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tv   Nightly Business Report  PBS  May 14, 2018 5:00pm-5:31pm PDT

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. > his is "nightly business report" with bill griffeth and sue herera. the rally? the dow extends its win streak as trade tensionscool, but can the upward climb for stocks continue? place your bets. why the supreme court's ruling today could give cash strapped states a new financial life line. outliving your money. it's a big worry for those saving for retirement, but is it just a myth? those stories tonight on "nightly business report" for moay, may 14th. and we do bid you good evening, everybody. welcome. eight straight. that's how many consecutive sessions the dow has nowin logg marking the average's longest win streak in eight months. an easing of trade txts witchs h china, optimism over earnings
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and economic data gave investors more reasons to buy even if the buying was relatively quiet. the dow when all was said and done rose by 68 points. the nasdaq was up by 8. the s&p added 2. but can this mini up swing that we've seen the past couple of weeks turn into somethinggg ? mike santoli tackles that for us tonight. will the third time be a charm? stocks are up n less than two weeks. 6% above their april low. the third strong rally since the short market set back struck at the end of january. the previous two tries regained a bit morelf than he value loss before stalling out close to current levels and sagging back towards the year's lows. vestors are now asking whether this recovery attempt can be trusted. there are a few reasons to believe this advance does have a better shot of holding up than the prior one. for one, the best corporate earnings season in years is just about in the books tnd
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results now may stop a good dea better than the rest of the year. strong enough to support stocks through the period of rising bond yield making peace with the ten year treasury near 3%. the market's own behavior has been much more stable this time around measures of s&p 500 index volatility back near normal levels after m of elevated readings that suggested greater market risk. m thket is fairly broad and its leadership is encouraging. small cap stock indexes tied closely tthe u.s. economy are just about at a record high. technology, financials, energy and industrial shares are outperforming as well which sends a solid signal about all these factors suggest this rally is on its way to earning back the benefit of the stock but not completely. it's unclear if the market will continue to take a further rise in interest rates or oil prices in stride. and while corporate profits exceedore than first exagctations,ng doubts remain. so investors can trust this
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rally forow but need to verify that it can handle the possible challenges of thisoint in the economic cycle. for "nightly business report," i'm mike santoli. as wed, mentio stocks traded higher today amid hopes of a potentialreak through in trade tensions between the u.s. and china, the world's twot larg economies may be close to reaching some type of deal ahead of ay visit the vice premiere to washington this week. kayla tausche has more. >> reporter: a key bargaining chip in the talks between the u.s. and china, removing barriers for chinese telecom giant zte. president trump saying he wants ompany back in business fast tweeting today is part of i larger deal negotiated. >> this is part of a very comppx relationsetween the united states and china that involves economic issues, national security issues and the like. an issue of hig concern for china. >> reporter: it's a sharp reversal from the multipleem enfot action the
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administration has taken as intelligence agencies issued warngs about zte. last march commerce fining the company $1.2 billion for olating iran n andth korea sanctions. >> the unprecedented penalty reflects zte's premeditated, egregious scheme to evade s. law. ly reporter: in april banning u.s. firms from sug components to zte. this month the pentagon says zte was' security risk and prohibited the sale of devices on military bases. the president's about face meeting critism from both sides of the aisle. chuck schumer. >> hisolicy is designed for a new goal, make china great again. the toughest thing w. could the thing that sent a shot across the bow to the chineses taking tough action against actors like the zte ortwork. >> rr: republican senator marco rubio said the u.s. would be, quote, crazy to allow them
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operate without tighter restrictions. today secretary ross suggested things had changed. >> zte did do some appropriate things. they've admitted to that. the question is are tre alternative remedies to the one that we had originally put forward? and that's the area we will be exploring very, very promptly. >> reporter: the white house declined to comment on what o china wouer the u.s. in return if penalties on zte were relaxed. a source briefed on the says at least two options are on the table. the approval of a u.s. semiconductor and reversal of tear rfs on agriculture. i'm kayla tausche in washington. the price of crude oil continues to rise and it's all out supply and demand. a new report from opec says the global glut of crude oil may be mostly gone. the oil cartel says the stockpiles in the developed
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world stand just 9 million barrels above the 5 year average. opec also increased its forecast for demand this year while lowering its outlookor production, hence, the continued rally. oil traders toay were a watching the deadly violence in gaza between israeli troops and palestinians marking the bloodiest day there since the 2014 war. palestinians were protesting the opening of the u.s. embassy in jerusalem. price of domestic crude sabtled e $70 a barrel today. as oil prices rise so do gac . one survey says the national average is inching towards $3 a gallon. and less money in people's pockets has traditionally been viewed as bad for the ecomy, but as steve liesman reports, that may no longer be the case. >> reporter: when oil prices used to rise in america, congress has been quick to say, draggr dth, but that looks to be changing. some economists now think the scourage of higher oil prices
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will have a negligible effect on u.s. growth, some even think zero. the reason, o u.s. production has surged making it the number two oil pducer making less exports and more imports. it could offset the decline in consumer sending, mike peroli, chief economist with j.p. morgan chase say we think,quote, the effect will round to a wash. he says specifically a 0.2% decline ir consu spending will likely be offset by a 0.2% increase in capital spending. comments by st. louis fed president james bullish says the fed is thinking the same way. >> it used to be a big oil frac was bad news but now i think it's neutral. it hurts our consumer side but it helps usn the production side and more or less washes out at this point. so i think it's not what it used to be to track oil priceor the u.s. economy.
