tv Nightly Business Report PBS August 9, 2016 1:00am-1:31am PDT
♪ this is "nightly business re with tyler matheson and sue herrera. ♪ chaos and cancellations. a global computer failure halts all of delta's flights for hours, stranding tens of thousands of passengers worldwide. >> i am proposing an across the board income tax reduction, especially for middle income americans. >> taxes, trade and regulations. donald trump outlines a bold economic plan he says will jump start america's economic growth. rules of the road. a chinese company best known for a search engine is focused now on car engines taking on some of silicone valley's biggest players. those stories and more on
"nightly business . good evening and welcome. sue is off tonight. hundreds of flights cancelled. thousands more delayed. that's not what an airline wants in the middle of the summer travel season. that's exactly what happened today to delta. a power outage in atlanta where delta is based triggered a worldwide computer outage grounding flielgts for six hours. tens of thousands of passengers were marooned. nothing worked. there was no check-in system, no updated airport screens. even the website was affected. boarding passes, such as they were written, had to be written by hand. the chaos pressured the second largest airlines, the latest in a string of challenges facing the travel industry this summer. it started in may with the long snails paced security lines. now terror, zika fears could be taking a toll.
susan lee has more on delta's massive delay. >> all delta flights worldwide were grounded for hours after an early morning power outage in atlanta crashed the global systems. hundreds of flights were cancelled with many more experiencing long delays. >> i apologize for the challenges this has created for you with travel experience. the delta team is working hard to restore and get these systems back as quickl >> reporter: adding to the travel confusion status boards weren't displaying correctly, some saying flights were at the gate or on time, frustrating customers. >> we had no warning whatsoever that they were -- the system was delayed. >> they had to do everything manually and couldn't get the computers to work. there was no checking your bags or anything. it was a hassle.
>> reporter: most passengers we spoke to said delta personnel handled the situation relatively well. delta has issued a system-wide waiver for those affected by monday's travel chaos. delta will refund passengers or rebook for those that have been affected by cancelled flights or significantly delayed. for "nightly business report" i'm susan lee at laguardia airport. >> whether it's an airline outage, zika or terror fears, the problems for the travel industry seem to keep on coming. how much of an impact are these factors having on the industry? hannah sampson is associate editor for the online travel news and information website and joins us now to discuss. good to have you with us. i am assuming, correct me if i'm wrong, the kinds of computer glitches, outages that happened today at delta happened a couple of weeks ago to southwest. they have plagued united in the past. are things that if they are not recurring passengers forgive and
forget quickly. >> it tends to be a big maybe it is in the news for a couple of days but people travel and don't change their plans because of a power outage that led to d i think it is a flash in the pan. >> you a different answer if you were stranded today as many thousands of passengers were. you may not be so quick to forgive . let's talk about how the travel business is weathering the challenges it's facing this summer. everything from terror worries to concern about zika and more. >> it hasn't been an easy year. it hasn't been an easy summer for the industry. i think what we are seeing and hearing across the entire industry is that people are still traveling. they are being a little more
cautious about how they are traveling. so maybe they are not going to some of the destinations that have been targeted by terror attacks or maybe they are not going to places that have rapiy spreading zika. >> where is that being felt? are we getting documentation, for example that travel is off a little bit to france, belgium, turkey and maybe there are other places including the national parks of the u.s. picking up some of the travellers? >> that's certainly -- no one wants to benefit from someone else's misfortune. a lot of destinations are making it clear to say that. but when france and belgium and turkey, for example, are feeling the pinch because people are concerned about safety going there, other destinations in norway or the uk or especially
