Some of the biggest Financial Institutions including jp morgan chase, barkleys the royal bank of sc ubs will pay billions for manipulating the Interest Rate markets, one of the least regulated markets in the financial world and one of the largest, about 5 trillion changes hands every day. The traders from different banks didnt act as rivals but rather they worked together to rig the price of u. S. Dollars and euros in a scheme that went on nearly every day for five years through 2012. Eamon javers has more. Deep inside of the posh offices of the major banks, in the private digital exchanges of the private traders was right ought of the mafiainity invited to join the scam. Mess this up and you sleep with one eye open up. And if you aint cheating you aint trying. And yes, the left competition the better. And today that language caught up with the traders as new u. S. Attorney general l lyn announced the massive setty traeders formed a group they dubbed the cartel. It is perhaps fitting they chose that name as it aptly described the brazenly illegal behavior they engaged in on a nearly five year basis. Almost every day for more than five years trade in this cartel used a private electronic chat room to manipulate the spot markets exchange r between euros and dollars using coded language to conceal the collusion. On wall street the reaction was muted. Ubs, barkleys and royal shares of scotland were up and for their part the banks seemed poised to shrug off the settlements with analysts saying some of the penalties were lighter than expected. For example today chase said they do not anticipate future material constraints on business activities. Lynch said the investigation is open and on going but the big mystery is how profital this scam was for the big banks. The department of justice hasnt calculated they made from the underlying scam and that makes it hard to address the fines handed down today. Aim eamon jfrs in washington. The clearest read yet about the near term outlook for ratds. In the merchandise from the last meeting, most policymakers agree that raising rates in june would be too soon. Hampton pearson has the details. In remarkably plane english, minutes from the med meeting say most policymakers agreed that june is too early to race key Interest Rate that have been kept at historic lows since 2008. Data on First Quarter gdp is not yet final. Policymakers are concerned about the lingering impact of the strong dollar on u. S. Exports and the decline in Business Investments due to declining oil prices. More ammunition for economists and analysts seeing the fed staying on the side lines until rater later in the year. This will direct the weakness back to the fundamentals in the u. S. That has been ignored as of late and this justifying the fed to remain on hold until the earliest of the latter part of 2015 and holding the fed on the until 2016. And the feds say janet yellen did discuss send an Early Warning that a hike might be imminent ant the and the timing will be on a meeting by meeting basis saying the markets are prepared. And the markets from an equity stand point have been marketing a slower but more consistent move up in rates over the next six months. Now whether the bond market preempts that because of a sustained movement in oil prices or because of inflation, it is clear there is some expectation for it. By the time the fed meets again in midjune it will have two more job reports and revised data on Economic Growth before deciding what is next for Interest Rates. Im Hampton Pearson in washington. That data depended federal reserv is looking at weak economic First Quarter growth and the Government Agency charged with calculated the growth rate acknowledges problems with the numbers. As Steve Liesman first reports, First Quarter data has been weaker over the past 30 years and today the bureau of Economic Analysis aaware of the issue and pledges fixes over the next several months. The minutes in the Federal Reserve werent enough to lift stocks which spent the day around the flat line. By the close the dow jones average fell 27 points to finish at 18285 and the nasdaq higher by two points and the word today were the airlines on the notice to cut fares and much of the stocks off as much as 10 . General electric gave information on the finance asset sale coming as it has more than doubled a target from benefits from the purchase of all stones power business. And johnson and johnson is predicting big returns for one of the biggest businesses pharmaceuticals. The largest maker of the health s outlined a strategy to get pharma sales flying. But investors gave the plan a cool reception sending shares lower in trading. Meg terrell has more from the headquarbrunswick, new jersey. Johnson and johnson is the Worlds Largest health care company. And pharmaceuticals is the largest business bringing in more than 32 billion last year. That accounted for almost half of the j j sales and the majority of the profit. Today the company for growth to 100 analysts and investors in the home town of new brunswick, new jersey. The ceo in an interview explained what is driving the biggest unit. If you go back since 2009, weve launched 14 compounds and if we look forward between now and 2019, we expect to have 10 new compounds. That is 10 new drugs they are planned to submit for Regulatory Approval each with the potential to bring in more than a billion dollars in annual revenue. Youll have some wins and some that dont turn out the way you expect but over all were very confident in the ability, particularly based on what weve been a do over the past several ye impac patients and drive this innovation going forward. Growth is important as they face significant pharma challenges. The pharma drug ol issio is expected to be taken over and they may become vulnerable to generic competition by 2019, including th arthritis drug recommendic aid. It is the largest product of the company and the patent will expire in late 2018 and the question now for investors and for the company is will we see bio