>> announcer: this is "nightly business report," with tyler mathisen and sue herera. going positive. a flurry of deals helps stocks start november way bang and pushed the dow jones industrial average into the black for 2015. health scare. chipotle shuts down several dozen stores because of an e. coli outbreak. we'll take a look at the fallout. and have and have nots. mortgage lending on the rise, but mostly to those with stellar credit scores. so what does that mean for the housing market? all that and more on "nightly business report" for monday november 2nd. good evening, everyone, and welcome. glad you could join us. it was a strong start to the month of november. as a spate of mergers set the tone and put investors in a buying mood on the first trading day of this new month. more on those deals in just a

moment. meantime, how'd the numbers do? here they are. dow jones industrial average up 165. to 17,828. blue chip index now positive for the year. the nasdaq was 73 points higher. the s&p 500 notched a 24-point gain. with the benchmark back above 2,100 for the first time since august. first up on the deal list, dow component visa aggressively expanding its global footprint with its biggest acquisition ever. the company is bringing visa europe back into the fold after the two separated nine years ago. the stock was off about 3% today, but that was mostly on an earnings miss. mary thompson has more now on visa's $23 billion buy. >> reporter: buying visa europe means visa is now truly everywhere you want it to be. paying more than $23 billion for the european bank-owned visa europe gives san francisco-based visa inc. access to 38 new countries and 500 million new

cardholders. europe becomes visa's second largest market behind the u.s. ceo charlie sharp telling analysts on a call the deal fills in a critical piece missing from visa's global footprint. >> this transaction does create a truly integrated global leader that will allow us to capitalize on strong growth opportunities in a highly attractive region prrpt like smaller rival mastercard visa's global profile will be unified, resulting in $200 million in cost savings along with added earnings soon after the deal closes. >> we expect it to be accretive to our stand-alone revenue and eps growth before transition costs, beginning in fiscal year 2017, the first full year of the combination. >> reporter: the world's largest electronic payments firm paying cash, preferred stock and an earn-out to investors based on the new company meeting certain revenue targets. to fund the cash portion visa's raising 15 to 16 billion dollars in debt while promising to continue its tradition of aggressive buybacks. visa aiming to buy back enough stock over the next few years to offset the diluted impact of the

preferred stock it's issuing for the deal. in addition to the visa europe purchase, visa reporting fourth quarter earnings a bit below estimates. the stronger dollar and higher client incentives hitting results. two factors behind the firm's modest outlook for fiscal 2016. still analyst keith mcveigh saying the visa europe deal positions visa in the right place in a market still offering great growth potential. >> people move away from cash and more toward credit. you get a lot of focus on the u.s. in terms of gdp. but to us where the real opportunity is globally as you start to see people use their smartphones more for purchases, particularly in developing markets, they're front and center for that. >> reporter: visa charging ahead with a plan to keep it at the forefront of the global payments industry. for "nightly business report" i'm mary thompson. well, visa may have been the biggest deal of the day but it definitely wasn't the only one. first another drug merger to tell you about. the london listed pharma company shire will purchase diax in a deal worth $6.5 billion. shire fell 1%.

diax surged 28%. and a deal we reported on last week is now official. conagra announcing it has agreed to sell its private label business to treehouse foods for nearly 3 billion. conagra ended the day a fraction higher while treehouse tumbled more than 5%. meantime, bristol-myers squibb will buy a private drug developer called cardioxil in a deal with tha could be worth $2 billion. that long with a few other transactions, values today's m&a activity a little bit north of 30 billion bucks. >> wow. it's also a heavy week for economic data culminating with friday's jobs report. today we got a read on manufacturing and construction spending. the growth rate in the manufacturing sector slowed last month to its lowest level since may of 2013. the institute of supply management's index of factory activity came in at 50.1, its fourth straight drop but slightly above expectations. any reading above 50 indicates expansion. but construction spending on

