tv Nightly Business Report PBS September 9, 2019 5:00pm-5:31pm PDT
>> announcer: this is "nightly business report" with sue herera and bill griffeth. attorney generals really care about where the rubber meets the road, and thatros for the residents of their state and consumer we also care about businesses,l especima s businesses tt may be locked out as a result of what may be monopolistic power. >> sending a message. almost everytate joins an investigation into potential antitrust behaviort google. don't look now, stocks are record levels.g back towards what investoes need to keep in mind as the market grinds higher. and to buy or not to buy? the falln housing seas under way and mortgage rates are falling.
but biddingar haven't what s?d. all that and much more tonight on "nightly business report" for monday, september 9th. good evening, everyone, and welcome. nearly all of the llnation's attorneys general are joining together and opening up an investigation into google over antitrust concerns. we told you last week about the possibility of a bipartisan probe into google's practices, but n t we know size and the scope. just friday google said it received a request for informion from the justice department about past ininstigations. ylan mui has details. >> reporter: 50 attorneys general are ban launch a sweepingg antitrust investigation into google. standing inf fronte supreme court, they voiced concern about the dominance of google'sat seah rm but pledged a thorough and fair proceeding. >> this investigation is not a lawsuit, it is an investigation to determine the facts. and right now we' looki at
advertising, but the facts will lead to where the facts r:ad. >> reporoday a.g.s also said they're worririorbout ivacy, search bias andog whether is buying up and locking out competitors. several a.g.s stressed that they support innovation, but questioned whether google has >> the questor us today is whether google has strayed from its founding princles to not do evil in its search and releleless drive to be the market dominantplayer. >> reporter:pl but some experts caution the broad scope of this instigation could backfire. >> if it's that these are bad for consumers,e they'll h a very difficult casas to make, which is why there has not been action at theedal level is igureall the sides cannot out, we know what google is doing something wrong, we just can't figure out what it is. >> reporter: 48 states along with the district of columbia uerto rico have joined together. only two states are not operating, alabama and california, where google is h d
headquarterad artered. californ remains deeplyco erned and are for fightingti prs. it didn'tove the needle much on google's parent company, alphabet. you can make it four straigf days gains for the dow jones industrial average as optimism remains over the upcoming tlkde but a decline in technology shares kept a lid on gns in the broader market. the dow rose just 38 points, nasdaq ropped by15, the s&p was essenti.ly flat mike stoli gives us his current view of the market.>> the stock market finds itself back in a familiar face with a somewhat different view this time around. after climbing above its choppy august trading range last week, the s&p 500 has returned to its .evel from july 311st since that point both interest rates and investor sentiment have moved quite a bit. in late july the 10-yea treasu yield was above 2%.
it is now around 1.6% after plunging under 1.5 after recession fears flared. lower yields are good for stocks, so long as t economyg isn't enter recession, which explains thehe5% bounce a global rush for safe bonds and heated trade war volleys between the u.s. and china have investor stratogy far more than the 6% pullback would t. this too is a potential positive for stocks as investor pessimism, evident in surveys and heavy withdrawals from stock funds often give way to relief llies. stocks on their own are not particularly cheap. in fact lt ouyear'sh quarter collapse started with the s&p at a similar valuation to what we're seeing rightnow. but with u.s. economic data holding up better than feared and the u.s. federal reserve poised to cut rates thi month, there is a chance that bond yields and investors belief in stocks overshot to the downside in augu
this doesn't meanol theility is over, but perhaps wall street next jolt, wherever it might come from. for "nightly business report," i'm mike santoli at the new york stock exchange. >> so as the market heads higher, what should you be watching? joinin us is barryjames, president and portfolio manager at james investment research. s nice t you again, as always. >> it's great to be with you. >> what about mike's final point, that maybe m thisket is better prepared to handle the issues that haven't gone away yet, the fed and interest rates, brexit and the trade war? >> yeah, we've had a chance to digest it, i think. mike's point about sentiment being off right now, not too bullish, is a good sign that people have already maybe hit the exits that needed to hit the exits and g itesoom for the market to go high. you know, you were talking about getting up to nhi s. shh, don't tell anybody. let's keep it between ourselves njso we can it. >> yeah, but for that reason you
are pretty cautious on thism market four own portfolio perspective. you're still very defensive, en't you? >> we are. we're about half stocked and half funds in our balanced accounts, and the types of stocks we're buying a hopefully ones that can weather the storm on either side. the consume iuying and we saw that today with the consumer credit number a peop certainly using their credit cards. so that side of the economy i think is going to be all right and that's probably a good place to add. but as w just heard on the technology side, you get into these -- you know, these antitrust things, the same thing happened in 2000, 2001, andwa tt 't a very good time for the tech stocks. but they have been leading this advance so there maybe will be a move over into more sane types of set rities. >> we you anticipating from the fed, and how might it affect the markets we edge
