tv Nightly Business Report PBS May 4, 2017 4:59pm-5:30pm PDT
>> announcer: this is "nightly business report" with tyler math make no mistake, this is a repeal and a replace of obamacare. make no mistake about it. an historic vote. the house passes a bill to replace the affordable care act. who wins, who loses, and what happens next. commodity crush. oil prices plunge. gold hits a six-week low. is this the weak link in the market rally? second life. why boeing's souped-up super hornet is gaining renewed attention in washington. this is "nightly business report" for thursday, may 4th. good evening, everyone, and welcome. the gop cheered, the democrats
jeered, when the republican-controlled house of representatives passed a new version of its health care bill, overhauling, some would say scrapping the affordable care act and fulfilling a major campaign promise of the gop and president trump. the margin of victory was slim but it was enough and it caps weeks of negotiations following the failure of an earlier gop version. in a nutshell, the bill eliminates the mandate requiring individuals to carry health insurance and some businesses to provide it. it creates age-based tax credits to help people pay for coverage. it lets states seek waivers for covering preexisting conditions and some benefits deemed essential under obamacare. it includes funding for those considered high risk and it overhauls medicaid's funding formula. house speaker paul ryan applauded the chamber's vote but says it is not a done deal yet. the legislation now makes its way to the senate where it may
and probably will undergo substantial changes. >> we still have a lot of work to do to get this signed into law. and i know that our friends over in the senate are eager to get to work. [ laughter ] they are. we're going to see that work through. you know why we're going to see this work through? because the issues are just too important. the stakes are just too high. >> despite the house passage of that bill, a number of questions remain about subsidies, preexisting conditions, and where the insurance companies stand. bertha coombs decided to take a look. >> reporter: congressional leaders and the white house celebrated the passage of the american health care act, saying by repealing affordable care act regulations, they will be able to bring down premium costs for americans. >> people are suffering so badly with the ravages of obamacare. and i will say this, that as far as i'm concerned, your premiums, they're going to start to come down. >> reporter: one of the ways the house bill does that, letting
states opt out of aca insurance benefit requirements to allow the sale of less costly plans. for insurers, that adds new complexity. >> at this point there's so much uncertainty, we're still talking about state waivers. it's not clear what the states are going to do as a consequence of that. >> reporter: the bill also gives states the option of taking those with preexisting conditions, dropping coverage, and putting them in high risk pools, providing money through 2026. that funding could cover about 600,000 people a year. but in texas alone there are 200,000 with preexisting conditions that would qualify. the former chief of healthcare.gov says it wouldn't be enough. >> there is risk sharing that exists right now in the aca. $15 billion of that is dedicated
to it. we don't know how big the number of states are. if there's two states, there's more than enough money. if there's 15 states, there's nowhere close to enough money. >> reporter: the new bill would replace that with 2,000 to $4,000 a year based on your age. it doesn't address $12 billion in obamacare subsidies. that's key to whether insurers will offer coverage in 2018. >> if that gets cut off, a large percentage of them might leave the market. >> reporter: the health insurer trade group says the industry needs stability now. they say they will work with the senate to improve the bill,
starting with enhancing the tax credits for those in areas with higher health costs. bertha coombs, "nightly business report," new york. on wall street, initial reaction to passage of the bill was mixed. health insurance stocks moved mostly higher except for anthem which has some of the greatest exposure to the exchanges. hospital stocks finished mixed but got a slight lift on news of anticipation that the gop would craft its own bill. ceos meekins is here to talk about the potential winners and losers. president trump said this business is really complicated, and boy, is it ever. i'll ask you for some clarity here. let's start with hospital stocks. if something like what was passed by the house today eventually becomes law, are they winners, losers, better off,ers
with worse off? >> they're losers in the long term. the cuts to medicaid would negatively impact hospitals. individuals having a 6, 8, $10,000 hospital bill, we've seen in states like ohio individuals are beginning to walk away from that debt and hospitals have had to eat that bad debt. which is why names like hca, tenet, some others in the hospital space, are all going to be negatively impacted in the long term. in the near term, medicare conditio conditions. hospitals c good over the next 18 months. but over the long term, really they really will be negatively impacted. >> and of course we don't know what the senate will do to this particular piece of legislation. it's assume it stays primarily the way it is now. do you think some of the pharma names might benefit?
