tv Nightly Business Report PBS July 11, 2019 5:00pm-5:30pm PDT
♪ this is "nightly busineh report" will griffeth and sue herera. ♪ dow th27,000. market hits a new milestone on optimism over a rate cut, making it even trickier to invest at these lofty levels. new prognosis. the white house kills its prescription drug rebate rule, sending insurance stocks higher, but wil big pharma be the next target? the real world. inflation is more than just numbers. it could mean paying more for your coffee. a those stories more tonight on "nightly business report" for thursday, july 11th. ♪ and we bid you a good evening, everybody, and welcome. the dow and the s&p both closed at record highs today. in fact, the blue chip rally as you heard rallied past 27,000 for the first time ever. investors cheered a second day
capital hill testimony from fed chair jerome powell where hi alled a potential cut in interest rates later this month. health care stocks also contributed to the rise. we willhy explainn a moment, but first the closing numbers for this thursday with the ge industrial ave gaining 227 points to 27,088. the nasdaq was down six, the s&p addedix bob pisani has more on the record-setting day. >> reporter: another day,ot r market milestone. investors cheered comments from the federal reserve signaling that a rate cut is likely just ound the corner. the dow crossed about 27,000 for the first time today and the s&p 500 movedust to the edge of 3,000,nt fraction of a poi below it. close enough. what a difference five yearss. ma the s&p has moved 50% in less than five years from 2000 in august of 2014 to 3,000 essentially this week. the market today is different than it was in 2014. investors have played favorites in a very big way, big tech and
faang names dominate among the winns. amazon and netflix up almost 500 points each since the s&p crossed 2,000 five years ago. chip stocks skyrocketed, nvidia an amd up 700% in the last five years. we have seen big gamesrom broadcom and zie link as well. the bigger companies get bigger andigger, particularly tech related companies. cisco is another example. ere are a few non-tech outliers like united health and home depot that have been big performers but not many. energy stock is down lling, which is no surprise. oil was $500 five years ago and $60 today. the other losing sector is retailersng inclu stock's like macy's and gap downat big. oes it mean that a handful of titans have come toin de
the market? it is about growth. growth is hard to find globa iy soestors are willing to pay up almost anything for growth wherever they can find it. for "nightly business report", i'm bani at the new york stock exchange. so with the market at new highshat should you do right now? joining us to talk about that is patrick chivonic, the chief strategist. welcome, patrick. nice to>>ee you again. hello. >> is it more difficult to navigate the market at new highs? >> right now the economy is more wobbly than the market seems to be. you know, that's why the fed is talking about cutti which is something that the market is excited about, but the economy is slowing and it cou slow further. now, you know, it could pull through. so i wouldn't go so far as to say that the market's riding for a fall, buthere could be bumpier days ahead. >> yes, i mean that's the big conundrum we're facing right now. jerome powell just told us that the global economy isdolowing and it is taking our
economy with it. earnings will be coming out starting next week, and certainly expectations are not very high for those, yet here we sit at all-time highs today. is this simply a stock marke on a sugar high because of the lower rates? >> no, because ironically it is not a market that is gorging on when look at what's really risk. expensive in the market today, it is actually your safe harbors. treasuries are -- you know, are returning 2%,s which barely above inflation. so the problem is that while, you know, if you look and you don't like the risk that you see out there, if you want to take money off the table where do yot it? it is actually more expensive to try to hide from risk than it is to actually ride it out right now. >> s you are a longer term investor, do you just kind of hiay put in market but expect some volatility? >> i think that's really the best choice that you have. i do think that you need to
realistically assess yow much ri can afford. you know, if the market were down 30% in a t year becausere was a recession, how would you cope? you should always be thinking about that, but aou shoulo be thinking about what you are giving up by simply going and hiding under a rock yor ar or two. i think you are giving up quite a bit, both in tms of sho term and long-term gains if you go and do that. >> patrick, thank you so much. patrick shivonic with silver crest asset management nlt we mentioned rally in health care stocks helped lift the dow above 27,000. here is why. the trump administration today withdrew the proposal that have eliminated rebates from government drug plans. that boosted thehares of unitedhealthcare, cigna and cvs, but raised the possibility of new restrictions on drugmakers, which pressured that group
today. meg terrell has that story for us. >> reporter: today it abandoned the plan. here is what it was aiming to do. for medicare insurance plans, beneficiarons pay aly premium and when they get a prescription they pay an oc out-oft cost at the pharmacy counter. how is it determined how much they pay for the medicines? the drug company sets a list price and pharmacy managers negotiate a rebate on the drug, but insuranceco-pays for drugs are often t based onhe list price, not the price after the rebate. and insurane pbms companies take the rebate and spread it across their plan beneficiaries to lower premiums for everyone. wh the trump administration rule sought to do is instead apply the rebates direcy to the price of drugs at the pharmacy counter. so the patient being prescribed the drug could pay a lower pce at the pharmacy, but because the rebates wouldn't be spread across the beneficiaries emiums for everyone could go up. that according to capital streets malinski presented a
