Transcripts For WHYY Nightly Business Report 20140930

September 30th. Good evening, everyone, they say that breaking up is hard to do. But not at ebay apparently. The online ebay auction says it plans to spin up its lucrative pay pal division into a separately traded company sometime last year. The announcement is a drama immigraic reversal f ebay would benefit from a split. Investors lining up to take part and shares up 8 , lining up for what it means to ebay investors. Ebays corey e commerce payments will stand on their own, a move the Company Believes will make sense, ebay only accounts for 15 of the business. As we continue, looking forward to 3. 5 years, we think the Competitive Position and the competitive environment of commerce and payments are going through accelerating change that creates new sets of opportunities and challenges for both ebay and pay pal, and that operating independently and separate will give ebay and pay pal focus, strategic flexibility, and an ability to move quickly and decisively in this changing environment. Investors reacted positively to the plan sending shares going way up today, none more pleased than carl icahn, the investor who first proposed a spinoff back in february. In a Statement Today he praised ebays change of course calling it a nobrainer that will enhance values for shareholders, a sentiment voiced by another active shareholder and analyst, saying this will allow pay pal to be better evaluated. It will compete directly with apple pay, we recently downgraded it. Google wall will be more of a competitor next year. I think the one element that opens up is the concept that alibaba could purchase the marketplace. But challenges do remain, on both businesses they face steep competition, from brick and mortar retailers and Financial Service Companies Like american express. However, two Standalone Companies will allow investors to better assess those risks. For nightly business report, im Morgan Brennan at the nasdaq in new york city. Ebays decision to split off a pay pal is creating a lot of buzz in the payments world increasingly populated by companies promising to make it easier for retailers to accept and for consumers to make payments from their mobile phones. Mary thompson now with the whos who in the mobile payments space. Ebays breaks up with paypal, splitting up the business just over 40 of its revenue, for assignment watchers there is a pay off in payments. I think in the split we think there is value in the payment side efforts value i dates what apple and others are doing. What apple is doing with its soon to be launched apple pay is hoping to get a piece from the rapidly growing mobile payoffs. The amount should be up from 205 billion. Hundreds are competing for a piece of the Consumers Digital wallet. The analyst says with so many options, consumers and retailers dont want to commit to just one. There is still so much that needs to be sorted out with retailers what they prefer to accept and consumers what provides them a value for use are their phone. In the mobile space there are a few firms pulling away from the crowd, thanks to new technology or established systems that are just too expensive to replace. Industry watchers says that means winners will be Mature Network operators, like visa, master card, and american express. It doesnt matter if a person pays for a purchase at the register, on line or with their phone. If the payments are made with a credit card linked to their networks they get a cut. All three are working with one of the newest players in mobile pay, apple. A firm experts see becoming a leader. The tech giant creating an eco before the launch of apple pay, selling a phone with preinstalled app with hundreds of mayerchanmerchants. I think it bodes well for the longer term success. Others see pay pal being replicated in mobile, meaning . Things like the big players are likely to stay the same for now. For nightly business report, im mary thompson. A big story that broke last week is still a big topic of discussion on wall street, the resignation of bill gross from pimco, the massive Asset Management firm he helped to create, well, today the new ceo and dan iverson spoke with the growth and how the firm will carry on without him. Bill gross resigned last week, we had in pce a Succession Plan that had been in process all during the course of this year. Bill was going to leave eventually, we all knew that, whether it was friday or next year, we put our plan in place and moved forward. Bill gross was a brilliant investor. We moved forward in terms of a manager. We as a team will move forward with a model based more on teamwork. Despite reports of billions from outflows from pimco in the wake of bill grosss decision on friday, the vast majority of clients will stay wi the firm. On wall street, stocks were up and down before ending the day and the monday of september to the down side, but the major averages did wrap up the Third Quarter with gains, the dow fell 28 points, the nasdaq lower by 12. S p 500 off by 5 and a half. For the just completed Third Quarter