tv Nightly Business Report PBS June 26, 2017 5:00pm-5:31pm PDT
this is "nightly business report" with tyler mathisen and sue herera. >> health care impact. how would the senate bill affect the uninsured? what about premiums and the deficit? these questions answered. in the spotlight. why an american manufacturer finds itself at the center of the deadliest london fire in decades. too far? is the minimum wage hike in seattle hurting the very people it was supposed to help? those stories and more tonight june 26th. business report" for geechood evening. to be here. the numbers are in. key questions about the senate health care bill have been answered. the nonpartisan congressional budget office estimates the number of people who would be uninsured would increase by 22
million by 2026. that's compared with the number under the current law. the scoring also found that premiums would rise substantially before they fell. and that the legislation would decrease the budget deficit by more than $300 billion, principally via federal medicaid cuts. these numbers will be analyzed and then some by senators ahead of a potential vote on the legislation later this week. health care stocks were mixed on wall street today as were the major averages as you see there. the dow jones industrial average added 14 to 21,409. nasdaq off 18 and the s&p 500 rose fractionally. and health care, of course, isn't the only thing investors will be watching this week. bob pisani looks ahead. >> reporter: it will be a busy week for the markets on economic news, earnings and fed
officials. fed chair janet yellen speaks tomorrow on london on global economic issues. it's been rough for economic news recently. the news in the second quarter has not been much more positive than the first quarter. goods today were weaker than expected for may. look at consumer confidence for june tomorrow. confidence has been climbing all ye though it did slip a bit in may. we'll also get personal income and spending more may. income has been flat. spending has been trending up this year. the health care industry from insurers to hospitals will be watching what happens in washington, a vote by the senate on its health care bill may become thursday. general mills, nike, early in the second quarter for earnings on the 11 companies on the s&p 8 of the 11 have beaten the estimates. that's higher than normal. more importantly, analysts seem encouraged by what they're hearing from early reporters. only 4 of the 11 companies reporting have seen earnings estimates for the third quarter go lower after reporting. that's a good sign. for the past several years,
analysts generally lowered their future earnings estimates after company reports. all right. it's too early to call this a major trend, but if it keeps up the bulls will seize on it as another reason to keep the rally going. for "nightly business report," i'm bob pisani at the new york stock exchange. and as investors wait that possible health care vote on thursday, senate republicans have issued a revised draft of their bill. the new provision would penalize consumers for not keeping their plans by imposing a six-month waiting period before they could reenroll. the hope is is that that would incentivize younger healthier americans to maintain their health insurance. and also in washington today, the supreme court said it would allow partial implementation of the president's temporary travel ban affecting people from mostly muslim nations. the jus ti closer con to the case in october when they'll hear oral arguments and the business world will be watching. hampton pearson has our story. >> reporter: the supreme court
revival of the trump travel ban on travelers from six muslim majority countries is a reversal of fortune for president trump who had been on the losing end of several lower court rulings that blocked his original executive order issued last march. the president released a statement calling the high court's action a clear victory for our national security. he said it allows the travel suspension for the six terror-prone countries and the refugee suspension to become largely effective. the justices issued an order that allows the trump administration to implement part of a temporary ban. it cannot be enforced, the high court says, against travelers, quote, who have a credible claim of a bona fide relationship with someone or some organization in the u.s. three of the court's more conservative justices, clarence thomas, neil gorsuch, samuel alito said the court remedy will prove unworkable and invite a flood of lawsuits. >> this is going to be a lit the bit of a logistical nightmare because authorities are now
going to have to decide when someone aps for a visa from one of these six muslim countries does this person have enough of a connection to the united states? >> reporter: the travel industry is already raising concerns. the ceo of airbnb on twitter saying a travel ban has always been bad policy. trip adviser still concerned about the impact on refugees. and the chief executive from royal caribbean cruise line urging caution. >> travel business, you don't like any kind of a travel ban. >> reporter: the travel ban is part of a bigger struggle between the trump administration and business. some of the same high-tech firms that met last week with president trump at the white house have filed briefs saying the travel ban hurts u.s. competitiveness and there were reports apple ceo tim cook told president trump technology employees are nervous about the administration's approach to immigration. in addition to the travel ban, when the justices return this fall, already on the calendar
