Captioning sponsored by wpbt this is n. B. R. Susie im susie gharib. Ghosts of the financial crisis come back to haunt standard and poors. The Justice Department is close to filing a lawsuit against the agency for wrongdoing in its ratings before the financial crisis. Tom im tom hudson. Weakness in Technology Shares helps derail a fiveweek runnup on wall street, we look at stocks and the individual investor. Susie and michael dell could be taking the Computer Company that bears his name private, as soon as this week. A look at what going private means for investors. Tom that and more tonight on n. B. R. susie entirely without legal merit, thats what standard and poors is calling a potential lawsuit by the department of justice, for s ps mortgage bond ratings ahead of the financial crisis. These charges come five years after the financial crisis and would be the first alleging illegal behavior by a major ratings agency. As darren gersh reports, s p is fighting back. Reporter what took so long . Thats the reaction from critics who have long argued standard and poors gave a stamp of approval to flawed Mortgage Securities that helped bring on the financial crisis. It has to do with the unique role that ratings agencies play in the entire system of selling and distributing securities and the claims that they de about their role for which they were paid handsomely. Reporter in a statement, standard and poors said the Justice Departments lawsuit had no legal or factual merit. Saying it would disregard the central facts that s p reviewed the same subprime mortgage data as the rest of the market including u. S. Government officials who in 2007 publicly stated that problems in the subprime market appeared to be contained. Reporter s p goes on to argue that the securities at issue in the Justice Departments case were reviewed by another ratings agen and received the same rating. S p says it also began downgrading many Mortgage Securities in 2006, warning that conditions in the Housing Market were deteriorating. But critics say what matters is what s p claimed at the time it stamped securities triple a. The ratings agencies claim that they have unique analytic abilities and very sophisticated models that enable them to determine the credit worthiness of a bond, a derivative, a security. Rorter s p pointout cou rulings he diissed what it called challenges to a Credit Rating made with 20 20 hindsight. If the Justice Department does sue, standard and poors says it will vigorously defend itself. Darren gersh, n. B. R. , washington. Tom still ahead, tonights word on the street consumers, the street. Coms David Peltier joins us with some Consumer Product stocks, worth shopping for now. One trading session after topping 14,000 the Dow Jones Industrial average turned back, thanks to analyst downgrades of dow stocks walmart and chevron. He blue chips fell 129 pois, the nasdaq lost 48 points, the s p off 17. 5 points. Susie Big Stock Market selloffs like todays, are rough for Retail Investors. Thats especially true because some have only recently ventured back into stocks. But how do we know if individual investors are really buying equities at all, and why do we care . Suzanne pratt reports. Reporter maybe youve seen the headlines, or perhaps youve heard the banter on television. What everyone is talking about is the Retail Investor, and whether he or she is cozying up to stocks again . The answer depends on where you look, and who you ask. Financial planner Lewis Altfest says phones at his firm are busy with clients interested in equities. The little guy is coming back into the market. The little guy has got bonds up to his eyeballs, and is starting to peel off some of those bonds. Reporter and, there is hard datto backup what people like altfest are experiencing. In the past three weeks, investors have put 30 billion to work in stock mutual funds, something that hasnt happened for years. Surprisingly, however, about the same amount came into bond funds. That may suggest investors are finally willing to take some risk with their cash stocks or bonds, theyre really not picky. Ameritrades Jeff Goldberg says traffic at his midtown branch is definitely up, but not back to prefinancial crisis levels. I wouldnt say its the mt, but its certainly up from where its been. There was a time maybe six months ago where we were seeing a little less traffic, but now its just grown and grown. Reporter and, heres a curious tidbit also from ameritrade. It turns out their newly minted index of Retail Investor sentiment shows investors turned a bit more bearish in january than they were in the fall. Theyre still buying stocks, but less volatile names. And, ameritrade also says we should be paying close attention to what the little guy does. Ty te to stronger than we give them credit for. In this case now, were seeing this gravitation of clients to risk assets such as equities as opposed to bonds. And, that bodes well for the future of the market. Reporter its true professional investors may not pay much attention to how the little guy feels about stocks. But, dont forget the little guy was a noshow in the market in the last few years, and he missed a powerful rally. Suzanne pratt, n. B. R. , new york. Susie jeff klntop says dow 14,000 could be as good as it gets this year. Hes chief Market Strategist at lpl financial. You know, jeff,s thiss not what investors want to hear. You arsaying this is as good as its going to get. Why is that . You know, this year as we head down 14,000 its an important milestone. I think its one that can take some time to digest. Its very big one. Take a look at what happened when we hit 13,000 last year. We hit it in february. It really wasnt until december that we left it after a period of ups and downs and were able to move higher. That was true also in the year before when we hit 12,000 in february and lingered there until december. That could