Transcripts For KRCB Nightly Business Report 20130108 : vima

Captioning sponsored by wpbt this is n. B. R. Tom good evening. Im tom hudson. Susie is off tonight. The nations biggest banks move to put the housing crisis behind them, paying billions of dollars to settle claims of foreclosure abuse. With the fiscal cliff drama over for now, investors look to the markets next hurdle earnings season. Coming up what to expect from Corporate Americas bottom lines. And we kick off a new series, n. B. R. U. , our partnership with some of the nations top universities. Tonight does maximizing shareholder value hurt the economy . That and more tonight on n. B. R. the nations largest banks announced two big settlements today over the housing crisis. 10 of them are settling with federal regulators over allegations they mishandled foreclosures. And in a separate deal, bank of america and governmentowned mortgage giant fannie mae settled the score over trillions of dollars worth of bad home loans. In all, the deals cost the Banking Industry billions of dollars, but as sylvia hall reports, they put to rest some big problems left over from the housing bust. Reporter its an expensive time for bank of america. The Company Announced today it will pay out billions of dollars in two separate mortgage settlements. The first lays to rest a dispute between fannie mae and countrywide the troubled mortgage giant bank of america bought in 2008. Bank of america will pay 3. 5 billion directly to fannie mae. And buy back almost 7 billion worth of bad mortgages that countrywide sold to fannie mae before the housing bust. Bank of america will also sell servicing rights on two million mortgages, bringing the total value of the settlement to over 11 billion. The deals get most of countrywides liability off the corporate balance sheet, a big step in moving bank of america past the housing crisis. I do think its another quarter in which their shareholders arent taking home any money, so its painful, its costly, but it does get you closer to putting the whole thing behind you and not going to compromise the Capital Position of the bank in any way. Reporter also today, ten major banks, including bank of america settled claims they abused the foreclosure system, seizing defaulted homes without proper paperwork. The banks agreed to fix those abuses two years ago, with a casebycase review of foreclosure practices. But that just wasnt moving fast enough, and proved too costly. Bring in todays deal the banks will pay a total of 8. 5 billion. Three billion of that will go to homeowners hurt bthe bas; the rest, five billion to assistance programs like loan refinancing, for homeowners who are struggling. It helps current homeowners and its going to help the marketplace at the margin. You know, the con, if there is one, is the fact that well never, it will make it less likely now that well ever get a full accounting of the foreclosure irregularities that existed. And how widespread were they, what were the types of irregularities and what were the full dollar amounts. Reporter but experts do expect some of these settlements will have lasting impacts. At the end of the day, the unintended consequence of all this is going to be a little harder to get mortgage and is gointo cost you a bit more. Reporter while kotowski says the worst of the housing crisis is over for banks, he thinks bank of america has more work to do to get out from under its mortgage burdens. Sylvia hall, n. B. R. , washington. Tom while the nations biggest banks are trying to put the mortgage crisis behind them, theyre also recovering from the worst financial crisis since the great depression. Erika miller tonight takes a closer look at the Financial Health of the countrys banks. Reporter the economy may be weak, but the nations biggest banks are in their best shape in years. Capital levels now are double, and in some cases triple what they were at the height of the financial crisis. Most banks are making money again. Most bad loans have been charged off. So overall, the Banking Sector is in pretty good shape. Reporter an increasing number of banks are expected to get the feds approval to give back more money to shareholders, in the form of higher dividends and stock buybacks. Citigroup is expected to get permission for its first Share Buyback since 2007. I think if they get that this time, it will be a clear sign of a positive situation. Because suddenly you have what was arguably the most impaired surviving bank able to have a Share Repurchase and increase their dividend. Reporter investors have taken note. The k. B. W. Bank index is up 4 this year. Thats on top of a 30 gain last year. But its not all smooth sailing for big banks this year. Economic growth is far from robust. Another big problem is the low Interest Rate environment. Essentially the challenge is the spread between what they can pay for deposits and what they can earn on loans because of these very low Interest Rates is compressed. That makes earning money difficult. Reporter that said, some argue its a good time to buy bank stocks because valuations are still relatively cheap. At 11. 