tv Nightly Business Report PBS December 6, 2010 7:00pm-7:30pm PST
>> susie: it looks like a tentative deal is in the works on taxes. the plan could involve a compromise on the bush tax cuts, and an extension of unemployment benefits. >> tom: we'll tell you what we know, and whether it will help fix the economy. you're watching "nightly business report" for monday, december 6. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
-- some time this evening tentative deal with republicans. >> tom: susie, here's what we know so far. the deal would extend the tax cuts for two years for everyone, including the wealthy. it also renews the estate tax, hitting estates valued at over $5 million with a 35% tax. the deal also renews recently expired federal jobless benefits for 13 months. >> susie: darren gersh is following this story and joins us now from our washington bureau. darren, tell us what else you are hearing about this deal. >> well, first of all i think we should say right off the bad that this could go a long way towards relieving some of the uncertainty that people have been complaining about in the economy's, small businesspeople, other businesspeople when they make their clan plans. now one of the new and interesting points in this is that there is a payroll tax holiday for employees. that's the first 2%, 2 percentage points of the payroll tax which would boost hiring, the white house would hope, and so as an example for somebody
making up to 40,000 dollars, we don't know where the cap would be exactly right now but that could be an 800 dollar boost to their bottom line so that could be a big deal worth 120 billion dollars next year. >> darren, i understand i have just been told that the president is speaking now and we hope to update everyone in just a few moments but first i would like to hear a little bit more from you. all right o so businesses now can plan better because they know what the tax situation is going to be. but what does all this mean for the economy, you have been reporting so much about how everything wants to take care of deficits, this doesn't look like that is going to solve that problem. >> no, it certainly won't it will, like i said t will relieve some of the uncertainty but we still have a little bit of uncertainty. i'm told that the r & d tax credit, for example, which big businesses count on, that's not quite a done deal yet. but we have to keep in mind that this is extending tax cuttings which most people counted on anyway. so it is removing some uncertainty. the new piece could be this payroll tax cut, 120 billion
dollars. and that is enough to make some difference in the economy next year. >> susie: i think the question is going to be as consumers have more money in their pockets, will they spend? >> well, that is really tied up. i mean there has been an uptick in consumer spending. there are some people, most economists are hoping that we're goinging to get back to what they dahl trend growth, around two, two and a half percent next year. it's not going to make a huge difference in the jobs outlook. that is the problem. that is why the white house and congressional republicans are aiming towards this payroll tax holiday to get some hiring going. that is the key to consumer spending, to get the jobs picture under control and as ben bernanke said over the weekend on 60 minutes, that does not seem to be that unemployment is coming down quickly. >> all right, darren, we will let you go so you can check and see what the president is saying. maybe you can circle back and give us more of an update. thanks a lot. nbr's washington bureau chief darrin gersch.
>> tom: is ben bernanke right about the economy? that question was debated nationwide after the fed chief told cbs' "60 minutes" program last night the u.s. recovery is not self-sustaining. bernanke said the fed's strategy to pump masses of money into the financial system would help the economy, but many people worry that's risky. erika miller reports. >> reporter: patience may be a virtue. but is it also the key to the economic recovery? with the unemployment rate close to 10%, many are wondering whether the government could-- or should-- be doing more to create jobs. economist bob di clemente thinks no additional stimulus is needed for now. >> there's been a period now, in which the initial big stimulus effort has faded, and yet we've seen some encouraging signs of stronger consumer spending these last three or four months. some of the housing indicators are not as dismal. some, in fact, have been generally encouraging. >> reporter: of course, patience is not easy if you are one of the 15 million unemployed americans. many people and businesses would like the government to take
bolder action to bolster the recovery. economist julia coronado has a list of things congress could do to help the economy heal. >> i think that a payroll tax holiday would be something that clearly be something that would get money into the economy in the near term. extending the "buy america" bonds program would help state and local governments manage their fiscal situation and provide a sense of certainty for financial markets. >> reporter: she would also like to see tax credits for businesses that bring back money earned overseas to the u.s. many economists also think the federal reserve should act more aggressively to lower interest rates. last month, the central bank announced it would buy $600 billion worth of bonds. fed chairman ben bernanke says he's ready to do more, if needed. coronado thinks he should double the level immediately. >> $1 trillion to $1.5 trillion would certainly be a strong signal and also a commitment that we are going to do this. this is the amount we are going to commit to.
