tv Nightly Business Report PBS May 6, 2016 7:00pm-7:31pm PDT
this is "nightly business report." with tyler mathisen and sue herera. hiring slows. fewer jobs were created last month than many had predicted. that has some wondering whether the economy has lost its momentum. crude realities. why the prolonged downturn in oil prices is rippling well beyond the louisiana energy industry. >> people treat us like we're magicians. >> the magic of fixing an iphone screen. meet the guys who had a bright idea and turned their fix-it hobby into big business. those stories and more on "nightly business report" for fridy 6th. good evening and welcome. the interests of wall street and washington and main street converged today. the common bond?
jobs. today's april jobs report wasn't very strong but it wasn't terrible either. the not so good part was that hiring slowed significantly. in fact, job growth was the slowest since last september. the u.s. economy did add jobs but just 160,000 of them, far fewer than the 205,000 expected and below the average of the past three months. the unemployment rate remained steady at 5%. the good news was that worker wages picked up. average hourly earnings ro rose .3%. more on the american jobs picture. >> reporter: job growth in april was the weakest in seven months. nearly all the gains came from three sectors -- professional and business services, health care, and finance. which produced a combined 129,000 new jobs. >> i think overall the signal from the data has been that things are a little weaker than we thought. i don't think it's drama
i think we're still improving, just at a somewhat slower pace. >> reporter: president obama pointed out the u.s. job market continues to outperform most other major countries. >> we've got to do everything we can to strengthen the good trends and to guard against some dangerous trend in the global economy. >> reporter: the state of maryland is answering the challenge. in march it led the nation in job growth. employers generating 19,300 new jobs with high-tech employers leading the way. at the top of the list, sienna, a global leader in network commuting, headquarters outside baltimore. with 5,000 employees worldwide and a market cap in compels of $2 billion, one of its biggest challenges is the increasing competition for skilled workers. >> we can pick and choose to a certain extent and we're seeing more candidates coming to us, not just talking to sienna, clearly talking to others. we have to get harder to get them to choose us over the other
offers they may have or be pursuing. >> reporter: christine keck is a recent hire. it's her job to tell the sienna story to the analyst community. she says her years of experience have now paid off in the best job of her career. >> sienna makes the gray becomeses with the bloongy lights that make the internet work. and that's never been more important than now. we have internet economies, we have cell phones that are driving people's businesses and livelihoods. and the teenage kids who can't get themselves off of snapchat. >> reporter: increases in workers' pay over the last 12 months was one of the few positives in the april jobs report. if the slow-down in job growth continues it reduces the likelihood of rate hikes by the fed before the presidential election. in washington, i'm hampton pearson for "nightly business report." today the president of the federal reserve bank of new york said it is reasonable to expect that the central bairpgs will raise interest rates twice this
year. in an interview with the "new york times," bill dudley conceded that the jobs report was weaker than expected but that it doesn't necessarily change his economic outlook. john sylvia joins us now to talk more about the state of the labor market, he's chief economist at wells fargo securities. how much of this fall-off in hiring is attributable perhaps to a slowing economy and how much may be factors? >> there may be some seasonal factors in the retail trade numbers. but also perhaps in the construction numbe. but i'd go back to your earlier point, tyler. the wage gains were pretty significant. and combined with even modest general gaib gains, you're talk personal income gains that will sustain consumer spending going forward. >> do you expect that that trend in wages will continue? because we've been waiting for a long time to see significant improvement or at least noticeable improvement in wages. >> sue, i'd go back to your
sienna story. that just ties in that when you're looking for skilled workers, and we increasingly are looking for skilled workers, in a somewhat tight labor market with a 5% unemployment rate, i do expect that wages will continue to rise. and both wages and broader compensation, sue, i think is on the rising trend. >> all in all, then, do you think that interest rate hikes are on the table for as early as june? or what are you thinking there >> i think june is still possible. but i would be very cautious here. don't forget we're still going to have second quarter gdp, gross domestic product, growth at below 2%, most likely. that's going to be a very tough environment to the fed raise in june. they may raise in september and december, so that would give you your two rate hikes. june is iffy with below 2%
growth. >> the participation rate is something that i watch and it came in at 62.8%. down about .2%. not a significant fall-off but does that worry you at all? >> absolutely. it's just not picking up. one of the great things that happened in the 1980s and 1990s is we brought in a lot of people at the margin to participate in the labor market developing skills that would help them over time. that's just not happening right now. so it does worry me that you've got an improving labor market but it's a very thin improvement. >> productivity earlier this week. the numbers were a little soggy. what's the problem? >> one, how do we measure productivity in an economy that's increasingly service-oriented? tyler, we used to be able to look at manufacturing, measure i couldn't tell put pretty easily, the number of workers pretty easily. now in a service economy it's much more difficult to measure
those productivity gains. >> john, thank you very much, have a great weekend. john sylvia with wells fargo comput securiti> stocks shrugged off w than expected job growth. the dow jones industrial ave gained nearly 80 to 17,740. the new mexiasdaq added 19. the s&p 500 rose 6. for the week the major indexes were lower. dow and s&p, this is their second straight week of losses. for the nasdaq its third. the canadian wildfires we told you about yesterday, it is spreading. the big one. according to officials it is threatening two oil sands sites just south of ft. mcmurray, alberta. the fire has already prompted precautionary production cuts and shutdowns. that along with a drop in the number of u.s. oil rigs sent prices higher today to more than $44 a barrel. louisiana is one of the most important oil-producing states in our nation. a gateway to the gulf of mexico.
