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tv   Nightly Business Report  KQED  May 17, 2016 7:00pm-7:31pm PDT

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. this is "nightly business report" with tyler mathisen and sue herera. >> stocks think. stirring fears of higher interest rates as two fed officials say it's possible that action may be taken in june. home sweet home, especially for home depot where americans continue to spend on sprucing up their houses. what a mess as airport security lines grow, so do tempers. can anything be done quick to fix a problem that's only expected to get worse? all of that and more tonight on "nightly business report" for tuesday, may 17th. good evening, everyone. welcome. what's good for the economy is bad for stocks. the federal reserve has been looking for any indication that prices are rising and that
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inflation is heading back to its target level. today, that's exactly what it got. the consumer price index, the prices americans pay for goods and services, rose 4% last month, the fastest rate in three years. it could be a sign the economy is regaining some steam and it could give the federal reserve just what it needs to raise interest rates again at potential leanne earlier date than wall street expects and that's exactly what the markets did not like. the dow jones industrial average dropped to 17,529. the nasdaq fell 59. and the s&p 500 was off 19. mary thompson has more on today's stock slide. >> reporter: the catalyst for the decline, some hotter than expected data on consumer prices as well as nonvoting members between the federal reserve who said the two to three rate hikes this year would not be
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unreasonable. >> we'll have a great discussion and get a lot more data between now and then and do more homework and analysis. >> i'm at this stage sort of inconclusive on how i'm going to be thinking about june but i wouldn't take it off the table. >> the comments are raising expectations that central banks could move as soon as this summer to raise interest rates and consumer stocks decline on wall street today and the gains we saw in the energy sector, thanks in parts to continued gains in oil prices with oil finishing above $48 a barrel. it was home depot that declined in the dow jones industrial average, the home improvement retailer lower despite posting better than expected first quarter numbers in the forecast. dow jones industrial transportation average bucked the downward trend.
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interest rates are likely to make the numbers jump in the week ahead and traders will be focused on the relief the fed minutes from the last meeting and whether or not we could see a rate increase in june or july. for "nightly business report," i'm mary thompson at the new york stock exchange. industrial production rose .7% in april. that is the biggest increase for a single month since november of 2014. but the bounce reflected weather-related factors rather than higher spending by consumers and businesses. >> the housing market remains strong. housing starts, which marked the beginning of construction of a new home, rose more than 6.5% last month. but with single family homes still in short supply, diana olick spoke with the biggest builders at the home building conference in new york. >> reporter: the tone at the jpmorgan home building
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conference today was a cautious optimism. home builders are seeing increased demand from buyers but also increased costs of construction. >> this is a tough market condition. we've seen the market recover since the downturn but the recovery has been slow, steady and in a pretty tight band. >> reporter: lennar, one of the nation's largest public builders has hedged its best investing in multifamily apartment buildings and single family rental homes. it's not building entry-level homes even though that's where demand is highest. >> are you all missing a huge opportunity here? >> well, the first thing you say is that demand is the highest. it might be high demand but not enabled demand. we're still mortgage constrained. it's hard for first-time buyers to get the downpayment and to qualify for a mortgage. >> reporter: home construction is climbing out of the pit of construction but for single family it's 30% below historical norms. never mind the pent-up demand
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left over. mortgage rates, which were expected to rise, have fallen to three-year lows, making the time right for buyers. >> credit availability is not what it was before the financial crisis and i don't think it should be. it's been getting better and better over the last several years. >> rates are low but better credit availability may not be enough. especially with the supply of starter homes so low and builders essentially leaving them in the dirt. for "nightly business report," i'm diana olick in new york. the strength in the housing market helped home depot turn in a solid quarter. mary thompson mentioned that in the program. the chain raised its earnings in revenue forecast for the year after it reported better than expected results for the most recent quarter bucking the broader retail trend. courtney reagan takes a look at the place where consumers are spending. >> reporter: if you listen closely, you'll hear signs of
