tv Nightly Business Report PBS September 22, 2016 1:00am-1:31am PDT
♪ with tyler mathisen and ness most participants do expect that one increase in the federal funds rate will be appropriate >> standing pat. the fed refuses a hike, but only for now. and some investors are wondering if the central bank is creating a crisis of confidence for the ma >> we're supposed to feel good because you've taken a drug that you're overcharging six times what it's worth and you're going to drop the price to 300. >> playing defense. the ceo of epipen maker mylan defends her company in front of a very angry congressional committee. and insider trading charges. a high-profile hedge fund manager the target of new s.e.c. allegations. th stories and more tonight
on "nightly siness for wednesday, september 2 good evening, everyone. and welcome. i'm sue herera. tyler mathisen is on assignment tonight. the federal reserve did not budge. though there was some disagreement, policymakers decided not to raise interest but the central bank did say a few iortant things. that near-term risks to the economy were more balanced, it signalled a possible rate hike this year and lowered its outlike for long-term interest rates and with that, stocks took off. the dow jones industrial average grew to 18,293. the nasd added 53. harpton pearson has more on what janet yellen signalled to investors. >> policy makers say it's not yet time to raise key interest rates. inflation is too low and there is still room for further
improvement in th >> most of us judge that the case for an immediate increase in the federal funds rate is stronger, but it would be sensible, given the finding of a bit more running room to wait to see some continued progress, evidence we continue to progress toward our objectives. >> the fed is lowering its forecast for growth for the next three years. just 2% for 2017 and 2018, falling to 1.8% by 2019. but esther george of kansas city, loretta messter from cleveland and eric rosen green of boston all wanted to raise rates today. and the majority of the central bank officials now expect a rate hike before the end of the year >> most participants do expect that one increase in the federal funds rate will be appropriate th
and i would expect to see that if we continue on the current course of labor market improvement, and there are no mainly new risks that develop and we simply stay on the current course. >> the feds' next meeting comes just one week before the november elections, with the fed chair dismissing statements from republican presidentialnominee, donald trump, that policy makers are playing politics with interest rate decisions. >> i can say emphatically that partisan politics plays no role in our decisions about the appropriate stance of monetary policy. we are trying to decide what the best policy is to foster price stability, and maximum employment. and to manage the variety of risks that we see as affecting the outlook. >> when asked specifically about the possibility of a november increase, just one week before the election, the fed chair
repeated her standard response. that every fed meeting is live. for "nightly business rep i'm hampton pearson in washington the fed's refusal to raise interest rates is creating a confidence. >> the fomc delivered almost exactly the statement the stock market was anticipating, no rate hike, a hawkish statement, saying the case for an increase in the federal fund rate had strengthened and they modestly upgraded the economic outlook. the s&p rose initially, dropped, then rose again. banks which move up on perceptions of a steeper yield curve declined. reitz and utilities rose. the fed's strange refusal to pull the trigger on a rate hike is the main topic on trading desks. a santial minority believe it's creating a crisis of confidence. yellen apparently does not share this concern during the president conference she said there was little risk the fed
would fall behind the curve. she said one rate hike this year would be appropriate, and we iterated that every meeting is live. yellen seems to have accomplished her goal of maintaining as much flexibility as possible for the fomc. for "nightly business report,"m. we have more analysis on the fed and economy. global chief investment officer at guggenheim participan. you correctly said the last time you were on with us the fed was not going to move on rates this time around. so kudos on that front. but the reasons why they didn't move. what did you make of what ms. yellen said? >> i think that what janet yellen picked up on some of the things that governor brainard had said in her statement a couple weeks ago. basically she indicated that our policy tools or the fed's policy tools are better at fighting inflation than they are of getting us out of low inflation
or deflation. and so there was sort of a hypothetical of a willingness to let employment run for a while, maybe let inflation pick up a little bit more befor the fed started to act. but, of course, three of the desended and that was quite a statement. i think she'll feel some pressure to act in december. but i don't think they're going to be in any hurry to raise rates in 2017. >> and '17. do you agree with what some are saying, that it is causing a crisis of confidence? maybe not with long-term investors, but maybe with those that have a shorter time horizon? >> sue, i've talked about this credibility gap the fed has created. they indicated they want to raise rates and all of a sudden point to a set of circumstances they can't raise rates. so i think the market -- i think the fed is trying to say, you know, when they make the statement that everyth is date-independent. k they want to keep their
options open. but i think it's also something confusion into the marketplace, because peopl can't figure out which data matte from meeting to meeting. and so a lot of people, you know, thought they should move ats meeting. but then, you know, was pretty apparent to me fromome of the comments that got made and then lyle brainard's statement that, no, they were going to wait and let the economy expand a little faster. >> so what's your best guess about when they will raise? >> well, i think they will do something in december. because i think they would like to get some kind of action in this year. even if just to maintain their credibility. bu what was interesting today was in the dot plot, which -- where the fed predicts future interest rates. they only indicated two rate increases for 2017. so i think we're on a pretty slow, gradual trajectory in terms of rates. and that's causing some concern, because we are starting to see overheating in some portions of the economy, like commercial real estate. and, you know, rosengreen pointed that out.