october rose more than half a percent to the highest level since march of 2008. big week for data. also a big week on the earnings front for big media. questions will likely continue to focus on the future of the industry as content and delivery companies wrestle with evolving business models. julia boorstin takes a closer look. >> reporter: the hot topic for media giants this week, the strength of the tv bundle. and the subscription fees and ad dollars tied to it. last quarter bob iger rocked the media industry when he warned that even industry-standard espn would start to feel an impact of the fraying cable cord, reducing profit projections for espn. this quarter investors will be listening closely for updates on subscription fees, ratings and ad revenue that follows. plus how quickly digital dollars are ramping and how much they can compensate for declines in traditional models. >> everyone's trying to figure out what the new model's going

to be and how it's going to work. part of the problem is there isn't necessarily a lot of agreement about that. >> one of the biggest questions i think is going to come up on the call, on these calls-s going to be the decision of the partners of comcast, of fox, of disney, to offer on houle yue an ad-free product p. >> reporter: so far this earnings season there is some good news from the three largest cable companies. improvements in subscriber numbers, which bodes well for the content giant. comcast and time warner cable dramatically reducing video subscriber losses while charter actually gained subscribers. signs that concerns about the pace of cord cutting might be overblown. and cowan's doug kreutz says no matter the degree of cord cutting, some companies are better positioned than others. >> we like cbs the most. and really the rationale is they don't have any basic cable networks. so whatever happens to the bundle, they have a lot less risk than their peers. >> i probably worry most about the pure play kind of cable, big bundle cable networks that have

a lot of revenue, a lot of eyeballs spread out over a lot of viewers. so that would be like a discovery or a scripps. >> now we'll see if expectations were so significantly reset last year that the numbers we see this week end up looking positive. for "nightly business report" i'm julia boorstin in los angeles. our guest tonight ringing a bit of the alarm bell on the economy, saying there is a 30% chance the u.s. could fall back into recession by 2017. mohamed al errian joins us, chief economic adviser with allianz. good to see you, mohammed. welcome back. >> thank you, sue. >> let's start first of all with why you feel the 30% chance exists. we're talking about the market doing so well, a lot of m&a. but what is it you see that perhaps the rest of us don't? >> so the market is doing well. it's doing well because of liquidity. whether it's the liquidity of central banks or in this case the liquidity of companies being pulled back in. the economy is doing less well. if you like, the economy ended

up in the hospital, in the icu, during the global financial crisis it's out there have. it has healed. but it's still structurally impaired. two things happen when you're structurally impaired. first you cannot run. you can walk but you cannot run. that's why growth is stuck in the 2% to 2 1/2% range. second, you expose to external shocks. in the case of the economy the biggest threat unfortunately, sue, comes from the rest of the world. >> so as you look at the u.s. economy at 2% to 2 1/2% growth, do you think that is a phrase you used to use, the new normal for u.s. growth, or can it lever up a little bit from there? >> it can and it should. and what it takes is for our politicians to unleash the amazing productive capacity of this economy. the problem is that they're not doing so. so when you look forward it's hard to see this economy continuing at 2 to 2 1/2 without one of two things happening in the next two or three years. either we will transition,

either private sector will be able to transition to higher growth and there's a lot of cash on the sideline, there's lots of innovations, or alternatively we're going to be dragged down by the rest of the world. and that's why i put the probability of a recession by 2017 at 25% to 30%. now, the good news is that 70% to 75% is we stay out. but it's important to realize, especially important for d.c. to realize that we need better policies to unleash the productive capacity of this economy. >> what part of the world are you most concerned about that would have the biggest effect on the u.s. economy? is it china because of its scope and size? >> so two parts. first the emerging world is now slowing and two countries are already in recession, russia and brazil. so it is very hard for the american world to operate well in a world in which the central banks in the west are experimenting. so the first part is that the emerging world is no longer the locomotive that it has been, and it has been a really important

