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tv   Nightly Business Report  PBS  May 22, 2018 5:00pm-5:30pm PDT

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report" with sue herera and bill griffeth. looking for answers, but that's not what investors got. instead, uncertainty increased and stocks fell. ceo shakeup. jcpenney's boss bolts toowe's in the middle of a massive overhaul for the iconic american retailer. feeling the heat. hawaii's erupting volcano has vacationers rethinking their get aways to a state that reliesil heav on tourism dollars. those sries and more tonight on "nightly business report" for this tuesday, m 22nd. good evening, everybody, and wall street spent the day searching for clarity, but the answers did not come from y the president cast doubt s to whether the planned
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meeting with north korea's leader will take place as scheduled next month. >> there's a chance it will work out. anthere's a , a very substantial chance that it won't work out. i don't want to waste a lot of time and i'm sure he doesn't want to waste a lot of time so there's a veryubantial chance that it won't work out. that's okay. that doesn't mean it won'ttork ver a period of time but it may not work out for june 12th, but there's a good chance that we'll have the meeting. >> and that created a cloud of uncertainty over a closely watched geopolitical issue and stocks fell into the closing bell. now on the close the dow jones dropped to 24,834. the nasdaq off 15 and the s&p 500 was down remember yesterday the markets actually rallied on word of a trade tru between the united states and china, but today was a different story. the president he is not satisfied with how the trade negotiations are progressing. he called them a star he also said no deal has been reached with chinese tecom
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company zte. one wall street analyst said these mixls sig on trade were making investors more cautious. >> be there was some posit news on the trade front for automakers. china said it plans to cut tariffs on vehicles from the u.s. to 15% from 25% starting in july. as we have bee reporting, china is an important market for american automakers andhe that ed lift the shares of general motors, ford, and fiat chrysler in sstoday's n. >> also in washington, the house this evening passed a measure that some call the largest roll back of wall street regulations since theinancial crisis. the legislation is designed to ease restriction on small and medium sized lenders. the senate has already passed this bill so it is entirelyib po it could be signed into law as early as this week. so what impact might that legislation have on the regional banks? joining us to offer his insight is ed groshans,lt the h markets senior analystbanker.
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do you expect this roll back to basically lift all boats in the al banking sector? >> i certainly do. i think this is a big benefit for all the banks in that 50 t billio $250 billion range. a lot of these heavy regulations that were made for global international banks will be dialed back and give management teams more freedom to handle their capital allocations. >> so the restrictions -- these are coming out of dodd-frank. you feel that perhaps they were overly rerictive, that they kept these banks from being able to do their business and make more loans,s that the idea? >> so all of the banks are subject to aual stress tests, and at least all the banks over 50 billion and to do that you had to makeurthat you didn't fall below the capital minimums. so all of these banks held ont the excess capital, which they really didn't need. once they become de-designated they will not haveo hold the excess capital, return it, buy
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backs, return i via increased dividends or grow it and make more loans. >> any therere risks to rolling it back, to rolling back those restrictions on the regional banks and the mid-sized banks? >> from my perspective there are limited risks to doing that it could drive some excess risk taking, but even former governor trulea usaid it was too low of reshold and it needed to be raised. >> you said this will basically said this will lift all boats. >> sosure. immediately banks like comerica would be dedes significant nated and they would be allowed to manage the capital the wayhey wanted to. they still need to meet stress tests but they don't need to meet the sicar stress test and th as we go down the line 18 months down the line you would see american express. and a number o otheranks also
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have more freedom with their capital and have allocated amongst their balance sheet their shareholders, the things that they think are important, i not thes that the fed think is important. >> how much time do you think it will take forherickle down effects of these regulations being lifted to impact thett line of the banks and, therefore, as an investor do you add thoseo your portfolio now in anticipation of that trickle down coming sooner rather than ater? >> that' good question. ancial we -- the f sector was the biggest recipient of the breaks from taxeform so erything else we're going to have down the line is going to be taincrem but this -- we were in a very good environment. economy is growing, interest rates are going up. room for lending and now we have capital freedom. hen you're looking at financials broadly, i would be over weight the sector and certainly looking at thegi al bank space. >> on that note, ed, thanks so much. thank you. elsewhere, jcpenney's ceo is
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leaving the company. marvin ellison's exit is just as they are in the middle of a massive revamp. he's leaving to become the next ceo o lowe's which itself has had a hard time keeping up with its rival home depot. this management shakeup sent shares of both companies down today. courtney ragan has more now on the ceo switcherooo. >> reporter: after less than four years with jcpenney,arn ellison is moving on. he will take over as lowe's ceo in july. the move surprising investors and jcpenney, too. a jcpenney spokesperson tells me the companyus wast told days ago and didn't know about his decision when it announced earnings on thursday. there's a board meeting this week with the ceo main discussion. a search committee has been formed to look both inside and outside the retailer for its next ceo. four executives wil take over
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as part of the office of ceo l when hves june 1st. this is unlike his very telegrhed move into the top job. he spent a year as ceo u designationder then ceo mike uldan. they wan an apparent transparent ceo transition after the turbulence from ron johnson. he spent 12 years at home depot and 15 years at target. they have pointed to his weakness in merchandising. most of his career has been in operations likenhancing the supply chain and integrating the stores and website, but that weaknesss a key strength for his new job at lowe's. the home improvement retailer has a history of falling behind home depot often cit by analysts as a better operator with better store locations and bigger professional business while h instituted a number of hrategies wit mixed results at jcpenney, the sudden resignation isn't what they wanted.
