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tv   Nightly Business Report  PBS  June 15, 2015 6:30pm-7:01pm PDT

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this is "nightly business report" with tyler mathisen and sue herrera. >> stalemate talks between greece and its creditors go nowhere. and that's not the only thing rattling investors. there's also unc surrounding the fed. >> few and far between. why deals in the home building sector like today's merger of ryland and standard pacific don't happen often. >> consolidation waves from cigna to anthem and united health and aetna. is merger maenaa catching on in the health care industry? all that and more on "nightly busi re and we bid you good evening, everybody. i'm bill griffith in for tyler mathisen. >> great to have you with us. i'm sue herrera. it's a new week, of course but a familiar worry.
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greece debt cross-ice ace pears to be deepening and that rattled investors around the world. european union officials say no new concessions needed to secure funding. e ens says it won't give in to demands for more pension and wage cuts. that stalemate pressured stocks at the openal thoet major indices paired some of the losses. by the close, e dow jones fell 107 points 17,791. well off the fly of 200 points earlier in the day. the nasdaq dropped 21 and the s&p 500 was off nine points. stocks in europe got hit even harder. we have more from london. >> reporter: another day of selling for european stocks as last ditch talks with greece over the weekend failed to result in a deal. all major european indices closing in the red with the greek market being the clear underperformer out there, pulled dune by weakness especially seen in banking stocks. now speaking before european parliament earlier, the ecb
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president, he urged both sides to move quickly towards a deal but he also said that ball now is squarely in the greek government's court. cnbc spoke exclusively t greek prime minister and he said that greece and international lenders, they both need to make compromises. >> we really need both sides to climb down from their high horses and really work on a compromise an honorable compromise to find a solution and move forward on this. >> germany's new commissioner has warned that europe must prepare for a state of emergency from the first of july if no deal has been reached by then. for "nightly business report," i'm reporting from london. >> and the breakdown in those greek talks kicked off a week that does promise to be a big one for the markets. dominick shoe tells us now what is on the calendar and why investors need to pay close attention. >> there's a slew of potentially market moving news on the economic and corporate agenda this week.
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but three in particular are going to get outside attention. on tuesday, the fed kicks off two days worth of meetings that will ultimately tleed a decision wlon it will look to raise interest rat for the most part many experts aren't expecting any fireworks from the fed. >> i don't think they're going to raise in june. largely because they have -- they haven't really prepared markets for that. they haven't broadcast that. i think once we see a little bit more evidence for consumer spending and really the economy takes some real traction in this improvement that we' seeing i think the fed will be more comfortable. >> also this week there will be a lot of eyes trained on any n developments out of greece and continued negotiations for a bailout practice from other european nations. talks broke down this past weekend and now the threat of a possible debt default by the country is adding volatility to markets globally. there are risks but not yet a sense of panic as many believe a deal will ultimately be struck. >> my guess is this latest deadline feels as binary as any
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we've seen. my guess also is that greece will be in the euro-zone as long as germany wants them there. so to that end, the imf and the ecb will try to find a way to extend and get something on both sides that's agreeable and move this forward. >> reporter: that's the big picture. now on the company specific or micro front, both software giant oracle and fedex will report earnings this week both chf could tell a story about the health of certain parts of the economy. we're looking to see that fedex's earnings and revenue lines continue to expand as a sign of where the kple is going. we want to make sure that's -- that's kept its momentum. similar with oracle. we want to see that their orders and their earnings progression continues as an expression of where the economy is going to be. >> depending on how those three events take shape, each could have a real impact on how markets develop this early on in the summer. for "nightly business report," i'm dominick chu. >> joining us to talk about the big week ahead and what it will
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mean for markets is kristina hooper. she is evener investment strategist. so the fed is one of the top positions on your list at this point. what do you need to hear from the fed chief? >> well, what we need to hear from chair yellen and what we expect to hear is an emphasis on focusing on the path of rate hikes as opposed to the initial liftoff. we know that market participants are getting more nervous about when the fed will begin acting as it becomes more likely that fed will act before the fourth quarter given the economic data we've seen recently. and so what we need to hear chair yellen say is to really down play the importance of initial liftoff. and emphasize the importance of the path of rate hikes which we expect to be relatively low and take far longer to get to the end of the cycle. >> do you sense that the markets want the fed to cut to raise
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rates sooner rather than later? it is something they fear or something they would celebrate? it however, there is a growing group of market participates that would likely celebrate it. at the end of the day, our xpikttation is that most market participates will take it quite well after some kind of initial volatility because they'll recognize that it represents a vote of confidence for the economy. >> a lot of people are going to be watching inflation numbers that we got later this week. how key will that be as you form your investme in strategy for clients? >> inflation is becoming more important. ke in mind it is at a low level today. it's m it carefully as we move forward throug the year. however, we recognize and we advise clients to always be thinking about inflation and be hedging it in portfolios. >> and what about the talks with greece?
