tv Nightly Business Report PBS May 11, 2017 4:59pm-5:29pm PDT
>> announcer: this is "nightly business report" with tyler mathisen and sue herera. retail rout. macy's sales plunge deepens as americans abandon malls. the company warns the troubles could get even worse. leaders meet. why the u.s. will not discuss a very thorny economic topic with its biggest trading partners. doctors and data. do mammograms contain clues detectable only by computers to help find cancer earlier? meg terrell reports. those stories and more tonight on "nightly business report" for thursday, may 11th. good evening, everybody, and welcome. it looks like the magic is gone at macy's. the country's largest department store saw sales fall sharply in the first quarter and its
profits fall even more. as we told you yesterday, the retailer has been struggling for quite some time with declining mall traffic, increased online competition, and a race to the bottom discounts. investors did not like what they saw, sending shares tumbling to a nearly six-year low. this was the first earnings report for macy's new ceo. as courtney reagan reports, he has an even tougher job ahead of him than many thought. >> reporter: there are no signs of a turnaround in macy's quarter. sales have fallen for a ninth straight quarter. executives said there were no surprises in the quarter, although that's not the case for investors. even low expectations weren't low enough. still, the department store is reiterating its full year forecast, leaving ground to make up for the rest of the year. most analysts say macy's woes are not a read-through on the
consumer. u.s. consumers are quite healthy. department stores just aren't giving them what they want. >> we think the consumers are strengthening. this isn't a consumer issue. it's legacy versus forward retail. it's legacy versus value. department stores right now are not checking either of those boxes. >> reporter: jeff gannett took over the top job seven weeks ago. in his first tv interview, he said he was working on ideas to reexcite consumers. right now the top 10% of shoppers make up half of macy's sales. >> the notion of the store and the experience you have to put into it is different today and will be different in the future than the way it has been in the past. we're working on the next generation of stores, looking at smaller stores, putting more fashion in. we're adding experiences like food eateries. looking at the role of service. >> reporter: but is that enough? macy's has a decent online business and it's expanding its
own discount concept within stores, called backstage. executives say shoppers like it. and it is lifting sales without cannibalizing them in the rest of the store. but right now, it's amazon that's satisfying convenience for shoppers, and discount stores like t.j. maxx and outlets are giving consumers value. gannett says his head isn't in the sand, he sees the challenges and he's facing them. but investors are getting impatient. for "nightly business report," i'm courtney reagan. meanwhile the storied kohl's was a little different, seeing profits grow thanks to low inventory levels, higher store traffic, and its tie-up with under armour. that bet in athleisure did little to stem the falloff in sales, which sent sales 8% lower on the day. that's not all. dillard's stock was slammed after it reported a decline in quarterly revenue, and a similar story for nordstrom which posted a decline in same store sales,
its stock falling in initial afterhours trading. it was a dramatic week in washington topped off by the sudden firing of fbi director james comey by president trump. although the stock market did not react to the surprise move, investors have been following the potential fallout closely. today, in a nbc news exclusive, lester holt asked the president about his decision. >> he's a showboat. he's a grandstander. the fbi has been in turmoil. you know that. i know that. everybody knows that. you take a look at the fbi a year ago, it was in virtual turmoil, less than a year ago. it hasn't recovered from that. >> monday you met with deputy attorney general rod rosenstein. >> right. >> did you ask for a recommendation? >> what i did was, i was going to fire comey, my decision. >> you had made your decision before they came in the room? >> i was going to fire comey. there's no good time to do it, by the way.
