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tv   Nightly Business Report  PBS  May 30, 2014 1:00am-1:31am PDT

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. 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 green berg's reality check, researching stocks in terms of risk. you can learn more at check. reversal of fortune, economic growth fell sharply in the first few months of 2014. so why are top economists and federal reserve policymakers so optimistic about the rest of the year? >> bidding war, what hillshire foods has that other companies are willing to get. >> and apple needing a cool gadget to beef up the stock now that the deal is done?
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we have all that and more on "nightly business report" for thursday may 29th. good evening, everyone, and welcome. stocks rose again today with the s&p 500 ending at yet another fresh all-time closing high. and the dow, within 17 points of its own record high, this happening despite the numbers showing this year. the gross domestic product showed a must worse is% decline with the wicked weather getting much of the blame. but wall street was unfazed. stocks got a big boost in jobless claims last week which are now back at pre-recession levels and there was also a modest pending home sales in april. that was the second monthly increase in a row. dow up 65. nasdaq higher -- excuse me, the
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s&p 500 added ten to close at the new all-time high of $19.20. and bench mark with the 11-month lows with the trading at 2.4%. so what gives? why are stocks at near record three times since last year, how is the economy counting on growth in the year ahead. steve liesman has more. decline actually caused economists to be more optimistic in the second quarter, on average they raised their forecast on the current quarter to a strong 3.7%, the reason? the negative number appears to be mostly the result of tough winter weather, the downward numbers came because of much lower inventory.
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turns out businesses kept a lot less stock on their shelves in the first quarter and they have to restock now. >> part of that negative is the weather, to be sure. but if you think about what the bounceback will be in the second quarter you still have a growth rate of less than 2%, so i think that is a disappointment of what people were thinking before. >> a big drop in unemployment insurance claims reported today to just 300,000. bolsters the bull's case for the strike and the economy. the bigger question being debated what happens after the bounceback andcxw the decline in-year-old in-year-old -- in yields for the u.s. government debt has some believing that the bond market is stiffing out the weaker growth ahead. >> the fall, since the beginning of the year reflects an appreciation that maybe the surge in growth we got at the end of last year will not be sustained over the next couple
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years. >> next year, they believe that the bank will scale back, that could help the bounceback more than just a blip. >> here is something else that some say could give the economy a lift and with the decades old ban on u.s. produced crude oil. a new report today has started up the debate concluding that such a move could create jobs and gas prices putting more money in the public sector. >> rising oil prices, more pain at the pump leaving consumers wondering if the u.s. is ramp up energy production then why are prices so high? traders say part of the reason is geo-politics, concerns with the market and supplies coming out of libya, iraq and iran. but a new study by the ihs says there is a solution, lifting
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airport restrictions on u.s. crude, an issue currently being debated in washington. the study's author says it could ease oil and gas prices but also add more than a million jobs to the u.s. economy. >> it is time to lift this ban, it is pathetic, if they think that a 1970s policy would be applicable today. it would be a cost savings for the consumer. >> they point to the findings that a total of $476 billion in additional investment would be generated in producing an average of more than a barrel of oil a day between 2016 and 2030. that increase in u.s. production would cut the u.s. import bill by an average of $76 billion a year. in addition, producing crude could add up the total cost savings of $265 billion over the course of 15 years, for u.s. consumers. >> if the export ban on crude
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was lifted i believe the global provides prices of crude would come down, because it eases the availability. i think we could see it go down below -- you know, probably into the 90s if we did, that would be the initial shock. >> but for now as washington continues the conversation, prices remain high. for "nightly business report," i'm jackie deangelo. after oil prices today, crude rose after the data showed a sharp drop in inventory off setting the u.s. crude and supplies. and for the calls on the import ban, go to our website at and earnings out today from sanderson farms, the numbers were just ducky. profits doubled from last quarter, higher demand for the fresh and frozen chicken as consumers switched from expensive beef to more economic
