tv Nightly Business Report PBS September 30, 2015 1:00am-1:31am PDT
this is "nightly business report" with tyler mathisen and sue herara. >> four horsemen of the fourth quarter. with the ugly third quarter almost done, there are four things investors need to watch that could make or break the year for stocks. >> up up and away as home prices rise, developers are hoping big sales come in small packages. reinventing the strip. what gaming industries are doing to lure millennials and turn around the rough year. all that and more tonight on "nightly business report" for tuesday, september 29. >> good evening and welcome. just one day to go before the end of the month. and september sure hasn't been pretty for investors. all the major indexes, equities that is, on track for declines and once the book closes on september, it also closes on the
third quarter. which could be the worst quarter for stocks in years. but now, attention turns to the fourth when football games and investment years are won or lost. this year's fourth quarter has at least four challenges that will determine whether 2015 turns out to be a winner for investors like you or a loser. >> challenge number one, china and the global economy. the world as thomas freedman wrote is flat, interconnected. that's one of the ki lessons of 2015. when china. hes, the world catches a cold and china's slowing economy no one knows by exactly how much has spelled trouble for commodities, oil and metals most notably. it's also meant harder times for companies that export into the world's second largest economy, companies like caterpillar and the automakers. china's stock market nose dived albeit after steep run-ups.
billions in wealth evaporated. what's next for china and what will it mean for investors the world over? challenge number two, u.s. corporate profits. how will they stack up for the third quarter when companies start reporting about ten days from now? predictions are s&p profits could decline 4% or more. the bright areas like consumer discretionary and financials more than offset by declines in energy where profits could fall by two-thirds from just a year ago. it's tough for stocks to make headway when corporate profits stall. >> the big picture is we are in an earnings recessions. i think it's these continual hits downtown grade in earnings that is just weighing on this market. >> challenge number three. congress and the white house. speaker boehner's resignation may make a government shutdown less likely this week. >> i spend every day trying to do the right things for the right reasons. i'm not going to be any
different tomorrow than today. >> but boehner will be gone come november. what then? what happens in december when the government's borrowing ability dries up unless the debt ceiling is raised? americans seem to like divided government, dysfunctional government not so much. finally, challenge number four. is the central banks. will easier money from the central bankers in europe, japan and china help those economies stabilize or even expand? and when will the fed move? janet yellen and others say a rate hike will probably come this year. but if a rate hike finally does come, how will the markets react? four big unknowns, four big challenges as the fourth quarter kicks off. >> and brian jacobson joins us to talk more about what lies ahead for the market's next quarter. he's at wells fargo funds. welcome back, brian. so look into. >> thanks for having me. >> look into the fourth quarter.. is it going to be better? start out with a blanket kind of
statement here. is it going to be better than the quarter we're just ending? >> well, i really don't see how it could be much worst than the quart we're ending as you pointed out slurg. there were a lot of things weighing on the markets, concerns bbs china, corporate profits, concerns about commodity prices but the fourth quarter i do think is going to be better not just because it can't get much worse but because at third quarter the fundamentals weren't all that bad. there are a lot of concerns about the outlook for growth especially coming from china. however, i believe a lot of those concernses are somewhat overblown. their manufacturing sector has been slowing. what isn't often talked about is how the service sector is actually growing fairly decently. that's actually the concerns about china as those concerns may be abate a little bit, we could have this headwind get a little gentler for us going forward. >> we identified four challenges, china, corporate profits, congress, and the
central banks. of those four, which is the one you will be watching most closely in the fourth rtquarter? >> most immediately i'm going to be looking at the data coming out of chooimpb because i think a lot of investors are fixated on what's going to happen there. will they be able to navigate the slowdown in their growth rate going from 10% a few years ago to 7%, maybe 6% going forward. also in october, we're going to be seeing the results of the fifth plainiam of china, the communist party will have the fifth plainiam where hopefully they'll lay out a road map what sort of further market reforms they'll be implementing. i think it's going to be a pivotal month a lot focused on china. but we also have corporate profits coming up here soon. and right now, expectations are very low for those corporate profit growths and low expectations are actually good in terms of being able to beat those. >> central banks, the u.s. fed, we hear from several members of
the fed at different times saying they are on track to raise rates sometime there year. but that would put them at odds with the majority of central banks across the world. do you think that they will raise rates before the end of the year and what kind of headwind might that be in the fourth quarter? >> i do think that the fed will raise rates at some point this year. i think that the maybe the october meeting, october 27th and october 28th, is on the table for a rate hike. it's all depending upon the economic and financial conditions going into na meeting. so if we see some better data coming out of china, if the corporate profits may be earnings didn't decline by 4%, if it was closer to 1% or flat which is what i'm expecting, i think the fed could have a good footing for actually hiking rates. the key isn't necessarily whether or not the fed hikes. it's why do they hike. if it's hiking because they think that the economy can handle it and inflation is turning up, the markets could take that as a very positive
