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tv   Nightly Business Report  PBS  September 24, 2015 1:00am-1:31am PDT

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this is "nightly business report." >> paying the price. volkswagen ceo is out of a job as the emissions scandal threatens much more than just the automaker. economic diplomacy and it's taking place in seattle. as ceos from some of america's biggest companies discuss thorny issues with the president of chi china. countdown to shutdown. business that is could be impacted if the federal government cannot avert a closure. all that and more on "nightly business report" for wednesday, september 23rd. good evening and welcome. he's out. the man in charge of the world's biggest automaker by sales has resigned. just days after the volkswagen emission cheating scandal was exposed in the united states and then quickly spread around the
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globe. in a statement ceo martin vinterkorn said he was shocked by the events of the past few days. the scandal has pressured the stock which is down more than 30% over the past few days. it has prompted investigations and lawsuits. phil lebeau has our report on the resignation of volkswagen's ceo. >> reporter: the crisis involving rigged diesel emissions has claimed its first executive. martin vinterkorn has resigned saying he didn't knowingly do anything wrong. but the vw board said it may be possible there are criminal proceedings involving executives at the automaker. meanwhile vw's board will choose the next ceo on friday. herbert diest, mathias mueller, and rue better stiller are considered front-runnerers. their job will be to stabilize an automaker who has admitted it screwed up and sold clean diesel
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cars that really weren't clean. in fact, the epa says almost 500,000 vw diesel cars hive been out on the road emitting up to 40 times more pollution than allowed. consumers feel duped. >> i think it's appalling, honestly. i was shocked. the fact that they would put software in to cheat the smog testing is unbelievable. >> i don't think i'd buy a vw any time soon. >> before i thought of hem as the peak of the peak of automakers, really great, very trust worthy, good quality cars. now i'm just -- i don't know what to think. >> reporter: that ainger may leave some buyers to go after the automaker in class action lawsuits. meanwhile, volkswagen in the face of federal and state investigations has hired the law firm of kirkland sxel leand ell same law firm that represented
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bp during the gulf oil spill. analysts are trying to determine how this scandal could potentially impact other areas of the auto sector. bank of america merrill lynch says auto suppliers that have the greatest exposure to volkswagen have the most at risk. the firm says board warner, delphi, genteg, and magna could see earnings pressure in the event of a material decline in volkswagen's global business. and those stocks all finished lower today. did if we see a big drop in volkswagen's business what will it mean overall for the auto industry and could it hurt economic growth in germany or europe? jack narad is executive editorial direct and market analyst at kelly blue book and joins us now. good to have you with us. i don't mean to minimize this but general motors in the wake of the ignition scandal and toyota in the wake of the sudden acceleration issues that it confronted a few years back, their profits have never been
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higher. their sales have been very good. why should we expect volkswagen to suffer because of this? >> well, i think the big issue here is the disarray of the management. i mean, here you've got potential criminal proceedings, you've got the ceo resigning in the midst of this. a lot's going on that could make this a bigger story. that's my concern about volkswagen. more so than the fines they're going to have to pay and the compensation they're going to have to put out to owners on this. it's what does this do to management, what does this do to their overall brand image globally? >> what impact might it have on economic growth in germany in particular, if any at all? >> well, significant economic growth. because volkswagen is a major, major employer in germany. germany of course is the anchor of the european union. and keeping the euro afloat, essentially, and has done so the past several years as we've seen
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crisis after crisis on the euro. anything that softens the german economy can have a big-time trickle-down effect throughout western europe. >> they're going to stop selling the diesel motors apparently at least until they get a fix in place. that is not a huge part of their business in the united states, only 3% or 4% of vw's revenue comes from u.s. sales or sales here in the united states. but how damaging is this likely to be overseas? are we going to see less foot traffic in dealerships, fewer sales? how dramatic? >> i think initially we're going to see the volkswagen loyalists be the ones who are the most hurt by this. the most taken aback by it. and a lot of people look at volkswagen as being a different kind of car company. but not this kind of different and they don't want that to happen. they're buying volkswagen here kind of as an anti-big company purchase. and thinking that volkswagens
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environmentally conscious than most grands. so this fly in the face of that. and does so globally, as a matter of fact. >> which brings us to the epa. what about regulation? now we're seeing broadening investigations in california specifically, they're going to be taking a look at different brands. do you think that this is wider than just vw? and do you think that we will get more regulation as a result of this incident? >> well, i think we'll both get more regulation and more stringent enforcement of current regulation, and maybe more of the latter than the former. in a lot of instances, the auto manufacturers are self-policing. certainly there's an audit function that epa does. car companies aren't just certifying themselves and going on off about their business. but there is somewhat of a cozy relationship between epa and the auto manufacturers. generally that's a good thing. they're sharing information, they're working things out to the betterment of the industry
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and the consumer. but in this instance, when epa is obviously circumvented by some technology that, you know, essentially is deceitful, then that whole game changes. and i think we're going to see much more stringent enforcement of epa rules going forward. >> jack, thank you very much, kelly blue book. chinese president xi jinping was in seattle today for day two of his nearly week-long visit to the united states. after a policy speech last night, president xi met with many american ceos. this all before he heads to the white house tomorrow. michelle caruso-cabrera is in seattle with more on what today's meetings are about and what participants are hoping to achieve. >> president xi, thank you for being here. >> reporter: economic diplomacy in seattle today. as chinese president show jinping toured boeing
