report" with tyler mathisen and susie gharib. brought to you in part by -- >> the street.com. founded by jim cramer, the street.com is an independent source for stock market analysis. cramer's action alerts plus service is home to his multimillion dollar portfolio. you can learn more at the street.com/nbr. where do we stand? home depot and macy's say spring is the thing to look toward, but one survey on housing says the best of the recovery may be behind us. so is the economy in the winter doldrums or are there real problems ahead? grand canyon, a controversial bill in arizona has big business racheting up the pressure on the state's governor. and being nimble. in the second part of our health care series, how one health

insurance start-up is trying to compete with the big boys. we have that and a whole lot more on "nightly business report" for this february 25th. >> good evening, everyone, and welcome. after months of punishing snow storms and bone-rattling temperatures across much of the nation, a lot of people along with retailers, real estate agents, auto materials and just about everyone else seem to have bad case of spring fever. with the first official day of spring three weeks away we're getting now some hard numbers on the weather's toll on the economy. specifically its toll on two of the nation's biggest store chains and the price it's exacting on the housing market. we start today with a read on how economy is doing right now after home depot and macy's both saw profits rise last quarter but still felt the sting of bad weather in the form of weaker than expected sales. but again, spring is just around the corner, they say. and both chains have a lot to look forward to. courtney reagan has more. >> reporter: extreme winter weather kept millions of

americans sidelined indoors throughout much of january and february. and it shows in retail earnings reports. while the weather weighed on retail during the height of the storms, the good news is winter ends. and today retailers and investors are moving on, looking towards spring. macy's says while it expected a sales decline in january, the month was worse than expected, due in part to the harsh winter weather that caused nearly 30% of the retailer stores to close at some point during the month. but ceo terry lundgren is thinking spring, saying once warm spring weather arrives and our full assortment of fresh spring merchandise is in place, we believe customers will return to a more normalized pattern of shopping. >> i think what we have to do is look at the november-december period for macy's. they're up close to 3.6%. their online business remains robust. so we're looking past it and clearly with shares up today i think most of the street is as

well. >> reporter: for home depot, the weather impact balanced out. the negative hit to sales in outdoor and building material goods was partially offset by the increase in sales of heating, weather stripping and snow removal-type products. but home depot is looking even more forward to spring than macy's. not only does the home improvement retailer think strengthening home values will continue to lift sales, but the first quarter is also the most important one to home improvement retailers as consumers begin spring planting a sprucing up their homes. >> we think there'll be a massive release of pent up demand. people have been stuck in their houses for six weeks. we think they get out and retail sales for the first quarter probably start better than they started. >> reporter: while changing seasons won't cure everyone's retail ills, spring fever is just what wall street ordered. for "nightly business report," i'm courtney reagan. meanwhile, bitter cold weather along with higher home prices and a tight supply of

homes on the market caused home prices to fall in december. according to the case sharer home price index, prices fell .10% the second month-to-month decline that row. burt survey also reported that in december home prices in the 20 biggest u.s. cities rose more than 13% since december of 2012. yale economist robert shiller, namesake of the closely watched survey, predicts more uncertainty in housing prices in the year ahead. >> i think prices will continue to go up for the first part of the year at a fairly good pace. but i think they may weaken. there's a lot of signs showing that the housing market is weakening. >> the survey also says that the strongest part of the housing recovery may be quote over. no matter where home prices are ultimately headed, you can be sure of one thing, your grocery bills are heading hire. the usda predicts that food prices will rise between 2.5 and 3.5% this year which is right in line with overall inflation.

but that is based on a normal weather pattern. and with a devastating drought out west and polar vortex visits things have been far from normal lately. the agency admits california's drought may have a large and lasting impact on fruit, vegetable, dairy and egg prices. gus lochet joins us to talk about how economy is doing. he's a senior economist at pnc. so gus is the economy is it just winter doldrums or is something else going on? >> i think it's primarily the weather. people have put other car sales, put off home purchases because of the bad weather. but i think once things get a little bit better consumers will go out and start spending again. >> a couple of weeks ago, gus, we were all concerned about unrest and turmoil in the emerging markets, concerns about asia and china. should we be concerned about those things? is asia the emerging markets, is china slowing so much that it's

going to affect us? >> you know, i think it may be a slight drag on growth, but overall the global economy looks like it's in pretty good shape. we have seen growth in asia and china in particular slow over the past year or so, but developing economies continue to expand. europe has come out of recession. that's a big positive for the u.s. economy, because there are a lot of exports to europe. and so i think that in general the global economy will be a plus for the u.s. this year. certainly there is some concern about what's going on with the federal reserve that is causing some uncertainty in emerging markets. so that maybe a slight drag on their growth. but overall, i think trade is going to be positive for the u.s. this year. >> gus, let's talk a little bit more about some of the fundamentals right here at home. you just heard our report about housing, prices going up and in the last couple of weeks we've seen that builder confidence is down. today consumer confidence lower than expected. how do you explain all of that in your scenario for how the u.s. economy is doing? >> well, we did see a slight decline in consumer confidence in february, but the current

