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tv   Nightly Business Report  PBS  July 20, 2013 1:00am-1:31am PDT

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report" with tyler mathisen and susie gharib brought to you by. >> sailing through the heart of historic cities and landscapes on a river, you get close to iconic landmarks, to local life, to cultural treasures. viking river cruises, exploring the world in comfort. >> the day after in detroit, reality sets in. so what happens next to city workers, bond holders and mutual fu fund owners since it's the largest to go bankrupt. >> fail to prevent insider trading by employees. >> and peak power usage, the mercury is rising and grids are under pressure. but what if the utility could store electricity before a heat
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wave hits? all that and more on "nightly business report" for friday, july 19th. good evening everyone. i'm sue herrera. susie gharib is off tonight. the day after the largest municipality in the bankruptcy history and today, the reality how bad things are in detroit and how bad they can get. how much will bondholders recover and what about the pensions of current policemen, firemen and other city workers? the unknowns with the growing number of lawsuits being filed, they will likely take years to shake out. brian sullivan is on the ground in detroit where city and state officials are hoping this drastic move will save the city. >> for years detroit is living on borrowed money and time and now it seems the city may have run out of both. detroit filing the largest municipal bankruptcy in the united states listing billions
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in obligations, hundreds of millions in deficits and 100 thousand or more creditors. they blame the declining population, which sent the population down by more than half over the last 50 years and with it a declining tax base. in a 77-block area, just one home per block on average is paying taxes, and there are more than 76,000 abandoned homes and structures in the city. we went out to see some homes and structures being torn down to ever the city more pleasant to live in what has been a difficult time. the case is far from center. in fact, there are moves to block the case from going into court, however, if the case does indeed go into bankruptcy courts, the major and governor of michigan hope the courts will wipe out debts and obligations strapping this already cash strapped city and though many may look in detroit and say it's unique that way, the mayor
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saying other cities may face the same fate in years to come. >> detroit is just the first city of many dominos that will probably fall. there are several cities in the same situation that we're in. if it does it for us, everybody say why detroit and why not us? >> reporter: whatever the outcome of this bankruptcy proceeding, the ripple effect will be far and wide. unions pushing bank against the bankruptcy because they are afraid pensions might be cut. >> my husband and i have no source of income coming in because we're both retired police from the city of detroit. we would lose everything. >> reporter: no matter what happens, this case will ripple through the courts for months, if not years and could change the face of detroit for good or bad for a long, long time. for "nightly business report," i'm brian sullivan in detroit. >> and on the heels of that detroit bankruptcy today miami was accused of securities fraud
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from three bond offerings in 2009. they said they issued false and misleading statements and miami cannot play shell games with the finances. the city was reprimanded in 2003. steven a.cohen is one of most successful fund firms of them all but that could change. a civil complaint is filed against cohen to super vice two of his trader employees. that are accused on an insider trading scream and bar cohen from managing other people's money. scc capital said he's done nothing wrong and will fight the charges. do today's fcc moves forshadow
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moves to come? ron is a journalist that worked with cohen. why is there so much attention with him? >> he's one of the most successful hedge fund people in the industry. he started with $25 million, he himself is said to be worth $9 billion and at it's peak, sac was managing 15 or $16 billion. so quite a big success story, and he's also known for some of the things that have come with that success, a large house -- >> or excess. >> or ex excecess depending on point of view. a lot of real us state. i think in someways the government and others identify him as the poster boy or poster child for the hedge fund industry. >> what about the civil charges? they are easier generally to prove, is that why you think the fcc took this particular move?
