Transcripts For KQED Nightly Business Report 20151222 : comp

With sevenyear lows. Those low oil prices are pressuring gas prices which today according to aaa fell below 2 a gallon nationwide on average for the First Time Since 2009. Thats the depths of the great recession. To put that into perspective, that price is cheaper than a gallon of milk and a dozen eggs. And as Jackie Deangelis reports, thats saving americans a lot of money. Reporter the world is awash with oil, and prices continue to decline. The theme of lower for longer expected to last well into the new year. Its a problem for big oil, Energy Companies and the stock market. But its been a boon for consumers. As predicted by aaa, the National Average for a gallon of regular gas has fallen under 2. More than 2 3 of u. S. Gas stations are selling gas below that price. Translation americans have saved more than 115 billion on gas this year. Roughly 550 per licensed driver. It is the holiday gift thats going to keep on giving. We could actually go about 10 to 20 cents lower from where we are right now. And i dont expect prices to rise. As we head into christmas, warm weather and cheap gas will encourage people to hit the road. Aaa says that more than 91 million americans are likely to drive more than 50 miles this holiday season. How low can we go . Unless something changes, we potentially could see that two handle that Goldman Sachs called for earlier this year. For nightly Business Report im Jackie Deangelis. Its been widely documented that isis funds its activities in part through the sale of oil. Isis has made millions from selling the commodities from its fields it controls in syria and iraq. But how are oil crude prices impacting the finances of isis . Deena kezofsky takes a look. Reporter sliding Oil Prices Hit some countries economies more than others. But when it comes to terrorist organizations like others, that raises some of its revenue from selling oil at half the price on the black market, the answer as to whether or not that dip will hurt its funding may surprise some. Oil prices are not going to have a Significant Impact on isis. Isis relies upon a variety of income sources. They rob banks. They extort businesses. They shake down people for protection money. They break into businesses and homes and steal property. Any of these outlawed terroristtype activities are their sources of revenue. Reporter though oil is just one part of isiss revenue, its not insignificant. Lets look at the numbers here. Officials say isis has been bringing in about 40 million per month from selling oil with about 30,000 Barrels Per Day coming from syria and about 10,000 to 20,000 from iraq. Lets not forget, though, the price of oil now is about half of what it was last summer, meaning isis is probably also making less because of that drop. Plus we have to consider military activity against their oil fields, which also diminishes supply. And though oil did make up a large part of its revenue, isis reportedly makes even more money from extortion and taxation. So while a drop in Oil Prices May not be enough to seriously weaken the Terror Network it certainly does not help the islamic States Economic situation either. Some reports indicate that monthly salaries of the Terror Networks fighters which generally run from about 400 to 600 per month for unmarried men has been reduced by about 25 . Still experts remain skeptical. Oil is, if anything, a bonus to their operations. Tomorrow they could lose their oil fields and be deprived of that income. But what they need most are soldiers, weapons, and explosives. And those are not expensive commodities to buy or maintain. For nightly Business Report im deena kezofsky. Spains investors reacted negatively to the results of a fractious national election. None of the four competing parties won enough seats in parliament to form a government. Insurgent parties made major inroads, winning more than 100 seats. In response to the stalemate spains main stock index fell more than 3 1 2 on the day. Julia chatterly reports tonight from madrid. Reporter uncertainty Reigns Supreme here in spain this morning following last nights election. After four years of austerity incumbent Prime Minister Mariano Rajoys party losing their majority. We also saw a strong showing from the far Left Podemos Party which i think is also fueling some of the uncertainty and concern in the market. What we saw is a blowing open of the twoparty political system. Four parties now in play. The problem is that no two individual parties can tie together here to form a majority. So a lot of head scratching over where this will take the country in the future and who ultimately can lead this country forward. I see two options. I see the possibility of a minority government being formed by the incumbent Prime Minister mariano rajoy, and the party itself hinted at that this morning. We could also see a broader coalition, but i think will be very unstable and will likely see spain go to fresh elections perhaps even as early as 2016. Two political analysts this morning telling me that theyre 5050 on that prospect. So it remains a bit of a risk. I think the important thing spectrum. For investors do the Center Left Socialists form some kind of alliance with the far left podemos . That i think is the big risk. Now, when i spoke to the socialists earlier today, they said to me theyre going to do nothing to put spains financial credibility at risk, that the people of spain, the markets come