in the u.s. are feeling more optimistic because they think it is a better option. >> has the brexit vote affected travel to or from britain into the u.s.? british travellers are big travellers and they come to the united states. has that affected their predilection to travel or has the strong dollar discouraged travellers? >> right after the brexit vote which surprised a lot of people, you could hear americans saying, well, let's go ahead and take that summer trip to london now. at the same time u.s. companies are concerned about the impact they are going to see from brits coming to the u.s. up in the air, how that's going to turn out. there are a lot of destinations in the u.s. trying to cater more to domestic travellers. because they fear the fallout
from the uk and europe. >> hannah, thank you. hannah sampson with skift tonight. stocks'sed back. declines led by health care names despite a rise in oil prices and a big rally in energy shares. the dow jones industrial average fell to 18,529. nasdaq dropped nearly eight and the zap 500 off about two. as for oil, there are reports that opec is planning informal talks for september. that raised hopes for an output freeze or cut even. that sent the price of domestic crude up nearly 3% on the day. donald trump today vo make america's economy great again. speaking at the detroit economic club, the republican presidential nominee said he would cut taxes, revamp trade agreements and proposed a moratorium on new regulations. john harwood is on the beat from the motor city. >> reporter: donald trump tried to jumpstart his campaign which
has been struggling of late with the economic speech here in detroit. in addition to the familiar regimen of tax cuts he added a new proposal that his daughter signalled in her speech at the recent republican convention. >> no one will gain more from these proposals from low and middle income amer my plan will help reduce the cost of child care by allowing parents to fully deduct the average cost of child care spending from their taxes. >> in addition to the new child care proposal he reiterated the desire to renegotiate trade deals like nafta, pull out of the trans pacific partnership, roll back regulations including obamacare and dodd/frank. as for the tax cuts he did change those proposals slightly. last september he rolled out a
plan that had three rates -- 10, 20 and 25%. he had new rates today. take a listen. >> we will work with house republicans on this plan, using the same brackets they have proposed. 12%, 25%, and 33%. these reforms will offer the biggest tax revolution since the reagan tax reform. which unleashed years of continued economic growth and job creation. >> now the new tax proposal accomplished two things. it aligns him closely with paul ryan, the speaker and house republican. it reduces the deficitt o tax pd at $10 trillion added to the deficit over ten years. his aides say a newe estimate will be coming in weeks. >> the new deductibility of
child care expenses is one thing. lowering the business tax rate to 15% is another. interesting to see whae effect on deficit will be. i don't want to get much into the weeds here. we may not know how that deduction for child care expenses would work. of course, most people who have write-offs on their taxes are wealthier and don't use the standard deduction. >> right. we don't know, tyler, first of all, whether it is refundable so people without income tax liability would be able to benefit from it. if not, that means the benefits would skew toward the upper end of the income scale. we don't know whether or not this is something that will exist on every tax form irrespective of if you itemize or take a standard deduction. a lot of unanswered questions. in the case of the child care plan they will have more details in the coming weeks. >> i was struck by two things. he stuck to the script religiously. it was an untrump trump today.
in the face of multiple hecklers he kept his >> he was very disciplined. i'm sure that pleased republicans in his campaign and beyond. he was still trump though. at one point he said something that was flat-out false about hillary clinton's economic proposals. he quoted her as having said last week, we are going to raise taxes on middle income families. in fact, she said we weren't going to raise taxes on middle income families. >> john harwood, thank you very much. both trump and clinton proposed spending a lot more on infrastructure as a way to grow the economy. today, new york times op-ed columnist pull krugman talked about needing investments in everythi to transportation. according to the "wall street journal" wall street is urging governments to invest in big ticket projects now while interest rates are low. joining us is the writer of the "wall street journal" article harrison.
