tv Nightly Business Report PBS September 29, 2017 5:00pm-5:31pm PDT
>> announcer: this is "nightly business report" with tyler mathisen and sue h rally rolls on. the wall street boom was alive and well in the third quarter. but will it be a different story in the fourth? red-hot flying high. our market monitor says it could go even higher. mission to mars. elon musk wants to make it a reality in just five years. those stories and more tonight on "nightly business report" for fr good evening, everyone, welcome. and it's nice to be back. what a run it's been for stocks. the quiet grind higher pushed the s&p 500, the nasdaq and small cap russell 2000 to record highs today. on this friday, which is also the last day of the week, the month, the quarter, the dow
posted its first eight-quarter win streak in, yes, 20 years. the s&p 500 recorded its sixth straight month of gains. that's saying something, because historically between may and october tends to be the worst period for stocks. let's get right to the numbers, shall we? today the dow jones industrial averag added 23, to 22,405. nasdaq was up 42, it's 50th record close this year. the s&p 500 rose nine. for the quarter, all of the major indexes had solid gains, as you see right there, about 4% or better. what drove the gains? and what may happen in these final three months of the year? bob pisani takes a l >> reporter: u.s. stocks hit record highs this quarter. stock markets from japan and china had 52-week highs. hang seng and hong kong, two-year highs. bulls are betting that slow but
persistent global growth coupled with tax cuts in the u.s. could keep the markets at record highs in the fourth quarter. the global economy is continuing to expand. growth sectors like banks, energy, materials, industrials, all outperformed in september. the trend is expected to spill over into the fourth quarter. we're expecting double digit growth in industrials and material earnings. energy is also expected to keep rallying, not as much as it was in the prior quarters. major hurricanes had a modest impact on earnings for airlines, retail and insurers. but recovery will like boost sectors like materials and autos in the fourth quarter. tax cuts and technology will also be factored in. tech has been the market leader all year long, up about 25%. but the biggest bet is on semi conductor earnings, set to jump 25% in the fourth quarter. major growth from a number of companies including micron.
one wild card, apple, whose earnings are expected to grow 12% in the fourth quarter. but the stock swayed 6% in september as doubts grew about how many would be buying the new apple 8 and apple x. speaking of wild cards, north korea and the federal reserve are the two other big risks out there for the fourth quarter. for "nightly business report," i'm bob pisani at the new york stock exchange. so let's turn to brad macmillan for more on the market and what he sees ahead in the fourth quarterly. he's the chief investment officer at commonwealth financial network. welcome, brad, nice to have you with us. >> thank you, sue, great to be here. >> you think the market is firing on all cylinders, correct? >> i do. when you look at the fundamentals, when you look at the economy, when you look at all the bad news, it just keeps going up. i think you have to respect that. >> so where do you think it heads from here? i mean, we've had 50, 50, records in nasdaq so far this year. my colleague scott wapner said earlier today that 79% of the
traders he talks to, people like you, think the market will go higher. but zero percent think stocks are cheap. >> i think that's a very fair statement. the question i'm asking myself is not will the stock market go higher, but why wouldn't it go higher. what would bring it down? when you think about all the bad news we've had, the storms, the missiles over japan, the talk of a nuclear war, for goodness sake, and nonetheless, there's a force pushing it up. and that's the strength of the economy, the strength of corporate earnings, and it just makes sense for prices to keep rising. >> now, october, which we're heading into, traditionally i mean, it gets a bad reputation, certainly, and for good reason, perhaps. but september also does not have a stellar reputation, and the market defied those odds. will it continue to do so in october? >> well, what's interesting is, october has obviously some bad days in there.
september historically is the worst month for the market. what happens is the market actually rises, and rises strongly in september, that's a usually a really good sign for the rest of the year. i take september's results as a pretty good indicator that the rest of the year might be pretty good as well. >> what areas of the market seem most opportunistic for you and others that seem a little bit dear? >> well, when you look at opportunity, i think energy is at the front of the list. there's been a lot of disruption, there's been a lot of worry. energy is actually really cheap right now and you're starting to see it respond. that's the biggest opportunity. in terms of areas to be concerned about, i think some of the tech areas, some of the high fliers in particular, may have gotten ahead of themselves. we may see a pullback there. people are looking more for bargains. they see the growth but they're worried about paying too much. >> we also see from your notes that you like europe perhaps a little bit more than the united states. what part of europe?
