tv Nightly Business Report PBS September 14, 2016 6:30pm-7:01pm PDT
♪ this is "nightly business . with tyler mathisen and make a merger. bayer buys monsanto in the biggest takeover of 2016. creating an agricultural conglomerate that could reshape the farming industry. hitting the road. if you're in pittsburgh, you can get an uber car that drifz itself. >> ae way to raise funds for supplies. those stories and more tonight on "nightly business report," september 241th name the biggest takeover of the year. bayer buying monsanto, the price tag $56 billion. but getting the deal done was not easy and won't be. bayer came calling not once, not
twice, but three times before monsanto agreed to be acquired and each time the price tag increased. today's deal came in at $128 a share. and that sent shares of monsanto slightly higher in the trading session. the takeover will create a conglomera that operates in pharmaceuticals, health care products, pesticides. so it still needs regulatory approval, and given that monsanto is the world's largest supplier of genetically modified seeds, the combined company would be a power house that could reshape the farming industry. hampton pearson has details. >> repor americans seed and fernandez giant, monsanto, is about to be swallowed up by its german pharmaceutical rival, $66 billion, making it the biggest global takeover deal so far this year. >> we've been through 40 years now of depressed crop prices.
ten-year low for corn, five-year low for wheat. when you look at a deal like this, you can't try and tame these things. you have to take the longer view. >> rep creates a vast conglomerate, pharmaceuticals and pesticides. with annual revenue at $26 billion. bigger by far than the closest rival, switzerland's sen general at that, a key selling point for buyers' ceo. >> this enables both companies to combine their efforts early on to develop better integrated solutions for the phrmas rather than doing things sequentially. >> reporter: shareholders don't get to vote on the deal and there are antitrust concerns. >> if regulators block the deal, they may monsanto a $2 billion breakup fee. the firms hope to close the deal at the end of the 2017. for "nightly business repor i'm hampton pearson in
washington. so what kind of impact might this mega deal have on farmers and the u.s. agricultural busi jon jonas oxgard joins us. welcome, jonas, nice to have you with us tonight. let's start first of all with -- i think you think that this might be good for perhaps one part. or party in the deal. but not necessarily together. >> yeah. it's clearly good for monsanto. they get a 44% premium on their undisturbed price. and this is a good premium, by any standard. it's hard to see how this is truly value-creating for them. it's 5 to 6% return investment. a big investment for fairly low returns. >> what do you see as the regulatory risk here? >> so technical regulatory is actually not that bad. they don't have a lot of truly overlapping sales.
but the political risk, i think, is significantly higher. farmers are clearly incensed about this. we had -- was it 250 farmers in washington make their case in front of willsack and others. grassley holding hearings next week in the senate on the space. and yeah, the farmers are upset. and i think the politicians, particularly the corn belt, where there soon will be job cuts. >> explain why the farmers are enset. upset. in creasingly fewer participating, not because of this merge, but others as well? >> yeah, this is the fourth major deal in the space. and span of what is it, eight months? so, yeah. farmers are clearly concerned about the reduction in competition. it doesn't help that we still don't know what the outcome of dow dupont is, even though we think that's going to pass approval. we don't know what they're going to have to divest.
so at this point, i think people assume that everything will stay consolidated. >> it's also coming at a time when agricultural prices are down. and one of the arguments that the companies are making is that it will boost prices. do you see that this deal significantly increasing prices, or just marginally? >> well, i mean, farmer net income is down, because corn prices are down, or crop prices are down. but the farmer input cost has not done down. seed pricing relatively stable. what farmers are concerned about is seed pricing will go up. seed pricing has practically doubled in the last ten years and they're going to continue if the competition is less. >> why do you think the stock price on monsanto is where it is today when the deal price is $128 a share? i think we had it at $106. >> yes, the stock prices have barely moved.
