tv Nightly Business Report PBS May 17, 2016 1:00am-1:31am PDT
this is "nightly business report" with tyler mathisen and sue herera. >> what monday blues? stocks kick off the week in rally mode. after going nowhere for a year, are new highs within reach? china's oil industry is now struggling. tonight, rare access to that nation's oil fields. you're hired. what some employers really think of your online degree. all that and more tonight on a special edition of "nightly business report" from chicago. for monday, may 16th. >> good everyone, welcome. we're broadcasting from the heart of chicago thanks to our friends at the studios of wttw. the big story tonight, the rally
on wall street and driven by two very familiar factors, oil and apple. the combination lifted the dow jones industrial average 175 points and closed at 17,710. nasdaq added 57 and the s&p 500 gained 20. let's focus first, though, on oil prices which rose to 2016 highs because of some production outages globally and because of an upbeat forecast from goldman sachs. one of the most active banks in commodities. jackie deangelis his more. >> a new order called for by goldman sachs. are the bears on wall street starting to get bullish? goldman changing the price target to $50 a barrel. goldman was one of the biggest
bears on the streets at one point calling for $20 oil. we didn't see $20 exactly but earlier this year in february, we did get closer to 26 on oversupply concerns. goldman cautions that prices could grow lower in early 2017 bringing global inventory back up and seasonal trends show the demand dropped in the first quarter. estimates are a little less than 4 million barrels per day. highest output since 2008. production in the u.s. is steadily dropping. but other factors are impacting oil as well. perhaps maybe more persuasive than what goldman sachs is suggesting. >> demands running about 700, 800,000 barrels a day over last year, a really significant amount. it's a record at this point. the weak dollar has supported prices. we have lost production in the u.s. and in venezuela but opec
keeps producing at record levels so that's kind of offsetting that at this point. >> but buyer beware, last year in june prices went to 60 before they dropped to about $40 in august when summer demand drops off. if history repeats itself, we could see that pattern again this year. for "nightly business report," i'm jackie deangelis. despite the rise in oil prices today, the prolonged downturn took yet another victim. filing for chapter 11 bankruptcy protection after securing support for its plan from its creditors. it can improve the balance sheets and will focus on oil and gas production in oklahoma and colorado. that prolonged drop in crude prices has taken a toll on the oil industry in china, which, as you probably know, is the second largest oil consumer. in an unusual move, some production in china is quietly being shut down.
eunice yoon obtained rare access from the oil fields tonight. >> reporter: few outside china's state dominated oil industry get a chance to see this. the oil field is the second largest in the country and developing it has been a national priority for this energy-hungry economy. the first oil well was dug here in 1961. the industry, which was seen as strategic, the government expanded the oil fields. but now china's oil industry is a victim of the global supply glut. in january, offshore producers said output had dropped the most since 1999 after china says its production in 2016 is expected to fall for the first time in 17 years. and it's already closed four sites at this field as competitors like saudi arabia
refuse to produce output and squeezing high-cost producers in beijing. here, machines as they are called in china, hang their heads in silence. each of these oil wells produces about ten barrels of oil a day. the workers here tell us the process isn't very efficient. when the price of oil was high, though, the company still made a lot of money but now that is no longer the case. the workers say production had been cut by at least 10%. many complain about shorter working hours, lower pay, no bonuses or raises. jong, a veteran, earned $615 a month. many of us don't want to work here anymore. some have already left the oil field and started small businesses, he says. the salary here is low while the prices of goods continue to rise. contract workers like shing tell us assignments are few and far
