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tv   Nightly Business Report  PBS  October 27, 2014 7:00pm-7:31pm EDT

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this is "nightly business report" with tyler mathisen and susie gharib. brought to you in part by -- >> thestreet.com. featuring stephanie link who shares her investment strategies, stock picks and market insights with action alerts plus, the multimillion dollar portfolio she manages with jim cramer. you can learn more at thestreet.com/nbr. breaking 80, the price of oil falls blow a key level during the trading day. while that's good news for drivers, it could be bad news for parts of the job market. hashtag disappointing. twitter's quarterly revenue more than double ed but its outlook failed to impress investors. not accepted. apple pays with supposed to usher in a new way to pay for just about anything, but a week after its launch, why are two
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major drugstore chains disabling the technology? we have all that and more tonight on "nightly business report" for monday, october 27th. good evening. and welcome. the price of oil has always had an outside impact on the economy, on the stock market and on consumers. remember how careful you were about driving when gasoline was up above $4 a gallon and not so far ago? or where you set your thermostat after getting your home heating bill. but right now with lackluster global demand and oil production especially here in the u.s. at a peak, gas prices are near a four-year low. the price of crude has fallen roughly 25% since hitting a high back in june. and that's added to the volatility in the markets and worries now about how low oil can go. today another sharp pullback in oil prices. for a time they even dipped below the $80 a barrel level before they recovered. at the close, oil was basically
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flat. and exactly $81 a barrel. jackie deangelis has more on falling oil prices and what they could mean for the economy and you. >> reporter: oil prices continuing their decline, and that has retail gas prices sinking like a stone. the national average for a gallon of regular gas now $3.08, a four-year low. prices at the pump falling 18 cents in just the last two weeks according to the lundberg survey. this is good news for consumers who are saving roughly $50 a month in gas. not only will they feel this power of low gas prices, but they may choose to spend that money elsewhere, but could there be bad news, too? the u.s. oil boom is adding thousands of jobs to the u.s. economy. if oil prices continue to fall, analysts expect that could cause producers to scale back on drilling, which could mean less job growth in the industry. >> the main reason you have a
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problem here is that at a certain level, it doesn't pay to explore, it doesn't pay to produce more. at that level, that's why we heard all this talk about all this exploration in new technologies when we were at the higher prices. at this level, now all your producers are going to have to think twice about taking the on people and going further in their explorations. >> the oil majors spend money on other things, they make capital expenditures and reduced purchases could make a big dent in the me. will will oil producers start to feel the pinch? estimates to produce in this country are anywhere from 70 to $77 a barrel, so there's still wiggle room. with goldman sachs reducing its forecast to $75 a barrel, well, that's dangerous territory. the question now, of course, how low can we go? >> it looks like it's going to take a while. maybe take a few months, but once we broke through certain levels on a monthly chart, it looks like you could see levels
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as low as $50 some months from now. >> reporter: if oil prices continue to collapse, aaa says gas prices will move lower in tandem. we could see the national average fall under $3 in the coming months, but it does seem like that could come at a price. jackie deangelis. falling crude prices haven't just impacted major producers like chevron or exxonmobil. lesser known companies involved in drilling, exploration, oil field services and other energy-related businesses have seen their shares plunge since oil prices hit a high on june 20th. shares of nabors industries, one of the world's biggest drillers, tumbled 38% from those june highs. transocean, the offshore oil rig giant down 36%. newfield exploration and southwestern energy each off 34%. the cost of fuel, of course, one of the biggest expenses for airline, so when fuel prices decline, it's generally good news for carriers and their shareholders.
