Skip to main content

tv   Nightly Business Report  PBS  April 30, 2018 5:00pm-5:31pm PDT

5:00 pm
. this is "nightly business report" with bill griffeth and sue herera. golden sales atol then arches. appetite for mcdonald's was ng st and investors ate up the stock as the ceo solidify's the company's turn around. ambitious deal. sprint and t-mobile reach an agreement to mergely potenti reshaping the wireless market if regulators allow it. > feeling crabby? why one industry is getting pinched just as it enters itssy bu season. those storie and more on "nightly business report" for monday, april 30th. and we bid you good evening, everybody. april is now in the books. stocks finished the day -- th moith gains making the first month that we've seen positive ihrthe past for the major averages. it comes despite a pull back in
5:01 pm
th market today. stocks were a bit lower today by the technology and telecom sectors despite some strong earnings and a number of announced mergers.ll when was said and done today, the dow fell by 148 points. it was up 180 at one time but it finished at 24,163. the nasdaq was dow53 points. the s&p dropped 21. as we mentioned, all of the major averages wereigher for the month. so strong earnings we just mentned include mcdonald's which was a bright spot in the market today. the world's largest ft food chai served up a strong quarter and it did it in part by raising prices. that raised the stock price by 5.5% today. kate rogers takes a look at how mcdonald's is putting the gold arches. he golden >> reporter: mcdonald's turn around isoing strong under ceo bill easterbrook. revenues and earnings topped revenue estimates and global store sales blew by estimates up
5:02 pm
s was able to lure customers with deep discounts using the 1, 2, $3 valuenu $1 mccafe s.bevera >> the company needs a national value program and that's what we see in e 1, 2, $3 platform. that's going to be what drives traffic tthe restaurant, get people in the door but ultimately what we're seeing is multiple items being purchased there and the average transaction size goes up. our company is taking thein pri up on the higher end, morem premiu items. that's a good balance. >> reporter: other changes move into fresh not frozen beef for quarter pounders set to reach 14,000 locations in the u.s. by early may. than p iompany is working to upgrade the menu even ditching antibiotics from chicken mcnuggets and removing soda from happy meals.
5:03 pm
>>in mto more transparent, more authentic with products. moat's resonating and it hasn't gotten thet of attention it deserves. we've seen a shift in the u.s.n er demand for that at this point. i think mcdonald's is meeting that. >> mcdonald's is working to revolutionize its restaurants accelerating the rolloute with thax savings. uber eats ship with with delivery available in more than11,000 restaurants globally also contributed to growth in the quarter. for "nightly business report, i'm kate rogers. let's talk more about what's working for the fast food cha m and wha lia head. joining us tonight, david palmer. managing director at rbc capital markets. hank you for joining u tonight, david. >> happy to join you. >> actually, sales over seas were better than they were in the. s., wer?'t th >> they were very strong over seas. they've bundled together many lead markets in a segment and those include some of europe,
5:04 pm
canada, australia.ts those marad 8% same store sales growth. extremely strong. many of those markets are doing the stuff that the u.s. will be doing or is doing now. they'reg essentially seehe future there with many of the d and ed assets and f they hope that's where mcdonald's usa is in one to two years. >> david, you know, the $1, $2 $3 meal, what impact did that have on its results today? and you say one of the things that you were watching very closely was so called check growth. what does that mea and whyid you like it? >> well, they rolled out a new value platform, the $1, $2, $3 menu. that menu was arguably not quite thehe success thatwere hoping it would be. they said it was within expectation but their tsffic negative in the quarter. perhaps that value platform will build in popularity over time and it will help their traffic trends from here as they add the
5:05 pm
premium items they're going to be doing. doing fresh quarter poundersot off t grill made to order burgers, and that's really test w great andre hoping that by the end of the second quarter we'll have the benefit ofh b traffic and check but for now this 1, 2, 3 h menu had mixed results. it's been causing the stock to bounce around a bit in the near term. >> beef, more transparency on the ingredientser electronic payments. they've upgraded the stores. all t try and beat these upstarts that have been doing this anyway in the fast foo business and the fast casual business. what remains to be done for mcdonald's now? >> well, they're going to finish this off because they're doing about 1,000 experience of the future restaurants, all these digital conveniences are being added. about 1,000 restaurants per quarter and that's going to be done over the next two years. by the end of 2019 the large majority of restaurantsre ove 12,000 of the 14,000 in the u.s.
