. this is "nightly business report," with tyler mathisen and susie gharib. oil shot, prices rising to their highest level in years as the iraq violence intensifies. some oil experts say that it could easily go higher. and disruption as the conflict escalates, a number of american companies in iraq could feel the heat. and show me the profits. add streaming music to the list of things that amazon now offers. but will it help increase profits? something shareholders keep looking for. all this and more on "nightly business report" june 12th, thursday. good evening, everyone, we begin tonight with the escalating violence and chaos across iraq. and even though al-qaeda

militants have taken over cities and are closing in on oil refinery, thousands of miles from wall street the impact here in the u.s. it clear. stocks have been plunging and the price of oil surging. as more regions of iraq fall into the hands of insurgents there are calls for the u.s. to intervene in the crisis as fears that the uprising could spread beyond iraq's borders. three years after american troops have pulled out of iraq government officials in baghdad now are asking the u.s. for assistance in containing the rebels. but president obama has made no commitments and says he is looking at all options. >> i don't rule out anything. because we do have a stake in making sure that these jihadists are not getting a permanent foothold in either iraq or syria. meanwhile, the violence is heightening worries about the supply of oil and a spike in energy prices.

let's look at the closing prices today, brent oil futures climbed to $113 a barrel today. the cost of west took crude jumped more than $2, hitting the highest price of the year, $106 a barrel. jackie deangelo has more. >> reporter: the political situation in iraq causing volatility among the area. the prices are relatively high for the last few weeks. what is interesting, though, is that gas prices remained relatively stable in the past few weeks, the cost of a gallon is $3.36, down two cents from a week ago and only a penny higher than the same time last year. but this could be the calm before the storm if geo-political situations in iraq worsens, and if it goes higher traders expect to pay more the next time you show up. >> overall, the wholesale for gasoline, we're heading above

that level. and the important thing here is refineries are not going to have an excessive amount of capacity. so we'll see constraints this summer. >> analysts have often likened gas prices to taxes, no one likes to pay more and when they have to they cut elsewhere. >> to say the average consumer is suffering from high gas prices is probably a little an understatement. this could be a real kick in the pants, as well. >> and comments from president obama earlier today that he is not ruling anything out leaving the door open for possible u.s. intervention. for "nightly business report," i'm jackie deangelo. the trouble in iraq is impacting companies that do business there. morgan brennan has more on what is at stake. >> iraq has the fifth largest proven crude oil reserves in the world. as the conflict escalates, the threat of production looms. it is a scenario that could

impact a number of u.s. energy companies. starting with integrated oil giants, exxon mobile has the murphy oil all have operations throughout iraq and of these names, exxon the most exposure. but analysts say that the oil still accounts for only a small amount of the global production meaning the benefits associated with rising oil prices could more than offset the negative impacts with local disruptions. >> the other 95, 96, 97% of the business for these guys is now theoretically more profitable. there is more business to do because the prices are higher. just so long as you don't get it so high that you start to worry about gdp growth and damage. >> and oil services companies that service and maintain oil company equipments. >> you're talking about haliburton and baker hughes made an early push into the country,

lot of operations in the south frankly have not been very profitable. they are pushing that back to break even, or do a little better even, have had success with that. >> they have had an impact on the companies, bottom line, something we saw at baker hughes after operations were suspended at an iraq facility just last year. still a lot will come down to location. southern iraq accounts for a lot of the oil output. but it is in the north where the companies stand to lose the most. that is because many companies and oil field services have increased their investments and operations in that region. it held the promise of bigger profits than the south. an escalating conflict could derail those efforts. for "nightly business report," i'm morgan brennan. we talk more about iraq and the impact on u.s. energy prices. the founding partner at again capital. john,'i)÷ thank you for joining >> thank you. >> let me start right off with

prices and where they're going. you predict worse case scenario if things really get bad it could get up to $150 a barrel, talk us through your thinking on that. already in a multi-month high right now. we dust off the chart and see where the mark was. that was when the oil hit $247 a barrel. just rounding off the target that is the number. we have gotten through 105, next up is 110. i think after that, that will be generated by real damage on the ground or even real worries, what i call a credible threat to baghdad. >> worse case 150, what is the likeliest case in your view? >> well, i'm not too sure to be honest with you, tyler, this happened so quickly. the northern output from iraq has been off line for months but this has been nothing new that the market has not been able to

deal with q$]7already. but the southern oil facilities, that is 100% of it right now, 3 million barrels a day to put it in perspective, 10% of opec's barrel a day to the world. that is when you get into this what-if scenario. i think if it calms down and they relax prices will come down quickly. >> and what kind of adjustments can they make going off line? will opec increase their production? >> well, opec does not have the capacity to make up the 3 million barrels, it is just not there. that is what makes this so dire if it is impacted. the u.s. has 3 billion barrels of oil in storage, we could tap them it. we are producing 8.4 million barrels a day but that is not enough. every ten barrels sustained is half a gdp, when the pump price

