Im susie gharib. We begin tonight with a stern warning about Climate Change and the huge economic risk for american businesses and investors. Now dont think its just another warning and just another report. This one comes from a coalition of prominent Business Leaders and former president ial cabinet members leading the way former treasury secretary hank paulson who managed the financial crisis in the bush administration. In their report, Risky Business they describe the risks of Climate Change as more severe and catastrophic than the housing crisis, and the cost in the hundreds of billions of dollars. They also say u. S. Businesses are in the dark about the dangers and are urging them to take action now to reduce the impact of Climate Change. Earlier today, i talked with hank paulson and began by asking how much time do we have before were really hit with the Climate Crisis. Its both immediate and its decades away, so this crisis is a threat to our economy. Its not a financial threat, but its a real threat to our economy, and in many ways, its more cool and proverse than the housing bubble because once co 2 is in the atmosphere, its there for many centuries, and so there is no possibility of a government to come in at the very end and take action and avoid the very worst outcomes. What do you want american businesses precisely to do . First of all, i want investors to demand that american businesses make more disclosures, make more disclosures about their co 2 emissions, make more disclosures about risks that they face, risks from stranded assets. I want businesses to make longterm investments that protect them, protect their shareholders because the investments they make today are going to be key to protecting the economy in the future. Now youre calling on a national tax on carbon emissions. How would that fix the problem . The key thing is until you put a price on carbon, until you charge a company that pollutes for the cost of pollution, its going to be very difficult to deal with this problem. Some people would say that a carbon tax is coming at a time that the u. S. And global economies are struggling to grow. So what is the trade off between the risks to u. S. Economic groelt a growth and the risk to a Climate Crisis . I think a healthy economy and a healthy environment are opposite sides of the staples coin. I think that you could structure a carbon tax so that it allowed us and encouraged us to remain competitive. Lets talk a little bit about the u. S. Economy. Inflation and higher Interest Rates, how considered are you . My big concern is growth and Sustainable Growth above 2 . Inflation isnt my big concern today. Our economy has been growing at 2 roughly since the Third Quarter of 2009 and i think to accelerate growth were going to need bipartisan structure reform, immigration reform, were going to need tax reform, you know, tax system that gives us the revenues we need and allows us to create jobs. As Federal Reserve chair janet yellen, is that hurting or helping the economy in growth . Im not going to comment on monetary policy, what the fiscals are saying. I believe that, of course, we need to give back to a world where asset prices are set by the real economy, not set by monetary policy. I want to look around the world at Key Countries and get a few words from you on how they impact us. First of all, china, weak, slow growth, what does it mean for the u. S. And our economy . China has a growth model that ran out of stream. They need to reform the economy and if they do so and im optimistic they will do so over time, this will be beneficial to the United States. What about weak growth in europe . Obviously, weak growth in europe is not good for the United States economy, but the european economy is doing better now. Rising tensions in iraq. Rising tensions in iraq demonstrate that the islamist terrorists havent gone away. They are very determined. They are very organized and thats a significant threat to stability of the world and the global economy. Well, it was a down day on wall street. Concerns about violence and political turmoil in iraq including unfounded rumors about a Syrian Military strike against militants in iraq that helped wipe out early gains. The major averages started higher following strong data about new home sales in may and higher Consumer Confidence in june, but stocks lost steam around midday about those concerns about iraq. There was a dip in oil prices and therefore Energy Stocks and maybe some good Old Fashioned profit taking as we head toward the end of the quarter. The dow had the lost day in a month causing down 119 points off the lows of the day. The nasdaq, which hit a fresh 14year high before retreating today was down 18 at the close and the s p was off by 12 after reaching an alltime intra day high this morning. Adding to the pessimistic settlement, speaking in new yorked to he said the Federal Reserve should begin raising Interest Rates as soon as next quarter. Thats much earlier than a lot of fed watchers are expecting. Benchmark rates should be higher because the fed is closer to reaching goals it set for the unemployment rate, Economic Growth and inflation. More now on those solid housing reports out today. Sales of new homes surged in may, rising by a far more than expected 18. 