tv Nightly Business Report PBS June 19, 2017 5:00pm-5:31pm PDT
this is "nightly business report" with tyler mathisen and sue herera. >> what a way to start the week. the market climbs to levels never seen before as enthusiasm returns to the technology sector and investors regain confidence in the economy. flying high. will 2017 be one of the stro strongest years e aerospace and defense sectors? water shed moment. why it's a key time for investors looking to put their money in the world's second largest economy. those stories and more tonight on "nightly business report" for monday june 19th. good evening, vieveryone, i'm contessa in tonight for sue herera. >> i'm bill griffeth in for tyler mathisen coming to you
from the new york stock exchange, the blue chip dow and s&p both closed at records today with no major economic reports, the optimism seems to have come from the technology sector which is the best performing group this year. even after that wobbly performance we saw last week. here are the closing numbers for this monday. the dow industrial average advanced by 144 point to close at 21,528. the nasdaq was up 87. that's a 1.5% gain. the s&p 500 added 20 points today. contessa? if you're a long-term investor, you're probably not complaining act the market's performance so far this year. with history as a guide, mike s santoli takes a look at what might happen in the months ahead. >> reporter: not quite halfway through 2017, the stock market has already returned nearly 10%. equal to the long-term average gains for a full year. it would be a mistake to assume this means stocks are way ahead of themselves or due to stall for the next several months.
it turns out the stock market only rarely produces an average return in a given calendar year. since 1928, only 6 years saw the s&p 500 index gain between 5% and 10%. what we've come to think of as the long-term average yearly performance. indexes declined more than 20% in a year, four times as often, in fact, and experienced outright declines 30 times in those 89 years. this is a good reminder that equity markets deliver their rewards in waves, not in metered doses. so if the market is unlikely to simply idle near this level for the next six months where might is go based on historical conditions and patterns? no one can say with much certainty, the weight of the evidence tilts toward the upside. the ongoing recovery in corporate profits and economic growth, the behavior of the market, itself, this year, a calm persistent uptrend, most closely resembles past years that finished strong. whenever the s&p has been up at least 7.5% in the year's first 100 days as it was this year,
stocks added to those gains through year end 20 out of 23 times. and since 1950, if there have been at least 15 all-time highs through may just like this year, the index added on average another gain of nearly 8% through december which is significantly better than in the average year. one looming negative exception to these encouraging patterns is 1987. a scary year to come up in historical comparisons given the crash that october. yet it's important to note that stocks had soared a whopping 40% from january into august that year, a far more overheated market than the current one so far. none of these historical patterns make the market to immune to shots from a sharp growth slowdown, aggressive series of federal reserve rate hikes or a political crisis, but they do serve as comforting context for a stock market that has surprised many this year with its quiet relentless strength. for "nightly business report," i'm mike santoli. jack ablin joins us now to talk more about the market and if the gains we've seen so far
this year can continue in the months ahead. good to see you, jack. >> thanks, bill. thank you. >> by many measures, this market is overvalued. you agree with that. what's powering it and can this continue, do you think? >> yeah, i think it's a combination of certainly improving earnings. there's no question about it. but you're right, relative to those earnings, revenue to revenues, the market is still at pretty stretched levels. so what it is, i believe, is liquidity, it's that age-old drip that's been going on now since the financial crisis. in fact, over the last 12 months, central banks collectively have added more than $2 trillion to the financial system. i think that's emboldened investors and allowed them to take on maybe more risk than they would normally like to see when values are like, you know, where they are today. >> and jack, what we saw today in the markets is much of the rally being driven by tech here.