between. it's not easy to find work nowadays. it's even harder to stay at a long-term job, he says. migrant workers are just like donkeys. if a donkey can carry a heavy load, it gets fed. if not, no food. yet, having oil is a national security concern for china. though less and less is coming from homegrown producers, as long as oil prices stay so long. for "nightly business report," i'm eunice yoon. now to apple. the stock easily the best performing today on the plu chip dow index after warren buffett disclosed it purchased more than 9.5 million shares of the company during the first quarter. according to regulatory filings, this is berkshire's first investment in apple. this decision was not made by buffett himself but by one of his two deputies. apple shares moved more than
3.5% higher, its best day since march. the berkshire hathaway stake in apple comes as tim cook began a tour of china. that's the second biggest market for the company. cook visited one of apple's main stores in downtown beijing and was accompanied by the president of the china's popular ride-hailing company which apple invested a billion dollars in just last week. apple's business has come under pressure in china recently because of the slowing of the economy and increased competition and a government clampdown on some of it is services, including itunes and ibooks. pfizer is buying anacore pharmaceuticals. this deal comes one month after pfizer scrapped plans to purchase allergan for $160 billion. some day the deal represents a shift in strategy, one that focuses on strengthening its
pipeline of drugs ahead of the decision to sell or spin off the generic business. shares soared 57% today. pfizer shares rose fractionally. the dow component and verizon will strike negotiations tomorrow after meeting with labor secretary tom perez over the weekend. nearly 40,000 workers walked off the job last month. the grievances include the outsources of some jobs and the capping of pension. it has been nearly a year since the stock market hit record highs and since then the indices have made little progress and enduring wild swings along the way. account bull market resume after a 12-month break in mike santolli take as look. >> a year anniversary from the all-time high and a couple of scary plunges along the way. the index is about 3% below the
may 21st, 2015, high of 2130. given the circumstances, it could have been a good deal worse. corporate profits have been in decline for three straight quarters and running 7% below forecast. most foreign markets at least 20% at some point in the last year. the u.s. economy has been too sluggish for the federal reserve to follow the plan to raise interest rates to more normal levels and the race for president has followed a surprising path and now revolves around the theme of economic unease. what, then, has been supporting stocks? well, in part, it is that low interest rate. the treasury yield fell and feasting on dividend-rich stocks driving the dow jones up in the last year, the same amount that the dow transportation index has dropped due to worries over sluggish trade. a rotation among sectors has
allowed the major indexes without matching them. this has kept stocks from getting much cheaper as corporate stockses ha have fall. it's slightly below the valuation of a year ago. of course, if today's profit projections are a bit more plausible than the overall optimistic forecast a year ago, stocks could certainly muster a run at those old highs. in other words, they will likely take a better economy to energy this meandering market. unfortunately, it will be months before we know with any confidence if this is a good bet. for "nightly business report," i'm mike santolli at the new york stock exchange. so can this bull market continue higher after that basic 12-month hiatus. matt maley is a strategist and joins us now. a year ago when the market was at or hanging around the all-time highs, people didn't use the phrase overvalued.
now the market is a little bit lower and everybody's worried about it being overvalued. that doesn't sound to me like a recipe to propel stocks higher. >> no, tyler, the main reason for that is they are coming down. the valuations, you have price earnings ratio when earnings are going down and that means the ratio is going to move up even though prices are coming down. so that's got to be when you have valuations at these levels, combined with this sideways move in the market for 18 months, as you guys talked about, at a time when we still have all sorts of stimulus from the ecb and boj, even though the fed has pulled back, people are starting to get a little less confident about the effect or impact of central bank stimulus. so you've got a lot of things working against the market going higher and even though it hasn't be abl to breakdown. >> a lot of people think as though we've seen the wor in terms of earnings that we've troughed, if you will.
