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tv   Nightly Business Report  PBS  May 27, 2016 1:00am-1:31am PDT

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this is "nightly business report" with tyler mathisen and sue herera. >> flexing some muscle. that's what the u.s. economy seems to be doing in the second quarter after an anemic start to the year. >> 3% down for a house? sound familiar? thun nation's largest mortgage lender is bringing back low down payment loans, but are they as risky as they once were? >> so dramatic and severe and intense and thought i would die on the table. >> but she didn't. and the unconventional surgery to implant a device in her brain, her very last hope actually worked. the second part of our series modern medicine. tonight on "nightly business report," for thursday, may 26th.
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good evening, everyone. i'm sharon epperson in for sue herera. >> i'm tyler mathisen. welcome, everybody. signs of strength to tell you about from the factory floor to housing data to the labor market. new numbers out today show the world's largest economy is rebounding in the second quarter from that slow start to the year. and you can be sure that the federal reserve, which says data drives decision-making is paying very close attention. let's start with jobs. the number of americans applying for unemployment benefits fell last week, more than expected. according to the labor department, jobless claims were down 10,000 to a seasonally adjusted 268,000. that is the second straight week of declines following a choppy spring. >> to the factories, where orders for long lasting manufactured goods surged in april, according to the commerce department. strong demand for transportation equipment helped lift durable goods orders nearly 3.5%. and that was well above that expectations. however, a key proxy for
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business investments continued to show signs of weakness. >> and the housing market continues to power right along this spring. the numb of homes that went under contract to be sold climbed to the highest level in more than a decade. the national association of realtors says pending home sales in april rose more than 5%. that's easily exceeded expectations. but as we have been reporting, one of the issues playing the housing market is affordability. as home prices rise, many just can't afford to buy let alone mack a down payment. so wells fargo has decided now to launch a new low down payment mortgage program. but as diana olick reports, skeptics wonder just how many first time home buyers the program will really help. >> the new home loan from the nation's largest lender requires just 3% down payment for a conventional fixed rate loan funded by fannie mae. >> we're offering a simplified product that is less expensive
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and we think a far better way for someone to buy their first home. >> the down payments can come from a gift, perhaps from parents or community down payment assistance programs. borrowers do not have to complete a home buyer education course, but if they do, they can get their interest rate slightly reduced. borrowers must have a 620 fico score and need mortgage insurance. critics argue this is a return to a time when borrowers didn't have enough skin in the game. but wells fargo claims it is still low risk to the banks. >> with this product, we're being very clear that they have to have the ability to repay the mortgage, we have to make sure that they have a history of repaying debt, or at the very least responsible management of their finances. >> but there are a couple of hitches with that. first, fannie mae loans are exempt from the so-called ability to repayrolls that federal regulators put in place after the credit crisis. borrowers can have higher debt levels.
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second, a 620 fico score means you don't have a good history of repaying debt or managing finances. which means very few borrowers would qualify at that score unless they brought something else to the table. >> you need something like big down payment, which you're not having with this loan, or big bank account. which is unlikely with somebody who is lower income and have a lower credit score. >> he says he does not think this will be a game changer for first time borrowers but could bring big banks back into an area that he abandoned since the financial crisis. >> the reason they're doing this, the regulators are looking at them and saying what are you doing to serve lower income minority, borrowers in areas where you colles deposits. >> this new loans is wells fargo's answer as long as the borrowers who ask for it qualify. for "nightly business report," i'm diana olick in washington. >> stocks took a breather today after two days of triple digit gains.
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here are the numbers. the dow jones industrial average declined 23 points, 17,828 was the close there. nasdaq, however, added about 7 points to 4901. s&p 500, it was down, but just by .02. despite today's small moves, stocks are working their way back toward their 2016 highs. this market isn't the same as the one just a few weeks ago. mike santoli explains. >> on the surface, not much is different. the corporate profit outlook for this year is about the same. the yield on the ten year treasury was below 2% then and hardly budged. but oil prices have continued climbing. up more than 10% in the past five weeks to reach $50 a barrel. this helped the market for riskier bonds to strengthen further, which offers better support for stocks. and shares of big banks often viewed as a bellwether are up nicely since the broad s&p 500 index was last at the 2100 mark. these factors suggest the market is on slightly firmer ground than it was in april.