daily closer to the next fed meeting? >>yes. they have given every indication they're going to be cutting probably multiple times yet this year. as long as they flow that path, which everybody expectct i think the market will bey ste as she goes. if they don't do it, that might cause aittle bit of fear. then people will be worried about recession. but i think they're just kind of steady as she goes, bring down those short-term rates because they're really kind of out of whack with the rest of the bond market >> they are, but we've bn hearing from banks today and lately that those rates are cutting into their net interest margins. it's hurting the loan portfolio. all these other areas -- talk about those parts of th economy that benefit from lower rates but there are still plenty parts of the economy that don't, right? >> yeah. the banks make it on the spread between short-term and
longer-term lending and that's prty nrow right now. so they're looking for fees in other areas. that's you and me. >> right, right. >> that they'rey' trying to get those fees from where ihey can't ge on the spread, as it were. so they're trying to come up ps and ferent different services that they can charge us for. i'm not tooorried about the big banks, i'l be i'm reallynot. >> what would you recommend in terms ofng b somewhat defensive? give me a couple of soutors that you like. >> sure. i would go with the consumers, especially noncyclical typesf stocks. that would be like the krogers of the world or even on the consumer sidehe walmarts. they are going to continue to have very, very good busineou. i say some things that are sure to keep showing up a yr doorstep a the waste collectors like republic. we like them pretty well.
and, you know, l alsok at the real estate area. some pockets in the real estate area like public storage and things like that look pretty good. >> barry james with james investment research, than. aifth person died over the weekend from that mysterious lung illness apparentlyy relate toen vaping. today the american medical association urged the public to avoid e-cigaree use altogether until more can be learned. in the meantime, the govnment is getting involved and the industry is on notice. aditi roy has more from san francisc >> reporter: the heat is on e-cigarette companies, asl fede regulators hikeressure on the industry amid rising reports of vaping-lked lung illnesses. nge fda today issued a warning letter to juul over its marketing practices, saying the company has h represented that juul products present a lower risk of o-tobalated disease or are less harmful than one or
more otherrc comially marked tobacco products. juul has 15 days to respond. the fda letteromes after the cdc warned people last wee to stop using e-cigarettes amid hundreds of nasesionwide of vaping-linked lung illnesses. so far the ancy is investigating 450 cases across 33states. five deathsatave been reported. many of the cases involve thc, the active ingredient in marijuana, or a combination of thc and nicotine. a small number involved just nicotine products. former fda cmissioner gottlieb says the root of the problem could be black market ts prod >> it doesn't look like these are legitimate legally sold vapes that conin nicotine produc sold by the big brands. those are not safe. they stillau can harm. we believe they can cause chronic lung injury with prolonged use, b it doesn't appear they're causing the kind of acute lung reactions we' seeing right now.
ee reporter: juul says it's been monitoring the situation adding s products don't include thc, any compound dived from products.or those found in thc juul is working on its applation to keep selling e-cigarettes in the u.s. that deadline is next may. i'm aditi roy, san francisco. >p next, lobster dealers ares boiling mad. >> reporter: these maine distributors are in a kind of lobsterjail. trapped by tariffs. i'll have the story ahead on "nightly business report." maine's lobster industry has
invested heanly to o the chinese market, but now tha new tariff have gone into effect, contessa brewer tells us how fmuch the group isling the pinch. as you saw, she's in maine for us tonight. >> reporter: stephanie meadows' space is small but the lobster company does big business and, well, lobster. >> i primarily export lobster. >> reporter: and when the maine lobster industry worked to open up chinese markets, stephanie was right there, investing, expanding to open up the voracious appetite for lobster. we were doing half our business with china. this place would have been ce rocking and rolling. we had basically a 24-hour operation. >> reporter: but since last supper, stephanie's st sales ha plummeted by half. she'sut hours and workers, the imdect of a t war and china slapping tariffs on arican r. lobs >> july 6, 2018, it all came to
a seeching halt. and we didn't really sell any more lobsters to china. >> reporter: she's not alone. the uoverall. lobster industry has seen its exports to china plummet 60% the first half of this year, compared to the same time frame last year before tariffs went into place. and now china has just tacked on tariffs, now totaling 35% on american lobster. you know who's benefitting in this whole trade war between the u.s. and china? canada. >> it's the same product on the northern side of the border as it is here in the state of her maine. and so the opportunity just presented themself to them and they'ralizing on it. >> reporter: canada's lobster business in china has jumped40% this year, and canada has signed a free trade agreement with the ropean union that willfa litate its movement there. the u.s. has nouch agreement. u.s. lobster exports to canada
