That and more tonight on nightly Business Report for thursday, november 7th, 2013. Good evening everyone on this very busy day. Im tyler mathisen. Im sue herrera in this week for susie gharibment wall street was a twitter over twitter today. Well get to that in just a second. First, stocks sold off following a stronger than expected report on economic report that stokes fears the Federal Reserve may pull back. It rose 2. 8 , expectations 2 and coupled that with a drop in u. S. Unemployment claims as everybody waits for the jobs report tomorrow and you have a sell off. The dow falling 1 or 15 three points to 15,593, a weak text sector on the nasdaq dragging that nasdaq down 74 points and the s p slid 23. That stronger than expected gdp number surprised economy hiss but analysts are warning hang over effects from the Government Shutdown were likely tempered in the fourth quarter. Steve liesman has more. Economic growth was hotter in the Third Quarter than investor expected but that could be cold comfort in the months ahead. The government Gross Domestic Product rose 2. 8 well ahead of the 2 consensus and the best quarterly number in a year. The data accounts for growth before the Government Shutdown and the controversial debt ceiling debate that many economist believe weaken growth in the current quarter. Still, better to have more men tum than less. Housing surged ahead by 14. 6 , durable purchases by consumers up nearly 8 and exports up 4. 5 and invenn tomorrowries, there was a big inventory, 86 billion. Business equipment purchases fell and federal government fell by 1. 7 . Its the strong growth in inventories with concerns about the shut down that makes economists concerned about the current quarters growth. If they put too much on the shelf last quarter, they will spend this quarter working it off. Its seen at 1. 6 , one shot in the arm for Global Growth could be from europe. It cutted lending rate with declining inflation. They signalled more measures could be on the way. There will be attention to tomorrows delayed octobers jobs report for growth and for fed policy. For nightnightly business repo im steve liesman. Joining us to talk more is lindsey, shes chief economist at staern a. Q. Good to have you with us. Thank you. You heard steves report there. How strong was this economic report really . He suggests once you scratch the service a little bit, theres a little less than meets the eye. Thats right, on the sure face the headline growth was impressive at 2. 8 , this was the second consecutive quarter with above 2 close but it paints a different picture of the economy when you look at the key. The consumer is already pulling back in the Second Quarter falling down to. 8 from 2. 1 but fell to 1. 5 . We look at businesses, too, they are very much sidelined hesitant to invest in equipment, structures and employees, this is a report where certainly the devil was in the details. Lindsey, did the market get it wrong then . The market sold off on the idea the report was Strong Enough to perhaps change the feds bond buying program. It sounds like you would disagree with that. I think the market was a little jittered by the position of headline strength and component weakness. So theres a fear that the fed will look at that headline number and say you know what . The economy moo is actually improving enough that we can rollback accommodation. I do not believe this is enough to suggest that the fed will move away from their accommodative past. The fed is very much focused on the labor market data rather than one quarters growth data point. I think the market will eventually shrug this off and realize the fed and their policies are here to stay for quite sometime. And labor market you mentioned leads us to tomorrow and the jobs report, a lot of people thinking that that jobs report is going to be soggier than some of the more recent ones. What is your prediction here on the high end and the low end . You know, im looking for about 135, 140 for payroll growth. Jobs job creation has been slowing since the start of the year. At the beginning of the year we were seeing plus 200,000 numbers. Now we slow to a pace of about 140,000 and i suspect that pace will continue to lose momentum to the end of the year, maybe slowing to a pace of 125,000. Clearly at this point, the current level of production is meeting the current level of demand and with productivity out pacing growth there is no incentive for businesses to hire especially at the backdrop of added encertainty giving the sha fan gins in washington. It sounds like the headline today looked like the economy was doing better and recovery was on firmer footing, if you look underneath that in when you just mentioned about job creation, it sounds like maybe this recovery is just lukewarm. I think youre very much right. I think well see this 2, 2. 5 range for sometime carrying over through 2014. Now one of the variables, too, that affected Third Quarter growth was inventories. If we strip out inventories for growth, we saw 2. 