>> reporter: but even she concedes raising government spending is politically unpopular these days. to make it an easier sell to taxpayers, coronado would combine short term spending bills with long term deficit reduction strategies-- like raising the social security retirement age. erika miller, "nightly business report," new york. >> susie: here are the stories in tonight's n.b.r. newswheel: a mixed close on wall street. the dow fell 19 points, the nasdaq rose three and the s&p 500 down 1.5. trading volume kicked off the week with 803 million shares moving on the big board and 1.8 billion on the nasdaq. the u.s. supreme court will decide whether a landmark sex discrimination case against wal- mart can continue as a class- action, or if it should be heard as individual cases. at issue: whether the complaints of six female workers should represent as many as 1.5 million wal-mart female employees.
the suit alleges the nation's largest retailer discriminated against women in both pay and promotions. and france ruled today continental airlines is guilty of involuntary homicide for its role in the crash of a concorde jet back in 2000. continental was ordered to pay more than $1.3 million dollars to air france, the concorde's owner. the crash was blamed on a piece of metal that fell off a continental jet. >> tom: still ahead, "beyond the scoreboard." tonight, a look at whether n.f.l. players walk this spring and what a strike could mean for the n.f.l. economy. >> susie: a major crackdown on financial fraud: the justice department arrested hundreds of people for ponzi schemes and other investment scams. over 500 people face criminal or civil charges as part of the 3.5-month investigation dubbed "operation broken trust." there are an estimated 120,000
victims, with $10.4 billion in losses. now "broken trust" is the first national probe of investment frauds targeting the public. u.s. attorney general eric holder says today's crackdown should be a warning to scammers. >> to anyone attempting to or operating an investment scam, we will use every too at out disposal to find you, to stop you, and to bring you to justice. cheating investors out of their earnings and savings is no longer a safe business plan. >> susie: holder will continue to fight financial fraud. he plans to do that by helping boost financial literacy and by putting more fraud agents on the beat. >> tom: the real estate slump has by-passed one corner of the country-- the corn belt. growing demand for food worldwide is driving up grain prices, and driving up farm prices. chicago's federal reserve bank says farmland values in the region rose 3% in the third quarter. many economists think the trend will continue for the next few years. so as diane eastabrook reports, that has farmers competing with investors for land.
>> reporter: on this central illinois farm, the harvest is over and corn is in storage for winter. but, this land is still making money. >> this farm here is over 300 acres... >> reporter: suburban chicago real estate broker doug hirsh owns the farm and 44 others in illinois and indiana. >> we thought it would be a great inflation hedge. it's conservative. >> reporter: hirsh and his father-in-law began buying farmland three years ago and leasing it to farmers. last january, he and 15 investors started a fund that now owns 1,400 acres of prime farmland. hirsh says, so far, the dough farms opportunity fund is up roughly 17%. >> farmland. is always going to be there. it's a hard asset and it provides a return you know renting to your farmer. and, all of the land is 100% occupied. it's not like an office building, which you have 50%. >> reporter: scorching global demand for grain and sky-high grain prices are fueling
farmland values in rural america. except for a slight correction last year, land prices have been on a tear. and, agriculture economist dan basse sees no end in sight. >> it's hard to see any big corrections coming in farmland, at least as china continues to be more hungry for food and more hungry for grain. >> reporter: the prospect of values rising even higher is luring foreign investors to central illinois, where farmland tops $8,000 an acre. banker steven myers says with a limited amount of land for sale, the competition is becoming cut- throat. >> the local folks out in the country are competing with some high-dollar people, whether it be a local investor or an investor from out of the area, so the more people you throw into the room to buy the land, the harder it is for the local person to do it. >> my grandfather and father farmed this... >> reporter: no one knows that better than farmer scott hoeft. recently he tried to buy the 270 acres that his family has leased for three decades. but an investor outbid him.