signal. >> all right. brian, thank you so much. brian jacobson with wells fargo funds. >> on wall street stocks re-andered between gains and losses as investors looked ahead to the employment report. the dow jones industrials rose 47 points to 16,000049. nasdaq dropped 26. weighed down by a decline in apple. and the s&p 500 gained two points. >> consumers remain confident nest september despite all the volatility. the conference four said its index of consumer attitudes rose to the highest level since january. lower gasoline prices were part of the reason for the rise in optimism. >> fiat chrysler underreported highway deaths accord which said they failed to report fatalities and injuries required by law. it says it is cooperating with regulators. the senate is expected to vote the an some point tonight on a bill that would keep the government funded temporarily. and while it's expected to pass,
the deadline to get it all done system tomorrow at midnight. eamon javers is in washington tonight. the temporary spending bill would keep the government open till december 11th you but then what happens? >> it's anybody's guess. we've got a really weird situation in the house of representatives where there's a total leadership vacuum after john boehner said he's resigning from the speaker of the haas. they'll kick the can down the road till december 11th. we expect that will pass tomorrow. you'll look at a government shutdown potentially then and there will be a new leader in the house of representatives and a very fractious republican conference looking to pick some fights and not looking to cut dees with the obama administration. >> it's not merely the government shutdown that is hanging over the ledge here as speaker boehner wraps up his tenure. what else might he get done? there's a highway bill. there's a lot of stuff out there. >> there's also the debt ceiling package don't forget about that one, so important for financial markets as we go through the fall. that's going to expire sometime
in november according to the treasury. we'll have to watch and see what speaker boehner wants to do here there is a school of thought he might want to clean the barn and get a lot of these things done before he leaves as speaker at the end of october. the question though is, does he even have the votes to do that? could he pull that off. he's been playing it very close to the vest and says he won't do anything differently than he would have done it otherwise now that he's announced his resignationings. >> eamon, thank you. still ahead, why developers are thinking small to get the renter nation generation back into buying
snoovlt home prices continue to rise. the latest report from s&p case shiller reported a nearly 5% increase nationally in july from a year ago. the index has risen at a 4% or higher annual rate since september of 2012, and that's a rate of growth that's much higher than inflation. and it is those rising prices that are keeping many millennials from buying a home especially in urban areas where they want to live. now that millennials are aging out of college and into marriage and parenthood, developers are coming up with new ways to get them back into buying. very small ways. diana olick reports. >> reporter: into. >> this is really simple. pull this and the whole thing comes down. >> yes. >> this is a picture frame that converts into a dining table. >> reporter: welcome home to your 372 square foot home that is. >> these are magnets. >> the eating space is small but the whole idea is that the condo
doesn't eat up your home buying budget. this unit sells for $275,000. about half the neighborhood's meed yab price. that is how developers are targeting millennials who until now have been the renter nation generation. >> definitely first time home buyers. so about 80% of all of our buyers including our one-bedrooms have all been first time home buyers. >> the studios may be small but in the heart of a trendy pricey d.c. neighborhood where most young people can only afford to rent. >> we're definitely getting a consumer that's prices out of the market. you know, they look at older resales, and now they get to come and look at something that's brand-new. so that's a great difference when you're comparing a 1970s build older condominium with something that's brand-new with all the fit and finish. >> the building does have this communal rooftop deck with
spectacular downtown views. it does not, however, have some of the fancier amenities. no pool, no fitness center, but no sky high condo fees either. everything here is smaller. >> we're certainly seeing the average unit size of the last five years has fallen from a plan standpoint by about 13%. so you're seeing a drive toward more efficient units, smaller units, less hallways, less wasted space. spend a lot of time in the design process on efficiency. >> reporter: the building is about 70% sold even before the grand opening. a big sign that an a big cohort is willing to come back to buying, just not in a big way. nor 234rks i'm diana olick in washington. >> to learn more about what developers are doing to get millennials back into home buying read her story on our website, nbr.com. las vegas is also trying to lure millennials who don't play
