tv Nightly Business Report PBS April 1, 2015 7:00pm-7:31pm PDT
this is "nightly busines sue herera. big miss. job growth in the private sector slows sharply last month and afte of weak data should investors be concerned? close the spigot as the drought worsens. unprecedented, statewide water restrictions and the impact on business could be big. hefty tolls. thousands of bridges are in need of repair but where's the money to fix them? all that and more tonight on "nightly business report" for wednesday, april 1st. >> good evening, everyone and welcome. we told you it could happen and today, it did. business slowed its pace of hiring in march. today's weak report from the private payroll processer, adp,
has many on wall street and main street rethinking their expectations for the big government employment report out on friday. businesses added just 189,000 jobs in march, says adp. that's the first month of gains below 200,000 in more than a year and it was far short of the 225,000 that economists were looking for. and it wasn't just adp's report that disappointed today. manufacturing activity slowed for the fifth month in a row and construction spending slipped as well. and all of that weighed on stocks. the dow jones industrial average fell 78 points to 17,698. nasdaq dropped 20 and the s&p 500 gave up 8 points. today's reports add to a string of recent economic misses but will there be better days ahead? our steve liesman has the answer. >> reporter: investors riding the market bull these days have been forced to hang on for dear life. as the economy and the market take them for a very bumpy ride.
freezing february temperatures in east have slowed economic growth and a strong dollar and weak overseas growth have flattened corporate profits. add to that a stock market that seems to buck up by triple digits one day and buck down by triple digits the next. over the last four months, we've seen more econ misses than hits. we are moving forward to be sure. and certainly companies have recovered to a great deal but the economy is not getting the breakaway speed that many expected this year. the question for investors is whether they should look through the current weakness for better days ahead. last year sank by 2% in the first quarter and raging back to grow by nearly 5% over the next six months. so is this another case where investors should han rebound? >> i think the economy is going to reaccelerate. i think weather played a big role particularly on gdp in q1. and the underlying growth in the economy i think is 3%.
that will become evident as the year progresses. >> reporter: a big test comes friday with the march jobs report. wall street looks for strong gains of 248,000 jobs but there's downside risk given the weak economic data and a miss in the adp jobs report and the ism manufacturing survey. all an investor can do these days is climb on the back of the bull and hold on tight. for "nightly business report," i'm steve liesman. now to california which today imposed unprecedented statewide water restrictions. governor jerry brown, head of the country's biggest state economy, has ordered residents, businesses and farms to sharply cut their water usage. jane wells has more on california's first ever mandatory water curbs. >> reporter: the drought california is about to get real. it has not been this dry in the golden state since the 1980s when george hurst, william randolph's father bought this property.
i'm at hurst cap and the grass is low and so is the water table. after years of threats, the governor is demanding the state water resources slashed use by 25%. among the orders the governor wants to replace 50 million square feet of lawns on government property with drought tolerant plants. create a temporary rebate for consumers to apply appliances with more efficient ones. require golf courses and other large facilities to significantly cut water use and ban new homes and developments for using water for landscaping unless they use drift irrigation. not yet in this order, water rationing. that is not happening statewide for consumers. however, it is happening in specific communities like the ones around hurst castle here and while the pool is empty is renovated due to a leak, it's unclear whether it will be refilled. this castle gets this water from
mountain springs, which are currently only producing 5% of their normal water. back to you. >> all right, jane thank you. what do these new restrictions mean for businesses? everything from wine makers in the north and produce in the south to disneyland in the south. kevin clouten is managing director for the center of milk institute. good to have you with us. what will these restrictions do for busines we just mentioned, what will it mean for them? >> short-term it means you're going to see an increase this costs. it means water, which is something that we normally associate as being very cheap, even here in california is going to have marginal increases in costs and it's going to be harder to get. and one would expect that the local water providers, because of the mandate to reduce usage, are going to start imposing penalties on anybody who's previously been very free with their taps. >> i was very surprised that 41% of the water usage goes to
irrigation. what is this going to do not necessarily to the bigger farms but to the smaller farmers? >> well, te thing that's been happening actually for the last three years. california's seen smaller farms take it in the ear because not only is the cost of marginal water, the water they can't get from the regular allocations going up but the number of these farms have had to rely on wells. and one of the problems there is that wells are very expensive to drill, especially deeper, an they drain the water out of the upper level water table, a lot of these smaller farms are just simply running out of water. they can't water the crops. >> californians used 181 gallons of water a day by some reports. do you think they'll really cut it by 25%? >> well they certainly will. the question is how quickly. the fact is that california in a per capita basis is more water efficient than we've been at any time going back over three decades. the catch is that our population
keepg up. so yes, it will happen. all we need to do is look at the australian example. they survived a drought of over 12 years and certainly learned how to conserve. so can we. >> what are you hearing from businesses out there about the drought? when i was last out in california you know, some of e smaller businesses that i talked to they were very worried about this situation. it's been a four year drought so far. >> the real problem is nobody can see the end of it. even though the currents are supposed to have started to change early this year and the projection is that the drought won't be as bad next year it's not going to be enough for us to get our water reserves and back and water table back. food will continue to cost more overall operations are going to cost more. and for a lot of small businesses especially businesses sociabitiedy associated with agriculture, their margins shrunk considerably. they have reasons to be concerned.
