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tv   Nightly Business Report  PBS  October 13, 2017 5:00pm-5:31pm PDT

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>> announcer: this is "nightly business repor with tyler mathisen and s scrapping subsidies. the white house halts key payments to health insurers, leaving the industry and millions of americans in limbo. business in iran. the president takes a hard line on that country, decertifying the nuclear deal. and boeing pays extra close attention. what's new on netflix? well, the stock price hit a new as traditional media s have headaches. those stories and more tonight on "nightly business rep. good evening, everyone, and welcome. the stock market finished the week on yet another high note. the nasdaq closed at a record. the dow and the s&p 500 almost
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did. even with a number of developments out of washington, investors were focused on the possibility that corporate profits will be strong this quarter and that global economic growth will continue to improve. today the dow jones industrial aver rose 30 points to 22,871. nasdaq was up 14 to that record. the s&p 500 added two. for the week, all of the major indexes were higher. the maet risen even more today if not for the decline in the health care stocks. shares of hospital operators and insurers were lower after president trump said the administration will immediately stop making subsidy payments to health insurers that sell plans under the affordable care act exchanges. those payments are used to offset the cost of coverage for low-income people. as bertha coombs explains, that leaves a lot >> reporter: president trump says he's cutting off what he calls subsidies to health insurers. >> that money is going to
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insurance companies to lift up their stock price. and that's knonot what i'm abou. take a look who those insurance companies support. i guarantee you one thing, it's not donald trump. >> reporter: those csr payments or cost sharing reduction subsidies are used by insurance companies to lower out of pocket costs for 6 million people on affordable carpresident's move much difference for them. >> insurers will still have to pay for those subsidies themselves, they're required to by law. >> reporter: without action by congress, exchange insurers could have to absorb subsidy lawsuits in the fourth quarter, which analysts say will hurt smaller regional carriers the most. for 2018, with open enrollment set to start november 1st, most carriers have already priced in large premium increases to account for the loss of csrs. those higher prices will actually cost the government more than the subsidies themselves. >> the effect of that will be
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the premium subsidies will also increase. the one thing that's kind of ironic about the effect of this is that it will actually increase the federal spending on low income persons in the exchanges by about $360 billion over ten years. >> reporter: the congressional budget office expects because of those high premiums, we'll see an attrition of about a million people dropping out of the exchanges for next year. the big question is what the insurers will do about the individual market beyond that. >> at a certain point you have to say this market is not worth it for me anymore, i'll take my marbles and go to a more profitable market. >> reporter: insurers expressed concern about the president's moves and urged congress to act in a bipartisan fashion to stabilize the exchanges. as one analyst put it, with open enrollment three weeks away, it's now going to be up to the o try to shore things up. bertha coombs, "nightly
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president trump today refused to certify that iran is complying with the terms of a landmark 2015 nuclear deal. he also described that country as a, quote, fanatical regime. despite taking a hard line, the president didn't do something he repeatedly suggested he would do, namely scrap the deal entirely. eam eamon javers reports from e whhouse. >> reporter: president trump said he would decertify the nuclear deal but remain in the agreement. that means it will be up to congress to decide whether or not to reimpose sanctions on tehran. >> as we've seen in north korea, the longer we ignore a threat, the worse that threat becomes. it is why we are determined that the world's leading sponsor of terrorism will never obtain nuclear weapons. >> reporter: the president was critical of the deal cut by his
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predecessor, an agreement he's called "one of the worst ever." >> by its own terms, the iran deal was supposed to contribute to regional and international peace and security. and yet while the united states adheres to our commitment under the deal, the iranian regime continues to fuel conflict, terror, and turmoil throughout the middle east and beyond. >> reporter: by keeping the deal in place despite his harsh criticism of it, the president is walking a fine political line. >> this was a nod to secretary mattis, to secretary tillerson, and to general kelly, all of whom think that keeping the agreement in place is in the national security interests. the president felt more strongly in the other direction. this to a certain extent is a compromise among these men. >> reporter: reaction among american allies was mixed. a joint statement from the leaders of france, germany, and the united kingdom said "we
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encourage the u.s. con to consider the applicatio implications." israel's prime minister was more effusive in his support of president trump's approach, saying one thing is absolutely certain, in a few year's time, the world's foremost terrorist regime will have an arsenal of nuclear weapons, that's a tremendous danger for our collective future. as the president spoke, the treasury department announced new sanctions against iran's revolutionary guard and two other iranian entities. the president said that in the coming months he could announce new sanctions or tear up the nuclear deal altogether. for "nightly business report," i'm eamon javers at the white house. and boeing is one of the big western firms that started doing business in iran following the signing of that deal a couple of years ago. it says its plan to sell 80 passenger jets to iran air appears to be safe for now. boeing also has aircraft purchase agreements in place with other iranian carriers.