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poultry. and sander son's gains were small potatoes compared to shares of other meat producers, shares of tyson up 6%, hillshire farms up 13% because of a food fight on wall street with two different food giants both making bids to acquire hillshire fa farms. >> reporter: jimmy dean sausages never looked so good. hillshire brand is the company that makes them. they're also behind the sarah lee deserts. right now it is a hot deal on wall street, tyson foods, the largest meat producer and pork producer steps in offering to buy hillshire for $50 a sha%%ñ n a deal worth $6.8 billion, upping the offer from pilgrim's pride to buy hillshire for $30 a
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share. clearly, their corn dogs and other items are in demand. >> they do have some pretty nice brands in their portfolio. for example, jimmy dean breakfast platform that they have is a growing platform and has been doing really well. >> higher margins, established brands and strong supermarket presence are appealing. as tyson says in a press release, we believe that the strength of the products in the breakfast category will allow tyson to offer opportunities from shifting trends from the attractive and fast-growing day parts. hillshire says it is thoroughly reviewing tyson's offer. no question the food section is hot for deals. >> the deals, to off set pilgrim and tyson, they have transformed their balance sheets in the last three to five years, so they're in a much stronger position than
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they have been. >> so what impact would this deal-making be on the consumer? >> if all the energy that these companies expect from the deal actually come through, you know you would hope eventually that prices may even be lower to the consumer. >> the next move may come from pilgrim's pride if it decides to raise its offer to beat tyson. the investors certainly see the potential for a bidding war. in fact, shares of hillshire surged on wall street today indicating that investors see this company fetching a higher price. for "nightly business report." still ahead, apple shares rally today on news of its beef acquisition. but does the company have a new innovative product in the pipeline to get investors really excited? >>
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. a french bank may have to pay a big fine for ignoring u.s. tough sanctions against iran, cuba and sudan, the justice department is pushing them to pay more than $10 billion to settle those allegations which would be one of the biggest penalties ever imposed on the bank. the np is negotiating with u.s. banking authorities over whether it could lose the ability to transfer money into and out of the u.s. a bunch of other banks may be in trouble for possibly overcharging the u.s. government on foreclosure fees. the u.s. attorney's office in new york city is investigating whether uncle sam was charged way too much for expenses occurred during foreclosures on federally backed home loans, the banks have already received
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subpoenas, pnc, citizens financial, and the royal bank of scotland. warehouse club operator costco reported its latest quarterlies today, sales were up but so were costs. and with the retailer's profits getting squeezed, prices could be higher, too, courtney reagan has more. >> reporter: running a retailer is an expensive task, add in foreign currency and gasoline price fluctuations as well as membership fees and it becomes an even more difficult business model. warehouse reporter costco reporting disappointing profits bogged by higher expenses. it is the fourth straight quarter that wall street missed the earnings expectations. but analysts see it as one of the strongest retailers out there. revenue took hits from weak foreign exchange rates and lower prices at the pump. profits are getting squeezed as
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costco faces higher merchandise costs. shoppers may not need to worry about big price hikes. the cfo said the cost of#ax its popular rotisserie chicken has increased, but costco has not pushed the price on the consumer. the ceo says costco does pass on higher costs to consumer, although slower and to a lesser degree than other retailers so it hurts the shockers' pocketbooks less. >> the prices were higher, sales were fine. do i think anything unusual was going on here? i don't. i still think costco is the best retailer in the world, any time you can buy costco cheaper than the day before you should. they are still running the business very very well. >> it is not enough to deter analysts, at least four reiterate the recommendation to
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buy shares of costco, i'm courtney reagan, for "nightly business report." and releasing more on the portfolio of google. 83% of the tech workers are male and white. women account for only 17%. but in terms of racial diversity black workers account for 2% of the work force, hispanics, 3%, 4% are asian. google and other tech companies have been under pressure to release diversity data. if you think you have seen the best from apple well think again. the maker of the iphone and ipad and mac products could have something evenyó;lz juicier, th dropped the bomb shell heard around the world. >> we're not smart enough to do great things, we want to do a few good, really incredible things. and that has not changed. the focus is keep going down the path of building great, great
