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tv   Nightly Business Report  PBS  July 9, 2018 5:00pm-5:31pm PDT

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this is nightly business report with bill griffith and sue herera. >> monday rally, the dow soars more than 300 poin. is the bull ready to make a run to new highs? or is this as good as itge . >> newellth, homeowners are sitting on a record amount of cash. so why aren't they tapping into all of that equity? >> planning for retirement, why working a little longer can have a big impact on your nest egg. those stories and more for mond july 9th. >> we bid you good evening, everybody. stocks rallied to start this week. the mood was upbeat, it was enough toll ph the dow back
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into positive territory for a year, thanks to a moveigher in ba stocks, which had their best days since late particular, and in turn, that helped to divert attmtion away f fears of a globe a.m. trade war, at least for today. here arehe final numbers, the dow industrials up 32 points. the nasdaq added 67ed the s&p ga4. more now on today's sharp move higher. tart to the ong week, with the dow rising more than 300 points. for weeks, stocksave been on edge over rallies of a global trade war. there was no escalation of the trade war receipt kick, and that may be enough for the trade war rally. china renewed its pledge to reopen the markets more. >> cyclical stocks like industrials and technology all rose while the banks had their biggest stay in several months. the prospects foretter earnings.
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remember, jpmorgan will kick off the second quarter season earnings fday. another positive catalyst was friday's jobs report. that added 213,000 jobs in june, beating expectations,ag but growth was modest. that kind of lldieks scenario makes trader more comfortable that the fed may n embark on an aggressive campaign to raise i erestrates. as bob mentioned, next comes rnings which stan ernest on friday, could profit reports and believe it or not trade actually help the bull case for rastocks. >> tde tensions have been seen as a drag on the stock market this ye, living with trade policy fction for several months has helped the market backdrop in a few ways. this could set up wall street's
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goals for another shot at stretching a rally to january's peak levels. how have global trade disputes been cast -- they pressured ars of the stock market. such as industrial manufacturer's, which has left the sector nearly 10% off its reco high. this has made that crucial group appearar less extensive too a few months ago. >> weariness over trade has also compressed long term bond deals. relieves borrowing costs and make equity valuations look a bit better. its trade issue and threat to global growth has led economists to predict the federal reserve might ease off its tightening campaign late this year. the aressive trade rhetoric has drained away investor enthusiasm. surveys show a three month low in optimism, and cash has been
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steadily puld from stock funds in recent weeks. they often serve as contrarian signals that leave the market poised for relief rallies. none of this means the market will escape the trading range that's prevailed since february. rallies have stalled while below the january peak, and seasonal factors will turn negative by late july. there's a chance that the market has made a tentative peace with the trade warstory, opening a lane for the bulls to make a bit of a mid summer run at the wintertime highs. for nightly business report, i'm mike saoli. >> there are a number of wall street firms that have become cautious onstocks. today, for example, guggenheim partners called this latest rally the last hoorah. a morgan stanley strategist says it's time to go full on defensive.