5:06 pm
will be done at that time and at that phese guys are going to have a lot of digital coeniences both orderin wherever you want but also getting it wherever you want with the deliver back home and this is going to make them ready for the amazon future that we're seeing, which is, of course, that peopleant to be abl to get their food at home and they also with theia mille hitting the family years, they want to have the real ingredients. this is -- this is really about mcdond's preparing themselves for the next generation. >> you mentioned the fresh food. that brings uso fresh beef and they're launching it at kind of the beginning of the -- or end the spring,eginning of summer. what is the risk of that particular move, if any?we >> , the risk is going to be on the operations side. they areg truly mak this, hot off the grill. it's going to be cookedor you and by being fresh it has less cook time but still that's 90 seconds or so and you can pullne them telling you to up to a curbside lane if you're
5:07 pm
in the drive through if it's not quite ready. what happens if three or four of those orders come in at successions. an operations challenge can happen. that would be a rich n's problem because that's a nice, premium product. for yea the premium side has not done as well as the fast casual. >> i can hearhe shareholders out there, they like what they hear about all the fresh beef b and thing they care about the dividend. is it going up, do you think? >> that -- that -- that's actually pretty good news for these guys. their cap ex, cap expenditures are elevated clip for the next twoears which will keep their dividend growing with earnings, but after that point you coulde nice step change in the dividends. for long-term shareholders this t goingbe a nice dividend story over the next three plus years. >> david palmer with rbc capital markets. go see you. thanks for joining us again. >> thank you. asone men earlier, the
5:08 pm
telecom sector suffered a sharp pull back despite t-mobile's agreement to buy sprint for more than 26 billion. on friday we told you a deal was near and today it was made official. wall street appears bit skeptical that the deal will get federal approval sprint shares fell 13%. t-mobile was lower. julia boorstin has morel. >> reporter: t-mobile is buying sprint for an all stock deal worth $26.5 billion. the third and fourth largest reless companies are creating a giant which will create t-mobile which will have 120 million john le who will run the combined company, saying this deal will allow it toly t compete with even larger at&t and verizon. he says that will be a gthd g for consumers. >> take that competition and super charge it. put it on faster speeds, bigger scale, bring lower prices. take that -- my commitment, our commitment is if you liked that goingition before, you'r to love what's coming with this
5:09 pm
one. >> reporter: but the merger is not a sure thing. consumers caution that a sprint/t-mobile would harm consumers by reducing competition. the department of justicelys lio take a hard look at the implications of the deal. >> regulators are going to look at this in 4 to 3 looking at their mobile bills going higher. promotions have been down for the iphone. it doesn't look like a competitivemarket. sprint ceo who will serve on the board of e combined company says they'll argue to regulators that the deal will create thousands of jobs and is necessary for the u.s. to catch up with china, which is ahead with next generation 5g wireless. >> what makes this ueque is weet to build the world's most advanced 5g network and the combination of our company allow us to do that. we've made a commitment that we're going to offer the best b productst services at the lower prices. we plan tore make this market competitive. >> still, there are big challenges ahead. the government blocked a merger
5:10 pm
of at&t and t-mobile and there was a previouslan abandoned to combine earlier. they're hopeful the regulatory environment has changed saying they hope the deal will close in the first half of next year. for "nightly business report," i'm julia boorstin in los angeles. sprint t-mobile was not the only deal announced. marathon petroleum saying it was buying rivamdeavor. series rose by 13% while marathonp was fraction. then there's walmart, which is selling its u.k. supermarket business for about $10 billion. news of that deal sent shares of walmart up more than 1%. and that's not all. marriott vacations worldwide i buyingimeshare operator ilg for $4.7 billion in cash and stock. shares of ilg rose 4% wle marriott vacations fell nearly 9%. >> and logistics company
5:11 pm
prologis is auiring dct industrial trust in a nearly $8.5 billion transaction. shares cliend 11 pores percent for dct. inflation hit an important milestone last month. the federal reserve's preferred inflation bometer rose 2% from a year earlier. it is the first time in more than a year that the so-called price index for personal consumption expenditures or e achieved the central bank's target. economists say the latest target offers fresh evi long economic expansion is finally lifting consumer pricy. not o has inflation hit a milestone but so has the econom expansion and that could be good news for the stock market. steve liesman explains. >> reporter: the current economic expansion turns 106. 106 months old and tying it for the secon longest in u. history. when this expansion began in 2009 following the deep downturn
5:12 pm
from the financial crisis, the ipad was still a year away from beingle ed. at eight years and ten months old the current upturn w tiesh the expansion that ramped up from 1961 to 1969. it's almost twice as long as the average expansion but has 14 months to break the record. of course, that didn'tnd well. stocks began rallying a few months before the expansion started to continued rising. accelerated to the rising but in a spot of volatility of late. in the o'61 '69 upturn stocks gained 18%. they surged before but they're up 181 now this run. this has been a growth runno li other. inflation has risen half the typical expansion. and it'ment is higher surged in the recession. growth has averaged only half
