Is still growing at a moderate pace, the housing sector is improving, Household Spending is expanding, but Business Investment has slowed, the Unemployment Rate is still elevated as we know, and strains in the Global Financial markets pose significant risk. As darren gersh reports, the fed wants to keep a low profile for the next few weeks. Reporter less than two weeks before the election, the Federal Reserve was clearly not looking to make big changes in its policy statement. So what we got were slight course corrections today. On inflation, for example, the fed said inflation picked up somewhat from september, because of Higher Energy prices, but that trend may already be in the rear view mirror. If anything, core inflation has been coming in low over the past three months. The core c. P. I. Increased only 0. 1 over july, august, and september, pushing it further below their 2 target, i think that might be more significant for them than the fact that Energy Prices rose in a transitory way over the summer. Reporter we wont know for a few more weeks what the fed talked about at todays meeting, but its a good bet chairman ben bernanke and his colleagues are trying to figure out what to do at their december meeting. Thats just before a bondbuying program called operation twist expires. Its goal is bringing down long term Interest Rates. My guess is what they will do is they will expand their open ended quantitative easing, double it from 45 to closer to 85 billion a month in treasury purchases. So be more aggressive than the current quantitative easing. Reporter another topic of discussion today was most likely what to tell the world about where the fed hopes to take the economy. The Central Banks already sets a target for inflation of 2 . The debate now is whether to be equally specific about the feds goal for unemployment. The plus in targeting the employment rate is they get more juice in the sense that it would pushing longterm Interest Rates down more and it would push stock prices and housing prices up more. Reporter but members of the feds policy Setting Committee disagree on how to measure that target. Lots of things besides the fed thats action influence the Unemployment Rate. So its very hard to set a target for something you dont control and the circumstances around which you cant really foresee that well. Reporter the fed would like to reduce uncertainty about what it is trying to do, but first the fed itself has to resolve its own uncertainty about how low it can push unemployment. Darren gersh, n. B. R. , washington. Susie for more analysis on that fed decision, diane swonk joins us, shes chief economist at mesirow financial. So, the fed is sticking to its plan, no real surprises today. Did anything stand out for you . You know, there really wasnt much that stood out. I think that was important. The real issue here is that the fed is still continuing to be sort of a certainty in this ocean of uncertainty for both consumers and investors alike, saying were willing to leave that punch bowl out that a little longer than anybody thought and maybe get some people tipsy. There wasnt much Market Reaction to the fed decision. Do you think the message of the markets is there is really not much more that the fed can do to fix the economy . I dont think the fed is out of bullets at all, nor do they. They think every time they do something, they need to do more. And the Federal Reserve is certainly going to make another announcement in december to compensate for the end of what they call the twist. Chubby checkers song, the twist. Theyre going to continue to buy more Treasury Bonds and extend their Balance Sheet further. The problem for the fed is it is almost as if ben bernanke has dropped the money from the proverbial helicopters and it has got caught in the trees and theyre trying to shake it out of the trees and have it fall to the ground so we can pick it up and spend it more. A lot of people are homeless, and a lot of people are going to be voting in the election, and theyre trying to figure out what is going on in this economy. We seem to get two pictures. We have companies saying that the outlook is bad, and were hearing theyre laying off workers and closing plants and cutting costs, and yet the message from the report card from the feds sounded a little more encouraging about the recovery. So which is it . Clear it up for us. What were seeing is the Manufacturing Sector, which had been the shining star, is going to the housing sector, which has been absent during much of this recovery, the fact that the housing sector is coming back is a really powerful message out there, and really important that housing prices have bottomed. Thats the Largest Equity Holdings for most consumers, and that along with the fact were building homes again, particularly singlefamily homes, and in terms of the dollar. Bigger than apartments, and that is not happening again. Thats an important start in the right direction. You know, Warren Buffett said today it really doesnt make a difference which candidate ends up in the white house. American businesses and the economy will improve under either one. So does it really matter who wins the president ial race . You know, i spend more time understanding politics to handicap what is going to happen with fiscal policy, tax policy, and spending policy, because that matters at this stage of the game. What really is is the game changer is not really who is president , but who wins the senate and so we have a roadmap going forward, getting rid of some of the uncertainty on taxes, spending, and Everything Else out