Friday, december 12th. Good evening, everyone. A dramatic selloff in stocks today with the dow tumbling more than 300 points. The selloff snapped a streak of 7 winning weeks in a row for the market. Well have more on that in just a moment. But we begin tonight with the price of oil, which also sells today and sell hard to a nearly sixyear low. The latest driver . The International Energy agency is now predicting that Global Oil Demand next year will grow even less than first predicted. Renewing investor worries about flowing Economic Growth around the globe. Heres how oil prices settled today. Domestic crude tumbles more than 2 to 57. 81 a barrel down 12 just this week. International grain crude off 1. 83, a drop of 11 . Jackie deangelis has more on the latest plunge in oil and just how low oil prices could really go. Rep is 50 a barrel the new 100 a barrel for crude . Thats reflected in the price action. Down 10 this week alone and under 60, the market is forecasting more downside. Unless you see something happening geopolitically to make this market go higher, unless you see anything happen in terms of technicals, some sort of turnaround, i dont see it going uprig right now. Reporter the National Average for a gallon of gas is now 2. 60 according to aaa and experts call for 2. 50 by the end of the year. Theres a mixed reaction in the stock market. Mixed Energy Producers seen their stock prices drop which makes investors change their stock strategy for 2015. The focus now on rail. Rail shipments of crude gone from 20,000 barrels a day in 2009 to an expected 1. 1 Million Barrels this year. And since Pipeline Capacity cant keep up with production, rail is expected to continue to sell the gas. We are seeing an increase in rail shipments, principally, due to the growth of north american supply thats occurred at such a pace that the existing Pipeline Transportation infrastructure has struggled to keep up. Reporter it seems to be the perfect storm for rail. Record shipments at a time where low Oil Prices Mean costs come down. The stock to watch, kansas city southern. Union pacific and cfx to name a few. While exxon mobile and chevron down today, the rails are seeing double digit gains on the year. For nightly Business Report, im Jackie Deangelis. And now back to that big selloff in stocks today which accelerated into the closing bell wiping out all the gains that youve made since october. Capping off the worst week for the dow in more than three years. Heres how things look at the close and close your eyes, it was ugly. The dow down a bracing 315 points. The nasdaq, off 54 and the s p ended lower by 33. For the week, send the children out of the room for this. The dow and the s p were both down about 3. 5 . The nasdaq fared a little bit better. It was down 2 2 3 . More on the selloff on oils and other commodities, founding, and daniel ror, of Materials Research at morning star. John, let me begin with you here. You heard in the report that some people predict 50 barrel oil. Some people, ive seen, call for 40. Do you think it could get that low and if it does, is that good or bad for the Global Economy . Well, i think 50 Jackie Deangelis was referring to was a big fat round number, psychological level that people will key on, even casual observers of this market will now be honing to see if we break that level next week. Could come that quickly. I do believe it could happen. The reason its commodities, the whole syndrome were in right now is increase supply, shaky demand and nothing done to address either end of that spectrum. Were not seeing a pickup in the global economies and nobody, i mean nobody, is doing anything to cut back on supply in the market. Two weeks ago when you were here the week before thanksgiving, oil was about 70 and you saw it going into the 50s early in 2015 but i guess weve gotten there a little ahead of your schedule. Let the record show kilndup was right. Daniel ror, one has been in the whole realm of other commodities of the goods like copper, iron ore and so forth. If theyve got that kind of coverage on equities, wed be really rolling, wouldnt we, daniel . Certainly would. Look at iron ore started the year at 135 and now below 70 a ton on that stuff. What thats really giving you is a pulse of the chinese economy. Specifically, the pulse of the chinese Real Estate Market and that market is teetering right now. So are we talking, daniel, of a i hate to use this word because it gets misunderstood, a crash of sorts thats going on in the commodities market and whats the Ripple Effect of that . Well, comparing where we are today in prices versus longterm prices, were still well above where we had been historically. Were well above historical norms. As far as whether we could be looking at further declines heading into 2015 and this would perhaps meet the definition of crash, we think theres more downsides to