hits four, or 4.50, 5 -- >> that is what ewant to ask you, what do you see for the labor day situation? >> you're talking 4.50, 110, 120 easily. the boomerang on that tyler, it affects it. it is a whole big syndrome of people not spending on vacations and we're back in a recession. >> you know i saw a headline say that iraq threatens the whole global energy supply for years. that seems like a really strong statement, how true is that? >> well, you know this whole situation was predicted back when iraq was invaded in 2003. we were worried about the country breaking apart and for a shiite arc. because where they are, the iranians, the central government of iraq, that isv@y where most the oil was. this was a pitched battle between the sunnis and iran, now

their counterparts in iran. it is not as if these are sunnis that are friendly to us, like the saudis are, they're a pretty brutal group and not likely to get oil to the west to keep the economy alive. so it is a pretty grim outlook. and rising fuel prices are the big concern for the nation's biggest airline, because jet fuel is a large share of the expense, delta and united fell more than 5%, american, southwest and jetblue all saw significant losses, as well. meanwhile on wall street, stocks fell on those worries about iraq. but also on some disappointing economic news. a smaller than forecast rise in retail sales in the month of may and a surprise jump in jobless claims, the dow fell 110 points,

the second triple digit loss in a row. the nasdaq down 34, the s&p lost 13 points. general motors looking to drive its share price high. the board approved 5 million shares of company stock hoping to offset the bad press and spending, the ignition switch switch debacle as well. and money and retirement accounts can be taken by creditors to cover bankruptcy debts. inherited ira money not received from a spouse is not protected in bankruptcy proceedings, unlike most other retirement savings accounts. and anyone under 65 who is planning on retiring this year may need that ira and a whole lot more. fidelity investments say couples retiring in the coming years should see 220 billion in health

care costs even with medicare. nursing home or long-term care. still ahead, downward drop. can lululemon, the one-time billion dollar company return to the customer? stomer? the chairman of the federal communications commission is asking telecom and cable companies to step up and take the lead on cyber attacks, tom wheeler urged companies like time warner to take

responsibility and accountability before the agency has to impose new regulations. and shares of lululemon, after shares plunged 60% last quarter lowered the outlook for the full year. shares fell south, 16%, the upscale clothing company says it is due to the big tax bill. but as courtney reagan reports lululemon is getting squeezed from all sides. >> reporter: it was a lemon of an earnings report for lulu and the retailer is not inspiring much confidence that it will get better any time soon. while lululemon reported a better than expected first quarter and a $50 billion share buyback, the unexpected news that cfo john curry will retire at the end of the year is concerning investors. adding to that, the founder and

board member chip willson continuing to bring tensions to the lulu family voting against the current chairman and another board member saying neither fits with the core values of the company. when asked about the board division on the earnings call, the current ceo said? >> it is awkward. >> while lululemon has a high level of customer loyalty it struggled to recover from last year's see-through pants recall and later uninspiring product. the new ceo calls 2014 a transitional year as it revamps the process, although some analysts think the period of investment may last longer. they are living through product from the old design team. they are spending money on traffic driving initiatives in the second quarter and third quarter but it is a work in progress. it is not the same lulu it was a

year or two ago. as the athletic wear category grows so does the competition. lulu may not be the same as it was several years ago but it is still worth more than $6 billion, it is culturally different enough from companies like nike that it is an unlikely acquisition. gap has seen products grow, all likely taking pieces of lulu's market share, as competition intensifies and lulu stumbles investors are beginning to wonder if the once wall street darling is now a fallen star. and intel sending shares up as much as 4% in after-hours trading, where we begin, the chip maker increased its guidance for the second quarter and also the full year saying it expects stronger than expected demand for personal computers. earlier it called for flat revenue this year, now it

expects some growth. shares rose slightly to $27.96. and lands end was popular with investors today after posting strong first quarter earnings. the clothing chain, which was recently spun off from sears saw a higher profit and revenue margins. also driving up those revenues, the stock dropped to $28.79. and a schlichter-up of top executives at twitter. the social media chief operating officer rogani has resigned but will stay on as chief executive officer, twitter does not expect to take on a replacement. shares went to 36.79. and a surprise move, the founder and ceo of tesla opening of his companies technology patents to any automaker who wants to make long-range electric cars. musk says it will increase development of better and more

electric cars leading to more sales across the sector and actually strengthen tesla's market share. shares of tesla did not react favorable, down to 3.52. and mobile, making software that protects corporate data. accessed by employees on smartphones. the offering raised $100 million with shares priced at nine apiece, the stock rose to $11.02. and good news for phil mickelson. "the new york times" reports the lucky lefty was not involved in any insider shading of clorox, around the time that it was trying to be acquired in 2011. wall street been looking for timely shares of chlorox, including trades by phil mickelson. and seems just about