1 or a tenth higher than the end of the Second Quarter. So very much unchanged, and unchanged is not enough strength to suggest the fed is ready to rollback the monthly bond purchases. Thank you very much. Lindsey, chief economist at staern ag. After the hype, quitter made the debut on the New York Stock Exchange and a strong one. Shares rose 73 in the first day of trading, exceeding the expectations of many. We look at what turned out to be an eventful day. Reporter how much is 140 characters worth . The answer is billions. Twitter, the upstart social networking site that lets Users Exchange brief messages, photos and videos went public and became one of the worlds most valuable companies. The shares were priced at 26 a piece but jumped to 50 within the first few moments of trade at the New York Stock Exchange. They settled below that level, it leaves twitter valued in the rage of 30 billion. Bigger than the companies listed. Weve had consistent tremendous growth across the world, frankly, for the last several years, over 230 million monthly active users. We have a tremendous set of thoughts and strategies to increase the slope of the growth curve. I would consider some of them tactics, some of them broad strategies in service to doing what i refer to as bridging the gap between the massive awareness and deep engagement. Reporter todays action makes twitter not just one of the biggest but also one of the most successful ipos in recent history. Thats good news for twitter and the nrk stock exchange, which is surpassed rival nasdaq after it famously botched facebooks listings last year in terms of tech ipos. They dismissed talk of another tech bubble and experts the iopos in this year to grow. The market is in a level where it makes sense to take companies out. The investors are receiving them pretty well. I dont feel its wrong. I think people are being thoughtful about what they want to own, what they dont want to own and the market is conditioned, if it keeps working, i think the supply of ipos will keep coming. Reporter the challenge is keeping investors happy because at this prices its trading 75 times revenue to date, 20 times for facebook and four times for amazon. One has already downgraded the shares saying they are quote simply too expensive. For nignightly Business Report im kelly evans at the New York Stock Exchange. Ipos like twitter are beautiful when they work when the stock opens smoothly and price goes up but it doesnt always happen than way skpmts after the initial flurry of enthusiastic buying, those shiny shares sell off hard. Dominic chu with a lesson in the crowds. Reporter lets face it, most of us werent in that select group of folks that got the 26 ipo price for twitter shares. An elite group of institutional viewers and wealthy vinces were part of that action. So, should you rush in and buy shares of these hot ipos whenever you can . A lot of gains happen on that first day of trading so recent history gives examples why you might want to wait a little while if you didnt get that ipo price. Take yelp, the company had an ipo price of 15 on march 2nd, 2012. Yelp shares soared and closed at 58. 26 a gain of 54 . If you bought shares at the closing price, your investment would have fallen in value at 6 just one year later. Then, there is Internet Radio company pandora. If you bought in the close of first day trading you would lose 39 of your investment a year later. Same goes for groupon. It rose 31 back on the first day in november of 2011. If you rush to buy it at the close of the first day of trading, you would have lost 85 of your investment just one year later. Professional networking site linked in is the only real bright spot. Shares doubled back in may of 2011 and if you bought at the close you would have made money, a whopping 5 . Ipo trading is often filled with volatility and thats why many veteran investors stay away father or moth from them. I would never buy on ipo. I wait until things settle out and people figure out what it is. Once the emotions come out of it, thats the time i look to buy a stock like this. Reporter we all know what happened to facebook. Shares lost half their value in the first three months of trading, but its worth noting if you held on to shares of facebook, yelp, pandora and linked in you would currently make money. Groupon, on the other hand, is still trying to get back positive. Consumer credit rose more than expected in september but the Federal Reserve says americans cut back on use pg credit cards for the fourth straight month. Borrowing for cars and Student Loans rose by 16 billion, while Credit Card Debt fell 2 billion. Consumer spending which accounts for more than 2 3rd s of Economic Activity grew. Fannie mae and freddie back are close to paying back. The biggest providers posted strong earnings in the Third Quarter as the Housing Market continues to recover. The gains will enable fannie and freddie to send the u. S. Treasury 39 billion in december and that will finish repaying or come close to it, the government aid they got when they were rescued in 2008 and expected by early next year the government will turn a profit on the 187 billion bailout of the two mortgage giants that own or guarantee 2 3 rrds of all u. S. Home loans. It will cost 2 billion to cover the back pay of 850,000 government workers furloughed over that 16day Government Shutdown. Thats a cost that will be passed on to taxpayers