tv Nightly Business Report PBS November 13, 2015 7:00pm-7:31pm PST
>> announcer: this is "nightly business report," with tyler mathisen and sue herera. terror in paris. multiple attacks leave more than three dozen dead in the french capital. we'll have a report and discuss these new destabilizing events. equities have their worst week since the summer. and oil falls toward $40 a barrel. we'll look at the week just passed and look ahead in light of tonight's development. and search for a treatment. the fate of two drugs and one mother's hope for her two sons. all that and more tonight on "nightly business report" for friday november 13th. good evening, everyone. paris is a city under siege tonight. multiple attacks involving gunfire and explosions across the french capital have left more than three dozen dead. the situation is still developing and is extremely
fluid. the attacks took place at a paris restaurant outside the stade de france soccer stadium where a france-germany soccer match was taking place and at a theater. there are reports of an ongoing hostage situation at that location. this is the second time this year that paris has been hit by terror and tonight's events mark a new dangerous chapter in the war against terror. it is a chapter with major destabilizing potential for economies and markets. and those markets are already reacting around the globe. joining us now to discuss tonight's attacks in paris is john canali. he's an investment strategist and economist for lpl financial. john, welcome. good to have you with us. >> good to be here. >> there's more that we don't know than we do know at this hour. and these events are developing. but the one thing we can certainly say is that this is a new and dangerous turn in the war on terror, one that with really influence economies and
markets not just next week, for months and years. >> yeah, we've had a difficult week already in financial markets. but of course this -- the scale of this type of event goes far beyond just financial markets. and what markets want to see is certainty. and certainly this kind of event really introduces a lot of uncertainty, and markets are going to be asking is this just the first of many of these attacks or are they going to spread to other cities? and of course markets don't like that uncertainty. so i think for now it's a wait and see. but if we go through the next days and weeks and months and there's more of these and they're larger, that can really have a big impact on both markets and economies. >> this is a lesson yet again and a lesson we have learned at the attacks at "charlie hebdo" earlier this year, in boston and elsewhere. this is a lesson that risk takes many, many different forms. obviously, there are the more prosaic forms. an earnings miss or whatever. an economic number that can cause the market to go down. but these kinds of things which
we live with every day can take markets in violent turns very quickly, can't they, john? >> they definitely can. history will show you that there can be extremely sharp and swift downward movements in equity markets and all risk assets when these type of events occur. but history will also show you as long as the events are not widespread and impact economic data or economic activity offer over a wide area, over a long period of time, markets can and do recover. so right now we just don't know about to say whether or not this is just isolated to paris or it's european-wide or it's global. once markets can wrap their heads around that, then i think we can see this is just a one or two-day event or it's a three or four-week event. >> one certainly remembers boston and the response to that, the bombing a couple of years ago. earlier this year the "charlie hebdo" attacks that left i believe it was 17 dead in paris. and markets certainly have to digest this kind of information.
take us through some of the history of how markets react when something like this happens. it generally means that people move away from riskier assets and into more secure assets. isn't that true, john? >> that's true over the very short term. if this were to have happened during the trading day, what you would have seen was a swift move away from risk assets like equities and within equities to safer havens like utilities and telecom and then certainly overall a move from stocks into bonds. so that's typically what you see during these type of events. as events unfold and more news comes in suggesting that the attack is a more localized thing, that can reverse. but in this case that might take a couple days or weeks or months town fold. typically that's the pattern but we just don't know enough sitting here friday night to understand what's -- >> that's exactly the point on which to close. there is much more that we don't
know than we do at this hour. john canali with lpl financial. thank you very much. >> thank you. as john mentioned, stocks did close out a very rough week and they ended it on the down side. that of course before tonight's tragic events in paris. concerns over the economy, the health of the consumer and a slide in oil prices sets -- nasdaq 77. and the s&p 500 was down 22. for the week all of the major indexes fell more than 3% as you see right there with the nasdaq off 4 1/4%. the blue chip dow lost more than 660 points in the past five trading sessions. well, oil. that's another one to watch. it is melting down again. domestic crude settled near $40 a barrel near 40% this week.
