Transcripts For KQED Nightly Business Report 20150304

Israeli Prime Minister Benjamin Netanyahus forceful speech to a joint meeting of congress and the house vote for Homeland Security but the monthly auto makers set the tone for the day. Sales mostly rose even as brutal Winter Weather blanketed part of the country but for some that just wasnt enough. Chrysler missed estimates despite sales increasing nearly 6 . Fords numbers were off by 2 much worse than expectations. The standout was General Motors posting a 4 rise, better than expectations as trust sales surged. Shares of Fiat Chrysler and ford slumped while General Motors rose a fraction. Philip lebeau has more on last months auto sale. Reporter pardon the pun, but february auto sale ss were at 16. 23 million below estimates 16. 6 or 16. 7 million. For the major auto makers almost all reported sales below wall street estimate ford being the one that reported declining sales with sales dropping 1. 9 . What happened last month . Blame it on the weather. Storms really hurt showroom traffic, especially in the northeast where sales fell by as much as 50 in some markets because of the repeated snowstorms. Add in ice storms in the southeast late in the month and thats a big reason sales slowed down in the month of february. That said, a couple of bright spots. Pickups and suvs in heavy demand. Gm truck seamales up more than 30 last month. Question is what happens with auto sales this month . March is the beginning of the auto seas season where we really start to see business pick up. If weather improves most dealers around the country expect we should see auto sales move substantially higher. Philip lebeau, nightly Business Report, chicago. Stocks were sandbagged today by those auto Sales Results and some traders say the decline in equities was to be expected following the big records on the dow and the s p and the nasdaq nipping above 5,000. By the close, the blue chip dow index was off 85 points to 18,203. Nasdaq lost 28 back below 5,000 and s p 500 was down 9. The Energy Market spent much of the morning spent on the israeli Prime Minister Benjamin Netanyahu to strike a deal with tehran. Netanyahu thinks iran cant be trusted. The greatest danger facing our world is the marriage of militant islam with nuclear weapons. To defeat isis and let Iran Get Nuclear Weapons would be to win the battle but lose the war. We cant let that happen. [ applause ] the reaction was seen for a bit in the oil markets with wti crude rising and then giving back some gains. Settled at 52. 52. Brent saw gains at 2. 5 as you see there. Jackie deangelis h reporter the oil market reacting to geopolitical news today after israeli Prime Minister Benjamin Netanyahu addressed a potential nuclear deal with iran saying, quote, this is a bad deal a very bad deal. Were better off without it. Saw a spike on the wor but then some of the gains when president obama reacted. Lets wait until theres a deal on the table that iran has agreed to at which point everybody can evaluate. Reporter the significance of deal or no deal is irans oil supply. If we get a deal u. S. Could lift sanctions on iran. If oil could flood the market and depress prices further. If we dont get a deal we could see the market work through the supply it already has and prices could slowly rise again. A deadline for the talks is late march. Crude managed to settle over 50 a barrel with brent crude over 60. Oil prices have been hovering in this range for weeks. What could be some of the shortterm catalysts . Well to the downside a dollar that continues to strengthen after hitting an 11 year high today. To the upside news tomorrow that inventories are tightening. For nightly Business Report, im. John harwood with more on on the israeli Prime Ministers speech and the house vote to fund the department of Homeland Security. Good to see you as always john. Lets start with iran if we could and mr. Netanyahus impassioned plea to congress not to do this deal with iran and then the president came back and said there was nothing new in the well sue, the president delivered a very eloquent and powerful speech. It may not have been new, but it was well delivered. It drew a very enthusiastic reaction from Congress Members of both parties even though Many Democrats had boycotted this speech. The acid test going to be what is the reaction, if in fact we get a deal . The president has said the chances are less than 50 50. The negotiators continue to work in switzerland, thats iran and the pf plus 1 including britain, france russia china, germany all trying to strike this deal. So, you know is the Prime Minister netanyahu going to be able to turn political or Public Opinions strongly against it . Is he going to deter a deal from being struck . Were giengoing to see that play out the next few weeks. It was rich irony secretary of state kerry was in switzerland the same time this speech was going on. My questn for you is what