Transcripts For KQEH Nightly Business Report 20141212 : vima

One in five americans never expect to get out of debt. How can you keep your money issues from spiraling out of control . Mo tonight on nightly Business Report for thursday, december 11th. Good evening, everyone and welcome. Stocks sprinted out of the gate this morning spurred by good news about jobs, the dip in oil prices and better than expected retail sales for november but then, like a horse that ran the first furlongs too fast, the market slowed. Though it did cross the finish line with modest gains. After being up as much as 225 points, the dow finished 63 points higher on the day. Nasdaq added 24 and the s p was up 9. Oil moved lower again. Domestic crude fell another dollar closing below 60 a barrel for the first time in 5. 5 years. Foreign brent crude fell half a buck finishing at 64. 24 a barrel. After that pickup in spending last month, retail sales rose 7 10 of 1 , nearly double forecast led by autos, clothing and electronics. Jobless claims fell by 3,000 last week, so what do all the data threads mean for the economy . Steve liesman takes a look. Reporter the theory was simple. With lower gas prices, americans would buy more sweaters, discretionary stuff they could purchase with extra money in their pocket. Trouble was there was no proof thats what americans were doing until today. The government reported that retail sales in the critical shopping month of november were much better than expected and october sales revised higher. The key stat . Gas station sales fell 0. 8 but clothing and apparel, aka sweaters, up 1. 2 . Sales on the internet surged 1 suggesting the Holiday Season got off to a good start for retailers. Some of the things that are happening and commodity pricing is going to be a significant positive. Its the tax cut people are talking about. Its going to work its way into retail sales, its going to work its way into consumer confidence. Remember, its not just the consumer. The enterprise benefits lower energy as well. Reporter economists thinking overall growth is somewhat better in the Fourth Quarter than originally estimated. Some look a big decline after strong Third Quarter growth but could come in 2. 5 and 3 on the strength of the consumer. Attention now turns to the most 6 all. December when consumers and retailers play that great game of cat and mouse. One hopes prices are cut and the other hopes stockings get stuffed at full price. For nightly Business Report, im steve liesman. How consumers make their spending decisions was one of the topics at the annual conference in new york city today where some of the biggest names in business and finance were speaking. Other big topics . Falling oil prices. The economy. The markets and a landmark decision in an inside trading case. Mary thompson was there. Reporter high above the streets of new york, the falling price of oil, a popular topic at the annual deal book conference. Lower oil prices are like a tax cut to the economy. Reporter goldman ceo Lloyd Blankfine said its good for the u. S. And better for europe. Europe should be ecstatic. Europe is far and away on importer of oil. Its a very big boon to their economy. Reporter lucys lower oil causing additional damage to the russian economy wounded by sanctions led by military actions in ukraine. I think theres a kind of perfect storm right now of pressures on russias economy. Now its even weaker because of oil prices. Reporter here in the u. S. , oils recent plunge shaking the stock market. Though Hedge Fund Titan ray dalio said its in tact thanks to around the world but worry is that the Central Banks helping will be limited down the road. We are long at equities and holding those positions and its a reflatively good time. Id be worried if we took a year or two in the future, what the effectiveness of Monetary Policy will be, particularly in a deflati deflationary environment. Reporter a hot topic, ruling on wednesday that would render trading places moot especially by the exchange commission. Sec share mary white acknowledging it could be a landmark ruling. No question, its a significant decision and my initial sense of it is that it took the opinion and decision and overly narrow view of the Insider Trading law and that is a concern. But were continuing to review it. Reporter a ruling that could turn the approach to regulating Insider Trading inside out. For nightly Business Report, im Mary Thompson in new york. In washington and with hours to go before tonights deadline to shut down the u. S. Government, Republican Leaders delayed the vote over the controversial spending bill. The delay indicates they were not certain they had enough votes to pass the measure. Opposition from republicans and liberal democrats alike. Congress still has until midnight to pass a continuing resolution that would keep the government open. Do you feel a little less wailt . The Federal Reserve said for the first time in more than three years, americans Household Net Worth declined during the Third Quarter following 00. 