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tv   Nightly Business Report  PBS  May 14, 2014 7:00pm-7:31pm PDT

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clo . this is "nightly business report" with tyler mathisen and susie gharib. brought to you in part by. >>, featuring herb greenberg who reminds investors that risk is real, with herb greenberg's reality check in terms of stocks and risks. you can learn more at check. the magic of macy's disappeared just a bit in the first quarter, sales were soft but management is optimistic. is the ceo right or is the consumer pulling back? cisco kid, the stock initially takes off, could this dow component be setting the tone for tomorrow? taking a toll, president obama says hundreds of thousands
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of jones -- jobs are at risk if congress lets the highway trust fund run dry, halting the projects to re-build bridges and roads across the country. good evening, everyone, and welcome, i'm tyler mathisen. i'm sue herrera filling in for susie gharib. there were no records on wall street as investors did a little profit-taking and sold more on stocks. we begin with macy's, the nation's biggest department store chain and a shopping staple for most americans for generations, shares of the chain ended just a hair lower today after reporting sales fell short of forecast last quarter due to all that brittle and brutal winter weather and a slow start to spring even though profits were slightly higher. courtney reagan has more on last quarter's results and how confident the retailer is about business in the months ahead. >> reporter: macy's turning in a first quarter a little less
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magical than previous quarters. the department store posting an increase in profits but disappointing sales. macy's says colder weather and the shift in timing of its family and friends sale had an impact on the quarter. but on a conference call, the retailer's chief financial officer said year to date sales are already back well in positive territory. and macy's says the consumer demand is strong enough to reiterate the earnings forecast, the retailer is also increasing its dividend and stock buy back program. the ceo says it is not macy's's best quarter but it is good enough, many on wall street consider macy's to be one of the strongest retailers so today's lackluster sales have them worried. >> you're seeing a choppy back drop and a consumer last year hit by a payroll tax. this year there is uncertainty in health care. so i think you're seeing shifts
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taking place between home improvements as well as apparel. >> home was the weakest category in the quarter for macy's. the company says the weakness may be related to fewer housing starts and lower new home sales. they say the trend has improved in early may. it is the improving trends that has wall street giving macy's a pass, at least for now. for "nightly business report," i'm courtney reagan. well, macy's is not the only retailer reporting this week. both walmart and j.c. penny are set to record their earnings tomorrow. joining us now to talk more about his expectations for these retailers, let's start, though, with a wrap-up on macy's if you don't mind. it is a darling on wall street, everybody loves terry lundgren, deservedly so. are they going to be able to meet their goals? >> macy's is a special breed along with macy' macy's is shifting customers
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from target, from penny, from every major retailer in mid-tier specialty and department store. so macy's will continue to win while the rest of retail is really a big cause for concern. >> you know, i was surprised with some of the results in the retail space. mostly because there was so much discounting. but that did not seem to resonate with consumers this time around, why? >> so there has been discounting now for several straight months through the 21 wild winter storms we had. the consumers are immune to discounting and using their mobile devices to find better price points. so they're out-smarting the stores and forcing them to sell at even lower profit margins than before. >> how much did the data breach affect the consumers? because it seems they want to use more cash than before. >> so you're completely correct, the consumers are wanting to use
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more cash than debit. target is hurt the worst but it is affecting all retailers, particularly apparel and jewelry and accessory retailers that depend the most on credit. >> let's go to what you think or what you expect from walmart tomorrow and i'll pick up on the point that you just made. which is could target's pain with that data breach be walmart's gain? >> target's breach is definitely walmart's gain, their sales have been negative for over a year. so now you have walmart reporting the declining revenue, walmart u.s., the same store sales won't be good but the forecast will be much better than people expect for two reasons, one, the gain targets pain. two, with the world cup coca-cola coming, and the proprietary coca-cola partnership for every world cup match that a billion viewers
