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tv   Nightly Business Report  PBS  May 24, 2018 5:00pm-5:31pm PDT

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>> "nightly business report," with sue herera and bill oiffeth. summit. president trump calls off the meeting with north korea, sending geopolitical shockwaves through the market. going up. w thatre gas prices are headed. some say that could hurt already weakening home sales. > disrupting the economy. tenology is fast changing the way we work and live. that's making federal reserve officials a bit neverous. ose stories and much more for "nightly business report" on this thursday, may 24th. good evening. welcome. investors were caught off-guard when the white houseaid the highly anticipated summit with north korea was canceled. theews pulle down the major indexes and injectioned new
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uncertainty, something that wall street doesn't like. gold pricessi cred a safe haven moved higher, as did the defense stocks. by the close the dow jones industrial average dropped 75 points to 24,811. th nasdaqell one point and s&p was down five. eamon javers has more for us tonight from the >> a dramatic set back in b negotiationsetween the united states and north korea over that country's nuclear program. the president today announcing that the united states will not participate in the scheduled summit with north korea on june 12th in singapore. the president citing recent comments from north korea insulting the vice president and betweene sabre rattling the north korean side. the president said the united states military is prepare to act now if necessary. >> i've spoken to general matt is and the join chiefs ofou sta anmilitary, by far the most powerful anywhere in the
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world and has been greatly enhanced recently, as you all know, is ready if necessary. >> the president also suggested he's salked to theth koreans and the japanese, and they stand really in terms of their military's well. he also suggested he had an agreement from both countries to pay for theosion cost or much of the financial cogs of any military action that happens in the korean peninsula in the weeks and months to come. he ended the remarks on a more optimistic note, suggesting the summit could still happen, be re-added to the schedule and urging americans to not be xious. >> hopefully everything will work out well with north korea, and a lot of things can happen, including the fact that perhaps and would wait, the possible existing summit could take place, or a summit at some later date. nobody should anxious.
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we have to get it right. >> the south korean sidee, meanwh expressing some am bifflens. they had suggestedli e in the week there was a 99.9% likelihood the summit would take place. now that it's canceled, there's some anxiety on the korean peninsula about what happens next. i'm eamonafter, from the white house. as sue mentioned safe haven were -- are the good buffers to the geopolitical uncertainty, and do they belong in quire portfol portfolio. bill stone j fns us tonightm stone investment partners. thanks for joining us. >> thanks for having ime. seems we haven't seen much of a safe haven play amid st. the political buncertaint today we did. why? >> i think today was a mix of a geopolitical with north korea
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involved also drags china in there, too. as you know, we have the china trade spat, which gets hot at different times. i think it wa all mixed up together. that's why gold is definiteloc one ated with geopolitical, but i thinkhat's y you got that mix of maybe more movingafe haven that we have seen in a while. >> if this continues to play out the way i didtoday, if you're not comfortable being in gold, are there other safe haven plays th investors might want to take a look at? >> certainly if you think this is going to lead to a downturn in the economy, so say you think it's goi spark more of a trade ward, bonds aren't a bad ple. i thi that's probably the wrong play, because i don't think this is going to drag down the global econ if you don't believe that, yields probably move higher. a weird -- i don't know that i would consider it a safe haven, but a place that i think is interesting, if you think part of this is transitory, we may
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still have somee opolitical, but usually the market adjusts to b that you think yields are going to -- interest rates will movep over time, i do still like the financial stocks. they've be one of the sectors that have shrugged off higher interest rates, as long as the economy keeps doing okay. >> what about defense stocks. they rallied as well. is that a place you would look? >> it's usually an interesting part. the hard part is they've had a very good move, so they're certainly not necessarily cheap, but it's worst aook in terms of long term they've been, you know, good performers as well. >> you know, bill, you brought up a good point, you don't think this will escalate. even if it doesn't shouldn't you hedge a bit and rho some safe havens as a balanced proached? you're absolutely right. i think the worst decision
