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tv   Nightly Business Report  PBS  May 20, 2016 1:00am-1:31am PDT

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♪ this is nightly business report. >> retail surprise. what walmart, the world's largest retailer, has working in its favor that many of the new ones do not. amgen's break through that could drastically reduce heart disease. $1 trillion. why americans are borrowing more money than ever to pay for the new ride. that and more tonight on "nightly business report" for thursday, may 19. good evening, everyone. i'm sue herrera. tyler matheson is on assignment. stocks and a familiar worry pressuring the markets. there is growing concern a federal reserve interest rate increase could come next month
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and weigh on an already struggling global economy. it crept into the market yesterday and remained there today, pushing the s&p 500 into negative territory for the year. by the close, the dow jones industrial average fell 91 points to 17,435. it had been down nearly 200. the nasdaq was up 26, the s&p 500 lost 7. domenic chu has more on today's slide. >> a fresh round of worries crept back in the markets as traders continue to digest headlines from the federal reserve and key earnings reports. the weakness comes a day after the fed left the door open for a possible interest rate increase next month and earlier today new york federal reserve president bill dudley reiterated the same stance. >> i'm convinced my own forecast is on track. then i think a tightening in the summer, the june/july time frame is a reasonable expectation. it is a question of whether the
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car cooperates and performs in line with my personal expectations. >> interest rate concerns were just part of the picture. you had more uncertainty injected into the outlook for consumer spending and retail stocks. walmart gave a more upbeat earnings report that seemingly bucked the trend of largely negative results in the industry. the ongoing investigation into the circumstances surrounding the krark of an egypt airplane and you have enough to keep traders on the cautious side. not positive enough to push markets higher but not so negative as to cause a broader market sell-off either. traders will have data to digest on home sales and earnings for the likes of deere, the world's biggest farm equipment maker. for "nightly business report" domenic chu from the new york stock exchange. >> as mentioned the bright spot today was walmart. after a string of weak retail reports the world's largest retailer surprised investors
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with better than expect ed earnings and revenue sending up shares 9 and a half percent, the biggest one day jump since october of 2008. courtney reagan looks at why walmart bucked the broader retail trend. the world's largest retailer giving more confidence in the consumer today. walmart's first quarter profit and revenue better than expected with the key u.s. comparable sales metric also stronger than analyst forecasts. gaining for the 7th straight quarter. in store traffic improving for the sixth consecutive quarter. the discounter wouldn't elaborate on details of the month by month performance. cfo brett bigs told me over the phone it was good throughout the quarter which differs from what most other retailers detailed. however, more than half of walmart sales come from grocery and less than 8% come from apparel, a category which has been challenging for many others. plus, walmart's core consumer has likely benefitted from more
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positive macro economic factors. >> walmart will be a beneficiary, ultimately of what effectively seems to be the pay raise for lower income households. you're seeing income grow at above average rates for the bottom quartile, pay raises across retail. that's a proxy for wage increases in general for unskilled workers. that's really just gotten under way. >> minimum wage has increased for many americans. i asked walmart's u.s. ceo on a media call specifically if the higher wages it's now paying led to higher employee purchasing in stores. he said the simple answer is yes. walmart cfo brett bigs told me he agrees that several macro economic factors are helping the core consumer but added there is an air of uncertainty that's likely keeping the consumer from being as bullish as they would like to be. to be sure it wasn't perfect.