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products and you know, later this year we've got you know, the best product pipeline that i have seen at apple in my 25 years at apple. >> some claim, but can the company live up to that bold statement. here to talk more about it is andy hargrave, senior specialist, andy, good to have you with us. let's start with the beats deal, apple paid a lot of money for some headphones and for a streaming music service that is nowhere near the top of the heap so far. how do you grade this acquisition? >> well, it -- good on a few different levels. i think financially i would give it a pretty good grade actually. it is headphones, but really expensive headphones that would make a good margin. i think in the whole, what they play for the business is pretty attractive. for a strategic kind of move, i
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would grade it really low, because apple needs big markets, music is a large market but on apple scale i would have hoped to have seen them try something bigger. >> andy i want to ask you about the sound bite we just heard from eddy cue, best product idea i've seen at apple in my 20 years, do you buy the hype or is it for real? >> i think that is pretty aggressive, theçml;÷ product pie they had in 2007 was probably pretty tough to beat in the area of consumer electronics, i think now they will probably have bigger iphones, maybe that is what he is referring to. i would be surprised if he had anything similar to what we saw in 2007 in terms of impact of the company. >> tell us how you view the stock right here, andy. i noted today that the stock is trading at its highest level since i believe it was the fall of 2012. it is up there pretty high. where did you think it can go?
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>> probably upwards of $650, based in part on the six cycle. quite honest ly once you get ino that i think we'll be faced with pretty significantly decelerating and possibly declining numbers right now. we like it, but unless they launch some pretty massive new product or service between now and then we would be more likely to be sellers above that 650 level than continue -- >> and that is not so far from where it is today. >> it is not so far from where it is today, no. it has been a good start. well, let's talk a little bit about the future. on monday is apple's world developer's conference. usually they don't say too much to move the needle. but are you expecting the ceo to say something that will pump up the volume for apple investors?
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>> not really, there is always the outside chance. and management certainly, has been effusive, i guess in their praise of the pipeline. so maybe they come out with something that surprises us but i'm not expecting it a whole lot. i'm expecting it to be mostly software updates that people are usually aware of right now. >> you know they have good share in the iphone market, but samsung has certainly bitten at that business. they have not been blowing away the music world since streams has come on with pandora. is this company as innovative as it was five years ago? >> well, i think so. i think part of the issue and part of the knock on them not being innovative is they're rhino chasers, unicorn chasers, you know, they're bigger, they have had the ipad and it isjpd2t really, really hard to come out with products that address that big of a market and have that
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big of an impact on the world. and i think they try, which takes a long time. so you know, i think it is still an incredibly innovative company. i don't knock them for that i just think it is a really big company. it is hard to move the needle at big companies. >> all right, andy, thank you very much, we appreciate it. andy is with pacific crest companies. shares of abercrombie announcing a smaller than expected loss. revenues fell slightly but were still better than analysts' estimates. looking ahead, the company stood by its earnings forecast, the stock rose to $37.14. a health care deal in the news today. health care facility operator amsurg is buying sheridan health in a deal valued at nearly $2 and a half billion. am surge says they will have a deal of about $750 billion,
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sheridan is a privately held company. a cloud computing deal could be in the works between microsoft. reportedly the two are in talks to let microsoft cloud customers use sales force relationship management programs. sha shares of both companies rose in today's section, microsoft up a fraction to $34.34, sales rising to $52.40. and susie, you can soon pay your bill in bit coin, isn't that good news? the satellite company says they will accept the currency as payment so get your bit copes together. shares rose to $59.55. express reporting weaker than first reported results. also saw the store sales shrink. sales fell sharply, the stock up