2, the Financial Sector has the lowest price to earnings ratio of any group, based on projected 2013 earnings. Jim sinegal isnt impressed. Theres good reason banks should trade at lower multiple than other sectors. Theres a lot of risk there. A lot of leverage and banks arent going to be as profitable Going Forward as they were in the past. Reporter investors will be watching friday for more hints about the health of the sector. Thats when wells fargo will become the first of the big banks to release Fourth Quarter numbers. Erika miller, n. B. R. , new york. Tom still ahead, tonights word on the street, electronics. How Semiconductor Giant intel is working to break further into the Consumer Electronics business. James rogers of thestreet. Com joins us. Investors had a bad case of nerves today as they ready for the official start of earnings season, tomorrow. The dow closed down 50 points, the nasdaq lost nearly three points, and the s p 500 was off four. Tomorrow, aluminum giant alcoa will be the first dow component this period to report quarterly results. Its expected to show decent profit growth, but on the whole Corporate America has seen far better quarters. Suzanne pratt reports. Reporter after weeks of fiscal focus, wall street could use a more fundamental topic to chew on. Earnings season could provide that distraction, but, it may not be a positive one. S p 500 firms are expected to post on average only a 2. 8 increase in q4 profits. Just a few months ago, analysts were hoping for a much healthier 10 gain. So what happened . Its just a continued slow growth environment. You know in the Third Quarter earnings were basically flat. So this is actually an improvement over last quarter, even though Earnings Growth is still expected to be very low. Reporter specifically, businesses felt after effects from hurricane sandy, and they were unwilling to spend with all the fiscal cliff uncertainty. On top of that, demand from europe as well as china was weak. But, heres the good news. A low earnings hurdle ultimately makes its easier for companies to impress investors. And, s ps sam stovall says they could get a little help from lower expenses. The things that might end up acting as tailwinds i think could be a near 8 decline in the cost of oil and also the reduction in the commodity costs. Reporter digging into the q4 numbers, six out of 10 sectors are expected to post a gain in profits, with financials and Consumer Discretionary stocks topping the list. On the other hand, the industrials sector has the weakest anticipated growth. Still, anticipation of an anemic earnings season has yet to trouble the stock market. Dont forget the s p 500 hit a fiveyear high on friday. I think all of this has to do with anticipation. That things are expected to get better. That there is a muted vshaped recovery anticipated for global g. D. P. And for u. S. Corporate earnings. Reporter tomorrow, our earnings coverage continues when we interew alcoa chairman klaus kleinfeld. Hell detail how his business is likely to shape up in 2013. Suzanne pratt, n. B. R. , new york. Tom even with investor attention moving quickly from the fiscal cliff, now to corporate earnings, 2013 has gotten off to a very fast start. Its the best beginning to a year since 2010. Chris hizy is the chief Investment Officer of u. S. Trust. He joins us from that firm in new york. 2010, chris, youll remember it, pretty good year, s p 500 up 14 . Dow anticipate similar returns this year . Yeah, just almost to the exact number. Were expecting alltime highs probably sooner rather than later. I know we always use the year end as a way to put a line in the sand on a number. But were looking at 1600, which is basically a little multiple expansion this year based on policy transparency. Not the policy itself but fiscal policy transparency times about 108 in earnings, maybe 10 on the low end and that gets you to a new alltime high. Tom 1600 on the s p 500 that is about 10 over where we are trading even today after this fast rally, you mentioned fiscal policy transparency. A lot of people want to watch it being made again. You think it is over for investors. They are telling us that, it has been telling us that for a while. Bond yields the uncertainty is in beyond land than equity land this is what we call the great rotation year. It has been the great Global Rebalancing in terms of world growth. And now you are saying reflationary efforts in terms of Monetary Policy wick the baton over to fiscal fiscal policy. That becomes the catalyst now and the uncertainty around equities is really what weve all come to know over the last few decades which is are earnings going to be good or not. Tom how about it, what about corporate earningsnd really more to the point the quality of the Earnings Growth. Top line Revenue Growth . You know, weve been watching this story unfold since late 2008, early 2009. The bear camp basically said you cant increase your profit numbers 009, banner year, low quality, low quality but banner year in terms of profits, quicking off a low of 48 to 59. 