SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Record-setter. One stock today set an all-time record for the highest price ever. We`ll tell
you which one it is and whether it`s still a buy.
TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Pennies from heaven.
JCPenney gave investors a big surprise late today and shares soared. Can the gains stick?
GHARIB: And the golden years. Many retiring boomers want to have fun, and all they are spending is having a big impact on the travel industry.
The final part of our series, “Aging in America” tonight on NIGHTLY
BUSINESS REPORT for Thursday, August 14th.
MATHISEN: Good evening, everyone, and welcome.
The markets end the day just modestly higher but at their highs of the day, but it was a record-setting day of another kind because one stock has gone where no other stock has ever been before. It is a company you know run by an investor whose become a household name. It is Berkshire Hathaway (NYSE:BRK.A). And one share of Mr. Buffett`s class A stock became the first ever to cross the $200,000 barrier today and it closed at an eye- popping $202,850, up 3,241 today alone.
The next highest price stock is the transportation company Seaboard.
It goes for around $3,000. Today`s gains give Berkshire the fifth highest market value of any publicly traded, bigger than Wells Fargo (NYSE:WFC), bigger than Johnson & Johnson (NYSE:JNJ), and a whole lot more. It means that one share of Berkshire could buy a six bedroom, four bathroom in Omaha, the company`s home base, or four years of tuition at an average private school.
How about a ticket aboard Virgin Galactic`s commercial passenger spaceship, when it finally takes off? Or trade that one share for a brand- new 2015 Bentley Continental GT with just enough left over to fill up the gas tank? Let`s just say it`s probably not a car Buffett would catch himself in anytime.
So, why does one share costs so much? Basically because Buffett says he likes it that way, attracting long term investors, not traders.
GHARIB: So, does it make sense to buy Berkshire stock or take profits now?
With us now, David Rolfe. He`s chief investment officer at Wedgewood Partners, where Berkshire is one of its top holdings.
David, nice to have you with us. You know, looking at the performance of Berkshire Hathaway (NYSE:BRK.A) A shares this year, they`re up something like 13 percent. That`s much more than the S&P or the Dow.
So, as an investor, should you take your profits now and let it go at that?
DAVID ROLFE, WEDGEWOOD PARTNERS CHIEF INVESTMENT OFFICER: I don`t think so. I think there is still room for the stock to run for the rest of the year?
GHARIB: How much better could it get?
ROLFE: I`m not expecting a repeat of the first half, but I still think there is at least another 6 percent, 7 percent, 8 percent left in the
stock through the end of the year.
MATHISEN: David, I`m going to ask you an odd question. I think but for the presence of Warren Buffett at the helm of Berkshire Hathaway (NYSE:BRK.A), there have been any other CEO, the investment bankers would have long ago convince that CEO that that company needs to be broken up, that parts don`t fit together. Should Berkshire be broken up? And do you think it will be after Buffett retires?
ROLFE: I don`t think so, and I think that`s one of the under appreciated aspects of this conglomerate is that the average or good business gets better under this conglomerate. Buffet has a unique source of cheap capital in the insurance segment that helps him grow and acquire companies. The only division I think that could be spun out in the years ahead is the energy division, which has been renamed Berkshire Energy. But even, this is an oddball collection, if you will, but it makes sense and
let`s let — let`s let the master continue to paint.
GHARIB: Well, you know, you say it`s a unique company and it`s unique also in a sense, that — I mean, just listen to this, class A shares
$200,000 a share, most companies like to keep their share price at $1,000 or less and that`s where we have the stocks. Buffett doesn`t believe in stocks split, he doesn`t believe in dividends.
Do you think there`s going to be a day where investors or, you know, somebody will force them into doing this?
ROLFE: I think the dividend question is far, far in the future. I think well after Buffett and Munger left the scene, and they still have plenty of opportunity to reinvest in the railroad business, particularly the energy business. He`ll put the cash to work. There`s no need for dividend.
MATHISEN: Do you own the A shares, or B shares, or a little of both, and would you buy either or both at 202,000 bucks a share?
ROLFE: We own the B shares, and it`s our largest holding at Wedgewood Partners, and we still think it`s the best bargain we can find as we enter
the sixth year of the bull market.
GHARIB: Best bargain, that`s really something.
OK, thanks a lot, David. Thanks for coming on the program.