are issues concerning gay rights, voting rights and possibly overturning whistleblower protections enacted as part of the dodd/frank financial reform laws. i'm hampton pearson, "nightly business report" at the supreme and at the white house, president trump welcomed the head of one of the world's fastest growing economies. he met with india's prime minister and the two agreed to work closely on economic and security matters. india is also a market that many american ceos would like more access to. seema mody takes a look at the economic ties that bind the two countries. >> reporter: prime minister modi's first face-to-face meeting with president trump will be more about relationship building and establishing trust as india has been somewhat absent from this administration's foreign policy discussions that have been dominated by china, russia and mexico. this weekend, modi received a warm welcome from corporate america. jeff be strkszos of amazon, and
ceo tim cook coming to d.c. to meet with the indian leader. can we ask you questions about how the meeting went? >> it was fantastic. >> reporter: india represents a significant economic opportunity for tech companies in particular, with 277 million internet users and mobile growth on the rise making india the number-one market for android. the guest list of business executives wasn't limited to the tech sector. ceos of walmart were on hand. these consumer-facing brands hoping to capitalize on india's population of more than 1.3 million. half of which are under the age of 25. as modi has prioritized moving india away from a cash-dependent society to a banked one, companies like mastercard and jp morgan see opportunity. what was modi receptive to? >> he's always receptive, very open, very smart, very receptive, very action-oriented. >> reporter: biggest sticking point you would say? >> i don't think there was a sticking point per se. >> reporter: during his visit modi will look for answers as to
how india fits into trump's agenda. if he isn't confident india will be prioritized, that could post challenges for american companies looking to invest there. >> i think there's a lot of recognition of how much has been done in the last three years but how big the agenda still is in order to move things, to move aside obstacles to really promote investment in india. >> reporter: today's meeting with trump will be followed by a cocktail reception and a working dinner making modi the first foreign head of state to dine at the white house with the president. perhaps, a nod to the importance of this growing alliance going forward. seema mody, washington. illinois is on track to become the first state to have its credit rating cut to junk status. such a move would deepen its deficit and cost taxpayers more for years to come. s&p global rating says it could lower illinois' credit worthiness if lawmakers fail to agree on a state budget for the third straight year. a junk rating would mean the state would have to pay a higher
interest rate when it borrows money, for things like building roads or refinancing existing debt. oil prices rebounded a bit today after falling to seven-month lows last week. as we reported, that decline was due to supply concerns. there's simply too much of it. drilling activity in the u.s. is climbing undercutting recent opec production cuts so what might that mean for stocks since equities tend to follow the move in oil prices? we take a look. >> reporter: when oil prices take dramatic tips, investors worry that stocks will follow, but some say the market is changing and so is that trend. it's happened before over the last decade, we've seen the price of oil and stocks decouple twice but for different reasons and that's the key. in 2008, oil was at 1.45 as stocks were sinking. it took a while but demand issues eventually took the crude price down with stocks. in 2014, crude started another collapse from $107, but stocks have managed to move steadily higher.
that time it was a supply-driven story. the shale revolution. demands were not growing fast enough to absorb supply growth but it was relatively robust. >> stocks go up as crude oil goes down. stocks go down as crude oil goes up. it's immensely understandable given the fact that energy is such an important input into the production of almost anything and everything. >> reporter: now it looks like it's happening again. oil prices have fallen more than 20% since their january highs, putting the commodity in a bear market. while the stock bull run carries on. lower for longer may not be a phenomenon, good for consumers. it's good for companies that use crude. not great for big oil, but most companies have managed to bring costs down to carry on. lower prices may throw a punch to gdp, but you could argue that would keep the fed off balance
and deter fmore tightening this year balance, a long protracted bear market in crude. you could get a small rally intraday, a small rally intraweek. you could get a month-long rally. is it crude oil prices can get much above wti, past $50 a barrel again? i suspect probably not. >> reporter: also in 2008, energy companies were about 15% of the s&p. now they're about 6%. so the earnings impact is less than it was before. the general consensus now that crude can still fall, but it won't take the market down with it. for "nightly business report," i'm jackie de-angeles. still ahead, why bmw's biggest plant in the world is about to get a little bit bigger. >> reporter: bmw is expanding in south carolina. how many jobs are being added? how much money is being pumped into this plant? and what does it mean for bmw in the united states? i'm phil lebeau. that story coming up on "nightly business report."
