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tv   Nightly Business Report  PBS  January 20, 2017 4:59pm-5:29pm PST

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tonight, friday, january 20th. >> good evening. welcome. donald trump became the 45th president of the united states at noon today. he spoke 35 words that are specified in the constitution. an oath used by every president since george washington. and so the trump era begins. exactly what it portends for americans, for the world, is uncertain. it is always so when power transfers from one president and administration to another. the time for empty talk is over, said mr. trump, in an occasionally bracing but brief 16-minute inaugural address. now he said arrives the hour for action. now the pageantry to the protests. >> after a long and bruising political season, the familiar rituals of an american inaugural frames the one thing everyone agreed on today. the peaceful transfer of power
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in the united states of america. >> so help me god. >> congratulations, mr. president. >> president trump spoke to an audience of billions in the united states and around the world. and told them the approach to the world has changed. >> from this day forward, it is going to be only america first. >> he had a kind word for the outgoing chief executive saying barack and michelle obama have been magnificent during the transition but he described america under president obama as a country of economic and social decline. >> the crime and the gangs and the drugs that have stolen too many lives and robbed our country of so much unrealized potential. this american carnage stops right here and stops right now. >> ultimately, trump is a please campaigned on job creation and
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that was the core message of his address today. >> we will bring back our jobs. we will bring back our borders. we will bring back our wealth. and we will bring back our dreams. >> and the peaceful transition of power did take place today. former president obama's helicopter, no longer known as marine one, flew past the capitol dome shortly before the new president began the parade. >> and late today, the senate confirmed the first member of the trump cabinet. retired marine general james mattis will assume the title of secretary of defense. the vote was overwhelmingly in his favor. almost immediately after donald trump was sworn in as president, the department of housing and urban development suspended its plan to cut mortgage insurance premiums for borrowers. it was announced days ago by the obama white house and was meant to help more borrowers gain
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access to the mortgage market. they said fhas reserves were healthy enough to withstand the lower revenue. today new administration gave no explanation for the rollback which had been scheduled to go into effect on january 27th. >> the new administration is committed to rolling back obama's climate action man. the updated website said that president trump will eliminate these harmful and unnecessary policies, adding that lifting the restrictions in the plan will help american workers and increase wages. obama's action plan proposed to cut carbon dioxide emissions. >> while the new president attended his inaugural lunch, mask wearing protesters clashed with police in the nation's capital while chanting anti-trump slogans. they've blocked traffic, damaged cars and destroyed store windows. protesters in san francisco blocked uber headquarters while others linked articles across
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the golden gate bridge. the stock market wasn't fazed. the dow jones industrial average rose. the nasdaq add 15 and the s&p 500 was up 7. but investors who had been watching the inaugural address closely were looking for more than a thematic populist speech. they wanted to hear about tax cuts, spending ask other american purchases could help earnings increase growth. >> president trump delivered one of the shortest inaugural addresses in modern times and the markets drifted lower. the problem? the speech was long on protectionist talk but very short on specifics and what his priorities would be. the president said we must protect ourselves from countries that are stealing our companies and destroying our jobs and that protection will lead to greater prosperity and strength. but the stocks have been sideways for over a month because traders have awaited specifics. tax cuts and infrastructure
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spending, for example, and they heard precious little on those issues from president trump. as a result, several sectors that have done well, aerospace and building and construction, almost sideways lower in the afternoon because of that continuing lack of detail. does this 19 trump rally is over? not at all. but it is certainly pausing. the early priorities are both around repetitioning obamacare and repealing trade policy. from the new york stock exchange. >> so what can we expect in the first 100 days in office? co-head of global fixed investment institute join us now. welcome. good to have you with us. mark, let me begin with youful are these first 100 days a time to try on make money or just to sort of wait and see what
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unfolds? >> yeah. i think we have a lot priced in. we're pretty optimistic. so wait and see. the devil will be in the details. we conceptually know what mr. trump is up to. but tax policy is very difficult, very complicated. i think we will take pause for these 100 days. i think the market will give them benefit of the doubt. >> do you agree with that? there is some worry in the market, apparently, that congress may get bogged down on reforming the affordable care act and not make as much progress on corporate tax cuts. >> yeah. i completely agree. the bond market is a wait and see mode. consolidation, we saw the big move. we saw in it november and december. and now we need details. both from an investor's point of view and even the fed. looking for more details in terms of setting monetary policy. >> brian, let me follow up with that. the bond market has been sort of
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topsy turvy here in the past few days. do you expect that to continue? >> yes. i mean, i think we're going to trade. if you think of the ten-year treasury yield. the trade between 230 and 260. so moving up 5, 10, even 15 basis points from day to day, week to week. i think that's within normal expectations here. the market tries to feel out what some of those details might be. >> mark, if you had to commit new money to this market in the first 100 days, where would you put it to work? >> companies and generate lots of free cash flow. the one thing we know is rates are up. short rates are going higher. that has to change way an investor changes their portfolio. the old consumer staples and utilities. i think the trade is off. i think you have to look for rising dividends that will inflation protect you going forward. the company with the biggest