before political ambition. So that might be the Silver Lining here. But for now all options are open. The Coalition Talks will begin today. And well just have to wait and see. For nightly Business Report im Julia Chatterly in spain. In china leaders there today approved an economic blueprint for next year. According to the wall street journal, the plan was laid out in a closeddoor meeting of senior party officials. The plan attempts to reduce industrial overcapacity and cut the stockpile of unsold homes. All an attempt to restart growth. Specific details arent expected to be released until march when that countrys legislature convenes. But as eunice yoon reports from tengshan, china the steel sector of the worlds second largest economy is also struggling. Reporter outside a Government Office in the biggest steel town in china a faceoff between police and workers who demand payment after a steel plant here shut down. We want our back pay and our medical insurance, he says. Were not asking for much. Thousands of workers lost their jobs at the tang suntin 34r57b9, one of numerous mills that have gone under across the country. Already this year chinas Steel Association estimates the industry has lost nearly 9 billion. These people say that the factory has turned its back on them, so now theyre pinning all of their hopes on the government. But the authorities seem more concerned about silencing them and us rather than listening to the workers concerns. Tangshan is home to more than 300 steel mills. In recent times its turned out beans and coils for chinas roads, bridges, and new properties, producing more steel than the entire united states. But with the economy slowing down the citys once mighty industry is stalling. Too many factories competing for too little demand. Some stateowned factories were told are running at a loss. Shipping excess products overseas at extremely low prices. While Many Private Companies like tungshan sunting go idle. Chun worked in his plant for nearly three decades, earning as much as 500 a month. Entire families worked in the same plant. Multiple generations, he says. Together they could make a monthly salary of 1,500. Now they have zero. His health ailing, chun believes the government should step in to bail out his employer, a former stateowned company which the authorities have encouraged to go private a decade ago. It was a mistake to make it a private company, he says. We used to be guaranteed jobs. No longer the case in chinas slowing economy. For nightly Business Report im eunice yoon in tungshan. And on wall street today stocks did finish higher helped by a rise in shares of apple and microsoft late in the day. And a rally in hospital shares after the white house said more americans signed up for Subsidized Health insurance. We reported on that for you on friday. The Dow Jones Industrials up 123 points. To 17,251. The nasdaq gained 45. And the s p 500 added 15. And still ahead, taking to the skies. Meet the entrepreneur who is hoping these little drones turn his Small Business into an even bigger one. Bmw north america has been hit with a 40 million fine from regulators. The national Highway Safety Administration Says the automaker failed to promptly tell owners of recalls involving its mini cooper side impact crash test. As part of the deal the company admitted to violating u. S. Regulations. The ridehailing company lyft is expected to raise up to a billion dollars in a new round of financing according to bloomberg, which cited a delaware state filing. The latest round of funding could value lyft at more than 4 billion. These are very cool. Theyre one of the hottest gifts this holiday season. Hundreds of thousands of drones are expected to be sold this month. And they now face some government regulation. Weve been reporting this, that starting today those who own drones will have to register them with the federal aviation administration. But with the new rules for this indemand gadget one entrepreneur is finding big opportunity. Mary thompson reports from the new Jersey Drone Academy in waynegoes, new jersey. Reporter drones getting plenty of buzz this holiday. The faa forecasting americans will buy 800,000 recreational drones in the fourth quarter. An estimate that has new Jersey Drone Academy owner jim barnes bracing for a postchristmas rush. Im expecting probably next year before june probably up to 500 students. Reporter thats a big increase from the 71 students barnes taught after opening the academy this spring. Hes moving to a bigger space, turning a former driving range into a netted facility where come april anyone over 14 can take a series of classes on drones. They will learn safely how to build, program, and fly a drone. Reporter 15yearold owen ford is a former student and a longtime fan of these unmanned aerial systems. I really like the strangeness about it. I like how outlandish and i kind of went in the hobby from there. Reporter with interest in drones soaring the faa is taking action to make sure our skies remain safe. Federal workers visited big box retailers selling drones to educate workers on how to operate them properly. And starting today, owners need to register their drones or face Civil Penalties of over 27,000 and criminal penalties of up to a quarter of a million dollars. The faa sees the registration process as a way to educate users on how to fly safely and within the laws of the land. Like keeping drones below 400 feet and five miles from an airport. Hob yifts will