its biggest weekly loss in more than eight months. jackie deangelis tells us why oil is sliding. why it's impacting the market and what it could mean for your budget. >> reporter: the international energy agency today declared a world oil glut. a record 3 billion barrels in storage and demand for all that crude will tick down this year. earlier this week the agency said we won't see $80 oil till 2020. opec adding to the chatter, saying its outlook is essentially unchanged, we're only three weeks away from the next big meeting in vienna. further pressure coming from a stronger dollar. supported by the possibility of a fed rate hike in december and a weak euro. the perfect storm to send prices under $40 quickly. >> the technicals after an early november spike have really just kind of plummeted. iea says their inventories were close to 3 billion barrels and here in the u.s. when they include the sbr they jumped back over 2 billion barrels this week.
there's a lot of supply out there. >> while lower crude prices take a toll on the equity markets because the big producers are weighted heavily on the averages, it's actually very good for consumers. the national average for a gallon of regular gas, $2.19, down 25% from this time last year. according to aaa. $2 is still in sight by the end of the year. low crude prices also take heating oil prices down. 40% since this time last year. but traders caution there is some support in the market. in the high 30s. and there are always unforeseen events that could turn this trend around. >> you're looking at the 37.75 low at the end of august. on that one meltdown day when just everything was coming unglued. that's certainly your next technical stop and the next point that i think a lot of people will be looking at from a chart perspective. >> reporter: so absent any catalyst, crude oil prices will have a rough time rebounding as some thought they would this year. for "nightly business report" i'm jackie deangelis. let's turn now to john kill dorf to talk more about the oil
market. he's a good friend of "nightly business report." john, always good to see you. >> my pleasure. >> i wish it took place on a night unlike tonight where there are still ongoing developments over in paris. when events like this one, multiple attacks in paris, multiple locations with at least three dozen dead now. how do these kind kinds of events play out in the oil markets in the ensuing days and weeks historically? >> well, you have to look at -- it depends on the region where the trouble is, tyler. so in this one it should be a depressing factor for oil prices because the response by the governments around the world will likely be one where security is greatly increased, where people may hunker down. so economic activity in the west arguably will slow down as people sort out is there more danger ahead, to i need to shelter in place to a degree, and not go out, not spend money --
>> so the chilling event that often accompanies these types of events. people go to their home and they don't go out as much. maybe they don't spend as much. lower economic -- >> they don't drive as much -- they don't travel -- >> they don't travel as much. all other things being equal, that would slow the demand for oil. >> that's correct. and that's because western targets are being hit. now, the counter to that, or what ensues later, tyler, is what is the response going to be in the region? if this does end up being linked to either al qaeda in the arabian peninsula like we've seen before or it is an isis-linked attack, if the response is to go into the region in a much heavier way, into iraq, into turkey, if oil assets are going to come into play, into harm's way, then obviously that would be a security premium, inflation factor for oil prices and they would go on a rip higher. >> is there a strategic asset -- you follow a lot of asset categories. is there a strategic asset that
is more prone to being affected by terror or geopolitical risk than oil? >> no. i would say absolutely not. obviously, the international equity markets will have to sort this out for the factors we just talked about. but oil can come into the crosshairs. and i've been worried about -- not worried but i guess worried that the bombing of the russian airplane will get linked to isis and that their response will be very robust again in the region and you have again potentially the kind of war situations we get in that -- in response to these things. and that oil becomes in the crosshairs as isis gets more and more desperate. >> let's talk very quickly about what happened this week in the oil markets. it was a major sell-off, a slide. 8%. i'm not saying it came out of nowhere. but it certainly came. why? >> four-letter word. glut. finally the realization hit this market, that there's over 2 billion barrels of all kinds of petroleum products in the united states and another billion around the world.
