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tv   Nightly Business Report  PBS  August 16, 2016 1:00am-1:31am PDT

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this is "nightly business report" with tyler mathisen and su. >> slow motion rally. the three major stock indexes kicked the week off with a record close. and this modest melt-up comes during the calmest market in 75 years. apartment mega merger. why today's $4 billion deal could be a sign that landlords are worried the rental market is taking off. after a summer of long lines and delays, air travelers may finally have something to smile about this fall. those stories and more tonight on "nightly business report" for monday, au good evening, and welcome. call it a hat trick, a trifecta, a triple, call it whatever you want. but whatever you do call it,
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make sure you describe today as one of those rarest of stock market sessions. for only the second time in more than 15 years, the other was just last week, all three major market barometers finished the day at rec highs. they sent intraday highs as well. who really knows why stocks rise or fall on any given day. as good an explanation as any today was oil prices were up. west texas crude gained 3%, and finished at a one-month high of $45.35 a barrel. commodity shares bought a boost and oils gain in turn was fueled by last week's signals that major producers may cap production. here are the final stock market numbers for a low volume but record-setting monday in august. the dow rose 60 to finish at 18,636. the nasdaq was up 0.6 of a percent or 29 points, outperforming the dow and the s&p to close the day at 5262 and the s&p 500 jumped 6 to 2190.
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this melt-up has been slow and steady. some might even call it boring. but as mike santoli tells us, some want to know if this is the calm before anothe >> the stock market's recent move to record highs has been unusually subdued. by some measures, the past month has seen the calmest market in 75 years. that's based o narrow trading range. in all but two days in the last weeks the s&p has gained or lost less than half a percent. and this is not just a pattern of late summer doldrums. august often seize erratic trading and has been among the weakest month for stocks in recent years. wh volatility now? several have turned at once. the vote by the uk in june to leave the european union was over done. u.s. economic data brightened considerably and companies began
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surpassing profit forecast, even as investors gained confidence the federal reserve would not lift interest rates soon. yields on government bonds have remained near record lows. the resulting slow-motion rally has confounded many markets of continues unsettled markets following the sharp wintertime downturn. the question now is whether this lull is simply the calm before another market storm. the odds do seem to favor some pickup in volatility into september which even in strong markets has been a time for wall street dips and dives. incoming data could easily upset the tight consensus about fed moves or the strength of the consumer. history says a low drama market is not necessarily something to be feared. perh should try to enjoy the quiet while it lasts. for "nightly business report" m mike santoli. with interest rates low and likely to stay that way, a federal reserve official suggests that the central bank should consider raising its inflation target. john williams says the current target does not work in a low
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interest rate environment because there's not enough room to cut rates in the event of an economic downturn. a higher target would give the fed more room to maneuver, he thinks. the head of the san francisco fed alsoe fed could simply target nominal economic output or government spending programs should kick in automatically during downturns. home builders are feeling better about the economy. according to the national association of home builders, sentiment improved this month, especially when it comes to current and future sales. the housing market is being supported by those historically low interest rates and increase in household formation and a solid labor market. an apartme mega merger to tell you about. midamerican apartment communities will buy post properties for $4 billion. the deals sent shares of post higher by 9%, midamerican lower by 4%. the combination creates the largest publicly traded apartment real estate by numbes it a sign that landlords are
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starting to scramble in a slowing market. diana olick takes a look. 7. >> the assets are highly complimentary, and that, say the ceos of maa and post properties is why merging the two apartment companies makes sense. maa will buy post for roughly $4 billion, resulting in a combined portfolio of 105,000 apartments in 317 properties. that will make maa the largest apartment in the nation. >> when you have an entity that large you can get economies to reduce operating expenses. >> they will have its largest foot hold in the sun belt. the chairman and ceo said the combined company will capture a broader market and submarket footprints with improved rental price point diversification. the merger comes at some of a turning point. rents and occupancy are still strong but starting to slip,
