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tv   Nightly Business Report  PBS  October 31, 2014 1:00am-1:31am PDT

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. 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 with action alerts plus, the multi-million dollar portfolio she manages with jim cramer. you can learn more at the street.com/nbr. don't let the rally fool you. the dow jones industrial average powered higher but it was all because of one stock. and a closer look shows some underlying weakness. proud to be gay, and with those words, fortune 500 ceo tim cook of apple may have changed the business world. stronger than expected. economic growth exceeded expectations in the third quarter, but can the momentum continue? we have all that and more on the
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"nightly business report" for thursday, october 30th. good evening, and welcome everyone one day after the federal reserve said the u.s. economy was strong enough for the central bank to end its latest bond-buying stimulus program. the dow rallied and how. the blue chips zoomed to another triple digit gain, powering the move today, strong corporate earnings most notably from the credit card giant visa, saying simply more people charged more money on their cards, also helping them. also better than expected economic growth last quarter and initial jobless claims, hanging around a 14-year low. the dow up a big 221 points. but the nasdaq was only up about 17 and the s&p 500 rose a relatively modest 12%. bob pasani on the dow's big rally, despite underlying from
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the weaker market. >> reporter: it was a strange day with the dow soaring while the s&p 500 and nasdaq were only up a little. what is up with that? well, what happened, visa reported terrific quarters and guidance up about 10%. because the dow is a price-weighted index, most of the gain in the dow about 160 of the 221 point gain was due to visa, the market was not nearly as strong. there were only two advancing, and the sector with the biggest gains was utilities, closing at an historic high, but they're hardly a market leader. two terrible days, tech and energy, and a smaller chip firm intersol reported slower earnings. oil dropped again today, and big oil got hit particularly service names like habachi were also
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weak, good news that the market moved up even as oil has dropped. also impressive that the market has not sold off because the fed was fairly optimistic in its assessment of the u.s. economy. now in the past, stocks might have sold off due to fears that higher interest rates might be coming. but that has not happened yet. maybe the market is shedding some of the fears down the road. more now on that strong report on the economy's growth in the third quarter. the gross domestic product grew at a rate of 3.5% in the summer months, thanks to big gains of business spending and sales exports and more military spending, steve liesman breaks down the report on the u.s. economy and what might be ahead. >> reporter: maybe janet yellin and the fed knew something, so eyebrows were raised when the fed ended quantitative easing,
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citing solid job gains. but today, the government announced the growth topped expectations with a 3.5% rise in gross domestic product. coming on the back of a strong second quarter it was the best six-month gain for the economy since the recession ended, four of the past five quarters have seen growth to some percent. >> clearly the economy does not need excessive monetary policy, but we'll have it, the fed to pursue the extraordinary accommodation until it is obvious the inflation pressure rises. it is not there yet. >> yet, they raised questions about whether or not the numbers could continue. a surge in national defense sp seems unlikely to compete. trade added 3.5%, a strong dollar could weaken u.s. exports, and consumer spending growth was middling in the third
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quarter and will have to accelerate in the christmas season if the rosy economic strength will maintain its shine. all the economic weakness overseas, and the feds agree to tighten monetary policy, even though that move may not happen until well into next year. they turn their data to the fourth quarter, even when you have a number above expectations confidence runs very low. and a new round of pessimism is just one data point away. i'm steve liesman for "nightly business report." and visa, we told you about their strong outlook, and master card with a strong quarter, shares number two credit card and debit processes charged more than 9% higher today after netting more than a billion dollars in profit as consumers spend more. it was just the opposite story at citigroup and surprising news for the banks and investors tonight. after the market closed the bank
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sharply lowered the quarterly profits, city says it earned 88 cents a share, not the dollar seven as reported originally. the bank blames the revision on a massive $600 million increase in legal fees for regulatory inquiries and investigation. citigroup fell as much as 2% in after-hours trading. an historic day for corporate america as tim cook became the highest profile ceo ever to come out and claim he is proud to be gay. so what does it mean for cook and the company he leads? josh lipton has more. >> reporter: apple's ceo tim cook values privacy and doesn't particularly like to draw attention to himself. today he made a public decision, in an op-ed, he wrote while i
