tv Nightly Business Report PBS October 4, 2017 5:00pm-5:31pm PDT
>> announcer: this is "nightly business report" wit record run. all-time highs on wall street. increased optimism on main street. even as the recent hurricanes dent the job market. healthy competition. a surprise drug approval sends one stock soaring and one falling. and it may be part of the fda's plan to try to lower the cost of medicine. muny mayhem? municipal bond investors woke up to a big surprise after president trump said that puerto rico's debt could be wiped out. those stories and more tonight on "nightly business report" for this wednesday, october the 4th. good evening, everybody. i'm bill griffeth in tonight for
tyler mathisen, coming to you once again from the new york stock exchange, hi, sue. >> good to see you, bill. i'm sue herera. a record close for stocks. but we begin tonight with the job market. and the potentially unprecedented impact that hurricanes irma and harvey could have on the labor market, at least in the short term. today we learned that american employers created fewer jobs in september than they had in any single month in nearly a year, primarily because of hurricanes harvey and irma. as hampton pearson reports, the disruptions are expected to show up in the monthly government jobs r >> reporter: today's private sector hiring survey is the first indicator of just how much of an impact hurricanes harvey and irma had on the job market last month. only 135,000 new hires in august, the lowest in nearly a year. small businesses were hurt the most, losing from 50 to 60,000 jobs, according to payroll processor adp.
leading economists say fed chair janet yellen has already indicated monetary policymakers are anticipating the hurricanes' impact. >> the fed signaled they already know the data is going to be noisy and expect some weakness. we in consensus are saying, look, roughly the average hurricane takes 60,000 off the employment growth. this one feels a little stronger than average. >> reporter: those same economists say construction hiring, on the rebound after two months of decline, will accelerate with post-hurricane rebuilding. and they say other key sectors of the economy are in recovery as well. auto sales were up more than 6% last month, topping 1.5 million, as americans began replacing destroyed vehicles. new manufacturing data out today shows the service sector of the economy expanding at its fastest pace in more than a decade. >> these surveys from the ism, both the service sector and the manufacturing sector, are also
looking forward to after the hurricanes and were both quite strong. >> reporter: marketwatchers and economists say any setback in job growth from the hurricanes will be temporary and reversible. for "nightly business report," i'm hampto >> and as hampton alluded to there, while job growth may be slowing temporarily, as he said,tiv in the service sector rose to a high, driven by increases in both new orders and business activity. the services sector makes up the bulk of our economy and includes everything from health care to financial services to construction. american optimism on the economy is at an all-time high. the third quarter cnbc all america survey found that a record number of americans, more than 40%, believe that the economy is excellent or good. the four-quarter average for every major economic metric in
the poll, including housing and wages, and the stock market, are also at records. and that optimism is part of the reason why stocks just keep climbing. today, as we mentioned, the three major indexes closed at yet another record. each has now set at least 40 all-time highs this year alone. the dow itself has set 45, that was today, up another 20 points to 20,661. the nasdaq, the s&p, both added about three points today. meantime, bill, on capitol hill it was the senate's term to question the former ceo of equifax about that data breach which impacted 145 million americans. yesterday richard smith faced questions from a house panel on the company's response to that breach. today, senators grilled him on another issue, a report that equifax was awarded a $7 million no-bid contract from the irs. >> it's being reported in the media this morning that you've
just received a no-bid contract from the irs for fraud prevention. can you explain to the american people, not just as consumers who have been exposed and breached here, but as taxpayers, why in the world should you get a no-bid contract right now? >> i'm not sure it was a no-bid. my understanding, i don't profess to have the details, senators, it's with the irs. it's a contract we've had in the past, i think it's being renewed. >> you realize to many americans right now that looks like we're giving lindsay lohan the keys to the mini bar. >> i understand your point. >> under the irs contract, equifax will verify taxpayer identities and help prevent fraud for the tax agency. last night we reported that the fcc was considering making millions of dollars available to repair communication networks in puerto rico. and today, $77 million was in fact approved.