have jumped 130%. sources on both sides of the border tell us they believe maine lobster is being shipped from canada to china. the premium is not close to what they makelling to china, so no matter how you crack it open, the maine dealers are losing money. >> most people's pockets aren't deep enough to sit around and take a 50% hit to your business waiting for it to return. >> reporter:he lobster company in the midst of a w trade trapped by tariffs, and not knowing when it will end. contessa brewer, "nightly business report." an activist investor calls for a that's where we begin tonight's market focus. taking aore than $3 billion stake in at&t, wrote a letter questioning that company's acquisition strategy and called on it to cut unnecessary assets to improve itsbusiness. the hedge fund is also seeking seats on at&t's board. at&t shares rose about 1.5% to
36.79. cable operator altis is looking to join the wireless industry by offeringmo unlimite le service for $20 a month. the new unit will use at&t and sprint's wireless netwos to deliver its service and the co any's ceo says the price is guaranteed for life. shares dropped nearly 2.5% to $28.43. u.p.s. is planning to hire about 100,000 seasonal workers the hires make between $14 and $30 an hour as p.s. expects a record season for daily package deliveries during its peak shipping season. shares were up more than1% to $121.66. acadia pharmaceutical shares soared after the latest trial of its meparkinson's tre showed promise on patients with dementia so acadiat plans to m with the fda next year to add dementia to that drug's list of
applications. shares skyrocketed more than 63% today to $38.85. target plans to roll out a vamped loyalty program called target circle. that will be nationwide nt month. the free program offersli perso 1% cash back on target purchases and early accesso sales. other retailers require macy's, nordstrom and kohl's have been spending in their loyalty programs. me bank ofca hiked its rating on energer to a buy ratira saying that the challenges facing the battery maker are known and the firm has confidence they can turn things around. energize shares spiked 7% today to $43.46. > well, with labor day in the rear-view mirror, the fall housing mket is just getting under way. the competition is, well, a bit weaker than you'd expect given oday's rock-bcktom mortgageck
rates, giving early signs that buyers may have the upper hand. diana olick explains why. >> reporter: at a sunday open house in dallas, xas, there re plenty of potential buyers for this four bedroom tudor listed at $1.4million, but not a whole lot of pressure. >> for a while it was just a very, very hot market it was really a seller's market for a while. i think it's jt kind of cycling. >> reporter: and that's why darrell and carrie smith areir taking time deciding whether to buy a larger home or enlarge theirurrent one. they worry less about buyer economy.ioand more about the >> any kind of recession could be -- you know, could affect our incomes. we don't know for sure. but it's something that we have to consider. >> reporter: the smiths are not alone in their concern. ironically investor concern isd what's beh the drop in mo mortgage rates, which are a full percentage point lower thanar ago.
that should help sellers but apparently it's not.ar there are fewer bidding wars today than just a yearago. >> i think people are a little more cautious to pull the trigger. in order to really sell a home quickly and for the best value you're going to get right now, you really need torice it correctly, because it hasn't -- it's not a seller's market right >> reporter: consu sentiment in housing improved in august, according to a monthly survey from fannie mae, mainly because a lot more people think mortgagl rates weep falling. but other components of the survey or not so rosy. fewer think now is a good time to buy or sell a home and more job in the next year.ing dustin collins and his wife have buthey're not willing to rush into a new house. >> knowing the frenzy is overll and w be able to find -- it's more about finding the right house for us than paying a little too much for us maybe. feel now that houses are sittsg a littllonger, it gives us more of an opportutyd to fe house we want. >> reporter: a house they want
with a price that fits well in their comfort zone. i'm dna olick in washington. let turn to skyler olson, seor economist at zillow. welcome back, good to see you again. >> thanks for having me >> the one group that you're most concern about are those first-time buyers. why? what do you think is going on ere? >> yeah. the entry level housing market is where weaw kind of the most abrupt slowdown through this past home shopping season. now, tha doesn't -- you know, be honest, it's still a more housing market in general than, say, top-tier homes, but the change, moving from the beginning of the home shopping season where things were really still competitive to now where things have slowed down pretty significantly, right. existing home s on entry level housing have fallen off a lot and it's causing a little bit more inventory in that segment in the sense that things are ting longero sell. overall in august one out of every six listings on the market
