tv Nightly Business Report PBS October 2, 2018 5:00pm-5:31pm PDT
business report with bill griffeth and sueera. payday. amazon, one of the country's orest employer is raising the minimum wage f workers and encouraging others to do the same. blue chip record, the dow hitsn all-time high as investors cheer the strong economy. mortgage fraud, rising home prices are making it harder to afford a house. some buyers decid to fumbling the numbers. those stoores and tonight on tuesday, october 2nd. and we do bid you good evening, everybody. ordinarily the dow closing at an all-time high wou be the t story. but that's not the case today. we will have more on wall ec street'sd breaking day in just a moment. but with he begin tonight with
one thing that h been helping fuel the stock market higher, that is the job market, which is coming into sharp focus this week. tomorrow we get adp private payroll report. thursday the weekly jobless claims, and friday the gove ment's monthly employmen numbers will be released. but today the job story was about amazon, the company which is one of the country's private employers raising minimum wage for workers to $15 an hour. m that'se than double the federal minimum wage and it includes all of its full-time, part time, temporary and seasonal eloyees in the u.s. it's a change that could have a wide-reaching economi impact, especially when you consider amazon has added more americanb n the past decade than any company and yet to bennounced second headquarters is expected to employ an additional0,000 people. as courtney reagan reports the amundsonen wage increase could inspirether companies to
follow. >> a big move for a big company just in time for the holidays. >> a $15 an hour. >> amazo is increasing its minimum wage in the u.s. to $15 an hour. from an average $11 an hour currently. 250,000 part time, full-time and seasonal workers will benefit from higher pay starting november 1st. at the same time, amazon is phasing out the restrictled stock program,in s employees preferbi predict aty and immediacy of cash. the company says the net effect is significantly more total compensation but hasn't detailed how much it will st. >> wehink it's a modest impact. we don't think it's having a material impact on the bottom line. remember amazon has so much initiatives. we think this is a great move >> senator bernie sanders has been a vocal krig critic of amazon pointing the to the disparity between the employees
and jeff o basohs saying it doesn't payou employees . >> we sat back and listened to critics and thought long and ha about what we wanted to do. we evaluated our approach to compensation and decided that we wanted to le we wanted to come out. we wanted to do this now. >> the senator now giving basesas ohs and amazon credit for the pay increase. >> bezos and amazon are now leading the way the. but there is absutely now no reason by other profitable corporations like wal-mart, like the fastfood industry, like retail in general, and other employer -- other employees -- no reason now a why theyo should not be paying their employees at least $15 an hour. >> bezos responding in a tweet, thank you at senator sanders we are excited about this and hope others join in.
>> amazon is cheering this move. otr retailers are crying right now over this. >> three years ago wal-mart mada multibillion-dollar investment to increase worker's pay. now at $11 an hour. target is at $12 with a goal of $15 by the year 2020. >> if you want to succeed in the at future you have to match this. otherwise, you know, you end one a demotivated workforce or all the good ones leave and go somewhere to make more money. >> iig a labor market a high wage is the best recruiting tool in time to fill the 100,000 seasonal jobs. for nightly business report, courtney reagan. even with the tight labor market the chair of theer f reserve does not expect inflation to rise sharply. in a speech tay on the economy jerome powell called the broader pick up in wages a welcome development and says he is not concerned about overheating. >> what is more likely, in my view, is that many factors, fncluding better conduct
monetary policy over the last few decades have greatly reduced but not eliminated the effects that tight labor markets have on heflation. >>hairman says he expects to stick with the central bank's current path of igradualerest rate hikes. michael feroli t about the impact of the amazon move here. the chief economist at jp morgan welcome back >> thank yo >> i guess this is what a tight labor market do does, wages star to go up, don't they. >> exactly. and i think we -- i think amazon's mov rather than big direct effect on the economy is more reflective of e annomy starting to operate at full d full ent -- at or bey employment. i think the fact that we have the unemployment rate below 4% generated helpe to contribute amazon's move. it has been a factor in large ta ers also announced a big move. >> what about the fact that you know senator sanders whoas featured in courtney's piece is calling on marilyn erreta to
raise wages? today alone we had thousds of employees and mcdonald's in detroit rallying asking for $15 an hour. at what point does that start to trickle down if at all to the economy? >> right. so you know you can't totally discount that there may be some pr benefit some social responsibility aspect here. but it'er iting that all the announcements come at a time kewhen the labor m is tight and not five years ago. i think- it isu know it's reflective the fact that like i aid we have a tight labor mechanic. it's gradually showing up in the aggregate numbers. we are seeing average hourly earnings creing higher we get another look at that this fridar for septe numbers. it's showing up in american paychecks. and we tivnk current trends that continues on into next year. >> you so think other companies will be forced to follow amaze and's lead here. is that the idea. >> i think they will not ncessarily because ama is bidding away so many workers.
