales here in china, the worlds secondlargest market. Sales in china slipped 26 the last quarter. Apple has been under tremendous pressure from chinese regulators. The ibooks and itunes and movie store shut down in china last month. Speaking of bbchu ching, a Company Valued at 25 billion, theyve been lost in a very heated competition with uber but they are the dominant player here with 87 market share, 11 million riders a day. Theyve expanded their service as recently, not just to include private riding but also buses and chauffeurs that drive cars of these users. Certainly investors have been speculating for some time that apple could be entering the car business. Todays announcement that perhaps another hint of apples larger strategy moving forward, tim cook has said hes more interested in the software aspect of it. Finding ways to connect that smartphone with infotainment, incar experience. Theres speculation whether apple is building up their own driverless car. The timing of this is very interesting, considering that tim cook will be visiting china later this month. Akiko fujita, shanghai. Hackers strike at the heart of the Global Financial system. Wooerl well tell you what they did and what it means. An anticounterfeiting group has suspended ali babas membership. The International Anticounterfeiting coalition told members it had failed to inform the board about conflicts of interest involving an executive of the group. Member companies had recently pushed back against alibabas inclusion which some view as a marketplace for fakes. Gucci america, michael kors and tiffany left the coalition because of alibabas involvement. Facebook ceo zuckerberg defending against accusations of political bias which we told you about earlier this week. In an online post he wrote that facebook does not censor conservative topics and that the social Media Network does not permit the prioritization of one viewpoint over another. Zuckerberg said he is conducting a full investigation and will reach out to conservative leaders to discuss the issue. Global bank hackers strike again. They found their way into the financial messaging system believed to be the most secure in the world. The system is used by thousands of banks to move money all over the globe. And it comes as investigators are still trying to solve the heist from the central bank of bangladesh in february. Eamon javers is following the to have story for us. This is scary for banks around the world. The International Consort shum is called swift, based in brussels, they operate the electric messaging system that thousands of banks around the world and more than 200 countries use to send messages authorizing wire transfers of large amounts of money. Billions and millions of dollars at a time in some of these messages. So the fact that hackers could get into software that interacts with swift and authorize transfers right out of a bank account is really scary. Swift saying in a Statement Last night that they found a second instance where this apparently has happened. They would not name the bank or say how big it was or even what continent this bank was on but it has deep imapplications for the financial system. Any other shoes to drop in this story . Well, one of the Big Questions in all of this is w whodun whodunit . Dont know who did this attack against the unnamed bank revealed last night, we dont know who was behind that 81 million heist at the new york feds account that they held for the bank of bangladesh. One report out today suggested there may be a similarity between the hack at the bank of bangladesh and the attack on sony that we saw that was later blamed on the north koreans. Were going to need a lot more reporting on this to find out who is exactly behind it but theres some tantalizing threads now in the public discussion. Is there another alternative for the banks to use other than swift . Thats one of the questions that was floated out there. Why are we using swift if they can hack into it . But almost everybody uses it. Is there an alternative . Well, there isnt, sue. Youre right to spotlight that. Carolyn maloney, congresswoman on capitol hill, wrote to the new york fed asking them why they put so much stock in this particular system and the fed replied in answers that were revealed today, in essence, everybody around the world uses this system, so we have to use it too. The Global Financial system is really dependant on a few electronic systems, swift is just one of them. Eamon, thank you very much, eamon javers in washington. Its an important time of the year for the media industry, broadcasters and Digital Media want madison avenue to commit to buys ad ford the upcoming season. While digital has been taking ad dollars from television the trends this year are surprising. Julie boorstin explains. Reporter rumors of televisions demise may have been exaggerated. This years broadcasters pitching lineups will be the first time in five years they secure morivefront ad dollars than the prior year. Media dynamics projecting a 5 increase in dollars, a 10 increase in prices. Few media can match the kind of impact, the kind of sight, sound, motion that tv delivers for advertiser, particularly advertisers that