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especially in major metropolitan areas like here in d.c., where an abundance of luxury supply is hitting the market. >> when you have more supply, it definitely puts pressures on rent so you do see fundamental slowing going forward, which again i think makes this merger even more critical now that they can reduce upward expenses if the top line is not growing as fast as it was over the past 12 to 24 months. >> maintenance, advertising and insurance can be combined and cut, meaning better returns for investors. for "nightly business report" m it is a big week for retail erngz. we'll hear from target, foot locker and walmart. these reports follow the better than expected results from macy's, kohl's and nordstrom. as courtney reagan reports, many are trying to figure out if that struggling sector is really
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starting to turn. >> it's safe to say retail has been a mixed bag over the last year and the rough patches in the sect department stores been struggling. but recent retail earnings show signs of healthy consumer spending in a different direction, away from spending on homes and automobiles and possibly back to apparel. the big box retailers, including the biggest box, will report this week along with many others and analysts are warning investors not to abandon their patients just yet. investors certainly care about each quarter, but when it comesn geared toward winning in the long run, especially as it shifts for more online purchasing. jet.com will be importa this kweek but walmart is putting more emphasis on long-term results. >> i think that douglas millan is doing a great job here trying to position the company for the next 50 years rather than just
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the next quarter. so i think he's on the right track. too early to tell on jet.com in terms of how that will turn out. in a few years time we play look back and say it was brilliant. >> when it comes to the consumer, spending is strong. doug mcmillan seize encouraging signs from shoppers and low fuel prices do shop. terry lundgren agrees, but thinks consumers have been spending only in concentrated categories that benefit home depot and lowe's. we'll find out this week whether that continues or if consumer dollars of shifting once again. department store results were better than expected, though on low expectations. clothing spending has been weak, so even a little positive news got a lot of attention. and if early back-to-school clothing spending has been good for kohl's and denim is good for macy's, maybe american eagle, gap and americ outfitters will see growth as well.
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at least for now there are signs of renewed life. i'm courtney reagan. we turn to the devastating floods in louisiana. tens of thousands of residents have been rescued from their homes. about 10,000 are in shelters until the waters recede. at least five deaths are linked to the flooding. the governor declared a state of emergency over the weekend and described the floods as unprecedented and historic. the hardest-hit areas have been around baton rouge where 20 inches of rain fell over the weekend and where more is expected. and from floods to heat. heat that's blanketing the east coast and much of the country and bringing high temperatures to some of the country's biggest cities. with the heat comes high demand for electricity, which is testing our nation's power grid. the chief electrical engineer for pacific northwest national laboratory, he leads research projects and oversees new technology that improve the power grid. thank you for joininus. it's a pleasure that have you
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here, jeff. >> thanks, sue. good evening. >> so tell me how the power grid is now. give me the status of it as compared with, say, a few years ago when we did have rolling outages when the weather would get this hot. >> certainly there's two aspects of grid reliability we pay attention to. one is availability. and that's the availability of resources or supply to meet the demand. this ys doing pretty well in that area. the grid operators may close attention to forecasts, demand forecasts, and then they schedule the supply to meet that demand. >> so, jeff, there's been a lot of talk in the political campaigns about improving the nation's infrastructure. how would you rate the electric infrastructure in this country if you had to grade it a to f, and what needs to be done to bring it up to a higher grade if it's not already there? >> we're certainly working very hard on that. the u.s. department of energy has recently unveiled a grid
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modernization initiative. the secretary of energy announced that in january with over $200 million of funding to s we'll work on epional chancing the resilience and reliability of the national power grid. i'll be focusing research to improve the ability of the grid operators to opera and manage the power grid. >> how would you grade it today if you had to, professor? >> we don't really necessarily give it a grade. i know the civil engineers give different infrastructures grades. i would say that it's in pretty good shape but we're always looking for areas of improvement. and what about security? of course the world is a dangerous place and the electrical grid is one area that might be susceptible to security breaches. how do you think the grid is in terms of that? >> absolutely. that's something that is of high concern to grid opers and the government alike.