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social security recipients will get a 2% increase in benefits next year. that amount is up sharply from the past two years but lower than what was projected this summer. the adjustment covers more than 61 million beneficiaries and is the highest since 2012. the rate of increase is tied to the consumer price index. that's a commonly used inflation gauge. >> that inflation gauge was higher for the month of september, the second straight increase and the largest in a month. most of the rise came from higher gas prices after hurricane harvey knocked refineries offline. the rise in gasoline prices also contributed to higher retail sales which saw the biggest increase in 2 1/2 years in september. there was increased demand for building materials and cars following the hurricanes harvey and irma. retail sales are expected to pick up in the holiday season and some are forecasting the strongest holiday season in
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years. higher sales tend to correlate with higher or better consumer sentiment. that's what was reported today. the university of michigan survey said sentiment unexpectedly hit a 13-year high this month as americans' perception of the economy and their own finances rebounded. the vice chair of the federal reserve today said he expects the central bank to stick to its schedule of interest rate increases which includes one in december and three ne >> i think that that's achievable if we continue to run good progress, for the first time in a decade having fostered more growth in the global economy than we expected, there's a good chance of that. >> on his last day on the central prabank, he said janet yellen should be reappointed. on wall st of netflix broke $200 a share, the
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first time the streaming service's stock has reached that level. as julia boorstin reports, it comes as traditional media companies stumble. >> reporter: netflix is expected to keep growing and growing and growing. goldman sachs and jpmorgan both raising their price targets on the stock on expectations that the company's recent price increase will boost revenue and its investment in content will pay off. despite the stock nearly doubling over the past year, investors think it can go even higher. >> i don't t a consideration or a reason not to buy netflix here. if it has rising revenues, the earnings will catch up to it. >> reporter: netflix projected it would add 4.4 million subscribers in the third quarter. analysts expect the company to pick up more than 6 million subscribers in the fourth quarter. while netflix soars, traditional media stocks have been under pressure, with growing concerns about consumers cutting the cord and the diminishing value of the tv bundle. at&t warned it would lose video subscribers in the third quarter, pointing to intense
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competition in the tv market and the impact of hurricanes. at&t added 300,000 subscribers to its new streaming service, direct tv now. but even that growth couldn't compensate for traditional tv losses. cable distributor charter is in a standoff with viacom over renewing their distribution agreement. shares bounced back today after moving lower yesterday. an analyst says concerns are overblown. >> you look at the pressure on the tv network stocks, and i think more so for some of the others like a viacom or tv station companies, you know, things have gotten to silly-land. the market is treating some of these equities like there's zero equity value. >> reporter: when the traditional media giants report over the next few weeks, we'll see what kind of a boost they get from new revenues such as at&t's directv now, and we'll see how much competition from the likes of netflix has hurt ratings and ad dollars. i'm julia boorstin in los
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angeles for "nightly business report senior media analyst at edward jones, welcome, nice to have you, robin. >> thank you, good afternoon. >> let's start with what you think the key is for the traditional media companies to continue to succeed and to continue to compete. is it as simple as content, or not? >> well, we certainly are in a period of a lot of uncertainty for these media companies in the last several years. so we do think it does come down to content for some of the companies that really have the best content. that is really going to be the way that they survive in a digital world. because whether or not, you know, more consumers are moving to digital, to mobile, they would be able to take that content and either sell to other providers or even offer their own service. we see more and more companies doing that. but you can't do that unless you have enough really popular
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content to create your own service. >> you know, robin, i notice that there's been a lot of consolidation in this area. and i suspect that you would see that that is an ongoing possibility. discovery and hgtv, at&t and time warner, and many, many others, comcast which owns the company that produces this show, they bought nbc. do you see consolidation as a way forward, and who will be the mergers and the mergees? >> that's a sign of the times we're in, because of the uncertainty, because of the need to have leverage in this dynamic, changing marketplace, some of these companies are too small to survive. that's why we saw some of the mergers we have already. certainly there are, you know, thoughts that really any of these companies could be
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inquire. and more of the mergers between the distributors like at&t and comcast, and the content companies, that's something we'll continue to see, as well as potentially -- what's been long thought about is tech companies getting n . it also comes down to pricing power, does it not? the longer your reach, the better pricing power you have. >> the bigger, better content, that's given the companies in the past better negotiating leverage with distributors out there. we think that will still be the case. >> do you have a favorite stock or two? >> the only company we recommend right now in the media space is disney. and that is really because of how diversified they are. you know, we do recoe the pressures in the media industry, and for espn in particular.
