this is "nightly business " with tyler mathisen an. >> battling back. two companies that faced big challenges show investors they have what it takes to top earnings expectations. >> hot market. we'll take you to one city in the u.s. where it's getting really hard to find a house. >> and wealth gap widens to a record between the rich and poor and now one group says it's holding back gr all that and more tonight on "nightly busines". >> good evening, everyone and welcome. the s&p 500 notched another record. the nasdaq just shy of one, but we begin tonight with earnings. expectations wer quarr profits, but the results as it turned out weren't as bad as expected. tonight hewlett-packard continues that trend.

the technology company that's in the middle of the largest corporate split in history recorded earnings of 87 cents per share, two cents better than estimates. revenues however, light coming in at $25.5 billion down from $27 billion last year. despite the revenue drop and a cautious outlook, the stock initially climbed after the report. the one thing to watch in hp's report. >> reporter: the big take away from the hewlett-packard earnings report is that the company is still seeing declines in many of its major units, but companies appe to be boosting spending albeit at a more modest level. that's important for a company like hp. many of us know them as the ones that make desktop and notebook computers, as well a printers. that's still a very big part of the company, but they are also devoting resources towards enterprise or business clients. later on this year hp's going to split itself into two separate publicly traded companies, one that's going to handle the

traditional pc and printer market the other is going to focus solely on selling technology solutions to business clients. a lot of what hp does in the future will be about whether it can compete effectively for those more lucrative enterprise clients. for "nightly business rep i'm dominic chu. best buy is bucking the retail trend, the chain reported a stronger quarter while many other retailers have posted disappointing results. both sales and profits at best buy topped wall street forecasts, up nearly 4%. courtney reagan has more. >> reporter: at least one retailer's transformation seems to be paying off. gaining market share in a category with declining sales. best buy beat wall street estimates for quarterly profit revenue, and comparable sales thanks in part to continued cost cuts and strong sales of appliance n smartphones, and large tvs. though muted by softness in tablet and computer sales.

>> they've proved to me once more that a well-run company who's executing well on the internet can compete with amazon even in a space that the internet has begun to dominate. if amazon had to make a profit they really could win the game with them. they are managing to do it and make a profit. that's pretty remarkable. >> many acknowledge best buy has garnered strengths from being one of the last large consumer electronics retailers still standing consumers are switching to spend on experiences, like dining out and travel and digital services rather than physical goods. >> you're buying your songs online you're buying and consuming movies online and what that means is that whereas in the past you might go to the store to buy those products once best buy got you in the store they had an opportunity to things best buy now to use a hockey analogy, loses out that potential shot on

goal. more harder and that shift continues. >> reporter: best buy's ceo acknowledged to me on the phone the trend towards experiences has been going on for a while. it is something that's real but it's exciting. using an example to explain, the best buy provides training and tools to capture images on your new camera at an experience like your child's soccer game. 65% of best buy's business is consumer electronics, a category industry statistics show is contracting, but jolie says large appliances particularly those with enhanced technology is a growing opportunity for the retailer. >> using appliances is a good category a, because their market share in that category right now is low, b, because we'll probably see sears, which has a significant amount of market share continue to donate that to other retailers. >> reporter: he specifically points to potential for connected home products and appliances like ovens you can start or turn off remotely. and best buy wants not only to

sell them to you, but also deliver, install, and teach you how to use them. for "nightly business rep" i'm courtney reagan. gap also out with its quarterly report. earnings were in line while revenue missed. the retailer saw continued weakness at its namesake banana republic brands and currency fluctuations also weighed on the results. still the company stuck to earnings guidance for the year. shares were little changed after hours. before the bell the stock was a few cents. the big merger in the health care sector, cvs health has agreed to omnicare expanding

cvs's presence in largest pharmacy benefipeople cvs health's acquisition of rs side is the number of individuals in the united states over the age of 80 are growing significantly. >> reporter: omnicare is the leading pharmacy provid ot are positive saying it will help the company hold on to medicare clients as they age, while strengthening its position in the fast growing specialty business helping drive industry $12.8 billion to acquire catamaran, following the deal to by envision in february. in a battle against rising drug costs, it's not t phy

