tv Nightly Business Report PBS October 28, 2014 7:00pm-7:31pm PDT
. this is "nightly business report" with tyler mathisen and susie gharib. brought to you in part by. the street.com. featuring stephanie link who shares her investment strategies, stock picks and market insights, the multi-million dollar she managers with jim cramer. you can learn more at the street.com/nbr. the federal reserve gets set to end its stimulus program. what comes next for the central bank some. >> mobile strength, facebook reports a 90% rise in profits but were investors looking for more to like? your financial future, we're all living longer, but can our pension systems afford it? can you? all that and more tonight on "nightly business report" for
tuesday, october 28th. good evening, everyone, policymakers at the federal reserve kicked off a two-day meeting in washington on enter rates. and on wall street, the investors launched a rally, powering the dow over a 17,000 threshold. today's gains were fouelled by the confidence at the super levels, also reassuring investors about the health of corporate america. and it was small tech corporations, not the big blue chips that helped the beaten down russell 2,000 index post a gain of nearly 3%, here is what happens, the dow up 187, the dow jumped 78 points and the s&p 500 added 23 points, steve liesman takes a look at tomorrow and what may be next at the central banks. >> reporter: two years and $1.6
trillion later, the federal reserve is set to end the bond program known as qe 3, or the third round of quantatite easing, the fed has seen the rates since 2014, and hiking them gradualing up 3% by the fourth quarter of 2017. that would be the longest, mildest rate hike cycle ever. they pushed the hike amid growing concerns in europe and the spread of ebola. with people twice as concerned. >> if they don't get their act together and stop the deflation trends happening in europe, they could drag us down. there is nothing worse than to have them import the inflation from europe.
so that is the thing that needs to be addressed. if it is, we should be just fine. >> reporter: in fact, europe even ranked as the biggest threat to the u.s. for recovery, outpacing regulatory policies. not to worry, three out of four think the european central bank will follow in the fed's footsteps and announce its own qe program. looking for 2.9% growth, even while the fed is expected to hike rates. the chance of recession? just 15% in the next 12 months. and not everyone is convinced qe is going away forever. survey respondents see about a one in six chance of qe for the next two years. home prices are still going up, just not as fast as before. the s&p case shiller home price index shows an overall gain of 5.6% in august over the year
prior, just short of the forecast. robert shiller of yale and the co-founder of monthly interest says that slowing prices may be a cause for concern. >> we had a big entry, seeing it flattening out. historically, that is a weakening sign. especially in the bubble state. now, there is a big difference between california and say, texas. or colorado. california has just been very bubbly. and now that is where we're seeing the sharpest decline. >> detroit had the greatest monthly gain in august, up nearly a percentage point just from july. followed by dallas, denver, and las vegas. here is some other data out today showing mixed signs on the economy. consumer confidence this month is at the highest level since 2007 thanks to job gains and lower gasoline prices.
but orders for big ticket long-lasting durable goods last month fell by a surprising 1.3% instead of rising as expected. businesses getting most of the blame for not buying new equipment. after the bell earnings from facebook which saw a 59% jump in revenue last quarter, a big rise in mobile advertising, the social networking giant earned an adjusted 4 cents per share, topping estimates of $4.2 billion. despite the jump in active monthly users shares were initially lower in after-hours trading as you see on the graphic. bertha coombs joins us with her one big takeaway, what is it, bertha? >> you know, it seems investors want beyond perfection. this stock hit an all-time high ahead of results today up nearly 50% year to date.
