tv Nightly Business Report PBS November 2, 2016 1:00am-1:31am PDT
♪ this is "nightly business report," with tyler mathisen and sue herera. november nerves. a tightening presidential race and a bed meeting put investors on edge today, as a month gets off to a rocky start. high gear. the auto industry remains on track for near-record sales this year. and open enrollment. why one health insurance startup sees opportunities, not obstacles in the obamacare exchanges. those stories and more tonight on "nightly business report" for tuesday, november 1st. good evening, everyone. and welcome. i'm tyler mathisen. sue herera is off tonight. well, maybe it's the election, and that tightening presidential race. or maybe it's this week's fed meeting, and the prospect of higher interest rates.
if not now, then maybe at next month's final fed gathering of 2016. whatever the reason, stocks stumbled on this first trading day of november, and wall street's fear index, the vix, moved higher. so did gold prices. but the mexican pesos fell against the u.s. dollar. some see its value as a proxy for donald trump's white house chances. the better his odds get, the lower the pesos. med day, the dow jones industrial average broke below 18,000. the s&p below 2,100. but the blue chip dow recovered some, still it ended down 105 points at 18,037. nasdaq was off 35 and the s&p 500 dropped 14. bob pisani has more on today's stocks slide. >> reporter: it's the first day of november, and normally this is a good time for stocks. november is the number one month for the dow and presidential election years, that's according to the stock traders al man ack and the period from november through april when the markets
tend to strongly outperform from may to october. so why are the traders so miserable? because the fed and the election is making everybody crazy. look at what happened today. on word that the election was tightening, the cbo volatility index went over 20 intraday. it's a sign that traders are reaching for protection. election may be affecting shopping. retailers went down after a poor in october, many analysts citing distractions from the election. and the fed isn't helping. a spike up in the last week has pushed the small cap down 5 of the last 6 sessions. small cap stocks tend to underperform during periods of higher rates. and high yield stocks, reits, telecom stocks, all way off highs. what's it mean? it means we're caught in a situation where every market's report is going to be layered with a dose of political observation, in the near future and a dose of fed-watching and those who want to talk about the
earnings situation, or something equally relevant like wage growth, well, you're all just going to have to wait. for "nightly business report," i'm bob pisani at the new york stock exchange. >> with one week to go, and investors on edge, where does this election stand? john harwood with us now. what do the latest polls show, john? >> bob mentioned that "washington post," abc tracking poll that showed donald trump for the first time in months, one point ahead of hillary clinton. that remains an outlier. and the reason that campaigns tend to look at averages of polls is because you could have one that goes one way high or low. in the averages, politics down to 2.5 points in favor of hillary clinton from 6. so that lead has been cut in half. also down in the "new york times." still has a lead, though, and we will see just in the next couple days whether the movement that has closed this race, which is largely republicans coming home to him continues. >> the question really is, how close is he getting in some of
those key battle ground states? he's got to thread a lot of needles, most especially florida and ohio. but even that doesn't get him there. >> exactly. mitt romney won 206 electoral votes in 2012. donald trump has got a chance to pick off florida, ohio, iowa, nevada. okay? that's good. if he gets all those states, he still only is at 265. then he's got to go to another tier of states where he's clearly behind outside the margin of error. places like wisconsin and pennsylvania, michigan. the other thing that is true is that there are two states that hillary clinton is threatening to take away from the right-hand column. so trump, if she is able to win north carolina and arizona, that 206 that trump started with goes down and he has to win more of those swing states. tough order. >> there are a variety of scenarios, aren't there, under which they could actually tie. >> there are. and -- >> unlikely, but possible. >> that's largely because two
states, nebraska and maine, split their electoral votes. so, for example, if donald trump wins the second district of maine, that is one electoral vote that would be added and there are various combinations of states that put in at 169. that one vote at 270. >> if it is a tie, it goes to the house of representatives. >> it is and part of the scenario for evan mcmullin, the independent candidate running in utah is to deny anyone an electoral majority and throw it to the house. he has some outside hope that house republicans, who he served as an aide, might turn to him. i think that's quite unlikely. i think if it goes to the house of representatives, donald trump is going to be the president. >> john harwood, thank you. >> you bet. now to the federal reserve, which began today a two-day meeting. it's a policy meeting, a big one. the central bank will issue a statement on interest rates tomorrow. but few expect it to make a move, especially with the outlook for the economy so muted. steve liesman surveyed some of the top economists and money
managers, the economy and outlook for growth. >> it will be santa that brings the next fed rate hike. the latest cnbc fed survey finds 100% of correspondents expect no fed rate hike in this halloween week on wednesday. but 86% of the responsibilitide expect the hike in the december meeting, roughly a year after the last hike. overall, the 39 respondents, including strategists, expect modest rate hikes in the years ahead with the rate rise over 1% by the end of 2017. the economic outlook, though, remains muted with growth forecast to be around 2% this year and next. and the stock market rising only a few percentage points. some are more optimistic than that. >> i think the stock market is going to respond favorably to the end of the election, get comfortable with the fed norm normalizing rates and react well to the return of earnings momentum and sales momentum we're starting to see right now.