but i think that the concern on the part of the doves is that if ey move too quickly, to derail the economy, that could bring us back into a recession. and given how low interest rates are, their tools are limited. >> scot always good to see you. thanks for coming back. scott minor with guggenheim partners with us tonight. the other story to also centered in washington. mylan's ceo on capitol hill, defending her compa and the 500% hike of life-saving epipens lawmakers on the committee were clearly very, very angry. and she offered no apologies. meg terrell is covering the hearing from capitol hill. hi, meg. >> reporter: hi, sue. it's been a very heated hearing, taking multiple hours here in washington. th mylan ceo facing a lot of questions over the company's decision to raise the price of the epipen to more than $600 from less than $100 just a few years ago. a lot of questions swirling around why they raised the price, what went into that, how
much profit they're actually making. this isn't the first hearing we have seen into the price of drugs in the last year. and that's frustration we're seeing expressed by some of the congress mmen here. elijah cummings, here's what he told mylan's ceo. >> after mylan takes our punches, they fly back to their mansions and in their private jets and laugh all the way to the bank. while our constituents suffer, file for bankruptcy, and watch their children get sicker or die. >> reporter: representative cummings referred to martin shkresh the ceo who raised a price by 5,000%, saying when he came in after he testified he called the congressmen i am by sills and he named the same for another company, valiant. he really calling on mylan to lower the price of the drug. and in another heated exchange he had with another congressman,
they asked about that decision of the $600 price and mylan's ceo said she thought it was fair. listen to this. >> we're supposed to feel because you've taken a drug you're overcharging six times what it's worth and you're going to drop the price to $300. >> sir, we were receiving $274. >> do you think you're overcharging at $600? ? >> sir, we believed it was a fair price and we have lowered the price by half? >> why did you lower it by half if you thought it was fair? if you thought it was fair, leave it where it's at. >> reporter: clearly, the heat not coming off mylan any time soon. back over to you. >> thank you very much, meg tirrell on capitol hill. you just heard heather bresch defending the high cost of her company's epipen before a very angry congress today. but beyond that hearing, how much can congress really do about soaring drug prices? eric gordon is professor at the universif michigan's ross school of business and joins us
now. welcome, eric. nice to have you here tonight. first of all, how do you think she did? how did heather bresch do on capitol hill? >> well, i think she did as well as she could with the facts. it's just that the fabts facts are lousy. her defense is pretty interesting. a defense that went something like this. this is a complex situation. none of you in th room understand it. so i'm going to repeat myself until you under it. i don't think she changed anybody's mind. >> does congress have the ability, though, to perhaps use her testimony or use this hearing as leverage on drug pricing? >> i think they did get some leverage from it. congress doesn't set prices, they don't have any authority to set prices. but here's how they're going to use their leverage. we saw it in the hearing. they're going to put leverage pressure on the fda torove generic drugs more quickly. if there was a generic -- true generic epipen, the price would be much, much lower. the second thing that came out is that congress can authorize
medicare and medicaid. government agencies that buy drugs more than anybody else. they can authorize them to negotiate prices. they can't negotiate prices now. if they get that authority, they can really drive down prices. so what we saw in the hearings was some of the two anues congress can use, despite the fact that they can't order mylan to do anything. >> we should note, there was an fda representative sitting right next to ms. bresch, and was also grilled by the congress people, so we'll see whether or not they do come up with more -- quicker approval, if you will, of the generic form. medicare and medicaid. that i think is an interesting part of the conversation. because the v.a. already has the ability to negotiate prices with drug makers. and we have seen sizeable reductions in the prices of drugs that the v.a. negotiates. how likely is it, though, we'll see some action on that particular issue? in this session of congress?