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>> we went from reading in the papers there was going to be racketeering charges levelled at steve cohen and maybe that won't happen so the fcc didn't sue. this is administrative. so of all the possible charges for lack of a better description they could have brought, this is the least among him. they want to bar him from managing other people's money. as a hedge fund it would seize to operate but his own family office at the end of the day with $9 billion or so to manage. but it's a big deal in one sense but in someways, probably prevents or probably forshadows the fact that there will be no criminal charges filed. >> that's what a lot of people think. >> yeah. >> one of the individuals care about this case is there is pension funds that have some money with sac capital. let's say that these charges go away, he is never really -- doesn't go down for it and that the insider trading cases against two of the former
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employees, those do not result in convictions. can he survive as a manager of other people's money? >> oh, yeah, sure. listen, he's got 9 billion so he'll be up and running. he's not closed. people have with drawn a serious amount of money from him during the allegations that were made in the press, even before this administrative proceeding has been brought, but let's say i'm, you know, the two insider trading cases that are currently out standing and don't go to trial this year, if they are found not guilty, the fcc would have little basis for admoni admonishing mr. cohen. does he let people back in who abandon him during this period or take on new investors and stay with those who stuck with him during the same period. >> thank you very much. good to see you. turning to wall street right now, slumping text shares weighing on the market following disappointing earnings thursday from microsoft and google but strong earnings before the bell
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from industrial giants general electric, honey well help offset the sale off. reporting a big boost in new orders. the biggest decliner was microsoft. it's shares tumbled more than 11% after it missed earnings estimates buzz of declining sales of pcs and writing down $900 million for it's surface tablet that apparently, no one wants to buy. in the end the major averages closed near the highs. the dow ending 4 points lower and the nasdaq down and the s&p cloelszed at fresh new record high. three years after the oil spill, billions in payments from bp to victims of the disaster are still being sent out. today a federal judge refused to temporary shut down a settlement program for victims of the 2010 spill refeuding claims from the oil giantest investigators of
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wide-spread fraud among those who made claims. g 20 finance administrators from the industrialized nations met in mass cow today and there is a lot on their blaets including slowing global growth. balancing federal budgets and volatile markets. more from moscow. >> reporter: the talks here in moscow was enough telling these countries and in particularly they need to do more to support demand and ever job creation the heart of this recovery. it may not be a he is age they want to hear, but they need to hear it more. 93 million people in the g 20 countries unemployed, a third unemployed for more than a year. yes, the g 20 can talk the talk but ultimately, it will come do you remember to t-- down to the government to ram that message home with greek politicians. but here, the talks continued.
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debates about propels for tax policies to address the tax trickery for some of the multinational corporations. this so going to impact the likes of apple, google, amazon in particular has been a hot top pick. discussions continue as the central bank of the g 20 arrive here tonight. they will talk about u.s. tapings, can these emerging market countries in particular come together and find ways to build pie nationfinancial safet. it will be similar to support jobs and growth. back to you. back in the u.s., it is day six of a massive heat wave affecting nearly half the country and also taxing our power companies. in new york city where temperatures topped out at 99 degrees today the local power utility said the city reached
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the all time electric peak usage. that's more than 13,000 mega watts and so far there have been no outages in the big apple. i probably just jinxed it. >> you might have. some folks in southern california, not as lucky. san diego gas and electric had power lost for hours to 123,000 customers. the exact cause is not determined but they say power is restored to all customers. that massive heat wave put utility companies across the country to the test scrambling to keep up with record demand but relief may be on the way for that heat wave and utilities, too, thanks to a breakthrough new technology. scott cohn has the story. >> reporter: they are sweatering in new york, living in this heat is hard enough. utilities have to work in it. that means delivering power the
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instant you turn on a switch. >> as a result, the electricity grid is built in an extremely complex fashion, and it's built for the very, very peak consumption. >> reporter: but what if a utility could score electricity ahead of time for days like this generating power when demand is low and selling it when demand is high? that's what they are working on in this lab in edison, new jersey. the energy storage is developing batteries that could, they say, replace entire power plants. >> it changes the whole economic and infrastructure and the whole paradigm of how we produce and consume energy. >> reporter: the idea has been around for decades but the challenge has been the cost. >> there needs to be a pretty significant decline in the cost of batteries. we would say 50 to 70% cost decline from where we are today. >> reporter: they uses zinc, cheaper and better replaceable
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in the batteries. there are 400 batteries here and this alone will be enough to power a small home for an entire afternoon. by next year they hope to have a larger version that could power a small neighborhood for days. business development manager is working with utilities and regulators. >> it's about putting pencil to paper on the business case for this technology and demonstrating we can in fact save utilities and rate payers a lot of money. >> reporter: it's not just utilities interested. a real estate company has the idea buildings in the future could come with batteries included. i'm scott cohn in edison, new jersey. still ahead, glaxco is accused of bribing doctors, officials and hospitals in china. they are going after the company in an unprecedented way. but first, a look at stocks that hit all-time highs today.