i think investors do see the fairly hefty regulatory concern or political concern. if you take a 50% probability of $128 and 50% probability of going back to 90, you end up with roughly 106. >> there you go. >> easy as math. >> thanks, jonas, we appreciate it. jonas oxgard. stocks took a breather today. closed mostly enclosur as oil dropped. the dow jones industrial average fell nearly 32 points to 1834. the nasdaq added 18, helped by a 3.5% rise in apple. the s&p 500 was down very slightly, a point and a quarter. as for oil, prices there fell about 3% for a second straight day after reports showed a large build in petroleum products. we've also seen a recent rise in treasury yields. and that is not sitting well with the stock market. in fact, the equities seem to
have become unusually sensitive to small changes in the bond market. mike santoli explains why. >> on the surface, the recent rise might seem like a good thing for stocks. don't rising yields mean the economy is improving and investors are willing to take on more risk? in one sense, this is true. and yields are still quite low, of course, with the ten-year treasury well below 2%. it is a pullback in equity since last week shows u.s. stocks are for now acutely sensitive to an bankrupt selloff of bonds which lifts their yields. investors have piled into sectors and dividend income, making these stocks less appealing as yields on safer government bonds go up. for these dividend sectors, utilities, telecom, consumer staples and real estate, together make up 18% of the s&p 500 index. the financial sector is only 13% of the index, once real estate stocks are excluded. another factor, rising yields
add pressure to the stock market's overall valuation. one of the key arguments for stocks in recent years, low bond yields help justify stocks somewhat elevated values in the eighth year of a bull market. with the recent rise in the ten-year treasury yield, on this basis, stocks appear less attractive than they have on average over the past five and ten years. no guarantee that yields will indeed keep rising, of course. and in the past, the stock market has eventually been able to absorb higher bond rates as long as they're accompanied by a stronger economy and better corporate earnings growth. until investors gain confidence that the economy and profit trends are getting better, stocks might well remain sensitive to each twitch of the bond mar for "nightly business repor i'm mike santoli at the new york stock exchange. >> meantime, the price of foreign imports into the u.s. fell in august for the first time in six months. the labor department says declining oil and food costs weighed down import prices which decreased .2%. that decline was a tad steeper
than expected. import prices have been constrained by a strong dollar and cheap crude. exports say this report points to tame inflation environment. last night, we told that american household incomes were on the rise for the first time in eight years, according to the census bureau's annual report on income and poverty. the median income rose more than 5% to $56,000 per household. joining us now to discuss this and other key findings in the report is trudy renwick, assistant division chief at the census bureau. ms. renwick. welcome. good to have you with us. this was by any stretch a very encouraging report. the gains were broad, i would say, across not just ethnic groups, but regions, as well. right? >> yes, indeed. yes, indeed. the income was up for all four regions of the united states. income was up for almost every race group. it was up for hispanics. up for men, up for women. really, a very, very broad based
improvement in median household income. and >> trudy, you know there has been a lot of talk about the issue of income inequality. as a matter of fact, it's present in the campaign right now. but it was an issue well before the presidential race started. did we see some improvement on that front? did it narrow? >> well, in the metrics we used to measure income inequality, we did not see a year-to-year change in income inequality between last year and this year. but we did see that there was an increase in income at the middle. that's what the median income measures and we saw an increase in income at the bottom, where we saw 1.2 percentage point drop in the poverty rate. so we did see good signs in terms of future narrowing of that income inequality. but between last year and this year, there was nothing that we could measure. >> good news is good news. but tell me how today's incomes compare on an inflation-adjusted
basis with incomes right before the recession or looking back, say, 20 years. >> okay, well -- the -- when we compared the incomes back to 2007, we see that we have not quite gotten back to the levels we were in 2007. and we have not gotten back to the peak income we had in 1999/2000. what we do see is that we have had the -- one of the highest year-to-year increases in median household income since we started measuring it. and the last time we had an increase this big was 1998. >> did i read some of the stats correctly in that most of the improvements are in more metropolitan areas? if you get out of the cities, into other parts of the country, the advances were not -- were not spreading. they were not as extreme. >> well, we saw increases in metropolitan statistical areas,
both in principle cities and in what most people would call the suburbs, which would be in metropolitan areas, but outside the principle cities. it's very small part of the population that lives outside those metropolitan statistical areas. and for them, we saw their income was flat and their poverty was flat. so we did not see an increase in income nor decrease in poverty. >> i'm going to ask you a quick answer to a tough question. why have incomes stalled? >> well, incomes didn't stall this year. they increased by -- >> compared with 2007 or back in 1999. why are we not higher than we are? >> well, i think that the great recession was a really tremendous blow to incomes. we never recovered. as i said, the peak incomes were 1999/2 a with the recovery of the early 2000 ls, we never recovered back to the 1999 levels and then hit with the great recession.