problem. >> the concern w premiums going up for medicare beneficiaries -- these are those over 65 and who vote -- would probably not like to see their premiums go up for 2020 or 2021. >> while the trump adenistration rule would h applied to medicare, there was concern it could lead t changes in rebates provimpd byyers as well. those contribute hundreds of millions of dollars in profit to pharmacy managers. that's why those stocks soared today but drug company stocks sank. that's because trump is not expected to give up onue the i of drug prices and may double down on effort that could pharma's bottom line. to parss are tryin comments the president made last week about a most-favored nation clause. >> for years and years other nations paid less for drugs than we do. sometimes by 60%, 70%. we will be and we are working on it right now, we are working on a favored nation clause where we
pay whateverhe lowest nation's price is. why should other nations like canada, or why should other natis pay much less than us? >> reporter: a source close to the administration tells me that's how the white house refers to a rule it has already proposed, tying the prices of some medicare drugs t an international average. trump said yesterday another an iuncement on drug price expected this week. for "nightly business report", i'm meg tirrell. >> the fed chair was back on capitol hill where he sent strong signals the federal reserve is ready and able to cut interest rates this month. >> reporter: the fed chair visit to capitol hill on day two was same as day one.vi he pd maybe a little context for how much the fed might cut july o. even jo >> you don't want to get behind the curve and let inflation drop well below 2%, because what happens is you get into this
unhealthy dynamic potentiallyer lower expected inflation gets baked into interest ra ms, whicns lower interest rates, which means less room for the central bank to. rea that becomes a self-reinforcing thing. we have seen it inapan. we are now seeing it in europe. that's why we think it is so important weefend our 2% inflation goal here in the united states. >> reporter: ave federal res conserved about being behind the curve like yup and japan might be one that might cut more deeply than it otherwise might, o ing what bullets it has reduce rates more effectively. stocks liked what powell said today, in part because it removed any potential risk he might reverse himself from day one. also, powell tended to ignore stronger ni stronger economic data, both inflation and jobata that fell by 13,000. that means the economic data may not matter all that much if the concerns are trade uncertalnty, glconomic weakness and inflation running persistently below t fed's 2% market, then
the data may not deter the fedr reserve what looks like a rate cut at the end of the among. i'm steve liesman in washington for "nightly businestereport." >> mentioned inflation data where prices posted the biggest gain in june. the core consumer price index, sich excluood and energy, rose by 3% and followed four on straightly gains. food and energy are often excluded buthose prices are considered volatile on a month-to-month basis but it is thetuff we pay for every day including things like >> like everything is increasing because salaries are increasing but it goes with the -- it is like gas. u need it. >> as a college student i think it is a little bit like, yikes, when you realize shall o, oh, ie $5 for this much coffee. you have to cut ba w. >> pricet up significantly. i remember when coffee was $0.50
a cup. a medium at dunkin' donuts is 2.85. if it goes to $4, wouldn't do it. >> i haven't paid attention to the pricing. it is kind of a necessary evil. i le coffee and whatever goes up, i'm just going to deal with >> so some people are seeing inflated prices at their local coffee shoput the government data and the feds say that inflation remains w tame. has it right? bob brusk is with us tonight, chief economist at fact and opinion economics. bob, first of all, welcome. thanks for joining us tonight. >> thank you. >> there's that old saying people will always complain about the price of bread and gasoline and inhis case coffee, but is there a glaring disconnect these days between what we are paying on an everyday basis and the tame inflation data we gethe from government and fed? >> i don't think so. i think the problem is that the people tend to focus onrices when they go up, and i think the other problem is that it is a low inflation environment. people's incomes don't gove up
much. when your income isn't going up very much and prices start goiny up, you rea begin to notice it and it hurts. >> so, mpbob, whatt do you think it will have? we heard some people say ifpr es went up too much they would stop buying. other people said they eed theiffee, they're going to keep buying. so if, indeed, it is moreec noticeablese wages are not going up as fast as they used to, what impact might that have? >> well, people can buy beans, grind them at home andndake coffeearry it to work. it will be a lot cheaper. a very practical advice from bob bruska. at this point why is inflation statistically speaking from the federal reserve and the government, as tame as it is right now? you know, jerome powell made a rather profound statement today when he said that low unemployment no longer leads to high inflion, which ishat we were taught in economics schools. why is that the case now? > yes, this -- this
unemployment inflation trade i've noticed in phillips' curve is pretty flat. usually the phillips' curve is dead. you have low inflation in japan, you have low inflation in europe, and we have low prices beinger ged every day out of china and we have a lot of technology aar all around cellphones that help us to check prices. all of this tends to keepve pris low. there's a lot of competition. there's low prices elsewhere in the world, low inflation elsewhere in the world, and incomes aren't going up. so people check tir phones lot to double check prices when they spend money and that keeps prices in ne. >> after mr. powell's testimony today, do you think they cut by 25 or 50? >> i would be surprised if they did 50,sue. i think you will get 25 and i think they're going to try to keep the other 2 pocket.r i don't see the case for 50. >> bob bruska with fndt opinion economics. good to see you, robert. thanks for joining us oonight. >> g to see you too. >> thanks. it is time to look at today's upgrades and downgrades.