the dow was up a half percentage, the s p saw its seventh quarter in a row of gains, but they were small, two thirds of a percentage point. Half a world away from wall street, thousands of protesters took to the streets of hong kong again closing banks and other businesses. So how are Big Companies dealing with thousands of workers being unable to get to their offices and what could be the longterm impact on business. From beijing, eunice yoon has more. Reporter hong kong is seen as the Financial Center on par wiew york and london. The chinese city is a former british colony and for many wall street banks hong kong is an important base in asia. So far the disruption from the ongoing protests in hong kong has been minimal. Companies have been preparing contingency plans ever since they indicated they would block the Downtown Business and shopping businesses to send a message to the communist party. Banks had to cut services in some parts of the city, other firms such as black rock have told their staff that they can work from home. The uncertainty has caused uncertainty in the stock market. Some dont see longterm effect on hong kongs standing unless the protests continue and weigh in on the economy. However, others say it is what make hong kong different from the rest of china. They say the real risk is if beijing cracks down on the city, undermining hong kongs role as a gateway for china and one that attracts International Investors because of the rule of law. For nightly business report, im eunice yoon. And so how will the policies affect the u. S. Markets in the Fourth Quarter . Lets find out from liz saunders, the chief investment strategist. Good to see you. Hi, tyler. For Fourth Quarter, what do you expect to see . Possible pullback, what . When the s p first hit 2,000 it was not because it hit the magical number or a technical condition, the internal markets looked shaky, they were not keeping up with the generals as they often say. Sentiment was very stressed. That told us that you were had an increased likelihood of getting the typical kind of Midterm Election year pullback, september was not a great month, you saw the pickup and volatility. I dont know whether well see that in just small caps but it would be helpful to get a bit of a pullback, that said i think the market is still intact. Why is that . First of all what happened five years ago was a secular bull market. That doesnt mean you dont have corrective phases, but all the conditions in place, secondary markets in place this time. We havent built anywhere near the excesses in the economy or the stock market that tend to precede bear market type of pullbacks. So corporate earnings are still moving higher. Leading indicators are still moving up. Ca Capital Spending is just starting to pull back up. Most of the excesses are not in place right now. That is why i think any corrective phase would likely be just that, a pull back in an ongoing market. Lets talk about the strong market, it has not been this strong for this long in quite sometime. And that can pinch the earnings of multinationals. Have we started to see that . What will you look for as the earnings reports come out this month in. You know, the s p is a little less exposed globally than it has been in the recent past because we have been moving a lot of business back to the u. S. Were in the energy renaissance, manufacturing renaissance, that is why the trade deficit is coming down. Youre right, when you have a surge in the dollar like weve seen i would expect some companies to talk about it. That said, 68 of the u. S. Economy is Consumer Spending and you look at the impact that the strong dollar has down on Commodity Prices and energy prices, it is a net big positive for not only the u. S. Economy but also for the stock market. I think were in a similar environment as we were in the 90s, where the dollar will go up and so will the stock market. Let me ask you this, at charles schwab, youre obviously in talks with a lot of investors, many of our viewers. Number one, what type of feedback are you getting from them in terms of Investor Confidence and sentiment. Number two, what types of things are you telling them to do . Because this is a tricky time in the market, and dont say everybody is different. Just roughly, what are you telling the individual investors to do with their portfolio . And youre right, it depends on the investor, but we think there is frothiness in the market and there is a likelihood of a pullback that tends to happen in midElection Years. More often than not, it is a buying opportunity. Depending on where your a allocation is, it could be seen as an opportunity. It is a tricky piece, you normally get actually, the average pullback in an Election Year is 18 , i dont think well get that. Again, i believe it is an ongoing bull market, but that is what were telling the investors. I would say the mood of the investors is not quite as optimistic as what some of the traditional sentiment investors tell you. There is some optimism, there is a lot of skepticism, a lot of all right, im in