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not even small cs are immune to any trade war fallout. and recently, morningstar investment managemt group told investors to brace for another lost decade for stocks. one of the authors of r at morningsport is the group's president and chief inveerment off dan, good to see you again, welcome back. >> hi, brill. i remember t dow touched 1,000 for the first time in the mid-60s, itulled back, didn't see that level again until the early 80s, tasdaq hit 5,000 in 2,000. pulled back, didn't see that level again for 15 years. are you talking about something like that happening ain? >> well,ow it plays out, we're not too sure about. stock e to history, the market price relative to say the earnings and cashflows that itn tes are very high. and from this level we think that returnings for investors that hold the stock market fore
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the next years and reinvest their dividends are going to end up with a low return. so low single digit returns. which is going to be low retive tohistory, and indicative of the high levels in e market. >> we have an economy that seems to be firing on all cylinders, we haveecord low unemployment. the fundamentals of the economy look good, it doesn't always translate into stocks, that oresn't bode wellhe stock market or contribute to higher prices in the stock mark? t's a good point, sue. everybody knows that the jobs market is improving. we all see the unemployme figures. we all see the record levels of corpore balance sheets, the high levels of profitability, there's a lot of positives, capital markets and stock markets are forward looking. prices reflect that in our opinion, the challenge is, when you get into these sort
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of later business cycle stages where you start to see unemployment very w, y start to see inflationary pressures rising, that's when investors tend to be the most optimistic,o unately, extrapolation can be hazardous to investor's wealth, at the points, people assume the good times are going to keep going, but unfortunately, a lot of nose positives are already in these very high valuation levels. >> what are investors to do with this. if we're to have a lower tn expected return for equities over the next 10 years or so, wher do you suggest thathey go to get the best return? >> look, i think it really depends on your type of investment strategy, for mr. people, trying to time the markets and exit the u.s. stock market now would be dangerous ced generally what we think they should do is bor lower returns, the challenge when you've hp high returns for the last fiv yea and 10 years, is that people start to think it's
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normal when they start to adjust their spending and savings lower your expectations, i think this is going to be a more challenging decade for stock market returns,now, for those investors that can take a long term view, andbe that m areth to be more contrary, and separate tmselves from the pack there's value in stock markets outside of the u. particularly the u.k. stock market. it unpopular, but also priced accordingly, we think there's value there, we also think there's value in emerging market stocks as well. the yield for cash s andrt term bonds is rising, so the alteative is much more attractive than it was 2, 3 years ago, when cash rates were anchored around zero. probably the lesson from our perspective is, the many people don't try to time the market. >> so noted. >> daniel needham, good to see you again, thanks for joining us
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tonight. >> thanks, bill, thanks sue. >> fund investors on arage registered modest gains in the second quarter. according to follow son reuters, the average diversified stock funds return during those three months was 3.37%. bo returns were relatively flat, but they saw a lot of cashflow into them. more than $126 billion according to the investment compa institute. >> shares of pfizer were in focus today, after the president targeted that company in a tweet. mr. trump wrote twitter, pfizer and others should be ashamed theyd have rai drug prices for no reason. they are taking advantage of the poor and others unable to defend themselves, while at the same timear givingin basement prices to other countries in europe and elsewhere. we will respond. in response, pfizercesaid, p for the majority of its drugs do remain unchanged, but last week we did tell you pfizer raised
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the priceff some its drugs, although it lowered the cost of others at the same time. pfizer shares fell midday when the tweet was posted. the stock was a fraction. >> the trump administration has decided suspend key payments that are part of the affordable care act. ane payments to ensurers help stabilize the ins market. the freeze could increase uncertainty and drive premiums this fall. a legal ruling that tossed out the formula used to calculate those payments, calling i flawed. >> the first day on the job for the man in charge of that health care phen viewer formed by mazon, berkshire hathaway and jpmorgan chase. his goal, nothing short of bringing costs down, and changing w health care ase know it. meg terrell has more. >> it's tall order, fix health care not only for the 1.2 million employees for amazon, berkshirewa hat and jpmorgan,
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but also aimed to create better blueprints nationally. even the name of the company isn't mean. they've been referring to it as abj for its three founding companies. its independent, based in boston and not for profit. some is known about the enterprise's mission. and for recent speaking ewpearances and previously writing in theorker and elsewhere, there are clues about how th accomplish it.e to the goals, they spell them out recently at a cnce in aspen. >> i get to have a million patients that i as a doctor get to add to my responsibility. and my job for them is to figure out ways that we're going to drive better outcomes, better ictisfaction with care. and better cost suncy with new models that can be ink baited for all.al >> that is aorder. but you know, what they're
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saying for me is resourc be the problem. uman behavior will be, and achieving scale am be. >> he laid out three sources of waste in the system. high administrative costs, secondng priand lastly, misutilization of care. what he said was the biggest contributor to waste. he defined it as the wrong care at the wrong time in the wrong way. he sent a $20,000 check to guande sight unseen. the biggest knock is that he's never run a major health company or system. andy suarez who ran medicare and medicaid said that's a strength. many expect progress will take time, it's not only possible, but much needed. as health care now accounts for 18% of th u.s. economy. for nightly business report, i'm
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tg terrell. >> it is time take a look at some of today's upgrades and down grades. dow component procter & gamble was down the company will report earnings below expectations next fiscal . ye the price target is 79, the shares telling 1 1/2% to 77.86. shares of anthem were upgraded to foutperformm market perform at bml capital. th new ceo and potential for stronger earnings growth. the price targe is $290. the stock was up more than 2 1/2% to 248.69. cal tal one financial was upgraded. with analysts citing credit card denquencies there. the stock rose. micha michael kors was rated a buy.