>> what about the wine grow sners. off. they've invested in technology for distributing water more advanced irrigation more advanced means of recycling water. they've had the best margins, so a lot of the wine growers are going to be in decent shap e catch is that if there's not enough water around for all of their crops, it means that you're going to have a few more years, possibly down the road where there's not as many bottles of california wine and they're going to need the prices to go up. >> what does it do to california's economy, bigger bigger picture, the interesting thing is that california has had one of the best years since the end of the recession over the last year in the middle of the drought, which makes one wonder how much better it would have last year the projection is that california lost over $2 billion in economic output because of the drought. this year the speculation is that it's going to be worse than that. we could be approaching $3
billion in losses. >> kevin, we have to leave it there. thank you, very informative. with the milken institute. >> my pleasure. >> jane wells who you heard in california will be back later in the broadcast with more on what her castle is doing with its land. auto sales tapped the brakes in march after months of healthy growth of the big three. ford sales dropped the most by 3.5%. general motors declined about 2.5%. chrysler managed to avoid a sales dropoff posting a gain of 1.7%. the seasonally adjusted annual rate came above 17 million and that was above the prior month. both down 1% in the st fooe ya chrysler up a nickel. dow component mcdonald's plans to raise the average pay for some of its workers. the world's largest fast food chain will increase wages in company owned restaurants that make up about 90,000 employees. it does not include workers employed by franchisees, run
almost 90% of restaurants. hourly pay tops $10 by the end of 2016. walmart is reportedly telling its suppliers to cut prices. wall street joe thing it is retailer is asking suppliers to do is scale back on joint marketing with walmart and e savings into lower prices instead. walmart has seen its market share erode over the past few years by other low cost competitors like costco and kroger. walmart is also taking a stand against religious freedom bills in its home state. as we reported last night, arkansas lawmakers passed legislation similar to the one recently passed in indiana. now, mary thompson has been reporting on this story for us from indianapolis. she's back in the studio now. and walmart issued its statement urging the governor in its home state to send that bill back not to sign it. what was the response? >> governor hutchinson didn't
veto but asked legislature to recall it or made it more like federal law. this is a surprise as enacted the changes before it was passed but said he'd sign it any way it came to his desk. noting these reflected generational splits in the u.s. said his own son asked him to veto it. walmart tweeted the supports religious freedom and encourages the legislature in arkansas to create a bill that doesn discourage discrimination. >> what changes does hutchison want? >> to look more like the federal law. this might mean changing language to give businesses the same religio individuals and tailoring language. wide latitude in claiming something other than a core tentative religious belief is being infringed upon by a state resolution. arkansas bill allows person to person lawsuits meaning i could file a suit against you if i
felt serving you impinged on my religious freedoms and likely have to be removed. >> and vicerer is a. i could sue if i felt you were denying me service unfairly. >> usually in these cases, the government is a party to these claims. in new york the party doesn't need to be party to the claim. >> what role does business, if any, have in prompting these changes? >> there was an outcry in the home state of arkansas with walmart and then a national level, a number of other companies out there denouncing these laws. it certainly caught politicians attention during the press conference. hutchison actually acknowledged that was one of his concerns. he had been concerned about it beforehand. corporate america making his voice known and state response to those concerns. >> mary thompson thank you. coming up the startling number of nation's crumbling bridges and where's the money coming from to fix them?
president obama today authorized financial sanctions against cyber criminals outside the united states and against companies that knowingly benefit from cyberespionage. president called cyber threats one of our nation's most serious national security challenges. chinese stocks jumped to seven year highs after the governor reported surprise jump in manufacturing there. rebound suggests that efforts to stimulate the world's second largest economy may be starting to take hold. china today also took another step in freeing up its highly protected banking sector. as eunice yoon reports from beijing, it's a big shift for that country's economy.