the market. To the extent, more Downside Risks to fixed investment in real estate. John, you look most especially at the physical commodity itself but as you have been here a couple of times, you talked about some of the companies that are highly leveraged in the Oil Shale Boom that might be vulnerable. I dont want you out of your depth, but the stocks have been hurt so badly. I think so. Again, this is commodities, at some point there will be a supply response. Whether its from opec or these companies are squeezed out from going bankrupt or Halt Operations from other things. Some supply will go offline. No question about it. Its uneconomical, their debt is unsustainable. So there will be casualties and so yes, the supply will contract. This should be stimlative to the Global Economy, most consuming europeans, chinese as well. Europeans are going to love this. Could add full percentage gdp to spain. To your point, i would still caution people, this could get ugly. 4 40, 35 a barrel. Its better in this sector. Wait until you see the eyes of the turnaround but get in early. It will be pretty clear that things are turning around and thats when you can buy. Well have you there to tell us. Lets talk more about how we got to this situation. Whats really going on . Dan just mentioned a moment ago a demand in china. We hear this, economy in china is slowing down. Emerging markets is slowing down. Is that all it is . In the u. S. , things are picking up. This time around, in the past, the selloffs for gasoline and crude oil were because of slowing Economic Conditions around the world. We have some slowness in china but the United States stepped up like a heavy weight boxing champion and delivered through fracking, you heard the story we came in on this jump in rail shipment. Going from 20,000 to over a Million Barrels a day. I mean, this is crazy stuff and we also rejigged a lot of internal pipelines to bring this oil to market. So its just been an incredible turnaround thats done this. Dan, we talked about the industrial commodities. We didnt really hit on a gold. Whats your view of gold at its current price and whats next for it . I got to imagine a fair number of our viewers own gold one way or the other. Gold is always an unusual animal in the respect it doesnt respond the same way that other commodities do. Its funny. Gold at 12. 25 an ounce pretty much where we started the year and we think some of that price stickiness around gold at 12. 25 has to do with how much supply is being dug out of the ground as precisely that sort of price range. When we look into 2015, we think current prices are actually a pretty good approximate of where theyre likely to average for the year. Dan, thank you very much. John kildup and daniel orr from chicago. For the nation, Package Delivery companies, lower fuel costs mean bigger profits. The biggest, ups gears up for biggest day of the year, 22nd. Morgan brennan went to the sorting hub in louisville to see how theyre handling all that handli handling. Reporter its peak Holiday Season and at world port, it means all hands on deck. This is our super bowl season. Thanksgiving all the way to the new year. Reporter parcel carriers global sorting hub that half of all express packages pass through. At this time of year, volume can triple with almost 7,000 packages processed each second, moving along 155 miles of conveyor belts in a facility the size of 90 football fields. Our aircraft change over 134 per day to over 200 aircrafts per day. Our levels itself will more than double. Reporter to prevent last year where more than 1 million packages missed christmas deadline, Company Invested 675 million to add more automation, increasing workforce and communicating more closely with customers. So far, it seems to be paying off. Shipping trackers ship matrix say ontime delivery rates on cyber monday increased compared to last year. Fedex has gone from 94 to 96. Our data shows ups has gone from 93 to 97. That is a significant improvement when it comes to operating at that high level. Its a big challenge. Reporter Mother Nature is still the biggest wild card. Thats why the parcel carriers have meteorologists on staff. At world port, ups has five. If poor weather moves in, the Weather Group a call can be made to divert a shipment to deicing crews. For us, its more important to be prepared for the worst case scenario. For instance, we actually put out alerts on the line of 30 risk of freezing drizzle in kansas city or whatever. So the people are prepared for that possibility. Reporter many packages move in and out of this facility by an airplane. Ups planes more than 500 planes in its air fleet. Competitor fedex has similarly large sum. Fuel costs could mean rising profits. The parcel carriers alltime highs. For the trend to continue, these parkages need to be delivered by christmas and here at world port, the race is on. For nightly Business Report, im Morgan Brennan in louisville, kentucky. Congress delivered good news late last night averting another Government Shutdown with hours to go before a deadline, a deeply divided house narrowly passed a 1. 