we've never had this much oil in products, gasoline, in storage before. and so -- and there's more coming at us every day. there's no end to the overproduction. this market is out of balance and it is not coming close to being back in balance. >> supply and demand. the demand is still there reasonably speaking but the supply has -- >> overwhelming, tyler. >> john, thank you very much. john kilduff with again capital. the decline in oil is one of the reasons why price increases across the economy have been so muted lately. the producer price index, which measures the prices companies receive for goods and services at the wholesale level, fell 4% in october. that's the second straight month of declines. excluding food and energy, so-called core prices also fell. well, consumers spent less than expected in october. retail sales rose .1% last month. and that follows slow spending over the summer and raises concerns about the upcoming holiday shopping season. consumer spending accounts for more than 2/3 of economic output.
but as bob pisani tells us, money is being spent, just not necessarily at the usual places. >> reporter: new 52-week lows everywhere in retailers today, but don't miss the key story. consumers are buying. they're just not buying at department stores and some apparel places. you can see this in the october retail sales report. online sales up over 7%. auto dealers up almost 7% as well. furniture sales up 5% and people were drinking and eating up more. those sales were up over 5%. and sales at home improvement centers wrup over 4%. and department store sales, just a measly 0.5%. see, they're not shopping at department stores. and by the way, some customers are buying aariel. younger consumers are flocking to fashion stores like h & m, forever 21, zara, and uniqlo but none of them are publicly traded in the united states. for "nightly business report" i'm bob pisani at the new york stock exchange. and today jcpenney
disappointed investors. despite reporting sales growth that beat expectations. sales fell sharply for penney's but that was nothing compared with some retailers several of whom expressed coutts doubts about the holiday shopping season in recent days. take nordstrom. its shares cratered nearly 15% today avenue after it cut its profit and sales forecast, something we told you about last night. still ahead, how to invest in this uncertain market. our market monitor has some ♪ ♪ shares of volkswagen brand cars fell more than 5% in october. that's the first full month following revelations the
automaker cheated on emissions tests. the automaker's head of sales said the company is not only feeling the impact of the scandal but also weakness in some markets. sales in russia fell 26% and dropped 50% in brazil. well, the fight over fantasy sports is escalating. fan duel and draft kings, the two largest companies in this fast-growing industry, are filing lawsuits of their own in an effort to keep their operations running in the state of new york. eric chemi reports from new york, where fantasy sports supporters staged a rally today. >> reporter: fantasy sports are fighting back in real-life court. today daily fantasy leaders fan duel and draft kings filed separate lawsuits against new york attorney general eric schneiderman hoping to keep their games running in the state despite the office's cease and desist order. meanwhile, fan duel organizers rallied in front of schneiderman's office to make
sure their voices were heard. >> i just don't think it should be a priority of schneiderman when there are so many other issues in the city and the state. >> reporter: they're fighting over a central question of whether this game is gambling. fan duel claims it's a game of skill. >> hundreds of thousands of people love to play every week. it's a harmless pastime that people love. as you can see from the hundreds of people out here. so we don't want it to be shut down. we're going to champion our cause. >> reporter: but regulators like schneiderman are focused on the fact that this is sports betting and gambling law in the state must be respected. >> our state constitution is pretty clear. it talks about bookmaking and the lotteries and all other forms of gambling are prohibited unless you have a specific exemption. and there simply is no exemption for daily online sports gambling. >> both might be right. it can be a game of skill and gambling. and that question may not matter until the courts decide. in the meantime fan duel and draft kings will keep accepting bets from new yorkers forcing the courts to act. one thing to watch for, some payment processors have already announced they will not accept new york payments during this
murky legal situation. if paypal bailed too that might mean more damage than any court action. for "nightly business report" i'm eric chemi in new york. >> and late today fan duel said it will start the process of limiting access to users in new york state. comcast ventures and nbc sports ventures have stakes in fan duel. comcast is the parent of cnbc. which produces this program. well, a strong dollar overhadove overshadows tyco's profit report and that is where we begin tonight's market focus. the company saw its revenue fall because of that negative foreign currency impact. the maker of fire protection and security systems says it still sees pockets of strength globally. shares slipped more than 3% to 35.31. perrigo shareholders rejected mylan's hostile $26 billion takeover bid. the failed deal ends a months-long back and forth between those generic drugmakers. mylan up 13% today to 48.78.