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anyone can makeha is t to force -- or be forced to sell out of stocks at the exact wrong back to the financial crisis. it is painful, but if you had enough cash or some gold, or bonds for that matter, thatal ac did pretty well, or bonds did very well during that point, but you know, you can't ride it out. if you can ride it out, we all ckknow s hit new highs again, so really the worst thing you can do iset forced out at the worst possible times. i think you're right. always have some h safeen to tide you over. >> bill stone with stone investment partners, thanks for joining us. >> you bed. wilbur ross today said a probe of car and truck impor is still in the early stages. as we reported yesterday,sthat ination could lead to new tariffs on imported automobiles, and it is being conducted on national security grounds. >> national security is broadly
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defined to include the economy, to include the impact on unemployment, to include a very big variety of things that one would not nmally associate directly with military security, butt' also the case that econ iic security military security, and without economic security you can't have military shares of the japanese car makers honda and toyoda fell today. toyota says imposingarfs could hurt american jobs and increase consumer costs. president trump today signed into law that rollback of some banking rules, as we've been reporting the bipartisan bill was designed to have the biggest impact on regional banks and mid-sized institution, it is the most significant change yet to the 2010 dodd/frank law and will
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make it easr for smaller banks to issue mortgages. existing home sales fell in april, as buyers contend with a still shrinking supply of homes for sale now they're also facing another financialheadache. diana oli explains. >> tammy washington is tired of the high cost of house and now the rising cost ofgas. >> and then the gas goes up every week. i mean, at wasost a dollar difference a moon ac. >> higher gas prices are just another negative fordomeowners ore so for potential buyers. home prices were u over5% in april according to the national association of realtors while kniffin tore fell over 6%. mortgage rates are also up to the highest level in over seven years. when you add higherates and prices, the average monthly price went from 172aiers to 1,190 today. an 11% jump, according to the
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realtor. mortgages ras, is burdening the housing costs for people who are living far away j from centers and downtown areas. >> while the mos recent trend has been a return to the urban core, living in the city has become enormously expensive. compared to making the trek out the suburbs or even the ex-urbs, as gas prices rise, iney eat away at the savings. >> i'm pla to relocate and go south where it's more i can't live and work just to pay for gas prices. >> reporter: there's no specific data on how higher gas prices affect home sales and and the impact is likely shrinking giving thear popy of hybrid cars and rideshares, but there's mo question that higher prices for anything take a toll on consumer confidence, and buying a home the biggest investment that most w peopll
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ever make, is all about confidence. fort, "nightly business rep i'm diana olick in gtwash. the etf made up of major home building companies is down more than 12% year to date while the s&p 500 has risen 2%. at's weighing on the sector? joining us is wl randell. thanks for jning us tonight. >> thanks for having me. home billeders have also been facing inflation in terms of labor costs andmaterial, right? >> most are experiencing about a 5% incree in input cost. thankfully so far they've been able to average that pricing power much the ultimate question is going to be, you have a tight lake labor market, rising commodities, particularly lumber prices. however does thatricing power stay in place? and do we start seeing a shift
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in mixo lower sd homes, which is already occurring, in order to help offset the speed bumps. >> i know i'm paying the same for a smaller carton of ice cream thesedays, so they're going to start downsizing the size of homes aswe . is that the idea? >> exactly. americans buy as much as the can afford. if you go back to 2,000, the average was about 2,000 square feet. today it's 26, 2700quare feet. so if you take a step back and think about it, mortgage rates are low enough to fund people to have a higher-mix homes, and as isates comeup, they'll have to change from a four-bed to dr three-m or whatever the case may be. >> is there a specific number os mortgage rhat is a trigger point? when bill and i bought our firs homes,re at 16% on mortgage rates, but it seems as ough consumers are much more sensitive at the lower levels th they have been in the past.
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>> i think there's a number of things to think about. it's a questn of how quickly the consumer gets shocked. if we go back all the way to 1980, if you have a 51-base point move in a 30-year or more within a period of a month, typically tt shocks the consumer and slows the sales by at least a few quarters. we saw that believe in may of 2013, but i could be off by one year. we didn't see it this time post the elections, so i was rious, because past press content would say we have a hiccupt and hasn't occurred. >> do you like the home building stocks who would you like here? >> we're relatively sective here. we think len nonar is interesti. what's different about themngs it's tran line with the witp, meaning the group small caps, typically trades at a premium.