so we saw big declines. the news yesterday was pretty good in terms that -- >> certainly was. >> well on the road of getting back with that. >> thank you very much. still ahead on the road. why requesting a ride from uber is taking on a whole new meaning in the steel city. federal prosecutors reportedly investigating wells fargo, according to dow jones. u.s. attorneys offices in new york and california. recently sent a suspend to the bank as part of the probe into its sales practices. the investigation is still in its early stages and could potentially lead to a criminal inquiry. as we have been reporting, wells fargo was hit with a fine after
thousands of its employees were caught setting up accounts customers didn't as this, the report came out late this afternoon, and that sent the stock of wells fargo down, as you see there. ford plans to move all of the company's small car production to mexico from the u.s. ford's ceo confirmed the expected move and said the lower wages in mexico will help increase profits. the automaker's michigan assembly plant which currently makes the small cars will likely shift production to larger, more profitable vehicles. republican presidential candidate, trump, has criticized ford in the past for moving jobs to mexico. but the company has said it needs to make solid business decisions. ford also expects profit to drop next year. this as it increases spending and invests in technology like electric cars, ride sharing and development of autonomous vehicles. ford's chief financial officer also said the company is seeing headwinds from commodity costs. but after the profit dip next
year, ford does expect to see an improvement in its bottom line. shares of ford today off about 2%. uber is now giving some customers rides in self-driving cars. it's happening in pittsburgh, where the ride-sharing giant is publicly testing how well autonomous drive uber cars perform. phil lebeau has more from the steel city. >> reporter: is this the future of ride-sharing? uber says it could be. that's why it's operating a handful of self-driving cars in pi >> i think the public is going to be delighted. i expect this is going to be kind of an interesting experience. you call on uber and you're used to a specific experience and now you have kind of a future coming to you a little bit early. >> reporter: customers who order an uber in this city will be offered a chance to ride in a self-driving car for fre uber will have a driver and engineer in the front seat, monitoring the car's performance and standing by to take over if
something goes wrong. meanwhile, there's a screen in the back seat so customers can track their ride, and see what the car sees. like other autonomous drive the uber let's the driv know when the car is ready to take over. hit this button, and now the car will control itself and i think we're going to turn at this intersection here. that was the car entirely. why is uber modifying ford fusions and cx-90s with 20 cameras and 7 lasers when the company already dominates the hide-share business in the u.s. by paying real people to drive their own cars? because sevel automakers and tech firms are testing or plan to roll out their own self-driving ride share programs. so when the day comes that autonomous drive cars start to take off, uber will have a fleet ready to roll. >> there was a conscious effort
to drive these first to market, because the business opportunity is pretty strong for them >> reporter: but are people in pittsburgh ready for self-driven uber cars? >> i would definitely feel comfortable riding in a self-driving car. i trust it over human drivers. >> i just took an uber and they were asking me if i would take one and i said no. >> i don't think the average person would be okay with no one behind the wheel, you know what i mean? but i think it would be somethin good for t >> reporter: pittsburgh will soon find out if these strange-looking cars become a normal part of getting around the stee. phil lebeau, "nightly business >> therapeutics experimental drug for treating muscular dystrop y gets new hope. e treatment for the disease has left the food and drug administration. dr. ronald farcas criticized the
effectiveness, resulting in the fda delaying its decision on that medicine. there is currently no approved treatment for the disea shares soared 26% to 32.45. all allergan will have a deal that will expand the portfolio of dermatology appointments. up 2% on the day at 244.81. the real action at veti which saw shares sky rocket. more than doubling to $20.85. going the other way, ruby tuesday said yesterday its ceo stepped down after the restaurant chain's board reportedly called for a resi according to the "wall street jour" the decision was tied to faltering sales and weakness in the dining industry. separately, the coy gave disappointing preliminary results for the current quarter. ruby tuesday down 7.5% to $2.82. cracker barrel saw profit
and sales rise as higher menu prices help to lift results. but the restaurant chain issued weaker than expected guidance for not just the current quarter, but also the full year. as a result, shares fell 7% to $139.98. boeing warped it may make additional production cuts to its line of 777 airliners if demand doesn't pick up. the ceo said a potential slow down in manufacturing would make it more difficult for the company to reach its financial goals. boeing down a fraction to $127.67. chin back in school and that means fund-raisers, bake sales, car washes soon follow to help pay for needed supplies. but increasingly, teachers are going online to raise funds to stock their classrooms with more than just extra notebooks and pencils. aditi roy reports from union city, california. >> come in and have a seat. >> reporter: the students in jeremy taylor's fifth grade class in union city, california, are going high-tech, using
