Be getting more mixed messages. Just today, an important gauge of manufacturing activity, the new york feds empire state survey, tumbled to its lowest level since 2009. But then another report on home Builder Sentiment hit its highest level in nearly a decade. With manufacturing and housing, two very important pillars of the economy, the debate within the market over when the central bank will act isnt going away anytime soon. Steve liesman has the story. Reporter as temperatures rise in august, the debate over the fed raising rates in december is reaching a new level. Youre looking at a significant correction in u. S. Equity markets and pushing the u. S. Economy back into recession. Reporter there are plenty of reasons the fed should stay pat and not hike. Chinas changing yuan, and yet weve seen the economy gaining momentum in the Second Quarter, and we think that will carry over in the second half of the yert. Reporter secondare quarter grows is now forecast to be above 3 . Consumer and business spending looks Strong Enough to power growth near 2. 5 in the current quarter. Job Growth Continues to run above 200,000. If you come down from mars today and looked at the level of the economy, you would say, gosh, you know, were way behind the curve. Reporter its a quandary the fed faces. The job numbers are moving in the right direction for a hike. The Inflation Numbers seem to go down every time the fed considers raising rates. On wednesday the minutes of the feds july meeting. The big event that could shake policy, chinese devaluation and plunge in oil happened in just the past couple weeks. Some believe janet yellen will stay on track to hike. I think it will happen. I think the fed is kind of finally had enough in terms of keeping it at zero. Everything were seeing now is a result of the fact that the fed is offsides. Reporter the raging debate over the first fed rate hike could simmer all the way up to the september 16th meeting. More now on that home builder report we were just talking about. The National Association of Home Builders said the industry is feeling much better about its business. The best its felt in a decade. A look at whats behind the surge in sentiment. Reporter Consumer Confidence in the Housing Market is, well, building. At least according to midatlantic home builder dan ryan. I think our customers are getting over the shock factor of the worst housing recession in history. I think its finally starting to wear off. Reporter and that has builders themselves feeling better. A monthly Sentiment Index from the National Association of Home Builders rose to its highest level in nearly a decade this month. Builders are feeling better about current sales and buyer traffic. Demand has been picking up because of, again, tightening job market, employment rate continues to decline, expectation of wage growth, Consumer Confidence remains elevated. Reporter expectations for the next six months which had been rising the most stalled. That may be on fears of rising Interest Rates. Although rates are still near historic lows. It is a risk, but its a fairly contained risk at this point in time. Reporter builders also cited continuing issues with land and labor. We are getting pressure on the labor and material side. Our materials are going up. Our labor prices are going up. And i dont think thats a bad thing. But we are going to have to continue to raise prices, and we do it in very small increments. Reporter builder confidence may be better, but singlefamily Housing Starts which used to move in tandem with sentiment are still well below normal levels. Sales of newlybuilt homes have also been bumpy this year as builders raised prices and focused on higherend models. Some builders say theyre going to rein in prices the second half of this year, but most say they still have pricing power, thats because all housing supplies, both new and old, is still tight and demand is only getting stronger. For nightly Business Report, diana olick in washington. The recent drop in oil prices is one of the reasons why some say the Federal Reserve should stand pat on Interest Rates in september. Low Oil Prices Mean inflation will likely run below the Central Banks target level. Well, today, crude slide continued near its 6 1 2year low. Since june, oil has lost about a third of its value. And according to a proprietary cnbc survey, many traders and energy Fund Managers think the prices could go even lower. Reporter with oil prices touching levels not seen in more than six years, Market Participants are wondering just how low oil will go. Exclusive survey that revealed a shift in expectations. To the down side. For the short term, september and october, almost twothirds of respondents say they expect prices to range between 30 and 40 a barrel, indicating that the bottom is not in yet for wti. For brent, 70 , 40 to 50 is a realistic near term target. More than half think the commodity will fall between 30 and 50 for wti, and 40 to 60 for brent. Thats lower than previously thought. Refineries have to turn around and make the fall products, gasoline, heating oil, things like that. Youre going to see less demand at the refinery level for crude oil. Youre going to see supplies start to build again. That will put pressure on prices. I dont think that pressure will be relieved until