role does congress have to play in this . The president in his rejoinder after the speech made it very clear, hey, look. The executive branch is paramount with respect to st dea and foreign policy. What role does congress have to play here . The role to me tyler, a couple of things. First, sanctions legislation that congress has enacted and to the extent that a deal would lift sanctions, that could involve a role for congress. I got different answers from aids on the hill. Different answers from members of the same party. So there doesnt seem to be a clear consensus and Mitch Mcconnell indicated after the speech today that hes going to attempt to push legislation to the senate floor to have Congress Weigh in on this deal. So this is a bit of a moving target. Democratic senator bob menendez who was the chairman of the Foreign Relations committee, now is the Ranking Member has been pushing sanctions legislation last year. They held off on pushing that through the senate. Mitch mcconnell is going to try to do something as soon as he can arrange it that might impact the negotiations in switzerland. Lets move to the department of Homeland Security legislation. The house did pass it. So whats next john . Reporter whats next is john boehner, the house speaker, breathes a very major sigh of relief because he and Mitch Mcconnell vowed were not going to have shutdowns, were not going to have Crisis Management and john boehner was undercut by more than 50 members of his own caucus last friday who took the interim deal that he had made with democrats and the members of the senate and they submarined that deal. Now that john boehner went to them this morning that said weve got no choice we got to pass funding. Well see if members of Congress Learn from that misfire and give john boehner more Maneuvering Room going forward. John thank you so much. In washington. Ty . The Congressional Department say the treasury will run out by october or november. Rely on accounting maneuve to keep the government afloat until then. Does this sound familiar . Without congressional, it would go back on obligations. Nine justices hear a major challenge tomorrow to keep aa key provision of the Affordable Care act. Subsidies. Some say it has the potential to derail the president s signature achievement and hinges on a few words. Hampton pearson has mo. Reporter tomorrow the Supreme Court justices will hear the biggest challenge for the Affordable Care act since a landmark 2012 decision upholding the individual mandate. This time opponents of the mandate are challenging the government subsidies offered to those who get their coverage through the Health Insurance marketplaces run by the federal government. The challengers and leading conservative legal scholars say the lies are crystal clear. Should only go to exchange established by the state. The challengers in this case who are some lowincome americans who dont want to purchase insurance and who but for the subsidy would not be required to purchase insurance because subsidy compensates zero income and makes eligible for the individual mandate under the statute. Reporter its limited over 7 million americans signed up through the Government Exchange and receive a subsidy to cover all or part of their coverage. The Obama Administration will argue it was not the intent of congress to pass a law that leaves out so much of the country. And supporters say there are numerous references to subsidies 900 plus pages that make up the Affordable Care act. If you want to talk about providing health care to more americans or Controlling Health care costs, lets have that conversation but dont have a bait and switch and really have a conservative assault on a fairly modest effort to establish Health Reform in the United States. Reporter while theres no constitutional showdown this time the stakes are nearly as high as three years ago. A ruling in favor of the challenges could gut how the Affordable Care act functions. For nightly Business Report, im Hampton Pearson in wa. Craig garthwait joining us now to discuss whats at stake for businesses and millions of people now covered under the Affordable Care act. Hes at the Kellogg School of management where he specializes in health care. Professor, welcome back. Lets just cut to the chase here. Would an adverse ruling out of the Supreme Court effectively end the Affordable Care act as we know it . Well certainly in the 30 plus states that chose to use the federal exchange rather than their own exchange the citizens there would lose access to subsidies. Many of those people would be unable to afford insurance and the exchange in those states would effectively cease to run. Premiums would be uninsured. In those states youd see the beginning of the end of the aca. What about the subsidies indeed mixed . What businesses would be most affected . Busines you look at are hospitals. If you think about how our Health Care System works, hospitals