tv Nightly Business Report PBS February 19, 2015 6:30pm-7:01pm PST
report" with tyler mathisen and sue herera. pay raise. walmart long criticized for not paying its workforce enough will spent a billion dollars for wage hike increases for half a billion employees this year. swipe. sending companies of the share lower with the major setback with a company in just a week's time. and driving into debt. american automobile buyers are borrowing a lot. it's a cause for concern. all that and more tonight on "nightly business report" for thursday february 19th. good evening and welcome. glad you could be with us. i'm tyler mathisen. sue herera is off tonight. well the largest private
employer in the country is making a big investment in its employees. walmart hikes to $9 above the federal minimum wage. the world's largest retailer has been under pressure from organized labor group demanding higher pay and better benefits. reported earnings today. they topped expectations but it did cut sales outlook citing the stronger dollar. investors pushed shares of walmart lower likely worried about the bottom line of worker pay initiative. it was the worst performing stock in the dow jones industrial average today. courtney reagan now with more on walmart and what was behind the company's big decision. >> reporter: the country's largest private employer will spend a billion dollars to increase wages for half a million of its 1.3 million workers. improve its scheduling and offer new training programs for career
advancement. currently, only 6,000 walmart workers make federal minimum wage but starting in april, wages for walmart's u.s. employees will be at least $9 and then at least $10 an hour by february next year. department managers will also see pay improve. >> part of walmart's problem has been concerns around inventories being out of stock. it's been about bad customer service, long lines at the checkout counters. there's been a lot of disgruntled workers. and fraj frankly, this does sound like a step to perhaps correct some of the past evils. >> reporter: in an exclusive interview with cnbc doug mcmillan said the pay increases ultimately bring sales dollars back into his store. >> it will play through retention, the ability to hire the talent we need to hire. i'm confident those things will work their way through because
we're investing to make them happen. we want associates so excited to take care of customers, thanking them for shopping with us. that's got to show up in sales. >> reporter: the cost of walmart's wage increase and training initiative are part of the reason in addition to ecommerce investments, its earnings forecast are below wall street's consensus. for the fourth quarter, walmart's earnings did beat expectations. revenues came in lighter than anticipated. most noteworthy however, sales in traffic at u.s. stores opened at least a year posting the strongest increases in two years. the retailer's chief financial officer said lower gas prices and better weather helped drive more customer trips to stores. however, walmart's u.s. ceo greg forn said the west coast ports congestion hurts pockets of merchandise right now and said if the labor contract issues aren't resolved the problems for all retailers will worsen.
out of stock inventory has been an issue for walmart in the past. though this time there's only so much the retailer can do about it. for "nightly business report," i'm courtney reagan. meanwhile, the luxury department store chain nordstrom failed when it reported earnings. full year outlook fell short of estimates. those sales last quarter did slightly beat those forecasts. shares dropped initially in after hours trading as you see on the chart following the earnings report. liz dunn more about retail earnings cheap gas prices and consumer spending. the founder and ceo of tao magid advisers. is raising wages the right thing for walmart to do and how do you expect it will affect the bottom line? >> i think it is the right thing to do. if you think about this in the
context of the broader economy, one of the challenges we've seen is stagnating wages and so i think that this is a huge step. walmart is the largest employer in the united states and so with this kind of step not only is it just about walmart, but sort of forces the hand of other employers to perhaps match these wage increases. so i think it's the right thing to do. investors obviously didn't like it today. but ultimately i do think that this will benefit nordstrom, i'm sorry, walmart. and come back to them. >> if some of the entry level workers have a few more dollars in their pocket they'll be able to spend a little more. maybe some more at walmart. >> absolutely. i think it will come back to walmart in terms of their sales. also in impacting customer service. employees feeling a little bit better about working at walmart and passing that on in terms of providing better customer service to customers which
should show up in the register. >> that was certainly mr. mcmillan's thought there. one more second on walmart. what did you make of the sales today? very favorable. >> this is the second time in a row, the second quarter in a row, we see better results out of walmart. i think it's notable, the fact it's coming from traffic. much has been said about whether or not gas prices are actually benefitting the consumer. i think this is a strong sign that they are. so numbers were good. obviously, the outlook a little bit disappointing. currency is one factor there. and then this cost of paying people more. >> you know, let's talk a little bit now about gasoline prices and your thoughts about how much if at all, those falling gasoline prices are translating into better sales at other retailers apart from gasoline stations. it seems like an awful lot of that money is getting saved or being driven towards paying down debt. what are you seeing? what are you sensing?