02 . A peer to peer lender began trading. Renee lanoc said the Online Platform allows to cut out banks and other lenders and is poised for solid growth. Its really building the economy for the next decade. We think we have enough opportunities to transform the entire banking system, make it more transparent, more costefficient, more consumer friendly. Well after pricing 15 a pop last night above their expected range, shares shot up 56 today and lending club isnt alone. On deck capital, a peer to peer Small Business lender is gearing up for its initial public Stock Offering in the near future but what is peer to peer lending. How can it work and can it change the banking business as we know it . Lets find out from cliff goldstein, personal analyst for nerd wallet, its for consumers. Cliff, welcome. Good to have you with us. Appreciate it. For people who dont know what this company, lending club, does, what does it do, how does it work and make money . Simply put, its an online financial marketplace that connects lenders with borrowers. They make money on origination fees from the loans that pass through their platform. Cliff, why would someone go to the lending club as opposed to their local bank . Theyre able to n÷ access smaller loans youre traditionally able to get. Up to 35,000 for individuals and 100,000 for Small Businesses. This is a space that banks are not active in in terms of the size. Who are the lenders . People like you and me, actually. Im an investor personally. There are thousands of people around the country who invest in these loans. As it has become more popular, more institutions have begun to invest as well. What are the risks to the borrower and the lender . The risks to the borrower are just that sorry, the risks to the lender are that the rates, theres a risk of default. Just like with any loan instrument or debt instrument, default rates could increase in an economic downturn. Its a young and immature market and dont know what its going to do over the longterm. Did you saw youre an investor and are you making direct loans to individuals and then if so, how do you decide whether that person is qualified for the loan and what the Interest Rate will be . So, i do make direct loans. I use an Automated Service that lending club provides that allocates my loans in 25 segments to different borrowers and that helps me build a diversified portfolio of loans just like an etf or mutual fund to get a diversified investment. Quickly, you might put in a thousand dollars as a way to make 5 on a loan or 9 on a loan or 5,000 on a loan. Am i understanding that correctly . Yeah. You know who youre lending to or is it anonymous . You dont know them personally but you can see what theyre using the funds for. Whats interesting is over 80 of borrowers actually use these funds to consolidate existing loans and especially credit card debt. How about the other way around . The borrower, do they know who theyre borrowing from . Not going to j. P. Morgan, going to cliff goldstein. How do i know what your financial standing is . You wont. Youll know the money has been invested with lending club and youre operating through their system. What if they dont pay . What if the lenders dont pay or the borrowers . The borrowers. Theres default rates that averaged 5 so far historically and that gets worked into the historical returns. Lenders and investors have traditionally seen 5 to 8 returns historically. Thank you for spelling it for this old guy here who doesnt cliff goldstein, nerd wallet. 20 dont think theyll ever get out of debt but theres smart ways to get your finances under control. Well tell you after this. United technologies out with some disappointing guidance after the market closed today. The industrial giant which makes everything from sikorski helicopters to elevators will be 60 a share versus a 1. 68 a share. Sending shares down initially in afterhours trading. More banks behaving badly. Not toying around fining ten banks a total of nearly 44 million for violating conflict of interest rules. The Financial Industry Regulatory Authority said the banks, including j. P. Morgan chase, city group, wells far goe, tried to secure advisory roles in the initial public Stock Offering of toys r us by offering the retailer favorable Analyst Coverage if they were named as underwrisohe ipo. None of the banks admitted to wrongdoing but city Group Spokesman said its pleased to have resolved the issue just a few days left for individuals to renew their Health Insurance plan through the healthcare. Gov or enroll in a new buplan. The deadline is this monday. Etna, one of the plan providers said its seeing a flood of customers enrolling in 17 states. Its not only the time for individuals to sign up for a Health Insurance plan, but for Small Businesses too looking to secure health care for their employees. Kate rogers has an update on the governments efforts to help Small Companies make some big decisions. Reporter the Small Business Health Options program or shop e change was set up to make it easier for businesses with fewer than 50 workers to enroll in Health Coverage under the Affordable Care act. They do not require insurance but hopes to provide coverage by making it cheap and easy. So how easy is it . We checked in with some Small Business guys to find out. Harris Jackson Owner of buffalo supply said he needed nittygritty details like Social Security numbers to enroll them in Health Insurance plans on colorados staterun shop e change this fall. He has always offered them coverage and thinks its key to attracting and retaining the best employees. He went to the exchange in search of lower costs, but found a lot of leg work. It took a lot of time to gather that data and to get it entered into the system and when i got finished and i attempted to get a quote, i couldnt get it to work. Reporter and as a Small Business owner, he said the time and Energy Required to enroll via shop wasnt worth it. In the end, he found a broker to get coverage for his workers instead. Jeff valt, of logan, west