tv Nightly Business Report PBS June 22, 2016 7:00pm-7:31pm PDT
this is "nightly business report" with tooil tyler mathisen and sue sigh. brexit on the brain, why tomorrow's vote on whether to leave the european union has investors on pins and needles. the feds will tell investors if they're in good shape. and old reliable, the surprising name topping one of the auto industries best lifts. all that and more tonight on "nightly business report" for wednesday june 22nd. good evening everyone and welcome. sue herera is off this evening, the evening before britains go to the polls to decide whether to stay in the european union or
quit. opinion polls wobble back and forth. right now it looks like a dead heat with both sides commanding about 44% of the probable vote but 12% remained undecided and in those undecided hands lie the future of an organization that dates to 1957. britain joined in the '70s, an organization that has never had a member pull out. investors around the globe have tip toed around the vote. u.s. stocks had modest moves lower and the dow jones finished at 17,781 and nasdaq dropped ten. since no nation has ever left the ue before no one knows what the economic impacts could be if britain pulls out but what is certain economies around the
globe could feel some dislocation. that's a fact not lost on fed chair janet yellen who has weighed in. what might the vote's impact be on the u.s. economy and markets. we learn more from london tonight. >> reporter: voting begins tomorrow in what british leaders are calling a once in a generation vote. the results will be felt outside the uk including on the u.s. economy. the uk is america's largest trading partner. we import cars, medicines and big auto parts. when it comes to the portion of overall trade for the u.s. the uk represents 3% so it's not a huge chunk of our trading activities, still if the british economy does decline it could hurt a key source of demands.
several kmimists are concerned about the fallout. >> it would usher in a period of uncertainty and it's hard to predict but there could be a period of financial market volatility that would negatively effect financial conditions and the u.s. economic outlook that's by no means certain but it is something we will be carefully monitoring. >> reporter: the other impact could be a weakening of the british pound. if britain does vote to leave george, who has a strong track record betting on the british pound or against it, says we could see a 20% devaluation for the pound if britain leaves. that would be mean a much stronger u.s. dollar and could be painful for any american company that does business here in the uk already suffering from the effects of the stronger u.s.
dollar but the real concern for the u.s. economy is the falling economy and the strengthening dollar, that's what kmimists fear could end up hurting the u.s. economy. it doesn't help that the kbhecoy already doesn't have much of a cushion for growing 2% and the fed is working hard to keep the stimulus flowing and interest rates low. that's why another key reaction is going to be european stocks and the euro because in that case we're talking about a 16 thl dollars economy about the size of the u.s. while we brace here for a possible exit, julia says regardless of the outcome there are few changes from the entire european union. she has more from brussels. >> reporter: here in the heart of europe, brussels we can only
wait to see what voters decide. we they decide to remain in the ue or leave. the polls are so close that it's anyone's guess. we have heard from the german finance minister saying no matter how voters decide europe will be changed by these events. i think that's little comfort to the skeptics who say why wasn't europe more forthcoming when the prime minister was trying to renegotiate this relationship in order to improve his position in this fight and actually wasn't given that much according to those uk voters. we've heard from the president of the group who says talking about closer integration now won't fly and he's right. it's not just about the uk, it's about the dutch and the fins. it's about the southern european countries who have been through
bailouts, iltally, greece and spain. investors won't break and if that is pulled away what about other bricks. france maybe too given the pref lens there. so while this may be a pivotal moment for the uk, the boom it creates could be far bigger for europe and investors will judge that early on friday morning. for "nightly business report" in brussels. the results of the voting in the uk will come out tomorrow night. most experts believe there will be a strong impact felt by makts across the world no matter the decision. here in the u.s. the u.s. central bank is ready for whatever happens. >> markets have been very responsive to changes in the
polls clearly so the vote could certainly bring on significant volatility. if that happens financial conditions could tighten and it could have an economic effect and we could feel that as well. we could feel that if there was significant risk with the dollar so we would have to take that into account in setting monetary policy. >> despite the reassuring tone janet yellen had to remind the house services committee that stock markets are not figuring into the fed's decision making process. >> it is not a third pillar of monetary policy. we do not target the level of stock prices that is not an appropriate thing for us to do. home sales rose last month to a nine year high suggesting that the housing market is strong. sales of existing homes rose nearly 2% in may to an adjusted
annual rate of more than 5.5 million. that's the highest rate since 2007. at the same time the median existing home price sits at $239,700. that's the highest on record. today hillary clinton and donald trump took their shots at how to fix the economy and naturally took shots at each other. john harwood joins us from washington. it was a little bit tit for tat. mr. trump firing back at mrs. clinton. >> hillary clinton had taken two roundhouse punches at donald trump in the last couple of weeks, one on national security saying he was temperamentally unfit to be president and one of them on the economy, that was this week, and talking about how his business experience is mostly about chapter 11.