>> the farm averaged for a little over $8,800 an acre. as i was looking at what i could afford to pay would have been somewhere in that $7,800 to $8,200 range. >> reporter: hoeft is hoping to buy land elsewhere in central illinois next year. and there's a chance he'll be bidding against doug hirsh. hirsh is planning a second farmland investment fund. diane eastabrook, "nightly business report," le roy, illinois.
>> tom: well, the stock market really kind of marked time today, digesting the pop that we saw last week in share prices. let's get you updated in tonight's "market focus" but coal miner massey was the biggest gainer among energy stocks. massey added another 2% today. shares are at their highest price since a deadly explosion at a west virginia mine in april. c.e.o. don blankenship will retire at the end of the year, feeding speculation it may be bought... or be a buyer. also within energy, anadarko added about 2%. it is just $3 below where it was trading before the gulf oil disaster in april. remember that anadarko owned a stake in the blown-out well. natural gas producer chesapeake was up about 2%. and tonight's close of occidental petroleum is a new two-year high.
health care stocks were the biggest losers, led by cancer drug developer celgene. the stock shed 8% on 10 times its usual volume. this is a 90-session chart. it has been studying the long term effect of its multiple myeloma drug revlimid, finding a possible increased risk in secondary cancers-- a disappointment. five years after inheriting the nextel wireless network, sprint now plans on shutting it down. that will happen by 2013. in the meantime, sprint will work on integrating the two wireless systems into one. sprint says it will save it up to $11 billion over the next seven years. investors cleary liked the move. sprint shares jumped 6% on more than twice their average volume. this rally takes the stock to a six-week high. merger talk was active in the book-selling business. that talk was fueled by an activist hedge fund manager saying he's ready to finance a buyout of barnes and noble by borders group. the bigger of the two, barnes
and noble, is the target. shares jumped almost 11%. the proposed buyout price is at $16 per share. investor ackman and his pershing square capital management now owns more than 37% of borders. he says he's ready to finance a deal between the two book stores. one other deal in the making. semiconductor testing equipment manufacturer verigy is at the table with a japanese competitor. the offer is for $12.25 per share, but today's 42% rally takes it well over that, indicating investors think another offer will be coming. and the world's biggest drugmaker by sales has a new leader. pfizer c.e.o. jeff kindler quit after four and a half years on the job. ian read is the new chief executive. the new c.e.o., read, most recently headed up pfizer's biggest business unit. morningstar analyst damien conover thinks read will continue to integrate wyeth, the company pfizer bought for $68 billion, and look for others. >> i see that cost-cutting continuing to happen,
utilizing some of wyeth's key pipeline products to augment pfizer's pipeline. and then also do the acquisitions like the recently announced king acquisition. we are weigh expecting one more acquisition of that size by 2012. pfizer shares rallied on the new c.e.o.'s first day, up 0.5%. over the past year, though, pfizer stock has lost 9%. and that's tonight's "market focus."
>> tom: an $8 billion a year business runs the risk of shutting down next year. it's a shutdown with ripple effects both on and off the field. tonight's "beyond the scoreboard," our look at the business of sports, begins with contract talks between the n.f.l. and its players union. rick horrow is a sports business analyst and c.e.o. of horrow sports ventures. welcome back. we're talking about the nfl and collective bargaining agreement due to expire march of 2011. just a few months away. a few weeks after super bowl. how is the league preparing for the possibility of no season. >> the tangible way is to offer the fans refunds if the games don't happen. 17 million fans so that could end up to a lot of money. also, they would need to make sure that they have a unified stance on all of these issues they are big market teams and small market teams and corporations whose contracts expire in different ways. they get television money, by the way, one year in advance, about $4 billion that is enough to fuel a lockout. hopefully it is enough to avoid one. >> tom: let's talk about the nfl economics. top line revenue is $8 billion a year, net profits about a billion dollars a year. you mentioned how many fans
