tv Nightly Business Report PBS September 16, 2015 1:00am-1:31am PDT
report" with tyler mathisen and sue herara. >> towering higher, the dow rises triple digitsig as invests bought stocks ahead of the start of the federal reserve's crucial meeting. wall of worry. the big issues keeping chief executives and wall street up at night. and study hall. what one startup is doing to try and change education in america. all that and more tonight on fight "nightly business report" for tuesday, september 15th. >> good evening, everyone. i'm sharon epperson. >> and welcome from me, as well. i'm tyler mathisen. there was optimism on the street today. not many expected a rally, let alone a big one. but they got it, despite all the general uneasiness. today a day before the start of the federal reserve's much
anticipated two-day meeting, investors bid up stocks digested some final economic data ahead of that meeting. more on that a little bit later in the program. but by the close, here are the numbers. industrials up 228 points to finish at 16,599. nasdaq higher by 54, and the s&p 500 was up 25 points. more on today's big move in stocks. >> stocks started up and they stayed up. now it's the day before a fed meeting. stocks usually do advance. it was a particularly broad rally although the volume was moderate. a lot of big caps up 2% or more whether you're talking about merck and the pharmaceuticals or ge and the industrials or procter & gamble, even united health care, all up more than 2%. now, there was a twist to the buy ahead of the fed story we saw today. some afraid traders aggressively sold treasuries, as well. that created big moves on top of the rally. big banks like bank of america,
jpmorgan and citigroup why outperforming the market in general as were regional banks like "uss bankcorp. why the move down in bonds? that's not clear. but there have been rumors for sometime that the chinese government, one of the biggest holders of bonds outside the united states has been an active seller for several weeks. for "nightly business report," i'm bob pisani. now to the wall of worry. the heads of some of the biggest companies in america have a long list of things they're concerned about. the quarterly survey of the business roundtable made up of corporations with more than $7 trillion in annual revenues cites growth, a strengthening dollar and a potential federal government shutdown as some of their top concerns. the chair of the group pointed specifically to congress as the top impediment to business expansion. specifically if lawmakers fail to fund the government beyond the end of this month and fail to increase the country's ability to borrow later this year. we've been following the story
from washington. eamon, very concerned because of the impact this will have on business. what is the likelihood of a shutdown? >> that's right. this is one of those stories that continues to gather steam as we go toward the end of the month deadline to fund the u.s. government. there's some question whether or not congress can sort of get its act together here and pass what's known as a continuing resolution just to continue the funding at current levels. there's concern among republicans that the current funding includes funding for planned parenthood. they don't like that. they would like to do something about that, but that is a showdown with democrats that could provoke a government shutdown. goldman sachs put out a note to its clients last week saying they're now rating the chances of a government shutdown higher than they had before. they say it's nearly 50% chance we'll have a government shutdown at the end of the month. >> how does what's happening on the presidential campaign trail impact what's going on in this debate? >> that's so fascinating here. we see this surge of donald trump and the republican presidential primary campaign.
is he al anti-establishment figure who has congratulate appeal in the republican base. what that's doing i think is riling up a lot of members of the republican party here in washington. they're a lot more likely to be willing to kind of stick it to their leadership, the republican leadership based on the success they're seeing donald trump having on the campaign trail. there's a real anti-establishment, anti-party chief dom kind of a mood in the republican party right now. and you could see that playing out into more of a willingness to buck leadership on things like this continuing resolution and other things throughout the year. so just watch for the impact of that because i think the rise of donald trump actually makes it a little bit more dicey for republican leaders to get a cr at the end of this month. >> i know you're going to be following this. we'll talk about this more in the program. thanks so much is, eamon javers in washington. >> we're going to do that right now. that trump surge plays right into one of wall street's
biggest concerns apparently. politico, the website reports that financial executives are growing increasingly "terrified" that donald trump could win the republican nomination. trump has recently ripped into executive pay, he's promised to raise taxes on hedge fund managers and more. dan clipton is the head of policy research and he joins us now. welcome. good to have you with us. do you think that the business leaders are "terrified" at the prospects of trump's winning the nomination? and if so, why? >> tyler, coming into this year, most business executives and large investors believe that this was going to be a hillary clinton versus jeb bush election. so any type of deviation from those two candidates creates a degree of uncertainty and there needs to be adjustment to the new candidates. you then throw in the wild nature of donald trump. he's an unknown. his temperament is unknown. his main line is that he's a boss to no one.
