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tv   Nightly Business Report  PBS  August 4, 2015 7:00pm-7:31pm PDT

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this is "nightly business report" with tyler mathisen and sue herera. >> missing the magic, expectations were high for disney to deliver but it was something not found inside its earnings reports. baked apple, the world's most valuable company falls deeper into collection territory. what is behind apple's decline. >> no 401(k), no problem. there are other ways that you can save for retirement. all of that and more on "nightly business report" for tuesday, august 4th. good evening, everyone. we begin with news about disney. expectations for it is results were pretty high. but the dow component didn't deliver the magic for investors. earnings of $1.45 a share did
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beat estimates but revenue came in at $13 billion, just below the consensus. julia boorstin has the one key takeaway from disney's quarterlies. >> disney's record quarter comes in two key divisions, marvel helped propel the revenue up 13% and operating income of 15% and the studio did not have to take a writedown on tomorrowland's disappointing results. led by espn, an increase in subscribers and rate increases helped offset lower advertising revenue. espn, along with disney channel and abc family helped outlay broadcast decline. it focused the quarter just a few weeks ago that it is inevitable that disney will eventually sell espn directly to
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consumers. >> julia, boorstin, thank you. apple fell deeper today into correction territory, shares of the blue tech company fell another 3% on heavy volume. they are now almost off 13% from their highs this year. $100 billion in market value since that peak. it's a fall in the stock price wasn't bad enough, there are also reports that apple's secure operating system are now vulnerable to worms and viruses. jon fortt has more on the rough run. >> reporter: shares down 13% from where they traded a couple of weeks ago, if you're looking for a single headline to explain the drop, though, you'll be looking for a while. apple shares have been falling since the company's earnings report partly on concerns that the iphone's growth might slow. >> the biggest concern is the
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calendar for the december quarter. the company had an enormous shipment and i think there are concerns whether they can beat that. we think they can. as a result, combined with other factors, we like the stock here on this weakness. another reason, china. stocks in the country have sold off in recent weeks, investors are worried about what that might signal about overall economic growth. tim cook has called out china's as the company's biggest growth market, that matters. finally, the stock is at the point where it's falling because it's fallen. apple is trading about he low the 200-day moving average, a key technical level that they read as a sign that momentum has turned against a stock. it won't be long until we get more news from apple. the company typically unveils and begins selling new iphones in september. that is sure to get investors to take another look at the stock for better or for worse. for "nightly business report," i'm jon fortt. >> apple weighed on the averages
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which ended lower for a third straight session. concerns about rising interest rates pressured stocks. dow jones industrial average dropped 47 points to 17,550 and nasdaq fell 9, s&p 500 was off 4. oil prices rebounded just slightly following yesterday's slight settling up 57 cents to $45.74 a barrel. factory goods rebounded in june. strong demand for transportation equipment helped the struggling manufacturing sector which has been stung by a strong dollar, weak overseas demand and spending cuts in the energy industry. the commerce department reported a 1.8% rise in factory orders following a decline in may. as a result of the report, barclay says overall economic growth for the second quarter now tracking at 2.9%. >> strong to support an interesting rate hike, so says the president of the atlanta federal reserve. dennis lockhart told "the wall
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street journal" that only a significant deterioration in economic momentum could convince him to wait longer. lockhart is one of the first officials to speak publicly since the policy meeting last week. a hostile bid in the drug sector late today as a result of rejected and unsolicited $30 billion offer from shire. if the deal were to happen, it would create a leading biotech company focused on rare diseases, the bid or word of it sent shares soaring. bertha coombs has more on the drama in the drug sector. >> reporter: only public for a month, but what a month it has been. the bio science company was spun off from baxter international. during the first earnings call as an independent company last week, ceo hansen said the firm was open to acquisitions as an
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acquirer. >> we are hungry for m & a but we are not desperate. i think we will use the discipline making sure that the strategy is aligned, the financials are there as well as we can integrate the organization. >> reporter: but it looks like they might now be the target, not the buyer. shire pharmaceuticals made an offer for the company which was learned last week so today shire is going public with its hostile $30 billion bid in what has been a busy year for health care mergers and acquisitions. >> 2014 was a busy year. 270 billion in announced deals. this year we have already eclipsed that with today's announcement with the unsolicited bid by shire. >> reporter: for ireland-based shire, it's an aboutface. it had agreed to be acquired
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last year but the deal fell apart after the u.s. changed the rules on american companies acquiring foreign firms to secure tax savings. now shire says its deal would give the combined company a strong profile in rare diseased drugs and benefits on the tax front. anderson's rich peterson says they've seen $100 billion in deals with u.s. firms selling to foreign acquirers. >> some of the foreign companies were one-time u.s. companies where upon they recorporated abroad to take advantage of lower tax rates. >> reporter: they rejected shire's bid saying it would be severely disruptive at such an early stage as a public company. an analysts say it can afford to hold off. baxter international still has a 20% stake in the firm and the rules prohibit any other investors from gaining more than a 10% stake making a hostile takeover very difficult.