6 from the month of april to the fastest pace in six years and also, home prices in the nations largest cities rose by 11 from the same month a year ago according to the latest home price index. That sent shares of a number of Home Builders higher including dr horton, lennar, baser and toll brothers. More listings and stronger employment drove the surge in sales during may and there may be more to it than that. Diana olick has the story. Reporter the new home numbers were good, perhaps too good to be true. You have to take a look at it with such goggles on and its just that. New home sales suffers from the law of low numbers. Reporter sales of newly built homes surged over 18 from may to june according to a Government Survey with a large margin of error. The base numbers are low, down over 60 from their peak in 2005. We release our homes in smaller fasmall smaller phases to keep up with the sales rate. Reporter prices for newly built homes surged 7 with the biggest gains on the pricier ends. Were increasing prices just a little bit, but not in leaps and bounds. Reporter prices for existing homes in april were up 11 from a year ago a smaller yearly gain than march. Prices are still well below the peak eight years ago this month but some local markets may be bubble territory. The reason its noisy, its moved from a National Real estate story to local and some parts of the country are appreciating rapidly like manhattan and the midwest are flat to down. Reporter while some worry about the latest price moves, the most famous home price watcher is unconcerned. Prices are more or less okay where they are. They went up way too high in 2006, and they came down like 50 , and now they are going up. They look about right, and you know, i hope people dont get so worked up about them. Reporter of course, homes are more expensive today than back in 2006. The Sticker Price may be lower, but we dont have the no money down, interest only mortgages to foot the bill. For nightly business report, im diana olick in washington. Two hearings on capitol hill, one in the house and other in the senate and both about the proposed 49 billion merger of at t and direct tv. At t chair man Randall Stevenson testified offering direct tvs broad Brand Service will make it more competitive, expand offerings and could lead to lower prices for consumers. Being able to offer direct tv nationwide is a game changer in terms of economics for deploying broad band. It will allow us to expand and enhance broad band Service Across 48 different states and mostly in under served rule area s. Critics of the deal testified today warning of less competition for paid tv services and potentially higher prices. And there is another expense that may cost you more, thats health care. A new report predicts americans will spend more on health care in 2015, almost 7 more reversing five years of slowing growth and cc connally of Price Waterhouse coopers which issued the report, says more companies will pass along the price increases to employees. Employers have been very actively pursuing the strategy of proving many workers into High Deductible Health plans and this means that the worker could face 1,000, 2,000, 3,000 first outofpocket before their Insurance Coverage kicks in. The report also says part of the increase comes from consumers who delayed treatment during a recession and now seeking the care they have postponed. We told you about Vertex Pharmaceuticals and the promising Cystic Fibrosis medicine. They released results with drugs improving patients long function and looking to get Regulatory Approval to sale the drug in europe and here in the u. S. Shares surged almost 41 . Now, thats pretty impressive performance on a tough day in the markets. Meg terrell has more on the news and potential next big breakout name in Clinical Trial was the most persistent this year and didnt disappoint. The stock soared and so do hope for thousands of patients with the rare long disease. For vertex the results mean big business. The drugs may draw more than 5 billion in peak annual revenue. The company has approval for one drug that helped a fraction of patients. It could extend benefits from 2,000 patients to more than 20,000. Everybody at vertex is focused on two things, getting this medicine submitted to regulators and approved and out to patients and bringing the next set of medicines behind it that offer potentially more benefit out to patients. For the next year, thats what well be focused on. Reporter while questions lingered over the price of the combination, analysts said the data had posite implications for the rest of the secsector. I think what it tells us, big picture, there is a lot of science playing out is working. A lot of the mechanisms and rational makes sense and Clinical Trials are better. Were smarter Drug Developers and lets leading to positive outcomes and that is leading to more successful studies which is leading to bigger stock prices. Reporter if you missed todays big move, never fear. There are bigger scenarios, michael yee points to biogen as a stock to watch. It could move ten to 15 on an ms drug. Intercep data is expected on a Liver Disease drug. Its a risky bet and a move like vertex today is certainly uncommon. Well, still ahead, which is the top state for business and what does it take to be the best of the best . The answer is coming up next. Get ready to pay more to fly. Ticket prices will cost more no matter which airline because the tsa is rising fees. Its 5. 60 per flight, doesnt sound like a lot but double than now. Walgreens withdraws profit goals. The drugstore of rare tore has to figure out part of the planned the lower than expected quarterly profit in a slowdown in the introduction of lower reimbursement of shares. It fell to 72. 