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perhaps the biggest change comes in investors perception of the u.s. economy and the federal reserve's plans for raising interest rates. consumer and industrial data have been good enough to support the case for a second quarter pickup in growth and federal reserve officials have consistently suggested in recent weeks that another boost to short-term rates could come in june or july if the economic data keep improving. the wall street consensus had discounted this possibility in part due to the impending vote on britain's eu membership and the unsettled presidential campaign. while the bond market hasn't fully priced in the prospect of a rate hike within two months, it moved in that direction. so, is it a good sign that stocks have been able to recover while odds of a rate hike have climbed? indicating investor comfort with the possibility? or would markets react badly to another close call on rates the way they did last september when the fed stood pat and after the december rate boost. these are the questions that will likely animate summertime trading in a resilient market that now faces an obstacle course of high stakes events.
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for "nightly business report," i'm mike santoli. >> oil prices broke a key milestone today. domestic crude hit $50 a barrel before pulling back a bit and that's its highest level since october of last year. since oil's lows in february, oil prices have climbed 80% and incredible assent helped by supply outages overseas and recent reports that show a decrease in stockpiles. >> the question becomes can oil continue to rise? our next guest last year predicted oil would dip into the high teens. for a while there, he looked like he would be right. then crude moved against him. here to discuss what he sees now is our friend john killduff, founding partner. i almost called you a founding father. you are a founding father, so to speak. >> >> you said high teens last year, i thought killduff is crazy. then oil went down into 26, $27, i thought not so crazy. crazy like a fox. what happened that caused oil to
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rebound and spring up the way it is and are we near an intermediate term peek? thanks for having me back. >> thanks for reminding me. >> last bastion of accountability. i do believe we're nearing a peek. a lot of influences have come together here to produce this $50 price print. listings like this massive canadian wildfire, knocked a million barrels off the market. >> u.s. production is down. >> u.s. production is down, that is the one key fundamental that i can't argue with and if i underestimated anything, it was a rapid shut down and shut down incredibly quickly. there are counties that were flourishing with oil production activity that are at zero. and we're down 800,000 barrels. >> nigeria, libya. >> but those are issues that have always been on the table. so are they even more concern
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now, is that why we're seeing oil prices rise in terms of some of the geopolitical fears? >> the u.s. barrels that we lost were the cushion, call it that. now nigeria barlrels, they were begging for a home to sell to for many months over the past year. the libyan situation, though, looks like it is coming back. there has been a deal there for government, ships loading oil as . their production is rebounding. we're reminded of two things, one, the opec meeting next week will show the cartel is very much in disarray still, that the saudis, iranians, iraqis are in the process of ramping up oil production, not lowering it, more than offsetting the u.s. loss. >> why does oil end the year in your view? >> i still think there is a possibility for a significant washout. i think the production cuts have put a floor on things. 35 to $40 a think. >> john, thank you very much. >> thank you. >> have a great long weekend. >> you too. president obama and leaders of the group of 7 leading
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industrialized nations met today . the big topic was how to accelerate the global economy. not all are in agreement on how to respond. the health of the global economy dominated talks. the leaders were in disagreement over where they believed the recovery stands. germany's angela merkel saying she believes the global ecomy is showing a certain amount of stable growth while prime minister shinzo abe here in japan wning of a lean and like event, specifically citing thei and commodity prices and saying they're at levels not seen at the financial crisis since 2008. the tpp on the agenda here, with the trade deal yet to be ratified, leaders agreeing to speed up the process aiming to have the deal finalized by the fall and take effect as early as next year, as for geopolitical
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risks, china and territorial disputes in the south china sea dominate in discussions. president obama saying g7 leaders also expressed concerns about the u.s. presidential election. >> they're rattled. and for good reason. they have done a lot of proposal s, ignorance of world affairs or cavalier attitude oregon interest in getting tweets and headlines instead of thinking through what it is that is required to keep america safe. >> tomorrow, the attention shifts to hiroshima where president obama will become the first sitting u.s. president to visit the site of the nuclear attack. he has made it clear there will be no apology, but the president said today that this visit would be a reminder that the job still
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isn't done when it comes to reducing conflict in the prospect of nuclear war in the future. for "nightly business report," akiko fujita, japan. still ahead, could rising wages for fast food workers back fire for the very people they're mean . a legal victory for google, siding with alphabet. the other day we told you the outcome of the trial could ripple through the entire software industry. theodore boza has the details from the courthouse now. >> after six years of litigation and plenty of increasingly heated back and forth between