one way or another. Closing National Parks during the shut down cost communities about 500 million in lost spending by visitors and the Internal Revenue service, of course, delayed 4 billion in tax refunds. The irs will need to delay next years tax Filing Season by up to two weeks. The Obama Administration says it will additionally curve Economic Growth in this, the current quarter. While seventh focused on twitter, there are budget talks going on trying to avert another shut down but today senator Lindsey Graham says those talks are deadlocked. Graham was quoted saying they were stuck she tried to say. For more on the budget talks, lets join john harwood. Weve seen this movie before and the market was very volatile during that period of time. Are we in for another round . Well, sue, we have seen this movie, not only before but continuously for two years, ever since 2011 when the setup of the Super Committee trying to get a deal for additional deficit reduction but couldnt get it because of this very simple equation. Republicans said to get a deal we need to cut entitlements, democrats said we need to raise taxes. Republicans have not been willing to go there. The question is is there some sort of a deal that can evade that fundamental road block . The way to do it is shrink the deal small to make the entitlements not about Social Security and medicare, the hut buttons but subsidies where you can get bipartisan agreement and make the revenue increases very small, not general tax increases but some sort of user fees on specific sets of consumers of Government Services and thats where we are right now, and weve got to see if we can get some sort of agreement to avoid a shutdown. Nancy pelosi wants to get it done by thanksgiving. The formal deadline that weve got for this round of budget talks is mid december but of course, there is nothing binds that occurs on that date. The real issue is going to be in january and february when Government Spending runs out and we got to raise the debt limit again, well find out whether were headed for the other shutdown that cost us jobs and government money. Thank you very much. John harwood reporting. For several years chance fats are disappearing from grocery isles and restaurant menus. Now the food and Drug Administration will finish the job. The fda announced it will require the Food Industry to gradually phase out art fish l chance fats. They can raise levels of bad cholesterol increasing the risk of heart disease, the heart clogging substance was once common in the american diet showing up in baked goods, fried foods, microwave popcorn. A dow component thousand dollar stock. Could they set the tone for tomorrow . But first, a look at how International Markets closed the day. A pair of big name earnings out after the bell. Price line and disney, price line earned 17. 39 a share beating estimates. Revenue rose 2. 27 billion, also beating estimates. Shares are up after hours and are up, hold on to your hat, 1200 since the market lows of 2009. Sheila joins us from the nasdaq. Sheila, what is the big take away on price lines numbers . The big take away the e travel sector shows strength and price line is undoubtedly the big leader. The Company Posted strong earnings for the Third Quarter with bookings growing 37. 5 . They also projected double did get growth for the fourth quarter, as well. The companies diversify in hotels, car rentals, air travel and internationally with an emphasis on asia pa sitif i can and latin america. There was a change at the top, jeffrey boyt will take over the chairman role and price line firmly in the thousand dollar claim after the bell. Sheila, thanks so much. Disney earned 77 cents a share, beating by a penny. Revenue up 1. 5 to 11. 6 billion. But shares fell right after the news. Julia boorstin follows disney and joins us now from San Francisco. What should investors focus on now, julia . Reporter sue, disneys results were better on across the board results. The studio showed strength, Consumer Product and interactive divisions swung to profit, which was unusual for a division thats only been profitable one quarter in the past. The reason the stock is trading lower seems to be on expectations about the Media Network division, the biggest. The studio the company warned there would be issues with deferred revenue from the prior quarter so not unexpected and disney says without those issues it would have showed an increase in operating profit on higher affiliate feeds and advertising but that seems to be what is impacting the stock. Sue, and tyler, there was a lot of optimism especially about digital. Weighed in and said with the new Marshall Netflix deal announced today it would be a win win fsh the company producing original content for netflix calling it a breakthrough and twitter says hes very bullish on mobile and social saying both things are great for disney. Very quick thought, if you would, julia, on twitter which you covered you were outside the headquarters, whats the buzz out there . To buzz here in california seems to be positive. There were a thousand employees gathered really early this morning to watch cnbc and the interview and people have gone back to work but they will be celebrating again when there is a big meeting at the headquarters. Thank you julia very much. There is good news for j. C. Penney for a change and thats where we begin tonights market focus. The retailer sales rose 1 in october for the first time in close to two years. Penny credits the return of deep discounts and popular in house brands, including st. Johns bay and stafford home goods. Home good sales rose more than 50 from a year ago. The stock surged 5. 