tv Nightly Business Report PBS March 15, 2019 5:00pm-5:31pm PDT
ouncer: this isne "nightly bu report" with bill active or passive. stocks are having their best start to a year in decades, and with a bull run tenears strong, are indexes still the best way to go? >> playing thegame. the big money parents shell out on the college prep industry. and round two. amazon got pushback in new york. well, now its pla f a new headquarters in northern virginia get put to the test as well. those stories and more tonight on "nightly business report" for this friday, march the 15th. and we do bid you a good evening, everybody, and wcome ck. sue is off tonight. yes, today is march 15th. if you remember your
shakespeare, that means it's the ides of march. thanks to the saga of julius caesar, it is a day if you're superstitious to worry about. d investorn't need to worry today as stocks took off about reutwed optimism ahe u.s./china trade negotiations. stocks also got a lift from boeing after a report said that the company was set to roll out a software fix for its gunded 737 max planes in ten days. but then boeing did admit its timeline for a fix is unchanged. well, today t d rose 138 points. the nasdaq climbed by 57. the s&p added 14. for the week, a three maj indexes were solidly higher. in fact for the nasdaq and the s&p, this was their best week of the year so far. and with e stron surge to start the year, many are again asking, are you better off with passivendex investing? bob pisani has the story. >> call it t triumph of
indexing. fund managers continue to trail their benchmarks. active managers who claim they would do better during periods of heightened volatility will have to find anoer argument. this week s&p dow jones indices released its report on how actively managed funds performed adainst the b market. active managers continued to show dismal performance against their passive index benchmarks. roughly 65% ofarge cap funds lagged the s&p 500 last year. thatks now m the ninth straight year that's happened. 2018 stood out because othe volatility in the fourth quarter. a managers did not ose wild outperform. that will bolster the claims of any financial managers who say investing in low cost funds remain the sound's investment strategy. this study has been going on for 16 years. the long-term results only strengthen the claim for index
investing. indeed while a fund manager may outperform for a year or two, the ou erformance does not last. after ten years 90% of large cap ndsunderperform the s&p 500. after 15 years more than 50% of trailing the index. longer term, the numbers were not much better in other categories like small cap stocks or fixed income. 80% or more of active managers across all categories underperrmed their respective benchmarks over a ten-year period. looking at managers' overall record last year, 2018 was the fourth wor year for stock managers since 2001. for "nightly business report," i'm bob pisani at the new york stock exchange. and jonning usht to make the case for active investing is an aively managed fund manager. sandy villari is back with us. good to see you >>again. thanks, bill. >> better performance on lower
fees. the advantage still goesith the passive index funds. what say you? >> sure. i mea certainly on the fee perspective. but if you look at a lot of the actively managed funds, a lotf them are closet indexers so they really have a low kind of active share where they really don't deviate much from the k.benchm what we try to do is to really coentrate our positions on about 20 to 25 of our very best ideas and try to irease that active share so we do deviate from the benchmark. that's sort o our tak on it. >> and you bring up an interesting point. you have to admit the structure of the market has changed dramatically over the last 10 or 15 years where you have this proliferation of etfs, the exchange traded funds. many mor index funds. the rise ofit algic investing, which tends to move indexes in tandem at all times. it just plays itself out where you want to go wit index
investing at that point, right? >> yeah. when youook back at decemb last year, which is the worst month since the great au depression, b of all the etfs, et cetera, you had pretty much the w -- the correlations went to one. everything moved in tandem, which was a little frightening. >> however, i have a theory, let's see what you think. as long as the market is i a bull market, yes, index investing will be the advantage. eaen you get a market inevitably or a downdraft of some kind, that's when you active managers can outshine. what do you think? >> yeah. so when you look at th s&p 500, it is market cap weighted so the top ten positions are ones that have been very successful.ou so look at the faangs, facebook, apple, amazon, google and i'd add microsoft to that list are 14.5% of the s&p 500. when someone buys that passive fund, hopefully they realize they're putting 14 cents o every dollar into those five