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have not ever denied my sexuality, i never publicly announced it either. i am proud to be gay, and consider it among the greatest gifts god has given me. apple's board of directors applauded cook's statement, a sign of the confidence they have in cook as chief executive. others see the business implications of the ceo ofhe a fortune 500 company openly declaring his sexual orientat n orientation. >> singapore, two days ago, reiterated they would not take away their anti-gay law, so now tim cook is openly, visibly out. >> it is an open question how the rest of the world reacts to cook's op-ed. still, whatever the reaction, this was an historic day when the ceo of the world's most
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valuable company said publicly and proudly that he is a gay man. so why make such a statement now? cook says that he is looking to make a difference. if hearing that the ceo of apple is gay helps people struggling to come to terms with who they are then it is worth the tradeoff he says with his own privacy. cook's op-ed was not a total surprise, though, in fact, just this week cook delivered a speech in which he called on his native state of alabama to do more when it comes to gay rights. >> as a state, we took too long to take steps toward equality. and once we began, our progress was too slow. too slow on equality for african-americans. too slow on inter-racial marriage which was only legalized 14 years ago. and still, too slow on equality for thing lgbt community. >> cook writes in his op-ed that he will continue to fight for equality for all people until he
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says, his toes point up. for "nightly business report," i'm josh lipton, in cupertino, california. let's turn to our guests to get their takes on what tim cook's personal disclosure will mean for the corporate world. bill george is a former ceo of medtronic, and kara swisher is co-executive at a leading tech website. let me begin with you, i spoke earlier with kara, by the way, and asked her if this was a kind of jackie robinson moment. but bill, why has it taken so long. why have ceos or board members been so hesitant to be open about their sexuality. >> i think it is very disappointing. you know, in minnesota, we had a big same-sex amendment, was going to constitutionally ban this for all time. a group of ceos we organized in
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minnesota were willing to speak up and put their company on the line. i think it has been way too long, tyler, the whole society. actually the business community in many ways is leading the way in sports -- >> but how can you say that, bill, if mr. cook is the first of the 500 or the first of the s&p 500 to acknowledge his sexuality? how can that be the name of the game? >> i can tell you the board member i worked with did hold back and it made me weep when i read it. but i think more and more, the encouragement is there, the acceptance is there. and i think within the business community there is wide acceptance today in the corporate world and benefits for same-sex partners. tyler, i think we are moving ahead. tim is a very humble, modest guy and is not one to say, look at me. so this is moving, to me, when he says this is my brick,
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building this brick by brick, the momentum is there, and even if pope francis can call a meeting, my wife, penny and i have been big supporters of trying to have equality for everyone. and no discrimination. >> okay, good, bill. let me get kara in this conversation, you know, in the silicon valley and the tech industry, the attitudes towards gay rights is much more progressive. but you just heard in the report a comment by one of the people in the story saying you know in other countries, and singapore was the example he gave. there are a lot of laws against gay rights, and that this will be difficult for tim cook to deal with the businesses overseas. what are your thoughts on that? >> well, it is not laws against gay rights, it is laws against gays, they're killing them in certain countries, it is not just getting rights to get married or anything like that. you know, i think he probably put it in the calculation, it
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doesn't matter. somebody has to be a leader. it took him a while to do it but he did it. he is now a big leader in this issue. he is the most prominent executive in the world, one of them and is coming out and saying i'm proud of what i am. and you know i think he just made the decision that the rest of the world has to get used to him rather than the other way around. >> kara, what was the reaction in silicon valley, you probably know more people than any single person, what was the reaction today? >> it is uniformly positive. you know, there was some back and forth on twitter with crazy people, but in general, the people in silicon valley have always been very progressive in issues of gay rights compared to most industries. even though there have not been outed ceos or things like that, there has been a relative tolerance for gay issues, and obviously san francisco, the bay area is one of the areas that is the most tolerant in this country, at least. >> bill, how does this admission