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headquarters. executives announced china would purchase 300 new planes. also two separate meetings with dozens of american ceos. in the morning warren buffett, gm's mary berra, apple's tim cook, to name a few, at a roundtable organized by former treasury secretary hank paulson. echoing what he said in a speech last night presidentst xi told attendees he's aware of the economic risks and challenges and steps are being taken to address them. he said china can maintain a high rate of growth for a long time to come. honeywell's ceo told us before the meeting he would raise a number of concerns. >> state-run enterprises need to become more open. they do open of their air space. if you try to fly through china, there's a huge swath you can't fly over. >> eporter: the ceo of dow chemicals spoke after the meeting and said cyber security was topic one. >> commercial attacks on companies like ours are real.
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they're real and they're from china. okay? the chinese can no longer just turn a blind eye to that. >> it's the government attacking you? >> i'm not going to give you that information but they're coming from china. we're working with all the governmental authorities. companies of high-technology capabilities like ours, our number one, two and three concern right now. the appropriate amount of strength and resolve out of our u.s. government is appropriate. >> did he address it enough for you here today? >> certainly the beginnings. ip/signer was mentioned in his remarks. yes, awareness is high. what's going to happen out of awareness? the rubber has to hit the road on that one. >> reporter: in the afternoon another meeting with ceos at microsoft headquarters. this a larger group of attendees, also much more secretive. the focus, the thorny topic of the internet and rules china reportedly wants to impose on foreign companies which would give the government access to their data. the chinese president leaves tomorrow for a state visit at
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the white house where he'll have more than one meeting with president obama. the agenda there, some kind of cyber accord, akin to the nuclear accords of the cold war. though there's a lot of skepticism about whether or not that can be achieved. for "nightly business report," michelle caruso-cabrera, seattle. >> over night more weak economic data out of china. a preliminary measure of chinese factory output in september the lowest since the financial crisis. the measure fell to a level that indicates a deceleration in the manufacturing sector. and in our nation's capital, thousands lined the streets to see pope francis in his first brief but wide-ranging formal remarks on u.s. soil, touching on both social and economic issues. he spoke of religious freedom being one of this country's greatest possessions and of climate change being a great challenge. mary thompson reports from washington. >> reporter: in his first visit to the white house, pope francis seeking common ground with americans.
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>> as the son of an immigrant family, i'm happy to be a guest in this country. >> reporter: his host, president obama, calling francis a pope of firsts. the first pope from the americas, the first jesuit pope, the first pope in the social media age. >> you are also the first pontiff to share a girt account. >> reporter: while francis em braces some aspects of the modern world he didn't refrain of warning of the trebles he believes it brings like climate change. >> i say urgency. it seems clear to me also that climate change is a problem we can no long er be left up to future generations. >> reporter: francis urging the u.s. to join the international community in protecting the vulnerable. and the programs he said would let the vulnerable know the
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blessings of brace and prosperity. the focus on the poor often leading to harsh criticism from francis about the systems that exclude the poor and the people that run those systems. whether they're economies or enterprises. it's caused critics to label francis anti-business or a social iist socialist. a label dismissed by this skra recess sent who bring his family to see the pontiff. >> if you go to church and read the gospels it's the same message that's been delivered since the beginning of our religion. we have to take care of the least among us. >> reporter: thursday the pope addresses some of the most powerful among us become the first pope to address a joint meeting of congress. >> where i hope in this country to offer words of encouragement to those who will guide the
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nation in the future to stay true to its founding principles. >> reporter: the son of immigrants appealed to the leaders of the nation built on immigrant toil and prosperity. for "nightly business report," mary thompson in washington, d.c. >> the main event of the pope's visit, arguably so i suppose, takes place on sunday in philadelphia when 2 million people are expected to attend an outdoor mass. and some companies have spent a lot of money to prepare for it, especially telecom firms. at&t spent about $25 million saying that's more than what it typically spends on other big events, including the super bowl. and verizon wireless says it spent roughly 24 million. the money was used to beef up the capacity of their wireless systems to make sure all those selfies,weets and shares get sent quickly and without interruption. that weak data out of china we mentioned a few moments ago, along with a decline in domestic oil prices, weighed on stocks today. the dow and s&p posted a loss for the fourth time in five sessions. by the close the dow jones
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industrial average fell 50 points to 16,279. the nasdaq was about 4 points lower. so was the s&p 500. and domestic crude fell 4% to settle below $45 a barrel. factory activity in the united states remains stuck at nearly a two-year low. financial data firm market said its preliminary september reading was the same as august's reading which was the lowest since 2013. a strong dollar and reduced capital spending by energy companies cited as the reasons for the weak performance. widely followed bond fund manager bill gross wants the federal reserve to raise rates now. in his monthly news letter to his clients, dprols said the central bank's aversion to normalizing rates is resulting in negative effects across the economy. he cited savers and investors and those getting hurt the most by those low rates. gross manages the $1.4 million janus global unconstrained bond fund. why main street business owners are watching washington very closely. .
