tv Nightly Business Report PBS May 23, 2018 5:00pm-5:31pm PDT
. this istl "nibusiness report" with bill griffeth and sue herera. cutting through the noise. the tradet. tit-for- the fed guessing game. while important, what really matters to invhetors is bottom line. and two companies made that evident toda new risk? why weakness in europe could start to spread here and make things a little more difficult fo investors. is the balkans back? we're taking a trip to that regi that went from boom to nearly bust to boom again all in just four years. those stories and more tonight on "nightly business report" for wednesday, may 23rd. and we do bid you good evening, everybody. welcome. it turnsut earnings really do matter. that was made clear today on wall street when two well-known companies, each operating in very different industries, both
gave investors new information about the thing that matters most, the bottom line. and both stocks saw very big moves in response. let's start with general electric. the company's aiceo today he sees no profit growth at itsow troubled unit this year. as part of a presentation that was posted on ge's website, john flannery said he expects the market for heavyy d gas powered turbines to remain weak through 2020. it was a reminder to nges at thes that c 126-year-old conglomerate won't happen overnight. to quote mr. flannery, he said, this is not going to ck a q fix. that sent the stock lower by 7 today.ercent the worst day in more than nine years. now to tiffany. while it may not be as widely held as general electric, today it proved that its turn around plan is starting to sparkle. e sales and profits trounced the forecast thanks to the americans and asia pacific
region. the company's new strategy included selling lower priced items which attracted millennial shoppers and it paid off for shareholders. that stock surged ts23%, best day in more than 17 years. so clearlyernvestors watching earnings, but they also paid close attention to the federal reserv stocks turned positive after the minutes from the central bank's hat recent meeting showed bankers would be comfortable allowing inflation to temporarily run above its2% price target. it's not oftenhat theed moved the markets like that, but today that's exactly what happened. the stock rose into the close. the dow finished up 52 points. it had beenown 167 points. nasdaq added 47. the s&p was up by eight. steve liesman has details now on that big debate within the central bank. fed officials are seriously debating a question they usually ask at the end ofikg rates. how much further to go? the minutes of the fed's may
eting show ateast a few central bankers answer the question, not much further at all. they believe the economy may o have changedch since the great recession that, quote, the federal funds rate could be at ve their estimates on the longer run normal level before too long. to be sure that's only a 1ew of th members of the committee, but with the fed right now at a funds rate of 1.5 to 1.75%, it'a anng discussion to be having. fed funds can normally top 5% of the cycle but it seems unlikely to go there now and that is welcome news to the stock market. that wasn't the only dovish or easy m mey type commente by the fed in their minutes. it was also noted the fed could le inflation run above the 2% target for some temporary period of time.dn specify how long. overall the fed saw solid economic growth and a strong labor market, but it wasn't too concerned about wage gains driving up inflation. the fed did worry though that fiscal stimulus from the tax cut
could overheat an economy already runni at potential. another concern, the president's trade policies. fed officials said in the minutes that their own business contacts are telling them that the uncertainty surrounding trade talks could hold back business investment and reduce business sentiment. despite these dovish signals, the fed made clear the next fed hike is coming soon and suggested maybe as soon as june. the d biggerate now, how many more come after that. for "nightly business report," s i'mve liesman in washington. there were new developments on the trade front late today. according totr "the wallt journal", the white house is considering the imposition of new tariffs on imported vehicles, on national security grounds. those tariffs could be as high 25%. the report says the plan is in the earlytages though the idea has been discussed with industry officials. > to the economy now where a new report shows manufacturing activity is at its strongest level since september of 2014.