perrigo off 6% to 146.90. spring leaf holdings, a personal and auto loan company, says it has reached a settlement with the department of justice that will let it go ahead with an acquisition of one main financial. the justice department says spring leaf will have to divest more than 120 branches so that it can proceed with the purchase. shares there up more than 11% on this otherwise down day. they finished at $49.23. staples and office depot are transferring -- offering to transfer $600 million in corporate contracts to a wholesaler. this is according to dow jones. the move is an effort by the firms to persuade the federal trade commission to grant the two companies antitrust approval so they can merge. shares of office depot rose a fraction to 752. staples down more than 1% to 12.61. so what should investors know
when it comes to today's uncertain marketplace? our market monitor guest has some ideas. erin gibbs joins us. she's equity chief investment officer at s&p capital i.q. erin, nice to have you here in person. >> thank you. >> i don't know that we've ever sat in person. i've met you over the television but not here. let's begin tonight with the unfolding developments in paris. >> yes. >> we don't -- what we know is much smaller than what we don't know about the origin, who will claim responsibility for this, indeed the death toll. we do know that more than three dozen have perished so far. how does this change your investing thesis, if it does, over the next six months? >> well, as you said, it's very early, but right now typically these types of very scary types of threats often don't have that much of a long-term impact on the stock market and our investing. it does seem to be very focused. so i don't see any really immediate impact. we can certainly see more volatility in the markets over
the next coming weeks just because the fear gauge is a little higher. people might be a little quicker to move out. but from an economic standpoint it really doesn't have a big impact overall. >> john kilduff, who was just here in our prior segment, said that he sees it a different way. he thinks that in the wake of events like this people tend to do less. they stay home more. they travel less. they may feel a little more protective of their assets and take a more defensive posture. do you see it that way? i guess not. >> it tends to flesh out very quickly. for me at least we tend to have fairly short-term memories. particularly when it's something that's so far off as in paris versus if it was much more localized within the u.s. like i said, you could see more volatility and you could see people scaling back, but particularly if this tends to be one isolated incident we don't see more incidents going forward, it just all happens tonight, i could certainly see
this being flushed out within a couple of weeks. and you see that with wars too. it tends to take a few weeks and people tend to go back to their normal pattern. >> let's take a look at quickly three of the stocks that you like right now. these are very consumer-facing companies. leading with apple, which has had a rough week. >> it has. and so i recommend it as a really good value, high-quality stock. right now we're expecting about 7% earnings growth over the next year. so if the price just stays on track of where its earnings growth is, you could see that 7% appreciation. on top of the fact that it's actually trading at a pretty big discount to where we've been seeing it over the past three years. so between the discount and good decent earnings growth, i could see this stock easily going up another 10% to 15%. >> quick thought on walt disney. who doesn't like disney? >> who doesn't like disney? disney is one of these great
growth stories. one, again, another high-quality long-term type of holding. but one of the things that we're really seeing potential growth for is they've acquired "star wars" as well as marvel's avengers. and it's not just the revenues from those films per se but the products relating to the films, the toys, the clothes. we saw a huge -- >> the merch. >> the merchandise. so we saw just an enormous amount of revenue attached to their "frozen" franchise, and we see the potential, particularly with the "star wars," going forward. >> erin, we have to leave it there on this very busy night. i should point out that your third pick is foot locker, and you say it's not just men's athletic shoes anymore. >> that's right. >> thank you very much. appreciate you being with us this evening. coming up, a critical few weeks lie ahead for possible treatment of a devastating disease. one family's inspiring story when we come back.