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by tim cook change the conversation in corporate board rooms towards gays and management? >> i think it really is going to open things up. and legitimatize the fact there are lots of gays, they're around us all the time whether they're open or not and allow people to be themselves. the whole idea is be yourself, and having something like don't ask, don't tell is hiding who you are and the antithesis of being a leader. i think it will open corporations in many ways where people haven't felt comfortable and to recognize we all have differences. and honestly speaking, any form of discrimination, including people of sexual preference is making all forms of discrimination legitimate. this is the last major one to fall and it is moving fast and i'm excited to see it finally going this way so we can accept people for who we are. >> kara, does this disclosure by tim, mr. cook, does it open up
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for lgbt individuals who might otherwise have held back, not gone for the brass ring out of some fear? does it now make them feel more liberated that they can, in fact, compete in the same way that straight people do? >> well, there has been gay ceos in history, and gay everything in history, it has just been hidden. i think it allows you to be yourself. there are a lot of stories about not talking about your spouse and partner and colleagues being able to, not being able to reveal yourself totally. now, the work place you don't do a lot of personal stuff but there is a personal element to the work place and i think if people know more about your life and you become more of a human be better leader. it is a lie when you're just closeted. it just is, any time when your in the closet and fully revealing yourself, you're not being as good a leader as you can. people at apple didn't know
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about this, his friends didn't know about it. it puts the stake in the ground for the next step that we all have to talk about it. and it is fine, people below tim cook, not apple, but in other companies they can look up and say why am i doing this and what is the cost for doing this. >> one final quick thought, bill. >> six years ago i wrote the first case ever in harvard business, i was shocked there were no cases about people coming out, a woman indicate out at verizon. you know, it is interesting, encouraging people to be who they are. tyler, we just have to encourage people always to be who they are. and i think this is just an important step that we're moving in the right direction. >> finally, too late. great conversation, bill george of harvard business school. kara swisher at rico, thank you. and still ahead, how kroger, a major player in the
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increasingly competitive grocery business has defied the odds and pushed back the competition. that story is next. while walmart being the nation's biggest seller of groceries, supermarket chain kroger is eating its lunch, posting 43 straight quarters of sales growth. how does kroger do it? sarah eisen has more. >> reporter: 8 million customers per day, more than 2600 stores and nearly $100 billion in
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annual sales. kroger has defied the odds and the competition to become america's second biggest grocer behind walmart. how? it was early to bring in natural and organic food and lower prices to compete with whole foods. >> really, our associates are doing it and improving and doing a great job each day to improve customer service, with the products we offer. and when you look at everything together with a great price, it is really a great job. >> the stock has more than doubled in the last year, driven by 43 straight quarters of sales growth. the ceo, rodney mcmullen is investing in new stores and to stay ahead of amazon fresh and others. kroger is also benefitting from a recovering consumer, and cheaper gas prices at the pump. >> if you look at from a digital standpoint, when we merged, they had a very strong click and collect operation that we're now testing in the store here in cincinnati. we'll start to roll it out.
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we merged with one company to deliver to home. so it is -- and we have an apple that is one of the best classes in apps. >> another thing that distinguishes kroger is the new simple brand organic product which will double in the next five years, according to mcmullen. because the shift to healthy for you better foods is here to stay. i'm sarah eisen, for "nightly business report." no caffeine buzz for shares of starbucks late today. and that is where we begin tonight's focus. after the closing bell shares of the world's biggest coffee chain fell on disappointing quarters and the company says the outlook for the fourth quarter is not much better. starbucks blames softer traffic. shares fell about 5% you see on the chart right there. at one point during the regular session stock rose a percentage point to 77.32. and linkedin beat on the top
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line, they saw their membership rise in the last quarter above what was expected. the company gave a lackluster forecast. shares were volatile, before the close, linked in at 2% higher at 202.90. and cigna, saying their health insurance growth adding new customers, the ceo expects the shares to grow. and "the new york times" says that higher circulation level helped them to narrow their loss, the papers also projecting a further decline in those ad sales for the current quarter. that disappointed investors, shares fell about 5% to 12.74. avon reported a profit for its third quarter that topped estimates but revenue came in below expectations. the cosmetic firm blamed weak foreign exchange rates and higher supply chain costs.