pharmacies but the pbms playing a more important role. >> we estimate in 2016 alone, specialt nation's larger has been increas pus back its drug makers on high priced specialty drugs like hepat treatments. that's benefitted consumers and insurance plansy but not without disruption. when express scr recoil at the high cost. >> reporter: expensive drugs in pipeline that tug

of war is likely to grow increasingly heated. bertha cf points closing about a point away from a new record close. the s&p 500 ended at 2130, a gain of abdh eao meetings we go sachs approved a pay hike approving in san francisco, ground zero for innovation. inonosr be company. the vote comes as mcdonald's ie pd higher wages and the right to

unionize this for the second straight day. now to the economy where the number of americans filing for unemployment benefits rose slightly than expected last week but despite the rise claims remain below 300,000, a threshold associated with a ma has been below 300,000 for 11 straight weeks. sales of previously occupied homes adjusted annual rate to 5.04 million. the drop in sales is being blamed on a lack of supply which in turn is driving up prices. get this in april 40% of properties sol o. issu is widespread it is most

acute in denver, where job ica nightmare. really pushing everyone throughout the process. >> reporter: denver's housing market is so tight that biddi t t8ha this house. a letter pleading his case and then used some risky tactics. >> i waived the inspection and the appraisal contingencies on all offers i made a this one, as well. >> reporter: that's what it took in a market that's down 15% from a year ago and homes that are listed are flying off the shelves. prices are up 11% from a year ago because supply is nowhere near demand. demand here is very high thanks

to above average employment growth. companies like apple and google bringing new workers here and there is new construction but it's mostly rentals, not condos. >> we're not building condos because we don't want to get sued. >> reporter: this developer is talking about a controversial colorado construction law put in place five years ago that makes developers far more susceptible to lawsuits for even the tiniest defect it has nearly stalled condo construction here fuelling rental demand and pushing rent. >> for investors it's a fantastic market but i don't think incomes have been rising at that pace and we all know what happened in 2008-'09 when we had an imbalance between incomes and value of property in this case rent. >> reporter: the only condos that are going up are on the very high end, where developers can afford to pay for insurance against lawsuits and go over the top testing for defects. >> two reviews, have people looking over each other's shoulder continually to make sure everything gets done right.

>> reporter: roy kline is developing where most units list for more than $1 million. the project is over 80% sold. kline calls that amazing, but says lawyers will target the project, scouring the units for defects. >> there are sharks out there looking to get you? >> absolutely. absolutely. so you really have to be careful. >> rep just the cost of doing business in the mile high city where home prices have nowhere to go but up. for "nightly business repor i'm diana olick in denver. >> to find out more about denver's housing market head to our website, nbr.com. still ahead, the great divide the split between the haves and the have nots. it's a big social issue and some are warning it's also a big

♪ ♪ the transpac initiati backed by president obama has cleared a key procedural hurdle in the senate. the bill faced major opposition from senate democrats, but the final passage is not yet clear. the senate will consider a number of amendments including controversial sanctions for trading partners that manipulate their currency. the bill is expected to face a quite tough time over in the house, the transpacific trade deal is the biggest trade pact since the north american free trade agreement, nafta, two decades ago. a financial regulation bill, the measure alter rules for small and mid sized banks and clears the way for months of negotiations. th republican-backed bill takes aim at the 2010 dodd-frank law

and in addition eedsasing rules for small banks, it would increase scrutiny for the federal reserve and give a chance to redo a business before being classified as systemically important. the securities and exchange commission announced fraud charges against an atlanta firm for its handling of the city's pension funds for police firefighters and transit workers. in an s.e.c. statement, the firm gray financial group, put pension fund clients into investments that did not comply with state law, and it collected more than $1.5 million as a result. a bit earlier in the program we told you that hewlett-packard reported better than expected earnings. well the company also sold part of its business in china to a chinese company. this is viewed by many as a so-called win for the chinese government which has been concerned about cyber spying following the snowden revelations. ai men javers is in washington with more on t