the fund provides subsidies to companies that will make communications services more accessible and affordable in places where costs on that island are just so high right now. and puerto rico was bankrupt even before hurricane maria hit. after touring the devastat the the country's mountain of debt would have to be wiped out. that statement sent shock waves through the nation's $3.8 trillion municipal bond market. michelle caruso-cabrera has more. >> reporter: president trump visi puerto rico yesterday, surveying the damage from hurricane maria. during his visit, he said this about the island's l debt load. >> we have to look at their whole debt structure. you know, they owe a lot of money to your friends on wall street. we're going to have to wipe that out. that's going to have to be -- you can say goodbye to that. i don't know if it's goldman sachs, or whoever it is, you can wave goodbye to that. >> reporter: as a result, puerto rico's bonds fell sharplies, this is the benchmark bond for
puerto rico, falling to as low as 32 cents on the dollar in today's session. when investors think a bond is going to be paid in full, it trades near 100 cents on the dollar. and take a look at companies like anbach, nbia, insured guarantee. if the issuer of the bond doesn't pay, they do. they all took a huge hit because they have large exposures to puerto rico. puerto rico is struggling with massive debt with the inability to get the power back on in the wake of hurricane maria. and what's become clear since the hurricanes, despite borrowing lots and lots of money, the island did not invest in its energy infrastructure. the median plant age in puerto rico is 44 years old compared to only 18 years old on the mainland united states. these plants are so old, they have to run on imported oil, many of them. in fact 47% of puerto rico's energy grid is powered by petroleum which all has to be shipped into the island.
that number in the is only 0.6%. as a result, puerto ricans spend a lot more per kilowatt hour for their energy, 21 cents versus 11 cents on the mainland in the united states. for "nightly business report," i'm michelle caruso-cabrera. and it's not just hedge funds invested in puerto rican debt. individual investors also own a lot of muni funds through bonds or directly. how concerned should you be? alexandra leventhal, her family has been in the business since started the business.dmot the bankruptcy, and now the hurricane. they've been negotiating with creditors to figure out how quickly they can get back. how quickly can the debt be wiped out? >> i consider this the equivalent of ford's drop dead
to new york city comment, which was the headline in "the daily news" in the 1970s. except in that case he had the ability to do something for new york city. in this case, it doesn't make sense, it's not really possible for the federal government to eliminate the debt of a municipality. and you mentioned hedge funds. let's talk about them for a second. that's from individual investors. those hedge funds are very savvy investors who have been in the process of suing or negotiating and trying to figure out what they're going to get back on their investments. and by the way, trump knows extremely well what it's like to deal with bondholders who are savvy boldholders who don't just say, fine, we'll wipe the debt away and call it a day. his debts didn't exactly work out that way. >> alexandra, if you're an individual investor and you have exposure through mutual funds or
etfs or the like, given the fluidity of the situation down there, how concerned should you be? >> that's a really interesting question. you were showing that graph of puerto rico, they were already trading 44 cents on the dollar, went down to 30. you're coming into a bad situation already. the good thing is there are not individual puerto rico municipal bond funds. puerto rico bonds are a component of other funds. there are some funds like oppenheimer which also is the old rochester fund which has a large percentage relative to other funds. people have seen the value of those funds go down. >> they're already worried about getting the money back anyway because of the bankruptcy. >> right. it was bad enough, the hurricane made it worse, and what trump's comments did didn't necessarily make the situation worse in terms of getting repaid. it just added on, piled on.
>> one other sidebar to this, alexandra, are the other municipalities that are in dire straits that are watching carefully to see how this has handled, i this of the sta of tf illinois that has had financial difficulties, they're watching this carefully as well, as are their mun ychlmuni bondholders. >> every situation that's occurred in municipal bond, detroit, california, illinois, chicago, puerto rico, was an issue unto itself. you're absolutely right, there is an effect of, gee, what's happening over there. there are all these different components, like in illinois you don't have the situation of the aging infrastructure, and those numbers obviously are staggering. you do have the pension situation and financial instability. but yeah, i mean, it does give you an idea. and that did not used to be the case. you had new york city in the
'70s, that was its own experience, until orange county, california, in '94, i think. and that was its own and then in the last few years you've had this tumbling one situation after another. the situation with puerto rico and the hurricane, the important thing there is the hurricane is stopping the ability of all those bonds to pay interest, because there's no sales tax, people aren't buying things. there's no electric power revenues, there's no electricity. it's heartbreaking. it's a such a great island and it breaks my heart, having been so intimately involved in it over the years. >> it is a very difficult situation. alexandra, thanks for the thoughts tonight. sue? bill, the president today made his way to las vegas to visit shooting victims and praise the first responders and the medical teams who responded to the worst mass shooting in this country's history. jane wells is covering the.
