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tv   Nightly Business Report  PBS  December 24, 2016 1:00am-1:31am PST

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>> announcer: this is "nightly business report" with tyler mathisen and sue herera, funded in part by hss. ♪ our value principles are patient first, and we want to deliver the highest quality care. >> the goal of creating and sustaining value is all about putting the patient at the center of the equation. >> the purpose of this organization is to help people get back to what they need and love to do. getting defensive. the president-elect pits lockheed martin against boeing, taking his negotiating approach to twitter, and thereby turning the defense industry upside down. surprise, surprise!
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it might sound crazy, but our market monitor says wells fargo is a stock to own, despite its run of stumbles and scandals. strike taking big. how one entrepreneur turned run-down bowling alleys into a modern powerhouse brand. find out how he made his millions tonight on "nightly business report." it's friday, december 23rd. good evening, everybody. i'm bill griffeth in tonight for tyler mathisen. >> and i'm sue herera. thanks for joining us, everybody. the defense sector is being shaken up. the president-elect is pitting lockheed martin against boeing, two of the world's biggest defense contractors. and today lockheed stock felt the pressure. as we reported last night, donald trump tweeted that he could use a boeing plane as a substitute for lockheed martin's f-35 combat jet. the f-35 is the most expensive weapons system in history with an estimated $400 billion price tag, nearly double the original budget. morgan brennan has more on what
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has the potential to be a big fight over fighter jets. >> reporter: call it a fighter jet face-off. donald trump is pitting the two biggest u.s. defense contractors against each other, taking to twitter to do it. the president-elect lobbing his latest 140-character social media missile at lockheed martin, again, writing, "based on the tremendous cost and cost overruns of the lockheed martin f-35, i have asked boeing to price out a comparable f-18 superhornet." but can the fourth-generation superhornet compete with a fifth-generation f-35 joint strike fighter? no. it's not designed to be stealthy and doesn't have the advanced electronics, who major factors that would take years and billions of dollars to become reality. and even then, say analysts, not likely. but it is a highly unusual move for a commander in chief, signaling a new era of competition. >> those companies doing the work will be very attuned to performance, and they will
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probably understand that they're not going to get a very sympathetic ear in the pentagon, or certainly from the oval office, if there are front-page headlines about delays or cost overruns or things like that. the president-elect has shown a willingness to reach out 140 characters at a time and rattle company managements if they're doing something that he doesn't like. >> reporter: the f-35 variance cost upwards of $135 million, so lockheed says they're working to get that down to $85 million by 2020. it can get closer to targets been it's actually in danger. but the less expensive f/a-18s have already snagged defense dollars that otherwise may have gone to its newer rival for the navy as well as canada, which announced a superhornet deal last month. of course, this could all be the president-elect's art of the deal, something he shed light on nearly a decade ago. >> i say it ad nauseam. i'll tell people during the negotiation, you think you're the only one? i have ten people who want this deal. and sometimes it's so and
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sometimes it's a little bit less than so, but i always create competition, because it makes the other side a little bit nervous. and even if -- i've had my own people come up to me and say, oh, mr. trump, you shouldn't keep telling them there are other people. i say do me a favor, let me negotiate. i want to brain-wash them. i want them to think there is so much competition. >> reporter: and creating competition is the goal, especially as lockheed negotiates more f-35 contracts and does so on the heels of an unprecedented contract in which the pentagon unilaterally decided the price it was willing to pay. for "nightly business report," i'm morgan brennan. well, meanwhile, the president of russia is rattling his own saber on missile defense systems and nuclear weapons during his annual end-of-year news conference. vladimir putin boasted about the strength of russia's nuclear arsenal but did say he would not be drawn into an arms race with the u.s. his comments came after donald trump said the u.s. should expand its own nuclear