conditions part of the index was actually at its highest level since the spring of 2008. so that's very good news. we have seen home sales come down. i think some of that's tied to what's going on with the weather. some of it is higher mortgage rates. but if we look at the fundamentals of the economy they look very solid. we continue to see job and income growth so consumers are spending a little bit more. they're also seeing greater weather from hire stock prices and house prices, so that's supporting their spending. for businesses, they're very profitable. their balance sheets are in great shape. they're looking to invest and take advantage of low interest rates. then on the government side we have less drag from tax increases and spending cuts than we had last year. so i think this year will be noticeably stronger than it was in 2013. >> let's get a quick thought on housing. i agree with most of what you said there bquibble with the ida that incomes are going up very much. there is i'm told a bit of a squeeze on affordability. incomes have not gone up enough to keep up with rising mortgage rates and rising prices.

is housing going to slow markedly this year because of that? >> well, certainly affordability has declined from where it was a couple of years ago where we had mortgage rates at 3.25% and prices were down tremendously. however, prices are still down by about 1/5 from where they were at their peak in 2006. we are seeing some job growth, some income growth, and we do see lenders a little bit more willing to lend. so i think although affordability is down somewhat, it's still pretty good on a historical basis. and i think that will be enough to bring people into the housing market. >> thanks a lot, gus. appreciate your coming by to talk to us. gus rochet, senior economist at pnc. on wall street today stocks up early gains falling in the final hour of trading after a choppy skeession. the dow fell 27 points, the nasdaq ended lower by 5, and the s & p slipped 2 points. it is now just 3 points shy of a fresh closing high, though.

stock investors and bond traders were transfixed of a "wall street journal" article today about what was behind the breakup of two of the biggest names in fixed income investing. the article recounted the heated tension and personal clashes between pimco cofounder bill gross and his departing co-chief executive officer, mohamed el-erian. gross disputed the characterizations of the article, saying el-erian's disagreement over his business plan for pimco was a factor for el-erian's resignation and not his style of management. >> two months before he resigned he basically told the executive committee he thought it was a good plan, an excellent plan, but that he wasn't the man to carry it forward. so all of this discourse about -- from my standpoint and the conflict between mohamed and

myself is overblown. >> el-erian, who will stay on with pimco's parent company, that's the german insurer alliance did not respond to requests for a comments. ukraine is now in a financial crisis, its economy paralyzed by those massive protests that ended in bloodshed last week. as the nation's leadership appeals to the international community for a $35 billion bailout its citizens now are shocked to find out that the former president lived a secret life of extravagance and oppulence. >> reporter: ten miles outside the center of kiev, viktor yanukovych's massive estate, complete with a mansion, pool house, spa, zoo, and even an ostrich farm. inside the main residence it seems nearly everything is gilded in gold, except for this white baby grand piano, a steinway. massive bedrooms, inlaid mosaic

tile in this bathroom, a coat closet bigger than many a bedroom which still contains dozens of luxury cashmere coats. the palace, as the ukrainians call it is guarded. they say they're there to prevent the thousands of ukranian tourists from raiding what's left along the way we spoke to these gentlemen who came after seeing it on tv. they can't believe the former president lived like this in a country which is still so poor compared to the rest of the world. in a guest house far from the crowds, dozens of journalists are working on another discovery. more than 100 binders of documents found in the nearby river apparently thrown there in an attempt to destroy them. the journalists are drying them, photographing them, and then posting them on the internet so the the whole world can see. even though the journalists have only just begun to look at this vast trove of documents, they

say they've already found evidence that will show the former president of the ukraine, viktor yanukovych, was laundering millions of dollars worth of bribery payments to secret accounts. oleg komanoc is a ukranian investigative journalist. >> these are the originals of the documents. and this means that we have the original proofs, proven texts that can reveal the truth. >> reporter: now that the form president is gone, ukraine's stock market has shot up almost 20%, and the country's bonds have rallied, too. thomas fila is the founder of ukranian investment bank. >> is the change in leadership good for the economy? >> it is very good. that's what the economy has been waiting for. the economy is in such a bad state because of local mismanagement, corruption. the previous president and government which has mismanaged the economy for the last four years. >> reporter: before the country can get back on its feet, the parliament needs to form a new

coalition government. the international community says it can't begin negotiating a bailout until it has someone to negotiate with. for "nightly business report," i'm michelle caruso-cabrera in kiev. investors are keeping an close watch on china. corporate debt there is at a record high. its stock market is the shanghai composite index has five fallen 5% over the last four sessions and china's currency is down nearly 2% against the u.s. dollar in the past year. so what's behind the steady slide in the yuan? >> reporter: investors are closely watching the chinese yuan. many people believe the weakness is part of asia's plan to form t the currency. traders say it could set the stage of a widening of the daily ban.