could be in line for a refund, 68,000 fans attend the average nfl game, each game, each week here across-the-board so if there is a lockout between the media, between the sponsors, between the ripple effect of employment who has got the most to lose. >> i think everybody does, frankly, the players so,, these players have three and a half, four years average life playing. the owners have billion dollar franchises. they have got to pay debt and the last bank i knew wasn't going to forgive debt just because of strike. some corporations don't pay, some do, television dollars, as we said. the bottom line is this $8 billion business and no one wants to risk killing that goose that laying the golden egg. >> tom: up north in canada the media company rogers company wants to get into sports, it owns the blue jays, has a billion dollar deal that it is talking about taking the toronto nba-nhl franchise and soccer franchise. but with lots of media companies have tried their hand at this we will look at a list of a number of those that have gotten out from time warner, disney, news corporation, tribune finally selling the cubs after a
generation of disappointment. what does rogers have to do differently. >> cubs didn't work out that well. >> not yet. >> what rogers needs to do is to take the vertically integrated assets and market and promote them as best they possibly can. hockey franchise, basketball franchise, canadian football, indoor building, outdoor building, soccer franchise, they'll have all of the assets if they acquire this, to do a great job and market and promote very well. >> tom: they are not alone. a number of companies still have assets in sports and shareholders old hem. liberty media with the braves, comcast and the philadelphia teams, madison square gardens in new york. rogers stock rci up 10% so far this year. what 19 best arrangement for a shareholder and a sports ownership? >> quickness and flexibility. because the bottom line is the sports world moves very fast. player movement, franchise leases, corporate stuff, and you've got to be able to empower a c.e.o. to be able to move that quickly. the corporations that are able to do that and in the sports world are the best ones. >> tom: finally sports world getting geared up for college football, bowls, bowls are big business.
35 of them stretched over the course of a month coming up in the weeks ahead. is this too many for sponsors to get their message out. >> absolutely, positively not. the bottom line is the big bowls have the big attention. but up to 35, every school, every corporation, are involved in this because they see their own moment in the sun. and companies like maaco and little caesars and all the companies who have made commitments believe in that as well. mediocre football, maybe, 12, 6 and 6 teams this year but it is football. >> tom: and big business at that rick horrow, the c.e.o. of horrow sports ventures. >> susie: here's what's coming up tomorrow: we'll talk about the current lending environment, mortages and foreclosures, and consumer banking with brian moynihan, c.e.o. of bank of america. and, our "word on the street" is "uncovered." from new trucks to gambling, we'll look at some breakout stocks that are benefiting as their sectors experience a resurgence. kraft foods is turning up the
heat on its battle with starbucks. kraft asked a judge today to stop starbucks from canceling its distribution contract. kraft now makes about $0.5 billion a year selling starbucks coffee to supermarkets and other retailers. last month, starbucks said it wants to end that deal and called today's move a "delaying tactic." >> tom: 2010 may turn out to be a better year for advertising spending than originally thought. several forecasts released today predict ad sales will be strong next year too. that's because spending in fast- growing economies like china will outweigh uncertainty in large western markets. experts predict advertisers will spend more money online as they move away from traditional media like newspapers. euqutuuuu b@
an update to the tonight's lead story, president obama announced the framework for an agreement made with congressional republicans on tax breaks. >> for the next two years every american family will keep their tax cuts. not just the bush tax cuts, but those that have been put in place over the last couple of years that are helping parents and students and other folks manage their
bills. in exchange for a temporary extension of the tax cuts for the wealthiest americans we will be able to protect key tax cuts for working families. the earned income tax credit that helps families climb out of pov earth. the child tax credit that makes sure families don't see their taxes jump up a thousand dollars for every child. and the american opportunity tax credit that ensures over 8 million students and their families don't suddenly see the cost of college shooting up. >> tom: the president also says unemployment benefits will be extended for 13 months. now we'll have complete coverage of this tax cut deal tomorrow. >> susie: finally tonight treasury secretary timothy quitener wants to hear from you. he launched the treasury note blog today at treasury.gov calling it an opportunity for greater transparency. but geithner won't be the only one blogging on "treasury notes." senior staff from throughout the department will add news and
info. if you can't make it over to treasury.gov to read the blog, you can follow the treasury on facebook and twitter. that's "nightly business report" for monday, december 6. i'm tom hudson. good night everyone, and good night to you too, susie. >> susie: good night tom. i'm susie gharib. good night everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: