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tv   Nightly Business Report  PBS  December 10, 2018 5:00pm-5:30pm PST

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. this is "nightly business report" with bill griffeth and sue herera. hat a reversal. av falling more than 500 points, the dowd finis higher. is there a way do protect your portfolio from what feels like never ending volatility. ng jumship. there have been a lot of sellers in this market but it's who is doing the selling that may signal how long this volatility will last. essons arned. ten years since bernie madoff confessed to orchestrating the rgest ponzi scheme ever. what has chand? those stories and more on "nightly business report" for monday, december and we do bid you a good evening, everybody. griffeth. sue is off tonight. what a reversal de. it looked like today was going
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to be another ugly one for investors. there were still trade concerns after a white house official said march was adl hard de for talks with china. apple got caught up in a legal battle with qualcomm when the chinese government banned the sale of most iphone models. and a critical vote on brexit in the u.k. parliament was delayed. it a served to push the dow dawn about 500 points at the low of the then apple suddenly reversed course midday and that seemed to help lift tech sector and then the broader market. by the close of another wild day of trading the dow finished 34 points higher to 24,423. the nasdaq added 51. and the s&p 500 was up by 4 points. mike santoli takes a look at the volatile market and whattho expect in e days and weeks ahead. >> reporter: more than two months into a nasty downturn stocks areav bg like some hybrid of a bull and a bear market. the s&p 500 is lower than it was
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a year ago in its second 10% correction in ten months and half ofre its stocks down at least 20% from the highs. several potential catalysts, the mid-term elections, a dovish turn a a trade truce with china has not led to any sustained rallies. defensive sectors are the onl h onesding up. to many traders and investors this represents a sign that a bear market might have taken hold. even with all of that, the s&p is down only a coupl percent for the year and remains up more than 40% since early 2016 and e economic fundamecoals inue to suggest no imminent risk of a u.s. cession. unemployment at 50-year lows, consumernd sg strong and services sector expanding nicely. a recession is what prompts a true bear market often defined as a 20% or greater drop in the broad market indexes. these conflicting signals have investors grasping at prior periods when the market occupied this gray area between bull and
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bear. reaching back to 2015 into 2016 where we saw an oil crash, credit market stress similar to now. back then the fed raised rates in december 2015 inon a voe verse yal first hike of the cycle. thenhe fed stood back and then the u.s. presidential election. it would be a comforting outcome eventually if the m followed that path but that doesn't make the day-to-day gytions any less jarring and of course no two market cycles match up in verydetail. for "nightly business report," i'm mike santoli. ay thoseo-day gyrations may not let up anye ime soon. hend manager paul tudor jonesho predicted the market crash said that investors should expect more big moves in the year. >> i think we're going to is he a lot more of what we just saw, which is a lot more volatility. you know, it's really say i'm really bullish,ri'm
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really b. i kind of see a two-sided market. i think in the next year we'll be wre w are today ten down and ten up. >> he did add that a potentialt decline i market could lead the federal reserve to hold off raising interest rates in 2019 and that in turn could boost equity prices. speaking of which, the fed funde fu markets which reflect traders sentiment about the future rate moves byerhe f reserve, it's gradually reducing the probability of a dember te increase. it now stands at 68%. that's a ur-month low. the market is also interestingly currently pricing ino rate increases for all of next year. that could change though. as we mentioned at the top of the program, there was disarray in london today when british prime minis trresa may was forced to delay a parliamentary vote on her proposed brexit deal because of concerns it did not have enough votes. not only did thaat c uncertainty for europe and brittain's future as part of the european union, but it further
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clouds investor's outlook on the global economy. wilfred frost reports for us from london. >> reporter: u.k. prime minister theresa may called off a make or break final vote on the brexit plan which was due tomorrow because she feared defeat. >> if we went ahe and held the vote it would be defeated. we wier, ore, defer the vote schedule for tomorrow and not proceed to divide the house at this time. >> reporter: she was mocked in parliament as she explained her reasons why. >> i listened very carefullyo what is being said in this chamber and out of it to what has been said in this chamber an i out of by members from all sides. from listening to those views it is clear that while there is broad support for many of the key aspects of the deal, o one
