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tv   Nightly Business Report  PBS  July 18, 2017 5:00pm-5:31pm PDT

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this is nightly business report with tyler mathisen and sue guerrero. plan c, senate republicans plus their next move after to repeal and replace obamacare fails. their latest plan, repeal now replace later may be doa. what's next? >>. flying high. nasdaq and s&p close at records. some investors worry the market is topping. others say full steam ahead. who's right? ibm reports 21st straight quarter of declining sales. have those shareholders had enough. those stories and more for tuesday, july 18. good evening and welcome.
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i'm tyler mathisen. sue has the evening off. drama in d.c. republican effort to the repeal and replace obamacare is dead. so it seems is a plan to repeal it now and replace it later. three moderate gop senators, susan clinollins said they woul oppose any vote to proceed with an immediate repeal of the law and the president is not happy. >> i'm search disappointed for seven years i've been hearing repeal and replace from congress and i've been hearing it loud and strong. when we finally get a chance to repeal and replace, they don't take advantage of it. that's disappointing. i'm very, i would say, disappointed in what took place. it will go on and we'll win. we're going to win on taxes. we're going to win on infrastructure and a lot of other things. >> health insurance stocks were mostly lower on this new wave of uncertainty. united health care reported a
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strong quarter and bucked the trend. with health care an ever growing part of the u.s. economy, the collapse of the health care bill was felt in the currents markets overnight when it became clear the latest version of the bill to repeal and replace aca would not move forward, investors in asia moved quickly to dump the u.s. dollar. john harwood is following the story from washington. what does the failure tell us about obamacare, about the president, about congressional republicans. >> reporter: first of all, about obamacare it says it's not easy to take away benefits to 20 million people have gained under a law. when people get subsidies to buy health insurance, they like it. about president trump, it shows his strategy of being detected from the it shall, not having a grasp of the details by standing by watching congress wasn't effective. for republicans in congress, it shows they've got a big split between the interest of their more affluent constituents who
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want lower taxes and smaller government and many of the working class voters that donald trump relied upon to win who like government benefits, like medicaid, like insurance subsidies. >> what is the next move for the gop here? do they just let the issue die? table it and the move on to tax reform? what? >> reporter: unclear whether they're going to try to make a motion to take up a straight repeal. it's not going to succeed. aside from other senators you mentioned, rob portman of ohio came out today against a straight repeal. that's not going to happen. only question is how quickly mitch mcconnell moves to plan c, which is what he described over the july 4th break, which is working with democrats to try to fix the insurance marketplaces, some members of the house are interested in doing that too, especially in rural areas where there's limited competition. that's a place where the president might be able to get bipartisan cooperation. >> the president said he had a very busy six months. signed a lot of bills.
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some are under dispute. he needs a win. how big a danger sign is this for the rest of his agenda? >> reporter: it's a big danger because, tyler, republicans have not displayed an ability to govern and do the things the give and take that are required to do major reforms. you need presidential leadership, president trump is weak. if republicans are going to pass a tax reform plan that does not explode the deficit, while they cut taxes, they're going have to figure out who they're going to raise taxes on to make it come out even in the end. that's not going to be easy and from the difficulty of the house border adjustment tax, we can see that they're struggling. >> all right. john. thank you very much. >> in washington tonight. on wall street, s&p 500 and nasdaq hit as we mentioned earlier, new highs today thanks in part the strong quarter from netflix. it wasn't all positive. bank shares slumped because of weak trading volumes reported by
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both bank of america and dow component goldman sax. shares weighed on the blue chip dow index which fell. nasdaq rose 29 to that fresh record. it is the eighth straight day of gains and marks its longest win streak in more than two years. s&p 500 added one, but it was good enough for a record. what should investors make of the market that sits at this lofty levels? >> reporter: there is a growing chorus of voices insisting the market topping out? why? some say the federal reserve will have a hard time reducing rates. the lack of progress on health care and tax cuts will catch up with the market. the biggest argument is how the market is overpriced. worry warts should calm down. earnings are historic highs. the global economy is improving.