are the de facto insurers of last resort. If you dont have insurance and go there, you get care. If youre unable to pay, hospitals often eat the costs and the biggest effect on their bottom line. They see changes by insuring tens of millions of americans. Were going to see hospital bottom lines do better. Its no surprise that those hospitals have been strong supporters of the aca and in particular have opposed any attempts to limit the subsidies through the Supreme Court. I would think also that Insurance Companies would be massively affected here because they have counted on a nonadverse risk to use the term here around which they have based all of their pricing. If the risk pool changes dramatically whose stock pool has gone up a lot as a result of the customers theyve gotten i think it would suffer. Absolutely. We sort of gave a deal to the Insurance Companies that said were going to make sure people buy insurance. Were going to give them suns di subsidies. We want to offer exchange througho the state. Now theyre changing the rules on those companies and you point out very well that youre going to get a selective pool of probably the sickest people who remain in and many of the products ultimately go away because they cant survive in a world in which we dont have a subsidized pool thats buying insurance. Those we losers but who would be some of the winners . Winners are sort of tough to find. People who oppose the Affordable Care act will obviously like a ruling that limits the subsidies because it would be the beginning of the end of the law. You could imagine a world in which we have sort of a well functioning legislative and executive body that would take a ruling against the aca, come together and develop a better more well crafted law. Thats not really the world that we live in though and so what you see is the aca is going to go away or large portions of it and those would be the winners, per se. I understand also that the socalled employer mandate might be affected here because it hinges in part on companies that have more than 50 employees, but for whom at least one or more employee receives some sort of subsidy. If theres no subsidy, theres no employer mandate, craig. Definitely going to weaken the employer mandate in those states because those will pay a penalty if your employee shows up on the exchange or receives a subsidy. Your lowest income employees dont qualify for subsidies anymore and in those places youll see the mandate weaken dramatically. The bad part about that is theres states where if people dont get insurance from their employers, they cant go to the exchange to get insurance because were going to effectively end the well functioning Exchange Market in those states. Thank you, craig. A thorny issue. Craig garthwait, Northwestern University Kellogg School of management. Thank you. Still ahead, are flag ship funds starting to slow . As performance rebounds. Investors pooled more than 8 billion out of total return fund last year. The 22nd straight month of withdrawals, but its less than the 11 billion of outflows in january. Over the past five months, total return funds formally run by pimco intermediate as well. We begin market focus with a restructuring announcement from target. Retailer plans to cut thousands of positions as part of an effort to reduce costs by 2 billion over the next couple of years. It also gave full year earnings guidance. It was better than estimates and said it plans to buy back 2 billion worth of shares this year and one of those shares were us today. A fraction of 78 even. Best buy reported better than expected quarterliliesy lyies on a better than expected holiday season. 51 cents a share, boosted Quarterly Dividend to 23 cents a share and the company will buy back a billion dollars worth of shares. First repurchase since 2012. Stock higher than expected finishing at 39. 18. Lumber liquidators reversed, stock sold off after 60 minutes on cbs. Reported that the company sold flooring with higher levels of formaldehyde but upgraded rating on the stock to buy from neutral saying fears generated by the program are overblown. Shares popped 5 to finish 48. 78. Activists sold some 20 billion in bonds today. The ten year bond was priced to yield about 3. 8 which was at the lower end of the guidance showing strong investor demand for one of the largest corporate on record. Fell a fraction to 96. 23. Shares of Restaurant Company bob evans fell sharply after the bell after the Company Misses earnings and revenue estimates for the quarter and issued light guidance for the year. The company also said it will not spend off its food unit and hired j. P. Morgan to hire on strategic for regions. Fell more than 15 after the close but rose a fraction during the regular session to 59. 