ROLFE: Thank you.
GHARIB: David Rolfe of Wedgewood Partners.
MATHISEN: Now, as for the rest of Wall Street, stocks ended higher despite a sharp spike in first-time jobless claims last week, and a mixed bag of earnings before the opening bell.
But soothing words from Russia`s Vladimir Putin about ending the bloodshed in Ukraine seemed to give investors a boost. Major averages closed the at the highs of the day, as I just mentioned, the Dow up 61, NASDAQ 19 points higher, S&P added eight, and the S&P and NASDAQ now on track for their biggest weekly gains since June.
And as stocks gained, bond yields fell with the yield on the 10-year
bond hitting a 14-month low just above 2.40 percent.
GHARIB: Some encouraging earnings from JCPenney. The struggling retailer appears to be staging a solid come back with shoppers and investors. After the market closed, Penny says it lost money in the second quarter, 75 cents a share, but that was much less than the 93 cents that was forecast. Revenues rose more than expected, up 5 percent from a year ago on a boost in same store sales.
Investors bought up shares on word that the retailer said it expects current quarter sales to increase in the middle single digits. In after- hours trading, JCP shares popped as much as 10 percent on the news and then
MATHISEN: Also, reporting after the bell, the upscale department store chain Nordstrom (NYSE:JWN) and more good news there with Nordstrom
(NYSE:JWN) taking in 95 cents a share, excluding certain items, a 2 cents a share beat. Revenue was right in line with the forecast, same store sales up 3.3 percent. Shares initially higher in late trading after the bell but
then the stock reversed course as you see on that graphic.
GHARIB: But some disappointing earnings news from the biggest retailer of them all, Walmart. It said U.S. sales were flat and it cut its earnings guidance for the year, blaming weak consumer spending and higher cost.
But as Courtney Reagan tells us, the company is focusing on some initiatives to help jump-start sluggish sales and profits.
COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
It could have been worse, Walmart post another quarter of sluggish U.S.
sales, although it did better than anticipated. The retailer is still struggling to get shoppers into stores, posting the seventh straight quarter of falling U.S. traffic. Profit was in line with expectations for the quarter, for the world`s largest retailer lowered the full-year guidance, saying higher than expected health care costs for employees and
increased e-commerce investment will weigh on results.
BUDD BUGATCH, RAYMOND JAMES MANAGING DIRECTOR: The sales number is better than I think people were expecting and better than we were expecting and the costs are pretty much explicable by health care, by some additional
e-commerce investment and a little bit by the overall economy as well.
REAGAN (on camera): Walmart says despite continued economic challenges, and a stretch consumer, the company is optimistic about the second half of the year, seeing bright spots in its smaller neighborhood stores which the company plans to open more of by the end of this year.
(voice-over): Walmart`s online sales have also been a bright spot for the company, though the retailer scaled back sales growth expectations for the segment from 30 percent to 25 percent for the full year.
And as the retail earnings spree continues, Kohl`s (NYSE:KSS) reported earnings that beat expectations but disappointed on same store sales for the quarter, still hanging on to hope that fresh inventory for back to school will attract the ever so cautious consumer.
For NIGHTLY BUSINESS REPORT, I`m Courtney Reagan.
MATHISEN: And home foreclosures are on the rise again, foreclosure activity across the U.S. up 2 percent in July, according to the housing firm RealtyTrac. That is the first increase in four months, but it is still way below the year ago level.
GHARIB: At least mortgage rates ticked a bit lower last week.
Freddie Mac reports that the average rate on a 30-year fixed loan was 4.12 percent. That`s down from 4.14 percent.
MATHISEN: Lending rates may move up and down, but the overall cost of homeownership is once again on the rise. And it`s not just the purchase price or those mortgage rates. Something else could be pushing your monthly payment higher.
Diana Olick explains.
DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): If your home sits by the ocean, a top a fire prone canyon, or even in a not-so nice neighborhood, you probably know you`re paying more for homeowners insurance. But something even closer to home may be driving your monthly
payments higher, your personal credit score.
LAURA ADAMS, INSURANCEQUOTES.COM ANALYST: Insurance companies use credit scores because they found a statistical relationship between a consumer`s credit score and the amount of claims and the severity of claims
that they file.