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there have been some incidents in the past that have raised awareness of this issue. there's some new government and industry standards that the utility operators are needing to follow to enhance the physical securis cyber security initiatives that we've been focused on for a number of years. this is a concern that has been with us for a while. i think the threat is hard to gauge, so our strategy is to be prepared and try to accommodate those types of threats that we can manage them, if they occur. >> we'll let you go, jeff. thank you for joinin. dagle with pacific northwest laboratory. and why google's fiber may be slowing down the rollout of its high-speed internet
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google's parent, alphabet, is reportedly rethinking its high-speed internet business. the fiber lines are proving very expensive and very time-consuming to install. as aditi roy reports, the company may be considering other ways to deliver broadband access. >> repor google fiber has been welcomed by cities like charlotte as a critical tool for getting residents and businesses on literally the fast track to cutting-edge technology. but now it may be facing roadblocks. "the wall street journal" reports google is rethinking its high-speed internet business because it's too costly and time consuming. now in six cities nationwide, alphabet's high-speed internet arm promises connection speeds up to 100 times faster than current basic broadband
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technology launching the servicf dollars to lay fiber optic cables in its subscriber cities. now google is reportedly trying to cut cost by leasing existing fiber, asking cities to build networks and in some cases abandon cables altogether and use wireless technology. >> google getting into fiber az a huge step out of their core advertising business and that's why they're going at it slow and costing them more money to do it. when you thi lg fiber, this is really dirty business, figuratively and literally. you're digging up yards, posting lines on telephone poles. this is something that you have a storm and you can have outages. the amount of customer calls is much dramatically different than getting calls from advertisers. >> google fiber launched ziksix years ago and is in six cities but has plans to expand to 16 locations.
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palo alto is one of the those cities but its chief information offir recently learned those plans have been delayed. google fiber informed the city that efforts would be delayed by six months. in a statement, a google spokesperson tells cnbc we're continuing to work with city leaders to explore the possibility of bringing google fiber to many cities. this means deploying the latest technologies in alignment with our product road map while understanding local considerations that takes time. fiber has drawn attention with the departure of several senior level executives and the company's self-driving unit. other bets make up a small percentage of the revenue, with an operating loss of $859 million, analysts say that the fiber business is still a smart investment. >> i thi that this is a brilliant move by google to talk more about fiber.
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and to really scare and intimidate the existing providers to provide better, faster, cheaper service to consumers. it's been proven that when ins improves, whether it's speed or cost declines, that google wins. so give credit to google to playing this game wisely. >> on alphabet's most recent earnings called, the ceo says the company continues to see fiber as a huge market opportunity an work closely with cities exploring both fiber and wireless. i'm aditi roy, san francisco. the department of justice has reportedly found evidence of possible criminal wrongdoing at volkswagen. according to "the wall street journal" officials are negotiating a settlement over the diesel emissions scandal. that is expected to result in charges and financial penalties. the report says prosecutors have not yet settled on which criminal charges they might bring against the automaker. tesla has retoestored the w
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"auto pilot" to its website in china. the company said the temporary removal of that term was a mistake. it revised some language on its site to make it clear to drivers that auto pilot was a driver-assist system and not a self-driving system. a beijing driver recently crashed his car in auto pilot mode and that accident fortunately did not result in any injuries. a number of other chinese companies are scrambling to compete with tesla. china the world's number one auto market and there's a push to make it number one for electric veh here's a report tonight from beijing. >> you probably haven't heard of ch auto and for good reason. from its headquarters in beijing, the company has designed and produced cars for other chinese car makers until it made this. the chen 2k-50.
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the first roadster and competitor to tesla's model s. the k-50 is the brain child of the founder, an engineer by trade. lu worked at jeep in china. then he traded his own brand, chen-2 which means the future in chinese. >> tra china is already the auto market in the world and without a doubt will be the biggest market for electric vehicles. we think it's very good that in such a fast-growing market the chinese government has provided guidance and incentives through its policies. >> beijing is targeting new energy cars for state support. it wants locally made hybrids and electric cars to expand tenfold to 3 million by 2025 to reduce pollution and help china become a technology leader. several i.t. and car companies, includin are rushing in to compete. >> you can see here our engineering prototype.