developed europe? >> right now developed europe is a good bet. the european central bank keeps putting money into the system. companies are doing better. people are feeling better. when people are feeling better, they can spend more money, which is good for profits. you can buy european companies cheaper right now than you can american companies. >> on that note, have a great weekend, brad, thanks for joining us. >> thank you, you too. >> brad macmillan with commonweal network. the president pushed his tax cut plan today in a speech to a manufacturers group. the president said it will reinvigorate industry, small business, and the middle class. >> this will be the lowest top marginal income tax rate for small and medium-sized businesses in more than 80 years. the lowest in 80 years. [ applause ] and it will be rocket fuel for our economy.
>> the president also said the newly-released tax framework would result in the, quote, rebirth of american industry. a new analysis by a nonpartisan think tank concludes that the gop tax blueprint would spread tax cuts across all income groups with the richest seeing the biggest windfall. preliminary estimates by the tax policy center show that the richest 1% of americans would get more than half of the benefits. and because of changes to tax benchmarks, that plan would increase the tax burden on about 28% of middle class workers. but as we've been reporting, many of the details are yet to be finalized, including the income cutoffs for the three new tax brackets. the search for a fed chief is ramping up. today president trump met with kevin worsh at the white house. worsh seems eager to bring reforms to the federal reserve.
other reports are that federal governor jay powell also met with the president. powell is a former top treasury official under president bush. current chair janet yellen's term ends in february. the secretary of health and human services is out. tom price, the highest ranking health official, has resigned his cabinet position amidd a growing scandal over the use of air flights at taxpayer expense. don wright will serve as acting secretary. he is currently the department's deputy assistant secretary. income and spending growth cooled off. the commerce department said consumer spending which for more than 2/3 of economic activity up 1% in august, in line with expectations of a higher rise in july. personal income up .2% in august after a bigger increase the prior month. the government said the data
reflects the effects of hurricane harvey but could not separately quantify the total impact of harvey on that data. today, president trump said the u.s. will not rest until puerto ricans are safe. but he also emphasized the vast challenges involved in the hurricane maria recovery effort. on the ground in puerto rico, a three-star general is taking the reins. contessa brewer >> reporter: heidi came to the convention center with our 5-year-old son, desperate to tell someone in charge how dire the situation is in her town. normally an hour's drive from san juan. how panicked her neighborhood are with no running water, gasoline, or cash. >> do you know what eight like, seven days with 38 cents? i was prepared for. we had enough water and food. we still do. but other people don't. i see a lot of people in the street and i can't help them. >> reporter: post-maria, cash is king. people wait in long lines at the atm for rationed withdrawals,
usually lessof hundred bucks. but they need cash in their cars to drive to one of the 90 open banks or atms. in this line, customers must have cash and patience. they waited 15 hours before the fuel delivery truck arrived. first responders got first dibs. a funeral director waited next to his hearse. you need the gas because you have four bodies to take care of tomorrow. >> yes, i have four bodies tomorrow to cremation. i'm empty. [ sirens ] >> reporter: the government says there's a backlog of bodies at the morgue for lack of resources. generators and fuel are going to water pumping stations. but only half the island has running water. >> it's not enough. >> reporter: the three-star general now leading the military response on the ground says repairing the supply chain and clearing that logistical logjam
will take time. can you give me a sense, personally, now, what you're seeing in puerto rico and putting that in perspective with your broader experience? >> so for me, harvey was monumental in texas, just because of the amount of flood damage. but impact here is completely different. it's like an atomic bomb went off. with all of the wind, and the wind impact knocking down all trees, knocking down electrical lines, it's just a very different disaster. >> reporter: the army corps of engineers is tackling electricity infrastructure. the airport and two major hospitals are now connected to the grid. the governor says companies that can't pick up their containers of essential goods at the port will be required to sell them to the government which will then distribute them. he's reducing the nightly curfew by two hours and lifting the alcohol prohibition. that is cold comfort for heidi, a bartender at ma mega resort.