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many s initiativestill getting underway. alan questrom is worried about the nearly 100,000 jcpenney employees.wa >> i think h well liked but he had none of the background necessary to run that kind of a ampany so i have to feel sorry for the peopl the penney company who have gone through veral different ceos in the last 10, 15 years. i think that it's really -- have to set bacthem back. >> reporter: one analyst says his leadership skills will be hard to replace. another says he made some improvements but they were over shadowed by theigr challenges facing department stores overall. for "nightly business report," i'm courtne ragan. it is time to take a look af some o today's upgrades and downgrades. shares of macy's were upgraded to positive from neutral at susquehanna. e analyst expects them to report earnings above expectations this year oner stro consumer spending and apparel sales. the price targ is 43 butespite the upgrade shares of macy's
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fell 4% to 33.12. > manchester united's rating was cut from sell to hold. the price target is $21. shares of manchester united were off nearly 1% to raytheon was downgraded from neutral to outperform at credit swoous swis. the price target on raytheon is $219 a share. and the price targetas raised it and b it's $10lion through the heights. it came from the ceo. so it's $106 a share.
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still ahead, the glass ceiling shatters at the new yor. stock exchan l global d making is happening at a record pace. the value of mergers and acquisitions has reached $2 trillion so far this year. new f datam thompson reuters shows the value of mnaor is than 60% higher this year than the same period last year. mnaugh some who watched the marked say the drive to do deals could be reaching its peek. it is no secret tha ceos earn a lot more than the average worker, and a newws report s just how much. lcio average the pay for chief executives in the s&p 500 was nearly $14 million last year while the average worker earned about $38,000.
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the union's findingsere based on publicly reported compensation data. in fact, this is the firstear that businesses were required to disclose the ratio of tceo pay median worker pay in their annual proxies. the new york stock exchange will have a new boss. stacy cunningham wigl be the leader in st female its 226 year history making her one of the most powerful women in global finance. bob pisani takes a lk at w she is and the challenges facing the nyse. >> reporter: the nyse has i first woman president. stacy cunningham started as an intern right here on tdi t floor in 1993. has been named the president of the 226-year-old institution. she'll b facing a number of challenges running the nyse. first, it'setng more companies to go public. the nyse makes a lot of moneypa charging ces to list on their exchange, but the ipo business is smaller than it was 20 years ago. partly because of more
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regulation, partly it'pr becaus ate equity has thrown so much money at fast-growing startups like uber and airbnb it's easier to stay private. her job is to convince them to go public. the second issue is fragmentation o trading. 40% of all trading occurs off of the exchanges in so-called dark pools that don't provide displayed prices. she wants more busin s to come back on the exchanges which would mean, of course, more revenue. wall street is often thought of as place that employs mostly men. that's true, but it's slowly changing. the two most well knownto exchanges in the world are run by women. stacy cunningham and a dedita freeman. there has been a l about the increasing number of women who sit on corporate boards, and while some progress has been made, it has not been easy. in fact, the current shareholder maternity estination
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is a goodam exple. leslie picker has that story for us tonight. >> reporter: when it comeso bumping up the number of women directors on boards, one key hurdle remains, many don't haved prior b experience. women currently hold about 17% of board seats among t 3,000 largest companies listed in the u.s. esthat is dte numerous studies which show having more diverse boarps company outperform. that's the crux of a shareholder fight a des city nation maternity which also owns brandp like pea in a and motherhood maternity. shares trading $2.60 each. five years ago they were ten times that amount. a group of unhappy shareholders want be to overthrow the current board of three men and one woman and replace it withom three and one man. shareholders will vote tomorrow at the company's annual meeting. one of the disdent nominees marla ryan says greater female