2010 double dip fears dismissed. We got not latter part of the year. We rose earnings again. And then in 2011 they said you couldnt grow the top. Corpora america was still going to be under deleveraging. They grew the top line 2012, the same thing. Third quarter, a little bit of a pullback. Basically call in the flat line, Fourth Quarter should be better than expected. Global growth has picked up. In 2013, topline growth, and profit numbers with margins just hanging in there, a little bit better consumer, better housing, better global growth, looks good. Within sectors where dow find that equity price growth . You know from, a sector standpoint were shifting more and more and rebalancing over the course of e next few weeks. Weve been doing that, towards cyclical and away from defences. We dont believe the dividend story in and of itself. That is Dividend Growth is overplayed. High dividends are, in terms of the defensive nature of where to put money so were moving more towards cyclical. An still is technology, a little bit in financial, materials and energy. Tom growth and optimism there from u. S. Trust. Its chris hizy with us from new york. Tom in just a few weeks the debate over Government Spending cuts will heat up. The Defense Industry is one of those targeted, and today president obama nominated former rebublican senator chuck hagel as his next secretary of defense. Hagel is a decorated vietnam veteran and former businessman. The president called him, the leader our troops deserve. As a successful businessman he also knows that even as we make tough fiscal choices, we have to do so wisely, guided by our strategy, and keep our military the strongest fighting force the world has ever known. Tom hagels not a shoein for the position. Hes received criticism for his record on israel, iran, and gay rights. Current defense secretary leon panetta says he will retire when his replacement is approved by the senate. Tom tonight we begin a new weekly series here on nbr. We partnered with some of the nations top universities to bring you the best research on business, the economy and investing. We call it nbru. Now our partners in this combine over 400 years of business knowledge. They include harvard university, standford, wharton and vanderbilt universities. Each monday we will speak with top professors about key money issues and you can read indepth at nbr. Com, just look for the tab. Now we begin our series with the corporate focus on shareholder value. Every. E. Oof a Publiclytraded Company concentrates on most prominently on display every day. That focus on share price hurts the economy, according to Margaret Blair, a professor at vanderbilt university. Professor, is shareholder value first best expressed by todays stock price . Yes, tom, thanks for having me on this show. The shareholder, the share price is something we can look at and find out what it is almost minutebyminute, literally minutebyminute. And so that tends to be what peop think of when they think about shareholder value. But in fact some shareholders have a shortterm interest and some have a longterm focus. And so whats valuable to one shareholder might not necessarily be the most valuable to another shareholder. Why do you contend focus on that value beat other long or shirt term is harmful . Well, because there are really two big problems with an excessive focus on shareholder value. Of course corporations have to have a profit. But the first problem with it is that if you focus on that exclusively t comes in, it comes in to conflict with a combination of two corporate characteristics. One is externalallities, many times the risks that corporations take in order to pursue a Business Activity dont fall only on the companies. Some of it falls on people outside the company or some of it falls on the employees or some of it falls on the creditors. But shareholders are protected from that. So with limited liability, their shareholders have a huge incentive to have the firm take excessive risks which are then laid off on to other people when the thing goes bad. The shareholders win when it works out but the rest of Society Loses when the risk fails. But doesnt the market make adjustments based on those other stakeholders in an efficient market that we have . Well, theres no reason why the stock price should reflect the value that might be otherwise captured by employees, for example. In fact, if you pay workers more or if you give them Better Health plan, that usually comes out of profits for the shareholders. But for instance, in environmental cost for an energy company, we saw the share price by bp get hit significantly during the oil spill back in april of 2010. So that was an exslernl external event that showed up immediately in shareholder value. Well, exactly. But the interesting thing is that bp apparently didnt take that into account in advance. The top leaders at bp were so focused on share value that they were cutting costs. And they were cutting back on safety procedures on that deepwater drilling rig and maybe on others, probably on others. Our time is always short here, too short. How do Company Decision makers find a balance between all stakeholders . Well, i think the big thing is that if you talk to a person that you know works for a particular company and you say well what does your company do, you never hear that person say oh we maximize share value. The company has to have a vision about what it does. It has to have a vision about who are its customers and what they want. And then you motivate your employees by getting them excited about serving that customer. Read the vision statement before e financial statement, maybe. Its nbru tonight, Margaret Blair of vanderbilt university. You can read more on this and other investing and business research, visit nbr. Com. Click on that nbru tachblt tom stocks took a breather after their big gains last week. With no news regarding the fiscal cliff, corporate earnings or economic data, the index traded in a 10 point range, with the losses reduced in the final hour of trading, ending down 0. 