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Nightly Business Report - Tuesday March 5 2013

Nightly Business Report - Tuesday March 5 2013

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Tonight on Nightly Business Report, a look at a historic day on Wall Street as the Dow hits an all-time high. NBR hits the drivers behind the Dow's rise and the current state of the individual investor.
Also, as part of our In Focus: The American Recovery series, a look at the comeback in the housing market.
Tonight on Nightly Business Report, a look at a historic day on Wall Street as the Dow hits an all-time high. NBR hits the drivers behind the Dow's rise and the current state of the individual investor.
Also, as part of our In Focus: The American Recovery series, a look at the comeback in the housing market.

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Published by: Nightly Business Report by CNBC on Mar 07, 2013
Copyright:Attribution Non-commercial


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<Show: NIGHTLY BUSINESS REPORT><Date: March 5, 2013><Time: 18:30:00><Tran: 030501cb.118><Type: SHOW><Head: NIGHTLY BUSINESS REPORT for March 5, 2013, PBS><Sect: News; International><Byline: Tyler Mathisen, Bob Pisani, Michelle Caruso-Cabrera, Sue Herrera, Diana Olick><Guest: Jim McCaughan, Mark Zandi><Spec: Dow Jones Industrial Average; Economy; Stock Markets; Business;Housing><Time: 18:30:00>ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen andSusie Gharib.TYLER MATHISEN, NBR ANCHOR: Uncharted story. The Dow Industrials closed atan all time high, breaking the previous record set nearly 5 1/2 years ago. The question now:where do stocks go from here and what should you do to be ready, whichever way they turn?And laying a foundation. As stocks hit new highs, the housing market shows strength of its own. In tonight`s in focus: housing`s rebound and risks.And good evening, everyone, and welcome to our public television viewers. I`m Tyler Mathisen.Susie Gharib is off tonight, and that is because we are proud to say, she is receiving theElliott V. Bell Award from the New York Financial Writers Association for her lifetimecontributions to financial journalism.It`s a great night for her and NBR and we congratulate her.Our top story aside from that, of course, is the Dow. It surged to a record high closetoday, rolling past the previous highs setback in October of 2007. Now, for its part the broader S&P 500 closed at a fresh 5 1/2 year high, and the NASDAQ finished the session at get this a 12-year high, reached just before the tech bubble burst back in the year 2000.All in all, a day for the record books. The Dow more than doubling since its bear marketlow almost exactly four years ago. But the questionis: why? Why so high? And why now?
 (BEGIN VIDEOTAPE)MATHISEN (voice-over): So why is the Dow so high when the economy is so cool, gas prices so high, and consumers still smarting from tighter take home pay?Well, one reason is this man, Ben Bernanke. The Fed chairman has been pumpingmoney into the system for years and he`s not stopping any time soon.BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: In the short term, I would believe that we ought to maintain a reasonable degree of fiscal support, stimulus for theeconomy.MATHISEN: But is it all Bernanke?CATHERINE KEATING, JPMORGAN INV. MGMT. AMERICA`S HEAD: It`s not just Bernanke.MATHISEN: Catherine Keating oversees nearly a trillion dollars of investments for JPMorgan (NYSE:JPM).KEATING: Balance sheets are strong. They are more liquid than in decades. Profitshave already surpassed pre-crisis highs a couple of quarters ago.MATHISEN: In fact, since the market`s 2009 low, corporate profits have risen faster than at any time since the tech boom of the 1990s. And Dow profits are forecast to rise 9.2 percent this year and 9 percent in 2014.Helping too is that the Dow isn`t the same measure it was back in `07.Gone from the index are bailed out AIG, Citi and G.M. In are Cisco(NASDAQ:CSCO) Systems, Travelers and United Health. A different Dow for a different time.(END VIDEOTAPE)MATHISEN: Be sure not every stock is up since the market bottomed back in `08.Hewlett-Packard (NYSE:HPQ) alone among the Dow components has lost money off 22 percent.But let`s say you had perfect timing and you put $1,000 into the following Dowcompanies when the bull started to run back in March of `09.And Caterpillar (NYSE:CAT), which is up 286 percent, you`d be looking at$28,060 today. Home Depot (NYSE:HD), $2,910. And American Express(NYSE:EXPR) (NYSE:AXP), up 513 percent, you would have a stash worth more than $500.Might we all be so lucky.
Well, with the Dow already up nearly 9 percent this year, even after it gained all of lastyear, when the Dow surges so smartly, investors naturally want to know where the heck are we? Near the beginning, middle or end of a bull market?Bob Pisani now with a history lesson on how the markets reacted following previousrecord high closings.(BEGIN VIDEOTAPE)BOB PISANI, NBR CORRESPONDENT (voice-over): So, we finally made it, historichighs on the Dow industrials. But now what? Stock bulls are saying that this could be the startof a sustainable bull market that could last for several years.Their main arguments: first, the Fed is back stopping the economy through low rates.Second, the economy is slowly improving. Third, earnings are at record highs. Fourth, there`srecord cash on the sidelines both from individuals and from corporate America. And, finally,with rates so low, there`s just no other place to put money right now.But there are plenty of headwinds that could prevent another bull market fromdeveloping. Bears point to sub 2 percent GDP growth that is constraining job creation, anemicrevenue growth for corporations, and the threat that the Fed may remove its stimulus programwell before there is robust economic growth.(on camera): The biggest threat to the market`s advance is also its biggest hope, andthat`s Washington -- a bigger deal on tax reform and entitlement, as well as an extension on thedebt ceiling would go a long way towards boosting business confidence, spending and hiringwould likely increase and conversely, the failure to do anything in Washington will also weighon the markets.For NIGHTLY BUSINESS REPORT, I`m Bob Pisani at the New York Stock Exchange.(END VIDEOTAPE)MATHISEN: Here to give his take on what`s next for stocks is Jim McCaughan, CEO of Principal Global Investors. It has $281 billion in assets under management.Welcome. Good to have you with us, Mr. McCaughan.JIM MCCAUGHAN, PRINCIPAL GLOBAL INVESTORS CEO: Good to be here,Tyler.MATHISEN: You know, the last time the Dow was as high as it is today, the multiple,the price earnings ratio on stocks was much higher than it is today. Does that give you anycomfort that equities can move up from even these lofty levels?

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