are that care about their brands and care about their image. You know, its very hard to match that kind of impact with a digital banner or search app. Reporter broadcasters of benefitting from political ad and the olympics but higher prices are also coming from less inventory. A number of Cable Networks are cutting back on commercial time. Even saturday night live is reducing its ad load. Now tv ads are getting more hightech. Media giants are leveraging big data to more narrowly target ads. Traditional Media Companies use digital targeting, internet giants are becoming more like traditional media. At this years digital new front, some 40 companies presenting to madison avenue putting Premium Digital video in the spotlight. Best positioned, facebook with its live video, hulus mix of shows, Googles Youtube and google preferred which sold out last year. Drawing magnet global to shift over 250 million into google preferred the next three years. The Business News is we are funding it from television budgets which is obviously where the majority of our spend resides. If you look at consumer usage, were just acknowledging that audiences are shifting out of Linear Television to other platforms. As digital individual draws more viewers its growing its ad lars, Digital Advertising projected to hit 68 billion, topping tv ad spending for the first time. While tv returns to growth its facing more competition than ever. For nightly business report, im Julia Boorstin in los angeles. Try and Fund Management exits its stake in pepsi in market focus. According to a regulatory filing the activist hedge fund sold its more than 18 millionshare stake in the snack and Beverage Company in march. Triann said pepsi addressed many of the operational issued addressed by the hedge fund. The news sent pepsi down 1. 5 . The cfo at tiffany and Company Steps down resigning from the luxury jewelry retailer by the end of the month to become cfo at Newell Brands which owns sharpie, markers and yankee candle. Shares fell nearly 3 to 64. 43. Honda posted an 860 million loss as currency he winds and hefty costs related to its takata air bag recall dragged down results. Subsequently the Company Plans to recall 21 million more vehicles in addition to the 30 million vehicles it previously recalled. Shares down more than 4 on the day to 26. 28. Acacia Communications Made its stock market debut today. The Telecom Equipment company rai 4. 5 million shares sold at 20 apiece. The stock rose more than 34 on the day to 30. 95. And pfizer will no longer allow its drugs to be used in lethal injections saying its products are meant to save lives. It is the latest u. S. Drugmaker to impose such controls which means the drugs used in executions are no longer legally available to authorities. Shares of pfizer were unchanged for the day at 33. 19. Our market monitor tonight is a value investor. She likes companies she says are misunderstood by the market and names that belong in your portfolio for the longterm. Joining us for the first time is our guest kim forrest, senior Equity Analyst at fort pick capital, good to see you. Thanks for having me. Lets start with your stock picks. Its retail which really got slammed this week. Urban outfitters, why do you like them . Well, theyre misunderstood like all the stocks that were going to talk about today. They are cast as a teen retailer and malbased, and theyre not really either one of those things. About 50 of their revenues are from the teen market but its the older teen and college age. Then the rest is for womens clothing. And that tends to be the higherend woman shopper. But the really exciting thing is the company goes after millennials where they want to shop which is in urban areas and next to colleges. So the company is just wellpositioned and we think its very misunderstood. My wife loves anthropology by the way. Vf corps, i dont know one child in the northeast who does not have a north face jacket. Well, im sure there are because this year, the sales of their jackets were a little light. And that is why theyre on the list. Theyre underperforming because everybody who made jackets underperformed this year. Warm winter. Yes but again, they have this stable of brands including vans, timberland, the north face, among others. And they are just excellent merchandisers and retailers. And they know what people want, make it, and do it in a very Cost Effective way. Now to technology. Intel made your list . Exactly. We think theyre misunderstood because they are intel inside, in your pc. But we think theyre going to move into mobile devices more and more. And cars and everythings getting smarter. We think intel has the technology that will drive our smart devices. All right, kim, on that note we thank you very much. Well have you back soon. Kim forrest with fort pitt capital. Coming up, how a box marked junk became one mans secret to success. The story of how he made his millions coming up next. And heres a look at what to watch for next week. Tuesday more retail earnings when home depot reports its quarterly results. Wednesday the Federal Reserve releases the minutes of its last meeting. The Worlds Largest retailer walmart reports earnings thursday. Thats what