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the stock's curre valuation is too low to ignore. price target now $88. the stock rosen fract to 67.39. still ahead, going to tttremes, what one state is doing toct workers and alleviate the shortage that's hurting businesses. american homeowners are sitting on more equity than ever before. but they're not taking advantage of it, diana olick explains why. >> home values today are skyrocketing, whicheans homeowners have a growing amount of cash at their disposal. so called tapable equity is the amount yfr home is worth, above the 20% cushion most lenders require. it grew by 7% in the first
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arter of this ar, compared to the previous quarter, compared to black knight, thati he largest single quarter growth since they began tracking it in 2005. homeowners have a collective $5 trillion in tapable equity. the highest volume ever recorded. il it down to the average homeowner with the mortgage who has gained $14,0 in tapable equity in the past year, and has $113,900 aavailable to drew. fewer are doing that. >> ihink the typical american doesn't have that level of awareness, they're not the numbers. >> home equity lines of cr sit which iond loans to pull out cash, were flat at the start of this year, for those that are using them, the amounth of cas they're taking out ist a two-year low. moreeople are doing cash out refinances on their first mortgage, which doesn't make a ton of sens interestates are higher today than they have been in several years, people would be losing a rock bogt open rate
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they already have in order to refi. most primary loans are fixed rates, wle home equity lines are not. >> who wants uncertainty when it comes to month finances. most americans look at, what are my repayments, whaty incomes coming in, going out. and wanting certainty around, i can cover my costs and not worry about it. >> homeowners may have newellth, they also have long memories, as back to the housing boom, when homes were used like atm's, and wew all k how that turned out. for nightly business report, dianaolick, washington. >> to read more about diana's storysind other h market trends. head to our website. >> we told you on fday how the economy created more jobs than expected last month. and how employers are still pen ng a lard time filling position some states are now taking extreme measures to attract workers. scott cohn has an example.
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>> it's dinnertime at the four taarter restaurant. the most impornt meal of the day because it's the only meal when they're open. >> the only thing that's holding you back is not being able to find people? >> absolute. >> the idea of trying to open more svices here. you know, it's not even -- we can't even barely staff our dinner service. >> the four quarter is in madison,t wisconsin, could be in almost any other state. the labor department 6 reports pngt 7 million job openings nationwide. more openings than there are unemployed people to fill them. in especially short supply? skilled workers whether on computers or inhe ki. it's really bad in wisconsin, with unemployment at historic lows. that'seyond theiant fox plant that's supposed to add 13,000 jobs. i wisconsi targeting chicago
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millennials. an hour commute or an hour with friends. in wisconsin, the average commute is it less than 22 minutes. >> patrick cunningham and h wife made the move 3 1/2 years ago. >> beer and cheese, tt's farming, that's all people think of. >> state officials know it will take morehan flashy ads. >> really trying t eliminate that skills gap. investments from k through 12 s, school to technical colleges. >> for it's part, they're working with the government partners and other stakeholders in wisconsin, t make sur it has the workforce it needs. the company wouldn't sayer whe the labor shortage is affecting its time lines. >> the biggest sale on group sll on may be groupon. that's where we begintonight's market focus. the e commerce platform has been in contact wh a number of public companies to gauge interest in a possible sale.