we see the summer driving season which actually starts in the spring of 2016. Reporter when asked what factors will impact crude prices the most, the majority of respondents said supply. Behind them, the dollar, and 10 said that technicals will drive crude prices. The world produces about 2 1 2 to 3 Million Barrels a day more than it uses. We need to get that under control for prices to rise. Demand isnt going to rise 2 Million Barrels a day between now and 2016. So the only way to get crude Oil Prices Higher is to reduce the supply. Reporter with respect to u. S. Supply, 60 still feel production will flat line or even rise. If theyre right, thats probably the most important variable that will support low prices. For nightly Business Report, im jackie deangeles. The federal government gave Royal Dutch Shell permission to drill for oil in the arctic ocean off the coast of alaska. Theyll drill deeper for oil than ever before. A tugofwar on wall street. Shares started the day on the weak manufacturing report. Energy shares also sandbagged the dow. But that strong home builder number took hold and propelled stocks higher. By the close, the Dow Jones Industrial average was up 67 to 17,545. Nasdaq climbed 43, and the s p 500 gained ten. Sarah johnson joins us now to talk about the mixed readings on the economy and what it might mean for the fed in the upcoming september meeting. Good to see you, sarah, welcome. Thank you. Why dont we start with todays data. Did any of it seem so compelling, that it might move the fed one way or another . No, i think the focus of the fed will be on the labor market indicators, and julys strong employment report is one more reason to go ahead and start raising Interest Rates in september. Are you at all concerned, do you think the Federal Reserve is concerned about whats been going on over in china . Do you think that is just a marginal influencer, or a major one . It is an influencer. Not a major one. But i think whats happening in china with the slowdown in growth re flegflects a broader concern about overall sluggish demand in the global economy, and the deflation in commodity prices. So where do you see gdp finally ending up as we go into the fall . How strong is this economy . Were projecting 2. 1 growth in real gdp for the Third Quarter, and a shade over 3 in the fourth quarter. But the Third Quarter result is held back by an inventory cycle. Essentially, there are two headwinds to the economy. One is the strength of the dollar, affecting global trade, and the second is the fact that we had an unsustainably high rate of inventory buildup during the first half. And that will lead to a correction in the Third Quarter and beyond. What do you expect on the dollar . Its basically been from sort of a dollar im thinking in terms of the euro basically 1. 04 up to 1. 11 recently. Are we in a trading range or do you expect a breakout one way or the other . I would expect that once the Federal Reserve raises Interest Rates, we would move towards the low end of that range, but not below it. Markets really have anticipated the first fed hike for a long time, and so as a result, its Economic Impact should not be severe. Sarah, thank you very much. Sarah johnson with ihs global insight. Federal reserve bank of dallas picked Robert Caplan to be the next president. Former Goldman Sachs banker. Just as the fed nears the critical time to raise the interest rate. A cutback in Consumer Spending and a slump in exports. Japans economy sh rank in the Second Quarter. Japans Gross Domestic Product by 1. 6 . Its the countrys first setback after a painful recession last year. Most analysts believe japans economy will return to growth in the current quarter. Still ahead, remember that irs breach we reported back in may . Turns out it was much larger than first thought. Well give you the details. Potentially concerning news for taxpayers. The interm Revenue Service said the cyber attack first disclosed back in may was much more extensive than previously reported. With more than 300,000 taxpayer accounts potentially affected and 600,000 breaches attempted. Aima, bring us up to date here. What do we know about who the hackers might be, and what do we know about the information theyve got and how theyre going to use it . What we know right now, tyler, it looks like about 220,000 additional people have been affected by this hack. Suspicion really centers on russian criminal gangs for now. But the irs has not said definitively actually whodunit. The way the hack worked is clever, actually. What the hackers did is used information they had already gotten from previous hacks about taxpayers, and then went to the irss own website and queried the irss website for tax return information for those taxpayers from back years. The presumption here is ultimately using that back year data the criminals might be able to do something a little more nefarious with that information, tyler. Is this worse than some of the hacks that weve seen on companies in the private sector . Target and others . Its not worse numerically. Obviously weve seen hacks that affected millions of people. Here were just talking about hundreds of thousands. But there is something about the idea of your tax return information getting hacked. It kind of gives people the heebiejeebies. This is a scary