the state is home to both drillers and other energy-related industries. and the long decline in oil prices hasn't gone unnoticed. brian sullivan reports tonight on the economic squeeze from larose, louisiana. >> reporter: the crude oil prices are more than $20 a barrel off their lows. don't tell anyone here in louisiana that there is a recovery in the oil and gas business the industry is still being hit hard. the industry here is different than most other states because much of it takes place in the water which is more complex and means higher costs. costs oil companies don't want to or simply can't pay. which means many of the ships and barges that support the industry aren't working. gulf of mexico oil production is actually up and projected to hit a record over the next two years. but that output is from existing wells. new projects need to be started to get people working again. as the owner of an oil rig repair and maintenance business
tells us, $45 or $50 per barrel oil won't restart the industry. >> i was hoping that magic would be $45 for the inland water rigs and it's not. i think we might need $60, $65 for operators to pick the inland bargeries back up. >> reporter: workers had to be laid off and unemployment is up across the state. crude's downturn is not just an oil story. it's also being felt in industries like fishing and shrimping. captain james blanchard in louisiana tells us he recently had a couple of guys who had been laid off in the oil business looking for work on his boat. >> over the last year i've gotten more phone calls from people that's been laid off looking for jobs. i have a crew of two. only so much i could do. >> reporter: but there are not enough jobs on the water to go around. another shrimper we spoke with said he's had more than 20 calls recently but laid off oil and gas employees looking for work. work he simply doesn't have.
for "nightly business report," i'm brian sullivan, larose, louisiana. >> to read more head to our website, nbr.com. still ahead, courtroom drama. the dramatic start to a trial, expletives and all, that centered on a 92-year-old media mogul. it's the trial that's captivating wall street and hollywood. at stake, money, of course. but also who gets to make health care and other personal decisions for media mogul sumner redstone of via come and cbs
fame if he's unable to do so himself. the frail 92-year-old is both companies' largest shareholder. the trial today began in dramatic fashion. julia boorstin tells us how we got here, hot players are, and what exactly is at stake. >> reporter: tears. f-bombs. a $150 million counter suit. a dramatic first day in court in the sumner redstone trial. there are two key questions in this lawsuit. was sumner redstone mentally competent when he removed his companion and ex-girlfriend manuale heardlight erzer and kicked her out of his pass? two, was he unduly influenced when he did so in allegations he was incompetent have had ripple effects on the companies he controls sparking shareholder lawsuits. redstone stepping down as chairman of body cbs and viacom. if redstone is deemed mentally competent that will shift control of his 80% voting stakes
in cbs and viacom to seven trustees including his daughter sherry and felito mann. there will surely be questions asked about who knew what and when. the court had its first problems of redstone in a videotaped testimony played for the judge. a transcript was then released to the public in which redstone made ample use of f-word and another derogatory term to describe herzer, saying she stole money from him and doesn't want her in his life. when asked if he loved her, he said no, he hated her. he says he's happy with his daughter sherry in charge of his care. judge cowan told herzer's attorney the burden is high to show why redstone's testimony and desires should not be respected. stressing that redstone's welfare is the most important thin dr. steven reid who examined redstone on behalf of manuale herzer testifying redstone's mental status was severely compromised and he didn't understand the consequences of
his actions. an additional twist, sumner redstone plans to sue his ex-girlfriends and former companions, manuale herzer and sydney holland, to recover the $150 million he gave them. the suit will also amuse herzer and holland of elder abuse. for "nightly business report," i'm julia boorstin in los angeles. cigna raises its yearly earnings guidance and that's where we begin tonight's "market focus." an increase in membership in the health insurer's commercial and government businesses helped to lift profit higher and top street estimates. revenue also rose but fell short of targets. shares of cigna fell 3% to 130.85. madison square garden saw its loss widen in the latest quarter but the entertainment company reported a jump in revenue as higher broadcast fees helped to lift its results. shares were down just a fraction to 161.60. warehouser which owns more than 13 million acres of timber land in the u.s. reported a decline in profits but saw an uptick in sales.