companies. so it's all fs when thio up and they continue to do well. but if you get some issues like happened with fk today where you get their chief product officer that's stepping down or other things fro an antitrust standpoint, it could be tough sledding for some of those big guys. >> indeed. sandy,s ways, again, thank you for joining us tonight. >> thank you, bill. by the way, that hope that i mentioned earlier about trade was sparked by a report that china's vice premier spoke on the phone today with treasury secretary mnuchin and with trade representalighthizer. there was also a perceived positive step at e close of the two week long nationa peoples congress in china. eunice yoon has more details on that for us. >> reporter: the main event today was the passagene of th foreign investment law, which could be a signal that bay jieig is willing to make compromises on its trade deal with washington. in anu highlyal move, the
draft law was revised at the very last minute to include language that addresses a long-standing issue facing american companies on ip theft. e of the big complaint is if companies want to introduce a new product or open a factory here, they need to go through ae licensing p with a government-led board and give a lot of proprietary information. this has been seen as a way to steal secrets and passhem to chinese competition. the new law is meant to address those sker barring officials from divulges trade secretsnd threatening them with criminal penalties. there is auestion of how it will be implemented. at his annual press brfing, the premier said he hoped the u.s. and china would produce a good tradedeal. he was also the highest ranking official to attempt to ease fes that beijing was using technology madeir by like huawei to spy on other countries. you explicite tel low this is not consistent with
chinese law. this is not how china behaves. we did not do that and will not do that in the future. the pedmier outl measures to stabilize growth. the most important tool, he said, big reductions to taxes and other fees. previously announced tax cuts i would kic in april. social science cuts could start in may. he repeatedhat china wouldn't engage in a flo-like stimulus. for "nightly business report," i'm eunice yoon in bbeijing. it has taken down celebrities and ceo s andwned half a trillion dollars worth of lawsuits. in the process, this week's college admission scandal has shined ath light o big business of getting into college. tonight our robt frank takes a look at one part of ,that the cvisers. >> reporter: theollege cheating scandal has cast a spotlight on one of the fastest growing industries in education, college consultants. there are now about 8,000 private educational consultants
in the u.s., up from just five years ago. revenues are over $400 million a ar. if you add in test prep and tutors, the numbers are timated to be in the llions. college consultants say william rick singer was just a bor a in an otherwise important industry that helped guide students in the college process. demand is soaring for kids of younger and younger amges. every other day i have a second grader or third grader's parents calling me asking what can we do as a second grader to help in the college admissions process. i id there's nothing we can do. yournly thing you can do child do what he wants to do. if he's interested in art, ceracs, painting music, let them explore those passions or talents and take it from there. maybe advisers charge around $15,000 a year with others charging by the hour.
some over $1,000 per hour. the most expensive programs run the hundreds of thousands of dollars over multiple years. me estimate college consultants are used by one-quarter of the students at private colleges. advisers say their focus is helping kids figure out what they want in a sc sol,teering them to the best fit and giving them a road map to get there. yet many parents, schoolci ofs and others say the college prep industry preys on the anxieties of wealthy parents, and helps widen the gap between the haves and the have nots in education. >> we offer scholarships and prs bono servi for students who can't afford it. we're not in this industry to widen the opportunity gap. unfortunately, this is the gait. an unfair game. we want to make sure that all heirents, regardless of family income level, have a fair chance, as much as that could >> be. he bull market for consultants is expected to continue, because the acceptance rates keep shrinking and the
criteria for getting in remains so opaque.e acceptance rate for stanford was 20% in 1994 now it's under 5%. with odds like those, it's no wonder that families are seeking any help they can get. fornitly business report," i'm robert frank. right now it may be g easie a job than to land a spot at a prestigious university t in fac department of labor said today there are 7.5 million job openings across the country. that t is therd highest level on record. but as we've heard, the problem ha that many employers have not been able to find enough skilled workers to fill those jobs. joining us now with how you can land one of t jses is our senior personal finance correspondent, sharonep rson. what are those skills that we keep hearing about that people are in such demand right now? >> a lot of people think they're hard skills, that you need to technology.west having technical skills is very important, but it's also important to have soft skil.