>> the chance of recession, 23% in the next year with the biggest stretch of the u.s. economy coming from global economic weakness. >> we have no ability on the monetary side to respond to it, because rates are already near record lows, arguably low rates hurting and the fiscal side is paralyzed because we're going to have divided government next year. so you tell me, when you're growing 1% something, unless global growth is better, you add any pothole, you're in trouble, in a recession. >> the survey also found wall street disagrees over the benefits of low interest rates, roughly a third think they help the economy, a third say they hurt and another third say they have little effect. for "nightly business report," i'm steve liesman. >> manufacturing activity in america expanded at a modest pace in october for the second straight month. faster production offset a slow down in orders. the institute for supply management says its index of factory activity rose .4%, the slight increase follows a weak performance this year, thanks to
a drop in oil prices, a rise in the dollar, and weak global growth. those factories may have been kept busy by automakers. the annual pace of sales last month topped year-ago levels and was much better than expected. as phil lebeau reports, trucks and suvs led the way. >> americans are as enthusiastic as ever to buy a new car or truck. check out general motors. last month, the automaker sold more than a quarter million vehicles. one of its best months of the year. and the average price they were sold for was up $1,000 compared to the same month a year ago. overall, gm sales dropped almost 2% in october. not quite the decline seen by nissan, toyota and fiat chrysler. ford had a fire at the company's headquarters, causing complications with the corporate computers. those numbers will come out later this week. but overall, the industry
remains on pace to match or fall slightly below the record auto sales we saw last year. and that's because demand for new vehicles remains high, thanks to strong consumer confidence, low interest rates and a wave of new vehicles with the latest technology and options the. the bottom line, americans are more willing than ever to pay for a new vehicle, especially trucks and suvs which remain red-hot sellers due to low gas prices, which means even those models that get relatively poor mileage are attractive right now. phil lebeau, "nightly business report," chicago. take a guess. how many u.s. auto and auto parts manufacturing jobs have been lost over the past ten years? 1 million? a half million? the answer, according to the bureau of labor statistics is about 133,000 off of a base of a little more than 1 million. so what happened to those jobs? why were they lost? where did they go?
here with answers is bruce bellxouski at the university of michigan transportation research. good to have you with us. what happened to nose jobs? >> well, if you look over the last ten years, it's the recession. and that the major issue having to do with that had to do with the reduction in sales that happened, particularly during the recession. where you look at your previous segment that talked about sales being at record levels, we're looking at over 17 million vehicles a year. but now that at that time, it went down 11 million. so the factories had -- >> go ahead. >> some of that went to -- some had to go -- deal with the reduction in market share by the manufacturers. which also led to retirement,
because of the people who are close to retirement, taking retirements, but also major layoffs. >> so obviously some of those jobs that were lost in the recession, when i guess the total number of employment in the auto industry fell to its trough, have come back. so we're now at something like 925 or 930,000. from the beginning of nafta to today, how did jobs in the auto business compare? >> well, nafta, of course, is a group of trading partners, u.s./canada and mexico. so you're looking at both sides of the u.s. you're looking at trade with canada, as well as mexico. some of the result -- data i was looking at recently showed that auto manufacturing in mexico went up about -- first of all, between 1994 and 2000, there was no changes in manufacturing. there were no manufacturing
losses. but from 2000 onwards, it was dramatic. so that mexico increased their manufacturing in auto motive, cars, as well as suppliers. maybe about 50, 60%. and u.s. went down about 50, 60%. now, it's easy to say, well, obviously, all -- everything went to mexico. but it's not quite that easy. when you look at what happened in mexico, there's foreign manufacturers who increased their manufacturing in mexico during that time. >> nonu.s. manufacturers. >> and volkswagen. >> non u.s. manufacturers. >> exactly. exactly. toyota has a plant there. so there's some of that that went on during that time, as well. >> all right. bruce, thank you very much. with the university of michigan transition institute. it was a volatile day for gas prices. futures hit their highest level in eight years at one point
today. after an explosion cut off a major fuel artery. though prices did fall back a bit on word the disruption may not be as bad as feared. there are still lingering concerns and jackie deangelis has the details. >> the country's biggest fuel pipeline shut down for the second time in two months. an explosion last night not only kicked colonial pipeline's main line offline, but also line two. that caused gasoline prices to spike at the outset. but there is good news. line two is now operational, line one is expected to be up and running on saturday. that took some of the air out of the earlier price spike. but the entire event had the energy markets on edge. the colonial pipeline is old, and any disruption can ripple through the market and be felt at the pump. the big concern was that we would see a repeat in the shutdowns in september that sent gas prices higher by 20 to 30 cents in some parts of the south, or potentially worse since two lines were impacted.
