♪ >> announcer: this is "nightly business report," with tyler mathisen and sue herera. alcoa's earnings numbers miss big, starting what many think will be one of the ugliest earnings seasons in years. chaos on capitol hill. without warning kevin mccarthy drops out of the speaker's race, raising questions about what happens next, just as congress faces tough budget deadlines. and tech tie-up. are two well-known companies working on one of the biggest takeovers in tech industry history? all that and more tonight on "nightly business report" for thursday, october 8th. good evening, everybody. and welcome back. a disappointing start to earnings season. alcoa, which unofficially kicked off third quarter results, reported a big earnings and revenue miss. the former dow component earned

seven cents a share. expectations were for 14 cents. revenue came in around $5.5 billion, down more than 10% from a year ago, hurt by sliding aluminum prices. shares of alcoa dropped initially on that report in after-hours trading. during the rg session it finished slyly higher. despite the disappointing quarter cnn klaus kleinfeld called his company resilient. >> if you look at what's going on in the market, you see there's a lot of volatility that's in there. from commodity prices to currencies, to worri over china, emerging economies, interest rates. and if you look at that and then reflect it to our quarter, i think you see quite a bit of resilience in there. >> morgan brennan has more on alcoa's quarterly results. >> reporter: alcoa earnings and revenue missing expectations with the biggest drag coming from its primary metals segment or the aluminum giant's smelting and refining operations. the company reporting a $59

million loss in that division as aluminum prices have plunged 25% this year. as we've seen throughout the commodity complex, it is a story of oversupply exacerbated by the slowdown in china, which is the largest consumer of aluminum nu and many other industrial metals. still the company reiterating its forecast for global aluminum demand's increase 6 1/2% this year and also projecting a global aluminum deficit in 2016. in terms of bright spots, revenue on alcoa's manufactured parts businesses continue to grow. those are the mid-stream and downstream businesses that alcoa plans to split into a separate company late next year, but again, this quarter it was all about weak commodity prices dragging down earnings and what couldish a potential harbinger for other industrial companies that will report in coming weeks. for "nightly business report," morgan brennan. well, despite the disappointing start to earnings season and analyst expectations for a slightly negative quarter overall, our guest tonight is

optimistic that earnings will surprise to the up side ande wil be flat. flat is the new up, i guess. andrew berkley, a portfolio strategist at oppenheimer and company. andrew, welcome. so why do you think that the numbers will be better than the negative 3.5% that is kind of the consensus forecast? >> how are you doing? you look at your overall aggregates down a little bit in terms of the con cessus forecast. we think it will surprise on the up side, really somewhere around flat. for two reasons. one is there's a chronic underestimation by analysts. they're usually too pessimistic by somewhere between 3% to 5%. so if we assume 3.5% is right around the median of that that will bring us right to about flat earnings. the second is we just don't see it's consistent, what we're seeing in the overall economy. where nominal gdp is still growing somewhere close to about 4%. that's really not consistent with down earnings. but it's really at the sector level when you get under that flat you'll see a very big dispersion between sectors. >> yeah, and let's talk a little

bit about that, andrew, if you work because you kind of divide it up into two camps -- those that have commodity exposure and perhaps more international exposure and those that do not. >> yeah, i think those are going to be the two big factors. alcoa's a very good example of a company that has a lot of international exposure and a lot of commodity exposure with very disappointing earnings. and i think that's going to be a consistent theme, which is really one that we've seen a lot throughout 2015, which is more companies that have nor domestic exposure, less commodity exposu exposure, those are the ones that have been delivering on their earnings. those companies that are really dependent on commodity prices which have been under pressure all year, those have really been the losers throughout the earnings season. so i think that's going to play out yet again in q3. that may start to change as we get into q4 and in 2016 as the dollar has started to stabilize a little bit, oil prices have started to stabilize, but for the current quarter that's still going to be to be a big factor. >> that's what i was going to

ask you, is the worst behind us? in other words, when we start having different comparisons, first quarter against last year's fourth quarter, this year against last year's fourth quarter. the commodity price slide, the energy issue, the dollar and so forth. >> i think so. if you look at where oil prices were in the fourth quarter of last year compared to the fourth quarter currently in october, they've already started to come down a bit. the dollar's already been strong. and the other point to make is companies have had longer to adapt tho those two big themes. this is something we've been in here for a number of years now. companies can no longer say they're surprised the dollar's been strong or earnings are weak. >> andrew berkley, thanks very much. andrew is with oppenheimer and company. >> stocks picked up steam in today's session after the federal reserve released the minutes from its latest meeting. we'll have more on that in just a moment for you. on wall street the dow rose 138 points to close at 17,050, its first close above 17,000 since