welcome. your piece this morning was interesting. while peop are talking about infrastructure projects, people are urging state and local governments to borrow. what do the numbers say and why? >> state and local governments were really, really hard hit during the recession. they had to make drastic budget cuts that were really painful. now that things are slowly getting better, they are still skittish about borrowing a lot of money. borrowing my state and local governments, the issuance of municipal bonds is off somewhat from the prerecession pace. they are now around a little shy of $150 billion a year which is quite a bit lower than it was before. there are still some anxiety and nervousness on the part of the gover issuing new bonds and -- >> i guess it's not just the governments that are gun shy. it is the voters. in many states including the one
i live in, most -- many if not all of the bond issues have to be approved at the polls. >> that's right. it's definitely a concern for a lot of states. you have referendums that voters have to approve. you have the situation that's strange where drivers of new borrowing isn't so much the interest rates. it's the popular mood. right now it's definitely anti-tax, anti-borrowing. that's holding back a lot. >> you know better than i whether states are in better fiscal shape and could take on additional borrowing. tell me about that. certainly the interest rates are as favorable as i have seen them. i have been around a long time. >> the fiscal picture is improving. it hasn't improved very much. it's been slow to come back. that's largely due to the fact that incomes haven't really come
back much. so states are in a better fiscal situation. it is not great yet. it's harder. then on the yield perspective they are really, really low because of a number of factors because the federal reserve kept rates low and investors are looking for safe investments. municipal bonds are one of the safest. >> thank you vermuch, david. we appreciate it. david harrison of the "wall street journal there is one major question hanging over the economy that has economists puzzled. how can growth be so weak at the same time the labor market is strong? steve liesman looks at the latest economic puzzle. >> reporter: when it comes to the economy e days we have a split decision. [ bell ringing ] in one corner weak growth. in the other the fed struggling to find out which is better. job growth weighs in well above average at just 1%.
economic growth is a full fledged weakling, a point below average. economists are betting on jobs. >> what can we measure better, the number of people working or the entire u.s. economy on a quarterly basis? the money has to be on the labor market being the right signal. >> one way to deal with the split is to call a tie. >> the gdp was one. the employment number suggests something like three. the truth is in the middle. >> what does it mean for stocks? more jobs and less growth suggests companies may be less profitable but consumers richer which could be okay for equities. >> that won't give us double digit stock market but four to six percent, points for dividend. 6 to 8 over the next five years or so. that would be fine. >> reporter: if the split decision is wrong it would be a policy 'tis mist take. the fed might be too low while inflation and the economy heat up. the fed is worried about weak growth more than strong jobs. y will be confused.
confusion breeds caution. we have seen it already. we are expecting the first rate hike in december. >> by then the fed should have a better idea if strong jobs knock out weaker growth. for "nightly business report," i'm steve liesman. still ahead -- not sure which way the economy is headed? we look to the transportation sector. trucks and trains mostly, for some clu. a number of smaller mergers announced today. the world's largest retailer, walmart, will buy jet.com, the all cash deal valued at $3 billion helps walmart better
compete online. digital sales just a fraction of walmart's overall business. shares of walmart fell fractionally today, as you see there. the south african company steinhoff will pay sleepy's company mattress firm. this is their first move into the u.s. market. the deal will create the world's largest multi brand mattress retail distribution company. shares of mattress firm were firm today, up 114% to 63.75. vail resorts will buy whistler black comb for a little more than a billion dollars which further diversifies their locations and will expand the season pass program. the transaction expected to close in the fall of the year. shares of vail up about 8% on the session. and tiaa confirms it has reached a deal to buy ever bank financial for $2.5 billion in cash to bolster the banking
business. this two weeks after ever bank said it was in talks for a buy out. shares up 3% in trade today. transportation is one of the most closely watched industries because it is viewed as a proxy for the health of the economy. more goods move in rail or truck, that means in theory there is more economic activity. for a while, the stocks that make up the sector haven't been performing as well as the broader market. but that looks like it is starting to change. morgan brennan has tonight's sector spo. ♪ >> reporter: the dow transports has begun moving higher, outperforming the broader stock market since the start of july. it's a big difference from earlier this year when the transportation average was trading down almost 30% from the late 2014 high. as wall street feared, another recession. the reversal is important because transports have long been seen as a barometer of economic health. what are transports signalling
