tv Nightly Business Report PBS September 15, 2016 6:30pm-7:01pm PDT
>> announcer: this is "nightly business with tyler mathisen a herera. triple-digit gains as the odds of an interest rate hike fall. lagging behind. why washington may be america's greatest economic weakness and hampering its ability to compete globally. luxury living. it's not your grandma's retirement home that more affluent americans are moving into these days. those stories and more on "nightly busines" for thursday, september 15th. good evening, everyone, welcome. a triple-digit gain for the dow as investors focused on a series of tepid economic reports, just one week before federal rev
policymakers meet to decide on interest rates. all of the major indexes rose 1% or more. the dow jones industrial ave 177 points to 18,212. nasdaq added 75. s&p 500 was up 21. the rally may have been sparked in part by today's soft economic data which lowered the possibility of a rate hike next week. today we learned consumers did not spend as much as they were expected to last month. that's important because consumer spending makes up 70% of economic activity. inflation was flat. the central bank wants to see that pick up. industrial production contracted as did a read on manufacturing activity in the new york area. so we have two reports tonight. first, steve leesman on what's going on with the economy. >> reporter: a massive amount of data released today that investors hoped would clarify the economic situation.
instead, the outlook is just as murky as before. retail sales came in worse than expected as consumers took august spending off. purchases in the current quarter remain strong. factories seemed to pause with the consumer as production registered a 0.4% decline. two closely watched regional manufacturing indices split, one up, one down. the jobs market remains strong. consumers should have the wherewithal to spend in the future. add it all up, and gdp forecasts for the third quarter still look fairly robust at 2.8% growth but down just a little bit. hopes for clarity were high as investors are still on edge about what the federal rev wio week. futures suggested an 11% chance of a hike next week. december seems the more likely bet. >> in the face of lackluster data we've seen in the last two weeks, the fed rhetoric hasn't changed. i think we're paying too much
attention to the fact that we have a fed that wants to get away from emergency levels of monetary policy, agnostic of market has got a mixed message. that's not data ddependency. it's clearly a fed that's waited too long and wants to get a rate hike in before december. >> reporter: for "nightly business" i'm steve leesman. >> reporter: stocks faced a rally today. a lot of it had to do with apple and tech stocks that supply apple. apple's huge rally this week is the main contributor in the gain in the indexes. remember, the bigger stocks have an outsize influence on how the index moves. apple is the biggest stock in the ininddex and has the bigges influence. apple has such a big weighting that the index moved up 20
points. you could say apple was the main reason the s&p moved up, all other things being equal. the companies that supply hardware and software to apple have also had a huge week. companies like broadcomm and analog devices are also up big. they helped drag indexes higher as well. tech-heavy indexes like the nasdaq 100 are strong as well. i'm bob fisani at the new york stock exchange. new york stock market y be when it comes to competitiveness in the overall u.s. economy, we're lacking. a new harvard business school study blames washington for hampering america's ability to compete globally. michael porter, one of the authors of that study and professor at harvard business school, joins us now to discuss the findings. professor porter, always good to see you, thanks for joining us tonight. one of the things the study points to very pointedly is the need for tax reform,
particularly corporate tax reform, particularl in light of what mr. trump said today. he says cut the rate to 15%. >> well, tyler, it's very good to be with you today. i think what i think our viewers need to understand is the u.s. has become very much of an outlier on corporate taxes. in a global economy, that's a very dangerous place to be. we have the highest statutory tax rate in the world of any other major nation. and the way we deal with taxes of foreign income is also unique. all the other countries have what's called a territorial system. we have a system where you pay twice, once where you made the profit in germany or wherever, and then you have to pay more to bring the money back to the u.s. we have trillions of dollars sitting offshore. this is really punishing investment. one of our most central priorities right now is to reform the corporate tax rate. we know what to do. the consensus solution is we
need to bring down the rate, down to the mid-20s, say, and we need to eliminate most if not all of the loopholes and deductions. that be done in a revenue-neutral way. but washington has been dithering about this issue, trading accusations for years. and we haven't made any progress. >> that brings me to some of the key findings. and you say basically america's economic challenges are structural, not cyclical, and we're dealing with a flawed u.s. political system that has led to an absence of progress in government, especially in washingt it pretty stunning report and you really do lay the blame on the lack of competitiveness, or progress, perhaps better said in the economy, squarely at the foot of congress and capitol hill. >> you know, we've been at this for five years. and we've looked very deeply across the whole economy. to make competitiveness improve in the u.s., we need business to do things. we need state and local
governments to do things. and we need the federal government to do things. and what we find is that business has really in the process of quite a, you know, turnaround in terms its commitment and work to enhance the productivity of the american economy and american communities. state and local governments are doing their best. you know, they can improve, but we see a lot of progress. but when we look at the federal government, we know two things that are very important. first of all, in our survey work, where we've looked at the kind of strengths and weaknesses of america in terms of competitiveness, we find that we have a lot of great strengths which should give us long term optimism about the potential of america. but we've allowed a bunch of weaknesses to crop up. areas like the tax code that we discussed, like infrastructure, like declining skills, like high cost health care, like a regulatory burden that is by all measures going on up.