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issue, on one issue there remains widespread and deep concern. >> reporter: she now heads to europe hoping to make concessions from european leaders, particularly on the irish back stop, something that seems difficult based on this tweet from the president of the european council who id, we will not renegotiate the deal but we are ready to discuss how to facilitate the u.k. ratification. the british pound had torrid session off the back of all of this hitting a d20-month low to fears of a no deal disorderly brexit that could destabilize financial markets and question mark about the prime minister's own future. that said, she has salvaged a couple of weeksn order to try to save her deal and with it her political future. for "nightly business report," i'm wilfred frost in london. n more on apple, which as we mentioned contribed to the
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volatility we saw in the market today. oat stock initially opened sharply lower word that the sale of some older iphone models had been banned in china after a court ruled that they violated patents held by qualcomm which, as you know, has bee locked in patent battles with apple for several years. apple responded by saying it did not violate any qualcomm patent and this f afternooned an appeal to overturn that sales ban. that aeared to when the stock turned higher midday and it took the rest of the market with it. meanwhile, in canada the chief financial officer of huawei was back in a vancouver court today and lawyers for that executive asked for bail in the u.s. extradition case. arguing that surveillance evices couldure that she does not flee. even though it is unrelated to the tradewe dispute b the u.s. and china, this huawei case is contributing to heightened tensio especially in beijing where the response has beeny
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unusua strong. euni as more tonight. >> reporter: the chinese government summoned ambassadored to lod beijing's complaint calling her detention vile in nature, extremely nasty and warned of grave consequences if cfthe is not released. the cfo and her company are under scrutiny by u.s. authorities that claim the chinese telecom's gear maker violated sanctions on iran through what they described as a hong kong shellle company c sky com. meng misrepresented thenc infl over sky com to international banks putting them at risk of breaching sanctions. theanguage is unusually strong for an official reaction highlighting high angryuteijing is a meng's arrest and why american companies,especially ech sector, are worried about a potential blow back on
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u.s./china trade tks and on them. ntey have been describing the cfo's treatearing handcuffs and ankle bracelets as degradin huawei's response has been much more muted saying we have eve confidence that the canadian and u.s. legal systems will reach the right. conclusi for "nightly business report," i'm eunice yoon in sbeijing. >> what a day, from trade to the fed to concerns over seas, there are a lot ofbussues contng to this volatility. is there a way tor protect y portfolio? joining us for an old-fashionedi session, tate throw is back with us. he's founder and psident of jewel financial. quint, good to be back. >> good to be here, bill. >> speaking broadly, not specific advice, because it varies from indiv individual. broadly speaking, first thing you say is don't panic sell in thisti voty, right? >> i think that's exactly right,
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bill. for example, today when we came in it was a very negative day. think about it, investors had all weekend to think about all the terrible things that are going on in the world. we ce out. we were down 500 points, and right when you thought oh, the worst, you know, we' kind of coming over this cliff, the market breathes and relief and we saw a pretty decent rebound into the bell. >> right. >> our view isn't that we're out of the woods. that's not our view at all, what we talked to investors about is if they wan to take a -- an approach, an active approach to theil voly and reduce exposure, they should have a plan in doing so. not panic sella but hav plan as the market recovers, look to reduce the allocation or the exposure when the s recovers in. >> you say reduce to a target amount. what do you mean? what >> so we talked to our clients about a specificat alln when
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the markets are good, when we're feeling positive about the valuations and let's say somebody, for example, is a 70/30 allocation, 70% exposed to stock, 30% to bonds, we adjust that depending on our fundamental or technical view of the market and so we are currently at about 1/2 allocation level. so if somebody is typically 100% invested, they' actually about 50% invested right now. so we are encouraging peopleo revisit their allocation and find aevel that is comfortable for them because i agree with paul tudor jones. i do not think that we are out of the woods with volatility. think that will continue. >> i'm going to run out of time here, but this is important. where do you go then to try and smooth things out or at least find some security? like gold for exampl what about bonds? >> i do like bonds if you can t buy individual paper.
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bond funds are going to be difficult because they're going erode as interest rates go up. one, two, three-year treasury nd if you can buy them outright are, in my opinion, offering good yield and a good place. utilities and staples are another area that we like here. >> all hang on. buckle up. do whatever you have to do. quint ftatrom joule financial. thank you for joining us tonight. >> thank you, bill. time to take a look at somea of s upgrades and downgrades. fedex was dograded to neutral and they cited the management shakeup at theni express in the middle of the busiest season. price target $220 and the shares fell 4% to $192.93. visteon was downgraded from neutral to sell. they expect the upcoming o business update a negative catalyst for that stock. price target $63.