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relief across wall street thanks to american homeowners. home depot posted quarterly results for profit and revenue and full-year earnings forecast. the retailer found particularly strong comparable sales growth of more than 7% in the u.s. >> now that prices are recovering, there are fewer houses relative to a year ago, about 12% of homes are under water versus two or three years ago it was in the 30s. people are spending it on roofing, on windows, doors. they are doing that and buying appliance because there's innovation there. >> reporter: spring is the holiday season for home improvement retailers because it marks the beginning of demand for outdoor merchandise from furniture to plants to roofing. that also means weather plays an important role in sales strength. this year, april was cooler and wetter than normal in many areas of the country. home depot acknowledged inconsistent weather throughout
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the quarter and did decelerate each month. however, it's not deterring analysts from pointing to continued strength for home depot going forward. >> ultimately, for home depot, it's one of the best executing companies across consumer and certainly in retail. it has one of the biggest amazon and online platforms in our coverage. buying home depot today, you're buying the sustain ability of the housing algorithm. >> home depot will follow the same general trends of home depot and slightly less strong. still, analysts are expecting more consumers that will spend when it comes to their hopes. for "nightly business report," i'm courtney reagan. according to bank of america and as reported by "the new york times," the standard & poor's stock index has fallen an average of 8.2% in years when an
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incumbent president is leaving office. the final year of an incumbent's eight-year term is the only year that average negative returns in that time period. so what does this mean for the market between now and the election and beyond? let's ask chief investment strategist at janie montgomery stock. i guess that traces back to uncertainty. do you think the market will be in a holding pattern at least through the election? >> well, tyler, you hit the operative word, uncertainty. markets disdain uncertainty and not knowing who is going to occupy the white house, neither of which have ever held a seat in it before, brings an amplification to the uncertainty surrounding the presidential election but there are other factors in play as well, including tg the fact that oil prices will lap the oil prices later this year.
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in addition to, that the dollar will strengthen 8%. it's down 4% so far this year. that's turning into a tail wind for profits. actually, the profit pictures are set up to improve in the second half of 2016 even in spite of the fact that we're obviously left with the tremendous amount of uncertainty with regard to the presidential campaign and as a consequence the factors together create a confluence of uncertainty that will keep markets really in a tight, tradeable range rather than breaking up or down. >> i was going to say, you're not expecting negative returns, just kind of -- i see you're expecting muted returns but on the positive side. >> that's right, sue. we believe that earnings are ultimately going to happen due to heavy lifting this year and better earnings, we think, over the balance of this year and into 2017 and as a consequence expect equity prices to reflect that. not necessarily to see them jump in price but rather to go up in at least a positive fashion and
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probably outdo bonds and cash over the next 12 to 18 months. that said, that doesn't mean there will be volatility which at times will challenge that thesis. >> quick thought, what about the fed? >> tyler, obviously today's news, you're commenting about it earlier, talking about two to maybe three rate hike this is year and putting the market back on it is heels with a june rate hike. i think it's a low probability but i think fed governors will start to set the market up for the prospects of a rate hike. it's not july. that's a bit quick. certainly, in september. >> thank you very much. >> thank you. still ahead, something ty and i just experienced in chicago. airport security lines. they are growing. so does the frustration felt by travelers. but is there a fix to the problem that's likely to get worse this summer?