impacts. aman is this an example of the chilly relations u.s. tech companies have with the chinese? >> reporter: it is also a lack of demand in china for american technology products in the wake of the edward snowden u.s. spying allegations. the hp subsidiary here is called h3c and hp is spinning that off, selling 51% to another entity that's controlled by a university the university that's considered the m.i.t. of china. that of course is affiliated with the chinese government. the government there now getting a majority stake in this digital networking subsidiary. >> hp i gather is holding on to other divisions over there that work in sort of consumer products printers and the like. let's patriot act. what about the professes against it? >> rep t s of the edward snowden spying allegations hestates as well with rand paul united states senator doing sort of a mini filibuster on the senate floor against the patriot act. now there's some real question about whether the provisions of

the patriot act that apply to spying on meta data for telephone records for american citizens whether those provisions will be reauthorized by the june 1st deadline or not. there's some question about whether or not there a votes in the senate to do that. the house has passed its version, not clear at this point what's going to happen here. >> we also heard from fbi director who expressed concerns over tech companies and their encryption. >> yeah broad number of companies wrote a letter to president obama thi week saying they don't want any limits placed in u.s. law on their ability to sell encryption. law enforcement, including fbi director comey said they want encry so they can get into the iphones and devices of criminals they are targeting with a warrant, but the companies would like to sell encryption to their companies uninhibited by the u.s. government comey saying he just doesn't think they see what he sees and it's a real culture clash now between law enforcement and u.s tech companies and doesn't look to be

resolved any time soon. >> thank you so much. aman javers in washington. things keep getting worse for lumber liquidators. that's where we begin tonight's focus, the ceo, robert lynch, quit abruptly as the firm has been in an investigation over products in china over allegations some of company's flooring contains the carcinogen formaldehyde. shares tumbled 16.5%. what a year it's been at that company, right now at $21.10. chico's, the retailer's chief says he'll retire next spring. no successor just yet. shares were a fraction lower to $17.02. shake shack getting a lift on speculation the company may flip some birds. filed an application for chicken shack in april. investors like the possibility of expansion, sending shares up 8.5% to $89.87. >> dollar tree posting higher

sales and traffic, also updating investors, saying it expects its deal to close in early july. its outlook for the current quarter came in below estimates. nonetheless, shares were 3% higher to $78.68. qualcomm announced a plan for a buyback program, under pressure by jana partners to increase share holder value. shares were 1% higher to $70.09. financial engines spiked on a reuters report that wells fargo is planning to offer financial engine services through its retirement platform. that move would make it available to 4 million wells fargo 401(k) participants. engines rose wells fargo was off a few cents to 56.01. shopify surged seeing strong

investor interest even though shares were priced above expectations at $17 a share. the company, which makes software to help retailers sell things online raised about $130 million. shares were 51% higher to close at $25.68. well sue, a new oecd study says income inequality in developed nations is hurting the global economy. the report found the richest 10% of the population saw their earnings grow 10% while the income of the poorest fell 3%. josh fineman, chief global economist at deutsche bank joins us. good to see you, thanks for coming. what's interesting to me here is beyond the sort of social strain that wealth disparity imposes, it may be transmitted in view of this study and in your view into slower growth and less vibrant economies. what's -- how does that get

transmitted, why happen? >> it could. keep in mind if it works the other way, too, there is a certai amount of income inequality that's a natural manifestation of a market economy, differential skills abilities, effort endowments things like that. that if it were squashed could potentially have negative impacts for incentives things like that. on the other side coin if inequality rises too much it could have negative effects and one could be if it retards mobility. the mobility of people say, born in the lower income brackets from being able to move as they age into higher brackets by their ability, their education, and so forth. if that is inhibited, that's a key channel through which it could have negative effect on the macro economy. >> josh a lot of people think