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here's how some of the biggest airline fared today. united up 4%, jetblue higher by 1%, american, delta and southwest all fractionally higher. meanwhile, opec will likely keep production levels right where they are. reuters reports say a senior oil official from iran says the oil cartel is not likely to lower its production ceiling at its next meeting in november. >> anthony chan joins us to talk about what lower oil prices mean for the economy. okay, anthony, you've heard the conversation. there are two sides to this story. one is that low oil prices helps u.s. consumers. the other is that it hurts increasingly significant u.s. producers. on balance, is oil at $80 a barrel, at 75, at 70 a good thing for the american economy? >> well, remember, when oil prices come down, it certainly gives a big boom to consumers
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adding as much as a billion a more for every penny gasoline prices go down. but as you always know, whenever something happens there's two sides to the issue. will it cut some capital expenditures and some jobs? of course. but you have to ask yourself what on net is the balance. on net a bigger positive contribution to the overall economy given that consumer spending the close to two-thirds of the economy and given the fact that capital spending on oil services and exploration is such a small share of the employment market that you all of a sudden see these fuel prices come down, you'll have more demand for goods and services and certainly more demand for airline tickets and things like that. that on net is going to be a positive. >> is there a point where oil prices get so low that it has a negative impact on the economy? so that right now $75 a barrel is sort of the number that a lot of people are talking about. if it goes below that, is there a point where it can have a negative impact? >> it can always have a negative impact to the extent that people start to think that that's a
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sign that the global economy is actually deteriorating. but when you look at the last couple years, the major reason why oil price are coming down is because the supply of oil has been growing at a fast pace, yet demand has slipped a little bit. but in terms of trying to balance both of those factors, it clearly is more supply driven than demand driven, but to the extent that lower oil prices reflect the fact that global economic growth is slowing, we're going to see investor sentiment and ultimately consumer sentiment taking a hit if prices go down too far. >> i guess what's different in this oil price slide, and it certainly has been a slide from the over the 100 barrel level back just a few months ago is that it used to be that when oil prices went down, who got hurt? opec got hurt. non-u.s. producers got hurt and there were some u.s. producers, but now a much more sniflt domestic oil industry in this country and so those american producers do feel a pinch,
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right? >> absolutely. because if you look at u.s. oil production over the years, it is increasing by a billion barrels a oil. all expectations are it will continue to do that. on the other side, what you also see is that u.s. producers are becoming more and more efficient and, of course, increasing their efficiency by almost 20% every year or every year and a half. even though they'll be hurt if oil prices come down, if you just wait long enough, the efficiency gains in production will, in fact, offset some of the decline, but that will take time. >> picking up on what tyler just said, there was a time when opec called all the shots and they have a big meeting on thanksgiving day, actually. is there some decision that they can make whether to cut production or any other move that you can make that really will influence the prices of oil. >> that's exactly correct. right now opec has a major decision to make. all indications suggest that
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opec is probably producing a little over a million barrels more than the world actually needs right now. to the extent that opec can, with cooperation from opec members cut the supply of oil not necessarily by a million but something close to that, that will do a lot to stabilize prices. they've made moves already they've cut 300 million barrels with kuwait. and numbers say they've cut close to 300,000 barrels of oil or more. so we need a couple hundred thousand more in terms of cuts and that will stabilize prices. >> anthony chan with jpmorgan chase. a pleasure. the price of oil was a big driver of stocks on wall street today. investors were cautious as they wait for a slew of major earnings reports and the latest policy announcement from the federal reserve later this week. concerns about the housing market also weighed on the markets after pending home sales rose by just a fraction of a point last month because credit
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is still tight for many would-be home buyers. a mixed finish on wall street, the dow rose by 12 points, the nasdaq added 2 point but the s&p lost 3 points. the price of gold fell for fourth straight session. down $2.50 an ounce. earnings after the bell from twitter, that's the micro blogging site, posted a loss of $175 million last quarter. adjusted earnings were one cent a share. that matched expectations. revenue more than doubled last quarter, slightly beating expectations but shares were sharply lower in late trading on concerns about slowing user growth. and a softer fourth quarter sales target. look at that falloff after hours. julia boorstin spoke with twitter's ceo after the numbers came out. >> twitter's revenue beat projections but the stock dropped after hour hs as its earnings per share came right in line with expectations. investors were hoping for an up
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side surprise. the ceo weighed in in our exclusive interview saying the company's user growth is actually larger than it appears. >> in the last quarter we reached our mobile profiles experience. and those new mobile profiles have dramatically increased the number of views, the number of engagements and the number of specifically of media content views on those profile experiences, so we like a lot the strategy we've got to grow that audience. >> as to questions of whether twitter can rev up its user growth, he says he believes twitter will be useful and vital to every person on the planet. for "nightly business report," i'm julia boorstin in san francisco. mixed news about merck's quarterly results. they reported better than expected earnings, but revenues that the pharmaceutical giant came in lower than analysts' estimates. it helped by cost cutting but was hurt by costs tied to acquisitions and from a sharp drop in sales from its gardisil
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vaccine. shares of the dow component fell 2%. a rough day for some big european banks, nearly one in five of the eurozone's top lenders, 25 in all, failed so-called stress tests performed by the european central bank to see whether the firms could withstand another economic downturn. nine of the failing banks were in italy, greece and cypress had three each, but ecb officials say most of those failing banks have actually made big strides in repairs their finances. turning to brazil where that country's stock market and its currency cooled off today in reaction to the razor thin electoral victory by the incumbent president over her pro-business rival. michelle ka ruse row cabrera has more. >> reporter: an incredibly negative reaction from investors to the re-election of dilma rousseff. take a look at shares on the most actively traded brazilian
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eff getting hit hard today on heavy volume. trading was heavy before the market opened. some of the brazilian companies also sharply lower. the oil giant off by double digits in percentage terms, down 21%. investors preferred the challenger neves who is much more centrist and pro business. coming up just how healthy is the health care sector? what to expect this week when a number of major companies in the industry report their earnings.