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sales growth improved only 7%, low by industry standards and also below what the company would like to see. >> e-commerce is leading the way. walmart has to fully participate in a growth of the channel. at this point they are not doing that. we need better trends on the e-commerce trend where the stock is trading from here. >> walmart is spending billions to improve the online shopping experience and the operations that support it. it will take time to generate results. for nightly business report i'm courtney reagan. >> the gap reported earnings late today. the clothing retailer plans to close 75 of the old navy and banana republic stores overseas by the end of the year saving nearly $300 million a year and improving operating margins. the company issued earnings that match expectations but revenue was shy of estimates. what's wrong with fashion apparel and why aren't consumers
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buying clothes? liz dunn, ceo of a retail consulting firm joins us now with answers. good to see you, liz, welcome. >> good to see you as well. >> is it on the shoulders of apparel or is there something else there? >> apparel is certainly a whipping boy right now. it's certainly not a strong category. consumers are spending on other things. i don't think that it's necessarily a weak consumer we e seeing. it is a consumer voting for other categories of spend. >> they like experiences. we keep hearing that, especially with millennials. they would rather go to a concert or something. >> absolutely. >> they don't have to be in the latest designer clothes. >> right. we are seeing kids spend or young adults spend thousands of dollars going to festivals and really going out to eat. they are voting for experiences. they also don't want to look like all the other consumers out
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there. so this younger consumer is really more focused on what kind of life they are living and the experience they are having. less so on wearing the fashion labels that everyone else is wearing. >> how does retail combat that though? how do they adjust to what looks like a pretty sizable shift in their industry? >> right. well, there are a couple of things they can do. fast fashion is one of the answers. it is one of the pressures and one of the answers. so traditional brick and mortar retailers need to get quicker at delivering fashion. they need to do so in smaller increments. not, you know, buy deep and sell cheap, but really buy smaller batches and deliver really fast fashion to consumers. i think they also need to bring experiential elements into the store. have events. bring excitement. really connect with the consumer. those are some of the answers, but the other answer is we are going to see more store closures
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from some of the biggest retailers. >> used to be the mall was a place to be. that's where the kids wanted to hang out. not the case anymore. >> yeah. they are forfeiting the mall. it's interesting. we saw out of walmart traffic is up 1.5%. the mall traffic was down mid to high single digits. that's a big disconnect. it really says that consumers are going other places other than the mall. not to mention the online sales that continue to increase. >> yeah. digital. all right. liz, thank you so much. >> thanks for having me. >> liz dunn with talmidge advisers. behr made a take over offer for monsanto. that would create the world's biggest agricultural supplier and would be the biggest foreign corporate take over ever by a german company. with few details the deal could be valued at more than $42 billion. monsano's board is reviewing the proposal and the shares rose
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3.5%. a medical break through could reduce heart attacks. the top cause of death worldwide. the company behind the research is amgen which uncovered an unknown genetic mutation that could pave the way to prevent heart disease. cardiovascular disease annually. here's more on the findings. >> some call it the future of -- using big data to identify genetic differences that affect our health. amgen identified a gene mutation linked to a significant decrease in the risk of heart disease and heart attack. it is now working to develop a drug focused on that target to try to my miracle the effects of the mutation. >> we found the mutation damages the function of the protein made by the gene.
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so what amgen started to do is develop an inhibiter of the protein hoping to basically simulate the fekt of the mutation by a drug directed against this protein. >> ceo of decode genetics, the icelandic company acquired four years ago for this research. the work was done by sequencing the genomes of 2600 ice landers. the population is helpful for this work because of similar genetic backgrounds. >> a rare mutation exists in iceland and is common in more on average average of 35% lower risk of heart attack and heart disease. on average they lived more than a year longer. the hope is the discovery will provide a new tool in the fight against heart disease. the number one cause of death worldwide. many say the approach will lead
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to an edge in developing medicines for multiple diseases. >> finding new targets is one of the hardest things for drug development. if you have access to genome technology you can identify new targets, new diseases, new indications. >> it is also the focus of part of president obama's precision medicine initiative comparing the genome sequences of a million americans for their medical records with the help of identifying new ways in which differences make us stronger. amgen estimates it might be two years from testing the new drug in people. from there, several years before it could apply for approval. a new drug isn't imminent but scientists are encouraged by a new approach. i'm meg turrell. now to a story that the world is watching. an egypt air flight from paris to cairo disappeared from radar. 66 people were on board. terrorism is not being ruled out. hadly gamble in paris has more on the tragedy in the sky.