they say the authorities are hoping to discourage speculative bets from the yuan showing there is risk the chinese currency could lose value. some economists believe the government could be dampening its security to boost the manufacturing sector because economy is slowing down. but at this stage, most people believe that the moves are more about beijing's plans to reform than over concerns about economic growth. for "nightly business report," i'm eunice yun in beijing. a look at how international markets faired today. april 15 just seven weeks away. now house republicans are preparing to unveil a new plan to simplify the nation's tax code. john harwood joins us now from

washington with more on the gop proposal. john, what is chairman kemp proposing? >> reporter: the comprehensive reform, tyler, in the nature of what ronald reagan signed into law during the 1980s. it would collapse the current rates from seven rates down to two, 10% and 25%. that would drop the top rate from 39.6 down to 25. it would have a sur tax on incomes -- earned income over $450,000 of 10%. and on capital gains and dividends it would tax them at ordinary rates but it would exclude 40% of the income from taxation. so effectively that takes the rate from the current 20% down to 15. >> all right. so we know, john, that any time there's a discussion about tax on capitol hill, there are debates on both sides of the aisle. what are the biggest potential land mines in this plan? >> reporter: the biggest land mines are the things that the chairman kemp, dave kemp the chairman of ways and means has not revealed yet that is how he pays for this.

in a revenue-neutral plan if you take the rate down from 39.6 to 25%, you're going have to raise a whole lot of money elsewhere. that's where the trouble is. what are they going to do on health care costs which are currently -- employer's costs are excluded from taxation. what are they going to do on charitable donations, state and local tax deduction, home mortgages? all of those are things that will draw huge amounts of potential opposition. and one other one that wall street is watching, a bank tax. it is expected this plan is going to have a variant of what president obama proposed and called a financial crisis responsibility fee a couple of years ago. chairman kemp is going to have something like that in there and wall street is nervous about it. >> if you want revenue neutrality and cut rates you've got to cut deductions as well. is there any real chance of tax reform passing this year? >> reporter: no. in fact mitch mcconnell senate republican leader came out this afternoon and said we're not doing it, we can't get it done. this is dave kemp the chairman trying to lay a marker down.

he leaves the chairmanship because he's term limited out. max baucus his partner on the democratic side in the senate now ambassador to china is trying to say this is the culmination of the process and start a discussion that will go on for years. >> john harwood, thank you very much. another legislative battle is raging in arizona. governor jan brewer has until the end of the week to decide whether to approve a bill that some say would allow businesses in the state to discriminate against gays. proponents say the bill protects the religious freedom of business owners. but as scott cohn reports, the biggest backlash is coming from businesses. >> reporter: opponents of senate bill 1062 say it gives businesses a license to discriminate. >> it feels like it opens the door for discrimination in a huge broad spectrum the way the bill is written. >> reporter: the bill doesn't use the word discrimination, nor does it use the word gay. in two pages, it simply guarantees people and businesses' rights to act in a

manner substantially motivated by a religious belief. backers in the legislature say the bill is pro business. >> you should not have to forfeit your religious freedoms and rights merely because you want to work or start a business in the state of arizona. >> reporter: but some of the loudest voices against the bill are businesses. american airlines, marriott and apple have all urged governor jan brewer to veto the bill. so has the organizing committee for next year's super bowl outside phoenix. >> we have four companies call us to tell us that we'll be dropped from their list as a potential investment location unless governor brewer vetoes the bill. >> reporter: the businesses that follow through could walk into the same controversy elsewhere. the expansion of same-sex marriage has triggered a tidal wave in the courts. what are the rights of a wedding photographer or an anotherist r florist or baker to refuse to do business with same-sex couples?

libertarian cato institute thinks concerns ant the economic impact of the law may be overblown. >> well, it will create economic activity for lawyers, that's to be sure. but we'll just have to wait and see whether nationally economic actors will take it out on the state of arizona as a whole. >> reporter: the last time an arizona law triggered this kind of controversy, immigration reform four years ago, the state dropped to 16th place from seventh in an annual cnbc ranking for business friendliness. governor brewer has until the end of the week to decide if this law is worth the risk. scott cohn, "nightly business report." and add to the list of the big businesses against this legislation, intel late this afternoon it also called for veto of the legislation. shares of intermune more than doubled on news its lung drug succeeded in a late stage trial. that's where we begin tonight's market focus. the drug which treats a fatal lung disease slowed lung deterioration in the study, spurring hopes thought might be

close to fda approval. the stock surged 170% today to $37.80. linkedin is taking on china. the company will launch a chinese language web site to expand its presence there. currently the social network hayes 4 million users of its english language site in the country. it says the new site will let it connect to china's 140 million professionals. shares of linkedin were up 5% today to $209.84. zu lily wowed wall street with its first earnings report since going public back in november. the daily deals site which tells clothing and accessories for women and kids saw fourth quarter sales double from last year. the company's current quarter outlook also topped estimates and watch these shares move up 36% to 58.41. different story at office depot as stunned investors by reporting a surprise quarterly loss. and warned that sales will continue to fall in 2014.