3 . Trading volume was 625 million shares on the big board. 1. 75 billion on the nasdaq. The utility sector suffered the most selling, down 1. 1 , while the telecommunication sector had the best gain, up 0. 6 . Big banking stocks did not see Much Movement today despite the Mortgage Servicing settlement with the federal government, but Mortgage Servicing stocks were in focus thanks to a bank of america deal. Bank of america sold the Mortgage Servicing rights on 215 billion or home loans to nationstar mortgage. The deal doubles the number of home owners nationstar will work with. Shares of nationstar jumped 16. 9 . Volume was 10 times normal, taking shares to a new high. Other companies in the servicing business jumped. Walter Investment Management gained 8. 2 . Ocwen financial was up 5. 4 on heavy volume. Both are less than a dollar away from new highs. Other standouts today ranged from an online superstore to the house of the mouse. Investment Bank Morgan Stanley upgraded its view of amazon. Com, thinking its overseas is poised to grow more quickly than expected. Shares jumped 3. 6 to close at an alltime high. Disney shares fell 2. 3 . The company is considering job cuts at its studio operations according to reuters. A settlement over Corporate America<\/a>s bottom lines. And we kick off a new series, n. B. R. U. , our partnership with some of the nations top universities. Tonight does maximizing shareholder value hurt the economy . That and more tonight on n. B. R. the nations largest banks announced two big settlements today over the housing crisis. 10 of them are settling with federal regulators over allegations they mishandled foreclosures. And in a separate deal, bank of america and governmentowned mortgage giant fannie mae settled the score over trillions of dollars worth of bad home loans. In all, the deals cost the Banking Industry<\/a> billions of dollars, but as sylvia hall reports, they put to rest some big problems left over from the housing bust. Reporter its an expensive time for bank of america. The Company Announced<\/a> today it will pay out billions of dollars in two separate mortgage settlements. The first lays to rest a dispute between fannie mae and countrywide the troubled mortgage giant bank of america bought in 2008. Bank of america will pay 3. 5 billion directly to fannie mae. And buy back almost 7 billion worth of bad mortgages that countrywide sold to fannie mae before the housing bust. Bank of america will also sell servicing rights on two million mortgages, bringing the total value of the settlement to over 11 billion. The deals get most of countrywides liability off the corporate balance sheet, a big step in moving bank of america past the housing crisis. I do think its another quarter in which their shareholders arent taking home any money, so its painful, its costly, but it does get you closer to putting the whole thing behind you and not going to compromise the Capital Position<\/a> of the bank in any way. Reporter also today, ten major banks, including bank of america settled claims they abused the foreclosure system, seizing defaulted homes without proper paperwork. The banks agreed to fix those abuses two years ago, with a casebycase review of foreclosure practices. But that just wasnt moving fast enough, and proved too costly. Bring in todays deal the banks will pay a total of 8. 5 billion. Three billion of that will go to homeowners hurt bthe bas; the rest, five billion to assistance programs like loan refinancing, for homeowners who are struggling. It helps current homeowners and its going to help the marketplace at the margin. You know, the con, if there is one, is the fact that well never, it will make it less likely now that well ever get a full accounting of the foreclosure irregularities that existed. And how widespread were they, what were the types of irregularities and what were the full dollar amounts. Reporter but experts do expect some of these settlements will have lasting impacts. At the end of the day, the unintended consequence of all this is going to be a little harder to get mortgage and is gointo cost you a bit more. Reporter while kotowski says the worst of the housing crisis is over for banks, he thinks bank of america has more work to do to get out from under its mortgage burdens. Sylvia hall, n. B. R. , washington. Tom while the nations biggest banks are trying to put the mortgage crisis behind them, theyre also recovering from the worst financial crisis since the great