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alibabi and iac are among the pontial suitors. acadia pharmaceutical was pressured after an report questioned the safety of that company's only drug. the report from the southern indevelop gative reporting foundation, also questioned the company's saless, practind alleged that acadia used regulatory loopholeso get the treatment improved. as a result, the shares fell nearly 7% to 16.63. helener products company of troy, said a rise in e commerce sales helped overall results top estimates. the company behind dr. scholls and vicks, saidt expects earnings for the year to beat analyst's targets. the shares rose to 114.85 and a hi 52 week high. snap may be teaming up with amazon, snap is developing a
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feature on its app that would allow users to take a picture of an object and be directed to an ap don listing to make a purchase. resnap s rose nearly 1% today. shares of amazon were up more than 1% to 1,739.02. jm smuckers is sayin good-bye to the pillsbury dough boy. they'r selling their baking business for just under $400 million. the unit houses the pillsbury brand. smuckers wants to invest in faster growing coffee and pet food segments. shares were off a fraction to 110.91. the share of older workers ages 55 or up, who are either working or looking for work is higher than it was a decade ag and even higher than it before the great recession. many older workers may want or need to work longer.
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and research shows that doing so could boost their income even more than increasing their savings. our senior personal finance correspondent is herein to exp why. good to see you as always. >> good to be here. >> a lote of peo worry they aren't on track saving for ftirement. >>hey even add a little bit to the pot, whyki would w longer be more additive. >> it's interesting,tu came out from the bureau of research that showed that even if you add an extra percent a s. year for 30 ye you're still going to come f ou muther ahead if you work longer by one year. >> they took someone who wanted to r at 66, and they saved -- instead of 6% a year in their retirement contributions, they saved 7%. that increased their total retirement income 2%. if they worked one year longer and retired at 67 instead of66. that increased their retirement
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income by nearly 8%. 7 3/4%. >> most of that comes from . social securi >> that's a huge difference? >> it's auge difference. >> there are drawbacks to working longer. one of the bgest benefits is that your retirement contributions will be able to add to them, and gro longer. increased g to get social security benefits. if you do want to get a part time job or want to work longer, many older workers, recent labor department found are unable to find the type of jobs that they may need to work longer, to m we th their while. so many americans depend on social security for a big part of t retirement income. and working longer would allow them to increase that benefi they really can't find the jobs that would allow them to increa it enough to get a sizable social security benefit. >> what if youe not in great health, you can't find a job that suits your particularci umstances. what can you do now?
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to help your retirement goals be met? >> the most born thing you can do is max out your retirement contribution if you're 50 or older, you can contribute more to your 401(k). you need to invest tha money aggressively. you may be retired for 20 years, a lot of that money has to be in the stock market. the otherhing to consider is how much money will you be getting in your social security benefits. maybe you get a side job that t allows y earn that much money so you can work longer and not have to take tho retirement benefits early. >> just increasing i and working one year longer can increase your retiremen benefits from social security. >> all right. i'm in. >> that's a guaranteed >> one more year. one more >> coming up, it's the final straw. for starbucks that is.
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starbucks has decided to go strawless, n adding itse to the list of major brands that are ditching plastic straws in the name of sustainability.og kaers reports to us tonight from new york. by 2020, the green plastic straws will be eye thing of the past. they plan toliminate single use plastic straws, just as demand for cold beverage declines. cold drinks make up more than half of starbucks beverage mix in the u.s. an increase of 35% from five ars ago. >> starbucks has designed this, a recycleable strawless plastic lid, available in 8,000
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locations in the u.s. and canada right now. >> i think it's a good thing, trying to be. >> it's convenient. you. >> hear about straws not being so great for the environment. people grab them out of habit. >> straws made from paper will be available for frappucino drinks and upon customerth requests for beverages. the company has not detailed how much the move will cost to implement. starbucks is the largest food and beverage retailer to a make commitment following straws. >> hyatt said it would elimiwste plastic stnd drink picks. mcdonald's has plans to phase out plastic straws in thelu.k. and ird. committeement a
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tos cut its greenhouse ga emissions and make its consumer packaging from renewablnd recycleable materials. duncan dounuts is doing away with its foam cups.re municipalities tackling single use straws on their own. for nightly business report, kate rogers in new york city. tonight,does it for us i'm sue herera, thanks for joining us. >> have a great evening, see you tomorrow.
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