the numbers are all pretty strong. one thing the company talked about on the conference call is that costs will continue to rise, facebook continues to look to acquired other social applications, acquiring what is very popular overseas in latin america and india. also they acquired instagram. and talk as though they may be having another acquisition in the works. so some investors might be taking a little pause. they might be taking a little bit of profit here, but compared to its peer, twitter, facebook is certainly performing on all cylinders. >> that is really the comparison, yesterday, twitter and that stock not doing well. bertha, thank you very much. bertha coombes at the nasdaq. also, gilead, sales of their hepatitis c drug, the treatment that costs up to a thousand dollars per day fell by 20% last
quarter. with that, gilead beat forecasters by 7%, shared slumped, but so far, the stock up 50% for gilead. and before we heard from pfizer, it reported earnings and cost cuts thanks to emerging markets including china, offsetting the rise of blockbusters like lipitor, it and others are not protected by patents. but now, pfizer shares were up by a fraction today. meg terrell spoke to the ceo about them acquiring astrazeneca for the inversion deal.
meg, what did the ceo say about the proposed rules for the treasury and covering inversions. >> they're very vocal, saying it puts american companies at a competitive disadvantage to their european counterparts. and he says the new proposed rules from treasury only complicate that further and put them at a further disadvantage when it comes to business development. he says that the fact the treasury says they may implement more rules or suggest more rules brings even more uncertainty to the process, potentially stopping the deal activity. pfizer will have to look at everything on a case by case basis. >> is there a chance they will start another inversion deal? >> some analysts like sun trust analyst john boris says instead of going for the big inversion deal like astrazeneca, pfizer may start to look at smaller
deals and beef up the cancer pipeli pipelines. >> all rightterrell, reportg f new york, thank you. another dow reporting results, profits at dupont shot up 52% thanks to selling more nutrition and health products and paying less for raw materials. but after forecasting slow growth ahead of the global economy, dupont shares were flat on the day. and still ahead, numbers showing we're living longer. but will your pension be there for you and what can you do about it. that is coming up.
just a week week ago before the mid-term elections with the candidates coming into the final stretch, spending a record amount of money on campaign ads. john harwood joins us from washington on how much money is being spent and where all that cash is going. i mean, that is the question of the day, john. this is not even a presidential race and you know there is not too many doubts about control of the house. so why is so much money pouring into these elections. and why? and how much? >> because susie, it is such a close race for control of the senate. in the house, 435 seats. but only about 20 are tightly contested. you have a dozen races in the senate that will determine whether democrats or republicans control for the last two years. that is why the total amount
that is being raised and spent is about $4 billion this year. that is up from 2.8, eight years ago when democrats were trying to win back the house and senate when george w. bush was president. >> john, what is business doing? which candidates are which parties are industries pouring money into? >> well, businesses tend as a general matter to be pro-republican. and the biggest single sector in terms of campaign spending in terms of donation is wall street and that means more towards republicans this year than it has in the last couple of years. but some sectors stand out as democratic friendly, high tech, you have a majority of high tech companies going democrat. but one is very heavily republican, that is the energy sector because president obama is pushing agenda on carbon emissions and climate change, 70
or 80% is going to republicans this year. >> so which party is getting the money, the democrats or republicans? >> the republicans are getting more money this year, it is estimated that republicans, overall, the outside groups as well as the candidates and parties themselves, the republicans will get about $157 million more. but that is only about 4% in the context of a $4 billion election. and i don't think, susie, it is going to make the difference in the outcome. these campaigns are going to be run on the ground in those states by local candidates, local issues. money is not likely to be to deciding factor. >> all right, we'll be waiting for those results just a few days to go, john, thank you so much. john harwood in washington. the government is suing at&t saying it misled millions of wireless customers who signed up for unlimited data plans. the ftc alleges that at&t failed to tell those customers that it would reduce data speeds someti by up to 90% once they went over a certain amount of data use.