august. the nasdaq was 19 points higher, and the s&p 500 notched a 17-point gain. domestic crude rallied closing nearly 3.5% higher at $49.43 a barrel. >> and as sue just mentioned, at the federal reserve's last meeting policy makers said the time for raising interest rates was near. but the group thought it would be best to wait. the central bankers were concerned about global developments and wanted more evidence of impact of the global slowdown on the u.s. economy. at that at the point meeting the fed did surprise many by deciding to keep interest rates unchanged. the number of americans filing new applications for jobless benefits fell to a near 42-year low last week. the labor department reports the claims for unemployment benefits dropped 13,000 to a senzly adjusted 263,000. that's the 31st straight week that sclamz remained below the key 300,000 mark. a stunner on capitol hill. house majority leader kevin

mccarthy, who was considered the front-runner to become the next house speaker, has dropped out of the race. >> the one thing i've always said to earn this majority, we're servants. we should put this conference first. and i think there's something to be said for to us unite. we probably need a fresh face. i'll stay on as majority leader. but the one thing i've found in talking to everybody, if we're going to unite and be strong we need a new face to help do that. >> separately, democratic presidential candidate hillary clinton laid out her plan to broaden wall street regulations. john harwood has been following developments on both of those items. and let's start, john-w kevin mccarthy dropping out of the race. how does this cloud the picture for some -- or does it clarify it for some of the big issues congress has to tackle over the next few weeks, like the debt ceiling? >> well, it might clarify 2 in the short term, tyler, because john boehner is likely to stay on given the fact that he said

he's going to stay in the job until there's a successor. we don't have one yet. so he we don't know how long that's going to be. could even stretch to the end of the year when we've got the debt limit is going to be ripening in november, for example. so it is possible that what looks like chaos and turbulence could actually protect the status quo for a while while john boehner stays on. >> there have been reports mr. boehner reached out to paul ryan today and apparently he said no, but this is an ongoing kind of saga that's developing on the hill. what happened next? >> i think a lot of people, sue, are going to be calling on paul ryan because he does seem to be the one figure that everyone agrees has the capacity to get the votes to become the speaker. and as someone who's got a track record of get something things done. he did the budget with patty murray last year. but paul ryan has said publicly doesn't want that job.

that leaves us in a position where jed hencering, jason chaffetz, who's already in the race, tom holcomb of oklahoma, all these names being thrown around -- >> getting something done with the democrat palt ry nuri is not the way -- hillary clinton and her plans to tighten regulations on wall street. what did she propose today? >> remember, tyler, there's the democratic debate. the first of the primary season next tuesday. and hillary clinton facing pressure from her left on wall street issues from bernie sanders, from maniin o'malley, came with a proposal, only released on main paper, she didn't want to draw too much attention to it, to enact some regulatory steps. first of all she's proposing a tax on high frequency trading, which has been associated with the flash crash and some other difficulties on wall street. she thinks that would be a deterrent. she's preparing to close a

loophole in the volcker rule that allows banks, guaranteed banks to do some business now through hedge funds. she would close that loophole. she would review the swapped pushout rule that was struck down in budget legislation last year and finally she says she would reorient prurosecution an regulation of wall street so that individual executives would be more likely to be prosecuted than they have so far. after all, nobody from wall street went to jail as a result of the financial crisis. >> thank you so much. john harwood on the north lawn of the white house. strike averted. the united auto workers and fiat chrysler reached a tentative new deal late last night. the agreement must be ratified by the automaker's 40,000 union members. neither the union nor the company released details but the union said it won big gains. during a congressional hearing michael horn expressed remorse over the automaker's

skirting of standards. as eamon javers reports, lawmakers were looking for more. >> the whole truth and nothing but the truth. >> reporter: it was a brutal day on capitol hill for michael horn, the ceo of volkswagen group of america as he testified before a congressional panel determined to learn just how his company cheated on emissions testing. >> we are determined to make things right. this includes accepting the consequences of our acts, providing a remedy and beginning to restore the trust of our customers, dealerships, employees, regulators, and the american public. >> reporter: but horn could not answer many questions and appeared flustered at times saying he couldn't understand questions or was distracted by photographers taking his picture. members of congress did not seem willing to cut him any slack. >> vw has betrayed a nation. a nation of regulators, loyalists, suppliers, and innocent customers. it's time to clean it up or get off the road. >> reporter: legislate ords did not get clear answers to just what volkswagen plans to do to

support car owners and dealers or how much the company e tects to pay in fines. but horn did give a timeline for how long fixing the hundreds of thousands of flawed cars on american roads will take. >> we are certain the remedy will end up being a multiyear approach? >> yes. if you look at 430,000 cars and the repairs might take five to ten hours, even in order to fix this, technical fixes, and if you look at your recall history in thisarket also with nhtsa, these actions take one to two years minimum hp. >> reporter: horn did say the company is withdrawing its request for certification of certain model year 2016 vehicles. that move might leave some american dealers without enough product 20 sell and stuck with inventory some customers are not willing to buy. i'm eamon javers in washington. >> still ahead, why two