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representation could help turn the comny around. >> it's not to say that men wouldn't understand or wouldn't be greato idease table, but i think it's highly more likely that a woman would truly understand and would anticipate an think about things from the customer's perspective more quickly and probably with better results. >> reporter: but an influential proxy adviser which advises shareholders how to vote, pointed out that none of the dissident investor nominees have previously served on company boards. they're urging investors not vote for any of the women nominees on either slate. >> if the company's argument is this shauf vanish stick trope that qualified women executives could not join a board of directors because they've never been on as a o board director before, then this embarrassing situation in corporate america will never be remediated. >> they declined to comment beyo the report. destination maternity did not
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return five requests forovomment the course of five days, but the company did put out a letter last night vowing a commitment to increasing gender diversity at the board level by identifyin andppointing at least one additional highly qualified female director to the board as soon as possible. regardless of which side wins tomorrow, more diversity may be a necessarytep in quickly turning around the embattled retailer. for "nightly business report," bom leslie picker. to read more destination ma turn knit's gender board fight you can read more at our website. higher profits hurt the bottom line at toll.builde they missed expectation and the expenses climbed. despite the miss toll brothers did beat onnd sales said it is seeing strong demand for orders even as interest rates rise. shares of toll brothers closed
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wn more than 9.5% to $39.46. > kohl's saw profits a revenues inch higher. that news was overshadowed by the warninghat it expects sales growth to slow in thend sealf of the year. the shares were off more than 7% to $60.61. well, more customers visited t.j. max and its other store brands this past ffquarter. the priced retailer topped both profit and sales expectations and be said it was raising its four year earnings forecast even as it expects stocks to rise. the shares finished up 3.25%. autozone said unseasonably ld weather caused sales to lose momentum resulting in an overall revenue miss. the auto partsai rr topped earnings expectations but it also warned that higher employew wageld cause costs to rise this year and those latter comments sent shares lower by 9%
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to .02. >> meanwhile, rival advanced auto parts grew profits but a decline in same store sales caused revenue to come up a bit short. sales skidded at $115.33. >> telecom services provider dicom said a decline in revenues caused earnings to fall and miss street targets. the company said the results prompted it to cut its profit and sales gdance for the full fiscal 2019. shares of the company were down 20% as a result of that news today. and higher customer spending helped cracker barrel deliv an all around solid quarter. the restaurant chain also said that it was hiking its dividend by 4% to $1.25 and added tha it continues to expectto same sre sales growth of between 1 and 2% this year. you've got to love their turnip greens. my favorite. shares up a fraction to 157.42
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dsz. a new vaccine is being put to the test made by merck. meg tirrell has more. >> reporter: the outbreak of ebola that began in westfra in 2014 became the largest er reported. by the time it ended it infected more than 28,000 people and led to more than 11,000 deaths. the epidemic spurred a callti t for vaccine and drug development and though several entered clinical trials, none were available fast enough to make a dent in that outbreak, but experimental vaccines are available now and one is being deployed in the democratic republic ofreongo w of friday there are 25 cases and 25 deaths. >> we hav also identified contacts, more than 500. around 570 i think as we speak. and thisl w help us, one for case management and, second, for the vaccination that we are planning tota on sunday.