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will see in every country, every continent. >> you know, we also have the fact that walmart is moving into less traditional and more niche areas. in which we saw that in the whole food reports earlier this week. walmart is offering more organic, more locally grown and that is really taking the steam out of some of the niche players in the food business. >> so great point, when you look at whole foods down 20% in a day. sprouts, fresh market down 20% or more. 40% for the year with walmart going shell stable, with wild oats brand bringing it in for natural organic and the fresh that you referenced, advantage walmart, disadvantage to the organic and fresh retailers. >> let's get to two retailers that had their share of troubles, quickly, j.c. penny and sears, how will pennies do when they come out with their numbers and will sears survive? >> they may not survive, because
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they wouldn't get a big enough number for sears canada, home was a difficult area for macy's, penny to save itself has to win at home. if they can't win at home it can't win and may have to re-organize in a bankruptcy sometime in 2015. >> very fascinating stuff, stores we all know and use. thank you. appreciate you having gme. all right, well, the mention of sears and the other retailers making news today, sears the troubled chain considering selling off 50% of its ownership stake in sears canada. sales in the great white north have been declining for years and recently closed down in some unprofitable locations. investors were not impressed, shares also fell for k-mart, falling nearly 6% today. and equipment giant, cisco, results were better than expected despite the sluggish demand for hardware, they topped
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estimates of 48 cents excluding the accounting items, revenue also beat expectations at $11 and a half billion, down from more than $12 billion a year ago but it beat the expectations. more on cisco's results, sheila, we always like to ask what is the big takeaway you see in the numbers. >> well, tyler, if there is one takeaway from cisco's report it is that they may finally be turning the quarter. they reported weaker quarters, but this one was better than expected. the company said that the guidance in the third quarter would be much better than expected. in fact, they say that daily expected revenue decline between one and 3% which is far better than the negative 5% that wall street had been expecting. so a lot of positive news coming about the traction of cisco's business, the ceo is talking about the growth rate when it
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comes to high end routers to perhaps good report fos cisco. as we told you at the top of the show there was a big selloff in the markets today especially for small cap stocks as the dow and s&p retreated from yesterday's record highs. the blue chip stocks ended lower for the first time in six sessions falling 101 points today, the nasdaq down 29, the s&p lower by about nine. another factor worrying traders today, a spike in inflation as the producer price index for april rose by more than a forecast, by 6/10th percent. steve liesman explains. once upon a time, america was a manufacturing powerhouse. about one in every three american jobs was on the factory floor. but beginning sometime around the end of the korean war
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services started to take over, now, just one in every ten americans is in manufacturing. yet, the government stuck to the old ways of measuring the economy. that is slowly changing. this year, they re-vamped the numbers to take account in the survey. 35% of the activity before, it is now 75% and should do a job of pinpointing inflationary pressures, the two times the index has been published including today it shows expectations well above the expectations. that is making former fed chair alan greenspan nervous. >> the presumption that it is -- no longer on the horizon, i think is a mistake. >> to be sure, these are producer prices. and they often don't get passed along one for one to consumers. but if inflation is going to start it is likely to be picked up first in wholesale prices.
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maybe especially now that it covers more of the u.s. economy. for "nightly business report," i'm steve liesman. president obama is looking to keep a campaign promise pushing legislation to raise more money to repair the nation's crumbling infrastructure. but it won't be easy. much needed repairs to roads, bridges and tunnels may mean higher federal taxessu and tol. hampton pearson has more. >> reporter: president obama chose the construction site of the new tappanzee bridge, a major crossing point over the hudson river, getting a billion dollar overhaul to make the point the infrastructure is falling apart and the federal government is running out of money to fix the problem. >> america doesn't stand still, there is work ready to be done. there are workers ready to do it. not just rebuild one bridge but i want us to rebuild every bridge.