there seems to be a lot of uncertainty building in around what trump actually means, and that's creating this uncomfortableness. i'll make one larger point. six weeks ago to our clients, donald trump was a form of entertainment. but because he's held that lead for so long and his support is somewhat broadened out, it's starting to make business leaders and investors think his candidacy is a lot more real than they initially anticipated. it's about getting used to the flow of this. >> what else do you think in terms of the landscape we're seeing with the gop candidates is being overlooked here? you said perhaps people should be looking more at carly fiorina right now. >> that's correct. when i look at previous primaries, the winner in the summer before the election is never the actual primary candidate. that includes both on the republican side and the democratic side. right now, the partisans are paying the most are the most vocal. that's reflected in the polls. as you get closer to the end of the year and the new primaries
races are going to happen, you start to see a winner emerge at the end. what we see, the relationship is, a candidate with high net favorable ratings now turns out to be the winner. that's john kasich, carly fiorina, marco rubio and even ben carson. both hillary clinton and donald trump have high negative unfavorable ratings and historically, that's not a good predictor of them being the nominee. >> you didn't even mention the name most people in the business establishment you might think that they would go there, and that would be jeb bush. let me come back to trump. i ask this only somewhat facetiously. he's a businessman. if business doesn't like a businessman, what's going on there. >> is it because they know too much about him and familiarity has bred contempt? >> look what he's advocating. forget he's a businessman for a minute. he's tapping into the anger in the republican party over immigration and trade and saying
he doesn't want to allow immigrants in the country needed for the workforce and saying he wants to go to a trade war with where a lot of these companies' overseas markets are. his positions although he's a businessman. >> reporter: his positions are at odds where many of the markets are going for the leaders. >> dan, thank you very much. >> the failure of congress to reauthorize the export import bank which guarantees loans for u.s. companies that do business abroad is forcing general electricing to move 500 jobs overseas. it's something ge warned could happen, and today, they said, it is. mary thompson is following the story for us. first a foremost, why is ge doing this? >> the jobs go to france, china and hungary because without the loans and assurances to foreign clients ge used to secure through the bank, it has to get them through other ecas. if ge is bidding on a foreign project mostly in developing countries these lines of credit
have to be secured before the bidding process can begin. typically governments request some of the jobs or production be home countries. so if they're going to extend the credit, they need -- >> cog morse ge jobs be moved over over seas as a result. >> the wouldn't say. it's bidding on 11 blld worth of projects as we speak. each will have its own financing package and set of criteria. unless congress reauthorizes the ex-imbank, the location of the jobs will be at the mercy of the agreements. in a statement today, ge said this could result in thousands of jobs from ge and its suppliers being relocated overseas. >> is ge the only company impacted by this? >> no, but although ge, boeing, as well as caterpillar, the banks benefit the most from the ex-imbank. while ge says the bank will help to -- excuse me, the bank had eps to keep the global playing field level because other countries have similar financing
arms, conservatives in congress have wanted to kill it because they feel it's contrary to the free market arsystem. some democrats believe's a subsidy for corporations. that's where the pushback on the bank has been. ge has been trying to lobby for its reauthorization but so far unsuccessful. >> krool be watching this. thanks, mary. >> thanks, mary. is the white house says it does not back a bill, a house bill that would repeal the 40-year-old ban on exporting u.s. oil. white house press secretary be josh earnest says it's a policy decision that need to be made by the commerce department. earlier in the day, house republicans said they plan on holding a vote on the issue in weeks. today oo west texas immediate rose more than 1% as you see there. >> now to those economic reports we mentioned earlier in the show. retail sales rose.2% in august from a month earlier. climbing for the second straight month. part of the reason for the increase is lower energy prices and a stronger job market. >> while consumers are holding
up, factors are struggling. a report on manufacturing in the new york region showed contraction in september for the second straight month. a second report on industrial production which measures output in manufacturing fell in august for the sixth time in eight months. much of the deline attributed to a cutback in production by automakers. as we know that economic data comes as the fed iss gettig ready to start its meeting and the economy looks a lot different today than it did the last time the fed hiked rates nearly a decade ago. steve liesman compares then and now. it was 2006 the last year the fed raised rates. there was no ipad, no iphone and no twitter to tweet about the decision. much of the economic data then painted a very different picture. unemployment in june 20064.6%. today it stands higher at 5.1. average job growth over the three months is more than twice what it was in '06. but the labor force participation rate is lower today. raising questions about just how much slack there is in the