48. Carnival cruise expected to be earnings beat in the companys Second Quarter but a gloomy outlook weighed on the shares of the Worlds Largest cruise operator. The profit forecast was below expectations. It blamed increase in the competition in the caribbean but carnival said that bookings for the remainder of this year are ahead. The stock was down 3 today to 38. 23. Shares of Elizabeth Arden fell on news of a restructuring makeover. The Cosmetics Company is aiming to save as much as 35 million a year by cutting staff, reorganizing the supply chain. Discontinuing poorly performing products and closing the purr toe rico affiliate. The dropped to 27. 41. A similar story at avon. Investors got a chance to react to news that avon plans to cut jobs. The Worlds Largest direct seller of cosmetics will cut costs and return to profitability. The strategy could result in annual savings as much as 55 million. Despite that, shares fell about 1 to 14. 55. And the Federal Reserve is giving citi group six more months to resubmit a revised capital plan. The bank rejected the original plan in march, citi needs the okay. Without it, it cant increase dividend. Shares fell to 47. 81. One sign an economic recovery may take hold is happening in those states hard hit by the great recession. Scott cohn reports on one that finds itself on top of a new study ranking americas top states for businesses. Reporter the recession hit the people of georgia where they lived, literally. Georgia over built, over built badly. Then the state lost more than 300,000 jobs in the Housing Market a mainstay of the state economy crumbled. At the worst, georgia lead the nation in foreclosures, one in every 300 homes and as late as 2011 the republican governor had this years state of the state address. Business is closed. Buildings are vacant and the newspapers that serve as the legal organs for their counties were filled with foreclosure notices as families lost their homes. Reporter so what is georgia doing now on top of the eighth annual cnbc rankings of states for top business . For one thing, capitalizing on the built in advantages, even during the worst of the crisis, georgia had a well developed infa sti infrastructure. Rise income may to 7. 2 but that means lots of available workers in a right to work state. More important, those workers are finding jobs at one of the fastest rates in the country as businesses come back to the state. Governor deal running for e reelection is happenty to claim credit. He spoke to us today on a business recruiting trip in israel. It is a State Government where people have trust and confidence and thats the reason that businesses choose to grow in the state of georgia. Reporter his opponent, the grandson of the former president says the recovery is uneven. If youre a big business, political deal maker or one of the governors friends, chances are things are going well for you in georgia today. If youre a Small Business or middle class family, chances are you feel forgotten. Reporter georgia has to repair education, kindergarten through College Schools are underfunded and test scores lag the nation. They bassed a half billion dollar budget increase because states need to be smart to compete. And rounding up the top five in that study, number two is texas, followed by utah, nebraska and North Carolina and you can read more about the top states for business on our website, all 50 are listed there in order at nbr. Com. Coming up on the program. Mcdonnells versus yum, two of the biggest rivals but which one has a better Competitive Edge . Thats next. Well, big Economic Reforms are coming to japan. The government of Prime Minister is overhauling the Economic Growth strategy. What they are doing is announcing cuts to the Corporate Tax rate, plans to ease up on health care and agricultural rules. New initiatives to get women to enter the work force and allow more Foreign Workers into the country. As soccer teams from around the world battle to qualify for the world cup in brazil, nbrs ultimate stock cup puts two of the biggest fast food giants against each other battling out in the global marketplace. Tonight its mcdonneelderry dod yum brands. Reporter mcdonalds is a symbol of the america, its headquarters in oak brooke, illinois. 2013 revenue, more than 28 billion. In 1955 it was open in san beer d california but ray crock expanded it into a global icon with 35,000 restaurants in 119 countries, serving about 70 Million People a day. Yum is a collection of brands, kentucky fried chicken, taco bell and pizza hut founded in 1977 spun off from pepsi. Its placed in louisville, kentucky and 2013 revenues were more than 13 billion. It has more restaurants than mcdonalds, about 40,000 and in more countries, 128. Like mcdonalds the dividends have grown but yum has struggled to find growth at home. With few international competitors, yum gets 70 of the profit from outside the United States. So who will win the food fight . Mcdonalds or yum brands. David palmer weighs in on this. Hes managing director at rbc capital markets. Good to see you again. Good evening. Lets start with mcdonalds, give me one strength and one weakness for them. The strength is that their brand has an incredible presence in the developed markets and that platform has held them in great stead adding sales layers and with those came strong earnings per share in the past. The weakness has been that it seems like the scrutiny of the generation and