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>> reporter: the vaccine is being provided by merck. in 2015 while ebola was still being transmitted it was tested in a study in guinea and sierra leone. after ten days nobody developed ebola while 23 cases developed in a group that wasn't vaccinated or received itr. la johnson & johnsonnd glaxosmithkline developed experimental ccines. none have received approval. merck is being used on an experimental basis. as of monday the provided more than 8,000 doses of the vaccine with an additional 8,000 expected this week. there are logistic call challenges. it must be kept extremely cold at minus 83 cell kri us.ic the ter is hard to reach. it will take place there or in a large city to the north wheree one c has been confirmed. despite the challenges, public
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health expre optimistic. the availability a is important tool in fighting ebola and they're concerned with the quick response. i'm meg tirrell. and coming up are the relentless volcanic eruptions putting amulti-million dollar dent in hawaii's tourism industry? hawaii is one of the mostac popularion spots in the u.s., but the relentlessan vo eruptions may be starting to hurt one of that state's biggest industries, tourism. there are reports tonight that vacation bookings have fallen almost 50% since those eruptions began.i sema m has the details.
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>> reporter: explosive eruptions, plumes of ash and boulders shooting into the air. hawaii's volcanic eruptions which started in ear may sho no signs of quieting down pushing travelers to rethink their hawaiia away. already two large cruise ships, pride of america and royal care caribbeans lady of the sea skipped a visit tohilo. local authorities say the closure of the park has already cost the island nearl $170 million, and that's likely to increase if more tourist the cancel their trips but hawa 's governor david ide is urging travelers not to cancel saying all of hawaii is open for business and visitors i one area that people need to avoid is lower tna whe eruption is going. hawaiian airlines ceo peter
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ingram also assured visitors that the airports are up and running. n on the big island the airport in kona is over 100 miles away from the affected area. hilo is the closest one to the volcano, and that's 20 miles away. >> centrist analyst says the big island of hawaii is not a popular of a spot compared to oahu and maui, but itay still spook travelers especially if the situation gs worse. that would be bad for hawaii's economy given that tourismth is largest industry. last year visitors spent nearly $17 billion accounting for almost a quarter of the state's gdp. making the active volcano a source of potential economic pain. for "nightly business report," mody, new york cnbc is out with the annual list of the 50 most private companies.
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these startups, if you will, are exploiting niches in their respective markets and could one day be worth billions if they already. the three biggest disrupters this year,nb ai number two is the ride sharing company and in the top spot, spacex. according to cnbc's disrupter ist, spacex has taken the lead in the new space race. tonight morgan brennan gives us a rare look inside spacex's operations in hawthorne, california. >> he lon founded the company for us to do great things in space and plan a settlemennd put people on mars. that's the way we think ourselves. >> reporter: space explorationf technologies, has been racking up wins. they have successfull flown a dozen rocket boosters previously sent to space. in february it made history.
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when it became the most powerful rocket evero be launched by a private company. and they made history again when two of its boosters returned to earth. that ability to reuse hardware enabled spacex torive down costs, dramatically cutting down costs even as iturned a profit. >> longer term you and elon have expressed this vision to see rocket launches that ares regular as airliner flights? >> we t launched 18es last year. this year we'll launch just under 30 we're doing probably 60% of the launches60% of the launches across the globe so in order to launch every oy, you have have a lot more launches. i think once we're flying people, that could actually be realized. >> reporter: spacex is expected to begin carrying astronauts to the international space station as soon as december and development of an even more
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powerful rocket is, according to shot well, on track to send humans to mars in 2024. >> i really want space what you n to be like see in the tv shows, fireflies, battle star galactic ka, "star wars." i want to meet other people or whatever they call themselves. mars ishe steppin stone. >> reporter: the new rocket is under development expected to be under use. the company is building more vehicles and producing an engine per day and using cutting-edged manufacturing techniques like 3-d printing. >> here they have the capability to turn out two rockets per month. the newest, most powerfulrs n which first launched is intended to fly up to 100 ttime. >> w does that mean for launch costs? >> launch costs hopefully will continue to go down, i think to the pointhere the average
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person could actually buy a yicket to mars. that's rea the ultimate goal for what we're trying to do. >> for "nightly business report" i'm morgan brennan in hawthorne, california. i'll let bill do that. i'm he going to stay grounded right here. 's another o, he look at the day on wall street. the dow dropped 178 to 24,834. the nasdaq was off 15 and the s&p 500 was down 8. chicken. >> i know. i am. totally. you're the explorer. that does it for us tonigh i'm sue herera. thanks for joining us. >> i'm bill griffeth. a haonderful evening. see you tomorrow.
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>> this is "bbc world news america." >> funding of this presentation is made possible bye eeman foundation, kovler foundation, pursuings solutir america's neglected needs, and purepoint financial. >> how do we 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. at purepoint financial, we have designed our modern approacho


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