similar competition prior to that . They detailed plan to bring to market meds for pain arthritis and insomnia and other items and they laid out their outline for what medicine should look like over the longterm. I hope you will go to your doctor and be screened for 3050 cancers and those which are deadly and well deliver cures on many diseases and we can prevent the diseases by vaccines. But first though the near term where j and j is hoping to reassure they have plans for growth. For nightly business repor im meg terrell in new brunswick, new jersey. Still ahead, are bond mutual funds and certain etfs a bigger risk than you think. What regulators are saying about these popular investments. Labor organizers and workers protested outside of mcdonalds headquarters. They demanding higher pay. 15 an hour. Mcdonalds said it would raise e starting minimum wage to 1 above the local minimum wage at companyowned stores. The demonstration comes ahead of the Company Shareholder meeting scheduled for tomorrow. Th protests come one day after los angeles will increase its city wage. Hiking pay to 15 an hour by the year 2020. The current minimum wage is 9 an hour. That measure would require business with more than 25 employees to comply while smaller businesses have an additional year. And one company that recently increased pay for some of the workers is target. That Company Reported earnings and retch that top revenue that topped analyst expectations citing Strong Demand at the center of the growth plan and increased the full year Earnings Guidance and sending shares slightly higher to close at 78. 18. Courtney reagan has more. Hitting a earnings bulls eye with results. Target revenue beating the streets expectations with improved comparable sales and in store traffic and the company increasing full year earningss forecast and surprising investors by resuming the Share Buyback program after taking a six quarter break. The Ceo Brian Cornell launched a number of new strategies in early march that appear to be paying off focus on signature categories like style, baby kids and wellness. Sales increased by more than double the average sales race in the First Quarter. Another bonus to the bottom line came from the lower shipping threshold from 50 to 25, implemented early in the quarter. In an exclusive inview the cfe said it is an investment that is paying off. We get a guest engaged digitally and see a sale increase in the store and we see groem increase 2. 5 times an we see shipping cost but we see incremental profitability. While they continue to incur expenses from the data breach totaling 1 e6 Million Dollars to date 166 million to date customers have put it behind them. They count the Lilly Pulitzer collaboration as a success but it wasnt perfectly executed and the website couldnt handle the traffic and many were frustrated with empty carts. We expect to provide a great Guest Experience regardless of where the guest interacts with us. Our teams are going back to understand what went wrong and testing in where we believe the issues were. This never moved the needle financially, but it generated traditional and social media buzz than any other collaboration. Exactly what analysts say the retailer needs to put the target back in its name. Im courtney reagan. Teens are shopping at American Eagle outfitters and that is where we begin the market focus. The earnings soar on better than expected sales and margins. They are forecasting Current Quarter profits to be above estimates as fewer discounts helped. The shares were at 16. 61. A different story for lowes. Missing estimates on the top and bottom line. And the Home Improvement chainsaw samestore sales tumble to 68. 50. And staples saw profits by 40 in the first quarr as store traffic dwindled adding to the company challenging and still waiting on Regulatory Approval of office depot and shares lower to 16. 15. And hormel earnings higher than expected but the second largest turkey processor is warning that the bird flu will impact the jenoy o turkey business and expect the sales to fall 15 in the second half of the year but shared popped 4 to 58. 14 prls. And pep boys saw shared surgeon talkover talk. They have been approached by Golden Gate Capital and other interested parties. They have a market cap of less than half a billion dollars and shares were 16 higher today to finish at 10. 75. Cable stocks like cablevision and time warner jumps on speculation that the French Holding company altice is buying sudden link for 9 billion. And altice is interesting in buying time warner. Time warner was more than 5 higher to close at 166. 55. After the bell sales force announce quarterlies better than expected and hiked the full Year Revenue Guidance and shares popped in after hours trading, during the regular session the stock was off 2 to 70. 16. Williamson omma tops the consensus in the late report today. The samestore sales came in strong but the Second Quarter guidance was weak when this blames on the west coast port slowdown. Shares were up but in regular session it was off at 77. 89. The s. E. C. Is suggesting reporting requirement, increasing the amount of Data Information from asset managements Like Fidelity and glam rock to get information about the assets in their funds, including derivative products and it would cover mutual funds and etfs. And a new report by the oversight counsel identified certain etfs and bond funds to be risky during times of stress the dodd frank law looks for productivities that could threaten the u. S. Financial system. Todd rosen blooj from s p capital iq joins us now. What do you think, are sern etfs inherently more dangerous and could they pose in a time of stress a real risk to the Financial System as the sfoc suggests . There are some that are riskier than others whether you talk about emerging bonds or stocks but plain vanilla etfs tied to the bonds are not risky and not a threat to the overall market place. So the Retail Investor who buys the more traditional etfs does not need to worry about that particular risk given