tv Nightly Business Report PBS December 5, 2017 5:00pm-5:31pm PST
>> announcer: this is "nightly business r with tyler economic optimism. corporate chieftains hasn't felt this good in years. but are they ready to hire? tech tumbles. it's been a rough run for the hottest sector of the year as investors try to figure out where the market goes next. a growing movement. they're young, they're highly educated. some were city-raised. now more and more millenials are becoming farmers. those stories and more tonight on "nightly business repor for tues good evening, everyone, and welcome. the u.s. economy recently posted its best growth rate in three years. and today a powerful group of chief executives say they're the
most optimistic they've been in almost six years. together these ceo's lead more than 16 million employees, generate more than $7 trillion in annual revenues, and can impact investment, wages, and hiring decisions. the business roundtable quarterly survey shows that their outlook for sales and capital spending has improved. but despite the optimism, hiring plans eased and rising wages were cited as a top cost pressure. our guest joins us to talk about u.s. ceos' optimistic view is echoed by him. good to have you with us. are you as optimistic as these ceos seem to be? >> i'm optimistic right now. we all have the holiday spirit. we're feeling pretty good. >> what is it that makes you feel good as we head into 2018? is it tax cuts? is it the pro-growth agenda of the administration and congress? is it just corporate profits
rising? what? >> i think right now, you know, we have equity markets, which obviously are at near all time highs and feeling pretty good. we got tax cuts on the horizon. we're seeing quite a bit of spending as well. so things are looking good right now. i would say that everything is lined up for things to be quite positive right now. >> i don't want to throw cold water on that, but is there anything that does have you concerned or that you're going to be watching out for? >> well, that's a hesitation at the end of what i'm saying. it feels good right now, but all good things must come to an end. so it's a question of how long will this party keep going. and usually when we get a tax break, usually when we get an increase in pay, it's not followed by another tax break or more increases in pay. and that means that we're probably going to face the music sometime toward the end of next year. >> and what will cause that to happen? you say we will go from boom to struggle in 2019. why?
>> well, i think a couple of things. number one is we'll have this tax cut behind us. so, you know, we're always looking for what's the next best thing. what's on the horizon. if we don't have another set of tax cuts ahead of us, then that's not going to make us too happy. once we start to realize that consumers have really dipped deep into their pockets and started saving quite a bit less on the back of those increases in equity prices, we'll start to see people pulling back their spending. when they pull back their spending, then growth starts to slow and equity starts to slow and it becomes a pretty big circular activity and pullback. >> what about wages? that was one of the th cited in the report that was a concern to business owners, big and small. >> it's a concern for business owners, they're not finding the labor that they need. they're not finding the right matches for the jobs they have open. but for consumers it's pretty good news, it means they'll be
paid more for the jobs they have. it's good news right now that we're seeing this kind of pressure on ceos. they're margins are getting compressed, which isn't great for equities but is good for the consumer right now. again, that can't go on forever, we can't squeeze margins forever without se implicat of that. >> on wall street, all of the major indexes finished lower with the s&p 500 posting its first three-day losing streak since august. financial stocks fell after jpmorgan and bank of america said trading revenue will be lower this quarter. the dow jones industrial av dr 109 points to 24,180. the nasdaq was off 13. s&p 500 declined nine. in the past week or so, stocks have undergone a bit of a shift. money moving has been moving out of some of this year's most popular sectors. bob pisani takes a look at what's happening beneath market
surface. >> reporter: the markets may have cheered the passage of the senate tax bill. but this raises the question how far can we push this tax cut train. since early last week, the sectors that would see the biggest boost from tax cuts are the ones that have outperformed considerably. four sectors have done very well. they would get the biggest boost from a 20% corporate tax cut. financials stocks, energy, industrials, and telecom. they would see double digit gains in earnings. one sector would see almost no boost. no surprise. banks, telecom have been big winners and tech has been a loser. there may be limits. today we saw bank stocks sell off aggressively. this may be a sign of profit taking and a sign we may be approaching this rally's limits. we're not out of the woods yet. the senate bill would put off corporate tax cuts until 2019. president trump hinted the final corporate tax rate may be 22%, not 20%. beyond taxes, traders are split
between those who want to sell on the news and those who say we could have a rally in the beginning of next year because we have stronger global growth, we have a weaker dollar, and we have a slow going federal reserve. but for the moment, that's a debate for a little bit later o on bob pisani at the new york stock exchange. jay powell had a vote today to confirm his nomination to head the federal reserve. senator elizabeth warren voted no. >> i'm concerned that the fed will roll back government rules under mr. powell's leadership. that is a risk we cannot afford. >> powell has signaled he is open to easing some financial regulation. he's also widely expected to continue janet yellen's policy of gradual interest rate increases. when it comes to the tax bill, the top house tax writer said the repeal of the corporate
and individual alternative minimum taxes is one of the priorities of the tax bill conference. kevin brady is overseeing the negotiations between the house and the senate as those two chambers try and reach an agreement on wha. >> i think that both the individual and the corporate amt is costly, complex, undermines pro growth and pro american provisions in the tax code. >> opponents of the bill made it clear that the fight isn't over. protesters arrived on capitol hill chanting "kill the bill" and "tax the rich, not the sick" as they assembled outside the offices of republican lawmakers. back on wall street, disney was the worst performing dow stock today. as we've been reporting, disney and 21st century fox have been talking again. according to cnbc, a deal could be announced as early as next week.