so it turns out that most of the areas that are our greatest weaknesses actually are areas that are heavily the responsibility of washington. and we -- there's a lot of consensus, again, on what we need to do. we need to deal with the corporate tax code. we need to build infrastructure to get ourselves back into the 21st century. we need to deal with regulation. we need to do some relatively well-undd and well-accepted things. >> nothing seems to happen. >> this is now a republican administrati and a democratic administration. the administration. it's not the parties per se. it's the system. the system is not designed today and it's not working today to actually solve problems, to make things happen. >> we would love to have you back to talk about some of the wise and what needs to happen to break the knot that seems to have strangled washington on this. i hope you'll agree to do that, michael porter. >> i would be honored to. >> we would love to have you
back. michael porter with harvard business school. speaking of politics, republican presidential candidate donald trump says he can get the economy growing 4%. speaking at the economic club of new york, he outlined his plan for the economy, which he says will create 25 million jobs. >> if we reach 4% growth, it will reduce the deficit. it will be accomplished through a complete overhaul of our tax, regulatory, energy, and trade policies. one of our greatest job creation measures is going to be our 15% business tax rate, down from the current 35% rate, a reduction of more than 40%. >> john harwood has been covering the story for us from new york. good to see you as always, john. was there anything different in mr. trump's plan today, in this address? >> in fact there was, sue. it was in that clip you just played from donald trump where
he talks about the 15% tax rate. in the old trump tax plan, the 15% rate would apply both to corporations but also to small businesses that are not incorporated but pay taxes through the so-called passthrough provisions in the individual tax code. that's no longer in his plan. so those unincorporated small businesses would pay, under the existing system, not at the lower 15% rate. and the reason he made that change is that it costs the federal government less money. one of the things donald tr was trying to do was narrow of deficit impact of his plan. >> how was he received in the room today, john? i sensed a mr. trump who was still mr. trump but was not the angry, snarling fellow. he was on a teleprompter for most of the time. >> he was. and he was presenting a measured demeanor, which i think the demeanor went over well in the room. you had people trying to press him for specifics, how exactly
are you going to create 3.5 to 4% growth? how are you going to renegotiate those trade deals that you say you want to scrap? he wasn't big on the details other than some of the familiar answers he's been saying, which is, you know, put all my good policies together and they're going to produce a great result, or i'll hire better people to do what existing government officials haven't been doing successfully. but at least by his presentation, he was more effective. >> and ms. clinton was back on the campaign trail. what was her message? >> her message was, i'm back on the campaign trail. she even took questions from the press to try to put a punctuation point, sue, on the issues about disclosure, why she didn't tell people she had pneumonia, that sort of thing. she said, as her aides previously said, i didn't think it was going to that big a deal, i wanted to power through, bum back. >> john harwood in new york, thank you. the hospitality business,
restaurants, hotels, and the like, has been a huge job creator over the past decade. but what happens to job growth wh more and more restaurants automate? susan lee reports from an mcdonald's in bergen field, new jersey. >> reporter: the brand may be familiar, but the way they're serving customers is changing. this is with u.s. s one o first mcdonald's to use automated kiosks to take orders. instead of walking up to a traditional cash register, you walk up to a computer screen, swipe, and press on a long list of options to make your sandwich and your salad. then grab a table and wait for your meal to be delivered. but it's not just mcdonald's getting more automated. competitors panera bread have already moved towards taking orders via kiosk. domino's pizza has a mobile app and you can place orders by the website. starbucks is doing the same. analysts say in addition to improving the customer experience, technology is also
