Transcripts For KQEH Nightly Business Report 20151027 : comp

Investors are enjoying the ride. With just four trading days left in october, the s p 500 is on track to close out its best month in four years. But there are a number of challenges the market has to overcome during the next few weeks and months, from the fed to profits to data. And as dominick chu reports from the new york stock exchange, many of those challenges will unfold in the coming week. This is a week thats going to be chock full of possible catalysts, possible things that could either drive the market up or down. Lets talk about whats going to happen on the big picture Macro Economic front. Youve got a lot of data coming out. Youve got durable goods coming up later on this week. Thats a sign perhaps of what people are buying in terms of things that are built to last more than just a few years. Cars, airplanes, washing machines. Youve also got of course the second day of a big Federal Reserve Central Bank Interest rate meeting. Will they or wont they raise Interest Rates . All of that ahead of whats going to happen later on on thursday this week when youve got the First Reading of Economic Activity, gross domestic product, gdp here in the united states. And of course whats happening elsewhere in the overall markets with pending home sales. Thats the sale of homes where contracts have been signed but not yet closed. Youve also got Small Companies specific stories as well. Were talking about apple. They come out with their earnings tomorrow. And later on this week youve got oil giants like chevron and exxon, both reporting their numbers as well. There are a lot of possibilities for catalysts that could make that a volatile week. For nightly Business Report im dominick chu here at the new york stock exchange. And china is always a challenge for the market since the health of the worlds second largest economy trickles through the Global Financial markets. This week chinas leaders will map out the countrys fiveyear economic reform plan. In beijing eunice yoon tells us what to expect. Reporter the leaders of the Chinese Communist party are gathering in beijing this week to discuss and set a social economic agenda for the next five years. The fourday conference is likely going to be an opportunity for the leaders to reassure investors that theyre committed to structural reforms. With the economy slowing down there have been increasing concerns that the leaders here are backing away from reforms that could set the economy on a better path. Theres expected to be a lot of discussion about how the market should play a dietive roecisive the economy. This conference traditionally produces growth targets. The current one is for around 7 for the year, and expectations are even among government researchers that the government is going to guide down that number to 6. 5 to reflect the slowing economy. For nightly Business Report im eunice yoon in beijing. And with all that data and news out this week, what should longterm investors keep their eyes on and what will amount to good news or bad news for that matter for stocks . Here to answer that is karen cavanaugh. Shes a strategist for a 200 billion investment platform. Shes with Voya Investment management. Karen, welcome, nice to have you here. Its nice to be here. Thank you. So what is front and center for you . Weve kind of laid out what the market is facing this week from the fed to china to earnings. But what would be front and center in your book . The primary thing that investors should be focused on is earnings. Because think about it. Everything kind of trickles through that earnings number. Theres a global slowdown, oil prices collapsing, it all shows up eventually in earnings. And thats whats happening. Are earnings as bad as we seem to think they are . There was quite a story in the wall street journal this morning. Or are they better than we think they are because so much of the pain is in just a couple of sectors, namely energy and materials and industrials . Not to minimize it. Its working its way through other sectors. But u. S. Corporations, theyre more resilient than you would think. And we always see these numbers that look very, very negative. And they usually surprise on the up side. So i think were still looking at potentially a negative Growth Scenario for the Third Quarter, but companies can surprise. Thats why its really important to stay diversified and not just look at the initial reports because i think theres a lot of u. S. Companies that are really doing what they can to move the ball forward. Right now things still look slightly negative. What about the fed, karen . The big debate is whether or not come wednesday theyre going to raise Interest Rates or whether theyre on hold until next year. What do you think . I dont think theyre going to raise Interest Rates. Since their september meeting data is coming in a little bit more negative. And i dont think theyre going to right now employments doing well but inflation is still very low. Globally inflation is very low. So i dont think theyre going to do anything to kind of upset the apple cart. I think theyre going to wait till 2016. Give me some ideas where i can put some money to work to make some more money. Well, being diversified is always the best thing to do. In