that technology is one of the main reasons why we are seeing that gap widen so dramatically. do you agree with that or not? >> i do. i think a big cause of it is increasing returns to skills and education. people who get the right skills the right education, their income's growing rapidly, those folks who don't, their incomes are lagging. that's a big -- not the only driver but a big driver of a widening inequality. >> what's the fix? >> you know not easy to say but clearly if education's a big part of the problem it's got to be a big part of the solution too. and getting folks to get more education, expanding opportunities to people throughout the spectrum income and social spectrum access to education and skills will be part of it. important to keep in mind this is not only a u.s. phenomenon. this is going on for decades across democratic and republican administrations, across countries, merging economies, as

well as developed economies, so there's no you know local solution to this. this is a global situation. >> although it is a global situation, the united states seems to be on the lead in terms of the gap widening. >> well the u.s. is certainly in the lead in terms of levels of inequality but that's always been true. in terms of its widening inequality maybe a little bit in terms of the 1% but not clear cut. in fact, s biggest increases, ironically in emerging economies, places like china. and the other thing i point out about the mobility issue, so far it seems that the widening inequality in the u.s. and elsewhere has not caused deteri in intergenerationa mobility and folks to move up. some people worry it may if it were to continue but so far it hasn't and that's at least encouraging to date. >> we leave on that good note.

josh fineman, thanks very much with deutsche asset and wealth management. coming up how one vineyard in drought-stricken california is turning water, waste ♪ here's what to watch tomorrow fed chair janet yellen will give a speech on the country's economic outlook and we'll have the outlook. the consumer price index is out, which is an important inflation indicator and that's what's on the agenda for friday. california is getting about $33 million in federal money for water saving programs upgrading irrigation controls line canals

to prevent seepage, catch your storm water runoff and other water conservation projects. the program is designed to increase local water supplies in the long term. other states impacted by the big drought will also receive funding. california's drought has some local wineries looking for alternative ways to save water. and as jane wells reports from the napa valley one vineyard owner is putting a new spin on turning water >> reporter: these are pinot noir? >> y. the grapes which will grows in napa valley go into very well known wines, but wine for the affluent has been watered with effluent. >> we're only using good quality water, just has a perception it's been passed through people. >> reporter: hav it? >> no i haven't. >> reporter: the waste water, which jason treats isn't clean

enough to drink, but a filtration system from ge plus uv and chlorine makes it clean enough to irrigate. >> these are fibers membrane fibers. >> reporter: the city of american canyon and southern napa cy has invested $10 million in the system to recycle water and is about to spend $3 million more to upgrade and expand because of drought. >> our water is sourced from state water projects so when the state says you're going to cut, we're going to cut. we have cleaned up toilet water watering these grids. >> reporter: no impact on the taste at all? >> no impact at all. >> reporter: he's been using recycled water for a long time and says the technology has only made it cleaner and better and you can't beat the price, less than half the cost of regular water. how come more farmers aren't using recycled water? >> there's still a negative perception about it. california's got a lot of growing up to do on how to use water well. >> r nord insists using the recycled water has

absolutely no impact on the taste of the wine and with other growers facing shortages of water, they are starting to believe him. he may be on to something. for "nightly business repe napa valley. >> i love jane wells. >> good enough for jane good enough for me. >> absolutely. that does it for "nightly business tonight. i'm sue herera. thanks for joining us. >> i'm tyler mathisen thanks from me as well. have a great evening, everyone and see you back tomorrow. the la ♪

♪ >> are you ready for the lake but need to put a little more speed in your speedboat? boating guru paul mikkelson has just the collection for you. it's a motoring good time at the auction house this week on "bid america". ♪ >> beautiful. five here, five-fifty. five-fifty, six hundred, six-fifty. hold on. six and a half in the fourth row. sold at $650 to 171. >> welcome back to picturesque willmar, minnesota visiting our favorite sailor paul mikkelson. paul has spent decades in pursuit of the perfect recreational boating collection and his auction has instilled vigor into collectors and boating enthusiasts nationwide.