>> it's overwhelming, not even having a bottle of water to drink. >> reporter: patience is in small supply. like water in the taps, fuel in the tanks, and food in the belly. brewer, san juan, puerto rico. still ahead, did amazon score with its first live stream of a pro football game last t? ment board of equifax reportedly considering taking back compensation for top executives in the wake of the massive data break that affected 143 million americans.
as first reported by "the wall street journal," the board could claw back pay for the former ceo and security officer. the two might not get paid this year and could give up past pay that hasn't yet vested. apple has received a record number of government national security requests for data in the first half of the year. while not disclosing a specific number, the company said it received more than 13,000 requests, more than double the number last year. it's unclear what's behind that increase. apple has had an uneasy relationship with law enforcement. last year the fbi ordered apple to unlock the iphone of the alleged san bernardino shooters. apple refused. walmart's jet.com will launch its own grocery brand to take on amazon, a store brand. the move is designed to compete with whole foods' 365 house brand which amazon recently acquired. jet.com's brand will be called uniquely j and will cater to the
needs of young urban adults, a demographic that walmart doesn't reach as well as jet.com does. store brands have the potential to offer retailers higher margins and more control over marketing and distribution. is amazon ready for some football? the nfl's latest experiment with streaming occurred last night when amazon streamed its first pro game. it's part of a reported $50 million deal struck back in april. the question is, was it a touchdown? julia boorstin joins us from los angeles. good to see you, julia. it was a big deal for amazon. give us a sense for how well the game did. >> reporter: we don't actually know yet how many people streamed the game on amazon. we were expecting those numbers already from the nfl and amazon. but we haven't gotten them just yet. i do have to say, sue, the game got off to a little bit of a rocky start. people were complaining about buffering issues. at one point the feed that we were watching actually shut down and had to start up again.
there were some co on twitter. there was also the issue of a weather delay, a 47-minute weather delay which may have hurt the viewership numbers. >> how big of a commitment is this from amazon? what does it mean for the company? >> reporter: a source tells me that amazon is paying about $50 million for a total of 11 thursday night games. and it's just for the streaming rights. it's not that you won't be able to watch these games where also, but that if you want to log into your amazon prime subscription, you will also be able to watch them live on amazon. this is a very important test for amazon, because they have very deep pockets and they're trying to figure out if it's worth investing in these sports rights which are very expensive, especially the nfl, in order to get people to really be committed to their amazon prime service, then maybe make more purchases related to the game. >> twitter streamed some nfl games last year. how does this compare to when twitter did it? >> reporter: well, it will be interesting to s. twitter had ten games, amazon has 11 games.
amazon did a preshow, a pregame show to try to get people excited. and twitter did not do that. so there are some differences in the way they're handling it. amazon obviously has some other capabilities in terms of retail, they can sell things connected to games, jerseys, et cetera. but the main difference is that twitter did not require people to log in to access the game. you didn't need to have a twitter account to sign up for this. you do have to be an amazon prime subscriber. the numbers that twitter reported seem relatively small compared to television ratings. so for instance, last year, twitter averaged 266,000 viewers at any given minute during the games, a total of 2.7 million people watched for at least three seconds. so the numbers are pretty small. we'll have to see how amazon's numbers compare. >> i know you'll get them to us when you can. thanks, julia, appreciate it. julia boorstin in los angeles. valeant completes the sale of its i nova unit.
the drug maker said the previously announced deal to sell inova pharmaceuticals has closed. the company plans to use the proceeds from the transaction to reduce its big debt load. investors cheered and sent shares up 4% on the session to $14.33. shares of several drug makerers took e s took a hit after the fort hood posted a database on its website allowing the public to search for documented reports of drug side effects. several reports showed a number of deaths associated with medications. some analysts pointed out the information was without context and does not necessarily prove that a particular drug have particular issues. some shares were lower in today's trading. biogen ended a percent higher. an experimental epilepsy drug was found to significantly
reduce seizure activity in children when compared with a placebo. the company says it plans to apply for regulatory approval next year. shares today, look at the numbers, not a misprint, 172% higher, to $35.05. defense contractor honeywell said it is raising its annual dividend 12% to $2.98 a share. separately, the company has faced pressure from an activist investor to spin off its aerospace business. but according to reports, honeywell says it's keeping the division. honeywell shares were fractionally higher to $141.74. tyson foods plans to cut 450 jobs across the country as part of its plan to operate more efficiently. the company also said it was lifting its guidance for the fiscal year due to strong performance in its beef segment. shares rose more than 7.5% to $70.45. and regulators may remove aig from stringent government
oversight that was ordered for the insurer after the 2008 financial crisis. regulators have been discussing a move that would released aig from the designation of too big to fail. aig's shares were slightly hire to $61.39. now to a weekly market monitor who is finding opportunities in real estate investment trusts or reits. he's john hunn at adelante management. why are you so hot on reits? >> i think reits in general, people are concerned about reits because of rising rates. i think if the rates are rising because the economy is going to get better, then the landlords will benefit in the long run. and for the most part, in the united states, the supply/demand picture for commercial real
estate is in balance. >> your first pick is toreno? >> yes. >> tell me about it. >> it owns and operates about 12.7 million square feet of industrial buildings in six of the major coastal markets. as you know, e-commerce has really boosted a demand for warehouse space. but i think as consumers' expectations of next day or even same delivery starts to get heightened, the focus has shifted from the large fulfillment centers to more delivery. toreno should be the beneficiaries of that trend. >> next on the list is regency centers corporation, r.e.g. is the symbol. you say, and i find this interesting, first of all, it has a nice dividend yield of 3.4%. you say it is the perceived loser in passwords spa space.