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bertha coombs, "nightly business report," new york. >> aetna raises its profit guidance and reported better than expected earnings for the second quarter. the health insurer strengthened its medicaid business and the ceo is optimistic about eye kwiring humana. >> the only overlap we have is with a few markets on medicare, we do well on exchanges, they are having trouble there. we have a large commercial business. they have very little commercial business. they carry the lion's share of medicare. so the overlap for us is very strong from the standpoint of complementary products and services. >> the stock finished the day up 1%. >> cvs issued an outlook for current quarter. it was struck by a large drop in sales after last year's decisions to stop selling tobacco products but saw a rise in prescription sales in part because of pricey specialty
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drugs. that wasn't enough, though, to prop up the stock which fell today more than 2%. the food and drug administration has approved the first ever 3-d printed prescription pill. it will treat certain epilepsy and seizure disorders. it will spread layers of the drug on top of one another until the right dosage is reached. still ahead, are big corporations trying to delay the push for bigger overtime pay, a former labor secretary says yes. we'll debate it.
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after the mortgage finance company mosted a sharp increase in second quarter profits. the results mark the 15th straight profitable quarter. during the quarter, freddie mac increased its purchases of home loans and sold off greater volumes of riskier mortgages. >> general motors will spend more than $800 million to upgrade a truck plant in flint, michigan, amid solid demand for the full-size pickup trucks and part of the $5.5 billion investment program. the overhaul will make assembly line improvements but won't
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result in new jobs. but one area that is seeing an increase in manufacturing jobs is the southeastern portion of the country. thanks in part to the rapid expansion of the auto and aerospace industries. phil lebeau reports from south carolina, a state leading the way in manufacturing job growth. >> reporter: from boeing's assembly line in charleston to the plant in columbia, south carolina has become a hub for manufacturing. >> nationally, 12% of the gdp of our country is manufacturing. south carolina is now up to 18%. something really, really special is happening. >> reporter: what's happening is a result of an intense push by south carolina leaders to attract aerospace and auto manufacturing jobs. helping push down the state's unemployment rate. recently, volvo picked south carolina over mexico for an assembly plant that will employee 2,000 people.
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governor nikki haley says convincing companies not to build south of the border means offering them a better option. >> the way we can step up is certainly costs you can go so far but we can step up on our training, with our workforce and we can step up with the business environment and how we proceed going forward. >> reporter: a big reason why made in south carolina has become so popular is because manufacturers like bmw can ship their products around the world. in fact, the port of charleston has become the busiest on the east coast. >> the infrastructure is really good because we bring in a lot of raw material, specifically natural rubber from southeast asia and we export a lot, particularly where we export 50% of what we make through the ports. >> reporter: made in south care carolina, the new face of manufacturing in america. phil lebeau, "nightly business report," charleston, south carolina. the high-end retailer neiman
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marcus filed for an offering of up to $100 million but that amount is a placeholder and likely to change. this would be the company's return to the marketplace after being taken private in 2005. coach beats estimates but there's more to the report than meets the eye and that's where we begin with the market focus. the company was helped by the acquisition of the luxury shoe brand but this is the eighth straight quarter of falling sales for the company's purses and accessories. shares of coach ended the day at $31.41, a gain of 3%. meanwhile, beezer homes missed revenue forecast. closings rose in the most recent quarter but shares tumbled 6%. and swinging to a profit in the latest quarter, lower costs offset a decline in revenue
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despite weaker print ad sales and negative currency impacts. shares up 2.5% to $22.43. zillow saw its shares zoom higher after posting bottom line results better than expected. the company's revenue also grew and topped forecasts. shares rose initially in after-hours trading and off 3% during the regular session to $74.20. and video game activision hiked for the second quarter in a row on the heels of a 15% increase in revenue helped by digital growth and more expansion in china. shares initially surged in afterhours trading but before the close the shares were up just slightly to $25.67. dow component travelers announcing executive changes late today. allen schnitzer will start december 1st and will join the board of directors as well. shares were little changed in initial afterhours trading.