OLICK: Homeowners with poor credit pay 91 percent more for homeowners insurance than people with excellent credit. Homeowners with medium credit pay 29 percent more than those with excellent credit.
One of the biggest U.S. insurers, State Farm, confirmed they do factor FICO scores into their rate. A spokesperson there said there is an undeniable correlation between credit information and insurance risk. She could not say how much in dollar terms, though, a poor credit scores could
raise insurance costs.
ADAMS: Consumers need to understand not every insurance company is going to factor credit the same way. So, while one insurer may factor it
very heavily, another may not.
OLICK: And the rate changes vary state to state. Poor credit can boost your insurance by 185 percent in Ohio, but three states, California, Massachusetts, and Maryland prohibit insurers from using credit scores to determine rates. Credit scores and the added costs they can incur have been blamed for the still weak housing recovery, but some argue it`s not
credit holding housing back, it`s cold hard cash.
LOGAN MOHTASHAMI, AMC LENDING GROUP: The reason why housing is so soft is because people just don`t make enough money. This economic recovery has really benefitted those with assets and the upper income
level. Real medium incomes have not recovered.
OLICK: And until they do, credit will not recover fully, either.
For NIGHTLY BUSINESS REPORT, I`m Diana Olick in Washington.
MATHISEN: To read more how your credit can affect the price of your
homeowners insurance, head to our Web site, NBR.com.
GHARIB: And just ahead, we`ll tell you where one sector of the U.S.
workforce freelancers are finding a healthy market for their skills and experience. That`s coming up.
MATHISEN: Many states aren`t collecting as much tax revenue as they used to. A study from the Rockefeller Institute found that this spring, revenues in 36 states out of 50 fell with an overall drop of nearly 1 percent each. That`s the first quarterly drop in four years. Most of the
second quarter losses were due to a sizable drop in personal income taxes.
GHARIB: How would you like flexible work hours and more control on who you work with? While millions of Americans are doing just that and are part of the so-called freelance economy, it`s big growing and popular with businesses trying to keep labor costs low.
Julia Boorstin has more.
JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
New technology platforms are connecting Americans with freelance work, fueling a growing freelance economy that accounts for $1.2 trillion of annual income.
Freelance startups touch virtually every part of the economy. Uber apps and Lyft pay car owners to drive. UpCounsel gives access to top attorneys at lower rates than law firms. Rev is a freelance transcription and translation services. HomeJoy screens house cleaners. And anyone who can go to the grocery store can make extra money working for grocery
Scripted screens and selects writers and connects them with writing assignments.
SHEREE WHITELEY, SCRIPTED FREELANCER: In a freelance capacity, often times your time is spent trying to find jobs and less doing them. Scripted make it easy to find a number of jobs in one spot and so you can get to
BOORSTIN: Companies ranging from trip advisors to small businesses
like law practices pay $50 to $1,000 per blog post.
SUNIL RAJARAMAN, SCRIPTED CEO: They can come to Scripted and have the work flow taken care of in one central place, track the work, provide, request edits to the writer, and they are guarantee the quality of the
writing that they get back from us.
BOORSTIN: Consultancy BMO Partners predicts that this year`s 35 percent of non-farm and non-government workers will be either full or part time freelance, projecting that number will go to 44 percent by the year 2020. The downside, freelance workers can suffer from the lack of benefits like health care. A national poll finds freelancers are more likely to be depressed and anxious. But for people who need work and companies that
need flexibility, freelancing can be a win, win.
GENE ZAINO, MBO PARTNERS CEO: Companies have really moved to what I`d like to call a project economy, where they are interested in giving work
out not as necessarily a position but as a project.
BOORSTIN: Without flexibility to expand as needed, companies can save money on overhead, while startups like Scripted helped find workers here in the U.S., instead of outsourcing overseas.
For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in Los Angeles.
MATHISEN: UPS and FedEx (NYSE:FDX) get the OK to expand in China and that is where we begin tonight`s “Market Focus”.
The package delivery giants have received licenses that will let them extend their express package service to new cities in China. The two companies have been waiting for this permission since 2009, that`s because postal laws in the country restricted foreign firms from delivering packages from abroad. Shares of UPS rose slightly to $96.07. FedEx
(NYSE:FDX) also up just a little bit to $149.64.