even amazon, a huge company like they are employing 250,000 in an economy employing about 150 million tt's .2% of employment np the fact that they are doing this is reflective of a broader economic environment that other companre feeling and they will feel the need to raise wages to retn workers. we are interestingly seeing the number of workers quitting jobs recently near all-time highs. thats a reflection of worker voting with their feet if they don't get a raise they can go sr. somewhere else and try luck elsewhere. you are going to see other companies follow, i think, not necessarily because they are being exported by jeff bezos to do so about because it's in their best interests. >> mr. poufl said he doesn't see inflationary. at what point might it become inflationary? would we havesee another wages.n -- in hourly
>> i think so. we are still- coming off a period where wages have beennn g quite a bit below what we thought they should over the past couple years. that means there is some scope fo wages to run a little hot. maybe that pressure is corporate margins a ltle bit. but profit margins are starting at a high point. the process can f run perhaps several quarters if not a few years before you necessarily s inflation get really out of hand. so i think there is somcope for wages to continue to grind higher without necessarily inflation moving up. nowly obvio it's powell's job to watch the inflation numbers veryareful for any any hint that's happening. so far he can probly rest easy that we are still several -- several months or quarters away from that being a big concern. >> thanks for joining us tonight. >> thank you. > as we mentioned earlier in the broadcast, the dow closed at an all-time high, rallying a second straight day to start the
fourthuarter. but the other indexes moved the opposite direction the dow jonesve industrialge rose 122 points to 267737. the nasdaq fell 37 and the s&p 500 was down 1 point. bob pisani looks at w the blue chips to new highs. >> industrials drove the bumming of the gains in the blue chip index with trade related names bogey caterpillar and having outsized impact in fa boein hit an dwrault high tp and tech fueled the rally with apple and intel other chip stocks bouncing back despiteri w over memory pricing and demand. on the flipside twos key gro were lester out. the bank stocks and retail names. the banks have been lagging because loan growth has been lackluster. the yield curve has been flat and because they had t pay more interest to depositls. as for reteakness let's call to it amazon effect process
big names like athenta aber kronly and fitch. and small retailers were all down four, five, six% after amazon's decision to raise the minimum wage to $15. some are concerned that this adds another layers of stress for retaers most of whom pay far below $15 as the minimum wage. reta margins have been pressured by here input and transportation costs. that's a big issue. for nightly business report, bob pisani at the new york stock exchange. now rising confidence i the economy is helping auto sales remain strong. and the latest numbers forr septemhat were recommendsed today show americans are willing to hand over a near record amount of money for a new car or truck. phil lebeau has the details. >> reporter: with rises at the mp relatively stable and the economy roaring auto dealers continue to see brisk business. last month fiat chrysler ouaced toyota, ford and honda
who all sold fewer vehicles than a year ago becausene hurri harvey brought massive flooding along the texas and louisiana coast leading to to a surge in replacemt sales in cement of last year. for all of 2018 sales are on pace to top 17 million vehicles for a fourth straight yere. not only americans buying vehicles at a healthy clip, they're paying more. the average price paid now tops $35700 largely because pickups and suv with higher sticker prices remain red hot and that's good news for the bottom line of auto makers. still auto stocks are stuck in neutral with som actually pulling back. ford is down 26% this year. despite the fact its f series pickup is noilgingleecord proof investors are looking for more than strong demand in the showroom. phil lebeau, nightly business
report. chicago. meanwhile tesla met and production goals when it comes to the model 3. the company said it delivered more than 55800 vehicles to customers in the third quarter. that is three times more than they delivered t previous quarter. but the stock fell after tesla warned of problems selling cars in china because of the new tariffs. it's time to look at some of today's upgrades and twroun dwrads. general electric upgrated at rb the analyst citing the successful track record of the newteeo. the rep on the management change yesterday. the pris. target is $ separately s&p downgraded their credit rating a moody put it on review for psible downgrade. but shares rose to $12.32. chevron was added to the conviction bye list over at goldman sachs. the analyst says rks to the stock have been overstated. the price target is $142.