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>> reporter: a few hundred miles away, vice president joe biden in cleveland, making a stand for mass transit to boost the economy. >> america remains the most dominant economic force in the world and we'll continue to be the most dominant economic force if we invest, if we invest in the future. if we invest in infrastructure. >> reporter: two separate funding crises are on the horizon. the highway trust fund which financing more than $50 billion a year in major projects is running out of money just as city and states begin the annual repairs that come with warmer weather. the department of transportation predicts delays on more than 110,000 projects this summer and the loss of several hundred thousand construction jobs next year. the gas tax at about 18 cents a gallon has not been raised in more than 20 years and it is even less likely in an election year. >> we're going to have to figure out a way to patch that over the next couple of months to make
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sure that states are not losing the billions that they're expecting. that we're not laying off workers. it is about 11% of the american work force that somehow is in infrastructure. >> reporter: meanwhile, the bill that governs all transportation policy expires at the end of september. a bipartisan six-year plan to maintain current spending levels at about 105 billion per year has just been introduced in the senate. the obama white house is pushing a four-year, $300 billion transportation overhaul to be paid by gas tax revenue, business reform and more tolls on highways. >> the senate has not really talked about the proposals they would use, but all we have is good ideas which you would have on the federal level, the revenues to pay for it is the real sticking point at this time. >> reporter: with so many moving parts the infrastructure overhaul will be like traffic in america's cities, subject to frequent stalls along the way. for "nightly business report,"
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i'm hampton pearson in washington. still ahead, regulators are close to voting on a new controversial plan that could directly impact anyone who surfs the web using a smartphone or tab. quite a scare today for walmart investors, the price of the stock fell sharply this afternoon falling by 6% in less than a second in what is called a mini flash crash, but then they rebounded, nonetheless the stocks fell. the exchange reported a problem with its data feeds on companies using the ticker
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symbols d through j. dupont, eaton, general motors, but it says the bottle neck didn't affect trading in the shares and the problem was quickly resolved. the fcc has a big vote coming up tomorrow over how much wireless spectrum, the nation's biggest mobile phone companies will be allowed to own and how much should be left over for smaller or future competitors. morgan brennan has more on the vote and why it matters to all of us. >> reporter: when the federal communications commission meets thursday it will vote on proposals that will affect wireless carriers and with them consumers. the topic? spectrum. >> the way to look at it it is the life blood for the wireless carriers. it is the connection point from the consumer to the network. >> there are different bands of the spectrum and the fcc has a process to determine which kind
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and what carriers they can use. the commission will take up another vote. whether to set aside some of the most sought-after spectrum low band that is expected to come to auction next year. such a proposal would limit the amount that industry giants verizon and at&t could purchase, reserving it instead for smaller competitors like sprint and t-mobile that could otherwise be out-bid. >> if you can free up more pipes the actual cost of stuff that goes through the pipes can go down. the key question is how do they free it up in a matter that is supportive of a competitive environment. >> the low band spectrum can travel farther distances through walls and other obstacles. and it is used for data plans as the public turns to the consumption such as video streaming low band becoming more attractive. >> the more they have, the faster speeds they can offer to consumers.
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>> that is why the details of the fcc's proposal will be very important, they will help to participate which carriers participate in the 2015 auction and whether the broadcasters that currently own the spectrum believe their wireless real estate is worth selling. for "nightly business report," i'm morgan brennan in los angeles. and to read more on the fcc's vote on spectrum and how it could impact consumers go to our website at and shares sent lower, tonight we begin our focus, earnings and revenue beat estimates as cost cuts helped the company offset lower sales of its tractors and other gear, but deere lowered the forecast with expected income declines, sales of agriculture and turf equipment will fall for the full year and the stock fell 2% to $91.70. sony shares plunged after the giant said they had a quarterly loss of $1.3 billion hit by costs of selling its pc
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business. the company predicts it will post its fifth annual loss in six years. the ceos and others are returning their bonuses to make up for the rough quarter. the stock fell to $16.50. yahoo! buying the mobile messaging app blink for an undisclosed amount. the application lets users send messages that will supposedly self-destruct after it is used by the sender. shares of yahoo! are down a fraction, $34.17 was the close. kate spade, the accessory and apparel designer posted a wider loss from continuing operations but that didn't seem to bother investors, the stock went to $37.60. the "the new york times"
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announcing that jill abramson is leaving, she has been the news room's leader since 2011 and was the first woman to take the job. shares were down to $15.06. and seaworld posting a wider than expected loss after the bell, the shares fell. the theme park operator blamed the declining traffic in the shift of the timing on easter and the spring break season as well as bad weather. the shares were down initially after the report. it is the biggest democracy on earth and this week voters in india will choose a new prime minister. so why should u.s. investors care? well, that is because the frontrunner for the top job is considered to be very business-friendly. and willing to open the country even more to more foreign investment. and a lot of u.s. companies are ready to jump right in.