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>> the white house said it's too early to say what happened to egypt air flight 804. it originates here last night at charles de gaulle in paris around 11:00 p.m. and was expected around 3:15 a.m. in cairo. the flight never made it. it cost radar contact between 2:30 and 2:40 a.m.er over the southern mediterranean. greek authorities say the plane was swerving, doing a 360 degree turn before it plummeted out of radar. we understand now that from egyptian authorities they are refusing to say the plane is anything other than missing. they say until they see debris they won't say further. there were multiple reports throughout the day that debris was found, even a life vest 120 miles off the coast of crete. we have heard greek authorities say degree found didn't belong to flight 804 and the french
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also reacted strongly today. a scheduled vote in the french parliament went through that extends the state of emergency law in this country that's been in place since the attacks last year. a lot of moving parts to the story. we'll update you as we know more. in paris, i'm hadly gamble. >> still ahead, a former corporate chairman, a gambler and a pro golfer and the insider toading case that ties them republicans and democrats struck a bill to help manage financial obligations and
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oversee debt restructuring. paul ryan says the plan will help put the u.s. territory on a path to reform. in inside trading triangle. federal prosecutors announced criminal charges against former dnc chairman thomas davis who they say illegally fed secret information about dean foods to the gambler billy walters who made profitable trades. >> as alleged for over five years davis repeatedly and systematically fed material nonpublic information about dean foods to walters who, in turn, benefitted handsomely to the tune of about $43 million in profits made and in losses avoided. from his trading in dean foods stock. >> walters allegedly fed some of the information to the pro golfer phil mickelson. according to a separate s.e.c. complaint. phil mickelson said he plans to repay the profits. more from washington. it's good to see you. a lot of us are questioning why
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the former chairman of dean foods would do something this dangerous. >> that's the big question here. what you see in the s.e.c. documents that were released today, they are painting a picture of a former board chairman here in financial dire straights. he needed money. at one point they said he owed money to the irs, had tens of thousands of dollars of debt on his credit card, owed money to an investment fund and they allege he misappropriated money from a battered women's charity to pay back gambling debts he owed in a las vegas casino. this is a portrait of a former dean foods chairman going through a personal financial very difficult time. the s.e.c. said it was related to his spending ambassad ing an >> many wonder why they did it and why phil mickelson would make the trade when he got the information and how the authorities tied it together and
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busted the operation. >> that's a question you ask in insider trading. usually it's powerful, sometimes famous or wealthy people trading tips to one another to make more money. don't they already have enough money? why would a guy like phil mickelson need to make this particular trade? the allegation laid out by the government today -- and it is just an allegation for now is that the gambler billy walters had taken some bets on behalf of phil mickelson. phil mickelson owed the gambler money. that's why the trade happened. the gambler passed him a tip and said, hey, want to trade in dean foods. phil mickelson made the trade, profited about $931,000 on the single trade. then allegedly repaid his gambling debt. this is all about gambling, golf and business lifestyle all three men participated in to one degree or another. >> we'll hear more about the case. thank you. >> you bet. >> television network executives
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are presenting the fall schedules to a host of advertisers. hoping to lure in more ad dollars. these up fronts as they are called mark an important time of year for broadcasters battling back against the fast growing digital world. according to julia borsen this time around what's old is new again. >> television giants wrapping up the up fronts expect a 5% increase in ad dollars. that's the first increase in five years amid a seismic shift in the way people consume content. judging from the network plans released this week in the up fronts, content is king. >> advertisers know to get the reach of television. that's true across the industry for turner. i was blown away from the up front. we have terrific new original shows at tbs and tnt. >> the network stressed the new high tech capabilities to better target viewers and deliver measurable results helping
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broadcasters back. nbc universal with the first up front that combined all of the media properties pointing out their ability to reach at least 20% of the viewing audience at any time. when you really take a moment to look at the facts and you look at the average american spend seven times watching television than they do. or 15 times more watching television content than on youtube. then the narrative changes. >> nbc focusing up front on the power of live events including the olympics and upcoming live musical "hairspray" plus historical strength in comedy. cbs is remaking macgyver and fox bringing back prison break and 24. fox with tales from the crypt and show time with twin peaks,