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it also is absorbing the acquisition, it seems to be progressing relativelywell, so we think there's value there, but we are selective in t thee of value we look at. there are some stocks like a slant/master plan community company called the howard hughes corp. there's a fair amount of up side there. ro basically we're additioning for dee value. >> thank you so much, will, for joining us tonight. >> thank you for having >me. ime to look at some upgrades and downgrades. hr was upgraded, the annualest says higher grain prices could increase tractor sales. price target now $185, that stock was up 1% to 158 period of time 18. apple's pri was increased to $214 a share. the analyst citesptism over the company's services bu nesses.
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the firm -- stock was off a fractures to 188.15. palo alto also saw the price target increased to $240 a shart deutsche bank. many expect the company to report a deceleration in product revenue next year, the analyst doesn't thinkt uld be as bad as many expect. th stock is up today. darden restaurants was added to the top picks list. the analyst calls the stock's valuation attractive and sees the potential for better than expected earnings. e stock roses nearly 1.5 per to 86.95. still ahead, the big debate inside the fed that has everything to do with technology.
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europe's tough new oules data privacy go into effect tomorrow. the rul force companies like facebook and google to make sure the data collection operations are safe. the cost of compliance is big, but the cost of not complying is even bigger. today a number of tech companies were in paris attending a major technology conference. e new rules were a hot topic. karen cho reports. >> reporter: this is france's answer to c.e.s. in lasvegas, a technology conference with 80,000 attenes from start ups to industry leaders. >> we need to take a broaderew f our responsibility to make sure we're not reacting to issues as they come up, but we're out there trying to prevent any issue from going forward. >> when we think about the responsibility, let's think about privacy.
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we will have to opate, recognizing that privacy is a human right. >> it's our beliea that d and a.i. would absolutely, absolutely reorder technology and buteness. >> rep such a high-level turnedous with ceos of facebook, uber, microsoft, ibm, tappingto the french revolution on technology, in particular to create an a.i. hub here in paris, as we're about to ntroduce european protection laws, which carry hefty fines. the french president macron defended -- >> europe is the right place to build new framework. u.s. is not regulated. it's not sustainable for our civilians. >> reporter: he's warned that some are too big to govern, and
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also t lobbied pay more tax in europe. many tech leaders have pledged to spend more on jobs and a training centers. clearly advances in technology have ha i a bigact on our economy. changing both the way we work and the skills that we need. but the size and scope of that alpact is hard t quantify, even for f reserve officials. steve liesman reports for us tonight from dallas, texas. >> reporter: growing disruptions of technology on the economy have reached a level where it's now a o imagine areaf concerned reserve.deral central banker are confused, intrigued, even may nervous to the labor market, and they just don't have a handle yesterday on the pace of change or the scope of change. >> because of distributed computing in the cloud, we think that it's accelerating, consumers have much morelo
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tech at their disposal than companies did 30iers, so the impact is the following. company versus far les prices power than historically. we think it will have auting effect. we think that needs to be taken into account. we think it's having an effect on product activityd >> they teap with the dallas fed for a conference titled technology-enabled disruption, where they heard stories about new systems where ten workers are replacewood two and car design that used to take a generation can be done in hours and just as easy i china and u.s. scary if you're one of the workers in the wave of one of these tech nolgtswaves. >> if you have a high school education or less in this coun sy, you'reing your job disrupted or eliminated, and if you don't get neretr which is easier to say than do, you may see yr product activity level decline. >> reporter: but even high school jobs like engineering can
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be at so fed banks one focused exclusively on abstractions like money very well lossity and inflation are deep into the thinking about job training. >> the onlay they have a lifetime of employment is if they have a lifetime of education. they have to commit themselves now to a lifetime of education, renstantly eshing skills. we'll have segments of our society, with hits geography other skill set. i'm not worried about it abroad. we always create new jobs up. >> reporter: what's being discussed here won't affect the next meeting, but ultimately it will help determine how much to raise tes, how low unemployment can go, and maybe most significantly, how much of economy can grow. for "nightly business report," i'm steve liesman indallas. best buy reports aslowdown in online sales growth. that's where begin tonight as
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market focus. it also said the profit margins were squeezed. that overshadowed better thanpe ed earnings, the company didn't update the full-year outlook, and that sparked some concerns, so the shares finished down. general electric's dividend will reportedly stay impact. bc said the conglomerate does not plan to cut the payout next year shares severed theirorst llop in nine years, today up almost costs caused earnings and sales to come in a little light over an hormel. the maker of spam noted higher fast-break and cmodityprices, the coke fell to 35.42. a poultry producers sanderson farms said the weaker pricing p causedfit and revenue to miss estimates in the most recent quarter. th i company said expected grain price toss increase in the second half of this year.
