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tv   Nightly Business Report  PBS  March 14, 2016 6:30pm-7:01pm PDT

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business report" with tyler mathisen and sue herera. >> it's the economy, how the raucous tone of the presidential campaign impacts a key issue this election cycle. checking in. a major chinese company is making a big push into u.s. real estate and it's hungry for american hotels. at a crossroad. two companies and two ceos returning from medical leave and lots of big hurdles ahead. all of that and more on "nightly business report" for monday, march 14th. good evening, everyone. welcome. a new survey tonight shows that the chaotic presidential campaign trail is changing the way people feel about the economy and not for the better. according to cnbc, the current
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climate is impacting the outlook for the american economy, which includes everything from taxes to jobs to foreign trade. and these forecasts are something investors are watching closely since the economy only grew at 1% in the final three months of last year. steve liesman breaks down the results of the survey. >> interesting results from the cnbc fed survey. we asked a bunch of political questions and what you see is of our 42 respondents, 56% say the campaign is negative for the economic outlook. 5% say it's positive and 39% say it has no effect. as for party choice, which party would be better for the economy, 18% say democrats and 40% say republicans but a large percentage says it doesn't matter or they are not sure, which is higher than we've seen in other surveys. how about the candidate who will be best for the economy here.
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zero percent say sanders, 13% trump, 16% clinton and 42% governor john kasich is seen as being best for the economy. how about best for wall street? similar results here. 11% for rubio. zero for cruz. 14% for trump. 22 for clinton and 35 for governor kasich. you can see here again, kasich loses a little bit. clinton gains it when it comes to the stock market but if that number two position unclear in this anti-establishment, anti-wall street campaign if candidates wear this as a badge of honor or the other, you can imagine sanders crowing about the why, zero percent of our respondents see him as good for the economy. john harwood covers washington and the campaign for us. good evening, john. is it possible that the harshness and unruliness of the
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campaign, as steve just described, is actually unsettling people as they make economic decisions? >> sure. markets don't like uncertainty and one of the things that we have is a republican party that has been torn apart in the prospect of a republican nominee who takes a position anti-thetical on issues like trade and immigration. >> that begs the question, can anyone really stop trump at this point? >> well, we're going to find out tomorrow, sue. you've got jackpots available in both ohio and florida. those will be a portion on a win or take all basis. marco rubio is trying to stop donald trump in florida. it does not look like he'll be able to. he's way behind in the polls but john kasich is running ahead of donald trump in ohio. if he can hold that crop of delegates, that will make it more difficult for donald trump to get the majority he needs to
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be nominated on the first ballot in cleveland. >> two questions in one here. what happened to trump's lead in ohio and do the so-called establishment republicans want him to drop out if he loses in florida? >> as far as rubio goes, there's some debate about that because if rubio drops out, delegates might be relieved and that would allow donald trump to potentially get some of those ahead of time. so the more votes that are held and possessed by donald trump, in terms of ohio, john kasich is a popular governor. he was recently re-elected easily. the fact that donald trump is competitive with him is a sign of how strong donald trump's candidacy is but john kasich is a popular politician and it's no surprise really that at the end of the campaign he's going to exert some of that underlying strength. >> we haven't mentioned mr. sanders. what is the chance that he could
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pull off a surprise and top the polls in michigan? >> the polls were way off last week. when we read them now, they say bernie sanders is well behind in both ohio, in north carolina and also in florida. but he's hoping to pull an upset. the challenge is, he's way ahead in delegates and needs big victories to make up that gap. >> john harwood reporting tonight in washington. on wall street, stocks closed mix on very light volume as investor digested the news. the nasdaq rose fractionally and the s & p 500 lost 2 1/2. oil prices fell as iran dashed hopes of a coordinated production freeze anytime soon. domestic crude settled down more than 3%. natural oil stocks have racked up big losses over the past year but, believe it or not, they've
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also come back a lot in recent weeks. morgan brennan drills down on the energy sector. >> reporter: energy stocks may have turned a corner. the center is performing a broader market of 2% so far this year versus the s&p 500's 1% decline. oil prices, despite losses today, have jumped nearly 25% in the past month. still, energy stocks have a long way to go. in 2013, oil was trading closer to $100 a barrel and down more than 40% since the bull market began back in 2009. michael kelly, an analyst, likes oil and gas producers, including rsp. >> if you get to $50 long term, these companies strive and thrive and make a lot of money at 50. we're not going to subscribe any
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value beyond that. those are going to be the names that have exposures. >> since the start of 2016, 19 energy companies with market caps of $500 million or more have reduced or completely suspended their payouts. according to s & p capital iq. many have been sectors in the recent rally. petroleum slashed the payout by over 80% yet shares popped nearly 50% since late january. and diamond offshore drilling, which suspended its dividend altogether, has seen stock soar nearly 40%. rising oil means companies can begin to make money or not lose as much. couples with steep spending cuts and cash flow story plays out most quickly with the companies hit the hardest. >> i think that was the prudent financial move by these companies to just, you know, shelf the dividend for the time being and i think, you know, the investors we talked with pretty
