Trumped estimates by 29 cents. Revenue of 17. 7 billion. Just about in line with forecasts but was 11 higher than last year. Investors like what they saw sending shares spiking in initial after hours trading as you see right there. John fort has the one key thing in the report investors need to watch. One take away from the google earnings calls that youtube is a big star in this report. Cfo reporting that viewing time of youtube videos was up 60 year over year. Thats the best growth rate in two years. Mobile viewing time was up 100 and that helped google despite the currency headwinds that knocked revenue down 1. 1 billion. It would have been 1. 1 billion higher. That combined with expense discipline sent the stock a lot higher after hours. Guys back to you. John thank you. Upbeat earnings and progress in greece helped send the nasdaq composite to a new high. By the close the Dow Jones Industrial average was 70 points higher to finish at 18,120. Nasdaq was 64 point higher. At that new record. And the s p 500 was up almost 17 points. Netflix was the topper forming stock on the s p 500. Shares surged 18 to a new high after a Strong Quarter and sharp increase in subscribers as we told you last night but even though the company is growing gang busters netflix is about to face a whole lot more competition. Streamsing video pioneer net nix is the Industry Leader with 65 million subscribers around the world drawing a range of rivals. In addition to amazon ramping up its investment in original content for its prime service hbo and show time launched direct to consumer streaming apps and now theres a new kind of adversary. Traditional providers offering slimmed down Digital Content bundles and thats not all. Facebook may have some play in this longterm. Youtube should have some play in this. In the past they should have had a play in this and they havent. That was an underexecuted opportunity for them. Amazon will be out there. What he says will distinguish the service is the content. Saying its originals in particular have been a massive draw for subscribers. Thats why netflix is ramping up its investment in all type of originals, series documentarys and featured films for a scope of content that will help it stay ahead of rivals. Especially since netflix isnt planning on raising prices. 9 a month for new subscribers. Charging 15 a month. Show time is being featured 30 days free but thats an 11. 99 product and you think about where the feeling is given the amount of usage. Theres no way that the usage of hbo or show time is near netflix. Its not a winner take all gail. While amazon and others are growing quickly so is netflix. So whats happening is everyone is maintaining their relative share but the total amount of internet viewing is growing at a very vigorous rate. So i think theyre experiencing significant success on their investment as is hulu. Well see that with hbo now. Because theres massive move from linear programming on to the internet. One sign of the growing power of streaming video, thursday netflix earned 34 emmy nominations. They went from 0 nominations. Also to buy hbos 126. And now results from dow component goldman sachs. The Company Reported its smallest quarterly profit in nearly four years. Earnings fell nearly 50 as fixed income trading dropped and litigation expenses rose. Shares of the bank closed down 1. 78. A fellow blue chip United Health also a dow member that fell in trading today. Reported higher profit for the Second Quarter and increased its full year outlook. The company benefitted from increased membership in its insurance operations but analysts are concerned that medical costs grew at a greater rate than expected. That pressured shares today slightly as you see there they finished 124. 93. To the economy now and the number of americans filing new applications for Unemployment Benefits fell more than expected last week. Initial claims dropped 15,000 to a seasonally adjusted 281,000 last week. Levels below 300,000 are viewed as a sign of a healthy labor market. The job market being closely watched by the Federal Reserve and today chair janet yellen told a senate panel she expects to see further gains in wage growth. I would expect to see a pick up. Its not a certainty here but it is and to my mind it is evidence of some remaining slack in the labor market so thats my forecast is that we will see some pick up in wage growth. Yellen also said three wage measures watched by the fed are employment cost index, Hourly Compensation and average hourly earnings. Housing is also a key component of the economy and today a new report showed home Builder Sentiment is at the highest level in a decade which was the height of the housing boom. According to the National Association of Home Builders builders are optimistic about the outlook of sales which are supported by job growth and relatively low mortgage rates. New mortgage rules have been put in place since the government passed the dodd frank act nearly five years ago as a response to the financial crisis. The protections that grew from it proposed a vast array of new regulations on lenders and borrowers