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shares fell 9% to $9.97. two very different companies making their wall street debut today. boot barn, this is a western foot wear and apparel company pricing 5 million shares raising $80 million, fifth street asset management sold 6 million shares at 17 each. look at how the shares turned out. boot barn, 9.75. fifth street fell to 13.37. and shares of trulia fell as investors reacted to a disappointing quarterly report. the website operator reported a loss that met estimates but sales came in weaker than forecast, zillo, which will acquire trulia saw shares fall a percentage point. the real estate watchers wondered why google plus put $50 million into auction.com, today
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the answer was revealed. it is all about the speed of information. diana olick has more. >> reporter: it is the power of the very public search, google using your search data to determine home sales, put it together with proprietary data from auction.com and you get not a forecast but a now cast. >> this now cast is about as close to realtime data as you can get. we're looking at ongoing realtime search traffic. >> reporter: it is the brain child of google's chief economist who says by using google's search terms and overlaying them onto auction sales data, they can predict the home sales faster than the realtors. why is that so important? because knowledge is power, for buyers, sellers, investors, government, even real estate agents knowing what is going on behind the closed doors of the housing market can translate into big money. >> last and final count for $84,000. >> auction does a very small
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fraction of the nation's home sales but they do auctions almost every day. the realtors are involved with a much larger share of home sales. auction says they have tested the model going back ten years and they claim they're very close to the realtor numbers. and usually beat consensus forecast. >> it is not a question of auction.com having more data. it is a question of auction.com having more timely data. >> reporter: the realtors didn't want to go on camera but told us they will watch, adding we stick by our data and believe it is most representative of the market. a market that has always been driven by the search and never more so than today. for "nightly business report," i'm diana olick, in washington. >> coming up, king james is back in cleveland. and with that, a one-man economic stimulus plan. what his return means to the local econom
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it's the first lawsuit of its kind related to the ebola crisis. a california lay firm is suing consumer products giant kimberly clark claiming they committed fraud by marketing and selling surgical gowns as protection against ebola. the class action suit said the gowns failed industry tests and don't meet protection standards against the disease putting patients and health care workers at risk. the firm is asking for more than a half billion dollars in damages. kimberly clark declined to
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comment on the suit. baseball's world series is now over and the new nba season has begun. and tonight, with the return of superstar lebron james, a new era begins for the cleveland cavaliers. and for the city's beaten down economy. so how much does the return of the king james mean for the city? morgan brennan has more from cleveland. >> reporter: the king is back in cleveland. tonight, the four-time mvp lebron james will take the court in his triumphant return as a cleveland cavalier. >> i am going to be extremely excited, happy to be back on this floor. there is going to be a special moment and we can't take it for granted. you don't get moments like this. they don't come around every day. >> reporter: the city that angrily mourned when the basketball star left for the miami heat four years ago is enthusiastically welcoming him home. it is not just fans. >> they will sell out every single game, that creates jobs,
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but also in bars, restaurants and hotels because their numbers go up. some of it directly, we're getting. there is all the ripple effect and the spinoff of that. that is harder to calculate but it is a significant amount of money. >> reporter: cleveland businesses are already seeing an impact, hotels receiving more advanced reservations and restaurants are booked solid. >> we're starting to see an up-tick in traffic. previously on cavs games we would have a good showing. people are coming into the games. and now they're turning into a social event. >> reporter: they project it could be more than half a billion dollars to the local economy. ticket prices for home games have gone up, the highest in the league on the secondary market and the top selling items in the nba are happening. >> for cleveland, that is something money can't buy. it is helping to change the dialogue about our city. >> reporter: now, the only question is can lebron james and his new teammates deliver?
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>> number one. >> reporter: for "nightly business report," i'm morgan brennan. in cleveland, ohio. and that is "nightly business report" for tonight, thank you for joining us. i'm susie gharib. cleveland's own susie gharib. i'm tyler mathisen, have a great evening, we'll see you 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 sla
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announcer: the following kqed production was produced in high definition. ♪ >> must have soup! >> the pancake is to die for! >> it was a gut-bomb, but i liked it. >> i actually fantasized in private moments about the food i had. >> i didn't like it. >> you didn't like it? >> dining here makes me feel rich. >> and what about dessert? pecan pie? sweet potato pie?

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