well-known tech companies may want to get together in what may be one of the biggest tech industry takeovers ever. dell computer is reportedly in talks to acquire emc. dell is privately held but shares of emc moved higher on the report, which if true would likely -- the deal would be the biggest tech tie-up ever. josh lipton takes a look at why these two companies would want to get together. >> michael dell has been relatively quiet since he took his company private two years ago but now he could be making a big move. cnbc reports that dell is in talks to buy emc for more than $27 a share. the deal makes strategic sense

for dell. a combination with emc could strengthen its market share in a number of areas. one would be in the enterprise storage business. that's a $36 billion market according to idc where the big players include companies like hp and net app. a merger would also give dell access to emc's security business where it would go head to head with giants like intel and cisco. finally, reports suggest is that a merger would include a controlling stake in emc's software company vm ware. its technology allows data centers to run more efficiently. so what's the benefit to emc such 'deal could put an end to its ongoing bat well activist investor elliott management which has been demanding the company boost its stock price. analysts say emc needs to act. >> elliott in our view could do a proxy battle if emc doesn't act. they need to make a move in the

next few weeks, and that's where our time is ticking for them to make a strategic move one way or another. >> reporter: there is no shortage of doubt about whether such a deal actually does get done. the merger would be costly and hard to finance. still, brett braceland, an analyst at pacific crest, says investors need to be apair ware of a broader trend. there is a wafer of consolidation coming to the i.t. hardware space, he says, meaning customers selling servers, storage, and network equipment. many old guard tech companies still generate a lot of cash but their stock prices have come under pressure because of the threat from newer cloud computing technologies. that means the economics of consolidation in the i.t. hardware market could now make a lot more sense. for "nightly business report" i'm josh lipton in san francisco. streaming just got a little more expensive. netflix upping the cost of its basic monthly service by a

dollar. the new price of $9.99 will go into effect in november for new customers. current subscribers won't have to pay more for a year. shares were more than 6% higher. they closed at 114.893. domino's posting results that missed on both the bottom line and -- shares fell about 5 per to 102.64. and costco says its same-store sales were flat last month but that was better than the expected decrease. shares were 2 1/2% higher today it 151.56. >> gap reporting that its same-store sales were down 1% in september, driven by a big decline in its banana republic division. shares slipped in initial after-hours trading. during the regular session the stock was up nearly 2% to 28.95. shares of polycom rose after the hedge fund elliott management disclosed a more than 6% stake in that firm. elliott is urging the video

conferencing equipment maker to consider a merger. polycom rose nearly 17%. >> americans are expected to spend this holiday season. the national retail federation released its forecast today but as courtney reagan reports, it's not necessarily how much how many consumers spend but what they'll be buying is key. >> reporter: with the christmas countdown in full swing, holiday sales forecasters are 34r5sing their bets. the national retail federation expects consumer o's to spend over $6-3030 billion 234 november and december, an increase of more than 23 1/2% over last year. though the increase is slightly weaker than last year's rate the industry group says it revthsz the economic tail wupds consumers are feeling. >> we know gas prices are at historic lows, home values are improving. we've seen some momentum in consumer spending throughout the course of the year. we think when we get to the hot holiday season they'll be

promotional. we think there are going to be a lot of exclusive deals and consumers are going to feel the positive momentum and are going to spend into the holidays. ? but where and when consumers spend their hard earned cash is key. it's no secret retailers will have a flurry of online deals during the key black friday week through cyber monday. but pwc's holiday ute lock service says the majority of shoppers still prefer the physical store. department stores like macy, jcpenney and nordstrom are expected to be tom shopping defendant naixs followed by mass merchants like walmart and target. when it comes to what drives the purchase, price, promotion, and quality of merchandise tops the list. >> the competition for consumer dollars between retailers only gets more intense with every passing holiday season. plus the millennial shoppers desire to give and receive experience-based gifts is giving physical gift giving a run for its money. >> they're very interested in connecting with friends and family, much more so than

trading traditional gifts. so we think it's really about dinner out, perhaps going to a ball game or some entertainment venue together. >> reporter: as a result restaurants, hotels and airlines could look forward to a christmas bonus as the 18 to 34-year-old shopper plans to send slightly more on travel, dining out and self-gifting than on gifts for others. but retailers aren't giving up on those bhieg physical gifts. retailers are hiring over 700,000 seasonal workers and e-commerce distribution centers to compete on customer service and shoppers' most compared perk, free shipping. a small priets to pay when nearly 20% of the annual sales are at stake. for "nightly business report" i'm courtney reagan in new york. retailers are hoping low gas price wills help sales. but so far that amears to be an economic mystery. gas prices are falling but