>> yeah, pharma got a massive tax cut as part of the house bill. $30 billion over ten years for the branded pharmaceutical industry. so names like pfizer and gilead and eli lily will benefit on their bottom line each year with hundreds of millions of dollars in tax cuts. it's a positive for them. additionally, not a single provision was inserted to deal with drug pricing. that's a big deal with a lot of americans having concern over rising drug costs. >> what about the medical device makers, the medicinetronics ame like? >> the medical device tax, $24 billion over ten years, is eliminated. at the same time, because hospitals oftentimes negotiate and make payments for medical devices, the downward pressure on hospitals could actually extend further downstream to the medical device and the health care i.t. companies. >> what do you think the fate is of this bill?
there were several times where we thought that perhaps they didn't have the votes. they finally did have the votes. will we see a replay of this as it goes to the senate, do you think? >> i think we're at halftime in the game. and the second half, as is the case in most playoff games you've seen, whether hockey or the nba, teams tend to play a little harder when it gets serious. so in the second half i think we're going to continue to see these fights. i think the bill is going to be dead eight our nine times before it passes. but like a cat that has nine lives, this thing has the potential to get done. i think by independence day you could see the senate move on something. >> we neglected to ask you about the insurance companies, the big insurers that have been fleeing the obamacare exchanges. what's going to happen to them? quick. >> sure. in the nongroup market, the names will get better, because the tax credits -- this bill benefits people under 40, hurts people aged 50 to 65. the medicaid-exposed names could
be negatively impacted if the $880 billion in medicaid cuts go through. >> chris, thank you very much. also on capitol hill, a house panel advanced a bill to overhaul wall street regulations. the house financial services committee voted along party lines to undue the group of laws known as dodd/frank, which lawmakers said choked lending. democrats say the laws protect american consumers. the drama in washington translated into relatively calm waters on wall street today. energy stocks dropped which capped some of the gains as investors looked ahead to tomorrow's monthly employment report. the dow jones industrial average off six points at 20,951. the nasdaq rose two. and the s&p 500 rose 1.39. that's about as flat as it gets, sue. >> you're right on that. that drop in energy stocks
was due to a plunge in the price of oil which fell to its lowest level since november, because of renewed concerns that opec may not take additional steps to reduce the supply glut. that pushed domestic crude down 5%. other commodity prices have also come under pressure in recent weeks. bob pisani takes a look. >> reporter: on the surface, it looks like an all clear for stocks to hit new highs. earnings are improving and the global economic outlook is improving as well. but there's two big flies in the ointment, china and oil. china is slowing its spending on growth initiatives. they're also tightening monetary conditions and there's talk of regulatory scrutiny. and oil has dropped to a six-month low, good news for consumers but not for oil companies. you put these two together and you have a commodity rout. oil down 10%, iron ore down 16%, nickels down 10%.
oil stocks as well as metal and mining companies are all down double digits this quarter. not surprisingly, analyses have begun taking down earnings estimates for oil companies. we're starting to see oil stocks show up on the 60-week low list. schlumberger joins the list today. how big a problem is this for the overall market? for the moment, stocks remain favorable. traders are betting that the chinese will back off from their recent slowdown as we get closer to october. that's when the chinese leadership is scheduled to turn over. for "nightly news," i'm bob pisani at the new york stock exchange. ahead, the retail rack. why it's not just the shift to online shopping that is leading to a rise in brick and mortar bankruptcies.
late today, cbs saw its profits drop, although helped by higher subscription fees. the company has been focusing on streaming services as more and more advertisers follow viewers online. and the big concern for the industry broadly is the rise in cord cutting. meaning a growing number of consumers who no longer want to pay for cable tv. and one way or another, cable television subscription fees work their way back to content providers, station owners, and networks like cbs. julia boorstin has more. >> reporter: the pay tv business suffered its worst first quarter ever, according to a new report. even if you account for additions from smaller skinny bundles such as sling tv and
directv, analysts say the pay tv business still lost half a million subscribers. >> it's not that these customers are leaving and going to virtual over the top players. those guys were weak too. so the content category was also down by about a percent and a half. for any individual conned plate player, they're doing worse. >> reporter: viacom's ceo acknowledged softness to subscriber numbers for the quarter, saying the fact that its most popular channels are not included in the popular skinny bundles is having an impact. and there are growing concerns that advertising gains may not be enough to offset ratings declines. time warner reported a 2% drop in ad revenue. viacom reported 1% drop in advertising for the quarter.