earlier this week the company unveiled its plans to sell its pulp business to paper and packaging distributor international paper in a cash deal worth $2.2 billion. shares of warehouser up a tick to 31.61. marriott international raised its quarterly dividend to 30 cents a share, that is up from 25 cents. the yield on the stock is now 1.73%. shares though down fractionally at $69.16. profit grew more than 15% at cognizant technology but the i.t. services provider saw slower revenue growth as clients spent less on services. the company also issued a downbeat forecast for the furnt quarter, citing softness in the health care and financial services sectors. despite the news, investors were pleased with results, shares up 5% to 60.55. operating profit fell 12% at berkshire hathaway. that missed estimates as the conglomerate owned by warren buffett cited weakened demand in
its railroad operations. despite that decline overall profit rose 8%. shares remained unchanged in after-hours trading but they did finish the day up a fraction to, get ready, $216,999.98. this week's market monitor has stock picks he says will rise 10% to 14% over the next year. kevin karan, portfolio manager with washington increasing advisers. last time he was on in october he recommended tj macs which is up 6.7%, general mills which is up 6.4%, and microsoft which is down 4.7%. welcome back, kevin. nice to have you here. >> good to be here, thanks. >> first of all how you feel about the market overall. we've had increased volatility, now a bit of weakness in terms of economic stats. how do you feel about the equities situation? >> the global fundamentals are challenging when we look at
earnings, we're seeing four quarters of down earnings. overall we're working through a difficult patch for the overall global economy and consequently focusing more intently than we have in a long time on emphasizing quality. even if it means having to pay up a little bit for it. so we're a bit more cautious with portfolios and trying to position them for whatever comes, whether it's a rebound in the second quarter, second half of the year, or whether or not we have some more tough slogging ahead. >> a couple of beveragemakers on your buy list. one very big. and alcoholic. one smaller. let's start with the bigger one. >> okay, so we're looking at budweiser as a company that is going through a transition. they're looking to make a very substantive acquisition in terms of their purchase or looking to acquire miller. and this is going to create a very large global consumer-based franchise, has a lot of market
power assuming it gets to regulatory approval. we think ultimately down the road this has a lot of -- this is going to have a lot of value creation globally. and tied to a very consistent performance from the global consumer with an added bonus in the emerging market consumers should we begin to see some improvement in those markets in the long-term. we think that stock can go to $138 and rising dividend to boot. >> okay. dr pepper/snapple, price target 102, you say a well-run company with really good brands? >> this is a company whose market cap is one-tenth the size of the we wu talked about. it's smaller, it's got better ability to grow from the smaller base. they've done a very good job getting ahead of consumer trends, moving away from sugary, carbonated beverages, focusing on low sugar, not as carbonated beverages. they've found a sweet spot.
schwepp's ginger ale is there, teas. they've been growing nicely. a boring company but not boring for the dividend industry who's looking for a rising stream of income, that dividend is growing nicely, we think that concontinue. >> your final one honeywell? >> well-managed company, a global conglomerate. most people know them, if you look at your thermostat that's on the wall, those kind of things in the the home. it's a much bigger company and it's been very well managed from an operational point of view. done some very good acquisitions in the past. we think that's a top-tier company that can go to $129, maybe $130 a share in the next 12 months. >> thanks for staying late for us, we appreciate it, have a great weekend. kevin karan with washington crossing advisers. coming up, shattered glass. the big business opportunity a few guys saw when others could only see a broken iphone.
this weekend is the 142nd running of the kentucky derby. the derby is one of the most heavily wagered events of the year. about $130 million in bets were made last year. more if you count wagers that weren't on the books. the overwhelming favorite to win tomorrow is nyquist, odds at 3-1. the purse likely $1.6 million for the winning horse. last year american pharoah won the kentucky derby and then went on to capture the triple crown. america's cup. it is the most prestigious trophy in sailing. this weekend boats like you've never seen before will begin competing for that coveted award. as courtney reagan explains from
new york this year it's all about technology on the water. >> reporter: the battle for the oldest trophy in sports returns to new york city for the first time in nearly a century. this weekend, six teams will compete for points in the america's cup world series that count toward the final event in bermuda next year. oracle team usa is the current defending america's cup champion but emirates team new zealand is leading the current series. the boats have come a long way in the 165-year history of the sport. today technology plays a big role. >> what makes the boat so special is the fact that it literally flies above the water. it hydrofoils above the water. it's very, very powerful. everything has to be human powered. doing speeds up to 50, 60 miles an hour. like auto racing, the harder you push it, the faster you go. you cross that line, you're going to feel the consequences.