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they have the debt payments and everything due 30th. but there are other deadlines in terms of the talks with european officials. what is an investor to do with all of that right now? >> well investors need to recognize that the saga in greece will likely continue and that it will create noise on the margins. but investors, if they have a long enough time horizon, need to be focused on their goals and how ve goals. and that's going to be delivered by having adequate exposure to stocks including those sectors that can provide a higher level of growth in the overall market as well as a significant amount of stocks that can provide dividends. because dividend income is very important in this low yield environment. >> all right. kristina thank you. good to see you again. >> thanks for having me. >> kristina hooper. and now to the economy where the rising dollar and weak global demand appear to be further pressuring the
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manufacturing sector. industrial production which measures the output of u.s. factories, utilities and mines decreased by .2% from the prior month. meantime home builders sent set rose in june hitting the highest level since september. national association of home builders says they expect optimism to strengthen further in the months ahead. >> two big home builders are merging. ryland and standard pacific are getting together in aedda $5 billion deal. investors like the move sendif both ryland and standard pacific up 5%. bob pisani has more on what is driving the deal and why mergers in this sectorrare. >> reporter: home building mergers are fairly rare events. why? builders don't like to buy each other because what they really want is land. that's what is scarce. so why pay a premium for operations when all you want is land? you buy the land. still, some very good reasons why this deal makes sense for
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both sides. first, both co specifically the combined company would have a strong presence in california. for ryland sales go from 9% to revenues to 27% today with lower exposure to the midwest and mid-atlantic regions. second the combined company would have more land to develop and as i said that is the end game for all builders. the combined company would have a good mix of first time and move up buyee thing the deal doesn't have is a big premium. it is being billed as a merger of equals standard pacific is offering to merge with ryeland at the market price. that suggests neither side thinks housing will be seeing robust growth in the near future. for "nightly business report," i'm bob pisani at the new york stock exchange. >> meantime some of the world's department store chains are also getting together n this case it's hudson's bay, the owner of saks fifth avenue and lord & taylor.
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they're buying a subsidiary for $3 billion including day. this deal will expand it further into europe. >> drugstore chain cvs health will acquire t and clinic business forforred -- for $2 billion. they will operate them under the cvs brand name in target stores. cvs health says the deal will increase sales and prescriptions. shares of both cvs health and target rose in trading today. >> and today's speculation is any indication another consolidation wave may be coming to the health care space. first, there are reports that cigna rebuffed a take over deal from anthem. and another that united health is also eyeing cigna and possibly aetna. the speculation sent shares of all four stocks higher today. bertha combs sorts it out for us. >> reporter: every day roughly
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10,000 babyboomers turn 65 becoming eligible for medicare providing health plans for them is a booming business and that's part of what is driving big health insurers to look for greater scale in medicare. >> we've been saying for a while now that the five insurers will go down to three big players so that they have the scale to capitalize on all the opportunitie tha are being afforded by obamacare and the privatizatio of medicare. >> cigna reportedly rejected a bid of $175 a share from anthem the nation's biggest blue cross operator whiw united health the nation's largest insurer is eyeing the connecticut-based insurer. but the ceo and the board also want to grow their medicare business after acquiring medicare provider health spring three years ago. just last month cigna was said to be among the suitors for medicare giant humana which was reportedly also being quartere aetna and anthem. >> cigna paid the right
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price, woint put that deal out of the question. i think humana is clearly seeking certain valuation and more than one suitor at the table with cigna and aetna reportedly rumored to be in the mix, you know anthem is clearly in the mix as well. as far as the cultures of cigna and humana and the management teams, i think there is a fair degree of compatibility. so for the right price, you know cigna could be a buyer or a seller. >> susquehanna analyst describes the insurance sector right now like a big game of pac-man. if cigna is acquired by anthem that means that humana will likely go to aetna for a lower premium. but if cigna doesn't want to sell it's best defense will be to go after humana and pay up. either way, he says it's crazy times ahead. bertha combs, "nightly business report," new york. >> well from speculation and health care to the increasing
