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Transcripts For WHYY Nightly Business Report 20140703

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Elst month, the fifth straight monthly gain of more than 200,000 sending cents an hour. With the p. M. July 4th holiday,clos a new rec 17,068. The nasdaq closing at a 14year new alltime high for the index. We have two reports tonight. Bob tells us about the dow reaching the 17,000 mark, and what it means for investors and the begin withr look at the june jobs report. Reporter junes robust employment gains are the latest evidence of a j market gaining stveraged 272,000 three months andained 2. Llun w spread with profe retail trade, h rs and h care with manufacturing all tndce day, presidenobam point. We just got a jobs report today showing tha seen the job growth in the United States in the first half of the year since 1999. [ applause ] so this is also the first time weve seen five consecutive months of job growth over 200,000 since 1999. [ applause ] and weve seen the quickest drop in unemployment in 30 years. The Unemployment Rate now at 6. 1 is the lowest since the 2008 financial crisis with a decline in longterm unemployment. The number of americans out of work for six months or longer dropped by 1. 2 million over the last year to under 3. 1 million, half of what it was three years ago. But wages have barely moved, up just 2 in the last 12 months, leading economist say a change is coming. I think well see wage growth pick up over the next 12 months rapidly. The real issue is people dont realize the labor market improved. Millions of americans are sitting on the unemployment sideline. 63 of adult americans are working or looking for a job. Thats the Lowest Labor Force Participation rate since the 70s. Some say thats enough of a speed bump to keep fed chair janet yellen and her Monetary Policy makers reluctant to move up the timetable for raising key shortterm Interest Rates. Were not seeing the Participation Rate come up, which is what you need to see for a healthier labor market. They will be slow in raising rates and keep them lower longer than the past. On the eve of Independence Day dow 17,000 and a blockbuster jobs report gave both wall street and main street reasons to celebrate. For nightly Business Report, im Hampton Pearson in washington. The jobs report proved to be the catalyst to get the dow over 17,000. How important is dow 17,000 . Big round numbersre psychologilly important because they focus attention on markets strength. Its another historic high for the index and more importantly, it happened on a day when the jobs report clearly indicates the economy is improving. Now people will see the news headline tomorrow, strong jobs report for june which also mentions the fact that the stock market hit another new high. Thats sure to spark discussion about whether its time to put more money back into the market or even get back in, but a survey we did in the new york area indicated many are still very skeptical. If i could change what i do investmentwise, certainly still a lo of uncertainty in the world. This is the latest in a spring of strong economic reports. This morning a survey of businesses in the Services Sector also showed improving demand for employment, which also supports a rebound in growth in the second half of the year. What is the risk for stocks right now . Traders have one big concern, a rapid spike in Interest Rates that could come if everyone is convinced that rapid Economic Growth will lead to much stronger inflation than expected but the keyword is rapid rise in rates. For example, the tenyear treasury yield 2. 6 to 3. 6 in a few days but many believe the stock market could stand a slow rise in rates, as long as there is clear evidence the economy continues to improve. For nightly Business Report, im at the new york stock exchange. John manly joins us now, chief equity strategist at wells fargo. It is exciting to have historic highs and milestones, but how should americans feel about all of this . You know, dow 17,000, strong jobs number, but the economic number, the Economic Growth, gdp on the downside. So, you know, connect the dots for us. How healthy is the economy and the stock market . Well, every now and then you have to ignore a few dots out of place. I think things are going from okay to good, and i think thats good for the stock market. I think that the fed is going to be slow to raise rates because they want to make sure, very sure its okay before they do and meanwhile, earnings are accelerating. I think earnings go up before Interest Rates and thats good for stocks. Stocks are supposed to zig and zag, they go up and down. They have been going up for 2. 