is the worst over, and if so, does that worry you that you're seeing a correction of maybe 3% and upward movement? let's get on with it and keep growing and adding money into the tech sector? >> well, i think, contessa, i think the tech move that we had this year caught a lot of people fl flatfooted so when they saw the downdraft toward the end of last week, i think most people looked at it more as an opportunity than a threat. you know, it remains to be seen how that plays out, certainly. tech is relatively expensive, although if you look at it, you know, in relative to its own history and relative to the market, it's not a stretch as it was, say, the tech bubble in 1999-2000. >> our viewers may be wondering, gee, is this the time to be getting in if i'm not already there or should i be committing new money? jack vogel often says it's always a good time to invest. especially if you're dollar cost averaging. what does jack ablin say about this market right now? >> i'm not going to repute the
notable jack on this one, but, you know, a lot of it also depends on your timeframe. remember, don't touch stocks unless you have at least seven to ten years to let it percolate in a portfolio and let it grow over time. i think if you build a portfolio right, you should never have to sell anything at a loss. what that really means is, you've got to time your needs, your, you know, drawing against your portfolio, against the assets that you're holding. if you need something tomorrow, don't put it in the stock market, put it in a money market fund. if you can hold for seven to ten years, certainly a long-term investing making a lot of sense. >> jack ablin with bemo private bank. always good to see you, jack. thank you. >> thanks, bill. the supreme court tightened rules on where injury lawsuits can be filed. the decision is considered a win for businesses that want to prevent plaintiffs from shopping around for friendly courts. the justices overturned a lower court ruling that allowed
hundreds of out of state patients to sue bristol-myers squibb in california over prescription drugs. and in a separate case, the supreme court ruled the trademarks that are seen as disparaging are protected under the 1st amendment. that case which involved an asian-american musician could have implications for similar disputes including for the washington redskins which had its trademark revoked under the same statute that the justices invalidated today. also in washington, executives from some high-profile technology companies, including microsoft, intel and mastercard, arrived at the white house for the first meeting of the american technology council. they met with presidential adviser jared kushner and focused in part on modernizing the government. >> together, we will unleash the creativity of the private sector to provide citizen services in a way that has never happened
before. we will foster a new set of startups focused on gov tech and be a global leader in the field making government more transparent and responsive to citizens' needs. >> eamon javerss is following the story for us. eamon, they were talking about 6,000 data centers for the government here, $86 billion that the government spends on technology. so what else is there to talk about in a big technology summit like this? >> reporter: well, contessa, the one stat that got my attention today was they said the department of defense is still using those old eight inch floppy disks we all remember from the distant past. that's still in the government i.t. procurement system. they're saying they want to take ideas from private sector executives and use them to modernize the way the government does business. they're trying to get best practices from the glittering lights of silicon valley. we've got tim co the idea is they're going to simply pick their brains here
for some good ideas. >> wait, not everybody uses floppy disks anymore? >> reporter: the -- >> is that old? >> reporter: we know -- i'll put the phone down for a second. i want to ask you about the ceos. jeff bezos of amazon, tim cook of apple were there. any notable absences? >> reporter: mark zuckerberg from facebook was invited to come today, i'm told declined saying he had a scheduling conflict. i'm also told the white house was sort of only interested here in ceo-level executives, that's why there's nobody else here from facebook. but that is a big person who's missing from the picture here today. obviously zuckerberg has been on his own sort of political-like tour of the country out there meeting with americans of every demographic in every state. you wonder whether he has political ambitions or whether it really was a scheduling conflict here at the white house. >> i know a lot of the ceos are sort of walking a fine line between trying to satisfy customers who may not like what the white house has to say and also trying to have the ear of
the president to effect change. eamon, thank you for covering that in such great detail. >> reporter: you bet. meanwhile the president of the federal reserve bank of new york has confidence in the economy. bill dudley said today inflation should rise alongside wages allowing the central bank to continue to gradually tighten interest rates.influn shl policd the economy is in a good place right now. americans are feeling good about the economy, the conclusion of cnbc's latest all america survey, certain key components hitting all-time highs. steve liesman takes a closer look at those results. >> reporter: economic optimism in the united states remains strong, as the post-election bump continues and even looks to be strengthening. the percentage of americans optimistic about the current situation and optimistic about the future remains at a record 30%. spurred on by surging republican optimism and democratic pessimism that remains below republican levels during the obama years. >> on the stock market, we have
three straight tracks in a row dating back to when just right after trump was elected where people are saying it's a better -- it's a good time to invest in the stock market even as we've seen record high dow jones industrial averages and record high stock prices in many sectors, so those are really important, positive indicators that people are feeling good about the economy. >> reporter: the cnbc all america economic survey shows the percentage of americans who think their home prices will rise in the next year is at a record and the percentage to see higher wages in the coming year is at a near record. it's not necessarily good news for the president. fewer americans who have positive outlooks say it's because of president trump and more americans who have negative attitudes, they pin it on the president. that as the survey shows a disconnect between optimistic views on the economy and views of president trump. >> president trump's base is
starting to erode from lihim, hs had a drop of ten points in approval from republicans. he's now under 80% approval among republicans. even those who say that they cast a vote for him in november, they've dropped off in their support as well. when you're left in that position, when your base starts to move away from you, it becomes very difficult to pass an agenda and to govern. >> reporter: the president's approval rating has fallen to 37%. down from 39% in april. and while president trump's approval on the economy is a bit better at 41%, those numbers are also down from the prior poll. for "nightly business report," i'm steve liesman. still ahead, the aerospace industry takes flight. >> the global dema fly which is reason orders for new airplanes are pouring in here at the paris air show. i'm phil lebeau. we'll go behind the scenes coming up on the "nightly business report."