career builder did a survey and asked hiring managers how important are the soft skills. they said 80% of the hiring managers want theseor skills than hard skills. be a team player, be able to w with many people on a team, pay attention to detail and focus on customer service, not just outside of your company but within other departments. make sure you're willingo work with others. >> are there areas more in demand than others? >> skilled labor is where a lot of the jobs are. about 25%. but another big area is data analysis, digital cyber security. u may find cyber security experts in health care or financial services, not justno tegy companies. so focus on the skills and then go into various areas and those skills become transferable to many different jobs. >> here's the question, how do you get those skills? where do you go? >> it's important to try to volunteer if you can for a small business, for a nonprofit
organization. getting some of those skills, take a class. when you get that experience, make sure you include thatn your resume. volunteer experience is still experience if it's relevant to what that job is lookingfor. also make sure that the words that are needed in terms of the type of technology that you're learning, include those words on the resume also. and the most important part is stay positive be confident. come into the interview, present yourself in thnd cover letter in your resume as if you've got this, you're ready for the even if you're learning on the way. don't let them know that, you'll ready. >> i heard somebody say this week but any mored you don't n a grow, you just need job skills. >> you definitely need job skills. you're getting your education, internships are critical. volunteering again, we want p t ged for our work but if you need the skills, you should just get that perience. >> sharon epperson, thank you as always. have a good weekend. coming up, this week's market monitor says believe it
or not there are ways washington can help your portfolio. he'll tell us how. tesla has finally taken the wrap its highly anticipated next vehicle, the model y. this small suv won't be out until late next year, but already qstions are swirling about whether this wl be a huge hit or not for tesla. phil lebeau has more fs >> the model y. >> reporter: it'she small suv driving big expectations. tesla's model y,g startin at $39,000, could eventually be the
automaker's best-selling vehicle ever, especially with the world's growing appetite for smaller utility vehicles. >> i'm confident that bt will of any midsize suv, it will be the one you want. >> reporter: the new suv will be built at tesla' plantn california, and at a new plant under construction in china. given the challenges tesla has faced ramping up production of its small sedan, the model 3, some analysts are wondering if the model y will wind upsi havi lar problems. by the time the model y comes out, theredy will alr be a number of other electric small suvspe adding ction as tesla tries to push sales from a quarter million it d y lastr to the expectation of well over a half million vehicles next year. >> we think tla is goio be facing a lot more electric vehicle competition from the likes of audi, jaguar, bmw, mercedes and others, starting
with the 2021 model year. he reporter: and that's not only challenge facing tesla ceo elon musk. he's been strimd pped of his chairmanship by the.e.c. and is still battling with how he uses social media to talk about his country. >> it felt like aging five years in one. it was really intense. sl reporter: s biggest difficulty is managing its cash flow and potentially turning a profit, while trying to sell moreower priced vehicles like the model 3 and eventually the model y, which isul sch to go on sale late next year. phil lebeau, "nightly business repo apple loses a round against qualcomm, and that's where w begin tonight's market focus. a san diego jury today found that apple did indeed infringe on threeatts held by mobile phone chip supplier qualcomm.
as a result, appleust pay$31 million for the infringement and this was only one of a series of patent lawsuits between these two companies going on around the world rightnow. shares of both were higher. apple was up 1% to 6.12. qualcomm gained 2% to 56.60. ford sai today it is cutting 5,000 jobs in germany and an undetermined number in the uk. it's all part of a larger $11 billion plan to restructure thee autos operations worldwide. ford was up two pennies to $8.43. shares of ulta beauty hit a 52-week high after quarterly results topped estimates a ler the belt night. the cosmetics retailer me-store sales rose10% on an increase in customer traffic. the ceo cited the popularity of kylie jenner's kylie cosmetics. ulta 3% to $338.41.