the so-called flash survey out today pnts to stron gains in both production and new business. it also showed that inflation is rising with input costs increasing at the fastest rate in nearly five years. saleses of new h fell at the beginning of the critical spring selling season. according to the commerce department, purchases were down 1.5% in april and last three months was revised lower. tparately, weekly mortgage refinances dropped an 18 year low. a sharp rise in interest rates meant fewer homeowners could benefit from refinancing their mortgage. total mortgage applicati volume which includes purchases of new homes was also lower. rising oil prices are helping certain parts of the american economy, especially egions like the balkan formation. north dakota's oil production is back near peak levels right n with breakthroughs in drilling echnology contributing to that resurgence. so is the balkan back? brian sullivan went to find outp
>>ter: this just may be the most interesting place in america. from boom to nearly bust and ck to boom all in just four years. so goes life here in the plains of north kota. the oil formation known as the balkans. with oil prices back above $70, drilling activity which a but shut down two years ago has resumed and with it so, too, ith confidence i local economy. still, even if b youriness isn't oil, oil prices are everybody's business. >> we're directly tied to the price ofil and unfortunately we compete in the oil business's labor market because we're -- they're taking our employees. every h, we watch oil day. >> reporter: after dumping stocks in many of the companies that operate up here, investors are again becoming bullish. shares of the biggest producer, continentals, resourre up 30% this year. other big north dakota like hess, whiting petroleum and
oasisetleum has risen more. continental spoke with us at a conference in bismarck. oie prices hit a bit of a sweet spot. >> we felt that oil prices were going to go up and they have and we still think it's going higher yet. we're not looking at $100 oil in e future or probably $90 oil, but certainly could be in the mid 70s and low 80s. >> reporter: this is good news not just for oil companies but the state and itspars as well. oil revenues are a huge part of the state'sbudget. it's really been transformational for our state in the last tenf years because the tremendous opportunity here, the amount of newcoapital that's in from the industry, job creation, population increase. we've gone from having onef the oldest populations in the country to one of the youngest. new business startup. big increase in gd per capita. >> reporter: the only thing most seem to agree on about oil is that it's famously difficult, if not impossible, to predict where oil prices are going.
a local people say that unlike a few years ago they'll be ready for whatever happens. >> we're ready this time versus last time. we kind of got caught with our pants down last time, and this time we're more prepared for it and in a lot better shape than we wer in the past. >> reporter: for "nightly businessreport", i'm brian sullivan, bismarck, north dakota. we often talk about the al sod wall of worry. things like rising interest rates, trade wail, higher prices and inflation. now there's another wild card to throw into that mix. it is europe. bob pisani explains. >> reporter: trade wars are, again, moving the stock market, but europe has bigger problems than trade. the european economy while still growing is much weaker than the u.s. economy. recent data show european manufacturing activity falling to an 18-month low. activity in the services sector at a 16-month low. earnings growth has also been anemic. european stocks as whole are
showing earniys growth for o 3% in the first quarter, that's compared to 26% in the united states which was dramatically boosted by tax cuts. the weakness in europe has been showing up in the earnings plport. tiffany, for ex reported stellar earnings today. ldwide weresales w up 7%, well above expectations. but european sales were down 9% there's also some political turmoil in europe, of course. the election of a government in italy that has been hos to the idea of remaining in the euro has also rattled markets ov there. you put it altogether and it's little wonder that the european stock market has dramatically undeerformed the u.s. stock market. european stocks are essentially flat in the last 12 months. the s&p 500 in the united states is up about 14%. that's outperformance. for "nightly business report" i'm bob pisani at the new york stock exchange. so how worried should investors be about europe's slowdown? joinin us is christina hooper,
chief market strategist at inves could he. good to see you again, welcome back. >> thank you. >> as far as -- >> investors should be -- >> you say be cautious but don't panic. why? >> well, for some very good reasons. while there's this assumption that we're in a synchronized global econoc recovery, the reality is much different. there are different headwinds and tailwinds for each economy fnd different economies are in different stages expansion. so while the u.s. just finished its10 th month of economic expansion, the eurone has only completed 60 months of economic expansion. so one could argue that it's still getting its sea legs, particularly given just how difficulthe economic down turn was and that it will take time. we ctainly saw it go through a breather in the first quarter that's extended into e second quarter, but i think we can attribute at least some of that
to a rise in input costs. they're at a three-month high. oil is higher as wells concerns about protectionism. keep in mind economic policy uncertainty has a very big impact on business investment. >> exactly. when you put together the fact that the u.k. is having a very difficult time making any headway wh the brexit negotiations that are going on. bob mentioned the situation in s italy, it s as though the landscape in europe has changed prettyca dramay in a short period of time. what impact do you think that is going to have on the u.s.? does it make it more attractive because it's a safer haven or are we going to feel some of the pple effects of europe? >> well, this actually makes aa great for diversification because the. s. certainly h some drivers that the eurozone doesn't, but the eurozone offers some opportunities like lower valuations that are harder to find in the united states. the brexit issue is certainly
significan i would argue that the u.k. is cee poster child for economic policy ain at this and that's why we've seen growth as low as it is, but i wl also argue that there is some potential in the eurozone. the european union has a champion, and that is emmanuel macron,he president of france. he's articulated a vision for reform of theurean union, and actually the recent coalition government in italy, with its ld, aggressive stance, may just be the catalyst to get the e.u. to start reforming. >> okay. what are those lower valuations attractive nk are for u.s. investors, perhaps? s it by region or is it by sector? what are you talking about here? >> i'm talking about region. if we were to look at the tock one versus the u.s. market, valuations are just more tative on ape bases as well as a price to book basis.ni there's oppor there. of course we need to be
environment, this but i would encourage diversification. >> christina hooper with invesco. appreciate your thoughts tonight. ank you. >> thank you. it is time to take a look at some of today's upgrades and downgrades. nordstrom was upgraded from buy to hold from deutsche bank. they cite the stock's valuation and they expect to gain traction throughout the year. the price target is . shares rose 4% to $47.62 shake shack was downgraded from neutral to buy at long bow research. the analyst cites the 60% run up stock in the past six months and now is the time to stop buying shake shack shares. the firm is telling clients to wait for a pull back before getting back in. the stock fell just a fraction to $57.89. analysts are at odds over celgene. the analysts say the stock's
valuation is too cheap to ignore. set the price target at $102. another analyst though disagrees. arg g argus research downgraded celgene from hold to buy. the risks outweigh the rewards given the medication revlemed. theplit call hadcelgene shares higher by more than 1% lotoday. itd at $77.67. stilld, ah real estate goes high tech. diana, what's coming up? >> reporter: hold on, let me ask. ala, what's next? >> diana, coming up on "nightly business report," a story about how amazon is working with lunara smart home services like me.