the fact there is always risk in investing certainly, but as you mentioned, most etfs dont pose a Systemic Risk. Right. Like General Electric and johnson and johnson are strong and so are those bonds and the etf that holds those underlying securities will have strong liquidity. If it doesnt trade that often, you might not be able to get out as quickly as you want to. But the good thing about etfs, you can trade them intraday. And lets talk about mutual funds and they are put under the microscope here too. And i assume were talking about mutual bond funds that invest in less liquid corners of the market in. Yes. And it is more common to see derivatives used in mutual funds so not Holding Stocks or bonds but ways to get exposure to that by not paying as much but by paying with risk. If there are risks, that can amplify the risk the fund is taking on if it is not managed in the right way. We think it is great it is providing more transparency about the underlying assets and the underlying holdings. The more the investor knows about the etf or the mutual fund the better they can handle the financial market. That is my question. People moved into the bond yield partly because of the yield and the perceived safety, about how do you know if that fund is using derivatives to hedge their positions . Well the easiest way is to go to their website and if they talk to a break down and if it adds up to more than 100 , it means they are offsetting with derivatives, if it adds up to 100 using traditi bonds it is a good bet you are holding bonds that are relatively safe depending on their relative bond quality or risk or duration. And what puzzles me is who is at risk if someone went bad in the etfs or the bond funds and who is at risk and is there a transmission that would take a hiccup in one corner of the bond market and then mat p across the whole system which is what the fsoc is supposed to be concerned about . Right. If there is a Systemic Risk or a market failure or Something Like what we saw in 2008 when there was a flood of money out of any risky securities then anything holding the securities will not only lose value but be harder to exist those respective positi if diversified or holding what i would call plain vanilla etfs, you will offset that or if you are investing in less lick witness or highyearold, then the risk is greater. Todd thank you very much s p capital iq. Coming up a Record Number of americans are working for Chinese Companies, just not in china. Here is what to watch f tomorrow. Goldman sachs and mcdonalds meet with shareholders. And Quarterly Results from retails including best buy and the gap. And that is on the agenda for thursday. And china will invest billions in the internet infrastructure and that is to increase speeds by the end of 2017 to bolster the Service Industry in areas like ecommerce green energy and bio energy. Alibaba was at the center of shares of big moves for the yahoo and it was said it will not be taxed after the spinoff. They may change the way they handle spinoff which are currently tax freeway. Yahoo made it clear any tax change would not impact the spinoff and stocks finished higher. And here in u. S. Investment is growing by leaps and bounds and more americans are working for Chinese Companies than ever before height rear in the United States. And Michelle Carusocabrera has the details. Roughly 80,000 americans are on the payroll of companies located here in the u. S. And five years ago that number was less than 15,000. In 2000, it was almost zero. Those numbers are still small regularive relative to chinese size. But still the authors of books about Chinese Investment in the u. S. About 2,000 jobs will be linked by 2020. Because investment is up sharply and rising. 47 billion has been poured into the u. S. By the chinese since 2,000 and 90 in the last five years. And the states receiving the most money, california texas and North Carolina 5. 5 billion and followed by illinois and new york. Many of those investments are in real estate and Oil Production and headquarters for Chinese Tech Companies like alibaba. The largest number of employees, North Carolina is the winner because it is the headquarters of lenovo buying ibm and employeeing 8,000 people. And additionally smithfield has several facilities there, employeeing 5,000 people. And in illinois and michigan those are manufacturing jobs. Americans are uncomfortable and suspicious of chinese company. Sefrlt highprofile purchases have been vetoed due to security concerns. E Chinese Government oil company has forced to drop its bid for unical in 2005 due to strong resistance in washington. Yesterday they discovered a klein hes espionage, stealing trade secrets from two u. S. Technology companies. And the head of the u. S. Chinese relationship said there are bad apples in every bushel. There are some that will come to steal and we do not see those people coming to invest are not coming to steal on mesh technology and they are not closing plants in the United States and relocating them back to china, but are they investing in r d in the United States absolutely. This a very positive story as opposed to the negative stories we hear about china. Whether positive or negative China Investment in the u. S. Is going to continue to grow and grow dramatically. For nightly business rep it is so nice to have you back. Good to be here. Thank you very much. That will do it for nightly business im sue herera. Im tyler mathisen. Im just happy to be here. Have a good night, everybody. Well see you tomorrow. Announcer major funding for quest is provided by. Sethi without water, life as we know it wouldnt exist. Our earths oceans, lakes, and rivers arent only cradles of biodiversity. They also play an essential role in regulating our climate, creating the oxygen we breathe and quenching the thirst of our growing population. But the health of our waters is declining worldwide and human activities are to blame. Im simran sethi and in this episode of quest
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