5:13 pm
the level of the average expansion. amid it all the federal reserve has kept rates well below the level that prevailed in other upturns. will it last? rates remain low but now they're rising. tax cuts can expand the economics expansion but deficits arerising. banks are well capitalized. asset values are high. most economists think the expansion will ctinue and eve take a run at being the longest on record but at's shortlyer that, later in 2019 or 2020 when many worryuc that bad or the exsenses borne of good times or even just time ielf will catch up with this 106 month old upturn that has not yet shown its age. fory "nighsiness report," i'm steve liesman. and the federal reserve begins its two-day policy meeting tomorrow. the central bank is widely expected toeepstnterest rates eady at the conclusion of the meeting on wednesday. time to take a look at some of today' grades and downgrades. we begin with wells fargo's rating which was raised to
5:14 pm
outperform from under perform in mrecc they cited an attractive stock valuation following a challenging few yearshe bank which is certainly an understatement. the price target $61. that stock finished t day fractionally lower at $51.96. spirit airlines saw its rating raise from underweight toov weight by jpmorgan. overall e favorable cost structure amid rising fuel prices. that price target now at$46. shares of spirit rose 23 cents to $35.72. that same jpmorgan airline analyst lowered tbs rating on e to neutral from overweight. the analyst cites the lack of talks from jetblue's pilot's union. the price is 22 andhares were lower at $19.19. >> colgate palmolive's rating was cut. a slowdown in the market
5:15 pm
operations. the price target was $69. the stock was off 2% to $65.23. still ahead, why home buyers are not necessarily springing into action during the spring lling se oil prices rose today after israel's prime ministerne benjan nyahu claims to have new information thathows iran ran a secret program to produce nuclear weapons. >> these files conclusively proof that iran is braze generally lying when it says it never had a nuclear weapons program. the files prove that. >> some say the prime minister's informatio is not new but the
5:16 pm
comments sent oil prices higher to above $68 a barrel. president trump has until may 12th to make a decision on the iran nuclear deal. the department of justices urging the judge overseeing the at&t/time warner antitrust case to at least consider alternative remedies if he does not block the proposed merger. during his closingts argum today that attorney for the government said that the judge should consider allowing at&t to buy parts of time warnerut not the turner cable television channels. he also implied that other structural changes to the deal could be made to soften the impact on consumers. boeing is one of the best rforming dow stocks this year and it was the top performer in year.ue chip index last now that company is looking to soar even higher. not simplyy delivering more planes and fighter jets or rockets, instead boeing is targeting new opportunities. phil lebu has more. >> reporter: boeing ceo dennis
5:17 pm
mullenberg had plenty of reasons to smile at the annual meeting in chicago. after all, production of commercial airplanes i running at a record rate and defense are rising but it's the global services ludesess, which i everything from supply chain management to digital services, that rgmullens keen to develop. >> we're continue to focus in a few primary areas. one is to grow our services business so where we can find strategic areas that complement our areas, that's a top priority. >> reporter: the service businesses made up 16% of d boeing's rec setting revenue last year. far smaller than the defense and commercial airplane orations and those two divisions continue to grow at healthy clips. in fact, boeing 737's most popular comrcial airplane has a backlog that is growing so h boeing me to increase production even more than is
5:18 pm
scheduled in order to keep up with demand. >> the general trend here isrd upwa pressure and we believe we have thego capacity t higher if we need to. >> reporter: the challenge for mullenberg and his team will be developing and acquiring new businesses while making sure the traditional operations don't miss a beat. if boeing can do both, then the stock is primed to soar even higher. phil lebea "nightly business report," chicago. arconic slashes its profits for the year. that's where we begin the market focus. the metals maker said the rise in the aluminum prices caused by import tariffsill cut int earnings growth this year, but the company does see revenue rising at a fter clip. for the latest quarter by the way arconic topped expectations andshey sent sha down 20% t $17.8 $17.81. meanwhile, a.k. steel topped expectations as higher sellingp es helped offset a decline
5:19 pm
in shipments. they expect to sell more product this quarter thanks to rising dethnd for steel fro automotive and manufacturing industries. shares of a.k. steel fel 3% though to $4.59. and strong demandd for bot earnings beat for allergan. they increased the four year outlook at a time when the company's outlook is unclear. the board has been consideng an array of options, including selling units, acquisitions, ans evenitting up the business. but today the ceo said he was not a propone of a major strategy shift and shares felly as a result5% to $153.65. >> diamond off shore said an increase in new drilling contracts helped it record a smaller than expected loss. revenue fell but that beat estimates. the company is seeing expected headwinds in the floating rig
5:20 pm