>> because in your letter you said i accepted their recommendation. you had already made the decision. >> oh, i was going to fire regardless of recommendation. he made a recommendation. he's highly respected, very good guy, very smart guy. the democrats like him, the republicans like him. he made a recommendation. but regardless of recommendation, i was going to fire comey. >> the market reaction, as we've been reporting, has been muted to the recent events in washington. today the focus win wall street was on earnings and disappointing numbers from major retailers. that pressured the entire sector and the broader market. the dow jones industrial average dropped more than 100 points early in the session but ended down 23. nasdaq was off 13, and the s&p 500 fell five. inflation pressures are building in the economy. the producer price index, which measures price gains before they reach the consumer, rose .5% in april, exceeding estimates. that broad based gain helped
push the annual increase to its largest in five years. reports on inflation are being watched by the federal reserve as they consider whether to hike interest rates and when to begin unwinding the balance sheet. it also comes as the labor market tightens. new applications for jobless benefits fell last week by 2,000, so it remains well below the threshold associated with a healthy job market. mortgage rates inched hire this week. they remain near their lows for the year. the average 30-year fixed rate mortgage is now near 4.65%. the 30-year rate is anchored around that level. after spending a decade on the sidelines the housing market, millennials are finally doing what many thought they woulden would never do. they're buying homes, igniting what some call the next hot
housing market. mark, welcome. >> good to be with you. >> the thing we're hearing lately is those lower priced starter homes are few and far between. it seems like this would make it even tighter. >> yes, that's been the problem for quite some time. we've got a lot more people looking to buy a home. but there's not a whole lot of inventory for them to look at. >> one of the things that the journal story reported was that some of the big major national builders are starting to transition to those lower priced homes because they're beginning to see demand. even toll brothers, which is known for its $800,000 houses, has started to come down in price point a little bit, and others as well. are you seeing that? >> we're seeing that. and we're seeing that in a number of markets, particularly markets that are favored by millennials, a lot of those are in the south and in the west. but markets like houston and dallas, which have generally been affordable, had seen, up
until recently, most of the action at the higher price points. now we're seeing a lot more interest in building homes at lower price points. that's true in atlanta, nashville, raleigh, charlotte, orlando. they're all seeing a lot more interest in what's thought to be traditional starter homes. but there's one other catch, that is that land just about anywhere outside of texas has become very, very expensive. so it's very hard to build homes at those lower price points. >> what is the broader implication for the economy if millenials do continue on this path of deciding they want to become homeowners? i assume it means they're more confident in their prospects and the economy if they're willing to take on a mortgage. >> i think the improvement in home buying is really a result of the improvement that we've seen in the labor market. we've seen the unemployment rate drop, we've seen the number of involuntary part-time workers come down, and we've seen the
quit rate go up, which tells me folks are moving out of jobs they took because it was the only thing they could find and moving into something they hope to be more permanent. that means it's time for them to put down roots and look to purchase a home or townhome. i think this is the type of thing that typically happens early in an economic recovery. i'm glad to finally see it happening. but it has powerful carry-through to other parts of the economy. when you buy a house, you buy things to go in it. >> oh, yes, you do. >> and a lot of stuff is made here in the u.s. >> we'll are watching home good stocks as a result of that. thanks, mark, we appreciate it. overseas, the bank of england cut slightly its outlook for growth in the uk to just below 2% this year. governor mark kearney warned 2017 will be more challenging for british households because wages won't be able to keep up with rising prices. but he did say that growth overall could pick up if the government secures a smooth exit from the european union.
meantime, the u.s. treasury secretary and the finance ministers from six other advanced economies are meeting to discuss some of the most pressing global economic issues. but there's one key topic that's proving tough to talk about. our report is from italy tonight. >> reporter: the world's most powerful economic officials are gathering here on the southern coast of italy in the industrial port town of bari. security is tight as finance ministers and central bankers from the g-7 countries hash out their differences, build relationships, and try to find common ground. but one of the most controversial topics of all is not on the table. trade. that's because back in march, treasury secretary steven mnuchin refused to commit to a statement that defended the benefits of free trade in his last meeting with our economic allies in germany.
here at the castle where the g-7 is taking place, officials want to avoid an embarrassing repeat of what happened in germany, so they did not put trade on the agenda. that's called a red flag, a sign of how tough the talks will be. it will be up to president trump to tackle that discussion when he comes to italy in a few weeks. mnuchin likely won't be able to avoid the issue of trade entirely. it could come up during his one-on-one meetings with other finance ministers. he held his first one today, almost as soon as he arrived. it was with italian finance minister paduan and lasted a half hour. here's what will be on the agenda. inequality and how to generate faster growth for more people. cyber security and disrupting terrorist financing networks. the stability of the financial systems. and of course, officials here will talk about taxes. there is widespread frustration over u.s. companies, especially in the technology sector, shifting their profits to
countries with the lowest tax rate. italy has been particularly aggressive about cracking down on this behavior. it settled with google for over $334 million in back taxes and reached a similar agreement with apple two years ago. but italy isn't the only country tightening its rules. france now requires airbnb to collect a tourist tax. and the european union has been locked in a court battle with apple for years, over $13 billion in back taxes. almost every official here agrees u.s. companies should pay more. the fight is who it should be paid to. the g-7 meeting officially kicked off this evening with a formal dinner to welcome everyone to bari. the discussions here will help set the tone for the president's visit later on this month. for "nightly business report," i'm elon muy in italy. ahead, why the airline industry might be bracing for new trav
wells fargo willcutting pro billion, on top of previously announced cost cuts of roughly the same amount. the company plans to use the savings to invest in technology to replace an aggressive sales culture. bank executives say the fallout from the fake account scandal of last year is accelerating these changes as the industry undergoes a shift. ford faces questions about where that company is headed along with the slumping stock price. shares of the automaker are trading near a five-year low.