5 years. We havent had an apresentationble decline of 10 in this market for awhile. Are we setting ourselves up as we go higher for even more pain when the correction finally does come, do you think . Some day it will come. I guarantee you i will not sell at the top, but i think ill sell within 5 or 6 of the top. We had a good number of five to ten percent corrections. That took the theme off and as your report said, people are skeptical. Thats skepticism that has to be maintained rather than a round number like 10 . I see you mentioned earnings aoment ago. Well start hearing from companies with corporate reporters for the second quarter. Do you think what we hear from ceos and look at the numbers and guidance will take stocks higher or lower . Higher. I think the number will be good. You never know what will come until it comes, but the last week of the quarter is usually the confessional period when you get bad numbers. We didnt see that many, and i get the sense earnings are lifting off rather than settling back. Jp morgan with the strong jobs report moved up the timetable when it thinks the fed will begin to actually raise Interest Rates. It now thinks it could happen this time next year. If in fact the economy is starting to pick up pace and the fed is likely to raise rates sooner than expected, is that good or bad for stocks . You know, i think its good if they do the right thing. I think the fed, i dont think the fed will raise Interest Rates unless they feel that raise in Interest Rates will not have an impact on the economy. You have to listen to what chair yellen says. She wants to encourage the economy. She will want to encourage for sometime. Even the first few rate hikes is a realization the economy can deal with higher Interest Rates. Its not a reduction in the stimulus, really. John, are you doing anything differently with your Investment Strategy in the momentum weve been seeing . We focussed on things like energy and technology where earnings begin to lift off, industry jells. I think thats still a good play. Dont forget to look offshore. I think europe may do better. Emerging markets are in such distress, there has to be a longer term play market there, as well. Have a nice weekend. Thank you. John manly of wells fargos funds. Still ahead, one size does not fit all with investment advice. With the dow at 17,000, two Financial Advisors join us to offer tips if youre 20, 30, 40 or 50 or beyond. More now on jobs and the positions that are in demand in the new economy, including ones in a high Tech Industry that are getting a big boost from a Small College in massachusetts. Marry thompson has more on where the jobs are. Reporter in biotech manufacturering, a technicians job is to grow healthy cells in a clean, strictly regulated environment. It can be the hardest for the company to fill. The ideal candidate is someone exposed to hands on laboratory work, familiar with the equipment, the use of diagnostic tools. Those are the people in demand. Reporter that demand the reason Quincy College launched a twoyear program to train. They decided for the opportunity for students to get jobs, to teach Bio Manufacturing and compliance would be the best fit for the students. Reporter the Quincy Program is unique because of the hands on experience students receive working on state of the art equipment like this wave rocker. The wave rocker used by Companies Like shire to grow cells that produce enzymes needed for the drugs it makes at the rare disease hub in lexington, massachusetts. Students learn to sheppard the cells as they multiply and extrae extract the needed proteins like the working world. What is the Employment Outlook . The outlook for job growth for Bio Manufacturing technicians is 10 from 2012 to 2022, thats 8,000 new jobs. 393 of the jobs are expected to be in the bay state by 2016 so Quincy College worked closely with local firms to design the program. If youre not doing what they need you to do, youre wasting youre time. Reporter 25yearold alex wilson isnt wasting time. A quincy graduate, he works four ten hour shift as week and over time when he can get it. My five year plan is a lead in the department. My ten year plan would be switch departments and go into r and d, research and development. Reporter the burro of labor statistics say entry level technicians earn about 40,000 a year. Shire declined to say what it pays, only that its pay is competitive and employees receive full benefits including tuition reimbursereimbursement. They are well compensated compared to other college graduates. These are good jobs for people starting out in the work force. Reporter this 27yearold isnt starting out, shes kick starting her career in biotech. Its ever changing. Its huge right now. Its not going away. Reporter and neither is she. A top student, shes interning now and setting her sights on a future in number logiceuro logi research. For nightly Business Report, im Mary Thompson in quincy, massachusetts. And to read more about this biotech training program, log on nbr. Com. Elsewhere, boeing ramped up deliveries in june and thats where we begin tonights market focus. The plane maker nearly doubled k deliveries of the 787 helping increase deliveries by 7 . The dow component says the Defense Space and Security Unit saw delivery gains. So shares rose a fraction to 128. 51. Shares of wall greegreens ae aid were driven by higher pharmacy sales. Investors cheered the news since they have been pressured by a wave of generic drugs. Shares of walgreens rose to 73 and change and rite aid closed at 7. 