virginia, managed to get enrolled on the federal share Shop Exchange but his experience wasnt without challenges. Like jackson, he wants to offer his workers coverage simply because its the right thing to do. To his relief, he found shop premiums in line what he he was paying last year and found the process to take him nearly 10 hours. Theres really nothing out there that says do this and then do that. Itb]xmuuty much trial and error. One letter or number wasnt correct or an initial was there, it shouldnt have been tfrs kicked out and prevented from kicked o hahp hc vented from system. Reporter the good news is jeff will be able to take advantage of the Small Business tax credit for businesses with fewer than 25 employees and average salaries of 50,000 or less. So jeff will get back 50 of the premiums he pays annually for his workeworkers health insura. It will expand to 100 or fewer fulltime equivalent workers. The shop enrollment goal for 2015 is 2 Million People and theres still a long way to go. A Government Accountability Office Report released last month found that only 76,000 workers had enrolled on Shop Exchanges as of summer 2014. For nightly Business Report, im kate rogers. An activist might be eyeing a merger between office depot and staples. Thats where we begin the market focus. Starboard value took a stake in staples and raising the position in rival, office depot. Some say the hedge fund could be setting the companies up to join forces. Shares for both chains rose and staples rising rh8. Lululemon with better Quarterly Earnings thanks to a jump in online orders. The yoga wear maker gave a disappointing outlook for investors seemed to ignore that. 56. 96. Shares of Urban Outfitters also rose after issued sive guidance oitfinc the retailer expects same store sales to rise in the current quarter. Shares popped 7. 5 to 32. 29. Shares of coach rose on the word of the french product maker lvmh is interested in buying the handbag maker. Lvmh, the louis vuitton. Coach rose to 34. 46. Ebay may be preparing to cut thousands of jnnkn the wall street journal said the company is thinking about the cuts ahead of the paypal unit. The 3,000 potential layoffs, about 10 of ebays workforce, reportedly come from the core operation and report said a stand alone ebay would be an attractive takeover target. Shares rose almost 3 today to 56. 78. Seaworld ceo is stepping down in january. The chairman will serve as interim chief and current ceo will stay on as vice chairman of the board. Investors didnt quite know what to make of the shares. As you see there, before the close, 3 higher at 16. 09. Norwegian saw its shares slide after report of a fire on a ship. Three people died after a fire broke out on oceania cruise ship which was in st. Lucia at the time. Guests have been disembarked. Norwegian acquired oceania. Closing down about 2 to 43. 73. And researchers suspended a Clinical Trial of a new ebola vaccine developed by merck and link genetics because fewer volunteers in the study [ozpx complained of pain in their hand and feet. The stock was down 19 cents finishing at 59. 34. Even though more people have Health Insurance, a lot of americans are saddled w unpaidil a new government report said nearly 20 of all consumers, thats about 43 Million People owe money for past medical care. The Consumer Financial Protection Bureau also says many people are confused by notices they get from hospitals and Insurance Companies about the cost of treatment. The debt dilemma is becoming more dire for some americans. One in five say they never expect to get out of debt. Sharon epperson with surprising statistics from a recent survey and money makes to make to keep debt from getting out of control. Is the debt problem getting worse or better . Its worse since credit card did this survey in may of 2013, they saw double in percentage of americans who say theyll be in debt forever. Theyre now saying that 18 of the people who responded to their survey said they would have debt for their lifetime and many people say if they are able to pay off that debt, theyll be in their 50s before theyre able to do so. Some say theyll probably be in debt until theyre at least 61 or older. In debt forever. What kind of debt, and whos most impacted by this . Were talking about credit cards, car loans, mortgages. All types of debt. Medical debt earlier. This is encompassing all kinds of consumer debt. We look at people, as you would expect, the older americans, 65 and older still in debt saying, im going to have this the rest of my life. Millennials, 18 to 29 years old have more time to pay off the z debt and more likely to say theyll be able to do that. Only 6 of them say theyll be in debt for life. I think we think about debt differently than our parents generation. Is it necessarily a bad thing . Please tell me it isnt. And ive got a lot of debt. Is it a bad thing to have debt . Whats really interesting is that in a household, 75,000 or more in income are just as kind of pessimistic about their debt situation as lower income folks because i think people have so much debt when you think about College Tuition debt, when you think about mortgages and all of that and were putting on that much debt. It can be a bad thing if you dont have control over it, and thats one of the things that i think this brought to light. The importance of really getting that debt under control. How do you fix the problem . What one or two pieces of advice can you get toee . Its like telling somebody how to lose weight, eat less, exercise more. But what . V know what