General Electric (NYSE:GE) apparently looking to shed another one of its units. The company is considering once again the sale of its appliance division as part of its effort to streamline and focus on selling more of its profitable industrial equipment. Electrolux is one of the parties interested in snatching up the unit. If it does, your GE washer will speak. Shares were up a fraction to $25.88, the close there.
Securities and Exchange Commission is reportedly looking into the joint bid by Valeant Pharmaceuticals and activist investor Bill Ackman for Allergan (NYSE:AGN). According to those reports, regulators are investigating whether the offer to buy the Botox maker broke any insider trading laws. Shares of Allergan (NYSE:AGN) rose slightly to $155.60.
Valeant jumped almost 2 percent to $111.04.
And shares of Amgen (NASDAQ:AMGN) hit a new record in today`s session, despite a batch of mixed news. The biotech company released disappointing results on its blood cancer treatment and recalled one of its drugs in Europe and the Middle East.
But, positive findings from another study are trumping that failure and according to a new filing, hedge fund Third Point has taken a stake in Amgen (NASDAQ:AMGN). All that helped push shares up 3 1/2 percent to $131.86.
GHARIB: Meanwhile, Merck (NYSE:MRK) got the OK from the Food and Drug Administration for a new type of sleeping pill. The drug is designed to help people with insomnia stay asleep. Merck (NYSE:MRK) rose 1 1/2 percent to $58.78.
So, if you`re a K-cup lover, get ready to pay more. Keurig Green Mountain is raising prices by 9 percent for its portion packs of coffee.
It blamed the price hike on expensive coffee bean prices, as well as rising costs for energy, packaging and transportation. Shares rose slightly to $114.30.
Coke and Monster Beverage are teaming up. Coke has taken a nearly 17 percent stake in Monster. That`s worth more than $2 billion. The beverage giant will transfer its energy drink businesses to Monster as part of the deal and Monster will give coke its non-energy beverages. Shares of Monster Beverage shot up by as much as 26 percent in after-hours trading.
During the regular session, the stock rose slightly to $71.65.
And it turns out Burger King`s “Satisfries” didn`t satisfy customers.
After less than a year, the chain is scrapping the lower-calorie, lower-fat French fries at most restaurants. Shares were unchanged at $26.42.
MATHISEN: The baseball world is waiting on the next commissioner, Major League owners will decide between Tom Werner, the owner of the Boston Red Sox, and Rob Manfred, who is the chief operating officer of MLB.
Whoever gets the top job has challenges of plenty awaiting him in this $8 billion-ish business.
Joining us to talk about it is Bob Boland. He`s professor of sports at New York University.
Professor Boland, welcome. Good to have you with us.
The votes are apparently going on today in Baltimore. What are the prime challenges that whoever wins this race face?
BOB BOLAND, NEW YORK UNIVERSITY PROFESSOR OF SPORTS: Really, three- fold. Baseball has grown in revenue under Bud Selig from approximately a
$4 billion entity a year or two, almost a $9 billion entity this year. But its fans have gotten older and it faces increasing competition. So, whoever moves the sport forward will move it forward effectively, get it more popular with younger people and keep labor peace moving forward in
that same direction so it remains the national pastime.
GHARIB: Those are two really important issues. Who do you think would be the better person to accomplish that?
BOLAND: Well, if I were thinking about the revenue, the three finalists are Tim Brosnan, the chief of business operations for Major League Baseball, might be the one who fits this prescription best. He has the lowest level of support and in many cases he and Werner are tied together as almost a package to stop the favorite Rob Manfred, the labor
MATHISEN: Baseball`s television ratings have not kept up with some other sports, in the middle of the World Cup, the World Cup was smacking baseball regularly.
How big a challenge is that? How is the audience — how do you build back the audience?
BOLAND: Well, baseball has a unique problem because it has a lot of product out there. I mean, every team plays 162 games, their 81 home games, all of them are on television now. So, you really — you really kind of divided the down the baseball product a lot, where you probably would focus is bringing the post-season back in its capacity and getting on as much as television and at times fans can see it most effectively, and that may not be on television now. Not maybe digitally, too, because we`re looking at a big change how we consume sports products.
GHARIB: So look ahead, let`s say 10 years from now, how is this whole business of baseball going to change under the leadership of sport of watching baseball going to change under the leadership of one of these guys?
BOLAND: Well, that`s a really great question. I don`t think we can necessarily tell.
