tv Nightly Business Report PBS March 21, 2016 7:00pm-7:31pm PDT
this is "nightly business report" with tyler mathisen and sue herera. new era. a historic trip to cuba has american ceos seeing bigger potential and obstacles. marriott sweetens its bid. presidential candidates promise to bring back lost manufacturing jobs. the key question is how. all of that and more on "nightly business report" for monday, march 21st. good evening. welcome. grand potential and big pitfalls. that is how u.s. business leaders view cuba. today president obama along with chief executives from marriott and xerox made a historic trip
to havana. they wanted to reestablish deep commercial ties between the united states and cuba. as reported tonight, reaching that goal won't be easy and is anything but assured. >> reporter: a historic handshake as president obama met l castro. another sign of the thawing relations between the countries. there was also an awkward moment when raul castro was forced to take a question from an american reporter about human rights in cuba. >> did you ask if we had political prisoners? i wanted to know if you have cuban political prisoners and why you don't release them. give me a list of the political prisoners and i will need them immediately. just mention the list. >> reporter: the tripped was marked by political events,
there was commercial news as well. starwood hotels will manage three hotels in cuba. one american welcomed them, sort of. >> american level like service or professionalism to the hotel industry here but also i'm ambivalent about that is you're missing all that. >> reporter: ceo of marriott hotel is part of the delegation traveling with the president. he said the cubans are struggling to decide how much american investment they want. >> i'm not sure any of us know how fast they will move and come to rest. there is an interest in both sides and greater engagement between the united states and cuba. greater economic growth. we know american travelers wants to come to cuba. >> reporter: there are many laws
and regulation fls cuba that make investment unattractive. >> it has to be lifted for us to be have more access to the market. it's also infrastructure elements here that absolutely need to be improved. there are currency rules that have to be improved. there are worker rules that have to be improved. there's so much that has to be done to have full bilateral trade happening. it will take a little while. i am convinced that the interest is there. i'm not convinced on how it will be done. >> reporter: president obama has one more day in cuba. he's attend a baseball game between the cuban national team and the tampa bay rays of florida. >> michelle mentioned starwood. while in cuba they agreed to a sweetened merger bid. one week after they received a buy out bid from a major chinese company. it would create the world's
largest hotel chain. world of the deal sent shares of starwood higher and marriott lower. we hear why starwood is such a hot property. >> reporter: as the first family landed in cuba sunday, the ceo of marriott wasn't far behind them. by first light monday, he was making headlines of his own with a higher offer for starwood. >> we made a significant move over the course of the weekend and decided we are very interested in strategic power of this combined platform. starwood board accepted it and ready to go. >> reporter: he thought he tied up the deal four months ago but the chinese are trying to break up the party at the last minute. november 16, marriott makes an offer after starwood spent much of the year looking for buyers.
weeks before shareholders would finalize the deal they were offered $76 a share but all in cash. the offer is firmed up one week later and raised to $78 a share again all in cash. now this morning, marriott is counter with $79.53 a share. they say they better understand how powerful the marriott rewards will be running in parallel. they are the best bet to compete in the digital marketplace against the likes of air b and b, expedia and priceline. >> we have gone back and there was competing bidder that surfaced last week. we said what is a fair offer for us to put forward. >> reporter: when china's bank what many believe was a staggering $2 billion to by the
waldorf in new york it proved how deep its pockets can be. many question if it will counter bid again. marriott won't rule out this is the final offer. >> no we haven't. we won't talk about what might happen. >> reporter: in havana, starwood became the first u.s. hotel company to sign a deal with the cuban government since the revolution. to manage and market two properties in the capital and assign letter of intent for a third. sherwin-williams will by valspar for more than $9 billion. the merger is the biggest acquistion in sherwin-williams 250 year history. shares of valspar got a fresh coat, up more than 23% while sherwin-williams got rolled down $15. ihs is moving its
headquarters to the united m but purchasing market data firm market. the deal is worth more than 13 billion dollar. by moving to the uk they will be able to take advantage of the lower corporate tax rate there through an inversion. the dow extends its win streak to seven. the dow jones industrial average rose 21 points to 17623. nasdaq gained 13 and s&p 500 added 2. steady economic growth could justify an interest rate increase as soon as april. mr. lockheart says there's enough evidence to justify a hike in short term rates. he agreed with the central ba bank's decision to leave them unchanged. he said inflation will accelerate and move towards the feds targets.