>> reporter: for the second day in a row, the president came to a place of heartbreak to praise those who had rushed in to help. >> americans dashed into a hail of bullets to rescue total strangers. >> reporter: he also met privately with victims of sunday night's massacre, even as investigators continue to process the well-armed lair stephen paddock created inside his las vegas hotel room, complete with cameras to surveil the hallway. newly released police body cam video shows what the chaos was like as officers responded sunday night. the gunfire lasted nine to 11 minutes. when a s.w.a.t. team finally broke into paddock's hotel room an hour later, they found him dead, a suicide. meantime his girlfriend returned to the u.s. from the philippines and was questioned by the fbi in los angeles in hopes of finding out a motive, something the bureau says is eluding them. >> this individual and this attack didn't leave the sort of
immediately accessible thumb prints that you find on mass casualty attacks. >> reporter: las vegas has more cameras per square foot than any nongovernmental place for surveillance, technology, security. is it enough? that was top of mind this week at the global gaming expo, a massive tech conference here. >> we don't have a thriving industry, we don't have a thriving las vegas if people don't feel safe. >> reporter: some compare the situation in vegas to the mgm grand hotel fire in 1980 which killed 85 people and led to an overhaul in building and safety codes. could this shooting lead to a similar sea change? whatever happened, it will be too late for the 58 murdered victims including an off-duty police officer who was at the concert sunday night with his wife. and when the gunfire started, he tried to protect others. >> he lives behind a wife and two children. we're very grateful for his sacrifice. >> reporter: a reminder that while many heroes lived, some did not. for "nightly business report,"
still ahead, a new roadmap and ford's decision to move away from tradiar european union regulators are going after two u.s. tech companies. the eu has ordered amazon to pay nearly $300 million in back taxes. the commissioner also took ireland to court for failing to collect about $15 billion in taxes from apple. authorities are arguing that apple, like amazon, profited from a system allowing it to avoid taxes that the eu feels should have been paid.
the fda wants to speed you want amount of time it takes to get generic versions of complex drugs to market. the theory is that increased competition means lower prices. and the agency is wasting no time. late last night it approved mylan's generic version of teva's blockbuster multiple sclerosis drug. and look what happened to the stocks. mylan stored. teva tumbled. meg terrell explains why this would be the first of more drug ap to come. >> reporter: the food and drug administra doesn't control the price of drugs. it does control whether drugs are approved. that's a key part of the agency's strategy to lower the cost of medicine. >> what i think the fda is trying to do is use market forces in the form of more competition, to put pressure on drug prices. obviously when things go generic, the prices of the drugs drop. >> reporter: late tuesday, the
fda approved a generic version of a multibillion dollar of a medicine for multiple sclerosis made by israeli pharmaceutical teva. it's considered a complex generic, one that's harder to copy under traditional approaches, making last night's approval a surprise. >> one of the bottlenecks at the fda was so-called complex generics which are hard to make, or have some unusual tweak to them that are different than your typical white solid pill. >> reporter: analysts estimate mylan could price the generic at a 40% discount to the branded drug. priced at 80 to $90,000 a year. they say it could capture as much as 45% of the market. the news drove mylan's stock higher. for teva, it was the opposite story. the drug accounted for almost 20% of its $22 billion in 2016 revenue. with the new competition, teva said today it expects fourth
quarter earnings per share will be reduced by 25 cents. the stock sank. mylan's approval came just two days after the fda issued new guidance for approvals of complex generic drugs. analysts say more approvals could be on the horizon, including for generic copies of advair and mylan's epipen, itself the subject of scrutiny over its price. >> all of the big troublemakers we've read about in the news have probably been in this area. >> reporter: in a blog post this week, dr. scott gottlieb, the fda's director, said they plan to bring more competition and lower prices to the drug market, promising, quote, we're just getting started. for "nightly business report," i'm meg terrell. frito-lay helps lift the bottom line at pepsi. and that's where we begin tonight's market focus. the food giant reported a better than expected profit thanks in part to selling more snacks. but weakness in its north american bevere business
caused overall sales to disappoint. the cfo of the company says it focused too much of its marketing efforts on newer products, and it will fix that mistake. >> we really had a strong pipeline of innovation this year. and we probably just moved too many resources from our core businesses of pepsi and dew into these new products. and frankly that cost us competitively for the quarter. we'll need to balance that out a little bit better over the next couple of quarters. >> pepsi shares finished up 21 cents today to $109.34. office depot is buying i.t. provider compucon, part of a plan for office depot to transition to a broader business c said it was cutting its guidan for 2017 due to hurricane disruptions. office depot shares were off almost 18% to $3.78.