tablets to learn lessons and writing computer codes to program this digital ball to move. taylor paid for these gadgets the through crowd funding, raising money on sites like gofundme.com and donors choose.org. >> i can dream bigger now and not be limited by the textbooks or what has decided to be in the classroom. oh, a 3-d printer? interesting. what would that look like in the classroom and it has changed the dynamic of what the kids see as possible. >> reporter: as student across the country go back to school, teachers are increasingly turning to crowd funding to pay for classroom expenses. teachers create a campaign online for supplies, technology needs, even field trips. then set a dollar goal that people can contribute towards. and the sites take a small percentage or fee from the donations. donors choose dot-org and raised more than $100 million in its last fiscal year, a record and $33 million in just the last two
months alone. gofundme.com, a general crowd funding site, reports education is its fastest growing category, raising $60 million in the last 12 months. >> it's more efficient with -- i can get an idea, i can read something and get an idea. and have it in the classroom within a month. instead of waiting for a district approval, seeing if the budget has enough money. but to really be almost more cutting edge for the students. >> reporter: students aren't the only ones benefitting from these campaigns. nearly all teachers pay out of pocket for at least some classroom expenses. according to go fund me's data. these crowd funding campaigns help ease that financial burden for teachers and school districts. especial ones that are cash-strapped. >> i'm not burdened by -- we don't have enough money for this. i'm not burdened by we don't -- we don't -- we already decided on this tack, even though it doesn't work as well for your clas it's dreaming big. i can dream much bigger now. >> reporter: donors choose
dot-org and is partnering with chevron, donating a portion of gas sales in select markets of schools and also target, which is giving away up to $5 million to help support kid-inspired public school projects. for "nightly business report," m aditi roy in union city, california. coming up, right for disruption. the way companies want to change the way you get in shape. ♪ u.p.s. expects to hire the same number of holiday employees this year as it did last. about 95,000 workers.
it's another sign that seasonal hiring will remain flat. earlier this week, target said it was planning on hiring 70,000 seasonal workers, also the same number as in 2015. workers are employer-based health care insurance are seeing their up-front health costs rise. this as more employees move into high deductible plans. according to an annual survey by the nonprofit, kaiser family foundation, just over half of employees this year have coverage with a deductible with at least $1,000. higher deductibles in most cases means lower premiums. the study found that premiums rose just modestly, but still outpaced the rate of inflation. no industry, these days, is safe from disruption. not even the fitness business. a number of startups are using technology to shake things up, and change everything from the way we work out to the devices we use to move our bodies. diana olick highlights a few of them from an industry leadership conference in denver >> reporter: from video games to
apps, the common thread in fitness disruption is technology and a and ingenuity. >> we wanted something you could have fun with. >> reporter: slim gym is competing for top disrupter at the association conference in denver an interactive weight-based full body video game console that its ceo hopes to put in studios across the nation. >> you're controlling the video game. you run, punch, jump and you shoot. stomp. >> rep it's competing against hook it, a technology platform that tracks and values athletic sponsorships on social and digital media. >> we'll track every single post that an athlete makes to social and digita media and analyze it for brand value, hash tags and mentions of a brand. >> reporter: hook it's technology was able to show that ranaldo, who had more than 200 million social media followers is actually underpaid, given the value of his following.
>> 1.2 billion engagement. and, you know, which is more than the entire nfl league combined. >> r hook it's growing client list includes the lakers, cavaliers, usta and go pro. but disruption doesn't just happen inside or online. taking the elliptical outside has given one company huge grow. >> we're somewhere between pure fitness like the indoor trainer and cycling. >> repor former triathlete and marine, brian pate loved running but an injury eliminated. that he developed this as a no-impact alternative. this year sales are up 50%. >> we do have a lot of olympians and professional athletes that use it. but it's really something for anybody who wants to get that running-like workout but just doesn't want to deal with the pounding of running. >> reporter: the company is making great strides, both on social media and with more than 17,000 sold on roads and trails
around the world. for "nightly business report," i'm diana olick in denver. >> that does look harder. >> not that easy. i've done it. >> oh, boy. wow. >> that does it for "nightly business r tonight. i'm sue herera. thanks for joining us. >> and thanks for me, as well. i'm tyler mathisen. have a great evening, everybody. we'll see you here tomorrow
announcer: the following program contains mature content which may not be suitable for all audiences. viewer discretion is advised. i must say, i find mr. hereward very agreeable. good night, fred. good night, vi. gert: is she from the government? fingers, oh, strong like monkey paws. ooh! yeah! can we buy two pretty girls a cake? we don't like cake. violet: they couldn't live without each other. you can see it, can't you? is provided by contributions to your pbs stations from...