at the millekin conference on wednesday, les moonves was bullish, saying cbs and its content are everywhere, from its own cbs all access service to skinny bundles and over the top streaming services like hulu's new bundle which launched this week. >> we think it's the wave of the future. you have to be everywhere, no matter how you want to get your content, we'll be there for you. >> reporter: with disney reporting earnings on tuesday and fox on wednesday, we'll see if those media giants can reassure investors. for "nightly business report," i'm julia boorstin in los angeles. the media industry isn't the only one going through a transformation. so is retail. 2017 is on track to be a record setting year for bankruptcy filings and store closings. but if consumers are by many measures spending, why are the retailers hurting so much? courtney reagan explains. >> reporter: retail may be at a tipping point. more shopping is shifting online in general, and to amazon
specifically, which is hurting store sales. consumers are spending more on travel instead of clothing. and investing in their homes rather than adding to their closets. the shifts have been happening over time. but after the recession, mall landlords gave concessions like lower rent or better lease terms, hoping to prevent ghost malls. several years later, as retailers weakened, equity firms stepped in, injecting cash to help prop them up. those owners provided the financing, but the interest payment on the debt is due now, which is the ultimate reason many of these retailers are closing for good. in fact half of the retailers filing for bankruptcy this year are highly leveraged with debt from private equity, including payless, the limited, and west seal. >> it's no different than a consumer who maxes out his credit cards. once you've maxed out your ability to borrow, your degrees of freedom if you should
encounter any sort of a crisis are much fewer and more far between. >> reporter: the debt strategy works when sales are growing higher. but as sales fall, there's not enough cash to pay back what's now due. making matters worse, as retailer sales begin to fall, some private equity firms want to make sure to get their money out. so they add even more debt, requiring the retailers to pay them special dividends. >> i think what you're looking at is really death by a thousand cuts. they just have less margin for error. so any time there's a little bit of a dip in the business, they -- it gets harder to pay their interest and gets harder to satisfy the rest of their obligations. >> reporter: and now there's less time to figure it out than in the past, because of major changes to bankruptcy laws in 2005. retailers now only have 210 days max to decide which stores to close and how to restructure to emerge from bankruptcy. prior to the law change, it wasn't uncommon for a retailer to need 18 months to emerge from
bankruptcy with a healthier business. higher leveraged retailers filing for bankruptcy now turns into liquidation and not reorganization much more frequently. for "nightly business report," i'm courtney reagan. anheuser-busch inbev brews up profits. the world's largest brewer said better than expected earnings were largely helped by the integration of rival sab miller. inbev said its sales of michelob ultrahelped offset declines for bud, the king of beers. it's starting to see increasing sales in brazil. shares rose. adidas reported higher earnings and revenue as the apparel company saw a pickup in its reebok brand. the company confirmed its guidance for the year.
ceo says he's happy with the latest results. >> we've built a very strong pipeline over a set of years, with a very clear view of where we're going to take the brands. america grew more than 30%. in china we grew 31%. in the two biggest sports markets in the world, we're by far outagreeigrowing the market. >> adidas shares rose fractionally. kellogg posted a higher than expected profit, but they saw overall sales fall as weakness in the company's north american and european markets dropped. lower sales in the u.s. and some foreign markets impacted cosmetic sales. the company says it sees sales growing in the low single digits this year. shares plummeted 22% to $3.62.
burger chain shake shack disappointed with its weaker than expected same store sales. the company cited softer foot traffic and cold weather during the quarter for that miss. shares initially fell in afterhours trading and ended the regular session down more than 2% to $33.12. you may have heard about the scam spreading through gmail yesterday. a legitimate-looking e-mail that if you clicked on it, could steal your personal information. it had a lot of people worried. andrea day now on what you need to know. >> reporter: call it a classic phishing scam. if you opened your e-mail, it looked like a friend or someone you work with was trying to share a google doc. our producer got two. here they are. it was just a trick. cyber criminals were trying to steal your information by fooling you into opening the document. if you did, you were asked to give permission for it to access your account. and from there, it went out to all of your contacts.
right now, it's not clear what kind of information attackers wanted to grab. google says only about .1% of gmail users were compromised. and the bad guys were shut down within an hour. what does that mean for a company like google? >> the fact that google is so big, they were able to see and take action on it pretty quickly. any time you offer services to the internet at large, there can be vulnerabilities. that's usually involving tricking users to compromise themselves. >> reporter: and according to google, even if you fell for the attack, there's nothing you need to do right now. you can always check out any apps that are connected to your account by going to google security, checkup. experts say it's always a good idea to keep changing your passwo password. and don't click on anything unless you're 100% sure. for "nightly business report," i'm andrea day. coming up, a battle for the sky. >> reporter: i'm morgan brennan in st. louis, missouri. this plane is part of boeing's fighter jet family.
we'll talk about the future of the f-18 program and the fight for defense dollars, coming up on "nightly business report." apple is investing in advanced manufacturing jobs. in an interview with cnbc, sea particular come told jim cramer the company is creating a $1 billion fund aimed at bringing those type of jobs to the u.s. >> a billion dollars of our u.s. money which we have to borrow to get, that's another whole topic, but we're really proud to do it. and by doing that, we can be the ripple in the pond. because if we can create many manufacturing jobs around, those manufacturing jobs create more jobs around them, because you have a service industry that
builds up around them. and we'll be announcing the first investment from the fund later in the month of may. >> mr. cook said apple has already created 2 million jobs in this country. and as we reported earlier this week, apple has a cash pile of more than $250 billion. the u.s. military is in need of fighter jets. and the battle to fill that demand is heating up. morgan brennan is at boeing's f-18 production line in st. louis. >> reporter: it's been the backbone of naval aviation for four decades. and now f-18 is getting a second life. >> we've always thought that the navy buying additional super hornets made sense, because they need airplanes to last to the 2040s. >> reporter: the navy disclosed that two out of every three f-18 planes are out of commission, awaiting repairs. they've been flown hard in a
post-9/11 world which has resulted in a serious fighter jet shortfall. this growler is the jamming plane outfitted for the super hornet, both part of the f-18 family and both assembled here in st. louis. boeing says it's ready to make more. >> we're producing two sets per month, growlers and hornets. we can do that going back up to three or four per month in the early '20s. >> reporter: there is an allotment for 14 new super hornets. the navy is expected to buy at least a hundred more in 2022, assuring dominance for decades to come. working on a new version for future orders. >> the block 3 now is going to keep us several steps ahead of what we project is the future threat. >> reporter: after a 20-year career with the navy, this pilot
test flies them as they come off the assembly line. he says it's imperative that future f-18s have more advanced capabilities. >> the whole idea is not to just be able to win today's battle. it's win the future battle. because an aircraft has to have the capabilities to stay ahead of the future threat. >> reporter: boeing argues the administration should buy more super hornets and less of the f-35s made by rival lockheed martin, a strategy that would save the pentagon tens of billions of dollars. still, the navy will need both fighters in its air wing, even as competition for future defense dollars heats up. >> the f/a-18 is the legacy fighter. and the f-35 is the new fighter. so as you would expect, the new fighter is going to have some improvements over the leg acy
fighter. it will be stealthier and have a longer range. but those facts come at a price. i think president trump has made it very clear he's looking for the lowest price possible. >> reporter: the super hornet currently costs about $75 million. an advanced version will add $3 million to the price. by comparison, a naval variant of the f-35 is about 120 million. whatever the final mix, the navy and the contractors involved say the planes will ultimately complement each other. enabling the military to better keep america safe. for "nightly business report," i'm morgan brennan in st. louis, missouri. finally tonight, may 4th is "star wars" day as in "may the 4th be with you." the day to celebrate one of the most successful franchises in movie history. since 1977, worldwide gross at the box office, more than $7 billion. according to "fortune," dvds and
digital downloads reach $16 billion. video games, more than $4 billion. then there's all the other stuff like intellectual property, books. they took in more than $3.5 billion. for a total of nearly $42 billio >> i think we both had some of those toys in there. >> oh, yeah. that will do it for us on "nightly business report," thanks for joining us. i'm sue herera. >> i'm tyler mathisen. see you back here tomorrow.