>> reporter: the twin-hulled carbon fiber catamaran is the lamborghini of sailboats traveling most of than two and a halftimes of the speed of the wind, up to 50 miles per hour. the 45-foot-long vessel with 84-foot sails literally flies or hydrofoils six feet or so out of the water. i got to experience it all firsthand. >> i'm holding on! >> reporter: billionaire oracle founder larry ellison is an expert sailor himself and founder of oracle team usa. ellison has also helped revive interest in the sport on both a fan and commercial level. >> larry's obviously a very passionate fellow. very passionate about the america's cup. and was very much instrumental in creating the concept behind the modern america's cup television properties. >> reporter: tv licensing for the america's cup has increased more than 300%, and that's drawn the attention of big sponsors
including title sponsor louis vuitton. bmw, fremont, sperry are among the others. for "nightly business report," i'm courtney r there are about 2 billion smartphones in the world today. a number expected to triple by 2020. cell phone repair has turned into a $4 billion a year industry. and that's why three young men in orlando, florida, had a feeling that something good might happen back in 2009 when they got the bright idea to fix smartphones. it happened to justin weatherall in 2008. he dropped a new iphone 3g. the screen, an ugly web of glass shards. he was only 21 but he'd already built computers and tried to sell them. it was no surprise really when he took things into his own hands. >> ended up trying to fix it myself. and failed miserably. >> reporter: his friend david,
mechanical engineer, warned him not to do it himself. >> i said, that sounds nuts, buy a new phone. >> reporter: instead weatherall ordered more parts and a bunch of broken phones. he figured out what kind of glass to use, began sourcing proper screws and tools. in weeks he and his buddy learned to fix apple's still-new and still-mysterious iphone touch screens. >> started to realize these things weren't as mystical. once you got inside them, they were an understandable device. >> reporter: they began fishing for customers on ebay. later on their own website. for about 80 bucks a pop. >> it was almost overnight that we started getting some clicks. >> reporter: one of weatherall's co-workers suggested a name for the side business -- you break, i fix. by night they fixed phones at weatherall's house. on his lunch hour he met locals at restaurants. >> people treated us like magicians. when i went to panera and fixed somebody's phone while they dran tea, you'd have
thought i pulled a bunny out of the head. >> reporter: friend trujillo thought they could do better. >> mailing their phones and being without them that long, that's crazy. >> reporter: he wanted to open a you break, i fix store. so he made weatherall and rife an offer they couldn't refuse. >> i put up the money, if it works, great. if it doesn't, you guys still have your internet business. >> reporter: late summer 2009, the first you break, i fix store opened in orlando. in just two months, store sales outpaced the website. three months in, a second store opened. three years later, they owned 47 stores coast to coast, fixing not only screens but water damage, replacing batteries, retrieving data in phones, tablets and pcs. to grow faster they decided in 2013 to begin selling the you break, i fix name to franchise owners. now there are more than 190 you break, i fix stores across the u.s. and canada. >> i just thought, it's a
phenomenal growth story. >> reporter: daniel lu ought to know a good growth story, he worked on wall street for 30 years. he just opened connecticut's first you break, i fix in norwalk. he and employees went through the six-week training program. >> there's one that breaks every two seconds. as i learned a long time ago, you can make extremely healthy returns by being first in a growing industry. >> reporter: healthy? you bet. store sales hit $62 million in 2015. weatherall can still fix a phone when he needs to because the campaign to make devices great again isn't ending any time so. >> to have grown to 190 stores is incredible. but what blows my mind is that we've barely scratched the surface of what's possible her >> scratched the surface. well. intentionally said. the you break i fix guys expect to have 275 stores opened by the end of the year. in case you're wondering they say it can take about $125,000
all in for new owners to get a store opened up. costs vary depending on where you're at. >> that actually is not all that big a price tag. >> compared with other franchises, a fast food place. >> we should shift. >> i am so nonmechanical. >> that does it for "nightly business report" for tonight. i'm sue herera. thanks for watching. >> i'm tyler mathisen. happy mothers day. >> thank you, and to joan as well. >> to all mothers out there, have a good weekend, see you .
john:a trump victory in indiana, and then the dominoes began to fall. consensus on the republican candidate. democrats.se for the i'm john harwood in for gwen ifill this week. months frome, six election day, tonight on "washington week." and then there was one. mr. trump: i actually wish the primaries were not over. it's so fun this way. but everybody's out. left.e only one that's ok, right? john: as his primary rivals fall away, donald trump looks to the general election as the presumptive republican nominee. party establishment ready to jump in and support him? >> i'm not ready to do that at this point. i'm not there right now. and i hope to, though. democratic on the side, hillary clinton inches closer with an eye on