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much understand that and we're happy with that. >> but one group has not partaken in the run-up, independent refiners. valero has tumbled since the 2016 start. pressured by higher crude prices and lower margins and lower recession fears. peek driving season is around the corner and analysts say that could fuel gain for some of these names. for "nightly business report," i'm morgan brennan. to merger news now, apollo global agrees to buy fresh market for more than $1 billion. this comes after fresh market was looking to sell itself. the takeover sent shares of fresh market up more than 23%. a chinese investment group wants to buy up u.s. real estate and it's going after starwood and made an unsolicited offer threatening a pending deal with marriott which sent shares higher. as susan lee reports, this bid
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is part of a bigger wave of chinese companies acquiring u.s. assets. >> reporter: not one but two multibillion dollar hotel deals led by the same chinese company, fresh off the 2014 purchase of the historic waldorf astoria hotel, they now have their group on the operator of w hotels, westin's and sheratons. now, back in november, marriott had agreed to buy starwood for close to $11 billion to build the world's largest hotel operator but now they are leading a counter bid along with primavera offering more money for starwood. that's on top of a separate deal being negotiated with onbong for close to $6.5 billion. this includes the famous essex hotel here in new york. the current trend of chinese
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money buying into u.s. real estate is an encouraging sign. >> given the volatility that we see in the global markets and in china in the last couple of months, some commercial real estate investors had a loss of confidence of chinese investors coming to the state. this is a real vote of confidence not only in u.s. real estate but chinese investors coming here as well. >> 2016 is expected to be a record year for chinese mergers and acquisitions outside of china. three monthsnto this year and we're already sitting at $105 billion in deals and counting, according to deal lodge. basically, that's the same amount that we saw in the entirety of 2015 which was the highest recorded in history for chinese m & a and it's not just going into real estate and properties. this year, ge sold off its appliance division in a $5.4 billion deal. another high-profile acquisition in 2016, china's richest man
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paying $3.5 billion for hollywood producer and legendary entertainment. you may remember this as a company from a few years ago and then listed it back in new york and who can forget the pork deal in 2012 which at the time was the largest chinese purchase in the u.s. by smithfield for $4.7 billion. and given the current conditions, it might be safe to say that we can expect more chinese money chasing u.s. assets in the future. for "nightly business report," i'm susan lee. still ahead, bad credit? no problem. the sign and drive sliver of the u.s. credit market that's making some investors nervous.
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an update now on the investigation into the crash that killed former chesapeake ceo aubrey mcclendon. the suv was going roughly 78 miles per hour when it hit a concrete bridge earlier this month. data from the vehicle's black box show that he tapped his brakes but not in the 31 feet before the impact. investigators found tire tracks but no skid marks as he was not wearing a seat belt. to companies at a crossroad, valeant and united. united, one of the most recognizable brands in the world and both are facing mounting challenges. we begin with united whose ceo is back at work today, two months after a heart transplant that followed a massive heart attack last fall. when oscar munoz can't ease back into his old job. as phil lebeau reports, he has
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big tasks ahead. >> it may look like business at usual at united airlines but at the company's headquarters, it's not a normal day. the ceo is back in the office and immediately attacking a persistent problem at united, poor labor relations. in a letter to employee, munoz wrote, "i have many priorities on my first day back but at the top of my list is my meeting today with our labor leaders. i believe that together we can resolve our contract issues. those issues, including the amount of a proposed pay raise, led more than 90% of unite's mechanics to reject its most recent contract offer. when union members voiced their complaint at an analyst meeting in new york last week, some admitted they are optimistic about working with munoz. >> he seems like he's a pretty decent ceo than what we had in the past but we hope he does the right thing for us. >> oscar is saying the right
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thing. we're waiting for the delivery. >> reporter: if munoz and united unions can get on the same page, the airline could finally improve its performance. for years, it's trailed other carriers in on-time arrivals, customer satisfaction and profitability. but that could change under munoz. according to the co-founder of southwest airlines. >> i'm a big admirer of the ceo oscar munoz and everything that i've seen him send out to his employees, it manifests the same humanistic spirit that southwest airlines did. >> reporter: if they can improve their performance, it can go a long way towards resolving another issue facing at the airline, dealing with two hedge funds that are pushing for new leadership on the united board of directors. phil lebeau, "nightly business report," chicago. and now to valeant, whose ceo, fresh from medical leave,
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faces numerous problems from death to federal investigations and recently delayed the earnings report due out tomorrow. meg lays out the problems facing the ceo michael pearson. >> reporter: three months since the street heard from mike pearson and investors will be listening closely tomorrow for clues about the drugmaker's future. his return at the end of the february from a two-month medical leave of absence recovering from severe pneumonia and other complications. analysts say he needs to make sure that the company has no more surprises in store. valeant's stock has lost more than 60% in the last year after a series of seemingly never ending setbacks. scrutiny over federal investigations, accusations of accounting fraud and finally pearson's illness. the return brought negative surprises. valeant postponed the fourth quarter earnings release and conference call and the s.e.v. filing on last year's results will be delayed even further.