fan knfewer than fewer 50,0 w borrowers would be eligible for the rediction. critics say the plan doesn't go far enough. sales of existing homes dropped much larger than expected 7% for the month. diana takes a look at what's behind it. >> reporter: it wasn't the blizzard that came at the end of january. the numbers on closed february home sales were based mostly on shoppers in warmer than average december. that's why the drop was rare. >> december was good. january was good and by that comparison it really declined. >> reporter: home sales fell 7%. it's not the rules now, it's the prices. >> they are getting to show
resistance to increasing prices. they are concerned with affordability. >> reporter: the winter saw near record low supplies for homes for sale nationwide and the usually strong spring housing season is seeing the same. that pushed february prices to the highest since 2007 just after the peak and spring demand is out stripping even a small rise in supply. >> we're seeing the bidding wars. >> reporter: d.c. real estate agent has two listings on the same block. she put them on last wednesday even before the official open houses yesterday. >> as soon as wednesday hit, we had multiple, multiple people in both houses. we've seen just a lot of buyers coming out at this point. >> that's not a problem. >> reporter: one potential buyer was out within an inspector by friday hoping to win his bid on one of the houses. >> now i see houses popping up every thursday and friday. it will be four or five more coming on the market.
that's nice, but there's also a lot more buyers. >> reporter: spring has up the competition and the bidding wars for what little there is. this house will have multiple offers. >> i expect so, yes. >> will you bid? >> yes. >> reporter: he'll bid, but he says he will only go so high. the sky is no longer the limit for home prices. a new study out today blame homeowners not home builders for the inventory builder shortage. according to trulia the price gap between premium and mid level homes is the main reason for the latest housing crunch preventing some home buyers from trading up. they just can't afford it. a senior economists for wells fargo joins us now. to the extent the housing market is ailing, what's ailing it? >> you know, the biggest concern
right now is the low level of inventories. of course, there are a whole host of reasons why there's a low level of inventories. we've already mentioned negative equity. there's nine million borrows that have less than 20% equity in their home. there was a lot less new constructia lot of builders concentrating at the higher end. what about credit? we hear that credit is still tight in some cases. you have to have pristine credit as well and you have to come in with that 20%. >> is that still the case? >> it was the case very early on in the recovery. those households with pristine credit was able to get loans quickly. we're seeing it gradually for
lower and middle income borrowers. the first time home buyers are still saddled with student loan debt which makes it a little more difficult for them. >> i was intrigued by this study out today that indicated that the mid price house that would be the step up house is a little bit out of reach f and beyond te mid price owners who wants to trade up to that premium priced house, those have gotten out of reach as well. you've kind of got a lockdown in place in many markets. >> you know, it is market flurry. housing affordability and those particular markets where labor market conditions increase very solidly. we're seeing home prices out pace income. as we continue to get later in the cycle, we're starting to see some wage and salary gains which makes us a little cautiously optimistic. >> you mention negative equity.
if the market is this tight, home prices have been rising. how serious is the negative equity problem in the real estate market now. i assume it was much better than tf it was at the dpbeginning of th recovery. those particular borrows that are under equity means they have less than 20%, they represent 18% of the market. that means that they will be less inclined to put their property on the market, which goes back into the lower level of inventories. that's just simply one factor that is leading to the shortage of housing supplies. >> thanks for your help tonight. >> thank you. still ahead, just when it looked like the valient story couldn't get more dramatic, it did.
supreme court will hear samsung's appeal in its patent battle with apple. justices said they would review that affirmed that samsung c copied the iphone features. samsung has been ordered to pay $900 million in damages. apple unveiled a phone today. it looks similar to the iphone 5s but with newer, powerful technology. they are adding a new ipad to its line up. the company is lowering the price of its apple watch. the first price cut introduced last year.
mr. cook also addressed his encryption fight with the government. >> we believe we have a responsibility to help you protect your data and protect your privacy. we owe it to our customers and we owe it to our country. >> the stock barely budged following one cent. the drama isn't over for the drug maker valient. the ceo backed for medical leave is out. the billionaire investor will join the board and the chief financial officer refuses to leave the board. the changes are being cheered by stock holders. meg has more on the company that is not short on controversy. >> reporter: another week, another wild swing. the latest news, the drug maker announced a shake up at the top.
ceo credited to build the super fast growing company through spending cuts is out. he will stick around until the company finds a replacement. activist owes a 9% stake in valien is helping to join the board immediately. the story focused on another board member. shiler ran valient during pearson's two month medical leave of absence. they accused shiler of improper conduct that contributed to the misstatement of its final results, and said he declined the board's request to resign. shiler responded through his lawyers saying the statement was inaccurate. he at no time engaged in
improper conduct relating to any statement of revenue the company is considering and declined the board's request to resign. valient confirmed the annual report. important so it doesn't trip in its $30 billion in debt. the company's relationship is ongoing. the key concern is whether it will turn up any other surprised. much more to come over the next month. watchers say the best successor would be a seasoned drug industry leader with turn around experience. analysts are on the look out for asset sales valient could use to pay down debt faster. the news isn't over. for "nightly business report," i'm meg terrell. anthem is csuing express scripts. they say they overcharge for prescription drugs. anthem is seeking about $15 billion in damages and is also
requesting to terminate the contract with express scripts. shares of anthem fell 2% to 140. shares of city got a modest lift after it was called for the bank to be split into two businesses. in a note issues last note analysts said the move could increase city shareholder value by 57%. city ended the day up a tick to 43.60. the agriculture company in talks now with the chemical producer bcsf and bayer about transactions. talks with bayer are focused on joint ventures. mattress firm not to be confused with firm mattress missed estimates.