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western companies doing business in china often face many challenges and cultural differences, and now several executives at glaxco smith kline are finding out the hard way being declined as they face acquisitions of bribing local officials and doctors. they may be business as usual in china. >> reporter: this isn't something you see every day on chinese tv, this week there was an interview with an executive of british drug giant glaxo smith kline shocking the international business community in china. >> what is going on with gsk is
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unprecedented. i've never seen the government go so strongly and loudly after one company. making such a big deal out of it in a criminal way. >> reporter: the alleged crime bribery of doctors, officials and hospitals in hundreds of millions of dollars. four glaxco executives have been demained and one ordered not to skip town, part of the crack down on the first foreign form to be insnared in the anti corporation drive. it's like catching a big fish this lauwyer says. it's a warning. one industry in need of a cleanup. healthcare, walk into a hospital and dysfunction is evident from the start. >> this is where people buy tickets to see a doctor. they normally cost a dollar but staffers will sell them for $85. the salary of our doctors is about $1,000 a month he says, commercial bribery and china's drug sector is very common.
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it's an open secret. they faced trouble breaking into this market complaining the local drug makers are entrenched into the hospital system. now the scandal is feeding the perception among international firms, china is even less welcoming. >> they are going after foreign companies right now to soften up the political ground because they will be going after state enterprise later in the year. >> reporter: a tip off of possibly even bigger change. for "nightly business report" in beijing. we begin tonight's market focus with earnings from whirlpool. they had 75% rise in profits. the company expects appliance demand in north america to improve more than thought however, the earnings per share did miss analyst expectations. analysts brushed that aside and sent shares up to $128.91.
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investors ate up shares of chipotle after increasing the full year same store outlook. they opened 44 new restaurants in the second quarter. the stock closed higher by 8.5%. the hospital operator slashed the forecast blaming lower patient admissions and the company said it was served with an additional superfrom the justice department as part of an investigation into medicare admissions. the stock was under pressure the entire day. it closed lower by almost 9% to $43.16. shares of intuitive surgical tumbled and said it expects sales of the ro bat tick surgery systems to remain under pressure. the company received a warning letter from the fda following an inspection of facilities in
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june. the stock finished down 7% to $392.67. retail me not made the wall street debut and the stock soared. the online coupon company opened above the offering price of $21 a share. retail me not offers digital coupons from everything from clothing and electronics to food and entertainment. they finished up 32%, to $27.70. tonight's market monitor has an upbeat outlook and for specific stocks, let's welcome mark, chief investment strategist. why are you sort of constructive on equities as you are and what do you think the second half of the year will look like? >> i think the second half of the year will look better than the first half, tyler. i think that we're going to see a capital spending up tick. we're seeing that in activity that has been increasing sequencely for three consecutive months. we look for the housing market recovery to continue on over the
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course of the remainder of the year and finally the process advanced. we're seeing job growth and we think collectively that will lead to accelerating economic growth over the back end of the year and that boosts well for risk assets, namely stocks. >> speaking of stocks, we have viewer questions for you tonight, mark. jenny of minnesota writes in and said i brought 300 shares of apple last year at about $600 per share. do you think i should sell apple at this price or hold on? >> i think, sue, she should hold on for a higher price later. unfortunately that $600 plus is a junk tour. apple is still an iconic brand generating over $15 billion of free cash flow. today's price a 2.9% dividend yield and there say product cycle at the moment. i would wait to see what they might be launching this fall that could drive it higher before you're willing to part
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with it let's talk about a company related, alexis from el paso wants to know how does the outlook for the vote a phone group look over the next year? >> we think good, tyler. vodafone developing activity for it's businesses in both emerging market countries and well-developed markets. the stock pays 57% dividend yield which is exceedingly hand some and gets you a long way towards realizing the person and it owns 49% of the verizon wireless footprint, which is a lucrative proposition and there is increasing talk if verizon will buy them out or do something in a way to pay them a huge dividend as a consequence of ownership stake. i would hold on to them. next, it's david from blue hill maine, writes in and says as a long-term holder of intel i would appreciate a conversation of the prospects in markets such as possible rather than pcs.