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news of another federal investigation came to light that day depressing shares even more. investors are awaiting the outcome of a specialty pharmacy answering accounting questions and a delayed 10-k. the company is focused on paying down the $31 billion in debt and make fewer acquisitions. investors are also concerned that health insurers and pharmacy benefit managers will increase the pushbacks on valeant's drugs. what they want from pearson's return is improved communication and, most of all, a smoother road ahead. for "nightly business report," i'm meg terrell. gw pharmaceutical reports a successful phase three trial for epilepsy and that's where we begin tonight's market focus. the british drug company has been testing a cannabis-based drug to treat children with
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epilepsy and had promising results. the news sent the company's shares soaring 120% today to 84.71. 3-d systems has plans to expand into health care and automatic complications and a steeper loss for the maker of 3-d printers. shares jumping more than 24% on the day to 1439. best day for the company in five years. drugmaker lynn net is reviewing the sales forecast for the year and the company is seeing unanticipated market softness and the loss of an unnamed key customer is expected to impact its sales. shares down nearly 5.5% to 21.19. red box owner announcing that the board will be exploring strategic alternatives for the company and has a plan to continue returning cash to
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investors and retiring debt. shares of the company ending marginally higher to 43.39 and spiked in after-hour spending. u.s. car loan delinquencies are rising. subprime auto loans over due by mother than 60 days reached the highest level in two decades raising concerns now about the health of the auto industry. joining us to discuss what this means for the hot auto sector is melinda, director of auto finance at experien automotive. how worried are you about this rise in delinquencies for subprime auto loans, namely, those that go to people with less than pristine credit? >> well, we certainly look at delinquency and while there is an increase overall, we do, of course, see an increase in subprime but we also look at the overall performance of the entire market and, yes, it is up
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but from an historical standpoint, if you go back ten years, we're still at lower levels for the entire market than we were prerecession. >> how much lower? because, you know how these events sometimes unfold. you see the subprime issues start to kind of fester, if you will, and then all of a sudden you do have an issue. so where are we in terms of the range? >> well, right now when we look at 60 day delinquency, for example, it's about .77%. prerecession you would see it about .84%. and then when you look at the percentage of the total market that is subprime, it's about 24.5% of all auto finance subprime. if you compare that to prerecession, it was closer to 30, 35%. yes, we've been growing subprime but historically it's still at very low levels. >> so, of all of the auto loans out there, prime, subprime, whatever, .77 are delinquent, of
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all the subprime loans that are out there, as i understand it, what has got people concern is rising delinquencies among those that are then packaged off and sold as bonds. is the problem really concentrated in those loans, the ones that are packaged or in all subprime loans? >> well, unfortunately, i don't have much visibility to what would be packaged versus what would not be packaged. >> uh-huh. >> but, of course, where the delinquency customers, it's in the subprime population and there are higher rates of delinquency and we see those rates rising in subprime. we spend more time looking at the total market, the average lender that has a very broad spectrum portfolio and they balance the risks that they know is going to occur with subprime and having stronger focus in the near prime population. >> any final thought here? we all remember the mortgage-backed securities that sort of vibrated through the financial system and caused such distress. can you see that happening with
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these bonds that are backed by auto loans? >> well, not necessarily. it's a much different product. the average debt level is going to be considerably lower, especially when you're looking at subprime debt. the average -- probably the average loan is 18 to $20,000 so considerably different versus a couple hundred thousand dollar mortgage. plus, of course, there's going to be residual value left on those cars so when they do go delinquent, an installment option and get 10, $12,000 back. >> melinda, thank you very much, with experien automotive. why the entertainment industry wants to blur the lines between content and technology. ♪
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south by southwest started out as a music festival but today it's much more. some of the brightest minds and technology attend this gathering looking for the next big thing. this year, it's the entertainment industry going high tech to lure new fans. julia boorstin reports from austin, texas. >> reporter: content is front and center at south by southwest with virtual reality on display and content sharing startups generating buzz. and this tech-savvy scene is a valuable audience for traditional media companies as well. usa's mr. robach hosting this and turning this church upside down to draw attention to preacher. silicon valley plastered the town with signs according to the show's star, thomas middleditch,
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tapping into the tech world is increasingly important. >> i think the industry is big enough that if everyone in that industry likes something, it's big enough to move a needle. so many people are involved in tech, you know, startups or working for a company or even in an office where it's kind of tacky kind of. >> reporter: this game of throne from hbo drew over 1200 fans in its first day. hbo investing in this attraction that uses technology to put visitors' pictures into the hall of faces hoping people will share their photos of social media. >> you're not only hitting that one influence, you're hitting every single person and that kind of continues to have a halo effect. it helps to amplify our marketing message. we like to do things that are more tapping into the technology which really speaks to this tech audience here at south by southwest. >> hbo, amc and usa are looking
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to boost the social conversation, promoting the hash tags for facebook, twitter and instagram and hoping to generate buzz on snapchat as the line between technology continues to blur. for "nightly business report," i'm julia boorstin in austin, texas. and that does it tonight for "nightly business report." i'm sue herera. your public television station seeks your report. >> and we thank you for it. i'm tyler mathisen. have a great evening, everybody. ♪
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