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during regular trading, it was $106.63. no shock, american's incomes have increased and they pack about the same purchasing power as in 1979. in june, the white house announced plans to expand by nearly 5 million people the number of salaried workers eligible to receive overtime pay. the proposal would make salaried workers earning less than about $50,000 a year eligible for that extra pay and that move is a controversial one. former labor secretary robert rice wrote an open letter urging companies not to delay these pay raises. mr. rice served under president clinton and is currently an economic professor at the university of california berkeley joining us along with jerry howard, ceo, association of national home builders which opposes the raise in the overtime threshold. gentlemen, welcome to you both. >> thank you. >> let me begin with you, jerry,
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if i might. this overtime threshold has been raised once, as i understand it, since 1975. and the president's plan to raise it to about $50,400, would take it, according to my research, back in inflation adjusted terms to the level that obtained in 1975. do you oppose any increase in that overtime threshold or just one as large as this one? >> well, the administration didn't ask us if we posed any. they just imposed over 100% increase in one fell swoop. >> i'm asking you, do you oppose any increase? >> no, i don't think we oppose any increase. we're reasonable. >> you think this is too big? >> it's too big and moreover applies to small businesses just coming out of a depression and as people are just starting to make money, you talked about incomes being frozen. in the home building sector, they haven't been frozen, they have been going down and you're putting the brakes on a very
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fragile home building recovery. >> what about that, secretary rice? there are a lot of small businesses struggling just to, you know, come out of an economic slump that was quite severe. there are other businesses that are not hiring. is this the right time to put this size of an increase in place to phase it in? >> yeah. this is not an increase in wages overall. this isn't even an increase in the minimum wage. this is an increase in overtime pay. the percentage of workers qualified for overtime. if an employer doesn't want to offer overtime, the employer doesn't have to. the employer can simply hire additional workers for 40 hours a week without any overtime. the point is, if we have an overtime rule and we've had it on the books in america since 1938, a 40-hour work week with time and a half for overtime, we should at least have an overtime rule that matches, at the very least, what we had in 1975. >> you're not suggesting, mr. rice, that this would not increase the employment costs
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one way or another for many businesses, are you? >> it could increase employment costs if a business wanted to keep people on overtime and not hire additional people for under 40 hours a week. all i'm saying is a business that really feels that it doesn't want to pay overtime has an option and that option is to bring on more workers and have them work 40 hours a week and not have anybody work for overtime. >> what about that, mr. howard? that sounds reasonable. it's not an increase in minimum wage or overall wages. >> i completely disagree with the secretary. right now there is a shortage of labor in the home building sector. we're having trouble finding people to come in and work 40 hours a week and for him to suggest we hire more people, that's going to add to the costs and add to housing. the workers just aren't there right now. >> mr. rice? >> it's one of the things that the employer does, an employer offers more wages in order to
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attract more workers. that's economics 101. what we want in this country are not only jobs, we want good jobs and american workers have suffered for years as pay has actually deteriorated, for most workers, in terms of adjusted for inflation. mr. howard? >> i would suggest that jobs in the construction sector are good jobs. also, i would suggest to the secretary that training for a carpenter, hvac person, even a framing carpenter, takes up to 18 months. it's naive to think we can go out there and hire these people. they have to be trained during the depression in our industry. many, many millions of laborers left the sector. they just don't magically reappear. and to say we can go out and hire more people is naive and it's dangerous if you want a strong economic recovery in the housing sector. >> gentlemen, we have to leave it there. thank you very much, both of you, for joining us tonight. i'm sure the debate will continue. robert rice, jerry howard.
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thank you. >> thank you. >> coming up, don't have a 401(k)? don't worry. there are other ways to build a nest egg and we'll show you how coming up. and here's a look at what is for tomorrow. the adp report will offer a read on the health of private employment.