5 to 8. 13 dlar8. 13, good day for pennies. Wendys from 26 million a year ago, more customers snapped up the pretzel bacon cheese burger and pretzel pub chicken sandwiches. Mmmm, lower than expected quarterly revenue worried investors. Shares down today 11. 5 to 8. 05. Toll brothers buying the Home Building business of shapel. It gets toll access to wealthy high Growth Markets such as metro los angeles, Orange County and the bay area of San Francisco. Shares up to 32. 68. Qualcomm, increasing competition overseas caused the leading mobile ship maker to post earnings short of the estimates. The company gave a weak outlook for the current period. The stock tumbled 4 to finish at 67. 09. Temper sealy was a big stock. The Third Quarter results comfortably beat wall street boosted by a bounce back in north american sales. The stock jumped 12 . More bad news drove down tesla. The model s electric car caught fire today for the third time in six weeks. No injuries in any of the fires unless you count the injuries suffered by teslas once highflying stock. It fell for the third day in a row after ricing by more than 400 earlier in the year. But now in audition to fierps, there are concerns about a battery shortage as well as the cost. Tesla will build more cars and become lately a favorite among short sellers who believe the stock is still over valued. Shares continue to fall since the Earnings Report tuesday down 7. 5 today to 139. 77. Shares of mens warehouse took off after an activist investor took a roughly 10 stake in the company. Eminence capital is encouraging to to acquire mens warehouse but the Company Rejected the bid calling it too low. The stock up 7 today to 45. 43. Up next, in the hunt for yield, commercial Real Estate Investors change the way of thinking. You may want to take some notes. That straight ahead but first a look at commodities, treasuries and currencies. Since the recession, commercial investors stuck to the safe tiff of u. S. Markets but a report shows thats changing thanks to new cash and new opportunities. Diana olick reports. Reporter new york, San Francisco, boston, these have been save havens for commercial real estate cash as investors licked recession narcoticry wounds. That is now turning around. It ends with a head wind. There is more positive momentum to help than what weve had in the last few years. Reporter that momentum is in the form of cash, foreign and institutional investors, private equity and rates not to mention that banks are lending again and the Mortgage Backed Security Market is on the rise. Market wide, while San Francisco is at the hot list, houston is second and denver, nashville and austin are seeing much more investor demand. A noticeable dropout, washington d. C. It fell from 8th to 2 2nd place. You c. Its been noise for the budget debate and shut down, see quest ration, those are symptoms, but the bigger story, i think in the eyes of investors is just the mess of uncertainty. Reporter so why is the oh, so ungamous warehouse so unpopular . E commerce, as shopping moves online they need Distribution Centers near big cities as consumers demand it overnight. Reporter from cities to sectors, industrial is number one surpassing the apartment sector. The warehouse subsector is driving the game. It had a major impact on the warehouse sector. Thank you. Reporter chamber street, a new jersey based reet went public this year and focuses on the warehouse space. We see other companies are adding more and more of a direct to the customer component to their warehouse operations. Reporter as competition for the space grows, vacancies are dropping, rents are rising and yield is looking very attractive. All the more reason for commercial cash to store itself in the sector. For nightly Business Report, im diana olick in washington. Finally tonight with twitter going public, we thought we would look at the first ever tweet back in 2006 it read just setting up my twitter. Wow. Pretty historic day, right . And lots of famous tweets like the way we got first hint that osama bin ladens compound was found. Thats it for nightly Business Report. Im sue herrera, thanks for watching. Im tyler mathisen. Sigh you back here tomorrow night. Nightly Business Report has been brought to you by. Thestreet. Com, up to the minute Stock Market News and in Death Penalty analysis. Our quant Rating Service provides objective ratings daily on over 4300 stocks. Learn more at the street. Com nbr. Was provided by were american airlines. And by contributions to your pbs station from viewers like you. Hi, im rick steves, and its christmas time in europe. From manger scenes to mistletoe from norway to rome, were celebrating all over the continent. Buon natale
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