in the next couple of weeks two drugs that combat a rare and fatal form of muscular dystrophy will come before the food and drug administration for review. meg tirrell reports on what could be a watershed moment for patients, families, and the biotech industry. >> reporter: it's been 13 years since jen mcneary's oldest son, sauchb, was diagnosed with a fatal disease that had no cure. >> it was a pretty hopeless feeling. i remember thinking one of the first questions was do they need some sort of infusion, do they need some sort of transfusion, do they need some chemotherapy? trying to they've pediatric diseases, what do we do. and i was really jealous of all the families at hitchcock that were receiving chemotherapy that day. we had to walk by the chemo
clinic. and i remember thinking like that was a really lucky diagnosis of cancer because at least there's something you can do. >> reporter: austin has duchenne muscular distroughy, a rare genetic condition that causes the muscles to decline over time. kids usually lose atability to walk by their teens and almost don't live to their 30th birthdays. austin, now 16, gets around in a power wheelchair. his younger brother max was diagnosed with duchenne as well. at 13 max is still walking, which jen credits to an experimental drug called e-teplerson. >> max was the first guy in this trial. he's sort of a little medical mirk sxl he might be the first of this generation to beat the disease. >> reporter: made by boston biotech company cerepta. initially tested in 12 patients. a similar drug called drisopersin from biomarin has been tested and more.
but after promising early results it's failed to show improvement in a large-scale study. biomarin later this month and serepta later this next year. after a long road filled with setbacks that threatened to derail both programs. >> the slow process is the fda wanting to do right by the patient advocates and providing a drug that has the promise of a clinical benefit with minimal safety risks. they're very much keeping in mind at the same point they are the gatekeepers of drugs, they are not meant to just approve snake oil. so they want to make sure they're an proving drugs that clearly don't have an effect or have a very high chance of failing in a confirmatory stud xwr xwrip. >> reporter: the drugs work in a very similar way using a technology called exon skipping. it's a wave circumventing the genetic blip that causes the body not to produce a crucial protein tauld distrophin. and in a disease as severe as duchenne with no effective treatments available you might wonder why there's any doubt these drugs get approved.
brian scorny says it comes down to evidence. >> in contrast to what we're used to seeing in an approved drug, they're pretty thin numbers p p. >> reporter: as for jen mcnairy's older son austin he's started taking e-tepleson as well as part of a larger study and jen said she started to see improvements in his abilities but accepts there are still unknowns about the drugs. >> we're going to have answers inside of ten years, whether it's really effective or whether it's just sort of effective, whether it's effective in only ten kids or whether it's effective in the whole population. so the answers will happen. i think the risk is not approving it and having kids decline and finding out five years from now that the drug was as good as we thought it was and kids died while they were waiting for it. >> thank you. >> reporter: for "nightly business report" i'm meg tirrell. and to recap our top and still developing story, paris came under siege tonight. there were multiple attacks involving gunfire and explosions
with dozens reported dead and scores injured. france's military is being deployed throughout the city, and the french president says the country's borders will be closed. the equity futures market coming under pressure because of the events, pointing to a potentially volatile day when the markets reopen on monday. and that is a very busy "nightly business report" for tonight. i'm tyler mathisen. thanks for watching. we'll see you monday. ♪
gwen: attacks in paris. politics at home. we cover the week tonight on "washington week." dozens dead. more wounded in paris. >> this is an attack not just on paris. it's an attack not just on the people of france. but this is an attack on all of humanity and the universal values that we share. >> french borders closed tonight and, again, more questions than answers. back in the states, politics as usual. >> how stupid are the people of iowa? >> trump insults, carson shrugs. >> i have spent that kind of thing. i don't have to get into it. >> as republicans spar over immigration, taxes, foreign policy, and each other. >> ted is a