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role technology is playi in medicine. today a who's wh gathered at the first annual click ideas exchange. wr futuristic health technology were on at agendaa. meg terrell has more. ♪ >> repor today in philadelphia it was the tech part of biotech in focus. executives scientistses physicians and even former president bill clinton met to discuss the future of health care. on display, everything from holograms to 3-d printing to virtual reality. >> we're seeing the tech revolution finally come into the medical cocoon. >> reporter: event host said using virtual reality to improve communication between drug companies, doctors, and patients about how medicines work taking viewers, for example, inside the body to travel through the bloodstreag technology owned by facebook click says that the technology in the fute could used for everythingg development to
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surgical training. >> in the fast you'd have to train in theater as a surgeon just like a pilot has to train in the air. but as we've seen over the last 20 30 years, pilots are now getting much of their training, the trag in simulation. the biotech ceos previously founded sirius radio shared their visions for the future as well. >> a million americans die each year of organ disease. a quarter million in lung disease. even more in stage kidney liver, and heart disease. being able to provide these million americans with a replacement organ, you would have a level of revenues which is something on the order of $10 billion per year. >> reporter: but amid the sci-fi discussions, the doctor of the university of pennsylvania raised increasingly urgent questions. what is this all going to cost and how will we pay for it? >> we end up taking the technology which is cost effective for a small group and
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applying it much more broadly. one of the consequences is the bang the benefit that you end it costs that you had quickly becomes dissipated. >> reporte he forecasts the costs will be increasingly discussed as the presidential election heats up. for "nightly business report," i'm meg terrell in philadelphia. and still ahead, the one thing that costs corporate america tens of billions of dollars in the first quarter. united technologies plans to sell or spin off the aircraft unit. the company says the sale would shave about 10 cents a share off
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2015 earnings. a spinoff 20 cents and a final decision is expected soon. phil lebeau spoke to united tech greg hays at a very busy paris air show. >> we would see a spin or a sale. i think by the end of july the next 60 days we'll have a final determination which of the two options it will be. >> they make the blackhawk helicopters which are favored by the u.s. military. shares of the down component fell 2.a5%. that wasn't the only news made at that paris air show. the two largest aircraft makers themselves kicked off the event with a number of big deals with the jet liners. phil lebeau back with >> reporter: a busy day here at the paris air show with boeing airbus focusing less on the number of planes ordered and focusing more on the types of
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planes and the airlines that are ordering those aircraft. airbus announced saudi arabia airlines is the launch customer for the new a-330300 regional plane which will be used on high volume routes in the middle east and in asia. meanwhile, airbus says the new plant in mobile alabama, is on track to open in september and deliver its first finished plane next year. the plane maker is prepared t as it expands production. >> we have it in shape. we know how to work together with them to anticipate the issues. >> rep meanwhile, boeing announced kutr airways will buy three of the airplanes which a backlog of more than 5,000 planes boeing is expecting to set a new record with more than 750 planes being delivered this year and sooegthe sikh sayso is looking
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to profit. >> volume is your friend when you're trying to make money. we have big fixed costs. we have ree industry has never deliver as many airplanes as we delivered last year. >> rep finally the new c series single aisle commercial airplane is taking flight in paris and is really one of the more interesting stories. despite numerous problems and delays bombardier says the c series will dlo go into service in the middle of next year and when it does bombardier says orders for the c series will finally take off. at the paris air show phil lebeau "nightly business report," paris, france. >> we begin tonight's market folk us with a late announcement from gap. they're closing 175 of the namesake stores and cutting 250 jobs at its headquarters as it tries to strengthen the struggling brand. the company which is also the parent of names like old navy and banana republic says it
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expects annual sales losses of about $300 million because of those closures. shares were higher initially after the bell. before the close, the stock was to $38.20. some competition for netflix. there are plans to launch a rival paid to watch video subscription service in china within a couple of months. netflix fell to 1%. the owner of kelly blue book and auto trader they're going to buy dealer track in a deal valued at $4 billion. the combination is expected to allow the firm's to provide a wide range of software for the auto industry and the market loved it. the shares soared up 58% to $62.98. and promising news for blue bird's sickle sell drug. the experiment treatment gotten couraging results in a one patient study involving a french teenager. bu the shares were lower though. fell by more than 1% to $177.78