deutsche bank is reportedly planning to cut 10,000 jobs or a tenth of its global work force according to the wall street journal. the decision is part of an effort touy theank to reduce costs and sepatelybloomberg said deutsche bank was planning to withdraw from a number of equities markets across the globe. comcast is preparing an all cast bid for the assets of 21st century fox. that offer would be a competing and superior bid to the one disney made late last year. disneyid is at $20 million. while no final decision has beee the work to finalize the deal is in the advanced stages. late tod a fox shareholder said he is urging the company to engage with comcast. both comcast and disney, fox's assets represent a way to better
compete against netflix. comcast and disney finished the day lower. f 21st centu finished higher. comcast is the parent company of cnbc which produces this program. excuses, excuses. target is jning a number of retailers who are blaming the weather for its quarterlyre lts. the retailer missed both earnings and sales expectations, and that rattled investors today. they sent shares down more than 5.5%. there was some positive news in target's report and kate rogers details. >> reporter: blame it on the weather. >> spring was colderhan normal, rainy and even snowy and that meant people didn't head out to target s to buy items like patio furniture and grills but the retaileraid at was offset by strong sales growth in food, home and beverage. target is also spending a lot of money to overhaul its business. it's in its second year of a three year $7 billion investment, one that continues to weigh on profits. the overhaul includes remodeling
stores, building new, smaller locations, offering lower prices and getting shoppers their orders faster. >> target is on a journey to become america's easiest place to shop. how are they doing it? they're doing it by curbside and car pickup. they're using shipped which is a service that allows you to use n perso help you get your goods and they're doing same-day delivery in many markets and offering two-day delivery andne on as well. >> reporter: target does expect margins to improve this year, and it did see a sharp increase in people coming into its stores. nearly 30% increase in digital sales. target is also hoping its own brands and partnerships will attract new customers. >> as we think about the future of retail we think a lot about convenience. helping customers just save time and money through different options. we think about product curat ion, too, and curation matters. >> reporter: alsoetn ta radar, ongoing tensions on china over trade. ceo ryan cornell says they're watching the situation closely
andill continue to be nimble and agile moving forward. for "nightly business report," i'm kate rogers. lowe's also blas the weather for its disappointing quarter. that's where we begin tonight's market focus. the home improvementr retai said a late start to the spring season caused results to miss estimas, but theompany did say it's encouraged by sales this month and expects that momentum to continue. separately, "the wall street journal" reported that biionaire investor bill ackman and hedge fundz. shaw group has each taken a $1 billion stake in least. it rose to $94.69 ralph lauren had a higher margin. same store sales are off and total revenue beat expectations. shares climbed 14% to the health insurer anthem said it wassp buyinge health. the price tag of that deal wasn't disclosed, but the merger
gnalled anthem's push to go into medical care services. it will allow it to buy large array of programs for consumers. shares of anthem fell actionally to $232.06. cosmetics maker rev lon has appointed the first female ceo. deborah periman will take over. shares of the ompany fell nearly 7% on the news to $17.55. and tln after the b the owner of victoria's secret c its profits forecast for the year. l brands down beat guidahee dropped prices. shares traded initially lower but finished the regular session he to $34.05. also after bell williams sonoma reported stronger than expected revenue andit pr the home furniture retailer said
that results were helped by demand for many of its brands and higher ecmerce sales as well. the company increased the full year revenue guidance. shares initially popped in after hours. thhe also finished regular session up nearly 4% to $49.18. the biggest name in retail and the biggest name in home building are joining forces in a smart way using smart home technology. ami zon and lenar have developed a new business model that could develop both big time. diana olick is in aldi, virginia, tonight. >> reporter: what better place to sell smart home technology. >> you're walking into an amazon experience center. >> currently traffic on your commute loo good. >> reporter: than in a tricked out model smart home. >> where you're able to look, play, and potentially purchase many of the connected devices thatou'veeard about and seen often ami zon.com.