the stock rose a fraction to 124.74. >> the same analystch at goldma downgraded congo to bye. the drieted the valuation at $81. the stock fell 2% to 78.28. weiatters now a simply called ww was added to jp morgan's foc list. the analyst says the stock's recently pullback makes it more attractive. price target is now $120. that's atock rising 1% to 73.35. still ahead, pepsi's beverage sales return to growth just as the the company's ceo
exits. the fda conduct add surprise inspection of juul's headquarters last we can. the agency i looking for additional information about the company's sales and marketing practices. inspectors collected more than 1,000 pages of documents. the surprise visit was part of the fda crackdown on ecigarette companies. more people are drinkingps s teas and gatorade and coala. they said it's beverage business ngturned to growth in the recent quarter, hel pepsi report a rise in profits the ceo's last day in the office. but the higher costs are a concern for investors. the stock fell today. sara eisen has more on the latest quarter for pepsi. >> the ceo ending her 12-year tenure upon a high note. pepsico posting a strong growth on the metric they use to show how the underlying business is
doing. double indigent increasing growing the freiheit o lay snack business and turn around in beverages continue are yibting to the growth.we hor, the strong dollar put a dent in the profit outlook. >> sfr the standpoint of the overall financials of the company, t first half of the year the dollar was actually a tailened to our results. it flipped to a headwind in q 3 and slightly more substantial he wwindbelieve in q 4. >> on her last day she told analysts and investors ifbl blessed to lead such a great company. during her leadehip petition steered the snack and drinks company toward better for y offerings. quaker oats. bubbly sparkling water and o doubling dow sparkling water by acquire soda stream. she successfully managed to fight off an activist investo who pushed to split the business into snacks and beverage companies. however, when a 22-year-old veteran of the company does take over tomorrow there are plenty questions. pepsi's stock has underperformed
one-cola this year a reason is that coke has moved to unload its bottlers making a leaner more focused company. it's also been more willing to think outside the becomes. coca-cola recen confirming it's exploring development of cbd benches made fromeannabis. ceo's exit marks a slrnging group of female ceos less than 25 within the s&p 50 less than 5% of the overall index. for nightly business report, i'm sarah eisen. the fd a a grants breakthrough therapy snapgs to clovis's experimental extremist. where we begin the market focus. the cancer drug maker said the designation for the prostate cancer therapy was awarded based on initial data from clovis's ongoinf studye drug. the new status is intended to speed up the approval process for theat tnt. shares of clovis on college rose more than 7% to 31.39.
payroll. er paycheck said higher revenue in the services segments helped total sales edge past expectpaions. the c also topped earnings estimates. shares rose more than 1% to 74.78. delta said that it took a $30 million hit from hurricane florence. and its facing rising fuel costs. there is a chance that thets airlines pro for the quarter will miss expectations. separately its rival united continental gave a disappointing earningsoutlook. shares of delta off 3% to 54.69. united katinale shares fell 1% to 86.71. >> after the bell right routers reported that mattress firm could file bankruptcy this week. they add the the largest maert retailer is looking to terminate costly store leases due to poor financial performance. ths news sent sha of the rival temper sealy initially high ner after hours trading ton. they were off nearly 2% to 48.38
during the regular session. maert firm's parent company by the way does not trade here in the united esst also on after the bell, j.cn said it's appointed jill solt ho as the new. p she wasviously ceo of the joanne stores. the investors were pleased and sent initially shares higher after hours. as you can there but during the regular session the jcpenney finished down. chinese buyers are backing away from doing deals in the u.s. largely due to trade tensions and heightened regulatory restrictions. according to deal logic, the number of deals are a fraction of what they were jewt a years ago. leslie picker is with us now to discuss the pros and cons of fewer cross border mergers. good to see you as always leslie. >> good to see you, sue. >> how does chinese deal making mpare today with that of just a few years ago before the trade
rhetoric was so muchn focus? >> so when you look back to 2016 chinese companies were buying about $31 billion worth of assets here in the u.s. when you look at the same ared, the first nine months of he year, 2018 that number is a fifth. compared to last year the number is half. we have seen a dramatic decrease inbound m and a activity from china. al what are the between the kmienz and american looks like now leslie. >> according to sources i've spoken with therohaved to a halt. any discussions taking placene between c companies and american companies have basically gone no where because everyone isery trigger shy when it comes to actually signing deals. they'r worried the trade tensions could spill over and that these massive multibillion-dollar deals that they are discussing could become a problem.an it's very, very, very challenging for companies wps