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in today's session. gun maker colt files for bankruptcy. the company warned thata quick sale to survive. the gun maker estimate that's it owes roughly $500 million to about 50 creditors. guns made about it 179-year-old company were beyond a reasont by union troops in the civil war. well the market knew it would not be pretty. but now a new report shows just how much dame the rising dollar inflicted on corporate america.isen has details. >> reporter: from ford to facebook to pfizer companies across industries are complaining about a stronger dollar cutting into their sales abroad. now we know just how much it's costing. about $29 billion shaved off the bottom line from north american companies in the first three of the year. that's the lat fire ask which advises companies on managing their foreign sales exposure. you add in european companies
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who got hit hard from the russian ruble nearly 40% slide in a year the cost of currency swings for companies is $31 billion. that's 57% more than last quarter and nearly four times more than a year ago. for american multinationals the main culprit is the euro falling more than 11% during the quarter. but companies also blame the yen, ruble, brazilian real and british pound for losses. >> you don't want to focus on those companies where a majority a vast majority 80%, 90% of the revenue come from overseas. yo want to be in a diversified brand name company that can weather the storm because for all intents and purposes the world is still kind of working throy on the economic front. best companies in the world are right here in america. >> some companies like coca-cola do h their foreign exposure in the occur sin market to protect themselves from losses. that's harder to do with emerging market currencies like
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brazil and russia since currencies plunged dramatically. other companies like procter & ga and pepsi said they're raising prices for consumer items on shelves abroad to help offset the currency losses. there is a silver lining. that is the euro is actually stronger against the dollar so far this quarter, up 4.5% which could provide some much needed relief for american companies that do business in europe. longer term though wall street expects the u.s. dollar to continue to strengthen as the federal reserve prepares to raise interest rates. so companies are going to have to get creative and prepare for more pain when it comes to currencies and some of the most brutal swings in history. for "nightly business report," i'm sayer why eisen. coming up a dramatic change in the city by the bay. we'll tell you why the views in san francie.
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the former ceo prevailed. said the federal reserve over it bailed out the giant insurer in 2008 and took an 80% stake in the company's equity. the judge did side with greenberg. he declined to award any monetary damages because it was not shown that shareholders had been damaged by the equity stake. greenberg was seeking $40 billion in compensation. and finally tonight, the san francisco skyline is changing. in a city where real estate prices are literally sky high one new building is following suit. josh lipton gives us an
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exclusive look at the tallest tower west of chicago. >> reporter: it's the start of what will be a historic building in san francisco, one that will dramatically change the skyline of the city by the bay. 181 fremont street is located in soma. a neighborhood that is home to hot tech companies including sales force, air b & b and pinterest. the top 17 floors of the 70 story tower will be luxury residences with some of the highest price tags in san francisco, a city with far more demand than supply when it comes to real estate. so many people are able to get jobs here in the tech world, health care fan. and the big problem is finding a place to live. so i think when you look at the companies that are here from spot fi sales force, uber
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list linkd in people want to work for the companies. >> the condoes will start at $3 million while some units will go north of $8 million. the pent house has yet to be officially priced. potential buyers include foreign investors and, of course, tech tim silicon valley. the building is designed with them in mind. everything in the condoes from the sound system to the heat can be controlled with an iphone. but what if the tech boom goes bust and brings real estate prices down with it? allen mark isn't worried. >> we really won't have much inventory right throu this decade. on top of that we have 3.5% unemployment secd lowest in the country. we created more jobs than 47 states. so there's continued growth. this is where people really want to live. >> but will they want to live in a high-rise in an all
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overpriced overcrowded city? we're going to soon find out. units go on sale starting this fall and allen marks says he's already got interested buyers. for "nightly business report," i'm josh lipton in san francisco. >> imagine the view. >> wow. i was just going to say. i think i'd pay that amount for that view. imagine that 360 view of all of san francisco. beautiful. beautiful. >> but pricey. that's "nightly business report" for herrera. >> i'mgriffith. have a great evening, everybody. we'll see you tomorrow.
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