everywhere, amazon has launched a streaming music service for amazon prime subscribers aimed at your ipod or cell phone. julie borsten has more. >> subscribers to the annual prime service get another perk, adding streaming services with coming as android expands to grocery delivery and music services, amazon has a heavy emphasis on play lists, most of the songs are six months old, not new releases. it deals with sony, featuring the likes of the doors, but has not yet made a link with the largest universal, which has names like lady gaga and elton john, today's launch makes the

prime subscription more appealing on the heels of a $20 price hike and helps it increase with the formidable rivals. apple with the recent $3 billion acquisition of beats, google has the play store and streaming, and pandora is on the rise. >> amazon is not going to favor y÷ compared to let's say, spotify or pandora, that will be a challenge, but amazon will respond by saying if you're a wçr(t&háhp % it is not a direct customer in the first place. and focusing on music, amazon is making a bigger play< o. >> amazon is trying to create a complete portfolio of experiences for its customers from books to summer shorts to now a music subscription service. it means the full package in order to keep people coming back day after day. one way to keep consumers coming back? a phone. there are reports that amazon

will unveil one at an eveny@ñ coming up on june 18th. coming up, soccer fans have the world cup. fans now have "nightly business report's" new ultimate stock cup challenge. we'll explain next. explain next. today, the world's biggest sporting event, the world cup begins with 32 countries battling out on the stage for ultimate prizes in football or soccer. and that got us thinking about

the biggest rivals. we'll take a look at 16 companies that battle it out every day in global business and we'll have an analyst tell you which stock he or she favors right now. call it nbr's the ultimate stock cup, these companies compete like spain, portugal, argentina and brazil, tonight we start with a coke classic, pepsi. it is perhaps the strongest brand in the world. coca-cola. born 1886, headquarters, atlanta. annual sales almost $47 billion. the original carbonated, caffeine confection rose in demand. but the strength was in bottling and distribution, time and again they forged big wins. the roster filled with names

such as nestea, tab, fresca, and hi-c, and capris sun, honest tea, and even a rock star are late additions. coke was mixed by a north carolina pharmacist, originally. now its home is in new york. annual sales worth more than $66 billion, bankrupt twice in the 20th century, the company merged with frito lay in 1965 and became pepsico owning brands like 7-up. gatorade and tropicana. it drove pepsi's market past coke for the first time and remains there today. >> let's turn to caroline levy for her play by play on the two. she is the managing director

after cfl america. so caroline, sticking with this sports lingo, you're saying on the field pepsi out-runs, out-scores coke. tell us the key reason why? >> well, really it is not because coke is not the stronger player in beverages, they definitely are particularly on a global stage. coke and pepsi are more neck and neck in the u.s., but coke is the clear winner in beverages, however, more than half of the earnings come from snacks, from a stock perspective we find pepsi more interesting. >> do you think it may ultimately be split into various divisions of food and beverage? >> i actually did, in 2009 we urged that it should split. and now we have them really trying to make it happen. i think analysts for many years have felt as i do that companies will do one thing extremely well

i think that a pepsi beverage company globally and a snack company globally will be far stronger to stand alone. >> you know, every good team has to have their strong players and s4ñ6 well, i think she is criticized for not ever run a division. she is financially savvy and has been involved in things like marketing, the results have been some serious market share losses in beverages. especially in big brands like tropicana which used to dominate high-end orange juice and no longer does.

that is the big criticism. the operating capability would be better in somebody else's hands, he was really a man of the people. i think he increasingly has become a global diplomat and spokesperson for the company. and other people are running the business. but he is still commanding strategy. >> and we're a little short on time. nobody markets better than coke, caroline, and yet you have an under-perform rating on this. >> i do, and again we're talking about the stocks here. the soft drink business is a very tricky one right now. i think there will be sugar issu issues, there will be sugar taxes in the u.s. and taxes in other countries. so i think that carbonated soft drinks in the u.s. are strategically challenge d. >> and right now, what is your target? >> $97 target. the stock over 100 splits in terms of the beverage snack business. and there is a reasonable chance that that may happen.

>> actually beats coke. i assume you're going to root for england? am i wrong? >> well, i'm south african, so i'm conflicted. >> all right, well, very good. caroline, thank you for joining us. >> thank you. >> you just heard which stock our guest prefers. we want to know what you think. coke or pepsi. vote in our ultimate stock cup on our website, nbr.com. and finally tonight, this year's world cup in brazil already has one claim to fame, the most expensive ever. the estimated costs for hosting the games is reportedly more than $11 billion. four years ago the same tournament cost south africa only four billion. but there is also a historical benefit for the winning country. the victor's economy has out-performed the world economy 4.5% in the month after the tournament. and why do they call it the world's most popular sporting event? more than 4 billion people are

expected to watch. tyler, if you combined the super bowl, the world series, the u.s. golf open there is still more people. >> doesn't add up to this at all. brazil and croatia were winning. >> that is "nightly business report," thank you for joining us. i'm tyler mathisen, thank you from me, as well. have a great evening. we'll see you back here tomorrow night. here tomorrow night.

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. man #2: it 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.