terms of sectors i like the sectors where people dont always think about maybe like global reits. Senior loans for steady income. And i do like large cap stocks of course too. And i always tell investors a good mix of stocks and bonds will get you through those rough patches in the market because corporate earnings, they have been pretty flat this year, and thats why the market has been pretty flat this year. But stay globally diversified. All right, karen, well leave it there. Thank you so much for joining us. Karen cavanaugh. Senior Market Strategist at Voya Investment management. On wall street stocks held on to most of 4r569 last weeks gains falling just slightly as investors wait to see what the Federal Reserve does and how earnings stack up and what Corporate America says about profits but what their commentary is, how the economy is doing as well. Dow jones industrial average lost 23 to 17,623, weighed down by apple. It reports earnings tomorrow. Nasdaq gained two. The s p 500 dropped about four. Energy shares like exxonmobil and chevron fell along with oil prices. Domestic crude sank to a twomonth low over concerns of a supply glut and weakening demand. And Natural Gas Prices dropped for a fourth straight session losing nearly 10 today to settle at their lowest level in three years. To the economy now. New home sales tumbled in september to the slowest pace in ten months. Economists are citing higher prices and also slower Overall Economic growth as the reason for that decline. The Commerce Department reports a drop of 11 1 2 , ending two consecutive months of increasing sales. New home sales declined in every region across the country, with the northeast falling the most off 68 from the prior month. That pressured shares of the Home Builders today. And business economists are forecasting modest Economic Activity for the Fourth Quarter. This according to a report by the National Association of business economists. Most of those surveyed. Growth of about 2 in the quarter. Respondents say their outlook for wages, salary, employment and profits has slowed since the last survey in july. And as we reported, the government will report a first read on Third Quarter gdp on thursday. A handful of deals. First duke energy is buying pied nont natural gas for about 5 billion. The acquisition adds roughly 1 million natural gas customers in north carolina, South Carolina, and tennessee and it helps duke shift from coal to gas generation. This is the second time this year an electric utility has purchased a gas distribution company. Shares of duke energy fell while piedmont soared more than 30 . In other deal news, Exchange Operator Intercontinental Exchange is buying Financial Data Firm Interactive data corp. For a little bit more than 5 billion. Intercontinental, otherwise known as i. C. E. , says the deal will help expand its market data business and that deal was approved by the boards of both companies. Manny, moe and jack have a buyer. Bridgestone america will acquire the auto repair and parts chain pep boys for about 830 million. The deal follows pressure from activist investor Mario Gabelli for the company to consider a sale. And they did. Pep boys shares climbed more than 20 today. Mr. Gabelli must be happy. In washington there are reports congress is close to a budget deal and an agreement to increase the debt limit. The deadlines are fast approaching. Money to pay for Government Operations runs out totally on december 11th, and the Treasury Department has said the federal Borrowing Limit must be raised by november 3rd or risk a default. Hampton pearson has been following the developments. What are some of the details, hampton, of this reported budget deal . Reporter well, even as we speak, tyler, the house gop conference is meeting to discuss the october aagenda. And what were hearing as far as possible details of this tentative bipartisan budget deal, it sets spending limits for the next two years through the fiscal year 2017. There would be higher spending on both military and domestic programs to be offset by savings elsewhere. Also a possible Medicare Part b fix protecting millions of seniors from major increases in their premiums and deductibles. Also theres a cautionary tale from the white house today. Nothing is agreed to until everything is agreed to. That from White House Press spokesman josh earnest. So next weeks debt limit deadline, thats what the bond market is worried about. This budget deal, if indeed it is inked, does it lessen the tlaeft a government default . Reporter the reports were getting is we may in fact get a separate attachment, a clean debt limit suspension. The debt limit currently at about 18 trillion. There would be a separate attachment dealing with that until march of 2017 going forward. After that it would be up to the Treasury Department to reset that limit based on borrowing at the time. Separate issues but of course linked. And the real political linkage here, sue, if you will, the desire of john boehner to get those two huge issues off the table before the likely next speaker of the house, paul ryan, takes over at the end of the week. What about the latest on that exportimport bank, hampton . I heard that may be resurrecting because of a parliamentary move in the house. Reporter yeah, this is almost a back