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capabilities. eamon javers is in washington for us tonight. and eamon, russia spent about $50 billion on defense last year, so what else did he say on this very expensive topic? >> reporter: well, vladimir putin wasn't shy about talking about that, and particularly about talking about all of the modernization that they have done in russia of their nuclear forces. and he also said that if there is a new arms race, which everyone's been talking about here over the past 24 hours or so -- he said if that is so, it's certainly not russia's fault. he pointed to the fact that the united states has been modernizing its nuclear forces and repositioning some of them as well, said russia is fully aware of that. and interestingly, given the history of the fall of the soerv soviet union and the huge spending in russia in the 1980s on weapons systems, he said to his domestic audience, we are going to be careful. if we are in a new arms race, we are not going to overspend here. we're not going to spend more than we can afford, so he's reassuring the domestic audience that history won't repeat itself like we saw in the 1980s. >> did he talk at all about the sanctions and their impact that
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they might be having on the russian people and the russian economy? >> reporter: well, clearly, what vladimir putin doesn't want to say is that the sanctions are having a very harsh effect on the russian economy. it's very tough on some of the oligarchs there who are close to vladimir putin. they were designed by the obama administration to be that way and to be sort of an economic pincer there. that's a problem for vladimir putin. and i think that as we pivot to 2017, what you're going to see is that vladimir putin really, really, really wants to get those sanctions repealed. we'll see whether donald trump agrees with that or has something else in mind. >> eamon javers in washington, as always, thanks. >> reporter: you bet. we have been reporting on china's reaction to the president-elect's choice of peter navarro to head a new white house national trade council. navarro is a vocal critic of the world's second largest economy. today, chinese state media expressed alarm and warned of a slowdown with the u.s., "that individuals such as navarro, who have a bias against china, are being picked to work in leading positions in the next
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administration is no laughing matter." so, with tensions rising with china and the chatter of an arms race, new uncertainties are being introduced right now, something that the market typically doesn't like. so, what should investors make of all of this? joining us tonight is paul christopher, head of global market strategist at wells fargo investment institute. paul, good to see you. >> thank you very much. >> here we sit with the u.s. markets near all-time highs. so, clearly, they're not too bothered right now, but i guess we do have to take a wait-and-see attitude to see how this plays out during the new administration, don't we? >> that's right. with the tweeter-in-chief in the wings, there are just so many different possibilities for foreign policy and trade policy. we think investors are best off right now sticking with their investment plans. >> what are you most worried about? i mean, we see the relationship between mr. trump and mr. putin, but now we see china kind of coming on the offensive, saying, you know, kind of a shot across the u.s. bow.
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what are you watching the most closely? >> that's right. i think your reporter hit the nail on the head a few minutes ago in the segment where you mentioned the "art of the deal." mr. trump, president-elect trump has his own art of the deal, so i think does vladimir putin. and so does the president or the chinese leadership. they have their own art of the deal. and the stakes are very great, they're very large. we don't really know how things will play out if each side starts taking on a different style of negotiation. so, yeah, we're worried about how china reacts or negotiates with the u.s. we're worried about the u.s. in the middle east and how the new foreign policy may change the balance of power there. >> right. >> and of course, in eastern europe. >> you know, wilbur ross, who of course is the commerce department head-elect, has said that for him, tariffs are a last resort. yet, mr. trump continues to mention them in the first sentence when he's talking about trade relations with other
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countries. what do you think tariffs would do to our economy, to the companies that have to export overseas and import goods here, and what would that do to the stock market? >> yeah, the first thing to realize is that it's not really just a multinationals problem anymore. all sorts of u.s. domestic companies, small cap, mid cap companies, have globalized supply chains now. even cutting off trade or reducing trade with mexico by threatening to renegotiate nafta. that could be difficult for a lot of u.s. companies. a broad swath of u.s. companies. and so, we think that would be negative for equities. we think it would boost inflation, push up bond yaeliel and it would be a source of frustration and uncertainty for earnings going forward. >> but again, we have to all wait and see how it all plays out in 2017. paul christopher with wells fargo investment institute. thanks again tonight. thanks. on wall street, a rise in new home sales and an increase in consumer sentiment were not enough to give stocks a big lift. equities meandering all session