economy. gdp growth tracking around 3%s in '06 not far from its four quarter average of 2.67% today. but there are big differences in inflation numbers and those are the ones the fed is concerned about. inflation now running at just 0.3% compared to a real 3% back then. core prices including food and energy were rising by 2.4% compared to half that now or 1.2%. the fed funds was already at 5% when the fed last hiked far from the zero rates they maintained for seven years. bulls ve a strong run. in june '06 the dowel closed about 5,000 points below where it trades today. investors will be watching inflation out tomorrow to see if the picture showsre signs of impatrioticment. for "nightly business report," i'm steve liesman. >> the fed and what if anything it decides to do is clearly the talk of wall street. and some of the biggest names in
business and investing have strong opinions about the central bank's next move. >> there's sort of pushing themselves into something where they have to do something here. i would no not be terribly aggressive if i were in that position. >> that's no reason to introduce extra uncertainty. on all the things that the fed's supposed to care about, this isn't the time to be moving >> the big question is not weather they're going to hike or not. the big question is why are we so obsessing with the single ha hike. >> whatever it is will be according to my knowledge fully in line with what they are aiming at which is to be anchor of stability. >> i think the market is more prepared for this increase than many, many traders believe it is. >> the fed's decision becomes trickier. i would argue that's the one governor on the feds being able to move because you can't drives the dollar too high. >> i must admit i'm a little bit baffled by the fact that 25g
basis point move on the part of the fed is going to have a major effect on economic activity across the globe. >> people are fussing about the fed, this and that with the fed. who cares? >> and he stuck his tongue out. if you want to know just how the federal reserve raises interest rates when it does race them, head to our website and watch steve liesman explain the process. still ahead, american airlines is on pace for a year of record profits. but where will it find its next leg of growth?
u.p.s. will hire as. as 95,000 temporary workers for the holiday season. that will number is in line with last year, a year when both u.p.s. and fedex stepped up their hiring to handle the growth in the ecommerce purchases. late today, rival fedex said it would increase shipping rates by nearly 5%. consumer staples, they're the products we buy no matter how the economy is doing, think tobacco, food, paper products. but this group has note been performing particularly well in the stock market lately. morgan brennan explains why and looks for pockets of opportunity in the group. >> since late august stock market correction, the consumer staple sector has underpinched the broader s&p 500 by half. the second worst performer behind utilities. comprise you have companies selling food, beverage and household supplies, items consumers need regardless of the
economy, staples are considered a more defensive sector. one some investors are rotating out of in favor of more cyclical stocks. experts expect that to continue. >> staples because of its defensive nature is going to suffer once rates start to raise and economic growth starts to heat up. the oer factor with consumer staples, it has the lowest earnings growth of any sector of the s&p excluding materials and energy which have gotten hit by the commodity downturn. >> there have been four cycles of rate incrises from the fed since 1990. consumer staples is tumbled every time losing an average of 1.5%. still it, losses tends to be better than the broader s&p which averaged a 2.5% decline. names tending to fair better include molson and costco which each have in the past averaged gains. pepsico and whole foods have historically sold off.
amid all the market uncertainty, there may be specific buying opportunities. >> the silver lining of all this volatility is that consumer staples are fairly valued at this point. so although i do favor cyclical sectors in the second half of the cycle, to the extent you do need a little bit of safety or income or yield in your portfolio, i think this is a much better valuation basis to buy consumer staples than we've seen in over a year. >> one place to look, companies poised to benefit from the holiday season. names like beer and wine producer constellation brands which has averaged a 17% gain in the final three months each of the past five years. that according to ken show. other stocks that tend to heat up with the holidays, mccormick and company, hormel and costco. as consumers eat drink and party more. for "nightly business report," i'm morgan brennan. >> hewlett-packard is slashing 10% of its workforce and that's
where we begin tonight's market focus cutting 25 to 30,000 jobs in an effort to save nearly $3 billion annually. this is on top of the 55,000 positions already cut as part of the company's on going restructure stairsabled. before the close the stock was a fraction higher at 27.11. target testing the grocery delivery waters teaming up with instacart, an online grocery shoppersservice to l order food and other products. at first the service will be only available in minneapolis. but the two companies are exploring an expansion into other markets in the future. shares were a fraction higher to close at 77al 82. positive drug trial results lifted shares of gw pharmaceuticals. the company's experimental drug for treating schizophrenia performed well in the study. shares up 7.5% to 114.92. >> great television has agreed to buy all of the tv and radio
stations of the sures communications. the deal worth about a half a billion dollars. will expand gray's operation into 28 states. gray television i prefer color, just me, the stock rose 13% today to finish at $13.30. miller-coors shutting down a brewery down in north carolina to cut costs. the company which is a joint venture bone molson coors and sab miller will lay off more than 500 people who worked at the plant. shares of molson coors popped to $72.64. and dense ply is buying sirona dental in a deal worth $5.5 billion. the combinationing will create the world's largest manufacturer of dental supplies. both stocks halted initially after the news but closed high. ply rose to $54.35. sirona dental was also sup 1% to 99.31. please remember to floss.