>> even if i don't buy an lenar home? >> that's right. >> it's not just gadgets? >> it's not just gadgets. the smart home of today is the wa people expect to live, that's ordering food as easily as it is opening doors as it is turning on lights and turning on movies. >> reporter:ovalexa, time. >> okay. >> what you'll notice is lights will go down, shades will come down, lighting will goeehind thtv. so this is anmazon pantry. >> those little thingies ine, thhese -- so you have your bounty. >> yeah. >> that w il arrive your normal amazon delivery. this is the power of wor-ng with >> i never need to go to a supermarket again. >> reporter: whether y h come to thome to try the technology or just see the ch, which is now standard in new lenar tours while touring. >> there's cross pollination that could happen. >>eporter: while the gadgetry is cool, it's theicserve.
amazon is selling it and lenar is selling. >> smart home is sca to a lot of people. when you put together all of these incredibly connected devices. a lot of people are saying, i'm intrigued. when you buy lenar's included home you -- >> get the guy. >> you get the guy 2. he'll come and help you activat >> reporter: and p.j. works with you for 90 days to customize it all. >> alexa, turn the lights blue. >> reporter: the home services business is becoming increasingly competitive. facebook just announced that consumers can now shop for home service experts through its e.cebook marketpl big names in a big battle for your home and how you live in it. for "nightly business report," i'm diana olick in aldi, virginia. coming up. getting away this summer. prepare for packed planes.
a rare look at what to watch tomorrow. a number of fed officiaak will be sg about economic conditions in the u.s. and abroad. we'll getnhe latest read how many people are applying for unemployment benefits with the release of the weekly jobless claims and a lookyt how m existing homes were recently sold. that is what we're watching for on thursday. las vegas casino workers have overwhelmingly voted to strike. the workers are eligible to walk offft the job june 1st if aren't negotiations reached before they expire at the end of the month. there has not been a widespread strike in las vegas since 1984. uber is now being valued at about 2 billion. this after the ride hailing company said the threees invrs are looking to buy stakes firm.
the announcement comes as uber reports a 55% increase in gross bookings from a year earlier. excluding one-time gains, uber cut i losses in half from a year ago. if you are planning to fly somewhere this summer, be prepared for a packed plane. the airlines are expecting to carry a record nberf passengers. phil lebeau takes a look at the busy summer ahead in the sky. >> reporter: taking a trip this summer? join the club. the airline iustry is gearing up for an estimated 246 million passengers from june 1st through august 31st. an all-time high for those months. up 3.7% compared t last year. >> what that means is at our peak, and it could be this weekend, m2.6lion people will travel on any one day. that's about 100,000 people a day more than last year. >> reporter: what's driving the demand to take off? it's the combination of a strong
economy, high consumer confidence and relatively low airfares in fact, compared to three years ago, airfares are down more than 10%, but airfares are starting fo move higher, largely because the cost o jet fuel has jumpeds al50% in the last year. united airlines ceo says the sue in fuel costs is worth watching, but so farot it's n hurting the company's bottom line. a message echoed by the ceo ofi ha airlines. >> we're not at a point where the level of oil is, you know, really a significant threat to thef profitability our business. >> reporter: as long as demand remains strong, airlines will try to raise fares so they can offset some of th fuel cost increases. aft don't expect big airfare hikes. r all, competition from low-cost carriers or between airlines looking to pick up market share in a particular city means that the price we pay
to flyhould remain relatively low. phil lebeau,bu "nightlness report," chicago. before we go, here's another look at the day on walreet. the dow had been down 167 points t finished up 52 to 24,886. the nasdaq was up 47 and the s&p gained 8 points today. >> quite a turn around. >> yeah. that does it for us tonight. i'm suere . thanks for joining us. b>> i'ml griffeth. have a great evening. see you tomorr.
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