this is "nightly business report" with tyler mathisen and susie gharib. >> mega merger, murdoch sets his sights on timewarner but his $80 billion bit is rejected. will he offer more and does this deal make sense? >> call to action, the white house urges immediate action from lawmaker s to crack down on what it calls an abuse of the tax system but will congress respond? >> blue chip record, upbeat earnings sends the dow to an all-time high and tonight focus shifts to ebay and the take away from this quarterly result. that and more coming up tonight on nig"nightly business report"r this wednesday, july the 16th. good evening, everybody. i'm bill griffeth in for tyler mathisen who will join us later in the program. >> that's right. and i'm susie gharib.

good evening from me, as well. media mergers were the talk as murdoch made it clear he has a new target, timewarner. murdoch made a big bid. he offered $80 billion but timewarner rejected it. it doesn't mean the story is over, far from it. many believe the price tag could go higher and if the deal gets done, it could prompt a wave of mergers in an industry a lot of ways. the stocks went 17% and had impact on 21st century fox which that dropped 6%. what is it about timewarner murdoch wants? does this deal make sense and which companies might be next? julia boorstin has the story. >> reporter: murdoch combining rivals with key complementary assets. fox bringing the broadcast

network and cable networks, fox news and fx. while has an unprecedented cable asset, hbo and tbs and tnt. there is also a sports story in this proposed merger. timewarner's tnt and tbs controls rights to nba basketball and fox has been investing to build a sports empire to rival espn with the launch of fox sports 1 last year. less complementary and less competitive, warner brothers and 20th century fox. they have 35% of the share this year. analysts see cost savings in such scale but sources say fox would like to maintain an iconic brand like warner brothers, the largest hollywood studio. it would not include cnn because of fox news. cnn would have to be sold off. it makes sense in the wake of mega distribution mergers,

direct tv and at&t, murdoch sees value in the scale of more negotiating leverage but timewarner says it's not interested in the offer for a combination of cash and non-voting stock. >> the board concluded that continuing to execute our plan and business plans will create significantly more value for the company and our shareholders, and that's superior to any proposal that fox is in a position to offer. >> timewarner and fox say they are no longer in talks. the question is whether fox comes back with more or another buyer jumps in. >> i think one of the dynamics timewarner faces, there is no controlling shareholder, and therefore the company really is in play. >> other cable content companies may also be in play, discovery and scripts networks interactive trading higher on the news. for "nightly business report", i'm julia boorstin in los angeles. >> with more on whether this deal makes sense and what it could mean for the media industry, we'll joined with a

media analysts. good to see you. >> likewise. >> a lot of brands in this merger. the big question, ask it make sense to you? >> the short answer is absolutely, it does make sense. while we did not anticipate a mega merger of this magnitude, when you think how the game is played in the media landscape it's about scale and i think julia eluded to that in her report where she talked about the plays that we've seen in the distribution side of the equation. so i think the content providers like fox and timewarner are responding to the wave of consolidation in order not to leave themselves vulnerable as they go to negotiations with distributors. >> a huge deal, $80 billion was the offering, initial offering price. how much higher do you think it goes and will murdoch have to make this a hostile deal to win timewarner in the end? >> susie, evaluation is a

sticking point in these negotiations. i suspect that he made somewhat lowball offer, and i would not at all be surprised by a significantly higher offer, if only to just get timewarner, you know, talking. we calculate that the premium that wasd, you know, north of 20%, i think we calculate about 12.5 times forward enterprise value, which i would argue somewhat low for a company like timewarner with the assets he has. i would go as far to say anything 13.5 to 14 times enterprise value would be a steal for fox. >> i kept hearing the arguments against the deal in terms of the amount of debt that 21st century fox would have to take on. they are a relatively small company when you consider the size but disney and media concerns out there, does that matter to murdoch? is this a case where he has his

sights set on the prize and no matter the cost, he'll get it? >> i think the stars are aligned for these kinds of mega mergers. you know, interest rates are still at relatively historic lows, and there is a very good case to be made here. they have talked about a billion dollars and not hard to foresee, you know, the revenue, upside and cost savings even exceeding that. so i think that if you put everything together in the context of the consolidation wave, a deal like this would not seem farfetched. >> you're talking about mega mergers. as you look at the media landscape, who are buyers and some targets? the name discovery comes up, viacom comes up as possible buyers. is that how you see it? >> sure, i think what will happen, susie, other companies will examine themselves and looking for dance partners here, so not to be vulnerable so you mentioned some names like amc