>> well, we're not going to see anything in this session of congress. and that's the harder one. so the fda gets its budget from congress, they can put the leverage on the fda, and that' going to change and the person from the fda girl who is involved with this has said, we're doing better and will continue to do better. the medicare/medicaid fight is going to be a political battle roya royale best yea out, if it ever. but we saw the battle lines, and what happened today was the people who want medicare, medicaid authority, they got some ammunition from her testimony today. >> eric, always good to have you with us. thank you for joining us. >>hank you, sue. >> eric gordon from the university of michigan. another drug maker raised the price of an acne medication to nearly $10,000 a tube. according to a report in the financial times, the privately held company called novum i am increased the price by 128%.
the two main ingredients arin expensive. one an antibiotic that's been around for decades, and the other is a form of aloe, a generic form of the same crime costs less than $30. the fed wasn't the only central bank to impact the markets today. policy makers at the bank of japan decided to try something different. instea prohibiting more money to stoke inflation, it is targeting interest rates on government bonds. akiko fujita has more fro tokyo. >> we saw the markets rally on initial reports of this decision, and the introduction of this yield curve controls. the ni gaining 300 points at the close. but a closer look at this policy fr and the comprehensive assessment shows this is really about tweaking an existing policy. e boj looking for a little more flexibility, looking to buy a little more time to reach that 2% inflation target. you can certainly argue, this is a letdown four the market.
investors looking for further rate cut into negative territory and you could also say this is in part an admission from the boj on defeat on its existing policies, although the governor in his press conference said this shift towards the yield control was really about bolstering the foundation laid by the policies boj has already put forth. take a listen. >> translator: there's a new framework which centers around a yield curve control will be more flexible to prices and financial conditions compared to the original method of controlling the growth of monetary base and outstanding gover >> that curve control means the boj is abandoning their monetary base to buy longer-term government bonds to keep ten-year yields near zero. boj also committing to overshootin' inflation, essentially committing to continued expansion of its monetary base until they can reach core cpi at 2% target and stay above that target in a
stable manner. we did see the yen weaken on the back of this decision, reaching that 102 level, but there is little confidence here in japan. it can maintain that level with so many external factors weighing on the currency. for "nightly business report," i'm akiko fujita in tokyo. still ahead, why the s.e.c. is charging a well-known high-profile hedge fund manager with insider trading. ♪ a well-known hedge fund manager has been charged with insider trading by the securities and exchange commission. the s.e.c. is accusing leon cooperman, head of omega advisers, of generating illicit profits from trading in atlas
pipeline participants. according to the complaints, cooperman built a position. cooperman was already a major shareholder in the company, and as the s.e.c. alleges, had obtained confidentia informat about the sale. when the deal was announced, shares of atlas rose more than 30%. cooperman said the s.e.c. sought a settlement with him andis fund, which he called unacceptable. a statement to cnbc, cooperman said the charges are without merit and that he plans to fight the >>he grilling may not be over for the chairman and ceo of wells fargo. the house financial services committees has skjed a hearing for the bank's fake account scandal. this comes one day after john stumpf came under intense krut knee. jpmorgan downgraded because of continued fallout from the scandal. shares came under pressure falling about 1.5%. a retiring official from
california's largest public employee pension fund said state and local governments should be required to pay more into the system. allan mill gan, outgoing chief actuary of the retirement system also said the pension fund needs to recalibrate its long-term investment predictions since returns continue to come in lower than expect viacom cuts its dividend in half. and that's where we begin tonight's market focus. the media giant/ed its quarterly dividend to 20 cents a sre and plans to exploit debt markets in an attempt to improve lick witty. its interim ceo would leave the company in november. and as for vi's stake in para mount pictures, the company confirmed it would not seek an investor. shar fell 11 cents to 36.05. target will buy back $5 million more of its own shares. the stock repurchases will begin once the retailer's current $10
billion share buyback ends by the end of the year. shares were up 1%o 69.47. carmax posted disappointing sales growth, citing a down turn in foot traffic. same-store sales rose about 3%, coming in short of expectations. th retailer also missed overall revenue expectations. carmax shares fell 2% to $54.60. and sales fall the fifth straight quarter at general mills. the food giant said weakness in its yogurt and cereal segments, along with a challenging macro environment, contributed to that drop. profit also fell but those results topped estimates, so shares rose nearly 1% to $65.26. bed bath and beyond saw its profit and revenue fall, both metrics missed street targets. the home goods retailer also reported weaker than expected sales growth in the latest quarter. shares rose slightly in after hours trading but ended up a fraction to 43.11. some new numbers tonight in