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is the market overpriced? the most important determine is s&p prices. not dramatically so. even the complaint the technology stocks are too expensive doesn't really ring tree. most tech stocks are below historic norms. there are pockets of the market that seem expensive. apple. trading near its highest valuation in 30 years. analysts had convinced everyone the iphone 8 will be a huge hit. maybe. that success is partly embedded in the stock already. another chamexample is energy stocks. everyone got the price of oil wrong this year. jacked up earnings because they assumed it would be $60 by now, but it's stuck in 40. there are pockets overvalued. the s&p 500 itself is only moderately stretched. the bull market, goldman sax
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says as long as it remains above trend, they're not worried just yet. nightly business report, bob new york stocks exchange. >> nobody is worried -- not worried until they are worried. what should you make of the market to put it in context. ron, you're also a historian of the market of sorts. well you certainly know the history of the market. when we've seen this kind of record breaking performance week after week after week, hitting new highs, new highs, new highs. what does it generally f lly fo. >> i'm not sure we've seen it quite this way. >> does feel different. >> we've seen volatility really tamp down over a long period of time. something we don't get to see too often. we've seen nominal new highs. since march when we really hit the peak momentum of this
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market, we seen a couple percent added to the dow. five or six added to the nasdaq. a lot came from a handful of stocks. netflix, facebook, amazon and the like. we have a relatively narrow market. it looks okay. it looks reasonably valued. i think what's happening here and i'll agree with bob is global growth is picking up the slack for slightly lower u.s. growth. technology stocks. and then we have the disciplinishing likely mood the reserve will get more aggressive with interest hikes given the low inflation we have seen. the stock market has begun to reprice in the notion rates aren't going to go up as dramatically as some feared weeks ago. >> if that's the case, where else are you going to put your money. >> exactly. 2.6% on a ten year treasury. you can get a lot of high quality stocks. outperform in that regard. the only place you would put your money is in other markets outside the united states which
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have been on fire. >> they have been going up. >> every market practically in the world. maybe venezuela hasn't. a lot of markets fortunately they've all been going up. in an era when so much of the money at play in the market is coming in through etfs, do records matter as much as they once did? do you worry about vulnerability because people are playing through etfs. >> it's a double edged sword. that's an embedded floor under the market. it's actually keeping the market from going down. i do worry about market structure insofar as there are more etfs than individual stocks. if you ever get some reason some headline that forces people to dump etfs, they will unduly pressure the stocks in the baskets that they buy. you could have one of those kind of shocking days that comes out of the blue, but right now wall
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street is shrugging off washington. earnings as bob said are doing pretty well as they did in the first quarter. you have a variety of supports for this market. i don't love the market in this environment, but it's also hard to fight it given that it continues to win. >> so quickly. what would turn you against this market? is there any -- >> everything that's happened in washington thus far would have turned me under any other scenario in my experience. the headlines that we've seen from washington would have caused 10, 15, 20% direction. it hasn't. you never sell a dull market short they say. i'm still cautious, but if you pick the right stocks, you're winning. >> ron, thank you very much. great to see you. goldman sachs was the worst performing stock. somewhere in the middle was united health care. reported earnings today. dominic chew wraps up the
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result. >> reporter: despite the earnings and solid returns on equity investing and equity trading, goldman sachs suffered a second straights quarter of subpar results in fixed income, currencies and commodities. revenues down 40% from a year earlier, gold mman sights low levels of volatility, low client activity and generally market making conditions. even when you fold in equity revenue, the number is down 18% from a year ago putting it at the top of a list it doesn't want to be leading. worst than j.p. morgan, twice as steep as bank of america and more than double the fall at city. united health group posted a beat on earnings and raised outlook if for the rest of the year. unit united's health is almost nonexistent in the affordable care act which is holding down revenue, but also holding down cost. also serving to shield unh from