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and that's the flagship of their media business. but over half the profits come from the studios, the theme parks, and places that are really doing very nicely for disney and are investing a lot in those areas. we like the valuation on the stock. we think that some of the concern over media is perhaps creating somewhat of an opportunity for the long investor. >> robin, we'll leave it there. thank you so much for joining us, have a great weekend still ahead, a sweet deal. will there be a get-together in the choc
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the irs has suspended its $7 million contract with equifax. the agency said it's putting the deal on hold as a precautionary step. as we reported yesterday, equifax had to take down a web page after a security analyst said he was targeted with malicious ads while visiting the site. about 145 million americans may have had their personal data exposed when equifax was suffering a security breach. shares of pg&e fell today and have had their worst week in nine years on reports that downed power lines may have played a key role in the deadly fires burning across northern california. state officials now investigating some power lines that were knocked down by a windstorm on sunday. regulators also looking into pg&e's maintenance operations and told the utility to preserve
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any evidence related to those fires. shares of pg&e tumbled 10% on the session today. the stock is off 16% this week. legal costs east away at wells fargo's earnings. that's where we begin tonight's market focus. the bank reported a drop in revenue and profits, saying results were hit by a $1 billion charge related to investigations of the bank's mortgage lending practices before the financial crisis. the precrisis mortgage issues are in addition to the fake account scandal that has embroiled that company over the past year. on a positive note, though, the bank saw stronger loan growth in its residentiasi in mortgages, on balance sheets for prime jumbo mortgages, a lot of demand and good growth in that area. commercial real estate, we're the biggest commercial real estate lender in the u.s. we've been relatively flat there. it's a very competitive market. >> shares fell nearly 3% to
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$53. . bank of america beat analysts' sales targets. the bank said higher interest rates helped push profits above expectations. the shares finished the day up about 1.5% to $25.83. and hostess brands' chief executive bill toller unexpectedly announced he will be retiring in march, causing ubs to downgrade the stock, saying toller is the driving force behind the twinkie makers' success. shares of hostess finished the day down 11% to $11.94. the company optinose which as you might guess makes medications for the ears, nose, and throat, went public today, the shares were $16 apiece. shares jumped more than 18% in their debut, closing today at a
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fragrant $19 for optinose. hp gave profit guidance for 2018 ahead of street forecasts. the technical company hiked quarterly dividends by 5% and said it plans to issue 50 to 75% of its free cash flow to shareholders through dividends and stock buybacks. shares were 6% higher at $21.71. samsung forecasting record third quarter operating profit thanks to strong results from its memory chip business. that was overshadowed by the surprise resignation of samsung's chairman who has been the face of that company since its de facto chief was sent to prison on corruption charges. he'll step down next year. his resignation deepens concerns over a leadership vacuum at that company. shares of steel makers rose today after a japanese steel company admitted to misleading hundreds more customers than originally thought. the latest disclosure doubles the number of effective
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companies to 500 now. kobe steel said some of its products lacked quality inspection and problems existed for more than a decade. boeing and general motors are just some of the companies that have used their products. that sent shares of u.s. steel companies higher, as you see there. saudi aramco is reportedly considering shelving its ipo. the company has struggled to select an exchange or to trade its shares. new york and london have been considered the frontrunners for the largest ever flotation of stock. saudi aramco is instead looking into a private share sale to the world's largest sovereign wealth funds and institutional investors. other reports say the ipo will not be pulled, just delayed. there could be a deal in the chocolate business. hershey reportedly preparing to submit a bid for nestle's
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confectionary business. leslie picker has been following the story for us. this is a sweet one. as we say. >> reporter: it's a good one, it makes me hungry this friday evening. this is the butterfingers, babe ruth, the u.s. confectionary business of nestle. that's been up for sale since june. the company announced they would look for strategic options for that business. cnbc.com has exclusively learned potentially buyers could include hershey, ferrero, ferrera, and private equity interests for this business. according to people familiar with the matter, the value for this business could be as much as $2.5 billion. >> do we have any idea who the frontrunner might be? $2.5 billion is a lot of money. those are a lot of very popular brands with a lot of depth in terms of penetration. >> reporter: absolutely. $2.5 billion is at the high end. apparently the bids are coming
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in betwe 2 and 2.5. usually it's up to the company to choose the highest bidder. those bids were submitted today. i think they'll still be sifting through to figure out exactly, you know, where the bids are, what they're offering. it could be a mixture of, you know, a bunch of different currencies, stock as well as cash in terms of how they're going to purchase this thing. those are all the types of things that nestle is going to have to sort out when it decides who the ultimate bidder will be. >> if it's hershey, theyl seal it with a kiss, right? >> reporter: that was a good one. >> i'm curious as to why mars, you didn't mention mars in there. mars is a very, very secretive company. maybe we just don't have the reporting on that. is nestle going to hold on to other confectionary businesses in europe, for example? or is this it? >> reporter: this is part of the plan by nestle that it announced in june, which was due to pressure that it's facing from an investor who has said they need to improve their margins, they need to streamline their business a bit more. so they will still hold plenty of businesses, plenty of food businesses over in europe.