there. We have one more meeting of the Federal Reserve before the end of the year. Anything we should be expecting . What are you monitoring over the next couple of weeks and months . What we will see is i think the fed will expand their Balance Sheet further into december. As we get into next year, i think we will see that shift, where the fed stops talking about calendar days, and actually starts explicitly targeting the Unemployment Rate over a period of time. Well see Something Like well keep monitor costs easy and continuing to expand our Balance Sheet until unemployment falls below 7 . They havent decided on the actual rate yet. I would have loved to have been a fly on the wall today because no doubt there was a debate on that. They want to get explicit targets so people really know what the fed is going to. Diane, thanks so much. Chief economist at mezro financial. Reporter im erika miller in new york. Still ahead, we look at why an improving economy isnt creating more construction jobs. Tom early stock gains on wall street turned to losses by the closing bell as investors and traders reacted to the Federal Reserves latest take on the economy. Positive news on housing failed to bolster stocks, well have more on housing a little later in the program. As for stocks the dow fell 25 points, the nasdaq lost nearly nine, and the s p was down four. For the second time this month, federal prosecutors in new york have filed a civil lawsuit against a big bank over bad home mortgages. Todays lawsuit goes after bank of america for at least one billion dollars in damages, alleging bank of americas countrywide financial unit duped the government into buying home loans destined to go bad. In the lawsuit, prosecutors said countrywide called its strategy the hustle, designed to speed up Mortgage Loans by eliminating quality safeguards. The hustle allegedly included misstated incomes for borrowers, inflated property appraisals and mis representations of the property being bought. But at the same time, countrywide claimed it was making it more difficult to qualify for home loans. Countrywide and bank of america systemically removed every check in favor of its own balance. They cast aside underwriters, eliminated quality controls, and concealed resulting defects. Reporter the government mortgage giants subsequently bought the mortgages, only to see them fail, contributing to the collapse and government rescue of fannie mae and freddie mac in 2008. This is the First Federal civil case involving loans sold to the two government mortgage giants. Two weeks ago, federal prosecutors sued wells fargo, accusing it of reckless mortgage lending, sticking taxpayers with the bill. Todays lawsuit claims bank of america failed to buyback loans from fannie mae false, and late this afternoon, a bank of america spokesman told n. B. R. That is simply false. The statement continued, at some point, bank of america cant be expected to compensate every entity that claims losses that actually were caused by the economic downturn. Susie as we reported, the Federal Reserve said the housing sector continues to improve, and there were more signs today. Sales of newly built Single Family homes surged to their highest level in more than two years. September sales rose 5. 7 to an annual rate of 389,000 units. That was much better than expectations. Home prices were up as well, rising for a seventh straight month, and nearly 5 year over year. All this week were looking at the housing market. Tonight will rising home sales, and higher prices mean more construction jobs . Currently, the Unemployment Rate for those workers is about 12 , much worse than the national average. Erika miller reports. Reporter the men and women in hard hats have been among the hardest hit workers since the great recession. The u. S. Economy may be recovering, but there has not been much of a gain in construction employment. Construction employment has been very spotty. Weve seen a couple of months and then it flattens out or even drops back down. Reporter in the past two years, the Construction Industry has added 36,000 jobs. Thats a fraction of the 3. 9 million positions that have been created in the private sector overall. But there has been one bright spot across the nation apartment construction. The reason has as much to do with lifestyle preference, as economics. There does seem to be a shift in preferences among young, potential homebuyers to live closer to the city or in the first ring of suburbs. Many of them are looking to stay in apartments living rather than having a home further out where they need a car to get any where. They would have more of a mortgage they would be tied into. Reporter on the flip side, public spending on construction has fallen sharply. Its down 3. 5 from a year ago, as state and local governments tighten their belts. The Construction Industry is hoping next year will be better for hiring than this one. Many u. S. Businesses have put projects on hold, due to political uncertainty, and worries about the fiscal cliff. But the most important factor is the economy you might expect that as the housing recovery gets a little bit of pace over the next year or so, that should translate into stronger hiring going forward. We are not going to return to levels we were at before the recession, the housing sector is not going to be that big again. But the trend should be up. Reporter if construction improves, its good for the economy as a whole. According to trade association figures, every billion dollars spent on construction creates 28,000 jobs throughout the economy. Erika miller, n. B. R. , new york. Susie tomorrow, we tackle the rental market, and one especially hot market for renters, as we continue our weeklong look at the housing comeback. Tom from housing to manufacturing. Manufacturing has been a bright spot in the u. S. Economy, but its outlook may be dimming. A preliminary report for october shows demand for u. S. Products is beginning to wane, threatening to turn manufacturing into a drag on the economy. Diane eastabrook has details. Reporter there was both good and bad news today for u. S. Manufactures. The good news Financial Information firm markit said its flash purchasing Managers Index showed modest improvement in october, increasing to 51. 