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more than 5.5 million people are estimated to have their fingerprint information stole anyone massive cyber security breach at the office of personnel management. that's five times more than the orange estimate when the breach was disclosed earlier this summer. the agency says it is working with groups like the fbi to determine the potential misuse of that stolen data. at midnight, one week from tonight, the government could potentially shut down. that's when funding for many federal agencies expires. but senate republicans are trying to avert a government closure. amon jarvis has been following developments from washington.
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what's the senate going to do this week, if we know? and what happens after that? >> i'll tell you what the plan is. what they're going to do is anybody's guess but the plan is tomorrow on thursday, mitch mcconnell and senate republicans will bring to the senate floor a measure that would be a short-term funding measure that would fund the u.s. government through december 11th. that measure, though, is going to have a rider on it that would defund manned parenthood. republicans upset about the abortion issue. they'd like to take that funding out of federal spending. democrats are not going to go for that. what's going to happen is that bill's going to fail and then they're going to bring up what's called a clean spending bill without the planned parenthood rider. that will likely pass and be kicked to the house of representatives by early next week. there is where speaker of the house john boehner is going to have tough decisions to make in terms of his republican conference and how they move forward on this. >> would he potentially have to pass it with democratic support? >> he would. that's something that people are talking about here in washington.
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could he pass the with democratic support? if he does that, would he see a challenge from his base republicans to his leadership as speaker of the house? and then really interestingly people are already speculating on whether or not democrats would vote to keep john boehner in as speaker of the house if there was a challenge to his leadership. it's all down the road but those are the kinds of decisions on boehner's plate. >> we've seen this movie before. we don't know if we're going to see a sequel. a lot of businesses were hurt and impacted the first time we saw a government shutdown. what about this time around? >> that's right, sue. all kinds of nooks and crannies of the federal government. business loves to complain about the federal government, complain about taxes. but then when the government's gone they suddenly notice all the benefits. a couple of tiny examples for you. one is social security number verification. banks need to verify people's social security numbers. and those services went dark last time there was a shutdown in 2013. i think there was a backlog of more than 1 million verification requests just in the first two weeks of that shutdown.