michael polk will retire at the ending of the second quarter. during his 10 totenure, the houd group company had been accused oftrategic missteps and the company agreed to give them board seats and accelerate a turn-around plan. newell was up a fraction today to $15.56. time for this week's market monitor. r guest has names of companies that he says could benefit from policy and regulation changes in washington. this is his o first timethe program. we welcome ben phillips. he's chief a investment officer eventshares. ben, good to see you. thanks for joining>>s tonight. hank you, bill. >> the first one has to do with the possibility of any infrastructure plans that may come out of washington, and you've chosen a company that might ben fefit from that, righ? >> that's right, gran it construction,gva.
we like the management team. he60% of revenue comes from infrastructure spending for the most part. usually it's l by the states. one fun fact for you. 29 states have increased gas taxes since 2013 in order to pay for infrastructure so we think they will be a key beneficiary since it's a nonelection year and that's when states hike gas taxes. last year the supreme court allowed stateso collect sales tax from e-commerce companies even if they're not basedn that state. you've got a company that came public last year and it's been on a tear this year. you think it could benefit from this change in rules. >> it's avalera, avar is the ticker. they a one of the few with this really high-quality sales tax compliance software they're able to use it across the nation. it's really beenmpowered by broadband internet and 5g telecom wil be the next big
empowerment for this company. >> 5g is expected to roll out later this year and you've chosen an old guard name in the technology world but this is very well, and that's cn. >> this is a mini noki nokia/ericss. he thing is it's much more dense. it requires a much higher density so you need these nodes closer together versus the ones right now the density requires a higher equipment cap ex, more upgrading of equipment and more spending. we think they are a direct beneficiary of that. >> all right, we will see what happens.ha ben,s for joining us. see you soon. ben phillips with eventshares joining us as our market monitor tonight. and coming up, amazon faces activists in arlington. >> a key vote this weekend could cide whether amazon's hq2 in
virginia goes the way of hq in new york. we'll have the story coming up on "nightly business" last night we told you about amazon's real estate exact in arlington, virginia, withth hom e selling at a brisk pace for rich prices. well, now a key vote this weekend in arlington could decide if amazon's hq2 project ewere does go forward or if it gets theork city treatment. amazon is promising to create some 25,000 jobs in th crystal city area there. some activists want to do what new york city did and send the company packing. scott cohn is in cryst city for us tonight.
>> reporter: there's no question amazon woual transform cry city, but there are lots of questions abouthow. >> as long as they're doing what they can to make sur traffic doesn't become an issue, it's an opportunity for virginia. >> what i'm concernedbout is what the workers are going to get as far as a living wage. >> i'm sure that's goinge to m prices skyrocket and make it hard for people to potentially buy in the futur >> a coalition ofgrommunity ps has been whipping up the frenzy, energized by activist success in driving the project out of new york. now they're targeting a saturday vote by the arlington county board on $23 million in newiv ince for amazon. >> we absolutely think that the county should voteeown thes incentives and put thatne towards investing in the community. >> proponents say the incentives are investing in the tmmunity. of $750 million approved by the state. christian dorsey is resisting calls to delay saturday's vote. >> there i nourpose to the
delay. when you have no purpose to something, doing io me is a breach of the public trust. >> the county incentives are mazon o the office space occupy, a boone to the developer who owns most of the property in crystal city. there are other perks for amazon, including a provisionm giving the advance notice of public recordsrequests, allf which the county defends. >> this is the way economic development has gone in this country for the past decade. >> $23 million in incentives is the equivalent of one hour's revenue for amazon. ev if they reject the package, it's not clear it would make any difference. but the activisting vow to be there makin hq2 not nearly as easy as amazon apparently once thought. for "nightly business report," scott cohn, arlington, virginia. and before we go, a final look at the dayknd the w on wall street. both strong. the dow rose 138 points.
nasdaq, technology continues to be the leader thisweek. it climbed by 57 points. the s&p added for the week all three of those major averages were solidly higher. for the nasdaq and the s&p, this was their best week of the year 2019ar in that is it for "nightly business report" for tonight. thank you so much for watching as always. e want to remind you that this is the time of year your public seeks yourstati support and we do thank you for that support. have a great weekend, everybody. we'll see you