networks, discovery networks and i think it's not inconceivable that a major company like amazon or google could swoop in here and make a competitive bid for timewarner. >> it certainly got everybody talking, that's good for sure. >> thank you. >> thank you. well, on wall street today, news about those deals, earnings and the economy pushed the dow jo jones to an all-time high. a fresh report showing production climbed in june capping the strongest quarter in almost four years and today, the federal reserve said in the beige book survey, all are seeing consumer spending and expanded manufacturing and on capitol hill, janet yellen testify income front of law make es said things are looking up. >> i am optimistic about the economy and that's reflected in

the forecasts that are included in the monetary policy report. we had a very surprising negative growth in the first quarter, which is a number that in a way doesn't seem consistent with the underlying momentum in the economy. >> and there was some momentum on wall street. here are the major averages, the dow added more than 77 points to 17,138 a new record and the nasdaq rose 10 and s&p gained eight. bank of america and department of justice are in talks to settle an investigation into mortgage securities. the bank reportedly got 13 beside and for selling defective mortgage backed securities are costing the bank big time, $4 billion worth. today bank of america blamed the fees for dragging down the profits. they plunged 43% in the second

quarter that was released today. the bank's stock fell 2% to $15.51. meanwhile, ebay posted a rise in revenue tonight despite increased competition from amazon and some smaller rivals. the online auction side earned 69 cents a share, a penny better than the street estimates. despite the rise in revenue, though, over the last year, results came in slightly below expectations and that company is forecasting third-quarter earnings below consensus. after the report came can out, the stock rose initially by 1.5%. seema mody is in the nasdaq with more on the results. what is the take away? >> ebay's revenue climbing 13% in the second quarter thanks to strength in the bpaypal busines but it's called challenging. they were hampered by a cyber attack in may and rising competition from other online players like amazon. analysts will look for clarity

on how ebay plans to fend off competition and deaf rememberuate the portfolio going forward. competition will be something to look forin the coming weeks. >> thank you. still ahead on the program. jack lou says corporate america is abusing the u.s. tax system and it's unpatriotic. why he wants congress to put an end to it. the u.s. imposed the toughest sanctions yet on russia over the ukraine conflict. the sanctions include one of the country's financial institutions, also state-owned oil company and some senior

government officials, including the deputy head of the parliament. these were imposed the same day that european union leaders met to discuss new sanctions of their own. >> the head of general motors legal department is set to testify on thursday at a senate hearing. his appearance follow as report in the new york times that casts doubt on how forthright general motors has been with regulators who have been investigating a defective ignition switch linked to at least 13 deaths over the last decade. lawmakers will also hear from mary bar ra, the chief executive at that hearing tomorrow. it's a term we're hearing more and more recently, tax inversions, just this week. two u.s. drug firms move forward with take over plans with international companies. earlier this year, pfizer attempted to do the same thing as it tried to acquire

asterjenika. they would result in a tax inversion. what exactly is it and why is it so attractive right now? dominic chu explains. >> reporter: tax inversions, a strategy that can be used to help shrink corporate tax bills. it could cut tax payments from outside the u.s. right now the tax on those profits is 35%. a tax inversion could drop that bill to zero in some cases. for example, michigan based drug maker perago bought elon and helping it save $150 million a year and they are not the only ones. new jersey based drug company brought ireland's and did the same thing. even fruit and produce giant

cheikta and more are in pending mergers that would relocate their tax basis to ireland. walgreens is also said to be considering a deal to bring it under switzerland's taxing authority. of course, all of this is costing america a lot of tax revenue. and the government wants to do all it can to close these tax inversion loopholes that could cost uncle sam billions of dollars over the coming years. >> also weighing in, jack lou said he wants congress to prevent american companies from shifting headquarters abroad to benefit from a lower tax rate, calling such a move an abuse of the system. >> we should have some economic patriotism here. it's not right to take an american firm to benefit from all of the things that we do in the united states to make it a safe place to do business but then say i don't want to pay taxes here and shift the corporate address over seas to pay a lower tax rate or no