>> reporter: china is creating its own version of the fdic. government has been talking about it for years and we finally have an actual launch date. may 1st. that's sending a signal to the markets that the government here is willing to make good on some of its pledges to reform the financial sector. under the new scheme, chinese deposits will be guaranteed up to 500,000 or 81,000 u.s. dollars. the move makes formal and official to what extent the chinese government is willing to protect chinese savers. the move is seen as a way for the government to be able to close down troubled financial institutions without creating public panic, especially if the economy continues to slow down and put pressure on the banks. the program is also seen as an important step towards even deeper financial reform. paving the way for the long awaited end of state controlled interest rates. for "nightly business report,"
i'm eunice yoon in beijing. >> while china is working to reform its banking sector the way americans bank and transfer money is changing. the biggest electronics payment of the year, executive want to make sure they stay ahead of the trend. as josh lipton reports there's a lot of money on the line. >> reporter: why write a check when you send money with the tap of a button? that's the appeal of peer to peer mobile payment apps. technology that lets users send funds to one another with their smartphonestp users open the app, find friends to send money to and tap a button. funds are then automatically transferred from a bank account. this market is expected to more than triple to $17 billion by the end of 2019 according to research firm forester. paypal is the dominant player in the space, executives there see a lot of opportunity especially overseas. >> we're still in the early days
of building our network around the world. you know we launched in russia last year. we've been in brazil for a few years. we're in india and china. we're really starting to get more inroads to some big markets outside the u.s. and phenomenal. >> reporter: paypal doesn't break down how much revenue it generates from peer to peer services but conducts billions of dollars of transactions per year. these mobile payment services are described as quick and easy but there are potential drawbacks. one can be security. that's why tech companies are investing in biometrics. technology that allows consumers to use their own physical characteristics, their facial features and eye redness, for instance to complete transactions. apple pay, for example, works with fingerprint scanning technology and alibaba's jack ma would allow users to pay by scanning face with a smartphone.
some analysts are skeptical. >> it's taken some time to get comfortable with the idea of having their fingerprints scanned, so i'm not certain that consumers are going to want to have their eyeballs scanned by their phones just yet. >> reporter: much of this biometric technology is still very much in its infancy, but some analysts do believe it's the future of payments where passwords and pins become a thing of the past. for "nightly business report," san francisco. we begin market focus with news that kraft and mondelez have been charged with trading manipulation. trading commission is suing both of the food giants with manipulation and an attempted manipulation of cash wheat, and wheat futures prices. shares of kraft little changed after the close. before the close, the stock was up 4% to $90.70. mondelez's stock didn't react initially but before the close up slightly to $62.29.
monsanto second quarter down 15% missing estimates corn seed sales weakened and stronger dollar weighed on results. the seed giant said its full year results will also take a hit because of the stronger dollar. shares rose about 4% nonetheless, to finish at $116.96. sears plans to raise more than $2.5 billion from shareholders by offering rights to buy shares in a real estate investment trust or reit. that will hold some of the company's stores and the latest attempt to shore up finances. the stock was off a few cents today to $41.33. simon property withdrawing its $17 billion buyout offer for rival mall operator mays rich after the board decided not to hold discussions on that bid. mays rich off more than 6.5%. simon property rose 1%. as godaddy making wall street debut today. the web hosting company priced
initial public offering at $20 a share above the expected price range. that values the company at estimated $4.5 billion including debt. shares closed at $26.15 a gain of 30%. america's infrastructure is falling apart, as you probably know. a new report says thousands of bridges are structurally deficient and the biggest challenge may be finding the money to make the necessary repairs. hampton pearson has more. >> reporter: there's good news and bad news about the nation east most heavily traveled bridges. 61,000 structurally deficient bridges are in need of repair but that's 2,000 fewer than at this time last year according to the latest data from the department of transportation. not surprisingly most of the heavy travel is on the interstate highway system with cars trucks and school buses, crossing those compromised bridges an estimated 215 million times daily. that's according to an analysis from the american road and
transportation builders association. >> inspect these bridges every year every two years depending on the structure and if there is a safety issue, they'll usually post the bridge for load where you can't have a certain amount of weight on the bridge. they will take steps and even close bridges if they're really unsafe to the traveling public but you don't want to let it get to that point. >> reporter: the the report come comes with set to expire may 31st. installed. when it comes to raising gasoline tax or another long-term revenue source to shore up the highway trust fund. that trust fund is the source of more than half the investments made by states to repair bridges and build roads. right now, at least a dozen states have put projects on hold pending congressional action. >> people are certainly talking about how to address this issue. but it really comes down to how you fund it and is there the
pol will in congress to look at a gas tax increase? so far they've said everything is on the table but they really need to come up with a long-term sustainable funding situation. >> reporter: according to federal government data the lack of infrastructure investment from all levels has created a nearly billion dollar back-up in highway and bridge projects. for "nightly business report," i'm hampton pearson in washington. coming up 82,000 acres of working ranch land and one man's decision not to develop it. but he still gets paid millions. that story n
here's what to watch tomorrow. more jobs data out. the initial jobless claims report will be read. a read on manufacturing with the monthly factory orders report and the fed will hold a two-day conference on economic mobility and the chair, janet yellin will speak. and that folks is what to watch tomorrow. millions of americans are unable to get credit cards, mortgages, and auto loans because they're labeled too risky by lenders. but fico has a solution. fair isaac, known as fico expected to announce a new credit scoring approach this week. according to reports, that score takes things into account like cable bill and cell phone bill. >> here's a change sue. more than 70% of actively managed open-ended mutual funds beat the total return of the s&p 500 in the first quarter this year. here's a look at the best performing u.s. equity funds so far this according to morganning star.
up 15%. de mont eagle, fourth investment growth fund as opposed to and the ober wise small cap fund 12.5% higher for the quarter. ty imagine having 82,000 acres of land. many might cash in and develop it. one well known family took another approach. kept the open space open but still got paid millions. jane wells has more from san zimi in california. >> reporter: it's the crown jewel towering over california's central coast. first castle built by newspaper mogul william randolph hurst is now a state park undergoing some renovations, but this spectacular structure is made even more dramatic because it's surrounded by nothing but open space. how do you feel when you're out here? >> home. >> reporter: steve hurst is the great grandson of william randolph who runs the 82,000 acre privately owned hurst ranch
surrounding the castle. 128 square miles appraised at nearly a quarter billion dollars. >> this property is a show piece. it's kind of a mercedes so to speak. >> quite an argument. >> yes it is. >> reporter: there were plans to put homes and golf courses here. that was unpopular. hurst managed to sell his development rights to the california range land trust, which paid him $95 million in public and private funds plus tax breaks to give up any plans to develop the land. >> when you do a conservation use, it's a fraction of the cost of what it would cost the government to protect it out right but you have landowner that manages the land saves them the tax and have a private steward. it's a win win. >> reporter: the hurst ranch is just the most extreme example of range land trust that exists in eight states. allow ranchers to pull money out of the property in exchange for never developing it. daniel zenton on the range land
trust board but the trust is running low on funds and there's a waiting list of 100 families willing to sell their development rights to preserve the ranch land. >> it allows us to pull money out of the ranch when it's not, right now, a great time to be a rancher. it's financially difficult to do that and i think a lot of people are struggling with that. >> reporter: even the hurst ranch isn't profitable though now the nation's leading producer of grass fed beef. most sold at whole foods but $95 million paid 10 years ago has kept it looking like it always has and always will. >> the fact that we look down at old california instead of a developed california really is quite remarkable. >> i gave away development rights while valuable i think it's more valuable the way it is. so we got to kind of sell it and keep it. >> reporter: for "nightly business report," jane wells, san simian california. big companies having fun
with april fools' day. google maps letting turn the game into a pac man video. i played today. best buy sent out a twee promoting new untangling service. amazon changing its web site to make it look like it did back in 1999. and groupon has offer for a transportation service that lets you order a car driven by cats. arrival to uber, i suppose. i will pass on that one. that's "nightly business report." i'm sue herera thank you for watching. >> i'm tyler mathisen. thank you from me as well. we hope to see you back here tomorrow