50. Shares of pets mart soared. In this case the Hedge Fund Jana Partners took a 9. 9 stake and well talk about a possible sale to improve the performance. That stock was up 12. 5 on that news, higher to 67. 28. Advisors to the chip wilson had been discussing with private equity firms the possibility of taking the retailer private. One of the firms thats in talks with the yoga apparel is Leonard Green partners. That sent shares to 42. 60. The removal of search results in europe is criticized as press censorship. A 7yearold blog post criticizing stan oneil. Google individuals have the right to request the removal of certain links but despite that, google shares rose to 593 and change. Big Tobacco Companies may merge by the end of the month. They have not fully negotiated terms but said to be a few weeks away from announcing a deal. Shares of lorillahrd jumped. Reynolds american rose more than 2 to 61. 56. And that good jobs report that we told you about also helped send certain stocks higher. Shares of staffing companies, Manpower Group and robert Math International both rose on the upbeat employment picture. Manpower rose to 86. 15 and robert half 1 high tore 49. 01. Now that the dow reach add milestone, youre probably wondering what to do with your money, whether in your 20s, 50s or beyond. Lets get to answers tonight. Director of Financial Planning at provice and director of Financial Planning and management at francis financial. Good to see you both. Thank you. Paul, it depends where you are on your life cycle. We dont have time to go through every decade but generally speaking, 20s, 30s, 40s . The 20yearold is going to keep more in equities and the 50yearold will keep less in equiti equities, thats the rule of thumb. Doesnt matter the level of the market . I dont think so. I tell the client the same thing where the dow is. Its about asset allocation. Look at the amount of risks that youre willing to acre cement, test that every quarter now as opposed to every year and make sure youre comfortable with some amount you might lose and adjust your allocation accordingly. Do you agree with that and if you do, how aggressive should that 20 or 30 something be with their Stock Investment . You know, a 20yearold can be a lot more aggressive. I would go up to 70 , to 75 in an equity allocation and then definitely bonds have to play a role, too, to keep the rest of the portfolio in bonds, and as far as what the market is doing right now, really, you have to focus on the long term, especially for a 20yearold. Youre not going to use this money, hopefully, for the next 35 to 40 years, and for that time frame, you have a lot of ups and downs coming your way. So you have to take your emotions out of the investment process, and keep the asset allocation. Lately because of the historically low yields that people are getting from their investments, specifically in bonds, they forgo bonds and go with dividend paying stocks instead. A wise move, riskier, what do you think . I think bonds still need to be in the portfolio, like i said, if you dont use it for the next 40 years, there is going to be ups and downs in the market, sometimes equities up, sometimes bonds are up. So each segment has its own role to play and i would shy away from getting rid of bonds completely and having stocks all in the portfolio. So lets turn paul to somebody who is in their 50s, or maybe somebody in retirement or close to retirement. You say that you meet with this group on a regular basis because its not like being 20 something. What is your advice . To bills point, as you get older, you have to be, excuse me, careful with how much you have in equities but more importantly, i live in florida and retired investors havent been able to get yields or bonds so they have gone more into equities and dividend paying stocks. Thats the group of investor im worried about. They have taken more risk that ready to assume. Those are the people im talking to. I agree there should be money in bonds but when Interest Rates rise, bonds will come down in value so shortterm bonds only in my view when you have that allocation. Are you telling this age group that maybe they should take profits given the unbelievable run that weve seen in the market . I think its a combination of taking profits and adjusting the strategy so that there will be more in bonds than equities and in the bonds, though, i think its critical they be short term to anticipate that whenever it happens, the rise in Interest Rates. Not to put too fine a point on things because of the time, but stocks are not all equal. You have riskier growth stocks, youve got the safer so to speak defensive plays. Yeah. What about a mixture. We discussed dividend paying stocks, large cap stocks most of the time. We like Small Cap Value tilt. I think thats the Growth Strategy that worked best for many years but there is safety in the large cap companies. Some final thoughts from both of you. Weve been talking about things you should do. What is the key thing that you would