the en value of the fox assets which include its movie and television production assets is roughly $60 billion. shares of both disney and 21st century fox moving lower in trading today. the media and entertainment industries have been swept up in allegations of sexual harassment. the list is long. the names of those fired are familiar ones. and they've brought in a lot of money for a lot of companies. so now investors are taking note of what could be a new risk. julia boorstin. >> reporter: the wave of firings in the wake of sexual harassment changes have massive costs, and not just in payouts to women. take the tv news business. the "today" show and "this morning" firing matt lauer and charlie rose, putting at risk the money abc brought in last year. the movie business, with harvey weinstein's fall. the weinstein company now ca
cash and unable to find investors or a buyer. amazon aflix suffering major costs from sexual harassment issues. netflix canceling louis c.k.'s television special, and overhauling "house of cards" after a costly hiatus. >> i thought ten years ago we were making progress. i look at the industries i thought were moving in the right direction and they've taken steps backwards. this is a more systemic issue that's going to have to be addressed. >> r now investors are increasingly look at the financial risks of sexual harassment and corporate cultures that allow it and the value of investing in more diverse management teams. take fox. analysts point to the risks posed by its $90 million in sexual harassment settlements and related management overhaul. and pension fund adviser cpw has
been pressuring the company to review its practices. now in focus, how more diverse companies can yield higher returns. >> i am a big believer that the best thing in the world is to create diverse teams of people. and this will not be fixed in the long run until there is a lot more workplace diversity. >> reporter: a morgan stanley study finding gender diverse companies returned nearly 5.5% more annually than their less diverse peers. julia boorstin in los angeles for "nightly business repor ahead, why more millenials are
a wildfire is spreading fast north of los angeles. the blaze forced the evacuation of thousands of residents and business owners. fire officials say they are facing high winds and low humidity and that those conditions are expected to remain throughout the week. the fire comes just months after deadly fires devastated the state's northern wine country. meantime, in northern california a shift is under way in farming. an increasing number of millenials are moving into the profession. they'r interested in organic foods, sustainable practices, and the change is making a big impact on big food companies. aditi roy has the story from yolo county. >> reporter: chris hay looks like a natural on his 150-acre farm. but the 34-year-old wasn't born on a farm. he studied philosophy in college. and up until seven years ago, hay was living a city life,
working a desk job. >> it just didn't gibe with a lot of the goals that i had for myself professionally. and i enjoyed working with food and all of those things just kind of meshed into, why not try farming? >> reporte that led him to a job on a farm and now he's the owner of say hay farms in rural yolo county, california. he's not alone. according to the usda's most recent census of farmers from 2012, the number of principal farmers ages 25 to 34 increased 2.2% from five years before. while some of the older age brackets saw double digit declines. a new survey by the national young farmer coalition also finds that the upcoming generation of farmers is demographically different from previous generations. they're likely to be college educated, not grow up in farm families, use sustainable practices, and produce organic
food. among those recruiting millenial foodies into farming, kimbal musk, brother of tech billionaire elon musk. >> if you looked at it five years ago, farming is what your grandparents did. over the past few years, there's been this extraordinary demand and desire to be a farmer among our youngest generation. >> reporter: he's disrupting the food chain with a collection of locally-sourced restaurants and an urban farm accelerator called square roots. they received 1100 applications from millenials to launch their own farm startups. >> it comes from the desire to be part of the real food revolution, to grow real food for their community. it's a wonderful thing that's going to. and it's super exciting. >> reporter: millenial focus on organic foods is having a real impact on business too. organic food sales in the u.s. totaled a record $43 billion in 2016, more than doubling since 2007. the biggest group driving those