even the chairman admits he's frustrated by the stock that has stalled. phil lebeau has our story. >> reporter: ford is the tale of two companies. its current business, selling trucks, suvs, and cars, just posted its second most profitable year ever. while earnings will be lower this year, business is still strong. then there's the other ford. the one spending heavily developing autonomous drive cars, electric models, and mobility solutions. ceo mark fields calls it one foot in today, another placed in tomorrow. and on the company's annual meeting webcast, he said the investments in the future of transportation will eventually pay off. >> we're going through this transition. we're embracing it. i think you'll see a lot more exciting news on this to come. >> reporter: fields may be excited about ford's future, but investors are not. ford's stock now hovers around $11. even bill ford, chairman of the company, admits he understands how investors feel.
>> we're as frustrated as you are by the stock price. and a couple of people have said, does the ford family care about the stock price. the short answer is yes, a lot. >> reporter: that's because the ford family owns the majority of the voting stock. so they profit when ford shares go up. is mark fields in danger of losing his job? no. he still has the confidence of bill ford and the board of directors. but fields' plan for the future of ford is facing greater scrutiny, especially since it's unclear when autonomous drive and electric vehicles might charge up the bottom line and shares of ford. phil lebeau, "nightly business report," chicago. >> read more about the frustrations surrounding ford's stock. head to our website, nbr.com. emirates air saw its profit plunge more than 80% for the year ended in march. the dubai-based airline was hit by greater demand for travel in what it calls destabilizing
events, including president trump's policies. emirates cancelled its dividend payment for the first time since 1996. the airline's chairman calls it one of the most challenging years to date. airline executives are reportedly meeting with homeland security officials to discuss the possibility of expanding a ban on bringing laptop computers and other large devices as carry-ons. the ban would extend to planes flying to the u.s. from europe. currently there are more than 350 flights a day from europe to the u.s. back in march, you may recall restrictions on electronic devices larger than a smartphone were put in place on flights from eight middle eastern and african countries. so with an expanded ban were to happen, how would it impact the airline industry? michael boyd is chairman of the boyd group and he joins us. mr. boyd, do you expect there could be a ban on laptops or ipads in the cabin on
intercontinental flights? >> absolutely. it could happen. if they think there's threat. and i can't find where that threat is, i can't get my arms around this one. but if they feel there's threat with someone using an ipad or a laptop in the cabin, yeah, they could ban them everywhere. >> what about in the hold? there's been some concern if they're checked with the luggage, it's equally a danger. >> if it's going to be used as an explosive device, whether it's in the cargo bin or in the economy cabin, it's dangerous. i think what they're focusing on is some use of this device that could be negative. and i don't get -- i just don't understand what that might be. >> if it were to happen on intercontinental flights inbound from europe to the united states, first, what's to cause it not to happen on all flights within the united states? and i point out that some airlines, notably united, have gone to in-flight entertainment
that realizlies on your persona either laptop or ipad. >> exactly. i don't understand what the rationale is. because again, as you just pointed out, a lot of ifes, in-flight entertainment systems, are based on me using my device and that means that won't be there. i just don't get a clear picture of what the threat is. we also have the pacific, we also have latin america. why just from europe? i don't got i t it. >> let's take it further and look at the cost airlines might incur. business travelers use their laptops frequently on flights, long or short, to do work. and will it cut back on those very lucrative business travelers, do you think? >> i don't know if it will cut back. it will certainly make it a very difficult situation. it would for me if i didn't have my laptop on an eight-hour flight. i think that might have some diminutive effect upon air travel going forward. i just don't understand, it's
not bidirectional, or one way from europe. >> or the airlines could allow you to rent a laptop, that would be one way around it, i suppose. a j.d. power survey reported yesterday indicates that we have rising mechantrics on things th affect consumers, those metrics are higher but it doesn't seem to square with all the rage we see on viral videos. >> it's nice counterbalance to being convicted by ipad or iphone video. it's a nice counter. i'm not so sure the metrics are all that real world as we need to be. somebody asked how the crew was on a flight three months ago, i don't remember. it's okay, but it's more anecdotal than anything that really indicates better. ontime performance is not better, by the way. it's about the same as it's been