and if indeed that is the case, this may be a good time to put your toe into the market if you have a long-term horizon. >> that's certainly true. one of the concerns, of course, is that the economy -- the economy is still -- we're still in the worst recovery since world war ii. how much of it is the economy going to bounce back and we see a slower economy around the world. i mean, china seems to be stabilizing but we're still getting a lot of mixed signals. it's not like bouncing back in a major way. however, if you're right, susan, that's going to be very positive because this whole thing with the bounce in oil is very important. because the real reason we had a big selloff in the first quarter was because of stresses in the credit markets. everybody was worried about it seizing up. maybe not to the degree of 2008 but still seizing up. still that hasn't happened and oil has stay elevated, that would be very positive for the market. >> matt, thank you for your time
tonight. we appreciate it. matt maley. and still ahead, the biggest change the hit startup investing in years and could revolutionize how small businesses are financed. ♪ the supreme court avoided issuing a major ruling on a case related to the affordable care act. the challenge was brought by religious employers who objected to the health law's contraception coverage mandate. the justices said they would not decide the case and sent it back down to the lower courts. there are new rules today for small investors. the security and exchange
commission allow mainstream investors putting money into start-ups allowing them to get into the ground floor. but with this new opportunity, also comes some risk. kate rogers has the details for us. good to see you, kate, as always. who exactly are we talking about? who can invest? >> the good news is that you don't have to be rich anymore to get in on the early stage investment. individuals who now make less than 100 k can invest either $2,000 or less than 5% of their annual income or net worth. people who make more money can invest more and until now under title 2 regulation of the 2012 jobs act, they had to be accredited, meaning $200,000 or more or a net worth of at least 1 million. >> kate, what can they buy? is there a restriction? >> the funding cap for equity crowd funding is at $1 million in a 12-month period, less than
the average round for small businesses which is around $2 million and this is not high-flying startups and they are warning divorce to do their due diligence before deciding to back the small businesses because they could potentially throws their investment. >> that's the risk you laid out to beautifully. how do they physically do it? how do they invest? >> there are registered broker deals to connect investors to companies as of friday the s.e.c. registered eight. we are waiting for them to release the names. and once again warning investors they have to do their research before putting money into one of the ventures. if you lose the full investment, it could be for as long as a decade until you start seeing that. it's definitely risky. >> kate, thanks so much.
kate rogers. >> a takeover offer for tribune that he is where we begin tonight's market focus. the owner of usa today of this all-cash bid from 22% to $475 million. the news comes after the owner of the chicago tribune and los angeles times previously rejected the unsolicited offer and went so far as to adopt what is known as a poison pill defense. the company has acknowledged the new offer and now says we're going to go ahead and review it. shares up 2% to $15.98. tribune up fractionally to $39. berkshire hathaway's ceo warren buffett has offered financial support to a group bidding for yahoo!'s internet asset. quicken loans is among the group of potential and buffett will only provide resources if the deal takes place.
yahoo! shares did rise more than 2.5% on the session. they finished at 3748. natural gas producer range resources will acquire rival memorial resource development in a deal valued at $3.3 billion. range resources will also assume more than $1 billion of memorial's debt. shares of range resources finishing today down 10% to 3769. memorial resource shares were up 3% to 1386. and through a new rebate program, valiant pharmaceutical will provide hospitals with steeper discounts. the pharmaceutical giant, criticized for the past drug price increases, will offer rebates between 10 and 40%. that amount will be determined based on the volume of drugs purchased during a quarter. shares of valiant rose more than 4% to 2705. well, from coffee to baby food, amazon now reportedly ready to disrupt another part of
the retail business. according to "the wall street journal," the online retailer is getting ready now to enter the multibillion dollar private label market for groceries and other goods. as josh lipton reports, the move may not be a simple one. costco has kirkland, walmart has great value and now amazon will have wickedly prime, making it the latest retail to expand its private label products. for one, this will allow the online retailer to offer consumers that many more products to choose from when shopping on its website. but there's also a strategic component. jeff besos with this decision is going right after big-name competitors, like walmart, costco and they can put pressure on third-party merchants selling products on his platform. >> it keeps these third-party merchants on it in, one, the
quality of what they sell and, two, in the prices that they charge consumers. >> there's also a financial component to this move. skully says that these niche products usually carry higher profit margins than name brands and consumers are big fans. store brand sales reached an all-time record and an increase of more than 2 million over the previous year. there are risks for amazon, however. the company has stumbled in the past. for example, last year, amazon made news when it had to pull its private label diaper brand citing the need for design and improvement. still, analysts think that besos is making the right move because the program will initially target and serve members of amazon's $99 per year prime program. it's important to keep those members very happy. skully estimates there are some 60 million prime members who spend up to four times more than nonprime members. for it is part, amazon declined
to commend on this report. for "nightly business report," i'm josh lipton in san francisco. amazon's move comes as traditional retailers struggle to increase their sales and foot traffic. as we've been reporting, consumers are still spending, they are just spending in different ways. so it's no surprise that some startups are trying to take advantage of the shift in consumer behavior and beat traditional retailers at their own game. courtney reagan reports from stockton, california. >> reporter: w clo sales at department stores and specialty retailers are less than stellar, some indicate that shoppers are still buying clothes. the co-founder sought out to solve a daily issue. >> my wife has a closet full of clothes and nothing to wear every day is what really inspired me to think about a solution. >> reporter: tote is like netflix for clothing.