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also on the data front, international trade, an important economic indicator and weekly mortgage applications figures are out. and that is what to watch for on wednesday. >> and baby boomers have too much risk in their retirement portfolio, so says a recent study by fidelity which found that many older 401(k) account holders, like me, had higher acquisition to equity than their age. many don't regularly rebalance their portfolios. >> but what if you're one of the 77 million u.s. workers who don't even have a 401(k) or an employer-sponsor employer-sponsored retirement plan. fear not. what do you have to do to secure your retirement income if you don't have that pension plan, the 401(k)? >> reporter: that's almost half of workers. there are other ways to save that you should know about and that's starting with an i.r.a. an individual retirement account is the best way to start saving.
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a traditional or a roth i.r.a. and the i.r.a., yes, does not allow you to save as much as a 401(k), with i this year you can save up to $18,000, but it's a place to start and you get the tax advantages that you would get with a traditional 401(k) or roth or 401(k) in that. you can have it tax deferred. >> what if i'm self-employed? >> the great news there is, you have more ways to save a lot more money. you have choices which most choose between a s.e.p. i.r.a. and save up to $53,000 in these accounts. what they are really looking at -- >> annually? >> you can put that in annually. that's about 25% of your earnings. self-employment income that you're able to put away. it's part 401(k) and a s.e.p. i.r.a. and there may be cash contributions if 50 or
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older. you could potentially put in more money. the other thing to think about is a simple i.r.a. but $12,500 -- >> it's something, right? >> right. >> there are tax advantages to all of those accounts. outside of tax advantage accounts what do you think about? >> very important if you're a high earner. you really want to think about the number that you want to save, the percentage which should be 10 to 20% of your income. and so you're going to have a taxable account and you won't have the tax savings but you'll have a nest egg. think about things that are important in terms of growth. not so much having all of your money in equities but having a diversified portfolio. >> fund the tax-exempt accounts first? >> yes. they should first go into those. >> thank you, sharon. >> thank you. the entrepreneurial spirit was alive and well at the white house today. start-up founders from all walks
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of life made their way to the nation's capital and made their first at the demo day. kate rogers reports and shows us what innovations were there. >> i started when i was 9 years old and because i really liked and couldn't find anything that fit my style and personality. so i started making my own. >> reporter: mosia has been on shark tank and steve harvey show but today his work was on display at the white house. the 13-year-old is founder of a bow tie company based in memphis, tennessee. he's part of a group of some 90 entrepreneurs from around the country invited to partake in the white house's first ever demo day. >> i feel great being here showing the bow ties to my president and spreading my business. >> reporter: also on hand were sisters betsy and emily to demo their business sort and plow. they grew up in a military
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family and are now repurposing military surplus into handbags. >> we've repurposed a total of 30,000 pounds of military surplus, have supported 38 veteran jobs and donating 10% of our profits back to organizations that support veterans for the past two years. >> reporter: one of the pillars is the white house that kicks off the event by announcing a slew of initiatives. among them, commitments by venture capitalists as well as from tech giants like google and facebook to invest in more women and underrepresented minorities. president obama stopped by the event to see what they had on display. >> we've got to make sure that everybody is getting a fair shot. it might be named stephanie or esteban. they might never step foot in silicon valley. we've got to unleash the full potential of every american, not leave more than half the team on
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the bench. >> reporter: the hope is that no matter who you are or where you are from, the idea of one day becoming your own boss is an attainable dream. for "nightly business report," in washington, i'm kate rogers. >> i want him to come and teach me how to tie a bow tie. i have tried with youtube and everything. we'll have him on. >> absolutely. all right. that's a great story to end "nightly business report" for tonight. i'm sue herera. thanks for joining us. >> and i'm tyler mathisen. have a great evening, everybody, have a great evening, everybody, and we'll see you tomorrow.
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announcer: this program has been made possible by... narrator: on this episode of "art and soul," a rare look at the most dramatic works of an american icon. man: it's an extraordinary, dark, and chilling moment, and it's something unlike anything rockwell has ever painted. narrator: a contemporary artist offers her own twist on "eye candy." twin brothers putting a classical spin on contemporary pop. uncovering the mystery behind haunting 19th century portraits. and, masterpiece... or clever fake? the lucrative business of art forgeries. it's all ahead on "art and soul." ♪