>> this is an impact that we should see for the lower end consumer a bit more than the consumer broadly. the lower end consumer has been lagging. they've really been struggling and the recovery has missed the lower end consumer. so, you know saving perhaps and perhaps just a little bit of catch-up. but i would say we've seen a number of upside surprises from you know more mass and discounters. that's a little bit of, you know the lower expectations but i do think we're starting to see a little bit of past through for consumers spending a bit more. >> final question. of all the retailers you follow what stock is your favorite right now and why? >> i like macy's and elle brands. they're taking share. they also have a little bit of a benefit from improving economy overall, but i think you really want to stick with share gainers in this market because we're not looking for tremendous growth in consumer spending and so i think the share gainers are the
places you want to be. >> liz, thanks. it's always great to see you. toumidge advisers. pressure on the dow all day long while tech remains strong and the nasdaq stayed positive. all end today, dow fell 44 points to close at 17,985 back below 18,000. s&p reached an all-time high before it finished lower below 2100. legal ruling against american express. the judge said the company violated anti-trust laws when it used a long standing practice that steered customers away from using lower cost credit cards. now the fees that american express charges merchants, they're routinely higher than other card companies. american express is going to appeal the decision and it will hurt competition. this is the second setback for american express in a week's time. last week, amedical examiner
said amex. shares off nearly 2% at $78.40. to the global markets where japan's benchmark nekay index. proposal for a six months extension of its loan agreements. the plan was rejected by germany. michelle caruso-cabrera has more on the negotiations and what might happen at a key meeting of euro zone finance ministers tomorrow. >> reporter: so it finally happened today. the greek government submitted a formal request for an extension of the bailout. the government refused to say it's a bailout extension, but everyone else in the euro zone is saying that is exactly what it is and that's what they needed in order to come to the table. so here we go again for the third time in two weeks. all of the euro zone's 19
finance ministers look at brussels for this request by the greek government. several key commitments in there and at the same time there are a number of other countries in the euro zone. germany in particular that feels the way it's worded there's just too much wiggle room in there that greece maybe could back out of previous commitments and not stick to the program as they have previously committed to. and at the same time still try to get more money out of the euro zone. so tomorrow still going to be very very contentious. the outcome is really key. if they don't finish tomorrow then the rest of the euro zone ministers, many of whom who have to go back to their home country and parliament the equivalent of trying to get back in congress if they don't get this done by tomorrow they don't think they'll have enough time before the official greek program expires. that means it will be cut off by the european central bank and that could be really devastating for the greek economy, close to
exiting the euro zone. if they don't get the deal done by tomorrow there's concerns about the banking system. would there be runs on the bank? and would the european central bank have a big decision about whether or not they're funding the greek banks? bottom line tomorrow is pivotal. for "nightly business report," michelle caruso-cabrera. oil prices fell for a second day after a government report showed record high inventories of crude. the energy information administration said it was the sixth straight week where levels were at a peak. uti fell off the session lows at $51.16. brent crude was down 32 cents at $60.21. oil and gas prices watched closely by the nation's drivers who have been in showrooms buying new cars. to pay for the new cars taken on record amounts of debt. almost $900 billion as of the fourth quarter of last year according to experian automotive.