goldman sachs launched coverage of the retail sector which cluded a buy rating on walmart. the analyst cites the retaveer's aggres strategy that could drive strong sales growth. the pri targes $123. the stock rose a fraction to 113.92. weight watchers was upgraded to neutral at j.p. morgan. they cite stabilizing growth trends. the$2 price i the stock gained 8% to 23.67. discount retailerll d's was upgraded to neutral from under performing at webb bus securities. the analyst cited stabilizing promotions at the company. the stock rose 4% to 62.85. all state was downgraded to underperform from neutral at credit squeeze with the analyst saying that theer ins margins are under pressure due to weather and competition. price target, $94. that stock fell 1% today to $103.15. still ahead, tech titans may
face a future with new rules . i'm juliaoorstin in sun valley, idaho, where a range of tech ceos are at the allen & co tech conference. that's coming up on the "nightly ♪usiness report". ♪ we got a report today that said the federal budget deficit sidened by more than 20% in the first nine monf the fiscal year. federal spending outpaced government tax recets, due in part to higher spending on military and intereste on th debt coupled with the tax cuts for corporations. thearnternational mon fund is forecasting more
economic pain for the eurozone. the organization says the region faces anemic growth stemming from trade tensions, brexit and italy's high debt levels.f the also backed the european central bank's plans for fresh stimuld. we tou last night that the white house was planning to launch an investigation into attacks onog techn companies imposed by the french government and, in fact,frarlier today ch lawmakers did approve the so-called digital tax setting up a fight with washington. kayla tausche has the details. >> reporter: the white house is fighting back as france moved closer to a new tax on tech companies. the u.s. trade representative launching a representation that could result in nfs tar on france for the fees it says unfairly target u.s. companies for being global leaders. the proposal is named for google, amazon, facebook and apple and would see about 30 pay al services compani an extra 3% on their revenue in france. it is retroactive to cover this
year. french finance ministe lamire defended the move and challenged the u.s. treasurysecretary, g7 and oec countries to reach an agreement. >> the sooner thereatill be intenal solution at the level, france will withdraw its national taxation. >> reporter: experts say this ght is just beginning. >> the bigger question is what will happen inev the nextal months, how other countries outside of the u.s. will react to this, whether or not it will insp ie them tolement their own digital taxes or whether or not it will be a warni not to implement these types of taxes until more international measures have moved forward. ee reporter: the white house is counterpunch has praised in washington, from leading republican lawmakers and busiss groups traditionally critical of tariffs to hawks and doves advising the president. the irony, even as they hit back against new fees on tech overseas, regulators are ramping
up the owncrutiny here at home. for "nightly business report" i'm kayla tausche in washington. delta is seeing tail wind. that's wheree begin tonight's market focus. the airline raised its 2019 profit outlook. they posted record revenue and raised its dividend and unlike its competitor it does not operate the boeing 737 max. >> we do not fly the max, and clearly there was a benefit for the airline in the quarter. i don't think there was a significant benefit. certainly it is not explaining the result we are seeing. onyou know, i know when the plane is going to come back. as we've seen, it has takenha longer any of us expected to see it return to service. is not going to be in place for the third quarter, maybe sometime into the fourth quarter. we don't have a crystal ball on at. >> the stock rose more than 1%t 60.16. t-mobile and sprint are reportedly expected to extend ul their29th deadline for their $26 billion the "wall street journal"
reports both wireless carriers discuss i ownershipues related to dish network. it would be the second deadline t-mobile shares dropped a fraction to 78.26. sprint shares fell near 3.5% to 6.91. shares of fastenall. the wholesale distributor says the trade war with china impacted numbers, specifically with higher tariffs on goods produced in china. the stock fell 3% to 30.36. shares of grubhub fell on fears of newth regulation. "new york post" says that new york state is reportedly looking to limit the fees food delivery companies can charge and require them to be listed liquor licenses when they deliver for restaurants that do serve alcohol. grubhub shares fell nearly 4% as a result today t74 even. ford and volkswagen announced a
. they plan to share intellectual and hardware. a formal announcent is expected tomorrow. folksolwagen does not trade in the u.s. . >> eric vinblad is retiring after serving in the post. he was a 35-year veteran at the company. mark jenkins will take over the reins of the troubled progrre which suf from the grounding of the 737 max aircraft. the stock was up 3% to 359 even. after the bell ilumina warned its fiscal second quarter revenue will be weaker than expected. the company cited weakness in direct-to-consumer market among other things. shares initially dropped and after hours tonight, they closed the regular session down more than 2% at 363.66. a bit earlier in our program we mentioned washington'sd increacrutiny of the tech sector. the potential wave of regation was t of mind in sun valley,