had an official price drop. ion here big sugge that demand is continuing to pull back despite low interest rates because really it's about then down pa fact that home values got sout farf pace with incom that keeping up thatha saving,s hard to do. >> you know, diana olick detailed some the reasons why in her research why she found things slowing down. given one in six homes got a price elcut, wha is behind the dramatic slowdown in your opinion in the market? >> i mean it's greater uncertainty. i think it's pretty clear kind of across the board thahothe ing market right now is in a transition. that's causing a few people just to tate. so it's really a good time to buy, depending on who you are right w. if you're fairly confident that your income will persist, say you're in at job mar that you are assuming will be a bit more
insulated from any recessions coming down the pipe, maybe a litt bit more insulated from the trade war, something like that, you have a lot of confiden and you already saved for that down payment. yeah, now's a gat time. if that's not you, more and more, as there's more and more uncertainty imarkets, that's a greater share of potential buyers. the alternainves are sta to look more attractive. if interest rates are w, cash out refis are cheaper and maybe i put an addition on my home instead of turni to the housing market to find another option. right now it' an uncertain time. when things are uncertain, it's hard to lot of confidence in one of the largest purchases that you will make in your lifetime. that's causing housing markets to take a stepte back. >> with tse hesitations comes some opportunity. where do you see the best opportunities geographically around the country rightnow,ht skyler? >> right now housing markets are still appreciating at a fairly fast clip in places like salt
lake city, isindianap charlotte, north carolina. aiat do these places have? they havey successful job markets, but really they're still at a pce pointshat are attainable for buyers, for fi t-time home buyers as opposed to the markets that we've seen over the past few months where home values were falling, like san jose, san francisco, seattle. so a flight to affordability is where you're still seeing buyer interest. >> skyler olson, always good to see you. thanks foryooining us >> thank you so much. up next, how one u.s. university hedgee against a trr. finly tonigh the ripples
of the trade war are trickling down to some of tna on's universities as students head back to school. decline in chinese students and the a billions in revenue that theyraditionally bring with them. as robert frank tells us now, one college had the foresight to protect itself wit insurance. >> reporter: as colleges and universities brace for a decline in the number chinese students, one school has found , solutiinsurance. there are more thanha 360,000 students from china w study in the.s. every year, a number that is now under threat as the trade war makes visas and jobs for chinese nationals harder to get. but the university of illinois is prepared. two yearsago, the university's business school and the engineer schoolought an insurance policy that would pay out if there's a substantial drop in revenues from chinese students. now, it't' unclear if it will b trigged this year since the student numbers are still rolling in, but the population of chinese students at the
time last year. for the first chinese student visas are falling nationally. the insurance was the brain child of jeff brow an economist whose researchocuses on insurance and risk management. when he became the dean of the business school in 2015, heie wo about a potential drop in the university's more than 5,000 chinese students who pay twice the tuition of in-state students. >> this was really, from my perspective, just good risk management actices, which is that we recognize that we had substantial exposure t a single country. >> reporter: brown and another professor, morton lane, who structuresnsurance products, helped create a policy with $61 million in coverage, equal c to thenese student revenue at the two colleges. >> we did a great thing. it was quite orinal. >> reporter: i purances out if revenues fall more than 18.5%. so if i falls 20%, they get a $12 million payout.
the preum is $424,000 a year andhe policy was syndicated through underwriters at the lloyds of london. >> some of the reason it took as long as it did to get in place was neither the underwriters nor the procurement pntple at the university had sn a policy like this before. >> reporter: other schoo have looked into getting their own policy, but given the trade war it has become far tooiv expe brown says while he's happy they have the insurance, he never to file a claim, and the school wants to keep growing its chines and overseas students to thrive in an increasingly global worl i >> the besurance policy is the one that you don't end up needin right? no one is eve unhappy that their house didn't burn down just because they pai pmiums on a homeowners insurance policy. >> reporter: chinese students at the university told us beyond worrying about visas and political rhetor, they ar more worried about getting jobs here after they graduate.
>>f don't know it will impact me like findingin a job here. not many companies willom spons eninternational st. >> reporter: for "nightly business report," i'm frank.t ere's a look at the final numbers from wall street today. the dow rose 38tspo nasdaq dropped 15, s&p 500 was flat. tdt is "nightly business report" for tonight. i'm s herera. thanks for joining us. >> i'm bill griffeth. have a great evening. see you tomorrow.
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