for defense and commercial aviation companies, 2017 is turning into one of the strongest years ever. demand for military jets and commercial airplanes is climbing and that makes this year's paris air show a very busy place for some of the world's largest companies. phil lebeau, as you saw, has more from us from paris. >> reporter: with lockheed martin's f-35 putting on a show in the sky, defense companies are taking center stage at the paris air show. >> we are absolutely busier, we have looked at what our meetings are and they are up by a large significant magnitude and we expect to have great interactions all day today and throughout the week. >> reporter: military
contractors are gearing up for more orders as countries expand their defense budgets including the u.s., where the trump administration is pushing for a 10% increase. >> i suspect they'll be in negotiation. we think we can see sustained low to mid single digit growth in the defense budget. >> reporter: for commercial airplane makers, the focus is on clearing out backlogs that now stretch well past 2020 which is why commercial orders at this year's show are not as robust as in recent years. >> we're at maximum production, all-time maximum production. it's not doom and gloom. it's just flat which is not a bad thing. >> reporter: the fact is, the number of people around the world who are flying continues to climb and should for the foreseeable future. >> we just updated our current market outlook. we over the next 20 years see a need for about 41,000 new airplanes. we're continuing to see lift there. >> reporter: boeing's optimism about surging global demand for travel is one reason why the company is exploring building a
hypersonic commercial airplane that would let people fly anywhere in the world within two hours. that's right. two hours of flying at speeds of up to five times the speed of sound. phil lebeau, "nightly business report," france. >> wow eqt bids to be the nation's largest natural gas producer, and that's where we begin tonight's "market focus." oil and gas company said it would pay nearly $7 billion for rival rice energy. eqt also said it will have the ability to drill longer horizontal wells as most of rice's energy assets are located right next to land owned by eqt. now, eqt shares fell about 9% to 53.51. rice energy shares surged nearly 25% to 24.57. financial services firm wedbush speculated that amazon's deal with whole foods makes food delivery service, grubhub, amazon's next logical takeover
target. said the e-commerce giant could benefit from grubhub's geographic presence and its delivery infrastructure. it also noted a potential deal could grow amazon's user base as grubhub and whole foods are found in some of the same markets. shares rose more than 4% to 45.34. and lab products maker perkin elmer will buy german based laboratory diagnostics for more than $1 billion. the merger will expand its reach into the autoimmune and allergy diagnostic markets and provide new infectious disease tests to its customers in china. perkin elmer shares raised 6.5%. valiant pharmaceuticals elected billionaire investor john paulson to its board of directors. the embattled drug company which is working toward reducing its debt said paulson's experience will help the company complete
its turnaround strategy. to date, paulson's hedge fund lost nearly $2 billion on its investments in vilaliant. they made money today, valiant shares were up 6%, close at $14. clovis said its study has met its goals in the late-stage study. it had a meaningful impact on delaying disease reoccurrence in patients who had an advanced form of ovarian cancer. clovis said it plans to it apply for regulatory approval within the next four months. shares soared as you can imagine. they were up by 46-plus percent to $87 .88. china's stock markets are some of the world's biggest but it hasn't always been easy for investors to gain access. that could change tomorrow if a major index provider decides to include shares of some chinese companies. bob pisani describes why global investors are paying close
attention. >> reporter: this is a big deal because indexes like msci rule the world since they determine what goes into all these etfs that we're buying. right now, only hong kong-listed stocks are included in the indexes. there are no mainland china stocks in it right now. mainland china's stock market is worth $6 trillion. that's the same essentially as the hong kong stock market. $6 trillion is almost one-tenth of the total stock market capitalization in the world and it's not in those indexe key issues with mainland china stocks, a couple of them, first, it's too easy for companies to hold trading in their stocks. chinese regulators now instituted new rules that limit under what circumstances and for how long chinese companies can both trade. there's been another issue. limits on how much that could be taken in and out of the market at any one time. but the creation of direct stock links between shanghai and hong kong and shenzhen and hong kong,
the two big exchanges in mainland china, now make it far easier to get money into and out of the mainland stock market. all right. what does all this mean for investors? it means if you own international indexes through exchangex chan change-traded funds, for exampl the chances are you'll be owns much more china stocks if this goes through. it will take place over several years, by the way, indexers don't have to go out and buy hundreds of stocks immediately in the chinese mainland market. of course, there's es tfs for all this. the biggest of all shares, emerging, the similar of eems are out there, if you want more direct exposure to mainland china stocks, symbol kba is one example created specifically to attract the index msci is using. part of the decision may be strategic, by the way. vanguard already uses an index from a competitor, ftse, that does include mainland china stocks. the symbol is vwo. finally, this decision comes at
4:30 p.m. tomorrow. for "nightly business report," i'm bob pisani at the new york stock exchange. elsewhere, the chinese version of amazon is setting records. nasdaq listed jd.com's summer sale was the biggest ever. just like amazon, jd.com sees drones as key to the future of delivery. our report tonight from beijing. >> reporter: i'm surrounded by toys, diapers, home appliances, pretty much everything that you would see in or home is at this jd delivery station. this is just one of jd's 6,900 delivery stations across the country. at this one, alone, about 10,000 packages are being shipped out. that's because yesterday, sunday, was a combination of a big summer sale for jd, june 18th is a chinese retailers' own shopping holiday. china already had singles day. but jd marked it with deep discounts.