to watch for next week. General motors is halting sales, halting sales of nearly 60,000 suvs. The vehicles have incorrect epa window stickers that overstate fuel economy. Including the 2016 chevy traverse, gmc acadia, and the Buick Enclave large crossovers. A warning tonight from subaru to its drivers. Dont drive some of our cars. The automaker is recalling more than 48,000 2015 to 2017 outback and 2016 to 2017 legacy models. The reason, the steering may fail. Subaru says these vehicles should not be driven until inspected or repaired. Youve seen our stories we hope every jobs friday promising Startup Companies but when do bright ideas turn into even bigger businesses . I got my hands dirty finding out how one man turned a revolutionary sponge, yes, a sponge, into a multimillion dollar enterprise based in fallcroft, pennsylvania, near philadelphia. Part of our new series how i made my millions. Reporter keeping up with aaron kraus isnt easy. A lot of inventers are serial inventors. And that description fits you . Absolutely, ive been inventing products and ideas since i was probably 10 years old. Reporter his most successful brain child, the perpetually happy, scrappy, scrub daddy sponge. This is not an overnight success by any means. The original business was a car washing and car detailing business . I like to tell everyone, i learned everything about business in the detailing busine. Reporter it was a business he started right after college back in 1993. Not exactly the career path his parents, body of them doctors, had envisioned. I started this process of inventing all these new improvements and new types of buffing and polishing pads. Reporter and in 2008 about 14 years after specializing in automotive foam products, 3m, having noticed the upstart competitor, offered him a deal he couldnt refuse. We were bought out by a 28 billion a year company. Reporter the terms of the acquisition werent disclosed but one of the patented products 3m definitely didnt want was this tough as nails sponge kraus initially designed to clean mechanics hands. We took the product, we made about 100 of them, put them in a box, i labeled it junk, put it in the back of the factory, and thats where it sat. From 2008 until 2011. And what got it off the shelf . I got to credit my wife. I asked aaron to come out here and clean the lawn furniture. I was looking at it, what am i going to use thats not going to scratch the paint off of this . Got those old sponges, ill have a use for them, use them, throw them out. Reporter he grabbed one of the rockhard plastic scrubbers and plunged it into a bucket of warm, soap why are water. And it wasnt softened . Totally soft. I said, whats that . The things ruined, its not going to scrub at all. I took it out, it worked a little bit. But as i was scrubbing, the temperature outside was changing, getting harder and harder. Reporter it was at that moment he realized the foam actually changed texture. Soft in warm water, hard in cold. Which made it perfect for cleaning just about anything i looked at it and i said, oh my god, we missed the entire boat. Reporter an epiphany for a sponge that kraus is still excited to show off. Oh, man. Isnt it amazing . He started giving it out to friends and family to test. Now its going to be great for scrubbing all your pots. Everybody came back with great results. Get out of my way, i want to do this. Reporter not everyon was this enthusiastic at first but a shot on qvc and a trip to the shark tank in 2012 stirred up interest. The retailers started calling. Bed, bath, beyond. Walmart. Home depot. Reporter until they kraus had only sold 100,000 worth of sponges. Now he estimates total retail sales have hit 100 million. What do mom and dad say now . At this point im the only one in my family that has patents and i think that theyre finally pretty proud. Kraus said it would not have been possible without support from his parents. His dad let him run the car detailing business out of his garage and loaned him the money to get started, a true fiveyear loan at one point above the banks rate. Why . At that point kraus was a credit risk. He paid it all back. If you dont have them, the sponges are really, really good. Im going to get one. Theyre tough, tough as nails. Why doesnt that ever happen to sinus before we go, another look at the day and the week on wall street. The dow dropped 185 points. The nasdaq off 19. The s p 500 was down 17. The major indexes were all lower for the week. That does it for nightly pills report tonight. Im sue herera. Thanks for joining us. Grab your sponge scrub daddies. Have a great weekend. Well see you on mon 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 gettin to the end of the day whys strickland called us in so bleedin early . I dont know. Esther didnt even have time to do me a proper breakfast. You dont think hes leaving as well, do you . I reckon hes found somebody, somebody to replace jack. Well, i knew it. Theyve got some nobody that weve never heard of and theyre just going to parachute him in. Or her . Huh . Morning. Morning. Sorry to call you in at this hour. Its just that something landed on my desk late last night and i need to act on it now. Its a possible new case