64. People are changing the way they shop. Not just what they buy, but how and where they buy it. And that is creating big challenges for some of the countrys biggest Consumer Companies. Sara eisen its fast. Its easy. Its fast. Its convenient for me. Reporter when it comes to buying the basics more and more people are turning to their computer. Like christie spears who rarely steps foot in a store these days. Now i can pretty much shop for anything online. Still shop for clothes but definitely use it for Household Items, cleaning products things we just regularly use in the house. Reporter the latest data from Consumer Edge Research showed socalled Consumer Products are now tied with media. Think online books and movies as the second most popular category bought online. Number one is apparel. And while most of the population still buys their Consumer Products at Grocery Stores or drugstores and only 9 on the internet, the fastest growth is online. There are definitely some web sites that are kind of a conglomerate of a couple Different Stores all in one web site. I love when i can buy dog food and cleaning products and snacks for the kids all on one web site. Reporter no site has been as influential as amazon. Com with the rise of Services Like amazon prime that promises free twoday shipping on almost everything. E idea of buying 6 pack of paper towel rolls online makes more sense than ever explaining why they use amazon than any other category except for breadits bread and butter media. I kept my sams Club Membership and use both to see which i save most on. I think amazon prime is going to come out on top. Reporter these are essential for Consumer Companies trying to understand not just what their customers want but where they want to buy. For instance proctor and gambill appointed first ever in charge of ecommerce sales. So focused on building relationships with brick and mortar retailers like walmart but now need to pivot from the decade old fight on the shelf to the ever changing battle for space on your screen. That transition is proving challenge for heavy weights like g g, kolgate and others. Its an opportunity for upstarts like Jessica Albas the Honest Company among others. Companies themselves recuring subscription based and Household Items like diapers and razors online to only add to pressure on the consumer giants in the years ahead. For nightly Business Report, im sara eisen. Coming up, tropical diseases pose a growing threat to some areas of the United States and now one company is looking into ways to fight them. 400 Million People around the world are affected by a tropical disease thats not widely discussed. Its called dengue fever and no treatments or vaccines available. The u. S. Is starting to see outbreaks. Meg tirrell has more from key west florida, and how one company is doing something never done before to try and keep that disease at bay. This is one of the areas i need to crawl under. Reporter patty spraug is on the front lines of a fight experts hope to keep off u. S. Shores. These are my people. I dont want my people to have be bitten or mosquitos. Its like hide and seek every day. Caller mosquitos carry diseases like dengue fever and which i can chikungunya. The disease usually isnt falgt but can be incredibly fatal. Its nicknamed break bone fever. Oxy tech releases male. The offspring produced quickly die off. Theres been local pushback to the plan over concerns with genetic modification. But keys experts in oxy tech said its safe and targeted specifically to the mosquito a nonnative species and the genetically modified bugs wont bite people. Only people do. Both merck and santa fooe have developments and important as dengue cases risen 30 fold in the last 50 years. Santa fe reported. Florida keys looks to test the bugs in the u. S. The experts look ahead to next year when the olympics land in rio daijhee rio de janeiro, brazil. Oxy tech received initial approval to receive genetically modified bugs there, among many efforts to control the mosquito population as the olympics bloom. Im meg tirrell in the florida keys. Thats nightly Business Report for tonight. This is the time of year your Public Television station seeks your support. And on behalf of your public tv station, thank you. Well see you to explore new worlds and new ideas through programs like this made available for everyone through contributions to your p. B. S. Station from. Youre off to see the wizard the Wonderful Wizard of oz. Nate clooney the hollywood musical. It evokes images of technicolor fantasies. Make me feel so good right now make me feel so good. Movie star romances. And barnraising dances. Plus, some of our most timeless music. Travel across the golden age of movie musicals by looking back at five of our most iconic films. Somewhere. Nominated for 20 and a half oscars if you count the miniature one given to judy garland. Over the rainbow. For her work as a juvenile, these five classic hollywood musicals captured the america of their times. Toto. I have a feeling were not in kansas anymore. Clooney the 1939 fantasy cherished by young and old