the able network amc in talks to acquire starz according to a bloomberg roorts. the talks may not result in a deal. shares of starz surged initially after close. at the end of regular trading, the stock up more than 1% to 38.79. tyler for airline investors this summer has been one of the best they've ever seen. low fuel costs and high demand helped deliver did the results many hoped for when the largest airline started merging eight years ago. that includes american which has moved one step closer to finishing the integration of us airways nearly 18 months after they merged. phil la bowl reports from american's new center in fort worth, texas. >> if you fly american, odds are somebody in this room at some point will be dispatching or monitoring your flight. american's new flight operation center is now up and running. 1600 employees under one roof handling more than a million
flights every year. >> a quarter of these people were working out of pittsburgh and now here in dallas fort worth. we have teams working together. you can't tell the difference where they worked before. we have technology working flawlessly. we did all this without one blimp in the operation. >> reporter: making american perform better was a top priority when parker engineered the merger of his former airline u.s. airways and the old american which had gone bankrupt. since then, american has rebounded and is now on pace for a year with record profits. thanks in large part to lower fuel costs. it has many wondering if this is as good as it gets for airline investors. an idea parker dismisses. >> there was a time where it felt maybe better than it possibly could be for a period of time. where we are today, it feels like we're in pretty good supply/demand balance. >> reporter: with operations under roof -- american is making a push to improve customer service including putting long-time employees on a team to handle thousands of complaints
and comments on twitter from passengers and customers. >> if we need to reach out to flight ops or reach out to our customer service people at the airport, we've got them all here within arm's reach. >> the next part of american's plan to grow profits which is under way includes upgrading its fleet to newer, more fuel efficient planes. phil lebeau, "nightly business report," fort worth, texas. >> coming up, lesson plans. the big money behind a startup that wants to change education in america.
>> in addition to the fed meeting that begins tomorrow, the consumer price index is out. the fed will be watching that. so is a measure of home builder sentiment with the index from the national association of home builders. fedex will release quarterly results. that is what to watch for wednesday. the wife of the late steve jobs wants to improve the u.s. education system. maureen powell jobs is committing $50 million to create new high schools telling "the new york times" her project ames to modernize curriculums and develop new ways of teaching. she chairs an organization called xq america which will accept proposals, partner with winning teams and support at least five schools over the next five years. she's not the only one spearheading an investment in education. other well-known nameses in technology and silicon valley are, as well. julia boorstin tells us about one startup drawing big name
backers. >> reporr: facebook partnered with summit public charter schools to build educational software. apple is handing out i mads and mac books and ibm pioneering a model to teach zwins, technology, engineering and math which it they are implementing in public high schools. startups are attracting are serious venture capital. they have raised $133 million from mark zuckerberg and firms including peter teal's founders fund. >> we believe this could be an extremely large and very profitable business. and a company that could go public in that process as a very big school system. >> reporter: old school which runs private elementary and middle schools just expanded to seven locations in the bay area and brooklyn. >> this is my first day at first grade. >> reporter: a team of engineers and educators is creating software to help teachers deliver a personalized
interactive curriculum which old school ames to offer to any school. >> the idea is by allowing on a small scale an experience that indicators to the individual at the large scale we can be actually evolve much faster as a school system and strike at the central problem which is that schools themselves need to be up-to-date if they're going to prepare kids for a future that is changing at an accelerating rate. >> reporter: technology gathers dootd from ipads and cameras in classrooms help teachers review sessions and update parents. >> we're building tools that super power teachers to enable them to become more efficient and effective at personalizing children's learning at meeting their individual needs, respecting their developmental progress, and communicating with their parents. >> reporter: and parents are excited about the new perspective that then a google veteran and engineers from uber and other startups bringing to education. >> the key difference for this
school is the enablement of individualized learning plans. >> and that's why parents are willing to pay over $20,000 per year. for "nightly business report," i'm julia boorstin in los angeles. that's "nightly business report" for tonight. i'm sharon epperson. >> i'm tyler mathisen. have a great evening. we'll hope to see you right back here tomorrow night.
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