locomotive. second, europe has yet to emerge from its own crisis. they're stuck at 1% to 1 1/2% growth. and they need td more. so think of it as being a tentative economy overall. the u.s. is by far the best economy out there. but it's not immune to problems in the rest of the world. >> very quickly, you say that the best thing politicians could do was to create policies that unleash the productive capacity of the american economy. give me the one change that would do more to do that than any other. is it reducing corporate taxes, bringing back overseas profits? what? >> so there is no killer app. there isn't one change. there is basically pro growth. investing in infrastructure, corporate tax reform, improving the labor market. there's a whole list of things that they know about, immigration reform, but they simply can't get the political will to implement it. >> mohamed, we have to leave it there. thank you so much. good to see you again. mohamed el-erian with allianz.

a health scare at chipotle. an expert will weigh in on food safety at the nation's dining chains. ♪ ♪ home buyers now have the highest credit scores on record. that according to new research out today. what does it mean for the health of the housing market? diana olick joins us to discuss. diana, this sounds like something we ought to be celebrating. credit scores are the highest

they've ever been. i thought mortgages were getting easier, but you say no. >> reporter: well, no. the numbers certainly aren't reflecting that. we thought that the credit box was opening up a little bit, that that noose around credit was easing up after the housing crash. but these numbers, 755 fico score, the average fico score of a person getting a mortgage to buy a home today. the average credit score of the average american is in the high 600s. so what it's really telling us is it's only those pristine buyers who are getting into the credit market. >> so is it impossible for someone that doesn't have pristine credit to get a mortgage today? >> it's certainly not impossible. it's just more expensive. there are a lot of good loan products out there. fha. the government-insured loan product is there. they have lower fico scores available. they will take a borrower with a lower score. but on top of that you're going to have to pay that mortgage insurance. and you might not get the lowest rate that's out there as well. so when you look at these numbers, even fha is showing

unusually high average fico scores and it might just be that when you have higher home prices and you have these borrowers who are looking at added costs because of their credit level they just can't afford it, so they're not buying. >> are lenders or regulators doing anything to widen the pool, make it easier? >> well, funny you should ask, tyler. fannie mae recently announced they're doing a new type of scoring. they're looking at a borrower's long-term credit health. they call it trended credit data. and they're using the credit agencies. so you don't just get a report that says oh, this credit card's up to date or that's not. it goes and it looks back at a borrower's payment history over time. and fannie mae at least is saying that that could help some borrowers who might have been on the fringe to get into that loan that they previously might not have been able to get to. >> diana, thank you. as always, diana olick in washington. aig posts a big earnings miss, and that is where eyre going to begin tonight's market focus. income in all but one of the company's underwriting businesses declined, and market

volatility weighed on the firm. the insurance giant's disappointing results also come as shareholders like activist investor carl icahn have been pushing the firm to break up. shares dropped initially after the close but during the regular session the stock was up 1% to 63.74. hewlett-packard's split into two companies took effect today. the personal computer and printer businesses are part of the hewlett-packard division while the rest of the company's businesses like software and services are part of hewlett-packard enterprises. ceo meg whitman explains why the move better positions the firm. >> we looked at the market. we looked at hewlett-packard's strengths. and we said being smaller and more nimble in this market is a huge advantage with not much depth. so hewlett-packard enterprise will have $5.5 billion of cash on the operating company, which is a completely different capital structure. so two different strategies. we have a lot of confidence that our strategy will be right. >> hewlett-packard was up about 13% to 13.83.