but are we better off and safer when it comes to mortgage lending . The effect of loose lending during the last housing boom was abundantly clear. Nearly 7 million u. S. Homes lost to foreclosure. The response a credit lock down caused by new lending rules under dodd frank. For lenders, this is all about paperwork, verification and doing a lot of the grunt work that was ignored or passed over before the crisis. The rules fill thousands of pages but are pretty simple. Highly risky loan products were banned. Borrowers now have to document their employment and at the time level. Lenders must disclose all the costs involved in each loan and most importantly lenders must verify a borrowers ability to repay. If youre a high credit quality consumer dodd frank just made it a much bigger pain in the butt to let a loan. You have to sell out more paperwork. You have to dig out more tax returns. You have to find information to lead to retirement accounts. Stuff that was never asked for before but if youre on the low end of the spectrum it has made it tougher to get that mortgage. Tight credit is blamed for a still falling Home Ownership rate now at the lowest level in a quarter century. Even the Federal Reserve chair readying to raise Interest Rates is on that band wagon. Demands for housing is still being restrained by limited availability of Mortgage Loans to many potential home buyers. Tight credit is also blamed for a shift in the lending landscape. Large bank lenders are moving out and independent nonbank lenders are moving in. I think dodd frank not only does it add complexity but adds a lot of confusion. Also adds significant costs in both time and labor. Big banks have other businesses that are more lucrative. There are so many ways to make a mistake and the banks learn from the financial crisis that the regulators will keep coming after you over and over and over again. So lending is less attractive to big banks. As a result nonbank lender home depot tripled in size over the past year. But its at the expense of innovation. Its about making certain that we double check and triple check and making absolutely certain that all the is are dott are crossed. If you dont and you make a mistake, once you make a mistake as a lender you wont be around for long. The home loans made today are the most pristine in history but also made in the slowest pace for decades. Up next when are workers employees and when are they contractors . New guidelines to finding that business have the potential to rock businesses small and large. What is inside all the Campaign Money war chests . The latest filings give us a glimpse of how the fundraising is going. The first detailed accounts were released yesterday for the Second Quarter and aman has been combing through the filings. The results are out. Who is leading, who is lagging and how . The results are out and what youre seeing is a real surge here in fundraising for jeb bush and also Hillary Clinton on the democratic side and Bernie Sanders also raising a lot of money here. Take a look at the Top Fundraising totals for the campaigns. Starting with Hillary Clinton at 47. 5 million raised for her campaign. Bernie sanders, large chunks of change here. Then ted cruz with 14 million. Marco rubio with 12. 1 million. Jeb bush at 11. 4. Put an asterisk next to that money. Then carson paul and graham rounding out the field here. All right. You know Campaign Fundraising isnt the whole story. Whats the other key piece of all of this . Thats the key features were seeing. Its not just the campaign themselves raising money but the super packs outside of the campaigns control raising enormous amounts of cash. Take a look now at the super packs themselves and the fundraising that they have done and youve sustain picture changes a little bit, jeb bush at 103 million for his super pack. We also see cruz with 38 million and rubio with 31. 8. Clinton with 24. 3. Then we see perry, kasik, christie and fiorina at the bottom of the list with 3. 4 million raised. So once you factor in the super pack money the picture changes dramatically guys and thats the story of this campaign year. A lot of this money will be outside of the direct control of the candidates themselves. Thank you very much. Greece received a Financial Life lifeline today when the head of the European Bank increased commercial lending to greek banks. Mario draghi at the European Central bank meeting, is he going to give more liquidity to the greek banks. We got the answer quickly. Yes. Thanks to the vote in greece last night and the financial arrangement in the shortterm which will allow greece to make the bond repayment to the European Central bank on monday 20th. Very good news in that sense. A lot of rumors about whether or not the banks will be able to open on monday. Sources close to the central bank telling us to be cautious at this stage. Its just see early to tell. Similar stories as far as capital controls are concerned. All very difficult to tell. Mario draghi was asked about what he thought about the talks between countries like germany and others and whether or not greece can leave the