Manfred is probably running on the past record of labor peace. Werner and/or Brosnan are running on some degree on futurism — the idea that they understand the entertainment business, that they understand how to make this game relevant to the next generation, and with an all-star game average age of fandom at 53, baseball is at a time that it needs to change
and get younger.
MATHISEN: So, how do you make the demo to come down? How do you make the baseball stadiums a place where guys want to take girls out on dates, if they can afford to go?
BOLAND: Well, the last one is probably make sure that there are prices that we can get to so the sport doesn`t go entirely corporate, play the games a little faster, and provide more entertainment in the stadium, and the in-stadium experience, and keep your teams relevant, and your games
relevant, and that is a challenge all the way around.
MATHISEN: Bob, thank you very much. Bob Boland, New York University.
And coming up, retiring baby boomers aren`t — they are watching baseball — no, they`re not. They`re having fun and reshaping economics of the travel industry. The final part of our series, “Aging in America”, right after this.
GHARIB: All this week in our “Aging in America” series, we told you about the impact that an older workforce and rapidly growing number of retirees is having on companies, the health care system and the overall economy. Well, in tonight`s fourth and final segment, we take a look at the fun part of retirement and how many retirees are not exactly sitting still.
Robert Frank has our story.
ROBERT FRANK, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Ralph and Karen Jones are retired, and they`re enjoying every minute of it.
The former New York teachers are like many boomers, they have more time on their hands and they`re taking to the road, skies and seas.
Boomers spend over $150 billion a year on travel, which they rank as their top leisure activity. They take an average of four trips a year, but they`re not just looking for a lounge at the beach.
Around the world cruises, safari and cultural tours of remote islands top the list for today`s retirees who wanted adventure and enlightenment in
MATTHEW UPCHURCH, VIRTUOSO TRAVEL CEO: What we`ve seen over the last
20 years is this huge shift in priorities from the accumulation of stuff to life experiences, and so, it`s quite frankly a lot of people are focusing on life experiences and travel as being one of the key, if not the key
conduit for that.
FRANK: And with prices coming down, you don`t have to be rich. Ralph
and Karen Jones have already spanned the globe.
KAREN JONES, RETIRED SCHOOL TEACHER: Being able to set aside the money and saying, OK, we`re going to go on a cruise, we`re going to go on a motor coach tour, we`re going to go see different places, and being able to
really go about the world.
RALPH JONES, RETIRED SCHOOL TEACHER: These are places that you read about or places that you might have seen on TV on the Travel Channel, and to actually have the opportunity to go there and experience that for yourself is really a nice luxury to have.
FRANK (on camera): Adults over 50 now account for up to 80 percent of luxury travel spending in America. So, hotels, cruise lines, airlines and online travel sites are quickly adapting. Boomers like multi generational travel with their kids and grand kids, they like to volunteer when they are
traveling and they love to bring home great stories.
R. JONES: When we`re on these trips, we usually run into people who are in our age group, mostly retired. You talk with some of them and they enjoy the traveling. A lot of times, they will talk to you about their friends who don`t ever go anyplace and they are always sitting at home or they are still working, and we just sort of have a little fun and say,
well, too bad for them.
FRANK (voice-over): With the rising middle class and affluent in emerging markets, the luxury travel business around the world is likely to keep on booming.
For NIGHTLY BUSINESS REPORT, I`m Robert Frank.
MATHISEN: I`d like to go to any of those places.
GHARIB: I was going to ask you, what`s on top of your list?
MATHISEN: You know I went to Italy and I loved it. I go back there –
GHARIB: You haven`t been to China.
MATHISEN: No, I have not.
GHARIB: You`ve got to get that.
MATHISEN: Not on leisure travel.
GHARIB: That`s NIGHTLY BUSINESS REPORT for us. I`m Susie Gharib.
And we want to remind that this is a time of year your public
television station seeks your support.
MATHISEN: And I`m Tyler Mathisen. On behalf of your public television station, thank you for your support and we hope to see you back here tomorrow night.
Nightly Business Report transcripts and video are available on-line post broadcast at http://nbr.com. The program is transcribed by CQRC Transcriptions, LLC. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Nightly Business Report, or CNBC, Inc. Information presented on Nightly Business Report is not and should not be considered as investment advice. (c) 2014 CNBC, Inc.