3 from 51. 1 in september. A reading above 50 is considered positive. Now, comes the bad news. Markit said its most recent survey of roughly 600 u. S. Factories found growth in new orders slowed to a modest pace this month. While hiring increased slightly it did so at the slowest pace in two years. And finally, factories said commodity costs increased sharply in this month. Markits chief economist Chris Williamson said, while the consumer side of the u. S. Economy appears to be finding a new lease on life, the Manufacturing Sector is currently acting as a drag in terms of both Economic Growth and the labor market. Purchasing managers told markit they think much of the weakness stems from uncertainty in europe and asia and concern about the fiscal cliff at home. Diane eastabrook, n. B. R. , chicago. Susie zynga, showed investors today that its very much in the game. After the market close, shares of the video game company, most famous for farmville, jumped more than 15 . Zyngas Quarterly Results met estimates, and the company also said it will buy back 200 million worth of shares. Looking at the numbers zynga broke even. And revenue was a bright spot up 3 from a year ago. But as Ruben Ramirez reports the gaming industry is shifting as people spend more time on their smart phones and tablets. Reporter you dont have to be a big company to get your game onto a smartphone, analysts call it the democratization, and its wreaking havoc on the video Game Industry. For years and year you had an arms race in the video Game Industry. The Bigger Companies were able to make much better games, better graphics, better talent, all those kinds of things and that worked really well when there was a limited market in terms of the shelf space in a store. Reporter sales of in the video Game Industry fell 24 last month, marking a tenth consecutive monthly decline. Big Companies Like electronic arts, Take Two Interactive and activision have struggled over to find their footing in a rapidly changing environment. Its just been a sector that has been decimated by the fact that mobile devices, tablets, and phones are really taking more and more of consumers time. Reporter the move to social gaming like zynga was supposed to breathe new life into industry, but thats fading fast. Now that everything is moving away from desktop and away from facebook to the mobile platforms zynga is just like everyone else and so far they havent proven that they can make money on that. Reporter over the next two weeks well see big name titles like halo, assassins creed, and call of duty hit store shelves just in time for the holidays. While schacter says those titles will likely do well, a shifting industry landscape may leave some of the big players behind. Ruben ramirez, n. B. R. , n. Y. C. Susie for rajat gupta, it will be two years in prison, and a 5 million fine. The former Goldman Sachs board member was sentenced here in new york today, for leaking boardroom secrets to his friend and former hedge fund manager, raj rajaratnam. Gupta was convicted of securities fraud and conspiracy. Prosecutors had asked for a prison term of eight to 10 years. So another rough day in the markets. And at least for investors, not allowed to hang their buy trades on from the Federal Reserves. Lets get everybody updated with tonights market focus. And u. S. Stocks did continue to move lower. Adding to their losses since late last week. Early gains in the s p 500 vanished in the first hour of trading. The index hugged the unchanged level waiting for the Federal Reserve, only to move lower after the central bank sticks with its strategy of bond buying and low Interest Rates. Trading volume was 649 million shares on the big board. It picked up from yesterdays pace on the nasdaq, to just below two billion shares. Among the top sectors, utilities was the biggest percentage loser, down 0. 7 . The energy and Technology Sectors fell 0. 6 each. Tech giant Cisco Systems was a drag on the Dow Jones Industrial average. The stock was stung by a disappointing outlook from a big competitor. Shares of cisco fell 3. 5 . Volume almost doubled. This is a two month low for shares. Adding to the cloud over cisco, hewlettpackard c. E. O. Meg whitman at a tech conference said, despite troubles at her company, she think h. P. Is in better shape to take advantage of the changing Technology Market than cisco. That boast didnt help h. P. Shares though. They sank 1. 5 closing a penny above their most recent low. As for the competitor whos outlook weighed on the tech sector, that was juniper networks. Late yesterday, the networking gear manufacturer had a disappointing forecast as spending by Telecommunications Companies remains uncertain. Shares dropped 9 even though the Company Reported better than expected earnings in the latest quarter excluding charges for layoffs. Networking stocks could face new selling pressure tomorrow. After the close ffive networks turned in disappointing Quarterly Results. After closing at 93. 