the money behind the race for the whit democrat hillary easily outraised rival republican donald trump last month, and also spent a lot more than he did. john harwood has more on the campaign cash from washington. good to see you, as always, john. so what did the august totals look like? >> well, for hillary clinton, she raised about $59 million. that was her best month so far. donald trump raised $41 million. but even more significant, is a similar edge in the cash on hand, as we begin the last two months before the election. hillary clin has got about $68 million in cash. that's been fueling a much heavier battleground state advertising campaign by her. donald trump's just got $50 million, which is a lot of money, but not necessarily by the standards of a general election fight. >> absolutely. there's a new poll out, what did the numbers show there? >> the nbc "wall street journal" poll out tonight shows that in a four-way race leads donald trump
by 43-37. that rebuts the idea that donald trump is essentially closed this. gary johnson 10%. jill stein, the green party nominee, 3%. if you put it at a two-way race between clinto and trump, she leads by 7 points, a substantial advantage, puts a lot of pressure on donald trump heading into the debate that begins next week. >> i was going to say, how much do numbers generally change at post debate, after at any times? do they change significantly or not? >> sometimes they do. but the changes don't necessary last. we saw in, for example, when walter mondale ran against ronald reagan, reagan had a big advantage all year. monday detail had a succeful first at any time. and then it opened back up. similar john kerry in 2004 had an effective first debate against george w. bush. made some progress. but lost it later. so typically, you see a
candidate who is trailing in the first debate, consolidate their party. because peopl are watching and then they rally wheend that candidate. do necessarily change the underlying structure of the race. >> john, thanks so much, as always. >> you bet. >> john harwood in washington. coming up, while upgrading a key part of the country's mobile emergency alert infrastructure, could be a lot easier said than . ♪ walmart paid out about $200 million in second quarter bonuses to hourly store staff. the bonus went to nearly 1 million workers and were awarded as part of a broad erin sen active plan, more than the number who received notice last year. on a per employee basis, the
average bonus comes to about $220. well mart is the largest private employer in the united states. the colonial pipeline says it expects to restore service to its leaking pipeline today. and that should alleviate some of the gas shortages and price spikes seen in the southeast, including in charlotte and atlanta. as we have been reporting, part of that major gas pipeline was shut down when a leak was discovered earlier this month. me analysts say it may take until october for the logistics to return to normal. volkswagen shareholders are demanding more than $9 billion in damages. according do a german court, around 1,400 lawsuits have been filed against the automaker as a result of the company's diesel emissions scandal. volkswagen admitted to putting test cheating software in as many as 11 million diesel vehicles worldwide. while you might have seen mornings on your cell phone before for bad weather, perhaps or a missing child.
but this week new yorkers received a very new type of emergency alert. the hunt for a terror suspect. this all comes just as the federal cnications commissi is fighting to update .he wireless emergency al but it may not be so easy. andrea day has the sto. >> i didn't think that the carriers would really make such a fuss about this. >> reporter: a fuss, he says, that's been quietly brewing between wireless carriers and the government. >> really, really intriguing. >> r it came to light early this week after millions of new yorkers woke up to this. the nation's wireless emergency alert system, blaring from cell phones. the message? the name and age of a man allegedly connected with the bombings. and instructions. see media for pic and call 911 if seen. >> this is a modern approach that really engaged the whole community. r but critics say the virtual wanted message for ahmad rahami wasn't enough, especially today. professor darrin hayes specializes in had information technology at pace university. >> if you're going to put out an
alert about a terror suspect, you have to have some kind of picture of that person, or at least a link where people can find out more information. >> reporter: the current system can just be 90 characters long. so how does that compare with social media? it's about two-thirds of a tweet. according to hayes, the message left out critical information. like the suspect was considered armed and dangerous. which he says may have caused more confusion and fear. >> with millennials, they're used to social media, they're used to visual or graphics and so we need to think about how to make alerts so that people will take more notice of them. >> reporter: the s.e.c. wants to update the system, with longer messages, images, urls and better targeting. some wireless carriers say not so fast. >> if we emergency everyone gets the mesge at once because of the broadcast capability and everyone taps on the urls at the same time, it would have a significant effect on the network. >> rep the wireless
aassociation tells us, quote, the wireless industry is preparing a trial to determine if multimedia capabilities like photos and videos could be included inuture alerts in a manner that is it not cause harmful network congestion or technical issues. >> the government will win out at the end of the day. >>. >> and he says that's because the vast majority of people will demand to have more information. the s.e.c. is scheduled to vote on the proposed update late next week. i'm andrea day for "nightly and that's it for us tonight. i'm sue herera. thanks for joining us. see you tomorrow
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