1 trillion spending bill to keep the government up and running at least through next summer. Despite internal battles from democrats about loosening up a bank regulation, president obama supports its passage. This, by definition, was a compromised bill. This is whats produced when we have the divided government that the American People voted for. There are a bunch of provisions in this bill that i really do not like. After approving a twoday extension of current funding, the senate bedated the same bill today and as it passes, the president said hell sign it into law coming up, the stocks our monitor said could make you money thanks to the big drop in oil and the prices of Energy Companies but up next, real life drama playing out in hollywood and the ripples being felt throughout. Probably hurst corp. Behind good housekeeping, and other magazines, newspaper, local tv stations, upping its stake in the Credit Agency fitch group as it looks to expand data and Financial Information business. Hurst plans to play nearly 2 billion for 30 stake in fitch to bring total share of the company to 80 . Another big media company, sony pictures, is still reeling from last weeks hack attack which exposed a range of inside information on everything from executive pay to embarrassing internal emails. So how much could this real life drama potentially cost the studio and some of those executives . Julia boriston has more. Reporter the assassination on kim jongun which sparked the hack attack, sony is racking up its defense. Amy pascal apologizing for racially insensitive emails about president obama. Scott ruden said jolie a spoiled brat before jolie and pascal ran into each other. Its a disaster for the studio and its a corporate email. Reporter whether pascal will be pushed out. Said id be surprised if my entire legacy was based on the leak of the email exchange. Disrupt download sensitive data, reporting sony is using hundreds of computers to executive the denial of service attacks as the stakes and the cost continue to rise. Its hard to estimate but at least tens of millions of dollars. You have five films pirated, the cost of remediation, the probable lawsuits from employees, exemployees, state and identities compromised and it goes on and on. Reporter hollywood players turn to social media to respond to the private negative comments about them now shared with the world. Producer megan tweeting, bipolar 28yearold lunatic . I thought myself as more eccentric. Kevin hart responding from calling a. Its time to get back to building this empire ive dreamed of. Shock waves from the hack are rippling throughout hollywood. Across the industry, executives are shifting away from email and towards the phone. And theyre searching through their emails with sony executives to see if theres anything else that could potentially leak out with some execs, even amy pascal, making calls to preemptively apologize. Im julia borston in los angeles. Dow component say its more to own it. Thats where we begin the market focus. General electric is raising its Quarterly Dividend 4. 5 . 23 cents a share to 3. 7 . 7th dividend in the last five years for General Electric and shares with the company down to 24. 89. The Health Care Company hike it by 24 cents a share, a 9 lift and pushes the stocks yield to more than 2 . Shares of the company fell nearly 2 to 43. 69. Morgan stanley moved lower today after buckingham downgraded the stock neutral from buy. The stock now trades at a premium to peer group. Thats enough today. Shares of morgan fell 3 . For the year, its down almost 16 . Shares of new skin fell today after saying the 2016 profit below market expectations. This direct seller of skin care nutritional projects cites regulatory concerns in china. Shares tumble 6. 5 , closing at 40. 16. Two companies that help businesses analyze data have strong debuts. New relic and horton. Relic shot up on their first day of training, while yahoo spinoff horton surged 65 to 26. 