shares of gopro got crushed today after google unveiled its new clip-on camera which could rival gopro's products. and they did it at a cheaper price. google's new device will retail for about $250 compared to $500 for gopro's newest model. gopro's shares were off 6% to $10.39. and after the bell, bloomberg reported that seaworld is reportedly being approached by england-based theme park operator merlin about a potential merger. seaworld is said to be discussing a sale with advisers. merlin is not the only potential buyer. shares rose in after-hours trading and ended the regular session up 4% to $14.11. as we reported last night, ford is shifting gears, mask out a new strategy for staying competitive in a rapidly changing automotive business. the ougautomaker says it will n focus more on trucks, suvs, and
electric vehicles. phil lebeau has the story. >> reporter: new ceo jim hackett is repositioning ford to compete in a world where electric, connected, and autonomous drive vehicles will change how we get around. >> the mandate here is that ford must compete. companies never choose to die. and yet many, by not evolving, are enabling that kind of fate. >> reporter: while ford invests in future vehicles, it's slashing costs by $14 billion. at the same time it will push more trucks and suvs, the most popular vehicles it sells, while cutting back on cars, which are far less profitable. but the biggest change is ford investing heavily in self-driving and electric vehicles. that's because ford needs to compete in china, the world's largest auto market, where the government is aggressively pushing its residents to plug in their cars. >> they've got to focus on the now, with cutting costs and
producing more suvs, because those are popular all over the world. but they've also got to be investing in the future technologies like electronic vehicles, like connectivity in cars. that's not going to pay off for a while. >> reporter: ford's chairman bill ford hired hackett to shake up the automaker. but he knows shifting gears at a company that's built cars and trucks for a century will take time. still, hackett knows he's on the clock. >> i want to declare to you that i get up every day feeling like time could be wasted here if we don't get moving. i feel a real sense of urgency. >> reporter: ford investors also feel a sense of urgency. their shares have lagged other automakers and the market as a whole over the last couple of years. phil lebeau, "nightly busi. coming up, will malls have to look a lot less like malls to keep shoppers coming in this?
consumers are expected to spend more this holiday season, according to a recent forecast from the national retail federation, sales may increase as much as 4% compared to last year. that's important because the holiday season of course can account for 20 to 40% of annual sales for many retailers. but with stores closing and foot traffic in decline, how are the nation's malls holding up as we head into this important holiday season? courtney reagan is in los angeles . >> reporter: so far this year, at least 20 retailer have filed for bankruptcy and more than 6100 stores are closing. but that doesn't mean the mall is dead. in fact, most malls are holding up okay.
they're just changing, investing a lot of money to keep up with the shifting consumer. this is a century city hamall i los angeles. it got a million dollar expansion and makeover. it's one of the highest rated malls in the country. there are more restaurant and specialty food options here than they are clothing stores. there are fitness clubs, lots of stores that cater to health and beauty, a tesla showroom, apple store, amazon books, and much more. >> a lot of the malls in the country and a lot of the physical asss are aging. you do need to upgrade the mall. you need to have the best retailers. and every 20 years or so, you need to spend that kind of capital to remake the mall. here at century city i believe we mall of the 21st century in what used to be the city of the 20th century. the idea is to keep the customer coming back, give them something to do, not just to shop but come
to a place to be, to meet their fends, create their own physical networks. >> reporter: mall owners and operators spoke about the state of the mall today and how it's changing. >> the business is detoxing. we're replacing the weak with the stronger. and as a result, we'll be stronger when we're done. >> we're expanding. we're doing cosmetics and wellness and fitness and service and value and food and beverage and entertainment. all these other types of categories are coming into our property. >> reporter: revamped malls will be put to the test with black friday less than two months away, as online shopping is expected to break new records this holiday season. shopping center manager jll ceo's sales of america retail
says -- >> consumer confidence is at an all- when people feel good about themselves, that affects retail sales. >> reporter: as mall owners ship away from clothing and toward experience and services, many malls are starting to look less like malls, hoping that's what keeps shoppers coming. for "nightly business report," i'm courtney reagan in los angeles, that does it for us tonight. i'm sue herera. thanks for joining us. >> and i'm bill griffeth. have a great eve
>> this is "bbc world news america." funding of this presentation is made possible by the freeman foundation, and kovler foundation, pursuing solutions for america's neglected needs. >> planning a vacation escape that is relaxing, inviting, and exciting is a lot easier than you think. you can find it here in aruba. families, couples, and friends can all find their escape on the island with warm, sunny days, cooling trade winds, and the