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donald trump, the presumptive republican presidential nominee said he plans to outline his economic vision in two weeks. according to reuters, trump plans to dismantle most of the dodd/frank financial regulations and says tech startups have created a new financial bubble. he does not plan to make any cuts to social security and auditing the fed is not his top priority. the senate today advanced a compromise bill to provide more than a billion dollars to combat zika. the emergency funding will be used for mosquito control and development potentially of a vaccine. the compromise provides $800
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million less than president obama requested. tjx does what most other retailers couldn't and that's where we begin tonight's market focus. the parent company of discount chains tj max posted positive revenue. tjx raised its profits for the year. shares of tjx up a fraction to 75.59. shares of the children's place reported higher than expected earnings in the latest quarter. in addition, the company also raised its profit guidance for the year. on the flip side, francesca saw its sales plummet after the unexpected resignation of its ceo. the company posted downbeat preliminary results for the quarter saying it expects earnings to come in at the low
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end of the previously issued guidance. the shares fell more than 29.5% to $10.50. and a hedge fund wants pandora to think about putting itself up for sale after the bell yesterday. they disclosed a nearly 10% stake in the streaming service, raising concerns about the company's business plan. pandora responded by saying it has a profitable core business and is committed to delivering long-term value for its shareholders. shares of pandora up 10%. there is an investigation into the sales practice of the lending club as we reported last we're. the peer to peer lenders resigned after the discovery of faulty loan sales by some of the staff. the news today sent shares down more than 8% to $3.60. the patent and trademark office will review bio science's
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request creating bio similar versions of drugs that the government agency said the patent on this drug may be invalid. shares of advy fell and other shares soared nearly 15% to 18.85. and one of the employees has been indicted on criminal charges related to an oil spill last year which leaked 143,000 gallons of oil near a beach in santa barbara, california. the company faces 46 criminal charges, including four felony counts. despite the news, shares rose more than a percent to 25.31. from congested subways to crowded airports, our nation's infrastructure is in need of repair. the american society of c engineers rates our system at a
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d plus and says the u.s. needs to spend $3.5 trillion on infrastructure by the year 2020. in our nation's capital, the issue is pretty obvious. hampton pearson reports on the problems plaguing the d.c. metro. >> reporter: with more than 700,000 riders per day, the washington metro subway system with thick lines and 120 miles of track is the second busiest in the country. but in the last 16 months, there's been a fatal fire last january where more than 80 passengers were injured, a 24-hour shutdown of the entire system in march that forced hundreds of thousands of commuters back into their cars and just last week, this dramatic video, a fireball arcs on the track moments after a train pulls away. these and many more incidents contributing to a crisis from metro riders. >> the antiquated system has been around for years.
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>> for me as a commuter, using the metro every day, i am worried to getting to work on time and i bring my kids on the metro sometimes. >> metro is all you have. you have to grim and bear it. what else can you do? >> metro's own data shows 216,000 smoke and fire incidents last year doubled the year before. ridership is down. 214 million last year. down from 225 million in 2009. despite a population increase and expanded service in northern virginia. metro's governing board estimates it needs to spend more than a billion dollar as year for safety and maintenance upgrades included designated funding from congress. for "nightly business report," i'm hampton pearson in washington. >> from trains to planes, you've seen the pictures of the long airport security lines. maybe you've spent a few hours in them. the frustration grows and the
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house panel is planning a hearing next week of how congress can help ease the wait times. today, dick durbin said 58 security officers and four bomb-sniffing canmb k-9 teams w sent to o'hare airport where the problem is particularly acute. eamon javers has more. >> it's frustrating. >> i try to tamper my frustration with the understanding that we want everybody to be safe. >> reporter: airline travel these days is all about hurry up and wait. and now american airlines says the delays at tsa check points are only getting worse, calling the lines unacceptable, american said during the spring break week of march 14th through 20th, nearly 6,800 of the airline's passengers missed flights because of checkpoint delays. the worst airports? los angeles, miami, atlanta, dallas and philadelphia. tsa says it is focused on
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countering threats as the transportation is a high-value target for terrorists. the strong economy means air carriers are enjoying record travel volume and so travelers should show up at airports two hours early. this week, dozens of travelers were stranded at o'hare after security delays caused them to miss their flight. airline officials were reduced to handing out blankets and cots. >> they have a funding issue and they talked to congress and we support this and there's more money going to training officers and more immediate officers coming online. but it's a long-term problem for them. >> reporter: the union for tsa says the federal agency needs a lot more manpower, 6,000 more screeners. although 200 new screeners graduate from training every week, about 117 people quit the agency in the same time frame. and that means tsa is just
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barely treading water. for "nightly business report," i'm eamon javers in washington. as we told you last week, long lines is a growing problem, as eamon pointed out, and it's expected to get worse this summer. why is it happening now and is there a fix to this problem? david joins us, an aviation expert and president of xenophone strategies. nice to have you here. >> glad to be here. >> ty and i were just in chicago. we can vouch for the fact that the lines were extremely long, even in the tsa precheck area. why is this happening now? >> there's a number of things. it's a lack of funding from congress, tsa is understaffed, over 4,000 less screeners that it did a couple of years ago, increased numbers of passengers and a renewed focus, an additional focus on looking for the things that are particularly
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dangerous, things like bombs. >> we had a guest on last week who pointed the finger at management. is it a management problem? >> i think it comes back to more than anything else, a congressional problem. congress does not provide the funding necessary to run at normal levels and tsa went to congress and asked them to allow them to focus more on bombs and lesson things like small pocket knives. congress rejected it. that's sucking up a lot of the resources and contributing to the line sgrs if it's a congressional problem, it doesn't sound like the way that congress moves these days that it will be able to fix that problem before the peek summer travel season. >> it's going to be very difficult. it's a long-term problem but there are short-term things that can be done as well. it's about time that the airlines kicked in and helped on this problem somewhat. one of the problems of going through screening now, everybody has tons of carry-on baggage because of checked baggage fees.