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>> reporter: the voting is over in india and the election results are expected in just two days. estimates are that more than half a billion indians voted in this pivotal election. india's economy is a huge issue with the budget deficit, rising inflation and corruption is rampant. india has risen just 5%. enter the candidate. representing the party who has emerged as a frontrunner in the exit polls. modi has used india's laundry list of problems for the campaign, making economic reform the key issue. so far, investors like modi's message. >> i think india is an economic power house already, but it has the potential to be an even bigger economic power house going forward. a win for mr. modi becoming prime minister should bring in structure reforms over the next
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couple of years which should get growth going back to the 7 or 8% range, which is really where india should be going at this point. >> reporter: many american corporations have investments, including dupont. in an effort to capitalize on india's growing middle class, walmart and starbucks having gradually expanding their presence in the company. experts say the pick-up in the economic growth will only be good news for the companies. but be cautious, sceptics say, modi may not be able to deliver on the promises. >> they hope it will be a big win by modi. i think they're a bit too optimistic. i think he will need to be a part of the coalition government and what held back policy-making in the previous government was also the same constraints in politics. >> reporter: but even if modi does face initial hurdles as prime minister, the business community believes he will still be able to do a better job than
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the incumbent congress party which has been blamed for a long laundry list of problems, including economic growth. coming up, baggage fes, little leg rooms, long lines. it is what happens when you fly these days but not everybody is complaining. we have the surprising new results of a survey. you hate to fly these days? well, before you answer you should know that despite higher ticket prices, long lines and all of those fees you end up paying a new survey says that airline passenger satisfaction has never been higher. it hit an all-time high.
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j.d. powers north american airlines study finds that fliers are happier than ever mostly because of easier check-ins and more in-flight amenities like wi-fi. we asked customers how they felt. >> i feel like everybody is better, you leave at the right time. sometimes you go through delays, but its to be expected. >> the prices haven't come down, but the fees go up. >> the luggage should be included in the flight. >> why do i want to pay $75 extra to get my bag here. >> i want more leg room on the plane. >> they just want to get as many people as possible. we don't have a high speed rail system in this country so we're stuck. >> i'm still going to travel. if they increase it, it is one of those things. you have to pay it if you want to go somewhere. >> j.d. power says customer satisfaction is still below the
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hotels rental car companies and other service industries. and finally, an update on the spring art auction season which has exploded in its first week with christie's auction house in new york city making history last night. selling 3/4 of a billion dollars worth of contemporary art in one night. so what were last night's big winners and who is doing all of that buying? robert frank has the story. >> i'm selling it here at $75 million. >> reporter: it was the best single auction ever for christie's auction house. their post-war and contemporary sale pulling in a record $744 million. about a dozen pieces sold for more than $20 million. buyers went for big paintings that made a statement. and asian buyers accounted for about half of the top ten sales showing that chinese collectors have become the biggest new force in the soaring art market. the top seller was the big surprise, it was "black fire,"
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by barnett newman, way above the estimate, and twice the previous record for newman. while not well known, newman is a big trophy for wealthy collectors. >> this is sort of like big game hunting. if you collect jackson pollock and roscoe, getting a newman is sort of like the white while. >> the second was francis bacon's called "three studies for a portrait of john edwards" it was a slight disappointment compared to earlier estimates. it became the most expensive piece ever sold at auction. warhol was a big winner, his race riot piece went for $63 million and his white marilyn went for $40 million, double the
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estimate. and jeff coombs brings surprises, his item, made from stainless steel, and each of them were filled with a fifth of jim beam bourbor, if it falls in price, the buyer can help himself to the stiff drink. >> that is a dual purpose piece of art. >> it is, maybe that makes it worth $38 million, i don't know. i'm sue herrera, thank you for joining us. >> and i'm tyler mathisen, thank you for joining us, we'll see you back here tomorrow night.
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announcemajor funding for "quest" is provided by... sethi: food... it fuels our bodies, delights our senses, and forms the backbone of family and cultural traditions. but we rarely pause between forkfuls to ponder where the food we eat comes from or where our leftovers are headed. we should, because even as the number of mouths to feed continues to rise in the u.s., roughly 40% of the food produced here goes to waste. globally, food production will have to double by mid-century.