sales, millenial parents, according to the organic trade association. and in a note this year about the packaged food industry, goldman sachs wrote, millenial consumers should drive the entirety of the industry's growth in the next decade. for chris hay, using sustainable practices and producing organic food isn't a business decision. it's a just the right thing to do. >> we're out here to help move the ball forward. and it's whole system of changes that needs to take place. >> reporter: silicon valley has taken notice of the millenial appetite for farming. venture capital investment into vertical or urban farms has increased from zero dollars invested in 2012 to more than $280 million so far this year. for "nightly business repor" i'm aditi roy, yolo county, california. also in california, business owners in the growing marijuana industry are facing major challenges. some might even call them potholes. the problems are coming into
focus as new industry rules go into effect on january 1st. jane wells h. >> reporter: to understand how crazy big the legal recreational marijuana market in california might be, head ten miles off a desert highway to an old gold rush town where the official population is listed at six. >> that was the old jail right there. and i reckon we'll make it back into a jail. >> reporter: he works for american green, a company which bought the tiny tumbleweed town of nipton near the nevada border for $5 million with hopes of turning it into a pot paradise. >> they brought money into the town which we really need. >> reporter: there are a ifs here. licenses to grow or sell recreational pot will be handed out january 1st. but one month out, the state
hasn't even started accepting license applications. and would-be entrepreneurs are combing through hundreds of pages of new regulations. is california ready for january 1st? >> y who am i to say? i ask ten people and i get ten different answers. >> reporter: california authorities believe they could collect as much as a billion dollars in pot taxes and everyone wants in, even silicon valley. baker is a bay area company which sells marketing and customer management software to dozens of cannabis stores and expects business to explode after january. >> everyone thinks the sky is going to fall down. it doesn't. there will be challenges. there will be some supply chain issues. but we think it will catch up very quickly. >> reporter: with all the confusion and some licenses costing $100,000, the state may find it tough to convince some in this long-time illegal industry to play ball. >> how do you take an industry that's not educated and matured .nd put it into a regulated
>> reporter: expect more than a few potholes come january. >> i think my biggest thing would be, and this is more like a christmas wish, during this time of uncertainty, we err on the side of understanding and forgiveness and don't make an example of certain people, well, they were 50 yards on the side. it just doesn't move commerce forward. it doesn't move humanity forward. >> reporter: no matter what happens, california dreaming continues. in what you might call gold rush 2.0. for "nightly business repor jane wells, nipton, california. higher costs cut into profits at toll brothers. the luxury homebuilder missed profit and revenue forecasts as it faced an increase in labor and raw material expenses. the company said new orders in the latest quarter rose at the slowest pace in six quarters. shares of toll came under pressure, down 7% at $46.93. the clothing company g3 said
strong demand for brands calvin klein and tommy hilfiger helped overall profits go and edge past expectations. revenue also improved when the company lifted its earning outlook for the full year. sales jumped 13% to close at $34.30. meantime, lands end swung to its first profit in two years as more customers made purchases online and through the company's catalogue. that demand helped offset weaker in-store sales. lands end shares finished the day up nearly 12% to $13.20. re-vance therapeutics said its medications to fix frown lines is proving to be successful. it will likely be the longest lasting medication on the market if approved. investors smiled on the result. meanwhile, allergan, which makes botox, saw its shares fall about
1.5% to $164.28. a trade dispute reportedly caused boeing to lose a deal with canada to sell that country 18 fighter jets. reuters says canada walked away from an agreement to buy the planes after the aerospace company took up a trade challenge against canadian plane maker bombardier. canada is now said to be interested in inking a deal with australia. boeing's shares closed down almost 1% to $275.54. the movie theater operators regal entertainment and cine world are tying the night. we told you last week the two were reportedly in talks. today regal agreed to sell itself to its british rival for more than $3.5 billion, creating one of the world's largest cinema operators. regal's shares climbed 9% to $22.68. starbucks ordered d up a 30
thousand square foot store in shanghai, its biggest location everywhere. starbucks has been expanding aggressively in china, opening up a new store there every, get this, 15 hours. china is the company's fastest growing market. coming up, imagine going from san francisco to tokyo in a little more than five hours. a denver company is working to revive supersonic airlines are expected to post record profits next year, according to an industry trade group, improving economies globally or lifting demand for air travel. however the report also shows that fares could start to increase as well. remember the concord?