the market but looking for the next shoe to drop. Tell me what the risk is, what is the next thing that is going to come around to surprise us. There is a lot of wariness for the down side and i believe that is a good sign that this wall of worry that the market likes to climb is still intact. Liz ann, great to see you again, Liz Ann Saunders with charles schwab. Coming up, why ford is making a big change to its vehicle, the f150, at a time when investors are questioning the nearterm outlook. That is next. In the story that broke late today and could color trading tomorrow, the centers for Disease Control and Texas Health Officials have confirmed the first ebola case diagnosed here in the u. S. The patient had recently traveled to west africa and is being treated in a hospital in west dallas. Shares of the drug maker techmera, spikes in after hours trading, alone along with sarepta therapeutic. And they were just mentioning ample global supplies, west Texas Crude Oil off nearly 3. 5 a barrel today, ending just a buck, 91. That is the biggest percentage drop for oil in almost two years, brent slumped below 95, meanwhile. Not only are oil prices fa falling, so are prices at the pump. Triple a says there are at least 26 states where drivers can find at least one station selling below three a gallon. Ford is betting on a radical change for the fseries pickup. Becoming lighter and more fuel efficient. While no mileage has been posted yet, some models can get more than 25 miles a gallon on the highway for a truck. The panels will be made of lighter weight aluminum and not steel. Phil lebeau takes us for a ride deep in the heart of texas. This is not your typical test drive. Then again, this is not your typical truck. The truck is 700 pounds lighter to be greater than 25 miles per gallon on the highway. One reason why . Panels on the truck are now made out of high strength aluminum, not steel. You think about all the improvements that come with the f150, not just the fuel efficiency but the fuel component, the driving, the acceleration, this changes the game. This is the best truck weve ever made. That is saying something, since the f series has been the best selling vehicle in america every year since 1982. It is also incredibly profitable. Ford makes an estimated 8 to 10,000 in profit out of every fseries ever sold, making it a very risky move. Now, despite gas prices falling ford believes they will make a pickup that is fuel efficient. The aluminum panels on the new fseries dont sound like the steel panels on the previous fseries but this is not like pushing in on a tin can. This is high strength aluminum alloy. And ford says the panels will meet the latest safety and durability tests. Were extremely confident in this test, testing over ten miles durability on this truck. Remember, the strength, the hard core part of the truck is stronger with more hard steel. Going lighter while promising to be Even Stronger in a market where truck buyers like build and bold pickups. Phil lebeau, nightly business report, san antonio, texas. And General Motors is set to announce a new road map, Ceo Mary Barra is set to announce goals tomorrow including a strategy to boost Company Profits and what it calls marketing the leading vehicles. Shares have fallen 20 since january, when barra was appointed ceo. And we begin tonights market focus with the Media Company that is buying move inc. , the owner of realtor. Com, for 950 million. The company owns one of the most trafficked websites for property in the u. S. , giving the wall street journal a chance to expand in the data market. Shares fell, move inc. Up 37 to 20. 96. And the video streaming site, announcing crouching tiger, hidden dragon, the legend, set to be released in 2015, to be released on netflix and imax theaters, shares rose up to 451. 18. European union regulators revealed details in a letter today why they believe that tax deals granted to apple in ireland were illegal. Authorities claim that ireland avoided International Tax rules by letting apple shelter profits in return for maintaining jobs. Apple says it has received no selective treatment. Despite all of this shares of apple were up slightly to 175. 00. Follow up to the current windows 8 operating system to be known as windows 10, the company skipped number nine in naming the new software. The universal flagship is aimed at capturing the new business market. Shares were off to 36. 46. And walgreens reporting a loss in the Fourth Quarter after the huge accounting charge from its recent acquisition of the swiss beauty company, alliance boost. It also warned that profits will continue to struggle because of lower drug reinvestment rates, stock closed at 59. 