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shares were off nearly 1% to 106 had the 02. med tronnics said higher sales helped earnings grow and topped expectations. the company also gave earnings guidance for 2019 in line with estimate. shares rose 2% to 86.99. after the bell, gap reported stronger than expected earnings, but that was overshadowed by disappointing rules from the old navy brand.av old has been a bright spot in past quarters, but not this time. its sales slowed down and led to an overall miss a gap. gap shares were initially lower in after hours, erasing a 3% gain during the rular session. and software company splunk sauce earnings pass expectations, saying the results were increased by new customers and stronger demand for its
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products. it also sees revens this current quarter beatic street star, but still -- they also ended the regular day down a action at 116.31. coming mup,t the woman when she couldn't get ahead work fog someone else, started her own piano. today it's worth billions. there are reports that the justice department has opened a criminal probe into bitcoin manipulation. according to bloomberg, it's focused on the practice tt's calledspoofs, when an investor floods the markets with fake orders. federal prosecutors are also working with the commodity futures trading commission --
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the company that makes candy hearts has been sold at auction. the 107-year-old company was purchased by spangler candy compan itself a 100 yea old company. it's best known for the dumdum loipops. it was unable to keep up, with competitors. so some of america's vintage candies are under one roof now. as you probably know, there is a national conversation women in the workplace taking place, especially in the tech industry. jane wells met one wom broke the gender rrier, and is encouraging others to do the same. >> finly 17 years ago trees tucker was chief technolty office fortune 500 company,
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when she had a sur. al mome >> we had this circle of excellence, the sales winners award trip to hawaiine year. and all the people walking across the stage were middle-aged white men. that's the first time i was thinking my career is probablyr limited . tucker created black line an accounting software company in los angeles. >> i cashed o nigh nest egg from my options. i maxed out my credit cards, i took out a second mortgage on my house. i had a couple friends who believed in me? >> men? actually when i needed a payroll loan, i would beg them for 3 or 40,0r:. >> reporteblackline has nearly 2400 customers, the best performing technology to debut in the last two years now she says she's seenrs and how often men and women are paid differently.
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she thinking phet of problem may be the different ways people negotiate. 've had women, who when they have been promoted have said, no,ha no,s okay, i make enough. the pay gap comes about. of how i think younger women are getting>>better. eporter: along the way she dare,er hair pink on a calling it the greatest social experiment ever. her banker introduced h and the cfo to one of his bosses. >> heooks over to mark, that's wonderful, congratulations. and the banker -- it was so funny, becausehe banker very teresa ioes, and um, the ceo. it's like, oh, nice, congratulations. i think it's important for young women today to what i've done and to know that it's possible. t to knowt you can go out and
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build a business fm absolutely nothing through a successful ipo, through life as a public company. women can do that. >> reporter: she is probably the most under the radar pink-haired female owner, but know she earled she's a role model. that does itor us tonight, i'm sue herera. thanks for joining us. >> i'm bill griffeth. tomorrow i friday. enjoy tonight. see you tomorrow.
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