taxes. >> eamon javers joins us now from washington. eamon, this is a complicated story. what specifically, does secretary lou want lawmakers to do? can they do? >> a lot of big questions is whether any effort to block the tax inversions would have to wait for a larger overall tax reform bill. there are a lot of folks on capitol hill that would like to do something to close the loophole but want to use it as a bargaining chip in an overall bill later in the year or next year or maybe in two years. what lou is saying is hey, we can't wait. we've got to do this right now. he's starting to get traction with that in terms of getting a single rifle shot bill that would do that this year but there is a real disparity between what democrats think on capitol hill and republicans. a lot are saying wait a second, if the u.s. corporate tax rate wasn't so high and the u.s. tax system as cumbersome, companies wouldn't be forced to take this

extreme step. that's where we ought to make the fix, not closing the loophole. >> economic patriotism. any comments from washington to that? >> we're actually starting to see movement here in washington. we saw a statement here from senate finance committee ron widen who said this inversion loophole must be plugged. he was one of those people we thought might be waiting for a larger deal. he's coming out and saying we got to do this now. already a little movement. we'll wait and see what the republicans say. >> what are the chances anything gets done and what are the risks to u.s. competitiveness if there are new rules that block the tax inversions? >> it's tough. it's tough to get anything done in this climate. a lot of these members are running this fall. it's touching time to get anything done at all and then in terms of the consequences, what the u.s. government is worried about is what they call mass

inversions where we don't see them doing it in ones and twos but hundreds, maybe thousands of american companies doing this, that could be a real problem. >> eamon javers in washington, thanks very much. >> secretary lou made the comments today at the so-called delivering alpha congress in new york hosted by cnbc and institutional investor. market moving news typically comes out of this conference and this year proved to be no different. tyler mathisen is there and has a look at who attended and what was said. >> bill, thanks so much. it may have been a bad hair day here in humid new york scity bu a great day if you're investing. the sat here with a venture of cnbc that produces "nightly business report" and institution business magazine. we heard from the best and brightest in the world of money management and hedge funds. beginning the day with ken griffin, the chief of ciddale.

he said it's going to be very hard for timewarner to say no to this deal. >> timewarner, great asset, hbo, warner studios, content is king, both those asset haves great content. the deal makes a lot of sense, for fox makes a lot of sense for timewarner shareholders. >> we then heard later in the day who really took the federal reserve to task. >> it's particularly puzzling today the fed is using wage growth as a key determiner of the current stance of policy. wages are in movement which is lagging indicators. shouldn't the fed focus on leading indicators? i really hope i am wrong in my assessment, i really do. in that case, i can just adjust my portfolio either way. the problem is, the fed is

making a bet where their adjustment could be way too late and have significant adverse consequences. and frankly, i don't know what it is in their forecasting record that gives them the confidence to make such a bet. >> later, nelson who said a proxy battle for pepsi co is a possibility. >> the stock was supposed to, according to them, earn $5 in 2012. they missed a little bit and earned 410. last year they were giving high fives because they got to 434 in 2013. so the stock is not moving because of earnings when the company should have been earning $5 two years ago. the stock is moving because people, shareholders see the wisdom of what we're saying. >> john paulson, the arthur of a couple of the greatest trades of all time. >> from an individual perspective, the best single investment you can make is to buy a primary residence that

you're the owner occupier of. today financing costs are extraordinary low, so you can get a 30-year mortgage, somewhere around 4.5% and if you put down, let's say, 10% and the house is up 5%, which is the latest data, then you would be up 50% on your investment. >> and more. >> cash is half a percent, bonds 2.5 heading to a loss of total return. high yield is not high yield anymore. slightly rch against history, 16 times earnings, average 15 times earnings, by 25% of the s&p yields more than bonds. that's a highly unusual condition. i think the market is fairly valued, i don't think it's over valued in the condition that normally leads to a peak. >> what a board should do is not tell the ceo what to do. they should leave him alone, really leave him alone but what they should say if you're not producing and they could have a lot of ways to gauge that, which