for the past 20 years. i don't get where they're getting these conclusions. >> and some of that data came out before this recent flurry of incidents involving the airlines. michael, thanks, always good to see you, michael boyd with the boyd group. verizon outbids at&t for straight path communications. verizon will pay more than $3 billion to acquire the wireless spectrum holder, trumping rival at&t's offer by double. the takeover will help verizon grow its spectrum portfolio for the development of its 5g wireless in the casnetwork. straight path plummeted 20%. investors were hoping that at&t would come back with a higher bid. the drug maker tevla's
shares rose 32%. the nfl has entered into an expanded partnership with twitter to provide the social media platform with live programming five days a week during football season. it doesn't include games but twitter will stream pregame coverage and other content year-round. twitter shares were down to $18.39. one of merck's key medicine received approval from the fda last night to treat advanced lung cancer in combination with other chemotherapies. the drug is already approved to treat other types of cancer. the company's ceo says he's seeing positive results. >> we're studying keytruda in almost 500 clinical trials. that's unprecedented. we're studying it across 30 tumor types. we're encouraged by data that we see in 20 tumor types. for us, it's all about making sure that we do the right studies, both mono therapy and in combination, to make the drug broadly available for patients who need it.
>> shares rose marginally to $64.63. the gun and ammo company vista outdoor reported a decline in sales and profits, saying it experienced an unprecedented drop in demand for its weapons and other products following donald trump's presidential victory. vista outdoor also gave full year guidance that was below street forecast but said it expects that excess inventory caused by the demand drop to stabilize, and that comment gave investors hope that the slump in gun sales may be nearing an end and shares rose more than 4% to $21.49. coming up, using computers to detect a type of cancer earlier than the human high is capable of. the future might be closer than you think.
yesterday we told you how artificial intelligence could one day revolutionize the field of medicine. tonight meg terrell looks at how computers could help detect a certain type of cancer. >> reporter: this mit professor teaches computers how to learn. her work focused on ancient languages until a breast cancer diagnosis three years ago. >> i realized today we have more sophisticated technology to select our shows on amazon than for treatments for patients. >> reporter: she set out to change that, using her expertise in artificial intelligence and machine learning. in collaboration with doctors at mass general hospital, her group is training computers to analyze mammograms. the hope, detect signs of cancer earlier than the human eye is capable of.
>> looking back, was there something in these very complex images that would provide a hint of cancer development? for a human, it's hard to quantify the change. but for a machine which looks like millions of these images, this should really help people to learn what are those early signs. >> reporter: experts say artificial intelligence will change the practice of medicine, starting with diagnosis. these doctors found a path to ai a year ago after winning a competition to program computers to detect cancers. their program exceeds the accuracy of a pathologist. >> the combination of human plus ai in this example reduced the expert's error rate by 85%. that was an exciting finding.
for certain tasks, it's getting very close. and combining the two gives you the optimal solution. >> reporter: path ai is working with tech company phillips to advance the technology. it's an increasingly crowded field as pharmaceutical companies partner with tech companies and startups. the market is expected to grow to more than $6.5 billion in 2021. >> basically right now it's getting validated. it's ready now to move on to how we look after patients. so it's just right at a transition from validation to the initiation of clinical practice. >> reporter: she hasn't given up her focus on computer language processing. only now she's teaching computers how to read health records. the goal, to help patients make more personalized treatment decisions and improve the practice of medicine. >> now after being a patient, i very strongly feel that, you know, it's my duty to go and
change it. that's what i'm trying to do. >> reporter: for "nightly business report," i'm terrell. >> to read more about how artificial intelligence is changing medicine, you can head to our website, nbr.com. that will do it for us on "nbr." i'm sue herera. thanks for joining us. >> thanks from me as well, i'm tyler mathisen. have a great evening, everybody, and we'll see you back here tomo.