today donald trump came back hard trying to get on offense saying he was the candidate who could change and shake up washington and hillary clinton wasn't. why? because he argued she's corrupt. he talked about the big speeches she's given to wall street firms and the money the clinton foundation has taken and all that he went through trying to hurt her badly. >> he has been trying to portray her as tied to special interests, getting paid for speeches and that's not. not really. look, hillary clinton and bill clinton have raised a lot of money over a long period of time, but they've been in public service. hillary clinton started at the children's defense fund. she has not -- her career has not been principally about making money although like many politicians she has made a bunch after she left as first lady and
bill clinton that is after he left as president and when she left as secretary of state she made a ton of money giving speeches. now, there's no proof that they've been corrupted by that money but bernie sanders made the argument that it was corrosive to the idea of changing washington so donald trump picked up that theme. >> mr. trump has campaigned on a very dramatic tax cuts. what do the numbers say about what it would do to the deficit. >> the numbers say that if you ask the conservative tax foundation even after assuming the so-called dynamic effects of growth, be it would add $10 trillion over ten years to the deficit. mr. trump has not identified a way to pay for that. his contention is that the growth would be greater than the tax foundation has estimated and you wouldn't have a deficit at all but other think tanks said similar things about a
$10 trillion loss to the treasury. there's no question that donald trump would at least for some p years add to the deficit. >> all right. thank you very much. tomorrow the federal reserve will tell the nation's biggest banks and shareholders whether their plans to stand up to the financial shocks are strong enough and investors want to know if they can raise they're dividends. we'll take house speaker paul ryan rolled out a plan that would repeal the affordable care act
but would keep portions of it such as letting parents carry their children. it would add positions like expanding health savings accounts and buying insurance across state lines. the biotech sector got a strong lift after a report on medicare spending showed the growth rate did not top its target which would have triggered cost cuts. jason is the senior director. welcome, good to have you with us. i hope i'm pronoun your name correctly. there's another guy that has a name like yours and he calls it. >> you have. >> what does it mean for the future of this sector? >> right now the sector is climbing the wall of worry over pricing. in fact there's been a lot of discussion on your show about the uk and what will happen and the uk's insurance government
agency refused to offer a very high reimbursement rate for a new cystic fibrosis drug. when we look at whether will medicare be around and be able to fund our health care needs there was a report that was going to deal with drug pricing and that report looks like it's delay de so it looks like we're going to see no action and no action is good news because the fear is we will see price controls from count some day. >> are there drugs that you're aware of that are in the pipeline or soon to come to market that will be extraordinarily high priced like the ones that treat help at this time tis c that came out in the past couple of years and how burdenensome might they be and i assume those are the ones that medicare might be targeting. >> that's right. when we look at the new group of
drugs that are personalized medicines and something called car t, they're very expensive, anywhere from $200,000 to maybe $1 million a person. how are we going to pay for that? that concern is starting to creep into the marketplace as the reality of these drugs gets closer in terms of their clinical maturity and being commercialized. something has to give. we can't pay for everything. >> it's really a very very difficult ethical question when you start to look at cost versus benefit in this area because obviously each patient is individual and the prices can be very high. take us through that thinking very briefly. >> a great example is the decision on the reimbursement of the cystic fibrosis drug. what they found is a very small very short i thibenefit against
high price target and the government decision was made no. governments all around the globe in japan and europe are able to regulate price controls and say what is the risk, what is the benefit and what is the aggregate benefit to society. that's something that our health care system has never been able to deal with and yet we're going to have to deal with it because when we look at the medicare trustee's report we know that medicare is just not funded to pay for everything. so again, something's got to give but who has the political will to deal with that and in a political election cycle that becomes a more prominent question. >> thank you very much. very clear. very helpful. we appreciate it. investors give the thumbs down to tesla's bid for solar city and that's where we begin tonight's market focus. last night the auto maker made a nearly $3 billion takeover for
the company. another company founded by tesla's ceo. he says the deal would allow customers to buy cars in a one stop shop. solar city shares rose 3%. shares of window bag goe got a lift today after there was a jump in quarterly profit and revenue rose better than expected thanks to an increase in sales in the company's towables. shares up 6% on the day to $22.95. analysts are bullish on price line. the price target increased to $1,500. the firm cited an expectation of improving margins.
shares up 1%. it's a different story for mcdonald's. they were down graded to neutral to buy citing overall slowing in the u.s. burger restaurant sales and tougher year over year comparisons. shares off more than 1.5%. tomorrow the federal reserve will release the first round of the so-called stress test for the big banks, the purpose is to see if the banks have enough capital to handle a sharp economic down turn. investors will look to see if the banks are strong enough to raise dividends. joining us to talk more is the analy mark analyst. some banks have had stumbles when these stress test results have come out in the past.