38. They were two of seven ipos to hit the street today. There may be big changes in store at conway after the teamsters want to vote to unionize dock workers at the miami area facility. Conway fell 2 3 of a percent to end at 22 dollars and change. Tonight, had energy picks he said investors should buy now. Lets meet him. Hes a guy whose name i can actually pronounce for a change. Hank smith. Chief investment officer. Good to have you with us. Good to be here. You like the energy names here because you think theyre at buy points . Well, look. The market is up off of the low 2 by the last two months, the Energy Sector sold off about 40 and our view, this is a buying opportunity for longterm investo investors. Maybe not for traders. We might be early here, but particularly in the quality names, we think it represents a nice buying opportunity. Lets talk about one of the big names in the oil space we think about, hank. Exxon, its trading now around 86. This was a hundred dollar stock at the beginning of the year. Do you have nerves of steel to buy it now . I dont think so. This is one of the highest Quality Companies in the world. It has a history of not only paying a dividend but increasing the dividend on a regular basis with a yield of over 3 . Theyre also buying back shares. Youre buying it at a very low valueuation and exxon has proven it can return positive returns to shareholders over the decades regardless of where the price of oil has been. And so i think this is a good buying opportunity. You point out over the decade in the 2000s, exxon in a time where oil was averaging 40 a share, returning 7 to investors. Id take that any day. Thats right, and remember that was the decade of no returns for the broad market and yet got positive returns for exxon. But in the decade of the 70s where oil averaged 10 a barrel, exxon got the return. Dow cousins chevron. Well, i think its a very similar case, a very high quality. Youre getting a better yield, four plus percent yield. Thats better than a bond yield. Buy u. S. Treasury for 2 today or buy chevron for twice that at a 4 yield and be relatively confident youre going to get growth of income there. Plus, chevron actually has a little bit better Production Profile than exxon right now. And how about shlumberjay . More volatile but the highest quality. Down 30 off its peak a few months ago, unlike exxon and chevron down 15 and 20 respectively. But again, youre buying the highest Quality Company and we think at 30 down from where it was a few months ago is a very good buy. Thank you. Slumber jay is more fun to say than hank smith. Thank you. Coming up next, how upstarts are taking aim at the snack aisle at your supermarket and a 16 billion in the process. More fallout from those defective and potentially deadly air bags made by japans Takata Corporation that could explode with too much force and spray shrapnel. Recalling in more high humidity states including florida, georgia, hawaii, louisiana, mississippi, texas, puerto rico and the u. S. Virgin islands finally tonight, susie, a look at an upstart organic Snack Company disrupting the snack aisle and getting a lot of people to eat just a little bit healthier. Jane wells has more. Well, ive been eating a lot of these lately. Reporter and these are fighting for space on the snack table this football season. Almost 16 billion. Reporter but potato chip sales are struggling and corn are a gateway snack to obesity. Guiltless gourmet, created in the 90s, benitos. Chips and puffs made from beans. I like things high in protein. Reporter doug for man found no such snack so he tried to make something on his own, something he didnt know beans about. People say, you cant do that. Until never work and you go through that stage. And then while youre trying to develop it, youre going, maybe those guys were right. You cant do it. Reporter he did do it. Bean chips cost twice as much as potato or corn chips. He claims theyre not musical fruit due to the way theyre made and nongmo and gluten free, Everything Else in right now. One of the investors is ceo dan costello who used to work for frito lay and not revealing sale numbers gone to 30,000 outlets from 5,000 outlets. Reporter theyre in half the nations outlets. Not sure if theyre in the snack aisle or healthy gluten free foods. Its not an easy thing to fill the market where people havent seen the product before. Reporter convincing its healthy and paying more to do so is the ultimate goal, especially during football season. Super bowl ad . Not yet. Its been discussed and ill leave it at that. Stay tuned. For nightly Business Report, jane wells. We have a weekend for snack foods and rethink whats going on in the market and what to do with your portfolio. Two more trading weeks. All gains from october wiped away. Next week, a fed meeting to look forward to, or not as the case may be but the market paying attention to that and continuing whats going on in oil. Window dressing in oil. Maybe see more selloffs. Absolutely. Hope you continue to watch nightly Business Report. Thats it for us for tonight. Im susie gharib. Have a great weekend. Thank you from me as well. Im tyler mathisen. Well see you back here on monday. Get your shopping done. Nightly Business Report has been funded in part by thestreet. Com and action alerts plus where jim cramer and fellow Portfolio Manager stephanie link share their investment strategies, stock picks and market insights. You can learn more at thestreet. Com nbr. We believe in banking
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