tv Nightly Business Report PBS October 24, 2017 5:00pm-5:31pm PDT
>> announcer: this is "nightly business repor with tyler mathisen and sue herera. industrial strength. the dow soars triple digits to another record with caterpillar and 3m doing the heavy lifting. >> drama in d.c. another republican takes a stand, raising questions about the president's economic and tax agenda. and up in smoke. northern california's cannabis crops destroyed by wildfire. and the timing couldn't be worse. those stories and more tonight on "nightly business report" for tuesday, october 24th. good evening, everyone, and welcome. has the evening off. stop me if you've heard this one before. the dow closed at a record.
its 54th of the year. it was powered by two stocks, caterpillar and 3m, both of which reported better than expected profits and offered better than expected outlook thanks to a growing economy. that dynamic duo helped the dow close at 23,441. nasdaq was up 11. s&p 500 added four. morgan brennan has more on caterpillar and 3m and what is driving the industrial s >> reporter: if industrial stocks are a bellwether of economic growth, then growth is brisk. caterpillar got the most attention after the machinery maker crushed profit estimates and hiked its four-year forecast by an eye popping 25%. it was a similar story for 3m. with a maker of industrial coatings and post-it notes, the
stock had its best performance in eight years. united technologies which slid on weaker margins, raised guidance for the second time this year. and it all speaks to the underlying strength of the sector. >> what's been surprising to us is how strong the quarter has gotten off so far. and the expectation that there's nice momentum into the fourth quart if you look at how evaluations of these industrials look stretched, now we're beginning to see the growth coming through to justify the higher multiples. >> reporter: after years of slumping sales, production has picking up and the global economy is expanding, fueling sales growth across many different businesses. factor in major cost cutting initiatives, a flurry of asset sales and new product offerings, and companies like cat, honeywell, and others are
beginning to reap rewards. but there was one notable exception. >> to call ge as an outlier is an understatement. you're in the middle of the throes of a management change, a complete reset of earnings expectations. we're all now waiting for news about the dividend as well as the blueprint for ceo john flannery that he'll unveil on november 13th. >> reporter: after dismal earnings last week, analysts say general electric appears to be the sector's outlier, with that stock hitting a fresh multiyear low today. for "nightly business report," i'm morgan brennan. with industrial companies like cat and 3m fueling the market to new highs today, does this mean the market rally is broadening out? christina hooper is global strategist at invesco. christina, welcome, good to have
this rally recently has been tech and financials. today, a couple of old line industrials helped along. is this a good sign, is it a sign that there is a rot? >> well, there's certainly a rotation going on. and this particular one has been fueled not just by the global economic recovery, but by a weaker dollar, which is certainly helping a number of industrials. but i think the key point is that the advances being made by the stock market for the most part are fairly narrow. and it does suggest some underlying vulnerability. that coupled with, of course, stretch valuations. >> give me some detail on that, on where it is narrow and why that is a vulnerability. >> well, it's narrow in that we just don't have that many stocks on a given day participating in a rally. if we were to look back over the
last few months, for example. so we certainly had something of a rotation. but what we have, the net result has been that we have pretty stretched valuations. and much of it hasn't been fueled necessarily by earnings improvement, but by expectations. expectations about a legislative agenda that has not yet come to fruition, in particular the tax reform package. >> what should i do if i am at my sort of full investment threshold in my personal portfolio, given what you seem to be suggesting, that stocks are fully or even a little overvalued? >> there's nothing to say this rally can't continue for a while. i would argue there is an upward bias for the stock market, at least in the shorter term, given that we do have two key drivers, that global economic recovery as well as fairly accommodative monetary policy. the key is to participate in
capital appreciation, but be very well diversified so you can protect on the downside. so that means exposure to equities. but we want to be not just within the u.s., but have a robust exposure outside the u.s. be diversified and have an adequate exposure to alternative. >> thank you so much, christine hooper. investors were loving it at mcdonald's, strong sales were reported thanks to cheap soda and build your own burgers. the company has been working to increase traffic at its u.s. restaurants after losing share to fast casual rivals. higheres late this afternoon, attention was on washington. republican arizona senator jeff flake announced he will not seek reelection, expressing dismay with president trump and the >> we must never adjust to the present coarseness of our
national dialogue, with the tone set at the top. we must never regard as normal the regular and casual undermining of our democratic norms and ideals. we must never meekly accept the daily sundaye ersungering of ou. >> it came hours after senator bob corker and president trump renewed their attacks on each other. it comes as tax reform talks gain momentum and where every vote counts. john harwood is in washington for us tonight. john, i haven't seen a day like this in my memory, where two members, staunch conservative members of a president's own party, were so directly critical of the >> reporter: stunning rebukes of the president, tyler. senator flake said he wasn't