helping restaurants cut costs. >> some of the rise in automation, kiosks, all payments, things like that, to some dege is a direct result of what's going on with labor costs and other profitability challenges they've had. >> reporter: mcdonald's argues it's more about the redistribution of labor. >> we now have concierges out in the lobby helping people place orders on the screen. we have food runners to bring people their food so they can sit down and wait for their food. it's more of a repositioning, not cutting any jobs. >> reporter: analysts say that might be true in the short term, but in the long run it comes down to profits, especially as groups like fight for 15 push for a higher minimum wage. >> the labor environment has accelerated the rate of investment or the likelihood to adopt technology and invest in technology by franchisees and brands. >> reporter: all this technology is offering the customization diners want. at the same time it's offering
the cost savings that restaurants need. it's changing the industry as a whole and maybe how we eat. i'm susan lee in bergenfield, new jersey. hiring for the holidays may be more difficult for workers this. is formally realizingct safety samsung's galaxy note 7 smartphone after reports of overheating and exploding batteries. samsung has already issued a voluntary recall of the device. but that recall has been plagued with problems including conflicting information.
the note series is one of samsung's most expensive phones and the demand has been strong. an activist investor is calling on wells fargo to split the roles of chairman and keefe executive. the needmore fund of toledo filed a resolution saying management needs strong ov over from the board, following the latest fraud scandal. shares of wells fargo fell as the broader market rose today. earlier today i spoke with senator elizabeth warren of massachusetts, a vocal critic of the bank who said senior managers at wells fargo need to be held accountable. >> there is a serious problem with senior management at wells fargo. look, we're talking about a scandal here that involves thousands of their employees cheating tens of thousands of customers out of money and making millions of dollars doing it for the bank. and so the question is about
senior management, is it the case that they really didn't know what was going on? because if they didn't, then this is a bank that's just too big to manage. >> senator warren and the rest of the banking committee will host a hearing on the issue next week. it may be september, but some companies are already hiring for the holidays. as we've been reporting, ups and target say they're adding about the same number to their payrolls this year as last. but that's where the similarities end. this time around there is a clear shift towards e-commerce. morgan brennan has more. >> reporter: the holiday hiring has started, heading into what's expected to be the busiest peak season on record. retailers and transportation compan from target to amazon to fedex are poised to ramp up recruitment. ups expects to hire 95,000 workers, same as last year, for
the holiday season. but with e-commerce sales projected to surge, and the u.s. unemployment rate under 5%, good workers may be hard to find. ups has launched a redesigned hiring website. it's recruiting on college campuses, at ncaa games, and is offering shorter, more flexible work hours. some think it's going to get ugly. >> online is growing, which means demands for those jobs is growing. this year it's going to be even more of a struggle for retailers to find the people they need to get the orders out the door on time. >> reporter: even if sales remain sluggish for traditional brick and mortar retailers, demand for e-commerce continues to soar. factor in a light labor market in some regions, and pay is likely to push higher. wages could rise as much as $3
an hour, from an hourly rate of 10 to $12. the dynamic requires companies to strike a difficult balance. on the one hand, having enough people to handle volumes smoothly, on the other maintaining profit margins. training workers to handle the holiday rush can take six weeks, and then companies need to hang on to them at least until january, when the holiday rush comes to an end. for "nightly business r. oracle sees its quarterly results come up short. that's where we begin tonight's market focus. despite reporting a rise in profit and revenue, the company missed estimates on both. oracle attributed the results to lower than expected software licenses. they ended the regular session up 1.5% at $40.86. good year is hiking dividends and plans to return as much as $4 billion to shareholders. they raised quarter dividends
from 3 cents to a dime a share. the company reaffirmed its earnings guidance for the year. shares up for the day 5% at $32.39. supermarket chain kroger declared a dividend of 12 cents a share and said its board of director approved a share buyback, sending shares up 2% to $31.25. berkshire hathaway raised its position in energy company phillip 66 by 1 million shares, according to a r e latest investment brings the conglomerate stake in the company to shares are up to $79.10. novavax shares plunged when the company says its drug for a respiratory virus did poorly during a trial. shares plummeted more than 80% after hours. the stock finished up just a fraction, to $8.34.