depression. Erika miller tonight takes a closer look at the Financial Health<\/a> of the countrys banks. Reporter the economy may be weak, but the nations biggest banks are in their best shape in years. Capital levels now are double, and in some cases triple what they were at the height of the financial crisis. Most banks are making money again. Most bad loans have been charged off. So overall, the Banking Sector<\/a> is in pretty good shape. Reporter an increasing number of banks are expected to get the feds approval to give back more money to shareholders, in the form of higher dividends and stock buybacks. Citigroup is expected to get permission for its first Share Buyback<\/a> since 2007. I think if they get that this time, it will be a clear sign of a positive situation. Because suddenly you have what was arguably the most impaired surviving bank able to have a Share Repurchase<\/a> and increase their dividend. Reporter investors have taken note. The k. B. W. Bank index is up 4 this year. Thats on top of a 30 gain last year. But its not all smooth sailing for big banks this year. Economic growth is far from robust. Another big problem is the low Interest Rate<\/a> environment. Essentially the challenge is the spread between what they can pay for deposits and what they can earn on loans because of these very low Interest Rate<\/a>s is compressed. That makes earning money difficult. Reporter that said, some argue its a good time to buy bank stocks because valuations are still relatively cheap. At 11. 2, the Financial Sector<\/a> has the lowest price to earnings ratio of any group, based on projected 2013 earnings. Jim sinegal isnt impressed. Theres good reason banks should trade at lower multiple than other sectors. Theres a lot of risk there. A lot of leverage and banks arent going to be as profitable Going Forward<\/a> as they were in the past. Reporter investors will be watching friday for more hints about the health of the sector. Thats when wells fargo will become the first of the big banks to release Fourth Quarter<\/a> numbers. Erika miller, n. B. R. , new york. Tom still ahead, tonights word on the street, electronics. How Semiconductor Giant<\/a> intel is working to break further into the Consumer Electronics<\/a> business. James rogers of thestreet. Com joins us. Investors had a bad case of nerves today as they ready for the official start of earnings season, tomorrow. The dow closed down 50 points, the nasdaq lost nearly three points, and the s p 500 was off four. Tomorrow, aluminum giant alcoa will be the first dow component this period to report quarterly results. Its expected to show decent profit growth, but on the whole Corporate America<\/a> has seen far better quarters. Suzanne pratt reports. Reporter after weeks of fiscal focus, wall street could use a more fundamental topic to chew on. Earnings season could provide that distraction, but, it may not be a positive one. S p 500 firms are expected to post on average only a 2. 8 increase in q4 profits. Just a few months ago, analysts were hoping for a much healthier 10 gain. So what happened . Its just a continued slow growth environment. You know in the Third Quarter<\/a> earnings were basically flat. So this is actually an improvement over last quarter, even though Earnings Growth<\/a> is still expected to be very low. Reporter specifically, businesses felt after effects from hurricane sandy, and they were unwilling to spend with all the fiscal cliff uncertainty. On top of that, demand from europe as well as china was weak. But, heres the good news. A low earnings hurdle ultimately makes its easier for companies to impress investors. And, s ps sam stovall says they could get a little help from lower expenses. The things that might end up acting as tailwinds i think could be a near 8 decline in the cost of oil and also the reduction in the commodity costs. Reporter digging into the q4 numbers, six out of 10 sectors are expected to post a gain in profits, with financials and Consumer Discretionary<\/a> stocks topping the list. On the other hand, the industrials sector has the weakest anticipated growth. Still, anticipation of an anemic earnings season has yet to trouble the stock market. Dont forget the s p 500 hit a fiveyear high on friday. I think all of this has to do with anticipation. That things are expected to get better. That there is a muted vshaped recovery anticipated for global g. D. P. And for u. S. Corporate earnings. Reporter tomorrow, our earnings coverage continues when we interew alcoa chairman klaus kleinfeld. Hell detail how his business is likely to shape up in 2013. Suzanne pratt, n. B. R. , new york. Tom even with investor attention moving quickly from the fiscal cliff, now to corporate earnings, 2013 has gotten off to a very fast start. Its the best beginning to a year since 2010. Chris hizy is the chief Investment Officer<\/a> of u. S. Trust. He joins us from that firm in new york. 2010, chris, youll remember it, pretty good year, s p 500 up 14 . Dow anticipate similar returns this year . Yeah, just almost to the exact number. Were expecting alltime highs probably sooner rather than later. I know we always use the year end as a way to put