shares of arroni came under pressure today after the manufacturer said it will stop selling a type of panel suspected to have contributed to the spread of that deadly fire through a london apartment building a few weeks ago. arconic, created by alcoa's separation into two companies, saw its stock fall about 6%. morgan brennan has more on this latest development. >> reporter: it was the worst fire in london in decades. the deadly blaze at grenfell tower that's left at least 79 people dead. >> there are two points of priority for me, the building, but also the internal aspects of that building. we're working with experts, and
the inspiration behind the coating. how it was affixed to the building. preliminary tests on the installation samples collected from grenfell tower show that they combusted soon after. the initial tests also failed the safety test. >> reporter: as investigators assess the damage and discuss possible manslaughter charges, one supplier has been thrust into the spotlight. arconic made the aluminum cladding in question. cladding widely acknowledged as combustible and for that reason considered even by the company, itself, to be a fire risk in high-rise construction. for its part, arconic saying, "while we public general usage guidelines, regulations and codes vary by country, need to be determined by the local building code experts." it announces it's halting global sales of the panels for use in
high-rise applications immediately. while the fire was started by a refrigerator, investigators believe the cladding and adjoining insulation which was not made by arconic contributed to the quick spread of the deadly blaze. while such materials are not allowed on high-rises in the u.s. and many other parts of the world, the panels had been used throughout the uk. as officials assess the safety of 6600 buildings across britai, dozens turned up similar cladding and failed safety tests. analysts say it has potential implications for the company formerly known as alcoa. >> the total size of the business is $200 million to $300 million so we can call it maybe 2% of revenues. so from an actual estimate kind of impact to earnings, it's not that big or impactful of an issue. the real issue will be the longer-term litigation and/or the negative pr associated with it. >> reporter: it all comes as arconic searches for a new permanent ceo. on the heels of a nasty proxy
battle with elliot management. this situation could now make it much harder it recruit. for "nightly business report," i'm morgan bre the scandal-plagued airbag maker takata filed for bankruptcy protection. the japanese company said this is the only way it can keep on supplying replacements for faulty airbag inflaters linked to the deaths of at least 16 people. so far, 100 million inflaters have been recalled worldwide. the largest automotive-related recall in u.s. history. bmw's the latest automaker to announce it is investing and adding jobs in the u.s. the german car company will spend $600 million and add 1,000 jobs to its final assembly plant in south carolina. latest move by an auto industry adjusting to a trump administration that has threatened to slap a tariff on imported vehicles. phil lebeau has more now from spartanburg. ♪ >> reporter: bmw's biggest plant in the world is getting a little
bigger. german automaker adding 1,000 jobs to keep up with global demand for its suvs and crossovers. >> you hear a lot about different companies when they close down or relocate then just to know that bmw is going to invest more money and that's going to increase more jobs and that's more stability so that's a very exciting time for the associates that are working here. >> reporter: 70% of the models bmw builds in spartanburg are exported. that's good news in the eyes of the trump administration. but it's how many vehicles that are imported by bmw and other german automakers that has drawn the ire of the president. earlier this year, he told a german newspaper, "you can build cars in the united states, but for every car that comes to the usa, you will pay a 35% tax." bmw chairman harold krueger has met with trump and is confident there will not be a tax slapped on imported bmws.
>> i'm not worried because we explained when i was in washington with the german chancellor, had the opportunity to talk about our business here in spartanburg, i could explain and the president acknowledged that one clearly how successful our operation is here in south carolina. >> reporter: meanwhile, bmw is moving forward with its plans to build a plant in mexico. still for some on capitol hill, the question is not whether or not to tax imported models, but how to get europe to drop its tariff on vehicles built in the u.s. >> negotiate a treaty with europe so that american products can go to europe without tariff and vice versa and the automotive sector, this would be a home run for american automobile manufacturers. >> reporter: the big hit today for workers in spartanburg, adding jobs and security at the largest auto plant in the u.s. phil lebeau, "nightly business report," spartanburg, south carolina. alphabet and avis team up on self-driving cars. that's where we begin tonight's "market focus." the car rental company signed a deal with alphabet's car unit,
to store and maintain waymo's fleet of 600 autonomous vehicles. chose to work with avis because of that company's geographic footprint in the u.s. and experience cleaning and fixing cars. avis shares soared 14%. shares of alphabet down 1%. in a similar move, apple is reportedly working with hertz to test self-driving technology. according to reports, aps to co six lexus suvs leased from hertz. shares of hertz popped 13% on the news to 1083. apple shares fell fractionally to 145.82. real estate investment trust store capital said berkshire hathaway took a nearly 10% stake in the company, worth almost worth $400 million. store said the new investment positions it for growth. shares r1 1% on the news.
the pan dora ceo may step away from the company he founded. according to recode, westergram plans to leave the music streaming giant but will likely remain in his role until a replacecement is found. pandora shares up 2% to $8.46. it's been three years since seattle approved raising its minimum wage to $15 an hour for lower paid workers but a new report out today from the universi says the increased minimum wage is having an opposite effect and is actually hurting workers. mark long is one of the co-authors of the study and professor of public policy and governance at the university of washington. and he joins us to talk more about that. welcome. it's a pleasure to have you here, mark. >> thank you for having me. >> this has been called a very credible study and it has not yet undergone pure review. however, i'm interested in the fact that it seems to contradict what's been called years of research which came up with kind of an opposite finding.