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>> and rbq economics says the biggest will be of distribution. higher wealth prices is oil company shareholders and from oil consuming regions in the ions of oil producing r which there are now many more. this time a lot money stays in the united states. economists their new ideas may not continue if oil surges abo $100 a barrel. gas prices have outsized impact on the american psyche. sustained gas prices ave $3 a gallon could undermine confidence but there might be an offset to that, too. >> i think people aremu paying o attention to our energy prices. energy prices going up are somewhat bad for the consumer. they've benefitted from aax cut. >> will better growth and tax cuts offset the impact of higr oil prices? that remains to be seen. or now some economists are doing a big rethink of the economics of oil. meanwhile, the head of the
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federal reserve bank of nleveland said that a shifting outlook may m more interest rate increases than initially thought. loretta ster is a voting member of the central bank this year. she cited the continued economic expansion, but she also noted that inflationas yet to reach the central bank's 2% goal in a ained way. policy makers meet again next month. thank you, bill.up theme court today opened the doors to legalized sports betting across the country. the decision could all state governments to join what is a very lucrative industry. eric chemmy has the details. >> we could start taking bets tomorrow. >> reporter: wle it may not start tomorrow, a big change is coming to new jersey, sports betting. the operator of the racrack said there's no hard date as to ien people can place their bets buts coming very, very soon. new jersey is declaring thvicto. highest court in the land today overturned a 26-year-old federalaw that had prevented
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states fromrt legalizing spos gambling. it's not just new jersey. victory fors also a any other state that wants to do the same thing, and a lot of them do. a overozen have already passed bills authorizing sports gambling. >> the stakes arehuge. right now it's estimated that americans spend $150 billion a year on illegal sportsli ga. estimates are all over about how much of that will move to legal sports books. deutsch ban alysts think it could be a $4 billiony opportuny 2023 with 13 states adopting it. state legislatures are looking at getting a shot at taxing the revenues. they see this happening quickly. >> it's one word andt's huge. people anticipated it would be overturned based on theon quesg of the chief justices, but here it is and i think you're going to see some very interesting events unfold fairly quickly. >> reporter: the decision could reshape professional sports as we know it, bringing in more
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money. higher media ad rates and more engaged fan base. imagine team jerse with tea casino names. maybe the technology servicers hire them to manage their sport books. some worry that a of the money will increase the incentives for players to fix matches and throm games aning it easier to place sports bets could make it easier for problem gamblers to get in over their head. for "nightly business report," i'm eric chemmy. investors cheered the decision sending stocks like caesar's entertainment, penn national and b higher. time to take a looom at of today's upgrades and downgrades. u ups was upgraded from buy to neutral. ups's plan to upgrade its network and improving margins. price target $144. that stock rose fractionally to
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$116.34 today. csx was upgraded to neutral frl by goldman sachs. the analyst says csx is insulated from some of the bigger challenges facing that indust industry. price target n $60. shares of xerox were dograded to neutral from ye b overweig jpmorgan. the price tart is $38. the stock fell 4% to $28.87. twinkie's maker hostess brandt wt from buy to hold. they cite uncertainty over margin and profit improv pent. thece target is 14. the shares fell nearly 4% to finish at $12.76. still ahead, why the gold standard of retiremt research says a widely held belief is more of a myth.