work out again this year. Remember 14,000 is a big milestone. Last seen on october 2007. Memories of the peak, i think, are still lingers with many investors and will likely see a period of ups and downs before we move to this bull market. All right. And you think that there are warning signs, there are some red flags out there. Tell us which one stands out the most to you. Thats right, susie, tom had mentioned the downgrade, certainly the earnings picture isnt as bright in the second half of thisier as i think what many analysts are expecting right now. Theyre looking for double digits Earnings Growth in the third and fourth quarters of this year, as high as 17 percent in q4, unlikely to material size, hard for stock valuations to go higher when earnings expectations are going to be falling significantly. The other picture is europe t affected the market today, that is something that has affected our markets over the last several years giving us ups and downs. The crisis may have been alleviated for some areas of the marketplace but only just papered over. I think well continue to see flareupsin europe and lingering economic crisis in stagnation over the course of this year buffeting our financial markets. Its interesting how there are different opinions, looking at the same data because heres how the bulls see it they see all of this money flowing into stock mutual funds. They see that the job numbers are getting better. Theyre saying that the worries about europe and the issues going on in washington are diminute shalling. So why the disconnect lookingate the same information . Well, i dont think theres necessarily a disconnect. Its just looking in the Rearview Mirror versus looking out the windshield. All those things are wellknown. They pass the fiscal cliff, a few issues ahead of us, they are small, but yes, the european issues regarding a financial crisis have been dealt with. The ecb has new powers. That was last years news. The question is what is the cost for that financial crisis solution which is austerity meaning very lackluster economic environment unlikely to see any acceleration there. So look forward is where we see the weaker picture, again not the end of a bull market. I think that that would be only the case if maybe pes were around 17 or 18 where they usually are. Still have room ahead. Let me jump up. Let me jump in because we have a less than 30 seconds. You heard suzannes package, individual investors feel like i have to get into this market because i dont want to miss out. Quickly what are you telling your investors what they should do and still be safe about it, real quickly. There were good opportunities to buy on the pullback, we dont see a bear market. You want to look to buy industrial stocks from the manufacturing recovery, Home Builders from that longterm uptick in housing activity, those are good places to add as the market pulls back. Well see how it plays out, thanks. Jeff kleintop, chief Market Strategist at lpl financial. Tom stocks werent the only market seeing some selling pressure. Silver saw red. Silver for march delivery fell 0. 24 today, nearly 1 , to 31. 72 an ounce, but silver was below 30 as recently as mid december, so prices have rallied. Erika miller takes a closer look at the investor demand for silver. Reporter the white metal has been in white hot demand. In january, the u. S. Mint temporary suspended sales of 2013 American Eagle silver coins, because it ran out of them. A mindboggling sevenandahalf million coins were purchased in january; the biggest month on record. The total was just one and a half million ounces the month before. Over six million coins were sold in january of last year. Yes, theres always strong collector interest at the start of every new year. But this year, theres also Strong Demand from silver investors, and traders. This year, for the last three months, all ive been hearing down here is i want to buy silver coins. I want to buy silver coins. Reporter some are buying silver out of fear about inflation. Specifically, they worry the federal reserves efforts to boost the economy will devalue the dollar, so they want to own alternative currencies. But silver doesnt just benefit from safehaven buying, its also an industrial commodity. Its used in automobile manufacturing. And many automakers are forecasting increased Global Demand for new cars and trucks. The big question, of course, is where silver heads from here. From 2001 to 2010, silver moved frombout 4 an oun to 2 but in 2011, prices peaked at nearly 50, but then pulled back. According to a recent survey, Precious Metals experts think silver will average around 40 dollars an ounce this year, a gain of over 30 from 2012. So what could derail the silver rally . Silver has been kind of trading between this 28 and 32 level for some time now. And, i think if you find that there is a raise in Interest Rates to curb inflation, i think you are going to find thats very bearish for silver. Reporter another risk is a big rally in the stock market. If investors get more comfortable with risk, they may bail out of safehaven investments like Precious Metals. Erika miller, n. B. R. , new york. Tom we continue our monday series with some of the nations top universities bringing you the best research on business, the economy and investing. We call it n. B. R. U. Our partners combine over 400 years of business knowledge harvard, stanford, wharton and vanderbilt. Every monday we speak with top professors about key money issues. And you can read indepth articles at www. Nbr. Com, just look for the nbru tab. Tonight, after the super bowl of advertising, the super bowl, celebrity endorsements, and shareholder value. We spoke with steve posavac, marketing professor at vanderbilt university. I began by asking, what kind of celebrity endorsement makes a good investment for a company and its shareholders. Well, tom, celebrity endorsements