now experts say that some areas of the southeast may only see price hikes up about 5 cents. damage to the main line is closely watched, because it runs from houston to the east coast. supplying refined product roughly 50 million americans. line two, which transports less was used in the previous case as a means for bypass. >> we saw wholesale gasoline get above $1.60 a gallon, the wholesale price. they're still up 5 cents a gallon. but crude oil and gasoline futures have both been moving lower over time, and we would expect to see that as anymore bad news from the pipeline. >> gasoline finished up 5% higher, not getting everything back because stakes are high to deliver on the repair estimate. the risk is that this could be worse than last time, with shortages and price hikes running not just through the south, but up to the east coast.
licensee of yum brands in china. which includes kfc, taco bell and pizza hut. got that? the ceo has plans for expansion in that country. >> we've got about five stores for every million of population. and we can see this as a market in the long-term that will have more yum restaurants in china than we have in the united states. so we could get a 20,000 restaurants here. >> wow. as for shares, they finished their first day of trading up 8%. shanghai looks at some of the challenges yum china faces. curry rice bowls and wraps made with peking duck. no, this isn't the menu of a chinese restaurant but a kfc in china. for decades, yum brands, the company behind kfc, has tailored its menus to the chinese, make this market the biggest outside the u.s. with 7,300 restaurants
spread across the country. but in recent years, yum has struggled. food safety scandals and a surge in anti u.s. sentiment has depressed yum sales and profits. the issue, says american restauranteur bob boys says that kfc and pizza hut have gone from the place to be to just another place. >> consumers are looking at kfc has a quick meal and from a convenience standpoint. i wouldn't say it's very aspirational these days. >> reporter: so yum is experimenting with new menu items, like fried calamari and improving the dining experience. yum is reaching out to those up and coming consumers with pizza hut. in china, pizza hut is going more upscale. the company is renovating the restaurant to give them a sophisticated look and feel. still, yum faces fierce competition. from global chains like mcdonald's and local players,
too. the smartphone revolution in china cities has given dineners an endless menu of options with the click of an app. >> kfc got into delivery, and used to be kind of the only -- again, the only game in town. now with these apps, it basically brings to the home any restaurant in the market at any price range. there is now hyper competition, and so anyone -- any one restaurant can compete with the big boys. >> turning up the heat on yum. for "nightly business report," i'm eunicion in shanghai. we begin tonight's market focus. the nation's largest drug maker and costs associated with discontinuing a trial for a cholesterol treatment. the company reported lower profit for the quarter that missed estimates by a penny. revenue did see an increase,
though. shares ended the day down 2% at 31.07. an increase in crop exports at archer daniels mid land. the agricultural company expects that export momentum to continue into the next year, meeting a rosie outlook for profit margins. shares soared 7% to $46.75. and gannett which owns "usa today" is ending acquisition talks with the media company tronk, because terms of the deal were not acceptable. tronk is formerly known as tribune. according to bloomberg, gannett reported issues funding the nearly $700 million transaction. tronk shares plummeted 12% to 10.54. gannett off to 7.59. valiant is making a push to sell its stomach drug division to japan-based takeda.