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a bit to $13.63. another miss after hours from lions gate entertainment. that company saw its revenue decline 8%. that is despite strong contributions from the movie divergent which premiered ten days before the end of the quarter. shares fell, stock up more than 2 and a half percent to 29.53, but you see the fallout. and the revelations by edward snowden, including surveillance on a number of foreign countries, some say it could be cause for concern for the american business company. edward snowden's interview is being played up in china. people here are calling him a patriot and hero. a government spokesperson said that edward snowden only exposed what many people here already suspected. that america is the biggest cyber spy and adheres to double
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standards. this comes after five chinese military officers were indicted, that spying is one thing, but spying to steal corporate ideas to give your company an advantage is lost in the matter. the question this week has been how much can china retaliate when it wants american know-how and the two economies depend so much on each other. the press has started toózsl0 s its tone including commentaries running outward. saying it shouldn't underline the overall relatio in the amer business community concerned about retribution. there are concerns they are under threat of losing businesses for state-owned companies, and cisco has been criticized for being complicit,
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u.s. tech firms say they're already facing a tough business environment in china. coming up, the biggest annual meeting for cancer doctors gets under way tomorrow. there is one topic expected to dominate the conference. we have the details next. an important safety warning about tanning salons and skin cancer. the food and drug administration just announced that sun lamps used in tanning salons must carry a black box type warning label stating they should not be used by children under the age of 18. and market materials must include information about cancer risks to adults, urging repeat customers be checked for skin
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cancer on a regular basis. and british pharmaceutical giant smith klein approaching companies on better brands, gsk has about 50 drugs in what it calls its established portfolio including heart burn drugs like zantac, with tough competition from generic rivals, they are looking to focus on lucrative new drugs. big pharmaceutical companies along with wall street investors are gearing up for one of the biggest events in the industry. this weekend's annual meeting of the american society of clinical oncology, getting under way in chicago. >> reporter: asco is bound to move stocks, analysts say the key thing will be drugs fighting cancer, how do they work?
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immunotherapies work in different ways, some harvest the cells, multiplying them, and reinventing into the body to fight the cancer. another drug recodes the cells to be better cancer hunters, then destroys them and finds other cancers. others are medications taken by infusion. some pack a hearty punch against cancer cells, others help immune cell cells see the enemy, revealing invisible cancer cells so the immune cells can identify the target and then attack. smaller companies like geno and kite farmer are in the sales. this weekend will give us another look at the promise of these medicines. for "nightly business report," i'm meg terrell. nearly one and a half
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million vehicles are being recalled for safety concerns, but this time ford is the company involved. most of the effective late model cars, 900,000 of them are ford with the torque sensor inside the steering column. also the concerns are taurus sedans being recalled to update the floor mats. more troublepî,ñ could be oe way for general motors over the recall of two and a half million cars with faulty ignition switches linked to deaths. they say they met with the suspended general motor's engineer who was involved in the recall but pulled off the job in april along with another handful of gm employees. and welcome news for gm after it recalled about 15 million cars so far this year. only eight vehicles earned a
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superior rating for their collision warning systems and tests conducted by the insurance institute for highway safety. and four of those cars were made by general motors, that includes the only non-luxury make in the bunch, the 2014 chevy, the others topping the ratings, bmw 5 series, the bmwx 5, the buick, the cadillac xts, and the hyundai genesis. >> so they're doing some things right. >> those systems are amazing. >> that is "nightly business report," thank you for joining us, i'm susie gharib. i'm tyler mathisen, thank you from me as well. have a great evening, and hope you join us back here tomorrow night.
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man: it's like holy mother of comfort food.ion. kastner: throw it down. it's noodle crack. patel: you have to be ready for the heart attack on a platter. crowell: okay, i'm the bacon guy. man: oh, i just did a jig every time i dipped into it. doug: ...which just completely blew my mind. woman: it felt like i had a mouthful of raw vegetables and dry dough. sbrocco: oh, please. i want the dessert first! [ laughs ] i told him he had to wait.