advice someone in their 20s, 30s and 40s not to do and then well turn to paul and see what he says. I think what you shouldnt do is not get carried away by the ups and downs of the market. Emotions play a big part and you need to really learn how to take those away. I would like to add that emerging markets and you mentioned before emerging markets is a segment thats especially is very important for 20, 30yearolds because thats where were seeing growth capacity potential in the next 15 to 20 years. Real quickly, the best tip about what not to do. No knee jerk reaction, stick to your plan. Very good advice. Thank you both and have a good Holiday Weekend. Thank you. Thank you. And coming up on the program, how one startup is rethinking the way health care is delivered cutting costs and maybe even saving you a trip to the emergency room. A real set back in illinoiss efforts to increase what state retirees pay for their health benefits. The Illinois Supreme Court ruled the states constitutions pension protection clause prevents any reduction of Health Care Benefits for retired workers even though the couffer are under funded. Average Mortgage Rates dipped a little bit this week, they are down to 4. 12 , down from 4. 14 , just aeek ago. And finally tonight, we all know the hassles of seeing a doctor or waiting for hours in the emergency room. What if you could by pass that . Well, one young physician had a bright idea thats making that possible and in the process, hes helping patients and doctors, too. Come right in and say hey, i have a sore throat. Reporter Jay Parkinson is a doctor. His patient, our health care system. Everybody know health care is broken and inefficient. Reporter thats why he started the twoyearold Service Provides access to doctors online and on the fine. They can answer questions, give advice, diagnose problems, prescribe medications and speed the referral process and its paid for by employers. More than 100 companies are paying about 30 a month per employee to offer it as a benefit. Nobody has said this is a bad idea, ever. Reporter certainly, not martin. I woke up one morning and i felt deathly ill. Reporter he works at a new york tech startup. He has a primary care physician but called sherpa instead. In less than an hour i had a prescription called in and referral to a specialist who i went and saw later that afternoon. Reporter better yet, communications with sherpa dont generate insurance claims. The service is reducing claims by about 70 . So the company all of a sudden locks reoks healthy so ps increase. Reporter its not the first time parkinson mixed modern medicine with technology. His practice took to the streets in brooklyn. He was carrying about 280,000 in student debt so he began texting and emailing with patients. His story attracted national media. My day was spent answering reporters questions, you know, book offers, movie offers. It was insane. Reporter instead of trying to become a star, he dedicated himself to improving the health care experience. For patients and for doctors. The doctor has this higher position and what this does is put the patient in charge in a big way. Reporter ida santana is a staff doctor and earns more than she might as an average primary care physician. Its moving medicine into an electronic age where most doctors dont email with their patients and thats like who doesnt email . Reporter so far, companies are using it in new york, new jersey and california with illinois coming on board soon. A new york cybersecurity firms coo stumbled across it and is a big believer. We didnt think it existed but i started googling around and i came across sherpa and it was exactly what we described to each other as what we like. Reporter he thinks having a doctor on call is making his company efficient. His employees dont need to see a doctor to communicate with one and thats what Jay Parkinson calls progress. To me, the future of primary care looks what like what im dog here. They tried to create a win, win and says the specialists that sherpa contacts are trying to cut wait times because they are depending on more referrals. I hope we see more like this. The medical Industry Needs to be overhauled in terms of service and its happening slowly bit by bit. By the way, i enjoyed the past couple weeks. Tyler has been on vacation for two weeks, hell be back, well be here tomorrow for july 4th. Great having you, always. Thats nightly Business Report for tonight. Im susie gharib, thank for watching. Im bill griffeth. Have a wonderful Holiday Weekend but well see you tomorrow for a special july 4th edition of nightly Business Report. See you then. This is bbc world news. Funding of this presentation is made possible by the freeman foundation, newmans own foundation, giving all profits to charity and pursuing the common good for over 30 years, kovler foundation, nd union bank. At union bank our relationsh manageruse their expertise in Global Finance to guidyo through the business es astpporties of international commerce. We putur extended global

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