idaho, where tech titans are meeting. julia boorstin spoke t them. ♪ h >> reporter: w apple's tim cook, facebook's sheryl sandberg and twitter ceo siegel walking the paths here in sun valley along with former ceo eric wang, big tech is out in force. so is talk of regulating the giants ahead of antitrust hearings on capitolill next week. sam altman, who funded y kbiniator which funds and add vieadd -- advises, says it will be harder. >> the companies are sort inned but when i talk to most they want regulation. we're in uncharted territor i think e we figure out how to regulate more quickly and effectively than w have in the past or we end up in a world where at some point we have to do it in a clumsy way. >> forr twitter ceo dig cost
lo says antitrust and privacy issues shouldn't be conflated. >> it is not just the fact that companies are big that should cause them to be regulated. the sietz ze of the company doe have any iact on the kinds of things it might be doing. it is those specific things that companies are doing withdata, the way they're managing it or >> reporter: the question is what laws would best protect consumers without giving an unfair advantage to giants that can better afford regulation. verizon ceo notes how hard it is for regulation to keep up with innovation. >> i t ink the technolog moving so fast, so if you do regulation it is just moving so fast it is hard. so i think it is up to responsible leaders. > reporter: while mark zuckerberg, who tried to dodge the cameras here, says he does not want to regulate facebook himself, we will see how much the tech companies here enforce changes around the likes of privacy to avoid drastic government action. or "nightly business report", i'm julia boorstin in sun valley, idaho. and coming up, the smallest state in the country is f some big economic challenges.
♪ ♪ ♪ here is what we're watching. tomorrow the producer price index will be providing investors with additional information on inflation pressures within the economy. we will see if the trade war with china is having an on its economy when beijing releases import and export number for the monthf june. and the president of the chicago fed speaks on economic etconditions and my policy. that's what we're watching for friday. wall street banks are lending less money to farmers. according to reuts, which cites fdic data, agricultura loans a the nation's top banks fell 37% between the peak in
2015 and march of this year. banks nk increased their ex boeposure to the rural midwest in part because farmers had collateral, but theom retreat as farmer's incomes decline. we told you yesterday virginia was s ranked topte for business in cnbc'survey due to the quality of workforce and educational system. yhere are 50 states. that means somebad to come in last. tonight scott cohn takes us to the survey's worst state for business, rhode island. >> reporter: for a little state, rhode island has big problems, but to hear the governor tell it the worst is over. h >> wee stopped the decline. we have stopped the decline, and working together w have ignited a comeback of this great state and our economy. >> reporter: the comeback has yet to show up in the numbers, near the bottom forusiness friendliness, cost of doing business, economy, and still at the bottom for infrastructure.
fixing that has beenriity for governor gina ramondo. >> there's me road work going at any is state than time in our lifetime. >> reporter: fund by controversial program to charge tolls on trucks, n surprisingly unpopular with collins.like michael >> we need to kill this cancer in this state because it is going to spread like wildfire to other states. >> tyonk >> reporter: the governor rode her plan to reelection last year, but it still faces some scepticism. >> got to do something. as long as the money actually goes to the roads. >> the issue isn't going to tap into consumers, you know. somebody has to pay for it. ter: the administration says in its first three years there's been $1.5 billion worth of n road construction, 100 miles of roads paved, and nearly 200 bridges repaired. n unemployment i in line with the national average, and 30 businesses have mov to the state. but school test scores are low and economic growth is among the lowest in the country, more proof that a comeback, no matter
how hard you try, doesn't happen overnight. for "nightly business report", i'm scott cohn. before we go, here is a look at the day's final numbers on wath street. dow gained 227 points to close above 27,000. dathe n was down six and the s&p 500 added six to finish at a record. that is "nightly business report" tonight. i'm sue herera. thanks for joining us. >> i'm bill griffeth. have great evening. see you tomorrow. ♪ ♪
woman: this is "bbc wor news america." is made possible by... the freeman foundation; by judy and peter blum-kovler foundation, pursuing solutions for america's neglected needs; and by contributions to this pbs station from vwers like you. thank you. nada: this is "bbc world news america." reporting from washington, i am nada tawfik.