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ahead of the christmas holiday. the dow finished up about 15 points to 19,933. the nasdaq added 15, and the s&p 500 gained two. for the week there was a bit of holiday cheer for the three major indexes. the obama administration has struck deals with both deutsche bank and with credit suisse over toxic securities. deutsche bank has agreed to pay more than $7 billion to settle with the justice department over its sales of risky mortgage-backed securities, which contributed to the financial crisis. separately, credit suisse has agreed to pay more than $5 billion to settle the probe into its sales of subprime mortgage bonds. the justice department took the unusual step of suing barclays over its toxic mortgage-backed securities instead of settling. the government alleges that the bank fraudulently sold more than $30 billion of risky bonds. the lawsuit comes after talks to reach a settlement broke down. certainly, retailers are hoping that the grinch doesn't steal christmas this year, with
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most making a last-minute push, very last-minute, to lure shoppers in. it's an important time of year for this sector because many of the stores earned the bulk of their revenue right now in the fourth quarter. courtney reagan reports for us tonight from a queens center mall in elmhurst, new york. >> reporter: if you haven't finished your holiday shopping yet, you're not alone. >> today's my first day. >> it's going to be last-minute shopping. >> reporter: during the season, millions of americans turn to the internet to check off their shopping lists, pushing online sales up nearly 11%, according to adobe. >> i've done it online. >> when you go to specific sales and then you look online, you can find a difference. >> reporter: but the clock has run out on standard shipping in time for christmas. with christmas less than two days away, many stores are very busy today, at least compared to other days so far this holiday season. with christmas eve and hanukkah tomorrow, it's pretty much traditional retailers' last chance to scoop up those sales. shoppertrak, which tracks
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instore foot traffic, expects today will turn out to be the third biggest day of the year for shopper visits. retailers' christmas wish is for that forecast to translate into strong sales in the final hours. >> i'm getting stuff for my mother. >> i'm getting something pink for my girlfriend. >> a little trinket for a secret santa at the office. something for the kids and the lady. >> reporter: sales tracking data from npd through december 10th shows the shopping lull between black friday and christmas, a drop-off that's become an unwelcome tradition, has been deeper this year than usual. >> the trend this year has been one of hopeful expectation that has not materialized for most retailers. so there was a real hope that last weekend and into this week there would be a surge of shoppers in the brick-and-mortar stores, and we simply haven't seen that. >> reporter: instore shopping hasn't been great so far, partly due to the strength of online shopping, but also because retailers have trained shoppers, the longer they wait, the deeper
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the discounts get. he joins the chorus of others expecting holiday sales to still grow the forecasted 3% to 4% this season, though bynes points out, that means only an average season. but there's always a chance for a christmas miracle. for "nightly business report," i'm courtney reagan in elmhurst, new york. still ahead, why hollywood is not celebrating what has been a record year at the box office. . hollywood is on pace for another record year, but the entertainment industry is not celebrating the milestone. julia boorstin explains why. >> reporter: the north american box office will hit a new record
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this year, topping $11.3 billion, according to comp score, but hidden in that record are some concerning trends. higher ticket prices are driving the record box office haul, not bigger audiences. attendance is expected to be flat from 2015 but down about 6% from a decade ago. >> when you look at the percentage increased over the years in box office revenues, often that comes a little bit at the expense of attendance because of those higher ticket prices. >> reporter: thanks to declining home entertainment revenue, higher marketing costs and fewer big hits, average profits at the seven biggest studios fell 17% through september, according to cowen. >> i remember my family! >> reporter: and disney dominated, earning more than half of industry profits in that period with five of the ten biggest films of the year, including the top two, "finding dorrcto dori" and "captain america: civil war." all of the studios suffered from flops, from "ben her" to "bfg"