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wall street is upping its investment in the home flipping market. kkr is seeking a quarter of a billion dollars into a company that buys loans mad to speculators who buy homes, renovate them and sell them quickly, presumably for a profit. these kinds of loans those are not cheap. th command interest rates of between 8 and 12% and often have short 12-month maturities. one estimate has put borrowing by flippers ail $15on this year. that's nearly 25% more than last year. a with investor cash now ruling the market, regular home burs who need a market are at a disadvantage. that's where a financial startup is stepping in and backing home buyers with cash.
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diana olick has more. >> reporter: in today's ultra competitive housing market, cash is king. they would like to close quickly without dealing with a buyer's mortgage. most buyers don't have cash and that's where a tech based startup ribbon is looking to cash in. >> we have democratize sense of capital to empower consumers to be able to enable any buyer to bid with cash. so buyers can n compete effectively in the open market begins instutional investors, wall street capital and very wealthy individuals. >> reporter: ribbon is launching in the very hot charlotte, north carolina, market. it's not a lender but it does de rite potential buyers to see how much mortgage the could qualiffor. they appraise the home the buyer wants. they back the dealo with cash the seller is guaranteed the money regardless. if the buyer's mortgageoesn't come through, ribbon buys the house and gives the buyer more
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timeeto the mortgage and buy it back from ribbon for the same price. the buyer can rent the home while they do this for up to a year. they pay ribbon 1.95% of the price of the home. if the buyer never gets the loan be or pulls out, ribbon sells h thse to another investor. >> that frees up our capital to help another consumer in the market. >> ribbon is backed by pete flint, the founder of trulia. the first move was to empower buyers and sellers, the next mo t is making transaction of buying and selling a home an historically stressful experience easier. for "nightly business report," miana olick in washington. you can read more about the startup backing buyers with carbon our website, sears continues selling assets or considers it, and that's where we begin tonight's market focus. the retailer has formed a special committee of independent board mbers to explore the
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possible sale of some assets including the kenmore appliance brand. ceo eddie lampert has offered to buy kenmorese . the company is evaluating that and other es of sears rose more than ld to $3.65. there ce a management shakeup at tesla. ceo elon musk said he was launching a reorganization of business to irove communication and trim activities not vital to tesla's success. musk also added tt tesla would modelelerating hiring for 3 production. shares fell to $291.97. cbs is suing sherry red stone in anpt att to block redstone's plan to merge cbs and viacom. national amusements controls both of those companies. cbs said the lawsuit was needed prevent the redstone family and nationalnt amuse from
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breaching their phi du dfiducias and forcing a merger at below market value. the s board isoing to meet this week to discuss substantially cutting national amusement's voting power. cbs shares finishe up2% at $56.5. $28.74 went down 5% to shares of sim man tech recovered some of the loss it suffered last week when they said an internal audit could cause ame resta of financial results. investors got more details saying a former employee made accusations against the company r50e related to its financial planning. they seemed to like the transparency. they sent shares up more than 9 pers percent to $21.40. ter the bell the data center operator switch reported a stper than expected drop in profits as higher labor costs hurt results.
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investors didn't seem to care. shares were initially lower in after hours trading butis fd the regular session up 1% to $57.47. we've all heard the ominous warnings about a looming retirement crisis in the u.s. for about half americansve who ot saved enough for their golden years, but a newom repor he employment benefit research institute now suggestn that t may not be as dire as feared. lori lucas is the president and .eo of vb she joins us tonight to talk about the findings. you studied what? 20,000 retirees over the period of time that they are retired. during the first 20 years of their retirement you found that they spent much less than anticipated, yes?ah >> that's right. we were looking at actual spending patterns in retirement and depending on the amount of g non-hous assets people had going into retirement, they were spending onl about 12 to 27% of
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those assets through the0 ars of their retirement. why is that. the money or do they live a much mo modest lifestyle. which one? >> you look at some of the people. the people in the small asset group had 30,000 in prly they had things they needed to spend money on and sey don't have that much money but they'rell preserving their aserts. is a really strong driver of why people won't spend their money in retirement. >> but i w don'tt to give anybody a false sense of the idea that they're not going to outlive their moneth e are people who do outlive their money, right? >> yeah. in that small asset group with the $30,000, about 1/3 of those people did spend on their assets, butst integly, even