learn those lessons at the academy but thats not the only lesson its targeting. Barnes partnering with Professor Mike schumer of the new Jersey Institute of technology to conduct research with drones and to drain First Responders on how to operate them. They can permit First Responders to communicate much faster. They make decisions faster. If they can make decisions faster, the likelihood of saving lives is there. Reporter barnes also working with the Jersey City School system on a program to get kids out of the classroom, into the field so they can put drones in the air. Expecting the skys the limit when it comes to the future of drones. For nightly Business Report im Mary Thompson in ringose, new jersey. Now for the drone. Regulators reject staples bid for office depot and thats where we begin tonights market focus. The trade commission turned down the revised acquisition offer. Staples says the ftc isnt making a counteroffer and it is still willing to enter negotiations to address the concerns. Staples rose a fraction to 9. 39. Office depot off 1 1 2 to 5. 33. Oracle has settled allegations by the federal trade commission. The ftc accusing the company of leaving up to 850 million pcs susceptible to hacker attacks when it released security updates for its java software. No comment from oracle. Despite the news shares were slightly higher to 36. 42. Investors getting a chance to react to junipers security issues. The company says it has discovered two Security Problems that could affect one of its operating system products. Reuters reports the department of Homeland Security is working with the firm on its investigation. Shares tumbled about 5 to 27. 25. And the centers for Disease Control says it is investigating a more recent batch of e. Coli cases linked to chipotle. The cdc doesnt know yet if this is part of a larger outbreak that started back in october. But the agency says five people have been reported sick. Shares fell 3 1 2 to 522. 01. Tyler accurativist investorl icahns firm has hiked its bid for pep boys to nearly 1 billion continuing a tug of war with bridgestone. Pep boys says its board has deemed icahns offer a superior proposal and gave bridgestone until midweek to respond. Shares rose almost 7 to 16. 85. A positive note from an analyst lifted shares of fitbit in todays session. Pacific security says the fitness band makers holiday sales have been exploding. Since a weak black friday performance. Shares were almost 5 higher to 29. 10. And mcdonalds is considering a sale of part of its stake in its japanese arm. Thats according to a nikkei business daily report. The unit could go for more than 800 million. Shares rose a bit to 117. 69. And as the year winds to a close, many stock market watchers are looking back at 2015 to see which stocks had really lousy years, underperforming their peers. Dominic chu takes a look at these misfit stocks and whether their luck may change in the new year. Reporter many stock Market Investors are already taking a look at whether the current environment has created potential bargains. In other words, which stocks that have fallen out of favor could be the big winners next year. Think of them as the misfit stocks, the ones cast off by investors. Now, the most notable place in the market for those misfit stocks is the Energy Sector. By far the worst performer in the large cap s p 500 index, losing a quarter of its value for its Energy Stocks in 2015. But are there parts of the beatenup sector that could now be value plays . We see value in the part of the Energy Sector that were finding in marketing. All those are going to do fine. And dont forget, there is a potential for an upside surprise if we get any type of demand growth in 2016. Its not just about the negative sectors, though. The years bestperforming large cap sector is consumer discretionary, which encompasses everything from retailers to Movie Companies and tv companies. That group, that sector is up 7 as a whole. But Companies Like gap stores, also michael kors and macys and other Retail Stocks have been lagging behind. And thats leading some experts to look at it and other parts of the market for potential bargains. I do think companies that are inexpensively priced, low p e ratios, low price to sales, and that pay generous dividends are where you want to be heading into 2016. Generally speaking, theres more cautious optimism about potential market returns next year. While the bears will point to considerable headwinds like the possibility of slowing Economic Growth globally or the strength of corporate earnings and geopolitical risks, thats just to name a few, some of the bulls think that 2016 is shaping up fairly well. This time last year valuations for stocks in general were very high, and so was optimism as we enter 2016 we actually see pessimism very, very high and valuations coming something closer to something reasonable. And so with a 3 Global Growth rate were expecting, we think its a good year for stocks in 201637. All of those points and more are going into how investors going into preparing for the coming year. For nightly Business Report im dominic chu. Warmer than usual weather isnt bringing good tidings to some of the nations retailers. According to weather companies, the mild temperatures are expected to last right through christmas for much of the nation. Joe feldman, senior managing director at Telsey Advisory Group joins us now to tell us which retailers will benefit from this warm weather trend. Joe, we sa