we do, a lot of parameters and if you're not coming up and not doing as well as your peer group, get off the golf course and get to work. >> a very interesting thing. one of the preeminent ones in the world of investing. now back to you. >> thanks a lot, tyler. black rock, the largest money manager reported better than expected earnings and that's where we begin the market focus. it was helped by strong markets and strength sending profits up 11% in the quarter, but despite broad stock market gains, block rock actively managed u.s. equity business is still struggling. still, block rock's shares rose slightly to $325.17. pnc financial's profits came in better than expected. helped by cost cutting but low interest rate wills continue to pressure revenue this year. investors were concerned about that, shares were down 3.5% to $85.00 and change. the nation's largest regional

lender was helped by a jump in commercial lending offsetting a drop in loan margins and higher expenses. still, shares fell 2% to 4 2.53. according to reports out around midday, general electric is in talks to sell the household appliances business. that sale could fetch somewhere between 1.5 and $2.5 billion. the move would be part of ge's strategy to sell businesses in those sectors where it is not a leader or not set for growth. shares were up 1.5% to $27.02. some troubling news for chocolate lovers tonight. hersheys is increasing prices. first increase in three years. the reeses peanut better cup maker expects the sales growth to be at the low end of the target range. shares field as a result of

2.5%. yum brands posed earnings that came in slightly above analysts estimates after the bell tonight. kfc say sales in china jump as it recovers from a flu outbreak that slashed demand for chicken last year. it also reaffirmed its earnings outlook for the entire fiscal year. shares of yum brands initially lower but during the regular session the stock was down to $82.71. coming up, won't you be my neighbor? well, if that means moving into one particular area of northern california, you're going to have to pay up.

the nation's home builders are feeling much more confident about the housing recovery. a monthly index from the national association of home builders climbed in july to a six-month high. that rise is being attributed to a strengthening labor market and rising consumer sentiment and that sent shares of the home builders higher in today's session. meanwhile, mortgage applications fell more than 3% because loan rates ticked up a bit. that's according to the mortgage banker's association. rates on a 30-year fixed are 4.15% for the weekending july 10th. another reason people are being priced out. home prices are rising faster than gains in income. one area where prices aren't raising faster is in california in the heart of silicon valley, about 20 minutes from the headquarters of facebook and google and technology companies and when the tech sector does well, so does the local housing

economy. josh lipton has more. >> reporter: silicon valley real estate is red hot but there is no place hotter than here in athens, california. aven average houses rose 40%. there was a buying friend see for homes in the $5 million range. that demand pushed buyers into the ultrahigh end. in just the fix quarter, there were seven sales in excess of $10 million. why the increase? it's in the heart of silicon valley, which is thriving. >> we have a market here with high demand, low supply and of course, we're the center of technology. the tech sec tomorrow tor is do everything that drives the tech sector, local economy, private equity, we are the center of invasion here. so that more than anything

drives the housing market. >> reporter: there are many exclusive communitities for the elite but it's the most sought after location and buyers are proving fast. ken of the leon reality sold a mansion for $14 million to a chinese buyer in 72 hours. >> one of the reasons it's so hot right now is forbes named it as the number one most afluent zip code in the area. many of my clients want to be in the best area of america to so that helped boost it. >> reporter: buyers pay for their homes in cash and some investors from china will pay for a mansion site unseen. he is on track to do $500 million in sales this year. he's now even buying a plane so he can show chinese and indian buyers the beautiful views of what they could be buying. the take away, if you're a

realtor you might think about coming to atherton. if you're a buyer, talk about sticker shock. >> talk about your dream house, huh? >> seems like home prices are reaching lofty levels in my home state there. keep an eye on that. >> looks beautiful all the same. that's "nightly business report" for tonight. thanks for watching. i'm susie gharib. >> i'm bill griffeth. have a great evening, everybody. we'll see you tomorrow.

laura: all of his life twister had been known as a slack, twisted old chap. but searching through the storm for edmund he had courage... ...his own kind of courage. no matter how many times queenie looked at the tea leaves, she saw the same thing-- a raven...bad news... a death leading to new beginnings. queenie: tripe and onions, my dear. that's a treat you'll have to sit up for. cooked with a bit of thickening, how you like it. ( weakly ) i'll have some later on. you eat. we're gonna get you well again. perhaps just the smell of it might do me good. twister turrill, i ain't going to watch you fade away before my eyes.