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cash flow will make a nice return. >> let me follow up with a thought for the "wall street journal" today and others reporting, the obama years were very, very kind to stock investors. second only to annualized return to the clinton years among modern presidents. part of that was because mr. obama came in when stocks were low. an accident of timing. what do you think is a reasonable rate of return over the next few years for equities, with equities as high as you pointed they will out to be? >> i think a reasonable rate of return. it depends on the devil in the details. if corporate tax rates are going from 26 to 40%, that's a big head wind for companies. they can buy back stock. i think you can get mid to single digit returns. and income will be an important part of that equation. >> brian, do you want to comment on it? and what is your expectation for
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economic growth? how much of the stock market performance will be pegged to the 3% growth rate the new president. he intends to achieve? >> if he can achieve 3% growth rate, i suspect stocks will go up and bonds will go down. a lot of question marks between here and there, obviously. and looking for those details. at this point, i'm not sure the bond market, i don't think, believes that a 3% growth rate is imminent by any means. >> is the fed going to be as central to our economic thinking and to our markets going forward as it was over the past eight years? >> yes. i think the fed is always important. as we move into this year, one of the big uncertainties are exactly which direction president trump will take fed. he has a couple opener governor seats. he can appoint in the near term.
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and then of course, chair yellen's term expires early next year. and we will see him appoint, or nominate her replacement sometime this summer. so a lot of big developments coming on the fed front to watch. and again, some of that uncertainty that we need become more uncertain for the bond direction, for the bond market to get some direction. >> thank you very much for helping us tonight. mark spellman. >> and still ahead, amid the inauguration, general electric trick reported earnings and there's one persistent problem it can't seem to shake.
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day two of the federal reserve characterized the labor department as operating at full strength. janet yellen said workers are starting to see meaningful raises for the first time since the recession. >> in the coming months, i expect some further strengthening and market conditions as the economy continues to expand at a moderate pace. a view that is shared by most of the colleagues on the federal open market committee. >> chair yellen also. she saw few signs of the economy overheating. >> proctor and gamble gave its forecast. they posted better than expected revenue driven in part by sales and its beauty and health care business. the experts stay upbeat outlook is the result of its turn-around strategy that included the sale of numerous brands.
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it sells gillette razors, pampers, diapers, saw its shares rise more than 3%. >> it was different story for general electric which matched expectations. the conglomerate which is working to transform itself is still dealing with a long running problem. its oil business. as a result, shares slumped 2% making it the worst performing dow stock on the index today. morgan brennan has more. >> general electric trick is in the midst of an invention. oil and gas lower as the company anticipates later in the year. on a call with an lists, they reiterated guidance and called it a, quote, solid year. >> we seement on mix in the
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united states, and here orders up by 23%. meanwhile the resource sector and related markets continue to have head wind. >> there are also bright spots. while orders for equipment fell, orders for services just 20%. a good indicator for future earnings as g.e. transform back into more of a traditional industrial company. it could be signalling the final inning of the industrial recession. >> we are still in a slow growth world, we are still in a slow growth united states. there needs to be some catalysts to driving new growth, other than just comparing it against easier numbers every year. and that will come from i think the great hope is, a combination of changes in tax rate, tax policy, and in infrastructure
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investment. customers are generally feeling better but there's still uncertainty. >> uncertainty around the tax code. and uncertainty around health care as president trump seeks to repeal and replace the affordable care act. just two of the policy changes that could impact g.e. on this inauguration day, much still remains to be seen. in the meantime, the drop in sales meant a drop in the stock. walgreens proposed to take over rite aid and that's where we begin. the federal trade commission has raised anti-trust concerns in the nearly $9.5 million merger. they said they could divest as part of the deal but it may not be enough to push the deal through. walgreens fell 3%. rite aid though cratered down
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13% at 7.46. without citing specifics, bristol myers, the news comes as they received fda acceptance of its own lung cancer medication. shares of bristol myers down 7% at 49.23. merck is at 62.53, to close. the railroad operator kansas city southern posted lower profit and unchanged revenue in the latest quarter. the company said results were impacted by weakness in its energy division. but k.c. southern which gets nearly a third of its business there mexico tries to reensure investors that it was positioned well despite concerns over amenning or repealing nafta. the shares were up 4% on the day to 87.91. and at&t is seeing strong growth