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vis visteon shares are down. five below was upgraded from buy to hold in loop capita the analysts say five below is more resistant to an e downturn than most retailers. price target shares rose more than 6% to $101.71. still ahead, passive investing has become very popular, but what happens when the market turns downward? more international news. there was a dramatic development in paris when french president emmanuel macron pledged to
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eliminate the recent controversial tax increase proposed on pensners. he proposed to raise the national minimum wage in france in january. macron's televised address was in response tohe wave of protests that challenged his authority. they were his first pub ac statemener weeks of demonstrations that turned violent this weekend in pas. macron called this an historic time for his country and he vowedo speed up the tax relief and to restore calm. meanwhile, the white house has imposedanctions on three north korean officials including a top aide to leader kim jong-un. the action is aimed at pucnishig pyongyang. the sanctions freeze assets under u.s. jurisdiction and prohibit actio with anyone in the united states. and in japan prosecutors there have indicted carlos ghosn, the former chair of nissan. they say ghosn violated the laws
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by under reporting the mp sation. the indictment comes three weeks after authorities arrested him. ghosn is one of the world's most respective automotive executives. the latest market volatility is causing retail investors to grow more cautious as pull theit money of mutual funds. according to some estimates last week, t 24th consecutive week of fund outflows. that could hav implications for the broader market. leslie picker joins us from new york. how much money are weab talking t when you talk about the mutual outflows in recent weeks and mont? >> reporter: mutual outflows in billion is over $12 last week over the course of 24 months. we're lookingt ove $100 billion, bill. so this is pretty signific24t. weeks for those who don't want to do the math, that's about six months worth of ioutflows, which pretty significant when you think about what that means for the mutual fund industry as well as what it
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means for the equity market. >> so-cled passi investing, index funds, exchange traded fund they become very popular at the expense of actively managed funds wavre you human beings buying and selling stocks. so when you see -- anden they'v ery popular during a bull market for the last decade. what happens when the market heads lower. what is the expect for active versus passive investing? >> that's a big question that a lot of people are considering, including the federal what does all of this move towards pass sieve investing mean for the broader market? what we start to see, according to market participants, is that index funds, when people redeem from index funds, meaning when ey take money out of the index funds, the index funds are therefore forced to sell assets in ant equival to the index. so it's all of the different stocks in an index are weighted in a certain amount and people start taking their money o of index funds. those index funds have to sell ocks that kind of mirror an
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index, so to speak. so there's no rl discrepancy in the stocks that they're selling, which makes it really hard for other participants in the market to pick stocks that they believe are poised to prosper because ofda fntal reasons when they look at the balance sheet, when ty look a the income statement and other catalysts that could drive the stock higher. it turns out they get punished ecause people are selling the index fund. >> leslie picker in new york, thank you. see you later. elsewhere, nutrisystem shares are bulking up. that's where we begin tonight's market the weight management company is being purchased by lttivity h for $1.5 million. they develop fitnessgr ps for customers age 50 and older. nutrisystem wld presumably add nutrition to those programs. arentsystem is the company of the namesake brand and of the south beach diet. shares ofis nutem, one of the big gainers, at 27% while
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tivity health dropped 31%. more than 10,000 verizon employees have chosen to leave that company through next year through voluntary buyouts. verizon is looking to cuttosts as invests in the 5g network. they had 132,000 employees. shares rose to $58.27. meanwhile, gilead sciences may have a new ceo. they will take over in ma one analyst says that will make the stock more voteable. the stock fell 1% to $67.49. a major yelphaholder is calling for changes at the board. sqn says it believes the has failed to hold itself and management accountable for the coany's strategic missteps. yelp called the directors active
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and open minded. ares rose 3% to $35.64 g and pro plans to move production for most of the cameras boundrom the u. out of china. the company said the decision wa made to avoid any new potential tariffs. the cost will be minimal. in a regulatory filing they said international bound cameras will remain in china. stock fl 1% to $4.92. now to housing a becau of recent price declines, homeowners are no longer seeing big gains in equity. some are even losing the ability to pull cash out of their homes. diana olick has more. >> reporter: homeowners in most placesgre still mak money, but they are now seeing the smlest gains in twoyears. the average homeowner gained $12,400 in h equity between the third quarter of last year and this year t according core logic. that includes price depreciation and paying down the mortgage.
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that's down from $16,000n annual gains in the second quarter. places in the west saw bigger gains, california and nevada more tha $30,000. homeowners in north dakota, louisiana and connecticut los value. this is all because the gains in home prices areshrinking. why? rising mortgage rates which did drop back in the last month but are still considerably higher than a year ago. we're also seeing more homes come on the market which has taken the ht outf that strong competition we werese eing. the drop in equity gains has been sharpest in the third quarter of this year. in fact, the amount of cashable equity whichuc is how cash people can pull out of their homes felluarter to quarter. 1/4 of a million homeownersave no equity to tap now. they are feeling less confide in their investment. that means they're less likely to p mor money into the home
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and even into the greater economy. fornitly business report," i'm diana olick in washington. coming up, it's been ten years since the biggest investnt fraud was uncovered and the victims are still picking up the pieces. here's a look at what too watch for tomorrow. the producer price index will give investors a fresh read o inflation, something the fed will be watching closely. google ceo is scheduled to testify on capitol hill over potential bias in the search results. cbs holds the shareholder meeting after delays of les moonves stepping down. that should be interesting. that's what we'll be watching for on tuesday.
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meanwhile, the number of job openings has climbed back up. according to the labor department, there were more than 7 million positions available in october. that's the second highest lel. it means there are 1 million more job openings than unemployed workers, more evidence of our tight labor questions as continue to arise about the health. gasoline prices have hit a low. the average price of a gallon o regular was $2.42. that's 4 cents lower than a week ago. 28 cents lower than aonth ago. fueling that decline is a drop 3% oil which fell another today to settle around $51 a rrel. number of pharmaceutical companies are facing an investigation into alleged price fixing. what began as a lawsuit brought by stas into two medications in 2016 has now expanded into a government probe involving 16 companies. investigators claim that those drugakers colluded to keep the
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high for at cially least 300 different medications. the generic manufacturers have rejeed those accusations. shares of several generic makers finished mixed in today's making. the victims of bernie madoff are still picking up the pieces. ten years after the biggest investment fraud was exposed,do confessed to the $65 billion investment scheme in the thick of the crisis. it fundamentally changed the way we invest, the way investmentso ad are regulated and how we trust. many are wondering, could it happen again?co scot has our report. >> reporter: joyce greenberg who invested millions with madoff remembers the shock. >> i think what he did is despicable. >> reporter: eileen kemp says her parents now in their90s lost 3/4 of their net worth. >> it was shock, disbeeve and
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mistrust. >> reporter: the world had seen investment scandals before but nothing like this. he was respected, former chairman of nasdaq. sought after expert lik at this roundtable a year earlier. >> we saw, meaning my brother and myself, that there was an opportunity to bring automation into the over-the-counter marketplace. reporter: but his investment advisory business with a reported $65 billion under management was sm. >> i gift wrapped and delivered the largest ponzi scheme i history to them and somehow they couldn't be bothered to conduct a thorough and proper investigation. >> reporter: the agency has missed the whole investigation. >> they don't have i in the front of their mind, they certainly have madoff in the back of their mind. >> reporter: the lead prosecutor, noin private practice, says now it's necessary.
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institutions and regulators. ten pefully the passage of years has not led them to losek tr of that. >> madoff claimed to have worked alone. 15 people including hisounger brother peter pleaded guilty. four people including madoff's son mark committed suicide.ff mas in the tenth year of a 150 year sentence at a medium security prison in ohio. his defense attorney stays ih. to >> he's doing okay for 80 years old. >> reporter: when we visited in 2013, he told us bt's likeng in the army. you'reot worried about it. >> reporter: as for the victims it's complicated. they're getting 75% of their inciple, unheard of in a ponzi scheme. they're lucky to get anything at
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all. courts have ruled the terms they thought they had earned, some $50 billion in all, were nothing about bernie madoff's cool fiction. i'm scott cohn. >> ainal look at the day on wall street. these numbers don't tell the whole storyou as heard by now. closing up 35 points. the nasdaq added 51. 4.e s&p was up what a day. that's "nightly business report" for tonight. i'm bill griffeth. thanks for washington. have a great evening. we'll see you tomorrow.
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