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two tech giants, the jury in the courthouse behind me decided in favor of google. essentially they have decided that the company did not violate oracle's copy right when it used java programming to create android. we have since heard from both companies giving statements. let me read you the first from oracle. they said they brought this lawsuit to put a stop to google's illegal behavior. we believe there are numerous grounds for appeal. google for their part issued this statement. today's verdict that android makes fair use of java represents a win for the android ecosystem so the java programming community and for software developers who rely on open and free programming languages. so google will not have to pay $9 billion and there is likely a sigh of relief among the huge community of developers and startups that rely on open source. that is the software at the heart of the nearly 6-year lawsuit. as for what is next, well, likely a lengthy appeals process
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as oracle alluded to, but for now, a victory for google whose lawyers shortly after their decision was handed down said they were going out to celebrate. deirdre boza for "nightly business report" in san francisco. mcdonald's temporarily shut its headquarters outside chicago because of demonstrators. the protesters were marching for $15 an hour minimum wage and rights to form a union on the same day the company was hosting its annual shareholders meeting. this is a third year in a row the burger chain had to ask headquarter workers to stay home for the day. as fast food workers around the country do push for that $15 an hour minimum wage, mcdonald's usa former ceo ed rensy says it is cheaper to invest in new technology and automation rather than increase worker wages. others in the restaurant industry agr >> people look to automate everything they can, especially in the kitchen, where you can build equipment to do certain
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things for you. if the government and states continue to push this $15 wage and not give tip credit for the waiters, you are going to see a huge layoff in people. you look at the payout over a number of years, you cannot pay somebody $15 an hour when somebody is buying a burger for $4. it does not work. >> and joining us now to discuss this is eric brin olson. professor, welcome, good to have you with automation is coming, whether there is a hike in the minimum wage or not. how disruptive, transformative, maybe, is it going to be in the restaurant business? >> i think it is going to be very big. we have h already seen that technology is having some big effects in terms of medium wages, stagnated for a while. and the technologies that are in the pipeline will be able to automate a lot more tasks the next ten years than they did the
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last ten. >> one thing you pointed out in the research is that aversion we have seen over productivity growth and employment growth. we're looking at jobs today from taking tolls at the highway to restaurant workers, to people even taking their blood pressure, all those jobs have gone away and replaced by machines. how is this divergence between productivity and employment really played into what we're seeing? >> well, that's exactly right. historically as productivity grew and the pie got bigger, there was a rising tide that lifted everybody. wages rose for everybody. but for the past 20 years or so, median income stagnated, fallen, there has been a falling share of the people who are working. and there are many reasons for that. but part of it is the technology that is automating a lot of routine repetitive jobs. there is still more demand for data scientists, for creative people, for nurturing, but people doing routine work are finding it harder and harder to
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compete with machines. >> back to the restaurant business. i presume as automation comes in, whether it is taking orders, bagging french fries at mcdonald's or wendy's or wherever, that is going to mean fewer jobs in those locations. is that race towards fewer jobs going to be accelerated by a rise in the median wage, in other words, are companies going to accelerate the use of automation, costing jobs as wages rise? >> there will be some of that. to keep this in perspective, we should understand that technology has been destroying jobs, it always has been creating jobs, there is a balance, a turn there that is natural and healthy. that's how the economy becomes more productive and that's how our living standards rise as people move from one area to the other. but it is true that if you push up the wages, say, through a minimum wage, that does increase the incentive for companies to automate faster than they otherwise would have. >> all right, professor, thank you very much. i'm sure this will be an ongoing conversation.
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we hope to have you back soon. eric with m.i.t. total sales slide for the 13th straight quarter at abercrombie and fitch. that's where we begin tonight's ma focus. the fashion retailer also reported a decline in profit as fewer shoppers hit the stores. the results fell short of expectations, abercrombie says the current quarter will remain challenging. shares plummeted more than 15% to 2114. sears says it will explore options for its iconic kenmore, craftsman and diehard brands by expanding availability outside of the stores. the news comes as the retailer posted a continued decline in earnings and revenue. company announced the departure of its chief financial officer. investors seem to be pleased with the news, shares rose 6.5% to 1334. and sales soared at discount chain dollar tree, prompting the company to raise its guidance for the year. profit also rose in top estimates driven in part by the company's addition of nearly
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8,000 stores, from its acquisition of rival family dollar. shares were up more than 12.5% to 8837. profit rose a whopping 46% at burlington stores, which helped the off price retailer top estimates today. sales were also higher and above estimates. the strong quarter prompted the company to raise its full year outlook. shares finished today up nearly 7.5% to $60.03. increase in new members and membership fees drove profit higher at costco despite the positive news. comparable store sales remain flat for the quarter, well below the 2% gain analysts were expecting. nonetheless, shares rose 3.5%, 149.71 was the close there. and u.s. foods made a splash today in its first day as a public company. the food services outfit raised more than a billion dollars in one of the biggest initial public offerings so far this year. shares up better than 8% to