27. Mixed news in housing to tell you about, the house index price shows they rose a bit less, year over year, the increase was slower than 20 years and down more than a percentage point in june. Of the 20 biggest cities in the index, San Francisco was the only metro area to see prices decline in july. Despite that broadbased slowdown in home price gains, many wouldbe first time home buyers are not moving in and not picking up the slack in sales. But are millennials really against home sales are just victims against tougher times. Diana olick has more. Reporter millennials dont buy houses, they are savvy, and first generation rent. Younger people seem to have a less attitude toward housing. I dont know why, im not one of them. Reporter but do they really . I wouldnt say that the entire generation is antihome ownership. Reporter meet these millennials, married with condo. We started to work right out of college, so we were able to save money over the years. Reporter yes, they have student debt. Yes, they love urban life. Yes, they see no reason for a phone connected to the wall s. And yes, their rent just kept rising, so last year they bought their first home in the heart of d. C. When it started to even out and numbers matched up kind of figured it was time. Reporter both 28, ken and ashley are older than their parents were when they got married. And that is the crux of it. Millennials are getting married and having children later in life, the two biggest drivers of home ownership. But that can be an advantage. Are you both smarter borrowers than your parents . I think so. One of the most important things for me was understanding what we were getting ourselves into. Understanding all of the intricate deals with a mortgage and the lending process. Reporter by virtue of being older, millennials may be wiser home buyers and lived through the recession, knowing more about buying homes than their parents did. Unlike their parents, they dont want the house in the suburbs, a stereotype that holds up. We plan to stay in the city for as long as we possibly can. Bad news for the nations builders who still believe this generation will ultimately outgrow its urban lifestyle and head for Greener Pastures or any lawn at all. For nightly business report, im diana olick in washington. Coming up, hitting the jackpot, just how big does the gambling industry have on the u. S. Economy . Were going to las vegas, baby, next. An update now on the bankrupted rebel casino in atlantic, according to the wall street journal, they currently have the highest offer of 94 million topping that of Real Estate Developer glenn straub which made an initial cash bid of 90 million. And finally tonight, the American Gaming Association is out with a report on the gaming industrys impact on the economy. And with new casinos being built across the country, new products are being added to keep customers coming through the door. Jane wells has more from las vegas. Reporter gaming in america is proving you win some, you lose some. Las vegas is rebounding, Atlantic City is struggling. Several Gaming Companies are competing to expand in states like massachusetts. And for the first time the industry has commissioned a study on gamings Economic Impact on the american economy. It is kind of a big deal. We employ 1. 7 million people, actually larger than the airline industry, we contribute a quarter of a Million Dollars to the economy and taxes to local and state governments around the country. Reporter hoping to grow those numbers, companies in las vegas are debuting new slot machines. I dare you to play this game without laughing, you cannot do it. Reporter at the same time, casino floor space is las vegas is getting smaller. Ly millennials dont play slots as much as older americans, and the casinos are looking to make money, mgm is building with ab adjacent park for half a billion dollars. It is a very different experience. Reporter to keep people in the casino, Machine Companies are making games more social. We find that slot players really like to have a Community Experience so we have developed some games where they share in a bonus, our game of dragon goes between the various machines and selects one of the five players of that bank to get a bonus. Reporter one of the Biggest Challenges remains a lot of regulations, regulators are reluctant to make the skill space even though it would attract younger players. Then there are all the rules to moving the machines across state line. If you look at all the different regulations, there are a million different regulations that manufacturers have to adhere to as they move equipment across the country. Reporter as they try to move more of the equipment as the states open up to gambling. Believing that it will get ey easier could be a bad bet. And that is it for us, im susie gharib. And im tyler mathisen, thank you for joining us, hope to see you right back here tomorrow night. This is bbc world news america. Funding of this presentation is made possible by the freeman foundation, newmans own foundation, giving all profits to charity and pursuing the common good for over 30 years, kovler foundation, and union bank. Union bank, and beijing tourism. At union bank, our relationship managers work hard to know your business, offering Specialized Solutions and capital to help meet your growth objectives. We offer expertise and tailored solutions for Small Businesses and major corporations. What can we do for you