traditional games like slots. executives are reinventing the strip in an effort to turn around what has been a rough year for the gaming industry. jane wells reports tonight from sin city. >> reporter: it's not your prerecession las vegas anymore. sin city these days is about making slot machines more like video games. it's about things that have nothing to do with gambling like building a massive outdoor arena. it's more about the rooms than the casinos. all part of sharper, smarter management as las vegas got back up from the recession's knockout punch. >> we're doing better. thank god. >> still, it's not quite the glory days. gaming revenues overall on the strip are down 2% this year. there are fewer high rollers from asia as a corruption crackdown in china is felt from here to makkah. >> really struggling in makkah. our revenues are down 30, 40%. the market underground a lot of duress. >> mgm's ceo thinks makkah will
start turning around in 2016 as new properties open. in las vegas, the company is busy building a $400 million 20,000 feet stadium with aeg as it continues looking for revenue outside of gaming. as for gambling, gaming equipmentmakers agree they're struggling to attract millennials to play slot machines. they have new machines which mix chance with skill. casinos want a piece of fantasy sports lesion not regulated currently by gambling. >> many regulators are saying this is a gray area. we're trying to make it black or white. casinos can either get involved or they can't. >> meantime investment in casinos, some buildings resolution still vacate but not everywhere. the tropicana was just bought out of bankruptcy. by pin national gaming >> we only paid $360 million for
it, only and we love the location. >> ceo tim wilmont says they plan to spend a couple hundred millions to improve it and provide a stip destination for loyalty members across the country. the blackstone group bought the cosmopolitan from deutsche banc for half off. >> we posted our first net income in the second quarter. that's the goal is to make money. >> if management is smart, the house always wins eventually. jane wells, las vegas. more layoffs in the oil patch and that's where we begin tonight's market focus. chesapeake energy will cut about 15% of its workforce blaming it on slumping oil and gas prices. shares were down in initial after hours trading on this news during the regular session is, the stock was up 1% to $6.79. rah lauren is stepping down from his post as ceo. a former president at old neighbor, go figure, will be
taking his place. lauren has been the ceo and lead designer since he founded the firm nearly 50 years ago. shares popped in initial after hours trading. at the close the stock off slightly at $104.05. at&t make take a $1 billion charge according to a regulatory filing. a change in exchange rates could wipe more than $1 billion off the value of the company of the company's directv assets in venezuela. shares rose slightly today to 32.07. >> japan tobak quo will pay $5 billion to acquire the rights to reynold's americans national american spirits brand outside the u.s. the brands include camel and newport. it will still have the rights to natural american spirit here in the u.s. shares were up slightly to $43.47. positive late stage drug study results lifted shares of eli lilly. that company's treatment that it's developing with the firm called incyte for rheumatoid arthritis was more effective
than a commonly prescribed medication. shares rose slightly to $80.28. bank of america is expected to announce layoffs according to the wall street journal. a couple hundred people in an effort to cut costs. shares were off a fraction to $15.35. the big business of sleep may get even bigger. a new study shows getting a solid night's rest can not only help your memory but can boost your immune system keeping you healthy. we take a look at the value of getting extra zs. >> reporter: scientists have known for a century that sleep facilitates our memories. research published today suggests it's similarly helping our immune systems remember, as well. researchers in germany and the netherlands compared the way our brains are understood to store memories with the way our immune system recognizes invaders. >> it all comes down to slow wave sleep, that time in our nonrem cycle that's the deepest
slumber. it's during that time an important transfer occurs from our memories from initial to long-term storage. it's then that our immune systems retain information necessary to recognize invaders when they return through increases in what are known as persisting t cells. the work adds to a growing body signifying how crucial sleep is to our health and happiness. but the centers for disease control and prevention says so many people get inefficient sleep, as the i public held problem. >> a very large percent of society either doesn't get eight hours or seven hours that they need or they are unhappy with the amount of sleep they're getting. and even more importantly, the quality of the sleep is not that great. >> an estimated 50 to 70 million american adults have a sleep or wakefulness disorder. almost a third report sleeping less than six hours a night according to the cdc. >> if you get two or three hours of very high quality sleep, that can then offset the fact that
you may not have gotten your full eight hours. >> more than 55 million prescriptions were written for sleep dugs last year according to ims health including for lunesta and ambien. the total market topped $1 billion in revenue. as we enter cold season, today's research appears to fortify there's nothing better than a good night's sleep. for night threat business report, i'm meg terrell. >> why entrepreneurs are flocking to a city far from silicon valley. >> and here's what to watch
tomorrow. we'll get a read on the labor market ahead of friday's big employment report. adp's employment is out on wednesday. fed chair janet yell condition speaks tomorrow afternoon and i an report on weekly mortgage applications and that is what to watch wednesday. >> when you think of nashville, you probably think of country music and good barbecue. soon you might think of startups and entrepreneurs. kate rogers reports from this southern city in tennessee. >> reporter: nashville is thrown for its music scene which contributes some $10 billion to the region each year. a different industry quadruples that stat, health care contributing $39 billion it the regional economy in 2014 according to the nashville health care council. programs like the jump start found drid are helping nashville's health care startups take their ideas to the next level. they've graduated 48 companies in the past six years raising a total of $31 million. >> the great thing about the