it hasn't flown since 2003. but japan airlines is interested in bringing back supersonic planes. in fact it's now investing in a colorado company developing these ultrafast jets. how soon could they be flying? phil lebeau tells us when they may . >> reporter: this is the future, according to the boom supersonic, a plane flying almost 1500 miles per hour, cutting hours off of international flights. the plane is years from being built, but japan airlines likes its potential. it's sinking $10 million into the plane's development, with the option to buy 20 of them. why would japan airlines want a supersonic jet? because flights from san francisco to tokyo currently take 11 hours. but on a supersonic plane, the time would be cut to 5 1/2 hours. in addition, boom supersonic's jets would only have business class seats.
so 45 to 50 people would pay a premium to travel long distances in half the time. >> everyone today is flying on the same airplanes, between the same airports, with a similar on board product and there's no differentiation. real differentiation will be flights that are half the length. >> reporter: the idea also appeals to sir rich br branson who has options to buy the planes. it'sn y since the concord stopped flying due to a high profile crash that tarnished the plane's reputation. but boom believes the next of will have better performance and lower cost due to more advanced engines and the use of lighter materials like carbon fiber. while boom supersonic has plane lovers dreaming, the company is a long ways from building a jet that will fly at mach 2.2. a small prototype is expected to be tested by the end of next year. but a full scale supersonic plane is not expected to be
built until well into the next decade. phil lebea ford is pushing further into china. the automaker plans to launch 50 new vehicles in that country by 2025, including 15 electric ones. ford sales have been weak recently in the world's largest car market. y h the move will reverse that trend. do you ever have a craving for coffee or other food while driving? if you do, general motors is hoping it has the cure. drivers in more than 2 million connected gm cars can now press a few buttons and place an order that they can then pick up minutes later in a drive-through lane. looking for a rare type of gift to give for the holidays? sue is looking for one for me. >> definitely. >> instead of heading to the mall, you can go straight to some of the world's biggest auction houses. robert frank is in new york toni. >> reporter: i'm here at christie's in new york, where just last month they sold that
leonardo da vinci for a record $450 million. christie's also sells more affordable items, though still pricey, like $10,000 handbags. this month, christie's and sotheby's are both making a big push to get into the holiday gift giving business. the two auction houses are expected to sell more than $150 million worth of gift oriented luxury goods just this month. from watches and wine to handbags and jewelry. many of the sales will be online as the companies expand their digital platforms and become a sort of billionaire's amazon for the holiday season, where the rich can shop in one place for their pricey baubles. >> we're trying to appeal to the broad spectrum of luxury buyers and show them everything at the same time for their convenience. >> r is selling the world's largest indictment, 111 karats. $406 million.
and the guys, something more affordable. special edition watches that start at just $4,000. at christie's, it's a bonanza with almost $1 million worth of these bags which are almost impossible to get from a store. this is a himalayan crocodile one, sold for over $100,000 just today. the rolex daytona will go for $500,000 to $1 million. and a 1962 ma calan that's 4 to $6,000 will make for great drinking around the fireplace. the sales highlight another top trend for the wealthy, where top luxury goods are now considered collectibles like art that will appreciate in value over time. >> my tag line is that a lot of the bags we sell are wearable works of art. the craftsmanship that goes into them, the skill, the colors, the exotic leathers, you know, i do think they're works of art. women are starting to buy and collect them, and men, as works
of art, having them be something they live with and really enjoy. >> reporter: we'll see if the da vinci of handbags keeps soaring in price. for "nightly business repor robert frank. >> your puppies would like those handbags. >> they would, oh, my gosh, can you imagine? honey! that does it for "nightly business tonight. i'm sue herera. thanks for joiningus. >> i'm tyler mathisen. thanks from me as well. have a great evening, everybody, and .
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