a line in the sand on a number. But were looking at 1600, which is basically a little multiple expansion this year based on policy transparency. Not the policy itself but fiscal policy transparency times about 108 in earnings, maybe 10 on the low end and that gets you to a new alltime high. Tom 1600 on the s p 500 that is about 10 over where we are trading even today after this fast rally, you mentioned fiscal policy transparency. A lot of people want to watch it being made again. You think it is over for investors. They are telling us that, it has been telling us that for a while. Bond yields the uncertainty is in beyond land than equity land this is what we call the great rotation year. It has been the great Global Rebalancing<\/a> in terms of world growth. And now you are saying reflationary efforts in terms of Monetary Policy<\/a> wick the baton over to fiscal fiscal policy. That becomes the catalyst now and the uncertainty around equities is really what weve all come to know over the last few decades which is are earnings going to be good or not. Tom how about it, what about corporate earningsnd really more to the point the quality of the Earnings Growth<\/a>. Top line Revenue Growth<\/a> . You know, weve been watching this story unfold since late 2008, early 2009. The bear camp basically said you cant increase your profit numbers 009, banner year, low quality, low quality but banner year in terms of profits, quicking off a low of 48 to 59. 2010 double dip fears dismissed. We got not latter part of the year. We rose earnings again. And then in 2011 they said you couldnt grow the top. Corpora america was still going to be under deleveraging. They grew the top line 2012, the same thing. Third quarter, a little bit of a pullback. Basically call in the flat line, Fourth Quarter<\/a> should be better than expected. Global growth has picked up. In 2013, topline growth, and profit numbers with margins just hanging in there, a little bit better consumer, better housing, better global growth, looks good. Within sectors where dow find that equity price growth . You know from, a sector standpoint were shifting more and more and rebalancing over the course of e next few weeks. Weve been doing that, towards cyclical and away from defences. We dont believe the dividend story in and of itself. That is Dividend Growth<\/a> is overplayed. High dividends are, in terms of the defensive nature of where to put money so were moving more towards cyclical. An still is technology, a little bit in financial, materials and energy. Tom growth and optimism there from u. S. Trust. Its chris hizy with us from new york. Tom in just a few weeks the debate over Government Spending<\/a> cuts will heat up. The Defense Industry<\/a> is one of those targeted, and today president obama nominated former rebublican senator chuck hagel as his next secretary of defense. Hagel is a decorated vietnam veteran and former businessman. The president called him, the leader our troops deserve. As a successful businessman he also knows that even as we make tough fiscal choices, we have to do so wisely, guided by our strategy, and keep our military the strongest fighting force the world has ever known. Tom hagels not a shoein for the position. Hes received criticism for his record on israel, iran, and gay rights. Current defense secretary leon panetta says he will retire when his replacement is approved by the senate. Tom tonight we begin a new weekly series here on nbr. We partnered with some of the nations top universities to bring you the best research on business, the economy and investing. We call it nbru. Now our partners in this combine over 400 years of business knowledge. They include harvard university, standford, wharton and vanderbilt universities. Each monday we will speak with top professors about key money issues and you can read indepth at nbr. Com, just look for the tab. Now we begin our series with the corporate focus on shareholder value. Every. E. Oof a Publiclytraded Company<\/a> concentrates on most prominently on display every day. That focus on share price hurts the economy, according to Margaret Blair<\/a>, a professor at vanderbilt university. Professor, is shareholder value first best expressed by todays stock price . Yes, tom, thanks for having me on this show. The shareholder, the share price is something we can look at and find out what it is almost minutebyminute, literally minutebyminute. And so that tends to be what peop think of when they think about shareholder value. But in fact some shareholders have a shortterm interest and some have a longterm focus. And so whats valuable to one shareholder might not necessarily be the most valuable to another shareholder. Why do you contend focus on that value beat other long or shirt term is harmful . Well, because there are really two big problems with an excessive focus on shareholder value. Of course corporations have to have a profit. But the first problem with it is that if you focus on that exclusively t comes in, it comes in to conflict with a combination of two corporate characteristics. One is externalallities, many times the risks that corporations take in order to pursue a Business Activity<\/a> dont