can do a lot for brands. One of the most important things they can do is lead to just a lot of awareness of the branda l of excitement, consumers Pay Attention to the marketing of a brand to the extent that a celebrity is associated with it. But the other thing celebrities do very well is position products. Products in some categories, think soft drinks, for example, that arent very differentiated based on the product self but if you have a celebrity endorsement speak up on behalf of the product wa, people think about that celebrity than bleeds on to the brand, helps to seerbt the brand in the same way we associate the same way we think of that celebrity. Tom the ski that the attention is paid ultimately to the product, not to the celebrity making the pitch though, right . Well, absolutely thats the case. The celebrity in some sense can overwhelm the product in certain situations. You want a celebrity with a clear and popular image. You want when people think about the celebrity to be what you want people to think about the brand. Remember a few years back kodak had Dennis Rodman as an endorser and to poe that didnt make any sense because kodak a family brand and Dennis Rodman was famous for not being Family Friendly so that didnt work so well. In that case the focus became very much on rodman versus kodak. He was very photo genic, you have to give him that, very photo genic, Dennis Rodman. Your research has found though that the less an audience knows about a celebrity, the higher the quality, the perceived quality of the endorser so ignorance really is bliss, why do you think that is . Well, generally if we dont know if we agree or disagree with somebody on something we tend to assume that we agree with them. Look at some of the best endorsers in recently history. Look at michael jordan. We were familiar with michael jordan. We know what he looked like as he dunked the bastball fe howis tongue wagged when he took off from the free throw line and so forward. But we didnt know what he thought on political issues or social issues. The problem is when celebrities tell us where they stand on these issues, theres going to be a lot of the audience that disagrees. A celebrity comes out and identified strongly with either the democratic or Republican Party what they have done then is alienated half of their audience so ideally what celebrities want to do is be familiar with the audience but not really tell too much about what they really think about, key issues of the day because what is going to happen is people willind ways to disagree with the celrities and the celebrities wont be as compelling as spokespeople. You mentioned michael jordan. He was paid millions by nike and his share shoulders to sell equipment. For those shareholders what is the lesson that your research has about how a shareholder can assess whether or not they think a company is spending their money wisely on a big multimillion dollar endorsement . For marketers this are a number of choices how they will spend their money. To justify what they are doing. For shareholders the question is what is the skel ebb rit endorser buying for the brand. What marketers need to do to be using money well is buying just something for the brand. If the goal is a wareness of the brand t if the goal is to position the brand as celebrity endorsers can do a tremendous amount with that. Pepsis recent endorsement deal with beyonce, for example, is going to do a lot to bring attention to the brand. Shes hip, shes successful. And people are going to think of pepsi the way they think about beyonce. So even though its i think a 50 million endorsement deal, they i am sure will be positive because it ill be a very effective spokesperson for them. Her fans and supporters putting aside all the lip syncing controversy in recent weeks. Steve weve got to leave it there. Steve with us, steve is with vanderbilt university. Susie lots of talk on wall street about dell going private, with some saying the struggling computer maker could make the move as early as tomorrow. The wall street journal cites sources as saying the final buyout price could top 23 billion, or as much as 13. 75 a share. Reportedly, the partners in the buyout include Founder Michael dell, silver lake partners, the private equity firm, and microsoft, each putting up billions of dollars. Susie tom, a lot has changed in the p. C. Market since michael dell founded the company 30 years ago, the question now is what shape dell will take as a private company. Tom susie, dell shares followed the Broader Market lower. Lets get going with tonights market focus. Tom stocks were lower after hitting five and a half year highs on friday. The p 500as under pressure from the opening bell. The selling picked up into the closing bell. The index ended lower by 1. 1 . Volume fell from fridays pace. 693 million shares traded on the big board. Under 1. 9 billion moved on the nasdaq. The Technology Sector saw the biggest drop, falling 1. 6 . The financial and Consumer Discretionary sectors were down by more than 1 each. Weighing on the market this afternoon was the news we reported at the beginning of the program the possible federal government civil lawsuit against Credit Ratings Agency Standard and poors over its handling of mortgage bond ratings during the housing boom. S p 500 Parent Company mcgraw hill fell about 7 per share in an hour and a half. It finished the day down 13. 8 . The stocks worst single day drop since the stock market crash of 1987. Feow bond ratingagency moodys also got hit, dropping 10. 7 on heavy volume. Two years ago the Financial Crisis Inquiry Commission called the big Credit Ratings agencies, key enablers, of the financial crash. Moodys has not been mentioned as part of the expected action from the Justice Department. While the market awaits to hear if theres a deal to take dell private, another tech giant is making a deal. Orcale wants to buy telecommunications gear maker acme packet. Oracles purchase continues the companys growth into internet networking gear. That strategy really began three years ago when oracle took over sun microsystems, and continues with its buyout of acme, valuing acme at 1. 