it is a practice known as froffling. and customers are noticed about the practice on their monthly bill. and apple and alibaba, the ecommerce jt may be teaming up. at a conference late monday, kim cook boasted that apple pay had more than 1 million adjustments for the first time on line. despite cvs and rite aid disabling, apple is just getting started. >> we have a lot more merchants and banks to sign up, we're only in this part of the world. we're just getting started. but the early amount looks fantastic. >> at the same conference, alibaba ceo says he is open to
using apple pay in china but says both companies have to work together. >> that is always -- good marriage needs both sides hard working. and i -- i respect apple and respect them very much. i think he is doing a fantastic job, i hope we can do something together. >> well, investors like the idea, but shares of apple hit an all-time high today closing at nearly $107 each, with alibaba shares rising 2% to just below $100. coke results beat forecasters, the company is not convinced they can turn around. that is where we begin tonight's focus, the handbag maker saw the sales fall in the first quarter and predicts a continued plunge. they saw their slowest quarterly sales growth in china for two years, and is relying on that company to make up for retailer
shares in the u.s. like michael kors, shares fell to $34 even. aetna topped forecast and raised the forecast for the year, still they slipped a bit because the insurer said that medical costs for some of the small business coverage came in higher than projected. the ceo tried to reassure investors. >> in the end, we'll meet annual guidance, and raised and beat third quarter in a row. we anticipate that the earnings and revenue will all come in fine for this year. >> shares are down about 2.5% or a buck 99. whirlpool's earnings up, the appliance maker lowered the four-year profit estimate because of recent acquisitions, which didn't phase investors either. shares popped up 10.of 6.
and higher car sales, the auto dealer group said it would spend a quarter of a billion buying back shares. the stock rose almost 7% to 55. 58. big blue also out with a buyback, the board of directors authorized an additional $5 billion worth of stock to be repurchased. the company says it will make the purchases depending on market conditions, coming on top of the remaining $1.4 billion left on its current buyback plan. the stock rose 1% to 163.60 madison square garden with a trend, exploring separating their entertainment business with their media and sports business operations. the sports business owns teams like the knicks and rangers and regional sport networks like msg. its entertainment hosts concerts, shares were up 11% to
72.99. and receptos surged today. on word that the drug maker's experimental bowel disorder drug met its main goal in a study. the ceo explained the potential for the drug. >> 70,000 patients get diagnosed in the united states alone per year, approximately 70% of patients each year with colitis, there is an opportunity to make a difference with patients and see substantial revenue as a result. and panera reported a quarterly drop in profit, this comes as the food chain is trying to speed up service at the restaurants, shares dipped but during the regular session the stock was up 1.41 to $171. another interesting report to tell you about, statistics show that men and women in the u.s. are living longer than ever, according to the folks at
the society of actuary. the average folk is living into their 80s. what does that mean for your retirement? rick jones is here, welcome, good to have you here. these numbers are quite something. they indicate that life expectations for men and women are up about two years, a 65-year-old woman can expect to live almost to 89. a male, well past 86. this means that pension funds will have to pay benefits longer. how much more will companies have to put into those funds to cover those benefits? >> that is a great question. we anticipate that over time the average traditional pension plan will see its cost increase on the order of 7%, following the release of the statistics yesterday by the society of actuaries. >> so what does that mean?
that you can't count on your company to help you through your old age and you're pretty much on your own? do we have to rely on our 401(k)ss? >> well, the promises made need to be stood behind. there are federal laws as well as a federal insurance guarantee system that suggests that those pensions need to be secured. on a forward-going basis, many are shifting to 401(k) type of programs so that individuals are responsible for their investments and manage a stream of lifetime patients. >> so with respect to the stream of obligations which you say will be 7% more expensive, where does that money come from? does it come out of company profits or dividends that a company like general electric may otherwise pay to its investors? >> all the above. it could be a cash need that would otherwise defray their
ability to pay difficuvidends o back shares. it will have implication statements as well. >> well, you know, one of the good news we're saying is we're living longer. the bad news is, we have to have enough money for the retirement. what advice are you giving people about how they should deal with their 401(k)s? how much should you contribute? how often should you contribute? what are the risks? >> well, starting early, we suggest you start at the beginning of the career and save on the order of 15%. beyond that, there are things that you can do to control your own retirement like thinking about the right retirement age for you so you have accumulated the right amount. relying on automated features, target date funds and other investment techniques helped, which are intended to help you best manage your investments. and then effective draw down techniques so that you can
manage your dollars effectively over your life expectancy. >> when you talk about planning your retirement age, i hear it as code for we better plan to work longer? >> i hear that as good decoder, yes. and without wonking out here, there are quite a few companies taking their pension obligations and basically bundled them and as i understand it, bought an annuity. what does it do to the pension? >> well, the part of your first question is yes, it does take the obligation off of their books to the extent that they're fully relieving their obligation and shifting it over to an insurance company. that does mean that those individuals are no longer available for pbgc coverage, which is a federal insurance guarantee program for pensions.