from the dead story. Tonight supposedly Bipartisan Group of house members will try to revive the exportimport bank. It stopped doing business this summer after basically leaders let the charter expire. So what happened to get this back on the floor is a majority of members, 218, signed a discharge position. Thats the first step in trying to revive the exim bank legislatively. It will force a vote on the issue. Its rarely used. Over the past 50 years about 10 of the more than 200 discharge positions have won congressional approval. But the odds are in the house, this one has a good chance because both big business and big labor are lobbying to save the exim bank and including some conservative republicans on the flip side have labeled it corporate welfare. It can get through the house. Its fate in the senate is yet to be determined. Hampton thanks very much. Hampton pearson reporting from washington. Still ahead tonight, why the 95 billion beef industry is firing back and rejecting the findings of a new study. Federal prosecutors are reportedly working on a criminal case against a former Goldman Sachs banker. As first reported by the New York Times, the banker is suspected of taking confidential documents from an employee of the Federal Reserve bank of new york. The new york fed is one of goldmans regulators. According to the report, the former banker may plead guilty to a misdemeanor. Goldman would play a 50 million fine under a tentative deal with new york regulators and would acknowledge that it failed to properly supervise its employee. General motors and the United Auto Workers union have reached a tentative agreement. The deal avoids a potential strike and was announced minutes before the midnight sunday deadline. Details were not released but Union Officials say the deal represents significant wage gains and job commitments. The Meat Industry is coming under fire. A report by the World Health Organization warns that red and processed meats have the potential to cause cancer. Courtney reagan has more on the study and what the big beef industry is doing to fight back. Reporter doctors and the American Cancer Society have said eating too much red and processed meat could increase the risk of cancer. Now the World Health Organizations francebased Cancer Agency is backing up that theory. After 22 scientists evaluated more than 800 studies from several continents, the Organization Says consumption of ham, sausage, bacon, and other processed meats can lead to colon and possibly stomach cancers. And puts processed meat in the same danger category as cigarettes and asbestos. The w. H. O. Says red meat is probably cancercausing as well, potentially colon, pan kraet i can, and prostate. However, as with most health warnings, there are skeptics and the Meat Industry is fighting back. The north American Meat institute says the w. H. O. Claim defies both common sense and numerous studies showing no correlation between meat and cancer and cites many studies that show Health Benefits of balanced diets including meat. Commodities futures didnt move much on the news. American Restaurant Association president and commodity strategist David Maloney says thats probably because weve heard about the potential linkage between meat and cancer before. The fact that we didnt see an initial sharp reaction, especially in Something Like cattle futures, which have been on a pretty good run as of late, are actually due for a shortterm correction lower. That we did not see a major reaction by stock prices, it only fuels my initial reaction that the response to this will not be longstanding. Reporter however, if consumers take the warning to heart and pull back on meat consumption, it could spell big trouble for the Meat Industry. For farmers, meat producers, and even shake up the global meat trade balance. The north American Meat institute says the Meat Industry contributes almost 900 billion to the u. S. Economy. Beef alone is a 95 billion a year business in the u. S. , which is the Worlds Largest producer and importer of beef in the world according to the usda. A separate group of International Researchers are putting the statistics into perspective. Global burden of disease project estimates up to 84,000 Global Cancer deaths per year could be associated with diets rich in red and processed meats compared to a Million Deaths due to tobacco smoking, 600,000 from alcohol, and more than 200,000 from air pollution. For nightly Business Report im courtney reagan. Xerox reports its first quarterly loss in years, and thats where we begin tonights market focus. A big charge because of a disrupted project weighed on the companys results. Lower printer sales and a stronger dollar didnt help either. Xerox says it will conduct a review of its Business Operations but a sale of the firm is not being considered. Shares fell 3 to 10. 02. Another down day for valeant pharmaceuticals. That firm defended itself against allegations of fraudulent business practices, which we told you about last week. But the company also says it has named a committee to look into the claims. Shares slipped more than 5 to 110. 04. Ork oracle pulling the curtain back today on a host of new cloudbased series. Coceo mark hurd says the firms ability to compete with others in the cloud space is growing. And if w