7 billion in cash, or 29. 25 per share. The buyout offer sent shares of acme packet up 23. 6 , closing above the offer from oracle. This is an 11 month high for the stock. Oracle stock fell 3 . The company has the cash to do the deal. In the last quarter it had more than 30 billion in cash and short term investments. Facebook continues seeing heavy adin and votile ic swing the stock continued a selloff that began a week ago, falling 5. 5 today. The recent selling began after reporting a big jump in expenses in the recent quarter. Meantime, a strong flu season means stronger demand for cleaning products for clorox. Fourth quarter earnings were up from a year ago, and better than wall street expectations, thanks to higher Sales Volumes and prices. Clorox said it will spend more money on advertising. Its optimistic enough to raise its financial forecast. Shares climbed 0. 7 closing at an alltime high. Four of the five most actively traded Exchange Traded products were lower. With the broad market down, the s p 500 volatility note was up, gaining 6. 9 . And thats tonights market focus. While the u. S. Economy shrink just a fraction at the end of last year part of the economy driven by the consumer continued to grow. Tonights word on the street is consumer, David Peltier back with us. Portfolio manager at the street. Com with us from the web site in new york. David, you know, consumer focus stock sectors outperform the Broader Market over the past year. Can that continue . I think thats a really good point. Especially in 2012. When generally the Consumer Sectors are considered defensive so the fact they outperformed i think they can continue to outperform in 2013. Were in a period now where essentially an alltime high and a lot of folks are calling for a bit of a pullback. And clearly a lot of these Consumer Goods Companies come with dividends. Thats with a theme we saw in the first half of last year but the stocks continued to do well at the end of theas year into thiserio. Cocacola someone of those you have your eye on as a dividend consumer goods, what do you like out of coke. Im the resident dividend ock advisor here at the stet and i reallyike 29. 7 dividend yield at coke. The company has enough earnings to easily cover this 2. 1 times over but more importantly cocacolas growing the dividend, growing its dividend 50 consecutive years. And i think sometime in february theyll make that streak 51. Again they have the Solid Earnings to cover it. And with the dividend moving higher i think will you see the stock move up towards 40 as well. Speaking of Solid Earnings we heard late last week from colgate, palm olive, very decent last quarter, higher margins, better volume, even higher product prices here. Wh d anticipate out of colgate. Again very Strong Quarter acrosstheboard like you said this dividend say little bit smaller, about 2. 3 on the yield. But i think you will awe see colgate which again has consistently raised its dividend each february, they have the earnings coverage that they will be able to raise that dividend considerably. I think will you see the stock will yelled about 2. 5 . Even though the stock is near alltime highs i think can continue to move higher when that dividend gets boosted. A lot of folks get nervous about buying stocks at new 52week highs or new alltime highs. Kimberlie clark is another Consumer Products goods companylso seing a new recent high just lately, kmb the ticker symbol. Does it concern you to buy Kimberlie Clark at these prices . Admittedly they have had a very good run but when you look at that 3. 3 dividend yield thats about a point and a half better than are you getting on the 10year treasury now. A full point better than the average stock in the s p 500 offers. And again kimberlie is firing on all cylinders, when they raise that dividend this february it will be 41 consecutive years. Investors will always pay a premium for that. I think you see the stock ultimately move up towards par or 10 a share. Helen so its not so much necessarily paying a dividend, its also the growth and sustainability of that growth, isnt it . Absolutely. The ability to grow that dividend consistently, investors will reward that and dividends are one of the few predictable things in the stock market. Do you have any position in this trio, david . No, tom, im restricted. David peltier, word on the street. Dave is with thestreet. Com susie tomorrow on n. B. R. Susie in tonights commentary, what the latest jobs report didnt tell us. Heres simon constable, columnist at the wall street journal. Friday we got news that jobs remain scarce in the u. S. Unemployment is still hovering around 8 but that doesnt really give any sense of just how bad things are for the vast majority of americans. Thursday last week i heard a presentation by professor matthew slaughter of dartmouths tuck school of business. It was sobering to say the least. First he pointed out it will take until 2020 for the economy to get back the number of jobs we had at the beginning of the great recession. It gets worse. Even if you have a job your earnings are being eroded. Medn pay adjusted for inflation, has fallen since 1989, it should be a reminder to anyone who thinks were on the road to recovery that it will be a long road. Im simon constable for the wall street journal. Tom thats nightly Business Report for monday, february 4. Have a great evening everyone, you too susie. Susie goodnight tom, thanks for watching everyone. Well see you online at www. Nbr. Com and back here tomorrow night. Captioning sponsored by wpbt captied 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