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>> what's your competitive edge over tesla. >> translato the exterior is made of carbon fiber materials and the interior is aluminum all th is different from tesla. >> the lightweight carbon body and aluminum frame are meant to improve performance. one of the challenges that the government faces is that it has to roll out all the infrastructure to make sure that energy-efficient cars are appeal to the public. the government has already set up charging stations like this one in big cities like beijing but it has a long way to go. even though, ch auto is investigating more than $300 million into a new factory to produce the k-50, which lu says could price higher than tesla when the chinese car debuts in 2017. >> transla people often think made in china cars sell at the low end, which leaves the impression that chinese cars are cheap and poor quality. we want to change that impression. >> along with the future of china's car industry
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twitter and apple may be close to striking a deal, and that's where we begin tonight's market focus. twitter is in talks with apple to launch its app on apple tv. that app would allow viewers to stream national football league games. twitter recently signed a $10 million deal with the nfl to stream ten thursday night games during the 2016 season. shares of twitter soared more than 6% to 20.86. shares of apple were up 1% to 109.51. ibm has signed a deal with work day. they are expected to tap into ibm's cloud computing services to create new programs. shares of ibm fell seven cents and work day shares rose to 83.65. profit nearly tripled at cisco. they said lower food costs helped drive profit as well as sales higher in the latest quarter. separately after the bell on
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friday, the hedge fund trion hedge management upped its shares. shares of time inc. revealed that hedge fund januarion partners bought 5%. and aig will part ways with its mortgage insurance business. they will sell the division to arch capital for $3.5 billion. the deal, which is not guaranteed to close, could nevertheless be finalized this week. aig shares rose marginally on the news to $59.22. a hotel operator that runs a number of popular brands says its payment processing system has been breached. the ati hotels and resorts which includes hyatt, sheraton, marriott and western says it may have impacted 20 in ten
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states and the district of columbia. malware was installed to capture credit card information at the point of purchase. airfares this fall are expected to fall, a lot. that's according to researchers who track how much it costs to fly. while this is good news if you're booking a flight, it's not great news if you own airline stocks. phil lebeau has more. >> reporter: if you're packing your bags for a trip this fall, you might have a little extra money to spend when you take off. that's the prediction of the travel website hopper, which expects domestic fares to drop more than 8% through october. it's the continuation of a trend the industry has seen over the last three years. as domestic airfares have steadily declined, hitting an average of $232 for a round-trip ticket in july. why are fares falling? partially because airlines have added more seats on more routes, so there's plenty of capacity. and airlines will drop ticket prices to ke those seats
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filled, especially in the fall, which is traditionally one of the slowest seasons for travel. another factor is the drop in jet fuel prices. that allows carriers to lower fares but still make a profit. but this trend is not good for airlines. passenger revenue per available seat mile, a primary factor investors use to gauge the growth of airlines, has been down for most of the last year. as a result, investors have not been excited about airline stocks and they have lagged the market overall. while everyone enjoys a good fare sale, not every flight will feature lower ticket prices. if you're booking to a popular destination at a popular time, say labor day weekend, you may not see much of a discount. i'm phil lebeau, chicago. >> phil has got that one right. to find out how to find a cheap flight this fall, head to our website, nbr.com. coming up, the maker of the world's most expensive watches has reac
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finally tonight, what happens when you combine the work of a graffiti artist and a watch maker? the answer is very, very expensive. robert frank has the story of .ne of the world's priciest time >> richard mill makes the most expensive watches in the world with an average sale price of $185,000. the new model marks a new extreme. a piece of graffiti for your wrist for $800,000, it's a
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collaboration with french street arti cyril congo. he used tiny air brushes to color each part of the watch. >> these around the streets, paints bridges -- big illy art. >> exactly. >> he's making 30 of the watches and they're already sold out. while the luxury watch industry is slowing, neil can't keep up with demand. >> we cann satisfy everybody. the watch business has very much turned into volume. people upset by volume. i'm not. >> for "nightly business report" i'm bill frank. >> and the brand is known mainly among the super rich. while sales of luxury watches fell 16% in june, richard mill is set to have another
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record-breaking year. before we go, here's another look at the record close on wall street. the dow up 60 to finish at 18,626. the nasdaq higher by 29 to close at 5262. and the s&p 500 jump >> i just want a classic watch. >> simple watch. simple is good. >> sumpl always good. that's "nightly business report." i'm sue herera. >> i'm tyler mathisen. thanks for me as well. we'll see you
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