americans don't seem to be spending the savgings. or are they? steve liesman. >> reporter: call it the curious case of the gas savings. americans spend less with every fillup but sales at the mall don't show the gain. leading to the question what ppened to the extra gas money? >> i'm saving it to for when the gas goes up. >> reporter: along comes the jpmorgan institute, a new research outwith terabytes of real spending data and a groundbreaking report. they say they found the money. like a good sherlock holmes mystery it's right under our noses or rather at the diner, the grocery store and at the movie theater. >> they spend it on restaurants, groceries, that's another 10%, but you also saw boosts to other retail categories. department stores, entertainment, electronics and appliance ppz. >> reporter: the not for profit institute -- the sending of 25

million chase credit and debit card holders around the nation. a big finding of the new study, most economists thought that americans spent just 45 cents of every dollar saved at the pump. jpmorgan's findings? it's nearly double that. >> what we find by looking at these 25 million counts, that contrary to what conventional wisdom has been saying for this last while, is in this last period of very steep gas price declines people are spending most of what they save at the pump. they're saving 80% of what they save -- >> it helps with my grocery bills. >> it goes. on mills. >> to be sure some of the increased spending shows in the data but not all of it, with its reams of real spending data jpmorgan makes a compelling case. americans are spending the savings at the gas pump. mystery solved. case closed. for "nightly business report" i'm steve liesman in washington. comingup, what experts say is the best thing that's ever happened to small business.

here's what to watch for tomorrow. a read and report on import-export prices. another economic indicator, wholesale trade numbers are out. and we'll hear new york fed president bill dudley. that is what to watch for friday. bill gross is suing pimco, the company he left last year, saying he was driven out of the bond fund giant. gross, who co-founded pimco, is seeking $200 million in damages, accusing current and former executives at the firm of leaking disparaging information about him to the media to engineer his ouster. he alleges breach of contract.

pimco says the suit is without legal merit. in the final part of our series on mom-and-pop shops who are going digital, tonight we meet a jeweler who is taking her traditional business into the 21st century. sharon epperson has her story. >> reporter: fourth generation jewelry miriam gamushian still makes jewelry the way it's been done for centuries. by hand. >> our business is incredibly old-fashioned. >> reporter: but her company and the industry have come a long way from doing business the old-fashioned way. >> before things didn't happen so naft. before you didn't have the luxury of speed. so if a customer in california wanted to see something it could take them up to two weeks to gets the piece, then show it to the customer and then by the time the whole business was done from a to z could be a month. today i can do that in 24 hours. >> reporter: gamushian says

12350ed is key because consumers want inside tat grat faix. and now clients from all over the world can see her pieces immediately on social media. >> a woman can represent when you see a picture of a ring on a finger or a necklace or an earring. it's just something that we are very -- we like to see. in real-time with pictures. so women do see that and they want to try it on, it's a lifestyle. >> socialist media is the best thing to ever happen to small business. it used to be you needed to get through these gatekeepers to get to them. now if somebody's on social media you can get to them. but the thing is it's all about the goog ability of your business and your brand. >> gamushian knows her design well, design for women by women. she targets women where they spend most of their time. instagram. >> i was so surprised women would say my age and up had

checked me out they knew my name, they knew about my collection, they knew some of the stores, where i appeared. i thought wow, these people really did their homework. how did you do that? well, i checked you out. >> experts say there may be no need for small business owners to use several toopz of social media. >> use one social media type well you don't need to be doing facebook, pinterest, google plus, all at the same time. you should be doing one well and it should be one the where the target customer is spending majority of their time online. still, even keeping it simple can become overwhelming as business grows. >> the thing with technology, even though it's easy in a way i think you do mork much more. because you're able to reach so many more people within the day, within the same day. >> reporter: but there is one more factor that gamushian says managing it all manageable. >> i love it. i love what i do. i'm passionate about our

industry and all our babies we create. >> for "nightly business report" i'm sharon epperson. >> that's my dream job, work with jewelry. she's got beautiful stuff. >> beautiful items. absolutely. >> heavy sigh. >> i'll get you some for christmas. >> no, you will not. that will do it for "nightly business report." i'm sue herera. thanks for joining us. >> and i'm tyler mathisen. have a great evening, everybody. we hope to see you right back here tomorrow night.

kacyra: it kind of was, like, the bang that set off the night. rogers: that is the funkiest restaurant. thomas: the honey-walnut prawns will make your insides smile. [ laughter ] klugman: more tortillas, please! khazar: what is comfort food if it isn't gluten and grease? braff: i love crème brûlée. sobel: the octopus should have been, like, quadripus, because it was really small. sbrocco: and you know that when you split something, all the calories evaporate, and then there's none. whalen: that's right.