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another one is the alaskan fishing season. they weren't able to open that on time in 2013. thousands of dollars a day in losses for alaskan fishermen. big and little, all kinds of impacts here. >> amon, thank you as also from washington. a key agency of the government is also in limbo. that being the export/import bank. it provides loans to foreign buyers of american goods. its chatter expired june 30th and now its funding could run out at the end of the month. it's not just big corporations that could be affected. as kate rogers reports, small companies could feel the hit as well. >> reporter: for small businesses like mary howe's howe corporation in chicago, the fate of their livelihood hang in the balance. it's all because of the uncertain future of the exposhe/import bank, an agey integral to the operations of her company. howe's business exports up to 40% of industrial refrigeration
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equipment to places including central america and canada. the export/import bank ensures the monoed to the company from foreign customers, giving her access to working capital from her bank. her backup plan, to self-fund. >> without access to particulate call it stifles our growth and we are in a growth mode. even our exports are growing. all we have the choice to do if we can no longer finance it internally is tamp down on the sales. >> the bank is considered a lifeline for small businesses that export products overseas, making and guaranteeing loan, providing insurance to support exports. xm's charter expired in june meaning it's been unable to provide new loans or insurance but it continue to service its existing portfolio. funding coinciding with a potential government shutdown on
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october 1st. the senate planned to fund the bill which has moved to the house nor consideration. part of the reason congress let the bank's charter lapse is due to fighting over who accesses capital. in 2014, the bank did $20.5 billion in financing. $5 billion of it supported exports from small businesses. the remaining $15.5 billion supports other exports by big corporations, including boeing and general electric, among others. >> i don't believe it's fair, the vast majority of the resources of the xm bank goes to a handful of fortune 100 companies that have very large lobbying presence on capitol hill and in the administration. so most of this goes to very successful, well-heeled companies that don't need the money in the first place. >> reporter: but howe contends the failure to reauthorize the xm bank will stifle the gross of small american exporters. >> this has a big effect going
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forward on the job market. >> reporter: supporters are hopeful fare a long-term reauthorization of the bank. for "nightly business report," i'm kate rogers. >> to find out more about h the fate of the export/impact bank will affect smul businesses, nbr.com. reports first niagara financial group is exploring a sale sent shares higher. the bank reportedly hired jpmorgan to advise cot on a possible sale. it's also looking into other opportunities. the company has a market value of about $3 billion with nearly 400 branches. shares up 14.5% today to $10.26. bio med realty trust, a real estate investment trust that focuses on biotechnology companies, reportedly in talks to sell itself. the firm attracted interest from morgan stanley and has a market value of nearly $4 billion. shares popped more than 12%, $21.54. depo med announcing it has
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received a positive patent decision. the review will clear the way for the company's infringement lawsuits against rivals. shares were off just slightly to $24.09. heron they are pupil saw shares rise after that company's experimental drug for pain met the goals of its study. the drug helped lower pain in patients following surgery. shares jumped nearly 22% to $40.81. coming up, the big threat to one of california's lucrative wine producing regions.
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nike reports earnings, new home sales and durable goods orders, a read on how many americans filed for unemployment benefits and that's what to watch for thursday. a follow-up to a story we told you about this week. ceo of touring pharmaceuticals says he will lower the price of a 62-year-old drug just days after making headlines for raising it 5,000%. the chief executive did not say what the new price of the life-saving medication would be. he is expected to make that determination over the next few weeks. and he said it was the outrage over the price increase that prompted him to make the change. fast-moving wildfires in northern california are threatening some of the state's most important lucrative wine-producing regions at the peak of harvest. at jane wells reports fro middle town, california, the financial burden will be shared by insurers as well. >> reporter: this is what's left
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of dawn woods' home and winery. she hasn't seen it yet. all she's been told is the house and prize-winning winery went up in flames. >> it's a great wine. we said that was the best wine we ever made and now it's all gone. so it's kind of heartbreaking. >> reporter: woods said she barely escaped the valley fire alive. fires which have taken six lives and consumed thousands of structures across northern california threaten to also take a toll on the agricultural cash cow. >> sweet. >> reporter: wine. >> very sweet. like a raisin. >> reporter: lake county is just east of napa valley and wine in this rural community is a $60 million industry. the fires hit just at harvest was starting. >> at this point we believe that there's been minimal number of acres of grapes burned. >> reporter: flames came within feet of the grapes at cimarron
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vineyard, postponing the harvest and bringing the fear of smoke taint. >> we've had the grapes tested and there is minimal to no smoke damage. >> reporter: the grapes fared better than the houses. over 1,600 homes destroyed and hundreds more damaged. the financial fallout will be shared by the insurance companies. >> we had the office over here. >> reporter: farmers insurance alone is dealing with 1,000 claims so far. including one for jim westrick who plans to rebuild. >> we'll have a new house. we'll have a new home. >> the drought in california does create higher propensity for fire damage. we certainly recognize that. we do shift resources and have the ability to be able to respond to those events in that geographic area where we think it's most likely. >> reporter: it's already an expensive fire season and it isn't over yet. >> it's a tough time for everybody. but we're all going to band together, make it work.
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>> reporter: for "nightly business report," jane wells, middletown, california. >> to read more how wildfires in california are threatening wine production, head to nbr.com. you can rebuild a house quickly but you can't re-establish those wonderful plants overnight. >> no, you can't. your hearts go out to them. on that note, "nightly business report" for tonight, that's it for us. i'm sue herera. >> i'm tyler mathisen. have a great evening, everybody, see you tomorrow.
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narrator: for decades, space has been the domain of powerful governments with vast resources. hubbard: nasa's budget hit a huge spike, almost 5% of the federal budget. narrator: those days are long gone. now a new generation ofntrepreneurs is reaching for opportunities and profits in space. but this new space era carries major risks and costs. greason: if we fly in space enough, people will die. narrator: coming up, how the big, bold ideas of silicon valley and reshaping america's next frontier.

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