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it's been one week since apple launched its new iphone based mobile payment system and already some retailers are dropping apple pay. mary thompson has more. >> reporter: as the battle for bragging rights in mobile payments heats up one of the newest entrants proves too hot to handle for two retailer. cvs and rite aid were not among apple pay's retailing partners, but they did have the technology needed to accept it. less than a week after apple pay's launch they disabled those systems, and with good reason according to this analyst. >> cvs and rite aid are part of the merchant customer exchange which is a competing initiative
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to apple pay. >> reporter: the exchange is a group of more than 50 per chants frustrated and fed up with the fees they pay debit and credit card processors like visa, mastercard and american express. industry experts say their refusal to take apple pay isexp. industry experts sayhe retailer with its processing partners. >> they declined comment but the moves by rite aid and cvs come ahead of the launch of the exchange's own mobile payment app called currency. there are no credit card payments so there are no processing fees charged to retailers. if currency gains wide acceptance, retailers might save millions given mobile payments are forecast to hit $90 billion in the u.s. by 2017. but that, analysts say, and currency and apple pay's success depends on the consumer. >> i think the customer is going to decide who the winners and
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losers are. >> they might choose apple pay's ease of use or the promise of discounts and rewards from retailers who track their spending habits. both offer stepped-up protection from tokenization. >> they both protect the consumer, the card holder from being identified with the transaction. what consumers identify as being best for them will determine the winners in this space. a space changing quickly and with plenty of room for current and future players. for "nightly business report" i'm mary thompson. amgen beats its forecast. thanks to high demand for its white blood cell drug and increased sales of its newer treatment following the report the company raised its full year forecast. shares were volatile in after hours trading. the stock was up $48.20.
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the pharmaceuticalmaker says botox moves allergan. it has brushed off attempts by valiant. this new bid game as allergan posted results that topped analysts expectations. shares of novavax surged today on news that trials for its ebola vaccine are advancing. the drug developer is already doing a nonhuman study of the vaccine and the ceo says testing will progress rapidly. >> we expect to be able to make doses in the tens of thousands in this clinical trial by december and by the end of the first quarter we'll be able to manufacture at our by o tech company be able to manufacture in the millions of doses per month. >> the stock popped 13% on that news to $5.80. a setback for another company.
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the food and drug administration is asking for information on the biotech's application for its new ms drug. this means that the filing for the treatment will now be delayed into mid2015. shares there down 32% today alone closing at $15.91. strong quarterly earnings from citizens financial. they were up more than 30% from last year. it also declared a 10 cent quarterly dividend it will pay to shareholders in november. despite that shares were down to 22.85. micron technologies board authorized a share buy back program sending its shares higher. this is the chipmaker's first share repurchase plan in three years. it rose 4%. amazon is buying rooftop media. this is the online comedy services company as it looks to build its digital media library. rooftop places comedians'
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performances online and shares the contents. it recovered a bit from last week's sell-off. and shares of kohl's plunged initially in after-hours trading after the retailer issued a warning. the company said its sees earnings for the year hitting the low end of its previous guidance. kohl's is blaming weak sales. that sent the stock lower finishing the regular session with a slight drop at $58.5. we heard from merck today, but later this week a number of pharmaceutical health care giants are slated to post reports. more on what wall street will be watching for. >> reporter: pfizer is expected to report its third quarter in the morning. sales still pressured after the patent expiration of blockbusters like lipitor. with the new breast cancer treatment in development still years away. a very different story for
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gilead. sales of its hepatitis c drug are expected to top $10 billion this year resulting in earnings growth of 10%, but when the biotech giant reports tuesday, investors will be anxious to hear more about its all in one hepatitis treatment. analyst karen anderson says specialty drugs are where the growth is now. >> it's been such a strong combination of powerful launches for drugs that are extremely innovative, very high unmet need. because of that, they have the strong pricing power. >> reporter: for the major insurers, low medical cost trends have helped boost profits. how long will it continue especially for the large players in the affordable care act exchanges. aetna will be the first of the group to report tuesday followed later by the biggest exchange player and cigna, which pressures profited in the second quarter. but for some pressures could be
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offset by the bounce back in overall enrollment since the great recession. >> the availability of new insurance, people being able to afford the co-pays, through having higher employment leves s all of that is tying together and supporting growth in the sector. >> it has helped send the health care sector to all-time highs putting it on pace to outperform the overall markets for the fourth straight year. coming up, place your bets on what's shaping up to be a big fight in the garden state on the future of sports betting. we'll explain right after this.