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this is u.s.-specific. these are the u.s. brands they've decided that they could achieve a much better valuation in a sale, largely due to consumer tastes. these are brands we know and love, but do we eat laffy taffy on a daily basis anymore? >> it's the time of year to sell it. >> i can see the headlines, butterfingers and kisses. >> you're on a roll tonight. >> oh, baby, it's the weekend. >> thanks, leslie. >> reporter: tha > cominup, stuck in the middle. are you part of the middle class? the answer dep
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and here's a look at what to watch next week. monday, video streaming giant netflix reports financial results after the bell. on wednesday, the federal reserve will release my favorite book of all, the beige book, an aptly titled look at economic conditions in the u.s. on friday, new home construction in september. we get the release of housing starts. that's what to watch next week. the head of jp morgan chase does not like the crypto currency bitcoin. he made his feelings clear in september when he called it a fraud. yesterday, on his company's earnings conference call, he said he wasn't going to talk about bitcoin anymore. that is, until today. when he made these comments at a conference at the institute of international finance. >> bitcoin hit a new high today. >> i could care less what bitcoin trades for, how it trades, why it trades, if you're
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stupid enough to buy, you'll pay the price for it one day. >> there you go. he also called it a great product for criminals but added that he thinks the blockchain technology behind bitcoin is valid. the white house has promised an historic tax cut for america's middle class. how republicans go along with that. whether you'll fall into that category is a matter of some debate. robert frank looks at what it means >> reporter: house republicans are considering a new plan to allow the middle class to continue deducting their state and local taxes. the question now is what is the dollar definition of middle class. and does it depend on where you live. in the face of opposition from high tech states like california, new york, and new jersey, house republicans are proposing to eliminate state and local tax deductions for the top earners that allow the middle class to keep them. the new battle is to where to draw that income line. the median income in america right now is around $59,000 a
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year. of course $59,000 goes a lot further in illinois and minnesota than it does in new york or massachusetts. representative peter king of new york says the cutoff should be $400,000 a year, saying that's what counts as middle class in his high cost district of long island. according to census data, the median income in new york is $61,000. in massachusetts it's $74,000. and in illinois, it's 57. iowa, it's 52. an analysis from the pew research center finds the upper bound of middle class various even more widely. being middle class in new york state stops at around $112,000. in california it's 120. in mississippi, the upper bound is $75,000. alabama, it's 85. all of this matters because the higher they raise the income threshold, the less revenue they get from eliminating the tax, showing yet again how fixing one
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tax problem often creates another. for "nightly business report," i'm robert frank. on friday, as you know, we usually bring you our weekly market monitor segment. as luck would have it, on this friday, the 13th, we ran into technical problems. you can still, though, find his stock picks on our website, nbr.com. i never believed in that, but today there's been a lot of glitches. anyway, we hope your day was glitch-free. that's "nightly business report" for tonight. i'm sue herera. thanks for joining us. >> and happy friday 13th, everybody, i'm tyler mathisen. have a great wee.
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♪ >> this is "bbc world news america." funding of this presentation is made possible by the freeman foundation, kovler foundation, pursuing solutions for america's neglected needs, and fox searchlight. >> my mum says you are writing a book to stop people going to war. i would really like if you write a book for me. >> have you come to see my woods? >> i'm going to call my bear winnie. >> you should call him pooh. if he ignores you, you can pretend you were just saying "pooh." >> pooh! why does everyone like winnie

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