euro zone. He harsh words on that too. This union is imperfect. Its fragile and vulnerable and doesnt deliver all the benefits that it could if it were to be completed and so the future now should see the size and steps on further integration. He was forced to admit its not up to the European Central bank to decide whether greece leaves or stays in the euro zone but he did say at no point have we ever believed greece would leave. Perhaps very strong words. Coded message to germany that still suggests greece should or could leave at some point in the future. For nightly Business Report im julia in frankfurt. Citigroups profit surges and thats where we begin tonights market focus. Earnings and revenue topped expectations. Sharply lower legal costs and strong trading results. It was the highest quarterly profit in 8 years. Shares were up to 58. 59. Ebay out with mixed results the day before it spins off its paypal unit. The company beat on the bottom line but the top line the revenues those results were below forecast. The firm announced an additional 1 billion in its Share Buy Back program. Separately it will sell its enterprise unit for nearly a billion dollars. Shares were more than 3 higher on that news to 65. 59. And sherwinwilliams cutting its outs look for the year. This is stronger dollar and rain weather demands for its products in certain markets. Shares off 7. 5 to 26123. Garmin saw its shares plunge in todays trading session. Disappointing Earnings Guidance and cut the yearly profit forecast. It blames increased promotions. It slipped 7 . Matel swung to a loss and posted the Second Straight Quarter of declining sales. They blamed Weak International demand for the barbie doll. The stock ended the regular session almost 2 lower at 2515. A big beat on both the top and the bottom lines. Despite that the Oil Field Services points higher vieder saw its quarterly profit decline from last year mainly because of restructuring charges. Shares popped initially in after hours trading. Before the close it was up to 8389. More business travellers are using uber over traditional taxes according to certify. Uber overtook taxis as the most expense form of Ground Transportation in the three months ending in june. Based its filings on millions of trip receipts at its north american clients. Uber is one of Many Companies that make up is to called gig economy which relies on independent workers for shortterm projects. The rise of these companies sparked a debate over when workers are employees and contractors. It could have implications for businesses across the country. Just yesterday the Labor Department issued new guidance on the topic. Hes at georgetowns universitys lacourt school of public policy. Nice to have you here. Thank you. Nice to be here. It seems as though the Labor Department is broadening out the definition of employees. Is that a correct read . Theyre trying to. Theyre trying to. Historically the issue has been who really controls the work the amount of work whose equipment, Labor Department is now saying if the worker really depends on the company for the job, for the work at all then they really are an employee and they have offered a broader set of guidelines to determine that. So that is what they wanted to do. In the case of uber who controls the work there . Well that will tonight to be debated. The courts have to weigh in on that. You can make the case that the worker owned the car and chooses when and how much to work. They take some initiative in terms of how many passengers they pick up and how they drive. All of those would argue for them to be independent contractors. On the other hand if the worker is completely dependent on the company for the job at all it could go the other way. The courts will have to help us sort these out. Whats the implications for big businesses versus Small Businesses . Who do you think this change effects the most . Well if someone is classified as an employee it raises some costs in terms of overtime minimum wage, Social Security and unemployment taxes. I think it probably effects Small Businesses more because they have fewer margins they can adjust on. Bigger companies can try to take some of these fees out of the wages paid to the workers. Smaller companies have less flexibility on that. On the other hand we just talked ability uber. Theyre a very Large Company this will effect a lot. It depends on how many of these workers are effected by these decisions. I was going to ask you and you touched on it there, why does it matter . It matters because once youre called an employee the company is more responsible to provide benefits say under ball balm care or to pay overtime and minimum wages. If youre an independent contractor they dont have to worry about that. Some can come out of the workers pay. They can be charged a fee. But not all of them. It does cost the company more. Thats why a lot of companies would like to keep these folks as independent contractors if they can. Which i would think would lead to a lot of legal challenges. It will. The Labor Department has drawn a pretty fuzzy line. Theres six factors to help determine the answer to the question of does the worker depend on the company. The courts really have to weigh in about where that line gets drawn. Thank you very much. Appreciate it. Thank you. And coming up the nations second Largest Pension Fund uses indexing to invest. But is it the right strategy for you . My interview with the chief Investment Officer next. And heres what to watch for tomorrow. Dow component General Electric will report its quarterly results. A widely watched indicator of inflation is due and also on the data front, Housing Starts an important read on the health of that industry and that is what to watch for friday. Well when one of the biggest Pension Funds in the country makes a move investors Pay Attention and yesterday i had a chance to speak with the head of the california state teachers retirement system. Thats the nations second largest pension outfit at delivering alpha and Investment Conference cosponsored by cnbc. About 70 of your u. S. Equity portfolios basically indexed. Why does that work for you . And for the portion that isnt indexed, what do you look for . It works for me us and it works for individual investors as well because its low cost. Often times active management is expensive and doesnt out perform the market. We found that three quarters of the time an active manager is not going to beat that broad market so its easier for us to own the entire market. We dont just own the s p 500. We own russell 3000. So we own 3,000 stocks in the u. S. And when stocks go up 1 we go up 1 . Thats the smart way and the efficient way and then when you play on the margins what are you trying to do and where do you find the extra return youre looking for . Thats part of the challenge. We often said alpha repeatable out performance is difficult to find and were going to do it through a small cap scenario with the smaller stocks where you start to see growth and value make a bit of a difference. Well be investing with people that do a deep dive and a deep analysis into the company and try to add value. Its hard to find those managers. Theyre not as strong overtime. Biggest Single Holding today is . Apple stocks. Largest stock in the usa. Whats the biggest stock in the usa. Indexing alone. Exactly. It would be the biggest one. I should point out when we index our cost is literally a fraction of a basis point on a 50 billion portfolio. Its in the hundreds of thousands of dollars. A big different Fee Structure than a mutual fund. A lot of endowments and public Pension Funds like yours have started to move into alternative investments. They have big holdings and hedge funds. Where does that play in your fund and is it expanding . Are you buying more private equity hedge funds . Its about a third of our portfolio and it will stay about a third of our portfolio. Were 23 billion because were so huge in private equity. We think thats about the max of the large size you can do. For about 25 billion in real estate. We can probably grow that but real estate is fairly valued right now. Were starting to grow our portfolio in infrastructure and other longterm assets. How important and how limiting are what you describe as the esg principles under which you have to operate environmental, social and government issues. Is it net a positive for you or restraint for you and your shareholders . Right now we believe its going to be a net positive and its not going to be a value add. Its going to be a risk reduction. Because what were trying to do is avoid environmental risks, social risks that we think our industries are going to die because theyre not adding value and we have long argued for over 25 years that good Corporate Governance adds value. In almost every case in every asset class i can make the argument that its a risk but also an opportunity for gains. One of the points made earlier today was that in the world of big data the costs, the externalities will be easier to account for and a bigger risk. No question about it. Lets take environmental risk. Companies pay to dispose of their water waste, their physical waste, at some point we believe theyll be charged to dispose of their gaseous waste. You want to factor that in and its going to effect earnings. Thank you very much. Thank you, sir. California state teachers retirement system has 193 billion in assets under management. The point about big data changing the way costs are accounted for and charged to companies. Its coming in a big way. It sure is. Thats an awful lot of money to manage. Fascinating. Learned something yesterday. Thats nightly Business Report for tonight. Thanks for watching. I learn something every day. I know you do. Have a great evening everybody. Well see you tomorrow. The following kqed production was produced in high definition. [ music ] yes, check, please people. No its all about licking your plate. The food is just fabulous. I should be in psychoanalysis for the amount of money i spend in restaurants. I had a horrible experience. I dont even think we were at the same restaurant. And everybody, im sure, saved room for those desserts
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