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in that group 1/3 also grew their assetsver the nearly 20 year period so it's a very inefficient use of spending down assets for this group. >> when they add to their aets is it because they're taking part-time jobs? the return on their investments? why are they adding to their assets or how are they doing it? >> they're basically leading their assets as a nest egg and perhaps they're a getting great sense of financial security having that little amount of money to fallnd back on just basically living off of social security. >> i learned a new word today, lori. decumulation. we spend our years so much accumulating money and assets, but it's our retirement years when we are expected to decumulate we adapt, right? >> yeah. i mean, you think about it, people have spe their whole lives saving and it being save d into their head t and not spend. it's hard to flip that switch
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and spend when there's so much ow longinty about you're going to live, are you going to have a catastrophic health ce event that you need to save for. you can understand thegy psychof being very difficult to spend on the savings. >> indeed, lori. thank you for j us tonight. with the employment benefit research institute. >> thank you. coming up, why deducting charitable donations may be harder under the new tax law and how you can on to that popular break. well, the sale of the century certainly lived up to itsname. the auction of the peggy and david rockefeller collection had ennd it smashed all records. robert frank tallies the winning
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bids for us tonight. >> reporter: would you like 53? gentleman on the ale there? >> reporter: it was billed as the sale of the century, and it lived i up to promise. the collection of peggy and david rockefeller was expected to fetch more than $500 million over the course of last week at christie's and when the hammers fell for the last time and the online bidd close the total reached 832 million. it wasge the l auction ever for a single collection. almost double the previous record. bidders came from 53 countries all vying for a piece of that rockefeller history and more than half had never bought from christie's before. the big paintings, picasso, monet andmatisse account for much of that but many estimation blew pastth . david rockefeller's money clip was estated at $1,000. it sold for $75,000. and the family picnic set given
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to them by the king of morocco was estimated at 5 to 10,000. that went for 212,000. and napoleon's sugar bowl and dessert service estimated at around $200,000 went for1.8 million. the good things all things must go to charity. harvard and the museum of modern art will get m $100lion and the rockefeller brother's funds will get $250 milli and the castle on former relations and thedmerican farm lan trust. the art auctionsl r on this week at sotheby's and christie's go back to the sales room with $1.5 billion worth of art. we'll see if there's more energy and money left in those auction htddles. robert frank, "n business re wonderful story. charitable giving isn't just for the rockefeller estate. there are many ways to givege rously and earn a tax break for yourself, but there's some
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new rules that go along with the new tax code so once again our senior financial correspondent sharon epperson is heretho save day. >> good to be here. >> what is a smart way for us to donate to chaty given the new landscape that we're in? >> one way to think about giving to charity and give generously is to set up a donor advised fund. it works like a per account for charitable giving. you can contribute cash, stock, mutual funds. you can contribute real estate or artwork. yo can take an immediate tax deduction for the money that you contribute at tha time in that tax year. you can wait and give to certain charities ove time smaller amounts of whatever you may have na that fund. >> who runs these funds? who do i call? >> they're run by nonprofits, community foundations and charitable arms of a financial services firm. the lgest donor fund is the fidelity charitable giving fund. aschwab has charitable giving
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fund. the way that you can do it, the way to set it up is pretty simple. start with $5,000. you put that into the account and then you're able to pay an administrative fee of $100 and probably some management fees depending onow it's invested and then you can give up to 50,000 -- sorry, $50, only $50 at a time to whatever charity you'd like. you can give a small donation of $50 or you can give a large donation but you can start with $5,000 and take that tax break time. t tha >> in the last couple of seconds that we have, how does the new tax code t impactse funds if at all? >> well, it certainly does impact it. you have to itemize your ductions in order to take the charitable deduction. bundli, your givi giving a big amount like in a donor advised fund one year and mayno giving another year may be a way to take that charitable contribution and with the increase in the standard deduction still have an amount that's over that amount so it makes stones itemize. >> you did it again. >> yes, indeed.
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>> thank you. >> you always have me taking notes for sure. >> uh-huh. before we go, here's another look dt the on wall street. the dow made it eight straight gains today with a gain of 68 points. was much higher than that earlier. the nasdaq was up by 8. the s&p added 2 points today. that does it for "nightly business report" tonight. i'm sue herera. thanks for joining us. >> i'm bill griffeth. thanks for joining us. we'll see you torrow.
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>> this is "bbc world news america." >> funding of this presentation is made possible by the freeman foundation, kovler foundation, pursuing solutions for america's neglected needs, d purepoint financial. d >> hwe shape our tomorrow? it starts with a vision. we see its ideal form in our mind, and then we begin to chisel. we strip away everything that stands in the way to reveal new possibilities. h purepoint financial, wee


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