the loss is partly because of expenses tied to its recent merger with office max, the office supply retailer has struggled as more shoppers are purchasing office goods online. shares of office dedepot tumbled. western union shares also on the down side on word that u.s. authorities are investigating the company on whether money moved on its network that may have been tied to alleged fraud. the company says it's received multiple subpoenas since november. shares fell almost 1.5% to $16.12. and shares of tesla revved higher on an upgrade out of morgan stanley. the investment firm more than doubled its price target of the heck carmaker's stock to $320. the analysts wrote that tesla has the opportunity to not only disrupt the auto industry but also the electric utility industry by building battery packs for energy storage. the stock rose about 14% today

to $248. look at this chart over the past 14 months the stock is up 650%. and even more good news for tesla. "consumer reports" says tesla's model s sedan was the best overall car, bar none. it scored a 99 out of 100 by the magazine's reviewers. the best auto brands, lexus was number one again follow by accura then out audi. toyota and subaru were tide for fourth place. jeep at the bottom of the list. how investment capital is hoping to shake up the insurance industry. that's next. more big job cuts coming to

the nation's biggest bank, jp morgan chase now plans to eliminate 8,000 workers as businesses at its mortgage and retail banking divisions continues to shrink. that number is double the number of cuts that had been announced, and it comes on top of more than 16,000 layoffs that took place just last year. finally tonight, venture capital getting into health insurance. in the second part of our series, insurance upstarts. bertha coombs takes a look at the story. >> reporter: if oscar's new york city offices seem more like a tech start-up than an insurance firm, it's no accident. >> we wanted to build a company that was like having a doctor in the family. >> reporter: cofounders kevin mezani, mario slosser set out to use big data much the way consumer oriented tech firms do as the driving force to their health insurance start-up.

>> the big is interesting only if you can light up consumer experiences that point you to the type of doctor you're looking for, the type of care you're looking for or give you the context on what care might cost relative to your specific plan. >> reporter: they raised $45 million last year to launch oscar from venture capital firms including the founders fund and cosla ventures and got an additional $30 million this january. >> i think that the validation there is that people see the potential in action of a company coming into an industry that has had a history of giants that are slow moving. >> more information about the affordable care act. >> reporter: they're using old-fashioned shoe leather to help build word of mouth. they say it has paid off on new york's health insurance exchange. >> you may be able to configure what it takes to be a health plan more efficiently and effectively than a lot of the traditional players.

>> reporter: but longer term managing medical costs and pricing contracts could be a big hurdle for upstarts like oscar. operating only in new york city, oscar has contracted with a wide network of doctors and hospitals and with teledocs which allows members to access their doctor anytime for free over a phone or computer. the big question is about managing costs in terms of the medical costs. what have you seen so far that makes you feel that you're on track? >> because we utilize technology and data, we have early signals of what's coming in. we feel comfortable that the risk that we have is manageable. >> reporter: in the first three months, they say their enrollment was in the thousands with a slightly younger demographic mostly under 55 years of age. oscar executives won't give any specific numbers until after open enrollment closes march 31st. but in their regulatory filings they had anticipated signing up

7500 customers this year. now it appears they'll easily exceed that, bertha coombs, "nightly business report," new york. >> that's "nightly business report" for tonight. i'm tyler mathisen. thanks for watching. >> and i'm susie gharib. have a great evening, everyone. tyler and i will see you right back here tomorrow. "nightly business report" has been brought to youin part by -- >> the street.com. founded by jim cramer, the street.com is an independent source for stock market analysis. cramer's action alerts plus service is home to his multimillion dollar portfolio. you can learn more at the street.com/nbr.

[ ♪music ] >> the economic problems in the neighborhood of west oakland have created a variety of artistic opportunities, not only for those who need space, but for those who need their voices heard. >> bruce beasley: if you make art for the market, you won't make good art. so you have to excite yourself and then you'll hope you'll excite other people. >> this time on spark, a few stories from west oakland. [ ♪music ] >> major funding for spark is provided by the william and flora hewlett foundation, supporting creativity and innovation in the arts since i 1967. and by the kqed campaign for the future