philip lebeau in chicago with that report. we're seeing record auto loans but whose borrowing might surprise people. why? >> reporter: i think it will surprise people. people borrowing the most had the best credit. the super prime credit rated consumers did more borrowing than any other group and that includes those with subprime or deep subprime credit ratings. we've heard this. people with the poor credit are driving auto sales. this report shows that's not the case. >> we have heard numerous stories abt selling vehicles to weaker credit. is it a concern? is it a myth? what is it? >> >> reporter: it is a concern but not inflating sales overall. look. in any market you will see dealers selling vehicles to people who can't afford those vehicle payments. that's inevitable. that's going to happen all the time. when you look at the repossession rates or the delinquency rates on auto loans, they'r're below historical averages. we're not seeing a problem right
now similar to what we saw in 2008 and 2009. >> a lot of different advertising loan types. no money down. 0% financing. seven year loan. what's the most popular? the seven year rising to the top? >> reporter: it's not the most popular yet but quickly becoming more popular. six and seven year loans is what we see most people take out. most people do six year loans but increasingly seven year loans are offered. >> that's really amazing. philip lebeau in chicago tonight. still ahead, yahoo made a big move today to reinvent a critical part of its business. but will it work? we
the labor market appears to be perking along. the number of americans filing unemployment benefits dropped to 283,000 last week. president obama submitted annual economic report to congress and it paints a positive picture of the economy. over the next 12 months. the report clearly outlines his agenda which includes overall overhauling the corporate tax code increasing infrastructure spending and some new trade agreements. >> reporter: he reiterates what he proposed in the state of the union and his budge. we've seen a celebration from the president over the accelerating job market which created 260,000 jobs on average per month in 2014. heightened growth and better trends in unemployment which is now, of course below 6%.
and the president's remedies are what he calls middle class economics. steps to improve middle class incomes through labor market reforms, through new tax credits and tax benefits for average families and higher taxes on the wealthy. >> republicans control the congress. will the middle class economics play there? go very far? >> no. it won't go far at all but the president is trying to shape the debate that's accelerating now in the 2016 presidential race tyler, as well as the congress that meets the next president. his successor. he's trying to move the ball down the field. maybe get some things but not very much of this agenda. >> obviously, the gop has their issues with the president, but some in his own party have issues with him, specifically i think over corporate taxes and expanding trade. is he making his own party unhappy? >> yes. he's making both parties unhappy, actually because democrats don't share his priority for reducing that top corporate tax rate from 35% to
28% as he's proposed. he'd have to close a lot of loopholes to do it. that's very difficult to do. but one thing that's more likely to get through which is democrats are very opposed to are the transpacific trade deal. the president tries to make the argument that the problem the labor movement is objecting to jobs going overseas downward pressure on wages, it's a result of globalization but not the trade deals themselves and he said he's going to get enforceable standards to prevent a race to the bottom in these new days. >> john harwood in washington. thank you, reporting from capitol hill or nearby. >> three companies returning more cash to shareholders is where we begin tonight's market focus. coca-cola and kol gate all up. coke up to 38 cents a share and tiro up to 22 cents a share. a special dividend of $2 a share
and colgate buying up stock. coke up almost 1%. colgate shares down about a half percent. price line's result today. beat on the top and bottom lines. growth by hotel and car reservations. travel booking site said it would buy back additional 3 billion shares. it did warn investors about the impact of a stronger dollar. still, priceline popped about 8.5% to look 1218 at $5 a share. more than 2 million subscribers in the quarter. the chief explained how he wants to continue to invest in new subscribers. >> i was accused in the second half of last year. of thinking more about customers than shareholders. which, by the way, you can judge
from the. we gave huge guidance. it's revolution. one by one taking all the things that everybody hates about wire les wireless and eliminating them structurely forever. >> up to $31.85. it was a mixed quarter for hormel. my favorite corn beef hashed raised the outlooks. and continued demand for turkey. shares up more than 2% today to 57.65. the government is suing to block the merger between cisco and u.s. foods. the two largest distributors say the proposed $3.5 billion merger would hurt in distribution and raise prices. shares of cisco off 3% to $35.56. yahoo wants to show it can
make mobile work. that's what meyer was trying to prove at the first ever mobile developer's conference today. investors seemed pleased sending up shares more than 1.5%. josh lipton with a look at why it's so important for yahoo to get this part of its business right. >> good morning and welcome. we are so excited about today. >> reporter: yahoo's ceo marissa meyer said when she first joined yahoo in 2012 the mobile business there was a hobby, not a job. these days meyer is working hard to change course. that's why today, she hosted yahoo's first ever mobile developer conference. where the company announced a sweep of products for developers and touted yahoo's mobile success. >> this reinvention of our products for the mobile space is we're having the achievement i'm most proud of as my ten years at ceo. investment paid off.