is citi the one we should watch closest tomorrow? >> i think the ones that we should be watching would be the largest six banks in the u.s. which would included j.p. morgan chase bank and the the custody banks because the stress tests have a new level of complexity which would be counter party risk in a global environment and as well there's also how would they react to negative interest rates. so the stress tests will be tougher tomorrow and certainly citi group will be in the cross hairs of that. >> are these banks healthier now than they were say three, five years ago? not just with respect to being able to pass a test, but just healthier generally. >> revenues are up, capital ratios are up. they've done a great job in the last five years of making themselves much stronger and i
would say the u.s. banks are among the strongest banks in the world now. >> do you anticipate that when these results come out that any of the banks you mentioned will be restricted in their ability to pay or raise dividends to the levels they might like to do? >> it's likely that bank of america and citi group will still feel some restrictions. likely most of the banks will not be able to have the sort of dividend increases that we have seen in prior stress test cycles simple because they're getting to the upper end of their pay out ranges. they can't pay out that much more as a percentage of profits and profits are not growing as fast as they were during the early part of the recovery. so it's likely that the largest banks will be constrained. we expect that most of them will
have some small increases. >> thank you very much. we'll be watching with great interest tomorrow. >> thank you. >> you bet. coming up, j.d. power out with the most reliable brands for automobiles. did yours make the list? here's a look at what to watch tomorrow. the look at the market when jobless claims come out. new home sales for may and the existing ones are good and the big uk ref dumb on whether to leave the european union.
that's what to watch thursday p. here is welcome news for car buyers. a new survey shows owners report fewer problems with their new vehicles, especially when it comes to infotainment systems. >> reporter: after years of improving the reliability of new models kia has become number one in new vehicle quality. it topped this year's survey. it's the first time since 1989 a non-luxury brand has stopped the reliability survey. researchers say it's due to kia focusing on cleaner model launches where auto makers struggle with issues that can pop up unexpect antly. >> the new vehicles that are coming out very well, very well thought out in the design pha
phases. >> r the out industry is doing a better job cranking out vehicles with fewer problems especially when it comes to infotainment systems. that appears to be improving as auto makers focus on giving drivers in-car options that are easier to use. amy says her new land rover has the connectivity that she wants without overwhelming her. >> it didn't have all the bells and whistles so it was kind of simple and clean on the inside and it was a good fit for me. >> reporter: while kia may be the auto maker with the most reliable new vehicles but there's good news for the american brands. second time in the last 30 years the big three all improved their reliability in the same year with the biggest gains coming from jeep and
chrysler. tad leon was big for the advertising world but now it's a south by southwest type of event in france where different media worlds meet. we go to the south of france. >> reporter: this is tadvertisig industry's worlds have collided. you have the legacy broadcasters touting a foot hold in digital and advice and snapchat are touting their expansion and momentum. >> it's a good time t expand. ma listenens took over. there's a lot of demand. we announced 15 new networks around the world. >> reporter: with conference goers buzzing about the future
of viakom the chairman, we got his take on how he sees the situation unfolding. >> we have a relationship with them, a significant relationship, in terms of we're buying media on behalf of our clients. >> reporter: does th depend on remaining ceo. >> no, it depends on the value that is delivered to our clients. >> reporter: facebook and chase announcing instagram had 500 million monthly users. the last 100 million have joined faster than the prior users so we're seeing tremendous momentum around the world and enthusiasm for a platform that's about visual communications. not to be outdone twitter's coo voicing optimism for his company
amid growing criticism. >> we're excited about video because video is great for people on twitter, it's great for publishers that put content on there and it's great for marketers. it's a terrific canvass for advertisers and we've shown that advertisers get better returns when they use video in their ad campaigns. >> reporter: a week that may look like a day at the beach, executives say it's one of the most productive weeks of the year. most conversations about deals start here. for "nightly business report" in ca. >> i would call it my most productive week of the year too. finally tonight who says people don't like a front-runner. in this election year politicals are having an impact on baby names. more than 115,000 baby names registered on the website baby center names from the clinton and trump families are on the
>> narrator: in the shallow, turquoise, clear waters of grand cayman's north sound, dozens of wild southern stingrays glide effortlessly through the sea. >> these southern rays are very, very important to the cayman islands from an ecotourism perspective. >> narrator: tourists from all over the world come to the site to interact with the animals. >> you don't get that kind of experience anywhere else in the world. >> it's the number one water sports attraction on the island. >> it's a hundred foot vis, it's generally calm and the animals are very conditioned. >> narrator: thousands of people each year visit the iconic stingrays of grand cayman, and for more than a decade researchers have been studying the animals. among other things, they want to find out what impact