concept that your information, your most sensitive Financial Information could now be in the hands of russian criminals. What they might do with it ultimately is the fear here. Now, what the irs thinks is going to happen here is that these criminals will use this information to file bogus returns and then collect bogus refund checks from the irs, and pocket that money and make off with it. So ultimately, the victim here is likely to be the federal government, not those taxpayers. But still, to be caught up in this can be really very scary. Absolutely. Thank you very much. You bet. Some of the nations big box retailers report earnings this week. Walmart and home depot both dow components will release their bell before the opening bell tomorrow. Its not just their numbers that matter, but also what they say about the health of the consumer. Courtney regan tells us what to look for from the new york stock exchange. Reporter we may get a better idea about the state of the American Consumer as some of the nations biggest retailer report Second Quarter earnings this week. It really sets the stage for the second half of the year. And youll get some early indication of how the backtoschool season has gone. Reporter two dow components lead things off. Home depot is expected to get a boost from the rebounding housing sector, and walmart blaming higher labor costs, and a stronger dollar. Walmart is looking for continued growth and sales, while also ramping up its online business. Theyre spending a lot of money online, moving a lot of customers out of the brickandmortar stores, which we think is a positive. We also want to take a hard look how the Small Format Stores are doing, the neighborhood markets. We think thats a big area of growth for walmart. Reporter also tomorrow well hear from Dicks Sporting Goods and t. J. Maxx. And thursday sears is scheduled to report as well as the gap. Well get Second Quarter results on friday from footlocker. A rising dollar for some of the bigger names which do a lot of International Business like walmart and gap, during the first half of the year, but with china devaluing its currency last week, chinese imports coming into the United States should be a bit cheaper, which might serve to lift the retail outlook going into the second half of the year. Fed watchers will alsoing looking for signs of confidence moving forward. The thought is, if the labor market is stronger, and if consumers are beginning to spend more money, that could lead to higher price inflation. Something the fed says has been missing from its equation that it needs in order to raise rates. Im Courtney Regan for nightly Business Report in new york. Qvc did some shopping of its own. Zu lilly known for flash sales is being purchased by Liberty Interactive qvc network, more than 2 billion. The ceo of qvc said the two companies have a lot in company. Ive been talking to our team at qvc about zu lily for the last couple of years. Ive used them as a role model for someone taking a new approach to the web. Were both companies that are trying to create inspiration, create the joy of discovery, to bring customers back every day with new ideas to add value to their lives. Shares of zu lilly jumped 49 to close at 18. 74. Liberty interactive fell to 29. 80. The pump and valve maker pent hair is purchasing erico global for 1. 8 billion. It comes weeks after the activist took a stake. Finished at 62. 60. Este lauder reported a decline in sales and gave soft guidance in the fiscal year. Cosmetic maker which owns brands like clinique and mac and bobby brown said the results were hurt by the stronger dollar. The stock fell almost 7 to 82. 80. Luxury hotel owner Strategic Hotels and resorts is exploring a possible sale. The Investment Trust has hired jpmorgan as its adviser. That sent shares of Strategic Hotels up over 2 to 14. 22. U. S. Steel is closing an alabama plant which will affect about 1,100 workers. Theyre trying to improve the efficiency of the unit. U. S. Steel down over 1 today to 19 even per share. And retailer Urban Outfitters reported record sales and beat analyst earnings estimates. The company was helped by results that its namesake brand saw Strong Demand for the free people line of clothing. That helped send shares initially higher in afterhours training. In the regular session, shares fell slightly to 32. 32. Amazon shares rose slightly following a frontpage article in the New York Times this weekend that portrayed the company as a harsh and demanding place to work. That was the good part. The article described amazon which recently overtook walmart as the biggest retailer in terms of market value as a successful but ruthless company. Where workers are pushed to extremes, backstabbing is encouraged, and where managers show little sympathy for employees suffering from illness or other loss. The ceo sent a widely distributed memo to staff saying the article doesnt describe the amazon i know. Or the caring amazonians i work with every day. I strongly believe anyone working in a company that really is like the one described in the New York Times would be crazy to stay. I know i would leave such a company. Today the stock rose less than 1 . Disney is bringing the force to california and florida. The company detailing an ambitious plan to integrate star wars into its