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to "the divergent series, allegiant." only 3 of 14 summer sequels outperformed their predecessors, with "zoolander 2" and "bridget jones" falling flat. and while china's box office grew by almost half last year, boosting hollywood revenue, this year, chinese growth basically flatlined. comp score says expecting china's box office growth to continue would be misguided. >> it has gone from a novelty-driven factor where audiences there haven't really had those kind of in-theater experiences with the great amenities and these brand-new, beautiful theaters. now that will shift from a novelty factor for the movie-going experience and shift to the quality of the movies. >> with so many entertainment alternatives both in the u.s. and abroad and the cost of going to theaters on the rise, the bar for quality content is higher than ever. for "nightly business report," i'm juhl boar citizen in san francisco. china hits general motors
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with a $29 million fine, and that's where we begin tonight's "marcus focus." chinese officials allege that the automakers joint venture engaged in monopolistic pricing for buick, cadillac and chevrolet models. gm says it will ensure all appropriate actions are taken in regards to this matter. it doesn't happen often, but gm shares managed to finish the day right where they began, unchanged at $35.69. discount store operator fred's saw its shares rise today after a regulatory filing revealed alden global capital took a nearly 25% stake in the company. the activist investor says the shares are undervalued and represent an attractive investment opportunity. shares finished the day up 4% to $20.20. and calmain foods swung to a quarterly loss. the egg producer said it was negatively impacted by an oversupply of eggs but that prices have started to rise recently. shares rose. shares of gnc holdings hit a
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record low today after piper jaffray cut its rating on the stock to underrate and slashed its price target. the analyst said the company's decision to discontinue its paid membership program adds to the risk of an earnings miss. and as a result, the stock was down 10% today to $10.84. medical supply distributor cardinal health will pay $10 million to the u.s. government. regulators allege they failed to report suspiciously large orders of addictive painkillers. cardinal health shares rose, though, to $72.88. and now to our market monitor, who has names of large-cap stocks he says could benefit from the trump presidency. this is his first time joining us on the program. he is damon barglow at rockland trust management group. welcome, damon. nice to have you here. >> hello. thanks for having me. >> we'll get to your first pick, exxonmob exxonmobil. it's probably pretty obvious, one of the reasons why you like it, but tell us more. >> yeah, i mean, clearly, the
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fact that tillerson's going to be secretary of state and exxon has a friend on capitol hill, that can only help them, right? but mainly, the reason why we like them is energy stocks have come up quite a bit off of their 2015 lows, but we think there's still room to run, particularly when opec is talking about production cuts. and then the incoming administration is talking about deregulation that could benefit production and exploration. >> another of your picks, home depot. it rises and falls along with the fortunes of the housing market. i guess you're betting on a better housing market down the road, huh? >> yeah, well, actually, the housing market is pretty good right now. we've had, you know, pretty good increases in home equity value over time, but home depot is a direct beneficiary of those rises in terms of home equity value, because then people are going to do repairs and remodeling. the other thing is, if you think about a reduction in corporate
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taxes, home depot gets 90% of their sales from the united states versus the average of about 50% for more large-cap companies in the s&p. and then, clearly, trump has made home ownership a key initiative of his administration. and we got these great numbers today in terms of increased home sales. but if he can do anything to help that, that would be a positive for home depot. >> i'm curation about your last pick, which is wells fargo. because the bank has had such tough sledding. >> yes, it has. >> there are still investigations pending. the california attorney general looking in at possible criminal activity. why do you like the stock at this juncture? >> well, we like it in part for those reasons, it's a little bit tarnished, and we're not afraid to go after a company that has a little scandal associated with it. the fact is that the key players that were part of the cross-selling scandal are out, stumpf and their head of
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community banking, tolstadt, and i think they can do well along with their other banking peers. if you think about the trump bump post election, a lot of their big peers, they rallied along with their peers, but they're still lagging them significantly. and so, i think if you want to get into -- if you want to take advantage of a favorable environment for banking, it's not too late with wells fargo. >> okay. on that note, damon, thank you very much for joining us. >> thank you. >> damon barglow with rockland trust management group. meet the entrepreneur who put a new spin on an age-old sport and turned it into a successful empire. find out how he made his millions, next.