fall only on the companies. Some of it falls on people outside the company or some of it falls on the employees or some of it falls on the creditors. But shareholders are protected from that. So with limited liability, their shareholders have a huge incentive to have the firm take excessive risks which are then laid off on to other people when the thing goes bad. The shareholders win when it works out but the rest of Society Loses<\/a> when the risk fails. But doesnt the market make adjustments based on those other stakeholders in an efficient market that we have . Well, theres no reason why the stock price should reflect the value that might be otherwise captured by employees, for example. In fact, if you pay workers more or if you give them Better Health<\/a> plan, that usually comes out of profits for the shareholders. But for instance, in environmental cost for an energy company, we saw the share price by bp get hit significantly during the oil spill back in april of 2010. So that was an exslernl external event that showed up immediately in shareholder value. Well, exactly. But the interesting thing is that bp apparently didnt take that into account in advance. The top leaders at bp were so focused on share value that they were cutting costs. And they were cutting back on safety procedures on that deepwater drilling rig and maybe on others, probably on others. Our time is always short here, too short. How do Company Decision<\/a> makers find a balance between all stakeholders . Well, i think the big thing is that if you talk to a person that you know works for a particular company and you say well what does your company do, you never hear that person say oh we maximize share value. The company has to have a vision about what it does. It has to have a vision about who are its customers and what they want. And then you motivate your employees by getting them excited about serving that customer. Read the vision statement before e financial statement, maybe. Its nbru tonight, Margaret Blair<\/a> of vanderbilt university. You can read more on this and other investing and business research, visit nbr. Com. Click on that nbru tachblt tom stocks took a breather after their big gains last week. With no news regarding the fiscal cliff, corporate earnings or economic data, the index traded in a 10 point range, with the losses reduced in the final hour of trading, ending down 0. 3 . Trading volume was 625 million shares on the big board. 1. 75 billion on the nasdaq. The utility sector suffered the most selling, down 1. 1 , while the telecommunication sector had the best gain, up 0. 6 . Big banking stocks did not see Much Movement<\/a> today despite the Mortgage Servicing<\/a> settlement with the federal government, but Mortgage Servicing<\/a> stocks were in focus thanks to a bank of america deal. Bank of america sold the Mortgage Servicing<\/a> rights on 215 billion or home loans to nationstar mortgage. The deal doubles the number of home owners nationstar will work with. Shares of nationstar jumped 16. 9 . Volume was 10 times normal, taking shares to a new high. Other companies in the servicing business jumped. Walter Investment Management<\/a> gained 8. 2 . Ocwen financial was up 5. 4 on heavy volume. Both are less than a dollar away from new highs. Other standouts today ranged from an online superstore to the house of the mouse. Investment Bank Morgan Stanley<\/a> upgraded its view of amazon. Com, thinking its overseas is poised to grow more quickly than expected. Shares jumped 3. 6 to close at an alltime high. Disney shares fell 2. 3 . The company is considering job cuts at its studio operations according to reuters. A settlement over Student Loans<\/a> hit shares of forprofit school i. T. T. Educational services. The school agreed to pay 46 million to s. L. M. , known as sallie mae. Sallie mae had sued, arguing i. T. T. Owed itoney f stude loans ing bad. I. T. T. Educational lost almost a fifth of its market value, with shares dropping 19. 3 . This is more than a 10 year low. S. L. M. Slipped 0. 6 . Four of the five most actively traded Exchange Traded<\/a> products were lower. The lone winner was the nasdaq 100 tracking fund, up a fraction. And thats tonights market focus. Tom tonights word on the street electronics. Beginning tomorrow in las vegas, the newest computers, smart phones, televisions, just about any high tech gadget you can think of will be on display at the Consumer Electronics<\/a> show. Intel is among the companies hoping to make a splash. Intel is intel is paging a big splash this year, james roger is with thestreet. Com. He joins us from the nsye. They wrapped up what it will preview the show in las vegas what did you learn. There were big announcements there. First i will talk about one thing we didntee. We didnt see a big settop Box Announcement<\/a> there were rumors about that running into the show. Intel did announce a video gateway powered by one of its chips that is part of a collaboration with comcast but no big settop box news. What there was was a lot of news around chips. Mobile devices and things that intel is really, really going to focus on. We saw intel talk about how its lowered power