hewlett-packard enterprises fell 1 1/2% to 14 had the 49. hsbc saw its profits rise in its third quarter. earnings topped expectations as a decrease in regulatory fines made up for increased spending. the bank also says it will move ahead with cost-cutting measures. the stock was off just a few cents to 39.04. another smaller deal to tell you about in a day of deals. constant contact, an e-mail marketing company, will be purchased by endurance international group in a deal worth a little more than a billion dollars. endurance says the investment will give it access to a half million new customers. shares soared 22% to 31.88. cisco saw its profit slide more than 10%. this as expenses from its abandoned merger with rival u.s. foods weighed on its bottom line. even a rise in sales couldn't offset those costs. shares fell a fraction to 41.04. estee lauder reported results that easily topped estimates. despite the impact of a stronger

dollar, the beauty company saw sales rise. the firm also hiked its quarterly dividend by 25% to 30 cents a share. the stock popped 8% on the day. it finished at 86.97. chipotle is temporarily closing more than 40 restaurants in washington state and oregon due to an e. coli outbreak. shares of the company falling 2 1/2% today on the news. jane wells has more on the health scare. >> reporter: turns out there's a dark side to eating healthy. chipotle mexican grill, popular for fresh ingredients, may be the source of an e. coli outbreak in oregon and washington state which has sickened at least 22 people and sent eight to the hospital. >> a majority of them have eaten at chipotle restaurants, leading us to believe that a food product at chipotle may be the source of their infection. >> reporter: health officials are asking others who may have eaten at chipotle in that region in october and have symptoms such as vomiting and diarrhea to be tested.

and as a precaution chipotle shut down all 43 stores in both states, telling us in a statement, "timing of reopening will be dictated by the progress and pace of the investigation. that is the top priority now." health officials say the causes of e. coli outbreaks is changing. it used to be often due to undercooked meat. that's what happened to jack in the box during the '90s. more recently, though, e. coli outbreaks are due to fresh produce as americans buy more fresh produce and as more restaurants offer freshly prepared food. chipotle has had other health scares this year. a store in the los angeles area was shut down when dozens of customers and staff showed symptoms of norovirus. and a salmonella outbreak in the minneapolis area was traced to chipotle tomatoes. the investigation in oregon and washington could take days or weeks. >> it's not uncommon not to be able to pinpoint a specific food item. especially in complicated dishes where there are multiple ingredients. >> reporter: the good news, none of the patients had the most severe form of e. coli and the

clock is running out on new cases showing up. while investors sold shares on the news today, many analysts are bullish on the stock, assuming the problem has been contained. for "nightly business report" jane wells, los angeles. so from fast casual dining to fast food just how safe is our food supply here in the united states? sandra eskin is director of food safety at the pugh charitable trust. she joins us now. thank you very much for being with us. 48 million americans a year are sickened by foodborne illness. what are the biggest contributors to that? meat and poultry? produce? what? >> statistics show that an increasing number of illnesses are linked to produce, but we have historically seen illnesses due to meat and poultry products. so we still have different foodborne illnesses, different pathogens, related to different products. >> but in general, when you look at the u.s. food system, it has improved, has it not, over the years? nothing's perfect, obviously,

and we probably still need improvement. but how would you kind of rate it or difference a thumbnail sketch of how safe it is? >> sure. definitely the food supply, the safety of the food supply has improved. we have one of the safest food supplies in the world, but we can make it safer. we had a lot of luck dealing with certain pathogens, certain bacteria like e. coli. if you look back to the 1990s as was mentioned in the report, we had a surge of serious infections linked to a particularly toxic form of e. coli. what we've seen over the course of the last 20 years is a significant decrease. 50% infections with this particularly serious form of e. coli. how did that happen? it was a combination of smart government policies and improved practices by industry. we still have many pathogens, salmonella being an example, where we just have not had a lot of success bringing down the

illnesses. >> two questions for the price of one here, ms. eskin. number one is are there any weak spots that we need to particularly be addressing? so much more of our food these days, seafood, produce, is imported. and number two, what can individuals do to minimize pr chances of getting sick? >> well, on the first question you did highlight one of the concerns. a growing proportion of our food supply anywhere from 10% to 15% is imported. and that's something that is concerning. we want to ensure that we have enough -- we have enough ability to ensure that the food we're getting from abroad is as safe as what we produce here. congress passed a law. the president signed it in 2011. that's going to address the safety of the overwhelming percentage of food supply including food imports. that is being implemented. we need to have enough funding. that will make a big difference in assuring the safety. on the second question, what you can do, everyone should follow