comfortable with the president's fingers on the nuclear button. he talked about assaults on decency and truth. that's an extraordinary thing you don't see. it's a reflection of the extraordinary nature of the donald trump presidency. and as you indicated at the top, there are 52 republicans in the united states senate. to pass the tax bill, they need at least 50 of them. there are several republicans who are at risk of flaking off and stopping tax reform. and president trump is not task of holding them together any easier. >> no, and the president obviously is not on such great footing with senator mccain, also of arizona. certainly rand paul has different ideas about what should happen with tax reform. do you think that these republicans in the end will go along with a republican tax bill or is it just too early in the process to say?
>> reporter: most of them will, tyler. i talked to two mcconnell advisers who say that they're confident that jeff flake will go along with the tax bill despite the blistering criticism. but there are at least three republicans vulnerable to defecting. one is bob corker, one is john mccain, one is rand paul. bob corker says he won't vote for anything that adds to the deficit. rand paul wants a bigger middle class tax cut. john mccain also has longstanding concerns about the deficit. this is not going to be easy for the president. and the more he engages in these skirmishes, the harder he is making it. >> john harwood in washington tonight, thank you very much. during a lunch meeting with senate leadership, the president asked who the senate members, the gop, would like to see him nominate to lead the central bank. one report indicated that stanford economist john taylor, a so-called hawk, won the informal vote. and as steve liesman reports, he
is just one of five on a short list of candid >> reporter: president trump has narrowed his choice for fed chair to five names. one may bring dramatic change. the other would maintain the status quo. the position is one of the most important the president will choose. the leading candidate is believed to be jerome powell, over here. he's a republican nominated by president obama. the federal reserve governor since 2012 was previously a partner at the private equity firm the carlisle group. and he favors rolling back some financial regulation, keeping some as well. powell is seen bridging the gap between a desire for change at the fed by some republicans and a desire to maintain the status quo which wall street seems to prefer.
treasury secretary steve mnuchin favors powell. kevin warsh served during the financial crisis on the federal reserve from 2006 to 2011 but he broke with fed officials when he left in 2011. he thought the fed had gone too far in keeping rates and policy too low for too long. the question is whether or not warsh being the fed chair would mean higher rates. trump is also considering john taylor, really seen as a leading light in m. he has strongly advocated for the fed to follow rules for setting fed policy. fed officials oppose him, saying it takes away discretion during financial crises. the president says he likes and respects current fed chair janet yellen and she remains among the top five. but most believe the president wants his own person in the job. the president could face opposition from republicans who have been critical of the fed. still, yellen has more
experience at the fed, as you can see here, than all of the other candidates combined. gary cohn, director of the national economic council, a top economic adviser to the president, was once a leading candidate but his odds fell almost to nothing after he criticized the president's response to the violence surrounding the charlottesville protest. the futures market gives him less than a 2% chance of being named fed chair. the markets rate the possibilities and try to price them in. white house insiders say the only list that matters is in the president's own mind. and no one has seen that list yet. for "nightly business report," i'm steve liesman. home prices are higher and many are expected to tap into that newfound equity. that means more people are likely to take out home equity lines of credit. but not in the same way they did a decade or so ago. diana olick explai. >> reporter: since the housing crash, homeowners have regained over $6 trillion in collective home equity. but they haven't been tapping
it. part of that is stricter mortgage underwriting and just a hangover fear from the housing crash. that's all changing now. about 10 million homeowners are expected to take out a home equity line of credit in the next five years, more than double what originated in the last five years. why? people are not moving so much because of the limited supply of homes for sale. also, lenders had pulled back on theories keyer loans after the crash but now refinances have dried up. what will people do with the money? harvard's joint center for housing said we will spend over $300 billion renovating and repairing our homes in the next year. home equity lines will be used to consolidate debt and lower interest rates and to refinance old lines that may be hitting the end of the draw period. that's when you have to start paying principal along with interest. it's home as atm again. but this time lenders will limit
how much you can take out. in other words, you can't take l of it. for "nightly business report," i'm diana olick in washington. >> to read more about the expected rise in home equity lines of credit, head to our website, nbr.com. ahead, a big breakup. the relationship fears will end after 100 ye a 100-year marriage is over. after a century-long history together, sears will stop selling whirlpool appliances effective immediately. shares of both sears and whirlpool fell with whirlpool sales also pressured by a profit warning late yesterday. the losses were steep.