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>> intel again is an iconic franchise, a mote business, if you will, given the industries by the chip making capacity. it stumbled here recently, particularly being rather slow and pc sells to smart phone and tablet-like devices. we think they will get it. you get a 4% dividend yield today's price the stock seems cheap but 11 times forward earnings so it has evaluation support. again, it's a cash cow. so we continue to think the longer term process for intel looks attractive. >> bonus time now, two stocks that you like, we got about 45 seconds left so 20 seconds a piece on pnc and helmric and change. >> pnc, the housing market and it has a big footprint in the southeast which is a growing popular area.
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in audition, obviously recovery and distressed sales particularly in the florida marketplace and as well as domestic recovery. it's a 1-2 punch we think will be profitable for pnc and helmric and pain, state of the art oil rig portfolio, active in the shale and has impressive day rates and we think again strongly about the long-term prospects for the energy in the united states, which we think hp will be a benefactor of. >> any disclosures on the last two? >> we own them all for clients, tyler. >> have a great weekend. >> you do the same. and coming back, since -- coming up, since the financial crisis, most people look at wall street and think of greed. there is one symbol it has endured. first, some food stocks that hit all-time highs today.
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a visit to the new york stock exchange is high on the list for things to do for those visiting the big apple but a few blocks away the iconic wall street bull that over the years came to represent the good and the bad of the financial capital of the world. >> we don't know exactly the meaning of the bull, but i think it's strength. >> reporter: this is the famous bull of lower manhattan. >> it's a classic. it's a classic were it's become one of new york city's biggest attractions. people from all over the world come to see it, to be near it, to touch it. >> some people tell me that if
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you touch the bull, you will get lucky, so i did it. >> reporter: it's the star of a short film called "my life in the canyon of heroes". >> back in 1989 just before christmas -- >> reporter: it captured a lot of attention, enough for the smithsonian to notice. it's a smithsonian finalist. >> in someways i'm trying to take the bull away from the bankers and sort of bank to the people. >> reporter: the 7,100 pound 16-foot long bronze bull was sk -- sculpted by this man. when you made the bull, what was your vision? >> the vision was give strength and power to young people for a better future. >> reporter: we introduced him to the man immortalizing his bull on film. so you gentlemen met for the first time and what do you think of the work? >> the work is fantastic and i think he did a really, really
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good job. >> reporter: the bull was a christmas gift to the people of new york city of the stock market crash. they wanted a bear, too, but that wasn't in the cards. >> after the stock market crash, my idea was the bull because the bull means power. >> reporter: the sculpt tours moved downtown just a few blocks to bowling green park where it sits today. >> this is the perfect place for the bull. >> it sure is. by many accounts the bull is the second most visited landmark in all of new york city, second only to the statute of liberty. >> wow. be sure to join us on monday, folks. we'll begin a five-part series how to not out live your money from thinking the 4% rule to protecting your retirement stash. that the monday right here on "nightly business report." >> i have to set the dvr for that. that does it for "nightly
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business report." i'm sue herrera. susie gharib is back on monday. >> i'm tyler mathisen. have a great weekend everybody. stay cool. inject liquidity. see you monday. "nightly business report" has been brought to you by. >> sailing through the heart of historic cities and landscapes on a river, you get close to iconic landmarks, to local life, to cultural treasures. viking river cruises, exploring the world in comfort.
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. >> the university of california confirmed home(i securityr secretary janetlp napolitano. >> the university of cavipját a boeke on for the nation and the cworld. >> protesters citing a poor credentials icd a interrupt the hearing. a hefty penalty and fine both fort( pg&exdñr for the san brun pipeline explosion. two guilty verdicts in the richmond gang rape trialçó brin closure for the brutali] crime that drew national attention. >> we the jury find george zimmerman not guilty. >> and outrage or the acquittal of george zimmerman for the shooting deathñi


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