safe food handling practices, make sure not to cross-contaminate. don't use the same knives and cutting boards for meat and poultry as you use for other foods. make sure things are cooled and chilled. but also pay attention to news reports like this one. be mindful when there's a recall. make sure you that don't eat food that has been recalled. and i think for most of us that should protect us. but there are some infections that are particularly serious, mostly when we're looking at sensitive subpopulations, young children, older individuals, people with compromised immune systems. >> all right. >> however, we do see that even healthy people can get really, really sick. >> sandra, thank you for your help tonight. we appreciate it. sandra eskin with the pew charitable trusts. coming up, the growing pains of startup health insurers as open enrollment season begins. ♪

♪ here's what to watch for tomorrow. october auto sales are out. also on the data front a report on factory orders. and that is what to watch for on tuesday. the epa says volkswagen used devices also to manipulate u.s. emissions tests for about 10,000 additional diesel vehicles including some of its luxury brands, audi and porsche. volkswagen denies the new allegations. the company admitted back in september that it did rig tests on about 11 million cars worldwide. san francisco voters will head to the polls tomorrow to weigh in on proposition f,

otherwise known as the air bnb initiative. the results could have a major impact on the service, which allows users to rent out a room or their whole house to strangers. the proposal would toughen the rules that users must follow like putting a cap on the number of times a unit can be rented out. proponents say the service is purk long-term renters out of the city. air bnb has reportedly spent more than $8 million to defeat that measure. open enrollment season is here, and this year marks the third one for the affordable care act. what began with very, very public technical glitches on the website, now the system is seeing some success. but as bertha coombs tells us, there are still growing pains. >> reporter: for software firm tools forever signing with a startup insurer seemed a good fit. non-profit health republic of new york's rates were low. >> it was a substantial amount of money it was going to save our company. >> reporter: they were happy to be in a health republic ad in 2014, but then this fall things changed. >> we had received notice they

were going to increase our rates between 19% and 29% this year, and then shortly after receiving that notification we learned they were closing their doors. >> reporter: an abrupt turnaround for the insurer launched with more than a quarter million dollars in federal loans under the aca. its low prices made it the second most popular carrier on new york's exchange, with 200,000 members. but it was paying out more in medical costs than it was taking in. then federal officials set reimbursement rates to insurers for aca plan losses well below expectations, leaving health republic deep in the red. regulators forced it to shut down. >> for these small new players they just didn't have enough time and backup to really learn the business and figure out who this new customer base was. >> reporter: health republic's rival start-ups, both privately funded, also experienced growing pains. ventraback's oscar health saw a

loss of 24 million nasdaq 2014 after taking in nearbily 60 million in premiums. but with new funding from google it's expanding to offer plans in california and texas while hoping to get near break even in new york. >> we generally think we can get to profitability maybe two or three years or so after we enter new markets. so we should start seeing that now as we sort of like roll out in additional markets and the u.s. will continue to invest. >> north shore hospitals insurance plan care connect lost market share knits second year but its ceo says coordinated care through the hospital has helped keep medical costs and pricing in mine. >> if you were a small group employer in 2014 with care connect and you had the same plan, you're paying more today than you would have when you started with care connect. >> reporter: tools forever has signed on with an established insurer for 2016. >> i'm optimistic this will work

out for us. >> reporter: opting against start-ups for now and hoping for no more surprises. bertha coombs, "nightly business report," report. and that will do it for "nightly business report" for tonight. i'm sue herera. thanks for joining us. >> and thanks from me as well. i'm tyler mathisen. have a great evening, everybody. we'll see you right back here tomorrow night. ♪ ♪

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