division. weight loss company nutrisystem topped expectations ter the bell. the results were helped by strength in its direct to consumer company also raised its full year guidance. shares initially popped in after hours and also ended the regular day up 1.5% to $29 even. bill? f signed the number contracts to purchase existing homes barely budged in march, and that was before the rise in mortgage rates. so what will the rest of the pring market look like, especially for the youngest of e ? diana olick reports for us tonight. >> reporter: march was the official start of mering, but buyers didn't exactly spring into action. ending home sales, which measure signed contracts forexisting homes, were basically flat comparery to febrnd 3% lower compared to march of last year according to the national association of realtors. month the third straigh of annual e realtors continue to blame the severe shortage of homes for sale as well as weakening
5:21 pm
affordability. sky high prices have more borrowers putting less down on after holding steady for two years, the share of conventional ans backed by fannie mae with less than 10% rose last year and ise expectation is it will higher this year. >> people are struggling to come up with downpayment and, hence, going for the minimum that is needed. >> reporter: millennials are getting hit hardest having to stretch their budgets the most because there are so few entry-level homes for sale.mi ennials were the primary drivers of homeownership last year but fell back in the first quarter of this year. >> american workers are looking for affordable n homes right wherever they can find them. has become a real crisis. >> reporter: now they' facin higher mortgage rates as well. the weak march sales numbers came ines even before r jumped at the start of april. lman says may higher rates will cool demand and actually help. >> if there were two buyersor every house instead of three, it
5:22 pm
might actually be healthy for the marketom >> reporter: prices usually lag sales by a few months but sales have weakened for a while and sales continue to surge higher in this cycle. this i crisis bordering on historic changing the rules of how housing works and pushing more potential buyers out of thk altogether. for night"nightly busines i'm diana olick in washington. com,g a shortage of workers i i leaving onendustry feeling pretty crabby. >> detroit is no longer under state oversight allowing the ty to regain control of its finances. the decision by the financial review commission comes more an three years after the motor city emerged from the largest
5:23 pm
municipal bankrups.y in history. city officials recently reporte three consecutive budget surp s surplus surp as the weather gets warmer you can bet that the crabbers along maryland's eastern shore are preparing for their season. this year they're facing a major obstacle, not enough workers because of tighter restrictions on immigratio ylan mui has our story. >> reporter: crabbers have worked the docks here on hooper's island, maryland, for generations hauling in live crabs. to get that famous jumbo lunch meat, d.w. hall relies on two dozen women from mexico to pick it by ha the workers are here on smporary h2v visas. owner brian halaid he was lucky to get their paperwork approved. there were so many applications he had to enter a federal lottery. >> we got lucky. we got our visa is.
5:24 pm
without them we'd be out of business. >> that's what happened down the street at russellall wherein stead of cracking claws, all you can hear is the ticking of the clock. >> as you see, we have an empty picking no here. >> reporter: harry phillips runs the seafood plant but he's not sure for how much longer. >> this is a killer. we are starting a new building knowing we were going to get o workers. we've always gotten them in the past and right now i can almost jump over board because what am i going to >> reporter: businesses hearsay they can't find locals to take these jobs e work can be grueling. the women protect their fingers with tape and the positio only last a few months, but one of the country's biggest labor unions says that argument doesn't hold water. >> what you have is employers who need t get approval for the visas very early in the year
5:25 pm
claiming in january. i can't find someone who wants to do this job ithe summer and then they bring in foreign worker and then when americans go to look for the job in the summer, lit's, oh, i already have people so you can't apply. >> reporter: but out on hooper's island, he's already invested more than $50,000 in new equipment for workers who may never show up. >> everything prett much in this area is odi hold inclu we've got a boiler over i this area that we had purchased in order to increase our capacity. unfortunately, now we've also put a hold on this. >> reportr: the departmf homeland security says it does plan to increase the number of visas next month, but we don't know by how many. and the industry isorried it will be too little too late. for "nightly business report," i'm ylan mui at the seafood market in washington. finally tonight, as expected, it was a recordwe end at the box office. "avengers infinity war" pulled
5:26 pm
inn eye popping $630 million. it gave disney the largest north american and worldwide debut. it opened everywhere over the weekend except inch a. it opens in that country in mid may. here's another look at today on wall street. the dow fell 8 points. the nasdaq off 53. s&p 500 dropped 21. despite today's declines, some major averages were all higher for the month. and that is "nightly business report" tonight. i'm sue heorra. thanksoining us. >> i'm bilgriffeth. thanks for joining us. see you tomorrow.
5:27 pm
5:28 pm
5:29 pm
5:30 pm
>> this is "bbc world news america." >> funding of this presentation is made possible by the freeman foundation, kovler foundation, pursuing solutions for america' neglected needs, and purepoint financial. >> how do we shape our tomorrow? it starts with a vision. we see its idealorm in our mind, and then wbegin to chisel. we strip away everything hat stands in the way to reveal new possibilities. at purepoint financial, we have designed our modern approach to banking around you --