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familiar names to break through the clutter. to make it more appealing, tv giants are adapting to consumer demand by offering more content on demand with fewer ads. >> by producing the ad load, the sheer amount of ads but by making them more relevant and increasingly every day we get more sophisticated and we can actually demonstrate to advertise rs and marketers. >> cutting down on advertising time. to make sure ad dollars pay off for marketers. i'm julia borsten in los angeles. >> julia just reported on nbc universal, the parent company of cnbc which produces this program. >> applied materials sees new orders surge. that's where we begin tonight's focus. the maker of manufacturing tools raised the profit forecast after saying orders hit 15-year high. earnings per share beat
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expectations sending it higher in after hours trading. the stock closed the regular session slightly lower to 1991. perry ellis saw quarterly profits soar 50% on higher margin products. the clothing designer and distributor reported a drop in revenue as currency head winds weighed on the results. they raised the earnings forecast for the next year. perry ellis shares rose 13% to $18.61. in contrast, dick sporting goods reported a decline in profits. consumers spent less. sales did rise and were in line with targets. the sports equipment retailer gave a down beat outlook for the year as the clothing of rival sports authority is expected to weigh on the results due to anticipated deep discounts from the company's liquidation. shares were up almost 8.5% to 4136. it was aer worse than expe quarter at advanced auto parts
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with the company attributing results to service short falls. the news prompted advance auto parts to lower the revenue forecasts for the year. shares were down to 13354. to the world of politics now. if new national poll of registered voters puts donald trump slightly ahead of hillary clinton in a general election match-up. it's still early, of course. we want to know what john harwood makes of the polling. john, good to see you. the initial expectation was that ms. clinton had a big challenge over mr. trump. what's changed? >> what happened is once you wrap up a party's nomination, two things happen. a lot of americans see you as a winner. winning begets winning in politics. also, people in your party who had been supporting other candidates rally around you. in april when the nbc "wall street journal" poll showed hillary clinton with an 11-point lead the big reason was donald trump had only 72% of
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republicans supporting him. now he's in the high 80s. that's close to what you need to win a national election. his party is unified. hillary clinton not so much. hillary clinton came into the race with image problems. a lot of americans find her untrustworthy. that's a problem she has to deal with all campaign long. she has a persistent fight with bernie sanders in which bernie sanders is casting doubts about her, her commitment to real change and that's causing democrats to be less than enthus about hillary clinton. it's hurting her numbers and helping donald trump. >> does she have to mend fences with mr. sanders? >> she does. she made a gesture in that direction today. an interview on cnn in which she said of course i will talk to bernie sanders about the platform, the convention process, all things that people think concessions might be made.
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she asserted she had, in effect, already won the nomination. bernie sanders this afternoon put out a statement saying, not so fast. millions of americans have doubts on hillary clinton's campaign. he said he'll fight all the way to the end which is not good for hillary clinton. >> all right. thank you so much. john harwood at the white house. coming up, $1 trillion. why drivers are paying more money than ever to get behind the wheel of a new car. td bank is retiring the coin counting machines. last month we told you about errors that penny arcade machines made when counting cash. soon after, the bank took them
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out of operation and conducted an investigation. today, the bank said it will be retiring the fleet and will provide alternative ways to count coins for customers. general motors is close to creating a plan to compensate owners of late motdle cross overs purchased with window stickers that over stated fuel economy. according to numerous reports the plan would cover nearly 170,000 vehicle owners. the awesome say the mislabeling was an error. americans are borrowing more money than ever to pay for new cars and trucks. in fact, the total for all auto loans now tops $1 trillion. as phil le beau reports that number is expected to go higher. >> with auto sales close to a record high, the demand for new vehicles, especially higher priced pick-ups and suvs has consumers borrowing more money to pay for new models. according to experian, auto
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loans topped $1 trillion in the first quarter of the year, a 10% increase compared to last year. who is borrowing? the majority of auto loans are held by those with solid credit ratings of prime or super prime. there has been a slight increase in subprime loansish yed to those with the poorest credit records.bined with an up tick of loan payments 30 or 60 days overdue had some concerned it had hit the limit. some of the largest dealerships believe industry sales are being propped up with hefty rebates. >> those concerned along with questions about the overall health of the economy helped explain why auto stocks shifted into reverse in the last year all of the major awesojor autome seen sales drop. phil le beau, chicago.
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>> to read more about auto loans roaring past $1 trillion for the first time ever, head to our website. and finally tonight, gas prices may be inching higher, but thisser memorial day weekend they will be at an 11-year low. according to the oil price information service, gas prices will average about $2.29 per gallon during the upcoming holiday weekend. last year prices were about $2.75 a gallon. that will do it for nightly business report tonight. thanks for joining us. have a great evening, everybody. we'll see you tomorr
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