during the 18-day period, $17.6 billion worth of goods crossed its site, up 50% from last year. jd's founder says chinese consumers are looking for quality. >> spend a lot to attract the woman to buy on our platform. so now most of apparel, bags, watches and jewelry and cosmetics. also more and more chinese consumers buy the luxury bands and high quality bands. >> reporter: today these goods are being delivered mainly by jd's 7,000 couriers but in the future the company hopes drones will be delivering, too. amazon is hot about drones but its plans are held back by red tape in the u.s. jd, though, already has 40 drones flying real routes mainly in rural parts of china. >> try to use drone to deliver
from the station to the end users. in china, you know, people are living in apartment, so we cannot use the same way to do, like, amazon u.s. but the countryside is a huge market. >> reporter: currently jd's drones can carry up to 66 pounds or 30 kilograms of weight and they're looking into a model that can one day carry one ton worth of products. coming up, follow the ad money. >> reporter: i'm here at the cannes line advertising festival, pitching to the biggest brands around the world. we're tell you where ad dollars are moving and which trends to watch coming up on "nightly business report."
the merger between draftkings and fanduel is being challenged by the federal trade co attorne of washington, d.c. according to the complaint, the merger would harm consumers because together the two companies woul 90% of the u.s. daily factntasy sports. in a joint statement, they said they're disappointed by the decision. the world's largest brands and those companies o s are in the south of france trying to figure out if they should direct the dollars to traditional or digital media. julia boorstin is following the money from cannes advertising festival. >> reporter: snap looms over the seaside quazette. with snap's giant ferris wheel as it fights to grow ad dollars.
and pinterest is here with new search technology with these interactive kiosks. facebook and google with these giant cabanas in cannes that dominate the beach as well as the digital ad market. google just yesterday announced more steps to combat extremist contest. >> there were the issues around measurement and then right behind that in the beginning of this year, we had all this noise and it's real noise about brand safety. and i think those are really the underlying issues that are facing marketers today. >> reporter: so how do you address those issues? google talked about how they're investing in premium content for youtube, paying for professional shows featuring big stars. and we're hearing from snap, pin pinterest and traditional media giants here talks about top-tier talent which is safer advertisers on a range of platforms whether it's old-fashioned television or a story for snap stories. cnbc parent nbc universal saying
it's seeing an uptick in ad dollars. >> a world of premium content, television companies, we're able to capitalize on that. those are nonissues for companies particularly like nbc universal and seeing a tidal wave of money come back to premium content specifically during the television upfront. >> reporter: not just television shows, nbc universal is showcasing new con it's producing in partnership with snapchat as well as buzzfeed for the olympics. they're also featuring their mobile ad sold through cargo focused entirely on premium content. >> the issues around fake news, around hate speech inside a video, which you see on youtube, are all things that remind advertisers it's not all about audience and trying to find the right audience but being in contextually right places is a major and important thing they work on. >> reporter: push for data, assurances and better deals to make sure they're
maximizing their return on ad investment. for "nightly business report," i'm julia boorstin in cannes, france. finally tonight an 18 carat emerald once owned by the rockefeller family could become the most expensive emerald ever auctioned. it's estimated the stone will sell between $4 million and $6 million. eh. that's "nightly business report" -- >> i would point out to your husband that that matches your eyes, by the way. >> that's very -- >> just saying. >> that's very sweet. good night, everybody.
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