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in its new live tv streaming service. in a regulatory filing, it said it saw more than 200,000 customers sign up for directv now. schlumberger saw results. the company said weakness in foreign markets drove down revenue but that was still good enough to beat expectations. it was off just a fraction to 86.49. herbal life said the securities and exchange commission has requested information with regard to anti-corruption laws in china. the up is plimt company said a strong dollar would cause earnings for the quarter and the year to come in lower than previously expected. it was down 13 cents to 53.01. the known short seller said airplane parts maker might be
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the valiant of the aerospace industry. add go it has a massive debt load and accuses of engaging in price gouging. it also noted largest customer is the defense department. making it a target for the new president who has vowed to cut government spending. it finished out at 226.90. and apple is suing qualcomm for $1 billion. alleging the chip maker overcharged apple for products. it was a suit for anti-competitive licensing activities. qualcomm fell nearly 2.5% to 62.88. apple was up a fraction to 122 even. now to our monitor who has a list of stocks you might want to consider buying in mr. trump's first 100 days. this is his first time joining us. the managing principle of the
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wealth management firm spectrum management group. the first time for you. first day for the new president. how do you think it will go the first 100 days or so? >> well, i think it will be positive. if nothing else, trump is certainly pro business so it should be good things ahead. >> some of the pricks areicks a this people think is part of administration. let's begin the big refiner. >> sure. the three expected big changes regular had aer to relief, this infrastructure spend and. at a relief. infrastructure spend and tax relief take time but regulatory can happen quickly. all the refiners in the country are required to buy renewable energy credits. and it has doubled in the last year. so some relief there. a company like valero could have
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a major increase in earnings. and it is already trading at a pretty low multiple and 3.8% dividend roughly. i think it has great potential in the first 100 days. >> next is u.s. bank corps. >> plus regulatory relief. the banks rallied very strong after the election. and they've been pulling back simps since the first of the year. we don't expect rates to jump tremendously but they will be rising incrementally. and any kind of move upward is great for the banks. u.s. bank is very well run. it came out a couple days ago with earnings release and it was positive. >> and the third and final choice is united continental, the airline company. >> exactly. and they have some, a few head winds but they've changed management. that is focusing on getting their cost structure in line with major competitors like
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delta. there's a lot that can be done there. predominantly, they have great leverage in material of what falls to the bottom line. and capacity is being could not strained so we think united has to increase pricing incrementbly. if we have regulatory relief in the energy field, they'll benefit from going lower. >> and they have no dearth of ways to charge fees. thank you very much. good luck to you. coming up, washington to main street. what small business owners want from their new president.
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here's a look at what to watch for next week. a fifth of the s&p 500 and 40% of the zoi industrials have their earnings next week including mcdonald's, johnson and johnson and caterpillar. the housing market with both existing and new home sales. hhs nominee tom price faces the senate finance committee following this week's hearing which turned contend shus. that's what to watch for next week. small business optimism has surged since donald trump was elected president and many are up beat the new administration will follow through on promises to roll back regulations. others are a bit nervous as kate
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rogers found out when she traveled to detroit. >> joe spencer has seen economic booms and busts. in the last year, things have pick up in a big way. >> last year we had our best year for a restaurant. $1.2 million sales. >> he expanded to a second location and plans to open two food trucks. one thing is on his mind these days. how donald trump stands to impact the economy. >> his policies should be business friendly. we have to wait to see what that is. i feel as long as the auto business is doing well, we will do well and detroit will do well. that's my chief concerns. >> the business owners have varying concerns. it has seen small business
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growth. in reason years, over $3 billion has been invested in detroit's downtown where more than 100 small businesses have been launched. he opened his restaurant in 2003 as the recession took hold. while trump's deregulation is optimistic, it isn't always a good thing. >> small businesses are the ones that bear the brunt of things that happen in washington. people talk deregular laegs, i get worried. it doesn't help the common people. it helps a she can few people. but it never trickles down. >> ellis brown is staying optimistic. the college drop-out launched the team in 2008 after perfecting her family's recipes. today she renailed some 300
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stores across the midwest including whole foods. >> there is a spirit the city carries. that's a spirit of resilience. all entrepreneurs know that it is an extremely tough journey. there are times we want to give up. so we need a motivation to keep pushing. i'm not in business just for myself. it is to give back to the community as well. the way that i give back is by providing jobs. and the more my company grows, the more jobs i can provide. if i had one ask from the trump administration, it wouldn't to strengthen the economy. >> that sounds like a pretty good wish for anybody. small business or not. to read more about how the trump administration may affect small businesses, head to our website. and before we go, here's another look at the markets on inauguration day.
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the dow jones industrial average rose 94 points. it finished up the session at 19,827. the nasdaq add 15 points. and the s&p 500 was up 7. ? a pretty stable day in the markets. >> a little volatile early. we'll see. you never know what's going to happen in the market. >> thank you from me as well. have a great weekend. we'll see you back here on monday.
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