now? >> the demand is okay, but not great. it's just coming off a fairly week base, still relatively muted economic environment we are in now. we'd love to see better activity to give us more conviction in the economy getting better. >> case in point truckers. trucking is a leading economic indicator. since 70% of all goods in the u.s. move at some point by this mode of transport. the american trucking association report weak shipments and too many trucks on the road. there's been a slight up tick in demand that helped stocks like knight transportation, swift transportation, werner enterprises and a small but closely watched company called coveted transportation jump this quarter. then the railroads. after being battered by the classic commodity prices shares of norfolk southern and kansas city southern chugged higher this quarter despite tepid earnings. experts believe u.s. rail lines after free falling for more than
a year might be bottoming out. >> we have seen the pick up in freight activity in the months of june and july. we have seen it on the rail side with an improvement in coal and grain picked up from the troughs earlier in the second quarter. we have also seen it on the truck side a little bit. it's partly due to more seasonality in the weather. we have a hotter summer start that's starting to move volume through. >> investors view railroads and transport stocks as potential va plays since they are trading lower. a reversal from two years ago. while the worst might be over for the sector, weight volumes have a long road ahead to return to the 2014 highs. key factors including inventory levels, energy prices and the strength of the dollar could derail a recovery. at least where this sector is concerned. for "nightly business r i'm morgan brennan. profit rises at sotheby's. the auction house said cost cuts
and higher commission margins lifted earnings. lower sales dragged down revenue but results were good enough to top estimates. shares rose to 36.49. bilgest one day gain there in more than four years. milk prices helped drive profits higher at dean foods. those results came in on the skim side, a little light, missing estimates. revenue for the quarter fell because of a drop in volume. shares down 3.5% to $18.16. strong product demand and lower prices for animal feed helped tyson foods top profit expectations. revenue fell but it was good enough for street targets. they raised the full year earnings guidance. up 74.07 at the close. robust sales of the drug botox drove revenue higher but the results misd street
expectations. the biotech company saw the loss widened but managed to top earnings estimates. they cut the forecast for the year saying it doesn't plan to enter into merger talks. sales down for the day at 248.31. news corps had an up tick thanks to strong performance in the company's digital real estate segment. those results were shy of street targets. the owner of the "wall street journal" said it has regained profitability but earnings for the quarter missed estimates. shares were flat in after hours trading as you see t finishing the regular session up a tick at $12.84. coming up, hitting the road. the chinese company that's competing against powerful silicon valley firms to change driving
the man instrumental in building google's self-driving car business is leaving. technician chris ermsen joined google in 2009 to join what was then a secret project. the decision comes about a year after google hired a former hyundai executive toar unit. two other top executives have left the project as well. google is not the only company with big plans for a self-driving car. far from it. the chinese company baidu is trying to compete and is hiring people from silicon valley to
help in the effort. here's more from beiji >> reporter: chinese internet giant baidu is working fast to create a self-driving car. considered the google of china it is known more for the search enginer engines but they are betting that like its american counterpart it can down the road in the future the car will be a smartcar. the value of the software will be more important than the body and the hardware. >> reporter: until now chinese companies lagged behind foreign rivals in the auto industry. new internet and electric technologies promised to reset the starting line. chinese firms are hoping to get an edge. baidu isn't interested in making the actual car, just the brains. >> it really builds up strength
in a.i. technology. it's very innovative in this area. >> reporte the compa hired hundreds of people in silicon valley to focus on a.i. or artificial intelligence. it is now among the top tech firms applying deep learning where computers learn by themselves. it is also tailoring the in-car systems so the country's tech salve vvy drivers can connect w smartphones. maps have more than 70% of the chinese market. [ speaking in a foreig >> tra here are the applications. you can use them for phone calls, browse maps, navigate and use voice recognition. it is hard to type while driving. >> do you think the app could be popular outside of china as well? >> this year the map app will be available in more than 190 countries. when the map becomes more popular overseas we'll consider bringing the car system abroad as well. >> reporter: together with various awesome they are aiming to sell a completely driverless car on a mass scale in five
years. >> we believe we can build the best self-driving cars in the world. >> reporter: why is it important to be first. >> because you can collect more data with more self-driving cars on the road. and the system will be smarter. >> reporter: potentially helping baidu to surpass rivals on the road. >> that is "nightly business repo for tonight. i'm tyler matheson. thanks for watching. have a great evening, everyone. we hope to see you back here tomorr.