.eema mody takes a look at this >> reporter: after working together for more than a century, sears and whirlpool have cut ties due to a pricing dispute, meaning customers can no longer buy whirlpool appliances from sears apartment stores. in an internal memo to employees, sears wrote that whirlpool had sought to make demands that would have been prohibited us from offering whirlpool profits to our members at a reasonable breakup with se whirlpool reported disappointing earnings and cut its 2017 guidance, citing sustained inflation. the ceo made the point that cutting ties with sears won't be a big loss for the company. >> to give you the expect of magnitude, the entire sears business represents 3% of our global business of which the brand portion is only a small
fraction. >> reporter: whirlpool has been dealing with competition from where then electric. south korean players, samsung and lg, are selling their products in the united states below cost, making washing machines a controversial trade battleground and sears is also dealing with a challenging environment as it rivals lowe's, home depot, and best buy. sears' market share has been on the decline in the u.s. and experts say this breakup with whirlpool could serve as yet another roadblock for the department store. for "nightly business rep. former dow component at&t reported earnings that missed wall street forecasts. the number two wireless carrier also posted a loss of video subscribers. the company earned 74 cents a share, a penny shy of expectations. revenue down from a year ago to about $39 billion. investors were left wanting more. the stock lower in initial after hours trading. and julia boorstin now has the one key takeaway in at&t's resu
>> reporter: at&t's results were a bit lighter than expectations on both the top and the bottom line. but while at&t's video numbers disappointed, there was a bright spot. its wireless subscriber gains were stronger than wall street expectations. this after the company preannounced the loss of 90,000 video subscribers in the quarter, saying that while it added more digital video subscribers than expected to its directv now service, that couldn't make up for traditional video losses. for "nightly business report," i'm julia boorstin. hurricane disruptions hit results at jetblue, that's where we begin tonight's market focus. flight cancellations due to two hurricanes along with higher revenue costs hit into earnings at the airline. jetblue says those factors will likely carry into the fourth quarter as well. still, numbers topped estimates. shares finished up nearly 4% to $20.62.