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there's a new kind of grinch threatening to ruin some christmas mornings this year. congestion at the twin ports of los angeles and long beach, california, is doubling the amount of times it's taking ships to offload cargo. those delays are hitting the toy industry especially hard as it tries to get imports to stores ahead of the all-important shopping season. a big setback in new jersey's plan that would have allowed casinos in the garden state to begin sports betting yesterday. that didn't happen. and now some are questioning whether it will ever happen. morgan brennan has more. >> reporter: racetrack monmouth park had planned to open the first sports book in new jersey. after a new law repealed the planned betting for racetracks.
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but that was put on hold after the judge granted the nfl and other major sports leagues a temporary restraining order on grounds of irreparable harm. that means a lawsuit by the most powerful leagues against the state to keep betting banned will now proceed, but not without new jersey and its businesses pushing back. >> we believe firmly that when we get back to the 3rd circuit court of appeals at a higher level, we'll be successful and this is a delay not the elimination of being able to offer sports betting to fans in new jersey. >> thanks to a 1992 federal law, sports betting is illegal in the u.s. and all but for grandfathered states, nevada, delaware, oregon and montana. of those, only one, nevada, actually takes wagers on individual games at sports books, new jersey will become the second. state officials argue this is needed to help save new jersey's struggling gambling industry, particularly atlantic city where falling gaming rev news have caused four casinos to close so
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far this year costing thousands of jobs. but analysts say the casinos are less prone to adopt this for now because the federal ban and the fact that it's unlikely to be a major revenue driver. in nevada, sports betting accounts for nearly 1% of overall gaming revenue. >> i don't think you'll see any of the major atlantic city casinos in a rush to put in sports books until the federal rule is very, very clear. you know, these guys have licenses in multistates and other countries and they won't put that at risk where a racetrack in new jersey is probably running break-even cash flow at best and has much less to lose putting money into a sports book. >> which is why it is a race track that's first out of the gate. with this case widely expected to get appealed no matter the outcome. meantime, if you want to bet on football, you'll have to fly to vegas. for "nightly business report" i'm morgan brennan.
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some good news for toyota which reaffirmed its position as the world leader in auto sales. they sold 3 mrs more than a year ago and beat out volkswagen and general motors for that title. consumer reports magazine is out with its annual list of the most and least reliable new cars. here they are. the top spots the scion and the lexus and the lexus es-300-h hybrid. the bottom of the list, the ford fiesta and the mercedes-benz cla 250. the biggest problem this year, infotainment systems and incar electronics that don't function properly. all those bugs and glitches you get when you have too many electronics. >> the three of the top were all toyota brands, which toyota leading the top selling car. >> good time for toyota, after a long time.
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that's "nightly business report." thanks for watching. i'm susie gharib. >> i'm tyler mathisen. we'll see you right back here tomorrow. "nightly business report" has been brought to you in part by -- >> thestreet.com. featuring stephanie link who shares her investment strategies, stock picks and insights with action alerts plus, the multimillion dollar portfolio she manages with jim cramer. you can learn more at thestreet.com/nbr.
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>> funding of this presentation is made possible by the freeman foundation, newman's own foundation, giving all profits from newman's own to charity and pursuing the common good. kovlar foundation, and union ank. >> for 150 years we believed the commercial bank owes its clients strength, stability, security, so we believe in keeping lending standards high,

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