32, shares fell as much as 10 in after hours trading. A. T. T. Saw the growth in its new wireless customers slow down to a fraction of its biggest competitor verizon. Earnings were three cents higher than estimates, while revenues were disappointing. Almost half its revenue comes from its wireless business. 151,000 customers signed long Term Contracts during the quarter. Verizon had 1. 5 million new subscribers. A. T. T. Stock dropped 0. 8 . The stock has been sliding since the first week of october, when it hit a four year high. We saw mixed results and stock reactions from a quartet of big defense contractors. Boeing had better than expected earnings and it raised its full year outlook. But shares dropped a fraction. Northrupgrumman shares also fell despite beating earnings estimates. Lockheed martin rallied 2. 1 after raising its outlook and reporting stronger than anticipated results. And General Dynamics was up 2. 4 even though its earnings came up short of estimates. Facebook was very heavily traded after last nights better than expected earnings report. It translated into a 19 stock price pop today. Volume was five times average. This is its biggest single day rally since it went public in may at 38 per share. But even with the pop, it remains well below that initial price. Meantime, netflix fell 11. 9 after warning last night it may lose money this quarter thanks to its International Expansion costs. The five most actively traded Exchange Traded products were mixed. The gainers were the emerging markets fund and the s p 500 volatility note. And thats tonights market focus. Susie the big business of Debt Collection is about to get a new watchdog. The Consumer Financial Protection Bureau said today it will supervise firms that collect at least 10 million in Consumer Debt annually. Thats more than 60 of the collection industry. The bureau says it will examine whether collectors are up front about who they are and how much people owe. Theyll also watch for companies that harass consumers or use dishonest phone tactics. Tom this is an important week for microsoft and its shareholders. The company is due to officially launch its newest operating system on friday called windows 8. But today the Company Learned it faces a fine by european regulators that could amount to more than 7 billion. Reporter microsoft has a month to respond to accusations it did not offer a choice of internet browsers beyond its own Internet Explorer in a recent version of its current windows software. It is required to do so under an agreement with european regulators three years ago. In a statement, microsoft said we sincerely apologize for this mistake, calling it a technical error. As microsoft prepared to release its windows eight software friday, it also acknowledged its making changes in how users can choose their internet browser as a result of its discussions with the european commission. Microsoft has a lot at stake. A european fine could be as much as 10 of its global revenues of 74. 3 billion. And with a new version of windows coming this week, that product is a key driver of future business. The Windows Division brings in 25 of the companys revenues. Shares sank 0. 6 to close at 27. 90, their lowest price since midjanuary. Susie in the money file tonight, its that time of year again. Open enrollment for Medicare Part d, the Prescription Drug coverage. Heres karen gibbs, founder of the gibbs perspective. Its open enrollment time for Medicare Part d. If youre 65 years or older, disabled or a care giver for someone on medicare, you have from now until december 7 to review and modify your Prescription Drug plan. Approximately 49 Million People are enrolled in Medicare Part d and can expect an average annual premium increase of 7 , but increases can vary from as low as 1 to as much as 23 . Any changes you make will be effective january 1, 2013. Medicare has increased coverage for brand name and generic drugs in the donut hole, the gap between initial coverage limit and maximum coverage and expanded coverage to include depression, alcohol abuse and cardiovascular disease. Compare the cost of Prescription Drugs, both brand name and generic; determine if your preferred pharmacy is in the plans network; and consider whether you want coinsurance or copayment coverage or some combination of both. With more benefits, better choices and lower costs, it makes sense to shop and compare. To find a plan, go to www. Medicare. Gov. Im karen gibbs. Susie when it comes to celebrities and big pay checks, you hear a lot about oprah and brad pitt, but what about those who continue to earn big bucks when theyre gone. Forbes is out with its annual list of top earners among, dead celebrities. Elizabeth taylor is number one her estate earned 210 million in the past year, much of it from an auction of her jewels and art. Shes followed by michael jackson, at 145 million, and perennial top seller, elvis, at 55 million. Tom if youre wondering how they manage to pull in such big bucks, most of it comes from licensing deals with their estates. Thats nightly Business Report for wednesday, october 24. Good night tom and everyone. Tom goodnight susie, well see you online at www. Nbr. Com and back here tomorrow night. Captioning sponsored by wpbt captioned by Media Access Group at wgbh access. Wgbh. Org join us anytime at nbr. Com. There, youll find full episodes of the program, complete show transcripts and all the market stats. Also follows us on our Facebook Page at bizrpt. And on twitter bizrpt
comparemela.com © 2020. All Rights Reserved.