the drug maker biogen reported results that beat street expectations. sales of the company's spinal muscular atrophy drug beat expectations but concerns arose about future revenue growth for the treatment. shares of biogen were off nearly 4% to $315.73. > eli lilly said robe robust demand for its newer drugs will offset losses when it loses some of its patent protections in 2018. >> we're growing through that. 9% growth. if we exclude the old produc, our newest products drove almost 14 points of growth for the company. that's the power of our innovation story as we return to er products are getting bigger faster than we're losing
revenue on the patents. >> eli lilly shares fell to $85.17. td ameritrade saw profit above street expectations. the ceo said investor engagement remains strong despite low market volatility. >> we see quite an engagement uplift. our new accounts are going up. and we have significant increase in our net accounts year over year. we're up about 30% in our accounts this year, over 2016. market participation is broad. >> the company also hiked its quarterly dividend 17%. shares finished up almost 4% to $50 on the nose. chipotle served up a disappointquarter. after the bell the burrito chain reported profits and sales missed analysts' estimates. the company said it was some encouraging signs, shares initially fell in extended
hours. they did finish the regular session up 1% at $324.30. while california wineries are trying to recover from those recent wildfires, there's another industry that is taking a big hit from that natural disaster. marijuana. some cannabis growers are still reeling from the fires just months about the legalization of recreational marijuana in the state. aditi roy reports tonigh >> this is how you got to my front door. here we'll go up and go in the second floor. >> reporter: damon crane can tell you exactly why everything was in his house, even though there's nothing left of it. >> this was a doorway going into my lower part of my house. my sister's room is right here in the corner. >> reporter: he lost virtually everything, and barely escaped him with his family when the flames came over the hill and
peered into his home. >> it just looked like a wall of flames coming straight towards me. it took ten minutes for us to get going. i started using the hose to wet the house but i knew the flames were too close. we jumped in the car and took off. >> reporter: he didn't just lose his home. he lost his livelihood. what did this used to look like? >> it was green for sure. >> reporter: he's a marijuana grower. he was getting ready to tap into a growing market with the state's legalization of recreational marijuana two months away. crane had spent tens of thousands of dollars to meet the regulatory requirements of recl. that's money he won't get back, because marijuana is still illegal on a federal level, you can't get crop insurance for what he says was going to be a banner harvest. >> it was two days away from harvest, it was coming out
really amazing. >> reporter: crane is one of at least 34 pot farmers in california who lost everything in the wildfires. it's still a small slice of the 50,000 growers in the state. but for those who were affected, the losses are huge. unlike wine grapes which were mostly harvested, marijuana was at the end of the growing season, which meant most of the crops were still out. the facilities here were all full of cannabis? >> yes. >> reporter: and you can't even make out -- >> i'm trying to tell the difference between the dry room and some of the storage areas. >> reporter: dennis hunter is co-founder of a company which grows and distributes medical marijuana to 500 dispensaries. he showed us green houses and processing facilities once full of cannabis, leveled. hunter says they lost a third of their crop. they're now examining the crop
that did survive in their lab to make sure there's no smoke damage. >> it will definitely affect how we do business. and having that working capital to keep growing and providing more products for our patients. >> reporter: despite their losses, both hunter and crane vow to rebuild and replace what mother nature took. what are you going to that's what we do. i'm going to clean it up and keep going. >> reporter: hunter says they expect to make up for the losses by relying more heavily on the growers who were not impacted by the wildfires. statewide, insiders say they did not expect pot prices to go up since the majority of growers throughout california were not affected by the wildfires. for "nightly business report," i'm aditi roy, santa rosa, california. coming
general motors reported a drop in profits. its results were still better than expected. the largest u.s. automaker reported a strong sales of crossovers in the u.s. and china, despite a planned decrease in production in north america. >> we generated solid results. we're very pleased with the position of our u.s. dealer invent 120,000 units. that sets us up not only for a good strong fourth quarter, but going into 2018. >> shares gained 3%. are ride sharing companies like uber and lyft killing the taxi business? those companies are becoming more popular, especially in new york city, where the yellow taxi
has long been the king of the road. phil l. >> reporter: it's not the death of the cab. but there's little doubt fewer people are hailing taxis. in fact morgan stanley says more people took an uber instead of a taxi in new york city last july. it says uber snagged 36% of all rides in new york just ahead of taxis and other ride share operators. uber's rise in popularity means it is now the dominant choice for those using a ride share app, and increasingly that includes business travelers who are hailing an uber instead of renting a car or waiting for a taxi. but uber's competitor, lyft, is gaining ground. the corporate travel expense firm certify says corporate travelers chose lift 11% of the time when choosing transportation out on the road. the growth in ride sharing is one reason why rental stocks have fallen out of favor.
hertz, avis, and other rental car companies say it's a mistake to write off their businesses. after all, there's still demand for their rental cars. but as these new reports show, increasingly ride sharing is how more and more people are choosing to get around. phil lebeau, "nightly business repo chicago. >> and to read more about the road ahead for lyft and other ride sharing companies, head to our website, nbr.com. that, folks, is "nightly business report" for tonight. thanks for watching. i'm tyler math. hope you have a great evening. we'll set.
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