health care industry is they're going through dramatic change where there's new ways to reimburse, are new ways to pay doctors and manage populations. new partnerships being formed. and that's all very scary and lots of change going on in the industry. huge businesses are having to rethink the way they run hair business. but that's exciting for the entrepreneur. exciting for the innovators. >> reporter: and graduates like envision hart which created an ecg machine that fits in the palm of your hand are trying to disrupt the health care industry in a time of major change. >> nashville is a great city for launching a health care company at the crossroads of innovation and health care services. by being in this place, we can take our technology and test the waters. >> but health care is just one piece of a thriving startup scene in nashville which is home to the nashville entrepreneur center where we are right now. this is one of nine regional hubs across the state of tennessee dedicated to giving would be startups and entrepreneurs access to resources including capital and
mentorship opportunities. >> the only way to attract good ideas and entrepreneurs is to have really good mentors, people that have been in their shoes before that have started businesses. they understood how difficult it really was to or is to start a business. and really walk with those entrepreneurs along the way. >> but nashville wouldn't be complete withoutity own music startup success story. artisan created a product called the instrument one that turns basic musical gestures into any sound including a guitar or drum. the user wants to create when hooked up to an iphone, ipad or computer. they're in the top 100 most funded projects on kickstarter, raising over a million dollars. >> nashville's become a perfect storm. there's the interest in startup culture and tech-based innovation is unprecedented. tools that are available to people mean that they can start companies in a lot more different places and environments than they otherwise could. you no longer need to be in
silicon valley. >> that setting is music to these entrepreneurs' ears. for "nightly business report," in nashville, tennessee, i'm kate rogers. >> very cool. >> that is a cool device. >> it really is. to learn more about why entrepreneurs are flocking to nashville, head to our website, nbr.com. >> the calendar may say september for another day but some of the nation's biggest retailers are acting like it's december. from walmart to toys "r" us, national stores already rolling out holiday offers. as courtney reagan reports they're going all out to make sure they get a piece of your christmas cash. >> reporter: it's less than three months till christmas. to some, that may sound like an eternity, but for others, shopping time is already running short. every year, the competition gets hotter and hotter. this year is no exception. as retailers race to put out holiday programs earlier and earlier. and hopes of grabbing shopper he's dollars before rivals.
>> it's always a tough competitive environment but i think another interesting point is because retailers got so promotional in black friday in the lastriour or five years, it's diminished the importance of the holiday. they've extended promotions throughout the whole holiday season and put them all online so now consumers don't feel the pressure to be in the store 6:00 a.m. friday black friday morning. >> reporter: walmart has already been running its layway program for a month and has released its hot toys as chosen by kids list with many star wars toys topping the list. kmart has already put out its now yearly tonguing in cheek layaway commercial. >> ridiculous to take your gifts home today, avoiding the holiday rush with no money down leasing >> and toys "r" us has lowered its free shipping threshold to $19 citing the upcoming holiday season as a reason for the move. despite the everit earlier holiy program relations the first forecast for holiday sales are
among the weakest in years. alex partners forecasts holiday sales to increase but at a level below the five-year average and a level that could fall below the lowest growth rate since the great recession. while there are a lot of positive factors influencing consumers currently, there are also many negatives. the job market be steadier, but wage growth is stagnant. home values are rebounding but expenses like health care and education are rising, too. gas prices are low, but depressed oil prices are partly a result of slowing global growth. deloitte's retail practice leader rod sides says the balance ultimately tips with how it makes consumer cans feel when they look at their economic portfolio. he says the weak forecast is causing his clients, retailers to take down their expectations, as well. fewer are predicting a terrible christmas for retail, but it could be more ho, ho, hum.
for "nightly business report," i'm courtney reagan. >> i'm not ready. >> i'm not ready for christmas or win the. >> or winter, exactly. that will do it for us for "nightly business report" tonight. sue herara. >> i'm tyler mathisen, thanks from me, as well and have a great evening everybody. we hope to see you right back here tomorrow night.
>> at some point every musician chooses their instrument, and that instrument, with all its intricacies and demands, will lead them down their creative path. >> barbara bonney: the word amateur means they do it because they love it. how many times have i burst into tears because i've been so inspired by what people bring up here. >> musical instruments, this time on spark. [ ♪music ] >> major funding for spark is provided by the william and flora hewlett foundation, supporting creativity and innovation in the arts since 1967. and by the kqed campaign for the future program venture fund