subscribers get three garments at a i am ttime. you save $600 over retail pricing and it's individual style that is key to keeping shoppers subscribing. but this is one example of a retail startup using technology to disrupt the traditional way of thinking. and over time, the founders realized that data was doing a better job of cure rating style selections than human stylists. subscriber numbers are growing 15% each month and it's not without competition. the black tux rent formalwear and have a loyal following. and then another giving venture capital funding to disrupt retail as we know it. >> relying on the salespeople to make that final sale, relies on exclusive advertising on tv and
print media to associate the brand with the product. coupled with interesting social content is the winning formula. >> the co-founder has his eye on bigger fish. >> a lot of retailers would likely like us continue to do what we're doing and we're not going to see much competition from them until, you know, we start to launch in a bigger way. >> a battle cry to department and specialty stores may not want to ignore. i'm courtney reagan in stockton, california into coming up, are online degrees really worth it? what potential employers think of your internet-based diploma.
♪ and here's a look at what to watch for tomorrow. housing starts are out and consumer prices are among the economic reports that will be released tomorrow. also, dow component home bdepot is out with earnings. and that's what to watch for on tuesday. >> well, it is commencement season. many college graduates now entering the workforce a growing number aren't graduating from a traditional college or university. instead, they are earning their degrees online. but how are those dip employee mas viewed by potential employers? sharon epperson takes a look at why o whether all degrees are created equal. >> reporter: 32-year-old jonathan paul dropped out nine years ago. >> i kind of was in limbo here for a while and i was looking
for a way to complete my degree. >> reporter: but he didn't go back to a physical campus to get it. he recently earned a bachelor's degree in finance from penn state university after completing all of his coursework online. >> i kind of approached it from more of a learning point of view instead of the end result of just, you know, getting a grade. >> reporter: nearly 3 million college students are taking courses exclusively online. bypassing the traditional campus experience. while they may not have the same opportunities to socialize and network as students on campus, they are gaining valuable skills. our students tell us that they come away learning more than perhaps they learned in a residential class and as an added benefit they got more comfortable with using technology which is a great skill to have in the marketplace today. >> reporter: online degrees are becoming more accepted by the academic community and employers. 71% of college leaders in one study says the outcomes in
online-only education are the same or superior to face-to-face instruction. another survey found nearly half of middle and senior managers, 47% said they would be extremely or very likely to hire someone with an online degree. >> employers today are absolutely placing an online degree on the same level playing field with the more traditional university. however, with anything on your resume, you need to be prepared to speak to the benefits of your online degree. >> reporter: highlighting your creative thinking and ability to work in a group are key attributes to many employers. so is expertise in using social and digital media. >> a lot of meetings are being conducted using hangout. >> reporter: you must be se self-directed and disciplined too. >> you can't knock it out in a week or something like that but it's organized within each week. >> reporter: for jonathan paul,
it has paid off. >> i have a 4.0 technically and that demonstrates the commitment i've made and i've been able to implement a plan. >> reporter: another attribute this recent grad hopes will catch the attention of potential employers. for "nightly business report," i'm sharon epperson in center valley, pennsylvania. and on that note, that is "nightly business report" for tonight. i'm sue herera. thank you for joining us. >> and i'm tyler mathisen. thank you to our friends here at wttg in chicago. have a great evening, everybody. we'll see you tomorr.