theme parks. On friday we told you such a plan was possible, and one of the ways that disney could make more money off the popular franchise. Tonight, julia borston has details on what disney plans to do, and what it might mean for its bottom line. Reporter for the first time ever, star wars fans will be able to visit a galaxy far, far away. The ceo announcing two new starthemed lands building in the parks in anaheim and orlando. Were creating a jawdropping new world that represents our largest single themed land expansion ever. [ cheers and applause ] reporter the two 14acre parks, no opening date announced yet. Both will feature rides based on the flight in the millennium falcon. Theyll feature can tin as. To freshen the star wars presence before the new land opens, disneys updating its popular Jedi Training academy. This new multibilliondollar investment in star wars and the u. S. Parks shows disney making the most of its 4 billion acquisition of lucas films in 2012. And the Investment Highlights the Growth Potential at the u. S. Theme parks. Sbr analyst Barton Crockett said the new lands will give disney leverage to raise prices, adding up to a doubledigit Growth Opportunity in the launch year. He also said it puts even more pressure than ever on the next star wars movie opening december 18th, to be a huge hit. Ill be really nervously reading the first reviews that come out of the star wars movie, because you dont want all the capital going into it and have the movie turn out to be a stinker. Reporter a shanghai park is opening next year. Shifting focus to the u. S. Parks will help disney stay ahead of universal who has poured billions of dollars into new rides, including harry potter. Coming up, more goods being transported by rail over old and outdated tracks. But thats starting to change. Tonight we look at some of whats being done to fix our aging infrastructure in the first part of our series the big fix. Heres a look at what to watch for tomorrow. As we reported earlier, home depot and walmart will release their quarterly results. And more Home Construction data is on tap. The Commerce Department will release Housing Starts before the opening bell. And thats a little of what to watch for tuesday. The National Labor Relations Board said Northwestern University Football Players cannot form the nations First College athletes union. The nlrb did not address whether Football Players are school employees, instead it ruled that the prospect of union and nonunion teams could throw off the competitive balance in college football. The ruling only applies to private schools. Fixing americas infrastructure. The American Society of Civil Engineers says trillions of dollars need to be spent just to maintain or modestly upgrade everything from roads to bridges. So all this week well examine some of the major infrastructure issues facing this country. And some possible solutions. We begin our series called the big fix with a look at the overcrowded rail system. Tonight Morgan Brennan takes us to a csx terminal in ohio where a company is making a big investment in the network so it can haul more intermodal containers that can transport gs by either ship, truck or rail. Its a big car to the future, freight rail. Up by more than a third since 2009. But much of the infrastructure has remained stuck in the past. Thats changing. How do you quadruple capacity in a sentryold freight rail tunnel extending one mile under the heart of washington, d. C. . Thats exactly what csx plans to do with the virginia avenue tunnel. One part of the 850 Million National gateway initiative, between csx and seven states. When we finish this tunnel, well be able to move 280 trucks on a single train. Thats a lot of highway congestion well alleviate. All part of an 11year multiphase to move more freight between the east coast ports and the midwest. They want to allow two trains at the same time, and bridges and tunnels to fit trains double the cargo. Csx is betting the work will result in a conversion of more than 14 billion truck miles to rail. And help save 2 billion gallons of fuel in the process. Intermodal has been a strong growth area for the railroad. It continues to be over the very long run when you think about the United States transportation infrastructure. The rails really are well positioned to continue to take market share off of the trucks and onto the rails. Another freight rail sees dollar signs as well. Last year Union Pacific completed a 400 million intermodal facility in new mexico, to move more containers between ports in the texas and the midwest. Freight railroads pour money into this part of their business, theyre already starting to see results. Csx noticed a 5 increase in the latest earnings report. A bright spot in an otherwise lackluster Second Quarter. For nightly Business Report, im Morgan Brennan in north baltimore, ohio. The big fix series continues tomorrow with whats being done to our energy infrastructure, and all of those old and outdated transmission lines. Thats a big job to say the least. That does it for nightly Business Report for tonight. Im sue herera. And im tyler mathisen. We hope to see you back here tomorrow night. Announcer imagemakers is made possible by the members of kqed. [ clattering ]
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