fiat chrysler will recall nearly 2 million vehicles worldwide for an airbag defect that's been linked to three de and five injuries. airbags in the recalled cars may not deploy. the models impacted were sold between 2010 and 2014 and include the chrysler sebring, the chrysler 2 hundred, the dodge caliber, aveng and compass suvs. as car sharing continues to grow, one city is taking a rather unique approach and has started its own car sharing program. it's called blue indy. in indianapolis, it's changing the way some people get around. phil lebea. >> reporter: cassie is a car share believer. she sold her car a year ago and got behind the wheel of a blue indy electric car when she
needed to get around town. >> it doesn't serve all of my needs, but it does a large portion of it, especially when i'm downtown. >> reporter: the program started last year. a french automaker and the city of indianapolis are investing a combined $47 million to build a network of 278 electric cars that charge at 79 parking stations throughout the city. >> we've already been able to show really positive early growth. so we're off and running. this is about a year old now. it's overachieving expectations on every category you can imagine. >> repor so far, blue indy has just over 2,000 annual members, spending $9.99 a month and 20 cents per minute to drive around in one of the program's small electric cars. but blue indy is still in the red and is unlikely to turn a profit until thousands more join the program, which could take se which is why people like joe are
not sold on indy's car sharing program. he says blue indy cars are taking up valuable parking spots in front of his restaurant, and he wonders how many people actually use the cars. >> i can't believe it's meeting their expectations as far as their subscribers' usage. again, you don't see them driving around. i'm around the city a lot. >> reporter: that's the challenge for car share companies. whether it's zipcar or general motors' new maven program, the question is whether they can get enough users to become major players in how america gets around. cassie knows there are skeptics but for her and others in indy, these little blue cars are a big step towards a life without the hassles and costs of owning a car. phil below, "nightly business indianapolis. coming up, living large. a growing number of older americans are moving into active adult communities. and they want them plush and
posh. as is baby boomer generation moves into its golden years, homebuilders are ramping up so-called active adult communities. one big name in luxury likivings leading the pack. toll brothers is looking to service boomers who don't want to cut corners. >> reporter: jeff and today are not retired yet. they moved into this active adult community outside of denver a year ago. >> it was a good way to get
involved in things. >> reporter: they chose a new home built by toll brothers, a national luxury brand. >> because t it, you know, the last house you're going to have. >> reporter: that's what toll is playing to in this community, and in one going up in nearby heir or an are aurora, colorado. >> they don't want to simplify. they want to right size. a lot of them are coming from 3 and 4,000 square feet family houses and they're downsizing in square footage but still want the luxury, still want the house to live big and fit their needs. >> reporter: demand, according to toll, is only growing. the company has had strong sales in the northeast and midwest and on a recent earnings call, the ceo said toll is now expanding the adult brand out west, quote, in a big way. which means going even bigger on the lifestyle options. bigger and better clubhouses. a full staff coordinates everything from lectures to
entertainment, games and competitions, full gyms, indoor and outdoor pools. even line dancing if you like. but it doesn't come cheap. >> we've been fortunate. we've both worked for 30 plus years and been able to save and invest and all that stuff. we have funds accumulated to get here. >> reporter: and for as long as they're active, they intend to stay here. for "nightly business repor" i'm diana olick in broomfield, colorado. >> read more about luxury active adult communities by logging onto our website, nbr.com. finally tonight, cantor fitzgerald raised $12 million at its annual september 11th charity day. every year celebrities, sports stars, help the firm make trades. all the day's global revenues, there's eli manning, get distributed around the globe. the company has raised more than $135 million since the world
trade cent attacks in 2001. 658 cantor employees perished that day. before we go, here is another look at the rally on wall street today. all of the major indexes rose 1% or more. the dow gained 177 points to 18,212. the nasdaq added 75. the s&p 500 was up 21. that's it for "nightly m sue herera. thanks for watching. >> thanks from me as well, i'm tyler mathisen. have a great evening, everybodyk
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