$28 billion this year on mobile ads, according to research firm emarketer, so the stakes are high and there's a lot of money on the line. for "nightly business report," i'm josh lipton in san francisco. coming up uber and lift two popular start-ups that are changing the way people hail cabs cabs are facing legal challenges that threaten their business model. so the west coast ports are reporting now lower cargo volumes for january. the ports of seattle and tacoma said imports fell 21% compared with the same month a year ago.
port of long beach said volumes off 24%. the port of los angeles will release its numbers next week and it said it expects the report to show steep drops. the decline is being contributed to that ongoing labor dispute and slowdown. uber the ride-hailing app that's changing the taxi industry is expanding the amount of capital it expects to raise by a billion dollars and that brings the total current round of funding to just under $3 billion. the start-up decided to increase the round because of high demand for its shares. the company is also seen its revenue growth accelerate in recent months. well as uber grows, so do its challenges and some of those challenges could end up bringing legal challenges. uber and lift facing lawsuits brought by drivers in cities that could dramatically increase the cost of doing business and potentially change their business models. kate rogers reports. >> reporter: the model that has
allowed the sharing economy to flourish could change dramatically as decisions are awaited in two law suits with uber and lift in california. at the heart of the cases, which seek class action status is whether their drivers are independent contractors or employees. the plaintiffs argue their employees and are seeking reimbursement for things like gasoline and vehicle maintenance. if judges rule in their favor, cost for transportation technology start-ups uber and lift could increase significantly to include health insurance costs, social security unemployment insurance, and wage protection. uber and lift argue their technology platforms providing services to drivers as well as passengers. in los angeles, an uber driver who asked us to withhold his name said he's spending $80 a week on gasoline $30 a month on car washes and $300 a year on maintenance. his reimbursement on those costs
alone could near $5,000. he may be an independent contractor but feels like more of an employee as he claims uber has control over the jobs he accepts. >> what i really feel as an employee given that uber controls everything i do from where i go to how i can look and how i can talk to people. and every job that i take i'm forced to take even if i lose money on the contract. otherwise, i'm fired. so in that way too, i feel like an employee because i'm not given a choice as to what my duties are. >> reporter: not all drivers are pushing for benefits. brooklyn based lift driver robert henderson said he likes the convenience of being an independent contractor although admittedly he receives health insurance through his wife. becoming an employee would change his outlook. >> it's an obligation. and i don't want the obligation feeling. i like the fact that when i'm ready to work i can work. >> reporter: attorney shannon
liz rear den said flexibility and employment status aren't mutually exclusive. >> that's a common refrain. oh the workers like being their own boss. they like being independent contractor but the truth, they're not independent contractors. they're working for these companies, following the company rules. they're not getting paid proper wages and employee benefits. >> reporter: uber and lift declined to comment and while the decisions could be limited to drivers in california, liz reardin plans nationwide class action status which could be a game changer for other sharing economy start-ups across the country. for "nightly business report," i'm kate rogers. and finally tonight, china welcomed the year of the sheep today ushering in the lunar new year part of the tradition. the sheep has a bad rap. some believe brings bad luck but apparently not for u.s. investors. for the past years, sheep has
been the most profitable year for the s&p 500. time and again with average annual returns of about 21%. it is the third most profitable year for the dow and we're not pulling the wolol over your eyes. that's "nightly business report." i'm tyler mathisen. have a great evening, everybody. we hope to see you right back here tomor
kevin: today on ask this old house... i'll show you how to fix a sagging plaster ceiling with the help from some window screens. jessica: i think it looks fantastic. it's a complete transformation. roger: guys, very simple. it's white and it's made of styrofoam. what is it? tom: i know exactly what it is. we use it all the time. what do you do with it tom? i'll show the latest in super-efficient home-heating and cooling technology. so all your heating and cooling is going to be provided by this single outdoor condensing unit, and even though you can have multiple zones inside, it's only one box outside. kevin: that's next on ask this old house. let's go outside our comfort zone. let's push our boundaries, push ourselves and then let's redefine the word "comfort."