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ongoing uncertainty in washington that we gist talked about. unh is seeing growth as a health care provider. pharmacy benefit management growth in on tum health services group with earnings of 21% to $1.5 billion. johnson and johnson also beat earnings forecast and it too is raising the bar on sales and profit expectations for the rest of the year at the world's largest health product company. even as competition dented sales, last month, johnson and johnson closed on biggest deal ever. provide a sales boost during the second half of the year. for nightly business report, i'm dominic chew. ibm's revenue fell for 21st straight quarter. not a strend they wanted to see continue. saw growth in higher margin businesses including cloud and artificial intelligence services
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for the quarter ibm did beat wall street earnings with $2.97 a share. revenue, though, fell about 5% to a roughly $19 billion level. following the report, the stock was volatile. we have more on ibm's quarter. the big take away for ibm is the company continues to struggle to transform itself. it's legacy business is still slowing while the company is still trying to grow its higher margin next general tech like cloud computing, artificial intelligence and data analytics. these businesses, which the company calls strategic imperative now makes up 43% of ibm's total revenue. though it grew at a slower pace the previous quarter than the one before it. it has not been enough to make up for older slowing divisions. big blue has seen more than five years of declining revenue growth. a bright spot, ibm reaffirming
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full year guidance despite some analyst calling for the company to cut it. for nightly business report, san francisco. joining us now to talk a little bit more about ibm is chris. he is ceo of amplify. he owns the stock in his funds. good to have yo with us. we are not bullish on ibm due to monumental transformation they are trying to go through i can't remember a time ibm wasn't going through some transformation. when are they going to be tra transformed. >> that's a good question. it's been forever. it's like living in a house that you're trying to remodel and it's not done yesterday. that's what investors are tired about. five years of transformation talk and we get results today not that promising. building concern here. ibm really needs to execute quickly. >> it's not they're not making money. they're making nice profit. their sales keep inching lower
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and lower and lower and lower. they've got a very nicely product called watson, but is watson delivering the goods here? is it making money? are they banking too much on watson. >> it's not yet. i think it's helping their cyber security and their cloud computing offerings because unlike amazon with aws, if you as a company use their offerings, you get access to watson. ibm successfully dangling it as incentive. we'll see in the coming quarters. again, time is not on their side here. they're a solid company financially. thinking about a technology stock with growth prospects, right now ibm doesn't if fit that mold. >> i can get my ibm if i wanted through an etf like yours, index fund. any number of ways. if i'm tempted to buy the indivi stock, is it basically a dividend play or growth play in any sense.
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my sense is you're going to tell me buy it for the yield. >> that's right, tyler. buy for the yield. 3.9% dividend yield. there is the upside they could get this transformation going and the stock could be 20, 30% gainer, but if they don't, you'll still clip that coupon and hopefully wait for it to rally. >> what about other areas in technology that speak growth to you? where is that sweet spot? >> i think besides cyber security, artificial intelligence, you have to look at social and mobile computing. oomt of opportunities there. advantage ibm has is this brand. they can bring that brand to these new technologies. they have an advantage versus these startups that don't have the financial resources or existing relationships and that's what ibm really needs to put together to be successful. >> chris, thanks very much. still ahead, the housing market is hot, but home builders
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are less optimistic. there's an interesting reason why. we'll tell you about it. home prices are up. demand for new homes. seems like the perfect environment for home builders. report shows not as optimistic as one would think. diana explains. the trump administration
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canadian lumber sent sentiments flying again. dough considerably from last high in march. monthly index fell in july and june's reading was revised down to lowest level since last november, just before the presidential election. sentiment had shot up after the election often the hope of deregulation in the market. it rose even further when the trump administration rolled back some environmental policies involving water, but then it took a u-turn on canadian lumbar tariff and builders are worried more trump trade policies will add to cost. granger mcdonald wrote this is hurting housing affordability even as consumer interest in the new home market remains strong. current sales, sales expectations and buyer traffic all fell with the last one still stuck in negative territory. for nightly business report, i'm diana in washington. another health scare for chipotle, that's where we begin tonight's market focus.