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more than 67 million people bowled at least one time last year. more than a third of them at a place run by tom shannon. he's an entrepreneur who has turned run-down alleys into an international brand that has become the largest player in the $6 billion u.s. bowling industry. tyler mathisen introduces us to him in tonight's "how i made my millions." >> i haven't got a chance. maybe i do. >> reporter: don't let that first ball fool you. >> that was pretty abysmal. >> reporter: tom shannon knows how to strike it rich, in bowling. >> ha! >> reporter: how many total bowling centers do you run? >> now, 308 and about 9,000
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employees. >> reporter: his ten-pin empire, known as bowl more amf, racks up about $550 million in annual revenue and hosts plenty of celebrities. >> al pacino, the kardashians. >> reporter: the kardashians were here? you're kidding me! >> i taught kim how to bowl. >> reporter: i'll bet you did. it all started with a lot less glamour and a single location. bowlmore lanes, a new york city institution that shannon walked into in 1984, more than half a century after it opened. >> it was very run down, probably no investment in it in at least three decades. >> reporter: but the darden business school graduate saw potential for a revamped bowling experience. >> business was financed with a combination of $3,000 in equity, which is all i had, and $2 million borrowed. >> reporter: from whom? >> about two-thirds of it was a seller note. i borrowed from small business investment corps at 17.5%
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interest. >> reporter: then he went to work, adding new technology, updating the decor, improving the music and the menu and transforming the tired bowling alley into a hip, nighttime destination. >> we used to renovate during the day, clean up and open for business at 5:00. >> reporter: and it worked. shannon says by 1999, the union square location was the highest grossing bowling alley in the country. two years later, he tried the same trick in suburban maryland with a similar result. >> and so, i thought, well, it's working in manhattan and it's working in bethesda, we have a model that will work. >> reporter: soon, he saw customers rolling through the doors of six bowlmore centers at a time when thousands of alleys were closing shop, including amf, the biggest player in bowling at the time. for shannon, it was an entry angle to big-league bowling. >> i partnered up with a private equity firm, and we managed to buy amf out of bankruptcy for $300 million. so overnight, i went from six
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bowling alleys to 272. >> reporter: then there's another acquisition. you get even bigger. brunswick. >> yes. so, this was, i would say a little audacious. >> reporter: the newly combined bowlmore/amf spent more than $270 million to score 85 additional centers from brunswick in 2014. the company currently operates under four brand names -- bowlmore, amf, brunswick zone, and bowlero, and it spares no expense on renovation. do you work with like theatrical stage and set designers to do this? >> we do it all in house. for me, maybe the funnest part of the business is that i get to create this crazy spectacle in which you can bowl, and it actually has an economic return. >> reporter: a healthy one at that. in 2015, the annual revenue hit higher than $500 million and welcomed more than 25 million visitors to its lanes. >> i view this as a long-term
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play. and i don't know where the limit is. i expect at some point we'll be a multibillion dollar, diversified entertainment company. [ laughter ] >> well done. >> ah, good for you, tyler. and i know what you're thinking, shannon has no plans to take the company public any time soon, but he is looking to expand his empire outside the bowling industry. stay tuned. and finally tonight, consumers are joyful! at least according to the latest data on christmas tree sales. purchases are up 10% from a year ago, and the assumption is that if trees are selling briskly, consumers may also increase their spending on gifts. and as the theory goes, if spending increases, the broader economy will benefit. makes sense to me. >> it does. are you done with the wrapping? >> no. no, i'm not done. i'm done with the buying. >> tick-tock, tick-tock. >> no kidding! that will do it for "nightly business report" tonight. i'm sue herera. have a great holiday, everybody. >> i'm bill griffeth.
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merry christmas, happy hanukkah. we will see you monday for a special edition of "nbr." goodnight. >> announcer: "nightly business report" has been funded in part by hss. our value principles are patient first. and we want to deliver the highest quality care. >> the goal of creating and sustaining value is all about putting the patient at the center of the equation. >> the purpose of this organization is to help people get back to what they need and love to do. ♪
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susan: barack obama won the white house on the promise of hope and change. as the first black president prepares to leave office, we look back on what he delivered. i'm susan davis. the obama legacy, tonight on "washington week." >> by so many measures our country is stronger and more prosperous than it was when we started and you can't argue that we aren't better off. susan: barack obama inherited an economy in crisis. eight years later the stock market is strong, the economy is stable and health care has become a reality for millions of previously uninsured americans. but critics, including the president-elect say the recovery has been too slow and too many people have been left behind. >> some of yoin

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