the deal could be reached in the coming weeks. the report also added another bidder may be involved in the sale talks. valiant shares soared more than 33% on the day to $23.86. and bernie sanders speaking out once again against drug price increases. today the vermont senator criticized the price of humanalog saying why has the price insulin gone up 700% in 20 years? it's simple. the drug industry's greed. sanders sent out a second tweet attacking another medicine. saying, quote, a permanent solution that gives everyone who uses insulin reasonable access will require leadership and cooperation across many stakeholders, including manufacturers, pbms, payers and policy makers. shares of lilly off about 1% at
$72.98. if you're shopping for health insurance, open enrollment on the affordable care act's exchange begin today. this time, there are significant challenges. as we have been reporting, premiums are spiking and insurers pulling out of those exchanges. that's not stopping one startup insurance company. in colorado from launching its obamacare plan. bertha coombs reports tonight from denver. >> reporter: for startup insurer, bright health, colorado was the perfect place to launch a new affordable care act plan. >> one is it's a state that prioritizes health. people in colorado prioritize their health. number two, it's a regulatory political environment that's a proactive, positive, progressive. >> reporter: the former united health executive's timing is either precious ant or fool-hardy. nearly half of california enrollees will be in the market for a new health plan this year.
after united health and humana pulled out and rocky mountain health scaled back due to big losses. what makes bright health think they'll do better? >> we feel the model will be a drchter. >> reporter: they're partnering with the state's largest health system, sen toura health, as their sole network provider. the promise to consumers is better access and care within that closed network. >> what we're really focusing on is how can we help people connect with that individual provider. >> reporter: but the key is to get the pricing right, especially here. more people in colorado tend to buy their health insurance without aca subsidies. but 38% of the market, compared with about 15% of the market nationally. if they could attract younger, healthier people with those low premiums, bright health as a shot at keeping costs in line. >> geography matters in health care and we do have places that have better risk pools than other places. >> reporter: the startup hopes
to enroll 20 to 30,000 people, but says this year is about building a successful plan. >> how well do we operate? what's the customer experience? how does digital technology working work? it's really a full set of metrics that will be looking at to determine success for bright health. >> reporter: for now, their venture backers are willing to be patient when it comes to bottom line metrics, profits. bertha coombs, "nightly business report," denver. coming up, trash talk. can a gas-guzzling garbage talk be turned into a clean electric machine? ♪
garbage trucks. they weigh a lot, they stop, they start,y idle, they burn up a lot of fuel. and they're among the dirtiest vehicles on the road. now the co founder of tesla wants to make them cleaner and greener. aditi roy explains. ♪ >> reporter: this garbage truck to be the next big thing in the trash-hauling industry. all because of something you don't see and barely hear. inside the truck is a powertrain made by tesla co founder, ian wright. his company makes cleaner powertrains for what he calls the dirtiest vehicles on the road, garbage trucks, buses. >> they waste fuel.
by going to electric drive, we can save a vast amount of fuel and save a lot of money. >> reporter: wright his says electric powertrains are quieter, use 67% less fuel, and produce 63% fewer emissions. the powertrains cost $200,000, about half the price of a brand-new garbage truck. wright says customers can also save $40,000 a year in both fuel and maintenance costs. wroit sold 15 powertrains to a group which provides trash and recycling services to sonoma county. but there is competition. a private bay area company has been making all electric powertrains for google shuttle buses and chicago's trash trucks, among other clients since 2009. wright says his powertrain, fueled by a gas turbine, has advantages over a purely electric one. >> it's actually cleaner than pure electric, because the engine we use for the on-board generator burns cleaner than the average mix of u.s. power
stations so it's actually cleaner not to plug it in. >> reporter: wright speed just completed a $30 million deal to provide powertrains to new zealand and wright says it's working on a potential deal with mac trucks, a volvo subsidy area. i'm aditi roy. and that is "nightly business report" for tonight. i'm tyler mathisen. thanks for watching. have a great evening, everybody and we'll see you back here tomorrow evening. -"jacques pépin: heart & soul" is brought to you by...
for those who cook with heart and soul, we present a kitchen made with passion. introducing the completely reimagined suite of appliances from kitchenaid. you can see more at kitchenaid.com. oxo good grips -- thoughtfully yours. vine connections, proud importer of laposta, single-vineyard malbecs. argentina at your table. bertolli -- proudly crafting olive oil since 1865. -viva bertolli! -riedel, the wine glass company. -oceania cruises -- worldwide destinations, fine dining, personalized service. your world. your way. -i live on the shoreline in connecticut, but i visit my friend jean-claude regularly