they would be eligible for the state insurance guarantees. so there is a shift from the federal pension guarantee to the state insurance guarantees. >> all right, interesting conversation, rick, obviously, work longer, save 15% and keep your fingers crossed. rick jones, thank you very much. you're welcome. coming up on the program, a big indian comglomerate that thinks americans are willing and able to travel around on scooters. that story is next.
two of the nation's biggest airlines have already agreed to merge and now will combine their frequent flier programs, american airlines and u.s. airways will continue to base upgrades and free flights on how many miles customers fly instead of how much money they spent on tickets. for most americans the idea of an electric scooter sounds like a quaint idea that will never take off here in the u.s., but one of the world's largest companies based in india thinks americans are ready for an eco-friendly two-wheel ride. phil lebeau has more. >> reporter: it is called the gen-z, an electric scooter that goes as fast as 30 miles an hour, travels up to 30 miles on a single charge, and comes with a battery pack you can take out and charge in your house.
sounds great. but will americans pay $30,000 for an electric scooter. the chairman says yes. >> i went to a dinner last night, i had to walk the last four blocks. it reminded me of mumbai. the traffic everywhere in the world is becoming a nightmare. people are going to want very easy travel. >> reporter: he runs a company his grandfather started almost 70 years ago in india. but then, it steadily expanded. the low-cost suvs are popular in india and asian countries. and he says he would like to eventually sell suvs here in the u.s. >> that is one of our ideas. you really don't make it in the vehicle business unless you make it here in the u.s. >> reporter: they know how to compete in america. the traffic has carved out a market with the john deere's
green machines, the tractors have become popular for those in rural america, looking for a smaller, less expensive option. >> there is something going on here in the u.s., which is a transition to smaller horsepower tractors, as well as to tractors that are simple, rugged and basic, we seem to be in the right place at the right time. >> he clearly has a foothold here in the u.s. but he says he is just getting started. in fact, he calls america the emerging market. and finally tonight, if you have ever dreamed of owning an entire town, here is your chance. the catch, no one lives there, it is a ghost town with some saying the spirit of the former owner is haunting the area. all 62 acres of johnsonville
will be sold to the highest bidder through auction.com with the starting bid at $8,000, tyler, you can just get it for halloween and can get the little scooter to go with it. that is "nightly business report" for tonight, i'm susie gharib, and i'm tyler mathisen, have a great evening, we'll see you back here tomorrow. >> "nightly business report" has been brought to you in part by. the street.com, featuring stephanie link who shares her investment strategies, stock picks and market insights with action alerts plus, the multi-million dollar portfolio she manages with jim cramer. you can learn more at the street.com/nbr.
>> just on a wave, crashing on the ocean. and it starts off kinda, there's little whirls of water, and then it gets gentle. >> it's both the best of times and the worst of times. those years between childhood and adulthood, when every nerve is exposed. and when even the meekest of us feels unleashed. as you'll see in tonight's episode of "spark!" -- this can be a time of extraordinary achievement, as young people stretch their creative muscles for the first time. later in the show, we'll visit with these kids at oakland's destiny arts program as they learn to feel the expressive power of movement. but first, we'll introduce you to some of the bay area's most accomplished young poets,