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the airlines could offer temporary relief on checked baggage fees which would help the long lines at the airport. >> most people would check the bags and wouldn't have to go through the great screening but do you really think people who have gotten so accustomed to carrying on and don't want to wait in a baggage claim line, do you think it would alleviate the problem that much? >> there's no dwhea question tht would help. that would help. additional screeners would help. in the end, we have record numbers of people in the air transport system and it is going to be a very difficult summer. >> what about privatization? >> there's a privatization program now where in 21 airports, private companies do the screening under tsa's supervision, under tsa's rules. there's no way to get that in place before the summer season. and doing it wholesale across the system would be a little bit extreme. >> but do you have hope that that would be helpful?
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do it better even if they are being supervised by the government tsa? >> let's not forget that the tsa's primary job is to keep people in the skies safe, to keep our airplanes and airport systems safe. something that they are good at is not to be efficient and move people through quickly. that's secondary. and private companies that are operating under the same rule, with the same equipment, with the same resources are probably not going to do it more efficient than tsa. >> david, thank you very much. thanks, david. >> my pleasure. coming up, there are more companies than ever selling access to television but there is one that may be worth watching.
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here's a look at what to watch for tomorrow. dow component sysco is viewed as a barometer of the enterprise tech sector. the federal reserve released the minutes of the last meeting and facebook ceo addresses allegations of political bias at the social networking website. that's what to watch for on wednesday. well, the way we watch tv is changing and those changes aren't just coming from traditional television companies but also from tech firms, a lot of them. julia boorstin has more on how tech is tackling tv from the internet expo in boston. >> there are more companies than ever selling access to television. cable and satellite tv companies, verizon and after years of offering traditional bundles of channels, they are
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now increasingly taking new approaches. offering less expensive slimmed-down bundled distributed over the internet, like fling tv. plus, there are a slew of tech and internet companies jumping into the game. sony is offering playstation view and amazon is partnering with comcast to sell its tv service and hulu is announcing it is working on a new live tv service. already in advanced talks with two of its owners, fox and busy abc. >> the one that you really have to worry about is hulu because it's backed by the content companies themselves and therefore has that one key element which is they've got the programming. >> and it's not just hulu. google's youtube, amazon and apple are working on their live tv packages, hoping to also from all of that data, about what people are watching. tech giants embracing tv is
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pushing tv companies to become more high tech. comcast showcasing a new program for the olympics. adapting the company's options to meet shifting demands. >> what our company is trying to do is make sure that we're really available to customers on wherever they want to go and so some customers clearly will not buy a bundle. some will want a skinny done bell and some will take it another way. that's why we bought "nightly business report" nbc universal. >> and to keep the customers from switching away to the host of new markets which they predict will be a rising trend projecting by 2018, one in five customers will not subscribe to cable. for "nightly business report," i'm julia boorstin in boston. and before we go tonight, here's another look at the selloff on wall street. the dow dropped 180 points to finish at 17,529.
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the nasdaq fell 59 and the s&p 500 was off 19. >> the fed got back in the equation today. >> i know. in a big way. >> in a big way. >> there might be volatility tomorrow as well. fasten the seat belts. that does it for "nightly business report" tonight. i'm sue herera. thanks for joining us. >> and i'm tyler mathisen. have a great evening, everybody. we'll see you back here tomo is brought to you by...
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