so, how did you conduct this study differently? did you use different data? different statistics? or different metrics that nigmi lead to the result? one of the things we've done that had not been available to other researchers is we've been able to look directly at the low-wage labor market because our data allows us to evaluate specifically low-wage workers rather than using an industry as a proxy. >> now, how exactly were the low-wage workers hurt? and you put an actual number on it of $125 a month because of the hike in the minimum wage. explain how these individuals were hurt and how you came to that $125 number. >> yes. what we do, we look at all low-wage jobs and we evaluate first what happened to the average wage rate, and then we see that the minimum wage worked as intended, raised workers' average wages, but we find a larger pen sen taj decrease in their hours and in the total
number of jo available for low-wage workers so as a consequence, their earnings fell by an average of $125 per job per month. >> so employers cut hours and cut low-wage workers. did overall employment decline as a result or were low-wage workers replaced by more higher-wage, higher-skilled workers? >> what we see in seattle as with a lot of the nation, this is a good economic climate. so the seattle economy is doing very well as a whole, but we're not seeing those gains accruing at the lower end of the wage distribution. >> so what do you think the impa as we mentioned, it hasn't undergone pure review, but it certainly is getting a lot of press and a lot of interesting comments. what do you think the impact will be on either seattle or on the debate overall? >> one of the things to understand, seattle raised its
minimum wage from $9.47, state min wimum wajge to $13. this is a large percentage increase in the minimum wage and also a local minimum wage. both of those factors may particularly have caused more disemployment than what you would see if you did a study of the national minimum wage or state minimum wage. >> so what do you think? bottom line me here, mark. does raising the minimum wage help low-income workers or not? >> well, right now what we're seeing, at least with the local minimum wage, is it's not raising their earnings. if anything, it's lowering their earnings. at least the earnings that are available to them here in seattle -- seattle city limits. now, again, that may not be the same effect you'd see with a state minimum wage or with a smaller minimum wage increase. both of those factors could be playing a role here. >> all right, mark, we'll leave it at that. thank withdrew veyou very muc >> mark long with the university of washington.
coming up, new venture, would you binge watch a television show or series on facebook? a hedge fund has taken a $3.5 billion stake in nestle. third point is now the fourth largest shareholder in the world's biggest food company. the hedge fund pushing nestle to increase returns as a demand for its products weakens. the stake is the largest ever taken by third point. shares of nestle trade on the swiss exchange. unilever is reportedly threatening to pull ad spending from google and facebook. the "sunday times "can reports unilever is demanding better
information on the performance of online advertisements. unilever's one of the world's largest advertisers with brands such as dove and helman's mayonnaise. facebook going hollywood, the social need ya company doesn't want to just be the pls go to connect with friends, it also reportedly wants to be the place people go to watch videos, longer ones. julia boorstin takes a look at what could be facesbook's next venture. >> reporter: netflix and hulu, watch out. facebook executives have been making rounds in hollywood meeting with the studios and talent agencies about creating all sorts of shows to be exclusive to facebook. >> if they don't start investing in traditional tv-like content, their growth will slow more meaningfully. >> reporter: facebook's vp of media partnership nick grudin saying "we're focused on episodic shows and helping all our partners understand what works across different verticals and topics. we're funding these shows directly now but over time we want to help lots of creators make videos funded through
revenue sharing." facebook already commissioned unscripted shows from vox among others, but facebook is also interested in more traditional scripted tv shows. "the wall street journal" reporting facebook is willing to spend up to $3 million per episode. which is in line with the cost of some shows on amc and netflix. this comes as facebook along with google face demands from advertisers for brand safety. these new shows would create more premium ad inventory. >> being able to say, hey, we're digital, we get targeting, we get reach and you get content that you can feel safe having your brand around, absolutely that resonates. >> last year, facebook created a video tab as a destination for video and this year, it created a separate video app for facebook users to save videos to watch on their television sets. facebook is reportedly looking to start launching originals later this summer. and this push into professional content comes on the heels of apple making its first original tv shows.
"planet of the apps" which launched earlier this month and "carpool karaoke" coming to itunes in august. these tech giants look to join amazon, net politiflix, hulu an snapchat as the ultimate way to snag consumers' attention. for nexting"nightly business re i'm julia boorstin in los angeles. before we say good night, so great to have you back. >> thank you very much. it was an extended time away. all is good. i'm delighted to be back. >> we're delighted to have you. that does it for "nightly business report" tonight. i'm sue herera. thanks for joining us. >> i'm tyler mathisen. have a great evening, everybody. we'll see you right back here. .
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