once they signed deals to face issues from the regulatory frone and trade front because it causes missed opportunities. and it requires them to therefore backtrack. as deals are signed companies put other projects on hold. the opportunity costs become problematic down the road if the deal ultimately doesn't come together in the end. >> you mentioned regulation. how much do you ink regulators in either china or the u.s. have contributed to where we find ourseves. >> we seeing both sides clamp down on moving assets on broad. the u.s. there is the committee on foreign investment or cfius. and their role, this agency comprised of members of the treasury and national security, members of the administration, their role is totook inbound foreign direct investment and determine whether itould be a national security concern. their powers have been expanded as of mid-august. and therefore it's very
uncertain for chinese companies or companieslshere to really pursue squikss here. because they are not sure whatu the will look like or what they look like in practice. on the chinese t side,y have been clamping down on the big avnglomerates that taken on debt in recent years. and they are saying, you know, you can't actually take on more debt to fund sqkss in the u.s. or elsewhere. >> all right leslie thank you s. mu leslie picker at the new york stock exchange tonight. coming up, a new risk developing in the mortgage market. fraud. ten yeerps after the is, there ortgage cr is a new risk developing in the
mortgage business, fraud. and maybe not the kind you are think bag. diana olick has more. >> reporter: as home values rise and more people want to own homes it's inevitable. more will lie and cheat to get a mortgage mortgage fraud risks jumped over 12% annually in the end of the second quarter, according to core logic. they gauge risk by looking at instance of fraudn identity and income among other things. the biggest jump, 22% was in misrepsenting income. lenders are pretty strict now about how much debt you can carry in relation to income. so people are t juicing numbers. also, more investors in market foreigning or flipping means more people claiming they will occupy the propert when they won't. >> most people want to say they are limping in the property becausehe terms of the loan will be better than if buying as investment. >> mmat leib of apec home loan says this is the most common typef frau he sees but all fraud means more risk when
he sells to banks or investors. >> if for some reason they see something that we missed tha we should have caught, they could then force us to buy back the loan. meaning that they -- they won't actually purchase i and they'll make us buy it back and keep it. >> states with the highest rate of fraud risk are new york, new jersey, florida, d.c. and mexico p california, the priceyest real estate market ranked ninth. and fraud is easier than ever to perpetrate thanks to the internet a quickts search res in a befy of cites that not only alnerality fake pain pay stubs to but geny phone calls. >> people can generality a fake thingsb and do all these on the internet they couldn't do 10, 20, 30 years ago. > the risk isn't just from borrows. brokers who package loans are committing more fraud.be why? use as interest rates rise and the refinance market i dries
up they need more business fm buyers. for nightly business, diana olick in w>hington. ell the housing market is cooling a bit across thetr co a deeper chill is setting in on one of the nation's morema expensiveets, new york city. and this is happening even as wall street pay rises. something that hasy historica helped lift manhattan prices. robert frank explains. >> reporter: it's a buyers mark in one of the toniest maal estate markets in the country. attan real estate now a one-year long correction. total salesling 11% in the third quarter. the fourth straight quarter of double digit decinne. acco to a new report from could douglas he willerman and samuel. the average price of a new york city apartment is down 4% toious tnder $2 million and the high end of the maraw prices fall 12%. as the rest of the country deals
with a shortage of homes for sale, the listings in manhattan are now at the highest level since 2011. that's oversupply is contributing to the decline in sales. along with fewer foreign buyers. not even a rising stock market can lift hles. whre also hurting because of the recent tax changes in high tax l statee new york. add to that rising mortgage level nd even the entry in manhattan is hurting. big price drops are floueen across the city. this penthouse in soho is 5500 square wheat with five bedrooms, four bathrooms and 1900 square feet of terrace was three replaces and an outdoor gentlem. >> we see drops for properties o overpriced start with. i think if you are looking for something that was really overpriced therere some bargains you can find throughout the city. >> this first came onar thet
in 2016 at $25 million. it dropped thisummer to $19 million. and just this week it fell to $17 llion. whether that counts as a bargain remains to be seen. bargains being a relative term in the dizzying heights of manhattan real estate. for nightly business report, i'm robert franke in manhattan. >>is and tha nightly business report for tonight. i'm sue herera thanks for joining us. >> i'm bill griffeth. have a great evening,l verybody. wee you tomorrow.
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