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2491. and a top apple executive reportedly raised the idea of buying time warner at a meeting between the two companies. but the idea never got off the ground. the financial times says apple would likely be more inclined to buy a video streaming company. do any names come to mind? how about netflix? it looks to increase its spending on original content. apple, time warn, netflix, all up on the day. madmen may have left the air a year ago, but fans of the retro show can now bring a piece of it home. part of a rising trend of auctioning hollywood memorabi a me is creating a new source of revenue for studios. julia boorsti has the story from los angeles. >> want peggy olson's typewriter on don draper's lighter? there are props and set pieces up for sale, sold on behalf of lions gate from the 92 episodes over 7 seasons. screen bid and auction houses specializes in items from tv
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shows will start the auction on wednesday. many items starting at less than $100. fans can bid online and auction winners receive a certificate of authenticity and a screen shot of where the product was within the show. screen bid charges a buyers fee and takes a cut, delivering the rest to lions gate. >> here is a brand-new montiization for you. and beyond just the, you know, incremental dollars and cents that will fall to your bottom line, it is a wonderful marketing engagement and cultural extension. >> lions gate and other studios benefit not just from incremental revenue from selling items like don draper's glasses or lighter, but also the fact that auctions like these help drum up attention for shows long after they have left the air. inspiring fans to download episodes on itunes or amazon or to stream them on netflix, helping media giants extend the life of their brands. the fact that it is now easy for people to binge on shows long after they leave the air grows
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the potential fan base for these kinds of auctions. >> the availability of the streaming services for people to access the show wherever they want and to revisit these characters, revisit these story lines is going to make the demand really high. >> there are no official estimates, but the business of selling hollywood memorabilia generates at least a billion dollars in annual sales according to screen bid's chairman. a sale of breaking bad props brought in more than $65,000 for walter white's copy of leaves of grass alone. so some of these items could get up into the tens or even hundreds of thousands of dollars, for something like don draper's car. for "nightly business report," i'm julia boorstin in los angeles. coming up, why researchers may have a whole new set of options when it comes to treating depression, substance abuse, even ptsd. the second part of our modern medicine series is next.
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the human brain, a miracle, of course, and in many ways still a medical mystery. but now technology is helping doctors understand how the brain really works. and in the process, he's unlocking new treatments. meg terrell has the second part of our series, modern medicine. >> as many as one in five veterans return from war with post traumatic stress disorder. their current options for trea behavioral therapy and medicine. but those options don't address the electrical circuitry governing our bodies and brains. >> we focused a lot on the chemical side because in the mid-20th century we began to develop the first medications that affected neurotransmitters. >> dr. darren go heritydoherty the department of psychiatry at
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massachusetts general hospital. >> the other side is the electrical and that's been less exploited as a treatment potential. >> doherty and others are working to change that, with funding from the defense advance research project agency or darpa. scientists are working to build new ways to treat psychiatric disorders, like ptsd. through deeper understandings of the electrical signals in our brains. >> what it really boils down to is precision and reaction with the neurons of the brain that are involved in neuropsychiatric illness. >> already patients are using early models. deep brain stimulation is fda approved for the treatment of parkinson's disease symptoms. as well as obsessive-compulsive disorder. murphy had a deep brain stimulation device implanted ten years ago to treat her severe depression. she calls it a life saver. >> this episode started in august of 2 004 and nothing could budge, budge it. i have a resume of seven pages with all the drugs i tried. and 30 rounds and nothing made a
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dent, just worse and worse and worse. >> out of options, murphy agreed to try deep brain stimulation. not fda approved for depression. it is a serious procedure, requiring brain surgery to put in place. >> brain surgery sounds so dramatic and severe and intense and my greatest hope that day was that i would die on the table. i had no -- my last shot, you know? i'll do this and if it doesn't work, i can say i tried everything, but it worked. >> the device murphy has, sends a constant electrical charge to her brain. the newer prototype being developed will be a closed loop system. sensing misfires among neurons and sending corrective charges when needed. >> when it reaches a certain threshold, it would stimulate another brain area that when it activates would suppress those neurons and the symptoms associated with it. >> researchers hope that it will present a whole new set of options for treating everything from depression to substance addiction to ptsd.
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for "nightly business report," i'm meg terrell. >> to read more about deep brain stimulation and its products, head to our website, nbr.com. tomorrow, meg tells us the story of two siblings who because of medical advances can see again. fascinating stuff with the brain. >> fascinating report. mental health, such an area that many people don't want to delve into and find out how to treat, even the conventional ways. and these ways are fantastic. >> truly so. >> all right. that's "nightly business report" for tonight. i'm sharon epperson. thanks so much for watching. >> i'm tyler mathisen. thanks from me as well. have a great evening. hope to see you right back here
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