consumption on its bridge chips and also on its core architecture, part of intels big push toward ultra books and convertibles, also high power tablets as well. So there was a lot of information about that type of thing, as well as also intels efforts around, you know, windows 8 tablets. And also it gave a sneak peek of its fourth common trail chip which will be launched for the Holiday Season<\/a> 2013. A lot of technology involved there with intel, really focused on the Technology Side<\/a> of it as opposed to the consumer side because it goes inside the gear obviously. As you know the traditional computer represents the bulk of intels revenue over the past several years, still twothirds of its revenues. Mobile computing is just a small share. Its less than 10 so this focus on mobile really is the opportunity. But how far behind is intel to its competitors . Well, you know, you look at things like smart phone where intel is significantly behind. But intel clearly sees a big opportunity around tablets and these trawl books which is superskinny lap tops. If you look at what the analysts are saying, intel recently got a big upgrade from lazard capital markets. One of the reasons for that as well as improving margins and money factoring strength was also the fact that a lot of these trawl books are common to market, particularly toward the second half of the year. So i think that there is a lot of momentum around this. And also i think with windows 8 tablets i think were only really scratching the surface at the moment. And i think there is more that we can see. Jt 30 seconds left. You mentionedhe upgrade intel received today ahead of the Consumer Electronics<\/a> show. The stock has had a tough time over the past 12 months though clearly lagging as the pc business has been peeled away. What is the prospect for that traditional business . You know, i think that there is going to be more pain in the pc market. Like that is what we are hearing from a lot of analysts t is really a question about how quickly Companies Like<\/a> intel and others can really move forward around tablets and other types of devices from what i heard today i thought it was reasonfully reasonably positive. This is clearly a long way to go. Dow own any shares of intel, james. None whatsoever. Probably use product with intel chips inside. James rogers tonight, with thestreet. Com. Thank you. Thank you tomorrow on n. B. R. Last year, global headlines were dominated by europes debt crisis, so is the situation any better. We talk Global Market<\/a> risks, with the eurasia groups ian bremmer. While washington lawmakers finally reached a deal on the tax part of the fiscal cliff, tonights commentator says something is missing fromhe solution larity. Heres simon constable, columnist at the wall street journal. If the shenanigans in congress at year end have taught us anything its that washington just cant help but do stupid things. While the tax situation for Many Americans<\/a> may now have been solved, the problem of spending cuts hasnt. Thats bad in itself, not getting an important job done, but its also actually harmful to the u. S. Economy. Not solving it has increased what economists call policy uncertainty. Broadly speaking thats ambiguity around what the government is going to do with laws etc. When uncertainty is high, businesses, the real drivers of job growth in the economy, tend to invest in fewer factories and hire fewer people. Despite congress managing to avoid the fiscal cliff, uncertainty in the u. S. Is still elevated. How do we know . The smart people at stanford and chicago measure it in the us Economic Policy<\/a> uncertainty index. That index is now around three times the level it averaged during 2006. In a recent paper, the same authors that track uncertainty say increases are driven mainly by tax, spending and healthcare policy uncertainty. The consequence lower Economic Growth<\/a> and millions of potential jobs lost. Now if our government can just get its act together, provide some clarity and then get out of the way of the private sector then maybe our economy can get roaring again, just like it used to. Im simon constable. Tom finally tonight, a twitter inspired term garnering new fame the American Dialect Society<\/a> named hashtag its word of the ar for 2012. For those who dont tweet, hashtag is the practice used on twitter for marking topics with a hash symbol followed by a word or phrase. The runner ups for word of the year included fiscal cliff, gangnam style, and marriage equality. Past winners include, occupy, tweet, and bailout. Thats nightly Business Report<\/a> for monday, january 7. Have a great evening everyone, well see you online at www. Nbr. Com d back here tomorrow night. Captioning sponsored by wpbt captioned by Media Access Group<\/a> 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<\/a> at bizrpt. And on twitter bizrpt","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia902906.us.archive.org\/4\/items\/KRCB_20130108_003000_Nightly_Business_Report\/KRCB_20130108_003000_Nightly_Business_Report.thumbs\/KRCB_20130108_003000_Nightly_Business_Report_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240619T12:35:10+00:00"}