why so, and why do you like if? >> people think amazon is going to drive every brick and mortar store out of the business. we have a contrarian view, for example, amazon's acquisition of whole foods, we think it's an admission by amazon that it needs physical buildings to deliver groceries to consumers and is a validation of the high quality real estate that regency owns. it trades at a 10% discount to breakup vacu ju value. >> the stock performance is sometimes down, sometimes folks tell me to buy something that's up 200%, i'm always skeptical of that. your next pick is starwood waypoint with 2.5% dividend yield. >> yes, starwood waypoint just announced a merger with another company to form the largest reit that owns and operates single fami honmes for rent.
as the economy gets better, that business will benefit. and the business in general of renting single family homes will get a boost from millennials getting older but having a tendency to rent rather than own. sfr has a really good geographic footprint in the sun belt. and as you know, there's been not a lot of starter homes that have been built since the financial crisis. so sfr sits in a nice spot in terms of that perspective. >> john, thanks very much. >> thank coming up, out of this world. elon musk's big plans to conquer the red
nevada dispens pulled in $27 million do you think the first month of recreational marijuana sales in the state. that's nearly double what colorado and oregon sold during their first months. according to the nevada department of taxation, those sales generated more than $3.5 million in taxes. volkswagen is warning investors that its third quarter profit will be hit by unexpectedly high costs for repairing diesel cars in the u.s. those cars were equipped with emissions cheating software. the automaker is setting aside an additional $3 billion to comply with its legal settlement which calls for vw to fix 600,000 cars that used that illegal software. volkswagen has already agreed to pay $23 billion to settle a class action lawsuit by car
owners as well as other proceedings. what's your five-year plan? maybe you want to buy a home, start a family, maybe retire. for spacex founder elon musk, his five-year plan includes landing on mars. and he's now outlining how he's going to get there. morgan brennan goes to infinity and .> reporter: mars may be closer spacex founder elon musk took to the stage at a major space conference in australia to outline his plan to colonize the red planet. >> we're becoming a multiplanet species. >> reporter: musk is targeting 2022 for the first cargo mission and 2024 to transport the first humans. it's wildly ambitious, or as he puts it, aspirational, attempting to bring people to our neighboring planet a full decade earlier than nasa. some experts say it's unrealistic since the rocket that will accomplish this has
yet to even be built. that construction will start next year, funded by the company's satellite launches and government cargo missions. no estimate on price, although musk did say last year development could total $10 billion. to that extent, he debuted a new design meant to cut costs and make the new rocket of the future the go-to for all spacex's many missions, including a new one. >> if you built a ship that's capable of going to mars, what if you take that same ship and go from one place to another on earth? >> most of what people consider to be long distance trips will be completed in less than half an hour. >> reporter: musk, who also runs electric car company tesla, hopes to make those trips as affordable as an economy class airline ticket. although details on timing remain scant. but spacex isn't the only company with astronomical ambitions. rival lockheed martin introduced
its own project, a base camp comprised of an orbiting space station and a reusable lander to carry humans to mars' surface and back. that camp will operate with orion which has its own ambitions to send americans to mars by mid-2030. i'm morgan brennan. before we say good night, i'm so happy you're back. >> i had a little jury duty. >> and on assignment. good to see you back. we missed you. that does it for us. i'm sue herera. thanks for joining us. >> great to be back. i'm tyler mathisen. have a great
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