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bo temporarily shutdown a restaurant in northern virginia after a number of customers got sick. symptoms were consistent with it did not come from the food supply. news comes as chipotle still works to recover from food safety issues back in 2015. shares fell 4%. harley davidson cut full year shipment forecast after reporting a drop in sales that missed expectations. earnings came in ahead of estimates, but lowered profit margin guidance for 2017. faces weakening demand from baby boomers and fewer millennials riding the big hogs. lock heed marten said increase in sales of f 35 flyers
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helped drive profit higher. those results along with revenue better than expected lifted sales and earnings forecast for the year. still shares fell a fraction to 286 .79. networking giant erickson. lowered forecast siting ongoing low investment by telecom companies. erickson also said it would speed up cost cutting initiatives. shares down a big 16% to $6.07. after the bell, pharmaceuticals said three of experimental drugs to treat cystic fibrosus improved lungs better than expected. testing various drug combinations to find out which one turns outs to be most effective. shares skyrocketed following the news. ended the regular at $132.16. coming up. other stores close locations,
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alcoh khols has a different strategy. how it will steal customers from struggling rivals. . as much $5 billion owed on student loans could be erased due to lost paperwork. tried to collect from borrowers, but had cases dismissed because of a lack of documentation.
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nation national. 160 in default. loans originally issued by banks and purchased by national collie gent. during the process, ownership records were lost. dick's sporting goods is shutting boutique women's store called chelsea collective. launched two years ago just in two cities. close early next month. company plans to direct women back to major dick's stores for apparel and fashion needs. closing stores is not however part of kohl's strategy. unlike many department store rivals, all part of the retailers plan to stay competitive in ever changing industry. a kohl's store in clifton, new jersey. >> reporter: department stores are not having a good year. sales continue to fall for the group and macy's, jcpenny and
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sears are closing hundreds of unprofitable locations. kohl's sales have fallen, it isn't adding to department store closu closures. instea it's investing more than half a billion dollars and opening new locations. despite falling sales, says kohl's gets lumpbed to department store, but argues it's different. >> we're part of this generalized brick and mortar apparel store retailing. i think that the practical matter is the facts are that we're not the same. whether it's the position we have on balance sheet and therefore the flexibility we have to act, whether it's the store portfolio being newer and off mall. whether it's technology advancements. >> he says his stores are the retailers biggest asset and says
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kohl's is benefitting from the specialty and department store closin closings. plans to go after that more aggressively. >> there's a strategic plan in place. to really go after the sales in a meaningful way. we'll get our share anyway. market shares shift because of closers. our objective is to get more than our fair share. we're pretty optimistic on that. we're already kind of seeing it. >> also launched under armour merchandise. expects sale strength to continue throughout the year. while kohl's has a strong loyalty program with 70 million members. no doubt amazon's prime program is eating into department store sales. some estimates say amazon has 85 million u.s. prime members and growing. kohl's ceo is in for the challenge. >> i think we're in good
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position there. we have a physical presence. they don't. we have to leverage it. we have to do a better job of earning customer dollar. finally tonight. when you go shopping, do you look specifically for goods made in the usa? as we mentioned last night, the white house dubbed this made in america week. with a focus on promoting made in america manufacturing and a push to bring back jobs. how important is it to you to buy u.s. made goods? we tried to find out. >> i think it's good to support what we have here. >> if a product is made in the united states, it's going to cost more because of tv laws we have here, like minimum wage and things like that. >> domestic goods might cost a little more for us to make. however in the long-term, it's kind of paying into some security to always ensure that there's some stability economically down the line and potential jobs for future people down the line.
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>> definitely conscious of trying to buy domestic products. it's not o make it or break it deal. >> a new reuters poll shows 70% of americans think it's very important or somewhat important to buy u.s. made goods, but not everyone is willing to pay a premium for them. 37% say they don't want to pay more. and that is nightly business report for tonight. i'm tyler mathisen. thanks for watching. have a great evening everybody. we'll see you back here to
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