the company issued earnings guidance and will replace the ceo who will become chairman and get a firm mattress. shares fell in after hours trading. they rose during the day. you can say they firmed up to 42.69. today marks the tenth anniversary for twitter. despite changes in management and a push on new features, the company still faces challenges opinion ten years later it's still looking for profit. it lost two million users during the end of 2015. shares flat at 16.89. they lost nearly two-thirds of their value and about a third below the initial offering price of $26 back in november of 2013. as the presidential campaign heats up, one promise that almost every candidate makes is creating more manufacturing jobs. while everyone agrees more manufacturing positions would be great, the kraelt is rareality
the jobs isn't easy. >> reporter: the presidential candidates have been saying it for months. they are tired of seeing americans lose manufacturing jobs. >> companies are leaving our country rapidly whether it's carrier air-conditioning, whether it's ford, whether it's eaton. i was in cleveland, they are leaving. so many companies are leaving. frankly, i'm disgusted with it, and i'm tired of seeing it. there's no reason for it. it's just gross incompetence at the highest level. we should not allow it to happen. >> i want companies to know if they walk out on america, they're going to pay a price. if they ship jobs overseas, we're going to make them give back the tax breaks they receive here at home. >> they keep pushing that promise. why? america regained just half of the 1.7 million of the manufacturing jobs lost during and immediately after the last
recession. while many manufacturers have rehired or added new workers in recent years, they're plans are far leaner than they used to be. that's becaused they used more animation, more robotics and not as many workers. for those manufacturers who have moved some production overseas to keep costs down, bringing those plants back to the u.s. sounds good on paper until they add up the numbers. >> i think it's really hard to think you can force people back here and still be able to get somebody to buy your product at a higher cost. it comes down to your customers afford the price of your product. that's really what it comes down to. >> ideal industries like other companies here in the u.s., said it's able to keep some manufacturing here in the state by focusing on more advanced products if they able to sell at a higher price. it says that is the key to making a profit when it's made in the usa. "nightly business report," chicago. coming up, water, we all
need it but the way we get it is in dire need of major and expens. here's a look at what the look for tomorrow. investors will be watching to see what nike says about future orders. the justice department and apple head to court over the encrypted iphone with one of the san bernardino shooters. president obama speaks to the cuban people in havana. the nation's two largest
daily fantasy sports sites have agreed to stop taking bets in new york through the end of baseball season which overlaps with the beginning of football season. new york attorney general sued the companies last year. he alleged the sites operate games of chance, betting. the company say they host contests based on skill. you might not have noticed it but you're paying more for gas. the average price of a gallon rose nearly 25 cents in the past four weeks. you'll pay on average $2.02 a gallon. be newark, new jersey they had low e price at 1.66. the highest was in los angeles at 2.72. prices may increase further because u.s. refiners have to prepare summer gray gasoline and that costs more to make. america's pipes are in bad shape, but fixing them will cost tens of billions of dollars.
>> reporter: the critical water situation this flint, michigan continues to make headlines. according to the data, water issues in the u.s. go well beyond just flint. out of more than 7,000 schools subject to testing of acceptable epa led levels, 431 reported heightened levels of led between 2012 and 2015. experts say more focus should be placed on how the water is delivered. >> the water quality in the united states is very high. the infrastructure that is conveying that water is in need, serious need of investment right now. if we continue on the path that we're on now and if we do not increase investment in these contra areas, we're putting at risk by 2020, over $400 billion in u.s.
gdp, 700,000 jobs would be in danger and over half a trillion dollars in personal income would be a risk. >> reporter: here is what the american society of civil engineers says it will take to mitigate the issue. to increase investment in pipes, water treatment and other water infrastructure, they say allocate about $9 billion per year nationwide over nine years. it would cost about $80 billion in all protecting businesses from potential losses due to water issues upwards of $150 billion. newark, new jersey is in the spotlight as well. >> does it need help? yes. are we flint, michigan in no. the public schools are almost a mini flint. some of these buildings are over a century half old. to maintain the water filters in the schools, we estimated it
would be a little over $100,000 a year. >> this problem can and should be addressed. the technologies there is a good investment for us tonight. >> that is "nightly business report" for tonight. i'm sue herera. thanks for watching. >> i'm tyler mathisen. thanks from me as well. have a great evening. we'll see you back here